Bloomberg News

Rogers’s Profit Rises More Than Estimated on Data Spending

October 26, 2011

(Updates with closing share price in sixth paragraph.)

Oct. 26 (Bloomberg) -- Rogers Communications Inc., Canada’s largest wireless carrier, reported third-quarter profit that rose more than analysts estimated after luring customers on smartphone data plans.

Net income climbed 29 percent to C$491 million ($484 million), or 87 cents a share, Toronto-based Rogers said today in a statement. Profit excluding some items was 89 cents a share, exceeding the 82-cent average of estimates compiled by Bloomberg. Chief Financial Officer Bill Linton is retiring in the second quarter of 2012, the company also said.

The carrier offered deals like the Samsung Galaxy S smartphone for 1 cent on a three-year contract to entice new customers. That helped lift wireless data revenue growth to 28 percent in the quarter, while the rate of subscriber turnover climbed and average revenue per user, or Arpu, dropped amid competition from new carriers like Wind Mobile.

“Competitive forces continue to impact Arpu and affected subscriber additions in the quarter,” Maher Yaghi, an analyst with Desjardins Securities in Montreal, said in a note today. He rates the shares “hold.’

The wireless unit’s profit margin dipped to 47.7 percent last quarter from 48.5 percent a year earlier.

Rogers rose 0.2 percent to C$35.93 at 4 p.m. Toronto time. The shares have climbed 3.8 percent this year.

New CFO

Linton will be succeeded by Anthony Staffieri, most recently senior vice president of finance at Rogers’s rival BCE Inc., Canada’s largest phone company and the country’s No. 2 wireless carrier.

Rogers Chief Executive Officer Nadir Mohamed said customer turnover, or churn, accelerated from a year earlier in an ‘‘intensely competitive environment.”

“While churn did drift up modestly we’re seeing that more in the lower end of the market,” Mohamed told analysts on a conference call.

Rogers last quarter added 74,000 subscribers on contracts, the long-term customers who typically buy a smartphone and spend more on data. That was down from 125,000 a year earlier and lower than Yaghi’s estimate of 141,000.

Average revenue from both contract and prepaid customers, who usually opt for cheaper calling plans, was C$61.79, down from C$64.38 a year earlier and below Yaghi’s estimate of C$62.

Sales rose 1.2 percent to C$3.15 billion, compared with the average analysts’ estimate of C$3.18 billion. Net income was C$380 million, or 66 cents a share, in the year earlier quarter.

(Rogers held a conference call this morning. To listen to a replay, go to RCI/B CN <Equity> CWP <GO> and click on the link under Investor Relations.)

--Editor: Cecile Daurat

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net


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