Rogers CEO says response to new wireless pricing has exceeded expectations

TORONTO — The chief executive of Rogers Communications Inc. said Tuesday that a major change in wireless billing strategy is surpassing internal expectations, although overall subscriber additions in the second quarter missed analyst estimates.

The Toronto-based wireless, internet, cable and media company began selling wireless plans that don’t charge overage fees on June 13, a move since followed by Telus and Bell, which own Canada’s other national mobile phone services.

Overage fees contribute to the company’s wireless service revenue, but Rogers officials said they expect better economics in the medium and longer term to offset a moderation in revenue growth in the short term.

“While it is still early days, the response has been overwhelmingly positive,” Rogers CEO Joe Natale told analysts Tuesday on a second-quarter conference call.

Net additions to Rogers post-paid wireless services were down sharply from the same period of 2018. The company added 77,000 postpaid subscribers, compared with 122,000 a year earlier, and below a consensus estimate of 89,000.

By comparison, Freedom Mobile — which has had no-overage plans for more than a year — added 61,000 postpaid customers in its March-May quarter from a smaller base in Ontario, Alberta and British Columbia.

Natale focused more on the 365,000 subscribers who took up the new Rogers no-overage plans in six weeks, two-thirds of them choosing higher-priced monthly plans than they had previously.

Rogers had expected a majority to opt for lower-priced plans than they had, he said.

“And so we were quite pleasantly surprised to see the inverse happening,” Natale said.

Overall, analysts said the Rogers wireless business had a soft quarter — although opinions varied about whether its subscriber additions were disappointing or better than anticipated given that a general slowdown has been expected.

Analyst Drew McReynolds of RBC Dominion Securities wrote in a note to clients Tuesday that postpaid net additions at Rogers were better than RBC’s estimate of 67,000. By contrast, Aravinda Galappatthige of Canaccord Genuity said the 77,000 was short of his estimate of 95,000 and the consensus estimate of 89,000 net postpaid additions.

But Galappatthige also noted that the wireless division’s EBITDA (earnings before taxes and other items) was “robust” at $1.13 billion and “nicely above” his estimate of $1.119 billion and consensus of $1.120 billion.

Rogers is the first of Canada’s national wireless companies to report its second-quarter results and provide initial feedback from their adoption of no-overage plans since mid-June.

The Rogers financial report missed analyst estimates in terms of overall adjusted earnings per share and overall revenue.

Analysts had estimated $1.17 per share of adjusted earnings with $3.87 billion of revenue, according to the financial markets data firm Refinitiv.

The company’s revenue for the three months totalled $3.78 billion, up one per cent from $3.76 billion a year earlier.

Overall revenue from wireless, including services and devices, was $2.24 billion — up one per cent from last year. Revenue from the cable division was up one per cent to $997 million, with internet services as the major driver.

Revenue from the Rogers media division was down three per cent to $591 million, following the sale of its consumer magazines in April and lower revenue from the Toronto Blue Jays baseball team.

After adjustments, the diluted profit was equal to $1.16 per share.

The company’s second-quarter profit was $591 million, up 10 per cent from $538 million in the second quarter of 2018.

Rogers and Telus have also recently introduced new financing options that allow customers to spread the cost of new devices over several years. Bell hasn’t announced a device financing plan.

Last week, the Canadian Radio-television and Telecommunications Commission said it would investigate the deals to determine if they comply with an industry code of conduct that limits mandatory contract terms.

The wireless code requires carriers to limit service contracts to 24 months or less in length and there have been questions about whether device financing plans over a longer term would be acceptable to the regulator.

Just Posted

Woman killed in collision west of Rocky Mountain House

A 42-year-old woman is dead after a two-vehicle collision in Clearwater County… Continue reading

Rough camper “tree house” found hidden in Red Deer woods

“This took a bit of work,” says man who discovered it

Central Alberta has one less peacekeeper with death of Nobel Prize-winning vet

The late Wayne Coubrough and Wayne Bevis helped diffuse tensions in the Middle East

TC Energy applauds Nebraska court victory over opponents of Keystone XL pipeline

CALGARY — One of the last major hurdles for the Keystone XL… Continue reading

Tribunal rules Edmonton pharmacist harmed integrity of profession

EDMONTON — An Edmonton pharmacist has been found guilty of unprofessional conduct… Continue reading

WATCH: Trailer stolen from Red Deer deli

A Red Deer business has contacted police after a trailer was stolen… Continue reading

Your community calendar

Thursday The Red Deer and District Garden Club hosts its annual Flower… Continue reading

Alberta loses extra-innings thriller at men’s baseball nationals

Alberta came up just short in their second game at the Baseball… Continue reading

G7 leaders should step up own climate plans to help the Amazon, Greenpeace says

OTTAWA — Some Canadian environment groups are urging Prime Minister Justin Trudeau… Continue reading

Third-party buys billboard to promote Bernier’s anti-mass immigration stance

OTTAWA — Billboards with Maxime Bernier’s face and a slogan advocating against… Continue reading

Ottawa ready to pass law forcing CN to restore rusting Quebec Bridge

Ottawa says its ready to take ownership of the aging Quebec Bridge… Continue reading

TC Energy applauds Nebraska court victory over opponents of Keystone XL pipeline

CALGARY — One of the last major hurdles for the Keystone XL… Continue reading

‘Our bigger enemy’: Trump escalates attack on Fed chief

WASHINGTON — President Donald Trump launched a furious and highly personal attack… Continue reading

Ontario shipyard accuses feds of unfairly stacking deck in Davie’s favour

OTTAWA — An Ontario shipyard is accusing the federal government of trying… Continue reading

Most Read