5G a race between countries, not carriers: Rogers’ Natale

Rogers Communications Inc. CEO Joe Natale emphasized the $1.7 billion the company recently spent on 600 MHz spectrum in a speech to shareholders that effectively doubled as an anti-MVNO message to government on Thursday. “The race to 5G is not with other carriers,” Natale said. “The race to 5G is with other countries. And we want Canada to be one of the first,” Natale said. “We cannot do this alone. We need the right regulation … and the right partnership with government,” he told shareholders. “We have invested billions to build Canada’s communications industry, and we will invest billions more,” Natale told shareholders at the company’s annual general meeting in Toronto. Rogers was the big spender in the 600 MHz auction, grabbing 52 licenses. The speech placed a large emphasis on the importance of investing in infrastructure capabilities, language that echoed the response of the large telecoms to the government’s proposed new policy directive to the CRTC. “In some markets the government backs companies that ride on the networks of other carriers, at a vastly discounted price. Companies who don’t invest in their country’s national infrastructure,” Natale said. “This approach suppresses investment, it stifles innovation, and it sabotages network quality. In short, it stalls a nation’s economic prosperity.” Earlier this week in its submission to the government’s new proposed policy directive, Rogers said that the CRTC should have to consider the extent to which its decisions “encourage investment in advanced telecommunications networks including in rural and underserved areas." The proposed directive came two days before the CRTC walked back its position on mobile virtual network operators, leaving open the possibility that those carriers would be entitled to access the networks of the bigger players. For the three months that ended on March 31, the company posted total revenues that were down one per cent to $3.6 billion from the same quarter last year. Net income slumped eight per cent to $391 million. Though the overall numbers were down, what improved was its wireless postpaid churn rate, which hit a historic 0.99 per cent -- its lowest ever. The churn rate has been a focus of the major carriers for some time now. Shaw Communications Inc. noted as much when it launched an ad campaign it said was intended to induce defections. Rogers noted the churn improved again on better customer service. The company said in the second-quarter of 2017 that the customer service component will help it achieve a rate of below one per cent. That churn improvement came at the cost of lower-than-expected rate of gross additions, according to RBC analyst Drew McReynolds in a Thursday note. Rogers added some 23,000 wireless subscribers in the first quarter, 72,000 less that the 95,000 they added in the same quarter last year. The total number of postpaid and prepaid customers stood at 10.7 million. Both Rogers blended average billing per user (ABPU) and blended average revenue per user (ARPU) were up $64.62 and $54.13 respectively, representing a growth of three per cent and one per cent. Internet subscriber additions also slowed from the same period last year, down to 14,000 additions from 26,000 additional subscribers. The total base sat at 2.4 million, an increase of 97,000. The company lost 28,000 television subscribers, more than double the 12,000 television subscribers they lost last year, for a total base of 1.6 million -- a loss of 71,000. Adam Shine, an analyst at National Bank of Canada, wrote after the conference call that, “we can’t … sugar coat the very weak subscriber numbers in both Wireless and Cable other than to say that promotional activity lessened in 1Q19 where management was even more disciplined in its targeting efforts.” Natale said the first quarter is traditionally slower than either the holiday period of Q4, or the back-to-school period of Q3, calling this Q1 "typical." “We’re not going after loading for loading’s sake. There is a lot of add-loading out there if you want it,” Natale said in the call. He said that there is a “seasonality more than ever” in the wireless market. “At the end of the day, we’re trying to drive long-term shareholder value. And that’s really underpinned in metrics like continued growth in ARPU, its underpinned by churn results and therefore lifetime value, its underpinned in margin expansion, and so we will weigh that off growth in customer additions at the right time in the marketplace,” Natale said. “Looking forward, we continue to see robust growth opportunity. It may not be as high as Q4 -- Q4 had sort of a 5.7 per cent growth factor -- but still very healthy growth overall,” he said. — With reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Ahmad Hathout at ahathout@thewirereport.ca

5G a race between countries, not carriers: Rogers’ Natale

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