Rogers revenues, profit fall due to roaming and overage drops

Rogers Communications Inc. announced a seven-per-cent fall in revenues and a four-per-cent decline in profits during its fourth quarter earnings call on Thursday, with the company largely attributing that to an eight per cent fall in wireless revenues. Overall revenues dropped to $3.68 billion, down from $3.95 billion a year earlier, while wireless revenues fell from $2.49 billion to $2.29 billion, which Rogers CEO Joe Natale told investors was largely due to falls in roaming and overage revenues. Net income was down to $449 million in the three months ended Dec. 31. Natale told analysts that Rogers’ base of roaming customers meant it was best positioned to profit from a return to international travel, while predicting the completion of the “overage melt” -- caused by the pivot towards unlimited plans -- by mid-2021. Cable revenues increased by three per cent on the year before, while Rogers reported media sector revenues of $409 million, a 23 per cent decrease on the $530 million it reported a year earlier, with Natale attributing it to delays in starting the 2020-21 NBA and NHL seasons, as well as the “softness” in the advertising market. Rogers added 114,000 net new postpaid wireless subscribers in the fourth quarter of 2020, 17,000 less than it added the year before, for a total postpaid subscriber base of 9.68 million customers. In prepaid wireless, Rogers lost 40,000 customers in the quarter, 36,000 fewer than in the fourth quarter of 2019, for a total of 1.26 million. The prepaid total was down 142,000 from the 1.402 million Rogers reported last year. Rogers added 19,000 net internet additions in the quarter, 8,000 down on last year, for a total of 2.6 million subscribers. That subscriber base is 64,000 more than the 2.53 million customers it boasted at the same time last year. Wireless average revenue per user (ARPU) was $50.02 for the quarter, a drop of $5.24 from this time last year. Rogers also added 71,000 net new subscribers to its IgniteTV platform, down 35,000 on the year before, for a total subscriber base of 544,000, 218,000 more than the 326,000 it reported last year. Responding to a question from Scotiabank analyst Jeff Fan about when customers would recognise Canada’s 5G networks as a major differentiator, Natale said the new technology would come in tranches, with the impact less immediate in Canada than in countries with “lacklustre” existing networks. The first -- when 5G devices from big companies like Apple Inc. hit the market -- was already occurring, Natale said, while a second tranche would occur when 5G fixed wireless access could be deployed. The final tranche would centre around 5G’s Internet of Things (IoT) applications. Natale told analysts that Rogers was in a “very strong position” to take advantage of 5G due to it having the largest iPhone base and most customers on unlimited plans, as well as its strong subscriber base. He described the shift away from being reliant on overage revenues and towards unlimited plans as the “one thing we had to do” to get ready for 5G. “We couldn’t have an overage based regime around the customers who want to use the most data in a paradigm that came out of 3G and 4G and expect to take advantage of 5G,” Natale said. “Look at some of the early gaming apps, they burn up 10 GBs in a few minutes.” Rogers has launched 5G networks in 160 cities and towns across Canada, and last month announced the launch of the country’s first standalone “core” 5G network. Asked by RBC Capital Markets analyst Drew McReynolds for more insights about Rogers’ 5G customers, Natale declined to share specifics but said the base was “indexed towards the iPhone” and tied to unlimited plans. “Therefore they are by definition our highest value, most data consumptive customers,” Natale said. “So this really is about the top decile of the market.” -- Reporting by Adam Langenberg at alangenberg@thewirereport.ca, and editing by Anja Karadeglija at akarad@thewirereport.ca

Rogers revenues, profit fall due to roaming and overage drops

Broadcast | January 28, 2021

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Rogers revenues, profit fall due to roaming and overage drops

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