July outage, Shaw financing costs, to blame for Rogers profit drop

Rogers Communications Inc.’s profit fell 24 per cent for the three months ending Sept. 30, compared to last year, with customer credits and the Shaw Communications Inc. transaction to blame for the shortfall. Wednesday the company released its third quarter financial results, which also marks the first full business quarter since the national network outage. “While very disappointed with the network outage, the impact was isolated and our teams have worked hard to regain customer trust. Importantly, we have gotten better from what we have learned as we accelerate investments, network resiliency in order to provide always-on connectivity and service to our customers,” Rogers president and CEO Tony Staffieri told analysts on a Wednesday morning call. Staffieri noted that the company provided $150 million in credits to Rogers’ customers this past quarter. “Importantly, these credits will not carry into the fourth quarter and we're encouraged that our better execution plans are working. Additionally, even with the impact of the credits, we are able to maintain our 2022 full-year guidance ranges.” Rogers’ financial performance can also be attributed to an agreement it made with its lenders in which the latter gave the incumbent a one-year extension to close the Shaw deal. According to its agreement with lenders, the Special Mandatory Redemption will be extended to Dec .31, 2023 and bondholders will receive $1.03 per share, $520 million, in initial consent fees on or before Sept. 9. If the Shaw deal does not close by the end of the year, bondholders will get an additional $0.51 per share by Jan. 9, 2023, totalling approximately $256 million. Rogers’ executives did not take any questions on its transactions with Shaw and Quebecor Inc. due to the fact that it is currently in front of the competition tribunal for review. Rogers posted $3.74 billion in revenue and $371 million in profit, a two per cent increase and 24 per cent decrease respectively from last year’s third quarter. The company estimates that without the July network outage credits, it would have posted an increase in revenue between six to seven per cent. Wireless service revenue increased by three per cent this quarter, thanks to higher roaming revenue with significantly increased travel and a larger postpaid mobile phone subscriber base. Revenue would have increased by nine per cent were it not for the credits, the company’s financial statement notes. Roaming would have also increased the average revenue per user (ARPU) by three per cent this quarter but because of the credits it ultimately fell by two per cent, or $1.31, going from $58.13 last year to $56.82 this year. Staffieri said the impact of the outage was “maybe a little bit more pronounced for cable than wireless,” because of an intensely competitive market in the sector through the quarter. The outage credits caused the cable service revenue to decrease by four per cent this quarter instead of increase by two per cent. The average revenue per account (ARPA) in its cable division fell by $7.45, for a total of $124.34 per month, compared to last year’s $131.79 per month. Staffieri said the subscriber results for cable were also not what the company hoped for. Cable saw net losses of 7,000 customers this quarter, compared to last quarter which saw net additions of 8,000. Last week Bell reported what it said were record subscriber additions for its third quarter, partially driven by the company seeking to capitalize on the fallout from Rogers’ network outage. “Against the backdrop of very aggressive and opportunistic promotional activities from our national competitor, we were less effective in responding to this dynamic early in the quarter,” Staffieri said. Rogers reported 429,000 gross additions this quarter for postpaid mobile phone customers. That is 30,000 more than the 399,000 customers it added last year. Net additions this quarter, 164,000, underperformed by 16,000 customers compared to last year which saw 180,000 net customers. Gross additions and net additions for prepaid mobile phones were 232,000 and 57,000 respectively – a 78,000 customers increase and 46,000 customer increase respectively, compared to last year’s third quarter. – Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Paul Park at ppark@thewirereport.ca.

July outage, Shaw financing costs, to blame for Rogers profit drop

News | November 9, 2022

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July outage, Shaw financing costs, to blame for Rogers profit drop

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