Competition bites – or at least nibbles – Rogers’ results

17 Feb 2011

Rogers Communications’ combined mobile, TV, broadband and fixed line revenues grew by 3% year-on-year to CAD3.15 billion (USD3.19 billion) in the fourth quarter of 2010, whilst consolidated net profit rose by 5% to CAD327 million. However, ‘adjusted net profit’ – a measure used by Rogers’ management to assess ongoing performance of the business – fell 3% year-on-year to CAD359 million. A 16% increase in adjusted operating profit at its cable/broadband division was offset by a 6% decline at Rogers’ wireless arm, primarily driven by costs associated with an increasing volume of smartphone activations, as well as a 33% decline in the broadcasting segment related to start-up costs of new sports channel. In the mobile segment, the number of new wireless subscribers signed up by Rogers in the fourth quarter fell by 5% year-on-year to 123,000, and the number of new post-paid customers dropped sharply from 109,000 in 4Q09 to 49,000 in October-December 2010. Rogers’ two biggest cellular rivals, Bell and Telus, added 157,000 and 109,000 new post-paid subscribers, respectively, in the same quarter. Furthermore, Telus and Bell reported respective 4Q10 net income increases of 45% and 25%. Rogers’ CEO Nadir Mohamed attributed the weak profit and rate of subscriber take-up to an ‘intensely competitive market,’ in which Bell and Telus have regained momentum in a sector previously dominated by Rogers via their new HSPA-based shared national network, and new entrants such as Wind Mobile, Mobilicity and Videotron are also investing heavily to make an impact. To fight back against the newcomers, in 2010 Rogers launched a new discounted voice and messaging brand, ‘Chatr’.

Rogers activated a record number of smartphones in the quarter ended 31 December 2010 – 635,000 – around 71% of which were for existing subscribers, helping to boost future revenues with more lucrative voice/data plans. Smartphone subscribers represented 41% of the company’s overall post-paid subscriber base at year-end, up from 31% twelve months earlier. The company had a total of 8.98 million mobile customers at end-2010, up by 483,000 year-on-year.

Canada, Rogers Communications