Rogers adjusted profit up, helped by wireless margins

Tue Jul 24, 2012 11:33am EDT
 
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(Reuters) - Rogers Communications Inc (RCIb.TO: Quote), Canada's largest mobile phone company, reported higher adjusted earnings on Tuesday as margins rose in its cellular phone business even as competition picked up, and its shares rose more than 5 percent.

Wireless operating profit margin as a percentage of network revenue rose to 48.2 percent from 46.5 percent in the same quarter last year. The company said better cost control and lower customer turnover helped margins.

"We could see the revenue trajectory was lower than what we had anticipated, and we took immediate action. We accelerated a number of cost management objectives," Chief Executive Nadir Mohamed said on a conference call with analysts.

On a call with reporters, Mohamed said Rogers is working to improve its supply chain, reduce discretionary costs and boost customer service, probing which problems spark customer service calls: "If you can address the underlying drivers we have a better customer experience and frankly the costs also improve."

The monthly postpaid churn rate, the proportion of customers cancelling their service, fell to 1.15 percent from 1.21 percent in the same quarter last year, and this helped margins. Mohamed noted that smartphone customers, who make up an increasing share of Rogers' business, tend to have lower churn.

Rogers, which also owns television stations, magazines and the Toronto Blue Jays baseball team, maintained its guidance for fiscal 2012 - it expects adjusted operating profit between C$4.73 billion and C$4.92 billion, up from C$4.72 billion in 2011.

RBC Capital Markets analyst Drew McReynolds said the results beat his expectations, largely on the strong wireless margins, and he was encouraged to see Rogers maintaining its outlook.

"We believed this quarter there was a risk that management would revise downward," he wrote in a note to clients.

The stock rose 5.3 percent to C$39.22 on the Toronto Stock Exchange by mid-morning on Tuesday.   Continued...