Canada's Rogers hit by new wireless rules, hockey costs

Wed Feb 12, 2014 1:23pm EST
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By Alastair Sharp

TORONTO (Reuters) - Rogers Communications Inc (RCIb.TO: Quote), Canada's largest wireless telephone company, reported quarterly results on Wednesday that were much weaker than expected, blaming regulator-mandated changes to its wireless pricing that hit revenue and profit.

Shares in Rogers fell more than 5 percent to a five-month low after the company, also a major cable-TV provider, released the results and pointed to more tough times ahead.

"I'd like to see better execution on the wireless front. On cable, I wouldn't say they are doing horribly, but they could improve," said Dave Heger, an analyst at Edward Jones.

Heger recommends buying Rogers stock based on a heavily discounted price relative to its potential if it runs its businesses more effectively.

"Guy Laurence has his work cut out for him to reinvigorate the business," he said, referring to Rogers' new chief executive, Guy Laurence, who left Vodafone UK to take the job late last year.

The company's ability to command a premium price for its Internet, television and telephone services has suffered in recent quarters as rivals match its technical prowess and offer heavy promotions to win market share.

Toronto-based Rogers added 34,000 net postpaid wireless subscribers in the fourth quarter, far fewer than expected and down from 58,000 a year earlier.

Postpaid customers sign multiyear contracts and typically pay much more each month than prepaid subscribers, and are therefore highly coveted by telecom executives.   Continued...

A woman walks by a sign at the Rogers Communications headquarters building on the day of their annual general meeting for shareholders in Toronto, April 25, 2012. REUTERS/Mark Blinch