Rogers profit tops forecasts but wireless lags

Wed Feb 22, 2012 11:47am EST
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TORONTO (Reuters) - Rogers Communications, Canada's biggest wireless telecoms company, said on Wednesday that cost-cutting and growth in its cable and media businesses pushed it to a stronger than expected quarterly profit despite lagging core wireless results.

Rogers also said it would increase its quarterly dividend by 11 percent and launch a C$1 billion ($1 billion) share buyback program, which helped push up its shares almost 1 percent to C$38.13 on the Toronto Stock Exchange.

The buyback program allows the company to repurchase about 10 percent of its outstanding Class B shares.

The quarterly results themselves were lackluster, analysts said. Profit from Rogers wireless business fell, reflecting high upfront costs tied to subsidizing activations and lower average monthly bills for its more valuable postpaid subscribers.

"It wasn't a strong quarter," said analyst Maher Yaghi at Desjardins Securities. "But they managed their costs enough not to have that impact on revenue translate too much to earnings."

BMO Capital Markets analyst Tim Casey downgraded the stock to "market perform" from "outperform" after the results, citing the wireless performance.

Rogers activated a record number of iPhones and other smartphones but many existing customers defected to rivals. All told, the company added far fewer mobile customers than its two main competitors: BCE Inc's Bell Canada unit and Telus Corp.

Rogers said it added 42,000 net postpaid subscribers in the quarter. By comparison, Bell Canada added 132,000 net postpaid subscribers and Telus grabbed 148,000. Postpaid subscribers sign multi-year contracts and typically pay four times more a month than pre-paid users.

"We did see a tick up in postpaid churn particularly at the lower end of the market," Rogers Chief Executive Nadir Mohamed told analysts on a conference call. "We've got some work to do here and we can do better on this metric."   Continued...