January 29, 2015 / 12:57 PM / 2 years ago

UPDATE 2-Rogers Communications sheds customers but beats expectations

3 Min Read

(Adds details from conference call with analysts, share-price move)

By Alastair Sharp

TORONTO, Jan 29 (Reuters) - Rogers Communications Inc , Canada's largest mobile provider, lost a large number of wireless and cable-TV customers in the fourth quarter but its focus on "value over volume" allowed it to beat lowered earnings expectations.

Chief Executive Guy Laurence said on Thursday the Toronto-based company stepped up its shift away from promotions to win or keep customers. As a result, Rogers lost 58,000 net postpaid wireless subscribers and 36,000 cable subscribers.

Laurence, who joined the company in December 2013, said that as it tacked away from promotions, Rogers launched sports, streaming-TV and wireless roaming initiatives. That has spurred customers to buy more services, increasing the average customer bill.

"We started tackling the practice of rolling forward various promotional and retention offers that portions of our existing base were put on in past years as Band-Aid solutions to more systemic issues, which we are now addressing," he told analysts.

Rogers also lost 4,000 Internet customers, and 18,000 landline phone lines.

Analysts broadly took the drop in subscribers in stride and Rogers shares rose 1 percent on Thursday.

Postpaid churn, which is the percentage of wireless contract customers leaving each month, jumped to 1.46 percent from 1.34 percent a year earlier. Postpaid customers sign long-term service contracts, spend more and are less likely to leave than those who pay upfront.

The average Rogers wireless customer, a blend of contract and prepaid subscribers, paid C$59.86 per month in the quarter, up from C$58.59 in the year-before quarter.

RBC Capital Markets analyst Drew McReynolds wrote in a note that the trade-off of declines in the number of postpaid subscribers for growth in the amount that customers pay for services "is the more prudent strategy for the company".

Rogers said net income was C$297 million ($237 million), or 62 Canadian cents a share, in the three months to Dec. 31, compared with C$320 million, or 57 cents a share, a year earlier. Revenue rose 4 percent to C$3.37 billion.

On an adjusted basis Rogers made 69 Canadian cents a share. That beat analysts' average expectation of 64 cents.

It upped its annual dividend by 5 percent.

Rogers said the launch of its National Hockey League coverage performed as anticipated, with C$100 million of revenue. Overall, its media unit's revenue jumped 20 percent.

For 2015, Rogers expects adjusted operating profit of C$5.02 billion to C$5.175 billion and free cash flow of C$1.35 billion to C$1.5 billion.

$1=$1.26 Canadian Reporting by Alastair Sharp; Editing by Alden Bentley; and Peter Galloway

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