(Adds details, analyst and company comment)
By Alastair Sharp
TORONTO, Oct 23 (Reuters) - Canadian telecom and media company Rogers Communications Inc posted a 28 percent decline in third-quarter net income on Thursday, but reaffirmed its profit targets for the year as it heralded the end of a corporate shuffle.
Rogers, the country’s largest provider of cellular service, added just 17,000 net wireless subscribers on contracts, who typically spend more per month and are less likely to switch providers than those who pay for service upfront.
That was a sharp drop from the 64,000 added a year ago. Postpaid churn, which is the percentage of those valuable customers leaving each month, jumped to 1.31 percent from 1.23 percent in the prior quarter.
In a bright spot, the average Rogers wireless customer, a blend of contract and prepaid subscribers, paid more per month in this quarter, at C$60.96, versus the previous one.
“While we saw some positives in this release, overall it was disappointing, especially in terms of wireless churn and cable and media margins,” Canaccord Genuity analyst Dvai Ghose wrote in a research note.
Revenue at the company’s cable unit was hit by promotional pricing designed to stem the flow of deserting viewers. Another 30,000 customers dropped their cable service in the quarter, while 7,000 discarded home phone service. Rogers added 16,000 Internet customers.
Rogers said profit at its media unit sunk on lower ad revenue, programming costs, higher player salaries for its Toronto Blue Jays baseball team, and launch costs for its newly-won coverage of National Hockey League games.
Chief Executive Guy Laurence, who took the job a little over a year ago, stressed that the quarterly results were as expected and that a major revamp of the company was now complete.
“The business is gaining momentum with the recent unveiling of our awesome new NHL experiences and with the launch in the coming days of our shomi subscription video on-demand service,” Laurence said in a statement accompanying the results.
Shomi, a joint venture with Western Canada-focused Shaw Communications Inc is a traditional media response to the threat posed by online rivals such as Netflix Inc.
The Toronto-based company said it had net income of C$332 million ($295 million), or 64 Canadian cents a share, in the three months to Sept. 30, compared with C$464 million, or 90 cents a share, a year ago. Its revenue was up slightly at C$3.25 billion.
1 US dollar = 1.1244 Canadian dollar Editing by W Simon and Alden Bentley