(Reuters) - Rogers Communications said on Wednesday its quarterly earnings rose more than expected as a strong performance by its media unit compensated for a lackluster showing by its wireless business, Canada’s largest.
Profit generated by the media unit, which produces television and radio content, rose 38 percent, boosted by solid advertising and subscriber growth from its specialty sports channel Sportsnet One.
That helped offset a 1 percent decline in profit from the wireless business. The drop reflected heavy upfront costs tied to a record number of new smartphone sales, while the average customer spent less on wireless service.
Smartphone sales may have been stronger but many customers likely were waiting for the October release of Apple’s latest iPhone. Rogers is the country’s largest wireless provider, with more than 9 million users.
Adjusted third-quarter net profit rose to C$485 million ($477.2 million), or 89 Canadian cents a share, from C$479 million, or 83 Canadian cents, a year earlier. Analysts had on average expected the Toronto-based company to earn 82 Canadian cents a share, according to Thomson Reuters I/B/E/S.
Operating revenue for the company, which owns publishing and media businesses as well as Major League Baseball’s Toronto Blue Jays, rose 1 percent to C$3.15 billion. That was in line with analysts’ average estimate of C$3.18 billion.
The results were released before the opening of regular trading on the Toronto Stock Exchange.
The average Rogers customer on a wireless contract paid C$72.08 a month in the quarter, down from C$74.47 a year earlier. Pre-paid users - who do not sign a long-term contract and typically use more basic phones - paid C$16.72, down 38 cents.
Rogers, along with Canada’s other major established wireless operators, Telus and BCE’s Bell, is facing pricing pressure as upstart carriers lure away value-conscious consumers.
Rogers boasts the highest wireless bills and margins in the industry, giving it more leeway to weather the current drag and leverage its high-paying customers as the industry pushes to encourage more customers to tap data on smartphones.
Rogers added 161,000 net wireless subscribers in the third quarter - consisting of 74,000 postpaid and 87,000 prepaid customers - and 64,000 cable-based customers for its television, Internet and landline telephone products.
The company said subscribers using smartphones now account for 52 percent of all post-paid contracts.
Analysts on average had expected Rogers to add at least 100,000 post-paid wireless subscribers, whose long-term contracts are typically far more lucrative than pre-paid users.
Growth in subscribers may have been limited by the new iPhone from Apple not being available before the quarter-end.
The company also said Chief Financial Officer Bill Linton will retire in the second quarter of 2012 and will be succeeded by Anthony Staffieri, who was most recently senior vice president of finance at BCE Inc.
($1 = 1.016 Canadian Dollars)
Reporting by Euan Rocha and Alastair Sharp in Toronto, Aftab Ahmed in Bangalore; Editing by Frank McGurty