(Reuters) - Rogers Communications Inc (RCIb.TO), Canada’s largest mobile phone company, said on Wednesday quarterly profit rose after stripping out special items, as a wave of new smartphone subscribers boosted wireless revenue.
Shares of Rogers jumped more than 5 percent after the Toronto-based company said the percentage of smartphone subscribers surged, before giving back some gains. Apple Inc’s (AAPL.O) iPhone 5 went on sale late in the quarter.
Smartphones are an important revenue driver because each user pays Rogers nearly twice as much each month as a non-smartphone phone user.
“We are attracting and retaining our highest lifetime value customers, which is squarely on strategy, and the most significant driver of our top line,” Chief Executive Nadir Mohamed said on a conference call with analysts and investors.
Rogers, which also owns television stations, magazines and the Toronto Blue Jays baseball team, added 76,000 net postpaid wireless subscribers, up slightly from 74,000 in the same period last year. Postpaid subscribers, who sign multi-year contracts, typically pay more each month than prepaid customers.
“The company remains focused on its more lucrative postpaid base as is reflected in the better-than-expected results within the segment,” National Bank Financial analyst Adam Shine said in a note to clients.
Shine said adjusted earnings and a number of other metrics exceeded his expectations, thanks to strong wireless and cable results.
Rogers, BCE and Telus Corp (T.TO) dominate Canada’s wireless market, but several smaller companies have entered the fray since airwaves were set aside for them in 2008.
The new players include Globalive’s Wind Mobile, backed by Russia’s Vimpelcom Ltd VIP.N, and closely held Mobilicity and Public Mobile.
“Our plan is very clear, and it’s very different from new entrants,” said Rob Bruce, president for communications. “We are focused on delivering data through smartphones, and a premium offering to the most valuable customers.”
Rogers activated about 707,000 smartphones, up from 609,000 last year, and 36 percent of the devices were for new customers.
The percentage of postpaid subscribers using smartphones rose to 65 percent by the end of the quarter, up from 52 percent a year earlier, and wireless data revenue jumped 18 percent.
The average Rogers wireless customer spent C$61.92 each month, 13 Canadian cents more than a year earlier.
Monthly churn, or the average proportion of subscribers who canceled their service each month, edged down to 1.34 percent of postpaid customers, from 1.36 percent last year.
By late afternoon, Rogers shares were up 3.4 percent at C$42.49 on the Toronto Stock Exchange.
Adjusted operating profit in Rogers’ media division fell to C$50 million from C$55 million, as a weak advertising market hurt revenue in television, publishing and online media.
In cable operations, which includes both television and Internet services, adjusted operating profit jumped 10 percent as cost-cutting measures and a relatively small number of new subscribers improved margins.
The cable business has also faced more competition as telecom companies ramp up Internet-based television products.
Rogers was a strong opponent of a proposal from rival BCE Inc (BCE.TO) to take over television, radio and outdoor advertising company Astral Media ACMa.TO, a deal that Canada’s broadcast regulator vetoed last week.
Company officials said Rogers might consider bidding on “selective” Astral assets if they came on the market.
“We would evaluate them at that time,” Rogers Media President Keith Pelley said on a call with reporters. “We haven’t done anything at this particular time.”
Rogers’ net income fell to C$466 million ($470 million) in the quarter ended September 30 from C$491 million a year earlier, but rose to 90 Canadian cents a share from 87 Canadian cents.
Excluding restructuring costs and other items, earnings rose to C$495 million, or 96 Canadian cents a share, from C$489 million, or 90 Canadian cents, a year earlier. Operating revenue grew 1.4 percent to C$3.18 billion.
Analysts, on average, had expected earnings of 88 Canadian cents a share on revenue of C$3.16 billion, according to Thomson Reuters I/B/E/S.
Additional reporting by Maneesha Tiwari in Bangalore; Editing by Frank McGurty, Janet Guttsman and Richard Chang