TORONTO (Reuters) - Canadian cable company Rogers Communications (RCIb.TO) will take a charge of as much as C$525 million ($393 million) as it scraps development of its own internet-based television platform in favor of a Comcast Corp (CMCSA.O) X1 platform it does not expect to launch until 2018, it said on Friday.
The company had previously planned to launch an updated IPTV product by the end of this year or early next year to compete with telecom rival BCE Inc’s (BCE.TO) Bell Fibe TV product in eastern Canada.
Its shares fell 1.4 percent to C$50.64 in early afternoon trade as its short-term competitive stance took a hit, although analysts said the move should be positive over the longer-term.
Rogers said the move to a hosted platform would give it access to the “scale and technical roadmap needed to meet the ongoing pace of IPTV innovation.”
The move will likely result in a pretax non-cash asset impairment charge of between C$475 million and C$525 million in the fourth quarter ending Dec. 31, 2016, the company said.
“While Rogers joins its peers in the “IPTV graveyard”, we believe the decision to deploy X1 rather than internally develop IPTV brings a number of benefits” including less execution risk and lower long-term capital spend, RBC Capital Markets analyst Drew McReynolds wrote in a note.
Western Canada-focused Shaw Communications Inc (SJRb.TO) is rolling out a product built on top of the X1 platform after abandoning its own IPTV platfresform in mid-2015.
Reporting by Alastair Sharp; Editing by Bernard Orr