July 20, 2017 / 11:27 AM / 2 months ago

Rogers' profit beats on wireless strength but cable drags

A sign is pictured outside a Rogers Communications retail store in Ottawa, Ontario, Canada July 20, 2017. REUTERS/Chris Wattie

TORONTO (Reuters) - Canadian telecom company Rogers Communications Inc (RCIb.TO) reported a greater-than-expected 35 percent jump in second-quarter profit on Thursday, as a gain in wireless subscribers offset declines in its cable TV business.

The company said it added 93,000 net postpaid wireless subscribers in the second quarter ended June 30, compared with 65,000 a year earlier.

Average monthly bills also rose and postpaid wireless churn, a measure of customers dropping service, dropped to 1.05 percent a month, its lowest level since 2009.

It was the company’s first earnings report since Joe Natale took over as CEO in April. His predecessor, Guy Laurence, unexpectedly left in October following a conflict with the Rogers family, which holds a controlling interest in the company.

Natale, who previously ran Rogers’ rival Telus Corp (T.TO), has said he is focused on improving customer service at Rogers, which has long been plagued by high subscriber turnover.

RBC Capital Markets analyst Drew McReynolds said the results showed “a good balance of growth and profitability” but noted that cable and internet customer growth missed his forecasts.

Cable revenue was flat from a year earlier, missing estimates. Rogers blamed some of that shortfall on a regulatory ruling that lowered rates it charges internet resellers for wholesale access to its network.

Barclays analyst Phillip Huang said that internet sales were likely hurt by increased competition from rival BCE Inc’s (BCE.TO) Bell, which is expanding the area where it offers an upgraded fiber-optic network.

Bell beat Rogers in launching a next-generation TV platform in Canada, offering advanced bells and whistles including video streaming.

Late last year, Rogers abandoned an effort to develop its own next-generation streaming technology and decided to use Comcast Corp’s X1 platform.

Rogers said it plans to begin its launch of X1 in early 2018.

Rogers’ quarterly net income rose to C$531 million ($420.86 million), or C$1.03 per share, from C$394 million, or 77 Canadian cents per share, a year earlier.

Excluding items, the company earned C$1 per share, beating analysts’ estimate of 93 Canadian cents, according to Thomson Reuters I/B/E/S.

Revenue rose nearly 4 percent to C$3.59 billion.

Additional reporting by John Benny in Bengaluru; Editing by Saumyadeb Chakrabarty, Shounak Dasgupta and W Simon

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