January 6, 2009 / 4:06 PM / 10 years ago

UPDATE 3-Rogers posts wireless growth, but iPhone, cable weak

*Rogers says added 199,000 wireless subscribers

*Rogers says weak cable additions reflect soft economy

*Stock drops 5.9 percent (Adds details, analyst’s comments, closing stock price)

TORONTO, Jan 6 (Reuters) - Shares of telecom and media group Rogers Communications Inc (RCIb.TO) fell almost 6 percent on Tuesday after the company posted slumping iPhone sales and flat postpaid wireless subscriber growth in the fourth quarter and said its cable results are being hurt by a tough economy.

Rogers, which owns Canada’s biggest wireless carrier, said it added 199,000 net wireless subscribers in the traditionally strong quarter ended Dec. 31, up from 183,000 a year earlier.

The company said it sold about 130,000 of Apple Inc’s (AAPL.O) iPhones in the quarter. Jonathan Allen, an analyst at RBC Dominion Securities, said this was a “sharp drop” from 255,000 in the third quarter.

Rogers said that of the total wireless subscribers it added, 158,000 were in the key postpaid market, matching year-earlier results.

Postpaid customers, who pay their bills on a monthly basis and often sign up for multiyear contracts, are seen as more lucrative than prepaid users, who pay in advance for a preset amount of service.

“Overall, we think the wireless result met the market’s expectations,” National Bank Financial analyst Greg MacDonald wrote in a note to clients.

Still, Rogers shares slid C$2.19, or 5.9 percent, to close at C$35.00 on the Toronto Stock Exchange on Tuesday, suggesting investors were expecting a stronger holiday sales season for the Toronto-based company.

Rogers’ wireless arm “held its own ... but the business did not make as much headway as we had hoped,” Allen wrote to clients.

Rogers is fighting for market share against rivals BCE Inc (BCE.TO) and Telus Corp (T.TO). Competition has been fierce among the three carriers and could heat up further as new entrants promise to enter the market in the coming months.

At the same time, a weak economy threatens to choke telecom companies’ growth prospects. For example, consumers trying to save money are more likely to pick less feature-rich cellphones.

This means subscribers spend less on data services such as wireless video and Internet browsing. This, in turn, means lower revenue for Rogers and other telecom companies.

“Our wireless subscriber results reflect our success in driving greater penetration of more advanced wireless data devices and services,” Rogers Chairman and acting Chief Executive Alan Horn said in a statement.

Horn took over the company’s reins from founder Ted Rogers, who died late last year at age 75. The company has yet to announce a permanent successor.

Horn added, however: “Our fourth-quarter cable subscriber additions reflect the challenging economic backdrop.”

Rogers added just 4,000 basic cable subscribers in the fourth quarter, down from 20,000 in the year-earlier period, and gained 61,000 digital cable subscribers, flat from a year earlier.

“Though the cable results were mixed, the strong digital result suggests that Canada is better able to weather the economic storm than the U.S.,” National Bank’s MacDonald wrote.

Rogers added 19,000 high-speed Internet customers, down from 46,000 a year earlier. It added 40,000 residential cable phone customers, down from 65,000 a year earlier.

$1=$1.18 Canadian Reporting by Wojtek Dabrowski and Susan Taylor; editing by Peter Galloway

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