February 22, 2008 / 1:16 PM / 10 years ago

Rogers profit surges, but wary of U.S. economy

TORONTO (Reuters) - Rogers Communications Inc reported a 44-percent rise in fourth-quarter profit on Friday as growth in its wireless subscriber base and higher revenue from mobile-phone users helped results.

A live video image of actor William Shatner appears on a Rogers video phone in Toronto April 2, 2007. REUTERS/J.P. Moczulski

Despite the solid results, Rogers, Canada’s biggest wireless carrier and cable-TV company, will move to rein in costs and tighten its spending as it keeps a close eye on the woes of the U.S. economy, Chief Executive Ted Rogers said.

“These are troubling times,” Rogers told analysts during a conference call.

“While we aren’t seeing slowing in our markets, I’ve asked our team to be extremely diligent about our controlling costs and exercising restraint around spending so that we can react quickly if softness does spread across the border in a meaningful way,” he said.

Rogers said it earned C$254 million ($251 million), or 40 Canadian cents a share, in the three months ended December 31, up from a profit of C$176 million, or 27 Canadian cents a share, in the same period a year earlier.

Revenue rose to C$2.69 billion from C$2.37 billion.

Analysts were expecting the company to earn 42 Canadian cents a share before one-time items on revenue of C$2.68 billion, according to Reuters Estimates.

Rogers said it added 158,000 postpaid wireless subscribers in the quarter — fewer than the 189,000 it added in the same quarter a year earlier.

However, customer turnover fell to 1.17 percent from 1.24 percent. Average revenue per wireless user was up 6 percent at C$73.33, due to strong growth in use of data services such as text messaging and wireless e-mail.

Rogers and rivals BCE Inc and Telus Corp are girding themselves for more competition in Canada’s lucrative wireless market as the federal government prepares to auction off spectrum in late May.

Spectrum essentially refers to the airwaves over which wireless services are delivered. The government has set aside a chunk of the available space exclusively for bidding by new entrants.

National Bank Financial analyst Greg MacDonald wrote in a note to clients that the market should be “impressed” with Rogers’ results, “even if it remains cautious on wireless stocks going into the spectrum auction.”

He added: “we remind investors that Rogers is the incumbent wireless stock best able to ward off competition since it has a premium spectrum position and the least to lose as wireless increasingly takes share from wireline.”

The company’s cable Internet subscribers rose by 46,000 in the quarter to 1,465,000.

Rogers shares were down 30 Canadian cents to C$38.70 on the Toronto Stock Exchange on Friday morning.

($1=$1.01 Canadian)

Additional reporting by Jonathan Spicer; Editing by Peter Galloway

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