* Q1 EPS C$0.64 vs C$0.49 year earlier
* Excluding items, Q1 EPS C$0.69 vs C$0.40
* Wireless revenue, profit higher
* Postpaid wireless subscriber growth falls sharply
* Stock drops 1.5 pct to C$35.10 on TSX (New throughout, changes dateline to Ottawa from Toronto)
By Susan Taylor
OTTAWA, April 28 (Reuters) - Rogers Communications Inc (RCIb.TO) posted a 23 percent jump in quarterly earnings on Wednesday but the stock dropped on slower-than-expected growth in the most lucrative category of wireless subscribers.
Rogers, which owns Canada’s biggest wireless carrier and operates cable and media businesses, added 47,000 net postpaid wireless subscribers, or 57 percent fewer than in the same quarter last year. That was a sharper slowdown than analysts had expected.
The stock dropped 1.5 percent when trading opened in Toronto, after rising about 5 percent in the past week.
Postpaid customers, who pay their bills on a monthly basis, often sign up for multiyear contracts and are seen as more lucrative than prepaid customers, who pay in advance for a preset amount of service.
But an increase the portion of subscribers using data-heavy services such as email and text messaging on their smartphones helped shelter the quarterly results from the overall slowdown in postpaid growth.
Customers using BlackBerry, iPhone and Android devices now represent 33 percent of Rogers postpaid subscriber base, up from 23 percent at the same time last year.
“The big picture here is they’re focusing on profitable customers and managing their costs efficiently,” said Desjardins Securities analyst Maher Yaghi.
“To me, that is a long-term plan that should keep the company posting good results long term and not sacrifice bottom line for market share.”
The slower growth in postpaid subscribers in part reflected the launch of a new high-speed network by BCE (BCE.TO) and Telus T.TO late in 2009, and BCE’s Bell unit spending heavily on advertising during the Vancouver Winter Olympics.
That said, the 47,000 net additions lag the expectations of several analysts, ranging from Genuity Capital Markets’ forecast for 50,000 new postpaid subscribers to RBC Capital Markets’ expectation of 60,000 customers.
The wireless results got a lift from lower spending on marketing, said BMO Capital Markets analyst Tim Casey. “We expect spending and subscriber metrics to increase through the year,” he said in a note.
Wireless data revenue increased 40 percent in the quarter as Rogers activated and upgraded about 348,000 smartphones. Wireless operating revenue rose 8 percent to C$1.6 million ($1.58 million) as adjusted operating profit grew 17 percent to C$832 million.
“Our focus on wireless data and attracting and retaining higher value customers continues to pay dividends,” said Chief Executive Officer Nadir Mohamed.
For the three months to March 31, net income rose to C$380 million, or 64 Canadian cents a share, from C$309 million, or 49 Canadian cents, a year earlier.
Excluding items, earnings rose to C$408 million, or 69 Canadian cents a share, from C$256 million, or 40 Canadian cents, a year earlier.
Revenue rose 5 percent to C$2.89 billion.
Analysts, on average, expected earnings of 56 Canadian cents before special items and revenue of C$2.89 billion, according to Thomson Reuters I/B/E/S.
The company said it has no revisions to its 2010 annual financial and operating outlook ranges.
In February, Rogers forecast that its 2010 adjusted profit would climb 2 percent to 7 percent on a consolidated basis [ID:nN1699567].
Rogers, which merged its cable and wireless divisions and cut 900 jobs in September 2009, said costs at its wireless and cable units rose just 3 percent in the quarter.
Shares of Rogers, which climbed about 5 percent in the past week, fell 1.5 percent, or 55 Canadian cents, to C$35.10 on the Toronto Stock Exchange. ($1=$1.01 Canadian) (Additional reporting by Euan Rocha in Toronto; Editing by Frank McGurty)