April 29, 2009 / 11:12 AM / 9 years ago

UPDATE 4-Rogers profit sags, but wireless strong

* EPS C$0.49 vs C$0.54 year earlier

* Activates more than 360,000 smartphones

* Adds 104,000 new postpaid wireless subscribers

* Swine flu could hit roaming revenue, executive says

* Shares rise 7 Canadian cents to C$29.66 (Adds comments, stock price)

By Wojtek Dabrowski

TORONTO, April 29 (Reuters) - Canada’s Rogers Communications Inc (RCIb.TO) said on Wednesday quarterly profit slipped as a drop in advertising at its media division offset solid performances from its wireless and cable operations.

Rogers, the country’s biggest cable television company and owner of its largest wireless phone carrier, added 104,000 postpaid — or longer-term — wireless subscribers in the quarter, up from 97,000 additions a year earlier.

The company also activated more than 360,000 smartphones — feature-rich devices such as Apple’s (AAPL.O) iPhone and Research In Motion’s RIM.TORIMM.O BlackBerry — during the quarter. Shares of Rogers rose after its announcment.

However, the success of the smartphone campaign meant “significantly higher” acquisition and retention costs, Rogers said.

The results come amid concerns that the industry’s wireless subscriber growth could shrink alongside a slowing Canadian economy as cost-conscious consumers limit spending on telecom services like mobile phones.

“This quarter was pretty much in line with what I expected,” said Troy Crandall, analyst at MacDougall, MacDougall & MacTier. He added that Rogers’ wireless business is holding up well in the face of a recession.

While subscriber growth at Rogers quickened, a key measure of wireless revenue ebbed. the company said average monthly revenue per wireless user, or ARPU, dipped to C$72.15 from C$72.55 a year earlier.

Still, Crandall said Rogers’ wireless results were better than what Telus Corp (T.TO) reported earlier this month. Net subscriber additions at Telus dropped about 46 percent in the three months ended March 31, and ARPU fell 5.6 percent.

Rogers is engaged in a three-way fight for dominance of Canada’s wireless market with BCE Inc (BCE.TO) and Telus. That competition should intensify in the coming months with a wave of wireless startups expected to enter the market.

Rob Bruce, the head of Rogers’ wireless business, told analysts the swine flu outbreak could have an impact on wireless roaming revenue if travel restrictions are imposed to halt the spread of the disease.

Such restrictions could mean fewer foreigners roaming on Rogers’ network and fewer Rogers subscribers using other networks abroad.

“To the extent that we see the swine flu accelerate, I think we can expect to see some softening in roaming revenues,” Bruce said.


Overall, Toronto-based Rogers earned C$309 million ($255.4 million), or 49 Canadian cents a share, in the three months that ended March 31. That was down from C$344 million, or 54 Canadian cents, a year earlier.

Its overall revenue rose 5 percent to C$2.75 billion from C$2.61 billion a year earlier.

Adjusted income per share was 40 Canadian cents, down from 42 Canadian cents a year earlier.

Analysts were expecting the company to earn 44 Canadian cents a share before one-time items on revenue of about C$2.82 billion, according to Reuters Estimates.

At Rogers’ cable operations, revenue rose to C$743 million from C$695 million in the quarter.

The company owns a stable of radio and television stations across Canada, as well as some 70 magazines and trade and professional publications.

It is this media division that proved to be the weakest spot for Rogers in the quarter. There, revenue fell to C$284 million from C$307 million. Rogers blamed a “soft advertising market.”

Like other media companies, Rogers has seen its ad revenues soften as companies cut back on marketing spending amid the recession.

Rogers is now headed by Nadir Mohamed. He took over the company reins from founder Ted Rogers, who died late last year at age 75. Mohamed was previously the president of the company’s core communications division.

“We clearly are operating in an extremely challenging time and have much hard work to do in front of us to drive the performance of the business going forward,” he said in a conference call with analysts.

Rogers shares rose 7 Canadian cents to C$29.66 on the Toronto Stock Exchange. ($1=$1.21 Canadian) (Reporting by Wojtek Dabrowski; editing by Frank McGurty)

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