TORONTO (Reuters) - Rogers Communications Inc (RCIb.TO) said on Tuesday it swung to a second-quarter profit but stiff competition and a slowdown in the wireless market stifled growth of its mobile phone business, sending its shares lower.
Rogers, the telecoms and media group that owns Canada’s biggest wireless carrier and one of Canada’s largest cable companies, said it added 92,000 postpaid, or longer-term, wireless subscribers, down from 133,000 a year earlier.
“Additions were weak,” said Troy Crandall, an analyst at MacDougall, MacDougall & MacTier, who said consumers may have postponed signing up while they waited for Apple Inc’s (AAPL.O) popular iPhone 3G that was launched on Rogers’ network after the quarter closed.
“That could’ve been one of the reasons why we saw some weakness in this quarter,” he said.
Other factors that hurt growth in the mobile phone business included “a modest slowdown in overall wireless purchasing activity,” increased competition and an unusually strong second quarter for wireless growth a year earlier, Rogers said.
The company’s shares fell C$2.55, or 6.8 percent, to C$35.00 on the Toronto Stock Exchange.
Rogers said it earned C$301 million, or 47 Canadian cents per share, in the three months ended June 30. That compares with a loss of C$56 million, or 9 Canadian cents, in the same period a year earlier.
Adjusted net income rose to C$364 million, or 57 Canadian cents a share, from C$299 million, or 47 Canadian cents.
Analysts expected Rogers to earn 51 Canadian cents a share, according to Reuters Estimates. Earnings before one-time items were expected to be 53 Canadian cents a share.
The company’s forecasts remained unchanged, which could also disappoint some investors, Crandall said.
The Toronto-based company said its wireless monthly churn, or customer turnover, dropped to 1.06 percent from 1.15 percent. The average amount of revenue it brings in per wireless user each month grew to C$75.48 from C$72.65, partly because of more frequent use of wireless e-mail and text messaging services.
Rogers’ faith in its wireless business was also reflected in its C$1 billion worth of winning bids in Canada’s recently completed auction of spectrum, or airwaves over which mobile services are delivered.
Ted Rogers, the company’s CEO, said the company isn’t worried about potential market entrants that also won spectrum and are preparing to launch services. He said Rogers had seen competitors come and go in all of its businesses.
“We’ve not only survived, but thrived, and we will continue to do so,” he said in a conference call with analysts.
He reiterated the company remains concerned about the economy, particularly given manufacturing job losses in Ontario.
As well, “we must continue to demonstrate restraint on the cost side,” he said. “That’s essential.”
Total revenue grew to C$2.8 billion from C$2.53 billion, also helped by growth in wireless, cable, Internet and high-definition TV subscribers. Analysts on average had expected revenue of C$2.84 billion.
Rogers’ wireless business brought in C$1.52 billion in revenue, compared with C$1.36 billion a year earlier. Cable revenue grew to C$718 million from C$646 million a year ago.
Additional reporting by Jennifer Kwan; Editing by Frank McGurty