Rogers profit drops 28% even as revenue increases
Rogers Communications Inc. says its third-quarter profit declined more than 28 per cent as the telecom and media company pushed ahead with changes intended to improve its long-term performance.
The Toronto-based cable and wireless company, which also owns one of Canada's largest media businesses, reported $332 million of net income, or 64 cents per share — down from $464 million, or 90 cents per share.
Adjusted profits were equal to 78 cents per share, which was six cents below analyst estimates compiled by Thomson Reuters. Revenue increased one per cent to $3.25 billion, coming within analyst expectations.
Shares of the company dropped two per cent, or 87 cents, to $42.56 in morning trading on the Toronto Stock Exchange.
Rogers has been working on a multi-year plan to improve its results, including a reorganization of its operations under the leadership of chief executive Guy Laurence, who said the third quarter results are where the company expected.
The company — which has a national wireless network, regional cable operations in Ontario and Atlantic Canada, and major broadcast, print and digital media operations — is reaffirming its guidance for 2014 but says its adjusted operating profit and free cash flow will likely be at the lower end of the range.
Within the results, wireless revenue grew two per cent to $1.88 billion, as the company added 17,000 new postpaid subscribers, a smaller amount than last year.
Cable revenue slipped one per cent to $864 million as the company lost 30,000 TV subscribers and faced more pricing competition.
The media division, which houses Rogers' print and digital publications, TV and radio stations, and the Toronto Blue Jays, reported flat revenues of $440 million.
Laurence, a former Vodafone UK CEO who joined the company last December, told analysts Thursday that Rogers has reduced layers of its management and cut the number of executives ranked vice president and above by 15 per cent.
"It is not a trivial exercise but it is now complete," he said.
Rogers — which has Canada's largest base of mobile phone subscribers and one of the country's largest cable and Internet operations — has been losing market share to long-time rivals Bell, owned by BCE Inc. and Telus.
Bell complaint called 'petty'
Earlier this week, Bell's parent company filed an application with the broadcast regulator that included concerns over Rogers new NHL GamePlus mobile app, which offers multiple camera angles that users can interact with through the software.
Bell told the CRTC that it believes the app violates certain regulatory rules that require content created for broadcasters to be made available to all competitors. The company said the app should be made available for free to all NHL GameCentre Live subscribers, not just Rogers customers.
Rogers has said the features, which include cameras mounted on referee's helmet, were created for an interactive platform and wouldn't have been developed solely for TV broadcasts — therefore are exempt under the rules. The company has until Nov. 20 to respond formally to the complaint.
"They are complaining and trying to stifle innovation in hockey instead of actually applauding it, which is what we see from pretty much everybody else," Laurence told analysts.
"Obviously we don't believe that we have transgressed any rules, and we will continue to focus on delivering innovation for consumers, and not fighting little petty fights such as this. I don't think they will win. Let's see."
Laurence also told analysts he is "not seeking to get a lot of revenue" from the Game Centre Live app, but considers the product akin to a business-class upgrade for airlines, where coach customers have the option to upgrade for a price.