(Adds CEO's comments from calls with analysts and media;
By Alastair Sharp
TORONTO, April 21 Canadian cable,
telecommunications and media company Rogers Communications Inc
reported a 13 percent drop in first-quarter profit on
Monday, as a move to more customer-friendly pricing led to a
slip in earnings at its major wireless phone arm.
The price changes didn't help bring in new business,
however, with Rogers adding only 2,000 net postpaid wireless
subscribers in the quarter, a sharp miss on analysts' forecasts
even amid external warnings that tough winter conditions may
have kept potential customers out of retail stores.
On a call with analysts, new Chief Executive Officer Guy
Laurence said his leadership team has since sought to scale back
on promotions as it seeks a balance between average bill growth
and overall subscriber increases.
"We are experimenting with changing tactics," he said. "We
have reduced the amount of promotional activity, and we are
continuing to monitor that to see how it plays in the
The postpaid subscriber metric is closely watched as a proxy
for lucrative wireless growth, and Rogers, Canada's largest
wireless company, also missed expectations on it last quarter,
the first with Laurence at the helm.
"These results were poor across the board and we continue to
recommend a switch to Telus, BCE and Quebecor," Canaccord
Genuity analyst Dvai Ghose wrote in a note, referring to Rogers'
Rogers has in recent quarters lost luster with investors who
favor Telus Corp's earnings growth and BCE Inc's
dividend yield, while Quebecor Inc may embark on a
national wireless expansion.
"Wireless drivers were poor, but weak gross additions and
lower-than-expected device upgrades drove better-than-expected
margins," Ghose said, adding that he had expected Rogers to add
22,000 postpaid wireless customers.
CEO Laurence said he will present a plan to his board in
coming weeks that could presage foundational changes to improve
weaker parts of the company over the longer term.
"As is apparent from our first-quarter results, while there
are some areas of strength, there are also areas where we
clearly need to and will improve," he said.
An average Rogers wireless customer, a blend of contract and
prepaid subscribers, paid C$57.63 a month in the period, down
from C$59.68 a year ago.
Rogers said simplifying plans and lower roaming prices hurt
the wireless division, while losses in basic cable moderated.
The company, nevertheless, said it would increase its
dividend by 5 percent to an annual payout of C$1.83.
Rogers spent more than C$3 billion on wireless airwaves in a
recent spectrum auction - far more than either of its biggest
rivals Telus and BCE Inc, which share a national mobile
It also paid more than C$5 billion late last year for a
12-year deal to broadcast National Hockey League games, beating
out BCE for the TV rights to Canada's most popular sport.
"They are both long-term plays. They're not for the fizz and
buzz of the next few weeks," Laurence said on a call with
The cable division, Rogers' second-largest unit at half the
revenue of wireless, was flat as falling television and landline
phone sales offset steady but slowing growth in Internet
service. The company lost 20,000 TV customers, but added the
same number of Internet connections and 10,000 phone lines.
Toronto-based Rogers said net income fell to C$307 million
($279 million) in the quarter, from C$353 million a year
earlier. Operating revenue slipped slightly to C$3.020 billion.
On an adjusted basis that excluded one-time and
non-operating costs, the company said it earned 66 Canadian
cents a share. It was expected to earn 71 Canadian cents a share
on revenue of C$3.06 billion, according to Thomson Reuters data.
($1 = 1.1018 Canadian Dollars)
(Reporting by Alastair Sharp; Editing by Nick Zieminski and Jan