Rogers profit misses on weakness in wireless unit and sports-starved ad sales

FILE PHOTO: Rogers Communications logos are seen above a booth during the media day at the Canadian International AutoShow in Toronto, Ontario, Canada, February 14, 2019. REUTERS/Chris Helgren

(Reuters) - Canada's Rogers Communications Inc RCIb.TO missed quarterly revenue and profit estimates on Wednesday, as coronavirus-led restrictions hurt demand for its wireless services while cancellation of sporting activities sparked a slump in ad sales.

Revenue at Rogers’ media division plunged 50% to C$296 million in the quarter as the COVID-19 pandemic disrupted major sports activities in Canada and worldwide. The company said it expects the loss in media to continue till the fourth quarter.

Sports revenue for the company which owns the Toronto Blue Jays baseball team were also impacted as live events were postponed in the quarter. Rogers also owns a 37.5% stake in Maple Leaf Sports & Entertainment Ltd, which owns teams such as the Toronto Maple Leafs and the Toronto Raptors among others.

Government-imposed store closures to stop the virus spread led to a decline in new subscriber additions and sale of equipment for telecom providers, some of which are also reeling from a cut in ad spend as live sports events are postponed.

Revenue from roaming fell 90% in the quarter ended June 30 partly due to global travel restrictions, pulling revenue from wireless services down 13%. Revenue from its wireless equipment unit fell 17% on fewer device purchases and upgrades by existing customers.

The company said it was seeing some signs of recovery in the market as lockdown measures ease and stores are allowed to re-open.

“June saw a notable recovery in loading as most stores were starting to open and July is trending a little bit better as well”, Chief Financial Officer Anthony Staffieri said in an earnings call with analysts.

Rogers earned C$0.60 per share, below analysts’ estimate of C$0.71 per share.

Revenue fell 16.5% to C$3.16 billion, missing estimates of C$3.18 billion, according to IBES data from Refinitiv.

Reporting by Neha Malara; Editing by Shinjini Ganguli and Shailesh Kuber