Pricing changes dent Rogers wireless revenue; profit up

Reuters

By Alastair Sharp

TORONTO, Oct 24 (Reuters) - Rogers Communications Inc said on Thursday third-quarter revenue slipped at itswireless unit, the company's biggest business, due to pricingrevisions, even as its profit squeaked past expectations.

Canada's largest wireless company, which has some 9.5million mobile customers, said revenue was crimped by new,lower-priced roaming plans, while phone sales also dropped andfewer people signed up for service.

Rogers, also one of the country's biggest cable televisionand Internet providers, added 64,000 net postpaid wirelesssubscribers, significantly fewer than expected and down from76,000 a year earlier.

This is a closely watched measure because postpaid customerssign multi-year contracts and typically pay much more each monththan prepaid subscribers.

At that pace, Rogers could cede more of its leading marketshare to rivals Telus Corp and BCE Inc's Bell,which share a national wireless network. Both are due to reportquarterly earnings next month.

"Rogers Wireless is still underperforming and we expect muchbetter from Bell Mobility and Telus Mobility," Canaccord Genuityanalyst Dvai Ghose wrote in a note to clients.

Rogers' chief executive, Nadir Mohamed, who is due to leavehis post soon, said the slower wireless growth was likely linkedto the timing of premium device launches and moves by Canada'stelecom regulator to enforce maximum two-year contracts. Thishas forced operators to adjust pricing from their typicalthree-year contracts.

"My sense is that all of the changes in the industryassociated with the transition from three to two-year contracts,along with the timing and impact of device launches during thequarter, combined to moderate the market growth somewhat in theperiod," Mohamed said during his final earnings conference callat Rogers, before incoming CEO Guy Laurence takes over at thehelm early in December.

Excluding restructuring, acquisition and other one-timeitems, the company said third-quarter earnings rose to C$501million, or 97 Canadian cents a share, from C$495 million, or 96Canadian cents a share, a year earlier.

Analysts, on average, had forecast earnings of 96 Canadiancents a share, according to Thomson Reuters I/B/E/S.

Rogers said net income in the quarter fell marginally toC$464 million, from C$466 million.

Rogers, which also owns television stations, magazines andthe Toronto Blue Jays baseball team, said operating revenue rose1.5 percent to C$3.22 billion.

The company's wireless revenue declined 2.3 percent as phonesales dropped.

The average monthly bill of its wireless customers fell 1.8percent to C$60.81. Postpaid churn, the measure of how many ofthose valuable customers leave each month, was at 1.23 percent.

The company said the decline was largely due to changes itmade to pricing of its cross-border roaming service. In May, itintroduced a C$7.99 flat daily rate for customers traveling tothe United States.

Rogers lost 39,000 cable TV subscribers and added 18,000Internet customers in the quarter.

Established cable operators have suffered from the emergenceof cheaper online products, such as Netflix's streamingsubscription service.

Rogers has also been hit by rival Bell's continued rolloutof its Internet-based Fibe TV product in Ontario, which Rogers'Mohamed said is now available to 70 percent of Rogers' potentialsubscriber base.

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