Rogers Subscriber Growth Slows as Price War Heats Up
Rogers Communications’ Subscriber Growth Slows on Price War
(Bloomberg) -- Rogers Communications Inc. added fewer wireless subscribers in its fiscal second quarter amid a price war among Canadian telcos.
The Toronto-based company added 77,000 postpaid net subscribers, according to a statement Tuesday, short of analysts’ estimates for 99,250. Revenue was C$3.78 billion ($2.88 billion), also missing estimates of C$3.86 billion. Revenue at the wireless division, Rogers’ largest, rose 1% to C$2.24 billion.
Shares dipped 2.4% to C$68.20 at 10:10 a.m. in Toronto.
The telecoms and media company has been facing increased competition from players such as Shaw Communications Inc., which snatched 37% of new postpaid subscribers among the top four Canadian telecos in the first quarter of 2019, according to Bloomberg Intelligence data. Rogers’ market share of industry net adds declined to 13% from 35% in the same period.
Rogers is fighting back, announcing an unlimited wireless plan, Infinite, in June. Competitors BCE Inc. and Telus Corp. responded with their own promotional offers, sparking a price war.
Infinite is the “the right move for our customers, our company,” Rogers’ Chief Executive Officer Joe Natale, said on a post-earnings analyst call. Natale sees the unlimited data plan, along with Rogers’ zero-financing options for devices, helping to drive growth in the second half of the year.
David Heger, an analyst at Edward Jones, said that a dramatic slowdown in the wireless business became apparent in the first quarter, which helped manage expectations. Subscriber additions are “still down a fair amount from a year ago, but at least it’s more in line since expectations have been readjusted.”
Key Insights
Analysts have called Rogers’ Infinite unlimited wireless offering “worrisome” as such promotional plans may hurt the company’s average revenue per user in the short term. However, these can help the telecoms company to maintain its market share in a maturing wireless market in Canada.
“While Infinite had minimal impact in the second quarter, we are excited with the customer benefits and cost savings opportunities that these plans are expected to generate as we move into a 5G world,” Rogers Chief Financial Officer Tony Staffieri, said.
Adjusted earnings per share of C$1.16 fell short of analyst estimates of C$1.17 in the quarter.
Know More
- Read the 2Q earnings preview here.
- Read the statement here.
To contact the reporter on this story: Simran Jagdev in Toronto at sjagdev1@bloomberg.net
To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net, Jacqueline Thorpe
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