TORONTO — Rogers Communications Inc. felt the first financial bite from the COVID-19 pandemic during the tail end of its first quarter and senior executives said Wednesday they expect conditions will get worse in months to come.
Finance chief Anthony Staffieri told analysts that more customers will probably be unable to pay bills on time, but chief executive Joe Natale said Rogers has the resources to help its customers and employees through the crisis.
“We began to see the impact of COVID-19 in the final few weeks of Q1 and have quickly adapted our operations to continue delivering critical services to meet the evolving needs of our customers,” Natale said.
“Our networks are seeing unprecedented levels of activity and demand. They continue to provide a resilient foundation for our customers now, and into the future, as our nation recovers and rebuilds.”
Staffieri, the company’s chief financial officer, said Rogers has $3.8 billion of available liquidity, the highest in the company’s history, which allows it to continue operating the business while paying dividends and launching a share buyback plan.
But, Staffieri added that the macro environment will affect many of its customers — both families and businesses — and Rogers is preparing to help them while bracing for the likelihood that more accounts won’t be paid on time.
“In both our cable and wireless businesses, we have given customers the opportunity to extend bill payment terms if needed,” he said.
“We’re starting to see early increases in number of calls relating to bill payments and expect this will increase as unemployment rises and … business customers continue to be impacted.”
Natale said later in the call that unpaid bills are “a potential risk that may arise in the second half” if unemployment continues to rise and the pandemic-related closures are more extended than originally thought.
Besides the Rogers, Fido and Chatr wireless brands, Rogers operates internet-cable systems in three provinces, and a media division that includes 55 radio stations, the Citytv network, Sportsnet and the Toronto Blue Jays.
In the media segment, which had the biggest first-quarter revenue decline, there was a smaller impact on EBITDA — earnings that excludes taxes and other items — because it spent less for sport content and player salaries. The division saw a 12 per cent drop in top-line revenue compared with last year.
Overall, Rogers reported Wednesday that it had a $352-million net profit for the first three months of 2020, with net income of 68 cents per share, down from $391 million and 76 cents per share a year earlier.
Revenue and adjusted earnings were below analyst estimates. On average, they had estimated $3.5 billion of revenue and 80 cents of adjusted earnings per share, according to financial markets data firm Refinitiv.
Adjusted earnings reported Wednesday were $367 million or 71 cents per share, down from $405 million or 78 cents per share. Revenue was $3.42 billion, down five per cent from almost $3.59 billion.
In an open letter and statements to the Rogers virtual shareholder meeting, Natale said the company is committed to balancing long-term capital returns with its responsibility to society.
“We feel a keen responsibility to serve as the connective tissue in people’s lives right now,” Natale said. “And we will continue to do what’s possible as we all move through this.”
This report by The Canadian Press was first published April 22, 2020.
Companies in this story: (TSX:RCI.B)
David Paddon, The Canadian Press