Rogers slashes revenue outlook on quick adoption of unlimited wireless plans

Rogers earned $622 million or $1.19 per diluted share for the quarter

Enthusiasm for wireless data plans that don’t charge overage fees has forced Rogers Communications Inc. to slash its revenue expectations for this year.

Senior executives told analysts Wednesday that they were positively surprised that about one million customers have switched to its unlimited wireless data plans, but acknowledged that has meant less revenue from overage fees generated when consumers surpass the monthly limits.

Rogers said it now expects that 2019 full-year revenue may fall by up to one per cent compared with 2018 and the high end of its expectations is now only one per cent revenue growth.

It had estimated in January, several months before the switch to unlimited data plans at Rogers Wireless, that 2019 revenue growth would be between three and five per cent.

Chief executive Joe Natale said Rogers did an analysis before making the wireless plan change, but was surprised by how quickly consumers gravitated to the new unlimited data offerings.

“That ended up being three times the rate that we had anticipated, which I think is a good thing,” Natale said.

He said the switch to unlimited wireless data plans, which began in late June, was the beginning of a “critical and necessary shift” that has three long-term advantages: higher consumer data usage, increased customer satisfaction and lower costs to acquire and retain customers.

“Overage is a big pain point for customers. Rather than continue to perpetuate that complexity, which drives all sorts of … costs in our organization, we said ‘Let’s bite the bullet. Let’s create a very simple construct. And let’s get to the simplicity dividend as quickly as we can.’ “

He said it would have been preferable to know how quickly consumers would make the switch, but otherwise the change has been in line with expectations.

About 60 per cent of switched customers have upgraded to a higher-priced plan and 40 per cent opted for a less expensive one. Also, there were 13 per cent fewer calls for customer support during the quarter and the calls took a shorter average time for customers on the unlimited plans, he said.

Rogers reported net profit for the quarter ended Sept. 30 of $593 million or $1.14 per diluted share on $3.75 billion in revenue, compared with $594 million or $1.15 per diluted share on nearly $3.77 billion in revenue last year.

On an adjusted basis, Rogers earned $622 million or $1.19 per diluted share for the quarter, down from an adjusted profit of $625 million or $1.21 a year ago.

Analysts had estimated $1.31 per share of adjusted earnings with $3.87 billion of revenue, according to financial data firm Refinitiv.

Rogers was the first of Canada’s national wireless companies to adopt fixed monthly prices for its wireless data plans, but the move has been more or less matched by Bell and Telus. Freedom Mobile — which competes against the three national carriers in Ontario, Alberta and British Columbia — already had similar plans.

Besides its wireless business, Rogers has one of the country’s largest residential internet and cable TV services and a media business that includes radio, TV and digital outlets as well as the Toronto Blue Jays baseball team.

Third-quarter revenue from the wireless business was up one per cent from a year ago to $2.24 billion, cable revenue including internet was up one per cent to $997 million and media revenue was down three per cent to $591 million.

In its outlook, guidance for adjusted earnings before interest, taxes, depreciation and amortization was lowered to growth of three to five per cent compared with earlier expectations for growth of seven to nine per cent. Adjusted EBITDA in the third quarter was up nine per cent.

Rogers also cut its plan for capital spending this year to between $2.75 billion and $2.85 billion from between $2.85 billion and $3.05 billion.

Rogers class B shares fell below their previous 52-week low of $63.23 on Wednesday. The stock was down $4.87 at $61.52 in afternoon trading, a decline of about 7.3 per cent from the previous close.

Shares of Bell Canada’s parent, BCE Inc., were down about 2.7 per cent at $62.21 and Telus shares were down two per cent at $45.85. Shares of Shaw Communications, parent of Freedom Mobile, were down almost one per cent at $25.16.

David Paddon, The Canadian Press

Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Wetaskiwin Legion ‘Branch Briefings’

Branch #86 is planning its 90th anniversary

Feed replacement cost, precipitation threshold and more tweaked by AFSC

AFSC announces enhancements to perennial crop insurance programs

Road allowance closure goes to prov govt

Encroaching house situation could set ‘precedent’

County of Wetaskiwin council approves water rate hike of 3 per cent

Councilors balk at proposed rate increase of 4 per cent

Trudeau hypocrite on Iran plane crash

Writer says P.M. not that concerned about China hostages

VIDEO: Mass coronavirus quarantines seen in China won’t happen in Canada, authorities say

‘If a case comes here, and it is probably … it will still be business as normal’

RCMP receive tip on Amber Tuccaro’s homicide file

Banff RCMP contacted by a male who alleged that his father may be responsible for a missing person

Here’s what Canada is doing to stop the coronavirus from getting in

Health officials are monitoring multiple possible cases in Canada

Province investigating death of Samson Cree Nation youth in care

16-year-old found deceased outside in Rocky Mountain House

Blackfalds RCMP investigate fatal motor vehicle collision

Collision occurred at the intersection of Highway 11 and Burnt Lake Trail

Former Mountie, sports coach convicted of sex abuse in B.C. granted day parole

Alan Davidson was sentenced to almost six years for abusing seven boys in the late 1970s and early 1990s

Alberta privacy watchdog investigates ID scans at liquor stores

Alcanna Ltd., based in Edmonton, runs Liquor Depot, Wine and Beyond and Nova Cannabis stores

Survey finds support among Canadians for broader assisted-dying law

The survey was conducted Jan. 17 to 21 among 1,552 Canadians eligible to vote

New nasal spray launched in Canada to combat hypoglycemic shock in diabetics

Baqsimi is a nasal spray contains three milligrams of glucagon

Most Read