TORONTO – Wireless, digital cable, high speed Internet and cable telephony customers all saw growth slip in the fourth quarter, ended December 31st, reported Rogers Communications today.
While the company announced a doubling of its annual dividend, the authorization for a share repurchase program, and full year 2008 guidance ranges, the fourth quarter subscriber numbers it released shows a slowdown in growth in the quarter, compared to Q4 2006, perhaps reflecting the marketing onslaught from all video and telephony carriers and the uncertain nature of the economy going into the new year.
Gross postpaid additions on the wireless side of the company were 361,500 in the last three months of the year, 23% below the number of new customers who came on board from October to December in 2006. At year’s end, RCI had 5.91 million postpaid wireless customers and another 1.4 million pre-paid clients, a segment which also saw 25% lower growth in the quarter.
On the cable side, the company added 20,000 net new video customers overall, a 9.3% increase over Q4 ’06, for a total of 2.295 million. However, it added 60,700 digital cable subs, a decrease of 8.9% in the quarter. For the full year, Rogers added 218,500 more digital customers, a decrease of 2.2%. The company has 1.352 million digital cable households, a digital penetration rate of 59%. Rogers also saw flat results on the Internet customer side with a 1.1% decrease in growth of 46,300 new customers in the fourth quarter. On the year, however, the company added 164,500 Internet customers, an increase of 4.1%, for a total of 1.465 million.
Rogers also confirmed it will begin deploying switched digital video technology – which will enable the company to significantly expand capacity for new digital and high-definition services. “In addition, Cable will invest to expand Internet capacity to meet increasing usage demands, to accommodate continued expansion of its digital cable and telephony customer bases, to upgrade many of the remaining rural systems to 860MHz bandwidth to enable the provision of new services in those markets, and to improve the reliability, redundancy and survivability of the cable network,” says the press release.
Growth in Rogers cable telephony additions fell off dramatically in Q4, as the company added 65,300 new phone subscribers, 30% off last year’s Q4. In all of 2007, RCI added 290,000 cable phone customers, reaching 656,000, a decrease in growth compared to ’06 of 28%.
"We ended 2007 with good subscriber results reflective of healthy demand in the markets we serve and the quality of our service offerings, but we also have much work to do in continuing to develop and reinforce our platforms to secure continued growth into the future," said Ted Rogers, company founder and CEO, in the release. "Our plan for 2008 strikes a healthy balance between the continued delivery of profitable growth, the return of increasing amounts of our growing free cash flow to shareholders, and the investments that will help assure such growth continues well into the future."
As for that 2008 plan, here it is:
Full Year 2008 Guidance
(Millions of dollars, except subscribers) Guidance Range
————————————————— ——————-
Consolidated
Revenue $11,200 to $11,500
Operating profit (as adjusted) 4,000 to 4,200
Additions to property, plant and equipment
("PP&E") 1,900 to 2,100
Free cash flow 1,400 to 1,600
Supplementary Detail:
Revenue
Wireless (network revenue) $ 5,800 to $ 5,900
Cable Operations 2,900 to 2,950
Media 1,525 to 1,575
Operating profit (as adjusted)
Wireless $ 2,875 to $ 2,975
Cable Operations 1,130 to 1,190
Media 165 to 180
Additions to PP&E
Wireless $ 850 to $ 925
Cable Operations 750 to 830
Media 80 to 95
Net subscriber additions (000’s)
Retail wireless postpaid and prepaid 550 to 625
Residential cable revenue generating units
(RGUs) 550 to 625
“The 2008 additions to PP&E and free cash flow guidance does not include the potential acquisition of wireless spectrum from the Canadian Government during an auction scheduled to begin in May 2008 in which Rogers currently intends to participate. The guidance for 2008 PP&E expenditures includes the following incremental investment initiatives currently contemplated in addition to the recurring investments required to grow and maintain the current operations of Rogers’ businesses,” explains the release.
During 2008 Wireless intends to expand its High-Speed Packet Access ("HSPA") 3.5G network coverage beyond the current 58% of the population in its coverage area, to continue to increase data throughput speeds across the HSPA network and to also make significant investments in the capacity of its backhaul facilities. Wireless will also continue to invest to maintain its network quality leadership position, as well as in initiatives to improve the reliability, redundancy and survivability of the wireless network.
During 2008 Rogers Media intends to build out a new state-of-the-art production facility to house its Citytv and OMNI television operations in Toronto, as well as to complete the new national high-definition studio facility of Sportsnet and to build and launch two new OMNI television stations in Edmonton and Calgary.
During 2008, at the corporate level Rogers intends to invest in a business transformation initiative to begin designing and developing new and enhanced customer billing and operating support systems and related infrastructure for the Wireless and Cable businesses. In addition, RCI intends to invest in improvements to certain of its corporate owned real estate facilities across the country.
