TORONTO – Though he was just coming off an announcement of hundreds of management layoffs, and numbers showing a 24% drop in net income, fewer cable TV subscribers and flat revenue, Rogers CEO Guy Laurence put an optimistic face on his company’s financial outlook on Thursday.
Wireless, by far the biggest contributor to Rogers’s bottom line, saw a 1% drop in revenue, which the company attributed largely to its new simplified plans (bundling in fees like voicemail and caller ID) and changes like lower-priced roaming plans (as it did three months ago). But the drop in prices is being offset by increased consumer loyalty. “Postpaid churn continued to improve this quarter falling four basis points to 1.13%, compared to 1.17% in the second quarter of 2013,” the report said. “We believe the improved churn rate is partly attributable to our simplified pricing plans and the introduction of our higher value roaming plans.”
Equipment sales and related expenses dropped 12% this quarter because of fewer subscriber upgrades and gross activations. Rogers ended the quarter June 30 with 138,000 more postpaid subscribers and 117,000 fewer prepaid.
On the other hand, the number of gross postpaid additions dropped 17%. “The industry transition from three-year to two-year plans as a result of the recent adoption of the CRTC Wireless Code appears to have slowed overall wireless subscriber growth over the past year,” the earnings report said.
Asked by analysts if he envisioned further partnerships with Quebecor as the Quebec telco looks at expanding into a national wireless provider, Laurence said “we haven’t had the conversation” and “we don’t need a partner” to expand the wireless offering. In fact, Rogers has already deployed recently acquired 700 MHz spectrum in parts of Vancouver, Calgary, Toronto and Montreal, and recently announced $450 million to expand the wireless network in British Columbia.
Laurence also pointed to the various regional providers, noting that in most parts of Canada there are already four wireless providers. “You can say that if they come together, what actually changes?” Laurence said.
On the TV side, subscriptions fell by 120,000, offset by 53,000 more Internet subscribers and increased revenue from consumers choosing packages with higher speeds and data caps. The number of analog subscribers continues to decline, now at 14% versus 18% a year ago. It’s been two years since Rogers began an aggressive push to transition its subscribers away from analog so it can free up bandwidth for other uses.
Six months after Cartt.ca first reported that Rogers was planning an over-the-top service called Showmi, the company still refuses to acknowledge or deny that such a project exists. Asked about it, Laurence said that “rumours of the Loch Ness Monster have been around for decades” and that he had no comment on them.
Earlier this week, Rogers announced “several hundred” cuts to middle management. Laurence said the company’s reorganization plan would be complete by September, but wouldn’t say if the worst is passed, explaining that he would like to talk to his employees about that before the media. He added that the “vast majority of savings will be reinvested in expansion” and that because of new hires in other areas, “the number of people we employ will bobble up and down.”
Laurence also commented briefly about competitor BCE, which just announced it was taking Bell Aliant private. “Aliant has been more nimble than its parent company,” he said. “I hope it will become less nimble as the bureaucracy takes over.”
