Company chair Edward Rogers lays out Shaw purchase positives for investors
By Greg O’Brien
TORONTO — Despite the challenges of the pandemic, Rogers Communications today reported good results from its first quarter ended March 31, with revenue gains in its cable and media business units, although wireless service revenue was down compared to the same quarter last year.
Of course, there is more news than that orbiting the wireless, broadband, cable and media giant. While the company had so far been mostly mum on the recent new wireless policies announced by the CRTC (where the headline was mandated, regional, facilities-based MVNOs as well as mandated low cost wireless options), president and CEO Joe Natale seemed Wednesday to be satisfied with the Commission’s decisions.
“The MVNO decision provides certainty for industry, and so we can proceed with investments knowing the government is supportive of facilities-based competition and a facilities-based approach to our market,” Natale said responding to an analyst question during its first quarter conference call Wednesday morning.
As for the low-priced rate plans, he added, “we’re committed to working with regulators and our goal is the same: Fair, free-enterprise investment-based competition and industry that continues to evolve and lead globally and create affordable options for all Canadians.”
Still fresh in Natale’s mind was Monday’s wireless outage, which the company is still calling “intermittent”, but for the half-dozen Rogers customers we spoke with, there was nothing intermittent about the 16-hour outage. The company has since pledged to credit customers’ accounts.
Natale was apologetic during the call. “I’m deeply disappointed our customers had to experience that. Our team is deeply disappointed. We work very hard to earn the trust of our customers and we’re going to work very hard to earn it back,” he said. “Despite all the testing we did with respect to the software upgrade, it simply caused the problems and it took us a while to recover… our team worked diligently to restore the service as quickly as we possibly could.”
Of course, the big news item still top of mind with the company, regulators and others is its proposed purchase of Shaw Communications. While Natale didn’t talk much during the call about the merger, because he wasn’t asked much, company chairman Edward Rogers had plenty to say during the company’s virtual annual general meeting of shareholders during his address.
“We support as many carriers as want to enter into, or expand, in the wireless business that can compete on their own merits.” – Edward Rogers
“We have been asked how much competition in wireless should there be in Canada? Our answer is Rogers supports strong and vibrant competition in all of our businesses. We support as many carriers as want to enter into, or expand, in the wireless business that can compete on their own merits. Every business Rogers is in today is highly competitive and we perform better as a company when our customers see the choices available and how Rogers stacks up,” he said.
The chair went on to talk about the company’s impressive history of growth and innovation and said 5G is the next step for Rogers. “We know that requires even more commitment, long-term focus and willingness to build and invest. That’s why we are coming together with Shaw, at a time when this investment is needed more than ever. While some have commented against the deal, I want them to know that we welcome them with open arms to invest in the wireless business and in networks to provide all Canadians with the world-class connectivity they need.
“The Rogers Shaw deal is about where are we going in the next 20 years. How can Canada participate in a global industry with global platforms and technologies that increasingly pose a challenge to Canadian companies and Canadian culture?” Rogers asked.
He then pointed to the myriad ways Canadians can communicate and consume content through large foreign digital companies as evidence of strong, global competition. Canadians “can use Apple’s Facetime, Facebook’s WhatsApp and dozens of other choices. With the advent of 5G and its mobile and fixed ultra-broadband wireless capabilities, we anticipate similar changes in the market, with wonderful new products and services for consumers and businesses across Canada,” he explained.
And, as “the world moves to digital, 80% of the digital advertising revenue in Canada goes to Facebook and Google. Canadian content, voices and culture are at risk in this new world and traditional media in Canada is shrinking at an alarming rate.
“As a country we need to look at these global trends and understand how we can fit into them. How we can play and perhaps how we should not play. Today’s telecommunications networks require scale to compete on the world stage. We believe passionately that the Rogers-Shaw combination will help contribute to a stronger facilities-based future for Canadians,” he said.
“The concentrated schedule provided for more games but importantly, the Canada-on-Canada format seems to have elicited a much higher viewership, which we’re pleased to see.” – Tony Staffieri, Rogers
The company’s total revenue Q1 increased by 2% to reach $3.5 billion in the first quarter, largely driven by a 5% increase in cable revenue which topped $1 billion, compared to Q1 2020. Rogers attributed the cable revenue increase to “disciplined promotional activity, service pricing changes, and increases in our Internet and Ignite TV subscriber bases,” according to the company’s press release announcing its financial results.
“Media revenue increased by 7% this quarter (to reach $440 million), primarily as a result of higher sports and Today’s Shopping Choice revenue, partially offset by softness in the radio advertising market due to Covid-19,” reads the release.
The boost in media revenue, said chief financial officer Tony Staffieri on the analyst call, is thanks to the NHL’s compressed schedule, airing on Sportsnet and Hockey Night in Canada, and the fact all the games are amongst Canadian teams in this Covid-impacted year. “Clearly Sportsnet is the biggest impact,” he said, in answer to a question on the company’s media division. “What you saw in the first quarter were generally more NHL games than you would have had last year… The concentrated schedule provided for more games but importantly, the Canada-on-Canada format seems to have elicited a much higher viewership, which we’re pleased to see.”
A Sportsnet spokesperson confirmed to Cartt.ca for Hockey Night in Canada’s first Saturday night game (eastern time slot) is up 7% year-over-year while the second game (western time slot) is up 34% YOY. The featured Wednesday night game viewership is up 45% YOY.
The media division won’t fully bounce back, however, until the Rogers-owned Toronto Blue Jays can begin hosting fans at the Rogers Centre and there’s no telling yet when that might happen, said Staffieri.
In the quarter, wireless service revenue decreased by 6%, mainly as a result of lower roaming revenue due to continued global travel restrictions during Covid-19, and lower overage revenue, primarily as a result of the continued adoption of its Rogers Infinite unlimited data plans, said the company press release.
In terms of subscriber numbers, Rogers reported net additions of 44,000 net wireless postpaid, 14,000 Internet and 58,000 Ignite TV subscribers during the quarter. The company now has 9.7 million total wireless postpaid subscribers, 1.2 million wireless prepaid subscribers, 2.6 million Internet subscribers and 602,000 Ignite TV customers. It no longer publicly states how many total pay-TV customers it has.
Overall, Rogers reported its adjusted EBITDA increased 4% to $1.4 billion in the first quarter of 2021, compared to the same quarter of 2020. Net income increased 3% year-over-year to reach $361 million.
For more on Rogers’s financial results for the first quarter of 2021, please click here.
