Company also said it is confident it will compete against fourth player in Videotron
By Ahmad Hathout
TORONTO – Rogers executives said the company expects network resiliency to be a more important factor than price in driving up new subscribers going forward.
The company is coming off a network outage last summer that paralyzed the country, impacting critical institutions like government and banking. The fallout of the outage put a spotlight on the importance of network resiliency and redundance and spawned a commitment from the large carrier to physically separate its mobile and wireline networks and invest $20 billion over five years toward reliability.
“Across the industry, while price is always important, a more important factor is the internet reliability and that’s because — even in the consumer space with a lot of work from home — it’s become so critical,” Tony Staffieri, president and CEO of Rogers, said on a fourth quarter 2022 earnings conference call with analysts this morning.
“And so those fundamentals around customer experience is what we believe will, in the long term, continue to drive the right gross adds and the right churn fundamentals,” he added.
The company said it invested $3.1 billion last year, the majority of which was in its networks, including a 39% increase over the last five-year average in network infrastructure.
Staffieri also took aim at the suggestion – which Bell made in the previous hour in which it touted its 8-gig speeds – that cable is at a competitive disadvantage compared to the telco giant.
He said the company already has extensive fibre to the premises coverage. And where the company doesn’t have fiber straight to the building, Staffieri said older coaxial cable technology in the last mile “continues to deliver speeds that are well beyond customer demand at this stage. We’re offering at least one to one-and-a-half gigs across our entire footprint — 99% of our footprint is capable of those speeds and in many areas that’s now two and a half gigs and growing rapidly.”
He added that new cable technology that powers those speeds, called DOCSIS 4, “will only enhance the top end of those speeds.”
The company capped the three months that ended on December 31 with a revenue bump of 6% to roughly $4.2 billion compared to the same period last year, attributed to strong wireless and media growth. Net income was up 25% to $508 million, also for the equivalent period. Total earnings before interest, taxes, depreciation and amortization increased 10% in the quarter.
Cable revenue was flat at $1.02 billion in the quarter compared to the equivalent period. The company added 14,000 fewer new retail subscribers at 7,000 in the quarter compared to the same period last year, but has grown its total subscriber base to roughly 2.3 million.
Cable video saw losses of 10,000 in the quarter compared to a gain of 5,000 in the same quarter last year, but gained on its total base of subscribers at about 1.5 million.
Wireless revenues were up 7% to roughly $2.6 billion. The company added 193,000 net new postpaid subscribers, 52,000 more than in the same quarter last year for a total base of 9,392,000. The rate at which subscribers leave the company – churn – was a monthly 1.24%, up from the same quarter last year.
On prepaid, the company lost fewer subscribers this quarter at 7,000 compared to 21,000 in the comparable quarter for an increase in the sub base to 1,255,000. Churn was up to 5.90%.
Media revenue increased by 17% in the quarter due to higher sports revenue, including increased Toronto Blue Jays revenue and advertising.
The company recently agreed to push back the closing date on its acquisition of Shaw to later this month, as it awaits the innovation minister’s decision to allow the transfer of Freedom to Videotron, which is required for the deal to close.
Rogers said, when it comes to money, it can stomach delays in the process. The company’s executives said it has about $19 billion available, enough money to close the deal till the end of the year.
When asked about its ability to compete against Videotron — and with commitments to lower prices from a new competitor — Staffieri said it isn’t anything the company hasn’t seen before. “We have thrived in a competitive landscape in the past, including in 2022. We’ve entered into transactions that will allow the buyer of Freedom…and we’re confident we have what we need to be able to compete in a four-player market just as we’ve done in the past.
When asked about rumblings about the CRTC looking at wholesale pricing regime and talk of strategies to lower broadband prices, Staffieri said competition in the market is bringing those prices down.
“We feel good about the market dynamics and what the value add the industry and Rogers are bringing to customers,” he said. “I continue to highlight against the backdrop of increasing inflation in a number of parts of the sector and consumer goods, our industry and Rogers continues to reduce pricing.
“And that’s owing to the competitive intensity that’s out there.”
