TORONTO — Rogers Communications today was the first Canadian telecom company to release quarterly results which at least partly reflect the effects of the coronavirus pandemic and lockdown, which of course has taken a toll.
However, the company used the release of its results, as well as the conference call with financial analysts, its long-planned (and of course, virtual), annual general meeting, as well as an open letter to customers and shareholders to remind everyone that meeting the usual financial metrics are taking a back seat to what the company and industry are doing to help Canadians through the Covid-19 crisis.
“During this critical time, we are focused on keeping our teams and customers safe, and Canadians connected to what matters most in their lives. We began to see the impact of Covid-19 in the final few weeks of Q1 and have quickly adapted our operations to continue delivering critical services to meet the evolving needs of our customers,” said Joe Natale, president and CEO. “Our strong balance sheet positions us well to manage through this crisis. Our networks are seeing unprecedented levels of activity and demand. They continue to provide a resilient foundation for our customers now, and into the future, as our nation recovers and rebuilds.”
With traffic up more than 50% on its network as more people are now working from home – including 7,000 of its own customer care representatives – Rogers has continued to add capacity and manage traffic where needed to ensure customers stay connected during the Covid-19 pandemic. “To put that in context, we have seen as much growth in a few weeks as we would normally see over two years,” said Natale to the analysts about the spike in its wired network traffic. Traffic on the company’s wireless net is “flat to slightly down,” added CFO Tony Staffieri on the conference call.
Other steps Rogers has taken during the quarter to mitigate the impact Covid-19 is having on its customers include suspending international roaming and national long-distance fees for its phone subscribers and waiving overage fees for home Internet customers. It has also switched to 100% self-installs when it comes to broadband and TV customers, where Rogers reps use video conferencing to guide customers through their setups in home.
“I want to thank all the essential frontline workers supporting us everyday, with a special heartfelt thanks to health care teams and first responders, who are working tirelessly to keep us healthy and safe,” Natale added in his AGM address to shareholders. “We have invested for six decades to make sure we could be ready for unforeseen moments like this… and we want our customers, employees, government partners, communities and fellow Canadians to know that we are here for them, and we are proud of the world-class capability and reliability our networks are delivering to them.”
“We’ve implemented premium pay for our colleagues who are delivering critical and direct services to the public through this time.” – Joe Natale, Rogers
Rogers employees who still must report to work, like technicians still in the field fixing things and wireless retail staffers who are still working to provide emergency connectivity where needed, “in recognition of these roles, we’ve implemented premium pay for our colleagues who are delivering critical and direct services to the public through this time. We thank them for their dedication and commitment to our customers and to each other,” said Natale in his shareholder address.
As a result of retail locations being closed and reduced promotional activity to discourage customer trips to stores, Rogers has seen lower growth in postpaid wireless subscribers for the quarter. Postpaid gross additions were 257,000 for Q1 2020, compared to 295,000 for the same quarter of 2019. The result was a net loss of 6,000 postpaid wireless subscribers for the first quarter, compared to a postpaid net addition of 23,000 in Q1 2019. Monthly postpaid churn was 0.93% for Q1 2020, compared to 0.99% in Q1 2019.
On the cable side, Rogers had 17,000 net additions to its Internet subscriber numbers in the first quarter of 2020, compared to 14,000 Internet net additions in Q1 2019. In addition, its Ignite TV service had 91,000 net additions this quarter, which is almost double its 47,000 net additions in the same 2019 time frame.
Rogers Media’s financial results for the quarter reflected the suspension of all live professional sports broadcasting due to the Covid-19 pandemic. Media revenue decreased by 12% to $412 million primarily as a result of lower advertising and sports revenue, including at the Toronto Blue Jays franchise. However, since the media division no longer is paying rights fees for NHL and NBA games (and other things) not being played, nor the salaries of its baseball players, the Media division’s expenses dropped by 10% to $497 million in the quarter, so it’s loss expanded by just 1% to $85 million.
Overall, Rogers total revenue decreased by 5% to $3.4 billion in the first quarter of 2020, largely driven by a 17% decrease in wireless equipment revenue, as a result of lower subscriber activity surrounding the pandemic, and a 3% decrease in total service revenue. The service revenue decrease was a result of a 2% decrease in wireless service revenue and the 12% decrease in media revenue.
“The wireless service revenue decrease was primarily a result of lower roaming revenue, with lower overall roaming activity and as we provided these services to our customers at no cost during the Covid-19 pandemic, and lower overage revenue, primarily as a result of the continued adoption of our Rogers Infinite unlimited data plans,” reads the news release.
In terms of EBITDA (earnings before interest, taxes, depreciation and amortization), the company’s overall adjusted EBITDA was stable at $1.34 billion. Wireless adjusted EBITDA increased by 1%, cable adjusted EBITDA increased by 2%, but media adjusted EBITDA decreased by 1%.
Rogers’ overall net income was down 10% to $352 million in the first quarter of 2020, compared to $391 million net income in Q1 2019. Basic earnings per share were $0.70, compared to $0.76 in the same quarter of last year.
Free cash flow was $462 million in Q1 2020, up 14% from the same quarter of 2019, and Rogers ended the quarter with total available liquidity of $3.8 billion.
Given the uncertainty associated with the potential impact of Covid-19, Rogers announced it is withdrawing its 2020 financial guidance which was originally issued on January 22, adding “although we expect Covid-19 to adversely impact total service revenue and adjusted EBITDA in the short-term, strong free cash flow remains a priority for us this year.”
The full details of Rogers’ financial results for the first quarter of 2020, can be found here.
