Communications and media company Rogers Communications Inc. (RCI, RCI-A.TO, RCI-B.TO) Tuesday reported a decline in its third-quarter profit, reflecting various one-time items. On an adjusted basis, the Canadian company's net income rose from last year, driven by revenue growth mainly in its Wireless Network and Cable operations.
The company's third-quarter net income was C$485 million or C$0.79 per share, down 2% from C$495 million or C$0.78 per share last year.
On an adjusted basis, net income rose to C$505 million or C$0.82 per share from C$465 million or C$0.73 per share in the prior-year quarter. Adjusted results excluded, among other items, stock-based compensation expense of C$6 million as against a recovery of C$62 million last year.
On average, four analysts polled by Thomson Reuters expected the company to earn $0.53 per share in the quarter. Analysts' estimates typically exclude one-time items.
The company's quarterly revenue increased 2% to C$3.04 billion from C$2.98 billion in the previous year. Analysts projected revenues of $3.04 billion for the quarter.
Commenting on the third-quarter results, Nadir Mohamed, President and Chief Executive Officer of the company, stated, "Our third quarter results represent a healthy balance of growth, cost control and margin expansion, and double-digit increases in cash flow generation and cash returns to shareholders."
According to the company, it generated revenue growth at both Wireless network and Cable Operations, offset partially by lower wireless equipment sales and advertising sales declines at Media.
Wireless revenue totaled C$1.76 billion in the third quarter, an increase of 2% from C$1.73 billion last year. Wireless network revenue growth was fueled by postpaid net subscriber additions of 167,000 and wireless data revenue growth of 46%.
Data revenue, which now comprises 23% of the network revenue, was helped by the activation of more than 370,000 additional smartphone devices, predominantly iPhone, BlackBerry and Android devices. Subscribers with smartphones now represent approximately 28% of the overall postpaid subscriber base, up from 15% last year, and generate significantly higher than average ARPU. However, the growth in subscribers and data revenues was partially offset by economic pressures on roaming, long-distance and other usage based revenue items, the company noted.
Further, Rogers Communications stated that revenue from equipment sales declined year-over-year, reflecting large number of iPhones activated during that product's launch in the third quarter of 2008.
The company posted total Cable revenues of C$989 million, up 3% from C$961 million in the third quarter of fiscal 2008. Within Cable Operations, core Cable revenue was higher than the prior-year quarter, reflecting the continued increasing penetration of the company's digital cable product offerings. Additionally, the impact of certain price changes introduced to both analog and digital cable services during the previous twelve months contributed to the revenue growth.
The company also said that Internet revenues were up from last year, driven by 3% growth in the Internet subscriber base, combined with higher revenue resulting from Internet services price increases and incremental revenue from charges for additional usage for customers who exceed monthly gigabyte allowances associated with their respective plans.
Rogers Business Solutions posted third-quarter revenues of C$126 million, a decline of 4% from C$131 million a year ago. Lower revenues reflected a decline in the higher margin legacy data service business, with a shift in focus to leveraging on-net revenue opportunities utilizing Cable's existing network facilities, the company noted.
Rogers Retail operating revenue was C$97 million, down 10% from C$108 million a year ago. Additionally, the company's Media operations generated revenues of C$364 million, 6% lower than the last year's C$386 million. According to the company, the revenue decline mainly reflected lower revenue at Television, Radio and Publishing due to ongoing industry wide weakness in the advertising market and at The Shopping Channel. These decreases were partially offset by an increase in subscriber revenue at Sportsnet.
For the nine-month period, the company earned C$1.17 billion or C$1.86 per share, compared with C$1.14 billion or C$1.79 per share last year. Adjusted net income was C$1.17 billion or C$1.87 per share, higher than C$1.096 billion or C$1.72 per share in the prior-year period. Operating revenue rose to C$8.67 billion from C$8.39 billion in the previous year.
Among peers, BCE, Inc. (BCE) is set to announce its third-quarter results on November 12. Analysts forecast earnings of US$0.68 per share for the quarter on revenues of US$4.54 billion.
Another rival, Shaw Communications, Inc. (SJR) said on October 23 that its fourth-quarter net income slipped to C$124.00 million from C$132.38 million in the same quarter last year. On a per share basis, earnings dropped to C$0.29 from C$0.31 in the year-ago quarter. Consolidated service revenue was C$873 million, up from C$805.70 million in the year-earlier quarter.
RCI is trading at $28.33, up $1.16, on a volume of 123,615 shares.
RCI-A.TO is up C$1.10 and is trading at C$31.20, on a volume of 7,102 shares.
RCI-B.TO is trading at C$30.14, up C$1.24, on a volume of 1.97 million shares.
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