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Rogers faces increased wireless competition from Bell, Telus and new players(Canadian Press DataFile Via Acquire Media NewsEdge) By LuAnn LaSalle MONTREAL _ Rogers Communications Inc. (TSX:RCI.B) faced tougher cellphone competition from players big and small alike as the country's largest wireless carrier saw its second-quarter profit drop by nine per cent. "We're selling and competing in an increasingly competitive market," Rob Bruce, president of Rogers' wireless division, said Tuesday. Rogers said it was hit on a number of fronts in the cellphone market after reporting its net income slipped to $410 million, or 75 cents a share, down from $452 million or 77 cents a share a year ago. "We delivered the results today against a backdrop of fairly intense competition with our incumbent friends Bell and Telus, particularly in the business space with aggressive pricing and promotions," Bruce told reporters on a conference call. Bruce noted that Rogers' discount talk-and-text brand Chatr and Fido phone services faced continued pricing pressure from Telus' discount brand Kodoo and Bell's Solo and Virgin brands. Rogers also felt pressure in the "$15 unlimited space," Bruce said. New player Public mobile offers a $15 monthly unlimited talk plan. Chief executive Nadir Mohamed also said quarter's results reflect the "continued impact" of increased wireless competition. The emergence of new wireless players such as Globalive and Mobilicity _ along with increased competition between Rogers, Bell (TSX:BCE) and Telus (TSX:T) _ has helped to lower prices and send customers in search of the best deals. Despite the lower profits, earnings were still slightly above analyst expectations and the company generated three per cent growth in revenues. However, investors reacted by selling off the Toronto-based telecom giant's shares by 3.7 per cent, or $1.41, to $36.41 on the TSX. Toronto-based Rogers is Canada's largest cable TV operator, a major magazine publisher, TV and radio broadcaster and owner of the Toronto Blue Jays. In its financial report, Rogers noted that revenue rose three per cent to $3.12 billion from just over $3 billion last year. Meanwhile, earnings per share were four cents ahead of what analysts polled by Thomson Reuters had expected on an adjusted basis. An important area of new growth for Rogers will data applications on machines, appliances and vehicles, Bruce said. Rogers recently won a six-year contract with Hydro-Quebec to provide the public utility with wireless connectivity for its new "smart" meter program. It will provide wireless connections between Hydro-Quebec's central system and data from 3.8 million smart meters that will pass through 600 collectors. The technology also can be embedded in parking meters to read credit cards and in trains and transport trucks to keep track of freight and to maintain temperatures for perishable cargo, Bruce added. "We've got north of 500,000 of this assortment of devices on the network and we think that over time that many, many more things are going to become more connected." Also in the quarter, Rogers said its wireless division added 135,00 net wireless subscribers compared with 119,000 in the same quarter last year. More than 591,000 of its customers either activated or upgraded their iPhone, BlackBerry or Android smartphones in the quarter, compared with 385,000 in the same quarter in 2010. Rogers noted it's attracting and maintaining these "high value" customers who are generally on three-year contracts and known for using revenue-generating data services like email, streaming video and listening to music. Desjardins Financial analyst Maher Yaghi said the net postpaid subscriber additions of 108,000 were higher than his estimate of 65,000 and analysts' consensus estimate of 83,000, calling it positive given Rogers' recent "lacklustre" subscriber trends. "In terms of the overall industry, we believe Rogers garnered its fair share of postpaid net additions in the quarter compared with lower additions than peers in recent quarters," Yaghi wrote in a research note. But the wireless division continues to be a "drag" on Rogers' financial results, he said. Yaghi also said revenue from core cable operations grew five per cent year-over-year to $832 million versus his estimate of $812 million. Basic cable net losses were 9,000 compared with his estimate of 5,000 additions and high-speed Interest customer additions were 11,000, beating his estimate by 1,000, Yaghi said. (c) 2011 The Canadian Press |