Rogers slashes revenue outlook on quick adoption of unlimited wireless plans

Rogers earned $622 million or $1.19 per diluted share for the quarter

Enthusiasm for wireless data plans that don’t charge overage fees has forced Rogers Communications Inc. to slash its revenue expectations for this year.

Senior executives told analysts Wednesday that they were positively surprised that about one million customers have switched to its unlimited wireless data plans, but acknowledged that has meant less revenue from overage fees generated when consumers surpass the monthly limits.

Rogers said it now expects that 2019 full-year revenue may fall by up to one per cent compared with 2018 and the high end of its expectations is now only one per cent revenue growth.

It had estimated in January, several months before the switch to unlimited data plans at Rogers Wireless, that 2019 revenue growth would be between three and five per cent.

Chief executive Joe Natale said Rogers did an analysis before making the wireless plan change, but was surprised by how quickly consumers gravitated to the new unlimited data offerings.

“That ended up being three times the rate that we had anticipated, which I think is a good thing,” Natale said.

He said the switch to unlimited wireless data plans, which began in late June, was the beginning of a “critical and necessary shift” that has three long-term advantages: higher consumer data usage, increased customer satisfaction and lower costs to acquire and retain customers.

“Overage is a big pain point for customers. Rather than continue to perpetuate that complexity, which drives all sorts of … costs in our organization, we said ‘Let’s bite the bullet. Let’s create a very simple construct. And let’s get to the simplicity dividend as quickly as we can.’ “

He said it would have been preferable to know how quickly consumers would make the switch, but otherwise the change has been in line with expectations.

About 60 per cent of switched customers have upgraded to a higher-priced plan and 40 per cent opted for a less expensive one. Also, there were 13 per cent fewer calls for customer support during the quarter and the calls took a shorter average time for customers on the unlimited plans, he said.

Rogers reported net profit for the quarter ended Sept. 30 of $593 million or $1.14 per diluted share on $3.75 billion in revenue, compared with $594 million or $1.15 per diluted share on nearly $3.77 billion in revenue last year.

On an adjusted basis, Rogers earned $622 million or $1.19 per diluted share for the quarter, down from an adjusted profit of $625 million or $1.21 a year ago.

Analysts had estimated $1.31 per share of adjusted earnings with $3.87 billion of revenue, according to financial data firm Refinitiv.

Rogers was the first of Canada’s national wireless companies to adopt fixed monthly prices for its wireless data plans, but the move has been more or less matched by Bell and Telus. Freedom Mobile — which competes against the three national carriers in Ontario, Alberta and British Columbia — already had similar plans.

Besides its wireless business, Rogers has one of the country’s largest residential internet and cable TV services and a media business that includes radio, TV and digital outlets as well as the Toronto Blue Jays baseball team.

Third-quarter revenue from the wireless business was up one per cent from a year ago to $2.24 billion, cable revenue including internet was up one per cent to $997 million and media revenue was down three per cent to $591 million.

In its outlook, guidance for adjusted earnings before interest, taxes, depreciation and amortization was lowered to growth of three to five per cent compared with earlier expectations for growth of seven to nine per cent. Adjusted EBITDA in the third quarter was up nine per cent.

Rogers also cut its plan for capital spending this year to between $2.75 billion and $2.85 billion from between $2.85 billion and $3.05 billion.

Rogers class B shares fell below their previous 52-week low of $63.23 on Wednesday. The stock was down $4.87 at $61.52 in afternoon trading, a decline of about 7.3 per cent from the previous close.

Shares of Bell Canada’s parent, BCE Inc., were down about 2.7 per cent at $62.21 and Telus shares were down two per cent at $45.85. Shares of Shaw Communications, parent of Freedom Mobile, were down almost one per cent at $25.16.

David Paddon, The Canadian Press

Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Social media a blessing and a curse during time of crisis: B.C. communication expert

‘In moments of crisis, fear is very real and palpable,’ says SFU’s Peter Chow-White

Interior Health officials outline pandemic response in virtual town hall

Kelowna-Lake County MLA Norm Letnick moderates digital discussion, Q&A with Interior Health leadership

B.C. COVID-19 contact restrictions working, Dr. Bonnie Henry says

’Not out of the woods yet’ as next two weeks are critical

Interior Health issues alert following confirmed COVID-19 case on WestJet flight

The public exposure alert comes following the March 21 WestJet flight from Calgary to Kamloops

Some big city shoppers heading to small towns to stock up

With the cupboard bare in many large centres, shoppers are flocking to places like Ashcroft

Evening world update: U.S. restrictions extended 30 days; NY deaths near 1,000

Comprehensive world update, with the latest developments in the COVID-19 crisis

‘It’s up to us: Recently-returned B.C. couple urges Canadians to take COVID-19 seriously

Garrett Kucher and Tory Apostoliuk make it home after almost a week of lockdown in Spain

‘Nothing concrete’: Tenants, landlords lack details after B.C. unveils COVID-19 rental aid

Single mom in Golden says she’s already going to the food bank after being laid off

Canada will make sure masks sent by China meet quality standards: Trudeau

Chinese Embassy tweeted that China was sending 30,000 medical masks along with gowns, gloves and goggles

B.C. issues guidelines about distancing, reusable bags to grocery stores amid COVID-19

Hand sanitizer and markers to keep lines two metres are apart are needed, province says

No plans to call in military right now to enforce COVID-19 quarantine: Trudeau

Trudeau unveils $7.5M for Kids Help Phone, $9M for vulnerable seniors amid COVID-19

QUIZ: How much do you know about the Olympics?

Put your knowledge to the test with these 12 questions

B.C. announces $3M for food banks to increase capacity during COVID-19

It is not clear how much of the money will flow towards Greater Victoria food banks

Most Read