Rogers slashes revenue outlook on quick adoption of unlimited wireless plans

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

Rogers slashes revenue outlook on quick adoption of unlimited wireless plans

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

Nuxalk Public Health Nurse Sophie Mack is all smiles as she vaccinates her dad, hereditary chief James Mack Sr., with his first dose of the Moderna vaccine (photo submitted)
Cases drop as vaccine continues to roll out in Bella Coola

Seniors at Mountain View Lodge, Nuxalk elders, hospital staff and long-term care residents have all started to receive their vaccines so far

Interior Health has declared the Cariboo Chilcotin a community cluster. (Angie Mindus photo)
Interior Health declares Cariboo Chilcotin region a COVID-19 cluster, 215 cases since Jan. 1

Most cases are related to transmission at social events and gatherings in Williams Lake

A vial of the Moderna COVID-19 vaccine is displayed on Jan. 5, in Salt Lake City, Utah. (Rick Bowmer/AP)
Power outage spoils COVID-19 vaccine at Tl’etinqox

Temperature-sensitive vaccine no longer viable after Jan. 18 event

Nuxalk elder Caroline Mack, 85, receives her first dose of the Moderna vaccine on Jan. 19, at the Nuxalk Hall. (Caitlin Thompson photo)
First vaccines roll out for Nuxalk elders, hospital staff and long-term care residents

The Moderna vaccine arrived in Bella Coola on Sunday, Jan. 17

Toronto Public Health nurse Lalaine Agarin sets up for mass vaccination clinic in Toronto, Jan. 17, 2021. B.C. is set to to begin its large-scale immunization program for the general public starting in April. THE CANADIAN PRESS/Frank Gunn
B.C.’s COVID-19 mass vaccinations expected to start in April

Clinics to immunize four million people by September

Chief Public Health Officer Theresa Tam speaks during a daily briefing in Ottawa. (THE CANADIAN PRESS/Adrian Wyld)
31 cases of COVID-19 variants detected in Canada: Health officials

Dr. Theresa Tam made announces 13 more variant COVID-19 cases in Canada

An Atlantic salmon is seen during a Department of Fisheries and Oceans fish health audit at the Okisollo fish farm near Campbell River, B.C. in 2018. The First Nations Leadership Council says an attempt by industry to overturn the phasing out of salmon farms in the Discovery Islands in contrary to their inherent Title and Rights. (THE CANADIAN PRESS /Jonathan Hayward photo)
First Nations Leadership Council denounces attempt to overturn salmon farm ban

B.C.’s producers filed for a judicial review of the Discovery Islands decision Jan. 18

Daily COVID-19 cases reported to each B.C. health region, to Jan. 20, 2021. Island Health in blue, Northern Health green, Interior Health orange, Vancouver Coastal in red and Fraser Health in purple. (B.C. Centre for Disease Control)
B.C.’s COVID-19 infection rate stays stable with 508 cases Friday

Vaccine delivered to more than 110,000 high-risk people

More than 100 B.C. fishermen, fleet leaders, First Nations leaders and other salmon stakeholders are holding a virtual conference Jan. 21-22 to discuss a broad-range of issues threatening the commercial salmon fishery. (Black Press file photo)
B.C. commercial salmon fishermen discuss cures for an industry on the brink

Two-day virtual conference will produce key reccomendations for DFO

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

The District of Saanich’s communications team decided to take part in a viral trend on Thursday and photoshopped U.S. Senator Bernie Sanders into a staff meeting photo. (District of Saanich/Twitter)
Bernie Sanders makes guest appearance municipal staff meeting in B.C.

Vancouver Island firefighters jump on viral trend of photoshopped U.S. senator

School District 57 headquarters in Prince George. (Mark Nielsen, Local Journalism Initiative Reporter)
Prince George school district settles with sexual abuse victim

Terms were part of an out-of-court settlement reached with Michael Bruneau, nearly four years after he filed a lawsuit

Surrey provincial court. (File photo: Tom Zytaruk)
New COVID-19 protocols set for provincial courthouses

The new rules were issued on Jan. 21, and took effect immediately

Most Read