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.

Just Posted

Second transmission line cancelled for West Kelowna

BC Hydro now planning to just make upgrades to existing power line

Mike Field Quintet playing in Revelstoke this Friday

The band is known for their bright and energetic music

Going by electric car: Revelstoke adventurer does 100 summits without fossil fuels

Documentary Electric Greg showing in Revelstoke Nov. 30

Revelstoke City Council considering giving themselves a raise

The proposal right now is an increase to $25,000 for councillors and $70,000 for the mayor

VIDEO: Canadian allergists’ group wants Benadryl behind the counter due to side effects

Some doctors say the medication is over-used because of its easy availability

Sex assault charge stayed against Port Moody mayor

Rob Vagramov completed an alternative measures program, special prosecutor said

Campaign lights up support for North Okanagan healthcare

The goal is to raise $275,000 towards urgently needed equipment at the hospital

Costco relocation will create congestion on Kelowna roadways: resident

At least one Kelowna resident is unhappy with the proposed relocation of Costco within the city

“I thought, enough is enough”: B.C. teen takes on bullies through social media

‘I thought, enough is enough. I wanted to try something to stop it.’

World’s largest Indigenous tourism conference hits Kelowna

The Syilx, Nlakápamux and Secwépemc Nations are hosting the 2019 IITC

Audit finds Canada’s fisheries in decline and response lacks urgency

Report says 17 per cent of fish stocks are critically depleted, up from 13.4 per cent in 2018

Small group of Cherry fans protest his firing at Rogers HQ

One sign at the Toronto rally: ‘Rogers cancels Don, we cancel Rogers’

Most Read