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Canada's largest integrated telecom operator Rogers Communications (RCI) reported mixed earnings Thursday for the second quarter of 2017. The Bottom line beat consensus estimates but revenue missed. Rogers has been a favorite among Technology and Telco investors as it was the first wireless operator in Canada to offer Internet of Things (IoT) as a service to business enterprises.

Earnings: For Q217 net income was $394.53 million compared with $292.74 million in the year-ago quarter. Adjusted earnings per share of 74 cents were above consensus estimate of 71 cents. Revenue was $2,670 million below the consensus estimate of $2,762.8 million. Quarterly adjusted operating profit margin was 39.3% versus 39.0% from the year-ago quarter.

Reaction: Rogers Communications Inc. Class B NYSE: RCI Lunchtime 51.63USD +0.82 (+1.61%)

Segments Results

The company operates in the following segments: Wireless, Cable, Business Solutions, and Media.

Wireless: 

This segment includes wireless telecommunications operations for Canadian consumers and businesses 

  • Quarterly total revenue  $1,521.66 million, up 6% year over year.
  • Service revenues totaled $1,430.28 million, up 8% from the year-ago quarter.
  • Equipment sales were $91.39 million, down 14% year over year.
  • Quarterly adjusted operating profit for the segment was $686.53 million, up 9% year over year.
  • Adjusted operating profit margin was 48.0% compared with 47.3% in the year-earlier quarter.
  • Quarterly blended ARPU (average revenue per user) was $62.13, compared with $60.18 in the year-ago quarter.
  • As of Jun 30, the prepaid subscriber base totaled 1.689 million, with a gain of 77,000 subscribers from the year-ago quarter.
  • Monthly churn rate was 3.96% compared with 3.57% in the prior-year quarter.
  • At June 30, the postpaid wireless subscriber base totaled 8.710 million. In the second quarter, the company added 93,000 postpaid wireless subscribers. Quarterly postpaid ARPA (average revenue per account) was around $124.31 compared with $116.06 in the year-ago quarter.
  • The monthly churn rate was 1.05% versus 1.14% in the prior-year quarter.

Media End-to-End Incident Management, Farm & Food Monitoring and Level Monitoring are the three IoT services that the wireless carrier currently offers. and Liquidity

Cable:
 
This segment includes cable telecommunications operations, including Internet, television and telephony (phone) for Canadian consumers and businesses.
  • Quarterly total revenue came in at $646.41 million, flat year over year.
  • Service revenues totaled $645.67 million, flat year over year.
  • Internet revenues were $298.69 million, up 7% year over year.
  • Television (Video) revenues were $280.11 million, down 4% year over year.
  • Telephony revenues totaled $66.87 million, down 9% year over year.
  • Equipment sales were $1.51 million, flat year over year.
  • Quarterly adjusted operating profit for the segment was $318 million, up 3% year over year.
  • Adjusted operating margin was 49.2% compared with 47.7% in the year-ago quarter.
  • As of Jun 30, the high-speed Internet subscriber count was 2.186 million.
  • Rogers Communications added 11,000 high-speed Internet customers in the quarter.
  • Video subscriber base totaled 1.771 million, after a loss of 25,000 users. T
  • Telephony subscriber count was 1.098 million. The company lost 2,000 telephony subscribers in the reported quarter.

Media

This segment includes a diversified portfolio of media properties, including television and radio broadcasting, specialty channels, digital media, multi-platform shopping, publishing, and sports media and entertainment.

  • Quarterly total revenue came in at $473.29 million, up 4% year over year.
  • Quarterly operating expenses rose 9% year over year to $426.48 million.
  • Adjusted operating profit margin came in at 9.9% versus 14.6% with the year-ago quarter.

Business Solutions

This segment includes network connectivity through its fibre network and data centre assets to support a range of voice, data, networking, hosting and cloud-based services for small, medium and large Canadian businesses, governments, and on a wholesale basis to other telecommunications providers.

  • Quarterly total revenue came in at $71.33 million, down 1% year over year. Of the total, next-generation revenues were $58.69 million, up 1%. Legacy revenues were $11.14 million, down 12%.
  • Service revenues were $69.84 million, down 1%.
  • Equipment revenues were $1.49 million, flat year over year.
  • Quarterly adjusted operating profit was $23.78 million, up 3% year over year.
  • Adjusted operating margin was 33.3% compared with 32.0% in the year-ago quarter.

Cash Flow 

In Q217 Rogers Communications generated $611.49 million of cash from operations compared with $832.90 million at the end of Jun 2016. Free cash flow was $465.12 million compared with $367.79 million in the year-ago quarter.

Total outstanding long-term debt was approximately $11,454.83 million compared with $11,807.76 million at the end of Dec 2016.

Source: Rogers

Rogers Communications Press Release

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