Rogers reports 35% surge in profits in second quarter, beating analyst estimates

TORONTO – Rogers Communications reported a 35 per cent increase in second-quarter net income on Thursday, beating analyst estimates with an especially strong performance from its key wireless division.

It’s the first financial report issued by the Toronto-based telecommunications and media company (TSX:RCI.B) on Joe Natale’s watch since he became its CEO in April.

Natale is a former CEO of Telus (TSX:T), where he had a reputation of building customer satisfaction and reducing wireless subscriber turnover — factors that some analysts have said would be critical to his success.

He said his new team at Rogers has delivered strong results in its wireless division, but added there’s always room for improvement.

“The focus on customer experience and loyalty is one that requires the whole organization to play,” Natale said in a conference call.

“That takes time. That’s not something that’s going to happen overnight but it’s fundamentally important.”

For the wireless division, churn for contract subscribers improved to 1.05 per cent from 1.14 per cent a year earlier while average monthly post-paid revenue increased to $124.31 — up from $116.06.

Rogers also reported 93,000 net additions to contract wireless subscribers, above some analyst estimates.

During the call, one analyst asked whether Natale expected to divest any of the company’s non-core businesses.

“Right now, we’re happy with the mix of assets we have across the business,” Natale replied.

But he added that “we’re perpetually unhappy with our results in any part of our business. That’s sort of a state of mind.

“In the fullness of time, we’ll continue to look at some of our holdings and, if there are better ways of surfacing value, we’ll certainly consider them.”

Some analysts said they thought the Rogers media division, which includes the Toronto Blue Jays baseball team, the Sportsnet specialty cable channels as well as print, digital and broadcast operations performed well.

Several analysts also noted though that Rogers Cable had slightly weaker subscriber growth during the quarter than expected.

Overall net income was $531 million or $1.03 per share, while adjusted profit was $1 per share. That’s up from $394 million or 77 cents per share of net income and 83 cents per share of adjusted income in last year’s second quarter.

Analysts had estimated Rogers (TSX:RCI.B) would have 90 cents per share of net income, or 93 cents per share after adjustments, according to Thomson Reuters.

Revenue was $3.59 billion — up four per cent from last year’s second quarter and within analyst estimates.