Rogers misses Q4 estimates; new CEO wants to improve results
The Rogers Communications headquarters in Toronto. (Aaron Vincent Elkaim / THE CANADIAN PRESS)
LuAnn LaSalle , The Canadian Press
Published Wednesday, February 12, 2014 7:48AM EST
Last Updated Wednesday, February 12, 2014 12:18PM EST
The new CEO of Rogers Communications says he's not satisfied with the company's fourth-quarter results after its profit and revenue were lowered by cheaper cellphone roaming rates and monthly data-sharing plans.
Guy Laurence, who took over from former chief executive Nadir Mohamed last month, said Wednesday that Rogers' growth has slipped compared to its peers, referring to Bell (TSX:BCE) and Telus (TSX:T).
Laurence said he expects to deliver his strategy for the Toronto-based telecommunications and media company in May, noting the industry faces moderating growth and regulatory uncertainty.
"With respect to the results of Q4 and certain of the trends, while there are areas of strength overall, they're not satisfactory to me and over time I expect to do better," Laurence told analysts on his first conference call.
"Our margins, cash flows and return on assets are strong, but we slipped in terms of our growth rates relative to our peers and we need to execute in even a more methodical and disciplined manner as we go forward."
He pledged to improve customer service, which some analysts have noted needs work.
"We have opportunities to put our customers needs more front and centre in everything we do to deliver a better, more consistent experience," Laurence said.
The company also announced two initiatives that are geared to its shareholders -- a five per cent increase in its dividend and renewed share buyback program.
Canaccord Genuity analyst Dvai Ghose said he and other analysts had expected a 10 per cent hike in Rogers' dividend.
"While BCE and Telus appear to be trading at a discernible premium to RCI (Rogers), these results, 2014 guidance and the disappointing dividend hike clearly suggest that RCI should trade at a discount," Ghose said in a research note.
Ghose noted that BCE announced a dividend increase of six per cent last week.
Rogers stock was down five per cent, or $2.28, to $43.41 in late morning trading on the Toronto Stock Exchange.
Lawrence said the main difference between Rogers and U.K.-based Vodafone, where he was chief executive, is the value the company provides with content.
Rogers owns TV stations, such as City TV, 56 radio stations and magazines including Flare and Chatelaine. It also owns the Blue Jays baseball team and won a 12-year deal with the NHL to secure broadcast and multimedia rights on all platforms beginning in 2015.
Rogers reported $357 million or 69 cents per share of adjusted earnings for the three months ended Dec. 31 -- below analyst estimates of 75 cents per share.
The quarter's revenue also missed expectations falling one per cent from a year earlier to $3.24 billion and below estimates of $3.3 billion.
Rob Bruce, head of Rogers' communications division that includes wireless, said the move to reduce cellphone roaming rates has been significant.
Roaming rates charges for travel in Canada and the U.S. are under review by the Canadian Radio-television and Telecommunications Commission, which is considering regulations as a result of consumer complaints about the high costs.
Rogers said its simplified data sharing plans also had an impact. Rogers, as well as Bell and Telus, introduced sharing plans last summer that allow mobile phone and tablet users in a household to share one data package with a set amount of monthly data.
In its wireless division, Rogers added 34,000 net postpaid customers, who generally have lucrative smartphone contracts. That compares with net additions of 58,000 in the same quarter last year.
By comparison, BCE added 119,520 net postpaid customers in its fourth quarter.
Rogers said it cut its net loss of cable TV subscribers to 25,000 in the quarter, down from a loss of 28,000 year-over-year. Total cable subscribers as of Dec. 31 were 2.1 million compared with 2.2 million year-over-year.
The company added 13,000 net Internet customers versus 22,000 year-over-year. Total Internet subscribers were at 1.9 million compared with 1.8 million year-over-year.
In its financial results, Rogers net income before adjustments fell to $320 million or 62 cents per share from $522 million or $1.01 per shares in the fourth quarter of 2012.
The increased dividend will rise to 45.75 cents per share per quarter, or $1.83 per share on an annualized basis -- up from the previous rate of $1.74 per year.
The share buyback will give Rogers the opportunity, but not the obligation, to repurchase and cancel shares.