Rogers Communications Inc. beat analysts’ estimates for revenue and profit as Canada’s strong population growth gave another boost to its wireless division. The shares rose as much as 3.4% in Toronto.
(Bloomberg) — Rogers Communications Inc. beat analysts’ estimates for revenue and profit as Canada’s strong population growth gave another boost to its wireless division. The shares rose as much as 3.4% in Toronto.
The country’s largest wireless provider earned C$1.09 a share on an adjusted basis in the first quarter, better than Wall Street and Bay Street forecasts for 95 Canadian cents.
The company added 95,000 postpaid wireless subscribers during the quarter, about 44% more than during the year-earlier period. Rogers said it also enjoyed growth in roaming revenue, as Covid-19 was less of a barrier to Canadians’ travel plans this year.
The numbers don’t include any benefit from Rogers’ deal for Shaw Communications Inc., which closed earlier this month.
Revenue in Rogers’ cable division fell 2%. Chief Executive Officer Tony Staffieri said the company intends to turn that around. “Every one of our businesses needs and will be a growth business,” Staffieri told analysts Wednesday. “Within cable, that really comes from regaining market share.”
Shaw Savings
Rogers is in the early stages of absorbing Shaw, a cable TV and internet provider that it bought for about C$20 billion ($14.7 billion) in one of the largest-ever acquisitions of a Canadian company.
The contentious deal took two years to complete, and the companies were forced to sell most of Shaw’s wireless business for less than C$3 billion to beat back an antitrust case. They finally won approval from the Canadian government in March, with a number of conditions attached on jobs and network investment.
Read more: Canada’s Population Grows by Over 1 Million for First Time
Since the transaction closed April 3, Staffieri and his management team have been busy. They’ve announced a deal to take over BAI Communications’ Canadian unit, which holds the rights to provide wireless service in Toronto’s subway, with a promise to upgrade it.
The CEO also made management changes, appointing former Shaw executive Zoran Stakic as chief transformation officer and hiring Navdeep Bains, a former cabinet minister in Prime Minister Justin Trudeau’s government, as chief corporate affairs officer.
But Staffieri faces pressure to spend on networks and customer service while also pruning costs, in order to cut down the huge debt Rogers added to acquire Shaw. Moody’s Investors Service, S&P Global Ratings and Fitch have all placed the firm at their lowest investment grade rating.
S&P said the decision to finance the Shaw deal almost entirely with borrowed money “represents a significant departure from more conservative financial policies that had supported our ratings on the company.” But Staffieri said in an interview with Bloomberg News earlier this month that he sees no need for Rogers to sell assets, and it will be able to cut its leverage ratio quickly and grow its cash flow.
The company didn’t make any changes to the financial guidance it released on March 31. Company executives said they’re sticking to the target of finding C$1 billion in synergies from the Shaw merger, to come through through a combination of job cuts and savings on media content and other expenses.
(Updates with shares, comments from conference call)
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