Rogers Profit Meets Estimates as Customer Additions Miss

Rogers Communications Inc. (RCI/B), Canadas largest wireless carrier by subscribers, met analysts profit and sales estimates as the company initiated a turnaround plan to try to return to growth.

Second-quarter earnings fell to 84 Canadian cents a share, excluding some items, matching the average of analyst estimates. Revenue was little changed at C$3.21 billion, the Toronto-based company said today in a statement. Analysts had projected C$3.21 billion ($3 billion), according to the average of estimates compiled by Bloomberg.

Chief Executive Officer Guy Laurence, who took over in December, announced an effort two months ago to create long-term value by cutting costs and improving service in the face of mounting customer dissatisfaction. For now, he has said hes more focused on boosting revenue than reversing the trend of trailing subscriber growth. The wireless operator is also confronting the threat of new competition as Quebecor Inc. aims to become the fourth national carrier.

The CEO is still fairly new and weve seen some restructuring and new strategies, but itll likely take some time before we see any real changes there, Troy Crandall, a Montreal-based analyst at MacDougall, MacDougall & MacTier Inc., said in an interview before the earnings statement.

The restructuring plan, including cuts to management positions, is expected to be completed by September, Laurence said on a conference call with reporters.

Rogers signed up fewer long-term customers as Laurence shunned discount promotions. Still, the company made more money from each user, on average, than analysts projected.

Rogers added 38,000 wireless contract customers in the second quarter, compared with the 43,000 estimated by seven analysts surveyed by Bloomberg. Average revenue per contract customer was C$66.40 a month, compared with the C$64.93 expected by analysts.

Rogers decision not to pursue aggressive wireless promotions since the start of 2014 is clearly having an impact, Dvai Ghose, a Toronto-based analyst with Canaccord Genuity Group Inc., wrote today in a note to clients. All in all we see some signs of progress.

The bulk of revenue growth per customer came from users jumping to bigger data plans, said Anthony Staffieri, the companys chief financial officer.

Pricing had a smaller impact, and its really the migration to higher buckets thats driving the improvements youre seeing there, he said on a separate conference call with analysts.

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Rogers Profit Meets Estimates as Customer Additions Miss