Rogers slashes revenue outlook on quick adoption of unlimited wireless plans

Rogers earned $622 million or $1.19 per diluted share for the quarter

Rogers slashes revenue outlook on quick adoption of unlimited wireless plans

Enthusiasm for wireless data plans that don’t charge overage fees has forced Rogers Communications Inc. to slash its revenue expectations for this year.

Senior executives told analysts Wednesday that they were positively surprised that about one million customers have switched to its unlimited wireless data plans, but acknowledged that has meant less revenue from overage fees generated when consumers surpass the monthly limits.

Rogers said it now expects that 2019 full-year revenue may fall by up to one per cent compared with 2018 and the high end of its expectations is now only one per cent revenue growth.

It had estimated in January, several months before the switch to unlimited data plans at Rogers Wireless, that 2019 revenue growth would be between three and five per cent.

Chief executive Joe Natale said Rogers did an analysis before making the wireless plan change, but was surprised by how quickly consumers gravitated to the new unlimited data offerings.

“That ended up being three times the rate that we had anticipated, which I think is a good thing,” Natale said.

He said the switch to unlimited wireless data plans, which began in late June, was the beginning of a “critical and necessary shift” that has three long-term advantages: higher consumer data usage, increased customer satisfaction and lower costs to acquire and retain customers.

“Overage is a big pain point for customers. Rather than continue to perpetuate that complexity, which drives all sorts of … costs in our organization, we said ‘Let’s bite the bullet. Let’s create a very simple construct. And let’s get to the simplicity dividend as quickly as we can.’ “

He said it would have been preferable to know how quickly consumers would make the switch, but otherwise the change has been in line with expectations.

About 60 per cent of switched customers have upgraded to a higher-priced plan and 40 per cent opted for a less expensive one. Also, there were 13 per cent fewer calls for customer support during the quarter and the calls took a shorter average time for customers on the unlimited plans, he said.

Rogers reported net profit for the quarter ended Sept. 30 of $593 million or $1.14 per diluted share on $3.75 billion in revenue, compared with $594 million or $1.15 per diluted share on nearly $3.77 billion in revenue last year.

On an adjusted basis, Rogers earned $622 million or $1.19 per diluted share for the quarter, down from an adjusted profit of $625 million or $1.21 a year ago.

Analysts had estimated $1.31 per share of adjusted earnings with $3.87 billion of revenue, according to financial data firm Refinitiv.

Rogers was the first of Canada’s national wireless companies to adopt fixed monthly prices for its wireless data plans, but the move has been more or less matched by Bell and Telus. Freedom Mobile — which competes against the three national carriers in Ontario, Alberta and British Columbia — already had similar plans.

Besides its wireless business, Rogers has one of the country’s largest residential internet and cable TV services and a media business that includes radio, TV and digital outlets as well as the Toronto Blue Jays baseball team.

Third-quarter revenue from the wireless business was up one per cent from a year ago to $2.24 billion, cable revenue including internet was up one per cent to $997 million and media revenue was down three per cent to $591 million.

In its outlook, guidance for adjusted earnings before interest, taxes, depreciation and amortization was lowered to growth of three to five per cent compared with earlier expectations for growth of seven to nine per cent. Adjusted EBITDA in the third quarter was up nine per cent.

Rogers also cut its plan for capital spending this year to between $2.75 billion and $2.85 billion from between $2.85 billion and $3.05 billion.

Rogers class B shares fell below their previous 52-week low of $63.23 on Wednesday. The stock was down $4.87 at $61.52 in afternoon trading, a decline of about 7.3 per cent from the previous close.

Shares of Bell Canada’s parent, BCE Inc., were down about 2.7 per cent at $62.21 and Telus shares were down two per cent at $45.85. Shares of Shaw Communications, parent of Freedom Mobile, were down almost one per cent at $25.16.

David Paddon, The Canadian Press

Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

A vial of some of the first 500,000 of the two million AstraZeneca COVID-19 vaccine doses that Canada secured. THE CANADIAN PRESS/Carlos Osorio
Alberta joins Ontario in lowering minimum age for AstraZeneca vaccine

More than 700,000 doses of AstraZeneca have been administered in this country

Asymptomatic testing will now be available for "priority groups" who are most likely to spread the COVID-19 virus to vulnerable or at-risk populations. File photo by THE CANADIAN PRESS
Alberta identifies 1,516 new COVID-19 cases on Sunday

Central zone has 1,849 active cases

A damaged unicorn statue is shown in a field outside of Delia, Alta. in this undated handout photo. It’s not often police can report that a unicorn has been found, but it was the truth Saturday when RCMP said a stolen, stainless-steel statue of the mythical beast had been located in a field not far from where he’d been taken. THE CANADIAN PRESS/HO, RCMP *MANDATORY CREDIT*
Mounties get their unicorn; stolen statue of mythical beast found in Alberta field

Police are still looking for suspects, and have called in their forensics experts to help

There were six additional deaths across Alberta reported over the past 24 hours, bringing the death toll to 1,926 since the beginning of the pandemic. (File photo)
Conservative leader Erin O’Toole holds a press conference on Parliament Hill in Ottawa on Tuesday, April 6, 2020. Top Tory leaders of past and present will speak with supporters today about what a conservative economic recovery from COVID-19 could look like. THE CANADIAN PRESS/Sean Kilpatrick
O’Toole to vote against Conservative MP’s private bill on ‘sex-selective abortion’

Erin O’Toole said he supports a woman’s right to choose and will personally vote against the private member’s bill

People are shown at a COVID-19 vaccination site in Montreal, Sunday, April 18, 2021, as the COVID-19 pandemic continues in Canada and around the world. THE CANADIAN PRESS/Graham Hughes
Nothing stopping provinces from offering AstraZeneca vaccine to all adults: Hajdu

Health Canada has licensed the AstraZeneca shot for use in people over the age of 18

Deputy Prime Minister and Minister of Finance Chrystia Freeland responds to a question during Question Period in the House of Commons Tuesday December 8, 2020 in Ottawa. The stage is set for arguably the most important federal budget in recent memory, as the Liberal government prepares to unveil its plan for Canada’s post-pandemic recovery even as a third wave of COVID-19 rages across the country. THE CANADIAN PRESS/Adrian Wyld
Election reticence expected to temper political battle over federal budget

Opposition parties have laid out their own demands in the weeks leading up to the budget

Each spring, the Okanagan Fest-of-Ale is held in Penticton. This year, as a result of the COVID-19 pandemic, the festival will not be held. However, beer is still available. How much do you know about this beverage? (pxfuel.com)
QUIZ: How much do you really know about beer?

Put your knowledge to the test with this short quiz

Pall Bearers carrying the coffin of the Duke of Edinburgh, followed by the Prince of Wales, left and Princess Anne, right, into St George’s Chapel for his funeral, at Windsor Castle, in Windsor, England, Saturday April 17, 2021. (Danny Lawson/Pool via AP)
Trudeau announces $200K donation to Duke of Edinburgh award as Prince Philip laid to rest

A tribute to the late prince’s ‘remarkable life and his selfless service,’ the Prime Minister said Saturday

A vial of some of the first 500,000 AstraZeneca COVID-19 vaccine doses that Canada secured. THE CANADIAN PRESS/Carlos Osorio
Canada’s 2nd blood clot confirmed in Alberta after AstraZeneca vaccine

The male patient, who is in his 60s, is said to be recovering

The funeral of Britain’s Prince Philip in Windsor, England, on Saturday, April 17, 2021. Philip died April 9 at the age of 99. (Kirsty Wigglesworth/AP)
PHOTOS: Prince Philip laid to rest Saturday as sombre queen sits alone

The entire royal procession and funeral took place out of public view within the grounds of Windsor Castle

Prime Minister Justin Trudeau looks on as Deputy Prime Minister and Finance Minister Chrystia Freeland responds to a question during a news conference on Parliament Hill in Ottawa, Tuesday, Aug. 18, 2020. THE CANADIAN PRESS/Adrian Wyld
Expectations high as Trudeau Liberals get ready to unveil first pandemic budget

The Liberals will look to thread an economic needle with Monday’s budget

Most Read