Rogers Communications Inc. RCI-BT reported lower first-quarter profit and higher revenue as it works to pay down debt from its $20-billion takeover of Shaw Communications Inc.
The wireless giant had $256-million of net profit during the three-month period ended March 31, down 50 per cent from a year ago when it reported $511-million of profit.
Meanwhile, the company’s revenue increased 28 per cent year-over-year to $4.90-billion, up from $3.84-billion.
Rogers’s acquisition of Shaw, which closed on April 3 of last year, boosted revenue, while also resulting in higher financing costs and higher depreciation and amortization on assets acquired as part of the deal.
Rogers chief executive officer Tony Staffieri said the Toronto-based telecom has delivered on its goal of finding $1-billion of savings stemming from the deal a year ahead of schedule, and it is now focused on reducing its debt leverage ratio by selling off non- core assets.
Glenn Brandt, the company’s chief financial officer, said that process is taking longer than he had expected because the real estate market has been soft ahead of anticipated interest-rate cuts.
“We do anticipate completing sales in 2024,” Mr. Brandt said during a conference call to discuss the telecom’s results, later adding, “We are being diligent to ensure we maximize proceeds.”
Canadian telecom stocks have been under pressure lately owing to a combination of factors, including elevated interest rates, heightened competition and limited avenues for growth.
Shares of Rogers fell by 3.5 per cent to $52.21 on the Toronto Stock Exchange in Wednesday afternoon trading.
The telecom added 98,000 net new postpaid mobile-phone customers during the quarter, up from 95,000 during the same quarter last year. (Postpaid subscribers are those who are billed at the end of the month for the services they use, while prepaid customers pay upfront for wireless services.)
It lost, on a net basis, 37,000 prepaid customers, compared with a net loss of 8,000 during the first three months of 2023.
Ottawa recently announced plans to slash the number of temporary residents, and some analysts see that as a headwind for the sector, which has benefited from immigration in recent years.
Monthly ARPU – average revenue per user – was $58.06, up 80 cents year-over-year from $57.26.
Desjardins analyst Jérome Dubreuil characterized the ARPU growth as “impressive in the context of strong competition, and shows RCI’s commitment to its premium-brand-first strategy.”
“This might not be the case for peers as they have not fully followed this strategy,” he wrote in a research note.
Churn – the rate of customer turnover on a monthly basis – in its postpaid customer base rose to 1.10 per cent, up from 0.79 per cent during the same period last year.
BCE Inc. is scheduled to report next week, with Telus Communications Inc. slated for May 9.
