Enthusiasm for wireless data plans that donB次元官网网址檛 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.
B次元官网网址淭hat ended up being three times the rate that we had anticipated, which I think is a good thing,B次元官网网址� Natale said.
He said the switch to unlimited wireless data plans, which began in late June, was the beginning of a B次元官网网址渃ritical and necessary shiftB次元官网网址� that has three long-term advantages: higher consumer data usage, increased customer satisfaction and lower costs to acquire and retain customers.
B次元官网网址淥verage is a big pain point for customers. Rather than continue to perpetuate that complexity, which drives all sorts of B次元官网网址� costs in our organization, we said B次元官网网址楲etB次元官网网址檚 bite the bullet. LetB次元官网网址檚 create a very simple construct. And letB次元官网网址檚 get to the simplicity dividend as quickly as we can.B次元官网网址� B次元官网网址�
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 CanadaB次元官网网址檚 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 B次元官网网址� which competes against the three national carriers in Ontario, Alberta and British Columbia B次元官网网址� already had similar plans.
Besides its wireless business, Rogers has one of the countryB次元官网网址檚 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 CanadaB次元官网网址檚 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
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