Rogers Communications (RCI) Q3 Earnings Beat, Revenues Miss

Rogers Communications Inc (NYSE:RCI) , the largest integrated telecom operator in Canada, reported mixed financial results for the third quarter of 2017, wherein the bottom line surpassed the Zacks Consensus Estimate and the top line missed the same.

Rogers Communications continues to remain the first wireless operator in Canada to offer Internet of Things (IoT) as a service to business enterprises. End-to-End Incident Management, Farm & Food Monitoring and Level Monitoring are the three IoT services that the wireless carrier currently offers. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Net Income

Quarterly net income was approximately $372.66 million compared with $335.16 million in the year-ago quarter. Adjusted earnings per share of 81 cents were above the Zacks Consensus Estimate of 79 cents.

Revenue

Quarterly total revenue was around $2,856 million, down 3% year over year and below the Zacks Consensus Estimate of $2,897 million.

Operating Metrics

Adjusted operating profit was $1,167.47 million compared with $1,105.23 million in the year-ago quarter. Quarterly adjusted operating profit margin was 40.9% versus 39.7% from the year-ago quarter.

Cash Flow

During the reported quarter, Rogers Communications generated $1098.84 million of cash from operations compared with $945.63 million at the end of Jun 2016. Free cash flow was $429.32.12 million compared with $477.20 million in the year-ago quarter.

Liquidity

In the quarter under review, change in the cash and cash equivalents on Rogers Communications’ balance amounted $31.12 million. Total outstanding long-term debt was approximately $10,098.69million compared with $12,233.34 million at the end of Dec 2016.

WirelessSegment

Quarterly total revenue was around $1,706.12 million, up 5% year over year. Service revenues totaled $1,604.78 million, up 7% from the year-ago quarter. Equipment sales were $101.34 million, down 20% year over year.

Quarterly adjusted operating profit for the segment was $769.27 million, up 9% year over year. Adjusted operating profit margin was 47.9% compared with 47.1% in the year-earlier quarter.

Quarterly blended ARPU (average revenue per user) was $50.89, compared with $49.72 in the year-ago quarter. As of Jun 30, the prepaid subscriber base totaled 1.786 million, with a gain of 97,000 subscribers from the year-ago quarter. Monthly churn rate was 3.04% compared with 3.49% in the prior-year quarter.

As of Sep 30, 2017, Rogers Communications’ postpaid wireless subscriber base totaled 8.839 million. In the third quarter, the company added 129,000 postpaid wireless subscribers. Quarterly postpaid ARPA (average revenue per account) was around $128.54 compared with $121.39 in the year-ago quarter. The monthly churn rate was 1.16% versus 1.26% in the prior-year quarter.

Cable Segment

Quarterly total revenue totaled $694.26 million, up 1% year over year. Service revenues totaled $693.46 million, up 1% year over year. Internet revenues were $322.39 million, up 6% year over year. Television (Video) revenues were $300.85 million, down 3% year over year. Telephony revenues totaled $70.22 million, down 7% year over year. Equipment sales were $0.798 million, down 50% year over year.

Quarterly adjusted operating profit for the segment was $351.12 million, up 2% year over year. Adjusted operating margin was 50.6% compared with 49.8% in the year-ago quarter.

As of Sep 30, the high-speed Internet subscriber count was 2.213 million. Rogers Communications added 27,000 high-speed Internet customers in the quarter. Video subscriber base totaled 1.753 million, after a loss of 18,000 users. Telephony subscriber count was 1.099 million. The company gained 1,000 telephony subscribers in the reported quarter.

Media Segment

Quarterly total revenue amounted $411.77 million, down 3% year over year. Quarterly operating expenses declined 1% year over year to $359.89 million. Adjusted operating profit margin came in at 12.6% versus 14.8% with the year-ago quarter.

Business Solutions Segment

Quarterly total revenue totaled $77.41 million, up 2% year over year. Of the total, next-generation revenues were $64.64 million, up 5%. Legacy revenues were $11.17 million, down 18%. Service revenues were $75.81 million, up 1%. Equipment revenues were $1.59 million. Quarterly adjusted operating profit was $26.33 million, up 6% year over year. Adjusted operating margin was 34.0% compared with 32.6% in the year-ago quarter.

Rogers Communications continues to witness tough competition from market incumbents like TELUS Corp (NYSE:TU) and BCE Inc (TO:BCE) and other small regional cable-TV operators in the wireless market of Canada. Moreover, Shaw Communications Inc’s (NYSE:SJR) entry into the market with the WIND Mobile acquisition has intensified competition.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>