Actionable news
0
All posts from Actionable news
Actionable news in BCE: BCE Inc,

Rogers Communications Inc.'s Earnings Buoyed by Solid Wireless Results

Image source: Getty Images.

The wireless division of Rogers Communications (NYSE: RCI) was primarily responsible for the company's solid second-quarter showing. That said, all four of the company's business segments delivered stable or improving results due in part to contributions from Rogers 3.0 plan. Furthermore, with additional service expansions and product offerings on the horizon, Rogers hopes to keep its momentum going.

Rogers Communications results: The raw numbers

Metric

Q2 2016 Actuals

Q2 2015 Actuals

Growth (YOY)

Revenue

$3.46 billion

$3.40 billion

1.5%

Adjusted operating profit

$1.35 billion

$1.34 billion

0.7%

Adjusted earnings per share

$0.83

$0.80

3.7%

YOY = year over year. Data source: Rogers Communications.

What happened with Rogers this quarter?

Rogers' wireless division continues to drive results.

  • Rogers' wireless segment is by far its largest, contributing 56% of revenue and 63% of adjusted operating earnings last quarter. Because of its sheer size, any growth it delivers in needle moving, so it is no surprise to see that wireless revenue and adjusted operating earnings increased 1.5% and 0.6%, respectively, roughly matching the increase in its consolidated results. Rising service sales and muted cost growth drove these improvements.
  • Results at the cable segment, meanwhile, were flat on both the top and bottom lines. While the company captured a 15% rise in internet revenue, that was not enough to overcome revenue declines of 7% and 14% in the television and phone product lines.
  • On a more positive note, Rogers' business solutions segment grew revenue by 3% and adjusted operating earnings by 15%. However, because the segment is the smallest of the four by a large margin, it did not have that much of an impact on the company's overall results.
  • Finally, the media segment showed some improvement with revenue jumping 6% thanks to higher sports-related sales. Unfortunately, operating expenses rose 7% due to higher sports-related costs leading to flat adjusted operating earnings.

What management had to say

As CEO Guy Laurence noted in the earnings release:

We posted strong results in the second quarter, delivering solid revenue growth while attracting more customers across our Wireless and Internet businesses. We continued to make meaningful improvements to the customer experience, delivering our third straight quarter of Wireless postpaid churn improvement. We expanded our roaming leadership with the launch of Fido Roam, continued the rollout of our Gigabit Internet service to almost half our cable footprint, and introduced two innovative leapfrog solutions to Canadian businesses. Overall, we're making good headway on our Rogers 3.0 strategy.

While Rogers' results are improving, it is still facing intense competition from the impact of the internet on its legacy businesses as well as increasing competition from rivals in the wireless space. Telecom and media rivals Shaw Communications (NYSE: SJR) and BCE (NYSE: BCE), for example, are growing their presence in the wireless space through acquisitions. Shaw Communications, for example, recently entered the wireless segment after acquiring WIND Mobil while BCE is boosting its presence via a deal to buy Manitoba Telecom. These deals could lead to increased pricing pressure, which has the potential to tamp down growth at Roger's key segment.

Looking forward

Rogers is working to overcome these headwinds through its Rogers 3.0 plan, which is focused not only on maintaining its leadership and momentum in wireless but on strengthening its cable business and driving growth in the business market. In cable, the company is investing to double the reach of its fastest internet service by the end of the year. Meanwhile, it recently launched two new solutions to the business market, including its first new cloud-based solution. These initiatives are designed to reignite growth in its other segments to take some of the pressure off its wireless business.

A secret billion-dollar stock opportunity
The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.

Matt DiLallo owns shares of Rogers Communications. The Motley Fool recommends Rogers Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.