Rogers Communications sees earnings dip
Canadian firm added 100,000 customers last quarterTORONTO -- Canada's surging cable TV business is finally showing signs of slowing down with the rest of the economy.
Canadian wireless and cable giant Rogers Communications said Wednesday that first-quarter earnings slipped as higher wireless and cable revenue was offset by an advertising decline at its TV and print division.
Toronto-based Rogers posted a profit of CAN$309 million ($252.5 million) for the period ending March 31, down 10% from a CAN$344 million profit in 2008.
Revenue rose 5% to CAN$2.75 billion ($2.25 billion), against a year-earlier CAN$2.6 billion, with wireless jumping 8% to CAN$1.54 billion ($1.26 billion) and cable revenue growing 7% to CAN$743 million ($607 billion) on the back of higher basic cable and high-speed Internet sales.
But the media division saw revenue fall 9% to CAN$284 million ($232 million), as advertisers curbed expenditures on TV, radio and print ads.
Rogers also faced steep acquisition and retention costs to sign up smartphone users at its wireless division. The wireless giant no longer breaks out its mix of iPhone and BlackBerry users, and indicated only that it signed or upgraded 360,000 smartphone users during the latest quarter.
Nadir Mohamed, Rogers' newly installed CEO, told analysts that his company faced economic headwinds.
"While Rogers is operating from a position of business and financial strength, we are clearly negotiating through challenging times and have much hard work in front of us to drive the performance of the business forward," Mohamed said.
In addition to its cable, wireless phone and Internet access businesses, Rogers runs the Toronto Blue Jays baseball club, local radio and TV stations, and 70 magazines -- all of which are vulnerable in a consumer downturn.
Rogers also faces an increasingly tough fight for wireless phone customers -- a key profit driver -- with Telus and Bell Canada, as well as future competition from new entrants into the wireless phone market after a recent government spectrum auction.
During the last quarter, Rogers signed up 17,000 new basic cable subscribers to hit 2.31 million customers in all, and added 91,000 new high-speed Internet subscribers for a base of 1.58 million customers.
But Rogers said the recession has resulted in lower demand for Internet and cable phone services as Canadians move less and fewer new homes are built. In addition, the Canadian high-speed Internet access market is maturing as broadband penetration continues to deepen.