Rogers Communications Q4 Profit Down 39%; Hikes Dividend, To Buy Back Shares

(RTTNews) - Canadian communications and media company Rogers Communications Inc. (RCI, RCI-B.TO) on Wednesday reported a 39 percent decline in profit for the fourth quarter from last year, reflecting the impact of lower-priced roaming plans and pricing changes at its wireless segment.

In addition, the company's board of directors increased the annualized dividend by 5 percent and also authorized the repurchase of up to C$500 million of the company's shares for another one-year period.

Anthony Staffieri, Executive Vice President and Chief Financial Officer said, "Our fourth quarter results largely reflect the continued impact of new customer-friendly wireless roaming and simplified sharing plans we put in place several quarters ago which have been dilutive to our revenue growth rate. However, we delivered continued top-line growth in Cable, Media and Business Solutions."

Rogers Communications' net income for the fourth quarter was C$320 million or C$0.62 per share, down from C$522 million or C$1.01 per share in the year-ago quarter.

Adjusted net income for the quarter was C$357 million or C$0.69 per share, compared to C$448 million or C$0.86 per share in the prior-year period. On average, fifteen analysts polled by Thomson Reuters expected the company to report earnings of C$0.75 per share for the quarter. Analysts' estimates typically exclude special items.

Operating revenue for the quarter declined 1 percent to C$3.24 billion from C$3.26 billion in the same period last year. Analysts had a consensus revenue estimate for the quarter of C$3.31 billion.

The lower revenue reflects a 2 percent decline in wireless network revenue as well as a 13 percent decrease in equipment sales, offset by growth in Cable, Business Solutions, and Media segments.

The decline in wireless network revenue was mainly related to the introduction of lower priced roaming plans and pricing changes associated with the company's new simplified plans that provided additional customer value. The modest slowing of Cable revenue growth reflected television subscriber losses offset by continued growth in Internet.

Wireless data revenue for the quarter rose 13 percent from the year-ago period to C$825 million, reflecting continued penetration and growing use of smartphones, tablet devices and wireless laptops. However, blended ARPU decreased 3 percent from last year because the voice component declined at a faster rate than the increase in the data component.

Wireless activated and upgraded 790,000 smartphones in the quarter, down from about 940,000 activations in the year-ago quarter. The decrease was mainly due to an 18 percent reduction in hardware upgrades by existing subscribers in the latest quarter. However, the addition of smartphones increased the percentage of subscribers with smartphones to 75 percent of wireless' total postpaid subscriber base.

The company expanded its customer base with 34,000 wireless postpaid net subscriber additions, compared to net additions of 58,000 in the year-ago period. Monthly postpaid churn declined to 1.34 percent from 1.40 percent last year, while average monthly revenue per user or ARPU decreased C$3.41 to C$66.34.

For fiscal 2013, Rogers Communications net income declined to C$1.67 billion or C$3.22 per share from C$1.69 billion or C$3.30 per share in the previous year. Adjusted net income for the year were C$1.77 billion or C$3.42 per share, compared to C$1.78 billion or C$3.41 per share last year.

Operating revenue for the year rose 2 percent to $12.71 billion from $12.49 billion in the previous year.

Street expected the company to report earnings of C$3.47 per share for the year on revenues of C$12.76 billion.

Looking ahead to fiscal 2014, Rogers Communications forecasts adjusted operating profit in a range of C$5.00 billion to C$5.15 billion.

In a separate press release, Rogers Communications said it plans to file with the Toronto Stock Exchange or TSX a notice of its intention to renew its prior normal course issuer bid or "NCIB" for its Class B non-voting shares for a further one-year period.

Rogers Communications said that during the twelve-month period commencing February 25, 2014 and ending February 24, 2015, it may purchase on the TSX, the NYSE and alternative trading systems the lesser of 35.78 million Class B shares, representing about 10 percent of the public float of the Class B shares, and that number of Class B shares that can be purchased under the NCIB for a total purchase price of C$500 million.

Rogers Communications also said its board has approved a 5 percent increase to the annualized dividend rate to C$1.83 per Class A voting and Class B non-voting share from C$1.74 per share. Effective immediately, the new quarterly dividend rate will be 45.75 cents per share.

Following the approval of the dividend increase, the board declared a 45.75 cent quarterly dividend on each of its outstanding Class A voting shares and Class B non-voting shares. This quarterly dividend will be paid on April 4, 2014 to shareholders of record on March 14, 2014, and is the first quarterly dividend to reflect the newly increased C$1.83 per share annualized dividend level.

In Wednesday's regular session on the Toronto stock exchange, RCI-B.TO is trading at C$43.96, down C$1.73 or 3.79 percent on a volume of 236,203 shares.