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Rogers Communications Inc. (RCI - Analyst Report) declared first-quarter 2014 financial results, wherein its bottom line missed the Zacks Consensus Estimate. The company’s board of directors raised its annual dividend by 5% to $1.83 per share. The increased dividend of $0.4575 per share will be distributed on a quarterly basis.

Quarterly net income stood at $278.6 million or 52 cents per share compared with $320 million or 62 cents in the year-ago quarter. The figure also missed the Zacks Consensus Estimate of 64 cents. Quarterly total revenue stood at $2,740.7 million, nearly in line with the year-ago quarter number.  

First-quarter operating profit came in at $1,053.6 million, down 2% year over year. Quarterly operating margin was 38.4% compared with 38.9% in the year-ago quarter.

During the first quarter of 2014, Rogers Communications generated $370.3 million of cash from operations compared with $730.5 million in the year-ago quarter. Free cash flow was $323.1 million against $320.3 million in the year- earlier quarter.

At the end of first-quarter fiscal 2014, Rogers Communications had $1,979.3 million of cash and marketable securities on its balance sheet compared with $2,088.2 million at the end of fiscal 2013. Total outstanding debt stood at $12,283.9 million versus $11,047 million at the end of fiscal 2013. The debt-to-capitalization ratio stood at 0.73 compared with 0.72 at the end of fiscal 2013.

Wireless Segment

Quarterly total revenue came in at $1,567.3 million, down 2% year over year. Network revenues totaled $1,484.7 million, down 3% from the year-ago quarter. Equipment sales were $82.6 million, up 18% year over year.

Quarterly adjusted operating profit for the entire segment was $716.9 million, up 3% year over year. Adjusted operating margin was 45.7% in the first quarter of 2014, compared with 43.5% in the year-earlier quarter. Over the same time frame, Wireless Data revenues came in at $757.2 million, up 10% year over year. Wireless Data revenues represented around 51% of the total wireless network revenue against 45% in the prior-year quarter.

During the first quarter of 2014, the Wireless segment activated 579,000 smartphones against 673,000 in the year-earlier quarter. Most of the smartphones were either Apple Inc. (AAPL - Analyst Report) iPhones, Black Berry Ltd. (BBRY - Analyst Report) devices or Google Inc. developed Android handsets. Quarterly consolidated ARPU (average revenue per user) or Blended ARPU was $52.3, down 3.6% year over year.

During the reported quarter, Postpaid retail subscribers base stood at 8.076 million, up 2.5% year over year. Smartphone customers constituted a record 76% of the overall postpaid subscribers as against 71% in the year-ago quarter. Quarterly Postpaid ARPU was $59.2, down 5.2% year over year. Monthly churn rate stood at 1.2% versus 1.22% in the prior-year quarter.

Prepaid subscriber base totaled 1.356 million, down 10.5% from the year-ago quarter. Quarterly Prepaid ARPU was $12.6, down 5.7% year over year. Monthly churn rate was 3.55% against 4.48% in the prior-year quarter.

Cable Segment

Quarterly total revenue came in at $780.5 million, flat year over year. Basic cable operations revenues totaled $391.1 million, down 6% from the year-ago quarter. Internet revenues were $276.8 million, up 10% year over year. Home Telephony revenues were $109.8 million, down 2% year over year. Quarterly adjusted operating profit for the whole segment stood at $371.2 million, down 5% year over year. Adjusted operating margin stood at 47.6%, in the reported quarter, compared with 49.8% in the year-ago quarter.

At the end of first-quarter fiscal 2014, Cable TV subscriber base stood at 3.990 million, up 4.1% year over year. High-speed Internet subscriber base was 1.98 million, up 4.6% year over year. Digital cable subscriber base now constituted 85% of the total television subscriber base compared with 81% in the year-ago quarter.

Media Segment

Quarterly total revenue came in at $333.1 million, up 8% year over year. Quarterly adjusted operating loss was $21.8 million against $6.4 million in the last-year quarter.

RBS Segment

Quarterly total revenue came in at $85.3 million, up 1.1% year over year. Quarterly adjusted operating profit was $25.4 million, up 18% from the prior-year quarter. Adjusted operating margin stood at 29.8%, in the reported quarter, compared with 24.7% in the year-ago quarter.

Outlook

Rogers Communications expects adjusted operating profit for full-year fiscal 2014 in the range of $4,838.5–$4,983.7 million. The company also expects after-tax free cash flow to be between $1,379 million and $1,451.6 million while capital expenditure for the full year is expected in the band of $2,201.5–$2,298.3 million.

Currently, Rogers Communications has a Zacks Rank #4 (Sell).

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