Rogers Communications Inc. (RCI Quick QuoteRCI - Free Report) declared mixed financial results in the second quarter of 2016, wherein the bottom line missed the Zacks Consensus Estimate but the top line surpassed the same.

Quarterly net income was approximately $305.4 million (up 8.5% year over year) or 60 cents per share (up 10% year over year). However, adjusted earnings per share were 62 cents per share, short of the Zacks Consensus Estimate of 64 cents.  

Quarterly total revenue came in at around $2,687 million, up 1.5% year over year, outpacing the Zacks Consensus Estimate of $2,663 million.

Second-quarter adjusted operating profit came in at $1,044.2 million, up 0.7% year over year. Quarterly adjusted operating margin was 39% compared with 39.3% in the year-ago quarter.

During the second quarter of 2016, Rogers Communications generated $869 million of cash from operations, reflecting an increase of 0.6% year over year. Adjusted free cash flow was $383.7 million, up 4% year over year.

At the end of the first half of 2016, Rogers Communications had no cash and cash equivalents on its balance sheet compared with $5 million at the end of 2015. Total outstanding debt was approximately $12,697 million compared with $21,504 million at the end of 2015. The debt-to-capitalization ratio was 0.72 compared with 0.73 at the end of 2015.

ROGERS COMM CLB Price, Consensus and EPS Surprise

ROGERS COMM CLB Price, Consensus and EPS Surprise | ROGERS COMM CLB Quote

Wireless Segment

Quarterly total revenue came in at around $1,497 million, up 1% year over year. Service revenues totaled $1,386 million, up 5% from the year-ago quarter. Equipment sales were $111 million, down 27% year over year.

Quarterly adjusted operating profit for the segment was $655.8 million, up 1% year over year. Adjusted operating margin, as a percentage of service revenue, was 47.3% compared with 49.3% in the year-earlier quarter.

Quarterly blended ARPU (average revenue per user) was $46.65, up 0.3% year over year. As of Jun 30, 2016, the prepaid subscriber base totaled 1.612 million, up 18.2% from the year-ago quarter. Monthly churn rate was 3.57% versus 3.63% in the prior-year quarter.

As of Jun 30, 2016, Rogers Communications’ postpaid wireless subscriber base totaled 8.350 million, up 2.3% year over year. In the second quarter, the company added a net of 65,000 postpaid wireless subscribers. Quarterly postpaid ARPA (average revenue per account) was around $89.97, up 5.4% year over year. Monthly churn rate was 1.14% compared with 1.19% in the prior-year quarter.

Cable Segment

Quarterly total revenue came in at $674.4 million, flat year over year. Services revenues totaled $674 million, flat year over year. Of this, Internet revenues were $291.5 million, up 15% year over year. Television (Video) revenues were $305.4 million, down 7% year over year. Telephony revenues were $76.7 million, down 14% year over year. Equipment Sales were $0.4 million, down 50% year over year.

Quarterly adjusted operating profit for the segment was $321.7 million, flat year over year. Adjusted operating margin was 47.7 % in the reported quarter, compared with 47.6% in the year-ago quarter.

As of Jun 30, 2016, high-speed Internet subscriber base was 2.076 million, up 3.4% year over year. In the reported quarter, Rogers Communications added a net 12,000 high-speed Internet customers. Video subscribers totaled 1.847 million, down 5.3% year over year. The company lost 23,000 video subscribers in the second quarter. Telephony subscriber count was 1.085 million, down 3%.  The company gained 5,000 telephony subscribers in the reported quarter.

Media Segment

Quarterly total revenue came in at $476.7 million, up 6% year over year. Quarterly adjusted operating profit was $69.8 million, flat year over year.

Business Solutions Segment

Quarterly total revenue came in at $75.2 million, up 3% year over year. Of the total, Next-generation revenues were $60.5 million, up 7%. Legacy revenues were $13.2 million, down 15% and Equipment revenues were $1.6 million, double year over year. Quarterly adjusted operating profit was $24 million, up 15% year over year. Adjusted operating margin was 32% compared with 28.7% in the year-ago quarter.

Outlook

Rogers Communications expects 2016 operating revenues, adjusted operating profit and free cash flow to increase in the band of 1%-3% on a year-over-year basis.

Zacks Rank & Stocks to Consider

Rogers Communications currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the same industry include AT&T Inc. (T Quick QuoteT - Free Report) , Frontier Communications Corp. and T-Mobile US Inc. (TMUS Quick QuoteTMUS - Free Report) . All three stocks currently hold a Zacks Rank #2 (Buy).

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