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Rogers Communications (RCI) Q2 Earnings & Revenues Up Y/Y

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Rogers Communications (RCI - Free Report) delivered adjusted earnings of 83 cents per share for second-quarter 2018, that came ahead of the Zacks Consensus Estimate of 79 cents per share. The figure surged 40.6% from the year-ago quarter.

However, total revenues of $2.91 billion missed the Zacks Consensus Estimate of $2.93 billion. Nevertheless, the figure grew 4% on a year-over-year basis. The primary driver of the top line was the wireless services segment. This apart, growth of 10% in Internet revenues in the Cable revenue segment also acted as a catalyst.

Wireless Details

Wireless (58.9% of total revenues) increased 6.7% from the year-ago quarter to C$2.21 billion. Service revenues climbed 5%, while equipment revenues increased 14% in the quarter.

Blended ARPU (average revenue per user) was C$55.60, up from C$54.21 in the year-ago quarter and C$53.68 in the previous quarter.

As of Jun 30, prepaid subscriber base totaled almost 1.71 million, a gain of 16K from the year-ago quarter but a loss of 10K subscribers on a sequential basis. Monthly churn rate was 3.98% compared with 3.96% in the year-ago quarter.

As of Jun 30, postpaid wireless subscriber base totaled roughly 8.92 billion, a subscriber gain of 211K from the year-ago quarter and 95K from the previous quarter. Monthly churn rate declined to 1.01% from 1.05% in the year-ago quarter and 1.08% in the previous quarter.
 
Adjusted EBITDA increased 12% year over year to $1.029 billion, which can primarily be attributed to service revenue growth.

Cable Details

Cable (26.4% of total revenues) inched up 2% from the year-ago quarter to C$991 million. Service revenues climbed 2%, while equipment revenues were flat on a year-over-year basis.

While Internet revenues increased 10%, television and phone revenues declined 5% and 12%, respectively.

As of Jun 30, 2018, Internet subscriber count was nearly 2.37 million, a gain of 98K from the year-ago quarter and 20K from the previous quarter.

Management stated that its offering of Ignite Gigabit Internet over the entire Cable footprint benefited top-line growth. Increasing demand for speed continues to be a growth driver, as 58% of the residential Internet base is now on speed of 100 Mbps or higher, up from 51% in the year-ago quarter. Management also stated that the rollout of Ignite TV is on track.

Rogers Communications lost 52K subscribers on a year-over-year basis and around 20K subscribers sequentially to reach an installed base of almost 1.72 million in the Television segment.

Phone subscriber count was nearly 1.12 million, with a gain of 22K from the year-ago quarter and not much change from the previous quarter.

Adjusted EBITDA increased 2% year over year to C$342.5 million driven by favorable product mix shift toward higher margin Internet services.

Media Details

Media (16.2% of total revenues) decreased 5% from the year-ago quarter to C$608 million due to lower revenues from Toronto Blue Jays.

Segment operating expense decreased 5% from the year-ago quarter to C$548 million.

Adjusted EBITDA increased 2% year over year to C$60 million.

Consolidated Results

Adjusted EBITDA increased 8% from the year-ago quarter to $1.06 billion. Adjusted EBITDA margin expanded 160 basis points (bps) from the year-ago quarter, primarily owing to strong growth in revenues and improving cost structure.

Rogers Communication, Inc. Price, Consensus and EPS Surprise

Rogers Communication, Inc. Price, Consensus and EPS Surprise | Rogers Communication, Inc. Quote

Cash Flow Details

Cash provided by operating activities increased 27% year over year to C$1.048 billion. However, free cash flow decreased 7% to C$562 million due to increase in capital expenditure (CapEx). The CapEx in Cable increased due to investments in “customer premise equipment and our cable network” related to Ignite TV product and improvement of the quality. Higher investments in the broadcast infrastructure increased Media related CapEx.

The increase in capital expenditures in wireless was due to the augmentation of the LTE network with 4.5G technology investments, which are 5G ready as well.

Rogers Communications paid C$247 million in dividends and ended the second quarter with a debt leverage ratio (adjusted net debt/adjusted EBITDA) of 2.6.

Zacks Rank & Stocks to Consider

Rogers Communications currently has a Zacks Rank #3 (Hold).

American Woodmark Corporation (AMWD - Free Report) , AMC Networks Inc. (AMCX - Free Report) and IMAX Corporation (IMAX - Free Report) are stocks worth considering in the same sector, all sporting Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for American Woodmark, AMC Networks and IMAX is currently pegged at 7.2%, 9% and 19%, respectively.

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