A month has gone by since the last earnings report for Rogers Communication (RCI). Shares have lost about 2.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Rogers Communication due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Rogers Communications (RCI) Misses on Q4 Earnings, Revenues
Rogers Communications reported fourth-quarter adjusted earnings of 76 cents per share that missed the Zacks Consensus Estimate by 2.6%.
Total revenues of $2.99 billion also missed the consensus mark by 1%.
Adjusted earnings decreased 11.5% year over year to C$1 per share. Total revenues increased 0.6% year over year to C$3.95 billion.
Notably, fourth-quarter 2019 results were reported per IFRS 16.
During the quarter, Rogers announced collaboration with Cibic Telecom to provide a connected car solution in Canada and the United States by integrating Cubic Telecom’s Platform for Application and Connectivity Enablement with Rogers’ mobile network.
Wireless Details
Wireless (63.1% of total revenues) increased 1.2% from the year-ago quarter to C$2.49 billion.
During the quarter, Rogers announced investments in its wireless network to enhance connectivity in Kelowna, West Kelowna and Westbank First Nation for Rogers and Fido customers.
Service revenues decreased 1% to C$1.78 billion, attributable to decrease in prepaid subscriber base and blended average revenue per user (ARPU) as a result of overage revenues due to faster adoption of Rogers Infinite unlimited data plan launched last quarter.
During the quarter, the company introduced Rogers Pro On-the-Go, a new retail service that delivers and sets up wireless devices at a customer’s location of choice.
Equipment revenues were up 7.1% to C$705 million due to increase in gross postpaid subscribers. However, this was offset by lower device upgrades by existing users in the reported quarter.
Monthly blended ARPU was C$55.26, down 1.2% year over year. Meanwhile, monthly blended average billing per user (ABPU) was C$66.17, up 1.6% primarily a result of an ongoing shift in the product mix of device sales toward higher-value devices.
As of Dec 31, 2019, prepaid subscriber base totaled almost 1.4 million, a loss of 224K subscribers from the year-ago quarter. Monthly churn rate was 5.58% compared with 5.85% in the year-ago quarter.
As of Dec 31, 2019, postpaid wireless subscriber base totaled roughly 9.44 million, up 281K from the year-ago quarter driven by strong adoption of Rogers Infinite plans by new customers. Monthly churn rate was 1.26% compared with 1.23% in the year-ago quarter.
Segment operating expense decreased 0.5% from the year-ago quarter to C$1.43 billion.
Adjusted EBITDA increased 3.5% year over year to C$1.06 billion. Adjusted EBITDA margin expanded 100 basis points (bps) on a year-over-year basis to 42.7%.
Cable Details
Cable revenues (25% of total revenues) were flat year over year and came in at C$987 million. The stable revenues were due to higher Internet subscriber base and the movement of television customers to higher content tiers. Service revenues were flat year over year.
Internet revenues increased 7.3% due to user shift toward higher-GB tiers and increase in subscriber base, partially offset by increased promotional activities. As of Dec 31, 2019, Internet subscriber count was nearly 2.53 million, up 104K from the year-ago quarter.
On Nov 20, Rogers announced that Amazon’s (AMZN) Amazon Prime streaming services app was available for subscribers on Ignite TV.
Television revenues were down 2.2% year over year due to decline in television subscriber base. This was offset by migration of subscribers from legacy TV product to Ignite TV and the movement of customers to higher content tiers.
Subscriber count was nearly 1.58 million in the Television segment, a decline of 106K from the year-ago quarter.
Phone revenues plunged 37.2% year over year primarily due to bundled discount pricing and decline in subscriber base. Subscriber count was nearly 1.07 million, a decline of 44K from the year-ago quarter.
Equipment revenues decreased 25% year over year to C$3 million.
Segment operating expense decreased 2% from the year-ago quarter to C$490 million.
Adjusted EBITDA increased 1.6% year over year to C$497 million. Adjusted EBITDA margin expanded 90 bps on a year-over-year basis to 50.4%.
Media Details
Media (13.4% of total revenues) declined 1.9% from the year-ago quarter to C$530 million. The decline in revenues was primarily due to the sale of the company’s publishing business.
Segment operating expense increased 1.6% year over year to C$508 million primarily attributed to higher programming costs.
Adjusted EBITDA decreased 45% year over year to C$22 million.
Consolidated Results
Operating costs were flat year over year at C$2.42 billion. As a percentage of revenues, operating costs contracted 10 bps to 61.3%.
Adjusted EBITDA increased 0.6% from the year-ago quarter to C$1.53 billion. Adjusted EBITDA margin expanded 10 bps to 38.7%.
Balance Sheet & Cash Flow Details
As of Dec 31, 2019, Rogers Communications had cash and cash equivalents of $494 million compared with $262 million at the end of the previous quarter.
Cash provided by operating activities increased 10.9% year over year to C$1.16 billion. Free cash flow increased 5.5% year over year to C$497 million attributed to lower capital expenditures and higher adjusted EBITDA, partially offset by higher interest on borrowings.
Rogers Communications paid C$256 million in dividends in the reported quarter. The company repurchased shares worth $357 million.
Rogers Communications ended the fourth quarter with a debt leverage ratio (adjusted net debt/adjusted EBITDA) of 2.9, up 40 bps from the end of 2018.
Guidance for 2020
Revenues are expected to be down 2% to up 2%. Adjusted EBITDA is expected to increase up to 2%.
Capital expenditure is expected in the range of C$2.7-2.9 billion. Free cash flow is expected to increase in the range of 2% to 4%.
The company expects to expand the Rogers 5G network to over 20 more markets in 2020.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
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Rogers Communication (RCI) Down 2.3% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Rogers Communication (RCI). Shares have lost about 2.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Rogers Communication due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Rogers Communications (RCI) Misses on Q4 Earnings, Revenues
Rogers Communications reported fourth-quarter adjusted earnings of 76 cents per share that missed the Zacks Consensus Estimate by 2.6%.
Total revenues of $2.99 billion also missed the consensus mark by 1%.
Adjusted earnings decreased 11.5% year over year to C$1 per share. Total revenues increased 0.6% year over year to C$3.95 billion.
Notably, fourth-quarter 2019 results were reported per IFRS 16.
During the quarter, Rogers announced collaboration with Cibic Telecom to provide a connected car solution in Canada and the United States by integrating Cubic Telecom’s Platform for Application and Connectivity Enablement with Rogers’ mobile network.
Wireless Details
Wireless (63.1% of total revenues) increased 1.2% from the year-ago quarter to C$2.49 billion.
During the quarter, Rogers announced investments in its wireless network to enhance connectivity in Kelowna, West Kelowna and Westbank First Nation for Rogers and Fido customers.
Service revenues decreased 1% to C$1.78 billion, attributable to decrease in prepaid subscriber base and blended average revenue per user (ARPU) as a result of overage revenues due to faster adoption of Rogers Infinite unlimited data plan launched last quarter.
During the quarter, the company introduced Rogers Pro On-the-Go, a new retail service that delivers and sets up wireless devices at a customer’s location of choice.
Equipment revenues were up 7.1% to C$705 million due to increase in gross postpaid subscribers. However, this was offset by lower device upgrades by existing users in the reported quarter.
Monthly blended ARPU was C$55.26, down 1.2% year over year. Meanwhile, monthly blended average billing per user (ABPU) was C$66.17, up 1.6% primarily a result of an ongoing shift in the product mix of device sales toward higher-value devices.
As of Dec 31, 2019, prepaid subscriber base totaled almost 1.4 million, a loss of 224K subscribers from the year-ago quarter. Monthly churn rate was 5.58% compared with 5.85% in the year-ago quarter.
As of Dec 31, 2019, postpaid wireless subscriber base totaled roughly 9.44 million, up 281K from the year-ago quarter driven by strong adoption of Rogers Infinite plans by new customers. Monthly churn rate was 1.26% compared with 1.23% in the year-ago quarter.
Segment operating expense decreased 0.5% from the year-ago quarter to C$1.43 billion.
Adjusted EBITDA increased 3.5% year over year to C$1.06 billion. Adjusted EBITDA margin expanded 100 basis points (bps) on a year-over-year basis to 42.7%.
Cable Details
Cable revenues (25% of total revenues) were flat year over year and came in at C$987 million. The stable revenues were due to higher Internet subscriber base and the movement of television customers to higher content tiers. Service revenues were flat year over year.
Internet revenues increased 7.3% due to user shift toward higher-GB tiers and increase in subscriber base, partially offset by increased promotional activities. As of Dec 31, 2019, Internet subscriber count was nearly 2.53 million, up 104K from the year-ago quarter.
On Nov 20, Rogers announced that Amazon’s (AMZN) Amazon Prime streaming services app was available for subscribers on Ignite TV.
Television revenues were down 2.2% year over year due to decline in television subscriber base. This was offset by migration of subscribers from legacy TV product to Ignite TV and the movement of customers to higher content tiers.
Subscriber count was nearly 1.58 million in the Television segment, a decline of 106K from the year-ago quarter.
Phone revenues plunged 37.2% year over year primarily due to bundled discount pricing and decline in subscriber base. Subscriber count was nearly 1.07 million, a decline of 44K from the year-ago quarter.
Equipment revenues decreased 25% year over year to C$3 million.
Segment operating expense decreased 2% from the year-ago quarter to C$490 million.
Adjusted EBITDA increased 1.6% year over year to C$497 million. Adjusted EBITDA margin expanded 90 bps on a year-over-year basis to 50.4%.
Media Details
Media (13.4% of total revenues) declined 1.9% from the year-ago quarter to C$530 million. The decline in revenues was primarily due to the sale of the company’s publishing business.
Segment operating expense increased 1.6% year over year to C$508 million primarily attributed to higher programming costs.
Adjusted EBITDA decreased 45% year over year to C$22 million.
Consolidated Results
Operating costs were flat year over year at C$2.42 billion. As a percentage of revenues, operating costs contracted 10 bps to 61.3%.
Adjusted EBITDA increased 0.6% from the year-ago quarter to C$1.53 billion. Adjusted EBITDA margin expanded 10 bps to 38.7%.
Balance Sheet & Cash Flow Details
As of Dec 31, 2019, Rogers Communications had cash and cash equivalents of $494 million compared with $262 million at the end of the previous quarter.
Cash provided by operating activities increased 10.9% year over year to C$1.16 billion. Free cash flow increased 5.5% year over year to C$497 million attributed to lower capital expenditures and higher adjusted EBITDA, partially offset by higher interest on borrowings.
Rogers Communications paid C$256 million in dividends in the reported quarter. The company repurchased shares worth $357 million.
Rogers Communications ended the fourth quarter with a debt leverage ratio (adjusted net debt/adjusted EBITDA) of 2.9, up 40 bps from the end of 2018.
Guidance for 2020
Revenues are expected to be down 2% to up 2%. Adjusted EBITDA is expected to increase up to 2%.
Capital expenditure is expected in the range of C$2.7-2.9 billion. Free cash flow is expected to increase in the range of 2% to 4%.
The company expects to expand the Rogers 5G network to over 20 more markets in 2020.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.