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Rogers Communications Reports First Quarter 2013 ResultsRevenues Up 3% with Continued Growth at Wireless and Cable; Customer Base Expands with 32,000 Wireless Postpaid Net Subscriber Additions and 18,000 Total Cable Service Units; Adjusted Operating Profit Grows 8% and Diluted Earnings Per Share Up 18% Reflecting Top Line Growth and Continued Efficiency Improvements; TORONTO, April 22, 2013 /CNW/ - Rogers Communications Inc., a leading diversified Canadian communications and media company, today announced its unaudited consolidated financial and operating results for the first quarter ended March 31, 2013, in accordance with International Financial Reporting Standards ("IFRS"). Financial highlights from continuing operations are as follows(1):
"The record first quarter levels of both revenue and adjusted operating profit which Rogers reported represents a solid start to 2013," said Nadir Mohamed, President and Chief Executive Officer of Rogers Communications Inc. "The positive operating trends which we achieved during 2012 are carrying into the new year as evidenced by the continued improvements in ARPU, data and Internet revenue, churn and margin profiles which we reported for the first quarter of 2013. This balanced growth across subscribers, revenue, margins and earnings reflects the combination of our superior asset mix, innovative product offerings, and successful ongoing efficiency gains, further supporting the 10% dividend increase we announced earlier in the quarter." Highlights of the first quarter of 2013 include the following: Top Line Growth Continued
Continued Cost Efficiency Gains Drive Profit Growth and Margin Expansion
Continued to Enhance our Leading Networks to Monetize Rapid Data Growth
Customer Experience Further Enriched
Media Focus on Sports and Local Content
Balance Sheet Strength Further Reinforced with Continued Healthy Cash Flow Generation, Increased Liquidity and Lower Cost of Borrowing
Cash Returned to Shareholders Grows with Announcement of Further Dividend Increase
Announcement of CEO Succession
This earnings release, which is current as of April 22, 2013, is a summary of our first quarter 2013 results, and should be read in conjunction with our first quarter 2013 MD&A and our first quarter 2013 Unaudited Interim Condensed Consolidated Financial Statements and Notes thereto, our 2012 Annual MD&A and our 2012 Audited Annual Consolidated Financial Statements and Notes thereto, and our other recent filings with securities regulatory authorities which are available on SEDAR at sedar.com or EDGAR at sec.gov. The financial information presented herein has been prepared on the basis of IFRS for interim financial statements and is expressed in Canadian dollars unless otherwise stated. As this earnings release includes forward-looking statements and assumptions, readers should carefully review the section of this earnings release entitled "Caution Regarding Forward-Looking Statements, Risks and Assumptions". In this earnings release, the terms "we", "us", "our", "Rogers", "Rogers Communications" and "the Company" refer to Rogers Communications Inc. and our subsidiaries: Wireless, Cable, Business Solutions ("RBS") and Media. CONSOLIDATED FINANCIAL RESULTS
SEGMENT REVIEW WIRELESS Summarized Wireless Financial Results
Summarized Wireless Subscriber Results
Wireless Subscribers and Network Revenue For the three months ended March 31, 2013, Wireless activated and upgraded approximately 673,000 smartphones, compared to approximately 642,000 in the first quarter of 2012. This addition of smartphones increased the percentage of subscribers with smartphones to 71% of Wireless' total postpaid subscriber base at March 31, 2013, compared to 60% as at March 31, 2012. These subscribers generally commit to multi-year term contracts and typically generate significantly higher ARPU than non-smartphone subscribers. The increase in wireless network revenue for the three months ended March 31, 2013, compared to the corresponding period of 2012, reflects the continued growth of Wireless' postpaid subscriber base and the increased adoption and usage of wireless data services. For the three months ended March 31, 2013, wireless data revenue increased to $762 million, a 22% increase from the corresponding period of 2012. This growth in wireless data revenue reflects the continued penetration and growing usage of smartphones, tablet devices and wireless laptops, which drive increased usage of e-mail, wireless Internet access, text messaging, data roaming, and other wireless data services. A portion of this growth reflects enhancements to data roaming plans introduced in the third quarter of 2012. For the three months ended March 31, 2013, wireless data revenue represented approximately 45% of total network revenue, compared to approximately 39% in the corresponding period of 2012. The 3.5% year-over-year increase in blended ARPU for the quarter ended March 31, 2013, compared to the corresponding period of 2012, primarily reflects the aforementioned growth in wireless data revenue, partially offset by the continued decline of wireless voice ARPU. The wireless data component of blended ARPU increased by 20.5%, partially offset by a 7.3% decline in the wireless voice component as a result of a general shift in usage patterns from voice to data based wireless services and the general level of competition around wireless voice services. Wireless Equipment Sales The decrease in revenue from equipment sales for the three months ended March 31, 2013, compared to the corresponding period of 2012, primarily reflects changes in device pricing and resultant subsidies driven by increased competition, partially offset by an increase in the mix of smartphones activated towards higher value devices versus the corresponding period in the prior year. Wireless Operating Expenses The increase in cost of equipment for the three months ended March 31, 2013, compared to the corresponding period of 2012, was primarily the result of the increased number of smartphone sales to new customers and upgrades for existing customers. During the three months ended March 31, 2013, we activated 5% more smartphones with a higher average cost per device than in the same period last year. Total retention spending, including subsidies on handset upgrades, was $247 million in the three months ended March 31, 2013, compared to $208 million in the corresponding period of 2012. The increase primarily reflects a higher number of hardware upgrades by existing subscribers than during the same period last year, a shift in the mix of smartphones activated towards higher value devices, and a more competitive device pricing environment. Other operating expenses for the three months ended March 31, 2013, excluding retention spending discussed above were relatively flat versus the same period of the prior year. Wireless incurred higher marketing costs, driven by increased promotional activities, which were offset by efficiency gains resulting from cost management and productivity initiatives across various functions. Wireless continues to focus on costs reduction and efficiency improvement initiatives. Wireless Adjusted Operating Profit The 4% year-over-year increase in adjusted operating profit and the 45.5% adjusted operating profit margin on network revenue (which excludes equipment sales revenue) for the three months ended March 31, 2013 primarily reflect the growth of network revenue in the period, coupled with cost management and efficiency improvements as discussed above.
CABLE Summarized Financial Results
Summarized Subscriber Results
Television Revenue Television revenue decreased for the three months ended March 31, 2013, compared to the corresponding period of 2012, from the 4% year-over-year decline in television subscribers combined with the impact of promotional and retention pricing activity associated with heightened competition, partially offset by pricing changes made in January 2013. Our digital cable subscriber base represents 81% of our total television subscriber base as at March 31, 2013, compared to 78% as at March 31, 2012. A larger selection of digital content, video on-demand, HDTV and PVR equipment continues to contribute to the increasing penetration of the digital subscriber base as a percentage of our total television subscriber base. Cable began a substantial conversion of the remaining analog cable customers onto its digital cable platform during 2012. This strategic migration will continue to further strengthen the customer experience, and once complete will enable the reclamation of significant amounts of network capacity, as well as reduce network operating and maintenance costs. The analog to digital migration, expected to be completed in 2015, entails incremental PP&E and operating costs as each of the remaining analog homes are fitted with digital converters and various analog filtering equipment is removed. Internet Revenue The year-over-year increase in Internet revenue for the three months ended March 31, 2013, compared to the corresponding period in 2012, reflects the increase in our Internet subscriber base, combined with a general movement to higher end speed and usage tiers, combined with Internet service pricing changes made during the previous twelve months. With our Internet customer base at 1.9 million subscribers, Internet penetration is approximately 49% of the homes passed by our cable network and 86% of our television subscriber base as at March 31, 2013, compared to 48% and 79% as at March 31, 2012, respectively. Home Phone Revenue The increase in Phone revenues for the three months ended March 31, 2013, compared to the corresponding period of 2012, primarily reflects the increase in our Phone customer base due to increased promotional activities. Phone lines in service grew 4% from March 31, 2012 to March 31, 2013 and now represent 29% of the homes passed by our cable network and 50% of television subscribers, compared to 28% and 46% at March 31, 2012, respectively. Cable Operating Expenses Cable's operating expenses decreased by 3% for the three months ended March 31, 2013, compared to the corresponding period of 2012. Excluding the positive impact resulting from an $8 million adjustment to licence fees payable to match the CRTC's billing period in the current quarter of 2013, the decrease would be 1% year over year. The decrease was driven by cost reductions, efficiency initiatives and lower activity volumes. Cable continues to focus on cost reductions and efficiency improvement initiatives. Cable Adjusted Operating Profit The year-over-year increase in adjusted operating profit for the three months ended March 31, 2013 was driven principally by increased service revenue coupled with cost reductions as discussed above, resulting in expanded adjusted operating profit margin of 49.8% for the three months ended March 31, 2013, compared to 45.8% in the corresponding period of 2012. Other Cable Developments On January 14, 2013, we announced a multipart strategic transaction with Shaw to acquire Shaw's cable system in Hamilton, Ontario and secure an option to purchase Shaw's AWS spectrum holdings in 2014. We will also sell to Shaw our one-third equity interest in specialty channel TVtropolis. Rogers' net cash investment is expected to total approximately $700 million if all aspects of the transactions are approved. During the three months ended March 31, 2013, we paid net deposits of $241 million for these Shaw transactions. We have received regulatory approval on the purchase of Shaw's cable system in Hamilton, Ontario and the other transactions are pending regulatory approval. The acquisition of Shaw's cable system in Hamilton, Ontario and sale of TVtropolis are currently expected to close in the second quarter of 2013.
RBS Summarized Financial Results
RBS Revenue RBS revenue increased 7% for the three months ended March 31, 2013, compared to the corresponding period of 2012, due to the increased revenue from the next generation business as well as a non-recurring equipment sale, partially offset by decreased revenue from legacy business. RBS' focus is primarily on IP-based services and increasingly on leveraging higher margin on-net and near-net revenue opportunities, utilizing existing network facilities to expand offerings to the medium and large-sized enterprise, public sector and carrier markets. Revenue from the declining lower margin off-net legacy business generally includes local and long-distance voice services and legacy data services. In contrast, revenue from the higher margin next generation business continues to grow, due to growth in customers and additional services sold to existing customers, and now represents 52% of total RBS service revenue. RBS Operating Expenses Operating expenses increased modestly for the three months ended March 31, 2013, compared to the corresponding period in 2012 due to the cost of equipment sales. Operating expenses declined 9% year-over-year excluding the impact of the non-recurring equipment sale. This decline was driven by a decrease in the legacy service-related costs due to lower volumes, as well as ongoing initiatives to improve costs and productivity. RBS has continued to focus on implementing a program of cost reduction and efficiency improvement initiatives to control the overall growth in operating expenses and to increase adjusted operating profit margin. RBS Adjusted Operating Profit The year-over-year increase in adjusted operating profit for the three months ended March 31, 2013 reflects growth in the higher margin next generation business coupled with cost efficiencies, resulting in the increase of RBS' adjusted operating profit margin to 24.7% from 20.7%. Other RBS Developments On April 17, 2013, we announced that we purchased 100% of the shares of BLACKIRON Data ULC ("Blackiron") from Primus Telecommunications Canada Inc. for cash consideration of $200 million. Blackiron is a provider of data centre and cloud computing services in Canada with approximately 4,000 customers. The purchase of Blackiron enables RBS to enhance its suite of enterprise-level data centre and cloud computing services.
MEDIA Summarized Media Financial Results
Media Revenue The decrease in Media's revenue for the three months ended March 31, 2013, compared to the corresponding period of 2012, reflects the continued impact of a soft advertising market, which continues to suppress growth in most of Media's divisions, along with residual impacts from the 2012 NHL lockout. This was partially offset by increased distribution revenue generated by Sportsnet and other specialty channels. Adjusting for the impact of the NHL lockout and other non-recurring items that occurred in 2012, Media's revenue for the three months ended March 31, 2013 is relatively unchanged compared to the same period in the prior year. Media Operating Expenses The decrease in Media's operating expenses for the three months ended March 31, 2013, compared to the corresponding period of 2012, reflects Media's reduced sports programming costs associated with the NHL player lockout, lower programming expenses due to broadcast scheduling changes, a positive impact resulting from an adjustment to licence fees payable to match the CRTC's billing period in the current quarter of 2013, and overall cost containment efforts. Media Adjusted Operating Loss The improvement in Media's adjusted operating loss for the three months ended March 31, 2013, compared to the corresponding period of 2012, primarily reflects the revenue and expense changes discussed above. Other Media Developments In February 2013, Media completed the purchase of the Metro14 Montreal broadcast license and re-launched the station as City Montreal in this key Quebec market. The purchase of this broadcast license, along with other acquisitions and agreements put in place during 2012, has increased City's reach by more than 20% to over 80% of Canadian households. ADDITIONS TO PP&E
Wireless Additions to PP&E The increase in Wireless additions to PP&E for the three months ended March 31, 2013, compared to the corresponding period in 2012, was attributable to the continued deployment of our LTE network as well as ongoing upgrades to the network to improve the LTE and HSPA+ user experience, and initiatives to improve network reliability and service platforms. Cable Additions to PP&E The decrease in Cable additions to PP&E for the three months ended March 31, 2013, compared to the corresponding period in 2012, reflects lower network investments on capacity and the timing of certain initiatives related to service enhancements on our video and data platforms, partially offset by investments in customer premise equipment related to the continued rollout of Next Box 2.0 set-top boxes and analog to digital subscriber migration activities. RBS Additions to PP&E RBS' PP&E additions for the three months ended March 31, 2013 remained flat compared to the corresponding period in 2012, and were comprised principally of expenditures on customer specific network expansions and support capital. Media Additions to PP&E Media's PP&E additions during the three months ended March 31, 2013 reflect expenditures on digital and broadcast systems, as well as upgrades for Sports Entertainment facilities. 2013 FINANCIAL AND OPERATING GUIDANCE We have no specific revisions at this time to the 2013 annual consolidated guidance ranges that we provided on February 14, 2013. See the section entitled "Caution Regarding Forward-Looking Statements, Risks and Assumptions" below.
Rogers Communications Inc.
Rogers Communications Inc.
Rogers Communications Inc.
Caution Regarding Forward-Looking Statements, Risks and Assumptions This earnings release includes "forward-looking information" within the meaning of applicable securities laws and assumptions concerning, among other things our business, its operations and its financial performance and condition approved by management on the date of this earnings release. This forward-looking information and these assumptions include, but are not limited to, statements with respect to our objectives and strategies to achieve those objectives, as well as statements with respect to our beliefs, plans, expectations, anticipations, estimates or intentions. This forward-looking information also includes, but is not limited to, guidance and forecasts relating to revenue, adjusted operating profit, property plant and equipment expenditures, cash income tax payments, free cash flow, dividend payments, expected growth in subscribers and the services to which they subscribe, the cost of acquiring subscribers and the deployment of new services, and all other statements that are not historical facts. The words "could", "expect", "may", "anticipate", "assume", "believe", "intend", "estimate", "plan", "project", "guidance", and similar expressions are intended to identify statements containing forward-looking information, although not all forward-looking statements include such words. Conclusions, forecasts and projections set out in forward-looking information are based on our current objectives and strategies and on estimates and other factors and expectations and assumptions, most of which are confidential and proprietary, that we believe to be reasonable at the time applied, but may prove to be incorrect, including, but not limited to: general economic and industry growth rates, currency exchange rates, product pricing levels and competitive intensity, subscriber growth, usage and churn rates, changes in government regulation, technology deployment, device availability, the timing of new product launches, content and equipment costs, the integration of acquisitions, industry structure and stability. Except as otherwise indicated, this earnings release and our forward-looking statements do not reflect the potential impact of any non-recurring or other special items or of any dispositions, monetizations, mergers, acquisitions, other business combinations or other transactions that may be considered or announced or may occur after the date the statement containing the forward-looking information is made. We caution that all forward-looking information, including any statement regarding our current objectives, strategies and intentions and any factor, assumptions, estimate or expectation underlying the forward-looking information, is inherently subject to change and uncertainty and that actual results may differ materially from those expressed or implied by the forward-looking information. A number of risks, uncertainties and other factors could cause actual results and events to differ materially from those expressed or implied in the forward-looking information or could cause our current objectives, strategies and intentions to change, including but not limited to: new interpretations and new accounting standards from accounting standards bodies, economic conditions, technological change, the integration of acquisitions, unanticipated changes in content or equipment costs, changing conditions in the entertainment, information and communications industries, regulatory changes, litigation and tax matters, the level of competitive intensity and the emergence of new opportunities. Many of these factors are beyond our control and current expectation or knowledge. Should one or more of these risks, uncertainties or other factors materialize, our objectives, strategies or intentions change, or any other factors or assumptions underlying the forward-looking information prove incorrect, our actual results and our plans could vary significantly from what we currently foresee. Accordingly, we warn investors to exercise caution when considering statements containing forward-looking information and that it would be unreasonable to rely on such statements as creating legal rights regarding our future results or plans. We are under no obligation (and we expressly disclaim any such obligation) to update or alter any statements containing forward-looking information or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by law. All of the forward-looking information in this earnings release is qualified by the cautionary statements herein. Before making any investment decisions and for a detailed discussion of the risks, uncertainties and environment associated with our business, fully review the sections of our first quarter MD&A entitled "Update to Risks and Uncertainties" and "Government Regulation and Regulatory Developments" and also sections entitled "Risks and Uncertainties Affecting our Businesses" and "Government Regulation and Regulatory Developments" in our 2012 Annual MD&A. Our annual and quarterly reports can be found online at rogers.com/investors, sedar.com and sec.gov or are available directly from Rogers. About Rogers Communications Inc. Rogers Communications is a diversified public Canadian communications and media company. We are Canada's largest provider of wireless communications services and one of Canada's leading providers of cable television, high-speed Internet and telephony services. Through Rogers Media, we are engaged in radio and television broadcasting, televised shopping, magazines and trade publications, sports entertainment, and digital media. We are publicly traded on the Toronto Stock Exchange (TSX: RCI.A and RCI.B) and on the New York Stock Exchange (NYSE: RCI). For further information about the Rogers group of companies, please visit rogers.com. Information contained in or connected to our website is not part of and not incorporated into this earnings release. Quarterly Investment Community Conference Call As previously announced by press release, a live webcast of our quarterly results teleconference with the investment community will be broadcast via the Internet at rogers.com/webcast beginning at 4:30 p.m. ET today, April 22, 2013. A rebroadcast of this teleconference will be available on the Events and Presentations page of Rogers' Investor Relations website, rogers.com/investors, for a period of at least two weeks following the teleconference.
SOURCE: Rogers Communications Inc. For further information: Investment Community Contacts Bruce M. Mann, 416.935.3532, bruce.mann@rci.rogers.com Media Contact Terrie Tweddle, 416.935.4727, terrie.tweddle@rci.rogers.com Index of Releases | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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News releases from and about Canada's Rogers Wireless mobile phone provider
Monday, April 22, 2013
Rogers Communications Reports First Quarter 2013 Results
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