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Rogers Communications (RCI) Q4 Earnings Beat, Revenues Miss

Rogers Communications Inc. RCI reported mixed financial results for the fourth quarter of 2017, with the bottom line beating the Zacks Consensus Estimate and the top line missing the same.

Net Income

Quarterly net income was approximately $329.75 million. Adjusted earnings per share of 88 cents were above the Zacks Consensus Estimate of 68 cents.

Rogers Communication, Inc. Price, Consensus and EPS Surprise

 

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

Revenue

Total revenues were around $2,858.38 million, up 3% year over year but below the Zacks Consensus Estimate of $2,865 million.

Operating Metrics

Adjusted operating profit was $1,340 million compared with $1,259 million in the year-ago quarter. Quarterly adjusted operating profit margin was 36.9% compared with 35.9% from the year-ago quarter.

Cash Flow and Liquidity

During the quarter, Rogers Communications generated $1,054.58 million of cash from operations compared with $828.71 million at the end of 2016. Free cash flow was $190.03 million, down 38% from the year-ago quarter.

In the quarter under review, change in the cash and cash equivalents on Rogers Communications’ balance amounted to $22.82 million. Total outstanding long-term debt was approximately $11,370.58 million compared with $12,654.96 million at the end of 2016.

WirelessSegment                                                                                           

Total revenues were around $1,722.74 million, up 6% year over year. Service revenues totaled $1,566.13 million, up 7% from the year-ago quarter. Equipment sales were $156.61 million, down 1% year over year.

Operating expenses amounted to $1,045.92 million, up 5% from the year-ago quarter. Adjusted operating profit was $676.82 million, up 9% year over year. Adjusted operating profit margin was 43.2% compared with 42.6% in the year-earlier quarter.

Blended ARPU (average revenue per user) was $49.94, compared with $47.79 in the year-ago quarter. As of Dec 31, 2017, the prepaid subscriber base totaled 1.778 million, with a loss of 8,000 subscribers from the year-ago quarter. Monthly churn rate was 3.22% compared with 2.62% in the prior-year quarter.

As of Dec 31, 2017, Rogers Communications’ postpaid wireless subscriber base totaled 8.704 million. In fourth-quarter 2017, the company added 72,000 postpaid wireless subscribers. Quarterly postpaid ARPA (average revenue per account) was around $99.59 compared with $94.36 in the year-ago quarter. The monthly churn rate was 1.48% versus 1.35% in the prior-year quarter.

Cable Segment

Quarterly total revenues were $685.48 million, up 2% year over year. Service revenues totaled $683.90 million, up 1% year over year. Internet revenues were $325.03 million, up 9% year over year. Television (Video) revenues were $292.76 million, down 4% year over year. Telephony revenues totaled $66.11 million, down 10% year over year. Equipment sales were $1.57 million, up 100% year over year.

Operating expenses of $332.11 million remained flat year over year. Adjusted operating profit was $353.36 million, up 3% year over year. Adjusted operating margin was 51.5% compared with 50.7% in the year-ago quarter.

As of Dec 31, 2017, the high-speed Internet subscriber count was 2.230 million. Rogers Communications added 17,000 high-speed Internet customers in the quarter. Video subscriber base totaled 1.740 million, after a loss of 13,000 users. Telephony subscriber count was 1.108 million. The company gained 9,000 telephony subscribers in the reported quarter.

Media Segment                                                                                                       

Quarterly total revenues amounted to $413.96 million, down 4% year over year.

Operating expenses declined 3% year over year to $383.27 million. Adjusted operating profit fell 20% year over year to $30.69 million. Adjusted operating profit margin was 7.4% versus 8.9% in the year-ago quarter.

Business Solutions Segment

Quarterly total revenues were $77.91 million, up 3% year over year. Of the total, next-generation revenues were $66.11 million, up 9%. Legacy revenues were $11.02 million, down 18%. Service revenues were $77.13 million, up 4%. Equipment revenues were $0.79 million, down 50% year over year.

Operating expenses rose 2% year over year to $52.73 million. Adjusted operating profit was $25.18 million, up 7% year over year. Adjusted operating margin was 32.3% compared with 31.3% in the year-ago quarter.

Deterrents

Rogers Communications continues to face tough competition from incumbents like TELUS Corp. TU and BCE Inc. BCE and other small regional cable-TV operators in the wireless market of Canada. Moreover, Shaw Communications’ SJR entry into the market with the WIND Mobile acquisition has intensified competition.

Plagued by such headwinds, the company carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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