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Rogers Communications (RCI) Q3 Earnings In Line, Revenues Lag

Rogers Communications RCI reported third-quarter 2021 adjusted earnings of 82 cents per share that matched the Zacks Consensus Estimate.

Total revenues of $2.91 billion however missed the consensus mark by 1.04%.

Adjusted earnings decreased 4.6% year over year to C$1.03 per share. Total revenues remained flat year over year at C$3.66 billion.

Rogers Communication, Inc. Price, Consensus and EPS Surprise

Rogers Communication, Inc. price-consensus-eps-surprise-chart | Rogers Communication, Inc. Quote

Wireless Details

Wireless (60.4% of total revenues) decreased marginally by 0.6% from the year-ago quarter to C$2.21 billion.

Service revenues increased 3.3% to C$1.7 billion as the result of a larger postpaid subscriber base, and higher roaming revenues as global travel restrictions were generally less strict than the same period last year.

Equipment revenues were down 11.6% to C$509 million due to lower device upgrades by existing subscribers.

Monthly blended ARPU was C$51.3, up 0.4% year over year, primarily as a result of a decrease in overage revenues, fueled by strong customer adoption of Rogers Infinite unlimited data plans.

Meanwhile, monthly blended average billing per user (ABPU) was C$64.7, up 1.8%, primarily due to increased roaming revenues.

As of Jun 30, 2021, the prepaid subscriber base totaled almost 1.176 million, highlighting a loss of 94K subscribers from the year-ago quarter. The monthly churn rate was 3.75% compared with 4.73% in the year-ago quarter.

As of Sep 30, 2021, postpaid wireless subscriber base totaled roughly 10 million, up 432K from the year-ago quarter driven by strong adoption of Rogers Infinite plans and an increase in market activity by Canadians. The monthly churn rate was 0.95% compared with 1.1% in the year-ago quarter.

Rogers expanded Canada's first and largest 5G network, which now reaches more than 850 communities. The company plans to extend 5G network availability to more than 1,000 communities, aiming to reach over 70% of the Canadian population by the end of 2021.

The company announced an investment of $3.3 billion in 3500 MHz band spectrum, with a target of covering 99.4% of the Canadian population, to enhance and accelerate the expansion of the 5G network.

Segment operating expenses decreased 2.7% from the year-ago quarter to C$1.1 billion.

Adjusted EBITDA increased 1.7% year over year to C$1.1 billion. Adjusted EBITDA margin expanded 110 basis points (bps) on a year-over-year basis to 50%.

Cable Details

Cable revenues (27.7% of total revenues) increased 2.8% year over year to C$1.01 billion as a result of the movement of Internet customers to higher speed and usage tiers in Ignite Internet offerings, increase in Internet and Ignite TV subscriber bases, and disciplined promotional activity. Service revenues increased 2.3% year over year to C$1 billion.

As of Sep 30, 2021, Internet subscriber count was nearly 2.65 million, up 77K from the year-ago quarter.

Ignite TV subscriber count was 732K in the Television segment, reflecting an increase of 259K from the year-ago quarter. During the quarter, the company partnered with Disney DIS to exclusively offer six months of Disney+ with select Rogers Infinite plans, and up to 12 months of Disney+ with select Ignite TV and Ignite SmartStream plans.

Rogers also launched Toober on Ignite TV and Ignite SmartStream, enhancing the platform's industry-leading selection of streaming services

The company expanded the Ignite WiFi Hub app with enhanced Active Time Details and Advanced Security to give customers greater control over their home WiFi.

Equipment revenues were up 166.7% year over year to C$8 million.

Segment operating expenses increased 4.2% from the year-ago quarter to C$500 million.

Adjusted EBITDA increased 1.6% year over year to C$516 million. Adjusted EBITDA margin contracted 60 bps on a year-over-year basis to 50.8%.

Media Details

Media (12.9% of total revenues) decreased 3.3% from the year-ago quarter to C$473 million, primarily as a result of the NHL and NBA completing seasons late in the third quarter last year due to coronavirus, when traditionally they conclude in the second quarter. The decrease was partially offset by higher Toronto Blue Jays game day revenues as coronavirus-induced restrictions eased and partial fan attendance was permitted.

During the quarter, Rogers relaunched Sportsnet's direct-to-consumer streaming service, SN NOW, in partnership with Deltatre and Firstlight Media, delivering world-class stream quality and reliability.

It also premiered Citytv's fall TV programming, witnessing a 9% year-on-year increase in primetime viewing during premiere week. Citytv is the only Canadian conventional television network to experience year-on-year audience growth in the coveted 25-54 age demographic.

Segment operating expenses increased 10% year over year to C$440 million, primarily attributed to higher Toronto Blue Jays player payroll and higher game day costs.

Consolidated Results

Operating costs increased 1.9% to C$2.06 billion. As a percentage of revenues, operating costs expanded 100 bps to 56.4%.

Adjusted EBITDA decreased 2.3% year over year to C$1.6 billion. Adjusted EBITDA margin contracted 100 bps to 43.6%.

Balance Sheet & Cash Flow Details

As of Sep 30, 2021, Rogers Communications had $6.4 billion of available liquidity, including $1.6 billion in cash and cash equivalents and a combined $4.9 billion available under bank credit facility.

Notably, the company had $6.9 billion of available liquidity, including $0.9 billion in cash and cash equivalents and a combined $6 billion available under bank credit facility at the end of the previous quarter.

Cash provided by operating activities increased 34% year over year to C$1.31 billion. Free cash flow decreased 41.6% year over year to C$507 million.

Rogers Communications paid out C$253 million in dividends in the reported quarter.

The company ended the third quarter with a debt leverage ratio (adjusted net debt/adjusted EBITDA) of 3, which remained unchanged year over year.

Zacks Rank & Stocks to Consider

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

Boyd Gaming Corporation BYD and IMAX Corporation IMAX are some better-ranked stocks in the broader consumer discretionary sector. While Boyd Gaming Corporation sports a Zacks Rank #1 (Strong Buy), IMAX Corporation carries a Zacks Rank #2 (Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

Boyd Gaming Corporation and IMAX Corporation are scheduled to report their quarterly results on Oct26 and 28, respectively.

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