Rogers Communications Inc., Canada’s largest wireless company, posted a 30 per cent rise in adjusted quarterly profit, increased its dividend and said its chief executive officer will leave the company early next year.
A successor was not named for CEO Nadir Mohamed, who will retire in January, 2014. He has led the company since the death of Ted Rogers, the broadcast and telecommunications company’s founder, four years ago.
Shares of the company jumped more than 5 per cent to $47.79, its highest price since late 2007, after it announced the change as well as steps to enhance shareholder value.
It increased its annual dividend by 10 per cent to $1.74 per share and authorized repurchases of up to $500-million of the company’s stock, or roughly 10 per cent of the public float.
“I think the dividend increase has a lot to do with it,” said Desjardins analyst Maher Yaghi, referring to the share price move. “It’s still a market where investors are searching for yield.”
Mr. Yaghi said investors were pleased that Rogers expects growth at its landline business – cable television and fixed-line Internet – even as BCE Inc.’s Bell ramps up its Internet protocol television service.
Rogers – once Canada’s clear leader in wireless technology – has struggled to match the market share expansion of BCE and Telus Corp. in recent quarters, while its higher average bills have also come under pressure.
In the final three months of 2012, subscriber numbers showed some weakness but average bills and churn – the average proportion of subscribers that cancel that service each month – were stronger than expected, said Drew McReynolds, an analyst at RBC Capital Markets.
The Toronto-based company, which also owns television stations, magazines and sports teams, said fourth-quarter adjusted net income jumped to $455-million, or 88 cents a share, from $350-million, or 66 cents, a year earlier.
Analysts on average expected Rogers to earn 72 cents a share, according to Thomson Reuters I/B/E/S.
Operating revenue rose to $3.26-billion from $3.16-billion, ahead of the $3.19-billion average forecast.
Rogers expects a 2.5 per cent to 4.5 per cent improvement in adjusted operating profit in 2013, pointing to its media division as a likely drag.
Rogers owns the Toronto Blue Jays baseball team, and last year paired up with BCE to buy a majority stake in Maple Leaf Sports and Entertainment, the owner of the National Hockey League’s Toronto Maple Leafs and a stable of other sports assets.
The media unit lost advertising revenue due to the months-long NHL lockout but executives said that was more than offset by not having to spend money to air the games. The labour dispute was settled in January.
“Most importantly though, the NHL lockout was settled shortly after the quarter ended, which is vital for the franchise and in turn for Rogers sports broadcast properties and our investment in MLSE,” Tony Staffieri, the company’s chief financial officer, said on a conference call.
In wireless, the unit that typically accounts for almost two-thirds of Rogers’ sales and profit, the company added 58,000 net postpaid subscribers, a closely watched metric given those customers often sign multiyear contracts and typically pay more each month than prepaid subscribers.
That was far less than the 143,834 additions reported by rival BCE, which operates under the Bell brand, last week. The third major operator, Telus, on Friday said it added 123,000 postpaid customers.
An average Rogers wireless customer paid $60.48 a month for service, up from a year earlier. It said 69 per cent of its postpaid mobile phone customers use smartphones such as Apple Inc.’s iPhone and BlackBerry devices.
Quarterly net income from continuing operations rose 62 per cent to $529-million, or $1.02 per share, compared with $327-million, or 61 cents per share, in the year-ago period.
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