At the very top of Canada's wireless industry, there's really only one way to go.
Yet Rogers the sector's largest player, isn't letting its lead slip in the face of increasing competition and eroded competitive advantage.
Without an exclusive hold on the iPhone and other iconic devices, the company's share of new wireless subscribers is slipping, especially as BCE Inc. and Telus Corp. continue to pull customers to their new network. There's also a greater proportion of new wireless competitors, such as Wind Mobile and Mobilicity, launching first in Toronto, where Rogers is based. Yet, on wings of wireless-data revenue growth, the telecom giant remains relatively steady, posting 21-per-cent growth in second-quarter profit, to $451-million, and a 5-per-cent boost in revenue, in line with expectations.
Rogers, however, has issued a conservative guidance for the competitive tumult ahead. Part of that disruption includes its launch of a new discount brand, Chatr Wireless Inc., which is likely to force big rivals to react and could make new wireless players change their pricing, putting additional pressure on the already declining price of voice services in Canada.
Part of Rogers' success has been maintaining its long lead in the number of lucrative smart-phone customers, having roughly the combined amount of its two main rivals. A year or more ago, with an advanced network its rivals couldn't match, Rogers was pulling in around 50 per cent of new, "post-paid" customers, who pay their higher bills at the end of the month.
"With the number of players in the market, I always felt that was not a sustainable kind of proposition," said Nadir Mohamed, president and chief executive officer of Rogers, said on a call with reporters. "In terms of market share, it will reflect that new entrants will get some share. But nobody should underestimate what we bring to the market."
Its rivals' new network, which Bell and Telus share, also means that international wireless carriers now have a choice of which network their users roam on in Canada, said Dvai Ghose, a telecom analyst at Canaccord Genuity.
"It's going to be very difficult to compete, because you've lost all your competitive advantages and you've got two guys ganging up on you - and they're sharing everything," Mr. Ghose said.
But even as the amount of new subscribers Rogers picks up is falling, and competition intensifies, the company is shifting its focus to upgrading its existing voice-only cellphone users to data-using smart-phone customers, who provide twice as much revenue per month on average.
Greg MacDonald, a telecom analyst with National Bank Financial Inc., said he remains bullish on Rogers because of this "wireless upgrade cycle," especially since new competitors have not yet taken a meaningful share in the Canadian smart phone market.
"Wireless data is the one segment in telecom that still has the potential to give positive surprises in revenue growth," Mr. MacDonald said. "Looking at the one trend that's doing all the heavy lifting ... for this company, it should give reasons for people to be fairly optimistic."