Ted Rogers could be forgiven for enjoying a moment of schadenfreude as his company, cable operator Rogers Communications Inc., reported growing demand for all its services last year, leaving phone companies in the dust.
Revenue increased 14 per cent in the fourth quarter, driven by the addition of wireless, Internet, basic and digital cable, and phone customers, along with rate increases earlier in the year. For the full year, revenue rose 21 per cent.
Rogers and other cable operators have been locked in a battle with the big telephone companies since entering the local phone market in 2005. So far, the cable firms are benefiting on two fronts as they take phone customers away from the carriers, and the new service also spurs demand for other cable products like TV.
Rogers also has a fast-growing wireless business, expanded in recent years through acquisitions. It has the only GSM wireless network in Canada, a technology used by the majority of carriers worldwide, which Rogers believes gives it an advantage in terms of its range of devices and revenues from roaming services.
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These services have been added through a costly transformation that has seen Rogers pile on debt for takeovers and make investments to upgrade its network. The company is reaping the rewards from that strategy, observers say. At one point last month, Rogers leapfrogged phone giant BCE Inc. in terms of market value.
Mr. Rogers explained the company focused last year on execution and integration as it took a breather from a recent shopping spree.
“We believe our 2006 results show we're making progress in these respects,” Mr. Rogers, the company's 73-year-old founder, said Thursday on an earnings conference call. “We delivered a good balance of growth and profitability.... As you can see from the guidance, we're targeting more of the same for 2007.”
Rogers forecast that revenue this year will rise to between $9.7-billion and $10-billion from $8.84-billion in 2006. It expects an increase in 2007 operating profit to between $3.25-billion and $3.4-billion from $2.89-billion in 2006. And free cash flow is expected to jump to between $800-million and $1-billion in 2007 from $543-million last year.
The company predicted it will add between 625,000 and 725,000 subscribers for its non-wireless services this year, which could either mean a slowdown or uptick from 666,000 additions in 2006. Fewer customers are expected to sign up for wireless services this year, with Rogers predicting between 500,000 and 600,000 wireless subscriber additions this year, compared with 610,000 in 2006.
The outlook “exemplifies how this company has an advantage in its cable network and wireless handsets,” National Bank Financial analyst Greg MacDonald said.
Still, the year ahead holds some big changes for the industry, Mr. Rogers noted, citing the introduction of portable cellphone numbers next month, the expected deregulation of former monopolies in the local phone market, along with some key strategic priorities for Rogers including the rollout of a higher-speed wireless network and its expansion into the business market.
