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A man uses his cellphone while sitting outside a Rogers store in Toronto’s Financial District on June 18.

Fred Lum/The Globe and Mail

Riding a wave of new cellular customers that surpassed analyst expectations by a wide margin, Rogers Communications Inc.’s Joe Natale sees no signs that the wireless growth trend will reverse any time soon.

The chief executive officer of Toronto-based Rogers told investors Thursday he doesn’t expect any “short- or medium-term abatement" in the key factors that have led to industry-wide growth over the past two years, including a stronger economy, immigration and customers adopting second phones.

Rogers added 122,000 new wireless customers on contract in the three months ended June 30, which beat estimates in the range of 90,000 and was the most for a second quarter since 2009.

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Yet, despite outpacing forecasts and building on an already-strong first quarter, Rogers did not increase its financial guidance for the year, leaving some analysts asking whether the company was concerned about increased competition during the back-to-school and Black Friday promotional periods. However, Mr. Natale played down such concerns.

“Bear in mind that 65 per cent of our volume happens in the second half of the year. We don’t anticipate any challenges or problems of any magnitude, but I think investors rely on us to be thoughtful and conservative about the way we approach our financial commitments,” he said.

The company’s shares were down 0.7 per cent or 35 cents on Thursday, closing at $50.59, but analysts attributed the dip to investors taking profit after a run-up in the stock price in recent months.

Rogers, along with its national peers Telus Corp. and BCE Inc., has faced questions over the growing threat posed by Shaw Communications Inc.'s regional carrier Freedom Mobile, which has made improvements to its network and distribution channels. Freedom, which operates in Ontario, British Columbia and Alberta, launched plans with large data buckets last fall that goaded the Big Three into a five-day price war in December.

On Thursday, Freedom – which is hoping for continued support from the government, including favourable treatment in upcoming wireless airwaves auctions – announced new low-cost data plans. The deals come after the Canadian Radio-television and Telecommunications Commission ordered the Big Three to come up with similar plans. Freedom’s new offerings include more bandwidth than the plans that the incumbents have proposed in the regulatory process, which is still ongoing. “Our entry-level plans demonstrate that the federal government’s pro-competitive policies are working,” Shaw’s president of wireless, Paul McAleese said in a statement.

In the meantime, Freedom has posted its own large gains in subscribers, adding about 150,000 over its past two quarters combined. But Canaccord Genuity analyst Aravinda Galappatthige noted in a report Thursday that Freedom’s growth hasn’t appeared to dent Rogers. “There were some concerns earlier in the year as to how Freedom’s gains ... would impact Rogers. We suspect that the current net additions momentum could ease those fears in the near term.”

Second-quarter revenue at Rogers’s wireless business, the company’s biggest division, was up by 7 per cent to $2.21-billion and helped boost overall sales at Rogers to $3.76-billion, an increase of 4 per cent from the same period last year.

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Profit increased by 2 per cent to $538-million, or $1.04 per share, compared with $1.03 per share a year earlier. Rogers reported adjusted EBITDA growth of 8 per cent to $1.5-billion, just ahead of analyst forecasts (EBITDA means earnings before interest, taxes, depreciation and amortization).

Rogers also brought its rate of customer turnover down four basis points to 1.01 per cent, its best monthly churn result in nine years. (A basis point is a hundredth of a percentage point.) Customers paid an average of $64.80 a month, up 4 per cent from last year.

Under Mr. Natale, who has been with the company just more than a year, Rogers has continued to make customer service a priority and it says that, along with increased investment in its wireless network, helped boost its customer numbers.

Rogers also added 23,000 new internet customers in the period, the most for a second quarter since 2005, and said subscribers are spending more as they move to packages offering higher speeds.

It lost 9,000 cable customers, an improvement over the 25,000 it lost over the same period last year. Rogers is still in the midst of a “soft launch” of its new internet-based television platform, with employees and select customers using it now as it gets feedback before rolling it out widely later this year.​

Revenue at the company’s media division was down 5 per cent to $608-million, which Rogers attributed mainly to lower revenue from the Toronto Blue Jays baseball team. It has been making deep cuts to its magazine publishing business and said that operating expenses at the media unit were also down 5 per cent to $548-million in the quarter.

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Editor’s note: An earlier version of this story misstated the status of the Rogers TV product, which is now available to employees and select customers and is no longer at the trial stage. The story also included an inaccurate title for Shaw's Paul McAleese. This version has been corrected.
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