Rogers Communications Inc. said some effects of the COVID-19 pandemic on its business could linger as it announced financial results that missed analyst expectations and included a 53-per-cent decline in second-quarter profit.
Roaming revenues, which fell by about 90 per cent from a year ago as travel halted, are unlikely to recover quickly, chief financial officer Anthony Staffieri said during a conference call Wednesday.
And although Major League Baseball and the National Hockey League are set to resume, the company’s sports and media business will likely continue to incur losses in the third quarter, Mr. Staffieri said. In the second quarter, the business unit saw revenue decline by 50 per cent to $296-million.
Rogers also set aside an additional $90-million for bad debt, most of it in its wireless business, although the company said it isn’t seeing as many delayed payments or suspended accounts as it had initially expected.
“We saw notable impacts across all of our businesses as sales and new business activity essentially ground to a halt,” Rogers president and CEO Joe Natale told investors and analysts.
“These metrics are COVID-19 specific and do not reflect our underlying fundamentals, nor do they diminish our long-term growth prospects,” Mr. Natale added.
Rogers reported $279-million, or 54 cents a share, in net income for the three-month period ended June 30, down from $591-million, or $1.15 a share, a year ago.
On an adjusted basis, Rogers earned 60 cents per share, down from $1.16 during the same period last year and below the consensus analyst estimate of 73 cents per share from S&P Capital IQ.
Its revenue for the quarter was $3.16-billion, down 17 per cent from a year ago when it was $3.78-billion. Analysts had been expecting second-quarter revenue of $3.18-billion.
The company lost 67,000 net wireless subscribers as the health crisis forced it to temporarily close the majority of its stores. (Of those losses, 1,000 were postpaid subscribers, who are billed at the end of the month for the services they used, while 66,000 were prepaid customers, who pay upfront for wireless services.)
On the cable side, Rogers added 5,000 net new internet subscribers and 18,000 net new subscribers to its Ignite TV service. Cable revenues were down 3 per cent from a year ago as the company delayed price hikes and lifted data caps on some internet plans.
Analysts said the second quarter was likely the worst of the pandemic for the telecom sector, although certain headwinds, such as lower roaming revenues, are expected to continue.
“We expect [Rogers'] wireless results to be the weakest among incumbents due to its large exposure to roaming and overage revenue,” Desjardins analyst Maher Yaghi said in a note to clients. Rogers was the first of the three national wireless carriers to introduce unlimited data plans last year, which has caused its overage revenues to decline, Mr. Yaghi noted.
Overage revenues were further hit during the pandemic as customers self-isolated and relied more heavily on their home WiFi connections.
Looking ahead, Mr. Staffieri said there are encouraging signs that consumer confidence is returning, though it’s still early days. June saw an uptick in new customers as stores started to reopen, and July is seeing some improvement, as well.
“We do not know what back to school will look like as customers are only now slowly getting back to shopping, but the economy is opening up and that should help in our and the industry’s recovery,” Mr. Staffieri said.
The company also sees an opportunity to reduce costs, Mr. Natale said. During the second quarter, Rogers held off on pursuing structural cost savings, as it was waiting to see what the recovery would look like. Now that it’s become evident that it won’t be a speedy one, and with the potential for a second wave on the horizon, “there’s much more focus on taking action on some of these structural costs,”Mr. Natale said.
One option is to close down some of its physical call centres, allowing staff to work from home permanently, as it did with one building in Ottawa.
The pandemic has also accelerated the shift toward a self-service model, where customers install their own modems and other gear, saving the company considerable costs associated with dispatching technicians to people’s homes.
“That’s worked really well,” Mr. Natale said. “We’re never going back.”
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