Rogers tops forecasts as wireless, media units rebound from pandemic impact

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Rogers Communications Inc. says its wireless and media businesses rebounded from the impact of the COVID-19 crisis but still face headwinds and uncertainty amid a second wave of the pandemic.

As it released its third-quarter financial results on Thursday, the company also said it will review its roughly $1.7-billion investment in Cogeco Inc. and subsidiary Cogeco Communications Inc. if its hostile takeover bid for the Quebec-based cable business is unsuccessful by the Nov. 18 deadline.

“We would do what you would expect us to do,” chief executive Joe Natale said when asked about the matter during a conference call. “We’d review our capital allocation priorities with our board as part of our normal course of planning and strategic priority setting and come back to the investment community on what our thoughts and plans are around that capital allocation.”

Rogers has teamed up with New York-based cable company Altice USA Inc. to launch an $11.1-billion takeover attempt that would see Rogers acquire Cogeco’s Canadian operations while Altice would snap up its U.S. business, Atlantic Broadband. The offer has been rejected by the boards of the Cogeco companies, as well as their controlling shareholders, the Audet family.

Toronto-based Rogers is the first of Canada’s big telecom companies to report results for the third quarter, one that has seen the company turn the corner after store closings weighed on its wireless business during the previous three-month period.

Rogers added 168,000 net new wireless subscribers in the three-month period ended Sept. 30, as competition in the industry heated up, with consumers shopping for new phones and upgrading their data plans.

“Whether the industry will repeat the same level of subscriber growth in the traditionally busy Q4 holiday season is difficult to predict at this point,” chief financial officer Anthony Staffieri told analysts Wednesday. “But nevertheless, the industry has recovered well off the depths of Q2.”

Rogers’s media business, which has been hard hit by the pandemic as advertisers pulled back, saw its revenue grow by 1 per cent to $489-million from the same quarter a year ago as live sports resumed, However those gains were partly offset by lower revenue from the Toronto Blue Jays franchise. (Rogers owns the Blue Jays and the national broadcast rights to all National Hockey League games.)

Mr. Staffieri declined to provide updated financial guidance, noting that there continues to be economic uncertainty stemming from the pandemic, which has now entered a second wave.

He said he expects to see continued improvements in the company’s financial and operating results during the fourth quarter, but noted that roaming revenues – which were down by more than 70 per cent, or $90-million, from a year ago as the pandemic halted travel – are not likely to recover any time soon.

Rogers reported $512-million in profit for the quarter, 14-per-cent lower than the $593-million it saw during the same period last year. The earnings amounted to $1.01 a share, versus $1.14 a year ago.

Revenue for the quarter totalled $3.67-billion, down slightly from $3.75-billion a year ago but above the consensus analyst estimate of $3.34-billion from S&P Capital IQ.

Canaccord Genuity analyst Aravinda Galappatthige called the results “much better than expected,” while BMO analyst Tim Casey said Rogers beat expectations “on almost every metric.”

“Wireless results reflected pent-up demand and strong execution. Cable results continued to be solid as margins improve due to [customers doing their own installations]. Media results were very strong on the return of sports,” Mr. Casey said in a note to clients.

Shares of Rogers closed up 11.5 per cent at $58.40 on the Toronto Stock Exchange.

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