Second Quarter Revenue up 3% to $3.1 Billion, Adjusted Operating Profit Grows 4%, Adjusted Diluted EPS up 8% to $0.85, $559 Million of Free Cash Flow Generated;
Wireless Subscribers up 135,000 Driven by Record Number of New Smartphone Customers, While Wireless Data Revenue Growth Strong at 31% and Network Margins at 47%;
Cable Operations Adjusted Operating Profit Increases 17% Driving Margins to 48% on Continued Subscriber Growth and Cost Efficiencies;
Media Revenue up by 13% Reflecting Top Line Growth Broadly Across Portfolio.
Rogers Communications Inc. today announced its consolidated financial and operating results for the three and six months ended June 30, 2011, in accordance with International Financial Reporting Standards (“IFRS”).
This summary of our second quarter 2011 results should be read in conjunction with our second quarter 2011 MD&A, our second quarter 2011 Interim Unaudited Consolidated Financial Statements and Notes thereto, and our 2010 Annual Report all of which are incorporated by reference in this news release. The financial information presented herein has been prepared on the basis of International Financial Reporting Standards (“IFRS”) for interim financial statements and is expressed in Canadian dollars.
“Rogers delivered a solid performance in the second quarter both for financial and subscriber results, delivering solid growth in a highly competitive environment,” said Nadir Mohamed, President and Chief Executive Officer of Rogers Communications Inc. “The strength of our asset mix combined with successful execution on our priorities – wireless data growth, customer retention and managing our cost structure – enabled Rogers to generate continued strong margins and substantial free cash flow.”
Highlights of the second quarter of 2011 include the following:
- Generated consolidated quarterly revenue growth of 3%, with Wireless network revenue growth of 1%, Cable Operations revenue growth of 5%, and Media revenue growth of 13%, versus the same quarter last year. Adjusted operating profit increased by 17% at Cable Operations and by 47% at Media, but was partially offset by a 7% decline at Wireless primarily reflecting costs associated with the record number of new smartphone sales and ongoing declines in voice ARPU.
- Wireless data revenue growth accelerated to 31% and net postpaid subscriber additions totalled 108,000, helping drive wireless data revenue to now comprise 35% of Wireless network revenue. During the quarter, Wireless activated and upgraded 591,000 additional smartphones, of which approximately 40% were for subscribers new to Wireless, compared to 385,000 in the prior year quarter. This resulted in subscribers with smartphones, who typically generate ARPU nearly twice that of voice only subscribers, representing 48% of the overall postpaid subscriber base as at June 30, 2011, up from 35% as at June 30, 2010.
- Wireless launched the first Canadian commercial deployment of Long Term Evolution (“LTE”) network services in Ottawa. Rogers expects to follow this launch with market launches of LTE in Toronto, Montreal and Vancouver later this year, and in the rest of the top 25 Canadian markets in 2012. LTE is a next generation technology that enables unparalleled connectivity, offering speeds that are between three and four times faster than HSPA+ with peak theoretical download rates of up to 150 Megabits per second (Mbps) and upload speeds of up to 70 Mbps.
- Rogers began a $80 million investment to further enhance our wireless voice and data network in the Maritimes, extending the Rogers 4G HSPA+ coverage to almost one million more people across Nova Scotia, New Brunswick and Prince Edward Island, representing a 130% increase over the current population coverage of our network in those provinces.
- Rogers won an important contract to provision machine to machine (“M2M“) wireless connectivity for Hydro-Quebec over the next six years. Rogers will connect Hydro Quebec’s central system with up to 600 Smart Meter collectors, which aggregate electrical service utilization data relayed from Quebec’s approximately 3.8 million Smart Meters.
- Wireless launched Canada’s first Wi-Fi voice service for smartphones to help business customers save time and money by enabling mobile calls from their smartphones over a Wi-Fi network that do not count towards monthly voice plan minutes. Calls that originate on a Wi-Fi network are automatically transferred to the Rogers wireless network when the person leaves the Wi-Fi coverage area.
- The Small Business Specialist program was launched which is an innovative Canada-wide initiative that gives small business owners direct access to in-store trained specialists at 157 retail locations across Canada who can expertly and efficiently advise them on all of their business communications solutions needs.
- Rogers Remote TV Manager was launched by Cable in Ontario enabling digital TV subscribers the freedom and flexibility to search TV programming and manage PVR recordings online from anywhere with their computers, tablets and certain smartphones.
- Cable began the initial deployment of its innovative new Smart Home Monitoring offering, a first of its kind service in Canada that provides real-time customizable home monitoring, control, viewing and alerts from any computer or smartphone over a combination of Rogers’ broadband and wireless networks.
- Media announced the launch of CityNews Channel, a new 24-hour, interactive, local news channel in Toronto leveraging trusted news brands Citytv, 680 News and Maclean’s; as well as the launch by Citytv of reality TV competition series, “Canada’s Got Talent”. In addition, Media announced the launch of Sportsnet Magazine, Canada’s first national biweekly sports magazine, leveraging the Rogers Sportsnet franchise and brand to connect readers with the premier source for sports features and opinion.
- Generated $559 million of consolidated free cash flow in the quarter, defined as adjusted operating profit less PP&E expenditures, interest on long-term debt (net of capitalization) and cash income taxes, relatively consistent with the second quarter of 2010 and reflecting steady levels of adjusted operating profit being offset by an increased level of PP&E expenditures. Free cash flow per share increased by 2% over the same period reflecting accretion from share buybacks which have decreased the base of outstanding shares.