Rogers reports higher profits but braces for hit from massive network outage - The Globe and Mail

Rogers Communications Inc. RCI-B-T reported higher revenue and profits in its most recent quarter, helped by a rebound in wireless roaming, as it braces for the impact of a massive network outage on its third-quarter results.

The Toronto-based wireless giant also announced it has reached a deal with Shaw Communications Inc. SJR-B-T to extend the deadline for their contested $26-billion merger until the end of the year, as they await regulatory approvals.

The telecom said it will spend $150-million in the third quarter to compensate customers for the outage, which left millions without wireless, internet and home phone service, and paralyzed the Interac debit system. The company will credit its customers for five days worth of services.

The service disruption outraged consumers and is expected to weigh on the company’s subscriber figures in the third quarter.

“Since the outage of July 8, we did see an impact on our subscriber results, but we’re encouraged by the patience our customers have shown,” Rogers CEO Tony Staffieri told analysts during a conference call Wednesday to discuss the company’s second-quarter results.

Scotiabank analyst Maher Yaghi said in a research note the telecom expects to see elevated churn – which represents the monthly rate of customer turnover – as a result of the outage.

Mr. Staffieri has promised to make changes and investments to improve the resiliency of the company’s networks.

Rogers had $3.87-billion in revenue for the three months ended June 30, up 8 per cent compared with $3.58-billion during the same period last year. The company said it benefited from a rebound in travel, which allowed it to collect roaming fees when customers used their devices abroad, as well as higher levels of immigration and improved performance by its team.

The telecom reported $409-million in quarterly profits, up 35 per cent from a year ago when it had $302-million in profits. The earnings amounted to 76 cents a share, up from 60 cents a share.

Rogers added 122,000 net new postpaid wireless subscribers during its most recent quarter, up from 60,000 during the same period last year. (Postpaid subscribers are billed at the end of the month for the services they used, versus prepaid customers, who pay upfront for wireless services.)

RBC analyst Drew McReynolds said the telecom benefited from strong performance in its wireless division, which boosted its revenue by 7 per cent, as well as improvement in its cable business, which increased its revenue by 2 per cent.

The Competition Bureau is attempting to block the merger of Canada’s two largest cable companies, arguing it would result in higher prices and poorer service, particularly for wireless customers.

Rogers has struck a deal to sell Shaw’s Freedom Mobile, Canada’s fourth largest wireless carrier, to Quebecor Inc. QBR-B-T for $2.85-billion in an attempt to address those concerns.

Rogers said in a statement on Wednesday it is continuing to work with Quebecor to produce definitive transaction documents for the Freedom Mobile sale and will provide an update “in due course.”

“It’s a large deal. It’s close to $3-billion and contains quite a few complexities as we work through that,” Mr. Staffieri said, adding that Rogers and Quebecor each remain committed to the sale.

Rogers, Shaw and the Shaw family trust have agreed to extend the merger deadline to Dec. 31, with the option to extend further until Jan. 31, provided Rogers has the financing to complete the deal.

In March, Rogers tapped credit markets to replace a $19-billion bridge loan to finance the deal. The telecom raised US$7.05-billion by selling five bond issues south of the border, and $4.25-billion with four Canadian bond issues. The bonds contain a clause that requires them to be redeemed at 101 per cent of their value if the deal does not close by Dec. 31.

Rogers chief financial officer Glenn Brandt said if the merger is delayed beyond that date, the telecom has a number of options to finance the takeover, including seeking bank funding, extending the bonds’ redemption date or raising money through the capital markets.

However, Mr. Brandt said Rogers is “confident that there is plenty of time between now and year end to close the transaction and to use those bonds to fund the acquisition.”

Mr. Yaghi said the deadline extension demonstrates that Shaw remains committed to the deal and “should alleviate some investor concern as closing of the deal is taking longer than initially planned.”

“The decision was also made in order to take into consideration the possibility that the acquisition might have to be dealt with in a trial at the competition tribunal,” Mr. Yaghi added.

The Competition Bureau has requested more time to review the potential sale of Freedom Mobile to Quebecor, saying in court documents it has not yet been provided with a final agreement between Rogers and Quebecor.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Adblock test (Why?)

https://news.google.com/__i/rss/rd/articles/CBMid2h0dHBzOi8vd3d3LnRoZWdsb2JlYW5kbWFpbC5jb20vYnVzaW5lc3MvYXJ0aWNsZS1yb2dlcnMtc2hhdy1leHRlbmQtZGVhZGxpbmUtZm9yLWNvbnRlc3RlZC0yNi1iaWxsaW9uLW1lcmdlci11bnRpbC1lbmQv0gEA?oc=5

2022-07-27 11:17:38Z
1507205268