Oct 23, 2019
Rogers Cuts Annual Guidance Due to Popularity of Unlimited Plans
(Bloomberg) -- Rogers Communications Inc. cut forecasts for revenue and capital spending after customers embraced unlimited data plans at a faster rate than expected, the telecommunications firm said after posting earnings that missed analysts’ estimates.
Revenue for 2019 is now forecast to range between a 1% decrease and a 1% increase, down from previous guidance of a 3% to 5% increase. Capital expenditures are expected to be C$2.75 billion ($2.1 billion) to C$2.85 billion for the year, from as high as C$3.05 billion, Toronto-based Rogers said Wednesday in a statement. The company also cut its full-year forecast for adjusted earnings and free cash flow.
“The downward adjustment primarily reflects faster-than-expected adoption of our new Rogers Infinite unlimited data plans and the related reduction in overage revenue, lower wireless equipment revenue resulting from the highly competitive environment, and certain efficiencies recognized this year on capital expenditures,” the company said.
Rogers posted C$593 million in net income, or C$1.14 a share, for the third quarter, compared with C$594 million, or C$1.15 a year earlier. Adjusted earnings of C$1.19 a share missed the C$1.31 estimate of analysts surveyed by Bloomberg.
Rogers shared have dropped 5% this year, trailing its main rivals BCE Inc., up 19%, and Telus Corp., which has risen 6%.
Canadian telecom companies also face political pressure, with the latest federal election campaign targeting the wireless providers for their data plans. Prime Minister Justin Trudeau, whose Liberal Party was re-elected Monday with a minority government, pledged to cut wireless services costs by 25% within four years.
The Canadian Wireless Telecommunications Association said that competition is already creating value and lowering data prices.
“With the vigorous competition among wireless carriers, the cost of wireless data in Canada is already declining significantly,” the association said in an emailed statement. “Today, Canadians in every region of the country can get unlimited data plans starting from C$50-C$75 a month. This is a significant decline in the price of data from just a year ago.”
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