Noah Zivitz

Managing Editor, BNN Bloomberg

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Rogers Communications Inc. posted fourth-quarter profit on Thursday that was in line with expectations as its wireless and media division powered revenue growth.

It was the first round of earnings reported by the telecommunications giant since Tony Staffieri, its former chief financial officer, was brought back in November to replace Joe Natale as chief executive in the aftermath of a power struggle with the company’s chair, Edward Rogers.

The company’s quarterly net income fell 10 per cent year-over-year to $405 million. The earnings release indicated Rogers booked approximately $39 million in restructuring costs during the quarter. On an adjusted basis, it earned 96 cents per share and $1.52 billion before interest, taxes, depreciation, and amortization (EBTIDA). Revenue climbed six per cent to $3.9 billion.

Analysts, on average, were expecting Rogers to post 95 cents in per-share profit, and $1.52 billion in EBITDA, on $3.84 billion in revenue in the fourth quarter.

The company said it added 130,000 net new postpaid wireless subscribers in the division; a year earlier, it added 114,000. Revenue from wireless services rose six per cent to almost $1.74 billion, which Rogers attributed in part to an uptick in roaming fees as travel restrictions were eased. During a conference call with analysts Thursday morning, Staffieri said wireless “continues to lead [Rogers’] recovery.”

Meanwhile, the company’s media division saw revenue surge 26 per cent year-over-year to $516 million amid higher proceeds from advertising and subscription services.

However, the division swung to a loss as expenses surged 66 per cent. Rogers said that was because of higher production costs associated with the scheduling of National Hockey League and National Basketball Association seasons, as well as increased operating costs.

During the call, Staffieri expressed disappointment with Rogers’ cable division, where revenue was flat at $1.02 billion in the fourth quarter.

“We're not satisfied with the performance in this area, that's why we made changes to improve momentum and drive increased revenue and profitability in our cable business,” he said.

In December, Rogers appointed former Vidéotron Chief Executive Robert Dépatie as president and chief operating officer of its new Home and Business division, which includes responsibility for high-speed internet and television services.

Rogers is still working on closing its planned $20-billion takeover of Shaw Communications Inc. That deal was announced last March, and still awaits approval from the Competition Bureau; Canadian Radio-television and Telecommunications Commission; and the Ministry of Innovation, Science, and Economic Development. In its earnings release Thursday, Rogers said it’s expecting the transaction to close in the first half of 2022 and disclosed that it booked $62 million in costs associated with the deal during the latest quarter.

Also on Thursday, Rogers said it expects to generate up to $2 billion in free cash flow this year.

"We expect to have the financial flexibility to maintain our network advantages and to continue to return cash to shareholders," it said.

Of 16 analysts tracked by Bloomberg, 11 have a buy recommendation on Rogers, while the other five say it’s a hold. The consensus 12-month price target is $69.36 per share, suggesting 12 per cent potential upside from the stock’s closing price on the Toronto Stock Exchange Wednesday.