Canadian telecom giant Rogers Communications (TSX:RCI.B) third-quarter earnings were bolstered by a wave of new smartphone subscribers boosted wireless revenue.
In the third quarter, net income fell to $466 million or 90 cents per share, from $491 million, or 87 cents, a year earlier.
Excluding restructuring costs and other items, earnings rose to $495 million, or 96 cents from $489 million, or 90 cents a year earlier. Operating revenue rose 1.4 per cent to $3.18 billion.
Analysts, on average, had been expecting earnings of 88 cents on revenue of $3.16 billion, according to Thomson Reuters.
“Our top line and operating profit growth in the third quarter was highlighted by strong postpaid wireless smartphone sales and accelerated wireless data revenue growth, as well as strong margins in both our wireless and cable businesses where customer retention and cost containment initiatives have taken hold,” said Rogers Communications’ president and CEO Nadir Mohamed.
“Despite intensely competitive markets, we continued to successfully leverage our technology leadership to deliver new and innovative products and services and to invest in our networks at a healthy pace, while at the same time continuing to generate strong earnings and free cash flow.”
During the quarter Rogers added 76,000 net postpaid wireless subscribers, compared with 74,000 in the same period last year. Apple’s (NASDAQ:AAPL) iPhone 5 went on sale late in the third quarter. Postpaid subscribers, who sign multi-year contracts, typically pay more each month than prepaid customers.
Rogers activated about 707,000 smartphones, up from 609,000 last year, and 36 per cent of the new devices were for new wireless customers.
The percentage of postpaid subscribers using smartphones rose to 65 per cent by the end of the quarter, up from 52 per cent a year earlier, and wireless data revenue jumped 18 per cent.
Blended average revenue per user grew to $61.92 from $61.79 a year earlier.
Rogers said that Cable Television revenue was relatively flat, reflecting pricing changes together with a continued increase in penetration of its digital cable product offerings.
The digital cable subscriber base has grown by 1 per cent since September 30, 2011, and represents 79 per cent of Rogers’ total television subscriber base as at September 30, 2012.
The year-over-year increase in Internet revenue for both the three quarter and first nine months of 2012 reflects an increase in Internet subscriber base, combined with Internet service pricing changes made during the previous twelve months. The company said that its high-speed Internet customer base stands at 1.8 million subscribers.
Media revenues decreased for the three months ended September 30 as a result of softer results at Television, Publishing, Digital Media and The Shopping Channel partially offset by growth at Sportsnet and Sports Entertainment. Earlier this year the company purchased cable broadcaster Score Media.
Rogers is Canada’s largest cable TV operator and wireless operator and is a major magazine publisher, TV and radio broadcaster and sports team owner.
Rogers has said it expects to launch a credit card that will be part of a “virtual wallet” as the telecom company moves to mobile payments on smartphones.
Rogers and CIBC (TSE:CM) already have announced they will launch Canada’s first mobile payments system later this year, giving Canadians the ability to pay with their credit card using a smartphone.