Rogers announced its Q2 2015 results today, with the company reporting $363 million in income, down from $405 million the same period last year. Rogers blamed increases in depreciation and amortization, along with higher income taxes, for the profit hit. Revenues of $3.4 billion were up $190 million over the same period a year ago.
From a wireless perspective, Rogers highlighted its acquisition of Mobilicity, along with Shaw’s AWS spectrum licences. Wireless revenues for the quarter were $1.9 billion, representing 56% of total company revenues, and an increase of 6% from this time in 2014.
Rogers stopped its postpaid subscriber churn in the quarter after two quarters of loss. While there were 313,000 gross postpaid additions, total net subscribers were 24,000 postpaid subs, along with 8,000 prepaid, bringing the total subscriber base to just over 9.5 million.
The company activated 682,000 smartphones in the quarter up 16% from Q2 2014. Rogers noted that 83% of its postpaid subscriber base owns a smartphone, customers who are prized for their higher ARPU (average revenue per user) and loyalty, with less likelihood of churning.
Wireless churn increased six basis points over the same period last year to 1.19% and Rogers calls it a “modest increase” that is a result of its focus on optimizing subscriber value, migrating existing customers to current pricing plans, and the impact of the industry’s “double cohort.” Guy Laurence, Rogers’ CEO, noted during the company’s earnings call that he attributes the higher net subscriber numbers to better content bundles, and other value-added services, such as bundling Shomi and, on the Fido side, Spotify.
Blended ARPU for the quarter increased by $0.83 to $60.01, which Rogers says “was a result of increased network revenue and wireless data usage.” Laurence did note that the number could have been higher, but it issued a number of data-related promotions in the quarter around the time of the Double Cohort, which factored into lower data overage numbers.
Along with ARPU, the company is now reporting ARPA, or Average Revenue Per Account, factoring in accounts with multiple devices and services, an increasingly important representation of its customer base. ARPA increased $4.59 over the same period a year ago to $110.14 on, what Laurence claims, is a boost in Share Plan adoption.
One piece of negative news is that despite hedging the price of handsets for a number of quarters, Rogers may have to increase the prices of handsets due to the weak Canadian dollar. Rogers CFO, Tony Staffieri, noted on the earnings call that because many handset prices are tied to the U.S. dollar, as the Canadian dollar falls, the introductory price of handsets will have to rise.
On the spectrum side, the company has completed the deployment of 10Mhz of AWS-1 in British Columbia and Alberta, giving it the same amount of LTE coverage currently offered in Southern Ontario. Rogers also notes that it owns 40Mhz of contiguous spectrum across Canada in the 2500Mhz range, which is supported by the majority of the company’s LTE handsets.
Overall, Laurence says his company weathered the Double Cohort quite well, but insists that Rogers will keep having to prove the value of bundling content with wireless services if it wants to continue adding customers quarter over quarter.