Rogers Communications Inc. raised its outlook for the year, as Canada’s high immigration levels helped the company show another big gain in subscribers.
Canada’s largest wireless provider said it expects free cash flow of C$2.2 billion to C$2.5 billion this year. The higher end of that range is 14% above its previous guidance. It also raised its forecast for adjusted earnings before interest, taxes, depreciation and amortization.
For Rogers, it’s the first set of financial results to include Shaw Communications Inc., the Western Canadian cable and wireless company it bought for about C$20 billion ($15.1 billion). Rogers closed the deal in April after winning a battle with the country’s antitrust watchdog, which had tried to block it.
Revenue in Rogers’ cable division nearly doubled in the second quarter because of the acquisition, topping C$2 billion. The Toronto-based company was forced to divest the bulk of Shaw’s wireless customers.
In wireless, its most important unit, Rogers added 170,000 postpaid phones in the second quarter, beating analysts’ projections of just less than 130,000. Still, adjusted earnings of C$1.02 per share fell short of estimates of C$1.15, according to data compiled by Bloomberg.
Population growth has become a significant tailwind for Canadian wireless providers. The country added 292,000 people in the first three months of the year, almost all of it from immigration. It was the highest rate of growth for Canada in any first quarter in data going back to 1972.
But there’s also the prospect of price wars after Quebecor Inc.’s Videotron division acquired Shaw’s former Freedom Mobile business, giving it scale as the fourth-largest national player behind Rogers, BCE Inc. and Telus Corp.
Revenue per mobile phone user was down 3.6% in the second quarter, to an average of C$56.79 per month, Rogers said.
“With increased wireless competition, we will be watching for signs that discounting could accelerate in the key back-to-school period,” Stephanie Price, an analyst at CIBC Capital Markets, said in a sector note to investors before the release of earnings.
Rogers shares have fallen about 6.6% this year as of Tuesday’s close, trailing all of its main domestic rivals but still outperforming AT&T Inc. and Verizon Communications Inc.
(Updates with additional information on the results beginning in fourth paragraph)
