Rogers Communications Inc.
(
RCI
) declared mixed financial results for the fourth quarter of 2011.
However, wireless business, which accounts for nearly 58% of its
total revenue, continues with its dream run with record breaking
smartphone activations.
Quarterly net income was $320.5 million or 60 cents per share
compared with a net income of $296 million or 49 cents per share in
the year-ago quarter. The fourth-quarter adjusted EPS was 69 cents,
beating the Zacks Consensus Estimate of 67 cents. Quarterly total
revenue was $3,114 million, up 1% year over year, but fell below
the Zacks Consensus Estimate of $3,248 million.
Fourth-quarter adjusted operating profit was $1,072.1 million,
up 3% year over year. Quarterly adjusted operating margin was 34.4%
compared with 33.9% in the year-ago quarter. During the fourth
quarter, the company repurchased $366.5 million of Class B
non-voting shares and paid dividend totaling $186.2 million.
During the fourth quarter of 2011, Rogers Communications
generated $1,004.5 million of cash from operations compared with
$875.1 million in the year-ago quarter. Free cash flow during the
reported quarter was $364.6 million compared with $296 million in
the year-ago quarter.
At the end of 2011, Rogers Communications had $1,085 million of
cash and marketable securities on its balance sheet compared with
$878 million at the end of 2010. Total outstanding debt, at the end
of 2011, was $9,833 million compared with $8,654 million at the end
of 2010. At the end of 2011, debt-to-capitalization ratio was 0.74
compared with 0.69 at the end of 2010.
Wireless Segment
Quarterly total revenue was $1,789.5 million, up 2% year over
year. Network revenue was $1,608.2 million, remaining same year
over year. Equipment sales were $181.3 million, up 26% year over
year. Quarterly adjusted operating profit for the entire segment
was $656.6 million, down 5% year over year.
Adjusted operating margin was 40.8% in the reported quarter
compared with 42.9% in the year-ago quarter. In the fourth quarter
of 2011, wireless Data revenue was $588 million, up 19% year over
year. Wireless Data revenue represented around 37% of total
wireless network revenue compared with 31% in the prior-year
quarter.
During the fourth quarter of 2011, wireless segment activated a
record high 791,000 smartphones, up 24.6% year over year. Most of
these smartphones are either iPhone of
Apple Inc.
(
AAPL
), BlackBerry of
Research In Motion Ltd.
(
RIMM
) or
Google Inc.
(
GOOG
) developed Andriod-based handsets. Out of the total, around 35%
were new smartphone subscribers. Quarterly consolidated ARPU
(average revenue per user) was $57.64, down 4.1% year over
year.
On December 31, 2011, Postpaid retail subscribers' base was
around 7.574 million, up 3.4% year over year. Smartphone customers
now constituted 56% of overall Postpaid subscribers compared with
41% in the year-ago quarter. Quarterly Postpaid ARPU was $67.26,
down 3.8% year over year. Monthly churn rate was 1.49% compared
with 1.35% in the prior-year quarter.
Prepaid subscribers' base was around 1.761 million, up 6.6% year
over year. Quarterly Prepaid ARPU was $16.51, up 4.7% year over
year. Monthly churn rate was 3.51% compared with 3.04% in the
prior-year quarter.
Cable Segment
Quarterly total revenue was $934 million, remaining same year
over year. Basic cable operations revenue was $821.2 million, up 3%
year over year. RBS revenue was $91.2 million, down 16% year over
year. Video revenue was $21.6 million, down 31% year over year.
Quarterly adjusted operating profit for the whole segment was
$407.7 million, up 14% year over year. Adjusted operating margin
was 48.1% in the reported quarter compared with 45.9% in the
year-ago quarter.
On December 31, 2011, Cable TV subscribers' base was around
2.297 million, down 0.35% year over year. High-speed Internet
subscribers' base was 1.793 million, up 6.4% year over year.
Digital cable terminal base was 1.777 million, up 2.5% year over
year. Cable Telephony lines were 1.052 million, up 4.9% year over
year.
Media Segment
Quarterly total revenue was $419.5 million, up 3% year over
year. Quarterly adjusted operating income was $43.1 million, up 83%
year over year. Adjusted operating margin was 10.3% in the reported
quarter compared with 5.8% in the year-ago quarter.
Future Financial Outlook
Rogers Communications has provided guidance that its fiscal 2012
adjusted operating income will be C$4,730 million - C$4,915
million. Pre-tax free cash flow will be C$1,950 million - C$2,050
million. Wireless network revenue will be C$6,650 million-C$6,820
million. Wireless adjusted operating profit will be C$3,025
million-C$3,175 million. Cable revenue will be C$3,385
million-C$3,460 million. Cable adjusted operating profit will be
C$1,550 million-C$1,600 million. Media revenue will be C$1,690
million-C$1,750 million. Media adjusted operating profit will be
C$190 million-C$215 million.
New Capital Return Program
Rogers Communications declared that its Board of Directors has
approved an 11% increase in the annualized dividend to C$1.58 per
share effective immediately. Further, the Board has approved a
renewed share buyback program for the repurchase of up to C$1.0
billion of Class B Voting shares on the open market during the next
twelve months.
Our Recommendation
We maintain our long-term Neutral recommendation on Rogers
Communications. Currently, it has a short-term Zacks #3 Rank (Hold)
on the stock.
APPLE INC (
AAPL
): Free Stock Analysis Report
GOOGLE INC-CL A (
GOOG
): Free Stock Analysis Report
ROGERS COMM CLB (
RCI
): Free Stock Analysis Report
RESEARCH IN MOT (
RIMM
): Free Stock Analysis Report
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