Rogers Communications Inc.
(
RCI
) declared strong financial results for the third quarter of
2012, easily beating the Zacks Consensus Estimates. Quarterly net
income was $468 million or 90 cents per share compared with a net
income of $493 million or 87 cents per share in the year-ago
quarter.
However, third-quarter adjusted (excluding special items)
earnings per share of 97 cents were miles ahead the Zacks
Consensus Estimate of 89 cents. Quarterly total revenue was
$3,189 million, up 1% year over year, handily beating the Zacks
Consensus Estimate of $3,085 million.
Third quarter adjusted operating profit was $1,293.4 million,
up 5% year over year. Quarterly adjusted operating margin was
40.6% compared with 39.2% in the year-ago quarter.
During the third quarter of 2012, Rogers Communications
generated $1,146 million of cash from operations compared with
$1,128 million in the year-ago quarter. Free cash flow during the
reported quarter was $618 million compared with $569 million in
the year-ago quarter.
At the end of the third quarter of 2012, Rogers Communications
had $1,904 million of cash and marketable securities on its
balance sheet compared with $1,107 million at the end of 2011.
Total outstanding debt, at the end of the reported quarter, was
$10,736 million compared with $9,833 million at the end of 2011.
At the end of the third quarter of 2012, debt-to-capitalization
ratio was 0.74 compared with 0.74 at the end of 2011.
Wireless Segment
Quarterly total revenue was $1,897 million, up 3% year over
year. Network revenue was $1,751.3 million, up 2% year over year.
Equipment sales were $145.6 million, up 16% year over year.
Quarterly adjusted operating profit for the segment was $846.5
million, up 3% year over year.
Adjusted operating margin was 48.3% in the reported quarter
compared with 47.7% in the year-ago quarter. In the third quarter
of 2012, wireless Data revenue was $722million, up 18% year over
year. Wireless Data revenue represented around 41% of total
wireless network revenue compared with 36% in the prior-year
quarter.
During the third quarter of 2012, wireless segment activated
707,000 smartphones, up 16.1% 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. Of the total smartphones,
around 36% were new subscribers. Quarterly consolidated ARPU
(average revenue per user) was $62.2, up 0.2% year over year.
On September 30, 2012, Postpaid retail subscribers' base was
around 7.788 million, up 3.4% year over year. Smartphone
customers now constitute 65% of overall Postpaid subscribers
compared with 52% in the year-ago quarter. Quarterly Postpaid
ARPU was $71.8, down 0.8% year over year.
Monthly churn rate was 1.34% compared with 1.36% in the
prior-year quarter. Prepaid subscribers' base was around 1.644
million, down 6.4% year over year. Quarterly Prepaid ARPU was
$16.8, up 0.06% year over year. Monthly churn rate was 3.77%
compared with 3.37% in the prior-year quarter.
Cable Segment
Quarterly total revenue was $841.5 million, up 1% year over
year. Basic cable operations revenue was $472 million, down 1%
year over year. Internet revenue was $250 million, up 7% year
over year. Home Telephony revenue was $119.5 million, remaining
same year over year.
Quarterly adjusted operating profit for the whole segment was
$404.7 million, up 10% year over year. Adjusted operating margin
was 48.1% in the reported quarter compared with 44.4% in the
year-ago quarter.
On September 30, 2012, Cable TV subscribers' base was around
2.239 million, down 2.8% year over year. High-speed Internet
subscribers' base was 1.844 million, up 4.3% year over year.
Digital cable terminal base was 1.776 million, up 0.5% year over
year. Cable Telephony lines were 1.065 million, up 2% year over
year.
Media Segment
Quarterly total revenue was $393.7 million, down 4% year over
year. Quarterly adjusted operating profit was $50.2 million, down
9% year over year. Adjusted operating margin was 12.8% in the
reported quarter compared with 13.5% in the year-ago quarter.
Our Recommendation
We maintain our Outperform recommendation on Rogers
Communications. Currently, the company has a short-term Zacks #2
Rank (Buy).
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