Rogers Communications Inc., a leading diversified Canadian communications and media company, today announced its unaudited consolidated financial and operating results for the second quarter ended June 30, 2014, prepared in accordance with International Financial Reporting Standards (IFRS).
|Three months ended June 30||Six months ended June 30|
|(In millions of dollars, except per share amounts)||2014||2013||% Chg||2014||2013||% Chg|
|As adjusted 1 :|
|Basic earnings per share||0.84||0.97||(13)||1.50||1.77||(15)|
|Diluted earnings per share||0.84||0.96||(13)||1.49||1.76||(15)|
|Free cash flow 1||436||505||(14)||792||933||(15)|
|Basic earnings per share||0.79||1.03||(23)||1.38||1.72||(20)|
|Diluted earnings per share||0.76||0.93||(18)||1.33||1.69||(21)|
|Cash provided by operating activities||1,202||1,061||13||1,610||1,866||(14)|
|1||Adjusted amounts and free cash flow are non-GAAP measures and should not be considered as a substitute or alternative for GAAP measures. They are not defined terms under IFRS, and do not have standard meanings, so may not be a reliable way to compare us to other companies. See "Non-GAAP Measures" for information about these measures, including how we calculate them.|
"During the second quarter, we continued to improve churn rates, generate strong margins and successfully expand upon our sports media platform," said Guy Laurence, President and Chief Executive Officer of Rogers Communications Inc.
Laurence continued, "Late in the quarter we also announced Rogers 3.0, a seven-point multi-year plan that lays the groundwork to significantly enhance our customer experience and re-accelerate growth relative to peers. Over time this new customer centric structure will streamline the organization, clarify accountabilities, and improve our agility and execution."
New Strategic Plan Unveiled
- On May 23, 2014, CEO Guy Laurence, unveiled Rogers 3.0, a multi-year, seven-point plan that reflects feedback from thousands of customers, employees and shareholders. The plan builds on Rogers unrivaled asset mix and the underlying strengths of the Company to execute consistently, improve customer experience, and identify and capitalize on opportunities for growth and innovation.
- Consolidated revenue this quarter was consistent with the second quarter of 2013, reflecting revenue growth of 1% in Media and 6% in Business Solutions. Wireless network revenue was relatively unchanged year over year, a sequential improvement from the 3% decline in the first quarter of 2014. Excluding the decline in roaming revenue due to the new roaming plans introduced over the past year, Wireless network revenue would have been 2% higher than in the second quarter of 2013. Cable revenue was consistent with the second quarter of 2013 as continued Internet revenue growth combined with the impact of pricing changes across all product types was mostly offset by television subscriber losses.
- Activated 588,000 smartphones, of which 31% were new subscribers, with higher-value smartphone customers growing to 76% of Wireless postpaid subscribers.
Adjusted operating profit and net income
- The increase in consolidated adjusted operating profit reflects increases in Wireless of 3% and Business Solutions of 12%, partly offset by decreases at Cable of 2% and at Media of 16%. Wireless results benefited from lower levels of hardware upgrades and new activations. Cable's results were negatively impacted by higher investment in customer care and network, while Media's results were negatively impacted by lower advertising revenues, and investments in Toronto Blue Jays player salaries, programming costs, Next Issue Canada and Rogers' NHL initiative.
- Consolidated adjusted operating profit margin was 40.9% this quarter, higher than the same quarter last year, because of strong adjusted operating profit margins at Wireless of 50.4%, and Business Solutions of 29.5%.
- The reductions in adjusted net income and adjusted earnings per share are primarily the result of 15% higher depreciation and amortization expenses partially offset by the increase in the adjusted operating profit. Net income was 24% lower and diluted earnings per share were 18% lower than the second quarter of 2013.
Enhanced our leading networks to continue monetizing rapid data growth
- Deployed 700 MHz spectrum in select Vancouver, Calgary, Montreal and Toronto communities, delivering the ultimate mobile video experience to Rogers customers as they access the Internet and stream video deep inside buildings, basements and elevators.
- Announced $450 million of planned investments over the next three years to further expand our wireless network in more than 70 communities across British Columbia, including enhancing existing LTE connections with 700 MHz spectrum to allow customers to access the Internet at broadband speeds in even more places. When complete, Rogers will have invested $2 billion in its network in British Columbia, giving both rural and urban customers reliable and consistent access to the latest technology across the province.
Enriched the customer experience
- Signed a Partner Market agreement with Vodafone to become its partner in Canada. The agreement extends Vodafone's international experience, innovation and scale to Rogers in the Canadian market to generate a number of revenue, cost saving and product opportunities.
- Launched international wireless travel packs, bundling services consumers and small businesses need to stay connected, including data, talk and text, as well as providing for travellers who want to go online with their smartphone or tablet can now take advantage of a new data-only rate of $9.99 per day.
- Introduced Rogers Check-In, a new service capability that allows small business customers to quickly and easily review their account at any time with a Small Business Specialist to ensure they have the right services for their business needs.
- Launched suretap™ wallet, a new application that lets customers use their smartphones to securely store eligible payment cards and make payments at tens of thousands of retailers across the country.
- Became the first Canadian carrier to give details about how and when we shared customer information in response to requests from legal authorities, through the release of Rogers' 2013 Transparency Report.
- Rogers Vicinity, an automated loyalty program offering small businesses and their customers access to loyalty programs and awards, won Product of the Year award for the Rewards / Financial Services Programs category by a consumer-voted program. Vicinity's availability was also expanded this quarter to include Western Canada.
Accelerated sports and other content
- Launched Sportsnet WOW, a 24/7, live HD-quality stream of all seven of Sportsnet's TV channels. Designed to keep sports fans connected to their favourite teams, players, and Sportsnet programming, Sportsnet NOW is available on all mobile devices and computers for free with a Sportsnet TV subscription.
- Unveiled our 2014-2015 NHL national broadcast schedule, delivering double the number of games on free over-the-air TV and twice as many Hockey Night in Canada Saturday night games than ever before for Canadians. Respected announcers Jim Hughson, Dave Randorf, Paul Romanuk and Bob Cole will be the play-by-play team that will call NHL national games across all Rogers media properties, and for Hockey Night in Canada.
- Next Issue Canada continued to expand the offerings on its digital newsstand by adding People Magazine, National Geographic, Travel + Leisure, and Food & Wine to its already expansive list of more than 140 available North American magazine titles.
Invested in and developed our people
- Named one of Canada's 'Top Employers for Young People' for fifth consecutive year by Canada's Top 100 Employers. Judges noted that Rogers provides exciting and challenging work, a broad range of career opportunities, a strong total rewards package and a chance to work with the best and the brightest in the industry.
Maintained strong balance sheet and available liquidity
- Generated $436 million of consolidated quarterly free cash flow, while cash provided by operating activities was $1,202 million, and repaid $500 million of bank debt that was originally drawn under our credit facility in April 2014 to partially fund our 700 MHz spectrum purchase.
- Approximately $2.6 billion of available liquidity at June 30, 2014 includes $2.5 billion available under the bank credit facility and $0.1 billion available under the accounts receivable securitization program.