Rogers Communications Inc. (RCI) declared third-quarter 2013 financial results, where both its top and bottom line missed the Zacks Consensus Estimate.
Quarterly net income was $476 million or 92 cents per share compared with $470.3 million or 91 cents in the year-ago quarter. However, the adjusted EPS fell short of the Zacks Consensus Estimate of 95 cents. Quarterly total revenue was $3,063 million, up 2% year over year, but below the Zacks Consensus Estimate of $3,145 million.
Third-quarter operating profit was $1,274 million, up 4% year over year. Quarterly operating margin was 41.6% compared with 40.5% in the year-ago quarter.
During the third quarter of 2013, Rogers Communications generated $999.4 million of cash from operations compared with $1,088.7 million in the year-ago quarter. Free cash flow was a negative $478.8 million against $587.1 million in the year-ago quarter.
At the end of third-quarter fiscal 2013, Rogers Communications had $801.8 million of cash and marketable securities on its balance sheet as compared with $202.4 million at the end of fiscal 2012. Total outstanding debt was $9,945.6 million versus $9,919 million at the end of fiscal 2012. The debt-to-capitalization ratio was 0.70 compared with 0.73 at the end of fiscal 2012.
Wireless Segment
Quarterly total revenue was $1,753.7 million, down 2% year over year. Network revenues were $1,639.7 million, down 1% from the year-ago quarter. Equipment sales were $114 million, down 17% year over year.
Quarterly adjusted operating profit for the entire segment was $831.3 million, up 4% year over year. Adjusted operating margin was 47.4%, in the third quarter of 2013, compared with 44.6% in the year-ago quarter. In the same time frame, Wireless Data revenues were $782.8 million, up 15% year over year. Wireless Data revenues represented around 48% of total wireless network revenue against 41% in the prior-year quarter.
During the third quarter of 2013, the Wireless segment activated 574,000 smartphones against 707,000 in the prior-year quarter. Most of the smartphones were either Apple Inc.’s (AAPL) iPhones, BlackBerry Ltd.’s (BBRY) BlackBerry or Google Inc. (GOOG) developed Android handsets. Quarterly consolidated ARPU (average revenue per user) or Blended ARPU was $57.8, down 1.8% year over year.
At the end of the reported quarter, Postpaid retail subscribers' base stood at 8.040 million, up 3.2% year over year. Smartphone customers constituted a record 73% of the overall postpaid subscribers as against 65% in the year-ago quarter. Quarterly Postpaid ARPU was $68.77, down 3.8% year over year. Monthly churn rate was 1.23% versus 1.34% in the prior-year quarter.
Prepaid subscribers’ base was around 1.458 million, down 11.3% from the year-ago quarter. Quarterly Prepaid ARPU was $16.84, up 0.7% year over year. Monthly churn rate was 3.33% against 3.77% in the prior-year quarter.
Cable Segment
Quarterly total revenue was $829.4 million, up 4% year over year. Basic cable operations revenues were $429.4 million, down 3% from the year-ago quarter. Internet revenues were $279.3 million, up 18% year over year. Home Telephony revenues were $118.8 million, up 5% year over year. Quarterly adjusted operating profit for the whole segment was $403.8 million, up 5% year over year. Adjusted operating margin was 48.7%, in the reported quarter, compared with 48.1% in the year-ago quarter.
At the end of third-quarter fiscal 2013, Cable TV subscribers’ base stood at 3.956 million, up 4h.1% year over year. High-speed Internet subscribers’ base was 1.94 million, up 5.6% year over year. Digital cable subscribers' base constituted 83% of the overall total television subscriber base compared with 79% in the year-ago quarter.
Media Segment
Quarterly total revenue was $418 million, up 12% year over year. Quarterly adjusted operating profit was $52.3 million, up 10% year over year. Adjusted operating margin was 12.5%, in the reported quarter, compared with 12.8% in the year-ago quarter.
RBS Segment
Quarterly total revenue was $88.4 million, up 8% year over year. Quarterly adjusted operating profit was $27.6 million, up 32% from the prior-year quarter. Adjusted operating margin was 31.2%, in the reported quarter, compared with 25.6% in the year-ago quarter.
Outlook
Rogers slashed its outlook for tax payments for the full-year 2013 to $500 million from its earlier guidance of $650 million to $700 million.
Currently, Rogers Communications has a Zacks Rank #3 (Hold).
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