Rogers Communications Inc. (RCI) declared mixed quarterly numbers for the third quarter of 2014. Net income stood at $305.2 million or 64 cents per share compared with $446.5 million or 90 cents in the year-ago quarter. Moreover, adjusted earnings per share of 68 cents missed the Zacks Consensus Estimate of 82 cents.
On the other hand, quarterly total revenue grossed $2,896 million, up 0.9% year over year. The figure also surpassed the Zacks Consensus Estimate of $2,836 million. The upside was primarily driven by an increase in revenues in wireless and business solutions.
Adjusted operating profit came in at $1,206 million, down 2.2% year over year. Quarterly operating margin stood at 40.3% compared with 41.6% in the year-ago quarter.
In the third quarter of 2014, Rogers Communications generated $971.6 million of cash from operations up 0.5% year over year. Free cash flow was $385.1 million against $485 million in the year-earlier quarter.
At the end of the reported quarter, Rogers Communications had $95.6 million of cash and cash equivalents on its balance sheet compared with $2,115.1 million at the end of Dec 31, 2013. Total outstanding debt stood at $12,512.2 million versus $11,189.4 million at the end of fiscal 2013. The debt-to-capitalization ratio stood at 0.72, flat compared with fiscal 2013.
Wireless Segment
Quarterly total revenue came in at $1,728.1 million, up 1.8% year over year. Network revenues totaled $1,592.1 million, up 0.3% year over year. Equipment sales were $136 million, up 23.3% year over year.
Quarterly adjusted operating profit for the entire segment was $816.2 million, up 1.5% year over year. Adjusted operating margin was 51.3% in the quarter, compared with 50.7% in the year-earlier period.
During the third quarter, the Wireless segment activated 614,000 smartphones against 574,000 in the same period a year ago. Most of the smartphones were either Apple Inc.’s (AAPL) iPhones, Black Berry Ltd.’s (BBRY) smart devices or Google Inc. (GOOG)-developed Android handsets. Quarterly consolidated ARPU (average revenue per user) or blended ARPU was $56, up 0.2% year over year.
During the reported quarter, postpaid retail subscriber base touched 8.131 million, up 1.1% year over year. Smartphone customers constituted a record 77% of the overall postpaid subscribers as against 73% in the year-ago quarter. Quarterly postpaid ARPU was $62.8, down 0.7% year over year. Monthly churn rate stood at 1.31% versus 1.23% in the prior-year quarter.
Prepaid subscriber base totaled 1.366 million, down 6.3% from the year-ago quarter. Quarterly prepaid ARPU was $15.1, down 2.2% year over year. Monthly churn rate was 3.12% against 3.33% in the prior-year quarter.
Cable Segment
Quarterly total revenue came in at $794.2 million, down 1% year over year. Basic cable operations revenues totaled $398 million, down 4.2% from the year-ago quarter. Internet revenues were $285.9 million, up 5.8% year over year. Home Telephony revenues were $108.5 million, down 5.6% year over year. Quarterly adjusted operating profit for the whole segment stood at $376 million, down 3.8% year over year. Meanwhile, adjusted operating profit margin stood at 47.3% in the reported quarter, compared with 48.7% in the year-ago period.
Cable TV subscriber base reached 4.025 million, up 1.7% year over year. High-speed Internet subscriber base was 1.99 million, up 2.6% year over year. Digital cable subscriber base now constituted 87% of the total television subscriber base compared with 83% in the second quarter of 2013.
Media Segment
Quarterly total revenue came in at $404.4 million, flat year over year. Quarterly adjusted operating profit was $21.1 million, down a substantial 58.2% year over year.
RBS Segment
Quarterly total revenue came in at $88.2 million, up 3.2% year over year. Quarterly adjusted operating profit was $29.4 million, up 10.3% from the prior-year quarter. Adjusted operating profit margin stood at 33.3% in the reported quarter, compared with 31.2% a year ago.
Outlook
Rogers Communications expects adjusted operating profit for full year 2014 in the range of $4,838.5–$4,983.7 million. The company also expects after-tax free cash flow between $1,379 million and $1,451.6 million while capital expenditure for the full year is expected in the band of $2,201.5–$2,298.3 million.
Zacks Rank
Currently, Rogers Communications has a Zacks Rank #4 (Sell).
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