Rogers Communications Inc. (RCI) declared mixed quarterly numbers in the fourth quarter of 2014. Adjusted earnings per share of 53 cents missed the Zacks Consensus Estimate of 59 cents.
On the other hand, quarterly total revenue grossed $2,706 million, up 3.8% year over year. The figure also surpassed the Zacks Consensus Estimate of $2,663 million. The upside was primarily driven by an increase in revenues in the wireless and media segments.
Adjusted operating profit came in at $1,085 million, up 5.7% year over year. Quarterly operating margin stood at 36.6% compared with 36% in the year-ago quarter.
In the fourth quarter of 2014, Rogers Communications generated $907.7 million of cash from operations, down 3.8% year over year. Free cash flow stood at $242.1 million, down 152.3% from the fourth quarter of 2013.
At the end of 2014, Rogers Communications had $155 million of cash and cash equivalents on its balance sheet compared with $2,193.3 million as of Dec 31, 2013. Total long-term debt stood at $12,170.6 million versus $11,603.3 million at the end of fiscal 2013. The debt-to-capitalization ratio stood at 0.72, flat compared with the fiscal 2013 figure.
Wireless Segment
Quarterly total revenue came in at $1,671 million, up 3% year over year. Network revenues totaled $1,497.6 million, up 2% year over year. Equipment sales were $173.4 million, up 8 % year over year.
Quarterly adjusted operating profit for the entire segment was $638.3 million, up 4% year over year. Adjusted operating margin was 38.2% in the quarter, compared with 37.6% in the year-earlier quarter.
During the fourth quarter, the Wireless segment activated 836,000 smartphones against 790,000 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 prepaid blended ARPU was $59.86, up 2.2% year over year.
During the reported quarter, postpaid retail subscriber base touched 8.073 million, flat year over year. Smartphone customers constituted a record 84% of the overall postpaid subscribers as against 75% in the fourth quarter of 2013. Quarterly postpaid ARPU was $67.43, up 1.6% year over year. Monthly postpaid churn rate stood at 1.46% versus 1.34% in the prior-year quarter.
Prepaid subscriber base totaled 1.377 million, down 3.6% from the year-ago quarter. Quarterly prepaid ARPU was $15.14, highlighting a decline of 2.3% year over year. Monthly churn rate was 3.09% against 3.41% in the prior-year quarter.
Cable Segment
Quarterly total revenue came in at $766.8 million, flat year over year. Basic cable operations revenues totaled $381.2 million, down 2% from the fourth quarter of 2013. Internet revenues were $279.1 million, up 5.3% year over year. Home Telephony revenues were $103.9 million, down 6% year over year. Quarterly adjusted operating profit for the whole segment stood at $373.3 million, down 2% year over year. Meanwhile, adjusted operating profit margin stood at 48.7% in the reported quarter, compared with 49.7% in the year-ago quarter.
Cable TV subscriber base reached 4.068 million, up 2.3% year over year. High-speed Internet subscriber base was 2.011 million, up 2.5% year over year. Digital cable subscriber base now constituted 88% of the total television subscriber base compared with 84% in the second quarter of 2013.
Media Segment
Quarterly total revenue came in at $478.9 million, up 20% year over year. Quarterly adjusted operating profit was $68.7 million, up a substantial 59% year over year.
RBS Segment
Quarterly total revenue came in at $85.4 million, down 1% year over year. Quarterly adjusted operating profit was $30.2 million, up 17% from the prior-year quarter. Adjusted operating profit margin stood at 35.1% in the reported quarter, compared with 29.6% a year ago.
Outlook
Rogers Communications expects adjusted operating profit for full-year 2015 in the range of C$5,020–C$5,175 million. After-tax free cash flow is projected between C$1,350 million and C$1,500 million.
Zacks Rank
Currently, Rogers Communications has a Zacks Rank #4 (Sell).
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