Rogers Communications Inc. (RCI) declared mixed fourth-quarter 2013 financial results, wherein its bottom line missed the Zacks Consensus Estimate but the top line outpaced the same. Moreover, sluggish subscriber growth and a slowdown in smartphone subscriber addition have resulted in a 5.13% (equal to $2.13) fall in the stock price.
Quarterly net income was $345.5 million or 66 cents per share compared with $433.5 million or 83 cents in the year-ago quarter. However, the adjusted EPS of 60 cents significantly missed the Zacks Consensus Estimate of 68 cents. Quarterly total revenue stood at $3,138.3 million, down 1% year over year, but above the Zacks Consensus Estimate of $2,992 million.
Fourth-quarter operating profit came in at $1,129.3 million, down 1% year over year. Quarterly operating margin was 36% compared with 36.1% in the year-ago quarter.
During the fourth quarter of 2013, Rogers Communications generated $1,037.4 million of cash from operations compared with $646.4 million in the year-ago quarter. Free cash flow was $357.1 million against a negative cash flow of $37.7 million in the year- earlier quarter.
At the end of fourth-quarter fiscal 2013, Rogers Communications had $2,226.7 million of cash and marketable securities on its balance sheet as compared with $206.1 million at the end of fiscal 2012. Total outstanding debt stood at $11,779.8 million versus $10,103.8 million at the end of fiscal 2012. The debt-to-capitalization ratio was 0.72 compared with 0.73 at the end of fiscal 2012.
Wireless Segment
Quarterly total revenue was $1,791.2 million, down 4% year over year. Network revenues were $1,615.1 million, down 2% from the year-ago quarter. Equipment sales were $176.1 million, down 13% year over year.
Quarterly adjusted operating profit for the entire segment was $673.5 million, up 1% year over year. Adjusted operating margin was 37.6%, in the fourth quarter of 2013, compared with 35.8% in the year-ago quarter. In the same time frame, Wireless Data revenues were $798.4 million, up 13% year over year. Wireless Data revenues represented around 49% of the total wireless network revenue against 42% in the prior-year quarter.
During the fourth quarter of 2013, the Wireless segment activated 790,000 smartphones against 940,000 in the prior-year quarter. Most of the smartphones were either Apple Inc.’s (AAPL) iPhones, Black Berry Ltd.’s (BBRY) BlackBerry or Google Inc. (GOOG) developed Android handsets. Quarterly consolidated ARPU (average revenue per user) or Blended ARPU was $56.7, down 3.1% year over year.
During the reported quarter, Postpaid retail subscribers base stood at 8.074 million, up 2.9% year over year. Smartphone customers constituted a record 75% of the overall postpaid subscribers as against 69% in the year-ago quarter. Quarterly Postpaid ARPU was $64.2, down 4.9% year over year. Monthly churn rate stood at 1.34% versus 1.4% in the prior-year quarter.
Prepaid subscriber base totaled 1.429 million, down 162% from the year-ago quarter. Quarterly Prepaid ARPU was $14.98, down 2.1% year over year. Monthly churn rate was 3.41% against 3.77% in the prior-year quarter.
Cable Segment
Quarterly total revenue came in at $842.9 million, up 2% year over year. Basic cable operations revenues were $427.7 million, down 4% from the year-ago quarter. Internet revenues were $291.3 million, up 14% year over year. Home Telephony revenues were $121 million, up 2% year over year. Quarterly adjusted operating profit for the whole segment was $419 million, up 3% year over year. Adjusted operating margin stood at 49.7%, in the reported quarter, compared with 49.4% in the year-ago quarter.
At the end of fourth-quarter fiscal 2013, Cable TV subscriber base stood at 3.978 million, up 4.4% year over year. High-speed Internet subscriber base was 1.96 million, up 5.2% year over year. Digital cable subscriber base now constituted 84% of the total television subscriber base compared with 80% in the year-ago quarter.
Media Segment
Quarterly total revenue came in at $438.4 million, up 4% year over year. Quarterly adjusted operating profit was $47.4 million, down 35% year over year. Adjusted operating margin was 10.8%, in the reported quarter, compared with 17.3% in the year-ago quarter.
RBS Segment
Quarterly total revenue was $94.8 million, up 11% year over year. Quarterly adjusted operating profit was $28.1 million, up 7% from the prior-year quarter. Adjusted operating margin was 29.6%, in the reported quarter, compared with 30.7% in the year-ago quarter.
Outlook
Rogers expects adjusted operating profit for full-year fiscal 2014 to be in the range of $4,838.5–$4,983.7 million. The company also expects after-tax free cash flow to be between $1,379 million and $1,451.6 million while capital expenditure for the full year is expected to range from $2,201.5–$2,298.3 million.
Currently, Rogers Communications has a Zacks Rank #4 (Sell).
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