Rogers Communications RCI reported fourth-quarter 2022 adjusted earnings of 80 cents per share, which increased 5.6% year over year and beat the Zacks Consensus Estimate for earnings by 8.11%.
Quarterly revenues of $3.06 billion missed the consensus mark by 0.35%.
In domestic currency (Canadian dollar), adjusted earnings increased 13.5% year over year to C$1.09 per share. Total revenues increased 6.3% year over year, reaching C$4.16 billion, driven primarily by revenue growth in its Wireless and Media businesses.
Rogers Communication, Inc. Price, Consensus and EPS Surprise
Rogers Communication, Inc. Price, Consensus and EPS Surprise
Rogers Communication, Inc. price-consensus-eps-surprise-chart | Rogers Communication, Inc. Quote
Wireless Details
Wireless (61.9% of total revenues) increased 6.7% from the year-ago quarter’s levels to C$2.57 billion.
Service revenues increased 7% to C$1.85 billion, driven by higher roaming revenues associated with increased traveling and a larger mobile phone subscriber base.
Equipment revenues were up 6.2% to C$722 million because of higher device upgrades by existing subscribers and increased promotional activity.
Monthly mobile phone ARPU was C$58.7, up 0.9% year over year, as a result of increased roaming revenues.
As of Dec 31, 2022, the prepaid subscriber base totaled almost 1.25 million, highlighting an addition of 89K subscribers from the year-ago quarter’s levels. The monthly churn rate was 5.9% compared with 4.66% in the year-ago quarter.
As of Dec 31, 2022, the postpaid wireless subscriber base totaled 9.39 million, up 545K from the year-ago quarter’s levels. The upside can be attributed to strong operating performance, an increase in market activity by Canadians and increasing immigration levels with the continuing improvement of the economy as the COVID-19 environment improved. The monthly churn rate was 1.24% compared with 1.06% in the year-ago quarter.
Segment operating expenses increased 6% from the year-ago quarter’s levels to C$1.4 billion.
Adjusted EBITDA increased 8% year over year to C$1.17 billion. Adjusted EBITDA margin expanded 50 basis points (bps) on a year-over-year basis to 45.5%.
Cable Details
Cable revenues (24.5% of total revenues) declined 0.4% year over year to C$1.019 billion. Service revenues declined 0.5% year over year to C$1.011 billion.
As of Dec 31, 2021, the retail Internet subscriber count was nearly 2.28 million, up 55K from the year-ago quarter’s levels.
As of Dec 31, 2022, total Smart Home Monitoring subscribers reached 101K, highlighting a loss of 12K subscribers from the year-ago quarter’s reported figure. The total Home Phone subscriber count was nearly 836K, down 75K from the year-ago quarter’s figure.
The customer relationship net losses and the lower ARPA this quarter were a result of increased competitive promotional activity.
Equipment revenues increased 14% year over year to C$8 million.
Segment operating expenses decreased 2% year over year at C$497 million.
Adjusted EBITDA increased 1% year over year to C$522 million. Adjusted EBITDA margin expanded 60 bps on a year-over-year basis to 51.2%.
Media Details
Media (14.5% of total revenues) revenues increased 17.4% from the year-ago quarter to C$606 million, as a result of higher sports-related revenues, including higher Toronto Blue Jays revenues and higher advertising revenues, partially offset by lower Today's Shopping Choice revenues.
Segment operating expenses increased 1% year over year to C$549 million, primarily attributed to higher programming costs and higher Toronto Blue Jays player payroll because of the timing of games played.
Consolidated Results
Operating costs increased 3.8% to C$2.48 billion. As a percentage of revenues, operating costs contracted 150 bps to 59.7%.
Adjusted EBITDA increased 10.3% year over year to C$1.67 billion. Adjusted EBITDA margin expanded 150 bps to 40.3%.
Balance Sheet & Cash Flow Details
As of Dec 31, 2022, Rogers Communications had $4.9 billion of available liquidity, including $0.5 billion in cash and cash equivalents and a combined $4.4 billion available under the bank credit facility.
The company had $3.7 billion of available liquidity, including $0.7 billion in cash and cash equivalents and a combined $3 billion available under the bank credit facility at the end of the previous quarter.
Cash provided by operating activities decreased 0.2% year over year to C$1.14 billion. Free cash flow increased 35.7% year over year to C$635 million.
Rogers Communications returned $253 million in dividends to shareholders in the fourth quarter and declared a $0.50 per share dividend on Feb 1, 2023.
The company ended the fourth quarter with a debt leverage ratio (adjusted net debt/adjusted EBITDA) of 3.5, which remained unchanged sequentially.
Guidance
For full-year 2023, Roger expects total service revenue growth in the range of 4-7% and adjusted EBITDA growth in the range of 5-8%.
Free cash flow excluding Shaw financing is expected in the range of $2-$2.2 billion.
Key Developments in Q4
On Mar 15, 2021, Rogers announced an agreement with Shaw Communications SJR to acquire all of Shaw's issued and outstanding Class A participating shares and Class B non-voting participating shares for a price of $40.50 per share in cash with the exception of the shares held by the Shaw Family Living Trust, the controlling shareholder of Shaw and related persons. The transaction is valued at approximately $26 billion, including the assumption of approximately $6 billion of Shaw debt.
Rogers, Shaw and the Shaw Family Living Trust have agreed to extend the outside date for the Shaw Transaction to Feb 17, 2023.
Zacks Rank & Stocks to Consider
Rogers Communications currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Consumer Discretionary sector are Liberty Global LBTYA and Warner Bros. Discovery WBD, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Liberty Global and Warner Bros. Discovery are scheduled to report their quarterly results on Feb 22 and Feb 23, respectively.
The Zacks Consensus Estimate for LBTYA’s fourth-quarter 2022 earnings is pegged at 49 cents per share, unchanged over the past 30 days.
The Zacks Consensus Estimate for WBD’s fourth-quarter 2022 earnings is pegged at 8 cents per share, down 42.9% over the past 30 days.
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