Rogers Communications Inc. RCI-BT reported higher returns and earnings last quarter, helped by a rebound in wireless roaming, as it braces for the impact of massive network outages on third-quarter results.
The Toronto-based wireless giant also announced that it has reached an agreement with Shaw Communications Inc.
The carrier said it would spend $150 million in the third quarter to compensate customers for the outage, which has left millions without wireless, Internet and home phone service and crippled the Interac discount system. The company will spend its clients five days of services.
The outage has angered consumers and is expected to affect the company’s subscriber numbers in the third quarter.
Rogers CEO Tony Staveri told analysts during a call Wednesday to discuss the company’s second-quarter results.
Scotiabank analyst Maher Yaghi said in a research note that telecommunications expects to see a significant decline – which is the monthly average of customer turnover – as a result of the outage.
Mr. Staveri has promised changes and investments to improve the resilience of the company’s networks.
Rogers generated $3.87 billion in revenue for the three months ended June 30, up 8 percent compared to $3.58 billion during the same period last year. The company said it has benefited from the travel revival, which has allowed it to charge roaming fees when customers use their devices abroad, as well as higher levels of immigration and improved performance for its team.
The telecom company reported quarterly profit of $409 million, up 35 percent from a year ago when it posted $302 million in profit. Earnings were 76 cents per share, up from 60 cents per share.
Rogers added 122,000 new subscribers to the postpaid wireless service during the last quarter, up from 60,000 during the same period last year. (Postpaid subscribers are billed at the end of the month for the services they used, versus prepaid customers, who pay up front for wireless services.)
RBC analyst Drew McReynolds said Communications benefited from strong performance in its wireless division, which boosted its revenue by 7 percent, as well as improvement in the cable business, which increased its revenue by 2 percent.
The competition bureau is trying to prevent a merger of Canada’s two largest cable companies, arguing that it will lead to higher prices and poor service, especially for wireless customers.
Rogers struck a deal to sell Shaw’s Freedom Mobile, Canada’s fourth largest wireless carrier, to Quebecor Inc. QBR-BT for $2.85 billion in an effort to address these concerns.
Rogers said in a statement Wednesday that it is continuing to work with Kibecor to produce final transaction documents for the sale of Freedom Mobile and will provide an update “in due course.”
“It’s a big deal. “It’s close to $3 billion and has a few intricacies while we work on it,” said Mr. Staveri, adding that Rogers and Kibekor remain committed to the sale.
Rogers, Shaw and the Shaw Family Trust have agreed to extend the merger deadline to December 31, with the option to extend until January 31, provided Rogers has the financing necessary to complete the transaction.
In March, Rogers tapped into credit markets to replace a $19 billion bridging loan to fund the deal. The telecommunications company raised $7.05 billion through the sale of five South Border bond issues, and $4.25 billion through four Canadian bond issues. The bond contains a clause that requires it to be redeemed at 101 percent of its value if the deal is not closed by December 31.
Glenn Brandt, Rogers’ chief financial officer, said that if the merger is delayed beyond that date, the communications have a number of options for financing the acquisition, including seeking bank financing, extending the bond redemption date or raising funds through capital markets. Money.
However, Brandt said Rogers is “confident that there will be plenty of time between now and the end of the year to close the deal and use these bonds to fund the acquisition.”
Mr Yaghi said the extension of the deadline shows Shaw remains committed to the deal and “should alleviate some investor concerns because the deal is taking longer to complete than initially planned.”
“The decision was also made in order to take into account the possibility that the acquisition could be dealt with in a trial in a competition court,” added Mr. Yaghi.
The Competition Bureau has asked for more time to review the potential sale of Freedom Mobile to Quebec, saying in court documents that it has not yet been provided with a definitive agreement between Rogers and Quebecor.
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