Rogers Communications Inc. (RCI) declared solid financial results for the fourth quarter 2009. Supported by strong free cash (cash flow from operations less capital expenditures) generation, the Board of Directors of Rogers increased the annualized dividend rate by 10% from $1.16 to $1.28 per Class A Voting and Class B Non-Voting share effective immediately. It has also approved the renewal of Rogers’ NCIB program for the repurchase of up to $1.5 billion of its Class B non-Voting shares from the open market during next one year.
Total quarterly revenue was $3,057 million, up 4% year-over-year. This is also better than the Zacks Consensus Estimate of $2,923 million. This was primarily due to an increase in sales for the Wireless and Cable segments, particularly massive growth of the Wireless Data segment.
Quarterly net income was $310 million or 51 cents per share compared to a net loss of $138 million or 22 cents per share in the year-ago quarter. However, fourth quarter adjusted (excluding special items) EPS of 60 cents was significantly above the Zacks Consensus Estimate of 52 cents. This reflects the aggressive cost cutting measures taken by management during 2009.
Management has streamlined the operating cost structure to improve productive efficiency. Quarterly adjusted operating profit was $1,101 million, up 14% year-over-year. During the reported quarter, the company repurchased 13.4 million Class B Non-Voting shares for total consideration of $430 million and paid dividends on its common shares totaling $177 million.
During the fourth quarter, Rogers generated $869 million of cash from operations compared to $795 million in the year-ago quarter. Free cash flow during the same quarter was $298 million compared to a mere $12 million during the year-ago quarter.
At the end of fiscal 2009, the company had $930 million of cash and marketable securities on its balances sheet compared to $343 million at the end of fiscal 2008. Total outstanding debt, at the end of fiscal 2009 was $8,464 million compared to $8,506 million at the end of fiscal 2008.
Wireless Segment
Quarterly revenue was $1,734 million, up 5% year-over-year. Postpaid revenue was $1,524 million, up 7% year-over-year and Prepaid revenue was $74 million, up 6% year-over-year. Equipment sales were $136 million, down 13% year-over-year.
Quarterly adjusted operating profit for the whole segment was $744 million, up 16% year-over-year. Adjusted operating margin was 46.6% in the reported quarter compared to 42.7% in the year-ago quarter. In the fourth quarter, wireless Data revenue was $384 million, up 45% year-over-year. Wireless Data revenue represented around 24% of total wireless network revenue compared to 18% in the prior-year quarter.
During the fourth quarter, wireless activated approximately 400,000 smartphones. Most of those are either iPhone 3G, BlackBerry or Andriod-based handsets. At the end of the reported quarter, Postpaid retail subscribers’ base was approximately 6.98 million, up 8.2% year-over-year. Smartphone customers now constituted 31% of overall Postpaid subscribers compared to 19% in the year-ago quarter. Prepaid subscribers’ base was around 1.52 million, 1.6% year-over-year.
Cable Segment
Quarterly revenue of $1,019 million was up 3% year-over-year. Basic cable operations revenue was $795 million, up 7% year-over-year. RBS revenue was $124 million, down 6% year-over-year. Rogers Retail revenue was $110 million, down 6% year-over-year. Quarterly adjusted operating profit for the whole segment was $325 million, up 4% year-over-year. Adjusted operating margin was 31.9% in the reported quarter compared to 31.8% in the year-ago quarter.
At the end of the reported quarter, Basic Cable subscribers’ base was around 2.3 million, down 1% year-over-year. Internet subscribers’ base was 1.62 million, up 3.1% year-over-year. Digital cable terminal base was more than 1.66 million, up 7.4% year-over-year. Cable Telephony lines were around 0.94 million, up 11.5% year-over-year.
Media Segment
Quarterly revenue of $393 million remains almost flat year-over-year. Quarterly adjusted operating profit was $30 million, remains flat year-over-year. Adjusted operating margin was 13.2% in the reported quarter compared to 11.7% in the year-ago quarter.
Within this segment, Television, Sportsnet and The Shopping Channel delivered year-over-year increases in revenues driven by significant prime time ratings improvements, increased subscriber fees and improvements in consumer discretionary spending. On the other hand, Publishing, Radio and Sports Entertainment divisions reported revenue declines in the same quarter.
Read the full analyst report on “RCI”
Zacks Investment Research
