Rogers’ Steady 1Q20 Performance Faces Uncertainties

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Rogers Communications, Inc. (NYSE: RCI), one of Canada’s largest wireless, cable and media companies, reported steady 1Q20 results for its wireless operations. Even as the network is performing well under stay-at-home mandates, the company withdrew its 2020 guidance citing unknown COVID-19 impacts on its operations for the balance of the year.

Wireless service revenues for 1Q20 were C$1.7 billion, down 2 percent from C$1.75 billion in 1Q19 and down 4 percent sequentially from C$1.8 billion in 4Q19. The company attributed the declines mainly to a shift to unlimited data plans, the first among Canadian wireless carriers, with the subsequent reduction of variable charges and late fees. Wireless accounted for 56 percent of Rogers’ total service revenues in the quarter.

Wireless capital expenditures (capex) for the quarter was C$281 million, flat YtY compared with 1Q19 but down 22 percent from the $360 million in 4Q19, reflecting the seasonal slow start to network construction during Canadian winter months. Wireless accounted for 48 percent of the C$593 million of Rogers’ total capex for the quarter. Wireless capital intensity for 1Q20 was over 16 percent indicating network expansion activities. For full-year 2019, Rogers invested 47 percent of the C$2.8 billion total 2019 capex or $1.3 billion in its wireless network on service revenues of C$7.2 billion; FY2019 capital intensity was nearly 19 percent, reflecting the company’s sustained network modernization activity in 4.5G expansion and 5G rollout. On January 22, the company provided guidance for total 2020 capex in the C$2.7-2.9 billion range, since withdrawn.

As a leading telecom service provider in Canada (see, Wireless Networks in the Great White North), Rogers touts its ‘coast-to-coast-to-coast’ wireless network that spans from the Atlantic to the Pacific coasts and up to the Arctic Ocean. The company covers the vast Canadian land mass with its own network of over 25,000 cell sites and three network-sharing arrangements with Bell MTS in Manitoba, TBayTel in northwestern Ontario, and, Quebecor (Videotron) across Quebec and in Ottawa, extending coverage and HSPA/LTE network capabilities to parts of the country that Rogers does not reach.

The company offers postpaid and prepaid wireless services to consumers, businesses, governments, and other telecommunications service providers under its Rogers, Fido and chatr brands to 10.8 million Canadian subscribers as at end of 1Q20. Rogers says its high-speed mobile data 4G LTE network covered approximately 96% of Canada’s population of 37 million at year-end 2019.

Rogers is the first Canadian carrier to launch commercial 5G in four major cities – Vancouver, Toronto, Ottawa and Montreal – using the 40 MHz of mid-band 2.5 GHz spectrum that it has across Canada. The company plans to deploy 5G in another 20 cities in 2020 using low-band 600 MHz licenses it acquired in 2019. With 20 to 40 MHz across Canada, Rogers is relying on 600 MHz spectrum to carry wireless data across long distances and through dense urban environments.

 In the future, the company will expand its 5G network using mid-band 3.5 GHz spectrum along with dynamic spectrum sharing (DSS) that allows Rogers to leverage existing 4G spectrum such as 700 MHz and AWS (1700/2100 MHz) for 5G. Ericsson is Rogers’ primary 5G equipment supplier.

Rogers is assessing how COVID-19 may impact those planned 5G deployments.

By John Celentano, Inside Towers Business Editor

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