3 Key Takeaways From Rogers Communications’ Q2 Earnings Report

This earnings report may provide clues to early signs of success.

| More on:
The Motley Fool

Late last week, Toronto-based Rogers Communications (TSX: RCI.B)(NYSE: RCI) released its second-quarter 2014 results. While earnings per share (EPS) was down 13% for the quarter and down 15% for the first half of the year, Rogers continues to show improvements in its core operations as it executes a new strategy.

What do investors need to know?

1. Rogers 3.0

In May, Rogers unveiled a new strategic plan focused on seven priorities, referred to as Rogers 3.0. The company has already begun to restructure and is trying to get the right organizational structure in place.

In its latest quarter, in addition to eliminating some mid-management positions, Rogers also reduced 15% of upper management. In all, the company spent $30 million in restructuring costs for the quarter with plans to continue streamlining until September.

2. Healthy wireless ARPU

While postpaid average revenue per unit (ARPU) declined 1.4% year-over-year to $66.40, its decline eased by 350 basis points compared to last quarter (a decline of 4.9%). This sequential improvement is driven by a restrained use of promo and pricing.

Excluding roaming revenue, second quarter postpaid ARPU was stable (no year-over year decline!) compared to a 2.6% (also ex-roaming revenue) decline in the previous quarter.

As unlimited Canada-wide voice plans continue to cannibalize voice and feature (caller id, voicemail, etc.) revenue streams, investors may expect continued ARPU pressure in the near-term. This should be offset by an increase in data usage as customers migrate to higher data buckets.

3. Continued improvement in wireless churn

In combination with a restrained promo and pricing policy, Rogers was able to improve postpaid wireless churn by four basis points, from 1.17% a year ago to 1.13% this quarter. While this is still significantly above Telus’s (TSX: T)(NYSE: TU) Q1 postpaid subscriber churn of 0.99% (that’s amazing), Rogers’ management continues to have room to improve.

Ultimately, investors are seeing CEO Guy Laurence’s transformation begin to take shape. As management continues to restructure into September, there are significant signs, in ARPU and churn numbers, that the business is being positioned for the future.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Patrick Li has no position in any stocks mentioned.

More on Investing

Arrowings ascending on a chalkboard

5 Canadian Stocks That Have Gained Value Year to Date

Although many Canadian stocks have sold off this year, and by a significant amount, here are five that have actually…

Read more »

Filling up at the gas pumps.
Energy Stocks

Gas Prices Are Hitting Record Highs: 2 Stocks to Buy Now!

Buy Suncor Energy stock, Canada's integrated oil and gas giant that's benefitting immensely, as gasoline prices continue to soar.

Read more »

Senior Couple Walking With Pet Bulldog In Countryside
Bank Stocks

A Different Bank for a Comfortable Retirement

Want a comfortable retirement? Investing in this different bank today can help you reach that goal through a solid income…

Read more »

Money growing in soil , Business success concept.
Dividend Stocks

Top Canadian Dividend Stocks to Buy and Hold for the Long Term

These Canadian companies have been paying dividends for more than four decades and have been consistently growing the same.

Read more »

Bank Stocks

Bank of Montreal (TSX:BMO) Raises Dividend: Is the Stock a Buy?

Bank of Montreal is about to get a lot bigger. Should you buy the stock?

Read more »

man window buildings

Where Do Economists Expect Canadian Housing Prices to Fall Most?

Canadian housing prices may be falling -- in some regions, more than others -- but there are still plenty of…

Read more »

Business success with growing, rising charts and businessman in background
Energy Stocks

3 Hydrogen Stocks Set to Become Major Multi-Baggers

These three hydrogen stocks could certainly achieve multi-bagger status in the years to come after they overcome the present-day hurdles.

Read more »

Stocks for Beginners

Starting an Investment Portfolio? Buy These 3 Stocks!

Interested in getting a start in the stock market? Buy these three stocks today!

Read more »