Rogers raises subscriber forecast
Stock price leaps more than 5%
Wireless, Internet business picks up
DAVID PADDON AND ALLAN SWIFT
CANADIAN PRESS
Rogers Communications Inc.'s stock got a boost yesterday after the company announced it will add more wireless subscribers and high-speed Internet customers by the end of this year than previously expected.
Rogers class B shares closed at $48.35, up $2.59 or more than 5 per cent, with more than 2 million shares traded at the Toronto Stock Exchange.
Earlier, Rogers, which owns the Rogers Wireless and Fido cellphone networks, said it now expects to increase its wireless subscriber base by 600,000 to 650,000 in 2005 — 150,000 more than previously predicted.
"These numbers bode very well for future profitability," CIBC World Markets analyst Dvai Ghose said.
Rogers, which owns Canada's largest cable company and other businesses, also raised its estimate for its high-speed Internet subscriber growth to between 165,000 and 195,000, up from its previous forecast of 140,000 to 170,000.
During the third quarter, Rogers added 61,300 high-speed Internet subscribers, 71,000 digital TV subscribers and 17,400 basic cable subscribers — all well above the growth during the same period a year earlier.
Ghose said he was less excited about the growth in the Rogers cable business because profit-margins are thinner there than in the wireless business.
"On the cable side, my problem is that strong subscriber growth with Internet and digital (TV) has generally been at the expense of cable margins — they're much more mature products as I see them."
The analyst said he thought growth in Rogers newest business, land-based telephony, was in line with his expectations during the third quarter but "modest."
Rogers launched its Voice over Internet Protocol service in July. By the end of September, it had signed up 18,100 subscribers.
VoIP is delivered through its cable network.
In addition, about 17,600 subscribers were added to a traditional phone service at Rogers Telecom, the former Call-Net Enterprises that was acquired by Rogers on July 1.
"Both of (these) were relatively weak compared with peers," Ghose said.
Convergence Consulting Group estimates that cable companies will have 16 per cent of Canada's residential telephone market by the end of 2007, or about 2.1 million subscribers, of which 70 per cent will be VoIP.
"These numbers are based on current numbers, so far, and what we forecast is going to come," Convergence Consulting president Brahm Eiley said in an interview.
Rogers is to release its third-quarter financial results Oct. 25.
Convergence said Vidéotron Ltée and Rogers in particular have done well in capturing Bell Canada telephone customers, thanks to being able to offer a bundle of three or even four services on one bill.
In its latest update on the industry, Convergence believes cable companies will have 850,000 clients, or 6.5 per cent of residential phone subscribers, by the end of this year.
By the end of 2007, Convergence believes this will reach 16 per cent and by the end of 2009, 27 per cent, for a total of 3.8 million telephone clients.
Eiley said the consumer change has been radical.
"We've definitely been impressed at the speed at which the cable companies are moving," Eiley said in an interview.
The country's two main telephone companies will respond by providing television feeds over their telephone lines. |
