Response beats expectations

Photo: Contributed

The chief executive of Rogers Communications Inc. said Tuesday that a major change in wireless billing strategy that the company introduced in June has done better than management's expectations.

Rogers began selling wireless plans that don't charge overage fees on June 13, a move since followed by Telus and Bell.

"While it is still early days, the response has been overwhelmingly positive," Rogers CEO Joe Natale told analysts Tuesday on a second-quarter conference call.

There are already 365,000 subscribers on the new plans, he said, adding that about two-thirds of those chose higher-priced monthly plans than they had previously and one-third opted for lower-priced plans.

Natale said that Rogers management had initially expected the opposite.

"And so we were quite pleasantly surprised to see the inverse happening," Natale said.

With only six weeks of experience, he said, it's too soon to say what proportion of converts to the unlimited plans will opt to upgrade rather than downgrade but the conditions are favourable.

Earlier, Rogers announced second-quarter results that missed analyst estimates in terms of adjusted earnings per share and overall revenue.

The Toronto-based wireless, internet, cable and media company says its revenue for the three months totalled $3.78 billion, up one per cent from $3.76 billion a year earlier.

After adjustments, the diluted profit was equal to $1.16 per share.

Analysts had estimated $1.17 per share of adjusted earnings with $3.87 billion of revenue, according to the financial markets data firm Refinitiv.

The company's second quarter profit was $591 million, up 10 per cent from the comparable period last year.

The unadjusted net earnings amounted to $1.15 per diluted share, up from $1.04 per share or $538 million in the second quarter of 2018.

Rogers, Telus and Bell recently introduced new financing options that allow customers to spread the cost of new devices over several years. Last week, the Canadian Radio-television and Telecommunications Commission said it would investigate the deals to determine if they comply with an industry code of conduct that limits mandatory contract terms.

The wireless code requires carriers to limit service contracts to 24 months or less in length and there have been questions about whether device financing plans over a longer term would be acceptable to the regulator.

Companies in this story: (TSX:RCI.B)