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Rogers stock plunges after financial report misses Q3 estimates

Rogers stock plunges

Enthusiasm for wireless data plans that don't charge overage fees has surprised Rogers Communications Inc. executives and forced the company to slash its expectations for revenue growth this year.

The Toronto-based company's class B shares were down about six per cent in the first minutes of trading, putting them on track for one of their biggest one-day declines of the year, as it also reported lower than expected earnings in its latest quarter.

The stock was down $4.31 at $62.08 at the Toronto Stock Exchange in trading Wednesday morning, to put the share price below the previous 52-week low of $63.23 per share.

Senior executives told analysts that they were positively surprised by how many customers have switched to unlimited wireless data plans but acknowledged that the switch caused a short-term financial hit.

Rogers said it now expects that 2019 full-year revenue may fall by up to one per cent compared with 2018 and the high end of its expectations is now only one per cent revenue growth. It had earlier estimated 2019 revenue growth would be between three and five per cent above last year.

Chief executive Joe Natale said Rogers did an analysis before making the wireless plan change, but was surprised by how quickly consumers gravitated to the new unlimited data offerings.

"That ended up being three times the rate that we had anticipated, which I think is a good thing," Natale said.

"Looking back, I wouldn't change anything," Natale said.

"We had a long discussion with our board before we did this. We talked about the reason for doing it and we stood firm, collectively, on the grounds (that) this was the right thing for consumers, the right thing for the industry."

Rogers said Wednesday that about one million subscribers have adopted the unlimited data plans. About 60 per cent upgraded to a higher price plan and 40 per cent opted for a lower-priced plan.

Rogers reported net profit for the quarter ended Sept. 30 of $593 million or $1.14 per diluted share on $3.75 billion in revenue, compared with $594 million or $1.15 per diluted share on nearly $3.77 billion in revenue last year.

On an adjusted basis, Rogers said it earned $622 million or $1.19 per diluted share for the quarter, down from an adjusted profit of $625 million or $1.21 a year ago.



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