Credit: Shutterstock photoRogers Communications Inc.RCI declared mixed financial results for the fourth-quarter 2015, wherein the bottom line missed the Zacks Consensus Estimate but the top-line surpassed.
Quarterly net income stood at $224 million or 43 cents per share, almost unchanged on a year-over-year basis. However, adjusted earnings per share stood at 46 cents, fell short of the Zacks Consensus Estimate of 50 cents. Quarterly total revenue stood at $2,586.6 million, up 2.6% year over year, outpacing the Zacks Consensus Estimate of $2,487.3 million.
Fourth-quarter adjusted operating profit came in at $918.5 million, down 0.6% year over year. Quarterly adjusted operating margin was 35.5% compared with 36.6% in the year-ago quarter.
During the fourth quarter of 2015, Rogers Communications generated $711.7 million of cash from operations, reflecting a reduction of 7.9% year over year. Adjusted free cash flow was $205.3 million, flat year over year.
At the end of 2015, Rogers Communications had $8.2 million of cash and cash equivalents on its balance sheet compared with $132 million at the end of 2014. Total outstanding debt stood at $12,489.2 million against $12,170.6 million at the end of 2014. The debt-to-capitalization ratio was 0.73 compared with 0.72 at the end of 2014.
Wireless Segment
Quarterly total revenue came in at $1,484.2 million, up 4% year over year. Network revenues totaled $1,308.9 million, up 3% from the year-ago quarter. Equipment sales were $175.3 million, up 19% year over year.
Quarterly adjusted operating profit for the entire segment was $564.9 million, up 4% year over year. Adjusted operating margin was 43.2% compared with 42.6% in the year-earlier quarter.
Quarterly consolidated ARPU (average revenue per user) or Blended ARPU was $44.32, down 1.2% year over year.As of Dec 31, 2015, prepaid subscriber base totaled 1.606 million, up 16.6% from the year-ago quarter. Monthly churn rate was 3.17% against 3.09% in the prior-year quarter.
As of Dec 31, 2015, Rogers Communications' postpaid wireless subscriber base totaled 8.271 million, up 2.5% year over year. In the fourth quarter, the company added a net of 31,000 postpaid wireless subscribers. Smartphone customers constituted a record 83% of the overall postpaid subscriber base as against 76% in the year-ago quarter. Quarterly postpaid ARPA (average revenue per account) was around $83.96, up 3.8% year over year. Monthly churn rate stood at 1.35% against 1.46% in the prior-year quarter.
Cable Segment
Quarterly total revenue came in at $640.6 million, down 2% year over year. Services revenues totaled $639 million, down 2% from the year-ago quarter. Of this, Internet revenues were $260.7 million, up 10% year over year. Television (Video) revenues were $310 million, down 7% year over year. Telephony revenues stood at $76.4 million, down 14% year over year. Equipment Sales were $1.5 million, down 33% year over year.
Quarterly adjusted operating profit for the whole segment stood at $319.2 million, flat year over year. Adjusted operating margin stood at 49.8 %, in the reported quarter, compared with 48.7% in the year-ago quarter.
As of Dec 31, 2015, high-speed Internet subscriber base was 2.048 million, up 1.8% year over year. In the reported quarter, Rogers Communications added a net 16,000 high-speed Internet customers. Video subscribers totaled 1.896 million, down 6.3% year over year. The company lost 24,000 video subscribers in the fourth quarter. Telephony subscriber count stood at 1.09 million, down 5.2%. The company lost 15,000 telephony subscribers in the fourth quarter.
Media Segment
Quarterly total revenue came in at $419.6 million, up 3% year over year. Quarterly adjusted operating profit was $42 million, down a significant 35.9% year over year.
Business Solutions Segment
Quarterly total revenue came in at $71.2 million, down 2% year over year. Of the total, Next-generation revenues were $55.4 million, up 4%. Legacy revenues were $15 million, down 17% and Equipment revenues were $0.75 million, down 50%. Quarterly adjusted operating profit was $22.5 million, down 12% year over year. Adjusted operating margin stood at 31.6% compared with 35.1% in the year-ago quarter.
Outlook
Rogers Communications expects full-year 2016 operating revenues, adjusted operating profit and free cash flow to increase in the band of 1%-3% on a year-over-year basis.
Zacks Rank & Stocks to Consider
Rogers Communications currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same industry include Time Warner Cable Inc. TWC , Sprint Corp. S and United States Cellular Corp. USM . All the three stocks currently carry a Zacks Rank #2 (Buy).
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SPRINT CORP (S): Free Stock Analysis Report
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US CELLULAR (USM): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
