Improvements in fundamentals across the board helped Rogers Communications Inc. more than double first-quarter profits and the company said it’s finally bringing Apple’s iPhone to Canada, though it didn’t say when.
The positive news helped send the company’s stock ahead nearly 3%, up $1.22 to $44.12, at the Toronto Stock Exchange on Tuesday near midday.
Rogers reported net earnings of $344 million or 54 cents per share on a diluted basis, compared with a profit of $170 million, 26 cents per share in the year-earlier period.
That was well above an average analyst forecast for earnings of 43 cents per share in the period, according to Thomson Financial.
But perhaps the most eye-catching announcement included alongside its earnings was news of an agreement with Apple Inc. to bring its high-tech, touch-screen smartphone to Canada “later this year.”
The iPhone has been available in the United States for nearly a year and in Europe for several months but there’s been a delay in bringing it to Canada, where Rogers currently has the only GSM networks capable of handling Apple’s first phone. There have been reports that the big stumbling block has been pricing of the data services required to take advantage of the iPhone’s music and video features.
“We’re thrilled to announce that we have a deal with Apple to bring the iPhone to Canada later this year,” president and chief executive Ted Rogers said in a release. “We can’t tell you any more about it right now, but stay tuned.”
While Rogers executives declined to discuss the iPhone plans, pricing or timeline for the its rollout, the confirmation was the first time the company officially acknowledged a deal had been stuck with Apple. Analysts widely greeted the iPhone announcement with a positive response.
“Our analysis shows the iPhone could be an important catalyst for [Rogers] shares: it could add an extra 150,000 net (subscribers)… for Rogers, or $100 million in annual EBITDA,” wrote Jonathan Allen, an analyst at RBC Capital Markets. “The market will have to wait to see whether Rogers launches the current model or waits for the 3G (third-generation model)—expected to be released by Apple in July.”
“All the marketing for the iPhone has been spilling over the border for over a year, so there’s good awareness of the product,” Kaan Yigit, president of Solutions Research Group, told Marketing. “The GSM network in Canada—Rogers and Fido—is actually in better shape than the AT&T GSM network so it should be a smoother customer experience.”
However, Yigit also said Canadians may not jump on the iPhone bandwagon as quickly as people did in the U.S. When it comes to new technology products, Canadian consumers tend to be more price-sensitive, he said. Once difference in market size is taken into account, Yigit expects iPhone sales in Canada to represent 75% to 80% of the sales in the U.S.
SRG research into likely iPhone early adopters in Canada, found that the average age will be about 29 and 61% will be male, with a household income of $88,600. The SRG research also discovered that nearly half of those interested in getting an iPhone in Canada are currently with a wireless carrier other than Rogers or Fido.
Rogers said its revenue grew 14% to $2.6 billion, while the key wireless division saw postpaid net subscriber additions grow to 97,000 for the period.
Operating revenue at the wireless segment for the period ended March 31 was $1.43 billion, up 16% from $1.23 billion in the prior-year period.
“While many challenges lie ahead in the coming quarters, we are well on track to deliver another year of strong growth in both subscribers and profitability,” Ted Rogers said.
