A woman speaks on her cellphone in front of a Rogers Communications sign in this file photo.© Mark Blinch / Reuters
Rogers Communications Inc. CEO Guy Laurence is defending the departure of far more wireless subscribers than expected in the last quarter, arguing the losses are a by-product of his broader strategy aimed at pleasing customers willing to spend more for better service and perks.
Canada's largest wireless carrier said Thursday it lost a total of 58,000 postpaid subscribers in the fourth quarter, compared with the net gain of about 19,000 analysts had predicted the company would report.
But Mr. Laurence, who began implementing a plan to transform the company less than a year ago, said Rogers has added more value to its "mid– and top-tier tariffs" with features related to its NHL programming, a new streaming video service, and $5 per day roaming charges in the United States for customers on more expensive share plans for smartphones.
"Consequently we're adjusting the amount of investment we put into some of the other price tiers … people then have a choice as to how they view that in terms of value for money," Mr. Laurence said on a call with reporters after the company announced its earnings.
The company has been losing ground to Telus Corp. and Bell Mobility Inc. for several years after its rivals launched a joint network in 2009 and began selling Apple Inc.'s popular iPhone shortly thereafter.
And that competition is about stiffen with what the industry is calling the "double cohort," when a higher-than-usual number of contracts will come up for renewal. Starting in June, three-year contracts that customers signed before a national wireless code limited contracts to two years will expire at the same time as a wave of two-year plans.
Mr. Laurence described Rogers's subscriber loss as "a tale of two cities," saying it had to be considered in the context of the company's investment in add-ons that help retain higher-spending customers. "You've got significant improvement in customer satisfaction with the mid– and high-tiers and you've got a small number of people that have decided that it's not for them."
"But overall, I think you've got to put in context that we're talking about circa 50,000 people out of 9.4 million," he added.
At the end of the year, Rogers had 9.45 million total postpaid and prepaid subscribers in its all-important wireless division. Its national rivals Bell and Telus, which will report fourth-quarter results over the coming two weeks, both had around 8 million mobile customers in the third quarter of 2014. (Bell Mobility is owned by BCE Inc., which also owns 15 per cent of the Globe and Mail.)
While Rogers is shedding contract customers, those who remain are paying more, with average monthly revenue per user increasing 1.6 per cent from a year earlier to $67.43 in the fourth quarter, ahead of analyst estimates of $66.40.
Mr. Laurence, the former Vodafone UK Ltd. CEO who joined Rogers in December, 2013, said subscribers are choosing to pay more because they see value in the new services Rogers is offering.
"The thing to bear in mind on [increases in average revenue per user] is, yes, that's true, but it's not coming from price increases. It's coming from the fact that they want to buy more products and services from us," he said.
Rogers also lost a total of 58,000 cable subscribers in the period, more than the loss of 29,000 analysts expected, leading to what Macquarie Capital analyst Greg MacDonald said he believed to be "the worst subscriber result in the company's history."
Despite the challenges on the subscriber side, the company reported better than expected financial results with adjusted earnings of 69 cents per share, ahead of the 64 cents analysts on average predicted.
Fourth-quarter profit fell to $297-million, or 57 cents a share, from $320-million, or 62 cents, a year ago. Revenue rose 4 per cent to $3.37-billion. Analysts expected $3.36-billion.
The company said Thursday it expects 2015 adjusted operating profit of $5.02-billion to $5.175-billion.
Rogers raised its quarterly dividend by about 5 per cent to 48 cents a share.
With files from Bloomberg News