Cable could make turnaround in 2017: Canaccord

Rogers Communications Inc.’s second-quarter earnings may have foreshadowed a turnaround for cable in 2017, after the company reported its best second-quarter for Internet subscribers in eight years, according to Canaccord Genuity. “While the Telcos may be still edging out the cablecos in terms of overall net adds, the gap is narrowing,” Canaccord analyst Aravinda Galappatthige said in a Friday morning note following Rogers earnings report Thursday. “There is clearly some positive momentum on the Internet front for the cablecos in the East, and we see this in Rogers’ results.” The company reported a gain of 8,000 net new Internet customers, rising to 12,000 this quarter against 4,000 in the equivalent period last year. The gain helped offset losses in traditional television and telephone services. The company plans to roll out its 1 Gbps service to all four million eligible households by the end of the year. With this, Galappatthige said “there is clearly a window of opportunity to increase share until at least BCE’s FTTP rollout in Toronto is completed in late 2017/early 2018.” Barclays Capital analyst Phillip Huang said in a note Thursday that Rogers waded through competitive pressures successfully in the quarter and said management looks “to a turnaround in TV subscriber trends in 2017 following the rollout of IPTV,” though margins are expected to take a hit upon launching the product. Galappatthige said there are additional pressures that Rogers faces, including competition and promotional discounting that could affect margins into 2017, the impact of skinny basic and cord shaving, consistent revenue declines for telephone, and expenses related to the launch of IPTV in late 2016. Adding to that, RBC Capital Market’s analyst Drew McReynolds said in a Thursday evening note that IPTV and FTTH competition could result in subscriber losses. Several companies have recently announced fibre-to-the-home expansions, including Cogeco Inc. in Quebec, Telus Corp. in B.C. and Alberta and Saskatchewan Telecommunications Holding Corp. in Weyburn, Alberta. Rogers emphasized speed on a conference call Thursday as a pillar of its strategy to get customers on its higher-tiered Internet services, which Huang credits for financial and subscriber improvements for the quarter. It hopes to get customers on 100 Mbps as a baseline and then gradually bump them up the speed ladder as the need arises. Numbers released this month by the CRTC reported that revenue for cable and IPTV companies increased by 1.7 per cent between 2014 and 2015.

Cable could make turnaround in 2017: Canaccord

Brief | July 22, 2016

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Cable could make turnaround in 2017: Canaccord

Brief | July 22, 2016

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