Ever larger wireless data buckets belying consumption, Rogers says

Rogers Communications Inc. is pointing to higher data availability outstripping consumption as having a “moderating” influence on its average revenue per subscriber metric. The cable company’s head Joe Natale said Thursday that “data buckets have grown substantially” over the last little while, and have “grown faster than .” It’s something he said they are “watching closely.” The comments came on a conference call with analysts following a 2018 fourth quarter that saw monthly ARPU grow two per cent to $55.91 over the quarter that ended Dec. 31, but fall from the previous quarter, when it was $57.21. “It’s that headroom in the data buckets that we’re seeing in some parts of our base taking time to catch up to,” Natale said. “The demand is still great, but occupying that headspace, given data add-ons, data buckets, is the moderating impact or effect on ARPU as a whole.” Despite that, he said he feels confident about the company’s wireless growth prospects in the future. Intense wireless competition has gripped the industry for some time now. The big bomb arguably came in late 2017, when during the holiday season Shaw Communications Inc.’s Freedom launched its base 10 gigabytes for $50 “Big Gig” plan. The double-digit number of gigabytes were seldom seen before in the industry in Canada and eventually forced the hand of the Big Three to comply with what looked to be a new industry norm. But the data on data continues to paint a picture of consumption being well below that. Current data on usage pegs consumption at around two gigabytes per month, per user on average, according to data sets including the CRTC’s communications monitoring report (CMR) for 2017. The CMR said that’s a 30 per cent increase over the previous year. Yet, overage fees have proven to yield a sizeable chunk of change for the big telecoms. Data from that CMR found Canadians paid over a billion dollars in wireless overage fees in 2017. Freedom’s latest gambit sought to address that issue. This past holiday season, it tested the data appetite of the market by offering an additional 100 GB on select plans, following through on a campaign promise to focus on the problem. Natale had previously pointed to another kind of “headroom” -- the ability of the Canadian telecoms to reach more wireless customers due to a lower level of wireless penetration compared to the United States, which is oversubscribed. Factors in that equation include strong immigration numbers and more Canadians using multiple devices. On Thursday, Natale said as churn rates moderate, there will be fewer new subscribers available to add in the industry. “So managing the base appropriately and looking after the quality of incoming customers and upping the base of customers, upgrade appropriately is a very important skillset the team has worked hard to create over the last year and we’ll continue to develop as a muscle for the organization.” In Freedom’s last conference call, executives touted the strength of its ability to entice its subscribers higher up its bigger offers with its data sweeteners, including the Big Gig and Big Binge Bonus. As such, Rogers’ boss also said that there is an industry-wide gain in the pre-to-postpaid wireless migration -- providing for better customer loyalty and lower defections. “It's been a natural part of moving our customers up the value chain,” he said. He said part of the opportunity to “tier-up” customers may lie in them moving from “less capable smartphones to more capable smartphones,” as they extend that portfolio of capabilities across their family.” Rogers ended the quarter with a loss of 152,000 prepaid subscribers for a total base of 1.63 million. Barclays Capital analyst Phillip Huang said in a Thursday note that the prepaid losses “surprised” him. Otherwise, earnings were largely in line with analysts’ expectations. Wireless revenues increased eight per cent to $2.5 billion for the company, which added 112,000 postpaid subscribers -- an increase of 40,000 over the year -- with churn at 1.23 per cent -- its best fourth quarter in nine years, it said. The number of postpaid subscribers jumped 453,000 over the year for a total of 9.2 million. Cable revenues -- which include internet, television and phone -- were up one per cent to $989 million, and media was up three per cent to $540 million -- all compared to the same period the year prior. Total company revenues were up six per cent to $3.9 billion. Net income grew one per cent to $502 million. Internet revenues were up six per cent to $536 million. The company added 25,000 new subscribers in the quarter, representing a five per cent increase compared to the year prior. With the 109,000 it added over the previous 12 months, the total base sat at 2.4 million. TV revenues were down two per cent to $363 million, as the segment lost 16,000 customers in the quarter -- three thousand more than the same quarter the previous year -- for a base of 1.7 million. It lost 55,000 subscribers over the year. Finally, phone revenues were down 12 per cent to $86 million, losing 4,000 customers in the quarter but gaining 8,000 over the year for a total of 1.12 million. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Ever larger wireless data buckets belying consumption, Rogers says

News | January 24, 2019

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Ever larger wireless data buckets belying consumption, Rogers says

News | January 24, 2019

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