Telecom company reported that an increase in revenue in its media division was the result of increased Toronto Blue Jays revenue and its larger stake in MLSE.Nick Turchiaro/Reuters
Blue Jays fever is running rampant throughout the city of Toronto, giving restaurants, bars and hotels a welcome boost, along with the ball team’s parent company, telecom giant Rogers Communications Inc.
It’s the “power of live sports,” Rogers chief executive officer Tony Staffieri told analysts Thursday morning during the company’s third-quarter earnings call. The Blue Jays were mentioned at least 13 times by executives and analysts on the call, a day before the team kicks off Game 1 of the World Series on Friday at home against the Los Angeles Dodgers.
Mr. Staffieri said the marketing opportunities for the telecom company through the success of its sports teams, including the “ability to showcase our cable and wireless products and services to viewers of the game,” have clearly benefitted the company. And this brand awareness is only amplified by the Jays’ advancement to the World Series.
Rogers RCI-B-T noted an increase in revenue in its media division was the result of its larger stake in Maple Leaf Sports and Entertainment as well as increased Toronto Blue Jays revenue. The World Series is expected to continue to aid the division’s growth in the fourth quarter.
“The way our Toronto Blue Jays’ World Series run is captivating this country is a very clear demonstration of the power of our iconic sports teams,” said chief financial officer Glenn Brandt.
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Meanwhile, Rogers reported modest overall revenue growth as it added a net 111,000 wireless customers in the third quarter. Its adjusted earnings dropped in the wake of the move to increase its stake in MLSE.
Total revenue for the third quarter was $5.35-billion, up 4 per cent from a year earlier, meeting analyst consensus estimates. Wireless revenue increased 2 per cent to $2.66-billion, cable revenue was up 1 per cent to $1.98-billion and media revenue jumped 26 per cent to $753-million.
Rogers completed its acquisition of rival BCE Inc.’s 37.5-per-cent stake in MLSE in July for $4.7-billion, doubling its stake to become the majority owner with 75 per cent.
Within the next 18 months, Rogers anticipates acquiring the remaining 25-per-cent stake of MLSE from Canadian businessman Larry Tanenbaum’s company, Kilmer Group. Thereafter, it said it will determine how to best capitalize on those assets as it continues discussions with potential investors about becoming minority partners in its sports portfolio.
Mr. Brandt said institutional investors have expressed “tremendous interest” in this opportunity. He estimates the entirety of MLSE, combined with Rogers’ existing sports and media division, will be worth more than $20-billion.
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The telecom said its adjusted net income fell by 5 per cent in the third quarter to $726-million, or $1.37 per share, as the company’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) decreased 1 per cent “primarily as a result of the seasonal results for MLSE, as both the Toronto Maple Leafs and the Toronto Raptors are in their off-seasons in the third quarter.”
Rogers reported net income of $5.8-billion, or $10.62 per diluted share. The company said the increase in its net income was primarily the “result of a $5 billion non-cash gain to recognize our existing interest in MLSE at fair value, which was required as a result of the MLSE transaction.”
The telecom said it now expects capital spending of $3.7-billion in 2025, compared with its estimate of $3.8-billion from July.
In a note to clients Thursday morning, analysts with TD Securities Inc. said “the bar was arguably set low” for Rogers’s third-quarter results but that it “delivered well versus that bar.”
Slowing population growth is one of the reasons for the decrease in new subscribers, the company said.Mark Blinch/Reuters
Rogers added a net 62,000 postpaid wireless subscribers in the third quarter, beating analyst consensus expectations of 59,000, but still down 39 per cent from last year.
Prepaid phone subscribers increased by 49,000 this quarter, beating the consensus of 45,000, but down 44 per cent from the same period last year.
The telecom cited slowing population growth and a less active market owing to the federal government’s changed immigration policies as reasons for the decreases in new subscribers. Mr. Brandt said he expects the number of new wireless subscribers to remain within a similar growth range until Canada looks to once again increase immigration.
“It will come back. At some point, we will look to growing the population again, I expect. That’s a key part of economic growth for any country,” he said.
Mr. Staffieri also provided an update on the company’s direct-to-mobile satellite service, which it launched through a trial in July. Designed to aid mobile phone users in areas where no conventional cell service is available, the service only requires users to be somewhere that the sky is visible.
At launch, Rogers’s new data service included the ability to send text messages and access text-to-911, with plans to add apps, data and voice in the future.
Mr. Staffieri said the launch of some data and apps will now come in the fourth quarter of this year, with voice service to follow next year. More than one million users have signed up for the trial thus far, he added.