Rogers Communications Inc. RCI-B-T reported a jump in free cash flow in its third quarter but posted flat revenue and lower new subscription numbers, as it works toward a minority sale of its sports holdings.
The company reported $1.3-billion in free cash flow, up 65 per cent from last year and beating analyst expectations.
The free cash flow followed 46 per cent lower capital expenditures in the quarter. Earlier this year, the company said it planned to cut capital spending for the year by 30 per overall, in part by selling or deferring some infrastructure projects.
The higher free cash flow in the quarter was also the result of cable, wireless and real estate sales totaling $274-million in the quarter.
Revenue was up 1 per cent, with a 9-per-cent bump in its sports and media division, boosted by strong Toronto Blue Jays performance and the earlier start of the NHL regular season.
The company reiterated its plans to sell a minority stake in its recently consolidated sports holdings in the first half of 2027, but did not provide any further updates.
Over all, the Toronto-based telecom, sports and media company “reported an update which we characterize as slightly positive,” said analyst Jerome Dubreuil in a note to investors Friday, pointing to the strong free cash flow but noting “weak” subscriber additions.
The company added 17,000 net new postpaid mobile phone subscribers, down from 111,000 last year and below analyst expectations of 56,000.
Analysts said the subscriber figures reflect the company’s strategy to focus on selling higher value products instead of chasing a greater number of lower-paying customers. Meanwhile, Canadian population growth was flat in the quarter, meaning fewer new customers to compete over.
“In wireless, we stayed focused on financials versus chasing subscriber volume in what is typically a busy back-to-school quarter,” chief executive officer Tony Staffieri told analysts on a call Friday morning.
Improving overall average revenue per user (ARPU) – an industry metric that reflects how much the company ears from a customer – and free cash flow “is more important than tiny changes in volume growth,” said Toronto-Dominion Cowan analyst Vince Valentini in a note to investors.
For the company’s overall base of mobile phone subscribers, ARPU declined by about 2.6 per cent in the period.
Speaking to analysts Friday morning, Rogers chief financial officer Glenn Brandt said the drop was in part the result of a new policy which bans telecoms from charging certain setup fees.
“We continue to look to find ways to either eliminate or reduce those costs,” Mr. Brandt said. Where the company can’t eliminate them, he said, it will “try and offset them.”
When asked about finding efficiencies in the business, Mr. Brandt said the company has also had a “substantial reduction in costs” as a result of “more resourcing of our call center work offshore.”
Rogers reported a 91-per-cent loss in net income in the quarter, the result of an accounting change last quarter. Rogers recorded a $5-billion non-cash gain in the same quarter last year related to its holdings in Maple Leaf Sports and Entertainment, and that was not repeated this year.
The company reported adjusted net income of $701-million, down 3 per cent from last year.
Cable revenue was flat compared to last year, though its margins improved.
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