TORONTO — Rogers Communications Inc. posted a $352 million net profit for the first three months of 2020, but warns it cannot predict how its 2020 results will be affected by the continuing COVID-19 pandemic and economic recession.
The telecom company’s first-quarter net income amounted to 68 cents per share, down from 76 cents per share or $391 million a year earlier.
Its adjusted earnings were $367 million or 71 cents per share, down from $405 million or 78 cents per share.
Revenue from the company’s wireless, cable and media divisions totalled nearly $3.42 billion, down five per cent from almost $3.59 billion a year earlier.
All three major divisions saw lower revenue compared with last year, but the biggest decline was in media — which experienced a 12 per cent drop in top-line revenue compared with last year.
The company says its media sector — which includes the Toronto Blue Jays and several sport-focused media businesses — was affected by the suspension of all major sports leagues effective mid-March 2020.
Rogers chief executive Joe Natale said Rogers — which maintained its dividend and initiated a new share buyback plan on Wednesday — has a strong balance sheet that will help it navigate through the crisis.
“We began to see the impact of COVID-19 in the final few weeks of Q1 and have quickly adapted our operations to continue delivering critical services to meet the evolving needs of our customers,” said
“Our networks are seeing unprecedented levels of activity and demand. They continue to provide a resilient foundation for our customers now, and into the future, as our nation recovers and rebuilds.”
Demand for Rogers services such as mobile and internet has soared while Canadians work and entertain themselves from home, but analysts have warned the telecom industry is not immune from the recession’s effects.
RBC Capital Markets analyst Drew McReynolds said in an April 6 note that many investors may already view the sector’s first-quarter results as “irrelevant” and its second-quarter ending June 30 as a “write-off.”
“We expect Q2/20 performance to be among the worst on record for Rogers (and other Canadian telecom operators). Having said this, direct COVID-19 impacts should be transitory and alleviated once social distancing policies begin to be relaxed,” McReynolds wrote.
He predicted that Rogers stock could outperform other members of the sector, particularly major rivals BCE and Telus, but his outlook for all three was darker in early April than in a previous analysis issued just three weeks prior.
RBC lowered its price target for Rogers shares based on lower estimates for subscriber additions in wireless, less revenue growth in wireless, wireline and media, and lower margins than in its March 17 analysis.
As of the close of trading on Tuesday, Rogers stock was at $57.44 at the Toronto Stock Exchange, up from a 2020 low close of $47.27 set on March 23.
The Toronto-based company is owner of the Rogers, Fido and Chatr wireless brands, internet-cable systems in three provinces, and a media and sports business that includes 55 radio stations, the Citytv network, Sportsnet and the Toronto Blue Jays.
It holds a virtual shareholders meeting at 11 a.m. on Wednesday.
This report by The Canadian Press was first published April 22, 2020.
Companies in this story: (TSX:RCI.B)
David Paddon, The Canadian Press