Rogers raises dividend 11 per cent, has higher Q4 profits in competitive period

Rogers Communications Inc. hiked its dividend 11 per cent Wednesday after reporting higher fourth-quarter profits during what the telecom company described as an intensely competitive time in the industry.

"The results clearly reflect the strength of our asset mix as well as what we see as a continuation of an extremely competitive period in the market," president and CEO Nadir Mohamed said during a conference call with analysts.

Mohamed noted that Rogers returned $564 million of cash to shareholders in the fourth quarter through a combination of dividends and share buybacks, up six per cent from the fourth quarter of 2010.

Rogers (TSX:RCI.B) is raising its quarterly dividend to 39.5 cents per share or $1.58 on an annualized basis.

"We intend to continue returning significant amounts of cash to shareholders in 2012," Mohamed added.

The quarterly financial results for the Toronto-based company easily beat analysts' expectations.

Rogers said net income in the three months ended Dec. 31 grew eight per cent to $327 million, or 61 cents per diluted share, from $302 million, or 50 cents per share in the prior-year period.

Operating revenue increased to $3.18 billion from $3.14 billion.

On an adjusted basis — excluding taxes and one-time items —Rogers earned $372 million or 70 cents per share, up from $338 million or 60 cents per share in the year earlier.

That beat analysts' estimates compiled by Thomson Reuters, which put earnings per share at 67 cents and revenue at $3.2 billion.

In its wireless division, Rogers had 42,000 net postpaid wireless subscribers, generally on lucrative three-year contracts with iPhone, BlackBerry or Android smartphones.

By comparison, Telus (TSX:T) added 148,000 postpaid subscribers and Bell (TSX:BCE) added 132,000 in the same quarter.

Rob Bruce, president of Rogers' wireless division, said it was a competitive quarter.

"There's no waving the white flag going on here," Bruce told a conference call with media.

"This has been a quarter where lots and lots of competitive activity took place, but I think the investments that we make set us on the continuation of a very good path going forward."

Mohamed said Rogers was constrained by tight supplies of Apple's iPhone 4S during the quarter and the company had a higher level of customer churn.

Rogers has said its priority has been to upgrade existing customers' smartphones to keep them from going elsewhere in the competitive wireless industry.

Mohamed also said Rogers activated the highest number of smartphones ever with more than 790,000 activated in the quarter, a 25 per cent increase from the same quarter in 2010.

Rogers now has 56 per cent of its wireless subscribers on smartphones, he said.

Revenue from wireless data, which allows consumers to check email, text and watch video, now comprises 37 per cent of network revenue, up from 31 per cent in the same period last year.

"We continued to execute strongly on our wireless data strategy, despite what was an intensely competitive environment," Mohamed told analysts.

Revenues in its cable and media businesses were each up three per cent.

Operating profit increased 83 per cent in the media segment, and by eight per cent in its cable operations, but was offset by a five per cent decline in its wireless business, driven by the upfront costs associated with the high level of smartphone activations and iPhone sales.

A decline in the voice average monthly revenue per user also contributed to the overall decline, but was slightly offset by a 19 per cent growth in data revenue.

For fiscal 2011, Rogers earned a net profit of $1.56 billion, up four per cent from 2010. Operating revenue was up two per cent to $12.43 billion.

Toronto-based Rogers is Canada's largest cable TV operator, a major magazine publisher, TV and radio broadcaster and owner of the Toronto Blue Jays.

Last December, Rogers and Bell Canada (TSX:BCE) teamed up on a $1.07-billion bid for a majority stake in the country's biggest sports franchise company, Maple Leaf Sports & Entertainment.

The move is to help feed consumers' growing thirst for sports content to broadcast on everything from smartphones to tablets to televisions.

Rogers also announced a renewal of its share buyback program of up to $1 billion, or 10 per cent of its class B shares in 2012.

Shares in Rogers were up 39 cents to $38.16 in afternoon trading on the Toronto Stock Exchange.