(Bloomberg) — Rogers Communications Inc. said it expects to return to growth this year under a new lineup of executives after profit fell during a tumultuous 2021. The shares rose to the highest level in more than four months.
New Chief Executive Officer Tony Staffieri has made leadership changes in the company’s wireless, cable and media divisions and said he’s still confident Rogers can close a $16 billion takeover of Shaw Communications Inc. in the first half of the year. The deal is being reviewed by antitrust and telecommunications regulators in Canada.
In its guidance, Rogers said it expects adjusted Ebitda to grow 6% to 8% above last year’s mark of C$5.89 billion ($4.7 billion). Total service revenue is expected to grow 4% to 6%, the company said.
The shares were up 3.5% to C$63.93 at 1:17 p.m. in Toronto, the highest since Sept. 3 — shortly before a boardroom power struggle erupted within the Rogers family that saw Staffieri temporarily leave the company.
What Bloomberg Intelligence Says
Rogers Communications’ revenue growth and margins could improve in 2022 as it uses 5G to generate revenue streams from new services such as fixed wireless access and private networks. Its acquisition of Shaw, if approved, would provide Rogers with a national cable footprint, where it plans to drive broadband subscriber growth by leveraging its network-wide Gigabit speed offering.
— John Butler, Senior Analyst: Telecoms
In the fourth quarter, Rogers earned 96 Canadian cents a share on an adjusted basis, broadly in line with an average analyst forecast of 95 cents.
“For the share price, we think investors should be pleased with the results and the guidance,” Scotiabank analyst Jeff Fan said in a note to clients. “We note that the current 2022 guidance is before Shaw and will be significantly adjusted to reflect the transaction including the synergies, the impact of financing, and any potential remedy divestitures.”
For the full year, the company earned C$1.56 billion, or C$3.09 per basic share, down 2% from 2020. The sports and media unit lost money because Covid-19 disrupted broadcasting schedules and the Toronto Blue Jays baseball team played the entire season with reduced attendance because of pandemic restrictions.
But Staffieri said the division should see positive Ebitda this year and the company expects the Blue Jays will be able to play to full crowds in its stadium in Canada’s largest city. Rogers has no plans to sell the team, he said.
Restructuring Costs
This was was the company’s first earnings report with Staffieri as CEO. He was fired as the company’s chief financial officer on Sept. 29 after he participated in a plot to oust CEO Joe Natale.
That was part of a wild series of events that included Chairman Edward Rogers suing the company founded by his late father and battling with his sisters and mother for control of the board. He won a court decision in early November, allowing him to push out five directors.
The board then voted to dump Natale and bring back Staffieri in the top executive post, over the objections of other members of the Rogers family.
The company said it incurred about C$62 million in costs related to the Shaw deal, including fees for lining up a credit facility, and another C$39 million in other restructuring expenses that were “primarily severance costs.”
Key Numbers
- The company said it added 141,000 phones and 130,000 total net postpaid subscribers during the quarter. Bloomberg Intelligence analyst John Butler had expected 140,000; Wall Street expectations were for about 138,000.
- Revenue and adjusted Ebitda in the cable unit were flat compared with the previous year.
- Free cash flow for 2022 is expected to be C$1.8 billion to C$2 billion. Last year it was C$1.67 billion.
Market Reaction
- Rogers shares are up more than 6% YTD versus a 3.1% decline for the S&P/TSX Composite Index. Last year they gained 1.6% versus a 21.7% gain for the index.
(Updates with share price move, additional analyst commentary)
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