Rogers is seeing customer turnover in its postpaid mobile phone subscriber count, but the company’s CEO isn’t concerned.
The telecom giant’s Q4, 2023, financial report shows a monthly churn rate of 1.67 percent. Not only is this an increase year-over-year, but as TD analyst Vince Valentini noted, it’s “the highest churn [rate] we’ve seen in a long time.”
The churn rate refers to the percentage of mobile customers no longer paying to use Rogers’ services.
During a conference call discussing the financial results, Tony Staffieri wasn’t worried. “I’ll jump to the punch line, which is we’re not concerned about what we’re seeing on churn.”
Staffieri pointed to a couple of reasons for this. He noted promotional activity in the quarter from flanker brands, which wasn’t Rogers’ major focus. “Not that we neglected that segment, but our focus was on the premium.” For example, Rogers’ Black Friday deals didn’t focus on mobile plans. While Fido’s did, most were matching offers made by competitors.
The CEO said that “most” of the churn came from Fido and customers choosing to use its services for periods of time as they move around. He specifically pointed to foreign students, temporary workers, and residents new to Canada, a category Rogers “does extremely well in.”
“As they’re coming in and out of the country, that’s driving a healthier gross add, but you’re seeing those churn numbers come through as well.”
Despite the importance Staffieri placed on foreign students, he doesn’t believe the federal government’s announcement to limit study permits for international students will impact the company.
During the conference call, Staffieri estimated the wireless market grew by about 5 percent in 2023. Half of this came from the “new to Canada category,” and the other half from penetration increases, referring to consumers using Rogers products. He estimated the market will continue to grow by up to an estimated four and a half percent. While Stafferi said the announcement will “certainly” bring an impact, it’s “small in the context of overall market growth.”
There was no mention of whether the churn rates had anything to do with Rogers’ recent pricing changes.
Q4 financials
Rogers reported $5.3 billion in total revenue, a 28 percent increase year-over-year.
Revenue from services alone saw a 30 percent increase to $4.4 billion. Rogers largely credits its cable and wireless businesses for these figures.
However, net income, which is the final income adjusted for expenses, saw the company in the red with $328 million, a 35 percent decrease year-over-year. This decrease has to do with costs associated with the Shaw takeover.
Revenue from the wireless sector increased by 11 percent. Rogers made $2 billion in revenue from wireless services, a 9 percent increase year-over-year. It made $848 million in revenue from equipment sales, a 17 percent increase from Q4, 2022.
Rogers credits the growth to an increase in mobile subscribers and revenue from the 501,000 Shaw Mobile customers it acquired in the takeover.
The company added 184,000 postpaid mobile phone net ads, a nine percent decrease year-over-year. This figure does not include the 501,000 Shaw Mobile customers. Rogers said it transferred the majority to its network by December 31, 2023. There were 18,000 “deactivated subscribers” that the company says it couldn’t migrate.
The average revenue per customer in this quarter was $57.96, 73 cents less than the year prior, which Rogers says primarily came from the Shaw Mobile subscribers it acquired.
Revenue for wireless equipment increased by 17 percent due to new subscribers buying devices and the move towards higher-value devices.
Total revenue from cable services, which includes internet, televisions, and other services, was up 95 percent.
On the services side, Rogers reported nearly $2 billion in revenue, a 94 percent increase year-over-year, largely because of the Shaw takeover, which “contributed approximately $1 billion for the quarter.”
Revenue from equipment increased by 113 percent. Total customer relationships increased to 4.6 million, and each account paid an average of $142/month, a $12 increase year over year.
On internet specifically, the company added 20,000 net retail internet customers. Rogers now has over 4 million retail internet subscribers. This figure doesn’t include 182,000 Fido internet subscribers, as Rogers stopped selling plans for the service on October 1, 2023.
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