Prepaid Takes A Back Seat At Rogers
Source: www.emc.com , ,
Rogers Communications has released its Q1 2002 results. Rogers Communications
is the majority (55.9%) shareholder in the wireless operator, Rogers AT&T
Wireless. The wireless segment generated 44% of the group's revenue, although
Rogers TV operations (Rogers Cable) accounted for a 35% share towards operating
profits of CAD 379 million. Rogers AT&T Wireless contributed CAD 108 million.
The quarter showed a continued shift in Rogers AT&T Wireless' subscriber
mix. Post paid accounted for 83.4% of net additions, a massive swing from the
34.6% in Q1 2001. The drop in prepaid is further emphasised when Q4 2001 figures
are taken into consideration. Whilst prepaid numbers were driven higher by seasonal
promotions (Ready 4 U) and high AMPS prepaid activations in the Atlantic and
mid west regions, Q1 2002 levels were down 90% on the previous quarter.
Financial performance
| |
Q1 2002
|
Q1 2001
|
% growth
|
| Total revenue |
438,326 |
404,091 |
8.5 |
| Operating expenses |
327,475 |
310,206 |
5.6 |
| Operating profit |
108,099 |
91,214 |
18.5 |
| Net income |
-38,428 |
-83,256 |
53.8 |
| EPS |
-0.27 |
-0.68 |
47.1 |
| Capex |
101,195 |
160,563 |
-37.0 |
| Source: Rogers AT&T WirelessFigures are in CAD
000s, except EPSNet income excludes nonrecurring items |
The drop in capital expenditure was attributable to the substantial completion
of the GSM/GPRS network; only 23 new cell sites were added during the quarter.
The GPRS network now covers 90% of Roger's POPs, with coverage equivalent to
the existing AMPS network (93%) due in Q2 2002. Rogers remains on track to spend
CAD 550 million in 2002, commenting that the first 80% of GPRS covered POPs
cost CAD 275 million, with the next 13% costing CAD 50 million. The TDMA network
covers 83% of Canada's population.
Subscriber data
| |
Q1 2002
|
Q1 2001
|
% growth
|
| Subscribers |
3,056,800 |
2,588,300 |
18.1 |
| Digital users |
2,109,190 |
1,581,000 |
33.4 |
| AMPS users |
947,610 |
1,007,300 |
-5.9 |
| Post paid users |
2,311,400 |
2081,200 |
11.1 |
| Prepaid users |
745,400 |
507,100 |
47.0 |
| Net additions |
65,000 |
61,800 |
5.2 |
| Post paid net additions |
54,200 |
21,400 |
153.3 |
| Prepaid net additions |
10,800 |
40,400 |
-73.3 |
| Gross additions |
238,900 |
242,800 |
-1.6 |
| Gross additions split |
76.5% post paid |
65.7% post paid |
_ |
| Source: Rogers AT&T Wireless, EMC World Cellular
Database |
Throughout 2001 Rogers actively sought to attract new customers to higher earning
post-paid plans and to migrate its existing prepaid customers onto similar products.
It would appear that it has been successful in its ambition. Whilst gross additions
remained fairly flat (-1.6%) at 238,900, post-paid net additions rose 153%. In
contrast, prepaid net additions fell 73%. Whilst post paid churn has been trimmed
from 2001 levels, the significant rise in post paid additions can not only be
attributed to a customer shift to post paid. Rogers AT&T Wireless' strategy
of raising prepaid handset costs not only acted to reduce customer acquisition
costs for prepaid, but also made post paid products more viable. Rogers is continuing
to try to lock customers in for longer periods, customers on two year contracts
now account for 20% of the base. These measures are increasing and as a direct
consequence Rogers expects post paid churn to continue falling through 2002/3.
Other measures taken to boost post paid include offering incentives to customers
as contracts or as offers expire. The Ready 4 U plan was aimed at typical prepaid
users and acted as an ideal gift for the Q4 rush. Rogers has actively tried to
attract customers beyond the initial three-month period. Customers moving from
the Ready 4 U products to post-paid plans accounted for 9% of the period's gross
post-paid
 |
