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Rogers records $511 million profit in Q1 as it prepared to close Shaw deal

Rogers Communications Inc. saw its profit increase by 30 per cent to $511 million in its most recent quarter as it prepared to close a deal to buy Shaw Communications Inc.
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Rogers Communications Inc. saw its profit increase by 30 per cent to $511 million in its most recent quarter as it prepared to close a deal to buy Shaw Communications Inc.

The first quarter, which ended March 31, marks the last period before Toronto-based telecommunications giant Rogers combines with Shaw, which it purchased in March 2021 for $26 billion.

The two companies only got final government approval for the deal to move forward earlier this month, after agreeing to several terms including selling Shaw’s wireless business, Freedom Mobile, to Quebec-based Videotron.

In the three weeks since the transaction was closed, Rogers chief executive Tony Staffieri said he’s been focused on delivering $1 billion in synergies over the next two years, increasing capital investments in its and driving more competition and choice for customers, especially those in Western Canada.

“There’s lots of work to do, but I am very encouraged with the energy and excitement that I have seen in both the east and west as we bring these two strong companies together,” he said on a Wednesday call with analysts.

He added that he has spent much of the last month in the west, meeting with Rogers staff, customers and local governments and plotting further moves that will integrate Shaw.

He shared in mid-April that Rogers will relocate around 300 Shaw call centre jobs based overseas to B.C., Alberta and Manitoba — part of Rogers’ commitment to have a customer service team completely based in Canada.

As part of a set of conditions Ottawa attached to its approval of the merger with Shaw Communications Inc., Rogers must create 3,000 new jobs in Western Canada and establish a second headquarters in Calgary.

It must also spend $5.5 billion to expand 5G coverage and additional network services, as well as a further $1 billion to connect rural, remote and Indigenous communities.

Videotron was similarly ordered to offer plans that are at least 20 per cent lower than its competitors and spend $150 million over the next two years to upgrade Freedom Mobile’s network.

If Rogers breaches its conditions, it must pay up to $1 billion in damages. Videotron would potentially be subject to $200 million in penalties if it fails to meet its commitments.

Rogers’ work to tie up the Shaw deal and its $511 million profit compared with a net income of $392 million in the same period last year, when the company was still awaiting several approvals for the transaction, including the Competition Bureau, which vigorously fought the merger.

The profit amounted to diluted earnings per share of $1 for the period ended March 31, up from 77 cents during its previous first quarter.

“The Rogers business is executing better today than when this (Shaw) transaction was announced over two years ago, so we are ready and excited to move forward,” Staffieri.

On an adjusted basis, its net income totalled $553 million, a 20 per cent increase from $462 million during the prior first quarter, while its adjusted diluted earnings per share moved from 91 cents to $1.09 per share.

Analysts on average had expected a profit of $1.45 per share on a non-adjusted basis and $1.01 on an adjusted basis, according to estimates compiled by financial markets data firm Refinitiv.

Revenue for the period ticked up six per cent to $3.8 million in the most recent quarter, up from $3.6 billion in the previous first quarter.

Rogers’ revenue was fuelled by the company adding 95,000 net postpaid mobile phone subscribers, up 44 per cent from 66,000 last year.

Its monthly churn for the category was 79 per cent, up from 71 per cent during its previous first quarter.

Rogers’ wireless mobile phone average revenue per user was $57.26, one cent higher than the first quarter of the prior year.