Rogers to spend $150M on customer credits for outage, pushes back Shaw deal deadline
Rogers estimates it will spend $150 million on customer credits related to its recent network outage, less than some financial analysts had predicted.
The company reported its second-quarter earnings Wednesday morning, an update that comes after weeks of woes for the telecom giant.
It also said that it is pushing back a deadline to close its landmark $26-billion deal to acquire Shaw, moving the outside date to the end of this year. The companies had previously agreed to extend the deadline to July 31, but they face an unresolved court fight with the Competition Bureau over the transaction.
Rogers reported that revenue in the quarter was up 8 per cent to $3.87 billion, compared to the same time last year, while profit rose by 35 per cent to $409 million. On an adjusted basis, its earnings in the period were up 20 per cent to $463 million or 86 cents per share, just ahead of analyst forecast estimates.
The company also added 122,000 new wireless subscribers on contracts during the quarter, almost doubling the number of new customers it attracted during the same period last year.
Rogers' service outage took down its wireless and internet networks for more than 15 hours on July 8 and has led to consumer outrage and demands for compensation. It also raised serious concerns about the company's inability to route 911 calls for its subscribers during the disruption.
The Canadian Radio-television and Telecommunications Commission is probing the outage and Rogers executives faced tough questions during a parliamentary committee hearing earlier this week. The innovation minister has also given Canada's major telecom providers 60 days to strike formal agreements to assist each other during emergencies.
Rogers CEO Tony Staffieri said Monday that the company will spend at least $250 million to separate its wireless and internet networks, which he said could help improve network resiliency in the future.
As a result of the outage, and our promise to customers that we would proactively provide five days of credits on their services, we estimate we will refund approximately $150 million," Rogers said in a press release Wednesday.
Some analysts had estimated the five-day credits the company is offering customers will cost in the range of $170 million to $175 million.
The Shaw deal also faced new hurdles over the past month.
Following a mediation process in early July, Rogers failed to reach a settlement with the Competition Bureau over the transaction.
The bureau has taken Rogers and Shaw to court over the takeover and a side deal to sell Shaw's wireless business Freedom Mobile to Quebecor for $2.85 billion has so far not convinced the watchdog that the sale will not be bad for competition or consumers.
Rogers and Shaw continue to pursue the divestiture of Freedom Mobile to Quebecor on the terms set out in the previously disclosed agreement," Rogers said in a statement Wednesday. Negotiation of the definitive transaction documents are progressing, and the parties will provide an update in due course."
Shares of both Rogers and Shaw have been down since the mediation failed. Shaw's shares closed on Tuesday at $34.31, well below the deal's offer price of $40.50 per share.
Christine Dobby is a Toronto-based business reporter for the Star.