Rogers released its fourth quarter earnings for 2017 today, showing a strong fourth quarter performance due in part to the success of its $60/10GB promotional plan.
Rogers set of a promotional pricing battle in December 2017 with its competitors after launching a plan with 10GB of data for $60 in Western Canada and eventually bringing it to Ontario, its largest provincial market.
In its fourth quarter earnings call, Rogers CEO and president Joe Natale stated the company decided to launch the promotion when it did to “pull forward” the usual promotional volume during that time of year.
“The debate we had was, we can pull it forward or wait for someone else to pull it forward,” he said.
When directly questioned on whether it was in response to Freedom Mobile’s Big Gig plans, launched in October, and thus a sign of fear on the company’s part, Natale responded that the promotion had “nothing to do with any of our competitors.”
He added that Rogers has been competing with Freedom for 10 years and has seen “these types of rate plans” in the market before.
“There is zero concern from the board, from management whatsoever,” Natale stated.
While the promotions did prompt growth in the fourth quarter, there was also a downside related to systems failure.
On its call, Rogers noted that during the peak promotional period it experienced technical issues with its price plan change system, increasing the rate at which subscribers left the company during the quarter (known as the churn rate).
The churn rate for the fourth quarter stood at 1.48 percent, up from 1.35 percent during the same period last year.
“We believe the impact for that five-day period was about 35,000 deactivations,” said Natale, stating Rogers believes it added 15 basis points to the churn rate, which would have been 1.33 percent without the issue.
In response to what Rogers learned from the promotion, Natale said it confirmed what they knew about Canadian data appetites. He also promised investors that the momentum would carry forward.
During the call, Natale did not address recent CBC reports that Rogers has a high pressure sales environment. MobileSyrup did, however, obtain a memo to all employees from Natale in which he states: “There is no room in our organization for unethical or unfair practices – this applies to everyone at all levels.”
For the three-month period ended December 31st, 2017, total revenue increased by 3 percent year-over-year to $3.632 billion CAD, of which its wireless business contributed $2.189 billion.
In total, the company ended fiscal 2017 with 10,442,000 wireless subscribers.
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