Rogers Communications’ cable TV service will move to IPTV over the next two years, a system already used by Telus and Bell, CEO Nadir Mohamed said Wednesday as the company announced its first-quarter financials.
That means TV will be delivered over an Internet Protocol network and will allow users to watch sports, for example, while pulling up stats.
“Think about it as one big pipe into the home, a pipe that will allow consumers to access any type of content and entertainment, whether it’s broadcast, on-demand or user-generated. In the future, your TV and your computer will be one and the same.”
Rogers is losing TV subscribers, while IPTV rival Bell is attracting customers to its new IPTV service.
Rogers missed some of its financial targets in its first quarter. In response, Rogers intends to cut costs and improve customer service to deal with competition in the wireless and cable TV markets that has resulted in slower revenue growth, Mohamed said.
“I think the competitive intensity carries on, and so there’s clearly going to be pressure on the top line,” Mohamed said of Rogers’ revenues.
“But it’s very straightforward – in the short term, we’re addressing the cost side of the equation,” he said after the company’s annual meeting in Toronto.
Shares of Rogers closed down almost 6 percent Wednesday after the company reported disappointing first-quarter financial results. The stock was down $2.21 at $36.81 per share on the Toronto Stock Exchange.
The Toronto-based company’s wireless division has faced tougher competition from players big and small, while its cable division is battling fellow industry giant Bell.
Mohamed said Rogers is working to allow customers to use their devices to get the information they need for self-service when they have problems.
“To me, the best way to drive out costs is to improve our service. Where we would like to get to is customers using their own device to actually get the information they want, or service their requirement,” he said.
Mohamed added that Rogers will also look at trimming discretionary spending and supply costs, but he did not mention any further job cuts.
Rogers laid off about 300 employees in March, with the cuts focused on management and head office positions.
Mohamed assured analysts Tuesday that the company intends to improve its earnings before the end of the year and repeated the message to shareholders Wednesday.
“As I look to the balance of the year, I expect this competitive intensity to continue, and with moderating revenue growth … cost management is absolutely imperative,” he told the meeting.
Rogers posted a profit of $305 million, or 57 cents per diluted share, on $2.95 billion in revenue for the first quarter. That compared with a profit of $335 million, or 60 cents per diluted share, on $2.99 billion in revenue a year ago.
The company reported adjusted earnings of $356 million, or 67 cents per diluted share, below analyst expectations of 76 cents per share, according to Thomson Reuters.
Revenue of $2.95 billion also missed analyst expectations, which on average were for $3.05 billion for the first quarter of fiscal 2012.
In its first quarter, Rogers said it lost 7,000 cable customers in a highly competitive quarter with Bell’s IPTV service.
UBS analyst Phillip Huang said the loss of subscribers was not a “one-off event.”
As Bell expands its service, available in the Toronto and Montreal areas, Rogers will lose 86,000 cable subscribers in 2012, Huang estimated in a research note.
Huang noted that Rogers has stepped up the pace of cutting costs to sustain operating profits and cash flows. “Nonetheless, we believe there is a high likelihood that we will see management lower guidance when they release Q2 results.”