Rogers’ network outage, Shaw deal backlash to cast shadow on results

By Akash Sriram and Eva Mathews

(Reuters) – Rogers Communications’ quarterly earnings on Wednesday are likely to be overshadowed by commentary around the financial toll of an outage that impacted millions of customers and has cast doubts over its C$20 billion deal for Shaw Communications.

The company — one of Canada’s biggest telecom operators — could face a ballooning cost bill as it tries to win back customer confidence by making sweeping changes, including a C$10 billion ($7.74 billion) investment in artificial intelligence, testing and oversight.

“It will likely take time to fully restore the company’s credibility, but it will be critical for Rogers to spend what it takes to do so,” said analysts at TD Securities.

The brokerage expects a hit of about C$175 million in the current quarter related to one-time billing credits.

Other analysts, however, expect the disruption to have little impact over the long term.

CONTEXT

The deal for Shaw has been in the crosshairs of Canadian regulators, with the country’s competition bureau blocking the deal and the outage raising concerns around how a lack of competition exposes consumers to vulnerabilities.

Rogers, BCE Inc and Telus Corp together control 90% of the telecom market in Canada — where telecom rates are some of the highest in the world.

“They’re (Rogers) now going to face a really uphill battle trying to show that if they get bigger, their service is going to get better,” CFRA analyst Keith Snyder said.

FUNDAMENTALS

* Analysts expect the firm to post a revenue of $3.8 billion in the quarter ended June 30, up 6% from a year earlier -Refinitiv Data

* Earnings per share is estimated at 85 cents, up from 76 cents a year earlier

WALL STREET SENTIMENT

* Twelve of 16 analysts rate the stock “buy” or higher, while three have a “hold” rating and one rates it “sell” or lower

* The median price target is $77

* Rogers currently trading at $60.05

QUARTER REFINITIV ACTUAL BEAT, MET,

ENDING IBES MISSED

ESTIMATE

Mar. 31 2022 0.83 0.90 Beat

Dec. 31 2022 0.95 0.96 Beat

Sep. 30 2021 1.02 1.03 Beat

Jun. 30 2021 0.76 0.76 Met

​​Mar. 0.66 0.77 Beat

31 2021

Dec. 31 2020 0.98 0.99 Beat

Sep. 30 2020 0.78 1.08 Beat

Jun. 30 2020 0.71 0.60 Missed

All figures are in Canadian dollars

($1 = 1.2846 Canadian dollars)

(Reporting by Eva Mathews and Akash Sriram in Bengaluru; editing by Ankur Banerjee and Aditya Soni)