Rogers blames wireless revenue decline on CRTC fee ban

Rogers Communications Inc. said the decline in its wireless service revenue is mainly due to lower fee revenue as a result of the Canadian Radio-television and Telecommunications Commission (CRTC)’s decision to eliminate activation and modification fees.

The telecommunications and media company on Friday released its third-quarter earnings results, reporting a one per cent drop in wireless service revenue. The company said that, aside from the CRTC’s new ban, the decrease was a result of the decline in mobile phone average revenue per user due to the impact of intense competition.

“The full run rate for the decision was felt in the quarter,” chief financial officer Glenn Brandt told investors during the company’s earnings call. “These fees… were initially designed to recover specific costs within our business, and so we’re now moving back to finding alternatives for covering those costs.”

In mid-June, the CRTC implemented new consumer protections that prohibit service providers from charging fees when Canadians choose to modify or cancel their cellphone and internet service plans. The regulator in July asked Rogers, along with BCE Inc.’s Bell Canada, Telus Corp., to prove they’re not violating this after the telcos introduced different fees following the ban.

Brandt said mobile phone average revenue per user declined 2.6 per cent to $55.22 as a result of the immediate impact from the CRTC decision, together with the lagging impact of competition from prior quarters, most notably in the fourth and first quarters.

Rogers said the decline in wireless service revenue was partially offset by the year-to-date cumulative addition of new customers.

Meanwhile, it said the postpaid gross and net additions decreases in the quarter were primarily a result of “promotional discipline and lower overall market activity” in Canada.

The company’s total revenue went up by two per cent and total service revenue increased by one per cent in the quarter, primarily because of revenue growth in its media business.

Media revenue increased by nine per cent in the third quarter, as a result of higher sports revenue and subscriber revenue from the Warner Bros. Discovery suite of channels, partially offset by lower advertising revenue.

More to come.