Rogers Communications Inc. will offer an early glimpse of how Canada's wireless carriers fared in the second quarter as the first of the Big Three to report its earnings Thursday.
The Toronto company and its peers BCE Inc. and Telus Corp. were the subject of some debate last week as analysts traded opinions on the likelihood that a fourth national cellular provider will emerge. (BCE owns 15 per cent of The Globe and Mail.)
Scotia Capital Inc.'s Jeff Fan laid out what he views as a possible path for Quebecor Inc. to play a role in the formation of a fourth national operator through a partnership approach. He said he believes the federal government is willing to do what it takes to put the conditions in place to make that happen and reduced his share price targets on the incumbent players, cutting Rogers to $43 from $46.
Dvai Ghose, head of research at Canaccord Genuity, countered with his own report calling the threat of Quebecor's expansion hard to take seriously. Mr. Ghose later raised his rating on Rogers to hold from sell.
The regulatory and competitive threat of a fourth carrier is likely to weigh on Canadian wireless stocks for some time. But analysts will also be watching this week for signs Rogers is improving its wireless churn rate and protecting its share of the cable market as BCE's IPTV product continues to gain ground.
Rogers is also in the midst of a reorganization spurred by new CEO Guy Laurence's review of its troubles with customer service in particular.
Barclays Capital analyst Phillip Huang said he estimates revenue and operating income for each of Rogers' key business segments – wireless, cable and media – will be lower than management's guidance and said it's possible the company could lower its full-year targets on Thursday.
Average revenue per user for postpaid customers, a key metric for wireless businesses, could show signs of pressure, Mr. Huang said. The company has focused on migrating subscribers to simplified "share anything" plans, which are priced about $5 higher than legacy plans, but include more expensive features and have cut into revenue from add-ons such as long distance.
Rogers has been adding fewer subscribers per quarter than its competitors of late. Mr. Huang projects a net addition of 40,000 postpaid customers compared to 98,000 in the same period last year.
Consensus estimates project Rogers will report $3.2-billion in consolidated revenue and earnings per share of 84 cents, according to Bloomberg data.