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(Reuters)
By Wojtek Dabrowski and Scott Anderson
TORONTO (Reuters) - Rogers Communications Inc posted an 84 percent spike in quarterly profit, helped by what it called "simply phenomenal" sales of Apple's iPhone, but lowered its 2008 outlook for its wireless unit as the costs to activate new subscribers mounted.
Ted Rogers, the company's chief executive, also focused his remarks on reassuring investors and analysts about the strength of the company as it enters the economic slowdown.
"Compared to many companies today, we are extremely well financed to weather a storm -- even a big one. Our balance sheet is rock solid," he said in a conference call with analysts.
Rogers, which owns Canada's biggest wireless service provider, combines its cellphone offering with high-speed Internet and television -- services that its CEO said customers are unlikely to part with, even in a tough times.
"I think we put up a respectable quarter of growth, given the economic backdrop," he said.
Rogers said it earned $495 million, or 78 Canadian cents per share in the third quarter, up from $269 million, or 42 Canadian cents a share, in the same period a year earlier.
Total revenue rose to $2.98 billion, up from $2.61 billion a year earlier.
National Bank Financial analyst Greg MacDonald said the results were in line with his estimates and said the company's ability to generate cash, a dividend increase could be in the works.
"With double-digit operating cash flow growth, roughly $2 billion in expected free cash flow for 2009 and no debt due until 2011, we continue to believe this stock is very well positioned to outperform in the current market," MacDonald wrote in a note to clients.
"Though there was no dividend increase, the strong free cash flow suggests one is imminent."
Rogers said it added 191,000 post-paid wireless subscribers in the quarter. Post-paid users are those who pay monthly bills and often sign up for multiyear contracts. They are considered more lucrative than prepaid subscribers, who pay for a predetermined amount of service.
The company also said it activated about 255,000 iPhones during the quarter, with about one-third of the activations being new subscribers.
"The number of activations ... is simply phenomenal," chief operating officer Nadir Mohamed told analysts.
Rogers launched the iPhone in Canada on July 11. However, the initial sales drove significantly higher acquisition and retention costs at it wireless unit, the company said.
As a result, the company now sees its wireless adjusted operating profit between $2.80 billion and $2.85 billion, down from its original outlook of between $2.88 billion and $2.98 billion.
The company also said its cable division's Internet subscriber base grew during the quarter by 29,000 to 1.6 million, and digital cable households increased by 58,000 to reach 1.5 million.
(Editing by Dave Zimmerman)
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