MONTREAL - Rogers Communications Inc. has lost new cellphone customers due to increased competition, but said Tuesday it expects to retain its lead with the help of its new unlimited talk and text brand, Chatr.
Chief executive Nadir Mohamed said the cellphone market is competitive across the board, but added that Chatr will tap into a consumer need.
"We have been watching for a bit now the emergence of an unlimited talk and text market and that's where Chatr will be focused when we launch it," he said during a media conference call.
"I think it will help the market be even more competitive," he said, without giving away the discount brand's launch date.
During the second quarter, Rogers earned $451 million or 78 cents a share, from $374 million or 59 cents a year ago. Revenue was also up, rising five per cent to $3.03 billion from $2.89 billion.
On an adjusted basis, the comany earned 80 cents per share, compared with average analyst expectations of 68.8 cents per share according to figures compiled by Thomson Reuters.
Mohamed noted the wireless industry now has had two quarters of increased competition from new cellphone players and with Bell (TSX:BCE) and Telus (TSX:T) having upgraded their networks.
"We feel very strongly that we will more than hold our own as leaders in the market," he said.
Rogers, Canada's largest wireless player, already has discount brand, Fido, which offers lower fees and discount phones.
Rogers' wireless division added fewer subscribers in the quarter with 119,000 net new subscribers, compared with 142,000 net new subscribers added in the same period in 2009. Net post-paid subscriber additions dropped 50 per cent to 98,000 compared with 148,000 a year ago.
At the end of the quarter, Rogers had 8.6 million wireless subscribers, up from 8.1 million a year before.
New entrants such as Public Mobile, Mobilicity and Globalive's Wind focus on the lower end of the market with unlimited talk and text plans.
"In terms of market share, it will reflect the fact that new entrants — they will get some market share — but nobody should underestimate what we bring to the market."
Mobilicity has alleged that Rogers has contravened the "abuse of dominant position'' section of the Competition Act. That section doesn't allow the "use of fighting brands introduced selectively on a temporary basis to discipline or eliminate a competitor.''
Desjardins Securities analyst Maher Yaghi noted he was looking for a launch date for Chatr and dismissed Rogers' subscriber loss.
"We are not particularly concerned with lower wireless subscriber gains versus last year, as the trend is in line with our belief that wireless net additions will be more evenly spread among the major players," Yaghi wrote in a note.
Rogers' wireless division accounted for $1.7 billion of revenue, or more than half of the total for the entire Rogers business, which also includes cable, Internet, phone, specialty and conventional television, radio, magazine publishing and the Toronto Blue Jays.
Data services were the main driver of the wireless division's revenue growth with 27 per cent of revenue coming from those services, Mohamed said.
Rogers Cable, including cable and Internet services, Rogers Business Solutions, and retail stores, had $1 billion in revenue (up three per cent) while Rogers Media's revenue rose to $396 million from $366 million (up eight per cent).