Rogers Communications Inc. is planning to cut 900 jobs across its divisions, a spokesperson said Thursday.
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“That’s obviously going to have an affect on disappointing customers, but they want to try to keep the financials looking good and continue to grow their revenues,” said Roberta Fox, president and senior partner of Fox Group of Mount Albert, Ont. “It will be interesting to see what they intend to do with the business market.”
The cuts will affect mainly executive and management staff, said Odette Coleman, director of communications.
“I’m not going to give you a breakdown between divisions,” she said. Coleman would not say how many jobs would be cut in each region but said the company will trim three per cent of its total work force of 30,000. At the same time, the company plans to add customer support staff, Coleman said.
Until Nov. 5, Rogers was the only wireless carrier offering High Speed Packet Access (HSPA) over the Global System for Mobile Communications (GSM). It was the first Canadian carrier to carry Apple Inc.’s iPhone 3G.
As of Sept. 30, Rogers had 8.365 million wireless subscribers.
Founded by Ted Rogers in 1960, Rogers operates a wireless network and provides television, Internet and phone service over cable. It also has extensive television, radio and magazine holdings, including CityTV, 680 News, Medical Post, Marketing, Maclean’s and Canadian Business magazine.
Ted Rogers died nearly a year ago at 75, leaving control in the hands of a trust controlled by his son Edward and daughter Melinda, who hold executive positions with the firm. Nadir Mohamed replaced Ted Rogers as chief executive officer.
Rogers announced last June at the Canadian Telecom Summit it was going to re-enter the business market.
At the time, Terry Canning, senior vice-president of business network services at Rogers Business Solutions, said the firm wants to take advantage of its cable and fibre infrastructure to offer access services to multinational corporations.
Canning also said at the time Rogers "would not rule out" using fixed wireless as an access technology. Rogers currently has wireless licenses through Inukshuk, a joint venture it shares with Bell Canada
Rogers got its fibre network in 2005 when it acquired Call-Net Enterprises Inc., which operated Sprint Canada, for $330 million.
In 1989, it bought a 40 per cent stake in CNCP, which was later re-named Unitel and provided long-distance service in competition with Bell Canada. Rogers sold Unitel in 1995, after the company lost $500 million.
“The business market is probably the one that shifts the most frequently,” Fox said. “It seems like every 12 to 18 months they’re in it then they’re not then they’re in it. If you say you’re going to be in the (telecom) and wireless market you should be serving business customers.”
Revenues in Rogers Business Solutions dropped, from $131 million for the three months ending Sept. 30, 2008, to 126 million for the same period this year.
As of Sept. 30, Rogers Business Solutions was providing 36,000 broadband data circuits, up from 34,000 a year earlier, using services such as digital subscriber line (DSL), and data over cable service interface specification (DOCSIS) and Optical Carrier (OC) technologies.
Rogers launched its DOCSIS 3 service in July, which the company says allows download speeds over cable of 50 Mbps and upload speeds of up to 2Mbps.
According to the financial results released to the public, Rogers made $505 million on revenues of $3.036 billion during the three months ending Sept. 30. That was up from net earnings of $465 million on revenues of $2.989 billion for the same period in 2008. During the quarter ending June 30, Rogers made $412 million on revenues of $2.891 billion.
The layoffs can be seen as a sign that Rogers believes the national economy won't strengthen significantly in 2010. It's also a sign the company is preparing for fierce competition when at least three new wireless entrants - DAVE Wireless, Quebecor's Videotron and Public Mobile - enter the market in the next few months.
Rogers, Bell and Telus have been preparing for the competition by lowering prices on a number of their wireless products. According to a new report by Convergence Consulting Group of Toronto, that has had a significant effect on their bottom lines.
Although wireless has been a growth area for all carriers, the research firm forecasts there will be a two per cent decline in their average revenue per wireless user (ARPU) this year. "Over the last year Canadian wireless voice revenue growth has moved into negative territory," the report said. And while the incumbents' data revenue will continue to grow, competition from the new wireless entrants will mean their overall ARPU won't, it concludes.
Convergence Consulting came to that conclusion by looking at the U.S. market, where startups such as MetroPCS and Leap have ushered in a new era of low-priced unlimited voice, text and data packages there. The net result is that there has been no increase in ARPU among America's incumbents (AT&T, Sprint, Verizon Wireless and T-Mobile) for the last three years.
It belives the overall wireless subscriber count will go up an average 1.8 million a year over that period, as opposed to 1.45 million a year in the past three years, mainly due to lower prices.
Incumbent telcos and cable companies' revenues will also be hurt by customers who drop their wireline or VoIP service in favour of cellular-only connectivity, the report adds. The number of Canadian wireless-only households will hit 23 per cent by 2014, it predicts, up from eight per cent today.
The report assumes new spectrum holders Shaw Communications of Calgary and Bragg Group of Halifax will enter the wireless market. So far Shaw and Bragg have been silent on when they will start service.
--With files from Howard Solomon
