ROGERS Q1 2011 ARPU was down year-over-year 2.7% on a blended basis, from $61.59 in Q/10 to $59.91 this quarter
interestingly, this is now about the ARPU predicted for 2014 results according to Research and Markets “1Q10 Canada Mobile Operator Forecast, 2009 – 2014″ where they said “Rogers will decline from the current (2009) $63.32 to $59.02 in 2014”
as i commented in this previous post on that report, i think this is just the tip of iceberg as WIND MOBILE and MOBILICITY build out their own networks and are offering very real price competition. my prediction for 2014 would be more like $45 ARPU maximum (based on the pricing of those new competitors full unlimited voice-data-text plans) which is a 24% drop from here. this could be even lower. of course this could be positively impacted by rogers pricing of their forthcoming LTE network, depending on the percentage of their customers willing to pay a premium for the premium speeds it will offer.
investors should note that wireless represents $790m of Rogers $1,160m EBITDA in Q1, and as Rogers has total wireless revenue of $1,615m if that ultimately drops 25% based on ARPU reduction, that will wipe $400m out of Rogers EBITDA which is a 35% drop .
i also think rogers cable business (the rest of their EBITDA) will be under huge pressure in the next two years as internet TV (youtube, hulu, HBO direct) start to compete for customers at very low cost.
i would avoid Rogers (RCI-A.TO RCI-B.TO) stock completely (and possibly consider shorting it) based on the bad news that is coming … even though the valuation today looks compelling, one day very soon this future reality will arrive