Briefing

Rogers shares drop over seven per cent as popularity of unlimited plans hurts earnings

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The telecommunications firm cut its earnings and revenue guidance after one million Canadians signed up for unlimited data plans, on which Rogers does not charge overage fees. Rogers CEO Joe Natale said the unlimited plans will affect results for the next few quarters. (The Logic)

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Talking point: This is the biggest drop in Rogers stock in almost four years. The decline is partially due to missing analyst expectations—it was off 12 cents per share compared with average analyst estimates—but the financials reported Wednesday are only a part of the problem. Rogers is in the midst of a court fight seeking to keep charging smaller telecoms higher prices. If it loses, that will cut further into revenue. The company could also face fresh competition if the federal government makes it easier to set up a rival telecom, something the newly re-elected Liberals promised to do. Neither of these challenges are exclusive to Rogers, nor is the potential for unlimited plans’ popularity to affect the bottom line. Bell and Telus, which introduced similar plans, are each down over four per cent on the news.