Rogers profits jumped 35% in the three months prior to the recent outage – CBC News
Rogers Communications Inc. earned 10 per cent more revenue and saw its profits jump by more than a third in the three months leading to the end of June, a financial reporting period that ended just before a devastating outage wiped out the company’s telecom networks across the country.
The telecom giant posted quarterly results before stock markets opened on Wednesday, and the numbers painted a picture of a company whose business was booming.
Wireless service revenue increased by 11 per cent to just shy of $1.8 billion “primarily as a result of higher roaming revenue associated with significantly increased travel,” the company said. Rogers added roughly 122,000 new wireless customers during the quarter, roughly twice the number it added a year ago.
As well, cable revenues increased by 3 per cent to just over $1.03 billion, “primarily as a result of service pricing changes,” the company said.
The media division saw the biggest boost of all, with revenues increasing by 21 per cent to $659 million compared to the same period a year ago. The biggest reason for that uptick was the Toronto Blue Jays baseball team, which Rogers owns, being able to once again play home games and televise them from the Rogers Centre in Toronto.
This time last year, the Blue Jays were playing home games in the United States due to COVID travel restrictions.
Across all business units, Rogers took in just over $3.8 billion during the quarter, an eight per cent increase from last year, and posted a profit of $409 million — a 35 per cent increase from a year ago.
Cost of outage yet to be accounted for
However, all of this financial performance came before July 8th, when the company’s network was wiped out by a botched upgrade that caused cascading failures across the country.
Rogers estimates that it expects to issue about $150 million in rebates to customers as compensation for the outage, and pledges to spend billions in capital investments to upgrade its systems to ensure it doesn’t happen again.
“The investments we are making to enhance the reliability of our networks are the right things to do, and it will not impact our prices in this highly competitive market,” a spokesperson with the company told CBC News this week.
Rogers also officially delayed its self-imposed deadline to finalize its merger with Shaw until the end of the year. When the merger was first proposed in early 2021, both sides expected it to be completed by now, but regulatory delays caused them to push the deadline back until July 31.
On Wednesday, the company revealed it doesn’t expect to be able to make the deal official until the end of this year.
Sharp drop in inflation suggests interest rates have peaked: ING – Mortgage Rates & Mortgage Broker News in Canada – Canadian Mortgage Trends
The sharp drop in February’s headline inflation reading suggests rates have now peaked and that the next rate move will be a cut.
That’s the take from ING’s Chief International Economist James Knightley following a second straight month of Canada’s annual inflation rate surprising to the downside.
The consumer price index slowed to an annual rate of 5.2% in February, Statistics Canada reported on Monday, marking the largest deceleration since February 2020. That’s down from a reading of 5.9% in January and slower than the 5.4% rate expected by a Bloomberg survey of economists.
Most economists believe the drop in inflation all but guarantees another rate pause by the Bank of Canada at its April 12 meeting.
Some, like Knightley, are going further and calling for at least one 25-basis-point rate cut before the end of the year, particularly against the backdrop of the current global banking challenges. That would knock the Bank’s overnight target rate back down to 4.25% from its current rate of 4.50%.
“We still think the next move in the BoC policy rate will be downwards and that the first cut is likely to come before the end of the year,” Knightly wrote. “Canada’s greater exposure to interest rates rate hikes via a high prevalence of variable rate borrowing means consumer activity should slow through 2023.”
Additionally, higher household debt levels in Canada—more than 180% of disposable income versus 103% in the U.S.—means Canada is “especially exposed to the risk of a housing market correction in a rising interest rate environment.”
“Falling inflation rates will give the BoC the room to respond with looser monetary policy, especially with the Finance Minister Chrystia Freeland suggesting her upcoming budget will ‘exercise fiscal restraint’ to help in the battle against inflation,” Knightly added.
BMO’s Douglas Porter added that, with inflation subsiding at its current pace, “there’s really no underlying reason for the Bank to hike further.”
“Overall, the Bank’s pause looks prudent, and we expect them to stay at current levels for quite some time, barring a major flare-up in the banking turmoil,” he wrote.
The rise in shelter costs is slowing
Digging into the details of StatCan’s February inflation report, shelter costs rose at a slower pace year-over-year for the third consecutive month.
Slower growth was recorded in homeowners’ replacement cost, which is related to the price of new homes, which rose at an annual pace of +3.3% compared to +4.3% in January. Other owned accommodation expenses, which includes real estate commissions, also eased to +0.2% in February, down from a rate of +1.1% in January.
However, one shelter component remains one of the biggest drivers of overall inflation: mortgage interest cost, which climbed by 23.9%, up from +21.2% in January. This was the largest increase in 40 years, Statistics Canada noted. “Many will thus point to the BoC as the ’cause’ of inflation,” wrote BMO’s Porter, “although note that inflation is still 4.7% even excluding mortgage interest costs.”
That contributed to a moderate 0.3% month-over-month gain in CPI excluding food and energy.
The Bank of Canada’s preferred measures of core inflation also continued to ease, with CPI trim falling to +4.8% (from +5% in January), CPI median down to +4.9% (from +5%) and CPI common decelerating to +6.4% (from +6.6%).
US Fed announces latest interest hike in wake of banking turmoil – Al Jazeera English
The Fed has continued its cycle of rate increases aimed at stemming inflation, but indicated a pause could be on the horizon.
The United States Federal Reserve has announced its latest interest rate hike, a move aimed at lowering inflation by making borrowing more expensive for consumers.
The increase of a quarter of a percentage point on Wednesday sets the US central bank’s benchmark overnight interest rate in the 4.75 to 5 percent range, its highest level in 15 years.
The increase was widely expected and underscores the Federal Reserve’s determination to rein in inflation, which remains above policymakers’ long-term annual target of two percent.
But the interest rate increase follows the sudden failures this month of Silicon Valley Bank (SVB) and Signature Bank. Critics blamed the Fed’s relentless rate hikes for contributing to the failures, part of the biggest banking sector meltdown since the 2008 financial crisis, and some observers speculated that policymakers would be forced to pause the interest rate increases.
When asked on Wednesday if such a pause had been considered for the latest cycle, Federal Reserve Chair Jerome Powell said, “We did consider that.”
Nevertheless, Wednesday’s policy statement said the US banking system is “sound and resilient”. It added that recent stress in the sector was “likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation”.
The Fed also indicated that a pause in interest rate increases may be on the horizon. The latest policy statement omitted the oft-repeated language that “ongoing increases” in interest rates “will be appropriate”.
That phrase had been in every policy statement since March 16, 2022, when the Fed made its decision to start hiking rates to address inflation.
Now, the language has been softened. On Wednesday, the policy-setting Federal Open Market Committee said instead that “some additional policy firming may be appropriate”.
That leaves open the chance that the Fed may still lift rates one more quarter percentage point, perhaps at its next meeting in May, but it also suggests that the next hike could represent an initial stopping point for the rate increases.
Wednesday’s hike was the same size as the central bank’s previous rate decision in February.
The three major US stock indexes, which were mostly languid prior to the Fed announcement, moved higher in the immediate aftermath, as investors digested the hike and the accompanying statement.
Meanwhile, Powell said on Wednesday that — while recent stress on the banking system has added uncertainty to the outlook — it’s still possible the economy may not face a sharp downturn as the Fed works to contain inflation.
In terms of a soft landing for the economy, “There’s a pathway to that, and that path still exists,” Powell said.
Officials also projected the unemployment rate would end the year at 4.5 percent, slightly below the 4.6 percent seen in projections issued in December. The outlook for economic growth also fell slightly to 0.4 percent from 0.5 percent in the previous projections.
Inflation is now seen ending the year at 3.3 percent, compared to 3.1 percent in the last projections.
Alberta premier pitches more gas-fired power plants as UN climate panel calls for phaseout
Premier Danielle Smith says renewable energy is unreliable and that Alberta should build additional gas-fired power plants for a more predictable source of electricity.
“This is a natural gas basin,” Smith told delegates at the Rural Municipalities of Alberta (RMA) convention in Edmonton on Wednesday. “We are a natural gas province. And we will continue to build natural gas power plants, because that is what makes sense in Alberta.”
In response to questions from rural councillors, Smith also said she’s looking at ways to ensure solar and wind companies set aside money to reclaim land in the future for when a renewable installation is dismantled.
“I think that it needs to be addressed at the start, or we’re going to have the same problem that we had with the orphan wells, and why would we want to bring that to the province of Alberta?” said Red Deer County Mayor Jim Wood.
Smith said she met with power providers and learned the province’s electricity grid twice came close to needing more power than it could supply in the last few months.
She pointed to stagnant air and solar panels covered with snow and ice leading to a dearth of wind and solar generation at those times.
The emissions from natural gas plants can be captured and sequestered to meet climate targets, she said.
Smith’s promotion of more natural gas-fired power plants comes days after the United Nations’ Intergovernmental Panel on Climate Change said wealthy countries should phase out gas plants by 2035 to prevent irreversible damage to the planet.
The premier said it concerns her to see solar panels and wind farms installed on arable land.
Kara Westerlund, vice-president of RMA, says rural councils share that concern. She told reporters the installations should be going onto brownfields rather than “taking some of the best growing soils and agricultural land out of production.”
She sees renewable energy sources as complementary to oil and gas.
“We’ve never felt that one is going to replace the other,” Westerlund said.
Renewables a cheap source of energy, researcher says
RMA members previously voted for a resolution calling on the province to require renewable companies to pay for a bond that would cover the costs of removing solar panels or wind turbines past their useful lives.
The province already has a regulation from 2018 that stipulates how the sites are to be decommissioned.
Smith said she’s considering requiring renewable companies to set aside a proportion of revenue to save for site cleanup costs — and that the remediation money should transfer to any new site owners.
However, devising a solution for unreclaimed oil and gas sites is Smith’s priority.
“Once people feel comfortable that we’ve got the right model there, then the next obvious question is, what are we going to do about solar and wind?” she said.
According to the Alberta Energy Regulator, there are nearly 200,000 inactive or abandoned wells in the province.
Binnu Jeyakumar, director of electricity at the Pembina Institute, said inactive oil wells and renewable sites aren’t the same.
“We get orphan wells because we run out of viable gas production in these locations,” she said. “You don’t run out of wind or solar in a location.”
When equipment breaks down, it may be viable for an owner to install new turbines or panels, she said.
Jeyakumar also challenged the premier’s assertion that solar and wind are unreliable sources of electricity. She said hours of sunlight and weather are predictable: an electrical system operator can plan for those fluctuations by using diverse sources of energy, and by building more storage, transmission and distribution systems.
Most solar panel systems are built so snow and ice slide off or melt, she said.
She said building a new gas plant is a risky commitment in a world where energy prices fluctuate wildly and the power plant is likely to be around for another 30-to-40 years. She said there are sound reasons why investors are turning to renewables.
“I’m not saying we should only build solar,” she said. “But we should be basing our grid on solar and wind, because they are the cheapest options.”
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