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Rogers Communications SWOT & PESTLE Analysis

ID : 52358353 | Apr 2018

COMPANY PROFILE - Rogers Communications

Business Sector : Telecom & Mass Media

Operating Geography : North America, Canada

About Rogers Communications : Rogers Communications Inc. is a leading Canadian communications and media company. Founded in 1925 by Edward Rogers, the present enterprise dates back to 1960 when his son Ted Rogers founded Rogers Radio Broadcasting Corporation Ltd. Later the company acquired CHFI and started the cable and operations business. The company has its operations in landline and mobile telephony, internet services, digital television, broadcasting, cable TV and publishing with assets in telecommunications and mass media. It has around 25,200 employees as on 2016 with Alan Horn as the Chairman, Joe Natale as President & CEO and Edward S Rogers III as Deputy Chairman. Its mission is 'In Rogers, we strive to be unique with the form of services we render and how the operation of our business runs.'

Rogers Communications Revenue : $13.7 billion – FY ending Dec 2016

Competitive Analysis of Rogers Communications

The SWOT analysis for Rogers Communications is presented below:
Strengths
Weaknesses
1. Largest provider of wireless communication services in Canada
2. Diverse business operations and strong brand portfolio
3. Strong top line performance
1. Over dependence on Canadian market amidst heated competition
2. High attrition rate or employee turnover compared to industry standards
Opportunities
Threats
1. Partnership with Comcast
2. Growing demand for Cloud computing
1. Regulation in the industry
2. Reliance on third-party service providers and vendors
3. Rising competition in the industry

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Detailed SWOT Analysis of Rogers Communications

 

Strength

1. Largest provider of wireless communication services in Canada: With revenue of almost $8 billion, wireless is definitely the largest segment for Rogers with a contribution of 57%, operating profit of 63% and Canada’s largest provider of wireless services. The investments for expansion of the wireless multi-band LTE network have resulted in coverage to 95% of Canada’s population and the roll-out of prime 700 MHz spectrum now covers 91% of the population. Rogers thus enjoys a huge operational and customer base. Rogers wireless business segment distributes its products through various channels like independent dealer networks, retail stores and chains, ecommerce sites, call centres and outbound telemarketing, door-to-door agents and other distribution channels. As of 2016, it had 10.3 million subscribers. This has been made possible thanks to the wholly owned and operated 100% fibre optic backbone that provides wholesalers with seamless cross-border coverage.

2. Diverse business operations and strong brand portfolio: Rogers has been successful in creating a strong brand portfolio across 4 key segments viz. wireless, media, cable and business solutions along with widespread product distribution. Some major brands include Rogers and Fido in wireless, Maclean’s, Hello! Canada in publications, 50 radio stations including Sportsnet, the FAN, KiSS, JACK FM, and SONiC, VICE, a global youth media company, 20 TV channel and specialty channels including Sportsnet, FX (Canada) and FXX (Canada), OMNI, VICELAND. With a market share of more than 35% as of 2016, the company’s growth is said to be primarily driven by wireless services segment where it is the largest player by market share.

3. Strong top-line performance: The Company delivered strong top-line performance in FY2016. Revenue increased by 2% from $13.4 billion in FY2015 to $13.7 billion in FY2016. This was primarily driven by wireless service revenue growth of 5%.With a free cash flow of $1.7 billion and healthy liquidity of $2.5 billion; Rogers have a strong balance sheet to account for. There is increased full year Adjusted Operating Profit (AOP) growth to 5-6% with plans to invest incremental profit in networks. The company has been offering healthy quarterly dividends of $0.48 per share since Jan 2015 and $0.25 to $0.45 since 2008. There is also a Dividend Reinvestment Plan (“DRIP”) wherein Class A and B shareholders can have all or portion of dividends received reinvested with no brokerage or service charges applicable.

Weakness

This section is available only in the 'Complete Report' on purchase.

Opportunity

1. Partnership with Comcast: The recent partnership with Comcast to bring their X1 IP-based video platform and world class IPTV service to the customers in early 2018 will help Rogers to leverage Comcast’s substantial research and development investments. This is in line with their effort to bring innovation and state-of the-art technology to the consumers.

2. Growing demand for Cloud computing: According to the Infocomm Development Authority of Singapore (IDA), the global market for cloud computing is expected to reach $241 billion by 2020. Organisations and government agencies worldwide are shifting to the easier and cost-effective cloud computing services. The company currently offers cloud services for small, medium and large Canadian businesses and to telecommunications providers. The size of the cloud market for the small-to-medium-sized businesses was expected to be worth $2.6 bn in 2015 and projected to grow to $3.6 bn in 2018. Thus, Rogers may explore emerging opportunities from this increasing demand.

Threat

This section is available only in the 'Complete Report' on purchase.

References

1. Rogers CommunicationAnnual Report 2016: https://investors.rogers.com/2016-annual-report/

2. Rogers Communication Investor Presentation 2016: https://investors.rogers.com/investor-presentation/

3. BCE's profit beats expectations as it adds wireless, internet and TV subscribers: http://business.financialpost.com/telecom/update-1-canadian-bces-profit-beats-estimates-on-wireless-additions

4. New Rogers CEO Joe Natale plans to ‘obsess’ over customer service: https://www.theglobeandmail.com/report-on-business/new-rogers-ceo-joe-natale-plans-to-obsess-over-customer-service/article34753531/

5. https://www.reuters.com/finance/stocks/overview/RCI

6. Size of small-to-medium-sized business (SMB) cloud services market in Canada in 2015 and 2018 https://www.statista.com/statistics/499386/canada-smb-cloud-services-market/

7. Rogers and Telus step up wireless promotions to counter serious threat from Freedom Mobile http://business.financialpost.com/technology/rogers-and-telus-step-up-wireless-promotions-as-shaw-enters-the-market-with-freedom-mobile

8. Dividend Information https://investors.rogers.com/shareholder-information/dividend-information/

9. Company Overview of Rogers Communications Inc. https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=378755

The PESTLE/PESTEL analysis for Rogers Communications is presented below:
Political
Economical
1. Tax reforms mulled by government
2. Threat to net neutrality in Canada
1. Increased competition expected
2. Impact of foreign exchange on wireless
Social
Technological
1. Among Canada’s top employers
2. Growth of internet-based services
1. Changing technology landscape across business segments
2. Rise of IOT in the telecom sector
Legal
Environmental
1. Impact of billing regulations on Canada’s carriers
2. Demand for deregulation to foster innovation
3. Ease of regulations for foreign ownership to increase competition
1. Commitment towards environmentally sustainable processes
2. Recycling and waste management programs
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Detailed PESTLE Analysis of Rogers Communications

 

Political

1. Tax reforms mulled by government: The Canadian liberal government has been mulling to enforce a so-called Netflix tax on digital services purchased by Canadians from foreign-based firms over the internet. Companies like US-based Netflix do not apply federal or provincial sales taxes to monthly billings sent to Canadian customers for its streaming services. On the other hand, Canadian firms selling digital services within the country are forced to collect and remit federal and provincial sales taxes — such as BCE Inc.'s Bell, which has a service called Crave TV. Such a trend can place domestic digital suppliers at unfair competitive disadvantage. The briefing by the govt. said that countries like Australia have begun efforts to collect sales tax from firms like Amazon, Google and iTunes. In 2014, Rogers had urged Ottawa to require that taxes be levied and remitted by billing agencies hired by foreign suppliers.

2. Threat to net neutrality in Canada: The Canadian Radio-television and Telecommunications Commission (CRTC) received a draft proposal to develop the Internet Piracy Review Agency (IPRA) to maintain a list of websites that according to the proposal were peddling pirated materials and hence force all internet service providers to block them. The draft proposal is backed by three of the biggest telecom companies in Canada – Bell, Rogers and Cineplex along with some smaller companies working to limit access to websites they deem make use of pirated content. But without court oversight or a legal process to look into the proposal, the internet regulation undertaken by CRTC could pose a serious threat to net neutrality in Canada.

Economic

1. Increased competition expected: The Innovation, Science and Economic Development (ISED) Canada has announced a future auction for a 600 MHz spectrum, proposed to happen in the next couple of years. The outcome of this auction could increase competition in the telecom industry. For spectrum in the 614 MHz-698 MHz, ISED believes demand will exceed supply for the licence conditions in this band and so has proposed to adopt competitive measures in the form of a 30 MHz set-aside. This will be a reservation for active mobile network operators with less than 10% of national subscriber market share (a category which would include Shaw’s Freedom mobile and exclude Rogers, Telus and Bell). ISED believes this set-aside would help smaller operators to increase their low-band spectrum holdings to a level closer to the incumbent providers’.

2. Impact of foreign exchange on wireless: The wireless roaming revenue depends on the customer travel volumes which in turn are affected by the foreign exchange rate of the Canadian dollar and other general economic conditions. Since computers, software and machinery and other equipment are manufactured and sourced from abroad, a higher Canadian dollar lowers the cost of purchasing these goods. A lower Canadian dollar is good for export but Canadian companies haven’t typically been low-cost producers and hence the gains haven’t been substantial. But with superior product quality, customization and better customer service, the risks associated with currency fluctuation can be mitigated.

Social

1. Among Canada’s top employers: Rogers has been redesigning and updating the workplace through a strategy named Sharespace offering greater flexibility with quiet and interactive zones and access to technology. The online career planning tool called My Development Hub has been designed for long term career development of employees. The Imagine Canada dedicates 1% of the net earnings for philanthropic activities. Also, adjudged Canada’s Top 100 Employers (2018) and Canada’s Best Diversity Employers (2017).

2. Growth of internet-based services: Canadians are some of the most engaged internet users in the world with an average of approximately 36 hours spent online, the highest. Canadian desktop users seek an average of 3,238 unique web pages a month. Most Canadians use desktop or laptop to access the internet (67%) though mobile usage is on the rise for internet especially for the age group between 18 and 34. Email continues to be the top online activity with almost 92% citing it as a reason for accessing internet. Other uses include banking (68%), social media (59%) and reading about news (55%). Almost half (49%) use it for online shopping and the younger audience (18-34 years) engage in online video, TV, movies (59%) etc. The Smartphone penetration continues to increase with current level at 81%. Such internet usage patterns present huge prospects of growth and for a telecom and wireless services leader like Rogers in Canada.

Technological

This section is available only in the 'Complete Report' on purchase.

Legal

This section is available only in the 'Complete Report' on purchase.

Environmental

This section is available only in the 'Complete Report' on purchase.

References

1. Rogers Communication Annual Report 2016: https://investors.rogers.com/2016-annual-report/

2. Rogers Communication Investor Presentation 2016: https://investors.rogers.com/investor-presentation/

3. Telus, Rogers say they can’t meet wireless regulations deadline: https://www.thestar.com/business/tech_news/2017/11/20/telus-rogers-say-they-cant-meet-wireless-regulations-deadline.html

4. Internal document raises possibility of taxing Netflix and other digital services: http://www.cbc.ca/news/politics/sales-tax-netflix-bell-rogers-digital-melanie-joly-bill-morneau-internet-1.3937955

5. Canadian 600 MHz auction consultation launched https://www.telegeography.com/products/commsupdate/articles/2017/08/08/canadian-600mhz-auction-consultation-launched/

6. The Exchange Rate Opportunity http://www.mnp.ca/en/posts/the-exchange-rate-opportunity

7. Rogers introduces IoT as a service for Canadian Businesses https://www.rtinsights.com/rogers-iot-as-a-service-blue-rover/

8. Discover the potential of the Internet of Things https://www.rogers.com/enterprise/products-and-solutions/internet-of-things

9. Internet use in Canada https://cira.ca/factbook/domain-industry-data-and-canadian-Internet-trends/internet-use-canada

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Copyrights and Disclaimer

Rogers Communications SWOT and PESTLE analysis has been conducted by Nalinaksh Kashyap and reviewed by senior analysts from Barakaat Consulting.

Copyright of Rogers Communications SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.