What’s the cost of an outage that brings a major portion of the economy to a grinding halt?
If you’re Rogers Communications (TSX: RCI.B), it’s at least $150 million. At least, that’s what its expected to cost the company in the form of refunds following the outage that occurred on July 8 that impacted everything from its wireless customers, to debit transactions, to emergency services.
The figure was disclosed this morning by the company as part of their second quarter financial results, wherein the firm expects the promised five days of credits to services to cost the company that figure. That, of course, does not include any fines that may be levied against it or the cost of beefing up its infrastructure to prevent such an event from occurring again.
For the latter, CEO Tony Staffieri on Monday informed the Canadian House of Commons that it would be spending at least $250 million establishing what it calls an “always on” network. The intent is that it would stop future outages from occurring again.
“To be frank, this added layer of protection will be expensive. We estimate it will cost at least a quarter of a billion dollars, but we know it is the right thing to do,” said Staffieri.
The outage, notably, also cost the firm its Chief Technology and Information Officer, Jorge Fernandes, whom left the company late last week.
The costs related to the discount provided to Rogers’ customers are expected to be included within the firms third quarter financial results.
For the second quarter, the company reported total revenue of $3.9 billion, up from $3.6 billion in the year ago period. Adjusted EBITDA meanwhile amounted to $1.6 billion, a 16% improvement over the second quarter of 2021. Net income totaled $409 million.
As for the merger with Shaw Communications (TSX: SRJ.B), the company indicated that they have extended the outside date of the transaction to December 31, 2022, which could be extended to January 31, 2023 if the parties agree to a further extension.
The transaction however still remains subject to approval by the Competition Tribunal and Competition Bureau, as well as the Minister of Innovation, Science and Technology.
Rogers Communications’ Class B shares last traded at $60.40 on the TSX.
Information for this briefing was found via The Globe And Mail, Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
