Release Date: April 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rogers Communications Inc (RCI, Financial) reported a 2% growth in both service revenue and adjusted EBITDA, demonstrating resilience in a competitive market.
- The company achieved strong margin improvements year over year, maintaining industry-leading margins.
- Rogers Communications Inc (RCI) successfully executed its delevering plans, reducing leverage from 4.5 times to 3.6 times, positioning it as the lowest among major Canadian carriers.
- The company secured a $7 billion equity investment led by Blackstone, enhancing its balance sheet and financial stability.
- Rogers Communications Inc (RCI) was awarded the most reliable 5G wireless network in Canada for the seventh consecutive year, reinforcing its leadership in network reliability.
Negative Points
- The company experienced a decline in wireless subscriber additions, with 34,000 net new subscribers compared to 61,000 in the previous year, due to reduced immigration and market size.
- Blended mobile phone ARPU decreased by nearly 2% year over year, reflecting competitive intensity and lower roaming revenue.
- Cable service revenue declined by 1% in the quarter, impacted by competitive promotional activity and customer churn in satellite and video subscribers.
- The company faces challenges in maintaining price discipline in the wireless market, with ongoing competitive pressures and discounting.
- Rogers Communications Inc (RCI) is navigating a cautious economic environment with slower growth in its sector, driven by lower immigration and macroeconomic uncertainties.
Q & A Highlights
Q: Can you provide some color on your confidence in the annual outlook given the macro backdrop and potential impact from tariffs? Also, do you expect the revenue decline in cable to continue?
A: We have factored in macroeconomic issues into our outlook and continue to forecast growth in revenue and EBITDA. For cable, while there are headwinds from satellite and video losses, we expect internet and Xfinity products to offset these, leading to break-even and growth in the latter half of the year.
Q: Can you clarify if the free cash flow guidance includes the pro rata distribution on the structured equity investment? Also, what are your thoughts on wireless pricing discipline in the market?
A: The guidance was based on the existing balance sheet and capital structure, and the $7 billion structured equity transaction will be reflected in future reporting without altering guidance. Regarding wireless pricing, we see opportunities for ARPU growth and price discipline, focusing on higher value segments and multi-line consolidation.
Q: How are broadband net additions holding up, and what is the contribution from FWA and reseller initiatives?
A: We focus on growing net additions and revenue through all technology sets, including fixed wireless access (FWA) and wholesale. FWA has been successful, especially in areas without wireline, and we expect further growth with the launch of Xfinity products.
Q: What are your expectations regarding the MLSC equity transaction, and will there be third-party investors involved?
A: We expect to close the transaction by purchasing the BCE stake and are engaging with institutional investors interested in our sports assets. We anticipate league and regulatory approvals by mid-year and are exploring opportunities with an open mind.
Q: Could satellite technology eventually compete with cell phones for mobile data transmission in urban areas?
A: Satellite technology is emerging and will augment wireless and wireline networks rather than replace them. It will significantly enhance coverage, particularly for emergency services, but has limitations such as in-building coverage.
Q: How do tariffs impact your handset purchases, and can you quantify the roaming impact on ARPU?
A: Tariffs have little direct impact on us, and most suppliers are within Canada. Roaming traffic accounted for about 15% of the ARPU decline, with the rest due to market competition.
Q: Regarding the backhaul deal, does the free cash flow guidance include reduced interest costs from this deal?
A: The net cash flow impact from the transaction, including distributions and interest savings, does not substantially alter our free cash flow guidance. The distributions are about $0.4 billion annually, with interest savings offsetting this.
Q: What is the outlook for the corporate line, which has been increasing lately?
A: The increase is partly due to investments in Rogers Bank and integration costs from the Shaw acquisition. We are focusing on driving efficiencies across corporate departments, and the integration is largely complete.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
