Rogers Communications Inc. (RCI.B:CA) Q4 2025 Earnings Call Transcript
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Overview
The earnings call summary highlights optimistic projections for media revenue, adjusted EBITDA, and free cash flow for 2025. The company plans to maintain a strong balance sheet and focus on capital investment efficiency. Despite some uncertainties in the wireless market and promotional activities, the overall sentiment is positive. The strategic acquisition of MLSE and unlocking value from Sports & Media assets further supports a positive outlook. The Q&A session reveals a balanced approach to market challenges, enhancing the sentiment rating.
Key Financial Performance
Wireless Service Revenue $2.1 billion in Q4, even with 2024, adjusted EBITDA grew 1% to $1.4 billion, yielding an industry-leading margin of 67%. ARPU down 2.8% to $56.43 for the quarter. Reasons: Competitive market, selective offers, and lower immigration.
Mobile Phone Subscriber Net Additions 245,000 for full year 2025, churn improved to 1.43% for Q4 and 1.11% for the full year. Reasons: Success of market strategy and national scale.
Cable Revenue and Margins Q4 revenue up slightly over 2024, adjusted EBITDA up 1%, Q4 cable margin of 59%, up 30 basis points from last year. Reasons: Balanced subscriber growth, cost efficiency, and revenue growth.
Media Revenue and EBITDA Q4 revenue of $1.2 billion, more than double 1 year ago, adjusted EBITDA up more than fourfold. Full year pro forma revenue $4.1 billion, EBITDA $400 million. Reasons: Blue Jays postseason run and consolidation of MLSE results.
Free Cash Flow $1 billion in Q4, up 16% from 1 year ago. Full year 2025 free cash flow over $3.3 billion, up 10% year-over-year. Reasons: Reduced CapEx by 7%, capital intensity dropped to 15%.
Capital Expenditures $3.7 billion for 2025, down 8% year-over-year. Q4 CapEx down 7%. Reasons: Improved capital efficiency and cancellation of uneconomical projects.
Debt Leverage 3.9x at the end of Q4, down 0.6x from last year. Reasons: Sale of data center business and improved free cash flow.
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Operating Highlights
Rogers Satellite: Launched as the first and only wireless carrier in Canada to offer satellite to mobile, included in all 5G plus plans, providing connectivity in areas without traditional cellular coverage.
Screen Break: Introduced as a new national program to help balance screen time.
MLSE Acquisition: Acquired a controlling 75% interest in MLSE, a premier sports and entertainment company, with plans to purchase the remaining 25% stake later in the year.
Blue Jays Postseason: The extended postseason run significantly boosted media revenue, with Game 7 of the World Series being the most-watched broadcast in Canada's history outside of the Winter Olympics.
Wireless Market Performance: Achieved industry-leading wireless and cable margins, with a 67% margin in wireless and 59% in cable. Improved postpaid churn to 1.43% and added 39,000 mobile phone net additions in Q4.
Capital Efficiency: Reduced capital expenditures by 7% in Q4, achieving an 8-year low capital intensity of 15%. Free cash flow increased by 16% to $1 billion in Q4.
Deleveraging: Reduced debt leverage to 3.9x, achieving pre-Shaw levels nine months ahead of schedule.
Sports Monetization: Plans to monetize sports assets, including the remaining MLSE stake, to unlock value and enhance synergies with the communication business.
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Risk or Challenges
Market Competition: The wireless market remains highly competitive, particularly during peak selling periods like Black Friday and December. Competitors are engaging in heavy discounting and uneconomic loading, which Rogers has chosen not to follow, potentially impacting subscriber growth.
Economic Environment: The current low-growth environment and lower immigration levels are creating challenges for subscriber growth and overall market expansion.
Regulatory Environment: The company is canceling uneconomical projects due to the current regulatory environment, which could limit future growth opportunities.
ARPU Decline: Average Revenue Per User (ARPU) declined by 2.8% in the wireless segment, which could impact revenue growth.
Debt Leverage: Although debt leverage has improved, it remains at 3.9x, which could pose risks if economic conditions worsen or if additional investments are required.
Sports Monetization Risks: The planned purchase of the remaining 25% stake in MLSE and subsequent sports monetization efforts carry execution risks and may not deliver the anticipated financial benefits.
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Guidance & Outlook
2026 Service Revenue Growth: Projected to be in the range of 3% to 5%.
2026 Adjusted EBITDA Growth: Expected to increase by 1% to 3%.
2026 Capital Expenditures: Anticipated to decline to the range of $3.3 billion to $3.5 billion, down from $3.7 billion in 2025.
2026 Free Cash Flow: Projected to increase to the range of $3.3 billion to $3.5 billion.
Sports Monetization: Plans to purchase the remaining 25% minority interest in MLSE later in 2026, with expectations of unlocking significant unrecognized value.
Capital Efficiency: Further improvements expected in 2026, with a focus on canceling uneconomical projects in the current regulatory environment.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you help us unpack what would cause you to think you'd be at the low end versus the high end of the 0% to 3% EBITDA growth for 2026?
A:The guidance for EBITDA growth in 2026 is 1% to 3%. Factors influencing this range include variability across all businesses, promotional discounting in the telecom sector, cost reductions, and efficiencies across units. Playoff runs for sports teams are difficult to predict but are not the primary factor.
Q:How are you thinking about the wireless market this year, including market growth and competitive intensity?
A:The wireless market is expected to grow at 2% to 2.5%. Competitive intensity was high in Q4, especially after Black Friday, with unusually low promotional offers. Rogers is focusing on a balanced approach, emphasizing value propositions beyond price, such as satellite services and tiered hardware strategies. Promotional discounting continues in Q1, but Rogers is focusing on refining its value proposition.
Q:How should we think about wireless ARPU this year, and is roaming still a headwind?
A:Wireless ARPU growth is expected to be slow due to promotional activity. ARPU in remains positive, and Rogers is focusing on value propositions beyond price. Roaming was a headwind in 2025, but new roaming plans aim to increase adoption and reduce the decline in roaming revenue. The impact of roaming on ARPU will be clearer later in the year.
Q:Can you provide details on the free cash flow guidance and factors affecting it?
A:Free cash flow guidance reflects variability across interest, taxes, and CapEx. Timing of the acquisition of the 25% interest in MLSE and recapitalization of sports and media properties could impact savings. There is no specific drag, but variability across elements is considered.
Q:What are your thoughts on the Internet market and TPIA competition?
A:Promotional activity in the Internet market is stable. Rogers focuses on reliability, speed, and bundled services like Rogers Xfinity. Fixed wireless access is performing well. TPIA competition has minimal impact on Rogers' markets.
Q:Do you feel there is a risk to the downside on wireless pricing given the slowdown in subscriber growth?
A:Rogers is focused on balancing volume and ARPU growth, avoiding uneconomical price points like $20 plans. The company emphasizes value propositions and maintains strong wireless margins (67% in Q4). Promotional activities are limited to specific periods.
Q:Can you break down the drivers of the expected improvement in capital intensity and areas for cost savings?
A:Capital intensity improvement is due to the completion of the Shaw-Rogers integration, reduced investment pressure from lower immigration and home builds, and a focus on efficiency. Cost savings are being driven by scale improvements in cable and wireless, and synergies from combining RSM and MLSE.
Q:What are the qualitative reasons for continued penetration increases in the wireless market?
A:Penetration increases are driven by second, third, and fourth lines, add-a-line strategies, hardware discounting tied to multiple lines, and enterprise adoption of multiple phones for employees due to cybersecurity concerns. These factors align with long-term macro trends.
Q:What is the impact of regulatory changes on capital investment, and does it affect network evolution?
A:Regulatory changes and TPIA competition make investments in rural and remote areas less economical. Rogers focuses on using its own networks, like 5G HI, for growth. Lower immigration also reduces investment pressure. The company is shifting from high capital intensity post-Shaw integration to a more sustainable level.
Q:What would it take to pick up EBITDA growth in the cable business towards 2%?
A:Rogers continues to focus on efficiency improvements through digital tools and customer experience enhancements. While cable margins are strong at 59%, further growth will come from adopting new technologies and improving operational efficiency.
Q:What are your plans for the retail distribution network for wireless?
A:Rogers views its retail distribution network as a competitive advantage, especially for bundled services. Brand consolidation and digital transactions are expected to streamline the network over time, but the company is cautious to maintain market effectiveness.
Q:What are the next steps and timeline for the sports asset transaction?
A:The option trigger for the 25% interest in MLSE occurs in mid-2026. Synergies are already being driven, and the transaction process will follow the acquisition of the minority interest. There is strong market interest, and the transaction will proceed without delay after combining operations.
Q:Review of Unclear Management Responses
A:Management avoided providing specific guidance on when wireless ARPU growth would return, the exact impact of roaming on ARPU, and detailed timelines for the sports asset transaction. They also used general language when discussing cost savings and variability in free cash flow guidance.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Blue Jay
Break program
Canada history
Canada satellite
Canada subscriber
Canadians Atlantic
Game World
Internet medium
Internet subscriber
Jay season
Jays postseason
MLSE upside
Media term
Olympics driver
Rogers Satellite
Rogers broadcast
Rogers front
Rogers set
Rogers world
Satellite Canadians
Satellite cost
Satellite plan
Screen Break
Series Rogers
Winter
cable
capital efficiency
class asset
coverage
efficiency cash
flow capital
fundamental
future
loading
monetization opportunity
profitability
result success
sport asset
sport medium
text
value creation
RCI Transcript
Rogers Communications Inc. (RCI.B:CA) Q4 2025 Earnings Call Transcript
Positive1-29
The earnings call summary highlights optimistic projections for media revenue, adjusted EBITDA, and free cash flow for 2025. The company plans to maintain a strong balance sheet and focus on capital investment efficiency. Despite some uncertainties in the wireless market and promotional activities, the overall sentiment is positive. The strategic acquisition of MLSE and unlocking value from Sports & Media assets further supports a positive outlook. The Q&A session reveals a balanced approach to market challenges, enhancing the sentiment rating.
Rogers Communications Inc. (RCI.B:CA) Q3 2025 Earnings Call Transcript
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The earnings call summary presents a mixed picture. Basic financial performance and expenses show some concerns, such as increased debt leverage and unchanged EBITDA guidance. However, product development, market strategy, and shareholder return plans are more positive, with revenue growth expectations and strong demand for satellite services. The Q&A reveals confidence in pricing and churn management but notes some revenue declines. Overall, the sentiment is balanced, leading to a neutral prediction, as positive elements are offset by financial constraints and uncertainties.
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Rogers Communications Inc. (RCI) Q2 2025 Earnings Call Transcript
Positive7-23
Rogers shows strong financial health with increased free cash flow and improved debt leverage. The positive outlook for revenue and EBITDA growth, coupled with strategic investments in sports and wireless, indicates a promising future. While some uncertainties remain, such as sports asset monetization and MLSE synergies, the overall sentiment is positive due to strong financial metrics and strategic focus.
RCI Report
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