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01/11 11:06
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Wireless service revenue and adjusted EBITDA Each grew 1% year-over-year. This growth was driven primarily by subscriber additions, customer base management, and lower churn over the last 12 months. Wireless margin increased by 10 basis points to just over 65%, reflecting sustained emphasis on driving efficiencies.
Blended mobile phone ARPU $55.45, down 3% from the prior year. This decline was due to competitive intensity, lower outbound roaming revenue driven by reduced travel to the U.S., and adjustments for approximately 100,000 subscribers transitioned off discontinued plans.
Cable service revenue and adjusted EBITDA Service revenue grew 1%, and adjusted EBITDA grew 3% year-over-year. This was driven by steady retail Internet subscriber growth, disciplined customer base management, and modest price increases. Cable margins increased by 150 basis points to just over 58%.
Internet net additions 26,000, level with the prior year. This reflects solid performance in a highly competitive market across all regions.
Media revenue and EBITDA Revenue grew 10% to just over $800 million, driven by Sportsnet's success with the NHL playoffs, higher Toronto Blue Jays revenue, and the launch of the Warner Bros. Discovery suite of channels. Media EBITDA increased by $5 million year-over-year, despite higher programming costs and increased expenses for the Toronto Blue Jays.
Consolidated service revenue and adjusted EBITDA Each grew 2% year-over-year. This growth was supported by lower capital intensity and strong free cash flow.
Capital expenditures $831 million, down 17% from $1 billion in the prior year. Consolidated capital intensity decreased by 370 basis points to 16%.
Free cash flow $925 million, up 39% year-over-year. This increase was driven by higher adjusted EBITDA, lower capital intensity, and lower interest paid.
Debt leverage Improved to just over 3.5x, roughly a full turn improvement since year-end. This was achieved through organic delevering and the $7 billion equity investment led by Blackstone.
Satellite-to-mobile texting: Rogers launched satellite-to-mobile texting, the first and only wireless provider to offer this service in Canada. It covers over 2.5x more territory than any other Canadian wireless carrier and includes text to 911. The service is currently in beta trial at no cost.
5G advanced network technology: Deployment of 5G advanced network technology has started, and Rogers was ranked Canada's most reliable 5G Plus network by umlaut.
Wi-Fi 7 rollout: Rogers began rolling out Wi-Fi 7 nationally, starting in Calgary and Atlantic Canada, offering more reliable Wi-Fi to more devices.
MLSE acquisition: Rogers became the majority owner of MLSE with a 75% controlling interest. This positions Rogers as a leading global sports and media company with estimated Media revenue of $3.9 billion and EBITDA of $250 million for 2025.
Sports and media asset valuation: The value of Rogers' sports and media assets now exceeds $15 billion, with plans to unlock this unrecognized value for shareholders.
Wireless service revenue and EBITDA: Both grew by 1%, with 61,000 total subscriber net additions, including 35,000 postpaid.
Cable service revenue and EBITDA: Cable service revenue grew by 1%, and adjusted EBITDA grew by 3%, supported by 26,000 retail Internet net additions.
Media revenue growth: Media revenue increased by 10%, driven by expanded media content and strong viewership during the hockey playoffs.
Free cash flow: Free cash flow increased by 39% year-over-year to $925 million, driven by higher adjusted EBITDA, lower capital intensity, and lower interest paid.
Delevering plans: Rogers achieved a leverage ratio of 3.6x, nine months ahead of schedule, returning to pre-Shaw deal levels.
CRTC policy impact: Rogers criticized the CRTC policy allowing subsidized access to networks, warning it could lead to reduced capital programs and network investments.
CRTC Policy Impact: The CRTC decision allowing the three largest providers to operate as resellers on competitors' networks could force Rogers to cut capital programs and network construction jobs. This policy risks billions of dollars in network investment, potentially stifling competition and economic growth.
Wireless Market Growth: The wireless market is experiencing lower growth due to reduced immigration, leading to a decline in net new wireless subscribers compared to the previous year.
ARPU Decline: Blended mobile phone ARPU decreased by 3% year-over-year, driven by competitive intensity, lower outbound roaming revenue, and adjustments for retained subscribers on discontinued plans.
Media Operating Costs: Media operating costs increased by 9% year-over-year, driven by higher programming costs and increased expenses related to the Toronto Blue Jays, including player payroll and game day costs.
Debt Leverage: Although leverage has improved to 3.5x, the company faces ongoing challenges in managing debt levels, particularly following the acquisition of a 75% controlling interest in MLSE.
Capital Expenditures: Capital expenditures decreased by 17% year-over-year, which may impact long-term network infrastructure investments.
Revenue Growth: Total service revenue is now expected to grow by 3% to 5% in 2025, an increase from the prior outlook of 0% to 3%.
Adjusted EBITDA: Adjusted EBITDA guidance remains unchanged at 0% to 3%, reflecting the seasonality of MLSE results in the second half of the year versus the first half. Full calendar year impact will be accretive to EBITDA in 2026.
Capital Expenditures: Capital expenditures for 2025 are expected to be at the very low end of the guidance range of $3.8 billion to $4 billion.
Free Cash Flow: Free cash flow for 2025 is anticipated to be $3 billion to $3.2 billion, unchanged from prior guidance, including distributions from the equity investment transaction.
Sports and Media Segment: Pro forma calendar 2025 Sports and Media revenue and adjusted EBITDA are estimated to be approximately $3.9 billion and $0.3 billion, respectively, reflecting the consolidation of MLSE.
The selected topic was not discussed during the call.
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.
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.
The earnings call shows mixed results: EPS missed expectations, but there is optimistic guidance for cable revenue and subscriber growth. The equity investment and debt repayment are positive, but the removal of the DRIP discount is negative. The Q&A reveals concerns about market growth and vague responses on tariffs and MLSE, indicating uncertainty. Overall, the neutral rating reflects balanced positive and negative factors, suggesting limited stock movement in the short term.
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