Rogers Communications(RCI) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a 2% growth in service revenue and adjusted EBITDA year-over-year, with strong margin improvements [6][25][34] - Wireless service revenue and adjusted EBITDA each grew 2% year-over-year, driven by subscriber growth [27] - Free cash flow remained unchanged at $586 million compared to the prior year [35] Business Line Data and Key Metrics Changes - Wireless and Internet net additions totaled 34,000, down from 61,000 last year, reflecting a smaller market size due to reduced immigration [28] - Cable service revenue decreased by 1%, while adjusted EBITDA increased by 1% year-over-year, driven by a 4% decrease in operating costs [30] - Rogers Sports and Media saw a 24% increase in revenue year-over-year, attributed to additional Toronto Blue Jays home games and advertising revenue from the Nations Hockey Tournament [32] Market Data and Key Metrics Changes - The company experienced a decline in mobile net additions, with the total mobile market estimated to be down by one-third [56] - The blended mobile phone ARPU decreased by just under 2% from $58 to $57, influenced by competitive intensity and lower roaming revenue [28][110] Company Strategy and Development Direction - The company is focused on executing with discipline, delivering efficiencies, deleveraging the balance sheet, and advancing plans to surface value from sports assets [9][10][18] - A commitment to deleveraging was emphasized, with leverage expected to decrease to 3.6 times following recent equity capital raises [15][26] - The renewal of the NHL partnership and the acquisition of a majority stake in MLSE are key strategic moves to enhance the company's sports asset value [19][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged slower growth in the sector due to lower immigration and a highly competitive market but maintained a positive outlook for revenue and EBITDA growth [7][10] - The company remains focused on maintaining solid financials and restoring growth in the cable segment [46][48] - Management expressed optimism about improving price discipline in the wireless market despite ongoing competitive pressures [58][61] Other Important Information - The company completed a $4 billion hybrid securities offering and announced a $7 billion equity investment, significantly lowering leverage [26][37] - Capital expenditures for the quarter were $978 million, down 8% from the previous year [34] Q&A Session Summary Question: Confidence in annual outlook given macro backdrop and cable trends - Management acknowledged macroeconomic issues impacting the outlook but remains optimistic about growth opportunities in revenue and EBITDA [45][46] Question: Clarification on free cash flow guidance and wireless pricing - Free cash flow guidance remains unchanged, and management noted a focus on price discipline despite competitive pricing pressures in the market [55][56] Question: Contribution from FWA and reseller initiatives in broadband - Management highlighted ongoing improvements in net additions and revenue through various technology sets, including Fixed Wireless Access [66][68] Question: Expectations about MLSE equity and transaction hurdles - Management expects to close the transaction for the BCE stake and is exploring opportunities with institutional investors [73][76] Question: Pacing of wireless subscriber additions and market dynamics - Management noted a slow start to the year but observed improved activity in March and April, maintaining a market growth estimate of around 3% for the year [84][85] Question: Impact of tariffs on handset purchases and roaming effects on ARPU - Management indicated minimal direct impact from tariffs and quantified roaming as contributing approximately 15% to the decline in ARPU [107][110] Question: Corporate line losses and capital expenditures outlook - Management acknowledged rising corporate line losses due to investments in Rogers Bank and ongoing efficiency efforts [120][122]