Rogers Communications, Inc. Q1 FY2024 earnings call

Key Messages

• Rogers had a strong first quarter with 9th straight quarter of momentum, growing total service revenue by 31% and adjusted EBITDA by 34%.
• Celebrated one-year anniversary of Shaw merger, having delivered $1 billion synergy targets one year ahead of schedule and focusing on selling noncore assets.
• Completed first nationwide live test of 5G network slicing technology in Canada, with plans to use it for first responders and business customers.
• Installed AI cameras in Okanagan Valley for wildfire monitoring and partnered with CableLabs to launch CableLabs North at Rogers Campus in Calgary.
• Glenn Brandt noted exceeding cost synergy targets, Wireless leading in growth and ARPU, Cable building momentum, and Media results impacted by prior year factors.

In Q1 2024, Wireless service revenue and adjusted EBITDA were both up 9%, with postpaid mobile phone net additions at 98,000. Cable service revenue was up 94% and adjusted EBITDA up 97% due to the Shaw acquisition, with retail Internet net additions at 26,000. Media top and bottom line were down due to prior year gains and front-loaded costs. Wireless contributed around a portion of total revenue, Cable (including Shaw acquisition) a significant portion, and Media a smaller portion.

Rogers reaffirmed 2024 guidance: service revenue growth of 8% to 10%, adjusted EBITDA growth of 12% to 15%, capital expenditures of $3.8 billion to $4.0 billion, and free cash flow in the range of $2.9 billion to $3.1 billion.

Real estate market softness affecting timing of asset sales, competitive intensity leading to elevated churn and revenue erosion, and interest rate environment impacting the pace of asset sales.

Q: Sebastiano Petti asked about Internet results in the footprint and Wireless ARPU strategy.

A: Anthony Staffieri responded about Internet net adds from wireline and fixed wireless access, and about Wireless ARPU growth focused on Rogers premium brand.

Q: Vince Valentini inquired about interest costs and ARPU adjustment.

A: Glenn Brandt explained interest costs being lower than expected and ARPU still positive without subscriber write-downs.

Q: Maher Yaghi asked about additional cost synergy projects and margin improvement.

A: Anthony Staffieri and Glenn Brandt discussed continued efficiency improvements, revenue synergies, and margin expansion in Cable.

Q: Tim Casey asked about Cable revenue erosion and West construction.

A: Anthony Staffieri talked about revenue erosion due to video cord-cutting and pricing, and West construction related to completing last mile fiber.

Q: Jerome Dubreuil asked about data center sales and immigration impact.

A: Glenn Brandt mentioned data center sale process and Anthony Staffieri discussed market growth and immigration impact on net adds.