Q1 2021 Rogers Communications Inc Earnings Call

Thank you for standing by this is the conference operator.

Welcome to the Rogers Communications, Inc. First quarter 2021 results conference call. As a reminder, all participants are in listen only mode and the conference is being recorded.

Following the presentation, we will conduct a question and answer session to join the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you may signal, an operator by pressing star and zero.

I would now like to turn the conference over to Paul Carpino, Vice President of Investor Relations with Rogers Communications. Please go ahead.

Thanks, Carol good morning, everyone and thank you for joining us today I'm here with our President and Chief Executive Officer, Joe Natale, and our Chief Financial Officer, Tony Staffieri.

Today's discussion will include estimates and other forward looking information from which our actual results could differ. Please review the cautionary language in today's earnings report and in our 2020 annual report regarding the various factors of assumptions and risks that could cause our actual results to differ with that let me turn it over to Joe to begin.

Thank you Paul and good morning, everyone.

This time last share member of weeks into navigating what we had hoped would be the short term disruption to our everyday lives.

That was the business really the only started to experience will result in significant shifts in our economy.

Consumer behaviors.

What transpired over the past year of young with any of us could ever have imagined.

Those vaccines rollout across the country, we do see the light at the end of the total.

While we continue to navigate the third wave of the pandemic across the country I'm incredibly proud of for teams ability to image.

And deliver solid results across our business.

We have made over the past year has allowed us to quickly adapt our operations and have positioned us well for the long term with new capabilities, including digital solutions for our customers.

Today I'll take you through the highlights of our first quarter, followed by an overview of our continuing ability to deliver for our customers of all successfully matching costs.

I'll then share some thoughts on how our business is well positioned to deliver sequential improvements throughout this year before turning to Tony for a more detailed commentary.

Despite varying degrees of Lockdowns in openings. This past quarter, we continued to see improvements across our business.

In wireless we saw of our strongest Q1 the loading in postpaid net additions in three years with 44000, new subscribers. This was a solid result, given Q1 is typically a quiet quarter.

All of the travel restrictions continue to impact roaming revenue in our wireless business total service revenue was down by only 1%.

And we expect soon for a lot of the overage problems associated with the unlimited plans.

We further maintain strong customer retention this quarter, achieving postpaid churn of <unk>, 88%.

An additional five basis point improvement year on year.

Our team's continuous delivery of disciplined cost management and focused execution, which enabled us to achieve adjusted EBITDA service margin up 310 basis points from the same period last year.

Consumer sales of our digital in the reach all platforms remained strong this quarter.

To meet the evolving needs of our customers are accelerating our digital first plan and self serve capabilities to make it easier to connect.

As consumers increasingly adopt digital platforms will continue to leverage the efficiencies of the game to invest in a better customer experience.

Our strong digital infrastructure and increased productivity as it becomes increasingly critical for our businesses.

Across the Canada recently.

According to Cisco over 70% of small businesses reported the pandemic has accelerated the need to go digital support these businesses and Rogers for business. We introduced the advantage of mobility and advantage of security to the new solutions that allow small to medium businesses to strengthen the digital capabilities.

For the secure and reliable connectivity out of predictable cost.

We also continue to rollout the solutions and investments to bolster connectivity for businesses of all sizes.

For the first national carrier to introduce of managed solution for wireless private networks, enabling large businesses to securely connect devices to their network prioritize network traffic control sensitive data and run the business applications.

This past year has illustrated how connectivity can fundamentally change, how we live and work and as such we remain focused on delivering affordable plans for <unk>.

Today, we have reached $2 6 million subscribers on our Rogers' infinite unlimited data plans of normal increase of about 60% from last year, which highlights our clear leadership position in unlimited plans.

To continue to meet demand, we will continue to invest in Canada's first <unk> largest and most reliable <unk> network to build a strong body ecosystem for cabinet as future.

To deliver productivity to bridge the digital divide that exists across our country as of today, we've delivered five G connectivity to 173 communities across the country with more to come.

And we were recently ranked first for the highest amount of time spent on five G. Baidu club the global leader in fixed broadband the mobile network testing.

While the lineup markets with <unk> and develop strong capability for Canada's future. We also remain committed to expanding service and connectivity for underserved communities, including rural and remote regions.

Last month, we announced the $300 million agreement alongside the federal provincial local governments in eastern Ontario to bring reliable wireless connectivity to 99% of eastern Ontario. The residents and businesses. This is the largest wireless public private partnership in Canadian history.

Over the next five years.

We'll provide connectivity to 113 municipalities and indigenous communities across the eastern Ontario and.

And of project that has the potential to create more than 3000, new jobs and as much as $420 million of local economic growth, while the brink's vital <unk> infrastructure to this region.

Okay.

We're also helping to close of the digital divide in Western Canada with the expansion of our wireless network, including five G connectivity along highways 16 at 14 of British Columbia.

The build of two new towers of the highway 16, known as the highway of tiers will provide reliable connectivity each of those who live work and travel along the critical route. The these towers will provide 252 kilometers of new highway side, where the coverage closing key gaps along this corridor.

And providing continuous coverage and the safer communities along all 720 kilometers of northern highway through the French George.

In our cable business, we delivered consistent improvements as customers and their families of continuing to work and learn from home and as customers continue to choose the self serve options Rev.

Revenue grew by a solid 5% year over year, adjusted EBITDA was up 8% and margin as margins expanded growth has been driven as a result of investments made on our ignite platform.

More customers are choosing self install auctions and proactive network maintenance, which enables us to alleviate customer issues before the habit.

As a result.

A material reduction of the truck Rolls has contributed to our improved performance.

Finally, and Roger Sports of media, we saw improved results with the return of live professional sports broadcasting in Q1 revenue was up 7% driven by increased advertising spending as the condensed 17 week NHL broadcast the schedule started to unfold.

And while adjusted EBITDA in our sports and media business continues to operate at a loss.

Reported a solid 31% year over year improvement.

In the coming months, it's expected that the largest pressure on adjusted EBITDA. In this part of our business will continue to be the lack of Toronto Blue Jays home games at the Rogers Center and associated revenues those games bring it.

The steady improvements delivered across our business this quarter have put us in a strong financial position overall, including $4 billion in liquidity.

As we remain focused on delivering sequential improvements each quarter. We also remain focused on making the right long term growth investments.

This includes our recent announcement to come together with Shaw true.

More choice and competition for businesses, new jobs and investment in Western Canada and to accelerate the candidates five G rollout.

It will continue working with the various regulatory bodies, who can review of this transaction and expected the deal to close in the first half of next year.

Overall, we will work with government to ensure we maintain an environment, which allows for continued investment.

Last week's decision of mobile virtual network operators recognizes the critical importance of facilities based competition and provides us with the stronger degree of certainty around the future investments.

As with any decision we are studying details of the ruling the look forward to working with the regulators to ensure investment based competition is able to continue as we focus on closing the rural digital divide and bringing worldly leading connectivity to Canadians.

As we navigate the remarkable time in our industry and our lives. We also remain optimistic about the growth oriented future and as such we continue to make investments in network innovation and digital infrastructure.

We will also continue to make investments in our communities across Canada I'm proud to share that we recently expanded the eligibility for our connected for success program to provide more access to high speed low cost of Internet program to those who need the most the first of its kind is now available to additional two in addition.

750000 households across Ontario, Newfoundland in New Brunswick, including customers, receiving income support disability benefits or seniors receiving the guaranteed income supplement.

We continued our investment in the next generation of innovators and leaders of this quarter with our 2021.

Ted Rogers community grants, which went from 42 youth organizations across Canada. These.

Of these grants will support critical programs for youth in our communities, particularly as they face new challenges brought about by the pandemic.

Additionally, we were pleased to partner with the change of care Foundation to launch the Rookie League program.

This program will help ensure the 14000 Canadian youth, who face barriers develop important life skills, while building confidence.

Team and leadership skills.

In summary, our core businesses are operating well, our long term investments and closing of the digital divide and investing in communities to continue and we are in a strong position to resume growth as the economy recovers.

And to ensure strategic long term strength for our company and the decades ahead.

I'm deeply appreciative to our teams and how they continue to work and Availably and collaboratively to ensure our customers receive the services they rely on more than ever before.

And with that let me turn the call over to Tony Tony over to you.

Thank you Joe and good morning, everyone. The.

Despite the challenges associated with the ongoing pandemic each of our businesses continued to recover in Q1.

On a consolidated basis revenue and EBITDA, both returned to year over year growth with revenue up 2% and adjusted EBITDA up 4%.

In wireless we delivered strong postpaid net adds and impressive margin improvement despite ongoing pressure in service revenue.

Service revenue declined 6% year on year, driven by the impacts of reduced roaming revenue and continued overage revenue declines with air travel continuing to be very limited roaming revenue declined $66 million or 64% from one year ago.

<unk> was $49 nine.

Down 7% from one year ago, overage revenue declined $24 million or 45% year on year associated with the impacts from our transition to Rogers infinite unlimited plans.

We are now in the final quarters of the majority of our overage revenue transition and this puts US well ahead of our national competitors in terms of preparing our customers for five G. Importantly.

Importantly, we have now removed the headwinds of unsustainable overage fees to support service revenue growth going forward.

Despite service revenue being down 6% wireless adjusted EBITDA only declined 1%. This resulted in continued improvement in adjusted EBITDA service margin to 63%, reflecting an improvement of 310 basis points from last year are.

<unk> initiatives are gaining traction, which should further underpins strong revenue flow through and profitability growth rates average revenue recovers.

Our cable business continues to deliver strong results revenue increased 5% driven by an increase in ARPA more customers transitioning to our ignite internet and TV offerings and the result of disciplined promotional activity.

Homes passed and customer relationships, each grew year over year and sequentially.

Despite operating in a full pandemic environment this quarter versus Q1 last year, we still achieved increases with internet net additions of 14000.

And ignite TV net additions of 58000.

ARPA also grew on a year over year basis. This revenue growth driver.

In addition to continued improvement in cost efficiencies resulted in adjusted EBITDA, increasing 8% year over year.

This gave rise to a margin of 47, 7% this quarter up of 110 basis points from last year.

We continue to see improvements in capital spending efficiency with self install remaining at about 90% of all installations as well as ongoing improvements in hardware costs K.

<unk> capital intensity was 21% down from 26% in Q1 last year and as a result of cash margins for cable we're at 27% this quarter.

Moving to our media business. This segment continues to be materially affected by the pandemic as well, while the results remain volatile and well off the levels when compared to the pre <unk> period, we continue to improve versus pandemic lows seen last year.

The revenue was $440 million up 7% from last year as advertising continued its gradual pickup given the increase in live sports programming.

Net abaca was still negative $59 million.

But of 31% improvement from last year.

The return of the Blue Jays to the Rogers Center remains the largest factor in terms of driving revenue and EBITDA improvement going forward.

We don't have anything new to update in this regard, but look forward to their future return when we can keep fans employees and team members and their families safe.

On a consolidated basis total service revenue was down 1% and adjusted EBITDA was up 4% if.

If you exclude the impacts of roaming and data overage, we would've been up 2% and service revenue and up 10% and adjusted EBITDA.

COVID-19 impacts in Q1, we're still notable with estimated impacts of $110 million in revenue and $70 million and adjusted EBITDA.

Capital expenditures in Q1 of $484 million down 18% year over year, reflecting of Capex intensity of 13, 9%.

This run rate is well below what we anticipate in 2022 2021, while we have not given capex guidance for this year, we continue to anticipate our capital intensity for the full year to be in the 12 to 14 per cent range for wireless.

And approximately 22% for cable as we accelerated investments in our <unk> and broadband networks.

As discussed last quarter cash income taxes increased this quarter and were $325 million, reflecting the timing of the tax payments.

Associated with customers moving towards installment plans for their handsets.

As a result, our cash tax rate as a percentage of adjusted EBITDA was 23% in the quarter, but we will see our cash taxes dropped to approximately 10% of adjusted EBITDA in the coming quarters.

Free cash flow for Q1 was $394 million down 15% from a year ago, primarily driven by the increased cash taxes.

In terms of financial strength, we ended the quarter with $4 billion of available liquidity.

Our weighted average cost of borrowings was for zero, 2% as at March 31, and our weighted average term to maturity.

Was $13 seven years.

With a strong balance sheet and disciplined financial track record, we are well positioned to pursue our previously announced shall acquisition as we noted in our announcement the cash component of this transaction is estimated at $19 billion on closing and we have secured all necessary short term financing required.

To close this transaction.

On closing our leverage ratio is expected to be just over five times debt to EBITDA.

However, we expect our leverage to quickly move to under three five times within 36 months of close as we expect the transaction the yield substantial synergy benefits in excess of $1 billion realized within the first two years of close.

Turning to our outlook for Q2.

We continue to hold off on providing annual guidance at this time as the COVID-19 related conditions that led to the withdrawal of our guidance back in April of 2020, particularly the resumption in roaming and the resumption of in stadium revenues for the Jays continues today.

That said, we will continue our approach of providing the quarterly transparency. We have provided since the pandemic commenced in Q1 last year.

The second quarter of last year reflected the most significant impacts associated with the pandemic, while the country remains in a significantly restricted environment, we have adapted well to operating in the COVID-19 era, and we anticipate our Q2 results will reflect continued year over year of.

Improvements across our businesses.

In our wireless business, we continue to operate with notable restrictions on our traditional retail distribution channels. However, we continue to see positive loading environment as seen in Q1 as a result of our diversified channel mix.

We believe service revenue should return to growth in Q2 as roaming should have some year on year improvement and we expect <unk> to be flat on a year on year basis, which is similar to Q1 levels on an absolute dollar basis.

Based on current transition level to unlimited, we expect Q2 to be the last quarter in which overage revenue declines will materially impact our year on year service revenue and <unk> measurements.

As we have highlighted in the past underpinning. These unlimited plans are better off of RP opportunities lower churn better cost structure and improve customer satisfaction.

Additionally, in Q2, we continue to anticipate strong wireless margins, although year on year growth rates will be flat to slightly positive.

In our cable business, we expect strong results to continue in Q2 with year over year of growth in revenue adjusted EBITDA.

And adjusted EBITDA margins, as we benefit from efficiency gains and higher revenue.

Additionally, capex intensity is expected to be approximately 22% down from 25% in Q2 last years as benefits from self install and ignite TV platform continue.

In our sports and media business, we expect the advertising to continue to grow slightly from this quarter's levels and reflect meaningful year over year improvements from the low point in Q2 last year.

However, EBITDA will be down year on year as we capture of the corresponding rights fees for our sporting programs as well as the <unk> player salaries.

In terms of Capex, we will see an acceleration in our spend this quarter and we will likely see capital intensity levels of approximately 22% for cable and 17% for wireless.

On cash taxes, you will start to see more normalized tax rate after the $325 million cash.

Cash tax installment in the first quarter and we expect our cash tax rate to be approximately $175 million in Q2 and continue to work its way down to more traditional rates in the coming quarters.

As a result of the higher Capex and taxes in Q2 free cash flow will be down on a year over year basis.

I hope this extensive quarterly transparency gives you some good insight on the business as we continue to manage the pandemic impacts.

However, as our Q1 results show, we are executing extremely well and effectively managing all aspects of the things we can control our underlying fundamentals continue to improve and position us well as we eventually move out of this pandemic.

Let me now turn the call back to the operator to commence with the Q&A.

Thank you we will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad Youll hear a tone of acknowledging your request.

If you are using a speakerphone. Please pick up your handset before pressing any keys to withdraw your question. Please press Star then two.

We will pause for a moment as callers join the queue.

Our first question comes from drew Mcreynolds of RBC. Please go ahead.

Yeah, Thanks, very much share good morning first.

Maybe a bigger picture question here on so so good good loading this quarter and it sounds like the.

The momentum and activity out there continues in Q2.

Joe or Tony can you comment on.

What what's driving the the market expansion of the market activity and particularly on the postpaid net.

<unk> of it.

Secondly on operating leverage Tony you've commented in the past few quarters debt.

Certainly you'll see a little bit more potential flow through of here is the top line recovers.

Should it should it play out that way through the rest of the year.

Is there any change to that view.

And lastly, maybe one back up for you Joe on the digital execution. It sounds like a lot of progress that's been made in the last year.

Where are you on further progress in that digital journey or is most of it is kind of your capability in place or is there still much more to do on on the digital side. Thank you.

Sure.

Drew thanks for the questions, let me take the <unk>.

First one and the third one ask Tony to speak to the leverage question.

In terms of the market growth.

It's a combination of things we saw in Q1.

We saw the market open up a little bit as restrictions were lifted.

The partway through the quarter around that sort of at the February timeframe.

That's one second ill sort of pent up demand from last year as people were kind of you know working through what their thinking was around getting a new phone getting them upgraded plant et cetera.

Given the the the on again off again restrictions around Covid, a number of customers just didn't feel as comfortable getting.

Getting out there and doing and doing their thing.

I think with that you know.

In relation to your your.

Third question is we've got a lot better of digital execution over the course of last year.

In my view on that drew is that that's sort of.

Like painting, the Golden Gate Bridge by the time, you think you finished the time to start again.

And digital execution will be a never ending journey for this organization.

Very proud of the things would be called blood the accomplished last year, the ability to order online and a half per one the go deliver to wherever you want the ability to order.

Order on line to have curbside pick up.

The et cetera, and all kinds of abilities to make price plan changes and conduct business online through the app et cetera.

That'll be an ongoing piece of our work you couple with that some of our capabilities with respect to the data analytics and you know running both the sales and marketing function as well as the service function through data analytics, the ability to look into the day to deeply and see which customers Mike.

Deserve some outreach.

And how the best orchestrate that outreach and what particular next action makes the most sense for that customer our degree of of understanding and investment in AI and analytics has gone up substantially in the last 12 months with more to come. It's also happening on the service front, we've got a lot more ability to.

Look deep into.

Ill customer devices in the network and understand you know for example in someone's home, whether the Wi Fi pods are working well whether there is an issue with respect to a particular device in the home and therefore proactively look at you know driving a better experience in our cable business as an example.

So those things will continue we've got a great team on that front, we've invested heavily over the last number of years with the right tools and platforms and we've become a destination for strong talent in that area in the something that ill.

Years ago digital was adjunct two of the business I would say that today digital is becoming core in fact is core to the business and there is a fundamental platform and how we operate both in terms of marketing and sales, but also in terms of customer support and service I hope that helps.

On your question of operating leverage.

Really is reflective as we look forward to reflective of what we have done on our fixed cost structure.

And margin expansion and how would you see that playing out.

Traditionally we think about flow through to use the term Hugh Hugh you mentioned of being at 50% to 55%, sometimes 60% in the wireless space our expectation in the near term is that flow through rate should be slightly higher than that owing to the work we have done.

On.

Our fixed costs.

In the short term as I mentioned in my scripted.

The scripted comments you may not see the margin expansion that you saw over the last three to four quarters.

As our expectation is as.

Things open up.

There are some upfront costs related for example to our.

Store distribution channels and so some of those heightened the expenditures we've taken into account.

Expenditures et cetera, and so while we continue to see good solid margins of the magnitude of year on year expansion in the near term will be less than you've seen looking backwards, but notwithstanding that youll see very good flow through going forward.

And just one more comment drew just going back to your first question the other.

Anticipation.

I'll have is around.

Around.

Growth in the market with respect to our new Canadians.

Our estimate says that you know in any given year, especially given our current stance from from our government around the immigration of we're expecting 400000 per.

Plus new Canadians.

The two arrived here permanently of roughly another 400000 that are coming on.

The work visas plus on top of that you know of foreign students.

So these are all sort of upside factors that have yet to play into the marketplace on top of the sort of latent demand and excitement around getting a new device that has been a holdover from last year. So you know there's some things that were our president of the market and other things, we're anticipating of the market as part of the recovery.

On top of the roaming and everything else of Tonys talked about.

Okay got it thank you both.

Thanks for your next question Arrow.

Our next question comes from Jeff fan with Scotiabank. Please go ahead.

Thanks, Good morning.

On.

Couple of questions first just on the transaction on the shelf transaction.

I think I heard you say that the closing is expected in the first half.

I think at the time when the deal was announced.

Back in March you said it was going to be a year is there.

Is there a change in the timing or is that just a more general timeframe that you want to give to the street.

And then more importantly on the integration I know, it's still early but wondering if he can talk a little bit about the.

Planning around the integration and the teams that you may be putting together in.

In preparation of the integration. So you can hit the ground running in about a year's time and then just finally.

Just for this year, when we think about <unk> trajectory for the second half how should we think about this because vaccination rates are going up in Canada. I know I know cases are still going up in some parts of the country. The VAT.

Explanation rates are going up how do we think about.

How vaccination rates tied back to how you think about <unk>.

The trajectory for the second half. So if you can just help us think about that a little bit. Thanks.

Thanks, Jeff why don't I start on your two questions with respect to Charlotte and ask Tony to talk about our pool in the second half and the correlation to.

Pandemic recovery of vaccination.

So first of all of our view on timing Hasnt changed.

Yeah, We've said generally it's in about a year's time.

And that Hasnt changed and.

No.

Of course, we can't be specific we don't know how that's going to play out, but that's generally our view and nothing has changed to two to move us from that view in terms of integration.

I think it's important to understand the companies continue to operate as two separate companies.

Until the deal is approved there is a governance structure.

That we are outlined in the purchase agreement that allows for a high level of discussion.

During this regulatory approval cycle.

And we started that process started that process of.

The high level of discussion.

And you know vetting some of the key items that we're allowed to talk about.

In the meantime, we've struck a integration chain.

With dedicated full time people are led by one of our senior leaders with functions across all aspects of our business.

And there's a work plan that involves a number of very specific work streams in all of the different topics you might imagine.

And our goal is to have a fully detailed integration plan.

In the next six to nine months.

For the integration plan that allows us to hit the ground running the minute we get approval.

That looks at you know.

Exactly how we will drive the synergies exactly the operating structure are exactly what we plan to do with different parts of the organization et cetera to the extent that we can unravel that during this period of operating as two separate companies, but we feel we have the right struck.

Sure it'll be led by our team.

The directly and we're going to be working through it over the course of the next many months as we have something more specific to say around it.

Of course, we'll provide commentary to the investment community, but right now really is an exercise of it and taking the synergies that we have talked about that were part of the deal are in the beginning and flushing them out and making sure that we've got every one of them bagged and tagged.

And part of an execution plan with the Accountabilities.

Because of their number of people in our organization that I spent a lot of time inside the mergers and integrations are.

Got a long history of that area of our CFO, Tony staff areas of long history of that area of number of our executives do as well. So we feel we've got the the experience of the battle scars frankly from from driving the sorts of efforts.

And I would reinforce though as I said last time on the call that you know of job one is the core business.

Part of the reason of having a dedicated team on this is that the dedicated team will spend all of their energy on the integration with the right leadership support from a number of our executives while you know.

The 99, 9% of the company focuses on.

Our goals, our financial plans and coming out of Covid with the momentum that you saw in Q1 et cetera. So that's sort of where we're at with respect to the integration.

Tony you talked about <unk> and our views on it.

Jeff to answer your question in terms of how we see the vaccination rollout impacting <unk>.

Ultimately, we equate vaccination with increasing the safety and comfort of.

Of individuals both on the consumer side of the business side to move outside of the home and we equate outside of the home to increase usage.

We do know that as soon as we come out of Lockdowns.

And we particularly saw it last summer there was a huge spike in usage.

On our traffic and so ultimately that is the driver of our boot.

As individuals' use more are they then see the more obvious need for something like an unlimited plan.

We're moving up in tiers, and so we see the catalyst to be very strong and the correlation to be strong in terms of usage and therefore.

Customers moving up and plans.

But secondarily it means opening up of our retail distributions and that continues to be a very strong channel to have a strong upgrades and upsell in terms of tiers.

Given the one on one human experience and advice.

That our agents can provide so.

You know that.

It's really of the corvid is is driving that usage and and the need for higher tiers.

Thank you.

Thanks, Jeff next Questionary L.

Our next question comes from Arlinda Lee of.

Of Canaccord Genuity. Please go ahead.

Good morning, Thanks for taking my questions. A couple of from me obviously on the cable side very strong results five per cent revenue growth of eight different type of debt.

There appears to be.

Net of a trend in the industry, where you're seeing the cycle of upgrades, obviously largely due to the work from home conditions can you just talk to that cycle and the trend that you've seen archrock shades.

How you see that sustainability.

We had to think.

Think about instead of the post pandemic World post Lockdown period, how that will play out well that type of kind of sustaining the catheter for pet.

And it's been okay.

And then secondly.

With respect of Capex.

We've seen the yet to the.

Telco counterparts.

Announce some increases in the expansions.

Capex up I was wondering I know you've given them.

Okay.

It happens on 'twenty one.

The current beside of you fairly comfortable with the current trajectory in the current levels.

And then lastly, five day sort of line.

From a set of the the outage out from a couple of days ago that you can share.

Thank you.

Fixed sort of into Tony you want you take the.

Sure sure Yeah, I remember I think if I understood. Your first question, what we did see during the pandemic is very.

Obvious, but clear demand for bandwidth of.

And in particular very high bandwidth as you had multiple members of the family either working from home are doing scored from home et cetera, and so we clearly saw that in our touring.

And if you look at the proportion of customers that now sit above the 100 megs. It is clearly the vast majority are in our customer base.

And how do we see this playing out post pandemic two things one.

If you were to look at most of what's out there in terms of media and leading thought on our workplace environment going forward. The most seems to coalesce around a probable mix and so to the extent that there is still some work from home, we think of those times when our individuals.

Our working from home, they're going to demand the best connectivity possible still and too.

Strong bandwidth strong reliability is something that when you need it even though it may be more infrequent Ah you're not willing to sacrifice and moved down to something less so we see the risk of migrations down as being a small risk and.

And we continue to see the opportunity for up sell to be more on the stronger side. So we're fairly confident about the demand for our product.

Particularly with respect to the higher speeds going forward as you know we have ubiquitously, one gig available across our entire footprint.

And thats soon to be one and a half gigs.

So from a product standpoint, we're quite comfortable in terms of the product advantage, we have there all.

Your second question relates to Capex.

And whether or not.

I think you're asking how we see it for this year and in particular into next year and whether we're comfortable with capex levels on the cable side.

And I think of few things, we'd say there one is we.

We continue to charge forward and have been over the last several years on net work in both wireless and cable I think youll see it on the wireless side in terms of the <unk> leadership, we have.

And so I don't think theres.

There shouldn't be any doubt.

In anyone's mind about our ability to continue to lead on that front and have the right Capex investment dollars there.

We said we'd be in the 12% to 14% range on wireless capital intensity and that's still the thinking in some quarters you just as I said in Q2, you may see it spike up.

As we make hay on.

Some of our projects and you'll see in Q2 at 17% so.

So we'll continue to do the right thing in the wireless and Youll see the results of that.

And then on the cable side I think it's important to highlight that in cable well the 'twenty one 'twenty, 2% capital intensity is way down from where we have been that has not at all been at the expense of network investment quite the contrary, we've ramped up the proportion of spend in the absolute dollar spend.

That goes into cable network.

What you are seeing our efficiency gains and prioritization of cash things in cable other of.

Come down.

A great example of efficiency gains would be on the CPE side, where with our ignite platform CPE costs continue to come down nicely.

And you see that.

And so going forward I would only get too far ahead of ourselves in terms of.

Long term view of cable Capex, but we continue to see roughly in the low twenties as the right percentage for us keep in mind I think it's important to keep in mind the advantage, we get with <unk>.

Today, a coax and DOCSIS still continues to deliver a very powerful solution for what we call of the last mile and so we have not had to nor will we have to put material dollars in order to lead in the marketplace in terms of network performing.

Ubiquitously.

Over time, we will continue on node segmentation and we have been doing that.

And you can expect us to continue to do that and that's all within.

Of the capital intensities.

We've talked about.

Hope that helps.

And Arvind. Thank you for the opportunity to address the instrument and wireless service issues experienced by many of our customers earlier this week.

After after of the recent software upgrade it led to.

Congestion and service impacts for many customers across the country.

I'm deeply disappointed that.

Our customers had an experience of that problem.

Our team is deeply disappointed we've worked very hard to earn the trust of our customers.

And we're going to work very hard to earn it back.

Despite all the testing that we did with respect to the software upgrade.

It's simply caused the problems are and it took us a while to recover.

The problem really started in the middle of the night on Monday, where we started seeing intermittent a failure of intermittent connectivity and the ability for customers to connect.

And for the better part of about 16 hours before we can get things back to normal our team worked diligently to restore the service as quickly as we possibly could.

You have my commitment and you have the commitment of Ericsson I've had the number of conversations with their CEO in the last few days that we're not just kind of got to the bottom of this work very hard to make sure it doesn't happen again.

Uh huh.

Connectivity of more than ever is an important part of what we all.

I have learned to rely on.

And at the heart of it.

It's you know it.

It's about trust and we worked very hard to earn the trust as I've said.

And we're going to work very hard to.

Regain that trust with customers that I have had a difficult time turning.

During that period of Monday, Thanks for the question Arlinda.

Thank you.

Thanks for everything.

Next question area.

Our next question comes from Simon Flannery of Morgan Stanley. Please go ahead.

Hi, good morning Diego.

The filling in for Simon Thank you for taking the questions.

Similar to the cable upgrade question can you unpack some of the drivers behind the five.

5% revenue growth.

4% growth in ARPA of maybe the balance of pricing increases versus upgrades this quarter.

And then on the envy of no decision just curious to get your initial thoughts on the decision and also your view on the inclusion of the lower cost plans. Thank you.

Well thanks for the question I'll take the first one of them and Joe will respond to the M. B you know.

Part of your question.

In terms of the ARPA and what's contributed to the.

The growth for more generally I think your question was the 5% revenue growth.

Points of that was really the ARPA growth and the other point is the increase in subscribers.

Over the course of the last year with respect to increase in subscribers as of the pandemic eases up we fully expect volumes to improve as well.

And the ability to upgrade our customers to the igloo.

<unk> platform, the pace of which we do that will improve and that comes with accretive ARPA for us and so we're quite optimistic in terms of both the volume side as.

As well is that contributing to ARPA growth.

As I said as the pandemic eases up in.

In terms of the 4% ARPA growth, it's made up of two primary things of that you've touched on them.

The last year, we did introduce of price increase.

And that is certainly helping the year on year comparisons, but importantly, we've gotten a lot better at managing promotional discounting.

And driving that discipline within our channels so that.

Our customers are more comfortable.

In terms of paying for the value of that Theyre getting and the reasons for it and so that seems to be working nicely and so as I said in my.

My scripted comments as we look to the Q2 and frankly beyond Q2, we continue to expect to see very good ARPA improvements on the back of those items, but also upped hearing as I mentioned as customers move to to the ignite platform.

And did go in terms of the wireless review of outcome of decision that came last week.

First of all I believe the envy of no decision provides certainty.

For our industry.

And we can proceed with investments knowing that the government is supportive of facilities based competition and a facilities based approach to our market.

We've been waiting for that decision for.

For a while and the degree of uncertainty is very very helpful.

Underscores that investment matters and underscores that.

But we are looking to build the capability in Canada.

That allows investment to reach far into rural Canada. The allows investment to continue to.

Allow leadership on the global basis.

Oh, the Canadian wireless networks across.

The board have.

In the top performing in the world for the last many many years ranked number one the number two historically I think this decision underscores the fact that investment matters and the facilities based approach to the regulation environment of matters.

We're gonna keep reviewing to understand some of the nuances and the ruling and we look forward to a very healthy dialog of the CRM to see on that front as we kind of you know.

Unpack some of the very specific decisions and the comments that are in there.

And as I've said before we're committed to working with regulators.

Our goal is the same fare free enterprise investment based competition.

And the industry that continues to evolve the lead globally and continues to create.

Create affordability options for all Canadians and on the comment of your range plans.

We're committed to the affordability options and we'll look at those rate plans and see how the best.

Articulate the meet our channels and our marketing as we go forward and work closely with the guarantee see on all of those items.

Thanks Diego next question Ariel.

Our next question comes from Jerome keep rule of day Jordan. Please go ahead.

Yes. Thank you good morning, and congratulations on the results. The maybe maybe if you can comment a bit more on the a and b I know that.

As in the first the how confident are you that the Makena has been set for pricing.

He can have the a fair pricing going forward.

And also does that provide a read through on the decision for for wholesale Internet and then a second question regarding media revenue.

Obviously, you mentioned the stadium attendance restrictions, but the sungard and expected results. This quarter on that front can you maybe explain the higher sports related revenue. Since we we also had the NHL in Q1 of last year.

Sure I'll take the MD of no comment a question Jerome and maybe Tony take the media.

Sports question as a whole.

As I just said around the decision last week first of all to your second question, it's really hard to understand whether there's any read through on the decision. The T. P. I a decision of <unk>.

Third party Internet access the decision is the one that's still pending.

And really we're just waiting to hear.

What come backs what comes back from that decision and therefore I don't think of anything we can read through from from my perspective as a whole in terms of the rates that have been put forward. The message is loud and clear and let's continue to private affordability options for Canadians and we've been doing exactly that we've been doing exactly that as well.

Created you know of rate plans through our chatter or fido, and our Rogers brand that create different affordability options the capabilities for Canadians.

I think there's a way to work the.

Affordability rate plans into the equation.

What you've seen from us on the wireline side and the cable side is indicative of that I said in my remarks that.

We were one of the first to launch the connected for success program back in 2012.

<unk> provides affordable internet for Canadians that are in.

You know subsidized rent to income sort of geared homes of disability services are on guarantee of income supplement we just amped that up too.

The reach of about 750000 Canadians.

Through that program and there are internet rate plans are starting to about $10.

The thing we intent on driving forward across the west as we include Shah of that footprint post of the approval process.

And we're just going to keep looking for for the affordability options, we're completely aligned with the government on the from that perspective as well.

And we'll work through the details of the <unk> to see exactly how these are well positioned.

In the marketplace.

Yeah.

Jerome on the second part of your question in terms of media revenue I.

I think of couple of things one is clearly a sports net is the biggest impact.

In terms of those year on year numbers. So what you saw in the first quarter were generally more of NHL games than you would've had last year and so while we had of season.

Last year, the concentrated schedule provided for more games.

But importantly, it's interesting that the viewership on the games this year and the format.

The Canada in Canada format seems to of elicited a much higher viewership, which we're pleased to see and so both of those of you know factored into.

With revenue numbers, who are quite pleased with overall, so that's really the driving factor on that.

Thank you that's helpful.

Thanks, Jerome and area of we have time for one more question.

Our final question comes from Sebastiano Petti of Jpmorgan. Please go ahead.

Yeah.

Okay, great. Thanks for taking the question.

The follow up on some of your comment.

Can you provide perhaps a little bit more color on your comment of that.

Continuing to anticipate strong wireless margins, although the year on year growth rate range would be flat to slightly positive.

Is that on a relative.

Relative to the first quarter or are we thinking about relative to <unk>.

The 20, maybe getting one of them a little bit of color there would be great.

Sure. The comments are with respect of margins is twofold one.

What you have seen is very good in terms of what I would describe absolute margins and wireless.

Over the last.

Several quarters.

And it's been on a very good trajectory in terms of improvements.

And you'll see that our year on year, as well and so I am sort of.

You look at the 310 basis point improvement year on year in Q1, just wanted to be careful debt I won't get too far ahead of ourselves and continue to expect to see that continue that type of margin expansion as we start to lap some of the cost initiatives. The frankly started in Q2 of <unk>.

Last year in part out of necessity and so you know the.

The amount of of expansion.

Particularly in the next few quarters.

Just be more muted a because we're lapping and as I said.

There are some costs as things open up.

Debt, we tend to incur in terms of as I said.

The store costs training and just general things as we ramp up that are of more onetime in nature. So continued good margins, but the year on year pacing.

We will just slow down a bit over the next few quarters in wireless.

Okay that makes sense and then a quick follow up I think of the past any of the while you've talked about.

So getting to that 30% kind of cash margin in cable.

Providing some color on where.

What do you expect capex the kind of come in obviously.

The drivers of EBITDA margin expansion as well as we're thinking about you know that 30% kind of cash margin is that something we should be expecting more.

Moving closer towards that.

Going into 2022 and beyond any of any changes to perhaps your previous expectations around that thank you.

In terms of our cable cash margins, we continue to target, 30% or better.

As we describe our interim a threshold or target.

You would've seen in Q3, Q4 cash margins being in the 29% range of.

Because of the seasonality you saw it come down a little bit in Q1 of.

But for the current year and 21, we continue to see and I would say.

Cash margins in the 28% to 30% range for this year. So it isn't something we're pushing out to next year.

We will have some ebbs and flows and again just some of the pandemic related expenses, you know may impact that on the margin.

But that 30% Beacon is still what we're focused on and headed towards this year.

Thanks again.

Great Thanks for that channel.

And thanks, everyone for listening in.

AGM.

The 11, a M and if you'd like to access.

Our remarks Joe's remarks.

You can get there through the Investor our Investor Relations site.

Thanks, again, and if you have any follow ups, please reach out to Investor relations.

This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.

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