Q4 2022 Rogers Communications Inc Earnings Call
We will begin to yield market share growth this year.
In media, we delivered a strong fourth quarter and full year in.
In 2022, we grew revenue by 15% and turned $127 million of losses into $69 million of profit.
Our media performance clearly stands out in the industry, reflecting the quality of our assets and the team's execution capability.
Importantly, these results did not come at the expense of investment in 2022, our team invested a record $3 1 billion in capital. The vast majority of which is now in networks in fact, a doubling of where we were several years ago and network investment.
Looking ahead to 2023, we continue to see healthy growth catalysts supporting our businesses from factors such as healthy population growth penetration headroom and the benefits our transition to <unk> technologies will bring.
And against this backdrop of healthy growth, we expect to continue leveraging our execution momentum to drive leading share of customer growth, which will fuel robust organic growth in both total service revenue and adjusted EBITDA. As you saw this morning in our full year guidance release.
You will also see the free cash flow will continue to grow as well as we deliver another year of record investment and our customers and our networks and in fact in 2023, we have allocated an incremental $700 million of our capex envelope towards ensuring we continue to have the best one.
Ireland and wireline networks.
As I reflect on the year I am proud of our entire team for their relentless focus and disciplined execution and firm commitment to our customers and shareholders.
While there is clearly more work to do we have reestablished momentum.
Before I turn it over to Glenn Let me provide a brief update on shop as you heard last week. The federal Court of appeal reaffirm the decision of the competition Tribunal to federal courts have now unanimously and decisively ruled in favor of these pro competitive transactions named.
The sale of freedom to Quebec, or and the sale of shop to Rogers.
To quote the tribunal decision there will continue to be for strong wireless competitors in Alberta, and British Columbia.
And the decision goes further concluding that Quebec or will be a more disruptive wireless carrier and Rogers will inject a new and substantial source of competition.
Given the matters before the federal government for final approval, we will not provide any further comment at this time.
Let me now turn the call over to Glenn.
Yes.
Thank you Tony and good morning, everyone. Thank you for joining us. This morning, I know, it's a busy morning.
Rogers industry, leading fourth quarter and full year results reflect the company's commitment to better execution combined with continued investment in our networks.
In wireless fourth quarter service revenue was up a very healthy 7%.
This reflected higher roaming revenue as global travel travel continued to recover.
As well as a postpaid phone subscriber base, which has consistently led.
On market share and growth throughout 2022.
The wireless market in Canada is healthy and competitive.
And now we're better execution is allowing us to grow share once again.
Our loading was very strong as we added 193000 postpaid net additions.
Reflecting a 37% increase from one year ago.
Loading was particularly robust during the black Friday and boxing week promotional periods.
And we achieved record black Friday loading with strength continuing through to the end of the quarter.
As we have seen all year, our results have been driven by better execution.
Growth in our unlimited plans.
Increases in immigration.
And the continuation of customers embracing the diversified value plans Rogers provides across Canada.
Through the very active Q4 promotional period postpaid mobile phone churn was also higher.
Again, reflecting a very competitive Canadian wireless industry.
With consumers very aware of the peak promotional periods and the available pricing and value alternatives.
As a result of this increased activity churn for the fourth quarter came in at $1, two 4% compared to 1.06% one year ago.
<unk> for the quarter was $58 69 up 1% benefiting from consumers continuing to travel.
We exited Q4 with roaming revenues at 140% of pre pandemic levels.
And we're just over 84% of pre pandemic roaming traffic volume.
Wireless adjusted EBITDA was up a solid 8%, reflecting excellent flow through from our service revenue growth with adjusted EBITDA service margins coming in at over 63%.
Moving to our cable business total revenue was stable and unchanged from one year ago.
While adjusted EBITDA was up 1%, reflecting tighter cost performance.
Cable adjusted EBITDA margin was 51%.
Which is up 60 basis points from a year ago.
As Tony has noted the fourth quarter continued to be a very aggressive in promotional intense period in the wireline market.
Led by our National peer.
We were largely measured and balanced in our competitive response matching competitive offers where appropriate.
While seeking to maintain underlying profitability wherever possible versus driving loading.
Gross ads remained strong while customer churn remains elevated reflecting that promotional activity.
The market is competitive.
On a product basis, we delivered 7000 retail internet net customer additions in the fourth quarter.
Down from one year ago, again, reflecting the highly promotional environment.
Additionally, we continue to make significant investments in our cable network.
<unk> $235 million in cable network infrastructure alone in Q4.
In our media business our results continue to reflect the quality of our sports and media assets with strong topline and bottom line results in Q4.
Revenue was up 17% driven by better content rates, our revenue distribution benefit from major League baseball and higher advertising revenue in the quarter.
This drove strong profitability with adjusted EBITDA of $57 million and $83 million turnaround from the $26 million loss in the same quarter last year, which as Youll recall was affected by Covid on live sports.
At a consolidated level Q4 service revenue grew by 6% and adjusted EBITDA grew by 10%.
Capital expenditures were $776 million.
And free cash flow, excluding Shaw financing costs were $644 million.
I should add.
Our deposit interest income is roughly covering our four 2% weighted average coupon on our $13 billion cash held on reserve for the Shah bond financing.
We achieved our 2022 guidance range, despite the $150 million credits paid to customers in the third quarter.
On a consolidated basis for the full year total service revenue grew over 6% and.
And adjusted EBITDA increased by almost 9%.
Capital expenditures came in at approximately $3 1 billion.
And free cash flow for the year, excluding Shaw financing was 2.0 billion.
All meeting guidance.
This performance is a clear demonstration that we are growing topline and bottom line and reinvesting these profits aggressively and increasingly back into our networks for Canadians.
Importantly, these results also show we are in a strong position operationally and financially as we prepare to integrate with shop succinctly. We are ready for when we received the final regulatory approval.
Turning to the balance sheet.
At December 31, we had $4 9 billion of available liquidity.
Including $460 million of cash on hand, and cash equivalents and a combined $4 4 billion available under our revolving bank credit facilities.
We also held $12 $8 billion in restricted cash and cash equivalents that will be used to partially fund the cash consideration of the Shaw transaction when that closes.
Yeah.
Our weighted average cost of all borrowings was four 5% as at December 31 2022.
And our weighted average term to maturity was 11 eight years.
Our debt leverage ratio at quarter end, excluding the shelf financing was three one times compared to three four times at December 31 2021.
As previously discussed until we close the Shaw transaction.
We use adjusted net debt, which excludes the <unk> financing and related cash held in reserve to analyze our debt and calculate leverage.
The Shah related senior notes derivatives, and restricted cash and cash equivalents associated with the transaction financing.
Issued for the specific purpose of funding the acquisition, which of course is not yet closed.
In terms of our outlook for the coming year.
We continue to see strong momentum in our business.
And we have provided a robust outlook for 2023.
Our 2023 outlook includes includes strong top line bottom line and free cash flow growth along with continued emphasis on investing in our networks.
Focused in particular on network reliability and customer service.
2022 has been a year of remarkable turnaround, which will continue into 2023.
We are executing well and our.
Our outlook reflects this.
We anticipate total service revenue growth in the range of 4% to 7%.
And adjusted EBITDA growth in the range of 5% to 8%.
These growth metrics continued to build on the industry, leading organic growth we delivered in 2022.
We are also continuing with our commitment to invest in our networks in 2023.
Our anticipated 2023 capital expenditures, excluding Shaw integration costs will be in the $3 1 billion to $3 $3 billion range.
We anticipate free cash flow, excluding Shire integration, we will grow in 2023, ranging from 2.0 billion to $2 2 billion.
As we head into 2023, we are monitoring the economic environment for signs of economic pressures.
But we believe our execution is sound and we are managing effectively through the overall economic and business climate.
Once we receive approval for the <unk> transaction, we will provide an update to our guidance, which will reflect the combination of these two strong and healthy organizations, but in the meantime, you can see that our underlying business is performing well and that we have not nor will become distracted.
In summary, we are very pleased with our results in Q4 and for 2022.
These results reflect the Rogers teams ability to make the necessary changes in the business and deliver better execution and our teams did both of these very well without distraction.
122 was not perfect and we know we have more work to do.
But we have the right team in place and have established a much improved cadence for delivering more consistent and leading results.
Thank you for your interest and attention this morning, and with that area can you. Please commence with the Q&A.
Lee.
We'll now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad, you'll hear tone acknowledging your request if youre 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 of callers join the queue.
Our first question comes from Vince Valentini of TD Securities. Please go ahead.
Yes, thanks very much.
The guidance you've given.
Impressive by the way in fourth quarter I should add.
Can you just clarify what you what youre doing with your wireless <unk> assumptions in there since you did a lot of moving pieces with roaming and potentially new new competition.
Would you be assuming positive wireless <unk> growth within the service revenue on EBITDA.
<unk> provided.
You will see.
Continued those slowing growth in <unk> coming from roaming you will see continued emphasis.
On.
Our customers upgrading to unlimited plans and premium plans and so that will have a positive impact on our <unk> Vince.
So, yes, youll see that revenue growth.
We will also be flowing through our book.
Cool and just to clarify Glenn that Gee.
The new guidance, assuming you get the deal done.
We have to sort of wait until your next scheduled call in April with Q1 results or are you planning some sort of interim investor event.
Showcase what the pro forma it looks like.
Thank Vincent in fairness, let me, let me not presume so.
<unk> of when that will come and get ahead of our skis.
We will be ready when we get clearance.
But but let me not guess when that will come relative to our next.
Our next earnings release or prior.
I don't want to be presumptuous, and I don't want to speak on behalf of others.
Files on their desk.
Fair enough. Thank you.
Okay.
Our next question comes from Maher Yaghi of Scotiabank. Please go ahead.
Thank you for taking my questions good morning, and congratulation on the good results.
Especially for the guidance, which is.
Within the current environment.
But.
I did want to ask you a question related to the overall wireless market, we're starting to see.
Deceleration.
Wireless service revenues and subscriber loading in the U S.
And some of that is coming from.
Reduction in enterprise and the business segment.
Now Canada.
Different Beast for sure we're seeing a lot of immigration, but can you talk a little bit about your expectation for wireless in 'twenty three.
And are you seeing any deceleration of your business segments, which could you know.
Put some cap on how much further growth we can see in our.
Subscriber loading.
Thanks for that.
The question there.
As you stated.
In your comments, Canada is slightly different.
In the U S macro environment, owing to a couple of things that have helped us on the wireless side from a market perspective in 'twenty, two which we expect to continue into Q3.
And we've talked about them before but notably the level and pacing of immigration continues to be strong when we look at foreign students and temporary workers.
<unk> continues to be strong as well and importantly, the penetration levels in Canada continue to have headroom and so.
As we head into 'twenty three we're not foreseeing.
<unk> pressure on those and with respect to the business. What we have seen is proportionately the business segment and in particular small business has continued to grow in line with the consumer and those trends that I just talked about and so as we look to 'twenty three we continue to see.
Fairly healthy backdrop.
Look at the overall wireless market total number of subscribers for the market seems to have grown in 2002 by just over 5% and one of the healthiest growth rates we've seen.
In a long time and so our expectation is that we'll continue to see healthy growth.
In 2003 may not be as high as 22, because there is a bit of the post pandemic catch up we believe that happened earlier in the year.
But as we look for the rest of the year.
Continue to see.
Opportunity for that growth.
Thank you and then just the.
So right there on the on the guidance that you see it reflects that population grow asked specifically about the.
The business market is I think in the business market, we have an opportunity to continue to increase our.
Our share in that market, but I think if you look at our service revenue guidance of 4% to 7% is reflective of those general trends of population growth. So we're not we're not out of line.
Sorry to cut you off.
Thank you thank you for that.
Increased.
Uh-huh information, but I wanted to ask you in terms of the operational performance and Tony Since you came then implement the changes.
We're seeing.
The benefit on the bottom line.
Can you talk a little bit what's the what's the next step in your.
Overall view.
Keep improving operations, even further from here.
What should we be looking for in terms of <unk>.
Changes that you could see at Rogers.
Beyond what's happening with the Shah we'll see.
It's a good question there.
What you saw this year when I say this year in 2022 was a rebalancing back to the fundamentals of our business, which has been <unk>.
Frankly.
To ensure we have the best network and ramp up investment in our wireless and wireline network combined with improvements in the customer experience and as we head into 'twenty three.
We look at the industry, what Youll continue to see as improvements in our network that are tangibly visible to our consumers and business customers.
That's important to us and secondarily, when we think about customer service, we think about the customer experience.
And as an industry as technology continues to evolve we see the opportunity to continue to make things simpler for our customers and continue on the agenda of resiliency and redundancy of our network and so they need connections. They can trust that are always on and those are the themes that youll continue.
<unk> to hear us focus on and we believe that's going to be the fundamental catalysts to continue to have leading market share.
As we head into 'twenty, three that will convert to the financials that you'll see it's as simple as that in our mind there.
Thank you.
Okay. Thanks, Matt next question area.
Our next question comes from Jim Macdonald of RBC. Please go ahead.
Yes, thanks very much good morning.
Expanding on the previous question, maybe starting with you Tony specifically on the cable side I think everyone's well aware of.
The strategy there.
And getting that segment back on its feet post outage and also in anticipation of a.
Our broader transaction it could be in a transition just wondering what your expectations are cable side for Rogers Standalone.
As we at least start the beginning of the year here.
And then secondly for you Glenn just an update on the on my end on the balance sheet.
Assuming the deal closes obviously understand that the passage of time, so I'm delivering evolving market conditions et cetera.
I'd Love to hear how you are seeing delivering post deal close over the next two to three years just relative to.
You had previously indicated if theres any change there. Thank you.
Question drew.
In terms of the cable side of the business.
About it and two two points one is the backdrop.
We'll accelerate growth we saw.
Very good growth in the market size in wireless and there is a bit of a lag as that translates to new home construction and homes passed in our cable business. So we see that.
Fueling our growth in homes passed <unk>.
And with additional investments, we will put into homes passed so we see the opportunity and high likelihood for the size of the market for us to continue to grow and as we retool some of the fundamentals in that business.
Our expectation is you will see.
Largely in the back half of 'twenty three.
But starting to see early signs in Q1 and more so in Q2 improvements in subscriber market share you see it in the fundamentals retooling of the business in terms of.
Bringing in simplicity in our operations, we've actually invested more in our experience.
Then we have in any previous year, yet our overall cost structure has come down for cable and that's really a reflection of that.
Transformation to the fundamentals in that business. We are also at the same time and we've talked about this on previous calls our re indexing from our flanker Fido Internet back to the Rogers main brand, it's a much better customer experience in terms of a better modem.
<unk> and.
A whole bunch of things related to that.
And you see that when we look at the churn in the flanker product versus our main brand.
Rogers Internet has substantially by a wide margin lower churn than Fido Internet. So what you see you are trying to move to.
The more value add brand for us of Rogers and we've been making that change in the short term. Our main competitor has launched I would describe aggressive.
Competitive promotional pricing.
Especially in the higher tiers of one gig.
Above which is fine we will compete with that but as Glenn said in his opening remarks, our response to that will be very measured at the right time in terms of <unk>.
Competing on that basis.
But right now there were a few things we wanted to focus on the fundamentals.
In that business and so thats, what youre seeing and how we think about our outlook for this year.
And then drew in terms of the Shaw transaction and our balance sheet.
When we received the regulatory approval and close on Shah I'll start with we have all of the permanent funding in place to close we have $13 billion in.
Cash held in reserve from the proceeds from our $13 billion in bond issues from last March 2022.
That those bonds as Youll all recall.
Our in place and extended out through two being available through to year end 'twenty. Three so we have plenty of runway. There. We also have $6 billion in committed bank term loans.
With terms ranging from three to five years split evenly across three four and five years.
So that takes our cash funding up to $19 billion available.
And then there is a portion of the purchase price of course its done in shares for the Shaw family.
And then finally, there will be proceeds that come in.
From the transaction into Shaw Communications, where we close from Shaw sale of freedom.
<unk> and so.
All of that netted together, we have all of the funding in place to close the transaction and meet all of our liquidity needs through the year without touching the $4 $9 billion of liquidity I mentioned that we had on hand at year end.
So the balance sheet is strong in terms of corporate funding.
We will meet all of our maturities in.
Rogers specific commitments as well as being able to close on shore without needing to come back to the capital markets.
In terms of where we will be on leverage when we close we'll be right around five times maybe.
A tick over five times when we close.
Depending upon timing, we've taken advantage of the time that we've had to.
Sure.
Strong organic growth within the Roger Standalone business, we have had some.
Expenses come in along the way, which we now have to cover on our balance sheet not the least of which was the cost of extending those those bonds because we did not close in 'twenty two even with those added expense in.
We will still be closing right at around five times low five times when we close on the transaction I anticipate.
And then going forward, we haven't given a forecast as to.
Schedule around Delevering.
But.
If you look at.
Where our EBITDA rolls up with Shaw as Abbott.
And then you look at what our path is on synergies I think you'll you'll see through earnings growth alone.
We generate some significant de levering on an annual basis.
I don't know if youre looking for a rough rule of thumb think of it in the range of probably four to six times, depending upon the year, depending upon how much of the year we have.
Left in 'twenty three once we close.
But if you were to try and model it along those lines drew I think you'd probably be in the bowl.
And then free cash flow in the in the outer years, maybe not in the first 12 months, but we will have available free cash flow to nominally pay down debt as well.
That's about as fulsome as I want to get right now, but that will give you an idea of how to model it.
Okay.
Thorough answers thank you both.
Thank you next question Ariel.
Our next question comes from Sebastiano Petti of Jpmorgan. Please go ahead.
Hi, Good morning, Thanks for taking the question just sticking with cable network investment and competition theme you did mention in your prepared remarks that the fourth quarter was aggressive in promotional intensity.
National peer, but at the same time I think Tony you mentioned that you expect perhaps market share trends to improve in <unk> and <unk>. So on a near term basis, if you could maybe unpack.
Some of the drivers there and you expect.
Within the first and second quarter team can lead to the better subscriber market share that would be great and then maybe a longer term question.
In the U S you're seeing.
Your larger peers charter Comcast talk about DOCSIS four <unk> upgrade path. Obviously, you are largely going to follow the Comcast paths, but they've already got the DOCSIS four <unk> by 2025 pretty much ubiquitously across our footprint.
What does that mean for Rogers.
While market share some may improve over the next couple of quarters here relative to belt. They are continuing on their fiber path.
Assuming the transactions with shop closings here shortly obviously tell us for.
<unk> in terms of cyber overlap as well.
Maybe give us a view on how Rogers is thinking about the long term.
<unk> DOCSIS four <unk> upgrade path.
Maintaining.
Competitiveness relative to your fiber costs.
Okay.
Thanks for the question Sebastian.
Two parts to your question. The first is as we look to 'twenty three and I just wanted to clarify as we talk about market share improvements.
I just wanted to reiterate and level set expectations that it will be a progressive ramp in 'twenty three.
A little bit in the first quarter ramping to the second quarter and then into the back half.
And so I just wanted to.
Just make sure we're not getting too far ahead of ourselves in terms of the fundamentals that get us there.
We're very focused on.
The customer experience.
And are they getting reliable internet at speeds that they want.
We're less focused on a price battle, what we do know is you can sign on a customer.
Very low <unk>, but in the end if theyre getting experience. They are not happy with then that is the primary reason for change we continually look at the market reasons for customers coming onboard reasons for customers leave and across the industry and that's true of both Canada and U S.
While prices always important or more important factor is the internet reliability and thats because we just.
Even in the consumer space with a lot of work from home. It has become so critical and so those fundamentals around customer experience is what we believe will in the long term continue to drive the rate growth side.
And the right churn fundamentals.
So thats one the second point relates to DOCSIS four let me be clear, we do not have a competitive disadvantage in our internet business in fact, we see it as a competitive advantage.
And our footprint, we've been deploying fiber all the way to the home all the way to the business premise.
Over a decade, and so we have robust complete fiber to the prem.
Throughout our footprint.
And where it isn't and we still have coax in the last mile. We're in the fortunate position that coax in the last mile continues to deliver speeds that are well beyond <unk>.
Customer demand at this stage we're offering.
At least one to one five gigs across our entire footprint.
99% of our footprint is capable of those speeds and in many areas. That's now two five gigs and growing rapidly.
The migration to DOCSIS four <unk>.
We will only enhance the top end of those speeds and we expect that to come as a fast follow if not in line with where you see our U S peers going on DOCSIS forward, the biggest limiting factor and you've heard that from from them I suspect.
Are the chipset.
That support the DOCSIS four.
But we are extremely comfortable that as we look to 'twenty four 'twenty five appointment for DOCSIS four that will still be well ahead of where the market demand is so we have plenty of capacity plenty of headroom.
To meet the.
Customer expectations.
As we move to DOCSIS four but again that's for that portion of it work.
Where the cost effectiveness of coax in the last mile continues to be very compelling.
Great. Thank you.
Okay. Thanks for that channel next question area.
Our next question comes from David Barden of Bank of America Merrill Lynch. Please go ahead.
Hey, guys. Thanks, so much for taking the questions.
So I guess I wanted to talk a little bit about the merger.
And congrats on getting thus far in the process.
There.
The first question would be given that it's been probably a year longer than we thought given what we've watched happen.
With the down here in.
Further in LTE.
And their response to fiber overbuild.
Or are the synergies of this merger that you articulated two years ago had $1 billion still real.
And how do you think about the.
Capex requirements.
I mean absorbing Shaw in the fee.
Sure.
That'd be one.
And then the second one would be not to put you in a tough spot.
To put you at that spot which is.
Youre, making the argument that.
At the core and whatever you've done.
Your agreements with them.
We're going to make them more effective competitor.
In the Canadian wireless market, which sounds like a terrible thing if you're an equity investor and Rogers can you square that.
For me.
Like why why the net of these two things.
Even up to create.
Better competitor in <unk> quarter.
Less than the benefit that I'm going to get from the.
Investor in the benefits of the Shaw cable merger synergies.
I just needed a refresher on how this morning.
Excited about the Rogers transaction.
I'll start and Glen will fill in on.
On some additional points, but as we look to and we've continually assess.
Throughout <unk>.
Our investment thesis on the Shaw transaction.
<unk> as to what we thought and I think there are two things.
But I would describe at a macro level firstly on the cost synergies. The additional time has allowed us to as I mentioned earlier make progress on retooling our own shop, and so we will be entering.
That transaction from a position of greater clarity on our cost structure and our cost road in so a very macro level, we have heightened confidence.
On the synergy benefits the second piece and we haven't talked about it much.
Much.
If at all are the revenue synergies on this and the time, we did the deal we look at the Canadian population in particular, where Shah has as its primary cable markets and that growth is more that expected when we looked at it two years ago, owing to those <unk>.
Sectors that are driving our own cable market growth.
Mentioned earlier.
A number of other factors as well, but if we step back and look at those two primary.
Factors the <unk>.
<unk> thesis not only continues to hold but in our view continues to improve.
With the passing of time.
The second part of your question relates to having a fourth wireless competitor.
Have thrived.
Thrived in a competitive landscape.
In the past, including in 2022.
We've entered into transactions that will allow the buyer of freedom.
To enhance their competitive ability.
And it's over to US and we are confident we have what we need to be able to compete in a four player market just as we've done in the past and it's all going to be about relative share and four player market.
There are a number of dynamics in.
So when you talk about the impact.
It isn't necessarily.
Anything that a fourth player picks up it is at the expense of Rogers.
There are dynamics in market share and we're comfortable as I said that we have what we need to be able to compete for share in.
In that space.
And then and then Dave maybe if I could just add in a little bit more on yes on synergies and capital expenditures.
As Tony has mentioned we've had more time to look at the synergies we remain committed to that Tony touched on that the capital expenditure piece.
We've the plan the model forecast Hasnt changed from from our initial evaluations action I think fundamentally if you look at Shaw communications and how it operated its wireline in its wireless business over the last few years a significant portion of its.
Capital spend has gone into the wireless side of that balance sheet and investing in there. They are the build out of their wireless infrastructure. We have a strong national wireless network that we already have well in hand in terms of investing.
Sure acquisition.
Sure as an acquisition of the wireline side.
Their business.
We will take communications annual capital spend.
And devoted to wireline assets in the West succinctly.
So if you if you work on that premise.
I think ladder up to what that that that business plan looks like and how it forecast but.
That's in a nutshell, that's how we prepare for taking in Shaw and the capital spend related to sure. It will be focused on wireline investing in the west.
To go along with what we're already doing in our core business today.
I think Tony answered the rest of it.
Alright.
Thank you Paul I appreciate it. Thanks, Thanks, David next question Ariel.
The next question is from Ken <unk> with BMO capital markets. Please go ahead.
Yes, Thanks, a few from me.
One just a clarification Glenn just on the Capex comment are you.
Implying that you will spend the $1 billion a year in western Canada, or the seven Notionally the 700.
Rent on wireline.
I'm not going to get into into the.
The closed specifics yet Tim.
We're in 2023 have given our guidance for 'twenty three stand alone we will see when we close the transaction before I start.
What numbers, we're going to spend on onshore in year.
But.
We will invest.
In the wireline networks two to invest in customer service.
Across our entire footprint once we take ensure that entire footprint will will go from coast to coast will invest as needed.
And that'll be an investment program that it's done over years not over over months. So.
Understood.
Okay got it.
Okay, a couple of questions for the Tony and one for you Glenn just Tony could you talk a little bit about that.
Wireless loading dynamics in the quarter.
But.
And then you had a very successful loading quarter, but.
Our proven churned.
Did.
Were affected.
We're more active on the flanker brands, perhaps in anticipation of that.
With freedom at Quebec, or can you just talk about the competitive dynamics within the brands in the quarter.
And then just curious if you could comment on some of the media signaling coming out of.
Checkers in each of these of the CRT D C.
Focused on pricing again.
Just wondering if you've had any dialogue or any comment.
Many of US have heard this kind of signaling before just would be interested in your perspective.
And lastly, Glenn just a clarification on the median number of sectors.
Onetime dam contribution in the fourth quarter could you confirm that and perhaps quantify it. Thank you.
Thanks, Tim for the questions a couple.
Couple of things is just to give you some context on the fourth quarter quite a bit of competitive intensity in terms of promotional activities not just on the price plans, but to some extent of handsets as well.
So what you saw play out and we were largely more reactive in terms of.
The flanker in fact, when you look at.
Over the course, much like home Internet.
Been re indexing back to our premium brand and if you look at the rate of growth in the fourth quarter of Rogers vis vis phyto.
What you see is a significantly.
Faster rate of growth on Rogers.
So we're pleased with that on balance so notwithstanding that competitive intensity.
We continue to make good traction on re indexing.
Our premium brand and <unk>.
We've been on.
Throughout 2022, and we'll continue to do.
In 'twenty three.
But no doubt some of the value out there and it's just a reflection of the market. There is good value for consumers.
In the fourth quarter and.
The overall impact on service revenue was.
It was offset by share gains, which is important in a market where the rate of growth is accelerating and so we're always trying to balance off both of those.
And I think we we are striking the right balance between.
Market share gains and.
And <unk> growth as well.
And so that's what really reflected the heightened churn that you saw in Q4.
For us and the industry.
In terms of.
Your your.
Second question.
On pricing.
Well, there's not a lot I can say with respect to the new CRT Sea chair, we look forward to working constructively and proactively.
At the right time.
With the mandate of the CRT C. As we would with any other regulatory body.
What I will say is.
We feel good about the market dynamics and the value add that the industry and Rogers is bringing to customers.
Continue to highlight against the backdrop of.
Increasing inflation in a number of parts of the sector and consumer goods.
Our industry and Rogers continues to reduce pricing.
If you were to look at it over the last several years and in particular over 2022, one of the few if not the only sector that actually has price declines.
In the marketplace and that's owing to the the competitive intensity that's out there and frankly as I've said in other forums, our intent to continue to figure out ways to bring more value add too.
Two customers.
And then Tim just quickly on your question around the MLB proceeds.
My transaction to to release the details on.
And so I can't I can't give you a specific amount.
It does it relate to MLP, having sold the minority interest.
And the remaining minority interest in health and one of its properties and then the distribution to each of the teams.
And so that was our we recorded our share of it in the quarter.
Thank you both.
Thanks, Tim. Thank you Tim next question Arrow.
Our next question comes from Simon Flannery of Morgan Stanley . Please go ahead.
Great. Thank you very much good morning, you talked a little bit about revenue synergies and one of the things we're seeing in the U S is the rise of the double play the Internet plus wireless bundle and.
Triple play bundle kind of declining over time, perhaps you could just give us a little bit of a sense of how you see that in Ontario, what sort of that outperformance you see having being able to offer that combination to your customers what percentage of your cable base does have your wireless product.
How do you see the opportunity to bring that playbook crowd to western Canada.
Thanks for the question Simon I'll start.
And Glenn will pick up but at a very macro level.
We've been watching that trend closely in the U S and Canada we've.
Because we've had I would say more experience at it having been a cable and wireless operator.
In significant parts of the country.
For a long period of time in terms of the bundling, it's largely been a price dynamic in terms of enticing the.
<unk> when you look at the actual buy dynamic in many ways a channel distribution is different and how the customer buys.
And a number of other factors in terms of the decision making criteria.
How they think about them and so other than promotional incentives to bundle them.
I would say the fundamentals of the business seem to be.
Continue to be.
Somewhat and so we will continue to capitalize on that coming together at the right time.
But price alone isn't the answer long term and it really gets back to.
The comments I gave earlier with two long term cable.
Turn rates.
So we continue to watch that trend and certainly it's an opportunity for us in terms of bundling, we don't disclose the specifics of.
Within our footprint with that.
It looks like in terms of bundled offering for competitive reasons.
But I would say it.
Is growing perhaps not as much as you might think.
Maybe the only the only thing I would add to that Simon is.
Ignite.
Offering is particularly attractive as people's viewing habits turned towards streaming too to help still provide a base upon which to sell.
Our video service product. It has a very strong offering that allows people to access streaming as well as.
The traditional channel lineups very conveniently so that does help.
Help as well.
Great and what is there anything to call out on the video.
Numbers in the quarter.
I think I think we've we've touched on on what I think the priorities were it was a it is a very competitive market. It remains competitive going into 'twenty three.
And.
Yeah, I don't think Theres really anything more to call out than that.
Great. Thank you.
Thank you Simon next question Ariel.
Our next question comes from Stephanie price of CIBC. Please go ahead.
Good morning.
<unk> can you talk a little bit more about the <unk> rollout and the Sochi with Dan coverage targets you have.
And what you've seen in terms of an uptick in customers moving to higher tier plans.
All right.
And then finally, how do you think about network costs.
And the more time.
Thanks for the question Stephanie.
In terms of <unk> rollout.
As you saw on previous calls.
Were very quick out of the gate very early in the year to deploy.
The band Spectrums as you referenced a very quickly.
As of today, we're sitting at.
Approaching 85%, we're at about 83% today in terms of <unk> coverage.
And so we continue a very aggressive ramp.
And you can expect that as we had.
Towards the end of the year that will approach 90%.
So we continue to deploy that spectrum.
Very quickly.
And.
And in many markets you will.
Youll see the banner <unk> plus much like you do in the U S.
That will continue to be.
At a very rapid pace as well so that's all proceeding well I think in terms of the network cost Stephanie think of it in the context of the.
The higher band spectrum carries more data.
<unk> service users consume more data on a on a per gig basis, you need the mid and high end.
And we will need those as we move into the years to come to carry the data, but it's the capital investment in that spectrum and getting it into our towers.
Think of that as being the network costs associated with <unk> there.
There are fixed costs largely there the capital spend that we put into spectrum into infrastructure.
And those are the fixed costs that you had in the margins you see them below the EBITDA line in terms of our capital spend.
Once we get them out there, we deploy them and we can run services out to our customers.
Great. Thank you very much.
Next question area.
Our next question comes from Jerome Deborah of D. Jordan. Please go ahead.
Hey, good morning, Thanks for my questions. Two from me. The first one is on cable I would like to get a knob dates on the percentage of your cable network that overlaps with the fiber to the premises.
And then second question on wireless Grateful stay the adds again.
Do you agree that now a larger proportion of Ah.
Wireless subscriber growth.
From a bit of a lower end of the market then.
Yes.
Means in terms of the strategy to adopt to go to market. Thank you.
Thanks for the question drew almost start with the second part.
And then Colin I'll come back to the cable question.
In terms of the war.
Wireless as you think about you.
Canada as well as the students migration certainly that segment would index first too.
Linker brands.
And we've seen that in as.
So I would say in the near term there is a slight indexation to that but at the same time, what we're finding is a very good and healthy migration to the Rogers brand, especially as a result of as we've talked about our focused efforts on.
That migration within our base.
So.
I would say it continues to be.
Much like it always has been and so I wouldn't overstate that the market is moving to in a big way to the flanker as I said I think it's slight but theres more.
Then enough offsetting.
In the base and the rest of the market to get the right mix to the premium brand.
And Jerome in terms of the percentage of our network that we have fiber to the prem.
Without without seeking to frustrate you with my answer.
We're opportunistic with it.
Atlantic, Canada is an overbuild or a rebuild of our of our network facilities, because Atlantic Canada is primarily aerial over the air.
Transmission and pulls are simply easier to run fiber.
Then varying and replacing plant that way on a cost per home passed basis, we can be opportunistic and run fiber through Atlantic Canada.
New construction build when the trenches are open we're putting in fiber to the Prem we're opportunistic with it but don't think of it in the context of they've done X percent and still have 100 minus X percent to go.
Our hybrid fiber coax has a long long 10 year still to run DOCSIS four <unk> will be.
<unk>.
Yep.
Entirely competitive with with whatever we can deliver over our fiber to the Prem <unk>.
Plants as well there'll be comparable.
And we will be competitive with our peers, where they have fiber to the prem over our hybrid DOCSIS sorry.
Sorry hybrid fiber coax plant so.
Think of it in that regard.
Yeah.
Okay. Thank you.
External.
Next question Arrow.
Our next question comes from Arvin that go with it.
Canaccord Genuity. Please go ahead.
Good morning.
My question two for me one just to go back to wireless churn.
Obviously, we're seeing an uptick which is always a natural considering sort of the China traffic and so forth, but maybe.
Maybe Tony you can talk about your expectations.
For the medium to longer run.
There's always been a case and suggests that day is that that can be structural decline in churn, which would obviously help margin.
Since the broad the model.
For all the reasons that I've been excited from family plans to sort of the lifecycle of the device I wanted to get your thoughts on how you see that.
That that that thesis in light of sort of what we're seeing right now where most of the companies are coming in.
Our wireless churn and then.
Perhaps I'm Glenn on the free cash flow guide.
I did notice that cash taxes.
2022.
To get a sense of any color you can provide on what you are building it until 'twenty three that with respect to cash taxes.
Thank you.
On the first part with respect to our thoughts on wireless churn and the implication of it certainly.
<unk> said the industry is traditionally thought of lower churn.
As a better enabler because.
You save on the cost of acquisition.
We found was.
In particular, when you look at the fourth quarter and the competitive intensity there.
I would say the general principle.
It's still true lower churn is always better and we're always focused on making sure we try to keep as many customers and losing one is always too many so that that fundamental doesn't change.
At the same time the cost of acquisition, if you've looked at the industry overall over.
Over the last three years to four years hasnt been coming down and so notwithstanding the.
The slightly heightened churn that you see in the fourth quarter you continue to look at our margins sitting at a.
Strong performance, there and it's actually up year on year. Despite the increase in churn and so when you look at the fundamentals of it.
I would say our thinking on this is sort of real time matured so that we get the right balance.
Ultimately, it's net mobile phone market share that we stay focused on.
And the churn aspect is one piece of that formula on a secondary metric basis hope that helps.
And then <unk>.
On the on the free cash flow.
And cash taxes, there is not there is not a material difference from year to year really.
Youll see some difference going from 22 to 'twenty three as a result of the quarterly timing of some cash taxes that were paid in 'twenty, two but it's not it's not.
Thematic lean material number from one year to the next.
Okay, great. Thank you.
We have time for two more questions certainly our next question comes from Betsy <unk> of UBS. Please go ahead.
Great. Thank you.
To provide an update on how we should think about the synergies maybe merger integration costs after the deal.
The second question on what Youre seeing in the business market than what could be the opportunity asking you closed the deal. Thank you.
Good morning, and thanks for the question I'll start with the second one.
And Glenn and I'll come back to the first question in terms of the overall business market as you heard in my opening or on a previous question.
The population growth.
The contributors to overall market growth.
That I talked about is certainly helping the consumer side and as you would expect we see a very quick follow on lag in the business market. So the size of the business market.
Improving as well while at the same time, our penetration rates in business and in particular.
Small business continues to improve and so the growth that we're seeing is.
I would say slightly more indexed to small business.
And that continues to be an area that we're quite pleased.
With our our.
And that and continue to see more avi for penetration there.
And then back to you on the on the cost to achieve the synergies I think as a rough rule of thumb, if you think of it as well.
We're.
Driving at $1 billion a year of synergies.
Think of it is likely a one times turn on that in terms of our cost to achieve that will give you a rough rule of thumb to to work off of.
Okay. Thank you.
Thank you.
Last question Ariel.
Our final question comes from David Mcfadden of Cormack Securities. Please go ahead.
Okay.
Yeah. Thanks for squeezing me in.
Im just looking at the guidance obviously your guidance looks quite strong I was just wondering if you will.
An update on our revenue.
Roaming revenue volume.
Volume.
Revenue in the fourth quarter, and then kind of what you are looking at.
For next year.
And then the second question.
And now I think.
That part of your speeds are comparable to balance further offering.
But how do you explain the fact that they keep putting up very strong net adds particularly.
All the other cable companies.
Seems like they are taking share there.
Thanks for the question Dave.
Again, I'll start with the second one and.
Glen will come back to the first one as I said on the <unk>.
Subscriber share on the Internet side on cable.
It's not lost on us in terms of.
Our performance on customer share and so it's something that very closely and as I said.
Our response will continue to be very disciplined and measured.
And.
What you see there is not.
Capability.
Discrepancy, but all Youre seeing play out is.
Pricing and.
As I said I think we've got the right approach on this and we're playing the long game and so.
I wouldn't confuse short term promotional pricing with the long term health of that business and the fundamentals in that business.
I continue to reiterate that capability speeds on home Internet continue to far outpace where customer demand is.
And so average speeds.
Would sit in the 300 Megs and so when you got to.
Top end speeds that are available in the marketplace, we're well beyond that by a factor of approaching 10 X.
So that's why I say network capability.
It is not at all an issue and in fact as I said.
We think of our network is a competitive advantage when you look at Internet and our TV product combined.
Across our footprint and so so.
What you see playing out.
And in our view, it's as simple as that.
And then David on on roaming.
Succinctly were running at about 85% of roaming volume relative to 2019 pre COVID-19 levels.
And we're sitting at we've ticked up to about 140%.
Comparatively.
<unk> 2019 pre COVID-19.
Revenue volumes or revenue so.
We've seen that tick up from Q2 and Q3 travel remains.
Ongoing.
And so we're.
We're through largely through that cycle of getting back to where we were maybe a little bit more room.
But on in terms of volume.
Sure.
We've picked up a little bit I would anticipate that roaming revenue to temper, a little bit youre not going to see that necessarily grow.
Much more than where we're sitting other than filling in the rest of that volume.
Well, maybe I can just with that.
A follow up on that because I.
I'm just wondering how you through your <unk>.
85% of 120 revenue okay.
Now today that their volumes flat.
Covenant and around 12%. So we are ramping substantially more demands on your volumes lower what's implied.
Hum.
Rami I mean, how do you explain I'm just.
Common stock.
So without getting inside their numbers I can't right.
Right I got it.
Reserve My response to mine I'm confident in where we are these are rough rules of.
The 85% from month to month, maybe its five or 10 different here and there there might be a little bit of rounding I think I think generally you can see it in the airports the airports are busy.
Travel is back business travel is lighter than it had been previously.
Consumer travel is probably a little bit heavier business travel a little bit lighter than where we were.
Going through Covid.
If airports.
Are able to get their flow sorted out I think you'll see continued growth in travel we're coming up on March break it will be interesting to see what those volumes are.
Think I think let.
Let me just respond by saying the roaming growth.
Is relatively mature relative to where we were.
Two years ago, one year ago, and so we've seen some sequential growth from Q2 and three into Q4, we've ticked up to 140 versus 130 <unk> great.
I think if we hold that grow at a little bit as as more business travel comes back.
There's still there's still room for a little bit of growth.
And.
It'll be what it'll be a pause there.
Okay, alright, thanks, so much thanks David.
Thanks, everyone for joining us today and if there's any follow up please feel free to reach out to us. Thank you.
Thank you all.
This concludes today's call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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