Q1 2024 Rogers Communications Inc Earnings Call

Operator: Thank you for standing by. This is the conference operator. Welcome to the Rogers Communications, Inc. first quarter 2024 results conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. Following the presentation, we'll 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, then zero. I would now like to turn the conference over to Paul Carpino, Vice President of Investor Relations with Rogers Communications. Please go ahead.

Thank you for standing by this is the conference operator welcome to the Rogers Communications, Inc. First quarter 2024 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 then zero.

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

Paul Carpino: Thank you, Ariel, and good morning, everyone, and thank you for joining us. Today, I'm here with our President and Chief Executive Officer, Tony Staffieri, and our Chief Financial Officer, Glenn Brandt.

Paul Carpino: Thank you Ariel and good morning, everyone and thank you for joining us today I'm here with our President and Chief Executive Officer, Tony Staffieri, and our Chief Financial Officer, Glenn Brent 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 <unk>.

Paul Carpino: 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 2023 annual report regarding the various factors, assumptions, and risks that could cause our actual results to differ. As a reminder, we will be holding our annual meeting this morning at 11 a.m., and we will be concluding this call at approximately 8.50. We'd ask that you keep your questions limited to one question and a brief follow-up, if necessary, so we can answer as many questions as possible. To view the webcast of our AGM, a link can be accessed through the Investor Relations portion of our website. With that, I will turn it to Tony to begin.

Paul Carpino: Thousand twenty-three annual report regarding the various factors assumptions and risks that could cause our actual results to differ as a reminder, we will be holding our annual meeting. This morning at 11, a M and we will be concluding this call at approximately $8 50, we would ask that you keep your questions limited to one question and a brief follow up if necessary. So we can get.

Paul Carpino: As many questions.

Paul Carpino: As possible to view the webcast of our AGM a link can be accessed through the investor relations portion of our website with that let me turn it to Tony to begin.

Anthony Staffieri: Thank you, Paul, and good morning, everyone. I'm pleased to report that Rogers delivered another strong quarter of growth in the first quarter of 2024. This reflects the ninth straight quarter of momentum for the company. Looking at the first quarter, we executed our game plan with discipline and focus. We delivered industry-leading results and made record investments to drive growth, improve efficiencies, and lead the industry. In Q1, we grew total service revenue by 31% and adjusted EBITDA by 34%. We reaffirmed our industry-leading financial guidance for the year, and we invested $1.1 billion in capital across our cable and wireless networks. All in all, a very productive first quarter.

Thank you Paul and good morning, everyone.

Anthony Staffieri: I'm pleased to report the Rogers delivered another strong quarter of growth in the first quarter of 2024. This reflects the ninth straight quarter of momentum for the company.

Anthony Staffieri: Looking at the first quarter, we executed our game plan with discipline and focus we delivered industry, leading results and made record investments to drive growth improve efficiencies and lead the industry.

Anthony Staffieri: In Q1, we grew total service revenue by 31% and adjusted EBITDA by 34%, we reaffirmed our industry, leading financial guidance for the year, and we invested $1 $1 billion in capital across our cable and wireless networks all in all a very productive first quarter.

Anthony Staffieri: In wireless, service revenue and adjusted EBITDA were both up 9%. Cable service revenue was up 94%, and adjusted EBITDA was up 97% due to the Shaw acquisition from one year ago. From a subscriber perspective, we continue to attract the most customers, adding 124,000 postpaid mobile phone and retail internet net additions. This is the highest number of net additions in our industry. In wireless, we led the market with 98,000 postpaid mobile phone net additions, up 3,000 from last year. And we continue to see a healthy mix from the new-to-Canada market. The competitive intensity from the fourth quarter carried into Q1, and the team executed its game plan with discipline.

Anthony Staffieri: In wireless service revenue and adjusted EBITDA were both up 9% cable service revenue was up 94% and adjusted EBITDA was up 97% due to the Shaw acquisition from one year ago.

Anthony Staffieri: From a subscriber perspective, we continue to attract the most customers, adding 124000 postpaid mobile phone and retail Internet net additions. This is the highest number of net additions in our industry and.

Anthony Staffieri: In wireless we led the market with 98000 postpaid mobile phone net additions up 3000 from last year.

Anthony Staffieri: And we continue to see a healthy mix from the new to Canada market the competitive intensity from the fourth quarter carried into Q1 and the team executed their game plan with discipline.

Anthony Staffieri: In retail internet, we delivered 26,000 net additions, up 12,000 from one year ago. We introduced Rogers 5G home internet in the quarter, offering home internet to customers in places we historically could not. It's early days, but we're seeing good consumer interest in the product. Overall, we remain focused on returning to organic revenue growth in cable by year end. In media, top and bottom lines were down as a result of a one-time gain in the prior year's results and front-loaded programming and payroll costs in the quarter.

Anthony Staffieri: In retail Internet, we delivered 26000 net additions up 12000 from one year ago, we introduce Rogers <unk> home Internet in the quarter offering home Internet to customers in places, we historically could not.

Anthony Staffieri: It's early days, but we're seeing good consumer interest in the product overall, we remain focused on returning to organic revenue growth in cable by year end.

Anthony Staffieri: And media top and bottom line were down as a result of a one time gain in prior year's results and Frontloaded programming and payroll costs in the quarter we.

Anthony Staffieri: We'll see things even out as the year progresses to deliver profitable growth here on a full year basis. Our media brands continue to be critical to our company and our customers as demand for sports and entertainment grows. Q1 was the most watched first quarter in Sportsnet's history.

Anthony Staffieri: We will see things even out as the year progresses to deliver profitable growth here on a full year basis.

Our media brands continue to be critical to our company.

Anthony Staffieri: Customers as demand for sports and entertainment growth Q1 was the most watched first quarter and sports nets history.

Anthony Staffieri: Trenching Sportsnet as Canada's number one sports network. Moving on to the merger, April marks the one year anniversary of the Shaw merger. I have to say I continue to be impressed with the Shah assets and the power of our combined scale. We have integrated the two companies and delivered on the key commitments we set for ourselves in the first year. We delivered on our $1 billion synergy targets one year ahead of schedule, and we remain focused on selling non-core assets to reduce our debt leverage ratio. Overall, we are well ahead of schedule, and I could not be prouder of our team.

Anthony Staffieri: Trenching Sportsnet as Canada's number one sports network moves.

Anthony Staffieri: Moving on to the merger April marks the one year anniversary of the shop merger.

Anthony Staffieri: Say I continue to be impressed with the chi assets and the power of our combined scale. We've integrated the two companies and delivered on the key commitments, we set for ourselves in the first year, we deliver on our $1 billion synergy targets. One year ahead of schedule and we remain focused on selling noncore assets to reduce.

Our debt leverage ratio.

Anthony Staffieri: Overall, we are well ahead of schedule and I could not be prouder of our team.

Anthony Staffieri: I'm also proud of our efforts to continue to drive innovation in the quarter. In January, we completed the first nationwide live test of 5G network slicing technology in Canada. This technology will use our 5G network to create multiple lanes of wireless traffic. Each slice or lane can provide tailored features, from low latency to faster speeds to more capacity.

Anthony Staffieri: I'm also proud of our efforts to continue to drive innovation in the quarter in January we completed the first nationwide life test of five <unk> network slicing technology in Canada.

Anthony Staffieri: This technology will use our <unk> network to create multiple lanes wireless traffic each slice or lane can provide tailored features.

Anthony Staffieri: From low latency to faster speeds to more capacity to.

Anthony Staffieri: To start, we'll use the technology to offer a dedicated lane for first responders to have priority on the network. Over time, it will be a meaningful solution for our business customers. Network Slicing will also help accelerate the expansion of Rogers 5G home internet. To get ahead of wildfire season, we installed AI cameras in the Okanagan Valley to help first responders monitor, detect, and prevent wildfires.

Anthony Staffieri: To start we'll use the technology to offer a dedicated lane for first responders to have priority on the network over time.

Anthony Staffieri: It will be a meaningful solution for our business customers network slicing will also help accelerate the expansion of Rogers five G home Internet.

Anthony Staffieri: To get ahead of wildfire season, we installed AI cameras in the Oaken Hagen Valley to help first responders monitor detect and prevent wildfires.

Anthony Staffieri: This important trial will help us understand how to use 5G technology, and soon satellite technology, to mitigate the devastating impact of climate change. We also announced a strategic partnership with CableLabs, a global tech organization, to launch CableLabs North at the Rogers campus in Calgary. CableLabs has been a crucial source of technological breakthroughs for the broadband industry, including DOCSIS 4 technology. It has brought together industry leaders like Comcast and Charter to develop scalable tech.

This important trial will help us understand how to use <unk> technology and soon satellite technology to mitigate the devastating impact of climate change.

Anthony Staffieri: We also announced a strategic partnership with cable lives a global Tech organization to launch cable labs, north at the Rogers campus in Calgary.

Anthony Staffieri: Cable labs has been a crucial source of technological breakthroughs for the broadband industry, including DOCSIS four technology. It has brought together industry leaders like Comcast and charter to develop scalable tech.

Anthony Staffieri: Rogers technologists will work with global industry partners to develop converged 5G and 10G solutions that ensure seamless connections for customers in and out of the home. As we look ahead to the launch of our 10G and DOCSIS IV Internet Roadmap, CableLabs North will be front and center.

Anthony Staffieri: Rogers Technologists will work with global industry partners to develop converged <unk> and <unk> solutions that ensure seamless connections for customers in and out of the home.

Anthony Staffieri: As we look ahead to the launch of our <unk> and DOCSIS four Internet roadmap cable labs, north will be front and center.

Anthony Staffieri: Taking a step back, I'm pleased with our consistent, sustained momentum. We have delivered strong results for nine straight quarters, and we have exceeded our Shaw merger target. At the one-year anniversary of the merger, I remain confident in our plan and proud of our team. I would like to thank our entire team for their continued commitment to driving growth and innovation. I now turn the call over to Glenn.

Anthony Staffieri: Taking a step back I am pleased with our consistent sustained momentum we have delivered strong results for nine straight quarters, and we've exceeded our shop merger targets at the one year anniversary of the merger I remain confident in our plan and proud of our team I would like to thank our entire team for their continued commitment.

Anthony Staffieri: Fitment to driving growth and innovation, let me now turn the call over to Glenn.

Glenn Brandt: Thanks, Tony. And good morning, everyone. Thank you for your time and attention this morning.

Glenn Brandt: Thanks, Tony and good morning, everyone. Thank you for your time and attention this morning.

Glenn Brandt: Rogers' first quarter results reflect another strong quarter of industry-leading growth and execution. Notably, it also marks the one year anniversary of closing our Rishaw transaction, and I am very pleased to report that we have very substantially outpaced our initial timeline for our cost synergy, deleveraging, and overall integration targets. We continue to execute well, including identifying opportunities to further improve operating performance, network and customer service reliability, and innovation in wireless. Against the backdrop of a highly competitive environment, we continue to lead with very strong year-over-year growth across subscriber net ads, service revenue, adjusted EBITDA, and ARPU.

Rogers first quarter results reflect another strong quarter of industry, leading growth and execution.

Glenn: Notably it also marks the one year anniversary of closing over Shaw transaction and I am very pleased to report that we have very substantially outpaced our initial time line for our cost synergy deleveraging and overall integration targets.

Glenn: We continue to execute well, including identifying opportunities to further improve operating performance network and customer service reliability and innovation.

Glenn: In wireless.

Glenn: Against the backdrop of a highly competitive environment, we continue to lead with very strong year over year growth across subscriber net adds service revenue adjusted EBITDA and <unk>.

Glenn: Our continued emphasis on our premium <unk> services and the Rogers brand and the value. These plans generate for our customers is reflected in our sustained growth and financial performance.

Glenn Brandt: Our continued emphasis on our premium 5G services and the Rogers brand, and the value these plans generate for our customers, is reflected in our sustained growth and financial performance. We have led on wireless operating and financial performance for nine consecutive quarters now, and not by accident. Wireless service revenue in the corridor grew 9%, and Postpaid Mobile Phone Customer Net Additions were $98,000, up 3,000 year over year on what was also a very strong prior year comparison. Importantly, and deliberately, the vast majority of our new customers were welcomed on our premium Rogers brand, which is fundamental to our operating strategy.

Glenn: We have led on wireless operating and financial performance for nine consecutive quarters, now and not by accident.

Glenn: Wireless service revenue in the quarter grew 9% and postpaid mobile phone customer net additions were 98000.

Glenn: <unk> 3000 year over year on what was also a very strong prior year comparative.

Glenn: Importantly, and deliberately the vast majority of our new customers were welcomed on our premium Rogers brand.

Glenn: Which is fundamental to our operating strategy.

Glenn: Overall mobile phone <unk> as reported was up more than 1% year over year.

Glenn: More striking on an organic basis adjusting for the impact of our Shaw mobile customers <unk> is up almost 3% year over year.

Glenn Brandt: Overall, mobile phone ARPU, as reported, was up more than 1% year over year. More strikingly, on an organic basis, adjusting for the impact of our Shaw mobile customers, ARPU is up almost 3% year over year. Once again, our disciplined focus on the Rogers brand is delivering leading market share and strong financial performance. Postpaid mobile phone churn in the quarter was 1.1%, up 31 basis points year over year.

Glenn: Once again, our disciplined focus on the Rogers brand is delivering leading market share and strong financial performance.

Glenn: Postpaid mobile phone churn in the quarter was one 1% up 31 basis points year over year.

Glenn: While churn remains elevated it is down from the prior quarter, both in absolute terms and in the amount of increase from the prior year comparative.

Glenn: These results reflect our continued disciplined balancing subscriber growth and financial performance.

And as a result, our wireless adjusted EBITDA is up 9% and our adjusted EBITA margin grew by 10 basis points year over year to 64%.

Glenn Brandt: While churn remains elevated, it is down from the prior quarter both in absolute terms and in the amount of increase from the prior year. These results reflect our continued discipline balancing subscriber growth and financial performance. And as a result, our wireless adjusted EBITDA is up 9%, and our adjusted EBITDA margin grew by 10 basis points year over year to 64%. Moving to our cable business, we continue to build momentum on subscriber loading both east and west and in and out of our wireline territory as we pursue growth in the 40% of Canadian homes not covered by our wireline footprint.

Glenn: Moving to our cable business, we continue to build momentum on subscriber loading both east and west and in and out of our wireline territory as we pursue growth in the 40% of Canadian homes, not covered by our by our wireline footprint.

Glenn: Leveraging our national capabilities from coast to coast, we are targeting to return our cable business back to organic revenue growth in the fourth quarter of this year.

Glenn: Cable revenue was up 93% year over year roughly doubled in scale as a result of the Shaw transaction.

Glenn Brandt: Leveraging our national capabilities from coast to coast, we are targeting to return our cable business back to organic revenue growth in the fourth quarter of this year. Cable revenue was up 93% year-over-year, roughly doubled in scale as a result of the Shaw transaction. Organically across the combined operations, underlying revenue is down 3% year over year, reflecting sustained promotional competition carried over at least in part from the 2023 holiday period through the first quarter.

Glenn: Organically across the combined operations underlying revenue is down 3% year over year.

Afflicting sustained promotional competition carrying over at least in part from the 2023 holiday period through the first quarter.

Glenn: Yes.

Glenn: Adjusted EBITDA also reflects the scale benefits of the Shaw acquisition.

Glenn: We're growing 97% year over year.

Glenn: On an organic basis cable's adjusted EBITDA was up 7% year over year against an already strong prior year comparative largely reflecting our substantial success driving cost synergies, which I will come back to shortly.

Glenn Brandt: Adjusted EBITDA also reflects the scale benefits of the Shaw acquisition, growing 97% year over year. On an organic basis, Cable's adjusted EBITDA was up 7% year over year against an already strong prior year comparison, largely reflecting our substantial success driving cost synergies, which I will come back to shortly. We are encouraged by our performance on Retail Intranet, Net Edition, which is starting to reflect the benefits of our growth strategy. Retail internet net additions were 26,000 in the first quarter, almost doubled from 14,000 in the prior year.

Glenn: We are encouraged by our performance on retail Internet net additions, which is starting to reflect the benefits of our growth strategy.

Glenn: Retail Internet net additions were 26000 in the first quarter.

Glenn: Almost doubled from 14000 in the prior year.

Glenn: And a very competitive environment, we are seeing growth driven by our diverse product capabilities and starting to grow customer additions in markets, where Rogers has not previously operated.

Offsetting the impact of competitive promotional pressure on revenue growth I am very happy to report that we have completed our cost synergy plan a full one year ahead of schedule.

Glenn: We exited the first quarter, having achieved our full $1 billion cost synergy target run rate within 12 months from acquisition rather than the original 24 month target.

Glenn Brandt: In a very competitive environment, we are seeing growth driven by our diverse product capabilities and starting to grow customer additions in markets where Rogers has not previously operated. Offsetting the impact of competitive promotional pressure on revenue growth, I am very happy to report that we have completed our cost synergy plan a full one year ahead of schedule. We exited the first quarter having achieved our full $1 billion cost synergy target run rate within 12 months from acquisition rather than the original 24-month target.

Glenn: Moreover, through the first full year of the <unk> acquisition.

Glenn: We have realized approximately $600 million of cost synergies in our reported results more than double our original one year target.

Glenn: These savings will continue to flow through our results in the coming quarters, providing further support for our industry, leading 56% cable margins, which are up 140 basis points against the prior year.

Glenn: Finally in our sports and media business media revenue was down 5% and adjusted EBITDA was down $65 million year over year.

Glenn Brandt: Moreover, through the first full year of the Shaw acquisition, we have realized approximately $600 million of cost synergies in our reported results, more than double our original one-year target. These savings will continue to flow through our results in the coming quarters, providing further support for our industry-leading 56% cable margin, which is up 140 basis points against the prior year. Finally, in our sports and media business, media revenue was down 5%, and adjusted EBITDA was down $65 million year over year.

Glenn: Most notably the year over year change reflects a very strong prior year comparative.

Glenn: Affecting media content revenue and cost as well as higher payroll expenses at the Toronto Blue Jays this year.

Glenn: Okay.

Glenn: At a consolidated level.

Glenn: Q1, total service revenue increased 31% and adjusted EBITDA was up by 34% driving our consolidated EBITDA margin up by 210 basis points year over year to 45%.

Glenn: Yeah.

Glenn: Capital expenditures were up 19% year over year to just over $1 billion.

Glenn: Most predominantly reflecting continued investment in our wireless and cable networks to support our growth priorities.

Glenn Brandt: Most notably, the year-over-year change reflects a very strong prior-year comparative affecting media content revenue and cost, as well as higher payroll expenses at the Toronto Blue Jays this year. At a consolidated level, Q1 total service revenue increased 31 percent and adjusted EBITDA was up by 34 percent, driving our consolidated EBITDA margin up by 210 basis points year-over-year to 45 percent. Capital expenditures were up 19% year over year to just over $1 billion.

Glenn: We also saw an increase in our in our sports and media capital spend as we completed the majority of the second and final year of renovations at the Rogers Center.

Glenn: Early feedback from fans and players has been exceptional.

Glenn: While capital expenditures did grow capital intensity declined by approximately 170 basis points versus the prior year to approximately 21, 6%.

Glenn: And after tax free cash flow grew 58% year over year to $586 million.

Turning to the balance sheet at March 31, we had $4 6 billion of available liquidity, including $800 million in cash and short term deposits and $3 8 billion available under our bank credit facilities.

Glenn Brandt: Most predominantly reflecting continued investment in our wireless and cable networks to support our growth priorities. We also saw an increase in our sports and media capital spend as we completed the majority of the second and final year of renovations at the Rogers Center. Early feedback from fans and players has been exceptional.

Our weighted average interest rate on all borrowings is below four 8%, which is down from four 9% at December 31, 2023 and.

Glenn: And our weighted average term to maturity is 11 years.

Glenn: Both measures favorably impacted by our very successful bond financing completed in February.

Glenn Brandt: While capital expenditures did grow, capital intensity declined by approximately 170 basis points versus the prior year to approximately 21.6%. And after tax-free cash flow grew 58% year-over-year to $586 million. Turning to the balance sheet, at March 31st, we had $4.6 billion of available liquidity, including $800 million in cash and short-term deposits and $3.8 billion available under our bank credit facility. Our weighted average interest rate on all borrowings is below 4.8%, which is down from 4.9% at December 31, 2023, and our weighted average term to maturity is 11 years.

Glenn: Yeah.

Glenn: Our four seven times debt leverage ratio at quarter end was flat to year end 2023, notwithstanding seasonal working capital and spectrum investments made in the first quarter.

Glenn: Our target is to reduce leverage by roughly half a turn each year on average supported by a combination of earnings growth available free cash flow and proceeds from asset sales.

Glenn: We have processes currently underway to sell targeted noncore assets predominantly real estate assets, which are at various stages of progress <unk> consideration.

Glenn: And we do anticipate completing sales in 2024.

Glenn: While taking longer than originally anticipated as a result of softness in the current real estate market ahead of anticipated interest rate reductions. We remain committed to this initiative and we are being diligent to ensure we maximize proceeds.

Glenn Brandt: Both measures were favorably impacted by our very successful bond financing completed in February. Our 4.7 times debt leverage ratio at quarter end was flat to year end 2023, notwithstanding seasonal working capital and spectrum investments made in the first quarter. Our target is to reduce leverage by roughly half a turn each year on average, supported by a combination of earnings growth, available free cash flow, and proceeds from asset sales. We have processes currently underway to sell targeted non-core assets, predominantly real estate assets, which are at various stages of progress or consideration. And we do anticipate completing sales in 2024, although it may take longer than originally anticipated as a result of softness in the current real estate market ahead of anticipated interest rate reduction.

Glenn: In the meantime, the combined effect of our December 2023 sale of our Cogeco Holdings and our February 2024 U S dollar bond issue.

Glenn: Both of which were used together with other available funding to repay a combined $5 billion of our Shaw related bank term loans.

Glenn: Has lowered our 2023 annual interest cost by approximately $100 million in turn helping free cash flow.

Glenn: Finally, we are reaffirming all of our 2024 guidance range targets.

Glenn: This includes service revenue growth of 8% to 10%.

Glenn: Adjusted EBITDA growth of 12% to 15%.

Capital expenditures of three eight to 4.0 or $1 billion.

Glenn: And free cash flow in the range of $2 $9 billion to $3 1 billion.

Our industry best outlook reflects our confidence in continued strong execution and world class assets.

Glenn Brandt: We remain committed to this initiative, and we are being diligent to ensure that we maximize proceeds. In the meantime, the combined effect of our December 2023 sale of our Kojico holdings and our February 2024 US dollar bond issue, both of which were used together with other available funding to repay a combined $5 billion of our Shah-related bank term loans, has lowered our 2023 annual interest costs by approximately $100 million, in turn helping free cashflow.

Speaker Change: Let me conclude by joining Tony and thanking our entire team here at Rogers from coast to coast.

Our employees remain focused and committed to serving our customers with our collective passion to grow and innovate for the benefit of all Canadians.

Speaker Change: Thank you for your time this morning, and with that area can we please commence with the Q&A. Thank you.

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, you'll hear atone acknowledging your request.

Glenn Brandt: Finally, we are reaffirming all of our 2024 guidance range targets. This includes service revenue growth of 8 to 10 percent, adjusted EBITDA growth of 12% to 15%, capital expenditures of $3.8 to $4.0 billion, and free cash flow in the range of $2.9 billion to $3.1 billion.

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

Our first question comes from Sebastiano Petti of J P. Morgan. Please go ahead.

Sebastiano Petti: Hi, Thanks for taking the question a solid internet results in the first quarter.

Glenn Brandt: Our industry-best outlook reflects our confidence in continued strong execution and world-class assets. Let me conclude by joining Tony in thanking our entire team here at Rogers from coast to coast. Our employees remain focused and committed to serving our customers with a collective passion to grow and innovate for the benefit of all Canadians. Thank you for your time this morning, and with that, Ariel, can we please commence the Q&A? Thank you.

Sebastiano Petti: If perhaps you can give us a little bit of color around the <unk>.

Sebastiano Petti: I guess the way to describe it in footprint of our income than growth in the market within the 60% of homes that you do pass versus that.

Sebastiano Petti: Remaining 40% that youre kind of pushing into with perhaps SWA any tpa et cetera.

Sebastiano Petti: Could maybe unpack what you saw within the first quarter, we had the benefit in either I guess cohort and then maybe how you're thinking about the progression of Internet net adds over the course of the year.

Operator: Thank you. We will now begin the question and answer session. To join the question queue, you may press star, then 1 on your telephone keypad. You will hear a tone 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 2.

Sebastiano Petti: Yes.

Sebastiano Petti: Those two two different buckets, if you will.

Speaker Change: And then the other question that I did have.

Speaker Change: What's more.

Speaker Change: Guards to just the competitive environment, obviously, the ARPA growth was pretty strong.

Speaker Change: On the wireless side.

Speaker Change: How are you thinking about Rogers go to market strategy.

Speaker Change: The ability to continue to drive <unk> growth given the backdrop, obviously you would have had a nice tailwind.

Speaker Change: From converting over the shock subs.

Sebastiano Petti: Hi, thanks for taking the time to answer the question. Solid Internet results in the first quarter. I was wondering if perhaps you could give us a little bit of color around the, I guess the way to describe it, infoprint or incumbent growth in the market within the 60% of homes that you do pass versus that, you know, remaining 40% that you're, you know, kind of pushing into with perhaps FWA, maybe TPA, etc. So if you could maybe unpack what you saw within the first quarter, the benefit in either, I guess, cohort, and then maybe how you're thinking about the progression of internet net ads over the course of the year, you know, in those two, you know, two different buckets, if you will. And then there was another question that I did have.

Speaker Change: Two of the Rogers brand than any other levers that we should perhaps be thinking about.

Speaker Change: As well on the wireless RP side. Thank you so much.

Speaker Change: As Shannon. Thank you for the question on the first one in terms of.

Speaker Change: Excuse me.

Speaker Change: The Internet net adds.

It came from a number of different initiatives.

Speaker Change: Both.

Shannon: You described it in footprint or on net for our wireline business.

Shannon: Well as some from the launch of our fixed wireless access product.

Shannon: We're not disclosing the split on those but let me say our strategy on this has been clear on what youre seeing in the first quarter.

Shannon: Our continuation of the Green shoots clearly in our.

Shannon: Wireline cable footprint. The intent was always really two fold in the west focus on gross adds and you see that coming through through a number of different initiatives.

Anthony Staffieri: With more in regards to just the competitive environment, obviously, ARPU growth is pretty strong on the wireless side. How are you thinking about Rogers' go-to-market strategy and the ability to continue to drive ARPU growth given the backdrop? Obviously, you have had the nice tailwind from converting over the Shaw subs to the Rogers brand, but there are other levers that we should perhaps be thinking about as well on the wireless ARPU side. Thank you.

Shannon: <unk> and.

Shannon: Early days, but we like what we see in that market in the east it's been about churn reduction.

Shannon: And.

Shannon: Early initiatives are giving us.

Shannon: Solid results on that and so we like what we see there.

Shannon: As you know our wireline footprint covers about two thirds of Canadian households for the other one third we have a two pronged strategy. One was the launch of fixed wireless access.

Shannon: And the launch of that product has a has.

Anthony Staffieri: Sebastiano, thank you for the question. On the first one, in terms of [inaudible] Excuse me, the internet net ads, it came from a number of different initiatives, both, as you described it, in footprint or on net for our wireline business, as well as some from the launch of our fixed wireless access product. We're not disclosing the split on those, but let me say, you know, our strategy on this has been

Shannon: <unk> has been quite terrific.

Shannon: And it really speaks to the quality of the product itself in terms of how it performs for a home internet and including video streaming, but secondarily, the ease of buying and setting up of the product is something thats really resonating with consumers and so as we focus on that one.

Shannon: Their territory, it's been extremely helpful and there are certain use cases.

Anthony Staffieri: And what you're seeing in the first quarter, our continuation of the green shoots, clearly in our wireline cable footprint, the intent was always really twofold. In the West, focus on gross ads, and you see that coming through a number of different initiatives and early days, but we like what we see in that market. In the East, it's been about churn reduction, and early initiatives are giving us solid results on that, and so we like what we see there. As you know, our wireline footprint covers about two-thirds of Canadian households. For the other one-third, we have a two-pronged strategy.

Shannon: It's also.

<unk> been helpful.

Shannon: New to Canada for example, as as folks get here and are looking to get set up certainly theyre looking to assume card in a smartphone but home Internet is top of mind and this is something that we've been able to add to our.

Shannon: Suite of offerings to make it easy for that segment of the market.

Shannon: We've also started although Q1 was very very early.

Shannon: The wholesaling of Internet to bundle it with our national wireless offering in the one third.

Shannon: Territory, where we don't have.

Anthony Staffieri: One was the launch of fixed wireless access, and the reception of that product has been quite terrific. And it really speaks to the quality of the product itself in terms of how it performs for home Internet, including video streaming. But secondarily, the ease of buying and setting up the product is something that's really resonating with consumers. And so, as we focus on that one-third territory, it's been extremely helpful. And there are certain use cases where it's also been helpful, new to Canada, for example, as folks get here and are looking to get set up. Certainly, they're looking for a SIM card and a smartphone.

Shannon: Wireline assets.

Shannon: Early days on that and.

Shannon: As you would've seen in the fourth quarter, we purchased <unk> to facilitate that strategy.

Shannon: And that is.

Shannon: Ramping up nicely as well.

Shannon: Second part of your question relates to the competitive intensity in <unk>.

Shannon: I continue as we look to some of the offers and that are in marketplace that were in Q4 continued into Q1.

Shannon: Revenue to reemphasize that some of those offers are focused on a certain segment of the market and we're playing a balanced portfolio of game, we will compete aggressively with some of those offers and what I would call the flanker.

Anthony Staffieri: But home Internet is top of mind, and this is something that we've been able to add to our suite of offerings to make it easy for that segment of the market. We've also started, although Q1 was very, very early, the wholesaling of the Internet to bundle it with our national wireless offering in the one-third of the territory where we don't have wireline assets. Early days on that, and as you would have seen in the fourth quarter, we purchased CommWave to facilitate that strategy.

Shannon: Segment of the market, but we continue to stay focused so that the vast vast majority of our net adds are on the Rogers premium brand and what we're seeing work nicely as customers wanting to move from <unk> to <unk> with our $50 entry price points.

Shannon: It's been a real catalyst for <unk> growth overall in our portfolio. So as we look to the rest of the year, we will continue with that strategy and as consumers look to upgrade their phones and want to get on the best <unk> network.

Anthony Staffieri: And that is ramping up nicely as well. The second part of your question relates to competitive intensity and ARPU. I continue, you know, as we look at some of the offers that are in the marketplace that were in Q4, continued into Q1, I continue to re-emphasize that some of those offers are focused on a certain segment of the market, and we're playing a balanced portfolio game. We'll compete aggressively with some of those offers in what I would call the flanker segment of the market, but we continue to stay focused so that the vast, vast majority of our net ads are on the Rogers premium brand.

Shannon: What we will continue to execute on so simple as that.

Speaker Change: Great. Thanks.

Speaker Change: So bastian.

Speaker Change: Next question area.

Speaker Change: Our next question comes from Vince Valentini of TD Cowen. Please go ahead.

Vince Valentini: Thanks very much.

Vince Valentini: Start with a clarification first Glenn you said.

Vince Valentini: Interest costs of 100 million lower in 2023, I think Thats, what you said I'm not sure that's quite that low.

Glenn: Sure lower than they otherwise would be in 'twenty four from those initiatives Vince. So if I said 23 I misspoke. It's this year's interest costs will be down by $100 million as.

Anthony Staffieri: And what we're seeing work nicely is customers wanting to move from 4G to 5G with our $50 entry price points. That's been a real catalyst for ARPU growth overall in our portfolio. So as we look to the rest of the year, we'll continue with that strategy, and as consumers look to upgrade their phones and want to get on the best 5G network, that's what we'll continue to execute on. It's as simple as that.

Glenn: As a result of the interest savings from the Cogeco proceeds received in December.

Glenn: This money, we don't have to borrow and then also the $3 $4 billion Canadian we raised in February.

Glenn: We raise added about four 9% and it's paying back.

Operator: Thank you, Sebastiano. Next question, Ariel.

Glenn: Floating rate term loans that we put on for the acquisition of Shaw that were.

Vince Valentini: Our next question comes from Vince Valentini of TD Cowen. Please go ahead.

Glenn: <unk>.

Glenn: Sitting just over six 5%.

Glenn Brandt: Thanks very much. Maybe I can start with a clarification first. Glenn, you said... Interest costs $100 million lower in 2023? I think that's what you said. I'm not sure that's what you meant. Lower than they otherwise would be in 24 from those initiatives, Vince. So if I said 23, I misspoke.

Glenn: And so the interest savings on that for the calendar year. We did this in February as another $50 million on top of the roughly $50 million, we save from the Cogeco proceeds so 2020 for interest expenses down.

Glenn: But.

Glenn: Yes down versus what would've been otherwise your full year 2000, and that's right costs are going to be higher than full year 2003, and they have to be <unk>.

Speaker Change: Absolutely absolutely right, but those initiatives have lowered what otherwise would have gone into our results and what would be part of which will be reflected in guidance. We knew about cogeco, we had not baked in the lower borrowings in February from the bond deal Alright.

Glenn Brandt: This year's interest costs will be down by $100 million as a result of the interest savings from the COJAGO proceeds received in December. That's money we don't have to borrow. And then there is also the $3.4 billion Canadian we raised in February. We raised that at about 4.9%, and it's paying back floating rate term loans that we put on for the acquisition of Shaw that were sitting at just over 6.5%. And so the interest savings on that for the calendar year.

Glenn: Alright.

Speaker Change: The second question, maybe for you as well, Brian, but whoever wants to chime in.

Brian: I think your underlying.

Speaker Change: <unk> performance.

Speaker Change: Is extremely encouraging given what we've seen in the market in terms of advertised pricing.

Speaker Change: You're doing a great job migrating and focusing on the Rogers brand, but I.

Glenn Brandt: We did this in February, which is another $50 million on top of the roughly $50 million we saved from the Cogeco proceeds. So 2024 interest expense is down. Yes, down versus what it would have been otherwise. Your full year 24 interest costs are going to be higher than full year 23.

Speaker Change: I think you would admit you do have some customers coming in at these lower end.

Speaker Change: <unk> prices, so to be able to offset that and show ARPA growth. The way you are is great I, just don't want that to be overshadowed by these these subscriber write downs I mean, it makes sense, if they're nonperforming subscribers.

Glenn Brandt: They have to be

Speaker Change: Does that have been discontinued.

Glenn Brandt: Oh absolutely, right, but those initiatives have lowered what otherwise would have gone into our results and what would be part of which would be reflected in guidance. Although we knew about COGICO, we had not baked in the lower borrowings in February from the bond deal.

Speaker Change: It's logical but it would really help us if you could adjust for it like if that one 4% <unk> growth you put up if you didn't have the 166000 subscriber write downs would that still have been slightly positive.

Speaker Change: Absolutely it would still live in positive Vince we are.

Glenn Brandt: Perfect. The second question may be for you as well, Glenn, but whoever wants to chime in, I think your underlying Arpoo performance is encouraging given what we've seen in the market in terms of advertised pricing. I know you're doing a great job migrating and focusing on the Rogers brand, but, I think you'd admit you do have some customers coming in at these lower-end flanker prices. So to be able to offset that and show ARPU growth the way you are is great.

Speaker Change: We have consistently had ARPA growth.

Speaker Change: On the on the right side of zero for the last several quarters without those write downs it still would've been positive.

Speaker Change: And on a on an organic basis, we still would've had growth north of 1% would have been in the range of one 5% or so.

Speaker Change: Those write downs the write downs are just a reflection of how we're going to market. We've discontinued those those business lines and just to be able to clarify and to be clear, we put that in our in our release, but.

Glenn Brandt: I just don't want that to be overshadowed by these subscriber write-downs. I mean, it makes sense if they're non-performing, you know, subscribers that are, you know, businesses that have been discontinued. It's logical, but it would really help us if you could adjust for it. Like, if that 1.4% ARPU growth you put up, if you didn't have the 166,000 subscriber write-down, would that still have been slightly positive, do you think? Absolutely not.

Speaker Change: Very clearly, yes, we would have been positive without without those write downs brands. That's very helpful. Thank you. Thank you. Thank you Vince next question area. Our next question comes from Maher Yaghi of Scotiabank. Please go ahead.

Maher Yaghi: Great. Thank you for taking my question.

Maher Yaghi: I wanted to congratulate you on attending your billion dollar cost synergies well ahead of plan now Tony I know you know.

Maher Yaghi: Of course some.

Maher Yaghi: Some reason probably you don't want to keep updating us on those synergies going forward, but.

Glenn Brandt: It would still have been positive, Vince. We have consistently had ARPU growth on the right side of zero for the last several quarters. Without those write-downs, it still would have been positive. And on an organic basis, we still would have had growth north of 1%; it would have been in the range of 1.5% or so without those write-downs. The write-downs are just a reflection of how we're going to market. We've discontinued those business lines. And just to clarify and to be clear, we put that in our release. But very clearly, yes, we would have been positive without those write-downs.

Maher Yaghi: Can you tell us what other additional.

Maher Yaghi: Ah projects you could be working on to improve on that billion dollar cost cutting efforts, which has been significant and.

Maher Yaghi: How should we think about the margins going forward as you continue to break the silos.

Maher Yaghi: Yeah.

Maher Yaghi: Bringing together operating systems et cetera, et cetera will we continue to see a margin improvement on the cable side or you will use most of those.

Glenn Brandt: That's very helpful. Thank you. Thank you, Vince. Next question, Ariel?

Maher Yaghi: For your go to market strategy and growing the subscriber base on the cable side like you said then.

Operator: Our next question comes from Maher Yaghi of Scotiabank. Please go ahead.

Maher Yaghi: <unk> Carless et cetera.

Speaker Change: Very good question there.

Maher Yaghi: Great, thank you for taking my question. I wanted to congratulate you on attaining your billion dollar cost synergies well ahead of schedule. Now, Tony, I know, you know, for some unknown reason, you probably don't want to keep updating us on those synergies going forward, but can you tell us what other additional projects you could be working on to improve on that billion dollar cost cutting effort, which has been significant? You know, how should we think about margins going forward as you continue to break down the silos and, and, you know, kind of bring together operating systems, etc, etc.

Speaker Change: A couple of things here that I'll unpack for you.

Speaker Change: What youll see from US going forward is a couple of things.

Speaker Change: Having hit the $1 billion of synergy savings.

Speaker Change: Meaning we're taking our foot off the gas pedal in terms of continued efficiency improvements and so.

Speaker Change: Rather than reported in the context of a $1 billion. What it grows two youll see that come through in expanding margins and Glenn will provide a little more color for that in a moment.

Glenn: And so we continue to see opportunities in working with our vendors.

There are still some systems and integration projects that need completion on those will provide some additional synergies.

Glenn: But the other piece we're focused on are the revenue synergies and what we're seeing is very good traction.

Maher Yaghi: Will we continue to see margin improvement on the cable side, or will you use most of those to go in for your go-to-market strategy of growing the subscriber base on the cable side, like you said, and, you know, fixed wireless, etc.

Glenn: In terms of.

Glenn: Enterprise our business space.

Glenn: Particularly in the west as we bring together, our wireless and wireline offering in.

In a complete bundled package for businesses and.

Anthony Staffieri: Very good question, Mayor. A couple of things here that I'll unpack for you, as what you'll see from us going forward are a couple of things. Having hit the $1 billion of synergy savings doesn't mean we're taking our foot off the gas pedal in terms of continued efficiency improvements. And so, rather than report it in the context of a billion and what it grows to, you'll see that come through in expanding margins, and Glenn will provide a little more color on that in a moment.

Glenn: And so we see that segment of the market in terms of geography, probably our fastest growing right now and so that revenue synergy is certainly one.

The second piece relates to new construction.

Glenn: While it has slowed a bit the pace of new construction, particularly in major markets.

Like Vancouver, and Toronto continues to be strong and we said we would over index in that space in the west and our strategies. There are starting to yield good results that youll see come through.

Glenn: In future quarters.

Anthony Staffieri: And so, we continue to see opportunities for working with our vendors. There are still some systems and IT integration projects that need completion, and those will provide some additional synergies. But the other piece we're focused on is revenue synergies, and what we're seeing is very good traction in terms of enterprise or business space, particularly in the West, as we bring together our wireless and now wireline offering in a complete bundle package for businesses.

Glenn: It's a combination of both the revenue side as well as the cost side that youll continue to see it.

Glenn: In quarters, both through margin expansion, but also as we talked about exiting the year with topline growth in cable.

Glenn: Those pieces I talked about are going to be crucial.

To that strategy and that's what we're focused on executing on.

Glenn: And then <unk>.

Glenn: Just filling in the remaining targets that we'll be going after we have largely completed the people side of of our cost synergy targets and by far that's the category that we have accelerated the most.

Anthony Staffieri: And so, we see that segment of the market, in terms of geography, probably our fastest growing right now. And so, that revenue synergy is certainly one. The second piece relates to new construction. While it has slowed a bit, the pace of new construction, particularly in major markets like Vancouver and Toronto, continues to be strong. And we said we would over-index in that space in the West, and our strategies there are starting to yield good results that you'll see come through in future quarters.

Glenn: It had the benefit of driving dollar cost savings it had the larger benefit of moving through the integration of the combined operations faster and settling people into their new responsibilities quicker and so.

Glenn: That's by far the largest piece that we've accelerated in terms of targets that we're still looking to get at.

Glenn: I'll highlight a few of the media content costs, we have started on.

Anthony Staffieri: So, it's a combination of both the revenue side as well as the cost side that you'll continue to see in quarters, both through margin expansion, but also as we talk about exiting the year with top-line growth in cable. Those pieces I talked about are going to be crucial to that strategy, and that's what we're focused on executing on.

Glenn: But there is still more to more to factor in over the coming.

Glenn: I'll say one to two years is some of it is going to take a longer effort in terms of reflecting.

Glenn: Changing viewing habits and fully rolling those in.

Glenn: One of the other initiatives that I had highlighted early on was the prevalence of fiber that we picked up particularly in the west with the acquisition of Shaw and the ability to replace microwave backhaul with fiber connected backhaul over more of our <unk>.

Glenn Brandt: And then, Mayor, just filling in on the remaining targets that we'll be going after. We have largely completed the people side of our cost synergy targets, and by far, that's the category that we have accelerated the most. It had the benefit of driving dollar-cost savings. But it had the larger benefit of moving through the integration of the combined operations faster and settling people into their new responsibilities quicker.

Glenn: Towers that.

Glenn: As is underway, but it's it's earlier days.

Glenn: <unk>.

Glenn: As we move that through over the coming year, I'm anticipating pulling out a significant number of.

Glenn: Significant amount of cost for that microwave spectrum backhaul.

Glenn: And replacing it with owned fiber infrastructure and so that will involve construction over the next one to two years.

Glenn Brandt: And so that's by far the largest piece that we've accelerated. In terms of targets that we're still looking to get at, I'll highlight a few of the media content costs we have started on, but there's still more to factor in over the coming, I'll say, one to two years. Some of it's going to take a longer effort in terms of reflection, changing viewing habits, and fully rolling those in. One of the other initiatives that I had highlighted early on was the prevalence of fiber that we picked up, particularly in the West, with the acquisition of Shaw, and the ability to replace microwave backhaul with fiber-connected backhaul over more of our cell towers.

Glenn: And then beyond as we build towers.

Glenn: And then.

Glenn: I think in terms of where I anticipate margins going over time, particularly as we reverse the current negative.

Glenn: Trend on cable revenue I expect that we will see some additional upside on our cable margins.

Glenn: We.

We're at 56% now I think over time, you could see that move up by.

Glenn: Somewhere in the range of a number another one or 2%.

Glenn: As we settle into revenues and continue to drive some of those cost savings.

Glenn Brandt: That is underway, but it's early days. And as we move that through over the coming year, I'm anticipating pulling out a significant number of, a significant amount of costs for that microwave spectrum backhaul and replacing it with our own fiber infrastructure. And so that will involve construction over the next one to two years and beyond as we build towers. And then, in terms of where I anticipate margins going over time, particularly as we reverse the current negative trend on cable revenue, I expect that we will see some additional upside on our cable margins.

Speaker Change: That's great. Thank you.

Speaker Change: Thanks, Mark Thanks, Mary next question area. Our next question comes from David Barden of Bank of America. Please go ahead.

Speaker Change: Hi, good morning, its Matt sitting in for Dave Thanks for taking the questions.

Matt: First of all I just.

Matt: Wanted to clarify on the <unk>.

That you are running ahead of that.

Matt: Piece on the synergy realization.

Matt: In relation to when.

Matt: When you set guidance.

Matt: Was it contemplated at that time that you would be.

Matt: A year ahead on realizing the synergies.

Matt: Or should we be expecting that as you work to those items that Glenn just kind of laid out.

Glenn Brandt: We're at 56% now, and I think over time you could see that move up by somewhere in the range of another one or two percent as we settle in revenues and continue to drive some of those cost savings.

That would be kind of incremental to what you were contemplating when guidance was provided and then just secondly on a different topic on the fixed wireless access I totally understand you don't want to give quarterly updates on the new launch and how it's going.

Glenn Brandt: That's great. Thank you.

Operator: Thanks, Mayor. Thanks, Mayor. Next question, Ariel.

Matt: I was curious if you'd be.

Matt: Willing or able to kind of quantify how large an opportunity you think it actually is.

David Barden: Our next question comes from David Barden of Bank of America. Please go ahead.

Matt: Other operators look at it as excess capacity and they have a kind of a clear line of sight as to what that capacity is and how many subscribers can fill it up. So if there is any color that you can provide along those lines would be helpful.

Unknown Speaker: Hi, good morning. It's Matt sitting in for Dave.

Unknown Speaker: Thanks for taking the questions. First of all, I just wanted to clarify on the, you know, it's great that you're running ahead of the pace on the Synergy Realization. In relation to when you said guidance, you know, was it contemplated at that time that you would be, you know, a year ahead in realizing the synergies? Or should we be expecting that as you work through those items that Glenn just kind of laid out, that would be kind of incremental to what you were contemplating when guidance was provided?

Speaker Change: Thank you Matt on the on your first question in terms of running running ahead of the original pace.

Matt: I've been signaling through Q3, and Q4 last year.

Matt: That we're very happy with the accelerated pace.

Matt: And.

Matt: Im not surprised that a year in we have have met that $1 billion target that was a critical target for us and we were focused on meeting that sooner rather than later so the quick answer to your question is not a surprise to us and would have been factored in as we were we were rolling out our guidance and which is why we've reaffirmed guidance.

Unknown Speaker: And then, on a different topic, on fixed wireless access, I totally understand you don't want to give quarterly updates on the new launch and how it's going, but I was curious if you'd be willing or able to kind of quantify how large an opportunity you think it actually is. You know, other operators look at it as excess capacity, and they have a kind of clear line of sight as to what that capacity is and how many subscribers can fill it up. So if there's any color that you can provide along those lines, it would be helpful.

Matt: Again this.

Matt: With this release.

Matt: For the year so.

Speaker Change: That answers that question.

Speaker Change: On the second part Matt.

Speaker Change: In terms of fixed wireline wireless access in the market, we see for that we're going to let the customers decide in terms of what works best for them.

Anthony Staffieri: Thank you, Matt. On your first question, in terms of running ahead of the original pace, I've been signaling through Q3 and Q4 last year that we're very happy with the accelerated pace, and I'm not surprised that a year in, we have met that billion-dollar target. That was a critical target for us, and we were focused on meeting that sooner rather than later. So the quick answer to your question is not a surprise to us and would have been factored in as we were rolling out our guidance, which is why we've reaffirmed guidance again with this release for the year. So that answers that question.

Speaker Change: Depending on their particular use case.

Speaker Change: As we look to the potential demand for that we're comfortable we have the capacity for it particularly as we approach the.

Speaker Change: Get into the back half of the year and launch network slicing, that's going to allow us to have dedicated lanes for fixed wireless access users. So it doesn't congest our mobile smartphone users.

Speaker Change: Our other enterprise applications and so.

Speaker Change: We're comfortable we have the capacity to meet demand depending on the customers that choose that but.

Anthony Staffieri: On the second part, Matt, in terms of fixed wireless access and the market we see for that, we're going to let the customers decide in terms of what works best for them depending on their particular use case. As we look to the potential demand for that, we're comfortable we have the capacity for it, particularly as we approach the get into the back half of the year and launch network slicing, that's going to allow us to have dedicated lanes for fixed wireless access users so it doesn't congest our mobile smartphone users or other enterprise applications and so we're comfortable we have the capacity to meet demand depending on the customers that choose that, but as well we'll continue to focus on the ability to sell our wireline product, but also wholesale wireline in those territories, so we just think about it as we can now address a hundred percent of homes passed and we have three technologies to get there, our online cable fiber network, wholesaling, coax from other players, and then fixed wireless access.

Speaker Change: As well.

Speaker Change: We will continue to.

Speaker Change: Focus on the ability to sell our wireline product.

Speaker Change: But also wholesale wireline in those territories. So we just think about it as we can now address 100% of homes passed and we have three technologies to get there are online.

Speaker Change: Cable fiber network.

Wholesaling.

Speaker Change: Coax.

Speaker Change: From other players and then fixed wireless access.

Speaker Change: Okay. Thanks, a lot guys.

Speaker Change: Great. Thanks, Matt next question Ariel.

Speaker Change: Our next question comes from Tim Casey of BMO. Please go ahead.

Speaker Change: Thanks.

Speaker Change: Tony.

Tim Casey: Just talk a little bit about cable I'm, just wondering if you could talk about.

Tim Casey: With some of the revenue.

Tim Casey: Erosion you are seeing on the minus 3% is is any of that due to pricing and.

Tim Casey: If you could unpack as some of that just price.

Tim Casey: Price discounting.

Tim Casey: By Bell or is there also bundle credits that are going through as you in your in your footprint you you offer more.

Anthony Staffieri: Thanks a lot, guys. Great. Thanks, Matt. Next question, Ariel.

Tim Casey: Wireless wireline bundles to retail customers just wondering if you could.

Tim Casey: Maybe shed some light and then secondly, when you talked about the construction opportunities at West is this related to.

Operator: Our next question comes from Tim Casey of BMO. Please go ahead.

Tim Casey: Thanks. Tony, I could just talk a little bit about cable. I'm just wondering if you could talk about some of the revenue erosion you're seeing on the minus 3%. Is any of that due to pricing? And if you could unpack, is some of that just price discounting by Bell? Or is it also bundle credits that are going through as you in your in your footprint, do you offer more wireless wireline bundles to retail customers?

Tim Casey: What you used to talk about how Shaw had laid fiber too.

Tim Casey: To the street, but not to the building since that what Youre talking about is sort of completing the last mile. There. Thanks.

Tim Casey: Okay.

Tim Casey: With the second part.

Tim Casey: The short answer is yes, that's a big component of it and so but there is also new construction thats going on as well that is nearing completion and so we're aggressively chasing those in terms of penetration on a building by building basis.

Tim Casey: Just wondering if you could, David, shed some light on this. And then secondly, when you talked about the construction opportunities at West, is this related to what you used to talk about how Shaw had laid fiber to the street but not to the buildings? Is that what you're talking about, sort of completing the last mile there? Thanks.

Tim Casey: But absolutely either bringing.

Tim Casey: Fiber up to the suites or from the curb.

Tim Casey: To the buildings.

Tim Casey: That is definitely a strategy that we've been executing on.

Tim Casey: In terms of the first part of your question the revenue erosion that we're seeing in cable truly a few different things that are going on there.

Anthony Staffieri: And I'll start with the second part. The short answer is, yes, that's a big component of it. And so, but there's also new construction that's going on as well that is nearing completion, and so we're aggressively chasing those in terms of penetration on a building by building basis, but absolutely bringing fiber up to the suites or from the curb to the buildings. That is definitely a strategy that we've been executing on.

Tim Casey: If you were to look at now.

Tim Casey: Notwithstanding what I would describe as healthy competition in the Internet space, We continue to post positive <unk> growth in Internet.

Tim Casey: And so and that really speaks to.

Tim Casey: Our ability to continue to offer.

Tim Casey: One gig speeds plus.

Tim Casey: Throughout our entire base and the team has been.

Tim Casey: Actively working and doing a good job in executing the upsell of customers too to that product and so much like you see on the wireless side, where we've had good base management in moving customers too.

Anthony Staffieri: In terms of the first part of your question, the revenue erosion that we're seeing in cable, there are really a few different things that are going on there. If you were to look at, notwithstanding what I would describe as healthy competition in the Internet space, we continue to post positive ARPU growth on the Internet. And so, and that really speaks to our ability to continue to offer one gigabit speeds plus throughout our entire base.

Tim Casey: Higher speeds and tears Youre seeing the same thing happening on the cable side as well.

Offsetting that is quite frankly, the cord cutting youre seeing on video and so.

Tim Casey: That is providing what I would say natural headwinds against the.

Tim Casey: Against the revenue line, but keep in mind that comes at a much lower margin than the internet upside, we see and so that's why one of the factors synergies are certainly one but the mix shift of predominantly more internet revenue vis vis video revenue.

Anthony Staffieri: And the team's been actively working and doing a good job of executing the upsell of customers to that product. And so, much like you see on the wireless side, where we've had good base management in moving customers to higher speeds and tiers, you're seeing the same thing happening on the cable side as well. Offsetting that is, quite frankly, the cord cutting you're seeing on video. And so that is providing what I would say natural headwinds against the revenue line.

He is providing.

Tim Casey: Support for our margin expansion in the cable business and so.

Tim Casey: While we are focused on returning to topline growth.

Anthony Staffieri: But keep in mind, that comes at a much lower margin than the internet upside we see. And so that's why one of the factors, synergies are certainly one, but the mixed shift of predominantly more internet revenue vis-a-vis video revenue is providing support for our margin expansion in the cable business. And so while we're focused on returning to top-line growth, the decline is predominantly coming from the video side declines.

Tim Casey: The decline is predominantly coming from from the video side declines.

Tim Casey: Great.

Speaker Change: Thanks, Tim Thanks, Nick next.

Speaker Change: The next question area.

Speaker Change: Our next question comes from Stephanie price of CIBC. Please go ahead.

Stephanie Price: Good morning.

Stephanie Price: Free cash flow came in.

Stephanie Price: <unk> this quarter I'm just curious if you could talk about the drivers and how we should think that the cadence of free cash flow through the year.

Stephanie Price: Thanks, Stephanie I think.

Stephanie Price: It came in.

Stephanie Price: It came in stronger year over year I think.

Operator: Thanks, Tim. Our next question comes from Stephanie Price of CIBC. Please go ahead.

Speaker Change: I would say it's.

Speaker Change: It's where we would expect it to be given the guidance through the year.

Stephanie Price: Our next question comes from Stephanie Price of CIBC. Please go ahead. Good morning, free cash flow came in strong this quarter. Just curious if you could talk.

Speaker Change: We've if you look at where our capital spend is.

Speaker Change: It's.

Speaker Change: On an annualized basis, we're not far off from.

Speaker Change: The range, we've given maybe a little bit higher.

Anthony Staffieri: Thanks, Stephanie. I think it came in stronger year-over-year. I would say it's where we would expect it to be, given the guidance through the year. If you look at where our capital spend is, it's on an annualized basis. We're not far off from the range we've given, maybe a little bit higher. In the first quarter, which is usually a little bit slower for the winter months, we had a good construction season here through the winter, and so that allowed us to lean in a little more. We also had the finishing of the Rogers Centre, year two of the renovations, and so that was in the first quarter.

Speaker Change: In the in the first quarter, which is usually a little bit slower for for the winter months. We've had a good construction season here through the winter and so that allowed us to lean in a little more we also had the finishing up of the Rogers Center.

Speaker Change: A year or two of the renovations and so that was in the first quarter.

Speaker Change: I do.

Speaker Change: Don't read anything into the up or down on the free cash flow I think youll see us continue a pace and hit our guidance.

Speaker Change: And then on wireless churn at one 1% can you talk a little bit about how you see those metrics evolving over 2024, and the broader wireless pretty substantially here.

Anthony Staffieri: Stephanie, in terms of churn, the summary is we continue to see an environment where we'll have heightened churn. Certainly, in Q1, as you saw, many of the offers from Q4 continue into Q1.

Speaker Change: In terms of churn.

Speaker Change: The summary is we continue to see an environment where.

Speaker Change: We will have heightened churn certainly in Q1 as you saw.

Speaker Change: Any of the offers from Q4 continue into Q1, what you saw us.

Anthony Staffieri: What you saw is continued heightened churn, as Glenn pointed out, sequentially when you look at year-on-year increases, it came down in Q1 as some of that promotional activity subsided in and out of the quarter, but as we look to the rest of the year, we continue to see factors that would suggest heightened churn. A number of them are just the way the new-to-Canada segment works in terms of coming in and coming out, and that's a factor that's going to be a bit of a permanent input to increased churn.

Speaker Change: <unk> heightened churn as Glen pointed out.

Speaker Change: Sequentially when you look on year on year increases it came down in Q1.

Speaker Change: As some of that promotional activity subsided.

Speaker Change: In and out of the quarter, but as we look to the rest of the year.

Speaker Change: We continue to see factors that would suggest.

Speaker Change: Heightened churn.

Speaker Change: A number of them is the.

Speaker Change: Just the way the new to Canada segment works in terms of coming in coming out and that's a factor that's going to be.

Speaker Change: A permanent.

Speaker Change: Input to increase churn.

Speaker Change: And ease of switching is it's going to be another factor facilitated by E Sim as.

Anthony Staffieri: Ease of switching is going to be another factor facilitated by eSIM, as an example, and there are other factors that we see driving up churn, but it isn't something that we're necessarily concerned about. It actually continues to, and it's really a demonstration of the competitiveness in the market, and as customers decide to and have choices, we do well in that environment, so we continue to look at it on a net basis and ensure that the cost of acquisition costs continue to come down so that even in a higher churn environment, we have a very balanced approach to deliver industry-leading margins on the wireless portfolio.

Speaker Change: As an example, and there are other factors that we see driving of churn.

Speaker Change: But it isn't something that we're necessarily concerned about it actually.

Speaker Change: Continues to.

Speaker Change: And it's really a demonstration of the competitiveness in the market and as customers decide to.

Speaker Change: And have choices, we do well in that environment. So we continue to look at it on a net basis.

Speaker Change: And ensure that the cost of acquisition costs continue to come down so that even in a higher churn environment.

Speaker Change: We have a very balanced approach to deliver industry leading margins.

Speaker Change: The wireless portfolio.

Operator: Thanks, Stephanie. Next question, Ariel.

Speaker Change: Yeah.

Speaker Change: Thank you.

Speaker Change: Stephanie next question area. Our next question comes from Jerome Cabral of Chardan. Please go ahead.

Jerome Dubreuil: Our next question comes from Jerome Dubreuil of Desjardins. Please go ahead.

Anthony Staffieri: Hey, good morning. Thanks for taking my questions. The first one, you know, we're seeing reports of potential data center sales, so maybe just provide you an opportunity to comment on that. But, you know, some foreign telecom operators do see data centers as a way to offer maybe more end-to-end connectivity solutions and as an important part of digital infrastructure. If you can comment on the rational potential sale there, then my second one would be on the new immigration target by the federal government. If you can comment on the dynamics you are seeing on penetration in the future, just so we have a better idea of where net ads might be trending in the future, thank you.

Jerome Dubreuil: Hey, good morning, Thanks for taking my questions. The first one.

Jerome Dubreuil: We're seeing reports of potential data center sales. So maybe just provide you an unfortunately it would commenting on that but you know some boring telecom operator is they do see a data centers as a way to offer maybe more end to end connectivity solutions and gain important as part of digital infrastructure.

Jerome Dubreuil: He can comment on the rationale of potential sale there and then my second one would be on the new immigration target by the federal government. If you can comment.

Jerome Dubreuil: On the dynamics you are seeing on penetration in the future. Just so we have a better idea of where the net adds might be trending in the future. Thank you.

Anthony Staffieri: Thank you, Jerome. I'll start with the first one: there have been some media reports over the last month or so around a potential sale of our data centers. And so, you know, it's true; we are looking to raise about a billion dollars in asset sales, predominantly real estate. However, we are looking for interest in our data center business. The business that we're looking to sell is not one that would affect how we sell our wireless services or the end-to-end, as you say, data aspect of those services.

Speaker Change: Thank you Jerome I'll start with the first one on there were some media reports over the last month or so.

Speaker Change: Round, a potential sale of our data centers.

Speaker Change: And so it's true we are looking at raising about $1 billion in asset sales predominantly real estate. However, we.

Speaker Change: We are looking.

Speaker Change: Looking for for interest in our data center business the business that we're looking to sell is not.

Speaker Change: Not one that would affect how we sell our.

Speaker Change: Our wireless services or.

Speaker Change: The end to end as you as you say.

Speaker Change: Data aspect of those services.

Anthony Staffieri: It's an enterprise-type data center business that is really focused on third-party sales. We have our own data center requirements that we manage separately from that. We are, and we have undertaken a process to see if there are interested parties. We're taking our time with all of our asset sales, and I mentioned this in my comments. The interest rate environment has run with rates a little bit higher for a little bit longer than anticipated, and so that has had a slowing effect on the timing of the real estate sales, as well as the timing around the data centers.

Speaker Change: The enterprise type data center business that.

Speaker Change: <unk> is really focused on third party sales, we have our own.

Speaker Change: Data center requirements that we managed separately from that.

Speaker Change: We are.

Speaker Change: We have undertaken a.

Speaker Change: Process to see if there are interested parties, we're taking our time with all of our asset sales that I mentioned this.

Speaker Change: I think in my comments the interest rate environment.

Speaker Change: Has.

Speaker Change: One.

Speaker Change: With rates, a little bit higher for a little bit longer than anticipated and so.

Speaker Change: That has had a slowing effect on.

The timing for the real estate sales as well as the timing around around the data centers I do expect that we will have.

Anthony Staffieri: I do expect that we will have asset sales to announce this year. I'm hoping that we will have some interest, sufficient interest in the data centers. That might be one of the opportunities. That's as much as I'll say on that. And then on the immigration numbers. Yeah, on the immigration piece.

Speaker Change: Asset sales to announce this year I am hoping that we will have some interest sufficient inter.

Speaker Change: Interest in the data centers that might be one of the opportunities.

And that's as much as I'll say on that.

Speaker Change: Sure.

Speaker Change: And then on the on the immigration numbers on the immigration piece Jerome I would say it's important to set the context for you to look at total.

Anthony Staffieri: The immigration piece, Jerome, I would say it's important to set the context. If we're to look at total market growth for the industry, last year, it was over 5%, which was remarkable. As we look to the first quarter, which is the initial impact of some of the curbing of foreign students to Canada, we expect market growth to be about 4.6% for Q1. That would be our best estimate. As we look to the balance of the year, we continue to see likely growth, all things considered, in the 4% to 4.5% range, which continues to be extremely strong growth.

Speaker Change: Market growth for the industry last year, it was over 5%, which was remarkable as we look to the first quarter, which is the initial impact of some of the curbing of foreign students to Canada.

Speaker Change: We expect market growth to be about four 6% for.

Speaker Change: For Q1 would be our best estimate.

Speaker Change: As we look to the balance of the year, we continue to see.

Speaker Change: Likely growth all things considered in the four to four 5% range, which continues to be extremely strong growth I reemphasize the growth that you see in the market is really combination of two factors.

Anthony Staffieri: I want to re-emphasize that the growth that you see in the market is really a combination of two factors. Half of it, roughly, is from penetration gains, and then the other half relates to the "New to Canada" category. So it's important that you always look at it in that context.

Speaker Change: Half of it roughly is from penetration gains and then the other half relates to the new to Canada categories. So it is important.

Speaker Change: That you always look at it in that context.

Anthony Staffieri: Thank you. Great. Thank you. Yeah. Thanks, Jerome. Our next question comes from Batya Levi of UBS. Please go ahead. Great, thank you. I'm just going back to cable revenue declines.

Speaker Change: Yes.

Speaker Change: Great. Thank you, yes, thanks, Charl area, we're going to take two more quick questions. Please.

Speaker Change: Our next question comes from Betsy <unk> of UBS. Please go ahead.

Betsy: Great. Thank you just going back to the cable revenue can you provide more color on that.

Betsy: To get to growth in <unk> from about 3% declines now and well.

Operator: Our next question comes from Batya Levi of UBS. Please go ahead.

Betsy: Assuming that video will continue and how should we think about broadband net adds for the balance of alcohol.

Batya Levi: Okay, a couple of things there. In terms of the strategy to return cable to top line growth, it's really a combination of factors, some of which I've talked about, or maybe all of them. One is turning around our market share performance in our cable footprint. And you're seeing early signs of that already.

Speaker Change: Gotcha, Okay, a couple of things there in terms of the.

Speaker Change: The strategy too.

Speaker Change: Return cable to topline growth, it's really a combination of factors some of which I've talked about.

Speaker Change: Maybe all of them of which I've talked about.

Speaker Change: One is turning around our market share performance.

Speaker Change: In our cable footprint and you are seeing early signs of that already.

Anthony Staffieri: And that's across our entire footprint, both in east and west. And we have a compelling value proposition there, where we can offer superior internet product performance across more homes passed than our competitors can. So it's about execution on that.

Speaker Change: And that's across our entire footprint, both in east and West.

Speaker Change: And we have a compelling value proposition there, where we can offer a superior internet product performance across more homes passed than our competitors can so it's about execution on that.

Anthony Staffieri: Embedded in that is the opportunity to continue to grow internet ARPU because of our ability to offer speeds of minimum of one gigabit ubiquitously across our entire footprint. And in certain areas beyond that, and as we continue with our network enhancements, largely around mid split and high split, then we'll continue to improve the product offerings there. And so that's in the near term. I won't even get into DOCSIS IV, it's a much longer term, but that's in the near term.

Speaker Change: Embedded in that is the opportunity to continue to grow internet <unk> because of our ability to offer speeds minimum of one gig ubiquitously across our entire footprint and.

Speaker Change: And in certain areas beyond that.

Speaker Change: As we continue with our network enhancements largely around mid split in high split.

Speaker Change: Then we will continue to improve the product offerings there.

Speaker Change: And.

Speaker Change: And so thats in the near term I won't even get into the DOCSIS four it's much longer term and that's the near term.

Speaker Change: And then we look to the <unk>.

Anthony Staffieri: And then we look to the medium to small business enterprise side of it. And that's an area we've been under penetrated into. And so we're very focused on that, and we see double-digit growth in that segment of the market, which has been working well for us. And we expect it to continue to do so. And then, of course, there's the one-third of the market that we haven't addressed in the past. And those are the one-third homes that I have already mentioned.

Speaker Change: Medium to small business enterprise side of it and that scenario, we've been underpenetrated in and so we are very focused on that and we see double digit growth in that segment of the market, which has been working well for us and we expect it to continue to do so.

Speaker Change: And then of course, there is the one third of the market that we haven't addressed in the past.

Speaker Change: And those are the one third homes that I already mentioned and we're addressing that market through our fixed wireless access as well as through wholesale.

Anthony Staffieri: And we're addressing that market through our fixed wireless access as well as through wholesale. And so those are the primary factors that we are executing on to get back to growth overall in our cable business. The second part of the question, Batya, just remind me.

Speaker Change: And so those are the primary factors that we are executing on.

Speaker Change: To get back to growth overall on our cable business.

Speaker Change: The second party collections back to you just remind me.

Anthony Staffieri: On broadband net ads through the year. Oh, broadband net ads through the year. And so, and this really is a corollary to my response in the first part, job one is to continue to focus not just on ARPU growth but, in particular, market share and penetration gains. And so you should expect us to continually have year-on-year growth in our net ad internet performance as we approach what we consider to be strong market share gains.

Speaker Change: <unk> net adds through the year for broadband net adds through the year and so.

And it really is a corollary to my response in the first part job. One is to continue to focus not just on <unk> growth, but in particular.

Speaker Change: Market share and.

Speaker Change: Penetration gains.

Speaker Change: And so you should expect us to continually have year on year growth in our net add internet performance.

Speaker Change: As we approach what.

Speaker Change: We consider to be.

Speaker Change: Strong market share gains.

Anthony Staffieri: Thank you. Thank you, Batya. Ariel, let's squeeze one more in, please. Our next question comes from Aravinda Galappatthige of Canaccord Genuity. Please go ahead. Thanks, good morning. Two quick ones from me. On wireless ARPU, can you maybe talk about the impact?

Speaker Change: Okay. Thank you. Thank you back at area lets squeeze one more in please.

Speaker Change: Our next question comes from Arvind <unk> of Canaccord Genuity. Please go ahead.

Arvind: Thanks. Good morning, two quick ones from me on wireless RF too can you just maybe talk about the impact.

Arvind: The impact because if international roaming and.

Arvind: Some of the price adjustments that you did at the end of the year and then secondly on the cable side I apologize. If you gave this number out Glenn I know in the last quarter you provided a pro forma.

Operator: Our next question comes from Aravinda Galappatthige of Canaccord Genuity. Please go ahead. Thanks.

Arvind: Revenue movement number I was wondering if you can repeat that for Q1.

Aravinda Galappatthige: I'll start with the second one, the pro forma, or as I say organic revenue growth or shrinkage in the quarter would have been negative 3%, similar to the prior quarter, negative 3% for the quarter, and then EBITDA was up 7% on an organic basis, reflecting the impact of the cost synergies. On wireless ARPU, the price increases; international roaming, there's not, there hasn't been that much of an impact from international roaming in terms of year over year change.

Arvind: The.

Speaker Change: I'll start with the second one the pro forma or as I say organic revenue growth or shrinkage in the quarter.

Glenn: Would have been negative 3%.

Glenn: Similar to the prior quarter negative 3% for the quarter and then EBITDA was up 7% on an organic basis, reflecting the impact of the cost synergies on a on wireless <unk>.

Glenn: The.

Glenn: The price increases.

Glenn: International roaming there theres not there hasnt been that much of an impact from international roaming in terms of year over year change.

Aravinda Galappatthige: We are through all of the catch-up by now as a result of travel shifts and changes from coming out of COVID, and so there's not a large impact on ARPU from any changes in international roaming. We did have a price change go through earlier than in the year, but it is a component of a number of different things. The largest impact really has been the emphasis on our premium brand and moving customers up to our 5G services and up tiering customers as opposed to that price increase which only affected a small component of our customers that were not on contract.

We are through.

Glenn: All of the catch up by now as a result of travel shifts and changes from from coming out from Covid.

Glenn: And so there is not a large impact on our <unk> from any changes in international roaming.

Glenn: We.

We did have.

Glenn: Our price change go through earlier than in the year.

Glenn: It is a component.

Glenn: A number of different things the largest impact really has been.

The emphasis on our premium brand and moving customers up to our <unk> services and up tearing.

Glenn: Customers as opposed to.

That price increase only affected.

Glenn: A small component of our customers that.

Glenn Brandt: Thank you. Great. Thank you, Aravinda. Thank you, Aravinda.

We're not on contract.

Speaker Change: Okay. Thank you.

Speaker Change: Great. Thank you very random thanks, Arlinda and thanks for joining our call and if there is any additional questions. Please reach out to the IR team. Thank you.

Paul Carpino: Thanks Aravinda and thanks for joining our call, and if there's any additional questions, please reach out to the IR team. Thank you.

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

Speaker Change: This concludes today's conference call you.

Speaker Change: You may disconnect. Your lines. Thank you for participating and have a pleasant day.

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