Q3 2024 Rogers Communications Inc Earnings Call

Unknown Executive: Thank you for standing by.

Thank you for standing by this is the conference operator welcome to the Rogers Communications, Inc. Third quarter 2024 results Conference call. As a reminder, all participants are in a listen only mode and the conference is being recorded following the presentation. We will conduct a question and answer session.

Unknown Executive: This is the conference operator.

Unknown Executive: Welcome to the Rogers Communications Inc. 3rd Quarter, 2024 Results Conference Call. As a reminder, all participants are in a listen-only mode, and the conference is being recorded.

Unknown Executive: Following the presentation, we'll conduct a question-and-answer session. To join the question cues, 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.

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.

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

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

Paul Carpino: Thank you, Gailene, 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 Gail 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 Glen brand.

Paul Carpino: During our Q&A, I'd ask you to limit yourself to one question and a quick follow-up. It's needed. Today's discussion will include estimates. Another forward-looking information from which our actual results could differ.

Paul Carpino: During our Q&A I would ask you limit yourself to one question and a quick follow up if needed. 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 MD&A and in our Twenty's twenty-three annual report regarding the various factors assumptions.

Paul Carpino: Please review the cautionary language in today's earnings report, MD&A, and in our 2023 Annual Report regarding the various factors, assumptions, and risks that could cause our actual results to differ.

Speaker Change: And risks that could cause our actual results to differ with that let me turn it over to Tony to begin.

Tony Staffieri: With that, let me turn it over to Tony to begin. Thank you, Paul. Good morning, everyone. I'm very pleased to report that Rogers delivered another strong quarter of results. For 11 consecutive quarters, we have delivered industry-leading results driven by discipline, execution in a healthy and competitive market. We once again reported industry-leading market share and wireless industry-leading margins in wireless and cable and strong profitability in media. And we continue to invest in the future growth of our three core businesses. And we made significant progress in strengthening our balance sheet. As you saw this morning, we announced a transaction with a leading global financial investor to provide an innovative $7 billion structured equity financing.

Tony Staffieri: Thank you Paul and good morning, everyone I'm very pleased to report that Rogers delivered another strong quarter of results for 11 consecutive quarters, we have delivered industry, leading results driven by disciplined execution and a healthy and competitive market.

Tony Staffieri: We once again reported industry, leading market share in wireless industry, leading margins and wireless and cable and strong profitability in media and we continue to invest in the future growth of our three core businesses.

Tony Staffieri: And we made significant progress in strengthening our balance sheet. As you saw this morning, we announced the transaction with a leading global financial investor to provide innovative $7 billion structured equity financing.

Tony Staffieri: The proceeds will be used to pay down debt, and as a result, we now expect our debt leverage ratio to reach 3.7 times by year end. This is well ahead of our 4.2 times target we previously communicated, and it will accelerate our Shah deleveraging plans by a full 12 months. This structured financing transaction is the first of its kind in Canada, and demonstrates our innovative approach to maintaining an investment-grade balance sheet while investing in growth.

Tony Staffieri: Proceeds will be used to pay down debt and as a result, we now expect our debt leverage ratio to reach three seven times by year end. This is well ahead of our four two times target, we previously communicated and it will accelerate our Shaw deleveraging plans by a full 12 months.

Tony Staffieri: Yeah.

Tony Staffieri: This structured financing transaction is the first of its kind in Canada and demonstrates our innovative approach to maintaining an investment grade balance sheet, while investing in growth.

Tony Staffieri: Closing is subject to the finalization of definitive agreements, and is expected to happen in the fourth quarter.

Tony Staffieri: Closing is subject to the finalization of definitive agreements and is expected to happen in the fourth quarter.

Tony Staffieri: Let me now turn to our third quarter results. This quarter, we added a record 227,000 mobile phone and internet net additions. And over the past 11 quarters, we have added 1.9 million mobile phone and internet net additions. It's clear our strategy is working, and our team is executing with discipline. More Canadians continue to choose Rogers more than any other provider in Canada. I'm proud of our team and the efforts, their efforts to compete in a healthy and competitive marketplace. Wireless post-paid mobile phone net additions were 101,000, and prepaid net ads were 93,000. The market was competitive during the seasonally busy back to school period, and we effectively used our Chatter brand to gain customers in the new to Canada March.

Tony Staffieri: Let me now turn to our third quarter results.

Tony Staffieri: This quarter, we added a record 227000 mobile phone and Internet net additions and over the past 11 quarters. We have added $1 9 million mobile phone and Internet net additions. It's clear our strategy is working and our team is executing with discipline.

Tony Staffieri: More Canadians continue to choose Rogers more than any other provider in Canada I'm proud of our team and the efforts there efforts to compete in a healthy and competitive marketplace.

Tony Staffieri: Wireless postpaid mobile phone net additions were 101000 and prepaid net adds were 93000.

Tony Staffieri: It was competitive during the seasonally busy back to school period, and we effectively used our chatter brand to gain customers in the new to Canada market.

Tony Staffieri: We remain focused on ensuring a clear delineation between our premium 5G brand and our successful prepaid Chatter brand. We have been executing on our brand differentiation strategy for almost two years now, and it's been highly effective in delivering strong results. Table loading was also strong in the third quarter. We delivered retail internet net additions of 33,000, up 15,000, or 83% from last year. This brings our year-to-date retail internet net additions to 85,000, a 50% increase from one year ago. Our expanded footprint and diversified internet product offering are driving this growth. By choosing Rogers, customers can select the products and plans that best meet their needs, delivered seamlessly through our network capabilities, whether it's direct fiber, fiber coax, 5G wireless home internet, or wholesale TPA.

Tony Staffieri: We remain focused on ensuring a clear delineation between our premium <unk> brand and our successful prepaid chatter brand we have been executing on our brand differentiation strategy for almost two years now and its been highly effective in delivering strong results.

Tony Staffieri: People loading was also strong in the third quarter, we delivered retail Internet net additions of 33000 up 15000 or 83% from last year. This brings our year to date retail Internet net additions to 85000 or 50% increase from one year ago.

Tony Staffieri: Our expanded footprint and diversified internet product offering are driving this growth by choosing Rogers customers can select the products. Some plans that best meet their needs delivered seamlessly through our network capabilities, whether it's direct fiber fiber coax five G wireless home Internet.

Tony Staffieri: Our wholesale P P I E.

Tony Staffieri: Our strong wireless and cable loading is underpinned by our networks. In the third quarter, two global leaders in network benchmarking reaffirmed our network leadership position. Umla once again awarded Rogers Canada's most reliable 5G network. In a separate benchmarking study, OpenSignal recognized Rogers for delivering the most reliable wireless services in Canada. OpenSignal also awarded Rogers as Canada's fastest and most reliable internet. The report found we consistently delivered the most reliable experience, the fastest overall download speeds, and the best streaming experience in Canada. Our customers have told us reliability is what matters most to them, and we're outperforming our competitors on this key metric.

Tony Staffieri: Our strong wireless and cable loading is underpinned by our networks in the third quarter two global leaders in network benchmarking reaffirmed our network leadership position.

Tony Staffieri: Once again awarded Rogers, Canada's most reliable <unk> network.

Tony Staffieri: In a separate benchmarking study open signal recognize Rogers for delivering the most reliable wireless services in Canada.

Open signal also awarded Rogers as Canada's fastest and most reliable Internet. The report found we consistently deliver the most reliable experience the fastest overall download speeds and the best streaming experience in Canada.

Tony Staffieri: Our customers have told US reliability is what matters most to them and we're outperforming our competitors on this key metric.

Tony Staffieri: We're also advancing our doxxus roadmap. This quarter, we successfully trialled doxxus for modem technology with four gigabit download and one gigabit upload speeds. This is a global first, and we just hit another milestone. We have started trialing the Comcast XER modem, the most advanced Wi-Fi 7 and 10G capable router in Canada. And Rogers satellite to mobile partner SpaceX just completed a global first. A successful real-world test with T-Mobile of their Starlink low Earth orbit direct to cell constellation during hurricanes, LN and Milton. SpaceX also enabled and tested emergency alerts by a satellite to mobile phones in affected areas.

Tony Staffieri: We're also advancing our DOCSIS road map this quarter, we successful successfully trialed DOCSIS four modem technology with four gigabit download and one gigabit upload speeds. This is a global one and we just hit another milestone we have started trialing the Comcast <unk> modem the most advanced Wi Fi.

Tony Staffieri: Seven and 10 G capable router in Canada.

Tony Staffieri: Roger satellite to mobile partner, Spacex just completed a global first a successful real world test with T mobile of their star link lower orbit direct to sell constellation during Hurricanes Lane and Milton.

Tony Staffieri: Spacex also enabled and tested emergency alerts via satellite to mobile phones and affected areas with over 300, Leo satellites and service the technology was able to support thousands of residents with messaging service.

Tony Staffieri: With over 300 Leo satellites in service, the technology was able to support thousands of residents with messaging service. As we previously announced, we're bringing the same industry-leading technology to Canadians. From a financial perspective, our growth, strong execution, and continued efficiency gains are delivering industry-leading financial performance and industry-best margins. In fact, we've set a new benchmark at Rogers with our best ever cable and wireless margins. Wireless service revenue was up 2%, and adjusted evata was up 5%. We delivered wireless margins of 66% and blended our food remains stable. In cable, we remain on track to return to growth in the fourth quarter.

As we previously announced we are bringing the same industry, leading technology to Canadians.

Tony Staffieri: From a financial perspective, our growth strong execution and continued efficiency gains are delivering industry, leading financial performance and the industry best margins.

Tony Staffieri: In fact, we set a new benchmark at Rogers with our best ever cable and wireless margins.

Tony Staffieri: Wireless service revenue was up 2% and adjusted EBITDA was up 5%, we delivered wireless margins of 66% and blended <unk> remained stable and cable we remain on track to return to growth in the fourth quarter and Q3 cable revenue improved sequentially to a dip.

Tony Staffieri: In Q3, cable revenue improves sequentially to a decline of 1%. So we're seeing steady progress here towards our return to growth in the fourth quarter. With the improvements in cable revenue adjusted, have it though a strong up 5% and our team delivered industry leading margins of 58%. Our sports and media business also had a strong quarter. We showed strong growth and profitability with revenue growth of 11% and adjusted have it up was up a healthy 25%. As Canada's communications and entertainment company, life sports and entertainment are core to our business strategy. In the third quarter, we signed a strategic agreement to buy bells 37.5% ownership state in Maple Leaf Sports and Entertainment.

Tony Staffieri: Klein of 1%.

Tony Staffieri: So we're seeing steady progress here.

Tony Staffieri: Towards a return to growth in the fourth quarter.

Tony Staffieri: With the improvements in cable revenue adjusted EBITDA was strong up 5% and our team delivered industry, leading margins of 58%.

Tony Staffieri: Our sports and media business also had a strong quarter, we showed strong growth and profitability with revenue growth of 11% and adjusted EBITDA was up a healthy 25%.

Tony Staffieri: As Canada's Communications and Entertainment Company live Sports and entertainment are core to our business strategy in the third quarter, we signed a strategic agreement to buy Bell's 37, 5% ownership stake in Maple Leafs Sports and entertainment.

Tony Staffieri: It's a significant step in our long term plan to surface value more value for our shareholders. So overall, all three businesses are executing very well, and we have clearly and significantly advanced our balance sheet, delivering well ahead of plan. Before I hand over things to Glenn, I want to thank our team for delivering strong results and disciplined execution in a competitive and healthy market. We've delivered 11 straight quarters of growth, invested in new innovations, and made big bold bets. We have momentum, and I'm proud of our team for their relentless hard work.

Tony Staffieri: It's a significant step in our long term plan to surface value more value for our shareholders. So overall all three businesses are executing very well and we have clearly and significantly advanced our balance sheet delivering well ahead of plan.

Tony Staffieri: Before I hand over hand over things to Glenn I want to thank our team for delivering strong results and disciplined execution in a competitive and healthy market. We've delivered 11 straight quarters of growth invested in new innovations and made big bold bets, we have momentum and I'm proud of our team for their relentless.

Tony Staffieri: This hard work.

Glenn Brandt: Let me now turn over the call to Glenn. Thank you, Tony, and good morning, everyone. Thank you for joining us. As Tony has said, this is now our 11th straight quarter for posting sector-leading operating and financial performance, and we are proud of those results. We remain focused on delivering consistent, disciplined execution with strong performance and growth. We are following through on what we have said we would do, urgency and without distraction, including on our accelerated delivering plans. This morning we announced an innovative $7 billion structured equity financing with a leading global financial investor to acquire a minority stake and a portion of our wireless backhaul transport infrastructure.

Tony Staffieri: Now ill turn it over.

Tony Staffieri: Turn over the call to Glenn.

Glenn: Thank you Tony and good morning, everyone. Thank you for joining us.

Glenn: As Tony has said this is now our 11th straight quarter for posting sector, leading operating and financial performance and we're proud of those results. We remain focused on delivering consistent disciplined execution with strong performance and growth.

Glenn: We are following through on what we have said, we would do with urgency and without distraction, including on our accelerated Delevering plans.

Glenn: This morning, we announced an innovative is $7 billion structured equity financing with a leading global financial investor to acquire a minority stake in a portion of our wireless backhaul transport infrastructure.

Glenn Brandt: This is a transformative transaction and the first of its kind in Canada, and it will further strengthen our investment grade balance sheet. This transaction is subject to completion of definitive agreements, which we expect we will complete and close on in the fourth quarter. The $7 billion in proceeds will be used to pay down a corresponding amount of debt. As a result, we now expect to end the year with leverage in the range of 3.7 times.

Glenn: This is a transformative transaction and the first of its kind in Canada and it will further strengthen our investment grade balance sheet.

Glenn: This transaction is subject to completion of definitive agreements, which we expect we will complete and close on in the fourth quarter.

Glenn: The $7 billion in proceeds will be used to pay down a corresponding amount of debt.

As a result, we now expect to end the year with leverage in the range of three seven times.

Glenn Brandt: More on this shortly, but let me now turn to an overview of our were strong third quarter results. Wireless service revenue grew 2% year over year, reflecting the continued growth in our mobile subscriber base and continued emphasis to add subscribers on our Rogers premium 5G brand. Postpaid mobile phone customer net additions were a strong a very strong 101,000, and prepaid net additions were 93,000 in the quarter. As expected, the back to school period was competitive this year, particularly in the seasonally strong prepaid market, which tends to be more active for back to school. Rogers remained disciplined in the market and delivered an effective balance across strong subscriber loading and disciplined fundamentals reflected in stable ARPUH.

Glenn: More on this shortly but let me now turn to an overview of our strong third quarter results.

Wireless service revenue grew 2% year over year, reflecting the continued growth in our mobile subscriber base and continued emphasis to add subscribers on our Rogers premium <unk> brand.

Glenn: Postpaid mobile phone customer net additions were a strong a very strong 101000 and prepaid net additions were 93000 in the quarter.

Glenn: As expected the back to school period was competitive this year, particularly in the seasonally strong prepaid market, which tends to be more active for back to school.

Glenn: Rogers remain disciplined in the market and delivered an effective balance across strong subscriber loading and disciplined fundamentals reflected and stable <unk>.

Glenn Brandt: As a result, our aggregate net phone additions were 194,000 in Q3, which we expect will once again lead the sector on market share for subscriber growth for the 11th consecutive quarter. In a competitive environment, we are leading in net ads while maintaining stable ARPOOH and driving service revenue growth. Post-paid mobile phone churn was 1.12% for the quarter, which is roughly unchanged from the prior year and from the first half of 2024. Wireless adjusted EBITDA was up a strong 5% year over year, reflecting enhanced economies of scale and improved efficiency. This was reflected in our adjusted EBITDA margin, which was up by 220 basis points over the prior year to 66%, a company all-time high and sequentially up from the second quarter, our prior all-time high.

Glenn: As a result, our aggregate net phone additions were 194000 in Q3, which we expect will once again lead the sector and market share for subscriber growth for the 11th consecutive quarter.

Glenn: In a competitive environment, we are leading in net adds while maintaining stable <unk> and driving service revenue growth.

Glenn: <unk> paid mobile phone churn was one 2% for the quarter, which is roughly unchanged from the prior year and from the first half of 2024.

Glenn: Wireless adjusted EBITDA was up a strong 5% year over year rich.

Reflecting enhanced economies of scale and improved efficiency.

Glenn: This was reflected in our adjusted EBITDA margin, which was up by 220 basis points over the prior year to 66% a company all time high and sequentially up from the second quarter, our prior all time high.

Glenn Brandt: Moving to our cable business, we continue to deliver strong profitability as we focus on returning to revenue growth. Cable revenue was down negative 1% year over year, a further sequential improvement from the negative 2% decline in the second quarter and on its path to turning positive as we exit 2024. That remains our intent and focus. Cable adjusted EBITDA is up a healthy 5% year over year, and cable margins are a very strong 58%, up 330 basis points from last year and an all time high. Our employees have worked very hard to leverage our scale efficiencies and cost synergies to deliver enhanced services to our customers while delivering stronger operating performance.

Glenn: Moving to our cable business, we continue to deliver strong profitability as we focus on returning to revenue growth.

Glenn: Cable revenue was down negative 1% year over year, a further sequential improvement from the negative 2% decline in the second quarter and on its path to turning positive as we exit 2020 for.

Glenn: That remains our intent and focus.

Glenn: Cable adjusted EBITDA is up a healthy 5% year over year and cable margins are a very strong 58%.

Glenn: 330 basis points from last year, and an all time high.

Glenn: Our employees have worked very hard to leverage our scale efficiencies and cost synergies to deliver enhanced services to our customers, while delivering stronger operating performance.

Glenn Brandt: Internet net additions are up significantly year over year, reaching 33,000 in the third quarter, which is up almost double from the prior year. And finally, our sports and media revenue is up 11%, and adjusted EBITDA is up 25% for the quarter. The third and fourth quarters are seasonally our strongest of the year for our sports and media business driven primarily by revenue growth at the Toronto Blue Jays and the NHL on Rogers Sportsnet. We expect this we expect this performance will continue through the fourth quarter as well. At a consolidated level, total service revenue increased 1% and adjusted EBITDA was up 6% year over year.

Glenn: Internet net additions were up significantly year over year, reaching 33000 in the third quarter.

Which is up almost double from the prior year.

Glenn: And finally, our sports and media revenue is up 11%.

Glenn: And adjusted EBITDA is up 25% for the quarter.

The third and fourth quarters are seasonally our strongest of the year for our sports and media business driven primarily by revenue growth at the Toronto Blue Jays and the NHL on Roger Sportsnet. We expect this we expect this performance will continue through the fourth quarter as well.

Glenn: At a consolidated level total service revenue increased 1% and adjusted EBITDA was up 6% year over year.

Glenn Brandt: This drove our consolidated EBITDA margin up by 230 basis points to a strong 50%. Pre cash flow for the quarter was 915 million dollars, up 23% from the prior year, primarily reflecting the higher adjusted EBITDA and lower interest expense on long-term capital, long-term debt. Capital expenditures were 977 million dollars in the quarter. Down 40 million, or 4% from last year, largely as a result of minor timing shifts.

Glenn: This drove our consolidated EBITDA margin up by 230 basis points to a strong 50%.

Glenn: Free cash flow for the quarter was $915 million up 23% from the prior year.

Glenn: Primarily reflecting the higher adjusted EBITDA and lower interest expense on long term capital long term debt.

Glenn: Capital expenditures were $977 million in the quarter.

Glenn: Down $40 million or 4% from last year, largely as a result of minor timing shifts.

Glenn Brandt: Turning to the balance sheet. At September 30th, we had $4.8 billion of available liquidity, including $800 million in cash and short-term deposits on hand, and $4 billion available under our bank credit facilities. Our weighted average cost of all borrowings was 4.7%, and our weighted average term for maturity was 10 years. We ended the quarter with a debt leverage ratio of 4.6 times, down 0.1 time from the prior quarter, driven by stronger earnings combined with debt repayments. This morning's announced $7 billion structured equity financing signed with a leading global financial investor reflects our commitment to deliver and further strengthen our investment grade balance sheet.

Glenn: Turning to the balance sheet.

Glenn: At September 30th we had $4 8 billion of available liquidity.

Glenn: Including $800 million in cash and short term deposits on hand, and 4 billion available under our bank credit facilities.

Glenn: Our weighted average cost of all borrowings was four 7%.

Glenn: And our weighted average term to maturity was 10 years.

Glenn: We ended the quarter with a debt leverage ratio of four six times.

Glenn: Down 0.1 time from the prior quarter, driven by stronger earnings combined with debt repayments.

Glenn: This morning's announced $7 billion structured equity financing signed with a leading global financial Investor reflects our commitment to de lever and further strengthen our investment grade balance sheet.

Glenn Brandt: The Shaw Transaction has broadened our national reach and expanded the scale of our world-class assets. This $7 billion structured equity financing represents another transformative opportunity for us. It is the first of its kind in Canada with one of the world's leading financial investors. Sixingtly, the companies have agreed to terms for Rogers to sell a minority interest in certain parts of our wireless back-haul transport infrastructure. To be very clear, our cell towers and related spectrum holdings are not included in this transaction and remain 100% owned and controlled. We will continue to retain full operational control and consolidation for our entire national wireless network.

Glenn: The Shaw transaction has broadened our national reach and expanded the scale of our world class assets.

Glenn: This $7 billion structured equity financing represents another transformative opportunity for us.

Glenn: It is a first of its kind in Canada with one of the world's leading financial investors.

Glenn: Succinctly the companies have agreed to terms for Rogers to sell a minority interest in certain parts of our wireless backhaul transport infrastructure.

Glenn: To be very clear.

Glenn: Our cell towers and related spectrum holdings are not included in this transaction.

Glenn: And remain 100% owned and controlled and we will continue to retain full operational control and consolidation for our entire national wireless network.

Glenn Brandt: Closing is subject to finalizing definitive agreements, all of which are expected to be completed and closed in the fourth quarter. We will use the proceeds to repay debt, and with this transaction, we expect that we will have reduced year-end leverage to around 3.7 times, a full turn improved from prior quarters, and well ahead of our previously communicated target of 4.2 times. We remain committed to delivering and will remain opportunistic for further strengthening of our balance sheet, including in regard to our purchase of an additional 37.5% interest in MLSC, which we expect to close in 2025.

Glenn: Closing is subject to finalizing definitive agreements all of which are expected to be completed and closed in the fourth quarter.

Glenn: We will use the proceeds to repay debt and with this transaction. We expect that we will have reduced year end leverage to around three seven times, a full turn improved from prior quarters and well ahead of our previously communicated target of four two times.

Glenn: We remain committed to Delevering and we'll remain opportunistic for further strengthening of our balance sheet, including in regard to our purchase of an additional 37, 5% interest in the MLC.

Glenn: Which we expect to close in 2025.

Glenn Brandt: As we deliver, it is also important to highlight that we are still investing in growth in our core businesses in Canada for long-term value creation. Our wireless cable and sports and media operations are built on disciplined investing, targeting sustainable long-term growth.

Glenn: As we de lever. It is also important to highlight that we are still investing in growth in our core businesses in Canada for long term value creation.

Glenn: Our wireless cable and sports and media operations are built on disciplined investing targeting sustainable long term growth.

Glenn Brandt: And finally, we are reaffirming all of our 2024 guidance range targets. We consistently lead in a competitive environment, and we continue to deliver on our near-term and longer-term goals.

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

Glenn: We consistently lead in a competitive environment and we continue to deliver on our near term and longer term goals.

Glenn Brandt: Let me conclude by thanking the entire Rogers team. Thank you. Your perseverance, dedication, and resourcefulness has consistently outperformed our peers on growth and financial performance, quarter-in and quarter-out. This is a strong team working with world-class assets attracting global investors, and we remain optimistic with the opportunities ahead for us.

Glenn: Let me conclude by thanking the entire Rogers team. Thank you.

Glenn: Your perseverance dedication and resourcefulness has consistently outperformed our peers on growth and financial performance quarter in and quarter out.

Glenn: This is a strong team working with world class assets, attracting global investors and we remain optimistic with the opportunities ahead for us.

Unknown Executive: Thank you for your time this morning, and with that, Gailene, may we please commence with the questions answers. Thank you.

Glenn: Thank you for your time this morning, and with that Geely may we please commence with the question and answers. Thank you.

Glenn: Yes.

Glenn: Okay excuse.

Unknown Executive: We'll now begin the question and answer session. To join the question queue, you may press star, then one on your phone keypad. You'll hear a tone acknowledging your request. If you're using a speaker phone, please pick up your handsets before pressing any keys. To withdraw your question, please press star, then two.

Glenn: Excuse me.

Speaker Change: Now begin the question and answer session.

Speaker Change: And the question queue you May Press Star then one on your telephone keypad, Yes, Eric Schoen acknowledging your request.

Speaker Change: We are using a speakerphone please pick up your handset before pressing any key.

Speaker Change: Your question. Please press Star then two.

Batya Levi: Our first question is from Batya Levi with UBS. Please go ahead. Great. Thank you.

Speaker Change: Our first question is from Bob <unk> with UBS. Please go ahead.

Speaker Change: Great. Thank you I would like to size would be.

Batya Levi: I'd like to start with the structure that could be financing if you could provide a little bit more detail in terms of if there will be any shares issues with this, how it would impact maybe your operational, your operations as you lease back some of that network elements for your own support. Any color on that, that would be great.

Bob <unk>: Starting with equity financing, if you could provide a little bit more detail in terms of if there will be any shares issued with the how it would impact.

Bob <unk>: Maybe are operational.

Bob <unk>: Your operations as you lease back some of that.

Bob <unk>: At work elements.

Bob <unk>: And so forth.

Bob <unk>: Any color on that that would be great and then second question was more on the wireless side, if we could talk about a bit more on the come.

Batya Levi: And then second question was more on the wireless side, if we could talk about a bit more on the competitive environment as we go head into the holiday season. And if you think that the stable article can be sustained. Thank you.

Bob <unk>: The environment as we head into the holiday season, and if you think that the.

Bob <unk>: Stable.

Speaker Change: Thank you.

Glenn Brandt: Thank you, Batya. On the first question, to be clear, we are not leasing assets. This is not a sales and leaseback transaction. We are selling a minority equity interest in a portion, regional portion of our wireless back-haul transport infrastructure. And that's the extent of the transaction. It is an equity transaction with that minority interest in the subsidiary company. We will maintain full operating control of our entire network, including these assets that are involved in selling the minority equity stake. There are no RCI shares involved, RCI A or B, no delusion to our RCI shareholders. This is a minority interest being acquired in a portion of our wireless back-haul.

Speaker Change: Thank you about yet on the on the first question to be clear we are not leasing assets. This is not a sale and leaseback transaction.

Speaker Change: We are selling a minority equity interest.

Speaker Change: And a portion.

Speaker Change: Regional portion of our wireless backhaul transport infrastructure.

Speaker Change: And that's the extent of the transaction it is an equity transaction.

With that that minority interest in the subsidiary company, we will maintain full operating control of our entire network, including these assets that are involved in selling the minority equity stake.

Speaker Change: There are no RCI shares involved RCI, a or b no dilution to our.

Speaker Change: RCI shareholders.

Speaker Change: This is a minority interest being acquired and a portion of our wireless backhaul and there is no lease.

Glenn Brandt: And there is no lease.

Glenn Brandt: Batya, on the second part of your question relating to wireless competitive density getting into the fourth quarter.

Speaker Change: Back to you on the second part of your question relating to a wireless competitive intensity getting into the fourth quarter, it's always difficult to predict.

Glenn Brandt: It's always difficult to predict competitive market dynamics amongst the various brands that are in the market. But if we look to the third quarter in the back-to-school season, we were very focused on being disciplined with our promotions. We led with a bundled offer of internet and wireless and stuck to that. And it executed well and resonated throughout the back-to-school period. You saw that we continue to focus on our primary brand strategy, Rogers 5G Premium. When you look at the 101,000 post-paid nets, the vast, vast majority of those are on the Rogers brand. So the team is doing an excellent job of focusing on that segment in migrating customers from Phyto and Chatter to the premium brand.

Speaker Change: Competitive.

Speaker Change: Market dynamics.

Speaker Change: Amongst the various brands that are in the market.

Speaker Change: Sure.

Speaker Change: If we look to the third quarter and the back to school season, we were very focused on being disciplined with our promotions, we led with a bundled offer of internet and wireless and.

Speaker Change: And stuck to that.

Speaker Change: And executed well and resonated.

Speaker Change: Throughout the back to school period.

Speaker Change: You saw that we continue to.

Speaker Change: Focus.

Speaker Change: On our primary brand strategy Rogers <unk> premium when you look at the 101000 postpaid nets. The vast vast majority of those are on the Rogers brand. So the team is doing an excellent job of focusing on that segment and migrating customers from fido and chatter to the premium brand.

Glenn Brandt: and you saw us execute really well with the Chatter brand in the New to Canada and back to school category. There what we saw was as a result of a number of system changes we made, we've got a platform now on Chatter that is very good in terms of self-serve and has dramatically lowered our cost to serve in the prepaid segment. And so we've consolidated all our prepaid into Chatter and we discontinued prepaid on Rogers and Fido, and that's working extremely well in the fourth quarter also. We like what we see in terms of the prepaid customers; they're predominantly on auto pay, and so the behavior is very similar to a post-paid customer. They're coming in at very healthy ARPUs, and so the strategy is working well, and we'll continue that into the fourth quarter.

Speaker Change: <unk>.

Speaker Change: And you saw us.

Speaker Change: Execute really well with the chatter brand in the new to Canada and back to school category. There. What we saw was as a result of a number of system changes. We made we've got a platform now and chatter.

Speaker Change: That is very good in terms of self serve and has dramatically lowered our cost to serve in the prepaid segment.

Speaker Change: So we've consolidated all of our prepaid.

Speaker Change: Chatter and we discontinued prepaid on Rogers and Fido.

Speaker Change: And that's working extremely well in the fourth quarter also we like what we see in terms of the prepaid customers theyre predominantly on Autopay.

Speaker Change: So the behavior is very similar to a postpaid customer and theyre coming in at very healthy <unk> and so the strategy is working well and we'll continue that into the fourth quarter, Although you should expect prepaid to.

Glenn Brandt: Although you should expect prepaid to come down in the fourth quarter, there's, you know, seasonality related to it in the third quarter, and we expect the focus in the fourth to be on to post-paid.

Speaker Change: To come down in the fourth quarter, there is seasonality related to it in the third quarter and we expect to focus in the fourth to be onto postpaid.

Unknown Executive: Thank you.

Speaker Change: Got it thank you.

Speaker Change: Okay.

Vince Valentini: And next question, the next color is Vince Valentini with TD Cullen.

Speaker Change: The next question next question.

Speaker Change: Hi.

Speaker Change: The next caller, then valentini with TD Colin Please go ahead.

Vince Valentini: Please go ahead. Thanks very much. I will sneak into as well.

Speaker Change: Thanks very much.

Speaker Change: Sneak into as well.

Vince Valentini: One, just if you can flush out that prepaid a bit more at healthy ARPUs means like close to $30, close to what you were getting in low-end flanker before Tony. And I also note, you know, churn on prepaid way lower this year than it was last year and this quarter even better at 2.8%. So, in your mind, is there really any difference between a low-end flanker and a prepaid customer anymore? So that's question one.

Speaker Change: <unk>.

Speaker Change: Just if you can flesh out that pre paid a bit more healthy RPE means like close to $30 close to what you were getting on low end flanker before Tony and I also note Neil.

Speaker Change: Churn on prepaid way lower this year than it was last year in this quarter, even better at two 8%. So you can you remind us or really any difference between the low end flanker and and a prepaid customer anymore. So that's question one the other sorry, Glenn but something just sounds too good to be true here, who is going to give you a $7 million.

Glenn Brandt: The other, sorry Glen, but something just sounds too good to be true here. Who's going to give you $7 million for no equity and no lease payments? Is there what is the buyer getting here? Are they getting some sort of like option to resell these assets back to you in the future, or what's the angle here? There has to be something for somebody to want to pay for that you might already be interested in the infrastructure.

Speaker Change: No no equity and no lease payments is there what is the buyer getting here are they getting some sort of.

Speaker Change: Like option to resell these assets back to you in the future or what's the what's the angle here there has to be something for for somebody to want to pay for the minority interest in the infrastructure.

Glenn Brandt: We can turn to that.

Speaker Change: We can we can turn to that do you want me to turn to that first Tony Okay.

Glenn Brandt: Do you want me to turn to that first, Tony? Okay. So the arrangement is obviously the wireless backhaul, transports data, the towers to our core and so the transport going from the edge of our towers to the edge of our core is a business of transporting data, and currently that business is 100% owned and controlled nationally from coast to coast by Rogers. This is a transaction that takes a portion, a regional portion of that national transport and creates a subsidiary that, using wholesale rates, will pay for the transport and so it creates revenues. There are expenses and capital for maintaining that regional portion of the backhaul.

Tony: So the arrangement is obviously.

Tony: The the.

Tony: The wireless backhaul.

Transports data.

Tony: Yeah.

Tony: The towers to our core.

Tony: And so the transport going from the edge of our towers to the edge of our core.

Tony: It is a business of transporting data.

Tony: And currently that business is 100% owned and controlled.

Tony: National <unk> from coast to coast.

Tony: By Rogers.

Tony: This is a transaction that takes.

Tony: A portion a regional portion.

Tony: Of that.

Tony: At National Transport.

Tony: And creates a subsidiary.

Tony: That using wholesale rates.

Tony: Pay for the transport.

Tony: And so it creates revenues there were expenses and and capital for maintaining that regional portion of the backhaul.

Glenn Brandt: and that ultimately will drive net income within the subsidiary. It's a consolidated subsidiary; won't affect Abitta, but the minority interest holders will earn a portion of the net income within that subsidiary, and there will be distributions paid from that net income and from the cash that settles between our operating company and at Rogers Endy and the subsidiary carrying the backhaul in these regions. Or in this region. And that's the business model. So there's no lease; there will be periodic distributions of available cash; they'll settle up, and that's the business model.

Tony: And that ultimately will drive net income within the subsidiary consolidated subsidiary won't affect EBITDA.

Tony: But the minority interest holders will earn a portion of the net income within that subsidiary and there will be distributions paid from that net income and from the cash.

Tony: That settles between our operating.

Tony: Company, and Rogers and the and the subsidiary carrying the backhaul in these regions are in this region.

Tony: And Thats the business model, so theres no lease there'll be.

Tony: Periodic distributions of available cash they will settle up and.

Tony: That's the that's the business model.

Glenn Brandt: That makes more sense. So Rogers pays an operating expense as opposed to at least to use the supply agreement, yes. Okay, and so that, and a portion of it controlling portion of that will attribute to our CI, and a minority portion of that will attribute to the minority investor.

Speaker Change: That makes more sense, so rogers pays in operating expense as opposed to at least.

Speaker Change: It's a supply agreement yes.

Okay.

Speaker Change: And a portion of it.

Speaker Change: Controlling portion of that.

Speaker Change: The attribute to RCI.

Speaker Change: And a minority portion of that will attribute to the minority investor.

Glenn Brandt: Sorry, then just a follow up on that. Is this data transport backhaul significantly underutilized today so that there's excess capacity to grow those revenues? Is that the catch?

Speaker Change: Then just a follow up on that it is this data transport backhaul significantly underutilized today, so that theres excess capacity to grow those revenues is that the cash.

Glenn Brandt: Okay, so just to be very clear and to make sure there's no confusion.

Okay. So just to be very clear and to make sure there's no confusion.

Glenn Brandt: This is not a business that will sell backhaul to other carriers. This is a business that will continue to serve Rogers exclusively and will continue to consolidate up into Rogers. There is data revenue or data traffic growth going on today. Annually, our data traffic grows by 40 to 50% as a result of increased data loading to each subscriber. And as a result of subscriber growth from quarter to quarter.

Speaker Change: This is not a business that will sell backhaul to other carriers.

Speaker Change: This is a business that will continue to serve Rogers exclusively.

Speaker Change: And we will continue to consolidate up into Rogers.

Speaker Change: There is data revenue our data traffic growth going on today annually, our data traffic rose by 40% to 50%.

Speaker Change: As a result of increased data loading to each subscriber.

Speaker Change: And as a result of subscriber growth from quarter to quarter.

Glenn Brandt: We will maintain the network as we always have. We'll continue to maintain it, invest in it. We control that investment. We control that operation of the infrastructure.

Speaker Change: We are we will maintain.

The.

Speaker Change: The network as we always have we will continue to maintain it invest in it we control that investment we control that operation of the infrastructure. This is simply setting up a supply agreement between our subsidiary in the operating company.

Glenn Brandt: This is simply setting up a supply agreement between a subsidiary and the operating company. The returns to the investor, the minority investor coming in, are based on that traffic. And we have the forecast worked out based on historic and expected growth rates to set up that business and the volumes that it will drive, the revenues that will drive, the expenses that are expected for operating it. And the distributions out to the minority investor and back up to our CI as the controlling shareholder. Those distributions are forecast to be anticipated to be relatively stable within a known range based on our forecast.

Speaker Change: The.

Speaker Change: The returns to the Investor the minority investor coming in.

Speaker Change: Or based on that traffic.

Speaker Change: And.

Speaker Change: And we have we have the forecast.

Speaker Change: Worked out.

Speaker Change: Based on on historic and expected growth rates two to set up that business and the volumes that it will drive that revenue that will drive the expenses that are expected for operating at and the distributions out to the minority investor.

Speaker Change: And back up to RCI is the controlling shareholder those distributions are forecast to be.

Speaker Change: And just are anticipated to be relatively stable within a within a known range based on our forecast.

Glenn Brandt: I guess you don't want to tell us that known range at this point. I'm not looking to disclose the financial terms. No offense.

Speaker Change: I guess, you don't want to tell you that known the range at this point.

Speaker Change: I'm not looking to disclose the financial terms no offense. Thank you.

Glenn Brandt: Thank you. Thank you, Glenn.

Speaker Change: Thank you Glenn that was much better.

Tony Staffieri: That was much better. Thank you. It's on the first part of your question.

Speaker Change: Thank you Vince on the first part of your question.

Tony Staffieri: We have been driving, and we are seeing a blurring of the lines between prepaid and postpaid. And it's been a very deliberate strategy for us, and it's been very competitive. Beneficially competitive for us in that segment of the market where Chatter is participating. Customers are coming in, as I said earlier, largely on auto pay. And so the behavior is very much like post-paid and we're seeing very little difference. Any arpus is very strong. Our prepaid arpus is not that different than Quebec, or just to put it in perspective. We're not going to quote specific ARPU numbers by brand, but that will give you a sense of the value proposition and the strength of the pricing on the Chatter brand.

Speaker Change: We have been driving and we are seeing.

Speaker Change: Blurring of the lines between prepaid and postpaid.

Speaker Change: It's been a very deliberate strategy for us and it's been very competitive.

Speaker Change: Beneficially competitive for us in that segment of the market.

Speaker Change: Chatter is participating.

Speaker Change: Customers are coming in as I said earlier largely on Autopay and so the behavior is very much like postpaid.

Speaker Change: And we're seeing very little difference.

Speaker Change: And the <unk> is very strong our prepaid <unk> is not that different.

Speaker Change: Then, Quebec or are just to put it in perspective, we're not going to quote specific ARPA numbers.

Speaker Change: By brand, but that'll give you a sense of the value proposition and the strength of the pricing on the chatter brand.

Unknown Executive: Thank you.

Speaker Change: Okay. Thank you.

Maher Yaghi: Next question, Gayle? The next question is from Maher Yaghi with Scotiabank.

Speaker Change: Next question gaming.

Speaker Change: The next question is from Mayer Yaghi with Scotiabank. Please go ahead.

Maher Yaghi: Please go ahead. Great.

Mayer Yaghi: Great. Thank you for taking my question, so just to follow up on.

Maher Yaghi: Thank you for taking my question. So just to follow up on this interesting transaction that you guys announced today, trying to figure out what kind of effective rate the minority interest is getting on this deal, trying to triangulate a little bit more the impact of this transaction on your future free cash flows. And what percent of your backhaul is included in this deal? You say that it's a regional part of your network, but if you can just ballpark a little bit how much of your current backhauling this represents. And are there a minimum commitment that you need to provide your equity minority shareholder on this deal in the future that is set in advance, or it's just paper use.

Mayer Yaghi: On this interesting transaction that you guys announced today trying to figure out what what kind of effective rate. The minority interest is getting on this deal.

Speaker Change: Trying to triangulate a little bit more out the impact of this transaction on your future free cash flows and what percent of your backhaul is included in this deal.

Speaker Change: You say that it's a regional parts of your network, but if you can just.

Just ballpark a little bit how much of your current back holding this represents.

Speaker Change: And are there minimum commitments that you need to provide your equity minority shareholder.

Speaker Change: On this deal in the future that is set in advance or it's just pay per use.

Glenn Brandt: I'll have a follow up on after that. So it's based on tiered wholesale rates, volume tiered as the data traffic grows, the tearing adjusts. There is no specific term on the investment. There is no guaranteed minimum for the distributions. There is a theoretical maximum that we would reach or approach as you get into higher and higher tiers. Keep in mind, we've got a business that's growing data rates at 40 to 50 percent. And so, if this were to run indefinitely, that 40 to 50 percent annual growth would get quite high. And so the rates are adjusted accordingly in the tearing.

Speaker Change: I'll have a follow up on.

Speaker Change: After that.

Speaker Change: So it's.

Speaker Change: It's based on <unk>.

Speaker Change: Tiered wholesale rates volume tiered.

Speaker Change:

Speaker Change: As the data traffic grows.

Speaker Change: The cheering adjusts.

There is no specific term on the investment there is no guaranteed minimum for the distributions.

Speaker Change: There is a.

Speaker Change:

Speaker Change: A theoretical maximum that we would reach.

Glenn Brandt: The costs and the maintenance will all be factored in, and the distributions. The order of magnitude, mayor, I'm not going to quantify the annual distributions. What I would say on a business of approaching $10 billion of annual EBITDA, if you were to factor in the interest savings on $7 billion of debt repayment at our annual cost of just over 4.5 percent, that's roughly $300 million a year. The distributions of the net income that apportion to the minority investor will be a little bit higher than those net after tax interest savings, but not materially higher. I expect well inside $1 billion of distributions coming out from the minority interest investment.

Speaker Change: Coming out from the.

Speaker Change: From the minority interest investment and so.

Glenn Brandt: And so let me give you that range, and that is a very wide range deliberately so that I'm not steering to exact returns on the call. It's not fair to the investor. And we're still working on completing the final documents. But this is an excellent opportunity for the company to deliver. It's a structured equity transaction. We maintain control; we deliver, and the impact on our free cash flow and ability to continue to invest in our business carries on unrestricted by this transactional. Great. It sounds like it's basically a bond on the back calling. It's like selling a bond on your back calling business.

Speaker Change: Let me give you that range and that is a very wide range deliberately so so that I'm not steering too.

Speaker Change: Exact returns on on the call that's not fair to the Investor and we're still working on completing the final documents, but this is an excellent opportunity for the company to de lever. It's a structured equity transaction, we maintained control we de lever.

Speaker Change: And the.

Speaker Change: <unk> on our free cash flow and ability to continue to invest in our business carries on.

Speaker Change: Unrestricted by this transaction.

Speaker Change: Great. It sounds like it's basically a bond on on back on the backhaul, it's like selling a bond on your back hauling business.

Glenn Brandt: We're selling a; I'm going to resist that description in that this is an equity transaction, and so it'll be considered as such. And so we're selling though a distribution stream. Yes, okay. And do you have any options to re-purchase that ownership over time? We will have full control over how long this investment remains in place, and we'll determine that in the fullness of time with the needs of our balance sheet. Yes.

We're selling a oh I'm going to resist the.

Speaker Change: Yeah.

Speaker Change: That description and that this is an equity transaction and so it'll be you know.

Speaker Change: Considered as such.

Speaker Change: And so we're selling though.

Speaker Change: <unk>.

Speaker Change: A distribution stream.

Speaker Change: Yes, Okay, and do you have any option to repurchase debt.

Speaker Change: Pet ownership over time.

Speaker Change: We will have full control over how long this.

Speaker Change: This investment remains in place and are and we will determine that in a phone or some time with what the needs of our balance sheet.

Speaker Change:

Speaker Change: Yes.

Glenn Brandt: One last question. Are the distributions to the equity partners of that entity tax deductible? No, they would be equity distributions, and so they would be treated as such. And so that's the, you know, we will be repaying debt that has tax-deductible interest. We will be paying distributions that are not tax deductible, but even with the effect of that, if I factor in the difference between what I expect will be the annual distribution amounts and the annual interest savings in the context of our free cash flow. It's not a significant increment to our obligations. Great. Thanks.

Speaker Change: One last one.

Speaker Change: Are the distributions to the equity partners that entity tax deductible.

Speaker Change: No they would be equity distributions and so they would be treated as such and so that's the.

Speaker Change: We will be.

Speaker Change: Repaying debt that has tax deductible interest we will be paying distributions that are not tax deductible.

Speaker Change: But even with the effect of that if I factor in the difference between what I expect will be the annual distribution amounts.

Speaker Change: In the annual interest savings.

Speaker Change: In the context of our free cash flow.

Speaker Change: It's not a significant.

Increment to our our obligations.

Unknown Executive: Thank you, Mayor Gailene.

Drew Mcreynolds: Can we have the next question, please? Thank you, Mayor. Certainly.

Drew Mcreynolds: The next question is from Drew McLeanles with RBC. Please go ahead. Yeah, thanks very much. Thank you very much. Good morning. Sorry. Yeah.

Drew Mcreynolds: I had trouble cut a climate on.

Drew Mcreynolds: I'm sure the financing is being asked to death here, but one follow-up there for you, Glenn. Just, you know, in terms of valuing that minority state, you know, obviously you're not going to get into the details there specifically, but just what was the approach to how that came about. And then just switching gears here on the wireless network revenue growth, you're tracking a two percent. You're going to be ahead of your large cap peers. As you look into kind of Q4 and 2025, you know, we're seeing some incremental our poor pressure and obviously today's announcement on, you know, what could be even more modest market expansion next year, just with some immigration tweaks.

Drew Mcreynolds: Just wondering how you are looking at network revenue growth in Q4. And, you know, are we at the trough? Can we climb back up to, you know, maybe not historical mid single digit, but, you know, where do you aspire to get to this? You look through the medium term. Thank you.

Glenn Brandt: Thank you, Drew. On the question on valuation and, you know, how the valuations arrived at, you know, Drew, you know, the investors will, you know, would look at this as a stream of cash flows that they would, you know, work in their modeling and run as a valuation. We've done the same here.

Glenn Brandt: It's a fairly straightforward business. We've got growing data loading across infrastructure that we own and control. We've done so for decades, and so from our standpoint, we're pretty confident in our ability to determine over, you know, the near, midterm, long-term horizon, what it takes to operate a wireless network and the backhaul transport related to that. This is a transaction that, when you own and control the entire national network, you can look at it, not have to worry about the arrangements with partners, not have to worry about the intricacies of that; we control it. We control the operating costs, and so we're able to forecast with a pretty good degree of confidence where the data loading traffic is going to go.

Speaker Change: It's a fairly straightforward business.

We've got a growing data loading across infrastructure that we own and control we have done so for decades, and so from our standpoint, we're pretty confident in our ability to determine over the near midterm long term horizon, what it takes to operate a wireless network and the backhaul trans.

Speaker Change: Support related to that.

Speaker Change: This is a transaction that when you own and control the entire National network. You can look at it not have to worry about the arrangements with partners not have to worry about the intricacies of that we control. It we control the operating costs and so we're able to forecast with a pretty good degree of confidence.

Speaker Change: The data loading traffic is going to go.

Speaker Change: We have a tiered rate structure that's that reflects.

Glenn Brandt: Traffic today and the loading going out into the future, that generates the revenues with a good degree of confidence. We know the operating costs, the capital costs of maintaining that transport with a good degree of confidence, and then those forecasts, I'm sure the investors look at and run their own analysis and assessment based on their experience, and then it's just a financial valuation of what their hurdle rate returns are, how they value it, how they risk adjust it.

Speaker Change: Traffic today, and the loading going out into the future.

Speaker Change: That generates the revenues with a good degree of confidence we know the operating costs the capital costs of maintaining that transport with a good degree of confidence and then those forecasts I'm sure. The investors look at in and run their own analysis and assessment based on their experience and then it's just a financial valuation of.

Speaker Change: What their hurdle rate returns are how they value it how they they risk adjust it and we have determined that the value of their minority stake as being $7 billion Canadian.

Glenn Brandt: And we have determined the value of their minority stake as being $7 billion Canadian, and so it's a significant valuation. But let's keep in mind, we carry a very significant volume of traffic on that network, and so that's the simplicity of it.

Speaker Change: And so it's a significant valuation, but let's keep in mind, we carry a very significant volume of traffic on that network.

Speaker Change: And so you know.

Speaker Change: That's that's the simplicity of it.

Glenn Brandt: And then in terms of your question around ARPU and revenue growth going into the fourth quarter, I would anticipate that the fourth quarter will be competitive just as the third quarter was. We will continue to emphasize a disciplined approach to going after our net ads, emphasizing our premium brand, and you've seen us for, you know, while many quarters now, leading on net ads while being disciplined around the impact on ARPU and sustaining revenue growth. I expect what you've seen in the third quarter and a competitive quarter will carry into the fourth.

Speaker Change: And then in terms of your question around <unk>, and <unk> and revenue growth going into the fourth quarter.

Speaker Change: My my I would anticipate that the fourth quarter will be competitive just as the third quarter was.

Speaker Change: We will continue to emphasize disciplined approach to going after our net adds emphasizing our premium brand and you've seen us for.

Tony Staffieri: Drew, if I could add to that, just to bring it back to the macro revenue outlook. I think, besides ARPU, I think it's important to look at the size of the market. The Canadian landscape continues to have healthy growth. We expect the industry, once everyone's reported, continues to grow somewhere between four to four and a half percent. We certainly saw lower volumes and size of market in the third quarter as a result of government limitations on foreign students, temporary workers. And most recently, we have some impact in the fourth quarter is limit or curbing of immigration, but notwithstanding that, we continue to see good growth in terms of penetration gains.

Tony Staffieri: As well as population growth. And so against that backdrop of healthy growth in the marketplace, the team's been doing an excellent job of face management, upselling customers from Chadow and Fido into the Roger's premium brand and focusing on value proposition that is beyond just price, and that seems to be resonating as well. We've said we're committed to ARPU growth, and the strategy we have seems to be resonating. And right now, we reported in Q3 stable ARPUs, but we continue to see the opportunity through the various execution tactics we have to grow ARPU into next year.

Unknown Executive: Thank you both. Great.

Unknown Executive: Thank you, Drew.

Sebastiano Petti: Next question, Galey.

Sebastiano Petti: Next question is from Sebastiano Petti with JP Morgan. Please go ahead. Hi, thank you for taking the question. Just wanted to maybe touch on the MLSE announcement earlier last month. Just to see if you can provide additional color about the structure and how we should be thinking about that, particularly the language about I think in the press release. Today, that Rogers will be the largest owner of MLSE, with a controlling interest in the 75%. So when can we perhaps expect to see additional details of what that structure might look like, given commentary previously that will not be a leveraging transaction?

Speaker Change: The best D&O Petti with J P. Morgan. Please go ahead.

D&O Petti: Hi, Thank you for taking the question.

D&O Petti: Just wanted to maybe touch on the MLC announcement earlier last months just to see if.

D&O Petti: He can provide additional color about the structure and how we should be thinking about that particularly the language about I think in the press release today that you know Rogers will be the largest owner of MLS see with a controlling interest in the 75%. So when can we even perhaps.

D&O Petti: <unk> expect to see additional details of what that structure might look like given commentary previously that we will not be a lever leveraging transaction.

Sebastiano Petti: So that's my first question. Thanks, Sebastiano. We stand by the statement that we will manage this, that we will continue to emphasize or delivering. We'll continue to manage our balance sheet with the closing of that MLSE investment. And particularly this structured equity transaction gives us some optionality and some leeway on how we structure that to continue to hold the gains from this transaction and look to how we fund MLSE between now when we close, which I expect will be out in 2025. There's a number of different ways we could do that. I expect on closing, we will own and control a majority stake in MLSE.

D&O Petti: And so that's my first question.

Speaker Change: Thanks, Sebastian I know the we standby the statement that it will we will manage this that we will continue to emphasize or de levering will continue to manage our balance sheet.

With the closing of that MLC investment.

Speaker Change:

Speaker Change: And particularly the.

Speaker Change: This structured equity transaction gives us.

Speaker Change: Some optionality in some leeway on on how we structure that too to continue to hold the gains from this transaction and and look to how we fund MLS see between now and when we close which I expect will be out in 2025.

Speaker Change:

Speaker Change: There is there is a number of different ways, we could do that I expect on closing, we will own and control a majority stake in MLC.

Glenn Brandt: It could be as high as 75% if we bring in outside partners over time, whether it's at closing or subsequent, or whatever. We'll determine all that in the fullness of time. This structured equity transaction will provide us with a substantial delivering. We will close 2024 in the range of 3.7 times. I anticipate, with the MLSE transaction, we will close 2025 in a similar range, and maybe I'll just leave the comments that that's Sebastiano. That was a similar range to 3.7 that you anticipate exiting 2024. Yes, sorry, yes. Yes.

It could be as high as 75% if we bring in outside partners.

Speaker Change: Over time, whether it's at closing or subsequent or whatever we'll determine all of that in the fullness of time.

Speaker Change: This structured equity transaction that will provides us with a substantial delevering.

Speaker Change: We will we will close 2024 in the range of three seven times.

Speaker Change: Anticipate.

Speaker Change: With the MLC transaction.

Speaker Change: We will we will close 2025.

Glenn Brandt: Okay, and then I mean just zooming back, as we think about the delivering overall, I mean I think the strategy of the stated plan was to deliver by half a term before asset sales entering the year. We now have, on an organic basis, the things that we'll probably not be coming in. Even with there's no asset sales that have come through. So we're not necessarily delivering half a turn on an organic basis. We look at the pressures across the ecosystems and implied guidance, and I understand the improvements on an operational basis that Rogers currently executing against.

Glenn Brandt: But as you think about the path for delivering over the next several years, the question we're planning from investment. I mean, what is the strategic? Equity transaction, announced today, I mean, what does that imply about the cash generation of the business? I mean, is the company still looking, is management still look at Rogers' ability to deliver over the next several years and has that materially changed as we think about the backdrop of the ecosystem? Thank you. Well, we remain extremely confident in our ability to generate cash from operations. So, to the extent it's changed. I'm more confident.

Glenn Brandt: We announced we would hit a billion dollars of cost energies in 24 months, and we hit it within 12 months. We will realize a billion dollars of cost energy savings realized in year in 2024. And so I'm confident in our ability to drive earnings growth, cost energies, cost efficiencies, improved margins. That helps lift our EBITDA. It helps lift our free cash flow. We will generate $3 billion of free cash flow in 2024. And we hold a very substantial portion of that free cash flow after dividends to pay down debt. So, to the extent it's changed.

Glenn Brandt: I'm more confident at the end of 24 than I was going into 24 in our ability to hold cash from operations and pay down debt. We are doing that. So I remain confident and, you know, very satisfied. We announced when we went into this transaction with Shaw that within 36 months we would deliver back down to, you know, in the range of where we were pre-Shaw. Well, pre-Shaw, we were a little bit over three times with this transaction. We are approaching the mid three times range. And we're not yet at the second anniversary of the Shaw transaction.

Speaker Change: And.

Speaker Change: And very satisfied we announced when we went into this transaction with Shaw that within 36 months, we would de lever.

Speaker Change: Back down to.

Speaker Change: In the range of where we were pretty sure well pre Shah.

Speaker Change: We're a little bit over three times.

Speaker Change: With this transaction.

Speaker Change: We are approaching the mid three times range and.

Speaker Change: And we're not yet at the second anniversary of the Shaw transaction.

Glenn Brandt: I appreciate we haven't sold the targeted billion dollars of non-core assets. And that's just your question. I acknowledge that. But we're not desperate. It wasn't ever going to be a fire sale in the interest rate environment. We've had to take a pause on that. I think what we've shown is strong flexibility around adjusting our strategy. We were going to sell non-core assets and then get to our Kojiko shares. Last year, we realized the non-core assets would be delayed. And so we flipped and we sold our Kojiko stake, delivered at the end of 23 from that substantially.

Speaker Change: I appreciate we haven't sold the targeted $1 billion of noncore assets and that's the gist of your question.

Speaker Change: I acknowledge that but we're not desperate wasn't ever going to be a fire sale in the interest rate environment, we've had to take a pause on that.

Speaker Change: I think what we've shown.

Speaker Change: Is.

Speaker Change: Strong flexibility around adjusting our strategy, we were going to sell noncore assets and then get to our cogeco shares last year, we realized the noncore assets would be delayed and so we flipped and we sold our cogeco stake de Levered at the end of 'twenty three from that.

Glenn Brandt: This year we found an opportunity. I appreciate you said we haven't sold assets. We've sold $7 billion in inequity interest in assets that, if you were to look to our balance sheet and find the netbook value for those assets, $7 billion far outstrips the netbook value of those assets. And this is a portion of our wireless backhaul. This is not even the majority of our wireless backhaul infrastructure on our balance sheet. And we sold it for $7 billion of equity interest. We control the operations; you're right to acknowledge these assets aren't non-core, they're core, and that's why we will maintain control.

Speaker Change: <unk>.

Speaker Change: This year.

Speaker Change: We found an opportunity.

Speaker Change: I appreciate you said, we haven't sold assets we.

Speaker Change: We sold $7 billion.

Speaker Change: And an equity interest in assets that if you were to look to our balance sheet and find the net book value for those assets.

Speaker Change: $7 billion far outstrips, the net book value of those assets and this is a portion.

Speaker Change: Of our wireless backhaul.

Speaker Change: This is not even the majority of our wireless backhaul infrastructure on our balance sheet and we sold it for $7 billion of equity interest.

Speaker Change: We control the operations.

Glenn Brandt: But I think we're showing a very dedicated, driven intent to deliver and continue to invest and grow. Maybe I'll pause there.

Sebastiano Petti: Yes, Sebastiano. Thanks, Sebastiano. We'll next question, Gailing.

David Barden: And the next question is from David Barden with Bank of America. Please go ahead. There you go, thanks so much for taking the question.

David Barden: I'm going to have to ask one more on the securization thing. And then I'll ask one about the business.

Glenn Brandt: So Glenn, I think that the word that we want to use, I would use is securization, right, that you've created this subsidiary, this inter-company payment system. There's a forward, three of these payments, your front end loading, the receipt of these payments, you know, into your balance sheet in $7 billion. And my question a little bit is, you know, the original plan was we would deliver, and our cash outflows would go down. But here with this setup, where the payments out to the minority folder are greater than the inter savings from paying down $7 billion in debt, you're delivering, but your payments are going to pop.

Glenn Brandt: And so I guess the question is, what's the point of that? Why is it so important to have a lower, you know, numerator divided by the denominator if your cash outflows are actually going up instead of down?

Tony Staffieri: And then, Tony, I guess, you know, one of the big conversations we've been having has been, you know, how the impact of the government's new immigration policies or posture are going to impact industry growth and how it does impact industry growth of the industry will react. And you guys have been probably the biggest beneficiary of new Canadian market net additions. I'd love to kind of get your perspective on that. Thank you, guys.

Glenn Brandt: Let me answer the first question first. Your, your reference to securitization. I'll just highlight a securitization transaction would be debt. And this isn't debt.

Glenn Brandt: The second part of your question, or how does this make sense, because you're saving on interest, but you're paying out more on distributions. I've been careful not to enumerate what we are paying out in distributions. And so I would, I would just suggest to you that this is an excellent opportunity for the company because on the balance we are very pleased with where we anticipate that balance to go over the future, and I'll just leave it at that.

Speaker Change: We are very pleased.

Speaker Change: With where we anticipate that balance to go over our over the future and I'll just leave it at that.

Speaker Change: Second part of your question.

Speaker Change: But relating to.

Speaker Change:

Speaker Change: Really relating to the size of the market I think a couple of things I would say the government curbing of the new to Canada category. If you look at the foreign students.

Speaker Change: Our estimate it's corroborated by some other reports.

Speaker Change: It had been prepared externally.

Speaker Change: You know that category is down in the third quarter at 40% year on year temporary workers.

Speaker Change: Foreign temporary workers is down 20% to 25%.

Speaker Change: And so in the new to Canada category.

Speaker Change: That has impacted it.

Speaker Change: And as you say, we've traditionally done extremely well in that category, but what you see in our results for the third quarter is that.

Speaker Change: We execute cros.

Speaker Change: All segments of the market and perform extremely well our estimate is that we once again have leading market share in the third quarter in both postpaid.

Speaker Change: And total mobile phones.

Speaker Change: And so that's a really attractive.

Speaker Change: <unk> two again, our focus on the Rogers premium brand.

Speaker Change: As I said the vast vast majority of our net adds is on the Rogers premium brand.

Speaker Change: And now increasingly good share on on chatter.

Speaker Change: In terms of the size of the market outside of the new candidate category, we've traditionally seen over the last year and a bit.

Speaker Change: If we look at that trend line.

Speaker Change: Excluding new to Canada, we're seeing organic growth in the 2.5% to 3%.

Speaker Change: As a result of penetration penetration growth, which is now at 88% and.

Speaker Change: And going up to 90%.

Speaker Change: Very soon.

Speaker Change: Early indications are good on that and so we like what we see.

Speaker Change: In terms of the CRT sees.

Speaker Change: Commentary in looking at it it's not a surprise that indicated that earlier in the spring I wish they were looking at various fees in the industry.

Speaker Change: We will obviously.

Speaker Change: Dissipate and cooperate and providing all the information that they need.

Speaker Change: But as I said.

Speaker Change: We've already evolved in terms of our value.

Speaker Change: <unk> proposition on roaming.

Speaker Change: Alright. Thank you. Thank you thanks, Simon and our last question Gayla in place.

Speaker Change: The next question is from Doug.

Speaker Change: I'll, let Patti <unk> with Canaccord Genuity. Please go ahead.

D&O Petti: Good morning, Thanks for fitting me in two quick ones.

Doug: A follow up obviously.

Doug: Of all gladden.

Doug: That should set up into vicinity of three seven times leverage even exiting 2025, just wanted to clarify does that and does that in vision. The noncore real estate sales or does that exclude that and the second question is obviously on guidance when you look at 12% to 15% Guy.

Doug: Did that does require an uptick in Q4.

Doug: Perhaps maybe talk to what could drive that I know that would be some pricing actions that you've taken anything that would change the trajectory that we've seen in Q2 and Q3. Thank you.

Doug: Thank you you are into the on the on the revenue.

Doug: We're going into.

Doug: Inactive quarter, its a strong quarter for us across our businesses.

Doug: We remain determined to.

Doug: To meet those guidance ranges as I've indicated and so.

Doug: I'll leave the answer at that you've hit on some of the some of the elements of that in terms of some pricing initiatives.

Unknown Executive: This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.