Q4 2024 Rogers Communications Inc Earnings Call
Thank you for standing by. This is the conference operator. Welcome to the Rogers Communications, Inc. 4th 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.
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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, Mr. Carpino.
Paul Carpino: Thank you Gaylene and good morning everyone and thank you for joining us. Today I'm here with President and Chief Executive Officer Tony Staffieri and our Chief Financial Officer Glenn Brandt.
Paul Carpino: Today's discussion will include estimates and other forward looking information from which our actual results could differ.
Speaker Change: 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. With that, let me turn the call over to Tony.
Tony: Thank you, Paul, and good morning, everyone. I'm pleased to report that we continued to deliver industry-leading results in a highly competitive fourth quarter.
Tony: Q4 caps our third straight year of delivering results that lead the industry.
Tony: In 2024, we attracted more subscribers than any of our competitors, adding a combined 623,000 wireless and internet net additions. More Canadians continue to choose Rogers over any other carrier.
Tony: We delivered the highest wireless margins, the highest cable margins, and stable ARPU. We also delivered the best service revenue and adjusted EBITDA growth in the industry, and grew free cash flow by 26%.
Tony: As it relates to the fourth quarter, the environment remained very competitive, and we continued to execute with discipline. It's clear our team has led the industry by balancing subscriber growth with financial performance.
Tony: Wireless service revenue was up 2%, adjusted EBITDA grew by 6%, and we added 95,000 net postpaid and prepaid phone subscribers.
Tony: While this is down year on year, this was due to a much smaller market size as a result of government policies to reduce the New to Canada category.
Tony: Nonetheless, strong market share performance with the majority of our loading once again on our premium 5G brand.
Tony: Our margin profile remained very healthy at 66% and blended ARPU remained stable at $58.
Tony: Despite the competitive intensity, postpaid mobile phone churn improved to 1.53%, a good improvement over last year.
Tony: In CABLE, we delivered on our commitment to return to growth in the fourth quarter. And although it is only marginally positive, this is a significant milestone in our drive to grow our market share and revenue in this business.
Tony: We continued to deliver strong EBITDA growth in cable, and we continue to benefit from ongoing efficiency gains in retail internet net ads, which were up 30%.
Tony: Importantly, our focus on discipline loading is evident and reflected in record margins of 59%.
Tony: In media, revenue was up 10% and adjusted EBITDA was a healthy $53 million.
Tony: While the advertising market was a bit softer than anticipated in the quarter, our overall business was strong this year. This is a strong foundation for when we close on the acquisition of our competitor's stake in MLSC.
Tony: We are operating in a highly competitive environment, and we led our competitors in wireless and cable loading and delivered financial results that led the industry.
Tony: Our strong results are underpinned by our network leadership and our innovative investments.
Tony: In 2024, we were awarded Canada's Most Reliable Networks by Independent Testing Agencies, OOMLAT and OpenSignal.
Tony: We have made significant investment to remain Canada's largest and most reliable 5G network. And I'm pleased to report that we are now also Canada's most reliable internet.
Tony: At the same time, we advanced several industry firsts in 2024. We delivered four gigabit download and one gigabit upload speeds in an ongoing trial with DOCSIS IV technology.
Tony: We partnered with SenseNet to introduce wildfire detection technology to Canadian communities.
Tony: We completed Canada's first national live trial of 5G network slicing.
Tony: and we're making meaningful progress on the launch of satellite-to-mobile technology.
Tony: 2025 marks 40 years since Rogers launched wireless in Canada, and we continue to build on this innovation leadership.
Tony: We started to roll out the Rogers Xfinity suite of services to Canadians, beginning with Canada's first home internet backup solution, Rogers Xfinity StormReady.
Tony: and yesterday we launched Rogers Xfinity App TV bringing together live TV and streaming services together on one platform.
Tony: Overall, in 2024, we delivered strong results while making meaningful progress on our long-term growth strategy.
Speaker Change: Before I turn the call over to Glenn, I want to touch on two transactions announced previously.
Speaker Change: First, we announced an agreement with Bell to purchase its 37.5% stake in Maple Leaf Sports & Entertainment. This will take our current minority interest in MLSC to a majority 75%.
Speaker Change: Expanding our ownership of MLSC is an important step to deliver long-term growth and surface additional value from our world-class sports and media assets.
Speaker Change: In December, we received clearance from the Competition Bureau, and we are now awaiting League and CRTC approvals.
Speaker Change: Second, we announced an innovative, first-of-its-kind transaction to Canada to raise $7 billion through a structured equity investment for the sale of a minority stake in part of our wireless backhaul infrastructure.
Speaker Change: This transaction is reflective of our focus to de-lever and further strengthen our investment-grade balance sheet.
Speaker Change: We continue to work on definitive agreements and we will provide a more fulsome update at the appropriate time.
Finally, let me touch on our 2025 outlook.
Speaker Change: In 2025, we expect markets to remain competitive and expect growth in wireless to continue to be impacted by the number of newcomers to Canada.
Speaker Change: With this backdrop, we will remain disciplined in the market and balance growth to ensure steady financial results.
Speaker Change: Our 2025 outlook reflects continued growth in service revenue, adjusted EBITDA, and free cash flow. This growth will be underpinned by approximately $4 billion in capital investments to grow our core businesses.
Speaker Change: We delivered strong operating and financial results in 2024 and remain focused on continuing this disciplined leadership in 2025.
Speaker Change: In closing, I want to thank our team for delivering these results in a competitive environment. The team's consistent, disciplined execution over the past three years has set the standard for our industry.
Over to you, Glenn.
Glenn: Thank you, Tony, and good morning, everyone. Thank you for joining us.
Speaker Change: I'm pleased to report that Rogers ended 2024 with another strong quarter.
Speaker Change: Our results reflected healthy service revenue and EBITDA growth, continued strong margins and stable ARPU, all of which are characteristic of the disciplined pricing and balanced approach we have maintained in the marketplace for wireless and cable loading.
Speaker Change: Our wireless margin was up by 250 basis points year over year at industry leading levels of 66%.
Speaker Change: Through 2024, we have added 512,000 net postpaid and prepaid phone additions, leading the Canadian wireless sector for a third consecutive year.
Speaker Change: As expected, the wireless market remained highly competitive through the fourth quarter, reflecting the holiday season and the lower growth environment.
Speaker Change: In the fourth quarter, Rogers delivered on its disciplined approach with 95,000 net postpaid and prepaid phone additions, down from 111,000 last year, reflecting the smaller market size.
Speaker Change: Post-paid mobile phone churn was 1.53%, a 14 basis point improvement over last year.
Speaker Change: As reflected in our prepaid loading, we used our Flanker brands to effectively compete with very aggressive promotions in the marketplace.
importantly.
Speaker Change: Our strong aggregate net phone additions throughout 2024, combined with our solid financial results, stable ARPU, and increased wireless margin, demonstrates Rogers' emphasis to balance subscriber growth without compromising financial performance.
Speaker Change: Moving to our cable business, I am pleased to report we met our target and returned cable revenue back to slight year-over-year growth in the fourth quarter.
Speaker Change: Cable Adjusted EBITDA was up a healthy 5% year-over-year and our cable margin continues to reflect our focus on cost efficiency.
Speaker Change: reaching 59% for the fourth quarter, which is up 290 basis points from one year ago.
Speaker Change: reflecting the strength of Canada's most reliable internet combined with the scale of our national footprint, both of which we will continue to leverage in 2025.
Speaker Change: Sustained growth in our internet subscriber base remains critical and will continue to be underpinned by leading technology and disciplined pricing in the market.
Speaker Change: The ongoing trend for customers to adjust their video viewing preferences was reflected in our year-over-year decline of video subscribers, which was down 35,000 year-over-year.
Speaker Change: We continue to focus on efficiency initiatives to offset the impacts of this decline, which has driven a 7% decrease in operating costs this quarter compared to the prior year.
Speaker Change: Additionally, we are investing in the video experience for our customers with enhanced content and capabilities.
Speaker Change: These initiatives include broader content with NBCUniversal and Warner Bros. Discovery, bringing the most watched lifestyle and entertainment content to Canadians.
Speaker Change: This, along with rolling out the Rogers Xfinity suite of services, will ensure our customers experience the best in entertainment today and for years to come.
Speaker Change: Finally, our sports and media revenue was up 10% and adjusted EBITDA was $53 million compared to $4 million last year.
Speaker Change: This improvement was driven by higher sports and entertainment-related revenue, including higher subscriber and other revenue, as well as some benefit from the Taylor Swift Heiress Tour Toronto Concerts hosted at Rogers Centre.
Speaker Change: In Q4, advertising revenue was softer than originally anticipated, which contributed to our updating of full-year consolidated service revenue growth to 7% versus the 8% low end of our guidance range, which we first provided back in February last year.
Speaker Change: Notwithstanding the lighter advertising revenue, our media business delivered strong results in Q4 and for the full year, with full-year revenue and adjusted EBITDA growth of 6% and 9% respectively.
Speaker Change: As we look to 2025, we enter the year with a very strong underlying media and sports business, even before completing the purchase of the additional 37.5% stake in MLSC.
Speaker Change: On a consolidated level, total service revenue was up 2% in Q4 and adjusted EBITDA was up 9%.
Speaker Change: These results reflect the strong performance and efficiency efforts across all three of our businesses.
Speaker Change: As a result, Rogers delivered consolidated margins of 46% in the fourth quarter, which is up 250 basis points from the prior year.
Speaker Change: Capital expenditures for the quarter were $1 billion, reflecting our ongoing investment coast-to-coast in our Canadian wireless and wireline networks.
Speaker Change: Free cash flow was also very strong at $0.9 billion, reflecting a 7% increase year-over-year.
Speaker Change: Turning to the balance sheet at year end, we had $4.8 billion of available liquidity comprised of $900 million in cash and short-term deposits on hand and $3.5 billion available under our bank credit facilities.
Speaker Change: Our weighted average cost of all borrowings was 4.6%, and our weighted average term to maturity was 10 years.
Speaker Change: We ended the year with a debt leverage ratio of four and a half times.
Speaker Change: This is below our previously targeted level of achieving 4.2 times by year-end.
Speaker Change: which was primarily impacted by lower service revenue and adjusted EBITDA, as well as slower than expected progress on asset sales originally anticipated in the 2024 outlook.
Speaker Change: As you recall, last quarter, we announced that we entered into a non-binding term sheet with a leading global financial investor for a proposed $7 billion structured equity investment.
Speaker Change: The equity investment, if completed, would result in the investor acquiring a minority stake in a subsidiary that will own a portion of our wireless backhaul transport infrastructure, with Rogers continuing to maintain operational control.
Speaker Change: Substantially, all of the net proceeds are expected to be used to reduce debt and further strengthen our balance sheet.
Speaker Change: As an update, we continue to consider, evaluate, and work on definitive agreements with respect to the proposed equity investment. Completion remains subject to entering into binding definitive documentation with the investor.
Speaker Change: Please note that as we are in the midst of this process, I won't be providing any further commentary nor update on this transaction during this call.
Speaker Change: And finally, we continue to move forward on our agreement to buy the 37.5% additional ownership stake in MLSE for $4.7 billion.
Speaker Change: Rogers will pursue the appropriate funding options for this transaction aligned with maintaining our investment grade balance sheet including among other options raising an equity investment in our sports and media holdings.
Speaker Change: Importantly, and just to be clear, we are not considering issuing RCI common shares to fund this purchase.
Speaker Change: For our 2025 outlook, based on our current economic assumptions, we anticipate single-digit growth for total service revenue and adjusted EBITDA, strong free cash flow, and continued investment in our networks coast-to-coast across Canada.
Speaker Change: We anticipate the environment for our businesses to remain competitive in the coming year with continued moderating wireless subscriber growth versus 2024 as Canada's immigration and foreign student levels decline.
Speaker Change: We anticipate total service revenue and adjusted EBITDA growth both in the range of 0% to 3%.
Speaker Change: Capital expenditures of $3.8 billion to $4.0 billion and free cash flow of $3.0 billion to $3.2 billion.
Speaker Change: I will also highlight that this guidance excludes any impacts associated with our pending MLSE transaction.
Unknown Speaker
Speaker Change: 2024 has been a very busy and competitive year and Rogers outperformed its peers in terms of financial performance and disciplined wireless and cable subscriber growth.
Speaker Change: Our teams have worked tirelessly to execute effectively on our core businesses while also moving forward on our longer-term priorities.
Speaker Change: This has included integrating the Rogers and Shaw operations and driving growth in Canada across all of our core assets while remaining focused on driving down leverage.
These are the priorities.
of Rogers Employees.
together against the backdrop of a highly competitive marketplace.
Speaker Change: We have once again delivered sector leading operating and financial performance in 2024 for the third consecutive year.
Speaker Change: and we have done so while investing in bringing industry-leading technology and innovation and world-class entertainment to Canadians.
and the best is yet to come.
Speaker Change: Thank you for your time this morning. And with that, Gaylene, may we please commence with questions and answers. Thank you.
Thank you.
We'll now begin the question and answer session.
Speaker Change: To join the question queue, you may press star then one on your telephone keypad. You'll hear a tone acknowledging your request.
Speaker Change: If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, you can press star then choose.
Speaker Change: Our first question is from Drew McReynolds with RBC. Please go ahead.
Speaker Change: Yeah, thanks very much. And good morning to for me on first on the 2025 service revenue growth guidance.
Speaker Change: Can you just unpack a little bit more your assumptions with respect to the volume side of the equation here for 2025? Obviously, we're all aware it's a moderating population growth environment, just curious.
Speaker Change: as to what your expectation is there in both impacts on wireless and cable. And then secondly, maybe for you, Glenn, on the balance sheet, you're not going to dive any deeper, I don't think, into the structured equity financing.
Speaker Change: proposal but can you give us a sense of in the scenario where you know that doesn't occur just what
Speaker Change: are some of the alternatives you have in mind with respect to managing kind of the balance sheet and getting to where you need to get by the end of the year just with respect to investment grade ratings and targeted leverage. Thank you.
Speaker Change: Good morning, Drew, and thanks for the questions. I'll start with the volume one and then Glenn will touch on your balance sheet question.
Speaker Change: In terms of size of market as we look to 2025.
Speaker Change: be helpful to give you our perspective on 2024, and in particular, exiting the market in the fourth quarter. You know, what we saw in terms of net ads, market size, it was probably down, our estimate,
Speaker Change: between 25 and 30% year on year. Notwithstanding, the market continues to grow through penetration, and a little bit of population growth.
Speaker Change: For the full year 2024, size of market we estimate grew just over 4% down from over 5% the year before, and we saw a progressive steady decline throughout each of the quarters.
As we look to 2025.
Speaker Change: Our estimate is the market's going to grow somewhere in the range of about three percent. We continue to see good penetration gains, secondhand sets.
Speaker Change: and we see good potential for growth on that side of it. And so, you know, market growing at 3%, us continuing to over-index on market share is something we expect to deliver on this year.
Speaker Change: On the cable side, as we look to that market, you would have seen that size of market grow in two respects. One is homes passed, and as construction volumes and flows continue to close out in 2024.
We had homes passed.
Approaching 3% for for the year.
Speaker Change: We continue to expect it to be between 2.5 and 2.8% this year. But importantly for us,
Speaker Change: Particularly with the launch of our fixed wireless access product, there are an additional six and a half million homes.
Speaker Change: that is now an addressable market for us and has been. And so for us, that is a significant potential opportunity in terms of market size.
Speaker Change: So we looked at, against that market size, we looked at our expectations and our targets to obtain subscriber share in both wireless and cable.
Speaker Change: putting those together with solid ARPU performance. That's how we came up with the revenue ranges in our guidance.
Speaker Change: And then Drew, with respect to your question on our balance sheet and our commitment to maintaining our investment grade ratings, and that remains an absolute priority for us.
and you've seen that.
Speaker Change: I'm not going to guide or speculate or pre-announce our intentions on our potential or prospective capital raises.
Speaker Change: But I would emphasize we have several options open to us and and I'll leave it at that But then just repeat we are absolutely focused and committed to maintaining our investment grade ratings
Okay, thanks a lot.
Thank you, Drew. Next question, Kayleigh.
Batia Levy: The next question is from Batia Levy with UBS. Please go ahead.
Speaker Change: Great, thank you. Two questions. One on the wireless side. Can you characterize maybe the competitive environment post the holiday season? OneQ used to be a slower activity period in the past. Are we seeing a little bit more return to a normal trend here? And if you would expect the churn improvement to continue? And second question on CapEx.
Speaker Change: Can you provide more color on the CapEx drivers this year? Should we assume that DOCSIS 4.0 upgrade would be maybe peak and CapEx starts to come down next year? Thank you.
Speaker Change: Thanks, Padia, and good morning. In terms of the competitive environment post the holiday season as we moved into January,
Speaker Change: What we saw was typical of prior years with a slowdown in mall traffic and volume. What we did see is a pullout of promotional offers.
As you would expect.
Speaker Change: We certainly did that and we saw that in the marketplace as well.
There are a few areas that are competitors.
Speaker Change: continue to put out there in terms of small business offers.
but even that promotional pricing and tactics.
Speaker Change: have slowed down as well. So we sort of see a normal course.
Speaker Change: And that's following a Q4 period that I would describe as par for the course in terms of competitive intensity and promotional offers. I wouldn't describe it as more intense or less intense than prior year as a comparator.
So a good, healthy, competitive environment.
Speaker Change: Our focus on churn has been and continues to yield results for us in both wireless
as well as internet.
Speaker Change: Key factor there is improvements in customer service and customer experience.
Speaker Change: It's been a focus for us, particularly given we have the largest wireless base.
Speaker Change: in the country. And so it's an important value add strategy for us to do that. We've been doing and delivering on a number of initiatives to improve that. And you see that coming through in the results and our expectation is to continue to drive those churn improvements throughout 2025.
Speaker Change: And then on your question on CapEx, I'll lead and Glenn will top up, but a couple of things you should expect. Our capital program continues to focus, the vast, vast majority of our capital spend is on network and network innovation.
Speaker Change: We intend to continue to lead in network performance, predominantly centered around reliability.
Speaker Change: That's key for the customers today, and so that's what we continue to focus on.
Speaker Change: We've been investing on the cable side in Midsplit. The West is completed. We've announced that previously. We continue to work quickly in the East and we see dramatic improvements in network performance and churn, frankly.
As we roll out
The mid split and that's a precursor.
Speaker Change: Unknown Speaker The less expensive part of it. So what we what you do see in our capital investments for cable is more of the heavy lifting. But even with that, we're looking at a few hundred dollars per home pass.
Speaker Change: So, a relatively modest investment to deliver superior internet quality in the marketplace.
Speaker Change: And the only thing I would add to that, Batia, is that that portion of the rollout, that'll be multi-year. You won't see that in a large investment up front. That will take years to transition all of the subscribers.
Speaker Change: So, you know, the spend this year will be, if you want to call it a peak, it'll certainly be the more prominent.
Thank you.
Thanks, Pat. Next question, Gailene.
Speaker Change: Certainly. The next question is from Vince Valentini with TD Cohen. Please go ahead.
Vince Valentini: Yeah, thanks very much. Tag on to Drew's question on volume, very good color there. If you're expecting sort of two and a half to three percent volume growth across cable and wireless,
Speaker Change: Am I missing something on the map there? First off, second off, does that align with what we've seen in the past few weeks in terms of price announcements?
Speaker Change: both on internet from both telcos and cablecos, and in wireless even as early as this week with a bunch of favorable pricing changes. If those all stick...
Speaker Change: is 0% ARPU growth, the best you can do for the for the full year. Granted, first half may be a bit tougher. But if your guidance is for the full year, I'm just just wondering if we can frame how you think about ARPU and the recent pricing changes versus that guidance.
Speaker Change: Good morning, Vince. I'll start and Glenn will add some more detailed color.
Speaker Change: But as we set our, frankly, our budgets and our guidance ranges for this year.
Speaker Change: We try to take into account a number of puts and takes and come up with what we think is a fairly balanced, prudent view of what we're going to deliver.
Speaker Change: You rightly pointed out we're operating against a market size that continues to grow and that's a good opportunity for us and we expect to capture leading share in wireless and growing share on the wireline side as well.
And then when you toggle that,
Speaker Change: Some of that is potentially impacted by further government policies that could be more downside or more upside, and that one's difficult to predict for us in this political environment.
Speaker Change: what seems to be a sea of change here for the country.
Speaker Change: And then we think about and have thought about some of the broader macroeconomic factors that could impact us.
including some of the recent
Speaker Change: Discussions around tariffs with our US neighbor. And so those are the factors that we put into our thinking in our models
We certainly have
Speaker Change: You know what we would describe as an ARPU playbook, internally that we execute to and, you know, our drive is as we make investments and provide more value.
Offerings to Canadians
Speaker Change: then we look to areas where we can monetize that, and you should expect that. And so I wouldn't describe Xero as the best we can do. We continue to look for ways to deliver more value and improve our ARPU.
position, but
Speaker Change: There are headwinds as well from time to time, particularly in competitive periods.
in terms of our competitors looking to leverage price.
above other factors.
We've
Speaker Change: pivoted to product differentiation and network superiority as increasingly our lead. We'll lean on price when we need to, but that's our strategy. And so the range you see sort of takes into account all those factors.
Vince Valentini: And Vince, I don't have, I don't really have anything to add to that. I think, you know, we've
Speaker Change: We focus on our technology, on the clarity around our brand, and discipline around our pricing.
Speaker Change: If there's an opportunity for upside on ARPU, I love your optimism and it's reflected here if we can find that opportunity, we will.
Speaker Change: But we also emphasize, you know, going and investing in subscriber growth and making sure we're competitive. So some of that is against the backdrop of a competitive environment, and that's why you see the ranges you see.
Thanks, Glenn. Can I just clarify on CapEx 2?
Speaker Change: just because we asked that question already. Is there any meaningful in 25 and would it carry into 26 for
Speaker Change: subsidized rural projects. I think Rogers won a lot of contracts in Ontario that are probably being built out right now. Just wondering if you can give us investors any sense. Is there some sort of temporary amount in there that that rolls off at some point?
Speaker Change: It's multi-year in delivery. You've seen it in some of our prior years.
Speaker Change: that is a that's a portion of what we invest in and expanding our footprint events.
Speaker Change: That will temper as we, as we move through the coming years, there will be a little bit more through 25 and beyond 25, but.
that's all that's all factored in as part of
Speaker Change: part of that spend envelope. Is there an opportunity to lighten in future years? I'm not going to start guiding beyond 25, but we balance what we invest in terms of expanding our footprint and seeking subscriber growth as well.
Thank you. Thank you. Thanks, Vince. Next question, Gaylene.
Speaker Change: The next question is from Meher Yagi with Scotiabank. Please go ahead.
Meher Yagi: uncertainties related to balance sheet issues. So I understand that you can't discuss specifics on the backhaul deal, but maybe I can ask a few questions around that.
Meher Yagi: So first, can you decide not to close on the MLSC transaction for some reason, and is there a break fee? Is it onerous to not close on that transaction?
Meher Yagi: Can you provide some sense as to why the backhaul deal is delayed beyond what you had initially expected? Is it a rating agency concern or just putting a final number on paper with the buyer?
Meher Yagi: and third, you indicated that it could be possible to raise capital around your sports asset as a backstop.
Meher Yagi: Can you help us understand how that could be set up and I guess my question is why not do this irrespective if the backhaul deal closes or not, just to be on the safe side. Thank you.
Speaker Change: Mayor, thanks for for the question and articulating that. We've been very clear on our intent to de-lever the balance sheet and we have been making good solid progress on that and we'll continue to look to alternatives that give us options.
Speaker Change: and that worked the best for Rogers, Rogers shareholders and our balance sheet.
Speaker Change: and we have options in doing that. So our intent and our direction of travel is clear.
Speaker Change: If you look at the constructs of our dividend payout ratio.
Speaker Change: our cash flow generation and the rate at which our free cash flow is growing, which leads the industry. We're in the best position to continue to de-lever organically in addition to the options that we have in terms of the balance sheet.
Speaker Change: To be clear, our intent is to close on the MLSC transaction once we receive those approvals and we're comfortable with the ability of our funding strategy for that to work within our balance sheet and remain investment grade.
Speaker Change: And then, Mayor, the only thing I would add is you've asked on, you know, on the timing.
Um...
Speaker Change: The financing is a complex transaction. I'm pleased with the progress.
Speaker Change: I'm not, you know, I'm not going to start predicting when we'll get to end of job again. I gave my best estimate when we announced that we had signed the non-binding terms in October.
Unknown Speaker
Speaker Change: We've made some progress, we have work to do, and I'm not going to update further than that in terms of why we are where we are. I'm enthusiastic about the opportunity. I'll leave it at that. The only thing I would add is that our guidance on free cash flow reflects...
Speaker Change: That transaction, whether it does or doesn't come to fruition, it won't affect our guidance on free cash flow.
Unknown Speaker
Thank you, Mayor. Next question, Kayleigh.
Speaker Change: The next question is from David Barden with VOA. Please go ahead.
Speaker Change: Hi, good morning. It's Matt sitting in for Dave. Thanks for taking the questions. First, if I could, I just wanted to kind of circle back to the kind of underlying assumptions a bit of the guidance. The commentary on your expected kind of market growth for wireless and
Speaker Change: helpful. But last year, you kind of shared with us that you wanted to achieve the positive top-line revenue growth by year-end, which you managed in Q4. What is that outlook?
Speaker Change: for the coming year? And how should we think about the balance of the revenue growth and the EBITDA growth between basically the wireless and the cable segments?
Speaker Change: and maybe if you could provide a little bit of color also on kind of some of the dynamics behind
your pricing expectations, I mean, particularly in wireless.
Speaker Change: As mentioned earlier, there are some pricing moves in the market, but I think a big driver of the downward pressure you're facing, if I'm not mistaken, and you can elaborate on it, is from people from two years ago or three years ago.
Speaker Change: who signed deals in a much higher price environment now coming due. And even if prices are up a little, they're still down relative to when you signed them years ago. So the balance in the pressure in ARPU between those
Speaker Change: that repricing of people coming off contract versus the current market price that you see on new subscribers would just be helpful color as we try to gauge where this market is going. Thanks.
Speaker Change: between cable and wireless. We don't guide for the individual business units.
you see in the update from Q4.
Speaker Change: where they are through Q4 and through 2024 on their revenue trajectories and beyond remarking on where the market sizes are going into 2025, which you've heard. I don't have anything further to add on that, but I'm not gonna give clarity around guiding in the individual BUs.
Speaker Change: In terms of pricing dynamics, look, Matt, we continue to look for opportunity to
Speaker Change: provide full value, increasing value and monetize that. Simple as that and as I said earlier we look to factors
beyond just price.
Speaker Change: And if I look to some of the differentiators we have, our credit card was a pretty significant advantage for us in the fourth quarter.
Speaker Change: where customers could finance handsets over 48 months cutting their monthly payments in half. The attach rate we had on that was far beyond expectations and those things customers see value in.
Speaker Change: Additionally and importantly, data usage continues to grow in the 30 to 50 percent range and so while
Speaker Change: So while pricing on a like-for-like basis may seem like it came down, what we have is usage continuing to grow. And so those customers from two to three years ago may be on plans and they're looking
Speaker Change: to move to something that gives them more value. So when we look at, I'd encourage you not to look narrowly at a particular category.
Speaker Change: Looking at our entire base, there are a number of things in terms of acquisitions, and we're always looking to what we describe as base management, and look to the customer and continue to provide them value and
Speaker Change: As I said in the opening remarks, the vast majority of our loading is on the Rogers Premium 5G brand. The attractiveness of the 5G network together with unlimited
Speaker Change: is meaningful to consumers and so we've had a long track record of stable ARPU and pricing competitiveness in certain times is nothing new and we'll continue to balance it as we as we have in the past.
Great, thank you.
All right. Thank you, Matt. Next question, Gaylene.
Speaker Change: Thank you. The next question is from Tim Casey with BMO. Please go ahead.
Thanks, good morning.
Tim Casey: Tony, can you talk a little bit about the timing on MLSC, when you think you can close it, and maybe just a little color on what's holding you up?
Speaker Change: I assume there's nothing on the CRTC with respect to broadcast deals. You have the Competition Bureau, so is it just...
Unknown Speaker ... ... ... ... ... ... ... ...
if structured equity.
Speaker Change: is delayed or you can't get it to the finish line. How does that change how you think about MLSC?
Thank you, Tim. Let me start with...
The MLSC approval process Glenn will speak to
Speaker Change: the second two items that you've highlighted. But in terms of MLSC, the league approvals, it's a process and I don't wanna speculate on either league or CRTC approvals.
which I'll talk to in a moment.
Speaker Change: It's a process and so we're going through that. We don't expect to see issues, but we're working through that. On the CRTC side, that one, MLSC does own NBA TV.
And so that does require CRTC approval.
Speaker Change: and seems to be a little slower than we anticipated in terms of that process.
Speaker Change: I don't want to speculate on time because we're dependent on other organizations for that, but it continues to move along. We don't see issues, but we continue to go down the process.
Speaker Change: And then, Tim, on your question of whether or not that's linked to the...
Speaker Change: the perspective structured equity investment, those are distinctly different independent deals.
Speaker Change: Independent Timing, no connection whatsoever. The Structured Equity Investment is successful, obviously.
Speaker Change: helps fund and strengthen our balance sheet, and so that remains an initiative in its own right. We have ample liquidity on hand at $4.5 billion at year-end. I have ample access to liquidity through a number of different options.
Speaker Change: Some immediate term, some that would take some time to implement.
Speaker Change: very, very comfortable with our flexibility and options around all of that. So no connection between those two. And then your question on economic outlook.
Speaker Change: The guidance reflects current economic conditions and near-term realities in the Canadian environment. It reflects where we are on population growth and the declining international student population in the Canada segment. So it reflects those realities.
Speaker Change: I'm not going to start speculating on what might happen with respect to tariffs or otherwise. I look at where we are today and that's reflected in our determination over to others to manage the stewardship of the Canadian economy and how we respond to the international realities.
Speaker Change: I'm confident that the Canadian economy is strong and weathers these from time to time and we'll come out the other side just fine.
Thank you. Great. Thanks, Tim. Next question, Gaylene.
Speaker Change: Our next question is from Benjamin Swinburne with Morgan Stanley. Please go ahead.
Speaker Change: Good morning, guys. It's Patrick Ho speaking on behalf of Ben Swinburne. Just wanted to ask a question on cable. Is there any more updates in terms of any synergy realization with Shaw? Any outstanding buckets? What's the progress with them? And any potential margin uplift that you see?
Speaker Change: The second question I have relates to the upcoming election in Canada. Can you speak about how Lodi might be impacted if the Conservatives win, and whether you think they will favour tighter immigration policies? Thank you.
Speaker Change: We have proceeded further and progressed further on the integration. I've mentioned, you know, previous calls.
Speaker Change: that we've substantially worked through the people side of the integration.
Speaker Change: We have some systems work that is nearing completion, we have other systems work that is, you know, perhaps, you know, midpoint to, to getting to, to the end on some of the more regional type systems integration that maybe had a bit of a longer term scale, but those are fairly minor in, you know, relative to the overall savings.
I have mentioned.
that the largest open item
Speaker Change: on cost efficiencies and synergistic savings now really lies around some of the long-term build on our wireless cell sites with fiber backhaul versus microwave that can pull out some cost savings.
Speaker Change: We still have a significant opportunity on our media content costs.
Speaker Change: and then continued work on improved customer service and improvements around our digital offering which can pull some of those costs out while increasing our effectiveness and serving our customers.
Speaker Change: Those would be some of the larger priorities that we're still looking at that I would put in the category, at least in part, if not entirely, as synergy. But from a cost synergy playbook, we've achieved a billion dollars.
Speaker Change: and and so I'm not going to provide any further granularity than that. Now we're really just working on year-over-year growth.
Speaker Change: There's a second part of your question Patrick and assumptions in terms of immigration in the new to Canada category
Speaker Change: We've been prudent in our thinking and our outlook for this year is based on what we have in front of us.
Speaker Change: It's too difficult and speculative to try to guess if and when there is a new government and what their take and policies might be and how fast they implement.
Speaker Change: and so if there is upside then great it's good for the industry and good for Rogers but we've taken a prudent approach based on the what we have in front of us now
Speaker Change: Great. Thank you. Thanks, Patrick. Galen, we have time for two more questions, please.
Galen: Thank you. The next question is from Aravinda Galapatyay with Kanakor Juniority. Please go ahead.
Speaker Change: Good morning. Thanks for taking my question. I wanted to talk a little bit about sort of the price action that has been announced by your competitors or maybe also sort of communicated by yourself to your customers. Is there anything meaningfully different when we kind of look at it year over year both on the cable side and across your services as we try to sort of thread the
Speaker Change: How should we look at the price changes that have been contemplated this year versus last year? And then a quick follow-up, with respect to your internet loading, maybe just an update on how you're doing in the West versus your legacy footprint. Maybe just a quick thought on how the progress has been in terms of the share shift there.
Thanks.
Thanks, Aravinda.
Speaker Change: Home Internet and Home Products. A couple of things, I would say loading has been good and strong across the entire nation.
Unknown Speaker
Speaker Change: with particular emphasis in the West. The West continues to be our fastest growing market and we're pleased with the penetration gains we're seeing there that's been consistent.
post-close of Shaw. So we're pleased with that.
Speaker Change: on the home internet side. Midsplit is done in the West, and so we have a significant product advantage when it comes to home internet. And now with the Rogers Xfinity rollout, we're very confident about the product differentiation that we have there.
Speaker Change: and then in the east, as I mentioned earlier, as we continue to roll out mid split.
Speaker Change: It's having an impact and so we like what we see.
And then, of course,
Speaker Change: in Quebec. We continue to make strides particularly now as we have the potential to offer a bundled product and that's a significant market opportunity for us.
Unknown Speaker
We're hitting all of those.
Unknown Speaker ... .
Speaker Change: and then Aravinda, on the first part of your question, maybe you could just repeat that. Who's on the recent price changes in the market, competitors and ourselves, and how that compares with Europe? Aravinda, in terms of that, we make price adjustments based on the market activity, size of market, and frankly, the value proposition, all in, that we're putting in front of the consumer. Our competitors will do what they do.
Speaker Change: will take a look at how consumers respond and then we respond accordingly based on that. I want to speculate too much on what anything happens over the course of one or two weeks and whether that sets any type of precedent for the rest of the year. It's a competitive environment and we will continue to make the moves we need to do to balance subscriber share leadership and our food growth.
Okay. Thank you.
Speaker Change: Okay, thanks Aravinda and Gaylene, we have time for one more question.
Speaker Change: The next question is from Jerome Jabrou with Desjardins. Please go ahead.
Jerome Jabrou: Good morning. Thanks for taking my questions. First one, can you remind us, please, of the synergies in general between the sports asset and the telecom business?
Jerome Jabrou: And then second question, you thanks for the guidance you provided for for 2025. That's helpful. I wonder if you can provide an organic deal leveraging guidance for for the year, you know, not notwithstanding what might happen with the structured equity.
Jerome Jabrou: Transaction, maybe what what the business will be able to do in terms of organic de-leveraging in 2025. Thank you.
Unknown Speaker
Speaker Change: I'll start with the first part, and then Glenn will talk to the second piece of it. In terms of
Speaker Change: Our strategy with respect to sports and entertainment. I think there's three principles that I'll outline
Speaker Change: But there are a few things I would highlight. Our ownership in sports and entertainment.
Speaker Change: is significant, and there's significant value, which is not reflected in our share valuation today. And so, that's the first point I'd make, and those assets continue to grow at double-digit rates in terms of value, and so it's a good growth opportunity for us strategically.
Speaker Change: The second part is the integration of assets and the synergies it creates. And there's really two parts to that that you're getting at. We see opportunities for operating cost synergies, for sure, as well as opportunities for revenue synergies.
Unknown Speaker across the the assets.
Speaker Change: And we expect to capitalize on that. And then, of course, their synergies as the largest.
Speaker Change: Distributor of content and in particular sports content throughout the nation. We have the unique ability to look at the whole ecosystem from sports ownership
Speaker Change: All the way to the viewing experience of the consumer, whether it's in their home or on their mobile device. And we think that's a huge opportunity for us to capitalize on.
Speaker Change: and we're on that course and as I said at the outset this is something that you'll hear and see more of as we go down that strategy but the value opportunity is significant for Roger shareholders.
Speaker Change: And then Jerome, on your question around the organic delivering, you see our guidance around
Evita Growth and Free Cash Flow.
Speaker Change: We will apply, you know, the available free cash flow of which we retain a substantial, substantial portion, certainly relative to our peers.
to invest back in our balance sheet.
and Lower Leverage accordingly, and so we will have some.
Speaker Change: Some emphasis around the organic de-levering as well as our other balance sheet initiatives that we've touched on. I'm not going to guide on leverage beyond that, but we'll continue to emphasize that de-levering. We have a ways to go and it remains a priority focus for us.
Thank you.
Speaker Change: Thank you. Thank you Jerome and thanks everyone for joining us and if there's any follow-up please reach out to the Rogers team here. Thank you. Thank you all.
Speaker Change: This concludes the question and answer session and today's conference call. You may disconnect your line. Thank you for participating and have a pleasant day.