Q1 2025 Rogers Communications Inc Earnings Call
Speaker Change: Thank you for standing by. This is the conference operator. Welcome to the Rogers Communications Inc. First Quarter 2025 Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded.
Speaker Change: Following the presentation, we'll conduct a question and answer session. To join the question Thank you, you may press star then one on your telephone keypad.
Speaker Change: Should you need assistance during the conference call, you may signal an operator by pressing star than zero.
Speaker Change: As a reminder, we will be holding our AGM this morning at 11 a.m. and you can pick up that call through the investor relations website.
Speaker Change: This call will last approximately until 8.45, so we ask that you limit yourself to one question, so we can accommodate as many questions as possible. We'll be happy to follow up with you later this morning on any other questions.
Speaker Change: Today's discussion will include estimates and other forward-looking information from which are actual results could differ
Speaker Change: Please review the cautionary language in today's earnings report in our 2024 annual report regarding the various factors, assumptions and risks that could cause our actual results to differ. With that, let me turn it over to Tony.
Thank you, Paul, and good morning, everyone.
Tony: This morning, we reported our first quarter results. As you saw, we continued to deliver growth, 2% growth in service revenue and 2% growth in adjusted EBITDA. And we delivered strong margin improvements year over year on our already industry leading margins. Thank you very much.
Tony: We also demonstrated our ability to execute on our delivering plans while continuing to invest in our core businesses to drive long-term growth. These solid results come against a backdrop of slower growth in our sector driven by lower immigration in a highly competitive market.
Tony: Our results also demonstrate our clear focus on discipline, execution, profitable growth and delivering the balance sheet. These are our key areas of focus and a more cautious economic environment.
Tony: Cable and wireless, we delivered strong financials, profitable subscriber growth and industry leading margins.
Tony: Despite a significantly lower rate of growth in the market, we delivered 57,000 wireless and internet net additions.
Tony: Q1 typically represents about 10% of annual subscriber growth for the industry and so as we work through the quarter we remain focused on price discipline and delivering profitable subscriber growth.
Tony: As I look to the year ahead, we'll continue to deliver the same industry leading performance through four priorities.
Executing with discipline, delivering efficiencies across the company
Tony: Delivering the balance sheet, and advancing our plan to surface value from our sports assets.
Tony: First, on executing with discipline, our sector is adjusting to lower immigration. This change was reflected in our 2025 outlook. Our revenue and ever-to-growth profile remains positive for the year and our priority is to maintain solid financials.
Financial Discipline is key in this or any market environment.
Tony: A good example is our focus on offering high-value wireless and internet plans on the Rogers brand, while delivering differentiated services, the most content, the best entertainment on Canada's most reliable networks.
Tony: The disciplined execution with a strong value proposition remains our priority to ensure our financial performance is consistent with a capital spending we are making to improve and grow our networks.
Second, on delivering efficiencies across the company.
Tony: In this more moderate growth environment, we will look to bring costs in line with revenue growth and to identify more efficiencies [inaudible]
Tony: This includes digital investments that both reduce costs and simplify and improve the customer experience. Our track record on driving efficiency has been notable and very effective over the past three years. And we expect continued strong performance in this area. Thank you very much.
Tony: Third and importantly are delivering efforts remain a top priority. We have been making strategic long-term investments for growth, while also accelerating the delivering of the balance sheet. Balancing both is key to our long-term strategy.
Tony: We made a clear commitment to deliever when we merged with Shaw to return leverage to 3.5 times 36 months after closing [inaudible]
Tony: We made very good progress on this priority. Since the start of the year, we have attracted an aggregate $9 billion of equity capital.
Tony: Upon closing our structured equity transaction, our leverage will be down at 3.6 times. We will have gone from the highest leverage amongst the three major Canadian carriers to the lowest leverage within two years after closing the Shaw transaction. We will have gone from the highest leverage within two years after closing the Shaw transaction.
Tony: It is clear and also worth noting that both domestic and international investors remain confident in Roger's strategy, asset base, and investment grade balance sheet as reflected through the significant investments. Thank you very much.
Tony: Our assets include Canada's most reliable networks with continuous industry leading new innovations.
Tony: Yesterday we rewarded the most reliable 5G wireless network in Canada by Umla for the 7th straight year, solidifying our long-standing leadership in network reliability.
Tony: and earlier this year, Open Signal also recognized Rogers as Canada's most reliable wireless network and most reliable internet.
Tony: We also started delivering 4GIG download and 1GIG upload speeds in select Calgary communities with the Rogers Xfinity modem.
Tony: This new technology supports multi-gig symmetrical speeds and includes Wi-Fi 7. We are the first internet provider to bring this next Gen Wi-Fi to Canadians.
Tony: Finally, we'll continue to advance our strategy to surface value from our sports assets.
Tony: The multi-billion dollar value of our world-class sports assets is not reflected in our share price and our priority is to change this
Tony: Earlier this month we announced the renewal of our partnership with the NHL. These national media rights now locked in until 2038 are the most valuable media rights in Canada.
Tony: The first deal was profitable and successful for Rogers and SportsNet, and we plan to build on this over the next 12 years.
On MLSC, we expect to close the transaction in mid 2025.
Tony: Upon close, we will control 75% of one of the most prestigious sports and entertainment organizations in the world. Beyond the sporting franchises associated with this investment, we will also expand our revenue and evate the base.
Tony: Our sports assets are unrivaled in Canada and our sports portfolio is one of the best in the world.
Tony: Sports assets continue to appreciate significantly in value and that's why investors remain very interested in holding a minority position in these appreciating assets. Thanks for your time.
Tony: We continue to meet with external investors who recognize the opportunity with our sports portfolio. For now, we remain focused on closing our MLC deal to become majority owners.
Tony: Overall, I'm pleased with our operating and financial performance in the first quarter and remain confident in our disciplined execution and steadfast focus to remain the leader in our sector.
Tony: We will focus on a very clear set of priorities consistent with our strategic plan to drive growth and surface value for our shareholders.
Tony: I would like to thank our team for delivering on our priorities and continuing to execute with discipline in a competitive environment as they consistently have over the past three years.
With that, over to you, Glenn. [inaudible]
Glenn: Thank you Tony, and good morning everyone, thank you for joining us [inaudible]
Glenn: We are proud to report that Rogers' first quarter results reflect continued discipline and execution and strong performance in a highly competitive and slower growth market.
Glenn: Both Revenue and Adjusted Evita are up year over year, margins continue to lead our sector and wireless and internet net additions were strong against this backdrop and we're all right.
Glenn: Importantly, we are also delivering on our commitment to significantly reduce leverage and strengthen the balance sheet protecting our investment-grade credit ratings.
Glenn: In February , we completed a very successful $4 billion hybrid securities offering.
Glenn: and we have recently announced our definitive agreement for a $7 billion equity investment led by Blackstone and backed by several leading Canadian institutional investors, which we expect will close shortly after all closing conditions are waived or satisfied.
Glenn: These combined transactions add $9 billion of equity capital to our balance sheet and substantially lower leverage from 4.5 times at 2024 year end to 3.6 times as at March 31st on a pro-forma basis.
Glenn: As a result, I am pleased to report that our balance sheet is sound and we are well positioned for the current business environment.
Glenn: Let me start with some highlights from our first quarter results.
Glenn: wireless service revenue and adjusted EBITDA each grew 2% year over year, primarily driven by subscriber growth over the last 12 months.
Glenn: Our wireless margin was up by 40 basis points compared to the prior year at just under 65%. Reflecting our sustained emphasis on driving efficiencies while balancing subscriber growth with pricing and margins.
Glenn: In the quarter, Rogers delivered a combined 34,000 net new wireless subscribers, down from 61,000 last year, reflecting the smaller market size due to reduced immigration.
Glenn: Importantly, we continue to drive a substantial share of net ads while improving churn, with post paid mobile phone churn down 9 basis points year over year to 1%.
Glenn: Blended mobile phone ARPU of $57 was down just under 2% from $58 in the prior year.
Glenn: Reflecting the competitive intensity and lower roaming revenue in the latest quarter driven in part by reduced travel to the US.
Glenn: As we operate our wireless business in the current environment, Rogers remains focused on the value proposition for our premium plans.
Glenn: Our Rogers 5G plans emphasize more value and savings for families as they add lines on Rogers, consistent with our balanced approach to the market.
Glenn: Moving to our cable business, service revenue was down 1% in the quarter, reflecting a combination of continued competitive promotional activity and customer churn in both satellite and video subscribers
Glenn: Additionally, we are lapping prior year price adjustments that occurred in the first quarter last year.
and which were not repeated in this latest quarter. [inaudible]
Glenn: Cacable's adjusted EBITDA was up 1% year-over-year, driven by a 4% decrease in operating costs from our ongoing cost efficiency initiatives.
Glenn: This was partially offset by increased brand investment with the first quarter launch of our Rogers Xfinity campaign.
Glenn: Internet net additions were 23,000 compared to 26,000 in the first quarter last year.
reflecting, in part, lower immigration activity.
Glenn: Wireline Services remain highly competitive across all regions from coast to coast.
Glenn: Our balanced approach to subscriber additions has driven both competitive market share gains while sustaining cable margins at just over 57%, a 110 basis point increase from the prior year.
Glenn: and in Roger's sports and media, we delivered very strong revenue growth and improved
Glenn: Revenue is up 24% year over year driven by additional Toronto Blue Jays home games in the quarter and by additional advertising revenue from the Four Nations hockey tournament.
Glenn: Additionally, we have benefited from higher subscriber revenue with the launch of Warner Bros. Discovery's Suite of Channels and Content.
Glenn: and the flow through from the higher revenue has translated into a $36 million improvement in
Glenn: On a consolidated level, service revenue, and adjusted EBITDA, each grew by 2% respectively year over year, and consolidated operating margins were up slightly to just over 45%.
Glenn: We continue to find growth opportunities in tighter markets, having added over 400,000 wireless and over 100,000 internet customers over the last 12 months.
Driving service revenue and evita growth and margin improvements . . .
Glenn: Capital expenditures for the quarter were $978 million, down 8% from one year ago, and capital intensity was down 190 basis points.
Glenn: Free cash flow of $586 million was unchanged from the prior year, largely due to timing differences in cash taxes.
Okay.
Glenn: Turning to the balance sheet at quarter-end, we had $7.5 billion of available liquidity comprised of $2.7 billion in cash and short-term deposits on hand and $4.8 billion available under our revolving credit facilities.
Glenn: Our weighted average cost of all borrowings was 4.7% and our weighted average term to maturity was just under 10 years.
Glenn: We ended the quarter with a net debt leverage ratio of 4.3 times compared to 4.5 times at December 31, 24 and down a full turn from the 5.3 times reported when we closed Shaw two years ago.
Glenn: The sequential in-quarter reduction was driven by the issuance of $4 billion in subordinated hybrid securities, which reduced leverage by 0.2 times. We intend to use these proceeds to repay debt and to fund the portion of our upcoming MLSC transaction.
Thank you.
Speaker Change: and as I indicated earlier, Rogers has now agreed to terms.
Speaker Change: for a $7 billion equity investment with funds led by Blackstone and backed by several leading Canadian institutions.
Speaker Change: Rogers will retain a majority controlling interest in its new Canadian subsidiary, which holds a regional portion of certain components of Rogers' wireless networks.
Speaker Change: Rogers maintains full operational control of its network from end to end, and will consolidate the subsidiary's financial results in its consolidated financial statements.
Speaker Change: The subsidiary is expected to distribute up to approximately Canadian $0.4 billion annually to Blackstone in the first five years both closing.
Speaker Change: After which Rogers' average capital cost for the investment is expected to be approximately 7% per annum.
Speaker Change: We intend to use the net proceeds from the transaction substantially to repay debt. And upon closing, we expect our net debt leverage ratio to be approximately 3.6 times on a pro forma basis for the end of Q1.
Speaker Change: Each of these capital transactions are aligned and consistent with our priority commitment to maintain and strengthen our investment grade credit ratings and to deliver back to the pre-shot transaction levels.
Speaker Change: With these initiatives, we have removed the discount on our dividend reinvestment plan or grip effective from our next dividend payment in July and we will be reverting to open market purchases to satisfy those shareholders opting to remain in the dividend reinvestment plan.
Speaker Change: And finally, we continue to move forward on our agreement to buy the 37.5% additional ownership stake in MLSC for $4.7 billion.
Speaker Change: As we await, league, and regulatory approvals for the transaction, we have had significant interest from various institutional investors seeking to invest in our sports assets.
Speaker Change: Nothing further to add at this time, but we intend to continue to develop and explore opportunities and look forward to providing further information in due course.
Speaker Change: Wrapping up then, we have once again delivered strong results in a competitive environment.
Speaker Change: We continue to execute well operationally, while also substantially strengthening our balance sheet.
Speaker Change: We have very substantially lowered our debt, which positions us well for today's more uncertain market.
Speaker Change: I would like to thank our employees for their consistent and dedicated execution across all of our businesses and for their success in once again delivering strong financial and operating performance during a period of major strategic investments.
Thank you for your time and attention this morning [inaudible]
Speaker Change: and with that, Kaleen, may we please commence with the questions and answers. Thank you.
Certainly.
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. If you're using a speaker phone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two.
Speaker Change: Our first question is from Batya Levi with UBS. Please go ahead.
Batia Levy: Great, thank you. Can we start with what you are saying? Thank you.
Batia Levy: Some color in terms of your confidence you have in the annual outlook, given the macro backdrop and potential impact from tariffs.
Batia Levy: and maybe another question on the cable trends. You mentioned the competitive environment. You expect the revenue decline to continue as you lab last year's adjustments or maybe some monetization opportunities as you roll out Xfinity. Thank you.
Batia Levy: Batya, thank you for the question. I'll start and I'm going to add some detailed comments as well.
Batia Levy: In terms of what we're seeing for the rest of the year, as both Glenn and I said in our comments, we took into account some of these macroeconomic issues that we're seeing in terms of slowdown in the economy into our outlook.
Batia Levy: and so we continue to forecast and see opportunities for growth in both revenue as well as
Batia Levy: and the second related to headwinds that we see from satellite and video losses.
Batia Levy: But notwithstanding that internet and some of the additional products that we have on the Xfinity platform.
Batia Levy: Well, more than offset that and you'll see that commencing in Q2 and for the rest of the year as you see cable revenue which includes business as well. I should highlight. Thank you very much.
Returning that segment to…
Batia Levy: to break even and growth in the back half of the year.
Batia Levy: Nothing much further to add to that, Batya. I think on the cable side specifically we will continue to find opportunities to grow subscribers through the year.
Batia Levy: That's a significant part of the year over year, growth plan for the division, as well as ongoing work on our plans.
Batia Levy: I think the emphasis here is to restore the right side of zero. I'm not looking for very substantial growth, but certainly expect for the year. In the coming quarters we will see a restoration of zero to positive growth. [inaudible]
Thank you. Thank you. Thank you. Thank you.
Next question, Galen.
Certainly, yes, certainly one moment, please.
Thank you. Bye.
Speaker Change: The next question is from Drew McReynolds with RBC. Please go ahead.
Drew Mcreynolds: Yeah, thanks very much. Good morning. Just first I get quick clarification on free cash flow guidance. Glenn, can you just remind us?
Wether
Drew Mcreynolds: The existing guidance included kind of the pro-rata distribution on the structured equity investment or whether that will be updated when that deal closes.
Drew Mcreynolds: and then more broadly, my real question just on wireless pricing. It seems like it's two steps forward, two steps back for the industry.
Speaker Change: You know, we have all the operators saying the right things about kind of acting differently in the market and trying to be disciplined, but you know, we don't see it necessarily on the price plans and handset discounts. So I just want to ask from Rogers perspective, is this simply now just a new normal?
Speaker Change: from here on in, or if not, what do you think needs to change here, just to obviously instill a little bit more discontent and firm up what has been a meaningful decline in pricing that everyone's seen over the last couple of years. Thank you.
Batia Levy: Drew, start with the first question on the free cash flow guidance.
Batia Levy: The guidance we gave for the year was provided based on the balance sheet and capital structure as it existed, but I said consistently and continue to say...
the transaction on the $7 billion structured equity.
Batia Levy: Will be reflected in our reporting going forward so people understand how it goes through and would not alter that guidance range so it'll be part of our reporting going forward and no adjustment to guidance.
Drew Mcreynolds: I'm the second part of your question, Drew. I think it's relevant to…
Batia Levy: Look at it in the context of the market dynamics. What we saw is a significant slowdown in the rate of growth in the market, if you're to look at Q1.
Batia Levy: The decline in our net total mobile net additions year on year is roughly in line with what we think the market is declining and so if you look at the post paid market our estimated is probably down for the total market in Q1 by about two thirds. [inaudible] in Q1 in Q1 in Q1
and in terms of total. [inaudible]
Batia Levy: Mobile, it's probably down by a third is our estimate and so against that backdrop notwithstanding we like to think that we were very price discipline in the first quarter. Again I reiterate first quarters about 10% of total annual volumes and so.
Batia Levy: We thought it was a good opportunity to focus on the higher value segments.
Batia Levy: with minimal discounting. We were disappointed to see the market still, as you mentioned, continuing with some discounts.
in the below $40 price point. [inaudible]
But we all that too, we think. [inaudible]
Batia Levy: the market adjusting to a smaller size. And, you know, as we look to the rest of the year, we see opportunities for growth in our poo frankly and price discipline. You would have seen late in the quarters. Thank you very much.
Batia Levy: Rogers coming out with a revised wireless pricing plan that is much more simplified, much more focused on the added benefits in terms of the value proposition besides just the data bucket size.
and also focused on multi-line consolidation.
Relative to our US peers. [inaudible]
Batia Levy: We're much more fragmented here in Canada in terms of multiple lines with multiple providers.
and so we're focused on that strategy as well.
Batia Levy: In terms of handset discount that you've talked about, we see the opportunity for the market here in Canada to probably move in line with where the US is and promotional activity centered more around the handsets.
Batia Levy: while maintaining price discipline and the plans themselves, the monthly subscriber plans. So those are some of the dynamics we see Drew and so
Batia Levy: We are optimistic about our outlook and the industry's outlook to improve price discipline in the marketplace.
Alright, great color, I don't need to thank you [inaudible]
Thanks, Drew. Next question, Gailin. Thank you.
Certainly one moment, please.
Speaker Change: The next question is from Aravinda Galappatthige with Khan Accord genuity. Please go ahead.
Aravinda Galibatige: Good morning, thanks for taking my question. On the cable side, Tony or Glenn, I mean, one thing that's sort of evident is that even though it's slightly down year over year, the broadband networks are holding up fairly well with respect to sort of what we've seen and what we expect from peers, I wanted to get a sense of the level of contribution you're getting now from FWA and sort of your reseller initiatives and how we should sort of pass that out.
You know, that net adds number from that perspective. Thanks.
Thanks for the question, Aravinda.
A couple of things.
Aravinda Galibatige: Our focus is on growing net ads and revenue through all our technology sets. We continue to remain focused on net.
Aravinda Galibatige: in both the East and the West, and we've seen good improvements on that particularly when it comes to bundling.
Aravinda Galibatige: We've always had a strong position in the east and notwithstanding that, continues to improve, but we're also seeing it in the west, and so there's good progress there on that, a very good incoming arpooz as well.
in terms of our... [inaudible]
5G wireless home modem
Aravinda Galibatige: That continues to do well also. Some of the technology improvements we've done in terms of...
Aravinda Galibatige: Network Slicing, but also upgrading the speed you would have seen us move up to 250.
Download Speeds. [inaudible]
on FWA, and that's been...
Succesful.
Aravinda Galibatige: across the nation, but in particular, in places where we don't have waterline in Quebec.
Aravinda Galibatige: in certain parts of Southwest Ontario. And as we look to launch our full suite of Xfinity products on that wireless modem, we expect the penetration opportunity of that continued to grow. So we're pleased with that.
and then finally on the wholesale. [inaudible]
Aravinda Galibatige: Side of it, where it makes sense we continue to deliver on that as well but you ought to think about the relative breakdown as you know focused on
Aravinda Galibatige: on net first, Fix wireless access, and then TPIAA is sort of the third piece of it. So that's roughly the big breakdown of those three technologies.
Thank you. Thank you. Thank you. Yeah, thanks, Aravinda. Next question, Gaili.
Aravinda Galibatige: The next question is from Tim Casey with BMO. Please go ahead. Yes, thanks. Did you clarify?
and your expectations about MLSE. Equity, Glenn, and your prepared remarks.
Aravinda Galibatige: You indicated you are talking to investors. So, you know, I get it, but you'll have control of another 37.5% of the equity. But should we expect you to own that or should we expect there to be third party investors?
involved when you close.
Aravinda Galibatige: My expectation on closing is that we will close the transaction with buying the BCE stake.
Aravinda Galibatige: and then on the other side of that we continue to get substantial interest from institutional investors.
Aravinda Galibatige: and so we will explore those opportunities with a very open mind and nothing further to say at this point, Tim, but we are certainly engaging in those discussions.
Speaker Change: What are the hurdles that you still have to go over to close the transaction? Are you seeing any data from the CRTC in terms of timing and from the leaks themselves? What are the hurdles that you still have to go over to close the transaction?
Glenn: No specific timing given. I don't expect any substantial hurdles.
were a known quantity to the leagues.
with our existing ownership interest.
Glenn: and it's a fairly straightforward transaction so the league approvals I expect in due course.
Glenn: and the CRTC review. Again, I don't expect any substantial hurdles there, but CRTC needs time to run its review, and so I think you heard our expectation on timing continues to be mid-year. [inaudible]
Nothing substantial or further to update from that.
Thank you.
Thank you, Tim. Thanks, Tim. Next question, Gayleen.
Speaker Change: The next question is from Vince Valentini with TD Cohen. Please go ahead.
Vince Valentini: Yeah, thanks very much. Stick on that topic with my first question. Do you hope that you can announce not close because it takes a while for approval, but announce a transaction with third party investors sometime in this calendar year?
Speaker Change: And a second question, just don't throw it out first, Paul doesn't cut me off to get through the list.
Speaker Change: In terms of wireless sub-ads, AT&T and Verizon have both signaled January and February is very weak, but they saw better ads in March.
Speaker Change: Can you give us any sense of the pacing through the quarter that-
that you saw in, and maybe some help on help.
Speaker Change: How Q2 in April has started? Are we seeing a bit of a recovery in what seemed like a very lackluster start to the year for wireless sub ads across not just for Rogers but the whole industry? Thank you.
Speaker Change: Vince, I'll start with the second part and then Glenn will come back to...
Speaker Change: your question on MLSC investment timing. In terms of the profile we saw in the first quarter, it's not dissimilar to what the others south of the border have communicated. It was a slow January , February .
Speaker Change: And somewhat to go, we see the update during March and March break. And so that's the profile we saw. And as we close out April we see a continued pacing of good volume activity. Let's see.
Speaker Change: If we were to, having said that, we continue, you know, last year we would have had total wireless market growth of just over 4%.
We indicated back in January when we released our guidance.
Speaker Change: that we saw a market growing for the full year, roughly 3%. We continue to see it as roughly 3% give or take a little bit.
Speaker Change: for the full year, and so a bit of a different dynamic from the U.S. in terms of where we were and they were, and so hopefully that's helpful in terms of how we see the pacing.
Yep. And Vince, Vince, on your first question, it's-
We're in discussions with folks who are interested.
Speaker Change: in the assets we own and are soon to acquire. It's premature for me to start speculating on when that might result in a transaction. I would say we are engaged in those conversations in earnest. [inaudible]
Speaker Change: We are more aware than the market is reflecting right now of the value of those assets on our balance sheet.
Speaker Change: We believe those assets to be worth something in the range of $15 billion once we close on the purchase of the additional interest in MLSC.
Others talking to us also understand that value. [inaudible]
Speaker Change: We are engaged in those discussions, as I say, in earnest and more to follow, but there's plenty of opportunity there, and we've been consistent in indicating that we are engaged in finding those opportunities.
Speaker Change: Tori, Tori, Paul, just a Clevver, I'm glad you're 15 billion is what you're estimated in it.
Speaker Change: Yeah, with 75% ownership of MLSC, or that would be you.
Okay, that's once we close, that's correct, yes. And 100% of the James obviously. Thank you very much.
Yes, and Roger Sinner. Yes.
Thank you, Vince. Thank you, Vince. Yeah, next question, Gaelin.
Thank you.
Speaker Change: Thank you, good morning, thanks for taking my question. A longer-term question on the satellite on the mobile side, divide-to-device. I understand there's really important limitations for this technology, so I don't think it's a near-term threat at all. But interested in hearing you on if you think eventually satellite could compete with cell phone for mobile data transmission in your binaries. Thanks.
Speaker Change: Thanks for the question, Jerome. As we previously announced, we're working with a few satellite operators to bring that technology to Canada.
Speaker Change: as quickly as we can, but it is an emerging technology as you said. And, um...
So we're working very closely. [inaudible]
Speaker Change: with the satellite owners. It's going to be a game changer. You know, today are wireless network including those of the competitors cover about 12% of the land mass here in Canada.
Speaker Change: and so there's a real opportunity to cover the whole nation, particularly with respect to 9-1-1 and first responder emergency texting.
Speaker Change: which will be the first wave of it. And that'll come in due course.
Speaker Change: I don't want to say too much on timing with respect to that. That's bad.
Speaker Change: We don't see satellite necessarily replacing wireless. It's much like the wireless [inaudible]
Speaker Change: We had 20 years ago as to whether wireless would supplant and there's always an increasing.
Speaker Change: Demand for data latency and a whole bunch of other things. [inaudible]
Speaker Change: and so it'll be something satellite, it'll be something that augments wireless and wireline networks.
Speaker Change: It does have limitations as well in terms of in-building. So you need to have some sort of direct satellite view, if you will, for it to operate. So certainly it's going to be a significant step up in coverage. You need to have some sort of direct satellite view, for it to operate.
Speaker Change: But it'll continue to evolve in terms of its capabilities, and so we don't see it as something that necessarily replaces terrestrial wireless.
Very clear. Thank you.
Gaylene: Alright, thanks Jerome. Gailin, we have time for two more questions please.
Speaker Change: Thank you. The next question is from Matthew Griffiths with Bank of America. Please go ahead.
Matthew Griffiths: Oh, hi, good morning. Thanks for taking the question. Sorry, I have to ask a tariff question.
Matthew Griffiths: So, are you guys purchasing that Rogers purchase handsets from like Apple USA and so anything that they do with tariffs with China, for instance, would you know influence your purchases of handsets?
Speaker Change: on Arpooh in the corner, and where you see that going kind of early on in Q2, thanks.
Speaker Change: Matthew, I'll start with the first one, and Glenn will talk to the second part, which is like roaming in our booth.
in terms of the tariff impact, that should probably... [inaudible]
and take a step back.
Speaker Change: Little-to-no impact on us directly. Most of our suppliers are within Canada and the other pieces of it largely come from outside the U.S., and so the tariff issue is more, as we said before, a concern around the macroeconomic impact for Canada and Canadians. And so we're going to have to take a look at how we're going to be able to do that.
Speaker Change: With respect to handsets specifically, I don't want to get into the details of exactly how we purchase. I will say that irrespective of how the legal structure of it is, it's still a bit of an unknown in a risk with respect to handsets given comments made by...
Speaker Change: the U.S. administration on the topic. And so we'll continue to watch that closely. And so, you know, we highlight it as a potential risk, but we think it's unlikely.
Speaker Change: and in terms of your ask on roaming in the quarter, the...
Speaker Change: Roaming traffic was probably 15% or so give or take of the decline in Arpa, the rest of it was competitive intensity in the market.
So they're helpful. Thank you so much
Thank you. Thanks Matt and Galeen, our last question please.
Speaker Change: Certainly, the last question is from Maher Yaghi with the Scotiabank. Please go ahead.
Meher Yagi: Great, thanks for squeezing me in. So I wanted to ask you a question on, I'll go back to Drew's question on the deal.
Speaker Change: the back-all deal. Glenn, your free casual definition does not include principal payments on least liabilities. I just wanted to make sure I understand the free casual guidance that you gave for 2025. Does it include?
Speaker Change: The reduced interest cost on borrowing is coming from this back hall deal which will lower your debt levels or not and if we include principal payments
Speaker Change: to look at cash on cash, real cash generation, including the lower debt levels and increased principal payments from the lease liabilities, how will the free cash generation be impacted from the steel?
Speaker Change: It down to just the dollar flows. Think of it more from the standpoint of the distributions that we make.
on the transaction.
Speaker Change: Net of the interest savings on the debt that is repaid.
Full value of the distributions they get paid out.
Speaker Change: Full value of the interest savings. Net off the cash. Taxes it will go up a little bit for the fact that the interest creates a tax deductible expense. The distributions do not. The net of that.
Dollar Flow
Speaker Change: He does not substantially alter where our free cash flow is, it would not have resulted in any difference in the guidance we gave on the year.
Speaker Change: The distributions, as I've indicated, are about $0.4 billion a year. The interest savings on a $7 billion debt repayment. You can figure that out, not far off from that number. The interest shelter offsets it a little bit. [inaudible]
Speaker Change: You're not talking about a substantial difference in the cash costs that will go out on the distributions.
Speaker Change: Okay, great. Just on the corporate line, the last on the corporate line.
Speaker Change: Has been increasing lately. Where is the outlook going forward on that line, including CapEx, because it has also increased here on here by about 35 million. Thank you.
The CapEx, you know, there's, you know, there's, [inaudible]
There are some, you know, year to year [inaudible]
Um...
Speaker Change: Variations and Capital Spend at the corporate level, some of its real estate related, some of its systems related from year to year that I don't expect to be particularly material year to year. [inaudible]
Speaker Change: The corporate losses line, we have some investments in the start-up of Rogers Bank, it is still getting its finding at scale and so that runs through the corporate line.
Speaker Change: I would say that all of our corporate departments along with our business departments
Speaker Change: have been a target of looking for efficiencies and driving those efficiencies that continues to be a focus for us.
Speaker Change: and so nothing further to clarify there. I think you've seen it rising in part as well, as a result of just the changes that come from the acquisition of Shaw and the roll-through of some of that integration. Thank you very much.
Speaker Change: That is largely complete from an operational standpoint, but there are still some remaining investments on the CapEx side, as you say in the systems as well as some people in some of those numbers as well.
That is one of the areas of focus for us.
Speaker Change: That's great. Thank you, Maher, and thank you everyone for joining us. We will happy to follow up if there's any other questions.
Thank you everyone for your time and attention. Much appreciated.
Speaker Change: This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.