Rogers (RCI) Q2 2026 Earnings Call Transcript

Rogers Communications reported Q2 consolidated service revenue of CAD 5.1B (+8% YoY) and adjusted EBITDA of CAD 2.4B (+3%), with free cash flow rising 6% to nearly CAD 1.0B. Capital expenditures fell 16% to CAD 695M, lifting capital intensity 350 bps to 12.4% (lowest since Q1 2008), and the company reaffirmed 2026 CapEx guidance of CAD 2.5B–CAD 2.7B and financial outlook ranges. The quarter also reflects a CAD 1B non-cash loss tied to MLSE put-liability fair value, while Rogers is set to buy the remaining 25% of MLSE in Q4 2026 (leverage 3.8x at June 30 vs 4.0x at Dec. 31). Liquidity remains strong at over CAD 6B, and the company declared a CAD 0.50 per-share dividend payable Oct. 2, 2026.

Analysis

The main investable signal is not the headline operating beat; it is the reset in capital intensity. In telecom, a lower capex run-rate can re-rate equity faster than revenue growth because it expands free cash flow, lowers perceived balance-sheet risk, and narrows the gap versus higher-yield bond proxies. That matters here because the market has been pricing Canadian telecom as a slow-growth, capital-hungry utility; if Rogers can defend share while spending less, the multiple should migrate toward a cash-yield framework rather than an earnings-growth framework.

The second-order effect is competitive discipline. If Rogers is less willing to buy subs with promotions, peers are forced to choose between matching discounts and protecting margins, which typically slows industry ARPU leakage over the next 1-3 quarters. The near-term risk is that the back-half revenue picture looks soft before these benefits show up, since fee changes and promo normalization can distort ARPU and service revenue sequentially even when churn improves.

On the strategic side, the sports-media monetization is a financing event, not a durable operating catalyst. The equity only gets full credit if the minority sale comes at a rich multiple and closes on schedule; otherwise, the market will refocus on leverage and rate sensitivity. Contrarian takeaway: the Starlink bear case is probably overdone for the next 6-18 months; the real falsifier is not satellite substitution, but Rogers failing to hold ARPU and capex discipline at the same time.

Key Decisions for Investors

• Long RCI / RCIAF on weakness over the next 1-3 months for the free-cash-flow rerating, with a stop if wireless service revenue deteriorates materially or capex re-accelerates above the new run-rate.
• Pair trade: long RCI versus short BCE as a relative-value expression on capex discipline and FCF conversion; the trade works if Rogers maintains churn control while peers keep leaning on discounting.
• Do not chase the stock higher on the MLSE monetization narrative alone; wait for league approval and first indications of minority-stake pricing before adding size, because that is the real de-leveraging catalyst.
• If RCI rallies sharply on the conference call, consider trimming into strength rather than adding, since the next 1-2 quarters may show noisy ARPU before the capex benefit fully flows through.
• No tactical short on RCI for Starlink headlines; treat that as a multi-year optionality issue, not a near-term substitution threat.