Rogers Communication, Inc.

and 2.8% this year. But importantly for us, particularly with the launch of our fixed wireless access product, there are an additional 6.5 million homes 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. 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. And putting those together with solid ARPU performance, that's how we came up with the revenue ranges in our guidance.

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. I'm not going to guide nor speculate or pre-announce our intentions on our potential or prospective capital raises, but I would emphasize we have several options open to us, 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 for that.

Great. Thank you, Drew. Next question, Gaylene.

The next question is from Batya Levy with UBS. Please go ahead.

Great. Thank you. Two questions. One on the wireless side. Can you characterize maybe the competitive environment post the holiday season? 1Q 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. 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.

Thanks, Padia, and good morning. In terms of the competitive environment post the holiday season as we moved into January, 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. We certainly did that and we saw that in the marketplace as well. There are a few areas that our competitors continue to put out there in terms of small business offers. but even that promotional pricing and tactics have slowed down as well. So we sort of see a normal course, 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. Our focus on churn has been and continues to yield results for us in both wireless as well as internet. Key factor there is improvements in customer service and customer experience. It's been a focus for us, particularly given we have the largest wireless base in the country. And so it's an important value ad 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. 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. We intend to continue to lead in network performance, predominantly centered around reliability. That's key for the customers today. And so that's what we continue to focus on. We've been investing on the cable side in mid-split. 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 to the DOCSIS IV implementation, which will be later this year. So think about the DOCSIS IV implementation as the less expensive part of it. So 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. So a relatively modest investment to deliver superior internet quality in the marketplace.

And the only thing I would add to that, Bhatia, is that that portion of the 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. So the spend this year will be, if you want to call it a peak, it'll certainly be the more prominent.

Got it. Thank you. Thanks, Pat. Next question, Gaylene.

Certainly. The next question is from Vince Valentini with TD Cohen. Please go ahead.

Yeah, thanks very much. Tag on to Drew's question on volume. Very good color there. If you're expecting sort of 2.5% to 3% volume growth across cable and wireless, your revenue growth guidance would then imply that to get to near the high end, your ARPU would be roughly flat. To get to zero, you'd need to see ARPU down 2% or 3%. Am I missing something on the math there first off, second off? Does that align with what we've seen in the past few weeks in terms of price announcements, 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, is 0% ARPU growth the best you can do for the full year? Granted, the first half may be a bit tougher, but if your guidance is for the full year. I'm just wondering if we can frame how you think about ARPU and the recent pricing changes versus that guidance.

Good morning, Vince. I'll start, and Glenn will add some more detailed color. But as we set, frankly, our budgets and our guidance ranges for this year, 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 and as 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. When you toggle that, 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, what seems to be a sea of change here for the country. And then we think about and have thought about some of the broader macroeconomic factors that could impact us, including some of the recent discussions around tariffs with our U.S. neighbor. And so those are the factors that we put into our thinking in our models. We certainly have what we would describe as an ARPU playbook internally that we execute to. Our drive is as we make investments and provide more value offerings to Canadians, then we look to areas where we can monetize that, and you should expect that. 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 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 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. So the range you see sort of takes into account all those factors.

And Vince, I don't really have anything to add to that. I think we focus on our technology, on the clarity around our brand and discipline around our pricing. 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. But we also emphasize 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, too, just because we asked that question already? Sure. Is there anything meaningful in 25 and would it carry into 26 for companies subsidized rural projects. I think Rogers won a lot of contracts in Ontario that are probably being built out right now. I'm just wondering if you can give us investors any sense. Is there some sort of temporary amount in there that rolls off at some point?

It's multi-year in delivery. You've seen it in some of our prior years. That's a portion of what we invest in in expanding our footprint of INST. That will temper as we move through the coming years. There will be a little bit more through 25 and beyond 25, but that's all factored in as 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.

Thanks, Vince. Next question, Gaylene.

The next question is from Meher Yagi with Scotiabank. Please go ahead.

Great. Thank you for taking my questions. Operational performance continues to be quite strong, advancing at a good clip, as you indicated, but markets investors don't like 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. 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? Second, 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? And third, you indicated that it could be possible to raise capital around your sports asset as a backstop. 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.

Mayor, thanks for the question and articulating that. We've been very clear on our intent to deliver 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 and that work the best for Rogers, Rogers shareholders and our balance sheet and we have options in doing that. Our intent and our direction of travel is clear. If you look at the constructs of our dividend payout ratio, 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 deliver organically in addition to the options that we have in terms of the balance sheet. 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.

And then, Mayor, the only thing I would add is you've asked on the timing. The financing is a complex transaction. I am pleased with the progress. 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. 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 that transaction, whether it does or doesn't come to fruition. It won't affect our guidance on free cash flow.

Great. Thank you, Mayor. Next question, Kayleen.

The next question is from David Barden with VOA. Please go ahead.

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 cable were helpful. But, you know, last year you kind of shared with us that you were, you know, wanted to achieve the positive top line revenue growth by year end, which you managed in Q4. what is that outlook 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? 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, As was mentioned earlier, there is 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 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, 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.

Thank you, Matt. On your questions around, you know, guiding between cable and wireless. We don't guide for the individual business units. You see in the update from Q4 where they are, you know, 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 going to give clarity around guiding in the individual BUs.

In terms of pricing dynamics. Look, Matt, we continue to look for opportunity to provide full value, increasing value, and monetize that. Simple as that. And as I said earlier, we look to factors beyond just price. 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. 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 are things customers see value in. Additionally and importantly, data usage continues to grow in the 30% to 50% range, and 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 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. 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 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 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 have in the past. Great. Thank you.

Great. Thank you, Matt. Next question, Gaylene.

Thank you. The next question is from Tim Casey with BMO. Please go ahead.

Thanks. Good morning. 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? I mean, I assume there's nothing on the CRTC with respect to broadcast deals. You have the Competition Bureau. So is it just leagues that are holding you back? And then I realize you don't want to talk about the structured equity, but how should we think of the interplay of those two deals? If structured equity is delayed or you can't get it to the finish line, how does that change how you think about MLSC? And then just on guidance, you touched on it briefly, but just how are you thinking about the economic outlook? Because I mean, It sure seems like Canada is going to take a hit, and how is that factoring into your guidance? Thanks.

Thank you, Tim. Let me start with the MLSC approval process. Glenn will speak to the second two items that you've highlighted. But in terms of MLSC, the league approvals, It's a process, and I don't want to speculate on either league or CRTC approvals, which I'll talk to in a moment. But 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. and seems to be a little slower than we anticipated in terms of that process. 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.

And then, Tim, on your question of whether or not that's linked to the prospective structured equity investment, those are distinctly different. independent deals, independent timing, no connection whatsoever. The structured equity investment, if successful, obviously 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. some immediate term, some that would take some time to implement. 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, 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 Canada segment. So it reflects those realities. 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. 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.

Our next question is from Benjamin Swinburne with Morgan Stanley. Please go ahead.

Good morning, guys. It's Patrick O 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? 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 favor tighter immigration policies? Thank you.

Thank you, Patrick, on your first question. No specific update. We have proceeded further and progressed further. on the integration. I've mentioned previous calls that we've substantially worked through the people side of the integration. We have some systems work that is nearing completion. We have other systems work that is perhaps midpoint to getting 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. relative to the overall savings. I have mentioned that the largest open item 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. We still have a significant opportunity on our media content costs, 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 in serving our customers. 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, and so I'm not going to provide any further granularity than that. Now we're really just working on year-over-year growth.

Here's a second part of your question, Patrick, and assumptions in terms of immigration in the new to Canada category. We've been prudent in our thinking, and our outlook for this year is based on what we have in front of us. We, it's too difficult and speculative to try to guess what, if and when there is a new government and what their take and policies might be and how fast they implement. 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. Great.

Thank you. Thanks, Patrick. Gaylene, we have time for two more questions, please.

Thank you. The next question is from Aravinda Galapatige with Canaccord Genuity. Please go ahead.

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 needle on ARPU here? 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. This is your sort of legacy footprint. Maybe just a quick thought on how the progress has been in terms of sort of the share shifts there.

Thanks. Thanks, Aravinda. Let me deal with the second part in terms of relative loading. And I assume you're talking wireless as well as... home internet and home products. A couple of things. I would say loading has been good and strong across the entire nation. 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. 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. And then in the East, as I mentioned earlier, as we continue to roll out Midsplit, it's having an impact. And so we like what we see. And then, of course, 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. So we're hitting all of those. 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 your...

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, and we'll take a look at how consumers respond, and then we respond accordingly based on that. I don't 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 in our food growth. Okay. Thank you.

Great. Thanks, Aravinda. And, Gaylene, we have time for one more question.

The next question is from Jerome Debreu with Desjardins. Please go ahead.

Yes, 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 just to see the benefits of integrating MLSC maybe going forward within Rogers, given that in the past we haven't seen really the market recognizing that value. And then second question, thanks for the guidance you provided for 2025, that's helpful. I wonder if you can provide an organic deal leveraging guidance for the year, notwithstanding what might happen with the structured equity

transaction maybe what what the business will be able to do in terms of for can I be leveraging in 2025 thank you Jerome I'll start with the first part and then Glenn will talk to the second piece of it in terms of our strategy with respect to sports and entertainment I think there's three principles that I'll outline it warrants a deeper conversation that will come in due course as we close MLSC But there are a few things I would highlight. Our ownership in sports and entertainment 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. 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 across the assets. And we expect to capitalize on that. And then, of course, their synergies as the largest 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 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. And then the last piece which is one for us which is how do we monetize that and through investment vehicles and the alternatives that we have, and how do we surface that value for Roger shareholders. 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.

And then, Jerome, on your question around the organic delivering, you see our guidance around EBITDA growth and free cash flow. We will apply 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 emphasis around the organic delivering 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.

Great. 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.

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.