Rogers Communications Inc.

Thank you for standing by. This is the conference operator. Welcome to the Rogers Communications third quarter 2020 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. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Paul Carpino, Vice President of Investor Relations with Rogers Communications. Please go ahead.

Thanks, Ariel. Good morning, everyone, and thank you for joining us. Today, I'm here with our President and Chief Executive Officer, Joe Natale, our Chief Financial Officer, Tony Staffieri, and our Chief Technology and Information Officer, George Fernandez. Before we begin, I want to remind everyone that today's discussion will include estimates and other full-looking information from which our actual results could differ. Please review the cautionary language in today's earnings report and in our 2019 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 Joe.

Thanks, Paul, and good morning, everyone. Let me start by speaking briefly about our third quarter results. Tony will provide additional detail and insight in a few minutes. Next, I will share an update on how we're continuing to adapt our business to both meet the needs of our customers and drive operating efficiency. And finally, as Canada's largest 5G provider, now covering 130 cities, I'll discuss our 5G rollout and the role our next-generation technology plays in driving long-term growth. and supporting Canada's future. First, our results. Rogers delivered significant sequential improvements in Q3 across each of our businesses, with a solid performance in customer additions, revenue growth, profitability, and free cash flow. As we previously noted after Q2, our results during the economic shutdown did not reflect the underlying fundamentals of our company nor the long-term growth prospects of our wireless cable or media businesses. This is evident in our Q3 results, which rebounded as demand growth resurfaced and we pivoted our operating model. Our results show we are managing the environment effectively and our long-term strategy is sound. In Q2, the overall wireless market declined by more than 80%. In Q3, As our stores reopened and our digital sales capability ramped, we delivered strong post-paid net additions of 138,000, up 34% from the same period last year. In addition, we delivered 30,000 prepaid net additions. This growth was driven by a number of factors, pent-up consumer demand, an active back-to-school shopping period, growth in our digital sales and service capabilities, and a continued growth in our 5G-ready unlimited plans. Our Rogers Infinite Unlimited plans grew by 300,000 this quarter to 2.2 million customers. This represents the largest unlimited customer base by far in Canada. Customers that no longer pay overage fees enjoy worry-free data usage and are well positioned for 5G. Our Infinite base has higher ARPU, lower churn, far better lifetime value with a lower cost to serve, and their data consumption is more than double that of customers on legacy plans. These results are certainly in line with our expectations and create a strong foundation as we grow our ever-expanding 5G footprint and iconic 5G devices like the exciting new iPhones arriving in Canada. Despite the competitive intensity in the quarter, our team continues to do a good job of managing churn, Post-pay churn in Q3 came in at 1.1%, a full 10 basis points better than Q3 of last year. Switching to our cable business, which also improved sequentially from the anomalous lows of Q2, revenue was flat. Adjusted EBITDA grew 2% year over year. And despite COVID-related delays and adjustments in the home building industry and the condo rental and Airbnb market dynamics, we delivered solid operating gains. We're very pleased to report that our DOCSIS and fiber network investments continue to gain recognition. Earlier this week, Ookla, a leader in network testing, recognized Rogers as the internet provider with the fastest speeds in Canada and the best consistent performance nationally. Switching to media, with the return of live sports in Q3, Our media business delivered year-over-year revenue growth and significant sequential improvements in EBITDA. This represents a material reversal after this business experienced the most significant impact during the depths of the COVID-19 lockdown. All four major sports and their viewing audiences were back in Q3. Viewing numbers were strong and advertising showed notable improvement from Q2. Advertising across all media was up 18% from a year ago, with sports advertising showing even stronger gains. This underscores the essential strength and resilience of live sports above all other media categories. Next, I want to highlight some recent business improvements that will play an important role in driving both efficiency and growth into the future. As I mentioned last quarter, COVID-19 fundamentally changed how we operate and greatly accelerated our business transformation plans. We fast-tracked initiatives that we had planned, including enhanced TV and Internet self-install, stronger digital capability, customer care agents working from home, just to name a few, and launching these changes in record time. This is more important than ever as customer behaviors and expectations change rapidly. Our ability to be agile and adapt how we serve customers is critical, and it's a muscle that is developing well at Rogers. This will pay dividends well beyond the period of the pandemic. In many cases across industries, the move to online shopping is three years ahead of forecast. Choice matters. and multiple sales and service channels matter. Building on our digital gains in the early days of the pandemic, our digital volumes continued to grow even as our stores reopened. Digital sales adoption is up materially year over year, and we're seeing a healthy mix between digital and bricks-and-mortar retail. This channel mix and the resulting improvement in channel economics allow us to be nimble, meet customer needs, and drive margin improvement. At the same time, digital service and digital support is up substantially, resulting in fewer service calls. Last month, we moved to digital self-serve only for simple transactions, such as making bill payments, changing contact information. Today, nearly all of our top five service transactions are completed digitally. Our virtual assistant conversations jumped over 200% since last year. and nearly 20% sequentially. We've now handled over 5.4 million conversations since the Rogers Virtual Assistant launched 18 months ago. With ongoing improvements through AI technology, we expect this to continue to deflect more calls, lowering costs, and importantly, saving our customers even more time. In cable, we continue to see excellent ongoing advancements with the self-install capabilities of our Ignite services. Our express self-install option delivered via courier makes up a growing percentage of our Ignite installs, eliminating a truck roll entirely. Together with our enhanced self-installs where our technicians drop off equipment and provide support for our customers through our virtual assistance app, these contactless installs represented 95% of our cable installations in Q3. When our customers do call us, our technical support agents also use our virtual assistance app. With the app, they now solve the majority of issues right away without needing to book a service appointment. We remain on track to save our customers an estimated 400,000 hours of their time and save us approximately 100,000 service truck rolls this year. This is an example of how our digital capability drives an enhanced customer experience. as well as increases the overall efficiency of our service processes. In addition to efficiency and cost management opportunities, investing for growth remains a top priority. Investing in networks is a critical part of our long-term and future success. In fact, it's an immediate imperative as we move to a 5G future. Today, Rogers customers enjoy the best wireless network experience in the country. Umlots, a global leader in network testing and benchmarking that ranks the performance of typical consumer use cases and tests, tests things like network reliability, download and upload speed, call setup time, video streaming stability and quality, has awarded Rogers the best wireless network in Canada for the last two years. To get to this point has required $30 billion of investments in our wireless network over the past 35 years. This is a scale business, and the importance of scale is more important now than ever as we begin the biggest generational cycle in technology and network capability. 5G will transform industries, fuel innovation across sectors, and drive economic growth in our tech-driven recovery. It will reduce the cost of data and fundamentally change how Canadians and businesses connect to the world. 5G technology is engineered to support a thousand-fold traffic increase over the next decade. While the full network's energy use is expected to be half the current levels, 5G is not just about innovation, but also supports a better environmental outcome. Rogers operates Canada's first and largest 5G network. powered by our long-time network partner Ericsson. We started the rollout in downtown Toronto, Ottawa, Montreal, and Vancouver back in January, and we have since expanded to 130 cities and towns, including the first city in Atlantic Canada. Just last week, coinciding with the announcement of Apple's 5G iPhones, we announced that we doubled the reach of the Rogers 5G network. Today, our 5G network is 10 times bigger than our peers. 5G requires the right infrastructure, the right partners, and investments to be ready to fully capitalize on its potential. We are well prepared in this regard. In addition to our network partner Ericsson, our strategic partnerships to research, incubate, and commercialize 5G solutions extend to campuses across Canada, including the University of British Columbia, the University of Waterloo, and Communitech. These partnerships and investments in digital infrastructure are critical to help Canada not just recover, but rebound from COVID-19. From tech startups to small and medium-sized businesses to large enterprises, they all need strong networks to unlock growth and unlock productivity. And of course, none of this great work and none of these accomplishments during this quarter could have happened without the dedication of our team members. I want to thank our entire team for their incredible effort and commitment they have demonstrated since the start of the pandemic. During the most complex business environment we have seen in our lifetime, our team has been there for our customers and for our communities. This has also been reflected in our recent annual employee engagement survey, where we achieved a score of 87% employee engagement. I could not be prouder of the continuous improvement culture that has been built at Rogers. And this will serve as well as we invest in more service and technology innovation and in rolling out the next generation of wireless or broadband capabilities. And with that, I'll turn it over to Tony to provide some more details on Q3. Over to you, Tony.