Rogers Communications Inc.

Thank you for standing by. This is the conference operator. Welcome to the Rogers Communications, Inc. second quarter 2022 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 1 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, Mr. Carpino.

Thanks, Ariel, and good morning, everyone, and thank you for joining us. Today I'm here with our President and Chief Executive Officer, Tony Staffieri, and our Chief Financial Officer, Glenn Brandt. Today's discussion will include estimates and other forward-looking information from which our actual results could differ. Please review the cautionary language in today's earnings report and in our 2021 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 to begin.

Thank you, Paul, and good morning, everyone. Our results for the second quarter demonstrated strong, growing momentum across each of our businesses. As our economy and our markets continue to expand, our teams executed well in capturing an increasing share of this growth and converting it into meaningful financials for each of our wireless, cable, and media businesses. Our drivers of top-line growth centered on a few main factors, namely the return of travel as well as market share gains in our wireless business, the expansion of our footprint into new areas while capturing a growing penetration rate in our cable business and the return of fans to the Rogers Center together with meaningful growth in advertising revenues for our media business. Our network outage just after quarter end was a major disappointment to all of us at Rogers. Network quality and reliability have been a core foundation of our company and this isolated albeit significant outage had a major impact on our customers. Changes are already underway to address not only the root cause of the outage, but more importantly, to ensure we emerge from the incident with more strength and resiliency that is truly industry-leading. As I've stated publicly in recent days, we can and will do better, and I am committed to ensure we make the necessary changes to earn back the trust and confidence of our customers and Canadians. Our improvements will include changes to our network architecture that will separate our wireless and wireline networks for better redundancy, better partitioning of our network to reduce the risk of a national spreading of an outage, changes to our internal processes on how we plan, control, and execute network upgrades, and importantly, a fail-safe method of ensuring communications for emergency and essential services work all the time, irrespective of any one carrier's outage. In terms of financial impact of the outage, the estimated cost of the customer credits we will issue in the third quarter will be about $150 million and will be reflected in those results. As well, the investments in our network will mean a reprioritization of projects within our consolidated capital envelope to ensure the needed network improvements get done as quickly as possible. I am confident we are doing the right things for our customers to rebound from the outage, and we will need to step up our efforts as we head into the busy back to school and fall season. Our Q2 results emphasize the strength of our assets, which delivered with better execution by our teams. In wireless, our renewed focused efforts are producing results, and this has allowed us to capitalize on growing share during the increased market activity we are seeing in Canada. Service revenue and adjusted EBITDA both increased 11% this quarter, driven by higher roaming revenue and a larger mobile phone subscriber base as the economy continued to grow. Underpinning this recovery were strong KPIs across the board in the areas of quality smartphone loading, churn performance, and ARPU growth. Postpaid mobile phone net ads were 122,000, up 62,000 from last year. Our efforts to drive better execution, specifically in phone loading, were also reflected in our prepaid net addition gains, where we saw 55,000 net new subscribers, compared to a loss of 28,000 one year ago. Our strong distribution network, excellent churn performance, growth in immigration, and overall better execution has driven these disproportionate share gains. Additionally, with more people returning to the office, we are seeing greater demand for our unlimited plans, which provide the extensive data buckets and speeds needed to support video, and other business applications being used in a hybrid work model. In fact, data usage is up 40% per subscriber compared to the same period last year. Q1 postpaid mobile phone churn improved by eight basis points to an impressive 0.68%. This reflected the best customer loyalty performance in the company's history. Our teams have worked hard to earn this loyalty by delivering the service and value our customers expect. Everyone at Rogers recognizes to maintain this performance, we will have to work very hard to earn back the trust and confidence of our customers following our network outage, but we're committed to do so. Finally, the mobile phone ARPU was a solid $58.83, up 6% from one year ago, Clearly, we are seeing Canadians embrace the return of travel, and our roaming revenue in Q2 has recovered to 130% of the roaming revenue we saw in Q2 of 2019. Additionally, our loading on the Rogers Popular Unlimited plans is also contributing to better ARPU dynamics. In cable, we delivered another quarter of sequential improvements in our growth. Revenue grew 3% this quarter, and adjusted EBITDA increased by 6%, reflecting a 100% flow-through rate of incremental revenue. Of particular note, adjusted EBITDA has benefited from the significant improvements in efficiency we have prioritized in 2022 relative to the prior year. This includes better managing of expenses and delivering improved operating efficiencies. Beyond improving our financials, our team has been focused on loading growth in our cable and Internet products, and their progress is reflected in our results. For example, retail Internet loading was 26,000, almost double from the same period last year. And importantly, the gains have been driven by loading on the Rogers brand. Additionally, we delivered the fourth consecutive quarter of positive video loading as well, I'm very proud of the team's improved execution in our cable results. This improvement was needed as we fell behind our peers over the past couple of years, but their hard work is starting to pay off. These better results also put us in a good position for when we come together with Shaw, once regulatory approval has been received. In the meantime, we know we have more work to do, and we'll continue to make additional investment in our selling channels improvements in our call center performance, and providing a better digital experience for our customers. Finally, in media, I'm very happy to report our team has returned the business back to profitability, a full quarter ahead of schedule. Revenue grew 21%, primarily as a result of the return of home games for our Toronto Blue Jays at the Rogers Center, as well as higher advertising revenue at our Sportsnet channels. Our media business experienced severe and extended impacts to its operations during the pandemic period, but we believe the worst is over and expect continued profitability in the second half of the year. Finally, let me touch on the Shaw transaction. We have extended the outside date for completion with Shaw to the end of this year. We believe that the Rogers, Shaw and Quebecor agreement addresses the concerns raised by the Commissioner of Competition and Minister Champagne. We will continue to engage with the Competition Bureau and ICED to highlight the significant benefits the merger will bring to Canadians and obtain the outstanding approvals. While we do this, we continue to work through the competition tribunal process. Rogers, Shaw and Quebecor are committed to seeing this transaction through to completion. The three companies have put together a competitive and commercially sustainable remedy that will create a strong Canadian fourth carrier with proven operations in multiple provinces that will reach over 80% of the Canadian population. Rogers, Shaw and Quebecor look forward to securing the outstanding regulatory approvals to deliver significant benefits to Canadian consumers, businesses and the economy. In summary, our Q2 results reflect the quality of our asset base, built over our 60-year history, as well as the dedication by the Rogers team to improve execution and restore our performance after a few very difficult years. We have reinvigorated our organization with an experienced, hands-on executive team who have given their teams the leadership, clarity, and accountability to do their jobs well and we are excited with the opportunities ahead. Let me now turn the call over to Glenn, who will provide a few more details on the quarter.