Rogers Communications, Inc. 2026 Q3 Earnings Call

Thank you, Gaylene, and good morning, everyone, and thank you for joining us. Today, I am 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 2025 annual report regarding the various factors, assumptions, and risks that could cause our actual results to differ. With that, let me pass the call over to Tony to begin.

Thank you, David, and good morning, everyone. I am pleased to report that we continued to demonstrate strong execution in our three lines of business during the third quarter. Against the backdrop of lower market activity, we continued to deliver on our commitments and our long-term strategy. In the third quarter, we grew consolidated service revenue and adjusted EBITDA each by 1%, reflecting continued positive momentum. We delivered industry-leading wireless and cable margins of 68% and 59%, respectively. We significantly improved capital efficiency, reducing capital expenditures by 46% in the third quarter. This resulted in our lowest capital intensity ratio in well over two decades. We delivered record free cash flow generating over CAD 1.3 billion. We further strengthened the balance sheet, improving our debt leverage ratio by 0.1 to 3.7 times. on October 1st, we reached a key milestone in our sports strategy, acquiring the remaining 25% stake in MLSE.

Rogers now fully owns one of the most valuable collection of sports, entertainment, and media assets globally. These assets are appreciating, but they are not currently reflected in our share price. Overall, we remain bullish about our plan to unlock shareholder value and drive long-term growth. I will now briefly turn to our operating performance in our three lines of business, which Glenn will discuss in more detail. In wireless, we stayed focused on financials versus chasing subscriber volume in what is typically a busy back-to-school quarter. While volumes were down for us and more broadly for the industry through the first nine months of 2026, we continued to execute with discipline in a less active market. We delivered 17,000 postpaid and prepaid mobile phone net additions. This was an intentional strategy to participate selectively in a lower volume market.

Importantly, loading was on the Rogers premium brand, which is very consistent with our market strategy. We launched our back-to-school offers in late July and focused on compelling value propositions that delivered more for customers. This included satellite to mobile technology and priority network access on Canada's best wireless network. Although service revenue was down due to lower fee revenue, we again delivered EBITDA growth and industry-leading wireless margins. Turning to cable, we saw our sixth quarter of positive service revenue growth. We once again saw margin expansion and adjusted EBITDA growth. We added 10,000 internet net adds, which reflects a less active telecom market. In media, we delivered very strong results with revenue growing 9% and adjusted EBITDA growing 12%, supported by a strong quarter for the Toronto Blue Jays. The Blue Jays had the highest overall attendance in the American League this season.

Over 3.3 million fans attended games, and the team drew crowds averaging 97% capacity. This is the club's best attendance since 2016 and the third highest in the Major League Baseball league this year. The Blue Jays' season reflects the value of our sports assets and the opportunity to grow them. Overall, we believe we have the best sports and entertainment assets globally. When combined with our strong national telecom reach, we offer a unique and compelling value proposition that none of our peers can replicate. This gives us a unique competitive position as we transform into a global communications, sports, and entertainment leader. The next step in our strategy is to consolidate our sports media and entertainment assets and to sell a minority interest to third-party investors, and we continue to target a closing date for that by the first half of 2027.

Investor interest in these assets is substantial as sports franchise valuations continue to rise. As an example, earlier this month, Sportico came out with their latest NBA franchise rankings, which had the value of the Toronto Raptors up 24%. These assets carry significant value, and together, these assets are worth even more. We have a unique set of assets within one integrated ecosystem. Five professional sports franchises across five major leagues, all in one city. Sportsnet, Canada's number one sports media brand and streaming platform with the most valuable sports content, including national NHL rights for the next 12 years. And iconic entertainment and sports venues in the heart of one of North America's biggest cities. We firmly believe the whole of Rogers is greater than the sum of its individual parts.

Our partnership with Live Nation to bring the Backstreet Boys to Canada is a great example of our One Rogers ecosystem. The 12-show residency next year is a new record at Rogers Centre. This model demonstrates the significant growth potential of our concert business. It also shows how we can leverage our assets to deliver a unique customer value proposition our competitors cannot match. This is all part of our plan to give Canadians more reasons to choose Rogers. By integrating our sports entertainment and connectivity businesses, we're able to reward customers and create experiences that deepen loyalty and drive long-term value. In closing, we remain committed to delivering on our priorities and to delivering for our customers, fans, and our shareholders. It's an exciting time for our company, and we look forward to delivering the next stage of growth.

I'd like to once again thank the entire Rogers team for delivering on our priorities for our company and our customers and our shareholders. I'll turn the call over to Glenn to walk through the financials in more detail.

Glenn, over to you. Thank you, Tony, and good morning, everyone.

Thank you for joining us. Our third quarter results reflect another quarter of strong, disciplined execution across our three lines of business. In what continues to be a slower growth, competitive telecom market, we have delivered consolidated service revenue and adjusted EBITDA growth. Our continued focus on cost efficiencies grew adjusted EBITDA margins across all three of our business segments. Wireless and cable adjusted EBITDA margins remain among global leaders at 68% and 59%, respectively. Notably, five years ago, at year-end 2021, those margins were 63% and 49%, respectively. Our streamlined capital investment priorities drove capital intensity to just under 10% in the quarter and 12% year-to-date. We have accelerated free cash flow, which is up 65% in the quarter and 34% year-to-date, reflecting the lower capital intensity.

Leverage has improved to 3.7 times, down sequentially from 3.8 times in the prior quarter and from four times at prior year-end. Perhaps most notably among those, we have substantially changed our capital trajectory and free cash flow profile to better navigate our regulatory and competitive telecom landscape. I'm pleased to report we are very well on our way to deliver on our 2026 targets. Our capital priorities remain on plan. Our balance sheet and free cash flow are substantially improved year-over-year, and we are executing on our sports monetization strategy on schedule and at a time when sports properties continue to attract investors and capital at substantial valuation premiums. Turning to each of our business units, starting with wireless. Wireless service revenue decreased by 1% year-over-year, very predominantly reflecting the negative impact of the CRTC's decision to prohibit certain fees starting in mid-June.

Mobile phone ARPU declined 2.6% to CAD 55.22 as a result of the immediate in-quarter impact from the CRTC decision, together with the lagging impact of the competitive intensity from prior quarters, most notably Q4 and Q1. While we have responded to offset some of the CRTC's impact, and let's keep in mind these fees were originally sized to recover real costs in our business, both service revenue and ARPU has been negatively impacted in the third quarter. Notably, excluding the impact of the CRTC's decision, we would otherwise be reporting modest positive service revenue growth and a better mobile phone ARPU decline that improved sequentially from the second quarter. More to do here. Importantly, our continued focus on cost efficiency expanded our wireless adjusted EBITDA margin by 130 basis points year-over-year to an industry-leading 68%.

Rogers continues to find efficiencies driving adjusted EBITDA margin and earnings growth despite the competitive and regulatory backdrop. These ongoing efficiency improvements reflect the scale of our operations and remain critical to driving earnings growth in our low-growth environment. Turning to subscriber growth. Our approach to the market remains disciplined and consistent. We are focused on base management, and we are leading with our premium Rogers wireless service plans rather than simply moving to discount prices to chase volumes. Our total mobile phone net additions were 17,000 in a relatively quiet back-to-school quarter, including 6,000 on postpaid. Postpaid mobile phone churn was relatively stable, up four basis points year-over-year to 1.03%. We view this modest uptick in churn to be temporary and reflective of the pricing actions we took early in the quarter rather than any permanent shift.