Thank you for standing by. This is the conference operator. Welcome to the Rogers Communications, Inc. Third Quarter 2025 Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] 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.

Thank you, Galyene, 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 2024 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. It's been quite a week for our Toronto Blue Jays, American League Champions, so I just wanted to say a few words about Canada's team. We're thrilled. The Blue Jays are in the world series, and it all starts north of the border tomorrow. As owner, our job is to give leadership the tools and resources to win. And as Canada's communications and entertainment company, we're about providing Canadians with the best sports and entertainment experiences. This is one of those moments, and this is what Rogers is all about. Let me now turn to the quarter. Q3 was another strong quarter for Rogers. We delivered industry-best combined mobile phone and Internet customer additions. We continue to grow our Cable business anchored by Canada's most reliable Internet. We again delivered the best Wireless and Cable margins in our sector, and we're seeing healthy revenue growth from our Media operations through organic growth and through now including MLSE revenue in our results. Overall, we executed with discipline and a clear focus on driving growth across our three main businesses. Let me start with Wireless. In the highly competitive Wireless market, we saw some pressure on service revenue and ARPU. Our priority continues to be on the consistent delivery of results. We added 111,000 total mobile phone net additions in Q3 and year-to-date, we added 206,000 mobile subscribers with the vast majority on the Rogers postpaid brand. We are leading the industry with innovative, transparent, feature-rich add-a-line plans. These plans meet the dual objective of providing customers with simple value-add options while targeting revenue growth opportunities to support strategic investments in our network. We are also leading the industry with satellite to mobile. This new groundbreaking technology connects Canadians in remote areas, and we now…

Thank you, Tony, and good morning, everyone. Thank you for joining us. We are pleased to report that Rogers' Third Quarter results reflect another quarter of strong, disciplined and leading financial and operating performance. Once again, we have delivered industry-leading margin performance in Cable and Wireless, and our Wireless churn is the best we have seen in over two years. We have delivered positive Cable revenue and adjusted EBITDA growth, and we expect that our combined Internet and wireless loading will once again lead our peers. Media has once again delivered sector-leading growth driven by our added Warner, Discovery media content and by our Toronto Blue Jays' very strong regular season performance. As well, this is the first quarter in which MLSE results are now fully consolidated with our Rogers Sports and Media business segment. And so we are pleased to report that Rogers is delivering solid results across all three core businesses against the backdrop of a competitive environment and slower growth economy. Starting with Wireless. We continue to deliver solid market share supported by disciplined financials. Wireless service revenue was flat and adjusted EBITDA was up 1% year-over-year, primarily reflecting the ongoing competitive intensity in the marketplace, continued lower immigration and lower international roaming and wholesale revenue. Our sustained emphasis driving cost efficiencies has moved our industry-leading Wireless margin to 67%, up 60 basis points against the prior year and near our all-time high of 68%. As well, we have maintained strong market share for mobile phone net additions, adding 111,000 net new subscribers, consisting of 62,000 postpaid and 49,000 prepaid mobile customers. Across the entire sector, Wireless subscriber additions continued lower versus prior year, reflecting continued lower immigration levels. Against this lower growth backdrop, we have added a sector-leading 206,000 net new mobile phone customers year-to-date, with…

[Operator Instructions] First question is from Stephanie Price with CIBC.

I was hoping you could talk a little bit more on the Wireless competitive environment as we head into the holiday season? And if you think the current pricing environment can be sustained here?

Stephanie, thanks for the question. In terms of -- we approached back-to-school, with a view of having a very simple redefined value propositions for the customer. And so we streamlined our price offerings. We made it more clear on the differentiation amongst the plans with features that are beyond just data bucket sizes. And what we found is it resonated well. We focused on add-a-line construct so that we could increase the number of lines per customer, and that's trending well for us as well. And we recently introduced tiered hardware promotional discounts so that the amount of discount on our hardware is graduated depending on the plan that the customer comes in on Verizon, if they're in currently customers today. And what we're finding is that's resonating extremely well with customers, and you're seeing that in our subscriber performance. And that's been continuing throughout October as well. And so we think we've got the right value proposition as we head into Black Friday and to the end of the year. And so that's what you should expect to see from us. We'll see how the marketplace responds. And to the extent we need to pivot based on the market dynamics, then we'll do so. But right now, we're feeling pretty good about the pricing constructs that we have in the marketplace.

And then maybe a follow-up on churn. Your churn has been down over the past 2 quarters. Great to see and hoping you can give us some thoughts on churn management and where there's further opportunities potentially.

What you're seeing is a very concerted effort. We've always focused on base management, but we've taken a much more holistic approach to base management and employing tactics that are resonating with customers in terms of what's important to them, drilling down on customers that we think might have a propensity to churn and dealing with the issues in advance of them calling us. And so there are a number of tactics that we've been going through, and the team is executing extremely well in base management. We expect to continue to see good churn performance across our entire base.

The next question is from Aravinda Galappatthige with Canaccord Genuity.

I wanted to start off with Wireless. Obviously, the lag effect of the historical promotional activity, it continues to show in the service revenue numbers. But just looking at the sequential trend in service revenue growth, I wanted to sort of clarify whether that was sort of items around roaming or external customers that would have had an impact on that number?

Thanks, Aravinda. Yes, the part of that decline really is lower roaming volumes as well as a reference to some wholesale revenues that, I'll shortcut and simply say, moved to another carrier. And so you're seeing that roll through. That's a very substantial part of what you've seen in the revenue.

And just maybe just a bigger picture question on operating leverage. I mean with the progress that's made on the AI side of things, the latest generation being agentic AI and so forth. Can you talk about the magnitude of the opportunities that you have to potentially deploy those technologies within the firm and potentially drive streamlining efforts within Rogers, whether it's in CX or even on the network operations side, marketing, et cetera? Just to get a sense of how material that could be from an operating leverage perspective to the company.

Thanks for the question, Aravinda. Really good question and something we've been spending quite a bit of time on, not just historically, but as advancements in AI tools and technology continues to grow exponentially, we continue to look at ways to capitalize on it. And we see three main areas. One is the customer experience, as you indicated, combining with a completely digital experience, and that's the journey we're on. It's going to allow us to give the customer a more consistent, streamlined experience to address whatever issue they have. And we're really looking forward to that and are much more cost effective -- on a much more cost-effective basis. The second relates to efficiency and the ability of these AI tools to make us much more efficient and some of which you're seeing already in our industry-leading margins in both Wireless and Cable. And then the third really relates to security and the ability to continue to enhance security for our customers and for our own data. And so it's all three of those categories that we're very much focused on, and we'll continue to deploy. So the opportunity for this is significant for us in this sector and we'll continue to follow in many ways the large players globally and the tools that they've deployed successfully, so that we're a fast follower in many of these areas and implementing them efficiently.

The next question is from Drew McReynolds with RBC.

Maybe extending the network revenue question, I think from Aravinda. Maybe, Glenn, can you talk about just, let's level set expectations about how that trends just given all the moving parts whether you want to talk about Q4 into 2026, just how are you thinking of the puts and takes and the trajectory? And then second question, obviously going to fit in a Jays one here. On the sports assets, I mean, clearly, incredible to see the whole country alive here. Maybe, Tony, you've talked about kind of how these three businesses have to stand on their own, but clearly, there's a branding and cross-promotional aspect to this all. Just wondering if we would see or have seen direct impacts on your telecom business in terms of subscriber growth or benefits that are coming your way on the telecom side that we'd see in either Q3 or Q4 or just maybe longer term?

Thanks, Drew. Let me start with the first part of that. I'm not going to take the opportunity to start guiding for '26. I will say the trends you see, I'll say, through the first 3 quarters of 2025 and the trajectory of hitting growth on the year for service revenue, we remain firmly committed to and expect. And so for the year, you'll see positive service revenue growth for Wireless. We all know the competitive framework that we operate in and the slower subscriber growth. That's why you see us leaning in on base management and churn improvement. That's a very efficient way of finding, if not revenue growth, certainly sustaining the base of operations. And so we remain committed to that. Q4, I expect, you'll see strong execution. Part of our Q3 backdrop as we are lapping a very strong Q3 in the prior year, and we have sustained and held the very fast part of that growth that you saw in '24 through the first 3 quarters of '25. So I'm pleased with that progress. So Q4 will be another strong quarter. I won't comment further on guiding for that or beyond in '26, but pleased with progress for sustaining that base management through the 3 quarters.

Drew, with respect to your second question, as you pointed out, we're looking to each one of our pillars of growth being Wireless, Cable and now Sports & Entertainment to stand on their own and drive value, profitability and growth in their own respect. But we also look to ensure that we're capitalizing on the cross synergies amongst all our assets. And the run of the Toronto Blue Jays and heading into the World Series, you can see that in spades in terms of the ability to enhance our brand, the ability to showcase our Cable and Wireless products and services to viewers of the game, and we've seen that throughout the year. If you think about some of the key events in 2025, Four Nations, the playoff run of the Toronto Maple Leafs, and then the Toronto Blue Jays and there are others as well. But you see the power of live sports, and it's good to see, and it's been a benefit for us, as I said, in and of itself, but also in terms of helping the broader Rogers.

The next question is from Vince Valentini with TD Cowen.

I assume you're getting a lot of favors and requests for tickets for the World Series. I'm wondering if you can compare that. How many requests are you getting for this versus the Taylor Swift concerts. You don't have to answer that.

These are the most World Series requests we've had in 32 years.

Thanks, Glenn, a very accurate answer as always. The more serious question. Look, you've been asked this several times. I want to hit this head on. Given pricing is improving in Wireless, your front book is now above your back book. And we've seen the CPI stats showed a material improvement in September to basically flat for Wireless pricing versus double-digit declines earlier in the year. All that should mean that Q3 is the trough quarter for Wireless ARPU at minus 3.2%. Can you not confirm that, that it won't get worse than that and should gradually get better over the next 5, 6 quarters?

Succinctly, I agree with your sentiment. I think we are seeing some strong initiatives around a large number of initiatives to sustain the base, low churn and sustain revenue. And so broadly, yes, I think you are seeing us continue solid Wireless growth on a full year as well as quarter-to-quarter. You saw a dip in the third quarter, but all of the elements that you've pointed out are true Vince.

If I can just sneak in one more. Wireless equipment margin was pretty positive contributor to EBITDA again this quarter. In the past, it hasn't always been a positive. Has something changed in terms of handset subsidies and the amounts you're giving out to or something changed with your deals with the vendors to allow that to be a sustainable source of positive EBITDA?

That's -- the driver for it in the third quarter was really our shift to the tiered promotional discounting that I spoke about. Although we implemented it later in the quarter, it came out of time with higher volumes with back-to-school. And so it was extremely and continues to be very effective in reducing our net hardware costs, but also in incenting the customer to move up tier. And so when we look at our ARPU in, we're really pleased with the effect that it's happening. You see ARPU in up very nicely year-on-year. So we like what we see there. And so it is, we believe, the beginning of a trend in terms of net hardware cost for us.

The next question is from Maher Yaghi with Scotiabank.

Glenn, I just wanted to double check on something. You -- in the previous question, you said in your response that you agreed with all the assumptions based on the basis of the question. But I'd just be very specific. Are you saying that you confirm that the back book of your Wireless service customers is above -- sorry, is below the current front book?

I'm answering from a general sentiment of whether or not we are troughing whether or not Wireless service revenue is growing. I'm not getting into the detail of front or back book. You've heard me answer these questions consistently, Vince, when -- or Maher, when we're asked on what's ARPU trajectory, I focus on service revenue growth and EBITDA growth. And on service revenue growth, I expect Wireless service revenue to grow each quarter and each year. We had a slight and it's a very slight decline just below 0 or flat in the third quarter. For the year we'll be positive, and I expect will be positive going forward. It's a mix of subscriber additions, pricing initiatives, service plan initiatives, simplifying our service plan offerings and trying to move customers up through premium plans. I could go on and on. So I don't want to talk about front and back book because it makes it seem like there's a difference between new and long-standing customers. It's really working with our service plans and our initiatives all around that to drive service revenue and EBITDA growth. So don't read too much into that. I'm answering from a general sentiment we expect Wireless Service revenue to grow period.

Perfect. Thank you for answering this question more precisely because I think there's still some gap left to be closed, but I agree that there's upside for next year. So I just wanted to ask you, I know it's not much visible in your results. And I'm not surprised because in Canada, we have a lag to the U.S. in terms of new product introduction, but results from AT&T yesterday and T-Mobile this morning are showing a significant increase in jump balls coming from customers looking to get their hands on the new iPhones. So I wanted to just see if you're noticing thus far in Q4, a slight pickup in jump balls in Canada yet? Or if not, why not? And how are you positioning yourself for Q4 for -- if we do see the same trend occurring in Canada, do you think handset subsidization will become a bigger factor in overall economics of floating customers in Q4 versus prior quarters?

A couple of things that you touched on, and I'll work backwards from your question. In terms of Q4, the demand for new devices and the subsidy and cost for us, what you see in market for us is how we intend to approach the marketplace in the fourth quarter. We think we have a very good value proposition, and our promotional incentives are really going to be centered around hardware rather than rate plans. But we're also going to be very disciplined in the tiering constructs that I spoke about earlier, so that higher promotional discounts come with our more premium plans and vice versa. In terms of, to use your term, jump ball that we're seeing with the launch of the new iPhone device, we've seen good demand for it. Our bigger constraint has been supply, frankly, on that front. And so that's been a limiting factor for us, but I would say at the margin. But we're seeing the same type of industry constructs for our business that you described.

The next question is from Batya Levi with UBS.

Can you talk a little bit about the competitive environment in terms of, if you're seeing any pickup in go-to-market strategy with converged offers? And from your perspective, can you give us a sense of maybe what percent of your broadband base takes the Rogers services as for mobile? And what are some benefits you see beyond just churn reduction?

Thanks, Batya, for the question. Converged offering is something that we spoke about in previous calls and continues to be competitive advantage for us, frankly, given our Wireline and Wireless converged footprint. And now with FWA, we're essentially converged on 100%. And so our go-to-market strategy has been to leverage our distribution channels, which are the strongest and frankly, the best in the industry here in Canada and leverage those to offer customers a converged home solution as well as their wireless products, and we're seeing good pickup in that. In terms of the percentage, we don't disclose that, but it continues to rise rather rapidly and customers looking for that solution. And there are a number of benefits beyond. The converged offer is a bundled discount, a modest discount for it, but there are other benefits the customer sees in terms of simplified servicing, having to deal with only one provider. And the convergence of the technologies as that evolves, they see benefit in that.

Got it. And just a quick follow-up on the lower CapEx for this year. Can you just provide a bit more color on where it's coming from and also how we should think about capital intensity going forward?

We've been very focused on efficiency throughout our operations. You've seen it and continue to see it in our operating margins across our Cable and Wireless businesses. And you'll see it in our Media business as well going forward at scale. But we've also continued to focus on capital efficiency. And that's what you're seeing play out there. There are projects that we decided not to invest in as a result of government decision on TPIA. Certain projects were just not viable and carried too much uncertainty and it's disappointing. We're a company that wants to invest in this country and in infrastructure. And when faced with uncertainty that those types of decisions create for us, we have no choice but to pull back on capital investment, and you see that impacting the total dollars. In terms of going forward, you should expect us to continue to look for improved efficiencies and ways of continuing to reduce our capital intensity across our businesses.

The next question is from Jerome Dubreuil with Desjardins.

The first one, I just wanted to hear maybe more about the financing plan for the Kilmer deal, which we understand is coming. Glenn, you mentioned that there's been credit agencies discussion. I'm sure they're aware but if you can comment on the plan maybe to bridge a gap just so the market is ready, and we don't have to start over with the balance sheet questions when the Kilmer deal comes.

So the -- what we're focused -- thank you, Jerome. What we're focused on is, first, acquiring the remaining 25% minority stake, combining the operations and then proceeding with recapitalizing the combined Roger Sports & Media, including MLSE and Blue Jays entity. That could happen very shortly on the heels of acquiring the minority stake or it could happen sometime following that. And so we're guiding towards -- within the next 18 months. I do anticipate it could well be in 2026, which is just inside 18 months now that we're standing in October. But it's over a timeframe that is going to take some time to work through the acquisition of the 25% stake. And over the course of that exercise, we are working with our analysis to figure out how best to capitalize that combined entity. It's going to depend upon the arrangements that we strike with the minority shareholder on buying out their stake and just when that comes. Tremendous interest being expressed by institutional -- potential institutional investors. They are an extremely attractive set of assets. We are working with the credit rating agencies, so they are aware of our timing. You mentioned -- you heard me mention on the second quarter call, critical for us was getting our arms around the Shaw delevering at midyear before and then embarking on this MLSE consolidation with RSM and recapitalization that allows the calendar to be reset, gives us time to fill in those details. So I'll quickly draw to a conclusion then, Jerome, that I'm not going to give you the roadmap on exactly how much we're selling down into whom because we -- I don't want to pre-announce. I don't have anything to pre-announce. I do know we have assets that are worth more than $20 billion once we combine it all and tremendous interest in buying in. We have shown time and again, most recently, with the Shaw acquisition, our ability to delever. We are absolutely focused on that exercise, and we have a tremendous value of assets here to do that with. So I'm highly confident on our execution.

Great, Glenn, and if I can just go more specifically on this if I can summarize there is that credit agencies are aware we're not going to need any equity to bridge a gap and probably -- I know the answer to that question, but it would be great to have it out there.

The -- yes, succinctly, yes, they are aware we have time to execute. They know we are committed to executing on this. I have been managing our credit ratings and our capitalization and capital structure and funding as a primary part of my role for coming up on 34 years now, I've been working with these credit rating agencies throughout that 34-year period. They're well aware of our intentions and our capabilities.

Galyene, we have time for two more questions, please.

The next question is from Matthew Griffiths with Bank of America.

Just on the Sports, in the past, if I'm not mistaken, it's been a priority to consider control of the assets following the transaction. That hasn't been brought up this morning, but I just wanted to see if that remains kind of one of the priorities that you're factoring in, in addition to the kind of shareholder return maximization from any potential deal 18 months down the road? And then separately, just on Wireless. On the cost side, in the release, it was mentioned kind of the satellite -- launch of the satellite service was one of the items called out for increased cost. And I just was curious if that was mostly a marketing-related comment or if it's related to kind of the payments to the partner or a combination of both? Just kind of what was -- what exactly is that referring to? Because I know so it's early days. So I just wanted some clarity, if it's possible.

Thank you, Matt. Let me start with the Sports side of it. I'll answer it quickly with just a reference back to the asset value within our sports holdings is, as I've said, somewhere in the range of once we own 100% of everything, Blue Jays and RSM operations today plus MLSE. We've indicated we think the value of that is over $20 billion if we were to sell a majority stake that would be raising north of $10 billion. I don't need $10 billion of equity improvement in the RCI balance sheet. And so I do expect we will maintain control simply because the exercise is not that large, and these assets are very valuable. We do anticipate we will control these assets.

And the second part of your question, Matt, in terms of our Wireless operating costs, you're referring to the comments made in the press release. Year-on-year, we've had a very modest increase in operating costs, and you see it in the disclosures of about $8 million. It's a combination of several factors. One of those factors that is described is the satellite to mobile initiative. And as you rightly point out, it does encompass both the marketing as well as the fee paid for the service under our contract. And we are currently in the beta trial mode. We've extended the beta trial mode to allow the commercial launch to be coincident with the launch of new feature capabilities of the satellite. Right now, it is just texting, but very soon, we're pleased to announce and see that it will include data as well. And so that's the reason for extending the beta trial before we get to commercial launch. And so you don't see any of the revenue pickup in our Q3 results, and you won't see it until we move to commercial launch.

The next question is from David McFadgen with Cormark Securities.

So maybe just following on the Rogers Satellite for a second. So right now, this texting, do you expect to add data, I guess that would be a light data plan. And then do you have any ideas when you'd be able to offer text, voice and just full data?

Thanks for the question, David. So on launch, again, to reiterate, it was texting, including 911 texting in terms of capability. We are extremely pleased with the advancement of the roadmap. Data wasn't going to come until next year and voice was planned for the year after that. As a result of the work that our partner has been doing at a very rapid pace, we're pleased that this quarter, what we will have for our customers is the ability to use data and apps. As you describe, it will be somewhat light data. We'll see the capability in terms of bandwidth once it's into production. But we're really excited about that. And then the next to follow is voice. We don't have something we can disclose on that. But you should expect it at some point in 2026.

Okay. And then can you give us any idea on the number of people that have signed up for the trial so far?

It's received terrific demand from our customers and Canadians broadly in signing up for it. As you can imagine, just given our topography and landscape here in Canada, there are significant areas that weren't covered by any wireless network, including some major highways. And so the use case for it is significant. And what we're seeing is a very good pickup. So it's a material amount. What I can tell you, it's over $1 million, but we're not disclosing the specific number because we don't want to get too far ahead of ourselves in trying to extrapolate what kind of revenue that means.

One of the real opportunities here for us, David, is that it covers the very remote regions of the country, it covers virtually every road and highway. And so there's the individual Canadians that are signing up the enablement of this for businesses is tremendous and the opportunity for us is tremendous.

Well, the fact that you've had over 1 million sign-ups, that's pretty very good. And then just one, if I could squeeze in one more. Just on the Wireless side. So if we don't see any change in immigration, immigration stays at the current levels, do you think your Wireless net adds would be similar next year or higher or lower?

Right. I think let me avoid guiding for next year. But I would say if I look at 2025, even with very, very low immigration our growth is in the range of 3% for the sector, for the industry and 3% growth is roughly 1 million adds for the industry. And so I would expect that to continue until immigration turns up again. It will at some point. I don't expect that in '26, would be wonderful if it did, but it will come back at some point. We will look to growing the population. Again, I expect that's a key part of economic growth for any country, but 3% growth in the base is certainly something we can still build on.

Thanks, everyone for joining us. If there's any follow-up, please feel free to reach out, and have a great day.

Thank you all. Go Jays.

This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.