On Wednesday, Rogers Communications (TSX:RCI) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
This content is powered by Benzinga APIs. For comprehensive financial data and transcripts, visit https://www.benzinga.com/apis/.
View the webcast at https://event.choruscall.com/mediaframe/webcast.html?webcastid=WsTsunZb
Summary
Rogers Communications reported strong Q1 2026 results with increased service revenue and adjusted EBITDA, reduced capex, improved free cash flow, and decreased debt leverage.
The company maintained industry-leading margins in wireless and cable, with positive net additions in wireless and retail Internet services.
Strategic initiatives included introducing new 5G plans, planning to complete the purchase of the remaining 25% minority interest in MLSE, and reducing capital spending by 30% to focus on debt reduction.
Rogers Communications expects free cash flow growth of $4.1 to $4.3 billion in 2026 and aims to maintain a lower capex run rate beyond 2026.
Management emphasized the importance of prudent capital management in a low-growth environment and criticized government policies that disincentivize investment.
Full Transcript
Paul Carpino (Vice President of Investor Relations)
Thank you Gaylene 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. As a reminder, we will be holding our Annual General Meeting (AGM) this morning at 11:00am and you can pick up that webcast through the Investor Relations website. To accommodate the Annual General Meeting (AGM), this call will last approximately until 8:45, so we ask that you limit yourself to one question and a quick follow up so we can accommodate as many questions as possible. We will follow up with you on any other questions later today. 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 actual results to differ. With that, let me turn it over to Tony.
Tony Staffieri
Thank you Paul and good morning everyone. I’m pleased to report that Rogers delivered solid results in a very active first quarter. Service revenue and adjusted EBITDA were up, CapEx and CapEx intensity were notably down, free cash flow accelerated and debt leverage was further reduced. Wireless and retail Internet net adds were positive. We continued to deliver. Industry leading margins in both wireless and cable and media delivered strong top line growth and a significant improvement in EBITDA overall. This was another quarter of solid execution based on our clear disciplined Strategy. In wireless, Q1 is typically a quiet quarter. This year we saw aggressive wireless promotional activity from competitors driven by supply rather than demand. Heading into the quarter we expected the market would be flat year over year with no population growth and potentially no new net adds. We did not lead on pricing aggression. As we’ve stated before, our priority is and remains on financials. This is even more important in a low growth environment. We were intentional and decided to lead with our value propositions, notably the best 5G network, terrific multi line value, the most coverage with Rogers Satellite accelerated rewards with a Rogers Red Credit Card, exclusive access to the best sports and entertainment experiences with Rogers beyond the Seat along with competitive pricing as the quarter carried on, we saw increasing aggressive wireless promotional activity. In the second half of the quarter we decided to participate selectively and when we decided to match the competition on price, we saw that our brand and value proposition resonated strongly. We finished the quarter with 33,000 net adds and from a financials perspective we improved Q1 wireless margins by 40 basis points to 65% and maintained stable service revenue. Yesterday we introduced new 5G plans with new features to further strengthen our network differentiation and increased value. In cable, we applied the same disciplined approach. We delivered positive Internet loading with 7,000 retail net additions. Service revenue and adjusted EBITDA were both up 1%, but after adjusting for the sale of our data centers last year, both service revenue and EBITDA were up organically a solid 2%. We improved Q1 cable margins by 30 basis points to deliver industry leading margins of 58%. In media, we delivered strong results in what has historically been a seasonally soft quarter reflecting the benefit of our MLSE investment. The scale and profitability of our sports and media operations is impressive. Revenue in Q1 was up 82% to just under $1 billion. Adjusted EBITDA was at break even largely as a result of the timing of rights fees, but nonetheless a $60 million year over year improvement. 2026 will be a transformative year for sports and media. We expect to complete the purchase of the remaining 25% minority interest in MLSE in the second half of this year. Following the close, we plan to combine our assets into one of the most significant sports ownership, media and entertainment entities globally. We are committed to unlocking the significant and unrecognized value with these premier sports assets and we will look to create additional revenue and EBITDA synergies. We plan to bring in external investors for a minority interesting in an entity we estimate will have a value in excess of $25 billion. We plan to use the proceeds from the sale of this minority interest to pay down debt. We believe these assets will provide long term growth opportunities and significant value even as we operate in the current low growth telecom business. Importantly, our sports assets operate with significantly lower CapEx commitment and we have a proven 25 year track record as strong operators of sports and media assets. Before turning the call over to Glenn, I want to touch on our capital reprioritization and increased free cash flow for 2026. In the current low growth environment, it is critical to prudently manage leverage and maintain our investment Grade balance sheet as we complete our major multi year investment cycle, we operate in a very capital intensive sector. Returns on investments can take years and sometimes even decades. This means we need government policies that reward investment and maintain certainty, especially in a slow growth environment. The government has introduced policies that do the opposite and this means we need to adjust our spending and be highly disciplined and deliberate stewards of of our capital. Today we announced a reduction in our capital spending by 30% versus last year. Our updated guidance range for CapEx is now 2.5 to $2.7 billion in 2026, translating to a capital intensity ratio of approximately 12%. Correspondingly, we expect free cash flow growth of 4.1 to $4.3 billion in 2026, an increase of approximately $800 million from last year. Given the macro environment, we are focusing on deleveraging our balance sheet. In Q1 we reduced our debt leverage ratio to 3.8 times, down another 10 basis points from 3.9 times at year end. With the additional free cash flow, we plan to accelerate debt reduction in 2026 and beyond. Overall, we are executing our plan with discipline in the current low growth telecom market and we are managing capital prudently. In this punitive regulatory environment, we are showing strong execution on capital efficiency and debt deleveraging as we move towards surfacing value by monetizing our sports and media asset portfolio. I want to thank our team for their terrific execution in the competitive environment and their ongoing focus on our key long term priorities. I’ll now turn the call over to Glenn.
Glenn Brandt (Chief Financial Officer)
Thank you Tony and good morning everyone. Thank you for joining us. As you’ve just heard from Tony, we have delivered strong results for the first quarter and with this morning’s report we are very substantially upgrading our 2026 full year guidance on capital expenditures and free cash flow. More on this momentarily. Let me first turn to the quarter. Against the backdrop of continued low growth and heightened competition for the sector, Rogers first quarter results are strong. Once again we delivered service revenue and EBITDA growth, margin expansion, capital expenditure reduction, free cash flow growth, positive wireless and Internet loading and additional delevering. And what’s more, each of our three businesses contributed positively to our results for the quarter. In wireless, service revenue was stable year over year and adjusted. EBITDA was up 1% driven by our continued focus on cost efficiencies, moving margin up by 40 basis points year over year to 65% for the quarter. In a highly competitive market with zero to low wireless revenue growth, our long standing track record for driving industry leading cost efficiencies and margins is even more critical and standout. We added 33,000 total mobile phone net additions in what is usually a seasonally quiet first quarter, including 28,000 net new postpaid subscribers, up 17,000 year over year and above our initial expectations. This past quarter was anything but seasonally quiet with our peers having continued their holiday level of discounting into 2026. Throughout the first quarter, throughout January and into February, we very deliberately opted not to discount our prices, seeking to restore sector pricing away from holiday level discounts. However, our competitors stayed with their aggressive discounting throughout the quarter and so we moved to selectively match their discounts with short time limited offers targeted to insulate our customer base from all of this. Our mobile phone Average Revenue Per User (ARPU) was 5560 for the quarter, down from last year by roughly $1.3 or 2.4%, and postpaid mobile phone churn of 1.22% was up by 21 basis points. Not surprisingly, in a seasonally quiet quarter, the discounts have only served to weaken performance metrics across the sector and are reflected in sector share price performance. With three quarters still to go in 2026, we are hopeful market competition will resettle around value for premium services rather than undisciplined discounting. Moving to cable, we once again delivered positive Internet subscriber net additions, grew service revenue and EBITDA and delivered industry leading margins. Cable service revenue and adjusted EBITDA were each up by 1% year over year, continuing the positive trend our team has delivered for several quarters now. Moreover, adjusting to exclude the impact of the December 2025 sale of our data center business, the organic growth for cable service revenue and adjusted EBITDA would have been plus 2% year over year. Our cable adjusted EBITDA margin in the first quarter increased to 58%, up 30 basis points year over year, consistently among the very best cable margins globally. And finally, retail Internet net additions of 7,000 reflected positive loading in a seasonally quiet but highly competitive quarter. Turning …
This post was originally published here
