Rogers Communications Inc. today announced its unaudited financial
and operating results for the third quarter ended September 30,
2023.
"We continued to deliver industry-leading
results in the third quarter, reflecting seven straight quarters of
growth and momentum," said Tony Staffieri, President and CEO. "Six
months into our Shaw integration, we're tracking ahead of our
synergy targets and deleveraging plans. At the same time, we
continue to introduce new technology, new innovations, and new
value propositions to Canadians. The team is firing on all
cylinders and executing with discipline, I am very pleased with our
progress."
Consolidated Financial
Highlights
(In millions of Canadian dollars, except per share amounts,
unaudited) |
Three months ended September 30 |
|
Nine months ended September 30 |
|
|
2023 |
|
|
2022 |
% Chg |
|
|
2023 |
|
2022 |
% Chg |
|
|
|
|
|
|
|
|
|
Total revenue |
|
5,092 |
|
|
3,743 |
36 |
|
|
13,973 |
|
11,230 |
24 |
|
Total service revenue |
|
4,527 |
|
|
3,230 |
40 |
|
|
12,375 |
|
9,869 |
25 |
|
Adjusted EBITDA 1 |
|
2,411 |
|
|
1,583 |
52 |
|
|
6,252 |
|
4,714 |
33 |
|
Net (loss) income |
|
(99 |
) |
|
371 |
n/m |
|
|
521 |
|
1,172 |
(56 |
) |
Adjusted net income 1 |
|
679 |
|
|
436 |
56 |
|
|
1,776 |
|
1,361 |
30 |
|
|
|
|
|
|
|
|
|
Diluted (loss) earnings per share |
($0.20 |
) |
$0.71 |
n/m |
|
$0.97 |
$2.28 |
(57 |
) |
Adjusted diluted earnings per share 1 |
$1.27 |
|
$0.84 |
51 |
|
$3.37 |
$2.66 |
27 |
|
|
|
|
|
|
|
|
|
Cash provided by operating activities |
|
1,754 |
|
|
1,216 |
44 |
|
|
3,842 |
|
3,348 |
15 |
|
Free cash flow 1 |
|
745 |
|
|
279 |
167 |
|
|
1,591 |
|
1,138 |
40 |
|
1 Adjusted EBITDA is a total of segments
measure. Free cash flow is a capital management measure. Adjusted
diluted earnings per share is a non-GAAP ratio. Adjusted net income
is a non-GAAP financial measure and is a component of adjusted
diluted earnings per share. See "Non-GAAP and Other Financial
Measures" in our Q3 2023 Management's Discussion and Analysis
(MD&A), available at www.sedarplus.ca, and this earnings
release for more information about each of these measures. These
are not standardized financial measures under International
Financial Reporting Standards (IFRS) and might not be comparable to
similar financial measures disclosed by other companies.
Strategic Highlights
Our five objectives guide our work and
decision-making as we further improve our operational execution and
make well-timed investments to grow our core businesses and deliver
increased shareholder value. Below are some highlights for the
quarter.
Build the biggest and best networks in the
country
- Launched 5G service for all transit
riders in the busiest sections of the Toronto Transit Commission
(TTC) subway system.
- Recognized as the best and most
reliable wireless network in Canada for the fifth straight year by
umlaut in July 2023.
- Invested over $1 billion in capital
expenditures, mostly invested in our wireless and wireline network
infrastructure.
- Invested in wildfire detection and
prevention technology to help combat climate change-related
events.
Deliver easy to use, reliable products and
services
- Introduced the red Rogers
MasterCard with 48-month device equal payment plan with 0% interest
and up to 2.6% cashback for customers.
- Introduced Rogers Internet and TV
services to customers in former Shaw territory.
- Introduced Ignite Self Protect for
customers to self-monitor their homes with connected devices.
Be the first choice for Canadians
- Attracted 225,000 net postpaid
mobile phone subscribers, our best ever quarterly result.
- Achieved combined mobile phone and
retail Internet net additions of 279,000, up 52,000 year over
year.
- Secured number-one spots for
flagship radio brands 98.1 CHFI, CityNews 680, and KiSS 92.5 for
the Summer 2023 ratings period.
Be a strong national company investing in
Canada
- Introduced Connected for Success,
our high-speed, low-cost Internet program, to eligible residents in
Western Canada.
- Sponsored the Shaw Charity Classic
presented by Rogers, the largest charitable contributor on the PGA
TOUR Champions.
- Recognized as the 2023 Right to
Play Corporate Hero for work with Indigenous youth.
Be the growth leader in our industry
- Total service revenue up 40%;
adjusted EBITDA up 52%.
- Generated free cash flow of $745
million and generated cash provided by operating activities of
$1,754 million.
- Achieved strong Cable adjusted
EBITDA margin expansion of 650 basis points; Shaw integration
tracking ahead of plan.
Quarterly Financial Highlights
Revenue Total revenue and total
service revenue increased by 36% and 40%, respectively, this
quarter, driven substantially by revenue growth in our Cable and
Wireless businesses, including the July 2022 network outage-related
credits of $150 million issued to customers last year.
Wireless service revenue increased by 15% this
quarter, primarily as a result of the cumulative impact of growth
in our mobile phone subscriber base, revenue from Shaw Mobile
subscribers acquired through the Shaw Transaction, and the impact
of the July 2022 network outage-related credits. Wireless equipment
revenue increased by 10%, primarily as a result of an increase in
new subscribers purchasing devices and a continued shift in the
product mix towards higher-value devices.
Cable service revenue increased by 105% this
quarter primarily as a result of our acquisition of Shaw as well as
the impact of the July 2022 network outage-related credits.
Media revenue increased by 11% this quarter
primarily as a result of higher sports-related revenue, including
at the Toronto Blue Jays.
Adjusted EBITDA and
marginsConsolidated adjusted EBITDA increased 52% this
quarter, and our adjusted EBITDA margin increased by 500 basis
points, as a result of improving synergies and efficiencies, and
the network outage-related credits issued to customers last
year.
Wireless adjusted EBITDA increased by 18%,
primarily due to the flow-through impact of higher revenue as
discussed above. This gave rise to an adjusted EBITDA margin of
63.9%.
Cable adjusted EBITDA increased by 132% due to
the flow-through impact of higher revenue as discussed above and
the achievement of cost synergies associated with integration
activities. This gave rise to an adjusted EBITDA margin of
54.2%.
Media adjusted EBITDA increased by $31 million
this quarter primarily due to higher revenue as discussed above,
partially offset by higher Toronto Blue Jays payroll costs.
Net loss and adjusted net incomeWe
recognized a net loss this quarter as a result of:
- higher depreciation and
amortization, higher finance costs, and higher restructuring,
acquisition and other costs, primarily associated with Shaw
acquisition- and integration-related activities; and
- a $422 million loss on an
obligation to purchase at fair value the non-controlling interest
in one of our joint ventures' investments; partially offset by
- higher adjusted EBITDA.
Adjusted net income increased by 56% this
quarter, primarily as a result of higher adjusted EBITDA.
Cash flow and available
liquidityThis quarter, we generated cash provided by
operating activities of $1,754 million (2022 - $1,216 million); the
increase is primarily a result of higher adjusted EBITDA. We also
generated free cash flow of $745 million (2022 - $279 million), up
167% as a result of higher adjusted EBITDA, partially offset by
higher capital expenditures and higher interest on long-term
debt.
As at September 30, 2023, we had $7.3
billion of available liquidity2 (December 31, 2022 - $4.9
billion), including $2.5 billion in cash and cash equivalents and
$4.8 billion available under our bank credit and other
facilities.
As a result of the Shaw Transaction, our debt
leverage ratio increased to 4.92 as at September 30, 2023.
This has been calculated on an adjusted basis to include trailing
12-month adjusted EBITDA of a combined Rogers and Shaw as if the
Shaw Transaction had closed at the beginning of the trailing
12-month period. If calculated on an as reported basis without the
foregoing adjustment, our debt leverage ratio2 as at
September 30, 2023 was 5.5 (December 31, 2022 - 3.3).
We also returned $264 million in dividends to
shareholders this quarter and we declared a $0.50 per share
dividend on November 8, 2023.
______________________________2 Available
liquidity and debt leverage ratio are capital management measures.
Pro forma debt leverage ratio is a non-GAAP ratio. Pro forma
trailing 12-month adjusted EBITDA is a non-GAAP financial measure
and is a component of pro forma debt leverage ratio. See "Non-GAAP
and Other Financial Measures" in our Q3 2023 MD&A for more
information about this measure, available at www.sedarplus.ca. See
"Financial Condition" in our Q3 2023 MD&A for a reconciliation
of available liquidity.
Shaw Transaction
On April 3, 2023, after receiving all required
regulatory approvals and after the Freedom Transaction (as defined
below) closed, we acquired all the issued and outstanding Class A
Participating Shares and Class B Non-Voting Participating Shares
(collectively, Shaw Shares) of Shaw Communications Inc. (Shaw)
(Shaw Transaction) for total consideration of $20.5 billion. We
also assumed approximately $2.9 billion of debt, net of cash and
consideration received from the Freedom Transaction, on April
3.
Also on April 3, 2023, the outstanding shares of
Freedom Mobile Inc. (Freedom), a subsidiary of Shaw, were sold to
Videotron Ltd. (Videotron), a subsidiary of Quebecor Inc.
(Quebecor) (Freedom Transaction). The Freedom Transaction provided
for the sale of all Freedom-branded wireless and Internet customers
and all of Freedom's infrastructure, spectrum licences, and retail
locations. The Freedom Transaction did not include the sale of Shaw
Mobile-branded wireless subscribers; accordingly, these wireless
subscribers remained with the Shaw business acquired by Rogers.
The acquired Shaw businessThe
Shaw business we acquired provides cable telecommunications,
satellite video services, and data networking to residential
customers, businesses, and public-sector entities in British
Columbia, Alberta, Saskatchewan, and Manitoba (Western Canada).
Shaw's primary products include Internet (through Fibre+), Video
(through Total TV and Shaw Direct satellite), home phone services,
and Wireless services (through Shaw Mobile to consumers in British
Columbia and Alberta). Subsequent to closing, we stopped selling
services under the Shaw Mobile brand to new customers. These
services continue to be offered by Rogers to existing Shaw Mobile
customers.
The combined Rogers and Shaw has the scale,
assets, and capabilities delivering unprecedented wireline and
wireless broadband and network investments, innovation, and growth
in new telecommunications services, and greater choice for Canadian
consumers and businesses. The combination is accelerating the
delivery of critical 5G service across Western Canada, from rural
areas to dense cities, more quickly than either company could
achieve on its own, by bringing together the expertise and assets
of both companies.
The results from the acquired Shaw wireline
operations are included in our Cable segment and the results of the
acquired Shaw Mobile operations are included in our Wireless
segment, from the date of acquisition, consistent with our
reportable segment definitions.
The Shaw Transaction has resulted in a material
increase to our depreciation and amortization expense that will
continue on an ongoing basis and a material increase in finance
costs in relation to the financing incurred to fund the acquisition
and acquiring Shaw's long-term debt. In addition, targeted cost
synergies, together with organic service revenue and earnings
growth, are anticipated to result in an offsetting and material
increase to our adjusted EBITDA and net income on an ongoing
basis.
About this Earnings Release
This earnings release contains important
information about our business and our performance for the three
and nine months ended September 30, 2023, as well as
forward-looking information (see "About Forward-Looking
Information") about future periods. This earnings release should be
read in conjunction with our Third Quarter 2023 Interim Condensed
Consolidated Financial Statements (Third Quarter 2023 Interim
Financial Statements) and notes thereto, which have been prepared
in accordance with International Accounting Standard 34, Interim
Financial Reporting, as issued by the International Accounting
Standards Board (IASB); our Third Quarter 2023 MD&A; our 2022
Annual MD&A; our 2022 Annual Audited Consolidated Financial
Statements and notes thereto, which have been prepared in
accordance with International Financial Reporting Standards (IFRS)
as issued by the IASB; and our other recent filings with Canadian
and US securities regulatory authorities, including our Annual
Information Form, which are available on SEDAR+ at sedarplus.ca or
EDGAR at sec.gov, respectively.
Effective the second quarter of 2023, we have
retrospectively amended our definitions of (i) adjusted net income
and (ii) adjusted net debt. See "Non-GAAP and Other Financial
Measures" in this earnings release and in our Q3 2023 MD&A for
more information.
For more information about Rogers, including
product and service offerings, competitive market and industry
trends, our overarching strategy, key performance drivers, and
objectives, see "Understanding Our Business", "Our Strategy, Key
Performance Drivers, and Strategic Highlights", and "Capability to
Deliver Results" in our 2022 Annual MD&A.
We, us, our, Rogers, Rogers Communications, and
the Company refer to Rogers Communications Inc. and its
subsidiaries. RCI refers to the legal entity Rogers Communications
Inc., not including its subsidiaries. Rogers also holds interests
in various investments and ventures.
All dollar amounts in this earnings release are
in Canadian dollars unless otherwise stated and are unaudited. All
percentage changes are calculated using the rounded numbers as they
appear in the tables. This earnings release is current as at
November 8, 2023 and was approved by the Audit and Risk
Committee of RCI's Board of Directors (the Board) on that date.
In this earnings release, this quarter, the
quarter, or third quarter refer to the three months ended
September 30, 2023, second quarter refers to the three months
ended June 30, 2023, first quarter refers to the three months ended
March 31, 2023, and year to date refers to the nine months ended
September 30, 2023, unless the context indicates otherwise.
All results commentary is compared to the equivalent period in 2022
or as at December 31, 2022, as applicable, unless otherwise
indicated.
Trademarks in this earnings release are owned or
used under licence by Rogers Communications Inc. or an affiliate.
This earnings release may also include trademarks of other parties.
The trademarks referred to in this earnings release may be listed
without the ™ symbols. ©2023 Rogers Communications
Reportable segmentsWe report our
results of operations in three reportable segments. Each segment
and the nature of its business is as follows:
Segment |
Principal activities |
Wireless |
Wireless telecommunications operations for Canadian consumers and
businesses. |
Cable |
Cable telecommunications operations, including Internet, television
and other video (Video), Satellite, telephony (Home Phone), and
smart home monitoring services for Canadian consumers and
businesses, and network connectivity through our fibre network and
data centre assets to support a range of voice, data, networking,
hosting, and cloud-based services for the business, public sector,
and carrier wholesale markets. |
Media |
A diversified portfolio of media properties, including sports media
and entertainment, television and radio broadcasting, specialty
channels, multi-platform shopping, and digital media. |
Wireless and Cable are operated by our wholly
owned subsidiary, RCCI, and certain of our other wholly owned
subsidiaries. Following the Shaw Transaction, aspects of Cable are
also operated by Shaw Cablesystems G.P., Shaw Telecom G.P., and
Shaw Satellite G.P. Media is operated by our wholly owned
subsidiary, Rogers Media Inc., and its subsidiaries.
Summary of Consolidated Financial
Results
|
Three months ended September 30 |
|
Nine months ended September 30 |
(In millions of dollars, except margins and per share amounts) |
|
2023 |
|
|
2022 |
|
% Chg |
|
|
2023 |
|
|
2022 |
|
% Chg |
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
Wireless |
|
2,584 |
|
|
2,267 |
|
14 |
|
|
7,354 |
|
|
6,619 |
|
11 |
|
Cable |
|
1,993 |
|
|
975 |
|
104 |
|
|
5,023 |
|
|
3,052 |
|
65 |
|
Media |
|
586 |
|
|
530 |
|
11 |
|
|
1,777 |
|
|
1,671 |
|
6 |
|
Corporate items and intercompany eliminations |
|
(71 |
) |
|
(29 |
) |
145 |
|
|
(181 |
) |
|
(112 |
) |
62 |
|
Revenue |
|
5,092 |
|
|
3,743 |
|
36 |
|
|
13,973 |
|
|
11,230 |
|
24 |
|
Total service revenue 1 |
|
4,527 |
|
|
3,230 |
|
40 |
|
|
12,375 |
|
|
9,869 |
|
25 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
Wireless |
|
1,294 |
|
|
1,093 |
|
18 |
|
|
3,695 |
|
|
3,296 |
|
12 |
|
Cable |
|
1,080 |
|
|
465 |
|
132 |
|
|
2,663 |
|
|
1,536 |
|
73 |
|
Media |
|
107 |
|
|
76 |
|
41 |
|
|
73 |
|
|
12 |
|
n/m |
|
Corporate items and intercompany eliminations |
|
(70 |
) |
|
(51 |
) |
37 |
|
|
(179 |
) |
|
(130 |
) |
38 |
|
Adjusted EBITDA |
|
2,411 |
|
|
1,583 |
|
52 |
|
|
6,252 |
|
|
4,714 |
|
33 |
|
Adjusted EBITDA margin 2 |
|
47.3 |
% |
|
42.3 |
% |
5.0 pts |
|
44.7 |
% |
|
42.0 |
% |
2.7 pts |
|
|
|
|
|
|
|
|
Net (loss) income |
|
(99 |
) |
|
371 |
|
n/m |
|
|
521 |
|
|
1,172 |
|
(56 |
) |
Basic (loss) earnings per share |
($0.19 |
) |
$0.73 |
|
n/m |
|
$1.00 |
|
$2.32 |
|
(57 |
) |
Diluted (loss) earnings per share |
($0.20 |
) |
$0.71 |
|
n/m |
|
$0.97 |
|
$2.28 |
|
(57 |
) |
|
|
|
|
|
|
|
|
Adjusted net income 2 |
|
679 |
|
|
436 |
|
56 |
|
|
1,776 |
|
|
1,361 |
|
30 |
|
Adjusted basic earnings per share 2 |
$1.28 |
|
$0.86 |
|
49 |
|
$3.41 |
|
$2.70 |
|
26 |
|
Adjusted diluted earnings per share |
$1.27 |
|
$0.84 |
|
51 |
|
$3.37 |
|
$2.66 |
|
27 |
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
1,017 |
|
|
872 |
|
17 |
|
|
2,988 |
|
|
2,299 |
|
30 |
|
Cash provided by operating activities |
|
1,754 |
|
|
1,216 |
|
44 |
|
|
3,842 |
|
|
3,348 |
|
15 |
|
Free cash flow |
|
745 |
|
|
279 |
|
167 |
|
|
1,591 |
|
|
1,138 |
|
40 |
|
n/m - not meaningful1 As defined. See "Key
Performance Indicators". 2 Adjusted EBITDA margin is a
supplementary financial measure. Adjusted basic earnings per share
is a non-GAAP ratio. Adjusted net income is a non-GAAP financial
measure and is a component of adjusted basic earnings per share.
These are not standardized financial measures under IFRS and might
not be comparable to similar financial measures disclosed by other
companies. See "Non-GAAP and Other Financial Measures" in our Q3
2023 MD&A for more information about each of these measures,
available at www.sedarplus.ca.
Results of our Reportable
Segments
WIRELESS
Wireless Financial Results
|
Three months ended September 30 |
|
Nine months ended September 30 |
(In millions of dollars, except margins) |
2023 |
|
2022 |
|
% Chg |
|
2023 |
|
2022 |
|
% Chg |
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
Service revenue |
2,026 |
|
1,761 |
|
15 |
|
|
5,782 |
|
5,275 |
|
10 |
|
Equipment revenue |
558 |
|
506 |
|
10 |
|
|
1,572 |
|
1,344 |
|
17 |
|
Revenue |
2,584 |
|
2,267 |
|
14 |
|
|
7,354 |
|
6,619 |
|
11 |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
Cost of equipment |
541 |
|
518 |
|
4 |
|
|
1,550 |
|
1,381 |
|
12 |
|
Other operating expenses |
749 |
|
656 |
|
14 |
|
|
2,109 |
|
1,942 |
|
9 |
|
Operating expenses |
1,290 |
|
1,174 |
|
10 |
|
|
3,659 |
|
3,323 |
|
10 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
1,294 |
|
1,093 |
|
18 |
|
|
3,695 |
|
3,296 |
|
12 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin 1 |
63.9 |
% |
62.1 |
% |
1.8 pts |
|
63.9 |
% |
62.5 |
% |
1.4 pts |
Capital expenditures |
381 |
|
543 |
|
(30 |
) |
|
1,291 |
|
1,337 |
|
(3 |
) |
1 Calculated using service revenue.
Wireless Subscriber Results 1
|
Three months ended September 30 |
|
Nine months ended September 30 |
(In thousands, except churn and mobile phone ARPU) |
|
2023 |
|
|
2022 |
|
Chg |
|
|
2023 |
|
|
2022 |
|
Chg |
|
|
|
|
|
|
|
|
|
Postpaid mobile phone 2, 3 |
|
|
|
|
|
|
|
Gross additions |
|
556 |
|
|
429 |
|
|
127 |
|
|
|
1,304 |
|
|
986 |
|
|
318 |
|
Net additions |
|
225 |
|
|
164 |
|
|
61 |
|
|
|
490 |
|
|
352 |
|
|
138 |
|
Total postpaid mobile phone subscribers 4 |
|
10,332 |
|
|
9,199 |
|
|
1,133 |
|
|
|
10,332 |
|
|
9,199 |
|
|
1,133 |
|
Churn (monthly) |
|
1.08 |
% |
|
0.97 |
% |
0.11 pts |
|
|
0.92 |
% |
|
0.79 |
% |
0.13 pts |
Prepaid mobile phone |
|
|
|
|
|
|
|
Gross additions |
|
263 |
|
|
232 |
|
|
31 |
|
|
|
711 |
|
|
580 |
|
|
131 |
|
Net additions |
|
36 |
|
|
57 |
|
|
(21 |
) |
|
|
23 |
|
|
96 |
|
|
(73 |
) |
Total prepaid mobile phone subscribers 4 |
|
1,278 |
|
|
1,262 |
|
|
16 |
|
|
|
1,278 |
|
|
1,262 |
|
|
16 |
|
Churn (monthly) |
|
6.00 |
% |
|
4.77 |
% |
1.23 pts |
|
|
6.10 |
% |
|
4.55 |
% |
1.55 pts |
Mobile phone ARPU (monthly) 5 |
$58.83 |
|
$56.82 |
|
$2.01 |
|
|
$57.76 |
|
$57.61 |
|
$0.15 |
|
1 Subscriber counts and subscriber churn
are key performance indicators. See "Key Performance
Indicators".2 On April 3, 2023, we acquired approximately
501,000 postpaid mobile phone subscribers as a result of our
acquisition of Shaw, which are not included in net additions, but
do appear in the ending total balances for September 30,
2023.3 Effective April 1, 2023, we adjusted our postpaid
mobile phone subscriber base to remove 51,000 subscribers relating
to a wholesale account.4 As at end of period.5 Mobile
phone ARPU is a supplementary financial measure. See "Non-GAAP and
Other Financial Measures" in our Q3 2023 MD&A for more
information about each of these measures, available at
www.sedarplus.ca.
Service revenueThe 15% increase
in service revenue this quarter and 10% increase year to date were
primarily a result of:
- the cumulative impact of growth in
our mobile phone subscriber base over the past year;
- the impact of the Shaw Mobile
subscribers acquired through the Shaw Transaction in April
2023;
- the July 2022 network
outage-related credits that were issued to customers in the prior
year; and
- higher roaming revenue associated
with increased travel.
The increase in mobile phone ARPU this quarter
was primarily a result of the impact of the July 2022 network
outage-related credits that were issued to customers in the prior
year.
The increase in postpaid gross and net additions
this quarter and year to date were a result of sales execution and
customer satisfaction in a growing Canadian market.
Equipment revenueThe 10% increase
in equipment revenue this quarter and 17% increase year to date
were primarily as a result of:
- an increase in new subscribers
purchasing devices; and
- a continued shift in the product
mix towards higher-value devices.
Operating expensesCost of
equipment The 4% increase in the cost of equipment this quarter and
12% increase year to date were a result of the equipment revenue
changes discussed above.
Other operating expenses The 14% increase in
other operating expenses this quarter and 9% increase year to date
were primarily a result of:
- higher costs associated with the
increased revenue and subscriber additions, which included
increased roaming and commissions; and
- investments made in customer
service.
Adjusted EBITDA The 18% increase
in adjusted EBITDA this quarter and 12% increase year to date were
a result of the revenue and expense changes discussed above.
CABLE
Cable Financial Results
|
Three months ended September 30 |
|
Nine months ended September 30 |
(In millions of dollars, except margins) |
2023 |
|
2022 |
|
% Chg |
|
2023 |
|
2022 |
|
% Chg |
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
Service revenue |
1,986 |
|
968 |
|
105 |
|
4,997 |
|
3,035 |
|
65 |
|
Equipment revenue |
7 |
|
7 |
|
— |
|
26 |
|
17 |
|
53 |
|
Revenue |
1,993 |
|
975 |
|
104 |
|
5,023 |
|
3,052 |
|
65 |
|
|
|
|
|
|
|
|
|
|
Operating expenses |
913 |
|
510 |
|
79 |
|
2,360 |
|
1,516 |
|
56 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
1,080 |
|
465 |
|
132 |
|
2,663 |
|
1,536 |
|
73 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin |
54.2 |
% |
47.7 |
% |
6.5 pts |
|
53.0 |
% |
50.3 |
% |
2.7 pts |
|
Capital expenditures |
560 |
|
259 |
|
116 |
|
1,417 |
|
784 |
|
81 |
|
Cable Subscriber Results 1
|
Three months ended September 30 |
|
Nine months ended September 30 |
(In thousands, except ARPA and penetration) |
|
2023 |
|
|
2022 |
|
|
Chg |
|
|
|
2023 |
|
|
2022 |
|
|
Chg |
|
|
|
|
|
|
|
|
|
Homes passed 2,3 |
|
9,869 |
|
|
4,776 |
|
|
5,093 |
|
|
|
9,869 |
|
|
4,776 |
|
|
5,093 |
|
Customer relationships |
|
|
|
|
|
|
|
Net (losses) additions |
|
(7 |
) |
|
(7 |
) |
|
— |
|
|
|
(1 |
) |
|
12 |
|
|
(13 |
) |
Total customer relationships 2,3 |
|
4,780 |
|
|
2,596 |
|
|
2,184 |
|
|
|
4,780 |
|
|
2,596 |
|
|
2,184 |
|
ARPA (monthly) 4 |
$138.46 |
|
$124.34 |
|
$14.12 |
|
|
$142.20 |
|
$130.16 |
|
$12.04 |
|
|
|
|
|
|
|
|
|
Penetration 2 |
|
48.4 |
% |
|
54.4 |
% |
(6.0 pts) |
|
|
48.4 |
% |
|
54.4 |
% |
(6.0 pts) |
|
|
|
|
|
|
|
|
Retail Internet |
|
|
|
|
|
|
|
Net additions |
|
18 |
|
|
6 |
|
|
12 |
|
|
|
57 |
|
|
45 |
|
|
12 |
|
Total retail Internet subscribers 2,3 |
|
4,302 |
|
|
2,277 |
|
|
2,025 |
|
|
|
4,302 |
|
|
2,277 |
|
|
2,025 |
|
Video |
|
|
|
|
|
|
|
Net additions |
|
23 |
|
|
7 |
|
|
16 |
|
|
|
27 |
|
|
42 |
|
|
(15 |
) |
Total Video subscribers 2 |
|
2,755 |
|
|
1,535 |
|
|
1,220 |
|
|
|
2,755 |
|
|
1,535 |
|
|
1,220 |
|
Smart Home Monitoring |
|
|
|
|
|
|
|
Net losses |
|
(2 |
) |
|
(4 |
) |
|
2 |
|
|
|
(11 |
) |
|
(11 |
) |
|
— |
|
Total Smart Home Monitoring subscribers 2 |
|
90 |
|
|
102 |
|
|
(12 |
) |
|
|
90 |
|
|
102 |
|
|
(12 |
) |
Home Phone |
|
|
|
|
|
|
|
Net losses |
|
(36 |
) |
|
(18 |
) |
|
(18 |
) |
|
|
(78 |
) |
|
(58 |
) |
|
(20 |
) |
Total Home Phone subscribers 2,3 |
|
1,648 |
|
|
854 |
|
|
794 |
|
|
|
1,648 |
|
|
854 |
|
|
794 |
|
1 Subscriber results are key performance
indicators. See "Key Performance Indicators".2 As at end of
period.3 On April 3, 2023, we acquired approximately 1,961,000
retail Internet subscribers, 1,203,000 Video subscribers, 890,000
Home Phone subscribers, 4,935,000 homes passed, and 2,191,000
customer relationships as a result of the Shaw Transaction, which
are not included in net additions, but do appear in the ending
total balances for September 30, 2023. The acquired Satellite
subscribers are not included in our reported subscriber, homes
passed, or customer relationship metrics.4 ARPA is a
supplementary financial measure. See "Non-GAAP and Other Financial
Measures" in our Q3 2023 MD&A for more information about this
measure, available at www.sedarplus.ca.
Service revenue The 105% increase
in service revenue this quarter and 65% increase year to date were
a result of:
- revenue related to our acquisition
of Shaw, which contributed approximately $1 billion for the quarter
and $2 billion for the year to date;
- an increase in our retail Internet
subscriber base and the movement of retail Internet customers to
higher speed tiers in our Ignite Internet offerings; and
- the July 2022 network
outage-related credits that were issued to customers in the prior
year; partially offset by:
- continued increased competitive
promotional activity; and
- declines in our Home Phone and
Smart Home Monitoring subscriber bases.
The higher ARPA this quarter and year to date
was a result of the acquisition of Shaw and the impact of the July
2022 network outage-related credits that were issued to customers
in the prior year.
Operating expenses The 79%
increase in operating expenses this quarter and 56% increase year
to date were primarily a result of:
- our acquisition of Shaw, partially
offset by the realization of cost synergies associated with
integration activities; and
- investments in customer
service.
Adjusted EBITDA The 132% increase
in adjusted EBITDA this quarter and 73% increase year to date were
a result of the service revenue and expense changes discussed
above.
MEDIA
Media Financial Results
|
Three months ended September 30 |
|
Nine months ended September 30 |
(In millions of dollars, except margins) |
2023 |
|
2022 |
|
% Chg |
|
2023 |
|
2022 |
|
% Chg |
|
|
|
|
|
|
|
|
|
|
Revenue |
586 |
|
530 |
|
11 |
|
1,777 |
|
1,671 |
|
6 |
|
Operating expenses |
479 |
|
454 |
|
6 |
|
1,704 |
|
1,659 |
|
3 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
107 |
|
76 |
|
41 |
|
73 |
|
12 |
|
n/m |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin |
18.3 |
% |
14.3 |
% |
4.0 pts |
|
4.1 |
% |
0.7 |
% |
3.4 pts |
|
Capital expenditures |
33 |
|
28 |
|
18 |
|
137 |
|
69 |
|
99 |
|
RevenueThe 11% increase in revenue
this quarter and 6% increase year to date were primarily a result
of higher sports-related revenue, including at the Toronto Blue
Jays.
Operating expensesThe 6% increase
in operating expenses this quarter and 3% increase year to date
were a result of:
- higher Toronto Blue Jays player
payroll; partially offset by
- lower Today's Shopping Choice cost
of goods sold.
Adjusted EBITDAThe increases in
adjusted EBITDA this quarter and year to date were a result of the
revenue and expense changes discussed above.
CAPITAL EXPENDITURES
|
Three months ended September 30 |
|
Nine months ended September 30 |
(In millions of dollars, except capital intensity) |
2023 |
|
2022 |
|
% Chg |
|
2023 |
|
2022 |
|
% Chg |
|
|
|
|
|
|
|
|
|
Wireless |
381 |
|
543 |
|
(30 |
) |
|
1,291 |
|
1,337 |
|
(3 |
) |
Cable |
560 |
|
259 |
|
116 |
|
|
1,417 |
|
784 |
|
81 |
|
Media |
33 |
|
28 |
|
18 |
|
|
137 |
|
69 |
|
99 |
|
Corporate |
43 |
|
42 |
|
2 |
|
|
143 |
|
109 |
|
31 |
|
|
|
|
|
|
|
|
|
Capital expenditures 1 |
1,017 |
|
872 |
|
17 |
|
|
2,988 |
|
2,299 |
|
30 |
|
|
|
|
|
|
|
|
|
Capital intensity 2 |
20.0 |
% |
23.3 |
% |
(3.3 pts) |
|
21.4 |
% |
20.5 |
% |
0.9 pts |
1 Includes additions to property, plant and
equipment net of proceeds on disposition, but does not include
expenditures for spectrum licences, additions to right-of-use
assets, or assets acquired through business
combinations.2 Capital intensity is a supplementary financial
measure. See "Non-GAAP and Other Financial Measures" in our Q3 2023
MD&A for more information about each of these measures,
available at www.sedarplus.ca.
One of our objectives is to build the biggest
and best networks in the country. As we continually work towards
this, we expect to spend more on our wireless and wireline networks
this year than we have in the past several years. This year, we
will continue to roll out our 5G network (the largest 5G network in
Canada as at September 30, 2023) across the country, including our
commitment to expand coverage across Western Canada and in the TTC
subway system. We also continue to invest in fibre deployments,
including fibre-to-the-home (FTTH), in our cable network and we
will expand our network footprint to reach more homes and
businesses, including to rural, remote, and Indigenous communities.
We continue to direct capital expenditures to strengthen the
resilience of our networks and make significant investments to
strengthen our technology systems, increase network stability for
our customers, and enhance our testing.
These investments will strengthen network
resilience and stability and will help us bridge the digital divide
by expanding our network further into rural and underserved areas
through participation in various programs and projects.
WirelessThe decrease in capital
expenditures in Wireless this quarter and year to date was due to
the timing of investments. We continue to make investments in our
network development and 5G deployment to expand our wireless
network. The ongoing deployment of 3500 MHz spectrum continues to
augment the capacity and resilience of our earlier 5G deployments
in the 600 MHz spectrum band.
CableThe increase in capital
expenditures in Cable this quarter and year to date reflect our
acquisition of Shaw and continued investments in our
infrastructure, including additional fibre deployments to increase
our FTTH distribution. These investments incorporate the latest
technologies to help deliver more bandwidth and an enhanced
customer experience as we progress in our connected home roadmap,
including service footprint expansion and upgrades to our DOCSIS
3.1 platform to evolve to DOCSIS 4.0, offering increased network
resilience, stability, and faster download speeds over time.
MediaThe increase in capital
expenditures in Media this quarter and year to date were primarily
a result of higher Toronto Blue Jays stadium infrastructure-related
expenditures.
Corporate Capital expenditures
this quarter were in line with prior year. The increase year to
date was a result of higher investments in our corporate
information technology infrastructure.
Capital intensityThe increase
in capital intensity this year was a result of higher capital
expenditures, as discussed above, partially offset by higher
revenue.
Review of Consolidated
Performance
This section discusses our consolidated net
(loss) income and other income and expenses that do not form part
of the segment discussions above.
|
Three months ended September 30 |
|
Nine months ended September 30 |
|
(In millions of dollars) |
2023 |
|
2022 |
% Chg |
|
2023 |
2022 |
|
% Chg |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
2,411 |
|
1,583 |
52 |
|
|
6,252 |
4,714 |
|
33 |
|
Deduct (add): |
|
|
|
|
|
|
|
Depreciation and amortization |
1,160 |
|
644 |
80 |
|
|
2,949 |
1,928 |
|
53 |
|
Restructuring, acquisition and other |
213 |
|
85 |
151 |
|
|
599 |
252 |
|
138 |
|
Finance costs |
600 |
|
331 |
81 |
|
|
1,479 |
946 |
|
56 |
|
Other expense (income) |
426 |
|
19 |
n/m |
|
|
381 |
(5 |
) |
n/m |
|
Income tax expense |
111 |
|
133 |
(17 |
) |
|
323 |
421 |
|
(23 |
) |
|
|
|
|
|
|
|
|
Net (loss) income |
(99 |
) |
371 |
n/m |
|
521 |
1,172 |
|
(56 |
) |
Depreciation and amortization
|
Three months ended September 30 |
|
Nine months ended September 30 |
|
(In millions of dollars) |
2023 |
2022 |
% Chg |
|
2023 |
2022 |
% Chg |
|
|
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment |
925 |
567 |
63 |
|
2,393 |
1,709 |
40 |
|
Depreciation of right-of-use assets |
92 |
71 |
30 |
|
264 |
202 |
31 |
|
Amortization |
143 |
6 |
n/m |
|
292 |
17 |
n/m |
|
|
|
|
|
|
|
|
|
|
Total depreciation and amortization |
1,160 |
644 |
80 |
|
2,949 |
1,928 |
53 |
|
Total depreciation and amortization increased
this quarter and year to date, primarily as a result of the
property, plant and equipment, right-of-use assets, and customer
relationship intangible assets acquired through the Shaw
Transaction.
Restructuring, acquisition and
other
|
Three months ended September 30 |
|
Nine months ended September 30 |
(In millions of dollars) |
2023 |
2022 |
|
2023 |
2022 |
|
|
|
|
|
|
Restructuring and other |
175 |
31 |
|
340 |
107 |
Shaw Transaction-related costs |
38 |
54 |
|
259 |
145 |
|
|
|
|
|
|
Total restructuring, acquisition and other |
213 |
85 |
|
599 |
252 |
The Shaw Transaction-related costs in 2022 and
2023 consisted of incremental costs supporting acquisition and
integration activities related to the Shaw Transaction. This
includes significant costs in the second quarter of 2023 relating
to closing-related fees, the Shaw Transaction-related employee
retention program, and the cost of the tangible benefits package
related to the broadcasting portion of the Shaw Transaction.
The restructuring and other costs in 2022 and
2023 were primarily severance and other departure-related costs
associated with the targeted restructuring of our employee base.
Severance and other departure-related costs in 2023 included costs
associated with the integration-related restructuring of our
combined employee base and the approximate $115 million impact of
the voluntary departure program we undertook this quarter.
Finance costs
|
Three months ended September 30 |
|
Nine months ended September 30 |
|
(In millions of dollars) |
2023 |
|
2022 |
|
% Chg |
|
2023 |
|
2022 |
|
% Chg |
|
|
|
|
|
|
|
|
|
Total interest on borrowings 1 |
535 |
|
366 |
|
46 |
|
|
1,450 |
|
973 |
|
49 |
|
Interest earned on restricted cash and cash equivalents |
— |
|
(71 |
) |
(100 |
) |
|
(149 |
) |
(105 |
) |
42 |
|
|
|
|
|
|
|
|
|
Interest on borrowings, net |
535 |
|
295 |
|
81 |
|
|
1,301 |
|
868 |
|
50 |
|
Interest on lease liabilities |
30 |
|
21 |
|
43 |
|
|
80 |
|
58 |
|
38 |
|
Interest on post-employment benefits liability |
(3 |
) |
— |
|
— |
|
|
(10 |
) |
(1 |
) |
n/m |
|
Loss on foreign exchange |
143 |
|
127 |
|
13 |
|
|
16 |
|
146 |
|
(89 |
) |
Change in fair value of derivative instruments |
(136 |
) |
(125 |
) |
9 |
|
|
(3 |
) |
(142 |
) |
(98 |
) |
Capitalized interest |
(11 |
) |
(8 |
) |
38 |
|
|
(28 |
) |
(21 |
) |
33 |
|
Deferred transaction costs and other |
42 |
|
21 |
|
100 |
|
|
123 |
|
38 |
|
n/m |
|
|
|
|
|
|
|
|
|
Total finance costs |
600 |
|
331 |
|
81 |
|
|
1,479 |
|
946 |
|
56 |
|
1 Interest on borrowings includes interest
on short-term borrowings and on long-term debt.
Interest on borrowings, netThe 81% increase in
net interest on borrowings this quarter and the 50% increase year
to date were primarily a result of:
- interest expense associated with
the borrowings under the term loan facility used to partially fund
the Shaw Transaction;
- interest expense associated with
the long-term debt assumed through the Shaw Transaction; and
- rising interest rates; partially
offset by
- reductions in our US
dollar-denominated commercial paper (US CP) and receivables
securitization balances.
The increase year to date was also affected
by:
- new debt issued in the last year,
primarily associated with the completion of our long-term financing
for the Shaw Transaction in early 2022 and to fund certain debt
maturities, including:
- the issuance of US$750 million subordinated notes in February
2022; and
- the issuance of $4.25 billion and US$7.05 billion senior notes
in March 2022; partially offset by
- higher interest earned on restricted cash and cash
equivalents.
Deferred transaction costs and otherThe
increases in "deferred transaction costs and other" this quarter
and year to date are primarily a result of the amortization of the
$819 million of consent fees paid in September 2022 and January
2023 to extend the special mandatory redemption outside date for
the SMR notes (as defined below) (see "Managing our Liquidity and
Financial Resources").
Other expense (income)The
increases in other expense this quarter and year to date were a
result of a $422 million loss related to the change in the value of
an obligation to purchase at fair value the non-controlling
interest in one of our joint ventures' investments.
Income tax expense
|
Three months ended September 30 |
|
Nine months ended September 30 |
(In millions of dollars, except tax rates) |
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
|
|
|
|
|
|
Statutory income tax rate |
26.2 |
% |
26.5 |
% |
|
26.2 |
% |
26.5 |
% |
Income before income tax expense |
12 |
|
504 |
|
|
844 |
|
1,593 |
|
Computed income tax expense |
3 |
|
134 |
|
|
221 |
|
422 |
|
Increase (decrease) in income tax expense resulting from: |
|
|
|
|
|
Non-(taxable) deductible stock-based compensation |
(5 |
) |
(4 |
) |
|
(2 |
) |
1 |
|
Non-deductible (taxable) portion of equity losses (income) |
2 |
|
7 |
|
|
(2 |
) |
8 |
|
Non-taxable income from security investments |
(4 |
) |
(3 |
) |
|
(10 |
) |
(9 |
) |
Non-deductible loss on non-controlling interest purchase
obligation |
111 |
|
— |
|
|
111 |
|
— |
|
Other items |
4 |
|
(1 |
) |
|
5 |
|
(1 |
) |
|
|
|
|
|
|
Total income tax expense |
111 |
|
133 |
|
|
323 |
|
421 |
|
|
|
|
|
|
|
Effective income tax rate |
n/m |
26.4 |
% |
|
38.3 |
% |
26.4 |
% |
Cash income taxes paid |
125 |
|
145 |
|
|
400 |
|
430 |
|
Cash income taxes paid decreased this quarter
and year to date due to the timing of installment payments. The
decrease in our statutory income tax rate this quarter and year to
date was a result of a greater portion of our income being earned
in provinces with lower income tax rates.
Net (loss) income
|
Three months ended September 30 |
|
Nine months ended September 30 |
|
(In millions of dollars, except per share amounts) |
|
2023 |
|
|
2022 |
% Chg |
|
|
2023 |
|
2022 |
% Chg |
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
(99 |
) |
|
371 |
n/m |
|
|
521 |
|
1,172 |
(56 |
) |
Basic (loss) earnings per share |
($0.19 |
) |
$0.73 |
n/m |
|
$1.00 |
$2.32 |
(57 |
) |
Diluted (loss) earnings per share |
($0.20 |
) |
$0.71 |
n/m |
|
$0.97 |
$2.28 |
(57 |
) |
Adjusted net incomeWe calculate
adjusted net income from adjusted EBITDA as follows:
|
Three months ended September 30 |
|
Nine months ended September 30 |
(In millions of dollars, except per share amounts) |
|
2023 |
|
2022 |
% Chg |
|
|
2023 |
|
|
2022 |
|
% Chg |
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
2,411 |
|
1,583 |
52 |
|
|
|
6,252 |
|
|
4,714 |
|
33 |
Deduct: |
|
|
|
|
|
|
|
Depreciation and amortization 1 |
|
897 |
|
644 |
39 |
|
|
|
2,434 |
|
|
1,928 |
|
26 |
Finance costs |
|
600 |
|
331 |
81 |
|
|
|
1,479 |
|
|
946 |
|
56 |
Other expense (income) 2 |
|
4 |
|
19 |
(79 |
) |
|
|
(41 |
) |
|
(5 |
) |
n/m |
Income tax expense 3 |
|
231 |
|
153 |
51 |
|
|
|
604 |
|
|
484 |
|
25 |
|
|
|
|
|
|
|
|
Adjusted net income 1 |
|
679 |
|
436 |
56 |
|
|
|
1,776 |
|
|
1,361 |
|
30 |
|
|
|
|
|
|
|
|
Adjusted basic earnings per share |
$1.28 |
$0.86 |
49 |
|
|
$3.41 |
|
$2.70 |
|
26 |
Adjusted diluted earnings per share |
$1.27 |
$0.84 |
51 |
|
|
$3.37 |
|
$2.66 |
|
27 |
1 Effective the second quarter, we
retrospectively amended our calculation of adjusted net income to
exclude depreciation and amortization on the fair value increment
recognized on acquisition of Shaw Transaction-related property,
plant and equipment and intangible assets. For purposes of
calculating adjusted net income, we believe the magnitude of this
depreciation and amortization, which is significantly affected by
the size of the Shaw Transaction, affects comparability between
periods and the additional expense recognized may have no
correlation to our current and ongoing operating results.
Depreciation and amortization excludes depreciation and
amortization on Shaw Transaction-related property, plant and
equipment and intangible assets for the three and nine months ended
September 30, 2023 of $263 million and $515 million (2022 -
nil), respectively. Adjusted net income includes depreciation and
amortization on the acquired Shaw property, plant and equipment and
intangible assets based on Shaw's historical cost and depreciation
policies.2 Other expense (income) for the three and nine
months ended September 30, 2023 excludes a $422 million loss
related to an obligation to purchase at fair value the
non-controlling interest in one of our joint ventures'
investments.3 Income tax expense excludes recoveries of $120
million and $281 million (2022 - recoveries of $20 million and $63
million) for the three and nine months ended September 30,
2023 related to the income tax impact for adjusted items.
Updates to Risks and
Uncertainties
See our 2022 Annual MD&A for a discussion of
the principal risks and uncertainties that could have a material
adverse effect on our business and financial results as at March 9,
2023, which should be reviewed in conjunction with this earnings
release. The following updates and supplements those risks and
uncertainties.
Shaw TransactionAs a result of
the Shaw Transaction, we are subject to a number of additional
risks, many of which are outside the control of Rogers. Certain of
these risks are disclosed in our 2022 Annual MD&A. Updates and
additions to these risks are described below.
We may fail to realize the expected synergies
and other benefits of the Shaw TransactionAchieving the anticipated
benefits of the Shaw Transaction depends on our ability to
consolidate and integrate Shaw's businesses, operations, and
workforce in a manner that facilitates growth opportunities and
achieves the projected cost savings and revenue growth without
adversely affecting the combined company's current operations. Even
if we successfully integrate Shaw's businesses, the anticipated
benefits of the Shaw Transaction may not be fully realized or they
could take longer to realize than expected.
The integration process may result in the loss
of key personnel, the termination or alteration of existing
material contracts or relationships, the disruption of ongoing
businesses, or inconsistencies in standards, controls, procedures,
and policies. There could be potential unknown liabilities and
unforeseen expenses associated with the Shaw Transaction that were
not discovered while performing due diligence. Coordinating certain
aspects of the operations and personnel of Rogers with Shaw will
involve complex operational, technological, and personnel-related
challenges. In addition to the day-to-day operations of Rogers,
management will need to focus on the integration of the Shaw
business.
Videotron Ltd.On April 3, 2023,
Rogers and Videotron settled the lawsuit arising on October 29,
2021, when Videotron launched a lawsuit against Rogers in the
Quebec Superior Court, in connection with an agreement entered into
by the parties in 2013 for the development and operation of a joint
LTE network in the province of Quebec. The lawsuit involved
allegations by Videotron that Rogers breached its contractual
obligations by developing its own network in the territory and
sought damages of $850 million. Rogers remains committed to serving
our customers through continued investment in the joint
network.
July 2022 network outageAs a
result of the network outage that occurred on July 8, 2022, a total
of four applications were filed in the Quebec Superior Court
seeking authorization to commence a class action against Rogers in
relation to this network outage. One of the applications was
subsequently withdrawn. A second application has since been
suspended. Each of the remaining two applications seeks to
institute a class action on behalf of all persons in Quebec who,
among other things, experienced a wireless or wireline service
interruption as a result of, or were otherwise impacted by, the
outage. Each remaining application also claims various damages,
including, among others, contractual damages, damages for lost
profits, and punitive damages. On June 22, 2023, a carriage hearing
was heard in respect of the two remaining applications; we expect a
decision identifying the representative plaintiff to follow later
this year.
At this time, we are unable to assess the
likelihood of success of these applications, or predict the
magnitude of any liability we might incur by virtue of the claims
underlying those applications or any corresponding or similar
claims that may be brought against us in the future. As such, we
have not recognized a liability for this contingency. If
successful, one of those claims could have a material adverse
effect on our financial results or financial condition. It is also
possible that similar or corresponding claims could be filed in
other jurisdictions.
TechnologySatelliteThe acquired
Shaw business utilizes three satellites (Anik F2, Anik F3, and Anik
G1) owned by Telesat to provide satellite services to customers.
Telesat has publicly disclosed anomalies with two of four thrusters
used for station-keeping on Anik F2. Customers in remote
geographies have begun experiencing periodic service interruptions
and the overall survivability estimations have been reduced.
To ensure continuity of service, workarounds
have been implemented by both Telesat and Rogers. To further
mitigate risk, we have accelerated our set-top box deployment plan
to transition impacted services away from Anik F2 to Anik G1. Such
workarounds and risk mitigation strategies may not be able to fully
mitigate present and future anomalies or failure of the
satellite.
These operational anomalies, and any future
anomalies or failure of any satellite, could negatively affect
customer service and our relationships with our customers and may
have a material adverse effect on our reputation, operations,
and/or financial results.
We do not maintain any insurance coverage for
the transponders on Anik F2, Anik F3, and Anik G1, including
business interruption insurance, that would cover damage related to
the loss of use of one or more of the transponders on the
satellites.
The provision of Internet connectivity in rural
areas by new entrants leveraging low Earth orbit satellite
technology, or expanded broadband and/or wireless infrastructure
from legacy providers, could also result in declining subscriber
trends among Satellite customers.
Key Performance Indicators
We measure the success of our strategy using a
number of key performance indicators that are defined and discussed
in our 2022 Annual MD&A and this earnings release. We believe
these key performance indicators allow us to appropriately measure
our performance against our operating strategy and against the
results of our peers and competitors. The following key performance
indicators, some of which are supplementary financial measures (see
"Non-GAAP and Other Financial Measures"), are not measurements in
accordance with IFRS. They include:
- subscriber counts;
- Wireless;
- Cable; and
- homes passed (Cable);
- Wireless subscriber churn
(churn);
- Wireless mobile phone average
revenue per user(ARPU);
|
- Cable average revenue per account
(ARPA);
- Cable customer relationships;
- Cable market penetration
(penetration);
- capital intensity; and
- total service revenue.
|
|
|
Non-GAAP and Other Financial
Measures
Reconciliation of adjusted
EBITDA
|
Three months ended September 30 |
|
Nine months ended September 30 |
(In millions of dollars) |
2023 |
|
2022 |
|
2023 |
2022 |
|
|
|
|
|
|
|
Net (loss) income |
(99 |
) |
371 |
|
521 |
1,172 |
|
Add: |
|
|
|
|
|
Income tax expense |
111 |
|
133 |
|
323 |
421 |
|
Finance costs |
600 |
|
331 |
|
1,479 |
946 |
|
Depreciation and amortization |
1,160 |
|
644 |
|
2,949 |
1,928 |
|
EBITDA |
1,772 |
|
1,479 |
|
5,272 |
4,467 |
|
Add (deduct): |
|
|
|
|
|
Other expense (income) |
426 |
|
19 |
|
381 |
(5 |
) |
Restructuring, acquisition and other |
213 |
|
85 |
|
599 |
252 |
|
|
|
|
|
|
|
Adjusted EBITDA |
2,411 |
|
1,583 |
|
6,252 |
4,714 |
|
Reconciliation of adjusted net
income
|
Three months ended September 30 |
|
Nine months ended September 30 |
(In millions of dollars) |
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
|
|
|
|
|
|
Net (loss) income |
(99 |
) |
371 |
|
|
521 |
|
1,172 |
|
Add (deduct): |
|
|
|
|
|
Restructuring, acquisition and other |
213 |
|
85 |
|
|
599 |
|
252 |
|
Depreciation and amortization on fair value increment of Shaw
Transaction-related assets 1 |
263 |
|
— |
|
|
515 |
|
— |
|
Loss on non-controlling interest purchase obligation 2 |
422 |
|
— |
|
|
422 |
|
— |
|
Income tax impact of above items |
(120 |
) |
(20 |
) |
|
(281 |
) |
(63 |
) |
|
|
|
|
|
|
Adjusted net income |
679 |
|
436 |
|
|
1,776 |
|
1,361 |
|
1 Adjusted net income includes depreciation
and amortization on the acquired Shaw property, plant and equipment
and intangible assets based on Shaw's historical cost and
depreciation policies. It therefore excludes depreciation and
amortization on the fair value increment recognized on acquisition
of Shaw Transaction-related property, plant and equipment and
intangible assets.2 See "Review of Consolidated Performance"
for more information as to the nature of this adjustment.
Reconciliation of pro forma trailing
12-month adjusted EBITDA
|
As at September 30 |
(In millions of dollars) |
2023 |
|
|
|
Trailing 12-month adjusted EBITDA |
7,931 |
|
Add (deduct): |
|
|
Acquired Shaw business adjusted EBITDA - October 2022 to March
2023 |
1,029 |
|
|
|
|
Pro forma trailing 12-month adjusted EBITDA |
8,960 |
|
Reconciliation of free cash
flow
|
Three months ended September 30 |
|
Nine months ended September 30 |
(In millions of dollars) |
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
|
|
|
|
|
|
Cash provided by operating activities |
1,754 |
|
1,216 |
|
|
3,842 |
|
3,348 |
|
Add (deduct): |
|
|
|
|
|
Capital expenditures |
(1,017 |
) |
(872 |
) |
|
(2,988 |
) |
(2,299 |
) |
Interest on borrowings, net and capitalized interest |
(524 |
) |
(287 |
) |
|
(1,273 |
) |
(847 |
) |
Interest paid, net |
512 |
|
326 |
|
|
1,324 |
|
767 |
|
Restructuring, acquisition and other |
213 |
|
85 |
|
|
599 |
|
252 |
|
Program rights amortization |
(14 |
) |
(10 |
) |
|
(58 |
) |
(49 |
) |
Change in net operating assets and liabilities |
(185 |
) |
(154 |
) |
|
258 |
|
(49 |
) |
Other adjustments 1 |
6 |
|
(25 |
) |
|
(113 |
) |
15 |
|
|
|
|
|
|
|
Free cash flow |
745 |
|
279 |
|
|
1,591 |
|
1,138 |
|
1 Consists of post-employment benefit
contributions, net of expense, cash flows relating to other
operating activities, and other investment income from our
financial statements.
Rogers Communications
Inc.Interim Condensed Consolidated Statements of
Income(In millions of Canadian dollars, except per share
amounts, unaudited)
|
Three months ended September 30 |
|
Nine months ended September 30 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
2022 |
|
|
|
|
|
|
|
Revenue |
|
5,092 |
|
|
3,743 |
|
|
13,973 |
|
11,230 |
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
Operating costs |
|
2,681 |
|
|
2,160 |
|
|
7,721 |
|
6,516 |
|
Depreciation and amortization |
|
1,160 |
|
|
644 |
|
|
2,949 |
|
1,928 |
|
Restructuring, acquisition and other |
|
213 |
|
|
85 |
|
|
599 |
|
252 |
|
Finance costs |
|
600 |
|
|
331 |
|
|
1,479 |
|
946 |
|
Other expense (income) |
|
426 |
|
|
19 |
|
|
381 |
|
(5 |
) |
|
|
|
|
|
|
Income before income tax expense |
|
12 |
|
|
504 |
|
|
844 |
|
1,593 |
|
Income tax expense |
|
111 |
|
|
133 |
|
|
323 |
|
421 |
|
|
|
|
|
|
|
Net (loss) income for the period |
|
(99 |
) |
|
371 |
|
|
521 |
|
1,172 |
|
|
|
|
|
|
|
(Loss) earnings per share: |
|
|
|
|
|
Basic |
($0.19 |
) |
$0.73 |
|
$1.00 |
$2.32 |
|
Diluted |
($0.20 |
) |
$0.71 |
|
$0.97 |
$2.28 |
|
Rogers Communications
Inc.Interim Condensed Consolidated Statements of
Financial Position(In millions of Canadian dollars,
unaudited)
|
As atSeptember 30 |
As atDecember 31 |
|
2023 |
2022 |
|
|
|
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
2,527 |
463 |
Restricted cash and cash equivalents |
— |
12,837 |
Accounts receivable |
4,335 |
4,184 |
Inventories |
462 |
438 |
Current portion of contract assets |
159 |
111 |
Other current assets |
942 |
561 |
Current portion of derivative instruments |
381 |
689 |
Total current assets |
8,806 |
19,283 |
|
|
|
Property, plant and equipment |
24,054 |
15,574 |
Intangible assets |
18,327 |
12,251 |
Investments |
1,569 |
2,088 |
Derivative instruments |
829 |
861 |
Financing receivables |
893 |
886 |
Other long-term assets |
996 |
681 |
Goodwill |
16,304 |
4,031 |
|
|
|
Total assets |
71,778 |
55,655 |
|
|
|
Liabilities and shareholders' equity |
|
|
Current liabilities: |
|
|
Short-term borrowings |
1,847 |
2,985 |
Accounts payable and accrued liabilities |
3,751 |
3,722 |
Other current liabilities |
316 |
252 |
Contract liabilities |
662 |
400 |
Current portion of long-term debt |
2,749 |
1,828 |
Current portion of lease liabilities |
487 |
362 |
Total current liabilities |
9,812 |
9,549 |
|
|
|
Provisions |
57 |
53 |
Long-term debt |
41,345 |
29,905 |
Lease liabilities |
2,037 |
1,666 |
Other long-term liabilities |
1,312 |
738 |
Deferred tax liabilities |
6,248 |
3,652 |
Total liabilities |
60,811 |
45,563 |
|
|
|
Shareholders' equity |
10,967 |
10,092 |
|
|
|
Total liabilities and shareholders' equity |
71,778 |
55,655 |
Rogers Communications
Inc.Interim Condensed Consolidated Statements of
Cash Flows(In millions of Canadian dollars, unaudited)
|
Three months ended September 30 |
|
Nine months ended September 30 |
|
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
Operating activities: |
|
|
|
|
|
Net (loss) income for the period |
(99 |
) |
371 |
|
|
521 |
|
1,172 |
|
Adjustments to reconcile net (loss) income to cash provided by
operating activities: |
|
|
|
|
|
Depreciation and amortization |
1,160 |
|
644 |
|
|
2,949 |
|
1,928 |
|
Program rights amortization |
14 |
|
10 |
|
|
58 |
|
49 |
|
Finance costs |
600 |
|
331 |
|
|
1,479 |
|
946 |
|
Income tax expense |
111 |
|
133 |
|
|
323 |
|
421 |
|
Post-employment benefits contributions, net of expense |
21 |
|
35 |
|
|
25 |
|
(28 |
) |
Losses from associates and joint ventures |
432 |
|
29 |
|
|
412 |
|
29 |
|
Other |
(33 |
) |
(20 |
) |
|
57 |
|
(21 |
) |
Cash provided by operating activities before changes in net
operating assets and liabilities, income taxes paid, and interest
paid |
2,206 |
|
1,533 |
|
|
5,824 |
|
4,496 |
|
Change in net operating assets and liabilities |
185 |
|
154 |
|
|
(258 |
) |
49 |
|
Income taxes (paid) received |
(125 |
) |
(145 |
) |
|
(400 |
) |
(430 |
) |
Interest paid |
(512 |
) |
(326 |
) |
|
(1,324 |
) |
(767 |
) |
|
|
|
|
|
|
Cash provided by operating activities |
1,754 |
|
1,216 |
|
|
3,842 |
|
3,348 |
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
Capital expenditures |
(1,017 |
) |
(872 |
) |
|
(2,988 |
) |
(2,299 |
) |
Additions to program rights |
(20 |
) |
(17 |
) |
|
(57 |
) |
(39 |
) |
Changes in non-cash working capital related to capital expenditures
and intangible assets |
95 |
|
118 |
|
|
66 |
|
22 |
|
Acquisitions and other strategic transactions, net of cash
acquired |
— |
|
— |
|
|
(17,001 |
) |
(9 |
) |
Other |
(8 |
) |
12 |
|
|
4 |
|
73 |
|
|
|
|
|
|
|
Cash used in investing activities |
(950 |
) |
(759 |
) |
|
(19,976 |
) |
(2,252 |
) |
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
Net (repayment of) proceeds received from short-term
borrowings |
(754 |
) |
134 |
|
|
(1,343 |
) |
745 |
|
Net issuance of long-term debt |
2,389 |
|
— |
|
|
7,789 |
|
12,711 |
|
Net proceeds (payments) on settlement of debt derivatives and
forward contracts |
111 |
|
27 |
|
|
232 |
|
(27 |
) |
Transaction costs incurred |
(19 |
) |
(557 |
) |
|
(284 |
) |
(726 |
) |
Principal payments of lease liabilities |
(99 |
) |
(80 |
) |
|
(264 |
) |
(233 |
) |
Dividends paid |
(264 |
) |
(253 |
) |
|
(769 |
) |
(757 |
) |
|
|
|
|
|
|
Cash provided by (used in) financing activities |
1,364 |
|
(729 |
) |
|
5,361 |
|
11,713 |
|
|
|
|
|
|
|
Change in cash and cash equivalents and restricted cash and cash
equivalents |
2,168 |
|
(272 |
) |
|
(10,773 |
) |
12,809 |
|
Cash and cash equivalents and restricted cash and cash equivalents,
beginning of period |
359 |
|
13,796 |
|
|
13,300 |
|
715 |
|
|
|
|
|
|
|
Cash and cash equivalents and restricted cash and cash equivalents,
end of period |
2,527 |
|
13,524 |
|
|
2,527 |
|
13,524 |
|
|
|
|
|
|
|
Cash and cash equivalents |
2,527 |
|
687 |
|
|
2,527 |
|
687 |
|
Restricted cash and cash equivalents |
— |
|
12,837 |
|
|
— |
|
12,837 |
|
|
|
|
|
|
|
Cash and cash equivalents and restricted cash and cash equivalents,
end of period |
2,527 |
|
13,524 |
|
|
2,527 |
|
13,524 |
|
About Forward-Looking
Information
This earnings release includes "forward-looking
information" and "forward-looking statements" within the meaning of
applicable securities laws (collectively, "forward-looking
information"), and assumptions about, among other things, our
business, operations, and financial performance and condition
approved by our management on the date of this earnings release.
This forward-looking information and these assumptions include, but
are not limited to, statements about our objectives and strategies
to achieve those objectives, and about our beliefs, plans,
expectations, anticipations, estimates, or intentions.
Forward-looking information
- typically includes words like
could, expect, may, anticipate, assume, believe, intend, estimate,
plan, project, guidance, outlook, target, and similar
expressions;
- includes conclusions, forecasts,
and projections that are based on our current objectives and
strategies and on estimates, expectations, assumptions, and other
factors that we believe to have been reasonable at the time they
were applied but may prove to be incorrect; and
- was approved by our management on
the date of this earnings release.
Our forward-looking information includes
forecasts and projections related to the following items, among
others:
- revenue;
- total service revenue;
- adjusted EBITDA;
- capital expenditures;
- cash income tax payments;
- free cash flow;
- dividend payments;
- the growth of new products and
services;
- expected growth in subscribers and the
services to which they subscribe;
|
- the cost of acquiring and retaining
subscribers and deployment of new services;
- continued cost reductions and
efficiency improvements;
- our debt leverage ratio;
- the benefits expected to result from
the Shaw Transaction, including corporate, operational, scale, and
other synergies, and their anticipated timing; and
- all other statements that are not
historical facts.
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Our conclusions, forecasts, and projections are
based on a number of estimates, expectations, assumptions, and
other factors, including, among others:
- general economic and industry
conditions, including the effects of inflation;
- currency exchange rates and
interest rates;
- product pricing levels and
competitive intensity;
- subscriber growth;
- pricing, usage, and churn
rates;
- changes in government
regulation;
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- technology and network
deployment;
- availability of devices;
- timing of new product
launches;
- content and equipment costs;
- the integration of acquisitions;
and
- industry structure and
stability.
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Except as otherwise indicated, this earnings
release and our forward-looking information do not reflect the
potential impact of any non-recurring or other special items or of
any dispositions, monetizations, mergers, acquisitions, other
business combinations, or other transactions that may be considered
or announced or may occur after the date on which the statement
containing the forward-looking information is made.
Risks and uncertaintiesActual
events and results can be substantially different from what is
expressed or implied by forward-looking information as a result of
risks, uncertainties, and other factors, many of which are beyond
our control, including, but not limited to:
- regulatory changes;
- technological changes;
- economic, geopolitical, and other
conditions affecting commercial activity;
- unanticipated changes in content or
equipment costs;
- changing conditions in the
entertainment, information, and communications industries;
- sports-related work stoppages or
cancellations and labour disputes;
- the integration of acquisitions;
- litigation and tax matters;
- the level of competitive
intensity;
- the emergence of new
opportunities;
- external threats, such as epidemics,
pandemics, and other public health crises, natural disasters, the
effects of climate change, or cyberattacks, among others;
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- in the event we place certain assets
for sale, we may not be able to achieve the anticipated proceeds in
relation to the sale of those assets and sales of assets may not be
achieved within the expected timeframes or at all;
- risks related to the Shaw Transaction
or Freedom Transaction, including the possibility:
- we may not be able to achieve the
anticipated cost synergies, operating efficiencies, and other
benefits of the Shaw Transaction within the expected timeframes or
at all;
- the integration of the businesses and
operations of Rogers and Shaw may be more difficult,
time-consuming, or costly than expected; and
- that operating costs, customer loss,
and business disruption (including, without limitation,
difficulties in maintaining relationships with employees,
customers, or suppliers) may be greater than expected;
- new interpretations and new accounting
standards from accounting standards bodies; and
- the other risks outlined in "Risks and
Uncertainties Affecting our Business" in our 2022 Annual MD&A
and "Updates to Risks and Uncertainties" in this earnings
release.
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These factors can also affect our objectives,
strategies, and intentions. Many of these factors are beyond our
control or our current expectations or knowledge. Should one or
more of these risks, uncertainties, or other factors materialize,
our objectives, strategies, or intentions change, or any other
factors or assumptions underlying the forward-looking information
prove incorrect, our actual results and our plans could vary
significantly from what we currently foresee.
Accordingly, we warn investors to exercise
caution when considering statements containing forward-looking
information and caution them that it would be unreasonable to rely
on such statements as creating legal rights regarding our future
results or plans. We are under no obligation (and we expressly
disclaim any such obligation) to update or alter any statements
containing forward-looking information or the factors or
assumptions underlying them, whether as a result of new
information, future events, or otherwise, except as required by
law. All of the forward-looking information in this earnings
release is qualified by the cautionary statements herein.
Before making an investment
decisionBefore making any investment decisions and for a
detailed discussion of the risks, uncertainties, and environment
associated with our business, its operations, and its financial
performance and condition, fully review the sections of this
earnings release entitled "Updates to Risks and Uncertainties" and
"Regulatory Developments" and fully review the sections in our 2022
Annual MD&A entitled "Regulation in our Industry" and
"Environmental, Social, and Governance (ESG)", as well as our
various other filings with Canadian and US securities regulators,
which can be found at sedarplus.ca and sec.gov, respectively.
Information on or connected to sedarplus.ca, sec.gov, our website,
or any other website referenced in this document is not part of or
incorporated into this earnings release.
About Rogers
Rogers is Canada's leading wireless, cable and
media company that provides connectivity and entertainment to
Canadian consumers and businesses across the country. Our shares
are publicly traded on the Toronto Stock Exchange (TSX: RCI.A and
RCI.B) and on the New York Stock Exchange (NYSE: RCI).
Investment community contact |
Media contact |
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Paul Carpino |
Sarah Schmidt |
647.435.6470 |
647.643.6397 |
paul.carpino@rci.rogers.com |
sarah.schmidt@rci.rogers.com |
Quarterly Investment Community
Teleconference
Our third quarter 2023 results teleconference
with the investment community will be held on:
- November 9, 2023
- 8:00 a.m. Eastern Time
- webcast available at
investors.rogers.com
- media are welcome to participate on
a listen-only basis
A rebroadcast will be available at
investors.rogers.com for at least two weeks following the
teleconference. Additionally, investors should note that from time
to time, Rogers' management presents at brokerage-sponsored
investor conferences. Most often, but not always, these conferences
are webcast by the hosting brokerage firm, and when they are
webcast, links are made available on Rogers' website at
investors.rogers.com.
For More Information
You can find more information relating to us on
our website (investors.rogers.com), on SEDAR+ (sedarplus.ca), and
on EDGAR (sec.gov), or you can e-mail us at
investor.relations@rci.rogers.com. Information on or connected to
these and any other websites referenced in this earnings release is
not part of, or incorporated into, this earnings release.
You can also go to investors.rogers.com for
information about our governance practices, environmental, social,
and governance (ESG) reporting, a glossary of communications and
media industry terms, and additional information about our
business.
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