Rogers lower capital spending for “foreseeable future”
By Ahmad Hathout
Rogers expects its sports and media business to exceed $25 billion following the purchase of the remaining 25 per cent stake in Maple Leaf Sports and Entertainment (MLSE), which it targets for closing later this year.
The call and put options for the purchase and sale, respectively, are coming due in July for Rogers to nab Kilmer Sports’s equity in the empire that owns the Toronto Maple Leafs, Toronto Raptors, Toronto Argonauts, and Toronto Football Club. (Rogers became a 75-per-cent owner when it purchased Bell’s 37.5 per cent stake in the company.)
After securing 100 per cent of MLSE, Rogers intends to bring in investors to buy a minority stake in the combined entity, which executives believe will bring the valuation to that mark. The proceeds will then be used to pay down debt.
“We estimate we’ll have a value in excess of $25 billion,” Rogers President and CEO Tony Staffieri said on a first-quarter earnings conference call Wednesday. “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.”
The valuation, Staffieri said, is based largely on publicly available information, which includes estimates from Forbes and Sportico. “We also look at the valuation of some of our businesses, including live entertainment or the concert business as well as our current media assets that include Sportsnet and Sportsnet+,” Staffieri said. “When you look at our streaming services and sports as an example, it continues to grow at double digits and streaming valuations, particularly in the sports context, continue to have a significant value premium to them.”
Chief Financial Officer Glenn Brandt added: “When I look at some of the transactions that are out there and contrast them to what we hold and the fact that we have all of the major sports franchises in one entity … there is nobody else that can touch this breadth of assets, this degree of vertical integration and leading assets in each of the categories.”
Rogers Sports and Media revenue was $988 million, up 82 per cent compared to the same period last year, thanks to the purchase of Bell’s stake in MLSE, higher Toronto Blue Jays revenue, as well as higher subscriber revenue from the launch of the Warner Bros. Discovery suite of channels.
Media revenue growth helped propel total revenue to $5.5 billion, up 10 per cent from the same period last year. Net income was up 72 per cent to $482 million, attributed primarily to lower finance costs and higher adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).
Rogers also announced Wednesday that it will spend less this year, to the tune of between $2.5 and $2.7 billion in 2026, which is 30 per cent less compared to last year.
Staffieri said this means some projects will be cancelled. “We don’t see the economics of building in certain areas as a result of the dynamics that have been placed on us and the sector through regulatory policy,” he said, adding there are also “capital efficiency improvements” and general deferral of some projects and “pacing” others to that they are “more in line with the revenue stream coming in.”
The elephant in the room is the CRTC’s policy on allowing the three largest telecoms to use competitor networks outside of their operating territory. Staffieri described this as “false economics of subsidization.”
“Telecom markets have never been more competitive, but we have also never been more regulated,” Edward Rogers, executive chair of the board, claimed at the company’s annual general meeting Wednesday. “The current approach imposes significant costs and uncertainty.”
Brandt, who said $2.5 billion is “not a shy level of investment,” provided a broader overview: “Over the past 3 years, Rogers has invested approximately $12 billion in capital expenditures across Canada,” he said. “These investments have primarily been focused on our wireless and wireline networks and IT infrastructure right here in Canada and puts Rogers annual capital expenditures amongst the largest of any company in Canada.
“This reduction is also a reflection of the slower growth opportunities for revenue and adjusted EBITDA in the telecom sector, driven by aggressive discounting and a regulatory environment that increasingly disincentivizes capital investments,” he noted, adding that this lower level of spending will continue for the “foreseeable future.”
Brandt did not elaborate on which segments this would impact, only saying that this is a “general lengthening of the delivery schedule” that includes networks, IT and general capital expenditures.
Wireless and cable revenues were $2.6 billion and $1.95 billion, respectively, up two and one per cent compared to the same period last year.
The company added 28,000 new postpaid wireless subscribers, up by 17,000 over the year, against 429,000 gross additions – up by 92,000 over the same period. The total postpaid base at the end of March was roughly 11 million, up by 244,000.
Churn was up 1.22 per cent, up 21 basis points, as Rogers noted unusually high promotional activity coming out of the holiday period.
“Throughout January and into February, we very deliberately opted not to discount our prices, seeking to restore sector pricing away from holiday level discounts,” Brandt said. “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.”
Prepaid net additions were 5,000, down by 18,000 compared to the same period last year, against gross additions of 149,000 – up by 17,000. The total prepaid base was 1.2 million, up by 76,000.
Monthly average revenue per user (ARPU) was down $1.34 to $55.6, which was attributed to the aforementioned discount activity.
“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,” Brandt said. “With three quarters still to go in 2026, we are hopeful market competition will resettle around value for premium services rather than undisciplined discounting.”
Internet net additions was 7,000, down 16,000 compared to the same period last year, for a total base of 4.5 million – up by 208,000.
Video net losses were 32,000, same as last year, for a total base of roughly 2.47 million – a decline of 114,000.
Landline losses were 30,000, 4,000 more than last year, for a total base of 1.36 million – down by 122,000 over the year.
Home monitoring net additions were 4,000, down by 1,000 over the year, for a total base of 157,000 – up 19,000 over the same period.
Photo via Rogers
