Rogers Communications Reports Third Quarter 2024 Results

More Canadians continue to choose Rogers Wireless and Internet than any other carrier in Canada

• Combined mobile phone and Internet net additions of 227,000 in Q3 and 502,000 for the year to date
• Q3 postpaid mobile phone net additions of 101,000; prepaid net additions of 93,000; retail Internet net additions of 33,000
• Rogers has added industry-best 1.9 million mobile phone and Internet net additions over the past 11 quarters

Continued disciplined loading, strong execution, efficiency gains, industry-leading financial performance, and industry-best margins

• Wireless service revenue up 2% and adjusted EBITDA up 5%; margin up 220 basis points to 66%; blended ARPU stable
• Cable revenue down 1%; adjusted EBITDA up 5%; margin up 330 basis points to 58%
• Free cash flow of $915 million, up 23%

Rogers' network leadership continues

• Awarded Canada's fastest and most reliable Internet by Opensignal
• Awarded Canada's most reliable 5G network by umlaut and most reliable wireless network by Opensignal
• Delivered DOCSIS 4.0 modem technology with 4 Gbps download and 1 Gbps upload speeds - a global first

Rogers announces transaction with a leading global financial investor that will materially reduce leverage with innovative $7 billion structured equity financing

• Now expecting leverage at year-end will be 3.7x
• Completion subject to finalizing definitive agreements
• Expected to close in the fourth quarter; proceeds will be used to pay down debt and further strengthen our balance sheet

Company reaffirms 2024 outlook

• Total service revenue growth of 8% to 10%; adjusted EBITDA growth of 12% to 15%; capital expenditures of $3.8 billion to $4.0 billion; and free cash flow of $2.9 billion to $3.1 billion

TORONTO, Oct. 24, 2024 (GLOBE NEWSWIRE) -- Rogers Communications Inc. (TSX: RCI.A and RCI.B; : RCI) today announced its unaudited financial and operating results for the third quarter ended September 30, 2024.

Consolidated Financial Highlights

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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 2024 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.}

"We continued to build on our momentum and deliver industry-leading results and attract more Canadians than any other carrier," said Tony Staffieri, President and CEO. "We delivered strong market share, record margins in Cable and Wireless, and we are on track to deliver our full-year targets. I’m proud of our team for delivering an eleventh straight quarter of growth and sector-leading performance while strengthening our balance sheet."

Strategic Highlights

The five objectives set out below 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

• Awarded Canada's most reliable 5G network by umlaut in July 2024.
• Recognized as Canada's fastest and most reliable Internet by Opensignal in July 2024.
• Delivered 4 Gbps download and 1 Gbps upload speeds with DOCSIS 4.0 modem technology trial.

Deliver easy to use, reliable products and services

• Launched home Internet and TV services across Quebec.
• Introduced multi-gigabit speeds to 70% of our Internet footprint.
• Introduced a program to help newcomers build credit and finance a new smartphone through a partnership with Nova Credit.

Be the first choice for Canadians

• Attracted 227,000 net combined mobile phone and Internet customers.
• Signed an agreement with BCE Inc. (Bell) to become the majority owner of Maple Leaf Sports & Entertainment (MLSE).
• Launched Bravo in Canada and announced plans to launch TV channels for HGTV, Food Network, Magnolia, Discovery ID, and Discovery.

Be a strong national company investing in Canada

• Invested $977 million in capital expenditures, further strengthening and growing our networks.
• Announced a partnership with SenseNet to bring wildfire detection technology to communities.
• Became the first-ever presenting sponsor of the 2024 Toronto International Film Festival.

Be the growth leader in our industry

• Grew total service revenue by 1% and adjusted EBITDA by 6%.
• Reported industry-leading margins in our Wireless and Cable operations.
• Generated free cash flow of $915 million, up 23%, and cash flow from operating activities of $1,893 million.

MLSE Transaction
On September 18, 2024, we announced an agreement with BCE Inc. (Bell) to acquire Bell's indirect 37.5% ownership stake in Maple Leaf Sports & Entertainment Inc. (MLSE) for a purchase price of $4.7 billion subject to certain adjustments, payable in cash (MLSE Transaction). We expect to finance a portion of the purchase price with funding from private investors and we do not expect financing of the MLSE Transaction will affect our debt leverage ratio outlook. The MLSE Transaction will also provide Bell the opportunity to renew its existing MLSE broadcast and sponsorship rights over the long-term at fair market value. This includes access to content rights for 50% of Toronto Maple Leafs regional games and 50% of Toronto Raptors games for which MLSE controls the rights. The MLSE Transaction is subject to certain closing conditions, including sports league and regulatory approvals. When the MLSE Transaction closes, we will be the largest owner of MLSE, with a controlling interest in 75% of MLSE.

MLSE owns the Toronto Maple Leafs (NHL), Toronto Raptors (NBA), Toronto FC (MLS), the Toronto Argonauts (CFL), various minor league teams, and associated real estate holdings, such as Scotiabank Arena. The MLSE Transaction will add to our existing sports portfolio, including ownership of the Toronto Blue Jays, Rogers Centre, and Sportsnet.

Quarterly Financial Highlights

Revenue
Total revenue and total service revenue each increased by 1% this quarter, driven by revenue growth in our Wireless and Media businesses.

Wireless service revenue increased by 2% this quarter, primarily as a result of the cumulative impact of growth in our mobile phone subscriber base over the past year. Wireless equipment revenue decreased by 1%, primarily as a result of fewer device upgrades by existing customers.

Cable revenue decreased by 1% this quarter, improving sequentially, as a result of continued competitive promotional activity and declines in our Home Phone and Satellite subscriber bases.

Media revenue increased by 11% this quarter primarily as a result of higher sports-related revenue.

Adjusted EBITDA and margins
Consolidated adjusted EBITDA increased 6% this quarter, and our adjusted EBITDA margin increased by 230 basis points, as a result of full realization of our synergy program associated with the Shaw Transaction together with ongoing cost efficiencies.

Wireless adjusted EBITDA increased by 5%, primarily due to the flow-through impact of higher revenue as discussed above in conjunction with ongoing cost efficiencies. This gave rise to an adjusted EBITDA margin of 66.1%, up 220 basis points.

Cable adjusted EBITDA increased by 5% due to the aforementioned synergy program and ongoing cost efficiencies. This gave rise to an adjusted EBITDA margin of 57.5%, up 330 basis points.

Media adjusted EBITDA increased by 25% this quarter, primarily due to higher revenue as discussed above, partially offset by higher Toronto Blue Jays expenses, including game day-related costs.

Net income and adjusted net income
Net income increased by $625 million this quarter to $526 million, primarily as a result of the $422 million loss recognized last year related to an obligation to purchase at fair value the non-controlling interest in one of our joint ventures' investments, higher adjusted EBITDA, and lower restructuring, acquisition and other costs, partially offset by higher income tax expense. Adjusted net income increased by 12% this quarter, primarily as a result of higher adjusted EBITDA.

Cash flow and available liquidity
This quarter, we generated cash provided by operating activities of $1,893 million (2023 - $1,754 million) and free cash flow of $915 million (2023 - $745 million), both of which increased primarily as a result of higher adjusted EBITDA.

As at September 30, 2024, we had $4.8 billion of available liquidity² (December 31, 2023 - $5.9 billion), consisting of $0.8 billion in cash and cash equivalents and $4.0 billion available under our bank and other credit facilities.

Our debt leverage ratio² as at September 30, 2024 was 4.6 (December 31, 2023 - 5.0, or 4.7 on an as adjusted basis to include trailing 12-month adjusted EBITDA of a combined Rogers and Shaw as if the Shaw Transaction had closed on January 1, 2023). See "Financial Condition" for more information.

We also returned $266 million in dividends to shareholders this quarter and we declared a $0.50 per share dividend on October 23, 2024.

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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 2024 MD&A for more information about these measures. These are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other companies. See "Financial Condition" in our Q3 2024 MD&A for a reconciliation of available liquidity.}

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, 2024, 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 2024 Interim Condensed Consolidated Financial Statements (Third Quarter 2024 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 2024 MD&A; our 2023 Annual MD&A; our 2023 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.

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 2023 Annual MD&A. References in this earnings release to the Shaw Transaction are to our acquisition of Shaw Communications Inc. (Shaw) on April 3, 2023. For additional details regarding the Shaw Transaction, see "Shaw Transaction" in our 2023 Annual MD&A and our 2023 Annual Audited Consolidated Financial Statements.

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 October 23, 2024 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, 2024, first quarter refers to the three months ended March 31, 2024, second quarter refers to the three months ended June 30, 2024, third quarter refers to the three months ended September 30, 2024 and year to date refers to the nine months ended September 30, 2024. All results commentary is compared to the equivalent period in 2023 or as at December 31, 2023, 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. ©2024 Rogers Communications

Reportable segments
We report our results of operations in three reportable segments. Each segment and the nature of its business is as follows:

Wireless and Cable are operated by our wholly owned subsidiary, Rogers Communications Canada Inc. (RCCI), and certain other wholly owned subsidiaries. Media is operated by our wholly owned subsidiary, Rogers Media Inc., and its subsidiaries.

Summary of Consolidated Financial Results

Results of our Reportable Segments

WIRELESS

Wireless Financial Results

Wireless Subscriber Results ¹

Service revenue
The 2% increase in service revenue this quarter and 5% increase year to date were primarily a result of the cumulative impact of growth in our mobile phone subscriber base over the past year, including our evolving mobile phone plans that increasingly bundle more services in the monthly service fee. The year to date increase was also affected by the impact of the Shaw Mobile subscribers acquired through the Shaw Transaction in April 2023.

Mobile phone ARPU remained stable this quarter and year to date.

The continued robust postpaid gross additions this quarter and year to date were a result of sales execution in a growing Canadian market. The decrease in gross additions this quarter was a result of a less active market and our focus on attracting subscribers to our premium 5G Rogers brand.

Equipment revenue
The 1% decreases in equipment revenue this quarter and year to date were primarily a result of:

• fewer device upgrades by existing customers; partially offset by
• an increase in new subscribers purchasing devices; and
• a continued shift in the product mix towards higher-value devices.

Operating costs
Cost of equipment
The 1% increase in the cost of equipment this quarter and 2% increase year to date were a result of the equipment revenue changes discussed above.

Other operating costs
The 5% decrease in other operating costs this quarter and 1% decrease year to date were primarily a result of:

• lower costs associated with productivity and efficiency initiatives; partially offset by
• higher costs associated with our expanded network.

Adjusted EBITDA
The 5% increase in adjusted EBITDA this quarter and 7% increase year to date were a result of the revenue and expense changes discussed above.

CABLE

Cable Financial Results

Cable Subscriber Results ¹

Service revenue
The 1% decrease in service revenue this quarter was a result of:

• continued competitive promotional activity; and
• declines in our Home Phone, Video, and Satellite subscriber bases.

The 17% increase in service revenue year to date was primarily a result of the completion of the Shaw Transaction in April 2023, which contributed an incremental approximately $1 billion in the first quarter, partially offset by the factors discussed above.

The lower ARPA this year was primarily a result of competitive promotional activity.

Operating costs
The 8% decrease in operating costs this quarter was a result of the full realization of our synergy targets associated with the Shaw Transaction and ongoing cost efficiency initiatives. The 8% increase year to date reflects a full nine months of results for the Shaw Transaction, which closed in April 2023.

Adjusted EBITDA
The 5% increase in adjusted EBITDA this quarter and 26% increase year to date were a result of the service revenue and expense changes discussed above.

MEDIA

Media Financial Results

Revenue
The 11% increase in revenue this quarter and 5% increase year to date were a result of:

• higher sports-related revenue, driven by higher subscriber revenue and higher revenue at the Toronto Blue Jays; partially offset by
• lower Today's Shopping Choice revenue.

Operating costs
The 8% increases in operating costs this quarter and year to date were a result of:

• higher Toronto Blue Jays expenses, including game day-related costs; partially offset by
• lower Today's Shopping Choice costs in line with lower revenue.

Adjusted EBITDA
The increase in adjusted EBITDA this quarter and decrease year to date were a result of the revenue and expense changes discussed above.

CAPITAL EXPENDITURES

One of our objectives is to build the biggest and best networks in the country. As we continually work towards this, we once again plan to spend more on our wireless and wireline networks this year than we have in the past several years. We continue to expand the reach and capacity of our 5G network (the largest 5G network in Canada as at September 30, 2024) across the country. We also continue to invest in fibre deployments, including fibre-to-the-home (FTTH), in our cable network and we are expanding our network footprint to reach more homes and businesses, including in rural, remote, and Indigenous communities.

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.

Wireless
The decreases in capital expenditures in Wireless this quarter and year to date were 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 and the commencement of 3800 MHz spectrum deployment continue to augment the capacity and resilience of our earlier 5G deployments in the 600 MHz spectrum band.

Cable
The decrease in capital expenditures in Cable this quarter was due to the timing of investments. The increase year to date reflects a full nine months of results for the Shaw Transaction. Capital expenditures reflect 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.

Media
The year to date increase in Media capital expenditures was a result of higher Toronto Blue Jays stadium infrastructure-related expenditures associated with the second phase of the Rogers Centre modernization project.

Capital intensity
Capital intensity decreased this quarter and year to date as a result of the revenue and capital expenditure changes discussed above.

Review of Consolidated Performance

This section discusses our consolidated net income and other income and expenses that do not form part of the segment discussions above.

Depreciation and amortization

The year to date increase in depreciation and amortization was primarily a result of the assets acquired through the Shaw Transaction.

Restructuring, acquisition and other

The Shaw Transaction-related costs in 2023 and 2024 consisted of incremental costs supporting acquisition (in 2023) and integration activities (in 2023 and 2024) related to the Shaw Transaction. In the first half of 2023, these costs primarily reflected 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 2023 and 2024 were primarily severance and other departure-related costs associated with the targeted restructuring of our employee base, which also included costs associated with voluntary departure programs. These costs also included costs related to real estate rationalization programs and transaction costs related to other completed and potential acquisitions.

Finance costs

Interest on borrowings, net
The 17% increase in net interest on borrowings year to date was primarily a result of:

• a reduction in interest earned on restricted cash and cash equivalents, as we used these funds to partially fund the Shaw Transaction on April 3, 2023; and
• interest expense associated with the long-term debt assumed through the Shaw Transaction; partially offset by
• the repayment at maturity of senior notes in March 2023, October 2023, November 2023, January 2024, and March 2024 at different underlying interest rates; and
• lower interest expense associated with refinancing a significant portion of the borrowings under our term loan facility with senior notes issued in September 2023 and February 2024.

Other expense (income)
The decreases 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 recorded in the prior year.

Income tax expense

Cash income taxes paid increased this quarter and decreased year to date due to the timing of installment payments.

Net income (loss)

Adjusted net income
We calculate adjusted net income from adjusted EBITDA as follows:

Key Performance Indicators

We measure the success of our strategy using a number of key performance indicators that are defined and discussed in our 2023 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:

Non-GAAP and Other Financial Measures

Reconciliation of adjusted EBITDA

Reconciliation of pro forma trailing 12-month adjusted EBITDA

Reconciliation of adjusted net income

Reconciliation of free cash flow

Rogers Communications Inc.
Interim Condensed Consolidated Statements of Income
(In millions of Canadian dollars, except per share amounts, unaudited)

Rogers Communications Inc.
Interim Condensed Consolidated Statements of Financial Position
(In millions of Canadian dollars, unaudited)

Rogers Communications Inc.
Interim Condensed Consolidated Statements of Cash Flows
(In millions of Canadian dollars, unaudited)

Subsequent Event

Following quarter-end, Rogers entered into a non-binding term sheet with a leading global financial investor which will finance a portion of its network with a structured equity investment of $7 billion. Completion is subject to finalizing definitive agreements and is expected to close in the fourth quarter.

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:

Our conclusions, forecasts, and projections are based on a number of estimates, expectations, assumptions, and other factors, including, among others:

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 uncertainties
Actual events and results may differ materially 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 or our current expectations or knowledge, including, but not limited to:

These risks, uncertainties, and other factors can also affect our objectives, strategies, plans, and intentions. Should one or more of these risks, uncertainties, or other factors materialize, our objectives, strategies, plans, or intentions change, or any other factors or assumptions underlying the forward-looking information prove incorrect, our actual results and our plans could vary materially 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 decision
Before 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 in our 2023 Annual MD&A entitled "Regulation in our Industry" and "Risk Management", 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 communications and entertainment company and its shares are publicly traded on the Toronto Stock Exchange (TSX: RCI.A and RCI.B) and on the New York Stock Exchange (: RCI).

Investment Community Contact

Paul Carpino
647.435.6470
[email protected]

Media Contact

Sarah Schmidt
647.643.6397
[email protected]

Quarterly Investment Community Teleconference

Our third quarter 2024 results teleconference with the investment community will be held on:

• October 24, 2024
• 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 our 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 [email protected]. 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.