Rogers expects its free cash flow to grow by between about $745-million and $945-million this year.Fred Lum/The Globe and Mail
Rogers Communication Inc.’s RCI-B-T share price jumped more than 13 per cent Wednesday to $51.21 after the company said it plans to reduce spending by about one-third this year, in part by cancelling or delaying infrastructure projects in light of “significant regulatory hurdles” that its chief executive noted “impede investment.”
Rogers is planning to reduce 2026 capital expenditures by 30 per cent – as much as $1.2-billion – compared to last year when it spent $3.7-billion. Executives said it will do so through a combination of cancelled and deferred projects and by finding efficiencies.
It is “no longer realistic to sustain the same level of capital investment” after a cycle of major spending, chief executive officer Tony Staffieri told shareholders at the company’s annual general meeting in Toronto Wednesday morning. “Some projects are simply uneconomical and will be cut.”
Meanwhile, the company is facing policy decisions that “increase costs and reduce revenue,” he said.
The reductions are expected to be spread across the company’s networks, its information technology systems and general capital expenditures, chief financial officer Glenn Brandt told analysts during the first-quarter earnings call, before the AGM.
In a speech at the AGM, executive chair Edward Rogers spoke about the regulatory hurdles. He criticized the government’s approach to internet access, which he said forces the company to provide below-cost network access to its competitors, as well as wireless policies that “undermine innovation.” He also noted that foreign streamers are not contributing to domestic content production, as Rogers is.
Already, Rogers had planned to slow down capital expenditure this year, with spending related to merging its networks with those of Shaw following the $20-billion takeover in April, 2023, largely behind it.
The company has also been under pressure from shareholders to pay down its long-term debt, which stood at $34.7-billion as of March 31. Executives said Wednesday they plan to expedite debt reduction, given the higher expected free cash flow for the year.
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Executives said they expect to complete the purchase of the remaining 25 per cent minority interest in Maple Leaf Sports and Entertainment in the second half of this year, followed by plans for the recapitalization of the combined sports and media group in late 2026 or early 2027 through minority equity investments. The company then plans to use proceeds from the minority sale to pay down debt.
Analysts have suggested Rogers could pay about $4-billion for the remaining MLSE stake. The company will look to find synergies when it merges MLSE with its existing media division, in particular by trimming third-party supplier costs, Mr. Brandt told analysts.
Rogers now estimates the complete portfolio – combining all of MLSE and Rogers’ existing sports and media assets – will be worth $25-billion, a $5-billion valuation increase since last fall, attributable to the rising value of sports teams.
Rogers’s revenue for the first quarter ended March 31 was $5.4-billion, up 10 per cent over last year, while net income was $482-million, up 72 per cent, in part because it now consolidates MLSE’s results and revenue. On an adjusted basis, Rogers said net income was up one per cent.
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TD Cowen analyst Vince Valentini called the quarter a “surprising beat” in a note to investors Wednesday morning, noting the “big and unexpected” changes to guidance.
Desjardins analyst Jérome Dubreuil called the results positive. “High spending amid challenging monetization conditions has been a common investor pushback in the last few years, and the meaningful capex reduction – if sustainable – should be well-received,” he said.
Earlier this month, Rogers announced that Rogers Sports and Media president Colette Watson is departing from her role after more than 30 years at the company. Her last day will be May 15. A replacement has not been announced yet.
Rogers added fewer net mobile phone subscribers and retail internet customers in the quarter compared to last year, and lost 32,000 linear television subscribers.
Average revenue per user – an industry metric used to represent the value of a customer – declined by 2.3 per cent in the quarter.
In early April, shares of all of Canada’s public telecom companies fell after analysts noted ongoing competition driving down mobile plan pricing. The S&P/TSX Composite Telecommunication Services Index is down 6 per cent to date this month.
Canada’s federal Parliamentary Budget Officer expects the country’s population growth to be flat for a second year in 2026, requiring telecom companies to turn to discounts and promotional pricing to draw customers from their rivals.