Rogers Communications Inc. (RCI)

Price Target 75$ CAD Sector Perform

-----Our view: Q2/22 results were ahead of our expectations with most wireless KPIs nicely ahead of forecast. 2022 guidance was reiterated. At current levels, we view Q2/22 results as positive for the shares. First impression

-----• Q2/22 results ahead of our expectations. Consolidated revenues and EBITDA were $3,868MM (+8.0% YoY) and $1,592MM (+15.9% YoY), respectively, versus our estimates of $3,786MM and $1,543MM (consensus is $3,798MM and $1,540MM). The positive revenue variance was mainly due to higher wireless network revenues on stronger ARPU growth. The positive EBITDA variance was due to the related flow-through to wireless EBITDA as well as slightly higher media EBITDA. Consolidated EBITDA margins were 41.2% (+280bps YoY) versus our estimate of 40.8%. Please see Exhibit 1 for a summary of Q2/22 results versus our expectations.

-----• A strong quarter for wireless as anticipated. Wireless revenues and EBITDA were $2,212MM (+7.2% YoY) and $1,118MM (+10.9%), respectively, versus our estimates of $2,179MM and $1,086MM (consensus is $2,180MM and $1,087MM) due to higher than forecast roaming revenue on renewed mobility and travel. Wireless EBITDA margins were 50.5% (+171bps), above our 49.8% estimate. Key wireless metrics were solid: (i) mobile phone postpaid net additions were +122k versus our estimate of +85k, consensus of +74k and +60k in Q2/21; (ii) mobile phone postpaid churn was 0.68% versus our estimate of 0.75%, consensus of 0.77% and down -8bps YoY; and (iii) mobile phone ARPU growth was +5.7% versus our estimate of +3.5% and consensus of +3.3%.

-----• Improving cable performance continues. Cable revenues and EBITDA were $1,041MM (+2.8% YoY) and $520MM (+5.7%), respectively, generally in line with our estimates of $1,035MM and $518MM (consensus is $1,036MM and $516MM) with results benefiting from the flow-through of Q1/22 price increases and improved efficiencies and execution. Cable EBITDA margins were 50.0% (+138bps YoY) versus our estimate of 50.1% (+150bps). Key cable metrics: (i) retail Internet net additions were +26k versus our estimate of +18k, consensus of +15k and +14k in Q2/21; (ii) cable customer relationships net additions were +14k versus our estimate of +15k, consensus of +8k and +7k in Q2/21; and (iii) cable ARPA increased +0.2% versus our estimate of -0.3% and consensus of +0.2%.

-----• Other notables. (i) the outside date on the Shaw transaction has been extended to December 31, 2022 (from July 31, 2022) with an option by either Rogers or Shaw to push it further out to January 31, 2023 provided committed financing is available; (ii) customer credits of ~$150MM from the July 8 network outage will be recognized in Q3/22; and (iii) Rogers Media results were slightly ahead of our expectations, albeit EBITDA break-even in the quarter.

You wait till Monday when Things start coming back online more

Things gonna start dropping like a rock

Watch.