This is the conference operator. Welcome to the Rogers Communications, Inc. Third Quarter 2024 Results Conference Call. As a reminder, all participants are in a listen-only mode and the conference is being recorded. Following the presentation, we'll conduct a question-and-answer session. I would now like to turn the conference over to Paul Carpino, Vice President of Investor Relations with Rogers Communications. Please go ahead, Mr. Carpino.

Thank you, and good morning, everyone, and thank you for joining us today. I'm here with our President and Chief Executive Officer, Tony Staffieri; and our Chief Financial Officer, Glenn Brandt. During our Q&A, I'd ask you limit yourself to one question and a quick follow-up if needed. Today's discussion will include estimates and other forward-looking information from which our actual results could differ. Please review the cautionary language in today's earnings report, MD&A and in our 2023 Annual Report regarding the various factors, assumptions and risks that could cause our actual results to differ. With that, let me turn it over to Tony to begin.

Thank you, Paul, and good morning, everyone. I'm very pleased to report that Rogers delivered another strong quarter of results. For 11 consecutive quarters, we have delivered industry-leading results driven by disciplined execution in a healthy and competitive market. We once again reported industry-leading market share in wireless, industry-leading margins in wireless and cable and strong profitability in media, and we continue to invest in the future growth of our three core businesses. And we made significant progress in strengthening our balance sheet. As you saw this morning, we announced a transaction with a leading global financial investor to provide an innovative $7 billion structured equity financing. The proceeds will be used to pay down debt, and as a result, we now expect our debt leverage ratio to reach 3.7x by year-end. This is well ahead of our 4.2x target we previously communicated, and it will accelerate our Shaw deleveraging plans by a full 12 months. This structured financing transaction is the first of its kind in Canada and demonstrates our innovative approach to maintaining an investment-grade balance sheet while investing in growth. Closing is subject to the finalization of definitive agreements and is expected to happen in the fourth quarter. Let me now turn to our third quarter results. This quarter, we added a record 227,000 mobile phone and Internet net additions. And over the past 11 quarters, we have added 1.9 million mobile phone and Internet net additions. It's clear our strategy is working, and our team is executing with discipline. More Canadians continue to choose Rogers more than any other provider in Canada. I'm proud of our team and their efforts to compete in a healthy and competitive marketplace. Wireless postpaid mobile phone net additions were 101,000 and prepaid net adds were 93,000. The market was competitive during the seasonally busy back-to-school period, and we effectively used our Chatr brand to gain customers in the new to Canada market. We remain focused on ensuring a clear delineation between our premium 5G brand and our successful prepaid Chatr brand. We have been executing on our brand differentiation strategy for almost two years now and it's been highly effective in delivering strong results. Cable loading was also strong in the third quarter. We delivered retail Internet net additions of 33,000, up 15,000 or 83% from last year. This brings our year-to-date retail Internet net additions to 85,000, a 50% increase from one year ago. Our expanded footprint and diversified Internet product offering are driving this growth. By choosing Rogers, customers can select the products and plans that best meet their needs delivered seamlessly through our network capabilities, whether it's direct fiber, fiber coax, 5G wireless home Internet, or wholesale TPIA. Our strong wireless and cable loading is underpinned by our networks. In the third quarter, two global leaders in network benchmarking reaffirmed our network leadership position. Ooma once again awarded Rogers Canada's most reliable 5G network. In a separate benchmarking study, Opensignal recognized Rogers for delivering the most reliable wireless services in Canada. Opensignal also awarded Rogers as Canada's fastest and most reliable Internet. The report found that we consistently deliver the most reliable experience, the fastest overall download speeds and the best streaming experience in Canada. Our customers have told us that reliability is what matters most to them, and we're outperforming our competitors on this key metric. We're also advancing our DOCSIS roadmap. This quarter, we successfully trialed DOCSIS 4 modem technology with 4 gigabit download and 1 gigabit upload speeds. This is a global first, and we just hit another milestone. We have started trialing the Comcast XER modem, the most advanced Wi-Fi 7 and 10G capable router in Canada. And Rogers satellite to mobile partner, SpaceX just completed a global first, a successful real-world test with T-Mobile of their Starlink low Earth orbit direct-to-cell constellation during hurricanes Helene and Milton. SpaceX also enabled and tested emergency alerts via satellite to mobile phones in affected areas. With over 300 real satellites in service, the technology was able to support thousands of residents with messaging service. As we previously announced, we are bringing the same industry-leading technology to Canadians. From a financial perspective, our growth, strong execution, and continued efficiency gains are delivering industry-leading financial performance and the industry's best margins. In fact, we've set a new benchmark at Rogers with our best-ever cable and wireless margins. Wireless service revenue was up 2%, and adjusted EBITDA was up 5%. We delivered wireless margins of 66%, and blended ARPU remains stable. In cable, we remain on track to return to growth in the fourth quarter. In Q3, cable revenue improved sequentially to a decline of 1%. So we're seeing steady progress here towards our return to growth in the fourth quarter. With the improvements in cable revenue, adjusted EBITDA was strong, up 5%, and our team delivered industry-leading margins of 58%. Our Sports & Media business also had a strong quarter. We showed strong growth and profitability, with revenue growth of 11% and adjusted EBITDA was up a healthy 25%. As Canada's Communications and Entertainment Company, live sports and entertainment are core to our business strategy. In the third quarter, we signed a strategic agreement to buy Bell's 37.5% ownership stake in Maple Leaf Sports & Entertainment. It's a significant step in our long-term plan to surface more value for our shareholders. So overall, all three businesses are executing very well, and we have clearly and significantly advanced our balance sheet, delevering well ahead of plan. Before I hand over to Glenn, I want to thank our team for delivering strong results and disciplined execution in a competitive and healthy market. We've delivered 11 straight quarters of growth, invested in new innovations, and made big bold bets. We have momentum, and I'm proud of our team for their relentless hard work. Let me now turn over the call to Glenn.

Thank you, Tony, and good morning, everyone. Thank you for joining us. As Tony has said, this is now our 11th straight quarter of posting sector-leading operating and financial performance, and we are proud of those results. We remain focused on delivering consistent, disciplined execution with strong performance and growth. We are following through on what we have said we would do with urgency and without distraction, including on our accelerated delevering plans. This morning, we announced an innovative $7 billion structured equity financing with a leading global financial investor to acquire a minority stake in a portion of our wireless backhaul transport infrastructure. This is a transformative transaction and the first of its kind in Canada, and it will further strengthen our investment-grade balance sheet. This transaction is subject to completion of definitive agreements, which we expect we will complete and close on in the fourth quarter. The $7 billion in proceeds will be used to pay down a corresponding amount of debt. As a result, we now expect to end the year with leverage in the range of 3.7x. More on this shortly, but let me now turn to an overview of our strong third quarter results. Wireless service revenue grew 2% year-over-year, reflecting the continued growth in our mobile subscriber base and continued emphasis to add subscribers on our Rogers premium 5G brand. Postpaid mobile phone customer net additions were very strong at 101,000, and prepaid net additions were 93,000 in the quarter. As expected, the back-to-school period was competitive this year, particularly in the seasonally strong prepaid market, which tends to be more active for back-to-school. Rogers remained disciplined in the market and delivered an effective balance across strong subscriber loading and disciplined fundamentals reflected in stable ARPU. As a result, our aggregate net phone additions were 194,000 in Q3, which we expect will once again lead the sector on market share for subscriber growth for the 11th consecutive quarter. In a competitive environment, we are leading in net adds while maintaining stable ARPU and driving service revenue growth. Postpaid mobile phone churn was 1.12% for the quarter, which is roughly unchanged from the prior year and from the first half of 2024. Wireless adjusted EBITDA was up a strong 5% year-over-year, reflecting enhanced economies of scale and improved efficiency. This was reflected in our adjusted EBITDA margin, which was up by 220 basis points over the prior year to 66%, a company all-time high and sequentially up from the second quarter, our prior all-time high. Moving to our cable business. We continue to deliver strong profitability as we focus on returning to revenue growth. Cable revenue was down 1% year-over-year, a further sequential improvement from the negative 2% decline in the second quarter, and on its path to turning positive as we exit 2024. That remains our intent and focus. Cable adjusted EBITDA is up a healthy 5% year-over-year, and cable margins are a very strong 58%, up 330 basis points from last year and an all-time high. Our employees have worked very hard to leverage our scale efficiencies and cost synergies to deliver enhanced services to our customers while delivering stronger operating performance. Internet net additions are up significantly year-over-year, reaching 33,000 in the third quarter, which is up almost double from the prior year. And finally, our Sports & Media revenue is up 11% and adjusted EBITDA is up 25% for the quarter. The third and fourth quarters are seasonally our strongest of the year for our Sports & Media business, driven primarily by revenue growth at the Toronto Blue Jays and the NHL on Rogers Sportsnet. We expect this performance will continue through the fourth quarter as well. At a consolidated level, total service revenue increased 1%, and adjusted EBITDA was up 6% year-over-year. This drove our consolidated EBITDA margin up by 230 basis points to a strong 50%. Free cash flow for the quarter was $915 million, up 23% from the prior year, primarily reflecting the higher adjusted EBITDA and lower interest expense on long-term debt. Capital expenditures were $977 million in the quarter, down $40 million or 4% from last year, largely as a result of minor timing shifts. Turning to the balance sheet. At September 30, we had $4.8 billion of available liquidity, including $800 million in cash and short-term deposits on hand and $4 billion available under our bank credit facilities. Our weighted average cost of all borrowings was 4.7%, and our weighted average term to maturity was 10 years. We ended the quarter with a debt leverage ratio of 4.6x, down 0.1x from the prior quarter driven by stronger earnings combined with debt repayments. This morning's announced $7 billion structured equity financing signed with a leading global financial investor reflects our commitment to delever and further strengthen our investment-grade balance sheet. The Shaw transaction has broadened our national reach and expanded the scale of our world-class assets. This $7 billion structured equity financing represents another transformative opportunity for us. It is a first of its kind in Canada with one of the world's leading financial investors. Succinctly, the companies have agreed to terms for Rogers to sell a minority interest in certain parts of our wireless backhaul transport infrastructure. To be very clear, our cell towers and related spectrum holdings are not included in this transaction and remain 100% owned and controlled, and we will continue to retain full operational control and consolidation for our entire national wireless network. Closing is subject to finalizing definitive agreements, all of which are expected to be completed and closed in the fourth quarter. We will use the proceeds to repay debt. And with this transaction, we expect that we will have reduced year-end leverage to around 3.7x, a full turn improved from prior quarters and well ahead of our previously communicated target of 4.2x. We remain committed to delevering and will remain opportunistic for further strengthening of our balance sheet, including in regard to our purchase of an additional 37.5% interest in MLSE, which we expect to close in 2025. As we delever, it is also important to highlight that we are still investing in growth in our core businesses in Canada for long-term value creation. Our Wireless, Cable and Sports & Media operations are built on disciplined investing, targeting sustainable long-term growth. And finally, we are reaffirming all of our 2024 guidance range targets. We consistently lead in a competitive environment, and we continue to deliver on our near-term and longer-term goals. Let me conclude by thanking the entire Rogers team. Thank you. Your perseverance, dedication, and resourcefulness have consistently outperformed our peers on growth and financial performance quarter in and quarter out. This is a strong team working with world-class assets attracting global investors, and we remain optimistic about the opportunities ahead for us. Thank you for your time this morning. And with that, may we please commence with the question-and-answer session.

Certainly. We'll now begin the question-and-answer session. Our first question is from Batya Levi with UBS. Please go ahead.

Great. Thank you. I'd like to start with the structured equity financing. If you could provide a little bit more detail in terms of if there will be any shares issued with this, how it would impact maybe your operations as you lease back some of that network elements for your own support? Any color on that would be great. And then the second question was more on the wireless side. If we could talk about a bit more on the competitive environment as we go ahead into the holiday season. And if you think that the stable ARPU can be sustained. Thank you.

Thank you, Batya. On the first question, to be clear, we are not leasing assets. This is not a sale-and-leaseback transaction. We are selling a minority equity interest in a portion of our wireless backhaul transport infrastructure. And that's the extent of the transaction. It is an equity transaction with that, that minority interest in the subsidiary company. We will maintain full operating control of our entire network, including these assets that are involved in selling the minority equity stake. There are no RCI shares involved, RCI A or B, no dilution to our RCI shareholders. This is a minority interest being acquired in a portion of our wireless backhaul and there is no lease.

Batya, on the second part of your question relating to wireless competitive intensity getting into the fourth quarter, it's always difficult to predict competitive market dynamics among the various brands that are in the market. But if we look to the third quarter in the back-to-school season, we were very focused on being disciplined with our promotions. We led with a bundled offer of Internet and wireless and executed well and resonated throughout the back-to-school period. You saw that we continue to focus on our primary brand strategy, Rogers, 5G premium. When you look at the 101,000 postpaid nets, the vast majority of those are on the Rogers brand. So the team is doing an excellent job of focusing on that segment and migrating customers from Fido and Chatr to the premium brand. And you saw us execute really well with the Chatr brand in the new to Canada and back-to-school category. There, what we saw was as a result of a number of system changes we made, we've got a platform now in Chatr that is very good in terms of self-serve and has dramatically lowered our cost to serve in the prepaid segment. And so we've consolidated all our prepaid into Chatr and we discontinued prepaid on Rogers and Fido. And that's working extremely well in the fourth quarter also. We like what we see in terms of the prepaid customers. They're predominantly on auto pay. And so the behavior is very similar to a postpaid customer, and they're coming in at very healthy ARPUs. And so the strategy is working well, and we'll continue that into the fourth quarter, although you should expect prepaid to come down in the fourth quarter. There's seasonality related to it in the third quarter, and we expect our focus in the fourth to be on postpaid.

The next question is from Vince Valentini with TD Cowen. Please go ahead.

Thanks very much. I have two questions. First, could you elaborate more on the prepaid segment? The average revenue per user is still around $30, similar to what you previously achieved with a low-end flanker. Additionally, I noticed that churn for prepaid is significantly lower this year compared to last year, with this quarter improving to 2.8%. Do you think there is any real distinction between a low-end flanker and a prepaid customer at this point? Second, I'm curious about something that seems too good to be true. Who would offer you $7 million without seeking equity or lease payments? What does the buyer gain from this arrangement? Are they potentially getting an option to sell these assets back to you later? There must be an incentive for someone to invest in the minority interest in the infrastructure.

We can discuss that. Would you like me to address this first, Tony? The arrangement involves the wireless backhaul, which transports data from our towers to our core. The transport from our tower edges to our core edges is purely focused on data transportation, and currently, this business is entirely owned and operated nationally from coast to coast by Rogers. This transaction takes a regional part of that national transport and establishes a subsidiary that will pay for the transport using wholesale rates. This creates revenue, as well as expenses and capital to maintain that regional section of the backhaul. As a result, there will be net income generated within the subsidiary. It is a consolidated subsidiary that will not impact EBITDA, but minority interest holders will receive a share of the net income from that subsidiary. There will also be distributions from that net income and from the cash settlements between our operating company and the subsidiary handling the backhaul in these regions. That is the business model. There is no lease involved, and there will be periodic distributions of available cash, along with settlements, and that outlines the business model.

That makes more sense. So Rogers pays an operating expense as opposed to a lease to you?

It's a supply agreement, yes. And a portion of it, a controlling portion of that will attribute to RCI and a minority portion of that will attribute to the minority investor.

Sorry, Glenn, just a follow-up on that. Is this data transport backhaul significantly underutilized today so that there's excess capacity to grow those revenues? Is that the catch?

Okay. So just to be very clear and to make sure there's no confusion, this is not a business that will sell backhaul to other carriers. This is a business that will continue to serve Rogers exclusively, and we'll continue to consolidate up into Rogers. There is data revenue or data traffic growth going on today. Annually, our data traffic grows by 40% to 50% as a result of increased data loading to each subscriber and as a result of subscriber growth from quarter-to-quarter. We will maintain the network, as we always have, we'll continue to maintain it, invest in it, we control that investment, we control the operation of the infrastructure. This is simply setting up a supply agreement between a subsidiary and the operating company. The returns to the investor, the minority investor coming in are based on that traffic. And we have the forecast worked out based on historical and expected growth rates to set up that business and the volumes that it will drive, the revenue that will drive, the expenses that are expected for operating it. The distributions out to the minority investor and back up to RCI as the controlling shareholder, those distributions are forecast to be anticipated to be relatively stable within a known range based on our forecast.

I guess you don't want to tell us that known range at this point.

I'm not looking to disclose the financial terms. No, Vince. Thank you.

Vince, on the first part of your question, we have been driving, and we are seeing a blurring of the lines between prepaid and postpaid. And it's been a very deliberate strategy for us, and it's been very competitive, beneficially competitive for us in that segment of the market where Chatr is participating. Customers are coming in, as I said earlier, largely on auto pay. And so the behavior is very much like postpaid, and we're seeing very little difference. And the ARPU is very strong. Our prepaid ARPU is not that different than Québec or ARPU, just to put it in perspective. We're not going to quote specific ARPU numbers by brand, but that will give you a sense of the value proposition and the strength of the pricing on the Chatr brand.

Next question, Galen?

The next question is from Maher Yaghi with Scotiabank. Please go ahead.

Great. Thank you for taking my question. So just a follow-up on this interesting transaction that you guys announced today. I'm trying to figure out what kind of effective rate the minority interest is getting on this deal, trying to triangulate a little bit more the impact of this transaction on your future free cash flows. And what percent of your backhaul is included in this deal? You say that it's a regional part of your network. But if you can just ballpark a little bit how much of your current backhauling this represents? And are there a minimum commitment that you need to provide your equity minority shareholder on this deal in the future that is set in advance or it's just pay per use? And I'll have a follow-up on after that.

So it's based on tiered wholesale rates, volume tiered as the data traffic grows, the tiering adjusts. There is no specific term on the investment. There is no guaranteed minimum for the distributions. There is a theoretical maximum that we would reach or approach as you get into higher and higher tiers. Keep in mind, we've got a business that's growing data rates at 40% to 50%. And so if this were to run indefinitely, that 40% to 50% annual growth would get quite high. And so the rates are adjusted accordingly in the tiering. The cost and the maintenance will all be factored in the distributions. The order of magnitude, Maher, I'm not going to quantify the annual distributions. What I would say on a business approaching $10 billion of annual EBITDA, if you were to factor in the interest savings on $7 billion of debt repayment at our annual cost of just over 4.5%, that's roughly $300 million a year. The distributions of the net income that a portion to the minority investor will be a little bit higher than those net after-tax interest savings, but not materially higher. I expect well inside $1 billion of distributions coming out from the minority interest investment. And so let me give you that range, and that is a very wide range deliberately so, so that I'm not steering to exact returns on the call. It's not fair to the investor, and we're still working on completing the final documents. But this is an excellent opportunity for the company to delever. It's a structured equity transaction. We maintain control; we delever, and the impact on our free cash flow and ability to continue to invest in our business carries on unrestricted by this transaction.

Great. It sounds like it's basically a bond on the backhauling. It's like selling a bond on your backhauling business.

We are selling through a distribution stream, and I want to clarify that this is an equity transaction and will be treated as such.

Yes. Okay. And do you have any option to repurchase that ownership over time?

We will have full control over how long this investment remains in place, and we'll determine that in the fullness of time with the needs of our balance sheet. Yes.

One last one. Are the distributions to the equity partners of that entity tax-deductible?

No, they would be equity distributions and treated accordingly. We will be repaying debt that has tax-deductible interest, while the distributions we pay will not be tax-deductible. However, considering the difference between the expected annual distribution amounts and the annual interest savings, the impact on our free cash flow will not significantly increase our obligations.

Thank you, Maher. Galen, we have the next question, please.

Certainly. The next question is from Drew McReynolds with RBC. Please go ahead.

Yes. Thanks very much. Good morning. Sorry, I had trouble climbing on. I'm sure the financing is being hashed to death here, but one follow-up there for you, Glenn. Just in terms of valuing that minority stake, obviously, you're not going to get into the details there specifically, but just what was the approach to how that came about? And then, just switching gears here, on the wireless network revenue growth, you're tracking at 2%, you're going to be ahead of your large-cap peers. As you look into Q4 and 2025, we're seeing some incremental ARPU pressure. And obviously, today is an announcement on could be even more modest market expansions next year, just with some immigration tweaks. I'm just wondering how you are looking at network revenue growth in Q4. And are we at the trough? Can we climb back up to maybe not historical mid-single-digit but where do you aspire to get to as you look through the medium term? Thank you.

Thank you, Drew. Regarding valuation, investors view it as a stream of cash flows for their modeling and valuation processes. We've approached it similarly. It's a straightforward business with growing data loading on our owned and controlled infrastructure, which we've managed for decades. We're confident in our ability to assess the operations of a wireless network and the related backhaul transport over the near, mid, and long-term. Since we own and control the entire national network, we don't have to worry about arrangements with partners and can focus on our operating costs. This allows us to reliably forecast data traffic trends. Our tiered rate structure aligns with current traffic and future loading, generating revenues we are confident in. We have a clear understanding of operating and capital costs for maintaining the transport. Investors will undoubtedly analyze our forecasts based on their expertise, considering their required return and risk adjustments. We have valued their minority stake at CAD 7 billion, which is a significant valuation, especially given the high volume of traffic on our network. In response to your question about ARPU and revenue growth for the fourth quarter, I expect it to remain competitive, similar to the third quarter. We will maintain a disciplined approach to acquiring net adds while highlighting our premium brand and have consistently led in net adds without negatively impacting ARPU or revenue growth. I anticipate that the competitive nature of the third quarter will continue into the fourth.

Drew, I want to build on that by discussing the macro revenue outlook. In addition to ARPU, it's crucial to consider the market size. The Canadian market is experiencing healthy growth, and we anticipate the industry will grow by approximately 4% to 4.5% once all reports are in. We did notice reduced volumes and market size in the third quarter due to government restrictions on foreign students and temporary workers, which will also affect the fourth quarter by limiting immigration. However, we are still experiencing good growth in terms of penetration and population increases. Given this favorable market growth, our team has excelled in managing our customer base, successfully upselling customers from Chatr and Fido to the Rogers premium brand, while promoting a value proposition that goes beyond just pricing, which appears to be working well. We remain committed to increasing ARPU, and our strategy is having a positive impact. While we reported stable ARPUs in Q3, we believe there are still opportunities to grow ARPU as we move into next year through our various execution tactics.

Great. Thank you, Drew. Our next question, Galen?

The next question is from Sebastiano Petti with J.P. Morgan. Please go ahead.

Hi, thank you for the question. I wanted to follow up on the MLSE announcement from last month. Could you provide more details on the structure and how we should understand it, especially regarding the statement that Rogers will be the largest owner of MLSE with a 75% controlling interest? When can we expect to see further information about this structure, considering it was mentioned that this will not be a leveraging transaction? That's my first question.

Thanks, Sebastiano. We stand by the statement that we will manage this, that we will continue to emphasize our delevering. We'll continue to manage our balance sheet with the closing of that MLSE investment. And particularly, this structured equity transaction gives us some optionality and some leeway on how we structure that to continue to hold the gains from this transaction and look to how we fund MLSE between now and when we close, which I expect will be out in 2025. There are a number of different ways we could do that. I expect on closing, we will own and control a majority stake in MLSE, which could be as high as 75%. If we bring in outside partners over time, whether it's at closing or subsequently or whatever, we'll determine all that in the fullness of time. This structured equity transaction that provides us with substantial delevering. We will close 2024 in the range of 3.7x. I anticipate with the MLSE transaction, we will close 2025 in a similar range.

Similar range to the 3.7x that you anticipate exiting 2024 with, Glenn, is that what you're...

Yes. Yes. Sorry, yes, yes.

Okay. Looking at the overall deleveraging strategy, the plan was to reduce leverage by half a turn before any asset sales at the beginning of the year. However, on an organic basis, we are unlikely to see the anticipated asset sales. This means we may not achieve the half-turn deleveraging organically. Considering the various pressures within the ecosystem and the guidance provided, while I acknowledge the operational improvements Rogers is undertaking, investors are concerned about what the strategic equity transaction announced today suggests regarding the business's cash generation. Is management still confident in Rogers' capacity to delever in the coming years, and has this perspective changed given the current market conditions? Thank you.

Well, we remain extremely confident in our ability to generate cash from operations. So to the extent it's changed, I'm more confident. We announced we would hit $1 billion of cost synergies in 24 months, and we hit it within 12 months. We will realize $1 billion of cost synergy savings realized in 2024. And so I'm confident in our ability to drive earnings growth, cost synergies, cost efficiencies, improved margins. That helps lift our EBITDA helps lift our free cash flow. We will generate $3 billion of free cash flow in 2024, and we hold a very substantial portion of that free cash flow after dividends to pay down debt. So to the extent it's changed. I'm more confident at the end of 2024 than it was going into 2024 in our ability to hold cash from operations and pay down debt. We are doing that. So I remain confident and very satisfied. We announced when we went into this transaction with Shaw that within 36 months, we would delever back down to in the range of where we were pre-Shaw. Well, pre-Shaw, we were a little bit over 3 times. With this transaction, we are approaching the mid-3x range, and we're not yet at the second anniversary of the Shaw transaction. I appreciate we haven't sold the targeted $1 billion of non-core assets, and that's suggest to your question. I acknowledge that, but we're not desperate, wasn't ever going to be a fire sale; in the interest rate environment, we’ve had to take a pause on that. I think what we've shown is strong flexibility around adjusting our strategy. We were going to sell non-core assets and then get to our Cogeco shares last year. We realized the non-core assets would be delayed. And so we flipped, and we sold our Cogeco stake and deleveraged at the end of 2023 from that substantially. This year, we found an opportunity. I appreciate you said we haven't sold assets. We've sold $7 billion in an equity interest in assets that if you were to look to our balance sheet and find the net book value for those assets, $7 billion far outstrips the net book value of those assets, and this is a portion of our wireless backhaul. This is not even the majority of our wireless backhaul infrastructure on our balance sheet, and we sold it for $7 billion of equity interest. We control the operations. You're right to acknowledge these assets aren't non-core; they're core. And that's why we will maintain control. But I think we're showing a very dedicated driven intent to delever and continue to invest and grow. Maybe I'll pause there.

Sebastiano, yes, thanks, Sebastiano. Next question, Galen?

The next question is from David Barden with Bank of America. Please go ahead.

Thank you for taking my question. I have another inquiry regarding the securitization. Glenn, I believe the term we should use is securitization, as you have established the subsidiary and this intercompany payment system. There is a forward stream of these payments, and you are bringing these payments into your balance sheet and $7 billion. My question is that the original plan was to reduce debt and lower our cash outflows. However, with the current setup, the payments to the minority holder are exceeding the interest savings from paying down $7 billion of debt. While you are deleveraging, your payments are actually increasing. So my question is, what is the point of that? Why is it crucial to have a lower numerator divided by denominator if your cash outflows are rising instead of decreasing? Additionally, Tony, we've been discussing how the government's new integration policies may affect industry growth and how the industry will respond. You have likely benefited the most from new net additions in the Canadian market. I would appreciate your perspective on that. Thank you.

Let me answer the first question first. Your reference to securitization, I'll just highlight a securitization transaction would be debt, and this isn't debt. Your second part of your question around how does this make sense because you're saving on interest, but you're paying out more on distributions. I've been careful not to enumerate what we are paying out in distributions. And so I would just suggest to you that this is an excellent opportunity for the company because on the balance, we are very pleased with where we anticipate that balance to go over the future, and I'll just leave it at that.

Second part of your question, David, relating to the size of the market. I think a couple of things I would say. The government curbing of the new to Canada category. You look at the foreign students; our estimate is corroborated by some other reports that have been prepared externally. That, that category is down in the third quarter, 40% year-on-year. Temporary workers, foreign temporary workers are down 20% to 25%. And so in the new to Canada category that has impacted it. And as you say, we've traditionally done extremely well in that category. But what you see in our results for the third quarter is that we execute across all segments of the market and perform extremely well. Our estimate is that we once again have leading market share in the third quarter in both postpaid and total mobile phones. And so that's really attributed to, again, our focus on the Rogers premium brand. As I said, the vast majority of our net adds is on the Rogers premium brand, and now increasingly good share on Chatr. In terms of the size of the market outside of the new to Canada category, we've traditionally seen over the last year and a bit, if we look at that trend line, excluding new to Canada, we're seeing organic growth in the 2.5% to 3% as a result of penetration growth, which is now at 88% and going up to 90% very soon and still lagging other countries on that key metric. So good opportunity for growth in terms of size of market.

Great. Thank you, David. Next question, Galen?

The next question is from Jerome Dubreuil with Desjardins. Please go ahead.

Hi, good morning. Thanks for taking my question. The first one is on the equity sale in the backhaul there. Just trying to bridge the gap with the leverage guidance that you have provided. If you can maybe clarify the tax impact on the sale of those shares? What's the net value of the $7 billion? That is question number one. And question number two is on the CapEx kind of longer-term for Rogers. I appreciate there's no real change from the deal you announced this morning, but I'm wondering if 2024 is a year with high CapEx, normal CapEx or low CapEx, I appreciate you we've been seeing mid and high split deployment, microwave backhaul replacement. Just looking if this year is a high CapEx year in general? Thank you.

Thank you for the questions, Jerome. The tax impact, I mean, just put that in the context of $7 billion of debt repayment, our average cost of debt is just over 4.5%. So the pre-tax or the available tax expense on interest expense would be around $300 million. Think of the net after-tax or additional tax cost to that takes your net savings down to about $0.25 billion roughly. And that will give you the order of magnitude on the net savings from the repayment of debt. And I'm sorry, your second question on the CapEx? Yes. I think I've been consistent in signaling that if you're modeling and I'm not going to start guiding for 2025 yet, but I think I've been consistent in my comments that if you were to model continuing our range of spend of around $4 billion, if you're going out, assume some inflationary impact but keep it in the range of $4 billion. We will manage our priorities within that band. As we grow revenues, the intensity will mediate or soften, but we're not looking to step down we're investing from roughly that $4 billion range. We have a number of priorities to get to. Our businesses are all growing. And that is a sufficient envelope for us to drive business growth in that order of magnitude.

Sorry, Jerome, just so we can get a couple of your line out there. Thanks. You can follow up later. Galen, time for two more quick questions, please.

The next caller is Simon Flannery with Morgan Stanley. Please go ahead.

Great. Thank you very much. Good morning. Tony, the CRTC recently put out a strategic plan. I'd love a general commentary on the regulatory environment and how you see that evolving over time. In particular, they had a recent comment on the roaming rates. They want some replies to you in the next few days. Perhaps you could just comment on that and then also just give us a little bit more color about how big roaming is for you in the wireless business currently? Thanks.

Thank you, Simon. To start with the roaming aspect, we have observed a year-on-year decline in total roaming revenue. While we do not disclose the exact figures, this has been the most significant factor affecting our ARPU in the third quarter. We are evolving our value proposition related to roaming to attract and increase the number of unique roamers, as we have noticed a decrease in that number. We are adjusting our offerings to compete with the alternatives available to customers outside of Canada, and early signs are promising. Regarding the CRTC's recent comments, we were not surprised as they had previously indicated this direction in the spring while reviewing various fees in the industry. We will cooperate by providing all necessary information. As I mentioned, we are already adapting our value proposition for roaming.

Thank you. Thanks, Simon. And our last question, Galen, please?

The next question is from Aravinda Galappatthige with Canaccord Genuity. Please go ahead.

Good morning. Thanks for fitting me in. Two quick ones. I want to follow up, obviously. First of all, Glenn, you mentioned sort of in the vicinity of 3.7 times leverage even that exiting 2025. Just wanted to clarify, does that envision the non-core real estate sales? Or does that exclude that? And the second question is, obviously, on guidance, when you can look at the 12% to 15% guide that does require an uptick in Q4. Perhaps maybe talk to what could drive that? I know there'll be some pricing action that you've taken? Anything that would kind of change the trajectory that we've seen in Q2 and Q3? Thank you.

Thank you, Aravinda. In terms of revenue, we are entering an active quarter, which looks strong for us across our businesses. We are committed to meeting the guidance ranges I mentioned earlier. You've touched on some key points regarding pricing initiatives; however, the majority of our growth comes from the increase in our subscribers. We have seen solid contributions from that throughout the first three quarters, which will also positively impact the fourth quarter. It's all about balancing these various factors. Regarding your question about the non-core real estate assets, that's still a work in progress. I tend to get tired of reiterating each quarter that we are addressing it, and it will happen. With high interest rates, we have adjusted our approach. Remember, a successful sale of all those targeted non-core assets could yield approximately $1 billion, which would impact our leverage by around 0.1. If any chances arise to complete those sales, we will take them, but I am not in a rush to force it or pursue a disinterested market. We will adapt as necessary. The 3.7 times range does not specifically depend on selling certain assets; we have a little more than a year to reach the end of 2025. We have numerous options for growing the business, generating free cash flow, applying that to reduce debt, and investing in our increased stake in MLSE. To clarify, that is factored into the 3.7 times, and I have various means to finance that acquisition, which will aid in our deleveraging efforts.

Great. Thank you, Aravinda. And thanks, everyone, for joining us on the call today. If there's any follow-ups, please reach out to the IR team. Thank you very much.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.