Rogers Communications Inc Q2 FY2025 Earnings Call

Thank you for joining us. This is the conference operator. Welcome to the Rogers Communications, Inc. Second Quarter 2025 Results Conference Call. I would now like to turn the call over to Paul Carpino, Vice President of Investor Relations with Rogers Communications. Please proceed, Mr. Carpino.

Great. Thank you, Gaylene, 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. 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 and in our 2024 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. Q2 was a significant quarter for Rogers. We delivered on major financial and strategic initiatives and we delivered strong operating results. In the second quarter, we continued to execute with discipline in our core businesses and we maintained a consistent, disciplined approach in a highly competitive market. We delivered positive revenue and EBITDA growth in our Wireless, Cable and Media businesses. Importantly, we returned to revenue growth in Cable. We made significant progress on our delevering plans by completing the $7 billion equity investment for a minority stake in parts of our wireless network, and we became majority owner of MLSE with a 75% controlling interest. Rogers, together with MLSE, is now one of the most prestigious sports and media companies globally with terrific long-term growth potential. With the inclusion of MLSE's financial results in our Media segment going forward, we estimate that for this full calendar year, Media revenue will be $3.9 billion, and EBITDA, $250 million. We also estimate the value of our sports and media assets now exceeding $15 billion, and we see significant opportunity to unlock this unrecognized value for shareholders. But to be clear, while we remain bullish on sports, we remain squarely focused on our Wireless and Cable businesses. We ended the second quarter at 3.6x leverage, bringing our leverage very close to where we were prior to the Shaw deal. We accomplished this 9 months ahead of our initial plan. Our success in the second quarter clearly demonstrates our focus on investing in growth while maintaining an investment-grade balance sheet. Turning to results. We delivered positive operating and financial results in Wireless, Cable and Media. Consolidated service revenue and adjusted EBITDA both grew 2%. We also posted strong margins and delivered strong free cash flow. In Wireless, service revenue and adjusted EBITDA each grew 1%. And while mobile markets continue to experience lower growth, we remain disciplined with 61,000 total subscriber net additions, including 35,000 postpaid. In Cable, we continue to see improved performance. Cable service revenue and adjusted EBITDA were up 1% and 3%, respectively. These are solid results in a challenging environment. We have successfully returned to growth in Cable. This was supported by another quarter of strong retail Internet net additions of 26,000. Media revenue was up 10% driven by expanded media content and strong viewership on Sportsnet during the hockey playoffs. I'm pleased with our efforts to deliver in our core business while making meaningful progress on longer-term strategic initiatives. We also continue to invest in the future. 2025 marks 40 years of wireless service in Canada. Last week, Rogers launched satellite-to-mobile texting, the first and only wireless provider to offer this groundbreaking new service to all Canadians. This is the next frontier in wireless connectivity, which is critical for a country as vast as Canada. Text messaging including text to 911 is now available across millions of square kilometers, a huge swath of Canada not covered by traditional wireless networks. It's a simple, easy service that automatically connects with your existing phone. This means people can text friends and family or text 911 in an emergency. With Rogers satellite, Rogers now covers over 2.5x more territory than any other Canadian wireless carrier. We're starting with the beta trial for all Canadians at no cost. And like other carriers globally, we will expand to support apps, data and voice including 911 voice services. Since launching the service 1 week ago, we've seen a terrific response from Canadians. In another Canadian first, we also started deployment of 5G advanced network technology. This quarter, Rogers was also ranked Canada's most reliable 5G Plus network by umlaut. In residential, we're seeing great traction with Rogers Xfinity as we roll out our roadmap and introduce new features and innovations. Rogers was the first Canadian Internet provider to start rolling out Wi-Fi 7 nationally starting in Calgary and Atlantic Canada. We have Canada's most reliable Internet and now we're leading the market to bring even better, more reliable Wi-Fi to more devices with the latest generation of Wi-Fi technology. Reliability matters most to our customers, and we're pleased to be the most reliable across our wireless and wireline networks. Before I hand things over to Glenn, I want to take a step back for a moment. Rogers is a proud Canadian company with a record of investing in Canada to connect and entertain Canadians dating back 65 years. Last month, the CRTC issued a decision that allows the three largest providers to continue operating as resellers on the networks of their competitors outside their existing wireline footprint. The CRTC ignored the views of almost the entire industry, including small and regional providers. The federal government is now reviewing the decision. The CRTC policy effectively provides subsidized access to well-capitalized corporations to use our balance sheet and capital. It stifles real competition based on real invested capital that drives investment, jobs and a thriving economy. Canada needs to incent and reward companies that make big, bold bets. That's how Rogers was built. And now the federal government has a decision to make. Let me be clear. If the current policy remains in place, it will force Rogers to cut capital programs and, with it, network construction jobs. Billions of dollars in network investment in our sector are at risk. Canada needs government leadership now to drive economic resiliency, competitiveness and affordable access to next-generation technologies. The CRTC decision does the opposite. As a company with a 65-year record of investing in Canada, we ask the federal government to lead and direct the CRTC to do the right thing for Canada and for our economy. Thank you. And let me now turn the call over to Glenn to take you through the quarter in more detail.

Thank you, Tony, and good morning, everyone. Thank you for joining us. We are proud to report that Rogers' second-quarter results reflect continued leading operational and financial performance, combined with transformative progress on our major strategic initiatives of deleveraging our balance sheet and moving forward on consolidating and monetizing our sports assets. Most critically, though, we have once again delivered disciplined leading financial and operating performance across all of our core businesses in a highly competitive marketplace. In wireless, we continue to deliver service revenue and EBITDA growth combined with industry-leading margins, solid market share and lower churn. Wireless service revenue and adjusted EBITDA each grew 1% year-over-year driven primarily by subscriber additions, customer base management and lower churn over the last 12 months. Our Wireless margin is up 10 basis points compared to the prior year at just over 65%, reflecting our sustained emphasis on driving efficiencies while balancing moderating subscriber and service revenue growth. In the quarter, Rogers delivered a combined 61,000 net new Wireless subscribers, down from 162,000 last year, again reflecting the moderating market size associated with reduced immigration. Importantly, churn improved once more to 1%, reflecting continued improvement around base management. Blended mobile phone ARPU of $55.45 is down 3% from the prior year, reflecting continued competitive intensity but also affected by lower outbound roaming revenue driven in part by reduced travel to the U.S. Also affecting ARPU this quarter, we have reversed or added back in the remaining prior year base adjustments for approximately 100,000 subscribers who have been retained and transitioned off discontinued plans. Moving to our Cable business. Service revenue is up 1% in the quarter, primarily reflecting steady retail Internet subscriber growth and disciplined customer base management, including moderating losses of video subscribers. Modest price increases introduced in the quarter have also contributed. Cable adjusted EBITDA is up 3% year-over-year driven by the flow-through of 1% service revenue growth combined with a 3% decrease in operating costs from our ongoing cost efficiency initiatives. We delivered this increase even as we continue to invest in our advertising and marketing investments around our new Xfinity platform. As a result, Cable margins are just over 58%, a very substantial 150 basis point increase from the prior year. Internet net additions of 26,000 are level with the prior year, and our performance coast-to-coast remains solid in a highly competitive market across all regions. Finally, in Rogers Sports and Media, we delivered very strong revenue growth and improved EBITDA. Revenue was up 10% to just over $800 million for the quarter, driven in part by Sportsnet's success with the NHL playoffs, combined with higher Toronto Blue Jays revenue and a very competitive division-leading Toronto Blue Jays team is carrying that success into the third quarter. Additionally, Media saw higher year-over-year revenue growth associated with the launch of the Warner Bros., Discovery suite of channels. And finally, Media EBITDA was up $5 million year-over-year. Operating costs were up 9% reflecting higher programming costs, most notably including those related to the launch of the Warner Bros., Discovery suite of channels and higher Toronto Blue Jays expenses, including player payroll and game day related costs. On a consolidated level, service revenue and adjusted EBITDA each grew by 2%, respectively, year-over-year. Our drive to lower capital intensity while still investing in our network infrastructure and growth markets continued in the second quarter. Capital expenditures were $831 million, down 17% from $1 billion in the prior year, and consolidated capital intensity is down 370 basis points to 16% for the second quarter. Free cash flow of $925 million is up a very substantial 39% year-over-year driven by the higher adjusted EBITDA, lower capital intensity and lower interest paid. Turning to the balance sheet. At quarter end, we have delivered very significant deleveraging while maintaining strong liquidity to fund our operating and strategic capital priorities. We ended the second quarter with just under $12 billion of available liquidity compared to $4.8 billion at December 31, 2024. This included $7 billion in cash and cash equivalents and $4.8 billion available under our bank and other credit facilities. The very substantial increase in our liquidity was driven by the late quarter closing of our previously announced $7 billion equity investment led by Blackstone and backed by leading Canadian institutional investors. We expect to distribute approximately $0.4 billion annually to the Blackstone-led fund over the first 5 years of investment, reflecting an effective cost to Rogers of roughly 6.25% over that period with a substantial offset to that amount driven by the lower interest expense resulting from the debt repayments. These distributions and the lower interest expense both commenced from July 2025 and will be fully reflected in our third quarter reporting. We have also benefited from organic deleveraging in the quarter from available free cash flow growth. As a result, our debt leverage improved to just over 3.5x, roughly a full turn improvement since year-end and essentially returning Rogers to our prevailing leverage prior to acquiring Shaw. And with that, we have achieved our Shaw deleveraging target of 3.5x, approximately 9 months ahead of our initial 3-year target, originally expected to be completed by the second quarter of 2026. We remain firmly committed to maintaining our investment-grade balance sheet while investing in growth in our core markets. With the integration and deleveraging of the Shaw transaction nearing completion, our focus now turns to the long-term capital funding of the additional 37.5% ownership stake in MLSE, which closed effective July 1. The $4.7 billion purchase price was primarily funded from bank credit facilities together with cash on hand, and we are now the largest owner and controlling shareholder of MLSE with a 75% controlling interest. As Tony has highlighted, Maple Leaf Sports & Entertainment operates a world-class collection of Toronto sports teams and entertainment assets and is one of the largest and most significant sports ownership organizations in the world. Starting with our third quarter report, MLSE's financial results will be consolidated in with our Media reporting segment. To help clarify the impact from this transaction, our press release this morning includes a full year 2025 consolidated pro forma view of the total scale of Rogers Sports and Media operations. On this basis, we estimate Rogers pro forma calendar 2025 Sports and Media revenue and adjusted EBITDA would have been approximately $3.9 billion and $0.3 billion, respectively had we consolidated MLSE with our Sports and Media business from January 1. Our focus now is on two key items in our Sports and Media strategy: deleveraging our balance sheet following the MLSE purchase and pursuing all options as we look to monetize and surface the very substantial unrecognized market value of our Sports and Media assets, currently not at all reflected in Rogers' stock price. We will provide updates on our progress as appropriate. Finally, moving to guidance. We have updated our 2025 outlook to reflect the consolidation of MLSE from July 1 as well as the completion of the equity investment for the remaining 6 months of 2025. Total service revenue is now expected to grow by 3% to 5% versus our prior outlook of 0% to 3%. Adjusted EBITDA is unchanged at 0% to 3%, which reflects the seasonality of MLSE results in the second half of the year versus the first half. As noted a moment ago, the full calendar year impact will be accretive to EBITDA in 2026. We expect capital expenditures for 2025 to be at the very low end of our guidance range of $3.8 billion to $4 billion. And finally, we anticipate free cash flow of $3 billion to $3.2 billion unchanged, and this includes the distributions of the equity investment transaction. Overall, Q2 represents a significant quarter of progress on our commitments: delivering strong and consistent financial and operating performance across each of our businesses, combined with substantially reduced leverage at just over 3.5x. We have transformed and strengthened our balance sheet with leverage restored back to where we were prior to our investment in the Rogers Shaw transaction. And we now have full control of a leading world-class collection of sports and entertainment holdings. Our focus and priority now turns to the long-term capital structure and monetization of those highly valuable assets in our Rogers share price. We believe Rogers has the best team in our sector and the best set of assets for near-term value creation. I want to join Tony in thanking our team of dedicated employees for their tremendous efforts and commitment to serving our customers and driving our long-term strategy and success. And with that, Gaylene, may we please commence with the questions and answers. Thank you.

Our first question is from Drew McReynolds with RBC.

First, starting with you, Glenn, just on the updated 2025 guidance, certainly we'll get the question. I'm assuming there's really no change to the core telecom outlook in that guidance other than obviously hitting the lower end of the CapEx range.

I think that's correct, Drew. We're satisfied with our organic performance this year. We're seeing a return to growth in Cable, ongoing growth in Wireless, and together with our success in Media, we're within the range we initially provided for the inclusion of MLSE.

Okay. And then just 2 others for me. On MLSE, so I appreciate the pro forma 2025 figures and obviously the seasonality, and you're confirming EBITDA accretion for 2026. Can you at a high level, I'm assuming we're not going to get MLSE guidance here, it's probably somewhat fluctuates year-to-year. But how "normal" do you see MLSE's 2025 performance as we kind of try and model this going forward? And then second, switching gears to Wireless on network revenue growth. Just, I think, about 0.6% in Q2. How does that trend for Rogers as we get into the back half and into 2026?

Sure. I'll start with the first question on MLSE. Well, on any of our operations, I'm not going to start guiding for '26 just yet. But in terms of scale and scope for the combined Rogers Sports and Media operations including the consolidation of MLSE, the pro forma indication we've given for '25 is that's a clean aggregation of where we are this year, doesn't include anything aggressive in terms of synergies or anything like that, which you've seen us perform on synergies. But that is just a straight aggregation of the businesses. It's a clean aggregation driven. And then on Wireless revenue growth, with the 1% growth that we've reported, that reflects the competitive environment we operate in. We're pleased that we're still driving growth across the business. We are still leaning in on cost efficiencies throughout our organization. I think through the second half, I expect that some of the price initiatives that we've undertaken in the year, they will continue on through the second half as well as continuing to manage the customer base with uplifting and upscaling customers through premium service plans. We'll continue to work those efforts through the second half of the year.

And just a reminder, if we could have just one question and one follow-up just so we can get through as many questions as we can. Next question, Gaylene.

The next question is from Aravinda Galappatthige with Canaccord Genuity.

With respect to the monetization of your sports assets which you've alluded to in prior calls, is there any update in terms of how those discussions or thoughts are trending? I mean I know there's a number of possibilities, a number of routes you could take. Is there anything incremental that you can sort of provide here? And I'll wait for the answer and come back with the follow-up.

Thank you for the question, Aravinda. Regarding Sports and Media, there is substantial inherent value, and we are focused on combining the assets while consistently working to monetize them to enhance our balance sheet. Additionally, we aim to reveal this value for our shareholders. We are exploring various options, and fortunately, we have promising possibilities ahead of us. While we cannot disclose our plans at this moment, we understand the objectives and are dedicated to them. At the appropriate time, we will share both our actions and the timeline, but for now, it is too early to provide details.

And a quick follow-up on Cable EBITDA number. Obviously, you produced 3% EBITDA growth on fairly flat revenues. The sub-trends seem to be holding up really well especially when you consider the market backdrop. Any kind of commentary around sort of the sustainability here? And maybe also just touch a little bit on the cost reductions that you're seeing there.

Aravinda, I'll begin with the revenue aspect, and Glenn will address the efficiency initiatives that are contributing to robust EBITDA growth in Cable. To provide some context, not long ago, this business was experiencing a decline of 4% year-on-year. However, we made several commitments and successfully executed on them. The team has done an excellent job in driving us to slightly positive growth in Cable, particularly in service revenue. This growth is supported by a few key initiatives. First, the market continues to expand, and our footprint is also growing. Despite a slowdown in home construction, there is still a significant pipeline. In the second quarter, homes passed have increased close to 3% year-on-year. Amid this, we are seeing strong market share performance in Internet additions on the wireline side, which is promising. We anticipate a slowdown in homes passed in the latter half of this year and into next year, but we expect to maintain strong subscriber market share. The second factor is our expansion into new areas with our 5G home internet product, supported by our 5G Plus wireless network. This initiative is performing well, and we can now offer our Xfinity products on that platform, creating an opportunity to serve nearly 7 million homes with a bundled offer, especially in areas where we already have significant Wireless market share. We have focused on encouraging customers to upgrade to higher tiers, and our network coverage, in terms of speed and reliability, is very strong, which resonates well with consumers. We are seeing customers move to higher tiers, positively impacting our revenue. In the small and mid-sized business sector, we are also expanding our national presence, which is contributing to growth within Cable. Lastly, when considering our product offerings, we take into account various aspects beyond just pricing in our value proposition. As we expand our suite of products, including things like our Storm-Ready home monitoring product, we enhance our value, especially in combination with the Xfinity video platform. This strategy is appealing to consumers and, in some instances, small businesses. All these factors reinforce our confidence that our Cable business will maintain stable to modest growth this year and position us well for the coming years.

And then the only thing I would add to all of that on the cost efficiency side, Aravinda, is there is no magic bullet here. It really is just attention to detail across the board on our costs starting with trying to bring out some of the customer care costs with focusing on improved customer service, improved network reliability. It's the day-to-day block and tackle across the board that's driving the cost efficiencies, and then the flow through with a 1% revenue growth.

Next question, Gaylene.

The next question is from Batya Levi with UBS.

Can you talk a little bit more about the competitive environment in wireless? I think you've mentioned we've seen some price-ups recently. Are there any early signs for back-to-school season? And maybe any change you're seeing in loadings as you lap last year's impact from lower immigration?

Batya, thank you. There's 2 parts to it. I'll start with the second piece which is your question on loading. It's probably worth sort of giving you our perspective on size of the market. Certainly, our expectation is in Q2, the size of the net add market is lower than last year as a result of largely the factors we've talked about on previous calls, which is the new to Canada category. As we enter the back half, we'll start to lap the introduction of some of the government policies that slowed that rate of growth. We had previously indicated that we expected for the full year the wireless market to grow about 3%. We're still looking and on track to that. But keep in mind, that's a rolling 12-month end of period to end of period. If we were to look at the rate of growth and the pacing in the second quarter, our estimate is it's probably more in the 2.5% range, give or take a few basis points. So it continues to trend down, but we continue to see growth in terms of penetration as being the biggest driver of continued growth. Against that backdrop, we're pleased with our performance in subscriber market share. And so as we look to the back half of the year, you can expect us to continue to perform well on the subscriber front and continuing growing subscribers. The second piece of it relates to ARPU, and that really gets at your question in terms of competitive intensity in the second quarter and particularly as we led off on the third quarter. We've been really trying to simplify our value proposition. We launched our simplified tiers with a better differentiation of the value proposition in each of them. And it's early days since the launch of that in June, but it's resonating with the customers and we like the base management moves as well as the new acquisition moves that we're seeing in the marketplace. We've reduced the level of promotional activity as well as we look to other factors that prop up the value proposition including, most recently, the launch of satellite. And so there are a number of other things that seem to resonate with customers that continue to help us improve our ARPU profile while still obtaining a strong share. Churn reduction has been a big factor in that in terms of overall subscriber net adds. And there's a number of factors for that as we continue to improve things for the customer and give them less reason to think about switching to competitor.

Next question, Gaylene.

The next question is from Stephanie Price with CIBC.

Curious how you're thinking about wireless roaming here. You mentioned it as a headwind to service revenue in the quarter, and Rogers had recently announced a new suite of travel passes. So curious about the percentage of service revenue that's coming from roaming here and how you kind of think about the evolution of that roaming offering.

Thank you, Stephanie. I think the reference really was to the in-quarter substantial decline in travel. I expect travel through the summer months as we complete the third quarter will pick up. There is still a decline in travel for Canadians to the U.S., but much of that has been displaced by international travel as well as just travel within Canada. On the international travel, those roaming pass is early days, but those are helping to compete better with some of the competitive offerings available both from Canadian operators as well as international SIMs that we find the passes are serving to be very convenient for customers to keep their number, to keep their contact but manage the cost of roaming. So early days. We expect it to be constructive and just part of the ongoing detail in managing ARPU and service revenue growth and meeting customer needs. Nothing more to add than that.

Great. And then on the Cable side, hoping we could dig a little bit more into the out-of-footprint expansion here in fixed wireless specifically. Just curious how much is contributing to growth in the near term and how you think about the opportunity out-of-footprint longer term.

Stephanie, we're not disclosing the split between what I would call in footprint versus out of footprint. But what I can tell you is that the product is resonating extremely well across the country, including places where we do have wireline. And in some use cases, it makes sense for consumers and small businesses to look to the flexibility and the mobility of the 5G HI product. As I said, the capability of the product continues to expand. Network splicing has been a significant contributor to expand the use case and the reliability of the product in certain instances. And then as I said in my earlier comments, expanding it to include the Xfinity suite of products has made it a very compelling value proposition. And so it's still early days as we expand, as I said, the use case and the product set for it, but we continue to be pleased with its performance and remain optimistic about its ability to penetrate those new markets, particularly on a bundled basis.

Next question, Gaylene.

The next question is from Vince Valentini with TD Cowen.

Hopefully, the first is just quick clarification as opposed to being Paul's question list. But you're giving us MLSE pro forma and adding it into your revenue and EBITDA. So that means you'll consolidate the debt as well, Glenn. Is there any material debt we should be thinking about being added in Q3?

No. No, in fact, it's generally offset by cash depending upon the seasonality and where you are in the year. But no, nothing. Even at its peak, it's inconsequential.

Perfect. Second, the $400 million Blackstone minority interest payments, to be perfectly clear, when we see your free cash flow in Q3, that's going to be above the line of free cash flow. We're not going to find another minority interest line with $100 million going out the door below your definition of free cash flow.

We will ensure clarity. It will either be included in that number or evident in the calculation of that number. We will guarantee it is transparent, Vince. We are not concealing any of that. In summary, it's approximately $0.4 billion in distributions. The offsetting interest savings net is about $50 million per quarter from distributions over net interest savings, including the tax impact spread evenly throughout the year. So, that results in $0.4 billion in savings, with about half of that being net savings on interest expense after considering the loss of the tax shelter. Is that clear?

Not really. Because I mean the interest savings are clearly going to be in your definition of free cash flow because interest is there.

The distributions will be as well.

Perfect. That's great. And then just you can call this more of a question is you mentioned synergies on MLSE. Are the synergies just naturally Rogers is a more efficient owner than the prior consortium of owners? Or do the synergies only come if you merge your MLSE with the Blue Jays and get rid of some redundant costs or benefits of scale or something? And therefore, are you implying that, that can happen sometime soon to put those 2 organizations together, even though you only own 75%?

What I'm intending to convey is it's a straight aggregation today. Once we own, we will be able to drive revenue and cost synergies like we did within the Shaw transaction and look to find efficiencies. They perhaps do that already. I expect that as we roll in the Toronto Blue Jays, Rogers Center with Scotiabank Arena and the other venues within MLSE and the sports teams within MLSE, we will find revenue and cost synergies. But that is not part of the pro forma that we are providing for 2025. So that's really all I was attending to convey. It's a straight aggregation right now.

Next question, Gaylene.

The next question is from Tim Casey with BMO.

Just following up on that. Tony, I understand you can't share details about the options you're considering. However, could you provide an outline of the timing? When should investors expect more clarity? Do you think you can outline this within the current year, or is it likely to be more of a 2026 situation that could actually happen in 2027? Is there anything you can share that would give us a sense of when we can expect more comprehensive information on the plan?

The short answer, Tim, is, and you're not going to like this, but it really is difficult to predict the timing on things. And we don't want to box ourselves into a timeline just for the sake of the timeline. We recognize the significance of the asset. I think we all recognize the alternatives available to us, and each of them are extremely attractive. The asset garners quite a bit of interest, as you would expect, as you've seen sales of interest in some of the sports teams recently. It's clear that the demand, the interest in the asset is there and values continue to increase. And so we're toggling with the substantiveness of the asset, the fact that it's growing with us managing our balance sheet at the same time. And so we're being very thoughtful about how and when. At the outside, I wouldn't say that this is necessarily a 2027. I think something in the midterm is what you should expect to get clarity on. But there's not much more in terms of timing and the what that we can expand on right now.

So when you say it's not necessarily 2027, like it could go later than that? Or did you mean that's...

The opposite, Tim, that it will be sooner than that.

We've got 1.5 years before the end of '26, and this is a priority for us but we need to get it right.

Next question, Gaylene.

The next question is from Maher Yaghi with Scotiabank.

Congratulations on closing both deals in the quarter. I wanted to ask you, Glenn, just on a pro forma basis, forward-looking leverage ratios, what would you say it is currently including the transaction that you closed on Blackstone and MLSE, please?

If we take into account the $4.7 billion spent to acquire BCE, the leverage ratio goes from around 3.5 times to approximately 4 times when we include that investment and the full-year EBITDA impact of MLSE. Moving forward, we expect to see an organic reduction in leverage throughout this year as well as in the short to medium term, as Tony mentioned, with a focus on the long-term capital structure for Roger Sports and Media, including MLSE. While I won't provide specific guidance for the long term, we expect to continue emphasizing deleveraging through organic growth. For example, in July, we initiated a bond tender program that allowed us to repay $3.1 billion in securities with proceeds from the Blackstone deal, even though those securities were trading below par. We typically wouldn't pay them off early, but thanks to the Blackstone funding, we no longer need that portion of our long-term debt. Consequently, we reduced our debt by that $3.1 billion at a cash cost of about $2.85 billion, saving $250 million that effectively disappears from our balance sheet. We're also actively working on real estate and other surplus assets, and I anticipate that proceeds will come in over the next six months. Overall, combined with organic growth, we're concentrating on the details of deleveraging, which remains a key priority.

I would like to follow up on Wireless. We have noticed some recent price increases, and it's uncertain how this will play out during the back-to-school season. Looking ahead to 2026, I want to understand your thoughts on the potential improvement in ARPU as we move past a period of significant price changes towards a more stable pricing environment. To provide context, the 3% decline in ARPU this quarter—how much of this is due to the reclassification of your 96,000 postpaid subscribers? Additionally, as we consider 2026, Tony, what are your thoughts on the expected pace of improvement in ARPU?

I'll start with the last part. As we look at a couple of things, Maher, one is the value proposition particularly for us on the Rogers branding, and we are pleased with the gross additions as well as the base management strategies we've implemented to move in the right direction. We've made several pricing adjustments over the last month to simplify, strengthen, and stabilize pricing for us and hopefully for the industry. It's only been about a month, and as we enter the back-to-school season, which kicks off the busy period, we will need to assess the market dynamics. What we are seeing is less focus on volume given the industry's current reality and more emphasis on getting pricing and the value proposition right. We are looking to make the value proposition of our higher tiers on the Rogers brand more appealing, and we appreciate the volume shift we are observing. This presents a good opportunity to continue strengthening ARPU in the second half and into next year. We touched on roaming, which has been a challenge. Roaming has been somewhat deflationary as there are alternative solutions available. Our approach is to balance pricing with volume, hoping that our recent strategies encourage customers traveling to the U.S. or elsewhere to choose the most convenient and affordable options. We expect roaming volumes to increase and reverse the recent trend. With the launch of Satellite, though it is new, we have priced it in a way that makes the value proposition compelling. We hope it gains widespread interest and becomes an add-on to the plans. I will pause there, as we have several other initiatives in the works that you'll see us introduce in the marketplace, but overall, we remain focused on strengthening ARPU alongside strong subscriber growth, which will drive wireless growth overall.

And then, Maher, on your question on the base adjustments, really the reference there on the roughly 100,000 subscribers that we've restored back into the customer base, those are now reflected back in all the calculations. It's now a clean calculation. So over the last several quarters, you would have been running your calculations with, I think, generally running around a 1% bump in our reported churn impact from those base adjustments. Our reporting is now perfectly clean. There's no noise from the removal of any of those base adjustments.

Next question, Gaylene.

The next question is from Jerome Dubreuil with Desjardins.

I'm interested in the longer-term CapEx profile of the company. I recognize that there might be changes to the outlook with regards to upcoming regulatory decisions. But still, there might be some potential for Cable CapEx reduction in the light of the advancing integration of the Shaw assets. Any chance you can discuss about the potential for where Cable CapEx could stand in a couple of years? Maybe like what's done at a recent industry event.

Thank you, Jerome. Similar to before where I indicated I wasn't going to guide for '26, I won't guide for 2 years out either. But we've been clear in all of our commentary from approaching and then post closing of the Rogers Shaw transaction that we do intend to drive lower capital intensity within Cable. You're starting to see the effect of those efforts through calling down our capital spend to the very low end of guidance in this year. I expect those efforts to continue as we prioritize our investment and still driving growth, still investing in infrastructure. And that's why you heard in Tony's comments how important it is that the regulatory environment remains supportive of that. But our intention is to continue to invest in growth but that the capital intensity will lighten. I'm not going to give you a specific number other than to acknowledge that the Cable capital intensity in particular is higher than it needs to be. Pleased with the progress through the second quarter on overall consolidated intensity. But we still have more work to do there in the coming years.

Next question, Gaylene.

The next question is from Matthew Griffiths with Bank of America.

So first on mobility. Multiline discounts aren't necessarily new, but I think they're more generous than they have been in the past. And I was just curious to get your thoughts, if you can share them on how you think that might impact ARPU going forward and how it might impact service revenue maybe in a different direction going forward if they happen to be positive and have good churn reduction kind of attributes. And then secondly, synergies related to the MLSE deal have come up a number of times. Is there anything you can share on what near-term expectations or near-term timelines could be for synergy realization, whether it be on the cost side initially first that we could expect you to execute on would be helpful.

Thanks for the question. I'll start with the first one. We launched what I would call a robust multiline strategy, and it's not dissimilar to what you saw in the U.S. market several years ago. If we were to look at lines per account, we're relatively underpenetrated here in Canada. And as we look to some of the market dynamics, particularly in the $30 to $40 price points, what we do know is that many of those, a significant portion of those are second, third and fourth lines. And so what we've done is focused on tiering so that there are multiline discounts. And so you should think about while in aggregate certainly that's dilutive to ARPU, it is incremental service revenue. And so it's just something that we think makes sense to the extent that we can get the right price points and make third and fourth line very competitive in the $30 to $40 range then we think it's a good strategy. And so you should expect and one of the things we'll talk to in future quarters is average number of lines per account and see how that evolves. It's still early days. But transparently, that's the rationale and the tactic for that. Second piece relates to synergies, and Glenn's touched on it. And let me just start off by saying before Glenn adds additional comments, it's early days and too early for us to talk about synergies. What I will tell you is we have a very good track record that you saw being executed in the Shaw transaction of identifying material synergies. We went into this transaction with a view that we could execute on very strong synergies across our sports and media properties. And certain things that need to happen before we can execute on those, but the thinking, the planning is underway. And at the right time as we execute on those and/or are closer to executing on them, we can be more specific. But right now, let's put it in perspective. We just closed the BCE transaction in early Q3. And so we've provided an initial view of what it means for this year to be helpful, but too soon to talk about specifics in terms of outer periods and synergy opportunities.

And I have nothing to add to that. I think Tony has captured it all. It's premature.

Next question, Gaylene.

The next question is from David McFadgen with Cormark Securities.

A couple of questions really related to Rogers Satellite. I was wondering if you could give us some idea on the product roadmap, like when you might be able to offer a voice and data. And then secondly, I was just wondering what your thoughts are on the ability of the incremental revenue that you expect to drive from Rogers satellite, like it's potential to arrest the ARPU decline in Wireless.

Thank you for the question, David. To address the first part regarding capability, it will rely on the satellite provider and the progress of their satellite launches and capacity. We anticipate this to happen sometime later in 2026, although it could be sooner as we collaborate with our satellite partners regarding the technology and when voice and data services might become available. The second part of your question pertains to potential revenue growth. It is too early to make predictions. We believe the use case for Canadians is significant. We have launched it as a beta product, similar to launches in other regions. It is free and accessible to all Canadians. Once they sign up, they can begin using the service for texting and 911 texting. Starting in October, it will transition to a paid service priced at $15 per month, but customers who registered during the beta period will pay $10, receiving a $5 discount for a year. This service is available to all Canadians, regardless of their current mobile provider. We believe the importance of this technology for a vast country like Canada will benefit us and the nation greatly. We'll see how it performs in terms of user adoption, but I can tell you that in the first week, sign-ups have been strong.

Can you tell us who your partners are in this? I thought it was mainly Starlink, but are there others?

There are others. That's one of them. But we still have others we're working with. Clearly, Starlink is the global leader on this frontier and that's what allowed us to bring it to market when we have. But we'll continue to work with our other partners. You would have seen a little while ago, we signed an MOU with Telesat, and it's more of a Canadian solution, but they've got a ways to go to get to commercial launch. But as the industry in terms of satellite connectivity continues to evolve, you're going to expect Rogers to partner with whatever the best solution is and bring that to our customers and Canadians.

And 1 last question, please Gaylene.

Our last question is from Patrick Ho with Morgan Stanley.

Just 2 questions for me. So on Cable, I noticed that ARPA was down 3% for the quarter. Could you help us unpack what exactly drove this change within your different product segments within Cable and how we should think about this trending going forward? And then secondly, so some of your competitors have been getting into the data center space. Any plans for Rogers to expand its core business beyond just traditional wireless and cable and into data centers to drive further growth?

On ARPA, there's nothing specific to call out. There's competitive forces ongoing. We have modest price initiatives that are helping to restore the overall revenue growth. But it's the traditional competitive forces combined with ongoing video trimming of video subscribers. We've moderated that but it continues to decline. And so it's a mix of what you've seen historically. Within the core business, we have a data center business, no secret. We've been looking at potentially divesting that business. Those considerations are ongoing. There has been a number of reports in media of AI-related and data center-related investments across the telecom sector. I'll just candidly and succinctly say I have absolutely nothing to add in that regard. We continue to focus on our network infrastructure, wireless and wireline, our sports and media business. They remain our core points of emphasis and concentration.

Thank you, Patrick, and thank you all for joining us. IR is available for follow-ups as well. Have a great day.

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