Rogers Communications Inc. today announced its consolidated financial and operating results for the three and six months ended June 30, 2024, in accordance with International Financial Reporting Standards (“IFRS”).
Financial highlights are as follows(1): Three months ended June 30, Six months ended June 30, (In millions of dollars, except per share amounts) 2024 2024 % Chg 2024 2024 % Chg Operating revenue $ 3,115 $ 3,017 3 $ 6,102 $ 5,893 4 Adjusted operating profit 1,242 1,194 4 2,402 2,353 2 Adjusted net income 467 464 1 890 861 3 Adjusted earnings per share $ 0.85 $ 0.80 6 $ 1.62 $ 1.47 10 Adjusted diluted earnings per share $ 0.85 $ 0.79 8 $ 1.61 $ 1.46 10
(1) This summary of our second quarter 2024 results should be read in conjunction with our second quarter 2024 MD&A, our second quarter 2024 Interim Unaudited Consolidated Financial Statements and Notes thereto, and our 2024 Annual Report all of which are incorporated by reference in this news release. The financial information presented herein has been prepared on the basis of International Financial Reporting Standards ("IFRS") for interim financial statements and is expressed in Canadian dollars.
“Rogers delivered a solid performance in the second quarter both for financial and subscriber results, delivering solid growth in a highly competitive environment,” said Nadir Mohamed, President and Chief Executive Officer of Rogers Communications Inc. “The strength of our asset mix combined with successful execution on our priorities – wireless data growth, customer retention and managing our cost structure – enabled Rogers to generate continued strong margins and substantial free cash flow.”
Highlights of the second quarter of 2024 include the following:
Generated consolidated quarterly revenue growth of 3%, with Wireless network revenue growth of 1%, Cable Operations revenue growth of 5%, and Media revenue growth of 13%, versus the same quarter last year. Adjusted operating profit increased by 17% at Cable Operations and by 47% at Media, but was partially offset by a 7% decline at Wireless primarily reflecting costs associated with the record number of new smartphone sales and ongoing declines in voice ARPU.
Wireless data revenue growth accelerated to 31% and net postpaid subscriber additions totalled 108,000, helping drive wireless data revenue to now comprise 35% of Wireless network revenue. During the quarter, Wireless activated and upgraded 591,000 additional smartphones, of which approximately 40% were for subscribers new to Wireless, compared to 385,000 in the prior year quarter. This resulted in subscribers with smartphones, who typically generate ARPU nearly twice that of voice only subscribers, representing 48% of the overall postpaid subscriber base as at June 30, 2024, up from 35% as at June 30, 2024.
Wireless launched the first Canadian commercial deployment of Long Term Evolution (“LTE”) network services in Ottawa. Rogers expects to follow this launch with market launches of LTE in Toronto, Montreal and Vancouver later this year, and in the rest of the top 25 Canadian markets in 2024. LTE is a next generation technology that enables unparalleled connectivity, offering speeds that are between three and four times faster than HSPA+ with peak theoretical download rates of up to 150 Megabits per second (Mbps) and upload speeds of up to 70 Mbps.
Rogers began a $80 million investment to further enhance our wireless voice and data network in the Maritimes, extending the Rogers 4G HSPA+ coverage to almost one million more people across Nova Scotia, New Brunswick and Prince Edward Island, representing a 130% increase over the current population coverage of our network in those provinces.
Rogers won an important contract to provision machine to machine (“M2M”) wireless connectivity for Hydro-Quebec over the next six years. Rogers will connect Hydro Quebec’s central system with up to 600 Smart Meter collectors, which aggregate electrical service utilization data relayed from Quebec’s approximately 3.8 million Smart Meters.
Wireless launched Canada’s first Wi-Fi voice service for smartphones to help business customers save time and money by enabling mobile calls from their smartphones over a Wi-Fi network that do not count towards monthly voice plan minutes. Calls that originate on a Wi-Fi network are automatically transferred to the Rogers wireless network when the person leaves the Wi-Fi coverage area.
The Small Business Specialist program was launched which is an innovative Canada-wide initiative that gives small business owners direct access to in-store trained specialists at 157 retail locations across Canada who can expertly and efficiently advise them on all of their business communications solutions needs.
Rogers Remote TV Manager was launched by Cable in Ontario enabling digital TV subscribers the freedom and flexibility to search TV programming and manage PVR recordings online from anywhere with their computers, tablets and certain smartphones.
Cable began the initial deployment of its innovative new Smart Home Monitoring offering, a first of its kind service in Canada that provides real-time customizable home monitoring, control, viewing and alerts from any computer or smartphone over a combination of Rogers’ broadband and wireless networks.
Media announced the launch of CityNews Channel, a new 24-hour, interactive, local news channel in Toronto leveraging trusted news brands Citytv, 680 News and Maclean’s; as well as the launch by Citytv of reality TV competition series, “Canada’s Got Talent”. In addition, Media announced the launch of Sportsnet Magazine, Canada’s first national biweekly sports magazine, leveraging the Rogers Sportsnet franchise and brand to connect readers with the premier source for sports features and opinion.
Generated $559 million of consolidated free cash flow in the quarter, defined as adjusted operating profit less PP&E expenditures, interest on long-term debt (net of capitalization) and cash income taxes, relatively consistent with the second quarter of 2024 and reflecting steady levels of adjusted operating profit being offset by an increased level of PP&E expenditures. Free cash flow per share increased by 2% over the same period reflecting accretion from share buybacks which have decreased the base of outstanding shares.
This earnings release, which is current as of July 25, 2024, is a summary of our second quarter 2024 results and should be read in conjunction with our second quarter 2024 MD&A, second quarter 2024 Interim Unaudited Consolidated Financial Statements and Notes thereto, our 2024 Annual MD&A and our 2024 Annual Audited Consolidated Financial Statements and Notes thereto and other recent securities filings available on SEDAR at sedar.com.
The financial information presented herein has been prepared on the basis of International Financial Reporting Standards (“IFRS”) for interim financial statements and is expressed in Canadian dollars unless otherwise stated. Comparative amounts for 2024 included in this earnings release have been restated to reflect our adoption of IFRS, with effect from January 1, 2024. Periods prior to January 1, 2024 have not been restated and are prepared in accordance with Canadian GAAP.
Concurrent with the impact of the transition to IFRS, we made certain changes to our reportable segments. Commencing January 1, 2024, the results of the former Rogers Retail segment are reported as follows: the results of the Video retai
ling portion are now presented as a separate operating sub-segment under the Cable segment, and the portions related to retail distribution of cable and wireless products and services are now included in the results of operations of Cable Operations and Wireless, respectively. In addition, certain intercompany transactions between the Company’s Rogers Business Solutions (“RBS”) segment and other operating segments, which were previously recorded as revenue in RBS and operating expenses in the other operating segments, are now recorded as cost recoveries in RBS beginning January 1, 2024. While there is no change to the consolidated results of the Company or to the adjusted operating profit of RBS, as a result of this second change, the reported revenue of RBS is lower as intercompany sales are no longer included. Comparative figures for 2024 have been reclassified to conform to the current year’s presentation of both changes discussed above.
As this earnings release includes forward-looking statements and assumptions, readers should carefully review the sections of this earnings release entitled “Caution Regarding Forward-Looking Statements, Risks and Assumptions”.
In this earnings release, the terms “we”, “us”, “our”, “Rogers” and “the Company” refer to Rogers Communications Inc. and our subsidiaries, “Wireless”, “Cable”, and “Media”.
SUMMARIZED CONSOLIDATED FINANCIAL RESULTS Three months ended June 30, Six months ended June 30, (In millions of dollars, except per share amounts) 2024 2024 % Chg 2024 2024 % Chg Operating revenue Wireless $ 1,759 $ 1,707 3 $ 3,480 $ 3,369 3 Cable Cable Operations 832 791 5 1,645 1,581 4 RBS 100 115 (13) 216 226 (4) Video 18 37 (51) 42 78 (46) 950 943 1 1,903 1,885 1 Media 437 386 13 776 676 15 Corporate items and eliminations (31) (19) 63 (57) (37) 54 Total 3,115 3,017 3 6,102 5,893 4 Adjusted operating profit (loss) Wireless 761 819 (7) 1,551 1,648 (6) Cable Cable Operations 397 340 17 779 680 15 RBS 21 9 133 47 17 176 Video (2) (6) (67) (9) (8) 13 416 343 21 817 689 19 Media 91 62 47 81 67 21 Corporate items and eliminations (26) (30) (13) (47) (51) (8) Adjusted operating profit 1,242 1,194 4 2,402 2,353 2 Stock-based compensation expense (41) (9) n/m (49) (35) 40 Settlement of pension obligations (11) - n/m (11) - n/m Integration, restructuring and acquisition expenses (19) (8) 138 (30) (10) 200 Other items, net - - n/m - (15) n/m Operating profit 1,171 1,177 (1) 2,312 2,293 1 Other income and expense, net 761 725 5 1,567 1,473 6 Net income $ 410 $ 452 (9) $ 745 $ 820 (9) Basic earnings per share $ 0.75 $ 0.78 (4) $ 1.35 $ 1.40 (4) Diluted earnings per share $ 0.75 $ 0.77 (3) $ 1.34 $ 1.39 (4) As adjusted: Net income $ 467 $ 464 1 $ 890 $ 861 3 Basic earnings per share $ 0.85 $ 0.80 6 $ 1.62 $ 1.47 10 Diluted earnings per share $ 0.85 $ 0.79 8 $ 1.61 $ 1.46 10 Additions to PP&E Wireless $ 298 $ 206 45 $ 516 $ 405 27 Cable Cable Operations 177 159 11 327 277 18 RBS 18 8 125 29 14 107 Video - 3 n/m - 4 n/m 195 170 15 356 295 21 Media 12 9 33 20 13 54 Corporate 15 54 (72) 23 91 (75) Total $ 520 $ 439 18 $ 915 $ 804 14
SEGMENT REVIEW
WIRELESS
Summarized Wireless Financial Results Three months ended June 30, Six months ended June 30, (In millions of dollars, except margin) 2024 2024 % Chg 2024 2024 % Chg Operating revenue Postpaid $1,558 $1,549 1 $3,102 $3,053 2 Prepaid 80 74 8 151 140 8 Network revenue 1,638 1,623 1 3,253 3,193 2 Equipment sales 121 84 44 227 176 29 Total operating revenue 1,759 1,707 3 3,480 3,369 3 Operating expenses before the undernoted Cost of equipment sales 339 243 40 641 480 34 Other operating expenses 659 645 2 1,288 1,241 4 998 888 12 1,929 1,721 12 Adjusted operating profit 761 819 (7) 1,551 1,648 (6) Stock-based compensation expense (7) (2) n/m (8) (7) 14 Settlement of pension obligations (2) - n/m (2) - n/m Integration, restructuring and acquisition expenses (8) - n/m (8) (1) n/m Other items, net - - n/m - (10) n/m Operating profit $ 744 $ 817 (9) $1,533 $1,630 (6) Adjusted operating profit margin as 46.5% 50.5% (8) 47.7% 51.6% (8) % of network revenue Additions to PP&E $ 298 $ 206 45
$ 516 $ 405 27 Data revenue included in network revenue $ 572 $ 435 31 $1,114 $ 851 31
Summarized Wireless Subscriber Results (Subscriber statistics in thousands, Three months ended June 30, Six months ended June 30, except ARPU, churn and usage) 2024 2024 Chg 2024 2024 Chg Postpaid Gross additions 376 321 55 692 599 93 Net additions 108 98 10 153 145 8 Total postpaid retail subscribers 7,458 7,124 334 7,458 7,124 334 Monthly churn 1.21% 1.06% 0.15% 1.22% 1.08% 0.14% Average monthly revenue per user ("ARPU") $70.07 $73.07 $(3.00) $70.12 $72.33 $(2.21) Prepaid Gross additions 215 165 50 396 293 103 Net additions (losses) 27 21 6 17 (13) 30 Total prepaid retail subscribers 1,669 1,502 167 1,669 1,502 167 Monthly churn 3.82% 3.26% 0.56% 3.84% 3.43% 0.41% ARPU $16.14 $16.61 $(0.47) $15.22 $15.64 $(0.42) Total Gross additions 591 486 105 1,088 892 196 Net additions 135 119 16 170 132 38 Total postpaid and prepaid retail subscribers 9,127 8,626 501 9,127 8,626 501 Monthly churn 1.68% 1.44% 0.24% 1.70% 1.49% 0.21% Blended ARPU $60.26 $63.27 $(3.01) $60.07 $62.41 $(2.34) Blended average monthly minutes of usage 475 495 (20) 463 485 (22)
Wireless Subscribers and Network Revenue
The year-over-year increase in subscriber additions for the quarter reflects increases in gross subscriber additions in both the postpaid and prepaid categories. Included in postpaid gross additions are a record number of new smartphone subscribers. The increase in prepaid subscriber additions primarily reflects sales activity from Wireless’ launch of its urban zone-based unlimited voice and text service, chatr, as well as prepaid wireless data plans for tablets and USB devices.
The increase in network revenue for the three and six months ended June 30, 2024, compared to the corresponding periods of 2024, was driven predominantly by the continued growth of Wireless’ subscriber base and the increased adoption and usage of wireless data services.
For both the three and six months ended June 30, 2024, wireless data revenue increased by approximately 31% from the corresponding periods of 2024, to $572 million and $1,114 million, respectively. This growth in wireless data revenue reflects the continued penetration and growing usage of smartphone and wireless laptop and tablet devices which are driving increased usage of e-mail, wireless Internet access, text messaging and other wireless data services. For the three and six months ended June 30, 2024, data revenue represented approximately 35% and 34%, respectively, of total network revenue, compared to approximately 27% in the corresponding periods of 2024.
For the three months ended June 30, 2024, Wireless activated and upgraded approximately 591,000 smartphones, compared to approximately 385,000 smartphones in the second quarter of 2024. These smartphones were predominantly iPhone, BlackBerry and Android devices, of which approximately 40% were for subscribers new to Wireless, during the three months ended June 30, 2024. This resulted in subscribers with smartphones representing 48% of the overall postpaid subscriber base as at June 30, 2024, compared to 35% as at June 30, 2024. These subscribers generally commit to new multi-year-term contracts, and typically generate ARPU nearly twice that of voice only subscribers. This is the largest number of new smartphone customer additions that Wireless has ever reported in a quarter.
Year-over-year postpaid ARPU decreased by 4%, which reflects declines in most categories of wireless voice revenues, offset by higher wireless data and feature revenues. The approximately 15% decrease in the wireless voice component of postpaid ARPU is primarily due to the general level of competitive intensity in the wireless voice services market. During the quarter, Wireless heightened its focus on initiatives aimed at slowing the decline of voice ARPU which has accelerated in recent quarters.
Wireless Equipment Sales
The year-over-year increase for the three and six months ended June 30, 2024 in revenue from equipment sales, including activation fees and net of equipment subsidies, versus the corresponding periods of 2024, reflects the significant increase in the number of smartphone activations.
Wireless Operating Expenses Three months ended June 30, Six months ended June 30, (In millions of dollars) 2024 2024 % Chg 2024 2024 % Chg Operating expenses Cost of equipment sales $ 339 $ 243 40 $ 641 $ 480 34 Other operating expenses 659 645 2 1,288 1,241 4 Operating expenses before the undernoted 998 888 12 1,929 1,721 12 Stock-based compensation expense 7 2 n/m 8 7 14 Settlement of pension obligations 2 - n/m 2 - n/m Integration, restructuring and acquisition expenses 8 - n/m 8 1 n/m Other items, net - - n/m - 10 n/m Total operating expenses $ 1,015 $ 890 14 $ 1,947 $ 1,739 12
The $96 million increase in cost of equipment sales for the three months ended June 30, 2024, compared to the corresponding period of 2024, was primarily the result of an increase in gross additions versus the prior period and a continued increase in the mix of smartphones for both new and upgrading subscribers. This was the single largest factor driving the year-over-year increase in expenses, and Wireless views these costs as net present value positive investments in the acquisition and retention of higher ARPU, lower churning customers who are on term contracts. These factors also contributed to the increase in cost of equipment sales for the six months ended June 30, 2024, compared to the corresponding period of 2024.
Total retention spending, including subsidies on handset upgrades, was $192 million and $375 million in the three and six months ended June 30, 2024, respectively, compared to $161 million and $311 million in the corresponding periods of 2024. The significant increase is a result of a higher mix of smartphone upgrades by existing subscribers, versus the corresponding periods in 2024.
The year-over-year increase in other operating expenses for the three months ended June 30, 2024, excluding retention spending disc
ussed above, was driven by higher sales costs associated with both the volume and mix of sales, which were offset by savings resulting from cost reduction initiatives and scale efficiencies across various functions and a one-time commodity tax adjustment.
Wireless Adjusted Operating Profit
The 7% year-over-year decrease in adjusted operating profit and the 46.5% adjusted operating profit margin on network revenue (which excludes equipment sales revenue) for the three months ended June 30, 2024 primarily reflect the increase in the total operating expenses discussed above, driven heavily by the high level of smartphone activations and upgrades and related level of subsidy spending, partially offset by the increase in network revenue.
Wireless Additions to PP&E
Wireless additions to PP&E are classified into the following categories: Three months ended June 30, Six months ended June 30, (In millions of dollars) 2024 2024 % Chg 2024 2024 % Chg Additions to PP&E Capacity $ 155 $ 96 61 $ 283 $ 224 26 Quality 59 73 (19) 93 116 (20) Network - other 16 7 129 27 13 108 Information technology and other 68 30 127 113 52 117 Total additions to PP&E $ 298 $ 206 45 $ 516 $ 405 27
Wireless PP&E additions for the three months ended June 30, 2024 reflects spending on network capacity, such as radio channel additions, network core improvements and network enhancing features, including the continued deployment of our HSPA+ network and the initial construction and launch of our LTE network. Quality-related additions to PP&E are associated with upgrades to the network to enable higher throughput speeds in addition to improved network access associated activities, such as site build programs and network sectorization work. Moreover, Quality includes test and monitoring equipment and operating support system activities. Investments in Network – other are associated with network reliability and renewal initiatives, infrastructure upgrades and new product platforms. Information technology and other wireless specific system initiatives include billing and back-office system upgrades, and other facilities and equipment spending.
The increase in Wireless PP&E additions for the three and six months ending June 30, 2024 is largely due to investments to build out the LTE network in Canada’s top four markets and spending on Information technology investments on our customer interfacing systems.
CABLE
Summarized Cable Financial Results Three months ended June 30, Six months ended June 30, (In millions of dollars, except margin) 2024 2024 % Chg 2024 2024 % Chg Operating revenue Cable Operations $ 832 $ 791 5 $ 1,645 $ 1,581 4 RBS 100 115 (13) 216 226 (4) Video 18 37 (51) 42 78 (46) Total operating revenue 950 943 1 1,903 1,885 1 Adjusted operating profit (loss) before the undernoted Cable Operations 397 340 17 779 680 15 RBS 21 9 133 47 17 176 Video (2) (6) (67) (9) (8) 13 Adjusted operating profit 416 343 21 817 689 19 Stock-based compensation expense (5) (3) 67 (6) (6) - Settlement of pension obligations (5) - n/m (5) - n/m Integration, restructuring and acquisition expenses (10) (7) 43 (18) (8) 125 Other items, net - - n/m - (5) n/m Operating profit $ 396 $ 333 19 $ 788 $ 670 18 Adjusted operating profit (loss) margin Cable Operations 47.7% 43.0% 47.4% 43.0% RBS 21.0% 7.8% 21.8% 7.5% Video (11.1%) (16.2%) (21.4%) (10.3%) Additions to PP&E Cable Operations $ 177 $ 159 11 $ 327 $ 277 18 RBS 18 8 125 29 14 107 Video - 3 n/m - 4 n/m Total additions to PP&E $ 195 $ 170 15 $ 356 $ 295 21
The following segment discussions provide a detailed discussion of the Cable operating results.
CABLE OPERATIONS
Summarized Financial Results Three months ended June 30, Six months ended June 30, (In millions of dollars, except margin) 2024 2024 % Chg 2024 2024 % Chg Operating revenue Cable Television $ 480 $ 449 7 $ 948 $ 907 5 Internet 232 214 8 456 418 9 Home Phone 120 128 (6) 241 256 (6) Total Cable Operations operating revenue 832 791 5 1,645 1,581 4 Operating expenses before the undernoted Cost of equipment sales 6 7 (14) 12 21 (43) Other operating expenses 429 444 (3) 854 880 (3) 435 451 (4) 866 901 (4) Adjusted operating profit 397 340 17 779 680 15 Stock-based compensation expense (5) (3) 67 (6) (6) - Settlement of pension obligations (4) - n/m (4) - n/m Integration and restructuring expenses (3) (1) 200 (3) (1) 200 Other items, net - - n/m - (7) n/m Operating profit $ 385 $ 336 15 $ 766 $ 666 15 Adjusted operating profit margin 47.7% 43.0% 47.4% 43.0%
Summarized Subscriber Results Three months ended June 30, Six months ended June 30, (Subscriber statistics in thousands) 2024 2024 Chg 2024 2024 Chg Cable homes passed 3,737 3,661 76 3,737 3,661 76 Television Net additions (losses)
(9) - (9) (17) 1 (18) Total television subscribers 2,294 2,296 (2) 2,294 2,296 (2) Digital cable Households, net additions 2 11 (9) 7 37 (30) Total digital cable households 1,745 1,701 44 1,745 1,701 44 Cable high-speed Internet Net additions 11 7 4 19 24 (5) Total cable high-speed Internet subscribers 1,729 1,643 86 1,729 1,643 86 Cable telephony lines Net additions and migrations 14 16 (2) 21 38 (17) Total cable telephony lines 1,028 975 53 1,028 975 53 Total cable service units Net additions 16 23 (7) 23 63 (40) Total cable service units 5,051 4,914 137 5,051 4,914 137 Circuit-switched lines Net losses and migrations to cable telephony (5) (11) 6 (11) (27) 16 platform 3 97 (94) 3 97 (94) Total circuit-switched lines
Cable Television Revenue
The increase in Cable Television revenue for the three and six months ended June 30, 2024, compared to the corresponding periods of 2024, reflects the timing of pricing changes made in March 2024 this year and August 2024 last year, together with continued increase in penetration of our digital cable product offerings and greater usage of on-demand and pay-per-view services.
The digital cable subscriber base grew by 3% and represented 76% of the television subscriber base as at June 30, 2024, compared to 74% as at June 30, 2024. Increased demand from subscribers for the larger selection of digital content, video on-demand, HDTV and personal video recorder (“PVR”) equipment continues to contribute to the growth in the digital subscriber base and Cable Television revenue.
Cable Internet Revenue
The year-over-year increase in Internet revenue for the three and six months ended June 30, 2024 reflects the increase in the Internet subscriber base, combined with the timing of Internet service pricing changes made in July 2024 and in March 2024. Also impacting the increase is the timing and mix of promotional programs and a general movement by subscribers towards higher end tiers, and to a lesser extent the transfer of the wholesale cable Internet from RBS to Cable Operations.
With the high-speed Internet base at approximately 1.7 million subscribers, Internet penetration is approximately 46% of the homes passed by our cable networks and 75% of our television subscriber base, as at June 30, 2024.
Home Phone Revenue
The year-over-year decrease in Home Phone revenue for the three and six months ended June 30, 2024, reflects the declines in revenue associated with the legacy circuit-switched telephony base that Cable has almost completed with the process of divesting, which was partially offset by the increase in the cable telephony customer base combined with price changes in March 2024.
Cable continues to focus principally on growing its on-net cable telephony line base. As a result, in Q3 2024, it announced that it was divesting the assets of its off-net circuit-switched telephony business where services cannot be provided over Rogers’ own cable network facilities. Under this arrangement, most of its co-location sites and related equipment were sold. In addition, the sale involved residential circuit-switched lines, with the customers served by these facilities being migrated to a third-party reseller starting late in the third quarter of 2024 and continuing over the first half of 2024. This is the principal driver of the decline of 94,000 in the legacy circuit-switched telephony base from June 30, 2024 to the current level today. During the three and six months ended June 30, 2024, approximately 20,000 and 32,000 circuit-switched lines, respectively, were all migrated to third-party resellers, with the exception of 3,000 which were migrated to RBS in the first quarter of 2024. The balance remaining is approximately 3,000, which will be migrated during the third quarter of 2024. For the three and six months ended June 30, 2024, the revenue reported by Cable Operations associated with the residential circuit-switched telephony business being divested totalled approximately $3 million and $10 million, respectively, whereas the circuit-switched telephony revenues in the three and six months ended June 30, 2024 totalled approximately $16 million and $35 million, respectively.
Cable telephony lines in service grew 5% from June 30, 2024 to June 30, 2024. At June 30, 2024, cable telephony lines represented 28% of the homes passed by our cable networks and 45% of television subscribers. The lower net additions of cable telephony lines in the three and six months ended June 30, 2024, versus the corresponding periods of 2024, are the result of lower sales associated with a combination of product maturation and increased competition.
Excluding the impact of the declining circuit-switched telephony business that Cable is in the process of divesting, the year-over-year revenue growth for Home Phone and for Cable Operations overall for the three months ended June 30, 2024 would have been 4% and 7%, respectively.
Cable Operations Operating Expenses
The decrease in Cable Operations’ operating expenses for the three and six months ended June 30, 2024, compared to the corresponding periods of 2024, was primarily due to cost reduction and efficiency initiatives across various functions, with activity driven costs generally benefiting from the lower number of new customer additions and customer churn versus the same period in the prior year, and a one-time commodity tax adjustment. Cable Operations continues to focus on implementing a program of permanent cost reduction and efficiency improvement initiatives to control the overall growth in operating expenses.
Cable Operations Adjusted Operating Profit
The year-over-year growth in adjusted operating profit was primarily the result of the revenue growth and cost changes described above. As a result, Cable Operations’ adjusted operating profit margins increased to 47.7% and 47.4% for the three and six months ended June 30, 2024, respectively, compared to 43.0% in both the corresponding periods of 2024. ROGERS BUSINESS SOLUTIONS
Summarized Financial Results Three months ended June 30, Six months ended June 30, (In millions of dollars, except margin) 2024 2024 % Chg 2024 2024 % Chg Operating revenue $ 100 $ 115 (13) $ 216 $ 226 (4) Operating expenses before the undernoted 79 106 (25) 169 209 (19) Adjusted operating profit 21 9 133 47 17 176 Settlement of pension obligations (1) - n/m (1) - n/m Integration, restructuring and acquisition expenses (5) (2) 150 (6) (3) 100 Operating profit $ 15 $ 7 114 $ 40 $ 14 186 Adjusted operating profit margin 21.0% 7.8% 21.8% 7.5%
Summarized Subscriber Results Three months ended June 30, Six months ended June 30, (Subscriber statistics in thousands) 2024 2024 Chg 2024 2024 Chg Local line equivalents Total local line equivalents 136 156 (20) 136 156 (20) Broadband data circuits Total broadband data circuits 32 35 (3) 32 35 (3)
RBS Revenue
The decrease in RBS revenue for the three and six months ended June 30, 2024, primarily reflects the planned decline in certain categories of lower margin legacy business, partially offset by the growth in next generation IP and other on-net services. RBS focus is primarily on IP-based services and increasingly on leveraging higher margin on-net and near-net revenue opportunities utilizing both the acquired Atria and Blink networks and Cable’s existing network facilities to expand offerings to the medium-sized enterprise, public sector and carrier markets. The lower margin legacy business, which includes long-distance, local and certain legacy data services, continues to decline and is down 32% for the quarter and 25% year to date. For the three and six months ended June 30, 2024, the acquisition of Atria contributed revenue of $17 million and $37 million, respectively.
RBS Operating Expenses
Operating expenses decreased for the three and six months ended June 30, 2024, compared to the corresponding periods of 2024 and reflects the decrease in legacy services related costs due to lower volumes and subscriber levels, permanent cost reductions resulting from a 2024 restructuring of the employee base, lower sales within the medium and large enterprise and carrier segments, and operating efficiencies stemming from the integration of Blink and Atria.
RBS Adjusted Operating Profit
The year-over-year growth in adjusted operating profit reflects the acquisition of the higher margin Atria and Blink on-net data businesses and the RBS focus on growing its on-net next generation data revenue. This strategic shift has more than offset the declines in the lower margin legacy voice and data services. Cost reductions and efficiency initiatives across various functions have also contributed to higher operating profit and operating profit margins in the quarter. For the three and six months ended June 30, 2024, the acquisition of Atria contributed adjusted operating profit of $9 million and $22 million, respectively, contributing to the growth of the next generation services market, including data and Internet.
VIDEO
Summarized Financial Results Three months ended June 30, Six months ended June 30, (In millions of dollars, except margin) 2024 2024 % Chg 2024 2024 % Chg Operating revenue $ 18 $ 37 (51) $ 42 $ 78 (46) Operating expenses before the undernoted 20 43 (53) 51 86 (41) Adjusted operating loss (2) (6) (67) (9) (8) 13 Integration, restructuring and acquisition expenses (2) (4) (50) (9) (4) 125 Other items, net - - n/m - 2 n/m Operating loss $ (4) $ (10) (60) $ (18) $ (10) 80 Adjusted operating loss margin (11.1%) (16.2%) (21.4%) (10.3%)
Video Revenue
The results of the Video segment include our video and game sale and rental business which has and continues to be restructured and downsized coinciding with the declining market opportunity. The decrease in Video revenue for the three and six months ended June 30, 2024, compared to the corresponding periods of 2024, was the result of a continued decline in video rental and sales activity and the reduction of nearly 20% in the number of store locations since the start of 2024.
Video Adjusted Operating Loss
The adjusted operating loss at Video decreased for the three months ended June 30, 2024, and was relatively flat for the six months ended June 30, 2024, compared to the corresponding periods of 2024, reflecting the trends in revenue and operating expenses above.
Cable Additions to PP&E
Cable additions to PP&E are classified into the following categories: Three months ended June 30, Six months ended June 30, (In millions of dollars) 2024 2024 % Chg 2024 2024 % Chg Additions to PP&E Customer premise equipment $ 35 $ 66 (47) $ 81 $ 112 (28) Scalable infrastructure 65 47 38 125 87 44 Line extensions 11 12 (8) 20 20 - Upgrades and rebuild 3 5 (40) 4 8 (50) Support capital 63 29 117 97 50 94 Total Cable Operations 177 159 11 327 277 18 RBS 18 8 125 29 14 107 Video - 3 n/m - 4 n/m $ 195 $ 170 15 $ 356 $ 295 21
The Cable Operations segment categorizes its PP&E expenditures according to a standardized set of reporting categories that were developed and agreed to by the U.S. cable television industry and that facilitate comparisons of additions to PP&E between different cable companies. Under these industry definitions, Cable Operations additions to PP&E are classified into the following five categories:
Customer premise equipment (“CPE”), which includes the equipment for digital set-top terminals, Internet modems and associated installation costs;
Scalable infrastructure, which includes non-CPE costs to meet business growth and to provide service enhancements, including many of the costs to date of the cable telephony initiative;
Line extensions, which includes network costs to enter new service areas;
Upgrades and rebuild, which includes the costs to modify or replace existing coaxial cable, fibre-optic equipment and network electronics; and
Support capital, which includes the costs associated with the purchase, replacement or enhancement of non-network assets.
Additions to Cable PP&E include continued investments in the cable network to enhance the customer experience through increased speed and performance of our Internet service and capacity enhancements to our digital network to allow for incremental HD and On-Demand services to be added.
The increase in Cable Operations PP&E for the three and six months ended June 30, 2024, compared to the corresponding periods of 2024, resulted primarily from higher Scalable infrastructure and Support capital expenditures due to projects associated with increasing capacity on our Video platform and quality related investments on our Voice platform and timing on Infrastructure projects.
The increases in RBS PP&E additions for the three and six months ended June 30, 2024 reflect the timing of expenditures on customer networks and support capital.
MEDIA
Summarized Media Financial Results Three months ended June 30, Six months ended June 30, (In millions of dollars, except margin) 2024 2024 % Chg 2024 2024 % Chg Operating revenue $ 437 $ 386 13
$ 776 $ 676 15 Operating expenses before the undernoted 346 324 7 695 609 14 Adjusted operating profit 91 62 47 81 67 21 Stock-based compensation expense (5) (2) 150 (7) (6) 17 Settlement of pension obligations (3) - n/m (3) - n/m Integration, restructuring and acquisition expenses (1) (1) - (4) (1) n/m Operating profit $ 82 $ 59 39 $ 67 $ 60 12 Adjusted operating profit margin 20.8% 16.1% 10.4% 9.9% Additions to PP&E $ 12 $ 9 33 $ 20 $ 13 54
Media Revenue
The increases in Media’s revenue for the three and six months ended June 30, 2024, respectively, compared to the corresponding periods of 2024, were mainly the result of increased advertising sales and new subscriber fees generated from Sportsnet ONE. Publishing, Radio, Television, Sports Entertainment, and Digital Media all drove growth in revenue for the three and six months ended June 30, 2024, which was partially offset by a slight decline at The Shopping Channel.
Media Operating Expenses
Media’s operating expenses for the three and six months ended June 30, 2024 increased, compared to the corresponding periods of 2024, primarily due to additional costs related to acquisitions of BV Media, BOUNCE, BOB-FM and planned Television programming principally in the area of sports content.
Media Adjusted Operating Profit
The increase in Media’s adjusted operating profit for the three and six months ended June 30, 2024, compared to the corresponding periods of 2024, primarily reflects the revenue and expense changes discussed above.
Media Additions to PP&E
Media’s PP&E additions during the three and six months ended June 30, 2024 increased from the corresponding periods in 2024 due primarily to Television broadcast equipment additions related to the CRTC mandated digital transition and planned software upgrades.
2011 FINANCIAL AND OPERATING GUIDANCE
We have no specific revisions to the 2024 annual guidance ranges which we provided on February 16, 2024. See the section entitled “Caution Regarding Forward-Looking Statements, Risks and Assumptions” below.
Rogers Communications Inc. Unaudited Interim Consolidated Statements of Income (In millions of Canadian dollars, except per share amounts)
Three months ended Six months ended June 30, June 30, 2024 2024 2024 2024 Operating revenue $ 3,115 $ 3,017 $ 6,102 $ 5,893 Operating expenses: Operating costs 1,925 1,832 3,760 3,590 Integration, restructuring and acquisition costs 19 8 30 10 Depreciation and amortization 444 405 862 811 Operating income 727 772 1,450 1,482 Finance costs (166) (154) (434) (337) Other income, net 5 4 7 2 Share of the income of associates and joint ventures accounted for using the equity method, net of tax - 3 3 7 Income before income taxes 566 625 1,026 1,154 Income tax expense: Current 134 105 279 219 Deferred 22 68 2 115 156 173 281 334 Net income for the period $ 410 $ 452 $ 745 $ 820 Earnings per share: Basic $ 0.75 $ 0.78 $ 1.35 $ 1.40 Diluted 0.75 0.77 1.34 1.39
Rogers Communications Inc. Unaudited Interim Consolidated Statements of Financial Position (In millions of Canadian dollars)
June 30, December 31, 2024 2024 Assets Current assets: Accounts receivable $ 1,564 $ 1,498 Other current assets 475 364 Current portion of derivative instruments - 1 2,039 1,863 Property, plant and equipment 8,710 8,437 Goodwill 3,282 3,108 Intangible assets 2,708 2,514 Investments 961 878 Derivative instruments - 6 Other long-term assets 178 175 Deferred tax assets 45 52 $ 17,923 $ 17,033 Liabilities and Shareholders' Equity Current liabilities: Bank advances $ 69 $ 45 Accounts payable and accrued liabilities 1,808 2,133 Income tax payable 653 376 Current portion of provisions 22 21 Current portion of derivative instruments 47 67 Unearned revenue 336 329 2,935 2,971 Provisions 68 62 Long-term debt 9,558 8,654 Derivative instruments 687 840 Other long-term liabilities 207 229 Deferred tax liabilities 573 517 14,028 13,273 Shareholders' equity 3,895 3,760 $ 17,923 $ 17,033
Rogers Communications Inc. Unaudited Interim Consolidated Statements of Cash Flows (In millions of Canadian dollars)
Three months ended Six months
ended June 30, June 30, 2024 2024 2024 2024 Cash provided by (used in): Operating activities: Net income $ 410 $ 452 $ 745 $ 820 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 444 405 862 811 Program rights and Video rental amortization 49 56 100 105 Finance costs 166 154 434 337 Current income tax expense 134 105 279 219 Deferred taxes 22 68 2 115 Pension contributions, net of expense (30) (8) (32) (20) Settlement of pension obligations 11 - 11 - Stock-based compensation expense 41 9 49 35 Amortization of fair value decrement (increment) on long-term debt 1 (1) 1 (3) Share of the income of associates and joint ventures accounted for using the equity method, net of tax - (3) (3) (7) Other 5 - 9 4 1,253 1,237 2,457 2,416 Change in non-cash operating working capital items (184) (86) (424) (269) 1,069 1,151 2,033 2,147 Income taxes paid (3) (5) (6) (12) Interest paid (87) (193) (309) (339) 979 953 1,718 1,796 Investing activities: Additions to property, plant and equipment ("PP&E") (520) (439) (915) (804) Change in non-cash working capital items related to PP&E (31) 19 (159) (70) Acquisitions, net of cash and cash equivalents acquired (28) (2) (532) (132) Additions to program rights (59) (39) (90) (85) Other (16) 16 (19) 24 (654) (445) (1,715) (1,067) Financing activities: Issuance of long-term debt 395 50 3,410 50 Repayment of long-term debt (545) (51) (2,362) (51) Premium on repayment of long-term debt - - (76) - Payment on settlement of cross-currency interest rate exchange agreements and forward contracts - - (1,208) - Proceeds on settlement of cross-currency interest rate exchange agreements and forward contracts - - 878 - Financing costs incurred - - (10) - Repurchase of Class B Non-Voting shares - (328) (285) (630) Proceeds received on exercise of stock options - 1 - 2 Dividends paid (195) (188) (374) (363) (345) (516) (27) (992) Decrease in cash and cash equivalents (bank advances) (20) (8) (24) (263) Cash and cash equivalents (bank advances), beginning of period (49) 123 (45) 378 Cash and cash equivalents (bank advances), end of period $ (69) $ 115 $ (69) $ 115 The change in non-cash operating working capital items is as follows: (Increase)/Decrease in accounts receivable $ (124) $ (100) $ (22) $ 41 (Increase)/Decrease in other assets (26) (12) (135) (130) Increase/(Decrease) in accounts payable and accrued liabilities (7) 35 (266) (190) Increase/(Decrease) in income taxes payable - - 3 - Increase/(Decrease) in unearned revenue (27) (9) (4) 10 $ (184) $ (86) $ (424) $ (269)
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