Rogers Communications Q4 Earnings Miss Expectations, Amid Investments In Core Businesses

Rogers Communications Inc. (RCI) reported its fourth-quarter earnings on January 30, 2025, with a mixed bag of results. While the company's net income and adjusted earnings per share (EPS) beat analysts' expectations, its revenue and guidance for 2025 fell short of market forecasts. Rogers' subdued guidance for the coming year, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) expected to grow between zero percent and three percent, raised eyebrows among investors.

Rogers' wireless service revenue gained by two percent in the quarter, driven by growth in its mobile phone subscriber base over the past year. However, the company's media division faced weakness during the fourth quarter, leading to a reduction in its guidance for 2025. Rogers cited this weakness as a reason for the reduction in its EBITDA growth forecast.

Rogers' investments in core businesses, such as network expansion and sports franchises, have been a significant driver of its growth in recent years. The company's acquisition of a 37.5 percent stake in Maple Leaf Sports & Entertainment Ltd. (MLSE) from BCE Inc. for $4.7 billion in September 2024 has given it control of the most valuable sports franchise in Canada. This investment is expected to turn MLSE into a sports powerhouse, as analysts have suggested. By owning a significant stake in MLSE, Rogers gains access to valuable sports content and assets, which can be leveraged to attract and retain customers. Additionally, the investment in MLSE provides Rogers with a new revenue stream, as it can monetize the sports content through advertising, sponsorships, and other means.

However, Rogers' investments in core businesses have not been without challenges. The company's media division has been facing headwinds, with media revenue increasing by 10 percent in the fourth quarter, but lower than expected. This slowdown in growth, coupled with increased competition in the wireless market, has led to a subdued outlook for 2025.

Rogers' investments in network expansion have contributed to its revenue growth and improved its competitive position in the Canadian telecom market. The company has consistently invested in expanding and upgrading its network infrastructure to provide better coverage and faster speeds to its customers. This investment has led to industry-leading results, with Rogers topping $20 billion in annual revenue in 2024 and adding 623,000 combined mobile phone and Internet net additions in the same year.

In conclusion, Rogers' investments in core businesses, such as network expansion and sports franchises, have been a significant driver of its growth in recent years. However, the company's subdued guidance for 2025 reflects the challenges it faces in its media division and the increased competition in the wireless market. As Rogers continues to invest in its core businesses, it will be crucial for the company to address these challenges and maintain its competitive position in the Canadian telecom market.