Rogers' Strategic Cost-Cutting and EV Market Synergy: A Recipe for Margin Expansion and Long-Term Outperformance

Rogers Communications (Rogers) has emerged as a standout in Canada's telecom sector, leveraging aggressive cost-cutting and strategic investments in the electric vehicle (EV) market to drive margin expansion and position itself for outperformance. In Q3 2025, the company announced a $13 million annualized cost reduction in its curamik® business under the Advanced Electronics Solutions (AES) segment. This move, part of a broader restructuring plan, is expected to generate $12–$20 million in charges over several quarters but will ultimately enhance profitability. Coupled with a gross margin guidance of 31.5%–33.5% for the quarter, Rogers is demonstrating its ability to balance short-term pain with long-term gains.

Operational Efficiency: The Foundation of Margin Expansion

Rogers' cost-cutting initiatives are not just about trimming expenses—they're about optimizing a business model that prioritizes high-margin, low-cost operations. The company has reduced capital expenditures by 17% year-over-year in Q2 2025 (a trend expected to continue into Q3), while deleveraging its balance sheet to a 3.6x leverage ratio—the lowest among Canadian telecom peers. This was achieved through a $7 billion equity infusion from Blackstone, which not only stabilized its financial position but also freed up capital for strategic reinvestments.

The results? Wireless margins approached 65%, and cable margins exceeded 57% in Q2 2025, with consolidated operating margins hitting 45%. These metrics underscore Rogers' ability to maintain service quality while driving efficiency. For investors, this signals a company that can thrive in a high-interest-rate environment without sacrificing growth.

EV Market Tailwinds: A Strategic Bet on the Future

Rogers is not just a telecom provider; it's a key player in the EV ecosystem. The company's $40 billion, decade-long investment in 5G infrastructure has positioned it to capitalize on the EV market's explosive growth. With a 5G+ network covering 32 million Canadians and a standalone architecture on the 3,500 MHz spectrum, Rogers is uniquely equipped to support the low-latency, high-speed connectivity required for vehicle-to-everything (V2X) communication, autonomous driving, and smart grid integration.

Key partnerships, such as its collaboration with Cubic Telecom for connected-car solutions, highlight Rogers' foresight. This partnership enables real-time navigation, diagnostics, and streaming in vehicles, creating a sticky ecosystem for automakers and consumers. Meanwhile, Rogers Electric, the company's subsidiary, is directly involved in installing and maintaining EV charging stations, aligning with the $300 billion global EV infrastructure boom.

Financial Discipline and Future-Proofing

Rogers' Q3 2025 guidance reflects its disciplined approach: capital expenditures are projected at $3.8 billion, with $4 billion allocated to 5G infrastructure in 2025 alone. This includes fiber backhaul and low-latency towers, ensuring the network is ready for 6G and beyond. The company's adjusted earnings per diluted share are expected to range between $0.50–$0.90, a testament to its ability to convert cost savings into shareholder value.

The EV market's tailwinds further amplify Rogers' potential. By 2030, 240 million EVs are projected to be on the road globally, creating demand for smart charging networks and connected vehicle technologies. Rogers' 5G Advanced (5G-A) rollout, including network slicing for rural broadband and first responders, ensures it's ahead of the curve in meeting these needs.

Investment Thesis: A High-Margin, Low-Cost Powerhouse

For investors, Rogers' combination of operational efficiency and EV market alignment makes it a compelling bet. The company's cost-cutting initiatives have already boosted margins, while its 5G infrastructure and EV partnerships position it to capture growth in a sector poised for decades of expansion. With a strong balance sheet, disciplined capital allocation, and a clear focus on innovation, Rogers is well-equipped to outperform peers in a high-margin, low-cost environment.

Conclusion: Buy and Hold for the Long Run

Rogers Communications is a textbook example of a company that balances frugality with vision. By slashing costs in non-core areas and reinvesting in high-growth opportunities like 5G and EV infrastructure, it's building a moat that few competitors can match. For those seeking a telecom stock with both margin resilience and growth potential, Rogers is a no-brainer. As the EV revolution accelerates, this stock is likely to ride the tailwinds—hard.