Rogers Communications: A Long-Term Owner's Perspective

But Rogers' moat is not widening in every direction. It is stable at the infrastructure layer and slightly narrowing on the pricing-power layer. The CRTC's recently added consumer-protection measures have explicitly banned certain fees that obstruct customers switching phone/internet plans; other notification rules taking effect in 2027 will require clearer prompts about promotion expiry and international roaming charges. Rogers itself acknowledged in Q1 2026 that its updated capex and free-cash-flow guidance directly reflected intensifying competition and regulatory decisions. This means the industry's barriers to entry remain high, but "customer lock-in" and "pricing latitude" are being gradually eroded by policy and by a fourth national competitor.

Judging by moat type, here is how I would score it:

These judgments draw on the company's annual report, quarterly reports, control structure, and the industry regulatory environment. Overall, I give Rogers a moat strength of 3/5, and I judge the trend to be "infrastructure moat stable, pricing moat slightly narrowing."

On governance, Rogers carries both strengths and clear discount factors. The strength: management's most commendable move over the past year is deleveraging. The company cut adjusted net debt/EBITDA from 4.5x to 4.0x by the end of 2025, and further to 3.8x in Q1 2026; the 2025 cash flow statement also shows that the company brought in CAD 6.656 billion of non-controlling-interest capital by issuing minority equity in a subsidiary, which is essentially substituting "equitized capital" for pure debt financing - a rational direction.

The discount factors matter more. First, the Rogers Control Trust retains voting control; Edward S. Rogers is both Executive Chairman and Control Trust Chair, and the control trust arrangement means key governance rights sit with the Rogers family for the long term. Second, the minority rights of Class B non-voting shares are weaker than at an ordinary single-class company: the company states plainly in its annual report that Class B holders generally have no vote, and that if someone makes an offer for the Class A voting shares, there is no legal or charter requirement to make an identical offer to Class B at the same time, and the two classes can even be offered different terms. For a long-term value investor this is not a minor issue but one that should be written squarely into the discount rate. Third, capital allocation is starting to get complex: the company completed the MLSE controlling transaction in 2025 and plans to buy the remaining 25% minority stake in 2026, while also renewing the 12-year NHL national media rights. These assets can strengthen brand and content differentiation, but they also turn the business from "understandable" into "understandable but harder to value." I therefore score management and capital allocation at 3/5: the direction is more rational than in prior years, but the governance structure still demands a discount.

Financial Quality and Owner Earnings

Start with the historical financial trajectory. The most important fact about Rogers over the past five years is not "surging profit" but that cash flow and EBITDA have stepped up persistently, though largely accompanied by acquisitions and integrations such as Shaw and MLSE. So the numbers getting bigger is real, but it cannot simply be equated with "organic competitiveness strengthening linearly."

Note: all figures in the table are in CAD hundreds of millions; "adjusted net income" and "free cash flow" are the company's definitions; comparability from 2023 onward needs to be discounted given the Shaw/MLSE and other transactions.

Looking only at the trend, it is almost flawlessly attractive: 2021-2025 total-revenue CAGR of roughly 10%, adjusted-EBITDA CAGR of roughly 14%, and free-cash-flow CAGR of roughly 19%. But the quality matters more. In 2025 the company reported net income attributable to shareholders of CAD 6.894 billion, which looks like an exceptional year; yet the cash flow statement discloses that this included CAD 4.976 billion of remeasurement gains on the MLSE investment, plus CAD 69 million of gains on a data center disposal. That means the 2025 reported EPS significantly overstates the durable earnings power. The more meaningful figures are: 2025 adjusted net income attributable to shareholders of CAD 2.721 billion, operating cash flow of CAD 6.059 billion, and free cash flow of CAD 3.356 billion. This shows the company is not padding accounting profit; on the contrary, the real distributable cash flow at least matches adjusted earnings, if not exceeds it - but the headline EPS cannot be used directly for valuation.

On margins, the 2025 total adjusted EBITDA margin was roughly 45.2%, below 2024's 46.7%; the two core segments, wireless and cable, still carry very high margins, and what actually drags on overall quality is not the network business but the weaker profitability and stronger seasonality of media/sports. Q1 2026 confirmed this further: wireless service revenue flat, ARPU down, churn up, yet wireless EBITDA still grew 1% year over year; Cable EBITDA also grew 1%; Media revenue jumped 82%, but adjusted EBITDA only improved from -CAD 63 million to CAD 0. This is not a bad thing, but it shows that media is the "nice-to-have" optional layer, not the high-quality cash cow that wireless/broadband are.

On the balance sheet, Rogers' problem was never whether it has assets, but how much of those assets is built on debt and complex transactions. At the end of 2025 total assets were CAD 90.012 billion, total liabilities CAD 65.726 billion, a liability ratio of roughly 73%; cash was CAD 1.344 billion, with a large stack of short- and long-term borrowings and lease liabilities. Management disclosed adjusted net debt of CAD 38.856 billion, for leverage of 4.0x; by Q1 2026 adjusted net debt fell to CAD 37.966 billion, leverage 3.8x, with available liquidity of CAD 5.981 billion. This shows there is no near-term survival risk, but shareholder safety is still constrained by debt rather than benefiting from net cash.

Capex intensity is one of this company's most critical financial variables. In 2025 capex was CAD 3.707 billion, capital intensity 17.1%, down from 2024's 19.6%; in April 2026 the company cut full-year capex guidance further to CAD 2.5-2.7 billion while raising free-cash-flow guidance to CAD 4.1-4.3 billion. This is good news for shareholders, but it also means: the success or failure of the future valuation depends heavily on whether "lower capex is sustainable without damaging network competitiveness." If the lower 2026 capex reflects efficiency gains, the valuation is on the low side; if it is "contractionary belt-tightening" forced out by competition and regulation, then the higher-looking FCF cannot be fully capitalized.

On shareholder returns, in 2025 the company declared common-share dividends of CAD 1.079 billion, and the total share count rose from 536.1 million shares to 540.2 million shares at year-end, an increase of about 0.8%. This shows the company mainly returns capital to shareholders through cash dividends rather than disciplined buybacks; meanwhile, owing to the DRIP and equity incentives, the share count still expands slightly. On capital-allocation quality, this means the company does not yet qualify as the typical "per-share-value-oriented" Buffett-style buyback culture.

If I compute "owner earnings," I would be a touch more conservative than the company's own free-cash-flow definition. My conservative estimate is:

The most important assumption here is setting maintenance capex at CAD 2.7-3.0 billion, that is, below the actual 2025 capex of CAD 3.707 billion but above the most optimistic reading near the CAD 2.7 billion top of the new 2026 guidance. The reasoning is simple: I am willing to grant that 2025 capex may have run high, but I am unwilling to treat the low 2026 capex as the long-term norm right away. On this basis, Rogers' 2025 conservative owner earnings are roughly CAD 2.8-3.1 billion, equivalent to 9-10x the current equity market cap, or an owner-earnings yield of around 10%. This shows: it is not an absurdly cheap stock, but it is by no means a high-valuation stock propped up by storytelling.

To sum up this section, my judgment: the profit is broadly real cash profit rather than an obvious accounting illusion; but growth cannot be separated from capital investment, and the headline EPS is heavily contaminated by fair-value remeasurement. I see no obvious sign of financial fraud, and KPMG issued an unqualified opinion; the real risk lies not in accounting tricks but in the fact that capital intensity and leverage make a "cheap-looking" valuation more fragile.

Valuation and Margin of Safety

Based on data near the US-listing close on June 2, 2026, RCI's US-listing price was roughly USD 38.22, market cap USD 20.364 billion; at the day's CAD exchange rate that translates to roughly CAD 52.9 per share and a total equity market cap of roughly CAD 28.18 billion.

Owner-Earnings Discount Method

I use the conservative owner-earnings range from the previous section to run three valuation scenarios. All of the following are estimates of equity value, not enterprise value; the discount rate already embeds the risk premium for a single stock, Canadian regulation, dual-class shares, and leverage.

The most fragile assumption in this model is not the growth rate but maintenance capex. If after 2026 Rogers can genuinely hold network quality, subscriber growth, and pricing discipline at lower capex, then the current price is on the low side; if the high 2026 free cash flow is just a temporary compression of investment, then the FCF yield seen now will partly be given back. I will therefore not treat the company-guided CAD 4.1-4.3 billion free cash flow entirely as "permanently capitalizable" owner earnings.

Relative Valuation Method

Using more robust metrics that can be cross-checked against official annual-report data, Rogers sits roughly here relative to its two Canadian comparables, BCE and TELUS:

Three things stand out here. First, RCI is not much cheaper than BCE or TELUS on EV/EBITDA, so it is not an asset the market has "obviously thrown away." Second, RCI is cheaper on P/FCF, but a major source of that cheapness is precisely the market's worry about its maintenance capex, governance discount, and the industry price war. Third, on a balanced and slightly conservative view, TELUS carries lower leverage, BCE has a more common-share-friendly governance structure, while Rogers is caught in a tug-of-war between cheaper P/FCF and a governance discount.

Looking at RCI alone, the current price corresponds to an adjusted P/E of roughly 10.5x, because 2025 adjusted EPS was about CAD 5.04; but the P/E computed on reported EPS is only about 4x, which is meaningless, because 2025 net income was sharply inflated by the MLSE remeasurement gain. On P/B, RCI is roughly 1.6x book equity attributable to shareholders; but it must be stressed that a telecom company's book carries large goodwill and intangibles from acquisitions, and Rogers' goodwill and intangible assets together approach CAD 48.9 billion, exceeding shareholders' equity, so it is by no means a "book-value-at-a-discount" asset-type bargain.

Asset and Liquidation Value Method

Treated as a liquidation candidate, Rogers is not attractive. At the end of 2025 total assets were CAD 90 billion, but of that goodwill was CAD 20 billion and intangible assets CAD 28.9 billion, together approaching CAD 48.9 billion; even if those intangibles include genuinely valuable spectrum, media rights, and sports assets, you cannot simply buy it as a "hard-asset discount." On the other hand, in 2025 the company raised CAD 6.656 billion of capital by selling/introducing minority stakes in network assets, proving its infrastructure assets do carry monetizable value. So this company has hidden asset value, but it is not a liquidation-cushion type of investment. The asset method only tells us: the downside will not be entirely empty, but it cannot be treated as a "book-value floor."

Combining the three methods, I lay out the following price framework:

Translated to the US-listing price, at USD 1 ≈ CAD 1.3838, the ideal entry range is roughly USD 31-35, and the current USD 38.22 is closer to "holdable, but not necessarily worth buying aggressively." My conclusion: the current price carries some discount to fair intrinsic value, but almost no discount to conservative intrinsic value, so the margin of safety is not adequate.

Risks, the Bear Case, and Opportunity Comparison

The most important risk is not short-term volatility but permanent loss of capital. For Rogers, what is truly dangerous is a stacking of the following.

First is competition risk. Q1 2026 data show wireless service revenue flat year over year, ARPU falling, and churn rising, which means the price war is no longer just market sentiment but a financial fact. If Quebecor/Freedom keep pushing a low-price strategy from local markets to the national level, and Rogers cannot stabilize ARPU through network quality and bundled services, then the "communications oligopoly valuation" the market grants it will keep getting marked down.

Second is regulatory risk. The CRTC has recently banned certain fees that obstruct customers switching providers, and strengthened requirements for notices before promotions and contracts end. None of these changes is fatal on its own, but the direction is very clear: the policy environment leans toward making it easier for consumers to switch, rather than toward incumbents' lock-in ability. The most comfortable slice of economic rent the communications industry once enjoyed may not be fully preserved in the future.

Third is leverage and interest-rate risk. Rogers' leverage is falling, but in Q1 2026 it still stood at 3.8x adjusted net debt/EBITDA, far from easy. In the company's 2025 free-cash-flow definition, borrowing interest and capitalized interest alone amounted to CAD 1.924 billion; if EBITDA growth stalls while financing costs stay high, the elasticity at the equity layer will be poor. What you are buying is not a net-cash company but a residual equity claim where debt makes up the bulk of EV.

There is another often-underestimated category: governance and capital-allocation risk. The Rogers Control Trust's long-term control arrangement, the weak protection of Class B non-voting shares, and the company's evolution into a complex "communications + sports + content + asset monetization" structure all require investors to consciously raise the bar. The 2025 MLSE controlling transaction and the plan to buy the remaining 25% could bring ecosystem synergy, but could also complicate or even dilute the return on capital. Investors need to accept one fact: what you are buying is not the purest Canadian wireless-broadband company, but a complex group with clear control-structure features and strategic ambition.

For the strongest bear case, here is how I would write it for the shorts: "The golden age of the Canadian communications oligopoly is over. Rogers' infrastructure is of course valuable, but the industry's pricing umbrella is being pierced simultaneously by Freedom, the CRTC, and consumer-protection policy; the company tells a differentiation story with sports and media, but these assets have low returns, are capital-hungry, and add governance and valuation complexity. The cheap-looking FCF may just be a temporary peak after capex was suppressed." This is a bear case very much worth taking seriously. It may not be right, but it is by no means foolish. The facts supporting it include: ARPU falling, wireless service revenue stalling, tightening regulation, sharply cut capex guidance, and family control with a dual-class structure.

What facts would overturn my investment judgment? I would watch the following. If over the next two to three years wireless service revenue keeps stalling or turns negative, ARPU keeps falling, and churn stays high; if the lower capex buys not efficiency but deteriorating network quality and market share; if leverage stops falling and climbs back toward or above 4.0-4.5x; if the media/sports investment cannot translate into meaningful operating returns and only adds accounting accretion and narrative; if the company keeps making governance moves that leave minority shareholders uneasy - then I should admit I was wrong. These are not trivia but variables that can genuinely change intrinsic value.

When comparing with other opportunities, my judgment is fairly restrained. Versus BCE/TELUS, Rogers is not obviously cheaper on EV/EBITDA, only more attractive on P/FCF, but it also carries a more complex governance and capital-allocation discount. Versus the S&P 500 index or a low-cost global index fund, RCI's potential return may not be worse, but its certainty is clearly lower and its geographic and regulatory concentration clearly higher. Versus the current US 10-year Treasury yield of about 4.47%, Rogers' dividend yield is only about 3.8%, hardly an advantage; what truly attracts is not the dividend but the conservative owner-earnings yield of around 10% and the shareholder cash flow it may keep releasing. But this extra return must be exchanged for governance, leverage, and industry risk. If you could hold only 5 assets, I do not think RCI makes my top five. If you want to allocate a basket of North American defensive cash-flow assets, it can enter the watch list, but it is not clearly better than buying the index.

Checklist and Final Investment Conclusion

First, a simple checklist to wrap up the analysis above.

These judgments draw on the company's latest annual report, Q1 report, control documents, and industry/regulatory material.

The open questions and limitations also need to be laid out. First, maintenance capex cannot be mechanically and precisely separated from the financial statements, and this is the most sensitive assumption in the entire valuation. Second, whether the MLSE and NHL long-term interests can ultimately exceed the cost of capital is more strategic logic than a fully validated financial fact for now. Third, I built the core valuation framework using only official and highly credible sources; for metrics like peer P/B and a uniform-basis P/E - which are of limited meaning for the telecom industry to begin with and are heavily affected by accounting treatment - I did not force out low-confidence numbers just to "fill in the metrics."

【Final Rating】 Watch

【One-Sentence Investment Thesis】 Rogers is a high-barrier, strong-cash-flow Canadian communications infrastructure asset, but it is at the same time a high-leverage, heavily regulated, family-controlled, capital-intensive complex asset, and the current price does not offer a wide enough margin of safety.

【Core Bull Case】 First, Wireless and Cable remain high-quality, recurring, strong-cash-flow businesses, with 2025 free cash flow of CAD 3.356 billion and even higher 2026 free-cash-flow guidance. Second, the Canadian industry still has high concentration, and the spectrum, network, and license barriers have not disappeared. Third, management executed well on deleveraging over the past year, cutting adjusted leverage from 4.5x to 3.8x. Fourth, the current valuation's P/FCF and owner-earnings yield are no longer expensive.

【Core Bear Case】 First, Wireless ARPU is falling and churn is rising; the price war has already entered the income statement. Second, the dual-class structure and family control reduce minority-shareholder governance protection. Third, capex and media/sports investment make the valuation highly sensitive to assumptions. Fourth, leverage is falling but still on the high side, not enough to let a conservative investor rest easy. Fifth, the 2025 reported EPS is severely distorted by remeasurement gains, easily creating the illusion of "surface cheapness."

【Key Assumptions】 The company must keep growing the subscriber scale of wireless and broadband; the ARPU decline cannot run out of control for long; the lower 2026 capex cannot come at the cost of network competitiveness; leverage must keep falling steadily; and the MLSE/NHL/media assets must at least "not drag down the return on capital."

【Fair Buy Price】 My more comfortable entry range is CAD 43-48, roughly USD 31-35; this corresponds roughly to a 25%-30% discount to neutral intrinsic value plus an additional discount for governance and leverage. The current price is better suited to continued watching than to aggressive position-building.

【Target Holding Period】 If I later buy in at a more suitable price, I think this kind of asset should be held for at least 5-10 years; for your "over 10 years" horizon requirement, it matches on business durability, but the entry discipline must be stricter.

【Expected Annualized Return】 Estimated at the current price: conservative scenario roughly 3%-5%, neutral scenario roughly 7%-10%, optimistic scenario roughly 11%-13%. The conservative scenario is not bad because the current valuation is already not high; but whether the neutral and optimistic scenarios materialize depends on capex, ARPU, and deleveraging.

【Maximum Loss Risk】 The permanent-loss scenario I see as low-to-moderate probability but worth taking seriously is a 40%-60% equity loss: if the wireless price war becomes long-lasting, regulation keeps compressing economic rent, management further raises complexity in sports/media without raising returns, and leverage proves hard to cut, then equity value would be sharply compressed. In extreme cases the drop could be even deeper.

【Tracking Metrics】 Going forward I will keep tracking: wireless service revenue growth, postpaid net additions, ARPU, churn, retail internet net additions, Cable ARPA, adjusted EBITDA growth and margin, capex intensity, free cash flow and owner earnings, adjusted net debt/EBITDA, share-count changes, Media/MLSE EBITDA performance, and the regulatory moves of the CRTC/Competition Bureau.

【Signals That Trigger Re-evaluation】 I would re-evaluate immediately if Rogers posts declining wireless service revenue with ARPU still falling for several consecutive quarters; if subscriber quality and network reputation deteriorate after the capex cut; if leverage rises back above 4x with no clear path down; if the company keeps pouring large amounts of capital into media/sports assets whose returns are hard to prove; or if the minority-shareholder position is further weakened.

【Final Recommendation】 It is more fitting to place Rogers in the bucket of "worth watching continuously, but not yet time to rush in." It is not a bad company, nor is it overvalued junk; but from the perspective of a long-term business owner, a good business, complex governance, high leverage, and a not-cheap-enough price, combined, usually mean a bit more patience rather than a bit more impulse. If the price returns to a more discounted level in the future, I would be more willing to upgrade it from "Watch" to "Cautious Buy."

This report is based on public information and does not constitute investment advice. Markets carry risk; invest with caution.