Rogers to slash its Capex guidance of $2.9 billion for 2020

Rogers Communications said it will slash its Capex for 2020 as compared with the earlier guidance.
Rogers 5G network in Canada
Earlier, Rogers Communications was planning to spend between $2.7 billion and $2.9 billion towards Capex in 2020.

“It is too early to provide more specific guidance at this point but we will continue to focus our Capex spend on network coverage and capacity,” Joe Natale, president and CEO of Rogers Communications, said.

Rogers has already slashed its Capex by 4 percent to $593 million during the first quarter of 2020. It had invested CAD 791 million in Capex for the fourth quarter of 2019, registering 4 percent drop.

The decrease in capital expenditures was largely driven by the continued improvements in Cable Capex efficiency and by the initial stages of slowed Capex spending as a result of COVID-19.

Rogers, which faces stiff competition from rivals BCE and Telus, spent $281 million (flat) in Wireless and $251 (–13 percent) in Cable business in the first quarter.

Rogers said capital expenditures in Wireless in Q1 2020 were in line with 2019 and reflect continued investments in networks. It enhanced existing LTE network with 4.5G technology investments that are also 5G-ready. It continued work on 5G deployments in the new 600 MHz band as well as other bands.

Rogers said the decrease in capital expenditures in Cable this quarter was a result of lower purchases of customer premise equipment and investments in network and IT infrastructure, as it works towards goal of recognizing capital efficiencies and improving capital intensity.

Jorge Fernandes, who joined from Vodafone UK, is the chief technology and information officer of Rogers Communications responsible for finalizing Capex, technology selection, network roll outs and selection of its vendors.

Rogers has upgraded network infrastructure with additional fibre deployments, including increasing fibre-to-the-home and fibre-to-the-curb distribution. These upgrades will lower the number of homes passed per node and incorporate the latest technologies to deliver more bandwidth for reliable customer experience.

Rogers has turned on Canada’s first 5G network in Vancouver, Toronto, Ottawa, and Montreal using 2.5 GHz spectrum and brought exclusive 5G service to Rogers Infinite customers on the new Samsung Galaxy S20 5G series.

Rogers said its revenue fell by 5 percent this quarter, largely driven by 17 percent decrease in wireless equipment revenue, as a result of lower subscriber activity surrounding the COVID-19 pandemic, and 3 percent drop in service revenue.

Service revenue decreased as a result of a 2 percent decrease in wireless service revenue and a 12 percent decrease in media revenue.

The wireless service revenue decrease was primarily a result of lower roaming revenue, with lower overall roaming activity and as we provided these services to our customers at no cost during the COVID-19 pandemic, and lower overage revenue, primarily as a result of the continued adoption of our Rogers Infinite unlimited data plans.

Cable revenue was stable this quarter, primarily as declines in legacy television and home phone subscriber bases were offset by growth in our Internet and Ignite TV subscriber bases and the movement of Internet customers to higher speed and usage tiers.