Canadian carrier giant, Rogers Communications announced its third quarter earnings report last week. Highlights of the report indicated total revenue decreased by two percent this quarter, largely driven by a nine percent decrease in wireless service revenue. The wireless service revenue decrease, according to the report, was mainly a result of lower roaming revenue due to global travel restrictions during COVID-19, and lower overage revenue, primarily as a result of the continued adoption of the Rogers Infinite unlimited data plans. Wireless equipment revenue increased as a result of a shift in the product mix of device sales towards higher-value devices.
Consolidated adjusted EBITDA decreased four percent in the quarter and the company’s adjusted EBITDA margin was down 90 basis points. Wireless adjusted EBITDA decreased by 4 percent, primarily as a result of the flow-through impact of the aforementioned decrease in revenue, partially offset by cost efficiencies. This gave rise to an adjusted EBITDA service margin of 65.9 percent, an improvement of 300 basis points from last year.
In a statement issued with the report, the company said, “Due to the continued uncertainty surrounding the duration and potential outcomes of COVID-19, we are unable at this time to predict the overall impact on our operations and financial results, but the impact to date has been material. While results this quarter have recovered materially from the second quarter, it is not possible at this time to reliably estimate our financial results for the remainder of the year; therefore, we will not provide an updated financial outlook for 2020.”
Regarding the proposed Cogeco transaction, the company said on October 18, Altice USA presented a revised offer to the privately-owned company. If the offer is accepted by Cogeco, Rogers would acquire Cogeco’s Canadian assets for a gross purchase price of $6 billion, less the value of Rogers’ investment in Cogeco of $2.3 billion (which is inclusive of the bid premium), for net cash consideration of $3.7 billion. If a mutually satisfactory agreement or, at the very least, a clear path forward to completion of a transaction, is not reached by November 18, 2020, Altice USA has stated it will withdraw the revised offer.
Cogeco’s controlling shareholder and Boards of Directors rejected the revised offer. Subsequently, Altice USA and Rogers jointly reaffirmed that should Cogeco’s controlling shareholder and Boards of Directors wish to engage with subordinate shareholders about the offer, the revised offer remains in effect until November 18, 2020.
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