ROGERS COMMUNICATIONS INC. All trends remain Stable.
KEY CREDIT RATING CONSIDERATIONS
The rating confirmations and Stable trends primarily reflect four factors: (1) the Company's solid 2023 overall operating results including the Shaw acquisition, which closed on
RATING DRIVERS
In Morningstar DBRS' opinion, Rogers' credit profile has improved meaningfully within the current rating category since the Shaw acquisition. Although leverage currently remains above the threshold normally associated with a BBB credit rating, the Company has taken and/or announced numerous credit-positive initiatives in order to achieve its stated medium-term target of reducing net leverage below 3.0 times (x) by YE2025. Morningstar DBRS could take a positive rating action if Rogers were able to leverage its expanded national footprint to drive EBITDA growth and/or reduce debt such that gross leverage is sustainably maintained between 3.5x and 4.0x.
Conversely, Morningstar DBRS could take a negative rating action if Rogers were to experience a weakened operating performance that fell materially below Morningstar DBRS' current forecast and/or if the Company were to pursue more aggressive financial management such that free cash flow was not directed to debt reduction, resulting in a delay in the deleveraging plan or leading to the expectation that leverage would be maintained structurally at current levels.
EARNINGS OUTLOOK
Morningstar DBRS expects Rogers' earnings profile to continue to strengthen, reflecting growth in the cable business, particularly in the
FINANCIAL OUTLOOK
Morningstar DBRS expects Rogers' financial profile to continue to improve in 2024, reflecting growth in EBITDA and an estimated
CREDIT RATING RATIONALE
Rogers' credit ratings reflect the size and diversity of its customer base, which contributes to the stability and predictability of the Company's cash flows. Rogers is the incumbent cable provider in
The Company has also invested heavily in its telecommunications networks, spending roughly
The credit ratings also reflect intensifying competition, the expected loss of legacy wireline services revenues, higher near- to medium-term network investment spending, and the risks associated with technological change.
Morningstar DBRS notes that operations are subject to a relatively high degree of regulation by the
TRANSACTION-SPECIFIC DISCLOSURES
This disclosure includes any financial statement adjustments that deviate materially from those contained in the Issuer's published financial statements.
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.
A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (
BUSINESS RISK ASSESSMENT (BRA) AND FINANCIAL RISK ASSESSMENT (FRA)
(A) Weighting of BRA Factors
In the analysis of Rogers, the relative weighting of the BRA factors was approximately equal.
(B) Weighting of FRA Factors
In the analysis of Rogers, the relative weighting of the FRA factors was approximately equal.
Weighting of the BRA and the FRA
In the analysis of Rogers, the BRA carries greater weight than the FRA.
Notes:
All figures are in Canadian dollars unless otherwise noted.
Morningstar DBRS applied the following principal methodology:
Global Methodology for Rating Companies in the Communications Industry (
The following methodologies have also been applied:
DBRS Morningstar Global Criteria: Preferred Share and Hybrid Security Criteria for Corporate Issuers (
DBRS Morningstar Global Criteria: Guarantees and Other Forms of Support (
The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.
A description of how Morningstar DBRS analyzes corporate finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/397223.
The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info-DBRS@morningstar.com.
The credit ratings were initiated at the request of the rated entity.
The rated entity or its related entities did participate in the credit rating process for these credit rating actions.
Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with these credit rating actions.
These are solicited credit ratings.
The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS trends and credit ratings are under regular surveillance.
Information regarding Morningstar DBRS credit ratings, including definitions, policies, and methodologies, is available on dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.
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