Unlike its competitors in the telecom space, Rogers has always been more than a stodgy play on cable, internet and wireless but its share price has tumbled 53 per cent over the past three years.CHRIS HELGREN/Reuters
You have to give Rogers Communications Inc. RCI-B-T some credit: The stock is so beaten up that it is now looking attractive as a dividend play. But is a 5.7-per-cent yield enough to entice investors who have noticed that the stock is going down, down, down?
Unlike its competitors in the telecom space, Rogers has always been more than a stodgy play on cable, internet and wireless.
It owns the Toronto Blue Jays baseball franchise! It acquired Shaw Communications Inc. for $26-billion! And it generates plenty of Rogers family ownership drama!
By comparison, many investors looked upon Telus Corp. T-T and BCE Inc. BCE-T (full disclosure: I own shares in both companies) as little more than dividend-printing ATMs, which generally lagged Rogers in share price performance and excitement.
But look who’s lagging now. Rogers’s share price has tumbled 53 per cent over the past three years, putting it neck-and-neck with the BCE disaster. What’s more notable: Rogers is trailing its Canadian telecom peers by an average of 25 percentage points so far in 2025.
One problem is that the Canadian telecom sector is struggling through intense competition for wireless customers during a period of slowing immigration growth, and investors have discovered that Rogers – even after absorbing Shaw – is not immune to these trends.
When Rogers last reported its quarterly financial results, in late January, the company said that it had added 95,000 wireless customers in the last three months of 2024.
The figure was slightly below analysts’ expectations and down from 111,000 wireless net additions a year ago. Rogers will report its first-quarter financial results on April 23.
Investors have put more faith in smaller players. The share price of Cogeco Communications Inc. CCA-T has gained nearly 18 per cent over the past 12 months. Quebecor Inc. QBR-B-T is up nearly 24 per cent over the same period, leading the sector.
The other problem is that Rogers is saddled with an enormous pile of debt that has restricted some of its financial flexibility and turned attention toward how it plans to maintain an investment-grade credit rating.
Long-term debt was nearly $42-billion at the end of 2024, up from $16.7-billion at the end of 2020, before it announced the Shaw transaction. The company’s total debt to EBITDA – or earnings before interest, taxes, depreciation and amortization, which is a measure of operating profits – is now the highest among the big three telecom players.
Rogers is now making deals to repair its balance sheet, even as it prepares to buy BCE’s stake in Maple Leaf Sports & Entertainment later this year for $4.7-billion.
Earlier this month, it announced an agreement to sell a minority stake in its wireless infrastructure to a consortium led by Blackstone Inc. for $7-billion. But the deal left investors unimpressed: Rogers’ share price slid 10 per cent in the five days following the announcement, settling at a 16-year low on April 10.
Some of the biggest obstacles to a sustained rebound rest with the broader telecom sector. Competition for wireless customers has weighed on average revenue per user – or ARPU, an important industry metric that measures the value of each subscriber – and analysts believe telecoms will continue to struggle this year.
“For the remainder of 2025, we expect ARPU pressure to persist, and we don’t expect pricing to turn positive until at least 2026,” Maher Yaghi, an analyst at Bank of Nova Scotia, said in a note this week.
Even the traditional defensive qualities of telecom stocks aren’t appealing to investors right now.
Consumers tend to hold onto their phones and internet connections during economic downturns, which should make stocks like Rogers a sound bet as U.S. tariffs threaten the Canadian economy. But concerns over debt levels may be playing a bigger role in driving investor sentiment right now.
And the fact that some analysts expect BCE will slash its dividend payment, perhaps by 50 per cent or more, may be tarnishing the entire sector’s appeal to dividend investors, even as interest rates fall. That’s a hurdle for investors who may be drawn to Rogers’ 5.7-per-cent dividend yield.
Sure, Rogers has a few things going for it.
It has shown that it has the ability to jettison assets to pay down debt. It can continue to drive savings from its Shaw acquisition.
And the stock’s price-to-earnings ratio, based on estimated 2025 profits, is the lowest in the sector and looks cheap even next to traditionally low-valuation U.S. telecoms, such as AT&T Inc. and Verizon Communications Inc.
But cheap only gets you so far. Rogers, like its telecom peers, has to show investors that it has more going for it than long-term disappointment.