Fitch Views Rogers Transactions as Neutral to Ratings

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings believes the recent transactions announced by Rogers Communications Inc. (Rogers) are neutral to its credit profile. Importantly, Fitch expects Rogers will continue to maintain its current trajectory to reduce leverage below 2.5x by 2017 through debt reduction and EBITDA growth. Leverage at the end of the first quarter 2015 was 3.1x.

The series of transactions include Rogers completing the previously announced spectrum acquisition of AWS-1 spectrum from Shaw Communications Inc., the acquisition of 100% ownership in Mobilicity and a spectrum swap with WIND Mobile. Rogers' net investment for the transactions is approximately CAD365 million including a CAD175 million benefit from tax losses.

Rogers' Negative Rating Outlook is reflective of the increase in near-term financial risk associated with Rogers' CAD3.3 billion 700 MHz spectrum. The cash requirements were substantially above expectations, although Fitch acknowledges the strategic importance and lumpiness that is related to this critical investment as the company's wireless competitive position would be materially diminished without it.

Given the elevated leverage, Rogers has limited ratings flexibility for operating shortfalls, material unexpected cash requirements from other initiatives or any additional leveraging events. Thus, Rogers must reduce leverage to improve its financial risk profile.

Fitch believes Rogers maintains some flexibility to minimize the cash impacts from these transactions. Rogers could monetize non-core assets that would provide additional cash sources including Rogers CAD1 plus billion stake in Cogeco Cable. However, Fitch does not include an asset sale of Cogeco Cable in our analysis as a potential sale is highly speculative and uncertain.

The transaction incrementally improves Rogers spectrum position in British Columbia, Alberta and Southern Ontario by increasing the amount of contiguous spectrum available for LTE deployment. The spectrum acquisitions allow Rogers to improve the speed and network capacity in these areas with minimal capital spending. Transaction, which requires Competition Bureau approval, has already been approved by the Court.

Additional information is available at 'www.fitchratings.com'.

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Fitch Ratings
Primary Analyst
William Densmore
Senior Director
+1-312-368-3125
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
David Peterson
Senior Director
+1-312-368-3177
or
Media Relations
Alyssa Castelli, +1 212-908-0540
[email protected]

Source: Fitch Ratings

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