Operator: Good day, and welcome to the Rogers Communications Third Quarter 2018 Results Conference Call. Today's conference is being recorded.
At this time, I would like to turn the conference over to Mr. Glenn Brandt. Please go ahead, sir.

Glenn Brandt: Thank you, Simon. Good morning, everyone, and thank you for joining us. I'm here with our President and Chief Executive Officer, Joe Natale; and our Chief Financial Officer, Tony Staffieri. Today's discussion will include estimates and other forward-looking information from which our actual results could differ. Please review the cautionary language in today's earnings report and in our 2017 Annual Report regarding the various factors, assumptions and risks that could cause our actual results to differ.

And with that, let me turn it over to Joe to begin.

Joseph Natale: Thank you, Glenn, and good morning, everyone. I'm pleased to share our third quarter results with you.
Let's start with our financials.
Overall, we delivered a strong third quarter with total revenue growth of 3% and adjusted EBITDA growth of 8%.

Given our robust year-to-date results, we are raising our full year adjusted EBITDA and free cash flow guidance. Let me offer some highlights across our business.
In Wireless, we delivered another strong quarter. We continued to reduce postpaid churn, delivering the best Q3 postpaid churn since 2009. We continued our strong ARPU growth and attractive, high-quality net additions.

The team executed strong price discipline, adding the right customers with the right long-term economics. We continue to see a strong positive trajectory on lifetime value. In Cable, we reported solid results during one of the most intensely competitive back-to-school periods. We increased total service unit net additions by 5,000 over last year. We also added 35,000 Internet net additions.

That's 6,000 more than last year and our best result since 2016. Despite the aggressive approach from our main competitor, we are pleased with our market share gains and footprint.
In Media, we grew adjusted EBITDA while revenue was down year-over-year, and our margins were up over 300 basis points. Overall, we have made terrific progress and reflects our relentless focus on delivering consistent and sustained performance in our core business. More broadly, the macroeconomic environment continues to be stable, and we see strong growth prospects in Cable, Wireless and Media.

We have a strong team, the right strategic priorities and solid momentum on our side. I am proud of what the team has accomplished and the growth prospects ahead. One of our key strategic priorities is to drive meaningful improvement in our customers' end-to-end experience. It starts with serving and supporting our customers in their channel of choice. We are driving continuous improvement by fixing customer processes and addressing moments of truth while ensuring we have the right tools and resources to serve our customers.

And our efforts are paying off.
We are seeing a healthy increase in digital adoption, driven by our focused investments in our digital platform. We are building customer awareness of our digital options and giving customers a reason to move to digital with features like Fido Extra. In the last year, we have doubled our digital sales and service activities, making it easier for customers to upgrade their device, change their plan or activate a new line.
In the call center, we are reducing call volumes.

We are giving customers more self-serve options and addressing top call drivers, including hardware upgrades, daily usage and promotion expiry. More than ever, we are proactively reaching out with targeted communications and offers, delivering a better, more personalized experience. We're also giving customers more control over their data through our smartphone app, helping to avoid unexpected charges and to improve service. In Cable, our proactive network maintenance program lets us monitor, identify and fix issues in our network before our customers call. This has prevented 15,000 truck rolls in the third quarter alone.

We also continue to offer self-install, eliminating over 250,000 installation truck rolls this year.
Cost efficiency is a natural outcome as we drive complexity out of the customer experience. As I have said before, customer service improvement and cost savings go hand-in-hand. As a result, year-to-date Wireless margins have improved by 150 basis points and Cable by 100 basis points. Our efforts to build a customer-first culture are taking hold, and you see this reflected in customer churn.

We will continue to drive improvement to wireless churn in a sustained and consistent way over time. We're also making well-timed strategic investments to bring our customers the best networks, technologies and services of the future. Last month, we announced a multiyear, multimillion partnership with UBC to build a made-in-Canada 5G ecosystem. Current estimates suggest 5G will deliver 500x more connected devices than 4G. We are firmly focused on developing the best applications and relevant use cases so Canada can reap benefits from 5G.

Through the UBC partnership, we will codevelop 5G applications to drive R&D in Canada. We'll have 5G-ready equipment and infrastructure up and running on the UBC campus in the first half of 2019. The UBC campus offers a real urban community that will become a proving ground for how we deploy 5G across Canada. We also just announced plans to launch LTE-M in Ontario as part of our 5G road map. LTE-M is a network upgrade that powers the next generation of IoT capabilities.

LTE-M will support customers with lower bandwidth, lower-cost devices, extended coverage and improved battery life. It will support fleet tracking, smart meters, home automation and smart city centers. LTE-M will also enable customer applications such as wearables, monitoring and tracking solutions. All these efforts build on our comprehensive partnership with Ericsson, North America's 5G partner of choice. On the residential front, we continue to make steady progress on Ignite TV.

We have launched the service and preliminary feedback from customers has been very positive. While it is early days, Ignite TV is driving positive ARPA and improved early life cycle churn. Later this month, we will start our employee trial in Atlantic Canada. Ignite TV truly delivers an unmatched entertainment experience for our customers. It offers a great voice remote, cloud DVR and deep integration with all forms of entertainment, from Netflix and YouTube to interactive sports scores and statistics.

We will soon integrate Amazon Prime as well. This is a constantly evolving road map backed by a strong team of 10,000 engineers that is virtually impossible to replicate. But this is just the start. We're well on our way to bringing Canadians the world's best connected home road map. I look forward to sharing more details in the coming quarters.

In closing, I'd like to thank our entire team for their incredible commitment to our customers and to our organization. I am proud to share we were recently named one of Canada's 50 Most Engaged Workplaces. This recognition reflects the culture we are building, building to deliver for our customers and to make Rogers a destination for top talent.
Let me now turn it over to Tony. Tony, over to you.

Anthony Staffieri: Thank you, Joe, and good morning, everyone. I'm pleased to share some additional highlights from our strong performance this quarter.
We continue to show steady growth in our service revenue while driving efficiency deeper and deeper into the company, which is resulting in meaningful margin expansion. On a consolidated basis, we reported total revenue growth of 3% and adjusted EBITDA growth of 8%. This reflects margin improvement of 180 basis points compared to the prior year while delivering solid operational metrics across the business.

For 2018, we had set a full year goal of 100 to 200 basis point margin expansion improvement compared to 2016. We're tracking well ahead of that goal and to date achieved cumulative margin expansion of 270 basis points. Looking at our Wireless business, we reported strong service revenue growth of 5%, which reflected a combination of meaningful subscriber growth and ARPU growth. Our continuing ARPU growth is being driven by our disciplined approach to translating the increase in consumer demand for data along with our focus on base management. This quarter, we saw growth of 3% in blended ARPU and 4% in blended ABPU or average billing per user.

We're tracking towards our goal of delivering full year growth of 2% to 4% on blended ARPU and 3% to 5% on blended ABPU, with year-to-date growth of 3% and 4%, respectively. Along with strong ARPU and ABPU growth, we also reported 124,000 postpaid net subscriber additions. Our commitment to improving the customer experience has resulted in churn of 1.09%, which is a 7 basis point improvement year-on-year. On adjusted EBITDA for Wireless, we reported growth of 8%. Wireless margins continued to expand this quarter by 90 basis points.

We remain disciplined and focused on the longer-term growth of our business by balancing subscriber growth with the right economic value. Turning to our Cable business. We grew revenue and adjusted EBITDA by 1% and 4%, respectively. Internet results continue to be the largest contributor to our growth, and the positive trend in our Internet business remains very strong. Internet revenue now represents 55% of our Cable business, and we expect the strength of our product to increase going forward, as Internet becomes the key anchor in the household.

Our ability to offer Ignite Gigabit Internet across our entire Cable footprint continues to attract customers. This quarter, we reported 35,000 net subscriber additions in Internet along with 8% revenue growth. Similar to our Wireless business, we continue to expand our margins in Cable. This quarter, even with increased marketing spend on awareness of our Ignite TV platform, we expanded margins impressively by 160 basis points over the prior year. In the fullness of time, we fully expect to realize further meaningful margin expansion, but expect some fluctuations in the short term due to the timing of initiatives and increased costs related to the transition over to our Ignite TV platform.

In Media, revenue declined year-on-year largely due to the Blue Jays, but our continued discipline around costs across our other Media assets has resulted in adjusted EBITDA growth of 20% in the quarter. Turning back now to our consolidated figures, I'll now go through some additional details on our financials.
The strength of our adjusted EBITDA growth enabled us to continue to make investments in our network and generated free cash flow of $550 million. This is an increase of 5% compared to the prior year, while delivering substantial dividends of $247 million to shareholders this quarter.
Given our ongoing uplift to the network across both our Cable and Wireless businesses, overall capital intensity came in at 18.6%.

Over the long term, we expect Cable capital intensity to decline significantly as the penetration of Ignite TV reaches our entire base and we move off of legacy set-top boxes. In the near term, we pull forward node splitting to realize more efficient per-home economics and continue to drive our nodes closer and closer to our customers.
With our hybrid fibre-coaxial network, we are able to plan and be strategic around our fiber investments. These investments will be made gradually as consumer demand reaches the long runway ahead of coax cable, which is not for the foreseeable future. All of our nodes are fed with fiber, and we are able to deliver what our customers need not only today, but well into the future, including for 5G.

We remain committed to capital efficiency and ensuring appropriate returns on our existing assets. We ended the quarter with a debt leverage ratio of 2.5x, materially lower than 2.8x we reported a year ago. The improvement is due to both higher adjusted EBITDA and lower net debt. Our balance sheet remains healthy with our solid, investment-grade credit ratings, stable outlooks and attractive rates on our outstanding debt. The management of our balance sheet comes down to the quality of our assets and ensuring we're prepared for the future.

While we're pleased with the improvement as we head into our optimal leverage ratio range, we reiterate that we're focused on the fundamentals of the business, and we'll revisit long-term, sustainable dividend growth at the right time. For the year, with the solid progress we've made on the fundamentals and strong execution, we're raising our outlook for 2018 adjusted EBITDA growth to a range of 7% to 9% from our original range of 5% to 7%. We're also increasing our free cash flow guidance to 5% to 7% from the original 3% to 5% guidance range. In conclusion, we're extremely pleased with our performance and the steady growth that we have demonstrated this year. The even stronger guidance reflects our confidence in our execution on the sustainable growth, along with our ability to deliver on the fundamentals.

With that, I'll ask the operator to open the lines for questions.

Operator: [Operator Instructions] We'll now take our first question from Dave Barden from Bank of America.

David Barden: I guess I had a few, if I could. The first one was, Joe, with respect to the Ignite TV rollout, you highlighted the higher ARPU and lower churn kind of early characteristics. Could you talk about the profitability characteristics, net of the kind of variable costs that come along with that product, at the margin? And does that kind of inform, Tony, some of your comments about margin might be kind of moving around a little bit in the Cable business? And then the second kind of related question is, you guys kind of set that 100 to 200 basis point margin expansion goal over a two-year period, which you guys have kind of blown through pretty nicely.

Can you kind of maybe set a bar at the margin now to look out maybe a year or two years forward what you think the incremental cost savings opportunities might look like?

Joseph Natale: Thanks, Dave. Why don't I take the first one and Tony will give you the second question? On Ignite TV, first of all, we're pleased with the results so far in Ignite. It is early days. We launched the product externally in July, the goal really being to really harden a broader service experience. The platform is working very well.

It's making sure that the processes around ordering, billing, installation and customer support are really kind of in great shape, and they're shaping up very well as a result of that effort. We do believe that the long-term profitability, in fact the long-term cash prospects of that business, are very strong. If you kind of take a look at it just broadly for a second, number one, in terms of an overall installation effort on the front end, it's a very -- much more simplified product to implement as a whole. If you look at the CPE requirements and the installation costs, we talked about that before, with legacy TV, we're running over about $1,000, one of the largest, for a full implementation. With Ignite TV, that's closer to the $400 range, and there's still opportunity to kind of compress that over the fullness of time.

Add to it the fact that it's much easier to discover content for our customers, and we believe that's why we're seeing, even in the very early stages, strong ARPA uplift as customers have an easier time finding content and navigating their content, I mean, therefore, we think, a much easier time consuming content. We'll continue to find other ways of packaging and merchandising content in the fullness of time, which I think will help, again, with the economics of the business. We're pleased with the overall early days, and more to come on that point, Dave.

Anthony Staffieri: Picking up on Joe's comments, Dave, from a total cash flow perspective, we see opportunities both in terms of margin, but particularly in terms of reduced capital intensity for Cable going forward. Joe has talked about -- just talked about some of the opportunities of materially reducing our capital intensity from where it is now as the launch of Ignite TV continues.

From a margin perspective, we see good opportunity to not only continue to grow ARPUs, but accelerate ARPUs and ARPA in particular. And then on a margin basis, we see the opportunity to expand margins. I don't want to get too far ahead of ourselves in terms of what that means, but with the product, we've taken the opportunity to simplify a lot of our processes and improve the customer experience. And as a result, that is dropping out costs. And you see some of that coming through already, but more to come.

My comments in terms of lumpiness of margins was meant more in terms of the very near term. As we continue to expand, you can expect some lumpiness in costs like awareness advertising, for example. And so think about it in that context. But longer term, we continue to be very optimistic about the cash flow opportunities.

Operator: [Operator Instructions] We'll now take our next question from Vince Valentini from TD Securities.

Vince Valentini: Your Wireless ARPU or ABPU, whichever you want to focus on, clearly trending better than your peers' in the industry. So far this year, in this 3% range, call it, 3x higher than what the other two incumbents are doing. Is this a temporary thing in your mind? I mean, is the industry growth really 1% or lower and you won't be able to sustain this 3%-or-so range for much longer? So when we're looking at 2019, should we have level set expectations that your ARPU growth should be in the 0.5% or 1% range, same as Bell and TELUS? Or do you think you're still doing things with base management that will carry beyond this year?

Joseph Natale: I think that's -- first of all, it's -- I don't think it's appropriate for us to give ARPU guidance in the longer term, but I would say to you that we still see the fundamental growth and base management opportunities there in our business. The appetite for data continues with our customers. Any given cycle, there are customers that are arriving at our doorstep and customers that are leaving, and we're looking very carefully to make sure that we do a great job of managing that base and finding opportunities to focus on lifetime value.

I think fundamentally, the industry continues to grow. And really, the onus is on us to continue making sure that we drive affordability for our customers at the same time drive economic value for our business. We don't believe that the industry growth opportunity, the behavior around people consuming data more and more over time doubling every 24 months or so. And then the opportunity for us in base management is substantial, and we believe there's still opportunity for us, therefore, in ARPU growth.

Operator: We'll now take our next question from Jeff Fan from Scotiabank.

Jeffrey Fan: I just want to focus on subscriber loading on Wireless for a second, particularly on gross adds. So this quarter, it looks like it was down a little bit from last year. You had great churn numbers, so the net continues to be very stable. But wonder if you can comment just what's going on in the market and what your observations are because gross adds had been growing and the market has been growing, and you guys were growing in the last few quarters. I wonder if there's anything that's happening there on gross loading.

And then just a quick follow-up on CapEx. You -- on Wireless, wondering if you're -- you feel like you're spending at the right pace. And then just very quickly on Cable. I think, Tony, you mentioned -- or Joe, you mentioned about maybe sunsetting the legacy Cable service. Wondering if there's any timing that you can put around that.

Joseph Natale: Okay, first of all, on Wireless, Jeff, we're very pleased with our Wireless results in Q3, really believe it is a trifecta for us. We had very strong, high-quality net adds with strong lifetime value, strong ARPU at 3%, ABPU at 4%. And churn, churn improved by 7 basis points on top of the 10 basis points that churn improved Q3 last year. So 17 basis points in subsequent Q3s. In terms of the growth in the marketplace, we still continue to see the market growing.

We exited last year, 2017, at 5% market growth. We saw about 6% market growth in the first half of this year. We really push the team to be disciplined in terms of price in the marketplace, focusing on high-quality net adds, and we're very pleased with the result that came out of that. We don't see any change to market growth penetration prospects. At the end of the day, we still think that there's an opportunity to work our way towards U.S.

levels of penetration. As you know, Canada sits at about 87% wireless penetration. The U.S. sits at about 120%. I think we'll continue to see that march towards 120% over the fullness of time.

How will it be reflected each and every quarter? It's kind of hard to say until everyone reports and we see all the results and really look back and say, okay, what was the growth like this quarter? But the macro conditions for continued growth in the sector, we believe, are still there. On the Wireless CapEx front, we do believe that we're making the right investments. We do believe that we've got the right plans in place. As we've said in the past, we made the move to 4.5G later in the cycle. I think it's done well for us.

It's done well for us because not only have we been able to implement the latest technology that is truly 5G ready in terms of 4.5G capability, but the unit cost price points have been much stronger than they were at the beginning of the cycle. And therefore, we're enjoying much better economics in terms of the unit cost of delivering a gig. So I look at that, which is the way we look

at it: What does it cost to deliver a gig? And therefore, we're doing, I think, a very good job of managing those unit costs. I do believe that you'll see consistent Wireless CapEx intensity from us, and we think we have the right levels to sustain the investment we're going to make in 5G in the years ahead. So we won't see any a sort of erratic surprises or big changes on that front in the short to medium term.

On the Cable side, we -- our goal has been to grow Ignite TV at a thoughtful pace, at a pace that drives the quality and capability in the marketplace on service experience that reinforces the fact that Ignite TV is a premium brand. You will see us at some point in the future, I won't say exactly when -- at some point in the future, you will see us stop-sell legacy TV, and then really kind of drive further efforts in getting the -- both OpEx and CapEx efficiencies of that move. As you can imagine, having various vintages of TV set-top boxes and home gateways drives complexity in the field for our people. And going to an all-IP network and going to a passive hybrid fibre-coax network as a whole, we'll also continue to see strong OpEx and CapEx savings for us.
The good thing for us is that we can make those changes, including adding capacity, on a success basis.

Now go back to what Tony said a few minutes ago, we have had a 1-gigabit capability across our footprint for a very long time, and it's served us well in terms of the market. And that's why you continue to see Internet penetration growth, 13 straight quarters of Internet penetration growth. In a lot of ways, our main competitor is playing catch-up with our fiber investment because of the capability we've had for a long time in the marketplace. But we do look forward to those opportunities because our focus on margin expansion and CapEx efficiency improvement are not stopping this year, and we've got a whole playbook on both those fronts, some of them shorter term in duration and some of them longer term that will come with the full migration to Ignite TV in the platform as a whole. So more to come on that front as we feel comfortable competitively.

And specifically telling you more about that, we will, but rest assured that those plans are very specific and very definite in nature.

Operator: We'll now take our next question from Drew McReynolds from RBC.

Drew McReynolds: Maybe for you, Joe, first, just on the competitive environment in Ontario. We know it's always been competitive. It sounds like it was extremely competitive, and you still certainly managed through that well.

Can you just talk a little bit more on both cable and wireless competition and kind of expectation as we get into a seasonally competitive Q4? And then second question, just on the iPhone upgrade cycle versus prior years. Is there anything that you're seeing that's unusual in terms of the upgrade dynamics as we've seen it to date at least?

Joseph Natale: Great. Thanks, Drew. In terms of the competitive nature of our business, I think it's fair to say it's as competitively intense as it's ever been and frankly across all areas of our business. Gone are the days where the Cable business was less competitive than the Wireless business.

Frankly, both are intensely competitive. And in the residential business over back-to-school, there are a lot of people that are looking to hook up their service. It's more of an Internet-only kind of marketplace during the back-to-school period if you think about students. Having kids myself in university, I know exactly kind of the type of dynamic that's out there with respect to wanting to have simple Internet service and wanting a low price. So I think it creates a lot more intensity over that particular period of time.

We feel we're well prepared for both the Cable business competitive intensity. We've got a great product, we've got a great team and we've got a road map that is quite exciting beyond just cable TV if you look at the Connected Home and where it's going. And we've got a team that's very much focused on execution.
On the Wireless front, look, it's a very competitive market in Canada, has been for many years. Wireless is a shopper category.

Every time there is a brand-new device that comes out, customers look up and say, hey, maybe I want that device, and so the intensity begins. We're very proud of the fact that we've got the best distribution in the country and proud of the fact that we've got good momentum on the Wireless front. And we have focus around sales and marketing that is respectful of the competitive dynamics, but also looking very carefully and specifically at base management and lifetime value as a whole. So I'll leave it at that in terms of the competitive intensity.
In terms of iPhone upgrades, we're very excited about the iPhone XR.

We're taking preorders for that phone, in fact, starting today. The only dynamic that's different, I guess, you could say, is that, yes, this year, we have a double-pronged iPhone launch with the more affordable device going second. The last launch was the other way around with the more affordable device going first. So of course, with every iPhone launch, there's a bit of a different nuanced dynamic in the marketplace. We're pleased with what we've seen so far from the iPhone Xs and Xs Max, and we're prepared for Q4 in our channels and across our business for what will be another busy season and a very exciting season for the Rogers organization

Operator: We'll now take our next question from Simon Flannery from Morgan Stanley.

Simon Flannery: Coming back to the 5G comments about UBC, can you just talk a little bit about what you think you need in terms of spectrum and in terms of infrastructure? There's obviously a millimeter wave auctions kicking off here next month, and then a lot of action in the kind of 3.5-or-so gigahertz band. Do you think you have what you need for 5G? Or what would you like to have to be able to compete? Is it -- and what bands are you trialing with UBC?

Joseph Natale: Simon, if you stand back and look at 5G overall, there are a few things that are fundamentally important to 5G. One you've hit on, which is spectrum, spectrum is very important. We have a strong base of 3,500-megahertz spectrum today. There is a 3,500 auction coming up in 2020, and that will become, I believe, the first tranche of important spectrum for the future of 5G and hopefully with millimeter wave opportunities for us soon thereafter.

So -- but spectrum is an important part of 5G.
The second thing that's very important around 5G are the economic use cases. We're all busy postulating where there might be strong use cases for 5G. At this point, there really are a series of trials and PowerPoint presentations. We're working hard to make sure we can find good environments where we can test the reality of some of these use cases, hence the UBC R&D collaboration.

UBC has got a great engineering group very much focused on codeveloping some of these ideas and applications with us, and proving out both the technological and the economic use cases. It also helps with the third factor.
The third factor is, in 5G we need access and attachment rights, access to poles, access to ducts, access to, call it, real estate rights if you want to call it that. And on that front, that's going to be a challenge for the industry as a whole. It requires cooperation across all levels of government, federal, provincial, municipal.

It requires changes to the telecom act in making sure that everyone has access to various poles and capabilities and ducts and rights-of-ways to kind of integrate this infrastructure.
One good thing about the UBC campus, it's a city within a city. And the university actually runs that city and it has responsibility for all the services that support 65,000 students in that community. So we view it as a very attractive place to try not just the technological ideas but also the ability to have sort of unfettered access to the infrastructure so that we could actually bring to life those ideas in a meaningful way.
And so stand back, those are three things.

Spectrum is really important. We're going to be pushing hard on that front and making sure that we do everything in our power to expand the availability and create a wider apportionment of 3500 spectrum for the industry as a whole.
Number two is working hard with municipalities and landlords and partners across the country and all levels of government to try to get the right attachment rights and make sure that we can economically deliver on the 5G promise because if we're paying users rent for various capabilities in different parts of the country, then those are costs that we'll have to bear and they will be borne by the customer in the end. So it's important that we get economic rights that make sense.
The third thing is proving the use cases, right, making sure that we really sift through the absolute plethora of ideas and opportunities around 5G and pick the focus few that we really believe are right for Canada and are right for the industries and the businesses that are most important to Canadian industry and really go after those.

It will largely be a B2B play, a vertically focused play. And therefore, it's important we make the right bets. The worst thing that we can all do in 5G would be to just kind of sprint across the landscape with a splattering of ideas in every area and really kind of achieve little excellence in any of them. So we're going to be very focused in that area. Hope that helps.

Operator: We'll now take our next question from Maher Yaghi from Desjardins.

Maher Yaghi: I wanted to just -- maybe first question on Internet loading. Strong results compared to last year. Is it -- I wanted to just know if there's a bit more wholesaling activity going on in the third quarter of this year versus last year because -- the only reason I'm asking is the revenue generation from the subscribers was sequentially slightly down quarter-over-quarter versus last year. So just wanted to know if wholesaling was more successful this year than last year or it's mostly the competitive profile on pricing that's affecting the revenue line.

And a follow-up just on 5G. Joe, you talked a lot on that, and thanks for that. And -- but I wanted to just ask you a question that is on many people's minds, is the timing difference between the cost that will be put to use to create this 5G environment and the timing of when the revenue generation will come from these new use cases might be longer in time basically between the revenue and the cost than the technological advancement we had previously in 3G and 4G. And would that create a bit more pressure on the balance sheet?

Joseph Natale: Okay, why don't I start with some comments broadly about Internet loading. Tony, I'm going to ask you to comment on the wholesale question around that and the ARPU as well.

So first of all, Maher, thank you for your questions. We are pleased with what we're seeing overall in our Cable business. Revenue was up 1%. EBITDA was up 4%. And on a footprint of 4.4 million homes, we grew Internet additions by 6,000 to 35,000 overall.

We did see Internet revenue go up 8% as a whole, which we think is a very strong number. And penetration is still very strong, continues to grow, we said, for 13 straight quarters in a row. Maybe, Tony, you can comment on the wholesale question and anything else you wanted to add to that piece.

Anthony Staffieri: Maher, a couple of comments. In terms of the sequential pieces that you see, it's really year-on-year that's more relevant.

Q3 is highlighted by the back-to-school season, and so you get a different dynamic than you would have seen in Q2. And as Joe said, good performance on a year-on-year basis and particularly when you look at that performance relative to homes passed. And as we've said before, we continue to improve our penetration rates consistently every quarter on a year-on-year basis. And so in the third quarter, it was even above one point of penetration improvement. So we're pleased with that.

In terms of where they're coming from and the impact of wholesale, I describe wholesale as one very small in the overall metrics. But importantly, relatively flat. So it really wasn't a factor on a year-on-year or even on a sequential basis. So I'd describe it as nonimpact. Hopefully, that answers your question.

Joseph Natale: On 5G, Maher, there's one important part of 5G that doesn't get a lot of airtime or attention because we're all focused on the kind of exciting use cases. But frankly, the most exciting economic use case is the ability to deliver network capacity, especially in densely populated areas, at a lower per-gig unit cost. And that's where the -- there is a level of energy going on right now on 5G. You're seeing it in building out small cells. You're seeing it in densely populated areas, in arenas and in places where there are a lot of people coming together, using their smartphones in a very intense way.

So I think that is the best and most important and proven economic use case. That will be the first thing out of the gate. I think it'll help to kind of create good economics and, therefore, create some air cover, if you will, for some of the other use cases that will have a bit of a J curve, a bit of a J curve of investment. The thing is that the use cases that will have a J curve of investment will not require, I believe, massive CapEx investment. There'll be places where we can create overlay capabilities, if you want to call them that, build applications, et cetera.

And then as the market penetration grows from those ideas, then we'll see the revenue come and the ability to actually continue to make further investments, right. Bear in mind that 5G is an overlay to a strong 4.5G network. It's a very important point. We're not ripping or replacing 4G like some other previous generation changes in technology. It is truly an overlay.

And also, bear in mind that 3.5-gig frequencies can be added to existing high-band networks. So we've got the opportunity to kind of integrate this in a seamless, evolutionary way. The next-generation radios will support existing frequencies and support 4.5 and 5G. So we're getting economies of scale and scope with the latest radio technology. Because of our movement, again, in the later part of 4.5G cycle, we can take advantage of these economies in a much more meaningful way.

And therefore, we think we're well positioned. We won't see that kind of gap between investment and financial return because that has been around with some of the previous technologies. Now we've all made the jump to 4G. It took a while for smartphone adoption to catch up and the rest of the -- it's a bit of a different game in 5G. Hope that helps.

Operator: We'll now take our next question from Aravinda Galappatthige from Canaccord Genuity.

Aravinda Galappatthige: Two for me, please. The first one on Cable. I wanted to get a sense, Joe, of the traction you're getting on the SME side and enterprise side in general. I know that remains an opportunity for you as incrementally it drives growth and profitability on the Cable side.

And secondly, on the Wireless front, I guess connected to the early ARPU questions, we're starting to see the very large data buckets being offered. And I'm talking about the 10-gig-type buckets that are being offered fairly often nowadays on a promotional basis in the mid-70s. I was curious as to how that plays into sort of the medium-term ARPU growth picture. I mean, if you look at it headline-wise, obviously, $75 is a lot higher than your average ARPU, but much depends on what base of your subset are taking up those promotions. So I just wanted to get your thoughts on that and how that -- what that says about the health of the pricing growth on a longer-term basis in the industry.

I'll leave it there.

Joseph Natale: Okay. Thank you, Aravinda. Thanks for your questions. On the small and medium front, I mean, overall, we're doing very well in very small business.

Think of that as sort of 10 employees and below. We're seeing good growth in that area across capabilities that we have with wireline services, both Cable and related kind of value-added services, everything from point-of-sale capability, et cetera. We think it's a big opportunity because we still have a very small percentage of the market in that area. In the medium business space, we think there's also opportunity. There, it requires kind of leveraging some of the technologies and platforms from enterprise, but making them more shrink-wrapped and easy to configure and deploy in the middle market.

So as we work on that piece of it as well, then we'll have opportunities to kind of grow penetration in the medium-sized market as well as the small business. It'll take time for this to show up in our results, but we feel very bullish around the opportunity. We'll look no further to the market share of our peers in Canada and the U.S. or their cable peers and telecom peers. We are underinvested in this area, and it is job one for our enterprise team to go after this opportunity.

So more come on that front. It's still upside for us.
On Wireless ARPU, it's a great question. There's no question that there's a huge appetite for data amongst our customer base. And there will be promotions that come and go through every period.

It's just the normal course of our business because of the strong appetite that customers do have for bigger data buckets. The key for us is to make sure that we can deliver better unit costs and monetize that data growth in a better way. So that means we're looking across our business, both OpEx and CapEx, to make sure that the margin on a gig reflects the appetite of the base to want bigger data buckets. In terms of the ARPU impact of that, we continue to kind of focus on driving a strategy where we increase ARPU across different sections of the base based on my -- go back to my comments earlier on base management. I think there's an opportunity to both increase data consumption, monetize it better and then have a segment value-based approach to making sure that we manage the best of our abilities to grow ARPU in the process.

So this is something that's been going on for a long time. This is not something that's new. And what you're seeing is just the fact that there's promotional intensity in Wireless from time to time with bigger data buckets.

Operator: We'll now take our next question from Richard Choe from JPMorgan.

Richard Choe: Great.

Just wanted to follow-up. Given the nice margin improvement and the guidance raise, how should we think about the dividend potential increase and maybe CapEx going forward? What should we be considering in terms of the margin increase versus the dividend?

Joseph Natale: Sure. In terms of the dividend, kind of reaffirm what we said in the past. We're playing the long game. And Tony referred to it.

We're playing the long game. This is all about sustainable, long-term dividend growth, and there's nothing new to report on that front overall. Tony, you want to talk about CapEx?

Anthony Staffieri: Sure. On capital intensity, Richard, or CapEx overall, again, don't want to overreach into long-term guidance. But I think in terms of some of the pieces of it, we've been fairly consistent on Wireless capital intensity.

Sort of see the range we're at now, somewhere in the 12% to 14% range, as kind of the ongoing capital intensity for Wireless which we think makes sense. And then on the Cable side, we intend, and you will see in the fullness of time capital intensity come down over the long term to peer levels. And so there's nothing new to report there either.

Operator: We'll now take our next question from Sanford Lee from Macquarie.

Sanford Lee: First off, guys, congratulations on the solid quarter and guidance raise.

My question relates to the telco fixed wireless Internet solutions that are up in rural. Now we're seeing the technology has opened up another 800,000 of new, entirely broadband homes. So do you see this as a kind of a fit today? Or is it -- it's something that's still maybe a couple of years away as far as having a material impact on Rogers Cable?

Joseph Natale: Well, we're seeing the comments as you are, Sanford, coming from both Verizon and AT&T around their trialing and experimentation with fixed wireless. I'd tell you we firmly believe that a hybrid fibre and coax network has a lot of longevity and has really strong compelling economics. What I'd say to you is that if the economic case on fixed wireless and the technological reliability is proven on a global basis or on a very specific scale basis, then we will still look at it and find opportunities to integrate it into our network.

We really look at it as our mandate is to deliver strong, reliable bandwidth and capability to our customers. And we are in a business where in some cases that's fiber, in some cases that's fiber and coax. In some cases, that might be fixed wireless for the last mile. It's still right now a very expensive solution, and it's also something that it will take time to really improve on the reliability. I don't believe that the technology is really ready right now to challenge coax and fiber.

And therefore, we're going to maintain our current versus the -- yes.

Sanford Lee: If I can ask one quick one on the Wireless ARPU where, obviously, your growth hasn't -- you haven't seen really the slowdown in growth as your peers. And part of it, I think, is attributable to the positive impact by removing this year some of those contracts from the base. However, like you said, there's never been a point there with all this free data. Taking away the offers, do you think that's going to impact you going forward? Or are you still offsetting -- able to offset it with the higher-tiered plans?

Anthony Staffieri: Sanford, on the ARPU, yes, I had said in my opening comments I think for the full year, based on an IFRS 15 adjusted basis, we saw a full year ARPU growth of 2% to 4%, and that captures the impact of the government of Canada contract, which we said would be one point that declines over time as those customers move off of our network.

And so we don't see anything that is materially going to change the trajectory of ARPU. As Joe talked about, the fundamentals in the industry continue to be there. And our execution in capturing that growth continues to perform well. So nothing that we see would suggest those coming off the trajectory.

Operator: We'll now take our next question from Dave McFadgen from Cormark.

David McFadgen: Just a question on the Wireless EBITDA growth. Joe, you talked about reducing call volumes in the Wireless business. I was just wondering where you stand with respect to that because I know you have a target there and you'd like to bring that down. I'm just wondering if that is having much of an impact on reducing the costs in the business? Or is there still a lot of room there to take up costs on the call center?

Joseph Natale: I still believe there's good opportunity on that front, Dave. As I mentioned in my opening comments, digital adoption continues to grow.

We saw that double from this time a year ago, and we still have a lot of opportunity on that front. A combination of increasing digital business penetration and adoption and then also working hard to take complexity out of our call center. In Q3 alone, we remediated some 100 different customer service processes and took complexity out of what our frontline teams have to deal with. And what that will do is continue to drive call volumes down. We think there's opportunity to chip away at that for the next number of years, frankly.

At the same time, what it does do is it leaves our agents to really spend the time they need to spend with our customers on the most important conversations, not dealing with a particular error or lack of clarity, et cetera. Our goal, as you've heard me say before, is to be clear, simple and fair with our customers. And that is showing up in everything that we're doing. It's showing up in how we're improving processes, how we're driving digital adoption. And we continue to make investments in the smartphone apps that allow our customers across all brands to interact with us, and that'll continue to have opportunity for us in the very long term.

David McFadgen: If I can just follow up or maybe push it a little bit more. I think you're targeting maybe a $50 million reduction in expense in the call center. I was just wondering where you stood with that and exactly what percentage call volumes are down.

Joseph Natale: We continue to drive improvement in call volume. I'm not going to get into the specifics of the numbers or the dollars for a whole bunch of reasons, Dave, but suffice it to say that the improvements continue year-over-year, and you see it reflected in our margin expansion, as being a key driver of margin expansion.

Operator: Ladies and gentlemen, we have additional time for one more question. And our last question will come from Drew McReynolds from RBC.

Drew McReynolds: Joe, just back to, yes, kind of 5G-related IoT. Two questions on this. You put out an announcement about your LTE-M network in Ontario that you're building out now.

Does that mean at some point presumably you shut down your 2G network, which is my understanding that's kind of in a lot of your M2M business? And does that kind of add an extra layer of cost savings in the equation at some point? And then secondly, I know you don't want to quantify your M2M revenue contribution, but just can you directionally comment on how it's been building over the last two or three years? Is this something that you wait for 5G and then this thing takes off? Is it a little bit more exciting right now? Then kind of just characterize it.

Joseph Natale: Great, Drew. Let me start from the end and work my way back. We are the market leader as it relates to machine-to-machine in terms of having the best share of the overall opportunities in the market. It goes back to the fact that originally, we were a sole GSM provider in the early days of modems for machine-to-machine, and we've maintained that lead through the move to LTE, et cetera.

We continue to see steady growth in that business as a whole. Bear in mind it is still a very small percentage of the total Wireless revenue. We believe it'll accelerate as we grow capabilities. You heard me say earlier that we believe that 5G will bring 500x the number of devices. I think that's reflective of the fact that machine-to-machine will take on even greater proportion of the business opportunity for us as a whole.

Yes, whenever you have multiple technology layers and multiple networks, there's always cost reduction as you decommission a network and repurpose the spectrum, et cetera. In the scheme of things, given the bandwidth consumption of machine-to-machine on 3G, it will produce some benefits and savings for us, but it's not of a material nature in size in terms of the overall cost reduction opportunities. It'll be helpful to us, but it's not like we're turning down a big, broad network. It is a layer on the 3G network.

Operator: Ladies and gentlemen, this concludes the Q&A session for today's conference.

I would now like to turn the conference back to our hosts for any additional or closing remarks.

Glenn Brandt: Thank you, Simon. I think with that, we'll close the call. Thank you, everyone, for joining us this morning and for your interest in Rogers. Thank you.

Operator: This concludes today's call. Thank you for your participation. You may now disconnect.