Rogers Communications (TSX:RCI.B)(NYSE:RCI) is a very well-run Canadian telecommunications company that pays a generous dividend, providing passive income to retirees. However, in fiscal 2020, Rogers saw sharp revenue and adjusted earnings declines associated with COVID-19 of $1.4 billion and $500 million, respectively, with the company’s wireless and sports and media businesses feeling the most impact.
Stable revenue and profitability
It appears that Rogers’s cable business was resilient, with stable revenue and profitability through the period, and expanding margins through the company’s efficiency initiatives. Despite the environment, Rogers grew free cash flow by 4% in 2020 and ended the year with a healthy balance sheet, including $5.7 billion in available liquidity.
Growing fundamental long-term value
Notwithstanding the short-term impacts on Rogers’s businesses, the fundamental long-term value of the company’s wireless, cable, and sports and media assets appears to remain intact. With exceptional assets, a strong balance sheet, and efficient operations across all of Rogers’s businesses, the company is well-positioned as the economy recovers.
An unprecedented spike in demand
Throughout the pandemic, with millions of Canadians relying on Rogers to work, learn, and connect from home, the company’s networks have served as the connective tissue across people’s lives. Despite the unprecedented spike in demand with home internet traffic shooting up more than 50%, the company’s networks appear to have held up incredibly well.
Decades of investment amounting to $60 billion
Being ready for a COVID-19 moment appears to have taken decades of investment, amounting to about $60 billion over the last 35 years in Rogers’s networks. These investments have contributed to Canadians enjoying the fastest mobile download speeds in the world. It was determined to be faster than all other G7 countries, according to OpenSignal, an independent global body that provides analytics and insights on wireless connectivity.
Keeping Canadians entertained through creative and digital programming
In addition, the extraordinary efforts of Rogers’s team enabled network and personal connections with customers. Its sports and media teams appear to have turned basements and backyards into studios to deliver the news to Canadians 24/7. Rogers’s sportsnet team also appears to have kept Canadians entertained through creative, digital programming during a required hiatus from live sports.
Strong culture of innovation
Further, its strong culture of innovation was also evident in the company’s customer service pivots. Rogers’s offerings and delivery transformed in record time. In under five weeks, Rogers moved 90% of the company’s to a work from home model, including 7,000 Canada-based contact centre employees. Rogers Centre also transformed into the largest food pantry from which the company distributed eight million meals for Canadian families as part of the company’s Step Up to the Plate initiative with Jays Care Foundation.
Scholarships and community grants
In addition, Rogers used the company’s media assets to ensure women fleeing domestic violence knew whom to call and provided access to free phones and data plans once those affected had found safety in shelters. Millions of dollars in scholarships and community grants went to help rising talent across the country.
Focused on shareholders
Overall, shareholders are likely to benefit from the investments Rogers has made across the company’s businesses, particularly with the company’s 5G network.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
The Motley Fool recommends ROGERS COMMUNICATIONS INC. CL B NV. Fool contributor Nikhil Kumar has no position in any of the stocks mentioned.