Company has also shifted how it thinks about spending during the Covid-19 crisis
By Greg O’Brien
TORONTO – Count Rogers Communications president and CEO Joe Natale as someone who wants to see the development and deployment of 5G wireless technology get back to full speed once the current Covid-19 crisis abates.
When Natale was asked on Wednesday morning’s conference call with financial analysts discussing the company’s first quarter results about how the company might be able to continue to work on its deployment of the next generation of wireless technology – and if he has heard anything about December’s planned auction of 3500 MHz wireless spectrum – Natale said Rogers has divided up how it currently is approaching all of its capital expenditures across the company, and that his preference is for the auction to go ahead.
“For the last few weeks, we have looked at all of our capital projects and initiatives that we had on the go or were about to start. We categorized them into three buckets,” he said. “One, is capital that is volume-oriented, where volumes right now are changing. For example, we think there will be a bunch of new homes that will be added to our footprint in the very near term and these are subdivisions that were just about to have people move into the homes, but housing starts have fallen off and there will be a diminishment of housing starts as a result and we typically had been adding 60-80,000 homes a year to our footprint, those are volume-oriented things that we are adapting to or shifting.”
“Number two is initiatives where there is or isn’t permission. In other words, if we worked very hard to get a building permit to put up a tower… and we can still do it, we’re doing it. If we still require that permission, given that a lot of building departments are closed, a lot of roadwork is not happening, etc., then of course that capital won’t be spent,” he continued.
“The last thing we want to do is put capital in the ground and have it lay fallow for a long time.” – Joe Natale, Rogers
“The third category, which gets to 5G, is ‘what are the strategic priorities that still make sense to go after that we believe is still possible to get done efficiently, effectively, and that is still reasonably tied to the expectation of revenue or return.’ The last thing we want to do is put capital in the ground and have it lay fallow for a long time.”
Natale noted Rogers has already launched 5G in four cities with partner Ericsson and it hopes to continue but is unsure of the speed at which it can. “In the case of 5G… we have a plan to keep going for the rest of the year but whether we do 20 or 15 or 10 cities, is going to depend on the point around permission and keeping our strong run-rate going with the contractors and their ability to get the work done,” he explained. “But we do think 5G is an important strategic plank for us as an organization… It still has all the benefits we’ve talked about in terms of efficiency in delivering bandwidth and spectrum efficiency in terms of enabling capabilities down the road, therefore we think it will be money well spent.”
“We also do believe there may be a point in time where there are opportunities to do some of these projects on a better unit-cost basis as different suppliers and organizations are looking to shore up the work for their businesses and therefore are willing to make a better deal in deploying their technology or deploying their resources.”
As for getting access to 3500 MHz, “we’ve been waiting a while for this mid-band spectrum. It is important for 5G,” said Natale. Rogers is already well-fixed with lower frequency spectrum, but it needs the higher frequencies (3500 MHz and millimetre wave after that) to really take advantage of the promise of the new wireless standard.
“We think we know exactly what we need and have the headroom to proceed with” the auction, and even when it starts December 15th (“We don’t know if it will be delayed or not,” he added), the structure of the auction is such that it won’t end until January, the company’s next fiscal year, anyway.
“We’d like the auction to proceed,” he added.
Plus, given the economic downturn we’re still just in the beginning of, Natale speculated the federal government may allow the companies which win spectrum to extend their payment terms. “We think there will be some flexibility on some of these fronts in terms of a timing point of view,” he added, to allow the cellcos time to smooth out their finances once we’re clear of the pandemic.
File photo courtesy of Rogers.
