Morningstar DBRS Assigns Provisional Credit Rating of BB With a Stable Trend to Rogers Communications Inc.'s Proposed Subordinated Notes Issuances

DBRS Limited (Morningstar DBRS) assigned a provisional credit rating of (P) BB with a Stable trend to Rogers Communications Inc.'s (Rogers or the Company) proposed fixed-to-fixed rate subordinated notes issuance (the Notes) due April 15, 2055. There is no change to either the Company's Issuer Rating or Senior Unsecured Notes rating, which remain at BBB (low) with Stable trends.

The Notes will be unsecured subordinated obligations of Rogers. The payment of principal; premium, if any; and interest on the Notes will be subordinated in right of payment to the prior payment in full of all senior indebtedness. The Notes will also be structurally subordinated to all debt and other liabilities of, and guarantees by, Rogers' subsidiaries.

Morningstar DBRS expects Rogers will use the net proceeds of the Notes to repay certain of its outstanding indebtedness and/or fund a portion of the purchase price for the Company's pending acquisition of BCE Inc.'s indirect ownership stake in Maple Leaf Sports & Entertainment Inc. Pending any such uses, the Company may invest the net proceeds in bank deposits and money market securities.

The Notes are being offered in Canadian and U.S. dollars in no-call five-year (30NC5) and no-call 10-year (30NC10) tranches. Morningstar DBRS regards the Notes as subordinated hybrid debt, which is rated two notches below the Company's Issuer Rating and Senior Unsecured Notes rating. Morningstar DBRS has assigned a 50% equity weighting to the proposed Notes, reflecting the deep subordination of the Notes to Rogers' senior unsecured debt, an assumed term to maturity of 30 years, the Company's ability to defer interest payments for up to five years (unlimited deferral periods are permitted), and the presence of acceptable replacement language that supports the notion of permanence of subordinated debt in Rogers' long-term capital structure strategy. In year 21 (2046) the equity treatment of the Notes will drop to 25% and in year 26 (2051), the equity treatment of the Notes will drop to 0%.

The credit rating on the Notes is provisional, based on information provided to Morningstar DBRS by the Company and its agents as at the date of this press release. The credit rating can be finalized upon receipt of the final information, data, and governing transaction documents. To the extent that the documents and the information provided to Morningstar DBRS as of this date differ from the final version of the governing transaction documents, Morningstar DBRS may assign a different final credit rating to the Notes.

Rogers' credit ratings reflect the size and diversity of its customer base, the Company's status as national incumbent telecommunications service provider and the performance of its advanced 5G network. The credit ratings also reflect intensifying competition, the expected loss of legacy wireline services revenues, higher near- to medium-term network investment spending, and the risks associated with technological and regulatory change.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024) at https://dbrs.morningstar.com/research/437781.

BUSINESS RISK ASSESSMENT (BRA) AND FINANCIAL RISK ASSESSMENT (FRA)
(A) Weighting of BRA Factors
In the analysis of Rogers Communications Inc., the relative weighting of the BRA factors was approximately equal.

(B) Weighting of FRA Factors
In the analysis of Rogers Communications Inc., the relative weighting of the FRA factors was approximately equal.

(C) Weighting of the BRA and the FRA
In the analysis of Rogers Communications Inc., the BRA carries greater weight than the FRA.

Notes:
All figures are in Canadian dollars unless otherwise noted.

Morningstar DBRS applied the following principal methodology:
-- Global Methodology for Rating Companies in Services Industries (February 3, 2025) https://dbrs.morningstar.com/research/447184

Morningstar DBRS credit ratings may use one or more sections of the Morningstar DBRS Global Corporate Criteria (February 3, 2025 https://dbrs.morningstar.com/research/447186) which covers, for example, topics such as holding companies and parent/subsidiary relationships, guarantees, recovery, and common adjustments to financial ratios.

The following methodologies have also been applied:
-- Morningstar DBRS Criteria: Approach to ESG Factors in Credit Ratings (August 13, 2024)
https://dbrs.morningstar.com/research/437781

-- Morningstar DBRS Global Corporate Criteria (February 3, 2025)
https://dbrs.morningstar.com/research/447186

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

A description of how Morningstar DBRS analyzes corporate finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/431153.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info-DBRS@morningstar.com.

A provisional credit rating is not a final credit rating with respect to the above-mentioned security and may change or be different than the final credit rating assigned or may be discontinued. The assignment of a final credit rating on the above-mentioned security is subject to receipt by Morningstar DBRS of all data and/or information and final documentation that Morningstar DBRS deems necessary to finalize the credit rating.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS trends and credit ratings are under regular surveillance.

Information regarding Morningstar DBRS credit ratings, including definitions, policies, and methodologies, is available on dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.

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