Bruce M. Mann - Vice President of Investor Relations Nadir H. Mohamed - Chief Executive Officer, President and Director Anthony Staffieri - Chief Financial Officer and Executive Vice President Robert W. Bruce - President of Communications Division Kenneth G. Engelhart - Former Vice President of Regulatory

Jeffrey Fan - Scotiabank Global Banking and Markets, Research Division Glen Campbell - BofA Merrill Lynch, Research Division Vince Valentini - TD Securities Equity Research Simon Flannery - Morgan Stanley, Research Division Drew McReynolds - RBC Capital Markets, LLC, Research Division Gregory W. MacDonald - Macquarie Research Tim Casey - BMO Capital Markets Canada Adam Shine - National Bank Financial, Inc., Research Division Dvaipayan Ghose - Canaccord Genuity, Research Division Robert Goff - Byron Capital Markets Ltd., Research Division Maher Yaghi - Desjardins Securities Inc., Research Division Matthew Niknam - Goldman Sachs Group Inc., Research Division David McFadgen - Cormark Securities Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Rogers Communications First Quarter 2013 Results Analyst Conference Call. [Operator Instructions] I would like to remind everyone that this conference is being recorded today, April 22, 2013. And I would now like to turn the conference over to Bruce Mann with the Rogers Communications management team. Please go ahead.

Well, good afternoon, everybody. Thanks for joining us for Rogers' first quarter 2013 investment community teleconference. It's Bruce Mann here. Joining me on the line in Toronto are Rogers President and CEO, Nadir Mohamed; our Chief Financial Officer, Tony Staffieri; Rob Bruce, who's the President of our Communications Division; and Keith Pelley, who is President of our Media division. Also joining us today, Bob Berner, our Chief Technology Officer; and then Ken Engelhart, who runs our regulatory team, is joining us on the line as well. We released our first quarter results right at the market close this afternoon. The purpose of the call is to crisply provide you with a bit of additional background right up front, and then we're going to answer as many of the questions as time permits. As today's remarks and then the discussion which ensues will undoubtedly touch on estimates and other forward-looking information from which our results could be different, you should review the cautionary language in the release and in our 2012 Annual Report, including the various factors and assumptions and risks that could cause things to differ, because all of those apply equally to the dialogue on the call. If you don't have copies of today's release and/or our annual report, they're both available on the Investor Relations section of rogers.com or on the EDGAR or SEDAR securities website. So with that, what I'll do is I'll turn it over to our CEO, Nadir Mohamed, and then Tony Staffieri, our CFO, for some brief introductory remarks. And then the management team will dive into taking your questions. So over to you, Nadir.

Thanks, Bruce, and welcome, everyone, and thank you for joining us. As you can see from today's earnings release, we delivered another balanced set of financial and subscriber results. We had a strong start to 2013 in terms of both revenue and adjusted operating profit. And importantly, a number of the positive operating trends in ARPU, churn and margin profiles, which we achieved during 2012, are clearly carrying into 2013. The balanced growth in Q1 across subscribers, revenue, margin and earnings clearly reflects our innovative product offering and the strength of our asset mix, which positions us uniquely as Canada's largest wireless provider, complemented by healthy broad band, video and media businesses. In particular, our top line growth for both Wireless network and Cable revenues further accelerated for the straight -- fourth straight quarter. At the same time, consolidated margin, adjusted operating profit, earnings per share and free cash flow are all up versus Q1 of last year. On the subscriber front, our focus continues to be on driving data, smartphone activations for Wireless and Internet growth for Cable, and we've been successful executing this strategy in Q1. Now it's important to note that in terms of the quality of the net subscribers we added this quarter, they were almost exclusively on higher value voice-plus-data smartphone plans, whereas in Q1 of last year, there were large number of data-only postpaid adds on data sticks and tablets, which, as you know, have a lower ARPU profile than the average smartphone subscriber. Having said that, whereas our churn rate for postpaid subscribers improved year-over-year again this quarter, we're highly focused on reducing this further. I see this as frankly our best opportunity to drive a more balanced share of net additions. Importantly, we delivered postpaid ARPU growth for the second quarter in…

Thank you, Nadir, and good afternoon, everyone. I'll provide a little bit of additional context around the financial results and metrics for the quarter, and then we can get into the specific questions you may have. On the top line, our consolidated revenue was up 2.9% for the quarter driven by revenue growth of 4.4% at both Wireless network and Cable. Media's revenue on a reported basis was down 3.7%, but adjusting for residual impacts related to the NHL lockout and a onetime pickup in the prior year, Media's revenue would have been generally flat with Q1 of 2012, to Nadir's point earlier. Rogers Business Solutions also grew revenue this quarter by 6.9% with IP next generation and on-net revenue now representing 56% of the total base. In this quarter, we also continued to improve the trajectory of consolidated adjusted operating profit, which grew at 7.8% compared to 6.8% in Q4 and negative 5.9% in Q1 of last year. And we expanded consolidated margins for the quarter by 170 basis points from 37.2% last year to 38.9% this quarter. So good continued progress in the trajectory of growth on both the top line and adjusted operating profit lines. In our Wireless business, postpaid revenue growth of 5% and postpaid ARPU growth of 2% was driven largely by continued growth in wireless data, which now accounts for 45% of our network revenues. Data revenue growth was up 22%, representing the third straight quarter of accelerated growth, with smartphone activations up 5% year-on-year as well. During the first quarter, about 70% of our Wireless gross adds came in on smartphones. And as a result, 71% of our postpaid customer base is now on one. So we're continuing to have success concentrated in the higher end of the market. Notably, retention spending was…

Thanks, Tony. So with that, operator, if you could explain how you'd like people to organize the Q&A polling process, so we would be ready to answer questions.

[Operator Instructions] Your first question today will come from the line of Jeff Fan of Scotia bank.

My question is on your churn and retention costs. I'm trying to understand how you balance the 2. You show very good churn improvement year-over-year on the postpaid side, but your retention cost seems to be a lot higher than at least what we were looking for. So it seems like, on the one hand, yes, churn did come down, but it did cost you quite a bit to bring that churn number down. Just can you help us understand a bit of how you manage this and what we should expect going forward?

Yes, Jeff, it's Rob. I think the thing that will be helpful is that when we look at retention costs, I mean, retention costs really represent retention costs as well as handset upgrades. In a quarter like Q1, where we had intensely low prices on smartphones, it drives a lot more handset upgrade activity. So if we sort of disaggregated the retention costs for the quarter, which were about $250 million, about $210 million of that was a combination of hardware and commission on hardware upgrades. So that was the vast majority, and that is why the numbers look so high. The remainder of the activity that was really focused on retention would be at normal levels.

So maybe just a quick follow-up. You alluded to the intensely low prices on smartphones. Was there something in the quarter? And how would you characterize the quarter on what drove those low prices in the industry?

Yes, listen, it was a fairly active quarter across-the-board. I think I would characterize it as being almost a continuation of a very intensely competitive Q4, aggressive device promotions, $0 iPhone 4, $99 iPhone 5, $0 Samsung Galaxy III, very much like what we saw in Q4. We also saw some pressure on some premium brand pricing, premium brand pricing on non-premium smartphones the TELUS $43, 400-megabit plans, and plans in that midrange that were highly aggressive. And we also saw some intense activity with iPhone 5 on $45 MSF plan. So again, very aggressive and very attractive handset prices. So the second we put those out there as an industry at retail and to acquire new customers, of course we're obligated to match those kind of prices for our existing customers, which drives a fair number of customers to the stores to actually upgrade sooner than they would normally do, Jeff.

Your next question will come from the line of Glen Campbell of Bank of America.

Just to follow up on Jeff's line of questioning there, should we regard this new pricing or the low Q1 pricing as sort of the new normal on the high-end smartphones? And maybe just stepping back a little bit, is there anything that you can see that would suggest that smartphone customers, when they upgrade, are taking anything less than the heaviest subsidy available or waiting any longer than absolutely necessary to upgrade? I'm just trying to get a sense of what we should look for, for the rest of the year.

Yes, Glen, just to follow on, I think to call it a new normal would be a stretch. Q4 for sure was abnormally competitive, and it seemed to sort of trickle back into Q1. But at this point, it's really a 2-quarter phenomena. I think these devices are valuable. We're very committed to try to make sure that the customers are aware of the value that are in those devices. However, at the same time, I mean, we're not seeing any movement in trends in terms of the patience of the customers to wait even longer to upgrade, nor are we seeing any rapid decline in the subsidies that are required by the manufacturers to actually bring these products to market at reasonable prices. So those are the 2 things that I think I would factor into your thinking as you model those out going forward.

And Q2 so far is similar to Q1?

I beg your pardon?

Q2 so far fairly similar to Q1?

It's early days, but I think the nature of the quarter is a little bit different from the outset without saying much more than that.

Your next question will come from the line of Vince Valentini of TD Securities.

I'm going to stick with Wireless. The prepaid sub losses, I guess, this has been going on most quarters in a row now for a couple of years. Can you give us any sense where all these prepaid customers are going? I would get the sense that the new entrants are all desperately out there looking for money these days and probably not that aggressive in the market. Is it still prepaid subsidy is going to new guys? Or would it be going to Bell and TELUS? Or is the market just disappearing?

Yes, yes. Really, Vince, it's really a very fundamental shift to postpaid going on in the market. So the quick answer and a good answer is prepaid customers are becoming postpaid customers, and we're finding our prepaid customers are migrating to become postpaid customers of ours. And this is not something that's really unique to Rogers or to Bell or TELUS. Even Verizon has dropped dramatically. They were in the range of 250-plus thousand nets a year ago, and they're dropped down into the, if I remember, somewhere between 25,000 and 40,000 net positive this quarter. So a dramatic drop. New entrants continue to chase these loads, both with their very, very low-end postpaid offering and with prepaid offerings. As you know, Vince, our focus is we don't chase the lowest value loads. We're still fully supporting this business but not at any cost. And as we've learned, most of the customers, they will eventually become postpaid customers. So it's a business we want to continue to plan but, again, not at any cost.

Your next question will come from the line of Simon Flannery of Morgan Stanley.

I was wondering if you could just talk about the BLACKIRON acquisition. Just talk a little bit that you can about sort of describing the company and what it was that appealed to you about it and any other financial metrics you can share. Is this the start of a broader push into hosting cloud-type services? Or is this going to give you what you need in that space?

Yes, Simon, it's Nadir. I will put it squarely as kind as of the strategy that we've had for RBS, which is really providing business connectivity and increasingly manage solutions to our customers. So what we're looking to do is complement the network side with data centers and some skills in cloud computing and managed solutions. So we wanted something that, frankly, was Canadian because that's where we play. And with where the data centers are located, and particularly the new data center, it's squarely in our footprint. So it's very much a complementary acquisition. And scale-wise, it kind of fits our RBS business, which remains to provide solutions to on-net, IP-based and increasingly up the value chain. So in that sense, it's a continuation of that strategy.

Your next question will come from the line of Drew McReynolds of RBC Capital Markets.

Just 2 questions for me. Just for you, Rob. If you look at for the rest of 2013 and you just look at your aspirations for postpaid ARPU growth, we're clearly, I think, awaiting new roaming plans to come into effect. And then, obviously, you've mentioned that you lapped up for year-over-year comps. Can you just comment on what your aspirational kind of growth target would be largely on postpaid ARPU? And then another question, just on the Cable side, the Internet revenue growth of 15%, obviously some kind of higher tier sub-growth pricing in there. I'm just wondering if you can kind of break down that growth a little bit. What percentage is pricing? What percentage is some of the upgrades to higher tiers?

Okay. Firstly, of course, the -- our predictions about where we're going from a revenue perspective is really trapped in our guidance, and I would always fall back on the things that we've told you from a guidance perspective, Drew, and use that to kind of populate the balance of the year. So I missed the -- a little bit of your second question. Was it about Internet revenue?

Yes, just on the Internet revenue growth. Obviously pretty strong in the quarter, and there's obviously moving parts in there, pricing, the higher tiers, I think, business contributed. Just wondering if you can kind of break down that growth a little bit by what contributed to it.

Yes. I mean, first and foremost, let me start it off by saying that we've seen growth of about 15%. It's well split between getting new subscribers, and our subscriber growth, as you can see, continues to be strong. We have some significant migrations of customers up to higher tiers. And as well, we had some overage as people continued to grow and expand and see incredible facility for Internet. And as I've said on past calls, Internet has been really one of the hallmarks, one of our incredible strengths. And we think that's because of our superior product with much better speed, the aggressive marketing that we do to our competitors' DSL base. We continue to see growth rates on small and medium business that are driving revenue increases in the 20%, 25% range. And we've continued to augment that Internet service with the launch of premium technical support we call TechXpert. We removed all our traffic management processes, and we've continued to re-speed a lot of our tiers to make our services even more attractive. So I think those things in combination have really been the backbone of our success on the Internet.

Your next question will come from the line of Greg MacDonald of Macquarie.

Questions on gross adds. I saw that they're down about 4.5% this quarter. I know that there was a first quarter '12 perhaps outsized iPhone issue. Can you talk about what the normalized postpaid gross add trends are right now? I'm wondering, on the maturity side of the business, whether we peaked or not. And then as a related question about -- on sub mix, a lot of promotions this past quarter on the flanker brands, and I'm wondering, are -- we seem -- it seems to be that that's where a lot of gross adds are shifting to as we go forward. Is there any usage pattern difference that we should be focused on? I'm wondering whether data roaming is a lot lower for these types of customers. I will say data ARPU was very strong this quarter. Voice was weak. So trying to put the trends together.

Okay, that's a awful lot packed into 1 question, Greg, but I'll do my best. Listen, standing back, first and foremost, and I think most people on the call know, it's difficult to understand size versus share at where we are in the market. Of course, we're the first to release, Greg. And as you pointed out so rightly, last year -- it's hard to read this year against last year. We had a very significant iPhone residual sort of flow-through, and we also had an iPad launch in March, which absolutely contributed to the very solid load profile that we saw last year. And those events went relatively unduplicated this year. As Nadir said, we're very happy with the profile of the loads. If we compare them to a year ago, they're spectacular, almost double the number of smartphone loads. Again, very high ARPU loads. We did about 18,000 a year ago, and we did 35,000 this year. Last year, the remainder of our mix was made up of tablets and sticks, which again have a much lower ARPU. And they dropped off significantly this year. Our view is this at least reflects partially a reality of MiFi and tethering beginning to be available on almost all smartphone devices. So what we once counted as a subscriber now appears really as incremental data revenue. And we saw some really good numbers there. We saw we were up plus 22%, smartphone subs now reaching North American highs, as Nadir highlighted, and data revenue making up 45% of our total revenue. So again, happy with the numbers, happy particularly with the ARPU profile of the numbers. Again, difficult at this point to say how the numbers shake out from a share perspective, but those would be my thoughts. Coming back to your question on sub mix, to the flankers, it would seem, just from our observations, that for sure some of that is true, that probably there's a better balance than there was 4 or 5 years ago between the flanker brands. And I don't like to think about it because Fido for us is very much a very core brand. And the usage profile at this point, no big trends that we can point out on the differences in usage profile, but we'll be looking at those in more detail over time. Thanks for the question.

And just for clarity, Rob, the -- it's -- the lower voice ARPU is a function of that flanker mix, right? I mean, can't argue with the data, but the voice is still lower.

The voice ARPU, the voice ARPU is going down as a function of a decline in MSF, LD over time drifting down, essential services effectively being rolled into the base of the plans. So I wouldn't point necessarily to what you'd call flanker brands for that, but I would point more to some of the line items that we normally talk about when we're talking about the revenue lines from a voice perspective.

Your next question will come from the line of Tim Casey of BMO Capital Markets.

Just switching over to the regulatory side, can you refresh our memory on when you expect to hear on your proposed acquisition of the Shaw spectrum? And if the proposal is denied, what repercussions do you have with regard to that spectrum?

Ken, do you want to take that one?

Sure. The 5-year limitation period for Shaw to sell the spectrum to an incumbent does not come up until September of 2014. So I don't expect a decision from Industry Canada until September of 2014 or thereabouts. Obviously, it's very useful spectrum for us to provide LTE services, so if we're not allowed to buy it, we'll need to figure something else there.

But presumably, wouldn't there be some clarification of that going into the auctions?

I don't expect it, no.

And -- but do you not have the ability to influence what Shaw does with the spectrum if it -- between now and then?

Tim, a couple of things. One is I think we want to avoid speculation. But you should know that in our agreement with Shaw, we've got various alternatives that we'll explore under those conditions. But I think it's premature to speculate. Our view is very straightforward that this is a spectrum that's not used currently. If you look what's happened with wireless data and consumption, it's going up by leaps and bounds, 100% -- hundreds of percentage points. That's every year. So it's responding to demand from consumers, and we think the best thing to do is actually make that available in terms of networks to consumers. But we'll play it out, and we won't speculate, I don't think, in terms of process that government might undertake.

Your next question today will come from the line of Adam Shine of National Bank Financial.

Rob, maybe just in the context of the evolving nature of competition perhaps by geography, I don't want to press you across the country, but there's at least one incumbent that obviously is being pretty vocal about its efforts to push deeper into the West where, obviously, you have a pretty strong presence in B.C., Alberta. Can you speak to how that dynamic is evolving and whether or not you're feeling any added pressure from that context?

Yes, we continue to have very strong share in B.C. and continue to work on building that share. Lots and lots of focus still, and lots of extra investment from our perspective in Alberta, both in terms of stores, in terms of network investment and in terms of partnership with large clients in that market. So -- and further to that, we continue to work hard in the province of Saskatchewan to serve the oil and the other industries in Saskatchewan. So lots and lots of activity, lots of focus for us and some great ARPU and lots of money in those provinces that is being spent on Wireless, and we're there in a big way.

So just -- and just from a modeling perspective on a side note, just for Tony, just as it relates to that $8 million license fee payment for the CRTC matching, is there any color that you can give us for coming quarters or nothing at this time?

Yes, Adam, I would say on that it was a onetime adjustment to our balance sheet payable as we reconcile their accounts with the government on that. They clarified in the way they want the timing of the payments. And so, based on that, there was a onetime overaccrual that we reversed into income. And so we're just being transparent with that onetime item in the quarter. So it doesn't impact anything going forward.

Your next question will come from the line of Dvai Ghose of Canaccord Genuity.

Your incumbent competitors on the Wireless side suggest that the new entrants are no longer the main drivers of pricing and stability in the sector, but the Fido brand. They point to your double your minutes, double your bits offers as well as your half price for 3 to 6 months, et cetera. They're going to want to argue they can understand why given your weak share of postpaid additions. We'll see what the other 2 report for this quarter, but argue that's a bit of a fruitless task because, as you yourselves acknowledge, it's churn, which is the issue, not growth. How do you respond to such allegations? And just a very quick related point, I was a little surprised by the increase in device subsidies because of the iconic nature of the iPhone 4S from the year ago period. With the exception of BlackBerry 10, as you yourselves pointed out, there was nothing particularly special in this quarter. So what drove up those subsidies?

Yes, why don't I deal with Fido first? Fido continues to be a really strong brand and is a brand that we're active with in the marketplace, just as we are with Rogers brand. I think that when we stand back and look clearly at all the things that are going on, it's an active participant in that mid-market but not leading prices down, but rather a participant in that market for that target group that it appeals to. The second one, Dvai, from a device subsidy perspective, again, the competitive intensity is there in the market. Frankly, I think others are having difficulty getting loads. And when that happens, we see the trigger price being pulled continuously. And that trigger is pulled way more on devices these days for one reason or another by our competitors, and we continue to be active in ensuring that we've got full competitive pricing on handsets and devices. That's a critical decision criteria for our competitors, and we're committed to doing that in the long term.

Your next question will come from the line of Rob Goff of Byron Capital Markets.

Nadir, you had commented on the impact of competition on subscribers and promotions. Could you go further in terms of talking about the impact on your pricing leverage across your Cable services?

And Rob, I just want to make sure. You're talking about on the Cable TV side, I assume?

Yes, on the Cable.

Yes. Now what we're seeing in the market is a twofold, I'll call it, promotional activity. On the one hand, what you have is our primary competitor deep discounting on the IPTV side as they rolled that out through our footprint. And obviously, what we're trying to do is to make sure that we stay focused on the one that we're promoting, which is Internet, but, at the same time, protect our share in the Cable TV side. That's a balance between matching some of the discounts and what we do in terms of margin. But frankly, Rob, our focus is what we believe the future is and where we see growth, which is Internet. And so we're squarely on the path of leveraging our superior Internet service. Rob just went through some of the characteristics. And we're seeing great success. You can see that in the loads, whereas we had the impact of the deep discounting on TV show through Internet. What you see is strong growth on the Internet side and telephony. So we're seeing those 2 things are being played out in the market, and I would look at the quarter and look at the subscriber balance between Internet, Cable and phone and square it with the margin that were produced and the EBITDA growth and look at it as a pretty good balancing act starting in Q1.

Your next question will come from the line of Maher Yaghi of Desjardins Capital Markets.

I just wanted to talk a little bit about Cable again. I mean, when you talk -- when you're starting the year at the growth of 13%, and yet your core Cable guidance for the year is 1% to 4%. I agree I mean, you mentioned you're going to face some stronger year-on-year comp in the second half, but that suggests a very heavy decline in the second half, which I suspect is not going to happen, looking at the trends we're seeing right now. So is it fair to say that Cable is meeting your expectation so far this year and cost cutting is ahead of plan? And can you talk a little bit about what can we expect more in terms of cost cutting going into the second half?

Yes, Maher, it's Rob Bruce. Again, I think I said it a little earlier on the call with respect to Wireless, our guidance is actually the best clue to what we can expect going forward. Obviously, very committed to ensuring that our cost base is competitive as can possibly be, so we'll continue to be active on that front. And we are in a good position, as I highlighted, on having a very superior Internet product, which is putting us in a tremendously good place and lots of success in terms of growing our telephone products. So the combination of the 2, I think, are real positives right now, and the balance of the year should fall in line at minimum with the guidance.

And Maher, this is Nadir. I just wanted to say what you'd expect me to say, us having spent time together for many, many years. One is, it is only 1 quarter and our guidance is for the full year. So generally, we don't approach these things on the basis of a single quarter's performance. And the second thing, just to remind everybody that whereas we give guidance at the consolidated level, we do give additional information that's supplementary. That supplementary information, we don't actually update as we go forward. It's there just for information to give context for the guidance that we do update when required.

Okay, great. Can you just maybe split the improvement in the margin on the Cable side from product mix and actual operating costs being driven down by improvement and efficiencies?

I think, Maher, it's actually both. If you look at our Cable revenues, they went up 4% driven, obviously -- or the core part of that is the Internet revenue going up. But 4%, if you go back the last few quarters, is certainly much stronger than what we've had, and it reflects what we've been doing over the last couple of years in terms of building out the Internet platform. So you can see that coming through. On the operating expense side, continued efficiencies. We went through a program of really driving our costs. We continue to focus on that. You look at OpEx and -- on the Cable segment, it's actually down on a year-over-year basis, let's say, around 3%. And we do have that onetime benefit that we referred to, but even if you take that into consideration, it shows a very good performance on the cost side. So I think margin, frankly, has been benefiting from both, and that, for me, is the reason that when we look at the quarter, we're encouraged by the fact that we're seeing significant now top line growth across our business.

And your next question today will come from the line of Matthew Niknam of Goldman Sachs.

Questions on use of cash. I'm wondering if you can help us think through how you prioritize use of cash post the dividend. And more specifically around potential M&A, is there a greater criteria of focus on improving the top line growth profile of the company, or is it more weighted towards gaining greater scale and improving profitability?

Yes, Matthew, it's Nadir. I think when we're talking about capital, I always say that the first thing that we look at and will never compromise is having the best networks and best platforms. So whether that's wired or wireless, we always start with what we need to do in terms of quality, speed and just having the ability to say we're the fastest, most reliable and, frankly, the superior network provider in the country. So that's -- I take that as something that we'll never move away from. Having said that, when you look at in terms of returns to capital and M&A, we'll always do what we think is right from an M&A perspective. We have a strategic game plan that we're focused on executing, and you've seen that in play over the last couple of years. We're very focused on network plays like Atria or Blink, at the same time looking at content on the sports side with theScore acquisition that's nearing completion, the interest in MLSE and, beyond that, the acquisition of sports property or content property. So those will give you a flavor for what we're looking at in terms of M&A, and we'll frankly continue to execute on our game plan as required. And we don't look at dividend and buyback policies as getting in the way but rather complementing our approach to what we do with our cash and our capital. Having said that, when we look at returning monies to shareholders, I think you've seen a consistent pattern. I've always said that we want to be seen as somebody that's conservative in terms of dividend policy but established a track record for dividend growth. Over the last 4 years, I think, if you go back, I mean, we started every year, we've increased dividend by about 10%, couple of cases where it sits slightly higher at 11%. Obviously, can't comment on what that looks like going forward, but we would frankly like to continue to be able to grow dividends. We're always sensitive to keeping that in sync with operating cash flow growth and our leverage target that we set out earlier, 2x to 2.5x. When you take all of that, I think fair to say share buybacks become more something we'll look at on an opportunistic basis. Having said that, over the last few years, we've probably bought back more than 1/4 of our company in terms of shares. So that gives you a sense of a company that's done, I'd say, pretty well in terms of returning monies to shareholders but never at the expense of something that we think is germane to having the best franchise in Canada.

And ladies and gentlemen, we do have time for one final question today. That question will come from the line of David McFadgen of Cormark Securities.

I have a question on your Internet penetration. It's 86% on your basic kilo subscribers. I was just wondering how high that could go. And so I think what would be helpful is if you can tell us how many subscribers you have that are Internet only.

Yes, David, it's Rob. We think that over time, Internet is going to be the anchor product, and it'll be -- it'll eventually go to 100%.

And ladies and gentlemen, this does conclude the question-and-answer session for today. I will turn the call back to Bruce Mann.

Well, thanks very much, operator. And the management team here at Rogers would like to thank everybody on the call for investing your time with us this afternoon during what we know is a busy period. We appreciate your interest and support. If you've got questions that weren't answered on the call, please call myself or my colleague, Dan Coombes, where both of our contact info is on the earnings release. And thank you very much again. This concludes today's call.

And thank you. Ladies and gentlemen, this does conclude the conference call for today. We thank you for your participation, and you may now disconnect your lines.