Thank you for standing by. This is the conference operator. Welcome to the Rogers Communications, Inc., Fourth Quarter 2019 Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Paul Carpino, Vice President of Investor Relations with Rogers Communications. Please go ahead, Mr. Carpino.

Thank you, Ariel. Good morning, everyone, and thank you for joining us. Today, I'm here with our President and Chief Executive Officer, Joe Natale; our Chief Financial Officer, Tony Staffieri; and our Chief Technology and Information Officer, Jorge Fernandes. 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 2018 annual report regarding various factors, assumptions and risks that could cause our actual results to differ. With that, let me turn it over to Joe.

Thank you, Paul, and good morning, everyone. This morning, we released our 2019 fourth quarter and full year results along with our 2020 guidance. Let me start with some comments on the overall year followed by the fourth quarter. In 2019, we took significant steps to position Rogers for long-term growth and success. On the strategic front, we led the industry with the launch of unlimited data, we accelerated the rollout of Ignite TV, we laid the critical foundation for 5G, we drove solid growth in our B2B segment, we repositioned media for the future. We also made meaningful progress on the customer experience front. We improved service levels; grew digital adoption; increased the critical customer metric, likelihood to recommend; and reduced our overall cost to serve. From a culture perspective, we hit a record 85% in employee engagement, exceeding global best-in-class by 5 points. Proudly, we were named one of Canada's most admired corporate cultures. Overall, we made substantive progress on our strategic priorities. In terms of financials for the full year, we continued to deliver cash flow and EBITDA growth. If you put aside the impact of our unlimited transition, we continued to grow the key underlying fundamentals of the business. Turning to the fourth quarter. Financials came in as expected, and subscriber metrics were very strong. In Wireless, we delivered stable financials and saw strong underlying growth. We added 131,000 postpaid net subscribers, and grew our Infinite base to 1.4 million. Overall, the rate of Infinite adoption continues to exceed our expectations. It is very clear we have a compelling value proposition that resonates with Canadians. As a reminder, we led the industry with the launch of unlimited data and equipment financing to achieve 3 objectives: One, stimulate data use and get ready for 5G by driving…

Thank you, Joe, and good morning, everyone. Overall, we're pleased with the momentum with which we exited the fourth quarter of 2019, particularly on the subscriber front. We had strong subscriber metrics in both our wireless and cable offering, driven by the continued transition associated with our unlimited data Infinite plans. Customers continue to embrace these plans and the revenue improvement, ARPU lift and efficiency benefits associated with these plans should contribute to healthy financial growth in the second half of 2020. I will provide more color on our guidance for 2020 momentarily, but let me give you a quick recap of the quarter. In Wireless, service revenue decreased 1% year-on-year, driven by a reduction in blended ARPU as a result of reduction in overage fees. Importantly, however, the year-over-year rate of decline in ARPU in the fourth quarter is already starting to improve compared to Q3 as overage declines slowed and more customers came in on Infinite plans. Gross and net postpaid subscriber additions as well as subscriber adoption of our Infinite plans were strong in Q4. Net postpaid loading was up a healthy 17% as we added 131,000 postpaid subscribers. This robust growth was driven by an active market where Rogers clearly benefited from the appeal of our Infinite and Fido plans, our extensive distribution channels and our leading wireless national network. Churn was up 3 basis points from last year and, again, better trending than the 11 basis point increase we saw in Q3 and better than we expected going into the quarter. I do want to draw your attention to an adjustment we made to our postpaid base in the quarter. Effective October 1, we reduced our postpaid subscriber base by 53,000 subs to remove a low ARPU public service customer that is in the process…

[Operator Instructions] Our first question comes from Vince Valentini of TD Securities.

Can I start with wireless ARPU and overage? If my math is correct, you would have been plus 1% instead of minus 1% on ARPU growth without the overage, that points to about $40 million. Tony, correct me if I'm wrong on that. That would be a bit lower than the $50 million you talked about in Q3. So that means -- is that math correct? And does that mean there can be lumpiness and seasonality from quarter-to-quarter because, obviously, you had more customers on unlimited plans in Q4 than you did in Q3, but yet the amount of loss seems to have come down a bit? So if you can clarify that first? And then secondly, with this CapEx guidance, I want to make sure I'm clear. The reduction in Cable you're talking about by the end of 2021, it doesn't look like a lot of that is baked into your guidance range for 2020. Are you expecting most of that decline from, call it, 29% down to 20% to 22% to happen next year and not in 2020? And then last related to that as well, just to clarify how you phrased it, is the $2.9 billion an aspirational high-end CapEx number that only is possible if we have a perfect regulatory world this year in terms of no MVNOs at all, no implementation of those lower PPIA rates? If there's anything negative on the regulatory front, you'd be less than $2.9 billion?

Thanks, Vince. I'll start with the first question, which is related to the overage decline in the fourth quarter. Your math is roughly correct. In the third quarter, we disclosed that we had overage decline of $50 million. In the fourth quarter, we had slightly less than that, a little more than the $40 million that you're quoting. But we saw a slight year-on-year decline, notwithstanding the fact that we had more customers come on to the Infinite plans. Keep in mind that Q3 is a seasonally high quarter with respect to overage revenues, and so what you had in the fourth quarter is the combination of the seasonal decline offset by the increased number of customers on the Infinite plans. With respect to your second question on CapEx, the range we provided of $2.7 billion to $2.9 billion reflects our intent to continue to reduce Cable capital intensity this year. In 2019, you saw us come down to 29% for the full year, and we're pleased with the progress that we made on that. And so you'll continue -- you should continue to expect Cable capital intensity to decline further in 2020. And so it will be good, meaningful progress, and then we expect it to decline again so that our exit rate by end of 2021 is in the 20% to 22% capital intensity range. In terms of regulatory impact, the range we provided of $2.7 billion to $2.9 billion is based on the fundamentals we've always talked about, wireless capital intensity in the 14% range; Cable, talked about coming down; and then a few other items related to corporate initiatives. The range we provided was intended to give us a bit of flexibility for a number of factors including the timing of some of the 5G investments, but also the migration and pace of -- and quantum of migration of customers to Ignite TV, and so we wanted to give ourselves a bit of flexibility for that. The complete range we provided of $2.7 billion to $2.9 billion is based on our current regulatory outlook. And so to the extent that regulatory decisions in the year were adverse or negative to what currently exists, we could very well see an investment range of less than $2.7 billion or the bottom end of our CapEx range.

Our next question comes from Simon Flannery of Morgan Stanley.

This is Landon Park, on for Simon. I was wondering if you could just walk through some of the levers at your disposable given the fact that your revenue guidance has a wider range than your EBITDA guidance and what you might be able to do if revenues do trend to one extreme or the other. And then secondly, I was wondering if you could talk a bit more about the performance uplift we should expect on your low-band 5G versus what we would have seen on a low-band 4G network? And do you have any specific expectations on the timing of DSS in devices and availability of that technology?

Okay. Why don't I take the first one, Landon, and then I'm going to ask Jorge to comment on the low-band 5G performance comparing it to 4G. On the first one, if you look at our guidance, we took it from a perspective of putting forward a conservative set of financial guidance points. We gave ourselves a wide berth on the revenue front, just to make sure that we had the understanding and the opportunity to kind of manage through whatever competitive dynamic might happen in the marketplace as we work through some pretty substantive changes that are happening. The move to unlimited, the move to equipment financing, these will all have a broader impact on the market. Rest assured that we are squarely focused on growing EBITDA and expanding margins in the business. We've had a history of driving good margin expansion. If you recall, between 2017 and 2018, over the 2-year period, we expanded margins by 200 basis points. And we've got a series of opportunities in our cost playbook and cost disciplined ideas that will continue to drive that trajectory and, therefore, provide great support with respect to the EBITDA guidance we put forward and the ability to kind of manage any sort of ups and downs in the marketplace. Also, bear in mind that part of the reason to go to unlimited is to drive the simplicity dividend. And if you look at unlimited, we're already seeing, in the underlying numbers, a strong cost efficiency payback as a whole. I'll give you a few sort of specific thoughts on that. We talked about the underlying ARPU being strong when you adjust for the overage decline. But if you look at likelihood to recommend, it's very strong for our Infinite base and churn is materially lower, so that drives very good lifetime value economics. The propensity to call is far lower as a whole and, therefore, we're seeing less activity in our call centers with our Infinite base, and these will all be things that translate through to better cost efficiency. As we launch equipment financing and make it the primary way of getting a device on the Rogers brand and the Fido brand, it will continue to drive better efficiencies on that front. Our assumption in our guidance is that equipment subsidies will largely be as they were last year. So anything that comes along in terms of improved equipment subsidies is goodness to the overall plan that we have in place for our business. So we see these as big opportunities. And we have our eyes fairly -- squarely focused on driving the cost margin that will, in turn, allow us to create better affordability for our customers so there could be greater adoption and penetration of our services and also to free up cash to invest in the future of this business. And that's the virtuous cycle that we're after. Jorge?

On the performance of the 5G low band, as we've explained before, our spectrum strategy is based on a combination of the low-band spectrum primarily for coverage, the mid bands for coverage and capacity and then, over time, high-band millimeter wave for deployment in areas where we have high density of users. The issue for low-band spectrum is not so much about an immediate greater performance than 4G, it's more about providing an equivalent coverage footprint than 4G at a relatively low cost given that the site footprint is already there. The real benefit over time comes when the 5G stand-alone core becomes available. At that point, we'll be able to combine both the new capabilities of 5G, namely around IoT capacity and low latency, with a very wide available coverage. So that's the key. On the dynamic spectrum sharing, we're currently testing the technology. It will be available later this year. Obviously, that will give us greater flexibility. As, of course, the 5G handset growth happens, we will have the flexibility to manage spectrum across 4G and 5G and use our current and future spectrum assets in a more efficient way.

Do you expect DSS to be in wireless devices this year?

Yes. Yes, we do.

Our next question comes from Tim Casey of BMO.

I'm sorry if you went over this already, Joe, but could you talk a little bit about the uptick in Q4 of subscribers to Infinite? And how you think that will progress through next year? And just a clarification, the sub count adjustment you made, can you flush that out for us, Tony, because I know you had removed some of the federal contract, I believe, it was last year that was going over to your competitor? How should we think about the adjustment this year in respect of the 131,000 postpaid adds you posted?

Tim, we're very pleased with the adoption of Infinite in Q4 and it exceeded our expectations. I think we're thinking maybe closer to 1.3 million and a bit. Coming in at 1.4 million, again was ahead of expectations. And the way to look at it is, we see that continuing to ramp, if you will, through the first half of the year and then get to more of a steady state place in the second half of the year is the way I would kind of look at it as a whole. The mix we're seeing is still in the same range I talked about last time. 60% of people adopting Infinite are upgraders and 40% are downgraders, spending less or rate optimizing, if you will. But the vast majority of the transition to Infinite will be done by July 1, it's our current projection. And after that, it will be kind of steady state, price plan changes, new customers coming along, pre to post migrations, people migrating from Fido to Rogers, all those sorts of things that are kind of a normal course of business. I'll say it again, as I said to Landon just a minute ago, we're really happy with the underlying economics of what we're seeing. It's playing out exactly as we had hoped. The underlying recurring ARPU is strong when you take into account the mix I talked about. The churn benefits are material, and the impact in terms of cost to serve, cost to support is far better, all kind of held up by likelihood to recommend, which at the end of the day, kind of, is a very key metric in terms of customers' desire to stay with us over the long run. So our next big sort of focus is working the…

On the second part of your question, Tim. As I said, we made the adjustment for 53,000 customers. It was a provincial government contract. They were looking for pricing at extremely low ARPUs that economically didn't make sense for us. And so that business is transferring to another service provider. In terms of the transition during the fourth quarter, the number was very small, literally a few thousand. And so it had negligible impact on our net postpaid subscriber reported number as well as on our churn number. And in terms of the impact to the base, as I said, the year-on-year growth rate was impacted by 40 basis points as a result of that adjustment. And so we wanted to follow the same type of approach we did for the government of Canada, as you highlighted, and wanted to avoid the distortion that it would provide in our metrics going forward, particularly given the low ARPU that we were talking about for this. As I said, the economics just didn't work for us. The lifetime value was negative and dilutive to our business, and so we think we made the right decision on that.

Our next question comes from Maher Yaghi of Desjardins.

I'm trying to get my head around the guidance. I'm sorry to get back on that topic again, but when I look at your exiting results for Q4 on EBITDA with plus 1%, you're accounting for EBITDA for 2020 to between 0% and 2%, so middle ground is 1%. Why should we see continued degradation in EBITDA growth in the first half when a lot of the pain -- some pain already has materialized in Q3 and Q4 and affected your EBITDA growth? So I'm trying to just figure out what's the cause of the increased pressure on EBITDA growth in the first half. And I guess, inside that guidance, what's your assumption on subsidies? Are you continuing to assume that subsidy -- the subsidy model will continue in 2020 or some relief is in there to get to your guidance? And I have a follow-up question on wireless, please.

Okay. I'll start with those 2, Maher. In terms of our performance for the fourth quarter, we reported adjusted EBITDA growth of 1%. It's important to keep in mind that, that 1% is inclusive of the IFRS lease accounting impact year-on-year, which we've said is about 3 points of impact year-on-year. So you ought to think about it. As we go into each of the quarters in 2020, the lease accounting impact will be an apples to apples in terms of year-on-year, and you can remove that 3-point adjustment. So in the first quarter -- so in the fourth quarter, that 1% equates to an IFRS adjusted number for a lease of negative 2%. And so that's the important factor to keep in mind for the first half of 2020. In terms of our outlook for subsidy, as Joe mentioned, by the end of this month and into the first week in February, we've announced that we will retire the subsidy plans and move to all installment -- equipment installment plans. We think that's the right approach for the customer. And as part of that, we think we'll continue to see reductions in subsidy costs as the value proposition focuses on the connectivity rates and the plans in unlimited and worry-free overage plans in Fido. In terms of our outlook, in our plan, we haven't necessarily relied on that to happen in order for us to hit our EBITDA guidance. And so we think that's a big opportunity for the industry, and we'll need to see how the competitive dynamics play out. But we're primarily focused on other cost playbook initiatives in order to be within our guidance range on EBITDA.

I'm with you, Tony, on the IFRS 16 impact, but when you look at your 2019 guidance of 3% to 5%, and removing that impact of IFRS 16, you're basically calling for the same kind of EBITDA growth in 2020 versus 2019. So again, I'm going back to trying to figure out, you guys talked about the second half improvement and the gain that you expect to get from the launch of Unlimited and the cost benefit. And so from the guidance that you're giving in 2020, it doesn't seem like we're at the point to begin to benefit from that transition. So when is that benefit going to be fully reflected as we're looking at 2021 now?

Okay. A couple of things, just to level set. For the full year 2019, we had flat revenue and EBITDA growth of 4%. Adjusting for lease, we had EBITDA growth of 1% for the full year. And as we saw it play out, it was really a tale of 2 stories in 2019, first half and second half. And what you saw in the second half was declining top line and declining EBITDA and -- compared to what you saw in the first half of 2019. And so we're reiterating the same type of approach for 2020 in reverse. We'll continue to see a drag on top line as well as EBITDA for the first half of the year and then we expect to see growth in the back half. And we want to be cautious about how we see that growth. It will depend on a number of dynamics and, in particular, competitive dynamics in the marketplace in what is a very busy period. And so we think our guidance appropriately reflects the type of quarterly and first half, back half SKU that we've previously talked about.

Okay. And on -- sorry, on Wireless, you had a nice quarter in terms of loading postpaid customers. I guess there is a -- there was a lot of subsidies, there were a lot of gift cards going around in the fourth quarter. I would have thought your ARPU would have been more effective than what it showed up in the results. Can you talk a little bit about the quality of the customers you're getting? And how that ARPU number came out to where it was, showing some improvement sequentially?

Sure. A couple of things, Maher, to be helpful on that. First, I'll start with the quality of the customers coming in. We're very pleased with the lifetime value as well as the ARPU in. If you were to look at, one of the things I've talked about before is we look at ARPU in, and it's up year-on-year. And when I say ARPU, I mean, IFRS ARPU. Obviously, ARPU is up as we have more device attach rates. But meaningfully, ARPU is up year-on-year and the lifetime value of the customers coming in is up significantly. So we're very pleased with the mix of customers that made up not only the postpaid nets, but also the gross additions that we had in the Wireless business. Q4 was, as always, extremely competitive. But what we did see when you step back and look at all-in promotional -- subsidy and promotional costs for the quarter, they were actually down year-on-year on a cash basis. And so you saw some of that bleed into our fourth quarter. If you were to look at equipment -- net equipment subsidy costs, they were down slightly year-on-year. And as you know, as a result of the amortization over the life of the contract, you'll see more of that bleed in. But if you step back and look at the economic cash basis, it was down year-on-year. Again, less than we would have targeted back in July. But notwithstanding that, still on a positive trajectory as we head into 2020.

Our next question comes from Jeff Fan of Scotiabank.

A couple of clarifications and then maybe a broader question. Clarification regarding the service revenue. This quarter saw a bit of an improvement from last quarter. Last quarter, it was down minus 1.6%. It was down only 1% this quarter. Tony, based on your comment, as we look out to 2020, are we -- are you expecting the first half, given the seasonality of overage and other factors, that it will be worse than the minus 1% and gets worse before it gets better on the inflection? Maybe just help us out in clarifying that. The second clarification is just regarding the subsidies. So you're planning to move subsidies out of your system, but you haven't included in your guidance. So it sounds like you're not assuming that your competitors will just simply follow. So for your contract asset, which, I guess, picks up the subsidies, are you assuming that it's going to be roughly similar to 2019 is what you would likely see in 2020? And then just on the broader question, as you kind of look at the competitive environment, what we've seen in the last quarter, the last 9 months or so and then looking out to 2020, is there any -- are there any plans to maybe consider altering your reporting to blend your post and prepaid subscribers and report phone just to kind of shift the focus away from pure loading and focus more on maybe the financials and service revenue, et cetera? I want to get your thoughts there.

Okay. I'll start with the first one, Jeff. As you've highlighted, we had a bit of an improvement in the trajectory of service revenue, and so we're pleased with that. As we look to the first half of 2020, you should expect about the same as what you saw in the fourth quarter. Q3 was a decline of almost 2% and then improved in the fourth quarter. As we look to the first half, as I said, it will be, we think, about the same as the -- as we saw in Q4. I want to be careful that we don't start to slide into quarterly guidance, but at the same time, we want to be very helpful in terms of first half and second half. And so hopefully, that will help you. In terms of the subsidy, 2 things to highlight. One is moving away from the subsidy model construct to installment plan isn't necessarily by itself about reducing the promotional discount, if you will. It's about making it simpler for the consumer. So we're much more transparent in what the connectivity rate plan is versus what the cost of the handset is. And so simplicity and transparency is really the focus there. At the same time, we have and we'll continue to reduce the amount of promotional discount that's inherent in the device pricing. And so -- and that's true, whether it's on the old subsidy rate plans or whether on installment plans. That is going to be highly market-driven. We'll need to do what we need to do to be competitive in the marketplace. And so we'll see how that plays out. As I said, in the fourth quarter, we saw a bit of a decline year-on-year. And so within our plans for 2020, we've assumed a…

Let me just add one comment, Jeff. I mean if you look at the -- what drives the underlying economics of our business, as Tony said, revenue, EBITDA, cash flow, those core economics and share revenue growth, it's a combination of things. As you know, there are gross additions that come into our business, roughly 1.6 million postpaid gross adds last year. There are deactivations, roughly 1.2 million deactivations. And then as much as 1/3 to 1/2 of our base is going through either a price plan change or retention activity. The quality of each of those transactions is what really drives the fundamentals of our business. The quality of what comes in, what goes out and the interactions throughout the course of the year around, retention and adjustments is really what drives the fundamentals of revenue growth, EBITDA growth and cash flow growth. So we'll continue to kind of point to the quality of those items. Increasingly, pure net adds are only a small part of the story when you look at the broader picture of all the activity that goes on every single day.

Our next question comes from Drew McReynolds of RBC.

Two housekeeping or maybe 3 housekeeping items for me. On Rogers Media, can you just speak to the dynamic of the higher programming cost in the quarter? Is that something that we'll see for 2020? And how should we overall be modeling Rogers Media? Second question on the Cable EBITDA margins, certainly still continue to go in the right direction. Wondering if, Tony, you can just comment on the drivers of that going forward in terms of further margin expansion with respect to either mix or certainly additional cost efficiencies? And then lastly, just on the capital return side of the equation, can you just fine-tune some comments in and around how you see the buyback? And with respect to dividend growth, I don't think anyone was certainly expecting growth -- another increase today, but just what needs to come together to resume some dividend growth in the future?

Yes, Drew, a couple of things. I'll start with the Media portion of it. As you know, it's always a bit lumpy in Media in terms of timing of programming costs vis-à-vis the revenue profile, and so there's never a perfect matching with any month or quarter. So as you look to 2020, you ought to think about Media as good, solid growth. And we've always talked about growth in Media on a more consistent basis in the 2% range, and that continues to be our outlook for Media. And you should expect margins and, therefore, EBITDA growth to be somewhat more consistent, again, with some of the numbers you would have seen throughout 2019 when you exclude the impact of publishing. And so again, top line growth, together with EBITDA growth and some modest margin expansion in Media. On the second piece of it, I'll come back to margin, I just needed some clarification, but on capital return, again, we reiterate that we're committed to cash return model. We think from a balance sheet perspective, we sit at a comfortable place in terms of liquidity. Leverage at 2.9x is a little more elevated, but we comfortably burn that off in the normal course of our operations and growth. And so with that, in 2019, you saw some pretty healthy cash returns of $655 million through share buybacks in addition to the dividends. As we look to 2020, there's 3 factors that are on top of mind for us, as you would expect. And one is the timing and pacing of our cash flow growth. And so you can expect us to toggle it with that. And we've talked about the first half of the year being more muted in terms of growth. The second piece of it relates to the upcoming spectrum auction. And so we'll need to get further clarity on the timing of that and how we think about timing and quantum of share buybacks. And the third is, somewhat related to that is, how we're naturally burning off our debt leverage ratio as well. So those are sort of the 3 factors we think about in that. And then on your second part on margin expansion, I'm not sure I got the question if it related to all businesses or...

Just the Cable one, Tony.

Oh, yes, on the Cable one, 2 things. We expect -- as Joe said, over the last several years, we've seen very good margin expansion on Cable, and it's really been on 2 fronts. One is the indexing of more subscribers and, therefore, revenue to Internet, which is naturally a higher margin business, together with some cost efficiency things that we've continually been able to focus on. And so as we look to 2020, we see continued improvements in EBITDA margins. And certainly, at the cash margin level, I've talked about CapEx intensity continuing to move down for Cable, and that will contribute to, we think, a pretty good cable cash margin expansion in 2020.

Bear in mind, we're going through -- Drew, we're going through another transition in Cable. We're going through the migration to Ignite. We ended the year with 325,000 Ignite customers, and we also decided to stop sell our legacy solution. We also, as I mentioned in my comments upfront, launched self-install. So we're trying to work our way through that transition with a lower CapEx CPE footprint given the inherent efficiencies of the new solution versus our legacy, dramatically different CPE footprint in terms of cost. And we believe there's good opportunity on the self-install front. We know that other peers of ours who've launched similar product are seeing good success on that front, and just getting to that same level is of great inherent benefit to us. So we're kind of working in that calculus at the same time as just driving the overall performance of the business. Once we're in steady state with respect to the Ignite transition, there'll be -- we've worked our way through that, and that's goodness on many fronts.

Our final question comes from Richard Choe of JPMorgan.

Wireless loadings were solid, service revenue kind of came in better and broadband revenue came in better. The only kind of weakness was on the video side, but guidance is for minus 2% to plus 2% for service revenue. That seems pretty wide given the way the trends are pointing to. Is there something we're missing there?

Sure. I -- on the revenue side, we -- a couple of things. As we make the transition -- continue to make the transition to Unlimited, still a number of moving dynamics for us and, frankly, for the industry in terms of what may play out on the competitive front. On the Cable side, we see a good path to continued growth in 2020. But it's really the former that we wanted to leave ourselves room to make sure that we have the flexibility to do what we need to do in the marketplace in the short-term to have the right long-term result. And so notwithstanding the fact that we've provided what you've described as a fairly broad range on service revenue, I think the key point that we're trying to make in guidance is we will land EBITDA within the somewhat narrow range that we provided. And so I think that's really the important point that we'd like you to walk away with.

Great. And one quick follow-up. There's been some, I guess, thoughts of a big upgrade cycle coming. How much leeway have you provided yourself for your EBITDA guidance for the year?

In terms of -- when you talk about the upgrade cycle, I don't know if you're referring to perhaps a 5G migration or -- can you just clarify that, Richard, what you're referring to?

5G iPhone cycle.

Yes, I think -- look, as -- a couple of things on that. It's not unlike what we saw from 3G to 4G in Canada. We sort of think about the migration is happening. In normal course, we might see a bit of heightened activity depending on the utility value for the customers. But that's something will play out. I would say, we factored in some heightened activity, but our expectation is it's not going to be something substantial in terms of when you look at it as a percentage of our total base in 2020.

Bear in mind, Richard, that the iPhone 11 was a very successful device and, therefore, the inherent activity and the subsidies around that high-volume device are a part of the 2019 numbers that we're comparing against. And we'll look carefully at what comes out of the device ecosystem and that will determine, along with 5G capability, the extent of that. But I think we've provided sufficient headroom for ourselves to function well in that particular launch.

Thanks, Richard. And thanks every -- sorry, Ariel. And thanks for joining us on the call today, and please feel free to call IR with any follow-up questions. Thank you.

Thank you.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.