a Communications Services Analyst with the firm. Next up, we have Rogers, represented by CEO Tony Staffieri. Rogers Communications is a diversified communications and media company that owns the largest national wireless service provider in Canada and the largest cable operator in the country. It also has a media business with a focus on sports and regional TV and radio, which includes ownership of Toronto Blue Jays Baseball Club and a sizable stake in Maple Leaf Sports & Entertainment. Rogers has 538 million shares outstanding, including 111 million voting A shares, with A shares trading around CAD 41 and B shares at around CAD 37 for an equity market cap of CAD 20 billion, net debt of CAD 47 billion, other assets of CAD 9 billion, and price value of CAD 58 billion.
We are delighted to have Tony Staffieri, President and CEO of Rogers, joining us virtually. Tony has served as the company's Chief Executive Officer since January 2022, and prior to that, he held the Chief Financial Officer position at Rogers for nine years. Do we have Tony online?
Yep, hopefully you can hear and see me, Sergey. Thanks for having me, and good morning, everyone.
Thank you, Tony. Good to have you. Tony, a lot has changed, both in the U.S. and Canada, since we spoke at our symposium last year. Trade relations between the two countries are being reassessed on both sides of the border. Canada, just like the U.S., recently had important federal elections, and immigration flows into both countries are declining. You are running the largest wireless service provider and the largest cable operator in Canada. Given your scale, you have a unique perspective in the Canadian consumer and the Canadian economy broadly.
Before we get into individual businesses, maybe to set the stage, if you could share your thoughts at a high level on the state of the Canadian economy, Canadian communications market, the position that Rogers has in the market, as well as your view of the regulatory environment and how it plays into your growth and investment objectives.
Okay, that's a good start, Sergey. You know, a couple of things I would say at the outset. You know, our telco business, cable and wireless, is largely driven by population growth, whether it's home construction on the cable side and certainly on the wireless side. Immigration in the new-to-Canada category has been a big driver of growth. If you were to look at, you know, over 18 months ago, wireless, in terms of volume, was growing over 5%. That's a combination of population growth, would have been half of it. The other half was just penetration gains. We continue in wireless to be underpenetrated in terms of when you look at mobile-to-population relative to other countries, and in particular the U.S. On the cable side, because of construction, home construction, we had that business in terms of size of market growing at 3%.
Over the last six to nine months, the government took a position to curb the new-to-Canada category, combined with the slowdown in the economy. Housing starts have slowed. Whatever was in progress continued to go through. In the first quarter in our cable business, you would have seen year-on-year homes pass growing close to 3%. Both of those are slowing. Overall, we expect the wireless business to grow roughly 3% this year, which is largely driven by the penetration gains. In the long term, we certainly expect the government to resume immigration and new-to-Canada category. In the near term, we still have a growing economy.
As you mentioned, Sergey, we went through a federal election recently, and the new government, while it's not a majority government, is certainly acting like one in terms of how they're thinking about public policy, how they're thinking about long-term policy for the telecom sector. We are encouraged by that. Our new Prime Minister is certainly very experienced, having been a central banker here in Canada and in the U.K. He has a very, very good, I would say, broad economic mindset, and we are encouraged by that. We are looking forward to, as he issues and develops policies for our sector, something that continues to encourage facilities-based investment and competition. We will see how that plays out. That is how we are thinking about the regulatory framework. In terms of specific decisions, we have not had anything recent that has changed much.
We're not expecting anything in the near term that would be detrimental to our industry. Rather, we're expecting things to be positive, given the amount of investment, capital investment, and employment that our sector has for the nation.
Great. This is an excellent overview. Maybe we could start with the wireless business, which is obviously your largest business by revenues and EBITDA. You have been leading the market in postpaid phone net additions for several years. With that said, as you alluded to earlier, I mean, market growth has been slowing, and I think promotional discounting in the wireless industry has remained elevated for quite some time. I think on the first quarter call, you mentioned that over the balance of the year, you see opportunities for growth in ARPU and price discipline. Could you talk a little bit about the factors that give you confidence in that expectation? What are some of the factors that you can control, and what are some of the industry-wide dynamics that you think would lead to greater discipline in the market?
Out of the last few quarters, and in particular in the first quarter, what you saw is the impact of contracting growth. We're still growing here in Canada in terms of volume on the wireless side. We expect, as I said on the call earlier here, for the year growth to be in the roughly 3% range in terms of volume for Canada. Q1 was, it's usually a very cyclically slow quarter. We do about 10%-15% of the total year's volume in the first quarter. What we saw was a combination of the industry looking to reduce promotional intensity in the beginning. In some cases, we saw price increases. Certainly, we launched a new range of prices for the Rogers brand. While we all have what I would call flanker brands, Rogers has been focused on the Rogers brand, the premium 5G unlimited plans.
We launched a new value proposition for that. We were pleased to see the market follow that. Nonetheless, there was quite a bit of promotional activity in the back half. Our sense is, and based on the comments made by other industry players, our competition coming out of Q1 is they were adjusting to a much lower volume and probably caused some behavior in the marketplace that was driven by the lower volumes. Our sense, given that the other players just have not had significant players, have not had revenue growth, they seem to be very focused in the second quarter on resuming ARPU growth. While we still have volume growth, the industry in the last little while has really been impacted by lack of ARPU growth. Two main players have had negative ARPU.
Our sense is, one, what we're seeing in the marketplace, as well as what they have said, they seem to be focused on reducing promotional activity. That gives us optimism that the industry fundamentals will continue to evolve and be strong as we head to the back half of the year, as we're all focused on not just volume, but the value proposition and getting back to ARPU growth for the industry overall.
Got it. Great. Switching to cable, since acquiring Shaw two years ago, you achieved your CAD 1 billion synergy target one year ahead of schedule, and you continue to look for incremental cost efficiencies. You have been improving the rate of decline in cable revenues, and I believe you're targeting break-even level and eventually modest growth in the back half of the year. In your opinion, what needs to happen for Rogers to get to consistent moderate revenue growth in cable, and what are some of the primary drivers for that, and how would you rank them in terms of magnitude, in terms of impact on your top line improvement in this segment?
Our focus on the cable side has been to, as you point out, Sergey, focus on revenue growth while continuing to eke out efficiencies. Certainly, post-Shaw, very good head start on synergies. There are additional, what I would describe as efficiency plays that we continue to pursue. We have industry-leading margins at roughly 57%-59% in the cable business, and we're pleased with where that's trending. The focus for us in the last little while has been taking that business and driving to growth. The headwind, not unlike the U.S. market, has been the loss of video subscribers. That revenue, albeit it's at a roughly 50% margin, has been an impact to our top line. With Shaw, we also acquired the satellite TV business, which is a declining business.
Notwithstanding those headwinds, we were very much focused on overall growing this business, and we have been doing it through a combination of things that resulted in taking a business that over a year ago was declining at 4%. In the fourth quarter, we got that business on top line to break-even year on year. A slight dip in the first quarter to - 1%, that was because of some seasonal things in terms of timing of pricing increases. In the second quarter, you'll see us return to positive growth in the cable business. We continue to be very optimistic about the growth potential in cable that has really been driven and continues to be driven by a few things in terms of top line. One is focusing on market share where we have a cable footprint.
We pass about 10 million homes, which is about 60% of the population here in Canada. Within that, really focused on internet and having the best internet. We were looking for a branding pillar of best internet. Through various third-party assessments, we have the best, most reliable, and fastest internet overall in the country. That has been a good platform for us in increasing market share where we have the cable footprint. We are not leading yet, but we have made substantial strides in increasing the penetration of internet, while at the same time moving the market up in terms of internet pricing to what we think is the right value proposition for that segment.
On top of internet, we've relaunched the Comcast Xfinity platform, which is now branded Rogers Xfinity here in Canada, together with the products that come with that, including Storm- Ready WiFi internet, Pro Protect for the home, and a few other products that have resonated with customers. It is interesting, post-close of Shaw, BC and Alberta are now our fastest-growing markets. That is good to see on that front. Penetration gains is certainly one anchor point in getting cable revenue growth. The second relates to the launch of fixed wireless access for us. We have the largest wireless network in the country. We cover 99% of the population. We have the most spectrum. We have capacity. We decided to launch nationally, but in particular in those markets where we do not have a wireline footprint, notably Quebec and southwest Ontario, Cogeco territory.
We launched our fixed wireless access product about a year ago, and we priced it competitively with wireline product. Given we're both a wireline and wireless operator, we were very disciplined in coming to market with that product, not in a disruptive way, but just pricing it at market. We have had tremendous success with that. To give you a sense, the fixed wireless access, the wireline market we do not cover with our footprint today is almost 7 million homes. We now address that with fixed wireless access. Through network slicing, we are now about to launch the ability to put our complete Rogers Xfinity products on that network, fixed wireless access. Since launch, we have raised the price twice, and the elasticity on the product has been extremely good. We are very optimistic about the growth potential with fixed wireless access.
The third pillar of growth for the cable business is the business segment. We've done extremely well, and we knew coming together with Shaw was going to give us the ability to offer a national footprint on wireline combined with wireless. We're seeing that business growing double-digit, particularly in the small to mid-market. We're seeing some large enterprise, but our sweet spot seems to be in the mid to small, which is the larger enterprise population here in Canada. It's those three primary pillars that have been contributing to our turnaround in top-line cable revenue growth.
Great. This is a great overview of cable. As you know, one of the focus areas for this symposium is sports. Rogers owns a collection of premier sports assets in Canada, including your ownership of the Toronto Blue Jay B baseball Club, Rogers Centre, as well as a 37.5% interest in Maple Leaf Sports & Entertainment, which in turn owns the Raptors, the Maple Leafs, Toronto FC. You are obviously in the process of purchasing another 37.5% interest in MLSE from Bell for CAD 4.7 billion. Yesterday, you got news on league approvals. We estimate that pro forma for the Bell transaction, your sports assets could be worth CAD 12.5 billion or CAD 23 per share of Rogers. Management has mentioned on the call that they could be even worth CAD 15 billion.
Regardless of what the number is, I think we could both agree that you're probably not getting credit for sports in your current market valuation. The company continues working on surfacing value from your sports assets. On the first quarter call, you mentioned that you received interest from institutional investors in acquiring minority stakes in your sports portfolio. Could you discuss a little bit how you're approaching overall this potential value surfacing process from your sports portfolio? What are some of the likely steps or range of steps that you're considering, and what is the timeline for this process?
Sergey, as you point out, we have significant value of assets on our balance sheet, and the value is not reflected in our share price today. We're largely valued, almost exclusively valued on our cable and wireless business. Notwithstanding that, when you look at the set of assets that we have, which includes 100% ownership of the Toronto Blue Jays, it includes our media assets, the most significant of which is Sportsnet, which is the largest sports distribution network here in Canada by far and has been consistently for the last 10 years and a good producer of cash flow. We're about, given the league approvals that we announced yesterday, we're about over the next month or so to buy out our competitor on MLSE, and so we'll own 75% of that. Our strategy here is to consolidate sports.
I should, excuse me, highlight for the group, MLSE owns the Toronto Maple Leafs, the Toronto Raptors, Toronto FC, and MLS Soccer Club, as well as a concert business and a few other things in what I would describe as the third largest city in North America. The value of the assets is significant. It is not reflected in our share price today. Our approach on this is really to make sports and entertainment a meaningful second pillar of value beyond the telco assets of cable and wireless. There are a few things we are doing. We have already started work on the synergies. These businesses, besides the asset value and the increasing asset value, which has been growing double digits, we want to make it a meaningful EBITDA and cash flow business for us as well.
We aren't disclosing the numbers, but it's meaningful, and it'll be self-sustaining in terms of being able to be well capitalized with a combination of equity and debt and produce cash flows. We're working through the synergies as we put them together. In the near term to midterm, we're looking, just given our balance sheet debt leverage, to monetize some of the assets through a minority sale, through a private equity infusion. We have quite a bit of interest, as you would expect, in these assets in the marketplace. We're looking at what's the best for us in terms of getting liquidity. You'll see through that us putting a marker in terms of what the near-term value is of these assets, which we expect to be well in excess of the Forbes value and the CAD 12.5 billion that you mentioned, Sergey.
In the longer term, we're looking to meaningfully surface this value for the Rogers shareholders. That's really the end game for us with respect to sports and entertainment. We haven't ruled out any options. It could be a continuation of equity investment to pay down debt for our shareholders. It could include an IPO for some of it, or it could include a complete spinout of sports and entertainment to the Rogers shareholders. We continue to look at those options. Those will take some time. There are probably two precursors to those. One is buying out the remaining minority shareholder in MLSE, which we have a right to buy out a year from now, which we expect to do. The second is structuring the transaction in a very tax-efficient way, which will require advanced rulings from the tax authorities here in Canada.
That's the direction of travel with respect to sports and entertainment.
Got it. That's a great overview of sports. Maybe before we get to the audience, one more question from me. One of the company's objectives since acquiring Shaw has been returning leverage to 3.5x within 36 months of closing. You have recently taken a significant step in this direction by agreeing to sell 49.9% minority interest in your original wireless backhaul transport business to Blackstone for CAD 7 billion. Could you talk a little bit about the main reasons for that transaction? why it makes sense for Rogers? and what are some of the other steps that you've taken already or plan to take in the near to medium term to further reduce leverage?
We've been very focused on getting our debt leverage. At the time we closed Shaw, we were sitting at 5.3x debt leverage ratio. We said within 36 months, as you pointed out, Sergey, we would get down to 3.5x . We're pleased that following the structured equity transaction with Blackstone, we'll sit at 3.6x . It will go up slightly as we close the MLSE transaction. As I said earlier, as we bring in private equity investment, that will bring it back down. We like the progress we've made, both through some of the balance sheet transaction as well as through organic cash flow. The organic cash flow side has slowed because of the top-line slowdown in the industry and for us, but it's still growing.
On the organic side, what we are doing and what we have communicated is we continue to look to increase efficiencies and continue to grow EBITDA. We are also focused on efficiencies in our capital programs. This year, we will come in at closer to the bottom end of our guidance, so about CAD 3.8 billion compared to the almost CAD 4.1 billion last year. That is really two things: one, to improve efficiency, and two, to increase cash flow so that we can organically continue to reduce our debt and our debt leverage. There are these transactions. There is the structured equity transaction that was led by Blackstone. There are other institutional investors involved in that, and also the hybrid securities that we did earlier in the year as well. A combination of factors to continue to focus on reducing leverage.
We continue to have a longer-term target to get our leverage before 3x . We are getting at a stage where we have more optionality as we head into 2026 with respect to capital allocation and doing what is best for shareholders as we consider options in next year and outer years in terms of dividend increases and/or share buybacks. We do not want to get too far ahead of ourselves. Right now, the focus is on continuing to deliver the balance sheet.
Got it. Great. I have a few more questions, but I wanted to open it up to the audience to see if there are any questions for Tony. Okay. Maybe a question kind of on M&A broadly. Obviously, you have successfully integrated Shaw. While near-term focus might be on execution, deleveraging, and sourcing value from sports assets, as you look out over medium term to longer term, what types of assets could be of interest to you from an M&A perspective? What potentially could accelerate or amplify your strategy?
Over the next three to five years, we continue to be focused on Canada, to be clear. We're not looking to expand outside of Canada because we continue to see opportunities for growth here, certainly on the wireless side through both penetration as well as our expectation is the resumption of population growth. We see good growth opportunity there. Then on the cable side, both where we have the wireline footprint, we expect to see with population growth very good housing starts in the outer years, good growth there. In particular, with the fixed wireless access technology, good growth in the markets where we don't have wirelines. That's our primary growth. I've talked about sports and entertainment as a second pillar of growth.
In terms of M&A or asset acquisitions, we would focus on small tuck-ins for those core businesses, but we're not looking to move into any meaningful adjacent sectors and make investments in that. We are focused on our core businesses, maximizing cash flow, and then making the right capital allocation decisions with respect to those assets.
Got it. Maybe a question on the cost structure. As we mentioned, you achieved your CAD 1 billion of synergies one year ahead of schedule. Now that the synergy target is in the rearview mirror, I guess what are some of the meaningful cost-saving initiatives or cost-efficiency initiatives you're working on right now that could become more sizable contributors to margins over the medium to longer term?
To put it in context, as we think about our cost-efficiency programs within the company, we've moved from the vocabulary of integration synergies to just efficiency gains. You see that in two meaningful ways. One is our overall margins. We lead the industry here in Canada and more broadly. Our wireless business has about 65% margins with a very good flow-through rate on incremental revenue. Cable, as I earlier said, hovers in the 57%-59% range in terms of margins. We continue to see opportunities to move those margins up. The other one is capital CapEx efficiency. That's one we've been working hard on recently to look for efficiency gains in doing that.
The broad categories of how we're getting those items, certainly labor efficiency, as you would expect, which when you look at capital, is about 40%-50% of our capital spend. There have been very good improvements in that. More broadly, we look to AI and digital and the work we've been doing there as meaningful movers of the needle on cost efficiency. More and more, when you look at traditional call volumes, they've come down substantially. NORA Call Centers two years ago was a cost center of in excess of CAD 1 billion. We've been able to materially reduce that number and continue to reduce it. One is we improve service. Two, as we provide alternative ways of servicing the customer, whether it's acquisition or it's a technical problem that they have through a digital experience. That's been very good.
We have been doing that at the same time that we have been reducing churn. We like what we see there in terms of cost improvements. Very broadly, those are two buckets. Of course, the last one is continuing to work with our vendors and our suppliers in continuing to move costs down. We made good progress there. One of the approaches we had was to consolidate our vendor list meaningfully from many vendors to a few global leaders. That has allowed us to have better service, better product while at the same time reducing our costs.
Great. I believe we are at the end of our session, Tony. On behalf of everyone at Gabelli, thank you so much for participating in our symposium today and sharing your thoughts on the company and the industry. Thank you.
Thank you for having me.