RCICN Credit: Deleveraging Heads to Overtime

Research evidence excerpt

RCICN Credit: Deleveraging Heads to Overtime

Update

July 23, 2026 02:39 AM GMT

Morgan Stanley & Co. LLCMTMT Credit Research | North America Lindsay A Tyler

Credit Analyst

RCICN Credit: Deleveraging Lindsay.Tyler@morganstanley.comMorgan Stanley India Company Private Limited+ +1 212 761-2734

Nishant Satyam

StrategistHeads to Overtime Nishant.Satyam@morganstanley.com +91 22 6995-6796

Key Takeaways

Post 2Q26 print, we maintain our cautious stance given muted core growth,

funding needs, ratings pressure, and deleveraging hinging on asset moves.

Against flat 2Q wireless service revenue growth, management cited population

and ARPU headwinds, easing promotions, limited satellite substitution risk.

FCF rose 6% YoY, but aided by asset-sale proceeds and lower investment, the

latter outlined by management last quarter as a response to regulation and

leverage.

Co. reiterated FY26 guide (3-5% service rev. & 1-3% EBITDA growth, C$4.1-4.3bn

FCF) but disclosed a C$4.35bn MLSE purchase price vs. the prior C$3.3bn

carrying.

Management expects the MLSE buy-in to close in 4Q26 using bank debt,

followed by a Rogers Sports minority stake sale targeting 1H27 with proceeds for

debt reduction.

We forecast co. adj. net leverage rising >4x at YE26 from 3.8x now, driving

corresponding apples-to-apples metrics beyond Moody's and S&P's low-BBB

thresholds.

S&P’s negative outlook remains, although we expect time to execute the

monetization plan considering Nov. 2025 placement and proximity to HY.

We reiterate our sell rec. on the 32s given delayed deleveraging, limited positive

catalysts, rel val vs. telcos. We remain sidelined in long bonds and hybrids.

Related Credit Research: RCICN Credit: FCF Boost Not a Home Run (22 Apr 2026);

BCECN Credit: Bell Balancing Deleveraging and AI Spend (7 May 2026)