Rogers 2004 Annual Report Download - page 22

20 Rogers Communications Inc. 2004 Annual Report
SIGNIFICANT FOURTH QUARTER 2004 EVENTS
Purchase of Rogers Wireless Shares
On September 13, 2004, we announced an agreement with JVII General Partnership (“JVII”), a general partnership wholly-owned by
AWE, whereby we agreed to purchase all of JVII’s 27,647,888 Class A Multiple Voting shares (“Class A shares”) and 20,946,284 Class B
Restricted Voting shares (“Class B shares”) of Wireless for a cash purchase price of $36.37 per share totalling $1,767.4 million. We closed
this transaction on October 13, 2004. As a result of the transaction, the shareholders’ agreement among RCI, Wireless and JVII dated
August 16, 1999, as amended, was terminated; the registration rights agreement between Wireless and JVII, also dated August 16, 1999,
was terminated; and JVII’s four nominees to Wireless’ Board of Directors resigned.
Upon closing of this transaction on October 13, 2004, our ownership of Wireless increased from 55.3% at September 30, 2004 to
approximately 89.3%.
The sale by AWE of its shares of Wireless did not impact or change the extensive North American wireless voice and data roam-
ing capabilities between Wireless and AWE (now part of Cingular Wireless LLC). Customers of Wireless and Cingular continue to enjoy
the benefits of seamless wireless roaming between Canada and the U.S. on North America’s largest combined GSM/GPRS/EDGE network.
On November 11, 2004, we announced an exchange offer to purchase all of the publicly-owned Class B Restricted Voting shares
of Wireless, with the consideration being 1.75 RCI Class B Non-Voting shares for each Wireless Class B share held. The acquisition was
successfully completed effective December 31, 2004, and Wireless became a wholly-owned subsidiary. We issued a total of 28,072,856
RCI Class B Non-Voting shares as consideration in this transaction.
Refer to “Critical Accounting Policies and Estimates – Purchase Price Allocations” and Note 3 to the Consolidated Financial
Statements for more details regarding these transactions.
Acquisition of Microcell Telecommunications Inc.
On September 20, 2004, together with Wireless, we announced an all cash offer of $35.00 per share to acquire all of the issued and out-
standing equity securities of Microcell, Canada’s fourth largest wireless communications provider. Microcell’s Board of Directors
recommended that its shareholders tender to Wireless’ offer, we obtained certain necessary regulatory approvals and the acquisition
was successfully completed effective November 9, 2004. The acquisition of Microcell has made Wireless the largest wireless operator in
Canada with over 5.5 million wireless voice and data customers across the country at December 31, 2004, and the only Canadian wireless
provider operating on the world standard GSM/GPRS/EDGE wireless technology platform. We believe that the integration of Microcell,
amongst other things, will lead to significant operating and capital spending efficiencies. Refer to “Critical Accounting Policies and
Estimates – Purchase Price Allocations” and Note 3 to the Consolidated Financial Statements for more details regarding this transaction.
In the “Supplementary Information” section of this MD&A, certain financial and operating information has been prepared on a
pro forma basis as if the three transactions relating to Wireless, as described above, and related financings had occurred on January 1,
2003. Such information is based on our historical financial statements, the historical financial statements of Microcell and the account-
ing for the purchase of Wireless shares.
Financings
During the fourth quarter of 2004, long-term financings totalling approximately $3.3 billion were put in place. Approximately $2.8 billion
was issued by Wireless to finance our purchase of the 34% interest in Wireless from AWE and the acquisition of Microcell. Approximately
$509 million was issued by Cable to refinance borrowings under bank facilities. Refer to the section “Consolidated Liquidity and Capital
Resources” and Note 11 to the Consolidated Financial Statements for more information regarding long-term debt.
SEASONALITY
Our operating results are subject to seasonal fluctuations that materially impact quarter-to-quarter operating results, and thus one
quarter’s operating results are not necessarily indicative of what a subsequent quarter’s operating results will be. Each of Wireless,
Cable, Media and the Blue Jays has unique seasonal aspects to its business. For discussions of the seasonal trends affecting the
Wireless, Cable, Media and Blue Jays segments, please refer to the respective segment discussions below.
COMPETITION
We currently face effective competition in each of our primary businesses from entities providing substantially similar services, some of
which have significantly greater resources than we do. Each of our businesses also faces competition from entities utilizing alternative
communications and transmission technologies and may face competition from other technologies being developed or to be developed
in the future. For detailed discussions of the specific competition facing each of Wireless, Cable, and Media, please refer to the respec-
tive segment discussions below.
OPERATING AND FINANCIAL RESULTS
See sections in this MD&A entitled “Critical Accounting Policies and Estimates” and “New Accounting Standards” and also the Notes to
the Consolidated Financial Statements for a discussion of critical and new accounting policies and estimates as they relate to the dis-
cussion of our operating and financial results below.