Rogers 2005 Annual Report Download - page 14

10 ROGERS 2005 ANNUAL REPORT . LETTER TO SHAREHOLDERS
in our Wireless, Cable and Media businesses and the acquisition of
Rogers Telecom during 2005. We are also delivering on our com-
mitment to deleverage our balance sheet, as we generated strong
operating profit growth, converted two outstanding preferred debt
securities into equity, and utilized equity as a currency in our acquisi-
tion of Rogers Telecom.
We continued to grow our subscriber levels at very respectable
rates, attracting new customers to our services, while at the same
time generally reducing the rate of churn of existing customers
through cross-selling additional products and improved customer
service and retention programs. We grew the number of Wireless
subscribers by 11.8% adding more than 649,800 net subscribers
and significantly reducing postpaid churn to 1.61%, while aver-
age revenue per postpaid subscriber increased by 6.8%. At Cable,
both Internet and digital cable net subscriber additions were up
versus the prior year as we added 208,500 and 237,800 subscrib-
ers, respectively, while holding our basic cable subscriber base
steady. We also launched our voice-over-cable telephony service for
consumers, adding almost 50,000 subscribers by year end. In addition,
we acquired approximately 525,000 consumer and business local
wireline telephony lines during the year with our acquisition of
Rogers Telecom.
At Media, the launch of three new FM radio stations in the Maritimes
and the acquisition of TV broadcasting licences in British Columbia
and Manitoba during 2005 added to Rogers’ clout in Canada’s media
industry. And in the wake of Canada’s successful bid to host the 2010
Olympic Winter Games, Rogers Media, together with CTV/BGM, won
the exclusive high-profile broadcast rights for the games.
ANTI C I PATIN G T HE F UT URE
As technologies rapidly advance and converge, there are tremendous
opportunities for Rogers to deliver increasingly innovative products
that add significant convenience and value to our customers’ lives.
Equally important are the opportunities to continue leveraging many
of the platforms and distribution channels of our Wireless, Cable and
Telecom businesses to drive further efficiencies and better returns.
In recent years, we have made much progress in centralizing cer-
tain infrastructure operations, including information technologies,
call centres, and finance under a shared services model. In 2005 we
took another significant step by combining our Wireless, Cable and
Telecom units under a single operating management structure. This
structure is designed to facilitate continued strong and profitable
growth while sharpening our integrated approach to many of Rogers’
markets, channels and functions.
We also continued to increase the breadth and depth of our
management team. During the year we were fortunate to attract
several experienced executives into the company to spearhead our
telecom operations, as well as our company-wide human resources,
corporate marketing, finance and purchasing functions.
By nearly any measure, it’s clear that 2005 was a year of great results
for Rogers, and was a period in which we began to reap the benefits
of several strategic initiatives we embarked upon in recent years to
further expand the scale and scope of our business.
2005 was a time of integration and execution, of organizing for the
future, and of establishing important capabilities and presence in the
telephony market. It was also a year during which we strongly secured
our position as Canada’s largest wireless provider with leading posi-
tions in cable, media and telecom.
It was a demanding year as we integrated recent acquisitions, built
and reorganized, but we kept our eye on the ball, continuing to exe-
cute the day-to-day operations of our businesses. I am very proud
and grateful for the hard work and commitment of the nearly 25,000
dedicated employees across Rogers.
INTE G R ATING TH E PL AT FORM
A very important accomplishment of 2005 was in substantially com-
pleting the considerable task of integrating Microcell’s network, sub-
scriber base and billing platforms, which we acquired late in 2004.
Indeed, we made better progress than anticipated and are positioned
to meet or exceed the operating cost savings of $100 million per year
starting in 2006 that we targeted, in addition to significant savings in
our future capital expenditures. Not only was the integration trans-
parent to customers, we improved the customer experience by signifi-
cantly enhancing the signal strength for all of our wireless customers
and dramatically expanding the coverage area for Fido subscribers.
With the Microcell integration essentially complete, we are now
solidly the largest wireless provider in Canada, both in terms of cus-
tomers and network coverage, and we cover the market with two
powerful but separate brands – Rogers Wireless and Fido. We are
now also at the forefront with the richest wireless spectrum holdings
of any North American carrier. This enviable spectrum position allows
us to add network capacity more efficiently and is also ample from
which to deploy next generation wireless technologies like HSDPA,
which we will begin rolling out in 2006.
During 2005, we expanded the scope of our integration efforts to
include Call-Net Enterprises, which we acquired on July 1, 2005, and
which has now been rebranded Rogers Telecom. Through the Rogers
Home Phone division, Rogers Telecom focuses on the consumer market,
while Rogers Business Solutions brings to bear Rogers’ communica-
tions capabilities for the business market. This initiative will continue
through 2006 but it is well underway and is progressing as planned.
EXEC U T ING T O D EL IV ER RESU L TS
Consistent with our commitment to shareholders, Rogers delivered
strong consolidated financial results in 2005. A 13.7% increase in
revenues to $7.9 billion and a 21.4% increase in operating profit
before integration expenses to $2.3 billion reflected solid pro forma
revenue and pro forma operating expense year-over-year growth
Fellow Shareholders, Customers, Employees and Partners,