Rogers 2007 Annual Report Download - page 31

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ROGERS COMMUNICATIONS INC. 2007 ANNUAL REPORT 27
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
2. SEGMENT REVIEW
WIRELESS
WIRELESS BUSINESS
Wireless is the largest Canadian wireless communications service
provider, serving 7.3 million retail voice and data subscribers at
December 31, 2007, representing approximately 37% of Canadian
wireless subscribers. Wireless operates a GSM/General Packet
Radio Service (“GSM/GPRS”) network, with Enhanced Data for GSM
Evolution (“EDGE”) technology. Wireless is Canada’s only national
carrier operating on the world standard GSM technology platform.
The GSM network provides coverage to approximately 94% of
Canada’s population. Wireless has also deployed a next generation
wireless data technology called UMTS/HSPA (“Universal Mobile
Telephone System/High-Speed Packet Access”) across most of the
major markets in Canada and have UMTS/HSPA roaming in 50
countries as well as access to these services across the U.S. through
roaming agreements with various wireless operators. Its subscribers
also have access to wireless voice service internationally in 202
countries and wireless data service internationally in 138 coun-
tries, including throughout Europe, Asia, Latin America and Africa
through roaming agreements with other GSM wireless providers.
Wireless Products and Services
Wireless offers wireless voice, data and messaging services across
Canada. Wireless voice services are available in either postpaid or
prepaid payment options. In addition, the network provides cus-
tomers with advanced high-speed wireless data services, including
mobile access to the Internet, wireless e-mail, digital picture and
video transmission, mobile video, music downloading, video calling
and two-way short messaging service (“SMS”).
Wireless Distribution
Wireless markets its products and services under both the Rogers
Wireless and Fido brands through an extensive nationwide distri-
bution network of over 13,250 dealer and retail locations across
Canada (excluding Rogers Retail locations, which is a segment
of Cable), which includes approximately 3,250 locations selling
subscriptions to service plans, handsets and prepaid cards and
approximately 10,000 additional locations selling prepaid cards.
Wireless’ nationwide distribution network includes: an inde-
pendent dealer network; Rogers Wireless and Fido stores which,
effective January 2007, are managed by Rogers Retail; major retail
chains; and convenience stores. Wireless also offers many of its
products and services through telemarketing and through a retail
2007
(Millions of dollars, except subscribers) 2008 Range Actual
Consolidated
Revenue (1) $ 11,200 to $ 11,500 $ 10,123
Adjusted operating profit (2) 4,000 to 4,200 3,703
Additions to PP&E 1,900 to 2,100 1,796
Free cash flow (3) 1,400 to 1,600 1,290
Supplementary Detail:
Revenue
Wireless (network revenue) $ 5,800 to $ 5,900 $ 5,154
Cable Operations (4) 2,900 to 2,950 2,603
Media 1,525 to 1,575 1,317
Adjusted operating profit (2)
Wireless (5) $ 2,875 to $ 2,975 $ 2,620
Cable Operations (4) 1,130 to 1,190 1,008
Media
(6) 165 to 180 176
Additions to PP&E (7)
Wireless $ 850 to $ 925 $ 807
Cable Operations (4) 750 to 830 705
Media 80 to 95 77
Net subscriber additions (000s)
Retail wireless postpaid and prepaid 550 to 625 651
Residential cable revenue generating units (RGUs) (8) 550 to 625 655
(1) In addition to Wireless network, Cable Operations and Media revenue, includes revenue from Wireless equipment, RBS, Rogers Retail and Corporate items and eliminations.
(2) Excludes stock-based compensation expense, integration and restructuring related expenditures, and, in 2007, the impact of a one-time charge resulting from the renegotiation of an Internet-related
services agreement.
(3) Free cash flow is defined as adjusted operating profit less integration and restructuring expenses, PP&E expenditures and interest expense and is not a term defined under Canadian GAAP.
(4) Includes cable television, residential high-speed Internet and residential telephony activities; excludes RBS and Rogers Retail.
(5) Excludes operating losses related to the Inukshuk fixed wireless initiative estimated at $25–$30 million in 2008 and of $31 million in 2007.
(6) Includes losses from Sports Entertainment estimated at $20 –$25 million in 2008 and of $17 million in 2007.
(7) Excludes PP&E expenditures related to integration activities and the Inukshuk fixed wireless initiative of $5 million and $15 million, respectively, in 2007.
(8) Residential cable RGUs are comprised of basic cable subscribers, digital cable households, residential high-speed Internet subscribers and residential cable and circuit-switched telephony subscribers.
2007 WIRELESS NETWORK REVENUE MIX
(%)
Postpaid 95%
Prepaid 5%