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30 ROGERS COMMUNICATIONS INC. 2007 ANNUAL REPORT
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Wireless Operating Highlights for the Year Ended
December 31, 2007
• Networkrevenueincreasedby19%to$5,154millionin2007from
$4,313 million in 2006.
• Strongsubscribergrowthcontinuedin2007,withnetpostpaid
additions of 581,000 and net prepaid additions of 70,000.
• Postpaidsubscribermonthlychurnwas1.15%,comparedto1.32%
in 2006.
• Postpaidmonthlyaveragerevenueperuser(“ARPU”)increased
7% from 2006 to $72.21, aided by strong increases in wireless data
revenue.
• Revenuesfromwirelessdataservicesgrewapproximately49%
year-over-year to $683 million in 2007 from $459 million in 2006,
and represented approximately 13.3% of network revenue com-
pared to 10.6% in 2006.
• Wireless’adjustedoperatingprotmarginincreasedto50.2%in
2007, compared to 46.1% in 2006.
• WirelesslaunchedtheRogersVisionsuiteofservicesonWireless’
new HSPA 3G wireless network, the fastest wireless network in
Canada, including the first wireless video calling service in North
America. This powerful 3G technology significantly improves
data download speeds on wireless devices, providing a user
experience similar to broadband high-speed wireline services.
• WirelessdecommissioneditsTDMAandanalogwirelessnetworks
effective May 31, 2007 and moved the remaining customers on
these networks onto its more advanced GSM network.
• The Fido wireless brand was recognized by J.D. Power and
Associates as being the number one rated Canadian wireless
carrier for postpaid wireless service customer satisfaction. This
independently conducted research determined that Fido out-
ranked all six of the other Canadian wireless brands in terms of
customer perceptions of billing, call quality, cost of service, cus-
tomer service and service plan options. Fido also earned the top
score in the wireless retailer category.
Summarized Wireless Financial Results
Years ended December 31,
(In millions of dollars, except margin) 2007 2006 % Chg
Operating revenue
Postpaid $ 4,868 $ 4,084 19
Prepaid 273 214 28
One-way messaging 13 15 (13)
Network revenue 5,154 4,313 19
Equipment sales 349 267 31
Total operating revenue 5,503 4,580 20
Operating expenses before the undernoted
Cost of equipment sales 703 628 12
Sales and marketing expenses 653 604 8
Operating, general and administrative expenses 1,558 1,361 14
2,914 2,593 12
Adjusted operating profit (1)(2) 2,589 1,987 30
Stock option plan amendment (3) (46) – n/m
Stock-based compensation expense (3) (11) (15) (27)
Integration expenses (4) – (3) n/m
Operating profit (1) $ 2,532 $ 1,969 29
Adjusted operating profit margin as % of network revenue (1) 50.2% 46.1%
Additions to PP&E (1) $ 822 $ 684 20
(1) As defined. See the “Key Performance Indicators and Non-GAAP Measures” and the “Supplementary Information: Non-GAAP Calculations” sections.
(2) Adjusted operating profit includes a loss of $31 million and $25 million related to the Inukshuk wireless broadband initiative for 2007 and 2006, respectively.
(3) See the section entitled “Stock-based Compensation Expense”.
(4) Costs incurred related to the integration of Fido.