Rogers 2008 Annual Report Download - page 66

62 ROGERS COMMUNICATIONS INC. 2008 ANNUAL REPORT
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Generally, our licences are granted for a specified term and are
subject to conditions on the maintenance of these licences. These
licencing conditions may be modified at any time by the regulators.
The regulators may decide not to renew a licence when it expires
and any failure by us to comply with the conditions on the mainte-
nance of a licence could result in a revocation or forfeiture of any
of our licences or the imposition of fines.
The licences include conditions requiring us to comply with
Canadian ownership restrictions of the applicable legislation. We
are currently in compliance with all of these Canadian ownership
and control requirements. However, if these requirements are vio-
lated, we would be subject to various penalties, possibly including,
in the extreme case, the loss of a licence.
We May Engage in Unsuccessful Acquisitions or Divestitures.
Acquisitions of complementary businesses and technologies, devel-
opment of strategic alliances and divestitures of portions of our
business are an active part of our overall business strategy. Services,
technologies, key personnel or businesses of acquired companies
may not be effectively assimilated into our business or service
offerings and our alliances may not be successful. We may not be
able to successfully complete any divestitures on satisfactory terms,
if at all. Divestitures may result in a reduction in our total revenues
and net income.
We Have Substantial Debt and Interest Payment Requirements
that May Restrict our Future Operations and Impair our Ability
to Meet our Financial Obligations.
Our substantial debt may have important consequences. For
instance, it could:
• Makeitmoredifcultforustosatisfyournancialobligations;
• Require us todedicateasubstantialportionofanycash ow
from operations to the payment of interest and principal due
under our debt, which would reduce funds available for other
business purposes;
• Increase our vulnerability to general adverse economic and
industry conditions;
• Limitourexibilityinplanningfor,orreactingto,changesinour
business and the industry in which we operate;
• Placeusatacompetitivedisadvantagecomparedtosomeofour
competitors that have less financial leverage; and
• Limitourabilitytoobtainadditionalnancingrequiredtofund
working capital and capital expenditures and for other general
corporate purposes.
Our ability to satisfy our obligations and to reduce our total debt
depends on our future operating performance and on economic,
financial, competitive and other factors, many of which are beyond
our control. Our business may not generate sufficient cash flow
and future financings may not be available to provide sufficient net
proceeds to meet these obligations or to successfully execute our
business strategy.
We Are Subject to Various Risks from Competing Technologies.
There are several technologies that may impact the way in which
our services are delivered. These technologies include broadband,
IP-based voice, data and video delivery services; the mass market
deployment of optical fibre technologies to the residential and
business markets; the deployment of broadband wireless access,
and wireless services using radio frequency spectrum to which we
may have limited access. These technologies may result in signifi-
cantly different cost structures for the users of the technologies,
and may consequently affect the long-term viability of certain
of our currently deployed technologies. Some of these new tech-
nologies may allow competitors to enter our markets with similar
products or services that may have lower cost structures. Some
of these competitors may be larger with more access to financial
resources than we have.
We May Fail to Achieve Expected Revenue Growth from New
and Advanced Services.
We expect that a substantial portion of our future revenue growth
will be achieved from new and advanced services. Accordingly, we
have invested and continue to invest significant capital resources in
the development of our networks in order to offer these services.
However, there may not be sufficient consumer demand for these
new and advanced services. Alternatively, we may fail to anticipate
or satisfy demand for certain products and services, or may not be
able to offer or market these new products and services successfully
to subscribers. The failure to attract subscribers to new products and
services, or failure to keep pace with changing consumer preferences
for products and services, would slow revenue growth and have a
material adverse effect on our business and financial condition.
We Are Highly Dependent Upon our Information Technology
Systems and the Inability to Enhance our Systems or a Security
Breach or Disaster Could Have an Adverse Impact on our
Financial Results and Operations.
The day-to-day operations of our businesses are highly dependent
on their information technology systems. An inability to enhance
information technology systems to accommodate additional cus-
tomer growth and support new products and services could have an
adverse impact on our ability to acquire new subscribers, manage
subscriber churn, produce accurate and timely subscriber invoices,
generate revenue growth and manage operating expenses, all of
which could adversely impact our financial results and position.
In addition, we use industry standard network and information
technology security, survivability and disaster recovery practices.
A portion of our employees and critical elements of the network
infrastructure and information technology systems are located at
the corporate offices in Toronto, Ontario, and Brampton, Ontario,
as well as an operations facility in Markham, Ontario. In the event
that we cannot access these facilities, as a result of a natural or
manmade disaster or otherwise, operations may be significantly
affected and may result in a condition that is beyond the scope of
our ability to recover without significant service interruption and
commensurate revenue and customer loss.