Rogers 2009 Annual Report Download - page 25

Download and view the complete annual report

Please find page 25 of the 2009 Rogers annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 130

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130

ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT 29
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
usage during the economic recession. These reductions in roaming
and out-of-plan usage caused a decline in the voice component
of postpaid ARPU compared to 2008, which was to a large degree
offset by the significant growth in wireless data.
During 2009, wireless data revenue increased by approximately
44% over 2008, to $1,366 million. This growth in wireless data
revenue reflects the continued penetration and growing usage
of smartphone and wireless laptop devices which are driving the
use of text messaging and e-mail, wireless Internet access, and
other wireless data applications and services. In 2009, data revenue
represented approximately 22% of total network revenue,
compared to 16% in 2008.
Wireless’ success in the continued year-over-year reduction of
postpaid churn reflects targeted customer retention activities and
continued enhancements in network coverage and quality.
Wireless activated approximately 1,450,000 smartphone devices,
predominately iPhone 3G, BlackBerry and Android devices, during
2009. Subscribers with smartphones represented approximately
31% of the overall postpaid subscriber base as at December 31,
2009, compared to 19% as at December 31, 2008. These subscribers
have committed to new multi-year term contracts and, in a majority
of cases, attached both voice and monthly data packages which
generate considerably above average ARPU.
Wireless Equipment Sales
The year-over-year decrease in revenue from equipment sales,
including activation fees and net of equipment subsidies, in 2009
versus 2008 reflects an overall increased mix to higher subsidy
smartphone devices, including the incremental subsidy required
with the iPhone 3GS launch in June 2009.
20092008
2007
2008
2007
2009
21.9%16.4%13.6%
DATA REVENUE PERCENT
OF BLENDED ARPU
(%)
20092008
2008
2009
31.0%19.0%
SMARTPHONES AS A PERCENT
OF POSTPAID SUBSCRIBERS
(%)
Wireless Operating Expenses
Years ended December 31,
(In millions of dollars) 2009 2008 %Chg
Operating expenses
Cost of equipment sales $ 1,059 $ 1,005 5
Sales and marketing expenses 630 691 (9)
Operating, general and administrative expenses 1,923 1,833 5
Operating expenses before the undernoted 3,612 3,529 2
Stock-based compensation expense (recovery)(1) – (5) n/m
Settlement of pension obligations(2) 3 – n/m
Integration and restructuring expenses(3) 33 14 136
Total operating expenses $ 3,648 $ 3,538 3
(1) See the section entitled “Stock-based Compensation”.
(2) Relates to the settlement of pension obligations for all employees in the pension plans who had retired as of January 1, 2009 as a result of annuity purchases by the Company’s pension plans.
(3) For the year ended December 31, 2009, costs incurred relate to severances resulting from the targeted restructuring of our employee base to combine the Cable and Wireless businesses into a
communications organization and to severances and restructuring expenses related to the outsourcing of certain information technology functions. For the year ended December 31, 2008,
costs incurred relate to severances resulting for the restructuring of our employee base to improve our cost structure in light of the declining economic conditions.