Rogers 2009 Annual Report Download - page 31

ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT 35
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
• Cable’sInternetsubscriberbasecontinuedtogrowduringthe
year and penetration is approximately 45% of the homes passed
by our cable networks and 71% of our television subscriber base.
In addition, digital penetration now represents approximately
72% of television households.
• HDTVdigitalcablesubscribersincreased26%fromDecember31,
2008 to December 31, 2009, to 715,000.
• Expandedtheavailabilityofourresidentialtelephony service
to approximately 26% of homes passed by our cable networks.
Cable ended the year with 937,000 residential voice-over-
cable telephony lines, which brings the total penetration of
cable telephony lines to 41% of television subscribers at
December 31, 2009, up from 36% in the prior year.
• IndependentresearchrmcomScoreInc.foundRogersHi-Speed
Internet to have the fastest and most reliable Internet access
speeds for Ontario customers. The results, which were based on
over 300,000 network speed tests conducted over a three month
period in mid-2009, showed that the Rogers Hi-Speed Internet
product delivers the faster and more reliable Internet speeds
when compared to Cable’s primary DSL competitor.
• Cable launched DOCSIS 3.0 high-speed Internet service,
including two new 25 Mbps and 50 Mbps tiers, the fastest resi-
dential Internet access service available in our Cable territory. As
part of the DOCSIS 3.0 launch, Rogers introduced the first DOCSIS
3.0 wireless “N” cable gateway in North America.
• Cable enhanced its position in the small business market
with the launch of innovative business-grade communications
services designed specifically for the Canadian SME segment
providing multi-line small businesses with access to a suite of
leading-edge telephony solutions including line hunting and
simultaneous ringing.
CABLE OPERATIONS
Summarized Financial Results
Years ended December 31,
(In millions of dollars, except margin) 2009 2008 %Chg
Operating revenue
Core Cable $ 1,780 $ 1,669 7
Internet 781 695 12
Rogers Home Phone 513 514 –
Total Cable Operations operating revenue 3,074 2,878 7
Operating expenses before the undernoted
Sales and marketing expenses 243 248 (2)
Operating, general and administrative expenses 1,533 1,459 5
1,776 1,707 4
Adjusted operating profit(1) 1,298 1,171 11
Stock-based compensation recovery(2) 12 30 (60)
Settlement of pension obligations(3) (10) – n/m
Integration and restructuring expenses(4) (31) (9) n/m
Adjustment for CRTC Part II fees decision(5) 46 (25) n/m
Operating profit(1) $ 1,315 $ 1,167 13
Adjusted operating profit margin(1) 42.2% 40.7%
(1) As defined. See the sections entitled “Key Performance Indicators and Non-GAAP Measures” and “Supplementary Information: Non-GAAP Calculations”.
(2) See the section entitled “Stock-based Compensation”.
(3) 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.
(4) For the year ended December 31, 2009, costs incurred relate to i) severances resulting from the targeted restructuring of our employee base to combine the Cable and Wireless businesses into a
communications organization; ii) severances and restructuring expenses related to the outsourcing of certain information technology functions; and iii) the integration of Futureway and Aurora
Cable. For the year ended December 31, 2008, costs incurred relate to i) severances resulting from the restructuring of our employee base to improve our cost structure in light of the declining
economic conditions; and ii) the integration of Futureway and Call-Net Enterprises Inc. (“Call-Net”).
(5) Relates to an adjustment for CRTC Part II fees related to prior periods. See the section entitled “Government Regulation and Regulatory Developments”.
• Cablebeganthelaunchofitsnew50MbpsDOCSIS3high-speed
Internet service, the fastest residential Internet access service
currently available in the market.
• Cable fur thered its lead as Canada’s premium video
entertainment provider with the addition of 34 high-
definition channels during 2009 to its already robust content
lineup, bringing Cable’s offering to more than 100 fully dedicated
HD channels and over 470 HD Movies, specials and TV shows On
Demand. Rogers Cable customers can now receive four times
more HD content choices than are available through Canadian
satellite TV offerings.
• CablelaunchedTVCallDisplay,anewproductenhancementto
its Rogers Home Phone and Rogers Digital TV service whereby
incoming calls are displayed and managed on customers’ TV
screens, including the option for customers to send calls directly
to their Rogers voicemail with their TV remote control.
• CableintroducedtheRogersOnDemandOnlineportal,Canada’s
most comprehensive online destination for primetime and
specialty TV programming, movies, sports and web-only extras.
By expanding the TV experience to the Internet, Rogers’
Cable, Internet and Wireless customers can now enjoy their
TV anywhere, anytime with a vast and rapidly expanding library
of top programming wherever they have an Internet connection
in Canada.
Total operating revenue increased $139 million, or 4%, from 2008,
and total adjusted operating profit increased to $1,324 million or
by $91 million, a 7% increase from 2008. See the following segment
discussions for a detailed discussion of operating results.