Rogers 2010 Annual Report Download - page 31

ROGERS COMMUNICATIONS INC. 2010 ANNUAL REPORT 35
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPERATING HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 2010
• Cable grew high-speed Internet subscribers by 67,000, cable
telephony lines by 66,000, digital cable households by 69,000 and
television subscribers by 9,000 during the year.
• 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73%ofourtelevisionsubscriberbase.In
addition,digitalpenetrationnowrepresentsapproximately75%of
television households.
• HDTVdigitalcablesubscribersincreased19%fromDecember31,2009
to December 31, 2010, to approximately 850,000.
• Thecableresidentialtelephonysubscriberbasecontinuedtogrow
ending the year with just over 1 million residential voice-over-cable
telephony lines, which brings the total penetration of cable telephony
linesto44%oftelevisionsubscribersatDecember31,2010,upfrom
41%intheprioryear.
• CablecompletedthedeploymentofDOCSIS3.0high-speedInternet
serviceto100%ofitsfootprint.
• Cablecontinuestoleverageitspositioninthesmallbusinessmarket
with its 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grewitsRogersOnDemandOnlinebroadbandvideoservice
offerings to over 10,000 hours of content and a registered user base
of approximately 300,000. This included the launch of a transactional
rentals section that allows consumers to rent new release movies
and library titles, the addition of 2 live streaming channels and a
comprehensive 2010 FIFA World cup cross platform offering, which
featured live streaming and on demand coverage of over 60 games in
4 languages.
• Cabledivestedcertainassetsrelatedtoitsremainingcircuit-switched
operations, including co-location sites and related equipment. In
addition, the remaining residential circuit-switched lines in Cable
Operations are in the process of being transferred to a third party
reseller. The portion of RBS’s business customer lines provisioned
over these circuit-switched co-location facilities will continue to be
serviced by RBS under a separate wholesale arrangement.
See the following segment discussions for a detailed discussion of
operating results.
(1) The operating results of Kincardine are included in Cable Operations’ results of operations from the date of acquisition on July 30, 2010.
(2) As defined. See the sections entitled “Key Performance Indicators and Non-GAAP Measures” and “Supplementary Information: Non-GAAP Calculations”.
(3) See the section entitled “Stock-based Compensation”.
(4) 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.
(5) For the year ended December 31, 2010, costs incurred relate to restructuring expenses resulting from the outsourcing of certain information technology functions. 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 resulting from the outsourcing of certain information technology functions; and iii) the integration of acquired businesses.
(6) Relates to the resolution of obligations and accruals relating to prior periods.
(7) Relates to an adjustment for CRTC Part II fees related to prior periods. See the section entitled “Government Regulation and Regulatory Developments”.
CABLE OPERATIONS
Summarized Financial Results
Years ended December 31,
(In millions of dollars, except margin) 2010(1) 2009 %Chg
Operating revenue
Cable Television $ 1,830 $ 1,780 3
Internet 848 781 9
Rogers Home Phone 507 513 (1)
Total Cable Operations operating revenue 3,185 3,074 4
Operating expenses before the undernoted
Sales and marketing expenses 222 243 (9)
Operating, general and administrative expenses 1,539 1,533 –
1,761 1,776 (1)
Adjusted operating profit(2) 1,424 1,298 10
Stock-based compensation (expense) recovery(3) (7) 12 n/m
Settlement of pension obligations(4) –(10) n/m
Integration and restructuring expenses(5) (3) (31) (90)
Other items, net(6) (7) – n/m
Adjustment for CRTC Part II fees decision(7) –46 n/m
Operating profit(2) $ 1,407 $ 1,315 7
Adjusted operating profit margin(2) 44.7% 42.2%