Rogers 2010 Annual Report Download - page 5

We delivered respectable results in a year marked by a new
competitive reality and a sluggish recovery from the economic
recession. In particular, we maintained our relentless focus on
driving wireless data growth and smartphone penetration where
we have proven success in attracting and retaining higher value
customers who generate greater average revenue and churn less.
At the same time, the competitive environment reflects multiple
new wireless entrants who have now launched service, our two
primary wireless competitors fully transitioned to HSPA networks
gaining access to an expanded array of wireless devices, and the
launch of IPTV video services by the primary incumbent telco in
our cable territory.
There’s no question that 2011 will be both dynamic and
challenging, and as a company we remain focused on our game
plan – perfecting and evolving our core business, investing in next
generation platforms and building new revenue streams to
drive long-term growth.
Evolving our Core Business
Last year I wrote about the transformation underway in
communications and media.
Today, our customers are using smartphones as TVs, laptops as
telephones, TVs as time shifted entertainment and gaming stations,
and cell phones as boarding passes. And as a company we continued
to create the seamless connections whenever, wherever and
however Canadians choose to communicate and consume content --
a key focus for Rogers and a key theme of the pages that follow
in this annual report.
We are resolute in our focus on continuing to strengthen our core
business in the areas of service, network and cost management.
Enhancing the Customer Experience -- Continually enhancing our
customers’ experience and making it easier to do business with us
is a key area of focus. We know that more of our revenue growth
will come from existing customers than from new customers as we
go forward, and we will continually develop newer, better, and
faster ways to deliver what customers want.
We delivered a number of initiatives in 2010 to strengthen the
customer experience. We launched a successful handset protection
guarantee program that enables eligible customers to quickly
and inexpensively replace lost or broken wireless devices. We also
deployed an award-winning new sales and service channel for our
small and medium-sized business segment called Live Agent, where
customers can bypass voice response systems to directly connect
with a knowledgeable agent. While 2010 was not without its
customer service challenges, overall we met or exceeded our
targeted service metrics.
For a growing segment of value-oriented urban consumers, we
launched a set of no-frills unlimited wireless talk and text services
under a new wireless brand called “chatr”. We brought the
Rogers on-demand TV experience to the Internet with the Rogers
On-Demand Online broadband video product which enables “TV
Everywhere” functionality for our customers. And we used the
2010 FIFA World Cup to bring a unique cross-platform experience to
Canadians by enabling them to enjoy the matches on-demand across
their TV, Internet and wireless devices.
Industry-leading Networks -- Our advanced wireless and broadband
networks are some of the best in the world and we deliver fast,
reliable and proven network experiences. In 2010 we continued
to push the envelope by increasing the speed of our national 3.5G
HSPA wireless network, and today provide wireless speeds of up
to 21Mbps to approximately 90 percent of Canada’s population.
We also cost effectively expanded our wireless broadband footprint
in rural parts of the country by crafting additional HSPA network
sharing arrangements.
We expanded the switched digital video and on-demand capabilities
of our cable network enabling industry-leading selections of HDTV
and on-demand content. And we completed the deployment of
DOCSIS 3.0 technology across 100% of our cable system enabling
significant increases in our broadband Internet service speeds.
Competitive Cost Structure -- As our business matures and
competition intensifies, revenue growth will continue to slow and
margins will be challenged. This means our focus will continue to
evolve from subscriber growth towards cash flow growth, and
managing costs and operating efficiently will become increasingly
important. In 2010 we made solid progress in controlling costs,
essentially holding our operating costs flat to 2009 levels excluding
costs associated with wireless equipment sales. This in turn enabled
us to invest significantly in our customers, our networks and our
products while returning significant amounts of cash to shareholders.
Investing in Next Generation Platforms
While we continue to evolve our core business, we also remain
focused on investing in the next generation of technology platforms
to ensure we remain Canada’s innovation leader.
I believe we have the assets and the proven track record to embrace
and lead the technology transformation underway. Broadband
and wireless continue to converge onto increasingly integrated
IP platforms, and content and distribution are becoming more
and more intertwined. This is setting the stage for more and
more ways of interacting, engaging and consuming information,
communications and entertainment – any content, on any device, any
where, any time – and this will enable future growth opportunities
for Rogers and exciting new experiences for our customers.
To leverage these possibilities, we are increasingly developing
cross-platform capabilities. And we’re investing in new platforms
that evolve our wireless and cable networks to enable the next
generation of capabilities and services.
We began trials late in 2010 of a true 4G wireless technology called
LTE, which promises even faster broadband data speeds delivered
with greater efficiency. The trial results to date, combined with
positive progress being realized by other wireless carriers, have
reaffirmed our view that LTE is the next generation technology to
which GSM based carriers such as Rogers will evolve. In 2011, we will
begin making the necessary investments and laying the foundation
for a multi-year deployment of LTE in Canada.
The recent completion of our DOCSIS 3.0 deployment will in turn
enable the future evolution of cable television services from one
based on linear broadcast technology to a fully IP-based product
with exciting new capabilities and flexibility. This will be a multi-
year evolution, but we believe the path is quickly becoming clearer
and intend to begin making investments to start the transition
later in 2011.
Building New Revenue Streams
To help drive future growth, we continued to advance our plans in
the areas of wireless data, machine-to-machine, digital media,
home monitoring and the business telecom segment.
To help us serve a larger number of business customers in the small
and medium-sized enterprise segment with on-net services, we
acquired two large fibre optic data networks previously owned by
electrical utility providers within and adjacent to our cable networks.
The acquisitions of Atria Networks and Blink Communications bring
fibre connections to thousands of additional commercial buildings,
existing customer bases and experienced employees.
At Rogers Media, to further reinforce our successful sports media
presence, we secured 10-year programming deals with Alberta’s two
NHL teams -- the Edmonton Oilers and Calgary Flames -- and the
Rogers Arena naming rights for the Vancouver facility that is home
to the NHL Canucks. We then leveraged our very successful Sportsnet
television franchise with the launch of a new national sports
network called Sportsnet ONE that features extensive live-event
programming, including professional hockey, basketball, soccer,
baseball and tennis.
Delivering Results in 2011
In February 2011 we announced an increase to our annual dividend
of 11 percent and a share buy-back program for 2011 of up to
$1.5 billion. These two announcements reflect our continued
success in generating free cash flow and our continued confidence
in the strength of the company.
Our 2011 plan strikes a healthy balance between continued subscriber
and financial growth, and the continued return of significant
amounts of free cash flow to shareholders. It reflects a disciplined
management approach to a complex and intensified competitive
environment. It reflects a focus on our networks, systems and service
delivery platforms to enable more seamless connections for our
customers. And it reflects prudent investments to reinforce our
competitive advantage and drive new streams of revenue.
Importantly, we’ll also invest in our brand and our reputation.
The environment around us has shifted and become more complex,
and we’re adapting to this changing environment with programs,
policies and investments that reflect the diverse needs of our
stakeholders. We will continually reinforce the Rogers brand – a
proven, valuable franchise that resonates strongly with Canadians
from coast-to-coast. It’s a brand that has long stood for innovation
and choice. Our decisions and actions will continue to reinforce
those hallmarks, whether it’s about being first with technology,
responding to changing markets, or being responsive to our
customers changing needs.
I am pleased with the progress of our business in 2010 and in
particular would like to thank our employees for their incredible
hard work and dedication. We are steadfastly focused on execution,
are enthusiastically pursuing the many opportunities in front of us,
and are up for the challenges that we know will continue in 2011.
Thank you for your continued investment and support,
Nadir Mohamed
President and Chief Executive Officer
Rogers Communications Inc.
” I’m pleased to report that despite
an intensely competitive environment
that moderated our growth, we
met or exceeded our key financial
commitments in 2010 and delivered
against our strategic priorities.”
LETTER TO SHAREHOLDERS
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