Rogers 2012 Annual Report Download - page 35

MANAGEMENT’S DISCUSSION AND ANALYSIS
4. Strengthen the Customer Experience
We introduced “FLEXtab”, a wireless device upgrade program that
allows postpaid customers to get an early wireless device upgrade by
paying the unamortized subsidy at any point after one month during
their contract term.
We also redesigned and simplified our wireless offers and pricing
tiers, making it easier for customers to use our services and also
reducing the complexity and service times for our sales and support
teams. Our new data-centric plans offer unlimited voice and text
along with a range of data usage and data plan sharing options to
meet the varying needs of our customers.
We unveiled a new retail store concept and design for our Rogers Plus
stores. The new stores include a personalized and integrated service
approach, which is part of a larger retail transformation to enhance
how we service and sell to our customers.
Cable continued to repatriate its analog channels to free up
bandwidth to provide a richer customer experience, including
through additional HD content, faster Internet speeds and future IP-
based services.
Media continued to enhance Rogers’ engagement with sports fans by
investing in additional payroll for new Blue Jays players, extending
the Buffalo Bills in Toronto NFL series, signing new long-term
contracts for distribution of NHL hockey games, purchasing Grand
Slam of Curling and launching a new events division.
Through our efforts to strengthen the customer experience in 2012,
overall customer satisfaction and problem resolution scores improved
year-over-year.
5. Improve Productivity and Cost Structure
We successfully implemented a number of cost management and
efficiency improvement initiatives across the Company. The priority
was on intelligent efficiency gains and focused execution, including
reducing the number of initiatives we execute, consolidating work
and reducing duplication, managing our discretionary spending,
tightening our entire supply chain, eliminating calls into the call
centre, and enhancing our discipline around general and
administrative spending. This is an ongoing process that will allow us
to invest in strengthening the value we deliver to our customers.
6. Drive Future Growth Opportunities
Together with CIBC, we launched Canada’s first mobile payment solution.
It allows consumers to pay for purchases with their CIBC credit card at the
checkout counter using a near-field-communication-enabled Rogers
BlackBerry. This service will be available at businesses across the country
where contactless credit card payments are already accepted. Rogers has
been at the forefront of laying the foundation and developing the
ecosystem to allow mobile commerce to flourish in Canada, and this is
one of the first solutions of its kind anywhere in the world.
We announced the exclusive availability of OutRank, a new, best-in-
class online marketing solution for small businesses. Millions of
Canadians search online for local services, yet less than 45% of
Canadian small businesses have a website. OutRank offers local
businesses a website, paid search marketing, search engine
optimization and a performance dashboard, all for an affordable
price. With this solution, business owners can attract new customers
and achieve a positive return on their marketing investment.
We announced an alliance with international mobile operators KPN,
NTT Docomo, SingTel, Telefónica, Telstra and Vimpelcom. The alliance
will co-operate on global M2M business initiatives supporting a
single, global platform that multinational customers can leverage to
enable connected devices in multiple countries to better manage
operations and reduce costs. Rogers is Canada’s M2M leader,
committed to providing the enterprise tools and platforms for the
rapid delivery of next generation M2M connectivity across industries
and market segments. We also announced an alliance with Axeda
Corporation that will accelerate the deployment and reduce the
complexity around the development of M2M solutions in Canada.
Businesses and developers can access the Axeda Platform to build and
deploy enterprise M2M applications.
Our 2012 revenue growth of 23.9% in the small business segment of
Cable broadband Internet and telephony and 27% in RBS on-net next
generation enterprise segment revenues compared to 2011
demonstrate that Cable and RBS are positioned for continued growth
in these areas. During 2012, we grew 37% or $13 million in our M2M
technology and enterprise mobility application business segment.
We have made advancements in our Digital Media operations with
continued cross-platform investments across web and mobile platforms.
Our focus is on improving the user experience and engagement across
our various properties, as well as the back end infrastructure.
2012 PERFORMANCE AGAINST TARGETS
The following scorecard shows the guidance ranges that we
established for selected full year financial and operating metrics versus
actual results:
Full-Year 2012 Guidance
(In millions of dollars) 2012 Actual 2012 Guidance Achievement
Consolidated Guidance
Adjusted operating
profit(1) $ 4,834 $ 4,730 to $ 4,915 ✓
Additions to PP&E(2) 2,142 2,075 to 2,175 ✓
Pre-tax free cash
flow(3) 2,029 1,950 to 2,050 ✓
Cash income taxes 380 425 to 475 +
Achieved ✓Exceeded +Missed X
(1) As defined. See the section “Key Performance Indicators and Non-GAAP
Measures”.
(2) Includes additions to Wireless, Cable, Media, RBS, and Corporate PP&E
expenditures. See the section “Additions to PP&E”.
(3) Pre-tax cash flow is defined as adjusted operating profit less PP&E expenditures
and interest on long-term debt (net of capitalization), and is not defined term
under IFRS.
Adjusted Operating Profit
We leveraged our leading networks, channels and brands to deliver
an increase in consolidated adjusted operating profit of 2%
compared to 2011, which falls approximately in the middle range of
the 2012 guidance we provided at the start of the year. Early in 2012,
our revenue growth trajectory was generally lower than anticipated
due to competitive intensity in the Canadian communications
industry. We took immediate action to accelerate a number of cost
management initiatives aimed at offsetting the top-line pressures,
and also put in place initiatives to reaccelerate the rate of revenue
growth. We drove cost efficiencies across the business by streamlining
and reducing complexity, while strengthening the customer
experience by delivering seamless, reliable and easy-to-use services
and support. In so doing, we reduced consolidated operating
expenses, excluding the cost of equipment sales, by approximately 2%
from 2011 levels and grew consolidated margins to 39%.
Additions to PP&E
To maintain our network leadership, we invested in significantly
expanding our LTE wireless 4G network. Our focus was on further
increasing our broadband cable Internet speeds and enhancing our
television platform to more seamlessly provide a four-screen “TV
Anywhere” experience.
2012 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 31