"Rogers delivered a solid performance in the second quarter both for financial and subscriber results, delivering solid growth in a highly competitive environment," said Nadir Mohamed, President and Chief Executive Officer of Rogers Communications Inc. "The strength of our asset mix combined with successful execution on our priorities - wireless data growth, customer retention and managing our cost structure - enabled Rogers to generate continued strong margins and substantial free cash flow."
Highlights of the second quarter of 2011 include the following:
· Wireless data revenue growth accelerated to 31% and net postpaid subscriber additions totalled 108,000, helping drive wireless data revenue to now comprise 35% of Wireless network revenue. During the quarter, Wireless activated and upgraded 591,000 additional smartphones, of which approximately 40% were for subscribers new to Wireless, compared to 385,000 in the prior year quarter. This resulted in subscribers with smartphones, who typically generate ARPU nearly twice that of voice only subscribers, representing 48% of the overall postpaid subscriber base as at June 30, 2011, up from 35% as at June 30, 2010.
· Wireless launched the first Canadian commercial deployment of Long Term Evolution ("LTE") network services in Ottawa. Rogers expects to follow this launch with market launches of LTE in Toronto, Montreal and Vancouver later this year, and in the rest of the top 25 Canadian markets in 2012. LTE is a next generation technology that enables unparalleled connectivity, offering speeds that are between three and four times faster than HSPA+ with peak theoretical download rates of up to 150 Megabits per second (Mbps) and upload speeds of up to 70 Mbps.
· Rogers began a $80 million investment to further enhance our wireless voice and data network in the Maritimes, extending the Rogers 4G HSPA+ coverage to almost one million more people across Nova Scotia, New Brunswick and Prince Edward Island, representing a 130% increase over the current population coverage of our network in those provinces.
· Rogers won an important contract to provision machine to machine ("M2M") wireless connectivity for Hydro-Quebec over the next six years. Rogers will connect Hydro Quebec's central system with up to 600 Smart Meter collectors, which aggregate electrical service utilization data relayed from Quebec's approximately 3.8 million Smart Meters.
· Wireless launched Canada's first Wi-Fi voice service for smartphones to help business customers save time and money by enabling mobile calls from their smartphones over a Wi-Fi network that do not count towards monthly voice plan minutes. Calls that originate on a Wi-Fi network are automatically transferred to the Rogers wireless network when the person leaves the Wi-Fi coverage area.
· Generated $559 million of consolidated free cash flow in the quarter, defined as adjusted operating profit less PP&E expenditures, interest on long-term debt (net of capitalization) and cash income taxes, relatively consistent with the second quarter of 2010 and reflecting steady levels of adjusted operating profit being offset by an increased level of PP&E expenditures. Free cash flow per share increased by 2% over the same period reflecting accretion from share buybacks which have decreased the base of outstanding shares.
