Rogers Communications Inc (RCI) 2002 Q2 法說會逐字稿

Management Session I

Welcome to the Rogers Wireless and Rogers Communications incorporated second quarter 2002 earnings release conference call. During the presentation, all participants will be in a listen-only mode and afterwards you will be invited to participate in a question and answer session. At that time if you have a question, please press the 1 followed by the 4 on your telephone. As a reminder, this conference is being recorded Thursday, July 18th 2002. And now I would like to turn the conference over to Bruce Mann, Vice President, Investor Relations at Rogers communications. Please go ahead sir.

Thanks very much operator. Good morning everybody, it is Bruce Mann here. We have Ted Rogers with us this morning, the founder and Chief Executive Officer of Rogers Communications to share some opening remarks and then as we have done in prior quarters, we will spend the first portion of the call discussing and taking questions on Rogers wireless and the second portion focusing on Rogers communications. In addition to Ted with me this morning here in Toronto from Rogers wireless are Nadir Mohamed, President and CEO; John Gossling, our Chief Financial Officer; Robert Bruce, in charge of Marketing; Robert Berner, on the technology side, also with me is Alan Horn, RCI's Chief Financial Officer and Lorraine Daly, our corporate treasurer. The detailed second quarter earnings release is for both Rogers Communications and Rogers Wireless were made available this morning. If you do not have a copy, you can find that on the rogers.com website, they are on the newswires, they are also posted on the first call. Please have a chance to review the releases in their entity as they include some cautionary Safe Harbor language, that is important and that apply equally to the forward-looking statements in our discussions this morning on the call. We will keep our comments brief so we can focus on your questions rather than summarizing the releases. I will turn the call over to Ted Rogers for some brief regards and then to Nadir and then will take your questions on Rogers wireless and will cover the other Roger's divisions. Go ahead Mr. Rogers.

Good morning everyone. We had a good quarter across Rogers. We delivered on what we said we would do. Revenue growth of nearly 11 percent, operating profit up 16 percent. All of the operating divisions contributing to the growth. You know, at 75 percent, Rogers has the highest level cable penetration of any large North American cable company and this provides us with the significant base of customers to sell new services such as high-speed internet, internet like digital cable DOD and other advanced high bandwidth services, many of which have not been fully developed yet. The key is revenue and profitability for home . Rogers has sold at least one cable product to 75 homes out of every 100 homes past. That is real value for the sale of additional products. The unique intensity of our clustering combined with the deep level of penetration provides us with the solid platform to achieve operating efficiencies of cable.

At wireless, we have the only two national foot printing calendar, brand new state-of-the-art network built on the global GSM technology standard, an immense base of over 3 million customers and a business with tremendous growth in Florida. Everything will be wireless in the future, your phone, your laptop, your blackberry, and many other things. Importantly of both cable and wireless, the CAPEX cycle has peaked. Our cable plans among the most advanced in North America. It is now nearly all to way and our rebuilds will be substantially completed in 2003, at the end of the year. We have a brand new IP network, email platforms, state-of-the-art data seller in place following their chance in team's hugely successful transition from . You have not heard of complaints about the Rogers products and you are not going to be hearing about them in the future and wireless, just as past quarter, we fully completed the overlay of the new GSM/GPRS network following the completion late last year of the new Amdoc's back office systems.

You know, in the bigger picture, who would have ever thought that we would see the events of Enron, WorldCom and Adelphia and others all emerging together. You know the world has the right to ask what was management doing? Where were the auditors? Where were the boards? These events have created a confidence crisis in the capital markets of far reaching implications for companies that rely on the capital markets. Alan will give you some detail in a little while, but let me say very clearly that our branches are counting is conservative by industry standards in both cable and wireless sectors. Because we have been responsible in executing our financial strategy under the leadership of Alan Horn and Lorraine Daly, we had a very strong liquidity position, with available funds of over 2.4 billion dollars at the end of the quarter. We have solid corporate governance. It is something that I am proud of that we've worked very hard to perfect over the years. It is something that I think is an especially important for a family controlled company. We have separate chairman of the board at RCI, Gar Emerson who happens to be one of the foremost Canadian securities and corporate governance lawyers and who has incredible value in either side. Our board audit committees are chaired by independent members. We have an internal audit group that has direct access to the audit committees and to our external auditors KPMG.

Most importantly, we have a strong management team with ethics and values, which I believe are beyond approach. As a very important part of our governance factors, any related party transactions are reviewed and approved by the independent members of our board and they are fully reflected in our audited financial statements. You will notice that my signature as well as I have with the chairman of the board appears below our financial statements in our annual report attesting to their accuracy and completeness. While it was a quarter at in the financial market and especially typically one for all of you and the investment community, overall, Rogers had strong results with good sales and financial performance. All of our businesses are on plan to continue our progress into the second half of 2002. We see no reason to change our goings. Wireless continue to deliver improvements across all key operating metrics. Cables delivered on their commitments are demonstrating that the first quarter was elaboration and not a trend. Bringing in strong gains in the second quarter in digital and Internet subscribers very much stabilizing the basic sub-base. Cable goes into the second half of the year having very significantly increased the market awareness of the digital cable offering. Was'nt easy that new bundle offers that are resonating extremely well in the market and on track for the third launch of DOD. Previous financial performance again reflects the strength of the brands in the top market; I think excellent management and the industry experience of the management team that was top notch by keeping the cost structure in line with the market around them.

And I going to stop here and turn it over to Nadir and I am extra-ordinarily pleased to join this 2 years ago, who has assembled a great team and the results are starting to reflect his leadership and his team's performance.

Thank you. Good morning everyone. In the second quarter, we were again completely focused on our core objective of profitable growth delivering the third consecutive quarter of double-digit operating income growth. As well this quarter, we were again successful in significantly shifting the mix of our loads toward wholesale customers. We finished the quarter with our wireless voice subscriber based up 15.6 percent year-over-year. We had an over 71 thousand net additions in the second quarter of this year up 53 percent over last year. On a growth basis, both phases represented 82 percent of our total growth conditions. Our result on prepaid reflected record changes that were made in the first quarter to improve the profitability of the product.

On the customer retention front, we had solid success in controlling churn with postpaid churn for the quarter down to 1.8 million percent from 2.10 last year and prepaid churn at 2.41 percent down 13 percent year-over-year. We were successful in holding the postpaid accrues which declined to 2.2 percent year-over-year while prepaid accrues decreased 1.9 percent due to high usage from our subscribers. The combined with the 15.6 growth in our subscriber base, we achieved year-over-year second quarter network revenue growth of 10.1 percent. On the sales and marketing side cost of acquisition was 387 dollars per growth rate excluding retention cost, up primarily due to the higher acquisition cost associate with the significant improvements next towards post phase that are referred to.

On the operating sides to support the double digits subscriber growth year-over-year, our operating expenses grew by 1.4 percent for by 5.4 percent excluding the impact of the CR 2C contribution of rate decrease. Operating income for the first quarter decrease sorry for the quarter increase by 30 percent, the fourth quarter in a row of delivering year-over-year profitable growth as Rogers wireless. One of the priorities were laid out for 2002, was to quickly complete the deployment our GSM/GPRS and network overlay to match our analog footprints, which covers 93 percent of the Canadian population. And as Ted pointed out, we completed this during the second quarter ahead of schedule and on budget and today we have loaded approximately 140,000 customers on to our GSM/GPRS network. Finally on the down rate of last Friday, well we are disappointed, we also recognize the sweeping nature of these recent actions across the North American wireless sector and more importantly the down rate will not impact our access to equity. Our plans call for existing bank credit facility of 700 million to meet our revenues through our three-year planning arrays . At June 30 of this year with access to approximately 542 million, an additional borrowing under that facility. The priorities are outlined for the year reducing churn optimizing our customer mix profitable growth and as rapid kick-start to launching our SMS and data products remain unchanged. We are executing our target consistently and our full year guidance remains unchanged. With that, I will now turn it over to Bruce.

Thanks very much Nadir. Operator ready to take questions on Rogers Wireless from the participants. I think just take a moment to explain how would like to do the calling process and I will just remind people that since we will be covering cable media and our corporate on the second portion of the call, we would appreciate it, you could focus to questions during the first portion on Rogers Wireless and I think all of the participants would appreciate it if we could keep the questions to one or two parts and then we will cycle back around if we have time and be happy to ask for any other questions that you have after the call to the extent you don't get some answers. Operator would you please go ahead.

Management Session II

Ladies and gentlemen please remain online, the second portion of the conference call will be starting momentarily thank you for your patience.

Operator I think we are ready to start the second portion of the call what we will do is cover up as we have done in past quarters, we will cover our cable, media, and any other corporate RCI type maters in the second portion and with that I just turn it over to Alan Horn.

Thanks Bruce. As Ted mentioned, Rogers had a good quarter from an operational perspective; consolidated revenue was up 10.5 percent, operating profit up 15.7 percent to 288 million dollars with all divisions up over last year. With good post paid ads and wirelesses in the deal is just explained and the basic cable did show an high speed subscriber known as the cable roll as of last year and demonstrated as Ted said, that the Q1 results were an event rather than the start of a trend. Media produced good operating results in a difficult economy and was awarded a valuable new broadcast TV license for the kind of market. Let me touch briefly on a number of items in the quarter that give rise to income statement impacts below the operating profit line. During the quarter cable raised to US 550 million dollars of long-term debt and was a part of processes to repurchase its existing locked outstanding debts. These repurchases did rise to a net of 20 million dollars chart reflecting normal prepayment premiums in the right off the financing cost etc. Also in the quarter the strengthening of the Canadian dollar against the US dollar gives rise to 64 million dollars income inclusion under the new foreign exchange of as introduced this year.

Also during the quarter, we carried out to review required under GAAP of the carrying value of our non-temporary investments and as a result forth came the carrying value of stock and investments primarily our holdings of critical cabling and critical link, to reflect a significant and sustained market decline that has been an experience, this stage the non-cash impact of rising the critical holdings was 198 million dollars. Finally under the income tax of accounting rules on the more likely than not cash for the utilization of tax carry forwards who were required to judge the loss carried forward recognition of cables to reflect the fact that we are using part of these losses to shelter the gains of tax under the 18 - K Canada deposit proceeds.

Again that will be recognized in our Q4 array of results if the transaction closes as anticipated. As a result the adjustment of our deferred cash credit evaluation alliance comes to an income statement as a non-cash credit to earnings this quarter of approximately 115 million dollars.

Moving on to liquidity, I think as you had mentioned last Fridays Moody's down graded the ratings on wireless and put RCI ratings under review. Importantly these rating actions have no ability of any Rogers company to access our committed bank credit facilities or worth increase the cost of these facilities. We remain fully and comfortably in compliance with our bank and public ordinance and expect to remain so under our guidance and business trends. We continue to maintain a cash buffer of over 670 million dollars and this cash together was on gone in accessible bank lines given so available liquidities totaling 2.4 billion dollars on a consolidate basis. We are on track with our plans and we continue to maintain and just demonstrate our commitment to discipline capital spending and to financial flexibility that is key to strategic objective. As Ted said earlier at Rogers, we view our accounting is consulted by industry standards in all our segments cable, wireless, and media. Our capitalization policies are routinely reviewed by our auditors KPMG and their audits there are premiums and assessment that are shared directly with our audit committee. We fully expand equipment subsidiaries to arrive at our operating profit figures, were still associated with wireless phones and stock invests quarter set top box sales at cable. We do not capitalize cable disconnect and reconnect cost and cable its basic cable subscribers fully in accordance with CCTA guidelines. So, let me close here by saying that we are firm in our guidance for the year that we are well funded to execute our plans and that we will continue to execute responsibly on our financial strategies to insure that we continue to have the flexibility and buffers which are still important in these turbulent capital markets. And now back to Bruce.

Thanks Alan, with me today in addition to Alan, John , President and CEO of Drivers Cable and Tim Anderson the CFO have joined us as well as Tony Binder and Lord Nickson, the CEO and Chief Financial Officer of Media, as well Greg Henderson, our Corporate Controller is with us, So with that I will turn it over to you operator to call for questions after the second portion. Thank you.

Q and Session I

Thank you sir, ladies and gentlemen, if you would like to register a question, please press the 1 followed by the 4 on your telephone. You will then hear a three tone prompt to acknowledge your request. If your question has been answered and if you would like to withdraw your registration, please press the 1 followed by the 3. If you are using a speakerphone, please lift your handset before answering your request.

One moment, please for the first question. Our first question comes from Peter Rhamey of BMO Nesbitt Burns; please proceed with your questions.

Yes thanks very much. Very good results. Nadir, you had a good job emphasizing postpaid that shows up in the results from the last quarter and this quarter and lowering your operating cost, which is good, but what about free cash flow more specific to this, how do you see CAPEX trending longer term, in over three you don't construction CAPEX, I don't believe for and you can reduced spending on GSM presumably and you don't have your inbox system to install so isn't it , I know, you don't give official guidance on over three but doesn't it suggest that there will be aggressively bring down CAPEX here?

Peter thank you and just picking up on, what Ted referred to obviously,we have already peaked in terms of our capital investment and the GSM/GPRS deployment is behind us now, DuPont, Amdoc is behind us, if you look at the quarter and where we are on capital investments, we are showing it at a lower number frankly than last year and obviously we reflect I think is talked about. Having said that we are going to invest in capacity in the downs of the European. That's been the reason why we haven't changed the guidance for this year. Looking out further has there is no question that we are only aggressive in looking at capital. We are focused on getting to free cash flow and so combinations of earnings growth and looking at capital to coming down over the next couple of years is something that we are pretty committed to.

Would you those so far as to give us a timeframe for free cash flow positives?

What we give we have been pass to set to end of 2004 is when we get the free cash flow so if you think for the year 2004 and 2005. Now, you know, what we are already committed to is based on the transfer results just trying to improve on that but at this point that's what do we said.

How would you position that, this is my last part, relative to other carriers particularly in US, we are emphasizing free cash flow in the other part of 03?

Yeah when you, Peter and by the way, I like the three prior questions, we will take that this as not as routine, I mean here is the reality that, you know, every day as that we look at our results with, we think of free cash flow in terms of what are the things that drive in and the two keys to free cash flow clearly are operating earnings and capital and I think you have seen our results and clear to the commitment there to just drive that on going. We are just not as at this stage, ready to change our kind of overall, a guidance that was given

Great thanks Nadir and my apologies.

Our next question comes from Glen Campbell of Merrill Lynch; please proceed with your questions.

Yes thanks very much, Nadir you made great progress in changing the mix and favor of postpaid, you have also talked about increasing the proportion of business in heavy users within the postpaid mix. Could you give us any metrics or any census of how that's going?

Glen, Thank you, I mean, clearly when we started getting in to the year we talked about key strategic change in the mix going more to postpaid, I think we are successful in getting that change going. The other piece was focusing on the business and the youth market. Glen, to be quite of front on the business side we have not given specific numbers of to share, what I can't tell you that with, the focus we have had, it has taken us a while and we have seem some encouraging strength in the last part of the quarter which is suggest that we are getting . The change in mixed of business is more the longer term, aside is not something from internal but we are see some early times I say in the later part of the quarter.

Okay thanks very much.

Thank you.

Our next questions comes from Dvai Ghose of CIBC World Markets, please proceed with your question.

Yes thanks very much. Nadir, if I could talk about the leverage question again following from Peter Rhamey's questions, I am wondering if you would be looking at any sort of non organic events to try and bring down leverage such as a right equity issues, and on a related point, you talked about the strong liquidity you have in terms of your bank lines but you haven't released your governance, so could you give us a sense of comfort as to how onside you are in turn to the covenant ?

May be I'll just lead and then turn to Alan for some comments on the financing aspects, you should know that, I think you do,from my kind of essentially, our focus very much is on the operation. It is nothing more to get the earnings improvement going, we laid our fact that we have gained, and that's why we are focused on, we think that if there is one sure way of delivering on the promise of free cash flow through improving our results and that's the primary focus. I think that Alan you have action points.

Yeah, I think the in clearly in terms of, you know, that the balance sheet say currently there is no any sort of initial rights issue etc. and we do have the broadest campus buildings with some network value of roughly 157 to 160 million dollars that's on the wireless safe books and as far the amortization. Opportunities, there a in the context of wireless in terms of the bank facilities, I'll ask Lorraine just to take us through with us in the main component level is on.

Well sure at the end of June the government on total debt to cash flow under the bank loan which is generally the most restrictive set of government is 6.5 times, that's total debt to cash flow on a hyperlink for quarter basis.

And that's EBITDA cash flow, is it?

Yes basically yes.

Yeah.

Under that calculation and also the senior debt to cash flow of government under the bank loan is 5.5 times at the end of June.

Yeah.

We are well under that and under those calculations we show under the most restrictive government that we could borrow another 542 million dollars, under the 700 million lines, in addition to what is outstanding at the end of the quarter.

Great that's I get to know. Thanks very much.

Next question comes from Stuart Ishiwood of UBS Warburg. Please proceed with your question.

Hi, good morning. Couple of questions for Nadir. First of all, are you content to see declining prepaid subscribers through the next few quarters and secondly it looks like you are tracking to be right at the high end of your EBITDA target for the year and I am wondering if you see that as an opportunity to get more aggressive with marketing in the second half or whether you would rather bid your EBITDA targets? Thanks.

Stuart, thank you. So, there is a leading second question. On the prepaid first, you know, if you go back to where we started the year, we will talk about changes and mix and the driver clearly behind us was one that is the better nature of the postpaid customer, but also the economics for prepaid just weren't good enough. So, our focus was on fixing the profitability of prepaid. We feel we have done that. What is also done is we pushed up to look at how we drive the costs down and costs out of prepaid so that we can guess a better price point in market and guess the numbers again, but on a very different basis, the basis that makes us money and puts the product in a position that we like. On that maybe Robert you can talk about what was done in market.

Yes Stuart, we obviously continue to be and recognize the prepaid customers, our incremental customers, but we insist on the balance that we infact have given you guidance on previously with perspective postpaid and prepaid mix. That being that we will have a well mark at 50 percent of our customers on postpaid, but recently in fact Monday we launched a new handset, again completely unsubsidized handset marked at 149 dollar price point, which we feel, will make as much more competitive going forward on our prepaid offering and we will stick to that to where we need to be in terms of the share of the prepaid lot.

follows up from the question just little bit on what Rob said. I think John has taking beyond prepaid values. You will see us much more aggressive in terms of driving out from costs from the hardware side. So, we are working closely on that. On the issue of the EBITDA, I think, you know, we are obviously pleased with progress so far, the reality is the next two quarters are much more challenging if you look back at last year there is no question that as the year ended, we were much stronger and I refer to our operating earnings growth, double digit on last three quarters, clearly with, in the back end of the year and then comparing to a much better performance in the later half of last year. So, at this point, we are not changing the EBITDA guidance. Thank you.

Okay. Thank you.

Our next question comes from Richard Taboe of RBC. Please proceed with your question.

Thanks very much and good morning. Question on the sequential change in growth in the revenue, we saw a very strong pick up in the second quarter from the first quarter and that reversed what had been a declining trend, and I wondered if you could help us with what the main components were, why this quarter was particularly strong, whether it is seasonality, whether it is pickup in terms of any great changes, price changes you might have put through, or whether it is more of a mix issue?

Thank you Richard. Actually John coming to cover up the revenue questions.

Yes, Richard seasonality is clearly a big part of that. When you look at the change in the network revenue last year of Q2, sequentially from Q1, it is almost the same numbers around 32 million dollars, now within that, there were some things that happened early last year, for example, we took our system access fee up from four dollars a month to 625 and that was only Q1 of 2001 for two months versus the three months this year. Couple of things that happened in 2002, we did another SAP increase from 625 to 695, that's in for the fourth quarter this year and we have taken some rate increases on roaming, we kicked in late 2001. So, our roaming revenue while the traffic is not growing as quickly as it had in the past. The rate increases help us and our roaming revenue is growing and a lot faster rate than it was last year, growing at double rates from what was last year. So, going through the main components, the SAP components really offset each other and they will be picking up in dollar terms. If I can just add a couple more comments, obviously the mix of postpaid is opening up as well. In fact, this quarter net on the days prepaid actually came down by a point and the other thing is pricing, I think we have had fairly stabled certain relative past year's stability and pricing and I think everybody will know as we have gone to for a minute for new customers in July and generally are looking at, you know, how do we put value back in pricing.

I guess if I can just come back on this stocks, when I am trying to determine as well as this is the beginning of a trend that is likely to continue through Q3, Q4 and onwards or whether, you know, we are more likely to see a traditional seasonal pattern, and was there any one-time revenue or anything that was specific to this particular quarter?

No absolutely not.

Okay. Thanks very much.

Our next question comes from John Dorfman of Goldman Sachs. Please proceed with your question.

Hi, thanks. Nadir just two questions. One, can you just give some overall color on your view of a level of competition going on right now in the industry. Has it stabilized, that is somewhat, diluted too in the first quarter, is that continuing? And then secondly, can you talk about working capital and are you happy with the level of that right now and if not, how would you plan improving it?

Sure. I will lead off from the first question and John can cover off working capital. Compared to last year, I mean, there is no question remains as compared to as ever, I think, particularly in the west where doubt is, you know, I would clarify it as treating the west as Greenfield and often we have seen offers that clearly, suggest that they are approaching it from the prospective of prices as a leading way to capture share. Good news is that in the last quarter reported that seems to have stabilized somewhat the move to per minute is encouraging and it is encouraging to know that the I believe forth to tell us in our balance declared that they are also going to per minute. I think those are all encouraging signs. We have put some changes in the market that basically reflect. It will reflect an increased revenue for us going down beyond Q2 and maybe just a touch on prepaid, as we talk about prepaid and we will let you go in for the last one to cover up some of that.

Continuing down the road of driving profitability and prepaid, we have made moves at the beginning of July to unbundle our LD from prepaid. We previously had been the only carrier to include LD free. So, we will all though wake from that from that model and back into what is more conventional for the rest of the industry on prepaid that too will drive more favorable revenue as we move into Q3.

John, under working capital questions, you know, clearly we need to bring every dollar and working capital that we can. If you look at what happened this year, we have been quite successful in bringing our receivables down. We had better success on collections and our systems stability certainly helped the fact, came to build that on time. The other thing is that very aggressive line is getting our inventory levels down with the moderate now with new devices coming on market, market that are quite expensive in some cases, we did balance, you know, feeding the market with those devices with maintaining arbitrary levels. So, again we have been quite focused on that. If you look at the quarter-over-quarter changes, it has mainly affected there is some seasonality because of seasonality in the revenue for the receivables followed and the second piece is payables, the on our public debts is paid annually and not been paid in early Q2 and early Q4 or so. That has created some volatility of working capital quarter-to-quarter.

Great. Thanks very much.

Our next question comes from Rob Goth of Credit Suisse First Boston. Please proceed with your question.

Thank you very much. My question would be on the data used. Are there any early data points that you can give us in terms of GPRS usage or SMS usage?

Rob, I'll turn over to Roberts Bruce, but I do wanted to say that the contacts of these are early days, so whereas on some fronts there has been encouraging signs, it is early.

Hi Rob Goth, we were very very bullish on the future of SMS when I said that on the last call. But frankly today, we are disappointed with our efforts in really driving at, what we think is the incredible potential of SMS. As I told you on previous calls, we have a 101.9 million, two-way capable SMS handsets that are now turned on, and you are well aware SMS is into operability .We just recently completed the turnaround. Today we are running in Q2, 25 million messages and as we close the quarter approaching ten million messages per month. Revenue is still small and in the near the small and as Nadir said in early days, we got MO only pricing turned on now which is another one of the key ingredients. So, we expect to see a pickup in subsequent quarters Rob.

Okay. Thank you very much.

And we have time for one moment from Paul Pew of GMB. Please proceed with your question.

Thanks very much. You, Nadir you laid out for us your priorities, which are really focused on the operation side, and free cash flow will be a result of that ultimately. There has been obviously one carrier in the market that is under some distress. I am wondering, could you just identify where on you priority list if at all you would be looking at any potential asset acquisitions or company acquisitions in the context of what is occurring with the other GSM player in the market?

Well Paul I should ask you which one of the distress ones you are asking about . I mean the question Pew is coming up on microcell and one of things that I want to help to save this and in fact the questions come to us gentlemen because we are the same technology platform, but my answer would have been consistent if you look at our network deployment, what we have got coast-to-coast on GSM/GPRS, frankly very hard to see what America would be on that kind of transaction, I mean in a global sense, three players are better than four, but to suggest that there is an opportunity today, It will be hard for me to just kind of contemplate that.

Thank you very much.

Actually we will have a couple of more questions, the next one coming from David Lambert of TD Newcrest. Please proceed with your questions sir.

Hi, good morning, Nadir you talked about focusing your CAPEX in the second half on capacity that means you are going to spend about 250 million dollars of CAPEX on increasing capacity. Can you sort of estimate what capacity increases your budgeting for the second half on your networks?

David, I am just going to ask Robert Berner to talk about our networks deployment, and I would not suggest that is the only thing and by the way just for the, you know, and are hopefully you are getting a sense of our Sal too, and that is that we are clearly looking at capital, reducing capital as we go along in focused on maintaining it , improvements as we go forward. So having said that Robert just a little flavor on what is coming up from the rest of the year.

Right. As Nadir mentioned earlier David, we focused the first half of the year on completing our GSM as well as continuing to do construction where we need to do that for competitive reasons. The second half of the year will continue in adding GSM capacity, we did not build the network out to its maximum capacity but we are building that based on a success base formula and demand arrive, we are investing further in GSM capacity. But in addition to that off course we continue to build in the where they are economically justify to do so and that gives us improved coverage as well additional capacity in the area were we are doing them. We have some small investment in additional coverage as well in areas that do have already covered and in the final category of expenditure would be in the areas of advanced services of capacity for those platforms as well as new services that we will be launching in the second half of the year.

David its John Gossling, clearly you know what happened through the year and you can see for the number of the case. We would expect it to be in the lower and as the range that would be given for sure. I do not think there is much David on that for the balance of the year.

Okay. Just another quick one if I can, I understand that there are some efforts to between these interiors on the to set up a GPRS roaming arrangement. Has there been any development that Rogers involved and what sort of pricing would you see?

Well the GPRS roaming off course is in inconsistent at point in time. There is two ways to accomplish it, I might through direct connection and one is through, I guess easily described would be some sort of clearing house. Yes there are efforts going on to create that, we expect that to move forward this year. I don not have any pricing to discuss at this point in time, but for sure that it is in everybody's interest to complete a world footprint of GPRS roaming as soon as possible. And then just one other thing in reference to our partner AT&T Wireless we clearly offer GPRS roaming between AT&T Wireless and ourselves.

Okay.

So its not limited to AT&T Wireless and ourselves.

Are you putting on expanding that they are roaming with other US carriers other than AT&T Wireless or you, are you sure like them to just go beyond theirs?

David, on the GSM side we have roaming with singular as well. So, it is not limited to AT&T Wireless.

And for this portion our final question comes from John Grandy of Yorkton securities. Please proceed with your question sir.

Thanks very much. Just may be served by plenty of it appears to be a tight move in the financial release. It says you were profitable in the quarter and you might want to double-check that. Moving on the results for the two-way messaging seem to be down indefinitely year-over-year, do you think you are reaching saturation for this product or is that simply a but users are waiting for new product launch?

Hi, John its Robert Bruce responding to the question, the thing I would start off with they say that the results that we see from day low and two-day low do not really reflect the success what we had. I think as we get further into this, we recognize how lumpy these worked and when we compared to year ago we have some great lowering a fairly massive number of and things of that nature. As, we move forward you heard our press release about the Peer later deal for example 45,00 lines, many of those would not be reflected in our loss and sales, later on this year and we got a number of other deals like that that would not be reflected until we load them later. As well as we move into the basis like Rim and we count them as voice subscribers as supposed to data, which again sort of makes the numbers less than decade of the success we felt. So again we continue to believe that our GPRS data is going to be the future to driving up the approve of our customers and we are happy with our success today.

There was a question earlier regarding revenues from a GPRS and you have it with regard to the SMS product. Do you have any guidance on any other segments as GPRS at this early day?

Its early days again, the thing that I would point about our GSM customers versus our TDMA customers, as we are seeing our proves about 9 dollars higher on our GSM/GPRS customers versus the rest of our post paid customers so we continue even though lets mainly driven by voice at this point we continue to believe that there is lot of upsides from the GPRS perspective but its too early to comment on the specifics of how much.

That is great and thank you.

Thanks Nadir and John Grandy also thank you for your question actually it helped to create some additional space in the room, numerous accounts are left to change your under garments, so anyway operator what we will do is we just going to hit the news button for a minute, to shift a few people around in the room and we will be right back on in about 30 seconds and we will precede with the second half of the call. Thank you.

Ladies and Gentlemen please remain on line; the next portion of the conference call will be starting momentarily.

Q and A Session Part II

Thank you sir. Ladies and gentlemen, as a reminder to register for a question please press the 1 followed by the 4 on your telephone keypad, you will then hear a three-tone pulse to acknowledge your request. If your question has been answered and you would like to withdraw your registration please press 1 followed by 3. If you are using a speakerphone, please lift the handset before entering your request.

One moment please for our first question. The first question for this portion comes from Stuart Ishiwood of UBS Warburg; please proceed with your question.

Hi yeah, I was wondering if you can give me some feel for how big a part the bundles played in your growth in digital and Internet in the quarter and whether you see it, got a big boost from the introduction of those bundles and perhaps therefore would be a bit softer in Q3 and Q4 whether you can continue that kind of momentum?

Stuart it is John speaking, we are delighted with the response of the marketplace to the bundles. I think there is no question that we have probably won the site from the sales result which showed great other in fact that we saw in the quarter was a, you know, some additional that was occurred both in the development of the bundles and then in what I call as launch weight marketing costs, that is not suggest that we are going to back away from this but from we going to continue to push forward with ease, I guess, we are hired by the fact that for example 60 percent of the customers taking the bundle, in the quarter since they were launched which was in the midst of the quarter. Our taking those bundles and in so doing taking incremental services from Rogers, so that it lifts our revenues. As well as the bundles aim customers within the contexts of the digital offering at a higher margin, portion of particularly the big 10, which is a higher margin say than the all end practice we previously operated so it has given opportunity to improve our margins on the digital products and thirdly, of course that I think really probably the Summer tax one of the main drivers behind it not just to boost digital sales, but also the customer retention pack and Iam not sure its possible for me or anybody else to measure this as yet although I would, you know, say that the basic customer numbers for the quarter were obviously much better than last year and I think better than we have seen from some of our other conquerors and cable and so one of the reasons we are going to, you know, continue to push forward strongly with this because we believe it will have very high impact or good solid impact on customer retention if be believe there is a cable, they have got a big decision to make in terms of going back to take an affect direct rate sale on the high speed product and so I think the bottom line answered as your question as we are pushing forward with this. We are hardened by the results, you know, even as we go into a new quarter people are continuing to pick up the telephone call and we bring activity on the contact existing customers who have two, but not three and talking to them about the third so I am pretty delighted about that.

Thank you.

Our next question comes from John Henderson of Scotia Capital Markets; please proceed with your question.

Thank you. I wonder if you could answer a few questions on the Internet front and just how many Internet like customers would have been in the mix there? And then if you could follow up a little bit on Digital return, how much that is coming down as a result of the bundles and or said Digital box sales?

I will, you know, grab the Digital numbers at the of the Internet first. Again, we very pleased with the degree of interest overall in the cable Internet products and our ability to capitalize on interest in the marketplace? Second thing this that this is obviously a deliberate strategy that we talked about at the very beginning of the year, which was to move from what was previously kind of a one trick pony which was one product Internet offering to a suite of Internet products which makes sure first of all that the superiority of the cable networks and its ability and its ability to deliver that product it has taken full advantage of it, secondly they were note left competitively exposed by only having one product the people decided for whatever reason to leave that product with nothing else to offer them.

The third thing is that the light products sales force is less than one quarter overall. So that it is difficult for us to kind of you know retaining it to a prior and fast conclusions as to as sort of how the market place is behaving in terms of not having two products and soon to be three, so within that historical context, I will say this much. First the light represented less than 20 percent of our growth adds, second more than half of the adds were rather new customers or say. Thirdly, and I think this is important to you because people have asked about it, but between one and two percent only of our base down graded and finally the light products sale is a profitable product, it is a good product and we think there is a great potential for it out there in the marketplace, so its early days, but that kind of the trending that we are seeing so far and we think it is going to be very helpful to us to strengthen our projection, on the, you asked about digital and Internet turn, the digital turn, running at about 4.9 percent , that actually is down I think a little tiny bit and in fact if you look at the sort of month on month it was down sort of over the course of the quarter revenues. I mean in the early days, the bundles were introduced during the quarter so I think it is probably too early to draw any conclusions from that. The internet turn frankly was a little higher you know in the quarter than you would have liked, but I think that has luck to do with bundles and lots to do with lighter module that the factory imposed during the quarter, people thought on the bills the first time in April, May a five dollar rate increase which on a percentage basis is pretty stiff and so we saw some optic in turn not surprisingly in the month of May, but then I am pleased to tell you that in the month of June trended back down, so, the turn was just over 3 percent in the quarter, but with the trend pointing back down on as we had in the quarter, so I think we see the impact of price increase and hopefully you know that's kind of work to switch your systems.

Thank you very much for a very complete answer.

Our next question comes from Benjamin Swinburne of Morgan Stanley; please proceed with your question.

Good morning, questions for John, second quarter data adds were very strong typically not the strongest seasonally in the second quarter, is there any reason to expect data adds to slowdown in the third or fourth quarter, should we see that essentially ran back up again and then on the cable, core cable margins at 40.1 percent, I realize, you mentioned startup costs of the bundles, should we expect that number to continue to trend down slightly in the third and fourth quarter as well? Thanks.

Okay then thank you for the question, there is two completely different questions there. The, I think that with respect to the core cable margins, you know, the first quarter sort of reminded us of the competitive realities, you know, of our marketplace, both for cable and Internet and we told you in the first quarter when we were reporting the results frankly that we found less that satisfactory that we would respond and so that resulted in the quarter in which I think there was an unprecedented what I call competitive activity with new products both develop and launched in the quarter with the kind of marketing top fire power, we think we needed on order to kind of be toe-to-toe or better with our competitors that include something Ted mentioned which is significant digital line of campaign which helped both the basic product ad digital. It included the launch of the bundles, the new VIP benefits which changes from a discount to a use of a box, and the light product and the introduction of the sale boxes and so the marketing support that was put behind these product was substantially increased level, It is hard to be on going reality of our business but I think that you will not see such developments cost to obviously repeated and you won't see the certain the launch style wait continue, but you will see us continuing to put fire power behind these products because that is what we have to do. A lot of it might be directed more I would say a direct marketing and so if I guess in the context of that, you know, the pressure on the torpedo margin as you would refer to is going forward. I don't think it, I mean, I think we are going to be confronted by the need to continue to market these products extensively, but I think if anything it may be the slight listening of that pressure because we have put the launch step behind us. I should mention as well that we are much underway with the cost containment activity that we have talked in previous quarters we have seen some real success in terms of achieving efficiencies in the business and if anything we are going to be intensifying our efforts in this regard through the balance of the year so that should pay some dividend as well. On your first question which had to do with the pace of Internet add, I guess it is the most important think to say because we are reiterating our guidance for the year with respect to Internet. I think that, you know, we had from second quarters before, so its not unheard and I think we just cannot with standing the student disconnect, the good news is though students you know tend to come back and we are going to make damn sure that the majority of those come to us and the majority of people were our people in the market for high speed service not just the one for may have temporarily left us in the Spring, so I don't see anything that is going to sure suggest that we will finish the year in a manner other than we expected and I think there is some up sight to the alter business which issue might repel or not included in our original beginning of the year estimates because it did not at that time.

Thanks a lot.

Our next question comes from Glenn Campbell of Merrill Lynch , please proceed with your question.

Yes thanks very much. I am thinking about free cash flow. I am wondering, I guess first , quite sure thinking of rate increases going forward and second how aggressively you might be able to take capital expenditure say in next year, and the year after?

Well, I think we have, you know, discussed before and again Ted mentioned earlier describing the fact that we have, you know, we are making great progress on pushing forward to complete our rebuild and that will carry into next year because of the acquisition of the and the fact that both need to have some rebuild done, but by the end of the next year, we are going to see a significant, you know, reduction in the commitments that we have to make to those, and so I think that on that side I think I am curious on every reason to believe that we have said along with Alan, myself, and Jim and others in which to say that you are going to see that number continue to come down and to grow this year over last and next year over this year.

How are your thoughts on rate increases?

Yeah, rate increases, sorry. Well, we are doing the activity which we have already seen with respect to the deregulations which is really differed bringing some of the systems that is started at lower rate up to account of our basic minimum threshold rate of 20 dollars and we are ought to see now given notice to a big number of our customers in the area what we are deregulated about is to be implemented. We have further applications in front of CRTC which we expect to be approved intently to deregulate really the vast majority of the rest of our customers and I would think we will then move to do the same thing because of something that makes sense for us to do and represent, I think we do the appropriate level of value for a basic product in the marketplace. I think involving beyond that we have said our all along and I think you said in part of your commentary, so that, you know, we can't rely on a significant rate increases, given the competitive market place to drive our growth that we are going to drive by selling new products to new people. We are going to grow it with some rate increase activity, couple are going to drive as well by just running the business factor and so, you know, we will produce the grow, but I think it will be less driven rate increases that approximately has been in prior years.

Just a follow up on your answer on CAPEX, I mean, we can try do the math of the amount of figure how much less you will be spending with the rebuilds done. I am wondering though is the capital budget a big target for your efficiency involved tightening program and do you expect you will take a lot of it simply by determining the spend loss?

I think the answer for the question is yes. Glen this, I'll answer that, I think, the review of the CAPEX programs throughout the company and is clearly an ongoing process that we were focused on. We have the certain remedies set and reference in their rating they comment here by free cash flow and clearly is up focused both externally and internally on that item. As you say, we are looking at it, in a context of say, other matters as well including the returns and invested capital purchases, which is clear that we have to get and that will return on our investing capital as John Gossling mentioned during that the wireless say a part of the medium working capital as also a major focus say to ensure the return of new dollars tight up in working capital, we don't need to. So, we are focused on all these items, say in which we believe are right in the current environmental and other things that all company should be doing.

That's encouraging. Thanks very much.

Our next question comes from Bob Bek of CIBC World Markets; please proceed with your question.

Thanks good morning. Just on the back of Glen's question is can I it down a bit as far as your free cash flow forecast for cable as an idea provided for the wireless? Just on the main question, if I could for John. Just the basics sub loss is obviously quite good for quarter relative to appears and again the bundling part will be a big factor, can you give us a brief commentary, the black market, green market, we are not going deep into that, but do you think that is also starting to subside a bit and we can expect to see just short of general competitive pressure at this point would cost any additional BPH pressure? Thanks.

On the first state, Bob we are looking at cable, we are looking at the same type of horizons as say any deal indicate that to wireless set clearly cable has got some success based capital embedded in that in terms of boxes, modems, etc. which may affect but they run at the same time and if they all favor in terms of free cash flow.

Okay.

The management team of cable is committed as you said in wireless. It is an important objective for us and we are both at an overall prior improving the operation and results and capital responsibility, with respect to the black market, I guess, there is a level just two things going on, I think in the marketplace the first, it is that there is I think some recognition on the part of the public if something is going on much we really fully understand the issue but I think it is resulted in some less but minimum interest to some extent on their part that's been coincidence with some reduced level of retail and advertising activity, I think it is some of the retailers side but they won't to run the risk of having getting, you know getting into trouble or supported and how that risk and I think that in turn is going to accompany by the beginnings of some unfortunate activities seen in Vancouver this last week or so but I think the net result of all that is a bit of steam coming out of that particular engine. I think I should reduced that retail presence, I think we got a pretty good correlation that is in existence on the part of the programmers, distributors, both satellite and cable to kind of deal of issue and we are working as best we can to convince the government is not a critically attractive issue for them to get involved in, but we are trying to convince them that it is obviously they are going to accept rules to basically in broadcasting system and help us all within those rules. I would say that one of the things that is going to sitting up there is what a kind of domestic black market issue. It continues to be a concern, its occasion by the ease of which people can take service for unauthorized basis from experts view for technical reasons. I know they must treat it as a serious problem and I think they will have to act on it and I think probably accepting that we focused on but we know we can stand by if there is an action taken and our kind of programmer that just brought back, continued to impact on the marketplace on the value of programmer will buy and so on. But overall, I think that some of the level of activities on the black-market both domestic and international reducing and we are so we got to work hard on the basis of the subscriber did this for it was a whole series of issues including and a lot of other things and a lot of strategic numbers but we started on the next floor already two weeks ago.

Okay thanks very much.

Our next question comes from Vince Valentini from TD Newcrest, please proceed with your question.

Thanks very much. One small and one bigger picture question, on the digital box subsidiaries, very small this quarter, but I assume to get bigger, if I take 600,000 dollars to buy 6100 boxes it is only subsidy of 98 dollars a box. So I just want you to indulge with your selling those boxes versus your cost and that seems like a low subsidiary relative to some of the peers and the bigger picture question, I guess is for Alan is, if you are confident in the free cash flow profile improving, you sitting on 670 million or so in cash, I mean with the stock, so just estimated, you could do a substantial buyback of either wireless or our RCI stock that is something that will be considered.

May be with the three part questions, I will review part I and then I will ask to give you the sort of a numbers that how are selling boxes and Alan can deal about what customers you will have extensive commentary we are dealing are and in everything we don't ever find are dealing with. On the digital box, I guess, what to say is, when you take the position we take in, which I think is the right one with respect to how to treat this, we are accounting for, there is obviously an impact, as well cheer on your decision as to how aggressively to go about and sell the boxes. We will certainly view the the sale of boxes as one arrow in our clipper as opposed to the only arrow, we will sell boxes where it seems to appropriate to, you know, at the right solution for a given customer but we will obviously be looking at the impact going to have on our income statement and much of our this quarter's rate is going forward because there are benefits to have a customer with a box in the house and cooperate the sale of our box accordingly. So, I just don't think, I think, the point I make here is you are not going to see a gigantic push on by our part to sell the box. We are very happy to rent boxes to customers. In fact, there are many continuing not but they are happy and many of them continue to choose the rental options and we think that's fine. So, I think, you want to provide the numbers on the.

We are selling the boxes in the marketplace for about 250 dollars, which is a build up. The boxes cost as roughly 400 dollars; it is more roughly 150-dollar subsidy on an ongoing kind of basis. In this quarter, the boxes we sold primarily or partially are appreciated boxes. So, there is a lower level of subsidy in this quarter and so on a going forward basis, the subsidiary would be a bit higher, but not for longer.

And, the question of the, say, free cash flow and cash on the balance sheet, as I said, you know previously I think with our 9 billion dollar balance sheet, just a 600 million dollars of cash flow is reasonable, you know, part for from our perspective and in terms of the you know, the situation we confront, you know, clearly we know a look at the offshare, on-share price wireless share pricing and is not particularly happy with all other but, I think in the context of businesses, you know, still this year will be, you know, negative from a free cash flow perspective. I think, you know, we are being cautious in the current environment.

Our next question comes from Richard Taobe of RBC, please proceed with your question.

Good morning, thanks. Alan a question for you, when you look at the overall business and the capital intensity of it, longer term, what do you think you need to invest in it as a percentage of your revenue to sustain the business?

You know clearly it says that it depends on what the, which persons is, if you would say across the media and then it clearly the capital intensity is, you know, is very low. I think, you know when you look at it and then, you know, the contacts, more of, you know, quite fast but the capital investment will do in terms of driving EBITDA growth. You know, we have, as indicated, you know, we would like to add a cable as we go through the new , you know, this priviledge level of CAPEX, will come down now and will be you know, be down at, at that level of course for you forced for you on an ongoing basis, same resting with wireless, you know, fairly well over that the heavy lifting of GSMA, and you know the GSM build and again you know the incremental CAPEX now will be related to capacity which, you know, would be, you know, revenue generating. I think when you look at it some more in the context of, you know, the return on the investor capital, let us say, you know, this CAPEX sale requires us a force to necessarily, you know, the revenue, you know, to raise the capital intensity and clearly our goals that are is just insure that the return on investor capital and absolute terms as trend in the right way. I think an increase in inventor, an increase trend in the joint investor capital is from our prospective and you know one of the key drivers in terms of how the business is operating. Over the last couple of years, with the large capital programs that we have gone through, we have seen a decline and that is the tone in investor capital, I think as we get over those, you know, those programs would see the, you know in our planning horizon that the return on investor capital increase in and they would that as positive.

And maybe I compared it this way. If you were generating an EBITDA margin, that's on the cable side of about 35 to 36 percent, CAPEX is a percentage of revenue on a longer-term basis, you would see as being what 20 to 25 percent?

Thank you. You have to say, you know, probably say, you know, those are some numbers that we walk around and I walk around with, you know, we have specifically said that they are on an ongoing basis, you know, 400 million dollars in terms of a CAPEX, as we get through the rebuilders, it is a type of level, it had been and that is obviously that do not get you know, no caught off with you know, how many digital boxes or set-top boxes that are that are defined. But it is, you know, the capital, you know, fairly were in capital-intensive businesses, you know the level of CAPEX, you know, we have to make sure that we keep it in line with both top line growth, also they can know that they did well.

Thanks.

Our next question comes from Rob Goth of Credit Suisse First Boston. Please proceed with your question.

Thank you very much. My question would be for John. Could you give us an update on your new service rule outs, in terms of progress being made with your on demand services as mentioned, and perhaps looking much further towards telephony?

I do not really have anything to say with. We have been doing fair bit of work this summer on telephony, but continue to believe that the timetable to previously, you know, that are 4-year terms of these sort of availability and scalability of technology and the fight to get a appropriate business , suggest that some business of in the future. So, you know, I do not have anything new to tell you with respect to any of our timing in that regard. I am pleased to tell you with regard to the on demand side of the house that things are preceding as schedule. We expanded the small sort of, roughly small trials, who are much larger operational ratio tests, so, we have today, getting closer to 2000 subscribers that are on the service, in the central in Toronto and we are planning our commercial role about that service in August and that everything is running on track for that. The one thing that is the revenue in total depending on, kind appeared is is our discussions with the studio, we had in place now agreements with people like , Newline, , and so on and so there is program and that is available to us and will be available for our customers. The discussions with the large studio, pinned the sort of moving it around even pace, we are obviously going to get a good result as soon as we can, but we are also not going to sign agreements that are improving themselves and so, you know, that they have to set our business models. So, I think we are going to take a round track to launch the product in August in Toronto, we are then going to look at a subscription video on demand product, you know, potentially later in the year and then we are going to test our business on a month-by-month basis in order to help us determine the timetable for expansion of the service to other areas in the next year.

Okay. Thank you.

Our next question comes from Paul Pew from Griffiths McBurney Apartments. Please proceed with your question.

Thanks very much. Firstly, could you walk through the reign in due the bank line governance at Rogers table, somewhat to how you did the Rogers wireless for us and secondly, when you look at, and this is probably a question for Alan nor Ted, if he is still there. If you look at the corporate structure of Rogers and where the equity value currently is trailing in the market, obviously, I would agree with Vince Vaentini that it has been detonated here. There was a lot of discussion about breaking the company up to some extent, i.e., on the Rogers media side and clearly that has not been recognized for any value currently in the stock price and I am wondering if there is any, can you update us with regards to the initiatives in that regard, looking in at that alternative, substance value per your shareholder base by splitting up the media division to its shareholders. Thanks.

It is Lorraine. Okay, the bank loan governance for cable are generally most restricted to the cable than they are for wireless. At the end of June, the senior debt to cash flow governance and in this case its EBITDA last quarter annualized as supposed to trailing four quarters as it is wireless.

Okay.

So, in cable, the senior debt to cash flow covenant is six times the total debt to cash flow covenant is 6.5 times and according to our calculations, this leaves incremental borrowings for cables since they had nothing else standing any way, up over the amount of their one point 1.075 billion dollar bank loan. So, in other words they have accessed to the entire line at the end of June.

Thank you.

respond on the second box.

There are no plans to spend out media. I am very pleased with the progress that the media is making, its medium size growth with under Tony's leadership, he is think we are never understand it, but its not of a size that I would think we would want to have was a separate corporate company and it is incredibly helpful to the different Rogers brand of Rogers products in wireless and cable to have the tremendous backing that we have from media. So, its working very well in trends, helping trends so as to speak, which we are trying of do a lot of within the groups of companies.

I think the key and you're on it, Paul is this thing and first of all, I think we want to see media continuing to grow, you know clearly if there are any changes in the fundamental shift base and rules as we will make it unhelpful to or a problematic for our scientist to have a media company within the basic , you know, that could be an added point on it, but, you know, currently the media is providing, saying that, good results, good revenue growth, good EBITDA for the growth.

Its Ted, I can't help, but to comment there is a story in the Wall street Journal today about and trying to sell a bundle of adds to customers and it is something that Tony Binder and his group have been doing for many years and has quite a great success record.

Our next question comes from Tim of . Please proceed with your question.

Thanks. Good morning. I have a question for John. John, could you comment on the competitive nature of the MDU business right now? Are you seeing stability as far as your major competitors initiatives in that business or is it a segment that's getting more competitive? Thanks.

No. Thanks for the question. I think you know, if you go back my answer would have been quite different when ride through 3.5 years ago, but I think all of the efforts that we were undertaking at that time to form proper relationship with these people, proper in the sense that more business like and you know our relationship to begin with, were we actually talked to them each day and talked about their needs and try to service them better and so on. It has paid huge dividends for us, so what happens now is that you know there is really no way in which we can preserve exclusivity in building any of the rental buildings and as a result, it often is the case instead of us having some right to access this, of the manager or the owner, in effect gets the because they say they are so happy with the arrangement they have with Rogers and half of the customers, so they do not want do deal with of our digital having 2 cents of relationship. So, while we find our competitors are more certainly out there, we are also finding that the number of buildings that we are, you know, loosing, or even were we are facing direct competition you know is not that significant relatively speaking and we are also finding and I think this is important if you look at the growth of new homes in the in particular, as a result of brand new constructions are lot of this of 8 cents in our success and climbing up those new buildings and has been extraordinary and if you look around the landscape today and see all the plains I mean, I can tell you that there are huge percentage of our buildings today, as they are under construction have contracts to drivers cable plus the wireless going to provide services to all people. And so, I think it is going to give us good opportunity for not only to keep to keep the base in places there and you know keep an eye on it because the competitors are out there every day but at the same time as well to show some growth. So, I think it is an area that we have to be constantly vigilant on, but I think it is an opportunity more so than it represents a threat at this point of time.

Our next question is from John Grandy of Yorkton Securities. Please proceed with your question. Mr. Grandy, your line is open, you may proceed with your question.

Operator?

Yes I am afraid Mr. Grandy's line has disconnected at this point Sir.

All right, well let me thank you for conducting the call. On behalf of Ted and the management team of all the Rogers companies and thank you all the participants for joining us and especially for your ownership and your coverage of Rogers and if any one joined the call later, there is a re-broadcast on the Rogers website, there is also a dial-in number to access the re-broadcast that we recently put out on July 5th announcing our conference call. So again, thank you, for your further questions, please contact and myself. Our numbers and contact information are on the releases of this morning. This concludes our call. Thank you.