Some Rogers/Fido integration

Archived from groups: alt.cellular.fido (More info?)

Have been browsing Rogers's quarterly report at
http://library.corporate-ir.net/li [...] alMD&A.pdf


Some tidbits:

Rogers expects billing and back-office integration to be done before end
of 2005. Integration of the 2 GSM networks supposedly according to plan.


There are actiually 2 subsidiaries: Fido Inc. (formerly the Microcell
Connexions) and Fido Solutions Inc.(Formerly Microcell Solutions).

The GSM/GPRS/EDGE network provides coverage to approximately 93% of
Canada’s population. Wireless’ seamless TDMA and analog network provides
coverage to approximately 85% of the Canadian population in digital
mode, and approximately 93% of the population in analog mode.

POSTPAID
3 month periods ending March 31 2005 2004
change %change

Total postpaid retail subscribers 4,273.3 3,112.8
1,160.5 37.3
Average monthly revenue per user ("ARPU" ) 59.20 $ 55.74 $
3.46 $ 6.2
Average monthly usage (minutes) 454 362
92 25.4
Churn (2) 1.90% 1.73%
0.17% 9.8

So bringing in Fido greatly increased ARPU, yet Rogers is trying to
destroy that advantage by killing Fido's competitive offerings such as
City Fido, cheap long distance etc. It will be most interesting to see
how these numbers change a year from now. Note the churn rate going up.


ARPU for prepaid went from $10.96 to $12.09 per month. (Wow, what a
difference between prepaid and postpaid). Rogers admits this increase
was due to Fido subscribers who had far higher ARPU.



Now, something to watch for Fido customer, this is bound to be applied
to us eventually:

Effective December 1, 2004, voluntarily deactivating subscribers are
required to continue service for 30 days from the date termination is
requested. This continued service period, which is consistent with the
subscriber agreement terms and conditions, resulted in approximately
7,000 greater net postpaid subscriber deactivations being included in
the three months ended March 31, 2005. This had the impact of increasing
postpaid churn by 0.05% for three months ended March 31, 2005.


And this:

(4) Effective November 9, 2004, the deactivation of prepaid subscribers
acquired from Fido is recognized after 180 days of no usage to conform
to the Wireless prepaid churn definition. This had the impact of
decreasing prepaid subscriber net losses by approximately 12,000 in the
three months ended March 31, 2005 and reducing prepaid churn by 0.25%
for the three months ended March 31, 2005.


This is interesting. Prior to Microcell's bankrupcy, it had cleaned up
its act with regards to providing truthful subscriber numbers, resulting
in greater churn number, something analysts used to say Microcell wasn't
doing well. This shows that Rogers has a far more permissive definition
of "churn", waiting a much longer period before delcaring a prepaid
customer lost compared to what Microcell had.


Rogers mentions increase in inbound roaming revenus due to it the only
remaining GSM carrier in canada.


Data revenus represents 7.1% of total revenus, up from 4.9% last year.
(In europe, I think it is above 10%)


##
as a result of heightened marketing activity during the first quarter of
2005 associated with, among other things, the integration of Fido,
including initiatives to migrate Fido customers to contracts and
competitive offers in the market. These factors resulted in the 5.0%
increase in Wireless’ sales and marketing costs per gross addition to $380.
##

So there you go, Rogers really wants to convert Fido customers to
contracts. And it says that Fido traditionally has higher churn. Funny,
when Fido started and before it started wrecking its SMS plans, FIDO had
lower churn than AT&T and Bell.


##
Operating, general and administrative expenses increased by $94.2
million, or 48.2%, in the
first quarter of 2005 compared to the corresponding period in 2004 as a
result of the acquisition
of Fido, increases in retention spending and growth in network operating
expenses reflective of
the growth in Wireless’ subscriber base. These increased costs were
offset by savings related to
more favourable roaming arrangements and operating efficiencies across
various functions.
##

So, there are increases in retention spending. And while Fido just hiked
its roaming charges, Rogers admits it was able to negotiate lower
roaming charges.


##
Total retention spending (including subsidies on handset
upgrades) was $60.4 million in the first quarter of 2005 compared to
$37.0 million in the
corresponding period in 2004. Retention spending, on both an absolute
and a per subscriber
basis, is expected to continue to grow as wireless market penetration in
Canada deepens and
wireless number portability (“WNP”) becomes available.
##

##
The operating profit
margin on network revenue was 37.1% in the quarter compared to 40.4% in
the same period of
the prior year, reflecting the impact of the lower operating margins at Fido.
##

So, It seems Rogers will want to hike our rates to incrtease the margin
to match its own subscribers so that we don't "drag down" its results.

During the quarter, Wireless also acquired $4.8 million of spectrum
licences in the 2300 and
3500 MHz bands.