Rogers Reports Fourth Quarter 2008 Financial and Operating Results



    
        Fourth Quarter Consolidated Revenue Grows 9% to $2.9 Billion;

         Adjusted Operating Profit Grows 1% to $968 Million as Strong
      Double-Digit Operating Profit Growth at Cable is Partially Offset
        by Acquisition and Retention Costs From Successful Smartphone
       Campaign at Wireless and Advertising Revenue Declines at Media;

       Wireless Generates Further Improvements in ARPU and Churn, While
           Cable Drives Continued Year-Over-Year Margin Expansion;

     Consolidated Net Loss Reflects Non-Cash Impairment Charge of $294
      Million Relating to Conventional Television Assets Resulting from
               Recessionary Declines in Advertising Revenues;

     Rogers Board Approves 16% Increase in Annual Dividend and Renewal of
               $300 Million Share Repurchase Program for 2009
    

    TORONTO, Feb. 18 /CNW/ - Rogers Communications Inc. today announced its
consolidated financial and operating results for the three and twelve months
ended December 31, 2008.

    
    Financial highlights are as follows:

    -------------------------------------------------------------------------
                               Three months ended        Twelve months ended
                                      December 31,               December 31,
                        -----------------------------------------------------
    (In millions of
     dollars, except
     per share amounts)    2008     2007    % Chg     2008     2007    % Chg
    -------------------------------------------------------------------------

    Operating revenue   $ 2,941  $ 2,687        9  $11,335  $10,123       12
    Operating profit(1)     902      884        2    4,078    3,099       32
    Net income (loss)      (138)     254      n/m    1,002      637       57
    Net income (loss)
     per share:
      Basic             $ (0.22) $  0.40      n/m  $  1.57  $  1.00       57
      Diluted             (0.22)    0.40      n/m     1.57     0.99       59

    As adjusted:(2)
      Operating
       profit(1)        $   968  $   957        1  $ 4,060  $ 3,703       10
      Net income            164      302      (46)   1,260    1,066       18
      Net income
       per share:
        Basic           $  0.26  $  0.47      (45) $  1.98  $  1.67       19
        Diluted            0.26     0.47      (45)    1.98     1.66       19
    -------------------------------------------------------------------------

    (1) Operating profit should not be considered as a substitute or
        alternative for operating income or net income, in each case
        determined in accordance with Canadian generally accepted accounting
        principles ("GAAP"). See the section entitled "Reconciliation of Net
        Income to Operating Profit and Adjusted Operating Profit for the
        Period" for a reconciliation of operating profit and adjusted
        operating profit to operating income and net income under Canadian
        GAAP and the section entitled "Key Performance Indicators and Non-
        GAAP Measures".
    (2) For details on the determination of the 'as adjusted' amounts, which
        are non-GAAP measures, see the sections entitled "Supplementary
        Information" and "Key Performance Indicators and Non-GAAP Measures".
        The 'as adjusted' amounts presented above are reviewed regularly by
        management and our Board of Directors in assessing our performance
        and in making decisions regarding the ongoing operations of the
        business and the ability to generate cash flows. The 'as adjusted'
        amounts exclude (i) the impact of a one-time non-cash charge related
        to the introduction of a cash settlement feature for employee stock
        options; (ii) stock-based compensation (recovery) expense; (iii)
        integration and restructuring expenses; (iv) the impact of a one-time
        charge resulting from the renegotiation of an Internet-related
        services agreement; (v) an adjustment for Canadian Radio-television
        and Telecommunications Commission ("CRTC") Part II fees related to
        prior periods; and (vi) in respect of net income and net income per
        share, debt issuance costs, loss on repayment of long-term debt,
        impairment losses on goodwill, intangible assets and other long-term
        assets and the related income tax impact of the above amounts.
    n/m: not meaningful.


    Highlights of the fourth quarter of 2008 include the following:

    -   Generated growth in quarterly revenue of 9%, while adjusted operating
        profit grew 1% to $968 million as strong double-digit operating
        profit growth at Cable is partially offset by acquisition and
        retention costs from the successful smartphone campaign at Wireless
        and advertising revenue declines at Media.

    -   Wireless subscriber net additions totalled 199,000, with higher-value
        postpaid net additions of 158,000. Postpaid monthly ARPU (average
        revenue per user) increased 2% year-over-year to $74.71, driven in
        part by the 36% growth in data revenue to $262 million, representing
        approximately 18% of network revenue, while churn was further reduced
        to 1.12%.

    -   Wireless activated more than 400,000 smartphone devices during the
        quarter. Approximately 40% of these activations were to subscribers
        new to Wireless with the other 60% being to existing Wireless
        subscribers who upgraded devices, committed to new term contracts,
        and in most cases attached both voice and monthly data packages which
        generate considerably above average ARPU. The results of this
        successful smartphone campaign drove significantly higher acquisition
        and retention costs at Wireless.

    -   Wireless unveiled even faster speeds on its 3.5G next generation HSPA
        network, with 7.2 Mbps speeds now available from coast-to-coast to
        more than 75% of the Canadian population. Rogers' 3.5G network ranks
        amongst the fastest mobile networks anywhere in the world and allows
        customers to communicate in innovative ways with mobile multimedia,
        download large files ultra-fast and utilize Internet speeds on the go
        that are similar to a standard broadband connection.

    -   Fido launched new branding and a suite of straightforward 'all-in'
        plans aimed at the value oriented consumer segment that include usage
        alerts, easy price plan switching and the option of no term contract.

    -   Cable's Internet subscriber base grew during the quarter by 19,000 to
        1.6 million, and digital cable households increased by 61,000 to
        reach 1.6 million, of which more than 568,000 households now receive
        high-definition television ("HDTV") services.

    -   Cable ended the quarter with 840,000 residential voice-over-cable
        telephony lines, reflecting net additions of 40,000 lines for the
        quarter. This brings the total penetration of cable telephony lines
        to 36% of basic cable subscribers, up from 29% at December 31, 2007.

    -   Rogers recorded non-cash impairment losses on goodwill, intangible
        assets and other long-term assets totalling $294 million related to
        its conventional television business to adjust its carrying value to
        reflect a lower assessment of fair value amidst recent recessionary
        declines in advertising revenues.

    -   At December 31, 2008 Rogers had approximately $1.8 billion in
        available credit under its $2.4 billion committed bank credit
        facility that matures in July 2013. This liquidity position is also
        enhanced by the fact that our earliest scheduled debt maturity is in
        May 2011. This financial position provides us with substantial
        liquidity and flexibility.

    -   Rogers also announced today that its Board of Directors has approved
        a 16% increase in the annual dividend to $1.16 per share effective
        immediately, and that it has approved the renewal of a normal course
        issuer bid ("NCIB") to repurchase up to $300 million of Rogers shares
        on the open market during the next twelve months.

    -   Rogers' founder, President and Chief Executive Officer Edward S.
        "Ted" Rogers, passed away on December 2, 2008. Alan Horn, Chairman of
        the Board of Rogers Communications Inc., was appointed by the Board
        to serve as acting Chief Executive Officer as the Board performs a
        search, considering internal and external candidates, for a permanent
        CEO.
    

    "In December 2008, we mourned the passing of the Company's founder and
Chief Executive Officer, Ted Rogers," said Alan Horn, Chairman and acting
Chief Executive Officer of Rogers Communications Inc. "Ted Rogers was one of a
kind who built this company from one FM radio station nearly 50 years ago into
what is today Canada's largest wireless, cable and media company. His absence
has been felt deeply during this difficult time by everyone at Rogers and he
will be sadly missed, but never forgotten."
    "Generating nine percent top line growth in the face of the increasingly
challenging economic backdrop is a respectable performance for Rogers,"
continued Alan Horn. "Our Wireless and Cable businesses continue to generate
good subscriber growth, which speaks to the quality and utility of our
products. Our operating results also reflect the large but successful
investment our Wireless business again made this quarter in activating a very
significant number of smartphone customers who will in turn provide higher
than average revenue per customer and lower churn in subsequent periods."
    Horn concluded by saying "The increased dividend and renewal of our share
buyback program for 2009, which were both announced today, combine to provide
for a balanced and tax efficient allocation of a portion of the free cash flow
we expect to generate this year and underline our Board and management's
continued confidence in the strategic position of the Company."
    This earnings release should be read in conjunction with our 2007 Annual
MD&A and our 2007 Annual Audited Consolidated Financial Statements and Notes
thereto, as well as our 2008 quarterly interim financial and other recent
securities filings available on SEDAR at www.sedar.com. As this earnings
release includes forward-looking statements and assumptions, readers should
carefully review the sections of this release entitled "Caution Regarding
Forward-Looking Statements, Risks and Assumptions".
    In this earnings release, the terms "we", "us", "our", "Rogers" and "the
Company" refer to Rogers Communications Inc. and our subsidiaries, which are
reported in the following segments:

    
    -   "Wireless", which refers to our wireless communications operations,
        including Rogers Wireless Partnership ("RWP") and Fido Solutions Inc.
        ("Fido");

    -   "Cable", which refers to our wholly-owned cable television
        subsidiaries, including Rogers Cable Communications Inc. ("RCCI") and
        its subsidiary, Rogers Cable Partnership; and

    -   "Media", which refers to our wholly-owned subsidiary Rogers Media
        Inc. and its subsidiaries, including Rogers Broadcasting, which owns
        a group of 52 radio stations, the Citytv television network, the
        Rogers Sportsnet television network, The Shopping Channel, the OMNI
        television stations, and Canadian specialty channels including The
        Biography Channel Canada, G4TechTV and Outdoor Life Network; Rogers
        Publishing, which publishes approximately 70 magazines and trade
        journals; and Rogers Sports Entertainment, which owns the Toronto
        Blue Jays Baseball Club ("Blue Jays") and Rogers Centre. Media also
        holds ownership interests in entities involved in specialty
        television content, television production and broadcast sales.

    Substantially all of our operations are in Canada.
    "RCI" refers to the legal entity Rogers Communications Inc., excluding our
subsidiaries.
    Throughout this earnings release, percentage changes are calculated using
numbers rounded to which they appear.

    SUMMARIZED CONSOLIDATED FINANCIAL RESULTS (Unaudited)

    -------------------------------------------------------------------------
                               Three months ended        Twelve months ended
                                      December 31,               December 31,
                        -----------------------------------------------------
    (In millions of
     dollars, except
     per share amounts)    2008     2007    % Chg     2008     2007    % Chg
    -------------------------------------------------------------------------

    Operating revenue
      Wireless          $ 1,655  $ 1,466       13  $ 6,335  $ 5,503       15
      Cable
        Cable Operations    741      680        9    2,878    2,603       11
        RBS                 132      140       (6)     526      571       (8)
        Rogers Retail       117      105       11      417      393        6
        Corporate items
         and eliminations    (5)      (2)     150      (12)      (9)      33
                        -----------------------------------------------------
                            985      923        7    3,809    3,558        7
      Media                 394      364        8    1,496    1,317       14
      Corporate items
       and eliminations     (93)     (66)      41     (305)    (255)      20
                        -----------------------------------------------------
    Total                 2,941    2,687        9   11,335   10,123       12
                        -----------------------------------------------------
                        -----------------------------------------------------

    Adjusted operating
     profit (loss)(1)
      Wireless              639      658       (3)   2,806    2,589        8
      Cable
        Cable Operations    298      260       15    1,171    1,008       16
        RBS                  14        8       75       59       12      n/m
        Rogers Retail         1       (3)     n/m        3       (4)     n/m
                        -----------------------------------------------------
                            313      265       18    1,233    1,016       21
      Media                  46       63      (27)     142      176      (19)
      Corporate items
       and eliminations     (30)     (29)       3     (121)     (78)      55
                        -----------------------------------------------------
    Adjusted operating
     profit(1)              968      957        1    4,060    3,703       10
    Stock option plan
     amendment(2)             -        -      n/m        -     (452)     n/m
    Stock-based
     compensation recovery
     (expense)(2)           (25)      (4)     n/m      100      (62)     n/m
    Integration and
     restructuring
     expenses(3)            (41)     (17)     141      (51)     (38)      34
    Contract renegotiation
     fee(4)                   -      (52)     n/m        -      (52)     n/m
    Adjustment for CRTC
     Part II fees
     decision(5)              -        -      n/m      (31)       -      n/m
                        -----------------------------------------------------
    Operating profit(1)     902      884        2    4,078    3,099       32
    Other income and
     expense, net(6)      1,040      630       65    3,076    2,462       25
                        -----------------------------------------------------
    Net income (loss)   $  (138) $   254      n/m  $ 1,002  $   637       57
                        -----------------------------------------------------
                        -----------------------------------------------------

    Net income (loss)
     per share:
      Basic             $ (0.22) $  0.40      n/m  $  1.57  $  1.00       57
      Diluted             (0.22)    0.40      n/m     1.57     0.99       59

    As adjusted:(1)
      Net income        $   164  $   302      (46) $ 1,260  $ 1,066       18
      Net income per
       share:
        Basic           $  0.26  $  0.47      (45) $  1.98  $  1.67       19
        Diluted            0.26     0.47      (45)    1.98     1.66       19

    Additions to
     property, plant
     and equipment
     ("PP&E")(1)
      Wireless          $   310  $   252       23  $   929  $   822       13
      Cable
        Cable Operations    336      246       37      829      710       17
        RBS                  11       25      (56)      36       83      (57)
        Rogers Retail         9        9        -       21       21        -
                        -----------------------------------------------------
                            356      280       27      886      814        9
      Media                  32       32        -       81       77        5
      Corporate              85       60       42      125       83       51
                        -----------------------------------------------------
    Total               $   783  $   624       25  $ 2,021  $ 1,796       13
    -------------------------------------------------------------------------

    (1) As defined. See the sections entitled "Supplementary Information" and
        "Key Performance Indicators and Non-GAAP Measures".
    (2) See the section entitled "Stock-based Compensation".
    (3) Costs incurred relate to severances resulting from the restructuring
        of our employee base to improve our cost structure in light of the
        declining economic conditions, the integration of Call-Net
        Enterprises Inc. ("Call-Net"), Futureway Communications Inc.
        ("Futureway") and Aurora Cable TV Limited ("Aurora Cable"), the
        restructuring of Rogers Business Solutions ("RBS"), and the closure
        of certain Rogers Retail stores.
    (4) One-time charge resulting from the renegotiation of an Internet-
        related services agreement.
    (5) Relates to an adjustment for CRTC Part II fees related to prior
        periods.
    (6) See the section entitled "Reconciliation of Net Income to Operating
        Profit and Adjusted Operating Profit for the Period".


    For discussions of the results of operations of each of these segments,
refer to the respective segment sections of this earnings release.

    Reconciliation of Net Income to Operating Profit and Adjusted Operating
    Profit for the Period
    

    The items listed below represent the consolidated income and expense
amounts that are required to reconcile net income as defined under Canadian
GAAP to the non-GAAP measures operating profit and adjusted operating profit
for the period. See the "Supplementary Information" section for a full
reconciliation to adjusted operating profit, adjusted net income, and adjusted
net income per share. For details of these amounts on a segment-by-segment
basis and for an understanding of intersegment eliminations on consolidation,
the following section should be read in conjunction with tables in the
Supplemental Information section entitled "Segmented Information".

    
    -------------------------------------------------------------------------
                               Three months ended        Twelve months ended
                                      December 31,               December 31,
                          ---------------------------------------------------
    (In millions
     of dollars)           2008     2007    % Chg     2008     2007    % Chg
    -------------------------------------------------------------------------

    Net income (loss)   $  (138) $   254      n/m  $ 1,002  $   637       57
    Income tax expense       87       84        4      424      249       70
    Other expense
     (income), net           (3)      (2)      50      (28)       4      n/m
    Change in the fair
     value of derivative
     instruments            (43)       3      n/m      (64)      34      n/m
    Loss on repayment
     of long-term debt        -        -      n/m        -       47      n/m
    Foreign exchange
     loss (gain)             77       (1)     n/m       99      (54)     n/m
    Debt issuance costs       -        -      n/m       16        -      n/m
    Interest on
     long-term debt         157      138       14      575      579       (1)
                        -----------------------------------------------------
    Operating income        137      476      (71)   2,024    1,496       35
    Impairment losses on
     goodwill, intangible
     assets and other
     long-term assets       294        -      n/m      294        -      n/m
    Depreciation and
     amortization           471      408       15    1,760    1,603       10
                        -----------------------------------------------------
    Operating profit        902      884        2    4,078    3,099       32
    Stock option plan
     amendment                -        -      n/m        -      452      n/m
    Stock-based
     compensation
     (recovery) expense      25        4      n/m     (100)      62      n/m
    Integration and
     restructuring
     expenses                41       17      141       51       38       34
    Adjustment for CRTC
     Part II fees decision    -        -      n/m       31        -      n/m
    Contract renegotiation
     fee                      -       52      n/m        -       52      n/m
                        -----------------------------------------------------
    Adjusted operating
     profit             $   968  $   957        1  $ 4,060  $ 3,703       10
    -------------------------------------------------------------------------
    

    Net Income (Loss) and Net Income (Loss) Per Share

    We recorded a net loss of $138 million for the three months ended
December 31, 2008, or basic and diluted loss per share of $0.22, compared to
net income of $254 million, or basic and diluted earnings per share of $0.40
in the corresponding period in 2007.

    Income Tax Expense

    Due to our non-capital loss carryforwards, our income tax expense for the
three months ended December 31, 2008 and 2007 substantially represents
non-cash income taxes. As illustrated in the table below, our effective income
tax rate for the three months ended December 31, 2008 was (170.6%). The
effective income tax rate differed significantly from the 2008 statutory
income tax rate of 32.7% primarily due to impairment losses on goodwill and
intangible assets that are not deductible for income tax purposes. These
losses do not give rise to any tax benefits. Accordingly, our reconciliation
of income tax expense includes an increase of $51 million in respect of this
item. In addition, during the three months ended December 31, 2008, we
recorded a future income tax charge of $64 million relating to an increase in
the valuation allowance recorded in respect of realized and unrealized capital
losses and other future tax assets. The effective income tax rate for the
three months ended December 31, 2007 was 24.9%. The effective income tax rate
for the three months ended December 31, 2007 differed from the 2007 statutory
income tax rate of 35.2% primarily due to benefits realized from changes to
prior year tax filing positions and other adjustments.

    
    -------------------------------------------------------------------------
                                              Three months     Twelve months
                                                     ended             ended
                                               December 31,      December 31,
                                         ------------------------------------
    (In millions of dollars)                 2008     2007     2008     2007
    -------------------------------------------------------------------------

    Statutory income tax rates              32.7%    35.2%    32.7%    35.2%
    -------------------------------------------------------------------------

    Income before income taxes            $   (51) $   338  $ 1,426  $   886

    Income tax expense (recovery) at
     statutory income tax rate on income
     before income taxes                  $   (17) $   119  $   466  $   312
    Increase (decrease) in income taxes
     resulting from:
      Ontario harmonization credit              -        -      (65)       -
      Stock-based compensation                  2        2        5      (17)
      Vidéotron Ltée termination payment        -        -        -      (25)
      Change in valuation allowance            64      (13)      19      (20)
      Effect of tax rate changes              (11)      21      (33)      47
      Impairment losses on goodwill and
       intangible assets not deductible
       for income tax purposes                 51        -       51        -
      Difference between rates applicable
       to subsidiaries                          1       (3)      (2)     (12)
      Benefits related to changes to
       prior year tax filing positions
       and other items                         (3)     (42)     (17)     (36)
                                         ------------------------------------

    Income tax expense                    $    87  $    84  $   424  $   249
    -------------------------------------------------------------------------

    Effective income tax rate             (170.6%)   24.9%    29.7%    28.1%
    -------------------------------------------------------------------------
    


    Change in Fair Value of Derivative Instruments

    The change in the fair value of derivative instruments in the three
months ended December 31, 2008 was primarily the result of the changes in the
value of the Canadian dollar relative to that of the U.S. dollar related to
the Cross-Currency Interest Rate Exchange Agreements ("Cross-Currency Swaps")
hedging the US$350 million Senior Notes due 2038 that have not been designated
as hedges for accounting purposes. We have recorded our Cross-Currency Swaps
at an estimated credit-adjusted mark-to-market valuation. For the impact,
refer to the section entitled "Fair Market Value Asset and Liability for
Cross-Currency Swaps".

    Foreign Exchange Loss (Gain)

    During the three months ended December 31, 2008, the Canadian dollar
weakened by 16 cents versus the U.S. dollar resulting in a foreign exchange
loss of $77 million, primarily related to US$750 million of U.S.
dollar-denominated long-term debt that is not hedged for accounting purposes.
During the corresponding period of 2007, the Canadian dollar strengthened by
0.8 cents, versus the U.S. dollar and we had a foreign exchange gain of $1
million during the three months ended December 31, 2007.

    Interest on Long-Term Debt

    The increase in interest expense for the three months ended December 31,
2008, compared to the corresponding period of the prior year, is primarily due
to the $0.9 billion net increase in long-term debt at December 31, 2008
compared to December 31, 2007, including the impact of Cross-Currency Swaps
and the August 2008 issuance of US$1.75 billion aggregate principal amount of
Senior Notes, partially offset by the $655 million decrease in the amount
drawn under our bank credit facility at year-end. The net increase in our
long-term debt in 2008 was largely required due to the payment of an aggregate
$1.0 billion for the acquisition of spectrum licences in the AWS spectrum
auction.

    Operating Income

    The decrease in operating income in the three months ended December 31,
2008, compared to the corresponding period of the prior year, reflects the
growth in expenses, including impairment losses on goodwill, intangible assets
and other long-term assets, and integration and restructuring expenses, of
$593 million exceeding the growth in revenue of $254 million. See the section
entitled "Segment Review" for a detailed discussion of respective segment
results.

    
    Impairment Losses on Goodwill, Intangible Assets and Other Long-Term
    Assets
    

    In the fourth quarter of 2008, we determined that the fair value of the
conventional television business of Media was lower than its carrying value.
This primarily resulted from weakening of industry expectations and declines
in advertising revenues amidst the slowing economy. As a result, we recorded
an aggregate non-cash impairment charge of $294 million with the following
components: $154 million related to goodwill, $75 million related to broadcast
licences and $65 million related to intangible assets and other long-term
assets.

    Depreciation and Amortization Expense

    The increase in depreciation and amortization expense for the three
months ended December 31, 2008, compared to the corresponding period of the
prior year, primarily reflects an increase in depreciation on property, plant
and equipment ("PP&E") expenditures.

    Stock-based Compensation

    On May 28, 2007, our stock option plans were amended to attach cash
settled share appreciation rights ("SARs") to all new and previously granted
options. As a result, all outstanding stock options were classified as
liabilities and are now carried at their intrinsic value, as adjusted for
vesting, measured as the difference between the current stock price and the
option exercise price. The intrinsic value of the liability is now
marked-to-market each period and is amortized to expense over the period in
which the related services are rendered, which is usually the graded vesting
period, or, as applicable, over the period to the date an employee is eligible
to retire, whichever is shorter.

    
    A summary of stock-based compensation (recovery) expense is as follows:

                               Stock-based Compensation (Recovery) Expense
                                     Included in Operating, General
                                      and Administrative Expenses
                    One-time  -----------------------------------------------
                    Non-cash         Three months           Twelve months
                     Charge             ended                   ended
                      Upon           December 31,            December 31,
    (In millions    Adoption  -----------------------------------------------
     of dollars)  in Q2 2007        2008        2007        2008        2007
    -------------------------------------------------------------------------

    Wireless       $      46   $       4   $       2   $      (5)  $      11
    Cable                113           7          (2)        (32)         11
    Media                 84           5           1         (17)         10
    Corporate            209           9           3         (46)         30
                  -----------------------------------------------------------
                   $     452   $      25   $       4   $    (100)  $      62
    -------------------------------------------------------------------------
    

    At December 31, 2008, we had a liability of $278 million related to
stock-based compensation recorded at its intrinsic value, including stock
options, restricted share units and deferred share units. In the three months
ended December 31, 2008, $41 million was paid to holders of stock options and
restricted share units upon exercise using the SAR feature.

    Integration and Restructuring Expenses

    During the three months ended December 31, 2008, we incurred $38 million
of restructuring expenses related to severances resulting from targeted
restructuring of our employee base to improve our cost structure in light of
the declining economic conditions. In addition, we incurred integration
expenses of $3 million related to the integration of previously acquired
businesses and related restructuring.

    Adjusted Operating Profit

    Cable contributed to the increase in adjusted operating profit for the
three months ended December 31, 2008 compared to the three months ended
December 31, 2007, partially offset by a decrease in both Wireless' and
Media's adjusted operating profit for the three months ended December 31,
2008, compared to the corresponding period in 2007. Wireless' quarterly
adjusted operating profit reflects the significant costs associated with the
heavy sales volumes of smartphone devices as discussed below, while Media's
quarterly adjusted operating profit reflects the weakening industry
expectations in the conventional television business and declines in
advertising revenues amidst the slowing economy. Refer to the individual
segment discussions for details of the respective changes in adjusted
operating profit.
    Consolidated adjusted operating profit for the three months ended
December 31, 2008 and 2007, respectively, excludes: (i) stock-based
compensation expense of $25 million and $4 million; (ii) integration and
restructuring expenses of $41 million and $17 million; and (iii) a one-time
charge resulting from the renegotiation of an Internet-related services
agreement of $52 million in the three months ended December 31, 2007.
    For details on the determination of adjusted operating profit, which is a
non-GAAP measure, see the sections entitled "Supplementary Information" and
"Key Performance Indicators and Non-GAAP Measures".

    
    SEGMENT REVIEW

    WIRELESS
    --------

    Summarized Wireless Financial Results

    -------------------------------------------------------------------------
                               Three months ended        Twelve months ended
                                      December 31,               December 31,
                        -----------------------------------------------------
    (In millions of
     dollars, except
     margin)               2008     2007    % Chg     2008     2007    % Chg
    -------------------------------------------------------------------------

    Operating revenue
      Postpaid          $ 1,426  $ 1,283       11  $ 5,548  $ 4,868       14
      Prepaid                70       70        -      285      273        4
      One-way messaging       2        3      (33)      10       13      (23)
                        -----------------------------------------------------
      Network revenue     1,498    1,356       10    5,843    5,154       13
      Equipment sales       157      110       43      492      349       41
                        -----------------------------------------------------
    Total operating
     revenue              1,655    1,466       13    6,335    5,503       15
                        -----------------------------------------------------

    Operating expenses
     before the undernoted
      Cost of equipment
       sales                326      208       57    1,005      703       43
      Sales and marketing
       expenses             214      186       15      691      653        6
      Operating, general
       and administrative
       expenses             476      414       15    1,833    1,558       18
                        -----------------------------------------------------
                          1,016      808       26    3,529    2,914       21
                        -----------------------------------------------------
    Adjusted operating
     profit(1)(2)           639      658       (3)   2,806    2,589        8
    Stock option plan
     amendment(3)             -        -      n/m        -      (46)     n/m
    Stock-based
     compensation recovery
     (expense)(3)            (4)      (2)     100        5      (11)     n/m
    Integration and
     restructuring
     expenses(4)            (14)       -      n/m      (14)       -      n/m
                        -----------------------------------------------------
    Operating
     profit(1)          $   621  $   656       (5) $ 2,797  $ 2,532       10
                        -----------------------------------------------------
                        -----------------------------------------------------

    Adjusted operating
     profit margin as %
     of network
     revenue(1)           42.7%    48.5%             48.0%    50.2%

    Additions to
     PP&E(1)            $   310  $   252       23  $   929  $   822       13
    -------------------------------------------------------------------------

    (1) As defined. See the sections entitled "Key Performance Indicators and
        Non-GAAP Measures" and "Supplementary Information".
    (2) Adjusted operating profit includes a loss of $3 million and
        $14 million for the three and twelve months ended December 31, 2008,
        respectively, and a loss of $8 million and $31 million for the three
        and twelve months ended December 31, 2007, respectively, related to
        the Inukshuk wireless broadband initiative.
    (3) See the section entitled "Stock-based Compensation".
    (4) Costs incurred relate to severances resulting from the restructuring
        of our employee base to improve our cost structure in light of the
        declining economic conditions.



    Summarized Wireless Subscriber Results

                               Three months ended        Twelve months ended
                                      December 31,               December 31,
                          ---------------------------------------------------
    (Subscriber statistics
     in thousands, except
     ARPU, churn and
     usage)                2008     2007      Chg     2008     2007      Chg
    -------------------------------------------------------------------------

    Postpaid
      Gross additions(1)    369      362        7    1,341    1,352      (11)
      Net additions         158      158        -      537      581      (44)
      Adjustment to
       postpaid subscriber
       base(2)                -        -        -        -      (65)      65
      Total postpaid
       retail
       subscribers        6,451    5,914      537    6,451    5,914      537
      Average monthly
       revenue per user
       ("ARPU")(3)      $ 74.71  $ 73.33  $  1.38  $ 75.27  $ 72.21  $  3.06
      Average monthly
       usage (minutes)      596      596        -      589      573       16
      Monthly churn       1.12%    1.17%   (0.05%)   1.10%    1.15%   (0.05%)
    Prepaid
      Gross additions       173      156       17      632      635       (3)
      Net additions          41       25       16       67       70       (3)
      Adjustment to
       prepaid
       subscriber
       base(2)                -        -        -        -      (26)      26
      Total prepaid
       retail
       subscribers        1,491    1,424       67    1,491    1,424       67
      ARPU(3)           $ 15.91  $ 16.59  $ (0.68) $ 16.65  $ 16.46  $  0.19
      Monthly churn       3.03%    3.12%   (0.09%)   3.31%    3.42%   (0.11%)
    -------------------------------------------------------------------------

    (1) During the third quarter of 2008, an adjustment associated with
        laptop wireless data card ("air card") subscribers resulted in the
        addition of approximately 11,000 subscribers to Wireless' postpaid
        subscriber base. This adjustment is included in gross additions for
        the twelve months ended December 31, 2008. Beginning in the third
        quarter of 2008, air cards are included in the gross additions for
        postpaid subscribers.
    (2) During the second quarter of 2007, Wireless decommissioned its Time
        Division Multiple Access ("TDMA") and analog networks and
        simultaneously revised certain aspects of its subscriber reporting
        for data-only subscribers. The deactivation of the remaining TDMA
        subscribers and the change in subscriber reporting resulted in the
        removal of approximately 65,000 subscribers from Wireless' postpaid
        subscriber base and the removal of approximately 26,000 subscribers
        from Wireless' prepaid subscriber base. These adjustments are not
        included in the determination of postpaid or prepaid monthly churn.
    (3) As defined. See the section entitled "Key Performance Indicators and
        Non-GAAP Measures". As calculated in the "Supplementary Information"
        section.
    

    Wireless Network Revenue

    The increase in network revenue for the three months ended December 31,
2008, compared to the corresponding period of the prior year, was driven
predominantly by the continued growth of Wireless' postpaid subscriber base
and the year-over-year growth of wireless data. The 2% year-over-year increase
in postpaid ARPU reflects the impact of higher wireless data revenue, as well
as increased usage of various calling features, which was partially offset by
a modest decline in the voice component of ARPU. The voice component of
postpaid ARPU declined by approximately 2% during the quarter, reflecting the
impact of a softer economy on North American roaming, long-distance and
out-of-bucket voice usage combined with a general increase in the level of
competitive intensity. Excluding the decline in roaming which is linked
principally to the economic slowdown, the voice component of postpaid ARPU
would have decreased by less than 1% during the quarter.
    Wireless' success in the continued reduction of postpaid churn reflects
targeted customer retention activities and continued enhancements in network
coverage and quality.
    For the three months ended December 31, 2008, wireless data revenue
increased by approximately 36% over the corresponding period of 2007, to $262
million. This increase in data revenue reflects the continued growth of
smartphone and air card devices which is driving the use of text messaging and
e-mail, wireless Internet access, and other wireless data services, partially
offset by the impact of certain data services price reductions made in the
second and third quarters of 2008. For the three months ended December 31,
2008, data revenue represented approximately 18% of total network revenue,
compared to 14% in the corresponding period of 2007.

    Wireless Equipment Sales

    The year-over-year increase in revenue from equipment sales, including
activation fees and net of equipment subsidies, reflects the large volume of
smartphones sold in the fourth quarter of 2008.
    Wireless activated more than 400,000 smartphone devices, including iPhone
3G and BlackBerry devices, during the fourth quarter of 2008. Approximately
40% of these activations were to subscribers new to Wireless with the other
60% being to existing Wireless subscribers who upgraded devices, committed to
new multi-year term contracts, and in most cases attached both voice and
monthly data packages which generate considerably above average ARPU.
Smartphone devices as a percent of postpaid gross additions increased to
approximately 49% in the current quarter from approximately 13% in the same
quarter in 2007, while smartphone devices as a percent of device upgrades
increased to approximately 51% in the current quarter from approximately 18%
in the same quarter in 2007. Because Wireless incurs significant handset
subsidies for each unit activated, the results of this successful smartphone
sales campaign drove significantly higher acquisition and retention costs at
Wireless.
    The high upfront cost associated with adding smartphone subscribers so
rapidly is an investment made to obtain customers with significantly higher
than average ARPU for multi-year contracts which we expect will have the
effect in subsequent periods of being accretive to overall ARPU while reducing
overall churn.

    
    Wireless Operating Expenses

    -------------------------------------------------------------------------
                               Three months ended        Twelve months ended
                                      December 31,               December 31,
                        -----------------------------------------------------
    (In millions of
     dollars, except
     per subscriber
     statistics)           2008     2007    % Chg     2008     2007    % Chg
    -------------------------------------------------------------------------
    Operating expenses
      Cost of equipment
       sales            $   326  $   208       57  $ 1,005  $   703       43
      Sales and
       marketing
       expenses             214      186       15      691      653        6
      Operating, general
       and
       administrative
       expenses             476      414       15    1,833    1,558       18
                        -----------------------------------------------------
    Operating expenses
     before the
     undernoted           1,016      808       26    3,529    2,914       21
    Stock option plan
     amendment(1)             -        -      n/m        -       46      n/m
    Stock-based
     compensation
     (recovery)
     expense(1)               4        2      100       (5)      11      n/m
    Integration and
     restructuring
     expenses(2)             14        -      n/m       14        -      n/m
                        -----------------------------------------------------
    Total operating
     expenses           $ 1,034  $   810       28  $ 3,538  $ 2,971       19
                        -----------------------------------------------------
                        -----------------------------------------------------

    Average monthly
     operating expense
     per subscriber
     before sales and
     marketing
     expenses(3)        $ 24.46  $ 21.25       15  $ 23.09  $ 20.61       12

    Sales and marketing
     costs per gross
     subscriber
     addition(3)        $   509  $   440       16  $   459  $   401       14
    -------------------------------------------------------------------------

    (1) See the section entitled "Stock-based Compensation".
    (2) Costs incurred relate to severances resulting from the restructuring
        of our employee base to improve our cost structure in light of the
        declining economic conditions.
    (3) As defined. See the section entitled "Key Performance Indicator and
        Non-GAAP Measures". As calculated in the "Supplementary Information"
        section. Average monthly operating expense per subscriber includes
        retention costs and excludes sales and marketing expenses and stock-
        based compensation (recovery) expense.
    

    As a result of the significant number of smartphone activations, certain
Wireless metrics for the fourth quarter of 2008, including cost of equipment
sales, retention costs, cost of acquisition per subscriber and operating
expense per subscriber, increased measurably over the same period in the prior
year which had a dilutive impact on Wireless' operating profit growth.
However, the large majority of smartphone customers subscribe to both voice
and data service plans for multi-year terms, which has, to date, resulted in
these customers generating greater than 150% of the average subscriber ARPU.
These investments in attracting and retaining smartphone subscribers results
in the creation of net positive lifetime value per subscriber added.
Consequently, Wireless' ARPU levels are expected to be positively impacted
over the term of the subscribers' three year contracts. See the sections
entitled "Caution Regarding Forward-Looking Statements, Risks and Assumptions"
and "2009 Financial and Operating Guidance" below.
    Cost of equipment sales increased for the three months ended December 31,
2008, compared to the corresponding period of the prior year, and was
primarily the result of the large volume of smartphone sales.
    The year-over-year increase in operating, general and administrative
expenses, excluding retention spending discussed below, in the three months
ended December 31, 2008, compared to the corresponding period of 2007, were
partially driven by growth in the Wireless subscriber base. In addition, there
were higher costs to support increased usage of wireless data services, as
well as increases in information technology, customer care, and credit and
collection costs as a result of the complexity of supporting more
sophisticated devices and services. These costs were partially offset by
savings related to operating and scale efficiencies across various functions.
    Total retention spending, including subsidies on handset upgrades, was
$176 million in the three months ended December 31, 2008, compared to $110
million in the corresponding period of the prior year. As a result of the
fourth quarter smartphone marketing campaign, Wireless had a higher than
normal rate of upgrade activity by existing subscribers during the quarter.
Approximately 60% of the smartphone device activations in the fourth quarter
of 2008 were hardware and service plan upgrades by existing subscribers which
drove the largest portion of the increase in retention spending.
    Wireless estimates that the incremental hardware subsidy and data plan
commission costs associated with the significant smartphone volumes during the
fourth quarter of 2008 drove approximately $85 million of incremental expenses
versus what the same volume of devices would have been with the device sales
mix which existed in the fourth quarter of the prior year.

    Wireless Adjusted Operating Profit

    The year-over-year change in adjusted operating profit reflects primarily
the significant increase in cost of equipment sales from the smartphone
handset subsidies discussed above, partially offset by the increase in network
revenue. Primarily as a result of the investment in a significant number of
high ARPU, but high subsidy smartphone activations, Wireless' adjusted
operating profit margin on network revenue (which excludes equipment sales
revenue) decreased to 42.7% for the three months ended December 31, 2008,
compared to 48.5% in the corresponding period of 2007.

    Spectrum Auction Conclusion

    Wireless participated in the AWS spectrum auction in Canada which
commenced on May 27, 2008 and concluded on July 21, 2008. Wireless acquired 20
MHz of AWS spectrum, which operates in the 1700/2100 MHz frequency range,
across all 13 provinces and territories with winning bids that totalled
approximately $1.0 billion, or approximately $1.67/MHz/pop. Final payment was
submitted to Industry Canada on September 3, 2008 and Rogers was granted its
licences on December 22, 2008.

    Wireless Additions to Property, Plant and Equipment

    Wireless additions to PP&E, which excludes the acquisition of AWS
spectrum discussed above, are classified into the following categories:

    
    -------------------------------------------------------------------------
                               Three months ended        Twelve months ended
                                      December 31,               December 31,
                          ---------------------------------------------------
    (In millions
     of dollars)           2008     2007    % Chg     2008     2007    % Chg
    -------------------------------------------------------------------------

    Additions to PP&E
      HSPA ("High-Speed
       Packet Access")  $    76  $    57       33  $   315  $   316       (0)
      Network - capacity     54       38       42      200      169       18
      Network - other       107      100        7      259      175       48
      Information and
       technology and
       other                 72       54       33      152      147        3
      Inukshuk                1        3      (67)       3       15      (80)
                       ------------------------------------------------------
    Total additions
     to PP&E            $   310  $   252       23  $   929  $   822       13
    -------------------------------------------------------------------------
    


    Additions to Wireless PP&E reflect spending on network capacity, such as
radio channel additions and network enhancing features. Additions to PP&E
associated with the deployment of HSPA were mainly for the continued roll-out
to various markets across Canada and the upgrade to faster network throughput
speeds. Other network-related PP&E additions included national site build
activities, additional spending on test and monitoring equipment, network
sectorization work, operating support system activities, investments in
network reliability and renewal initiatives, and new product platforms.
Information and technology and other initiatives included billing and back
office system upgrades, and other facilities and equipment spending.

    
    CABLE
    -----

    Summarized Cable Financial Results

    -------------------------------------------------------------------------
                               Three months ended        Twelve months ended
                                      December 31,               December 31,
                        -----------------------------------------------------
    (In millions of
     dollars, except
     margin)             2008(1)  2007(2)   % Chg   2008(1)  2007(2)   % Chg
    -------------------------------------------------------------------------

    Operating revenue
      Cable
       Operations(3)    $   741  $   680        9  $ 2,878  $ 2,603       11
      RBS                   132      140       (6)     526      571       (8)
      Rogers Retail         117      105       11      417      393        6
      Intercompany
       eliminations          (5)      (2)     150      (12)      (9)      33
                       ------------------------------------------------------
    Total operating
     revenue                985      923        7    3,809    3,558        7
                       ------------------------------------------------------

    Operating profit
     (loss) before the
     undernoted
      Cable Operations(3)   298      260       15    1,171    1,008       16
      RBS                    14        8       75       59       12      n/m
      Rogers Retail           1       (3)     n/m        3       (4)     n/m
                       ------------------------------------------------------
    Adjusted operating
     profit(4)              313      265       18    1,233    1,016       21
    Stock option plan
     amendment(5)             -        -      n/m        -     (113)     n/m
    Stock-based
     compensation
     recovery
     (expense)(5)            (7)       2      n/m       32      (11)     n/m
    Integration and
     restructuring
     expenses(6)            (10)     (17)     (41)     (20)     (38)     (47)
    Contract
     renegotiation fee(7)     -      (52)     n/m        -      (52)     n/m
    Adjustment for CRTC
     Part II fees
     decision(8)              -        -      n/m      (25)       -      n/m
                       ------------------------------------------------------
    Operating
     profit(4)          $   296  $   198       49  $ 1,220  $   802       52
                       ------------------------------------------------------
                       ------------------------------------------------------

    Adjusted operating
     profit (loss)
     margin(4)
      Cable
       Operations(3)      40.2%    38.2%             40.7%    38.7%
      RBS                 10.6%     5.7%             11.2%     2.1%
      Rogers Retail        0.9%    (2.9%)             0.7%    (1.0%)

    Additions to PP&E(4)
      Cable
       Operations(3)    $   336  $   246       37  $   829  $   710       17
      RBS                    11       25      (56)      36       83      (57)
      Rogers Retail           9        9        -       21       21        -
                       ------------------------------------------------------
    Total additions
     to PP&E            $   356  $   280       27  $   886  $   814        9
    -------------------------------------------------------------------------

    (1) The operating results of Aurora Cable are included in Cable's results
        of operations from the date of acquisition on June 12, 2008.
    (2) The operating results of Futureway are included in Cable's results of
        operations from the date of acquisition on June 22, 2007.
    (3) Cable Operations segment includes Core Cable services, Internet
        services and Rogers Home Phone services.
    (4) As defined. See the sections entitled "Key Performance Indicators and
        Non-GAAP Measures" and "Supplementary Information".
    (5) See the section entitled "Stock-based Compensation".
    (6) Costs incurred relate to severances resulting from the restructuring
        of our employee base to improve our cost structure in light of the
        declining economic conditions, the integration of Call-Net, Futureway
        and Aurora Cable, the restructuring of RBS, and the closure of
        certain Rogers Retail stores.
    (7) One-time charge resulting from the renegotiation of an Internet-
        related services agreement.
    (8) Relates to an adjustment for CRTC Part II fees related to prior
        periods.

    The following segment discussions provide a detailed discussion of the
Cable operating results.

    CABLE OPERATIONS

    Summarized Financial Results

    -------------------------------------------------------------------------
                               Three months ended        Twelve months ended
                                      December 31,               December 31,
                        -----------------------------------------------------
    (In millions of
     dollars, except
     margin)               2008     2007    % Chg     2008     2007    % Chg
    -------------------------------------------------------------------------

    Operating revenue
      Core Cable        $   430  $   397        8  $ 1,669  $ 1,540        8
      Internet              182      160       14      695      608       14
      Rogers Home Phone     129      123        5      514      455       13
                       ------------------------------------------------------
    Total Cable
     Operations
     operating revenue      741      680        9    2,878    2,603       11
                       ------------------------------------------------------

    Operating expenses
     before the
     undernoted
      Sales and marketing
       expenses              58       69      (16)     248      257       (4)
      Operating, general
       and administrative
       expenses             385      351       10    1,459    1,338        9
                       ------------------------------------------------------
                            443      420        5    1,707    1,595        7
                       ------------------------------------------------------
    Adjusted operating
     profit(1)              298      260       15    1,171    1,008       16
    Stock option plan
     amendment(2)             -        -      n/m        -     (106)     n/m
    Stock-based
     compensation
     recovery
     (expense)(2)            (7)       1      n/m       30      (10)     n/m
    Integration and
     restructuring
     expenses(3)             (7)       -      n/m       (9)      (9)       -
    Contract renegotation
     fee(4)                   -      (52)     n/m        -      (52)     n/m
    Adjustment for CRTC
     Part II fees
     decision(5)              -        -      n/m      (25)       -      n/m
                       ------------------------------------------------------
    Operating
     profit(1)          $   284  $   209       36  $ 1,167  $   831       40
                       ------------------------------------------------------
                       ------------------------------------------------------

    Adjusted operating
     profit margin(1)     40.2%    38.2%        5    40.7%    38.7%
    -------------------------------------------------------------------------

    (1) As defined. See the sections entitled "Key Performance Indicators and
        Non-GAAP Measures" and "Supplementary Information".
    (2) See the section entitled "Stock-based Compensation".
    (3) Costs incurred relate to severances resulting from the restructuring
        of our employee base to improve our cost structure in light of the
        declining economic conditions and the integration of Call-Net,
        Futureway and Aurora Cable.
    (4) One-time charge resulting from the renegotiation of an Internet-
        related services agreement.
    (5) Relates to an adjustment for CRTC Part II fees related to prior
        periods.



    Summarized Subscriber Results

    -------------------------------------------------------------------------
                               Three months ended        Twelve months ended
                                      December 31,               December 31,
                        -----------------------------------------------------
    (Subscriber
     statistics in
     thousands,
     except ARPU)          2008   2007(1)     Chg     2008   2007(1)     Chg
    -------------------------------------------------------------------------

    Cable homes
     passed(2)            3,547    3,575      (28)   3,547    3,575      (28)

    Basic Cable
      Net additions(3)        4       20      (16)       9       18       (9)
      Total Basic Cable
       subscribers(4)     2,320    2,295       25    2,320    2,295       25
      Core Cable
       ARPU(5)          $ 61.79  $ 57.97  $  3.82  $ 60.47  $ 56.39  $  4.08

    High-speed Internet
      Net additions          19       46      (27)     102      165      (63)
      Total Internet
       subscribers
       (residen-
       tial)(4)(6)(7)(8)  1,582    1,465      117    1,582    1,465      117
      Internet ARPU(5)  $ 38.81  $ 36.67  $  2.14  $ 37.82  $ 36.51  $  1.31

    Digital Cable
      Terminals, net
       additions            137      110       27      404      374       30
      Total terminals
       in service(4)      2,283    1,871      412    2,283    1,871      412
      Households, net
       additions             61       61        -      191      219      (28)
      Total
       households(4)      1,550    1,353      197    1,550    1,353      197

    Cable telephony
     lines
      Net additions and
       migrations(9)         40       65      (25)     182      290     (108)
      Total Cable
       telephony
       lines(4)             840      656      184      840      656      184

    Cable Revenue
     Generating Units
     ("RGUs")(10)
      Net additions         124      192      (68)     484      692     (208)
      Total RGUs          6,292    5,769      523    6,292    5,769      523

    Circuit-switched
     lines
      Net losses and
       migrations(9)        (39)      (3)     (36)    (119)     (37)     (82)
      Total circuit-
       switched lines(7)    215      334     (119)     215      334     (119)
    -------------------------------------------------------------------------

    (1)  Certain of the comparative figures have been reclassified to conform
         to the current year presentation.
    (2)  During 2008, a change in subscriber reporting resulted in a decrease
         to cable homes passed of approximately 150,000.
    (3)  During the third quarter of 2008, a reclassification of certain
         subscribers had the impact of increasing basic cable net
         additions by approximately 16,000. In addition, basic cable net
         subscriber additions for the twelve months ended December 31, 2008
         reflect the impact of the conversion of a large municipal housing
         authority's cable TV arrangement with Rogers from a bulk to an
         individual tenant pay basis, which had the impact of reducing basic
         cable subscribers by approximately 5,000.
    (4)  Included in total subscribers at December 31, 2008 are approximately
         16,000 basic cable subscribers, 11,000 high-speed Internet
         subscribers, 8,000 terminals in service, 6,000 digital cable
         households and 2,000 cable telephony lines, representing 35,000
         RGUs, acquired from Aurora Cable on June 12, 2008. These subscribers
         are not included in net additions for the twelve months ended
         December 31, 2008.
    (5)  As defined. See the sections entitled "Key Performance Indicators
         and Non-GAAP Measures" and "Supplementary Information".
    (6)  During the first quarter of 2008, a change in subscriber reporting
         resulted in the reclassification of approximately 4,000 high-speed
         Internet subscribers from RBS' broadband data circuits to Cable
         Operations' high-speed Internet subscriber base. These subscribers
         are not included in net additions for the twelve months ended
         December 31, 2008.
    (7)  Included in total subscribers at December 31, 2007 are approximately
         3,000 high-speed Internet subscribers and 21,000 circuit-switched
         telephony lines, representing 24,000 RGUs, acquired from Futureway.
         These subscribers are not included in net additions for 2007.
    (8)  Included in high-speed Internet subscribers are 10,000 and 14,000
         ADSL subscribers at December 31, 2008 and 2007, respectively. In
         addition, ADSL subscriber losses were 2,000 in the three months
         ended December 31, 2008, while there were 3,000 subscriber additions
         in the three months ended December 31, 2007.
    (9)  Includes approximately 21,000 and 60,000 migrations from circuit-
         switched to cable telephony for the three and twelve months ended
         December 31, 2008, respectively, and includes approximately 2,000
         and 42,000 migrations from circuit-switched to cable telephony for
         the three and twelve months ended December 31, 2007, respectively.
    (10) Cable RGUs are comprised of basic cable subscribers, digital cable
         households, residential high-speed Internet subscribers and
         residential cable telephony lines.
    

    An overall economic slowdown in Ontario has resulted in lower net
additions of most of our cable products compared to the previous year, and has
most impacted sales of our Internet and Home Phone products.

    Core Cable Revenue

    Within Cable Operations, the increase in Core Cable revenue for the three
months ended December 31, 2008, compared to the corresponding period of the
prior year, reflects further penetration of our digital cable product
offerings, including increased HDTV adoption, combined with the year-over-year
increase in the number of analog cable customers. Equipment sales revenue
increased by $9 million when compared to the corresponding period in the prior
year, which is primarily the result of the HD digital box sale (versus rental)
campaign that ran during the quarter. Additionally, the impact of certain
price changes introduced in March 2008 and in March 2007 to both our digital
and basic cable services contributed to the growth in revenue.
    The digital cable subscriber base grew by 15% from December 31, 2007 to
December 31, 2008. Digital penetration now represents approximately 67% of
basic cable households. Increased demand for HDTV and personal video recorder
("PVR") digital set-top box equipment and digital content generally, combined
with multi-product marketing campaigns, which package cable television,
high-speed Internet and Rogers Home Phone services, contributed to the growth
in the digital subscriber base of 61,000 in the three months ended December
31, 2008. HDTV digital cable subscribers were up 37% from December 31, 2007 to
December 31, 2008, to 568,000 helped in part by an HD digital box purchase
promotion during the quarter.

    Internet (Residential) Revenue

    The year-over-year increase in Internet revenues for the three months
ended December 31, 2008, primarily reflects the 8% increase in the Internet
subscriber base combined with increased ARPU resulting from Internet services
price increases made during the previous twelve months and incremental revenue
from additional usage charges.
    With the high-speed Internet base now at approximately 1.6 million,
Internet penetration is approximately 45% of the homes passed by our cable
networks.
    In addition to the economic impacts on sales as discussed above, the
lower high-speed Internet net additions also reflect the growing penetration
of broadband in Canada.

    Rogers Home Phone Revenue

    The revenue growth of Rogers Home Phone for the three months ended
December 31, 2008, reflects the year-over-year growth in the cable telephony
customer base, offset by the ongoing decline of the circuit-switched and
long-distance only customer bases. The lower net additions of cable telephony
lines versus the previous year reflects the impact of a slowing Ontario
economy combined with increased win-back activities by incumbent telecom
providers as Rogers' market share increases.
    The base of cable telephony lines grew 28% from December 31, 2007 to
December 31, 2008. At December 31, 2008, cable telephony lines represented 36%
of basic cable subscribers and 24% of the homes passed by our cable networks.
    Cable continues to focus principally on growing its on-net cable
telephony line base, and as part of this on-net focus, began to significantly
de-emphasize circuit-switched sales earlier this year and intensified its
efforts to convert circuit-switched lines that are within the cable territory
onto its cable telephony platform. Of the 40,000 net line additions to cable
telephony during the quarter, approximately 21,000 were migrations of lines
from our circuit-switched to our cable telephony platform.
    The greater number of circuit-switched net line losses during 2008
compared to the corresponding period of 2007 reflect Cable's migrations of
lines within the cable areas from the circuit-switched platform onto the cable
telephony platform, combined with a significant de-emphasis since early 2008
on the sales and marketing of the lower margin circuit-switched telephony
product in markets outside of the cable footprint. Because of the strategic
decision to de-emphasize sales of the circuit-switched telephony product
outside of the cable footprint, Cable expects that circuit-switched net line
losses will continue as that base of subscribers shrinks over time.

    Cable Operations Operating Expenses

    The increase in Cable's operating expenses for the three months ended
December 31, 2008 compared to the corresponding period of 2007 was primarily
driven by the increases in the digital cable, Internet and Rogers Home Phone
line bases, resulting in higher costs associated with programming content,
customer care, network operations, credit and collection costs, costs
associated with CRTC Part II fees, and increases in information technology
costs. Additionally, during the fourth quarter of 2008 equipment costs
increased by $17 million, which is primarily the result of an HD digital box
sale (versus rental) campaign. Partially offsetting these increases was a
reduction in certain costs associated with Cable's Internet product resulting
from a renegotiated agreement with Yahoo! which became effective January 1,
2008, a year-over-year reduction in selling expenditures resulting from lower
volumes of RGU net additions than in the corresponding period of the prior
year, and scale efficiencies across various functions.

    Cable Operations Adjusted Operating Profit

    The year-over-year growth in adjusted operating profit was primarily the
result of the revenue growth described above, partially offset by the changes
in Cable's operating expenses. As a result, Cable Operations adjusted
operating profit margins increased to 40.2% for the three months ended
December 31, 2008, compared to 38.2% in the corresponding period of 2007.
    Cable Operations' base of circuit-switched local telephony customers as
discussed above, which was acquired in July 2005 through the acquisition of
Call-Net, is generally less capital intensive than its on-net cable telephony
business but also generates lower margins. As a result, the inclusion of the
circuit-switched local telephony business, which includes approximately
215,000 customers which have not been migrated to our cable network telephony
platform with Cable Operations' telephony business, has a dilutive impact on
operating profit margins.

    
    ROGERS BUSINESS SOLUTIONS

    Summarized Financial Results

    -------------------------------------------------------------------------
                               Three months ended        Twelve months ended
                                      December 31,               December 31,
                        -----------------------------------------------------
    (In millions of
     dollars, except
     margin)               2008     2007    % Chg     2008     2007    % Chg
    -------------------------------------------------------------------------

    RBS operating
     revenue            $   132  $   140       (6) $   526  $   571       (8)
                        -----------------------------------------------------

    Operating expenses
     before the
     undernoted
      Sales and marketing
       expenses               7       18      (61)      26       75      (65)
      Operating, general
       and administrative
       expenses             111      114       (3)     441      484       (9)
                        -----------------------------------------------------
                            118      132      (11)     467      559      (16)
                        -----------------------------------------------------
    Adjusted operating
     profit(1)               14        8       75       59       12      n/m
    Stock option plan
     amendment(2)             -        -      n/m        -       (2)     n/m
    Stock-based
     compensation
     recovery (expense)(2)    -        1      n/m        1        -      n/m
    Integration and
     restructuring
     expenses(3)             (2)     (17)     (88)      (6)     (29)     (79)
                        -----------------------------------------------------
    Operating profit
     (loss)(1)          $    12  $    (8)     n/m  $    54  $   (19)     n/m
                        -----------------------------------------------------
                        -----------------------------------------------------

    Adjusted operating
     profit margin(1)     10.6%     5.7%             11.2%     2.1%
    -------------------------------------------------------------------------

    (1) As defined. See the sections entitled "Key Performance Indicators and
        Non-GAAP Measures" and "Supplementary Information".
    (2) See the section entitled "Stock-based Compensation".
    (3) Costs incurred relate to severances resulting from the restructuring
        of our employee base to improve our cost structure in light of the
        declining economic conditions, the integration of Call-Net and the
        restructuring of RBS.



    Summarized Subscriber Results

    -------------------------------------------------------------------------
                               Three months ended        Twelve months ended
                                      December 31,               December 31,
                        -----------------------------------------------------
    (Subscriber
     statistics in
     thousands)            2008     2007      Chg     2008     2007      Chg
    -------------------------------------------------------------------------

    Local line
     equivalents(1)
      Total local line
       equivalents(2)       197      237      (40)     197      237      (40)

    Broadband data
     circuits(3)
      Total broadband
       data circuits(2)(4)   34       35       (1)      34       35       (1)
    -------------------------------------------------------------------------

    (1) Local line equivalents include individual voice lines plus Primary
        Rate Interfaces ("PRIs") at a factor of 23 voice lines each.
    (2) Included in total subscribers at December 31, 2007 are approximately
        14,000 local line equivalents and 1,000 broadband data circuits
        acquired from Futureway. These subscribers are not included in net
        additions for 2007.
    (3) Broadband data circuits are those customer locations accessed by data
        networking technologies including DOCSIS, DSL, E10/100/1000, OC 3/12
        and DS 1/3.
    (4) During the first quarter of 2008, a change in subscriber reporting
        resulted in the reclassification of approximately 4,000 high-speed
        Internet subscribers from RBS' broadband data circuits to Cable
        Operations' high-speed Internet subscriber base. These subscribers
        are not included in net additions for 2008.
    

    RBS Revenue

    The decrease in RBS revenues reflects a decline in lower margin resale
and legacy data service businesses, with a shift in focus to increasing the
strength of profitable relationships and leveraging revenue opportunities over
Cable's existing network. RBS continues to focus on retaining its existing
medium-enterprise and carrier customer base, but in late 2007 it suspended
most sales and marketing initiatives related to acquiring new medium and large
business customers other than purely on-net opportunities within Cable's
footprint. For the three months ended December 31, 2008, RBS data and local
revenues declined $9 million and $4 million, respectively, while long-distance
revenue increased by $7 million compared to the corresponding period of the
prior year.
    RBS continues to focus on managing the profitability of its existing
customer base and evaluate profitable opportunities within the medium and
large enterprise and carrier segments, while Cable Operations focuses on
continuing to grow Rogers' penetration of telephony and Internet services into
the small business and home office markets within Cable's territory.

    RBS Operating Expenses

    Operating, general and administrative expenses were relatively unchanged
compared to the corresponding period of 2007 as a modest increase in carrier
charges was offset by reductions in technical service and information
technology costs.
    The reduction in sales and marketing expenses for the three months ended
December 31, 2008, compared to the corresponding period of the prior year,
reflects streamlining initiatives associated with the refocusing of RBS'
business as discussed above.

    RBS Adjusted Operating Profit

    The changes described above resulted in RBS adjusted operating profit of
$14 million for the three months ended December 31, 2008, compared to an
adjusted operating profit of $8 million in the corresponding period of 2007.

    
    ROGERS RETAIL

    Summarized Financial Results

    -------------------------------------------------------------------------
                               Three months ended        Twelve months ended
                                      December 31,               December 31,
                          ---------------------------------------------------
    (In millions
     of dollars)           2008     2007    % Chg     2008     2007    % Chg
    -------------------------------------------------------------------------

    Rogers Retail
     operating revenue  $   117  $   105       11  $   417  $   393        6
                        -----------------------------------------------------

    Operating expenses      116      108        7      414      397        4
                        -----------------------------------------------------
    Adjusted operating
     profit (loss)(1)         1       (3)     n/m        3       (4)     n/m
    Stock option plan
     amendment(2)             -        -      n/m        -       (5)     n/m
    Stock-based
     compensation
     recovery (expense)(2)    -        -      n/m        1       (1)     n/m
    Integration and
     restructuring
     expenses(3)             (1)       -      n/m       (5)       -      n/m
                        -----------------------------------------------------
    Operating profit
     (loss)(1)          $     -  $    (3)     n/m  $    (1) $   (10)     (90)
                        -----------------------------------------------------
                        -----------------------------------------------------

    Adjusted operating
     profit (loss)
     margin(1)             0.9%    (2.9%)             0.7%    (1.0%)
    -------------------------------------------------------------------------

    (1) As defined. See the sections entitled "Key Performance Indicators and
        Non-GAAP Measures" and "Supplementary Information".
    (2) See the section entitled "Stock-based Compensation".
    (3) Costs incurred relate to severances resulting from the restructuring
        of our employee base to improve our cost structure in light of the
        declining economic conditions and the closure of certain Rogers
        Retail stores.
    

    Rogers Retail Revenue

    The increase in Rogers Retail revenue for the three months ended December
31, 2008, compared to the corresponding period of 2007, was the result of
increased sales of wireless products and services, partially offset by the
continued decline in video rentals.

    Rogers Retail Adjusted Operating Profit

    Adjusted operating profit at Rogers Retail was relatively unchanged for
the three months ended December 31, 2008, compared to the corresponding period
of the prior year, and reflects the trends noted above.

    CABLE ADDITIONS TO PP&E

    The Cable Operations segment categorizes its PP&E expenditures according
to a standardized set of reporting categories that were developed and agreed
to by the U.S. cable television industry and which facilitate comparisons of
additions to PP&E between different cable companies. Under these industry
definitions, Cable Operations additions to PP&E are classified into the
following five categories:

    
    -   Customer premise equipment ("CPE"), which includes the equipment for
        digital set-top terminals, Internet modems and associated
        installation costs;
    -   Scalable infrastructure, which includes non-CPE costs to meet
        business growth and to provide service enhancements, including many
        of the costs to-date of the cable telephony initiative;
    -   Line extensions, which includes network costs to enter new service
        areas;
    -   Upgrades and rebuild, which includes the costs to modify or replace
        existing coaxial cable, fibre-optic equipment and network
        electronics; and
    -   Support capital, which includes the costs associated with the
        purchase, replacement or enhancement of non-network assets.

    Summarized Cable PP&E Additions

    -------------------------------------------------------------------------
                               Three months ended        Twelve months ended
                                      December 31,               December 31,
                          ---------------------------------------------------
    (In millions
     of dollars)           2008     2007    % Chg     2008     2007    % Chg
    -------------------------------------------------------------------------

    Additions to PP&E
      Customer premise
       equipment        $   113  $    91       24  $   284  $   304       (7)
      Scalable
       infrastructure       111       72       54      279      167       67
      Line extensions        17       15       13       48       57      (16)
      Upgrades and
       rebuild               19       14       36       35       43      (19)
      Support capital        76       54       41      183      139       32
                        -----------------------------------------------------
    Total Cable
     Operations             336      246       37      829      710       17
    RBS                      11       25      (56)      36       83      (57)
    Rogers Retail             9        9        -       21       21        -
                        -----------------------------------------------------
                        $   356  $   280       27  $   886  $   814        9
    -------------------------------------------------------------------------
    

    The increase in Cable Operations PP&E additions for the three months
ended December 31, 2008, compared to the corresponding period of 2007, is
primarily attributable to a larger subscriber base, increased demand for
high-speed Internet access and the deployment of new technologies. This
resulted in increased spending on scalable infrastructure related to, amongst
other things, network capacity and continued investment in switched-digital
technology. The year-over-year increase in support capital reflects higher
investments in IT initiatives. Spending on CPE increased for the three months
ended December 31, 2008, compared to the corresponding period of the prior
year to support end-of-year digital promotional marketing activities.
    The reduction in RBS PP&E additions for the three months ended December
31, 2008, compared to the corresponding period of the prior year, reflects the
refocusing of RBS's business as discussed above.
    Rogers Retail PP&E additions are attributable to improvements made to
certain retail locations.

    
    MEDIA
    -----

    Summarized Media Financial Results

    -------------------------------------------------------------------------
                               Three months ended        Twelve months ended
                                      December 31,               December 31,
                       ------------------------------------------------------
    (In millions of
     dollars, except       2008                       2008
     margin)              (1)(2)  2007(3)   % Chg    (1)(2)  2007(3)   % Chg
    -------------------------------------------------------------------------
    Operating revenue   $   394  $   364        8  $ 1,496  $ 1,317       14
                       ------------------------------------------------------
    Operating expenses
     before the
     undernoted             348      301       16    1,354    1,141       19
                       ------------------------------------------------------
    Adjusted operating
     profit(4)               46       63      (27)     142      176      (19)
    Stock option plan
     amendment(5)             -        -      n/m        -      (84)     n/m
    Stock-based
     compensation
     recovery
     (expense)(5)            (5)      (1)     n/m       17      (10)     n/m
    Integration and
     restructuring
     expenses(6)            (11)       -      n/m      (11)       -      n/m
    Adjustment for CRTC
     Part II fees
     decision(7)              -        -      n/m       (6)       -      n/m
                       ------------------------------------------------------
    Operating
     profit(4)          $    30  $    62      (52) $   142  $    82       73
                       ------------------------------------------------------
                       ------------------------------------------------------
    Adjusted operating
     profit margin(4)     11.7%    17.3%              9.5%    13.4%

    Additions to
     property, plant
     and equipment(4)   $    32  $    32        -  $    81  $    77        5
    -------------------------------------------------------------------------

    (1) The operating results of channel m are included in Media's results of
        operations from the date of acquisition on April 30, 2008.
    (2) The operating results of Outdoor Life Network are included in Media's
        results of operations from the date of acquisition on July 31, 2008.
    (3) The operating results of Citytv are included in Media's results of
        operations from the date of acquisition on October 31, 2007.
    (4) As defined. See the section entitled "Key Performance Indicators and
        Non-GAAP Measures".
    (5) See the section entitled "Stock-based Compensation".
    (6) Costs incurred relate to severances resulting from the restructuring
        of our employee base to improve our cost structure in light of the
        declining economic conditions.
    (7) Relates to an adjustment for CRTC Part II fees related to prior
        periods.
    

    Media Revenue

    The increase in Media revenue for the three months ended December 31,
2008, over the corresponding period of 2007, primarily reflects the October
31, 2007 acquisition of Citytv which contributed $40 million and $28 million
to revenue in the fourth quarter of 2008 and 2007, respectively. Excluding the
impact of the Citytv acquisition, Media's revenue for the fourth quarter 2008
would have increased 5% versus the corresponding period in 2007. Also
contributing to revenue growth at Media was the Buffalo Bills NFL Toronto
series, revenues from Major League Baseball and Sportsnet, offset by modest
revenue declines at Publishing and Radio driven by advertising softness and
The Shopping Channel driven by a challenging retail environment.

    Media Operating Expenses

    The increase in Media operating expenses for the three months ended
December 31, 2008, compared to the corresponding period of 2007, primarily
reflects an additional $11 million of Citytv operating costs versus the two
month period following the October 31, 2007 acquisition date. Current year
expenses also include the Buffalo Bills NFL Toronto series and CRTC Part II
fees, both of which did not occur in 2007, partially offset by cost savings
across various functions.

    Media Adjusted Operating Profit

    The decrease in Media's adjusted operating profit for the three months
ended December 31, 2008, compared to the corresponding period of 2007,
primarily reflects the revenue and expense changes discussed above and overall
is reflective of the challenging economic conditions and the resultant
declines in advertising and retail sales activity.
    The challenging economic conditions have resulted in a weakening of
industry expectations in the conventional television business. As a result of
the challenging conditions and declines in advertising revenues, we recorded
an impairment charge of $294 million. See the section entitled "Impairment
Losses on Goodwill, Intangible Assets and Other Long-Term Assets" for further
details.

    Media Additions to PP&E

    The majority of Media's PP&E additions in the three months ended December
31, 2008, reflect the construction of a new television production facility for
the combined Toronto, Ontario operations of Citytv and OMNI, and are
relatively unchanged from the three months ended December 31, 2007.

    Recent Media Developments

    Media announced that the CRTC had approved its application for a 24-hour
news television channel to serve the city of Toronto and the Greater Toronto
Area. The channel will reflect Citytv's unique brand of news delivery, will be
complemented by content from Rogers' ethnically diverse OMNI stations and will
also feature news items contributed from other Rogers Media properties
including The Fan 590, 680News, Sportsnet, Publishing and the Blue Jays.
    OMNI was honoured by the Canadian Association of Broadcasters with Gold
Ribbon Awards in two categories, including Diversity in News and Information
Programming, and in Magazine Programming. These awards reaffirm OMNI's
excellence in delivering independent and third language programming to
Canada's multilingual and multicultural communities.

    OVERVIEW OF RECENT FINANCING AND SHARE CAPITAL ACTIVITIES

    Consolidated Liquidity and Capital Resources

    Operations

    For the three months ended December 31, 2008, cash generated from
operations before changes in non-cash operating working capital items, which
is calculated by eliminating the effect of all non-cash items from net income,
increased to $804 million from $791 million in the corresponding period of
2007.
    Taking into account the changes in non-cash working capital items for the
three months ended December 31, 2008, cash generated from operations was $840
million, compared to $839 million in the corresponding period of 2007. The
cash generated from operations of $840 million, together with the following
items, resulted in total net funds of approximately $868 million generated or
raised in the three months ended December 31, 2008:

    
    -   receipt of $20 million aggregate net advances borrowed under our bank
        credit facility;
    -   receipt of $1 million from the issuance of Class B Non-Voting shares
        under the exercise of employee stock options;
    -   receipt of $1 million in net proceeds from the settlement at maturity
        of certain Cross-Currency Swaps and the related forward foreign
        exchange contracts; and
    -   receipt of $6 million from other net investments.

    Net funds used during the three months ended December 31, 2008 totalled
approximately $850 million, the details of which include funding:

    -   additions to PP&E of $636 million, net of $147 million of related
        changes in non-cash working capital;
    -   the payment of quarterly dividends of $159 million on our Class A
        Voting and Class B Non-Voting shares; and
    -   additions to program rights and CRTC commitments aggregating
        $55 million.
    

    Taking into account the cash deficiency of $37 million at the beginning
of the period and the cash sources and uses described above, the cash
deficiency at December 31, 2008 was $19 million.

    Financing

    Our long-term debt instruments are described in Note 15 to the 2007
Annual Audited Consolidated Financial Statements. During the three months
ended December 31, 2008, an aggregate $20 million net advances were drawn
under our bank credit facility.
    In addition, on December 15, 2008, two of our Cross-Currency Swaps
matured on their scheduled maturity date and, as a result, we received US$400
million and paid $475 million aggregate notional principal amounts on the
settlement at maturity. Also on December 15, 2008, we settled forward foreign
exchange contracts to sell an aggregate US$400 million in exchange for $476
million. As a result of the maturity of these Cross-Currency Swaps, our US$400
million 8.00% Senior Subordinated Notes due 2012 are no longer hedged.
    At December 31, 2008, we had an aggregate $585 million of bank debt drawn
under our $2.4 billion bank credit facility that matures in July 2013, leaving
approximately $1.8 billion available to be drawn. This liquidity position is
also enhanced by the fact that our earliest scheduled debt maturity is in May,
2011.

    Shelf Prospectuses

    In order to maintain financial flexibility, in November 2007 RCI filed
shelf prospectuses with securities regulators to qualify debt securities of
RCI for sale in Canada and/or in the United States. In August 2008, US$1.75
billion aggregate principal amount of debt securities was issued in the United
States pursuant to the U.S. dollar shelf prospectus. In October 2008, an
amendment was filed to permit additional securities to be issued in Canada and
the United States pursuant to the shelf prospectuses so that the limit
available for securities to be issued in the United States pursuant to the
U.S. dollar shelf prospectus was essentially restored to the range of the
original shelf prospectus filings. The notice set forth in this paragraph does
not constitute an offer of any securities for sale.

    Normal Course Issuer Bid

    In January 2008, RCI filed an NCIB which authorizes us to repurchase up
to the lesser of 15,000,000 of our Class B Non-Voting shares and that number
of Class B Non-Voting shares that can be purchased under the NCIB for an
aggregate purchase price of $300 million for a period of one year. On May 21,
2008, RCI repurchased for cancellation 1,000,000 of its outstanding Class B
Non-Voting shares pursuant to a private agreement between RCI and an
arm's-length third party seller for an aggregate purchase price of $39.9
million and, on August 1, 2008, RCI repurchased for cancellation 3,000,000 of
its outstanding Class B Non-Voting shares pursuant to a private agreement
between RCI and an arm's-length third party seller for an aggregate purchase
price of $93.9 million. Each of these purchases was made under an issuer bid
exemption order issued by the Ontario Securities Commission and will be
included in calculating the number of Class B Non-Voting shares that RCI may
purchase pursuant to the NCIB. In addition, in August and September 2008, RCI
purchased an aggregate 77,400 of its outstanding Class B Non-Voting shares
directly under the NCIB for an aggregate purchase price of $2.9 million. The
NCIB expired on January 13, 2009. On February 18, 2009, RCI announced that it
had filed a notice of intention to renew its prior NCIB for a further one-year
period commencing February 20, 2009 and ending February 19, 2010. The number
of Class B Non-Voting shares to be purchased under the renewed NCIB, if any,
and the timing of such purchases will be determined by RCI considering market
conditions, stock prices, its cash position, and other factors.

    Interest Rate and Foreign Exchange Management

    Economic Hedge Analysis

    For the purposes of our discussion on the hedged portion of long-term
debt, we have used non-GAAP measures in that we include all Cross-Currency
Swaps, whether or not they qualify as hedges for accounting purposes, since
all such Cross-Currency Swaps are used for risk management purposes only and
are designated as a hedge of specific debt instruments for economic purposes.
As a result, the Canadian dollar equivalent of U.S. dollar-denominated
long-term debt reflects the contracted foreign exchange rate for all of our
Cross-Currency Swaps regardless of qualifications for accounting purposes as a
hedge.
    On December 15, 2008, two of our Cross-Currency Swaps matured on their
scheduled maturity date and, as a result, we received US$400 million and paid
$475 million aggregate notional principal amounts on the settlement at
maturity. Also on December 15, 2008, we settled forward foreign exchange
contracts to sell an aggregate US$400 million in exchange for $476 million. As
a result of the maturity of these Cross-Currency Swaps, our US$400 million
8.00% Senior Subordinated Notes due 2012 are no longer hedged.
    As a result of the maturity of the Cross-Currency Swaps described above,
on December 31, 2008, 93% of our U.S. dollar-denominated debt was hedged on an
economic basis while 87% of our U.S. dollar-denominated debt was hedged on an
accounting basis. That is, the Cross-Currency Swaps hedging our US$350 million
7.50% Senior Notes due 2038 do not qualify as hedges for accounting purposes
and our US$400 million 8.00% Senior Subordinated Notes due 2012 are no longer
hedged.

    
    Consolidated Hedged Position

    -------------------------------------------------------------------------
    (In millions of
     dollars, except                           December 31,      December 31,
     percentages)                                     2008              2007
    -------------------------------------------------------------------------

    U.S. dollar-denominated long-term debt    US    $5,940      US    $4,190

    Hedged with cross-currency interest
    rate exchange agreements                  US    $5,540      US    $4,190

    Hedged exchange rate                     Cdn   $1.2043     Cdn   $1.3313

    Percent hedged                                 93.3%(1)           100.0%

    -------------------------------------------------------------------------

    Amount of long-term debt(2) at fixed rates:

    Total long-term debt                     Cdn    $8,383     Cdn    $7,454
    Total long-term debt at fixed rates      Cdn    $7,798     Cdn    $6,214
    Percent of long-term debt fixed                  93.0%             83.4%

    -------------------------------------------------------------------------

    Weighted average interest
     rate on long-term debt                          7.29%             7.53%

    -------------------------------------------------------------------------

    (1) Pursuant to the requirements for hedge accounting under Canadian
        Institute of Chartered Accountants ("CICA") Handbook Section 3865,
        Hedges, on December 31, 2008, RCI accounted for 93% of its Cross-
        Currency Swaps as hedges against designated U.S. dollar-denominated
        debt. As a result, 87% of our U.S. dollar-denominated debt is hedged
        for accounting purposes versus 93% on an economic basis.
    (2) Long-term debt includes the effect of the Cross-Currency Swaps.
    

    Fair Market Value Asset and Liability for Cross-Currency Swaps

    In accordance with Canadian GAAP, we have recorded our Cross-Currency
Swaps at an estimated credit-adjusted mark-to-market valuation which is
determined by increasing the treasury-related discount rates used to calculate
the risk-free estimated mark-to-market valuation by an estimated credit
default swap spread ("CDS Spread") for the relevant term and counterparty for
each Cross-Currency Swap. In the case of Cross-Currency Swaps accounted for as
assets by Rogers (i.e. those Cross-Currency Swaps for which the counterparties
owe Rogers on a net basis), the CDS Spread for the bank counterparty is added
to the risk-free discount rate to determine the estimated credit-adjusted
value. In the case of Cross-Currency Swaps accounted for as liabilities (i.e.
- those Cross-Currency Swaps for which Rogers owes the counterparties),
Rogers' CDS Spread is added to the risk-free discount rate. The estimated
credit-adjusted values of the Cross-Currency Swaps are subject to changes in
credit spreads of Rogers and its counterparties. In 2007, we recorded our
Cross-Currency Swaps at the estimated risk-free fair value.
    The effect of estimating the credit-adjusted fair value of Cross-Currency
Swaps at December 31, 2008 is illustrated in the table below. As at December
31, 2008, the net liability of Rogers' Cross-Currency Swap portfolio increased
by $10 million to $154 million versus the net liability calculated on an
unadjusted mark-to-market basis. The increase in the net liability is a result
of the estimated fair value of the Cross-Currency Swaps accounted for as
assets decreasing by $65 million while the estimated fair value of the
Cross-Currency Swaps accounted for as liabilities decreased by $55 million.

    
    -------------------------------------------------------------------------
                                                            Swaps
                                                 Swaps  accounted        Net
                                             accounted        for  liability
                                                for as   as liabi-  position
    (In millions of dollars)                 assets (A) lities (B)    (A + B)
    ------------------------------------------------------------------------
    Mark-to-market value - risk free analysis $    572   $   (716)  $   (144)
    ------------------------------------------------------------------------
    Mark-to-market value - credit-adjusted
     estimate (carrying value)                $    507   $   (661)  $   (154)
    -------------------------------------------------------------------------
    Difference                                $    (65)  $     55   $    (10)
    -------------------------------------------------------------------------

    Of the $10 million impact, $7 million was recorded in the consolidated
statement of income related to Cross-Currency Swaps not accounted for as
hedges and $3 million related to hedges was recorded in other comprehensive
income.

    Outstanding Common Share Data

    Set forth below is our outstanding common share data as at December 31,
2008.

    -------------------------------------------------------------------------
                                                           December 31, 2008
    -------------------------------------------------------------------------
    Common Shares(1)

    Class A Voting                                               112,462,014
    Class B Non-Voting                                           523,429,539
    -------------------------------------------------------------------------
    Options to purchase Class B Non-Voting shares

    Outstanding options                                           13,841,620
    Outstanding options exercisable                                9,228,740
    -------------------------------------------------------------------------

    (1) Holders of our Class B Non-Voting shares are entitled to receive
        notice of and to attend meetings of our shareholders, but, except as
        required by law or as stipulated by stock exchanges, are not entitled
        to vote at such meetings. If an offer is made to purchase outstanding
        Class A Voting shares, there is no requirement under applicable law
        or RCI's constating documents that an offer be made for the
        outstanding Class B Non-Voting shares and there is no other
        protection available to shareholders under RCI's constating
        documents. If an offer is made to purchase both Class A Voting shares
        and Class B Non-Voting shares, the offer for the Class A Voting
        shares may be made on different terms than the offer to the holders
        of Class B Non-Voting shares.
    

    Dividends and Other Payments on Equity Securities

    On August 19, 2008, we declared a quarterly dividend of $0.25 per share
on each of the outstanding Class A Voting and Class B Non-Voting shares. This
quarterly dividend totalling $158 million was paid on October 1, 2008 to
shareholders of record on September 3, 2008.
    On October 28, 2008, we declared a quarterly dividend of $0.25 per share
on each of the outstanding Class A Voting and Class B Non-Voting shares. This
quarterly dividend totalling $159 million was paid on January 2, 2009 to
shareholders of record on November 25, 2008.
    In February 2009, our Board of Directors adopted a dividend policy which
increases the annual dividend rate from $1.00 to $1.16 per Class A Voting and
Class B Non-Voting share effective immediately to be paid in quarterly amounts
of $0.29 per share. Such quarterly dividends are only payable as and when
declared by our Board of Directors and there is no entitlement to any dividend
prior thereto.
    In addition, on February 17, 2009, the Board of Directors declared a
quarterly dividend totaling $0.29 per share on each of its outstanding Class B
Non-voting shares and Class A Voting shares, such dividend to be paid on April
1, 2009, to shareholders of record on March 6, 2009, and is the first
quarterly dividend to reflect the newly increased $1.16 per share annual
dividend level.

    2009 FINANCIAL AND OPERATING GUIDANCE

    The following table outlines guidance ranges and assumptions for selected
financial and operating statistics for 2009. This information is
forward-looking and should be read in conjunction with the section below
entitled "Caution Regarding Forward-Looking Statements, Risks and Assumptions"
and in related disclosures, for the various economic, competitive, and
regulatory assumptions and factors that could cause actual future financial
and operating results to differ from those currently expected.

    
    Full Year 2009 Guidance

    -----------------------------------------  --------  --------------------
                                                 2008             2009
    (Millions of dollars, except subscribers)   Actual      Guidance Range
    -----------------------------------------  --------  --------------------
    Consolidated
      Revenue(1)                               $11,335    Up  5%  to      9%
      Adjusted operating profit(2)               4,060    Up  3%  to      8%
      Additions to PP&E(3)                       2,021      (10%) to      0%
      Free cash flow(4)                          1,464    Up  9%  to     23%
      Annualized dividend                      $  1.00         $1.16

    Supplementary Detail:

    Revenue
      Wireless (network revenue)                $5,843    Up  6%  to     10%
      Cable Operations(5)                        2,878    Up  6%  to      8%
      Media                                      1,496       (6%) to      4%

    Adjusted operating profit(2)
      Wireless                                  $2,806    Up  5%  to      9%
      Cable Operations(5)                        1,171    Up  6%  to     10%
      Media(6)                                     142      (19%) to      2%

    Additions to PP&E
      Wireless                                    $929      (10%) to     (2%)
      Cable Operations                             829      (16%) to     (7%)
    -----------------------------------------  --------  --------------------

    1.  Consolidated revenue, includes revenue from Wireless equipment, RBS,
        Rogers Retail and Corporate items and eliminations in addition to
        Wireless Network, Cable Operations and Media revenue.
    2.  Excludes stock-based compensation expense and integration and
        restructuring related expenditures.
    3.  Consolidated additions to PP&E includes expenditures related to
        billing system development, Rogers Media and corporately owned real
        estate in addition to Wireless and Cable Operations PP&E
        expenditures.
    4.  Free cash flow is defined as adjusted operating profit less PP&E
        expenditures and interest expense and is not a term defined under
        Canadian GAAP.
    5.  Includes cable television, residential high-speed Internet and
        residential telephony services; excludes Rogers Business Solutions
        and Rogers Retail.
    6.  Includes losses from Sports Entertainment estimated at $20 million in
        2009.



    KEY PERFORMANCE INDICATORS AND NON-GAAP MEASURES

    Calculation of Adjusted Operating Profit, Net Income and Earnings
    Per Share

    -------------------------------------------------------------------------
                                     Three months ended   Twelve months ended
    (In millions of dollars,             December 31,          December 31,
     number of shares outstanding  ------------------------------------------
     in millions)                      2008       2007       2008       2007
    -------------------------------------------------------------------------

    Operating profit               $    902   $    884   $  4,078   $  3,099
    Add (deduct):
      Stock option plan amendment         -          -          -        452
      Stock-based compensation
       (recovery) expense                25          4       (100)        62
      Adjustment for CRTC Part II
       fees decision                      -          -         31          -
      Integration and restructuring
       expenses                          41         17         51         38
      Contract renegotiation fee          -         52          -         52
                                   ------------------------------------------
    Adjusted operating profit      $    968   $    957   $  4,060   $  3,703
                                   ------------------------------------------
                                   ------------------------------------------

    Net income (loss)              $   (138)  $    254   $  1,002   $    637
    Add (deduct):
      Stock option plan amendment         -          -          -        452
      Stock-based compensation
       (recovery) expense                25          4       (100)        62
      Adjustment for CRTC Part II
       fees decision                      -          -         31          -
      Integration and restructuring
       expenses                          41         17         51         38
      Contract renegotiation fee          -         52          -         52
      Loss on repayment of
       long-term debt                     -          -          -         47
      Impairment losses on goodwill,
       intangible assets and other
       long-term assets                 294          -        294          -
      Debt issuance costs                 -          -         16          -
    Income tax impact                   (58)       (25)       (34)      (222)
                                   ------------------------------------------
    Adjusted net income            $    164   $    302   $  1,260   $  1,066
                                   ------------------------------------------
                                   ------------------------------------------

    Adjusted basic earnings per
     share:
      Adjusted net income          $    164   $    302   $  1,260   $  1,066
      Divided by: weighted average
       number of shares outstanding     636        639        638        638
                                   ------------------------------------------
    Adjusted basic earnings per
     share                         $   0.26   $   0.47   $   1.98   $   1.67
                                   ------------------------------------------
                                   ------------------------------------------

    Adjusted diluted earnings
     per share:
      Adjusted net income          $    164   $    302   $  1,260   $  1,066
      Divided by: diluted weighted
       average number of shares
       outstanding                      636        639        638        642
                                   ------------------------------------------
    Adjusted diluted earnings per
     share                         $   0.26   $   0.47   $   1.98   $   1.66
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Calculations of Wireless Non-GAAP Measures

    --------------------------------------------------- ---------------------
    (In millions of dollars,         Three months ended   Twelve months ended
     subscribers in thousands,           December 31,          December 31,
     except ARPU figures and       -------------------- ---------------------
     operating profit margin)          2008       2007       2008       2007
    --------------------------------------------------- ---------------------

    Postpaid ARPU (monthly)
      Postpaid (voice and data)
       revenue                     $  1,426   $  1,283   $  5,548   $  4,868
      Divided by: average postpaid
       wireless voice and data
       subscribers                    6,362      5,832      6,142      5,618
      Divided by: 3 months for the
       quarter and 12 months for
       year-to-date                       3          3         12         12
                                   -------------------- ---------------------
                                   $  74.71   $  73.33   $  75.27   $  72.21

    --------------------------------------------------- ---------------------

    Prepaid ARPU (monthly)
      Prepaid (voice and data)
       revenue                     $     70   $     70   $    285   $    273
      Divided by: average prepaid
       subscribers                    1,467      1,406      1,426      1,382
      Divided by: 3 months for the
       quarter and 12 months for
       year-to-date                       3          3         12         12
                                   -------------------- ---------------------
                                   $  15.91   $  16.59   $  16.65   $  16.46

    --------------------------------------------------- ---------------------

    Cost of acquisition per gross
     addition
      Total sales and marketing
       expenses                    $    214   $    186   $    691   $    653
      Equipment margin loss
       (acquisition related)             63         43        219        149
                                   -------------------- ---------------------
                                   $    277   $    229   $    910   $    802
                                   -------------------- ---------------------
                                   -------------------- ---------------------
      Divided by: total gross
       wireless additions
       (postpaid, prepaid and
       one-way messaging)               544        520      1,982      1,998
                                   -------------------- ---------------------
                                   $    509   $    440   $    459   $    401


    --------------------------------------------------- ---------------------
    Operating expense per average
     subscriber (monthly)
      Operating, general and
       administrative expenses     $    476   $    414   $  1,833   $  1,558
      Equipment margin loss
       (retention related)              106         55        294        205
                                   -------------------- ---------------------
                                   $    582   $    469   $  2,127   $  1,763
                                   -------------------- ---------------------
                                   -------------------- ---------------------
      Divided by: average total
       wireless subscribers           7,930      7,357      7,678      7,128
      Divided by: 3 months for
       the quarter and 12 months
       for year-to-date                   3          3         12         12
                                   -------------------- ---------------------
                                   $  24.46   $  21.25   $  23.09   $  20.61

    --------------------------------------------------- ---------------------

    Equipment margin loss
      Equipment sales              $    157   $    110   $    492   $    349
      Cost of equipment sales          (326)      (208)    (1,005)      (703)
                                   -------------------- ---------------------
                                   $   (169)  $    (98)  $   (513)  $   (354)
                                   -------------------- ---------------------
                                   -------------------- ---------------------

      Acquisition related          $    (63)  $    (43)  $   (219)  $   (149)
      Retention related                (106)       (55)      (294)      (205)
                                   -------------------- ---------------------
                                   $   (169)  $    (98)  $   (513)  $   (354)
                                   -------------------- ---------------------
                                   -------------------- ---------------------

    --------------------------------------------------- ---------------------

    Adjusted operating profit
     margin
      Adjusted operating profit    $    639   $    658   $  2,806   $  2,589
      Divided by network revenue      1,498      1,356      5,843      5,154
                                   -------------------- ---------------------
      Adjusted operating profit
       margin                         42.7%      48.5%      48.0%      50.2%

    --------------------------------------------------- ---------------------



    Calculations of Cable Non-GAAP Measures

    --------------------------------------------------- ---------------------
    (In millions of dollars,         Three months ended   Twelve months ended
     subscribers in thousands,           December 31,          December 31,
     except ARPU figures and       ------------------------------------------
     operating profit margin)          2008       2007       2008       2007
    --------------------------------------------------- ---------------------

    Core Cable ARPU
      Core Cable revenue           $    430   $    397   $  1,669   $  1,540
      Divided by: average basic
       cable subscribers              2,320      2,283      2,300      2,276
      Divided by: 3 months for the
       quarter and 12 months for
       year-to-date                       3          3         12         12
                                   -------------------- ---------------------
                                   $  61.79   $  57.97   $  60.47   $  56.39

    --------------------------------------------------- ---------------------

    Internet ARPU
      Internet revenue             $    182   $    160   $    695   $    608
      Divided by: average Internet
       (residential) subscribers      1,563      1,454      1,531      1,388
      Divided by: 3 months for the
       quarter and 12 months for
       year-to-date                       3          3         12         12
                                   -------------------- ---------------------
                                   $  38.81   $  36.67   $  37.82   $  36.51

    --------------------------------------------------- ---------------------

    Cable Operations adjusted
     operating profit margin:
      Adjusted operating profit    $    298   $    260   $  1,171   $  1,008
      Divided by revenue                741        680      2,878      2,603
                                   -------------------- ---------------------
    Cable Operations adjusted
     operating profit margin          40.2%      38.2%      40.7%      38.7%

    --------------------------------------------------- ---------------------

    RBS adjusted operating profit
     margin:
      Adjusted operating profit    $     14   $      8   $     59   $     12
      Divided by revenue                132        140        526        571
                                   -------------------- ---------------------
    RBS adjusted operating profit
     margin                           10.6%       5.7%      11.2%       2.1%

    --------------------------------------------------- ---------------------



    Rogers Communications Inc.
    Unaudited Consolidated Statements of Income

                                     Three Months Ended   Twelve Months Ended
    (In millions of dollars,             December 31,          December 31,
     except per share amounts)         2008       2007       2008       2007
    ------------------------------ ---------- ---------- ---------- ---------

    Operating revenue              $  2,941   $  2,687   $ 11,335   $ 10,123
    Operating expenses:
      Cost of sales                     408        245      1,303        961
      Sales and marketing               381        336      1,334      1,322
      Operating, general and
       administrative                 1,209      1,205      4,569      4,251
      Stock option plan amendment         -          -          -        452
      Integration and restructuring      41         17         51         38
      Depreciation and amortization     471        408      1,760      1,603
      Impairment losses on goodwill,
       intangible assets and other
       long-term assets                 294          -        294          -
    ------------------------------ ---------- ---------- ---------- ---------
    Operating income                    137        476      2,024      1,496
    Interest on long-term debt         (157)      (138)      (575)      (579)
    Debt issuance costs                   -          -        (16)         -
    Foreign exchange gain (loss)        (77)         1        (99)        54
    Loss on repayment of
     long-term debt                       -          -          -        (47)
    Change in the fair value of
     derivative instruments              43         (3)        64        (34)
    Other income (expense), net           3          2         28         (4)
    ------------------------------ ---------- ---------- ---------- ---------
    Income (loss) before income
     taxes                              (51)       338      1,426        886

    Income tax expense (recovery):
      Current                             1         (2)         3         (1)
      Future                             86         86        421        250

    ------------------------------ ---------- ---------- ---------- ---------
    Net income (loss) for the
     period                        $   (138)  $    254   $  1,002   $    637
    ------------------------------ ---------- ---------- ---------- ---------
    ------------------------------ ---------- ---------- ---------- ---------

    Net income (loss) per share:
      Basic                        $  (0.22)  $   0.40   $   1.57   $   1.00
      Diluted                         (0.22)      0.40       1.57       0.99
    ------------------------------ ---------- ---------- ---------- ---------



    Rogers Communications Inc.
    Unaudited Consolidated Statements of Cash Flows

                                     Three Months Ended   Twelve Months Ended
                                         December 31,          December 31,
    (In millions of dollars)           2008       2007       2008       2007
    ------------------------------ ---------- ---------- ---------- ---------

    Cash provided by (used in):
    Operating activities:
      Net income for the period    $   (138)  $    254   $  1,002   $    637
      Adjustments to reconcile net
       income to net cash flows
       from operating activities:
        Depreciation and
         amortization                   471        408      1,760      1,603
        Impairment losses on
         goodwill, intangible
         assets, and other
         long-term assets               294          -        294          -
        Program rights and Rogers
         Retail rental amortization      43         35        146         92
        Future income taxes              86         86        421        250
        Unrealized foreign exchange
         loss (gain)                     53          -         65        (46)
        Change in the fair value
         of derivative instruments      (43)         3        (64)        34
        Loss on repayment of
         long-term debt                   -          -          -         47
        Stock option plan amendment       -          -          -        452
        Stock-based compensation
         expense (recovery)              25          4       (100)        62
        Amortization of fair value
         increment of long-term debt     (1)        (1)        (5)        (6)
        Other                            14          2          3         10
    ------------------------------ ---------- ---------- ---------- ---------
                                        804        791      3,522      3,135

    Change in non-cash operating
     working capital items               36         48       (215)      (310)
    ------------------------------ ---------- ---------- ---------- ---------
                                        840        839      3,307      2,825
    ------------------------------ ---------- ---------- ---------- ---------

    Investing activities:
      Additions to property, plant
       and equipment                   (783)      (624)    (2,021)    (1,796)
      Change in non-cash working
       capital items related to
       property, plant and equipment    147        119         40        (20)
      Acquisition of spectrum
       licences                           -          -     (1,008)         -
      Acquisitions, net of cash
       and cash equivalents acquired      -       (408)      (191)      (537)
      Additions to program rights
       and CRTC commitments             (55)       (26)      (150)       (67)
      Other                               6         (9)        (7)       (18)
    ------------------------------ ---------- ---------- ---------- ---------
                                       (685)      (948)    (3,337)    (2,438)

    Financing activities:
      Issuance of long-term debt        675        690      4,474      5,476
      Repayment of long-term debt      (655)      (485)    (3,335)    (5,623)
      Premium on repayment of
       long-term debt                     -          -          -        (59)
      Financing costs incurred            -          -          -         (4)
      Payment on re-couponing of
       cross-currency interest rate
       exchange agreements                -          -       (375)         -
      Payment on settlement of
       cross-currency interest rate
       exchange agreements and
       forward contracts               (969)         -       (969)      (873)
      Proceeds on settlement of
       cross-currency interest rate
       exchange agreements and
       forward contracts                970          -        970        838
      Repurchase of Class B
       Non-Voting shares                  -          -       (137)         -
      Issuance of capital stock on
       exercise of stock options          1          1          3         27
      Dividends paid                   (159)       (80)      (559)      (211)
    ------------------------------ ---------- ---------- ---------- ---------
                                       (137)       126         72       (429)
    ------------------------------ ---------- ---------- ---------- ---------
    Increase (decrease) in cash
     and cash equivalents                18         17         42        (42)

    Cash deficiency, beginning
     of period                          (37)       (78)       (61)       (19)
    ------------------------------ ---------- ---------- ---------- ---------

    Cash deficiency, end of period $    (19)  $    (61)  $    (19)  $    (61)
    ------------------------------ ---------- ---------- ---------- ---------
    ------------------------------ ---------- ---------- ---------- ---------

    Supplemental cash flow
     information:
      Income taxes paid            $      -   $      -   $      1   $      1
      Interest paid                     162        177        532        605

    ------------------------------ ---------- ---------- ---------- ---------
    ------------------------------ ---------- ---------- ---------- ---------

    Cash and cash equivalents (deficiency) are defined as cash and short-term
    deposits which have an original maturity of less than 90 days, less bank
    advances.


    Change in Non-Cash Working Capital Items

                                     Three Months Ended   Twelve Months Ended
                                         December 31,          December 31,
    (In millions of dollars)           2008       2007       2008       2007
    ------------------------------ ---------- ---------- ---------- ---------

    Cash provided by (used in):
    Increase in accounts
     receivable                    $    (92)  $    (51)  $   (166)  $   (122)
    Decrease (increase) in other
     assets                            (105)        17       (176)       (71)
    Increase (decrease) in accounts
     payable and accrued liabilities    220         68        115       (115)
    Increase (decrease) in
     unearned revenue                    13         14         12         (2)
    ------------------------------ ---------- ---------- ---------- ---------

                                   $     36   $     48   $   (215)  $   (310)
    ------------------------------ ---------- ---------- ---------- ---------



    Rogers Communications Inc.
    Unaudited Consolidated Balance Sheets

                                                    December 31, December 31,
    (In millions of dollars)                           2008         2007
    ----------------------------------------------------------- -------------

    Assets

    Current assets
      Accounts receivable                          $     1,403   $     1,245
      Other current assets                                 442           304
      Future income tax assets                             446           594
    ----------------------------------------------------------- -------------
                                                         2,291         2,143
    Property, plant and equipment                        7,898         7,289
    Goodwill                                             3,024         3,027
    Intangible assets                                    2,761         2,086
    Investments                                            343           485
    Derivative instruments                                 507             -
    Other long-term assets                                 269           295
    ----------------------------------------------------------- -------------

                                                   $    17,093   $    15,325
    ----------------------------------------------------------- -------------
    ----------------------------------------------------------- -------------

    Liabilities and Shareholders' Equity

    Liabilities
    Current liabilities
      Bank advances, arising from
       outstanding cheques                         $        19   $        61
      Accounts payable and accrued liabilities           2,412         2,260
      Current portion of long-term debt                      1             1
      Current portion of derivative instruments             45           195
      Unearned revenue                                     239           225
    ----------------------------------------------------------- -------------
                                                         2,716         2,742

    Long-term debt                                       8,506         6,032
    Derivative instruments                                 616         1,609
    Other long-term liabilities                            184           214
    Future income tax liabilities                          344           104
    ----------------------------------------------------------- -------------
                                                        12,366        10,701

    Shareholders' equity                                 4,727         4,624
    ----------------------------------------------------------- -------------
                                                   $    17,093   $    15,325
    ----------------------------------------------------------- -------------



    SUPPLEMENTARY INFORMATION

    Investments

                                                    December 31, December 31,
    (In millions of dollars)                           2008         2007
    ----------------------------------------------------------- -------------

                                                     Carrying     Carrying
                                                       Value        Value
    ----------------------------------------------------------- -------------

    Publicly traded companies, at quoted market value:

    Cogeco Cable Inc. 6,595,675  Subordinate Voting
                                 Common shares     $       228   $       315

    Cogeco Inc.       3,399,800  Subordindate Voting
                                 Common shares              85           134

    Other publicly traded companies                          6            16
    ----------------------------------------------------------- -------------
                                                           319           465

    Private companies, at cost                              17             8

    Investments accounted for by the equity method           7            12

    ----------------------------------------------------------- -------------
                                                   $       343   $       485
    ----------------------------------------------------------- -------------



    Long-term Debt

                                                            December December
                                   Due   Principal  Interest   31,      31,
    (In millions of dollars)      date     amount      Rate   2008     2007
    ---------------------------------------------------------------- --------
    Corporate:
      Bank credit facility                          Floating $  585   $1,240
      Senior Notes                2018 $ U.S. 1,400    6.80%  1,714        -
      Senior Notes                2038     U.S. 350    7.50%    429        -

    Formerly Rogers Wireless
     Inc.:
      Senior Notes                2011     U.S. 490   9.625%    600      484
      Senior Notes                2011          460   7.625%    460      460
      Senior Notes                2012     U.S. 470    7.25%    575      464
      Senior Notes                2014     U.S. 750   6.375%    918      741
      Senior Notes                2015     U.S. 550    7.50%    673      543
      Senior Subordinated Notes   2012     U.S. 400    8.00%    490      395
      Fair value increment
       arising from purchase
       accounting                                                12       17

    Formerly Rogers Cable Inc.:
      Senior Notes                2011          175    7.25%    175      175
      Senior Notes                2012     U.S. 350   7.875%    429      346
      Senior Notes                2013     U.S. 350    6.25%    429      346
      Senior Notes                2014     U.S. 350    5.50%    429      346
      Senior Notes                2015     U.S. 280    6.75%    343      277
      Senior Debentures           2032     U.S. 200    8.75%    245      198

    Capital leases and other                         Various      1        1
    ---------------------------------------------------------------- --------
                                                              8,507    6,033

    Less current portion                                          1        1
    ---------------------------------------------------------------- --------
                                                             $8,506   $6,032
    ---------------------------------------------------------------- --------


    Shareholders' Equity


                         Class A Voting Shares     Class B Non-Voting Shares
                       --------------------------- --------------------------
                                       Number of                   Number of
    (in millions of         Amount        shares        Amount        shares
     dollars, except   ------------------------------------------------------
     number of shares)                     (000s)                      (000s)
    -------------------------------------------------------------------------
    Balances, January
     1, 2008:          $        72       112,462   $       471       527,005
    Net income for the
     period                      -             -             -             -
    Shares issued on
     exercise of stock
     options                     -             -            21           502
    Dividends declared           -             -             -             -
    Repurchase of Class
     B Non-Voting
     shares                      -             -            (4)       (4,077)
    Other comprehensive
     income (loss)               -             -             -             -
    -------------------------------------------------------------------------
    Balances, December
     31, 2008          $        72       112,462   $       488       523,430
    -------------------------------------------------------------------------



                                                   Accumulated
                                                         other
                                        Retained comprehensive         Total
                       Contributed      earnings        Income  Shareholders'
    (in millions of        Surplus      (deficit)        (loss)       Equity
     dollars, except   ------------------------------------------------------
     number of shares)
    -------------------------------------------------------------------------
    Balances, January
     1, 2008:          $     3,689   $       342   $        50   $     4,624
    Net income for the
     period                      -         1,002             -         1,002
    Shares issued on
     exercise of stock
     options                     -             -             -            21
    Dividends declared           -          (638)            -          (638)
    Repurchase of Class
     B Non-Voting
     shares                   (129)           (4)            -          (137)
    Other comprehensive
     income (loss)               -             -          (145)         (145)
    -------------------------------------------------------------------------
    Balances, December
     31, 2008          $     3,560   $       702   $       (95)  $     4,727
    -------------------------------------------------------------------------



    Calculation of Net Income (Loss) Per Share

                               Three Months Ended        Twelve Months Ended
    (In millions, except          December 31,                December 31,
     per share amounts)        2008          2007          2008         2007
    ------------------ ------------- ------------- ------------- ------------
    Numerator:
      Net income (loss)
       for the period,
       basic and
       diluted         $       (138) $        254  $      1,002  $       637
    ------------------ ------------- ------------- ------------- ------------

    Denominator (in
     millions):
      Weighted average
       number of shares
       outstanding
       - basic                  636           639           638          638
      Effect of
       dilutive
       securities:
        Employee
         stock options            -             -             -            4
    ------------------ ------------- ------------- ------------- ------------
    Weighted average
     number of shares
     outstanding - diluted      636           639           638          642
    ------------------ ------------- ------------- ------------- ------------
    ------------------ ------------- ------------- ------------- ------------

    Net income (loss)
     per share:
      Basic            $      (0.22) $       0.40  $       1.57  $      1.00
      Diluted                 (0.22)         0.40          1.57         0.99
    ------------------ ------------- ------------- ------------- ------------


    Segmented Information

    For the Three Months Ended December 31, 2008

                                                         Corporate
                                                         items and   Consol-
    (In millions of                                         elimi-    idated
     dollars)               Wireless     Cable     Media   nations    Totals
    -------------------------------------------------------------------------

    Operating revenue        $ 1,655   $   985   $   394   $   (93)  $ 2,941

    Cost of sales                326        59        49       (26)      408
    Sales and marketing          214       115        79       (27)      381
    Operating, general
     and administrative          476       498       220       (10)    1,184
    -------------------------------------------------------------------------
                                 639       313        46       (30)      968
    Integration and
     restructuring                14        10        11         6        41
    Stock-based
     compensation
     (recovery) expense            4         7         5         9        25
    -------------------------------------------------------------------------
                                 621       296        30       (45)      902
    Depreciation and
     amortization                178       206        19        68       471
    Impairment losses on
     goodwill, intangible
     assets and other
     long-term assets              -         -       294         -       294
    -------------------------------------------------------------------------
    Operating income (loss)  $   443   $    90   $  (283)  $  (113)  $   137
                             --------------------------------------
                             --------------------------------------
    Interest on long-term
     debt                                                               (157)
    Foreign exchange loss                                                (77)
    Change in fair value of
     derivative instruments                                               43
    Other income                                                           3
    -------------------------------------------------------------------------
    Loss before income taxes                                         $   (51)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Additions to PP&E        $   310   $   356   $    32   $    85   $   783
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    For the Three Months Ended December 31, 2007

                                                         Corporate
                                                         items and   Consol-
    (In millions of                                         elimi-    idated
     dollars)               Wireless     Cable     Media   nations    Totals
    -------------------------------------------------------------------------

    Operating revenue        $ 1,466   $   923   $   364   $   (66)  $ 2,687

    Cost of sales                208        51        46       (60)      245
    Sales and marketing          186       137        66       (53)      336
    Operating, general
     and administrative          414       470       189        76     1,149
    -------------------------------------------------------------------------
                                 658       265        63       (29)      957
    Integration and
     restructuring                 -        17         -         -        17
    Stock-based
     compensation
     (recovery) expense            2        (2)        1         3         4
    Contract renegotiation
     fee                           -        52         -         -        52
    -------------------------------------------------------------------------
                                 656       198        62       (32)      884
    Depreciation and
     amortization                133       194        15        66       408
    -------------------------------------------------------------------------
    Operating income (loss)  $   523   $     4   $    47   $   (98)      476
                             --------------------------------------
                             --------------------------------------
    Interest on long-term
     debt                                                               (138)
    Foreign exchange gain                                                  1
    Change in fair value of
     derivative instruments                                               (3)
    Other income                                                           2
    -------------------------------------------------------------------------
    Income before income
     taxes                                                           $   338
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Additions to PP&E        $   252   $   280   $    32   $    60   $   624
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Segmented Information

    For the Twelve Months Ended December 31, 2008

                                                         Corporate
                                                         items and   Consol-
    (In millions of                                         elimi-    idated
     dollars)               Wireless     Cable     Media   nations    Totals
    -------------------------------------------------------------------------

    Operating revenue        $ 6,335   $ 3,809   $ 1,496   $  (305)  $11,335

    Cost of sales              1,005       197       178       (77)    1,303
    Sales and marketing          691       466       269       (92)    1,334
    Operating, general
     and administrative        1,833     1,913       907       (15)    4,638
    -------------------------------------------------------------------------
                               2,806     1,233       142      (121)    4,060
    Integration and
     restructuring                14        20        11         6        51
    Stock-based
     compensation
     (recovery) expense           (5)      (32)      (17)      (46)     (100)
    Adjustment for CRTC
     Part II fees decision         -        25         6         -        31
    -------------------------------------------------------------------------
                               2,797     1,220       142       (81)    4,078
    Depreciation and
     amortization                588       791        76       305     1,760
    Impairment losses on
     goodwill, intangible
     assets and other
     long-term assets              -         -       294         -       294
    -------------------------------------------------------------------------
    Operating income (loss)  $ 2,209   $   429   $  (228)  $  (386)  $ 2,024
                             --------------------------------------
                             --------------------------------------
    Interest on long-term
     debt                                                               (575)
    Debt issuance costs                                                  (16)
    Foreign exchange loss                                                (99)
    Change in fair value of
     derivative instruments                                               64
    Other income                                                          28
    -------------------------------------------------------------------------
    Income before income
     taxes                                                           $ 1,426
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Additions to PP&E        $   929   $   886   $    81   $   125   $ 2,021
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    For the Twelve Months Ended December 31, 2007

                                                         Corporate
                                                         items and   Consol-
    (In millions of                                         elimi-    idated
     dollars)               Wireless     Cable     Media   nations    Totals
    -------------------------------------------------------------------------

    Operating revenue        $ 5,503   $ 3,558   $ 1,317   $  (255)  $10,123

    Cost of sales                703       186       173      (101)      961
    Sales and marketing          653       519       226       (76)    1,322
    Operating, general
     and administrative        1,558     1,837       742         -     4,137
    -------------------------------------------------------------------------
                               2,589     1,016       176       (78)    3,703
    Stock option plan
     amendment                    46       113        84       209       452
    Integration and
     restructuring                 -        38         -         -        38
    Stock-based
     compensation
     (recovery) expense           11        11        10        30        62
    Contract renegotiation
     fee                           -        52                   -        52
    -------------------------------------------------------------------------
                               2,532       802        82      (317)    3,099
    Depreciation and
     amortization                560       737        52       254     1,603
    -------------------------------------------------------------------------
    Operating income (loss)  $ 1,972   $    65   $    30   $  (571)  $ 1,496
                             --------------------------------------
                             --------------------------------------
    Interest on long-term
     debt                                                               (579)
    Loss on repayment of
     long-term debt                                                      (47)
    Foreign exchange gain                                                 54
    Change in fair value of
     derivative instruments                                              (34)
    Other expense                                                         (4)
    -------------------------------------------------------------------------
    Income before income
     taxes                                                           $   886
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Additions to PP&E        $   822   $   814   $    77   $    83   $ 1,796
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Segmented Information

    For the Three Months Ended December 31, 2008

                                                   Cable
                            -------------------------------------------------
                                                         Corporate
                                                         items and
    (In millions of            Cable              Rogers    elimi-     Total
     dollars)               Operations     RBS    Retail   nations     Cable
    -------------------------------------------------------------------------

    Operating revenue        $   741   $   132   $   117   $    (5)  $   985

    Cost of sales                  -         -        59         -        59
    Sales and marketing           58         7        50         -       115
    Operating, general
     and administrative          385       111         7        (5)      498
    -------------------------------------------------------------------------
                                 298        14         1         -       313
    Integration and
     restructuring                 7         2         1         -        10
    Stock-based
     compensation
     (recovery) expense            7         -         -         -         7
    -------------------------------------------------------------------------
                                 284        12         -         -       296
    Depreciation and
     amortization                                                        206
    -------------------------------------------------------------------------
    Operating income                                                 $    90
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Additions to PP&E        $   336   $    11   $     9   $     -   $   356
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    For the Three Months Ended December 31, 2007

                                                   Cable
                            -------------------------------------------------
                                                         Corporate
                                                         items and
    (In millions of            Cable              Rogers    elimi-     Total
     dollars)               Operations     RBS    Retail   nations     Cable
    -------------------------------------------------------------------------

    Operating revenue        $   680   $   140   $   105   $    (2)  $   923

    Cost of sales                  -         -        51         -        51
    Sales and marketing           69        18        50         -       137
    Operating, general
     and administrative          351       114         7        (2)      470
    -------------------------------------------------------------------------
                                 260         8        (3)        -       265
    Integration and
     restructuring                 -        17         -         -        17
    Stock-based compensation
     (recovery) expense           (1)       (1)        -         -        (2)
    Contract renegotiation
     fee                          52         -         -         -        52
    -------------------------------------------------------------------------
                                 209        (8)       (3)        -       198
    Depreciation and
     amortization                                                        194
    -------------------------------------------------------------------------
    Operating income                                                 $     4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Additions to PP&E        $   246   $    25   $     9   $     -   $   280
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Segmented Information

    For the Twelve Months Ended December 31, 2008

                                                   Cable
                            -------------------------------------------------
                                                         Corporate
                                                         items and
    (In millions of            Cable              Rogers    elimi-     Total
     dollars)               Operations     RBS    Retail   nations     Cable
    -------------------------------------------------------------------------

    Operating revenue        $ 2,878   $   526   $   417   $   (12)  $ 3,809

    Cost of sales                  -         -       197         -       197
    Sales and marketing          248        26       192         -       466
    Operating, general
     and administrative        1,459       441        25       (12)    1,913
    -------------------------------------------------------------------------
                               1,171        59         3         -     1,233
    Integration and
     restructuring                 9         6         5         -        20
    Stock-based
     compensation
     (recovery) expense          (30)       (1)       (1)        -       (32)
    Adjustment for CRTC
     Part II fees decision        25         -         -         -        25
    -------------------------------------------------------------------------
                               1,167        54        (1)        -     1,220
    Depreciation and
     amortization                                                        791
    -------------------------------------------------------------------------
    Operating income                                                 $   429
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Additions to PP&E        $   829   $    36   $    21   $     -   $   886
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    For the Twelve Months Ended December 31, 2007

                                                   Cable
                            -------------------------------------------------
                                                         Corporate
                                                         items and
    (In millions of            Cable              Rogers    elimi-     Total
     dollars)               Operations     RBS    Retail   nations     Cable
    -------------------------------------------------------------------------

    Operating revenue        $ 2,603   $   571   $   393   $    (9)  $ 3,558

    Cost of sales                  -         -       186         -       186
    Sales and marketing          257        75       187         -       519
    Operating, general
     and administrative        1,338       484        24        (9)    1,837
    -------------------------------------------------------------------------
                               1,008        12        (4)        -     1,016
    Stock-option plan
     amendment                   106         2         5         -       113
    Integration and
     restructuring                 9        29         -         -        38
    Stock based
     compensation
     (recovery) expense           10         -         1         -        11
    Contract renegotiation
     fee                          52         -         -         -        52
    -------------------------------------------------------------------------
                                 831       (19)      (10)        -       802
    Depreciation and
     amortization                                                        737
    -------------------------------------------------------------------------
    Operating income                                                 $    65
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Additions to PP&E        $   710   $    83   $    21   $     -   $   814
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Audited Full Year 2008 Financial Statements

    In late February 2009, we intend to file with securities regulators in
Canada and the U.S. our Audited Annual Consolidated Financial Statements and
Notes thereto for the year ended December 31, 2008 and MD&A in respect of such
annual financial statements. Notification of such filings will be made by a
press release and such statements will be made available on the rogers.com,
sedar.com, and sec.gov websites or upon request.

    Caution Regarding Forward-Looking Statements, Risks and Assumptions

    This earnings release includes forward-looking statements and assumptions
concerning our business, its operations and its financial performance and
condition approved by management on the date of this earnings release. These
forward-looking statements and assumptions include, but are not limited to,
statements with respect to our objectives and strategies to achieve those
objectives, statements with respect to our beliefs, plans, expectations,
anticipations, estimates or intentions, including guidance and forecasts
relating to revenue, adjusted operating profit, PP&E expenditures, free cash
flow, expected growth in subscribers and the services to which they subscribe,
the cost of acquiring subscribers and the deployment of new services and all
other statements that are not historical facts. Such forward-looking
statements are based on current objectives, strategies, expectations and
assumptions that we believe to be reasonable at the time, including but not
limited to, general economic and industry growth rates, currency exchange
rates, product pricing levels and competitive intensity, subscriber growth and
usage rates, changes in government regulation, technology deployment, device
availability, the timing of new product launches, content and equipment costs,
the integration of acquisitions, and industry structure and stability.
    Except as otherwise indicated, this earnings release and our
forward-looking statements do not reflect the potential impact of any
non-recurring or other special items or of any dispositions, monetizations,
mergers, acquisitions, other business combinations or other transactions that
may be considered or announced or may occur after the date of the financial
information contained herein.
    We caution that all forward-looking information, including any statement
regarding our current intentions, is inherently subject to change and
uncertain and that actual results may differ materially from the assumptions,
estimates or expectations reflected in the forward-looking information. A
number of factors could cause actual results to differ materially from those
in the forward-looking statements or could cause our current objectives and
strategies to change, including but not limited to economic conditions,
technological change, the integration of acquisitions, unanticipated changes
in content or equipment costs, changing conditions in the entertainment,
information and communications industries, regulatory changes, litigation and
tax matters, the level of competitive intensity and the emergence of new
opportunities, many of which are beyond our control and current expectation or
knowledge. Therefore, should one or more of these risks materialize, should
our objectives or strategies change, or should any other factors underlying
the forward-looking statements prove incorrect, actual results and our plans
may vary significantly from what we currently foresee. Accordingly, we warn
investors to exercise caution when considering any such forward-looking
information herein and that it would be unreasonable to rely on such
statements as creating any legal rights regarding our future results or plans.
We are under no obligation (and we expressly disclaim any such obligation) to
update or alter any forward-looking statements or assumptions whether as a
result of new information, future events or otherwise, except as required by
law.
    Before making any investment decisions and for a detailed discussion of
the risks, uncertainties and environment associated with our business, see the
MD&A sections of our 2007 Annual Report entitled "Risks and Uncertainties
Affecting Our Businesses" (found on pages 55 to 59), as well as the "Updates
to Risks and Uncertainties" and "Government Regulation and Regulatory
Developments" sections of our Third Quarter 2008 MD&A. Our annual and
quarterly reports can be found at www.rogers.com, www.sedar.com, and
www.sec.gov or are available directly from Rogers.

    Additional Information

    Additional information relating to our company and business, including
our 2007 Annual MD&A and 2007 Annual Information Form, may be found on SEDAR
at www.sedar.com or on EDGAR at www.sec.gov.

    About the Company

    We are a diversified Canadian communications and media company. We are
engaged in wireless voice and data communications services through Rogers
Wireless, Canada's largest wireless provider and the operator of the country's
only national GSM/HSPA based network. Through Rogers Cable we are one of
Canada's largest providers of cable television services as well as high-speed
Internet access and telephony services. Through Rogers Media, we are engaged
in radio and television broadcasting, televised shopping, magazines and trade
publications, and sports entertainment. We are publicly traded on the Toronto
Stock Exchange (TSX: RCI.a and RCI.b) and on the New York Stock Exchange
(NYSE:   RCI). For further information about the Rogers group of companies,
please visit www.rogers.com.

    Quarterly Investment Community Conference Call

    As previously announced by press release, a live Webcast of our quarterly
results conference call with the investment community will be broadcast via
the Internet at www.rogers.com/webcast beginning at 8:00 a.m. ET today,
February 18. A rebroadcast of this call will be available on the Webcast
Archive page of the Investor Relations section of www.rogers.com for a period
of at least two weeks following the conference call.





For further information:

For further information: Investment Community Contacts: Bruce M. Mann,
(416) 935-3532, bruce.mann@rci.rogers.com; Dan Coombes, (416) 935-3550,
dan.coombes@rci.rogers.com; Media Contacts: Corporate and Media: Jan Innes,
(416) 935-3525, jan.innes@rci.rogers.com; Wireless and Cable: Terrie Tweddle,
(416) 935-4727, terrie.tweddle@rci.rogers.com

Organization Profile

Rogers Communications Inc.

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Rogers Wireless and Cable

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