Rogers Reports Strong Third Quarter 2007 Financial and Operating Results



    Consolidated Revenue Grows 13% to $2.6 Billion, Operating Profit (as
    adjusted) Increases 23% to $984 Million, and Net Income Increases 75% to
    $269 Million;

    Wireless Subscribers Surpass 7 Million with Net Additions up 20% Year-
    Over-Year, While Wireless Postpaid ARPU Grows 7% and Postpaid Churn Falls
    to 1.12%;

    Cable and Telecom Maintains Strong Net Additions of Basic Cable, Digital
    Cable, High-Speed Internet and Cable Telephony Subscribers;

    Subsequent to the End of the Quarter, Media Closes the Acquisition of the
    Five Citytv Television Stations

    TORONTO, Nov. 1 /CNW/ - Rogers Communications Inc. today announced its
consolidated financial and operating results for the three and nine months
ended September 30, 2007.

    
    Financial highlights are as follows:

    -------------------------------------------------------------------------
    (In millions of         Three months ended          Nine months ended
     dollars, except           September 30,               September 30,
     per share        -------------------------------------------------------
     amounts)             2007      2006   % Chg      2007      2006   % Chg
    -------------------------------------------------------------------------
    Operating
     revenue(1)       $  2,611  $  2,305      13  $  7,436  $  6,468      15
    Operating
     profit(2)             986       785      26     2,215     2,123       4
    Net income             269       154      75       383       446     (14)
    Net income
     per share:
      Basic           $   0.42  $   0.25      68  $   0.60  $   0.71     (15)
      Diluted             0.42      0.24      75      0.60      0.69     (13)

    As adjusted:(3)
      Operating
       profit         $    984  $    800      23  $  2,728  $  2,174      25
      Net income           268       169      59       753       492      53
      Net income
       per share:
        Basic         $   0.42  $   0.27      56  $   1.18  $   0.78      51
        Diluted           0.42      0.26      62      1.17      0.77      52
    -------------------------------------------------------------------------

    (1)  Certain prior year amounts related to Wireless equipment sales and
         cost of equipment sales have been reclassified. Refer to the section
         entitled "Reclassification of Wireless Equipment Sales and Cost of
         Sales" in our 2006 Annual MD&A for further details.
    (2)  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 "Reconciliation of Operating Profit to
         Net Income for the Period" section for a reconciliation of operating
         profit to operating income and net income under Canadian GAAP and
         the "Key Performance Indicators and Non-GAAP Measures" section. The
         introduction of a cash settlement feature for stock options resulted
         in a one-time non-cash charge upon adoption of $452 million on
         May 28, 2007, which is included in operating profit for the nine
         months ended September 30, 2007. See the section entitled "Stock-
         based Compensation Expense".
    (3)  For details on the determination of the 'as adjusted' amounts, which
         are non-GAAP measures, see the "Supplementary Information" and the
         "Key Performance Indicators and Non-GAAP Measures" sections. 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 expense; (iii) integration
         and restructuring expense; (iv) an adjustment of The Canadian Radio-
         Television Commission ("CRTC") Part II fees related to prior periods
         as a result of a recent notice from the CRTC that the Part II fees
         due in November 2007 will not be collected by the CRTC; and (v) in
         respect of net income and net income per share, the loss on
         repayment of long-term debt. Adjusted net income and net income per
         share also exclude the related income tax impact of the above
         amounts.



    Highlights of the third quarter of 2007 include the following:

    -   Generated continued strong double-digit growth in quarterly revenue
        and operating profit (as adjusted) of 13% and 23%, respectively. Free
        cash flow, defined as operating profit (as adjusted) less integration
        and restructuring expense, additions to property, plant and equipment
        and interest expense, increased 91% to $442 million. In addition, net
        income increased 75% to $269 million.

    -   Wireless subscriber postpaid net additions were 195,100 compared to
        171,200 in the third quarter of 2006. Postpaid subscriber monthly
        churn fell to 1.12% versus 1.30% in the third quarter of 2006.
        Wireless postpaid monthly ARPU (average revenue per user) increased
        7% year-over-year to $75.15 driven in part by the 53% growth in data
        revenue to $183 million. Data revenue now represents 13.6% of network
        revenue with monthly data ARPU in the quarter exceeding $10 for the
        first time.

    -   Cable and Telecom ended the quarter with 590,500 residential voice-
        over-cable telephony subscriber lines. Net additions were 81,200
        subscriber lines for the quarter, of which approximately 7,800 were
        migrations from the circuit-switched platform.

    -   Internet subscribers grew by 55,000 to a total of 1,418,500, while
        basic cable subscribers increased by 9,100 to a total of 2,275,400
        and digital cable households increased by 54,800 to reach a total of
        1,291,800.

    -   Cable launched three new 'triple play' packages that combine digital
        cable, high-speed Internet and Rogers Home Phone services in discrete
        packages and with easy to understand price points. These packages
        range from a basic starter package to a VIP Plus package, with the
        selection allowing our customers to choose the television, high-speed
        Internet and Home Phone plan that best meets their needs.

    -   The CRTC approved the agreement under which Rogers Media acquired
        five Citytv television stations on October 31, 2007. This acquisition
        gives Media a significantly enhanced broadcast television presence in
        the largest Canadian markets outside Quebec and is a natural
        complement to Media's existing television, radio and specialty
        channel assets.

    -   Successfully completed the amalgamation of RCI with its wholly owned
        Cable and Wireless holding company subsidiaries on July 1, 2007, with
        RCI assuming all the rights and obligations under the outstanding
        Cable and Wireless public debt indentures and swaps. As part of the
        amalgamation process, RCI entered into a new unsecured $2.4 billion
        bank credit facility. This amalgamation was effected principally to
        simplify the Company's corporate structure to enable the streamlining
        of reporting and compliance obligations. This intracompany
        amalgamation did not impact the consolidated financial position or
        results previously reported by the Company.
    

    "The company's continued healthy growth in subscribers and cash flow
reflect our intense focus on delivering innovative products, great customer
service and profitable growth," said Ted Rogers, President and CEO of Rogers
Communications Inc. "While our brand, franchises and markets are all strong,
we have much work to do to maintain our leadership position."



    MANAGEMENT'S DISCUSSION AND ANALYSIS
    FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007

    This management's discussion and analysis ("MD&A") should be read in
conjunction with our 2006 Annual MD&A and our 2006 Annual Audited Consolidated
Financial Statements and Notes thereto. The financial information presented
herein has been prepared on the basis of Canadian generally accepted
accounting principles ("GAAP") for interim financial statements and is
expressed in Canadian dollars. Please refer to Note 26 to our 2006 Annual
Audited Consolidated Financial Statements for a summary of the differences
between Canadian GAAP and United States ("U.S.") GAAP for the year ended
December 31, 2006. This MD&A is current as of October 31, 2007.
    In this MD&A, the terms "we", "us", "our", 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 Inc.;

    -   "Cable and Telecom", which refers to our wholly-owned cable and
        telecom subsidiaries, including Rogers Cable Communications Inc.
        ("RCCI"). In January 2007, we completed a previously announced
        internal reorganization whereby the Cable and Internet and Rogers
        Home Phone segments were combined into one segment known as Cable
        Operations. As a result, beginning in 2007, the Cable and Telecom
        operating segment is comprised of the following segments: Cable
        Operations, Rogers Business Solutions and Rogers Retail. Comparative
        figures have been reclassified to reflect this new segmented
        reporting;

    -   "Media", which refers to our wholly-owned subsidiary Rogers Media
        Inc. and its subsidiaries, including: Rogers Broadcasting, which owns
        Rogers Sportsnet, Radio stations, OMNI television, The Biography
        Channel Canada, G4TechTV Canada, and The Shopping Channel; Rogers
        Publishing; and Rogers Sports Entertainment, which owns the Toronto
        Blue Jays and the Rogers Centre. In addition, Media holds ownership
        interests in entities involved in specialty TV content, TV production
        and broadcast sales.
    

    On October 31, 2007 Media completed its previously announced acquisition
of five Citytv television stations. The acquisition will be accounted for
using the purchase method with the results of the Citytv stations consolidated
with those of Media effective October 31, 2007.
    "RCI" refers to the legal entity Rogers Communications Inc. excluding our
subsidiaries.
    Throughout this MD&A, percentage changes are calculated using numbers
rounded to which they appear.

    
    SUMMARIZED CONSOLIDATED FINANCIAL RESULTS
    -------------------------------------------------------------------------
    (In millions of         Three months ended          Nine months ended
     dollars, except           September 30,               September 30,
     per share        -------------------------------------------------------
     amounts)             2007      2006   % Chg      2007      2006   % Chg
    -------------------------------------------------------------------------
    Operating revenue
      Wireless(1)     $  1,442  $  1,224      18  $  4,037  $  3,323      21
      Cable and
       Telecom
        Cable
         Operations        657       580      13     1,923     1,695      13
        Rogers Business
         Solutions         140       148      (5)      431       441      (2)
        Rogers Retail      104        73      42       288       226      27
        Corporate
         items and
         eliminations       (2)       (1)    100        (7)       (3)    n/m
                      -------------------------------------------------------
                           899       800      12     2,635     2,359      12
      Media                339       319       6       953       893       7
      Corporate items
       and eliminations    (69)      (38)      82     (189)     (107)     77
                      -------------------------------------------------------
    Total                2,611     2,305       13    7,436     6,468      15
                      -------------------------------------------------------
                      -------------------------------------------------------

    Operating profit
     (loss)
     (as adjusted)(2)
      Wireless             686       564       22    1,931     1,466      32
      Cable and Telecom
        Cable Operations   256       210       22      733       630      16
        Rogers Business
         Solutions           7         6       17        4        37     (89)
        Rogers Retail        2         3      (33)      (1)       11     n/m
                      -------------------------------------------------------
                           265       219      21       736       678       9
      Media                 46        41      12       110       108       2
      Corporate items
       and eliminations    (13)      (24)    (46)      (49)      (78)    (37)
                      -------------------------------------------------------
                      -------------------------------------------------------
    Operating profit
     (as adjusted)(2)      984       800      23     2,728     2,174      25
    Stock option plan
     amendment(3)            -         -     n/m      (452)        -     n/m
    Stock-based
     compensation
     expense(3)            (11)      (14)    (21)      (58)      (37)     57
    Integration and
     restructuring
     expense(4)             (5)       (1)    n/m       (21)      (14)     50
    Adjustment for
     CRTC Part II
     fees decision(5)       18         -     n/m        18         -     n/m
                      -------------------------------------------------------
    Operating profit(2)    986       785      26     2,215     2,123       4
    Other income and
     expense, net(6)       717       631      14     1,832     1,677       9
                      -------------------------------------------------------
    Net income        $    269  $    154      75  $    383  $    446     (14)
                      -------------------------------------------------------
                      -------------------------------------------------------

    Net income
     per share:(7)
      Basic           $   0.42  $   0.25      68  $   0.60  $   0.71     (15)
      Diluted             0.42      0.24      75      0.60      0.69     (13)

    As adjusted:(2)
      Net income      $    268  $    169      59  $    753  $    492      53
      Net income
       per share:
        Basic         $   0.42  $   0.27      56  $   1.18  $   0.78      51
        Diluted           0.42      0.26      62      1.17      0.77      52

    Additions to
     property, plant
     and equipment
     ("PP&E")(2)
      Wireless        $    164  $    161       2  $    570  $    483      18
      Cable and
       Telecom
        Cable Operations   176       178      (1)      464       426       9
        Rogers Business
         Solutions          18        26     (31)       58        50      16
        Rogers Retail        5         3      67        12         5     140
                      -------------------------------------------------------
                           199       207      (4)      534       481      11
      Media                 27         8     n/m        45        33      36
      Corporate(8)           7        39     (82)       23       161     (86)
                      -------------------------------------------------------
    Total             $    397  $    415      (4) $  1,172  $  1,158       1
    -------------------------------------------------------------------------

    (1)  Certain prior year amounts related to Wireless equipment sales and
         cost of equipment sales have been reclassified. Refer to the section
         entitled "Reclassification of Wireless Equipment Sales and Cost of
         Sales" in our 2006 Annual MD&A for further details.
    (2)  As defined. See the "Supplementary Information" and the "Key
         Performance Indicators and Non-GAAP Measures" sections.
    (3)  See the section entitled "Stock-based Compensation Expense".
    (4)  Costs incurred relate to the integration of Fido Solutions Inc.
         ("Fido") and Call-Net Enterprises Inc. ("Call-Net"), the
         restructuring of Rogers Business Solutions and the closure of 21
         retail stores in the first quarter of 2006.
    (5)  Relates to an adjustment of CRTC Part II fees related to prior
         periods as a result of a recent notice from the CRTC that the
         Part II fees due in November 2007 will not be collected by the CRTC.
         See the "Government Regulation and Regulatory Developments" section.
    (6)  See the "Reconciliation of Net Income to Operating Profit and
         Operating Profit (as adjusted) for the Period" section for details
         of these amounts.
    (7)  Prior period per share amounts have been retroactively adjusted to
         reflect a two-for-one split of the Company's Class A Voting and
         Class B Non-Voting shares on December 29, 2006.
    (8)  Corporate additions to PP&E for the nine months ended September 30,
         2006 includes $105 million for RCI's purchase of real estate in
         Brampton, Ontario.
    n/m: not meaningful.
    

    For discussions of the results of operations of each of these segments,
refer to the respective segment sections of this MD&A.

    Stock-based Compensation Expense

    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. The SAR feature allows the option holder to elect to receive in cash
an amount equal to the intrinsic value, being the excess market price of the
Class B Non-Voting share over the exercise price of the option, instead of
exercising the option and acquiring Class B Non-Voting shares. All outstanding
stock options are now classified as liabilities and are 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 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. As a result of this
amendment, we recorded a liability of $502 million, a one-time non-cash charge
upon adoption of $452 million to revalue the outstanding options at May 28,
2007 and a $50 million decrease in contributed surplus. In addition, a future
income tax recovery of $160 million was recorded as a result of the amendment.
    Previously, all stock options were classified as equity and were measured
at the estimated fair value established by the Black-Scholes or binomial
models on the date of grant. Under this method, the estimated fair value was
amortized to expense over the period in which the related services were
rendered, which was generally the vesting period or, as applicable, over the
period to the date an employee was eligible to retire, whichever was shorter.
Subsequent to May 28, 2007, the liability for stock-based compensation expense
is recorded based on the intrinsic value of the options, as described above,
and the expense is impacted by the change in the price of our Class B
Non-Voting shares during the life of the option. At September 30, 2007, we
have a liability of $545 million related to stock-based compensation recorded
at its intrinsic value, including stock options, restricted share units and
deferred share units. In the three and nine months ended September 30, 2007,
$13 million and $30 million, respectively, was paid to option holders upon
exercise of options using the SAR feature.
    A summary of stock-based compensation expense is as follows:

    
                           --------------------------------------------------
                                          Stock-based Compensation Expense
                                         Included in Operating, General and
                            One-time           Administrative Expenses
    ----------------------  Non-cash  ---------------------------------------
                             Charge    Three months ended  Nine months ended
                              Upon        September 30,       September 30,
    (In millions            Adoption  ---------------------------------------
     of dollars)             in Q207     2007      2006      2007      2006
    -------------------------------------------------------------------------
    Wireless                $     46  $      2  $      4  $      9  $     11
    Cable and Telecom            113         3         3        13         8
    Media                         84         3         2         9         4
    Corporate                    209         3         5        27        14
                           --------------------------------------------------
                            $    452  $     11  $     14  $     58  $     37
                           --------------------------------------------------
    

    Reconciliation of Net Income to Operating Profit and Operating Profit
    (as adjusted) 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 operating profit (as
adjusted) for the period. See the "Supplementary Information" section for a
full reconciliation to operating profit (as adjusted), net income (as
adjusted), and net income per share (as adjusted). 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 Note 2 to the Interim Consolidated Financial Statements
entitled "Segmented Information".

    
    -------------------------------------------------------------------------
                            Three months ended          Nine months ended
                               September 30,               September 30,
    (In millions      -------------------------------------------------------
     of dollars)          2007      2006   % Chg      2007      2006   % Chg
    -------------------------------------------------------------------------
    Net income        $    269  $    154      75  $    383  $    446     (14)
    Income tax expense     166        76     118       165        43     n/m
    Other expense
     (income)               10        (4)    n/m         6       (11)    n/m
    Change in the
     fair value of
     derivative
     instruments             5        (2)    n/m        31        28      11
    Loss on repayment
     of long-term debt       -         -     n/m        47         -     n/m
    Foreign exchange
     gain                   (1)        -     n/m       (53)      (41)     29
    Interest expense
     on long-term debt     140       153      (8)      441       469      (6)
                      -------------------------------------------------------
    Operating income       589       377      56     1,020       934       9
    Depreciation and
     amortization          397       408      (3)    1,195     1,189       1
                      -------------------------------------------------------
    Operating profit       986       785      26     2,215     2,123       4
    Stock option plan
     amendment               -         -     n/m       452         -     n/m
    Stock-based
     compensation
     expense                11        14     (21)       58        37      57
    Integration and
     restructuring
     expense                 5         1     n/m        21        14      50
    Adjustment for
     CRTC Part II
     fees decision         (18)        -     n/m       (18)        -     n/m
                      -------------------------------------------------------
    Operating profit
     (as adjusted)    $    984  $    800      23  $  2,728  $  2,174      25
    -------------------------------------------------------------------------
    

    Net Income and Net Income Per Share

    As a result of the changes discussed below, we recorded net income of
$269 million for the three months ended September 30, 2007, or basic and
diluted earnings per share of $0.42, compared to net income of $154 million or
basic earnings per share of $0.25 (diluted - $0.24) in the corresponding
period in 2006. For the nine months ended September 30, 2007, we recorded net
income of $383 million or basic and diluted earnings per share of $0.60,
compared to net income of $446 million or basic earnings per share of $0.71
(diluted - $0.69) in the corresponding period of 2006.

    Income Taxes

    Due to our non-capital loss carryforwards, our income tax expense for the
three and nine month periods ended September 30, 2007 substantially represents
non-cash income taxes. As illustrated in the table below, our effective income
tax rate for the three and nine month periods ended September 30, 2007 was
38.2% and 30.1%, respectively. The effective income tax rate for the three
months ended September 30, 2007 differed from the 2007 statutory income tax
rate of 35.2% primarily due to a future income tax charge recorded for a
reduction in our future tax assets to reflect a decrease in the estimated
income tax rate that will apply on the utilization of our income tax losses.
The effective income tax rate for the nine month period ended September 30,
2007 differed from the 2007 statutory income tax rate of 35.2% due primarily
to the $25 million future income tax recovery recorded with respect to the
Videotron termination payment to reverse a charge recorded by us in 2006 (see
Note 11 of our Unaudited Interim Consolidated Financial Statements). In
addition, we recorded a future income tax recovery associated with the
reclassification of contributed surplus upon the introduction of a cash
settlement feature for employee stock options (see the section entitled
"Stock-based Compensation Expense"). The 2006 effective income tax rate was
less than the 2006 statutory rate of 35.8% due primarily to a decrease in the
valuation allowance recorded in respect of non-capital losses.

    
    -------------------------------------------------------------------------
                                       Three months ended   Nine months ended
                                           September 30,       September 30,
                                      ---------------------------------------
    (In millions of dollars)              2007      2006      2007      2006
    -------------------------------------------------------------------------
    Statutory income tax rate            35.2%     35.8%     35.2%     35.8%
    -------------------------------------------------------------------------

    Income before income taxes        $    435  $    230  $    548  $    489
    Income tax expense at statutory
     income tax rate on income
     before income taxes              $    153  $     82  $    193  $    175
    Increase (decrease) in income
     taxes resulting from:
      Stock-based compensation               -         4       (19)       11
      Videotron termination payment          -        25       (25)       25
      Change in the valuation allowance
       for future income taxes               -       (31)        -      (160)
      Other items                           13        (4)       16        (8)
                                      ---------------------------------------
    Income tax expense                $    166  $     76  $    165  $     43
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Effective income tax rate            38.2%     33.0%     30.1%      8.8%
    -------------------------------------------------------------------------
    

    Change in Fair Value of Derivative Instruments

    The changes in fair value of the derivative instruments in the nine
months ended September 30, 2007 were primarily the result of the changes in
the Canadian dollar relative to that of the U.S. dollar as described below.
For the three months ended September 30, 2007, the change in fair value of the
derivative instruments was primarily the result of the change in measurement
of hedge ineffectiveness.

    Loss on Repayment of Long-Term Debt

    During the nine months ended September 30, 2007, we redeemed Wireless'
US$155 million 9.75% Senior Debentures due 2016 and Wireless' US$550 million
9.75% Senior Notes due 2010. These redemptions resulted in a loss on repayment
of long-term debt of $47 million for the nine months ended September 30, 2007,
including aggregate redemption premiums of $59 million offset by a write-off
of the fair value increment arising from purchase accounting of $12 million.

    Foreign Exchange Gain

    During the three months ended September 30, 2007, the Canadian dollar
strengthened by 6.71 cents versus the U.S. dollar. This resulted in a foreign
exchange gain of $1 million during the three months ended September 30, 2007.
During the corresponding period of 2006, there was no gain or loss related to
foreign exchange on long-term debt not hedged for accounting purposes given a
nominal 0.03 cent decrease in the Canadian dollar in this period. During the
nine months ended September 30, 2007, the Canadian dollar strengthened by
16.9 cents compared to 5.06 cents in the corresponding period of 2006,
resulting in foreign exchange gains of $53 million and $41 million,
respectively.

    Interest on Long-Term Debt

    Interest expense decreased by $13 million and $28 million, respectively,
for the three and nine months ended September 30, 2007 compared to the
corresponding periods in 2006. The decrease in interest expense is primarily
due to the $687 million decrease in long-term debt as at September 30, 2007
compared to September 30, 2006, including the impact of cross-currency
interest rate exchange agreements.
    This decrease in debt was largely the result of the February 2007
repayment at maturity of Cable and Telecom's $450 million 7.60% Senior Notes
due 2007, the May 2007 redemption of Wireless' US$550 million Floating Rate
Senior Notes due 2010 and the June 2007 redemption of Wireless' US$155 million
9.75% Senior Debentures due 2016. These repayments were partially offset by
the $595 million net increase in bank debt as at September 30, 2007 compared
to September 30, 2006.

    Operating Income

    The 56% increase in our operating income to $589 million from
$377 million for the three months ended September 30, 2007 compared to the
corresponding period of the prior year is primarily due to the growth in
revenue of $306 million exceeding the growth in operating expenses of
$105 million. For the nine months ended September 30, 2007, operating income
increased by only 9% to $1,020 million primarily due to a $452 million
one-time non-cash charge related to the introduction of a cash settlement
feature for stock options adopted in the second quarter of 2007.

    Depreciation and Amortization Expense

    Depreciation and amortization expense for the three and nine months ended
September 30, 2007 remained consistent with the corresponding periods of the
prior year.

    Operating Profit (as adjusted)

    Operating profit (as adjusted) increased to $984 million and
$2,728 million for the three and nine months ended September 30, 2007,
respectively, from $800 million and $2,174 million in the corresponding
periods of the prior year. Operating profit (as adjusted) excludes: (i) the
impact of a $452 million one-time non-cash charge related to the introduction
of a cash settlement feature for stock options for the nine months ended
September 30, 2007; (ii) stock-based compensation expense of $11 million and
$14 million for the three months ended September 30, 2007 and 2006,
respectively, and $58 million and $37 million for the nine months ended
September 30, 2007 and 2006, respectively; (iii) integration and restructuring
expenses of $5 million and $1 million for the three months ended September 30,
2007 and 2006, respectively, and $21 million and $14 million, for the nine
months ended September 30, 2007 and 2006, respectively; and (iv) an adjustment
to Part II CRTC fees related to prior periods of $18 million for the three and
nine months ended September 30, 2007.
    For details on the determination of operating profit (as adjusted), which
is a non-GAAP measure, see the "Supplementary Information" and the "Key
Performance Indicators and Non-GAAP Measures" sections.

    OPERATING UNIT REVIEW

    WIRELESS
    --------

    Summarized Wireless Financial Results

    
    -------------------------------------------------------------------------
                            Three months ended          Nine months ended
    (In millions               September 30,               September 30,
     of dollars,      -------------------------------------------------------
     except margin)       2007      2006   % Chg      2007      2006   % Chg
    -------------------------------------------------------------------------

    Operating revenue
      Postpaid        $  1,274  $  1,080      18  $  3,585  $  2,989      20
      Prepaid               75        57      32       203       153      33
      One-way messaging      3         4     (25)       10        11      (9)
                      -------------------------------------------------------
      Network revenue    1,352     1,141      18     3,798     3,153      20
      Equipment sales(1)    90        83       8       239       170      41
                      -------------------------------------------------------
    Total operating
     revenue             1,442     1,224      18     4,037     3,323      21
                      -------------------------------------------------------

    Operating expenses
     before the
     undernoted
      Cost of equipment
       sales(1)            178       158      13       495       439      13
      Sales and
       marketing
       expenses            181       152      19       467       418      12
      Operating,
       general and
       administrative
       expenses            397       350      13     1,144     1,000      14
                      -------------------------------------------------------
                           756       660      15     2,106     1,857      13
                      -------------------------------------------------------
    Operating profit
     (as adjusted)(2)      686       564      22     1,931     1,466      32
    Stock option plan
     amendment(3)            -         -     n/m       (46)        -     n/m
    Stock-based
     compensation
     expense(3)             (2)       (4)    (50)       (9)      (11)    (18)
    Integration recovery
     (expense)(4)            -         1     n/m         -        (3)    n/m
                      -------------------------------------------------------
    Operating
     profit(2)(5)     $    684  $    561      22  $  1,876  $  1,452      29
                      -------------------------------------------------------
                      -------------------------------------------------------

    Adjusted operating
     profit margin
     as % of network
     revenue(2)          50.7%     49.4%             50.8%     46.5%

    Additions to
     property, plant
     and equipment
     ("PP&E")(2)      $    164  $    161       2  $    570  $    483      18
    -------------------------------------------------------------------------

    (1)  Certain prior year amounts related to equipment sales and cost of
         equipment sales have been reclassified. Refer to the section
         entitled "Reclassification of Wireless Equipment Sales and Cost of
         Sales" in our 2006 Annual MD&A for further details.
    (2)  As defined. See the "Key Performance Indicators and Non-GAAP
         Measures" and the "Supplementary Information" sections.
    (3)  See the section entitled "Stock-based Compensation Expense".
    (4)  Costs recovered (incurred) relate to the integration of Fido.
    (5)  Operating profit includes a loss of $8 million and $23 million
         related to the Inukshuk wireless broadband initiative for the three
         and nine months ended September 30, 2007, respectively, and a loss
         of $8 million and $16 million for the three and nine months ended
         September 30, 2006, respectively.


    Summarized Wireless Subscriber Results

    -------------------------------------------------------------------------
    (Subscriber
     statistics             Three months ended          Nine months ended
     in thousands,             September 30,               September 30,
     except ARPU,     -------------------------------------------------------
     churn and usage)     2007      2006     Chg      2007      2006     Chg
    -------------------------------------------------------------------------
    Postpaid
      Gross additions    383.0     368.9    14.1     990.5     990.8    (0.3)
      Net additions      195.1     171.2    23.9     422.6     390.7    31.9
      Adjustment to
       postpaid
       subscriber base(1)    -         -       -     (64.9)        -   (64.9)
      Total postpaid
       retail
       subscribers                                 5,755.9   5,208.9   547.0
      Average monthly
       revenue per user
       ("ARPU")(2)    $  75.15  $  70.37  $ 4.78  $  71.82  $  66.66  $ 5.16
      Average monthly
       usage (minutes)     582       541      41       565       541      24
      Monthly churn      1.12%     1.30%  (0.18%)    1.14%     1.34%  (0.20%)
    Prepaid
      Gross additions    179.0     169.4     9.6     478.7     434.3    44.4
      Net additions
       (losses)           48.0      31.9    16.1      44.7     (24.9)   69.6
      Adjustment to
       prepaid
       subscriber base(1)    -         -       -     (25.5)        -   (25.5)
      Total prepaid
       retail
       subscribers                                 1,399.3   1,324.9    74.4
      ARPU(2)         $  18.15  $  14.61  $ 3.54  $  16.41  $  12.93  $ 3.48
      Monthly churn      3.20%     3.52%  (0.32%)    3.52%     3.89%  (0.37%)
    -------------------------------------------------------------------------

    (1)  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 64,900 subscribers from Wireless' postpaid
         subscriber base and the removal of approximately 25,500 subscribers
         from Wireless' prepaid subscriber base. These adjustments are not
         included in the determination of postpaid or prepaid monthly churn.
    (2)  As defined. See the "Key Performance Indicators and Non-GAAP
         Measures" section. As calculated in the "Supplementary Information"
         section.
    

    Wireless Network Revenue

    The increases in network revenue for the three and nine months ended
September 30, 2007 compared to the corresponding periods of the prior year
were driven by the continued growth of Wireless' postpaid subscriber base and
improvements in postpaid average monthly revenue per user ("ARPU"). The
year-over-year increase in postpaid ARPU reflects the impact of higher data
revenue, as well as increased long-distance, add-on features and roaming
revenue. As Canada's only GSM provider, Wireless has experienced growth in
roaming revenues from subscribers traveling outside of Canada as well as
strong growth in inbound roaming revenues from travelers to Canada who utilize
Wireless' network.
    Prepaid revenue increased as a result of improved ARPU and a larger
subscriber base. The year-over-year improvement in ARPU is a result of
increased data usage and attractive prepaid offerings, including unlimited
evening and weekend plans.
    Wireless' success in the continued reduction in postpaid churn reflects
proactive and targeted customer retention activities, the commitment to
customer care and improvements in network coverage and quality. Prepaid churn
has improved in the first nine months of 2007 due to changes in offerings and
investments in retention programs.
    During the three and nine months ended September 30, 2007, wireless data
revenue increased by 53% and 49%, respectively, over the corresponding periods
in 2006 and totalled $183 million and $491 million, respectively. This
increase in data revenue reflects the continued growth of text and multimedia
messaging services, wireless Internet access, BlackBerry devices, downloadable
ring tones, music and games, and other wireless data services and
applications. For the three and nine months ended September 30, 2007, data
revenue represented approximately 13.6% and 12.9% of total network revenue,
respectively, compared to 10.5% and 10.4%, respectively, in the corresponding
periods last year.

    Wireless Equipment Sales

    The year-over-year increase in revenue from equipment sales, including
activation fees and net of equipment subsidies, reflects the increase in gross
additions and increased volume of handset upgrades associated with the growing
subscriber base.

    Wireless Operating Expenses

    
    -------------------------------------------------------------------------
    (In millions of        Three months ended          Nine months ended
     dollars, except          September 30,               September 30,
     per subscriber   -------------------------------------------------------
     statistics)          2007      2006   % Chg      2007      2006   % Chg
    -------------------------------------------------------------------------

    Operating expenses
      Cost of
       equipment
       sales(1)       $    178  $    158      13  $    495  $    439      13
      Sales and
       marketing
       expenses            181       152      19       467       418      12
      Operating,
       general and
       administrative
       expenses            397       350      13     1,144     1,000      14
                      -------------------------------------------------------
    Operating expenses
     before the
     undernoted            756       660      15     2,106     1,857      13
    Stock option plan
     amendment(2)            -         -     n/m        46         -     n/m
    Stock-based
     compensation
     expense(2)              2         4     (50)        9        11     (18)
    Integration recovery
     (expense)(3)            -        (1)   (100)        -         3    (100)
                      -------------------------------------------------------
    Total operating
     expenses         $    758  $    663      14  $  2,161  $  1,871      15
                      -------------------------------------------------------
                      -------------------------------------------------------

    Average monthly
     operating expense
     per subscriber
     before sales
     and marketing
     expenses(4)      $  20.74  $  19.34       7  $  20.39  $  19.47       5

    Sales and marketing
     costs per gross
     subscriber
     addition(4)      $    392  $    363       8  $    388  $    388       -
    -------------------------------------------------------------------------

    (1)  Certain prior year amounts related to equipment sales and cost of
         equipment sales have been reclassified. Refer to the section
         entitled "Reclassification of Wireless Equipment Sales and Cost of
         Sales" in our 2006 Annual MD&A for further details.
    (2)  See the section entitled "Stock-based Compensation Expense".
    (3)  Costs incurred (recovered) relate to the integration of Fido.
    (4)  As defined. See the "Key Performance Indicator and Non-GAAP
         Measures" section. As calculated in the "Supplementary Information"
         section. Average monthly operating expense per subscriber before
         sales and marketing expenses excludes the one-time non-cash expense
         related to the introduction of a cash settlement feature for stock
         options, stock-based compensation expense and integration recovery
         (expenses).
    

    Cost of equipment sales increased for the three and nine months ended
September 30, 2007 compared to the corresponding periods of the prior year
primarily as a result of retention activity and hardware upgrades, as well as
the increased volume of gross additions and the increased average cost of more
advanced handsets.
    The increase in sales and marketing expenses for the three and nine
months ended September 30, 2007 compared to the corresponding period of the
prior year was directly related to our largely successful sales and marketing
efforts targeted at acquiring high value postpaid customers and BlackBerry
customers. In addition, the increase was driven by increased marketing
activity related to Wireless' "Most Reliable Network" campaign and the
introduction of new products and services such as the BlackBerry Curve and
Rogers Vision.
    Growth in the Wireless subscriber base drove increases in operating,
general and administrative expenses in the three and nine months ended
September 30, 2007, compared to the corresponding periods of the prior year.
These increases were reflected in higher retention spending, costs to support
increased usage of data and roaming services, and increases in network
operating expenses to accommodate the larger subscriber base. Customer care
costs also increased as a result of Wireless Number Portability ("WNP"), the
decommissioning of the TDMA network in May 2007, and the complexity of
supporting more sophisticated handsets. These costs were partially offset by
savings related to operating efficiencies across various functions.
    Total retention spending, including subsidies on handset upgrades, has
increased to $102 million and $293 million in the three and nine months ended
September 30, 2007, respectively, compared to $72 million and $236 million,
respectively, in the corresponding periods of the prior year due to a larger
subscriber base which drove higher volumes of handset upgrades, as well as the
introduction of WNP in March 2007. Retention spending during the nine months
ended September 30, 2007 also increased due to the transition of customers to
Wireless' more advanced GSM service from the older generation TDMA and analog
networks, which were turned down in May 2007.

    Wireless Operating Profit (as adjusted)

    The strong year-over-year growth in operating profit (as adjusted) was
the result of the significant growth in network revenue. As a result,
Wireless' adjusted operating profit margins increased to 50.7% and 50.8% for
the three and nine months ended September 30, 2007, respectively, compared to
49.4% and 46.5% in the corresponding periods in 2006.

    Wireless Additions to Property, Plant and Equipment

    Wireless additions to PP&E are classified into the following categories:

    
    -------------------------------------------------------------------------
                            Three months ended          Nine months ended
                               September 30,               September 30,
    (In millions      -------------------------------------------------------
     of dollars)          2007      2006   % Chg      2007      2006   % Chg
    -------------------------------------------------------------------------

    Additions to PP&E
      Network -
       capacity       $     48  $     48       -  $    131  $    136      (4)
      Network - other       34        15     127        75        46      63
      High Speed Packet
       Access ("HSPA")      36        62     (42)      259       182      42
      Information and
       technology
       and other            42        28      50        93        58      60
      Inukshuk               4         8     (50)       12        61     (80)
                      -------------------------------------------------------
    Total additions
     to PP&E          $    164  $    161       2  $    570  $    483      18
    -------------------------------------------------------------------------
    

    The additions to PP&E for the three and nine months ended September 30,
2007, respectively, reflect spending on network capacity on the GSM and HSPA
networks and technology enhancements. Other network-related additions to PP&E
in the three and nine months ended September 30, 2007 primarily reflect
technical upgrade projects, consisting primarily of network features, channel
additions and operational support systems. Other additions to PP&E reflect
information technology initiatives such as billing and back office system
upgrades and other facilities and equipment spending. The reduction in
expenditures related to the Inukshuk wireless broadband initiative for the
nine months ended September 30, 2007 compared to the corresponding period of
the prior year is a result of costs incurred in 2006 for the initial
deployment of infrastructure in the largest Canadian markets.

    CABLE AND TELECOM
    -----------------

    Summarized Cable and Telecom Financial Results

    
    -------------------------------------------------------------------------
                            Three months ended          Nine months ended
    (In millions               September 30,               September 30,
     of dollars,      -------------------------------------------------------
     except margin)     2007(1)   2006(2)  % Chg    2007(1)   2006(2)  % Chg
    -------------------------------------------------------------------------

    Operating revenue
      Cable
       Operations(3)  $    657  $    580      13  $  1,923  $  1,695      13
      Rogers Business
       Solutions           140       148      (5)      431       441      (2)
      Rogers Retail        104        73      42       288       226      27
      Intercompany
       eliminations         (2)       (1)    100        (7)       (3)    n/m
                      -------------------------------------------------------
    Total operating
     revenue               899       800      12     2,635     2,359      12
                      -------------------------------------------------------
                      -------------------------------------------------------

    Operating profit
     (loss) before
     the undernoted
      Cable
       Operations(3)       256       210      22       733       630      16
      Rogers Business
       Solutions             7         6      17         4        37     (89)
      Rogers Retail          2         3     (33)       (1)       11     n/m
                      -------------------------------------------------------
    Operating profit
     (as adjusted)(4)      265       219      21       736       678       9
    Stock option plan
     amendment(5)            -         -     n/m      (113)        -     n/m
    Stock-based
     compensation
     expense(5)             (3)       (3)      -       (13)       (8)     63
    Integration and
     restructuring
     expense(6)             (5)       (2)    150       (21)      (11)     91
    Adjustment for
     CRTC Part II
     fees decision(7)       15         -     n/m        15         -     n/m
                      -------------------------------------------------------
    Operating
     profit(4)        $    272  $    214      27  $    604  $    659      (8)
                      -------------------------------------------------------
                      -------------------------------------------------------

    Adjusted operating
     profit margin(4)
      Cable
       Operations(3)     39.0%     36.2%             38.1%     37.2%
      Rogers Business
       Solutions          5.0%      4.1%              0.9%      8.4%
      Rogers Retail       1.9%      4.1%             (0.3%)     4.9%

    Additions to
     PP&E(4)
      Cable
       Operations(3)  $    176  $    178      (1) $    464  $    426       9
      Rogers Business
       Solutions            18        26     (31)       58        50      16
      Rogers Retail          5         3      67        12         5     140
                      -------------------------------------------------------
    Total additions
     to PP&E          $    199  $    207      (4) $    534  $    481      11
    -------------------------------------------------------------------------

    (1)  The operating results of Futureway Communications Inc. ("Futureway")
         are included in Cable and Telecom's results of operations from the
         date of acquisition on June 22, 2007.
    (2)  Certain prior year amounts have been reclassified to conform to the
         current year presentation.
    (3)  Cable Operations segment includes Core Cable services, Internet
         services and Rogers Home Phone services.
    (4)  As defined. See the "Key Performance Indicators and Non-GAAP
         Measures" and "Supplementary Information" sections.
    (5)  See the section entitled "Stock-based Compensation Expense".
    (6)  Costs incurred relate to the integration of the operations of Call-
         Net, the restructuring of Rogers Business Solutions and the closure
         of 21 retail stores in the first quarter of 2006.
    (7)  Relates to an adjustment of CRTC Part II fees related to prior
         periods as a result of a recent notice from the CRTC that the Part
         II fees due in November 2007 will not be collected by the CRTC. See
         "Government Regulation and Regulatory Developments" section.

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

    CABLE OPERATIONS
    ----------------

    Summarized Financial Results

    -------------------------------------------------------------------------
                            Three months ended          Nine months ended
    (In millions               September 30,               September 30,
     of dollars,      -------------------------------------------------------
     except margin)       2007    2006(1)  % Chg      2007   2006(1)   % Chg
    -------------------------------------------------------------------------

    Operating revenue
      Core Cable      $    386  $    358       8  $  1,143  $  1,054       8
      Internet             153       132      16       448       385      16
      Rogers Home Phone    118        90      31       332       256      30
                      -------------------------------------------------------
    Total Cable
     Operations
     operating revenue     657       580      13     1,923     1,695      13
                      -------------------------------------------------------
    Operating
     expenses before
     the undernoted
      Sales and
       marketing
       expenses             66        61       8       188       162      16
      Operating,
       general and
       administrative
       expenses            335       309       8     1,002       903      11
                      -------------------------------------------------------
                           401       370       8     1,190     1,065      12
                      -------------------------------------------------------
    Operating profit
     (as adjusted)(2)      256       210      22       733       630      16
    Stock option plan
     amendment(3)            -         -     n/m      (106)        -     n/m
    Stock-based
     compensation
     expense(3)             (1)       (3)    (67)      (11)       (8)     38
    Integration
     expense(4)             (4)       (2)    100        (9)       (6)     50
    Adjustment for
     CRTC Part II
     fees decision(5)       15         -     n/m        15         -     n/m
                      -------------------------------------------------------
    Operating
     profit(2)        $    266  $    205      30  $    622  $    616       1
                      -------------------------------------------------------
                      -------------------------------------------------------
    Adjusted operating
     profit margin(2)    39.0%     36.2%             38.1%     37.2%
    -------------------------------------------------------------------------

    (1)  Certain prior year amounts have been reclassified to conform with
         the current year presentation.
    (2)  As defined. See the "Key Performance Indicators and Non-GAAP
         Measures" and "Supplementary Information" sections.
    (3)  See the section entitled "Stock-based Compensation Expense".
    (4)  Costs incurred relate to the integration of the operations of
         Call-Net.
    (5)  Relates to an adjustment of CRTC Part II fees related to prior
         periods as a result of a recent notice from the CRTC that the
         Part II fees due in November 2007 will not be collected by the CRTC.
         See the "Government Regulation and Regulatory Developments" section.


    Summarized Subscriber Results

    -------------------------------------------------------------------------
    (Subscriber             Three months ended          Nine months ended
     statistics                September 30,               September 30,
     in thousands,    -------------------------------------------------------
     except ARPU)         2007    2006(5)    Chg      2007    2006(5)    Chg
    -------------------------------------------------------------------------

    Cable homes passed                             3,542.5   3,458.7    83.8

    Basic Cable
      Net additions        9.1      12.6    (3.5)     (1.7)      2.6    (4.3)
      Total Basic Cable
       subscribers                                 2,275.4   2,266.4     9.0
      Core Cable
       ARPU(1)        $  56.69  $  52.70  $ 3.99  $  55.86  $  51.91  $ 3.95

    High-speed Internet
      Net additions       55.0      51.0     4.0     118.2     113.0     5.2
      Total Internet
       subscribers
       (residential)(2)                            1,418.5   1,249.2   169.3
      Internet
       ARPU(1)        $  36.71  $  35.50  $ 1.21  $  36.46  $  35.25  $ 1.21

    Digital Cable
      Terminals, net
       additions          83.2      95.0   (11.8)    263.7     242.6    21.1
      Terminals in
       service                                     1,761.1   1,382.2   378.9
      Households, net
       additions          54.8      62.2    (7.4)    157.9     151.1     6.8
      Households                                   1,291.8   1,064.4   227.4

    Cable telephony
     subscriber lines
      Net additions(3)    81.2     106.1   (24.9)    224.6     222.9     1.7
      Total Cable
       telephony
       subscriber lines                              590.5     270.8   319.7

    Circuit-switched
     subscriber lines
      Net losses and
       migrations(3)      (6.6)    (24.1)   17.5     (33.1)    (32.8)   (0.3)
      Total circuit-
       switched
       subscriber
       lines(2)                                      354.3     357.9    (3.6)

    Total Rogers Home
     Phone subscriber
     lines
      Net additions       74.6      82.0    (7.4)    191.5     190.1     1.4
      Total Rogers
       Home subscriber
       lines(2)                                      944.8     628.7   316.1

    Revenue generating
     units ("RGUs")(4)
      Net additions      193.5     207.8   (14.3)    465.9     456.8     9.1
      Total revenue
       generating
       units(2)                                    5,930.5   5,208.7   721.8
    -------------------------------------------------------------------------

    (1)  As defined. See the "Key Performance Indicators and Non-GAAP
         Measures" and "Supplementary Information" sections.
    (2)  Included in total subscribers at September 30, 2007 are
         approximately 3,700 high-speed Internet subscribers and 37,900
         circuit-switched telephony subscriber lines, representing 41,600
         RGUs, acquired from Futureway in June, 2007. These subscribers are
         not included in net additions for the nine months ended
         September 30, 2007.
    (3)  Includes approximately 7,800 and 38,900 migrations from circuit-
         switched to cable telephony for the three and nine months ended
         September 30, 2007, respectively, and 14,400 and 23,600 migrations
         from circuit-switched to cable telephony for the three and nine
         months ended September 30, 2006, respectively.
    (4)  RGUs are comprised of basic cable subscribers, digital cable
         households, residential high-speed Internet subscribers and Rogers
         Home Phone subscribers.
    (5)  Certain prior year amounts have been reclassified to conform to the
         current year presentation.
    

    Core Cable Revenue

    The increases in Core Cable revenue for the three and nine months ended
September 30, 2007 reflect price increases, the growth in basic subscribers
and the growing penetration of our digital cable products. The price increases
on service offerings, effective March 2006 and 2007, contributed to Core Cable
revenue growth by approximately $14 million and $40 million, for the three and
nine months ended September 30, 2007, respectively. The remaining increase in
revenue of approximately $14 million and $49 million for the three and nine
months ended September 30, 2007, respectively, is primarily related to the
impact of the growth in digital subscribers.
    The digital cable subscriber base has grown by 21% from September 30,
2006 to September 30, 2007. The digital penetration of basic cable households
now represents 57%. Strong demand for high-definition and personal video
recorder subscriber equipment combined with Cable and Telecom's Personal TV
and the new 'triple play' marketing campaign, which offers cable television,
high-speed Internet and Rogers Home Phone services in discrete packages, were
contributors to the growth in the digital subscriber base of 54,800 and
157,900 households in the three and nine months ended September 30, 2007,
respectively. Basic cable subscribers increased by 9,100 in the third quarter
given the seasonal impact of college and university students connecting for
the school year.

    Internet (Residential) Revenue

    The increase in Internet revenues for the three and nine months ended
September 30, 2007 from the corresponding periods in 2006 primarily reflects
the 14% year-over-year increase in the number of Internet subscribers and
price increases of Internet offerings. The price increases on Internet
offerings, effective March 2006 and 2007, contributed to the Internet revenue
growth by approximately $4 million and $12 million for the three and nine
months ended September 30, 2007, respectively. The remaining increases in
revenue of approximately $17 million and $51 million for the three and nine
months ended September 30, 2007, respectively, are largely the result of the
impact of the growth in subscribers. The average monthly revenue per Internet
subscriber has increased in the quarter compared to the corresponding period
in 2006 given the price increases and was partially offset with the change in
product mix to more Lite and Ultra-Lite subscribers.
    With the high-speed Internet subscriber base now at approximately
1.4 million, Internet penetration is 62% of basic cable households, and 40% of
homes passed by our cable networks.

    Rogers Home Phone Revenue

    The growth in Rogers Home Phone revenue for the three and nine months
ended September 30, 2007 compared to the corresponding periods in 2006 is
mainly a result of incremental revenues from Rogers Home Phone
voice-over-cable telephony service, which added 81,200 and 224,600 net new
lines in the three and nine months ended September 30, 2007, respectively.
Partially offsetting the increase in voice-over-cable telephony lines is a
decline in the number of circuit-switched local lines of 6,600 and 33,100 for
the three and nine months ended September 30, 2007, respectively. During the
three and nine months ended September 30, 2007, there were 7,800 and 38,900
migrations, respectively from circuit-switched lines to cable telephony lines.
    The overall net growth in the Rogers Home Phone subscriber base
contributed to incremental local service revenues of approximately $26 million
and $80 million for the three and nine months ended September 30, 2007,
respectively, over the corresponding periods in 2006.
    Long-distance revenues for the three months ended September 30, 2007
increased by $2 million versus the corresponding period in 2006, and decreased
by $4 million in the nine months ended September 30, 2007 compared to the
corresponding period in 2006 due to ongoing declines in pricing and usage.

    Cable Operations Operating Expenses

    The increase in Cable Operations sales and marketing expenses of
$5 million and $26 million for the three and nine months ended September 30,
2007, respectively, compared to the corresponding periods of 2006 reflects the
significant growth and expansion of the cable telephony service as well as
other promotional activities.
    The increases in operating, general and administrative costs for the
three and nine months ended September 30, 2007 compared to the corresponding
periods of 2006 were primarily driven by the increases in digital cable,
Internet and Rogers Home Phone subscriber bases, resulting in higher costs
associated with programming content, customer care, technical service, network
operations, information technology and administration associated with the
support of the larger subscriber bases. This increase was partially offset by
the elimination of CRTC Part II fees for the three months ended September 30,
2007. This was due to a recent notice from the CRTC that the Part II fees due
in November 2007 will not be collected by the CRTC. For further details, see
the section entitled "Government Regulation and Regulatory Developments".
    In January 2004, Cable entered into a multi-year agreement with Yahoo!
Inc. ("Yahoo!") to offer Cable's high-speed Internet access subscribers a
co-branded broadband experience which included: Yahoo!'s email functionality;
hosting and storage; security, pop-up blocking and parental control tools;
digital photo tools; online music and game services; and an array of content
in a personalized user environment. Under this agreement, Cable paid portal
fees to Yahoo! for these services on a per subscriber basis. On October 31,
2007, Cable and Yahoo! entered into a renegotiated agreement effective January
1, 2008 under which Cable and Yahoo! will share advertising revenue
opportunities leveraging the high-speed Internet access subscribers, and Cable
no longer pays portal fees to Yahoo!. This renegotiated agreement will now
expire on December 31, 2011. In connection with the renegotiation of this
agreement, Cable will make a one time payment to Yahoo! of approximately $52
million and Cable's cost of providing its high-speed Internet service will be
meaningfully reduced over the term of the renegotiated agreement.

    Cable Operations Operating Profit (as adjusted)

    The year-over-year growth in operating profit (as adjusted) was primarily
the result of growth in revenue and subscribers. The elimination of CRTC Part
II fees for the quarter was also a contributing factor to the growth in
operating profit (as adjusted). As a result, Cable Operations adjusted
operating profit margins increased to 39.0% and 38.1% for the three and nine
months ended September 30, 2007, respectively, compared to 36.2% and 37.2% in
the corresponding periods in 2006.
    The economics of Cable Operations' base of circuit-switched local
telephony and long-distance customers which was acquired in July 2005 through
the acquisition of Call-Net is such that this part of its business is
generally less capital intensive than its on-net cable telephony business but
also generates lower margins. As such, the inclusion of the circuit-switched
local telephony and long-distance business with Cable Operations' on-net
in-region telephony business has a dilutive impact on operating profit margins
and makes the comparison of such margins with the margins of other pure play
cable companies difficult.

    ROGERS BUSINESS SOLUTIONS

    Summarized Financial Results

    
    -------------------------------------------------------------------------
                            Three months ended          Nine months ended
    (In millions               September 30,               September 30,
     of dollars,      -------------------------------------------------------
     except margin)       2007      2006   % Chg      2007      2006   % Chg
    -------------------------------------------------------------------------

    Rogers Business
     Solutions
     operating
     revenue          $    140  $    148      (5) $    431  $    441      (2)
                      -------------------------------------------------------

    Operating expenses
     before the
     undernoted
      Sales and
       marketing
       expenses             17        17       -        57        51      12
      Operating,
       general and
       administrative
       expenses            116       125      (7)      370       353       5
                      -------------------------------------------------------
                           133       142      (6)      427       404       6
                      -------------------------------------------------------
    Operating profit
     (as adjusted)(1)        7         6      17         4        37     (89)
    Stock option plan
     amendment(2)            -         -     n/m        (2)        -     n/m
    Stock-based
     compensation
     expense(2)             (1)        -     n/m        (1)        -     n/m
    Integration and
     restructuring
     expense(4)             (1)        -     n/m       (12)        -     n/m
                      -------------------------------------------------------
    Operating profit
     (loss)(1)        $      5  $      6     (17) $    (11) $     37     n/m
                      -------------------------------------------------------
                      -------------------------------------------------------

    Adjusted operating
     profit margin(1)     5.0%      4.1%              0.9%      8.4%
    -------------------------------------------------------------------------

    (1)  As defined. See the "Key Performance Indicators and Non-GAAP
         Measures" and "Supplementary Information" sections.
    (2)  See the section entitled "Stock-based Compensation Expense".
    (3)  Costs incurred relate to the integration of the operations of Call-
         Net and the restructuring of Rogers Business Solutions.

    Summarized Subscriber Results

    -------------------------------------------------------------------------
                            Three months ended          Nine months ended
    (Subscriber                September 30,               September 30,
     statistics       -------------------------------------------------------
     in thousands)        2007      2006     Chg      2007      2006     Chg
    -------------------------------------------------------------------------

    Local line
     equivalents(1)
      Net additions        2.6       6.6    (4.0)     12.7      22.8   (10.1)
      Total local line
       equivalents(2)                                221.7     194.4    27.3

    Broadband data
     circuits(3)(4)
      Net additions        1.1       3.0    (1.9)      2.5       7.2    (4.7)
      Total broadband
       data circuits(2)                               33.8      28.7     5.1
    -------------------------------------------------------------------------

    (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 September 30, 2007 are
         approximately 4,000 local line equivalents and 300 broadband data
         circuits acquired from Futureway in June, 2007. These subscribers
         are not included in net additions for the nine months ended
         September 30, 2007.
    (3)  Certain prior year amounts have been reclassified to conform to the
         current year presentation.
    (4)  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.
    

    Rogers Business Solutions Revenue

    The decrease in Rogers Business Solutions revenues reflects a decline in
long-distance revenue offset by an increase in local service and data revenue.
During the three and nine months ended September 30, 2007, long-distance
revenues declined by $13 million and $21 million, respectively, compared to
the corresponding periods of 2006 due to a decrease in the average revenue per
minute and a higher mix of North American minutes versus international
minutes. Local service revenue grew by $4 million and $11 million,
respectively, compared to the corresponding periods of 2006. In addition, data
revenues (including hardware sales) increased by $1 million and remained flat,
respectively, compared to the corresponding periods of 2006.

    Rogers Business Solutions Expenses

    Carrier charges, which are included in operating, general and
administrative expenses, decreased by $12 million and $8 million for the three
and nine months ended September 30, 2007, respectively, which reflects the
decrease in revenue. Carrier charges represented approximately 55% and 56% of
revenue in the three and nine months ended September 30, 2007, respectively,
compared to 60% and 57% of revenue, respectively, in the corresponding periods
of 2006.
    The increase in other operating, general and administrative expenses of
$3 million and $25 million for the three and nine months ended September 30,
2007, respectively, compared to the same periods of the prior year are
primarily the result of an increase in overall information technology and
network maintenance costs and increased support costs related to the Group
Telecom/360Networks assets acquired from Bell Canada in December 2006.
    Sales and marketing expenses increased by $6 million in the nine months
ended September 30, 2007, respectively, compared to the corresponding period
of the prior year, primarily due to initiatives targeting the small and medium
business markets launched in the first quarter of 2007.

    Rogers Business Solutions Operating Profit (as adjusted)

    The changes described above resulted in Rogers Business Solutions
operating profit (as adjusted) of $7 million and $4 million for the three and
nine months ended September 30, 2007, respectively, compared to operating
profit (as adjusted) of $6 million and $37 million in the corresponding
periods of 2006.

    ROGERS RETAIL

    Summarized Financial Results

    In January 2007, Rogers Retail acquired approximately 170 retail
locations from Wireless. The results of these stores are included in the
Rogers Retail results of operations since January 1, 2007.

    
    -------------------------------------------------------------------------
                            Three months ended          Nine months ended
                               September 30,               September 30,
    (In millions      -------------------------------------------------------
     of dollars)          2007      2006   % Chg      2007      2006   % Chg
    -------------------------------------------------------------------------
    Rogers Retail
     operating
     revenue          $    104  $     73      42  $    288  $    226      27
                      -------------------------------------------------------

    Operating
     expenses before
     the undernoted
      Cost of sales         48        35      37       135       109      24
      Sales and
       marketing
       expenses             48        30      60       137        91      51
      Operating,
       general and
       administrative
       expenses              6         5      20        17        15      13
                      -------------------------------------------------------
                           102        70      20       289       215      34
                      -------------------------------------------------------
    Operating profit
     (loss)
     (as adjusted)(1)        2         3      46        (1)       11     n/m
    Stock option plan
     amendment(2)            -         -     n/m        (5)        -     n/m
    Stock-based
     compensation
     expense(2)             (1)        -     n/m        (1)        -     n/m
    Restructuring
     expense(3)              -         -     n/m         -        (5)   (100)
                      -------------------------------------------------------
    Operating profit
     (loss)(1)        $      1  $      3     (67) $     (7) $      6     n/m
                      -------------------------------------------------------
                      -------------------------------------------------------

    Adjusted operating
     profit (loss)
     margin(1)            1.9%      4.1%             (0.3%)     4.9%
    -------------------------------------------------------------------------

    (1)  As defined. See the "Key Performance Indicators and Non-GAAP
         Measures" and "Supplementary Information" sections.
    (2)  See the section entitled "Stock-based Compensation Expense".
    (3)  Costs related to the closure of 21 retail stores in the first
         quarter of 2006.
    

    Rogers Retail Revenue

    The increase in Rogers Retail revenue of $31 million and $62 million for
the three and nine months ended September 30, 2007, compared to the
corresponding periods of 2006, was the result of the acquisition of 170 retail
stores from Wireless in January 2007 partially offset by a decline in video
rental and sales revenues of $1 million and $6 million, respectively,
resulting from lower transactions, customer visits and late fee revenue.

    Rogers Retail Operating Profit (as Adjusted)

    Rogers Retail recorded an operating profit (as adjusted) of $2 million
and a loss of $1 million for the three and nine months ended September 30,
2007, compared to operating profit (as adjusted) of $3 million and $11 million
in the corresponding periods of the prior year primarily resulting from lower
customer visits and increased sales and marketing expenses.

    CABLE AND TELECOM ADDITIONS TO PP&E

    The Cable Operations segment categorizes its additions to property, plant
and equipment ("PP&E") 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 premises equipment ("CPE"), which includes the equipment for
        digital set-top terminals, Internet modems and the 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 and Telecom PP&E Additions

    -------------------------------------------------------------------------
                            Three months ended          Nine months ended
                               September 30,               September 30,
    (In millions      -------------------------------------------------------
     of dollars)          2007    2006(1)  % Chg      2007    2006(1)  % Chg
    -------------------------------------------------------------------------

    Additions to PP&E
      Customer
       premises
       equipment      $     78  $     76       3  $    213  $    201       6
      Scalable
       infrastructure       37        50     (26)       95       104      (9)
      Line extensions       14        16     (13)       42        42       -
      Upgrades and
       rebuild              10         2     n/m        29         5     n/m
      Support capital       37        34       9        85        74      15
                      -------------------------------------------------------
    Total Cable
     Operations(2)         176       178      (1)      464       426       9
    Rogers Business
     Solutions(3)           18        26     (31)       58        50      16
    Rogers Retail            5         3      67        12         5     140
                      -------------------------------------------------------
                      $    199  $    207      (4) $    534  $    481      11
    -------------------------------------------------------------------------

    (1)  Certain prior year amounts have been reclassified to conform with
         the current year presentation.
    (2)  Included in Cable Operations PP&E additions are integration costs
         related to the integration of Call-Net of nil and $4 million for the
         three and nine months ended September 30, 2007, respectively, and
         $10 million and $23 million for the three and nine months ended
         September 30, 2006, respectively.
    (3)  Included in Rogers Business Solutions PP&E additions are integration
         costs related to the integration of Call-Net of $3 million and
         $5 million for the three and nine months ended September 30, 2007,
         respectively, and $8 million and $11 million for the three and nine
         months ended September 30, 2006, respectively.
    

    Cable Operations PP&E additions are primarily attributable to higher
spending on customer premises equipment and support capital relating to a
larger subscriber base. Spending on upgrades and rebuilds is driven by
upgrades and improvements in the Atlantic provinces and rural areas in
Ontario. Rogers Business Solutions PP&E additions for the three months ended
September 30, 2007 decreased compared to the corresponding period of the prior
year due to the timing of expenditures. The increase in Rogers Business
Solutions PP&E additions for the nine months ended September 30, 2007 is
primarily attributable to increased spending on network capacity and the
integration of the Group Telecom/360Neworks assets acquired from Bell Canada
in the fourth quarter of 2006. The increase in Rogers Retail PP&E expenditures
is attributable to improvements made to certain retail stores acquired from
Wireless in January 2007.

    MEDIA
    -----

    Summarized Media Financial Results

    
    -------------------------------------------------------------------------
                            Three months ended          Nine months ended
    (In millions               September 30,               September 30,
     of dollars,      -------------------------------------------------------
     except margin)       2007      2006   % Chg      2007      2006   % Chg
    -------------------------------------------------------------------------

    Operating revenue $    339  $    319       6  $    953  $    893       7
                      -------------------------------------------------------

    Operating expenses
     before the
     undernoted            293       278       5       843       785       7
                      -------------------------------------------------------
    Operating profit
     (as adjusted)(1)       46        41      12       110       108       2
    Stock option plan
     amendment(2)            -         -     n/m       (84)        -     n/m
    Stock-based
     compensation
     expense(2)             (3)       (2)     50        (9)       (4)    125
    Adjustment for
     CRTC Part II
     fees decision(3)        3         -     n/m         3         -     n/m
                      -------------------------------------------------------
    Operating
     profit(1)        $     46  $     39      18  $     20  $    104     (81)
                      -------------------------------------------------------
                      -------------------------------------------------------

    Adjusted operating
     profit margin(1)    13.6%     12.9%             11.5%     12.1%

    Additions to
     property, plant
     and equipment(1) $     27  $      8     n/m  $     45  $     33      36
    -------------------------------------------------------------------------

    (1)  As defined. See the "Key Performance Indicators and Non-GAAP
         Measures" section.
    (2)  See the section entitled "Stock-based Compensation Expense".
    (3)  Relates to an adjustment of CRTC Part II fees related to prior
         periods as a result of a recent notice from the CRTC that the
         Part II fees due in November 2007 will not be collected by the CRTC.
         See the "Government Regulation and Regulatory Developments" section.
    

    Media Revenue

    The increase in Media revenue for the three and nine months ended
September 30, 2007 over the corresponding periods in 2006 generally reflects
growth across all of Media's divisions. Rogers Publishing revenue in 2007 was
positively impacted by the launch of the Canadian edition of Hello! in 2006.
Rogers Radio revenue increased due to a combination of organic growth and the
acquisition of five radio stations in Alberta in January 2007. The growth in
Rogers Sports Entertainment revenue compared to the corresponding periods of
the prior year was due to increases in admissions, corporate sponsorships and
broadcast revenue. Rogers Sportsnet revenue also increased over the
corresponding periods of the prior year due to higher advertising revenue and
subscriber fees. OMNI TV generated double-digit increases in national
advertising for the quarter and year-to-date. These increases were partially
offset by a decrease in The Shopping Channel revenue resulting from lower
sales of electronic goods.

    Media Operating Expenses

    The increase in Media operating expenses, excluding the impact of the
one-time non-cash charge resulting from the introduction of a cash settlement
feature for employee stock options and stock-based compensation expense, for
the three and nine months ended September 30, 2007 compared to the
corresponding periods in 2006 is primarily due to operating costs of the five
Alberta radio stations, the launch of Hello!, and higher payroll costs at
Rogers Sports Entertainment. These increases were partially offset by lower
general and administrative costs and by the elimination of CRTC Part II fees
for the three months ended September 30, 2007. This was due to a recent notice
from the CRTC that the Part II fees due in November 2007 will not be collected
by the CRTC. For further details, see the section entitled "Government
Regulation and Regulatory Developments".

    Media Operating Profit (as adjusted)

    Media's operating profit (as adjusted) increased 12% for the three months
ended September 30, 2007 from the corresponding period in 2006 as growth in
Rogers Broadcasting's profit was offset partially by start-up losses in Rogers
Publishing and lower margins at The Shopping Channel. The elimination of CRTC
Part II fees for the quarter was also a contributing factor to the growth in
operating profit (as adjusted). The increase in the nine months ended
September 30, 2007 over the corresponding period of the prior year is mainly
due to strong results from Rogers Broadcasting.

    Media Additions to PP&E

    The majority of Media's PP&E additions in the three and nine months ended
September 30, 2007 reflect building improvements related to the planned
relocation of Rogers Sportsnet.

    CONSOLIDATED LIQUIDITY AND CAPITAL RE

SOURCES Operations Three Months Ended September 30, 2007 For the three months ended September 30, 2007, cash generated from operations before changes in non-cash operating working capital items, which is calculated by adjusting to eliminate the effect of all non-cash items from net income, increased to $875 million from $665 million in the corresponding period of 2006. The $210 million increase is primarily the result of a $184 million increase in operating profit (as adjusted). Taking into account the changes in non-cash operating working capital items for the three months ended September 30, 2007, cash generated from operations was $982 million, compared to $731 million in the corresponding period of 2006. The cash flow generated from operations of $982 million, together with the receipt of $1 million from the issuance of Class B Non-Voting shares under the exercise of employee stock options resulted in total net funds of approximately $983 million raised in the three months ended September 30, 2007. Net funds used during the three months ended September 30, 2007 totalled approximately $1,030 million, the details of which include funding: - net repayments under our bank credit facility aggregating $505 million; - additions to PP&E of $422 million, including $25 million of related changes in non-cash working capital; - the payment of quarterly dividends of $80 million on our Class A Voting and Class B Non-Voting shares; - additions to program rights of $18 million; - other net investments of $4 million; and - the net repayment of $1 million of capital leases. Taking into account the cash deficiency of $31 million at the beginning of the period and the cash sources and uses described above, the cash deficiency at September 30, 2007 was $78 million. Nine Months Ended September 30, 2007 For the nine months ended September 30, 2007, cash generated from operations before changes in non-cash operating working capital items, which is calculated by adjusting to eliminate the effect of all non-cash items from net income, increased to $2,344 million from $1,757 million in the corresponding period of 2006. The $587 million increase is primarily the result of a $554 million increase in operating profit (as adjusted). Taking into account the changes in non-cash operating working capital items for the nine months ended September 30, 2007, cash generated from operations was $1,986 million, compared to $1,747 million in the corresponding period of 2006. The cash flow generated from operations of $1,986 million, together with $875 million aggregate net advances under our bank credit facilities, and the receipt of $26 million from the issuance of Class B Non-Voting shares under the exercise of employee stock options resulted in total net funds of approximately $2,887 million raised in the nine months ended September 30, 2007. Net funds used during the nine months ended September 30, 2007 totalled approximately $2,945 million, the details of which include funding: - additions to PP&E of $1,311 million, including $139 million of related changes in non-cash working capital; - the repayment at maturity in February of Cable and Telecom's $450 million Senior Notes due 2007; - the redemption in May of Wireless' US$550 million Floating Rate Notes due 2010 ($609 million aggregate principal amount and $12 million premium); - the redemption in June of Wireless' US$155 million 9.75% Senior Debentures due 2016 ($166 million aggregate principal amount and $47 million premium); - the aggregate net payment of $35 million incurred on the settlement of two cross-currency interest rate exchange agreements and forward contracts in conjunction with the redemption of Wireless' US$550 million Floating Rate Senior Notes due 2010 in May 2007 and the redemption of Wireless' US$155 million 9.75% Senior Debentures due 2016 in June 2007; - the payment of quarterly dividends aggregating $131 million on our Class A Voting and Class B Non-Voting shares; - other net acquisitions and investments of $138 million, including the acquisition of Futureway Communications Inc. in June 2007 and the acquisition of five Alberta radio stations in January 2007; - additions to program rights of $41 million; - financing costs incurred of $4 million; and - the net repayment of $1 million of capital leases. Taking into account the cash deficiency of $19 million at the beginning of the period and the cash sources and uses described above, the cash deficiency at September 30, 2007 was $78 million. Financing Our long-term debt instruments are described in Note 15 to the 2006 Annual Audited Consolidated Financial Statements and Note 6 to the Unaudited Interim Consolidated Financial Statements for the three and nine months ended September 30, 2007. Three Months Ended September 30, 2007 During the three months ended September 30, 2007, $505 million aggregate net repayments were made under our bank credit facility. In addition, $1 million aggregate net repayments of capital leases were made. Nine Months Ended September 30, 2007 During the nine months ended September 30, 2007, aggregate outstanding bank debt increased by $875 million. In addition, during the nine months ended September 30, 2007, $1,226 million aggregate principal amount of other debt was repaid, comprised of $450 million aggregate principal amount of Cable and Telecom's 7.60% Senior Notes due 2007 repaid at maturity in February, $609 million (US$550 million) aggregate principal amount of Wireless' Floating Rate Senior Notes due 2010 redeemed in May at a redemption premium of 2%, or $12 million, for a total of $621 million (US$561 million), $166 million (US$155 million) aggregate principal amount of Wireless' 9.75% Senior Debentures due 2016 redeemed in June at a redemption premium of 28.416%, or $47 million, for a total of $213 million (US$199 million) and $1 million net repayment of capital leases. As a result, we incurred a net loss on repayment of long-term debt aggregating $47 million which is expensed in the income statement. Included in this amount are the aggregate redemption premiums of $59 million offset by a non-cash writedown of the fair value increment arising from purchase accounting of $12 million. In addition, in conjunction with these redemptions we made aggregate net payments on settlement of cross-currency interest rate exchange agreements and forward contracts of $35 million. RCI's $2.4 Billion Bank Credit Facility On June 29, 2007, the $1 billion Cable and Telecom bank credit facility, the $700 million Wireless bank credit facility and the $600 million Media bank credit facility were cancelled and RCI entered into a new unsecured $2.4 billion bank credit facility. At September 30, 2007, RCI had borrowed $1.035 billion under this new bank credit facility. RCI's new bank credit facility provides RCI with up to $2.4 billion from a consortium of Canadian financial institutions. The bank credit facility is available on a fully revolving basis until maturity on July 2, 2013 and there are no scheduled reductions prior to maturity. The interest rate charged on the bank credit facility ranges from nil to 0.50% per annum over the bank prime rate or base rate or 0.475% to 1.75% over the bankers' acceptance rate or LIBOR. RCI's bank credit facility is unsecured and ranks pari passu with RCI's senior public debt and cross-currency interest rate exchange agreements. The bank credit facility requires that RCI satisfy certain financial covenants, including the maintenance of certain financial ratios. Pari Passu Debt and Intracompany Amalgamation completed July 1, 2007 On July 1, 2007, RCI completed an intracompany amalgamation of RCI and certain of its wholly owned subsidiaries, including Rogers Cable Inc. ("RCAB") and Rogers Wireless Inc. ("RWI"). The amalgamated entity continues as RCI, and RCAB and RWI are no longer separate corporate entities and have ceased to be reporting issuers. This intracompany amalgamation does not impact the consolidated results previously reported by RCI, and the operating subsidiaries of RCAB and RWI are not part of and are not impacted by the amalgamation. As a result of the amalgamation, on July 1, 2007 RCI assumed all of the rights and obligations under all of the outstanding RCAB and RWI public debt indentures and cross-currency interest rate exchange agreements. As part of the amalgamation process, on June 29, 2007 RCAB and RWI released all security provided by bonds issued under the RCAB deed of trust and the RWI deed of trust for all of the then outstanding RCAB and RWI senior public debt and cross-currency interest rate exchange agreements. As a result, none of the senior public debt or cross-currency interest rate exchange agreements remain secured by such bonds effective as of June 29, 2007. As a result of these actions, the outstanding public debt and cross-currency interest rate exchange agreements and the new $2.4 billion bank credit facility now reside at RCI on an unsecured basis. The RCI public debt originally issued by Cable and Telecom has RCCI as a co-obligor and RWP as an unsecured guarantor while the RCI public debt originally issued by RWI has RWP as a co-obligor and RCCI as an unsecured guarantor. Similarly, RCCI and RWP have provided unsecured guarantees for the new bank credit facility and the cross-currency interest rate exchange agreements. Accordingly, RCI's bank debt, senior public debt and cross-currency interest rate exchange agreements now rank pari passu on an unsecured basis. Our subordinated public debt remains subordinated to our senior debt. Shelf Prospectuses In order to maintain financial flexibility, RCI is in the process of preparing to file shelf prospectuses with securities regulators to qualify debt securities of RCI for sale in Canada and/or in the United States. A previously filed shelf prospectus expired during 2006. The notice set forth in this paragraph does not constitute an offer of any securities for sale. Credit Ratings Upgrades In February 2007, Fitch Ratings increased the issuer default ratings for RCI, Wireless and Cable and Telecom to BBB- (from BB) and increased the senior debt ratings for Wireless and Cable and Telecom to BBB- (from BB+), while the senior subordinated debt rating for Wireless was affirmed at BB. In May 2007, Fitch affirmed these ratings, revised the ratings outlook to positive from stable and indicated that when the RCI amalgamation was completed on July 1, 2007, the issuer default ratings for Wireless and Cable and Telecom would be withdrawn and the rating on the Senior Subordinated Notes of Wireless would be upgraded to BB+ (from BB). In July 2007, Fitch confirmed that it had withdrawn the issuer default ratings for Wireless and Cable and Telecom and upgraded the rating on RCI's Senior Subordinated Notes to BB+ (from BB). In March 2007, Moody's Investors Service upgraded the senior debt ratings for Wireless and Cable and Telecom to Baa3 (from Ba1) and upgraded the senior subordinated debt rating of Wireless to Ba1 (from Ba2). In May 2007, Moody's announced that, pending routine due diligence to confirm that the RCI amalgamation and release of security was implemented as intended, there would be no ratings impact and the current Baa3 ratings would continue to prevail. In April 2007, Standard & Poor's Ratings Services raised its long-term corporate credit ratings for RCI, Wireless and Cable and Telecom to BBB- (from BB+), raised the senior debt ratings for Wireless and Cable and Telecom to BBB- (from BB+) and raised the senior subordinated debt rating for Wireless to BB+ (from BB-). In May 2007, Standard and Poor's announced that its ratings were unaffected following the Company's decision to amalgamate RCI with Wireless and Cable and Telecom and to release the security on its outstanding debt. As a result, RCI's unsecured senior debt is rated investment grade by each of Fitch, Moody's and Standard & Poor's. 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 interest rate exchange agreements (whether or not they qualify as hedges for accounting purposes) since all such agreements 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 interest rate exchange agreements regardless of qualifications for accounting purposes as a hedge. At September 30, 2007, all of our U.S. dollar-denominated debt was hedged with respect to foreign exchange fluctuations using cross-currency interest rate exchange agreements that qualify as hedges for accounting purposes. During the three months ended March 31, 2007, there was no change in our U.S. dollar-denominated debt or in our cross-currency interest rate exchange agreements. During the three months ended June 30, 2007, we redeemed an aggregate US$705 million of our U.S. dollar-denominated debt and terminated an aggregate notional principal amount of US$275 million of our cross-currency interest rate exchange agreements. On May 3, 2007 we redeemed our US$550 million Floating Rate Senior Notes due 2010 for US$561 million and on June 21, 2007 we redeemed our US$155 million 9.75% Senior Debentures due 2016 for US$199 million. In addition, in May 2007 we terminated two of our cross-currency interest rate exchange agreements aggregating US$275 million notional principal amount. During the three months ended September 30, 2007, there was no change in our U.S. dollar-denominated debt or in our cross-currency interest rate exchange agreements. During the nine months ended September 30, 2007, we redeemed an aggregate US$705 million of our U.S. dollar-denominated debt and terminated an aggregate notional principal amount of US$275 million of our cross-currency interest rate exchange agreements, all of which occurred during the three months ended June 30, 2007 as noted above. As a result of the foregoing debt redemptions and swap terminations, on September 30, 2007 100% of our U.S. dollar-denominated debt was hedged on an economic basis and on an accounting basis. Consolidated Hedged Position ------------------------------------------------------------------------- (In millions of dollars, September 30, December 31, except percentages) 2007 2006 ------------------------------------------------------------------------- U.S. dollar-denominated long-term debt US $ 4,190 US $ 4,895 Hedged with cross-currency interest rate exchange agreements US $ 4,190 US $ 4,475 Hedged exchange rate 1.3313 1.3229 Percent hedged 100.0%(1) 91.4% ------------------------------------------------------------------------- Amount of long-term debt(2) at fixed rates: Total long-term debt Cdn $ 7,249 Cdn $ 7,658 Total long-term debt at fixed rates Cdn $ 6,214 Cdn $ 6,851 Percent of long-term debt fixed 85.7% 89.5% ------------------------------------------------------------------------- Weighted average interest rate on long-term debt 7.63% 7.98% ------------------------------------------------------------------------- (1) Pursuant to the requirements for hedge accounting under Canadian Institute of Chartered Accountants ("CICA") Handbook Section 3865, Hedges, on September 30, 2007, RCI accounted for 100% of its cross- currency interest rate exchange agreements as hedges against designated U.S. dollar-denominated debt. (2) Long-term debt includes the effect of the cross-currency interest rate exchange agreements. Composition of Fair Market Value Liability for Derivative Instruments(1) ------------------------------------------------------------------------- September 30, January 1, (In millions of dollars) 2007 2007 ------------------------------------------------------------------------- Foreign exchange related $ 1,669 $ 858 Interest rate related 192 436 ----------------------------- Total carrying value $ 1,861 $ 1,294 ------------------------------------------------------------------------- (1) After adoption of new financial instrument accounting standards. Refer to Note 1 to the Unaudited Interim Consolidated Financial Statements for the three and nine months ended September 30, 2007. Outstanding Share Data Set out below is our outstanding share data as at September 30, 2007. For additional information, refer to Note 20 to our 2006 Annual Audited Consolidated Financial Statements and Note 9 to the Unaudited Interim Consolidated Financial Statements for the three and nine months ended September 30, 2007. ------------------------------------------------------------------------- Common Shares September 30, 2007 ------------------------------------------------------------------------- Class A Voting 112,462,014 Class B Non-Voting 526,793,372 ------------------------------------------------------------------------- Options to Purchase Class B Non-Voting Shares ------------------------------------------------------------------------- Outstanding Options 17,059,107 Outstanding Options Exercisable 11,856,365 ------------------------------------------------------------------------- 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 July 31, 2007, we declared a quarterly dividend of $0.125 per share on each of our outstanding Class A Voting and Class B Non-Voting shares. This quarterly dividend totalling $80 million was paid on October 1, 2007 to shareholders of record on September 13, 2007. On May 28, 2007, we announced an increase in our annual dividend from $0.16 to $0.50 per share, effective immediately. The new quarterly dividend is $0.125 per each outstanding Class A Voting and Class B Non-Voting share. Also on May 28, 2007, we declared a quarterly dividend at the increased rate of $0.125 per share on each of our outstanding Class A Voting and Class B Non-Voting shares. This quarterly dividend totalling $80 million was paid on July 3, 2007 to shareholders of record on June 14, 2007. On February 15, 2007, we declared a quarterly dividend of $0.04 per share on each of our outstanding Class B Non-Voting shares and Class A Voting shares. This quarterly dividend totalling $26 million was paid on April 2, 2007 to shareholders of record on March 15, 2007. On October 30, 2006, we declared a quarterly dividend of $0.04 per share on each of our outstanding Class B Non-Voting shares and Class A Voting shares. This quarterly dividend totalling $25 million was paid on January 2, 2007 to shareholders of record on December 20, 2006. COMMITMENTS AND CONTRACTUAL OBLIGATIONS Our material obligations under firm contractual arrangements, including commitments for future payments under long-term debt arrangements, capital lease obligations and operating lease arrangements, are summarized in our 2006 Annual MD&A, and are further discussed in Notes 15, 23 and 24 of our 2006 Annual Audited Consolidated Financial Statements. There have been no significant changes to these material contractual obligations since December 31, 2006 except for the changes in long-term debt previously discussed in the "Consolidated Liquidity and Capital Resources" section. GOVERNMENT REGULATION AND REGULATORY DEVELOPMENTS The significant government regulations which impact our operations are summarized in our 2006 Annual MD&A. The significant changes to those regulations since December 31, 2006, are as follows: Local Telephone Forbearance On April 4th, 2007, the Federal Cabinet overturned the CRTC's 2006 Local Forbearance Decision. Effective April 4th, 2007, the CRTC rules on winback (which prohibited the incumbent phone companies from contacting customers for three months after they chose an alternate telephone provider) and promotions (which imposed competitive safeguards for temporary pricing changes) were removed. In addition, the incumbent phone companies will be able to apply for deregulation by simply showing that they compete with a wireline facilities-based provider and a wireless facilities provider in a telephone exchange. As long as the competitive wireline facilities provider's service is available to 75% of the subscribers in an exchange and the incumbents meet quality of service tests (which were reduced by the Cabinet), the incumbents will be deregulated within 120 days of application to the CRTC. Diversity of Ownership In light of recent acquisition announcements in the Canadian broadcasting industry, the CRTC has launched a public proceeding in which it will review its approach to ownership consolidation and the availability of a diversity of voices in the broadcasting system. As part of its in-depth study, the CRTC will examine issues such as common ownership; concentration of ownership; horizontal and vertical integration; the benefits policy; licence trafficking; as well as the CRTC's relationship with the Competition Bureau. Written comments were provided by July 18, 2007, and a public hearing took place in September, 2007. The CRTC's objective is to establish clearly articulated policy guidelines going forward. As a result, major transactions (and their stated divestitures) that have already been announced will be examined within the context of the rules already in force when the transactions were announced. Their consideration will not be delayed by the CRTC's diversity of voices hearing, and will instead be heard and processed in a timely manner. Review of Broadcasting Regulations On May 10, 2007, the Chair of the CRTC announced that the CRTC had commissioned a report to look at all Canadian broadcasting regulations. The report will look at each regulation or policy and ask what its original purpose was, whether it is still relevant and effective and whether it should be retained, improved, streamlined or eliminated. The report was issued in September, 2007. On July 5, 2007, the CRTC issued Broadcasting Notice of Public Hearing CRTC 2007-10; Review of the regulatory frameworks for broadcasting distribution undertakings and discretionary programming services. This proceeding is a comprehensive review of the regulations affecting cable operators and pay and specialty services. The CRTC has made a number of proposals designed to move away from detailed regulation and rely more on market forces. There will be a hearing on January 28, 2008. Dunbar/Leblanc Report On September 12, 2007 the CRTC released the Dunbar/Leblanc report. This report was commissioned by the CRTC on May 10, 2007. The report examined Canadian broadcasting regulations and policies. The report recommended changes to the rules in a number of areas including simultaneous substitution, genre protection, access and advertising. The report's recommendations, if adopted, could have an impact on our Broadcasting and Cable operations. The report's recommendations will be examined in the Review of Regulatory frameworks hearing in January 2008. Part II Fees The CRTC collects two different types of fees from broadcast licencees. These are known as Part I and Part II fees. In 2003 and 2004, lawsuits were commenced in the Federal Court, alleging that the Part II licence fees are taxes rather than fees and that the regulations authorizing them are unlawful. On December 14, 2006 the Federal Court ruled that the CRTC did not have the jurisdiction to charge Part II fees. The Court ruled that licencees were not entitled to a refund of past fees paid. Both the Crown and the applicants have appealed this case to the Federal Court of Appeal. The applicants are seeking an order requiring a refund of past fees paid. The Crown is seeking to reverse the finding that Part II fees are unlawful. On October 15, 2007 the CRTC sent a letter to all broadcast licencees, including Cable and Rogers Broadcasting. The letter stated that the CRTC will not collect Part II licence fees due on November 30, 2007 and subsequent years unless the Federal Court of Appeal or the Supreme Court of Canada (should the case be appealed to that level) reverses the Federal Court's decision. Tower Policy On June 28, 2007, Industry Canada released its new Tower Policy (CPC-2-0-03- Radiocommunication and Broadcasting Antenna Systems). The policy will require wireless carriers and broadcasters to engage in more local and public consultation prior to erecting or significantly modifying antenna structures. The new policy could make it more difficult for Wireless and Rogers Broadcasting to erect towers required for their businesses. The new policy takes effect on January 1, 2008. UPDATES TO RISKS AND UNCERTAINTIES Our significant risks and uncertainties are summarized in our 2006 Annual MD&A. There were no significant changes to those risks and uncertainties since December 31, 2006, except as follows: We Are and Will Continue to Be Involved in Litigation In August 2004, a proceeding under the Class Actions Act (Saskatchewan) was brought against providers of wireless communications in Canada. Since that time, similar proposed class actions have also been commenced in Newfoundland & Labrador, New Brunswick, Nova Scotia, Quebec, Ontario, Manitoba, Alberta and British Columbia. The proceeding involves allegations by wireless customers of, among other things, breach of contract, misrepresentation, false advertising and unjust enrichment with respect to the system access fee charged by Wireless to some of its customers. The plaintiffs seek unquantified damages from the defendants. Wireless believes it has a good defence to the allegations. The plaintiffs applied for an order certifying a national class action in Saskatchewan. In September 2007, the Saskatchewan court granted the plaintiffs' application to have the proceeding certified as a class action. We are applying for leave to appeal this decision to the Saskatchewan Court of Appeal. We have not recorded a liability for this contingency since the likelihood and amount of any potential loss cannot be reasonably estimated. If the ultimate resolution of this action differs from our assessment and assumptions, a material adjustment to our financial position and results of operations could result. In December 2004, we were served with a court order compelling us to produce certain records and other information relevant to an investigation initiated by the Commissioner of Competition under the misleading advertising provisions of the Competition Act with respect to our system access fee. In July 2007 we were advised by the Competition Bureau that the inquiry has been discontinued. KEY PERFORMANCE INDICATORS AND NON-GAAP MEASURES We measure the success of our strategies using a number of key performance indicators that are defined and discussed in our 2006 Annual MD&A. These key performance indicators are not measurements under Canadian or U.S. GAAP, but we believe they allow us to appropriately measure our performance against our operating strategy as well as against the results of our peers and competitors. They include: - Revenue (primarily network revenue at Wireless) and average monthly revenue per subscriber ("ARPU"); - Subscriber counts and subscriber churn; - Operating expenses and average monthly operating expense per wireless subscriber; - Sales and marketing costs (or cost of acquisition) per subscriber; - Operating profit (actual and as adjusted); - Operating profit margin (actual and as adjusted); - Free cash flow; and - Additions to PP&E. See the "Supplementary Information" section for calculations of the Non-GAAP measures. Beginning in the second quarter of 2007, we have included certain non-GAAP measures which we believe provide useful information to management and readers of this MD&A in measuring our financial performance. These measures, which include operating profit (as adjusted), operating profit margin (as adjusted), net income (as adjusted) and basic and diluted net income per share (as adjusted), do not have a standardized meaning under GAAP and, therefore, may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to other financial measures determined in accordance with GAAP. We believe that the non-GAAP financial measures provided which exclude: (i) the impact of the one-time non-cash charge resulting from the introduction of a cash settlement feature related to employee stock options; (ii) stock-based compensation expense; (iii) integration and restructuring expense; (iv) an adjustment to CRTC fees related to prior periods; and (v) in respect of net income and net income per share, loss on repayment of long-term debt and the related income tax impacts of the above items, provide for a more effective analysis of our operating performance. In addition, the items mentioned above could potentially distort the analysis of trends due to the fact that they are either volatile or unusual or non-recurring, and can vary widely from company to company and impair comparability. The exclusion of these items does not mean that they are unusual or non-recurring. We use these non-GAAP measures internally to make strategic decisions, forecast future results and evaluate our performance from period to period and compared to forecasts on a consistent basis. We believe that these measures present trends which are useful to investors and analysts in enabling them to assess the underlying changes in our business over time. Adjusted operating profit and adjusted operating profit margins, which are reviewed regularly by management and our Board of Directors, are also useful in assessing our performance and in making decisions regarding the ongoing operations of the business and the ability to generate cash flows. These non-GAAP measures should be viewed as a supplement to and not a substitute for our results of operations. A reconciliation of these non-GAAP financial measures to operating profit, net income and net income per share is included in the "Supplementary Information" section. Certain of the non-GAAP financial measures presented beginning in the third quarter of 2007 have been refined and therefore differ from the non-GAAP financial measures provided in the second quarter of 2007, where the measures provided did not exclude stock-based compensation expense, restructuring expenses related to the closure of retail stores, and the adjustment for CRTC Part II Fees decision. RELATED PARTY ARRANGEMENTS We have entered into certain transactions with companies, the partners or senior officers of which are or have been directors of our company and/or our subsidiary companies. During the three and nine months ended September 30, 2007 and 2006, total amounts paid by us to these related parties are as follows: ------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, (In millions ------------------------------------------------------- of dollars) 2007 2006 % Chg 2007 2006 % Chg ------------------------------------------------------------------------- Legal services and commissions paid on premiums for insurance coverage $ - $ - - $ 1 $ 2 (50.0) ------------------------------------------------------------------------- Fees charged to our controlling shareholder for the personal use of our corporate aircraft and for other administrative services are subject to formal agreements approved by the Audit Committee. For the three and nine months ended September 30, 2007, the fees charged to our controlling shareholder for personal use of the aircraft and other administrative services were approximately $0.2 and $0.7 million, respectively. These transactions are recorded at the exchange amount, being the amount agreed to by the related parties and are reviewed by the Audit Committee. CRITICAL ACCOUNTING POLICIES AND ESTIMATES In our 2006 Annual Audited Consolidated Financial Statements and Notes thereto, as well as in our 2006 Annual MD&A, we have identified the accounting policies and estimates that are critical to the understanding of our business operations and our results of operations. For the three and nine months ended September 30, 2007, there are no changes to the critical accounting policies and estimates of Wireless, Cable and Telecom and Media from those found in our 2006 Annual MD&A. NEW ACCOUNTING STANDARDS Financial Instruments In 2005, the CICA issued Handbook Section 3855, Financial Instruments - Recognition and Measurement, Handbook Section 1530, Comprehensive Income, Handbook Section 3251, Equity, and Handbook Section 3865, Hedges. The new standards are effective for our interim and annual financial statements commencing January 1, 2007. A new statement entitled "Unaudited Interim Consolidated Statement of Comprehensive Income" was added to our financial statements and includes net income as well as other comprehensive income. Accumulated other comprehensive income forms part of shareholders' equity. Under these standards, all of our financial assets are classified as available-for-sale or loans and receivables. Available-for-sale investments are carried at fair value on the balance sheet, with changes in fair value recorded in other comprehensive income. Loans and receivables and all financial liabilities are carried at amortized cost using the effective interest method. Upon adoption, we determined that none of our financial assets are classified as held-for-trading or held-to-maturity and none of our financial liabilities are classified as held-for-trading. The impact of the classification provisions of the new standards on January 1, 2007 was an adjustment of $213 million to bring the carrying value of available-for-sale investments to fair value, with a corresponding increase in opening accumulated other comprehensive income of $211 million, net of income taxes of $2 million. For the three months ended September 30, 2007, the impact of the classification provisions of the new standards was an increase in the carrying value of available-for-sale investments of $20 million, with a corresponding increase in other comprehensive income of $16 million, net of income taxes of $4 million. For the nine months ended September 30, 2007, the impact of the classification provisions of the new standards was an increase in the carrying value of available-for-sale investments of $109 million, with a corresponding increase in other comprehensive income of $108 million, net of income taxes of $1 million. All derivatives, including embedded derivatives that must be separately accounted for, are measured at fair value, with changes in fair value recorded in the statements of income unless they are effective cash flow hedging instruments. The changes in fair value of cash flow hedging derivatives are recorded in other comprehensive income, to the extent effective, until the variability of cash flows relating to the hedged asset or liability is recognized in the statements of income. Any hedge ineffectiveness is recognized in net income immediately. The impact of remeasuring hedging derivatives on the unaudited interim consolidated financial statements on January 1, 2007 was an increase in derivative instruments of $561 million. This also resulted in a decrease in opening accumulated other comprehensive income of $425 million, net of income taxes of $136 million, and an increase in opening deficit of $8 million, net of income taxes of $2 million, representing the ineffective portion of hedging relationships. The impact of remeasuring hedging derivatives on the unaudited interim consolidated financial statements for the three and nine months ended September 30, 2007 was a decrease in other comprehensive income of $321 million and $731 million, net of income taxes, respectively, and a decrease in net income of $2 million and an increase in net income of $3 million, respectively, related to hedge ineffectiveness. During the three and nine months ended September 30, 2007, $281 million and $708 million, respectively, representing the foreign exchange loss on the notional amounts of the hedging derivatives was reclassified out of other comprehensive income and recognized in the unaudited interim consolidated statement of income. These amounts offset the foreign exchange gain recognized in the unaudited interim consolidated statements of income related to the carrying value of the U.S. dollar-denominated debt. In addition, during the three and nine months ended September 30, 2007 interest on derivative instruments of $33 million and $81 million, respectively, was reclassified out of accumulated other comprehensive income and recognized in the unaudited interim consolidated statements of income. As a result of the application of these standards, we separated the early repayment option on one of our debt instruments and recorded the fair value of $19 million related to this embedded derivative on the unaudited interim balance sheet on January 1, 2007, with a corresponding increase in retained earnings of $13 million, net of income taxes of $6 million. The change in the fair value of this embedded derivative for the three and nine months ended September 30, 2007 was $2 million and $4 million, respectively. We reviewed significant contracts entered into on or after January 1, 2003 and determined there are no significant non-financial derivatives that require separate fair value recognition on the unaudited interim consolidated balance sheet on the transition date and at September 30, 2007. In addition, the unamortized deferred transitional gain of $54 million was eliminated upon adoption, the impact of which was a decrease to opening deficit of $37 million, net of income taxes of approximately $17 million. Effective January 1, 2007, we record all transaction costs for financial assets and financial liabilities in the unaudited interim consolidated statements of income as incurred. We had previously deferred these costs and amortized them over the term of the related asset or liability. The carrying value of transaction costs at December 31, 2006 of $39 million, net of income taxes of $20 million, was charged to opening deficit on transition on January 1, 2007. In 2006, the CICA issued Handbook Section 3862, Financial Instruments - Disclosures, and Handbook Section 3863, Financial Instruments - Presentation. These new standards will become effective for the Company beginning January 1, 2008. We are currently assessing the impact of these two new standards. SEASONALITY Our operating results are subject to seasonal fluctuations that materially impact quarter-to-quarter operating results, and thus one quarter's operating results are not necessarily indicative of a subsequent quarter's operating results. Each of Wireless, Cable and Telecom, and Media has unique seasonal aspects to their businesses. For specific discussions of the seasonal trends affecting the Wireless, Cable and Telecom, and Media operating units, please refer to our 2006 Annual MD&A. 2007 GUIDANCE We have a generally positive bias towards the likelihood of exceeding the higher ends of certain of our full year 2007 financial and operating metric guidance ranges, including operating profit (as adjusted and excluding the impact of acquisitions and charges during the year) at Wireless, at Cable, and on a consolidated basis; additions to PP&E at Wireless; net subscriber additions at Wireless; and free cash flow on a consolidated basis. However, given the seasonally high and somewhat unpredictable sales and activity volumes associated with the fourth quarter holiday shopping period, we are at this point making no specific revisions to the full year 2007 financial and operating guidance ranges which were updated coincident with our second quarter 2007 results on August 1, 2007. (See the section entitled "Caution Regarding Forward-Looking Statements, Risks and Assumptions" below.) SUPPLEMENTARY INFORMATION Calculations of Wireless Non-GAAP Measures ----------------------------------------------------- ------------------- (In millions of dollars, Three months ended Nine months ended subscribers in thousands, September 30, September 30, except ARPU figures and ------------------- ------------------- operating profit margin) 2007 2006 2007 2006 ----------------------------------------------------- ------------------- Postpaid ARPU (monthly) Postpaid (voice and data) revenue $ 1,274 $ 1,080 $ 3,585 $ 2,989 Divided by: Average postpaid wireless voice and data subscribers 5,650.9 5,115.8 5,546.3 4,982.2 Divided by: 3 months for the quarter and 9 months for year-to-date 3 3 9 9 ------------------- ------------------- $ 75.15 $ 70.37 $ 71.82 $ 66.66 ----------------------------------------------------- ------------------- Prepaid ARPU (monthly) Prepaid (voice and data) revenue $ 75 $ 57 $ 203 $ 153 Divided by: Average prepaid subscribers 1,377.4 1,300.5 1,374.5 1,314.8 Divided by: 3 months for the quarter and 9 months for year-to-date 3 3 9 9 ------------------- ------------------- $ 18.15 $ 14.61 $ 16.41 $ 12.93 ----------------------------------------------------- ------------------- Cost of acquisition per gross addition Total sales and marketing expenses $ 181 $ 152 $ 467 $ 418 Equipment margin loss (acquisition related) 40 44 106 139 ------------------- ------------------- $ 221 $ 196 $ 573 $ 557 ------------------- ------------------- ------------------- ------------------- Divided by: total gross wireless additions (postpaid, prepaid and one-way messaging) 564.4 540.6 1,477.1 1,437.4 ------------------- ------------------- $ 392 $ 363 $ 388 $ 388 ----------------------------------------------------- ------------------- Operating expense per average subscriber (monthly) Operating, general and administrative expenses $ 397 $ 350 $ 1,144 $ 1,000 Equipment margin loss (retention related) 48 31 150 130 ------------------- ------------------- $ 445 $ 381 $ 1,294 $ 1,130 ------------------- ------------------- ------------------- ------------------- Divided by: Average total wireless subscribers 7,151.6 6,566.3 7,051.3 6,448.1 Divided by: 3 months for the quarter and 9 months for year-to-date 3 3 9 9 ------------------- ------------------- $ 20.74 $ 19.34 $ 20.39 $ 19.47 ----------------------------------------------------- ------------------- Equipment margin loss Equipment sales $ 90 $ 83 $ 239 $ 170 Cost of equipment sales (178) (158) (495) (439) ------------------- ------------------- $ (88) $ (75) $ (256) $ (269) ------------------- ------------------- ------------------- ------------------- Acquisition related $ (40) $ (44) $ (106) $ (139) Retention related (48) (31) (150) (130) ------------------- ------------------- $ (88) $ (75) $ (256) $ (269) ------------------- ------------------- ------------------- ------------------- ----------------------------------------------------- ------------------- Operating Profit Margin Operating Profit $ 684 $ 561 $ 1,876 $ 1,452 Add: One-time non-cash charge related to the introduction of a cash settlement feature for employee stock options - - 46 - Stock-based compensation expense 2 4 9 11 Integration expense (recovery) - (1) - 3 ------------------- ------------------- Operating Profit (as adjusted) $ 686 $ 564 $ 1,931 $ 1,466 Divided by Network Revenue 1,352 1,141 3,798 3,153 ------------------- ------------------- Adjusted Operating Profit Margin 50.7% 49.4% 50.8% 46.5% ----------------------------------------------------- ------------------- SUPPLEMENTARY INFORMATION Calculations of Cable and Telecom Non-GAAP Measures ----------------------------------------------------- ------------------- (In millions of dollars, Three months ended Nine months ended subscribers in thousands, September 30, September 30, except ARPU figures and ------------------- ------------------- operating profit margin) 2007 2006(1) 2007 2006(1) ----------------------------------------------------- ------------------- Core Cable ARPU Core Cable revenue $ 386 $ 358 $ 1,143 $ 1,054 Divided by: Average basic cable subscribers 2,269.7 2,255.6 2,273.5 2,257.3 Divided by: 3 months for the quarter and 9 months for year-to-date 3 3 9 9 ------------------- ------------------- $ 56.69 $ 52.70 $ 55.86 $ 51.91 ----------------------------------------------------- ------------------- Internet ARPU Internet revenue $ 153 $ 132 $ 448 $ 385 Divided by: Average Internet (residential) subscribers 1,389.3 1,239.4 1,365.3 1,213.6 Divided by: 3 months for the quarter and 9 months for year-to-date 3 3 9 9 ------------------- ------------------- $ 36.71 $ 35.50 $ 36.46 $ 35.25 ----------------------------------------------------- ------------------- Cable Operations: Operating profit $ 266 $ 205 $ 622 $ 616 Add: One-time non-cash charge related to the introduction of a cash settlement feature for employee stock options - - 106 - Stock-based compensation expense 1 3 11 8 Integration expense 4 2 9 6 Adjustment for CRTC Part II fees decision (15) - (15) - ------------------- ------------------- Operating Profit (as adjusted) $ 256 $ 210 $ 733 $ 630 Divided by Revenue 657 580 1,923 1,695 ------------------- ------------------- Cable Operations Adjusted Operating Profit Margin 39.0% 36.2% 38.1% 37.2% ----------------------------------------------------- ------------------- Rogers Business Solutions: Operating profit (loss) $ 5 $ 6 $ (11) $ 37 Add: One-time non-cash charge related to the introduction of a cash settlement feature for employee stock options - - 2 - Stock-based compensation expense 1 - 1 - Integration and restructuring expense 1 - 12 - ------------------- ------------------- Operating Profit (as adjusted) $ 7 $ 6 $ 4 $ 37 Divided by Revenue 140 148 431 441 ------------------- ------------------- Rogers Business Solutions Adjusted Operating Profit Margin 5.0% 4.1% 0.9% 8.4% ----------------------------------------------------- ------------------- (1) Certain prior year amounts have been reclassified to conform to the current year presentation. SUPPLEMENTARY INFORMATION Calculations of Adjusted Operating Profit, Net Income, Earnings Per Share and Free Cash Flow ------------------------------------------------------------------------- Three months ended Nine months ended (In millions of dollars, September 30, September 30, number of shares --------------------------------------- outstanding in millions) 2007 2006 2007 2006 ------------------------------------------------------------------------- Operating profit $ 986 $ 785 $ 2,215 $ 2,123 Add: Stock option plan amendment - - 452 - Stock-based compensation expense 11 14 58 37 Integration and restructuring expense (recovery) Cable and Telecom 5 2 21 11 Wireless - (1) - 3 Adjustment for CRTC Part II fees decision (18) - (18) - --------------------------------------- Operating profit, as adjusted $ 984 $ 800 $ 2,728 $ 2,174 --------------------------------------- --------------------------------------- Net income (loss) $ 269 $ 154 $ 383 $ 446 Add: Stock option plan amendment - - 452 - Stock-based compensation expense 11 14 58 37 Integration and restructuring expense (recovery) Cable and Telecom 5 2 21 11 Wireless - (1) - 3 Adjustment for CRTC Part II fees decision (18) - (18) - Loss on repayment of long-term debt - - 47 - Income tax impact: Stock option plan amendment - - (160) - Stock-based compensation expense (4) - (14) - Integration and restructuring expense (recovery) (2) - (7) (5) Adjustment for CRTC Part II fees 7 - 7 - Loss on repayment of long-term debt - - (16) - --------------------------------------- Net income, as adjusted $ 268 $ 169 $ 753 $ 492 --------------------------------------- --------------------------------------- Basic earnings per share: Net income, as adjusted $ 268 $ 169 $ 753 $ 492 Divided by: weighted average number of shares outstanding 639 633 638 631 --------------------------------------- Basic earnings per share, as adjusted $ 0.42 $ 0.27 $ 1.18 $ 0.78 --------------------------------------- --------------------------------------- Diluted earnings per share: Net income, as adjusted $ 268 $ 169 $ 753 $ 492 Divided by: diluted weighted average number of shares outstanding 639 644 644 641 --------------------------------------- Diluted earnings per share, as adjusted $ 0.42 $ 0.26 $ 1.17 $ 0.77 --------------------------------------- --------------------------------------- Free cash flow: Operating profit, as adjusted $ 984 $ 800 $ 2,728 $ 2,174 Deduct: Integration and restructuring expenses (5) (1) (21) (14) Property, plant and equipment expenditures (397) (415) (1,172) (1,158) Interest on long-term debt (140) (153) (441) (469) --------------------------------------- Free cash flow $ 442 $ 231 $ 1,094 $ 533 ------------------------------------------------------------------------- SUPPLEMENTARY INFORMATION Rogers Communications Inc. Historical Quarterly Summary(1) 2007 ------------------------------------------------------- (In millions of dollars, except per share amounts) Q1 Q2 Q3 ------------------------------------------------------- Income Statement Operating revenue Wireless(2) $ 1,231 $ 1,364 $ 1,442 Cable and Telecom 855 881 899 Media 266 348 339 Corporate and eliminations (54) (66) (69) ------------------------------------------------------- 2,298 2,527 2,611 ------------------------------------------------------- Operating profit before the undernoted Wireless 581 664 686 Cable and Telecom 228 243 265 Media 19 45 46 Corporate and eliminations (14) (22) (13) ------------------------------------------------------- 814 930 984 Stock option plan amendment(3) - 452 - Stock-based compensation expense(3) 15 32 11 Integration and restructuring costs(4) 1 15 5 Adjustment for CRTC Part II fees decision(5) - - (18) ------------------------------------------------------- Operating profit(6) 798 431 986 Depreciation and amortization 400 398 397 ------------------------------------------------------- Operating income 398 33 589 Interest on long-term debt (149) (152) (140) Other income (expense) 7 (24) (14) Income tax reduction (expense) (86) 87 (166) ------------------------------------------------------- Net income (loss) for the period $ 170 $ (56) $ 269 ------------------------------------------------------- ------------------------------------------------------- Net income (loss) per share:(7) Basic $ 0.27 $ (0.09) $ 0.42 Diluted $ 0.26 $ (0.09) $ 0.42 Additions to property, plant and equipment(6) $ 394 $ 381 $ 397 ------------------------------------------------------- 2006 2005 ---------------------------------------------------------------- -------- (In millions of dollars, except per share amounts) Q1 Q2 Q3 Q4 Q4 ---------------------------------------------------------------- -------- Income Statement Operating revenue Wireless(2) $ 1,005 $ 1,094 $ 1,224 $ 1,257 $ 1,050 Cable and Telecom 772 787 800 842 761 Media 240 334 319 317 300 Corporate and eliminations (33) (36) (38) (46) (40) ---------------------------------------------------------------- -------- 1,984 2,179 2,305 2,370 2,071 ---------------------------------------------------------------- -------- Operating profit before the undernoted Wireless 412 490 564 524 326 Cable and Telecom 222 237 219 237 222 Media 14 53 41 48 40 Corporate and eliminations (30) (24) (24) (39) (22) ---------------------------------------------------------------- -------- 618 756 800 770 566 Stock option plan amendment(3) - - - - - Stock-based compensation expense(3) 13 10 14 12 19 Integration and restructuring costs(4) 11 2 1 6 33 Adjustment for CRTC Part II fees decision(5) - - - - - ---------------------------------------------------------------- -------- Operating profit(6) 594 744 785 752 514 Depreciation and amortization 386 395 408 395 404 ---------------------------------------------------------------- -------- Operating income 208 349 377 357 110 Interest on long-term debt (161) (155) (153) (151) (163) Other income (expense) 1 17 6 (17) (22) Income tax reduction (expense (35) 68 (76) (13) 8 ---------------------------------------------------------------- -------- Net income (loss) for the period $ 13 $ 279 $ 154 $ 176 $ (67) ---------------------------------------------------------------- -------- ---------------------------------------------------------------- -------- Net income (loss) per share:(7) Basic $ 0.02 $ 0.44 $ 0.25 $ 0.28 $ (0.11) Diluted $ 0.02 $ 0.44 $ 0.24 $ 0.27 $ (0.11) Additions to property, plant and equipment(6) $ 340 $ 403 $ 415 $ 554 $ 431 ---------------------------------------------------------------- -------- (1) Certain prior year numbers have been reclassified to conform to the current year presentation as described in Note 1 to the Unaudited Interim Consolidated Financial Statements. (2) Certain prior year amounts related to Wireless equipment sales and cost of equipment sales have been reclassified. Refer to the section entitled "Reclassification of Wireless Equipment Sales and Cost of Sales" in our 2006 Annual MD&A for further details. (3) See section entitled "Stock-based Compensation Expense". (4) Costs incurred relate to the integration of Fido, Call-Net, the restructuring of Rogers Business Solutions, and the closure of 21 retail stores in the first quarter of 2006. (5) Relates to an adjustment of CRTC Part II fees related to prior periods as a result of a recent notice from the CRTC that the Part II fees due in November 2007 will not be collected by the CRTC. See "Government Regulation and Regulatory Developments" section. (6) As defined. See the "Key Performance Indicators and Non-GAAP Measures" section. (7) Prior period per share amounts have been retroactively adjusted to reflect a two-for-one split of the Company's Class A Voting and Class B Non-Voting shares on December 29, 2006. SUPPLEMENTARY INFORMATION Rogers Communications Inc. Adjusted Quarterly Summary Historical Quarterly Summary(1) 2007 ------------------------------------------------------- (In millions of dollars, except per share amounts) Q1 Q2 Q3 ------------------------------------------------------- Income Statement Operating Revenue Wireless(2) $ 1,231 $ 1,364 $ 1,442 Cable and Telecom 855 881 899 Media 266 348 339 Corporate and eliminations (54) (66) (69) ------------------------------------------------------- 2,298 2,527 2,611 ------------------------------------------------------- Operating profit(3) Wireless 581 664 686 Cable and Telecom 228 243 265 Media 19 45 46 Corporate and eliminations (14) (22) (13) ------------------------------------------------------- 814 930 984 Depreciation and amortization 400 398 397 ------------------------------------------------------- Operating income 414 532 587 Interest on long-term debt (149) (152) (140) Other income (expense) 7 23 (14) Income tax reduction (expense) (86) (104) (165) ------------------------------------------------------- Net income (loss) for the period $ 186 $ 299 $ 268 ------------------------------------------------------- ------------------------------------------------------- Net income (loss) per share:(4) Basic $ 0.29 $ 0.47 $ 0.42 Diluted $ 0.29 $ 0.47 $ 0.42 Additions to property, plant and equipment(3) $ 394 $ 381 $ 397 ------------------------------------------------------- 2006 2005 ---------------------------------------------------------------- -------- (In millions of dollars, except per share amounts) Q1 Q2 Q3 Q4 Q4 ---------------------------------------------------------------- -------- Income Statement Operating Revenue Wireless(2) $ 1,005 $ 1,094 $ 1,224 $ 1,257 $ 1,050 Cable and Telecom 772 787 800 842 761 Media 240 334 319 317 300 Corporate and eliminations (33) (36) (38) (46) (40) ---------------------------------------------------------------- -------- 1,984 2,179 2,305 2,370 2,071 ---------------------------------------------------------------- -------- Operating profit(3) Wireless 412 490 564 524 326 Cable and Telecom 222 237 219 237 222 Media 14 53 41 48 40 Corporate and eliminations (30) (24) (24) (39) (22) ---------------------------------------------------------------- -------- 618 756 800 770 566 Depreciation and amortization 386 395 408 395 404 ---------------------------------------------------------------- -------- Operating income 232 361 392 375 162 Interest on long-term debt (161) (155) (153) (151) (163) Other income (expense) 1 17 6 (17) (12) Income tax reduction (expense (39) 67 (76) (15) (6) ---------------------------------------------------------------- -------- Net income (loss) for the period $ 33 $ 290 $ 169 $ 192 $ (19) ---------------------------------------------------------------- -------- ---------------------------------------------------------------- -------- Net income (loss) per share:(4) Basic $ 0.05 $ 0.46 $ 0.27 $ 0.30 $ (0.03) Diluted $ 0.05 $ 0.45 $ 0.26 $ 0.30 $ (0.03) Additions to property, plant and equipment(3) $ 340 $ 403 $ 415 $ 554 $ 431 ---------------------------------------------------------------- -------- (1) This quarterly summary has been adjusted to exclude the impact of the adoption of a cash settlement feature for employee stock options, stock-based compensation expense, integration and restructuring costs, an adjustment to CRTC Part II fees related to prior periods, losses on repayment of long term debt and the income tax impact related to the above items. Certain prior year numbers have been reclassified to conform to the current year presentation as described in Note 1 to the Unaudited Interim Consolidated Financial Statements. See the "Key Performance Indicators and Non- GAAP Measures" section. (2) Certain prior year amounts related to Wireless equipment sales and cost of equipment sales have been reclassified. Refer to the section entitled "Reclassification of Wireless Equipment Sales and Cost of Sales" in our 2006 Annual MD&A for further details. (3) As defined. See the "Key Performance Indicators and Non-GAAP Measures" section. (4) Prior period per share amounts have been retroactively adjusted to reflect a two-for-one split of the Company's Class A Voting and Class B Non-Voting shares on December 29, 2006. Rogers Communications Inc. Unaudited Interim Consolidated Statements of Income (In millions of dollars, except per share amounts) ------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, 2007 2006 2007 2006 ------------------------------------------------------------------------- (Restated) (Restated) Operating revenue $ 2,611 $ 2,305 $ 7,436 $ 6,468 Operating expenses: Cost of sales 248 235 716 675 Sales and marketing 364 311 986 873 Operating, general and administrative 1,008 973 3,046 2,783 Stock option plan amendment - - 452 - Integration and restructuring 5 1 21 14 Depreciation and amortization 397 408 1,195 1,189 ------------------------------------------------------------------------- Operating income 589 377 1,020 934 Interest on long-term debt (140) (153) (441) (469) ------------------------------------------------------------------------- 449 224 579 465 Foreign exchange gain 1 - 53 41 Loss on repayment of long-term debt - - (47) - Change in fair value of derivative instruments (5) 2 (31) (28) Other income (expense) (10) 4 (6) 11 ------------------------------------------------------------------------- Income before income taxes 435 230 548 489 ------------------------------------------------------------------------- Income tax expense: Current 1 1 1 2 Future 165 75 164 41 ----------------------------------------------------------------------- 166 76 165 43 ------------------------------------------------------------------------- Net income for the period $ 269 $ 154 $ 383 $ 446 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net income per share: Basic $ 0.42 $ 0.25 $ 0.60 $ 0.71 Diluted 0.42 0.24 0.60 0.69 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Rogers Communications Inc. Unaudited Interim Consolidated Balance Sheets (In millions of dollars) ------------------------------------------------------------------------- September December 30, 2007 31, 2006 ------------------------------------------------------------------------- Assets Current assets: Accounts receivable $ 1,160 $ 1,077 Other current assets 330 270 Future income tax assets 577 387 ----------------------------------------------------------------------- 2,067 1,734 Property, plant and equipment 6,960 6,732 Goodwill 2,789 2,779 Intangible assets 2,010 2,152 Investments 464 139 Deferred charges 55 118 Future income tax assets 28 299 Other long-term assets 192 152 ------------------------------------------------------------------------- $ 14,565 $ 14,105 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities and Shareholders' Equity Current liabilities: Bank advances, arising from outstanding cheques $ 78 $ 19 Accounts payable and accrued liabilities 2,022 1,792 Current portion of long-term debt 1 451 Current portion of derivative instruments 107 7 Unearned revenue 211 227 ----------------------------------------------------------------------- 2,419 2,496 Long-term debt 5,863 6,537 Derivative instruments 1,754 769 Other long-term liabilities 183 103 ------------------------------------------------------------------------- 10,219 9,905 Shareholders' equity 4,346 4,200 ------------------------------------------------------------------------- $ 14,565 $ 14,105 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Rogers Communications Inc. Unaudited Interim Consolidated Statements of Retained Earnings (Deficit) (In millions of dollars) ------------------------------------------------------------------------- Nine months ended September 30, 2007 2006 ------------------------------------------------------------------------- Deficit, beginning of period: As previously reported $ (33) $ (606) Change in accounting policy related to financial instruments 3 - ------------------------------------------------------------------------- As restated (30) (606) Net income for the period 383 446 Dividends on Class A Voting shares and Class B Non-Voting shares (185) (24) ------------------------------------------------------------------------- Retained earnings (deficit), end of period $ 168 $ (184) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Rogers Communications Inc. Unaudited Interim Consolidated Statements of Comprehensive Income (In millions of dollars) ------------------------------------------------------------------------- Three Nine months months ended ended September September 30, 30, 2007 2007 ------------------------------------------------------------------------- Comprehensive income: Net income for the period $ 269 $ 383 Other comprehensive income, net of income taxes: Change in fair value of derivative instruments (9) 61 Change in fair value of available-for-sale investments (16) 108 ------------------------------------------------------------------------- (25) 169 ------------------------------------------------------------------------- Total comprehensive income $ 244 $ 552 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Rogers Communications Inc. Unaudited Interim Consolidated Statements of Cash Flows (In millions of dollars) ------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, 2007 2006 2007 2006 ------------------------------------------------------------------------- Cash provided by (used in): Operating activities: Net income for the period $ 269 $ 154 $ 383 $ 446 Adjustments to reconcile net income for the period to cash flows from operating activities: Depreciation and amortization 397 408 1,195 1,189 Program rights and Rogers Retail rental depreciation 17 18 57 55 Future income taxes 165 75 164 41 Unrealized foreign exchange gain - - (46) (36) Change in fair value of derivative instruments 5 (2) 31 28 Loss on repayment of long-term debt - - 47 - Stock option plan amendment - - 452 - Stock-based compensation expense 11 14 58 37 Amortization of fair value increment on long-term debt (1) (2) (5) (8) Other 12 - 8 5 ----------------------------------------------------------------------- 875 665 2,344 1,757 Change in non-cash operating working capital items 107 66 (358) (10) ----------------------------------------------------------------------- 982 731 1,986 1,747 ------------------------------------------------------------------------- Financing activities: Issuance of long-term debt 1,340 94 4,786 824 Repayment of long-term debt (1,846) (403) (5,138) (1,282) Premium on repayment of long-term debt - - (59) - Financing costs incurred - - (4) - Payment on settlement of cross-currency interest rate exchange agreements and forward contracts - - (873) (10) Proceeds on settlement of cross-currency interest rate exchange agreements and forward contracts - - 838 - Issuance of capital stock on exercise of stock options 1 23 26 63 Dividends paid on Class A Voting and Class B Non-Voting shares (80) (24) (131) (47) ----------------------------------------------------------------------- (585) (310) (555) (452) ------------------------------------------------------------------------- Rogers Communications Inc. Unaudited Interim Consolidated Statements of Cash Flows (continued) (In millions of dollars) ------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, 2007 2006 2007 2006 ------------------------------------------------------------------------- Investing activities: Additions to property, plant and equipment (397) (415) (1,172) (1,158) Change in non-cash working capital items related to property, plant and equipment (25) 21 (139) (17) Acquisitions - - (129) - Additions to program rights (18) (7) (41) (28) Other (4) 6 (9) (17) ----------------------------------------------------------------------- (444) (395) (1,490) (1,220) ------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (47) 26 (59) 75 Cash deficiency, beginning of period (31) (55) (19) (104) ------------------------------------------------------------------------- Cash deficiency, end of period $ (78) $ (29) $ (78) $ (29) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Supplemental cash flow information: Income taxes paid $ - $ 1 $ 1 $ 5 Interest paid 107 131 428 463 ------------------------------------------------------------------------- The change in non-cash operating working capital items is as follows: Decrease (increase) in accounts receivable $ 2 $ (88) $ (71) $ (125) Increase (decrease) in accounts payable and accrued liabilities 93 153 (183) 138 Increase (decrease) in unearned revenue (16) (4) (16) 39 Decrease (increase) in other assets 28 5 (88) (62) ------------------------------------------------------------------------- $ 107 $ 66 $ (358) $ (10) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash deficiency is defined as cash and short-term deposits which have an original maturity of less than 90 days, less bank advances. The preceding MD&A and financial statements should be read in conjunction with the third quarter 2007 Notes to the Unaudited Interim Consolidated Financial Statements that can be found at www.rogers.com and on SEDAR at www.sedar.com or on EDGAR at www.sec.gov. Caution Regarding Forward-Looking Statements, Risks and Assumptions This MD&A includes forward-looking statements and assumptions concerning the future performance of our business, its operations and its financial performance and condition. These forward-looking statements include, but are not limited to, statements with respect to our objectives and strategies to achieve those objectives, as well as statements with respect to our beliefs, plans, expectations, anticipations, estimates or intentions. Statements containing expressions such as "could", "expect", "may", "anticipate", "assume", "believe", "intend", "estimate", "plan", "guidance", and similar expressions generally constitute forward-looking statements. These forward-looking statements also include, but are not limited to, guidance relating to revenue, operating profit and property, plant and equipment expenditures, expected growth in subscribers, the deployment of new services, integration costs, and all other statements that are not historical facts. Such forward-looking statements are based on current expectations and various factors and assumptions applied which we believe to be reasonable at the time, including but not limited to general economic and industry growth rates, currency exchange rates, product and service pricing levels and competitive intensity, subscriber growth and usage rates, technology deployment, content and equipment costs, the integration of acquisitions, and industry structure and stability. Except as otherwise indicated, this MD&A does 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 announced or may occur after the date of the financial information contained herein. We caution that all forward-looking information is inherently uncertain and that actual results may differ materially from the assumptions, estimates or expectations reflected in the forward-looking information. A number of risk factors could cause actual results to differ materially from those in the forward-looking statements, including but not limited to economic conditions, technological change, the integration of acquisitions, the failure to achieve anticipated results from synergy initiatives, unanticipated changes in content or equipment costs, changing conditions in the entertainment, information and communications industries, regulatory changes, changes in law, litigation, tax matters, employee relations, pension issues and the level of competitive intensity amongst major competitors, many of which are beyond our control. Therefore, should one or more of these risks materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary significantly from what we currently foresee. Accordingly, we warn investors to exercise caution when considering any such forward-looking information herein and to not place undue reliance on such statements and assumptions. 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, fully review the section of this MD&A entitled "Updates to Risks and Uncertainties," and also the sections entitled "Risks and Uncertainties Affecting our Businesses" and "Government Regulation and Regulatory Developments" in our 2006 Annual MD&A. Additional Information Additional information relating to us, including our Annual Information Form, and discussions of our most recent quarterly results, may be found on SEDAR at www.sedar.com or on EDGAR at www.sec.gov. About the Company We are a diversified public Canadian communications and media company. We are engaged in wireless voice and data communications services through Wireless, Canada's largest wireless provider and the operator of the country's only Global System for Mobile Communications ("GSM") based network. Through Cable and Telecom we are one of Canada's largest providers of cable television, cable telephony and high-speed Internet access, and are also a national, full-service, facilities-based telecommunications alternative to the traditional telephone companies. Through 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 12:00 p.m. ET today, November 1, 2007. 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, Cable and Telecom - Taanta
Gupta, (416) 935-4727, taanta.gupta@rci.rogers.com


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