DBRS Upgrades Rogers Wireless to BBB (low) & BB (high), Stable Trends

DBRS has today upgraded the Senior Secured Notes & Debentures and Senior Subordinated Notes ratings of Rogers Wireless Inc. (Rogers Wireless or the Company) to BBB (low) and BB (high), respectively. The trends are now Stable. DBRS has also upgraded the ratings of Rogers Cable Inc. (Rogers Cable) to BBB (low) and the parent of both companies, Rogers Communications, Inc. (RCI) to BB (high). (See separate press releases on both Rogers Cable and RCI.)

The upgrade reflects Rogers Wireless’ improved overall credit profile including improved EBITDA margins (42.7% at the end of 2006), continued EBITDA growth driven and the expectation that free cash flow will more than double in 2007 to roughly $750 million. DBRS notes that Rogers Wireless has (1) significantly lowered its churn levels over the past three years (now below 2.0% per month on a blended basis), (2) driven ARPU growth to the upper $50 per month range in 2006 with significant growth in data services and the increase in voice usage offsetting lower average revenue per minute, and (3) continued to benefit from being the only GSM operator in Canada which gives it better handset pricing and the advantage of global roaming for its subscribers.

DBRS expects these operating factors to continue for Rogers Wireless in 2007 given (1) the rational three-player market is expected to continue, and (2) the fact that Canada, with penetration rates less than 60%, has ample growth left over the next three to five years. While DBRS does acknowledge that wireless number portability will be implemented in Canada in March 2007, DBRS expects the market to remain rational with the potential for Rogers Wireless to gain additional subscribers given its GSM handsets, global roaming and entry into the fixed-line business services market.

Finally, DBRS expects Rogers Wireless and its strong free cash flow in 2007 to help to fund Rogers Cable’s free cash flow deficit in 2007, which continues to be protracted but is expected to be reduced in 2007. Additionally, DBRS expects RCI, on a consolidated basis, to generate significant free cash flow of roughly $1 billion in 2007 (including cash tax savings) which will allow RCI and its operating companies to reduce debt levels and make strategic investments.

Notes:
All figures are in Canadian dollars unless otherwise noted.
These ratings are based on public information.