Fitch Places Rogers Wireless on Rating Watch Negative

Business Wire, Sept 14, 2004

CHICAGO -- Fitch Ratings has placed its 'BBB-' senior secured rating of Rogers Wireless Inc. (RWI) on Rating Watch Negative following Rogers Communications Inc.'s (RCI) announcement that the company has reached an agreement to purchase AT&T Wireless' 48.6 million shares of RWI for $1.8 billion. Fitch has withdrawn the rating on RWI's senior subordinated debt since the notes were retired. RCI plans to fund the obligation initially through a bridge financing facility for up to two years.

At this time, the effect this proposed transaction will have on RWI is uncertain since RCI has not provided definitive guidance whether RWI will ultimately fund this consideration and due to other mitigating strategic issues. RCI and RWI are potentially considering other corporate initiatives that could affect RWI's credit profile. These plans include RCI or RWI making an offer to purchase Microcell's assets as well as additional operational integration opportunities within the RCI operating family. When RWI and RCI determine a final strategic course of action, Fitch will resolve the Rating Watch Negative. Nevertheless, Fitch believes the above mentioned events are potentially leveraging to RWI. Possible outcomes of the final rating action could be an affirmation of RWI's rating depending on the amount of debt assumed by RWI or a rating downgrade of RWI's debt.

The operating and financial trends at Rogers Wireless have been strong based on the positive momentum created from the solid operating results over the past two years. Providing additional support to the rating, the Canadian wireless industry, while clearly price-sensitive and competitive, provides a more positive operating environment than in the U.S., particularly with only four players in the Canadian market, compared with at least six operators in the large urban cores within the U.S.

Moreover, RWI's credit protection measures strengthened considerably during the past 18 months, with debt-to-EBITDA of 2.5 times (x) at the end of the second quarter 2004, compared with 4.7x in 2002. Fitch expects continued improvement in RWI's credit profile, absent the above events, through growth in free cash flow to approximately C$200 million in 2004. The main drivers for this increase include a stable ARPU supported by growth in data revenues, comparable market share additions of postpaid subscribers, and fewer funds required for working capital considerations. RWI maintains a solid liquidity position with C$48 million drawn on a C$700 million revolver as of June 30, 2004. Additionally, RWI does not have any debt maturing until 2006.