Moody's rates Rogers Wireless notes

Moody's Investors Service assigned a prospective Ba3 senior secured rating to the recently announced and pending US$750 million 10-year debt issue of Rogers Wireless Inc., confirmed all other ratings, and maintained the positive outlook.

Affected by this action are the senior implied rating of Ba3, the Ba3 rated senior secured debt, including the company's C$160 million 10.5% senior secured notes due June 2006, US$196 million 8.3% notes due October 2007, US$490 million 9.625% notes due May 2011, and the US$750 million prospective new issue due 2014, and the senior secured debentures, including the US$333 million 9.375% debentures due June 2008 and US$155 million 9.75% debentures due June 2016. The company's US$179 million 8.8% senior subordinated notes due October 2007 are rated B2.

Moody's said the ratings are supported by rational, profit-oriented competition among the three main Canadian wireless operators to date, good cost discipline at Rogers Wireless which has led to a strong improvement in its EBITDA margin over the past year and Moody's expectation of free cash flow in excess of $200 million in 2004, up from a breakeven level for the full year of 2003.

Moody's said the ratings are constrained by the lack of demonstrated free cash flow compared to C$2.2 billion of debt, low barriers to future price competition, coupled with slowing subscriber growth and the re-emergence of price competition from the fourth operator following its capital reorganization last year, and the possibility, in Moody's opinion, for Rogers Communications to purchase the rest of Rogers Wireless due to the pending ownership change at AT&T Wireless Inc., as any debt component of such a transaction would be a partial burden on Rogers Wireless itself.

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