Rogers Communications Inc. (RCI) Q3 2010 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen, welcome to Shaw Communications fiscal 2010 third quarter conference call. Today’s call will be hosted by Mr. Jim Shaw, Vice Chair and Chief Executive Officer of Shaw Communications. At this time, all participants are in a listen-only mode. Following the presentation there will be a question-and-answer session. (Operator instructions) If the press has any question, please Mr. Shaw’s office after the call. Before we begin, management would like to remind listeners that comments made during today’s call will include forward-looking information and there are risks that actual results could differ materially. Please refer to the Company’s publicly filed documents for more details on assumptions and risks. Mr. Shaw, it is now pleasure to turn the call over to you. Please go ahead, sir.

Thank you, operator. And welcome to our third quarter results and thank you for joining us today. With me today we have our whole top team, which would be Mr. Peter Bissonnette, President; Mr. Brad Shaw, Executive Vice President; Mr. Steve Wilson, Chief Financial Officer; Mr. Michael D`Avella, Senior Vice President of Planning; Mr. Ken Stein, Senior Vice President of Regulatory; and Mr. Jean Brazeau, Senior Vice President of Regulatory also, and it’s kind of a duplicate [ph] there; and Mr. Jay Mehr, Group Vice President of Shaw Cable Operations; and Mr. Jim Cummins, Group Vice President of Satellite Operations; Mr. Paul Robertson, Group Vice President of Broadcast Services, I guess we call it; and also Mr. Trevor English who works in our whole investment area. So we are happy to welcome you here today. I will keep my comments short as you have already reviewed our results, which were released this morning. We continue to post impressive financial and operating metrics that (inaudible) towards the strength of our core Cable and Satellite business. Both revenue and EBITDA for the quarter was up 10% and our subscriber growth was strong across all products. We added basic customers in Q3 and our digital penetration rate is now approaching 70%. This quarter, we added over 66,000 digital phones lines and this represents our highest ever net addition in a quarter since launching this service in 2005. These results were achieved with a focus on profitability as our consolidated margin for the quarter exceeded 46% and our cable margin was almost 49%. Lastly Wednesday was a milestone regarding our proposed acquisition of the Canwest Broadcast assets. The court approved matters relating to the acquisition and we are working on completing the remaining steps in the transaction, including securing the regulatory required approvals. We expect this acquisition to close in the fall of this year. We continue to develop our Wireless business plan and we are pleased to announce that we have chosen Nokia-Siemens as our equipment vendor four our network build. We also have recently hired Lawrence Cook [ph] as our new VP of Wireless. Lawrence joins us with extensive knowledge and experience in the wireless industry, both in Canada and abroad. We will provide further updates on our Wireless initiatives as we approach our launch of this service. We are excited about the future of our Company. Our core business continues to be resilient in the face of heightened [ph] competition and continues to generate significant amount of free cash flow. We are ready with our expansion in the Wireless and our acquisition of one of the premier providers of content will position us to be one of the leading entertainment and communication companies in Canada. So, with that, thanks for joining us here today. We now like to open up the phones to answer any question before everyone leaves for probably a long-deserved long weekend with your family.

(Operator instructions) Your first question comes from Glen Campbell. Please go ahead, sir. Steve Harris – BofA/Merrill Lynch: Hi guys, this is Steve Harris [ph] on behalf of Glen Campbell who is traveling. First I will say congrats for the good quarter. Just a couple of quick questions. We were wondering if you could provide us with a quick updated view on the expected Wireless CapEx now that the NSN deal is signed. How much do you expect to spend in order to launch the major markets? And if you can talk about recent changes to your cable and triple-play promotions.

Steve, I can talk to – regarding the CapEx for Wireless we’ve committed to $100 million spend and we are still on track even though we are a little lighter this quarter, but certainly by end of the quarter network and some other things in place. That’s the number we are driving to. And then on promotions, we knew that would come up somehow in this call. There has been a lot of activity and a lot of noise from some of the other providers on our most aggressive price points in the world. And all I can say to that is that offer we do is the offer ‘9.95’ offer to double-play customers. We are currently getting over $100 ARPU from them. And so we really feel it’s a nice way to introduce the triple-play in a nice introductory six-month offer. And as always with promotions they come up and they go down and we move things around with what’s successful. And so you will continue to see that. Steve Harris – BofA/Merrill Lynch: Fantastic. Thank you very much.

Your next question comes from Tim Casey. Please go ahead, sir. Tim Casey – BMO Capital Markets: Thanks. Could you clarify a bit more on the regulatory process on Canwest? You mentioned it’s – you are expected to close in the fall. That would imply a pretty short review at the CRTC. I am just wondering if you could clarify a little bit more on the process of how to go through there?

Well, actually it’s consistent with the timing that we have normally with the commission on these – obligations. We had filed our applications in May. We expect now with the court dealing of the situation it will be decided in the near future. And then there will be a comment period before a hearing sometime in the month of September. So we are on track in terms of normal timing on this. There is no change in terms of normal process with this kind of application. Tim Casey – BMO Capital Markets: And in terms of remaining issues regarding the creditor process, when do you expect those to be resolved?

(inaudible)

Well, Tim, the sort of the court has approved – put forward the – the plan and also the process to the creditors. There will be a meeting of creditors on July the 19th. In the following week, assuming that as approved, which Michael would not have put it forward were he not confident that it would be approved, and the court will issue the order. I think the only thing remaining will be the regulatory competition bureau and CRTC approvals. Tim Casey – BMO Capital Markets: Thank you.

Your next question comes from Vince Valentini. Please go ahead, sir. Vince Valentini – TD Newcrest: Yes, thanks so much. Two questions. One may be just more of an accounting one for Steve. You still have some wireless EBITDA this quarter. Just a small negative amount that I would have thought any pre-launch cost would have just been capitalized. So in order to try to model this going forward for the next five, six quarters, say, before you launch, can you give us some sense of what’s in there and how that will grow?

Well, I guess I won't be specific at this point, but not everything has been re-capitalized. There are some pre-launch costs. There are only items that we would normally capitalize in a field environment. But there will OpEx there will be expensed. I think what’s important for everybody to understand is that you see the segmented disclosure that we are going to give you and so you have full visibility to the OpEx as it goes forward and full visibility in capital that we are spending in Wireless. Vince Valentini – TD Newcrest: Okay, fair enough. The other question is on the business market. May be Brad or – can you give us some sense of how much traction you are getting with the small and medium business segment, specifically in the Internet side and on telephony? A lot of people look at your Internet penetration and combine that with the telcos in your markets and say, "Geez, Western Canada market is almost saturated in terms of broadband penetration." But I suspect we are seeing an increasing amount of business penetration in your Internet subs that would I guess change the denominator. So, can you give us some flavor as to how much traction you are getting there and may be what percentage of your Internet and telephony subs are now businesses versus residences?

Hi, yes, Vince, on the phone side, we continue to have good traction. Similar to previous quarters, just under 11,000 small business adds on the phone side are included in the numbers. On the Internet side we continue to think there is great opportunity, but the success you are seeing is largely on the residential side. Our business Internet adds would be in the low small single digit thousand for the quarter.

I think too, Vince, when you look at it, that we’ve been going quarter after wherever they said our Internet penetration could come up as the team launches new like (inaudible) megabit programs and also just we are seeing like gains every quarter when everybody says, oh, no, you can't gain anymore and you are totally saturated. So, I think that will be the same on the business market as we are seeing on the consumer market and that’s basically, generally I think what the team sees around here.

Yes, you are right, Jim. Vince, it’s Brad. And just to add to that. We are probably seeing a little bit of churn in the business as Telus moves away from contracts and that’s creating a little more churn in the business. So that might also be contributing. Vince Valentini – TD Newcrest: Okay, many thanks.

Your next question comes from Greg MacDonald. Please go ahead, sir. Greg MacDonald – National Bank Financial: Thanks. Good afternoon, guys. And on behalf of all the analysts let me say thanks for hosting a conference call at 4:00 PM before a long weekend.

Oh, yes, you’re welcome. Greg MacDonald – National Bank Financial: Well, I always knew you guys as sadists.

(inaudible). Greg MacDonald – National Bank Financial: Yes, I have a quick question for you and this is – now that you’ve announced the network equipment vendor, anything more that you can share on the rollout strategy and I am specifically thinking of the possibility of – you’ve got this late 2011 estimated launch time. Is it possible – since it seems like you are going with an HFC plus strategy migration to LTE, is it possible that you could be launching in specific markets sooner than late 2011?

I don’t know who can really divulge that rate now, but it’s a good question. Greg MacDonald – National Bank Financial: I think I got my answer. Thanks.

Your next question comes from Phillip Huang. Please go ahead, sir. Phillip Huang – UBS Equities: Great. Thanks. Thanks for taking my question. I just want to just get a sense of you know to what extent are you seeing economic recovery and housing growth in your footprint helping your business in terms of subscribers and also receptiveness to rate increases?

I think we are seeing very strong economics happening in the marketplace, which is enabling us to continue to post strong subscriber growth and also opportunity for the other guys to grow as well is the great thing about the Western I think. On the – there is room for both of us to grow. In terms of rate increases, our pricing strategy has been consistent, and we continue to move down the same pricing strategy that we’ve had for the last number of years, and I think the economy (inaudible) as well.

Yes (inaudible) Phillip Huang – UBS Equities: Oh, you know, thanks for that answer. I just want to – I was going to say you know just for a follow on, on the – your success on home phone service, obviously a great quarter with a record number of net additions. And this is sort of in contrast with your peers, who have been reporting you know consistently poor [ph] net additions over the past several quarters. I am just trying to I guess understand a bit more behind – the reasons behind – are you – to what extent are you seeing the benefits of the improving economy in healthy growth and also is it just a function of greater marketing and promotions and what do you think about the risk of more aggressive response from Telus?

Well, I really, I will get you started off by saying right off the cuff that you will – one either or know what the other guys are doing on the time. I mean we talk to them a bit, but we are just do one thing and we just rely on our own team and they do a good job of delivering service and I think (inaudible) just comes by word of mouth it’s a – you know, if you like how your phone service works, you like this, you like that, and we just attract them and we’ve been able to do that with a lot more products over a lot of years. So, I don’t think you are seeing anything different than what you are used to seeing here. And of course we have promotions. Of course we do. But you know what, we see what we see out here, and people are attracted to our products.

Yes, and I think it fits in somewhat with our objective to create an excellent customer experience whatever interaction you have with whatever Shaw company, each and every time. That’s what I think that continues to differentiate and as you said, promotions will be up and down and move around. And I think we may be following on with working one.

(inaudible) and about this card promotion and (inaudible) perception was that somehow we are giving it away for $30 and that is the case, it’s triple play going from a double play as Brad said earlier that well for $10 more on a double play our ARPU is little over $100. Phillip Huang – UBS Equities: Got it. Thanks very much for – and congrats on the great results on the phones.

Your next question comes from Jeff Fan. Please go ahead, sir. Jeff Fan – Scotia Capital Markets: Thank you very much, and good afternoon, guys. I want to ask you questions about the future of the cable service and kind of how it stacks up to IPTV, because I guess there has been a lot of concerns about IPTV and how it impacts the cable service and whether cable is now behind the (inaudible) when it comes to the technology. Certainly doesn’t look that way based on the results that we are seeing. And if you look at the U.S. Cox and Comcast, and these guys are deploying new features like multi-room, interactive guides, so I wanted to see what you guys are doing on that front and any insight you can give us on the road map for new cable features that’s coming down the pipeline over the next number of months and quarters. Thanks.

Yes, thanks, Jeff. You know, it’s interesting you are asking the questions, because just – we actually spent some time with our engineering group just talking about that very topic and it was actually very, very exciting when we look at some of the enablers that we have in terms of new products where we look at our books on a capacity expansion, campaign for – devices that we’ll be making available that can provide even more high definition services. There is a lot of developments through our cable labs with respect to (inaudible) Android devices, (inaudible) technologies. And we should clarify this. There is a misconception that IP somehow is the Holy Grail. IP is just a platform (inaudible) it’s an open platform (inaudible) development. It doesn’t have anything to do with the experience, the customer experience. If you put our high definition and all the definition that we offer up against any other competitor, you will find that they are exemplary and they are high quality. And then the other thing we are looking at is how we aggregate content in the cloud and content libraries, delivery systems for that’s been our modus operandi. We deliver content and to the extent that we keep focusing on building our networks and make it much more smaller that’s going to be an enabler. There are also many devices out there right now, there is thin clients, there is IT devices, there are gateway devices and these are all being developed for a cable application as opposed to DDL or ADSL application. And then within the home we are seeing a great deal of success from our focus on the WiFi networks and the kind of programs that are available in the – whether it’s mobility through our Fiber to the Home. We launched recently our (inaudible) website and our customers are now able to – especially those customers that have movie services, they are able to get more content like all the entourage the programs et cetera through this website and they can actually display it on their PC, they can display it on the mobile device ultimately, they can play it on their TV. They can pause it, they can move it, they can stop watching it on their one device and go to another device. So there is some tremendous things we are doing – we are looking at high definition, higher definition. We are looking at Blu-ray quality 1080p. We are looking at 3D impact. The last two games of the World Cup will be in 3D. We are looking at this advanced network – the advanced advertising network with our advertisers and particularly when we look at the (inaudible) we do with our broadcasting content, they are looking at this (inaudible) and they look to what we can do in terms of relevant, directable advertising. So, there is – I can go on and on. I think we did for a couple of hours. We are extremely excited. We don’t think that there is an appreciation of what we actually do have and I am glad that Jeff that you are going to see it first hand and I think there should be may less out of the IP and more of what are our customers asking us to provide to them and what are they searching for, and we think we are in a very short period of time going to be able to deliver a multiple array on multiple platforms on multiple devices great programming, we call it Shaw Anytime, Any Device, Anywhere. Jeff Fan – Scotia Capital Markets: Right. A few very quick follow-ups. On the enhancements to the user experience I mean are you comfortable that you can get that into your customers without any change to your CapEx intensity profile on the core cable business? Secondly, on the timing of when some of these things may come. And then lastly, obviously you guys track churn to Telus or MTS IPTV. Wondering if you guys have any conclusions as to why some of those customers are moving over?

Well, yes, one of the things, all I see there, regroup here, Brad or Jay or whoever is going to talk but you know I mean it reminds me a little bit where (inaudible) IPTV is going to take over, well it reminds me of when they used to call the satellites the death star and they are going to kill all cable and all cable is going to be gone. So I mean one thing is you know the one thing that when I – when you look at the network it’s so solid and in really good shape, now they may need some CapEx once in a while and that kind of thing, yes, it does, but it’s a solid network with lots of fiber and lots of capacity, we need to build things. So, I mean there is no exclusivity to anything or any product that anyone loves. And maybe our product is different. But we will have a product that competes in that arena. And so it’s just how we come up with that product and how we develop our product. And we may want an exclusive product or we may license a product. I mean we got a few options there.

And then typically what we do is when we add a new product or a new device, it’s not a matter of deploying it across all three million of our customers. It’s a matter of providing a product that actually – we may be have a unique device or may be an IP cable gateway device, an old customer that want to enjoy that type of in-home gateway they will call up and say I’d love to have that product. And so you provide that device with them as they want the product. And it works well for us on (inaudible) it will work well for us in MPEG4, and it will work well for us on the kind of wireless in-home devices that we are actually advertising right now, where we are getting increased take up on.

And, Jeff, just to add to what Peter is saying in terms of the CapEx model, everything Peter is talking about is funded within our long term CapEx approach. So we are not forecasting an increase in intensity to do what Peter is talking about. Major step forward – a number of major steps forward will happen in certainly a month and not years in terms of timing. And then back to the Telus TV, certainly historically as we’ve gone over last five years of relatively intense competition, people have rushed up surprise. We are quite excited about the new environment and the opportunity with the – with IPTV [ph] to be able to compete based on customer experience and we are really excited about the next phase of that competition. Jeff Fan – Scotia Capital Markets: Great. Thanks very much. Helpful.

Your next question comes from Dvai Ghose. Please go ahead. Dvai Ghose – Canaccord Genuity: Yes, thanks very much. Again, your cable numbers are great despite Telus TV. But the one thing that Telus keeps pushing in their advertising is Anywhere PVR, so one PVR for up to six TVs and I think the thing they are going to push in this fall is wireless TV programming your set-top box from wireless. So, when can you introduce – obviously, wireless you have to launch the product, but on the one set-top box for six TVs, when can you introduce that? Is that really a big deal and indeed is the wireless aspect a big deal in your opinion?

No and no. On the wireless device, may be Michael you would like to add on– Michael D`Avella: Yes and the wireless device is not tied to any particular network. You can do it maybe like you (inaudible) device just a question of do we have the application to allow people to program a PVR and we do and we introduce them. Dvai Ghose – Canaccord Genuity: Fair enough. And a couple of quick follow-ups. On the pricing side, you heard the Q1 Telus call I am sure, as we all did. And Darren from Telus spoke about the time to turn the other cheek is now over. And basically saying that he is going to respond to some of your promotions with some aggressive TV promotion. Is that a concern or do you think you just have the quality that it doesn’t matter?

Well, hasn’t he already done that already like I mean this is not something new. What was – Jay or Brad or–?

Well, there is plenty – there is $650 laptop they are giving away for free. They are – I hear of triple-play for $30 (inaudible) opportunity, so that’s pretty aggressive and you know I think that – we’ve also heard that call and we are – probably the most assertive that he has been in a long time and we didn’t know whether or not that was just to may be match some of the results that they have seen. But because their capabilities have been a misunderstanding as you said, and what they offered where that we were – make – were available in the marketplace. And again as brad said, those are cyclical and they may not come back to the marketplace for a while and that’s just the nature of our work. Dvai Ghose – Canaccord Genuity: And that makes sense. That’s what competition is all about. And then the last question I have, which is slightly different on the competitive side. So, Rogers acknowledged today that they are going to launch this chatter unlimited wireless plan sometime by the end of this summer. So, what it leads me to ask you is number one are you concerned, they launch it outside their cable territories, which may make sense not to cannibalize their home phone. Are you concerned that it will take up some from your home phone in some magnitude? And number two, what is your own view of unlimited wireless price plans in light of your wireless launch plan for the end of next year?

Well, you know, you have to say it’s a little too early for us to respond to that because of course we only heard that information today too, so— Dvai Ghose – Canaccord Genuity: Right.

And so – I mean I think that the one thing that we build our wireless platform on and all of our especially on all of our products whether it’s the Canwest acquisition and the fact that we have already 3.4 million customers and we are just going to leverage those and we are not (inaudible) we are way more than that to include satellite, (inaudible) TVs, specialty channels, so we have a lot of tools here than in the two of those.

And then clearly it’s a – preemptive approach and they are still preserving their title services, which is preemptive. But I think that rather than worry about (inaudible) you know when I hear (inaudible) is going to a fairly good job of providing services in Quebec, and Dell and Telus and Rogers will have to be on their best, so work within that competitive environment. Dvai Ghose – Canaccord Genuity: Yes, I think you are right. Thank you very much.

Yes, let me just come back for one second for the benefit of our shareholders in the line. As we said, (inaudible) remain on promotion and demand (inaudible) proportions, but for the benefit of our shareholders we are looking basically the fact our ARPU in the fourth quarter, our total cable ARPU and you can all figure out this number, in the fourth quarter last year was $97 and in the third quarter of this year it’s $104. So, it’s gone up $7. I can tell you in the first three quarters or this year, we are running at record Internet ARPUs and here our additional ARPU has only come down slightly and it’s still at $20 even with the additions of (inaudible) 40% penetration, 70% penetration. So all I can say is those are the facts. You can't hide promotions in the ARPU figures. They are what they are. And so that’s what we are at. Dvai Ghose – Canaccord Genuity: And your margins remain very high as well. Thanks.

Exactly. Thank you.

Thanks so much, Dvai, it’s great seeing you again. Dvai Ghose – Canaccord Genuity: Yes.

Your next question comes from Maher Yaghi. Please go ahead. Maher Yaghi – Desjardins: Yes, thank you for taking my question. You know like questions before didn’t ask, but maybe I can ask you on the wireless CapEx for 2011. When do you expect to release your guidance for 2011?

Well we usually do it in the fall right.

Yes, so we will be releasing all of the guidance at the end of October when we do our year-end call. Maher Yaghi – Desjardins: Okay. You might have mentioned this on the last call, but from my understanding it should not be very high incremental increase in CapEx spending in 2011 versus 2010. Is it multiples of 2010 or it’s just a small increase you expect to see?

Well, it will be on probability more intense than the 2010 number, obviously, but at this point I think that’s as far as we’d like to go. Maher Yaghi – Desjardins: Okay. And just may be going back to the dividend question, now you have under your belt a lot of information regarding Canwest acquisition cost. You probably have advanced your understanding of your spending on Wireless. Can you may be review for us your take on what dividend increase you think is sufficient for you guys to continue the dividend growth model and how could you finance a potential increase in dividend if you are contemplating such a thing?

I think you know and Steve will probably have a comment, but in – I think we are probably on this stage where we need to get the Canwest transaction done. We need to consolidate our Wireless plans, which are happening right now. We need to come out with our year-end and that – so I think that I don’t if it will go up or down. That will be up to the Board to approve that. But right now we feel like fairly conservative. Maher Yaghi – Desjardins: Okay. And one last question on the promotional side. We have been seeing Telus offering (inaudible) a combo for $30 a month promotion out west. And you know like the same question many analysts asked Telus on the call, on the last quarter and they responded by saying that they are going to retaliate to your promotional offering. I am going to ask you the same thing. How can you afford not to retaliate to a $30 a month promotion by Telus to drive customers? Or do you think product differentiation alone from you guys can sustain that potential for it or you will have to resolve to reducing your prices to face that?

Yes. I think it’s a little bit challenging to play a game of (inaudible) on some individual practical execution. Like these targeted offers that happen from time to time as people come in and out of markets and what not and we are absolutely committed to lessening the promotional intensity in the marketplace and I think we are actually seeing some of that happen in the marketplace as the outcome is coming out in places. So I think there is some danger in find a chase an offer and find an offer that’s being used in new builds or try and find an offer and that – I think you will see it in the macro numbers and as Steve indicated, our macro numbers are good. We’ll compete as much we want to compete. Of course, we’d absolutely love to compete on customers, sure. Maher Yaghi – Desjardins: Okay. Thank you very much.

Your next question comes from Peter MacDonald. Please go ahead, sir. Peter MacDonald – GMP Securities: Thank you, Jim. Jim, maybe I could just ask the question on the dividend. It sounds as though you – in the past that the dividend growth model was something that you wanted to just absolutely keep in place and this time hear it – I just want to make sure I understood exactly what you are saying, you are being conservative right now in your interpretation, not going to make a decision until you at least get through the year-end, but did you say that it could possibly go up or it could possibly go down or is your intention still to keep it as a dividend growth model?

Yes, you know, I need to take my direction from the Board to give the team the direction and – certainly I don’t think we are looking at a down model. I think we are looking at either a growth model or may be a whole model I don’t know. We are going to have to look as we work through all these acquisitions and get everything kind of lined up. And so I would say that at the end of the day, you probably – I mean listen we are dividend growth company. So we’ve decided that a few years ago. Decided that was my father, my brother, and all the management team here. And we’ve been pretty resilient on that. And I think that’s what you should expect. Peter MacDonald – GMP Securities: Okay. If I can ask a question so for just a modeling question, in the release that – and this is on the satellite side, you talk about some – the revenue decline and EBITDA declines on the satellite services business as being part of some renegotiation on pricing. If we take this quarter, is this a normalized quarter or is there some one-time items that we’ve to be concerned about?

Yes. There are some one-time contracts flat rate renegotiations with some of our vendors and that’s completed now. So, as we move forward, it will continue to be positive. Peter MacDonald – GMP Securities: So, it will go back to something like last quarter or–?

Just to put it in perspective, so in 2007 our satellite margin was 35.3, three years ago it was 38, last year it was 35.4, year-to-date, 35.2. It is a very, very narrow band for quite a long time. We are actually at 36.3 this quarter even less the reduction in services. So, I think we are in that same band as we’ve always thought – material. Yes. Peter MacDonald – GMP Securities: And then the – switching gears a little bit, Telus – you talk about the – that you are going to make some changes there with some capacity. In the past you’ve had some large one-time CapEx items then some I guess condo fees associated with it. Can you give us some sort of timing with respect to that satellite launch and what that gives you and if that gives you anything different than express where you are guys doing it together again?

Well, the satellite is going to be launched in 2012, so it will be in service some time in that timeframe. We don’t have a specific date here. It’s under construction. It’s 16 Ku-band transponders at 107, Jim, it’s 106. It’s in our existing arc. And with MPEG4 it’s tremendous amount of capacity. It’s well over 100 HD channels Peter MacDonald – GMP Securities: Okay. And the CapEx so for that, does it come pre or does that come with launch, so one-time, the one large time number?

(inaudible) ongoing right?

So, there is no CapEx until 2012. Peter MacDonald – GMP Securities: Okay. That’s what I want to know. And then last question is can you just give me some guidance, I mean I don’t know if I am the only one on this but on the cash taxes, it was a little bit lower than what I thought this quarter. I was trying to figure out what it was like for the year. Are we resetting the bar with what we should expect on the cash tax right for this year or not?

No, I think some of the things that this quarter we are just truing up to our estimate for the full year and so it was a little lower this quarter because of those – we are obviously – it’s on the jump spends we’ve done last year it’s kind of (inaudible) we’ve looked at the TCA [ph] I think taxes will be somewhat lower than what we originally indicated. But it’s – we are still on track for roughly what you should expect. Peter MacDonald – GMP Securities: Okay. Thank you very much.

Okay, operator.

There are no further questions on the phone, Mr. Shaw.

Anyway, thank you. Thanks for joining us and have a good great, long weekend and if you are in the U.S., work away.