ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT

CONNECTIONS COME ALIVE ROGERS COMMUNICATIONS INC. AT A GLANCE

DELIVERING RESULTS IN 2011

FREE CASH FLOW DIVIDEND SHARE TOP-LINE GENERATION INCREASES BUYBACKS GROWTH

WHAT WE SAID: Deliver another year WHAT WE SAID: Increase cash WHAT WE SAID: Return WHAT WE SAID: Leverage of significant consolidated pre-tax returns to shareholders consistently additional cash to shareholders networks, channels and brands free cash flow. over time. by repurchasing Rogers shares to deliver continued revenue on open market. growth. WHAT WE DID: Generated $2 billion WHAT WE DID: Increased of pre-tax free cash flow in 2011, annualized dividend per share WHAT WE DID: Repurchased WHAT WE DID: Delivered 2% supporting the significant cash we 11% from $1.28 to $1.42 in 2011. 31 million Rogers Class B shares consolidated top-line growth returned to shareholders during for $1.1 billion. with 2% growth in adjusted the year. operating profit.

CAPTURE OPERATING FAST AND RELIABLE GROW WIRELESS DATA GAIN HIGHER VALUE EFFICIENCIES NETWORKS REVENUE WIRELESS SUBSCRIBERS

WHAT WE SAID: Implement cost WHAT WE SAID: Maintain Rogers’ WHAT WE SAID: Strong double-digit WHAT WE SAID: Continued rapid containment initiatives to capture leadership in network technology wireless data growth to support growth in smartphone subscriber efficiencies. and innovation. continued ARPU leadership. base to drive wireless data revenue and ARPU. WHAT WE DID: Reduced operating WHAT WE DID: Deployed Canada’s first, WHAT WE DID: 27% wireless expenses for the combined Wireless largest and fastest 4G LTE wireless net- data revenue growth with data WHAT WE DID: Activated nearly and Cable segments, excluding the work and completed the deployment of as a percent of network revenue 2.5 million smartphones helping cost of wireless equipment sales, by DOCSIS 3.0 Internet capabilities across expanding to 35% from 28% bring smartphone penetration to approximately 2% from 2010 levels. our cable TV footprint. in 2010. 56% of postpaid subscriber base.

Rogers Communications Inc. is a diversified Canadian communications and media company engaged in three primary lines of business. Rogers Wireless is Canada’s largest wireless voice and data communications services provider and the country’s only national carrier operating on the world standard GSM, HSPA+ and LTE technology platforms. Rogers Cable is a leading Canadian cable services provider, offering cable television, high-speed Internet access, and telephony products for residential and business customers. Rogers Media is Canada’s premier group of category-leading broadcast, specialty, sports, print and on-line media assets with businesses in radio and television broadcasting, televised shopping, sports entertainment, and magazine and trade journal publication.

Table of Contents

2 Letter to Shareholders 78 Management’s Responsibility for 82 Consolidated Statements of Financial Reporting Changes in Shareholders’ Equity 5 Why Invest in Rogers 78 Independent Auditors’ Report of Registered 83 Consolidated Statement of Cash Flows 6 Connections Come Alive Public Accounting Firm 84 Notes to Consolidated Financial Statements 16 Supporting our Communities 79 Consolidated Statements of Income and the Environment 126 Corporate Governance 80 Consolidated Statements of 18 2011 Financial and Operating Highlights 128 Directors and Senior Corporate Officers Comprehensive Income 18 Goals and Objectives in 2012 130 Corporate and Shareholder Information 81 Consolidated Statements of 20 Management’s Discussion and Analysis Financial Position 2011 FINANCIAL HIGHLIGHTS

2011 CONSOLIDATED REVENUE AND OPERATING PROFIT PROFILE

REVENUE ADJUSTED OPERATING PROFIT

WIRELESS 57% WIRELESS 62%

CABLE OPERATIONS 27% $12.4 $4.7 CABLE OPERATIONS 32% BILLION BILLION

MEDIA 13% MEDIA 4% BUSINESS SOLUTIONS 3% BUSINESS SOLUTIONS 2%

FINANCIAL HIGHLIGHTS IFRS CDN GAAP (IN MILLIONS OF DOLLARS, EXCEPT PER SHARE, SUBSCRIBER AND EMPLOYEE DATA) 2011 2010 2009 2008 2007

Revenue $ 12,428 $ 12,142 $ 11,731 $ 11,335 $ 10,123 Adjusted operating profit 4,716 4,635 4,388 4,060 3,703 Adjusted operating profit margin 38% 38% 37% 36% 37% Adjusted net income 1,747 1,678 1,556 1,260 1,066 Adjusted diluted earnings per share 3.19 2.89 2.51 1.98 1.66 Annualized dividend rate at year-end 1.42 1.28 1.16 1.00 0.50 Total assets 18,362 17,033 17,018 17,082 15,325 Long-term debt (includes current portion) 10,034 8,654 8,464 8,507 6,033 Shareholders’ equity 3,572 3,760 4,273 4,716 4,624 Market capitalization of equity 20,736 19,435 19,476 23,679 29,614

Wireless subscribers (000s) 9,335 8,977 8,494 7,942 7,338 Cable subscribers (000s) 2,297 2,305 2,296 2,320 2,295 Internet subscribers (000s) 1,793 1,686 1,619 1,571 1,465 Cable telephony subscribers (000s) 1,052 1,003 937 840 656 Number of employees 28,745 27,971 28,985 29,200 27,900

TOTAL SHAREHOLDER RETURN

TEN-YEAR COMPARATIVE TOTAL RETURN: 2002–2011 ONE-YEAR COMPARATIVE TOTAL RETURN: 2011

241% 97% 33% 88% 17% 18% (9)% 2% 16% 6%

S&P/TSX COMPOSITE INDEX RCI.B S&P 500 TSX* S&P 500 on TSX INDEX TELECOM TELECOM RCI.B S&P/TSX S&P 500 TSX* S&P 500 AND CABLE INDEX on TSX COMPOSITE INDEX TELECOM TELECOM INDEX AND CABLE INDEX

* Comprised of: Rogers, BCE, Bell Aliant, Cogeco, MTS, Quebecor, Shaw and Telus

FOR A DETAILED DISCUSSION OF OUR FINANCIAL AND OPERATING METRICS AND RESULTS, PLEASE SEE THE ACCOMPANYING MD&A LATER IN THIS REPORT. ROGERS COMMUNICATIONS INC. AT A GLANCE

ROGERS COMMUNICATIONS

Rogers Communications (TSX: RCI; NYSE: RCI) is a diversified Canadian communications and media company. As discussed in the following pages, Rogers Communications is engaged in three primary lines of business through its three principal operating segments: Rogers Wireless, Rogers Cable and Rogers Media.

ROGERS COMMUNICATIONS

WIRELESS CABLE MEDIA

WIRELESS

Rogers Wireless provides wireless voice and data communications services across Canada to more than 9 million customers under the Rogers Wireless, Fido and chatr brands. Rogers Wireless is Canada’s largest wireless provider and the only national carrier operating on the global standard GSM, 3G HSPA+ and highly-advanced 4G LTE technology platforms. Rogers Wireless is Canada’s leader in innovative wireless voice and data services, and provides customers with the best and latest wireless devices and applications. Rogers provides seamless wireless voice and data roaming across the U.S. and approximately 200 other countries internationally, and is also Canada’s leader in providing wireless machine-to-machine solutions to businesses across the country.

CABLE

Rogers Cable is a leading Canadian cable services provider, whose territory covers approximately 3.7 million homes in Ontario, New Brunswick and Newfoundland and Labrador with 61% basic penetration of its homes passed. Its advanced digital two-way hybrid fibre-coax broadband network provides the leading selection of on-demand and high-definition television programming, including an extensive line-up of sports, multicultural and local programming. Rogers Cable pioneered high-speed Internet access in North America and now 78% of its television customers subscribe to its high-speed Internet service, while 1.1 million customers also subscribe to its cable telephony service. Rogers Business Solutions is the division of Rogers which provides wired voice and data solutions to enterprise customers in and around Rogers’ cable footprint.

MEDIA

Rogers Media is Canada’s premier combination of category-leading radio and television broadcasting, televised shopping, sports entertainment, publishing, and digital media properties. Its Radio group operates 55 radio stations across Canada, while its Television properties include the five- station Citytv network; its five multicultural OMNI television stations; Sportsnet and Sportsnet ONE specialty sports television services licenced to provide sports programming across Canada; and The Shopping Channel, Canada’s only nationally televised shopping service. Media’s Sports Entertainment assets include the Toronto Blue Jays Baseball Club and Rogers Centre, Canada’s largest sports and entertainment facility. Media’s Publishing group produces 54 well-known Canadian consumer trade and professional publications.

FOR A DETAILED DISCUSSION OF OUR FINANCIAL AND OPERATING METRICS AND RESULTS, PLEASE SEE THE ACCOMPANYING MD&A LATER IN THIS REPORT. REVENUE ADJUSTED OPERATING PROFIT FY2011 REVENUE: ($ in billions) ($ in billions) $12.4 billion 11.7 12.1 12.4 4.4 4.6 4.7

WIRELESS 57%

CABLE $12.4 OPERATIONS 27% BILLION

MEDIA 13%

BUSINESS SOLUTIONS 3% 2009 2010 2011 2009 2010 2011

REVENUE ADJUSTED OPERATING PROFIT FY2011 REVENUE: ($ in billions) ($ in billions) $7.1 billion 6.7 7.0 7.1 3.1 3.2 3.0

POSTPAID VOICE 56%

$7.1 WIRELESS DATA 33% BILLION

PREPAID VOICE 3%

EQUIPMENT 8%

2009 2010 2011 2009 2010 2011

REVENUE ADJUSTED OPERATING PROFIT FY2011 REVENUE: ($ in billions) ($ in billions) $3.8 billion 3.7 3.8 3.8 1.3 1.4 1.6

TELEVISION 50% INTERNET 24% $3.8 BILLION HOME PHONE 13% BUSINESS SOLUTIONS 11% VIDEO 2% 2009 2010 2011 2009 2010 2011

REVENUE ADJUSTED OPERATING PROFIT FY2011 REVENUE: ($ in billions) ($ in billions) $1.6 billion 1.4 1.5 1.6 0.12 0.13 0.18

CORE MEDIA 90% $1.6 BILLION

SPORTS ENTERTAINMENT 10%

2009 2010 2011 2009 2010 2011 > LETTER TO SHAREHOLDERS

FELLOW SHAREHOLDERS,

We delivered solid results in 2011, demonstrating the underlying strength, durability and stability of our company. We have great franchises in growing businesses, the best asset mix of any communications company in North America, leading wireless and broadband networks, and a strong portfolio of diverse, category-leading media assets. And, we have a solid investment grade balance sheet with healthy cash flows, a seasoned leadership team, and a talented employee base.

02 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT At the same time, the competitive “ROGERS IS BEST POSITIONED environment continues to reflect the combination of multiple new wireless TO LEAD IN A WORLD WHERE entrants and our two primary incumbent DISTRIBUTION AND CONTENT wireless competitors having fully transitioned to HSPA networks, gaining access to an ARE INCREASINGLY CONVERGING…” expanded array of wireless devices. While we were successful in driving continued strong double-digit growth in wireless data revenues, the economics of the wireless voice business continued to be under pressure as intense competition asserted Despite a great deal of change in our knowledge, Rogers once again returned influence on pricing and customer churn. dynamic industry during 2011, three things more cash as a percentage of equity market We continued to deliver growth in our in particular remained constant: our strategy, capitalization to shareholders than any other cable business, adding nearly 150,000 total our competitive advantages, and Canadians’ telecom or cable company in Canada. cable service units in 2011. We continued insatiable demand to be connected to what At the same time, we further strengthened to execute on our “TV Anywhere” vision matters most wherever they are. Rogers our investment grade balance sheet. We and leverage and further enhance the remains solidly positioned in markets where ended the year with $2.1 billion of available undisputed superiority of our highly consumers want and continue to consume liquidity, while continuing to invest heavily in advanced broadband cable network. Rogers more and more – more wireless and customer retention, network enhancement is now able to provide customers the long- broadband connectivity, more information and product development initiatives. envisioned four-screen video experience and entertainment, and more desire to be with on-demand video delivery to the home connected to what matters to them most COMPETING STRONGLY television, PCs and tablets, smartphones, wherever they are. We continued to see the consumption and gaming devices. In 2012, we will further of communications, information and Across Rogers, there is a clear focus, not integrate these services, expand the range entertainment services converge across just on sustaining our lead as the top of capable devices, and continue to enhance networks, platforms and devices. Rogers integrated communications and media the digital set-top box user interface. is best positioned to lead in a world where company in Canada, on delivering upon distribution and content are increasingly We were also successful in our focus on our strategy of leading the enablement converging. We’re positioned to win as streamlining the cost structure in our cable and delivery of seamless, customer-driven digital content seamlessly traverses IP-based business, where during 2011, the Cable communications, entertainment, information wireless and broadband networks, to Operations segment generated strong and transactional experiences across any be consumed in real time or on demand operating leverage and increased the device, place or time. across multiple devices – big screen TVs, operating profit margin to almost 47%. DELIVERING RESULTS computers, tablets, smartphones and At the same time, we continued to improve 2011 was an intensely competitive year, gaming devices. the margins and drive greater amounts of as expected. Despite this backdrop, which on-net business in our Business Solutions We continued to grow our wireless moderated our growth, we continued our division. business by maintaining our relentless top-line, bottom-line and subscriber growth, focus on driving wireless data growth Our media businesses had an exciting and while meeting our operating profit and free and smartphone penetration, attracting profitable year as well, with continued cash flow targets and delivering against our and retaining high-value customers who momentum from new property launches, strategic priorities. generate greater average revenue and lower strong ratings, and initiatives to over-index The combination of continued sales strength churn. We ended 2011 with more than half around sports and local content, including and operating discipline allowed us to of our postpaid wireless subscriber base on Rogers’ 37.5% investment in Maple Leafs generate and return significant amounts of smartphones. And in the fourth quarter of Sports and Entertainment, that is expected cash to shareholders through a combination 2011, 37 percent of our wireless network to be completed in mid-2012. Media also of dividends and share buybacks. To our revenue was generated by wireless data. implemented a revamped, more integrated

2011 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 03 > LETTER TO SHAREHOLDERS

approach to selling to advertisers that has In 2011, we built on earlier initiatives and continued confidence in the strength of our also begun to yield results. While the media made solid progress in controlling costs, balance sheet and cash flow generation, and group’s top-line growth was tempered in essentially holding our wireless and cable in the growth potential of our industry. the latter part of the year by a slowing in operating costs relatively flat to 2010 levels, While delivering for our customers and the advertising market as world economic excluding costs associated with wireless shareholders is obviously critically important, concerns intensified, it finished 2011 with equipment sales. This in turn enabled us to giving back to the communities we serve is strong increases in operating profit and invest significantly in our customers, our also at the core of what we do at Rogers. To margins. networks and our products while continuing that end, I’m extremely proud of the Rogers to return significant amounts of cash to A WINNING GAME PLAN Youth Fund, an important initiative that we shareholders. Last year, I wrote about our focus on are launching across the company to support continuing to strengthen our core business While we are intensely focused on delivering Canadian youth and education. This program in the areas of service, network and cost results today, so too are we on making the represents Rogers’ national commitment to management. We made solid strides during right investments in the growth platforms for help Canada’s youth overcome barriers to 2011, enhancing our customers’ experience the future. To facilitate our future growth, education, empowering them to succeed in and making it easier for them to do business during 2011 we focused on opportunities the classroom and beyond. The program’s with us. But this is a journey, and much to build new revenue streams in areas in goal is to help youth between the ages of 12 work remains to be done. We will seek to and around our core businesses. In our and 19, especially those who are at-risk due continually develop newer, better, and faster communications business, these growth to poverty, isolation, having to adjust to a ways to deliver what customers want. focuses include the areas of wireless data, new language and culture, or who are facing the business segment, machine-to-machine challenges at home. We took a giant step forward in our core communications, and home monitoring and focus of assuring that our advanced wireless We have made progress in our business automation. While in Media, we zeroed in on and broadband networks are some of the in 2011, and I would like to thank our sports and local content along with growing best in the world and consistently deliver fast, employees for their incredible hard work and our presence in digital media. And these reliable and proven network experiences. dedication. We are steadfastly focused on are areas where you can expect to see us To that end, this past summer Rogers was continuing to drive performance and build continue to drive forward in 2012. proudly the first in Canada to launch a highly momentum, and look forward to the many advanced next generation LTE wireless DELIVERING RESULTS IN 2012 opportunities, as well as the challenges, in network that delivers some of the fastest Our 2012 plan strikes a healthy balance front of us, and to another year of delivering wireless data speeds in the world. By the between continued subscriber and value for our customers and shareholders. end of 2011, this wireless network, which financial growth, and the continued Thank you for your continued investment leads the industry, covered four of the largest return of significant amounts of cash to and support, markets in Canada – or more than 30% of our shareholders. It reflects a prudent the population – a significant achievement in management approach to a complex the history of the wireless industry in Canada. and significantly intensified competitive The multi-year deployment of LTE will environment that we have seen over the past continue in 2012 to cover many additional two-plus years. Our strategy and priorities markets across the country. remain intact as we invest in and evolve

our networks, systems, and service delivery Another core focus has continued to be platforms to both protect our core business on ensuring a competitive cost structure. Nadir Mohamed, fca and build new revenue streams. As our core businesses have matured PRESIDENT AND CHIEF EXECUTIVE OFFICER and competition increased, our top-line In February 2012, our Board authorized ROGERS COMMUNICATIONS INC. growth has moderated, but our cash flow an 11 percent dividend increase effective generation has remained strong as we immediately and the repurchase of up to focused increasingly on streamlining the $1.0 billion of Rogers shares over the coming business. year. These decisions reflect our Board’s

04 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT WHY INVEST IN ROGERS

ROGERS COMMUNICATIONS, THROUGH ITS THREE OPERATING SEGMENTS, HAS EXCELLENT POSITIONS IN GROWING MARKETS, POWERFUL BRANDS, PROVEN MANAGEMENT, A LONG RECORD OF DRIVING GROWTH AND SHAREHOLDER VALUE, AND THE FINANCIAL STRENGTH TO CONTINUE TO DELIVER LONG-TERM GROWTH.

LEADER IN CANADIAN MUST-HAVE PRODUCTS CATEGORY-LEADING COMMUNICATIONS INDUSTRY AND SERVICES MEDIA ASSETS

Canada’s largest wireless carrier and a A leading provider of communications Unique and complementary collection leading cable television provider, offering and entertainment products and services of leading broadcast radio and television, a ‘quadruple play’ of wireless, television, that are increasingly becoming necessities specialty TV, sports entertainment and Internet and telephony services to in today’s world, and the usage of which magazine assets. consumers and businesses. is increasing.

SUPERIOR ASSET MIX POWERFUL BRANDS EXTENSIVE PRODUCT DISTRIBUTION NETWORK

Majority of revenue and cash flow is Nationally recognized and highly-respected Powerful and well balanced national generated from wireless and broadband brands that stand strongly in Canada for product distribution network consisting services, the fastest growing and innovation, entrepreneurial spirit, choice of more than 3,400 Rogers-owned, least penetrated segments of the and value. dealer and retail outlets. communications industry.

PROVEN LEADERSHIP AND FINANCIALLY STRONG HEALTHY LIQUIDITY OPERATING MANAGEMENT AND DIVIDENDS

Experienced, performance-oriented Financially strong with an investment grade RCI common stock actively trades on the management and operating teams with balance sheet, conservative debt leverage TSX and NYSE, with average daily trading solid industry expertise, technical depth and significant available liquidity. volume greater than two million shares. and company tenures. Each share pays an annualized dividend of $1.58 per share in 2012.

ANNUALIZED DIVIDENDS PER SHARE: 2007–2012

$1.58 $1.42 $1.28 $1.16 $1.00

$0.50

2007 2008 2009 2010 2011 2012

2011 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 05 CONNECTIONS COME ALIVE WITH FREEDOM

06 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT > ROGERS CUSTOMERS KNOW THAT THE FREEDOM OF BEING IN TOUCH WITH FAMILY, FRIENDS AND COLLEAGUES MAKES THEIR LIVES MORE CONNECTED, AND THAT BEING CONNECTED TO THE INFORMATION AND ENTERTAINMENT THAT MATTERS MOST MAKES LIFE EASIER AND MORE ENJOYABLE

2011 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 07 > ACROSS MULTIPLE DEVICES AND SCREENS – WHETHER BY SMARTPHONE, TV, PC OR TABLET – ROGERS SEAMLESSLY CONNECTS ITS CUSTOMERS TO INNOVATIVE COMMUNICATIONS, INFORMATION AND ENTERTAINMENT EXPERIENCES WITH EASE

08 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT CONNECTIONS COME ALIVE WITH EASE

2011 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 09 CONNECTIONS COME ALIVE WITH POWER

> ROGERS MAKES BUSINESSES MORE PRODUCTIVE, PROVIDING TODAY’S WORKER WITH SEAMLESS ACCESS TO MISSION-CRITICAL INFORMATION AND COMMUNICATIONS AT THE OFFICE, AT HOME AND ON THE ROAD

10 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT WITH POWER

2011 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 11 12 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT > ROGERS’ WORLD-CLASS MEDIA CONTENT AND CUTTING EDGE BROADBAND AND WIRELESS TECHNOLOGY COME TOGETHER TO BRING THE BEST IN ON-DEMAND ENTERTAINMENT AND INFORMATION TO CUSTOMERS ON THE SCREEN OF THEIR CHOICE

CONNECTIONS COME ALIVE WITH WONDER

2011 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 13 CONNECTIONS COME ALIVE

ON ANY SCREEN AT ANY TIME

Rogers was one of the first carriers in the world to Rogers provides exceptional convenience and flexibility offer the communications ‘quadruple play’ of wireless, by enabling Canadians to ‘time shift’ how they access television, Internet and telephony services over its the broad array of communications, information and own networks. Few have more experience or success in entertainment experiences we provide. enabling subscribers to seamlessly shift their experience When it comes to entertainment, Rogers’ digital cable TV offers across screens. the most in on-demand programming and the widest selection Our customers can watch our digital cable TV content, à la carte of PVRs in Canada. With thousands of hours of on-demand movies and much more on their computer or tablet with Rogers entertainment and the ability to easily record, pause, forward On-Demand Online, whether at home or on the go. Never out of and rewind live content, our customers watch what they want touch, they are able to program their PVR with their smartphone, when they want it. And with Rogers Remote TV Manager, listen to their voicemail on their laptop or tablet, screen their our customers have flexibility to search TV programming and phone calls on their TV and even receive talking text messages on manage PVR recordings online from anywhere with their their home phone. The future is here today for Rogers customers computers, tablets and smartphones. In addition, Rogers who seamlessly experience content that’s important to them on On-Demand Online takes the digital TV experience and brings it the screen of their choice – their TV, PC, tablet or smartphone. to life on their PC or smartphone.

Productivity also thrives as commerce shifts across screens. With In today’s fast-paced, knowledge-based world of business, the Rogers, today’s professionals will access their applications, contacts ability to communicate and access information any time is a and calendars in real time on their smartphone. They’ll enjoy competitive advantage. Rogers helps make sure business people the convenience of a common voice mailbox for their office and are accessible to their customers and colleagues, and always wireless phones. They’ll collaborate with colleagues through virtual have access to their files and business tools. We help them whiteboarding sessions on their tablet. They’ll video conference with control how and when they are reached, so important calls and their customers. And they’ll pay for lunch with their cell phone. messages can be directed to them at different times or places. Whether it’s catching up late at night or conducting a web Whether with their mobile phone, television, computer, tablet or conference with a client nine time zones away, Rogers helps home phone, Canadians can enjoy seamless connections to rich make sure that time doesn’t get in the way. communications, information and entertainment experiences across devices and screens, thanks to Rogers.

14 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT WITH ANY CONTENT IN ANY PLACE

Consumers today want access to a broad selection of Rogers knows that no matter where its customers are, content – be it news, sports, or entertainment – and the being in touch with friends, family and colleagues makes ability to view it on their screen of choice. They want to their lives more connected. And being connected to the easily access the same personalized experiences in the information and entertainment that matters most makes home, at work or on the go. life easier and more enjoyable.

Rogers has its roots in the media business, and today we’re Rogers makes ‘place-shifting’ a reality. Today Canadians can proud to be able to bring the best in entertainment and connect to their communications, information and entertainment information to our customers – TV, movies, sports, news, almost anywhere they want to be, easily and seamlessly. We’re episodic, multicultural, high-definition, shopping, social enabling a shift to where watching TV on the train, conducting a networking and Internet content. It’s all complemented by the virtual whiteboarding session from the beach, disarming a home more than 15,000 hours of local programming produced each monitoring system from a smartphone, or answering a home year by our 34 Rogers TV cable stations. phone from 5,000 miles away are becoming everyday activities.

Our diverse array of content is reinforced by Rogers Media’s own Customers are no longer restricted to their couch to watch their collection of category-leading Canadian broadcast, specialty, favourite shows. They don’t have to pick up the phone to check publishing, sports and on-line properties. These include 55 radio their voicemail. They don’t need to be in town to catch their local stations, the five-station Citytv network, and five multicultural news. They don’t have to be in their house to monitor their home OMNI television stations. Our portfolio also includes Sportsnet, in real time. They don’t have to be at their PC to access their Canada’s most multiplatform specialty sports services; e-mail. And they don’t have to wait by the phone to get their calls. The Shopping Channel, the country’s only nationally televised Businesses no longer need to work in traditional offices and on-line shopping service; and a collection of 54 leading because Rogers helps them to quickly set up virtual workspaces consumer magazines and trade publications. for employees across the country – in branch offices or at And in addition to Rogers’ significant sports content rights, we home – making sure that the office is where the employee is. own the Toronto Blue Jays Baseball Club and the Rogers Centre, Connected around town or around the world, with complete Canada’s largest sports and entertainment facility. access to customers, colleagues, files and corporate applications, today’s workers are as productive on the road as they are in the office. Rogers makes it easier for customers to access the same personalized information, communications and entertainment experiences at work, at home and away, travelling to any of approximately 200 countries around the world.

2011 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 15 > LATE IN 2011, WE PROUDLY INTRODUCED THE ROGERS YOUTH FUND, A CORPORATE INITIATIVE THAT SUPPORTS AND EMPOWERS AT-RISK CANADIAN YOUTH THROUGH EDUCATION

CONNECTIONS COME ALIVE WITH COMMITMENT

16 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT SUPPORTING OUR COMMUNITIES AND THE ENVIRONMENT

Rogers is committed to a broad array of community and sustainability initiatives, and is an Imagine Canada Caring Company, committing at least 1% of net earnings before taxes annually to charities and non-profit organizations through cash and in-kind donations.

As one of Canada’s largest employers, As a particularly large purchaser of caring for and giving back to our electronics and paper, we pay special communities is vital. We support programs attention to minimizing potential that are dedicated to keeping children environmental issues. In the procurement and families nourished, safe and active supply chain, Rogers continually works – children’s education and sports, the with its partners through its agreements, recovery of lost children, local food banks relationships and code of conduct to and community safety. assure adherence to and enhancement of sound sourcing, production and In 2011, we proudly introduced Rogers recycling standards. And, as a service Youth Fund, a corporate initiative that provider who bills millions of customers supports and empowers at-risk Canadian each month, we’ve been an early and youth through education. This represents strong proponent of driving the adoption Rogers‘ national commitment to help of paperless electronic billing. Canada’s youth overcome barriers to education, inspiring them to succeed in Our objective is simple yet crucial – to the classroom and beyond through an ensure responsible, efficient use of natural innovative range of educational programs resources while reducing environmental that provide academic support, including impacts and ensuring regulatory compliance after-school homework clubs, tutoring and wherever we and our partners operate. mentoring programs, alternative schooling, We also measure our own carbon footprint and other essential tools. and undertake initiatives to reduce our greenhouse emissions where possible. We also sponsor a range of community events in support of organizations such as the Toronto Hospital for Sick Children, Easter Seals and many more. Our 34 Rogers ROGERS GIVES BACK TV cable stations produce thousands of > Youth education hours of local programming involving > Local shelters and food banks over 29,000 community groups, donating WITH > Community television coverage of local charitable events as well > Arts and culture as advertising resources. And we sponsor a variety of arts and culture initiatives which > Environmental stewardship highlight Canada’s artistic talent through > Supplier code of conduct our support of art galleries, film and > Responsible sourcing COMMITMENT television festivals, and literary awards. > Wireless device recycling > Paperless billing

2011 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 17 2011 FINANCIAL AND OPERATING HIGHLIGHTS

THE FOLLOWING REPRESENTS A SAMPLING OF ROGERS COMMUNICATIONS INC.’S 2011 PERFORMANCE HIGHLIGHTS.

GROWING FINANCIALS RETURNING CASH TO BALANCE SHEET LEADING NETWORKS SHAREHOLDERS STRENGTH

Delivered 2% consolidated Returned $1.9 billion of cash Approximately $2.1 billion Deployed Canada’s first, revenue and adjusted to shareholders in the form of available liquidity with no largest and fastest 4G operating profit growth with of an 11% dividend increase near-term debt maturities, and LTE wireless network and contributions from each of to $1.42 per share and the a ratio of 2.2 times net debt completed the deployment our three operating segments repurchase of 31 million to adjusted operating profit of DOCSIS 3.0 Internet while maintaining healthy Rogers Class B shares for capabilities across our cable adjusted operating profit $1.1 billion TV footprint margins of 38%

SMARTPHONE INTERNET AND BUSINESS SEGMENT EXPANSION AT MEDIA LEADERSHIP TELEPHONY PENETRATION OPPORTUNITY

Led Canadian smartphone Grew high-speed Internet and Significant progress in Launched 24-hour local news market with approximately cable telephony penetration penetrating the small business channel CityNews, FX Canada, 40% share and with 56% of levels to 78% and 46% and enterprise markets, Sportsnet World and Sportsnet our postpaid customer base of television subscribers, with SME revenues up Magazine, the Sports news now on smartphones respectively approximately 23%, and the barker channel, and numerous acquisition of Atria Networks, digital media properties enabling deeper drive into enterprise space

FOR A DETAILED DISCUSSION OF OUR FINANCIAL AND OPERATING METRICS AND RESULTS, PLEASE SEE THE ACCOMPANYING MD&A LATER IN THIS REPORT.

GOALS AND OBJECTIVES IN 2012

DURING 2012 WE WILL FOCUS ON SUSTAINING OUR LEAD AS THE TOP INTEGRATED COMMUNICATIONS AND MEDIA COMPANY IN CANADA, AND ON OUR STRATEGY OF BEING THE LEADING INTEGRATOR AND INNOVATOR THAT BRINGS PEOPLE, CONTENT AND DEVICES TOGETHER IN SEAMLESS, RELIABLE WAYS THAT PEOPLE DEPEND ON IN THEIR HOME AND WORK LIVES. WE WILL ALSO TARGET TO:

GROWTH AND NETWORK EFFICIENCY AND NEW REVENUE CASH RETURNS LEADERSHIP CUSTOMER EXPERIENCE STREAMS

Drive continued revenue and Maintain network leadership Drive cost efficiencies across Drive future growth through adjusted operating profit by significantly expanding the business by streamlining an increased on-net business growth of up to 4%, with Canada’s first LTE wireless 4G and reducing complexity, telecom presence, expansion pre-tax free cash flows network, further increasing while strengthening the of our media properties, and targeted at up to $2.1 billion our superior broadband customer experience by new revenue streams including and significant cash returned cable Internet speeds, and delivering consistently M2M, Rogers Smart Home to shareholders in the form enhancing our TV platform seamless, reliable and easy- Monitoring, multi-screen video of an 11% dividend increase to more seamlessly provide to-use services and support and digital media and share buybacks of up a four-screen “TV Anywhere” to $1.0 billion experience

18 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT FINANCIAL SECTION CONTENTS

20 MANAGEMENT’S DISCUSSION AND ANALYSIS 78 MANAGEMENT’S RESPONSIBILITY FOR Corporate Overview FINANCIAL REPORTING 21 Our Business 78 INDEPENDENT AUDITORS’ REPORT OF REGISTERED 22 Our Strategy PUBLIC ACCOUNTING FIRM 22 Consolidated Financial and Operating Results 79 CONSOLIDATED STATEMENTS OF INCOME 25 2012 Financial Guidance 80 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 81 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION Segment Review and Reconciliation to Net Income 82 CONSOLIDATED STATEMENTS OF CHANGES IN 25 Wireless SHAREHOLDERS’ EQUITY 31 Cable 83 CONSOLIDATED STATEMENTS OF CASH FLOWS 41 Media 84 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 44 Corporate 45 Reconciliation of Net Income to Operating Profit 84 Note 1: Nature of the Business 84 Note 2: Significant Accounting Policies Consolidated Liquidity and Financing 92 Note 3: Transition to IFRS 47 Liquidity and Capital Resources 99 Note 4: Segmented Information 50 Interest Rate and Foreign Exchange Management 101 Note 5: Operating Costs 52 Outstanding Common Share Data 101 Note 6: Finance Costs 52 Dividends on RCI Equity Securities 101 Note 7: Business Combinations and Divestitures 53 Commitments and Other Contractual Obligations 103 Note 8: Integration, Restructuring and Acquisition Costs 54 Off-Balance Sheet Arrangements 104 Note 9: Income Taxes 105 Note 10: Earnings per Share 105 Note 11: Other Current Assets Operating Environment 106 Note 12: Property, Plant and Equipment 54 Government Regulation and Regulatory Developments 107 Note 13: Goodwill and Intangible Assets 55 Wireless Regulation and Regulatory Developments 108 Note 14: Investments 56 Cable Regulation and Regulatory Developments 109 Note 15: Other Long-Term Assets 57 Media Regulation and Regulatory Developments 109 Note 16: Provisions 58 Competition in our Businesses 110 Note 17: Long-Term Debt 59 Risks and Uncertainties Affecting our Businesses 112 Note 18: Financial Risk Management and Financial Instruments Accounting Policies and Non-GAAP Measures 117 Note 19: Other Long-Term Liabilities 64 Key Performance Indicators and Non-GAAP Measures 117 Note 20: Pensions 65 Critical Accounting Policies 119 Note 21: Shareholders’ Equity 66 Critical Accounting Estimates 120 Note 22: Stock Options, Share Units and Share Purchase 68 New Accounting Standards Plans 68 Recent Accounting Pronouncements 122 Note 23: Capital Risk Management 123 Note 24: Related Party Transactions Additional Financial Information 124 Note 25: Commitments 70 Related Party Transactions 125 Note 26: Contingent Liabilities 71 Five-Year Summary of Consolidated Financial Results 125 Note 27: Subsequent Events 72 Summary of Seasonality and Quarterly Results 74 Summary of Financial Results of Long-Term Debt Guarantors 126 CORPORATE GOVERNANCE 74 Controls and Procedures 128 DIRECTORS AND SENIOR CORPORATE OFFICERS 75 Supplementary Information: Non-GAAP Calculations 130 CORPORATE AND SHAREHOLDER INFORMATION

2011 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 19 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2011

This Management’s Discussion and Analysis (“MD&A”) should be read Reporting Standards (“IFRS”) and is expressed in Canadian dollars, in conjunction with our 2011 Audited Consolidated Financial unless otherwise stated. This MD&A, which is current as of Statements and Notes thereto. The financial information presented February 21, 2012, is organized into six sections. herein has been prepared on the basis of International Financial

CORPORATE OVERVIEW SEGMENT REVIEW AND CONSOLIDATED 1 2 RECONCILIATION TO NET INCOME 3 LIQUIDITY AND FINANCING

21 Our Business 25 Wireless 47 Liquidity and Capital Resources

22 Our Strategy 31 Cable 50 Interest Rate and Foreign Exchange Management 22 Consolidated Financial and 41 Media Operating Results 52 Outstanding Common Share Data 44 Corporate 25 2012 Financial Guidance 52 Dividends on RCI Equity Securities 45 Reconciliation of Net Income to Operating Profit 53 Commitments and Other Contractual Obligations

54 Off-Balance Sheet Arrangements

OPERATING ENVIRONMENT ACCOUNTING POLICIES ADDITIONAL FINANCIAL 4 5 AND NON-GAAP MEASURES 6 INFORMATION

54 Government Regulation and 64 Key Performance Indicators and 70 Related Party Transactions Regulatory Developments Non-GAAP Measures 71 Five-Year Summary of 55 Wireless Regulation and 65 Critical Accounting Policies Consolidated Financial Results Regulatory Developments 66 Critical Accounting Estimates 72 Summary of Seasonality and 56 Cable Regulation and Quarterly Results Regulatory Developments 68 New Accounting Standards 74 Summary of Financial Results of 68 Recent Accounting 57 Media Regulation and Long-Term Debt Guarantors Regulatory Developments Pronouncements 74 Controls and Procedures 58 Competition in our Businesses 75 Supplementary Information: 59 Risks and Uncertainties Non-GAAP Calculations Affecting our Businesses

In this MD&A, the terms “we”, “us”, “our”, “Rogers” and “the interests in entities involved in specialty television content, Company” refer to Rogers Communications Inc. and our subsidiaries, television production and broadcast sales. which were reported in the following segments for the year ended December 31, 2011: “RCI” refers to the legal entity Rogers Communications Inc., excluding our subsidiaries. • “Wireless”, which refers to our wireless communications operations, carried on by Rogers Communications Partnership Substantially all of our operations are in Canada. (“RCP”); The financial information presented herein has been prepared on the • “Cable”, which refers to our cable communications operations, basis of IFRS for financial statements and is expressed in Canadian carried on by RCP; and dollars unless otherwise stated. Comparative amounts for 2010 • “Media”, which refers to our wholly-owned subsidiary Rogers included in this MD&A have been conformed to reflect our adoption Media Inc. and its subsidiaries, including Rogers Broadcasting, of IFRS, with effect from January 1, 2010. Periods prior to January 1, which owns a group of 55 radio stations, the Citytv television 2010 have not been conformed and were prepared in accordance network, the Sportsnet, Sportsnet ONE, Sportsnet World television with Canadian generally accepted accounting principles (“GAAP”). network, The Shopping Channel, the OMNI television stations, and Canadian specialty channels, including Outdoor Life Network, The Concurrent with the impact of the transition to IFRS, we made certain Biography Channel (Canada), FX (Canada), G4 Canada, and changes to our reportable segments. Commencing January 1, 2011, CityNews Channel; Digital Media, which provides digital advertising the results of the former Rogers Retail segment are reported as solutions to over 1,000 websites; Rogers Publishing, which produces follows: the results of the Video retailing portion are now presented 54 consumer, trade and professional publications; and Rogers as a separate operating sub-segment under the Cable segment, and Sports Entertainment, which owns the Toronto Blue Jays Baseball the portions related to retail distribution of wireless and cable Club (“Blue Jays”) and Rogers Centre. Media also holds ownership products and services are now included in the results of operations of

20 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 21 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT ADDITIONAL INFORMATION Additional informationInformation relating Form, to discussionsglossary Rogers, of of communications including our andonline 2011 media our at industry quarterly sedar.com, Annual terms, results, sec.gov mayor or be and connected rogers.com. found to a Information these websites containedinto are in this not MD&A. a part of and not incorporated 1. CORPORATE OVERVIEW OUR BUSINESS We are a diversifiedwith Canadian substantially all communications of andengaged our media in operations wireless company voice andWireless, and sales Canada’s data in largest communications Canada. wireless servicesThrough We communications through are Cable, services provider. wetelevision are services as one well as ofservices high-speed Internet Canada’s to access, and largest both telephony engaged consumers providers in and of radio and businesses. cable televisionshopping, Through broadcasting, consumer, digital Media, trade media, we televised andentertainment. are professional publications, We andExchange sports (TSX: are RCI.a and RCI.b) publicly(NYSE: and RCI). on traded the New York on Stock Exchange For the more detailed Torontobusinesses, see descriptions the Stock respective of segment discussions that our follow. Wireless, Cable and Media forward-looking information orstrategies could and intentions cause to our change,interpretations including current but not and objectives, limitedstandards to: new new bodies, accounting economicintegration standards conditions, of technologicalequipment from acquisitions, change, unanticipated accounting costs, the information changes and changing inlitigation communications content and conditions tax or industries, matters,emergence the of in new regulatory level opportunities. of changes, competitive the intensityMany and of entertainment, the these factors areor beyond our knowledge. control and Should currentother one expectation factors or morechange, materialize, of or any our these otherlooking risks, objectives, factors information or uncertainties prove strategies assumptions or incorrect, underlyingcould our or the vary actual forward- significantly intentions results from andwe what our warn we plans currently investors foresee.containing to Accordingly, exercise forward-looking cautionunreasonable when information considering to statements rely andregarding our on that future such(and results it we statements expressly or disclaim as would plans. anystatements such We creating or obligation) be assumptions, to are legal update whether underfuture or rights as alter no events, any a obligation or resultforward-looking of otherwise, new except information information, ascautionary in statements required herein. by this law. MD&A AllBefore making of is any the investment qualifiedof decisions and for the by abusiness, detailed risks, the discussion fully uncertainties review theUncertainties and Affecting sections our of environment Businesses” thisand and associated Regulatory “Government MD&A Developments”. Regulation entitled Our with “Risks annualbe and our and found quarterly online reports at can rogers.com/investors,available sedar.com directly and from sec.gov Rogers. or are This MD&Ameaning includes of applicable “forward-lookingamong securities other laws information” things andperformance within and assumptions our condition concerning, approved business, the bythis management its MD&A. on This the operations forward-looking dateinclude, information of and and but its these assumptions objectives are financial and notstatements limited strategies to, to withanticipations, statements achieve with those respectinformation estimates respect objectives, to to also as orforecasts our well includes, our relating as but to beliefs, intentions.plant is revenue, and equipment adjusted plans, not Thiscash expenditures, operating flow, cash limited dividend expectations, profit, payments, income expected forward-looking to,services property, tax growth to in payments, which guidance subscribers free they and the subscribe,the and deployment the of cost new of services, acquiringhistorical and subscribers all facts. and other statements The that“assume”, are words not “could”, “believe”,“guidance”, “expect”, “may”, “intend”, and “anticipate”, statements containing “estimate”, similar forward-looking information,forward-looking although expressions “plan”, not all statements areforecasts “project”, and intended projections include setbased out on to in such our forward-looking currentother identify information objectives factors are words. and and strategies andconfidential expectations and on Conclusions, and proprietary, estimates assumptions, that and time we most believe of applied, to which be butlimited reasonable are at may to: the prove generalexchange economic to rates, and besubscriber product industry incorrect, growth, pricing growth including, usageregulation, levels rates, and but technology currency deployment, and churn not devicenew rates, competitive availability, product the changes launches, intensity, timing in content of of and acquisitions, government equipment industry structure costs, and the stability. integration Except as otherwisestatements indicated, do this not MD&A reflector and the other our special potential forward-looking items impactacquisitions, or of of other any any business non-recurring dispositions,may combinations monetizations, be or mergers, considered otherstatement or transactions containing the that announced forward-looking information or is may made. occurWe after caution thestatement date that regarding the our all currentand forward-looking objectives any strategies factor, information, and assumptions,forward-looking intentions estimate including information, or expectation any isuncertainty underlying and the inherently that subject actualexpressed or results to implied may change by differof the risks, materially and forward-looking uncertainties from and information. those otherevents A factors number to could cause differ actual materially results and from those expressed or implied in the CAUTION REGARDING FORWARD-LOOKING STATEMENTS, RISKS AND ASSUMPTIONS Wireless andintercompany Cable transactions Operations, between(“RBS”) respectively. the segment In Rogerspreviously addition, recorded Business and as certain revenue Solutions other in other operating RBS segments, and are operating operating nowbeginning expenses recorded in as segments, January cost the recoveriesconsolidated in 1, which results RBS or 2011. to were result the of While this adjusted second operatingintercompany there change, profit the sales of reported is are RBS, revenue no2010 as of no longer RBS a have is included. change lowerpresentation Comparative as of been figures to both changes for reclassified discussed the above. toThroughout this conform MD&A, all tonumbers percentage rounded changes the to are thethat calculated current decimal the using charts, to graphs year’s whichfor and they ease diagrams appear. of that Please follow referencepart note have and of been management’s illustrative discussion included purposes and only analysis. and do not form MANAGEMENT’S DISCUSSION AND ANALYSIS

SEGMENT REVENUE SEGMENT ADJUSTED ADDITIONS TO CONSOLIDATED (In millions of dollars) OPERATING PROFIT CONSOLIDATED PP&E TOTAL ASSETS (In millions of dollars) (In millions of dollars) (In millions of dollars)

6,654 6,973 7,138 3,042 3,173 3,036 $1,855 $1,834 $2,127 $17,018$17,033 $18,362 3,948 3,785 3,796 1,324 1,4261,612 1,407 1,461 1,611 119 131180

2009 20102011 2009 20102011 2009 20102011 2009 20102011

Wireless Cable Media Wireless Cable Media CONSOLIDATED FINANCIAL AND OPERATING RESULTS See the sections in this MD&A entitled “Critical Accounting Policies”, OUR STRATEGY “Critical Accounting Estimates” and “New Accounting Standards” and Our business objective is to maximize subscribers, revenue, operating also the Notes to the 2011 Audited Consolidated Financial Statements profit and return on invested capital by enhancing our position as for a discussion of critical and new accounting policies and estimates one of Canada’s leading diversified communications and media as they relate to the discussion of our operating and financial results companies. Our strategy is to be the leading and preferred provider below. of innovative communications, entertainment and information services to Canadians. We seek to leverage our advanced networks, We measure the success of our strategies using a number of key infrastructure, sales channels, brands and marketing resources across performance indicators as outlined in the section entitled “Key the Rogers group of companies by implementing cross-selling and Performance Indicators and Non-GAAP Measures”. These key joint sales distribution initiatives as well as cost reduction initiatives performance indicators are not measurements in accordance with IFRS through infrastructure sharing, to create value for our customers and or Canadian GAAP and should not be considered as alternative shareholders. measures to net income or any other measure of performance under IFRS or Canadian GAAP. The non-GAAP measures presented in this We seek to exploit opportunities for Wireless, Cable and Media to MD&A include, among other measures, operating profit, adjusted create bundled product and service offerings at attractive prices, in operating profit, adjusted operating profit margin, adjusted net addition to implementing cross-marketing and cross-promotion of income, adjusted basic and diluted earnings per share and free cash products and services to increase sales and enhance subscriber loyalty. flow. We believe that the non-GAAP financial measures provided, We also work to identify and implement areas of opportunity for our which exclude: (i) stock-based compensation expense (recovery); businesses that will enhance operating efficiencies by sharing (ii) integration, restructuring and acquisition expenses; (iii) settlement infrastructure, corporate services and sales distribution channels. We of pension obligations; (iv) other items, net; and (v) in respect of net continue to develop brand awareness and promote the “Rogers” income and earnings per share, loss on repayment of long-term debt, brand as a symbol of quality and innovation. impairment of assets and the related income tax impacts of the above Our Cable and Wireless businesses are integrated in our items, provide for a more effective analysis of our operating Communications Services organization. This more streamlined performance. See the sections entitled “Key Performance Indicators organizational structure is intended to facilitate faster time to and Non-GAAP Measures” and “Supplementary Information: market, deliver an enhanced and more consistent customer Non-GAAP Calculations” for further details. experience, and improve the overall effectiveness and efficiency of The increased levels of competitive intensity have negatively impacted the Wireless and Cable businesses. This more integrated operating the results of our Wireless and Cable businesses during 2011. This approach also recognizes the continued convergence of certain includes higher subscriber churn and lower average revenue per user aspects of wireless and wireline networks and services. (“ARPU”) at Wireless and a slowing in the number of new subscriber additions and increased promotional and retention activity at Cable. During the first half of 2011, Media benefited from a rebound in the advertising market which again slowed in the later parts of the year. We recognized cost efficiencies during 2011 as a result of certain restructuring of our organization and employee base in some areas to improve our organizational efficiency and cost structure.

We believe that we are well-positioned from both a leverage and a liquidity perspective with a debt to adjusted operating profit ratio of 2.2 times. In addition, we had borrowed only $250 million from our $2.4 billion fully committed multi-year bank credit facility at December 31, 2011 and we have no scheduled debt maturities until June 2013.

22 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 23 3% 4% 30% 1 33%

MENT G ABLE ABLE E MEDIA C C MEDIA S PROFIT BY G ROGERS COMMUNICATIONS INC. MENT G E S TED OPERATIN S 11 $3.22 2011 ANNUAL REPORT 1 020

1 S $2.9 OLIDATED REVENUE BY OLIDATED REVENUE BY OLIDATED ADJU 3% S S 57% 6

TED EP 1 S CON CON 11 11 $2.5 ) ) 2009 20 % % ADJU ($) 20 ( 20 ( WIRELESS WIRELESS For detailed discussions of Wireless,respective Cable segment and discussions Media, below. refer to the Year Ended December 31, 2011December Compared 31, to 2010 Year Ended For the yearrepresented ended December 57%, 31,respectively 2011, 30% (2010 – Wireless, 57%, and 31% Cableadjusted and and operating 12%). 13% profit, On Media Wireless, the Cable of basis63%, and of 33% Media consolidated and our also 4%, represented respectively (2010 consolidated – 67%, 30%, revenue, and 3%). gnificant Developments in 2011 Operations and 10% atgrowth Media, of with consolidated 2%.million annual with adjusted Adjusted revenue operating profit operating margins of profit 37.9%. grew 2%(“NCIB”) to to $4,716 39.8 repurchase million Class upperiod B ending to Non-Voting February sharescancellation 21, the during 31 2012, million the lesser under Class$1.1 twelve-month which billion. B of we Non-Voting purchased shares $1.5 for during 2011 billion for or to $1.42 per Classout A $758 million Voting in and dividends to Class shareholders B during the Non-Voting year. share, paying grade debt offerings during6.56% the Senior year, consisting Notes of dueNotes $400 2041 million due and of 2021. $1,450were Among million used of to other repay 5.34% things, bankissues Senior debt proceeds maturing and in of redeem 2012, bothNotes the including of our and offerings US$470 public million US$350 debt ofreduced million 7.25% our Senior of weighted 7.875%December 31, average Senior 2011 from Notes. cost 6.68% at In December of 31, total, 2010. borrowing we to 6.22%largest at fibre-opticSolutions’ networks, enterprise which offeringsdeliver by augments on-net further data enhancing Rogers centricfootprint. its services Business within ability and to adjacent to Cable’s acquiring a net 75 percentEntertainment equity interest (“MLSE”) in MaplePension Leaf being Plan. Sports and The sold investmenthighly advances by sought-after Rogers’ content strategy theacross anywhere, to deliver our anytime, Ontario on advancedmedia Teachers’ any broadband assets, platform and whilevalue wireless continuing networks to of andcommitment, strengthen our following our and aMLSE, enhance planned will Sportsnet the total leveragedpercent approximately recapitalization equity media $533 interest of in million,available MLSE, brands. liquidity. representing and will a be Rogers’ 37.5 funded with currently net cash plant, and equipment (“PP&E”) expenditures,debt interest on (net long-term of7% capitalization) and from cashexpenditures. income 2010 taxes, decreased levels by to $1.9borrowed under billion our $2.4 billionmatures due committed bank in credit to facility that enhanced July by higher the 2013. fact thatJune PP&E This our earliest 2013, scheduled strong debt togetherflexibility. maturity liquidity is providing in position us with is substantial further liquidity and that our Board ofannualized Directors dividend had to approved $1.58that an per share 11% it effective increase immediately, has inprogram and authorizing the approved the repurchase the ofshares up on the to renewal open $1.0 market billion of during of the Rogers our next twelve NCIB months. share buyback Operating Highlights and Si • Generated revenue growth of 2% at Wireless, 4%• at In Cable February 2011, we renewed our normal course issuer bid • In February 2011, we increased the annualized dividend from $1.28 • We closed $1.85 billion aggregate principal amount of investment • We closed the acquisition of Atria Networks, one of Ontario’s • Rogers announced that it, along with Bell Canada, is jointly • Free cash flow, defined as adjusted operating profit less property, • At December 31, 2011, we had only $250 million of advances • Subsequent to the end of 2011, in February 2012, we announced MANAGEMENT’S DISCUSSION AND ANALYSIS

Summarized Consolidated Financial Results Years ended December 31, (In millions of dollars, except per share amounts) 2011 2010 % Chg Operating revenue Wireless $ 7,138 $ 6,973 2 Cable Cable Operations 3,309 3,190 4 RBS 405 452 (10) Video 82 143 (43) 3,796 3,785 – Media 1,611 1,461 10 Corporate items and eliminations (117) (77) 52

Total operating revenue 12,428 12,142 2

Adjusted operating profit (loss)(1) Wireless 3,036 3,173 (4) Cable Cable Operations 1,549 1,419 9 RBS 86 40 115 Video (23) (33) (30)

1,612 1,426 13 Media 180 131 37 Corporate items and eliminations (112) (95) 18

Adjusted operating profit(1) 4,716 4,635 2 Stock-based compensation expense(3) (64) (50) 28 Settlement of pension obligations(4) (11) – n/m Integration, restructuring and acquisition expenses(5) (70) (40) 75 Other items, net(6) – (14) n/m

Operating profit(1) 4,571 4,531 1 Other income and expense, net(7) 3,008 3,029 (1)

Net income $ 1,563 $ 1,502 4

Basic earnings per share $2.88 $ 2.61 10 Diluted earnings per share $2.86 $ 2.59 10 As adjusted:(2) Net income $ 1,747 $ 1,678 4 Basic earnings per share $ 3.22 $ 2.91 11 Diluted earnings per share $ 3.19 $ 2.89 10 Additions to property, plant and equipment (“PP&E”)(1) Wireless $ 1,192 $ 937 27 Cable Cable Operations 748 611 22 RBS 55 38 45 Video – 13 n/m

803 662 21 Media 61 38 61 Corporate(8) 71 197 (64) Total additions to PP&E $ 2,127 $ 1,834 16 (1) As defined. See the sections entitled “Key Performance Indicators and Non-GAAP Measures” and “Supplementary Information: Non-GAAP Calculations”. Operating profit should not be considered as a substitute or alternative for operating income or net income, in each case determined in accordance with IFRS. See the section entitled “Reconciliation of Net Income to Operating Profit and Adjusted Operating Profit for the Period” for a reconciliation of operating profit and adjusted operating profit to operating income and net income under IFRS and the section entitled “Key Performance Indicators and Non-GAAP Measures”. (2) For details on the determination of the ‘as adjusted’ amounts, which are non-GAAP measures, see the sections entitled “Key Performance Indicators and Non-GAAP Measures” and “Supplementary Information: Non-GAAP Calculations”. 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) stock- based compensation expense; (ii) integration, restructuring and acquisition expenses; (iii) settlement of pension obligations; (iv) other items, net; and (v) in respect of net income and earnings per share, loss on repayment of long-term debt, impairment of assets and the related income tax impact of the above amounts. (3) See the section entitled “Stock-based Compensation”. (4) Relates to the settlement of pension obligations for employees in the pension plans who had retired between January 1, 2009 and January 1, 2011, as a result of annuity purchases by the Company’s pension plans. (5) Costs incurred relate to (i) severance costs resulting from the targeted restructuring of our employee base and outsourcing of certain functions; (ii) acquisition transaction costs incurred and the integration of acquired businesses; and (iii) the closure of certain Video stores and other exit costs. (6) Relates to the resolution of obligations and accruals relating to prior periods. (7) See the section entitled “Reconciliation of Net Income to Operating Profit and Adjusted Operating Profit for the Period”. (8) See the section entitled “Additions to PP&E” n/m: not meaningful.

24 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 25 2012 Guidance ROGERS COMMUNICATIONS INC. 2,1271,950 2,075 1,950 to to 2,175 2,050 2011 Actual $ 4,716 $ 4,730 to $ 4,915 (1) (3) 2011 ANNUAL REPORT (2) restructuring and acquisitionand expenses; (iv) other (iii) items, net. settlement of pensionCorporate obligations; PP&E expenditures. expenditures and interest ondefined long-term term debt under (net IFRS. of capitalization), and is not a Pre-tax free cash flow Cash income taxes 99 425 to 475 Adjusted operating profit Additions to PP&E WIRELESS WIRELESS BUSINESS Wireless isprovider, the serving largest approximatelysubscribers Canadian at December 9.3 wireless 31, 2011, millionCanadian communications representing approximately retail 35% service wireless of voicestandard subscribers. and Global Wireless data Packet System operates Access/Longnetwork for on technology platforms. Term Mobile the Evolution communications/High-Speed global Wireless customers (“GSM/HSPA/LTE”) are ablethe wireless world to through access roaming theirHSPA agreements services with wireless in various other most networkroaming GSM parts operators. and footprints of Rogerscustomers’ and has number wireless oneagreement, of of usage Rogers available the hasoperator destinations in largest rather established for than the a implementinggenerally its third negotiated direct wireless party world. roaming services. relationship withthe Wireless multiple With with has majority operators within the ofpossibility each its of its roaming customers roaming travelling destinationscoverage in depth an in also area helps without order to coverage.the This ensure to best that possible eliminate Wireless’ network customers available the roam in a on specific destination. Full Year 2012 Guidance (In millions of dollars) Consolidated Guidance (1) Excludes (i) stock-based(2) compensation expense Includes (recovery); additions (ii)(3) to integration, Wireless, Pre-tax Cable free Operations, cash Media, flow RBS, is Video defined and as adjusted2. operating profit less SEGMENT REVIEW PP&E the related disclosures,regulatory for assumptions the and variousfinancial factors economic, and that competitive,expected. could and operating cause actual results future to differ from those currently 2011 Actual Range $ (As at 2011 Guidance February 16, 2011) 1,983 1,850 to 1,975 1,851 1,834 1,950 to 2,050 2,127 IFRS 2010 Actual $ 4,635 $ 4,600 to $ 4,765 $ 4,716 (1) (3) (2) acquisition expenses; (iii) settlement ofnet. pension obligations; and (iv) other items, Corporate PP&E expenditures. expenditures, interest on long-termtaxes, debt and (net is of not capitalization) a and defined term cash under income IFRS. After-tax free cash flow Adjusted operating profit Additions to PP&E The following tableselected outlines 2012 guidance financial rangesand metrics. should and This be assumptions read informationRegarding in for is conjunction Forward-Looking forward-looking with Statements, the Risks section and entitled Assumptions” “Caution and 2012 FINANCIAL GUIDANCE (1) Excludes (i) stock-based compensation expense; (ii) integration, restructuring(2) and Includes additions(3) to Wireless, After-tax Cable free Operations, cash flow Media, is RBS, defined Video as and adjusted operating profit less PP&E (In millions of dollars) Consolidated Guidance 2011 Performance Against Targets The followingfull-year table financial sets and forthversus operating metrics the the that actual guidanceperformance we provided results ranges consistent for we forafter-tax 2011 with achieved free selected cash our for2011, flow the and adjusted financial additions year. objectives to operatingrange PP&E that We by exceeded profit were $77 achieved the set million, highdeployment and which forth of end our was of for LTE primarily our 4G related wireless guidance network. to the accelerated Of therevenue, $286 million Wirelesscontributed year-over-year contributed $119 increasepartially in $165 million offset our by and million,$61 decreases consolidated Media in million Cable revenueeliminations in contributed of of $40 Operations million. Video, $47 $150 million and million, inOf an RBS the and increaseadjusted $81 operating in profit, Cable million corporate OperationsRBS contributed contributed year-over-year $46 $130 items million, million, Video increasecontributed and contributed $10 $49 in million million, and Media partially$137 our offset million by and consolidated a an$17 decrease million. increase in in Wireless corporate of items andRefer eliminations to of thethe respective individual revenue, segment operatingPP&E discussions expenses, of for operating Wireless, Cable details profit and of Media. and additions to MANAGEMENT’S DISCUSSION AND ANALYSIS

2011 WIRELESS REVENUE MIX Wireless holds 25 MHz of contiguous spectrum across Canada in the (%) 850 MHz frequency range and 60 MHz in the 1900 MHz frequency range across the country, with the exception of southwestern Ontario, northern Québec, and the Yukon, Northwest and Nunavut territories, where Wireless holds 50 MHz in the 1900 MHz frequency range. Wireless also has Advanced Wireless Services (“AWS”) DATA 33% spectrum, which operates in the 1700/2100 MHz frequency range, POSTPAID VOICE 56% across all 10 provinces and 3 territories. Wireless also holds certain broadband fixed wireless spectrum in the EQUIPMENT 8% 2300 MHz, 2500 MHz and 3500 MHz frequency ranges, together with Bell Canada, through an equally-owned joint venture called Inukshuk. PREPAID VOICE 3% Late in 2011, Rogers and Bell Canada jointly agreed to dissolve the Inukshuk joint venture during 2012 and split the jointly owned spectrum between the two parties. Wireless Products and Services Wireless offers wireless voice, data and messaging services including Rogers has initiated a network sharing arrangement with Manitoba related handset devices and accessories, across Canada. Wireless’ Telecom Services (“MTS”) for the purpose of building a joint HSPA+ services are generally all available under either postpaid or prepaid 3.5G wireless network in the province of Manitoba. This joint network payment options. Wireless’ networks provide customers with was completed in 2010 and was launched during the first quarter of advanced high-speed wireless data services, including mobile access to 2011 covering approximately 96% of the Manitoba population. In the Internet, e-mail, digital picture and video transmission, mobile addition, Rogers completed a business network sharing arrangement video, music and application downloading, video calling, two-way with TBayTel that enables our combined base of customers in North short messaging service (“SMS” or “text messaging”), and an Western Ontario to receive HSPA+ 3.5G wireless services under a joint increasing number of machine-to-machine wireless applications. brand (TBayTel with the power of Rogers) and Rogers customers in the rest of Canada to receive such services within the Thunder Bay coverage area in North Western Ontario. Wireless Distribution Wireless’ nationwide distribution network includes: an independent dealer network; Rogers Wireless, Fido and chatr stores; major retail WIRELESS STRATEGY chains; and convenience stores. Wireless markets its products and Wireless’ objective is to drive profitable growth within the Canadian services under the Rogers Wireless, Fido and chatr brands through an wireless communications industry, and its strategy is designed to extensive nationwide distribution network across Canada of maximize subscriber share, cash flow and return on invested capital. approximately 3,400 dealer and retail third party locations and The key elements of its strategy are as follows: approximately 360 Rogers owned retail locations. The distribution • Continually enhancing its scale and competitive position in the network sells its service plans and devices, and there are also Canadian wireless communications market; thousands of additional locations selling its prepaid services. Wireless also offers many of its products and services through telemarketing • Focusing on offering innovative voice and wireless data services and on the rogers.com, fido.ca and chatrwireless.com e-business into the targeted youth, family, and small and medium-sized websites. business segments, and specifically to drive increased penetration of smartphones and other advanced wireless devices;

Wireless Networks and Spectrum • Enhancing the customer experience through ongoing focus Wireless is a facilities-based carrier operating its wireless networks principally in the areas of wireless devices, network quality and over a broad, national coverage area, much of which is customer service in order to maximize service revenue and interconnected by its own fibre-optic and broadband microwave minimize customer deactivations, or churn; transmission infrastructure. The seamless, integrated nature of its networks enables subscribers to make and receive calls and to activate • Increasing revenue from existing customers by cross-selling and network features anywhere in Wireless’ coverage area and in the up-selling innovative new wireless data and other enhanced and coverage area of roaming partners as easily as if they were in their converged services to wireless voice customers; home area. • Enhancing and expanding owned and third party sales distribution Wireless’ underlying GSM/General Packet Radio Service/Enhanced channels to deliver products, services and support to customers; Data for GSM Evolution (“GSM/GPRS/EDGE”) network provides • Maintaining the most technologically advanced, high-quality and coverage to approximately 95% of Canada’s population. Overlaying national wireless network possible with global coverage enabled the infrastructure used for the GSM network is a next generation by widely adopted global standard network technologies; and wireless data technology called Universal Mobile Telephone System/ Evolved HSPA (“UMTS/HSPA+”) which covers approximately 91% of • Leveraging relationships across the Rogers group of companies to the population with wireless data services at speeds capable of up to provide bundled product and service offerings at attractive prices 42 Mbps. Further overlaying the infrastructure is the latest generation to common customers, in addition to implementing cross-selling, wireless data technology called LTE which covers approximately 32% distribution and branding initiatives as well as leveraging of the population with wireless data service speeds capable of up to infrastructure sharing opportunities. 150 Mbps. Wireless was first in Canada in deploying LTE across the country, starting with Ottawa in July 2011 and followed by Toronto, RECENT WIRELESS INDUSTRY TRENDS Montreal and Vancouver. By the end of 2011, the LTE network expanded to several cities around the Greater Toronto Area such as Focus on Customer Retention Mississauga, Brampton, Vaughan, Richmond Hill and Markham, and The wireless communications industry’s current market penetration in the Greater Vancouver Area, such as West and North Vancouver, Port Canada is estimated to be 78% of the population, compared to Coquitlam, Delta, Langley, Surrey and Maple Ridge. approximately 103% in the U.S. and approximately 122% in the

26 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 27 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT partners and long-distancecosts, carriers, and network the service CanadianCommission delivery Radio-television (“CRTC”) contribution Telecommunications levy; generated principally fromlong-distance monthly charges, fees, optional airtime,and government service data cost recovery usage, charges, fees, and system roaming charges; access and generated principallyancillary charges from such as airtime, long-distance and roaming. data usage and other pension, employee benefits and stock-based compensation; and • service costs, including inter-carrier payments to roaming • postpaid (voice and data services), which consist of revenues • prepaid (voice and data services), which consist of revenues generated fromhardware the and sale,retailers, accessories generally and to at directlyWireless’ to independent or customer subscribers service dealers, groups, below through websites and direct agents our telesales. fulfillment and cost, by of costs; and incurred to operateexisting subscriber the relationships, business asThese well on include: as attract a new day-to-day subscribers. • basis, service employee salaries and benefits, such as remuneration,• bonuses, other external purchases, such as: WIRELESS OPERATING AND FINANCIAL RESULTS For purposes ofbeen this classified according discussion, to the our following categories: Wireless• segment Network revenue revenue, which has includes revenue derived from: • Equipment sales net of subsidies, which consist ofWireless’ revenue operatingcategories expenses for assessing business are performance: segregated• into Cost of the equipment sales, following which is comprised of• wireless equipment Other operating expenses, which includes all other expenses connect to autilize local unlicenced areaeffective spectrum wireless within a access and local areathe point. the radius access of These approximately wireless point, 50-100 accessnetwork metres and connection (“LAN”) of points provide environment is (most speedsas recently 802.11n). only similar the As to versionwireless the designated a technology access, wired is many localselected primarily access local area designed points geographic for area, musta and in-building be must broadband also deployed be networkFuture interconnected to with to cover enhancements the supplynetworking the to connectivity ofopportunities the to the for range WiFioperators, Internet. wireless of access operators eachappropriate WiFi circumstances. or providing points service municipal capacity WiFi and mayLTE, the network worldwide and the provide GSMbroadband community’s coverage new wireless fourth additional technologywireless generation under (“4G”) evolution data path, the (orthogonal technology is frequency-division based andesigned to all on multiplexing) improve IP-based efficiency,range a lower that costs, of new improve is and voicewireless expand modulation networks, and the make specifically use data scheme integrate of with services new other spectrum available open allocations, technologyLTE and via standards. is better As mobile designed a 4GUMTS/HSPA, broadband to technology, build which onwireless is and and evolve the the standardbackwards world capabilities compatible upon standard inherent with which in seamless for UMTS/HSPA Wireless and mobile voice operates. iscapable broadband and designed LTE of to up is broadband provide tonetwork fully and data 150 services Mbps. in capabilities 2011 Wireless as deployed discussed and above. and launched data its LTE rates Development of Additional Technologies In additionbroadband to wireless the industry,Multiple namely two Access/Evolution GSM/HSPA Data main Optimized andsignificant (“CDMA/EVDO”), technology Code the broadband Division next pathsWireless wireless of technologydeployments the Interoperability in have mobile/ deployment slowed downannounced for is plans and to several move LTE. over WiMAX to Microwave operators LTE. have WiFi (the Access IEEEdevices, 802.11 such (“WiMAX”) as industry laptop standard) computers allows and personal suitably digital equipped assistants, to The ongoing development ofand wireless data transmission the technologies especially data increased communicationsto demand services, have migrate for led towardsbroadband wireless the wireless sophisticated providers networks next such as generationare wireless HSPA+ of and intended LTE. services, digital Thesequality to networks voice sound, and provide far data efficiency, and higher wireless enhanced video data communications streamingsupport capabilities. transmission These with networks speeds aincluding with wireline variety increased broadbandseamless of access Internet to increasingly corporateclient information access, and systems, advanced server-based including applications multimedianational desktop, data that can or services be applications, deploying accessed international next and on generation a basis. technology2011, local, with more Wireless than LTE. eight As million hasLTE Canadians at network, already December which had been will 31, access continue to to Rogers’ a expand during 2012. leader in Migration to Next Generation Wireless Technology Increased Competition from Other WirelessWireless Operators facesoperators as increased well as newdescribed entrants competition in in the the wireless from market, sectionBusinesses”. which The is of new fully incumbent this entrants have MD&Aplans introduced wireless entitled and new “Competition unlimited extremely pricing inresulted aggressive our in pricing downward and priceincreases promotions in adjustments customer which and churn have for lower Wireless. ARPU as well as Convergence of Technologies Technologies across differentthe platforms past have been fewproliferating converging years, across over andapplications examples the in of industry. the suchterminal Wireless market applications control place, launched haverecordings including application, been on several a the where terminal such remoteTV from content the digital a streaming smartphone application cable user or to smartphones a and tablet, can tablets. and a manage live their Demand for Sophisticated Data Applications The ongoing development of wirelesssuch data as transmission technologies, handsetsdevice and developers portable to computingdevices develop devices, with more has increasinglye-mail led sophisticated advanced and wireless smartphone other capabilities, corporate type sports, including information financial access technology information platforms, to andmusic, news, services, applications, shopping and services, streamingother photos, video functions. clips, Wireless mobile believesdevices television that and and the applications introductiondata of services. will such continue new to drive growth of wireless United Kingdom, and Wireless expectsto the Canadian continue wireless industry penetration to over grow therequires next by an several increasing years. approximately focusof As on new 4 penetration customer data satisfaction, deepens, percentageretention. and the it promotion voice points services to of existing customers, and customer MANAGEMENT’S DISCUSSION AND ANALYSIS

• sales and marketing related expenses, which represent the • operating, general and administrative related expenses, such costs to acquire new subscribers (other than those related to as retention costs, network maintenance costs, facility costs, equipment), including advertising and promotion and customer care expenses and Industry Canada license fees commissions paid to third parties for new activations; and associated with spectrum utilization.

Summarized Wireless Financial Results

Years ended December 31, (In millions of dollars, except margin) 2011(1) 2010(1) % Chg Operating revenue Network revenue $ 6,601 $ 6,526 1 Equipment sales 537 447 20

Total operating revenue 7,138 6,973 2 Operating expenses before the undernoted Cost of equipment sales 1,425 1,225 16 Other operating expenses 2,677 2,575 4

4,102 3,800 8

Adjusted operating profit(2) 3,036 3,173 (4) Stock-based compensation expense(3) (10) (12) (17) Settlement of pension obligations(4) (2) – n/m Integration, restructuring and acquisition expenses(5) (16) (5) n/m Other items, net(6) – (5) n/m

Operating profit(2) $ 3,008 $ 3,151 (5)

Adjusted operating profit margin as % of network revenue(2) 46.0% 48.6%

Additions to PP&E(2) $ 1,192 $ 937 27

Data revenue included in network revenue $ 2,325 $ 1,832 27

(1) The operating results of Cityfone Telecommunications Inc. (“Cityfone”) are included in Wireless’ results of operations from the date of acquisition on July 9, 2010. (2) As defined. See the sections entitled “Key Performance Indicators and Non-GAAP Measures” and “Supplementary Information: Non-GAAP Calculations”. (3) See the section entitled “Stock-based Compensation”. (4) Relates to the settlement of pension obligations for employees in the pension plans who had retired between January 1, 2009 and January 1, 2011, as a result of annuity purchases by the Company’s pension plans. (5) Costs incurred relate to (i) severance costs resulting from the targeted restructuring of our employee base and outsourcing of certain functions and (ii) acquisition transaction costs incurred and the integration of acquired businesses. (6) Relates to the resolution of obligations and accruals relating to prior periods.

WIRELESS NETWORK WIRELESS ADJUSTED • Subscriber growth continued in 2011, with net additions of REVENUE OPERATING PROFIT 378,000, of which approximately 71% were postpaid subscribers. (In millions of dollars) (In millions of dollars) • Postpaid subscriber monthly churn was 1.32% in 2011, compared to $6,245 $6,526 $6,601 $3,042 $3,173 $3,036 1.18% in 2010.

• Revenues from wireless data services grew approximately 27% to $2,325 million in 2011 from $1,832 million in 2010, and represented approximately 35% of network revenue compared to 28% in 2010.

• Postpaid monthly ARPU decreased to $70.26 in 2011 compared to $72.62 in 2010, reflecting the impact of competitive intensity and declines in roaming and out-of-plan usage revenues, which offset the significant growth in wireless data revenue.

• Wireless activated approximately 2.5 million smartphone devices during the year, predominantly iPhone, BlackBerry and Android devices. Approximately 38% of these activations were for subscribers new to Wireless and 62% were for existing Wireless 2009 20102011 2009 20102011 subscribers who upgraded to smartphones. These subscribers generally commit to new multi-year term contracts, and typically Wireless Operating Highlights for the Year Ended generate ARPU nearly twice that of voice only subscribers. December 31, 2011 Subscribers with smartphones now represent approximately 56% of • Wireless revenue increased by 2% from 2010 while adjusted the overall postpaid subscriber base, up from 41% from last year. operating profit decreased by 4% during the same period reflecting the upfront costs associated with a record number of • Rogers began an $80 million investment to further enhance our smartphone activations and iPhone sales and a decline in voice wireless voice and data network in the Maritimes, extending the ARPU, with margins on network services for the year at 46.0%. Rogers 4G HSPA+ coverage to almost one million more people

28 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 29 ly 20,000. These 319 (50) 478 (12) 731 114 147 (38) 2010 Chg 1,3307,325 119 249 1,652 109 1.18% 0.14% 3.18% 0.46% s” section. $ 16.10$ $ 62.62 (0.08) $ (2.42) $ 72.62 $ (2.36) % % 45 269 466 8 109 ROGERS COMMUNICATIONS INC. 2011 1,449 7,574 1,761 1.32 3.64 $ 16.02 $ 60.20 $ 70.26 2011 ANNUAL REPORT Ottawa, Montreal andmillion Canadians Vancouver access —technology. to giving LTE the more isenables world’s than a unparalleled fastest eleven nextbetween mobile connectivity, three and generation network four capable times wireless faster of than technology HSPA+. speeds that thatsolutions are to helptravelling Canadians outside easilylaunched of manage Roaming their Canada. Data dataalerts Passes Another use that while first while provide roamingmind. real-time in abroad, data Canada, giving usage cost Rogers certainty and peace of Wireless Subscribers and Network Revenue The year-over-year decrease in overallyear subscriber primarily net reflects additions an for increaseheightened the in competitive the intensity. level of churn associated with The increase in networkthe continued revenue growth in of 2011adoption Wireless’ compared and subscriber usage to base of 2010voice and wireless reflects the data ARPU increased services, offsetintensity in as by discussed large a below. decrease part in drivenDuring 2011, by wireless data thefrom revenue 2010, heightened increased to by competitive reflects $2,325 approximately the 27% million. continued penetration This andand growth growing usage wireless in of wireless laptop smartphone e-mail, data devices wireless revenue which Internetdata are access, services. In driving text 2011,of messaging increased data total network and revenue usage revenue, represented compared other of to approximately 28% wireless 35% in 2010. • Wireless launched a set of innovative new wireless roaming (2) (1) S 61 11 ,7 1 CRIBER S 020 UB 52 1 TPAID id S 6 , a S 1 (2) Prep PO s) d SS 5 (2) 1 id a ,979,5 7,325 7,574 subscribers are not included in postpaid net additions or churn for the year ended December 31, 2011. 6 1 2009 20 across Novarepresenting Scotia, a 130% New increase overof Brunswick the our current network population and in coverage those Prince provinces. Edward Island, machine (“M2M”) wireless connectivitynext for Hydro-Quebec six over years. the Rogerswith will Smart connect Hydro Meterutilization Quebec’s data collectors, central relayed system whichSmart from Meters. aggregate Quebec’s electrical approximately 3.8 service million four of the country’s largest metropolitan areas — Toronto, AND PREPAID (In thousan (In WIRELE Gross additions Net additions Monthly churn Gross additions Total postpaid retail subscribers Average monthly revenue per user (“ARPU”) Net additions Total prepaid retail subscribers Monthly churn ARPU Postp (2) As defined. See the section entitled “Key Performance Indicators and Non-GAAP Measures” and “Supplementary Information: Non-GAAP Calculation (1) In the second quarter of 2011, a change in operating policy resulted in a one-time decrease to the wireless postpaid subscriber base of approximate Summarized Wireless Subscriber Results Years ended December 31, (Subscriber statistics in thousands, except ARPU, churn and usage) Postpaid • Rogers won an important contract to provision machine to • Rogers turned on Canada’s LTE wireless network services across Blended ARPU Blended average monthly minutes of usage Prepaid MANAGEMENT’S DISCUSSION AND ANALYSIS

WIRELESS DATA DATA REVENUE PERCENT SMARTPHONES AS A PERCENT REVENUE OF BLENDED ARPU OF POSTPAID SUBSCRIBERS (In millions of dollars) (%) (%)

$1,366 $1,832 $2,325 21.9% 28.1% 35.2% 31.0% 41.0% 56.0%

2009 20102011 2009 20102011 2009 20102011

During 2011, Wireless activated and upgraded approximately Year-over-year ARPU decreased by 4%, which reflects declines in 2.5 million smartphones, compared to approximately 1.9 million wireless voice revenues, partially offset by higher wireless data smartphones during 2010. These smartphones were predominately revenues. Driving this decrease was a 13% decline in the wireless iPhone, BlackBerry and Android devices, of which approximately 38% voice component of ARPU, which was primarily due to the general were for subscribers new to Wireless. This resulted in subscribers with level of competitive intensity in the wireless voice services market, smartphones representing 56% of the overall postpaid subscriber and was partially offset by a 21% increase in wireless data ARPU. base as at December 31, 2011, compared to 41% as at December 31, 2010. These subscribers generally commit to new multi-year term Wireless Equipment Sales contracts and typically generate ARPU nearly twice that of voice only The increase in revenue from equipment sales for 2011, including subscribers. This is the largest number of smartphone activations and activation fees and net of equipment subsidies, versus the new smartphone customer additions that Wireless has ever reported corresponding period of 2010, reflects the increase in the number of in a fiscal year. smartphone activations to the highest levels ever reported by Wireless, as discussed above.

Wireless Operating Expenses Years ended December 31, (In millions of dollars) 2011 2010 % Chg Operating expenses Cost of equipment sales $ 1,425 $ 1,225 16 Other operating expenses 2,677 2,575 4

Operating expenses before the undernoted 4,102 3,800 8 Stock-based compensation expense(1) 10 12 (17) Settlement of pension obligations(2) 2 – n/m Integration, restructuring and acquisition expenses(3) 16 5 n/m Other items, net(4) – 5 n/m

Total operating expenses $ 4,130 $ 3,822 8

(1) See the section entitled “Stock-based Compensation”. (2) Relates to the settlement of pension obligations for employees in the pension plans who had retired between January 1, 2009 and January 1, 2011, as a result of annuity purchases by the Company’s pension plans. (3) Costs incurred relate to (i) severance costs resulting from the targeted restructuring of our employee base and outsourcing of certain functions and (ii) acquisition transaction costs incurred and the integration of acquired businesses. (4) Relates to the resolution of obligations and accruals relating to prior periods.

The $200 million increase in cost of equipment sales for 2011, and retention of higher ARPU subscribers, as these customers tend to compared to 2010, was primarily the result of an increase in hardware be lower churning customers who subscribe to multi-year term upgrade units versus the prior period and a continued increase in the contracts. mix of smartphones for both new and upgrading subscribers. An The modest year-over-year increase in operating expenses for 2011, unusually large number of existing iPhone and BlackBerry subscribers compared to 2010, excluding retention spending discussed below, became eligible for hardware upgrades during the second half of was driven by the growth in the Wireless subscriber base, which 2011. This, and the launch of Apple’s iPhone 4S, were the largest resulted in increased customer care costs due to the complexity of factors driving the year-over-year increase in expenses. Wireless views supporting more sophisticated devices and services, and increased these costs as net present value positive investments in the acquisition

30 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 31 % % 1 1 5% 11 2 2

.32% 1 61 – 284 (12) 146 73 020 QUALITY 2010 % Chg 1 TPAID 8% IT & OTHER 1 S . $ 937 27 $ 446 41 1 PO 8 NETWORK - OTHER SS 61 250 253 % 2011 6 .0 ) 2009 20 1 ROGERS COMMUNICATIONS INC. % $62 $ 1,192 WIRELE MONTHLY CHURN ( ices, and is also a facilities-based ders of cable television, high-speed he traditional telephone companies. TO PP&E 6 S 11 segment had 2.3 million television subscribers 2011 ANNUAL REPORT 2 $70.2 020 ADDITION 6 1 TPAID S SS 53% PO

SS ITY C WIRELE 11 Cable Operations ) 2009 20 APA $73.93 $72. % 20 ( WIRELE MONTHLY ARPU ($) C at December 31,television subscribers 2011, in representingdigital Canada. approximately At cable December 32% servicessubscribers 31, to of 2011, approximately it cable and1.8 provided 1.8 million million high-speed residential ofbrand, subscribers. Internet its it Under television residential provides service the and local Rogers small tosubscriber Home telephone business lines at Phone customers December approximately and 31, and 2011. long-distance had over services one to million CABLE CABLE’S BUSINESS Cable is one of Canada’sInternet largest access provi and cable telephonytelecommunications serv alternative to t Its business consists of the following three segments: The Quality Network – other Capacity Information technology and other Wireless Additions to Property, PlantWireless and additions Equipment to PP&E are classifiedYears into ended the December following 31, (In categories: millions of dollars) Wireless Adjusted Operating Profit The 4% year-over-year decrease46.0% in adjusted adjusted operating operating profit profitexcludes and margin the equipment on network salesincrease revenue in revenue) (which the forvolume total 2011 operating of primarily expenses,partially smartphone driven reflects offset by by sales the the the increase in and record network high revenue. activations as discussed above, spending on advertising andincreases were promotion predominately and offset dataand scale by activations. efficiencies savings across These various related functions. to operating Total retention spending,was including subsidies flat on$788 year-over-year handset million upgrades, in atoffset 2010, by $785 a as higher a mix million of result smartphones, compared of in to 2010. lower 2011, volumes of compared smartphones to Wireless PP&Ecapacity, additions such as radio for channeland additions, 2011 network core improvements reflect networkdeployment spending of enhancingadditions on to our network PP&E features,enable LTE are higher associated throughput including and with speeds,access upgrades in associated HSPA+ to addition the activities the tosectorization such networks. network improved as work. continued to network site Moreover, Quality-related equipment build Quality programs and includes and test operatingNetwork network and – support other monitoring system are associatedinitiatives, activities. with Investments network infrastructure in reliabilityInformation and upgrades technology renewal and and otherinclude wireless billing new specific and systemand back-office product equipment initiatives system spending. upgrades, platforms. and otherThe facilities increase ininvestments Wireless to build PP&E out additions ourmarkets LTE for with network across 2011 services fourand is of now Canada’s largely Vancouver available top due with intechnology to expansion Ottawa, investments Toronto, continuingplatforms Montreal into for on new 2012. servicesas contributed Information our well. to the customer year-over-year increase billing systems and Additions to PP&E Total additions to PP&E MANAGEMENT’S DISCUSSION AND ANALYSIS

The Rogers Business Solutions (“RBS”) segment of Cable offers local Cable offers multi-product bundles at discounted rates, which allow and long-distance telephone, enhanced voice and data networking customers to choose from among a range of Rogers’ cable television, services, and IP access to medium and large Canadian businesses and Internet, voice-over-cable telephony and wireless products and governments, as well as making some of these offerings available on services, subject to, in most cases, minimum purchase and term a wholesale basis to other telecommunications providers and within commitments. Rogers. RBS is increasingly focusing its business segment sales efforts within the Company’s traditional cable television footprint, where it During 2011, Rogers introduced and began offering an advanced is able to provide and serve customers with voice and data telephony real-time home monitoring and security service, which allows for services over its own infrastructure. remote access, monitoring and control from Internet connected computers and smartphones, as well as real time alerts and remote The Video segment offers digital video disc (“DVD”) and video game viewing. This service is marketed under the Rogers Smart Home sales and rentals, a business which we have been phasing out over the Monitoring brand. course of the past two years. In addition, management of Video, on behalf of Wireless and Cable, operates a retail distribution chain with approximately 360 stores at December 31, 2011, many of which Cable’s Distribution provide customers with the ability to purchase all of Rogers’ products In addition to our 360 retail stores, Cable markets its services through and services (wireless, cable television, Internet, and cable telephony), an extensive network of third party retail locations across its network pay their Rogers bills, and pick up or return Rogers digital and footprint. Rogers stores provide customers with a single direct retail Internet equipment. channel featuring Rogers’ wireless and cable products and services. In addition to its own and third party retail locations, Cable markets its services and products through a variety of additional channels, including call centres, outbound telemarketing, field agents, direct 2011 CABLE REVENUE MIX (%) mail, television advertising, its own direct sales force, exclusive and non-exclusive agents, as well as through business associations. Cable also offers products and services and customer service via our e-business website, rogers.com.

INTERNET 24%

Cable’s Networks TELEVISION 50% Cable’s networks in the provinces of Ontario, New Brunswick, and HOME PHONE 13% Newfoundland and Labrador, with few exceptions, are interconnected to regional head-ends, where analog and digital BUSINESS SOLUTIONS 11% channel line-ups are assembled for distribution to customers and VIDEO 2% Internet traffic is aggregated and routed to and from customers, by inter-city fibre-optic rings. The fibre-optic interconnections allow the majority of its cable systems to function as a single cable network. Cable’s two regional head-ends in Toronto, Ontario and Moncton, Cable’s Products and Services New Brunswick provide the source for most television signals used As at December 31, 2011, approximately 90% of Cable’s overall across its cable systems. network and 100% of its network in Ontario had been upgraded to transmit 860 MHz of bandwidth. With essentially all of Cable’s Cable has highly-clustered and technologically advanced broadband network offering digital cable services, it has a richly featured and cable networks in the provinces of Ontario, New Brunswick and highly competitive video offering, which includes high-definition Newfoundland and Labrador. Its Ontario cable systems, which television (“HDTV”), on-demand programming including movies, encompass approximately 91% of its 2.3 million television subscribers, television series and events available on a per-purchase basis or in are concentrated in and around three principal clusters: (i) the some cases on a subscription basis, personal video recorders (“PVR”), Greater Toronto Area, Canada’s largest metropolitan centre; time-shifted programming, as well as a significant line-up of digital (ii) Ottawa, the capital city of Canada; and (iii) the Guelph to London specialty, multicultural and sports programming. corridor in southwestern Ontario. The New Brunswick and Newfoundland and Labrador cable systems in Atlantic Canada During 2010, Cable introduced Rogers On Demand Online, Canada’s comprise the balance of its cable systems and subscribers. most comprehensive online destination for primetime and specialty TV programming, movies, sports and web-only extras. This value- Cable’s technology architecture is based on a three-tiered structure of added service is offered to all Rogers customers across Canada, with primary hubs, optical nodes and co-axial distribution. The primary Cable customers getting additional access to specialty content based hubs, located in each service region, are connected by an inter-city on their cable subscription. In 2011, a transactional section was added fibre-optic network carrying television, Internet, network control and to the service, allowing users to rent and stream new releases and monitoring and administrative traffic. The fibre-optic network is library titles online on an a la carte basis. The service can be accessed generally configured in rings that allow signals to flow in and out of via most Internet connected computers, tablets and smartphones. each primary hub, or head-end, through two paths, providing protection from a fibre cut or other disruption. These high-capacity Cable offers multiple tiers of Internet services, which are fibre-optic networks deliver high performance and reliability and differentiated principally by bandwidth capabilities and monthly generally have capacity for future growth in the form of dark fibres usage allowances. and unused optical wavelengths. Approximately 99% of the homes passed by Cable’s network are fed from primary hubs, or head-ends, Cable’s voice-over-cable telephony service, which is marketed under which serve on average 90,000 homes each. The remaining 1% of the the Rogers Home Phone brand, has grown to over one million homes passed by the network are in smaller more rural systems in subscribers. Cable offers a variety of home phone packages coupled New Brunswick and Newfoundland and Labrador that are served by with competitive feature sets and long-distance plans. smaller non-fibre connected hubs.

32 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 33 ROGERS COMMUNICATIONS INC. 6 11 2011 ANNUAL REPORT 020 1 ollars) d 2009 20 $3,948 $3,785 $3,79 clustered and interconnected in and around metropolitan areas; entertainment and communications productsbroadband and networks, such services as overspecialty the its ongoing and expansionbroadband of Internet its on-demand speeds, HDTV, andmonitoring emerging and video opportunities control; for home services, increasinglyquality faster andcustomer reliability support programs; of its innovative products,demographic services trends within and targeted its to multicultural service communities and territory, small businesses; such as products content andexpansion of entertainment itsDemand successful experience Online, broadband and video through withits platform, set the Rogers top box evolution On the capabilities and and user enhancement interface; continued of increasing number of customeras broadband homes Internet, with video and anchor telephony; products and such voice services into thewithin and small contiguous and to its medium-sized cable business footprint. segments CABLE TOTAL REVENUE of millions (In In recent years,made substantial North investments American inincluding the fibre cable installation to of television thein fibre-optic home companies their cable, and have premises respectivedigital initiatives, networks and and electronics cableinvestments in the have andexpanded development packages enabled of of voice-over-cable digital Internet, cableand cable television telephony services, television SVOD, including VOD companies pay services. television to These packages, offer PVR, HDTV programming, RECENT CABLE INDUSTRY TRENDS Investment in Improved Cable TelevisionService Networks Offerings and Expanded CABLE’S STRATEGY Cable seeks to maximizeand subscriber return share, revenue,advanced on operating cable invested profit networksmeet capital and the information, by innovative entertainmentits products leveraging and residential and communications its needsstrategy services and are technologically of as to business follows: customers.• The Maintaining key technologically advanced elements cable of networks and the systems • Offering a wide selection of advanced and innovative information, • Ongoing focus on enhanced customer experience• through the Targeting its product and content development to the• changing Continuing to lead the development and expansion of the online • Continuing to deepen its presence and core• connections Focusing in on an driving deeper penetration of its on-net data and Optical fibre joins thedistribution primary plant. hub Final to distributionnodes the to uses subscriber optical high-bandwidth homes nodes co-axial from insupport cable optical the with on-demand cable two-way amplifiers televisioncapacity to has and been increased Internet repeatedlyamplifier by service. introducing more technologies. advanced Co-axialbandwidth cable Co-axial and widely cabletelevision, deployed broadband means is Internet ofsubscribers. and carrying a telephony two-way services digital cost-effective, to residential high- On average, groups ofin 430 homes a are cable served(“FTTF”). architecture from The each commonly FTTF optical referred node plantwhich to provides as bandwidth includes fibre-to-the-feeder generallytransmission at from 37 860 the MHz, additional subscribers’ MHz premises downstream to of and/ornumber the upstream of primary bandwidth capacity homes hub.engineering As served is used practice by referred required,been for to each placed the to as optical “upstream” permitsize node-splitting. node a by Fibre continuous is installing cable reductiontransmitters additional reduced and of has return optical in receivers the transceiver in average the an modules head-ends node and andCable primary optical hubs. believes that thebandwidth 860 to MHz provide FTTF for architecture television,services, provides data, telephony sufficient and high other future network picture reliability. This quality, architectureof also advanced bandwidth allows for two-way optimizationvideo the introduction technologies, capability (“SDV”) such andexpand and service as MPEG4, offerings switched on andsuccessfully the digital offers existing deployed infrastructure. the SDV inclustered has ability almost been network to all offacilitates continue head-ends. its cable ability In to to systems rapidly addition,subscribers introduce served new Cable’s simultaneously. services by to Inurban large regional areas areas, of new head-ends Cable constructioncommonly is referred projects to now as in deployingprovides fibre-to-the-curb improved a (“FTTC”). major reliability This cable and architecture active reduced network network maintenance devices architecture being due deployed. to fewer Cable’s voice-over-cableadvanced telephony broadband IP multimedia services networkcable layer are service deployed across areas. offered its primary line This quality over digital network voice-over-cablePacket telephony platform an service Cable utilizing provides and for(“DOCSIS”) standards, a Data including network scalable Over redundancyhour as network Cable well and as customer Service premises multi- backup powering. InterfaceCable Specification operates on behalfacquired of Atria Wireless Networks and LP), a RBSoptic North (including American network the transcontinental recently fibre- extendingsignificant over North American 38,000 geographic footprint routelargest connecting markets kilometres while Canada’s also providing reachingof key a U.S. data markets for and thenetwork exchange extends voice from Vancouver traffic, inThe also the assets west known to include St.and as John’s local in peering. and the systems, east. regional Ininfrastructure. hubs, fibre, Cable’s Canada, network transmission the points extends electronics south into of to the U.S. Seattle from presence inthrough Vancouver the Minneapolis, (“POPs”), west, Milwaukee fromfrom and and Toronto the Chicago through switching Manitoba-Minnesota Buffalo in border, York and the Montreal mid-west City through Albany and network in to with New Europe the through internationalYork east. City. gateway switches Cable in New hasWhere connected Cable its doesbusiness North customer’s not American premises, havethird the party its wholesale local arrangement. own service local is provided facilities under directly a to a MANAGEMENT’S DISCUSSION AND ANALYSIS

increasingly fast tiers of Internet services, and telephony services. • Home Phone, which includes revenues from residential and small These investments have enabled cable television companies to offer business local telephony service, calling features such as voice mail increased speed and quality of service in their expanded digital and call-waiting, and long-distance; television packages, PVR, HDTV programming, higher speed Internet • RBS, which includes telephony and data services revenue from and telephony services. enterprise and government customers, as well as the sale of these offerings on a wholesale basis to other telecommunications Increased Competition from Alternative Broadcasting Distribution carriers; and Undertakings As fully described in the section entitled “Competition in our • Video, which includes the sale and rental of DVDs and video Businesses”, Canadian cable television systems generally face legal games. and illegal competition from several alternative multi-channel Cable’s operating expenses are segregated into the following broadcasting distribution systems. categories for assessing business performance: • Cost of equipment sales, which is comprised of cable equipment Growth of Internet Protocol-Based Services The availability of telephony over the Internet has become a direct costs; and competitor to Canadian cable television systems. Voice-over-Internet • Other operating expenses, which include all other expenses Protocol (“VoIP”) local services are being provided by non-facilities- incurred to operate the business on a day-to-day basis, service based providers, such as Skype and Vonage, who market VoIP local existing subscriber relationships, as well as attract new subscribers. services to the subscribers of local exchange carriers (“ILEC”), cable These include: and other companies’ high-speed Internet services. In addition and as • merchandise for resale, such as Video store merchandise and discussed below, certain television and movie content is increasingly depreciation of Video DVD and game rental assets; becoming available over the Internet. Traditional TV viewing has • employee salaries and benefits, such as remuneration, bonuses, been increasingly augmented by these and other emerging options pension, employee benefits and stock-based compensation; and available to consumers such as over-the-top television (such as Apple TV), online video offerings (such as Netflix) and Mobile TV. • other external purchases, such as: • service costs, which includes the following: In the enterprise market, there is a continuing shift to IP-based services, in particular from asynchronous transfer mode (“ATM”) and • the monthly contracted payments for the acquisition of frame relay (two common legacy data networking technologies) to IP programming paid directly to the programming suppliers, delivered through virtual private networking (“VPN”) services. This copyright collectives and the Canadian Programming transition results in lower costs for both users and carriers. Production Funds; • Internet interconnectivity and usage charges and the cost Increasing Availability of Online Access to Cable TV Content of operating Cable’s Internet service; and Cable and content providers in the U.S. and Canada continue to create platforms and portals which provide for online access to • Inter-carrier payments for interconnection to the local certain television content via broadband Internet connections instead access and long-distance carriers related to cable and of traditional cable television access. These platforms, including one circuit-switched telephony service; launched in late 2009 by Cable called Rogers On Demand Online, • sales and marketing related expenses, which represent the generally provide authentication features, which control and limit costs to acquire new subscribers, including advertising and access to content that is subscribed to at the user’s residence. The promotion, and commissions paid to third parties; and launch and development of these online content platforms are in the • operating, general and administrative related expenses, early stages and are subject to ongoing discussions between content which includes the following: providers and cable companies with respect to how access to televised and on-demand content is granted, controlled and monetized. • technical service expenses, which include the costs of operating and maintaining cable networks as Facilities-Based Telephony Services Competitors well as certain customer service activities, such as Competition has been ongoing for a number of years in the long- installations and repair; distance telephony service markets with the average price per minute • customer care expenses, which include the costs continuing to decline year-over-year. Competition in the local associated with customer order-taking and billing telephone market also continues between Cable, ILECs and various inquiries; VoIP providers. • community television expenses, which consist of CABLE OPERATING AND FINANCIAL RESULTS the costs to operate a series of local community- For purposes of this discussion, revenue has been classified according based television stations per regulatory to the following categories: requirements in Cable’s licenced systems; • expenses related to the corporate management of • Cable, which includes revenue derived from: Video; and • analog cable service, consisting of basic cable service fees plus • facility costs and other general and administrative extended basic (or tier) service fees, and access fees for use of expenses. channel capacity by third and related parties; and In the cable industry in Canada, the demand for services, particularly • digital cable service revenue, consisting of digital channel service Internet, digital television and cable telephony services, continues to fees, including premium and specialty service subscription fees, grow and the variable costs associated with this growth, such as the PPV service fees, VOD service fees, and revenue earned on the cost of content, commissions for subscriber activations, as well as the sale and rental of digital cable set-top terminals; fixed costs of acquiring new subscribers, are material. As such, • Internet, which includes monthly and additional use service fluctuations in the number of activations of new subscribers from revenues from residential and small business Internet access service period-to-period result in fluctuations in sales, marketing, cost of sales and modem sale and rental fees; and field services expenses.

34 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 35 % Chg – n/m (1) (7) 29 (5) n/m 40 115 13 n/m 38 45 (33) (30) (23) 70 result of annuity 452 (10) 143 (43) 8.8% 1,419 9 1,426 13 3,785 – 44.5% 2010 (23.1%) $ 3,190 4 $ 1,391 12 $ 662 21 $ 611 22 ns”. esults of operations from Networks LP (“Atria”) are ) ; (ii) acquisition transaction – – 8 6 2 (1) (9) (5) % % 03 8 8 55 (23) (39) 8% 405 8 .0 8 1,549 1,612 3,796 21.2 46. 2011 (2 ROGERS COMMUNICATIONS INC. $ $74 $ 3,309 $ 1,559 2011 ANNUAL REPORT ending the year with justtelephony over 1 lines, million residentialtelephony voice-over-cable which lines to brings2011. 46% the of television total subscribers penetration at December of 31, cable Internet subscribers whichnetwork and detects automatically delivers availablethe a first temporary 10 bandwidth burst MB of of onand speed a delivers for download a the or superior stream online which experience. loads content faster • The cable residential telephony subscriber base continued to grow • Cable deployed its popular SpeedBoost technology for high-speed (6) (3) (4) (5) (3) (2) (2) (2) (2) (3) (3) (7) the dates of acquisition onincluded July in 30, the 2010 RBS and results February of 28, operations 2011, from respectively. the The dates operating of results acquisition of on Blink January Communications 29, Inc. 2010 (“Blink”) and and January Atria 4, 2011, respectively. purchases by the Company’s pension plans. costs incurred and the integration of acquired businesses; and (iii) the closure of certain Video stores and lease exit costs. telephony lines by 45,000 and digital cable households by 39,000. and penetration is approximately 48%cable of the networks homes and passedaddition, digital by penetration 78% our now represents oftelevision approximately households. 77% our of television subscriber base. In December 31, 2011, to approximately 1.8 million. Video RBS RBS Video Cable Operations RBS Video Cable Operations Cable Operations Cable Operations RBS Video Additions to PP&E Adjusted operating profit Stock-based compensation expense Adjusted operating profit (loss) before the undernoted Adjusted operating profit (loss) margin Settlement of pension obligations Cable Operating Highlights for theDecember Year 31, Ended 2011 • Cable grew high-speed Internet• subscribers Cable’s Internet by subscriber base continued 83,000, to grow cable during the year • Digital cable subscribers increased 3% from December 31, 2010 to Operating revenue Other items, net (2)(3) Cable Operations segment includes(4) Cable As Television defined. services, See Internet the services(5) sections and See entitled Home the “Key Phone section Performance services. entitled Indicators “Stock-based and Relates Compensation”. Non-GAAP to Measures” and the(6) “Supplementary settlement Information: Non-GAAP of Calculatio pension obligations for Costs employees incurred in relate(7) the to pension (i) plans severance who costs had resulting Relates retired from to between the the resolution January targeted of 1, restructuring obligations 2009 and of accruals and our relating January employee to 1, prior base periods. 2011, and as outsourcing a of certain functions (1) The operating results of Kincardine Cable T.V. Ltd. (“Kincardine”) and Compton Cable T.V. Ltd. (“Compton”) are included in the Cable Operations r Summarized Cable Financial Results Years ended December 31, (In millions of dollars, except margin) Operating profit Total additions to PP&E Total operating revenue Integration, restructuring and acquisition expenses MANAGEMENT’S DISCUSSION AND ANALYSIS

• Cable closed the acquisition of Atria Networks, one of Ontario’s • Cable introduced Remote TV Manager, which enables Cable’s largest fibre-optic networks, which augments Rogers Business digital TV subscribers in Ontario to have the freedom and flexibility Solutions’ enterprise offerings by further enhancing its ability to to search TV programming and manage PVR recordings online deliver on-net data centric services within and adjacent to Cable’s from anywhere with their computers, tablets and smartphones. footprint. • Rogers launched a set of advanced real-time home monitoring, • Cable launched the Small Business Specialist program which is an control, security, viewing and alerts from computers and innovative Canada-wide initiative that gives small business owners smartphones through its Smart Home Monitoring offering. direct access to in-store trained specialists at 157 retail locations See the following segment discussions for a detailed discussion of across Canada who can expertly and efficiently advise them on all operating results. of their business communications solutions needs.

CABLE OPERATIONS

Summarized Financial Results Years ended December 31, (In millions of dollars, except margin) 2011(1) 2010(1) % Chg Operating revenue Cable Television $ 1,904 $ 1,835 4 Internet 927 848 9 Home Phone 478 507 (6)

Total Cable Operations operating revenue 3,309 3,190 4

Operating expenses before the undernoted Cost of equipment sales 29 41 (29) Other operating expenses 1,731 1,730 –

1,760 1,771 (1)

Adjusted operating profit(2) 1,549 1,419 9 Stock-based compensation expense(3) (9) (7) 29 Settlement of pension obligations(4) (4) – n/m Integration, restructuring and acquisition expenses(5) (8) (3) 167 Other items, net(6) – (7) n/m

Operating profit(2) $ 1,528 $ 1,402 9

Adjusted operating profit margin(2) 46.8% 44.5%

(1) The operating results of Kincardine and Compton are included in the Cable Operations results of operations from the dates of acquisition on July 30, 2010 and February 28, 2011, respectively. (2) As defined. See the sections entitled “Key Performance Indicators and Non-GAAP Measures” and “Supplementary Information: Non-GAAP Calculations”. (3) See the section entitled “Stock-based Compensation”. (4) Relates to the settlement of pension obligations for employees in the pension plans who had retired between January 1, 2009 and January 1, 2011, as a result of annuity purchases by the Company’s pension plans. (5) Costs incurred relate to severance costs resulting from the targeted restructuring of our employee base and outsourcing of certain functions. (6) Relates to the resolution of obligations and accruals relating to prior periods.

36 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 37 4 (18) 46 (46) 67 (28) 66 (21) 64 19 (48) 36 134 (20) n, the acquisition 2010 Chg 3,708 46 2,305 (8) 1,733 44 1,686 107 1,003 49 4,994 148 le. The transfer of these – 3 et additions for 2011. 39 45 8 (14) (12) d 4,000 cable telephony lines 114 2011 ich were migrated to RBS in the 3,754 2,297 1,777 1,793 1,052 5,142 ROGERS COMMUNICATIONS INC. 11 ,793 ,777 ,052 1 1 2011 ANNUAL REPORT 61 020 l 8 a 1 6 ,733 , ,003 2,3051 1 2,297 1 CRIBER Digit Home Phone S s) d UB S 6 4 9 66 61 937 , , 2,29 1 1 2009 20 BREAKDOWN CABLE thousan (In Television Internet TED ollars) 11 S .8% d ,549 6 1 4 ADJU S 9$ 020 1 1 ,4 (In millions of 1 44.5% PROFIT IN G G (1)(2) ,298 $ 1 42.2% 2009 20 $ CABLE OPERATION OPERATIN AND MAR (1) (1) (1) (4) 11 ,904 1 (3) Home Phone S (1) 020 1 848 927 (2) ,835 1 ollars) Internet d 3 507 478 1 1 78 5 ,780 from our acquisition ofresulted Compton. in an These increase subscribers in cable are homes not passed of included 9,000. in20,000 subscribers net was additions, recorded as but an are adjustment to included the in total the subscriber base ending for total 2011. Incremental balancefirst subscriber quarter for activity of for 2011. 2011. this These In base migrations additio is are included not in included n in net losses and migrations, but are included in the ending total balance for 2011. 1 Households, net additions Total digital cable households 2009 20 REVENUE BREAKDOWN CABLE OPERATION of millions (In Net additions Net additions (losses) Total television subscribers Digital Cable Net additions Net additions and migrations Total cable telephony lines Total cable high-speed Internet subscribers Total cable service units Net losses and migrations to cable telephony platform Total circuit-switched lines Television (2) Effective April 1,(3) 2011, approximately 20,000(4) wholesale cable Total cable Internet service subscribers units are which During comprised were 2011, of previously approximately television 34,000 subscribers, included cable circuit-switched in lines high-speed RBS Internet were subscribers migrated are and to now cable third-party included telephony resellers, lines. with in the Cab exception of approximately 3,000 wh (1) On February 28, 2011, we acquired 6,000 television subscribers, 5,000 digital cable households, 4,000 cable high-speed Internet subscribers an Cable homes passed Television Cable high-speed Internet Cable telephony lines Total cable service units Summarized Subscriber Results Years ended December 31, (Subscriber statistics in thousands) Circuit-switched lines MANAGEMENT’S DISCUSSION AND ANALYSIS

Cable Television Revenue With the high-speed Internet customer-base at approximately The increase in Cable Television revenue for 2011, compared to 2010, 1.8 million subscribers, Internet penetration is approximately 48% of reflects the continuing increase in penetration of our digital cable the homes passed by our cable networks and 78% of our television product offerings and pricing changes. The increase in the year-over- subscriber base, as at December 31, 2011. year growth rate of Cable Television revenue from 2010 to 2011 partially reflects the timing of annual pricing changes, which took INTERNET SUBSCRIBERS place in July 2010 and March 2011, combined with the cumulative AND PENETRATION effect of targeted bundling and retention initiatives to transition OF HOMES PASSED (In thousands) portions of the subscriber base to term contracts and a lower number of subsidized digital box sales. 1,619 1,6861,793

The digital cable subscriber base grew by 3% and represented 77% of television households passed by our cable networks as at December 31, 2011, compared to 75% as at December 31, 2010. Increased demand from subscribers for the larger selection of digital content, video on-demand, HDTV and PVR equipment continues to 48% contribute to the growth in the digital subscriber base and cable 45% 45% television revenue.

Cable expects to begin a substantial conversion of the remaining analog cable customers onto its digital cable platform during 2012 and 2013. This migration will enable the reclamation of significant amounts of network capacity as well as reduce network operating and maintenance costs going forward. The migration will entail 2009 20102011 incremental PP&E and operating costs as each of the remaining analog homes are fitted with digital converters and various analog filtering equipment is removed. Home Phone Revenue The year-over-year decrease in Home Phone revenue for 2011 reflects DIGITAL HOUSEHOLDS AND HIGH-DEFINITION the declines in revenue associated with the legacy circuit-switched PENETRATION OF TELEVISION HOUSEHOLDS telephony base that Cable has divested over the past five quarters. CUSTOMERS (In thousands) (In thousands) The decline was partially offset by the increase in the cable telephony customer base combined with price changes in March 2011. 1,664 1,733 1,777 715 850 942 Home Phone revenue decreased year-over-year as a result of the ongoing decline of the legacy circuit-switched telephony base, partially offset by the growth in cable telephony lines of 75% 77% 72% approximately 5% for 2011. The decline of the legacy circuit-switched telephony base included approximately 34,000 subscribers which were migrated to a third party reseller during 2011, per the sale agreement entered into during the third quarter of 2010, as discussed below. The lower net additions of cable telephony lines in 2011 versus 2010 were the result of lower sales activity as campaigns were less aggressive compared to the prior year.

Cable telephony lines in service grew 5% from December 31, 2010 to December 31, 2011. At December 31, 2011, cable telephony lines 2009 20102011 2009 20102011 represented 28% of the homes passed by our cable networks and 46% of television subscribers.

Cable continues to focus principally on growing its on-net cable Cable Internet Revenue telephony line base. Therefore, it continues its strategy to The year-over-year increase in Internet revenue for 2011 primarily de-emphasize the off-net circuit-switched telephony business where reflects the increase in the Internet subscriber base, combined with services cannot be provisioned fully over Rogers’ own network Internet services price changes made over the previous twelve facilities. During the third quarter of 2010, Cable announced that it months. Also impacting the increase is the timing and mix of was divesting most of the assets related to the remaining circuit- promotional programs and a general movement by subscribers switched telephony operations. Under this arrangement, most of its towards higher end tiers and a modest increase in revenue from co-location sites and related equipment were sold. In addition, the additional usage. sale involved residential circuit-switched lines, with the customers served by these facilities being migrated from Cable Operations to a third party reseller. During 2011, approximately 34,000 of these subscribers were migrated to third-party resellers. For the year ended December 31, 2011 the revenue reported by Cable Operations associated with the residential circuit-switched telephony business being divested totalled approximately $15 million.

38 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 39 % Chg – n/m 42 (10) (1) 40 115 146 (37) (13) 31 412 (23) result of annuity 2010 Chg 8.8% 2010 alance for 2011. $ 452 (10) $ 27 152 DS 1/3. Effective April 1, , 2011, respectively. 32 ns”. uisition transaction costs 109 ounts shown. 6 8 2011 (1) (1) % 8 s approximately 3,000 circuit- (17) 319 21.2 2011 ROGERS COMMUNICATIONS INC. $ 405 $6 2011 ANNUAL REPORT Cable Operations Operating Expenses Cable Operations’ operating expenses for2010, 2011 due were flat to compared costfunctions. to reductions Cable and Operations efficiencyprogram continues initiatives of to across permanent focus various initiatives cost to on control reduction the implementing overall and growth a in efficiency operating expenses. improvement Cable Operations Adjusted Operating Profit The year-over-year growth inthe adjusted result operating profit of was theAs primarily revenue growth a and result,increased cost to changes 46.8% Cable for described 2011, above. Operations’ compared to adjusted 44.5% for 2010. operating profit margins (4) (3) (2)

S s) d 11 (2) ,052 28% CRIBER 1 (2)(3) S (1) (In thousan (In UB S ED 020 (2) 1 SS ,003 27% 1 PA S % 6 switched lines which were migrated from Cable Operations to RBS2011, during approximately 2011. 20,000 circuits which were previously included in RBS are now included in Cable. These subscribers were removed from the ending b purchases by the Company’s pension plans. incurred and the integration of acquired businesses; and (iii) lease exit costs. 937 2 2009 20 AND PENETRATION AND OF HOME CABLE TELEPHONY Total local line equivalents Total broadband data circuits Integration, restructuring and acquisition expenses Broadband data circuits (2) Broadband data circuits(3) are those customer locations accessed On by January data 4, networking 2011, RBS technologies acquired including approximately DOCSIS, 4,000 DSL, broadband E10/100/1000, data circuits OC from 3/12 its and acquisition of Atria, and these are reflected in the total am (1) Local line equivalents include individual voice lines plus Primary Rate Interfaces (“PRIs”) at a factor of 23 voice lines each. The amount include Summarized Subscriber Results Years ended December 31, (Subscriber statistics in thousands) Operating revenue Operating expenses before the undernoted Settlement of pension obligations (1)(2) The operating results of(3) Blink As and defined. Atria See are the included sections in Relates entitled the “Key RBS to Performance results the Indicators(4) of settlement and operations Non-GAAP from of Measures” the pension and dates obligations “Supplementary of Information: acquisition for Costs Non-GAAP on employees January relate Calculatio in 29, to 2010 the and (i) pension January plans severance 4 who costs had resulting retired from between the January 1, targeted 2009 restructuring and of January our 1, employee 2011, as base a and outsourcing of certain functions; (ii) acq Years ended December 31, (In millions of dollars, except margin) ROGERS BUSINESS SOLUTIONS Summarized Financial Results Adjusted operating profit Excluding thebusiness impact that Cable of has divestedgrowth the this for year, declining Home the Phone year-over-yearbeen circuit-switched and 4% revenue and Cable telephony 5%, Operations respectively. for 2011 would have Operating profit Adjusted operating profit margin Local line equivalents MANAGEMENT’S DISCUSSION AND ANALYSIS

RBS Revenue RBS Operating Expenses The decrease in RBS revenue for the year ended December 31, 2011, Operating expenses decreased for the year ended December 31, 2011 primarily reflects the planned decline in certain categories of the compared to the corresponding period in 2010. This reflects a lower margin off-net legacy business, partially offset by growth in the planned decrease in the legacy service related costs due to lower next generation IP and other on-net services. RBS’ focus is primarily volumes and subscriber levels, permanent cost reductions resulting on IP-based services and increasingly on leveraging higher margin from a 2010 restructuring of the employee base, lower sales within on-net and near-net revenue opportunities utilizing both the certain customer segments, and operating efficiencies stemming from acquired Atria and Blink networks and Cable’s existing network the integration of Blink and Atria. facilities to expand offerings to the medium-sized enterprise, public sector and carrier markets. The lower margin off-net legacy business, RBS Adjusted Operating Profit which includes long-distance, local and certain legacy data services, The year-over-year growth in adjusted operating profit reflects the continues to decline and is down 32% year-to-date. In comparison, acquisition of the higher margin Atria and Blink on-net data the higher margin next generation business is up 11%. For the year businesses and RBS’ focus on growing its on-net next generation data ended December 31, 2011, the acquisition of Atria contributed revenue. This strategic shift has more than offset the planned declines revenue of $72 million. in the lower margin legacy voice and data services. Cost reductions and efficiency initiatives across various functions have also contributed to higher operating profit margins in the quarter. For the year ended December 31, 2011, the acquisition of Atria contributed adjusted operating profit of $43 million, contributing to the growth of the next generation services market, including data and Internet.

VIDEO

Summarized Financial Results Years ended December 31, (In millions of dollars, except margin) 2011 2010 % Chg Operating revenue $ 82 $ 143 (43)

Operating expenses before the undernoted 105 176 (40)

Adjusted operating loss(1) (23) (33) (30) Integration, restructuring and acquisition expenses(2) (14) (7) 100 Other items, net(3) – 2 n/m

Operating loss(1) $ (37) $ (38) (3)

Adjusted operating loss margin(1) (28.0%) (23.1%)

(1) As defined. See the sections entitled “Key Performance Indicators and Non-GAAP Measures” and “Supplementary Information: Non-GAAP Calculations”. (2) Costs relate to (i) severance costs resulting from the targeted restructuring of our employee base and (ii) the closure of certain Video stores. (3) Relates to the resolution of accruals relating to prior periods.

Video Revenue CABLE ACQUISITIONS The results of the Video segment include our video and game sale Acquisition of Atria Networks LP and rental business which has been, and continues to be, restructured On January 4, 2011, Cable closed an agreement to purchase a 100% and downsized coinciding with the declining market opportunity. The interest in Atria for cash consideration of $426 million. Atria, based in decrease in Video revenue for 2011, compared to 2010, was the result Kitchener, Ontario, owns and operates one of the largest fibre-optic of a continued decline in video rental and sales activity and the networks in Ontario, delivering premier business Internet and data reduction of nearly 20% in the number of store locations since the services. The acquisition will augment RBS’ small business and start of 2010. medium-sized business offerings by enhancing its ability to deliver Our initiative is to more deeply integrate our wireless, cable and on-net data centric services within and adjacent to Cable’s footprint. video rental distribution channels to better respond to changing The acquisition was accounted for using the acquisition method in customer needs and preferences. As a result of the declining market accordance with IFRS 3 with the results of operations consolidated opportunity and the integration of our wireless and cable businesses, with those of ours effective January 4, 2011. certain facilities and stores associated principally with the Video rental business have been, and will continue to be, closed. Acquisition of Compton Cable T.V. Ltd. On February 28, 2011, Cable closed an agreement to acquire the assets Video Adjusted Operating Loss of Compton for cash consideration of $40 million. Compton provides The adjusted operating loss at Video decreased for 2011, compared to cable television, Internet and telephony services in Port Perry, Ontario 2010, reflecting the changes and trends noted above. and the surrounding area. The acquisition was made to enter into the Port Perry, Ontario market and is adjacent to the existing Cable footprint. The acquisition was accounted for using the acquisition method in accordance with IFRS 3 with the results of operations consolidated with those of ours effective February 28, 2011.

40 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 41 % % 6 2% 6 2

4320 9 (35) 3813 45 n/m 201 33 113 73 611 22 APITAL REBUILD 2010 % Chg C $ 234 (4) $ 662 21 UPGRADES AND – 8 LINE EXTENSIONS 03 47 13 55 267 196 74 8 SUPPORT 2011 $ 225 $ ROGERS COMMUNICATIONS INC. TO PP&E S ADDITION S 2011 ANNUAL REPORT % 6 3

30% TURE

C CABLE OPERATION 11 ALABLE ) USTOMER PREMISE C % 20 ( S INFRESTRU C EQUIPMENT MEDIA MEDIA’S BUSINESS Media operatesconsumer and our trade publications, nationally-televisedservice television home shopping and andexplosive Sports growth in radio Entertainment. digital propertiesinfrastructure Media and broadcasting has is invested and significantly assets, producing in also people focused andplatforms, to on acquiring selling the grow contentproviders advertising and our operating on for e-commerce businesses. behalf digital our ofMedia’s operations on-line other broadcasting by and digitalstations group across content mobile (“Broadcasting”) Canada;stations; the comprises the multicultural five-station Citytv 55 OMNI broadcastsports broadcast television radio network; television television specialty Sportsnet services including World;Network, Sportsnet, other The Sportsnet Biography specialty Channeland ONE (Canada), services CityNews FX and (Canada), including Channel; G4nationally and Canada, Outdoor televised shopping The Life service.Dome Shopping Broadcasting Productions, also Channel, owns Canada’s 50% Canada’sproduction leader of and only in distribution services. HD mobile sports and events The increase in RBS PP&Eand additions for timing 2011 reflectscapital. of increased activity expenditures on customer networks and support equipment forassociated digital installation costs; set-top terminals, Internet modems and business growth and to provide service enhancements; areas; replace existing co-axial cable,electronics; fibre-optic and equipment and network purchase, replacement or enhancement of non-network assets. Customer premise equipment Scalable infrastructure Line extensions Upgrades and rebuild Support capital Additions to PP&E Cable Additions to Property, Plant and Equipment Cable additions to PP&E are classifiedYears into ended the December following 31, (In categories: millions of dollars) Total Cable Operations RBS Video Total additions to PP&E The Cable Operationsaccording to segment a categorizesdeveloped standardized and its set agreed PP&Ethat of to facilitate expenditures reporting by comparisons categories thecable of that U.S. companies. additions were cable Under to these televisionadditions to industry PP&E industry PP&E definitions, between are and classified Cable different into Operations the following• five categories: Customer premise equipment (“CPE”),• which Scalable includes infrastructure, which the includes• non-CPE Line costs extensions, which to includes network meet costs to enter• new service Upgrades and rebuild, which includes the• costs to Support modify capital, or which includesAdditions the to costs Cable PP&Enetwork associated include to continued with continue investmentsincreased to in the speed and the enhance performance cable the ofenhancements our customer to Internet service experience our andand through capacity digital on-demand services network to be to added. allowThe for increase incremental in Cable HD Operationsscalable PP&E for infrastructure 2011, resultedprojects and from higher support associatedcompliance initiatives, capital with timing of expendituresdevelopment spend quality on due work infrastructure projectscapital related to on and investments new investmentscustomer video that on billing platform contributedinvestments systems IPv6 capabilities. in to and set Support lower the platforms top unit boxes pricing for increase contributedequipment due for new to relate 2011. to the services. lower decrease to in Lower subscriber Customer activity premise and MANAGEMENT’S DISCUSSION AND ANALYSIS

Media’s publishing group produces 54 consumer, trade and The impact of the foregoing is that audiences are shifting a portion professional publications. of their time and attention from traditional broadcast and print to digital properties. As a result, advertisers are following this trend by Media’s digital group provides digital advertising solutions to over shifting a portion of their spending from traditional to digital media 1,000 websites. formats. Media’s sports entertainment group (“Sports Entertainment”) owns the Toronto Blue Jays, a Major League Baseball (“MLB”) club, and the Consolidation and Ownership of Industry Competitors Rogers Centre sports and entertainment venue. Ownership of Canadian radio and TV stations has consolidated through several large acquisitions in the sector by other media and telecommunications companies. This has resulted in the Canadian 2011 MEDIA REVENUE MIX (%) media sector being composed of fewer owners but larger competitors with more financial resources to compete in the media marketplace which is driving up content costs.

PUBLISHING 17% MEDIA OPERATING AND FINANCIAL RESULTS Media’s revenues primarily consist of: TELEVISION 41% RADIO 16% • Advertising revenues;

THE SHOPPING • Circulation revenues; CHANNEL 16% • Subscription revenues; SPORTS ENTERTAINMENT 10% • Retail product sales; and

• Ticket sales, receipts of MLB revenue sharing and concession sales MEDIA’S STRATEGY associated with Rogers Sports Entertainment. Media seeks to maximize revenues, operating profit and return on invested capital across its portfolio of businesses. Media’s strategies to Media’s operating expenses consist of: achieve this objective include: • Merchandise for resale, which is primarily comprised of the cost of • Continuing to leverage our strong media brands and content across retail products sold by The Shopping Channel; multiple platforms to offer advertising clients more comprehensive audience solutions and reach; • Other operating expenses, which include all other expenses incurred to operate the business on a day-to-day basis. These • Driving revenue share increases by continually improving audience include: ratings in key demographics on conventional, sports and specialty channels and on digital platforms by securing the rights to, and • employee salaries and benefits, such as remuneration, bonuses, promoting, premium and exclusive content; pension, employee benefits, stock-based compensation and Blue Jays player salaries; and • Working with Wireless and Cable to provide exclusive and premium content to our customers over advanced network and distribution • other external purchases, such as sales and marketing related platforms and in association with the Rogers brand; expenses, and operating, general and administrative related expenses, which include programming costs, printing and • Growing and building audiences by focusing on producing unique production costs, circulation expenses, and other back-office and quality content on our radio, TV, publishing and digital support functions. properties;

• Continuing to invest in technology and new digital experiences to capture the migration of audiences to digital platforms; and

• Enhancing the Sports Entertainment fan experience by continuing to invest in the Blue Jays and in upgrades to the Rogers Centre.

RECENT MEDIA INDUSTRY TRENDS

Migration to Digital Media The media landscape continues to evolve driven by the following major forces impacting audience and advertiser behaviour:

• Digitization and delivery of content;

• Increased availability of high-speed broadband networks;

• The proliferation of international and Canadian content available to Canadian consumers has significantly fragmented audiences;

• The explosion of easily available free and pirated content has challenged the monetization of content;

• Marketers searching for higher-ROI media vehicles; and

• The availability and lower costs of social media marketing tools.

42 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 43 % Chg – n/m (1) (4) n/m (12) 17 (10) (10) 131 37 n on October 1, result of annuity 9.0% 1,330 8 2010 $ 1,461 10 $ 105$3861 47 ns”. – 0 (1) (9) (3) % 8 (14) 1 1,431 ts incurred and the integration of 11.2 2011 ROGERS COMMUNICATIONS INC. $ 1,611 $ 154 $61 11 611 , 1 $ 2011 ANNUAL REPORT 020 61 1 ,4 1 ollars) d ,407 $ 1 2009 20 $ MEDIA REVENUE of millions (In Media Operating Expenses Media’s operating costs increased 8%increased in 2011, compared costs toprogramming 2010. costs The at are SportsnetMedia and Television, and primarily the 2 acquisitionportion radio of due BV stations, of partiallymanagement. the to offset by trade the planned publication disposition portfolio of increases a and in a focus on cost Media Revenue The increase in Media’sthe revenue in result 2011,programming, compared to of increased 2010, baseballgenerated reflects our from attendance, Sportsnet ONE new continued andresulted increased subscriber in advertising investments revenue sales, fees which Entertainment, increases in at and Radio, Digitaldecline Sportsnet, prime in Media. Television, Publishing, primarily Sports time Thisthe due trade to was publication the TV portfolio, disposition partially andat of relatively The a offset flat Shopping portion year-over-year Channel. sales by of a (5) (3) (4) (2) (2) (2) (2) (6) 2010, January 31, 2011 and January 31, 2011, respectively. purchases by the Company’s pension plans. acquired businesses. agreement toSportsnet broadcast the toTournaments. Rogers Sportsnet broadcast also Cup announced abroadcast over that multi-year highly agreement popular to will 20 Ultimateevents Fighting in also Championship Canada. top (“UFC”) allow tier ATP Worldlocal news Tour channelCitytv, 680News in and Maclean’s. Toronto leveraging trusted newsTalent” brands and itsbiweekly new Sportsnet sports Magazine,franchise and Canada’s magazine, brand first to connectsports national readers leveraging features with and the opinion. premier the source for Rogers Sportsnet acclaimed programming includingtogether with FX original Canadian original programming. series and movies not already ownSportsnet and World, relaunchedinternational sports the providing events including Setanta professional Canadianscricket. soccer, Sports rugby and with service as the world’s top offering that deliverssignificant local discounts and off original national prices. deals to Canadians with operating profit increasedmargins by for 37% the year during at 11.2%. the same period, with Adjusted operating profit Operating expenses before the undernoted Adjusted operating profit margin Operating revenue • Rogers Sportsnet and Tennis Canada announced a multi-year • Media launched its CityNews Channel, a new 24-hour, interactive, • Media launched its reality TV competition series “Canada’s Got • FX (Canada) digital cable channel was launched, which• delivers Media acquired the remaining shares in Setanta Sports which it did • Media launched RDeals, a new e-mail and Internet based daily deal • Media revenue increased by 10% from 2010 while adjusted Media Operating Highlights for the Year Ended December 31, 2011 (1) The operating results of BV! Media Inc. (“BV Media”), BOUNCE, and BOB-FM are included in Media’s results of operations from the dates of acquisitio Stock-based compensation expense Other items, net Additions to PP&E (2)(3) As defined. See the(4) sections See entitled the “Key section Performance entitled Indicators “Stock-based and Relates Compensation”. Non-GAAP to Measures” and the(5) “Supplementary settlement Information: Non-GAAP of Calculatio pension obligations for Costs employees incurred relate in to(6) the (i) pension severance costs plans resulting who from had the Relates retired targeted to restructuring between the of resolution January our of 1, employee obligations base 2009 and and accruals and (ii) relating January acquisition to transaction 1, prior cos periods. 2011, as a Summarized Media Financial Results Years ended December 31, (In millions of dollars, except margin) Operating profit Settlement of pension obligations Integration, restructuring and acquisition expenses MANAGEMENT’S DISCUSSION AND ANALYSIS

Media Adjusted Operating Profit CORPORATE The increase in Media’s adjusted operating profit for 2011, compared to 2010, primarily reflects the revenue and expense changes discussed CORPORATE DEVELOPMENTS above. Investment in Maple Leaf Sports & Entertainment On December 9, 2011, we announced that, along with Bell Canada, MEDIA ADJUSTED we are jointly acquiring a net 75 percent stake in MLSE being sold by OPERATING PROFIT the Ontario Teachers’ Pension Plan. MLSE is Canada’s preeminent (In millions of dollars) leader in delivering top quality sports and entertainment experiences to fans. MLSE operates the Air Canada Centre, the NHL’s Toronto $119$131 $180 Maple Leafs, the NBA’s Toronto Raptors, MLS’s Toronto FC, and the AHL’s Toronto Marlies, along with three television networks: Leafs TV, NBA TV Canada, and GOL TV Canada. Rogers’ net cash commitment, following a planned leverage recapitalization of MLSE, will total approximately $533 million, representing a 37.5 percent equity interest in MLSE and will be funded with currently available liquidity. The transaction is expected to close in mid-2012 and is subject to regulatory and league approvals.

Rogers Bank In 2011, we applied for a license to operate a bank under the federal Bank Act. The bank, to be called Rogers Bank, will primarily focus on credit, payment and charge card services. The licence is being 2009 20102011 reviewed by the Office of the Superintendent of Financial Institutions Canada (“OSFI”) and is pending approval.

MEDIA ACQUISITIONS Corporate Additions to PP&E Acquisition of Residual Interest in Setanta Sports The corporate additions to PP&E included $71 million for 2011 and On June 8, 2011, we acquired the remaining 47% of Setanta Sports $197 million for 2010, both of which related to spending on an that we did not already own for cash consideration of $11 million. enterprise-wide billing and business support system initiative. Setanta, now known as Sportsnet World, offers subscribers access to the world’s top international sports events including professional soccer, rugby and cricket.

Acquisition of Radio Stations On January 31, 2011, we acquired the assets of Edmonton, Alberta FM radio station BOUNCE (CHBN-FM) to strengthen our presence in this market.

On January 31, 2011, we acquired the assets of London, Ontario FM radio station BOB-FM (CHST-FM). This acquisition of BOB-FM, which is a continual ratings leader, represents our entry into the London, Ontario market.

Media Additions to PP&E Media’s PP&E additions increased during 2011 primarily due to television broadcast equipment additions related to the CRTC mandated digital transition and planned infrastructure upgrades.

44 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 45 – n/m (1) n/m (3) n/m 50 28 4014 75 n/m 11 n/m 87 14 22 n/m 13 (38) (20) n/m 612 (13) 669 – 2010 % Chg 4,531 1 1,639 6 2,881 (2) $ 4,635 2 $ 1,502 4 ) – – 8 8 6 8 8 ( 2 11 64 70 99 (14) (29) 8 535 66 2011 4,571 1,743 2, ROGERS COMMUNICATIONS INC. $ 4,716 $ 1,563 ct of tax rate changes. In March m the effect of tax rate changes. ck options. The proposed legislative ck option related liabilities. 0% primarily due to an income tax 2011 and 2010 was 25.5% and 28.9%, 2011 ANNUAL REPORT respectively. The 2011 effective incomestatutory tax income rate was tax lessrecovery rate than of the $59 of 2011 million resulting 28. fro The 2010 effectiveincome income tax tax rate rate of$69 was 30.5% million less primarily than resulting due2010, to the from the an 2010 federal the income budget statutory introduced effe taxtax proposed recovery deductibility changes that of of impact cash-settled the sto changes were substantively enactedthe in year December ended 2010. December Astax a 31, charge result, 2010, in of werecognized with $40 recorded respect to a million our one-time sto to income reduceFor the deferred year tax ended$99 assets December 31, previously million, 2011,December our 31, income compared taxes 2010.opposed paid to With were to respect $152 accounting tosubstantially income cash million all income taxcarryforwards tax in of expense, for 2012. payments As we our a as income the expect result tax of loss remaining to the carryforwards year utilization asdeferral utilize of non-capital well our of ended as non-capital of income partnership legislationOctober eliminating income tax 4, the that 2011,increase loss was significantly we in substantially estimate 2012detailed from our enacted the $99 cash in on million incomeGuidance”. we the While paid tax both in of section 2011 payments theseneither as items will of impact are the expected timing this ofexpense to cash for taxes, accounting MD&A have purposes. a entitled material impact “2012 to Financial our income tax Income Tax Expense Our effective income tax rate for Information: Non-GAAPadjusted Calculations” operating profit, for adjusted netper a income share. and full adjusted For earnings basis reconciliation details and of to forconsolidation, these the amounts an following on understandingwith section a Note of should segment-by-segment 4 be intersegment toentitled “Segmented the read Information”. eliminations 2011 in on Audited conjunction Consolidated Financial Statements 11 ,747 TED 1 S 020 78 $ 1 6 , 1 (1) ollars) $ d 6 OLIDATED ADJU S ,55 1 2009 20 $ CON NET INCOME of millions (In Interest on long-term debt Foreign exchange loss (gain) Loss on repayment of long-term debt Change in fair value of derivative instruments Capitalized interest Amortization of deferred transaction costs Settlement of pension obligations Stock-based compensation expense Other items, net Adjusted operating profit Integration, restructuring and acquisition expenses Operating profit Income tax expense Other income Impairment of assets Depreciation and amortization Net income Finance costs: Operating income Net Income The $61 million increaseprimarily in net due income to comparedmillion to the and the prior a growthoffset year $77 in by is million an adjusted decline increaseincrease operating in in in loss foreign profit on income exchange repayment tax of of loss long-term of expenses, debt $81 $26 of partially $12 million million. and an (1) Other income includes share of the income in associates and joint ventures accounted for using the equity method, net of tax. Years ended December 31, (In millions of dollars) The itemsexpense listed amounts that are below requiredunder to reconcile represent IFRS net to income the the asoperating non-GAAP defined profit measures consolidated for operating the year. profit income See and the adjusted section and entitled “Supplementary RECONCILIATION OF NET INCOMEPROFIT TO AND OPERATING ADJUSTED OPERATINGTHE PROFIT PERIOD FOR MANAGEMENT’S DISCUSSION AND ANALYSIS

Income tax expense varies from the amounts that would be computed by applying the statutory income tax rate to income before income taxes for the following reasons:

Years ended December 31, (In millions of dollars) 2011 2010 Statutory income tax rate 28.0% 30.5%

Income before income taxes $ 2,098 $ 2,114 Computed income tax expense $587 $ 645 Increase (decrease) in income taxes resulting from: Effect of tax rate changes (59) (69) Recognition of previously unrecognized deferred tax assets (12) (5) Stock-based compensation 4 40 Other items 15 1

Income tax expense $ 535 $ 612

Effective income tax rate 25.5% 28.9%

Other Income was primarily caused by the Canadian dollar’s weakening by 2.2 cents Other income of $8 million in 2011 was primarily associated with in 2011 (2010 – strengthening by 5.6 cents) versus the U.S. dollar. We investment income and expenses from certain of our investments, have measured the fair value of our Debt Derivatives using an compared to income of $1 million in 2010. estimated credit-adjusted mark-to-market valuation. Much of this change in the fair value of our derivative instruments is offset by the Interest on Long-Term Debt foreign exchange loss discussed above. For the impact, refer to the The $1 million decrease in interest expense during 2011, compared to section entitled “Mark-to-Market Value of Derivatives”. 2010, reflects the decrease in the weighted-average interest rate on long-term debt at December 31, 2011 compared to December 31, Operating Income 2010, substantially offset by an increase in the principal amount of The decrease in our operating income compared to the prior year is long-term debt through December 31, 2011, compared to due to the increase in operating expenses of $205 million, an increase December 31, 2010, including the impact of cross-currency interest in depreciation and amortization of $104 million, as well as an exchange agreements (“Debt Derivatives”). The change in principal increase in stock-based compensation expense, settlement of pension and weighted-average interest rate primarily reflects the re-financing obligations, integration, restructuring and acquisition expenses and activities completed in the first quarter of 2011. See the section other items of $41 million, partially offset by an increase in revenue entitled “Liquidity and Capital Resources”. of $286 million and a decrease in impairment of assets of $11 million. See the detailed discussion on respective segment results included in Loss on Repayment of Long-Term Debt this section entitled “Segment Review” above. During 2011, we recorded a loss of repayment of long-term debt of $99 million, comprised of aggregate redemption premiums of $76 Impairment of Assets million related to the redemption of two public debt issues, a net loss There was no impairment of assets charge for 2011. During 2010, we on the termination of the related Debt Derivatives of $22 million, and determined that the fair values of certain of Media’s radio stations a write-off of deferred transaction costs of $2 million, partially offset were lower than their carrying value and we recorded a non-cash by a gain of $1 million relating to the non-cash write-down of the fair impairment charge of $11 million, primarily resulting from the value increment of long-term debt. (See the section entitled “Debt weakening of advertising revenues in local markets. Redemptions and Termination of Derivatives”). Depreciation and Amortization Expense Foreign Exchange Loss (Gain) The year-over-year increase in depreciation and amortization expense During 2011, the Canadian dollar weakened by 2.2 cents versus the was due to certain IT and network assets brought to use in 2011, U.S. dollar resulting in a foreign exchange loss of $6 million, primarily compared to 2010, and an increase in amortization of intangible related to our US$350 million of Senior Notes due 2038 for which the assets resulting from acquisitions over the past year. associated Debt Derivatives have not been designated as hedges for accounting purposes. Much of this foreign exchange loss is offset by Stock-based Compensation the coincident change in the fair value of our Derivative instruments Our employee stock option plans attach cash-settled share as discussed below. During 2010, the Canadian dollar strengthened by appreciation rights (“SARs”) to all new and previously granted 5.6 cents versus the U.S. dollar, resulting in a foreign exchange gain options. The SAR feature allows the option holder to elect to receive of $20 million, primarily related to our US$350 million of Senior Notes in cash an amount equal to the intrinsic value, instead of exercising due 2038 for which the associated Debt Derivatives have not been the option and acquiring Class B Non-Voting shares. All outstanding designated as hedges for accounting purposes. stock options are classified as liabilities and are carried at their fair value, as adjusted for vesting, measured as using option pricing Change in Fair Value of Derivative Instruments models. The liability is marked-to-market each period and is In 2011, the change in fair value of the derivative instruments was the amortized to expense using a graded vesting approach over the result of the $14 million (2010 – $22 million) non-cash change in the period in which the related services are rendered or, as applicable, fair value of the Debt Derivatives hedging our US$350 million Senior over the period to the date an employee is eligible to retire, Notes due 2038 that have not been designated as hedges for whichever is shorter. accounting purposes. This change in fair value of the Debt Derivatives

46 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 7 47 21 10 2010 $50 $12 9 9 36 2011 $64 $10 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT March 21, 2011 issuancedue 2021 of and $400 $1,450 million million of 6.56% of Senior 5.34% Notes due Senior 2041; Notes and exercise of employee stock options. related changes in non-cash working capital; 3. CONSOLIDATED LIQUIDITY AND FINANCING LIQUIDITY AND CAPITAL RESOURCES Operations For 2011, cash generated fromoperating operations before items, changes which innon-cash non-cash is items calculated from$4,683 by net million removing income, in the 2010. increasedworking effect Taking capital to into items, of $4,698 account income all cash taxes the million paid changes generated from and in from interest$3,494 non-cash paid, million operations in for 2010. 2011, was Theof $297 $3,791 million a increase million, is primarily $217$53 compared the result million million to decrease increaseinterest in paid. in The taxes cash non-cashfollowing generated paid, from and working operations, items, together a capital$5,894 with million the resulted $12 in items, 2011: million in a decrease total in • the net receipt of funds an aggregate $1,850 of million gross proceeds approximately from the • $250 million net advances borrowed under the bank credit• facility; $3 million from the issuance of Class B Non-Voting sharesNet under funds the used during 2011details totalled of approximately which $5,906 include million, the the following: • additions to PP&E of $2,216 million, including $89 million of to stock-based compensationstock options, recorded restricted at shareyear units its ended and December fair deferred 31,paid share value, 2011, to units. $45 holders including In million ofshare the units (2010 stock – upon options, $58 exercise using restricted million) the share was SAR feature. units and deferred Employees Employee salaries andexpenses. benefits represent At a(2010 December material – 25,100) portion 31, full-time ofour equivalent 2011, our operating employees groups, we including (“FTEs”)corporate our across had office, shared which all services increased approximately organization of fromdue and the to 26,200 level higher at December levels 31,Total at 2010 salaries shared and services benefits and incurred customertime) for facing employees functions. (both in full$1,729 and 2011 part- million wasincreased in due approximately to 2010. the numberincrease $1,778 of Employee FTEs compared million, in salaries tocompared 2010, as to compared and stock-based well a as $50 benefits to the millionCompany’s compensation expense stock expense in price. 2010, expense due to fluctuations to in the $64 million Cable Media Corporate Adjusted Operating Profit As discussed above,increase Wireless, in adjusted Cable operating profit and2011 for compared the Media to year 2010. ended contributed December 31, to the Consolidated adjusted operatingin profit 2011, increased comparedprofit to to $4,716 for $4,635 million compensation 2011 million expense of in and $64of 2010. million 2010, and pension Adjusted $50 respectively, operating million;restructuring obligations and (ii) excludes: acquisition of settlement expenses (i) ofand $11 (iv) $70 other stock-based million million items, and net $40 of and million; $nil andFor $nil; $14 million. details (iii) on theis integration, determination a of non-GAAP adjusted measure, operatingIndicators profit, see which the sectionsInformation: and Non-GAAP entitled Calculations”. “Key Performance Non-GAAP Measures” and “Supplementary Other Items There were norecorded other $14 items million recorded ofobligations during net and accruals 2011. adjustments relating related During to to prior 2010, periods. the we resolution of Integration, Restructuring and Acquisition Expenses During 2011, weand incurred acquisition $70 expenses(i) million to severance of costs improve integration, associatedemployee our restructuring base with ($44 cost the million); structure targetedand (ii) acquisition restructuring the related transaction of integration costs to our ofclosure incurred of acquired certain businesses Video stores ($4 and million); other exit andDuring costs (iii) ($22 2010, million). the weand incurred acquisition $40 expenses(i) million to severance of costs improve integration, associatedemployee our restructuring base with ($21 cost the million); structure targeted (ii)outsourcing restructuring restructuring of related expenses certain of related to information our to(iii) technology the functions acquisition ($9 million); acquired transaction businesses costs ($5 million); incurredstores and and (iv) lease and exit the costs closure the ($5 of million). integration certain Video of During 2011, wepension incurred obligations a oflump-sum non-cash approximately contribution loss $11 of from approximatelyplans, million $18 the following resulting million settlement which from to$68 of the a our million pension of pension annuities planswho from had purchased insurance retired approximately companies betweenthe for section January all entitled 1, “Pension employees Plans 2009 Purchase and of Annuities”. January 1, 2011. See Settlement of Pension Obligations A summary of stock-based compensation expense is as follows: Years ended December 31, (In millions of dollars) The liability for stock-basedon compensation the expense fair is value of recordedperiod the based options, is as described above.Non-Voting impacted The expense shares by each during2011, the the we change life had a of in liability the the of option. $194 price At million (2010 December of – $180 31, RCI’s million) related Class B Wireless MANAGEMENT’S DISCUSSION AND ANALYSIS

• the payment of an aggregate $1,208 million for the March 21, 2011 CONSOLIDATED CASH FLOW redemption of U.S. $350 million ($342 million) 7.875% Senior Notes FROM OPERATIONS and U.S. $470 million ($460 million) 7.25% Senior Notes maturing (In millions of dollars) in 2012 (comprising $802 million principal and $76 million $3,526 $3,880 $3,956 premiums) and settlement of the associated Debt Derivatives and forward contracts (comprising $330 million net settlement paid on termination);

• the payment of quarterly dividends in the aggregate amount of $758 million on our Class A Voting and Class B Non-Voting shares;

• the purchase for cancellation of approximately 31 million Class B Non-Voting shares for an aggregate purchase price of $1,099 million;

• acquisitions and other net investments aggregating $559 million, including $426 million to acquire Atria, $40 million to acquire Compton, $38 million to acquire two radio stations in Edmonton, Alberta and London, Ontario, $16 million to acquire certain dealer 2009 20102011 stores, $15 million for a long-term deposit, $11 million to acquire the remaining ownership in Setanta Sports, and other net investments of $13 million; Financing • payments for program rights of $56 million; and Our long-term debt instruments and related derivatives are described in Note 17 and Note 18 to the 2011 Audited Consolidated Financial • payments for transaction costs of $10 million. Statements. During 2011, the following financing activities took place.

Taking into account the opening cash deficiency balance of Debt Issuances $45 million at the beginning of the year and the cash sources and On March 21, 2011, RCI issued in Canada $1,850 million aggregate uses described above, the cash deficiency at December 31, 2011, principal amount of Senior Notes, comprised of $1,450 million of represented by bank advances, was $57 million. 5.34% Senior Notes due 2021 (the “2021 Notes”) and $400 million of 6.56% Senior Notes due 2041 (the “2041 Notes”). The 2021 Notes 2011 USES OF CASH were issued at a discount of 99.954% for an effective yield of (In millions of dollars) 5.346% per annum if held to maturity while the 2041 Notes were issued at par to yield 6.56% if held to maturity. RCI received aggregate net proceeds of approximately $1,840 million from the issuance of the 2021 Notes and the 2041 Notes after deducting the original issue discount, agents’ fees and other related expenses. The Cash PP&E expenditures: $2,216 aggregate net proceeds from the 2021 Notes and the 2041 Notes were used to fund the March 2011 redemption of two public debt issues maturing in 2012 together with the termination of the associated Debt Derivatives, each as described below under “Debt $5,906 Redemption of long-term debt: $1,208 Redemptions and Termination of Debt Derivatives”, and to partially repay outstanding advances under our bank credit facility. Repurchase of shares: $1,099 Each of the 2021 Notes and the 2041 Notes are guaranteed by RCP and rank pari passu with all of RCI’s other senior unsecured notes and Dividends: $758 debentures and bank credit facility. Acquisitions and other net investments: $559 Additions to program rights: $56 Debt Redemptions and Termination of Debt Derivatives 2011 Transaction costs: $10 On March 21, 2011, RCI redeemed the entire U.S. $350 million principal amount of its 7.875% Senior Notes due 2012 (the “7.875% Notes”) and the entire U.S. $470 million principal amount of its 7.25% Senior Notes due 2012 (the “7.25% Notes” and, together with the “7.875% Notes”, the “2012 Notes”). RCI paid an aggregate amount of approximately $878 million for the redemption of the 2012 Notes (the “Redemptions”), including approximately $802 million aggregate principal amount for the 2012 Notes and $76 million for the premiums payable in connection with the Redemptions. Concurrently with RCI’s redemption of the 2012 Notes, RCI made a net payment of approximately $330 million to terminate the associated Debt Derivatives (the “Derivatives Termination”). As a result, the total cash expenditure associated with the Redemptions and the Derivatives Termination was approximately $1,208 million and RCI recorded a loss on repayment of long-term debt of $99 million, comprised of the aggregate redemption premiums of $76 million, a net loss on the termination of the related Debt Derivatives of $22 million, and write-off of deferred financing costs of $2 million, offset by a write down of a previously recorded fair value increment of $1 million.

48 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 49 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT Credit Ratings The following information relating toit our credit relates ratings is toratings provided as may our affect financing our costs ability and to liquidity. obtain Specifically, short-term and credit long-term Required Principal Repayments At December 31, 2011, thein required repayments the on all long-term nextprincipal debt repayments five due yearsmillion in due 2012, totalled in $606 2014, $3,569in million $844 million due 2016. million, due in The in comprised 2015,million 2013, required and (U.S. $1,119 of principal $1,000 $350 million repayment $nil million) due maturity for due of the in the 6.25% bank 2013 Senioradvances credit of is Notes, $250 facility, as the million against well at $356 repayments which December as 31, due we the 2011. had in The required borrowed 2014the principal are 5.50% the Senior $356 Notesthe million and 6.375% (U.S. the Senior $350 $763 Notes.2015 million) million consist The for (U.S. of required $750 $285 principalNotes million) million and repayments $559 (U.S. for due million $280 (U.S. in The million) $550 million) for required for the the principal 6.75% 7.50%million Senior Senior for repayments the Notes. 5.80% Senior due Notes. inCoincident 2016 with consist theterm maturity of debt, of certain $1,000 of ourwhich our U.S. Debt is Derivatives dollar-denominated not also included long- the mature, in the section the impact of principal entitledAgreements”). repayments “Material noted above. Obligations (See Under Firm Contractual Covenant Compliance We are currently indebt compliance instruments, and with we allthese expect of covenants to the remain during covenants in 2012.financial under compliance At leverage with our December covenants all 31, of our in 2011, effect there bank other wereConsolidated than no credit those Financial pursuant facility Statements).leverage to covenants, Based (see we on wouldapproximately Note have our had $16.3 17(j) most theDecember 31, restrictive capacity to 2011. billion to issue the up of to 2011 additional2012 Audited Cash Requirements long-termOn a debt consolidatedcash basis, at surplus we in 2012 anticipate fromthat that cash we generated we from will operations. willfunding generate We requirements expect have a in net 2012, sufficientour including the common capital funding shares, resources ofthe taking dividends to amount on into available satisfy accountDecember under cash our 31, our from 2011, cash $2.4 operations therebetween billion were and bank no subsidiary credit restrictionssubsidiaries. facility. on companies the At or flow of between funds In the RCI event that andsuch we funding require requirements any additional may funding, befinancing, satisfied of we by which believe issuing may that its additional any debt includecredit the facility restructuring or ofdepending issuing our public on existing or market bank portion private conditions. debt of In or existing addition,factors. issuing There we is debt equity, no may all assurance subject that refinance this to will a or can market be done. conditions and other commencing February 24,during 2012 such and one ending yearand/or period February alternative we 23, may trading 2013, purchaseClass systems and on B the up Non-Voting TSX, toshares the shares the NYSE that and lesser that canpurchase of number be 36.8 of price million purchased ClassNon-Voting of shares B under purchased Non-Voting under $1.0 thepurchases the NCIB NCIB will billion. and be for theconditions, The timing stock determined an prices, of our actual by such aggregate cash position management number and other considering factors. of market Class B 11 PROFIT G 020 x2.2x 1 1 TED OPERATIN S x2. 1 2. 2009 20 RATIO OF DEBT TO RATIO OF DEBT ADJU Normal Course Issuer Bid In February 2011,had we accepted a announced notice that filedfor by the RCI our Toronto of our Class Stockcommencing intention to Exchange February B renew 22, our Non-Voting NCIB that 2011 during shares and such for ending one-yearthe period February a lesser we 21, of may further 39.8 2012, purchaseof million on one-year and Class Class the B B period TSX Non-Voting Non-Voting upfor shares to shares and an that that can aggregate number number be of purchase purchased Class under B pricethe the Non-Voting of NCIB shares timing purchased $1.5 ofconsidering under billion, the such market NCIB with conditions, purchases and other factors. the stock to prices, actual be our determinedIn cash by 2011, position we management and shares purchased an for aggregate an 30,942,824shares, aggregate Class 9,000,000 purchase B price were Non-Voting between of purchased RCI $1,099 and pursuant million.purchase arm’s to price Of length of these private $285 thirdissuer million. agreements party These purchases sellers bid were forCommission made an under and exemption an aggregate areNon-Voting included order shares that in RCI may issued calculating purchase the pursuant toIn by number the 2010, NCIB. of we the Classshares purchased B an for Ontario aggregate an 37,080,906shares, aggregate Securities Class 14,480,000 purchase B were price Non-Voting between purchased of RCI pursuant $1,312 and million. topurchase arm’s price Of private length of these agreements $482 thirdissuer million. party These purchases sellers bid were forCommission made an under and exemption an aggregate areNon-Voting included order shares that in RCI may issued calculating purchase the pursuant toIn by number the February NCIB. 2012, of we the Class announcedaccepted that B a the Ontario notice Toronto Stock filed Exchangeour by has Securities RCI of Class our intention B to renew our Non-Voting NCIB for shares for a further one year period Shelf Prospectuses In November 2009,regulators we to qualify filed debt twoCdn securities $4 shelf of billion RCI, prospectuses of oneof debt with up for securities to securities the in U.S. sale Canada $4shelf of billion and in the up the prospectuses other to United for Statesexpiring the expired and shelf sale Ontario. prospectuses, Each in in of Decemberprospectuses these 2011 December with we filed securities 2011. twoRCI, new regulators shelf To one to for qualify replaceCanada the debt and these sale securities the ofUnited of other States up and for to Ontario. thein Each Cdn January of sale 2014. $4 the of billion new shelf up of prospectuses to debt expire U.S. securities $4 in billion in the MANAGEMENT’S DISCUSSION AND ANALYSIS

financing and the terms of such financing. A reduction in the credit a solvency basis at December 31, 2012. Consequently, in addition to ratings on our debt by the rating agencies, particularly a downgrade our regular contributions, we are making certain minimum monthly below investment grade ratings, could adversely affect our cost of special payments to eliminate the solvency deficiency. In 2011, the financing and our access to sources of liquidity and capital. special payments, including contributions associated with benefits paid from the plans, totalled approximately $30 million. Our total In March 2011, Standard & Poor’s Ratings Services affirmed the estimated annual funding requirements, which include both our corporate credit rating for RCI to be BBB and the rating for RCI’s regular contributions and these special payments, are expected to senior unsecured debt to be BBB, each with a stable outlook and increase from $62 million (excluding a lump-sum contribution of $18 assigned its BBB rating to each of the 2021 Notes and the 2041 Notes. million related to the purchase of annuities described in the following paragraph) in 2011 to approximately $73 million in 2012, subject to In March 2011, Fitch Ratings affirmed the issuer default rating for RCI annual adjustments thereafter, due to various market factors and the to be BBB and the rating for RCI’s senior unsecured debt to be BBB, assumption that our staffing levels will remain relatively stable year- each with a stable outlook and assigned its BBB rating to each of the over-year. We are contributing to the plans on this basis. As further 2021 Notes and the 2041 Notes. discussed in the section entitled “Critical Accounting Estimates”, In March 2011, Moody’s Investor Service affirmed the rating for RCI’s changes in factors such as the discount rate, the rate of compensation senior unsecured debt to be Baa2 with a stable outlook and assigned increase and the expected return on plan assets can impact the its Baa2 rating to each of the 2021 Notes and the 2041 Notes. In accrued benefit obligation, pension expense and the deficiency of October 2011, Moody’s Investors Service upgraded the rating for RCI’s plan assets over accrued obligations in the future. senior unsecured debt to Baa1 (from Baa2) with a stable outlook. Pension Plans Purchase of Annuities Credit ratings are intended to provide investors with an independent In 2011, we made a lump-sum contribution of $18 million to our measure of credit quality of an issue of securities. Ratings for debt pension plans, following which the pension plans purchased instruments range along a scale from AAA, in the case of Standard & $68 million of annuities from insurance companies for employees in Poor’s and Fitch, or Aaa in the case of Moody’s, which represent the the pension plans who had retired between January 1, 2009 and highest quality of securities rated, to D, in the case of Standard & January 1, 2011. The purchase of the annuities relieves us of primary Poor’s, C, in the case of Moody’s and Substantial Risk in the case of responsibility for, and eliminates significant risk associated with, the Fitch, which represent the lowest quality of securities rated. The credit accrued benefit obligation for the retired employees. The non-cash ratings accorded by the rating agencies are not recommendations to settlement loss arising from this settlement of pension obligations purchase, hold or sell the rated securities nor do such ratings provide was $11 million and was recorded in 2011. The Company did not comment as to market price or suitability for a particular investor. make any additional lump-sum contributions to its pension plans in There is no assurance that any rating will remain in effect for any the year ended December 31, 2011. given period of time, or that any rating will not be revised or withdrawn entirely by a rating agency in the future if in its judgment INTEREST RATE AND FOREIGN EXCHANGE MANAGEMENT circumstances so warrant. The ratings on RCI’s senior debt of BBB from Standard & Poor’s and Fitch and of Baa1 from Moody’s Foreign Currency Forward Contracts represent investment grade ratings. In July 2011, we entered into an aggregate U.S. $720 million of foreign currency forward contracts to hedge the foreign exchange risk on certain forecast expenditures (“Expenditure Derivatives”). The RATIO OF ADJUSTED OPERATING PROFIT TO INTEREST Expenditure Derivatives fix the exchange rate on an aggregate U.S. $20 million per month of our forecast expenditures at an average exchange rate of Cdn $0.9643/U.S. $1 from August 2011 through July 6.8x 6.9x 7.1x 2014. As at December 31, 2011, U.S. $620 million of these Expenditure Derivatives remain outstanding, all of which qualify for and have been designated as hedges for accounting purposes.

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 Debt Derivatives hedging our U.S. dollar-denominated debt, whether or not they qualify as hedges for accounting purposes, since all such Debt Derivatives are used for risk-management purposes only and are designated as hedges of specific debt instruments for economic purposes. As a result, the Canadian dollar equivalent of our U.S. dollar- denominated long-term debt illustrated in the table below reflects the contracted foreign exchange rate for all of our Debt Derivatives 2009 20102011 regardless of qualifications for accounting purposes as a hedge.

As discussed above in Financing (see “Debt Redemption and Deficiency of Pension Plan Assets Over Accrued Obligations Termination of Derivatives”), in March 2011, RCI redeemed all of its As disclosed in Note 20 to our 2011 Audited Consolidated Financial U.S. $350 million 7.875% Senior Notes due 2012 and all of its U.S. $470 Statements, our pension plans had a deficiency of plan assets over million 7.25% Senior Notes due 2012 and terminated the related U.S. accrued obligations of $133 million and $76 million as at $820 million aggregate notional principal amount of Debt Derivatives. December 31, 2011 and December 31, 2010, respectively, related to As a result, at December 31, 2011, 100% of our U.S. dollar- funded plans, and a deficiency of $39 million and $36 million as at denominated debt was hedged on an economic basis while 91.7% of December 31, 2011 and December 31, 2010, respectively, related to our U.S. dollar-denominated debt was hedged on an accounting basis. unfunded plans. Our pension plans had a deficiency on a solvency The Debt Derivatives hedging our U.S. $350 million Senior Notes due basis at December 31, 2011, and are expected to have a deficiency on 2038 do not qualify as hedges for accounting purposes.

50 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 51 6.68% 1.1697 Net asset 100.0% 100.0% $ 8,723 $ 917 $ 9,640 position (A + B) ember 31, 2010, RCI U.S. $U.S. $ 5,050 5,050 Cdn $ 9,607 Cdn $ 9,607 mber 31, 2011 91.7% December 31, 2010 December 31, 2010 % % % Derivatives in a 97.6 6.22 1.1340 ROGERS COMMUNICATIONS INC. 100.0 liability position (B) $ 10,599 $ 10,102 $ 497 ––– (10) 8 (2) U.S. $U.S. $ 4,230 4,230 Cdn $ 10,347 Cdn $ 10,597 $ (10) $ 8 $ (2) December 31, 2011 December 31, 2011 Derivatives in an asset position (A) 2011 ANNUAL REPORT (2) measure of our outstanding netnon-GAAP debt-related measure obligations. We internally useand this to make conduct valuation-related capital analysis structure-related decisions and it is reviewed using risk-free analysis (“theand risk-free many analytical analysts value”) torelated most is obligations closely used for represent by valuation the purposes, us Company’s calculated net as follows: debt- Rogers owes the counterparties),the Rogers’ risk-free discount Bond rate. Spread TheDerivatives was estimated credit-adjusted are added values subject to of to the counterparties. changes in credit spreads of RogersThe and effect its of estimatingat the December 31, credit-adjusted 2011, fair versusvalue value the unadjusted of risk-free of Derivatives mark-to-market December 31, Derivatives 2011, the credit-adjusted isour estimated net Debt liability Derivatives illustrated value was of the $499 unadjusted in million, risk-free which mark-to-market net is theadjusted liability $2 estimated value. million net The table more asset credit- value than $39 of below. our million, Expenditure Derivatives As whichmark-to-market was net asset is at value. the same value as the unadjusted risk-free (2) (1) (1) accounted for 91.7% and 93.1%,of respectively, our U.S. of dollar-denominated our debt Debt is Derivatives hedged as for accounting hedges purposes against versus designated 100% U.S. on dollar-denominated an debt. economic As basis. a result, on Dece Percent hedged Percent of long-term debt fixed We believe that theplus non-GAAP net financial Debt measure Derivativethe liabilities of risk-free related long-term analytical to value debt provides our the Debt most Derivatives relevant at and practical (1)(2) Before deducting fair value decrement Includes arising current from and purchase long-term accounting portions. and deferred transaction costs. (In millions of dollars) Long-term Debt Plus Net DebtThe Derivative Liabilities aggregate ofliabilities related to our our Debt long-term Derivatives at the debt mark-to-market values plus net Debt Derivatives Total long-term debt at fixed rates Expenditure Derivatives Mark-to-market value – risk-free analysisMark-to-market value – credit-adjusted estimate (carrying value)Difference, Expenditure Derivatives Total Difference 39 – 39 39 – 39 (In millions of dollars) Debt Derivatives Mark-to-market value – risk-free analysisMark-to-market value – credit-adjusted estimate (carrying value)Difference, Debt Derivatives 41 (540) $ 51 (499) $ (548) $ (497) Mark-to-Market Value of Derivatives In accordance with IFRS,our we Expenditure have recorded Derivativesestimated our (together Debt Derivatives our and credit-adjusteddetermined “Derivatives”) by increasing using mark-to-market thecalculate an treasury related the valuation discountestimated risk-free rates used bond estimated which to spread mark-to-marketcounterparty (“Bond for valuation is each Spread”) Derivative. for In byfor the the case an relevant as of Derivatives termcounterparties accounted assets and owe bycounterparty was Rogers), Rogers addedthe to (i.e. the the risk-free estimated those Bond discountDerivatives accounted rate credit-adjusted Derivatives for Spread to as liabilities determine for value (i.e. for those Derivatives which whereas, for the which the in bank the case of (1) Pursuant to the requirements for hedge accounting under IAS 39, Financial Instruments: Recognition and Measurement, on December 31, 2011 and Dec U.S. dollar-denominated long-term debt Hedged with Debt Derivatives Hedged exchange rate Amount of long-term debt at fixedTotal rates: long-term debt (2) Long-term debt includes the effect of the Debt Derivatives. Long-term debt Hedged Debt Position (In millions of dollars, except percentages) Net derivative liabilities for Debt Derivatives at theTotal risk-free analytical value Weighted average interest rate on long-term debt MANAGEMENT’S DISCUSSION AND ANALYSIS

regularly by management. This is also useful to investors and analysts OUTSTANDING COMMON SHARE DATA in enabling them to analyze our enterprise and equity value and to Set out below is our outstanding common share data as at assess various leverage ratios as performance measures. This December 31, 2011 and at December 31, 2010. In the year ended non-GAAP measure does not have a standardized meaning and December 31, 2011 we purchased an aggregate 30,942,824 Class B should be viewed as a supplement to, and not a substitute for, our Non-Voting shares for cancellation pursuant to our NCIB for a total results of operations or financial position reported under IFRS. purchase price of approximately $1,099 million. For additional information, refer to Note 21 to our 2011 Audited Consolidated Financial Statements.

December 31, 2011 December 31, 2010 Common shares(1) Class A Voting 112,462,014 112,462,014 Class B Non-Voting 412,395,406 443,072,044

Total Common shares 524,857,420 555,534,058

Options to purchase Class B Non-Voting shares Outstanding options 10,689,099 11,841,680 Outstanding options exercisable 5,716,945 6,415,933

(1) Holders of RCI’s 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.

TOTAL COMMON SHARES DIVIDENDS ON RCI EQUITY SECURITIES OUTSTANDING Our dividend policy is reviewed periodically by Rogers’ Board of (In millions) Directors (“the Board”). The declaration and payment of dividends are at the sole discretion of the Board and depend on, among other 479.9 443.1 412.4 things, our financial condition, general business conditions, legal 112.5 112.5 112.5 restrictions regarding the payment of dividends by us, some of which are referred to below, and other factors that the Board may at any point consider to be relevant. As a holding company with no direct operations, we rely on cash dividends and other payments from our subsidiaries and our own cash balances and debt to pay dividends to our shareholders. The ability of our subsidiaries to pay such amounts to us is subject to the various risks as outlined in this MD&A.

2009 20102011

Class B Non-Voting Class A Voting

We declared and paid dividends on each of our outstanding Class A Voting and Class B Non-Voting shares, as follows:

Dividend Dividends paid Declaration date Record date Payment date per share (in millions) February 17, 2009 March 6, 2009 April 1, 2009 $ 0.29 $ 184 April 29, 2009 May 15, 2009 July 2, 2009 $ 0.29 $ 184 August 20, 2009 September 9, 2009 October 1, 2009 $ 0.29 $ 177 October 27, 2009 November 20, 2009 January 2, 2010 $ 0.29 $ 175

February 16, 2010 March 5, 2010 April 1, 2010 $ 0.32 $ 188 April 29, 2010 May 14, 2010 July 2, 2010 $ 0.32 $ 187 August 18, 2010 September 9, 2010 October 1, 2010 $ 0.32 $ 184 October 26, 2010 November 18, 2010 January 4, 2011 $ 0.32 $ 179

February 15, 2011 March 18, 2011 April 1, 2011 $ 0.355 $ 195 April 27, 2011 June 15, 2011 July 4, 2011 $ 0.355 $ 194 August 17, 2011 September 15, 2011 October 3, 2011 $ 0.355 $ 190 October 26, 2011 December 15, 2011 January 4, 2012 $ 0.355 $ 187

52 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 53 $45 ks: c ,099 a y estimated as they 1 b $ uy e-dependent. ks: b ate. c a $758 b s: ant terms, including fixed or d uy b en k option d c

S hare to S S Divi ROGERS COMMUNICATIONS INC. HAREHOLDER S 11 .42 1 S 11 20 2011 ANNUAL REPORT – 331 148 16 495 73 – – – 73 47 62 25 7 141 020 132563 175 834 74 297 42 110 423 1,804 1 .28 $ 1 $ ollars) $ 815 $ 3,147 $ 2,397 $ 6,716 $ 13,075 $ – $ 1,725 $ 1,844 $ 6,533 $ 10,102 d H RETURNED TO S HARE AT YEAR END HARE AT YEAR Less Than 1 Year 1-3 Years 4-5 Years After 5 Years Total CA 16 S . 1 ,902 11 $ 2009 20 1 $ ANNUALIZED DIVIDEND ANNUALIZED PER 20 of millions (In COMMITMENTS AND OTHER CONTRACTUAL OBLIGATIONS Contractual Obligations Our material obligationssummarized under below at firm December25 contractual 31, to the 2011. arrangements 2011 See Audited are Consolidated also Financial Notes Statements. 17, 18 and ible shareholders to have all or a ividends automatically reinvested rokerage fees are payable by Plan hares purchased under the DRIP. (2) (3) (4) (1) minimum quantities to be purchased, price provisions and timing ofwill the depend transaction. on In future addition, economic we conditions incur and expenditures may for be other impacted items by that future are government volum legislation. Other long-term liabilitiesTotal (3) Purchase obligations consist(4) of agreements to purchase goods and Represents services expected that contributions are to enforceable our and pension legally plans binding in and 2012. that Contributions specify for all the signific year ended December 31, 2013 and beyond cannot be reasonabl – 20 9 8 37 (1)(2) Amounts reflect principal obligations due Amounts at reflect maturity. net disbursements due at maturity. U.S. dollar amounts have been translated into Canadian dollars at the Bank of Canada year-end r Material Obligations Under Firm Contractual(In Arrangements millions of dollars) Long-term debt portion of their regular quarterly cashin d additional Classcommissions, B Non-Voting service shares charges of or Rogers’ b common stock. No On OctoberNovember 1, 26, 2010. The DRIP enables 2010, elig the Board approved the DRIP effective Dividend Reinvestment Plan (“DRIP”) participants in connection with s Shareholders who electquarterly to dividends reinvested participate in additional seeof Class all Rogers B at Non-Voting or shares theDocument, a average with portion market respect to price, of the as applicable their dividend described payment inComputershare date. the Trust DRIP Company Plan ofon Canada is behalf the Plan ofshareholders of Agent Rogers participants and wishing acts to tofull participate in invest text the DRIP eligiblecomputershare.com/rogers. can of find dividends. the Non-registered the Registered are DRIP beneficial advised Plan shareholders financial to intermediary for Document contact details on and their how to participate broker, enrolmentWhile in the Rogers, investment DRIP. forms at dealerrequirements at its with or discretion, either Class may other Canadian B open fund Non-Voting market the shares orthat quarterly acquired issued such on DRIP by the share shares Rogers,acquired on our will, the current Canadian for open intention market is by the theQuarterly Plan foreseeable Agent. dividends future, areBoard continue only and payable to as there be Before and is enrolling when no in declaredcomplete entitlement the by text DRIP, to the of shareholders anyregarding are the dividend their advised DRIP prior uniqueCanadian to and and thereto. investment read U.S. residents to profile the can participate consult and in the their tax DRIP. financial situation. advisors Only In February 2012, Rogers’the Board annualized of dividend Directors rate approvedand from an Class $1.42 increase to in Bquarterly $1.58 Non-Voting per amounts Share Class of A $0.395 effectiveonly Voting per immediately payable share. to as Suchentitlement be and quarterly to any dividends paid when dividend are prior in declared thereto. byAt our the Board same and time,dividend there totaling in $0.395 February is per 2012,Voting no share the on and Board each Class of declaredApril B its a 2, Non-Voting outstanding 2012, quarterly Class shares, to A shareholdersfirst such of quarterly dividend record dividend to on to Marchannualized be reflect 19, dividend the paid rate. 2012, newly on and increased is $1.58 the per share In February 2011, Rogers’ Boarddividend of rate Directors from increased $1.28 the toVoting annualized $1.42 share per effective immediately Class to A$0.355 be Voting per paid and share. in Class quarterly B amounts Non- of Debt derivative instruments Operating leases Player contracts Purchase obligations Pension obligation MANAGEMENT’S DISCUSSION AND ANALYSIS

OFF-BALANCE SHEET ARRANGEMENTS been deregulated and are not subject to price regulation. However, regulations can and do affect the terms and conditions under which Guarantees we offer these services. Accordingly, any change in policy, regulations As a regular part of our business, we enter into agreements that or interpretations could have a material adverse effect on Cable’s provide for indemnification and guarantees to counterparties in operations and financial condition and operating results. transactions involving business sale and business combination agreements, sales of services and purchases and development of assets. Due to the nature of these indemnifications, we are unable to Industry Canada make a reasonable estimate of the maximum potential amount we The technical aspects of the operation of radio and television stations, could be required to pay counterparties. Historically, we have not the frequency-related operations of the cable television networks and made any significant payment under these indemnifications or the awarding and regulatory supervision of spectrum for cellular, guarantees. Refer to Note 18(e)(ii) to the 2011 Audited Consolidated messaging and other radio-telecommunications systems in Canada are Financial Statements. subject to the licencing requirements and oversight of Industry Canada. Industry Canada may set technical standards for telecommunications under the Radiocommunication Act (Canada) Derivative Instruments (the “Radiocommunication Act”) and the Telecommunications Act. As previously discussed, we use derivative instruments to manage our exposure to interest rate and foreign currency risks. We do not use derivative instruments for speculative purposes. Copyright Board of Canada The Copyright Board of Canada (“Copyright Board”) is a regulatory body established pursuant to the Copyright Act (Canada) (the Operating Leases “Copyright Act”) to oversee the collective administration of copyright We have entered into operating leases for the rental of premises, royalties in Canada and to establish the royalties payable for the use distribution facilities, equipment and microwave towers and other of certain copyrighted works. The Copyright Board is responsible for contracts. The effect of terminating any one lease agreement would the review, consideration and approval of copyright tariff royalties not have an adverse effect on us as a whole. Refer to the section payable to copyright collectives by Canadian broadcasting entitled “Contractual Obligations” above and Note 25 to the 2011 undertakings, including cable, radio, television and specialty services. Audited Consolidated Financial Statements.

Restrictions on Non-Canadian Ownership and Control 4. OPERATING ENVIRONMENT Non-Canadians are permitted to own and control directly or indirectly up to 33.3% of the voting shares and 33.3% of the votes of a holding company that has a subsidiary operating company licenced under the Additional discussion of regulatory matters and recent developments Broadcasting Act. In addition, up to 20% of the voting shares and specific to the Wireless, Cable and Media segments follows. 20% of the votes of the operating licencee company may be owned and controlled directly or indirectly by non-Canadians. The chief GOVERNMENT REGULATION AND REGULATORY DEVELOPMENTS executive officer and 80% of the members of the Board of Directors Substantially all of our business activities, except for Cable’s Video of the operating licencee must be resident Canadians. There are no segment and the non-broadcasting operations of Media, are subject restrictions on the number of non-voting shares that may be held by to regulation by one or more of: the Canadian Federal Department of non-Canadians at either the holding-company or licencee-company Industry, on behalf of the Minister of Industry (Canada) (collectively, level. Neither the Canadian carrier nor its parent may be otherwise “Industry Canada”), the CRTC under the Telecommunications Act controlled in fact by non-Canadians. Subject to appeal to the federal (Canada) (the “Telecommunications Act”) and the CRTC under the Cabinet, the CRTC has the jurisdiction to determine as a question of Broadcasting Act (Canada) (the “Broadcasting Act”), and, accordingly, fact whether a given licencee is controlled by non-Canadians. our results of operations are affected by changes in regulations and by the decisions of these regulators. Pursuant to the Telecommunications Act and associated regulations, the same rules apply to Canadian carriers such as Wireless, except that there is no requirement that the chief executive officer be a resident Canadian Radio-television and Telecommunications Commission Canadian. The same restrictions are contained in the Canadian broadcasting operations, including our cable television Radiocommunication Act and associated regulations. systems, radio and television stations, and specialty services are licenced (or operated pursuant to an exemption order) and regulated In its March 2010 Budget, the federal government announced its by the CRTC pursuant to the Broadcasting Act. Under the intention to remove the existing restrictions on foreign ownership of Broadcasting Act, the CRTC is responsible for regulating and Canadian satellites (subsequently passed into law in the fall of 2010). supervising all aspects of the Canadian broadcasting system with a The government also announced that it would review the foreign view to implementing certain broadcasting policy objectives ownership restrictions currently applied to telecommunications enunciated in that Act. companies. In June 2010, Industry Canada released its consultation paper on this matter asking for comments by July 2010 on three The CRTC is also responsible under the Telecommunications Act for options: the regulation of telecommunications carriers, which includes the regulation of Wireless’ mobile voice and data operations and Cable’s 1. Increasing the limit for direct foreign investment in broadcasting Internet and telephone services. Under the Telecommunications Act, and telecommunications common carriers to 49 percent; the CRTC has the power to forbear from regulating certain services or classes of services provided by individual carriers. If the CRTC finds 2. Lifting restrictions on telecommunications common carriers with that a service or class of services provided by a carrier is subject to a a 10 percent market share or less, by revenue; or degree of competition that is sufficient to protect the interests of 3. Removing telecommunications restrictions completely. users, the CRTC is required to forbear from regulating those services unless such an order would be likely to unduly impair the Rogers filed its comments in July 2010 submitting that of the three establishment or continuance of a competitive market for those options only option 1 was acceptable because options 2 and 3 fail to services. All of our Cable and telecommunications retail services have recognize the converged market for communications services in

54 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 55 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT , was introduced in the House of Commons in An Act to amend the Copyright Act (Copyright compliance with alllicenses will conditions be issued of with a licence, term of new 20 years; cellular and, andpopulation PCS of the licenced areaand will PCS continue to licences, apply including toMinister those all of cellular initially Industry Canada assigned may bythe review licence auction. and term amend The after the further fees consultation during with licencees. Consultation on a Policy andBand Technical and Framework Aspects for Related the toIn 700 Commercial MHz Mobile November Spectrum 2010,Industry through Canada the initiatedframework release a to of consultation auction spectrum its on in consultation a the policy paper, 700 MHz and band. technical During 2011, WIRELESS REGULATION AND REGULATORY DEVELOPMENTS Consultation on the Renewal ofCommunications Cellular Services and (“PCS”) Personal Spectrum Licences In March 2009,discuss Industry the Canada renewalthrough initiated of any competitive cellular a process. and public PCS consultation licencesIn to March that 2011, were Industryrenewal granted Canada process for released its cellularMarch decisions and 2011, thereby PCS regarding concluding licences the March the 2009. that The consultation began fundamental process determinations expiring initiated were: in in • At the end of the current licence term and where licencees• are in The previously existing annual fee of $0.0351 per MHzA per determinationconditions regarding of licence existingreleased separately. was A research decision notsuch has a and time, not released the been current at development made conditions of to this licence date remain and in time effect. until and will be Proposed Legislation Bill C-11, Modernization Act) September 2011 andreview. This has Bill goneintroduced is in to substantially June 2010 unchanged the andof died from the Legislative on Bill May the Committee order 2011 C-32and paper protections election. that for with of Bill the was copyright calling C-11and owners is to opportunities intended better of address toproviders’ the update the liability challenges and the Internet. would rights require Itregime ISPs whereby to would use notices a clarify alleging “noticewould and Internet copyright be notice” infringement service forwarded sent incost to turn ISPs recovery to for thedesigned notice customers. to The enable and BillBill illegal notice. provides would file also for It sharing legalizeprograms a would forms violation currently make of of copying used Internetwould copyright. for The sites by time permit shifting Cable’stechnology television cable services. customers The operators such Billof to as would broadcasters eliminate PVRs, offer thebroadcasting. and to current customers obligation pay network PVR for copies made for the purpose of new rules on theearly content of cancellation such fees contracts, thatsecurity the can determination deposits be of charged the andconsumers. to The the customers, the amendments cancellationsale use also of of and introduce prepaid renewal newand cards provisions rights and products the on of they disclosureJune the advertise. 30, the of 2010. The the amendments costs of cameAmendments the into to services force the Manitoba on on Consumer June Protection 15, Act 2011 wereConsumer passed Protection that Act largely described paralleled above.is The the Manitoba changes government currently toamendments. the in Quebec the process of drafting regulations under the , was , passed into law on December 15, 2010. An Act to promote the efficiency and adaptability of the An act respecting the mandatory reporting of Internet child Canadian economy byreliance regulating on certain electronicand activities means to amend that of the Canadian discourage Commission carrying Radio-television and out Act, Telecommunications commercialProtection the and activities, Electronic Documents Competition ActAct and Act, (Anti-Spam the Act) Telecommunications the Personal Information Bill C-28, The Bill addressesprohibiting unsolicited the commercial sending electronicconsent. of mail It commercial (spam) electronic prohibitsprotects by messages detrimental without the practicesinstallation to integrity of electronic computer commerce, programs ofcommercial without activity. consent transmission incommercial In the data representations course addition, of online andpersonal it information and via prohibits unlawful prohibits prohibits accessunauthorized to false compiling the computer the or systems supplying and collection or of the also lists of misleading of electronic provides addresses.consumers It for with aCompetition extended private Tribunal of liability. right Canadapenalties on It to of those impose who allows administrativeinternational violate action the monetary the respective for sharing Acts CRTCspammers and businesses allows outside of and for and the ofanticipated the information to Canada come into with and effect in our mid-2012. global evidenceAmendments to partners. the to The QuebecDecember Consumer Bill 2009 Protection pursue is Act to were introduceperformance passed new in provisions contracts applicable providedwireline to sequential and at Internet a service distance, contracts. including These wireless, amendments include 2010 Legislation and Associated Developments introduced in theintended to House fight ofservice Internet Commons child providers pornography inservices (“ISPs”) by (e.g., May Facebook, requiring and Google, 2010. Internet of and child Hotmail) Bill other to pornography. C-22 reportperson persons This any providing is requirement incident providing Internet includeswhere services the Internet child is following: pornography advised ifthat may of a address be an to available, Internet theperson the address organization has person designated reasonable must byoperated grounds report the to regulations. believe by Ifpornography, that a the the that Internet personcomputer services person must data. notify Bill are2010 the C-22 and came was police into being effect passed and as law by preserve used on the December the 8, House 2011. to of Commons transmit in child 2011 Legislation Bill C-22, pornography by persons who provide an Internet service Policy Direction to the CRTCIn on December Telecommunications 2006, theon Minister Telecommunications of to IndustryAct. the issued The CRTC a Direction under Policy instructsmaximum the Direction the Telecommunications CRTC extent to feasible relyregulate, if on under needed, market in forces the athe to manner minimum Telecommunications the that extent necessary. interferes Act with market and forces to Canada. The Company believesand 3 that to the limit attemptout the made reforms of to in step “pure optionswith with telecommunications” 2 the networks the is reality government’s ofstrategy for broadband Canada. attempt markets to and inconsistent implementThe a government digitalforeign has economy ownership yet changes. Itbe to is expected coordinated that make with an theon announcement a release will of determination the Industry Canada’santicipated on appropriate in determinations early potential structure 2012. of the 700 MHz spectrum auction MANAGEMENT’S DISCUSSION AND ANALYSIS

interested parties submitted comments on general policy followed in February 2008 by revised conditions of licence which considerations related to commercial mobile broadband spectrum imposed those obligations on wireless carriers. The documents use, competition issues, the use of the 700 MHz band for commercial clarified that roaming must provide connectivity for digital voice and mobile services and whether 700 MHz spectrum and available 2500- data services regardless of the spectrum band or underlying 2690 MHz spectrum should be auctioned simultaneously or technology used. The policy does not require a host network carrier separately. In addition, Industry Canada is seeking comments on to provide a roamer with a service which that carrier does not provide spectrum use for public safety broadband applications. Industry to its own subscribers, nor to provide a roamer with a service, or level Canada is expected to render its decisions regarding these issues and of service, which the roamer’s network carrier does not provide. The to initiate a consultation regarding the details of the 700 MHz policy also does not require seamless communications hand-off auction framework early in 2012. between home and host networks.

Globalive Communications Corp. (“Globalive”) filed a complaint with Decisions on a Band Plan for Broadband Radio Service (“BRS”) the CRTC in October 2010 against Rogers and the chatr brand, and Consultation on a Policy and Technical Framework to License claiming that Rogers was providing an undue preference to itself in Spectrum in the Band 2500-2690 MHz providing our chatr brand with seamless handoff for roaming. As In February 2011, Industry Canada released its Decisions on issues such noted above, this type of roaming was not mandated in the Industry as the band plan to be adopted for BRS in the band 2500-2690 MHz, Canada conditions of licence. In June 2011, in Telecom Decision CRTC the mapping of incumbent licencees into the new band plan and the 2011-360, the CRTC dismissed Globalive’s complaint. In August 2011, timing of the migration of incumbents to the new band plan. Among Globalive Wireless Management Corp. and The Public Interest other things, Industry Canada determined that the International Advocacy Centre (“PIAC”) filed, separately, applications requesting Telecommunications Union (“ITU”) band plan would be adopted for that the Commission review and vary its June 2011 Decision. Rogers the band and that incumbent licensees must return approximately filed its response opposing the applications in September 2011 and one-third of their licensed BRS spectrum. At the same time, Industry the applicants filed reply comments in October 2011. A decision is Canada initiated a consultation on a policy and technical framework expected in the spring of 2012. for new BRS licences. The consultation examined issues such as the block and tier sizes that will be used for the future auction of this Court of Appeal Overturns Federal Court Decision and Restores spectrum as well as competition issues and the extent to which the Governor in Council Decision That Ruled Globalive Eligible to use of spectrum caps, spectrum set-asides and rollout conditions are Operate in Canada warranted. Industry Canada is expected to render its decisions On February 4, 2011, the Federal Court overturned the Governor in regarding these issues and to initiate a consultation regarding the Council Decision P.C 2009-2008 in which the Governor in Council had details of the 2500 MHz auction framework early in 2012, either as varied the CRTC Decision that ruled Globalive was in fact controlled part of its 700 MHz consultation or separately. by a non-Canadian and therefore ineligible to operate as a telecommunications common carrier by determining the opposite, AWS Auction, Roaming and Tower/Site Policy that is, that Globalive was not controlled in fact by a non-Canadian In November 2007, Industry Canada released its policy framework for and thus was eligible to operate as a telecommunications common the AWS auction in a document entitled Policy Framework for the carrier. The Federal Court found that the Governor in Council Auction for Spectrum Licences for Advanced Wireless Services and Decision was based on errors of law and should be quashed. On other Spectrum in the 2 GHz Range. Of the 90 MHz of available AWS February 17, 2011, Globalive filed a Notice of Appeal with the Federal spectrum, 40 MHz were set aside for new entrants. Court of Appeal. On June 8, 2011, the Court of Appeal ruled in favour of the Government of Canada and Globalive by allowing their The policy further prescribed that all carriers are allowed to roam on appeals and restoring the Order in Council that permitted Globalive the networks of other carriers outside of their licenced territories at to launch in December 2009. commercial rates. New entrants are able to roam at commercial rates on the networks of incumbent carriers for five years within their licenced territories and for 10 years nationally. National new entrant CABLE REGULATION AND REGULATORY DEVELOPMENTS licencees will be entitled to five years of roaming and a further five CRTC Vertical Integration Policy Decision years if they comply with specified rollout requirements. Roaming In September 2011, the CRTC released Broadcasting Regulatory Policy privileges enable new entrants to potentially enter the market on a CRTC 2011-601 (Policy) setting out the Commission’s decisions on its broader geographic scale more quickly. regulatory framework for vertical integration in the broadcasting New entrants are defined as carriers with less than 10% of Canada’s sector. Vertical integration refers to the ownership or control by one wireless revenue. Roaming is to be provided at commercial rates. entity of both programming services, such as conventional television Rogers has entered into roaming agreements with a number of new stations, or pay and specialty services, as well as distribution services, entrants at commercially negotiated rates. Industry Canada also such as cable systems or direct-to-home (“DTH”) satellite services. The mandated antenna tower and site sharing for all holders of spectrum Policy: licences, radio licences and broadcasting certificates. All of these • Prohibits companies from offering television programs on an entities must share towers and antenna sites, where technically exclusive basis to their mobile or Internet subscribers. Any program feasible at commercial rates. Where parties cannot agree on terms, broadcast on television, including hockey games and other live the terms will be set by arbitration. It is expected that site-sharing events, must be made available to competitors under fair and arrangements would be offered at commercial rates that are reasonable terms. reasonably comparable to rates currently charged to others for similar access. Rogers has reached commercial agreements for antenna tower • Allows companies to offer exclusive programming to their Internet and site sharing with several new entrants. or mobile customers provided that it is produced specifically for an Internet portal or a mobile device. In February 2008, Industry Canada issued Responses to Questions for Clarification on the AWS Policy and Licencing Frameworks, which • Adopts a code of conduct to prevent anti-competitive behavior and answered questions about the AWS spectrum auction and about ensure all distributors, broadcasters and online programming tower sharing and roaming obligations of licencees. This was services negotiate in good faith. To protect Canadians from losing

56 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 57 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT CRTC Network Interconnection Decision In March 2011, the CRTCseparate initiated local, a wireless proceeding andregimes to review toll in i) network place the three rules. interconnection and The regulatory ii) CRTC theThe released need its Commission for Decision, altered IP TRPin interconnection the 2012-24, order regulatory in wireless to January(“CLEC”) interconnection 2012. become a rules wireless a soobligations carrier wireless related that is to competitive no equalother access local longer LECs. and required exchange A supply to of wirelesslocal carrier directory CLEC meet interconnection listings is the to entitled arrangements.the CLEC to CRTC Regarding shared-cost, determined that bill IPtelephone in and calls areas interconnection, keep, to where either a anprovide carrier affiliated a uses or similar IP unaffiliated arrangement to provider,Companies transfer to it must any must othermonths provider negotiate that of asks a a for formalsix it. request. commercial If months, agreementCommission agreement cannot anticipates either be implementation within reached or significant within partya progress year six after within an may agreement has been request negotiated. CRTCMEDIA REGULATION AND intervention. REGULATORY DEVELOPMENTS The Licence Renewals In December 2010,the the CRTC group-based announced (conventionalrenewal its and applications proceeding discretionary to ofMedia. consider This specialty) major represented the licence media firstcommitments time companies the relating CRTC including wouldexhibition impose on Rogers to licence a group basis.Citytv Canadian The Rogers conventional group program includesCanada, the television Outdoor OMNI expenditures Life and Network stationsThe and and The CRTC and Biography held Channel the specialtydecisions (Canada). licence in renewal services hearing July in 2011.447, G4 April In 2011 the Broadcasting releasing Rogers Decisions its renewals 2011-441 Media expiring and stations August 2011- weredifferent 31, given situation 2014 new of withlarge three-year the terms English-language licence group that Canadian recognized in broadcastexpects groups. the comparison that The Rogers to Commission next will the three years develop three such that its other other it large broadcast can groups be in holdings treated 2014. in during the same the manner as the the CRTCadditional released Telecom wholesalevolumes Regulatory charges of the Policy based resellingauthorized 2011-703 ISP. on monthly In rejecting usage-based place specificcapacity of of wholesale end-user these the charges charges,wholesaler interconnecting traffic the based and facility Decision on between theend-user the the reselling of facilities-based ISP. themaintenance fees A reselling will apply fixed ISP inrate addition as monthly structure to the came well access usage intothe charge. as fee effect The CRTC one-time new per on to February installationRogers review in 1, and February and 2012. 2012. vary Decisions Applicationsmid-2012. on the to the applications Decision are were expected in filed by ShawBasic Telecommunications and Services and OtherIn Matters May Proceeding 2011, theconcluding CRTC the released Telecom proceedingNotice Regulatory of Consultation initiated Policy CRTC 2011-291 2010-43, inaccess reviewing to issues January associated basic with 2010, telecommunicationsto services, in serve, including the the Telecom CRTC obligation basic retained an service obligation objective,for to and serve regulated in local regardILECs. (non-forborne) service to The subsidy. exchanges voice services CRTC The added and only determined to only the thatsteps for basic high-speed to service reduce incumbent Internet local obligation.areas will subsidies The through not eligible a Policy reduction be increases. also in for took the number further subsidy of and authorization of regulated rate t Service Pricing and Usage- a televisioncontinue to service provide thecontinue to during service offer it in to question negotiations, their subscribers. and distributors broadcasters must how must they haveservices provided that they consumers canpay with subscribe models. to more If through, flexibility thebeen for Commission made in example, in finds pick the this that and areaobligations insufficient a to further progress achieve proceeding the has will desired results. be held to impose In February 2011,previous the decisions CRTCwhereby on reselling initiated ISPs the a wouldtheir pricing be end-users proceeding exceeded subject of specific to to bandwidth additional wholesale caps. review charges In internet when its November 2011, services CRTC Review of Wholesale Interne based Billing Review of Broadcasting Regulations includingand Fee-for-Carriage Distant Signal Fees In March 2010, in Broadcastingdetermination Decision to 2010-167, implement the a CRTCis “value made similar the for to signal” the (“VFS”)received U.S. regime conflicting “retransmission that consent legal regime”. opinionsto Since as implement the to such CRTC whether a it regime,a has it ruling asked the the authority on Federalarguments Court an in of Appeal mid-September expedited for decision, 2010. basis. the In The Federal Februaryauthority Court Federal 2011, of to in Court Appeal adescribed heard implement ruled in 2-1 parties’ Broadcasting that split its Decision the 2010-167.appeal Rogers proposed to CRTC filed the has for Supreme “value leave CourtCogeco. the to of In for Canada September in 2011, signal” May theThe 2011 Supreme appeal as Court regime did is gave Telus leave expectedregime and to is to on appeal. be hold pending heard the in appeal. Under 2012. this Implementation VFS of regime,apply the the only proposed to licencees market-based ofCBC. negotiations private will Broadcasters local TV will stations,to: choose thus excluding on the (1) a(“BDU”s) station-by-station for basis negotiate the whether existing value with regulatory of framework. broadcasting theirterm This of signals; choice distribution three will or(i) years. be (2) undertakings valid Those continue mandatory for who under(iii) a distribution; choose the simultaneous fixed negotiation (ii)CRTC-imposed substitution. would timeline forego: priority However, for ifdistributor negotiations, channel broadcasters to unsuccessful placement; can blackout afterpurchased require the and their rights a the to that signalABC) are or airing and on other U.S. Canadian thecash (i.e. services. NBC, or programs CBS, Negotiated a FOX compensation they combination and placement, could of have be cash promotion, andshould other marketing). both consideration parties The request (e.g. it. channel CRTC will only arbitrate In Juneproceeding. 2009, In that the Decision, theISP CRTC CRTC revenues rejected to released the fund notion Canadianopinions its of ‘webisodes’. a filed Based tax decision on on in conflictingCRTC on the legal would proceeding, its refer thewhether new to decision an the media determined ISP, Federal thatBroadcasting when Court the Act. it The of distributes Courtthat Appeal released broadcasting, the ISPs its is Decision question dotelevision subject in of and to July not movie 2010 the actcannot ruling websites. be Therefore as the regulated broadcastersCanadian Court Cinema, under by Television concluded & the they offering Radioto Artists Broadcasting (“ACTRA”) connectivity appeal Act. filed to for to granted The leave the Alliance in Supreme of theSupreme Court Court of fall Canada. upheld ofcannot be Leave the regulated 2011. under to previous the In Broadcasting appeal decision Act. the was concluding February that 2012 ISPs Decision, the New Media Proceeding Follow-up • Directs the vertically integrated entities to report by April 2012 on MANAGEMENT’S DISCUSSION AND ANALYSIS

Distant Signals Vancouver, Ottawa and Edmonton later in 2010. In January 2011, The new distant signal consent regime commenced on September 1, Shaw Communications Inc. announced plans to launch wireless service 2011 whereby conventional television stations must consent to the in Western Canada early in 2012. However, during 2011, Shaw carriage of their local signals into distant markets. Under this regime Communications announced that instead of launching a wireless BDUs that want to carry time-shifted U.S. signals, must get prior network based on licensed spectrum, the company would launch a consent from each of the three large English-language networks WiFi network in select parts of their cable territory. Bragg (CTV, Global and Citytv) to carry their signals in those time zones. Communications Inc. has also announced that deployment of an Rogers Media is currently in negotiations with various distributors for HSPA+ network and activity has started in the several locations in carriage of distant signals. Atlantic Canada. New entrants could also partner with one another or other competitors providing greater competition to Wireless in more Regulatory Approval of Recent Acquisitions than one region or on a national scale, although this has not been In December 2011, Rogers and Bell Canada announced an agreement observed to date. to purchase a 75% interest in MLSE. This transaction is subject to In November 2009, Bell Canada and TELUS each launched service over approval by the Competition Bureau which will review the their joint HSPA networks, overlaid on their CDMA/EVDO based transaction to determine whether it results in a substantial lessening wireless networks. Until this time, Rogers Wireless was the only carrier or prevention of competition. As part of this purchase of MLSE, we in Canada operating on the world standard GSM/GPRS/EDGE/HSPA will also acquire effective control, jointly with Bell Canada, of three technology. The Bell Canada and TELUS HSPA launches enabled these Category 2 television licences, Leafs TV, Raptors TV and Goltv and two companies to provide a wider selection of wireless devices, and to unlaunched Category 2 services, Mainstream Sports and Live Music compete for HSPA roaming revenues which are expected to grow Channel. Acquisition of these services is subject to approval by the over time as HSPA becomes more widely deployed around the world, CRTC. both of which will increase competition at Wireless. In the first quarter of 2012, Rogers Media announced an agreement Rogers was the first carrier to launch LTE in Canada and has to purchase the Saskatchewan Communications Network, an maintained the lead throughout 2011. By August 2011, Bell Canada over-the-air broadcast station. The acquisition is subject to CRTC had also launched LTE in and around Toronto in small areas. TELUS approval. has announced that they will launch LTE in the first quarter of 2012. MTS has announced that they will launch LTE in late 2012. As COMPETITION IN OUR BUSINESSES LTE becomes more widely deployed around the world this will We currently face significant competition in each of our primary increase competition at Wireless. Wireless, Cable and Media businesses from entities providing substantially similar services. Each of our segments also faces Cable Competition competition from entities utilizing alternative communications and Canadian cable television systems generally face competition from transmission technologies and may face competition from other several alternative Canadian multi-channel broadcasting distribution technologies being developed or to be developed in the future. undertakings (including Bell TV (previously Bell ExpressVu) and Shaw Below is a discussion of the specific competition facing each of our Direct (previously Star Choice) satellite services and telephone Wireless, Cable and Media businesses. company IPTV services), and satellite master antenna television, as well as from the direct reception by antenna of over-the-air local and Wireless Competition regional broadcast television signals. They also face competition from At December 31, 2011, the highly competitive Canadian wireless illegal reception of U.S. direct broadcast satellite services. In addition industry had approximately 26.6 million subscribers. Competition for and importantly, the availability of television shows and movies wireless subscribers is based on price, quality of service, scope of streaming over the Internet has become a direct competitor to services, service coverage, sophistication of wireless technology, Canadian cable television systems. breadth of distribution, selection of devices, brand and marketing. Wireless also competes with its rivals for dealers and retail Cable’s Internet access services compete generally with a number of distribution outlets. other ISPs offering competing residential and commercial dial-up and high-speed Internet access services. Rogers Hi-Speed Internet services, In the wireless voice and data market, Wireless competes primarily where available, compete directly with Bell’s DSL Internet service in with two other national wireless service providers, the new entrants the Internet market in Ontario, with the DSL Internet services of Bell described further below, and two large regional players, resellers such Aliant in New Brunswick and Newfoundland and Labrador and as Primus, and other emerging providers using alternative wireless various resellers using wholesale telco DSL and cable Third Party technologies, such as WiFi “hotspots”. Potential users of wireless voice Internet Access services in local markets. and data systems may find their communications needs satisfied by other current or development technologies, such as WiFi “hotspots” Cable’s Home Phone services compete with Bell’s wireline phone or trunk radio systems, which have the technical capability to handle service in Ontario and with Bell Aliant’s wireline phone service in New mobile telephone calls. Brunswick and Newfoundland and Labrador. In addition, Home Phone service competes with ILEC local loop resellers (such as Primus) Through the 2008 auction, six new entrants acquired substantial as well as VoIP service providers (such as Vonage and Primus) riding regional holdings of AWS spectrum, and several much smaller over the services of ISPs. companies acquired small amounts of spectrum in generally rural locations. Globalive Wireless Management Corp. under the brand One of the biggest changes in the telecommunications industry is name WIND, launched service in December 2009 in Toronto and substitution of the traditional wireline video, voice and data services Calgary with expansion to Vancouver, Ottawa, Edmonton and by new technologies. Internet delivery is increasingly becoming a Hamilton in 2010. Quebecor Media Inc. launched service in Quebec in direct threat to voice and video service delivery. Younger generations August 2010. Public Mobile Canada Inc. launched service in the increasingly use the Internet as a substitute for traditional wireline Toronto-Montreal corridor in early 2010 in Ontario and Quebec. telephone and television services. The use of mobile phones among DAVE Wireless Inc., under the brand name Mobilicity, launched in younger generations has resulted in some abandonment of wireline Toronto in the spring of 2010 with subsequent expansion in telephone service. Wireless-only households are increasing although

58 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 59 do not ROGERS COMMUNICATIONS INC. Broadcasting Distribution Regulations 2011 ANNUAL REPORT allow Cablebuildings or where itssystems. it competitors is to technically obtain feasible exclusive to install contracts two in or more The competition facingentitled “Competition our in businesses ourthat Businesses”. is There our described cansuperior current be in to no or the those assurance we section to future provide, evolving or competitors industry at trends lowerthe will market prices, or in not adapt which changing we more marketof provide operate, quickly or requirements, introduce these services enter competing services. factorsrevenue Any could or reducere-pricing increase of our the market existing churn.attract subscriber share base new Wireless or ascustomers. customers lower anticipates decrease As pricing is wireless offered our somewireless to penetration extended of customers ongoing the to maythan population generate or deepens, those lower new requested generatedrevenue average growth. by from monthly existing revenues existing customers,In which addition, could the slow CRTC Changes in Government Regulations CouldResults Adversely of Affect Operations Our in Wireless,As Cable and described Media. inRegulation and the Regulatory sectionbusiness Developments”, activities of are substantially regulated thisand all by Industry MD&A of accordingly Canada entitled our and/or ourcould the “Government results CRTC, be of adverselydecisions operations affected of these on by regulators. athings, changes This regulation in consolidated licencing, relates regulations to, basis services among competition, and that other we by must the distribute,agreements, the wireless cable and wireline the interconnection televisionnetwork rates by programming we third parties,our may resale of charge networks, oursystems to our networks and and our provide ability operation roaming tosystems. on acquire access and an In to interest addition, to in ownership the otherfrom our communications costs time of of to time providing communications as servicesinitiatives a may result to be of address compliance increased with consumerrelated industry protection or concerns legislative issues ore-mail, such as Internet- cyber-crime copyrightbroadcasting and infringement, licences lawful unsolicitedregulatory may approval. access. commercial not Our generally cable, be wireless transferred without and RISKS AND UNCERTAINTIES APPLICABLE TOSUBSIDIARIES RCI AND OUR We Face Substantial Competition. have adopted to safeguardprevent, assets from deter loss and andfinancial unauthorized detect use, records fraud, to and and reviewof any material to weaknesses special verify or audit significant the deficiencies. steps accuracy adopted in ofOur light the EnterpriseCommittee and Risk theformal Board’s Management Strategic responsibility RiskAudit Group for Assessment Group risk conducts process. supports a byin In fraud which facilitating risk addition, significant the assessment a financial our tothat statement identify fraud Audit Internal those could any areas occurdocumented and identified ensure fraud andManagement risks methodology of verifiedmeasurable and this approach policies nature controls.expertise enable to are of a risk our mitigated Rogersopportunities consistent management management, by as and and which well Enterprise employeesrequired. as to relies implementing identify on Risk risk risks mitigation the and A strategies discussion as of theas risks well and as a uncertainties discussion towith of each us the of and specific our our risks businesses, and is subsidiaries, uncertainties presented associated below. RISKS AND UNCERTAINTIES AFFECTING OUROur BUSINESSES business is subject tomaterial risks adverse and uncertainties effect thatstrategies could to on result mitigate in risks our a areorganization business the responsibility to and of ensure manybetween financial levels that seizing of results. the an new The and opportunities appropriate policies and support balance the managing requirement is for risk. risk maintained Our management. Our culture Boardmanagement is in responsible, its responsibilityour in for businesses identifying and its the the implementation principalprocesses governance of risks appropriate to of risk role, manage assessment theseBoard for through risks. its overseeing The responsibility Auditassessment to Committee discuss and policies supports with risk the assisting respect management. to the risk In Board addition,regulatory in it requirements. the is Thesenior oversight responsible management of Audit for the compliance Committee adequacy with also of legal the reviews and internal with controls that we Rogers’ radiorespective stations markets compete as wellmagazines, with as with television, the otherCompetition outdoor media, other within such advertising the stations as newspapers, radioin and in individual broadcasting market digital industry areas, their amongst occurslevel, properties. individual primarily Media’s stations. On radio aradio national division operators, competes whichmarkets generally own across with and otherinformation Canada. operate larger services, New radio musicmusic station technologies, downloading, streaming clusters MP3 such in audience services, players share. as and provide on-line on-line competition web forThe Shopping radio Channel competes stations’ retailers, with various Internet retail retailers stores,products. catalogue and On direct awith mail broadcasting level, retailers other The forattention Shopping sales television Channel and of competes products its channels loyalty, on television. for and particularly channelThe with Canadian placement, magazine industry infomercials isboth viewer highly selling readers competitive, competing and for Canadian magazines advertisers. and This fromsignificant competition foreign, mostly comes U.S. quantitiesentertainment from titles that other websites sell inpublications in for compete readership and revenue. Canada. withRogers’ the On-line Canadian conventionalprincipally information for magazine television viewers andstations advertisers and and that with other broadcast specialty Canadian inincreasingly television their services with local markets, otherstations specialty compete channels distant and given Canadiansubscribers. signals the Internet anddownloading also time-shifting information U.S. represent competition for border and capacity share of viewership. entertainmentSports available Entertainment and toteams competes video for digital with audience.League The other Baseball Blue teams Toronto Jays forcompetes with players also other professional local and compete sporting fan and with special base. event other The venues. Major Rogers Centre Media Competition the large majoritytelephone of service. homes In addition, today wirelesspopularity. Internet continue service to is increasing use in standard home Video competes withchains, DVD as well and asrecently, individually video owned game and on-line-based operated salesservices outlets and over and, subscription cable more rental and rentalwell store satellite, as and distributors illegally services, downloaded ofon content copied location, on price as DVDs. and Competition availability demand of is titles. principally based MANAGEMENT’S DISCUSSION AND ANALYSIS

Generally, our licences are granted for a specified term and are spending by consumers and businesses or weak economic conditions subject to conditions on the maintenance of these licences. These may materially negatively affect us through decreased demand for licencing conditions may be modified at any time by the regulators. our products and services including decreased advertising, decreased The regulators may decide not to renew a licence when it expires and revenue and profitability, higher churn and higher bad debt expense. any failure by us to comply with the conditions on the maintenance Poor economic conditions may also have an impact on our pension of a licence could result in a revocation or forfeiture of any of our plans as there is no assurance that the plans will be able to earn the licences or the imposition of fines. assumed rate of return. As well, market-driven changes may result in The licences include conditions requiring us to comply with Canadian changes in the discount rates and other variables which would result ownership restrictions of the applicable legislation. We are currently in Rogers being required to make contributions in the future that in compliance with all of these Canadian ownership and control differ significantly from the current contributions and assumptions requirements. However, if these requirements are violated, we would incorporated into the actuarial valuation process. be subject to various penalties, possibly including, in the extreme case, the loss of a licence. We Are Subject to Various Risks from Competing Technologies. There are several technologies that may impact the way in which our We Are Highly Dependent Upon our Information Technology services are delivered. These technologies include broadband, Systems and the Inability to Enhance our Systems or Prevent a IP-based voice, data and video delivery services, the mass market Security Breach (Data or System) or Disaster Could Have an deployment of optical fibre technologies to the residential and Adverse Impact on our Financial Results and Operations. business markets, the deployment of broadband wireless access, and The day-to-day operations of our businesses are highly dependent on wireless services using radio frequency spectrum to which we may their information technology systems. An inability to enhance have limited access. These technologies may result in significantly information technology systems to accommodate additional customer different cost structures for the users of the technologies, and may growth and support new products and services could have an adverse consequently affect the long-term viability of certain of our currently impact on our ability to acquire new subscribers, manage subscriber deployed technologies. Some of these new technologies may allow churn, produce accurate and timely subscriber invoices, generate competitors to enter our markets with similar products or services revenue growth and manage operating expenses, all of which could that may have lower cost structures. Some of these competitors may adversely impact our financial results and position. be larger with more access to financial resources than we have.

In addition, we use industry standard network and information We May Fail to Achieve Expected Revenue Growth from New and technology security, survivability and disaster recovery practices. Our Advanced Services. ongoing success is in part dependent on the protection of our We expect that a substantial portion of our future revenue growth corporate business sensitive data including our customers’ as well as will be achieved from new and advanced services. Accordingly, we employees’ personal information. This information is considered have invested and continue to invest significant capital resources in company intellectual property and it needs to be protected from the development of our networks in order to offer these services. unauthorized access and compromise for which we rely on policies However, there may not be sufficient consumer demand for these and procedures as well as IT systems. Failure to secure our data and new and advanced services. Alternatively, we may fail to anticipate or the privacy of our customer information may result in non-compliance satisfy demand for certain products and services, or may not be able with regulatory standards, may lead to negative publicity, litigation to offer or market these new products and services successfully to and reputation damage, any of which may result in customer losses, subscribers. The failure to attract subscribers to new products and financial losses and an erosion of public confidence. services, or failure to keep pace with changing consumer preferences A portion of our employees and critical elements of the network for products and services, would slow revenue growth, increase churn infrastructure and information technology systems are located at our and could have a materially adverse effect on our business, results of corporate offices in Toronto, Ontario, and Brampton, Ontario, as well operations and financial condition. as an operations facility in Markham, Ontario. In the event that we cannot access these facilities, as a result of a natural or manmade We May Engage in Unsuccessful Acquisitions or Divestitures. disaster or otherwise, operations may be significantly affected and Acquisitions of complementary businesses and technologies, may result in a condition that is beyond the scope of our ability to development of strategic alliances and divestitures of portions of our recover without significant service interruption and commensurate business are a part of our overall business strategy. Services, revenue and customer loss. technologies, key personnel or businesses of acquired companies may not be effectively assimilated into our business or service offerings Network Failures Could Reduce Revenue and Impact Customer and our alliances may not be successful. We may not be able to Service. successfully complete any divestitures on satisfactory terms, if at all. The failure of our networks or key network components could, in Divestitures may result in a reduction in our total revenues and net some circumstances, result in an indefinite loss of service for our income. customers and could adversely impact our financial results and position. In addition, we rely on business partners to carry certain of We Have Substantial Debt and Interest Payment Requirements our customers’ traffic. The failure of one of these carriers might also that May Restrict our Future Operations and Impair our Ability to cause an interruption in service for our customers that would last Meet our Financial Obligations. until we could reroute the traffic to an alternative carrier. Our substantial debt may have important consequences. For instance, it could: We Are Subject to General Economic Conditions. • Make it more difficult for us to satisfy our financial obligations; Our businesses are affected by general economic conditions, consumer confidence and spending. Recessions or declines in • Require us to dedicate a substantial portion of any cash flow from economic activity or economic uncertainty generally cause an erosion operations to the payment of interest and principal due under our of consumer and business confidence and may materially reduce debt, which would reduce funds available for other business discretionary consumer spending. Any reduction in discretionary purposes;

60 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 61 (BC). Class Proceedings Act against Cable and other (Saskatchewan) asserting the ROGERS COMMUNICATIONS INC. against providers of wireless Class Actions Act 2011 ANNUAL REPORT was commenced against providers of wireless Class Actions Act Business Practices and Consumer Protection Act Class Proceedings Act, 1992 As a holding company, ourdependent ability to primarily meet ourpayments upon financial on intercompany obligations the advances, is rentaland payments, receipt cash other dividends of paymentsraised from by interest our us and throughsale subsidiaries of the assets. principal together issuance with of proceeds equitySubstantially and debt all andsubsidiaries. from of All the of our ourno subsidiaries obligation, business are contingent distinct or legal activities otherwise, entities to and are make have funds available operated to us by our Our Holding Company Structure MayOur Limit Financial Our Obligations. Ability to Meet In Augustproceeding 2009, under counsel the same for claims the as theordered plaintiffs original conditionally commenced proceeding. stayed Thiswas in a an second December abuse proceeding second of 2009 process. was on theThe Company’s basis appeal that of the it by 2007 certification the decision Saskatchewan was dismissed Courtleave of to Appeal. The appealrecorded Company to is a applying theassessment for Supreme is liability that Courtcannot the for of be likelihood Canada. and reasonably thisaction We amount estimated. of differs have contingency If anyadjustment the not from potential to since ultimate loss our our resolution financialresult. management’s assessment position of and and this results assumptions, ofIn operations a June could 2008, material athat proceeding was province’s commencedcommunications in Saskatchewan services under allegations in of,misrepresentation Canada. and false amongcharged The advertising by in us proceeding otherCanada. relation and to the The involves the things,restitution. other plaintiffs 911 wireless The fee communication breach are plaintiffsproceeding providers as intend a seeking in national of toliability class is unquantified action not seek yet in determinable. contract, damages an Saskatchewan. Any order and In potential certifying December 2011, the (British a Columbia) proceedingcommunications under in the Canada relatingby to the wireless system accessinvolves, carriers fee to charged amongcontrary some other to of the things,The their Plaintiffs allegations customers. are seekingpotential The of unquantified liability damages is proceeding and not misrepresentations yet restitution. determinable. Any In August 2008, a proceedingthat was province’s commenced in Ontarioproviders pursuant to of communicationsinvolved services allegations of, indeceptive among advertising Canada. relating other The to things,usage. charges proceedings for false, The long-distance misleading plaintiffs telephone and and were punitive seeking damages $20December of 2011 million $5 and the in million. settlement This general amount was proceeding damages insignificant. We was believe that settled we in havetaxes adequately provided based for on income all andcalculation indirect of the of informationsignificant that applicable judgment is in taxes currently interpreting available. taxfilings in rules The and are regulations. many Our tax amount subject cases, of to however, current andprovisions, audits, requires deferred income which tax and assetsassessment could of and could, interest liabilities materially and and penalties. change inThere the exist certain certain other circumstances,of claims and which potential result claims isconsolidated against financial us, in expected position. none to the have a materially adverse effect on our Class Actions Act erational Convergence. conditions; business and the industry in which we operate; competitors that have less financial leverage; and working capital andcorporate purposes. capital expenditures and for other general (Saskatchewan) wascommunications in commenced Canada relatingby to against wireless the system carriers providers accessseeking to fee unspecified charged of some damagesreimbursement and of of wireless punitive system their access damages, fee customers.Saskatchewan effectively collected. Court The In the September granted plaintiffs 2007,proceeding the the are certified plaintiffs’ as a applicationnature national, to of “opt-in” the class have class action. the wasAppeal. The later “opt-in” confirmed As by theoutside a Saskatchewan Saskatchewan Court have national, of to takeproceeding. “opt-in” specific In steps class to February participatebased action, on in 2008, the the arbitration our affected clausegranted in motion and customers our the wireless to Saskatchewan service Court agreements stayof directed was that the the its order certification proceeding plaintiffs in of those respect customers the who are action bound by would an arbitration exclude clause. from the class of In August 2004, a proceeding under the We Are and Will Continue to Be Involved in Litigation. Copyright Tariff Increases Could AdverselyOperations. Affect Results of Copyright tariff pressures continueto to affect increase, our services.operations. If such fees were increases could adversely affect our results of Our businesses, technologies, processescomplex. and A systems failure are to operationally executeexperiences, properly resulting may in lead increased to churn negative and customer loss of revenue. Our Businesses Are Complex. We Are Heavily Involved inIn Op an effort toongoing more efficiently emphasis serveoperations, our including on customer organization base, structure convergenceWe there and is have network of an also platforms. support commenced our system an initiative. wirelessconvergence enterprise-wide In plans lead billing the and to event operational andare problems cable incurred, that business or operational unforeseen implementation efficiencies delays mayimpairment of not may be result our in achieved loss and of service revenue and customers. Through outsourcingessential arrangements, components third ofand parties our customers, including business provide payroll, operationsservice call certain to centre technicians, support, our installation certaininvoice employees and printing. information Interruptions technologyour in ability functions, to these provide services and services to can our customers. adversely affect We Are Reliant on ThirdOutsourcing Party Arrangements. Service Providers Through • Increase our vulnerability to general adverse economic and industry • Limit our flexibility in planning for, or reacting• to, changes Place in us our at a competitive disadvantage compared• to some Limit of our our ability to obtain additional financing required toOur fund ability to satisfy ourperformance obligations depends and on ourfactors, on future many operating of economic, whichgenerate are financial, beyond sufficient our competitive control. cash Ouravailable and business to flow may provide not other sufficient and netor to proceeds successfully to future execute meet our these financings business obligations strategy. may not be MANAGEMENT’S DISCUSSION AND ANALYSIS

whether by dividends, interest payments, loans, advances or other remove or relax these limits can result in foreign telecommunication payments, subject to payment arrangements on intercompany companies entering the Canadian wireless communications market, advances. In addition, the payment of dividends and the making of through the acquisition of either wireless licences or of a holder of loans, advances and other payments to us by these subsidiaries are wireless licences. The entry into the market of such companies with subject to statutory or contractual restrictions, are contingent upon significantly greater capital resources than Wireless could reduce the earnings of those subsidiaries and are subject to various Wireless’ market share and cause Wireless’ revenues to decrease businesses and other considerations. significantly. See the section entitled “Restrictions on Non-Canadian Ownership and Control” under “Government Regulation and Regulatory Developments”. We Are Controlled by One Shareholder. Prior to his death in December 2008, Edward S. “Ted” Rogers The National Wireless Tower Policy Could Increase Wireless’ Costs controlled RCI through his ownership of voting shares of a private or Delay the Expansion of Wireless’ Networks. holding company. Under his estate arrangements, the voting shares In June 2007, Industry Canada released a new Tower Policy of that company, and consequently voting control of RCI and its (CPC-2-0-03) outlining a new antenna siting policy that took effect on subsidiaries, passed to the Rogers Control Trust, a trust of which the January 1, 2008. The new policy affects all parties that plan to install trust company subsidiary of a Canadian chartered bank is trustee and or modify an antenna system, including PCS, cellular and broadcasting members of the family of the late Mr. Rogers are beneficiaries. The service providers. Among other things, the policy requires that Rogers Control Trust holds voting control of the Rogers group of antenna proponents must consider the use of existing antenna companies for the benefit of successive generations of the Rogers structures before proposing new structures and owners of existing family and deals with RCI on the company’s long-term strategy and systems must respond to sharing requests. Antenna proponents must direction. As of December 31, 2011, private Rogers family holding also undertake public notification using defined processes and must companies controlled by the Rogers Control Trust together owned address local requirements and concerns. Certain types of antenna approximately 90.9% of the outstanding RCI Class A Voting Shares, installations are excluded from the requirement to consult with local which class is the only class of issued shares carrying the right to vote authorities and the public. in all circumstances, and approximately 9.6% of the RCI Class B Non-Voting Shares. Accordingly, the Rogers Control Trust is able to elect all of our Board of Directors and to control the vote on matters Wireless is Dependent on Certain Key Infrastructure and Handset submitted to a vote of our shareholders. Vendors, Which Could Impact the Quality of Wireless’ Services or Impede Network Development and Expansion. Wireless has relationships with a small number of essential network RISKS AND UNCERTAINTIES SPECIFIC TO WIRELESS infrastructure and handset vendors, over which it has no operational or financial control and only limited influence in how the vendors Spectrum Fees May Increase With the Renewal of Cellular and PCS conduct their businesses with Wireless. The failure of one of our Spectrum Licences network infrastructure suppliers could delay programs to provide While the Minister of Industry announced in March 2011 that the additional network capacity or new capabilities and services across previously-existing annual fee of $0.0351 per MHz per population of the business. Handsets and network infrastructure suppliers may, the licenced area would continue to apply to all cellular and PCS among other things, extend delivery times, raise prices and limit licences (850 MHz and 1.9 GHz) upon renewal, including those supply due to their own shortages and business requirements. If these initially assigned by auction, the Minister may review and amend the suppliers fail to deliver products and services on a timely basis or fail fees during the licence term after further consultation with licencees. to develop and deliver handsets that satisfy Wireless’ customers’ Changes to spectrum fees could significantly increase Rogers’ demands, this could have a material adverse effect on Wireless’ payments and as a result, could materially reduce our operating business, financial condition and results of operations. Similarly, profit. The timing of fee increases (if any) are unknown but increases interruptions in the supply of equipment for our networks could may impact our current accounting policies under which the spectrum impact the quality of Wireless’ service or impede network licences are treated as an indefinite life intangible asset and are not development and expansion. amortized.

Restrictions on the Use of Wireless Handsets While Driving May There is No Guarantee that Wireless’ Service Revenue Will Exceed Reduce Subscriber Usage. Increased Handset Subsidies. Most provincial government bodies have introduced and/or enacted Wireless’ business model, as is generally the case for other North legislation to restrict or prohibit wireless handset usage while driving American wireless carriers, is substantially based on subsidizing the while permitting hands-free usage. The only Canadian jurisdiction cost of the handset to the customer to reduce the barrier to entry, currently not having this type of legislation is Nunavut. while in return requiring a term commitment from the customer. For Some studies have indicated that certain aspects of using wireless certain handsets and smartphone devices, Wireless will commit with handsets while driving may impair the attention of drivers in various the supplier to a minimum subsidy. Wireless’ business could be circumstances, making accidents more likely. Laws prohibiting or materially adversely affected if by virtue of law or regulation or restricting the use of wireless handsets while driving could have the negative customer behaviour, Wireless was unable, or was effect of reducing subscriber usage, which could cause an adverse significantly restricted in its ability, to require term commitments or effect on Wireless’ business. Additionally, concerns over the use of early cancellation fees from its customers or did not receive the wireless handsets while driving could lead to litigation relating to service revenues that it anticipated from the customer commitment. accidents, deaths or bodily injuries, which could also have an adverse effect on Wireless’ business. Foreign Ownership Changes Could Increase Competition. Wireless could face increased competition if there is a removal of the Concerns About Radio Frequency Emissions May Adversely Affect limits on foreign ownership and control of wireless licences or a Our Business. relaxation of the limits, such as seen with the approval of Globalive to Occasionally, media and other reports have highlighted alleged links operate with its current ownership structure. Legislative action to between radio frequency emissions from wireless handsets and

62 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 63 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT It isproperties well that are established leaderswhen in that advertising their respective budgets advertising markets areradio, and dollars tightened. television categories Although and migrate mosttheir magazine of respective to properties markets, Media’s currently media suchfuture. perform performance well may Advertisers in notdecisions continue base on in statistics a the industry such substantial associations as and ratingsratings part agencies. or and magazine of If readership readershipMedia’s generated Media’s levels their were advertising by radio to purchasing sales and decreaseadvertisers could substantially, volumes television be adversely and affected. the rates which itChanges charges in Technology Could IncreaseThe Competition. increasing utilization ofto PVRs generate could television influencewith advertising Media’s revenues the capability as opportunitynetworks. viewers are The to provided emergence skipradio of advertising products subscriber-based could airednegatively satellite change on impact and radio theaudiences digital the are audience television also results listening migratingavailable. to of habits the Internet Media’s and as radio more video stations. becomes Certain An Increase in Paper Prices,Adversely Printing Affect Costs Media’s or Results Postage ofA Could Operations. significant portionpaper, of printing Publishing’s and operatinglargest expenses postage raw consists expenses. of Publishing’s material Paper operating expense, is expenses Publishing’soutside representing in suppliers single approximately for 2011. allof 9% of Publishing paper its depends of paper in supplies, stock upon can holds itself, fluctuate limited and considerably. quantities is Moreover,to unable pass Publishing to paper is cost control increases generallyparties paper on unable for prices, to customers. all which Publishing of reliesthe its on printing Canadian third services. Postal Inpublications. addition, Service Any Publishing disruption to in relies printing distribute on a or a postage services material large could have condition. percentage impact of A on its postage material Media’s expenses to increase results Publishing couldon in of have Media’s a business, paper results materially operations of adverse operations prices, effect or or financial printing condition. financial costs or incumbent telecom operators,these pursuant to rulesbusinesses. CRTC could rules. Changes severely to affect the costOver-the-Air Television Station of Licence RenewalsAffect operating Could Cable’s Adversely Results of these Operations. An imposition of asection VFS regime entitled wouldFee-for-Carriage increase “Review Rogers’ costs. and See ofRegulation the and Distant Regulatory Broadcasting Developments”. Signal Regulations Fees” including underRISKS “Government AND UNCERTAINTIES SPECIFIC TO MEDIA Pressures Regarding Channel Placement Couldthe Negatively Tier Impact Status of CertainUnfavourable of channel Media’s Channels. placementof could negatively The affectSportsnet, Shopping the results Channel, SportsnetBiography and Channel (Canada), ONE, our Outdoor Life Network, specialty Sportsnet and FX channels, (Canada). World, including G4A Loss in Canada, Media’s MarketMagazine Position Readership The in Could Radio, Adversely Television ImpactVolumes or Media’s and Sales Advertising Rates. Cable’s Business Telephony Operations areFacilities Highly and Dependent Services on of theCable’s ILECs. out-of-territorydependent business on telephony the operations availability are of highly facilities/services acquired from Cable’s single most significantacquiring purchasing commitment is programming.significantly the in cost recent of years, particularly Programminggrowth in connection in with the costsprogramming recent subscriptions costs within to the haveoperating industry results digital could if Cable adversely increased is specialty affectto unable Cable’s its to subscribers. channels. pass such programming Increasing costs on Increasing Programming Costs Could AdverselyResults Affect of Cable’s Operations. Cable utilizes encryption technologyunauthorized to access protect its and cablesubscription to signals from packages. controltechnologies programming Cable to access prevent based alsoThere unauthorized on can access uses to beprevent encryption its unauthorized no decoding internet of assurance and television service. in signals that or the security internet Cable access future.encryption will If be Cable technology, ableprogramming is including, to unable premium Cable’s VOD effectively toservice and SVOD, control subscription revenues, as cable well mayCable’s as access revenues. levels internet decline, with which our for could result digital in a decline in If Cable is Unable toPrevent Maintain Unauthorized Sustainable Access Security to Measures DigitalModems, to Boxes Cable or Could Internet Experience a Decline in Revenues. Cable requires accessway to in support order to structuresway deploy cannot and facilities. be municipal secured, Where Cable access rightsof may to apply access of municipal to under the rights the CRTCCourt of to Telecommunications obtain of Act. a However, right Canadajurisdiction the ruled Supreme to in establishpoles 2003 the of that hydroelectric terms companies. theaccess and As to CRTC a conditions hydroelectric result does company of offrom poles not the this access is Ontario decision, have Energy obtained to Cable’s Board pursuantBoard. the and the to the orders New Brunswick Public Utilities Failure to Obtain Access toRights Support of Structures Way and Could Municipal IncreaseOur Cable’s Business. Costs and Adversely Affect Improvements in thecoupled quality with increasing of availability ofthe streaming television shows video and Internet movies oversystems. on increases the If Internet competitionCanadian changes to in Canadiancompetition technology multi-channel cable with are ourimprovements television made cable in broadcasting services toInternet, technology it may any increasingly are increase. becomes alternative distributionspeed a In made Internet substitute service. for addition, with the traditional as high- respect system, to wireless RISKS AND UNCERTAINTIES SPECIFIC TO CABLE Changes in Technology Could Increase Competition. various healthvarious concerns, medical includingWhile devices, cancer, there including and arehealth hearing interference no issues aids with definitive areconcerns directly reports and over attributable or radio pacemakers. to studieswireless frequency radio emissions stating handsets frequency may that emissions, possible or discourage such that the future expose regulatory use actionsmore us of may result restrictive to in the standardspowered potential imposition on of devices, litigation. radio suchpredict It frequency the as nature emissions is or wireless extent from of also handsets. any low such Wireless potential restrictions. is unable to MANAGEMENT’S DISCUSSION AND ANALYSIS

Blue Jays Player Contract Activity Could Adversely Affect Media’s Operating Expenses Results of Operations. Operating expenses are segregated into two categories for assessing The addition of new players or the termination and release of Blue business performance: Jays player contracts before the end of the contract term could have • Cost of equipment sales, which is comprised of wireless and cable an adverse effect on Media’s results. equipment costs; and • Other operating expenses, which include all other expenses 5. ACCOUNTING POLICIES AND NON-GAAP incurred to operate the business on a day-to-day basis and service MEASURES existing subscriber relationships. These include: • merchandise for resale, such as Video merchandise and depreciation of Video rental assets, and purchases by The KEY PERFORMANCE INDICATORS AND NON-GAAP MEASURES Shopping Channel; We measure the success of our strategies using a number of key performance indicators, which are outlined below. The following key • employee salaries and benefits, such as remuneration, bonuses, performance indicators are not measurements in accordance with IFRS pension, employee benefits and stock-based compensation; and or Canadian GAAP and should not be considered as an alternative to • other external purchases, such as service costs, including inter- net income or any other measure of performance under IFRS or carrier payments to roaming partners and long-distance carriers, Canadian GAAP. network service delivery costs, and the CRTC contribution levy; sales and marketing related expenses, which represent the costs Subscriber Counts to acquire new subscribers (other than those related to We determine the number of subscribers to our services based on equipment), including advertising and promotion and active subscribers. A wireless subscriber is represented by each commissions paid to third parties for new activations; and identifiable telephone number. Cable television and Internet operating, general and administrative related expenses, subscribers are represented by a dwelling unit, and cable telephony including retention costs, network maintenance costs, subscribers are represented by line counts. In the case of multiple programming costs, facility costs, Internet and e-mail services, units in one dwelling, such as an apartment building, each tenant printing and production costs, and Industry Canada license fees with cable service, whether invoiced individually or having services associated with spectrum utilization. included in his or her rent, is counted as an individual subscriber. In the wireless and cable industries in Canada, the demand for Institutional units, such as hospitals or hotels, are each considered to services continues to grow and the variable costs, such as commissions be one subscriber. When subscribers are deactivated, either paid for subscriber activations, as well as the fixed costs of acquiring voluntarily or involuntarily for non-payment, they are considered to new subscribers, are significant. Fluctuations in the number of be deactivations in the period the services are discontinued. Wireless activations of new subscribers from period-to-period and the seasonal prepaid subscribers are considered active for a period of 180 days nature of both wireless and cable subscriber additions result in from the date of their last revenue-generating usage. fluctuations in sales and marketing related expenses and accordingly, We report wireless subscribers in two categories: postpaid and in the overall level of operating expenses. In our Media business, sales prepaid. Postpaid and prepaid include voice-only subscribers, data- and marketing related expenses may be significant to promote only subscribers, as well as subscribers with service plans integrating publishing, radio and television properties, which in turn attract both voice and data. advertisers, viewers, listeners and readers. Internet, Home Phone and RBS subscribers include only those Operating Profit and Operating Profit Margin subscribers with service installed, operating and on billing and We define operating profit as net income before depreciation and excludes those subscribers who have subscribed to the service but for amortization, income taxes and non-operating items, which include whom installation of the service was still pending. finance costs (such as interest on long-term debt, loss on repayment of long-term debt, foreign exchange gains (losses), change in fair Subscriber Churn value of derivative instruments, capitalized interest and amortization Subscriber churn is calculated on a monthly basis. For any particular of deferred transaction costs), impairment of assets, share of income month, subscriber churn for Wireless and Cable represents the in associates and joint ventures accounted for using the equity number of subscribers deactivating in the month divided by the method and other income. Operating profit is a standard measure aggregate number of subscribers at the beginning of the month. used in the communications industry to assist in understanding and When used or reported for a period greater than one month, comparing operating results and is often referred to by our peers and subscriber churn represents the sum of the number of subscribers competitors as EBITDA (earnings before interest, taxes, depreciation deactivating for each period incurred divided by the sum of the and amortization) or OIBDA (operating income before depreciation aggregate number of subscribers at the beginning of each period and amortization). We believe this is an important measure as it incurred. allows us to assess our ongoing businesses without the impact of depreciation or amortization expenses as well as non-operating Average Revenue Per User factors. It is intended to indicate our ability to incur or service debt, ARPU is calculated on a monthly basis. For any particular month, invest in PP&E and allows us to compare us to our peers and ARPU represents monthly revenue divided by the average number of competitors who may have different capital or organizational subscribers during the month. In the case of Wireless, ARPU structures. This measure is not a defined term under IFRS or Canadian represents monthly network revenue divided by the average number GAAP. of subscribers during the month. ARPU, when used in connection with We calculate operating profit margin by dividing operating profit by a particular type of subscriber, represents monthly revenue generated total revenue, except in the case of Wireless. For Wireless, operating from those subscribers divided by the average number of those profit margin is calculated by dividing operating profit by network subscribers during the month. When used or reported for a period revenue. Network revenue is used in the calculation, instead of total greater than one month, ARPU represents the monthly average of the revenue, because network revenue better reflects Wireless’ core ARPU calculations for the period. We believe ARPU helps to identify business activity of providing wireless services. Refer to the section trends and to indicate whether we have been successful in attracting entitled “Supplementary Information: Non-GAAP Calculations” for and retaining higher value subscribers. further details on this Wireless, Cable and Media calculation.

64 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 65 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT services, cable, telephony,network Internet services services, and rental mediaon of subscriptions a pro are equipment, rata recorded basis as as the revenue service is provided; optional services, pay-per-use services, videoof rentals products and are other recorded sales asdelivered; revenue as the services or products are when the equipment is delivereddealer and or accepted subscriber by in the therelated independent case to of new direct and existing sales.of subscribers Equipment equipment revenues; are subsidies recorded as a reduction meet the criteria asWireless, a these separate fees unitand, are of in accounting. recorded the As asrelated case a service part result, of period. of in The Cable,from equipment related 26 are to service revenue deferred 48 period months,service and for based Cable and on amortized subscriber ranges moves. over disconnects, Incrementalreconnects transfers the are of direct deferred installation to costsand the related amortized extent to of over deferredfees. the installation same New fees period connect asamortized installation over these the costs useful related life are installation of capitalized the related to assets; PP&E and on our radio oror television is displayed stations, on is our featured digital properties; in our publications, subscriptions from cable andmonth satellite in providers which are they recorded are in earned; the recognized as theseason. related Revenue games from radio areat and played the television time during agreements the is therevenue related recorded games baseball are from aired.Agreement, The Blue the which Jays distributes alsobased Major receive funds on to each League andseason club’s in revenues. from Baseball This which membercollectibility revenue it Revenue clubs, is is is reasonably assured; recognized earned, Sharing in when the the amount is estimableWireless, and Cabledirectly and to the Media revenuerelate; for products and the products and and services services to which are they charged CRITICAL ACCOUNTING POLICIES This MD&A hasConsolidated been prepared Financial with Statementsbeen reference prepared and to in our Notes accordanceBoard 2011 with thereto, Audited IFRS. reviews which The Auditannual our have Committee filings, accounting of the andstatements policies, to recommends reviews the approval Board.policies, all For of a see quarterly detailed our discussionStatements. Note and annual of In 2 our financial addition, accounting toadopted a by the us discussion and 2011sections of critical new Audited accounting “New accounting estimates ConsolidatedEstimates”, are respectively. Accounting standards Financial discussed in Standards” the and “CriticalRevenue Recognition Accounting Revenue is categorizedwhich into are the recurringrelationships, contractual following in or otherwise, types, with nature our the subscribers: on majority• a of monthly Monthly subscriber basis fees from in ongoing connection with wireless and wireline • Revenue from airtime, data services, roaming, long-distance and • Revenue from the sale of wireless and cable equipment is recorded • Installation fees and activation fees charged to subscribers do not • Advertising revenue is recorded in the period the advertising airs • Monthly subscription revenues received by television stations for • Blue Jays’ revenue from home game admission and concessions is • Discounts provided to customers related to combined purchases of sted Operating Profit Margin, E & Additions to PP Additions to PP&E includeplacing those our costs PP&E associated intorequires with service. extensive acquiring and Because and continual theinvestment investment communications in in new business technologies equipment, andand including expansion capacity, of geographical additions reach focuses to continually on PP&Ethese the are expenditures. planning, We significant focusthan funding and more and we on management management do managingbecause of additions on additions to managing to PP&E whereas PP&E depreciation have depreciation and ameasures amortization and required direct under expense IFRS impact amortization or on Canadian are GAAP. ourThe non-cash cash additions flow, accounting tocapital PP&E represent before related PP&EAccordingly, changes that for to we purposes non-cash actually ofthat comparing working took our additions title PP&E to to outlays, PP&Ecapital we in best before believe the reflect related period. our changesaccurate cost determination to of for non-cash period-to-period PP&E comparisons. working in a period, and provide a more Adjusted Net Income, and AdjustedPer Basic Share and Diluted Earnings Adjusted Operating Profit, Adju We have includedbelieve provide certain useful non-GAAPthis information MD&A financial to in measuring management measureswhich our and include that financial readers performance. operating we operating of These profit, measures, profit adjusted margin, operatingdiluted profit, adjusted earnings adjusted netstandardized per income, meaning share, adjustedcomparable basic under and to and GAAP free similarlytraded titled and, cash companies, measures nor therefore, flow presented shouldother by they may do financial other be not construed measures publicly not asdefine determined be an have in adjusted alternative accordance operating to a based with profit compensation GAAP. expense as (recovery); We operatingand (ii) integration, acquisition profit restructuring expenses; less: (iii)(iv) (i) settlement other of stock- items, pension net.earnings obligations; In and per addition, share adjustedimpairment excludes of net assets loss income and the and onitems. related adjusted income repayment tax of impacts of long-term the above debt, We believe that these non-GAAPmore financial effective measures analysis may of provide our foritems operating a mentioned performance. above In could addition, potentially the due distort the to analysis of the trends company-to-company and fact can that impairthese comparability. they The items are exclusion does of non-recurring. volatile not and mean can that varyWe they widely are use from unusual,decisions, these forecast infrequent future non-GAAP or resultsperiod-to-period and measures and evaluate compare our internally to performancebelieve forecasts from to on that a makemanaging consistent these basis. the strategic We measures business,them to and present assess the to underlying trends changes investors in our that andAdjusted business over analysts time. operating are in profitwhich useful enabling and are in adjusted reviewedDirectors, are operating regularly also useful profit bydecisions in margins, assessing regarding management our the performance and ongoingability and to our in operations generate making of cash Board flows. the of business andThese the non-GAAP measures should benot viewed a as substitute a for, supplementCanadian our to, results and of GAAP. operationsmeasures reported A to under operating IFRS reconciliation or included profit, net of income inNon-GAAP and these Calculations”. earnings the per non-GAAP share section is financial entitled “Supplementary Information: MANAGEMENT’S DISCUSSION AND ANALYSIS

• Awards granted to customers through customer loyalty programs Determining the Fair Values of Assets Acquired and Liabilities are considered a separately identifiable component of the sale Assumed transactions and, as a result, are deferred until recognized as The determination of the fair values of the tangible and intangible operating revenue when the awards are redeemed by the assets acquired and the liabilities assumed in an acquisition involves customer. considerable judgment. Among other things, the determination of these fair values involves the use of discounted cash flow analyses, We offer certain products and services as part of multiple deliverable estimated future margins, estimated future subscribers, estimated arrangements. We divide multiple deliverable arrangements into future royalty rates and the use of information available in the separate units of accounting. Components of multiple deliverable financial markets. Refer to Note 7 of the 2011 Audited Consolidated arrangements are separately accounted for provided the delivered Financial Statements for acquisitions made during 2011. Should actual elements have stand-alone value to the customers and the fair value rates, cash flows, costs and other items differ from our estimates, this of any undelivered elements can be objectively and reliably may necessitate revisions to the carrying value of the related assets determined. Consideration for these units is measured and allocated and liabilities acquired, including revisions that may impact net amongst the accounting units based upon their fair values and our income in future periods. relevant revenue recognition policies are applied to them. We recognize revenue once persuasive evidence of an arrangement exists, Useful Lives of PP&E delivery has occurred or services have been rendered, fees are fixed We depreciate the cost of PP&E over their respective estimated useful and determinable and collectibility is reasonably assured. lives. These estimates of useful lives involve considerable judgment. In determining the estimates of these useful lives, we take into account Unearned revenue includes subscriber deposits, installation fees and industry trends and company-specific factors, including changing amounts received from subscribers related to services and technologies and expectations for the in-service period of certain subscriptions to be provided in future periods. assets. On an annual basis, we re-assess our existing estimates of useful lives to ensure they match the anticipated life of the Subscriber Acquisition and Retention Costs technology from a revenue-producing perspective. If technological We operate within a highly competitive industry and generally incur change happens more quickly or in a different way than anticipated, significant costs to attract new subscribers and retain existing we might have to reduce the estimated life of PP&E, which could subscribers. All sales and marketing expenditures related to subscriber result in a higher depreciation expense in future periods or an acquisitions, retention and contract renewals, such as commissions impairment charge to write down the value of PP&E. and the cost associated with the sale of customer premises equipment, are expensed as incurred. Capitalization of Direct Labour, Overhead, and Interest Certain direct labour and indirect costs associated with the A large percentage of the subscriber acquisition and retention costs, acquisition, construction, development or betterment of our networks such as equipment subsidies and commissions, are variable in nature are capitalized to PP&E. The capitalized amounts are calculated based and directly related to the acquisition or renewal of a subscriber. In on estimated costs of projects that are capital in nature, and are addition, subscriber acquisition and retention costs on a generally based on a rate per hour. In addition, interest costs are per-subscriber-acquired basis fluctuate based on the success of capitalized during construction and development of certain PP&E. promotional activity and the seasonality of the business. Accordingly, if we experience significant growth in subscriber activations or Accrued Liabilities renewals during a period, expenses for that period will increase. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of accrued liabilities at the date of the financial statements and the Capitalization of Direct Labour, Overhead, and Interest reported amounts expensed during the year. Actual results could During construction of new assets, direct costs plus a portion of differ from those estimates. applicable overhead and interest costs are capitalized. Repairs and maintenance expenditures are charged to operating expenses as Onerous Contracts incurred. A provision for onerous contracts is recognized when the unavoidable costs of meeting the obligation under the contract exceed the CRITICAL ACCOUNTING ESTIMATES expected benefits to be derived by the Company. The provision is This MD&A has been prepared with reference to our 2011 Audited measured at the present value of the lower of the expected cost of Consolidated Financial Statements and Notes thereto, which have terminating the contract and the expected net cost of continuing been prepared in accordance with IFRS. The preparation of these with the contract. Before a provision is established, we recognize any financial statements requires management to make estimates and impairment loss on the assets associated with the contract. assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent Amortization of Intangible Assets assets and liabilities. These estimates are based on management’s We amortize the cost of finite-lived intangible assets over their historical experience and various other assumptions that are believed estimated useful lives. These estimates of useful lives involve to be reasonable under the circumstances, the results of which form considerable judgment. During 2004 and 2005, the acquisitions of the basis for making judgments about the reported amounts of Fido, Call-Net, the minority interests in Wireless and Sportsnet, assets, liabilities, revenue and expenses that are not readily apparent together with the consolidation of the Blue Jays, as well as the from other sources. Actual results could differ from those estimates. acquisitions of Futureway and Citytv in 2007, Aurora Cable and We believe that the accounting estimates discussed below are critical channel m in 2008, K-Rock and Outdoor Life Network in 2009, Blink, to our business operations and an understanding of our results of Cityfone, Kincardine and BV! Media in 2010, and Atria, Compton, operations or may involve additional management judgment due to BOUNCE-FM and BOB-FM in 2011 resulted in significant increases to the sensitivity of the methods and assumptions necessary in our intangible asset balances. Judgment is also involved in determining the related asset, liability, revenue and expense determining that spectrum and broadcast licences have indefinite amounts. lives, and are therefore not amortized.

66 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 67 Life Decreased by 1 year Decrease in Net Income if ROGERS COMMUNICATIONS INC. Life Increased by 1 year Increase in Net Income if 2011 ANNUAL REPORT 5 – 20 years $ 1 $ (1) Amortization Period Pension Plans When accounting for definedmade benefit pension in plans, determining assumptionsfuture are the performance valuation of ofestimates benefit plan include obligations assets. theassets and discount The the and rate, primary theprimary the assumptions assumptions rate expected and and ofpension return estimates compensation asset would on impact and increase.current plan pension economic liability, Changes conditions expense, and may toplan also other have of these an comprehensive the impact Companyable on income. the as to The pension there earn ischanges no the may assurance assumed thatvariables result the which rate would in plan of result willcontributions in changes be return. the in Company in the As being future requiredcontributions the well, to that make market-driven discount differ and significantlyvaluation rates process. from assumptions the and current incorporated other into the actuarial networks are based on theof underlying the contractual lives. marketing The agreement useful isdetermination life based on of historical customerimpacts the lives. amortization The expense estimated inperiods. useful the The current lives impact period as onthe of well net useful as income intangible lives future onshown of in assets a the the full-year chart below. basis finite-lived of intangible changing assets by one year is Credit Spreads and the ImpactRogers’ on Derivatives Fair Value are ofmark-to-market recorded Derivatives using valuation, an whichtreasury-related estimated is credit-adjusted discount determinedestimated mark-to-market by rates valuation by increasing anthe used estimated relevant the Bond term Spread and to for counterpartyDerivatives for in each calculate an Derivative. In assetcounterparties the the position case of (i.e., owe risk-free thosecounterparty Derivatives is Rogers), for added to whichestimated the the the credit-adjusted risk-free value. discount In rate Bond theposition to case of determine Derivatives Spread the (i.e., incounterparties), a liability for those Rogers’discount the Bond rate. Derivatives The Spread estimated bank are for credit-adjusted values is of subject which the addedcounterparties. Derivatives to Rogers to changes the owes risk-free in the credit spreads of Rogers and its Income Tax Estimates The Company provides forinformation income taxes in based each oncalculation currently of available the of jurisdictionssignificant income in judgment in which taxesCompany’s interpreting we tax tax in operate. filings rules The change are many and the subject regulations. amount cases, toliabilities, of The and audits, current however, could, which in and certainof could requires deferred circumstances, interest and result materially income penalties. in tax the assessment assets and Additionally, estimation of thethe income recoverability provisions includes of evaluating deferredthe tax ability assets to basedexpire use on against the our future underlying assessment taxableexisting future of income. tax tax Our laws, deductions assessmentstrategies. estimates before is Deferred of they based tax future upon assetsmore profitability are and likely recognized to tax thanwhich the planning the not extent deferred that tax that assets it can taxable is be utilized. profit will be available against Indefinite-lived intangible assets,broadcast including licences, goodwill as well andother as spectrum/ intangible definite life assets,basis assets, are including or assessed PP&E and forgenerating more unit impairment often (“CGU”) onthat is if an generates the cash annual events smallest inflowsinflows identifiable or that from group are other circumstances largely assets of independent orlife assets warrant. groups of intangible of assets the A assets. are cash Goodwill allocatedbased cash to and on CGUs indefinite for the thehigher level impairment testing than at an which operatingof management future segment. monitors cash These flows, it, analyses estimatedrates. which periods involve of During is estimates use 2011, not and applicablerecorded no discount an impairment impairment wasour charge broadcast recorded. of assets, During $11 due to millionweakening 2010, the industry related we challenging expectations to economic conditions in certainin and the advertising of revenues. radio business and a decline Impairment of Assets Brand Names Impact of Changes in Estimated Useful Lives (In millions of dollars) Customer RelationshipsRoaming AgreementsMarketing Agreements 2 – 5 years 2 – 12 5 years years $ 13 $ $ 3 3 $ (23) $ $ (4) (5) The determination ofinvolves the historical estimatednature experience, useful of marketing lives thesubscriber industries of considerations bases in brand andunderlying are which names subscribers the we based and judgments operate.rates on as The to going the the useful forward. applicabilitybased historical lives of The these on of churn usefulequipment. estimates rates lives The of of of useful roaming the the lives agreements useful of are lives wholesale agreements of and the dealer related network MANAGEMENT’S DISCUSSION AND ANALYSIS

The following table illustrates the increase (decrease) in the accrued benefit obligation and pension expense for changes in these primary assumptions and estimates:

Impact of Changes in Pension-Related Assumptions

Accrued Benefit Obligation at End Pension Expense (In millions of dollars) of Fiscal 2011 Fiscal 2011 Discount rate 5.50% 6.00% Impact of: 1% increase $ (150) $ (10) 1% decrease 182 9

Rate of compensation increase 3.00% 3.00% Impact of: 0.25% increase $8$2 0.25% decrease (8) (2)

Expected rate of return on assets N/A 6.80% Impact of: 1% increase N/A $ 6 1% decrease N/A (6)

Allowance for Doubtful Accounts Business We have elected not to restate any Business A significant portion of our revenue is earned from selling on credit Combinations Combinations that have occurred prior to to individual consumers and business customers. The allowance for January 1, 2010. doubtful accounts is calculated by taking into account factors such as our historical collection and write-off experience, the number of days Borrowing We have elected to apply the requirements the customer is past due and the status of the customer’s account Costs of IAS 23 Borrowing Costs prospectively from with respect to whether or not the customer is continuing to receive January 1, 2010. service. As a result, fluctuations in the aging of subscriber accounts will directly impact the reported amount of bad debt expense. For example, events or circumstances that result in a deterioration in the The information above is provided to allow investors and others to aging of subscriber accounts will in turn increase the reported obtain a better understanding of our IFRS changeover plan and the amount of bad debt expense. Conversely, as circumstances improve resulting possible effects on, for example, our financial statements and customer accounts are adjusted and brought current, the and operating performance measures. These are estimates based on reported bad debt expense will decline. our current understandings, and readers are cautioned that it may not be appropriate to use such information for any other purpose. NEW ACCOUNTING STANDARDS This information also reflects our most recent assumptions and expectations; circumstances may arise, such as changes in IFRS, International Financial Reporting Standards regulations or economic conditions, which could change these In February 2008, the Accounting Standards Board (“AcSB”) assumptions or expectations. confirmed that IFRS will be mandatory in Canada for profit-oriented publicly accountable entities for fiscal periods beginning on or after RECENT ACCOUNTING PRONOUNCEMENTS January 1, 2011. Our first annual IFRS financial statements are for the year ending December 31, 2011 and include the comparative period IFRS 7, Financial Instruments: Disclosures of 2010. Starting with the March 31, 2011 quarterly report, we have In October 2010, the IASB amended IFRS 7, Financial Instruments: provided unaudited consolidated quarterly financial information in Disclosures (“IFRS 7”). This amendment enhances disclosure accordance with IFRS including comparative figures for 2010. Please requirements to aid financial statement users in evaluating the nature refer to Note 3 of our Audited Consolidated Financial Statements for of, and risks associated with an entity’s continuing involvement in a summary of the differences between our financial statements derecognized financial assets. This amendment is effective for the previously prepared under Canadian GAAP and to those under IFRS as Company’s interim and annual consolidated financial statements at January 1, 2010 and, for the year ended December 31, 2010. commencing January 1, 2012. The Company is assessing the impact of this amended standard on its consolidated financial statements. First-Time Adoption of International Financial Reporting Standards IAS 12, Deferred Tax: Recovery of Underlying Assets Our adoption of IFRS required the application of IFRS 1, which In December 2010, the IASB amended IAS 12, Deferred Tax: Recovery provides guidance for an entity’s initial adoption of IFRS. IFRS 1 of Underlying Assets (“IAS 12”). IAS 12 will now include a rebuttal generally requires that an entity apply all IFRS effective at the end of presumption which determines that the deferred tax on the its first IFRS reporting period retrospectively. However, IFRS 1 does depreciable component of an investment property measured using include certain mandatory exceptions and limited optional the fair value model from IAS 40 should be based on its carrying exemptions in specified areas of certain standards from this general amount being recovered through a sale. The standard has also been requirement. The following are the significant optional exemptions amended to include the requirement that deferred tax on available under IFRS 1 that we have applied in preparing our first non-depreciable assets measured using the revaluation model in IAS financial statements under IFRS. 16 should be measured on the sale basis. This amendment is effective for the Company’s interim and annual consolidated financial statements commencing January 1, 2012. The Company is assessing the impact of this amended standard on its consolidated financial statements.

68 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 69 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT , Investments in Associates and Joint Ventures 8 IFRS 9, Financial Instruments In October(“IFRS 2010, 9”). theRecognition IFRS and IASB Measurement, 9, establishes issued principlesreporting which for of IFRS the replaces financial financial assets 9,relevant IAS and and financial Financial 39, useful liabilities informationtheir Instruments that Financial assessment to of will the users Instruments: present amounts, offuture timing and financial cash uncertainty statements flows. of an for interim This entity’s new and standard annual isJanuary consolidated effective 1, for financial 2015. thestandard The statements on Company’s its Company commencing consolidated financial is statements. assessing the impact of this new effective for the Company’s interimstatements and annual commencing consolidated January financial the 1, impact 2013. of Thestatements. this Company is amended assessing standard on its consolidatedIAS 27, financial Separate Financial Statements In May 2011, the IASB(“IAS amended IAS 27, 27”). Separateconsolidated Financial Statements statements This fromConsolidated IAS 27 Financial amendment and Statements.when moves The removes a it amendment company over prepares mandatesin the to separate that subsidiaries, IFRS financial statements, associates, 10, requirementsaccounted investment and for jointly for usingIFRS controlled either 9, entities Financial the Instruments. are cost Inthe addition, to method treatment this or be amendment for determines group in recognizing accordance dividends, reorganizations, with amendment the and treatment is of someconsolidated effective certain financial disclosure for statementsCompany commencing the requirements. January is 1, Company’s assessing This consolidated 2013. financial the The interim statements. impact and of this annual amendedIAS standard 2 on its In May 2011, the IASBJoint amended IAS Ventures 28, (“IAS Investmentsportion in of 28”). Associates an and investment This inbeen an amendment classified associate or requires as jointmethod, any venture held that retained until has for not continues sale disposal. to to Afterrequires be be for disposal, measured it an to usingmethod. if be associate The continued the to the or amendment equity beretained also accounted joint retained interest disallows for in under venture, the interest influence an the remeasurement or equity investment the of joint upon control. any amendment Company’s the This cessation amended interim of standard iscommencing significant and effective January for 1, annual 2013. the Thethis consolidated amended Company standard is on financial assessing its the consolidated impact statements financial of statements. IAS 19, Employee Benefits In June 2011, the IASBThis amended amendment IAS 19, eliminated Employeemandates Benefits the (“IAS that use 19”). of allalso the remeasurement ‘corridor’ impacts approach enhances beinformation and about recognized the in characteristics the of OCI.risk defined that benefit It disclosure plans entities and are the This exposed amendment to requirements, clarifies through when participation aand in company providing those should an recognize plans. expense a better liability for termination benefits. This amended standard is IAS 1, Presentation of FinancialIn Statements June 2011,Statements (“IAS the 1”). This IASB amendmentpresent requires amended the an entity items IAS to of separately to OCI 1, as Presentation items profit that ofCompany’s may and or Financial interim may loss. notcommencing be and This January reclassified 1, annual 2013. amended Thethis consolidated amended Company standard standard is on financial assessing its is the consolidated impact statements financial of effective statements. for the IFRS 13, Fair Value Measurement In May(“IFRS 2011, 13”). the IFRSindividual IASB 13 IFRS issued replacesguidance. the IFRS with The standard fair 13, a also value requiresassess disclosures Fair single guidance which enable Value contained source users the to measurements. in Measurement of This methods fair newinterim and value and standard measurement annual is inputsJanuary consolidated 1, effective used financial 2013. forstandard The statements on the its to Company commencing consolidated Company’s financial is statements. develop assessing the fair impact of value this new IFRS 12, Disclosure of InterestsIn in May Other 2011, Entities theEntities IASB issued (“IFRS IFRS 12,disclosure 12”). Disclosure requirements of IFRS Interests forincluding in 12 all Other establishes forms ofunconsolidated new subsidiaries, structured interests entities. and in Thisthe comprehensive new other joint Company’s standard entities, interim is andcommencing effective annual January for arrangements, consolidated 1, 2013. financial Thethis statements new Company standard is associates on assessing its the consolidated impact financial of statements. and IFRS 11, Joint Arrangement In May 2011, the IASBIFRS issued 11, IFRS 11, which JointVentures, Arrangements replaces (“IFRS the 11”). providesarrangements guidance by in for IASarrangement, focusing rather 31, a than on its Interestsstandard legal the in form more (as rights Joint addresses isarrangements currently and realistic by the requiring inconsistencies case). obligations interests The in reflectionaccounted jointly of controlled in for entities the of toeffective be under the for the joint Company’s the interim reportingstatements and equity annual commencing consolidated January of financial method.the 1, This 2013. joint impact The newstatements. Company of standard is this assessing is new standard on its consolidated financial IFRS 10, Consolidated Financial Statements In MayStatements 2011, (“IFRS the 10”).requirements of IFRS IASB SIC-12 Consolidation-Special 10, Purpose27 issued Entities which and Consolidated IFRS IAS replacesprinciples the and 10, for consolidation Separate Consolidatedfinancial the statements Financial Financial presentation whenentities. Statements, and This an new standard preparation establishes entity isannual effective of controls for consolidated the one consolidated Company’s2013. financial interim The or and Company statements is more assessingconsolidated commencing the financial other impact statements. of January this new 1, standard on its MANAGEMENT’S DISCUSSION AND ANALYSIS

6. ADDITIONAL FINANCIAL INFORMATION

RELATED PARTY TRANSACTIONS We have entered into certain transactions in the normal course of interest. The amounts paid to these broadcasters are as follows: business with certain broadcasters in which we have an equity

Years ended December 31, (In millions of dollars) 2011 2010 % Chg Fees paid to broadcasters accounted for by the equity method $17 $16 6

We have entered into certain transactions with companies, the or its subsidiary companies. Total amounts paid to these related partners or senior officers of which are Directors of our Company and/ parties, directly or indirectly, are as follows:

Years ended December 31, (In millions of dollars) 2011 2010 % Chg Printing, legal services and commission paid on premiums for insurance coverage $41 $39 5

We have entered into certain transactions with our controlling administrative services, were less than $1 million for the years ended shareholder and companies controlled by the controlling shareholder. December 31, 2011 and 2010. These transactions are subject to formal agreements approved by the Audit Committee. Total amounts paid to these related parties for These transactions are measured at the exchange amount, being the charges to Rogers for business use of aircraft, net of other amount agreed to by the related parties and are reviewed by the Audit Committee and are at market terms and conditions.

70 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 71 Canadian GAAP ROGERS COMMUNICATIONS INC. 2.1 2.1 2.1 2.1 (77) (278) (305) (255) (95) (97) (121) (78) 4%6% 3% 8% 12% 10% 15% 26% 933 563 343 485 105 73131 142 119 82 142 176 576 621 638 642 2.89 2.51 1.98 1.66 2.59 2.38 1.57 0.99 (116) (88) (81) (317) 2010 2009 2008 2007 3,760 4,273 4,716 4,624 4,619 4,282 3,860 4,668 1,964 2,597 3,056 2,438 2,591 2,643 2,761 2,086 1,461 1,407 1,496 1,317 3,108 3,018 3,024 3,027 3,785 3,948 3,809 3,558 1,391 1,325 1,2201,426 802 1,324 1,233 1,016 13,273 12,745 12,366 10,701 2011 ANNUAL REPORT $ 17,033 $ 17,018 $ 17,082 $ 15,325 $ 17,033$ $ 17,018 8,654 $ 17,082 $ $ 8,463 15,325 $ 8,506 $ 6,033 $ 12,142 $ 11,731 $ 11,335 $ 10,123 $ 4,635$ 1,502 $ 4,388 $ $ 1,478 4,060 $ $ 1,002 3,703 $ 637 $ 4,531 $ 4,316 $ 4,078 $ 3,099 $ 8,437 $ 8,197 $ 7,898 $ 7,289 $ 1.28 $ 1.16 $ 1.00 $ 0.42 $ 1,678$$ 3,880 $ 1,834 1,556 $ $ $ 3,526 1,260 $ 1,855 $ $ 3,500 1,066 $ 2,021$ $ 3,135 2.91 1,796 $ 2.51 $ 1.98 $ 1.67 $ 2.61 $ 2.38 $ 1.57 $ 1.00 $ 6,973 $ 6,654 $ 6,335 $ 5,503 $ 3,151 $ 3,006 $ 2,797$ $ 3,173 2,532 $ 3,042 $ 2,806 $ 2,589 IFRS 2.2 2% 2% 154 180 543 3.19 2.86 2011 (117) (150) (112) 3,572 4,756 1,107 2,140 2,721 1,611 3,280 3,796 1,559 1,612 14,790 $ 18,362 $ 18,362 $ 10,034 $ 12,428 $ 4,716 $ 1,563 $ 4,571 $ 9,114 $ 1.42 $ 1,747 $$ 3,960 2,127 $ 3.22 $ 2.88 $ 7,138 $ 3,008 $ 3,036 (3) (2) (1) (1) (1) Revenue growth Adjusted operating profit growth Debt/adjusted operating profit Total liabilities Shareholders’ equity Long-term debt Accounts payable and other liabilities Investments Other assets Corporate and eliminations Intangible assets Media Media Media Corporate and eliminations Corporate and eliminations Property, plant and equipment, net Goodwill Dividends declared per share Basic Diluted Basic Diluted Wireless Cable Wireless Wireless Cable Cable Ratios: Liabilities and Shareholders’ Equity Operating profit Net income Adjusted net income Adjusted operating profit Balance Sheet: Assets Cash flow from operations Property, plant and equipment expenditures Weighted average number of shares outstanding Adjusted earnings per share: Earnings per share: (1)(2) As defined. See the(3) section Cash entitled flow “Key from Performance operations Indicators excluding and Debt changes Non-GAAP includes in Measures”. net working derivative capital liabilities amounts. at the risk free mark-to-market value and is net of cash as applicable. Income and Cash Flow: Revenue FIVE-YEAR SUMMARY OF CONSOLIDATED FINANCIAL RESULTS Years Ended December 31, (In millions of dollars, except per share amounts) MANAGEMENT’S DISCUSSION AND ANALYSIS

SUMMARY OF SEASONALITY AND QUARTERLY RESULTS Other fluctuations in net income from quarter-to-quarter can also be Quarterly results and statistics for the previous eight quarters are attributed to losses on repayment of debt, foreign exchange gains or outlined following this section. losses, changes in the fair value of derivative instruments, other income and expenses, impairment of assets and changes in income tax Our operating results are subject to seasonal fluctuations that expense. materially impact quarter-to-quarter operating results. As a result, one quarter’s operating results are not necessarily indicative of what Summary of Fourth Quarter 2011 Results a subsequent quarter’s operating results will be. Each of Wireless, During the three months ended December 31, 2011, consolidated Cable and Media has unique seasonal aspects to its business. operating revenue increased 1% to $3,177 million compared to $3,138 million in the corresponding period in 2010, arising from Cable Wireless’ operating results are subject to seasonal fluctuations that Operations revenue growth of 3%, and Media revenue growth of 3% materially impact quarter-to-quarter operating results. In particular, while Wireless network revenue remained flat. Consolidated fourth operating results may be influenced by the timing of our marketing quarter adjusted operating profit increased 3% year-over-year to and promotional expenditures and higher levels of subscriber $1,094 million, with 14% growth at Cable and 83% growth at Media, additions and subsidies, resulting in higher subscriber acquisition and offset by a 5% decline at Wireless. activation-related expenses in certain periods. Consolidated operating income for the three months ended The operating results of Cable Operations services are subject to December 31, 2011 totalled $583 million, compared to $633 million in modest seasonal fluctuations in subscriber additions and the corresponding period of 2010. disconnections, which are largely attributable to movements of university and college students and individuals temporarily We recorded net income of $327 million for the three months ended suspending service due to extended vacations, or seasonal relocations, December 31, 2011, with basic and diluted earnings per share of $0.62 as well as our concentrated marketing efforts generally conducted and $0.61, respectively, compared to a net income of $302 million during the fourth quarter. Video operations may also experience with basic and diluted earnings per share of $0.54 and $0.50, modest fluctuations from quarter-to-quarter due to the availability respectively, in the corresponding period of 2010. and timing of release of popular titles throughout the year. RBS does not have any unique seasonal aspects to its business.

The seasonality at Media is a result of fluctuations in advertising and related retail cycles, since they relate to periods of increased consumer activity as well as fluctuations associated with the Major League Baseball season, where revenues and expenses are generally concentrated in the spring, summer and fall months.

In addition to the seasonal trends, revenue and operating profit can fluctuate from general economic conditions.

Wireless revenue and operating profit trends reflect the increasing number of wireless voice and data subscribers and increased handset subsidies as a result of a consumer shift towards smartphones, and a decrease in blended ARPU. Wireless has continued its strategy of targeting higher value postpaid subscribers and selling prepaid handsets at higher price points, which has also contributed over time to the significantly heavier mix of postpaid versus prepaid subscribers. Meanwhile, the successful growth in customer base and increased market penetration have been met by increasing customer service and retention expenses and increasing credit and collection costs. However, these costs have been offset by operating efficiencies and increasing roaming revenues from our subscribers travelling outside of Canada, as well as strong growth in roaming revenues from visitors to Canada utilizing our GSM network.

Cable Operations services revenue and operating profit increased primarily due to price increases, increased penetration of its digital products and incremental programming packages, and the scaling and rapid growth of our cable telephony service. Similarly, the steady growth of Internet revenues has been the result of a greater penetration of Internet subscribers as a percentage of homes passed. RBS’s operating profit margin reflects the pricing pressures on long- distance and higher carrier costs, with an increase in lower margin long-distance revenue. Video revenue has decreased as a result of a continued decline in video rental and sales activity.

Media’s results are generally attributable to continuous investment in prime time programming, increased subscriber fees and improvements in the advertising and consumer market. The launch of Sportsnet World, Sportsnet Magazine, CityNews and FX (Canada) during 2011 also resulted in incremental costs and revenue.

72 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 73 15 (15) ly recorded as – –– –– –– – ely. In addition, res for 2010 have egment results of rmer Rogers Retail segment ––– – ––– 2010 87 (87) ROGERS COMMUNICATIONS INC. 5 (4) (6) (41) (5) (14) (5) 4 24 40 62 5 40 26 (41) (9) (26) 11 22882 Q4 Q3 Q2 Q1 (28) (16) (30) (21) (22) (8) (8) (2) (11) (20) (20) (19) (18) (24) 3 23 (13) (26) 41 9 26 704364 821 373 819 343 829 346 954416 946 369 943 386 942 290 633 766 772 710 (429) (399) (405) (406) (143) (135) (173) (161) (164) (167) (170) (168) 1,073 1,165 1,177 1,116 1,064 1,218 1,194 1,159 3,138 3,111 3,017 2,876 $ 338 $ 479 $ 464 $ 397 $ 0.60 $ 0.83 $ 0.80 $ 0.67 $$ 0.54 $ 0.50 $ 0.66 $ 0.66 $ 0.78 $ 0.77 $ 0.62 $ 0.62 591 $ 439 $ 439 $ 365 $ 0.60 $ 0.83 $ 0.79 $ 0.67 $ 1,788 $ 1,816 $ 1,707 $ 1,662 $ 302 $ 380 $ 452 $ 368 ) ) ––––– IFRS 7 8 8 8 8 2011 ANNUAL REPORT 5 $ 0.76 5 $ 0.76 8 8 5 $ 467 $ 423 9$ 0. 9$ 0. 7 $ 0.75 $ 0.60 2011 32 $ 1,759 $ 1,721 8 15 761 790 8 8 8 22 6 1 8 8 407 437 339 – – (11) –––– –––– –––– – – – (99)–––99– –––– – ––11––––– –––– 8 3 795 727 723 8 26 $ 1, 8 44 55 91 (10) 3423 (19) 17 41 19 11 Q4 Q3 Q2 Q1 (36) (29) (26) (21) (34)(23) 19 (17) (41) (19) ( (11) (30) (30) (31) (26) (12) (4) (14) (30) (95) (159) (156) (125) 8 670 416 379 416 401 95342 940 950 953 5 (454) (427) (444) (41 (169) (167) (167) (165) 1,037 1,222 1,171 1,141 1,094 1,220 1,242 1,160 3,177 3,149 3,115 2,9 $ 372 $$ 4 0.62 $ 0.91 $$ 0.75 $ 0.70 $ 0.60 $ 0. 653 $ 559 $ 520 $ 395 $ 0.70 $ 0. $1, $ 0.61 $ 0. $ 327 $ 491 $ 410 $ 335 (1) (2) (2) (2) (2) (2) : (2) Basic Diluted are segregated as follows:operations the results related of to operationscommencing of wireless January the 1, and Video 2011, business cable certain are products intercompany presented and transactions as between a services separate the are operating Company’s segment RBS included and segment in the and former the other Rogers results operating Retail segments, s of which operations were previous of Wireless and Cable Operations, respectiv revenue in RBS andbeen operating reclassified expenses to in conform to the the other current operating period’s segments, presentation. are recorded as cost recoveries in RBS. For these two changes, comparative figu Earnings per share: Basic Diluted Wireless Cable Media Corporate items and eliminations Wireless Cable Media Corporate items and eliminations Loss on repayment of long-termImpairment debt of assets Stock-based compensation expense (recovery) Integration, restructuring and acquisition expenses Settlement of pension obligations Other items, net Earnings per share: (1) This quarterly summary provides the quarterly results under the current period’s presentation. Commencing January 1, 2011, the results of the fo (2) As defined. See the section entitled “Key Performance Indicators and Non-GAAP Measures”. (In millions of dollars, except per share amounts) Quarterly Consolidated Financial Summary Adjusted operating profit Adjusted net income Depreciation and amortization Settlement of pension obligations Integration, restructuring and acquisition expenses Operating revenue Stock-based compensation (expense) recovery Other items, net Operating profit As adjusted Income tax charge, cash-settled stock options Impairment of assets Additions to PP&E Total operating revenue Interest on long-term debt Income tax impact of above items Operating income Adjusted operating profit (loss) Net income Loss on repayment of long-termOther debt income (expense), net Income tax expense Add (deduct): MANAGEMENT’S DISCUSSION AND ANALYSIS

SUMMARY OF FINANCIAL RESULTS OF LONG-TERM DEBT below, presented with a separate column for: (i) RCI; (ii) RCP; (iii) our GUARANTORS non-guarantor subsidiaries (“Other Subsidiaries”) on a combined Our outstanding public debt, $2.4 billion bank credit facility and basis; (iv) consolidating adjustments; and (v) the total consolidated Derivatives are unsecured obligations of RCI, as obligor, and RCP, as amounts. Information for periods prior to July 1, 2010 has been co-obligor or guarantor, as applicable. presented as if the corporate reorganization (which occurred on July 1, 2010) had occurred on January 1, 2010. The following table sets forth the selected unaudited consolidating summary financial information for RCI for the periods identified

Years ended December 31 (unaudited)(3)(4) Other Consolidating Total Consolidated RCI (1)(2) RCP (1)(2) Subsidiaries(2) Adjustments (2) Amounts Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 (In millions of dollars) 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 Statement of Income Data: Revenue $ 105 $97$ 10,901 $ 10,604 $ 1,674 $ 1,521 $ (252) $ (80) $ 12,428 $ 12,142 Operating income (loss) (169) (141) 2,958 3,072 107 12 (68) (62) 2,828 2,881 Net income (loss) 1,563 1,502 2,920 3,147 861 363 (3,781) (3,510) 1,563 1,502

As at period end December 31 (unaudited)(3)(4) Other Consolidating Total Consolidated RCI (1)(2) RCP (1)(2) Subsidiaries(2) Adjustments (2) Amounts Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 (In millions of dollars) 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 Balance Sheet Data (at period end): Current assets $ 710 $ 650 $ 5,288 $ 2,773 $ 1,608 $ 1,622 $ (5,694) $ (3,286) $ 1,912 $ 1,759 Non-current assets 23,383 19,374 11,350 9,075 5,681 5,373 (23,964) (18,548) 16,450 15,274 Current liabilities 5,538 3,018 1,834 2,045 868 952 (5,691) (3,182) 2,549 2,833 Non-current liabilities 11,640 9,839 259 218 188 207 154 176 12,241 10,440

(1) For the purposes of this table, investments in subsidiary companies are accounted for by the equity method. (2) Amounts recorded in current liabilities and non-current liabilities for the guarantors do not include any obligations arising as a result of being a guarantor or co-obligor, as the case may be, under any of RCI’s long-term debt. (3) Information for periods prior to July 1, 2010 has been presented as if the corporate reorganization (which occurred on July 1, 2010) had occurred on January 1, 2010. (4) Information prior to January 1, 2011 has been conformed to reflect the adoption of IFRS and has been reclassified for a change in business strategy as described in this MD&A.

CONTROLS AND PROCEDURES information and communication flows are effective and to monitor performance, including performance of internal control procedures. Disclosure Controls and Procedures As of the end of the period covered by this report (the “Evaluation Management assessed the effectiveness of our internal control over Date”), we conducted an evaluation (under the supervision and with financial reporting as of December 31, 2011, based on the criteria set the participation of our management, including the Chief Executive forth in the Internal Control-Integrated Framework issued by the Officer and Chief Financial Officer), pursuant to Rule 13a-15 Committee of Sponsoring Organizations of the Treadway Commission promulgated under the Securities Exchange Act of 1934, as amended (“COSO”). Based on this assessment, management has concluded that, (the “Exchange Act”), of the effectiveness of the design and as of December 31, 2011, our internal control over financial reporting operation of our disclosure controls and procedures. Based on this is effective. Our independent auditor, KPMG LLP, has issued an audit evaluation, our Chief Executive Officer and Chief Financial Officer report that we maintained, in all material respects, effective internal concluded that as of the Evaluation Date such disclosure controls and control over financial reporting as of December 31, 2011, based on procedures were effective. the criteria established in Internal Control – Integrated Framework issued by the COSO. Management’s Report on Internal Control Over Financial Reporting Changes in Internal Control Over Financial Reporting and The management of our company is responsible for establishing and Disclosure Controls and Procedures maintaining adequate internal controls over financial reporting. Our There have been no changes in our internal controls over financial internal control system was designed to provide reasonable assurance reporting during 2011 that have materially affected, or are to our management and Board of Directors regarding the preparation reasonably likely to materially affect, our internal controls over and fair presentation of published financial statements in accordance financial reporting. with generally accepted accounting principles. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management maintains a comprehensive system of controls intended to ensure that transactions are executed in accordance with management’s authorization, assets are safeguarded, and financial records are reliable. Management also takes steps to see that

74 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 75 452 143 2010 8.8% 9.0% 6,526 3,190 1,461 38.2% 48.6% 44.5% 12,142 (23.1%) $ 4,635 $ 3,173 $ 1,419 $40 $ (33) $ 131 ) 8 0 6 2 % % % % % 8 8 8 8% 405 .0 2011 8 6,601 3,309 1,611 37.9 46.0 46. 21.2 11.2 12,42 (2 $ 4,716 $ 3,036 $ 1,549 $ $ (23) $1 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT Adjusted operating profit Divided by total revenue Adjusted operating profit Divided by network revenue Adjusted operating profit Divided by revenue Adjusted operating profit Divided by revenue Adjusted operating loss Divided by revenue Adjusted operating profit Divided by revenue SUPPLEMENTARY INFORMATION: NON-GAAP CALCULATIONS Operating Profit Margin Calculations Years ended December 31, (In millions of dollars, except for margins) RCI: RCI adjusted operating profit margin WIRELESS: Wireless adjusted operating profit margin CABLE: Cable Operations: Cable Operations adjusted operating profit margin Rogers Business Solutions: Rogers Business Solutions adjusted operating profit margin Video: Video adjusted operating loss margin MEDIA: Media adjusted operating profit margin MANAGEMENT’S DISCUSSION AND ANALYSIS

Calculations of Adjusted Operating Profit, Net Income, Earnings Per Share and Free Cash Flow

Years ended December 31, (In millions of dollars, except per share amounts; number of shares outstanding in millions) 2011 2010 Operating profit $ 4,571 $ 4,531 Add (deduct): Stock-based compensation expense 64 50 Settlement of pension obligations 11 – Integration, restructuring and acquisition expenses 70 40 Other items, net – 14

Adjusted operating profit $ 4,716 $ 4,635

Net income $ 1,563 $ 1,502 Add (deduct): Stock-based compensation expense 64 50 Settlement of pension obligations 11 – Integration, restructuring and acquisition expenses 70 40 Other items, net – 14 Loss on repayment of long-term debt 99 87 Impairment of assets – 11 Income tax impact of above items (60) (66) Income tax charge, cash-settled stock options due to legislative change – 40

Adjusted net income $ 1,747 $ 1,678

Adjusted basic earnings per share: Adjusted net income $ 1,747 $ 1,678 Divided by: weighted average number of shares outstanding 543 576

Adjusted basic earnings per share $ 3.22 $ 2.91

Adjusted diluted earnings per share: Adjusted net income $ 1,747 $ 1,678 Divided by: diluted weighted average number of shares outstanding 547 580

Adjusted diluted earnings per share $ 3.19 $ 2.89

Basic earnings per share: Net income $ 1,563 $ 1,502 Divided by: weighted average number of shares outstanding 543 576

Basic earnings per share $2.88 $ 2.61

Diluted earnings per share: Net income $ 1,563 $ 1,502 Divided by: diluted weighted average number of shares outstanding 547 580

Diluted earnings per share $2.86 $ 2.59

Calculation of Free Cash Flow

Adjusted operating profit $ 4,716 $ 4,635 Add (deduct): PP&E expenditures (2,127) (1,834) Interest on long-term debt, net of capitalization (639) (666) Cash income taxes (99) (152)

Free cash flow $1,851 $ 1,983

76 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 77 12 12 12 2010 8,685 1,537 7,148 $ 62.62 $ 16.10 $ 6,526 $ 72.62 $ 297 $ 6,229 8 12 12 12 2011 9,13 1,695 7,443 s”. $ 60.20 $ 16.02 $ 6,601 $ 70.26 $ 326 $ 6,275 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT (1) Voice and data revenue Divided by: average wireless voice and data subscribers Divided by: 12 months Prepaid (voice and data) revenue Divided by: average prepaid subscribers Divided by: 12 months Postpaid (voice and data) revenue Divided by: average postpaid wireless voice and data subscribers Divided by: 12 months Blended ARPU (monthly) Prepaid ARPU (monthly) Postpaid ARPU (monthly) (1) For definitions of key performance indicators and non-GAAP measures, see the section entitled “Key Performance Indicators and Non-GAAP Measure Wireless Non-GAAP Calculations Years ended December 31, (In millions of dollars, subscribers in thousands, except ARPU figures and adjusted operating profit margin) MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING December 31, 2011

The accompanying consolidated financial statements of Rogers The Audit Committee meets periodically with management, as well as Communications Inc. and its subsidiaries and all the information in the internal and external auditors, to discuss internal controls over Management’s Discussion and Analysis are the responsibility of the financial reporting process, auditing matters and financial management and have been approved by the Board of Directors. reporting issues; to satisfy itself that each party is properly discharging its responsibilities; and to review Management’s The consolidated financial statements have been prepared by Discussion and Analysis, the consolidated financial statements and the management in accordance with International Financial Reporting external auditors’ report. The Audit Committee reports its findings to Standards. The consolidated financial statements include certain the Board of Directors for consideration when approving the amounts that are based on the best estimates and judgments of consolidated financial statements for issuance to the shareholders. management and in their opinion present fairly, in all material The Audit Committee also considers, for review by the Board of respects, Rogers Communications lnc.’s financial position, results of Directors and approval by the shareholders, the engagement or operations and cash flows. Management has prepared the financial re-appointment of the external auditors. information presented elsewhere in Management’s Discussion and Analysis and has ensured that it is consistent with the consolidated The consolidated financial statements have been audited by KPMG financial statements. LLP, the external auditors, in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Management of Rogers Communications Inc., in furtherance of the Accounting Oversight Board (United States) on behalf of the integrity of the consolidated financial statements, has developed and shareholders. KPMG LLP has full and free access to the Audit maintains a system of internal controls, which is supported by the Committee. internal audit function. Management believes the internal controls provide reasonable assurance that transactions are properly authorized and recorded, financial records are reliable and form a February 21, 2012 proper basis for the preparation of consolidated financial statements and that Rogers Communications lnc.’s assets are properly accounted for and safeguarded. The internal control processes include management’s communication to employees of policies that govern ethical business conduct.

The Board of Directors is responsible for overseeing management’s responsibility for financial reporting and is ultimately responsible for Nadir H. Mohamed, FCA William W. Linton, FCA reviewing and approving the consolidated financial statements. The President and Executive Vice President, Board carries out this responsibility through its Audit Committee. Chief Executive Officer Finance and Chief Financial Officer

INDEPENDENT AUDITORS’ REPORT OF REGISTERED PUBLIC ACCOUNTING FIRM

TO THE SHAREHOLDERS OF ROGERS COMMUNICATIONS INC.: including the assessment of the risks of material misstatement of the We have audited the accompanying consolidated financial statements consolidated financial statements, whether due to fraud or error. In of Rogers Communications Inc., which comprise the consolidated making those risk assessments, we consider internal control relevant statements of financial position as at December 31, 2011, to the entity’s preparation and fair presentation of the consolidated December 31, 2010 and January 1, 2010, the consolidated statements financial statements in order to design audit procedures that are of income, comprehensive income, changes in shareholders’ equity appropriate in the circumstances. An audit also includes evaluating and cash flows for the years ended December 31, 2011 and the appropriateness of accounting policies used and the December 31, 2010, and notes, comprising a summary of significant reasonableness of accounting estimates made by management, as accounting policies and other explanatory information. well as evaluating the overall presentation of the consolidated financial statements.

Management’s Responsibility for the Consolidated Financial We believe that the audit evidence we have obtained in our audits is Statements sufficient and appropriate to provide a basis for our audit opinion. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the Opinion International Accounting Standards Board, and for such internal In our opinion, the consolidated financial statements present fairly, in control as management determines is necessary to enable the all material respects, the consolidated financial position of Rogers preparation of consolidated financial statements that are free from Communications Inc. as at December 31, 2011, December 31, 2010 and material misstatement, whether due to fraud or error. January 1, 2010, and its consolidated financial performance and its consolidated cash flows for the years ended December 31, 2011 and December 31, 2010 in accordance with International Financial Auditors’ Responsibility Reporting Standards as issued by the International Accounting Our responsibility is to express an opinion on these consolidated Standards Board. financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are Chartered Accountants, Licensed Public Accountants free from material misstatement.

An audit involves performing procedures to obtain audit evidence Toronto, Canada about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, February 21, 2012

78 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT CONSOLIDATED FINANCIAL STATEMENTS 79 2 (1) 11 40 612 2.59 (768) 2010 1,639 2,881 7,571 2,114 $ 2.61 $ 12,142 $ 1,502 ) – 8 8 7 8 8 6 1 7 2 8 88 8 70 8 535 2. (73 2011 1,743 2, 7,7 2,09 $2. $ 12,42 $ 1,563 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT (note 8) (notes 12 and 13) : (note 13) (note 9) (note 10) (note 5) (note 6) Diluted Impairment of assets Operating costs Depreciation and amortization Basic Integration, restructuring and acquisition costs Operating income Finance costs Other income (expense), net Operating expenses: Earnings per share See accompanying notes to consolidated financial statements. Operating revenue Share of the income of associates and joint ventures accounted forIncome using before the income equity taxes method, net of tax Income tax expense Net income for the year CONSOLIDATED STATEMENTS OF INCOME (IN MILLIONS OF CANADIAN DOLLARS, EXCEPT PER SHARE AMOUNTS) Years ended December 31, CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (IN MILLIONS OF CANADIAN DOLLARS)

Years ended December 31, 2011 2010 Net income for the year $ 1,563 $ 1,502 Other comprehensive income (loss): Defined benefit pension plans: Actuarial loss (89) (80) Related income tax recovery 22 21 (67) (59)

Change in fair value of available-for-sale investments: Increase in fair value 174 102 Related income tax expense (22) (13) 152 89

Cash flow hedging derivative instruments: Change in fair value of derivative instruments 33 (221) Reclassification to net income due to settlement of cross-currency interest rate exchange agreements 22 – Reclassification to net income for foreign exchange (loss)/gain on long-term debt (73) 264 Reclassification to net income of accrued interest 69 97 Related income tax expense (21) (25) 30 115

Other comprehensive income for the year 115 145 Comprehensive income for the year $ 1,678 $ 1,647

See accompanying notes to consolidated financial statements.

80 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT CONSOLIDATED FINANCIAL STATEMENTS 81 2010 January 1, –1 678 14 52 84 21 14 67 80 62 58 147 113 933 715 238 147 315 277 655 291 229 177 329 335 840 1,004 2010 2,133 2,066 1,443 1,289 1,7598,437 1,948 8,136 3,108 3,011 2,591 2,640 3,760 4,156 2,833 2,643 8,654 8,396 13,273 12,569 $45$– $ 17,033 $ 16,725 $ – $ 378 $ 17,033 $ 16,725 December 31, ROGERS COMMUNICATIONS INC. – – 5 0 8 8 8 30 64 16 35 37 3 134 322 276 335 503 ,362 ,362 2011 8 8 2,0 1,574 1,912 9,114 3,2 2,721 1,107 3,572 1,390 2,549 14,790 10,034 $57 $1 $– $1 December 31, 2011 ANNUAL REPORT Ronald D. Besse (note 18) (note 18) (note 17) (note 16) (note 12) (note 19) (note 15) (note 18) (note 18) (note 9) (note 11) (note 26) (note 21) (note 9) (note 27) (note 13) (note 17) (note 25) (note 14) (note 18(e)(ii)) (note 16) (note 13) Accounts payable and accrued liabilities Bank advances Income tax payable Accounts receivable Cash and cash equivalents Other current assets Current portion of provisions Current portion of derivative instruments Current portion of long-term debt Current portion of derivative instruments Unearned revenue Other long-term assets LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: ASSETS Current assets: Deferred tax assets Property, plant and equipment Goodwill Intangible assets Derivative instruments Investments Director Director Alan D. Horn, C.A. See accompanying notes to consolidated financial statements. On behalf of the Board: Other long-term liabilities CONSOLIDATED STATEMENTS OF FINANCIAL(IN MILLIONS POSITION OF CANADIAN DOLLARS) Shareholders’ equity Deferred tax liabilities Guarantees Commitments Contingent liabilities Subsequent events Provisions Long-term debt Derivative instruments CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (IN MILLIONS OF CANADIAN DOLLARS)

Class A Class B Voting shares Non-Voting shares Number of Number of Available-for-sale Total shares shares Share Retained financial Hedging shareholders’ Year ended December 31, 2011 Amount (000s) Amount (000s) premium earnings assets reserve reserve equity Balances, January 1, 2011 $ 72 112,462 $ 426 443,072 $ 1,113 $ 1,923 $ 281 $ (55) $ 3,760

Net income for the year – – – – – 1,563 – – 1,563 Other comprehensive income (loss): Defined benefit pension plans, net of tax – – – – – (67) – – (67) Available-for-sale investments, net of tax – – – – – – 152 – 152 Derivative instruments, net of tax – – – – – – – 30 30

Total other comprehensive income – – – – – (67) 152 30 115

Comprehensive income for the year – – – – – 1,496 152 30 1,678 Transactions with shareholders, recorded directly in equity: Repurchase of Class B Non-Voting shares – – (30) (30,943) (870) (199) – – (1,099) Dividends declared – – – – – (766) – – (766) Shares issued on exercise of stock options – – 10 266 – – – – 10 Acquisition of non-controlling interests – – – – – (11) – – (11)

Total transactions with shareholders – – (20) (30,677) (870) (976) – – (1,866)

Balances, December 31, 2011 $ 72 112,462 $ 406 412,395 $ 243 $ 2,443 $ 433 $ (25) $ 3,572

Class A Class B Voting shares Non-Voting shares Number of Number of Available-for-sale Total shares shares Share Retained financial Hedging shareholders’ Year ended December 31, 2010 Amount (000s) Amount (000s) premium earnings assets reserve reserve equity Balances, January 1, 2010 $ 72 112,462 $ 456 479,948 $ 2,304 $ 1,302 $ 192 $ (170) $ 4,156

Net income for the year – – – – – 1,502 – – 1,502 Other comprehensive income (loss): Defined benefit pension plans, net of tax – – – – – (59) – – (59) Available-for-sale investments, net of tax – – – – – – 89 – 89 Derivative instruments, net of tax – – – – – – – 115 115

Total other comprehensive income – – – – – (59) 89 115 145

Comprehensive income for the year – – – – – 1,443 89 115 1,647 Transactions with shareholders, recorded directly in equity: Repurchase of Class B Non-Voting shares – – (37) (37,081) (1,191) (84) – – (1,312) Dividends declared – – – (738) – – (738) Shares issued on exercise of stock options – – 7 205 – – – – 7

Total transactions with shareholders – – (30) (36,876) (1,191) (822) – – (2,043)

Balances, December 31, 2010 $ 72 112,462 $ 426 443,072 $ 1,113 $ 1,923 $ 281 $ (55) $ 3,760

See accompanying notes to consolidated financial statements.

82 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT CONSOLIDATED FINANCIAL STATEMENTS 83 – 3 (2) (8) (2) (2) 11 74 54 50 12 (75) (51) (29) (79) (89) (35) (10) 126 378 768 612 547 (140) (152) (651) (201) (423) (386) (816) (734) 2010 3,494 2,935 1,639 4,683 4,297 (1,834) (2,064) (2,387) (1,853) (1,312) $ (386) $ (147) $ (45) $ 1,502 ) ) – – 8 8 8 8 8 9) 6) 5 1 8 3 (4) (7) 31) 02) 7 57 26 11 64 8 8 ( (56) (27) (76) (33) (51) (45) (41) (99) (12) (10) 8 8 73 535 8 (639) (532) (169) (972) (75 2011 3,791 4,100 1,743 4,69 4,529 (2,127) (2, (2, (1,20 (1,099) $ (169) $( $ (57) $ 1,563 ROGERS COMMUNICATIONS INC. dvances. 2011 ANNUAL REPORT Program rights amortization Video rental amortization Finance costs Depreciation and amortization Impairment of assets Income tax expense Pension contributions, net of expense Settlement of pension obligations Stock-based compensation expense Amortization of fair value decrementShare (increment) of on the long-term income debt ofOther associates and joint ventures accounted for using the equity method, net of tax Decrease in unearned revenue Increase/(decrease) in income tax payable Interest paid Additions to property, plant and equipment (“PP&E”) Change in non-cash working capital items related to PP&E Investment in Cogeco Inc. andAcquisitions, Cogeco net Cable of Inc. cash andAdditions cash to equivalents program acquired rights Other Issuance of long-term debt Repayment of long-term debt Premium on repayment of long-term debt Payment on settlement of cross-currency interest rate exchange agreement and forward contracts Increase in other assets Decrease in accounts payable and accrued liabilities Increase in accounts receivable Adjustments to reconcile net income to net cash flows from operating activities: Net income for the year Change in non-cash operating working capital items Income taxes paid Proceeds on settlement of cross-currencyTransaction interest costs rate incurred exchange agreement andRepurchase forward of contracts Class B Non-Voting shares Dividends paid Proceeds received on exercise of stock options Investing activities: Financing activities: Cash and cash equivalents (bank advances), beginning of year The change in non-cash operating working capital items is as follows: Cash and cash equivalents (bank advances), end of year Cash provided by (used in): Operating activities: Change in cash and cash equivalents (bank advances) See accompanying notes to consolidated financial statements. Cash and cash equivalents (bank advances) are defined as cash and short-term deposits, which have an original maturity of less than 90 days, less bank a Years ended December 31, CONSOLIDATED STATEMENTS OF CASH(IN MILLIONS FLOWS OF CANADIAN DOLLARS) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (TABULAR AMOUNTS IN MILLIONS OF CANADIAN DOLLARS, EXCEPT PER SHARE AMOUNTS)

1. NATURE OF THE BUSINESS: Company’s reportable segments. Commencing January 1, 2011, the results of the former Rogers Retail segment are segregated as follows: the results of operations of the Video business are presented as a Rogers Communications Inc. (“RCI”) is a diversified Canadian separate operating segment and the former Rogers Retail segment communications and media company, incorporated in Canada, with results of operations related to wireless and cable products and substantially all of its operations and sales in Canada. Through its services are included in the results of operations of Wireless and Cable Wireless segment (“Wireless”), RCI is engaged in wireless voice and Operations, respectively. In addition, certain intercompany data communications services. RCI’s Cable segment (“Cable”) consists transactions between the Company’s RBS segment and other of Cable Operations, Rogers Business Solutions (“RBS”) and Rogers operating segments, which were previously recorded as revenue in Video (“Video”). Through Cable Operations, RCI provides television, RBS and operating expenses in the other operating segments, are high-speed Internet and telephony products primarily to residential recorded as cost recoveries in RBS beginning January 1, 2011. The customers; RBS provides local and long-distance telephone, enhanced effect of these changes in management reporting on the voice and data networking services, and IP access to medium and large comparatives for 2010 was a decrease in RBS revenue of $108 million Canadian businesses and governments; and Video offers digital video and a decrease in RBS operating costs of $108 million, and a decrease disc (“DVD”) and video game sales and rentals. RCI is engaged in radio in Video revenue of $212 million and a decrease in Video operating and television broadcasting, televised shopping, consumer, trade and costs of $206 million. These transactions were offset by elimination professional publications, sports entertainment, and digital media entries resulting in no effect to the consolidated revenue or operating properties through its Media segment (“Media”). RCI and its subsidiary costs. companies are collectively referred to herein as the “Company”. (c) Basis of consolidation: The Company’s registered office is located at 333 Bloor Street East, (i) Subsidiaries: 10th Floor, Toronto, Ontario, M4W 1G9. Subsidiaries are entities controlled by the Company. The financial statements of subsidiaries are included in the RCI Class A Voting and Class B Non-Voting shares are traded in Canada consolidated financial statements from the date that control on the Toronto Stock Exchange (“TSX”) and its Class B Non-Voting commences until the date that control ceases. shares are also traded on the New York Stock Exchange (“NYSE“). The acquisition method of accounting is used to account for the acquisition of subsidiaries as follows: 2. SIGNIFICANT ACCOUNTING POLICIES: • consideration transferred is measured as the fair value of the assets given, equity instruments issued and liabilities incurred (a) Statement of compliance: or assumed at the date of exchange, and acquisition These consolidated financial statements have been prepared in transaction costs are expensed as incurred; accordance with International Financial Reporting Standards (“IFRS”) • identifiable assets acquired and liabilities assumed are as issued by the International Accounting Standards Board (“IASB”). measured at their fair values at the acquisition date; These are the Company’s first annual consolidated financial statements prepared in accordance with IFRS, and the Company has • the excess of the fair value of consideration transferred elected January 1, 2010 as the date of transition to IFRS including the recognized amount of any non-controlling (the “Transition Date”). IFRS 1, First-time Adoption of IFRS (“IFRS 1”), interest of the acquiree over the fair value of the identifiable has been applied. An explanation of how the transition to IFRS has net assets acquired is recorded as goodwill; and affected the consolidated financial statements is included in note 3. • if the fair value of the consideration transferred is less than The consolidated financial statements of the Company for the years the fair value of the net assets acquired, the difference is ended December 31, 2011 and 2010 and as at January 1, 2010 were recognized directly in the consolidated statements of income. approved by the Board of Directors on February 21, 2012. (ii) Investments in associates and joint ventures: (b) Basis of presentation: The Company’s interests in investments in associates and joint The consolidated financial statements include the accounts of the ventures are accounted for using the equity method of Company. Intercompany transactions and balances are eliminated on accounting. Associates are those entities in which the Company consolidation. has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist The consolidated financial statements have been prepared mainly when the Company holds between 20 and 50 percent of the under the historical cost convention. Other measurement bases used voting power of another entity. Joint ventures are those entities are described in the applicable notes. The Company’s financial year over whose activities the Company has joint control, established corresponds to the calendar year. The consolidated financial by contractual agreement and requiring unanimous consent for statements are prepared in millions of Canadian dollars. strategic financial and operating decisions. Presentation of the consolidated statements of financial position The investments in associates and joint ventures are initially differentiates between current and non-current assets and liabilities. recognized at cost. The carrying amount is increased or The consolidated statements of income are presented using the decreased to recognize, in net income, the Company’s share of nature classification for expenses. the income or loss of the investee after the date of acquisition. Concurrent with the impact of the transition to IFRS described in Distributions received from an investee reduce the carrying note 3, the Company underwent a change in strategy which impacted amount of the investment. the Company’s management reporting resulting in changes to the

84 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 85 ROGERS COMMUNICATIONS INC. d other stock-based payments: 2011 ANNUAL REPORT discounts providedpurchases to of customersservices Wireless, related are Cableproducts to and and charged services to combined Media directly which they relate; products to and awards and the grantedprograms revenue to customers for arecomponent through the of customer the considereddeferred loyalty sales until transactions recognized a and,awards as as operating are a revenue redeemed separately result, whenservices by are the the are identifiable customerallocated and to provided the the award goods creditvalue by is or of estimated based the the onamount right the of Company. fair to revenue recognized theaward The is future credits based goods portion on redeemedaward and the credits relative number that services. to are of The expected the to be total redeemed. number of (viii) (ix) (e) SubscriberExcept acquisition and as retention described costs: incosts, note the 2(d)(iv) Company asretention expenses of it the subscribers relates as costs incurred. to related cable to installation (f) the acquisition or Stock-basedThe compensation Company’s an employee stocknote option 22(a), plans, attach which cash-settledall are granted share described stock appreciation in options. rightsto The (“SARs”) elect SARs to feature to allowsbeing receive the the in option excess holder cash marketthe an exercise price price of amount of the equalacquiring the Class Class option, to B B instead Non-Voting the of shares. Non-Votingclassified intrinsic All exercising share outstanding as the value, stock over option liabilities options and are using and option are valuation carriedShare-based at techniques Payment their that (“IFRS fairremeasured are each value, 2”). compliant period measured with The andvesting IFRS is fair approach amortized 2, value over torendered, the income of or using period over the a in theretire, graded liability which whichever period is is the to shorter. the related date services an are The employee Company is eligible hasdescribed to in a note 22(b). restricted RSUsas liabilities. that share The will measurement be unit of settledfor the in (“RSU”) liability these cash and are compensation plan, awards recorded recorded costs as is which a based charge is toChanges on income in over the the the vesting fairaward Company’s period and of value liability prior the to of award. subsequentof the the to the settlement award, the date, are award recorded due grantThe as and to a of payment changes charge is the in to amount income fairaward. in is value the year established incurred. as ofThe the Company vesting datedescribed has in of a note 22(c). the deferredas DSUs that liabilities. share will be The unit settled measurement in (“DSU”) cash of are plan, recorded the liability which for is these awards is The Company offers certaindeliverable products arrangements. and The services Company asarrangements part divides of into multiple multiple deliverable multiple separate units deliverableprovided of arrangements the accounting. arecustomers delivered Components separately and of elements the accountedobjectively have fair and for value reliably stand-alone determined.measured of value Consideration and any for allocated to undelivered thesetheir amongst elements the units fair the is can accounting valuespolicies be units are and applied based to the upon them.extent Company’s The that Company it relevant recognizes is revenueCompany probable revenue to and that the the recognition the revenue can economic be benefits reliably will measured. flowUnearned revenue to includes the subscriber deposits,and cable installation amounts fees subscriptions received to be provided from in future periods. subscribers related to services and monthly subscriber feeswireline in services, cable, connection telephony,of with Internet equipment, network services, wireless services rental and and recorded media subscriptions as are revenueprovided; on a pro rata basisrevenue from as airtime, the data services,and service roaming, is optional long-distance services,and other pay-per-use sales services, ofservices products or video are products recorded are rentals delivered; as revenue asrevenue the from the salerecorded when of the wireless equipment is andthe delivered cable independent and equipment dealer accepted by or is sales. subscriber Equipment in the subsidiessubscribers case related of are direct torevenues recorded upon activation new of as the and equipment; a existing installation reduction fees and of activationdo fees equipment not charged meet to theAs subscribers criteria a as result, a inequipment separate Wireless, unit these revenue of feesamortized accounting. are and, recorded over as inservice the part of period related Cable, forbased service are Cable on period. ranges deferred subscribermoves. The disconnects, from and related Incremental transfers 26reconnects of to direct service 48 are installation and installation months, costs fees deferred and relatedthese to amortized related to over the installationcosts the are fees. same capitalized extent to period New PP&Elives and of as connect of the amortized related over installation assets; the useful deferred advertising revenueadvertising is airsstations; on recorded is the featureddisplayed in in on Company’s the the Company’s the digital radio Company’s properties; publications; ormonthly period or television is subscription the stations for revenues subscriptions fromare cable received recorded and in satellite the month providers by in which theyThe television are Toronto earned; Blue Jays Baseballfrom Club’s home (“Blue game Jays”) revenue admissionas the and related concessions games is areRevenue played recognized from during the radio baseball and season. at television the agreements time is thereceive recorded related revenue games are from aired. theSharing The Major Blue Agreement, Jays League which also Baseballmember distributes clubs, Revenue based funds on tois each recognized club’s and in revenues. from This theamount revenue season is in estimable which and collectibility it is is reasonably earned, assured; when the Investments in publicly traded and private companies: (i) (ii) (iii) (iv) (v) (vi) (vii) (iii) Publicly tradedinfluence investments exists where areand no are classified recorded control at as fairprivate or available-for-sale value. Fair companies investments significant value of whereexists other investments and no in no controlestablished active market or market or asset exists based, significanttechniques, or is which projected influence determined income are valuation by applieddepending appropriately using on to well each its investment Changes future in fair operating value and ofcomprehensive these profitability investments prospects. are income recordedinvestments in are other (“OCI”) disposedare of considered impaired until or when there becomedecline is in a such impaired. fair significant value Investments or below prolonged cost. time as the The Company’s principal sources ofrevenues revenues for and financial recognition statement purposes of are these as follows: (d) Revenue recognition: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

based on the fair value of the award at the date of grant. Changes in purpose and is determined at initial recognition. All of the the Company’s liability subsequent to the grant of the award and Company’s non-derivative financial assets are classified as prior to the settlement date, due to changes in the fair value of the available-for-sale or loans and receivables. award, are recorded as a charge to income in the year incurred. The Available-for-sale financial assets are comprised of the payment amount is established as of the exercise date of the award. Company’s publicly traded and private investments. These investments are carried at fair value plus transaction costs The employee share accumulation plan allows employees to directly attributable to the acquisition of the financial voluntarily participate in a share purchase plan. Under the terms of asset, on the consolidated statements of financial position, the plan, employees of the Company can contribute a specified with subsequent changes in fair value, other than percentage of their regular earnings through payroll deductions and impairment losses, recorded in the available-for-sale the Company makes certain defined contribution matches, which are financial assets reserve, a component of equity, through recorded as compensation expense in the year made. OCI, until such time as the investments are disposed of, at (g) Income taxes: which time the cumulative fair value change in OCI related Income tax expense is comprised of current and deferred taxes. to the disposed investments is transferred to income. Current tax and deferred tax are recognized in the consolidated Upon initial recognition, all of the Company’s loans and statements of income except to the extent that they relate to a receivables, comprised of cash and cash equivalents and business combination, or items recognized directly in equity or in OCI. accounts receivable are measured at fair value plus Current tax is the expected tax payable or receivable based on the transaction costs directly attributable to the acquisition of taxable income or loss for the year, using tax rates enacted or the financial asset and subsequently carried at amortized substantively enacted at the reporting date, and any adjustment to cost using the effective interest method, with changes tax payable in respect of previous years. recorded through net income.

Deferred tax assets and liabilities are recognized for the future All of the Company’s non-derivative financial liabilities are income tax consequences attributable to differences between the classified as other financial liabilities and are initially financial statement carrying amounts of existing assets and liabilities measured at fair value plus transaction costs that are and their respective tax bases. Deferred tax assets and liabilities are directly attributable to the issue of the financial liability. measured using enacted or substantively enacted tax rates expected Subsequent to the initial recognition and measurement, to apply to taxable income in the years in which those temporary these non-derivative financial liabilities are measured at differences are expected to be recovered or settled. Deferred tax amortized cost using the effective interest method. Such assets and liabilities are offset if there is a legally enforceable right to liabilities include bank advances arising from outstanding offset current tax liabilities and assets and they relate to income taxes cheques, accounts payable and accrued liabilities, levied by the same authority on the same taxable entity, or on provisions, and long-term debt. different tax entities where these entities intend to settle current tax (b) Derivative financial instruments: liabilities and assets on a net basis or their tax assets and liabilities will The Company uses derivative financial instruments to be realized simultaneously. manage risks from fluctuations in exchange rates and (h) Foreign currency translation: interest rates, with respect to debt (“Debt Derivatives”) and Monetary assets and liabilities denominated in a foreign currency are to manage risks from fluctuations in exchange rates on translated into Canadian dollars at the exchange rate in effect at the certain forecast expenditures (“Expenditure Derivatives” consolidated statements of financial position dates and non-monetary and, together with Debt Derivatives, “Derivatives”). From assets and liabilities and related depreciation and amortization time to time, these instruments include cross-currency expenses are translated at the historical exchange rates. Revenue and interest rate exchange agreements, interest rate exchange expenses, other than depreciation and amortization, are translated agreements, foreign exchange forward contracts and into Canadian dollars at the average rate for the month in which the foreign exchange option agreements. All such instruments transaction was recorded. Exchange gains or losses on translating are only used for risk management purposes. The Company long-term debt are recognized in the consolidated statements of does not use derivative instruments for speculative income and consolidated statements of comprehensive income, as purposes. applicable. Foreign exchange gains or losses are primarily related to All derivatives, including embedded derivatives that must the translation of long-term debt. be separately accounted for, are measured at fair value, (i) Financial and derivative instruments: with changes in fair value recorded in the consolidated (i) Recognition: statements of income unless they are effective cash flow The Company initially recognizes loans and receivables, debt hedging instruments and designated as such for accounting securities and subordinated liabilities on the date they originate. purposes. The Company assesses whether an embedded All other financial assets and financial liabilities are initially derivative is required to be separated from the host recognized on the trade date at which the Company becomes a contract and accounted for as a derivative when the party to the contractual provision of the instrument. Financial Company first becomes a party to the contract. The changes assets and financial liabilities are offset and the net amount in fair value of cash flow hedging derivatives are recorded presented in the consolidated statements of financial position in the hedging reserve, a component of equity, to the when the Company has a legal right to offset the amounts and extent effective, until the variability of cash flows relating intends either to settle on a net basis or to realize the asset and to the hedged asset or liability is recognized in income. Any liability simultaneously. hedge ineffectiveness is recognized in income immediately.

(ii) Classification and measurement: On initial designation of a derivative instrument as a (a) Non-derivative financial instruments: hedging instrument, the Company formally documents the Financial instruments are, for measurement purposes, relationship between the hedging instrument and hedged grouped into classes. The classification depends on the item, including the risk management objectives and

86 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 87 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT the year-end trading values. Thecredit fair facility value of approximates thethe its bank interest rates carrying approximate current amount market rates. since the fairdetermined values of usingmark-to-market the valuation anthe Company’s which treasury-related (“risk-free”) involves derivatives discount estimated ratescalculate increasing used are to credit-adjusted to-market valuation by the anthe estimated relevant term credit and spread counterpartyIn for for the each risk-free case derivative. of derivativesderivatives in an asset for position (i.e.,Company estimated those which on the abank net counterparty counterparties basis), is mark- rate owe the added to to credit determine the the the spreadIn estimated risk-free for credit-adjusted the discount value. the casethose of derivatives derivatives for incounterparties which on a a liability thespread net position Company is basis), (i.e., owes added thechange the in Company’s to fair credit the valueas of risk-free the hedges discount derivativesimmediately not in rate. for designated the consolidated The statements accounting of income. The purposes changes in are fair valueas of recorded the cash derivatives designated recorded flow in the hedges hedgingextent reserve for effective, within accounting equity, untilrelating to to purposes the the the hedged asset are the variability or consolidated liability statements of is of recognized income. in cash flows (e) Current/non-current distinction: Fair value estimates areon made at relevant afinancial market specific point instruments. information in These time,and and estimates based involve are information uncertainties subjective andChanges about matters in in assumptions of the nature could significant significantly judgement. affect the estimates. The Company providesthat disclosure reflects the offair significance the of three-level value the hierarchy financial inputs measurements. used Fair liabilities inreference making value included to the quoted of in pricesand financial in liabilities. Level active Financial assets markets assets 1include for and and identical valuations financial are assets liabilities usingdata, in determined either Level inputs directly 2 by or basedLevel indirectly, 3 on other valuations than observableobservable the are market quoted market data. based prices. on inputs that(v) are notFinancial based assets on and liabilities dueone in year part from or thedates in consolidated whole are statements more of considered than financialand to position liabilities be non-current. areliabilities Other are recognized recognized financial as and assets date current. derecognized accounting. applying Financial settlement assets and (j)The Earnings per Company share: presentsBasic basic earnings per and shareattributable diluted is earnings calculated to by perweighted dividing common share average the data. income shareholders numberthe or year. of loss of The common dilutedthe the shares earnings income per Company outstanding or shareweighted during is by loss determined average attributable by the the to adjusting effects number of common all dilutive ofthe shareholders potential treasury common and stock common shares. The method the The Company for shares uses calculating diluted diluted earnings outstanding earningsemployee per per stock for share. options share and calculationdisclosed other in potentially considers note dilutive 10. the instruments, as impact of the fair values ofare investments determined that by are theof publicly quoted the traded investments. market values for each the fair values ofmarket private exists investments are determined where bymarket, no using active well asset established basedtechniques which or areinvestment projected applied depending income appropriatelyprofitability on valuation to its each assumptions future operating that prospects.existing and are at based theposition dates. Management on consolidated statements market of conditions for financial makes disclosure purposes only,the the Company’s fair values public of debt each instruments of are based on the carrying amounts in thefinancial consolidated statements of positionadvances arising of frompayable outstanding cheques, accounts accounts andapproximate receivable, fair accruednature values of bank these because financial liabilities instruments. of the and short-term provisions (b) (c) (d) strategy in undertakinghedged risk, the together hedge withto the assess transaction the methods effectiveness that andCompany of will the the makes be hedging an relationship. used the The assessment, hedge both relationship at aswhether the the well hedging as inception instruments are on of effective expected an in to be offsetting ongoing highly the basis,flows changes of in of the the fairhedged value respective risk, or hedged and cash whether itemsare the within attributable actual a range to results of of the 80 each to 125 hedge Impairment: percent. Fair values: (a) (iii) A financial asset carried atif amortized objective cost evidence is indicates considered thata impaired one negative or effect more on events thethat have estimated can had future cash be flowassets estimated of reliably. that are asset Individually tested significantremaining financial for financial assets carried impairment atcollectively, on amortized based on cost, an the are nature assessed of individual the asset. basis.An impairment The lossamortized in cost respect is calculated of as acarrying the difference amount financial between and asset the asset’s the measuredcash present at flows value of discountedrate. the at estimated Losses the future are asset’sincome recognized and original in reflected effective in thereceivable. interest an consolidated allowance account statements against of accounts In assessing collectivetrends impairment, of the the probability Company ofamount uses default, of historical timing loss of incurred, recoveriesas and adjusted the to for management’s whether judgement currentthat economic the and credit actualsuggested by conditions historical losses are trends. such are likelyAn to impairment berecognized loss greater by on or reclassifyingvalue the less available-for-sale reserve losses than financialincome. accumulated in The in assets equity cumulative thethe is loss fair consolidated to that statements of is income thethe is reclassified the consolidated from difference acquisition between equityimpairment statements loss to cost previously of recognized. and the(iv) currentThe fair Company value,instruments as determines follows: less the any fair values of its financial NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(k) Inventories and Video rental inventory: (iii) Restructuring: Inventories, including handsets, digital cable equipment and A provision for restructuring is recognized when the Company merchandise for resale, are primarily measured at the lower of cost, has approved a detailed and formal restructuring plan, and the determined on a first-in, first-out basis, and net realizable value. restructuring either has commenced or management has Video rental inventory, which includes DVDs and video games, is announced the plan’s main features to those affected by it. amortized to its estimated residual value. The residual value of Video Future operating losses are not provided for. rental inventory is recorded as a charge to merchandise for resale in (iv) Onerous contracts: operating costs upon the sale of Video rental inventory. Amortization A provision for onerous contracts is recognized when the of Video rental inventory is charged to merchandise for resale in unavoidable costs of meeting the obligation under the contract operating costs on a diminishing-balance basis over a six-month exceed the expected benefits to be derived by the Company. The period. provision is measured at the present value of the lower of the (l) Deferred transaction costs: expected cost of terminating the contract and the expected net The direct costs paid to lenders to obtain revolving credit facilities are cost of continuing with the contract. Before a provision is deferred and amortized on a straight-line basis over the life of the established, the Company recognizes any impairment loss on the debt to which they relate. assets associated with the contract. (n) Employee benefits: Financing costs incurred in connection with the issuance of long-term (i) Pension benefits: debt are capitalized and amortized using the effective interest The Company provides both contributory and non-contributory method. defined benefit pension plans, which provide employees with a lifetime monthly pension upon retirement. The Company’s net (m) Provisions: obligation in respect of defined benefit pension plans is Provisions are recognized when a present obligation as a result of a calculated separately for each plan by estimating the amount of past event will lead to a probable outflow of economic resources future benefits that employees have earned in return for their from the Company and the amount of that outflow can be estimated service in the current and prior years; that benefit is discounted reliably. The timing or amount of the outflow may still be uncertain. to determine its present value. The Company accrues its pension A present obligation arises from the presence of a legal or plan obligations as employees render the services necessary to constructive obligation that has resulted from past events, for earn the pension. The Company uses a discount rate determined example, legal disputes or onerous contracts. by reference to market yields at the measurement date on high quality corporate bonds to measure the accrued pension benefit Provisions are measured at the estimated expenditure required to obligation. Actuarial gains and losses are determined at the end settle the present obligation, based on the most reliable evidence of the year in connection with the valuation of the plans and are available at the reporting date, including the risks and uncertainties recognized in OCI and retained earnings. associated with the present obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that The Company uses the following methods and assumptions for reflects current market assessments of the time value of money and pension accounting associated with its defined benefit plans: the risks specific to the liability. (a) the cost of pensions is actuarially determined using the (i) Decommissioning and restoration costs: projected unit credit method. The projected unit credit In the course of the Company’s activities, network and other method takes into account the expected rates of salary assets are utilized on leased premises which are expected to have increases, for instance, as the basis for future benefit costs associated with decommissioning these assets and restoring increases. the location where these assets are situated upon ceasing their (b) for the purpose of calculating the expected return on use on those premises. The associated cash outflows, which are plan assets, those assets are valued at fair value. long-term in nature, are generally expected to occur at the dates of exit of the assets to which they relate. (c) past service costs from plan amendments are expensed immediately in the consolidated statements of income These decommissioning and restoration costs are calculated on to the extent that they are already vested. Unvested the basis of the identified costs for the current financial year, past service costs are deferred and amortized on a extrapolated into the future based on management’s best straight-line basis over the average remaining vesting estimates of future trends in prices, inflation, and other factors, period. and are discounted to present value at a risk-adjusted rate Contributions to defined contribution plans are recognized as an specifically applicable to the liability. Forecasts of estimated employee benefit expense in the consolidated statements of future provisions are revised in light of future changes in income in the periods during which related services are rendered business conditions or technological requirements. by employees.

The Company records these decommissioning and restoration (ii) Termination benefits: costs as PP&E and subsequently allocates them to expense using Termination benefits are recognized as an expense when the a systematic and rational method over the asset’s useful life, and Company is committed without realistic possibility of records the accretion of the liability as a charge to finance costs. withdrawal, to a formal detailed plan to terminate employment before the normal retirement date. (ii) Product guarantees: A provision for product guarantees is recognized for instances where replacement products will be provided to subscribers. The provision is based on historical data and an estimate of the future replacements required for products sold on or before the reporting date.

88 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 89 Rate useful life and lease term ROGERS COMMUNICATIONS INC. r the related estimated service 2011 ANNUAL REPORT Intangible assets: Subsequent costs: Depreciation: Brand namesCustomer relationshipsRoaming agreementsMarketing agreementsDuring thechanges year were made in ended estimated useful lives December compared to 31, 2010. 2011, no significant 2 to 5 years 5 to 2 20 to years 5 12 years years (ii) Intangible assetsrecorded at acquired their fairlives in values. Intangible are a assets amortized withtested finite over business for useful their impairment,residual combination estimated as values useful described and are liveswith amortization in finite methods and note useful lives for 2(r). are are intangible reviewed Useful at assets leastIntangible lives, annually. assets havingbroadcast an indefinite licences, life,impairment being are spectrum on and notSpectrum an licences amortized annualintangible and but basis, assets, broadcast as because areperiod there licences over described tested which is these are in no assetsinflows for are indefinite foreseeable expected note for to limit generate life the 2(r). net toindefinite cash Company. the life The isincluding determination the based expected of usage on of thesethe the an asset asset, assets’ and the analysis typical anticipated life changes ofproducts cycle in and of all services the that market relevant the demand asset for factors, helps the generate. Intangible assets withstraight-line basis finite over their useful estimated useful lives lives as follows: are amortized on a and expenses areperiod. amortized ove When parts of anare item accounted of for as PP&E separate have components different ofGains PP&E. useful and lives, losses they onby disposal of comparing an item theamount of of PP&E proceeds PP&E, are and determined from areconsolidated recognized statements disposal of within income. other with income in the(ii) the carrying Subsequent costs are includedrecognized in as the asset’s a carryingadditional separate amount or asset future onlysubsequent expenditures when will economic flow it toof the is the benefits Company item and probable can the becharged that associated costs to reliably operating measured. expenses All with as other incurred. expenditures(iii) are the PP&E are stated atimpairment losses. cost less accumulated depreciation and any Basis f acquisition, construction or s. Cost includes expenditures ms and restoring the site on iber installation is capitalized. ental installation costs related e acquisition of the asset. The ons and disconnections are s. Deferred reconnect revenues ctly attributable to bringing the multi-year sports programming cludes the cost of materials and red program rights for broadcasting Goodwill: Recognition and measurement: (i) Goodwill isconsideration the transferred for amount anfair acquired that business value exceeds resultsliabilities the of net when recognized. the When thecombination, identifiable the fair Company the assets, valueGoodwill enters is acquisition liabilities into assigned, of as a and method ofcash the generating business contingent units date of that of are thecombination. expected business to accounting Each combination, benefit cash from to the generating is business at unit which represents used. goodwill the is lowestand monitored level it for is never internal larger management than purposes an operating segment. Asset BuildingsTowers, head-ends and transmittersDistribution cable and subscriber dropsNetwork equipmentWireless network radio base station equipmentComputer equipment and softwareCustomer equipmentLeasehold improvements Straight-line Straight-line Straight-line Straight-line Straight-line Mainly diminishing balance Straight-line Straight-line 12-1/2% to 14-1/3% 6-2/3% to 25% 5% to 20% 14-1/3% to 33-1/3% 4% to 18% 6-2/3% to Over 33-1/3% shorter of estimated 20% to 33-1/3% Equipment and vehiclesDepreciation methods, ratesannually and and revised residual if the valuesor current residual are method, value estimated is reviewed useful differenteffect life from that of estimated previously.statements The of such income prospectively. changes is recognized in the consolidated Mainly diminishing balance 5% to 33-1/3% (i) Items of PP&E are measuredand at cost accumulated less impairment accumulated depreciation that losse are directly attributable to th cost of self-constructed assetsdirect labour, in any other costsassets dire to a workingdismantling condition for and their removing intendedwhich use, the they the ite are costs located, of for and which borrowing the costs commencement on datedevelopment qualifying o is assets on or after January 1, 2010. The cost of the initial cable subscr to reconnect Cable customers,of which reconnect are installation deferred revenue to the extent Costs ofexpensed, except other for direct cable increm connecti Depreciation is charged to the consolidated statements of income over their estimated useful lives as follows: (q) Goodwill and intangible assets: (p) AcquiredProgram program rights: rights represent contractual rightsbroadcast acquired television from programs. third Acqui partiesare to carriedimpairment at losses, costliabilities if less are recorded any. on accumulated thewhen consolidated Acquired amortization, statements the of licence program financial and period position cost begins rights accumulated and of the acquired and program programin is the rights available the is for related amortized consolidated use. toperiod The statements other of of external income 1 purchases considered over to impaired the 5 expected and years.non-financial exhibition If written asset program impairment off.useful rights testing Otherwise, are as lives. they notarrangements intangible are are scheduled, expensed as Program assets they incurred, subject when with are the to games rights finite are aired. for (o) Property, plant and equipment: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Development expenditures are capitalized if they meet the the identifiable assets acquired and the liabilities assumed is criteria for recognition as an asset. The assets are amortized over based, to a considerable extent, on management’s judgement. their expected useful lives once they are available for use. Research expenditures, as well as maintenance and training (ii) Income taxes: costs, are expensed as incurred. Income tax liabilities must be estimated for the Company, including an assessment of temporary differences. Any (r) Impairment: temporary differences will generally result in the recognition of (i) Goodwill and indefinite-life intangible assets: deferred tax assets and liabilities in the financial statements. The carrying values of identifiable intangible assets with Management’s judgement is required for the calculation of indefinite lives and goodwill are tested annually for impairment. current and deferred taxes. A cash generating unit (“CGU”) is the smallest identifiable group of assets that generates cash inflows that are largely (iii) Property, plant and equipment: independent of the cash inflows from other assets or groups of Measurement of PP&E involves the use of estimates for assets. Goodwill and indefinite life intangible assets are determining the expected useful lives of depreciable assets. allocated to CGUs for the purpose of impairment testing based Management’s judgement is also required to determine on the level at which management monitors them, which is not depreciation methods and an asset’s residual value, the rate of higher than an operating segment. The allocation is made to capitalization of internal labour costs and whether an asset is a those CGUs that are expected to benefit from the business qualifying asset for the purposes of capitalizing borrowing costs. combination in which the goodwill arose. (iv) Impairment of non-financial assets: (ii) Non-financial assets with finite useful lives: The impairment test on CGUs is carried out by comparing the The carrying values of non-financial assets with finite useful carrying amount of CGUs and their recoverable amount. The lives, such as PP&E and intangible assets with finite useful lives, recoverable amount of a CGU is the higher of its fair value, less are assessed for impairment whenever events or changes in costs to sell and its value in use. This complex valuation process circumstances indicate that their carrying amounts may not be used to determine fair value less costs to sell and/or value in use recoverable. If any such indication exists, the recoverable entails the use of methods such as the discounted cash flow amount of the asset must be determined. Such assets are method which uses assumptions to estimate cash flows. The impaired if their recoverable amount is lower than their carrying recoverable amount depends significantly on the discount rate amount. If it is not possible to estimate the recoverable amount used in the discounted cash flow model as well as the expected of an individual asset, the recoverable amount of the CGU to future cash flows. which the asset belongs is tested for impairment. (v) Provisions: (iii) Recognition of impairment charge: Considerable judgement is used in measuring and recognizing The recoverable amount is the higher of an asset’s or CGU’s fair provisions and the exposure to contingent liabilities. Judgement value less costs to sell or its value in use. If the recoverable is necessary to determine the likelihood that a pending litigation amount of an asset or CGU is estimated to be less than its or other claim will succeed, or a liability will arise and to carrying amount, the carrying amount of the asset or CGU is quantify the possible range of the final settlement. reduced to its recoverable amount. The resulting impairment loss is recognized in the consolidated statements of income. An (vi) Financial risk management and financial instruments: impairment loss is reversed if there has been a change in the The fair value of derivative instruments, investments in publicly estimates used to determine the recoverable amount. When an traded and private companies, and equity instruments is impairment loss is subsequently reversed, the carrying amount of determined on the basis of either prices in regulated markets or the asset or CGU is increased to the revised estimate of its quoted prices provided by financial counterparties, or using recoverable amount so that the increased carrying amount does valuation models which also take into account subjective not exceed the carrying amount that would have been recorded measurements such as, cash flow estimates or expected volatility had no impairment losses been recognized for the asset or CGU of prices. in prior years. Impairment losses recognized for goodwill are not reversed. (vii) Pensions: Pension benefit costs are determined in accordance with In assessing value in use, the estimated future cash flows are actuarial valuations, which rely on assumptions including discounted to their present value using a pre-tax rate that discount rates, life expectancies and expected return on plan reflects current market assessments of the time value of money assets. In the event that changes in assumptions are required and the risks specific to that asset. The cash flows used reflect with respect to discount rates and expected returns on invested management assumptions and are supported by external sources assets, the future amounts of the pension benefit cost may be of information. affected materially.

(s) Use of estimates: (viii) Stock options, share units and share purchase plans: The preparation of financial statements requires management to Assumptions, such as volatility, expected life of an award, risk- make judgements, estimates and assumptions that affect the free interest rate, forfeiture rate, and dividend yield, are used in application of accounting policies and the reported amounts of the underlying calculation of fair values of the Company’s stock assets, liabilities, revenue and expenses. Actual results could differ options. Fair value is determined using the Company’s Class B from these estimates. Non-Voting share price, and the Black-Scholes or trinomial Key areas of estimation, where management has made difficult, option pricing models, depending on the nature of the share complex or subjective judgements, often as a result of matters that based award. Details of the assumptions used are included in are inherently uncertain are as follows: note 22.

(i) Business combinations: Significant changes in the assumptions, including those with respect The amount of goodwill initially recognized as a result of a to future business plans and cash flows, could materially change the business combination and the determination of the fair value of recorded carrying amounts.

90 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 91 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT , Investments in Associates and Joint Ventures 8 IFRS 9, Financial Instruments In October(“IFRS 2010, 9”). theRecognition IFRS and IASB Measurement, 9, establishes issued principlesreporting which for of IFRS the replaces financial financial assets 9,relevant IAS and and financial Financial 39, useful liabilities informationtheir Instruments that Financial assessment to of will the users Instruments: present amounts, offuture timing and financial cash uncertainty statements flows. of an for interim This entity’s new and standard annual isJanuary consolidated effective 1, for financial 2015. thestandard The statements on Company’s its Company commencing consolidated financial is statements. assessing the impact of this new IAS 27, Separate Financial Statements In May 2011, the IASB(“IAS amended IAS 27, 27”). Separateconsolidated Financial Statements statements This from“Consolidated IAS Financial 27, amendment Statements”. and Thewhen amendment moves removes mandates a it that company over preparesin the to separate subsidiaries, IFRS financial statements, associates, 10 requirementsaccounted investment and for jointly for usingIFRS controlled either entities the 9 are costdetermines the to method treatment “Financial or be for recognizingcertain in dividends, group Instruments”. the accordance reorganizations, treatment and with of some Inamendment disclosure requirements. This is addition,consolidated effective financial this for statementsCompany commencing amendment the January is 1, Company’s assessingconsolidated 2013. financial the The interim statements. impact and of this annual IAS 2 amended standardIn on May 2011, its the IASBJoint amended IAS Ventures 28, (“IAS Investmentsportion in of 28”). Associates an and investment This inbeen an amendment classified associate or requires as jointmethod any venture held that retained until has for not continues sale disposal. to to Afterrequires be be for measured it disposal, an to usingmethod. be associate if The continued the to or amendment equity the beretained also accounted joint interest disallows retained for in under venture, theinfluence an the interest remeasurement or equity investment the of joint upon control. any amendment Company’s the This cessation amended interim of standard iscommencing significant and effective January for 1, annual 2013. the Thethis consolidated amended Company standard is on financial assessing its the consolidated impact statements financial of statements. interim and annualJanuary consolidated 1, financial 2013.standard The statements on its Company commencing consolidated financial is statements. assessingIAS the 1, Presentation impact of of FinancialIn Statements this June new 2011,Statements (“IAS the 1”). This IASB amendmentpresent requires amended the an entity items IAS to of separately to OCI 1, as Presentation items profit that ofCompany’s may and or Financial interim may loss. notcommencing be and This January reclassified 1, annual 2013. amended Thethis consolidated amended Company standard standard is on financial assessing its is the consolidated impact statements financial of effective statements. IAS 19, Employee for Benefits In the June 2011, the IASBThis amended amendment IAS 19, eliminated Employee themandates Benefits use (“IAS all 19”). of remeasurement theenhances “corridor” impacts the approach be disclosure and recognizedabout requirements, in the providing OCI. characteristics betterentities of It information defined also are benefit exposedamendment plans clarifies to and when a through the companyan risk should participation recognize that expense in a liabilityeffective those and for for the plans. termination Company’s This interimstatements and benefits. annual commencing consolidated January This financial the 1, amended impact 2013. of The standardstatements. this Company is is amended assessing standard on its consolidated financial IFRS 13, Fair Value Measurement In May(“IFRS 2011, 13”). the IFRSindividual IASB 13 IFRS issued replacesguidance. the IFRS with The standard fair 13, a also value requiresassess disclosures Fair single guidance which enable Value contained source users the to measurements. in Measurement of This methods fair new and value standard measurement is inputs effective used for the to Company’s develop fair value IFRS 12, Disclosure of InterestsIn in May Other 2011, Entities theEntities IASB issued (“IFRS IFRS 12,disclosure 12”). Disclosure requirements of IFRS Interests forincluding in 12 all Other establishes forms ofunconsolidated new subsidiaries, structured interests entities. and in Thisthe comprehensive new other joint Company’s standard entities, interim is andcommencing effective annual January for arrangements, consolidated 1, 2013. financial Thethis statements new Company standard is associates on assessing its the consolidated impact financial of statements. and IFRS 11, Joint Arrangements In May 2011, the IASBIFRS issued 11, IFRS 11, which JointVentures, Arrangements replaces (“IFRS the 11”). providesarrangements guidance by in for IASarrangement, focusing rather 31, a than on its Interestsstandard legal the in form more (as rights Joint addresses isarrangements currently and realistic by the requiring inconsistencies case). obligations interests The in reflectionaccounted jointly of for controlled in using entities the the of to equityfor be method. the This new joint the standard reportingstatements is effective commencing Company’s January ofthe interim 1, 2013. joint impact and Thestatements. Company of annual is this assessing consolidated new financial standard on its consolidated financial IFRS 10, Consolidated Financial Statements In MayStatements 2011, (“IFRS the 10”).requirements IFRS IASB of 10, SIC-12IAS issued which 27 Consolidation-Special IFRS replaces Consolidated Purposeprinciples and the 10, Entities Separate for consolidation and Financial Consolidatedfinancial the Statements, statements Financial presentation establishes whenentities. and This an new standard preparation entity isannual effective of controls for consolidated the one consolidated Company’s2013. financial interim The or and Company statements is more assessingconsolidated commencing the financial other impact statements. of January this new 1, standard on its In December 2010, theof IASB amended Underlying IAS Assets 12,presumption (“IAS Deferred Tax: 12”). Recovery which IASdepreciable 12 determines component will now of thatthe include an fair a investment the value rebuttal propertyamount model being measured deferred from recovered using through IAS taxamended a 40 sale. on should The tonon-depreciable standard be the has include based assets also been onIAS measured the its 16 using carrying shouldeffective requirement the for be the revaluation Company’s measured that interimstatements model on and annual commencing deferred the in consolidated January financial salethe 1, tax basis. impact 2012. This of The on statements. this Company amendment is amended is assessing standard on its consolidated financial IAS 12, Deferred Tax: Recovery of Underlying Assets (t) RecentIFRS accounting 7, pronouncements: Financial Instrument: Disclosures In October 2010,Disclosures the IASB (“IFRSrequirements amended to aid IFRS financial 7”). statement 7,of, users in Financial and evaluating This the Instruments: risks nature derecognized associated financial amendment with assets. anCompany’s The entity’s enhances interim continuing amendmentcommencing involvement and is disclosure January in 1, effective annual 2012. for Thethis consolidated amended Company the standard is on financial assessing its the consolidated impact statements financial of statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. TRANSITION TO IFRS:

As stated in note 2(a), these are the Company’s first annual these consolidated financial statements as at and for the year ended consolidated financial statements prepared in accordance with IFRS. December 31, 2010, and for the opening IFRS statement of financial position at January 1, 2010 (the Company’s Transition Date to IFRS). In The accounting policies set out in note 2 have been applied in preparing its opening and comparative IFRS statements of financial preparing the consolidated financial statements as at and for the year positions, the Company has adjusted amounts reported previously in ended December 31, 2011, the comparative information presented in financial statements prepared in accordance with previous Canadian GAAP.

Reconciliation of financial position and shareholders’ equity at January 1, 2010:

Reclassification Adjustments to Canadian for IFRS shareholders’ GAAP presentation Note equity Note IFRS balance Assets

Current assets: Cash and cash equivalents $ 383 $ (5) (f) $ – $ 378 Accounts receivable 1,310 (21) (f) – 1,289 Other current assets 338 (61) (f),(l) – 277 Current portion of derivative instruments 4 – – 4 Current portion of deferred tax assets 220 (220) (m) – –

2,255 (307) – 1,948

Property, plant and equipment 8,197 (50) (f) (11) (e) 8,136 Goodwill 3,018 (7) (f) – 3,011 Intangible assets 2,643 (3) (f),(l) – 2,640 Investments 547 167 (f) 1 (i) 715 Derivative instruments 78 – – 78 Other long-term assets 280 (46) (f),(g),(l) (121) (b) 113 Deferred tax assets – 84 (f),(m) – 84

$ 17,018 $ (162) $ (131) $ 16,725

Liabilities and Shareholders’ Equity

Current liabilities: Accounts payable and accrued liabilities $ 2,175 $ (118) (d),(f),(h) $ 9 (c) $ 2,066 Income tax payable 147 – – 147 Current portion of provisions – 4 (h) 10 (h) 14 Current portion of long-term debt 1 – – 1 Current portion of derivative instruments 80 – – 80 Unearned revenue 284 55 (d) (4) (d) 335

2,687 (59) 15 2,643

Provisions – 39 (h) 19 (h) 58 Long-term debt 8,463 (9) (g) (58) (g) 8,396 Derivative instruments 1,004 – – 1,004 Other long-term liabilities 133 – 44 (b),(c),(f) 177 Deferred tax liabilities 458 (133) (m) (34) (m) 291

12,745 (162) (14) 12,569

Shareholders’ equity 4,273 – (117) (n) 4,156

$ 17,018 $ (162) $ (131) $ 16,725

92 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 93 ROGERS COMMUNICATIONS INC. equity Note IFRS balance shareholders’ Adjustments to 2011 ANNUAL REPORT for IFRS presentation Note Reclassification GAAP 2,005 (246) – 1,759 2,875 (64) 22 2,833 13,371 (144) 46 13,273 Canadian $ 17,330 $(144) $ (153) $ 17,033 $ 17,330 $(144) $ (153) $ 17,033 Bank advancesAccounts payable and accrued liabilitiesIncome tax payableCurrent portion of provisionsCurrent portion of derivative instrumentsUnearned revenue 2,256 (137) 67 (d),(f),(h) $ – 40 238 – 14 $ 12 274 5 (c) – (h) 2,133 (f) 56 – $ (d) 9 – – (h) (1) $ 67 21 (d) 45 238 329 Accounts receivableOther current assetsCurrent portion of derivative instrumentsCurrent portion of deferred tax assets 1 $ 159 1,480 – 365 (159) $ (37) (m) (50) (f) (f),(l) $ – – – – $ 1,443 – 1 315 Property, plant and equipmentGoodwillIntangible assetsInvestmentsDerivative instrumentsOther long-term assetsDeferred tax assetsLiabilities and Shareholders’ Equity Current liabilities: 8,493 (46) 2,669Provisions (f)Long-term 3,115 debt 6 321Derivative instruments 721Other long-term liabilities (73)Deferred tax liabilities (10) – (7) (37) – (f),(l) 213Shareholders’ equity (e) (g),(l) (f) 52 (f) 8,437 (5) (137) (m) – (l) (1) (b) – 2,591 – 147 (i) 840 124 8,718 3,108 933 814 – 6 – – (9) 3,959 (107) 52 36 (g) (m) – (h) (55) 105 (52) – (b),(c),(f) 26 (g) (m) 229 (199) 8,654 (h) 655 (n) 840 62 3,760 Assets Current assets: Reconciliation of financial position and shareholders’ equity at December 31, 2010: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reconciliation of comprehensive income for the year ended December 31, 2010:

Reclassification Canadian for IFRS GAAP presentation Note Adjustment Note IFRS Operating revenue $ 12,186 $ (41) (f) $ (3) (d) $ 12,142

Operating expenses: Operating costs 7,594 (19) (f) (4) (b),(c),(h) 7,571 Integration, restructuring and acquisition costs 40 – – 40 Depreciation and amortization 1,645 (12) (f) 6 (e),(f) 1,639 Impairment of assets 6 – 5 (l) 11

Operating income 2,901 (10) (10) 2,881

Finance costs (762) – (6) (e),(g),(j) (768) Other income (expense), net (1) – – (1) Share of the income (loss) of associates and joint ventures accounted for using the equity method, net of tax – 10 (f) (8) (h) 2

Income before income taxes 2,138 – (24) 2,114

Income tax expense 610 – 2 (m) 612

Net income for the year 1,528 – (26) 1,502

Other comprehensive income (loss): Defined benefit pension plans: Actuarial gain (loss) – – (80) (b) (80) Related income tax recovery – – 21 (m) 21

– – (59) (59)

Change in fair value of available-for-sale investments: Increase (decrease) in fair value 104 – (2) (i) 102 Related income tax expense (13) – – (13)

91 – (2) 89

Cash flow hedging derivative instruments: Change in fair value of derivative instruments (227) – 6 (j) (221) Reclassification to net income for foreign exchange gain on long- term debt 264 – – 264 Reclassification to net income of accrued interest 97 – – 97 Related income tax expense (24) – (1) (m) (25)

110 – 5 115

Other comprehensive income for the year 201 – (56) 145

Comprehensive income for the year $ 1,729 $ – $ (82) $ 1,647

94 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 95 2010 December 31, 2010 January 1, ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT actuarial gains or losseslife over the average of remaining service previously the unrecognized employees.losses, cumulative At including actuarial the thewere gains unamortized date recognized and transitionalreduction obligation, of in of transition, retained retainedlosses earnings all of earnings, of $76 $149ended million resulting December million. were 31, 2010. recognized Actuarial in in OCI a In for compliance the with year IAS 19,immediately past if service vested, costs are oraverage recognized on remaining aCanadian straight-line GAAP, vesting basis past service over costs period the expected were recognized over if the averageemployees unvested. expected remaining to Under receivethe service benefits under date the period of plan.service costs At of transition, amounting to all $9as active such million previously were were recognized fully unrecognized in vested retained and earnings. past Furthermore, IASobligation 19 and plan requires assets bestatement that measured at of the the consolidated defined defined financial benefit benefit positionmeasured obligation date. at and Accordingly,resulting January plan in an 1, the assets $8the million 2010 Transition have reduction Date. and to retained been December earnings at 31,In addition, 2010, IASBenefit 19 Asset, and IFRIC MinimumInteraction, 14, limit Funding The the Requirement amount Limitasset that and on on can the a their be consolidated recognized statement Defined the of as present financial an position value to refunds of available contributionunrecognized plus past reductions service or costs. Thisin restriction a unrecognized has limit resulted onCompany’s the asset actuarial defined that canfurther benefit be reduction recorded of losses plans, $8 for millionretained one that which of has earnings the been and resulted recognizedended at in in December the 31, a OCI. Transition 2010, Date. $4 million For was the recognized year in (ii) (iii) (iv) Operating costsOther comprehensive incomeposition: Other long-term assetsOther long-term liabilitiesincome taxes 80 $ (5) $ (121) (53) $ (137) (112) (174) (249) (c) Stock-basedAs compensation: describedcompensation in to note employees.unsettled 22, stock-based compensation The the arrangements at Companywhich Company January requires 1, applied that 2010, has stock-based IFRS compensation granted be 2 measured stock-based based to on its Year ended December 31,Consolidated statement of comprehensive income: Adjustment before income taxesConsolidated statements of financial Adjustment to retained earnings before 2010 Related $ income tax effect 75 Adjustment to retained earnings $ (130) 44 $ (185) 64 The impact arising from the changes is summarized as follows: Upon adoptiondescribed of in IFRS, therecognized actuarial significant immediately accounting gains inEmployee policies OCI, and Benefits note as losses, (“IASGAAP, are permitted the 19”). as Company by used Under IAS the corridor previous 19, method Canadian to amortize Business combinations: Leases: Changes insimilar liabilities existing included in the decommissioning, cost of PP&E: restoration and Borrowing costs: Transfers of assets from customers: (i) (i) The Company has elected to(“IFRS apply 3”), IFRS retrospectively 3, to Businessplace all Combinations business on combinations or that afterprevious took the date Canadian of GAAP, transition,adopt January the 1, The Company 2010.Handbook Under had Canadian elected SectionJanuary to Institute 1, early 1582, 2010, the ofIFRS. requirements Business As of which Chartered a aregoodwill Combinations, condition converged relating Accountants’ under with to effective IFRSto business 1 January combinations of 1, that applying 2010impairment occurred indicators this was prior were tested exemption, identified. for Nothe impairment date impairment of existed even transition. at though no (ii) The Company has electedInternational to apply Financial the transitional(“IFRIC”) provisions Reporting 4, in Determining InterpretationsLease Whether (“IFRIC an Committee 4”), Arrangementhas thereby Contains any arrangements determining a that whether existthat at the contain the date Company a ofexisting transition lease to at IFRS onidentified. the January basis 1, of facts(iii) 2010. and No circumstances such arrangementsThe were Companyretrospective has elected applicationDecommissioning, to Restoration of and apply SimilarThis IFRIC Liabilities election the (“IFRIC allows 1”). 1, the exemptionchanges Company to to to Changes its measure the decommissioningestimates full impact in and applicable of restoration any at liabilities Existing adjustment the using was required date to of theof opening transition financial consolidated to statement position IFRS,IFRIC as 1. and a no result of(iv) applying thisThe election Company and has electedIAS to 23, apply Borrowing the Costs transitionalof provisions (“IAS transition. of 23”), prospectively from the(v) date The Company has electedIFRIC to apply 18, the transitionalprospectively provisions Transfers from the of date of of transition. Assets from Customers (“IFRIC 18”), (b) Employee benefits: (a) PrincipalIFRS exemptions 1 elected sets on out transition theit to requirements IFRS: that adopts the Companyconsolidated IFRS must financial follow for when statements.accounting The the policies Company first for establishedapplied the its time year IFRS retrospectively ended as these Decemberstatement the of 31, policies financial 2011, basis to position and2010, at the for has the date except opening preparing ofoutlined transition consolidated for as of its follows: January specific 1, exemptions available to the Company In addition topolicy differences the described changes inincome the required following to notes, taxes interest adjustconsolidated paid statements paid for and of the cashwhereas have flows accounting as been part they ofinformation. operating moved There activities, werepresentation into are of the no consolidated the statements previously of other cash body flows. material disclosed of differences related the as to supplementary NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the fair values of the awards. Under previous Canadian GAAP, the The impact arising from these changes is summarized as follows: Company accounted for these arrangements at intrinsic value. Year ended December 31, 2010 The impact arising from the change is summarized as follows: Consolidated statement of comprehensive income: Year ended December 31, 2010 Depreciation and amortization $ 2 Consolidated statement of comprehensive income: Finance costs–capitalized interest (3) Operating costs $ 3 Adjustment before income taxes $ (1) Adjustment before income taxes $ 3 January 1, December 31, 2010 2010 January 1, December 31, 2010 2010 Consolidated statements of financial Consolidated statements of financial position: position: Property, plant and equipment $ (11) $ (10) Accounts payable and accrued liabilities $ (9) $ (14) Related income tax effect 3 3 Other long-term liabilities (6) (4) Adjustment to retained earnings $ (8) $ (7)

Adjustment to retained earnings before As noted previously, the Company has elected to apply IAS 23 income taxes (15) (18) prospectively from the date of transition, January 1, 2010; Related income tax effect 4 – consequently, there was no impact to the consolidated statements of Adjustment to retained earnings $ (11) $ (18) financial position at that date. (f) Joint ventures: (d) Customer loyalty programs: (i) The Company applied IAS 31, Interests in Joint Ventures The Company applied IFRIC 13, Customer Loyalty Programmes (“IAS 31”), at January 1, 2010. The Company has elected to (“IFRIC 13”), retrospectively. IFRIC 13 requires that the fair value of use the equity method to recognize interests in joint the awards given to a customer be identified as a separate ventures as described in note 2(c). Previous Canadian GAAP component of the initial sales transaction and the revenue be required that the Company proportionately consolidate its deferred until the awards are redeemed. Under previous Canadian interests in joint ventures. This change had no impact on GAAP, the Company took a liability-based approach in accounting for the Company’s net assets and consequently is presented as customer loyalty programs. a reclassification difference.

Consistent with the requirements of IFRS, the liability balance has (ii) IFRS requires that the Company immediately recognize any been reclassified from accounts payable and accrued liabilities to gains that arise on non-monetary contributions to a joint unearned revenue upon transition. venture to the extent of the other venturers’ interest in the The impact arising from the change is summarized as follows: joint venture when certain conditions are met. Under previous Canadian GAAP, these gains were deferred and Year ended December 31, 2010 amortized into income over the life of the assets Consolidated statement of comprehensive income: contributed. The impact of this difference was to recognize Operating revenue $ (3) $15 million of unamortized gains in opening retained earnings. Depreciation and amortization increased by Adjustment before income taxes $ (3) $4 million for the year ended December 31, 2010 as a result of eliminating the amortization of the gain under previous January 1, December 31, Canadian GAAP. 2010 2010 Consolidated statements of financial The impacts of applying IAS 31 are summarized as follows: position: Year ended December 31, 2010 Accounts payable and accrued liabilities $ 55 $ 56 Consolidated statement of comprehensive income: Unearned revenue (51) (55) Operating revenue $ 41 Operating costs (19) Adjustment to retained earnings before Depreciation and amortization–change from income taxes 4 1 proportionate consolidation (12) Related income tax effect (1) – Depreciation and amortization–remove amortization of Adjustment to retained earnings $ 3 $ 1 deferred gain 4 Share of the loss of associates and joint ventures accounted (e) Property, plant and equipment: for using the equity method (10) The Company has applied IAS 16, Property, Plant and Equipment, Adjustment before income taxes $ 4 which requires that the Company identify the significant components of its PP&E and depreciate these parts separately over their respective useful lives which results in a more detailed approach than was used under previous Canadian GAAP. The Company has also applied IAS 23 which requires the capitalization of interest and other borrowing costs as part of the cost of certain qualifying assets which take a substantial period of time to get ready for its intended use. Under previous Canadian GAAP, the Company elected not to capitalize borrowing costs.

96 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 97 2010 2010 December 31, December 31, 2010 2010 January 1, January 1, ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT accounted for using the equity method 8 provisions – reclassificationcontract (4) (12) (10) (9) position: InvestmentsAvailable-for-sale equity reserve (1) 1 $ 1 $ (1) Increase in fair value of available-for-sale investments $ 2 Operating costsShare of the income of associates and joint ventures position: Accounts payable and accrued liabilitiesCurrent portion of Current portion of provisions $ – onerous 43Provisions – reclassificationProvisions – $ onerous contract (2) $ 48 income taxes (39) (19) (36) (26) (29) (35) Consolidated statements of financial Adjustment to retained earningsThere is noDecember 31, 2010 impact as a on result of this retained change. earnings at January 1, 2010 $ or – $ – (i)IAS Financial instruments – investments: 39investments in requires equity instruments thatprice that do the in not haveprevious an Company a quoted Canadian market active measureavailable-for-sale and GAAP, market at measured at classified thesefair fair cost, value. as as investments cost value closely available-for-sale. were approximated its Under The classified impact of this as change is summarizedYear ended as December follows: 31,Consolidated statement of comprehensive income: Adjustment before income taxes $ 2010 2 (h) Provisions: IAS 37,(“IAS Provisions, 37”), requires Contingent separatethe disclosure Liabilities consolidated of statements and provisionsrecognition of of on financial Contingent a the provision position facewhere Assets for and of onerous the also contracts; costsreceived that requires is to under any the fulfill contract previous contract, the Canadian neither contract of GAAP.were exceed which Therefore, reclassified were upon the from required transition, benefitsthe accounts under all to payable provisions Company be and$29 million. accrued liabilities recognized and anThe impact of onerous the changes is summarizedYear contract ended as December follows: 31, provisionConsolidated statement of of comprehensive income: Adjustment before income taxesConsolidated statements of financial 2010 $ 6 Adjustment to retained earnings before Related income tax effectAdjustment to retained earnings $ (19) 10 $ (27) 8 2010 2010 December 31, December 31, 2010 2010 January 1, January 1, unamortized discountsdiscountscosts $ (9) $ (9) 9 58 9 55 deferred gain 15 11 position: Other long-term assets – reclassify Long-term debt – reclassify unamortized Long-term debt – unamortized transaction income taxes 58 55 Finance costs – amortizationFinance costs – debt issuances $ 13 (10) position: Cash and cash equivalentsAccounts receivableOther current assetsProperty, plant and equipmentGoodwillIntangible assetsInvestmentsOther long-term $ assetsDeferred tax assets (5)Bank advancesAccounts (50) payable and $ accrued liabilitiesOther long-term (21) liabilities – remove – – (46) (37) 20income taxes (103) (1) 2 (7) 33 167 (150) (3) – (7) – 213 – (5) 15 11 Consolidated statements of financial Adjustment to retained earnings before Related income tax effectAdjustment to retained earnings $ 42 (16) $ 40 (15) Year ended December 31,Consolidated statement of comprehensive income: Adjustment before income taxes 2010 $ 3 (g) FinancialThe instruments – Company transaction has costs: appliedand IAS Measurement 39, Financial (“IASdirectly Instruments: attributable 39”), Recognition costs atassets to and January be liabilities added 1, andincome amortized to 2010, over to certain the the which life acquired consolidated ofGAAP, statements financial requires the of asset or these liability.transaction Under costs previous costs Canadian of $58debt million were related were todiscounts expensed the adjusted recognized Company’s on as long-term upon long-termother debt transition. have incurred. long-term beenrequirements. Additionally, reclassified Unamortized from assets unamortized toThe impact of the conform change is summarized as follows: with IFRS presentation Consolidated statements of financial Adjustment to retained earnings before Related income tax effectAdjustment to retained earnings $ 5 (10) $ 2 (9) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

January 1, December 31, (j) Financial instruments – hedge accounting: 2010 2010 IAS 39 requires that the Company include credit risk when measuring Consolidated statements of financial the ineffective portion of its cross-currency interest rate exchange position: agreements. Under previous Canadian GAAP, the Company elected not to include credit risk in the determination of the ineffective Intangible assets $ – $ (5) portion of its cross-currency interest rate exchange agreements. Adjustment to retained earnings before The impact of this change is summarized as follows: income taxes – (5) Related income tax effect – 1 Year ended December 31, 2010 Consolidated statement of comprehensive income: Adjustment to retained earnings $ – $ (4) Finance costs – change in fair value of derivative instruments $ 6 IAS 38, Intangible Assets (“IAS 38”), requires acquired program rights Change in fair value of derivative instruments (6) to be classified as intangible assets. Under previous Canadian GAAP, Adjustment before income taxes $ – these amounts were classified as other current assets and other long- term assets. Therefore, upon transition, the Company reclassified an

January 1, December 31, amount of $100 million at January 1, 2010 and $77 million at 2010 2010 December 31, 2010 to intangible assets.

Consolidated statements of financial The impact of the changes is summarized as follows: position: January 1, December 31, Equity reserves – hedging $ 7 $ 1 2010 2010 Consolidated statements of financial Adjustment to retained earnings before position: income taxes 7 1 Other current assets $ (61) $ (49) Related income tax effect (1) – Intangible assets 100 77 Adjustment to retained earnings $ 6 $ 1 Other long-term assets (39) (28)

Adjustment to retained earnings $ – $ – (k) Share of the income or loss of associates: IAS 1, Presentation of Financial Statements (“IAS 1”), requires that the (m) Income taxes: share of the income or loss of associates accounted for using the The above changes decreased (increased) the net deferred tax liability equity method are presented as a separate line item on the face of as follows: the consolidated statements of income. Under previous Canadian January 1, December 31, GAAP, the share of the income or loss of associates was included with Note 2010 2010 other income. Employee benefits (b) $ 44 $ 64 For the year ended December 31, 2010, the impacts of applying IAS 1 Stock-based compensation (c) 4 – was less than $1 million. Customer loyalty programs (d) (1) – (l) Intangible assets and impairment of assets: Property, plant and equipment (e) 3 3 IAS 36, Impairment of Assets (“IAS 36”), uses a one-step approach for Joint ventures (f) (10) (9) both testing for and measurement of impairment, with asset carrying Financial instruments – transaction values compared directly with the higher of fair value less costs to sell costs (g) (16) (15) and value in use (which uses discounted future cash flows) and assets Provisions (h) 10 8 are tested for impairment at the level of cash generating units, which Impairment of assets (l) – 1 is the lowest level of assets that generate largely independent cash flows. Canadian GAAP, however, uses a two-step approach to Decrease in net deferred tax liability $ 34 $ 52 impairment testing: first comparing asset carrying values with undiscounted future cash flows to determine whether impairment The effect on the consolidated statement of comprehensive income exists; and then measuring any impairment by comparing asset for the year ended December 31, 2010 was to decrease the previously carrying values with fair values, and assets are grouped at the lowest reported tax charge for the period by $18 million. level for which identifiable cash flows are largely independent of the Under IFRS, all deferred tax balances are classified as non-current, cash flows of other assets and liabilities for impairment testing regardless of the classification of the underlying assets or liabilities, or purposes. the expected reversal date of the temporary difference. The effect of The impact of this change is summarized as follows: this change, including the impact of netting deferred tax assets and Year ended December 31, 2010 Consolidated statement of comprehensive income: Impairment of assets $ 5

Adjustment before income taxes $ 5

98 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 99 2010 December 31, 9616 181 16 (16) (16) 2010 $ 117 $ 199 January 1, (j)(l) (6) –(i)(j) (1) (1) 4 6 1 1 (f) (5) (2) (c) 11 18 (e) 8 7 (b) $ 130(d) $ 185 (3)(g)(h) (42) (1) 19 (40) 27 Note ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT rental business. (iii) Video segment operates a DVD andMedia–This video game segment saletelevision and operatesconsumer, broadcasting theentertainment, trade Company’s and operations, digital media properties. radio and televised and professional shopping, publications, sports income. The impact of thisreserves difference on by transition $16 is$16 to million million. reduce equity and increase openingIn retained addition, earnings the by January Company 1, reclassified 2010 and antax $138 amount million payable of at December $61previously 31, to reported million 2010 under from at deferred Canadian income in GAAP its tax wholly-owned relating operating to partnership. liability its investment as compared to amounts (c) The accounting policiesdescribed of in theCompany’s the consolidated segments financial significant statements. aresegment The accounting the Company operating discloses samerestructuring policies results as note based and those expense, 2 on loss acquisition income todepreciation on before and the costs, settlement amortization, integration, other of impairment stock-based income of pension (loss), assets, shareaccounted obligations, compensation of finance for income other using costs, of thewith items, associates equity method, and and internal joint income ventures operating taxes, management results consistent differs reporting. fromstatements of This operating income. income All measure insubstantially of in the the of Canada. consolidated Company’s reportable segment segments are holders’ equity (each net of related tax) as follows: high speed Internet service and Rogers Home Phone; enhanced voice and dataand services, large and Canadian IP businesses and access governments; to and medium Wireless–This segment providesdata wireless retail communications services. and businessCable–This voice segment and providesand cable high speed television, Internet access cableto and telephony telephony residential products primarily following customers. three sub The segments: Cable business(i) consists of Cable the Operations segment which(ii) provides cable RBS services, segment offers local and long-distance telephone, (b) OPERATING SEGMENTS: Management reviews thesegments. operations Effective ofsegments January the were 1, Company bydescribed 2011, reclassified business in the to noteoperating results reflect segments and 2(b). of are the described These as the change follows: business(a) business in segments strategy are the as primary 4. SEGMENTED INFORMATION: Employee benefits (n) The above changes decreased (increased) share Stock-based compensation Customer loyalty programs Property, plant and equipment Joint ventures Financial instruments–transaction costs Provisions Financial instruments–hedge accounting Impairment of assets Income tax impact transferred from equity reserves Adjustment to retained earnings Equity reserves–available-for-sale investments Equity reserves–hedging Income tax impact transferred to retained earnings Adjustment to shareholders’ equity liabilities, is to reclassify theat current deferred January tax assetnon-current of 1, $220 million 2010 and$52 and reclassify million $159 $87 atdeferred million tax million asset. December at 31, at December 2010 JanuaryIFRS 31, from requires 1, 2010 deferred thatrecorded 2010 to tax subsequent in and liability changes OCIpreviously to to in this previous the years tax was be effect recorded also of recorded in items in the OCI, consolidated where statements of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(a) Information by reportable segments is as follows: Year ended December 31, 2011 Year ended December 31, 2010 Corporate Corporate items and Consolidated items and Consolidated Wireless Cable Media eliminations totals Wireless Cable Media eliminations totals

Operating revenue $ 7,138 $ 3,796 $ 1,611 $ (117) $ 12,428 $ 6,973 $ 3,785 $ 1,461 $ (77) $ 12,142 Operating costs* 4,102 2,184 1,431 (5) 7,712 3,800 2,359 1,330 18 7,507

3,036 1,612 180 (112) 4,716 3,173 1,426 131 (95) 4,635 Integration, restructuring and acquisition costs 16 39 14 1 70 52312– 40 Stock-based compensation expense* 10 9 9 36 64 12 7 10 21 50 Settlement of pension obligations* 253 1 11 ––– – – Other items, net* ––– – – 554 – 14

$ 3,008 $ 1,559 $ 154 $ (150) 4,571 $ 3,151 $ 1,391 $ 105 $ (116) 4,531

Depreciation and amortization 674 843 63 163 1,743 648 807 60 124 1,639 Impairment of assets ––– – – – – 11 – 11

Operating income (loss) 2,334 716 91 (313) 2,828 2,503 584 34 (240) 2,881 Finance costs (738) (768) Other income (expense), net 1 (1) Share of income of associates and joint ventures accounted for using equity method, net of tax 7 2

Income before income taxes $ 2,098 $ 2,114

Additions to PP&E $ 1,192 $ 803 $ 61 $ 71 $ 2,127 $ 937 $ 662 $ 38 $ 197 $ 1,834

Goodwill $ 1,146 $ 1,215 $ 919 $ – $ 3,280 $ 1,146 $ 1,058 $ 904 $ – $ 3,108

Total assets $ 9,184 $ 5,543 $ 1,947 $ 1,688 $18,362 $ 8,485 $ 5,322 $ 1,907 $ 1,319 $ 17,033

*Included with operating costs in consolidated statements of income.

The Company applies the same basis of accounting for transactions between reportable segments as transactions with external parties.

(b) In addition, Cable consists of the following reportable segments: Year ended December 31, 2011 Year ended December 31, 2010 Rogers Rogers Cable Business Total Cable Business Total Operations Solutions Video Cable Operations Solutions Video Cable

Operating revenue $ 3,309 $ 405 $ 82 $ 3,796 $ 3,190 $ 452 $ 143 $ 3,785 Operating costs* 1,760 319 105 2,184 1,771 412 176 2,359 1,549 86 (23) 1,612 1,419 40 (33) 1,426 Integration, restructuring and acquisition costs 8 17 14 39 313723 Stock-based compensation expense* 9–– 9 7––7 Settlement of pension obligations* 41– 5 –––– Other items, net* ––– – 7 – (2) 5

$ 1,528 $68 $ (37) 1,559 $ 1,402 $ 27 $ (38) 1,391

Depreciation and amortization 843 807

Operating income $ 716 $ 584

Additions to PP&E $748 $55$ –$ 803 $ 611 $ 38 $ 13 $ 662

Goodwill $ 1,000 $ 215 $ – $ 1,215 $ 992 $ 66 $ – $ 1,058

Total assets $ 4,410 $ 924 $ 209 $ 5,543 $ 4,097 $ 1,056 $ 169 $ 5,322

*Included with operating costs in consolidated statements of income.

100 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 101 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT Atria Networks LP: liabilities assumed 277 DIVESTITURES: Fair value of consideration transferredCurrent assetsPP&ECustomer relationshipsSpectrum licenceCurrent liabilitiesDeferred tax $ liabilities 426 Fair value of net identifiable assets acquired and GoodwillGoodwill represents the expected operationalacquiree synergies and/or with intangible the assets thatrecognition. do not The qualify for goodwill separate segment was and is allocated not tax $ to deductible. 200 The the customer RBS relationships are 10 reporting being5 amortized years. over a period of (52) 4 (17) 132 $ 149 (i) On January 4,purchase a 100% 2011, interest in theconsideration Atria of Networks $426 Company million. LP Atria, (“Atria”) closedowns based for in and cash an Kitchener, operates Ontario, agreementOntario, one delivering to of premier the businessThe Internet largest acquisition and will fibre-optic data augmentsized networks services. RBS’s business in offerings small by business enhancingdata and its centric medium- ability services within to and deliver adjacent on-net toThe Cable’s acquisition footprint. was accountedin for using accordance the acquisitionconsolidated method with with IFRS those2011 of 3 and the has withand Company contributed an effective operating incremental the income January revenueand of results 4, of $42 million $72 of amortization (excludingDecember million depreciation operations 31, ofapproximately 2011. $3 $60 million The andrestructuring have million) and acquisition been acquisition charged costs. to transaction Of forrecognized integration, these in costs costs, $2 fiscal the million were 2010year was ended and December year $1 31, 2011. million wasThe ended final recognized fair in values of the in the the assets acquisition acquired are and as liabilities follows: assumed 7. BUSINESS COMBINATIONS AND (a) 2011 Acquisitions: – (3) 13 22 87 43 (20) (77) 297 447 260 848 507 452 143 763 234 265 156 2010 2010 2010 6,526 6,973 4,316 1,835 1,729 3,190 3,785 1,461 $ 768 $ 669 $ 1,266 $ 7,571 $ 6,229 $ 12,142 December 31, December 31, December 31, 8 8 8 7 8 8 8 8 2 8 6 8 3 99 11 8 43 (29) (14) 326 209 537 927 47 405 8 303 263 164 2011 2011 2011 (117) 6,601 7,13 4,335 1,904 1,77 3,309 3,796 1,611 $73 $66 $ 1,454 $ 7,7 $ 6,275 $ 12,42 December 31, December 31, December 31, Television Internet Telephony (note 17) instruments Prepaid Postpaid Cable Operations: (note 20) RBS Video Advertising Circulation and subscription Retail Blue Jays Other eliminations Amortization of deferred transaction costs Capitalized interest Interest on long-term debt Loss on repayment of long-term debt 6. FINANCE COSTS: Cost of equipment sales Foreign exchange loss (gain) Change in fair value of derivative 5. OPERATING COSTS: Network revenue Wireless: (c) ProductRevenue revenue: is comprised of the following: Merchandise for resale Equipment sales Other external purchases Cable: Employee salaries and benefits Settlement of pension obligations Media: Corporate items and intercompany NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(ii) BOUNCE FM: (iv) Compton Cable T.V. Ltd.: On January 31, 2011, the Company closed an agreement to On February 28, 2011, the Company closed an agreement to acquire all of the assets of Edmonton, Alberta radio station acquire all of the assets of Compton Cable T.V. Ltd. (“Compton”) BOUNCE (CHBN-FM) for cash consideration of $22 million. The for cash consideration of $40 million. Compton provides cable acquisition of this radio station was made to increase the television, Internet and telephony services in Port Perry, Ontario Company’s presence in the Edmonton market. The acquisition and the surrounding area. The acquisition was made to enter was accounted for using the acquisition method in accordance into the Port Perry, Ontario market and is adjacent to the with IFRS 3 with the results of operations consolidated with existing Cable footprint. The acquisition was accounted for using those of the Company effective January 31, 2011 and has the acquisition method in accordance with IFRS 3 with the contributed incremental revenue of $3 million and an operating results of operations consolidated with those of the Company loss of $1 million for the year ended December 31, 2011. The effective February 28, 2011 and has contributed incremental acquisition transaction costs were approximately $1 million and revenue of $7 million and operating income of $3 million have been charged to integration, restructuring and acquisition (excluding depreciation and amortization of $6 million) for the costs in the current year. year ended December 31, 2011. The final fair values of the assets acquired and liabilities assumed The final fair values of the assets acquired and liabilities assumed in the acquisition are as follows: in the acquisition are as follows:

Fair value of consideration transferred $ 22 Fair value of consideration transferred $ 40

Current assets $ 1 Current assets $ 1 Broadcast licence 11 PP&E 10 Brand name 1 Customer relationships 23 Fair value of net identifiable assets acquired and Current liabilities (1) liabilities assumed 13 Fair value of net identifiable assets acquired and Goodwill $ 9 liabilities assumed 33 Goodwill $ 7 Goodwill represents the expected operational synergies with the acquiree and/or intangible assets that do not qualify for separate Goodwill represents the expected operational synergies with the recognition. The goodwill was allocated to the Media reporting acquiree and/or intangible assets that do not qualify for separate segment and is tax deductible. recognition. The goodwill was allocated to the Cable Operations (iii) BOB-FM: reporting segment and is tax deductible. On January 31, 2011, the Company closed an agreement to The customer relationships are being amortized over a period of acquire all of the assets of London, Ontario radio station, 3 years. BOB-FM (CHST-FM), for cash consideration of $16 million. The acquisition of this radio station was made to enter into the (v) Other: London, Ontario market. The acquisition was accounted for During the year ended December 31, 2011, the Company using the acquisition method in accordance with IFRS 3 with the increased its ownership interest in a subsidiary from 53% to results of operations consolidated with those of the Company 100% for cash consideration of $11 million. The Company effective January 31, 2011 and has contributed incremental recognized this increase in the ownership interest of a previously revenue of $5 million and an operating income of $1 million for controlled entity as a decrease in retained earnings of the year ended December 31, 2011. The acquisition transaction $11 million as the carrying amount of non-controlling interest costs were approximately $1 million and have been charged to was insignificant. integration, restructuring and acquisition costs in the current During the year ended December 31, 2011, the Company made year. another acquisition for cash consideration of approximately The final fair values of the assets acquired and liabilities assumed $16 million, which has been recorded as customer relationships. in the acquisition are as follows: The customer relationships are being amortized over a period of 5 years. Fair value of consideration transferred $ 16 (vi) Pro forma disclosures: Current assets $ 1 Since the acquisition dates, the Company has recorded revenue Broadcast licence 6 relating to these above acquisitions of $96 million, and Brand name 1 operating income relating to these acquisitions of $47 million (excluding depreciation and amortization of $66 million). If the Fair value of net identifiable assets acquired and acquisitions had occurred on January 1, 2011, the Company’s liabilities assumed 8 revenue would have been $12,437 million, and operating income would have been $2,830 million for the year ended Goodwill $ 8 December 31, 2011.

Goodwill represents the expected operational synergies with the (b) 2010 Acquisitions: acquiree and/or intangible assets that do not qualify for separate (i) Blink Communications Inc.: recognition. The goodwill was allocated to the Media reporting On January 29, 2010, the Company closed an agreement to segment and is tax deductible. purchase 100% of the outstanding common shares of Blink Communications Inc. (“Blink”), a wholly-owned subsidiary of Oakville Hydro Corporation, for cash consideration of $131 million. Blink is a facilities-based, data network service

102 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 103 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT BV! Media Inc: liabilities assumed 11 liabilities assumed 10 ACQUISITION COSTS: Fair value of consideration transferredCurrent assetsPP&ECustomer relationshipsCurrent liabilitiesDeferred tax liabilitiesFair value $ of net identifiable assets 24 acquired and GoodwillThe goodwill was allocated tois the not Media tax deductible. reporting segment and The customer relationships are being2 amortized years. over a period of $ 8 5 (3) (3) 4 $ 13 Fair value of consideration transferredPP&ECustomer relationshipsCurrent liabilitiesFair value of net identifiable assets acquired and $Goodwill 20 The goodwill wassegment allocated and to is tax the deductible. CableThe Operations customer reporting relationships are being3 amortized years. over a period of (iv) On October 9 1,purchase 100% 2010, of the outstanding theInc. common shares (“BV! Company of Media”) BV! closedMedia Media for is an a cash (1) Canadian agreementof consideration Internet $ news advertising to of and network information $24 andfor portals. publisher million. using The 2 the acquisition BV! acquisition wasthe accounted method in accordance results withCompany IFRS effective of 3 October with 1, 2010. operationsDuring consolidated the with $updated year its those valuation 10 ended offor of certain December the net the identifiable BV! 31,customer assets Media acquired 2011, acquisition. relationships Thisdecrease the of in resulted Company goodwill in $2 ofand an disclosed $2 at million increase December million 31, in from 2010. and theThe final amounts a fair recorded values of corresponding in the the assets acquisition acquired are and as liabilities follows: assumed operations consolidated withJuly 30, those 2010. of theThe Company fair effective valueswhich of were finalized the during 2010, assets are as acquired follows: and liabilities assumed, . INTEGRATION, RESTRUCTURING AND 8 During 2011, the Companyrestructuring incurred $44 million expenses (2010–$21targeted million) related of restructuring to ofCompany’s cost severances structure. its resulting employee base from and the to improve the Kincardine Cable T.V. Ltd.: Cityfone Telecommunications Inc.: liabilities assumed 20 liabilities assumed 65 Fair value of consideration transferredCurrent assetsPP&ECustomer relationshipsCurrent liabilitiesFair value of net identifiable assets acquired $ and 26 GoodwillThe goodwill wasand allocated is to tax deductible. the WirelessThe reporting customer segment relationships are being5 amortized years. over a period of (iii) On July $ 30, 17 2010,all the of Company the 3 closed assets ancash of agreement Kincardine consideration to Cable acquire T.V. oftelevision Ltd. and $20 (“Kincardine”) Internet for million. (1) surrounding services area. in Kincardine The Kincardine, provides acquisitionacquisition Ontario method was cable and in accounted accordance the for 1 with IFRS using 3 the with the results of $ 6 Fair value of consideration transferredCurrent assetsPP&ECustomer relationshipsCurrent liabilitiesDeferred tax liabilities $Fair value of net 131 identifiable assets acquired and GoodwillThe goodwill was allocatednot to tax the deductible. RBS reporting segment andThe is customer relationships are being5 amortized years. over a period of $(ii) 40 On July 9, 3 2010, theof Company closed the an assets agreement (11) tofor of acquire cash all Cityfone Telecommunications consideration (2) Mobile Inc. of Virtual (“Cityfone”) $26 Networkvoice million. Operator and 35 Cityfone and offers is dataprograms postpaid a services with wireless Canadian toaccounted major for subscribers Canadian using the throughIFRS brands. acquisition 3 private method The with in the label the acquisition accordance results Company of with effective was July operations 9, consolidated $ 2010. withThe those fair of values 66 which of were finalized the during 2010, assets are as acquired follows: and liabilities assumed, provider that delivers next generationto and leading small edge and services, mediumuniversities, sized schools businesses, and includingMississauga, hospitals, municipalities, Ontario in areas. theusing The the Oakville, acquisition acquisition Milton method was inresults and accordance accounted of with operations for IFRS 3effective consolidated with January with the 29, those 2010.acquisition of The amounted the transaction Company costs tocharged to related approximately integration to and the restructuring $1 expenses. millionThe fair and values were which of were finalized the during 2010, assets are as acquired follows: and liabilities assumed, NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During 2011, the Company incurred $22 million (2010 – $5 million) of During 2011, the Company incurred $nil (2010 – $9 million) of restructuring expenses and other exit costs related to the closure of restructuring expenses resulting from the outsourcing of certain underperforming retail store locations, primarily located in the information technology functions. province of Ontario, and other exit costs. The additions to the liabilities related to the integration, restructuring During 2011, the Company incurred $4 million (2010 – $5 million) of and acquisition activities and payments made against such liabilities acquisition related transaction costs for business combinations and during 2011 are as follows: integration expenses related to previously acquired businesses and related restructuring. As at As at December 31, December 31, 2010 Additions Payments 2011

Severances resulting from the targeted restructuring of the Company’s employee base $ 47 $ 44 $ (45) $46 Video store closures and other exit costs 4 22 (11) 15 Acquisition transaction costs and integration of acquired businesses 3 4 (5) 2

$ 54 $ 70 $ (61) $63

The remaining liability of $63 million as at December 31, 2011, which is included in accounts payable and accrued liabilities, is expected to be paid over the next two years.

9. INCOME TAXES:

(a) Income tax expense (benefit): Income tax expense varies from the amounts that would be computed The components of income tax expense (benefit) for the years ended by applying the statutory income tax rate to income before income December 31, 2011 and 2010 were as follows: taxes for the following reasons: December 31, December 31, 2011 2010 December 31, December 31, 2011 2010 Current income tax expense (benefit) $ (146) $ 245 Statutory income tax rate 28.0% 30.5%

Deferred tax expense (benefit) Computed income tax expense $587 $ 645 Origination and reversal of temporary Increase (decrease) in income taxes differences 752 426 resulting from: Effect of tax rate changes (59) (54) Effect of tax rate changes (59) (69) Recognition of previously unrecognized Recognition of previously unrecognized deferred tax assets (12) (5) deferred tax assets (12) (5) Total deferred tax expense $681 $ 367 Stock-based compensation 4 40 Other items 15 1 Income tax expense $ 535 $ 612 Income tax expense $ 535 $ 612

Due to Canadian federal and provincial enacted corporate income tax rate changes, the statutory income tax rate for the Company decreased from 30.5% in 2010 to 28.0% in 2011.

(b) Deferred tax assets and liabilities: The net deferred tax liability consists of the following: December 31, December 31, January 1, 2011 2010 2010 Deferred tax assets $30 $52$84 Deferred tax liabilities (1,390) (655) (291)

Net deferred tax liability $ (1,360) $ (603) $ (207)

104 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4 105 576 580 2010 2010 2.59 January 1, $ 1,502 $ 2.61 311 6 4 14 27 88 8 113 110 2010 543 547 2011 2. $ 185 $ 129 $ 315 $ 277 $ 1,563 $2. December 31, 8 6 2 10 2011 ROGERS COMMUNICATIONS INC. Non-capital $ 206 $ 322 carryforwards Other Total income tax loss December 31, Partnership Investment in 2011 ANNUAL REPORT Goodwill and other intangibles outstanding – basic Weighted average number of shares outstanding – diluted Employee stock options Basic Diluted 11. OTHER CURRENT ASSETS: Inventories 10. EARNINGS PER SHARE: The following tableearnings sets per share forth for the the yearsYears ended calculation ended December December 31, of 31, 2011 basic and 2010: andNumerator: diluted Net income for the year Denominator (in millions): Weighted average number of shares Prepaid expenses Effect of dilutive securities: Earnings per share: Video rental inventory Other Amortization expensemerchandise for for resale Video inamounted the to rental consolidated $26 statements million inventory of in 2011 income (2010 and is –Cost $54 million). charged of to $1,637 million equipment (2010 – $1,472 sales million) of inventory and costs. merchandise for resale includes The total number of anti-dilutiveand options that therefore were out excludedDecember of 31, the from 2011 money was 1,570,760 the (2010 – calculation 1,406,013). for the year ended Inventory PP&E and 62 44 2010 $41 $ 147 December 31, 45 45 2011 $41 $ 131 December 31, foreign jurisdictions Capital losses in Canada Tax losses in foreign jurisdictions As at December 31, 2011,carryforwards the Company had of Canadiancarryforwards non-capital loss of $583 $61Canadian million. million, and Ifbeyond. foreign and not As tax at utilized, December foreign$228 losses million the 31, of available 2011, majority will non-capital capital the losses of expire to Company offset loss the As had future between at capital approximately December gains. 31, 2026 2011,recognized deferred in tax and respect assets of have not the following been items: Benefit (expense) in Profit or LossBenefit (expense) in OCIAcquisitions/dispositionsDecember 31, 2011 (18)Deductible temporary (8) differences in – (2) (727) $ (484) (53) – $ (421) 105 $ – (865) (33) – $ (681) 162 $ 3 248 – $ (1,360) (3) (21) (55) (21) January 1, 2010Benefit (expense) in Profit or LossBenefit (expense) in OCIAcquisitions/dispositionsDecember 31, 2010 (199) (27) $ (263) – (2) $ (323) (77) $ (10) (464) – (61) (70) (360) $ – 124 6 – $ (138) 316 $ (367) (207) – 54 – 305 – (17) (603) (12) (17) The movement of deferred tax assets and liabilities are summarized as follows: Deferred tax assets (liabilities) The Company hasinvestment taxable temporary in differencesliabilities associated Canadian with have its domesticdifferences been where subsidiaries. the provided Companyreversal No is and with able such deferred to reversalFurthermore, respect control reversal is tax of the not such to timing temporary probablebe differences, of in implemented if such without the it the any occurs, foreseeable significant temporary could tax future. implications. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. PROPERTY, PLANT AND EQUIPMENT

Details of PP&E and accumulated depreciation are as follows: December 31, 2011 December 31, 2010 January 1, 2010 Accumulated Net book Accumulated Net book Accumulated Net book Cost depreciation value Cost depreciation value Cost depreciation value Land and buildings $ 865 $ 230 $ 635 $ 820 $ 202 $ 618 $ 764 $ 187 $ 577 Towers, head-ends and transmitters 2,105 1,202 903 1,585 995 590 1,348 832 516 Distribution cable and subscriber drops 5,282 3,585 1,697 5,206 3,316 1,890 5,066 3,056 2,010 Network equipment 6,832 3,699 3,133 6,027 3,250 2,777 5,475 2,826 2,649 Wireless network radio base station equipment 1,557 889668 1,410 776 634 1,220 656 564 Computer equipment and software 3,574 2,358 1,216 3,289 2,230 1,059 2,855 1,972 883 Customer equipment 1,592 1,228 364 1,470 1,087 383 1,359 950 409 Leasehold improvements 392 239 153 384 224 160 370 212 158 Equipment and vehicles 1,006 661 345 928 602 326 915 545 370 $ 23,205 $ 14,091 $ 9,114 $ 21,119 $ 12,682 $ 8,437 $ 19,372 $ 11,236 $ 8,136

Depreciation expense for 2011 amounted to $1,595 million (2010 – (December 31, 2010 – $1,613 million; January 1, 2010 – $1,014 million). $1,539 million). PP&E not yet in service and, therefore, not Capitalized interest on PP&E was at an interest rate of approximately depreciated at December 31, 2011 amounted to $1,371 million 5.1% (2010 – 5.9%).

Changes in the net carrying amounts of property, plant and equipment can be summarized as follows: December 31, December 31, 2010 2011 Net book Disposals/ Net book value Additions Acquisitions Depreciation Other value Land and buildings $ 618 $ 51 $ 1 $ (29) $ (6) $ 635 Towers, head-ends and transmitters 590 347 112 (147) 1 903 Distribution cable and subscriber drops 1,890 64 12 (264) (5) 1,697 Network equipment 2,777 796 12 (455) 3 3,133 Wireless network radio base station equipment 634 147 – (113) – 668 Computer equipment and software 1,059 467 3 (309) (4) 1,216 Customer equipment 383 171 1 (187) (4) 364 Leasehold improvements 160 12 1 (22) 2 153 Equipment and vehicles 326 72 – (69) 16 345

$ 8,437 $ 2,127 $ 142 $ (1,595) $ 3 $ 9,114

January 1, December 31, 2010 2010 Net book Net book value Additions Acquisitions Depreciation Disposals value Land and buildings $ 577 $ 55 $ 1 $ (15) $ – $ 618 Towers, head-ends and transmitters 516 215 3 (144) – 590 Distribution cable and subscriber drops 2,010 112 29 (261) – 1,890 Network equipment 2,649 573 – (435) (10) 2,777 Wireless network radio base station equipment 564 190 – (120) – 634 Computer equipment and software 883 424 11 (259) – 1,059 Customer equipment 409 180 – (202) (4) 383 Leasehold improvements 158 28 – (24) (2) 160 Equipment and vehicles 370 57 – (79) (22) 326

$ 8,136 $ 1,834 $ 44 $ (1,539) $ (38) $ 8,437

106 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 0 8 75 12 76 Net 107 8 116 200 232 210 2011 2010 book As at As at value 1, $ 3,2 $ 6,001 December 31, December 31, losses ((b)(ii)) impairment Accumulated Current period Current period impairment loss impairment loss amortization Accumulated ROGERS COMMUNICATIONS INC. Cost losses prior to impairment Net book value 2011 ANNUAL REPORT Disposals Amortization Disposals Amortization Additions/ Additions/ losses ((b)(ii)) December 31, 2010 January 1 2010 impairment Accumulated amortization Accumulated 2010 Acquisitions 2010 Acquisitions As at As at 52 38 – 14 52 27 – 25 Cost 190434 – 205 91 99 14 215 190 434 – 188 80 14 110 232 523 269 – 254 523 225 – 298 144 67 – 77 152 52 – 100 losses 1,871 – – 1,871 1,871 – – 1,871 1,068 1,007 – 61 996 992 – 4 4,282 1,586 105 2,591 4,218 1,484 94 2,640 January 1, prior to $ 5,699 $ 436 $ 66 $ (200) $ – $ 5,651 $ 169 $ 51 $ (161) $ (11) $ 5,699 $ 3,262 $ – $ 154 $ 3,108 $ 3,165 $ – $ 154 $ 3,011 $ 7,544 $ 1,586 $ 259 $ 5,699 $ 7,383 $ 1,484 $ 248 $ 5,651 December 31, impairment 0 8 75 Net 8 book value 105 2,721 losses ((b)(ii)) December 31, 2011 $ 259 $ 6,001 impairment Accumulated 8 8 $ 1,71 amortization Accumulated 8 62 50 – 12 75 – – 1, Cost 207436 – 222 91 116 14 200 523 313 – 210 132 56 – 76 8 losses 1, 1,309 1,077 – 232 4,544 1,71 prior to $ 3,434 $ – $ 154 $ 3,2 $ 7,97 impairment assets: Spectrum licences Goodwill Broadcast licences Brand names Customer relationships Roaming agreements Marketing agreements Acquired program rights intangible assets Broadcast licencesBrand namesCustomer relationshipsRoaming agreementsMarketing agreementsAcquired program rights 99 61 254 215 14 77 17 241 – 2 – – – – – 10 – 56 (70) – (44) (12) (17) (57) – – – – – – GoodwillSpectrum licencesBroadcast licencesBrand namesCustomer relationshipsRoaming agreementsMarketing agreementsAcquired program rights 1,871 $ 3,011 110 4 $ 298 – 97 232 25 100 – $ 72 – – – – – – – $ – – – – – 51 – – (15) $ (44) (17) (74) (11) – – $ (11) – 3,108 – 1,871 – – – 99 61 254 215 77 14 Spectrum licences 1,871 4 – – – Goodwill $ 3,108 $ 172 $ – $ – $ – Changes in the net carrying amounts of goodwill and intangible assets are as follows: Indefinite life intangible Details of goodwill and intangible assets are as follows: 13. GOODWILL AND INTANGIBLE ASSETS (a) Goodwill and intangible assets: Finite life intangible assets: Total intangible assets Total goodwill and NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amortization of brand names, customer relationships, roaming Company has made certain assumptions for the discount and agreements, and marketing agreements amounted to $143 million in terminal growth rates to reflect variations in expected future 2011 (2010 – $87 million). Amortization of these intangible assets with cash flows. These assumptions may differ or change quickly finite lives is included in depreciation and amortization in the depending on economic conditions or other events. Therefore, it consolidated statements of income. is possible that future changes in assumptions may negatively impact future valuations of CGUs and goodwill which would The costs of acquired program rights are amortized to other external result in further goodwill impairment losses. purchases in the consolidated statements of income over the expected performances of the related programs and amounted to $57 million The following tables gives an overview of the periods for which in 2011 (2010 – $74 million). the Company has provided cash flow projections, the method used to determine recoverable amounts, the growth rates used (b) Impairment: as the basis for the cash flow projections, and the pre-tax (i) Goodwill and indefinite life intangible assets: discount rates applied to the cash flow projections for CGUs with The Company tested CGU’s with allocated goodwill and allocated goodwill or indefinite life intangible assets that are indefinite life intangible assets for impairment during 2011 and significant to the Company’s total amount of goodwill and 2010 as at October 1 of each calendar year. In assessing whether indefinite life intangible assets, respectively: or not there is impairment, the Company uses a combination of Periods Growth Pre-tax approaches to determine the recoverable amount of a CGU, Spectrum Recoverable used rates Discount Goodwill licences Method (years) % rates % including both the discounted cash flows and market approaches. Under the discounted cash flows approach, the Wireless $ 1,146 $ 1,875 Value in use 4 0.5 9.7 Cable Company estimates the discounted future cash flows for three to operations 1,000 – Value in use 4 1.0 9.7 eight years, depending on the CGU and valuation technique used, and a terminal value. The future cash flows are based on (ii) Impairment losses: the Company’s estimates and include consideration for expected During the year ended December 31, 2011, the Company future operating results, economic conditions and a general recorded no impairment charge. outlook for the industry in which the CGU operates. The discount rates used by the Company consider debt to equity During the year ended December 31, 2010, the Company ratios and certain risk premiums. The terminal value is the value recorded an impairment charge in the Media segment of attributed to the CGU’s operations beyond the projected time $11 million relating to certain radio stations CGUs. Using the period of the cash flows using a perpetuity rate based on value in use approach, the Company determined the recoverable expected economic conditions and a general outlook for the amount of the CGUs to be lower than its carrying value. The industry. Under the market approach, the Company estimates recoverable amounts of the CGUs declined in 2010 primarily due the recoverable amount of the CGU using multiples of operating to the weakening of industry expectations in certain specific performance standardized by the respective industry. The radio markets.

14. INVESTMENTS:

December 31, December 31, January 1, 2011 2010 2010 Carrying Carrying Carrying Number Description value value value Publicly traded companies, at quoted market value: Cogeco Cable Inc. December 31, 2011 - Subordinate Voting 10,687,925, Common shares $ 549 $ 438 $ 343 (December 31, 2010 - 10,687,925, January 1, 2010 - 9,795,675) 289 224 144 Cogeco Inc. December 31, 2011 - Subordinate Voting 5,969,390, Common shares (December 31, 2010 - 5,969,390, January 1, 2010 - 5,023,300) Other publicly traded companies 12 13 9

850 675 496 Private companies, at fair market value 36 26 19 Investments in joint ventures and associates accounted for by the equity method 221 232 200

$ 1,107 $ 933 $ 715

108 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 109 Onerous contracts Other Total Onerous contracts Other Total ROGERS COMMUNICATIONS INC. at December 31, 2011, amounted to obligations obligations and restoration and restoration Decommissioning Decommissioning 2011 ANNUAL REPORT provisionsreversedprovisions – 9 – (1) – 6 8 (4) – (4) – 6 CurrentLong-termJanuary 1, 2010CurrentLong-termDecember 31, 2010Current $Long-term 1 17 18December 31, $ 2011 11 18 $ 29In 16 the course of $ thePP&E 2 14 Company’s assets activities, are a utilized numberwith 2 of which exiting sites are $ 23 and and 25 expected 35 other and ceasing to $ restoration their have $ use. costs obligation 9 26occur 26 associated The cash at 14 associated outflows the dates decommissioning are oflong-term exit generally 58 of 20 in $ $ expected 72 the 6 assets 32 nature. to ultimately to be which The 10 24 required they for relate, extent these 22 which sites of are is uncertain. The restoration $ provisions work $ for that 23 1costs 83 21 onerous 23 will to contracts be fulfillThese 62 relate in include to excess non-cancellable $ contractscompleted of contracts, within that the two which years. 73 have economic 17 are benefits 6 expectedThe to to other be be provisions obtained. includeprovisions. product guarantee provisions 38 and legal 35 16. PROVISIONS: Details of provisions are as follows: January 1, 2010AdditionsAdjustment to existing Amounts usedUnused amounts $ 18December 31, 2010 $Additions 29Adjustment to existing – $ 25Amounts used (2) $December 31, 2011 8 72 16 (11) 24 (12) 35 4 $ (25) 32 26 32 – $ 2 24 83 (13) $ 23 8 (17) $ 73 (30) 14 Amortizationended of December 31, 2011Accumulated amounted certain amortization to$11 as million (December $5 31, million long-term 2010 – (2010 $6 – million; $1 January million). 1, assets 2010 – $5 million). for the year 61 2010 2010 2010 $68 January 1, January 1, December 31, 68 2747 29 13 23 1410 11 10 16 12 9 54 16 223 183 175 172 2010 2010 8 62 2011 $26$13 $12$13 $ 147 $ 113 $6 December 31, December 31, December 31, 7 25 16 15 12 10 23 52 219 172 2011 2011 $33 $12 $ 134 December 31, December 31, 20) Revenues position: Current assets Expenses agreements insurance Non-current assets Current liabilities Non-current liabilities Net assets Deferred pension asset (note 15. OTHER LONG-TERM ASSETS: Statements of comprehensive income: Statements of financial There are no contingentthe liabilities Company’s or joint capital venture commitments intereststhemselves. relating or to relating The to theassociates joint financial ventures are statementsCompany. prepared of When for necessary, theaccounting policies adjustments the joint in line are with same ventures made those of to the and reporting Company. conformOn period December the 9, asBCE 2011, Inc., the the is Company jointlyLeaf acquiring announced Sports a that & net Entertainment it, 75 Ltd.Pension percent along (“MLSE”) equity from with the interest Ontario in Plan. Teachers’ entertainment Maple companies MLSEthings, and is the owns AirNBA’s one Canada and Toronto Raptors, Centre, the operates, the of MLS’sMarlies. Toronto NHL’s among FC The Toronto and Canada’s other the Company’s Maple AHL’sleveraged net Toronto Leafs, largest cash the commitment, recapitalization$533 sports following a million, of planned and representingtransaction a MLSE, is 37.5%completion expected will equity of to the interestapprovals, total customary transaction close in closing conditions is MLSE. and in approximately termination subject rights. The mid to regulatory 2012. and The league timing and The Company has24(c)). contributed certain Certain assets investmentsnominal to amount, joint in as the ventures fair private market (note value companies is not are determinable. The following carried presents at theCompany’s summarized a financial portion informationCompany of of as investments the accounted joint for using the ventures equity method: that are recorded by the Indefeasible right of use Long-term receivables Cash surrender value of life Deferred installation costs Deferred compensation Other NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17. LONG-TERM DEBT: Due Principal Interest December 31, December 31, January 1, date amount rate 2011 2010 2010 Bank credit facility Floating $ 250 $ – $ – Senior Notes* 2011 $ U.S. 490 9.625% – – 515 Senior Notes* 2011 460 7.625% – – 460 Senior Notes** 2011 175 7.25% – – 175 Senior Notes** 2012 U.S. 350 7.875% – 348 368 Senior Notes* 2012 U.S. 470 7.25% – 468 494 Senior Notes** 2013 U.S. 350 6.25% 356 348 368 Senior Notes* 2014 U.S. 750 6.375% 763 746 788 Senior Notes** 2014 U.S. 350 5.50% 356 348 368 Senior Notes* 2015 U.S. 550 7.50% 559 547 578 Senior Notes** 2015 U.S. 280 6.75% 285 279 294 Senior Notes 2016 1,000 5.80% 1,000 1,000 1,000 Senior Notes 2018 U.S. 1,400 6.80% 1,424 1,392 1,471 Senior Notes 2019 500 5.38% 500 500 500 Senior Notes 2020 900 4.70% 900 900 – Senior Notes 2021 1,450 5.34% 1,450 – – Senior Debentures** 2032 U.S. 200 8.75% 203 199 210 Senior Notes 2038 U.S. 350 7.50% 356 348 368 Senior Notes 2039 500 6.68% 500 500 500 Senior Notes 2040 800 6.11% 800 800 – Senior Notes 2041 400 6.56% 400 – – 10,102 8,723 8,457

Fair value increment (decrement) arising from purchase accounting (4) (5) 6 Deferred transaction costs and discounts (64) (64) (67) Capital leases ––1 Less current portion – – (1)

$ 10,034 $ 8,654 $ 8,396

(*) Denotes senior notes originally issued by Rogers Wireless Inc. which are now unsecured obligations of RCI and for which Rogers Communications Partnership (“RCP”) is an unsecured co-obligor. (**) Denotes senior notes and debentures originally issued by Rogers Cable Inc. which are now unsecured obligations of RCI and for which RCP is an unsecured guarantor.

(a) Bank credit facility: (c) Issuance of Senior Notes: The bank credit facility provides the Company with up to $2.4 billion 2011 Issuances: from a consortium of Canadian financial institutions. The bank credit On March 21, 2011, the Company issued $1,450 million of 5.34% facility is available on a fully revolving basis until maturity on July 2, Senior Notes which mature on March 22, 2021. The notes are 2013, and there are no scheduled reductions prior to maturity. The redeemable, in whole or in part, at the Company’s option, at any interest rate charged on the bank credit facility ranges from nil to time, subject to a certain prepayment premium. The net proceeds 0.5% per annum over the bank prime rate or base rate or 0.475% to from the offering were approximately $1,442 million after deduction 1.75% over the bankers’ acceptance rate or the London Inter-Bank of the original issue discount and debt issuance costs. Offered Rate. The Company’s bank credit facility is unsecured and On March 21, 2011, the Company issued $400 million of 6.56% Senior ranks pari passu with the Company’s senior public debt and Notes which mature on March 22, 2041. The notes are redeemable, in Derivatives (see Note 18(d)). The bank credit facility requires that the whole or in part, at the Company’s option, at any time, subject to a Company satisfy certain financial covenants, including the certain prepayment premium. The net proceeds from the offering maintenance of certain financial ratios. were approximately $398 million after deduction of the original issue As at December 31, 2011, $250 million (December 31, 2010 – $nil; discount and debt issuance costs. January 1, 2010 – $nil) of long-term debt was borrowed under our Debt issuance costs of $10 million related to these debt issuances $2.4 billion bank credit facility. were incurred and capitalized in the year ended December 31, 2011. (b) Senior Notes: These have been deferred and are included as deferred transaction Interest is paid semi-annually on all of the Company’s Senior Notes costs in the carrying value of the long-term debt. and Senior Debentures. 2010 Issuances: Each of the Company’s Senior Notes and Senior Debentures are On September 29, 2010, the Company issued $900 million of 4.70% redeemable, in whole or in part, at the Company’s option, at any Senior Notes which mature on September 29, 2020. The notes are time, subject to a certain prepayment premium. redeemable, in whole or in part, at the Company’s option, at any

110 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 111 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT (e) UnsecuredPrior Obligations: to theRCI’s Company’s public reorganization debt completedCable originally Communications on issued Inc. July (“RCCI”), byco-obligor, a 1, Rogers and wholly-owned Rogers 2010, Cable subsidiary, Wireless Partnership Inc. assubsidiary, (“RWP”), a had a as wholly-owned Rogers originally an issued by unsecured RogersRCCI Wireless Inc. guarantor, as had RWP whileprovided as an unsecured a RCI’s guarantees co-obligor unsecured for and RCI, the public guarantor. public the debt debt bank Similarly, issuedbank credit directly RCCI credit by facility facility, and andpassu senior on the an RWP public unsecured Derivatives. basis. debt had Accordingly, and RCI’s Derivatives rankedJuly pari 1, 2010 corporate reorganization: On June 30, 2010,Partnership RWP changed (“RCP”). its name Onreorganization to which Rogers July included the Communications amalgamation 1,another of RCI 2010, and RCCI the and amalgamated of company Company under completed theFollowing RCI’s name a Rogers this Communications amalgamation, Inc. operating wholly-owned certain liabilities of of theof the subsidiaries amalgamated operating company its togetherexceptions. assets forming with employees The and all amalgamated were companyor one did obligations transferred not in transfer orterm to its under: interests equity RCP, interests debt;intercompany in notes. any subject subsidiaries; derivative long- toAs instruments; certain a result realsubstantially of this all reorganization, estate ofWireless effective the operations. July assets; Company’s 1, ReportingWireless 2010, services shared continues as RCP separate and to services operating holds segments. reflect and theIn Cable addition, Cable and RCCI and ceasedas to a be result a of separatelonger the legal a amalgamation entity guarantor and on or effective Julycredit obligor, July 1, as 1, 2010 applicable, 2010 for facility, RCCIamalgamation, the is RCI Company’s no continues bank public tothe be Company’s the bank debt obligor creditRCP facility, in public remains respect debt of and either and each apublic Derivatives, of co-obligor while Derivatives. debt or guarantor, and as Following applicable, a for the the guarantor for the bank credit facility and Derivatives of $16recorded million, fair offset valueredemption, by increment a on of write-downassociated August $8 of Debt million. a 27, Derivativesprincipal Concurrent previously aggregating 2010, amount, with U.S. the including this $500amount the which Company million were U.S. not notional terminated accounted $10a for net as million the payment hedges. of The notional approximately CompanyDerivatives. $269 principal made million to terminate these Debt On August 31, 2010,principal the amount Company of its redeemed $460the the million prescribed entire 7.625% redemption outstanding price Senior of Noteseffective 107.696% due on of 2011 that the date. at principal Theof amount Company the incurred Senior a Notes net aggregating loss $35 on million. repayment On August 31, 2010,principal the amount Company of redeemed itsthe the $175 prescribed entire million redemption outstanding 7.25% price of Senioreffective 107.219% on Notes of that due the date. 2011 principal Theof amount at Company the incurred Senior a Notes net aggregating loss $13 on million. repayment As a result ofapproximately these $1,230 redemptions, million, the including Companyaggregate approximately paid $1,151 an principal million aggregate of payable amount in connection with and the redemptions. $79The million total loss for onthe repayment year the ended of December the 31, premiums 2010. Senior Notes was $87 million for 2010 Redemptions: On August 27, 2010,principal the amount Company of its redeemed U.S.Notes the $490 due entire million outstanding 2011 ($516 million) atthe 9.625% principal the Senior amount prescribed effective redemptionnet on that price date. of loss The 105.999%$39 Company incurred of on a million, the$31 million, repayment a including net of loss aggregate the on the Senior redemption termination Notes of premiums the aggregating associated Debt of On March 21, 2011,principal amount the of Company its redeemed U.S.Notes $350 the due million entire 2012 ($342 outstanding million) atthe 7.875% principal the Senior amount prescribed effective redemptionloss on that on price date. the of The repayment 107.882%including Company of incurred of aggregate a the Senior redemptionloss Notes premiums aggregating on $42 of$14 million, the million $27 termination due million,reserve to of in a amounts equity net the$1 previously and million. recognized associated Concurrent a in withCompany write-off Debt this the redemption, terminated of hedging on Derivatives the deferredU.S. March 21, of $350 transaction associated 2011, million costs the Debtnet notional of payment Derivatives principal of aggregating amount. approximatelyDerivatives. The $219 million Company to made terminate a theseOn Debt March 21, 2011,principal amount the of Company its redeemedNotes U.S. the due $470 entire 2012 million outstanding atthe ($460 principal million) the amount 7.25% prescribed effective Senior redemptionloss on that on price date. the of The repayment 110.735%including Company of incurred of aggregate a the redemption Senior premiumson Notes of the $49 aggregating termination million, $57due of a million, the net to associated loss amounts Debtequity, and Derivatives previously a of write-off recognized of $8offset deferred by million in transaction costs a of the write-down $1of of million, hedging $1 and a million. previously reserve recorded Concurrentthe in fair Company with terminated value this the increment associated redemption,U.S. Debt on $470 Derivatives aggregating March million 21,net notional 2011, payment principal of amount. approximatelyDerivatives. The $111 million Company to made terminate a theseAs Debt a result ofapproximately these redemptions, $878 the Company million,aggregate paid an including principal aggregate of approximatelypayable amount in $802 connection and with million with the $76 the redemptions. redemptions, In million theDerivatives addition, Company concurrent aggregating for terminated U.S. the the $820and associated million made Debt premiums an notional aggregate principalto net terminate amount these payment Debt of Derivatives. approximately $330The million total loss onthe repayment year ended of December the 31, 2011. Senior Notes was $99 million for (d) Redemption2011 of Redemptions: Senior Notes: time, subject tofrom a the offering certain were approximately prepaymentthe $895 original million premium. issue after discount deduction The and of debt net issuance. proceeds On August 25, 2010, theNotes Company issued which $800 mature million on ofin 6.11% August whole Senior or 25, in 2040. part,certain The at the notes prepayment Company’s are option, premium. redeemable, were at The any approximately time, $794 net subject million to afterdiscount proceeds a deduction and from debt of issuance the the costs. original issue offering Debt issuance costswere of incurred and $10 capitalizedThese million in have the related been year to endedcosts deferred in these December and the 31, debt carrying are 2010. value included issuances of the as long-term debt. deferred transaction NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Derivatives. RCl’s and RCP’s respective obligations under the bank 18. FINANCIAL RISK MANAGEMENT AND FINANCIAL credit facility, the public debt and the Derivatives continue to rank INSTRUMENTS: pari passu on an unsecured basis.

(f) Fair value increment (decrement) arising from purchase (a) Overview: accounting: The Company is exposed to credit risk, liquidity risk and market risk. The fair value increment (decrement) on long-term debt is a purchase The Company’s primary risk management objective is to protect its accounting adjustment as a result of the acquisition of the minority income and cash flows and, ultimately, shareholder value. Risk interest of Wireless during 2004. The fair value increment (decrement) management strategies, as discussed below, are designed and is amortized over the remaining term of the related debt and implemented to ensure the Company’s risks and the related exposures recorded as part of interest expense. The fair value increment is are consistent with its business objectives and risk tolerance. applied to the specific debt instruments to which it relates. (b) Credit risk: (g) Weighted average interest rate: Credit risk represents the financial loss that the Company would The Company’s effective weighted average interest rate on all long- experience if a counterparty to a financial instrument, in which the term debt, as at December 31, 2011, including the effect of all of the Company has an amount owing from the counterparty, failed to meet associated Debt Derivative instruments, was 6.22% (December 31, its obligations in accordance with the terms and conditions of its 2010 – 6.68%; January 1, 2010 – 7.27%). contracts with the Company.

(h) Principal repayments: The Company’s credit risk is primarily attributable to its accounts As at December 31, 2011, principal repayments due within each of the receivable. The amounts disclosed in the consolidated statements of next five years and thereafter on all long-term debt are as follows: financial position are net of allowances for doubtful accounts, estimated by the Company’s management based on prior experience 2012 $ – and their assessment of the current economic environment. The Company establishes an allowance for doubtful accounts that 2013 606 represents its estimate of incurred losses in respect of accounts 2014 1,119 receivable. The main components of this allowance are a specific loss 2015 844 component that relates to individually significant exposures and an 2016 1,000 overall loss component established based on historical trends. At Thereafter 6,533 December 31, 2011, the Company had accounts receivable of $1,574 million (December 31, 2010 – $1,443 million; January 1, 2010 – $ 10,102 $1,289 million), net of an allowance for doubtful accounts of $129 million (December 31, 2010 – $138 million; January 1, 2010 – (i) Foreign exchange: $157 million). At December 31, 2011, $719 million (December 31, Foreign exchange losses related to the translation of long-term debt 2010 – $712 million; January 1, 2010 – $561 million) of accounts recorded in the consolidated statements of income totalled $8 million receivable are considered past due, which is defined as amounts (2010 – gain of $20 million). outstanding beyond normal credit terms and conditions for the (j) Terms and conditions: respective customers. The Company believes that its allowance for The provisions of the Company’s $2.4 billion bank credit facility doubtful accounts is sufficient to reflect the related credit risk described above impose certain restrictions on the operations and associated with the Company’s accounts receivable. activities of the Company, the most significant of which are debt The Company believes that the concentration of credit risk of maintenance tests. accounts receivable is limited due to its broad customer base, In addition, certain of the Company’s Senior Notes and Senior dispersed across varying industries and geographic locations Debentures described above (including the 6.25% Senior Notes due throughout Canada. 2013 and 8.75% Senior Debentures due 2032) contain debt incurrence The Company has established various internal controls, such as credit tests as well as restrictions upon additional investments, sales of assets checks, deposits on account and billing in advance, designed to and payment of dividends, all of which are suspended in the event mitigate credit risk and has also established procedures to suspend the public debt securities are assigned investment grade ratings by at the availability of services when customers have fully utilized least two of three specified credit rating agencies. As at December 31, approved credit limits or have violated established payment terms. 2011, all of these public debt securities were assigned an investment While the Company’s credit controls and processes have been grade rating by each of the three specified credit rating agencies and, effective in managing credit risk, these controls cannot eliminate accordingly, these restrictions have been suspended for so long as credit risk and there can be no assurance that these controls will such investment grade ratings are maintained. The Company’s other continue to be effective or that the Company’s current credit loss Senior Notes do not contain any such restrictions, regardless of the experience will continue. credit ratings for such securities. Credit risk related to the Company’s Debt Derivatives and Expenditure In addition to the foregoing, the repayment dates of certain debt Derivatives arises from the possibility that the counterparties to the agreements may be accelerated if there is a change in control of the agreements may default on their respective obligations under the Company. agreements in instances where these agreements have positive fair At December 31, 2011 and 2010 and January 1, 2010, the Company value for the Company. The Company assesses the creditworthiness of was in compliance with all of the terms and conditions of its long- the counterparties in order to minimize the risk of counterparty term debt agreements. default under the agreements. All of the portfolio is held by financial institutions with a Standard & Poor’s rating (or the equivalent) ranging from A– to AA–. The Company does not require collateral or other security to support the credit risk associated with its Derivatives due to the Company’s assessment of the creditworthiness of the counterparties. The obligations under U.S. $4.9 billion aggregate

112 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 113 5 years 5 years More than More than years years 4to5 4to5 years years 1to3 1to3 ROGERS COMMUNICATIONS INC. 1 year 1 year Less than Less than 2011 ANNUAL REPORT cash flows cash flows Contractual Contractual Publicly traded investments: Stock-based compensation: (i) The Company managesmarket its prices risk ofconducting related its financial to publicly reviews fluctuationsrelated of traded to in these publicly investments the investmentsestablished available by to ensure information levels regularly that anyroutinely of engage risks in risk are risk within derivatives management tolerance. practices or such The as shortinvestments. hedging, Company selling does with respect not toAt its December 31, publicly 2011, a traded of $1 change in the the marketresulted Company’s price per in share publiclycomprehensive a income, traded net of $14 income investments taxes of million would $2(ii) million. change have inIn the addition, Company’sCompany’s market stock-based other outstanding compensation. risk stock All arises optionscarried of at are from the their classifiedusing fair Company’s accounting as value, the liabilities as for Company’s adjusted and Class for the are vesting, B determined Non-Voting share price, Black- amount amount Carrying Carrying liquidity to meetstressed its conditions, without liabilitiesdamage incurring when unacceptable to due, losses the underundrawn or Company’s both risking reputation. portion normalapproximately At and of December $2.1 31,January the 2011, billion 1, the Company’s 2010 (Decembermillion – (December bank 31, $2.4 31,million). billion), 2010 credit 2010 excluding – – facility letters $94 of $2.4The million; was credit January billion; following of 1,payments, are $66 2010 reflecting the undiscounted –financial disbursements $47 liabilities contractual at of December maturities, the 31, 2011 Company’s and excluding 2010: interest $ 12,034 $ 12,087 $ 2,416 $ 1,603 $ 2,357 $ 5,711 $ 12,673 $ 12,744 $ 2,130 $ 2,056 $ 2,001 $ 6,557 5 years 5 years More than More than years years 4to5 4to5 years years 1to3 1to3 1 year 1 year Less than Less than Cash outflow (Canadian dollar)Cash inflow (Canadian dollar equivalent ofNet U.S. carrying dollar) amount of derivatives – (5,023)* – – 900 (1,164)* (1,920)* 5,907 (1,939)* – 1,570 2,338 1,999 Cash outflow (Canadian dollar)Cash inflow (Canadian dollar equivalent of U.S. dollar)Cash outflow (Canadian dollar)Cash inflow (Canadian dollar equivalent ofNet U.S. carrying dollar) amount of derivatives – – (630) (244) (4,302)* – (386) – – 460 598 (1,475)* – 4,797 232 (844)* (1,983)* – 366 – 1,806 – 992 – 1,999 (d) MarketMarket risk: riskfluctuations is in the theinvestments, market risk the prices Company’s that of shareinterest the price, changes rates, foreign Company’s will in exchange publiclyfinancial affect rates instruments. traded the market and Company’s prices, income or such the as value of its December 31, 2010 Interest payments $ 645 $ 1,158 $ 864 $ 3,548 December 31, 2011 Interest payments $ 663 $ 1,219 $ 920 $ 4,229 * Represents Canadian dollar equivalentfor amount Debt of Derivatives. U.S. dollar inflows matched to anIn equal addition amount to of U.S. the2010, dollar amounts maturities net noted in long-term above, interestincluding debt at the payments December impact of 31, over the 2011 associated the Debt and Derivatives life are: of the long-term debt, Bank advancesAccounts payable and accrued liabilitiesIncome tax payableLong-term debtOther long-term liabilitiesDebt Derivative instruments: 2,133 2,133 2,133 $ 45 238 64 – $ 8,654 45 238 $ – 64 8,723 45 238 $ – – – – $ – 1,164 33 – 1,920 $ – 19 5,639 – – 12 December 31, 2010 December 31, 2011 Bank advancesAccounts payable and accrued liabilitiesLong-term debtOther long-term liabilitiesExpenditure Derivative instruments: Debt Derivative instruments: 2,085 2,085 2,085 $ 37 57 10,034 – $ 10,102 57 37 $ – 57 – $ – – 1,725 – $ 20 1,844 – 6,533 $ 9 – 8 (c) LiquidityLiquidity risk: risk is the riskfinancial that obligations the as Company they will fallrisk not due. through be The able Company the to managesleverage, management meet liquidity its of as itsstatements. outlined capital It also structure in manages andactual liquidity and note financial risk projected by cash 23 continuously flows monitoring to to ensure the that it consolidated will have financial sufficient notional amount of theequally Derivatives with are the unsecured Company’s and seniorcounterparties generally indebtedness. rank The is credit taken risk offor into the accounting consideration purposes (note in 18(d)). determining fair value NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Scholes and trinomial option pricing models. Both option pricing All of the $2 million impact was related to Debt Derivatives not models use the Company’s Class B Non-Voting share price during accounted for as hedges and recorded in the consolidated statements the life of the option. All of the Company’s outstanding RSUs of income. and DSUs are classified as liabilities and are carried at their On March 21, 2011, the Company redeemed all of the U.S. $350 million intrinsic value, as adjusted for vesting, measured as the principal amount of its 7.875% Senior Notes due 2012 and difference between the current share price and the respective U.S. $470 million principal amount of its 7.25% Senior Notes due 2012, RSU and DSU exercise price. The intrinsic value of the liability is and concurrent with these redemptions, on March 21, 2011, the marked-to-market each period, and stock based compensation Company terminated the associated Debt Derivatives hedging the expense is impacted by the change in the price of the Company’s U.S. $350 million 7.875% Senior Notes and the U.S. $470 million 7.25% Class B Non-Voting shares during the life of the RSU and DSU. Senior Notes. The settlement of these Debt Derivatives resulted in a At December 31, 2011, a $1 change in the market price of the net payment by the Company of $219 million and $111 million, Company’s Class B Non-Voting shares would have resulted in a respectively. change of $6 million in net income The effect of estimating the credit-adjusted fair value of the (iii) Foreign exchange and interest rates: Derivatives at December 31, 2010 is illustrated in the table below. As The Company uses derivative financial instruments to manage its at December 31, 2010, the credit-adjusted net liability position of the risks from fluctuations in foreign exchange and interest rates Company’s derivatives portfolio was $900 million, which is $17 million associated with its U.S. dollar denominated debt instruments. less than the unadjusted risk-free mark-to-market net liability The Company also uses derivative financial instruments to position. manage the foreign exchange risk in its operations. The Derivatives Derivatives Net asset Company does not use derivative instruments for speculative in an asset in a liability (liability) purposes. From time to time, these derivative financial position position position December 31, 2010 (A) (B) (A) + (B) instruments include cross-currency interest rate exchange agreements, foreign exchange forward contracts and foreign Debt Derivatives: exchange option agreements. All such agreements are used for Mark-to-market value – risk-free risk management purposes only and are designated as a hedge analysis $ 7 $ (924) $ (917) of specific debt instruments for economic purposes. Mark-to-market value – credit- adjusted estimate (carrying In July 2011, the Company entered into foreign exchange forward value) 7 (907) (900) contracts to manage foreign exchange risk on certain forecasted expenditures. All of these Expenditure Derivatives were accounted for Total Difference $ – $ 17 $ 17 as hedges during the year ended December 31, 2011, with changes in fair value being recorded in the hedging reserve, a component of All of the $17 million impact related to Debt Derivatives accounted equity. The Expenditure Derivatives fix the exchange rate on an for as hedges and was recorded in other comprehensive income. aggregate U.S. $20 million per month of the Company’s forecast expenditures at an average exchange rate of Cdn$0.9643/U.S.$1 On August 27, 2010, the Company redeemed all of the U.S. $490 million from August 2011 through July 2014. At December 31, 2011, principal amount of its 9.625% Senior Notes due 2011 and, concurrent U.S. $620 million of these Expenditure Derivatives remain with this redemption, on August 27, 2010, the Company terminated the outstanding. associated Debt Derivatives aggregating U.S. $500 million notional principal amount, including the U.S. $10 million notional principal The effect of estimating the credit-adjusted fair value of the Debt amount which were not accounted for as hedges. The Company made a Derivatives and the Expenditure Derivatives at December 31, 2011 is net payment of approximately $269 million to terminate these Debt illustrated in the table below. As at December 31, 2011, the credit- Derivatives. adjusted net liability position of the Company’s Derivatives portfolio was $460 million, which is $2 million more than the unadjusted risk- The effect of estimating the credit-adjusted fair value of the free mark-to-market net liability position. Derivatives at January 1, 2010 is illustrated in the table below. As at Derivatives Derivatives Net asset January 1, 2010, the credit-adjusted net liability position of the in an asset in a liability (liability) Company’s Derivatives portfolio was $1,002 million, which is position position position December 31, 2011 (A) (B) (A) + (B) $25 million less than the unadjusted risk-free mark-to-market net Debt Derivatives: liability position. Mark-to-market value – risk-free Derivatives Derivatives Net asset analysis $ 51 $ (548) $ (497) in an asset in a liability (liability) position position position Mark-to-market value – credit- January 1, 2010 (A) (B) (A) + (B) adjusted estimate (carrying Debt Derivatives: value) 41 (540) (499) Mark-to-market value – risk- Difference, Debt Derivatives (10) 8 (2) free analysis $ 94 $ (1,121) $ (1,027) Mark-to-market value – credit- Expenditure Derivatives: adjusted estimate (carrying Mark-to-market value – risk-free value) 82 (1,084) (1,002) analysis 39 – 39 Total Difference $ (12) $ 37 $ 25 Mark-to-market value – credit- adjusted estimate (carrying value) 39 – 39 Of the $25 million impact, ($1) million related to Derivatives not accounted for as hedges was recorded in the consolidated statements Difference, Expenditure Derivatives – – – of income prior to January 1, 2010 and $26 million related to Derivatives accounted for as hedges was recorded in other Total Difference $ (10) $ 8 $ (2) comprehensive income.

114 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 115 (66) (21) carrying carrying credit risk credit risk $ (439) $ (834) value, being value, being amount on a amount on a adjusted basis adjusted basis Estimated fair Estimated fair (497) (499) market market mark-to- mark-to- $ (917) (900) $ (458) (460) value on a value on a Unadjusted Unadjusted risk-free basis risk-free basis ROGERS COMMUNICATIONS INC. Cdn. $ Cdn. $ notional notional rate rate Exchange Exchange 2011 ANNUAL REPORT 350 1.0258 359 (6) (6) 350 1.0258 359620 0.9643 598 4 39 2 39 U.S. $ U.S. $ 4,125 1.2021 4,959 (918) (901) 1,905 1.2668 2,413 (548) (540) notional notional $ 575 1.0250 $ 589 $ 7 $ 7 $ 1,975 1.0252 $ 2,025 $ 47 $ 39 December 31, 2011, detailsposition of are as the follows: derivative instruments net liability value of long-term debt athave December 31, resulted 2011. in In addition,taxes a this would $3 of million $1change change in million. in the net ThereDebt carrying income, Derivatives would value with net a of have similar of offsetting the income been impact on associatedA net a U.S. portion income. of similar, $350 the million Company’s offsetting and accounts accrued of receivable liabilities and is accounts denominatedtheir payable in short-term U.S. nature dollars; however, andsignificant due the market to Expenditure risk Derivatives, arisingrates. there from is fluctuations no in foreign exchange All of the Company’s derivatives are unsecured obligationsAt of RCI. Decemberdenominated 31, long-term 2010,fluctuations debt in 93.1% foreign instrumentsDecember exchange of 31, were rates 2010, the details forposition hedged of are accounting as the Company’s follows: purposes. against derivative instruments At U.S. net liability dollar- As assets As liabilities As liabilities As assets As liabilities As assets As assets Net long-term liability portion Less net current liability portion December 31, 2010 Debt Derivatives accounted for as cash flow hedges: In 2011, a $6 milliondecrease) increase in related estimated fair to valueincome. (2010 – hedge $6 million ineffectiveness wasThe recognized long-term inliability net portion above of$64 comprises million, $503 as a at million December 31, derivative 2011. andAt instruments a December$250 derivative 31, million instruments of 2011,credit floating asset rate facility, with advances of allinterest outstanding the rates. of under Net the the income exceptionyear bank would ended Company’s have of December long-term changed 31,there 2011, by debt an was net $1 was of a million aggregate under income in 1% at the taxes bank the change of fixed credit facility. $1 in million, the if U.S. interest $350 rates charged millionterm on of debt advances instruments the aretherefore, Company’s not a hedged U.S. one for dollar-denominated centU.S. accounting dollar change long- purposes would and, in have the resulted in Canadian a dollar $4 relative million change to in the the carrying Debt Derivatives not accounted for as hedges: Net mark-to-market liability The long-termliability portion of above $840million, comprises as million at a December 31, and 2010. derivative a instruments derivative instruments asset of $6 Less net current liability portion Debt Derivatives accounted for as cash flow hedges: Debt Derivatives not accounted for as hedges: Net mark-to-market liability Debt Derivatives Expenditure Derivatives accounted for as cash flow hedges: Net mark-to-market liability Net long-term liability portion December 31, 2011 At Decemberdenominated 31, long-term 2011,fluctuations debt in 91.7% foreign instruments exchange of were rates the for hedged accounting Company’s purposes. against At U.S. dollar- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At January 1, 2010, 93.7% of the Company’s U.S. dollar-denominated details of the derivative instruments net liability position are as long-term debt instruments were hedged against fluctuations in follows: foreign exchange rates for accounting purposes. At January 1, 2010, Estimated fair Unadjusted value, being mark-to- carrying market amount on a U.S. $ Exchange Cdn. $ value on a credit risk January 1, 2010 notional rate notional risk-free basis adjusted basis Debt Derivatives accounted for as cash flow hedges: As assets $ 1,975 1.0252 $ 2,025 $ 84 $ 73 As liabilities 3,215 1.3337 4,288 (1,117) (1,080)

Debt Derivatives not accounted for as hedges: As assets 350 1.0258 359 10 9 As liabilities 10 1.5370 15 (4) (4)

Net mark-to-market liability $ (1,027) (1,002)

Less net current liability portion (76)

Net long-term liability portion $ (926)

The long-term portion above comprises a derivative instruments liability of $1,004 million and a derivative instruments asset of $78 million, as at January 1, 2010.

(e) Financial instruments: (i) Classification and fair values of financial instruments: The Company has classified its financial instruments as follows:

December 31, 2011 December 31, 2010 January 1, 2010 Carrying Fair Carrying Fair Carrying Fair amount value amount value amount value Loans and receivables, measured at amortized cost: Cash and cash equivalents* $–$–$ – $ – $ 378 $ 378 Accounts receivable 1,574 1,574 1,443 1,443 1,289 1,289 Financial assets, available-for-sale, measured at fair value: Investments* 850 850 675 675 496 496

$ 2,424 $ 2,424 $ 2,118 $ 2,118 $ 2,163 $ 2,163

December 31, 2011 December 31, 2010 January 1, 2010 Carrying Fair Carrying Fair Carrying Fair amount value amount value amount value Financial liabilities, measured at amortized cost: Bank advances, arising from outstanding cheques* $57$57$45$45$–$– Accounts payable and accrued liabilities 2,085 2,085 2,133 2,133 2,066 2,066 Income taxes payable ––238 238 147 147 Provisions 73 73 83 83 72 72 Long-term debt 10,034 11,471 8,654 9,688 8,396 9,315 Other long-term liabilities 276 276 229 229 177 177 Financial liabilities (assets), held-for-trading: Debt Derivatives accounted for as cash flow hedges** 501 501 894 894 1,007 1,007 Debt Derivatives not accounted for as hedges** (2) (2) 6 6 (5) (5) Expenditure Derivatives accounted for as cash flow hedges** (39) (39) ––––

$ 12,985 $ 14,422 $ 12,282 $ 13,316 $ 11,860 $ 12,779

(*) Denotes financial assets and liabilities that are carried at fair value in Level 1; fair value determined by quoted market prices (**) Denotes financial assets and liabilities that are carried at fair value in Level 2; fair value determined by valuation technique using observable market inputs

116 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 117 2010 2010 January 1, January 1, 61 89 (4) (8) 10 11 361616 33 31 11 18 45 (76) (28) 728 569 2010 2010 (106) (49) $ 229 $ 177 $ 652 $ 541 $ 106 $ 49 $ (80) $ (36) $26$13 $ (80) $ (36) December 31, December 31, 4 5 5 9 (1) 17 8 39 24 15 12 8 2011 2011 (133) (167) $ 276 $ 167 $6 $ (134) $33 $ (134) ROGERS COMMUNICATIONS INC. December 31, December 31, 2011 ANNUAL REPORT accrued benefit obligations plan (note 20) Deferred pension asset Deferred pension liability Other Deficiency of plan assets over Effect of asset ceiling limit Program rights liability Plan assets, at fair value Accrued benefit obligations Net deferred pension liability 19. OTHER LONG-TERM LIABILITIES: Deferred pension liability (note 20) Supplemental executive retirement Restricted share units Deferred compensation CRTC commitments (note 25) Liabilities related to stock options 20. PENSIONS: The Companydefined maintains benefit pension both plansplans contributory that cover and provide mostcontributions of non-contributory its pensions and employees. The non-pension earnings. based post The retirement onsupplemental Company unfunded benefits. pension does years benefits The to not certain Company executives. of provide alsoActuarial provides service, any estimatescompensation years levels are at of thebenefits time are based of primarily based retirement.certain upon Maximum on career retirement average adjustments. earnings, projectionscompleted subject The as to at of January most 1,2009 2011 recent for for employees’ three one of actuarialfunding the of purposes plans must valuations the and be January ofthese other 1, were plans. a plans. date no The later than next JanuaryThe actuarial 1, 2012 valuation for estimated for estimated present market value valuethese benefits of of at December the accrued 31,as 2011 net follows: and plan 2010 assets and January available benefits 1, 2010 to and are provide the for Consists of: Net deferred pension liability Guarantees: Business sale and business combination agreements: Sales of services: Purchases and development of assets: Indemnifications: Fair values: The Company did notfinancial have assets during any years non-derivative ended December held-to-maturity 31, 2011(ii) and 2010. The Company has2011 and the 2010 in following the normal guarantees course of at(a) business: December 31, As part ofassets transactions involving or business otherrequired dispositions, to business sales pay combinations, of counterpartiesresult for the of costs breaches and Company of losses representationsproperty may incurred and warranties, as be right intellectual a environmental infringement, liabilities, loss(including tax changes or legislation), damages litigationcontingent in against liabilities to the of laws counterparties, aprevious property, disposed and business tax orbusiness. regulations filings reassessments of of the(b) corporation thatAs carries part of on transactionsmay involving the be sales of requiredincurred services, the to Company as paywarranties, a counterparties changes forlegislation) result in or costs litigation against laws of the and counterparties. and losses breaches(c) regulations of (includingAs representations part tax of and transactionsassets, involving the purchases Company and may developmentcosts be of required to andrepresentations pay counterparties and losses for warranties,changes loss in incurred or lawslitigation damages against and as the to regulations counterparties. property, (including a tax(d) result legislation) or The of Company indemnifies breachesagainst its directors, claims of officersperformance and reasonably of employees incurred theirliability services insurance and for to its the directors resultingits and subsidiaries. Company, officers from as and well maintains as the those of The Company ismaximum unable to potential makecounterparties. a amount The reasonable estimate it amountfuture of also would events the depends andamount be on conditions, the has required which outcome beenfinancial cannot to of position accrued be relating in pay predicted. toguarantees these the No at types consolidated December ofHistorically, 31, indemnifications statements the 2011 or Company of has or notunder made 2010 these any indemnifications or significant or payments guarantees. January 1, 2010. (iii) The tables above present thewhich level in the the fair fair values valuefair of hierarchy into financial value instruments on thatare the are carried consolidated at statements categorized.categorized of financial position Therenon-observable in market were inputs)2010 and Level as January 1, no at 2010. December 3 31, financial 2011 and instruments (valuation technique using NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following information is provided on pension fund assets The following information is provided on accrued benefit obligations measured at December 31, 2011 and 2010 for the years then ended: measured at January 1, 2010 related to funded obligations including Years ended December 31, 2011 2010 the adjustments from the previously disclosed September 30, 2009 measurement date under Canadian GAAP: Plan assets, January 1 $ 652 $ 541 January 1, Expected return on plan assets 44 40 2010 Actuarial gain (loss) recognized in equity (17) 21 Accrued benefit obligations, September 30, 2009 $ 526 Contributions by employees 20 21 Service cost 4 Contributions by employer 80 60 Interest cost 10 Benefits paid (27) (31) Benefits paid (9) Plan settlements (68) – Contributions by employees 6 Plan assets, December 31 $684 $ 652 Actuarial loss recognized in equity 32 Accrued benefit obligations, January 1, 2010 $ 569 The following information is provided on pension fund assets measured at January 1, 2010, including the adjustments from the Net pension expense, which is included in employee salaries and previously disclosed September 30, 2009 measurement date under benefits expense, is outlined below: Canadian GAAP: Years ended December 31, 2011 2010 January 1, 2010 Plan cost: Plan assets, measured at September 30, 2009 $ 518 Service cost $36 $25 Actuarial gain recognized in equity 10 Interest cost 44 40 Contributions by employees 6 Expected return on plan assets (44) (40) Contributions by employer 15 Net pension expense 36 25 Benefits paid (8) Plan settlements 11 – Plan assets, January 1, 2010 $ 541 Total pension cost recognized in the consolidated statements of income $47 $25 Accrued benefit obligations arising from funded obligations are outlined below for the years ended December 31, 2011 and 2010: The Company also provides supplemental unfunded pension benefits to certain executives. The accrued benefit obligations relating to Years ended December 31, 2011 2010 these supplemental plans amounted to approximately $39 million at Accrued benefit obligations, January 1 $728 $ 569 December 31, 2011 (December 31, 2010 – $36 million; January 1, Service cost 36 25 2010 – $32 million), and the related expense for 2011 was $4 million Interest cost 44 40 (2010 – $4 million). In connection with these plans, $1 million (2010 – Benefits paid (27) (31) $2 million) of actuarial losses were recorded directly to OCI and Contributions by employees 20 22 retained earnings. Actuarial loss recognized in equity 73 103 Certain subsidiaries have defined contribution plans with total Plan settlements (57) – pension expense of $2 million in 2011 (2010 – $2 million). Accrued benefit obligations, December 31 $ 817 $ 728

(a) Actuarial assumptions:

December 31, December 31, January 1, 2011 2010 2010 Weighted average discount rate used to determine accrued benefit obligations 5.5% 5.9% 6.9% Weighted average discount rate used to determine pension expense 6.0% 6.9% N/A Weighted average rate of compensation increase used to determine accrued benefit obligations 3.0% 3.0% 3.0% Weighted average rate of compensation increase used to determine pension expense 3.0% 3.0% N/A Weighted average expected long-term rate of return on plan assets 6.8% 7.0% 7.0%

Expected return on assets represents management’s best estimate of The estimated average remaining service periods for the plans range the long-term rate of return on plan assets applied to the fair value of from 8 to 11 years. the plan assets. The Company establishes its estimate of the expected rate of return on plan assets based on the fund’s target asset allocation and estimated rate of return for each asset class. Estimated rates of return are based on expected returns from fixed income securities which take into account bond yields. An equity risk premium is then applied to estimate equity returns. Differences between expected and actual return are included in actuarial gains and losses.

118 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 119 2010 allocation January 1, percentage Target asset –– 652 541 2010 $ 728 $ 569 $ (76) $ (28) $36$32 $ (36) $ (32) 2010 December 31, January 1, – 4 17 8 8 6 2011 $ $ (133) $39 $ (39) 2010 ROGERS COMMUNICATIONS INC. 0.6% 1.4% 0% to 2% 18.6%40.3% 18.6%40.5% 10% 39.9% to 29% 29% 40.1% to 48% 38% to 47% December 31, 100.0% 100.0% December 31, % % % % % Percentage of plan assets 2011 0.9 37.7 42.4 19.0 100.0 2011 ANNUAL REPORT December 31, Preferred shares: (i) Rights and conditions: There are 400value, million issuable authorized in preferred series,be shares with without fixed rights par by andseries. terms the The of preferred Board shares each have of seriesmeeting no of to rights Directors the to Company. prior vote at to any general the(ii) issue of CommonRights such shares: and conditions: There are 112,474,388 authorizedpar Class value. A Each Voting Class sharesClass A without A Voting Voting share shares is areClass convertible entitled B Non-Voting on to shares. a 50 one-for-one votes. basis The into There arewithout 1.4 par value. billion authorizedThe Class Articles of B Continuance ofAct Non-Voting the (British Company Columbia) under shares impose the restrictionsand Company on issue the of transfer, the voting Classorder A to Voting ensure and that Classobtain the B Non-Voting Company licences shares remains in undertakings required qualified in to Canada. to hold or carry on certain of its business Benefit obligation Fair value of plan assets Benefit obligation Fair value of plan assets Deficit 21. SHAREHOLDERS’ EQUITY: (a) Capital stock: Funded plan: Unfunded plan: Deficit As the Companydisclosing the is history a ofTransition obligation Date. first-time and assets adopter prospectively of from the IFRS, the Company is The Company’s experience loss$16 (gain) million on fundedexperience in loss plan 2011 (gain) liabilities on was 2011 (2010 (2010 unfunded – plan $(1) – million). liabilities $(24) was $1History million), of million obligation in and and assets: the Company’s 2 (4) 78 2010 $82 $80 December 31, 9 1 (2) 88 8 2011 $90 $ December 31, Employer Employee Total $27 million in 2011 (2010 – $61 million). December 31 are as follows: Actuarial loss on plan liabilities Total loss recognized in OCI International Effect of asset ceiling limit Total loss recognized in OCI Domestic Funded plan: (e) HistoricalHistory information: of annual experience (gains) and losses: Debt securities Other – cash (d) SettlementDuring of pension obligations: 2011,$18 the million to Companypurchased its annuities pension made from plans, insurance companieshad following a for which retired all lump-sum employees the during who 2011. pension the The contribution plans purchase period of of fromresponsibility the for, annuities January relieves and 1, the eliminatesaccrued Company 2009 significant of to risk primary benefit associated Januarytransaction with, resulted 1, the in obligations a non-cashobligations loss of from for approximately the settlement $11on of million the the pension consolidated recorded statement in of retired operating income. costs employees. This Unfunded plan: Expected contributions by the$73 Company million. in 2012 are estimatedEmployee to contributions be for 2012 are2011 assumed to on be the at levelsthe assumption similar same staffing to on a levels year-over-year in basis. the Company will remain 20112010 $ 80 60 $ 20 $ 100 21 81 (c) Actual contributions to the plans for the years ended Equity securities: (b) Allocation of plan assets: Asset category Plan assets arecommon comprised stocks primarily and ofinvestments bonds. pooled The funds inapproximately pooled that 1% Canadian invest of the equity in the$1 pooled fund million fund. has Company’s This$1 (December results in million) 31, equity approximately Company’s of 2010 equity securities. the – securities plans’ $1 comprising assets million;The Company being makes January contributions toof indirectly 1, the plan plans invested 2010 to members securetarget in – the ranges and benefits established the by invests theThe Pension in Pension Committee Committee of permitted the reviewsbasis. investments Company. actuarial assumptions using on the an annual Cumulative loss recognized in OCI Actual return on plan assets was NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company is authorized to refuse to register transfers of any In February 2010, the TSX accepted a notice filed by the Company of shares of the Company to any person who is not a Canadian in its intention to renew its prior NCIB for a further one-year period. The order to ensure that the Company remains qualified to hold the TSX notice provides that the Company may, during the twelve-month licences referred to above. period commencing February 22, 2010 and ending February 21, 2011, purchase on the TSX up to the lesser of 43.6 million Class B (b) Dividends: Non-Voting shares, representing approximately 9% of the then issued During 2011 and 2010, the Company declared and paid the following and outstanding Class B Non-Voting shares, and that number of Class dividends on each of its outstanding Class A Voting and Class B B Non-Voting shares that can be purchased under the NCIB for an Non-Voting shares: aggregate purchase price of $1.5 billion, with the actual number of Class B Non-Voting shares purchased, if any, and the timing of such Dividend purchases will be determined by the Company considering market Date declared Date paid per share conditions, share prices, its cash position, and other factors. February 16, 2010 April 1, 2010 $ 0.32 In 2010, the Company repurchased for cancellation an aggregate April 29, 2010 July 2, 2010 0.32 37,080,906 Class B Non-Voting shares for an aggregate purchase price August 18, 2010 October 1, 2010 0.32 of $1,312 million, resulting in a reduction to stated capital, share October 26, 2010 January 4, 2011 0.32 premium and retained earnings of $37 million, $1,191 million and $84 million, respectively. An aggregate 22,600,906 of these shares $ 1.28 were repurchased for cancellation directly under the NCIB for an February 15, 2011 April 1, 2011 $ 0.355 aggregate purchase price of $830 million. The remaining 14,480,000 April 27, 2011 July 4, 2011 0.355 of these shares were repurchased for cancellation pursuant to a August 17, 2011 October 3, 2011 0.355 private agreement between the Company and an arm’s-length third October 26, 2011 January 4, 2012 0.355 party seller for an aggregate purchase price of $482 million. These purchases were made under issuer bid exemption orders issued by the $ 1.42 Ontario Securities Commission and were included in calculating the number of Class B Non-Voting shares that the Company purchased In February 2011, the Board increased the annualized dividend rate pursuant to the NCIB. from $1.28 to $1.42 per Class A Voting and Class B Non-Voting share (d) Available-for-sale financial assets reserve: to be paid quarterly in amounts of $0.355 per share on each Available-for-sale investments are carried at fair value on the outstanding Class A Voting and Class B Non-Voting share. consolidated statements of financial position, with changes in fair Consequently, the Class A Voting shares may receive a dividend at a value recorded in the fair value reserve as a component of equity, quarterly rate of up to $0.355 per share only after the Class B through OCI, until such time as the investments are disposed of and Non-Voting shares have been paid a dividend at a quarterly rate of the change in fair value is recorded in profit and loss. $0.355 per share. The Class A Voting and Class B Non-Voting shares share equally in dividends after payment of a dividend of $0.355 per (e) Hedging reserve: share for each class. Such quarterly dividends are only payable as and All derivatives, including embedded derivatives that must be when declared by the Board and there is no entitlement to any separately accounted for, are measured at fair value on the dividends prior thereto. consolidated statements of financial position, with changes in fair value of cash-flow hedging derivatives recorded in the fair value (c) Normal course issuer bid: reserve as a component of equity, to the extent effective, until the In February 2011, the TSX accepted a notice filed by the Company of variability of cash flows relating to the hedged asset or liability is its intention to renew its prior normal course issuer bid (“NCIB”) for recognized in profit and loss. its class B Non-Voting shares for a further one-year period. The TSX notice provides that the Company may, during the twelve-month (f) Other: period commencing February 22, 2011 and ending February 21, 2012, The Company’s defined benefit pension plan obligation is actuarially purchase on the TSX up to the lesser of 39.8 million Class B determined at the end of the year with changes recognized Non-Voting shares, representing approximately 9% of the then issued immediately as a component of equity through OCI. The actuarial and outstanding Class B Non-Voting shares, and that number of Class losses as a component of equity for the year ended December 31, B Non-Voting shares that can be purchased under the NCIB for an 2011 is $67 million (2010 – $59 million). aggregate purchase price of $1.5 billion, with the actual number of Class B Non-Voting shares purchased, if any, and the timing of such purchases to be determined by the Company considering market 22. STOCK OPTIONS, SHARE UNITS AND SHARE conditions, share prices, its cash position, and other factors. PURCHASE PLANS:

In 2011, the Company purchased for cancellation an aggregate 30,942,824 Class B Non-Voting shares for an aggregate purchase price Stock-based compensation to employees is measured at fair value. of $1,099 million, resulting in a reduction to stated capital, share Fair value is determined using the Company’s Class B Non-Voting premium and retained earnings of $30 million, $870 million and $199 share price, and the Black-Scholes option pricing model (“Black- million, respectively. An aggregate 21,942,824 of these shares were Scholes model”) or trinomial option pricing models, depending on purchased for cancellation directly under the NCIB for an aggregate the nature of the share-based award. purchase price of $814 million. The remaining 9,000,000 shares were purchased for cancellation pursuant to private agreements between the Company and arm’s-length third-party sellers for an aggregate purchase price of $285 million. These purchases were made under issuer bid exemption orders issued by the Ontario Securities Commission and were included in calculating the number of Class B Non-Voting shares that the Company purchased pursuant to the NCIB.

120 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 121 average Weighted exercise price exercise price Weighted average December 31, 2010 options (447,056) 34.89 Number of 6,415,933 $ 19.24 1,350,225 34.69 (2,528,585) 14.78 Number 11,841,680 $ 26.42 13,467,096 $ 23.73 exercisable 1 8 .59 ROGERS COMMUNICATIONS INC. 8 average Weighted exercise price ) 35.20 exercise price 0 $ 26.42 3) 15.96 8 December 31, 2011 8 8 ,7 Weighted average 9,099 $ 2 8 Options outstanding Options exercisable options 8 41,6 8 (507,39 Number of 2011 ANNUAL REPORT 5,716,945 $ 22. 1,133,600 34.35 (1,77 10,6 11, life (years) Stock option plans: Performance options: Weighted average (i) Options to purchase Classon B a Non-Voting one-for-one shares basisand of may the officers be Company of grantedDirectors the to Company employees, or and directors Committee. its by There affiliates are by the 302000 the Company’s million Plan, Board options of 25 Management authorizedand million under options Compensation 9.5 the authorized millionterm under options of the authorized each 1996 optiongenerally under Plan, graded is the vesting 7 over 1994 fourthe to years Plan. 10 but Management The may years begrant. and Compensation adjusted The by the Committee exercise vesting pricevalue period on for is options of the isfive-day equal the date average to before Class of the the grant fair date B market as quotedStock Non-Voting on the options TSX. shares aredetermined determined measured using at the as Company’s fairand Class the the value B Black-Scholes Non-Voting model. at share each price period(ii) end, During thegranted year 581,300 performance-based ended optionscertain (2010 key December – executives. 759,200) These 31, to of options the are 2011, 2000 governed Plan. by Thesefour the the years options terms provided vest Company that on certain aor targeted straight-line after stock basis prices the over are anniversaryperformance met date. on options (December At 31, December2010 2010 31, – – 4,479,930) 4,894,980; 2011, were January 5,056,430 outstanding. 1, Performance options are measuredend, at determined fair using value theprice Company’s at and Class the each trinomial B period model. Non-Voting share remaining contractual (a) Stock options: using the cashClass settlement B Non-Voting feature share at of $36.42. an average share price of RCI Number 3 19 2010 2010 outstanding 10,689,099 3.13 $ 28.59 5,716,945 $ 22.81 $50 $28 January 1, 9 26 2011 2819 17 17 $64 $29 2010 $ 133 $ 160 $ 180 $ 194 December 31, 40 30 2011 $ 124 $ 194 December 31, Summary of stock options: Exercisable, end of year Outstanding, end of year Forfeited Exercised Granted Outstanding, beginning of year (iii) A summary of the stock option plans, which includes performance options, is as follows: Stock options (a) Restricted share units (b) Deferred share units (c) Stock options (a) Restricted share units (b) Deferred share units (c) At December 31, 2011,are the as range follows: of exercise prices, the weighted average exercise price and the weighted average remaining contractual life Total fair value amount offollows: stock-based compensation liabilities is as $ 4.83 –$ $ 9.99 10.00 – $ 11.99$ 12.00 – $ 18.99$ 19.00 – $ 24.99$ 25.00 – $ 29.99$ 30.00 – $ 37.99$ 38.00 – $ 46.94 1,502,107 417,557 510,908 905,708 1,648,175 2,458,332 3,246,312 1.60 1.46 1.48 1.15 4.08 $ 10.44 5.45 7.61 1,502,107 2.63 14.10 417,557 22.64 29.41 510,908 34.10 905,708 703,750 $ 10.44 39.03 408,863 7.61 1,268,052 14.10 22.64 29.41 33.49 39.00 Stock-based compensation: Stock-based compensation: A summary of stock-basedin employee compensation salaries expense, and benefits which expense, is is as included follows: Years ended December 31, Range of exercise prices At December 31, 2011,(December 31, the 2010 Company – $180 hadwhich million; a January $161 1, liability 2010 million2010 of – – $194 $194 (December $174 million), million of 31, million)compensation 2010 recorded – is at $157 its fairand million; a value, DSUs. including January current The stock 1, options, totaldifference liability RSUs intrinsic between value the related ofthe strike to trading vested price price liabilities, of stock-based of whichshare-based the the is RCI share-based the awards Class awards(December B and at 31, Non-Voting shares 2010 –During for December $122 all the million; vested year 31, Januarymillion) ended was 1, December 2011 paid 31, 2010 to – 2011, holders $149 was upon $45 million). exercise million $124 of (2010 RSUs - and million stock $58 options NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unrecognized stock-based compensation expense at December 31, (December 31, 2010 – 664,169; January 1, 2010 – 613,777) were 2011 related to stock-option plans was $9 million (2010 – $11 million), outstanding. There is no unrecognized compensation related to DSUs, and will be recorded in the consolidated statements of income over since these awards vest immediately when granted. the next four years as the options vest. (d) Employee share accumulation plan: All outstanding options, including the performance options, are The employee share accumulation plan allows employees to classified as liabilities and are carried at their fair value as determined voluntarily participate in a share purchase plan. Under the terms of through the use of a valuation model. the plan, employees of the Company can contribute a specified percentage of their regular earnings through payroll deductions. The (b) Restricted share units: designated administrator of the plan then purchases, on a monthly (i) RSU plan: basis, Class B Non-Voting shares of the Company on the open market The RSU plan enables employees, officers and directors of the on behalf of the employee. At the end of each month, the Company Company to participate in the growth and development of makes a contribution of 25% to 50% of the employee’s contribution the Company. Under the terms of the plan, RSUs are issued to in the month, which is recorded as compensation expense. The the participant and the units issued will cliff vest over a period administrator then uses this amount to purchase additional shares of not to exceed three years from the grant date. the Company on behalf of the employee, as outlined above. On the vesting date, the Company shall redeem all of the participants’ RSUs in cash or by issuing one Class B Non-Voting Compensation expense related to the employee share accumulation share for each RSU. The Company has reserved 4,000,000 Class B plan amounted to $23 million for the year ended December 31, 2011 Non-Voting shares for issuance under this plan. During the year (2010 – $20 million) and is included in employee salaries and benefits. ended December 31, 2011, the Company granted 738,973 RSUs (e) Assumptions: (2010 – 631,655). The weighted-average fair value of stock options granted during the (ii) Performance RSUs: years ended December 31, 2011 and 2010 and the principal During the year ended December 31, 2011, the Company assumptions used in applying the Black-Scholes model and trinomial granted 189,571 performance-based RSUs (2010 – 187,508) to option pricing models to determine their fair value at grant date certain key executives. The number of units that vest and will be were as follows: paid three years from the grant date will be within a range of December 31, December 31, 50% to 150% of the initial number granted based upon the 2011 2010 achievement of certain annual and cumulative three-year Weighted average fair value $ 7.25 $ 7.66 non-market targets. Risk-free interest rate 2.8% 2.9% (iii) Summary of RSUs: Dividend yield 4.0% 3.7% A summary of the RSU plans is as follows: Volatility of Class B Non-Voting shares 29.0% 29.8% December 31, December 31, Forfeiture rate 3.6% 4.0% 2011 2010 Weighted average expected life 5.4 years 5.4 years Number of units For Trinomial option pricing model only: Outstanding, beginning of year 1,616,370 1,060,223 Weighted average time to vest 2.4 years 2.4 years Granted 928,544 819,163 Weighted average time to expiry 7.0 years 7.0 years Exercised (416,146) (217,877) Employee exit rate 3.6% 4.0% Forfeited (139,813) (45,139) Suboptimal exercise factor 2.6 2.6 Outstanding, end of year 1,988,955 1,616,370 Lattice steps 50 50

Volatility has been estimated based on the actual trading statistics of At December 31, 2011, 1,988,955 RSUs (December 31, 2010 – the Company’s Class B Non-Voting shares. 1,616,370; January 1, 2010 – 1,060,223), including performance RSUs, were outstanding. These RSUs vest at the end of three years from the grant date. 23. CAPITAL RISK MANAGEMENT: Unrecognized stock-based compensation expense at December 31, 2011, related to these RSUs was $32 million The Company’s objectives in managing capital are to ensure sufficient (December 31, 2010 –$22 million) and will be recorded in the liquidity to pursue its strategy of organic growth combined with consolidated statements of income over the next three years as strategic acquisitions and to provide returns to its shareholders. The the RSUs vest. Company defines capital that it manages as the aggregate of its RSUs, including performance RSUs, are measured at fair value, shareholders’ equity (which is comprised of issued capital, share determined using the Company’s Class B Non-Voting share price. premium, retained earnings, hedging reserve and available-for-sale financial assets reserve) and long-term debt. (c) Deferred share unit plan: The DSU plan enables directors and certain key executives of the The Company manages its capital structure and makes adjustments to Company to elect to receive certain types of remuneration in DSUs, it in light of general economic conditions, the risk characteristics of which are classified as a liability on the consolidated statements of the underlying assets and the Company’s working capital financial position. requirements. In order to maintain or adjust its capital structure, the Company, upon approval from its Board of Directors, may issue or DSUs are measured at fair value, determined using the Company’s repay long-term debt, issue shares, repurchase shares, pay dividends Class B Non-Voting share price. or undertake other activities as deemed appropriate under the During the year ended December 31, 2011, the Company granted specific circumstances. The Board of Directors reviews and approves 154,937 DSUs (2010 – 89,136). At December 31, 2011, 751,903 DSUs any material transactions out of the ordinary course of business,

122 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 19 123 2010 $8 $10 $29 December 31, December 31, $3 8 Balance outstanding, 27 2011 $11 $3 $39 December 31, ROGERS COMMUNICATIONS INC. Transaction value 2011 2010 2011 2010 $41 2011 ANNUAL REPORT Compensation: Transactions: and commission paid on premiums for insurance coverage term employee benefits expense Printing, legal services A Director ofOfficer the of Companycoverage. a is A Chairman firm DirectorChairman and which of of Chief a is law the Executive of firm paid which the Company provides Company is legal commissions iswhich services. provides Vice Senior A for printing Chair Director services. Partner and insurance Vice and PresidentThese of transactions are a recorded company related at the parties amount and agreed areoutstanding to by reviewed the by balances theunsecured, Audit interest owed Committee. free The 1 to and month due theseoutstanding for from payment balances related the insimilar with transactions date parties cash that these occurred within of before are January related 1, the 2010. parties transaction. relating There to are no (i) The compensation expense associated withemployee key management services for benefits as was follows: included in employee salariesSalaries, pension and and other short- Stock-based compensation (ii) The Companycompanies, has the partners or enteredof senior the officers into Company, of as which summarized are business below: Directors transactions with Company. These transactions, as summarizedthe below, amount were recorded agreed at toterms by and the conditions relatedCommittee. of parties formal and agreements are approved subject to byThe the the Company Audit soldcompany an for aircraft cashother to proceeds significant transactions a of during 2011 private $19 or 2010. million Rogers’(b) in family 2010. holding Transactions There withKey were management key personnel management no include personnel: theCorporate Directors Officers and the of most the Senior planning, Company directing that and are controlling the primarily Company’s responsible business for activities. The ultimate controllingControl shareholder of Trust thebeneficiaries which Company is of holds the theRogers Rogers voting Trust family control areCorporate members is Officers of of of the represented the Company. the as Company. RogersThe Directors, family. The Company The Senior enteredcontrolling Executive into shareholder of certain and holding the transactions companies Company with controlled and by the private the Rogers’ ultimate controlling family shareholder of the 24. RELATED PARTY TRANSACTIONS: (a) Controlling shareholder: including proposals ondivestitures, as acquisitions well as or annual capital other and operating majorIn budgets. February investments 2011, or theits TSX intention accepted to a renew notice itsTSX prior filed notice NCIB by provides for the that a Company further theperiod one-year of Company commencing period. may, February The during 22, thepurchase 2011 twelve-month and ending on FebruaryNon-Voting 21, the shares, 2012, representing TSX approximately 9%and of up outstanding the Class then to B issued B Non-Voting shares, the Non-Voting and shares that lesser numberaggregate that of purchase of can Class price be of 39.8Class purchased $1.5 B million under billion, Non-Voting the with sharespurchases Class the NCIB purchased, to actual if for B number any, be an conditions, of and share determined prices, the its timing by cash position, of and the such otherDuring factors. Company 2011, considering the Company30,942,824 market Class purchased B for Non-Voting cancellation sharesof for an an $1,099 aggregate aggregate million, purchasepremium price resulting and in retained$199 a million, earnings reduction respectively. of towere An stated $30 aggregate purchased capital, million, 21,942,824aggregate for share of $870 purchase these cancellation million price shares shares directly of and $814 under were million.agreements the The remaining between purchased NCIB 9,000,000 sellers for the for for an Companypurchases an cancellation were and made under aggregate arm’s-length issuer pursuantOntario bid purchase Securities exemption third-party orders Commission to issued pricenumber by and the of were of private included Class $285pursuant in B to calculating the Non-Voting million. NCIB. the shares The NCIB These that expired on theDuring February Company 21, 2011, 2012. purchased theNotes Company due issued 2021(note and $1,450 17(c)). $400 million million of of 5.34% 6.56%During Senior 2011, Senior the Notes Company redeemedamount due the entire of 2041 outstanding its principal due U.S. 2012 $350 and U.S. million $4702012 ($342 million (note ($460 17(d)). million) million) 7.875% 7.25% Senior Senior Notes Notes due During 2011,Derivatives hedging the the U.S. $350Notes million 7.875% Company and Senior Subordinated theThe U.S. terminated settlement of $470 these million Debt thethe Derivatives 7.25% resulted in Senior Company associated a Subordinated net(note payment 17(d)). Notes. by of Debt $219The million Company andmanagement monitors of $111 liquidityfuture debt development million, and of the leverage shareholders’ business. respectively return ratiosThe and to as Company sustain requirements part and is of itsmanagement remains not overall unchanged the from strategy2010. the subject year with ended respect December to 31, to capital externally risk imposed capital NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(c) Subsidiaries and joint ventures: The following are the significant subsidiaries and joint ventures of the Company:

Ownership interest Jurisdiction of December 31, December 31, January 1, incorporation 2011 2010 2010 Subsidiaries: Rogers Holdings Inc. Canada 100% 100% 100% Rogers Media Inc. Canada 100% 100% 100% FIDO Solutions Inc. Canada 100% 100% 100% Rogers Wireless Alberta Inc. Canada – 100% 100% Rogers Communications Partnership Canada 100% 100% – Rogers Broadcasting Limited Canada 100% 100% 100% Rogers Publishing Limited Canada 100% 100% 100% Blue Jays Holdco Inc. Canada 100% 100% 100%

Joint ventures: Inukshuk Wireless Inc. Canada 50% 50% 50% Dome Productions Inc. Canada 50% 50% 50%

The annual financial statement reporting period of the Company is (c) In the ordinary course of business and in addition to the the same as the annual financial statement reporting periods of all its amounts recorded on the consolidated statements of financial subsidiaries and joint ventures. There are no significant restrictions on position and disclosed elsewhere in the notes, the Company has the ability of subsidiaries, joint ventures and associates to transfer entered into agreements to acquire broadcasting rights to funds to the Company in the form of cash dividends or to repay loans programs and films over the next five years at a total cost of or advances. approximately $950 million. In addition, the Company has commitments to pay access fees over the next year totalling The following business transactions were carried out with the approximately $15 million. Company’s joint ventures and associates. Transactions between the Company and its subsidiaries have been eliminated on consolidation (d) Pursuant to CRTC regulation, the Company is required to make and are not disclosed in this note. contributions to the Canadian Media Fund (“CMF”) and the Local Programming Improvement Fund (“LPIF”), which are cable Transaction value industry funds designed to foster the production of Canadian 2011 2010 television programming. These contributions are based on a Revenue: formula, including gross broadcast revenue and the number of Joint ventures and associates – Rent, parking, subscribers. With respect to CMF, the Company may elect to interconnect fees $1$– spend a portion of the above amount determined by the aforementioned formula for local television programming and Purchases: may also elect to contribute a portion to another CRTC-approved Joint ventures and associates – Network access independent production fund. The Company estimates that its fees 12 13 total contribution for 2012 will amount to approximately Access fees paid to broadcasters 17 16 $74 million. Production fees 20 14 (e) Pursuant to CRTC regulations, the Company is required to pay License fees and service obligation 2 1 certain telecom contribution fees. These fees are based on a formula including certain types of revenue, including the The sales to and purchases from the Company’s joint ventures and majority of wireless revenue. The Company estimates that these associates are made at terms equivalent to those that prevail in arm’s fees for 2012 will amount to approximately $27 million. length transactions. Outstanding balances at the year-end are unsecured, interest free and settlement occurs in cash. The (f) Pursuant to Industry Canada regulations, the Company is outstanding balances with these related parties relating to similar required to pay certain fees for the use of its licenced radio business transactions as at December 31, 2011 was $5 million spectrum. These fees are primarily based on the bandwidth and (December 31, 2010 – $4 million; January 1, 2010 – $4 million). population covered by the spectrum licence. The Company estimates that these fees for 2012 will amount to $107 million.

25. COMMITMENTS: (g) In addition to the items listed above, the future minimum lease payments under operating leases for the rental of premises, distribution facilities, equipment and microwave towers, (a) The Company is committed, under the terms of its licences issued commitments for player contracts, purchase obligations and by Industry Canada, to spend 2% of certain wireless revenues other contracts at December 31, 2011 are as follows: earned in each year on research and development activities. Within one year $ 742 (b) The Company enters into agreements with suppliers to provide After one but not more than five years 1,467 services and products that include minimum spend commitments. The Company has agreements with certain More than five years 159 telephone companies that guarantee the long-term supply of $ 2,368 network facilities and agreements relating to the operations and maintenance of the network. Rent expense for 2011 amounted to $172 million (2010 – $180 million).

124 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 125 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT At the samequarterly time, dividend in totallingoutstanding Class $0.395 February A per Voting 2012,dividend and share Class the to B be on Board Non-Voting paidon shares, each on declared March such April of 19, 2, a 2012, its 2012,the and newly to is increased shareholders the $1.58 of per first share record quarterly annualized dividend dividend to rate. reflect In FebruaryCompany 2012, of the its intentionone-year TSX period. to The TSX renew accepted notice itsduring provides a the that prior the twelve-month NCIB Company notice period may, forand commencing ending a February filed February 24, further 23, 2012 by 2013,36.8 purchase the on the TSX millionapproximately the lesser 10% of ClassNon-Voting of shares, the B andshares issued that that can and be number Non-Votingpurchase purchased outstanding of price under the of Class Class shares,Non-Voting NCIB $1.0 B B shares for billion. an purchased, Non-Voting representing purchases aggregate The if will actual any,market number and be of conditions, the determined Class timing sharefactors. by B of prices, such the its Company cashIn February considering position, 2012, the and Company’sdividend Board other rate increased from the $1.42 annualized toNon-Voting $1.58 share per effective Class immediately Aamounts Voting to of and be $0.395 Class paid per B payable in share. as quarterly Such and quarterlyentitlement dividends when to are any declared dividends only prior by thereto. the Board and there is no $5 million. Thisthe proceeding settlement was amount was settled insignificant. in DecemberThe 2011 and Companyincome believes and indirect that taxes basedcurrently it on available. all has The of the calculationcases, information adequately however, of that requires is applicable provided significant taxes judgmentrules for in in and interpreting many regulations. tax audits, The Company’s which tax couldand filings deferred materially are income change tax subject assetscould, to the and liabilities amount and in provisions, of and interest certain and current penalties. circumstances, resultThere in exists certain the other claimsCompany, assessment and none potential of of claims which againsteffect is the on expected the to consolidated have financial position a of material the adverse Company. 27. SUBSEQUENT EVENTS: (a) (b) (e) (f) against Class Proceedings Act Business Practices and (BC). The Plaintiffs are seeking Class Proceedings Act, 1992 was commenced against providers of wireless In August 2009, counselproceeding for the plaintiffs under commencedasserting a the the second second same Class claims proceedingDecember Actions as 2009 on was the the Act basis that original it ordered was (Saskatchewan) The an proceeding. abuse Company’s of conditionally This the appeal process. dismissed of by stayed the the Saskatchewan Court 2007applying in of Appeal. for certification The leave Company decision is toThe was appeal Company to has the notsince Supreme recorded Court Management’s a of liabilityamount Canada. assessment of for any this is potential loss contingency the cannot that be reasonably ultimate the estimated.Company’s If assessment likelihood resolution and and assumptions,to of the a financial material position this adjustment and results of operations action could result. differs from the In June 2008,under a that proceeding province’s waswireless commenced Class communications in Actions servicesinvolves Saskatchewan allegations Act in of, among against Canada.misrepresentation other and providers things, false The advertising breach of in proceeding ofcharged relation contract, by to the the 911 Company fee providers and the in other wireless Canada.damages communication and The restitution. plaintiffs Thecertifying plaintiffs are intend the seeking toSaskatchewan. seek Any unquantified an potential proceeding liability order is not as yet determinable. In December a 2011, a proceeding(British national under Columbia) the classcommunications in action Canadacharged in relating by to wirelessproceeding the carriers system to involvesmisrepresentations some access of among fee contrary theirConsumer other to customers. Protection The the things, Act allegations of In August(Saskatchewan) 2004, was a commencedcommunications proceeding against in under providers Canadacharged of the relating by wireless Class to wirelessplaintiffs Actions the carriers are seeking system to Act specifiedeffectively, some access damages the reimbursement and of fee of punitive system theirSeptember damages, access 2007, fees customers. the collected. Saskatchewan The In application Court granted to the plaintiffs’ “opt-in” have class the action. Theconfirmed proceeding “opt-in” by nature the certified of Saskatchewan“opt-in” the Court as class class of was a Appeal. action, later Ashave affected national, a to customers national, take outside specificFebruary Saskatchewan steps 2008, to the participatebased Company’s in motion the on to proceeding.agreements stay was In the granted the andthat proceeding arbitration its the order Saskatchewan in clause Courtexclude respect directed of from in the the certificationbound of by class the an the arbitration of action clause. would plaintiffs wireless those service customers who are unquantified damages and restitution.not yet Any determinable. potential liability is In Augustpursuant 2008, to that a province’s proceeding was commenced in Ontario Cable and other providers ofThe communications services proceedings in Canada. involvedfalse, allegations misleading of, and amongfor deceptive long-distance other advertising telephone relating things, $20 usage. to The charges million plaintiffs were in seeking general damages and punitive damages of (b) (c) 26. CONTINGENT LIABILITIES: (a) (d) CORPORATE GOVERNANCE

BOARD OF DIRECTORS AND ITS COMMITTEES

AS OF FEBRUARY 21, 2012 AUDIT CORPORATE NOMINATING COMPENSATION EXECUTIVE FINANCE PENSION GOVERNANCE

Alan D. Horn, CA

Peter C. Godsoe, OC

Ronald D. Besse

C. William D. Birchall

Stephen A. Burch

John H. Clappison, FCA

Thomas I. Hull

Philip B. Lind, CM

Isabelle Marcoux

Nadir H. Mohamed, FCA

The Hon. David R. Peterson, PC, QC

Edward S. Rogers

Loretta A. Rogers

Martha L. Rogers

Melinda M. Rogers

William T. Schleyer

John H. Tory

Colin D. Watson

• CHAIR • MEMBER

“ Rogers has long benefited from strong, independent voices and Directors in the boardroom and sound governance structures which ensure that their influence is real. The structure of our Board is very much intended to ensure that the Directors and management act in the interests of all Rogers shareholders – an approach that has helped ensure the continuance of strong, independent, family-founded Canadian companies.”

PETER C. GODSOE LEAD DIRECTOR ROGERS COMMUNICATIONS INC.

“ Over the years, the Canadian economy has benefited greatly from family-founded-and- controlled companies that are able to take a longer-term view of investment horizons and general business management. At Rogers, we have successfully overlaid disciplined corporate governance processes that strike a healthy balance of being supportive of the business’s continued success, making business sense, and benefiting all shareholders.”

ALAN D. HORN CHAIRMAN OF THE BOARD ROGERS COMMUNICATIONS INC.

126 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT Rogers Communications’ Board of Directors is strongly committed to The Audit Committee reviews the Company’s accounting policies and sound corporate governance and continuously reviews its governance practices, the integrity of the Company’s financial reporting processes practices and benchmarks them against acknowledged leaders and and procedures and the financial statements and other relevant public evolving legislation. We are a family-founded-and-controlled company disclosures to be provided to the public. The Committee also assists and take pride in our proactive and disciplined approach towards ensuring the Board in its oversight of the Company’s compliance with legal and that Rogers’ governance structures and practices are deserving of the regulatory requirements relating to financial reporting and assesses the confidence of the public equity markets. systems of internal accounting and financial controls and the qualifications, independence and work of external auditors and internal auditors. With the December 2008 passing of Company founder and CEO Ted Rogers, his voting control of Rogers Communications passed to a trust The Corporate Governance Committee assists and makes of which members of the Rogers family are beneficiaries. This trust holds recommendations to the Board to ensure the Board of Directors has voting control of Rogers Communications for the benefit of successive developed appropriate systems and procedures to enable the Board to generations of the Rogers family. exercise and discharge its responsibilities. To carry this out the Corporate Governance Committee assists the Board in developing, recommending As substantial stakeholders, the Rogers family is represented on our Board and establishing corporate governance policies and practices and leads and brings a long-term commitment to oversight and value creation. At the the Board in its periodic review of the performance of the Board and its same time, we benefit from having outside Directors who are some of the committees. most experienced business leaders in North America. The Nominating Committee identifies prospective Director nominees for The Rogers Communications Board believes that the Company’s election by the shareholders and for appointment by the Board and also governance system is effective and that there are appropriate structures recommends nominees for each committee of the Board including each and procedures in place. committee’s Chair. The composition of our Board and structure of its various committees are The Compensation Committee assists the Board in monitoring, outlined above and on the following page. As well, we make detailed reviewing and approving compensation and benefit policies and practices. information on our governance structures and practices – including our The Committee is responsible for recommending senior management complete statement of Corporate Governance practices, our codes of compensation and for monitoring succession planning with respect to conduct and ethics, full committee charters, and Board member senior executives. biographies – easily available in the Corporate Governance section within the Investor Relations section of rogers.com. Also in the Corporate The Executive Committee assists the Board in discharging its Governance portion of our website you will find a summary of the responsibilities in the intervals between meetings of the Board, including to differences between the NYSE corporate governance rules applicable to act in such areas as specifically designated and authorized at a preceding U.S.-based companies and our governance practices as a non-U.S.-based meeting of the Board and to consider matters concerning the Company issuer that is listed on the NYSE. that may arise from time to time.

The Finance Committee reviews and reports to the Board on matters relating to the Company’s investment strategies and general debt and ROGERS GOOD GOVERNANCE PRACTICES equity structure.

> Separation of CEO and Chairman Roles The Pension Committee supervises the administration of the Company’s pension plans and reviews the provisions and investment performance of > Independent Lead Director the Company’s pension plans. > Formal Corporate Governance Policy and Charters

> Code of Business Conduct and Whistleblower Hotline

> Director Share Ownership Guidelines

> Board and Committee In Camera Discussions

> Annual Reviews of Board and Director Performance

> Audit Committee Meetings with Internal and External Auditors

> Orientation Program for New Directors For more information, go to rogers.com/governance > Regular Board Education Sessions for a complete description of Rogers’ corporate governance structure and practices, biographical information of our > Committee Retention of Independent Advisors Directors and copies our annual information circular and proxy. > Director Material Relationship Standards

2011 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 127 DIRECTORS AND SENIOR CORPORATE OFFICERS OF ROGERS COMMUNICATIONS INC.

AS OF FEBRUARY 21, 2012

DIRECTORS Alan D. Horn, CA Charles William David Birchall Isabelle Marcoux Martha L. Rogers Chairman, President and Vice Chairman, Chairman, Doctor of Chief Executive Officer, Barrick Gold Corporation Transcontinental Inc. Naturopathic Medicine Rogers Telecommunications Stephen A. Burch The Hon. David R. Peterson, Melinda M. Rogers* Limited Chairman, PC, QC Senior Vice President, Peter C. Godsoe, OC University of Maryland Senior Partner and Chairman, Strategy and Development, Lead Director, Medical Systems Cassels Brock & Blackwell LLP Rogers Communications Company Director John H. Clappison, FCA Edward S. Rogers* William T. Schleyer Nadir H. Mohamed, FCA* Company Director Deputy Chairman and Executive Company Director President and Chief Vice President, Emerging Business, Thomas I. Hull John H. Tory Executive Officer, Corporate Development, Chairman and Company Director Rogers Communications Rogers Communications Chief Executive Officer, Colin D. Watson Ronald D. Besse The Hull Group of Companies Loretta A. Rogers Company Director President, Company Director Philip B. Lind, CM* Besseco Holdings Inc. Executive Vice President, Regulatory and Vice Chairman, Rogers Communications

Left to right, seated: Isabelle Marcoux, Ronald D. Besse, Colin D. Watson, John H. Clappison Left to right, standing: William T. Schleyer, Thomas I. Hull, Stephen A. Burch, Charles William David Birchall, Alan D. Horn, Peter C. Godsoe, David R. Peterson, Martha L. Rogers, John H. Tory, Loretta A. Rogers

* Management Directors are pictured on the following page.

128 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT SENIOR CORPORATE OFFICERS Nadir H. Mohamed, FCA Edward S. Rogers Philip B. Lind, CM Melinda M. Rogers President and Chief Deputy Chairman and Executive Executive Vice President, Senior Vice President, Executive Officer Vice President, Emerging Regulatory and Vice Chairman Strategy and Development Business, Corporate Development Robert W. Bruce David P. Miller Terrie L. Tweddle President, Robert F. Berner Senior Vice President, Vice President, Corporate Communications Division Executive Vice, President Network Legal and General Counsel Communications and Chief Technology Officer Keith W. Pelley Jim M. Reid President, Rogers Media Linda P. Jojo Senior Vice President, Human Executive Vice President, Resources and Chief Human William W. Linton, FCA† SEE ROGERS.COM FOR AN Information Technology and Resources Officer Executive Vice President, Finance EXPANDED LISTING AND Chief Information Officer and Chief Financial Officer BIOGRAPHICAL INFORMATION OF ROGERS’ CORPORATE MANAGEMENT TEAM.

Left to right, seated: Jim M. Reid, Robert F. Berner, Terrie L. Tweddle Left to right, standing: David P. Miller, Melinda M. Rogers, Philip B. Lind, Keith W. Pelley, Edward S. Rogers, Robert W. Bruce, Nadir H. Mohamed, William W. Linton, Linda P. Jojo

† As announced in October, 2011, William Linton will retire as Chief Financial Officer during the second quarter of 2012 and will be succeeded by Anthony Staffieri.

2011 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 129 CORPORATE AND SHAREHOLDER INFORMATION

CORPORATE OFFICES STOCK EXCHANGE LISTINGS COMMON STOCK TRADING AND Rogers Communications Inc. Toronto Stock Exchange (TSX): DIVIDEND INFORMATION 333 Bloor Street East, 10th Floor RCI.a – Class A Voting shares Toronto, Ontario M4W 1G9 (CUSIP # 775109101) Dividends Closing Price RCI.b on TSX Declared 416-935-7777 or rogers.com RCI.b – Class B Non-Voting shares 2011 High Low Per Share (CUSIP # 775109200) CUSTOMER SERVICE AND First Quarter $36.04 $33.53 $0.355 PRODUCT INFORMATION New York Stock Exchange (NYSE): Second Quarter $38.19 $34.32 $0.355 888-764-3771 or rogers.com RCI – Class B Non-Voting shares Third Quarter $38.90 $34.80 $0.355 (CUSIP # 775109200) Fourth Q uarter $39.25 $34.75 $0.355 SHAREHOLDER SERVICES If you are a shareholder and have inquiries Equity Index Inclusions: Dividends regarding your account, wish to change your Dow Jones Canada Titans 60 Index Closing Price RCI.b on TSX Declared name or address, or have questions about Dow Jones Telecom Titans 30 Index 2010 High Low Per Share lost stock certificates, share transfers or FTSE Global Telecoms Index First Quarter $35.70 $30.95 $0.320 dividends, please contact our Transfer Agent S&P/TSX 60 Index Second Quarter $37.65 $33.81 $0.320 and Registrar: S&P/TSX Composite Dividend Index Third Quarter $39.12 $34.20 $0.320 S&P/TSX Composite Index Fourth Q uarter $41.31 $34.25 $0.320 Computershare Investor Services Inc. S&P/TSX Telecom Services Index 100 University Ave., 9th Floor, North Tower, Toronto, Ontario M5J 2Y1 2012 Expected Dividend Dates 877-982-5008 or Record Date*: Payment Date*: [email protected] March 19, 2012 April 2, 2012 June 15, 2012 July 3, 2012 Multiple Mailings September 14, 2012 October 3, 2012 If you receive duplicate shareholder mailings DEBT SECURITIES December 14, 2012 January 2, 2013 from Rogers Communications, please For details of the public debt securities of the contact Computershare as detailed above Rogers companies, please refer to the Debt * Subject to Board approval Securities section under rogers.com/investors to consolidate your holdings. Unless indicated otherwise, all dividends paid by Rogers Communications are designated INVESTOR RELATIONS INDEPENDENT AUDITORS as “eligible” dividends for the purposes of Institutional investors, security analysts KPMG LLP the Income Tax Act (Canada) and any similar and others requiring additional financial FORM 40-F provincial legislation. information can visit rogers.com/investors Rogers files its annual report with the U.S. or contact: Securities and Exchange Commission on Form DIVIDEND REINVESTMENT PLAN (“DRIP”) Computershare Investor Services Inc. Bruce M. Mann, CPA 40-F. A copy is available on EDGAR at sec.gov administers a convenient dividend Vice President, Investor Relations and at rogers.com/investors. reinvestment program for eligible Rogers 416-935-3532 or ON-LINE INFORMATION shareholders. For plan information and [email protected] Rogers is committed to open and full financial enrolment materials or to learn more about Dan R. Coombes disclosure and best practices in corporate Rogers’ DRIP, please visit computershare.com/ Director, Investor Relations governance. We invite you to visit the Investor rogers or contact Computershare as detailed 416-935-3550 or Relations section of rogers.com/investors earlier on this page. [email protected] where you will find additional information about our business including events and ELECTRONIC DELIVERY OF Media inquiries: 416-935-7777 presentations, news releases, regulatory filings, SHAREHOLDER MATERIALS governance practices, and our continuous Registered shareholders can receive CORPORATE PHILANTHROPY disclosure materials including quarterly electronic notice of financial reports and For information relating to Rogers’ financial releases, annual information forms proxy materials and utilize the Internet to various philanthropic endeavours, refer to and management information circulars. submit proxies on-line by registering at the “About Rogers” section of rogers.com You may also subscribe to our news by rogers.com/electronicdelivery. This approach e-mail or RSS feeds to automatically gets information to shareholders more quickly receive Rogers’ news releases electronically. than conventional mail and helps Rogers protect the environment and reduce printing SCAN THIS TO and postage costs. LEARN MORE FOLLOW ROGERS THROUGH THESE SOCIAL MEDIA LINKS rogers.com/investors Stay up-to-date FACEBOOK REDBOARD with the latest Rogers facebook.com/rogers redboard.rogers.com investor information

TWITTER SOCIAL GOOGLE + twitter.com/rogersbuzz http://social.rogers.com http://bit.ly/sp4I8I

CAUTION REGARDING FORWARD-LOOKING INFORMATION AND OTHER RISKS This annual report includes forward-looking statements about the financial condition and prospects of Rogers Communications which involve significant risks and uncertainties that are detailed in the “Risks and Uncertainties Affecting our Businesses” and “Caution Regarding Forward-Looking Statements, Risks and Assumptions” sections of the MD&A contained herein which should be read in conjunction with all sections of this annual report.

This report is printed on FSC certified paper. The fibre used in the © 2012 Rogers manufacture of the stock comes from well managed forests, controlled Communications Inc. sources and recycled wood or fibre. This annual report is recyclable. Other registered trademarks that appear are the property of the respective owners.

Design: Interbrand 8 trees 3,474 gal. of 385 lbs. 757 lbs. net 5,791,815 BTUs preserved wastewater solid waste greenhouse gases energy not Printed in Canada for the flow saved not generated prevented consumed future

130 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT “THE BEST IS YET TO COME.”

TED ROGERS / 1933–2008 ROGERS.COM