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Rogers Communications Inc. of life 2016 Annual Report At home, across the country and around the world – that’s the speed of life, and it’s never been faster. About

Rogers is a leading diversified Canadian communications and media company that’s working to deliver a great experience to our customers every day.

We are ’s largest provider of communications services and one of Canada’s leading providers of , high-speed , information technology, and services to consumers and businesses. Through Rogers Media, we are engaged in and television , sports, televised and online shopping, magazines and .

Our shares are publicly traded on the Stock Exchange (TSX: RCI.A and RCI.B) and on the (NYSE: RCI).

Page 3 Page 4 Page 5 Pages 7–15 Delivering on our 2016 financial and Segment Letter from strategy in 2016 operating results overview the CEO

Page 15 Pages 16–17 Page 18 Page 19 Looking Corporate Senior executive Directors ahead governance officers

Pages 20–21 Page 22 Page 23 Page 152 Corporate social Our vision 2016 financial Shareholder responsibility and values report information

2016 ANNUAL REPORT INC. 1 2 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT Delivering on our strategy in 2016

Total revenue Adjusted Free cash (In billions of dollars) operating profit (In billions of dollars) (In billions of dollars)

13.7 5.1 1.7 1.7 13.4 5.0 5.0 1.4 12.9

2014 2015 2016 2014 2015 2016 2014 2015 2016

5% 4bps 286k Wireless decrease Wireless service revenue in Wireless postpaid growth postpaid churn additions

compared to a churn rate 180k or 170% to 2% of 1.23% increase in 2015 in 2016 from 2015

11% 97k 56% Internet Internet increase in revenue growth net additions self-serve

the growth 60k or 162% transactions engine of our increase on the Cable segment from 2015 Rogers brand from 2015

2016 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 3 2016 financial and operating results

Total revenue Adjusted operating profit

Wireless 57% Wireless 63% $13.7 Cable 25% $5.1 Cable 32% Billion Billion Media 15% Media 3%

Business Solutions 3% Business Solutions 2%

KEY FINANCIAL INFORMATION Years ended December 31 (In millions of dollars, except margins and per share amounts, unaudited) 2016 2015 % Change

Total revenue 13,702 13,414 2 Total service revenue 1 13,027 12,649 3 Adjusted operating profit 2 5,092 5,032 1 Adjusted operating profit margin 2 37.2% 37.5% (0.3 pts) Net income 3 835 1,342 (38) Adjusted net income 2, 3 1,481 1,479 - Basic earnings per share 3 $1.62 $2.61 (38) Adjusted basic earnings per share 2, 3 $2.88 $2.87 - Additions to property, plant and equipment 2,352 2,440 (4) Cash provided by operating activities 3,957 3,747 6 Free cash flow 2 1,705 1,676 2 Annualized per-share dividend at year-end $1.92 $1.92 –

As at or years ended December 31 KEY PERFORMANCE INDICATORS 2016 2015 Change

Subscriber count results (000s) 1 Wireless postpaid net additions 286 106 180 Wireless prepaid net additions 111 75 36 Internet net additions 97 37 60 Television net losses (76) (128) 52 Phone net additions (losses) 4 (60) 64

Additional Wireless metrics 1 Postpaid churn (monthly) 1.23% 1.27% (0.04 pts) Postpaid ARPA (monthly) $117.37 $110.74 $6.63 Blended ARPU (monthly) $60.42 $59.71 $0.71

Ratios Capital intensity 1 17.2% 18.2% (1.0 pts) Dividend payout ratio of cash flow 2 58% 59% (1.0 pts) Return on assets 1,3 2.9% 4.6% (1.7 pts) Adjusted net debt / adjusted operating profit 2 3.0 3.1 (0.1)

1 As defined. See “Key Performance Indicators”. 2 Adjusted operating profit, adjusted operating profit margin, adjusted net income, adjusted basic earnings per share, free cash flow, dividend payout ratio of free cash flow, and adjusted net debt / adjusted operating profit are non-GAAP measures and should not be considered substitutes or alternatives for GAAP measures. They are not defined terms under IFRS and do not have standard meanings, so may not be a reliable way to compare us to other companies. See “Non-GAAP Measures” for information about these measures, including how we calculate them. 3 As a result of an IASB-issued clarification to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See “Accounting Policies” for more information.

4 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT Cable & Business Wireless Solutions Media

2016 Revenue 2016 Revenue 2016 Revenue

$7.9 $3.8 $2.1 Billion Billion Billion

l Service 92% l Television 41% l Sports 56% l Equipment 8% l Internet 39% l TV and Radio Broadcasting 22% l Phone 10% l The Shopping Channel l Business Solutions 10% and other 22%

Canada’s largest Ignite service provider #1 Gigabit sports media Internet service brand in Canada offered to our entire for the second Cable footprint year in a row in 2016

Owner of the 95%LTE 4.2 Million Toronto coverage homes passed, representing Blue Jays of Canada’s the largest cable footprint Baseball Club 1 population across ON, NB and NL

A Canadian Canada’s Operating leader in largest cable 51 radio stations M2M communications TV provider & 25 TV channels & IoT applications

1 , , and Newfoundland and Labrador

2016 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 5 6 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT Our 2016 results reflect solid execution of our plan and the value inherent in our unmatched asset portfolio.

Building for the long term

Fellow Shareholders,

In 2016, we took important strategic steps designed to build long-term shareholder value, while at the same time delivering strong results.

We continued to invest in our networks and our people to provide an ever-improving experience for our customers. Alan D. Horn Chairman of the Board Our 2016 results reflect solid execution of our plan and and Interim President and Chief Executive Officer the value inherent in our unmatched asset portfolio.

We achieved our best subscriber acquisition and retention metrics for a number of years, and revenue, adjusted operating profit and free cash flow all increased in line with our 2016 targets. Shareholder return for the year, which included $988 million in dividend payments, was 12.6%.

2016 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 7 We achieved our best subscriber metrics in recent years.

2016 Achievements Against Guidance 1 (in millions of dollars, except percentages) 2015 Actuals 2016 Guidance ranges 3 2016 Actuals Achievement

Consolidated Guidance Revenue 13,414 Increase of 1% to 3% 13,702 2.1% Adjusted operating profit 2 5,032 Increase of 1% to 3% 5,092 1.2% Additions to property, plant and equipment 3 2,440 2,300 to 2,400 2,352 n/m Free cash flow 2 1,676 Increase of 1% to 3% 1,705 1.7%

1 The table outlines guidance ranges for selected full-year 2016 consolidated financial metrics provided in our January 27, 2016 earnings release. Achieved Guidance ranges presented as percentages reflect percentage increases over 2015 actual results. 2 Adjusted operating profit and free cash flow are non-GAAP measures and should not be considered substitutes or alternatives for GAAP measures. These are not defined terms under IFRS and do not have standard meanings, so may not be a reliable way to compare us to other companies. See “Non-GAAP Measures” for information about these measures, including how we calculate them. 3 Includes additions to property, plant and equipment for the Wireless, Cable, Business Solutions, Media, and Corporate segments and does not include expenditures on spectrum licences.

We regained strong momentum in Wireless, Revenue, adjusted Late in 2016, we announced a long-term our largest segment, despite another year of operating profit strategic partnership with to bring intense competition. We gained more market and free cash flow Rogers customers a best-in-class video share than we have in several years, reinforcing experience by deploying the X1 all-IP-based all increased in our position as Canada’s largest wireless video platform. As a result, we terminated line with our provider. We also attracted the highest number our internal IPTV initiative. While the financial of new postpaid customers in Rogers history 2016 targets. impact of this was significant, we plan to offer while retaining more existing customers. customers a proven, scalable IPTV experience Our postpaid customer churn was at its beginning in early 2018. They will also benefit lowest level since 2010. from a continuous stream of the latest innovations in voice, data, video, smart home In Cable, Internet continued to be the growth monitoring, and other connected devices in engine of this business. Our product mix the home. In the interim, customers will see continues to shift to these higher-margin enhancements to our existing TV platform, services. At Rogers, we offer the fastest as well as new customer premise equipment widely available speeds in our marketplace. which will leverage our DOCSIS 3.1 network Accordingly, we reported double-digit Internet upgrade completed in 2016. revenue growth in 2016 and our Ignite Internet offerings are being experienced by an ever- Media delivered another year of compelling increasing number of Canadian households. content and entertainment. For the second year in a row, was the number one sports media brand in Canada. We made a commitment to shift from print to digital to keep pace with changing audience demands.

8 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT We regained strong momentum in our largest segment, Wireless, despite another year of intense competition.

2016 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 9 Roam Like Home has revolutionized the way our customers use their when they travel.

10 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT As always, our customers are at the centre of Rogers has Based on the Commissioner for Complaints everything we do, and our top priority is to consistently for Services 2015-2016 offer the products and services they want differentiated Annual Report, Rogers had a complaint and need for the best customer experience. resolution rate of 95% which was the best of any itself by With that in mind, we launched a number of major Canadian carrier. We still have significant investing in tools and offerings throughout the year to work to do and look forward to doing more for make our customers’ lives a little easier. our network to our customers in 2017, including offering more deliver leading self-serve options and new ways to interact with Among others, we expanded worry-free network service us digitally. wireless roaming; launched simplified, performance. mobile-first billing; and introduced a tool Rogers has consistently differentiated itself that allows families to manage their wireless by investing in our network to deliver leading data in real time. We also introduced Rogers network service performance. Today, more Unison, which offers the features of a than ever, this is critical to our ongoing traditional office desk phone system across success. The average number of connected multiple devices, allowing businesses to devices has increased to more than 10 per become more mobile and cost-effective. household. Customers are consuming more and more video content, including 4K television. We recognize our customers want simplicity Customers need more speed and capacity and immediacy when it comes to customer and this will only increase. We are in the best care. One of the ways we have addressed this position to provide this now and customers can is by investing in a variety of self-serve options, be sure that with Rogers, they will continue to including support. We were enjoy a leading Internet and video experience. the first telecommunications company in the world to launch customer care via Facebook Messenger, and this year, we were among the first globally to launch on Twitter. Our approach is resonating with customers, as we saw 56% more self-service transactions in 2016 than in the prior year.

Our customers are at the centre of everything we do.

2016 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 11 We offer the fastest widely available Internet speeds in our marketplace.

Our hybrid fibre-coax cable network allows us In 2016, we increased our investment in to scale efficiently in line with our customers’ training and development. We launched growing demands. In our footprint, 46% of 46% an intensive leadership program for more our residential Internet customers experience of our Internet than 160 executives, and we plan to broaden speeds of 100 Mbps or higher – twice as fast residential that program to include another 650 leaders. as our major competitor’s widely available This year we are also expanding our customers speed. In anticipation of our customers’ future onboarding program to include all of our needs, we also rolled out our Ignite Gigabit experience the 1,400 call centre employees. We again Internet service using the latest DOCSIS 3.1 benefits from garnered external recognition for our efforts technology to our entire footprint of more speeds of to make Rogers a great place to work when than four million homes in 2016. we were named one of Canada’s Top 100 100 Mbps Employers for the fourth consecutive year. Our Wireless spectrum and network or more. investments enable us to provide the Rogers has always been committed to connectivity, speed and reliability our making meaningful contributions to the customers have come to enjoy and expect. communities where we live and work. We expanded our multi-band LTE wireless This year, we expanded our Connected network coverage to 95% of Canada’s for Success program across our Cable population and continued to roll out our footprint. The program offers access to prime 700 MHz spectrum, which now covers affordable broadband Internet to more 91% of Canada’s population. than 150,000 low-income Canadians living in community housing. I encourage you to As with our networks, we are committed to review the corporate social responsibility making the right investments in our people to section of this annual report for a more ensure we deliver for our customers. Our goal detailed discussion of our commitments. has always been to attract, develop and retain the best people to serve our customers.

12 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT trademarks and/or copyright of Rogers Blue Jays Baseball Partnership. Used under license. under Used Partnership. Baseball Jays Blue Rogers of copyright and/or trademarks are photograph player and designs and marks related all uniform, JAYS, BLUE ™ TORONTO

Another successful season for the TM contributed to Sportsnet’s success as the #1 sports media brand in Canada.

2016 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 13 We intend to deliver sustainable long-term growth by making the most of the opportunities embedded in our existing assets.

14 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT Our 2017 guidance reflects a stronger growth outlook.

Full Year 2017 Guidance 1 (In millions of dollars, except percentages) 2016 Actual 2017 Guidance Ranges 1

Consolidated Guidance Revenue 13,702 Increase of 3% to 5% Adjusted operating profit 2 5,092 Increase of 2% to 4% Additions to property, plant and equipment, net 3 2,352 2,250 to 2,350 Free cash flow 2 1,705 Increase of 2% to 4%

1 Guidance ranges presented as percentages reflect percentage increases over full-year 2016 actual results. 2 Adjusted operating profit and free cash flow are non-GAAP measures and should not be considered substitutes or alternatives for GAAP measures. These are not defined terms under IFRS and do not have standard meanings, so may not be a reliable way to compare us to other companies. See “Non-GAAP Measures” for information about these measures, including how we calculate them. 3 Includes additions to property, plant and equipment for the Wireless, Cable, Business Solutions, Media, and Corporate segments net of proceeds on disposition, but does not include expenditures for spectrum licences.

Looking ahead

We begin 2017 with a strong financial We plan to In closing, I would like to thank our position, including investment grade debt enhance our customers, employees and shareholders ratings with stable outlooks. We plan to financial flexibility, for their support and my fellow Board enhance our financial flexibility, improve members for their stewardship and improve our our execution and capture cost efficiencies guidance. While 2017 will undoubtedly execution and and productivity improvements we see mark another year of fierce competition, throughout the business. This will position capture cost we will continue our journey of building us well to translate our revenue growth into efficiencies and long-term value for the benefit of all our increased profitability and free cash flow. productivity key stakeholders. As such, our 2017 guidance reflects a improvements we stronger growth outlook compared to see throughout our achievements in 2016. our business.

We have the right plan, tremendous strength in our 25,000 dedicated employees and executive team to build on the momentum Alan D. Horn we have established. As always our goal is Chairman of the Board and Interim President to deliver sustainable, long-term growth by and Chief Executive Officer making the most of the opportunities embedded in our existing assets.

2016 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 15 Corporate governance

As of February 9, 2017

“Rogers is committed to sound corporate governance practices and the structure of our Board is intended to ensure that the Directors and management act in the interests of all Rogers shareholders. Rogers benefits from the presence of strong, independent voices on our Board who add valued perspectives to oversight and decision making.”

Charles Sirois Lead Director Rogers Communications Inc.

Rogers Communications Inc.’s Board of Directors (the Board) biographies – in the Corporate Governance section at rogers. is strongly committed to sound corporate governance and com/governance. At this link, you will find a summary of the continually reviews its governance practices and benchmarks differences between the NYSE corporate governance rules them against acknowledged leaders and evolving legislation. applicable to U.S.-based companies and our governance We are a family-founded and controlled company and take practices as a non-U.S.-based issuer that is listed on the NYSE. pride in our proactive and disciplined approach towards ensuring that Rogers’ governance structures and practices are The Audit and Risk Committee reviews the Company’s deserving of the confidence of the public capital markets. accounting policies and practices, the integrity of the Company’s financial reporting processes and procedures Voting control of Rogers Communications Inc. is held by a and the financial statements and other relevant disclosures trust, of which members of the Rogers family are beneficiaries. for release to shareholders and the public. The Committee This trust holds voting control of Rogers Communications Inc. also assists the Board in its oversight of the Company’s for the benefit of successive generations of the Rogers family. compliance with legal and regulatory requirements relating As substantial stakeholders, the Rogers family is represented to financial reporting; assesses the accounting systems and on our Board and brings a long-term commitment to oversight financial control systems; and evaluates the qualifications, and value creation. At the same time, we benefit from having independence and work of external and internal auditors. outside directors who are experienced North American It also reviews risk management policies and associated business leaders. processes to identify major risk exposures.

The Board believes that the Company’s governance and risk The Corporate Governance Committee assists and makes management systems are effective and that the appropriate recommendations to ensure the Board has developed structures and procedures are in place. appropriate systems and procedures to enable it to exercise The composition of our Board and structure of its various and discharge its responsibilities. To carry this out, the committees are outlined in the table on the next page. As well, Corporate Governance Committee assists the Board in we make available detailed information on our governance developing, recommending and establishing corporate structures and practices – including our complete Statement governance policies and practices, and leads the Board of Corporate Governance Practices, our codes of conduct in its periodic review of the performance of the Board and ethics, full committee charters and Board member and its committees.

16 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT Board of Directors and its Committees

Chair Member Audit Corporate Nominating Human Executive Finance Pension and Risk Governance Resources

Alan D. Horn, cpa, ca

Charles Sirois

C. William D. Birchall

Bonnie R. Brooks

Robert K. Burgess

John H. Clappison, fcpa, fca

Philip B. Lind, cm

John A. MacDonald

Isabelle Marcoux

The Hon. David R. Peterson, pc, qc

Edward S. Rogers

Loretta A. Rogers

Martha L. Rogers

Melinda M. Rogers

The Nominating Committee identifies prospective Director Rogers’ good governance practices nominees for election by the shareholders and for appointment by the Board and also recommends nominees for each Separation Formal Corporate committee of the Board, including each committee’s Chair. Independent of CEO and Governance Lead Director Chairman Roles 1 Policy and Charters The Human Resources Committee assists the Board in monitoring, reviewing and approving compensation and benefit policies and practices. The Committee is responsible Code of Business Board and Director Share Conduct and Committee for recommending senior management compensation Ownership Whistleblower In Camera Guidelines and for monitoring succession planning with respect to Hotline Discussions senior executives. Audit and Annual Reviews Risk Committee Orientation The Executive Committee assists the Board in discharging of Board and Meetings with Program for Committee its responsibilities in the intervals between meetings of the Internal and External New Directors Performance Board, including to act in such areas as specifically designated Auditors and authorized at a preceding meeting of the Board and to Committee consider matters concerning the Company that may arise Board Director Material Authority to Education Relationship from time to time. Retain Independent Sessions Standards Advisors The Finance Committee reviews and reports to the Board on matters relating to the Company’s investment strategies 1 As a result of the departure of our former CEO, on an interim basis the roles of CEO and Chairman are not separated. The roles of CEO and Chairman will again be seperate once and general debt and equity structure. our new CEO commences at Rogers.

The Pension Committee supervises the administration of the Company’s pension plans and reviews the provisions and investment performance of the Company’s pension plans.

For a complete description of Rogers’ corporate governance structure and practices and copies of our annual information circular and proxy, go to rogers.com/investors

2016 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 17 Senior executive officers

1 2 3 4 5

6 7 8 9 10

11 12

For detailed biographical information of Rogers’ Executive Officers go to rogers.com/investors

1 Alan D. Horn, cpa, ca 6 Nitin Kawale 11 Jamie Williams Interim President and President, Chief Information Officer Chief Executive Officer Enterprise Business Unit 12 Dirk Woessner 2 Bob Berner 7 Deepak Khandelwal President, Chief Technology Officer Chief Customer Officer Consumer Business Unit

3 Frank Boulben 8 David Miller Chief Strategy Officer Chief Legal Officer and Secretary

4 Rick Brace 9 Jim Reid President, Chief Human Resources Officer Media Business Unit 10 Anthony Staffieri, fcpa, fca 5 Dale Hooper Chief Financial Officer Chief Brand Officer

18 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT Directors

1 2 3 4 5

6 7 8 9 10

11 12 13

For detailed biographical information of Rogers’ Directors go to rogers.com/investors

* Alan D. Horn, cpa, ca 4 Robert K. Burgess 9 The Hon. David R. Peterson, pc, qc Chairman Company Director Chairman Emeritus Rogers Communications Inc. Cassels Brock & Blackwell LLP * Pictured on previous page 5 John H. Clappison, fcpa, fca Company Director 10 Edward S. Rogers 1 Charles Sirois, cm Deputy Chairman Lead Director 6 Philip B. Lind, cm Rogers Communications Inc. Vice Chairman 11 Loretta A. Rogers Chairman Company Director Telesystem Ltd. 7 John A. MacDonald Company Director 12 Martha L. Rogers 2 C. William D. Birchall Company Director Company Director 8 Isabelle Marcoux Chair 13 Melinda M. Rogers 3 Bonnie R. Brooks, cm Transcontinental Inc. Company Director Company Director

2016 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 19 Corporate social responsibility

We’re always striving to do what’s right for our stakeholders and our country, whether it’s providing access to the Internet to people who can’t afford it, exercising environmental stewardship across our organization, or ensuring our suppliers are living up to our own values.

Our Connected for Success program offers In addition to ensuring that our products are access to affordable broadband Internet to over made while upholding sustainability principles, 150,000 Canadians with low-incomes living we also ensure that our products and services in community housing. Originally launched in are inclusive and accessible. We have a team of 2013 in partnership with Toronto Community Recognized customer service representatives who specialize Housing, we expanded the program in 2016 so as one of in our accessibility offerings. We continue to that it is now available for residents in non-profit Canada’s offer a wireless accessibility data and text plan housing organizations across our Cable footprint, Top 100 for people who are deaf or hard-of-hearing or giving them the tools and resources needed to have speech impediments. The plan includes experience the benefits of connectivity. Employers. unlimited messaging and adjusts based on the customer’s monthly usage. In 2016, we made significant strides to ensure that our suppliers are adhering to ethical and We continue to make steady progress towards sustainable practices that meet with our own our environmental targets to reduce our values. In early 2016, we joined the Joint Audit greenhouse gas emissions and energy usage Cooperation (JAC), a group of global telecom by 25% and 10%, respectively, by 2025, based companies that share common suppliers. on 2011 levels. We were once again named Through our participation in JAC, we share audit as one of Canada’s Greenest Employers by results among our peers to ensure that our . We also received our best-ever suppliers adhere to internationally recognized score from our 2016 Carbon Disclosure Project supply chain and sustainability standards along submission – receiving an overall grade of B, the ICT supply chain, upholding human rights ahead of our industry and Canadian average and social, labour and environmental standards. of C, demonstrating that we are taking the Rogers was the first Canadian company to join necessary steps to reduce our carbon emissions. JAC and we began our first audits in 2016.

20 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT In 2016, Rogers Hometown Hockey returned to host events in 24 new Canadian communities, uniting hockey fans and families across the country.

In 2016, we continued to invest in lighting upgrades, temperature adjustments and equipment run times in order to reduce energy consumption. We’ve also made energy In addition, we’re continuing to support the improvements, with more energy efficient Canadian economy through our business and computers, monitors and lighting. Our waste community investments. Over the last year, reduction programs have also continued to take we’ve donated approximately $60 million hold. Our Get Up & Get Green internal waste through cash and in-kind donations to various program has allowed us to centralize waste bins charitable organizations and causes and our and allow for better sorting measures. Jays Care Foundation funds programs and facilities that promote physical activity, education Within our business, we have also invested in and life-skill development among Canadian the employee experience by delivering more youth. As well, through the Rogers Employee training and development programs. In 2016, Volunteer program, employees are given our employee engagement score rose by two one paid day off annually, to volunteer at the points to 78%, showing that our investments are registered charity of their choice. making an impact on our employees. We were also recognized once again this year as one of We look forward to continuing our stewardship Canada’s Top 100 Employers, one of Canada’s as a responsible corporate citizen for all of the Best Diversity Employers, one of Canada’s Top stakeholders of our organization. Employers for Young People and one of Greater Toronto’s Top Employers. For more information on Corporate Social Responsibility at Rogers, please see our website rogers.com/csr and look out for our 2016 CSR Report, which will be released in spring 2017.

2016 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 21 Our vision and values

We aspire to grow our company by building a brilliant digital future for Canadians

Who We Are We are Rogers, a Canadian family business. We believe in innovation in everything we do. We invest ahead of the curve, and build for tomorrow. We deliver value and quality. We don’t cut corners. We understand you’re really busy, so we make things simple. Customers are part of our family, and we always look after family. We train and develop our people so you can always rely on us. We work as one team, with one goal: to serve you better. We love what we do. Tomorrow, we aim to do it even better. “The best is yet to come.” — Ted Rogers

What We Believe In How We Work

The world always needs new ideas Simplify and innovate The customer’s problems are ours to solve Take ownership of the what and the how Investing in people always pays off Equip people to succeed Being the best is the only goal worth having Execute with discipline and pride We win as a team, or not at all Talk straight, build trust, and over deliver

22 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 23 ROGERS COMMUNICATIONS INC. ar Summary of Consolidated Financial Results 2016 ANNUAL REPORT Guarantor Risks and Uncertainties Affecting Our Business Equity 87 Accounting Policies 71 Governance73 at Rogers Social Responsibility 105 Consolidated Statements of Cash Flows 106 Notes to Consolidated Financial Statements 104 Consolidated Statements of Changes in Shareholders’ 87 Other Information 98 CONSOLIDATED FINANCIAL STATEMENTS 98 Management’s Responsibility for Financial99 Reporting Report of Independent Registered101 Public Accounting Firm Consolidated Statements of Income 102 Consolidated Statements of Comprehensive Income 71 Governance and Risk Management hts 96 Summary of Financial Results of Long-Term Debt Compared to 2015 62 Sources65 and Uses of Cash Financial66 Condition Financial70 Risk Management Dividends71 and Share Information Commitments71 and Contractual Obligations Off-Balance Sheet Arrangements 38 201739 Objectives Financial and Operating Guidance 97 Five-Ye 47 Wireless 50 Cable 52 Business53 Solutions Media 54 Additions55 to Property, Plant and Equipment Review58 of Consolidated Performance Quarterly61 Results Overview of Financial Position 35 Our36 Strategic Priorities 201636 Objectives Key Performance Drivers and 2016 Strategic Highlig 91 Key Performance Indicators 93 Non-GAAP Measures 45 Summary46 of Consolidated Results KeyChangesinFinancialResultsThisYear 40 Leading42 Networks Powerful42 Brands Widespread43 Product Distribution First43 Class Media Content Customer43 Experience Engaged43 People Financial44 Strength and Flexibility Healthy Trading Volumes and Dividends Highlights 30 Products32 and Services Competition34 Industry Trends 83 Wireless 85 86 Cable Media 26 About27 Rogers 201629 Highlights Financial Highlights 74 81 75 Risk Management Controls and Procedures 62 Managing Our Liquidity and Financial Resources 40 Capability to Deliver Results 45 2016 Financial Results 103 Consolidated Statements of Financial Position 35 Our Strategy, Key Performance Drivers, and Strategic 30 Understanding Our Business 82 Regulation in Our Industry 26 Executive Summary 2016 Financial Report 24 MANAGEMENT’S DISCUSSION AND ANALYSIS MANAGEMENT’S DISCUSSION AND ANALYSIS

Management’s Discussion and Analysis This Management’s Discussion and Analysis (MD&A) contains Our forward-looking information and statements include forecasts important information about our business and our performance for and projections related to the following items, some of which are the year ended December 31, 2016. This MD&A should be read in non-GAAP measures (see “Non-GAAP Measures” for more conjunction with our 2016 Audited Consolidated Financial information), among others: Statements, which have been prepared in accordance with • revenue; International Financial Reporting Standards (IFRS) as issued by the • total service revenue; International Accounting Standards Board (IASB). • adjusted operating profit; • additions to property, plant and equipment; All dollar amounts are in Canadian dollars unless otherwise stated. • cash income taxes; All percentage changes are calculated using the rounded numbers •freecashflow; as they appear in the tables. Charts, graphs, and diagrams are •dividendpayments; included for reference; however, they do not form part of this • the growth of new products and services; MD&A. This MD&A is current as at February 9, 2017 and was • expected growth in subscribers and the services to which they approved by the Rogers Communications Inc. Board of Directors subscribe; (theBoard).ThisMD&Aincludesforward-lookingstatementsand • the cost of acquiring and retaining subscribers and deployment assumptions. See “About Forward-Looking Information” for more of new services; information. • continued cost reductions and efficiency improvements; We, us, our, Rogers, Rogers Communications, and the Company • traction against our ratio of adjusted net debt / adjusted refer to Rogers Communications Inc. and our subsidiaries. RCI operating profit; and refers to the legal entity Rogers Communications Inc., not including • all other statements that are not historical facts. our subsidiaries. Rogers also holds interests in various investments Specific forward-looking information included or incorporated in and ventures. this document includes, but is not limited to, our information and We are publicly traded on the (TSX: RCI.A statements under “Financial and Operating Guidance” relating to and RCI.B) and on the New York Stock Exchange (NYSE: RCI). our 2017 consolidated guidance on revenue, adjusted operating profit, additions to property, plant and equipment, and free cash In this MD&A, this year refers to the year ended December 31, flow. All other statements that are not historical facts are forward- 2016, and last year refers to the year ended December 31, 2015. looking statements. All results commentary is compared to the equivalent period in 2015 or as at December 31, 2015, unless otherwise indicated. We base our conclusions, forecasts, and projections (including the aforementioned guidance) on the following factors, among others: • general economic and industry growth rates; ABOUT FORWARD-LOOKING INFORMATION • currency exchange rates and interest rates; • product pricing levels and competitive intensity; This MD&A includes “forward-looking information” and “forward- • subscriber growth; looking statements” within the meaning of applicable securities • pricing, usage, and churn rates; laws (collectively “forward-looking information”), and assumptions • changes in government regulation; about, among other things, our business, operations, and financial • technology deployment; performance and condition approved by our management on the • availability of devices; date of this MD&A. This forward-looking information and these • timing of new product launches; assumptions include, but are not limited to, statements about our • content and equipment costs; objectives and strategies to achieve those objectives, and about • the integration of acquisitions; and our beliefs, plans, expectations, anticipations, estimates, or • industry structure and stability. intentions. Except as otherwise indicated, this MD&A and our forward-looking Forward-looking information: statements do not reflect the potential impact of any non-recurring • typically includes words like could, expect, may, anticipate, or other special items or of any dispositions, monetizations, assume, believe, intend, estimate, plan, project, guidance, mergers, acquisitions, other business combinations, or other outlook, target, and similar expressions, although not all forward- transactions that may be considered or announced or may occur looking information includes them; after the date the statement containing the forward-looking • includes conclusions, forecasts, and projections based on our information is made. current objectives and strategies and on estimates, expectations, assumptions, and other factors, most of which are confidential and proprietary and that we believe to have been reasonable at thetimetheywereappliedbutmayprovetobeincorrect;and • was approved by our management on the date of this MD&A.

24 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 25 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT BEFORE MAKING AN INVESTMENT DECISION Before makingdiscussion any of the investment risks,with decisions uncertainties, our and business, and environment fully“Regulation associated review for the in sections aManagement”, in as this detailed Our well MD&A asand entitled US Industry” our securities various regulators which othersec.gov, and can respectively. filings be found with at “Governance Canadian sedar.com and andFOR Risk MORE INFORMATION You can findInformation more information Form, aboutSEDAR on (sedar.com), us, and on including our EDGARat (sec.gov), our or [email protected]. website Annual you Information can e-mail (rogers.com/investors), onto us these or and on connected any othernot websites constitute referenced part in of this this MD&A. document does You can also go togovernance rogers.com/investors practices, for information corporate aboutglossary social our responsibility of reporting,additional a communications information about our business. and media industry terms, and plans. We are undersuch no obligation obligation) (and we toforward-looking expressly disclaim update any information orunderlying alter them, or whether anyevents, as statements the a or containing result factorsforward-looking otherwise, of new information except or information, incautionary as future statements herein. assumptions this required MD&A by is law. qualified All by of the the and/or information industries; accounting standards bodies. These factorsintentions. can Many of alsocurrent these expectations affect factors or are knowledge. ourrisks, beyond Should one our objectives, uncertainties, or control more or strategies,strategies, or of other our these and or factorsassumptions materialize, intentions underlying ourincorrect, the change, objectives, our forward-looking actual or resultsfrom information what and we prove currently our any foresee. plans could other varyAccordingly, significantly factors weconsidering or warn statementsand containing investors caution forward-looking them to thatstatements information it as would creating exercise be legal unreasonable rights caution regarding to our rely future on when results such or RISKS AND UNCERTAINTIES Actual events and results canexpressed be substantially or different implied from what byrisks, is forward-looking uncertainties, and information other becauseour control, factors, of including but many not of limited• to: which regulatory are changes; beyond • technological changes; • economic conditions; • unanticipated changes in content• or equipment changing costs; conditions in• the the communications, integration of acquisitions; • entertainment, litigation and tax matters; • the level of competitive• intensity; the emergence of new• opportunities; and new interpretations and new accounting standards from MANAGEMENT’S DISCUSSION AND ANALYSIS

Executive Summary ABOUT ROGERS Rogers is a leading diversified Canadian communications and media company. Rogers is a leading diversified Canadian communications and 2016 REVENUE BY SEGMENT media company that’s working to deliver a great experience to our (%) customers every day. We are Canada’s largest provider of wireless communications services and one of Canada’s leading providers of WIRELESS 57% cable television, high-speed Internet, information technology, and CABLE 25% telephony services to consumers and businesses. Through Rogers Media, we are engaged in radio and , $13.7 sports, televised and online shopping, magazines, and digital Billion MEDIA 15% media. BUSINESS SOLUTIONS 3% Almost all of our operations and sales are in Canada. We have a highly skilled and diversified workforce of approximately 25,200 employees. Our head office is in Toronto, Ontario and we have numerousofficesacrossCanada. 2016 ADJUSTED OPERATING PROFIT BY SEGMENT (%)

FOUR REPORTING SEGMENTS WIRELESS 63% We report our results of operations in four reporting segments. Each segment and the nature of its business are as follows: CABLE 32%

Segment Principal activities $5.1 MEDIA 3% Billion Wireless Wireless telecommunications operations for Canadian consumers and businesses. BUSINESS SOLUTIONS 2% Cable Cable telecommunications operations, including Internet, television, and telephony (phone) services for Canadian consumers and businesses. Business Solutions Network connectivity through our fibre network and data centre assets to support a range of voice, data, networking, hosting, and cloud-based services for the enterprise, public sector, and carrier wholesale markets. Media A diversified portfolio of media properties, including sports media and entertainment, television and radio broadcasting, specialty channels, multi-platform shopping, digital media, and publishing.

26 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 27 liable way to 172 (2) 377116 2 6 8.3% (0.4 pts) 2015 % Chg 2,079 3 1,658 1 3,465 – 3,239 1 7,651 3 5,0321,479 1 1,676 – 2 3,747 6 1,342 (38) 47.8% 0.7 pts 30.8% 1.2 pts 46.9% (1.6 pts) 37.5% (0.3 pts) 12,649 3 13,414 2 P measures and should not $ 2.61$2.87 – (38) Years ended December 31 169 384 123 835 ROGERS COMMUNICATIONS INC. 7.9% 2016 2,146 1,674 3,449 3,285 7,916 5,092 1,481 1,705 3,957 48.5% 32.0% 45.3% 37.2% 13,027 13,702 $1.62 $2.88 2016 ANNUAL REPORT , certain amounts have been retrospectively amended. See “Accounting Income Taxes defined terms under IFRS and do not have standard meanings, so may not be a re rmation about these measures, including how we calculate them. 2, 3 2 2 3 2, 3 1 2 3 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 As defined. See “Key Performance Indicators”. Adjusted operating profit, adjusted operating profitbe margin, considered adjusted net substitutes income, or adjustedcompare alternatives basic us earnings for to per other GAAP share, companies. measures. and See “Non-GAAP free These Measures” cash are for flow info are not non-GAA Policies” for more information. Adjusted operating profit Adjusted operating profit margin Adjusted operating profit margin Business Solutions Revenue Adjusted operating profit Adjusted operating profit margin Media Revenue Adjusted operating profit Adjusted operating profit margin as a % of serviceCable revenue Revenue Adjusted operating profit Adjusted operating profit margin Basic earnings per share Wireless Revenue Free cash flow Adjusted net income Adjusted operating profit (In millions of dollars, except margins and per share amounts) 3 1 2 2016 HIGHLIGHTS KEY FINANCIAL INFORMATION Adjusted basic earnings per share Cash provided by operating activities Net income Consolidated Total revenue Total service revenue MANAGEMENT’S DISCUSSION AND ANALYSIS

KEY PERFORMANCE INDICATORS As at or years ended December 31 2016 2015 Chg Subscriber count results (000s) 1 Wireless postpaid net additions 286 106 180 Wireless prepaid net additions 111 75 36 Wireless subscribers 10,274 9,877 397

Internet net additions 97 37 60 Internet subscribers 2,145 2,048 97

Television net losses (76) (128) 52 Television subscribers 1,820 1,896 (76)

Phone net additions (losses) 4 (60) 64 Phone subscribers 1,094 1,090 4 Additional Wireless metrics 1 Postpaid churn (monthly) 1.23% 1.27% (0.04 pts) Postpaid ARPA (monthly) $ 117.37 $110.74 $ 6.63 Blended ARPU (monthly) $ 60.42 $ 59.71 $ 0.71 Ratios Capital intensity 1 17.2% 18.2% (1.0 pts) Dividend payout ratio of net income 1, 2 118.0% 74.0% 44.0 pts Dividend payout ratio of free cash flow 1, 3 57.9% 58.9% (1.0 pts) Return on assets 1, 2 2.9% 4.6% (1.7 pts) Adjusted net debt / adjusted operating profit 3 3.0 3.1 (0.1) Employee-related information Total active employees (approximate) 25,200 26,200 (1,000)

1 As defined. See “Key Performance Indicators”. 2 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See “Accounting Policies” for more information. 3 Dividend payout ratio of free cash flow and adjusted net debt / adjusted operating profit are non-GAAP measures and should not be considered substitutes or alternatives for GAAP measures. These are not defined terms under IFRS and do not have standard meanings, so may not be a reliable way to compare us to other companies. See “Non-GAAP Measures” for information about these measures, including how we calculate them.

28 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 29 2,146 2,079 1,826 169 172 131 $2.88 $2.87 $2.97 382 123 116 122 384 377 3,467 1,674 1,658 1,665 3,449 3,465 7,305 3,285 3,239 3,246 7,916 7,651 Media Media ROGERS COMMUNICATIONS INC. under our $1.05 billion accounts Business Solutions Business Solutions Business 2016 ANNUAL REPORT Cable Cable Wireless Wireless ADJUSTED BASIC EARNINGS PER SHARE ($) 2016 2015 2014 ADJUSTED OPERATING PROFIT BY SEGMENT (IN MILLIONS OF DOLLARS) 2016 2015 2014 REVENUE BY SEGMENT (IN MILLIONS OF DOLLARS) 2016 2015 2014 and Chief Executivecurrently Officer, acting effective as JulyOfficer. our 2017. Interim Alan President Horn and is ChiefComcast Executive to bringcustomers in their early 2018. X1substantial Customers will IP-based research benefit from and video Comcast’s continuing commitment development to platform innovation. investments to and our their liquidity (2015 –(2015 $3.3 – $0.01 billion), billion), $2.4 comprisedfacilities billion available of (2015 under our nil – bank $3.0 cash credit our billion), on $1.05 and hand $0.25 billion(2015 billion – accounts available $0.25 under billion receivablereceivable available securitization program). securitization program to 3.0 as at December 31, 2016 from 3.1 as at December 31, at December 31, 2016 (2015average – 4.82%) term and to ourDecember overall 31, maturity weighted 2016 (2015 on – 10.8 years). our debt was 10.6 years as at 2015. OTHER SIGNIFICANT DEVELOPMENTS • We announced our intention to hire Joseph Natale as President • Late in 2016, we announced a long-term agreement with LIQUIDITY POSITION • Ended the year with approximately $2.7 billion of available • Our adjusted net debt / adjusted operating profit ratio improved • Issued US$500 million ($671• million) of 2.9% Our senior overall notes due weighted 2026. average cost of borrowings was 4.72% as tially offset by lower adjusted r subscriber base and movement ping this product and develop a (IPTV) product because of our operatingprofitinMedia. to $3,957 million asnon-cash a working result capital of and lower higherincreased interest net 2% paid. funding Free this provided cashadjusted year by flow operating to profit $1,705 and lowerand million equipment, additions partially as to offset property, by a higher plant result cash income of taxes. higher outstanding debt, continue to makeand investments return in substantial our dividends network, tomillion in shareholders. dividends We in paid 2016. $988 decision to discontinue develo of the impairment andInternet related Protocol charges we television recognized on our long-term relationship with Comcast Corporationdeploy (Comcast) and their X1restructuring, IP-based acquisition video andlosses associated platform, other with along the costsConsolidated wind Performance” with down and for more of higher information. higher . See equity “Review of result of the growth inour on-net next generation data services (including continued centre planned businesses), reductionrevenue. in which lower more margin, off-net than legacy revenue, offset driven by the thethe strength of Toronto Sportsnet Blue and Jays,publishing the and success partially radio of advertising. offset by continued softness in consolidated adjustedresulting operating from higher profit adjusted margin operating of profit in 37.2%, Wireless, of customers to higher-end speedlower and Television usage and tiers Phone wassubscriber revenue, offset primarily losses by due over to thepricing Television packages. past We year reported andnet positive additions the Cable in 2016, impact total driven of serviceup by 60,000 Internet unit Phone net year additions on of year,continue 97,000, and improved to Television see netmargin losses. an We Internet ongoing services,base shift with now on in 46% plans product withsecond of or download mix higher. our speeds of to residential 100 higher- Internet megabits per service revenue growth of 5%. subscriber base and the continuedARPA-generating adoption of higher-postpaid- Rogersincrease in Share data usage on these Everything plans. plansInternet revenue and from the the large Cable, and Business Solutions, par • Our cash provided by operating activities increased 6% this year CASH FLOW • Our substantial cash flow generation enabled us to reduce NET INCOME • Net income decreased 38% to $835 million, primarily as a result • Business Solutions revenue increased this year primarily as a • Media revenue increased as a result of higher sports-related • Adjusted operating profit increased 1% this year, with a FINANCIAL HIGHLIGHTS REVENUE AND ADJUSTED OPERATING PROFIT • Revenue increased by 2% this year,• primarily driven Wireless by service Wireless revenue increased largely as a result of a larger • Cable revenue decreased marginally as the 11% increase in MANAGEMENT’S DISCUSSION AND ANALYSIS

Understanding Our Business Rogers is a leading diversified Canadian communications and PRODUCTS AND SERVICES media company. We report our results based on four reporting segments, as follows: WIRELESS Rogers is a Canadian leader in innovative Wireless provides wireless voice and services technologies and services. We provide postpaid and prepaid to individual consumers, businesses, governments, and other wireless services under the Rogers, Fido, and brands, and telecommunications service providers. Our wireless network is one provide consumers and businesses with the latest wireless devices, of the most extensive and advanced independent high-speed services, and applications including: wireless data networks in Canada, capable of supporting wireless • mobile and fixed high-speed Internet access; services on smartphones, tablets, computers, and a broad variety of • wireless voice and enhanced voice features; machine-to-machine and specialized devices. See “Capability to • wireless home phone; Deliver Results” for more information about our extensive wireless • device protection; network and significant spectrum position. • text messaging; Cable provides high-speed Internet, television, and voice •e-mail; communication services to consumers, businesses, governments, • global voice and data roaming, including Roam Like Home and and wholesale resellers, leveraging our expansive fibre and hybrid Fido Roam; fibre-coaxial network infrastructure in Ontario, New Brunswick, and • bridging phones with wireless phones; Newfoundland and Labrador. See “Capability to Deliver Results” • machine-to-machine solutions; and for more information about our expansive cable networks. • advanced wireless solutions for businesses.

Business Solutions provides voice and data communications and CABLE advanced services, including data centres and cloud computing, to Our cable network provides an innovative and leading selection of the enterprise, public sector, and carrier wholesale markets over high-speed broadband Internet access, and online our fibre network facilities. viewing, phone, and advanced home Wi-Fi services to consumers Media provides services in sports media and entertainment and businesses in Ontario, New Brunswick, and Newfoundland and (including both the Toronto Blue Jays and our 12-year, exclusive Labrador. national licensing agreement (NHL Agreement) with the National Internet services include: Hockey League (NHL) to broadcast all nationally televised live NHL • Internet access (including basic and unlimited usage packages), hockey games within Canada on multiple platforms), television and security solutions, and e-mail; radio broadcasting, multi-platform shopping experiences, digital • access speeds of up to one gigabit per second (Gbps), covering media, and publishing. our entire Cable footprint; During the year, our Wireless, Cable, and Business Solutions • Rogers Ignite unlimited packages, combining fast and reliable reporting segments were operated by our wholly-owned speeds with the freedom of unlimited usage; and subsidiary, Rogers Communications Canada Inc. (RCCI). In 2015, • plans available under both the Rogers and Fido brands. those segments were operated by Rogers Communications Television services include: Partnership (RCP), and certain other wholly-owned subsidiaries. • local and network TV, including starter and premium channel Our Media reporting segment is operated by our wholly-owned packages along with à la carte channels; subsidiary, Rogers Media Inc., and its subsidiaries. • on-demand television; On January 1, 2016, Inc., a subsidiary of RCI, • personal video recorders (PVRs), including Whole Home PVRs transferred its partnership interest in RCP to and Data and a 4K PVR; Centres Inc. (RCDCI), a subsidiary of RCI, leaving RCDCI as the sole • linear and time-shifted programming; partner of RCP, thereby causing RCP to cease to exist. RCDCI • digital specialty channels; became the owner of all the assets and assumed all the liabilities • 4K television programming, including all 2016 and 2017 regular previously held by RCP. Subsequent to the reorganization, RCDCI season Toronto Blue Jays home games and select marquee NHL changed its name to Rogers Communications Canada Inc. and National Basketball Association (NBA) games; and • Rogers Anyplace TV, televised content delivered on smartphones, tablets, and personal computers. Phone services include: • residential and small business local telephony service; and • calling features such as voicemail, call waiting, and long distance.

30 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 31 ian retail distribution outlets. ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT an innovativeautomation home system; and or business monitoring,that allow security, customers to and card earn spending. cashback rewards points on credit Entertainment Ltd. (MLSE), which ownsthe the Toronto , Raptors,well Toronto as FC, various associated and real estate the holdings; and ,provider as ofservices multicarrier with several hundred wireless Canad and wireline products and GameCentre LIVE and Sportsnet NOW; Chatelaine, Today’s Parent, Flare, and Hello! Canada; unlimited access to a catalogueand US of magazine over titles; 230 and premium Canadian across new and existing platforms. OTHER Other services we offer to consumers• and businesses include: Rogers Smart Home Monitoring and Smart Business Monitoring, • Rogers Platinum MasterCard and Fido MasterCard, credit cards OTHER INVESTMENTS We holdarrangements, some of interests which include: • in our a 37.5% number ownership of interest associates in and Maple• our joint Leaf 50% ownership Sports interest & in Glentel Inc. (Glentel), a large As part ofservices our and products include: strategic change• to our focus on digital digital media, sports-related• our many assets, well-known including consumer• Rogers brands, by Next NHL Issue, such our digital magazine as service, which offers Maclean’s, • a broad digital presence that continues the extension of content In Sports Media and Entertainment,Canada’s we only own Major the League Toronto BaseballCentre Blue (MLB) Jays, event team, and venue, thegames, Rogers concerts, which shows, hosts and special the events. TorontoOur Blue NHL Jays’ Agreement,season, home which allows beganprofessional hockey, with us with the moreper than to 2014-2015 season 1,200 streamed regular NHL across deliverthe season television, Internet, games both smartphones, unprecedented through tablets,Rogers traditional and streaming NHL coverage services GameCentre as Live.Rogers well of national Our as rights NHL on Agreement thoseStanley platforms also Cup to grants Final, the NHLevents all playoffs (such NHL-related and as special therights events to NHL and sublicense All-Star non-game broadcasting GameBroadcasting rights and Corporation to the (CBC) TVA NHL and andCanada the brand Draft), to through Canadian and use a sublicense the agreement. Hockey Night In l conventional and specialty ss networks services for primary, et, and multi-protocol label for businesses that have one or their IT infrastructure in theand cloud securely and cost effectively; their networks atanalytics any via site aunderstand web and how portal; view theiranywhere; this network and network allows performance is customers being to used, better from almost bridging, and back-up connectivity. and ; broadcast distributionhouseholds; to approximately 86% of Canadian Outdoor Life Network, , and G4 Canada; and shopping channel, whichportion generates of its a revenue from significant online and sales. growing • Rogers Public Cloud, which enables businesses to manage services over multiservicecustomers to customer scale access and addInternet, devices services, IP such voice, that as and private cloud allow grow networking, solutions, with which their blend business seamlessly requirements; to technologiesprofessionally-managed solutions, including: with• Managed Wi-Fi, which security-embedded, allows customers to remotely monitor cloud-based, switching services, providingwide scalable area and privatecritical secure networking business metro that applications many and enables offices, and data interconnects cloud centres, applications) across Canada; or points of presence (as well as MEDIA Our portfolio ofcoast. Media assets reaches CanadiansIn from coast Television, to we operate severa In Radio, we operatemarkets more across than Canada, 5098.1 including AM CHFI, and popular FM 680 radio radioSONiC. NEWS, brands stations Sportsnet such in The as FAN, KiSS, JACK FM, and television networks: • Sportsnet’s four regional stations, , , • City network, which, together with• OMNI affiliated multicultural broadcast television• stations; stations, specialty has channels that include• FX The Shopping (Canada), Channel (TSC), Canada’s FXX only nationally (Canada), televised • extensive wireless and cable acce BUSINESS SOLUTIONS Our services aim to meetbusiness the applications. increasing These demands services of include: today’s• critical voice, data networking, Internet protocol (IP), and • optical wave, Internet, Ethern • simplified “leapfrog” information technology (IT) and network MANAGEMENT’S DISCUSSION AND ANALYSIS

COMPETITION CABLE Internet Competition in the wireless industry from national and regional We compete with other Internet Service Providers (ISPs) that offer operators and resellers has led to a highly competitive residential and commercial high-speed Internet access services. environment, as consumers have considerable choice in service Rogers and Fido high-speed Internet services compete directly providers and plan offerings across a wide array of pricing and with: service points. This puts downward pressure on pricing, potentially • Bell and ’s Internet service in Ontario; reducing profit margins, and could also affect our customer churn. • ’s Internet services in New Brunswick and Traditional wireline telephone and television services are now Newfoundland and Labrador; and offered over the Internet. This has allowed more non-traditional • various resellers using wholesale company providers to enter the market and has changed how traditional digital subscriber line (DSL) and cable Third-Party Internet Access providerscompete.Thisischangingthemixofpackagesand (TPIA) services in local markets. pricing that service providers offer and could affect customer churn levels. Television We compete with: In the media industry, there continues to be a shift towards digital • other Canadian multi-channel Broadcast Distribution and online media consumption by consumers, which in turn drives Undertakings (BDUs) including Bell, Shaw, other alternative advertisers to direct more advertising dollars to digital and online satellite TV services, and IPTV; versus traditional media. In addition, the number of competitors • over-the-top (OTT) video offerings through providers like , has increased as more digital and online media companies, YouTube, Apple, Prime Video, , and other including large global companies, enter the market. channels streaming their own content; and • over-the-air local and regional broadcast television signals WIRELESS received directly through antennas, and the illegal reception of We compete on customer experience, quality of service, scope of US direct broadcast satellite services. services, network coverage, sophistication of wireless technology, breadth of distribution, selection of devices, branding and Phone positioning, and price. We compete with: • Wireless technology — our extensive long-term evolution (LTE) • Bell and Bell Aliant’s wireline phone service in Ontario, New network caters to customers seeking the increased capacity and Brunswick, and Newfoundland and Labrador; speed it provides. We compete with Bell, , Shaw, MTS, • Incumbent Local Exchange Carrier (ILEC) local loop resellers and Videotron, SaskTel, and , all of whom operate LTE Voice over IP (VoIP) service providers (such as Primus and networks. We also compete with these providers on high-speed ), other VoIP-only service providers (such as packet access (HSPA) and global system for mobile and Skype), and other voice applications riding over the Internet communications (GSM) networks and with providers that use access services of ISPs; and alternative wireless technologies, like Wi-Fi “hotspots” and • substitution of wireline for wireless products, including mobile mobile virtual network operators (MVNO), such as President’s phones and wireless home phone products. Choice Mobile and Primus. • Product, branding, and pricing — we compete nationally with BUSINESS SOLUTIONS Bell, Telus, and Shaw, including their discount brands Virgin A number of different players in the Canadian market compete for Mobile (Bell), Koodo (Telus), and (Shaw). We enterprise network and communications services. There are also compete with various regional players and resellers. relatively few national providers, but each market has its own • Distribution of services and devices — we compete with other competitors that usually focus on the geographic markets where service providers for dealers, prime locations for our own stores, they have the most extensive networks. and third-party retail distribution shelf space. • Wireless networks — consolidation amongst regional players, or In the wireline voice and data market, we compete with facilities- with incumbent carriers, could alter the regional or national and non-facilities-based telecommunications service providers. In competitive landscapes for Wireless. markets where we own network infrastructure, we compete with • Inbound roaming — we compete with other major national incumbent fibre-based providers. Our main competitors are as carriers to provide service to international operators who have follows, but there are also regional competitors: customers who roam while in Canada. • Ontario – Bell, Cogeco Data Services, and Zayo; • Spectrum — Innovation, Science and Economic Development • – Bell, Telus, and Videotron; Canada (ISED Canada), formerly known as Industry Canada, has • – Bell Aliant and Eastlink; and announced a future 600 MHz , expected to • – Shaw and Telus. take place in the next two to three years. The outcome of this auction may increase competition.

32 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 33 ROGERS COMMUNICATIONS INC. or channel placement, viewer r merchandise sales revenue. 2016 ANNUAL REPORT attention, and loyalty. digital and printed; and games; streaming services, and portals; and TSC competes with: •retailstores; • catalogue, Internet, and direct• mail retailers; infomercials that sell products• on television; other and television channels, f Our publishing products competewith: for readership and• advertisers other Canadian magazines, both• digital and foreign, printed; mostly US, titles• that online sell information and directly entertainment websites. intoCompetition in Canada, Sports Media both and Entertainment• includes other: televised and online sports• programming; Toronto professional teams, for attendance at Toronto• Blue Jays MLB teams, for Toronto• Blue Jays local players sporting and and fans; special• event venues; professional and sports teams, fo Our digital media assets compete with: • other content available on the Internet, including• news traditional services, media, including TV, radio, and publishing. , and operator and outdoor advertising; and music downloading, portable mediastreaming services. players, and online music , CorusSiriusXM; Entertainment markets, including those ownedMedia, and operated and by Corus the Entertainment,national CBC, coverage; Bell some of which have greater shifting capability available to subscribers; outdoor advertising; and services. • with other media, including newspapers, magazines,• television, with new technologies, such as online web information services, Our radio stations competemarkets, mainly but with they also individual compete: stations• in local nationally with other large radio operators, including the CBC, MEDIA Television andadvertisers with: specialty• services other compete Canadian television for stations that viewers broadcast in and their local • other specialty channels; • distant Canadian signals and US border stations, given• the time- other media, including• newspapers, content magazines, available on radio, the Internet, and such as web-based streaming MANAGEMENT’S DISCUSSION AND ANALYSIS

INDUSTRY TRENDS The telecommunications industry in Canada and our reporting segments are affected by various overarching trends relating to changing technologies, consumer demands, economic conditions, and regulatory developments. See “Risks and Uncertainties Affecting Our Business” and “Regulation in Our Industry” for more information. Outlined in the table below are industry trends affecting our specific reporting segments.

WIRELESS TRENDS CABLE TRENDS More sophisticated wireless networks and devices and the rise of The Internet and social media are increasingly being used as a substitute multimedia and Internet-based applications are making it easier and faster for wireline telephone services, and televised content is increasingly to receive data, driving growth in wireless data services. Consumer available online. Downward Television tier migration (cord shaving) and demand for mobile devices, digital media, and on-demand content is Television cancellation with the intent of substitution (cord cutting) pushing providers to build networks that can support the expanded use of appear to be on the rise with increased adoption of OTT services, such as applications, mobile video, messaging, and other wireless data. Apple TV, Netflix, and Android-based TV boxes. The CRTC’s decision to Wireless providers are investing in the next generation of broadband lower wholesale Internet access rates may also adversely affect wireless data networks, such as LTE and future technologies, to support companies that wholesale Internet services. the growing data demand. Broadcast television technology continues to improve with 4K TV Wireless market penetration in Canada is approximately 83% of the broadcasts and high dynamic range (HDR) for higher resolution and population and is expected to grow at an estimated 0.9% annually over the improved motion video. next four years, per International Data Corporation. The CRTC Let’s Talk TV guidance requires service providers to offer The Canadian Radio-television and Telecommunications Commission customers with pick-and-pay choices, small reasonably priced packages, (CRTC) Wireless Code has limited consumer wireless term contracts to two and affordable entry-level TV channel options that may negatively impact years from three years, which has resulted in a greater number of the industry. In 2016, the CRTC established several criteria to increase customers completing and renewing contracts at any given time. Shorter- Internet access for Canadian residents and businesses. As a result, term contracts allow less time for carriers to recover subsidies. subscribers should have access to speeds of at least 50 Mbps and a service with unlimited data allowance. Subscribers are increasingly bringing their own devices or keeping their existing devices longer and therefore may not enter into term contracts for Our and VoIP telephony services compete with competitor wireless services. This may negatively impact our subscriber churn, but may IPTV deployments and non-facilities-based service providers, respectively, create gross addition subscriber opportunities as a result of increased which continue to increase competitive intensity that have and may churn from other carriers. This also may negatively impact the monthly continue to negatively impact the industry. service fees charged to subscribers. Cable and wireline companies are expanding their service offerings to Wireless providers are collaborating with OTT services to offer their include faster broadband Internet. Canadian companies, including customers unique, value-added benefits and service options. Rogers, are increasingly offering download speeds of 1 Gbps and Internet offerings with unlimited in response to the perceived Mobile commerce continues to increase as more devices and platforms “need for speed”. Consumers are demanding ever-faster speeds for adopt secure technology to facilitate wireless transactions. streaming online media, playing online video games, and for their ever- growing number of Internet-capable devices. In order to help facilitate these speeds, cable and wireline companies are shifting their networks towards higher speed and capacity data over cable service interface specifications (DOCSIS) 3.0/3.1 and fibre-to-the-home (FTTH) technologies. These technologies provide faster potential data communication speeds, allowing both television and Internet signals to reach consumers more quickly in order to sustain reliable speeds to address the increasing number of Internet-capable devices.

BUSINESS SOLUTIONS TRENDS MEDIA TRENDS Companies are using fibre-based access and cloud computing to capture Consumer demand for digital media, mobile devices, and on-demand and share information in more secure and accessible environments. This, content is increasing and media products, such as magazines, have combined with the rise of multimedia and Internet-based business experienced significant digital uptake, requiring industry players to applications, is driving exponential growth in data demand. increase their efforts in digital content and capabilities in order to Enterprises and all levels of government are transforming data centre compete. This trend is also causing advertisers to shift their spending infrastructure by moving toward virtual data storage and hosting. This is from conventional TV and print publishing to digital platforms. driving demand for more advanced network functionality, robust, scalable Competition has changed and traditional media assets in Canada are services, and supportive dynamic network infrastructure. increasingly being controlled by a small number of competitors with Carriers are dismantling legacy networks and investing in next generation significant scale and financial resources. Technology has allowed new platforms and data centres that combine voice, data, and video solutions entrants and even individuals to become media players in their own onto a single distribution and access platform. As next generation right. platforms become more popular, our competition will begin to include Some players have become more vertically integrated across both systems integrators and manufacturers. traditional and emerging platforms. Relationships between providers Companies are using third parties to increase security for their data and and purchasers of content have become more complex. Global information to address cyber threats and other information security risks. aggregators have also emerged and are competing for both content and viewers. Devices and machines are becoming more interconnected and there is more reliance on the Internet and other networks to facilitate updates and Access to live sports and other premium content has become even more track usage. important for acquiring and retaining audiences that in turn attract advertisers and subscribers. Therefore, ownership of content and/or long-term agreements with content owners has also become increasingly important to media companies. Leagues, teams, and networks are also experimenting with the delivery of live sports content through online, social, and virtual platforms, while non-traditional sports are also growing in mindshare.

34 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 35 after media assets in Canada, ROGERS COMMUNICATIONS INC. television programming. We will 2016 ANNUAL REPORT FOCUS ON INNOVATION AND NETWORK LEADERSHIP Innovation has alwaysbringing been a to parttechnologies, of Rogers has market our led the identity. way with Whether new many “firsts”. We it will is products continue toinnovative invest or new in products our that run wireless thethe across and growing them. cable We latest demand networks will and for aimwhile to maintaining data network meet our with network the speedto advantage. highest generate We quality and will of develop continue our core service technologies product offerings. and services that support GO TO MARKET AS ONE ROGERS One Rogers is our planand for brand all assets of to our workas employees, much network, more content, One closely together.cooperation, To Rogers, operate and we agilityassets across and must expertise the in one part organization. removewith of other the This company parts barriers to allows of beWe easily the for to shared will company to collaboration, workdeliver the enriched as benefit experiences One of across our our Rogersbase. product customers. sets across and customer our business segments to INVEST IN AND DEVELOP OUR PEOPLE Our employees are the heartfor and our soul company of and Rogersto our and invest their customers more passion is in our world-class.and people Our by development strategy updating programs is our and onboarding, establishing training, for clear all accountabilities employees. We strivefront-line to employees, provide our with people,need. particularly the our We training, believeempower tools, and that our support providingexperiences for they employees our better customers. training will and lead toolsDELIVER to to COMPELLING CONTENT EVERYWHERE increasinglyThe ways in positive which CanadiansThe consume new content expectation continue is to that evolve. Whether content will it be available is “onprogram demand”. watching at the homemobile latest device, or episode Canadians streaming now ofcontent expect a to they their be want, live favourite able whenthat to and sporting TV they consume where want. event any they want, on and on their Rogers the has device some of thewith most a sought- deep roster of leadingperiodicals, sports assets, and top radio award-winning stations,continue iconic to investfocus in on compelling enhancing the content cooperationBusiness for between Solutions, our our and Wireless, Cable, Media customershighly teams and so popular we cancustomers fully content want to leverage consume our it. and make it available wherever our w corporate objectives each year to progress on our long-term hort-term opportunities and risks. DRIVE GROWTH IN THE BUSINESS MARKET The Canadian businessvalued market for in communications SeptemberCanada services at an 2016 was estimated $22 bycurrently billion under-indexed for International 2017. in We this Databusiness believe market. customers Rogers Corporation is Currently, with core wewireless, telecommunication provide broadband, services our next such generation as and IP, and have data centrecommunications begun services, and collaboration, offering security, cloud, emerging and Internet services, of business such as serviceexecution-focused unified organization, innovation, will deliver supportedRogers new in opportunities the by for businessfocusofoursaswestrivetoattractandservemorebusiness market. an These opportunities alignedcustomers. will be and a key Improving customer experience is corethat to we our strategy. can We improve believe that significantly journey. in Our this goalwith area is and to Rogers have make when, started itbecoming how, on easy a leader for and in customers self-serve whereprocesses to options. This they interact and means want, simplifying policies our with andand front-line integrating a employee training. them focus into on our IT systems OVERHAUL THE CUSTOMER EXPERIENCE BE A STRONG CANADIAN GROWTH COMPANY The overarching goalgrowth in of a sustainable our waystrong strategy and translate margins, is this revenueincreasing adjusted to return growth on into operating assets, accelerate and returns revenue profit, to shareholders. free cash flow, an strategic priorities and address s We announced our new setstrategy of strategic builds priorities on in our Maynetwork 2014. many This strengths, and includingreaccelerate a our media unique growth mix relative of to assets,focus our around industry the and peers, customer, increasenetwork reinvigorate the focuses our and brands, continue onworking innovation our environment for how our leadership, employees. and weTo create can achieve anfollows: these enhanced goals,• we Be established a Strong Canadian• strategic Growth Company Overhaul priorities the Customer Experience • as Drive Growth in the• Business Market Invest in and Develop• our People Deliver Compelling Content Everywhere • Focus on Innovation and• Network GotoMarketasOneRogers Leadership OUR STRATEGIC PRIORITIES Our Strategy, Key Performance Drivers,As and part Strategic of Highlights our overall strategy and related priorities, we set ne Things (IoT). We believe our strategy of being first-to-market with MANAGEMENT’S DISCUSSION AND ANALYSIS

2016 OBJECTIVES For 2016, we set forth the following objectives related to our strategic priorities. Following these objectives are our strategic highlights for the year, showing our achievements against these objectives.

Strategic Priority 2016 Objectives Be a strong Canadian growth company Achieve our 2016 financial targets while investing to support future growth Overhaul the customer experience Save our customers time by making it easier for them to do business with us online and in-person Drive growth in the business market Expand our sales reach and introduce “leapfrog” technologies using our enterprise-grade networks Invest in and develop our people Build a high-performing culture by investing in employee development, new technology, and the workplace Deliver compelling content everywhere Deliver our content where our audiences want it and leverage it to differentiate our businesses Focus on innovation and network leadership Reclaim our leadership in Cable, maintain it in Wireless, and grow it in our business markets Go to market as one Rogers Work together, using all our assets and resources, to set Rogers apart from competitors

KEY PERFORMANCE DRIVERS AND 2016 STRATEGIC HIGHLIGHTS The following achievements display the progress we made towards meeting our 2016 objectives we set last year.

• Launched DeviceAdvice and Message Me for our Fido BE A STRONG CANADIAN GROWTH COMPANY customers. DeviceAdvice is a tool allowing customers to self- • 100% achievement of our 2016 guidance on selected full-year diagnose device issues and receive quick, personalized advice so metrics and achieved our best subscriber metrics in recent years. they can maximize the performance of their device. Message Me See “Financial and Operating Guidance” for more information. allows customers to contact Fido customer representatives via Facebook Messenger on their mobile or desktop device. • Launched Rogers Assist, an app that allows all Rogers OVERHAUL THE CUSTOMER EXPERIENCE employees to submit an issue to customer care on behalf of their • Launched a number of tools and offerings with a focus on friends, family, and acquaintances. becoming a leader in self-serve options. We saw a 56% increase • Collaborated with a Canadian app creator that helps people with in self-serve transactions on the Rogers brand and a 9% increase cognitive special needs, to create how-to videos for using a on the Fido brand this year. wireless device. Rogers.com now features five videos with • Expanded Roam Like Home to over 100 destinations in Europe, easy-to-follow instructions and closed-captioning that explain Asia, Mexico, South America, and Latin America, further how to perform key functions related to your simplifying how Wireless consumers use the Internet, make calls, device like sending a text or picture, connecting to a Wi-Fi and send texts and e-mails. Customers have access to their network, and making a phone call. Canadian plan features while traveling, all at a relatively low cost. • Expanded our Connected for Success program to more Furthermore, we broadened the availability of Roam Like Home communities across Ontario, New Brunswick, and Newfoundland by making it available on most consumer Wireless plans. and Labrador. This program provides affordable Internet services • Introduced Fido Roam, allowing customers to use existing data, to people that live in non-profit housing. This expansion more talk, and text from their Fido Pulse plans while traveling, for a low than doubled the number of eligible households across the daily price. Fido Roam covers all of the US along with country to up to 150,000. destinations in Europe, the Caribbean, South and Central • Released Rogers’ 2016 Transparency Report, our annual report America, the Middle East, Oceania, South Africa, and Asia. on how we share customer information in response to requests • Launched Data Manager, a new tool that gives families the ability from legal authorities. We are committed to protecting our to manage their wireless data in real-time and provide worry-free customers’ privacy and fulfilling our obligation as a good control. corporate citizen to follow the law and contribute to public • Launched Rogers EnRoute and Fido EnRoute, tools that save our safety. customers time by giving them the ability to track, in real-time, when a technician will arrive for an installation or service call.

36 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 37 and .Thisnew Second Jen . ROGERS COMMUNICATIONS INC. ge competitor, and marks a 7% uring the 2016-2017 NHL season Nirvana The Band The Show 2016 ANNUAL REPORT Bad Blood: The Vito Rizzuto Story GO TO MARKET AS ONE ROGERS FOCUS ON INNOVATION AND NETWORK LEADERSHIP entire team together to achieve ourby goals. We bringing demonstrated Rogers this Hometownintroducing Hockey to low-cost 150,000residents, Internet Canadians, and bringing for viewersever, more our while delivering strongest a community primetime strong year lineup of housing NHL and Sportsnet. entire cable footprint,available Internet speeds such in our that marketplace. we offerCorporation the to bring fastestwith our widely the customers most advanced a featuresdeploying available world-class Comcast’s in IPTV X1 the IP-based market service video today platform. by population in 2016, comparedoverall to LTE 78% network in2016, reach compared 2015. to 93% to Extended in 2015. our 95% of Canada’senable population the most in connected arena inEdmonton. Canada, the in as well asToronto Blue Sportsnet Jays home 4K, gamesduring in which which 4K. This we delivered will planJays,NHL,andNBAgamesin4K. continue to all in bring 2017, regular sports fans season more than 100 Blue to record up to90 eight hours 4K of programs 4K entertainment. at one time and storeCanadian up to specialty channel VICELAND,first-ever including scripted the series, network’s beats our closest English-langua increase year on year. Themost-watched 2016 Blue Jays Blue regular season Jays20 was million the season Canadians. In in Novemberlargest 2016, World Sportsnet network delivered Series its audience history, ever,2.66 with reaching an million average audience of viewers,previous which moreFurthermore, all-time Sportsnet than achieved doubled greatCup most-watched of success Sportsnet’s Hockey, with with thefor an World World average the audience entire of tournament, 1.1throughout and the million Series tournament. reached viewers 15.5 million Canadians game. original programming series is produced byInc. VICE (VICE) Media through Canada VICE Studio Canada. national NHL AgreementCanadians while than bringingreturned for ever the a third NHLwith before. hockey season festivities to d and entertainment. Rogers more Hometowncontent Hockey by adding twolineup, new with original scripted the series millennial-focused to our comedy City drama channels in North America to be available direct to consumers, • Successfully worked as one company, showing we can bring our • Extended our Ignite Gigabit Internet coverage to cover Rogers’ • Announced the long-term strategic partnership with Comcast • Extended our 700 MHz LTE network reach to 91% of Canada’s • Installed a new suite of technology and enterprise solutions to • Broadcast the first live• NBA, NHL, Introduced and the MLB new games NextBox in 4K 4K. PVR, giving customers the ability • Added six new programs to the 2016/2017 schedule for • Launched Sportsnet NOW, one of the first mainstream sports TV • Successfully completed the second year of our exclusive 12-year • Continued our commitment to deliver world-class Canadian al, economic, and ecological ,servers,systemssoftware,and INVEST IN AND DEVELOP OUR PEOPLE DRIVE GROWTH IN THE BUSINESS MARKET DRIVE COMPELLING CONTENT EVERYWHERE as the destination foras Canadian sports Canada’s fans number-one byeight closing sports months out media in 2016 2016 brand. andcompetitor Sportsnet has with widened a won the 42% gap39% lead from lead in its closest average in minutehigh audience audience with share. and 4.25 Sportsnet.ca a million reached unique an visitors all-time in October 2016, which 160 executives. 1,400 call centre employees andsolution launched for a part-time mobile employees. onboarding productive to better serve our customers. benefits and costs in their normal course of business. a reportrecognition released of our by effortsthe workplace. to Mediacorp promote diversity Inc. and inclusion in in editors March of Canada’s 2016 Top 100that Employers for in recognizes April 2016,programs an and employers award earth-friendlyemployees. policies with that actively innovative involve their environmental Corporate Knights inemployers June that incorporate 2016, soci an award that recognizes 2016 and as a Topby the Employer editors for of Young Canada’s Top People 100 in Employers. January 2017 customers in Ontario,Internet enabling them speeds toproductivity leverage with and faster blazing-fast business file unlimited transfers, continuity, real-time and dataincreased data high-quality bandwidth backup also video usage for means conferencing.users businesses can The to online connect more performance. simultaneously, improve without compromising Internet process of managingsolutions complex being IoT solutions. offeredMonitoring and Two Level as Monitoring. of a the service first includebusinesses to manage Farm multiple cloud-based applications. & Food network resources over the Internet. features of a traditionalphone. We landline were office the phoneAmerica first telecommunications to to provider one’s in launch mobile customers North to such stay connected aof across their solution. multiple location, allowing devices This them regardless to better solution serve their allows customers. infrastructure our as-a-service solutionmanage that critical lets data, applications businesses securely • For the second consecutive year, Sportsnet solidified its position • Launched an intensive• leadership Expanded program our for more national than onboarding• program Continued to to modernize our include workplace to help us be more • Selected as one of Canada’s Best Diversity Employers for 2016 in • Named one of Canada’s Greenest Employers for 2016 by the • Named one of the 50 Best Corporate Citizens in Canada by • Recognized again as a Top Employer for 2017 in November • Launched Rogers Ignite Gigabit Internet to small business • Announced certain IoT as-a-service offerings to simplify the • Launched Business App Market, a new platform for small • Launched Rogers Unison, a new mobile solution that brings the • Launched Rogers Public Cloud, a new data sovereign, cloud MANAGEMENT’S DISCUSSION AND ANALYSIS

2017 OBJECTIVES

Strategic Priority 2017 Objectives Be a strong Canadian growth company Achieve our 2017 financial targets while at the same time investing to support future growth Overhaul the customer experience Foster good relationships and obtain positive feedback from our customers through continual improvements to our customer service with a focus on self-serve Drive growth in the business market Utilize our enterprise-grade networks and introduce new products to gain market share in the business market Invest in and develop our people Invest in our employees’ futures, in part so they say they are proud to work for us, and to enhance employee engagement Deliver compelling content everywhere Maintain our status as the number-one sports media brand in Canada and leverage that status across our different platforms Focus on innovation and network leadership Continue to grow our leadership in Wireless and Internet, and set forth developments to reclaim a sound position in video Go to market as one Rogers Introduce the best customer offerings possible through leveraging the skills and capabilities of all our internal teams

Be a strong Overhaul Canadian growth the customer company experience

Go to Drive growth market as in the business one Rogers market

Focus on innovation Invest in & network and develop leadership our people

Deliver compelling content everywhere

38 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 39 ial results for evaluating the ring 2017 could materially alter ent of wholesale high-speed ROGERS COMMUNICATIONS INC. nnual full-year Board-approved ation in Canada is expected to Information about our guidance, nties Affecting Our Business”, and is consistent with the annual plans 2016 ANNUAL REPORT during the full-year 2016 in all segments in which we operate; for 2017 is hedged at an average exchange rate of $1.33/US$; economic condition,environment or affecting macroregulatory our changes decisions expected business in du activities. the We competitive note that underlying assumptionsBusiness around Solutions, and/or Media our results inyears, the 2017 current the and future Wireless, impactsfactored into of our Cable, guidance; which are currentlylevel unknown television and package not channels capped at above $25 thesmaller, per basic month, tier reasonably as onmaterially well an impact priced as our “à Cable revenue; la packages, carte” is basis andcapacity not in charge expectedaccess tariff service pending to approval compon of finalan rates impact is on expected our to Cable have revenue; higher-value smartphones and a similarwill proportion remain of on customers term contracts; grow in 2017 at a similar rate as in 2016; negatively impacted; moderating net lossesrelatively in stable Phone Cable subscriber base; Television subscribers; and a the related disclosurecompetitive, and and regulatory information assumptions, factors, about andcause risks our various that actual may future economic, financial andwhat we operating currently results expect. to differ from We provide annualbasis guidance ranges that on areplans. a Any consolidated consistent full-year updates withcourse to a of our theguidance full-year ranges that year financial appear above. guidance would over only the beKey made underlying assumptions toOur the 2017 guidance consolidated ranges aboveincluding, are but based not on limited many to, assumptions the• following material continued assumptions: intense competition consistent with• our a experience substantial portion of our US dollar-denominated expenditures • key interest rates remain• relatively stable no throughout 2017; significant additional regulatory developments, shifts in • the CRTC decision to require distributors to offer a basic entry- • the CRTC decision to significantly reduce interim rates for the • Wireless customers will continue to adopt,• and upgrade overall wireless to, market penetr • our relative market share• in continued Wireless subscriber and growth Cable in will Wireless not and be Cable Internet; The purposeshareholders, of and others in the understandingrelating certain financial financial to metrics outlookperformance expected 2017 is ofappropriate financ our to for other business. assist purposes. including the This investors, various assumptions informationand underlying it, should may is be forward-looking read not in conjunction be with “About Forward-Looking Information”, “Risks and Uncertai ial metrics on a consolidated bas 1 ✓ ✓ ✓ ✓ Ranges 2017 Guidance 2016 Actuals Achievement ✓ 2,352 n/m 1,705 1.7% 5,092 1.2% 13,702 2.1% 5,092 Increase of 2% to 4% 2,3521,705 Increase of 2% to 4% 2,250 to 2,350 2016 Actuals “Non-GAAP Measures” for information ted full-year 2016 consolidated financial 2016 uipment for the Wireless, Cable, Business uipment for the Wireless, Cable, Business 2,400 Ranges Achieved 1% to 3% 1% to 3% 1% to 3% Guidance ✘ 2015 2,440 2,300 to 1,676 Increase of 5,032 Increase of Actuals 2 2 3 Missed 1 3 2 2 and equipment, net plant and equipment Includes additions to property, plant and eq Adjusted operating profit and free cashbe flow considered are non-GAAP substitutes measures or and alternatives shouldterms for not under GAAP IFRS measures. and These doto not are compare have not us standard to defined other meanings, companies. sothese See may measures, “Non-GAAP including not Measures” how for be we information a calculate about reliable them. way Solutions, Media, and Corporate segmentsnot net include of expenditures proceeds for on spectrum disposition, licences. but does Guidance ranges presented asyear 2016 percentages actual reflect results. percentage increases over full- Solutions, Media, and Corporatespectrum segments licences. and does not include expenditures on Includes additions to property, plant and eq Adjusted operating profit and free cashbe flow considered are non-GAAP substitutes measures or and alternatives shouldterms for not under GAAP IFRS measures. and do Theseway not are have to not standard compare defined meanings, us so to they other may companies. not be See a reliable The table outlines guidance rangesmetrics for selec provided inpresented as percentages our reflect percentage increases January over 2015 27, actual results. 2016 earnings release. Guidance ranges about these measures, including how we calculate them. Additions to property, Free cash flow The above table2017 outlines guidance consolidated rangesconsideration financial our for current selected metrics. outlook full-year and These our actual ranges results for 2016. take into 3 Additions to property, plant Free cash flow 2 1 Consolidated Guidance RevenueAdjusted operating profit 13,702 Increase of 3% to 5% (In millions of dollars, except percentages) 2017 FULL-YEAR CONSOLIDATED GUIDANCE We expect steady growth inand revenue and lower adjusted operating additions profit higher to free property, cash flow. plantmaintain We and our expect to network equipment have advantages,continue to the to to financial return drive further cash flexibility to reduce to shareholders. debt, and to 3 2 Adjusted operating profit n/m – not meaningful 1 (In millions of dollars, except percentages) Revenue 13,414 Increase of approved by our Board. Consolidated Guidance 2016 ACHIEVEMENTS AGAINST GUIDANCE The followingpreviously provided table and our actual outlines resultsselected and full-year achievements 2016 guidance for financial the metrics. ranges that we had FINANCIAL AND OPERATING GUIDANCE We provide consolidated annual guidance ranges for selected financ MANAGEMENT’S DISCUSSION AND ANALYSIS

• in Business Solutions, continued declines in our legacy and • with respect to additions to property, plant and equipment: off-net business, and the continued execution of our plan to • we have rolled out LTE across the majority of our coverage grow higher-margin next generation IP- and cloud-based area as well as deployed newly-acquired 700 MHz and AWS-1 services; spectrum; and • in Media, continued growth in Sportsnet and declines in our • we will make expenditures to prepare our network for our traditional media businesses, including our print publishing anticipated rollout of the Comcast X1 IPTV platform in early offerings; and 2018. Capability to Deliver Results LEADING NETWORKS WIRELESS We are continuously enhancing our IP service infrastructure for all Rogers has one of the most extensive and advanced wireless of our wireless services. Advances in technology have transformed networks in Canada, which: how our customers interact and how they use the variety of tools • was the first LTE high-speed network in Canada; that are available to them in their personal and professional lives. • reached approximately 95% of the Canadian population as at Technology has also changed the way businesses operate. December 31, 2016 on our LTE network alone; • is supported by voice and data roaming agreements with Significant spectrum position international carriers in more than 200 destinations, including a Our wireless services are supported by our significant wireless growing number of LTE roaming operators; and spectrum holdings in both high-band and low-band frequency • includes network sharing arrangements with three regional ranges. As part of our network strategy, we expect to continue wireless operators that operate in urban and rural parts of making significant capital investments in spectrum to: Canada. • support the rapidly growing usage of wireless data services; and • introduce new innovative network-enabled features and functionality.

Our spectrum holdings as at December 31, 2016 include: Type of spectrum Rogers licence Who it supports 700 MHz 24 MHz in Canada’s major geographic markets, covering 91.1% LTE subscribers. of the Canadian population. 850 MHz 25 MHz across Canada. GSM and 3.5G HSPA+ subscribers (4G LTE in the future). 1900 MHz 60 MHz in all areas of Canada except 40 MHz in northern 2G GSM and 3.5G HSPA+ Quebec, 50 MHz in , and 40 MHz in the , subscribers (4G LTE in the future). , and . AWS 1700/2100 MHz 40 MHz in , , 30 MHz in southern Ontario 4G LTE subscribers. and 20 MHz in the rest of Canada. 2500 MHz 40 MHz FDD across Canada and an additional 20 MHz TDD in 4G LTE subscribers. key population areas in Quebec, Ontario, and British Columbia.

40 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 41 nada, respectively, we deliver ROGERS COMMUNICATIONS INC. ficant cable network capacity for our analog broadcast channels to er migration strengthened the 4G LTE subscribers. Mobile and fixed wireless subscribers. 3.5G / 4G HSPA+, 4G LTE subscribers. 3.5G / 4G HSPA+ subscribers. 3.5G / 4G LTE subscribers. 2016 ANNUAL REPORT homes sharing spectrum in each ; advanced video protocols; digital video; and directly to fibre. Homes and commercialthrough buildings hybrid are fibre-coaxial connectednetwork nodes. to using We our fibre connect network opticcoaxial the cable cable. node and to Using thespectrum the home in 860 to Ontario MHz thevideo, and voice, node Atlantic and and using broadband Ca services 750coaxial to our node MHz customers. segmentation Hybrid of increases fibre- by bandwidth reducing shared the per number of home cable customers passed that share theWe cable spectrum. continually upgrade the networkperformance to and improve reliability, capacity, reduce enhance operatingnew features costs, and and functionality. introduce For example,• we invest further in: segmenting our network nodes to reduce the• number of improving video signal• compression improving channel by and on-demand moving capacity• through to switched increasing more the FTTH footprintIn by early connectingreceiving 2016, more television signals we homes over completed the transitioning of customers all-digital services, freeing up signi additional features and services. The analog-to-digitalcustomer subscrib experience and,significant in amounts addition of tofuture allowing network network us capacity, operating tofrom enabled and analog reclaim maintenance us to costs. digital tofitting required The analog reduce additional homes migration spending with as digitalanalog filtering it converters equipment. and involved removing existing ransaction with Videotron, which could nership is a joint operation with BCE Inc. in ugh the following network sharing agreements: nada’s largest markets, while ork extends coast-to-coast and with Telecompopulation across Services, Manitoba; which covers 96% of the with , that coversnorthwestern Ontario; the and combined basewith of Quebecor customers (Videotron) in toprovince provide of Quebec. LTE services across the lead to thespectrum. acquisition of Videotron’s Tier 3 Toronto AWS-1 which Rogers holds awhich 50% 20 interest. MHz is Inukshukeastern usable) Canada, holds including of 30 certain FDD MHz populationand centres 2.3 (of eastern in GHz southern Ontario, spectrum southernNew primarily Quebec, in and Brunswick, smaller holdingsInukshuk in Manitoba, also50-175 Alberta, MHz) holds and inCanada. most The British 3.5 of current fixedthe the jointly Columbia. wireless held major GHz 2.3 LTE GHz population national and 3.5 network centres TDD GHz spectrum utilizes across bands. licences (between Three network-sharing arrangementsnetwork to capabilities: enhance coverage and • • • Type of spectrumAWS-1 spectrum Transaction Part of a larger strategic t Who it will support Type of spectrum2.3 GHz/3.5 GHz range Inukshuk Kind Wireless of Part venture Who it supports 850 MHz, 1900 MHz AWS spectrum includes local andsystems, hubs, regional points fibre,infrastructure. of The presence, transmission network and also electronics extendssouth IP to and routing to the and US Seattle; fromMinneapolis, switching from Milwaukee, the Manitoba-MinnesotaBuffalo; and and border Chicago; from through MontrealAshburn, from through allowing Albany Toronto to us New toalso through York reaching connect City key Ca and UStraffic. markets for the exchange of dataThe and network voice is structuredand to to optimize allow performanceInternet for and over reliability the a single simultaneousthat platform. delivery interconnect It of is withthat generally video, can distribution constructed result voice, from in hubs, fibre and rings cuts and minimizing other events. disruptions CABLE Our expansive fibre andservices hybrid to fibre-coaxial consumers infrastructure and delivers and businesses in Ontario, Newfoundland Newtranscontinental fibre-optic Brunswick, network that and extendskilometres over 46,000 and route Labrador. is usedgovernment to and We service other enterprise telecommunicationsalso service customers, use also providers. including our We extensivesite fibre operate traffic. network for In a backhaul Canada, for wireless the cell netw We also have access to additional spectrum thro We have an option arrangement to buy additional spectrum, subject to commercial terms and regulatory approvals, as follows: MANAGEMENT’S DISCUSSION AND ANALYSIS

Broadband Internet service is provided using a DOCSIS CCAP We also own or utilize some of Canada’s most recognized brands 3.0/3.1 platform, which combines multiple radio frequency including: channels onto one access point at the customer premise, • the wireless brands of Rogers, Fido, and chatr; delivering exceptional performance. The bandwidth of our Internet • over 20 TV stations and specialty channels, including Sportsnet, service offerings has increased 55-fold in the last 10 years as we FX (Canada) and FXX (Canada), OMNI, VICELAND, and City; bring new technologies to market when they become available. • publications, including Maclean’s, Chatelaine, Today’s Parent, This track record of investing in our networks and demonstrating Flare, and Hello! Canada; the capability to deploy best-in-class service is one of our key • Texture by Next Issue, with a catalogue of over 230 premium strategies for ensuring that we stay competitive with other service Canadian and US magazine titles; providers that provide Internet service into homes and businesses • over 50 radio stations, including 98.1 CHFI, 680 NEWS, over copper facilities. As at December 31, 2016, 100% of our cable Sportsnet The FAN, KiSS, JACK FM, and SONiC; network has been upgraded to DOCSIS CCAP technology • major league sports teams, including the Toronto Blue Jays, and supporting DOCSIS 3.1 and Ignite Gigabit Internet. teams owned by MLSE, such as the Toronto Maple Leafs, the , and Toronto FC; We continue to invest in and improve our cable network; for • an exclusive 12-year agreement with the NHL that allows us to example, with technology to support gigabit Internet speeds, Rogers deliver unprecedented coverage of professional hockey; 4K TV, our 4K PVR set-top box, and a significant commitment to live • TSC, the leading nationally broadcast, interactive, multi-channel broadcasting in 4K, including all regular season Toronto Blue Jays Canadian retailer; and home games in 2017 and numerous NHL and NBA games. • VICE, a global youth media company that produces and Voice-over-cable telephony services are provided over a dedicated distributes global online video and text content. DOCSIS network. Our offerings ensure a high quality of service by including network redundancy as well as network and customer WIDESPREAD PRODUCT DISTRIBUTION premise backup powering. Our phone service includes a rich set of features, such as TV Call Display, three-way calling, and advanced WIRELESS voicemail features that allow customers to be notified of, and listen We distribute our wireless products nationally using various to, their home voicemail on their wireless phone or over the Internet. channels, including: • an extensive independent dealer network; BUSINESS SOLUTIONS • company-owned Rogers, Fido, and chatr retail stores; We own and operate some of the most advanced networks and • major retail chains and convenience stores; data centres in Canada. We leverage our national fibre, cable, and • other distribution channels, such as WOW! mobile boutique, as wireless networks and data centre infrastructure to enable well as Wireless Wave and TBooth Wireless through our businesses to deliver greater value to their customers through ownership interest in Glentel; proactive network monitoring and problem resolution with • customer self-serve using rogers.com, fido.ca, chatrwireless.com, enterprise-level reliability, security, and performance. We operate and e-commerce sites; our own robust, facilities-based, transcontinental network with • our call centres; and 100% digital fibre optic backbone and strategic interconnect points • outbound telemarketing. to the US and overseas for cross-border and international coverage. Our primary and secondary Network Operation Centres proactively CABLE monitor Rogers’ networks to mitigate the risk of service We distribute our cable products using various channels, including: interruptions and allow for rapid responses to any outages. • company-owned Rogers and Fido retail stores; • customer self-serve using rogers.com and fido.ca; Our data centres provide guaranteed uptime and expertise in • our call centres, outbound telemarketing, and door-to-door collocation, cloud, and managed services solutions. We own and agents; operate 16 state-of-the-art, highly reliable, certified data centres • major retail chains; and across Canada, including: • an extensive network of third-party retail locations. • Canada’s first Tier III Design and Construction certified multi- tenant facility, opened in 2012 in Toronto; • Alberta’s first Tier III certified data centre, opened in 2014; and BUSINESS SOLUTIONS • a third Tier III certified data centre in , opened in 2015. Our sales team and third-party retailers sell Business Solutions services to the enterprise, public sector, and carrier wholesale POWERFUL BRANDS markets. An extensive network of third-party channel distributors deals with IT integrators, consultants, local service providers, and The Rogers brand has strong national recognition through our: other indirect sales relationships. This diverse approach gives • established networks; greater breadth of coverage and allows for strong sales growth for • extensive distribution; next generation services. • recognizable media content and programming; • advertising; • event sponsorships, including the Rogers Cup; • community investment, including Rogers Youth Fund; and • naming rights to some of Canada’s landmark buildings.

42 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 43 ROGERS COMMUNICATIONS INC. ngagement surveys and leadership m, and issuances of long-term debt. 2016 ANNUAL REPORT through initiatives including e development programs; and development, performance-drivenprograms, employee and recognition employees; career progression programs for front-line employees the tools and training to be successful. customers to manage andtime through customize MyRogers; their data usage in real- and understand their monthly charges; allowing Canadians tohome use when traveling their to included wireless destinations; and plan like theyan issue do to at customeracquaintances. care on behalf of their friends, family, and FINANCIAL STRENGTH AND FLEXIBILITY We have anleverage, investment-grade and balance substantial sheet,December available 31, conservative 2016. liquidity Our debt capital ofprovided resources consist $2.7 primarily by of billion cash available as operating lines at activities,receivable of securitization cash progra credit, andWe funds also cash own availablesecurities approximately equivalents, in under $1,047 publicly-traded companies million as our at of December 31, marketable accounts 2016. The equity following information is forward-lookingconjunction and should with be “About read in Forward-Lookingand Information”, Operating “Financial Guidance”, “Risks and Uncertainties Affecting Our competitive, and regulatorycould assumptions, cause factors, ourdiffer and actual from those risks future currently expected. financial that andSimilar operating to 2016, results we anticipate to generatingfrom a our net cash cash surplus provided inwill by 2017 operating have activities. We sufficient expectrequirements capital that in we resources 2017, including tocommon shares, the satisfy repayment funding of our maturing of long-termfinancing dividends debt, cash activities, and on investing other funding activities, our andtakes other requirements. This intoprovided account by our operating activities,$2.8 opening the bank amount billion availablesecuritization advance program, under and bank balance, our funds availableof cash to credit other us bank, from publicly the issued, facilities, issuance to or private placement time. our debt from Asrestrictions time on at accounts the flow December ofcompanies. receivable funds 31, between Rogers 2016, and its there subsidiary were no significant ENGAGED PEOPLE For our teamcreate of a great approximately workplace, 25,200experience, focusing which on employees, include: all we aspects• of strive the engaging employee to employees and building high-performing• teams aiming to attract and retain top talent through effective training • maintaining our commitment to• diversity and providing inclusion; a and safe, collaborative, and agile workplace that provides • Family Data Manager, a data manager tool that allows Wireless • a simplified mobile bill, making it• easier Roam for Like customers Home to and read Fido Roam, worry-free wireless roaming • Rogers Assist, an app that allows all Rogers employees to submit Business”, and our other disclosures about various economic, rth American professional ing English, French, Mandarin, ones, tablets, and the Internet; giving them thetechnician will arrive ability for an installation to or service track call; on their phone when a products without theresidence; and need for a technician visiting their accounts online ortheir through the Facebook Fido loginremember MyAccount multiple credentials, app login using eliminating credentialseasier and to the access; making self-service need to complete price plan changes and hardware upgrades online; for a telecommunications company) andglobally); Twitter (among the first • Rogers EnRoute, a new tool that saves customers time by • the ability for customers to install their Internet and TV take calls in four languages, includ • simplified login, allowing Fido customers to log in to their • the ability for Fido and Rogers consumer customers to and Cantonese; hockey across television, smartph began with the 2014-2015 NHLunprecedented season and coverage allows us to of deliver No for enhancing NHL action on any screen; Rogers NHLcamera GameCentre angles, LIVE exclusivevideo-on-demand interviews content; that and analysis, includes and revolutionary original festivities and outdoor viewing partiesCanada to over the 24 2016-2017 communities NHL across season; brought to Canada for the first time on Rogers digital cable; Properties andin-progress games MLB and highlights within Advanced Canada through 2021; Media2014, to which show makesdistributor of live Rogers World theprogramming Wrestling and in Canada; Entertainment’s exclusive (WWE) wholesaler flagship and a Blue Jays through our ownership of ; and and mobile rights for the . • customer care available over Facebook Messenger (a global first We are committedexperience to possible. providing Todifferent methods, our such do as: customers this,• with contact we centres the located have throughout• best Canada; an invested innovative in Integrated Voice several Response (IVR) system that can CUSTOMER EXPERIENCE • self-serve options, including: FIRST CLASS MEDIA CONTENT We deliver highlyfollowing sought-after initiatives: sports content• enhanced an by exclusive the national 12-year agreement with the NHL, which • Rogers NHL GameCentre LIVE, an upgraded online• destination GamePlus, an innovative and interactive experience within • Rogers Hometown Hockey Tour, which brings hockey-themed • the MLB Network, a• 24-hour an network 8-year, dedicated multi-platform to broadcast rights baseball, agreement with MLB • a 10-year multi-platform agreement that commenced in August • exclusive broadcasting and distribution• rights delivery of of the our Toronto exclusive Canadian English language broadcast MANAGEMENT’S DISCUSSION AND ANALYSIS

We believe we can satisfy foreseeable additional funding HEALTHY TRADING VOLUMES AND requirements by issuing additional debt financing, which, depending on market conditions, could include restructuring our DIVIDENDS existing bank credit and letter of credit facilities, entering into new Our Class B Non-Voting common shares actively trade on the TSX bank credit facilities, issuing public or private debt, amending the and NYSE with a combined average daily trading volume of terms of our accounts receivable securitization program, or issuing approximately 1.1 million shares in 2016. In addition, our Class A equity. We may also opportunistically refinance a portion of Voting common shares trade on the TSX. Dividends are the same existing debt depending on market conditions and other factors. on both classes of shares. In 2016, each share paid an annualized There is no assurance, however, that these financing initiatives will dividend of $1.92. or can be done as they become necessary.

44 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 45 377 2 116172 6 (2) y not be a reliable (158) 22 (153) 4 2015 % Chg 1,342 (38) 5,032 1 1,479 – 1,676 2 2,440 (4) 7,651 3 3,747 6 3,465 – 2,079 3 3,239 1 1,658 1 37.5% (0.3 pts) 12,649 3 13,414 2 $ 2.61$ 2.60 – (38) $2.87 – (38) $2.86 are non-GAAP measures and 835 384 123 169 (193) (159) 2016 Years ended December 31 5,092 1,481 1,705 2,352 7,916 3,957 3,449 2,146 3,285 1,674 37.2% 13,027 13,702 $1.62 $1.62 $2.88 $2.86 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT , certain amounts have been retrospectively amended. See “Accounting competitors. Many of theseshould are not not defined be terms considered underany alternative IFRS other and measures financial measure toPerformance of net performance income Indicators” under or IFRS.information. and See “Key “Non-GAAP Measures” for more Income Taxes formation about these measures, including how we calculate them. 1, 2 1, 2 1 2 1 2 1, 2 3 1 2 Wireless Cable Business Solutions Media Corporate items and intercompany eliminations Wireless Cable Business Solutions Media Corporate items and intercompany eliminations As defined. See “Key Performance Indicators”. Adjusted operating profit, adjusted operating profit margin, adjusted net income, adjusted basic and diluted earnings per share,As and free a cash result flow of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 should not be considered substitutesway or to alternatives compare for us GAAP to other measures. companies. These See are “Non-GAAP not Measures” defined for in termsPolicies” under for IFRS more and information. do not have standard meanings, so ma Diluted earnings per share Adjusted net income Adjusted diluted earnings per share Additions to property, plant and equipment Basic earnings per share Net income (In millions of dollars, except margins and perRevenue share amounts) 3 1 2 SUMMARY OF CONSOLIDATED RESULTS 2016 Financial Results See “Accounting Policies” in this MD&A and the notes toaccounting our policies 2016 and estimatesdiscussion. as they relate to theWe following useperformance several against our key strategy and performance the results of indicators our peers to and measure our Adjusted operating profit margin Adjusted basic earnings per share Total service revenue Cash provided by operating activities Free cash flow Revenue Adjusted operating profit Adjusted operating profit Audited Consolidated Financial Statements for important MANAGEMENT’S DISCUSSION AND ANALYSIS

KEY CHANGES IN FINANCIAL RESULTS THIS Cable adjusted operating profit increased this year as a result of lower operating expenses. YEAR COMPARED TO 2015 Business Solutions adjusted operating profit increased this year as a REVENUE result of the increase in revenues described above. Wireless service revenue increased this year primarily as a result of a Media adjusted operating profit decreased this year primarily as a larger subscriber base and the continued adoption of higher- result of higher sports-related costs, partially offset by lower postpaid-ARPA-generating Rogers Share Everything plans. conventional broadcast TV, publishing, and radio costs and the Cable revenue decreased marginally this year as the impacts of a higher revenue described above. higher subscriber base for our Internet products and the movement of customers to higher-end speed and usage tiers were NET INCOME AND ADJUSTED NET INCOME more than offset by Television subscriber losses and the impact of Net income decreased this year primarily as a result of a Phone pricing packages. $484 million charge recognized on our IPTV product, a Business Solutions revenue increased this year primarily as a result $140 million loss associated with the writedown of our shomi joint of the growth in on-net next generation services, including our data venture, and higher restructuring, acquisition and other costs. centre businesses, which more than offset the continued reduction Adjusted net income increased marginally this year as a result of in lower margin, off-net legacy revenue. higher adjusted operating profit, partially offset by higher other Media revenue increased this year primarily as a result of higher expense and higher income tax expense. sports-related revenue, driven by the success of Sportsnet and the Toronto Blue Jays, partially offset by continued softness in publishing and radio advertising.

ADJUSTED OPERATING PROFIT Wireless adjusted operating profit increased this year primarily as a result of service revenue growth as described above, partially offset by higher costs associated with increased volumes and costs of devices.

46 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 47 1.23% 1.27% 1.27% 75 36 677 84 106 180 2015 Chg 8% 1,606 111 8,271 286 1,354 167 3.45% (0.13 pts) 1.27% (0.04 pts) 5.1 0.71 $59.71$ $110.74 $ 6.63 92% Years ended December 31 111 761 286 2016 1,717 8,557 1,521 3.32% 1.23% SERVICE SERVICE EQUIPMENT $ 60.42 $117.37 1 ROGERS COMMUNICATIONS INC. y 154,000 Wireless prepaid subscribers as 2 2, 3 2016 ANNUAL REPORT Billion $7.9 Net additions Total prepaid subscribers Churn (monthly) Gross additions Churn (monthly) ARPA (monthly) Gross additions Net additions Total postpaid subscribers WIRELESS POSTPAID MONTHLY CHURN (%) 2016 2015 2014 2016 WIRELESS REVENUE MIX 2016 WIRELESS (%) Subscriber counts, subscriberperformance churn, indicators. See postpaid “Key ARPA, Performance Indicators”. As and at end blended of period. ARPUOn are July key 2, 2015, we acquireda approximatel result of our acquisitiondo appear of in , the ending which total are balance for not December included 31, in 2015. net additions, but Blended ARPU (monthly) Prepaid 1 2 3 WIRELESS SUBSCRIBER RESULTS (In thousands, except churn, postpaid ARPA, and blended ARPU) Postpaid %Chg 1,717 1,606 1,377 $7,258 $6,902 $6,743 1 866 (19) 749 (12) 3,239 1 4,412 5 2,567 5 7,6511,845 3 6 6,902 5 46.9% (1.6 pts) 2015 8,557 8,271 8,073 702 658 2016 3,285 4,631 2,684 7,916 1,947 7,258 Years ended December 31 45.3% 2 Prepaid WIRELESS Postpaid Cost of equipment Other operating expenses Equipment revenue Service revenue 2014 2015 2016 WIRELESS SUBSCRIBER BREAKDOWN (IN THOUSANDS) 2015 2014 (IN MILLIONS OF DOLLARS) 2016 WIRELESS SERVICE REVENUE of the Canadian wireless market. service revenue Includes the cost of equipment revenue and direct channel subsidies. The operating results of Mobilicityfrom the are date included of acquisition in on the July Wireless 2, 2015. results of operations Additions to property, plant and equipment (In millions of dollars, except margins) Adjusted operating profit margin as a % of Adjusted operating profit Operating expenses 2 1 Operating expenses WIRELESS FINANCIAL RESULTS As at December 31, 2016, we• had: approximately 10.3 million subscribers;• and approximately 34% subscriber share and 33% revenue share Revenue ROGERS IS CANADA’S LARGEST PROVIDER OF WIRELESS COMMUNICATIONS SERVICES Revenue MANAGEMENT’S DISCUSSION AND ANALYSIS

REVENUE The 1% increase in blended ARPU this year was a result of: Our revenue depends on the size of our subscriber base, the • increased service revenue as discussed above; partially offset by revenue per account, the revenue from the sale of wireless devices, • the impact of expanding our lower-blended-ARPU-generating and other equipment revenue. prepaid subscriber base relative to our total subscriber base as a result of our acquisition of Mobilicity and the general increase in Service revenue prepaid net additions over the past year. Service revenue includes revenue derived from voice and data We believe the increases in gross and net additions to our postpaid services from: subscriber base and the lower postpaid churn this year were results • postpaid and prepaid monthly fees; of our strategic focus on enhancing the customer experience by •datausage; providing higher-value offerings, such as our Share Everything •airtime; plans, improving our customer service, and continually increasing •longdistancecharges; the quality of our network. We believe the increases in gross and • essential services charges; net additions to our prepaid subscriber base and the lower prepaid • inbound and outbound roaming charges; and churn were a result of our continued focus on the promotion of our • certain fees. chatr offerings. The 5% increase in service revenue this year was a result of: • larger postpaid and prepaid subscriber bases. The overall ROAM LIKE HOME AND FIDO ROAM SUBSCRIBERS increase in service revenue pertaining to the increased prepaid (IN THOUSANDS) subscriber base was partially a result of our mid-2015 acquisition 2016 5,459 of Mobilicity; and

• the continued adoption of customer-friendly Rogers Share 2015 2,252 Everything plans and the general increase in data usage noted on these types of plans. These plans generate higher postpaid 2014 457 ARPA, bundle in various calling features and long distance, provide the ability to pool and manage data usage across multiple devices, and grant access to our other offerings, such as Equipment revenue Roam Like Home, Rogers NHL GameCentre LIVE, Spotify, and Equipment revenue (net of subsidies) includes revenue from Texture by Next Issue. sales to: • independent dealers, agents, and retailers; and The 6% increase in postpaid ARPA was a result of the continued • subscribers through fulfillment by Wireless’ customer service adoption of Rogers Share Everything plans relative to the number groups, websites, telesales, and corporate stores. of subscriber accounts as customers have increasingly utilized the advantages of premium offerings and access their shareable plans The 12% decrease in revenue from equipment revenue this year with multiple devices on the same account. was a result of: • larger average subsidies given to customers who purchased devices; and POSTPAID ARPA (MONTHLY) ($) • a 4% decrease in device upgrades by existing subscribers; partially offset by 2016 $117.37 • higher gross additions.

2015 $110.74

2014 $106.41

SHARE EVERYTHING SUBSCRIBERS AS A PERCENTAGE OF OUR ROGERS-BRANDED POSTPAID SUBSCRIBER BASE (%)

2016 58%

2015 51%

2014 31%

48 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 49 $3,285 $3,239 $3,246 95% 93% 84% ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT WIRELESS ADJUSTED OPERATING PROFIT WIRELESS ADJUSTED DOLLARS) (IN MILLIONS OF 2016 2015 2014 OF THE CANADIAN POPULATION LTE COVERAGE AS A PERCENTAGE (%) 2016 2015 2014 -to-day operations, to service discussed above; and smartphones; and discussed above. existing subscriber relationships, and to attract new subscribers. ADJUSTED OPERATING PROFIT The marginal increase inresult adjusted operating of profit thisexpenses, higher as year discussed was above. revenue, a partially offset by higher operating • higher advertising costs; partially• offset by lower commissions. The 5% increase in otherof: operating expenses this year• was a higher result service costs to support the higher service revenue The 6% increase in the cost• of equipment a this year shift was a in result of: the product• mix higher of gross additions; device partially• offset sales by the towards decrease higher-cost in device upgrades by existing subscribers, as OPERATING EXPENSES We assess operating expenses in two• categories: the cost of wireless• handsets and all equipment; and other expenses involved in day MANAGEMENT’S DISCUSSION AND ANALYSIS

2016 CABLE SERVICE REVENUE MIX CABLE (%)

TELEVISION 45% ONE OF CANADA’S LEADING PROVIDERS OF HIGH- SPEED INTERNET, CABLE TELEVISION, AND PHONE $3.4 INTERNET 44% SERVICES Billion

As at December 31, 2016, we had: PHONE 11% • approximately 2.1 million high-speed Internet subscribers; • approximately 1.8 million Television subscribers – approximately 31% of Canadian cable television subscribers; • approximately 1.1 million Phone subscribers; and CABLE SUBSCRIBER RESULTS 1 • a network passing approximately 4.2 million homes in Years ended December 31 Ontario, New Brunswick, and Newfoundland and Labrador. (In thousands) 2016 2015 Chg Internet CABLE FINANCIAL RESULTS Net additions 97 37 60 Total Internet subscribers 2 2,145 2,048 97 Years ended December 31 Television Net losses (76) (128) 52 (In millions of dollars, except margins) 2016 2015 % Chg Total Television subscribers 2 1,820 1,896 (76) Revenue Phone Internet 1,495 1,343 11 Net additions (losses) 4 (60) 64 Total Phone subscribers 2 1,094 1,090 4 Television 1,562 1,669 (6) Phone 386 445 (13) Cable homes passed 2 4,241 4,153 88 Total service units 3 Service revenue 3,443 3,457 – Net additions (losses) 25 (151) 176 Equipment revenue 6 8 (25) Total service units 2 5,059 5,034 25

Revenue 3,449 3,465 – 1 Subscriber count is a key performance indicator. See “Key Performance Indicators”. 2 Operating expenses As at end of period. 3 Includes Internet, Television, and Phone subscribers. Cost of equipment 3 4 (25) Other operating expenses 1,772 1,803 (2) CABLE SUBSCRIBER BREAKDOWN Operating expenses 1,775 1,807 (2) (IN THOUSANDS) Adjusted operating profit 1,674 1,658 1 2016 2,145 1,820 1,094 Adjusted operating profit margin 48.5% 47.8% 0.7 pts Additions to property, plant and equipment 1,085 1,030 5 2015 2,048 1,896 1,190

2014 2,011 2,024 1,150 CABLE REVENUE (IN MILLIONS OF DOLLARS) InternetTelevision Phone

2016 $3,449

2015 $3,465 REVENUE Internet revenue includes: 2014 $3,467 • monthly subscription and additional use service revenue from residential, small business, and wholesale Internet access subscribers; and • modem rental fees. CABLE SERVICE REVENUE BREAKDOWN (IN MILLIONS OF DOLLARS) Television revenue includes: • digital and analog cable services – comprised of: 2016 1,495 1,562 386 • basic cable service fees; • tier service fees; 2015 1,343 1,669 445 • access fees for use of channel capacity by third parties; and

2014 1,245 1,734 478 • premium and specialty service subscription fees, including pay-per-view service fees and video-on-demand service fees;

InternetTelevision Phone and • rentals of digital cable set-top boxes.

50 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 51 $1,674 $1,658 $1,665 -to-day operations, to service ting profit this year was a result ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT CABLE ADJUSTED OPERATING PROFIT (IN MILLIONS OF DOLLARS) 2016 2015 2014 associated withenvironment; partially offset by the changingover the past year, net of television promotional pricing. consumption the pricing packages described above. decrease in cable set-top box sales compared to the prior year. Internet modem equipment); and and retain existing subscribersubscribers. relationships, and to attract new credit received this year; conventional Television broadcasting; and offset by 4K TV offerings. of the revenue and expense changes described above. ADJUSTED OPERATING PROFIT The 1% increase in adjusted opera Television revenue The 6% decrease in Television revenue• this year was the a decline result in of: Television subscribers over the past year primarily • the impact and timing of general pricing increases implemented Phone revenue The 13% decrease in Phone revenue• this year the was a impact result of of: pricing• packages; partially less offset by promotional pricing provided to subscribers asEquipment a revenue result of Equipment revenue includes revenuedigital cable generated set-top from boxes and the Internet• modems. sale of The decrease in equipment revenue this year was a result of a OPERATING EXPENSES We assess Cable operating expenses in• three categories: the cost of programming; • the cost of equipment revenue (cable digital• set-top all boxes and other expenses involved in day The 2% decrease in operating expenses• this year was lower a service result and of: programming costs, partially• due to relative a vendor shifts in product• mix various to higher-margin cost Internet efficiency from • and increased advertising, partially productivity related to initiatives; our Ignite Internet partially and 2,145 2,048 2,011 46% 28% 4% alue, unlimited usage plans; (%) r the past year; partially offset by 2014 2015 >100 Mbps SUBSCRIBERS AS A PERCENTAGE OF OUR INTERNET SUBSCRIBER BASE 2016 2014 2016 2015 INTERNET SUBSCRIBERS (IN THOUSANDS) reduced access service rates. and offset by subscriber base move to higher-v tiers of our Ignite broadband Internet offerings; and over the past year, net of promotional pricing; tiers. • lower wholesale revenue as a result of a CRTC decision that Phone revenuebusiness includes local telephony service from: revenue• from monthly service fees; residential• calling and features such as• small voicemail, call long waiting, distance and calling. caller ID; and The marginal decrease in revenue this• year was Television a subscriber result losses of: ove • the net impact of changes• in a Internet decline service in pricing; additional partially usage-based revenue as portions of the Internet revenue The 11% increase in Internet revenue• this year a was larger a Internet result subscriber of: • base; general movement of customers to higher speed and usage • the impact and timing of general pricing increases• implemented a higher subscriber base• for our the Internet movement products; of and Internet customers to higher speed and usage MANAGEMENT’S DISCUSSION AND ANALYSIS

2016 BUSINESS SOLUTIONS SERVICE REVENUE MIX (%) BUSINESS SOLUTIONS NEXT GENERATION 81% LEADING-EDGE WIRELINE TELECOM AND DATA COMMUNICATIONS SERVICES TO CANADIAN BUSINESSES $0.4 Billion LEGACY 19% As at December 31, 2016, Business Solutions: • sold to enterprises and public sector; • sold to other carriers on a wholesale basis; • had 9,300 on-net fibre connected buildings; and Business Solutions continues to focus primarily on next generation • had fibre passing close to an additional 24,500 near-net IP-based services, leveraging higher margin on-net and near-net buildings. service revenue opportunities, and using existing network facilities to expand offerings to the enterprise, public sector, and carrier wholesale markets. Business Solutions also provides voice and data BUSINESS SOLUTIONS FINANCIAL RESULTS communications and advanced services, including data centres, Years ended December 31 cloud computing, fibre networking, and professional services.

(In millions of dollars, except margins) 2016 2015 % Chg REVENUE Revenue The 1% increase in service revenue this year was a result of: Next generation 307 288 7 • the continuing execution of our plan to grow higher margin, Legacy 71 85 (16) next generation on-net and near-net IP-based services revenue; Service revenue 378 373 1 partially offset by Equipment revenue 6 450• the continued decline in the legacy and off-net voice business, a Revenue 384 377 2 trend we expect to continue as we focus the business on next generation on-net and near-net opportunities and customers Operating expenses 261 261 – move to more advanced and cost-effective IP-based services and Adjusted operating profit 123 116 6 solutions. Adjusted operating profit margin 32.0% 30.8% 1.2pts Next generation services, which include our data centre operations, Additions to property, plant and equipment 146 187 (22) represented 81% (2015 – 77%) of total service revenue during the year. Business Solutions generates revenue from the provision of wireline communications services and the sale of related equipment to OPERATING EXPENSES enterprises and public sector at retail rates and to other Operating expenses this year were in line with 2015. telecommunications carriers on a wholesale basis. ADJUSTED OPERATING PROFIT Next generation revenue is generated by the provision of high- The 6% increase in adjusted operating profit this year was a result speed, high-reliability data and voice communications, provided on of the revenue changes discussed above. Rogers’ advanced IP, Ethernet, and cloud platforms, and mainly through Rogers’ extensive communications network and data centre infrastructure. BUSINESS SOLUTIONS ADJUSTED OPERATING PROFIT (IN MILLIONS OF DOLLARS) Legacy revenue is generated mainlybycircuit-switchedlocaland 2016 $123 long distance voice services and legacy data services, provided over time-division (TDM) and prior generation data 2015 $116 platforms, with client access often delivered using leased third- party network elements and tariffed ILEC services. 2014 $122

BUSINESS SOLUTIONS SERVICE REVENUE BREAKDOWN (IN MILLIONS OF DOLLARS)

2016 307 71

2015 288 85

2014 271 106

Next Generation Legacy

52 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 53 $169 $172 $131 $1,203 $1,106 $778 (IN MILLIONS OF DOLLARS) (IN MILLIONS OF 56% ROGERS COMMUNICATIONS INC. 52% 43%

(%) AND SPORTS REVENUE AS A PERCENTAGE REVENUE AND SPORTS 2016 ANNUAL REPORT MEDIA ADJUSTED OPERATING PROFIT (IN MILLIONS OF DOLLARS) 2016 2015 2014 SPORTS REVENUE SPORTS REVENUE OF MEDIA REVENUE 2016 2015 2014 and the success of the Toronto Blue Jays; and and production; cost savings from operating efficienciesfirst half and of job 2016; and cuts during the magazine content announced earlier this year. Entertainment; ADJUSTED OPERATING PROFIT The 2% decrease in adjustedof operating the revenue profit and this expense year changes was described above. a result The 3% increase in revenue this• year was higher a result sports-related of: revenue driven by the strength of Sportsnet • higher digital advertising revenue;• partially offset lower by advertising revenues across publishing and radio. OPERATING EXPENSES We assess Media operating expenses by: • the cost of broadcast content,• including the sports cost programming of retail products• sold by Toronto Blue TSC Jays and player• payroll; Sports and all Media other expenses and involved in day-to-day operations. The 4% increase in operating expenses• this year higher was sports-related a costs; result and of: • higher digital media costs;• partially offset lower by conventional broadcast TV and radio costs, partially due to • lower publishing costs due to the strategic shift related to 13% $2,146 $2,079 $1,826 60 3 172 (2) 8.3% (0.4pts) 2015 % Chg 2,0791,907 3 4 22% 62 9% 169 7.9% 2016 2,146 1,977 56% Years ended December 31 SPORTS SPORTS BROADCASTING THE SHOPPING CHANNEL PUBLISHING Billion MEDIA $2.1 (%) 2016 MEDIA REVENUE MIX 2015 2014 MEDIA REVENUE (IN MILLIONS OF DOLLARS) 2016 Jays; properties; digital media properties; sales; and Adjusted operating profit margin Additions to property, plant and equipment (In millions of dollars, except margins) Revenue Operating expenses Adjusted operating profit REVENUE Media revenue is earned from: • advertising sales across its• television, subscriptions to televised radio, products; • publishing, retail product and sales; • ticket sales, receipts of MLB• revenue circulation sharing, of published and products. concession MEDIA FINANCIAL RESULTS DIVERSIFIED CANADIAN MEDIA COMPANY We have a broad portfolio ofsignificantly media includes: properties, which most • sports media and entertainment, such as the Toronto Blue • our exclusive national 12-year• NHL Agreement; category-leading television and radio broadcasting • multi-platform televised and online• shopping; digital media; and •publishing. MANAGEMENT’S DISCUSSION AND ANALYSIS

ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT

Additions to property, plant and equipment include costs ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT associated with acquiring property, plant and equipment and (IN MILLIONS OF DOLLARS) placing it into service. The telecommunications business requires 2016 $2,352 extensive and continual investments, including investment in new technologies and the expansion of capacity and geographical 2015 $2,440 reach. The expenditures related to the acquisition of spectrum licences are not included in additions to property, plant and 2014 $2,366 equipment and do not factor into the calculation of free cash flow or capital intensity. See “Managing Our Liquidity and Financial Resources”, “Key Performance Indicators”, and “Non-GAAP Measures” for more information. 2016 ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT (%) Additions to property, plant and equipment are significant and have a material impact on our cash flows, therefore our CABLE 46% management teams focus on planning, funding, and managing WIRELESS 30% them. $2.4 Additions to property, plant and equipment before related Billion CORPORATE 15% changes to non-cash working capital represent capital assets to which we took title. We believe this measure best reflects our cost BUSINESS SOLUTIONS 6% of property, plant and equipment in a given period and is a simpler MEDIA 3% measure for comparing between periods.

Years ended December 31

(In millions of dollars, except capital intensity) 2016 2015 % Chg CABLE The increase in additions to property, plant and equipment in Additions to property, plant and equipment Cable this year was a result of greater investment in network Wireless 702 866 (19) Cable 1,085 1,030 5 infrastructure to further improve the reliability and quality of the Business Solutions 146 187 (22) network and to improve the capacity of our Internet platform to Media 62 60 3 deliver gigabit Internet speeds, partially offset by lower purchases Corporate 357 297 20 of our next generation NextBox digital set-top box along with lower investment in information technology compared to last year. Total additions to property, plant and equipment 1 2,352 2,440 (4)

2 Capital intensity 17.2% 18.2% (1.0 pts) BUSINESS SOLUTIONS 1 Additions to property, plant and equipment do not include expenditures on The decrease in additions to property, plant and equipment in spectrum licences. Business Solutions this year was a result of greater investments to 2 As defined. See “Key Performance Indicators”. our network and data centre last year.

WIRELESS MEDIA The decrease in additions to property, plant and equipment in The increase in additions to property, plant and equipment in Wireless this year was a result of lower expenditures on our wireless Media this year was a result of higher investments made to our network, along with lower software and information technology broadcast facilities and IT infrastructure. costs. Deployment of our 700 MHz LTE network has reached 91% of Canada’s population as at December 31, 2016 (2015 – 78%). CORPORATE The 700 MHz LTE network offers improved signal quality in The increase in additions to property, plant and equipment in basements, elevators, and buildings with thick concrete walls. Corporate this year was a result of higher information technology Deployment of our overall LTE network has reached approximately costsaswellashigherspendingonpremiseimprovementsatour 95% of Canada’s population as at December 31, 2016 various offices. (2015 – 93%).

CAPITAL INTENSITY Capital intensity decreased this year as a result of the decrease in additions to property, plant and equipment as described above, combined with the increase in revenue described previously in this MD&A.

54 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 55 160 (42) 2015 % Chg 2,277 – 2,117 3 93 2016 2,276 2,183 Years ended December 31 o stock-based compensation ROGERS COMMUNICATIONS INC. ng stock options, RSUs, and DSUs. 2016 ANNUAL REPORT equipment over the last several years,depreciable which assets; has offset resulted by in more equipmentrelated onerous contract charges 484 412 Total depreciation and amortization Depreciation and amortization wasresult of: stable this year• primarily the as a overall increase in• additions certain intangible to assets that• were property, fully ceasing amortized; amortization and on plant certain brand name assets and in 2016. IMPAIRMENT OF ASSETS AND RELATED ONEROUS CONTRACT CHARGES During the yearaggregate $484 ended million December impairmentcharge charge related 31, to and our 2016, onerous IPTV product. contract we recorded(In an millions of dollars)Impairment of property, plant and Onerous contracts and otherTotal impairment of assets and Year endedThese December 31, charges 2016 related toour IPTV our product decision as to arelationship result discontinue of with developing our decision Comcast toplatform. develop and a The long-term deploy onerousremaining their contract contractual X1 liabilities charges IP-basedproduct for primarily and the video relate were developmentliabilities. recognized of to We did in our not the record IPTV accounts an impairment payable charge and in 72 2015. accrued RESTRUCTURING, ACQUISITION AND OTHER This year, werestructuring, acquisition incurred and $160 other2016 expenses. primarily million These consisted (2015 expensestargeted of in restructuring – severance of our $111 coststhe employee associated million) wind base with and down in coststhese the of related expenses to and were changescosts incurred to associated primarily with certain as thebase, businesses. a targeted In the result restructuring 2015, of of reorganizationacquisition our of severance Mobilicity, employee of and the purchase our of our interest OMNI in Glentel. television stations, the DEPRECIATION AND AMORTIZATION (In millions of dollars) Depreciation Amortization We had a(2015 liability – ofrecorded at $157 $189 its fair million value, million) includi as related atWe t December paid 31, $69stock million 2016 options, RSUs, in and 2016 DSUs upon (2015 exercise. – $73 million) to holders of 57 20 55 (22) 2015 –– (4) n/m 55 11 774 (2) 111 44 477 (32) 2015 % Chg 2,277 – 5,032 1 1,342 (38) 70 24 61 (33) 2016 61 761 160 484 191 324 835 2016 2,276 5,092 Years ended December 31 Years ended December 31 ” for information about this measure, ricted share units (RSUs), and 2 1 2 2 , certain amounts have been retrospectively amended. See “Accounting other onerous contract charges Other expense (income) Finance costs Restructuring, acquisition and Impairment of assets and related Depreciation and amortization Stock-based compensation Income tax expense the stockcompensation program. price Seeinformation “Financial about equity Risk appreciation derivatives. Management” for risk for our stock-based receipt As a result of the IFRSIncome Interpretations Taxes Committee’s agenda decision relating toPolicies” IAS for more 12 information. including how we calculate it. Adjusted operating profit is asubstitute or non-GAAP alternative measure for and GAAPdoes should measures. not not It have be is a considered not standard a other a meaning, companies. defined so term See may under “Non-GAAP not IFRS be and Measures a reliable way to compare us to Net income STOCK-BASED COMPENSATION Our stock-based compensation, which includesstock stock options (with appreciationdeferred rights), share units (DSUs), is rest generally• determined by: the vesting of stock• options and changes share in units; the and market• price of the RCI impact Class of B certain shares; derivative offset instruments by to hedge a portion of ADJUSTED OPERATING PROFIT See “Key Changes2015” in for a Financial discussionthis of Results year. the This increase in Year adjusted Compared operating profit to 2 1 REVIEW OF CONSOLIDATED PERFORMANCE This section discusses our netnotformpartofthesegmentdiscussionsabove. income and other expenses that do Deduct (add): (In millions of dollars) (In millions of dollars) Adjusted operating profit Impact of vesting Impact of change in price Equity derivatives, net of interest Total stock-based compensation Stock-based compensation(2015 increased – $55 to million) primarilystock-based as $61 a result compensation million of theexecutives. vesting to in of additional 2016 employees, directors, and key MANAGEMENT’S DISCUSSION AND ANALYSIS

FINANCE COSTS INCOME TAX EXPENSE Thetablebelowshowsthedifferencebetweenincometax Years ended December 31 expense computed by applying the statutory income tax rate to (In millions of dollars) 2016 2015 % Chg income before income tax expense and the actual income tax expense for the year: Interest on borrowings 1 758 761 – Interest on post-employment Years ended December 31 benefits liability 9 11 (18) (In millions of dollars, except tax rates) 2016 2015 Loss on repayment of long-term debt – 7 (100) Statutory income tax rate 26.6% 26.5% Loss on foreign exchange 13 11 18 Income before income tax expense 1 1,159 1,819 Change in fair value of derivatives (16) 3n/m Computed income tax expense 1 308 482 Capitalized interest (18) (29) (38) Increase (decrease) in income tax Other 15 10 50 expense resulting from: Total finance costs 761 774 (2) Non-deductible stock-based compensation 5 5 1 Borrowings include long-term debt and short-term borrowings associated with our accounts receivable securitization program. Non-deductible portion of equity losses 18 11 Interest on borrowings Income tax adjustment, legislative Interest on borrowings decreased this year as a result of a lower tax change 3 6 1 amount of debt outstanding compared to 2015. See “Managing Non-taxablegainonacquisition – (20) Our Liquidity and Financial Resources” for more information about Non-taxable portion of capital gain (7) – our debt and related finance costs. Other items (3) (7) Total income tax expense 1 324 477 Loss on repayment of long-term debt Effectiveincometaxrate1 28.0% 26.2% We recognized a $7 million loss on repayment of long-term debt in Cash income taxes paid 295 184 2015 related to debt derivatives associated with the repayment or repurchase of certain senior notes in March 2015. These losses 1 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 were deferred in the hedging reserve until maturity of the notes Income Taxes, certain amounts have been retrospectively amended. See “Accounting Policies” for more information. and were then recognized in net income. The loss relates to transactions in 2013 wherein foreign exchange rates on the related Our effective income tax rate this year was 28.0% compared to debt derivatives were updated to then-current rates. 26.2% for 2015. The effective income tax rate for 2016 was higher than the statutory tax rate primarily as a result of non-deductible Loss on foreign exchange equity losses recognized on certain of our investments, partially During 2016, all of our US dollar-denominated senior notes and offset by the non-taxable portion of capital gains on the sale of debentures were hedged for accounting purposes. Foreign investments. exchange losses recognized in 2016 were primarily related to our Cash income taxes paid increased this year as a result of applying US dollar-denominated credit facility borrowings, which were not non-capital losses from the Mobilicity transaction to offset our 2015 designated as hedges for accounting purposes due to the short- liability. term nature of the borrowings. Foreign exchange losses recognized in 2015 were primarily related to the impact of fluctuations in the value of the Canadian dollar relative to the US NET INCOME dollar on working capital, consisting mainly of the unhedged Net income was 38% lower than last year. See “Key Changes in portion of our US dollar-denominated accounts payable. Financial Results This Year Compared to 2015” for more information. See “Managing Our Liquidity and Financial Resources” for more information about our debt and related finance costs. Years ended December 31 (In millions of dollars, except per share OTHER EXPENSE (INCOME) amounts) 2016 2015 % Chg Theincreaseinotherexpensethisyearwasprimarilyaresultof Net income 1 835 1,342 (38) equity losses recognized on certain of our joint ventures. During Basic earnings per share 1 $1.62 $ 2.61 (38) the year, we announced the decision to wind down our shomi joint Diluted earnings per share 1 $1.62 $ 2.60 (38) venture and recognized a loss of $140 million associated with the writedown of the investment and our share of the estimated cost of 1 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 the remaining obligations of shomi. Additionally, we recognized a Income Taxes, certain amounts have been retrospectively amended. See “Accounting Policies” for more information. net loss of $11 million this year on divestitures pertaining to investments. In 2015, we recognized a $74 million gain on our acquisition of Mobilicity, partially offset by a $72 million loss related to our share of an obligation to purchase at fair value the non-controlling interest in one of our joint ventures.

56 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 57 .See Income Taxes gacy, off-net business, partially ROGERS COMMUNICATIONS INC. . See “Accounting Policies” for more 2016 ANNUAL REPORT Income Taxes 2015 FULL YEAR RESULTS COMPARED TORevenue 2014 Consolidated revenue increased by 4%growth in of 2015, 5% reflecting in revenue was Wireless stable. and Wireless 14% revenue in increasedadoption Media, as while a result Cable of of revenue theEverything continued plans, partially higher-postpaid-ARPA-generating offset byroaming the plans. Rogers introduction Cable of revenue lower-priced was Share stablerevenue as was the offset increase by in Internet Media decreases in revenue Television and increased Phonegrowth revenue. at as Sportsnet, and apartially higher revenue offset result at by of the continuedadvertising, Toronto softness as the Blue well in as Jays, NHL conventional lower consumer TV retail Agreement, and sales at print TSC. Adjusted operating profit Consolidated adjusted$5,032 operating million, reflecting profit increases in Mediaoffset increased of by $41 million, in decreases partially adjusted in 2015 operating profit Business decreased to Solutions marginally asnet of a unit result $6 of costs higher million. forpartially Wireless equipment and offset a byARPA-generating greater number service the of plans upgrades, continuedCable and adjusted adoption operating higher of profithigher equipment was investments higher-postpaid- revenue. in stable customer in care,enhancement-related 2015 network, as and costs, customer a value productivity result of offset initiatives. The byresult decrease of continued in various declines Business inoffset the Solutions efficiency le by was a continued and generation growth business inprofit improvements. increased the Media primarily higher-margin asBlue adjusted a Jays. on-net, result operating of next the success of the Toronto Net income and adjusted net income Net income$1,341 million increased in 2014acquisition primarily and to as other a costs,expense, result lower $1,342 of finance and lower costs, restructuring, lower milliondepreciation higher income tax other in andretrospectively income, amended 2015 partially as amortization.Committee’s offset agenda a from decision by relating result to Net IAS higher of 12 the income IFRS Interpretations has been “Accounting Policies” for more information. Adjusted net income$1,532 decreased to million $1,479 inamortization million 2014 and in higher as 2015 otheradjusted from a operating expense, profit result partially and lower offset ofnet income by income tax higher expense. higher has Adjusted depreciation beenIFRS and retrospectively Interpretations amended asIAS Committee’s a result agenda 12 of decision the relating to information. $1,481 $1,479 $1,532 (2) n/m 767511 (1) 5 2015 % Chg 1,479 – 5,0322,277 1 – $2.87$2.86 – – 40 761 534 2016 1,481 5,092 2,276 $2.88 $2.86 Years ended December 31 asures” for information about these orporate office. Total salaries cludes the $3 million expense (2015 – 1 f deferred tax balances as a result of repayment of long-term debt for the year 1 3 1 4, 5 1 2 , certain amounts have been retrospectively amended. See “Accounting Income tax expense Other expense (income) Depreciation and amortization Finance costs 2015 2014 ADJUSTED NET INCOME (IN MILLIONS OF DOLLARS) 2016 As a result of the IFRSIncome Interpretations Taxes Committee’s agenda decision relating toPolicies” IAS for more 12 information. ended December 31, 2015. Income tax expense excludes thefor $213 the million year recovery ended (2015 December – 31,items. $40 2016 million For related recovery) to 2016, the income income tax tax impact expense for adjusted also ex Finance costs exclude the $7 million loss on Other expense for 2016 excludes aninvestments $11 and million a net $140 loss million on loss2015, divestitures on other pertaining the to wind income down excludes of$72 our a million shomi $74 joint loss million venture. related For gainnon-controlling to interest on in our acquisition one of share of our of joint Mobilicity ventures. an and obligation a to purchase at fair value the measures, including how we calculate them. $6 million expense) for the revaluation o Adjusted operating profit,earnings adjusted per net share income,substitutes and are or adjusted non-GAAP alternatives basic for measuresIFRS, GAAP and and and do measures. diluted not should These haveus are standard not meanings, not to so be defined may other not considered terms companies. be under as a See reliable way “Non-GAAP to Me compare legislative income tax rate changes. Adjusted net income Employee salaries and benefits representexpenses. a As at material December portion 31, of 2016,employees our we had (2015 approximately 25,200 –including 26,200) shared across services alland and benefits of the for our c full-time2016 operating employees were groups, and approximately part-time $2,073The employees increase million was in (2015 mainly a –salaries result and $1,975 higher of pension million). higher expenses. Toronto Blue Jays player EMPLOYEES 5 4 2 3 1 ADJUSTED NET INCOME Adjusted net incomeprimarily was as marginally a higher resultfinance of compared costs, higher partially to adjusted offset 2015, by operatinghigher higher profit income other tax and expense expense. (income) lower and Adjusted diluted earnings per share Adjusted basic earnings per share (In millions of dollars, except peramounts) share Deduct (add): Adjusted operating profit MANAGEMENT’S DISCUSSION AND ANALYSIS

QUARTERLY RESULTS The table below shows our quarterly consolidated financial results and key performance indicators for 2016 and 2015.

QUARTERLY CONSOLIDATED FINANCIAL SUMMARY 2016 2015 (In millions of dollars, except per share amounts) Full Year Q4 Q3 Q2 Q1 Full Year Q4 Q3 Q2 Q1 Revenue Wireless 7,916 2,058 2,037 1,931 1,890 7,651 1,981 1,973 1,903 1,794 Cable 3,449 858 865 870 856 3,465 855 871 869 870 Business Solutions 384 96 95 97 96 377 95 94 94 94 Media 2,146 550 533 615 448 2,079 560 473 582 464 Corporate items and intercompany eliminations (193) (52) (38) (58) (45) (158) (39) (27) (45) (47) Total revenue 13,702 3,510 3,492 3,455 3,245 13,414 3,452 3,384 3,403 3,175 Adjusted operating profit (loss) Wireless 3,285 792 884 846 763 3,239 754 879 841 765 Cable 1,674 435 431 415 393 1,658 426 416 414 402 Business Solutions 123 30 31 31 31 116 30 31 27 28 Media 169 49 79 90 (49) 172 56 58 90 (32) Corporate items and intercompany eliminations (159) (47) (40) (35) (37) (153) (40) (39) (35) (39) Adjusted operating profit 1 5,092 1,259 1,385 1,347 1,101 5,032 1,226 1,345 1,337 1,124 Deduct (add): Stock-based compensation 61 16 18 15 12 55 16 13 14 12 Depreciation and amortization 2,276 555 575 572 574 2,277 580 576 562 559 Impairment of assets and related onerous contract charges 484 484––– ––––– Restructuring, acquisition and other 160 34 55 27 44 111 23 37 42 9 Finance costs 761 188 188 189 196 774 192 190 182 210 Other expense (income) 2 191 (4) 220 9 (34) (4) 4 (31) 26 (3) Net income (loss) before income tax expense (recovery) 2 1,159 (14) 329 535 309 1,819 411 560 511 337 Income tax expense (recovery) 2 324 (5) 109 141 79 477 112 135 148 82 Net income (loss) 2 835 (9) 220 394 230 1,342 299 425 363 255 Earnings (loss) per share 2: Basic $1.62($ 0.02) $ 0.43 $ 0.77 $ 0.45 $ 2.61 $ 0.58 $ 0.83 $ 0.70 $ 0.50 Diluted $1.62($ 0.04) $ 0.43 $ 0.76 $ 0.44 $ 2.60 $ 0.58 $ 0.82 $ 0.70 $ 0.48 Net income (loss) 2 835 (9) 220 394 230 1,342 299 425 363 255 Add (deduct): Stock-based compensation 61 16 18 15 12 55 16 13 14 12 Restructuring, acquisition and other 160 34 55 27 44 111 23 37 42 9 Gain on acquisition of Mobilicity 2 – –––– (74)–(74)–– Loss on non-controlling interest purchase obligation – –––– 72–72–– Loss on repayment of long-term debt – –––– 7–––7 Loss on wind down of shomi 140 –140–– ––––– Net loss (gain) on divestitures pertaining to investments 11 –50–(39)––––– Impairment of assets and related onerous contract charges 484 484––– ––––– Income tax impact of above items 2 (213) (143) (56) (9) (5) (40) (7) (12) (13) (8) Income tax adjustment, legislative tax change 3 –––3 6––6– Adjusted net income 1, 2 1,481 382 427 427 245 1,479 331 461 412 275 Adjusted earnings per share 1, 2: Basic $2.88$ 0.74 $ 0.83 $ 0.83 $ 0.48 $ 2.87 $ 0.64 $ 0.90 $ 0.80 $ 0.53 Diluted $2.86$ 0.74 $ 0.83 $ 0.83 $ 0.47 $ 2.86 $ 0.64 $ 0.89 $ 0.80 $ 0.53 Additions to property, plant and equipment 2,352 604 549 647 552 2,440 773 571 621 475 Cash provided by operating activities 3,957 1,053 1,185 1,121 598 3,747 950 1,456 1,114 227 Free cash flow 1 1,705 392 598 495 220 1,676 274 660 476 266 Total service revenue 3 13,027 3,306 3,328 3,308 3,085 12,649 3,214 3,183 3,204 3,048

1 Adjusted operating profit, adjusted net income, adjusted basic and diluted earnings per share, and free cash flow are non-GAAP measures and should notbeconsideredas substitutes or alternatives for GAAP measures. These are not defined terms under IFRS, and do not have standard meanings, so may not be a reliable way to compare us to other companies. See “Non-GAAP Measures” for information about these measures, including how we calculate them. 2 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See “Accounting Policies” for more information. 3 As defined. See “Key Performance Indicators”.

58 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 59 plans increasingly incorporate ROGERS COMMUNICATIONS INC. ed a stable mix of postpaid and 2016 ANNUAL REPORT and the realization of our enhancedoffset customer by service efforts; partially more monthlydistance; minutes and and calling features,advantage such of value-added asHome roaming long and plans, such Fidoroaming usage as Roam. and vary Roam over Peak Like the course travel of a calendar seasons year. typically impact more consumers shift to smartphones; and subscribers. upgrade tounlimited usage; higher-tier and speed plans, including those with products and services as servicemore features, plans such are as increasingly unlimited bandwidth bundling of or TV a channels. greater number • higher handset sales as more consumers• shift stable to postpaid smartphones; churn, which we believe is beginning to reflect • decreasing voice revenue as rate • lower roaming revenue as more subscribersThe are trends in Wireless adjusted taking operating• profit reflect: higher handset subsidies that offset the higher• handset higher sales voice as and data costs related to the increasingWe number of continue tosubscribers. target We organic have growthprepaid maintain subscribers. in Prepaid higher-value plans aresimilar postpaid evolving to to have those properties evolution provides of Canadians with traditional greatera choice postpaid postpaid of subscribing or to plans. prepaidover service We plan. time believe Growth inretention, has this our customer resulted credit, base increases in and have been offset higher collection; by gains in costs operating however, efficiencies. Wireless for most operating customer results ofmarketing service, are the and influenced promotionalsubscriber cost by expenditures additions the and timing andsubscriber acquisition- higher of related and our levels activation-related subsidies,the expenses, third of typically resulting and in fourth in quarters.experience The third higher this and activity fourth as quartersseason-related a typically consumer result of behaviour. “backwireless The to handset launch school” and of modelsadditions. holiday popular can Highly-anticipated device new also launches typically affectfall season occur the of in each the level year. Wein of typically the see first subscriber lower quarter subscriber of additions additions the year, which around is aroaming the direct revenue impact of is fourth the dependent higher onis quarter customer impacted travel holiday volumes, by which Canadian season. dollar the and general Wireless value economic conditions. of the foreignCable exchange rateThe of trends in the Cable service revenue• primarily reflect: higher Internet subscription fees as• customers general pricing increasingly increases; offset• by competitive losses of Television• subscribers; Television subscribers downgrading their• service plans; lower and additional usage of Internet, Television, and Phone value of derivative instruments, QUARTERLY TRENDS AND SEASONALITY Our operating results generallyresult vary of from changes quarterfluctuations, in to general quarter among as economicsegments. a conditions other This means and our things, results seasonal a in one good in quarter are indication notWireless, each necessarily of Cable, and of how Media eachand we have certain our unique other will historical seasonal trends aspects reporting perform in, to, their in businesses. aFluctuations future in net quarter. attributed income to from losses quarter ongains the to or repayment losses, quarter changes of can in debt, also the foreign fair be exchange Wireless The trends inreflect: Wireless revenue• and the growing adjusted number of• wireless operating voice higher and usage profit data of subscribers; wireless data; other income and expenses, impairmentincome of tax expense. assets, and changes in Net loss and higher adjusted netThe income net loss of $9of million in the the $484 fourth million quarterrelated was impairment primarily and to a other result the charges discontinued“Review we investment recognized of in ourAdjusted Consolidated net IPTV income Performance” product. increased See higher in for the fourth more adjusted quarteramortization, as information. a and operating result lower of income tax finance profit, expense. costs, partially lower offset by depreciation higher and Higher adjusted operating profit Higher consolidated adjusted operating profitreflects in an the increase fourth quarter in Wirelessof adjusted the operating strong profit flow as through aimproved of result top Cable line performance growth described duehigher-margin above Internet to and services. the shift in product mix to Higher revenue Consolidated revenue increased 2%driven by in Wireless the service revenue fourth growth of quarter, 6%. largely Wireless serviceprimarily revenue as a increased resultadoption of 6% a larger in of subscriberEverything base plans the and and higher-postpaid-ARPA-generating the the increase fourth continued in data Rogers quarter usage on theseCable plans. revenue Share increased marginally inInternet the revenue fourth growth quarter of asTelevision 9% strong was and largely Phone offsetshift by revenue. in the product We mix decline to continue in higher-margin Internet to services. seeMedia an revenue ongoing decreased 2%result in of the fewer fourth postseasonlast quarter Toronto Blue year, primarily Jays as lower games a revenue overall compared within advertising publishing, to partially revenue, offset by and higher sales lower at TSC. circulation FOURTH QUARTER 2016 RESULTS Results commentary inthe “Fourth fourth quarter Quarter of 2016 2016 with the Results” fourth quarter compares of 2015. MANAGEMENT’S DISCUSSION AND ANALYSIS

The trends in Cable adjusted operating profit primarily reflect: Seasonal fluctuations relate to: • higher Internet operating expenses, in line with the increased • periods of increased consumer activity and their impact on Internet subscription fees; and advertising and related retail cycles, which tend to be most active • higher premium supplier fees in Television as a result of in the fourth quarter due to holiday spending and slower in the bundling more value-added offerings into our Cable products; first quarter; offset by • the MLB season, where: • lower general Television and Phone operating expenses. • games played are concentrated in the spring, summer, and fall months (generally the second and third quarters of the Cable’s operating results are affected by modest seasonal year); fluctuations in subscriber additions and disconnections, typically • revenue related to game day ticket sales, merchandise sales, caused by: and advertising are concentrated in the spring, summer, and • university and college students who live in residences moving fall months (generally the second and third quarters of the out early in the second quarter and canceling their service as well year), with postseason games commanding a premium in as students moving in late in the third quarter and signing up for advertising revenue and additional revenue from game day cable service; ticket sales and merchandise sales, if and when the Toronto • individuals temporarily suspending service for extended Blue Jays play in the postseason; and vacations or seasonal relocations; and • programming and production costs and player payroll are • the concentrated marketing we generally conduct in our fourth expensed based on the number of games aired; and quarter. • the NHL season, where: • regular season games are concentrated in the fall and winter Cable operating results are also influenced by trends in cord months (generally the first and fourth quarters of the year) and shaving and cord cutting, which has resulted in fewer subscribers playoff games are concentrated in the spring months watching traditional cable television, as well as a lower number of (generally the second quarter of the year). We expect a Television subscribers. In addition, trends in the use of wireless correlation between the quality of revenue and earnings and products and Internet or social media to substitute for traditional the extent of Canadian teams’ presence during the playoffs; home phone products have resulted in fewer Phone subscribers. • programming and production costs are expensed based on the timing of when the rights are aired or are expected to be Business Solutions consumed; and The trends in Business Solutions operating profit margin primarily • advertising revenue and programming expenses are reflect the ongoing shift from lower-margin, off-net legacy long concentrated in the fall, winter, and spring months, with distance and data services to higher-margin, next generation playoff games commanding a premium in advertising services and data centre businesses. revenue. Business Solutions does not generally have any unique seasonal aspects to its business. Other expenses Depreciation and amortization has been trending upward over the Media past several years as a result of an increase in our general The trends in Media’s results are generally the result of: depreciable asset base, related significantly to our recent rollout • fluctuations in advertising and consumer market conditions; and expansion of our wireless network. This is a direct result of • subscriber rate increases; increasing additions to property, plant and equipment in previous • higher sports and rights costs, including increases as we move and current years as we worked to upgrade our wireless network, further along in our NHL Agreement; and purchase NextBox set-top boxes, and roll out Ignite Gigabit • continual investment in primetime and specialty programming Internet and 4K TV to our Cable footprint. We expect depreciation relating to both our broadcast networks (such as City) and our and amortization to be relatively stable for the next several years as specialty channels (such as FX (Canada)). our additions to property, plant and equipment moderate and certain intangible assets become fully amortized.

60 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 61 ROGERS COMMUNICATIONS INC. d an overall increase in trade payables fference between the year-end exchange f Glentel’s international operations. anding derivatives, as well as the value increases for publicly-traded ons to property, plant and equipment. See uipment” for more information. on of the Cdn$ relative to the US$. See oyalty program, partially offset by increases result of certain divestitures and the wind ties pertaining to onerous contract charges f a receivable pertaining to the divestiture of ted to our share of remaining obligations ceivables driven by increased revenue. 2016 ANNUAL REPORT , certain amounts have been retrospectively amended. See “Accounting expected to be incurred in our shomi joint venture. recorded relating to our IPTV productas an a result of the timingpayable of pertaining payments to made, the partially divestiture offset o by the reduction of a in customer deposits at the Toronto Blue Jays. notes in 2017, partially offset byduring the the repayment year. of $1,000 million of senior notes US$, the upcoming maturity of $750are million now in classified senior as notes current, in and earlySee a 2017 “Sources decrease that and in Uses our of credit Cash” facility for borrowings. more information. primarily as a result of the appreciati rate and the hedged rate onsettlement our and outst maturity of certain derivatives discussed in “Financial Risk Glentel’s international operations. derivatives primarily as a result of the di depreciation, partially offset by additi down of shomi, partially offset byinvestments. fair “Additions to Property, Plant and Eq “Financial Risk Management” for more information. “Financial Risk Management” for more information. Management”. Income Taxes – 71 n/m See “Managing Our Liquidity and Financial Resources” for more information. 9 (1) (11) n/m 9610 90 124 94 n/m Reflects Primarily the reflects timing a of provision tax rela installments. 11 (11) (100) See “Managing Our Liquidity and Financial Resources” for more information. 15 7 47 Reflects changes in market values of equity and expenditure derivatives. See 50 (17) (34) n/m 95 23 24 Reflects changes in market values of bond forwards and debt derivatives, 800 – – n/m 388 (21) (5) Reflects a decrease pertaining to a l 318 (3) (1) n/m 303198 (88) (107) (29) Primarily reflects the reduction o (54) Reflects changes in market values of debt derivatives and expenditure 150 (52) (35) Reflects a reclassification of long-term receivables to current. 455 107 24 Reflects an increase in long-term pension obligations. 2015 $ Chg % Chg Explanation of significant changes 2,066 (149)5,636 (7) (367) Primarily reflects the reversal of certain temporary differences. (7) Reflects changes in retained earnings and equity reserves. 3,905 – – n/m 1,792 157 9 Reflects an increase in trade re 2,708 75 3 Primarily reflects increased liabili 1,000 (250) (25) Reflects the upcoming maturity of our $250 million and $500 million senior 7,2432,271 (113) (97) (2) Reflects amortization of intangible (4) assets. Reflects lower carrying values as a 5,017 96 2 2,622 (52) (2) 1,992 (284) (14) See “Current portion of derivative instruments” for more information. 23,553 (480)29,189 (2) (847) (3) 29,189 (847) (3) 15,870 (540) (3) Primarily reflects revaluation from the appreciation of the Cdn$ relative to the 10,997 (248) (2) Reflects the impairment of our IPTV-related assets as well as annual – 8 71 22 33 91 98 800 186 134 367 315 750 215 118 562 2016 1,917 5,269 3,905 1,949 2,783 7,130 2,174 5,113 2,570 1,708 23,073 28,342 28,342 15,330 10,749 1 1 1 Bank advances Short-term borrowings Income tax payable Current portion of provisions Unearned revenue Cash and cash equivalents Accounts receivable Inventories Accounts payable and accrued liabilities Current portion of long-term debt Other current assets Current portion of derivative instruments Current portion of derivative instruments As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Policies” for more information. Shareholders’ equity Total liabilities Total liabilities and shareholders’ equity Liabilities and shareholders’ equity Current liabilities: Total assets 1 Assets Current assets: As at December 31 (In millions of dollars) OVERVIEW OF FINANCIAL POSITION CONSOLIDATED STATEMENTS OF FINANCIAL POSITION Intangible assets Investments Total current liabilities Provisions Long-term debt Derivative instruments Other long-term liabilities Total current assets Property, plant and equipment Derivative instruments Other long-term assets Deferred tax assets Goodwill Deferred tax liabilities MANAGEMENT’S DISCUSSION AND ANALYSIS

Managing Our Liquidity and Financial Resources SOURCES AND USES OF CASH OPERATING, INVESTING AND FINANCING ACTIVITIES Years ended December 31 (In millions of dollars) 2016 2015 Cash provided by operating activities before changes in non-cash working capital items, income taxes paid, and interest paid 4,994 5,004 Change in non-cash operating working capital items 14 (302) Cash provided by operating activities before income taxes paid and interest paid 5,008 4,702 Income taxes paid (295) (184) Interest paid (756) (771) Cash provided by operating activities 3,957 3,747 Investing activities: Additions to property, plant and equipment (2,352) (2,440) Additions to program rights (46) (64) Changes in non-cash working capital related to property, plant and equipment and intangible assets (103) (116) Acquisitions and other strategic transactions, net of cash acquired – (1,077) Other 45 (70) Cash used in investing activities (2,456) (3,767) Financing activities: Net repayments on short-term borrowings – (42) Net (repayments) issuance of long-term debt (538) 754 Net (repayments) proceeds on settlement of debt derivatives and forward contracts (45) 129 Transaction costs incurred (17) (9) Dividends paid (988) (977) Other 5 – Cash used in financing activities (1,583) (145) Change in cash and cash equivalents (82) (165) Cash and cash equivalents, beginning of year 11 176 (Bank advances) cash and cash equivalents, end of year (71) 11

OPERATING ACTIVITIES FINANCING ACTIVITIES The 6% increase in cash provided by operating activities this year Accounts receivable securitization was a result of higher net funding provided by non-cash working Below is a summary of the activity relating to our accounts capital and lower interest paid, partially offset by higher cash receivable securitization program for the quarter and year to date: income taxes paid. Years ended December 31

INVESTING ACTIVITIES (In millions of dollars) 2016 2015 Additions to property, plant and equipment Short-term borrowings We spent $2,352 million this year on property, plant and Proceeds received on short-term equipment before related changes in non-cash working capital borrowings 295 294 items, which was 4% lower than 2015. See “Additions to Property, Repayment of short-term Plant and Equipment” for more information. borrowings (295) (336)

Acquisitions and other strategic transactions Net repayments on short-term Expenditures in 2015 included $129 million for the acquisition of borrowings – (42) our 2500 MHz spectrum licences and Shaw spectrum licences (including $2 million of related transaction costs) and $948 million related to the acquisitions of Mobilicity, our investment in Glentel, and certain dealer stores.

62 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS – 63 (68) (500) 2015 3,000 3,568 (Cdn$) Notional (71) (68) (301) rate 2016 2,420 2,860 As at December 31 Exchange (US$) ROGERS COMMUNICATIONS INC. Year ended December 31, 2015 Notional ties (2015 – $500 million). Certain 2016 ANNUAL REPORT Borrowings Bank advances Outstanding letters of credit long-term debtlong-term debt – – – 6,025 – (5,525) letter of credit facilities Effective April 1, 2016, we amendedfacility our $2.5 to, billion revolving credit amongJuly 2019 other to September things, 2020.the At extend the $1.0 same billion the time, non-revolving we creditextend maturity also facility the amended maturity to, date date among from other from April things, 2017 to April 2018. Issuance of Canadian dollar Repayment of Canadian dollar As at December 31,US$150 2016, we million) had $301 ofand million borrowings ($100 non-revolving million outstanding and credit underfunds facili our were revolving favourable borrowed in interestderivatives US rate related dollars to spread; theseand to borrowings we principal to take have convert payment advantage all entered the of obligations interest into a toAs debt Canadian at December dollars.bank 31, credit 2016, See facilities wethese of had facilities $2.4 available is billion, liquidityequally unsecured as with under all and illustrated our of our guaranteed below. senior notes Each by and debentures. of RCCI and ranks Available liquidity – bank credit facilities (In millions of dollars) Add (deduct): (In millions of dollars, except exchange rates) Total revolving & non-revolving credit and “Financial Risk Management” for more information. 1,140 4,017 (1,540) (4,226) (Cdn$) Notional rate Exchange (US$) 2,188 1.31 2,877 (2,038) 1.32 (2,686) edit facility) that was established Year ended December 31, 2016 Notional tial, temporary repayment from debt long-term debt term debt long-term debt Issuance of US dollar long-term Issuance of Canadian dollar Total long-term debt issued Repayment of US dollar long- Repayment of Canadian dollar Total long-term debt repaid in addition to ournon-revolving existing credit $2.5 facility is billion available revolvingmatures on in a credit April non-revolving facility. 2018 basis with The and noto scheduled principal maturity. repayments prior Inbank December 2015, credit we facilityDecember amended to 2015 our allow non-revolving throughremained par May $1.0 billion. 2016; Asyear, a the result we maximum of reduced repayments credit thenon-revolving made amount limit credit during of the facility borrowings frominterest rate available $1.0 charged under billion on borrowings our tofacility under $301 the falls non-revolving million. within credit The thecredit facility. range of pricing indicated forBelow our is revolving anon-revolving summary bank credit of facilities for the 2015 and activity 2016: relating to our revolving and Bank and letter of credit facilities In April 2015, webank borrowed credit facility the (non-revolving full cr amount of a new $1.0 billion As atsecuritization program December was $800 millionthe 31, (2015 – program 2016, $800 million)$1,050 was and million our (2015 committed –the total $1,050 to million). terms fund In funding of Julyamong up 2016, the other we under things, accounts to amended extend receivableto the the a January expiry 1, securitization 2019. date maximum program from January to, of 1,We 2018 continue to servicerewards and relating retain to substantially the accounts allthe receivables of receivables we remain the sell, recognized risks and on and of therefore, our consolidated statements financial positionshort-term and borrowings. thereceivables ranks The funding ahead received offrom buyer’s using is our the interest. interest recorded receivables as Thebuyer as collateral program of in for our restricts any trade other us assets. these purpose. receivables The has trade no claim on any of our other (In millions of dollars, except exchange rates) MANAGEMENT’S DISCUSSION AND ANALYSIS

Issuance of senior notes and related debt derivatives The table below provides a summary of the senior notes we issued during 2016 and 2015, with the proceeds used to repay outstanding advances under our credit facilities and for general corporate purposes.

(In millions of dollars, except interest rates and discounts) Total gross Transaction costs Principal Due Interest Discount/premium proceeds 1 and discounts 2 Date Issued amount date rate at issuance (Cdn$) (Cdn$) 2016 issuances November 4, 2016 US 500 2026 2.900% 98.354% 671 17

2015 issuances December 8, 2015 US 700 2025 3.625% 99.252% 937 December 8, 2015 US 300 2044 5.000% 101.700% 401 Total for 2015 1,338 13

1 Gross proceeds before transaction costs, discounts, and premiums. 2 Transaction costs, discounts, and premiums are included as deferred transaction costs and discounts in the carrying value of the long-term debt, and recognized in net income using the effective interest method.

The 2016 and 2015 senior notes were issued pursuant to public RATIO OF ADJUSTED NET DEBT / ADJUSTED OPERATING PROFIT offerings in the US.

Concurrent with the 2016 and 2015 issuances, we entered into 2016 3.0x debt derivatives to convert all interest and principal payment obligations to Canadian dollars. See “Financial Risk Management” 2015 3.1x for more information. 2014 2.9x All the notes issued are unsecured and guaranteed by RCCI, ranking equally with all of our other unsecured senior notes and debentures, bank credit facilities, and letter of credit facilities. Dividends In 2016, we declared and paid dividends on each of our Repayment of senior notes and related derivative settlements outstanding Class A Voting and Class B Non-Voting shares. We The table below provides a summary of the repayment of our paid $988 million in cash dividends, an increase of $11 million from senior notes during 2016 and 2015. 2015. See “Dividends and Share Information” for more information. (In millions of dollars) Shelf prospectuses Notional amount Notional amount We have two shelf prospectuses that qualify the offering of debt Maturity date (US$) (Cdn$) securities from time to time. One shelf prospectus qualifies the 2016 repayments public offering of up to $4 billion of our debt securities in each of May 26, 2016 – 1,000 the provinces of Canada (Canadian Shelf) and the other shelf prospectus (together with a corresponding registration statement 2015 repayments filed with the US Securities and Exchange Commission) qualifies March 15, 2015 550 702 the public offering of up to US$4 billion of our debt securities in March 15, 2015 280 357 the United States and Ontario (US Shelf). Both the Canadian Shelf Total for 2015 830 1,059 and the US Shelf will expire in April 2018. In November 2016, we issued US$500 million ($671 million) of debt securities under the There were no debt derivatives associated with the 2016 US Shelf. repayment. The associated debt derivatives for the 2015 repayments were settled at maturity. See “Financial Risk Dissolution of RCP Management” for more information. As a result of the dissolution of RCP on January 1, 2016, RCP is no longer a guarantor, or co-obligor, as applicable, for the Company’s WEIGHTED AVERAGE COST OF BORROWINGS bank credit and letter of credit facilities, senior notes and (%) debentures, and derivative instruments. Effective January 1, 2016, 2016 4.72% RCI continues to be the obligor in respect of each of these, while RCCI remains either a co-obligor or guarantor for the senior notes 2015 4.82% and debentures and a guarantor, as applicable, for the bank credit and letter of credit facilities and derivative instruments. See 2014 5.20% “Understanding Our Business” and “Summary of Financial Results of Long-Term Debt Guarantor” for more information.

64 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 65 repurchases of comparatively ROGERS COMMUNICATIONS INC. activities, the most significant of 2016 ANNUAL REPORT with a stable outlook; stable outlook. lower interest rates; and more expensiveMay 2016. senior notes made in March 2015 and CREDIT RATINGS Credit ratings provide an independentan measure issue of of credit securities quality and of and can long-term affect our financing ability andagencies to the obtain lower short-term terms ofdowngrade the the below financing. credit investment-grade, If itcost ratings rating of could financing adversely on and access affect to our our liquidity and capital. debt,We have particularly engaged(Standard a each & of Poor’s), StandardService Fitch & Ratings (Moody’s) Poor’s (Fitch),December and Ratings 31, to 2016, Moody’s Services the Investors creditnotes rate ratings and on debentures were RCI’s as outstanding our follows: • senior Standard public & Poor’s affirmed debt RCI’s senior unsecured debt issues.• at BBB+ Fitch affirmed As its BBB+• rating at with Moody’s a affirmed stable its outlook; comparably and equivalent rating of Baa1 with a COVENANTS The provisions ofnon-revolving bank our credit facilities described $2.5restrictions above on impose billion our certain operations revolving and which are and leverage-related maintenance $301 tests.2016 As and million at 2015, we December were 31, financial in compliance ratios, with all and financialagreements. covenants, all Throughout of 2016, therestrictions these terms of any covenants and material consequence did conditions on not our of operations. impose our debt the lowestratings quality are of generally consideredPoor’s securities and to Fitch) range rated. or Baa3 from (Moody’s)Fitch) Investment-grade BBB- or to Aaa AAA (Standard (Moody’s). credit (Standard & & Poor’s and In addition to$1,047 the noted million sourcescompanies as of at December of available 31, 2016 (2015 liquidity, – marketable $966 we million). held Weighted securities average cost of borrowings inOur borrowings publicly-traded hadDecember 31, a 2016 (2015 weighted –to average 4.82%) maturity and cost of a weightedfavourable of 10.6 average years decline term 4.72% (2015 in asreflects – the our at combined 10.8 effects of: 2016 years).• This weighted greater comparatively average utilization of our• interest bank credit our rate facilities; issuance of senior notes in November 2016• at comparatively the scheduled repayments and utlook BBB+ with a stable outlook Baa1 with a stable outlook 11 250 2015 3,000 3,261 received from the rating agencies as at December 31, 2016: $1,705 $1,676 $1,437 – 732 1 184 60 250 2015 % Chg 5,0322,440 1 (4) 1,676 2 2016 2,670 2,420 As at December 31 740 295 2016 5,092 2,352 1,705 Years ended December 31 licity transaction during the panies. See “Non-GAAP Measures” for 1 3 2 1 equipment capitalized interest Cash income taxes Additions to property, plant and Interest on borrowings, net of 2015 2014 2016 FREE CASH FLOW (IN MILLIONS OF DOLLARS) non-capital losses from the Mobi by same period in 2015. Cash income taxes are net of refunds received. information about these measures, including howAdditions we calculate them. to property,spectrum licences. plant and equipment do not include expenditures for Adjusted operating profit and free cashbe flow are considered non-GAAP measures as and shoulddefined not substitutes terms or under IFRS, alternativesreliable and way for do to GAAP not compare have measures. standard us These meanings, to are so other may not com not be a IssuanceCorporate credit issuer default ratingSenior unsecured debt BBB+ with a stable o BBB+ with a stable outlook Standard & Poor’s BBB+ with a stable outlook Baa1 with a stable outlook Fitch Moody’s Free cash flow (In millions of dollars) Adjusted operating profit Ratings for debt instruments acrossrange the universe from of AAA composite rates (Standardrepresenting & Poor’s and theD Fitch) (Standard or & Poor’s), highest Aaa Substantial (Moody’s) Risk (Fitch), quality and C (Moody’s) for of securities rated, to FINANCIAL CONDITION LIQUIDITY • higher cash income tax payments as a result of applying (In millions of dollars) 3 The 2% increase in free cash• flow this higher year adjusted was operating primarily profit;• a and result of: lower additions to property, plant and equipment; partially offset 2 1 Deduct (add): FREE CASH FLOW The table below shows the credit ratings on our borrowings Accounts receivable securitization program Total available liquidity Bank credit facilities Cash and cash equivalents MANAGEMENT’S DISCUSSION AND ANALYSIS

Credit ratings are not recommendations for investors to purchase, funding requirements to be $144 million in 2017 and to be hold, or sell the rated securities, nor are they a comment on market adjusted annually thereafter based on various market factors, such price or investor suitability. There is no assurance that a rating will as interest rates, expected returns, and staffing assumptions. remain in effect for a given period, or that a rating will not be revised or withdrawn entirely by a rating agency if it believes Changes in factors such as the discount rate, participation rates, circumstances warrant it. The ratings on our senior debt provided increases in compensation, and the expected return on plan assets by Standard & Poor’s, Fitch, and Moody’s are investment-grade can affect the accrued benefit obligation, pension expense, and ratings. the deficiency of plan assets over accrued obligations in the future. See “Accounting Policies” for more information. In order to RATIO OF ADJUSTED OPERATING PROFIT / INTEREST ON BORROWINGS manage the rising cost of our pension plans, effective June 30, 2016, the Rogers Defined Benefit Pension Plan was closed to new 2016 6.7x enrolment. Beginning July 1, 2016, employees not participating in the Rogers Defined Benefit Pension Plan became eligible for 2015 6.6x enrolment into a new Defined Contribution Pension Plan.

2014 6.4x Purchase of annuities From time to time, we have made additional lump-sum PENSION OBLIGATIONS contributions to our pension plans, and the pension plans have purchased annuities from insurance companies to fund the Our retiree pension plans had a funding deficit of approximately pension benefit obligations for certain groups of retired employees $387 million as at December 31, 2016 (2015 – $281 million). in the plans. Purchasing the annuities relieves us of our primary During 2016, our funding deficit increased by $106 million responsibility for that portion of the accrued benefit obligations for primarily as a result of a decrease in the discount rate we used to the retired employees and eliminates the significant risk associated measure these obligations and increased participation in our with the obligations. defined benefit pension plan prior to its closure to new members in 2016. We did not make any additional lump-sum contributions to our We made a total of $125 million (2015 – $118 million) of pension plans in 2016 or 2015, and the pension plans did not contributions to our pension plans. We expect our total estimated purchase additional annuities.

FINANCIAL RISK MANAGEMENT We use derivative instruments from time to time to manage risks related to our business activities, summarized as follows: Derivative The risk they manage Types of derivative instruments Debt derivatives • Impact of fluctuations in foreign exchange rates on • Cross-currency interest rate exchange principal and interest payments for US dollar- agreements denominated long-term debt • Forward foreign exchange agreements (from time to time as necessary) Bond forwards • Impact of fluctuations in market interest rates on • Forward interest rate agreements forecasted interest payments for expected long- term debt Expenditure derivatives • Impact of fluctuations in foreign exchange rates on • Forward foreign exchange agreements forecasted US dollar-denominated expenditures Equity derivatives • Impact of fluctuations in share price on stock- • Total return swap agreements based compensation expense

We also manage our exposure to fluctuating interest rates and we We designate the debt derivatives related to our senior notes and have fixed the interest rate on 91.2% (2015 – 90.3%) of our debt, debentures as hedges for accounting purposes against the foreign including short-term borrowings, as at December 31, 2016. exchange risk associated with specific debt instruments. We do not designate the debt derivatives related to our credit facility FIXED AND FLOATING DEBT AS A PERCENTAGE OF TOTAL BORROWINGS borrowings as hedges for accounting purposes. Our bond (%) forwards and expenditure derivatives are also designated as

FIXED 91.2% hedges for accounting purposes.

$15.4 Billion FLOATING 8.8%

66 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 67 2015 90.3% 4.82% 1.0882 100.0% Financial 10.8 years US$US$ 6,200 6,200 $$ 15,947 14,397 As at December 31 2016 91.2% 4.72% 1.1070 100.0% 10.6 years US$ 6,700 US$ 6,700 $$ 15,418 14,067 , on December 31, 2016, and r accounts receivable securitization ROGERS COMMUNICATIONS INC. d debt. As a result, on December 31, 2016 1 3 2 2016 ANNUAL REPORT borrowings Percent hedged Hedged with debt derivatives Hedged exchange rate Total borrowings Total borrowings at fixed rates Percent of borrowings at fixed rates Weighted average interest rate on Weighted average term to maturity Borrowings include long-term debt,short-term including borrowings the impact associated of debt with derivatives, and ou US dollar-denominated long-term debthedged reflects interest the rate. hedged exchangePursuant rate and to the Instruments: the requirements RecognitionDecember for and 31, hedge 2015, Measurement against accounting RCI designated US accounted under dollar-denominate forand IAS 100% 2015, 100% 39, of of its oureconomic purposes. US debt dollar-denominated derivatives debt is as hedged hedges for accounting and program. (In millions of dollars, except exchange rates, percentages, and years) US dollar-denominated long-term debt Amount of borrowings at fixed rates 3 BOND FORWARDS From time to(bond time, forwards) to we hedge use interestwe rate extendible risk on expect bond the debt forward toapproximately instruments $5.9 derivatives issue billion of in ourover outstanding the the public next debt five future. matures yearswe (2015 As will issue – public at $5.5 debt billion)those over December and that maturities we time 31, anticipate to together that fundrequirements. 2016, at with least a other We portion general of purposes use corporate only. funding bonddesignated The as hedges forwards for bond accounting purposes. for forwardsDuring risk noted 2014, management belowunderlying we Government have of entered Canada (GoC)comprise been into interest a rate bond risk portion thatanticipated forwards will of future the to interest debtforwards, hedge rate issuances. the we risk As$1.5 associated hedged billion a with notional the amount our resultfrom for anticipated underlying of 2015 future to these debt GoC$0.4 issuances billion 2018 bond 10-year notional andforwards amount are rate the effective for from December underlying December on 2014. 31, GoCOn 2018. November 30-year The 4, 2016, bond rate weforward exercised on a due $500 million January notionalUS$500 4, bond million 2017 senior insettle notes the relation due derivative. to 2026 Thethe the and amount bond forward paid issuance paid at represents the $53 of timefinance the of million the costs settlement fair and from to value will the be of rate hedging recycled into reserve method using over the the2026. effective life interest of the US$500 million senior notes due 1 2 As at Decemberdenominated 31, 2016, senior we noteshedged had using and debt US$6.7 derivatives. debentures, billion of all US of dollar- which were 8 (Cdn$) (Cdn$) (Cdn$) Notional Net cash Equivalent 1 rate rate Fixed Cdn$ interest hedged Exchange (proceeds) settlement rate (US$) Coupon (US$) 8,6838,533 1.31 1.31 11,360 11,159 Year ended December 31, 2016 US Hedging effect Notional date hese debt derivatives related to d credit facility borrowings. As a Maturity Notional amount , we have not designated them as (US$) amount Notional Principal/ Converting from a fixed US$ coupon rate to a weighted average Cdn$ fixed rate. (In millions of dollars, except exchange rates) December 8, 2015December 8, 2015 700 300 2025 3.625% 2044 3.566% 5.000% 5.145% 937 401 November 4, 2016 500 2026 2.900% 2.834% 671 (In millions of dollars, except interest rates) Effective date We did notfacility enter borrowings into during 2015. any debt derivatives related to our credit March 15, 2015March 15, 2015Total 550 280 830 (106) (48) (154) During the year, wecredit entered facility into borrowings debtspread as derivatives obtained a related from result tothese of borrowing our derivatives a funds to favourable in offsetrisk interest US the on rate foreign our dollars. US exchange We dollar-denominate and used interest rate (In millions of dollars) Maturity date result of the short-termour nature of credit t facilityhedges borrowings for accounting purposes. During 2016, we enteredto into our and credit facility settled borrowings debt as derivatives follows: related 1 Matured debt derivatives New debt derivatives to hedge new senior notes issued DEBT DERIVATIVES We use cross-currencyderivatives) interest to hedge rate the exchange foreign exchangeand agreements risk principal on (debt all payment of obligations thesenior interest notes of and our debentures. US dollar-denominated Debt derivatives entered Debt derivatives settled Net cash received MANAGEMENT’S DISCUSSION AND ANALYSIS

On December 8, 2015, we exercised a $500 million notional bond the bond forward at the time of settlement and will be recycled into forward due December 31, 2015 in relation to the issuance of the finance costs from the hedging reserve using the effective interest US$700 million senior notes due 2025 and paid $25 million to rate method over the life of the US$700 million senior notes due settle the derivative. The amount paid represents the fair value of 2025. As at December 31, 2016 we had $900 million notional amount of bond forwards outstanding (2015 – $1,400 million), all of which were designated as hedges for accounting purposes.

(In millions of dollars, except interest rates) Hedged GoC Hedged GoC Notional interest rate as at interest rate as at GoC term (years) Effective date Maturity date 1 amount December 31, 2016 December 31, 2015 1 2016 2015 10 December 2014 January 4, 2017 500 – 2.34% – 500 10 December 2014 April 30, 2018 500 2.52% 2.23% 500 500 30 December 2014 December 31, 2018 400 2.62% 2.52% 400 400 Total 1,400 900 1,400

1 Bond forwards with maturity dates beyond December 31, 2016 are subject to GoC rate re-setting from time to time. The $500 million due April 2018 was extended in April 2016 to reset in April 2017. The $400 million due December 2018 was extended in December 2016 to reset in January 2018.

EXPENDITURE DERIVATIVES forecasted US dollar-denominated expenditures. The table below We use foreign currency forward contracts (expenditure derivatives) shows the expenditure derivatives into which we entered to manage to hedge the foreign exchange risk on the notional amount of certain foreign exchange risk related to certain forecasted expenditures.

Year ended December 31, 2016 Year ended December 31, 2015 Notional Exchange Notional Notional Exchange Notional (In millions of dollars, except exchange rates) (US$) rate (Cdn$) (US$) rate (Cdn$) Expenditure derivatives entered 990 1.33 1,318 990 1.28 1,266 Expenditure derivatives settled 840 1.22 1,025 810 1.11 902

The expenditure derivatives noted above have been designated as Class B shares with a weighted average price of $50.30. These hedges for accounting purposes. derivatives have not been designated as hedges for accounting purposes. We record changes in their fair value as a stock-based As at December 31, 2016, we had US$1,290 million of expenditure compensation expense, or offset thereto, which serves to offset a derivatives outstanding (2015 – US$1,140 million), at an average substantial portion of the impact of changes in the market price of rate of $1.32/US$ (2015 – $1.24/US$), with terms to maturity RCI Class B shares on the accrued value of the stock-based ranging from January 2017 to December 2018 (2015 – January compensation liability for our stock-based compensation 2016 to December 2017). Our outstanding expenditure derivatives programs. In April 2016, we executed extension agreements for maturing in 2017 are hedged at an average exchange rate of each of our equity derivative contracts under substantially the same $1.33/US$. terms and conditions with revised expiry dates to April 2017 (from April 2016). EQUITY DERIVATIVES We use stock-based compensation derivatives (equity derivatives) In August 2016, we settled 0.3 million equity derivatives at a to hedge the market price appreciation risk of the RCI Class B weighted average price of $58.16 as a result of a reduction in the shares granted under our stock-based compensation programs. As number of share-based compensation units outstanding. at December 31, 2016, we had equity derivatives for 5.4 million RCI

68 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 69 3.1 (11) 800 2015 (2,180) 16,981 15,590 71 3.0 800 2016 (1,740) As at December 31 16,197 15,328 assets or liabilities, short-term ROGERS COMMUNICATIONS INC. 2 1 2016 ANNUAL REPORT 2,3 any adjustment for credit risk profit Adjusted net debt / adjustedprofit operating for profit the last is twelve measured consecutive using months. adjusted operating Includes currenttransaction and costs and long-termsection discounts. “Non-GAAP portion Measures” See for the “Reconciliation of calculationAdjusted of of this net amount. adjusted long-term debt and net adjusted debtmeasures debt” net debt in and before / the adjusted shouldmeasures. operating deferred profit not These are non-GAAP are bemeanings, not so considered defined may substitutes not terms be or under a alternatives IFRS reliablecalculate way for them. and to do GAAP compare not us to have other standard companies. See “Non-GAAP Measures” for information about these measures, including how we Short-term borrowings Adjusted net debt Net debt derivative assets valued without Bank advances (cash and cash equivalents) Adjusted net debt / adjusted operating 3 In addition to the2016 cash and cash and$1,047 equivalents as December at million Decembercompanies (2015 31, – 31, $966 of million). 2015 marketableOur noted securities adjustedDecember above, in 31, net 2015 weoutstanding debt publicly-traded primarily long-term debt, as held decreased partiallyfair a value offset of result by by our net of a debtPosition” derivative reduction for $0.26 a asset. more See in information. decrease “Overview the of billion Financial in our from ADJUSTED NET DEBT AND ADJUSTED NETADJUSTED DEBT OPERATING / PROFIT We use adjustedoperating net profit debt tocapital conduct and structure-related valuation-related adjusted analysis decisions.long-term net debt, and Adjusted debt net make debt net /borrowings, derivative and cash adjusted debt and cash equivalents. includes (In millions of dollars, except ratios) Long-term debt 1 2 Fair Fair value value (Cdn$) (Cdn$) (Cdn$) (Cdn$) amount amount Notional Notional rate rate As at December 31, 2015 As at December 31, 2016 Exchange Exchange (US$) (US$) amount amount Notional Notional As assetsAs liabilitiesAs liabilities 5,900 300 1.0755 1.3367 6,345As assets 2,032 401As liabilities (4) – 1,140 – 1.2410 1,400 1,415 (91) – 158 – 286 (15) As assetsAs liabilitiesAs liabilities 5,200 1,500 1.0401 1.3388As liabilities 5,409 2,008 150 1,751 (68) 1.3407As assetsAs liabilities 201 – As assets 990 300 1.2967 1.4129 900 1,284 424 (51) 40 (21) 270 8 as cash flow hedges: derivative assetas cash flow hedges: accounted for as cash flow hedges: accounted for as hedges: 2,028 as cash flow hedges: accounted for as hedges: derivative assetas cash flow hedges: accounted for as cash flow hedges: expenditure derivative assetaccounted for as hedges: 1,683 19 Debt derivatives accounted for Net mark-to-market debt Bond forwards accounted for Expenditure derivatives Equity derivatives not Net mark-to-market asset 2,080 (In millions of dollars, except exchange rates) Debt derivatives accounted for Short-term debt derivatives not Net mark-to-market debt Bond forwards accounted for Expenditure derivatives Net mark-to-market Equity derivatives not Net mark-to-market asset 1,659 (In millions of dollars, except exchange rates) MARK-TO-MARKET VALUE We record ourmark-to-market valuation, calculated derivatives in accordance using with IFRS. an estimated credit-adjusted, MANAGEMENT’S DISCUSSION AND ANALYSIS

DIVIDENDS AND SHARE INFORMATION DIVIDENDS The table below shows when dividends have been declared and paid on both classes of our shares:

Dividend per Dividends paid Declaration date Record date Payment date share (dollars) (in millions of dollars) January 27, 2016 March 13, 2016 April 1, 2016 0.48 247 April 18, 2016 June 12, 2016 July 4, 2016 0.48 247 August 11, 2016 September 11, 2016 October 3, 2016 0.48 247 October 20, 2016 December 12, 2016 January 3, 2017 0.48 247 January 28, 2015 March 13, 2015 April 1, 2015 0.48 248 April 21, 2015 June 12, 2015 July 2, 2015 0.48 247 August 13, 2015 September 11, 2015 October 1, 2015 0.48 247 October 22, 2015 December 11, 2015 January 4, 2016 0.48 247

In January 2017, the Board declared a quarterly dividend of $0.48 We use the weighted average number of shares outstanding to per Class A Voting share and Class B Non-Voting share, to be paid calculate earnings per share and adjusted earnings per share. on April 3, 2017, to shareholders of record on March 13, 2017. Years ended December 31 We currently expect that the remaining record and payment dates (Number of shares in millions) 2016 2015 for the 2017 declaration of dividends will be as follows, subject to the declaration by our Board each quarter at its sole discretion: Basic weighted average number of shares outstanding 515 515 Record date Payment date Diluted weighted average number of June 12, 2017 July 4, 2017 shares outstanding 517 517 September 15, 2017 October 3, 2017 December 11, 2017 January 2, 2018 ANNUALIZED DIVIDENDS PER SHARE ($)

OUTSTANDING COMMON SHARES 2016 $1.92 As at December 31 2015 $1.92 2016 2015 2014 $1.83 Common shares outstanding 1 Class A Voting 112,411,992 112,438,692 Class B Non-Voting 402,396,133 402,307,976 Total common shares 514,808,125 514,746,668 Options to purchase Class B Non-Voting shares Outstanding options 3,732,524 4,873,940 Outstanding options exercisable 1,770,784 2,457,005

1 Holders of our Class B Non-Voting shares are entitled to receive notice of and to attend shareholder meetings; however, they are not entitled to vote at these meetings except as required by law or stipulated by stock exchanges. If an offer is made to purchase outstanding Class A Voting shares, there is no requirement under applicable law or our 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 our constating documents. If an offer is made to purchase both classes of 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.

70 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 71 excess of one year at After 5Years Total ars. ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT –– (445) (51) – – (1,134) (1,579) – (51) 915––24 750 3,081161422 2,350510 10,016 165 359 16,197 1,083 18 153 1,067 105 – 2,421 1,039 344 5,081 GOVERNANCE BEST PRACTICES The majorityadopted of many best our practices for effective• directors governance, including: independent are lead director; • independent formal and corporate governance policy• we and charters; code have of business conduct• and whistleblower director hotline; share ownership guidelines; Voting control of Rogers Communications Inc.beneficiaries is of held by which a are trust, members the holds of voting the control Rogers of family.successive Rogers The Communications trust for generations theownership benefit of of of 91% of the theCompany outstanding Class Rogers (2015 A Votingstakeholders family shares – and of the owned via 91%).December approximately 27% the 31, The of 2016combined Rogers trust’s our (2015 equity total family – asNon-Voting of 28%) at shares are (2015 through – 141 142 substantial million). its million ownershipOur Class of Board is a A madeanother up 10 Voting of directors who four and bring members aleaders of rich in Class mix the North of Rogers experience America. B as family Allto business and of firm our governance, directors strong areshareholder oversight, firmly and value. committed the The ongoing Boardcorporate creation of as governance a wholepractices and is and committed continually benchmarks toand reviews sound them against its evolvinggovernance acknowledged governance legislation. system leaders isstructures The and effective procedures in place. and Board that believes there are that appropriate Rogers’ 1 Year 1-3 Years 4-5 Years ntractual arrangements as at December 31, 2016. See notes 3, 21, and Less than casting rights for sports broadcasting programs and films for periods in uct, and handset contracts we have committed to for at least the next five ye into which we have entered and are contractually obligated to pay. 2 2 4 1 3 5 2 contract inception. Player contracts are Toronto Blue JaysPurchase players’ obligations salary are contracts the contractual obligationsProgram under service, rights prod are the agreements into which we have entered to acquire broad Principal obligations of long-term debt (includingNet current (receipts) portion) disbursements due due at at maturity. maturity. US dollar amounts have been translated into Canadian dollars at the Bank of Canada year-end rate. Net interest paymentsDebt derivative instruments Purchase obligations Property, plant and equipmentIntangible assetsProgram rights Other long-term liabilitiesTotal 727 1,294 73 1,033 110 – 93 5,832 8,886 31 108 12 3,704 27 32 3 5,966 241 4,796 – 3 17,364 233 18 31,830 GOVERNANCE AT ROGERS Rogers is a family-founded, family-controlled companypride and in we take our proactiveour governance and structure disciplined and approach practicesshareholders. instil to the ensuring confidence that of our Governance and Risk Management OPERATING LEASES We have entered intodistribution operating leases facilities, for equipment thecontracts. rental and Terminating of wireless any premises, towers, ofhave a these and material adverse lease effect other on agreementsand us would as Contractual a not whole. Obligations” SeeConsolidated “Commitments and Financial Statements note for 28 quantification. to our 2016 Audited As a regular partprovide of for our indemnification business,transactions and we enter involving guarantees into to businessagreements, agreements counterparties sales that sale of in services, andassets. and Due purchases business to and the development combination natureto of of make these a indemnifications, reasonable we estimatewe are of could unable the be maximum requirednot potential to made amount pay any significant counterparties. paymentguarantees. Historically, under we these See indemnifications have or Financial note Statements. 27 to our 2016 Audited Consolidated OFF-BALANCE SHEET ARRANGEMENTS GUARANTEES 3 4 5 1 2 28 to our 2016 Audited Consolidated Financial Statements for more information. (In millions of dollars) COMMITMENTS AND CONTRACTUAL OBLIGATIONS CONTRACTUAL OBLIGATIONS The table below shows a summary of our obligations under firm co Bond forwards Expenditure derivative instruments Operating leasesPlayer contracts 159 235 109 94 597 Short-term borrowingsLong-term debt 800 – – – 800 MANAGEMENT’S DISCUSSION AND ANALYSIS

• Board and committee in camera discussions; • Nominating Committee - identifies prospective candidates to • annual reviews of Board and director performance; serve on our Board. Nominated directors are either elected by • Audit and Risk Committee meetings with internal and external shareholders at a meeting or appointed by the Board. The auditors; committee also recommends nominees for each Board • orientation programs for new directors; committee, including each committee chair. • regular Board education sessions; • Human Resources Committee - assists the Board in monitoring, • committee authority to retain independent advisors; reviewing, and approving compensation and benefit policies • director material relationship standards; and and practices. It is also responsible for recommending the • separation of CEO and chairman roles (except for the interim compensation of senior management and monitoring senior period where the Chairman acts as the interim CEO until a executive succession planning. successor CEO is appointed). • Executive Committee - assists the Board in discharging its responsibilities between meetings, including acting in such areas We comply with all relevant corporate governance guidelines and as are specifically designated and authorized at a preceding standards as a Canadian public company listed on the TSX and as a Board meeting to consider matters that may arise from time to foreign private issuer listed on the NYSE in the US. time. • Finance Committee - reviews our investment strategies, general BOARD OVERSIGHT debt, and equity structure and reports on them to the Board. The Board delegates certain responsibilities to its seven standing • Pension Committee - oversees the administration of our retiree committees to ensure proper oversight and accountability: pension plans and reviews the investment performance and • Audit and Risk Committee - reviews our accounting policies and provisions of the plans. practices, the integrity of our financial reporting processes and procedures, and the financial statements and other relevant You can find more details about governance at Rogers in the disclosure for release to shareholders and the public. It assists Investor Relations section of our website (rogers.com/governance), the Board in its oversight of our compliance with legal and including: regulatory requirements for financial reporting, assesses our • a complete statement of our corporate governance practices; accounting and financial control systems, and evaluates the • our codes of conduct and ethics; qualifications, independence, and work of our internal and • full Board committee charters; external auditors. It also reviews risk management policies and • director biographies; and associated processes used to manage major risk exposures. • a summary of the differences between the NYSE corporate • Corporate Governance Committee - assists the Board to ensure governance rules that apply to US-based companies and our it has appropriate systems and procedures for carrying out its governance practices as a non-US-based issuer listed on the responsibilities. This committee develops governance policies NYSE. and practices, recommends them to the Board for approval, and leads the Board in its periodic review of Board and committee performance.

As at February 9, 2017 Board of Directors and its Committees

Chair Member Audit Corporate Nominating Human Executive Finance Pension and Risk Governance Resources

Alan D. Horn, CPA, CA

Charles Sirois

C. William D. Birchall

Bonnie R. Brooks

Robert K. Burgess

John H. Clappison, FCPA, FCA

Philip B. Lind, CM

John A. MacDonald

Isabelle Marcoux

The Hon. David R. Peterson, PC, QC

Edward S. Rogers

Loretta A. Rogers

Martha L. Rogers

Melinda M. Rogers

72 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 73 tations, and retail stores, as well ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT workplace reflective of thebetter diverse performance communities – for we our servecompany. employees, drives our Our customers, and our Inclusionleaders and from across Diversity theour Council, business, inclusion and oversees comprised diversity the strategy. development of of integrated healthy workplaceprotect program. people Our by preventing goaldollars injuries as is well and as always we thousandsWe to invest of have hours millions in robust of safety programs training andminimize every practices year. in potential place topractices, identify hazards. our and sites, We andsafe. our continually work to monitor ensure employees those remain facilities, whichtransmission include sites, power supply s ownedas an and extensive vehicle fleet. leasedassociated We greenhouse are gas buildings, committed emissions toby and reducing cell energy the 2025, consumption reflected25% in and 10%, our respectively, based on company-wide 2011 levels. reduction targetsenvironmental of impact of ourProcurement Practices paper promise use. guides our Ourfor purchasing Publishing decisions paper Paper used forensure publishing. responsible We paper alsoand sourcing, work production, with and encourage suppliersconsumption. recycling, to We our promotecustomers, which employees help the to reduce benefitsIn to both paper addition, of and reduce energy our e-billingTexture usage. transition to their by to our consumption. digital paper Next media formats, Issue, such as produce will is another important way further inenvironmental which footprint. we To are reduce reduce managing and our wasteweproduce,welookforopportunitiestoavoidwaste responsibly our manage the generation, paper run programswork to to recycle increase and employees’award-winning reuse “Get recycling Up materials, and behaviours Get and through Green” program. our corporate citizenship, targeting to commitearnings at least before 1% of taxesorganizations. our net each In year$60 to million 2016, in charitiesorganizations cash and and and causes. Rogers non-profit We in-kindtheir also donations support provided our community to employeesVolunteer support and approximately Program, activities various which givesvolunteer through employees in the their the opportunity communitiesJays to for Rogers Care one Foundation paidmake Employee also day per positive works year. tophysical life The activity, education, ensure and choices life-skill children development. in through need programsof the that best ways we support canSuccess contribute to society. Our program Connected for provides broadband Internet to rent- • Inclusion and Diversity: At Rogers, we believe that an inclusive • Health, Safety, and Wellness: We have a comprehensive Environmental responsibility • Energy Use and Climate Change: Rogers operates thousands of • Paper Reduction: We are committed to reducing the • Waste and Recycling: Reducing the amount of waste we Community investment • Community Giving: We stand by the principles of good • Digital Inclusion: Digital inclusion is a priority for Rogers and one nefit policies and practices. behaviour, and good corporate emphasized “Invest In andkey Develop strategic Our priorities. People” We as wantthe to one best attract, of talent develop, our in andemployee Canada. engage We programs have increased includingtraining our programs, an investment a in new onboarding development planningrevised program, program, employee and new a engagementthe survey. way We our areacross employees also the changing work organization. inoversees Our order talent Chief to HumanCommittee foster management, Resources collaboration assists while Officer theapproving compensation the and Board be Human in Resources monitoring, reviewing, and pillar ofcustomer our experience strategy.address We and customer issues. are have committed implemented to programsa an part to of our improved identity,latest whether network it is technologies bringing toand new network market. products leadership or Focusing continues the to on be innovation a key priority under our to manage a range ofwe product responsibility comply issues. with For instance, allprograms relevant and teams safety to regulationsofferings, manage and and and codes, advise on have operateproper our stewardship accessibility disposal programs and to recyclingRogers Trade-Up of manage and FidoTrade. our the used products, including sensitivity of our customers’Policy private outlines information. our Rogers’ responsibilitiesprotection Privacy and of practices the regardingcustomers. personal the Our information Chief ofwith Privacy our this Officer policy employees and oversees all and from applicable our law laws, compliance enforcement and for responds customer to data. requests standards of integrity,citizenship, ethical underpinned by guidelines andthe policies that actions govern responsible of conduct. our directors and employees and promote strategy. Employee experience • Talent Management: With the launch of our strategy in 2014, we Customer experience • Customer Service and Transparency: Customer service is a core • Network Leadership and Innovation: Innovation has always been • Product Responsibility: We have programs and policies in place • Customer Privacy: Rogers highly values the security, integrity, and Good governance • Governance and Ethics: We strive to uphold the highest SOCIAL RESPONSIBILITY CORPORATE SOCIAL RESPONSIBILITY Rogers prides itselfstakeholders want on to deal beingtransparent, with and a a that company they means goodsocietal, feel economic, putting and is corporate programs environmental ethical benefits. in citizen. and place that Our Our have materialResponsibility aspects, focusapproaches in areas, grouped addressing them: are into listed six below Corporate along Social with our MANAGEMENT’S DISCUSSION AND ANALYSIS

subsidized tenants within partnered non-profit organizations and INCOME TAX AND OTHER GOVERNMENT PAYMENTS housing providers. Up to 150,000 Canadian households are We proactively manage our tax affairs to enhance Rogers’ business eligible for Internet access through the Connected for Success decisions and optimize after-tax free cash flow available for program, giving them the tools and resources needed to investment in our business and shareholder returns. We have experience the benefits of connectivity. established comprehensive policies and procedures to ensure we are compliant with all tax laws and reporting requirements, Economy and society including filing and making all requisite income and sales tax • Economic Performance: We strive to offer innovative solutions for returns and payments on a timely basis. As a part of this process, customers, create diverse and well-paying jobs, support small we maintain open and cooperative relationships with revenue businesses, pay our fair share of taxes, and deliver robust authorities to minimize audit effort and reduce tax uncertainty while dividends to shareholders. Beyond these direct economic engaging with government policy makers on taxation matters that impacts, our performance produces indirect economic benefits affect Rogers and its shareholders, employees, customers, and as well, including significant charitable donations and locally other stakeholders. procured goods and services. • Supply Chain Management: Suppliers play a huge role in our Income tax payments success, which is why we ensure that we have strong supplier Rogers’ total income tax expense of $324 million in 2016 is close to selection processes and management, and that we conduct the expense computed on its accounting income at the statutory business with socially and environmentally responsible rate of 26.6%. Cash income tax payments totaled $295 million in companies who share our values. Our Supplier Code of Conduct 2016. Cash income tax payments can differ from the tax expense sets out high standards for supplier performance in the areas of shown on the financial statements for various reasons, including ethics, labour rights, health and safety, environment, and timing of payments. Our cash income tax is generally lower than management systems. In early 2016, we joined the Joint Audit our tax expense primarily as a result of the significant capital Cooperation (JAC), a group of global telecom companies that investment we continue to make in our wireless and broadband share common suppliers. Through our participation in JAC, we telecommunications networks throughout Canada. Similar to tax share audit results among our peers to ensure that our suppliers systems throughout the world, Canadian tax laws generally permit adhere to internationally recognized supply chain and these additions to property, plant and equipment to be deducted sustainability standards. Rogers was the first Canadian company for tax purposes more quickly than they are depreciated for to join JAC, and we began our first audits in 2016. financial statement recognition purposes. In 2015, our cash income • Public Policy: We participate actively in public policy discussions taxes were further reduced by the utilization of loss carryforwards that are relevant to our operations and are fully transparent from the acquisition of Mobilicity. about our positions and activities. We are heavily involved with governments and regulators at the federal level through our Other government payments Regulatory and Government Relations offices and teams in both In addition to paying income tax on the profits we earn, we Toronto and Ottawa. The majority of our interactions take place contribute significantly to Canadians by paying taxes and fees to with two groups that regulate our activities: the CRTC and ISED federal, provincial, and municipal governments as follows: Canada. • various taxes on the salaries and wages we pay (payroll taxes) to See our annual Corporate Social Responsibility report on our approximately 25,200 employees; website (rogers.com/csr) for more information about our social and • property and business taxes; environmental performance. • unrecoverable sales taxes and custom duties; and • broadcast, spectrum, and other regulatory fees.

As outlined in the table below, the total cost to Rogers of these payments in 2016 was approximately $998 million.

(In millions of dollars) Income Non-recoverable Payroll Regulatory and Property and Total taxes and taxes sales taxes taxes spectrum fees 1 business taxes other payments Total payments 295 9 133 511 50 998

1 Includes an allocation of $266 million relating to the $1.0 billion, $3.3 billion, and $24 million we paid for the acquisition of spectrum licences in 2008, 2014, and 2015, respectively.

We also collected on behalf of the government approximately to optimize trade-offs between risk and return to maximize value to $1,809 million in sales taxes on our products and services and the organization. $545 million in employee payroll taxes. RISK GOVERNANCE RISK MANAGEMENT The Board has overall responsibility for risk governance and oversees management in identifying the principal risks we face in We are committed to continually strengthening our risk our business and implementing appropriate risk assessment management capabilities to protect and enhance shareholder processes to manage these risks. It delegates certain risk oversight value. The purpose of risk management is not to eliminate risk but and management duties to the Audit and Risk Committee.

74 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 75 her variables used to calculate ROGERS COMMUNICATIONS INC. mpetition due to recent changes 2016 ANNUAL REPORT Canadian market by acquiringwireless wireless licences. licences If or companiesresources a with enter holder significantly of greaterwireless the market capital share. Canadian See “Foreignmore market, Ownership information. and it Control” for could reduce our SUBSTANTIAL COMPETITION There is no assurance thatprovide our current services or that future are competitorsmore will superior not to quickly ours or torequirements, at lower evolving prices, enter adapt industrycompeting services. Any markets trends of these factors ormarket could we share reduce or changing revenue, our or business operate increase market churn. We in, may have some ongoing or re-pricingwe of may products need introduce and to services, extend as customers lower and wireless retain pricing offers existingof to subscribers. the attract As population new wireless deepens, penetration newlower average wireless monthly customers revenue, may which could generate slow revenue growth. Wireless could face increasedto co foreign ownership rules and control• of wireless licences: foreign telecommunication companies could enter the RISKS AND UNCERTAINTIES AFFECTING OUR BUSINESS This section describescould the have a principal materialresults. adverse risks effect Any and on discussion our uncertainties aboutwith business “About risks and that Forward-Looking financial should Information”. be read in conjunction GENERAL RISKS ECONOMIC CONDITIONS Our businesses are affectedconsumer by general confidence economic conditionseconomic and and activity, and spending. economicand uncertainty business Recessions, can confidence erode and consumer declinesof reduce discretionary in these spending. Any advertising, factors lower candecreased revenue demand negatively anddebt for profitability, affect and expense. our us higherpublishing, and churn through products A digital and revenue comes bad and reduced and is significant from affected the by sale the services, strength portion of of advertising the economy. Poor of economic conditions can our alsoplans have as an there impact broadcasting, is on no our assuranceassumed pension that the rate plans will of bechanges able in to return. the earn discount the Capital ratesour and pension market ot obligations, requiring volatilityfuture us may to make that result contributionsassumptions in differ in being the used in significantly the actuarial valuation from process. current contributions and The Executive Leadership Team andare the responsible Audit for and approving Risk our Committee methodology enterprise risk policies. Our and ERM management and policies employeesand to implement rely risk identify mitigation strategies risks as on required. and opportunities the expertise of our unauthorized use, to prevent, ith Internal Audit to monitor the nal Audit plan. Annually, Internal ssment includes reviewing risk sk assessment to identify areas of safeguard assets from loss and implementation of riskcontrol these exposures; policies and actions to monitor and significant deficiencies that may be identified; and by the Audit and Risk Committee or directed by the Board. deter, and detectfinancial records; fraud, and to ensure the accuracy of the adequacy and effectiveness ofacceptable level. the controls to reduceERM risks carries to out an anprincipal annual strategic risks risk to assessment achievingcorporate-, to our business identify corporate our unit- objectives and bybusiness department-level identifying risks unit and aligning objectives. Using and an aggregate departmentrisks approach, and ERM objectives identifies theircorporate the to potential top objectives. impact the This on corporate asse our ability to achieve our ENTERPRISE RISK MANAGEMENT Our Enterprise Risk Management (ERM)of program uses Defence” the framework “3 to Lines communicate risks. identify, Our assess, business units manage, andExecutive monitor, departments, Leadership led and by Team, the areaccountable the for first managing line oridentify of accepting and defence the assess and risks.minimize key these are Together, risks, risks, they define and enhanceobjectives. controls our and ability to action meet plans our business to ERM is theidentify the second top line risksappetite, and to of emerging meeting risks. defence. our Atlevel, the business ERM business ERM objectives, unit helps works and our department advice risk with management management in tomitigate managing provide these the governance risks. ERM and key works w risks and associated controls to reports, audit reports, andsenior industry benchmarks management andaccountability. interviewing ERM reports with theassessment results to of business the the ExecutiveCommittee, annual Leadership and strategic unit Team, the Board. risk the Audit and and Risk Internal Audit department is thethe third line design of defence.program, and Internal internal Audit controls, operational evaluates andand effectiveness risk management. mitigation of Risks,incorporated into controls, the the plans annual governance Inter Audit identified also facilitatesthe through and financial monitors statement management’s thispotential fraud completion ri fraud of process ordisclosures misstatement are in and ouroperating to effectively. financial ensure statements and these controls are designed and The Auditmanagement and and the Risk Boardour compliance and with Committee legal assists and the regulatory discusses requirements. Board inThe risk Audit overseeing and Risk policies Committee also• reviews: with the adequacy of the internal controls that have been adopted to • the processes for identifying,• assessing, and our managing risks; exposure to major risks and• trends our and business continuity and• management’s disaster recovery any plans; special audit steps adopted due• to material other weaknesses risk management or matters from time to time as determined MANAGEMENT’S DISCUSSION AND ANALYSIS

• ISED Canada’s policy regarding the transfer of spectrum assurances that a future event will not cause service outages. Such licences, combined with 2012 legislation that allows foreign outages may affect service revenue. ownership of wireless providers with less than 10% market share, could make it harder for incumbent wireless carriers to acquire DEPENDENCE ON INFORMATION TECHNOLOGY SYSTEMS additional spectrum. The legislation regarding foreign Our businesses depend on IT systems for day-to-day operations. If ownership of wireless providers could make it less expensive for we are unable to operate our systems, make enhancements to foreign wireless carriers to enter the Canadian wireless market. accommodate customer growth and new products and services, or This could increase the intensity of competition in the Canadian if our systems go down, it could have an adverse effect on our wireless sector. ability to acquire new subscribers, service customers, manage In addition, the CRTC Broadcasting Distribution Regulations do not subscriber churn, produce accurate and timely subscriber invoices, allow cable operators to obtain exclusive contracts in buildings generate revenue growth, and manage operating expenses. This where it is technically feasible to install two or more transmission could have an adverse impact on our results and financial position. systems. Most of our employees and critical elements of our network infrastructure and IT systems are concentrated in various physical TECHNOLOGY RISKS facilities. If we cannot access one or more of these facilities as a result of a natural or manmade disaster or otherwise, our INFORMATION SECURITY RISK operations may be significantly affected to the extent that it may be Our industry is vulnerable to cyber risks that are growing in both difficult for us to recover without a significant interruption in service frequency and complexity. Rogers, along with our suppliers, or negative impact to our revenue or customer base. employs systems and network infrastructure that are subject to cyberattacks, which may include theft of assets, unauthorized UNAUTHORIZED ACCESS TO DIGITAL BOXES OR INTERNET access to sensitive information, or operational disruption. A MODEMS significant cyberattack against our – or our suppliers’ – critical We use encryption technology developed and supported by our network infrastructure and supporting information systems could vendors to protect our cable signals from unauthorized access and result in service disruptions, litigation, loss of customers, significant to control access to programming based on subscription remediation costs, and reputational damage. packages. We also use encryption and security technologies to Management has committed to an information and cybersecurity prevent unauthorized access to our Internet service. program designed to reinforce the importance of remaining a Thereisnoassurancethatwewillbeabletoeffectivelyprevent secure, vigilant, and resilient organization. Our ongoing success unauthorized decoding of television signals or Internet access in depends on protecting our sensitive data, including personal the future. If we are unable to control cable access with our information about our customers and employees. We rely on encryption technology, subscriptions to digital programming, security awareness training, policies, procedures, and information including premium video-on-demand and subscription technology systems to protect this information. Rogers continues video-on-demand, and Internet service revenue may both to monitor this risk, leveraging external threat intelligence, internal decrease, which could result in a decline in our Cable revenue. monitoring, reviewing best practices, and implementing controls as required to mitigate cybersecurity risks. We have insurance coverage against certain damages related to cybersecurity NEW TECHNOLOGY breaches, intrusions, and attacks, amongst other things. The Audit Our network plans assume the availability of new technology for and Risk Committee is responsible for overseeing management’s both Wireless and Wireline networks. While we work with industry policies and associated procedures related to cyber security risks. standards bodies and our vendors to ensure timely delivery of new technology, there are no assurances these technologies will be External threats to the network are constantly changing and there is available as and when required. noassurancewewillbeabletoprotectthenetworkfromallfuture threats. The impact of such attacks may affect service revenue. COMPETING TECHNOLOGIES Several technologies have affected the way our services are IMPACT OF NETWORK FAILURES ON REVENUE AND delivered, including: CUSTOMER SERVICE • broadband; If our networks or key network components fail, it could, in some • IP-based voice, data, and video delivery services; circumstances, result in a loss of service for our customers for • increased use of optical fibre technologies to businesses and/or certain periods and have an adverse effect on our results and residences; and financial position. We rely on business partners to carry some traffic • broadband wireless access and wireless services using a radio for certain customers. If one of these carriers has a service failure, it frequency spectrum to which we may have limited or no access. might also cause a service interruption for those customers that would last until we could reroute the traffic to another carrier. These technologies may also lead to significantly different cost structures for users and therefore affect the long-term viability of We work to protect our service from the impact of natural disasters some of our current technologies. Some of the new technologies and major weather events such as ice storms, flooding, or have allowed competitors to enter our markets with similar landslides where it is necessary and feasible to do so. There are no products or services at lower costs. These competitors may also be larger and have greater access to financial resources than Rogers.

76 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 77 installations are excluded from tracts and instead offer two-year ROGERS COMMUNICATIONS INC. milar to other Canadian wireless h local authorities and the public. s and financial condition. 2016 ANNUAL REPORT the consultation requirements wit THE WIRELESS CODE The CRTC’s decision to implementthings, its Wireless effectively Code, required among Canadian other wirelessfrom carriers offering to three-year move service away con NATIONAL WIRELESS TOWER POLICY The policy affects all parties thatsystem, plan including to install personal or communications modifyand service an antenna (PCS), broadcasting cellular, serviceother providers. things, The policy thatantenna requires, antenna structures among proponents beforeowners proposing consider of existing new using systemssystems. structures respond existing Antenna to and proponents requests those notifying must to share follow the antenna aconcerns. defined public Certain process types for and of antenna addressing local requirements and SPECTRUM Radio spectrum is one ofon the our fundamental assets Wireless requiredimprove to business. current carry Our servicesamong ability and other to to offer factors, continueadequate new continued to spectrum, services access offer including depends to,spectrum and both on, licences and and the acquire new deployment ability spectrum licences. of, toIf renew we current cannot acquire andable retain to needed spectrum, continue wedeploy to may not offer new be andcompetitive services data improve speeds that our customers on want. currentto As a services a attract result, our and and ability timelyaddition, retain an inability basis, customers to acquireaffect could including and network retain be needed quality providing spectrum adversely andplant could and affected. result equipment. In in higher additionsChanges to to property, government spectrum feesour could payments significantly and therefore increase materially reduce our net income. HIGHER HANDSET SUBSIDIES Our wireless business modelthe is cost based of substantially subscriber oncarriers. handsets, subsidizing si This modelcommit to attracts a term customers contractsubsidy with per and us. unit We with in also thewe commit supplier are exchange, to of unable to a certain they recover minimum thethe devices. costs If customer of the contract, subsidies overbusiness, this the results of term could operation of have an adverse effect on our contracts, and this affectscosts our and customer subscriber churn. acquisition(excluding The and code retention was enterprise appliedDecember to 2, plans) all 2013 contracts and enteredplans) applied to as contracts into of (excludingentered enterprise June or 3, into. renewed 2015,information. no See after matter when “Regulation theyOur were in originally Wireless Ourregulation, business or customer Industry” behaviour could maketerm it difficult for be commitments for us or to more receive adversely impose early affected the cancellationcommitments. fees if service on laws, revenue customers or we anticipate from the term s. If advances in technology are rnet as the technology for wireless ed commercial e-mail, cybercrime, and lawful access. Generally, our licences aresubject to granted conditions for on the alicensing maintenance conditions specified of and term these related fees licences. andby may These the are regulators. be The modified regulators at maywhen any decide it not time expires, to and renew any aon failure licence by the us to maintenance complyforfeiture of with the of a conditions any licencecable, could of wireless, result our and in licencestransferred broadcasting a without or regulatory licences revocation approval. the generally or imposition may of notThe fines. be Our licencesCanadian include ownership conditions restrictions ofare requiring the currently applicable in us legislation. complianceand We to with control all comply requirements. ofviolated, these However, with Canadian if we ownership theseincluding, would in requirements the extreme be were case, the loss subject of a licence. to various penalties, possibly Regulatory changes or decisionsadversely made by impact theseregulation regulators our could relates to, resultsfees, among competition, other on the things, cablewe a licensing television programming and consolidated services must related agreements, that the basis. distribute, ratesnetwork This we by wireless third may parties, the charge resaleour and of to our networks, networks provide and our access roaming wirelinesystems, on operation to and our and interconnection ownershipcommunications of our systems. communications services In ability may addition, tocompliance be the increased acquire with costsconsumer from industry an of protection time concerns or providing interestcopyright to or infringement, such legislative unsolicit time in Internet-related as initiatives issues other as a to result address of CHANGES IN GOVERNMENT REGULATIONS Substantially all ofCanada our and/or the business CRTC, and activitiescould any regulatory are adversely changes affect regulated or decisions our by consolidated ISED results of operations. See REGULATORY RISKS Improvements in the qualitycoupled of with streaming video the overmovies increasing online the through Internet, availability OTTviewership, of content providers, are television which anticipated compete shows tocable for and increase television competition service formade provider Canadian todistribution any alternative system,competition. Canadian our In multi-channel addition, cablereplacing broadcasting wireless traditional wireline Internet services Inte is,Internet continues in may to develop. some face instances, The increased use ofadvertising PVRs revenue has as affectedtelevision viewers our can networks. ability skip Thesubscriber-based advertising to satellite continued aired generate and on emergence television AM digital the and and radio FM products growth radioeffect could audience of on affect listening the habits resultsalso and of migrating have our away a radioInternet negative from stations. as traditional Certain more broadcast audiencesavailable. video platforms are and to the audio content streaming becomes “Regulation in Our Industry” for more information. MANAGEMENT’S DISCUSSION AND ANALYSIS

The policy could prevent us from installing certain new antenna can offer these services. It is possible, however, that there may not systems and/or expanding our network, which would ultimately be sufficient consumer demand, or that we may not anticipate or affect our ability to serve our customers. satisfy demand for certain products and services or be able to offer or market these new products and services successfully to RADIO FREQUENCY EMISSIONS subscribers. If we do not attract subscribers to new products and From time to time, the media and other reports have highlighted services profitably or keep pace with changing consumer alleged links between radio frequency emissions from wireless preferences, we could experience slower revenue growth and handsets and various health concerns, including cancer, and increased churn. This could have a materially adverse effect on our interference with various medical devices, including hearing aids business, results of operations, and financial condition. and pacemakers. This may discourage the use of wireless handsets or expose us to potential litigation even though there are no COMPLEXITY OF OUR BUSINESS definitive reports or studies stating that these health issues are Our businesses, technologies, processes, and systems are directly attributable to radio frequency emissions. Future regulatory operationally complex and increasingly interconnected. If we do actions may result in more restrictive standards on radio frequency not execute properly, or if manmade or natural disasters affect emissions from low-powered devices like wireless handsets. We them, customers may have a negative experience, resulting in cannot predict the nature or extent of any restrictions. increasedchurnandlowerrevenue.

OBTAINING ACCESS TO SUPPORT STRUCTURES AND STRATEGY AND BUSINESS PLANS MUNICIPAL RIGHTS OF WAY Our strategy is vital to our long-term success. Changing strategic We must have access to support structures and municipal rights of priorities or adding new strategic priorities could compromise way for our cable facilities. We can apply to the CRTC to obtain a existing initiatives and could have a materially adverse effect on our right of access under the Telecommunications Act (Canada) business, results of operations, and financial condition. (Telecommunications Act) in areas where we cannot secure access We develop business plans, execute projects, and launch new to municipal rights of way. Failure to obtain access could increase ventures to grow our business. If the expected benefits from these Cable costs and adversely affect our business. do not materialize, this could have a materially adverse effect on The Supreme Court of Canada ruled in 2003, however, that the our business, results of operations, and financial condition. CRTC does not have the jurisdiction to establish the terms and conditions of accessing the poles of hydroelectric companies. As a RELIANCE ON THIRD-PARTY SERVICE PROVIDERS result, we normally obtain access under terms established by the We have outsourcing and managed service arrangements with provincial utility boards. third parties to provide certain essential components of our business operations to our employees and customers, including DEPENDENCE ON FACILITIES AND SERVICES OF ILECS payroll, certain facilities or property management functions, call Certain business telephony operations outside of our cable territory centre support, certain installation and service technicians, certain depend significantly on the availability of facilities and services network and IT functions, and invoice printing. Interruptions in acquired from incumbent telecommunication operators, according these services could adversely affect our ability to service our to CRTC rules. Changes to these rules could significantly affect the customers. cost of operating these businesses. ACQUISITIONS, DIVESTITURES, OR INVESTMENTS COPYRIGHT TARIFFS Acquiring complementary businesses and technologies, Pressures on copyright tariffs continue to affect our services. Any developing strategic alliances, and divesting portions of our increase in fees could negatively affect our results of operations. business are often required to optimally execute our business strategy. Some areas of our operations (and adjacent businesses) CRTC LICENCE RENEWALS are subject to rapidly evolving technologies and consumer usage In November 2016, the CRTC held hearings to consider the and demand trends. It is possible that we may not effectively renewal of many of our CRTC licences that permit us to operate forecast the value of consumer demand or risk of competing many of our Media television properties. These licences expire on technologies resulting in higher valuations for acquisitions or August 31, 2017. The CRTC has not yet issued its decision to renew missed opportunities. these licences. If any of these licences are not renewed, or are Services, technologies, key personnel, or businesses of companies renewed on terms that are adverse to our business plans, it could we acquire may not be effectively integrated into our business or have a significant negative impact on our results of operations. See service offerings, or our alliances may not be successful. We also “Regulation in Our Industry” for more information. may not be able to successfully complete certain divestitures on satisfactory terms, if at all. BUSINESS RISKS ORGANIZATIONAL STRUCTURE AND TALENT REVENUE EXPECTATIONS FROM NEW AND ADVANCED The industry is competitive in attracting and retaining a skilled SERVICES workforce. Losing certain employees or changes in morale due to a We expect that a substantial portion of our future revenue growth restructuring or other event could affect our revenue and may come from new and advanced services, and we continue to profitability in certain circumstances. invest significant capital resources to develop our networks so we

78 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 79 ver-the-air broadcast networks, annels are currently included in se substantially, our advertising bscription levels, and results of ROGERS COMMUNICATIONS INC. dcasters to digital platforms. The d in advertising dollars migrating 2016 ANNUAL REPORT MIGRATING FROM CONVENTIONAL TO DIGITAL MEDIA Our Media businessaffected operates by inmedia, customers which many is migrating driving industries shiftsand from in that the mobile conventional quality can alternatives andshifting to accessibility be to of our data digital conventional focusIncreasing media. towards We competition the haveplatforms, digital been for such market ascontent advertising to search alternatives, limit revenue has engines,from this resulte social conventional from risk. television networks, broa andimpact digital is digital greater onsuch conventional as o City and OMNI,from that subscription do not revenue. have Our aaffected second Media if revenue results we stream could areconventional be unsuccessful to digital adversely in platforms. shifting advertising dollars from OUR MARKET POSITION IN RADIO, TELEVISION,MAGAZINE OR READERSHIP Advertising dollars typically migrateleaders in to their respective media markets and propertiesadvertising categories, budgets particularly that when are are tight.properties Our radio, may television, andperform. magazine not Advertisers continue basedecisions a performing on substantial ratings how partassociations and of and they readership their agencies. data currently magazine purchasing generated If readership by our levels industry decrea radiosales and volumes television and theadversely ratings affected. rates or that we charge advertisers could be CHANNEL UNBUNDLING Recent CRTC regulatorycertain of decisions our have Mediachallenging television been properties unfavourable andprogramming have to resulted operating inimplementation a package of flexiblenegatively unbundling affect channel environment. the packaging tiercertain status, by of and su Media’s BDUs360, channels, CRTC-mandated Sportsnet could including ONE, the TSC, Sportsnetincluding World, Sportsnet, and Outdoor Sportsnet our Life required specialty Network, channels, Canada, and FX VICELAND. (Canada), Certain ch FXXfavourable (Canada), G4 channeladversely packaging affect our with resultsmay and not many some survive in industry BDUs. such specialty an networks This environment. See could “Television Services DECLINE OF PAY TELEVISION SUBSCRIBERS INThe CANADA number of paydecline. television Other households video offerings in available Canadadirect-to-consumer to continues subscription consumers and (for to free example, services), ashave well contributed as piracy, tohave this a material trend. adverse If effect on this our results decline of operations. continues, it could Distribution” for more information. ncial condition, and results of iting wireless term contracts to mobile products in Canada, this adcasters and digital competitors continue to increaseprogramming costs the could adversely costour affect business the if of operating we results are programmingthrough unable of subscription to fee rights. recover increases programming that Higher investments reflect the market. INCREASING PROGRAMMING COSTS Acquiring programming is thecommitment in single our most Cable significant televisionfor business purchasing and is a Media materialprogramming cost rights television to contenttraditional and properties. popular linear properties from television Increased both bro competition for INVENTORY OBSOLESCENCE Our inventory balance mainlywhich consists of generally wireless handset havefrequent devices, relatively wireless handset shortmanage introductions. product inventory If lifecycles levels weincrease the due based cannot risk of to inventory effectively on obsolescence. product demand, this may two years from threeno-term years, contracts the has numbercontractual increased. of obligation BYOD These to customers customers remain with material are with adverse effect under Rogers, on our which no churn. could have a INCREASE IN BRING YOUR OWN DEVICECUSTOMERS (BYOD) With the CRTC’s Wireless Code lim operations. Any interruptionnetworks in could the supply alsonetwork of affect development and equipment the expansion. for quality our ofApple our has service introduced or softtechnology impede Subscriber Identification to Modulecustomers (SIM) its of certain latest carriers touse switch iPads of between a carriers carrier-provided launched without SIM the vendors card. introduce in If soft Apple SIM or to the other their could major have handset US, an adverse effect allowing operations on our as business, churn, manyunder and no results customers of contractual obligation without tothat remain soft subsidized with SIM will Rogers. devices be We comingyears. expect to are the Canadian market in the next few DEPENDENCE ON CERTAIN KEY INFRASTRUCTURE AND HANDSET VENDORS Our wireless businessnumber of has essential relationshipsWe network do infrastructure not with have and operational ahave or handset financial limited vendors. control relatively influence over on them small how andHandset they only vendor conduct their market business sharetop with suppliers has us. which will recently augment this shifted dependency. towardsIf fewer one ofadding our network network capacity or infrastructure newand capabilities suppliers network and fails, infrastructure services. suppliers Handsets it can extendprices, could delivery and times, delay raise limit supplyrequirements, due to among theirdevelop other own shortages things. handsets and business products If that and these services satisfy onadverse suppliers a effect customer do timely on demands, our basis, not business, it or fina could have deliver a material MANAGEMENT’S DISCUSSION AND ANALYSIS

FINANCIAL RISKS LITIGATION RISKS CAPITAL COMMITMENTS, LIQUIDITY, DEBT, AND INTEREST – PAYMENTS In 2004, a class action was commenced against providers of Our capital commitments and financing obligations could have wireless communications in Canada under the Class Actions Act important consequences including: (Saskatchewan). The class action relates to the system access fee • requiring us to dedicate a substantial portion of cash provided wireless carriers charge to some of their customers. The plaintiffs by operating activities to pay interest, principal, and dividends, are seeking unspecified damages and punitive damages, which which reduces funds available for other business purposes would effectively be a reimbursement of all system access fees including other financial operations; collected. • making us more vulnerable to adverse economic and industry In 2007, the Saskatchewan Court granted the plaintiffs’ application conditions; to have the proceeding certified as a national, “opt-in” class action • limiting our flexibility in planning for, and/or reacting to, changes where affected customers outside Saskatchewan must take specific in our business and/or industry; steps to participate in the proceeding. In 2008, our motion to stay • putting us at a competitive disadvantage compared to the proceeding based on the arbitration clause in our wireless competitors who may have more financial resources and/or less service agreements was granted. The Saskatchewan Court directed financial leverage; or that its order, in respect of the certification of the action, would • restricting our ability to obtain additional financing to fund exclude customers who are bound by an arbitration clause from working capital and additions to property, plant and equipment the class of plaintiffs. and for other general corporate purposes. In 2009, counsel for the plaintiffs began a second proceeding Our ability to satisfy our financial obligations depends on our future under the Class Actions Act (Saskatchewan) asserting the same operating performance and economic, financial, competitive, and claims as the original proceeding. If successful, this second class other factors, many of which are beyond our control. Our business action would be an “opt-out” class proceeding. This second may not generate sufficient cash flow in the future and financings proceeding was ordered conditionally stayed in 2009 on the basis may not be available to provide sufficient net proceeds to meet that it was an abuse of process. these obligations or to successfully execute our business strategy. In 2013, the plaintiffs applied for an order to be allowed to proceed CREDIT RATINGS with the second system access fee class action. However, the court Credit ratings provide an independent measure of credit quality of denied this application and the second action remains an issuer of securities and can affect our ability to obtain short- and conditionally stayed. long-term financing and the terms of the financing. If rating At the time the Saskatchewan class action was commenced in agencies lower the credit ratings on our debt, particularly a 2004, corresponding claims were filed in multiple jurisdictions downgrade below investment-grade, it could adversely affect our across Canada, although the plaintiffs took no active steps. The cost of financing and access to liquidity and capital. appeal courts in several provinces dismissed the corresponding claims as an abuse of process. The claims in all provinces other than INCOME TAXES AND OTHER TAXES Saskatchewan have now been dismissed or discontinued. We have We collect, pay, and accrue significant amounts of income and not recognized a liability for this contingency. other taxes such as federal and provincial sales, employment, and property taxes. 911 FEE We have recorded significant amounts of deferred income tax In June 2008, a class action was launched in Saskatchewan against liabilities and current income tax expense, and calculated these providers of wireless communications services in Canada. It involves amounts based on substantively enacted income tax rates in effect allegations of breach of contract, misrepresentation, and false at the relevant time. A legislative change in these rates could have a advertising, among other things, in relation to the 911 fee that had material effect on the amounts recorded and payable in the future. been charged by us and the other wireless telecommunication providers in Canada. The plaintiffs are seeking unspecified damages We provide for income and indirect taxes based on all currently and restitution. The plaintiffs intend to seek an order certifying the available information and believe that we have adequately proceeding as a national class action in Saskatchewan. We have not provided for these items. The calculation of applicable taxes in recognized a liability for this contingency. many cases, however, requires significant judgment in interpreting tax rules and regulations. Our tax filings are subject to audits, which CELLULAR DEVICES could materially change the amount of current and deferred In July 2013, a class action was launched in British Columbia against income tax assets, liabilities, and provisions, and could, in certain providers of wireless communications in Canada and circumstances, result in the assessment of interest and penalties. manufacturers of wireless devices. The class action relates to the While we believe we have paid and provided for adequate alleged adverse health effects incurred by long-term users of amounts of tax, our business is complex and significant judgment is cellular devices. The plaintiffs are seeking unspecified damages required in interpreting how tax legislation and regulations apply and punitive damages, effectively equal to the reimbursement of to us. the portion of revenue the defendants have received that can reasonably be attributed to the sale of cellular phones in Canada. We have not recognized a liability for this contingency.

80 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 81 ess of our internal control over ROGERS COMMUNICATIONS INC. o provide reasonable assurance hat our financial statements are Management also takes steps to wever, no matter how well designed, 2016 ANNUAL REPORT CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING AND DISCLOSURE CONTROLS AND PROCEDURES There were noreasonably changes likely in 2016 tofinancial reporting. that materially materially affect, affected, our or internal are controls over MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management isadequate responsible internal controls over for financial reporting. establishingOur and internal control maintaining systemthe is Board designed to reasonable give assuranceprepared management and t and fairly presented intheIASB.Thesystemisintendedt accordance with IFRS as issuedthat by transactionsfinancial are records authorized, areassure assets the reliable. flow are of informationmonitors safeguarded, and performance and communication our is and internal effective, control and procedures. Management assessed the effectiven financial reporting as at Decemberset out 31, in 2016, the based Internal Control onby – the Integrated the criteria Framework Committee (2013) issued ofCommission Sponsoring (COSO), Organizations and of concludeddate. the that Our independent Treadway it auditors, wasreport KPMG effective LLP, on at have that issuedfinancial management’s an reporting audit assessment asunqualified of at opinion on December internal the effectiveness 31,control of control the 2016, over Company’s over and internal financialincluded provided in reporting an our as 2016filed on Audited of SEDAR Consolidated (sedar.com). that Financial Statements date.All This internal control report systems, ho have is inherentdetermined limitations, to be and effective canabout the even only preparation provide and reasonable presentation systems of assurance financial statements. that have been y-controlled company. Voting rrently known to us, we believe it We conducted an evaluation ofoperation the effectiveness of of the designDecember and our 31, disclosureparticipation 2016, of controls our underOfficer and management, including and procedures the thepromulgated Chief Chief as supervision under Financial Executive the at andamended. US Officer, Based Securities on this with pursuant Exchange evaluation, ourChief Act Chief to Financial the Executive of Officer Officer and 1934, Rule concludedprocedures as that were 13a-15 our effective at disclosure that controls date. and CONTROLS AND PROCEDURES DISCLOSURE CONTROLS AND PROCEDURES OWNERSHIP RISK CONTROLLING SHAREHOLDER Rogers is acontrol of family-founded, Rogers Communications is famil whose held by Rogers beneficiaries Control Trust, aremembers of a the Rogers smallof family, several group of our whom ofCommunications are individuals also Board. Inc. directors thatsuccessive and The generations are of the its trust Rogerscompany family. subsidiary subsidiaries The of a trustee holds Canadian is for chartered the bank. trust voting theAs benefit control atcompanies of of December controlled by 31, Rogers our the trust 2016, outstanding ownedapproximately approximately private, Class 10% 91% of our of A Rogers Classor B Non-Voting Voting shares in family (2015 – total(2015 shares 10%), holding – approximately 28%). (2015 Only 27%most Class – of A circumstances. Voting the shares 91%) As carrymembers total the of a and right shares our to result, Board votesubmitted outstanding to in and the a shareholder to vote. trust control the is vote able on most to matters elect all is notproceedings probable and claims, that individually oradverse the in total, ultimate effect will havecondition. resolution a on material If of it our becomesclaims any against business, probable us, of we that will financial recognize wewhich these a the will results, provision change during be in the or probability period heldour occurs, in liable which financial could for Consolidated beStatements material of to Financial Statements Position. of Income or Consolidated OUTCOME OF PROCEEDINGS The outcomeincluding of the allresolution the matters that proceedings described includespossible and for above, the us to claims uncertainties predict isto the against of result subject or the magnitude litigation. us, of toprocess. various the It Based claims due on factors is future information not cu and uncertainties involved in the legal OTHER CLAIMS There are certain otherdo claims not and expect potential any claims offinancial against these results. to us. have We a material adverse effect on our MANAGEMENT’S DISCUSSION AND ANALYSIS

Regulation In Our Industry television service ordered by the CRTC and introduced in 2016, as the CRTC believes there is enough competition for these services Our business, except for the non-broadcasting operations of provided by other carriers to protect the interests of users and has Media, is regulated by two groups: forborne from regulating them. Regulations can and do, however, • Innovation, Science and Economic Development Canada (ISED affect the terms and conditions under which we offer these services. Canada) on behalf of the Minister of Innovation, Science and Economic Development; and SPECTRUM LICENCES • the CRTC, under the Telecommunications Act and the ISED Canada sets technical standards for telecommunications Broadcasting Act (Canada) (Broadcasting Act). under the Radiocommunication Act (Canada) Regulation relates to the following, among other things: (Radiocommunication Act) and the Telecommunications Act. It • wireless spectrum and broadcasting licensing; licences and oversees: • competition; • the technical aspects of the operation of radio and television • the cable television programming services we must, and can, stations; distribute; • the frequency-related operations of cable television networks; • wireless and wireline interconnection agreements; and • rates we can charge third parties for access to our network; • awarding and supervising spectrum for wireless communications • the resale of our networks; systems in Canada. • roaming on our networks and the networks of others; • ownership and operation of our communications systems; and ROYALTIES • our ability to acquire an interest in other communications systems. The Copyright Board of Canada (Copyright Board) oversees the administration of copyright royalties in Canada and establishes the Regulatory changes or decisions can adversely affect our royaltiestobepaidfortheuseofcertain copyrighted works. It sets consolidated results of operations. the copyright tariff royalties that Canadian broadcasting Our costs of providing services may increase from time to time as undertakings, including cable, radio, television, and specialty we comply with industry or legislative initiatives to address services, pay to copyright collectives. consumer protection concerns or Internet-related issues like copyright infringement, unsolicited commercial e-mail, cybercrime, BILLING AND CONTRACTS and lawful access. Manitoba, Newfoundland and Labrador, Ontario, and Quebec Generally, our spectrum and broadcast licences are granted for a have enacted consumer protection legislation for wireless, wireline, specified term and are subject to conditions for maintaining these and Internet service contracts. This legislation addresses the licences. Regulators can modify these licensing conditions at any content of such contracts, the determination of the early time, and they can decide not to renew a licence when it expires. If cancellation fees that can be charged to customers, the use of we do not comply with the conditions, a licence may be forfeited or security deposits, the cancellation and renewal rights of customers, revoked, or we may be fined. the sale of prepaid cards, and the disclosure of related costs. Rogers is also currently subject to the CRTC Wireless Code and will The licences have conditions that require us, amongst other things, come under the forthcoming CRTC Television Service Provider to comply with Canadian ownership restrictions of the applicable Code of Conduct that will become effective on September 1, 2017. legislation. We are currently in compliance with these conditions. If See “CRTC Wireless Code” for more information. we violate the requirements, we would be subject to various penalties and it could include losing a licence in extreme cases. FOREIGN OWNERSHIP AND CONTROL Cable, wireless, and broadcasting licences generally cannot be Non-Canadians can own and control, directly or indirectly: transferred without regulatory approval. • up to 33.3% of the voting shares and the related votes of a that has a subsidiary operating company CANADIAN BROADCASTING AND licenced under the Broadcasting Act, and TELECOMMUNICATIONS OPERATIONS • up to 20% of the voting shares and the related votes of the Our Canadian broadcasting and telecommunications operating licensee company may be owned and controlled operations – including our cable television systems, radio and directly or indirectly by non-Canadians. television stations, and specialty services – are licensed (or operated Combined, these limits can enable effective foreign control of up under an exemption order) and regulated by the CRTC under the to 46.7%. Broadcasting Act. The chief executive officer and 80% of the members of the Board of The CRTC is responsible for regulating and supervising all aspects Directors of the operating licensee must be resident Canadians. of the Canadian broadcasting and telecommunications system. It is There are no restrictions on the number of non-voting shares that also responsible under the Telecommunications Act for the may be held by non-Canadians at either the holding company or regulation of telecommunications carriers, including: the licensee company level. Neither the Canadian carrier nor its • Wireless’ mobile voice and data operations; and parent may be otherwise controlled in fact by non-Canadians. • Cable’s Internet and telephone services. Subject to appeal to the federal Cabinet, the CRTC has the Our cable and telecommunications retail services are not subject to jurisdiction to determine as a question of fact whether a given price regulation, other than our affordable entry-level basic cable licensee is controlled by non-Canadians.

82 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 83 ministrative Monetary Penalties ROGERS COMMUNICATIONS INC. ommunications Act, regulations, 2016 ANNUAL REPORT disabilities; and 3.5 GHZ BAND POLICY CHANGES In December 2014, ISED Canada released3.5 its GHz policy spectrum changes band. to Rogers the has a 50% interest in the Inukshuk BILL C-43 On October 23,government. 2014, Amongst Bill other C-43 items,Broadcasting it was Act makes introduced amendments andcharging by to the subscribers the the for federal TelecommunicationsCRTC paper with Act the bills. authority to to assess Bill Ad prohibit C-43 also provides the WIRELESS 600 MHZ SPECTRUM LICENCE BAND On August 14, 2015,the ISED Canada reallocation released of amobile spectrum decision regarding licences services. inspectrum Canada the licences as will 600 the MHzauction US, reallocate that following band began the in the for 2016 UScurrently and 600 same using continues MHz the in progress. 600 incentive amount TV MHzfor channels band of spectrum mobile that will servicesallotment be plan auctioned will and will be beto provided complete with given the a transition. minimum a Certainwill of Rogers need 18 new to over-the-air months be TV transitioned. channels channel Notransition decision funding has in of been affected made the TV regarding will channels new or use whether an ISED Canada incentiveexpected before auction the format. Canadian Additionalexpected to auction consultations occur of in are the this next spectrum, two to which three years. is CANADIAN ANTI-SPAM LEGISLATION Canada’s anti-spamDecember 15, 2010 legislation and cameexception into of force was those on July sectionsinstallation 1, passed of of 2014, with the computer the Actforce into programs related on or to January software, law theplace 15, which under unsolicited the 2015. came legislation on effective A into Julyin private 1, compliance 2017. with right We this believe legislation. of we are action comes into for any contraventions of theor Telec CRTC decisions. The2014 Bill was and passed these into amendmentsbelieve law we became on are December effective in compliance 16, immediately. with this We legislation. guiding principles, fund design, and assessmenta criteria follow-up to proceeding be set to in takeoccur place thereafter in with 2017. a Implementationthe maximum will first funding year of level implementation, ofover increasing $100 by million the $25 in million$200 annually following million, with the fourcontingent incremental on increases years a in review yearsbeing of to four the managed and fund efficiently five reach in andFunds the is will third an be achieving year generated its by towireline annual extending intended ensure and a purpose. it wireless percent Internet is of cap and revenue textingthat levy revenue. on the of The revenue CRTC noted percentyear charge five at would the be $200 approximately millionpercent charge. the annual same cap as in the current revenue The CRTC also established regulatory measures• to address: issues related to wireless services• accessibility for online tools persons for consumers with to easily manage their data usage. nd Internet access services, on bile wireless technology should ribers should be able to access and be available not only inas Canadian many homes major and transportation businesses, roads but as on possible in Canada. Internet access service subsc speeds of at least 50to Mbps download and subscribe 10 Mbpsallowance upload, to and by 2021, a withreceiving service such the service by remaining offering 2031; 10% and of with the population an unlimited data CRTC REVIEW OF BASIC TELECOMMUNICATIONS SERVICES On April 9, 2015, the2015-134. CRTC issued Through Telecom Notice an ofthree-week Consultation extensive public hearing proceeding in April culminating 2016,telecommunications the with CRTC examined services a which meaningfully Canadians in requireensuring the to the digital availability participate services economy of to and affordable all Canadians.proceeding the basic The on telecommunications CRTC’s December CRTC 21, releasedCRTC role 2016 2016-496. its in The in decisions CRTC Telecom in set RegulatoryCanadians, as the Policy in its urban universal areas service as objective wellaccess that as to in voice rural services and and remote broadba areas, have To help attain the universal serviceshift objective, the the CRTC will focus beginservices to of to itsfollowing broadband regulatory services which frameworks Internet form from partare access of hereby wireline the basic universal services. voice service telecommunicationsof objective services As subsection within 46.5(1) of the such, the meaning Telecommunications• Act: the fixed and mobile wireless broadband• Internet fixed access and services; mobile wireless voice services. Designated highapproximately $100 cost million0.53% in local levy subsidies on in wirelinedecision, voice the 2016 and CRTC wireless determined collected serving that voicewill by the services current a be local revenue. areas voice phased In subsidy access service its out received is unavailable except andin 2017 a where to follow-up establish proceeding the reliable will specifics of occur broadband the phase-outTo of Internet the assist subsidy. inremote extending locations, broadbandfunding the into mechanism CRTC under-served with rural will and the establish specifics a of new the broadband fund including both fixedsuccessful achievement and of this mobile objective,several the criteria, including: CRTC wireless has established • networks. 90% To of measure Canadian residential the and business fixed broadband • the latest generally deployed mo Pursuant toregulations, the thetelecommunications carriers Telecommunications such as sameno Wireless, Act except requirement that that there rulesCanadian. and is We the believe associated chief alsoforeign we ownership executive and are control requirements. in officer apply compliance be withOn June a the 29, to 2012, foregoing resident Bill C-38passed amending the into Canadian Telecommunications Act law.companies The amendments exempttelecommunications with telecommunications market measuredinvestment by less restrictions. Companies revenue thattheir from are than foreign successful market intelecommunications growing market shares 10% revenue otheror than in acquisitions by will continue of way to excess of be exempt merger from of the restrictions. total 10% Canadian of total Canadian MANAGEMENT’S DISCUSSION AND ANALYSIS

Wireless Partnership which holds (on average) between 100-175 five years, during which time the CRTC will monitor competitive MHz of 3.5 GHz spectrum in most major urban markets in Canada. conditions in the mobile wireless market. The 3.5 GHz band will be reallocated for mobile services (it is currently only licensed for fixed wireless access in Canada). The TRANSFERS, DIVISIONS, AND SUBORDINATE LICENSING establishment of a new band plan and licensing framework for OF SPECTRUM LICENCES mobile services will be the subject of a future consultation. The In June 2013, ISED Canada released Framework Relating to band will eventually be relicensed on a flexible-use basis whereby Transfers, Divisions and Subordinate Licensing of Spectrum licensees will be permitted to determine the extent to which they Licences for Commercial Mobile Spectrum. The Framework lays will implement fixed and/or mobile services in the band in a given out the criteria ISED Canada will consider and the processes it will geographic area. use when it reviews spectrum licence transfers, including Until the future consultation is completed and the related decisions prospective transfers that could arise from purchase or sale options are released, all existing licences that will be renewed will be and other agreements. Key items to note are that: limited to the provision of fixed services. Licences will be renewed • ISED Canada will review all spectrum transfer requests, and will where licensees have satisfied all of their conditions of licence and not allow any that result in “undue spectrum concentration” and renewed licences will have a one-year term. On completion of the reduced competition. Decisions will be made on a case-by-case consultation process and release of related decisions, renewed basis and will be issued publicly to increase transparency; and licensees will have a high expectation of receiving new licences for • licensees must ask for a review within 15 days of entering into 10 or 20 years (depending on consultation outcome). Spectrum any agreement that could lead to a prospective transfer. ISED associated with existing licences that are not renewed by ISED Canada will review the agreement as though the licence transfer Canada will be made available on a first-come, first-served basis that could arise from it has been made. This timing did not apply using an application process. to agreements such as Rogers’ AWS agreements with Shaw and Quebecor made before the Framework was released. LEGISLATION REGARDING WHOLESALE DOMESTIC WIRELESS ROAMING RATES CRTC WIRELESS CODE On June 19, 2014, the federal government enacted legislation to In June 2013, the CRTC issued its Wireless Code. The Wireless cap wholesale domestic wireless roaming rates carriers can charge Code imposes several obligations on wireless carriers, including to one another at amounts no higher than the average rates carriers maximum contract term length, roaming bill caps, device unlocking charge their own retail customers. The legislation also provided the requirements, and contract summaries. It also lays out the rules for CRTC with the power to set domestic roaming rates between device subsidies and early cancellation fees. Under the code, if a carriers, regardless of the formula. The CRTC conducted a review customer cancels a contract early, carriers can only charge the into wireless roaming rates and the state of wireless wholesale outstanding balance of the device subsidy they received, which competition with a public hearing, which concluded in early decreases by an equal amount every month over no more than October 2014. 24 months. This effectively makes the maximum contract length two years. On May 5, 2015, the CRTC released its decision on the regulatory framework for wholesale mobile wireless services (Telecom The CRTC committed to a review of the Wireless Code’s Regulatory Policy 2015-177). The CRTC determined it is necessary effectiveness within three years of its implementation. In Telecom to regulate the rates that Rogers Communications and two of its Notice of Consultation CRTC 2016-293, released on July 28, 2016, competitors ( and Telus Communications) charge the CRTC called for comments on the effectiveness of the Wireless other Canadian wireless carriers for domestic GSM-based CodeandhowtheWirelessCodeshouldbeupdatedtoreflectthe wholesale roaming. The CRTC directed Rogers, Bell, and Telus to evolution of the wireless market since the Wireless Code’s each file proposed cost-based tariffs for wholesale roaming on implementation. An oral hearing began on February 6, 2017. November 4, 2015. Pending its final determination on the proposed tariffs, the CRTC approved, on an interim basis, a TOWER SHARING POLICY maximum rate for each of GSM-based voice, text, and data In March 2013, ISED Canada released Revised Frameworks for wholesale roaming provided by Bell, Rogers, and Telus across their Mandatory Roaming and Antenna Tower and Site Sharing, respective networks to other Canadian wireless carriers. This rate is concluding a consultation initiated in 2012. It sets out the current equal to the highest rate charged by each of Rogers, Bell, and Telus rules for tower and site sharing, among other things. The key terms to any other Canadian wireless carrier for each of GSM-based of the tower and site sharing rules are: voice, text, and data wholesale roaming as of the date of the • all holders of spectrum licences, radio licences, and decision. These rates were replaced when the CRTC gave interim broadcasting certificates must share towers and antenna sites, approval to the proposed cost-based tariffs filed by the carriers on where technically feasible, at commercial rates; and December 3, 2015 and made these interim rates effective • the timeframe for negotiating agreements is 60 days, after which November 23, 2015. The CRTC process to establish final rates arbitration according to ISED Canada arbitration rules will begin. remains underway. In Telecom Regulatory Policy 2015-177 released in May 2015, the The CRTC further determined that it is not appropriate to mandate CRTC determined that it would not mandate or require general wholesale MVNO access. wholesale tariffs for tower and site sharing. At the same time, it determined that its existing powers and processes are sufficient to Finally, the CRTC determined that the regulatory measures address tower and site sharing disputes related to rates, terms, and establishedinthedecisionwouldremaininplaceforaminimumof

84 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 85 ly-created Independent Local l revenues from those markets ision of provincially aggregated ROGERS COMMUNICATIONS INC. s; however, of that amount, in all vision, and Internet access, would d themes, asking what consumers nnections at telephone company 2016 ANNUAL REPORT and other sources; and choices and seek solutions if they are not satisfied. CRTC REVIEW OF LOCAL AND COMMUNITY PROGRAMMING On September 14, 2015,review the the policy CRTC framework for announced local(Broadcasting a and Notice community proceeding programming of to Consultationdue 2015-421). Comments October were February 29, 3, 2016. On 2015 June 15,regarding 2016, and the local CRTC released an its andRegulatory decision Policy CRTC oral community 2016-224). The television CRTC hearingfor created BDU a policy contributions new concluded model to (Broadcasting Canadianon on programming September set 1, to take 2017.annual effect Annual gross broadcasting contributions revenue will remain at 5% of TELEVISION SERVICES DISTRIBUTION On October 24, 2013,consultation the CRTC (Let’s launchedconsultation a Talk covered broad-based three TV) public broa on the subject of television. The licensed cable systems, upcan to be 1.5% used (ratherrevenue, to than 0.3% the fund must previous now community go 2%) News to channel a Fund programming. new for Ofremaining independently-owned this funding local will continue TVand to stations, independent go to production and the funds. the flexibility Canada This Media decision for Fund will provide BDUsmarkets the (, Toronto, that , , operate andnow Vancouver) direct to community their community channelsto channe in fund large markets, either or to community fundcase local of news Rogers), channel should on they TV wish programming to stations do (such so. in as City, smaller in the think about: • the television programming available• to them; the reception of television programming from• service providers whether they have enough information to make informed On July 22, 2015, theframework CRTC released for its decision wholesale onPolicy 2015-326). the The wireline regulatory CRTC determined services thataccess wholesale high-speed services, (Telecom which Regulatory areservices, such used as local to phone, supportcontinue tele to retail be mandated. competition The for services, prov however, would nophased longer be out mandateddisaggregated and in service would be withcentral conjunction offices co and with cable companyimplement head-ends. the disaggregated The requirement wholesale to will implementation high-speed include access of services makingRegulated rates them a will available continuecost to studies. over be based FTTH on access long-runOn increment facilities. September 20, 2016,(Telecom the Decision CRTC CRTC released 2016-379) a2015-326, to follow-up Telecom decision addressing Regulatory Policy disaggregated, the high-speed access TPIA, technicalaccess a service to implementation that FTTH willruling. facilities of provide The as decision new, ordered isRogers in consistent in the with our CRTC’s filings. thefor July Proposed positions the tariffs new 22, submitted service and by 2015 were supporting filed on cost January 9, studies 2017. d transparent regulatory policy r appropriate, and required all tices for Internet data plans. The s mobile wireless customers. The CRTC REVIEW OF WHOLESALE WIRELINE TELECOMMUNICATIONS SERVICES In October 2013,telecommunications the essential services CRTC rulings initiated2008. it The its released review in planned March determinedwhat review which terms of wireline and the services,carriers must and conditions, make under facilities-based availableproviders, such to telecommunications as other resellers. Extensive telecommunications submissions2014 service were filed leading during toDecember a 4, 2014. two-week public hearing that concluded on regarding differential pricing prac WHOLESALE INTERNET COSTING AND PRICING On March 31, 2016,of the costing CRTC inputs released and its the applicationhigh-speed decision process access on for services the existing that wholesale provide review forof a interconnection, single provincial but point whichfacilities are not (Telecom availabledetermined over that FTTH Decision access wholesaletelecom providers telecom CRTC were rateswholesale no paid 2016-117). longe high-speed by accessstudies The service competitive with providers proposeddetermined rates CRTC to for that file final all newapproved approval. wholesale were cost The to Internet CRTC be rates madeThe further interim CRTC that as will of were assess theapply the currently date when extent of new the to cost decision. wholesale which, studies high-speed if are access at submitted service all,filed in rates. retroactivity support On will our of June revised 30,proposed new rates. 2016, we cost studiesOn with October 6, the 2016,significantly CRTC, the reducing CRTC existing which issued interim Telecomtariff rates detail Order for component 2016-396, the of our capacity wholesaleapproval charge high-speed access of service final pending immediately. rates. The CRTC Theretroactivity will interim will assess rate apply the whenrates reductions extent are wholesale set took to high-speed on which, effect a accessto final set if service final basis. at rates The requires process all, after final established which written the by submissions CRTC the by will May CRTC make 31, a 2017, determination. CRTC intends to establish a clear an On May 18,Notice 2016, of the Consultationissues CRTC CRTC surrounding initiated 2016-192) the aCanadian to ISPs use proceeding examine related to (Telecom the ofproceeding the policy differential provision stems of from pricing Internetconcerning data an the practices plans. pricing application This practices by made usedits by Unlimited by Videotron Music when several offering service parties to it CABLE DIFFERENTIAL PRICING RELATED TO INTERNET DATA PLANS conditions. As aestablished result, by carriers ISED mayintervene Canada, in use the or event the that they tower and arbitration may site sharing process request negotiations fail. the CRTC to concluded on November 4, 2016. Aquarter decision of is 2017. expected in the first oral hearing commenced the week of October 31, 2016 and MANAGEMENT’S DISCUSSION AND ANALYSIS

In November 2014, the CRTC released its first decision arising from consisting of Canadian local channels, national mandatory services, the Let’s Talk TV hearing ordering the elimination of the 30-day community and provincial legislature channels, and the US 4+1 cancellation provision for cable, Internet, and phone services, networks. We also offer smaller, reasonably priced packages of effective January 23, 2015. specialty and premium channels. On December 1, 2016, we began offering all specialty and premium channels on an “à la carte” basis On January 29, 2015, the CRTC released decisions requiring local as well. stations to continue over-the-air transmission under the same regulatory regime currently in place and maintaining simultaneous On May 24, 2016, the CRTC released a notice of consultation substitution requirements, except for the NFL Super Bowl, (Broadcasting Notice of Consultation CRTC 2016-197) stating that beginning in 2017. In a related decision released the same day, the a hearing will be held in consideration of the license renewal CRTC found that it would be an undue preference under the applications of BDUs, including Rogers. The hearing, which Telecommunications Act for a vertically integrated company that commenced on September 7, 2016, reviewed the practices of all offers a Mobile TV service to exempt this service from standard BDU licensees in regard to the small basic service and flexible monthly wireless data caps and usage charges generally applicable packaging requirements described above that came into effect on to its wireless service. March 1, 2016. On March 19, 2015, the CRTC released the third of its decisions On November 21, 2016, the CRTC released Broadcasting Decision related to its Let’s Talk TV proceeding. The CRTC ordered CRTC 2016-458, renewing Rogers’ BDU licences from distributors to offer customers an option for a small basic service December 1, 2016 to November 30, 2017. In the decision, the consisting only of Canadian local channels (local radio is optional), CRTCestablishedwhatitcalledasetofbestpracticesforBDUsthat national mandatory services, community and provincial legislature serve to promote choice for Canadians and stated that it will channels, and, should they wish, US 4+1 networks beginning monitor all of these practices, including how BDUs promote and March 1, 2016. The retail rate for this entry-level service will be offer the small basic service and pick-and-pay and small package capped at $25 per month (excluding equipment). The CRTC options, and will take any necessary remedial action when it adopted phased-in requirements for selling channels to customers examines the renewal of the licenses for BDUs again in 2017 for a “à la carte” and as part of “pick-packs”. All channels above the basic full renewal term. tier must be offered on an à la carte basis or in smaller, reasonably priced packages by March 1, 2016. By December 1, 2016, they MEDIA must be offered in both forms. As a BDU, we will be permitted to continue to offer our existing basic service and programming COPYRIGHT RETRANSMISSION OF DISTANT SIGNALS packages. The CRTC will also revise its existing “preponderance” Pursuant to section 31(2) of the Copyright Act, television service rule so that consumers will have to be offered, but will not have to providers are permitted to retransmit programming within distant receive, a majority of Canadian services. over-the-air television signals as part of a compulsory licensing The CRTC also proposed several changes to the Wholesale Code regime. Rates for the distribution of the programming are (formerly the (VI) Code) addressing, amongst established through negotiation or set by the Copyright Board. other matters, penetration-based rate cards and minimum Distributors and content providers were unable to agree on a new guarantees. All licensed programmers and BDUs will be required rate for the distribution of distant signals after the expiration of the to comply with the Wholesale Code, which came into effect on current agreement in 2013. A proceeding was initiated by the January 22, 2016. Copyright Board, which began on November 23, 2015. The proceeding continued into 2016 with a decision expected in 2017. The March 19 decision also addressed rules for distribution of foreign services authorized for distribution in Canada, including The Collectives (content providers) have proposed a royalty rate requirements that foreign services make their channels available “à that is approximately double the current rate, which, if certified, la carte” and in “pick-packs” or in smaller pre-assembled packages would have a significant financial impact on Rogers with additional and abide by the Wholesale Code. Access rules for VI-owned costs of approximately $30 million per year. services and independent services, channel packaging, and buy-through rules for multicultural services were also addressed. LICENCE RENEWALS In a proceeding initiated by Broadcasting Notice of Consultation On March 26, 2015, in the final decision related to Let’s Talk TV, the CRTC 2016-225 released June 15, 2016, Rogers sought renewal of CRTC announced plans to establish a Television Service Provider our group-based licences (six City over-the-air English stations, (TVSP) Code of Conduct to govern certain aspects of the Sportsnet 360, VICELAND, G4Tech, Outdoor Life, FX, and FXX), our relationship between TVSPs and their customers as well as to allow five over-the-air ethnic licences, and our consumers to complain to the CCTS about their providers. On mainstream sports Sportsnet and Sportsnet One licences. We also January 8, 2016, the CRTC issued the final version of the TVSP sought approval of an application seeking a new licence to operate Code, which will come into effect on September 1, 2017. This a called OMNI Regional, which would operate decision also introduced new requirements related to the provision pursuant to a section 9(1)(h) order granting it mandatory carriage of service to persons with disabilities for both BDUs and on the basic service with a regulated affiliation fee. An oral hearing broadcasters. was held during the week of November 28, 2016, a final written On March 1, 2016, the first phase of the CRTC’s small basic $25 per reply was filed on January 9, 2017, and a decision is expected in the month (excluding equipment) television service mandate came second quarter of 2017. into effect. Effective March 1, 2016, we offer a small basic service

86 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 87 ROGERS COMMUNICATIONS INC. riven changes may also result in rty owes Rogers), the credit spread (including goodwill and spectrum e assessed for impairment on an 2016 ANNUAL REPORT PENSION BENEFITS When we account forare defined benefit made pension plans, inAssumptions assumptions and determining estimates the includefuture the compensation valuation discount increase, of rate, andthese the the benefit primary rate mortality assumptions and obligations. rate. of estimates Changesexpense, would to affect pension the pension assetincome. and Changes liability,markets in and and interest rates, other economic may alsoplan comprehensive conditions, have as an there impact including is on our noassumed pension assurance financial rate that of the return. planchanges will in Market-d the be discount able rates to andus earn other to variables the that make could contributions require the in the current future contributions thatactuarial and differ valuation assumptions process. significantly from incorporated into the IMPAIRMENT OF ASSETS Indefinite-life intangible assets and/or broadcast licences)annual basis, ar or more oftenfinite-life if events assets or circumstances (including warrant,other and intangible property, assets) plantcircumstances are and assessed warrant. for equipmentgenerating impairment and unit The if (CGU) events involvescash significant recoverable or estimates such flows, amount asestimates future terminal differ of growth unfavourablyimpairment a in rates, charges that the could and cash decrease future, net income. we discount could rates. experience FINANCIAL If INSTRUMENTS key The fair values ofcredit-adjusted our mark-to-market derivatives valuation. are If the recordedasset derivatives position using are (i.e. an in the estimated an counterpa for the bank counterparty isdetermine added the estimated to credit-adjusted the value. risk-freein If discount the a rate derivatives liability to are position (i.e.spread is Rogers added owes to the the counterparty), risk-freeadjusted our discount value rate. credit of The derivatives estimated credit- of requires assessment the of parties therates. credit to risk the instruments andFor the all instruments’ derivative instruments discount we where are hedge accounting requiredhedge is to effectiveness applied, ensure criteria both that retrospectivelyHedge and the effectiveness prospectively. hedging testing relationshipsand requires estimates. the meet use of both judgments capitalized amounts areprojects calculated that based are on capitalper-hour estimated in rate. costs nature, of In anddevelopment are addition, and generally interest basedequipment. construction costs Capitalized on amounts of a are increase theresult capitalized certain cost in of a during the property, higher asset depreciation and expense plant in future periods. and s could be different from these ing industry trends and company- Certain direct labour, overhead,the and acquisition, interest construction, costs development, associated ornetworks with improvement of are our capitalized to property, plant and equipment. The CAPITALIZING DIRECT LABOUR, OVERHEAD, AND INTEREST specific factors, including changing technologiesfor and the expectations in-service periodour of certain estimates assets at ofchange, the to ensure time. useful they We match reassess lives thefrom anticipated life a annually, of the revenue-producing or technology happens perspective. more when quickly, If or circumstances might technological in have a change different toequipment, way, reduce which than could the anticipated, result estimated we infuture a life periods higher depreciation or of expense an property,We in monitor impairment plant and charge review and our to depreciationat write rates least and down once asset a useful the lives year value. previous and change them estimates. ifestimates they in We are net different income from prospectively. recognize our the effect of changes in USEFUL LIVES We depreciate the cost of property,estimated plant useful and lives equipment by over consider their FAIR VALUE We use estimates to determine theliabilities fair value of assumed assets acquiredinformation, and in including an informationestimates acquisition, from include key financial using assumptions markets.rates, such the as These and discount best terminal rates,flow growth attrition available analyses. rates for performing discounted cash ESTIMATES estimates. These estimatesunderstanding are our critical resultsadditional of judgment to because operations. of our theassumptions We sensitivity used of business may in the methods need determining operationsexpense and the amounts. to asset, and use liability, revenue, and CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS Management makes judgments, estimates,affect and how accounting assumptions policies that arein applied, the assets, amounts wedisclosure report liabilities, about revenue,changes and contingent in our expenses, assumptions, assetsbusiness including and those and plans related our toamounts liabilities. and our we related future cash record. Significant Actual flows, result could materially change the Other Information ACCOUNTING POLICIES MANAGEMENT’S DISCUSSION AND ANALYSIS

The table below shows what the impact of an increase or decrease We amortize the cost of intangible assets with finite lives over their in the primary assumptions and estimates on our accrued benefit estimated useful lives. We review their useful lives, residual values, obligation and pension expense for 2016 would be: and the amortization methods at least once a year.

Increase (decrease) Increase (decrease) We do not amortize intangible assets with indefinite lives in accrued in pension (spectrum, broadcast licences, and certain brand names) as there is (In millions of dollars) benefit obligation expense no foreseeable limit to the period over which these assets are Discount rate expected to generate net cash inflows for us. We make judgments Impact of 0.5% increase (174) (21) to determine that these assets have indefinite lives, analyzing all Impact of 0.5% decrease 199 23 relevant factors, including the expected usage of the asset, the Rate of future compensation typical life cycle of the asset, and anticipated changes in the market increase demand for the products and services the asset helps generate. Impact of 0.25% increase 18 4 After review of the competitive, legal, regulatory, and other factors, Impact of 0.25% decrease (18) (4) it is our view that these factors do not limit the useful lives of our Mortality rate spectrum and broadcast licences. Impact of 1 year increase 48 5 Impact of 1 year decrease (49) (5) Judgment is also applied in choosing methods for amortizing our intangible assets and program rights that we believe most STOCK-BASED COMPENSATION accurately represent the consumption of those assets and are most Stock Option Plans representative of the economic substance of the intended use of Our employee stock option plans attach cash-settled share the underlying assets. appreciation rights (SARs) to all new and previously granted options. The SAR feature allows the option holder to elect to IMPAIRMENT OF ASSETS receive a cash payment equal to the intrinsic value of the option, We make judgments in determining CGUs and the allocation of instead of exercising the option and acquiring Class B Non-Voting goodwill to CGUs or groups of CGUs for the purpose of shares. impairment testing. The allocation of goodwill involves considerable management judgment in determining the CGUs (or We measure stock-based compensation to employees at fair value. groups of CGUs) that are expected to benefit from the synergies of We determine the fair value of options using our Class B a business combination. A CGU is the smallest identifiable group Non-Voting share price and option pricing models, and record all of assets that generates cash inflows that are largely independent outstanding stock options as liabilities. The liability is marked to of the cash inflows from other assets or groups of assets. Goodwill market each period and is amortized to expense using a graded and indefinite-life intangible assets are allocated to CGUs (or vesting approach over the period during which employee services groups of CGUs) based on the level at which management are rendered, or over the period to the date an employee is monitors goodwill, which is not higher than an operating segment. eligible to retire, whichever is shorter. The expense in each period is affected by the change in the price of our Class B Non-Voting SEGMENTS shares during the period. We make significant judgments in determining our operating segments. These are components that engage in business activities Restricted share unit and deferred share unit plans from which they may earn revenue and incur expenses, for which We recognize outstanding RSUs and DSUs as liabilities, measuring operating results are regularly reviewed by our chief operating the liabilities and compensation costs based on the awards’ fair decision makers to make decisions about resources to be allocated values, which are based on the market price of the Class B and to assess component performance, and for which discrete Non-Voting shares, and recognizing them as charges to operating financial information is available. costs over the vesting period of the awards. If an award’s fair value changes after it has been granted and before the exercise date, we HEDGE ACCOUNTING recognize the resulting changes in the liability as a charge to We make significant judgments in determining whether our operating costs in the year the change occurs. For RSUs, the financial instruments qualify for hedge accounting, including payment amount is established on the vesting date. For DSUs, the assumptions for effectiveness valuation models. payment amount is established on the exercise date.

INCOME TAXES AND OTHER TAXES JUDGMENTS We accrue income and other tax provisions based on information USEFUL LIVES AND DEPRECIATION AND AMORTIZATION currently available in each of the jurisdictions in which we operate. METHODS While we believe we have paid and provided for adequate We make significant judgments in choosing methods for amounts of tax, our business is complex and significant judgment is depreciating our property, plant and equipment that we believe required in interpreting how tax legislation and regulations apply to most accurately represent the consumption of benefits derived us. Our tax filings are subject to audit by the relevant government from those assets and are most representative of the economic revenue authorities and the results of the government audit could substance of the intended use of the underlying assets. materially change the amount of our actual income tax expense, income tax payable or receivable, other taxes payable or

88 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 89 December 31, 2015 Amended for the year ended unsecured, interest-free, and of the intangible asset with an ROGERS COMMUNICATIONS INC. 1,381 (39) 1,342 $ 2.68 ($0.07) $ 2.61 2016 ANNUAL REPORT ACCOUNTING CHANGES Change in accounting policy for measurementtaxes of deferred income Following theInterpretations Committee’s Novemberexpected agenda manner 2016 of decisionuseful recovery lives of publication addressing for intangible theretrospectively assets the of purposes with changed of indefinite our measuringInterpretations the related deferred Committee accounting tax, observed we that policy. IFRS Accounting in have Standard The applying 12, IFRS an International entity determinesof its recovery expected manner of theindefinite carrying useful amount life, andfrom reflects the that tax expected consequences mannerdeferred that of taxes follow on recovery. temporary Previously, differences arisingindefinite-life we from intangible measured the assets portion with of notax initial basis associated using underlying a capitalrecovery would gains result tax solely rate from basedwe sales upon have of the the adopted assets. notion an Consequently, that on accounting policy temporary to measure differences deferredassets taxes based arising upon fromexpected manner the of indefinite-life recovery tax of the intangible consequences assets. thatThe accounting follow policies from setfinancial the out in statements theconsolidated notes financial have to statements ourDecember consolidated as 31, been 2016 at and the and appliedthe comparative consolidated information for presented financial in in the statements asDecember year at 31, preparing and ended 2015. for the Inamended the year preparing ended our Consolidated openingStatements Statements and of comparative Comprehensive of Income,of Financial Consolidated Income, Position, Statements and Consolidated Shareholders’ Consolidated Equity, Statements we of have Changes amendedin in certain previously issued amounts financial reported statements. We have also entered intoshareholder certain transactions and with our companiessubject controlling it to formal controls.Committee. agreements Total These amounts approved transactions paidreflect by to are the these the charges to related Audit Rogers partiesnet for generally and occasional of business other Risk use administrative offor aircraft, services, each of and 2016 were and 2015. less than $1These million transactions are measuredrelated at the parties, amount which agreedCommittee. to are The by amounts also the owingdue reviewed are for by payment the intransaction. Audit cash within and one Risk month from the date of the ended December 31, 2015 Adjustments 31 Previously reported for the year 2015 170 26% 115 54% 2015 % Chg 27 2016 215 177 2016 Years ended December 31 Years ended December 31 law firm that provides a portion sactions in the normal course of mes probable that a contingent irectors of RCI, which include: Basic Diluted $ 2.67 ($0.07) $ 2.60 Company; and Company pays commissions for insurance coveragerelated (ceased party effective as April a 2015). of the Company’s legal services; premiums for insurance coverage Adjustments to the Consolidated Statements of Income for the year ended December 31, 2015 Purchases (In millions of dollars) Printing, legal services, and commission paid on (In millions of dollars) Revenue Earnings per share Other (income) expenseIncome tax expenseNet income (32) 466 28 11 (4) 477 (In millions of dollars, except per share amounts) In addition, duringannounced a strategic the change across yearthat our publishing we ended business such will Decembermobile focus applications. 31, on As 2016,titles digital a we result, content to we through$5 have million. the the sold Internet select aforementioned and publishing printing services company for • the chairman of a company that provides printing• services to the the chairman and chief executive officer of a firm to which the We have entered into businesspartners transactions or with senior companies officers whose are D business with related partiesThe amounts in received which from or we paid to have these an parties were equity as interest. follows: • the non-executive chairman of a We have entered into certain tran TRANSACTIONS WITH RELATED PARTIES liability will resultrecord in a provision an in outflowThe the amount period of of the economic change theavailable resources, in loss at probability we involves that occurs. judgment will time.liability could based Any be on material provision to information recognizedresults our of consolidated for operations. financial position a and contingent CONTINGENCIES Considerable judgmentcontingent is liabilities. involvedcurrently Our known to in us, judgment and theof the is probability the of the determination based contingencies. ultimate resolution If of on it information beco receivable, and deferred income tax assetsin and liabilities certain and circumstances, could, resultpenalties. in the assessment of interest and MANAGEMENT’S DISCUSSION AND ANALYSIS

Adjustments to the Consolidated Statements of Financial Position as at January 1, 2015 Previously reported as at Amended as at (In millions of dollars) January 1, 2015 Adjustments January 1, 2015 Goodwill 1 3,883 14 3,897 Total assets 1 26,522 14 26,536 Deferred tax liabilities 1,769 84 1,853 Shareholders’ equity 5,481 (70) 5,411 Total liabilities and shareholders’ equity 26,522 14 26,536

1 The adjustment relating to total assets and goodwill was recognized entirely within our Media reportable segment. Adjustments to the Consolidated Statements of Financial Position as at December 31, 2015 Adjustments Previously reported as at Adjustmentsasat for the year ended Amended as at (In millions of dollars) December 31, 2015 January 1, 2015 December 31, 2015 December 31, 2015 Goodwill 1 3,891 14 – 3,905 Total assets 1 29,175 14 – 29,189 Deferred tax liabilities 1,943 84 39 2,066 Shareholders’ equity 5,745 (70) (39) 5,636 Total liabilities and shareholders’ equity 29,175 14 – 29,189

1 The adjustment relating to total assets and goodwill was recognized entirely within our Media reportable segment. Adoption of amendments to IFRS 3. determine the transaction price; We adopted the following IFRS amendments in 2016. 4. allocate the transaction price to the performance obligations in the contract; and • Amendments to IAS 16, Property, Plant and Equipment and IAS 5. recognize revenue when (or as) the entity satisfies a 38, Intangible Assets that introduced a rebuttable presumption performance obligation. that the use of revenue-based amortization methods for intangible assets is inappropriate. We adopted the amendment IFRS 15 also provides guidance relating to the treatment of prospectively beginning on January 1, 2016. contract acquisition and contract fulfillment costs. • Amendments to IFRS 11, Joint Arrangements requiring business combination accounting to be applied to acquisitions of We expect the application of this new standard will have interests in a joint operation that constitute a business. We significant impacts on our reported results, specifically with adopted the amendment on a prospective basis for acquisitions regards to the timing of recognition and classification of revenue, on or after January 1, 2016, in accordance with the transitional and the treatment of costs incurred in acquiring customer provisions. contracts. The timing of recognition and classification of revenue will be affected because IFRS 15 requires the estimation of total The adoption of these amendments did not have a material effect consideration over the contract term at contract inception and on our financial statements. allocation of consideration to all performance obligations in the contract based on their relative stand-alone selling prices. We RECENT ACCOUNTING PRONOUNCEMENTS anticipate this will most significantly affect our Wireless arrangements that bundle equipment and service together into The IASB has issued the following new standards that will become monthly service fees, which will result in an increase to effective in a future year and will or could have an impact on our equipment revenue recognized at contract inception and a consolidated financial statements in future periods: decrease to service revenue recognized over the course of the • IFRS 15, Revenue from Contracts with Customers (IFRS 15) – contracts. IFRS 15 will supersede all existing standards and interpretations in IFRS relating to revenue, including IAS 18, Revenue and The treatment of costs incurred in acquiring customer contracts IFRIC 13, Customer Loyalty Programmes. will be impacted as IFRS 15 requires certain contract acquisition costs (such as sales commissions) to be recognized as an asset IFRS 15 introduces a single model for recognizing revenue from and amortized into operating expenses over time. Currently, contracts with customers. This standard applies to all contracts such costs are expensed as incurred. with customers, with only some exceptions, including certain contracts accounted for under other IFRSs. The standard requires In addition, certain new assets and liabilities will be recognized revenue to be recognized in a manner that depicts the transfer of on our Consolidated Statements of Financial Position. promised goods or services to a customer and at an amount that Specifically, a contract asset or contract liability will be reflects the consideration expected to be received in exchange recognized to account for any timing differences between the for transferring those goods or services. This is achieved by revenue recognized and the amounts billed to the customer. applying the following five steps: We believe significant judgments will need to be made when 1. identify the contract with a customer; defining the enforceable rights and obligations of a contract, in 2. identify the performance obligations in the contract; determining whether a promise to deliver goods or services is

90 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 91 ccretion of the lease liability) ecrease to operating costs, an ROGERS COMMUNICATIONS INC. our operating strategy as well as our Consolidated Statements of nts; however, we believe that the (IAS 17) standard. IFRS 16 introduces a Leases (IFRS 16) – In January 2016, the IASB issued the 2016 ANNUAL REPORT Leases an adjustmentapplication. to opening equity at the date of initial final publication of thethe current IFRS IAS 16 17, standard,single which accounting model will for lessees supersede andof for more all leases than with a 12value. term A months, lessee unless will the berepresenting required underlying its to asset recognize right is a to right-of-useliability, of asset, representing use low its the obligation to underlyingaccounting make treatment asset, lease for payments. and lessors The aunder will IAS lease remain 17. largely the same as • apply IFRS 16 with• full retrospective recognize effect; the or cumulative effect of initially applying IFRS 16 as telephone number. prepaid. Postpaid anddata-only prepaid include subscribers, voice-onlyintegrating subscribers, both and voice and data. subscribers withof 180 days service from the date plans of their last revenue-generating usage. The standard is effective for annualJanuary periods 1, beginning on 2019, or with after entity is early also applying adoption IFRS permitted, 15. We but have the only option if to either: the We areconsolidated financial assessing stateme result the will be impact awill significant increase of to be assets andcorresponding this liabilities, lease required as liability we on standardFinancial to Position, on as record wellincrease our as to a a finance costs d and (due right-of-use to an a assetamortization increase of the right-of-use to and asset). depreciation a and amortization (due to • IFRS 16, KEY PERFORMANCE INDICATORS We measure theperformance success of indicators, our which strategythese using are key a outlined numbermeasure below. our performance of performance key against We indicatorsagainst believe the results allow of ourperformance us peers indicators and are competitors. to The not followingIFRS measurements key appropriately and in accordance should with notany be other measure considered of performance alternatives under to IFRS. net income or SUBSCRIBER COUNT We determine the number ofactive subscribers to our subscribers. services basedvoluntarily on When or involuntarily subscribersdeactivations for in the non-payment, are period the they services are deactivated, are discontinued. considered either Wireless • A wireless subscriber• is We report represented wireless subscribers by in two categories: each postpaid and identifiable • Wireless prepaid subscribers are considered active for a period a policy choice to restate each nts and it is not yet possible to (IFRS 9) – In July 2014, the IASB Financial Instruments: recognition and (IAS 39). IFRS 9 includes revised guidance on the Financial Instruments issued the finalsupersede publication of IAS the IFRS 39, 9 standard, which will measurement classification and measurement ofexpected financial credit instruments, afinancial loss assets, new and the model new hedgeIFRS accounting for 9, guidance. financial Under assets calculating willthe be business impairment classified model in and which on measured theyof based are on held their and the characteristics contractualstandard cash will flows. alignmanagement. IFRS hedge The 9 accounting does newof not more hedge fundamentally hedging change closely relationships accounting therecognize with types or ineffectiveness, however the risk it requirementstrategies will provide to more used measure hedging and accounting for risk andeffectiveness management of introduce a hedging to relationship. moreguidance It qualify also carries judgment forward for on the instruments to hedge from recognition IAS assessperiods 39. and the beginning The derecognition standardadoption on is or of permitted. effectivestandard for after We on financial our annual January consolidated are financial statements. 1, assessing 2018, the with impact early of this considered distinct,obtains and control of the to distinct good or determine service. The when standard is effective the for annualJanuary periods 1, customer beginning 2018. on We or are after requiredto to retrospectively all apply IFRS contracts 15 application. that We intend are toprior make not period complete presented and oninitially recognize the applying the date cumulative IFRSbalance effect of 15 of of initial aspresented, equity subject an to at certain adjustmentwe the practical will to adopt. expedients beginning we the anticipate of opening We the have earliest aIFRS team period 15. dedicated This tosystem team requirements, ensuring has ensuring our our also data collection compliance beenand is appropriate, responsible with for communicating determining stakeholders. the Indevelopment upcoming of addition, new changes internalsystem this runs controls with as that intended and will the team various related help results ensure areWe accurate. is the are assisting implementingenable a us in new tocontract-by-contract revenue comply the recognition with basis, the systemrevenue including requirements to between of appropriatelyindividual IFRS different allocating contracts 15 for on performancebegin certain a a revenue obligations parallel streams. runsystem We within under in expect both 2017. to We IASthat will 18 will have and continue detailed throughout IFRS data theare 15 validation course using processes of continuing 2017. this to Asconsolidated a assess result, financial we the stateme make impact a reliable of estimate this ofestimated its financial standard impact. effects We of on expect the to adoptionconsolidated our disclose financial of statements. the IFRS 15 in our 2017 •IFRS9, MANAGEMENT’S DISCUSSION AND ANALYSIS

Cable CAPITAL INTENSITY • Cable Television and Internet subscribers are represented by a Capital intensity allows us to compare the level of our additions to dwelling unit; Cable Phone subscribers are represented by line property, plant and equipment to that of other companies within counts. the same industry. Our additions to property, plant and equipment • When there is more than one unit in one dwelling, such as an do not include expenditures on spectrum licences. We calculate apartment building, each tenant with cable service is counted as capital intensity by dividing additions to property, plant and an individual subscriber, whether the service is invoiced equipment by revenue. For Wireless, capital intensity is calculated separately or included in the tenant’s rent. Institutional units, like using total service revenue. We use it to evaluate the performance hospitals or hotels, are each considered one subscriber. of our assets and when making decisions about additions to • Cable Television, Internet, and Phone subscribers include only property, plant and equipment. We believe that certain investors those subscribers who have service installed and operating, and and analysts use capital intensity to measure the performance of who are being billed accordingly. asset purchases and construction in relation to revenue.

SUBSCRIBER CHURN DIVIDEND PAYOUT RATIOS Subscriber churn is a measure of the number of subscribers that We calculate the dividend payout ratio by dividing dividends deactivated during a period as a percentage of the total subscriber declared for the year by net income or free cash flow for the year. base, usually calculated on a monthly basis. Subscriber churn We use dividends as a percentage of net income and free cash measures our success in retaining our subscribers. We calculate it flow to conduct analysis and assist with determining the dividends by dividing the number of Wireless subscribers that deactivated we should pay. (usually in a month) by the aggregate numbers of subscribers at the beginning of the period. When used or reported for a period RETURN ON ASSETS greater than one month, subscriber churn represents the sum of We use return on assets to measure our efficiency in using our the number of subscribers deactivating for each period incurred assets to generate net income. We calculate return on assets by divided by the sum of the aggregate number of subscribers at the dividing net income for the year by total assets as at year-end. beginning of each period incurred. TOTAL SERVICE REVENUE POSTPAID AVERAGE REVENUE PER ACCOUNT Commencing in the fourth quarter of 2016, we began disclosing Postpaid average revenue per account (ARPA) helps us identify total service revenue as one of our key performance indicators. We trends and measure our success in attracting and retaining use total service revenue to measure our core business multiple-device accounts. A single Wireless postpaid account performance from the provision of services to our customers typically provides subscribers with the advantage of allowing for the separate from revenue from the sale of equipment we have pooling of plan attributes across multiple devices and on a single acquired from device manufacturers and resold. Included in this bill. Each Wireless postpaid account is typically represented by an metric is our retail revenue from TSC and the Toronto Blue Jays, identifiable billing account number. A single Wireless postpaid which are also core to our business. We calculate total service account may include more than one identifiable telephone revenue by subtracting equipment revenue in Wireless, Cable, number and receive monthly Wireless services for a variety of Business Solutions, and Corporate from total revenue 1. connected devices including smartphones, basic phones, tablets, 1 See note 5 to our 2016 Audited Consolidated Financial Statements. and other devices. Wireless postpaid accounts under our various brand names are considered separate accounts. We calculate Years ended December 31 Wireless postpaid ARPA by dividing total Wireless postpaid service (In millions of dollars) 2016 2015 revenue (monthly) by the average number of Wireless postpaid Revenue 13,702 13,414 accountsforthesametimeperiod. Deduct: Wireless equipment revenue 658 749 BLENDED AVERAGE REVENUE PER USER Cable equipment revenue 6 8 Blended average revenue per user (ARPU) helps us identify trends Business Solutions equipment revenue 6 4 and measure our success in attracting and retaining higher value Corporate equipment revenue 5 4 subscribers. We calculate blended ARPU by dividing service Total service revenue 13,027 12,649 revenue (monthly) by the average total number of Wireless subscribersforthesametimeperiod.

92 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 93 Long-term debt divided by net income Long-term debt Cash provided by operating activities Net income Basic and diluted earnings per share Net income Most comparable IFRS financial measure ROGERS COMMUNICATIONS INC. g, acquisition and dicators of our operating performance, of our 2016 ANNUAL REPORT Adjusted net debt (defined above) divided by 12-month trailing adjusted operating profit (defined above). Total long-term debt add (deduct) current portion of long-term debt, deferred transaction costs and discounts, net debt derivative (assets) liabilities, credit risk adjustment related to net debt derivatives, bank advances (cash and cash equivalents), and short- term borrowings. Adjusted operating profit deduct additions to property, plant and equipment net of proceeds on disposition, interest on borrowings net of capitalized interest, and cash income taxes. Adjusted net income: Net income add (deduct) stock-based compensation, restructuring, acquisition and other, impairment of assets and related onerous contract charges, loss (gain) on sale or wind downinvestments, of (gain) on acquisitions, loss on non-controlling interest purchase obligations, loss on repayment of long-term debt, and income tax adjustments on these items, including adjustments as a result of legislative changes. Adjusted basic and diluted earnings per share: Adjusted net income divided by basic and diluted weighted average shares outstanding. Adjusted operating profit: Net income add (deduct) income tax expense (recovery), other expense (income), finance costs, restructurin other, depreciation and amortization, stock-based compensation, and impairment of assets and related onerous contract charges. Adjusted operating profit margin: Adjusted operating profit divided by revenue (service revenue for Wireless). nies in the telecommunications sector. These are not recognized , so may not be reliable ways to compare us to other companies. gularly by management and our Board in assessing our performance alysis and make decisions about alysis and make decisions about institutions, and credit rating agencies as in To conduct valuation-relatedcapital structure. an We believe thisand helps equity investors value and and assess our analysts leverage. analyze our enterprise To conduct valuation-relatedcapital structure. an We believe thisand helps equity investors value and and assess our analysts leverage. analyze our enterprise To show how much cashin we have available our to repay company,strength debt and and which performance. reinvest isWe an believe important thatvalue some indicator a business investors of and and its our underlying analysts assets. financial use free cash flow to To assess the performance ofnoted our businesses items, before the because effects ofresults they the and affect could potentially the distortperformance. comparability the Excluding of analysis of our these trendsnon-recurring. financial in items business does not imply that they are To evaluate thedecisions performance of about our theability businesses, to ongoing and generate cash operations when flows. We of making believe the that certain business investorsprofit and and analysts to our use adjusted measurepayment operating obligations. our abilityWe also to use it service ascompensation one debt for component all in management and determining employees. short-term incentive to meet other • • • • • • • • • • Adjusted net debt / adjusted operating profit Adjusted net debt Free cash flow Adjusted net income Adjusted basic and diluted earnings per share Non-GAAP measure WhyAdjusted we operating use itprofit Adjusted operating profit margin How we calculate it and making decisions regardingmeasures may the also be ongoing used operations by investors, of lending our business and its ability to generate cash flows. Some or all of these NON-GAAP MEASURES We use the following non-GAAP measures. These are reviewed re ability to incur and servicemeasures under debt, GAAP and and as do not measurements have to standard meanings value under compa IFRS MANAGEMENT’S DISCUSSION AND ANALYSIS

RECONCILIATION OF ADJUSTED OPERATING PROFIT AND RECONCILIATION OF ADJUSTED EARNINGS PER SHARE ADJUSTED OPERATING PROFIT MARGIN Years ended December 31 (In millions of dollars, except per share amounts; Years ended December 31 number of shares outstanding in millions) 2016 2015

(In millions of dollars) 2016 2015 Adjusted basic earnings per share: Net income 1 835 1,342 Adjusted net income 1 1,481 1,479 Add (deduct): Divided by: weighted average number of Income tax expense 1 324 477 shares outstanding 515 515 1 Other (income) expense 191 (4) Adjusted basic earnings per share 1 $2.88 $2.87 Finance costs 761 774 Restructuring, acquisition and other 160 111 Adjusted diluted earnings per share: Depreciation and amortization 2,276 2,277 Adjusted net income 1 1,481 1,479 Impairment of assets and related onerous Dividedby:dilutedweightedaveragenumber contract charges 484 – of shares outstanding 517 517 Stock-based compensation 61 55 Adjusted diluted earnings per share 1 $2.86 $2.86

1 Adjusted operating profit 5,092 5,032 Basic earnings per share: 1 1 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Net income 835 1,342 Income Taxes, certain amounts have been retrospectively amended. See “Accounting Divided by: weighted average number of Policies” for more information. shares outstanding 515 515

Basic earnings per share 1 $1.62 $2.61 Years ended December 31 Diluted earnings per share: (In millions of dollars, except percentages) 2016 2015 Net income 1 835 1,342 Adjusted operating profit margin: Dividedby:dilutedweightedaveragenumber Adjusted operating profit 5,092 5,032 of shares outstanding 517 517 Divided by: total revenue 13,702 13,414 Diluted earnings per share 1 $1.62 $2.60

Adjusted operating profit margin 37.2% 37.5% 1 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See “Accounting Policies” for more information. RECONCILIATION OF ADJUSTED NET INCOME

Years ended December 31 RECONCILIATION OF FREE CASH FLOW

(In millions of dollars) 2016 2015 Years ended December 31

Net income 1 835 1,342 (In millions of dollars) 2016 2015 Add (deduct): Cash provided by operating activities 3,957 3,747 Stock-based compensation 61 55 Add (deduct): Restructuring, acquisition and other 160 111 Additions to property, plant and equipment (2,352) (2,440) Loss on repayment of long-term debt – 7 Interest on borrowings, net of capitalized Net loss on divestitures pertaining to interest (740) (732) investments 11 – Restructuring, acquisition and other 160 111 Gain on acquisition of Mobilicity 1 – (74) Interest paid 756 771 Loss on non-controlling interest purchase Change in non-cash working capital (14) 302 obligation – 72 Other adjustments (62) (83) Loss on wind down of shomi 140 – Impairment of assets and related onerous Free cash flow 1,705 1,676 contract charges 484 – Income tax impact of above items (213) (40) Income tax adjustment, legislative tax change 3 6 RECONCILIATION OF DIVIDEND PAYOUT RATIO OF FREE

Adjusted net income 1 1,481 1,479 CASH FLOW

1 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Years ended December 31 Income Taxes, certain amounts have been retrospectively amended. See “Accounting (In millions of dollars, except percentages) 2016 2015 Policies” for more information. Dividend payout ratio of free cash flow: Dividends declared during the year 988 988 Divided by: free cash flow 1,705 1,676

Dividend payout ratio of free cash flow 58% 59%

94 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 95 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT 3.1 (11) 111 800 (152) 2015 2015 5,032 1,000 (2,028) 15,590 15,870 16,981 15,590 71 3.0 (57) As at December 31 As at December 31 117 800 750 2016 2016 5,092 (1,683) 15,328 15,330 15,328 16,197 operating profit derivatives Divided by: trailing 12-month adjusted Netdebtderivativeassets Credit risk adjustment related to net debt Short-term borrowings Bank advances (cash and cash equivalents) Adjusted net debt Adjusted net debt Adjusted net debt / adjusted operating profit Deferred transaction costs and discounts Add (deduct): Long-term debt Adjusted net debt / adjusted operating profit (In millions of dollars, except ratios) (In millions of dollars) Current portion of long-term debt RECONCILIATION OF ADJUSTED NET DEBT ANDNET ADJUSTED DEBT / ADJUSTED OPERATING PROFIT MANAGEMENT’S DISCUSSION AND ANALYSIS

SUMMARY OF FINANCIAL RESULTS OF LONG-TERM DEBT GUARANTOR Our outstanding public debt, $2.9 billion bank credit and letter of credit facilities, and derivatives are unsecured obligations of RCI, as obligor, and RCCI, as either co-obligor or guarantor, as applicable. The following table sets forth the selected unaudited consolidated summary financial information for RCI for the periods identified below, presented with a separate column for: (i) RCI, (ii) RCCI, (iii) our non-guarantor subsidiaries on a combined basis, (iv) consolidating adjustments, and (v) the total consolidated amounts.

Non-guarantor Consolidating Years ended December 31 RCI 1, 2 RCCI 1, 2, 3, 4 subsidiaries 1, 2, 4 adjustments 1, 2 Total

(In millions of dollars, unaudited) 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015

Selected Statements of Income data measure: Revenue 10 24 11,746 11,489 2,173 2,099 (227) (198) 13,702 13,414 Net Income (loss) 5 835 1,342 674 1,439 990 1,104 (1,664) (2,543) 835 1,342

Non-guarantor Consolidating As at December 31 RCI 1, 2 RCCI 1, 2, 3, 4 subsidiaries 1, 2, 4 adjustments 1, 2 Total

(In millions of dollars, unaudited) 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015

Selected Statements of Financial Position data measure: Current assets 22,831 23,891 19,665 19,322 9,780 8,331 (49,706) (48,922) 2,570 2,622 Non-current assets 5 28,812 27,161 38,448 36,862 5,805 8,250 (47,293) (45,706) 25,772 26,567 Current liabilities 25,712 24,024 25,190 25,951 5,558 5,609 (51,347) (50,567) 5,113 5,017 Non-current liabilities 5 17,159 17,928 2,084 1,719 75 281 (1,358) (1,392) 17,960 18,536

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 RCCI 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 On January 1, 2016, Fido Solutions Inc., a subsidiary of RCI, transferred its partnership interest in RCP to Rogers Cable and Data Centres Inc. (RCDCI), a subsidiary of RCI, leaving RCDCI as the sole partner of RCP, thereby causing RCP to cease to exist (the dissolution). RCDCI became the owner of all the assets and assumed all the liabilities previously held by RCP. Subsequent to the reorganization, RCDCI changed its name to Rogers Communications Canada Inc. (RCCI). 4 The financial information for RCCI and our non-guarantors subsidiaries is presented on a pro-forma basis as if the dissolution of RCP had occurred on January 1, 2015. 5 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See “Accounting Policies” for more information.

96 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 97 urth quarter of 2016. See “Key r of 2015. See “Key Performance ing how we calculate them. terms under IFRS, and do not have adjusted operating profit, and dividend As at or years ended December 31 ROGERS COMMUNICATIONS INC. also applied to periods prior to January 1, 2015 and have been ey performance indicator in the fo 3.1 2.9 2.3 2.3 4%0% 1% 1% 2% 3% 1% 2% 377 382116172 374 122 131 351 106 161 89 190 2016 ANNUAL REPORT 59% 66% 58% 50% 74% 70% 54% 48% (158) (130)(153) (117) (145) (123) (149) (113) 4.6% 5.1% 7.1% 8.6% 2015 2014 2013 2012 GAAP measures. These are not defined 9,8772,0481,8961,090 9,450 2,011 2,024 1,150 9,503 1,961 2,127 1,153 9,437 1,864 2,214 1,074 3,9057,2432,2714,773 3,897 6,588 1,898 3,4985,636 3,765 3,211 1,487 4,897 5,411 3,215 2,951 1,484 2,392 4,599 3,698 1,3421,3421,4793,7471,6762,440 1,341 1,341 1,532 3,698 1,437 2,366 1,669 1,669 1,769 3,990 1,548 2,240 1,725 1,693 1,781 3,421 1,649 2,142 7,6513,4652,079 7,305 3,4673,239 1,8261,658 7,270 3,475 3,246 1,704 1,665 7,280 3,358 3,157 1,620 1,718 3,063 1,605 5,032 5,019 4,993 4,834 5,017 4,920 4,606 3,002 1.27% 1.27% 1.24% 1.29% 29,189 26,53629,189 23,615 26,536 19,618 23,615 19,618 13,414 12,850 12,706 12,486 18,53623,553 16,205 21,125 14,410 19,016 12,918 15,920 12,649 10,997 10,655 10,255 9,576 $110.74 $106.41 $ 2.61$ 2.61$ $ 2.87 2.60 $ 2.60 $ $ 2.97 3.24 $ 3.24 $ $ 3.43 3.32 $ 3.26 $ 3.43 $ 59.71 $ 59.41 $ 59.58 $ 59.79 $ 2.60$ 2.60$ $ 2.86 2.56 $ 2.56 $ $ 2.96 3.22 $ 3.22 $ $ 3.42 3.30 $ 3.24 $ 3.41 $ 1.92 $ 1.83 $ 1.74 $ 1.58 Income Taxes , certain amounts have been retrospectively amended. See “Accounting Policies” for more 3.0 2% 1% 835 835 384 123 169 58% (193) (159) 2.9% 2016 2,145 1,820 1,094 3,905 7,130 2,174 4,384 5,269 118% 1,481 3,957 1,705 2,352 7,916 3,449 2,146 3,285 1,674 5,092 5,113 1.23% 28,342 28,342 10,274 13,702 17,960 23,073 13,027 10,749 $117.37 $1.62 $1.62 $2.88 $ 60.42 $1.62 $1.62 $2.86 $1.92 Income Taxes nced reporting service revenue as a k porting postpaid ARPA as a key performance indicator in the first quarte ered substitutes or alternatives for es. See “Non-GAAP Measures” for information about these measures, includ 1 1,2 retation Committee’s agenda decision relating to IAS 12 2 1,3 2,3 2 3 er share amounts, subscriber count 4 1,2 3 3,5 1 2 2 ormance Indicators”. ating activities 2,3 2 2 1 2 2 Internet subscribers Television subscribers Phone subscribers Total service revenue Adjusted net debt / adjusted operating profit Intangible assets Investments Other assets Long-term liabilities Postpaid ARPA (monthly) Postpaid churn (monthly) Wireless subscribers Basic Basic Basic Wireless Cable Business Solutions Media Corporate items and intercompany eliminations Wireless Cable Business Solutions Media Corporate items and intercompany eliminations Return on assets Current liabilities Total liabilities Shareholders’ equity Blended ARPU (monthly) Dividend payout ratio of free cash flow Diluted Diluted Diluted Revenue growth Adjusted operating profit growth Dividends declared per share Goodwill Property, plant and equipment, net Dividend payout ratio of net income retrospectively amended. information. Adjustments relating to the IFRS Interp Performance Indicators”. Total service revenue has not been presented for periods prior to 2015. We comme As defined. See “Key Perf Postpaid ARPA has not been presented for periods prior to 2014. We commenced re Adjusted operating profit, adjusted net income, adjusted basic and diluted earnings per share,As free a cash result flow, of adjusted the net IFRS debt, Interpretations adjusted Committee’s net agenda debt decision / relating to IAS 12 payout ratio of free cashstandard flow meanings, are so non-GAAP may not measures be and a should reliable not way to be compare consid us to other compani Indicators”. Additional Wireless metrics Total assets Liabilities and Shareholders’ Equity Total liabilities and shareholders’ equity Subscriber count results (000s) Net income Adjusted net income from continuing operations Cash provided by oper Free cash flow Additions to property, plant andEarnings equipment per share from continuing operations Income and cash flow: Revenue Adjusted operating profit FIVE-YEAR SUMMARY OF CONSOLIDATED FINANCIAL RESULTS (In millions of dollars, except p results, churn, ARPA, ARPU, percentages, and ratios) Total revenue Total adjusted operating profit Net income from continuing operations Additional consolidated metrics Earnings per share Adjusted earnings per share Statements of Financial Position: Assets 1 2 5 3 4 CONSOLIDATED FINANCIAL STATEMENTS

Management’s Responsibility for Financial Reporting December 31, 2016

The accompanying consolidated financial statements of Rogers The Audit and Risk Committee meets regularly with management, Communications Inc. and its subsidiaries and all the information in as well as the internal and external auditors, to discuss internal Management’s Discussion andAnalysis(MD&A)arethe controls over the financial reporting process, auditing matters, and responsibility of management and have been approved by the financial reporting issues; to satisfy itself that each party is properly Board of Directors. discharging its responsibilities; and to review MD&A, the consolidated financial statements, and the external auditors’ report. Management has prepared the consolidated financial statements The Audit and Risk Committee reports its findings to the Board of in accordance with International Financial Reporting Standards as Directors for its consideration when approving the consolidated issued by the International Accounting Standards Board. The financial statements for issuance to the shareholders. The Audit and consolidated financial statements include certain amounts that are Risk Committee also considers the engagement or re-appointment based on management’s best estimates and judgments and, in of the external auditors before submitting its recommendation to their opinion, present fairly, in all material respects, Rogers the Board of Directors for review and for shareholder approval. Communications Inc.’s financial position, results of operations, and cash flows. Management has prepared the financial information The consolidated financial statements have been audited by KPMG presented elsewhere in MD&A and has ensured that it is consistent LLP, the external auditors, in accordance with Canadian generally with the consolidated financial statements. accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States) on behalf of Management has developed and maintains a system of internal the shareholders. Our internal control over financial reporting as at controls that further enhances the integrity of the consolidated December 31, 2016 has been audited by KPMG, LLP, in financial statements. The system of internal controls is supported by accordance with the standards of the Public Company the internal audit function and includes management Accountability Oversight Board (United States). KPMG LLP has full communication to employees about its policies on ethical business and free access to the Audit and Risk Committee. conduct. Management believes these internal controls provide reasonable February 9, 2017 assurance that: • transactions are properly authorized and recorded; • financial records are reliable and form a proper basis for the preparation of consolidated financial statements; and • the assets of Rogers Communications Inc. and its subsidiaries are properly accounted for and safeguarded. Alan D. Horn, CPA, CA Anthony Staffieri, FCPA, FCA The Board of Directors is responsible for overseeing management’s Interim President and Chief Executive Chief Financial Officer responsibility for financial reporting and is ultimately responsible for Officer reviewing and approving the consolidated financial statements. The Board of Directors carries out this responsibility through its Audit and Risk Committee.

98 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT CONSOLIDATED FINANCIAL STATEMENTS 99 ated financial performance ncial statements present fairly, ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT Chartered Professional Accountants, Licensed Public Accountants February 9, 2017 Toronto, Canada We believe that the auditis evidence we sufficient have obtained andopinion. in our appropriate audits to provide aOpinion basis forIn our our opinion, audit the consolidatedin fina all materialRogers respects, Communications theDecember Inc. 31, consolidated as 2015, financialand and at its position its December consolid of consolidatedaccordance 31, cash with 2016 International flowsissued and by Financial the for International Accounting Reporting the Standards Board. Standards years as thenComparative Information ended in Without modifying our opinion, wethe draw attention consolidated to Note financialcomparative 2(d) statements to information whichDecember 31, indicates 2015 has presented that beenadoption adjusted of the a to new reflect for accounting the policy. retrospective theOther Matter yearWe ended also havePublic audited, in Company accordanceRogers Accounting with Oversight the Communications standardsreporting Board Inc.’s of (United as the internalestablished States), of control December in(2013) over 31, issued by financial 2016, Internal thethe Committee based of Treadway Control Sponsoring onFebruary Organizations Commission 9, the of 2017 – expressed (COSO),on criteria an the unmodified Integrated and (unqualified) effectivenesscontrol over opinion our financial of Framework reporting. Rogers report Communications dated Inc.’s internal ng consolidated financial ated financial statements that or the preparation and fair presentation ofaccordance with these Internationalissued consolidated by Financial the Reporting financial Internationalsuch Standards Accounting internal statements Standards control as as Board,enable management and the in determines for preparation is of necessary consolid to Management’s Responsibility for the Consolidated Financial Statements Management is responsible f Auditors’ Responsibility Our responsibility is tofinancial express statements based an on opinion our onin audits. We these conducted consolidated our accordance audits standards and with the standardsOversight Canadian of Board (United the States). generally Publiccomply Those Company with standards ethical Accounting accepted require requirementsto and that plan obtain auditing we and reasonable performfinancial assurance the statements audit are about free from whether material misstatement. the consolidated An audit involves performing proceduresabout to the obtain amounts audit evidence statements. and disclosures The in proceduresincluding the selected the consolidated depend assessment financial on ofthe our the consolidated judgment, risks financial oferror. material statements, misstatement In whether of makingcontrol due relevant to those to the fraud riskthe entity’s or preparation consolidated assessments, and fair financial weprocedures presentation that of statements are consider appropriate in in internal theincludes circumstances. order An evaluating audit to also theused design and appropriateness audit the ofmanagement, reasonableness as accounting of well policies as accountingconsolidated evaluating estimates financial the statements. made overall presentation by of the statements of Rogersconsolidated Communications statements Inc., of which financial2016 comprise position and as the at Decemberincome, December 31, comprehensive 31, 2015, income, changes theand in cash consolidated flows shareholders’ statements for equity summary the of years of then significant ended, accountinginformation. and policies notes, and comprising other a explanatory are free from material misstatement, whether due to fraud or error. Report of Independent Registered Public Accounting Firm TotheShareholdersofRogersCommunicationsInc. We have audited the accompanyi CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

To the Board of Directors of Rogers Communications Inc. We have audited Rogers Communications Inc.’s internal control principles, and that receipts and expenditures of the company are over financial reporting as of December 31, 2016, based on criteria being made only in accordance with authorizations of established in Internal Control – Integrated Framework (2013) management and directors of the company; and (3) provide issued by the Committee of Sponsoring Organizations of the reasonable assurance regarding prevention or timely detection of Treadway Commission (COSO). Rogers Communications Inc.’s unauthorized acquisition, use, or disposition of the company’s management is responsible for maintaining effective internal assets that could have a material effect on the financial statements. control over financial reporting and for its assessment of the Because of its inherent limitations, internal control over financial effectiveness of internal control over financial reporting, included in reporting may not prevent or detect misstatements. Also, Management’s Report on Internal Control over Financial Reporting projections of any evaluation of effectiveness to future periods are included in Management’s Discussion and Analysis for the year subject to the risk that controls may become inadequate because ended December 31, 2016. Our responsibility is to express an of changes in conditions, or that the degree of compliance with the opinion on the Company’s internal control over financial reporting policies or procedures may deteriorate. based on our audit. In our opinion, Rogers Communications Inc. maintained, in all We conducted our audit in accordance with the standards of the material respects, effective internal control over financial reporting Public Company Accounting Oversight Board (United States). as of December 31, 2016, based on criteria established in Internal Those standards require that we plan and perform the audit to Control – Integrated Framework (2013) issued by the Committee of obtain reasonable assurance about whether effective internal Sponsoring Organizations of the Treadway Commission (COSO). control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of We also have audited, in accordance with Canadian generally internal control over financial reporting, assessing the risk that a accepted auditing standards and the standards of the Public material weakness exists, and testing and evaluating the design Company Accounting Oversight Board (United States), the and operating effectiveness of internal control based on the consolidated statements of financial position of Rogers assessed risk. Our audit also included performing such other Communications Inc. as of December 31, 2016 and December 31, procedures as we considered necessary in the circumstances. We 2015, and the related consolidated statements of income, believe that our audit provides a reasonable basis for our opinion. comprehensive income, changes in shareholders’ equity, and cash flows for the years ended December 31, 2016 and December 31, A company’s internal control over financial reporting is a process 2015, and our report dated February 9, 2017 expressed an designed to provide reasonable assurance regarding the reliability unqualified opinion on those consolidated financial statements. of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Chartered Professional Accountants, Licensed Public Accountants the company; (2) provide reasonable assurance that transactions February 9, 2017 are recorded as necessary to permit preparation of financial Toronto, Canada statements in accordance with generally accepted accounting

100 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT CONSOLIDATED FINANCIAL STATEMENTS – (4) 101 111 774 477 2015 1,819 1,342 8,437 2,277 13,414 $2.61 $2.60 seenote2(d) 484 160 761 191 324 835 2016 1,159 8,671 2,276 13,702 $1.62 $1.62 ROGERS COMMUNICATIONS INC. 5 6 7 9 13 13 10 11 12 7, 8 Note 2016 ANNUAL REPORT Restructuring, acquisition and other Basic Depreciation and amortization Impairment of assets and related onerous contract charges Diluted Operating costs Income tax expense Finance costs Other expense (income) Income before income tax expense Net income for the year Earnings per share: Revenue The accompanying notes are an integral part of the consolidated financial statements. Years ended December 31 Consolidated Statements of Income (In millions of Canadian dollars, except per share amounts) Operating expenses: CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statements of Comprehensive Income (In millions of Canadian dollars)

Years ended December 31 Note 2016 2015 seenote2(d) Net income for the year 835 1,342 Other comprehensive loss: Items that will not be reclassified to income: Defined benefit pension plans: Remeasurements 22 (101) 24 Related income tax recovery (expense) 27 (6) Items that will not be reclassified to net income (74) 18 Items that may subsequently be reclassified to income: Available-for-sale investments: Increase (decrease) in fair value 90 (143) Reclassification to net income for gain on sale of investment (39) – Related income tax recovery (expense) (7) 20 Available-for-sale investments 44 (123) Cash flow hedging derivative instruments: Unrealized (loss) gain in fair value of derivative instruments (336) 1,524 Reclassification to net income of loss (gain) on debt derivatives 255 (1,307) Reclassification to net income of loss on repayment of long-term debt 16 – 7 Reclassification to net income or property, plant and equipment of gain on expenditure derivatives (80) (148) Reclassification to net income for accrued interest (69) (58) Related income tax recovery (expense) 66 (65) Cash flow hedging derivative instruments (164) (47) Equity-accounted investments: Shareofothercomprehensive(loss)incomeof equity-accounted investments, net of tax (8) 23 Reclassification to net income of realized other comprehensive income for equity- accounted investments (15) – Equity-accounted investments (23) 23 Items that may subsequently be reclassified to net income (143) (147) Other comprehensive loss for the year (217) (129) Comprehensiveincomefortheyear 618 1,213

The accompanying notes are an integral part of the consolidated financial statements.

102 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT CONSOLIDATED FINANCIAL STATEMENTS – 9 11 15 50 96 10 95 103 198 150 800 455 318 303 388 2015 2,622 2,708 1,000 5,017 3,905 2,066 5,636 1,792 7,243 2,271 1,992 10,997 15,870 29,189 23,553 29,189 seenote2(d) – 8 22 33 91 98 71 186 800 134 750 118 562 315 215 367 2016 2,570 2,783 5,113 3,905 1,917 5,269 1,949 7,130 2,174 1,708 15,330 10,749 28,342 23,073 28,342 ROGERS COMMUNICATIONS INC. 8 7 8 18 19 20 16 19 20 16 21 12 23 27 28 23 14 15 16 17 16 12 Note 2016 ANNUAL REPORT John H. Clappison, FCPA, FCA Director Income tax payable Accounts payable and accrued liabilities Current portion of derivative instruments Other current assets Current portion of derivative instruments Cash and cash equivalents Accounts receivable Inventories Current portion of provisions Unearned revenue Current portion of long-term debt Bank advances Short-term borrowings Property, plant and equipment Total current assets Deferred tax assets Deferred tax liabilities Goodwill Alan D. Horn, CPA, CA Director Subsequent events The accompanying notes are an integral part of the consolidated financialOn statements. behalf of the Board of Directors: Commitments and contingent liabilities Assets Current assets: As at December 31 Consolidated Statements of Financial(In Position millions of Canadian dollars) Provisions Total current liabilities Long-term debt Total assets Total liabilities Total liabilities and shareholders’ equity Investments Derivative instruments Other long-term assets Other long-term liabilities Intangible assets Derivative instruments Liabilities and shareholders’ equity Current liabilities: Shareholders’ equity Guarantees CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statements of Changes in Shareholders’ Equity (In millions of Canadian dollars, except number of shares)

Class A Class B Voting shares Non-voting shares Equity Number Number Available-for- investment Total of shares of shares Retained sale financial Hedging hedging shareholders’ Year ended December 31, 2016 Amount (000s) Amount (000s) earnings assets reserve reserve reserve equity Balances, January 1, 2016 (note 2(d)) 72 112,439 402 402,308 4,474 598 57 33 5,636 Net income for the year – – – – 835 – – – 835 Other comprehensive income (loss): Defined benefit pension plans, net of tax – – – – (74) – – – (74) Available-for-sale investments, net of tax – – – – – 44 – – 44 Derivative instruments accounted for as hedges, net of tax – – – – – – (164) – (164) Share of equity-accounted investments, net of tax – – – – – – – (23) (23) Total other comprehensive income (loss) – – – – (74) 44 (164) (23) (217) Comprehensive income for the year – – – – 761 44 (164) (23) 618 Transactions with shareholders recorded directly in equity: Dividends declared – – – – (988) – – – (988) Shares issued on exercise of stock options – – 3 61 – – – – 3 Share class exchange – (27) – 27 – – – – – Total transactions with shareholders – (27) 3 88 (988) – – – (985) Balances, December 31, 2016 72 112,412 405 402,396 4,247 642 (107) 10 5,269

Class A Class B Voting shares Non-voting shares Equity Number Number Available-for- investment Total of shares of shares Retained sale financial Hedging hedging shareholders’ Year ended December 31, 2015 Amount (000s) Amount (000s) earnings assets reserve reserve reserve equity Balances, January 1, 2015 (note 2(d)) 72 112,448 402 402,298 4,102 721 104 10 5,411 Net income for the year (note 2(d)) – – – – 1,342 – – – 1,342 Other comprehensive income (loss): Defined benefit pension plans, net of tax – – – – 18 – – – 18 Available-for-sale investments, net of tax – – – – – (123) – – (123) Derivative instruments accounted for as hedges, net of tax – – – – – – (47) – (47) Share of equity-accounted investments, netoftax ––––– ––2323 Total other comprehensive income (loss) – – – – 18 (123) (47) 23 (129) Comprehensive income for the year – – – – 1,360 (123) (47) 23 1,213 Transactions with shareholders recorded directly in equity: Dividends declared – – – – (988) – – – (988) Share class exchange – (9) – 9 – – – – – Shares issued on exercise of stock options – – – 1 – – – – – Total transactions with shareholders – (9) – 10 (988) – – – (988) Balances, December 31, 2015 (note 2(d)) 72 112,439 402 402,308 4,474 598 57 33 5,636

The accompanying notes are an integral part of the consolidated financial statements.

104 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT CONSOLIDATED FINANCIAL STATEMENTS – – – – (9) 11 82 87 55 105 (70) (64) (16) (74) (42) 176 129 774 477 754 (116) (165) (977) (145) (771) (184) (302) 2015 1,342 5,004 3,747 4,702 2,277 (3,767) (1,077) (2,440) seenote2(d) – – – 5 (3) 45 11 11 34 14 71 61 (71) (82) (17) (46) (45) 761 324 140 484 835 (103) (988) (538) (756) (295) 2016 4,994 3,957 5,008 2,276 (2,456) (1,583) (2,352) ROGERS COMMUNICATIONS INC. 7 8 8 7 29 18 29 29 10 12 24 22 11 25 7, 8 Note 8, 17, 25 2016 ANNUAL REPORT its that have an original maturity of less than 90 days, less bank h equivalents was comprised of cash and demand deposits. ed to property, plant and equipment and ash provided by operating activities: ore changes in non-cash working capital ransactions, net of cash acquired Income tax expense Stock-based compensation Impairment of assets and related onerousGain contract on charges acquisition of Mobilicity Net loss on divestitures pertaining toLoss investments on wind down of shomi Depreciation and amortization Other Finance costs Post-employment benefits contributions, net of expense Program rights amortization intangible assets items, income taxes paid, and interest paid Net repayments on short-term borrowings Other Acquisitions and other strategic t Changes in non-cash working capital relat Other Transaction costs incurred Dividends paid Additions to program rights Net (payment) proceeds on settlement of debt derivatives and forward contracts Net income for the year Adjustments to reconcile net income to c Change in non-cash operating working capital items Cash provided by operating activities bef Net (repayment) issuance of long-term debt Additions to property, plant and equipment Interest paid Income taxes paid Cash provided by operating activities before income taxes paid and interest paid Financing activities: Cash used in investing activities (Bank advances) cash and cash equivalents, end of year Cash and cash equivalentsadvances. As are at defined December 31, as 2015, the cash balance and of cash short-term and cas depos Cash and cash equivalents, beginning of year Cash used in financing activities Change in cash and cash equivalents The accompanying notes are an integral part of the consolidated financial statements. Operating activities: Years ended December 31 Consolidated Statements of Cash(In Flows millions of Canadian dollars) Investing activities: Cash provided by operating activities NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Notes to Consolidated Financial Statements

We, us, our, Rogers, Rogers Communications, and the Company refer to Rogers Communications Inc. and its subsidiaries. RCI refers to the legal entity Rogers Communications Inc., not including its subsidiaries. RCI also holds interests in various investments and ventures. Page Note Page Note 106 Note 1 Nature of the Business 123 Note 16 Financial Risk Management and 107 Note 2 Significant Accounting Policies Financial Instruments 110 Note 3 Capital Risk Management 131 Note 17 Investments 110 Note 4 Segmented Information 132 Note 18 Short-Term Borrowings 112 Note 5 Revenue 132 Note 19 Provisions 113 Note 6 Operating Costs 133 Note 20 Long-Term Debt 114 Note 7 Property, Plant and Equipment 136 Note 21 Other Long-Term Liabilities 116 Note 8 Intangible Assets and Goodwill 136 Note 22 Post-Employment Benefits 120 Note 9 Restructuring, Acquisition and Other 140 Note 23 Shareholders’ Equity 120 Note 10 Finance Costs 140 Note 24 Stock-Based Compensation 120 Note 11 Other Expense (Income) 143 Note 25 Business Combinations 120 Note 12 Income Taxes 144 Note 26 Related Party Transactions 122 Note 13 Earnings Per Share 145 Note 27 Guarantees 122 Note 14 Accounts Receivable 146 Note 28 Commitments and Contingent Liabilities 123 Note 15 Inventories 147 Note 29 Supplemental Cash Flow Information

NOTE 1: NATURE OF THE BUSINESS

Rogers Communications Inc. is a diversified Canadian On January 1, 2016, Fido Solutions Inc., a subsidiary of RCI, communications and media company. Substantially all of our transferred its partnership interest in Rogers Communications operations and sales are in Canada. RCI is incorporated in Canada Partnership (RCP) to Rogers Cable and Data Centres Inc. (RCDCI), and its registered office is located at 333 Bloor Street East, Toronto, a subsidiary of RCI, leaving RCDCI as the sole partner of RCP, Ontario, M4W 1G9. RCI’s shares are publicly traded on the Toronto thereby causing RCP to cease to exist. RCDCI became the owner of Stock Exchange (TSX: RCI.A and RCI.B) and on the New York Stock all the assets and assumed all the liabilities previously held by RCP. Exchange (NYSE: RCI). Subsequent to the reorganization, RCDCI changed its name to Rogers Communications Canada Inc. (RCCI). We report our results of operations in four reportable segments. Each segment and the nature of its business is as follows: During the year ended December 31, 2016, Wireless, Cable, and Business Solutions were operated by our wholly-owned subsidiary, Segment Principal activities RCCI (2015 – RCP), and certain other wholly-owned subsidiaries. Wireless Wireless telecommunications operations Media was operated by our wholly-owned subsidiary, Rogers for Canadian consumers and businesses. Media Inc., and its subsidiaries. Cable Cable telecommunications operations, See note 4 for more information about our reportable operating including Internet, television, and segments. telephony (phone) services for Canadian consumers and businesses. STATEMENT OF COMPLIANCE Business Solutions Network connectivity through our fibre We prepared our consolidated financial statements in accordance network and data centre assets to support with International Financial Reporting Standards (IFRS) as issued by a range of voice, data, networking, the International Accounting Standards Board (IASB). Our Board of hosting, and cloud-based services for the Directors authorized these consolidated financial statements for enterprise, public sector, and carrier issue on February 9, 2017. wholesale markets. Media A diversified portfolio of media properties, including sports media and entertainment, television and radio broadcasting, specialty channels, multi-platform shopping, digital media, and publishing.

106 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (4) 107 477 3,897 1,853 $2.61 $2.60 Amended Amended as at January 1, 2015 for the year ended December 31, 2015 8 12 11 12 13 13 Note Note of the intangible asset with an sly issued financial statements. ROGERS COMMUNICATIONS INC. 3,883 14 26,522 14 26,536 $ 2.68 ($0.07) 2016 ANNUAL REPORT January 1, 2015 Adjustments for the year ended Previously reported December 31, 2015 Adjustments (d) CHANGES IN ACCOUNTING POLICIES ADOPTED2016 IN Change in accounting policy for measurementtaxes of deferred income Following theInterpretations Committee’s Novemberexpected agenda manner 2016 of decisionuseful recovery lives of publication addressing for intangible theretrospectively assets the of purposes with changed of indefinite our measuringInterpretations the related deferred Committee accounting tax, observed we that policy. IFRS Accounting in have Standard The applying 12, IFRS an International entity determinesof its recovery expected manner of theindefinite carrying useful amount life, andfrom reflects the that tax expected consequences mannerdeferred that of taxes follow on recovery. temporary Previously, differences arisingindefinite-life we from intangible measured the assets portion with of notax initial basis associated using underlying a capitalrecovery would gains result tax solely rate from basedwe sales upon have of the the adopted assets. notion an Consequently, that on accounting policy temporary to measure differences deferredassets taxes based arising upon fromexpected manner the of indefinite-life recovery tax of the intangible consequences assets. thatThe accounting follow policies set from outfinancial the in these notes statements toconsolidated our consolidated financial have statementsDecember as 31, been 2016 at and the and appliedthese comparative information for consolidated presented in in the financialended year statements preparing ended December ascomparative 31, the at and 2015. amendedConsolidated for In Consolidated the preparing year Consolidated Statements our Statements Statements of of opening FinancialStatements of Position, Income, and Changes and in of Shareholders’ Consolidated certainamountsreportedinpreviou Equity, we have amended Comprehensive Income, Previously reported as at ognized entirely within our Media reportable segment. ts of Financial Position as at January 1, 2015 s on a historical cost basis, except holders’ equity 26,522 14 26,536 1 1 Basic Diluted $ 2.67 ($0.07) effect as at the datePosition; of the Consolidated Statements of Financial depreciation andexchange amortization rates; and expenses – at– at the the average historical raterecognized. for the month in which the transaction was measured at fair value; described in note 22; and fair value as disclosed in note 24. The adjustment relating to total assets and goodwill was rec Net incomeEarnings per share 1,381 (39) 1,342 Adjustments to the Consolidated Statemen Deferred tax liabilities 1,769 84 Other (income) expense (32) 28 1 (In millions of dollars) (In millions of dollars, except per share amounts) Goodwill (c) FOREIGN CURRENCY TRANSLATION We translate amountsCanadian dollars as denominated follows: in• foreign monetary assets currencies and monetary liabilities into – at the exchange rate in • non-monetary assets, non-monetary liabilities,• and revenue and related expenses other than depreciation and amortization (b) BASIS OF CONSOLIDATION Subsidiaries arestatements entities we ofstatements control. our from the We date subsidiaries weceases. include gain We control in the of eliminate them allbetween until our financial our our intercompany subsidiaries control on transactions consolidated consolidation. and balances financial for: • certain financial instruments as disclosed in• note the 16, which net are deferred• pension liabilities for liability, stock-based compensation, which which are measured is at measured as All amounts are infunctional Canadian dollars currency unlessconsolidated otherwise is financial noted. statement the Our Canadian dollar. We prepare the NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (a) BASIS OF PRESENTATION Total assets Shareholders’ equityTotal liabilities and share 5,481 (70) 5,411 Income tax expense 466 11 Adjustments to the Consolidated Statements of Income for the year ended December 31, 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Adjustments to the Consolidated Statements of Financial Position as at December 31, 2015

Adjustments Previously reported as at Adjustmentsasat for the year ended Amended as at (In millions of dollars) December 31, 2015 January 1, 2015 December 31, 2015 Note December 31, 2015

Goodwill 1 3,891 14 – 8 3,905 Total assets 1 29,175 14 – 29,189

Deferred tax liabilities 1,943 84 39 12 2,066 Shareholders’ equity 5,745 (70) (39) 5,636 Total liabilities and shareholders’ equity 29,175 14 – 29,189

1 The adjustment relating to total assets and goodwill was recognized entirely within our Media reportable segment.

Adoption of amendments to IFRS (e) ADDITIONAL SIGNIFICANT ACCOUNTING POLICIES, We adopted the following IFRS amendments in 2016. ESTIMATES, AND JUDGMENTS • Amendments to IAS 16, Property, Plant and Equipment and When preparing our consolidated financial statements, IAS 38, Intangible Assets that introduced a rebuttable management makes judgments, estimates, and assumptions that presumption that the use of revenue-based amortization affect how accounting policies are applied and the amounts we methods for intangible assets is inappropriate. We adopted the report as assets, liabilities, revenue, and expenses. Our significant amendment prospectively beginning on January 1, 2016. accounting policies, estimates, and judgments are identified in this • Amendments to IFRS 11, Joint Arrangements requiring business note. Furthermore, the following information is disclosed combination accounting to be applied to acquisitions of throughout the notes as identified in the table below: interests in a joint operation that constitute a business. We • information about assumptions and estimation uncertainties that adopted the amendment on a prospective basis for acquisitions have a significant risk of resulting in a material adjustment to the on or after January 1, 2016, in accordance with the transitional amounts recognized in the consolidated financial statements; provisions. • information about judgments made in applying accounting The adoption of these amendments did not have a material effect policies that have the most significant effect on the amounts on our financial statements. recognized in the consolidated financial statements; and • information on our significant accounting policies. Note Topic Page Accounting Policy Use of Estimates Use of Judgments 4 Reportable Segments 110 X X 5 Revenue Recognition 112 X 7 Property, Plant and Equipment 114 X X X 8 Intangible Assets and Goodwill 116 X X X 12 Income Taxes 120 X X 13 Earnings Per Share 122 X 14 Accounts Receivable 122 X 15 Inventories 123 X 16 Financial Instruments 123 X X X 17 Investments 131 X 19 Provisions 132 X X 22 Post-Employment Benefits 136 X X 24 Stock-Based Compensation 140 X X 25 Business Combinations 143 X X 28 Commitments and Contingent Liabilities 146 X X

108 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 109 make a policy choice to restate (IFRS 9) – In July 2014, the IASB ROGERS COMMUNICATIONS INC. Financial Instruments: recognition and (IAS 39). IFRS 9 includes revised guidance on 2016 ANNUAL REPORT Financial Instruments We believe significant judgments willdefining need the to enforceable be rights madein and when determining obligations whether of a promise ais to contract, deliver considered goods distinct, or services andobtains control to of determine the distinct when good or the service. customer The standard is effectiveafter for January 1, annual 2018. periods WeIFRS beginning are required 15 on to to or retrospectively all apply initial contracts application. We that intend are to noteach complete prior on the period dateeffect presented of of and initially recognizeopening applying the balance IFRS cumulative of 15period equity as presented, at subject an the toanticipate adjustment beginning we certain will to practical of adopt. the expedients the we earliest We have a teamIFRS dedicated 15. to This ensuring team our hassystem also compliance been with responsible requirements, forappropriate, determining and communicating ensuring the upcomingvarious changes our stakeholders. with In addition,development data this of new team internal is collection controlssystem that assisting runs will in as help intended is the ensure and the the related results areWe accurate. are implementing aenable new us revenue to recognition complycontract-by-contract system with basis, to the including requirementsrevenue appropriately of allocating between IFRS 15 differentindividual on contracts performance a for certain obligations revenuebegin streams. a within We parallel expect run to undersystem both IAS in 18 andprocesses IFRS that 2017. 15 will using continue throughout this We thea course of will result, 2017. As westandard have on our are consolidated detailed financial continuingyet statements data and possible it to is to validation not assessexpect make the to a impact reliableadoption disclose estimate of of the of this statements. its estimated IFRS impact. financial 15 We effects in of our the 2017issued the consolidated final publication financial supersede of the IAS IFRS 9measurement 39, standard, which will the classification and measurementnew of expected financial credit instruments, loss a modelfinancial for calculating assets, impairment on andUnder the IFRS 9, new financial hedgebased assets on will accounting the be business guidance. classified modelcharacteristics and in of measured which their they contractual areaccounting cash standard held flows. will and The align the new hedgewith accounting hedge more risk closely management. IFRS 9the does not types fundamentally change ofmeasure and hedging recognize ineffectiveness, relationships howevermore it or will hedging provide strategies the used forfor requirement risk hedge accounting management to and to introduce qualify morethe judgment to effectiveness assess offorward a the guidance hedgingfinancial on relationship. instruments recognition from It IAS and 39.annual also The derecognition periods standard of carries is beginning effectiveearly on for adoption or permitted. after We arestandard January assessing on our 1, the consolidated impact 2018, financial of statements. with this •IFRS9, and IFRIC 13, (IFRS 15) – IFRS Revenue term at contract inception and on and classification of revenue, . tements in future periods: Revenue from Contracts with Customers obligations in the contract; and performance obligation. 1. identify2. the contract with a customer; identify3. the performance obligations in the determine4. contract; the transaction price; allocate the5. transaction recognize price revenue to when (or the as) performance the entity satisfies a Customer Loyalty Programmes 15 will supersedeIFRS all relating to existing revenue, including standards IAS 18, and interpretations in IFRS 15 introducesfrom a contracts single with modelcontracts customers. for recognizing This withincluding revenue standard certain applies customers, contracts toThe accounted standard with all for requires under revenuethat other only to depicts be IFRSs. recognized the some in transfercustomer a of and manner exceptions, promised at goodsexpected an or to amount services be togoods that received a or reflects in services. the exchange Thisfive is steps: consideration for achieved transferring by those applying the following IFRS 15 alsocontract acquisition provides and contract guidance fulfillment costs. relating toWe the expect treatmentsignificant the of impacts application onregards of to the our timing this of recogniti reportedand new results, the standard specificallycontracts. treatment will The timing with of have of recognition costswill and be classification incurred affected of because revenue in IFRSconsideration 15 over acquiring requires the the contract estimation customer allocation of of total consideration tocontract all performance based obligations on inanticipate their the relative this stand-alonearrangements selling that prices. will bundle We equipmentmonthly and most service together service significantly into equipment fees, revenue affect which recognizeddecrease our to at will service contract revenue Wireless contracts. result recognized inception over in the and course an a ofThe the treatment increase of costs to will incurred be in impacted acquiring as customer IFRScosts contracts 15 (such requires as certain sales contractand commissions) acquisition to amortized be into recognizedsuch costs as operating are an expensed expenses as asset incurred. over time.In addition, Currently, certain newon assets and liabilities our willSpecifically, be recognized Consolidated arecognized to contract Statements account forrevenue asset recognized any of and the timing or amounts billed differences to Financial between the contract customer. the Position. liability will be (f) RECENT ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED The IASB has issued theeffective following in new a standards future thatconsolidated year will financial sta become and will or could have an impact on our • IFRS 15, NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• IFRS 16, Leases (IFRS 16) – In January 2016, the IASB issued the • recognize the cumulative effect of initially applying IFRS 16 final publication of the IFRS 16 standard, which will supersede as an adjustment to opening equity at the date of initial the current IAS 17, Leases (IAS 17) standard. IFRS 16 application. introduces a single accounting model for lessees and for all We are assessing the impact of this standard on our leases with a term of more than 12 months, unless the consolidated financial statements; however, we believe that underlying asset is of low value. A lessee will be required to the result will be a significant increase to assets and liabilities, recognize a right-of-use asset, representing its right to use the as we will be required to record a right-of-use asset and a underlying asset, and a lease liability, representing its corresponding lease liability on our Consolidated Statements obligation to make lease payments. The accounting treatment of Financial Position, as well as a decrease to operating costs, for lessors will remain largely the same as under IAS 17. an increase to finance costs (due to accretion of the lease The standard is effective for annual periods beginning on or liability) and an increase to depreciation and amortization (due after January 1, 2019, with early adoption permitted, but to amortization of the right-of-use asset). only if the entity is also applying IFRS 15. We have the option to either: • apply IFRS 16 with full retrospective effect; or

NOTE 3: CAPITAL RISK MANAGEMENT

Our objectives in managing capital are to ensure we have sufficient We monitor debt leverage ratios as part of the management of liquidity to meet all of our commitments and to execute our liquidity and shareholders’ return to sustain future development of business plan. We define capital that we manage as shareholders’ the business, conduct valuation-related analyses, and make equity and indebtedness (including current portion of our long- decisions about capital. term debt, long-term debt, and short-term borrowings). The wholly-owned subsidiary through which our Rogers Platinum We manage our capital structure, commitments, and maturities MasterCard and Fido MasterCard programs are operated is and make adjustments based on general economic conditions, regulated by the Office of the Superintendent of Financial financial markets, operating risks, our investment priorities, and Institutions, which requires that a minimum level of regulatory working capital requirements. To maintain or adjust our capital capital be maintained. Rogers’ subsidiary was in compliance with structure, we may, with approval from our Board of Directors, issue that requirement as at December 31, 2016 and 2015. The capital or repay debt and/or short-term borrowings, issue shares, requirements are not material to the Company as at December 31, repurchase shares, pay dividends, or undertake other activities as 2016 or December 31, 2015. deemed appropriate under the circumstances. The Board of With the exception of the Rogers Platinum MasterCard and the Directors reviews and approves the annual capital and operating Fido MasterCard programs and the subsidiary through which they budgets, as well as any material transactions that are not part of the are operated, we are not subject to externally imposed capital ordinary course of business, including proposals for acquisitions or requirements. Our overall strategy for capital risk management has other major financing transactions, investments, or divestitures. not changed since December 31, 2015.

NOTE 4: SEGMENTED INFORMATION

ACCOUNTING POLICY USE OF ESTIMATES AND JUDGMENT Reportable segments JUDGMENTS We determine our reportable segments based on, among other We make significant judgments in determining our operating things, how our chief operating decision makers, the Chief segments. These are components that engage in business activities Executive Officer and Chief Financial Officer of RCI, regularly review from which they may earn revenue and incur expenses, for which our operations and performance. They review adjusted operating operating results are regularly reviewed by our chief operating profit as the key measure of profit for the purpose of assessing decision makers to make decisions about resources to be allocated performance for each segment and to make decisions about the and assess component performance, and for which discrete allocation of resources. Adjusted operating profit is defined as financial information is available. income before stock-based compensation, depreciation and amortization, restructuring, acquisition and other, finance costs, EXPLANATORY INFORMATION impairment of assets and related onerous contract charges, other Our reportable segments are Wireless, Cable, Business Solutions, expense (income), and income tax expense. and Media (see note 1). All four segments operate substantially in We follow the same accounting policies for our segments as those Canada. Corporate items and eliminations include our interests in described in the notes to our consolidated financial statements. businesses that are not reportable operating segments, corporate We account for transactions between reportable segments in the administrative functions, and eliminations of inter-segment revenue same way we account for transactions with external parties and and costs. Segment results include items directly attributable to a eliminate them on consolidation. segment as well as those that can be allocated on a reasonable basis.

110 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 61 55 (4) 111 484 160 761 191 111 774 totals totals 1,159 1,819 2,276 2,277 Consolidated Consolidated items and items and Corporate Corporate eliminations eliminations ROGERS COMMUNICATIONS INC. Business Business Solutions Media Solutions Media 2016 ANNUAL REPORT , certain amounts have been retrospectively amended. See note 2(d). Income Taxes 7,6514,412 3,465 1,807 377 261 2,079 1,907 (158)1,160 (5) 13,414 1,379 8,382 429 937 – 3,905 7,9164,631 3,449 1,775 384 261 2,146 1,977 (193) (34) 13,702 8,610 14,543 6,007 1,338 2,579 4,722 29,189 Wireless Cable Wireless Cable 5 9 5 7 9 24 10 11 11 24 10 7, 8 7, 8 Note Note 2 1 1 1 1 2 2 2 contract charges Included in Operating costs on theAs Consolidated a Statements result of of Income. the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Included in Operating costs on the Consolidated Statements of Income. Revenue Revenue Restructuring, acquisition and other Finance costs Other expense Income before income tax expense Additions to property, plant and equipmentGoodwillTotal assets 702 1,085 146 62Finance costs Other income 1,160 14,074 357 1,379 5,288 2,352 1,219 429 2,474 937 5,287 – 28,342 3,905 Income before income tax expense 1 2 Year ended December 31, 2015 (In millions of dollars) 1 INFORMATION BY SEGMENT Year ended December 31, 2016 (In millions of dollars) Additions to property, plant and equipmentGoodwill 866 1,030 187 60 297 2,440 Impairment of assets and related onerous Restructuring, acquisition and other Depreciation and amortization Depreciation and amortization Operating costs Adjusted operating profitStock-based compensation Total assets 3,239 1,658 116 172 (153) 5,032 Operating costs Adjusted operating profitStock-based compensation 3,285 1,674 123 169 (159) 5,092 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5: REVENUE

ACCOUNTING POLICY Revenue recognition We recognize revenue when we can estimate its amount, have delivered on our obligations within the revenue-generating arrangements, and are reasonably assured that we can collect it. Revenue is recognized net of discounts.

Source of revenue How we recognize revenue Monthly subscriber fees for: • Astheserviceisprovided • wireless airtime and data services; • cable, telephony, and Internet services; • network services; • media subscriptions; and •rentalofequipment Revenue from roaming, long distance, pay per use, and other • As the service is provided or product is delivered optional or non-subscription services and other sales of products Revenue from the sale of wireless and cable equipment • When the equipment is delivered and accepted by the independent dealer or subscriber in a direct sales channel Equipment subsidies related to providing equipment to new • Equipment subsidies are recognized as a reduction of and existing subscribers equipment revenue when the equipment is activated Activation fees charged to subscribers in Wireless • As part of equipment revenue upon activation of the equipment • These fees do not meet the criteria as a separate unit of accounting Advertising revenue • When the advertising airs on our radio or television stations, is featured in our publications, or displayed on our digital properties Monthly subscription revenue received by television stations for • When the services are delivered to cable and satellite subscriptions from cable and satellite providers providers’ subscribers Toronto Blue Jays revenue from home game admission and • When the related games are played during the baseball concessions season and when goods are sold Toronto Blue Jays revenue from the • When the amount can be determined Revenue Sharing Agreement which redistributes funds between member clubs based on each club’s relative revenue Revenue from Toronto Blue Jays, radio, and television broadcast • At the time the related games are aired agreements Revenue from sublicensing of program rights • Over the course of the applicable season Awards granted to customers through customer loyalty • Estimate the portion of the original sale to allocate to the programs, which are considered a separately identifiable award credit based on the fair value of the future goods and component of the sales transactions services that can be obtained when the credit is redeemed • Defer the allocated amount as unearned revenue until the awards are redeemed by the customer and we provide the goods or services • Recognize revenue based on the redemption of award credits relative to the award credits that we expect to be redeemed Interest income on receivables • As it is earned (i.e. upon the passage of time) using the effective interest method

112 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4 8 85 113 373 377 866 440 308 465 288 445 749 (158) 2015 2,079 3,457 3,465 1,343 1,669 7,651 6,902 13,414 6 6 71 378 384 870 474 325 477 307 386 658 (193) 2016 2,146 3,443 3,449 1,495 1,562 7,916 7,258 13,702 Years ended December 31 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT Equipment sales Advertising Subscription Retail Other Service revenue Next generation Legacy Equipment sales Service revenue Television Phone Internet Equipment sales Service revenue eliminations Total revenue Corporate items and intercompany Media: Total Media Total Business Solutions Business Solutions: EXPLANATORY INFORMATION Total Cable Cable: (In millions of dollars) Total Wireless Wireless: 202 2015 1,849 4,411 1,975 8,437 209 2016 4,435 2,073 8,671 1,954 Years ended December 31 as part of multiple deliverable lative fair values and recognize unt allocated to the delivered upon the deliveryperformance conditions, of the amo additional items or meeting specified revenue related to eachfor unit each unit when individually; the however relevant criteria are met item is limited to the non-contingent amount, as applicable. accounting, as long as thevaluetocustomersandwecandeterminethefairvalueofany delivered elements have stand-alone undelivered elements objectively and reliably; then accounting units based on their re stock-based compensation sales channel subsidies NOTE 6: OPERATING COSTS Multiple deliverable arrangements We offer some products and services • when an amount allocated to a delivered item is contingent Unearned revenue We recognize payments we receiveand in advance services of providing as goods subscriber deposits, unearned cable revenue. installationto fees, Advance Toronto ticket Blue payments deposits Jaysservices related ticket include and sales, subscriptions that and will amounts be provided subscribers in pay future periods. for arrangements. We recognize these as follows: • divide the products and services into• separate measure and allocate units the arrangement consideration among of the (In millions of dollars) Merchandise for resale Other external purchases Employee salaries and benefits and Total operating costs Cost of equipment sales and direct NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7: PROPERTY, PLANT AND EQUIPMENT

ACCOUNTING POLICY Recognition and measurement, including depreciation A CGU is the smallest identifiable group of assets that generates We measure property, plant and equipment upon initial cash inflows largely independent of the cash inflows from other recognition at cost and begin recognizing depreciation when the assets or groups of assets. asset is ready for its intended use. Subsequently, property, plant and equipment is carried at cost less accumulated depreciation Recognition and measurement of an impairment charge and accumulated impairment losses. An item of property, plant and equipment, an intangible asset, or goodwill is impaired if the recoverable amount is less than the Cost includes expenditures that are directly attributable to the carrying amount. The recoverable amount of a CGU or asset is the acquisition of the asset. The cost of self-constructed assets includes: higher of its: • the cost of materials and direct labour; • fair value less costs to sell; and • costs directly associated with bringing the assets to a working • value in use. condition for their intended use; • expected costs of decommissioning the items and restoring the If our estimate of the asset’s or CGU’s recoverable amount is less sites on which they are located (see note 19); and than its carrying amount, we reduce its carrying amount to the • borrowing costs on qualifying assets. recoverable amount and recognize the loss in net income immediately. We depreciate property, plant and equipment over its estimated useful life by charging depreciation expense to net income as We reverse a previously recognized impairment loss if our estimate follows: of the recoverable amount of a previously impaired asset or CGU has increased such that the impairment recognized in a previous Estimated year has reversed. The reversal is recognized by increasing the Asset Basis useful life asset’s or CGU’s carrying amount to our new estimate of its Buildings Diminishing balance 5 to 40 years recoverable amount. The carrying amount of the asset or CGU Cable and wireless network Straight-line 3 to 30 years subsequent to the reversal cannot be greater than its carrying Computer equipment and Straight-line 4 to 10 years amount if we had not recognized an impairment loss in previous software years. Customer premise equipment Straight-line 3 to 5 years Leasehold improvements Straight-line Over shorter of USE OF ESTIMATES AND JUDGMENTS estimated useful ESTIMATES life or lease term Components of an item of property, plant and equipment may Equipment and vehicles Diminishing balance 3 to 20 years have different useful lives. We make significant estimates when determining depreciation rates and asset useful lives, which require We recognize all costs related to subscriber acquisition and taking into account company-specific factors, such as our past retention in net income as incurred, except connection and experience and expected use, and industry trends, such as installation costs that relate to the cable network, which are technological advancements. We monitor and review residual capitalized and depreciated over the expected life of the Cable values, depreciation rates, and asset useful lives at least once a year customer. and change them if they are different from our previous estimates. We calculate gains and losses on the disposal of property, plant We recognize the effect of changes in estimates in net income and equipment by comparing the proceeds from the disposal with prospectively. the item’s carrying amount and recognize the gain or loss in net We use estimates to determine certain costs that are directly income. attributable to self-constructed assets. These estimates primarily We capitalize development expenditures if they meet the criteria include certain internal and external direct labour, overhead, and for recognition as an asset and amortize them over their expected interest costs associated with the acquisition, construction, useful lives once the assets to which they relate are available for use. development, or betterment of our networks. We expense research expenditures, maintenance costs, and Furthermore, we use estimates in determining the recoverable training costs as incurred. amount of property, plant and equipment. The determination of the recoverable amount for the purpose of impairment testing Impairment testing requires the use of significant estimates, such as: We test non-financial assets with finite useful lives for impairment • future cash flows; whenever an event or change in circumstances indicates that their • terminal growth rates; and carrying amounts may not be recoverable. The asset is impaired if • discount rates. the recoverable amount is less than the carrying amount. If we cannot estimate the recoverable amount of an individual asset We estimate value in use for impairment tests by discounting because it does not generate independent cash inflows, we test estimated future cash flows to their present value. We estimate the the entire cash generating unit (CGU) for impairment. discounted future cash flows for periods of up to five years, depending on the CGU, and a terminal value. The future cash flows

114 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 115 Net 687 404 264 449 7,073 1,872 10,749 amount carrying amount Net carrying depreciation 1 Accumulated ROGERS COMMUNICATIONS INC. Net amount Cost carrying 2016 ANNUAL REPORT depreciation Accumulated 998 (347) 651 942 (319) 623 423 (175) 248 383 (151) 232 Cost 5,2941,658 (3,421) (1,197) 1,873 4,960 461 1,543 (3,353) 1,607 (988) 555 1,311 (868) 443 1,236 (799) 437 20,900 (13,579) 7,321 19,588 (12,387) 7,201 30,584 (19,587) 10,997 28,652 (17,997) 10,655 those described above for value in use estimates. of thecomparable CGU entities and precedent using transactions in that multiples industry. of operating performance of JUDGMENTS We makedepreciating our significant property, plantmost judgments and accurately equipment in represent thatfrom the we those choosing believe consumption assetssubstance of and methods of the are benefits intended use most derived for of the representative underlying of assets. the economic • Usingamarketapproach–weestimatetherecoverableamount Wemakecertainassumptionswhenderivingexpectedfuturecash flows, which may includeterminal assumptions growth pertaining to rates. discountquickly These and depending assumptions on may economictherefore differ conditions possible or or othernegatively change that events. affect It future future is could valuations result in changes of impairment losses. CGUs in and goodwill, assumptions which may Net 687 404 264 449 7,073 1,872 10,749 amount carrying mounts of property, plant and equipment during 2016 and 2015. amount Additions Depreciation Impairment Other Net carrying depreciation Accumulated Cost cations, and other adjustments. future cash flows forthe periods of CGU, five to andmethodology ten a years, described depending terminal on consistent above, value, with while those similar acash applying to market flows assumptions participant the would areoperating value results make. of based in Future the CGU. on use terminal Our estimates values, our of future and cash estimates flows, discount of rates expected consider similar future factors to Includes disposals, reclassifi Land and buildingsCable and wireless networksComputer equipment and softwareCustomer premise equipmentLeasehold improvementsEquipment and vehiclesTotal property, plant and equipment 1,873 7,321 732 461 651 1,173 10,997 248 240 2,352 (522) (1,216) 64 443 46 (2,183) (296) (207) (205) 97 (28) (4) (412) (30) – – (91) – (5) (1) – – – – – 1 Land and buildings 1,062The tables below summarize the changes in the net carrying a (In millions of dollars) (375) December 31, 2015 December 31, 2016 (In millions of dollars) December 31, 2016 December 31, 2015 December 31, 2014 EXPLANATORY INFORMATION are based on ourof estimates and the expected CGU future afteroutlook operating considering for results economic the conditions CGU’s industry. andrates Our a discount of general rates consider return, market among debt other to things. equity Thethe ratios terminal CGU’s value and operations is certaincash beyond the risk flows the value premiums, using attributed projected aconditions to time and perpetuity a period general rate outlook of based for the the on industry. expectedWe determine economic fair value less costsways: to sell in one of• the following two Analyzing discounted cash flows – we estimate the discounted Cable and wireless networksComputer equipment and softwareCustomer premise equipmentLeasehold improvements 4,296 20,108 1,560 (2,424) (13,035) (1,156) 457 (193) Equipment and vehiclesTotal property, plant and equipment 28,652 (17,903) 1,169 (720) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions of dollars) December 31, 2014 December 31, 2015 Acquisitions Net carrying from business Net carrying amount Additions combinations Depreciation Other 1 amount Land and buildings 623 57 – (29) – 651 Cable and wireless network 7,201 1,322 15 (1,217) – 7,321 Computer equipment and software 1,607 691 1 (426) – 1,873 Customer premise equipment 555 245 – (339) – 461 Leasehold improvements 232 37 1 (25) 3 248 Equipment and vehicles 437 88 – (81) (1) 443 Total property, plant and equipment 10,655 2,440 17 (2,117) 2 10,997

1 Includes disposals, reclassifications, and other adjustments. Property, plant and equipment not yet in service and therefore not Year ended depreciated as at December 31, 2016 was $949 million (2015 – (In millions of dollars) December 31, 2016 $1,017 million). During 2016, capitalized interest pertaining to Impairment of property, plant and property, plant and equipment was recognized at a weighted equipment 412 average rate of approximately 3.9% (2015 – 4.0%). Onerous contracts and other 72 In 2016, we performed an analysis to identify fully depreciated Total impairment of assets and related assets that had been disposed of. This resulted in an adjustment to onerous contract charges 484 cost and accumulated depreciation of $3,557 million. The disposals had nil impact on the Consolidated Statements of Income. The $484 million charge relates to a change in strategic direction such that we have discontinued the internal development of our IMPAIRMENT OF ASSETS AND RELATED ONEROUS IPTV product. We have determined there is no significant salvage CONTRACT CHARGES value for any of the assets that were impaired as determined based During the year ended December 31, 2016, we recorded a total upon fair value less costs of disposal. The onerous contracts charge of $484 million for asset impairment and onerous contracts charges primarily represent the remaining contractual liabilities for related to our Internet Protocol television (IPTV) product. the development of our IPTV product and were recognized in accounts payable and accrued liabilities. All related charges impacted our Cable segment. During the year ended December 31, 2015, we did not record an impairment charge.

NOTE 8: INTANGIBLE ASSETS AND GOODWILL

ACCOUNTING POLICY RECOGNITION AND MEASUREMENT, INCLUDING Finite useful lives AMORTIZATION We amortize intangible assets with finite useful lives into We measure intangible assets upon initial recognition at cost depreciation and amortization on the Consolidated Statements of unless they are acquired through a business combination, in which Income, except programming rights which are amortized into case they are measured upon initial recognition at fair value. We operating costs on the Consolidated Statements of Income, on a begin recognizing amortization for intangible assets with finite straight-line basis over their estimated useful lives as noted in the useful lives when the asset is ready for its intended use. Upon table below. We monitor and review the useful lives, residual commencement of amortization, the asset is carried at cost less values, and amortization methods at least once a year and change accumulated amortization and accumulated impairment losses. them if they are different from our previous estimates. We recognize the effects of changes in estimates in net income Cost includes expenditures that are directly attributable to the prospectively. acquisition of the asset. The cost of a separately-acquired intangible asset comprises: Intangible asset Estimated useful life • its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates; Customer relationships 3 to 10 years and Roaming agreements 12 years • any directly attributable cost of preparing the asset for its intended use.

Indefinite useful lives We do not amortize intangible assets with indefinite lives, including spectrum licences, broadcast licences, and certain brand names.

116 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 117 r present value. We estimate the ROGERS COMMUNICATIONS INC. ing the asset’s or CGU’s carrying 2016 ANNUAL REPORT future cash flows forthe periods of CGU, five to andmethodology ten a years, described depending terminal on consistent above, value, with while those similar acash applying to market flows assumptions participant the would areoperating value results make. of based in Future the CGU. on use terminal Our estimates values, our of future and cash estimatesthose flows, discount described of above rates for value expected consider in use similar future estimates. factors to of thecomparable CGU entities and precedent using transactions in that multiples industry. of operating performance of USE OF ESTIMATES AND JUDGMENTS ESTIMATES We use estimatesintangible in assets determiningrecoverable amount for and the the purpose recoverable ofthe goodwill. impairment use testing of amount requires significant estimates, The of such• as: future determination cash flows; • of terminal growth rates; the and • discount rates. We estimate valueestimated future in cash flows use todiscounted thei for future impairment cash testsdepending on the by flows CGU, and discounting for aare terminal based value. periods on The future our of cashof estimates flows and the up expected CGU future to afteroutlook operating considering for results five economic the conditions CGU’s years, industry. andrates Our a discount of general rates consider return, market among debt other to things. equity Thethe ratios terminal CGU’s value and operations is certaincash beyond the risk flows the value premiums, using attributed projected aconditions to time and perpetuity a period general rate outlook of based for the the on industry. expectedWe determine economic fair value less costsways: to sell in one of• the following two Analyzing discounted cash flows – we estimate the discounted • Usingamarketapproach–weestimatetherecoverableamount Wemakecertainassumptionswhenderivingexpectedfuturecash flows, which may includeterminal assumptions growth pertaining to rates. discountquickly These and depending assumptions on may economictherefore differ conditions possible or or othernegatively change that events. affect It future future is could valuations result in changes of impairment losses. CGUs in andIf goodwill, assumptions our which estimate may ofthan the its asset’s or carrying CGU’srecoverable amount, recoverable amount we amount is reduceimmediately. less and its carrying recognize amount to the the loss in net income We reverse arespect previously of goodwill, recognized if ourpreviously impairment estimate of loss, impaired the except recoverable assetimpairment amount in or of a recognized CGUreversal in has is increased a recognized by suchamount previous increas that to year the ourcarrying has amount new reversed. of the estimatecannot The asset of or be CGU itsrecognized greater subsequent an impairment recoverable to loss than in the amount. previous years. reversal its The carrying amount if we had not the non-controlling interest, if ights fees, these prepayments are Recognition and measurement of an impairmentAn charge intangible assetamount is or less goodwill thanof the a is carrying CGU or amount. impaired asset The is• recoverable if the higher amount fair of the value its: less recoverable costs• to sell; value and in use. IMPAIRMENT TESTING We test intangiblewhenever assets an event with or finitecarrying change in amounts useful circumstances may indicates lives not thatintangible for their assets be and impairment recoverable. goodwill WeOctober for impairment test once 1, indefinite-life perimpairment. year or as at more frequentlyIf we if cannotintangible we estimate asset because the identify itinflows, recoverable we does indicators test amount not the entire of generate of CGU for independent an impairment. cash Goodwill individual is allocated tolevel CGUs (or at groups which of managementhigher CGUs) monitors than based on goodwill, an the which operatingmade to cannot segment. CGUs be The (or allocationfrom groups of the of goodwill CGUs) synergies that is goodwill of arose. are the expected business to benefit combination from which the any). If the fairthat value of the of considerationimmediately transferred recognize the the is difference lower as a than gain separately in net income. identified assets and liabilities, we Goodwill We recognize goodwill arisingthe from fair business value combinations of when liabilities the separately we identifiable assets assumed(including we the is acquired recognized and lower amount of than the consideration we paid Acquired program rights Program rights are contractual rightsto we broadcast acquire programs, from including thirdevents. rights parties We to recognize broadcast them liveand at sporting accumulated cost impairment less losses. accumulated Weon amortization capitalize the program rights Consolidatedlicence Statements period of begins Financialamortize and Position them the to when program otherthe the is external available purchases Consolidated for inexhibition use operating Statements period. and costs If programs on ofrelated are not Income scheduled, program we overOtherwise, consider rights the we the test to themfinite expected useful be for lives. impairment impaired as intangible and assetsThe with write costs them foragreements off. multi-year are sports recognizedapplicable and seasons in based television operating onaired broadcast expenses the or pattern rights during inprepayments are the which are expected the made rightscontract to at are towards be future the years’recognized consumed. commencement r of as To aexpenses intangible the over multi-year the extent assets contractare term. that and made To the for amortizedincluded extent annual that to in contractual prepayments operating feesConsolidated other Statements within of current a Financialconsumed Position assets season, within as the they the next – twelve rights are months. will prepaid be expenses on our NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUDGMENTS After review of the competitive, legal, regulatory, and other factors, We make significant judgments that affect the measurement of our it is our view that these factors do not limit the useful lives of our intangible assets and goodwill. spectrum and broadcast licences. Judgment is applied when deciding to designate our spectrum Judgment is also applied in choosing methods for amortizing our and broadcast licences as assets with indefinite useful lives since we intangible assets and program rights that we believe most believe the licences are likely to be renewed for the foreseeable accurately represent the consumption of those assets and are most future such that there is no limit to the period that these assets are representative of the economic substance of the intended use of expected to generate net cash inflows. We make judgments to the underlying assets. determine that these assets have indefinite lives, analyzing all Finally, we make judgments in determining CGUs and the relevant factors, including the expected usage of the asset, the allocation of goodwill to CGUs or groups of CGUs for the purpose typical life cycle of the asset, and anticipated changes in the market of impairment testing. demand for the products and services the asset helps generate.

EXPLANATORY INFORMATION

(In millions of dollars) December 31, 2016 December 31, 2015 December 31, 2014

Cost prior to Accumulated Net Cost prior to Accumulated Net Cost prior to Accumulated Net impairment Accumulated impairment carrying impairment Accumulated impairment carrying impairment Accumulated impairment carrying losses amortization losses amount losses amortization losses amount losses amortization losses amount Indefinite-life intangible assets: Spectrum licences 6,416 – – 6,416 6,416 – – 6,416 5,576 – – 5,576 Broadcast licences 329 – (99) 230 324 – (99) 225 324 – (99) 225 Brand names 420 (270) (14) 136 420 (270) (14) 136 420 (255) (14) 151 Finite-life intangible assets: Customer relationships 1,609 (1,470) – 139 1,609 (1,414) – 195 1,620 (1,339) – 281 Roaming agreements 524 (524) – – 523 (488) – 35 523 (444) – 79 Marketing agreements 10 (10) – – 10 (10) – – 10 (10) – – Acquired program rights 289 (75) (5) 209 332 (91) (5) 236 343 (62) (5) 276

Total intangible assets 9,597 (2,349) (118) 7,130 9,634 (2,273) (118) 7,243 8,816 (2,110) (118) 6,588 Goodwill 1 4,126 – (221) 3,905 4,126 – (221) 3,905 4,118 – (221) 3,897

Total intangible assets and goodwill 13,723 (2,349) (339) 11,035 13,760 (2,273) (339) 11,148 12,934 (2,110) (339)10,485

1 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See note 2(d).

The tables below summarize the changes in the net carrying amounts of intangible assets and goodwill in 2016 and 2015.

(In millions of dollars) December 31, 2015 December 31, 2016 Net carrying Net carrying amount 1 Net additions Amortization 2 Other 3 amount

Spectrum licences 6,416 – – – 6,416 Broadcast licences 225 – – 5 230 Brand names 136 – – – 136 Customer relationships 195 – (58) 2 139 Roaming agreements 35 – (35) – – 7,007 – (93) 7 6,921 Acquired program rights 236 46 (71) (2) 209 Total intangible assets 7,243 46 (164) 5 7,130 Goodwill 1 3,905 – – – 3,905 Total intangible assets and goodwill 11,148 46 (164) 5 11,035

1 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See note 2(d). 2 Of the $164 million of total amortization, $71 million related to acquired program rights is included in Other external purchases in Operating costs (seenote6),and$93millionin depreciation and amortization on the Consolidated Statements of Income. 3 Includes disposals, write-downs, reclassifications, and other adjustments.

In 2016, there were no acquisitions from business combinations.

118 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3 119 amount rates (%) Net carrying Pre-tax discount 3 Other seenote6),and$160million anization of the OMNI television 2 rates (%) reless Inc. (Mobilicity) spectrum ROGERS COMMUNICATIONS INC. Terminal growth Period of nal purchases in Operating costs ( flows (years) projected cash 2016 ANNUAL REPORT , certain amounts have been retrospectively amended. See note 2(d). Shaw spectrum licences We obtained 20licences from MHz ofpreviously Inc. contiguous, (Shaw) acquired after paired exercising optioninstallment a AWS-1 and ($250 spectrum paying millionacquisition, we the was recognized final previouslyassets the $100 paid of spectrum million inattributable $352 licences costs. 2013). as million, Subsequent Upon intangible non-contiguous which to included spectrum exercisingtransferred $2 the licences option, to million acquired certain proceeds. WIND of from Mobile directly Shaw Corp. were (WIND)Data for & Audio-Visual nominal Enterprises Wi cash licences We obtained $458our million of acquisition AWS-1recognized spectrum of the licences licences through Mobilicity ofacquisition. $458 million as as intangible described assets upon in note 25, and We didgoodwill not recognize orrecoverable an intangible amounts of impairment the assets CGUs exceeded charge their in carrying values. related 2016 to or our 2015 because the s we used in 2016 to determine recoverable amounts for CGUs or Income Taxes oups of CGUs, correspond to our operating segments as disclosed in Acquisitions combinations Net additions Amortization from business gram rights is included in Other exter 1 Recoverable amount method 6,3123,897 477 8 381 (160) – (3) 7,007 – – 3,905 amount Net carrying ssets or goodwill that we consider significant. Carrying value of indefinite-life intangible assets classifications, and other adjustments including a write-off of certain programming rights following a reorg of goodwill Carrying value 1 stations (see note 9). in depreciation and amortization on the Consolidated Statements of Income. Includes disposals, write-downs, re As a result of the IFRSOf Interpretations the Committee’s $247 agenda decision million relating of to total IAS amortization, 12 $87 million related to acquired pro groups of CGUs, with indefinite-life intangible a note 4. The table below is an overview of the methods and key assumption (In millions of dollars, except periods used and rates) For purposes of testing goodwill for impairment, our CGUs, or gr ANNUAL IMPAIRMENT TESTING 2015 SPECTRUM LICENCE ACQUISITIONS 2500 MHz spectrum licence auction We participated inCanada the during 2500 2015.consisting MHz We of spectrum were 20 licencemajor awarded MHz auction 41 blocks geographic in of spectrumrecognized markets contiguous, licences paired in the spectrum$27 million, Canada. in which spectrum included $3 Upon million of licences directly acquisition, attributable costs. as we intangible assets of CHANGE IN ACCOUNTING ESTIMATE Effective Januaryestimates 1, relating 2016, to theWe we useful determined lives that made of these assets certain havebelieve a brand an the name indefinite change useful brands assets. life are as inresult core we of to this accounting our change long-term inon estimate, going these we concern. assets ceased effective As recording January a amortization 1, 2016 on a prospective basis. 3 1 2 Acquired program rightsTotal intangible assetsGoodwill Total intangible assets and goodwill 10,485 276 6,588 485 – 477 445 64 445 (247) (247) (87) (20) (20) (17) 11,148 7,243 236 Spectrum licencesBroadcast licencesBrand namesCustomer relationshipsRoaming agreements 5,576 225 281 79 151 458 19 – 381 – – – – – – – (101) 1 – (44) (4) (15) 6,416 – – – 195 225 136 35 (In millions of dollars) December 31, 2014 December 31, 2015 Our fair value measurement forfair Media value is hierarchy. classified as Level 3 in the WirelessCableMedia 1,160 1,379 937 6,549 Value in use – 233 Value in use Fair value less cost to sell 5 5 5 0.5 2.0 1.0 7.9 9.2 7.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9: RESTRUCTURING, ACQUISITION AND OTHER

During the year ended December 31, 2016, we incurred to certain businesses. In 2015, these expenses were incurred $160 million (2015 – $111 million) in restructuring, acquisition and primarily as a result of the targeted restructuring of our employee other expenses. These expenses in 2016 primarily consisted of base, a reorganization of our OMNI television stations, the severance costs associated with the targeted restructuring of our acquisition of Mobilicity, and the purchase of our interest in Glentel. employee base and costs related to the wind down of and changes

NOTE 10: FINANCE COSTS

Years ended December 31 (In millions of dollars) Note 2016 2015 Interest on borrowings 758 761 Interest on post-employment benefits liability 22 9 11 Loss on repayment of long-term debt 16 – 7 Loss on foreign exchange 20 13 11 Change in fair value of derivative instruments (16) 3 Capitalized interest (18) (29) Other 15 10 Total finance costs 761 774

NOTE 11: OTHER EXPENSE (INCOME)

Years ended December 31 In 2016, we announced the decision to wind down our shomi joint venture. As a result of this decision, we recognized a net loss of Note 2016 2015 $140 million, which is recorded in losses from associates and joint (In millions of dollars) see note 2(d) ventures, associated with the writedown of the investment and the Losses from associates and joint estimated cost of our share of the remaining contractual ventures 17 216 99 obligations of shomi (most significantly video content costs). See Gain on acquisition of Mobilicity 1 25 – (74) note 19 for more information about the provision related to our Net loss on divestitures pertaining share of the remaining contractual obligations based on our best to investments 11 – estimate of the expected future costs. Other investment income (36) (29) A $72 million loss related to our share of the change in the fair Total other expense (income) 191 (4) value of an obligation relating to one of our joint ventures has been

1 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 recognized in losses from associates and joint ventures for the year Income Taxes, certain amounts have been retrospectively amended. See note 2(d). ended December 31, 2015.

NOTE 12: INCOME TAXES

ACCOUNTING POLICY Income tax expense includes both current and deferred taxes. We and their respective tax bases. We calculate deferred tax assets and recognize income tax expense in net income unless it relates to an liabilities using enacted or substantively enacted tax rates that will item recognized directly in equity or other comprehensive income. apply in the years in which the temporary differences are expected We provide for income taxes based on all of the information that is to reverse. currently available. Deferred tax assets and liabilities are offset if there is a legally Current tax expense is tax we expect to pay or receive based on enforceable right to offset current tax assets and liabilities and they our taxable income or loss during the year. We calculate the relate to income taxes levied by the same authority on: current tax expense using tax rates enacted or substantively •thesametaxableentity;or enacted as at the reporting date, including any adjustment to taxes • different taxable entities where these entities intend to settle payable or receivable related to previous years. current tax assets and liabilities on a net basis or the tax assets and liabilities will be realized and settled simultaneously. Deferred tax assets and liabilities arise from temporary differences between the carrying amounts of the assets and liabilities we We recognize a deferred tax asset for unused losses, tax credits, recognize on our Consolidated Statements of Financial Position and deductible temporary differences to the extent it is probable that future taxable income will be available to use the asset.

120 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – 6 5 9 (7) 11 (20) 121 477 482 2015 2015 1,819 26.5% 26.2% (2,066) (2,057) seenote2(d) seenote2(d) 8 – As at December 31 3 5 (7) (3) 18 324 308 2016 2016 1,159 (1,917) (1,909) 26.6% 28.0% Years ended December 31 loss loss Non-capital Non-capital ROGERS COMMUNICATIONS INC. carryforwards Other Total carryforwards Other Total 2016 ANNUAL REPORT reserve Investments reserve Investments partnership partnership change losses compensation Stub period Stub period income and income and Income tax adjustment, legislative tax Non-taxablegainonacquisition Non-taxable portion of capital gain Other Non-deductible portion of equity Non-deductible stock-based resulting from: DEFERRED TAX ASSETS AND LIABILITIES (In millions of dollars) Deferred tax assets Deferred tax liabilities Net deferred tax liability Thetablebelowshowsthedifferencebetweenincometax expense computed by applyingincome before the income statutory tax incomefor the expense tax year. and rate the to income tax expense (In millions of dollars, except rates) Statutory income tax rate Total income tax expense Income before income tax expense Computed income tax expense Effectiveincometaxrate Increase (decrease) in income tax expense Goodwill Goodwill 6 and other and other intangibles intangibles 243 477 237 234 2015 seenote2(d) erred tax assets and liabilities during 2016 and 2015. Property, Property, plant and plant and equipment equipment 3 and inventory and inventory (62) (65) 324 386 2016 Years ended December 31 due to legislative changes differences Revaluation of deferred tax balances (Reversal) origination of temporary Total income tax expense Total deferred tax (recovery) expense Deferred tax (recovery) expense: Current tax expense: Total current tax expense (In millions of dollars) The table below summarizes the movement of net def January 1, 2015 (see note 2(d))(Expense) recovery in net income(Expense) recovery in other comprehensive incomeAcquisitionsDecember 31, 2015 (see note 2(d)) – (889) (32) – (921) (632) (116) – (844) (313) 135 (178) 19 (80) – – (61) (96) 54 – (197) 32 16 (70) – (33) (1,844) (85) (51) (243) (2,057) – 175 2 81 Deferred tax assets (liabilities) (In millions of dollars) Deferred tax assets (liabilities) (In millions of dollars) January 1, 2016(Expense) recovery in net income(Expense) recovery in other comprehensive incomeDecember 31, 2016 – (26) – (109) (921) – (947) 178 (844) (953) (7) (178) 7 – (61) – (8) (61) 93 32 20 86 24 (85) 62 (2,057) 28 (1,909) EXPLANATORY INFORMATION We makeregulations significant when judgments wejudgments in to calculate evaluate interpreting whether income webased can tax tax recover on a rules our expense. deferred tax assessmentprofitability, We asset and of and tax existing make planning strategies. tax laws, estimates of future USE OF ESTIMATES AND JUDGMENTS JUDGMENTS CHANGE IN ACCOUNTING POLICY In November 2016,clarifications to the IAS IFRSapplication 12 of Interpretation tax that rates Committee provideintangible related issued asset to guidance the for on recovery thehave of the purposes retrospectively an of expected changed indefinite-life measuringnote our 2d). deferred related tax. accounting We policy (see NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We have not recognized deferred tax assets for the following items: There are taxable temporary differences associated with our investments in Canadian domestic subsidiaries. We do not As at December 31 recognize deferred tax liabilities for temporary differences because we are able to control the timing of the reversal and the reversal is (In millions of dollars) 2016 2015 not probable in the foreseeable future. Reversing these taxable Capital losses in Canada that can be applied temporary differences are not expected to result in any significant against future capital gains 1 31 tax implications. Tax losses in foreign jurisdictions that expire between 2023 and 2035 36 34 Deductible temporary differences in foreign jurisdictions 14 49 Total unrecognized temporary differences 51 114

NOTE 13: EARNINGS PER SHARE

ACCOUNTING POLICY EXPLANATORY INFORMATION We calculate basic earnings per share by dividing the net income or loss attributable to our Class A and Class B shareholders by the Years ended December 31 weighted average number of Class A and Class B shares (In millions of dollars, except per share 2016 2015 outstanding during the year. amounts) seenote2(d) We calculate diluted earnings per share by adjusting the net Numerator (basic) – Net income for the income or loss attributable to Class A and Class B shareholders and year 835 1,342 the weighted average number of Class A and Class B shares outstanding for the effect of all dilutive potential common shares. Denominator – Number of shares (in We use the treasury stock method for calculating diluted earnings millions): per share, which considers the impact of employee stock options Weighted average number of and other potentially dilutive instruments. shares outstanding – basic 515 515 Effect of dilutive securities (in millions): Options with tandem stock appreciation rights or cash payment Employee stock options and alternatives are accounted for as cash-settled awards. As these restricted share units 2 2 awards can be exchanged for common shares of the Company, they are considered potentially dilutive and are included in the Weighted average number of shares calculation of the Company’s diluted net earnings per share if they outstanding – diluted 517 517 have a dilutive impact in the period. Earnings per share: Basic $1.62 $2.61 Diluted $1.62 $2.60

For the twelve months ended December 31, 2016, there were nil options out of the money (2015 – 1,107,344). These options were excluded from the calculation of the effect of dilutive securities becausetheywereanti-dilutive.

NOTE 14: ACCOUNTS RECEIVABLE

ACCOUNTING POLICY EXPLANATORY INFORMATION We initially recognize accounts receivable on the date they originate. We measure accounts receivable initially at fair value, and As at December 31 subsequently at amortized cost, with changes recognized in net (In millions of dollars) 2016 2015 income. We measure an impairment loss for accounts receivable as the excess of the carrying amount over the present value of future Customer accounts receivable 1,455 1,329 cashflowsweexpecttoderivefromit,ifany.Theexcessisallocated Other accounts receivable 553 549 to an allowance for doubtful accounts and recognized as a loss in Allowance for doubtful accounts (59) (86) net income. Total accounts receivable 1,949 1,792

122 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 80 123 318 238 2015 79 315 236 2016 case of investments, is As at December 31 me. ROGERS COMMUNICATIONS INC. ments of Financial Position when Fair value Amortized cost Amortized cost Fair value Fair value Fair value Fair value 2016 ANNUAL REPORT 2 2 1 4 4 4 5 pon initial recognition, based on the purpose of the individual Cost of equipment$2,088 million sales (2015 – $1,966 and million) of merchandise inventory costs. for resale includes Total inventories EXPLANATORY INFORMATION (In millions of dollars) Wireless handsets and accessories Other finished goods and merchandise lus, in the case of our financial instruments not classified as fair value debt securities, and accounts payable and accrued liabilities on the gnition of our financial assets and financial liabilities are as follows: le to the acquisition or issuance of the financial instruments. The net amount on the Consolidated State iesareinitiallyrecognizedonthetradedatewhenwebecomeapartyto ehensive income. The net change subsequent to initial recognition, in the e ineffective portion of the hedge is recognized immediately into net inco mpensation expense or recovery in operating costs. vestment or when the investment becomes impaired. t using the effective interest method. r-sale Available-for-sale 3 Debt derivatives Held-for-trading Cash and cash equivalentsAccounts receivableInvestments, available-fo Loans and receivable Loans and receivable Amortized cost Amortized cost Bank advancesShort-term borrowingsAccounts payableAccrued liabilitiesLong-term debtBond forwardsExpenditure derivativesEquity derivatives Other financial liabilities Other financial liabilities Other financial liabilities Other financial liabilities Other financial liabilities Held-for-trading Amortized cost Amortized cost Held-for-trading Amortized cost Held-for-trading Financial instrumentFinancial assets Categorization Measurement method Financial liabilities Derivatives Subsequently measured at amortized cos The derivatives can be in anFor asset derivatives or designated liability as position cash at flow aSubsequent hedges point changes for in are accounting time offset purposes, historically against th or stock-based in co the future. Subsequently measured at fair value with changes recognized in other compr reclassified into net income upon disposal of the in we have a legal right to offset them and intend to settle on a net basis or realize the asset and liability simultaneously. Offsetting financial assets and financial liabilities We offset financial assets and financial liabilities and present the 3 4 5 1 2 ACCOUNTING POLICY Recognition We initially recognize cash and cash equivalents, accounts receivable, NOTE 16: FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS Classification and measurement We measure financial instruments by grouping them into classes u date they originate. All otherthe financial contractual assets provisions of and the financial instrument. liabilit instruments. We initially measure all financialthrough instruments at profit fair or value p classifications loss, and methods transaction of measurement costs subsequent to that initial reco are directly attributab We measure inventories, includingresale, handsets at and the merchandise lower for ofand cost net (determined realizable on value. anet We first-in, realizable will first-out value, reverse basis) not athe to previous inventories exceed later write increase the down in original value. to recognized cost, if NOTE 15: INVENTORIES ACCOUNTING POLICY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Derivative instruments We use derivative instruments to manage risks related to certain activities in which we are involved. They include:

Derivative The risk they manage Types of derivative instruments Debt derivatives • Impact of fluctuations in foreign exchange rates on • Cross-currency interest rate exchange agreements principal and interest payments for US dollar- • Forward foreign exchange agreements (from time denominated long-term debt to time as necessary) Bond forwards • Impact of fluctuations in market interest rates on • Forward interest rate agreements forecasted interest payments for expected long- term debt Expenditure derivatives • Impact of fluctuations in foreign exchange rates on • Forward foreign exchange agreements forecasted US dollar-denominated expenditures Equity derivatives • Impact of fluctuations in share price on stock-based • Total return swap agreements compensation expense

We use derivatives only to manage risk, and not for speculative Impairment testing purposes. We consider a financial asset to be impaired if there is objective evidence that one or more events have had a negative effect on its When we designate a derivative instrument as a hedging estimated future cash flows and the effect can be reliably instrument for accounting purposes, we first determine that the estimated. Financial assets that are significant in value are tested for hedging instrument will be highly effective in offsetting the impairment individually. All other financial assets are assessed changes in fair value or cash flows of the item it is hedging. We collectively based on the nature of each asset. then formally document the relationship between the hedging instrument and hedged item, including the risk management We measure impairment for financial assets as follows: objectives and strategy and the methods we will use to assess the • loans and receivables – we measure an impairment loss for loans ongoing effectiveness of the hedging relationship. and receivables as the excess of the carrying amount of the asset over the present value of future cash flows we expect to derive We assess, on a quarterly basis, whether each hedging instrument from it, if any. The difference is allocated to an allowance for continues to be highly effective in offsetting the changes in the fair doubtful accounts and recognized as a loss in net income. value or cash flows of the item it is hedging. • available-for-sale financial assets – we measure an impairment We assess host contracts in order to identify embedded derivatives loss of available-for-sale financial assets as the excess of the cost requiring separation from the host contracts and account for these to acquire the asset (less any impairment loss we have previously embedded derivatives as separate derivatives when we first recognized) over its current fair value, if any. The difference is become a party to a contract. reclassified from the available-for-sale reserve in equity to net income. Hedging reserve The hedging reserve represents the accumulated change in fair USE OF ESTIMATES AND JUDGMENTS value of the derivative instruments to the extent they were effective ESTIMATES hedges for accounting purposes, less accumulated amounts Fair value estimates related to our derivatives are made at a specific reclassified into net income. point in time based on relevant market information and information about the underlying financial instruments. These estimates require Deferred transaction costs assessment of the credit risk of the parties to the instruments and We defer transaction costs associated with issuing long-term debt the instruments’ discount rates. These fair values and underlying and direct costs we pay to lenders to obtain revolving credit estimates are also used in the tests of effectiveness of our hedging facilities and amortize them using the effective interest method relationships. over the life of the related instrument. JUDGMENTS Available-for-sale financial assets reserve We make significant judgments in determining whether our The available-for-sale financial assets reserve represents the financial instruments qualify for hedge accounting. These accumulated change in fair value of the available-for-sale judgments include assessing whether the forecasted transactions investments, less accumulated impairment losses related to the designated as hedged items in hedging relationships will investments and accumulated amounts reclassified into net income materialize as forecasted, whether the hedging relationships upon disposal of investments. designated as effective hedges for accounting purposes continue to qualitatively be effective, and determining the methodology to determine the fair values used in testing the effectiveness of hedging relationships.

124 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 66 98 66 86 125 (78) 759 305 113 2015 2015 1,243 849 298 134 115 54 59 86 (81) 2016 1,396 2016 As at December 31 Years ended December 31 without incurring unacceptable ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT Less than 30 days past billing30-60 date days past billing date 61-90 days past billing date Greater than 90 days past billing date allowance for doubtful accounts) expense Total LIQUIDITY RISK Liquidity risk is the riskobligations that we as will they not fall be due.our able We to manage commitments meet liquidity our and risk financial leverage by maturities, managing (see capital note 3). structure, Wemonitoring and also actual manage and financial liquidity projected risk cashsufficient by flows liquidity continually to ensure to wenormal meet will and have our stressed liabilities conditions, when due, under both (In millions of dollars) Customer accounts receivables (net of The activity relatedfollows: to our allowance for doubtful accounts is as losses or risking damage to our reputation. (In millions of dollars) The table belowreceivable. provides an aging of our customer accounts Allowance for doubtful accounts Net use Balance, end of year We use variousdeposits on controls account, and and billingWe processes, in monitor advance, and such to take mitigate appropriate ascustomers credit action have credit to risk. suspend fully checks, services used when established their approved payment creditprocesses limits have terms. or been effective violated in Whileeliminate managing credit credit risk, our risk theycontrols cannot and will credit continue there to can controlsexperience be will effective continue. be or and no that our assurance current creditCredit that loss these riskexpenditure related derivatives, to andpossibility that equity our the counterparties derivativeson debt to arises the their derivatives, agreements fromcounterparties may obligations. to bond the default minimize the We risk forwards, not of assess require counterparty default, collateral and theassociated or do other creditworthiness with security theseportfolio of to derivatives. support the of the CounterpartiesStandard credit our & to risk Poor’s the derivatives ratingAA-. (or entire are the equivalent) financial ranging from institutions A+ to with a Balance, beginning of year enditure derivatives. Our broad tements of Financial Position are exchange exchange and interest 1 Bond forwardsExpenditure derivativesEquity Credit, derivatives liquidity, and foreign Credit, liquidity, and interest Credit, liquidity, and market Debt derivatives Credit, liquidity, and foreign Cash and cash equivalentsAccounts receivable Credit and foreign exchange Investments, available-for-sale Market Credit and foreignBank exchange advancesShort-term borrowingsAccounts payableAccrued liabilities Liquidity and interest Long-term debt Liquidity Liquidity Liquidity Liquidity, foreign exchange, Derivatives can be in an assetfuture. or liability position at a point in time historically or in the Financial instrumentFinancial assets Financial Risks Financial liabilities Derivatives customer base limits thereceivable on concentration the Consolidated of Sta thisnet risk. of Our accounts estimates allowances based for oncurrent doubtful prior economic experience environment. accounts, We anddoubtful believe which an that assessment management our accounts allowance ofassociated for with sufficiently the our accounts receivable. reflects$541 As million at (2015 December the 31, – 2016, $461considered related million) of past gross credit accounts due, receivablebeyond which are risk normal is credit definedcustomers. as terms amounts and outstanding conditions for the respective CREDIT RISK Credit risk represents thecounterparty financial to loss a weamount financial owing, could failed instrument, experience to if fromconditions meet of its a its whom contracts obligations with we under us. the have termsOur and an credit riskreceivable exposure and is to our primarily debt attributable and exp to our accounts 1 EXPLANATORY INFORMATION We are exposed toprimary credit risk management risk, objective liquidityflows, is risk, and to ultimately, and protect shareholder value. market our Wethe income, risk. design risk cash and Our management implement strategies discussed belowand to ensure our the risks objectives related and exposures riskexposure by are financial tolerance. instrument. consistent The table with below our shows business our risk NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The tables below set out the undiscounted contractual maturities of our financial liabilities and the receivable components of our derivatives as at December 31, 2016 and 2015.

December 31, 2016 Carrying Contractual Less than 1to3 4to5 More than (In millions of dollars) amount cash flows 1year years years 5years Bank advances 71 71 71 – – – Short-term borrowings 800 800 800 – – – Accounts payable and accrued liabilities 2,783 2,783 2,783 – – – Long-term debt 16,080 16,197 750 3,081 2,350 10,016 Other long-term financial liabilities 18 18 – 12 3 3 Expenditure derivative instruments: Cash outflow (Canadian dollar) – (1,708) (1,240) (468) – – Cash inflow (Canadian dollar equivalent of US dollar) – 1,732 1,249 483 – – Equity derivative instruments – 8 8 – – – Debt derivative instruments accounted for as hedges: Cash outflow (Canadian dollar) – 7,417 – 1,435 – 5,982 Cash inflow (Canadian dollar equivalent of US dollar) 1 – (8,996) – (1,880) – (7,116) Debt derivative instruments not accounted for as hedges: Cash outflow (Canadian dollar) – 201 201 – – – Cash inflow (Canadian dollar equivalent of US dollar) 1 – (201) (201) – – – Bond forwards – (51) – (51) – – Net carrying amount of derivatives (asset) (1,659) 18,093 18,271 4,421 2,612 2,353 8,885

1 Represents Canadian dollar equivalent amount of US dollar inflows matched to an equal amount of US dollar maturities in long-term debt for debt derivatives.

December 31, 2015 Carrying Contractual Less than 1to3 4to5 More than (In millions of dollars) amount cash flows 1year years years 5years Short-term borrowings 800 800 800 – – – Accounts payable and accrued liabilities 2,708 2,708 2,708 – – – Long-term debt 16,870 16,981 1,000 3,188 1,800 10,993 Other long-term financial liabilities 28 28 – 19 5 4 Expenditure derivative instruments: Cash outflow (Canadian dollar) – 1,415 1,025 390 – – Cash inflow (Canadian dollar equivalent of US dollar) – (1,578) (1,163) (415) – – Equity derivative instruments – 15 15 – – – Debt derivative instruments: Cash outflow (Canadian dollar) – 6,746 – 1,435 – 5,311 Cash inflow (Canadian dollar equivalent of US dollar) 1 – (8,581) – (1,938) – (6,643) Bond forwards: Cash outflow – 91 – 91 – – Cashinflow – ––––– Net carrying amount of derivatives (asset) (2,080) 18,326 18,625 4,385 2,770 1,805 9,665

1 Represents Canadian dollar equivalent amount of US dollar inflows matched to an equal amount of US dollar maturities in long-term debt for debt derivatives.

The tables below show net interest payments over the life of the long-term debt, including the impact of the associated debt derivatives, as at December 31, 2016 and 2015.

December 31, 2016 Less than More than (in millions of dollars) 1year 1to3years 4to5years 5years

Net interest payments 727 1,294 1,033 5,832

December 31, 2015 Less than More than (in millions of dollars) 1year 1to3years 4to5years 5years

Net interest payments 714 1,313 1,042 6,025

126 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – – – 8 14 127 Fair 2015 value Other (Cdn$) income – – – 9 14 2016 (Cdn$) comprehensive amount Notional – – 6 2 4 rate 2015 As at December 31, 2016 – – 6 2 2 Exchange Net income itivity analysis for significant 2016 es net asset (liability) position. me and other comprehensive ROGERS COMMUNICATIONS INC. (US$) amount Notional 2016 ANNUAL REPORT to US$ $0.01 change in Cdn$ relative 1% change in interest rates $1 change 1% change in interest rates As assetsAs liabilitiesAs liabilities 5,200 1,500 1.0401 1.3388As liabilities 5,409 2,008 1,751 150 (68) 1.3407As assetsAs liabilities 201 – As assets 990 300 1.2967 1.4129 900 1,284 424 (51) 40 (21) 270 8 1% change in interest rates foreign exchange rate investments as cash flow hedges: for as hedges: debt derivative assetas cash flow hedges: accounted for as cash flow hedges: expenditure derivative liabilityaccounted for as hedges: 1,683 19 Expenditure derivatives – change in Short-term borrowings DERIVATIVE INSTRUMENTS As at December 31, 2016,term debt all instruments of were our hedged USexchange against rates dollar-denominated fluctuations for long- accounting in purposes. foreign The tables below show our derivativ (In millions of dollars, except exchange rates) The table below summarizes a sens exposures with respect toderivatives, our publicly-traded expenditure investments,December equity derivatives, 31, andconstant. 2016 It and senior showsincome 2015 notes would how have with net been asvariables. affected all inco by at changes other in the variables relevant risk held (Change in millions of dollars) Share price of publicly-traded Senior notes (floating) Debt derivatives accounted for Debt derivatives not accounted Net mark-to-market Bond forwards accounted for Expenditure derivatives Net mark-to-market Equity derivatives not Net mark-to-market asset 1,659 Bank credit facilities (floating) lling with respect to our publicly- d in US dollars. Due to the short- related to these investments to ased compensation is marked to Market price risk – publicly-traded investments We manage risk relatedinvestments to fluctuations in in publicly-traded thepublicly market companies prices by of available our regularly information reviewing Market price risk – Rogers ClassOur B shares liability related to stock-b Foreign exchange and interest rates We use debtforeign exchange derivatives rates associated with todebt our instruments. US manage dollar-denominated We designate risks thesenior debt from derivatives notes related fluctuations to and our purposes in against senior the foreign debentures exchangedebt risk as associated instruments. with hedges We specific use forforeign expenditure accounting exchange derivatives to riskhedges manage the in for ourexpenditures. certain operations, As of designating atdenominated our them December long-term forecasted debt 31, as wasforeign operational 2016, hedged exchange rates against all and using fluctuations of debtlong-term capital in derivatives. debt, our With respect as US tochange a our in dollar- the result Canadian dollar ofno relative effect our to on net the debt income. US dollar derivatives, would a have A one portion cent ofaccrued our liabilities accounts is receivable denominate and accounts payable and MARKET RISK Market risk isfluctuations the in riskinvestments, that our the share changes price,rates, foreign in will market exchange affect market our rates, income, andinstruments. prices prices, cash The interest flows, such or derivative the instruments of value as are we of described use our in to our this financial note. manage this risk available-for-sale ensure that anytolerance. We do risks not engage are inhedging, risk derivatives, management within practices or such as our shorttraded investments. se established levels of risk market eachaffected period. by the Stock-basedshares change during in compensation the the lifeand of expense price DSUs. an We of use award, is equity ourour including derivatives stock Class from exposure options, time B to RSUs, respect in Non-Voting time to to our manage our stock-based compensation,derivatives, stock-based as a a compensation one result of dollarNon-Voting liability. our share change equity would not in With have the a material price effect on of net a income. Rogers Class B term nature ofsignificant market risk these from fluctuations receivables inat foreign December exchange and 31, rates 2016. as payables, theyWe carry are exposed no tothe risk of changes impact inborrowings, market this bank interest credit rates facilities, has due andsenior to our on $250 unsecured million notes. floating interest As rate outstanding at expense long-term December 31, debt forfixed 2016, interest and 91.2% rates our (2015 of – short-term 90.3%). our short-term borrowings was at NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As at December 31, 2015 During 2016, we entered into and settled debt derivatives related Notional Notional Fair to our credit facility borrowings as follows: (In millions of dollars, amount Exchange amount value except exchange rates) (US$) rate (Cdn$) (Cdn$) As at December 31, 2016 Debt derivatives accounted for (In millions of dollars, Notional Exchange Notional as cash flow hedges: except exchange rates) (US$) rate (Cdn$) As assets 5,900 1.0755 6,345 2,032 Debt derivatives entered 8,683 1.31 11,360 As liabilities 300 1.3367 401 (4) Debt derivatives settled 8,533 1.31 11,159 Net mark-to-market asset Net cash received 8 debt derivatives 2,028

Bond forwards accounted for We did not enter into or settle any debt derivatives related to our as cash flow hedges: credit facility borrowing in 2015. As liabilities – – 1,400 (91) Expenditure derivatives We entered into new debt derivatives in 2016 and 2015 to hedge accounted for as cash flow foreign currency risk associated with the principal and interest hedges: components of the US dollar-denominated senior notes issued on As assets 1,140 1.2410 1,415 158 November 4, 2016 and December 8, 2015 (see note 20). The table Equity derivatives not accounted below shows debt derivatives we entered into to hedge senior for as hedges: notes issued during 2016 and 2015. As liabilities – – 286 (15)

Net mark-to-market asset 2,080 US$ Hedging effect (In millions of dollars, except for Fixed The table below shows derivative instruments assets and derivative coupon and Principal/ hedged instruments liabilities reflected on our Consolidated Statements of interest rates) notional Cdn$ Financial Position. amount Maturity Coupon interest Equivalent Effective date (US$) date rate rate 1 Cdn$

As at December 31 November 4, 2016 500 2026 2.900% 2.834% 671

(In millions of dollars) 2016 2015 December 8, 2015 700 2025 3.625% 3.566% 937 December 8, 2015 300 2044 5.000% 5.145% 401 Current asset 91 198 Long-term asset 1,708 1,992 1 Converting from a fixed US$ coupon rate to a weighted average Cdn$ fixed rate. 1,799 2,190 The table below shows debt derivatives that matured in Current liability (22) (15) conjunction with the repayment or repurchase of the related senior Long-term liability (118) (95) notes during 2015 (see note 20). (140) (110) Net mark-to-market asset 1,659 2,080 (In millions of dollars) Notional amount Net cash (proceeds) Maturity date (US$) settlement (Cdn$)

As at December 31, 2016, US$6.7 billion notional amount of our March 15, 2015 550 (106) outstanding debt derivatives have been designated as hedges for March 15, 2015 280 (48) accounting purposes (2015 – US$6.2 billion). As at December 31, Total 830 (154) 2016, 100% of our currently outstanding bond forwards and expenditure derivatives have been designated as hedges for Upon the repayment of the related senior notes in March 2015, a accounting purposes (2015 – 100%). In 2016, we recognized a $7 million non-cash loss, which was previously deferred in the $5 million increase to net income related to hedge ineffectiveness hedging reserve, was recognized in net income (see note 10). This (2015 – $3 million decrease). loss relates to transactions in 2013 wherein contractual foreign exchange rates on the related debt derivatives were renegotiated Debt derivatives to then-current rates. We use cross-currency interest exchange agreements to manage risks from fluctuations in foreign exchange rates associated with our US dollar-denominated debt instruments and credit facility borrowings. We designate the debt derivatives related to our senior notes and debentures as hedges for accounting purposes against the foreign exchange risk associated with specific debt instruments. We do not designate the debt derivatives related to our credit facility borrowings as hedges for accounting purposes.

128 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 129 500 500 400 2015 2015 1,400 (Cdn$) Notional – 500 400 900 2016 nded in April 2016 rate 1 Exchange Years ended December 31 Hedged GoC 810 1.11 902 990 1.28 1,266 (US$) ROGERS COMMUNICATIONS INC. interest rate as at Notional December 31, 2015 2016 (Cdn$) Notional 2016 ANNUAL REPORT Hedged GoC interest rate as at rate December 31, 2016 Exchange substantially therevised same expiry committed datesderivatives of terms have April and not 2017purposes. been (from conditions designated April with as 2016). hedges The for equity As accounting at December 31,for 2016, 5.4 we had millionweighted equity average (2015 derivatives price outstanding of – $50.30we (2015 settled 5.7 – 0.3 $50.37). million million) In equity August derivativesof 2016, RCI at $58.16 a weighted as Class average a price Bcompensation result units of outstanding. shares a reduction with in a theDuring number 2016, of we share-based recognized a$33 recovery, net of million interestcompensation receipts, expense (2015 of related to –equity the change derivative $22 inDecember fair contracts 31, million value 2016, of the net our recovery), fairasset of value of $8 of in million the (2015 received equitycurrent – portion derivatives $15 stock-based of was million payments. derivative an instruments. liability), which As is included in at On December 8, 2015, weforward exercised due a December $500 million 31, notional 2015US$700 bond in million relation senior to thesettle notes issuance the due of derivative. the 2025 Thethe and amount bond forward paid paid at represents the $25 timefinance the of million costs settlement fair and from to value will the be of rate hedging recycled into reserve method using over the the2025. effective life interest of the US$700 million senior notes due tered during 2016 and 2015 to manage foreign exchange risk related amount Notional 840 1.22 1,025 990 1.33 1,318 (US$) GoC rate re-setting from time to time. The $500 million due April 2018 was exte Notional 1 s extended in December 2016 to reset in January 2018. vatives were originally entered mpensation programs for stock (RSUs), and deferred share units Bond forwards with maturity dates beyond December 31, 2016 are subject to to reset in April 2017. The $400 million due December 2018 wa Equity derivatives We have equity derivatives toassociated hedge market with price appreciation RCI risk granted Class under our B stock-based Non-Voting co shares that have been As at December 31, 2016, wederivatives had US$1,290 outstanding million (2015 of expenditure rate – US$1,140 of million), $1.32/US$ranging at an (2015 from average January –2016 2017 to $1.24/US$), December to 2017). with Our Decembermaturing outstanding terms 2018 expenditure in derivatives (2015 to 2017 –$1.33/US$. maturity are January hedged at an average exchange rate of options, restricted share(DSUs) (see units note 24). Theinto equity at deri a weighted average priceone of year, $50.37 extendible with terms for toof further maturity one-year of the periods with hedge theagreements consent counterparties. for In each 2016, of we our executed equity extension derivative contracts under Expenditure derivatives settled Expenditure derivatives entered (In millions of dollars, except exchange rates) On November 4, 2016, weforward exercised a due $500 million January notionalUS$500 4, bond million 2017 senior insettle notes the relation due derivative. to 2026 Thethe the and amount bond forward paid issuance paid at represents the $53 of timefinance the of million the costs settlement fair and from to value will the be of rate hedging recycled into reserve method using over the the2026. effective life interest of the US$500 million senior notes due 1 GoC term (years) Effective date Maturity date Expenditure derivatives The table below shows the expenditureto derivatives certain forecasted into expenditures. which we en (In millions of dollars, except interest rates) Bond forwards During 2016 or 2015, we did not enter intoThetablebelowshowsthebondforwardswehaveenteredintotohedgetheunderlyingGovernmentofCanada(GoC)10-yearratefor any new bond forwards. anticipated future debt that were outstanding as at December 31, 2016 and 2015. 101030Total December 2014 December 2014 December 2014 January 4, 2017 April 30, 2018 December 31, 2018 500 400 500 2.62% 2.52% – 2.52% 1,400 2.23% 2.34% NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FAIR VALUES OF FINANCIAL INSTRUMENTS each derivative. For these debt derivatives and expenditure The carrying value of cash and cash equivalents, accounts derivatives in a liability position, our credit spread is added to the receivable, short-term borrowings, and accounts payable and risk-free discount rate for each derivative. accrued liabilities approximate their fair values because of the The fair values of our equity derivatives are based on the quoted short-term nature of these financial instruments. market value of RCI’s Class B Non-Voting shares. We determine the fair value of each of our publicly-traded Our disclosure of the three-level fair value hierarchy reflects the investments using quoted market values. We determine the fair significance of the inputs used in measuring fair value: value of our private investments by using implied valuations from • financial assets and financial liabilities in Level 1 are valued by follow-on financing rounds, third party sale negotiations, or market- referring to quoted prices in active markets for identical assets based approaches. These are applied appropriately to each and liabilities; investment depending on its future operating and profitability • financial assets and financial liabilities in Level 2 are valued using prospects. inputs based on observable market data, either directly or The fair values of each of our public debt instruments are based on indirectly, other than the quoted prices; the year-end estimated market yields. We determine the fair values • Level 3 valuations are based on inputs that are not based on of our debt derivatives and expenditure derivatives using an observable market data. estimated credit-adjusted mark-to-market valuation by discounting There were no material financial instruments categorized in Level 3 cash flows to the measurement date. In the case of debt derivatives as at December 31, 2016 and 2015 and there were no transfers and expenditure derivatives in an asset position, the credit spread between Level 1, Level 2, or Level 3 during the respective periods. for the financial institution counterparty is added to the risk-free discount rate to determine the estimated credit-adjusted value for

The table below shows the financial instruments carried at fair value.

As at December 31 Carrying value Fair value (Level 1) Fair value (Level 2) (In millions of dollars) 2016 2015 2016 2015 2016 2015 Financial assets Available-for-sale, measured at fair value: Investments in publicly-traded companies 1,047 966 1,047 966 – – Held-for-trading: Debt derivatives accounted for as cash flow hedges 1,751 2,032 – – 1,751 2,032 Expenditure derivatives accounted for as cash flow hedges 40 158 – – 40 158 Equity derivatives not accounted for as cash flow hedges 8 – – – 8 – Total financial assets 2,846 3,156 1,047 966 1,799 2,190 Financial liabilities Held-for-trading: Debt derivatives accounted for as cash flow hedges 68 4 – – 68 4 Bond forwards accounted for as cash flow hedges 51 91 – – 51 91 Expenditure derivatives accounted for as cash flow hedges 21 – – – 21 – Equity derivatives not accounted as cash flow hedges – 15 – – – 15 Total financial liabilities 140 110 – – 140 110

The fair value of our long-term debt is estimated as follows.

As at December 31 (In millions of dollars) 2016 2015 Carrying amount Fair value 1 Carrying amount Fair value 1 Long-term debt (including current portion) 16,080 17,628 16,870 18,252

1 Long-term debt (including current portion) is measured at Level 2 in the three-level fair value hierarchy, based on year-end trading values.

We did not have any non-derivative held-to-maturity financial assets during the years ended December 31, 2016 and 2015.

130 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 131 (99) (220) (935) 2015 1,958 2,163 1,086 3,295 1,024 (2,178) (1,221) 834 518 (431) (216) 2016 1,596 1,641 3,391 (2,027) (1,082) (1,186) ROGERS COMMUNICATIONS INC. As at or years ended December 31 2016 ANNUAL REPORT Our share of net loss Total net loss Expenses Our share of net assets Revenue Total net assets Long-term liabilities Current liabilities Current assets Long-term assets (In millions of dollars) INVESTMENTS, AVAILABLE-FOR-SALE Publicly-traded companies We hold a numberyear of we interests recognized in publicly-traded realized$81 companies. losses This million of nil (2015unrealized and losses) – unrealized with gains nil corresponding amountsother of of comprehensive in income, net respectively. realized income and losses and $164INVESTMENTS, million ASSOCIATES, AND of JOINT VENTURES We have interestssome in of which a include: number of associates andMaple joint Leaf Sports ventures, and Entertainment LimitedMLSE, (MLSE) a sports andthe Air entertainment Canada company, Centre, owns theToronto Raptors, NHL’s and MLS’ Toronto operates Toronto Maple FC, Leafs,other the the assets. AHL’s NBA’s We, Toronto along Marlies, withnet and BCE 75% Inc. equity (BCE), jointly interest37.5% own in an equity MLSE indirect withaccounted interest for our as a portion joint in venture representing using a the MLSE. equity method. Ourshomi investment inshomi is MLSE a jointpreviously is venture operated equally owned aservice by offering Rogers premium movies and and subscription televisionthrough Shaw cable series and set-top video-on-demand for boxes. viewing Our online investmentfor and in shomi as is accounted aannounced the decision joint to wind venturenote down 11). our using shomi joint venture the (see equity method.Glentel In 2016,In we 2015, weshares completed of Glentel our Inc.$473 (Glentel) purchase from million of BCE such for 50%Glentel cash that of is consideration Glentel of a the ishundred large, common jointly multicarrier owned mobile Canadian byinvestment phone in us retailer Glentel wireless with and isequity several accounted BCE. method. retail for as a distribution joint ventureThe using outlets. following the table providesour Our summary associates and financial joint ventures information and on our portions all thereof. 966 212 2015 1,178 1,093 2,271 169 958 2016 1,216 2,174 1,047 As at December 31 ere is a contractual agreement r activities and requires unanimous Private companies Publicly-traded companies arrangement; and obligations for the liabilities related to the arrangement. follow-on financing rounds,market-based approaches. third party sale negotiations, or quoted prices; and Investments, available-for-sale Investments, associates and joint ventures Total investments Investments in: EXPLANATORY INFORMATION (In millions of dollars) Impairment in associates and joint ventures At the end ofobjective each evidence reporting that period,associates impairment we and assess exists whether jointcompare in there the our is ventures. carrying investments amountamount If of in and the objective recognize investment the toany, evidence excess its as over a recoverable exists, loss the in recoverable net we amount, income. if We use theassociates equity and method jointinterest to in ventures; the account assets, weoperations. liabilities, for revenue, recognize our and expenses our investments of proportionate our in joint We recognize ourinitially at investments cost and in thenbased associates increase or on and decrease our the jointrecognition. carrying share Distributions amounts ventures we of receive from eachcarrying these amounts entities entity’s of reduce our the investments. income or lossWe eliminate after unrealized initial gainsassociates and losses or from joint ouramount investments of ventures our in interest against in the entities. our investments, up to the consent for strategic financialour and interests operating in decisions. joint arrangements We into• classify one of joint two categories: ventures – when we have the• rights to joint the operations net assets – of when the we have the rights to the assets and Investments in associates and joint arrangements An entity is an associate whenentity’s we have financial significant influence and overentity. the operating We policies areover but generally an entity do presumed when we not hold to more control than have 20%A of the significant joint the voting influence arrangement power. exists when th • private companies – at fair value using implied valuations from that establishes joint control ove Investments in publicly-traded and private companies We classify ourcontrol or investments significant influence in asaccount available-for-sale for investments companies them and as follows: where• we publicly-traded have companies no – at fair value based on publicly NOTE 17: INVESTMENTS ACCOUNTING POLICY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

One of our joint ventures has a non-controlling interest that has a $72 million loss relating to our share of the change in the fair value right to require our joint venture to purchase that non-controlling of this obligation (see note 11). interest at a future date at fair value. During 2015, we recognized a

NOTE 18: SHORT-TERM BORROWINGS

We participate in an accounts receivable securitization program We continue to service and retain substantially all of the risks and with a Canadian financial institution that allows us to sell certain rewards relating to the accounts receivables we sold, and therefore, trade receivables into the program. As at December 31, 2016, the the receivables remain recognized on our Consolidated proceeds of the sales were committed up to a maximum of Statements of Financial Position and the funding received is $1,050 million (2015 – $1,050 million). Effective January 1, 2015, we recognized as short-term borrowings. The buyer’s interest in these amended the terms of the accounts receivable securitization trade receivables ranks ahead of our interest. The program restricts program, increasing the maximum potential proceeds under the us from using the receivables as collateral for any other purpose. program from $900 million to $1,050 million. Effective July 8, 2016, The buyer of our trade receivables has no claim on any of our other we extended the term of the program from January 1, 2018 to assets. January 1, 2019. As at December 31 Below is a summary of the activity relating to our accounts receivable securitization program. (In millions of dollars) 2016 2015 Trade accounts receivable sold to buyer as Twelve months ended December 31 security 1,460 1,359 (In millions of dollars) 2016 2015 Short-term borrowings from buyer (800) (800) Short-term borrowings Overcollateralization 660 559 Proceeds received on short-term borrowings 295 294 Repayment of short- term borrowings (295) (336) Net (repayments) proceeds received on short-term borrowings – (42)

NOTE 19: PROVISIONS

ACCOUNTING POLICY Decommissioning and restoration costs that have uncertain timing or amounts are recognized as We use network and other assets on leased premises in some of provisions; otherwise they are recognized as accrued liabilities. All our business activities. We expect to exit these premises in the charges are recognized in restructuring, acquisition and other on future and therefore make provisions for the costs associated with the Consolidated Statements of Income (see note 9). decommissioning the assets and restoring the locations to their original standards when we have a legal or constructive obligation Onerous contracts to do so. We calculate these costs based on a current estimate of We make provisions for onerous contracts when the unavoidable the costs that will be incurred, project those costs into the future costs of meeting our obligation under a contract exceed the based on management’s best estimates of future trends in prices, benefits we expect to realize from it and where significant inflation, and other factors, and discount them to their present judgment is required in determining the amount of unavoidable value. We revise our forecasts when business conditions or costs. We measure these provisions at the present value of the technological requirements change. lower of the expected cost of terminating the contract or the When we recognize a decommissioning liability, we recognize a expected cost of continuing with the contract. We recognize any corresponding asset in property, plant and equipment and impairment loss on the assets associated with the contract before depreciate the asset based on the corresponding asset’s useful we make the provision. life following our depreciation policies for property, plant and equipment. We recognize the accretion of the liability as a charge USE OF ESTIMATES AND JUDGMENTS to finance costs on the Consolidated Statements of Income. ESTIMATES Restructuring We recognize a provision when a past event creates a legal or We make provisions for restructuring when we have approved a constructive obligation that can be reasonably estimated and is detailed and formal restructuring plan and either the restructuring likely to result in an outflow of economic resources. We recognize a has started or management has announced the plan’s main provision even when the timing or amount of the obligation may features to the employees affected by it. Restructuring obligations be uncertain, which can require us to use significant estimates.

132 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – – 133 969 600 692 600 900 500 900 400 692 250 400 500 800 500 500 484 277 (111) 2015 1,176 1,450 1,453 1,938 1,000 (1,000) 15,870 16,981 – ember 31, 2016 and 671 940 600 671 600 900 500 873 400 671 250 400 500 800 201 500 100 470 269 (117) (750) 2016 1,141 1,450 1,410 1,880 As at December 31 15,330 16,197 rate Interest ROGERS COMMUNICATIONS INC. 100 Floating amount Principal 2016 ANNUAL REPORT d for which RCCI was an unsecured guarantor as at Dec 2032 US 200 8.750% assets to whichtiming they and relate, whichrequired extent for are these of sites long-term is uncertain. restoration in nature. work The thatshomi willIn be 2016, we ultimately announced theventure. decision to shomi wind down is ourtherefore shomi equally responsible joint for owned our byliabilities portion of Rogers (most any and significantly remainingventure. contractual Shaw. video We have content We recognized a costs) are provisionremaining incurred related obligations to based by our on share the our offuture best the costs. estimate of the expected Other Other provisions include variousto legal be settled claims, within which five years. are expected ble Inc. which are unsecured obligations of RCI an Liabilities shomi Other Total Decommissioning 1 provisions 1 – – 1 for which RCP was an unsecured guarantor as at December 31, 2015. Senior debentures originally issued by Rogers Ca Senior debentures Senior notes 2026 US 500 2.900% Senior notes 2025 US 700 3.625% Senior notesSenior notes 2023 2024 US 850 600 4.100% 4.000% Senior notes 2023 US 500 3.000% Senior notesSenior notes 2021 2022 1,450 600 5.340% 4.000% Total long-term debt Senior notes 2020 900 4.700% Senior notes 2044 US 1,050 5.000% Deferred transaction costs and discounts Less current portion Senior notes 2019 500 5.380% Senior notes 2043 US 650 5.450% Senior notesSenior notes 2018 2019 US 1,400 6.800% 400 2.800% Senior notes 2043 US 500 4.500% Senior notes 2017 250 Floating Senior notes 2041 400 6.560% Senior notes 2017 500 3.000% Senior notes 2016 1,000 5.800% Senior notes 2040 800 6.110% Bank credit facilities US 150 Floating Senior notes 2039 500 6.680% (In millions of dollars, except interest rates) Due date Bank credit facilities Senior notes 2038 US 350 7.500% 1 NOTE 20: LONG-TERM DEBT EXPLANATORY INFORMATION (In millions of dollars) Decommissioning and restoration costs Cash outflows associated withgenerally our expected decommissioning to liabilities occur are at the decommissioning dates of the December 31, 2015AdditionsAdjustments to existing ReversalsAmounts usedDecember 31, 2016Current 40Long-term – 20 – 60 119 35 (6) 112 – – (7) 119 20 167 – – (13) 5 30 – 112 – – 17 134 3 33 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Each of the above senior notes and debentures are unsecured and, In 2015, we entered into a new bank credit facility (non-revolving as at December 31, 2016, were guaranteed by RCCI (2015 – RCP), credit facility) that provides access to $1.0 billion of non-revolving ranking equally with all of RCI’s other senior notes, debentures, borrowings, in addition to our existing $2.5 billion revolving credit bank credit facilities, and letter of credit facilities. We use derivatives facility (revolving credit facility). The non-revolving credit facility has to hedge the foreign exchange risk associated with the principal no scheduled principal repayments prior to maturity. The interest and interest components of all of our US dollar-denominated rate charged on borrowings under the non-revolving credit facility senior notes and debentures (see note 16). falls within the range of pricing indicated for our revolving credit facility. Effective January 1, 2016, as a result of the dissolution of RCP (see note 1), RCP is no longer a guarantor or co-obligor, as applicable, Our $2.5 billion revolving credit facility is available on a fully for the Company’s bank credit and letter of credit facilities, senior revolving basis until maturity and there are no scheduled notes and debentures, and derivative instruments. RCI continues to reductions prior to maturity. The interest rate charged on be the obligor in respect of each of these, while RCCI is either a borrowings from the revolving credit facility ranges from nil to co-obligor or guarantor for the senior notes and debentures and a 1.25% per annum over the bank prime rate or base rate, or 0.85% guarantor, as applicable, for the bank credit and letter of credit to 2.25% (1.00% to 2.25% prior to April 2014) over the bankers’ facilities and derivative instruments. acceptance rate or Inter-Bank Offered Rate. Effective April 1, 2016, we amended our $2.5 billion revolving credit WEIGHTED AVERAGE INTEREST RATE facility to, among other things, extend the maturity date from July Our effective weighted average rate on all debt and short-term 2019 to September 2020. At the same time, we also amended the borrowings, as at December 31, 2016, including the effect of all of $1.0 billion non-revolving credit facility to, among other things, the associated debt derivative instruments and the exercised bond extend the maturity date from April 2017 to April 2018. As a result forward, was 4.72% (2015 – 4.82%). of the repayments made during the year, we reduced the amount of borrowings available under our non-revolving credit facility from BANK CREDIT AND LETTER OF CREDIT FACILITIES $1.0 billion to $301 million. During the years ended December 31, 2016 and 2015, we had the following activity relating to our revolving and non-revolving bank As at December 31, 2016, we had $0.3 billion ($0.1 billion and credit facilities: US$0.2 billion) drawn under our revolving and non-revolving credit facilities (2015 – $0.5 billion). We have entered into debt derivatives Year ended December 31, 2016 related to the US dollar-denominated portion of these borrowings to convert all the interest and principal payment obligations to (In millions of dollars, Notional Exchange Notional Canadian dollars (see note 16) as at December 31, 2016. except exchange rates) (US$) rate (Cdn$) Issuance of long-term debt in As at December 31, 2016, we had available liquidity of $2.4 billion US dollars 2,188 1.31 2,877 (2015 – $3 billion) under our $2.9 billion of revolving and Issuance of long-term debt in non-revolving credit and letter of credit facilities (2015 – $3.6 Canadian dollars 1,140 billion), of which we had utilized approximately $0.1 billion (2015 – $0.1 billion) related to outstanding letters of credit and $0.4 billion Total long-term debt issued 4,017 of borrowings (2015 – $0.5 billion). Repayment of long-term debt in US dollars (2,038) 1.32 (2,686) SENIOR NOTES AND DEBENTURES Repayment of long-term debt in Interest is paid on our senior notes as follows: Canadian dollars (1,540) • semi-annually on all of our fixed rate senior notes and Total long-term debt repaid (4,226) debentures; and • quarterly on our floating rate senior notes.

Year ended December 31, 2015 We have the option to redeem each of our fixed rate senior notes and debentures, in whole or in part, at any time, if we pay the (In millions of dollars, Notional Exchange Notional premiums specified in the corresponding agreements. except exchange rates) (US$) rate (Cdn$) Issuance of long-term debt in Canadian dollars – – 6,025 Repayment of long-term debt in Canadian dollars – – (5,525)

134 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2 135 (Cdn$) and discounts Transaction costs in net income using the 1 1,338 13 (Cdn$) in fair value of derivatives are proceeds Total gross ROGERS COMMUNICATIONS INC. nominated borrowings under our issuance Discount/ premium at 2016 ANNUAL REPORT atives to convert all interest and principal payment obligations to bank creditpurposes. facilities These losses that werederivatives offset which were were by primarily the awere not change result used of in to our hedged fair debt offset value derivativesdollar-denominated the that of for foreign borrowings. exchange Both risk accounting and the related the to foreign offsetting these gain exchange in US recognized the loss change in financeIncome. costs on the Consolidated Statements of PRINCIPAL REPAYMENTS The table below shows thedebt principal repayments due on our inDecember long-term 31, 2016. each of the next(In five millions of years dollars) and thereafter2017 as at 2018201920202021ThereafterTotal long-term debtFOREIGN EXCHANGE We recognized $13 million in(2015 net foreign – exchange losses $11attributed in million 2016 to in the net US losses). dollar-de These losses were primarily 750 2,181 16,197 900 10,016 900 1,450 (Cdn$) s and discounts in the carrying value of the long-term debt, and recognized Notional amount (US$) amount Due date Interest rate Principal Notional amount Gross proceeds before transaction costs andTransaction discounts (see costs note and 29). discounts are included as deferred transaction cost effective interest method. There wererepayment. no The debtrepayments were settled associated at derivatives maturity (see note debt associated 16). derivatives with the for 2016 the 2015 2015 repayments March 15, 2015March 15, 2015Total for 2015 550 280 830 702 357 1,059 2016 repayments May 26, 2016 – 1,000 Maturity date (In millions of dollars) Concurrent with the 2016 and 2015 issuances, we entered into debt deriv 1 2 Repayment of senior notes and relatedThe derivative table settlements below provide anotes summary during of 2016 the and repayment 2015. of our senior Canadian dollars (see note 16). Date Issued Issuance of senior notes The table below provides a summary of the senior notes that we(In issued millions in of 2016 dollars, and except 2015. interest rates and discounts) 2015 issuances December 8, 2015December 8, 2015Total for 2015 US US 700 300 2025 2044 3.625% 5.000% 99.252% 101.700% 937 401 2016 issuances November 4, 2016 US 500 2026 2.900% 98.354% 671 17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TERMS AND CONDITIONS public debt securities are assigned investment-grade ratings by at As at December 31, 2016 and 2015, we were in compliance with all least two of three specified credit rating agencies. As at financial covenants, financial ratios, and all of the terms and December 31, 2016, these public debt securities were assigned an conditions of our long-term debt agreements. There were no investment-grade rating by each of the three specified credit rating financial leverage covenants in effect other than those under our agencies and, accordingly, these restrictions have been suspended bank credit and letter of credit facilities. as long as the investment-grade ratings are maintained. Our other senior notes do not have any of these restrictions, regardless of the The 8.75% debentures due in 2032 contain debt incurrence tests related credit ratings. The repayment dates of certain debt and restrictions on additional investments, sales of assets, and agreements can also be accelerated if there is a change in control payment of dividends, all of which are suspended in the event the of RCI.

NOTE 21: OTHER LONG-TERM LIABILITIES

As at December 31 (In millions of dollars) Note 2016 2015

Deferred pension liability 22 404 296 Supplemental executive retirement plan 22 62 56 Stock-based compensation 24 64 50 Other 32 53 Total other long-term liabilities 562 455

NOTE 22: POST-EMPLOYMENT BENEFITS

ACCOUNTING POLICY Post-employment benefits – Defined Benefit Pension Plan Consolidated Statements of Income in the periods the employees We offer contributory and non-contributory defined benefit provide the related services. pension plans that provide employees with a lifetime monthly pension on retirement. Post-employment benefits – Defined Contribution Pension Plan On July 1, 2016, we closed the Defined Benefit Pension Plan to We separately calculate our net obligation for each defined benefit new members and introduced a Defined Contribution Pension pension plan by estimating the amount of future benefits Plan. This change did not impact current members and any employees have earned in return for their service in the current and employee enrolled in the Defined Benefit Pension Plan will prior years and discounting those benefits to determine their continue to earn pension benefits and credited service in those present value. plans. We accrue our pension plan obligations as employees provide the We recognize a pension expense in relation to our contributions to services necessary to earn the pension. We use a discount rate the Defined Contribution Pension Plan when the employee based on market yields on high quality corporate bonds at the provides service to the Company. measurement date to calculate the accrued pension benefit obligation. Remeasurements of the accrued pension benefit Termination benefits obligation are determined at the end of the year and include We recognize termination benefits as an expense when we are actuarial gains and losses, returns on plan assets, and any change in committed to a formal detailed plan to terminate employment theeffectoftheassetceiling.Thesearerecognizedinother before the normal retirement date and it is not realistic that we will comprehensive income and retained earnings. withdraw it. The cost of pensions is actuarially determined and takes into account the following assumptions and methods for pension USE OF ESTIMATES AND JUDGMENTS accounting related to our defined benefit pension plans: ESTIMATES • expected rates of salary increases for calculating increases in Detailed below are the significant assumptions used in the actuarial future benefits; calculations used to determine the amount of the defined benefit • mortality rates for calculating the life expectancy of plan pension obligation and related expense. members; and • past service costs from plan amendments are immediately Significant estimates are involved in determining pension-related expensed in net income. balances. Actuarial estimates are based on projections of employees’ compensation levels at the time of retirement. We recognize our net pension expense for our defined benefit Maximum retirement benefits are primarily based on career pension plans and contributions to defined contribution plans as average earnings, subject to certain adjustments. The most recent an employee benefit expense in operating costs on the actuarial valuations were completed as at January 1, 2016.

136 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 137 uarial reports prepared in vide other tax-deferred savings the Statement of Investment ension plans, which includes the ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT Policies and Procedures and regulatory requirements; and monitoring compliance; respect of the administration of the pension plans; and pension plan funds. investment strategy following investment management of the plans; performing duties inactuarial and investment respect management services; of the plans, including audit, Statement of Investment Policies and Procedures; • specifying the kinds of investments that can be• held in using asset the allocation plans and• diversification strategies; purchasing and annuities from time to time. • reviewing and approving the audited financial statements of the The assets ofsegregated accounts the isolated defined fromand our benefit managed assets. pension TheyStatement of following are plans Investment Policies invested and are all Proceduresof with having held the adequate applicable objective funds to in payInvestment the regulations and benefits market promised return by risk and the is• plan. managed by: contracting the professional investment managers to execute the The Rogers Definedpension based Benefit on years Pension ofin retirement service Plan for and inflation. earnings, The provides withJuly plan no was 1, a closed increases 2016. to defined new Participationemployees members on in are the required planplan. was to In 2009 voluntary make and 2011, and regular weretirees. enrolled purchased Accordingly, contributions group the annuities current into for plan ourRogers members the then are primarily active employeessupplemental pension as plan is providedto to opposed provide certain benefits senior in executives excess to ofthe amounts that defined retirees. can be provided benefit(Canada)’s from maximum An pension pension limits. plan unfunded underWe also the sponsor smaller Income definedto benefit the Tax pension Rogers plans in Act Defined addition Employees Benefit Pension of Plan. ThePension Rogers Pension Plan Plan Communications for forbenefit Inc. Selkirk pension Employees and plans.Regulated are The Employees the closed of Pensionsimilar Rogers legacy Rogers Plan to defined Cable for theemployees Communications Certain from main Inc. the Federally pension is Cablethis plan plan business was closed were but to new eligible members only on to JulyIn federally participate; 1, 2016. addition regulated to thevarious defined defined benefit contribution pension plans plans, toof the certain we Company groups also and of provide to employees employeeschoose hired to after join. March Additionally, 31, 2016 wearrangements, who pro includingprogram a which Grouparrangements. are RRSP and accounted a forThe Pension Group as Committee TFSA administration of deferred of the our contribution registered Board p following of principal areas: Directors oversees• the overseeing the funding, administration,• selecting communication and and monitoring the performance of all• third parties proposing, considering and approving• amendments; proposing, considering and approving• reviewing amendments to management the and act 4 3 (4) (3) 19 (18) 2015 4.3% 3.0% 4.1% 3.0% 2015 expense in pension 5 4 (5) (4) 23 (21) CPM B Scale CPM B Scale 2016 CIA Private with CIA Private with Increase (decrease) 3.0% 4.3% 3.0% 4.1% 39 18 2016 (41) (18) 167 (146) 2015 obligation CPM B Scale CPM B Scale 48 18 (49) (18) 199 CIA Private with CIA Private with (174) 2016 in accrued benefit Increase (decrease) increase increase Rate of compensation Mortality rate Discount rate Rate of compensation Mortality rate Discount rate Impact of 1 year increase Impact of 1 year decrease Impact of 0.5% increase Impact of 0.25% increase Impact of 0.5% decrease Impact of 0.25% decrease assumptions: increase Mortality rate (In millions of dollars) We sponsorpension a arrangements number forand employees, of including defined contributory definednon-pension benefit post-retirement contributions and benefits. non-contributory We plans.supplemental pension also benefits provide to We certain unfunded executives. do not provide any EXPLANATORY INFORMATION Discount rate Rate of future compensation Principal actuarial assumptions Pension expense Sensitivity of key assumptions In the sensitivity analysisbenefit shown obligation below, for we determine ourused the to funded defined calculate plans the usingthe defined the Consolidated benefit same obligation Statements we method sensitivity of recognize by Financial on changing Position. oneconstant. We assumption This calculate while leads holdingchange to the in others defined limitations benefitthat in obligation shown the will in likely analysisassumption will be the as change different at table, the from correlated. a since actual time, and it that some is assumptions likely are that more than one Weighted average of significant Defined benefit obligation NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The funded pension plans are registered with the Office of the Years ended December 31 Superintendent of Financial Institutions and are subject to the (In millions of dollars) 2016 2015 Federal Pension Benefits Standards Act. The two defined contribution plans are registered with the Accrued benefit obligations, beginning Commission of Ontario, subject to the Ontario Pension Benefits of year 1,713 1,592 Act. The plans are also registered with the Canada Revenue Service cost 119 98 Agency and are subject to the Income Tax Act (Canada). The Interest cost 75 65 benefits provided under the plans and the contributions to the Benefits paid (70) (46) plans are funded and administered in accordance with all Contributions by employees 35 32 applicable legislation and regulations. Remeasurements, recognized in other comprehensive loss (income) and The defined benefit pension plans are subject to certain risks equity 134 (28) related to contribution increases, inadequate plan surplus, unfunded obligations, and market rates of return, which we Accrued benefit obligations, end of mitigate through the governance described above. Any significant year 2,006 1,713 changes to these items may affect our future cash flows. Thetablebelowshowstheeffectoftheassetceiling. The table below sets out the estimated present value of accrued plan benefits and the estimated market value of the net assets Years ended December 31 available to provide these benefits for our funded plans. (In millions of dollars) 2016 2015 As at December 31 Asset ceiling, beginning of year (3) (7) (In millions of dollars) 2016 2015 Interest – (1) Remeasurements, change in asset Plan assets, at fair value 1,619 1,432 ceiling (excluding interest income) 3 5 Accrued benefit obligations (2,006) (1,713) Asset ceiling, end of year – (3) Deficiency of plan assets over accrued benefit obligations (387) (281) Plan assets are comprised mainly of pooled funds that invest in Effect of asset ceiling limit – (3) common stocks and bonds that are traded in an active market. The Net deferred pension liability (387) (284) table below shows the fair value of the total pension plan assets by major category. Consists of: Deferred pension asset 17 12 As at December 31 Deferred pension liability (404) (296) (In millions of dollars) 2016 2015 Net deferred pension liability (387) (284) Equity securities 990 873 The table below shows our pension fund assets. Debt securities 625 554 Other – cash 4 5 Years ended December 31 Total fair value of plan assets 1,619 1,432 (In millions of dollars) 2016 2015 The table below shows our net pension expense. Net interest cost Plan assets, beginning of year 1,432 1,285 is included in finance costs and other pension expenses are Interest income 68 56 included in salaries and benefits expense in operating costs on the Remeasurements, return (loss) on plan Consolidated Statements of Income. assets recognized in other comprehensive (loss) income and Years ended December 31 equity 32 (10) Contributions by employees 35 32 (In millions of dollars) 2016 2015 Contributions by employer 125 118 Plan cost: Benefits paid (70) (46) Service cost 119 98 Administrative expenses paid from Net interest cost 7 9 plan assets (3) (3) Net pension expense 126 107 Plan assets, end of year 1,619 1,432 Administrative expense 3 3

The table below shows the accrued benefit obligations arising from Total pension cost recognized in net funded obligations. income 129 110

138 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 32 139 118 150 2015 allocation percentage Target asset 35 125 160 0.3% 0% to 2% 2016 2015 19.7%41.3% 7% to 17% 38.7% 33% to 48% 30% to 50% 100.0% Years ended December 31 0.3% 2016 12.4% 48.8% 38.5% ROGERS COMMUNICATIONS INC. 100.0% Allocation of plan assets 2016 ANNUAL REPORT Domestic International Total (In millions of dollars) We estimate our 2017 employerto contributions be to our $144 funded million. plans the The 2017 actual actuarial value funding willdefined valuations. depend The benefit on average obligation the duration results as(2015 of – of the at 19 years). December 31, 2016Actual is net 19 return years on$44 million). plan assets was $97 millionWe in have 2016 (2015 recognizedincome – a and retained cumulative earnings of loss2016 $380 (2015 in – million $306 as million). other at December comprehensive 31, ALLOCATION OF PLAN ASSETS Plan assets consist primarily ofstocks pooled and funds bonds. that The invest pooled in fundssecurities common have investments in and our equity $2 million corporate (2015 – $3 bonds. million)our of own plan securities assets under As are our indirectly defined invested benefit a in plan. We make result, contributions to approximately themembers plans and to secure invest theranges in benefits of established permitted plan byactuarial investments assumptions on using our an annual the basis. Pension target Committee,The table which below shows the reviews actual contributions to the plans. Equity securities: Debt securities Other – cash Employer contribution Total contribution Employee contribution – 3 9 2 4 (2) (3) 56 65 45 22 56 (56) (10) (17) 2015 2015 2015 – 5 7 2 3 2 (3) 56 75 32 62 (68) (69) (65) (99) 2016 2016 2016 Years ended December 31 Years ended December 31 Years ended December 31 of year salaries and benefits expense costs interest income) costs comprehensive (income) loss comprehensive (loss) income and equity Net interest cost, a component offinance the costs plan and cost is above outlined is as included follows: in (In millions of dollars) (In millions of dollars) (In millions of dollars) Accrued benefit obligation, beginning Pension expense included in employee Interest income on plan assets Interest cost on plan obligation Netinterestcostrecognizedinfinance Return (loss) on plan assets (excluding Change in financial assumptions Change in demographic assumptions Netinterestcostrecognizedinfinance Effect of experience adjustments The remeasurement recognized in other comprehensivedetermined income, as is follows: Change in asset ceiling Remeasurement recognized in other Benefits paid Remeasurement recognized in other We also providecertain executives. supplemental The unfunded tableobligations, below pension pension includes expense benefits ourbenefits, included net accrued in interest to cost benefit employee and other salaries comprehensive income. and Accrued benefit obligation, end of year We alsoexpense have of $3 million defined inin 2016 employee contribution (2015 salaries – and $3 benefits plans million), expense. which is with included total pension NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 23: SHAREHOLDERS’ EQUITY

CAPITAL STOCK

Number of shares Share class authorized for issue Features Voting rights Preferred shares 400 million • Without par value •None • Issuable in series, with rights and terms of each series to be fixed by our Board of Directors prior to the issue of any series Class A Voting shares 112,474,388 • Without par value • Each share entitled to •Each share can be 50 votes converted into one Class B Non-Voting share Class B Non-Voting shares 1.4 billion • Without par value • None

RCI’s Articles of Continuance under the Company Act (British The holders of Class A shares are entitled to receive dividends at Columbia) impose restrictions on the transfer, voting, and issue of the rate of up to five cents per share but only after dividends at the the Class A Voting and Class B Non-Voting shares to ensure that rate of five cents per share have been paid or set aside on the we remain qualified to hold or obtain licences required to carry on Class B shares. Class A Voting and Class B Non-Voting shares certain of our business undertakings in Canada. We are authorized therefore participate equally in dividends above $0.05 cents per to refuse to register transfers of any of our shares to any person share. who is not a Canadian in order to ensure that Rogers remains On January 26, 2017, the Board of Directors declared a quarterly qualifiedtoholdthelicencesreferredtoabove. dividend of $0.48 per Class A Voting share and Class B Non-Voting share, to be paid on April 3, 2017, to shareholders of record on DIVIDENDS March 13, 2017. We declared and paid the following dividends on our outstanding Class A Voting and Class B Non-Voting shares:

Dividend per Date declared Date paid share (dollars) January 27, 2016 April 1, 2016 0.48 April 18, 2016 July 4, 2016 0.48 August 11, 2016 October 3, 2016 0.48 October 20, 2016 January 3, 2017 0.48 1.92

January 28, 2015 April 1, 2015 0.48 April 21, 2015 July 2, 2015 0.48 August 13, 2015 October 1, 2015 0.48 October 22, 2015 January 4, 2016 0.48 1.92

NOTE 24: STOCK-BASED COMPENSATION

ACCOUNTING POLICY Stock option plans as liabilities and carry them at their fair value, determined using the Cash-settled share appreciation rights (SARs) are attached to all Black-Scholes option pricing model or trinomial option pricing stock options granted under our employee stock option plan. This models, depending on the nature of the share-based award. We feature allows the option holder to choose to receive a cash remeasure the fair value of the liability each period and amortize it payment equal to the intrinsic value of the option (the amount by to operating costs using graded vesting, either over the vesting which the market price of the Class B Non-Voting share exceeds periodortothedateanemployeeiseligibletoretire(whicheveris the exercise price of the option on the exercise date) instead of shorter). exercising the option to acquire Class B Non-Voting shares. We classify all outstanding stock options with cash settlement features

140 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 55 19 40 18 141 (22) 2015 61 32 45 17 (33) 2016 Years ended December 31 abilities, which is the difference ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT receipt expense between the strike price ofprice the share-based of awards and the the trading based RCI awards, Class as B at$56 Non-Voting December million). shares 31, 2016 for was all $61 vestedWe million share- (2015 paid – $69stock million in options, 2016 RSUs,settlement (2015 feature, and representing – a $73 weighted DSUs averagethe million) share date upon price of to on exercise exercise of holders $51.70 of (2015 using – $46.63). the cash As at December 31, 2016,fair we value had of a totalbased $189 liability million compensation, recognized (2015 at including its The – stock current $157 portion options, of million) this RSUs,is is related and $125 included to million DSUs. (2015 in stock- – accountsterm $107 million) payable and portion and of accruedincluded liabilities. in this other The long-term is liabilities long- (see $64 note 21). millionThe (2015 total intrinsic – value $50 of vested million) li and is Equity derivative effect, net of interest Total stock-based compensation Deferred share units Restricted share units STOCK OPTIONS Options toone-for-one purchase basis may be our granted toofficers our employees, Class directors, and by BCompensation the Non-Voting Committee.authorized shares Board under There on variousseven of plans, to a are and ten Directors years. eachover The option 65 vesting or has period four is aCommittee million generally term our may graded years; adjust vesting of options theexercise Management however vesting price terms the is onNon-Voting the shares, equal determined Management grant to as date. thegrant the date The five-day Compensation as average fair quoted before on market the the TSX. value ofPerformance the options Class B We granted 420,035 performance-based496,200) options to in certain 2016 key (2015 executives.basis These – over options four vest years on providedmet a that graded certain on targeted or stock after priceswe each are anniversary had date. Asoutstanding. 2,268,102 at December 31, performance 2016, options (2015 – 3,688,612) EXPLANATORY INFORMATION The table below isexpense, a which summary of isexpense. our included stock-based in compensation employee salaries and benefits (In millions of dollars) Stock options 50 1.5 n/a 1.1% 4.5% 3.9% 2015 22.0% 2.4 years 9.9 years $4.65 50 1.5 n/a 0.5% 3.7% 3.9% 2016 21.3% 2.4 years 9.9 years $6.20 Years ended December 31 on the actual trading statistics Volatility has been estimatedof based our Class B Non-Voting shares. ESTIMATES Significant management estimates arevalue used of stock to options, determine RSUs, theweighted and DSUs. average fair The fair table value belowand shows of the stock 2015, options and grantedBlack-Scholes during the 2016 model principal assumptionstrinomial for option used pricing non-performance-based models in fordetermine applying their performance-based options fair options the value to at and grant date. USE OF ESTIMATES AND JUDGMENTS Employee share accumulation plan Employees voluntarily participate in thecontributing share accumulation a plan specified by percentagematch of their employee regular earnings.recognize contributions our We contributions as up a compensationwe expense to in the make year aaccumulation plan them. certain are included in amount Expenses operating costs. and relating to the employee share Restricted share unit (RSU) and deferredWe share recognize unit outstanding (DSU) plans RSUs andthe DSUs as liabilities liabilities, and measuring values, compensation costs which based areNon-Voting on shares, the based and recognizing awards’ on themcosts fair as over the charges the to vesting operating market periodchanges after of price it the has awards. been of If grantedrecognize an and the before award’s the the fair exercise Class resulting value date,operating we B changes costs in inpayment the amount the liability is year established asthe the as payment amount a of is change established the charge as occurs. vesting of to the date. exercise For date. For RSUs, DSUs, the Weighted average expected life Weighted average fair value Risk-free interest rate Dividend yield Volatility of Class B Non-Voting shares Weighted average time to vest Weighted average time to expiry Employee exit rate Suboptimal exercise factor Lattice steps NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Summary of stock options The table below is a summary of the stock option plans, including performance options.

Year ended December 31, 2016 Year ended December 31, 2015 Weighted average Weighted average (In number of units, except prices) Number of options exercise price Number of options exercise price Outstanding, beginning of year 4,873,940 $41.47 5,759,786 $38.71 Granted 1,054,530 $49.95 1,289,430 $44.77 Exercised (1,811,727) $40.45 (1,978,149) $35.40 Forfeited (384,219) $47.80 (197,127) $43.49 Outstanding, end of year 3,732,524 $43.70 4,873,940 $41.47 Exercisable, end of year 1,770,784 $40.39 2,457,005 $38.57

The table below shows the range of exercise prices, the weighted average exercise price and the weighted average remaining contractual life as at December 31, 2016.

Options outstanding Options exercisable Weighted average Number remaining contractual Weighted average Number Weighted average Range of exercise prices outstanding life (years) exercise price exercisable exercise price $34.29 – $34.99 510,845 0.92 $34.38 510,845 $34.38 $35.00 – $39.99 452,075 2.13 $37.96 452,075 $37.96 $40.00 – $44.99 1,541,154 4.87 $43.99 496,637 $43.78 $45.00 – $49.96 1,228,450 7.05 $49.33 311,227 $48.36 3,732,524 4.71 $43.70 1,770,784 $40.39

Unrecognized stock-based compensation expense as at December 31, 2016 related to stock-option plans was $3 million (2015 – $7 million), and will be recognized in net income over the next four years as the options vest.

RESTRICTED SHARE UNITS Years ended December 31 The RSU plan allows employees, directors, and officers to (In number of units) 2016 2015 participate in the growth and development of Rogers. Under the terms of the plan, RSUs are issued to the participant and the units Outstanding, beginning of year 2,484,405 2,765,255 issued vest over a period of up to three years from the grant date. Granted and reinvested dividends 763,364 798,074 Exercised (826,918) (822,972) On the vesting date, we will redeem all of the participants’ RSUs in Forfeited (183,766) (255,952) cash or by issuing one Class B Non-Voting share for each RSU. We have reserved 4,000,000 Class B Non-Voting shares for issue under Outstanding, end of year 2,237,085 2,484,405 this plan. Unrecognized stock-based compensation expense as at Performance RSUs December 31, 2016 related to these RSUs was $35 million (2015 – We granted 98,889 performance-based RSUs in 2016 (2015 – $41 million) and will be recognized in net income over the next 114,979) to certain key executives. The number of units that vest three years as the RSUs vest. and will be paid three years from the grant date will be within 50% to 150% of the initial number granted based upon the DEFERRED SHARE UNITS achievement of certain annual and cumulative three-year The DSU plan allows directors, certain key executives, and other non-market targets. senior management to elect to receive certain types of compensation in DSUs. Under the terms of the plan, DSUs are Summary of RSUs issued to the participant and the units issued cliff vest over a period The table below is a summary of the RSUs outstanding, including of up to three years from the grant date. performance RSUs.

142 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 143 the employee’s contribution icity for cash consideration of count rates, attrition rates, and Us vest. All other DSUs are fully ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT terminal growthanalyses. rates for performing discounted cash flow USE OF ESTIMATES AND JUDGMENTS ESTIMATES We use estimates toand determine the liabilities fairincluding assumed, values of information using assets acquired include from the key assumptions financial such best as markets. dis available These information, estimates EXPLANATORY INFORMATION We didcombinations not in make 2016.which any we We describe acquisitions below. made Goodwillstore that recognized several in acquisitions the resulted acquisitions 2015recognized dealer was in in 2015, on business deductibleGoodwill all for represents the other tax expectedbusiness acquired acquisitions operational purposes; and/or intangible synergies assets was goodwill with thatrecognized do separately. the not not qualify to be tax-deductible. 2015 ACQUISITIONS Mobilicity In Julyoutstanding 2015, common shares we of Mobil completed the acquisition of 100% of the EMPLOYEE SHARE ACCUMULATION PLAN Participation in the planto is 10% voluntary. of Employees their can regular contributean earnings annual up through maximum payroll of $25,000). deductionsour The (up plan to Class administrator B purchases Non-Votingmarket on shares behalf on of a themake a employee. monthly contribution At of basis the 25% onthat end to 50% of the of each month, open month,purchase we and the additionalrecognize plan shares our contributions administrator made on as a uses compensation behalf expense. thisCompensation of amount the expenseaccumulation to plan employee. was $41 million related We in 2016 (2015 – to $38 million). EQUITY DERIVATIVES theWe employee have entered into equitystock-based share derivatives compensation to expense hedge (see a notea portion 16) and of $33 recognized our millioncompensation expense for gain these derivatives. (2015 – $22 million gain) in stock-based $443 million.services Mobilicity to Canadians in provided Toronto,Vancouver Ottawa, to wireless Calgary, its Edmonton, prepaid and telecommunication subscriberslicences. and owned AWS-1 spectrum (2015 – $26 million) andnext will three be years recognized as in thevested. net executive DS income over the 2015 826,891 (257,677) (122,512) 1,324,169 1,770,871 2016 972,894 (132,620) (214,687) 1,770,871 2,396,458 Years ended December 31 that provide guidance on the sset for the purposes of measuring Income Taxes In November 2016,clarifications to the IAS IFRS 12 Interpretations Committee issued CHANGE IN ACCOUNTING POLICY deferred tax (see note 2(d)). Asretrospectively a changed result of our the clarifications,the related we measurement have of accounting the gain policy, on acquisition including of Mobilicity in 2015. of an indefinite-life intangible a NOTE 25: BUSINESS COMBINATIONS ACCOUNTING POLICY We accountmethod for of accounting. business Onlycontrol acquisitions combinations over that the result acquired using in businessescombinations. our are the We accounted gaining for calculate as the acquisition business fairas value the of sum the of consideration paid we the transferred fair and value the at equitywe the interests assumed date we to of issued, acquire the less acquisition subsidiary. the of liabilities the assets We measuretransferred goodwill less as theassets the net fair acquired recognizedmeasured value and amount at fair of of value liabilities asis the the of negative, assumed, the a identifiable consideration acquisition gain date. which onincome. When acquisition the is are excess recognized immediately generally in net We expense the transactionwe incur costs them. associated with acquisitions as Summary of DSUs The table below isperformance a DSUs. summary of the DSUs outstanding, including Performance DSUs We granted 328,206443,139) performance-based to DSUs certain in keyand 2016 will executives. be (2015 The paid – number threeto years of from units the 150% that grant dateachievement vest will of be within of 50% non-market the targets. certain initial number annual granted and based cumulative upon three-year the Outstanding, beginning of year Granted and reinvested dividends Exercised Forfeited Outstanding, end of year Unrecognized stock-basedDecember 31, compensation 2016 related expense to these as DSUs was at $30 million (In number of units) application of tax rates related to the expected method of recovery NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Subsequent to the acquisition of Mobilicity, Rogers and WIND The table below shows the incremental revenue and net loss undertook an AWS-1 spectrum licence asset exchange in Southern before taxes for the Mobilicity acquisition since the date of Ontario to create an additional 10 MHz of contiguous, paired acquisition to December 31, 2015. AWS-1 spectrum for Rogers. In addition, Rogers transferred certain non-contiguous AWS-1 spectrum licences previously held by (In millions of dollars) Mobilicity Mobilicity in British Columbia, Alberta, and various regions in Incremental revenue 30 OntariotoWINDfornominalcashproceeds. Net loss before taxes 1 17 Prior to the date of acquisition, Mobilicity was protected under the 1 Includes acquisition transaction costs of $16 million. Companies’ Creditors Arrangement Act and the acquisition date fair value of the net identifiable assets exceeded the consideration paid, resulting in a gain on acquisition of $74 million (see note PRO FORMA DISCLOSURES 2(d)). This acquisition provided an enhanced spectrum licence If the Mobilicity acquisition had occurred on January 1, 2015, we position and tax losses to the Company. estimate our incremental revenue from the acquisition would have been $59 million and income before income tax expense would have decreased by $17 million for the year ended December 31, Other 2015. In 2015, we completed other individually immaterial acquisitions for total cash consideration of $33 million. The pro forma disclosures are based on estimates and assumptions we believe are reasonable. The information provided is not Final fair values of assets acquired and liabilities assumed necessarily an indication of what our consolidated financial results The table below summarizes the final fair values of the assets will be in the future. acquired and liabilities assumed for all the acquisitions described above.

(In millions of dollars) Mobilicity Other Total Fair value of consideration transferred 443 33 476 Net identifiable asset or liability: Current assets 5 3 8 Property, plant and equipment 11 6 17 Spectrum licences 458 – 458 Customer relationships 1 –1919 Deferred tax assets 175 – 175 Current liabilities (31) (2) (33) Other liabilities (8) – (8) Deferred tax liabilities 2 (93) (1) (94) Fair value of net identifiable assets acquired and liabilities assumed 517 25 542 (Gain on acquisition) goodwill 2 (74) 8 Acquisition transaction costs 16 – 16

1 Customer relationships are amortized over a period of seven years. 2 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See note 2(d).

NOTE 26: RELATED PARTY TRANSACTIONS

CONTROLLING SHAREHOLDER and are subject to the terms and conditions of formal agreements Our ultimate controlling shareholder is the Rogers Control Trust approved by the Audit and Risk Committee. The totals received or (the Trust), which holds voting control of RCI. The beneficiaries of paid were less than $1 million for each of 2016 and 2015. the Trust are members of the Rogers family. Certain directors of RCI represent the Rogers family. TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL Key management personnel include the directors and our most We entered into certain transactions with private Rogers family senior corporate officers, who are primarily responsible for holding companies controlled by the Trust. These transactions planning, directing, and controlling our business activities. were recognized at the amount agreed to by the related parties

144 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 56 30 145 115 170 2015 2015 32 70 177 215 2016 2016 As at December 31 Years ended December 31 ROGERS COMMUNICATIONS INC. idiaries, joint arrangements, and 2016 ANNUAL REPORT liabilities PURCHASES AND DEVELOPMENT OF ASSETS As part ofassets, transactions we involving may purchaseslosses be and required incurred development to as of warranties, pay a loss counterparties result for orregulations of costs damages (including and breaches to ofcounterparties. tax property, representations legislation), changes and or in laws litigation and against the (In millions of dollars) SALES OF SERVICES As part ofrequired transactions to involvingbreaches make sales of payments representations of andregulations to services, warranties, (including we changes counterparties in maycounterparties. tax as laws be and legislation), a or result litigation of against the SUBSIDIARIES, ASSOCIATES, AND JOINT ARRANGEMENTS We haveDecember the 31, 2016 and following 2015: • material Rogers Communications operating Canada Inc.• (see subsidiaries note Rogers 1); Media and Inc. as at We havesubsidiaries 100% ownership arereporting interest incorporated period for in annual in financial statements these reporting. Canada subsidiaries.When and necessary, adjustments Our are have made topolicies the conform of the the accounting same subsidiaries torestrictions those on of RCI. the There abilityassociates are to no of transfer significant funds subs toloans Rogers as or cash advances, dividends or subjectwhere to applicable. repay to the approval of otherWe shareholders carriedassociates out and the jointour arrangements. following subsidiaries Transactions have been between business eliminated ondisclosed us consolidation in transactions and and this are note. not with our (In millions of dollars) In addition, duringannounced a strategic the change across yearthat our publishing we ended business such will Decembermobile focus applications. 31, on As 2016,titles digital a we result, content to we through$5 have million. the the sold Internet select aforementioned and publishing printing services company for Accounts payable and accrued Accounts receivable Revenue Purchases Outstanding balances at year-end aresettled unsecured, in interest-free, cash. and 3 3 20 36 13 2015 2015 3 Outstanding balance as at 2016 December 31 5 47 30 12 2016 31 2015 Years ended December 31 27 erty, environmental liabilities, unsecured, interest-free, and Years ended 2016 alaries and benefits as follows: December 31 law firm that provides a portion mmarizes related party activity for s incurred as a result of breaches irectors of RCI, which include: 1 Company; and Company pays commissions for insurance coveragerelated (ceased party effective as April a 2015). of our legal services; commission paid on premiums for insurance coverage benefits Stock-based compensation does not include theClass effect B of Non-Voting shares changes or in equity fair derivatives. value of RCI Total compensation BUSINESS SALE AND BUSINESS COMBINATION AGREEMENTS As part ofassets, or transactions other business involving combinations,counterparties we business for may costs be dispositions, and required to losse sales pay of We had the following2015 as guarantees part as of our at normal course December of business: 31, 2016 and the business transactions described above. NOTE 27: GUARANTEES of representationsinfringement, loss and or damages to warranties, prop intellectual property right due for payment intransaction. The cash following within table su one month from the date of the (In millions of dollars) changes in laws and regulations (includingagainst tax legislation), the litigation counterparties,business, or reassessments contingent of previous liabilitiesthat tax carries filings of on of the the business. corporation a disposed We recognize these transactionsrelated at parties, the amount which agreedCommittee. are The to amounts by also owing the reviewed are by the Audit and Risk • the chairman of a company that provides printing• services to the the chairman and chief executive officer of a firm to which the • the non-executive chairman of a Transactions We have entered into businesspartners transactions or with senior companies officers whose are D 1 Compensation The compensation expenseservices for was included key in employee s management for employee (In millions of dollars) Printing, legal services, and Salaries and other short-term employee Post-employment benefits Stock-based compensation NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

INDEMNIFICATIONS No amount has been accrued in the Consolidated Statements of We indemnify our directors, officers, and employees against claims Financial Position relating to these types of indemnifications or reasonably incurred and resulting from the performance of their guarantees as at December 31, 2016 or 2015. Historically, we have services to Rogers. We have liability insurance for our directors and not made any significant payments under these indemnifications or officers and those of our subsidiaries. guarantees.

NOTE 28: COMMITMENTS AND CONTINGENT LIABILITIES

ACCOUNTING POLICY USE OF ESTIMATES AND JUDGMENTS Contingent liabilities are liabilities of uncertain timing or amount JUDGMENTS and are not recognized until we have a present obligation as a We are exposed to possible losses related to various claims and resultofapastevent,itisprobablethatwewillexperiencean lawsuits against us for which the outcome is not yet known. We outflow of resources embodying economic benefits to settle the therefore make significant judgments in determining the obligation, and a reliable estimate can be made of the amount of probability of loss when we assess contingent liabilities. the obligation. We disclose our contingent liabilities unless the possibility of an outflow of resources in settlement is remote.

EXPLANATORY INFORMATION COMMITMENTS The table and paragraphs below show the future minimum payments for our contractual commitments that are not recognized as liabilities as at December 31, 2016:

Less than After (In millions of dollars) 1 Year 1-3 Years 4-5 Years 5Years Total Operating leases 159 235 109 94 597 Player contracts 1 161 165 18 – 344 Purchase obligations 2 422 359 153 105 1,039 Program rights 3 510 1,083 1,067 2,421 5,081 Total commitments 1,252 1,842 1,347 2,620 7,061

1 Player contracts are Toronto Blue Jays players’ salary contracts into which we have entered and are contractually obligated to pay. 2 Purchase obligations are the contractual obligations under service, product, and handset contracts to which we have committed for at least the next five years. 3 Program rights are the agreements into which we have entered to acquire broadcasting rights for sports broadcasting programs and films for periods in excess of one year at contract inception. Operating leases are for network sites, office premises, and retail In 2007, the Saskatchewan Court granted the plaintiffs’ application outlets across the country. The majority of the lease terms range to have the proceeding certified as a national, “opt-in” class action from five to fifteen years. Rent expense for 2016 was $223 million where affected customers outside Saskatchewan must take specific (2015 – $219 million). steps to participate in the proceeding. In 2008, our motion to stay the proceeding based on the arbitration clause in our wireless In addition, as at December 31, 2016, our contractual service agreements was granted. The Saskatchewan Court directed commitments were $241 million for the acquisition of property, that its order, in respect of the certification of the action, would plant and equipment and $233 million for the acquisition of exclude customers who are bound by an arbitration clause from intangible assets. the class of plaintiffs. In addition, as at December 31, 2016, our contractual In 2009, counsel for the plaintiffs began a second proceeding commitments related to all of our associates and joint ventures under the Class Actions Act (Saskatchewan) asserting the same were $524 million, which are not included in the above table. claims as the original proceeding. If successful, this second class action would be an “opt-out” class proceeding. This second CONTINGENT LIABILITIES proceeding was ordered conditionally stayed in 2009 on the basis We have the following contingent liabilities as at December 31, that it was an abuse of process. 2016: In 2013, the plaintiffs applied for an order to be allowed to proceed System Access Fee – Saskatchewan with the second system access fee class action. However, the court In 2004, a class action was commenced against providers of wireless denied this application and the second action remains communications in Canada under the Class Actions Act conditionally stayed. (Saskatchewan). The class action relates to the system access fee At the time the Saskatchewan class action was commenced in wireless carriers charge to some of their customers. The plaintiffs are 2004, corresponding claims were filed in multiple jurisdictions seeking unspecified damages and punitive damages, which would across Canada, although the plaintiffs took no active steps. The effectively be a reimbursement of all system access fees collected. appeal courts in several provinces dismissed the corresponding

146 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (25) 147 2015 2015 1,338 6,025 7,338 (1,059) (5,525) (6,584) – 671 2016 2016 4,017 4,688 (5,226) (1,000) (4,226) Years ended December 31 Years ended December 31 20 20 20 20 Note Note ROGERS COMMUNICATIONS INC. rrently known to us, we believe it hat we have adequately provided ssment of interest and penalties. 2016 ANNUAL REPORT facilities facilities debt long-term debt Borrowings under bank credit Discount on bank credit facilities Repayment of bank credit Total repayment of long-term The following two tablesand provide repayment of details long-term on debt. the net cash issuance Total proceeds on issuance of Income Taxes We provide for incomecurrently taxes based available on and allthese of believe the items. t information that Thehowever, is requires calculation significant judgment oftax (see applicable rules note and 12) taxes regulations. in Ourcould interpreting in materially tax change filings many the are amount subjecttax cases, of to current audits, and assets deferred which income circumstances, and result in the liabilities asse and provisions,Outcome and of Proceedings could,The in outcome certain including of the allresolution the matters that proceedings described includespossible and for above, the us to claims uncertainties predict isto the against of result subject or the magnitude litigation. us, of toprocess. various the It Based claims due on factors is future information not cu is and not uncertaintiesproceedings probable involved and claims, that in individually oradverse the the in total, ultimate legal effect will havecondition. resolution a on material If of it our becomesclaims any against business, probable us, of we that will financial recognize wewhich these a the will results, provision change during be in the or probability period heldour occurs, in liable which financial could for Consolidated beStatements material of to Financial Statements Position. of Income or Consolidated Net issuance of senior notes Net repayment of senior notes (In millions of dollars) (In millions of dollars) 33 (66) (23) (61) 754 (185) (302) 2015 2015 7,338 (6,584) 3 (538) 2016 14 4,688 (18) (12) (5,226) 182 (141) 2016 20 Years ended December 31 Years ended December 31 Note ncurred by long-term users of s. The class action relates to the items debt term debt (In millions of dollars) (In millions of dollars) Accounts receivable Inventories Unearned revenue Other current assets Accounts payable and accrued liabilities Total change in non-cash working capital The following table summarizesterm net debt. issuance (repayment) of long- CASH PROVIDED BY FINANCING ACTIVITIES CHANGE IN NON-CASH OPERATING WORKING CAPITAL ITEMS NOTE 29: SUPPLEMENTAL CASH FLOW INFORMATION Cellular Devices In July 2013, a class actionproviders was launched in British Columbia ofmanufacturers against of wireless device wirelessalleged adverse health communicationscellular devices. effects The i inand plaintiffs punitive are damages, effectively seeking Canadathe equal unspecified portion to damages the of and reasonably reimbursement revenue be of attributed the toWe the defendants have sale not have recognized of a cellular liability received phones for this in that contingency. Canada. can 911 Fee In June 2008, a classproviders action of wireless was communications launched services in inallegations Saskatchewan Canada. against It of involves breachadvertising, among of other things, contract, inbeen relation to misrepresentation, charged the 911 by and feeproviders us that false had and in thedamages Canada. other and wireless restitution. Thecertifying telecommunication The plaintiffs plaintiffs the intendSaskatchewan. are to proceeding We seek seekingcontingency. an have unspecified as order not a recognized national a class liability for action this in claims as an abuse of process.Saskatchewan The have claims now in been all dismissed provincesnot other or recognized than discontinued. a We liability have for this contingency. Proceeds on issuance of long-term Repayment of long-term debt Net (repayment) issuance of long- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes net cash (payments) proceeds on debt derivatives and forward contracts. Years ended December 31 (In millions of dollars) Note 2016 2015 Years ended December 31 Payments on termination of (In millions of dollars) Note 2016 2015 US$550 million debt derivatives 20 – (596) Proceeds on debt derivatives 11,167 1,059 Payments on termination of Payments on debt derivatives US$280 million debt and forward contracts (11,212) (930) derivatives 20 – (309) Net (payment) proceeds on Payments on termination of settlement of debt derivatives forward contracts 16 (53) (25) and forward contracts 16 (45) 129 Payments on debt derivatives related to credit facility Thefollowingtwotablesprovidedetailsonthegrossproceeds borrowings 16 (11,159) – (payments) on debt derivatives and forward contracts. Total gross payments on debt derivatives and forward Years ended December 31 contracts (11,212) (930) (In millions of dollars) Note 2016 2015 Proceeds on termination of US$550 million debt derivatives 20 – 702 Proceeds on termination of US$280 million debt derivatives 20 – 357 Proceeds on debt derivatives related to credit facility borrowings 16 11,167 – Total gross proceeds on debt derivatives 11,167 1,059

148 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT NOTES 149 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT Notes Glossary of selected industry terms and helpful links

3G (Third Generation Wireless): The third Broadband: Communications services which FTTH (Fibre-to-the-Home): Represents fibre optic generation of standards and allows for the high-speed transmission of voice, cable that reaches the boundary of the living space, technology. A key aim of standards was to data, and video simultaneously at rates of 1.544 such as a box on the outside wall of a home. enable data speeds above Mbps and above. 384 Kbps. 3G networks enable network operators GSM (Global System for Mobile): A TDMA- to offer users a wider range of more advanced BYOD (Bring Your Own Device): Refers to the based technology and a member of the “second services while achieving greater network capacity action that customers are able to sign up for generation” (2G) family of mobile protocols that is through improved spectral efficiency. Advanced wireless services on a personally purchased device deployed widely around the world, especially at the services include video and multimedia messaging as opposed to the traditional means of acquiring 850, 900, 1800, and 1900 MHz frequency bands. one through a term contract. and broadband wireless data, all in a mobile HDR (High Dynamic Range): An imaging environment. Cable Telephony (Phone): The transmission of real- technique used to reproduce a greater dynamic 3.5G (Enhanced Third Generation Wireless): time voice communications over a cable network. range of luminosity than is possible with standard digital imaging or photographic techniques. Evolutionary upgrades to 3G services that Churn: This business performance measure is provide significantly enhanced broadband used to describe the disconnect rate of customers Homes Passed: Total number of homes which have wireless data performance to enable multi- to a telecommunications service. It is a measure the potential for being connected to a cable system megabit data speeds. The key 3.5G technologies of customer turnover and is often at least partially in a defined geographic area. in North America are HSPA and CDMA EV-DO. reflective of service quality and competitive Hosting (Web Hosting): The business of housing, 4G (Fourth Generation Wireless): A technology intensity. It is usually expressed as a percentage and calculated as the number of subscriber units serving, and maintaining files for one or more that offers increased voice, video and multimedia websites or email accounts. Using a hosting capabilities, a higher network capacity, improved disconnecting in a period divided by the average number of units on the network in the same period. service allows many companies to share the cost spectral efficiency, and high-speed data rates over of a high-speed Internet connection for serving current 3G benchmarks. CLEC (Competitive Local Exchange Carrier): files, as well as other Internet infrastructure and 4K - Ultra-High Definition Video: Denotes A telecommunications provider company that management costs. a specific television display resolution of competes with other, already established carriers, generally the ILEC. Hotspot: A Wi-Fi access point in a public place 4096 x 2160 pixels. 1920 x 1080 resolution full such as a café, train station, airport, commercial HD televisions present an image of around Cloud Computing: The ability to run a program office property, or conference centre. 2 megapixels, while the 4K generation of screens or application on many connected computers delivers an 8 megapixel image. simultaneously as the software, data and services HSPA (): HSPA is an reside in data centres. IP-based packet-data enhancement technology ARPA (Average Revenue per Account): This that provides high-speed broadband packet data business performance measure expressed as a CPE (Customer Premise Equipment): services over 3G networks. HSPA+ provides high- dollar rate per month includes all the revenue Telecommunications hardware, such as modems speed broadband packet data services at even generated by an account as opposed to a user or or set-top boxes, that is located at the home or faster speeds than HSPA over 4G networks. device so that a customer who has many devices business of a customer. will typically have a higher ARPA than a customer HUp (Hardware Upgrade): When an existing with only one device. CRTC (Canadian Radio-television and wireless customer upgrades to a new wireless Telecommunications Commission): The federal device, this is referred to as a HUP or Hardware ARPU (Average Revenue per User): This business regulator for radio and television broadcasters UPgrade. performance measure, expressed as a dollar rate and cable TV and telecommunications per month, is predominantly used in the wireless companies in Canada. ICT (Information and Communications and cable industries to describe the revenue Technology): A term that includes any generated per customer per month. ARPU is Data Centre: A facility used to house computer communication device or application, such an indicator of a wireless or cable business’ systems and associated components, such as radio, television, cellular phones, computer operating performance. as telecommunications and storage systems. and network hardware and software, satellite It generally includes redundant or backup systems, and so on, as well as the various services AWS (Advanced Wireless Services): The wireless power supplies, redundant data communications and applications associated with them, such as telecommunications spectrum band that is connections, environmental controls (e.g., air videoconferencing. used for wireless voice, data, messaging services, conditioning, fire suppression), and security and multimedia. controls. ILEC (Incumbent Local Exchange Carrier): The dominant telecommunications company providing Bandwidth: Bandwidth can have two different DOCSIS (Data Over Cable Service Interface local telephone service in a given geographic meanings: (1) a band or block of radio frequencies Specification): A non-proprietary industry standard area when competition began. Typically an ILEC is measured in cycles per second, or Hertz; (2) an developed by CableLabs that allows for equipment the traditional phone company and original local amount or unit of capacity in a telecommunications interoperability from the headend to the CPE. The exchange carrier in a given market. transmission network. In general terms, bandwidth latest version (DOCSIS 3.0/3.1) enables bonding of is the available space to carry a signal. The greater multiple channels to allow for 250 Mbps or greater IoT (Internet of Things): The concept of connecting the bandwidth, the greater the information- transmission speeds depending upon how many everyday objects and devices (e.g., appliances and carrying capacity. channels are bonded together. cellular phones) to the Internet and each other. This allows them to sense their environment and BDU (Broadcast Distribution Undertaking): DSL (Digital Subscriber Line): A family of communicate between themselves, allowing for the An undertaking for the reception of broadcasting broadband technologies that offers always-on, seamless flow of data. and the retransmission thereof by radio waves or high-bandwidth (usually asymmetrical) transmission other means of telecommunication to more than over an existing twisted-pair copper telephone line. IP (Internet Protocol): The packet-based computer one permanent or temporary residence or dwelling DSL shares the same phone line as the telephone network protocol that all machines on the Internet unit or to another such undertaking. service but it uses a different part of the phone must know so they can communicate with one line’s bandwidth. another. IP is basically a set of data switching and Bps (Bits per Second): A measurement of data routing rules that specify how information is cut transmission speed used for measuring the amount Fibre Optics: A method for the transmission of up into packets and how they are addressed for of data that is transferred in a second between information (voice, video or data) in which light is delivery between computers. two telecommunications points or within network modulated and transmitted over hair-thin filaments devices. Kbps (kilobits per second) is thousands of of glass called fibre optic cables. The bandwidth IPTV (Internet Protocol Television): A system bps; Mbps (megabits per second) is millions of bps; capacity of fibre optic cable is much greater than where a digital television signal is delivered using Gbps (gigabits per second) is billions of bps; and that of copper wire and light can travel relatively Internet Protocol. Unlike broadcasting, viewers Tbps (terabits per second) is trillions of bps. long distances through glass without the need receive only the stream of content they have for amplification. requested (by surfing channels or ordering video ).

150 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT GLOSSARY

Helpful links ISED Canada (Innovation, Science and Prepaid: A method of payment for wireless Canadian Radio-Television and Economic Development Canada): The service that allows a subscriber to prepay Telecommunications Commission (CRTC) Canadian federal government department for a set amount of airtime in advance of The CRTC is an independent public organization responsible for, amongst other things, the actual usage. Generally, a subscriber’s that regulates and supervises the Canadian regulation, management, and allocation of prepaid account is debited at the time of broadcasting and telecommunications systems. radio spectrum and establishing technical usage so that actual usage cannot exceed It reports to Parliament through the Minister of requirements for various wireless systems. the prepaid amount until an additional Canadian Heritage. www.crtc.gc.ca prepayment is made. ISP (Internet Service Provider): A provider Innovation, Science and Economic Development of Internet access service to consumers PVR (Personal Video Recorder): A consumer Canada (ISED Canada) and/or businesses. electronics device or application software that ISED Canada is a ministry of the federal government records video in a digital format. The term whose mission is to foster a growing, competitive, LAN (): A network includes set-top boxes with direct-to-disk knowledge-based Canadian economy. It also created via linked computers within a small recording facility, which enables video capture works with Canadians throughout the economy area, such as a single site or building. and playback to and from a hard disk. and in all parts of the country to improve conditions LTE (Long-Term Evolution): A fourth for investment, improve Canada’s innovation Set-Top Box: A standalone device that receives performance, increase Canada’s share of global generation cellular wireless technology (also and decodes programming so that it may known as 4G) which has evolved and enhanced trade, and build an efficient and competitive be displayed on a television. Set-top boxes marketplace. www.ic.gc.ca the UMTS/HSPA+ mobile phone standards. may be used to receive broadcast, cable, and LTE improves spectral efficiency, lowers costs, satellite programming. Federal Communications Commission (FCC) improves services, and, most importantly, The FCC is an independent United States allows for higher data rates. LTE technology is Spectrum: A term generally applied to government agency. The FCC was established by designed to deliver speeds up to 150 Mbps electromagnetic radio frequencies used in the the Communications Act of 1934 and is charged with further increases over time. transmission of sound, data and video. Various with regulating interstate and international portions of spectrum are designated for use LTE Advanced: A mobile communication communications by radio, television, wire, satellite, in cellular service, television, FM radio, and and cable. The FCC’s jurisdiction covers the 50 standard which represents a major satellite transmissions. enhancement of the LTE standard. With a states, the District of Columbia, and U.S. territories. peak data rate of 1 Gbps, LTE Advanced also SVOD (Subscription ): www.fcc.gov offers faster switching between power states Offers, for a monthly charge, access to specific Canadian Wireless Telecommunications and improved performance at the cell edge. programming with unlimited viewing on an Association (CWTA) on-demand basis. M2M (): The wireless The CWTA is the industry trade organization and inter-connection of physical devices or TPIA (Third-Party Internet Access): Wholesale authority on wireless issues, developments, and objects that are seamlessly integrated into high-speed access services of large cable trends in Canada. It represents wireless service an information network to become active carriers that enable independent service providers as well as companies that develop and participants in business processes. Services providers to offer retail Internet services to their produce products and services for the industry, are available to interact with these ‘smart own end-users. including handset and equipment manufacturers, objects’ over the Internet, query, change content and application creators, and business-to- their state and to capture any information TSU (Total Service Unit or Cable TSU): In business service providers. www.cwta.ca associated with them. the cable TV industry, this refers to television, Internet, and cable telephony subscribers. The Wireless Association (CTIA) Near-net: Customer location(s) adjacent to A subscriber that has purchased television The CTIA is an international non-profit membership network infrastructure allowing connectivity to and Internet services is counted as two TSUs. organization, founded in 1984, representing wireless the premises to be extended with relative ease. A subscriber that has purchased television, carriers and their suppliers, as well as providers Internet, and cable telephony services is and manufacturers of wireless data services and Off-net: Customer location(s) where counted as three TSUs, etc. products. The CTIA advocates on their behalf before network infrastructure is not readily available, all levels of government. www.ctia.org necessitating the use of a third-party leased VOD (Video on Demand): A cable service access for connectivity to the premises. that allows a customer to select and view GSM Association (GSMA) movies and shows at any time from a library The GSMA is a global trade association representing On-net: Customer location(s) where network of thousands of titles. nearly 800 operators with more than 250 companies infrastructure is in place to provide connectivity in the broader mobile ecosystem, including to the premises without further builds or third VoIP (Voice over IP): The technology used handset and device makers, software companies, party leases. An on-net customer can be to transmit real-time voice conversations equipment providers, and Internet companies, as readily provisioned. in data packets over a data network using well as organizations in adjacent industry sectors. Internet Protocol. Such data networks In addition, more than 180 manufacturers and OTT (Over-the-Top): Audio, visual, or include telephone company networks, cable suppliers support the Association’s initiatives as alternative media distributed via the Internet TV networks, wireless networks, corporate associate members. The GSMA works on projects or other non-traditional media. intranets, and the Internet. and initiatives that address the collective interests of the mobile industry, and of mobile operators in Penetration: The degree to which a product or VoLTE (Voice over LTE): A platform to provide particular. www.gsma.com service has been sold into, or adopted by, the voice services to wireless customers over base of potential customers or subscribers in LTE wireless networks. The LTE standard Commission for Complaints for a given geographic area. This value is typically only supports as it is all Telecommunications Services (CCTS) expressed as a percentage. IP-based technology. Voice calls in GSM are An independent organization dedicated to POPs (Persons of Population): A wireless circuit switched, so with the adoption of LTE, working with consumers and service providers to industry term for population or number carriers are required to re-engineer their voice resolve complaints about telephone and Internet of potential subscribers in a market, a call network, while providing continuity for services. Its structure and mandate were approved measure of the market size. A POP refers to traditional circuit-switched networks on 2G and by the CRTC. www.ccts-cprst.ca one person living in a population area, which, 3G networks. in whole or in substantial part, is included Wi-Fi: The commercial name for a networking in the coverage areas. technology standard for wireless LANs that Postpaid: A conventional method of payment essentially provide the same connectivity as For a more comprehensive glossary for wireless service where a subscriber pays wired networks, but at lower speeds. Wi-Fi of industry and technology terms, a fixed monthly fee for a significant portion allows any user with a Wi-Fi-enabled device to go to rogers.com/glossary of services. Usage (e.g. long distance) and connect to a wireless access point. overages are billed in arrears, subsequent to consuming the services. The fees are usually arranged on a term contract basis.

2016 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 151 Corporate and shareholder information

CORPORATE OFFICES STOCK EXCHANGE LISTINGS COMMON STOCK TRADING AND Rogers Communications Inc. Toronto Stock Exchange (TSX): DIVIDEND INFORMATION Dividends 333 Bloor Street East, RCI.B – Class B Non-Voting shares Closing Price RCI.b on TSX Declared Toronto, ON M4W 1G9 (CUSIP # 775109200) 2016 High Low Close per Share 416-935-7777 RCI.A – Class A Voting shares First Quarter $52.66 $46.15 $52.00 $0.48 (CUSIP # 775109101) Second Quarter $53.01 $48.34 $52.30 $0.48 CUSTOMER SERVICE AND Third Quarter $58.99 $52.30 $55.66 $0.48 PRODUCT INFORMATION New York Stock Exchange (NYSE): 888-764-3771 or rogers.com RCI – Class B Non-Voting shares Fourth Quarter $56.07 $50.15 $51.79 $0.48 (CUSIP # 775109200) SHAREHOLDER SERVICES Shares Outstanding at December 31, 2016 If you are a registered shareholder and have Class A 112,411,992 inquiries regarding your account, wish to Class B 402,396,133 change your name or address, or have questions about lost stock certificates, share 2017 Expected Dividend Dates transfers, estate settlements or dividends, Record Date*: Payment Date*: please contact our transfer agent and registrar: DEBT SECURITIES March 13, 2017 April 3, 2017 For details of the public debt securities CST Trust Company of the Rogers companies, please refer to June 12, 2017 July 4, 2017 P.O. Box 700, Postal Station B the “Debt Securities” section under September 15, 2017 October 3, 2017 Montreal, QC H3B 3K3, Canada rogers.com/investors December 11, 2017 January 2, 2018 416-682-3860 or 800-387-0825 * Subject to Board approval [email protected] INDEPENDENT AUDITORS KPMG LLP Unless indicated otherwise, all dividends paid Duplicate Mailings by Rogers Communications are designated If you receive duplicate shareholder mailings ON-LINE INFORMATION as “eligible” dividends for the purposes of from Rogers Communications, please Rogers is committed to open and full financial the Income Tax Act (Canada) and any similar contact CST Trust Company as detailed disclosure and best practices in corporate provincial legislation. above to consolidate your accounts. governance. We invite you to visit the Investor Relations section of rogers.com/investors DIVIDEND REINVESTMENT PLAN (DRIP) INVESTOR RELATIONS where you will find additional information Rogers offers a convenient dividend Institutional investors, securities analysts about our business, including events and reinvestment program for eligible and others requiring additional financial presentations, news releases, regulatory shareholders to purchase additional Rogers information can visit rogers.com/investors filings, governance practices, corporate social Communications shares by reinvesting their or contact us at: responsibility and our continuous disclosure cash dividends without incurring brokerage fees or administration fees. For plan information 888-935-7777 or materials, including quarterly financial releases, annual information forms and management and enrolment materials or to learn more 416-935-7777 (outside North America) about Rogers’ DRIP, please visit https:// or [email protected] information circulars. You may also subscribe to our news by email or RSS feeds to automatically www.canstockta.com/en/InvestorServices/ CORPORATE PHILANTHROPY receive Rogers news releases electronically. Dividend_Reinvestment_Plans/Overview_ For information relating to Rogers’ various Of_DRIPs/ or contact CST Trust Company as philanthropic endeavours, refer to the DIRECT DEPOSIT SERVICE detailed earlier on this page. “About Rogers” section of rogers.com Shareholders may have dividends deposited directly into accounts held at ELECTRONIC DELIVERY OF SUSTAINABILITY financial institutions. To arrange direct SHAREHOLDER MATERIALS Rogers is committed to continuing to deposit service, please contact CST Trust Registered shareholders can receive electronic grow responsibly and we focus our social Company as detailed earlier on this page. notice of financial reports and proxy materials and environmental sustainability efforts by registering at https://www.canstockta.com/ where we can make the most meaningful en/InvestorServices/Delivery_of_Investor_ impacts on both. To learn more, please Materials/Electronic_Consent. This approach visit rogers.com/csr gets information to shareholders faster than conventional mail and helps Rogers protect the environment and reduce printing and postage costs. CAUTION REGARDING FORWARD-LOOKING INFORMATION AND OTHER RISKS GLOSSARY OF TERMS This annual report includes forward-looking statements about the financial condition and For a comprehensive glossary of industry and prospects of Rogers Communications that involve significant risks and uncertainties that technology terms, go to rogers.com/glossary are detailed in the “Risks and Uncertainties Affecting our Businesses” and “About Forward- Looking Information” sections of the MD&A contained herein, which should be read in conjunction with all sections of this annual report. Facebook facebook.com/rogers

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152 ROGERS COMMUNICATIONS INC. 2016 ANNUAL REPORT The best is yet to come. Wireless Cable Media rogers.com