Connecting Your World 2016/17 ANNUAL REPORT Your Life

IFC ™ Your Life. Connected. Life. Your 2016/17 ANNUAL2016/17 REPORT Your World Your Connecting OFC

Connecting Your World 2016/17 ANNUAL REPORT Your Life. Connected.™ ™ OBC Your Life. Connected. Your keep us all connected. It also means connecting with our customers in their world. us all connected. It also means keep For SaskTel, connecting people to their world goes beyond just building and maintaining networks that that connecting people to their world goes beyond just building and maintaining networks For SaskTel, Saskatoon East – 22nd Street 410 SK S7K 5T6Saskatoon Current Swift West Road 1831 North Service SK S9H 3T2 Current Swift Weyburn 1711 East Avenue SK S4H 2Y7 Weyburn Yorkton West Road 210 York SK S3N 3N4 Yorkton

IBC 47 – 12th Street East 47 – 12th Street 1B3 Albert SK S6V Prince SecurTek Head Office SecurTek N. 70 – 1st Avenue SK S3N 1J6 Yorkton District Offices SaskTel Moose Jaw West 55 Ominica Street Moose Jaw SK S6H 1W8 North Battleford 1201 – 100th Street SK S9A 3Z9 North Battleford Prince Albert Second Floor

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1-800-SASKTEL (727-5835) https://support.sasktel.c @SaskTel https://www.facebook.com/SaskTel http://www.sasktel.com/

: [email protected] : [email protected] oll Free: 1-800-667-8201 oll Free: View this Annual Report at https://www.sasktel.com/about-us/company-info/ financial-reports https://www.sasktel.com/about-us/company-info/ at View this Annual Report please contact and operations, our initiatives about SaskTel, information For more F: (306) 352-6514 (306) 352-6514 F: http://www.sasktel.com/about-us/news/ at Communications Corporate please call 1-306-777-4897. Annual Report, the 2016/17 SaskTel of obtain additional copies To P: Toll Free in US and Canada: Free Toll P: 1.877.242.9950 Corporation West Direct Crescent 355 Longman SK S4N 6G3 Regina 777-0333 (306) P: T E Twitter: Our Locations Head Office SaskTel Regina Drive2121 Saskatchewan SK S4P 3Y2Regina International SaskTel Floor 3rd Street, 1825 Lorne SK Canada Regina Website: By Phone: By Email: Facebook: Contact Us Contact IFC ™ Your Life. Connected. Life. Your 2016/17 ANNUAL2016/17 REPORT Your World Your Connecting OFC

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Honourable Dustin Duncan Telecommunications Saskatchewan for Minister Responsible Respectfully submitted, Respectfully I have the honour to submit herewith the annual report of SaskTel for the for SaskTel of the annual report I have the honour to submit herewith certified duly the financial statements, including 31, 2017, year ending March by the Treasury approved and in the form the Corporation, by auditors for Telecommunications The Saskatchewan with all in accordance Board, Act. Holding Corporation Dear Lieutenant Governor: Her Honour S.V.M., S.O.M., Solomon Schofield, The Honourable Vaughn Saskatchewan Lieutenant Governor of Regina, Saskatchewan Saskatchewan Regina, 2017 June 30, Letterof Transmittal 2 | TABLE OF CONTENTS Contents IBC 85 81 77 43 15 11 6 4 3

Contact Us Corpora Sask Board o 49 46 45 44 43 Consolida Management’s DiscussionandAnalysis CSR Highlights 10 9 8 7 6 Sharing OurS Pr Financial Highlights Letter o

esident’s Message

Tel Executive Notes toConsolida Consolida Independent Auditor’sR R Managements R The PrairieConnection Making aBigConnectioninMooseJaw Connecting WithOurCustomers Connecting theAtlantic,PacificandAr Connections Y eport of ManagementonInternalControl OverFinancialReporting f Transmittal f Directors te GovernanceStatement ted FinancialStatements andNotes tories ted FinancialStatements ou CanCountOn esponsibility for FinancialStatements ted FinancialStatements eport ctic Oceans 0 80000 60000 40000 20000 160000 140000 120000 100000

SASKTEL 2016/17 ANNUAL REPORT | 3

15.5% 15.0% 45.2% 2016/17 Wireless 1.35 1.34 1.33 1.30 1.29 ($ Millions) IT Infrastructure 34.5% 2015/16 (Millions) Wireline – Other 21.7% Wireline Wireline – Copper 1.8% Wireline (Homes) 2014 25.3% $316.1M ■ Passed ■ Connected 2013 14.1%

Fibre ■ Wireless ■ Copper ■ Fibre 2012 11.3%

0 2014 2013 2012 250,000 200,000 150,000 100,000 50,000 0 2016/17 Buildings & Equipment 11.0% NETWORK 2015/16 Fibre to the Premises to the Premises Fibre Accesses by Technology Wireline – Fibre 27.3% – Fibre Wireline Other 5.3% Product Development 2.4% 2016/17 Capital Expenditures 2016/17 Capital Expenditures 96000 64000 32000 160000 128000 0 27.0 100,000 700,000 500,000 300,000 200,000 400,000 600,000 DSL 65.4% Mar-17 c-16 Accesses – RH Accesses Data Usage – LH Data Dec-15 LTE c-14 De 13.5 275,381 Accesses Dec-14 Number of Number of Accesses Dec-12 De CDMA 4G ■ ■ ■ ec-13 D 1.9% 27.0 000 000 500 000 500 000 ec-10 5,000 4, 3,000 2, 1,000 0

1, 500 0 2, 1, 3,000 2, ACCESSES ACCESSES D

BYTE TERA Dial Up 2.8% 29.9% Fibre 2016/17 Internet Accesses fusion CUSTOMER Data Usage & Network Usage & Network Data Accesses Technology Access Points selectWI-FI SaskTel

0.0 2016/17 Budget 2016/17 4.7%

$104.2 2016/17 Data 26.4% Data Equipment Other 2.6% Advertising, Security and

150 Expense 5.4% Software 15.4%

ce Net Finan Net Internet, maxTV,

$2.4 $134.8 14.0%

13.6% Amortization

13.5 12.5% Depreciation & & Depreciation

ages & Beneﬁts & ages

W 10.5%

Net Salaries, Net

Services (Percentage) Goods and Goods 100 $7.8 $1.2 $1.5

$1,277.2M

come In Other ($ Millions) $6.0

($ Millions) Revenue

$12.4 2015/16 0.0 *2014

2016/17 2015/16

$105.9 50 150 75 100 125 Long 3.3% Distance Wireless 40.8% Wireless Return on Equity Revenues 2016/17 Budget Local &Local 16.8% Enhanced *12 month fiscal year ending December 31. *12 month fiscal year ending December Net Income FINANCIALS

2017/18 Budget FinancialHighlights 4 | PRESIDENT’S MESSAGE There havecertainly beenchallengesin 2016/17. The investmentthat madethelargest impactin With anybusiness,thevisionthat drivesthecompany tendstoalsodefinethe 400 additionaltowersinruralareas. President’s Message success, butalsotobuildingtheorganization andculture that are itsfoundation. 2016/17, wasthecompletion of our4GLTE upgrade Communications technologiescontinue torapidly financial andcultural rewards. Over thepastyear, SaskTel haskept itspromise to SaskTel spent$11.8 millionexpandingthereach NETWORKING YOUNETWORKING TO YOUR WORLD continued success. company where weneed togoguaranteeits However, despite thesechallenges,2016/17hasbeen evolve, andthisevolutionisdrivingchangesinthe I amproud tosaythat what definesall of us at SaskTel comes toconnecting peopletotheirworld.Although expansion brought LTE service to more than LTE networkintheprovince. WhileLTE wasalready on transforming ourbusinesshasallowedustorise of ourLTE service tocover 99%of Saskatchewan company’s success. Thismakes settingavisioncriticaltonotonlycompany’s an extremely successful year. Thepath wesetout to thetest.Ourindustryremains highlycompetitive, the pastyear, we’veseenthisphilosophyreap both way consumers choosetointeractwiththeworld. we firstestablishedthisgoala few yearsago,we’ve well establishedinSaskatchewan’s majorcities,the but weare more focused theneverontakingthis residents, givingSaskTel thelargest owner-operated program. BetweenJune2016andMarch 2017, in Saskatchewan. invest over$300millionincapitalspendinghere incorporated itintoeverythingwedo.And,over is ourvisionof beingthe bestICTcompany whenit 10,000-square-foot facilityhassignificantly As wecontinue ourtransformation intoafull-service With 51,000 square feet of data centre space spread Saskatoon TierIIIdata centre. The24,000-square-foot service withnineadditionaltowerscoming onstream BUILDING BETTER TOOLS FOR BUSINESS BUILDING BETTER completed our$30.0 millioninvestmenttobring In February2017, weannounced thepurchase of In January2017, webeganoperations at ournew ICT company, 2016/17saw usfocus ontheemerging In thecities,SaskTel continued thedeploymentof expanded thedata centre space wehaveavailable Rural highspeedInternetcoverage alsoreceived a customers continued todemandfasterwireless and years, wehavepassed213,351 homesandbusinesses our an existingTierIIIdata centre eastof Regina. The and uploadspeedsavailablethrough theservice. Our across eightlocations inSaskatchewan, wehave facility features 9,650 square feet of data hallspace that isexpandableto30,000 square feet. to ourwireless networkthat doubledthe download the province andserves714 communities. Along the world. with fibre and connected 96,387 toournetwork. We with expandedcoverage, SaskTel deployedupgrades we are committed to that objective. needs of businessestohavetheirdata hostedlocally. boost through theexpansionof ourfusioninterNET hosting for businesses intheprovince andacross positioned ourselvestobe aleaderindata centre infiNET toallMooseJawresidences, makingitthe largest fibre-connected community in Western Canada. in theRegina area. in 2016. fusionisnowavailableon68towersacross infiNET ™ fibre opticnetwork.Overthepastfive SASKTEL 2016/17 ANNUAL REPORT | 5 is embedded in our culture at SaskTel and we pride and we SaskTel at in our culture is embedded was thrilled that MediaCorp once again named us one once MediaCorp was thrilled that their world also means being reflective of it. Diversity of it. Diversity reflective also means being their world trust placed in us by the people of Saskatchewan. in us by the people of trust placed the reason we have earned the trust of our customers, the trust of we have earned the reason , SaskTel President and CEO President , SaskTel Ron Styles all the staff at SaskTel for their great work. great for their at SaskTel all the staff ourselves on building a workforce as diverse as the as diverse on building a workforce ourselves the Employers and one of Canada’s Best Diversity of communities we serve. In November 2016, SaskTel SaskTel 2016, we serve. In November communities Ultimately, understanding how to connect people to people to connect how understanding Ultimately, LAYING THE FOUNDATION FOR YOUR TRUST YOUR FOR THE FOUNDATION LAYING suppliers, and business partners, and I’d like to thank like partners, and I’d suppliers, and business Sincerely, Our people stand at the heart of what we do. They are we do. They are what the heart of at Our people stand Top Employers for Young People. Young for Employers Top Together, we will continue striving to be worthy of the striving to be worthy of we will continue Together, happily give their own time to a wide range of causes causes range of happily give their own time to a wide place in our communities, the program has partnered has partnered the program in our communities, place beyond just building and maintaining the networks the networks building and maintaining beyond just were put toward a wide range of causes including a wide range of put toward were way, donating over 60,000 volunteer hours and more volunteer hours and more over 60,000 donating way, with the Ministry of Education to provide small grants to provide Education with the Ministry of was the growing success of our I Am Stronger Am Stronger our I of success was the growing with our customers in their world. customers in their with our the training of new foster parents. new foster the training of the donation of video conferencing equipment to the video conferencing of the donation than $200,000 in money, goods and services that that goods and services in money, than $200,000 the form of the SaskTel Pioneers. Many employees Pioneers. Many SaskTel the of the form through financial and in-kind donations to charitable donations financial and in-kind through that keep us all connected. It also means connecting means connecting It also us all connected. keep that donations and sponsorships. At SaskTel, we have and sponsorships. At SaskTel, donations as individuals; still, the Pioneers continue to lead the as individuals; still, the Pioneers continue address the bullying problem. I am pleased to say that I am pleased to say that the bullying problem. address and non-profit organizations across Saskatchewan. across organizations and non-profit and technology. Much of our support is provided is provided our support Much of and technology. our own employee-driven volunteer organization in organization our own employee-driven volunteer of up to $1,000 to youth-led initiatives that will help that to youth-led initiatives up to $1,000 of our efforts on supporting youth, rural life, diversity, diversity, rural life, on supporting youth, our efforts Foster Families Association of Saskatchewan to assist Saskatchewan of Association Foster Families However, we aren’t just active in the community via just active in the community we aren’t However, campaign. Seeking to raise awareness and provide and provide to raise awareness campaign. Seeking For SaskTel, connecting people to their world goes world goes to their people connecting For SaskTel, solutions to the bullying and cyberbullying taking solutions to the bullying One of our most successful initiatives during 2016/17 initiatives our most successful One of CONNECTING IN THE COMMUNITYCONNECTING $24,650 was provided to 29 initiatives in 2016/17. to 29 initiatives was provided $24,650 This can take many forms; however, we like to focus to focus we like however, many forms; take This can 6 | STORIES OF DATA CENTRE SPACE DATAOF CENTRE 51,000 Count On Count Connections You Can known asuptime. site infrastructure performance, also centre facilitiesintermsof potential consistently evaluates variousdata SaskTel. TheTierclassification system requirements, makingitafirst for new facilityfor meetingallTierIII The UptimeInstitutecertified the generator rooms. square feet for thesecond floor square feet, andanadditional4,630 data hall,expandableupto30,000 including aninitial9,650-square-foot 24,000 square feet of buildingarea, but what keeps thoseconnections connecting peopletotheworld, SaskTel isproud of itshistoryof safe? Whenyousendyourdata out 2017, inSaskatoon—added into thecloud,what guarantee centre—opened January 26, is there that it’sbeingstored in Saskatoon. Anewdata somewhere reliable, safe and secure? four inRegina andtwo That’s where SaskTel centre locations, Data Centres come six different data in. Priorto2016/17,

SaskTel hosted square feet in SQ/FT a combined 31,088 total of their technologypartners. customers are demandingfrom and assurance that business services withthesecurity, availability cutting-edge technologytodeliver world-class data centres havethe essential information. SaskTel’s protect themselvesagainstlosing are searching for superiorwaysto An increasing numberof customers the continent. parties inmunicipalitiesallover government, corporate and private a widerangeof clients—including space tohousecrucialfilesfrom add 10,000 square feet of data hall SaskTel Data Centre capacityand facility willsignificantlyincrease $10.7 million.Theadditionof the Data Centre eastof Regina for proceed withpurchasing aTierIII announced itreceived approval to On February6, 2017, SaskTel without impactingcustomers.” downtime, andcanbemaintained by thecentrewillnothaveany ensure thevitalequipmenthoused are twoofeachcomponentto mechanical components,sothere maintainable electricaland III Data Centrerunsconcurrently SaskTel newTier Data Centres.“The Operations Managerforallthe connectivity,” saidTodd Blahitka, power, coolingandnetwork data centresaretoprovidesecure criticalfunctionsofallour “The SASKTELSASKTEL 2016/17 2016/17 ANNUAL ANNUAL REPORT REPORT| | 7 7 SaskTel is providing over 5 years is providing SaskTel the of the connection towards trail in Saskatchewan. 350,000 anniversary of Confederation Confederation anniversary of $ th Once fully connected, The Great The Great connected, fully Once the from will span the country, Trail and Arctic Atlantic to the Pacific every through and will pass oceans, just date, To and territory. province the trail of kilometres over 21,500 91 percent which is operational, are The goal is route. the proposed of the of all the branches to connect which is especially trail this year, significant because it’s Canada’s 150 and 25 years since construction of of construction and 25 years since the trail began. “The trails are a national will be cherished treasure that to come,” for generations said Showchuck. “They are a tremendous example of the benefit commitment to and value that environmental stewardship can achieve.”

In its entirety, the trail leads through the trail leads through In its entirety, in urban, rural, routes land and water and wilderness landscapes, linking along 24,000 communities 15,000 one of It is considered kilometres. multi-use the longest networks of trails in the world, and is recreational cyclists, and hikers, used by walkers paddlers, horseback riders, cross- skiers and snowmobilers. country With the volunteers attending the With the volunteers attending the province, various events across logged 76 hours of EnviroCare connecting towards volunteer effort and beautifying the trails in a single I EnviroCare, behalf of “On day. to extend an enormous would like our members and thank you to all of said Tony volunteers,” hard-working SaskTel’s Showchuck, Chairperson of Employee Network. EnviroCare such as these “Accomplishments would simply not be possible without time and dedication.” their generous On June 25, 2016, 38 staff and 38 staff 2016, 25, On June in four family members volunteered help the to locations Saskatchewan goal their reach Canada Trail Trans from Trail The Great connecting of The other. Canada to the one side of led by the SaskTel volunteers were of Committee, a group EnviroCare SaskTel conscious environmentally mission to create employees with the and promote community a greener and awareness environmental collaboration through initiatives and engagement.

Pacific and Arctic Oceans Arctic and Pacific Connecting theAtlantic, Connecting With Our Customers

Customer experience is paramount With EMW’s large mobile workforce to SaskTel, so much so that in and an annual growth rate of 20%, 2014 the corporation embarked the company required a way to on an initiative called CX First. It communicate with their employees is much more than customer across multiple locations, share service, sales or technical support. information and hold conference It is the sum of all interactions a calls on demand. Ideally, it would also customer has with SaskTel, including provide them with enough flexibility their feelings, emotions and to allow for business expansion. perceptions. CX First ensures that SaskTel worked with EMW and the customer experience is a found the perfect answer with the primary positive differentiator. Integrated Business Communications Over the past year, SaskTel’s CX First (IBC) service. IBC is a cloud-based initiative has focused on alleviating communication and collaboration pain points for customers. For solution with features that work example, courtesy notifications were as one to seamlessly integrate implemented to alert customers communications over multiple before they hit their data limit on networks. It combines all the their mobile devices. Small changes features EMW needed to meet its like this make a big impact in management goals. improving their experience. “We challenged SaskTel to find a That’s not to say the CX First solution that would take the phone initiative didn’t address system headache out of our business larger issues as well, like and allow us to focus on what we’re offering a product good at,” said Dustin Brears from that is capable EMW Industrial. “IBC was the natural of connecting winner as it is completely hosted and employees we don’t have to do anything but across keep the power on in the building.” multiple SaskTel has made it a business office best practice to put the customer locations. experience first—CX First—whether That’s what EMW it’s by alleviating small, day-to-day Industrial Ltd was annoyances with a little extra looking for when trying to effort, or customizing products create a communications link and services to meet large between their employees at their corporate challenges. new head office in Saltcoats and offices in Yorkton. STORIES 8 | SASKTEL 2016/17 ANNUAL REPORT | 9

MBPS SPEEDS UP TO 260 network is one largest urban centres in the province: in the province: urban centres largest Moose Jaw, Regina, Saskatoon, Current, Estevan, Swift Weyburn, and North Battleford Yorkton, Albert. Prince FTTP is the ultimate technology for delivering super-fast directly broadband into people’s homes and businesses. Signals are delivered over fibre via pulses of literally light that the speed of travel at glass. light through infiNET “Our of the most advanced anywhere said Ron in the world today,” and CEO. President Styles, SaskTel we are extremely proud that “And is now the largest fibre Moose Jaw Canada.” community in Western

™ service service now have ™ network. It’s part of network. It’s part of service, they can service, service will enable a service

In September of 2016, SaskTel SaskTel 2016, In September of its for build the residential completed making Jaw, network in Moose fibre community in fibre it the largest home Canada. Now every Western in businesses and the majority of to infiNET Moose Jaw have access It’s the biggest, it’s the fastest, and it’s it’s the fastest, It’s the biggest, other city than any connected more Canada. in Western Since beginning construction of of beginning construction Since network in Moose Jaw in the fibre invested approximately SaskTel 2013, the city to million to convert $30.0 infiNET SaskTel’s options, such as more set-top boxes set-top boxes options, such as more and whole-home PVR. With the infiNET SaskTel download movies and music in a HD TV the time, watch fraction of four and record on up to seven TVs, the same time. Even at programs home phone service their SaskTel is on the new network, so, in the infiNET future, new and enhanced whole range of , High their maxTV possibilities for services. Speed Internet, and voice to the called Fibre program a larger million (FTTP), a $670.0 Premises optics investment to deploy fibre to homes and upgrade the directly network in the nine broadband increased bandwidth and the fastest increased Internet speeds in Saskatchewan, maxTV they also get more Not only do customers who have made the switch to infiNET Fibre Optic Network, the fastest Fibre with speeds Internet in Saskatchewan up to 260 Mbps. of

inMoose Jaw Making a Big Connection 10 | STORIES The Prairie ConnectionThe had previously. they times fasterthantheservice and uploadspeedsuptothree Connected 5plan,withdownload access totheSaskTel interNET Saskatchewan. Residents nowhave 26 communitiesinnorthern in nearly2,700 homes across High SpeedInternetservice SaskTel alsocompletedupgrading faster thanon4G. games, allat speedsupto10times share pictures andvideos,play watch HDmovies,stream music, customers havethefreedom to the population. With LTE, SaskTel in theprovince andreaches 99%of LTE networkisthelargest of itskind class communications services are That’s whyinvestmentsinworld- more todaythaneverbefore. to thelatest technologymeans town, oronafarm,havingaccess Whether youliveinacity, ina Saskatchewan. Thenewwireless all-important whenitcomes to keeping everyoneof the 400 towersservingrural 1.4 millionSaskTel customer coverage tomore than connections. SaskTel the expansionof LTE invested over$300 million incapitalover achievement was the pastyear, a The year’sfirst number that will grow to of 2021. $1.4 billion by theend project; it’sanongoingcommitment. Saskatchewan isnotanisolated connecting peopleinrural communities. ForSaskTel, spread across more than300 to nearly100,000 newhouseholds and theintroduction of IPTVservice an additional15ruralcommunities, the deliveryof HighSpeedInternetto evolution toVoice overLTE (VoLTE), rural Saskatchewan willincludethe Future networkenhancements for attract newresidents. opportunities for business,andhelp it willenhance lives,create new Canada’s fastestfibre opticsnetwork, communities gainaccess toWestern Prince AlbertandSaskatoon. Asrural to expertiseandresources inboth the optimallocation for itsproximity service. Rosthern wasselectedas community of Rosthern to infiNET a pilotproject toupgradetherural Construction beganearlythisyearon and Witchekan. the ruralareas around Greenstreet Speed fusionInternetservice to SaskTel isalsoexpandingitsHigh Estevan, Lanigan,andMelville. Buffalo Pound, Cochin, Edenwold, serve ruralareas around Baildon, Internet equipmenttotowersthat added newHighSpeedfusion more reliable onlinenetwork,SaskTel customers access toafasterand To provide evenmore rural 99 POPULATION and reaches in theprovince largest of itskind LTE networkisthe OF THE OF % ™

SASKTEL 2016/17 ANNUAL REPORT | 11 Tel’s new Tier III Data Centre in Centre new Tier III Data Tel’s , 72% of SaskTel suppliers suppliers SaskTel , 72% of oduction oduction or the first place ranking by J.D. Power & J.D. ranking by or the first place ed first by J.D. Power & Associates for Power & Associates J.D. ed first by for Associates & Power by J.D. ed third Tel expanded to more than 400 towers in rural than 400 towers expanded to more Tel Tel changed the look Tel on the J.D. Power award for highest television for award Power on the J.D. Saskatchewan, since announcing the project in announcing the project since Saskatchewan, in the largest network making our LTE June 2016, by a wide margin. the province In 2016/17 W in the West and Internet customer satisfaction year. consecutive the fourth for Region Tied f the West overall network quality for for Associates year. consecutive the second for Rank Rank Opened Sask east Centre a Tier III Data and acquired Saskatoon Regina. of Sask The intr of shareMORE plans wireless allows customers to share across data all the devices in their household, which is important to them. Sask its Consumer of and feel relatable advertising to be more and human, and highlight the of experiences real-life customers. Saskatchewan providing in Saskatchewan, located were opportunities to small and medium- economic local businesses. sized Satisfaction. Experience Purchase Wireless Canadian Customer Care. Canadian Wireless

• • • • • • • • •

eel to sasktel.com, eel to sasktel.com,

ovements were made to technology, policies, made to technology, ovements were Tel began sending out courtesy notifications to notifications began sending out courtesy Tel

customers warning them that they are nearing their they are customers warning them that their limit, allowing them to better manage data use. data Sask Impr with and education and customer communication to the In-home Wi-Fi experience. regard SaskTel made online improvements that include that made online improvements SaskTel so users can experience browsing a customized available and prices promotions, see the products, wireless to them, as well as the ability to purchase and services. products Besides a new look and f

• • CUSTOMERS AND SUPPLIERS and evolve in order to grow continues As SaskTel we solutions to all customers, to deliver innovative mind. Our customers always top of their needs keep the best experience first, and we aim to provide come our superior networks, exceptional possible through solutions and applications. and advanced service, • CSR has been integrated into our business strategy strategy into our business CSR has been integrated to help us deliver many years, and continues for risk efficiency, operational growth, on revenue leading alignment. As a management and strategic Technology and Communications Information annual (ICT) we attained in Saskatchewan, provider and had over $1.2 billion in 2016/17, of revenue million customer connections 1.4 approximately 388,000 accesses, wireless including over 615,000 Internet accesses 275,000 network accesses, wireline subscribers. maxTV and 110,000 In 2016/17, we continued our pursuit of connecting connecting pursuit of our we continued In 2016/17, customer on exceptional focusing your world through employees, investing in our engaging our service, our environmental reducing community, provincial to better and expanding our services footprint are Our efforts Saskatchewan. of serve the people Social Responsibility Corporate delivering on our residential to and our commitment (CSR) targets and business customers.

Responsibility Highlights Corporate Social Social Corporate 12 | CORPORATE SOCIAL RESPONSIBILITY HIGHLIGHTS • EXPERIENCE EMPLOYEE • • • •

by MediaCorpCanadaInc.for the11 Named oneo seventh consecutive year. of trainingfrom April1,2016, toMarch 31,2017. consecutive year. by MediaCorpCanadaInc.for theeighth Sask category byWaterstone HumanCapital. Corporate Cultures inthebroader publicsector R the fifthtime. for Young People byMediaCorpCanadaInc.for R Named oneo straight year. Our employeesare engrainedinourprovince. ecognized asoneof Canada’s10MostAdmired ecognized asoneof Canada’sTop Employers They represent thediversityandculture of Employers byMediaCorpCanadaInc.for the Tel employeescompleted almost70,500 hours Saskatchewan, andcanbefound allaround • Namedoneof Canada’sBestDiversity our province, working,raisingtheirfamilies and volunteering.Withouttheirstrength total workforce at theendof March 2017. and commitment, wewouldn’tbeable representation, sittingat 9.9% of the f Saskatchewan’s Top Employers f Canada’sGreenest Employers to delivertheoutstandingcustomer in visibleminorityemployee experience that wedotoday. • SaskTel sawanincrease in • SaskTel sawanincrease disability representation to 2017, upfrom 5.5%. 10.4% at theendof March 2017, upfrom at the endof March 5.7% in2004. organization, to9.4% • Since 2004, rise withinour SaskTel has th seen total representation

Indigenous • • • • • • difference inthelives of Saskatchewan people. partnerships, weare committed tomaking apositive community for over100years.Through longstanding SaskTel isproud toremain anintegralpartof our INVESTMENTCOMMUNITY

over $291,425. SaskTel, thetotalfundsmadeavailableequalled organizations. Matched bya50%allocation from program contributed more than$194,285 to69 Acr time tosupportworthwhilecommunity initiatives. completed more than45,000 hoursof volunteer more than$159,000 incharitabledonations and province, theSaskTel Pioneerscontributed With mor annual IndigenousYouth Awards of Excellence. Wicihitowin Foundation havepartnered tohostthe and Services of Saskatchewan. to theProvincial Association of Transition Houses just over$22,300 inpre-paid phonecards todonate devices were recycled, enablingSaskTel toinvest SaskTel Phonesfor aFresh Startprogram, 12,990 Between January2016andMar bullying initiatives. own SaskTel IAmStronger kindnessandanti- to theyouthof thisprovince toimplementtheir applications were approved with$24,650 given Between April2016andMar 217 communities throughout theprovince. associations, venues, events andpartnershipsin profit andcharitableorganizations, community Invested mor 2016 mark oss theprovince, theSaskTel TelCare e than4,200 membersacross the ed the18 e than$2.7 millionin888non- th yearthat SaskTel andthe ch 2017, 29grant ch 2017, underthe ENVIRONMENTAL SUSTAINABILITY • SaskTel entered into an agreement with Indigenous and Northern Affairs Canada to provide fibre to As a good corporate citizen, SaskTel works to First Nation Band Offices and Tribal Council Offices balance our business priorities with protecting across Saskatchewan, which will provide these the environment. We are well positioned to take locations with the capability to access 10 Mbps the next step in environmental sustainability and symmetrical dedicated Internet service. stewardship, with a solid foundation that has organizational practices aligned with environmental • Through SaskTel’s Community Participation policies. SaskTel’s Environmental Management Program, SaskTel added DSL Internet to the System allows SaskTel to manage environmental communities of Crystal Lake and York aspects of our business effectively based on Lake in the 2016/17 fiscal year. International Organization for Standardization standards (ISO 14001). • Named one of Canada’s Greenest Employers by MediaCorp Canada for the eighth consecutive year. SaskTel is the only Saskatchewan-based company to win this award since its inception. • Since 2009, the Phones for a Fresh Start program has recycled 94,289 devices. • Internal employee-led group EnviroCare completes “greening initiatives” in the province, including a partnership with The Great Trail in the summer of 2016.

ECONOMY AND SOCIETY SaskTel continues to invest in capital expansion and upgrades that help stimulate economic growth, proactively meet growth needs and ensure a constantly improving network. Our investment is also helping to meet customer demand, particularly for data and cell service. • During the 2016/17 period, SaskTel invested $316.1 million in capital expenditures to improve customer experience and create opportunities to provide additional enhancements and capabilities in the future. • Through the Connecting Canadians program, SaskTel provided broadband Internet to 26 northern SASKTEL 2016/17 ANNUAL REPORT communities at a cost of $9.9 million, $7.5 million of which will be reimbursed through the program. | 13

SASKTEL 2016/17 ANNUAL REPORT | 15 SASKTEL 2016/17 ANNUAL REPORT | 15 es ecord of service ecord of Capital Expenditur policies Significant accounting Five-year r Glossary

37 39 41 38 Looking ces ehensive Income (Loss) ehensive Income ear End e Expense ovided by Operating Activities ovided by Operating ovided by (Used in) Financing ome tegic Risks e Business Risks eturn on Equity ting Results Cash Pr Cash Used in Investing Activities Cash Pr Capital Management Net Financ Other Compr Activities Financial Summary Net Inc R Revenues Expenses Stra Cor

trategic Direction trategic Introduction 36 31 35 Liquidity and Capital Resour 36 36 30 34 35 Risk Management 27 28 Opera 29 30 36 Our Business S Performance management Changes In Fiscal Y Changes In Fiscal Forward- Caution Regarding Information

16 36 29 18 24 27 16 17 16 Contents Management’s Discussion and Analysis Discussion Management’s INTRODUCTION CAUTION REGARDING The following management’s discussion and analysis (MD&A) FORWARD-LOOKING INFORMATION focuses on the strategies, business operations, consolidated Many sections of this discussion include forward-looking financial position and results of operations of Saskatchewan statements about SaskTel, its business outlook, objectives, Telecommunications Holding Corporation (SaskTel or the plans and strategic priorities, the sources of liquidity we Corporation), including its major strategic business units and expect to use to meet our anticipated 2017/18 cash its subsidiaries. This discussion and analysis should be read requirements, and our network deployment plans. A in conjunction with the Corporation’s audited consolidated statement is forward-looking when it uses information financial statements and accompanying notes on pages 43 known today to make an assertion about the future. Forward- to 76 of this report and includes information available to the looking statements may include words such as anticipate, Corporation up to May 26, 2017, unless otherwise stated. believe, could, expect, intend, may, should, will and similar expressions. Since these forward-looking statements reflect CHANGE IN FISCAL YEAR END expectations and intentions at the time of writing, actual Effective for the previous fiscal period, the SaskTel results could differ materially from those anticipated if known Board of Directors approved a change in its or unknown risks and uncertainties impact the business, or year end from December 31st to March 31st. if estimates or assumptions turn out to be inaccurate. As a SaskTel’s transition period was the 15 months result, SaskTel cannot guarantee that any of the predictions ended March 31, 2016. The comparative forecasted by forward-looking statements will occur. As well, period for financial reporting purposes forward-looking statements do not take into consideration is the 15 months ended March 31, the effect of transactions or non-recurring items announced 2016, however, the explanations or occurring subsequently. found within this MD&A will be Readers should not place undue reliance on forward- comparing the 12-month looking statements, as a number of factors could cause period ending March 31, actual results to differ materially from estimates, predictions 2017, with the 12-month and assumptions. Factors that can influence performance period ending March include, but are not limited to: general economic and political 31, 2016, unless conditions, interest and exchange rates, performance, otherwise stated. competition and regulatory environment. Given these uncertainties, assumptions contained in the forward-looking statements may or may not occur. MANAGEMENT’S DISCUSSION AND ANALYSIS MANAGEMENT’S 16 | SASKTEL 2016/17 ANNUAL REPORT | 17

network ™ service) ™ onsumption habits otocol Television (IPTV) footprint Television otocol cess network throughout both urban throughout network cess olio of cloud-based services olio of f technology, competition, and competition, f technology, f Things (IoT) continuing to gain momentum continuing f Things (IoT) or agile and innovative organizations or agile and innovative cial and residential video monitoring, access video monitoring, cial and residential ed Fibre-to-the-Premises (FTTP) infiNET (FTTP) ed Fibre-to-the-Premises owing importance of cyber security of owing importance eting Services (DirectWest) eting Services owing data centre footprint and services footprint centre owing data easing size and scale of competitors and scale of easing size celerating adoption of over-the-top (OTT) and cloud- and over-the-top (OTT) adoption of celerating ftware and consulting solutions for communications solutions for and consulting ftware ftware and digitalization penetrating all aspects of penetrating and digitalization ftware owth in data consumption and network utilization that is that and network utilization consumption owth in data oadband becoming a basic service a oadband becoming ersistent and disruptive regulatory change ersistent and disruptive regulatory Cord cutting,” “cord shaving,” and “cord nevers” shaving,” and “cord cutting,” “cord Cord Ubiquitous local ac Ubiquitous A gr A developing portf Mark Commer So International) worldwide (SaskTel providers service and rural Saskatchewan smart home, and medical alert, lone worker, control, (SecurTek) interactive services service providers’ business (e.g. software-defined networks, business (e.g. software-defined providers’ service and big data) network function virtualization, networks and the 5G wireless driving the development of services wireline fibre-based expansion of P Rapid evolution o customer needs “ Br Incr The need f Ac based services Changes to television c So The gr The Internet o Gr throughout the province (maxTV province the throughout in Regina, Saskatoon, Moose Jaw, Prince Albert, Weyburn, Weyburn, Albert, Prince Jaw, Moose Saskatoon, in Regina, Current Swift Estevan, and Internet Pr Extensive Advanc

• • in achieving over $1.2 billion is highly competitive, SaskTel million customer 1.4 and approximately annual revenue accesses, wireless over 615,000 including connections Internet 275,000 network accesses, wireline 388,000 subscribers. maxTV and over 110,000 accesses, • • • • • • • • • • • • • plans these changes and proactively of is fully aware SaskTel and create adapt to will successfully how the company for opportunities within the industry. The Business Environment and Communications within the Information operates SaskTel to This industry continues (ICT) industry. Technology of change, as by a significant amount be characterized by: evidenced • • • • •

tion (4G) network and the ™ ,200 access points in over 2,000 locations points in over 2,000 access ,200 ong Term Evolution-Time Division Duplex (LTE-TDD) fixed Division Duplex (LTE-TDD) Evolution-Time ong Term Your Life. Connected. Your Wi-Fi in 4 selectWI-FI service) (SaskTel the province throughout largest geographically continuous Long Term Evolution Evolution Term Long continuous geographically largest in Canada network wireless (LTE) L (High Speed fusion access rural broadband for wireless A world-class Fourth Genera Internet service)

• SaskTel and its subsidiaries offer the widest breadth of ICT the widest breadth and its subsidiaries offer SaskTel including: in Saskatchewan, and services products • • Saskatchewan Telecommunications Holding Corporation Telecommunications Saskatchewan The Holding Corporation. Crown is a Saskatchewan owned subsidiaries (SaskTel, wholly Corporation’s a wide offer International) and SaskTel SecurTek, DirectWest, and solutions to customers services, products, array of these the world. Together, around and in Saskatchewan 4,000 approximately of subsidiaries have a workforce one of Time Equivalents (FTEs), making SaskTel Full employers. largest Saskatchewan’s Saskatchewan Telecommunications Telecommunications Saskatchewan Holding Corporation IT’S ABOUT US CONNECTING WITH YOU— WITH IT’S ABOUT US CONNECTING WITH YOU AND THEN CONNECTING WORLD. YOUR OUR BUSINESS LEADING WE’RE SASKATCHEWAN’S COMMUNICATIONS AND INFORMATION COME (ICT) YOU PROVIDER. TECHNOLOGY A NEW PHONE, NEED YOU US WHEN TO YOU OR TV. INTERNET, LIGHTNING FAST BUSINESS YOUR US WHEN TO COME SOLUTIONS, NEEDS COMMUNICATION AND HELP MORE CUSTOMERS REACH TO BE MORE EFFICIENT. EMPLOYEES YOUR IS ABOUT FOR SASKTEL, COMMUNICATION MATTER, CAREERS THAT COMMUNITY, AND PEOPLE WHO MAKE A DIFFERENCE. WHO AND PEOPLE 18 | MANAGEMENT’S DISCUSSION AND ANALYSIS in networkdesign andoperation. that increaseVirtualization (NFV) theimportance of software in Software DefinedNetworks(SDN)andNetwork Function networks. Thisisbeingreinforced through developments new product offerings that complement theevolution of their is creating opportunitiesfor incumbentcarrierstodevelop collaboration, managedsecurity, andprofessional services data centres, cloudservices, unified communications and Increasing demandfrom businessesfor managed networks, in themarket. adoption of newservices that are startingtogainacceptance information technology isresulting in the developmentand between traditionalcommunications technologyand services targeted at businesscustomers.Convergence Services sectorthrough thedevelopmentof newIT-based communications services istheSoftware &Computer potential tooffset declining revenues andmargins inlegacy An area of growth withintheICTindustrythat hasthe Software &ComputerServicesSector • • • due to: (OTT) services in Canadaishavinganimpactonallcarriers The hugepopularityof Netflixservice andotherover-the-top The market for paidTVservices continues tobedisrupted. voice service affordable. on thetraditionallocalvoice subsidyregime tokeep wireline there are large high-cost servingareas andcustomersstillrely change isof concern inregions suchasSaskatchewan where Canada—10 timesthecountry’s existingspeedtargets. This universal objectivefor fixed broadband Internetaccess across of 50Mbpsdownloadand10uploadasthenew As partof thisnewregime, theregulator hassettargets that willbefundedbyCommunications Service Providers. accomplished through thecreation of a$750.0-million fund focus onbroadband Internetaccess services. Thiswillbe for traditionaltelephoneservices andincreasing the announced inlate 2016that itisphasingoutthesubsidies addition totheapproval of recent acquisitions,theCRTC The regulatory environment alsocontinues toevolve.In forecast toincrease outto2020. this sameperiodat around 3.4%. Thesector’sprofitability is Revenue growth isalsoexpectedtoberelatively flat over to remain sluggish outto2020, rangingnohigherthan1.7%. output increasing byamere 0.3%. Growth rates are expected expansion until2012.Since then,growth hasslowedwith Canadian ICTindustry. Thesectorwasundergoing healthy Communications Services isamajorsectorwithinthe Communications Services Sector

Pr their Internetinfrastructure Significant additionstotheamounto Downwar essure onnewstreaming services d pressure ontheirpaidTVsubscriberbases f traffic carried on f traffic carried with thisdirection from theshareholder inmind. were developedbytheBoard of Directors andManagement SaskTel’s vision, mission,core themesandstrategic goals the Challengeprogram overthenextseveralyears. make contributions totheprovincial government’sMeeting management hasbeenbrought intofullfocus andSaskTel will natural resource revenues, theimportance of soundfiscal that Saskatchewan iscurrently facingduetoreduced sound fiscalmanagement.Giventhefinancialchallenges workforce, ensuringcompetitiveness, and maintaining investments ininfrastructure, thedevelopmentof askilled SaskTel alignsitselftothesepriorities through prudent priorities outlinedinthePlanfor Growth. Asaresult, Crown corporations are expectedtocontribute: priorities were outlinedintheplan,towhichallSaskatchewan future developmentof theprovince. Sixcore growth-oriented multi-year planservesasthegoverningframeworkfor the Saskatchewan Planfor Growth: Vision2020andBeyond.This In September2012,theGovernmentreleased the priorities of theprovincial government. the company’s overallstrategic direction isguidedbythe Saskatchewan. Inadditiontotheneedsof themarketplace, SaskTel isaCrown corporation of theProvince of Alignment toourShareholder TO SASKATCHEWAN. PROVINCE ANDOURDRIVETO GIVEBACK INVESTMENTS WEMAKETHROUGHOUTTHE ITS PEOPLE. THISINFORMSALLOFTHE UNDERSTANDING OFSASKATCHEWAN AND TRUE “HOME TEAM,” WEHAVE ASTRONG THRIVE THROUGHTECHNOLOGY. ASTHE WE AREEMPOWERING BUSINESSESTO THE CONSUMER’S DIGITAL LIFEAND TO THEIRWORLD. WEAREENABLING BEING THEBESTAT CONNECTING PEOPLE WE CONTINUE TO ACHIEVE OURVISIONOF DIRECTION STRATEGIC The Governmentc 6. 4. 3. 2. 1. 5.

through innovation Maintaining soundfiscalmanagement Advancing thepr Incr Ensuring c Developing askilledworkf Investing in easing exporttrade ompetitiveness ontinues to be committed to the ontinues tobecommitted tothe frastructure ovince’s natural resource strengths orce SASKTEL 2016/17 ANNUAL REPORT | 19

OPTIMIZE operate our To network existing to the benefitto of the people of Saskatchewan. e on breadth of services of e on breadth ease broadband penetration ease broadband celerate transformation to an transformation celerate ow revenue and profit from from and profit ow revenue ICT provider customer experience Ac Gr Deliver an outstanding Incr Capitaliz the business market

5. 2. 1. 3. 4. TRANSFORM transform To services, people, systems processes, to technology and be successful in the long term. The following sections outline each of these Strategic Goals these Strategic outline each of sections The following them realizing made toward were and the achievements that 2016/17. throughout The achievement of SaskTel’s vision, mission, and future vision, mission, and future SaskTel’s The achievement of well-established themes on two we focus that requires state and Transform direction— strategic guide our overall that and develop services will aggressively . SaskTel Optimize the long- over successful the company will keep that markets to harvest the benefits while continuing term (Transform) of the to the benefit its existing network and services from these together, Taken (Optimize). Saskatchewan people of SaskTel’s framework for the overarching two themes provide Goals. five Strategic Goals Strategic have Directors of Management and Board SaskTel’s Goals Strategic to identified five distinct, yet interrelated Core Themes Core guide the company: information technology infrastructure. End-to-end business End-to-end infrastructure. technology information to enhanced leading will be updated, systems and processes new activities. These management in our service capabilities businesshow customers do will better facilitate capabilities it easier and make speed to market, our improve with SaskTel, to do their work. employees for to will contribute state in our future These investments itself by delivering to differentiate continuing SaskTel and a unified experience, providing outstanding connectivity, local and committed. remaining

To provide the best customer best the customer provide To To be the best at connecting people connecting best be the at To Honesty, Integrity, and Respect. Integrity, Honesty,

: : to their world. their to VALUES MISSION: VISION and applications. experience through our superior networks, superior our through experience solutions service, advanced exceptional Supporting the transformation of customer experience, along customer experience, of Supporting the transformation networks and services, converged with the development of SaskTel’s of will be an equally important transformation Professional services, managed IT services, and managed managed IT services, services, Professional our newest offerings. the nucleus of will form cloud services The intelligent broadband network will facilitate the delivery network will facilitate The intelligent broadband and both consumers for services new converged of network access, businesses. Consumers will benefit from security television, and packaged with communication, data network access, Businesses will be offered services. technology (IT) and information providing services, centre, end-to-end solutions. Implementing state-of-the-art converged, intelligent converged, Implementing state-of-the-art of networks is the foundation communications to provide will continue We success. future SaskTel’s throughout unrivalled network capabilities and coverage this intelligent The development of Saskatchewan. in a ubiquitous, seamless network will result broadband networks and devices. across customer experience will be that access Customers will have one broadband and Wi-Fi networks. served via mobile, fixed, The experience that customers are demanding from SaskTel SaskTel demanding from customers are that The experience our customers.is evolving and we must change along with on improvements is focusing SaskTel to achieve this, In order are We (CX) First program. our Customer Experience through capabilities, providing investing heavily in customer self-serve interacting options for of number customers with a greater with SaskTel. As changes to customer requirements, technology, technology, requirements, As changes to customer occur, to continue regulations and traffic, data competition, business. our of transformation toward is progressing SaskTel new network technologies,Investments in customer service, ensuring that are skills and workforce systems, processes, staying While the future. for is well positioned the company base, SaskTel true to our history and our loyal customer the premier we can remain so that to change will continue and communications information next-generation of provider Saskatchewan. of the province within technology services SaskTel’s Future State Future SaskTel’s Our Vision, Mission, and Values and Vision, Mission, Our 20 | MANAGEMENT’S DISCUSSION AND ANALYSIS • • • • • 2016/17 ACHIEVEMENTS

Experience (CX)Firstprogram. F Care Study. Came thir quality intheWest. Tied f Purchase Experience Satisfaction Study. Came firstintheJ Region for the fourth yearinarow. Customer Satisfaction Studyfor TVandInternetintheWest R urther implemented our industry best practices Customer urther implementedourindustrybestpractices Customer SaskTel’s profitability. Our employeestake accountability for deliveringthisexperience whilebalancingcustomerneedswith and deliveringanexcellent experience. Ourcustomersfeel valuedandreceive apositiveexperience whenwe: As alocalcompany that isclosetoitscustomers,SaskTel takes great prideinknowingwhat isimportanttoourcustomers a significantdisadvantage. that donotliveuptoincreasing customerexpectations for speed,reliability, simplicity, andservice willfindthemselves at An importantcompetitive differentiator continues tobethedelivery of anoutstandingcustomerexperience. Providers eceived theJ.D. Power award for firstintheWireline • • • • •

or firstinthe J.D. Power ranking for overallnetwork R Set clearexpecta Mak If itgoeswr Do itrightthefirsttime espond quicklytotheunexpected e iteasyfor ourcustomers d intheJ.D. Power Wireless Customer DELIVER AN OUTSTANDING CUSTOMER AN EXPERIENCEDELIVER ong, ownitandfixquickly .D. Power 2016Canadian Wireless tions andliveuptoourcommitments

• • • •

Pr seamless access toservices at anational level. with BellCanadaandTELUS Signed anextensiono customer experience andreducing manualeffort. (IBC) service automated provisioning capabilities,improving R 99% of thepopulation. across Saskatchewan—the LTE networknowcovers Completed ourL improving insightsintocustomerneeds. olled out various Integrated Business Communications olled outvariousIntegrated BusinessCommunications ogressed onbusinessintelligence initiatives aimedat TE wireless networkexpansion f theNetworkReciprocity Agreement , ensuringcustomersreceive

SASKTEL 2016/17 ANNUAL REPORT | 21 f Digital Subscriber Line (DSL) Internet towers, bringing the total fusion network became the largest wi-fi selectWI-FI network became the largest Tel ough the Connecting Canadians Program, provided provided ough the Connecting Canadians Program, eached agreements with eight communities to with eight communities eached agreements Added nine new rural communities serving 714 68, towers to number of the province. across The Sask Thr R the to them through services access bring enhanced Model. Community Participation Expanded the availability o points in access over 4,200 with network in the province, locations. over 2,000 customers in Northern Saskatchewan 2,700 approximately to 5 Mbps download and 1 Mbps upload speeds inaccess 26 communities. service in rural Saskatchewan to 13 new communities and to 13 new communities in rural Saskatchewan service in 38 communities. upgraded the Internet service

• • • • • gest fully fibre community incommunity gest fully fibre t work together seamlessly. INCREASE BROADBAND PENETRATION INCREASE BROADBAND f Fibre to the Premises (FTTP) to the Premises f Fibre , controls and security. , controls tic use of the best network for customers’ needs and location. the best network for tic use of Multiple networks tha Automa Built-in quality

• • • oadband penetration in fibre neighbourhoods increased neighbourhoods increased in fibre oadband penetration A large part of our future success relies on SaskTel remaining a market leader in the delivery of broadband access broadband in the delivery of leader a market remaining on SaskTel relies success our future part of A large outside the province. travel or have locations they may and wherever Saskatchewan to customers throughout services customers have access while ensuring that customer base our broadband increasing from will come growth Future our broadband will achieve this by increasing needs. We their growing to meet capacity in order to higher speeds and services. our broadband the sales of our networks, and by growing and speed of the quality coverage, As customers’ consumption of online content continues to increase, fixed and mobile broadband access services have services access broadband and mobile fixed to increase, continues content online of consumption As customers’ to customers as local as important has become access broadband reliable and lives. Fast to their indispensable become was. once landline service by: characterized the future, of service core envisioned as SaskTel’s is intelligent broadband Secure, TE coverage was expanded to over 400 towers that serve to over 400 towers that was expanded TE coverage TE wireless network expansion across Saskatchewan network expansion across TE wireless Moose Jaw became the lar Canada. Western Br over year. year 14% Continued build-out o L along with expansion to in major centres infrastructure in 2017. with plans to start in Yorkton Estevan and Weyburn rural areas, ensuring that our rural customers enjoy the our ensuring that rural areas, as urban customers. experience same LTE L was completed. SaskTel’s LTE network now covers 99% network now covers LTE SaskTel’s was completed. network in LTE making it the largest the population, of geographically continuous and the largest the province network in Canada.

• • • • 2016/17 ACHIEVEMENTS • 22 | MANAGEMENT’S DISCUSSION AND ANALYSIS • • • • 2016/17 ACHIEVEMENTS • • 2016/17 ACHIEVEMENTS

advanced platforms. Moose Jaw—all voice linesinthiscityare nowoperating on Br highlighting SaskTel’s proven capabilitiesinthisspace. Pr showed growth. Our Integra and capabilities. significantly expandingouradvanced data centre capacity an existingTierIIIdata centre wasacquired eastof Regina, A newTierIIIda and Treehouse. History, MovieNetwork,FX/FXX,Hollywood Suite, max Completed c within arapidlychangingindustry. SaskTel mustalsomaintainastrong focus oncost managementin order toensure long-termprofitability and survival needs of ourcustomers.Whilethecentral motivation of thistransformation istosecure newrevenue opportunities, In thefuture, SaskTel willbemore flexibleandagileinorder tosuccessfully compete andstay relevant withtheevolving provider. Thisrequires changesto: SaskTel mustcontinue toadaptitsbusinessmodelandaccelerate itstransformation from atraditionalcommunications importantly, anopportunityfor SaskTel’s long-termsuccess. products andservices. Thesedisruptionsshownosignsof slowingandrepresent asignificantthreat to,and,more resulting intechnologicaldisruption,increased consumer choice andcompetition, andfinancialpressures onlegacy Convergence betweentraditionalcommunications technologyandinformation technologycontinues toaccelerate, increasing capabilities around theInternetof Things(IoT). delivering over-the-top(OTT) services that willworkseamlesslyacross alldevices andnetworks,developing We willdelivergreater valuetocustomersthrough ourbreadth of services byemployingourmultiplenetworks, consumer andbusinessmarkets. Saskatchewan. SaskTel willcontinue tobundletogetherservices that provide totalsolutionsfor selectsegmentsinboth SaskTel, togetherwithitssubsidiariesandbusinesspartners,offers thewidestbreadth of services of anyICTprovider in ofessional Services engagementscontinued togrow, oadband Line Gateway technology was implemented in oadband LineGateway technologywasimplemented in • • • • • GoAppswere launched including,WWENetwork, TV

Our utiliza The channelsweusetogetpr The waywepr Our skillsandcultur Our r ACCELERATE TRANSFORMATION PROVIDER TO ICT AN eputation andbrandinthemarketplace. ted Business Communications (IBC) service ted BusinessCommunications (IBC) service onsumer homeautomation trialsinRegina. tion of partnershipswithintheindustryecosystem. ta centre wasopened inSaskatoon and ovision andsupportservices. CAPITALIZE SERVICES OF BREADTH ON e. oducts tomarket.

• • • • • •

operational flexibility, agility, andspeed. systems andprocesses aimedat achievinggreater and mediaenhancements. platform toenhance maxTV withnextgeneration IPTV and Regina. Expanded da Consumer UnifiedCommunica Continued implementa Partner infiNET Partner installations, andinfrastructure renewal projects. projects includingtheFTTPprogram, businessservice Expanded ourgr with customers. ed with Ericsson to adopt their MediaFirst ed withEricssontoadopttheir MediaFirst ed withNetflixto to offer theirpopularservice -enabled ta centre footprint inbothSaskatoon eenfield partnership to include special eenfield partnershiptoincludespecial maxTV customers. tion of enhancements to internal tion of enhancements tointernal tions was trialed tions wastrialed

SASKTEL 2016/17 ANNUAL REPORT | 23

te LAN Service (VPLS)te LAN Service and tion of world-classtion of oice Grade Access for IP Trunking on DSL IP Trunking for Grade Access oice ted Business Communications (IBC)ted Business Communications oduced Business Fibre Services over Gigabit Services Business Fibre oduced ovided a web content filtering solution for filtering solution ovided a web content Mosaic Stadium Passive Optical Networks (GPON), including ManagedPassive Optical Networks (GPON), including (VPN) Network Virtual Private and two Dedicated Pr Launched 1Gb Virtual Priva Launched V Completed the installa new in Regina’s infrastructure communications Integra including delivering new features enhancements capabilities, account mail and billing voice improved to use iOS and and the ability reporting, code tablets Android Intr Internet services CommunityNet both LANspan IP and Dedicated speeds for improved and Saskatoon Internet in both Regina » » » » » » » » » » » »

e evolved to provide improved improved e evolved to provide es were launched including: es were ecovery, delivering a cloud-based ecovery, frastructure Service focused on providing on providing focused Service frastructure ed a significant increase in Professional in Professional ed a significant increase f our Tier III data centres in both Saskatoon in both centres f our Tier III data GROW REVENUE AND PROFIT FROM THE BUSINESS MARKET BUSINESS THE FROM PROFIT AND REVENUE GROW ee value-added resellers (VARs) were signed to sell our were (VARs) ee value-added resellers monitoring and management of customers’monitoring and management of network equipment and business continuity for ‘pay as you go’ service disaster recovery Managed Hosting servic system management and support operating hardware, Cloud Disaster R Managed In Successfully increasing traction and sales in the business market is critical to SaskTel’s future given the ongoing given the future is critical to SaskTel’s in the business market traction and sales increasing Successfully market. within the business predicted growth opportunities for greater and the services consumer of commoditization with evolving along services managed and emerging of new on the introduction efforts to focus continue will SaskTel on our primarily will focus customers. We total solutions for providing business services, of our existing portfolio as select markets as well outside the province), their operations (including within the province business customers beyond Saskatchewan. » » » the province. and east of Regina has attracted business from across across business from has attracted Regina and east of engagements. Services » » » Thr Solution outside Saskatchewan. Hosted Collaboration New business servic Experienc Launch o

• • • 2016/17 ACHIEVEMENTS • 24 | MANAGEMENT’S DISCUSSION AND ANALYSIS ● made inourCustomerExperience (CX)Firstprogram. provide inboththeconsumer andbusinessmarkets. Thesemeasures willalsobemore consistent withtheinvestmentwehave give usamore accurate indication of howwellweare servingcustomersthrough insightsintotheexperience ourservices of SaskTel regardless of thequalityof service theymayhavereceived. Themovetothenewexperience-based measures will impacted bycircumstances beyondSaskTel’s control (suchasregulatory decisions)that cannegatively affect acustomer’sview discontinued infavourof twonewmeasures focused oncustomerexperience. Insomeinstances, customerperception is of insight intotheeffectiveness of ourcustomerservice activitiesandhowwellwe are performing onouroverallstrategy for SaskTel. Thecustomerperception indicators found withintheCustomerPerspective of thebalanced scorecard provide 2016/17 customermeasures are once againstrongly focused oncustomersatisfaction, givenitsimportance asadifferentiator CUSTOMER PERSPECTIVE Balanced Scorecard Targets andResults 12-month fiscalyearendingMarch 31,2017. were developed by Managementandapproved bytheBoard of Directors. AllBalanced Scorecard measures represent the track progress toward ourstrategic goalsandmake adjustmentsasrequired. Targets for eachbalanced scorecard measure scorecard are strategic, andquantitatively describewhat thecompany’s success lookslike. TheKSMsenableManagementto success: Customer, People, Operational Excellence, andFinancial.TheKey Success Measures (KSMs)found withinthe SaskTel usesabalanced scorecard tomonitorandmeasure performance infour areas criticaltothecompany’s long-term Balanced Scorecard OF THESEAREAS. PROACTIVELY MANAGING THECOMPANY TOWARD THEACHIEVEMENT OFEXCELLENCE INALL PERFORMANCE. WECONSTANTLY MONITOR OURKEYPERFORMANCEINDICATORS, TO EXCELLENCE INOURCUSTOMER SERVICE,WORKFORCE, OPERATIONS, ANDFINANCIAL OUR SHAREHOLDERS—THEPEOPLE OFSASKATCHEWAN. ASSUCH, SASKTELISCOMMITTED INFRASTRUCTURE ANDSERVICES, WHILEALSODELIVERINGVALUABLE FINANCIALRETURNSTO SASKTEL EXISTSTO PROVIDE WORLD-CLASS INFORMATION ANDCOMMUNICATIONS PERFORMANCE MANAGEMENT 2016/17 Performance Measure Customer Satisfaction

Achieved delivering anoutstandingcustomerexperience.Headinginto2017/18, thecustomerperception measures willbe establish thebaselinefor performance onournewcustomerexperience indicators. Through ourongoingcommitment todeliveringanoutstandingcustomerexperience, weexpecttoperform wellin2017/18whilewe accomplishment. We willincrease ourfocus onthebusiness market in2017/18order toimprove ourperformance goingforward. share) coupled withcurrent challengesinSaskatchewan’s economy, maintainingourbusinessmarket perception isaconsiderable market inSaskatchewan (particularly withrespect towireless services where large competitors haveessentiallybeenbuyingmarket maintained ourcustomerperception results achievedin2015/16. Giventhestate of intense competition found withinthebusiness outcome of SaskTel investmentsandstrong focus oncustomerexperience throughout 2016/17. Withinthebusinessmarket, we perception withintheconsumer market. The improvement inperception withintheconsumer market overthepastyearisan Customer satisfaction results inboththeconsumer andbusiness markets were mixed in2016/17. We metourtarget for customer Customer experience –business Customer experience –consumer Customer perception –business utmrpreto osmr1pointbelow2014 Customer perception –consumer ● •

Partially achieved ●

Not met Improved by2points 051 cul21/7Ata 061 agtRsl 2017/18Target Result 2016/17Target 2016/17Actual 2015/16 Actual over 2014 New indicator for 2017/18 New indicator for 2017/18 2015/16 actual 2015/16 actual 1 pointabove Maintained 2015/16 actual 2015/16 actual 1 pointabove 1 pointabove ● ● •

Establish baseline Establish baseline N/A N/A

SASKTEL 2016/17 ANNUAL REPORT | 25 85% 27.9% actual 13,959 15,965 1% above 2015/16

• ● ● ● N/A N/A 85% 26.8% actual 16,319 15,466 1% above 2015/16 service. We achieved 95% of our Homes Passed our Homes Passed achieved 95% of We service. N/A 28.2% 15,542 21,989 85% 27.0% 34,468 24,306 2015/16 Actual 2016/17 Actual 2016/17 Target Result 2017/18 Target 2015/16 Actual 2016/17 Actual 2016/17 Target Result Target 2017/18 4% above 2014 actual N/A Not met

● Partially achieved

• ● Number of homes passed Number of Hay survey result for for Hay survey result employee engagement target. Results were just below our objective due to unfavourable winter weather conditions that resulted in construction delays in in construction resulted that conditions winter weather just below our objective due to unfavourable were Results target. its broadband to increase program helping the FTTP delays in early 2017/18, up on these construction expect to catch We some FSAs. the province. throughout penetration and our both our 2016/17 target exceeded again, we have Once efficiency. our overall operational for proxy is a key margin EBITDA activities such as improvement continuous of to be a result continue performance margin in EBITDA 2015/16 actual. Improvements and fleet efficiency), utilization space (including improved improvements operational and business simplification collaboration, Crown the year. spending throughout and controlled Overall, we are very pleased with the results of our Fibre to the Premises (FTTP) program in 2016/17. We surpassed our target for for surpassed our target We in 2016/17. (FTTP) program to the Premises our Fibre of very pleased with the results Overall, we are Serving customers as Fibre new broadband to acquire effort part to a concerted large Homes Connected by 42%. This was due in our infiNET demand for high with extremely coupled completed, were (FSAs) Areas Number of homes connected Number of EBITDA margin EBITDA * Only reflects results of SaskTel’s Fibre to the Premises program. to the Premises Fibre of SaskTel’s results * Only reflects Hay survey result for skill evolution for Hay survey result Results were not measured in 2016/17. not measured were Results Achieved

FTTP Execution* Employee Engagement 2016/17 Performance Efficiency Measure 2016/17 Performance Measure ● OPERATIONAL EXCELLENCE PERSPECTIVE EXCELLENCE OPERATIONAL overall and SaskTel’s program (FTTP) to the Premises our Fibre of on the execution focus measures excellence Operational The margin. (EBITDA) amortization and depreciation, taxes, interest, by earnings before as measured efficiency operational positioning versus our competitors, network, successful access to our broadband is critical to improvements FTTP program goal. strategic penetration broadband delivery on our increase and the ultimate efficiency, to operational improvements PEOPLE PERSPECTIVE PEOPLE learning and engagement, employee measures: two specific on focused again once were 2016/17 for measures The people Survey. the annual Hay Employee through collected by data provided are these measures both of for results The and growth. is availableno data As a result, this year. the survey undertake did not SaskTel in 2016/17, budget challenges Due to provincial the of a resumption through these indicators of its measurement will resume SaskTel these two indicators. for year-end at in a success to SaskTel’s development is crucial and skill in both employee engagement Progress survey next year. employee industry. very competitive 26 | MANAGEMENT’S DISCUSSION AND ANALYSIS ● operational cost management. strategic goalof growing revenue andprofit from thebusinessmarket. There willbeafocus oncontinuous improvement of SaskTel willseeknewrevenue sources from managedandemerging services andthebusinessmarket aswemovetoward our to make significantinvestmentsincapitalprograms that are transforming ournetworks,operations, andservice offerings. is experiencing;industrychangesthat are placingpressure onSaskTel’s revenues, costs, andprofit margins; andtheneed SaskTel’s long-termfinancialperformance. This focus isimportantgivenfinancial pressures that the Province ofSaskatchewan capital investment.Allof ourkey financialmeasures are concentrated onensuringinsightintothe continuous improvement of 2016/17 financialmeasures focused onshareholder value, revenue andgross margin growth, netincome, andtheintensity of FINANCIAL PERSPECTIVE Measure 2016/17 Performance Revenue /Gross Margin Capital Net Income Shareholder Value

Achieved Telco BusinessMarket Revenues *Revised approved official target. overall capitalprogram. Capital intensitycameinlowerthantargeted. Thisresult isonce againduetoprudentmanagementof capitalspendingwithinour of expenses. Net income greatly exceeded expectations asaresult of revenue growth, describedabove,andastrong focus onthemanagement to thecontinued expansionof DSLandFibre networksacross ruralandurbanSaskatchewan. wireless wholesalecontract renegotiations withothercarriersandincreased revenue from consumer InternetandmaxTV services due traction duetocurrent economic challengesandpublicsectorfiscal restraint. Year-over-year revenues haveincreased asa result of Total revenues cameinslightlybelowtarget duelargely toacombination of increasing competition, slowerthananticipated market strong earnings,andchangesinaccumulated othercomprehensive income (AOCI). Our debtratio cameinbelowthe2016/17target andbelow2015/16results. Thiswaslargely duetoincreased equityasaresult of the year. In 2016/17, wewere abletodeliverahigher-than-expectedReturn onEquity, largely duetoexceeding ourtargeted netincome for Total revenues Debt Ratio Capital intensity Net Income ROE ● •

Partially achieved ●

Not met New indicator for 051 cul21/7Ata 061 agtRsl 2017/18Target Result 2016/17Target 2016/17Actual 2015/16 Actual $1,264.8M $105.9M 2016/17 51.9% 23.2% 14.0% $1,277.2M $340.2M $134.8M 47.9% 24.8% 15.4% $1,287.4M $372.0M $104.2M 12.5%* 50.8% 25.7% ● ● ● ● ● ● • •

$1,320.5M $122.1M $373.9M 22.9% 51.2% 13.6% SASKTEL 2016/17 ANNUAL REPORT | 27 Workforce Regulatory Operating Environment Operating Competitive Capabilities Competitive Broadband Access Services Broadband Competitive broadband service offerings for both wireline for both wireline offerings service Competitive broadband with customers networks need to provide and wireless Without successful speed and availability. required for opportunities offerings, product broadband may be limited. offerings service complementary Continuous technological advancements and product and product advancements Continuous technological and agility speed greater drive the need for transformation including transformation, System as an organization. Business Intelligence increased the development of market maintaining a competitive capabilities, is critical to to integrate process and costly position. It can be a lengthy legacy systems. and support new and New approaches to systems and processes are required for for required are to systems and processes New approaches the operating Improving services. managed and emerging is essential to these new services and delivery model for advantage. and competitive achieve customer satisfaction Sustained technological and business model changes skills and changes to workforce accompanying require evolve must continually knowledge. The workforce aggressive technological transformation, to address customer demands. Software, and increasing competition recruitment analytics skillsets present and data wireless, in high they are challenges given that and retention demand and short supply. toThe Federal Government and its agencies continue disadvantageous are that reforms engage in regulatory such as operators to incumbents, in particular regional add costs, in increased result often These reforms SaskTel. Of to our business and impact profitability. complexity Obligation Basic Service is the CRTC’s particular concern for will phase out the subsidy we receive (BSO) decision that serving areas. in high-cost service local voice of provision ACCELERATE TRANSFORMATION TO AN ICT PROVIDER TO TRANSFORMATION ACCELERATE and evolve with the to grow The ICT industry continues information technology and communication of convergence to to an ICT provider transforms While SaskTel technology. opportunities, it must also new revenue advantage of take long- ensure management to on cost focus maintain a strong to an ICT with transforming associated Risks term profitability. include the following: provider INCREASE BROADBAND PENETRATION INCREASE BROADBAND primary the customer’s is quickly becoming Broadband ability to in the home and business. SaskTel’s service access on having a superior is reliant penetration broadband increase networks across new services the delivery of for infrastructure broadband with increasing associated The risk and devices. is as follows: penetration DELIVER AN OUTSTANDING CUSTOMER EXPERIENCE CUSTOMER AN OUTSTANDING DELIVER SaskTel to its customers, is close that company As a local to customers is important what pride in knowing great takes by delivering ancompetition the from itself and differentiating with The risk associated customer experience. outstanding follows: is as experience an outstanding customer delivering Control Evaluate Mitigate & RNANCE Report Identify VE GO Assess Monitor Strategic Risks Strategic within the strategic approach uses an integrated SaskTel risks. The risks are to identify strategic planning process determined based on the ability to achieve goals and targets of or more one of Plan. Realization outlined in the Strategic direction. to modify its strategic SaskTel these risks may require Key strategic and core business risks that could have a could business risks that and core strategic Key below. listed business are on SaskTel’s effect material deemed to be lower risk,Additional risks and uncertainties unknown, may also have a material currently are or risks that business. on SaskTel’s effect Governance is provided by SaskTel’s Board of Directors, Audit Directors, of Board SaskTel’s by is provided Governance risk appetite is SaskTel’s and Risk Committee and Executive. Risk Matrix. Corporate an approved determined through All employees are considered risk managers, with SaskTel’s risk managers, with SaskTel’s considered All employees are senior management, together with Directors, of Board risk management at for responsibility having ultimate risk is depicted in the used to manage process The SaskTel. framework below. RISK MANAGEMENT may risk that and to uncertainty subject are All businesses goals and operational to achieve strategic their ability affect in relation exposures manages risk actively SaskTel objectives. to identify The ability tolerance. priorities, and risk to business Governance, in SaskTel’s risks resides key to and respond an which takes (GRC) Framework Risk and Compliance with Strategic integrates and enterprise-wide approach Internal Audit. and Operations Planning, Risk Management, 28 | MANAGEMENT’S DISCUSSION AND ANALYSIS discussed below. enablers, fulfillmentandassurance. Key operational risksare interruption, security, infrastructure, supplychain,change execution of SaskTel’s businessfunctions,such asbusiness Operational risksfocus onSaskTel’s risksassociated withthe OPERATIONAL RISKS Operational, Financial,Compliance andLegal risks. with theexecution of itsbusinessfunctions.Thisincludes Core BusinessRisks focus onSaskTel’s risksassociated Core BusinessRisks profit from thebusinessmarket isas follows: to customers.Theriskassociated withgrowing revenue and while evolvingitsexistingportfolio, providing totalsolutions SaskTel isintroducing newmanagedandemerging services THE BUSINESSMARKET GROW REVENUEANDPROFITFROM and timelymannerisimportantfor continued success. Developing andlaunchingthesenewservices inanagile and emerging services focused onbusinesscustomers. communications services anddiversifyintonewmanaged it importantfor SaskTel toexpandbeyondlegacy are disruptingtraditionallinesof business.Thismakes Continual technologicalchangeswithintheICTindustry provide service cannotberuledout. of ahardware orsoftware failure impairingourabilityto Given thecomplexity of theinfrastructure, thepossibility Our confidence levelinournetworkandsystemsishigh. variety of services rangingfrom traditionaltocuttingedge. information systemsarchitecture hasevolvedtoprovide a SaskTel’s extensivecommunications networkand asset values. reduced revenues, increased expensesandimpairmentof and otherforms of accidental lossthat could result in damage ordestructionfrom natural hazards, vandalism throughout theprovince. These assetsare subjectto SaskTel hasasubstantialinvestmentinphysicalassets changing environment. risks associated withconducting businessinsucharapidly services, theregulatory environment, andthecontinued change intechnology, thegrowth of InternetProtocol (IP) information systemstodayiscomplex duetotherate of maintain customertrustthat theirdata issafe. Securing information. Astrong securityframeworkisnecessary to store customer, employee,operational andcompetitive and networksthat are usedtoprocess, manageand Systems securityinvolvestheprotection of systems System andInformation Security New Products andServices Business Interruption Technology

and contingencies. Consolidated FinancialStatements, Note 23–Commitments and isdiscussedbelow. More detailisavailableintheNotesto privacy. Litigation isSaskTel’s key compliance andlegalrisk governance, intellectualproperty, litigation, regulatory, and contractual, professional, third party, statutory, environmental, and regulations. Risksreviewed inthiscategory include SaskTel’s risksassociated withourneedto comply withlaws The Compliance andLegal riskcategory focuses on COMPLIANCE ANDLEGAL RISKS management Statements, reported at thistime.TheNotestoConsolidated Financial cash flow. Nosignificant core businessfinancialrisksare investments, publicreporting, revenue assurance, fraudand exchange, credit, financialmisstatement, pensionplan, Risks reviewed in thiscategory includeinterest rate, foreign FINANCIAL RISKS SaskTel’s results andreputation. and third partyliability, whichcould negatively impact exposure includecontractual, professional, statutory, numerous andvisible.Various aspectsof legalrisk with thousandsof peopledailyandourassetsare due tovariousactivitiesundertaken. Employeesinteract SaskTel, like allbusinesses,faces theriskof legalaction Note 21–Financialinstruments andrelated risk highlights somefinancialexposures. Litigation SASKTEL 2016/17 ANNUAL REPORT | 29

4.6 9.0 43.6 81.3 58.9 50.3 28.5 28.9 40.1 2016 (5.9) 2016 704.9 474.8 211.4 166.8 (27.3) 406.0 290.2 1,574.2 1,407.4 15 months 15 months $ 616.5 $ 1,569.6 $ 1,569.6 $ 120.8 $ 126.7 ended March 31, ended March ended March 31, ended March

1 1 1 % % nmf nmf nmf 6.0 4.6 1.2 3.1 8.8 4.1 7.4 0.5 6.8 37.0 (2.4) (6.5) 69.2 46.6 40.0 (9.0) 22.8 (4.6) (13.0) (2.9) (9.9) 1.7 (7.3) 7.5 24.8 7.8 31.5 2016 Change (0.1) 53.6 2016 Change (22.5) (3.4) 15.1 142.9 26.5 18.5 326.5 11.0 3.4 231.3 (16.8) (7.3)

1,268.9 18.4 1.5 $ 1,264.8 $ 12.4 1.0 $ 105.8 $ 82.5 $ 105.9 $ 28.9 27.3 569.6 (7.8) (1.4) 376.0 167.6 (4.6) (2.7) 35.3 1,126.0 (8.1) (0.7) $ 496.2 $ 24.7 5.0 $ 1,264.8 $ 12.4 1.0 12 months 12 months ended March 31, ended March ended March 31, ended March 7.9 10.1 60.2 42.0 37.1 24.5 38.4 32.6 34.6 53.5 2017 2017 561.8 337.5 380.6 214.5 163.0 169.4 (25.9) 1,287.3 1,117.9 $ 1,277.2 $ 188.3 $ 134.8 $ 1,277.2 $ 520.9 Goods and services purchased Goods and services Salaries, wages and benefits Depreciation Amortization Internal labour capitalized FINANCIAL SUMMARY FINANCIAL nmf – no meaningful figure nmf ($ millions) Revenue ($ millions) Wireless services Wireless Total comprehensive income comprehensive Total Other income Consolidated Revenues Consolidated 1 Expenses Consolidated Net Income Consolidated This MD&A will be comparing the 12-month period ending March 31, 2017, with the 12-month period ending March 31, 2016, 2016, 31, period ending March with the 12-month 31, 2017, ending March 12-month period the will be comparing This MD&A stated. unless otherwise OPERATING RESULTS , Internet and data services , Internet and data maxTV Local and enhanced services and enhanced Local Equipment services distance Long Advertising services Security monitoring services International software and consulting services and consulting software International Other services Other comprehensive income (loss) income Other comprehensive Net income Net finance expense Net finance Results from operating activities operating from Results 30 | MANAGEMENT’S DISCUSSION AND ANALYSIS *12-month fiscalyear endingDecember 31. Net Income 2017/18 Budget 2016/17 Budget s RETURN ON EQUITY ON RETURN INCOMENET Net Income Return onEquity 75 100 125 150 2017/18 Budget 2016/17 Budget ome for the12monthsendingMarch 31,2017, growth of 1.0% andatotalexpensereduction of 0.7%. in 2015/16. Netincome increased through revenue was $134.8 million,up$28.9 millionfrom thesameperiod Net Inc 50 $105.9 2015/16 2016/17 2015/16 2016/17 *2014

*2014 2015/16 $12.4 ($ Millions) Revenue ($ Millions) $6.0 (Percentage) Other Income 78$. $1.5 $1.2 $7.8

100 Goods and Services

06 010150 120 90 60 30 0 Net Salaries, $76.4 Wages & Beneﬁts

Depreciation & 10.5% Amortization $104.2 $105.9 24$134.8 $2.4 Net Finance 12.5% Expense 150 $122.1 13.6% 14.0% $134.8 0.0 2016/17 15.4% $104.2

2016/17 Budget t s s s s s t s $30.6 million. and services, resulted inSaskTel exceeding itsbudgetby maxTV, Internet,data, andnewemerging products revenue growth inkey businesssegments,includingwireless, into themarket. Strong cost managementcoupled with legacy services, andintroducing newcompetitive services Saskatchewan bymanagingitscost structures, optimizingits SaskTel provides strong returns totheProvince of

evenues grew $12.4 million(1.0%), mainlydueto e expensedecreased $2.4 million,primarily eciation andamortization decreased by$1.5 million defined benefitpensionplan. $53.6 millionasaresult of netactuarial gainsonSaskTel’s Accumulated othercomprehensive income increased by Net income increased $28.9 million. 1.4 percentage pointsfrom fiscal2015/16. Return on equityincreased to15.4% infiscal2016/17, up Net salaries,wagesandbenefitsincreased by enhanced services andlongdistance. by decreases tolegacy services suchaslocalaccess, and emerging revenues. Revenue growth isbeingoffset increases inwireless, maxTV , Internet,data andmanaged R previous fiscalyears. due tofewer sinkingfundmarket valueslossesthanin Net financ as aresult of increasing theusefullivesof network assets. Depr generate revenue. spending, offset byincreased direct costs incurred to (1.4%), largely duetomanagement’sfocus oncontrolled Goods andservic capitalized toprojects. offset byanincreased amount of internallabour $1.2 million,primarilyduetoeconomic increases, 13.5 es purchased decreased $7.8 million 27.0

SASKTEL 2016/17 ANNUAL REPORT | 31 Other 2.6% Equipment 4.7% and Software 5.4% and Software Advertising, Security Internet and Data 26.4% Internet and Data maxTV, 1700 $1,277.2M ong growth in our managed and in our ong growth

850 Wireless revenues increased by $24.7 million (5.0%) from from million (5.0%) by $24.7 increased revenues Wireless to the relates this increase portion of A large 2015/16. with other carriers. contract a wholesale of renegotiation of as a result to grow continue revenues retail Wireless and Unit (ARPU) growth Per Revenue Average strong in accesses. modest increase to post strong continue , Internet, and data maxTV year over year. million (3.4%) $11.0 of growth revenue has increased and ARPU strong remains growth Access and data faster Internet of advantage as customers take network. world-class, fibre-based speeds via SaskTel’s network, and str network, and portfolio. services emerging from 2015/16. SaskTel saw a decline in business grade SaskTel 2015/16. from of economic systems, which is reflective communication by This was offset within Saskatchewan. conditions consumer from in revenue a year-over-year increase sales. devices wireless services, and long distance saw revenue declines of saw revenue and long distance services, due to primarily are These decreases (7.7%). million $21.4 and trends, service replacement substitution, OTT wireless nevers.” “cord because of growth little to no organic Equipment sales have declined $9.0 million (13.0%) million (13.0%) Equipment sales have declined $9.0 Legacy wireline services such as local access, enhanced such as local access, services wireline Legacy

Local &Local 16.8% Enhanced 2016/17 Revenue Profile Wireless 40.8% Wireless 3.3% Distance Long t s s t

2016/17

$1,277.2 Other 0

$1,320.5

$7.8

Software Advertising, Security & & Security Advertising, $0.7

$1,287.4 Long Distance Long $1,277.2 $4.6

$1,264.8 Equipment

$9.0 Local & Enhanced & Local $1,231.0

$16.8

, Internet & Data & Internet , maxTV

$11.0 Wireless $24.7

($ Millions) 2015/16 ($ Millions) *2014 $1,264.8 2016/17 2015/16 Revenues for the 12 months ending March 31, 2017, 31, 2017, the 12 months ending March for Revenues the from million (1.0%) $12.4 million, up $1,277.2 were intervention, regional Regulatory same period in 2015/16. and increasing saturation pricing, market wireless opportunities to SaskTel’s impacting are competition services. wireline legacy revenue declines from offset continued being met through These challenges are as in Internet growth adoption, a resurgence wireless fibre over SaskTel’s delivered services customers opt for

1,200 1,240 1,280 1,320 REVENUES s Revenues Revenues 2016/17 Budget 2017/18 Budget Revenue *12-month fiscal year ending December 31. *12-month fiscal year ending December , Internet, and data (26.4%); and local access, enhanced and local access, (26.4%); , Internet, and data maxTV (40.8%); wireless primarily of composed are revenues SaskTel’s accesses wireless that indications are to decline and there continue revenues Legacy (20.1%). and long distance services, to its network improvements Internet bandwidth through its customer increasing offers SaskTel saturation. approaching are to rural communities. broadband DSL Internet and wireless fusion and further expansions of including FTTP, infrastructure managed ICT solutions including innovative by offering portfolio services its managed and emerging to grow continues SaskTel to its customers. services centre cloud and Tier III data 32 | MANAGEMENT’S DISCUSSION AND ANALYSIS *12-month fiscalyear endingDecember 31. . Wireless –Revenue&Accesses maxTV, InternetandData –Revenue&Accesses Local &Enhanced–RevenueAccessCounts MILLIONS

MILLIONS ■ Total Accesses MILLIONS $270 $300 $330 $360 ■ Total Accesses $450 $475 $500 $525 $550 $0 $50 $100 $150 $200 $250 $300 ■ Total Accesses 21 051 061 2016/17 2016/17 2015/16 *2014 352$2. 375$3. $359.7 $334.3 $337.5 $326.5 $305.2 21 051 061 2016/17 2016/17 2015/16 *2014 227$3. 245$1. $199.1 $212.7 $214.5 $231.3 $242.7 21 051 061 2016/17 2016/17 2015/16 *2014 423$9. 509$1. $535.1 $516.7 $520.9 $496.2 $482.3 116.666667 233.333333 350.000000 466.666667 583.333333 0.000000 140 210 280 350 180 270 360 450 70 90 0 0 Budget Budget Budget 2017/18 2017/18 Budget 2017/18 Budget Budget Accesses –RH Accesses –RH Revenue –LH Revenue –LH Accesses –RH Revenue –LH 250,000 260,000 270,000 280,000 290,000 0 100,000 200,000 300,000 400,000 500,000 600,000 600,000 610,000 620,000 of data that suitstheirneeds. share data amongalltheirdevices andtochoosetheamount shareMORE plansin2016/17tooffer customerstheabilityto to thechangingwireless environment andhaslaunched plans that offer more data and features. SaskTel isadapting growth isalsoattributable tocustomersmigrating toprice by 3.0% whichhascontributed toincreased ARPU. ARPU Year overyear, smartphonepenetration hasincreased of strong ARPUgrowth andamodestincrease inaccesses. Wireless retail revenues continued togrow whichwasaresult renegotiation of awholesalecontract withothercarriers. 2015/16. Alarge portionof thisincrease relates tothe Wireless revenues increased by$24.7 million(5.0%) from WIRELESS SERVICES alternative, atrend that SaskTel expectstocontinue. to replace theirexisting wireline services withawireless in networkaccesses (2015/16–7.4%). Customerscontinue (7.3%) from 2015/16. Thisdecline isduetoa6.4% reduction Local access andenhanced services declinedby$16.8 million LOCAL ACCESS ANDENHANCEDSERVICES max which hadapositiveimpactonARPU. access growth. infiNET 38 communities, whichhascontributed tobothARPUand service to13newcommunities andupgradedspeedsin of itsfibre-based service, infiNET SaskTel ismeetingthesedemandsbyexpandingthefootprint faster Internetspeedstomeettheirincreasing data demands. $11.0 million(3.4%). In2016/17, more customersare selecting maxTV, Internet,anddata services revenue increased by TV , INTERNET, ANDDATA SERVICES Local &Local E M i l l i o n s 100.0 150.0 200.0 250.0 300.0 50.0 maxTV, Internet a M i l l i o n s 0.0 270 280 290 300 310 320 330 340 350 360 370 Total ne Reve nhanced - connections haveincreased 35.3%, Totala A ccesses $242.7 21 051 061 061 ugt2017/18Budget 2016/17Budget 2016/17 2015/16 *2014 ccesses . SaskTel rolled outitsDSL 21 051 061 061 ugt2017/18Budget 2016/17Budget 2016/17 2015/16 *2014 $305.2 Dt Reve nd Data - nue A & $231.3 $326.5 ess Co ccess nue A & unts $214.5 ccesses $337.5 $212.7 $334.3 $199.1 $359.7 - 100,000 200,000 300,000 400,000 500,000 600,000 250,000 260,000 270,000 280,000 290,000 s d n a s u o h T 1,000.00 900.00 800.00 700.00 600.00 500.00 400.00 300.00 200.00 100.00 - $37.6

SASKTEL 2016/17 ANNUAL REPORT | 33 $41.8

$42.0 $46.6 2015/16 2016/17 Budget 2016/17 Budget 2017/18 12 months nutes 30 55.0 95.0 ons) - - illions) $53.2 *2014 tes (in m (in nutes & enue Mi & LD Mi LD $- $60.0 $50.0 $40.0 $30.0 $20.0 $10.0 s n o i l l i M LD Rev LD 15 27.5 47.5

through existing customers and externally through existing customers and externally through through ADVERTISING SERVICES ADVERTISING million in to $37.1 decreased revenue Advertising services of a decrease million in 2015/16, $40.0 from 2016/17, the to exceed continue These results million (7.3%). $2.9 which has experienced industry, traditional directory revenue declines and ongoing pressures significant financial is to maintain its strategy SaskTel’s its peak in 2008. since its through retention revenue industry-leading print directory print and digital products) of Solutions (bundling Mysask411 on investment (ROI) total leads and return and ability to prove to diversify with ongoingto its customers while continuing development. and service product SECURITY SERVICES MONITORING million to $1.7 increased Security monitoring revenues and due to customer growth in 2016/17, million $24.5 continues SaskTel value-added features. use of increased both organically to actively seek out business growth acquisitions. customer account LONG DISTANCE LONG million $4.6 decreased have revenues distance Long is primarily due to loss The decrease 2015/16. from (9.9%) such as social media, customers to substitute services of less as well as customers moving to and VoIP, wireless expensive bundle plans. EQUIPMENT (13.0%) million $9.0 have decreased revenues Equipment its customers offer to continues SaskTel 2015/16. from services implementation design, training, and consulting, Equipment their business. solution for the right to ensure market current of the reflective declined and are sales have by increased offset partially These declines are conditions. devices. wireless from revenues THOUSANDS $27.4 $41.9 $69.2 1,000 900 800 700 600 500 400 300 200 100 0 $66.7 0 $40.0 0.0 0.0 $64.1 $38.2 $24.8 $37.1 $24.5 $60.2 Minutes – RH $35.8 Revenue – LH Revenue $22.9 $22.8 Budget 2017/18 $54.9 Budget ($ Millions) 0 70 60 50 40 30 20 10 ($ Millions) ($ Millions) $53.2 $46.6 $42.0 $41.8 $37.6 *2014 *2014 *2014 *2014 2015/16 2016/17 2016/17 2016/17 2016/17 2016/17 2015/16 2015/16 2015/16

$60 $50 $40 $30 $20 $10 $0

■ LD Minutes MILLIONS LD – Revenue & Minutes 2016/17 Budget 2016/17 Budget 2016/17 Budget 2017/18 Budget 2017/18 Budget 2017/18 Budget Security Monitoring Revenue Advertising Revenues Equipment Revenue Revenue Equipment *12-month fiscal year ending December 31. *12-month fiscal year ending December 34 | MANAGEMENT’S DISCUSSION AND ANALYSIS *12-month fiscalyear endingDecember 31. Goods &ServicesPurchased 2017/18 Budget 2016/17 Budget Other ServicesRevenue & ConsultingRevenue International Software Solutions 2017/18 Budget 2017/18 Budget 2016/17 Budget 2016/17 Budget Expenses EXPENSES 1,080 1,100 1,120 1,140 2015/16 2016/17 2015/16 2015/16 2016/17 2016/17 *2014 *2014 *2014 $1,126.0 ($ Millions) 2015/16 $7.8 Goods & Services ($ Millions) $561.8 ($ Millions) $1.2

Net Salaries, $21.7 ($ Millions) Wages & Benefits $24.8 $569.6 $6.2 $570.9 $4.6

Depreciation $32.6 $7.4 $574.7 $7.9 $3.1 10801116115211881224126012961332136814041440

Amortization $9.0 0.0 0.0 $45.8 0 $582.2 $1,117.9 $48.4 $10.7

2016/17 t s t t communication systemat newMosaicstadiuminRegina, SK. offerings andprofessional services toinstallastate-of-the-art Integrated BusinessCommunications, data centre service 2016/17, thisportfolio sawgrowth innewservices including by growing itsmanaged andemerging services portfolio. In opportunities toreplace declininglegacyservice revenues up $7.8 million(31.5%) from 2015/16. SaskTel seeksout Other services revenues increased to$32.6 millionin2016/17, OTHER SERVICES of wireless devices. aggressive competition, regional pricingandincreasing cost cost persubsidized wireless device continues torisedue offset byincreased wireless acquisition costs astheaverage replaced withSaskTel fusion . Thesesavingswere partially the exitof SaskTel’s Satellite Internetservices, whichwas advertising. Inaddition,significantsavingswere realized with reduction inspendingoncontracted services, materials and SaskTel’s focus oncost managementresulted inasignificant for fiscal 2016/17, down$7.8 million(1.4%) from 2015/16. Goods andservices purchased decreased to$561.8 million GOODS ANDSERVICESPURCHASED enhancement revenues. lower software related professional services and and increased maintenance andsupportfees, offset by primarily duetohigherprofessional services abroad $7.9 millionin2016/17, up$0.5 millionfrom 2015/16, Software andconsulting service revenues increased to INTERNATIONAL SOFTWARE ANDCONSULTING SERVICES

network assets. as aresult of increasing theusefullives of select Depreciation andamortization decreased by$1.5 million early 2016/17. (0.3%), largely duetoeconomic increases provided in Net salaries,wages,andbenefitsincreased $1.2million incurred togenerate revenue increases. spending, partiallyoffset byincreased direct costs (1.4%), largely duetomanagement’sfocus oncontrolled Goods andservices purchased decreased $7.8 million $8.1 million(0.7%) to$1,117.9 million. Expenses for the12monthsendingMarch 31,2017, fell 37.5 375 Expenses 6.5 1,080 1,100 1,120 1,140 1,160 1,180 1,200 ($ ($ M $1, .0 126.0 ons) illi 2 0 1 5 / 1 6 13.0 75.0 750 .8 $7.8 G o o d s & S e r v i c e s .2 $1.2 N e t S a l a r i e s , W a g e s & B e n e f i t s

.6 $4.6

D e p r e c i a t i o n

.1 $3.1

A m o r t i z a t i o n

$1, .9 117.9 2 0 1 6 / 1 7 SASKTEL 2016/17 ANNUAL REPORT | 35 2016 2016 $ (5.9) $ 40.1

15 months 15 months 15 months ended March 31, ended March 31, ended March 1 % % nmf

500 300

2016 Change 2016 Change $ 37.0 $ (2.4) (6.5) $ (0.1) $ 53.6 250 150 12 months 12 months ended March 31, ended March 31, ended March 2017 2017 SALARIES, WAGES, AND BENEFITS SALARIES, WAGES, LABOUR) CAPITALIZED OF INTERNALLY (NET million, to $354.7 increased wages, and benefits Net salaries, increases due to economic largely (0.3%) up $1.2 million 2016/17. in early provided $201.4 million in 2016/17, down $1.5 million from 2015/16. 2015/16. million from down $1.5 million in 2016/17, $201.4 to the change in asset mix and usefulThis is primarily due select network assets. lives of DEPRECIATION & AMORTIZATION DEPRECIATION to expense decreased and amortization Depreciation $ 34.6 $ 53.5 $371.1 $208.8 0 0 $208.6 $370.2 $207.7 $202.9 ($ Millions) $354.7 $353.5 $201.4 $351.3 ($ Millions) *2014 *2014 2016/17 2016/17 2015/16 2015/16 OTHER COMPREHENSIVE INCOME (LOSS) INCOME COMPREHENSIVE OTHER NET FINANCE EXPENSE NET FINANCE 2016/17 Budget 2017/18 Budget 2016/17 Budget 2017/18 Budget Net Salaries & Benefits & Net Salaries Depreciation & Amortization & Amortization Depreciation ($ millions) ($ millions) Net Finance Expense Net Finance (loss) income Other comprehensive *12-month fiscal year ending December 31. *12-month fiscal year ending December Other comprehensive income increased to $53.5 million, up $53.6 million from the loss recognized in 2015/16. The income in 2015/16. the loss recognized million from million, up $53.6 to $53.5 increased income Other comprehensive benefit pension plan and the the defined to the assets and liabilities of changes in actuarial assumptions related from resulted are of the plans). The assumptions the liabilities rate used to calculate defined benefit plan (i.e. the discount recognition service financial statements. the consolidated 18 – Employee Benefits of disclosed in Note Net financing expense decreased $2.4 million (6.5%) to $34.6 million during 2016/17, due primarily to sinking funds market due primarily million during 2016/17, to $34.6 million (6.5%) $2.4 Net financing expense decreased million in 2015/16. $4.5 to losses of million compared $0.9 losses of 36 | MANAGEMENT’S DISCUSSION AND ANALYSIS Equity Net Debt Less: Sinkingfunds Debt Ratio Short-term debt Long-term debt Capitalization declaring dividends of $30.0 million. Equity increased $158.4 millionafter recording netincome of $134.8 million,othercomprehensive income of $53.6 millionand increased $16.0 million,primarilyto fundcontinued investmentinproperty, plantandequipment, aswellintangibleassets. SaskTel’s debtratio decreased to 47.9% at March 31,2017, downfrom 51.9% at March 31,2016. Theoveralllevelof net debt 1 industry standards. the lastfivefiscal reportingperiods,SaskTel paidatotal of$323.5 millionindividendswhilemaintainingadebt ratio within to CICduringthefiscalyearendingMarch 31,2017, consistent withtheprevious fiscalperiodendedMarch 31,2016. During borrowings partiallyoffset byincreased long-termborrowing compared to 2015/16. SaskTel paiddividends of $30.0 million financing activities of $24.9 million for the12monthsendedMarch 31,2016. Thisisprimarilydueto reduced short-term Cash usedinfinancingactivitieswas$17.2 million for the fiscalyearendedMarch 31,2017, compared tocash by provided Expenditure sectionof theManagement’sDiscussionandAnalysis. 16 –Deferred Income –Government Funding). Additionaldetailsof the2016/17capitalprogram are includedintheCapital decreased $18.6 millionto$54.6 million.Governmentfundingincreased $3.3 millionin2016/17to$6.7 million(seeNote invested inproperty plantandequipmentwas$261.6 million,up$10.2 millionfrom 2015/16. Spendingonintangibleassets 12 monthsendedMarch 31,2016, primarilyduetotheacquisitionof additionalspectrumlicences in2015/16. Total cash Cash usedininvestingactivitieswas$309.4 millionfor thefiscalyearendedMarch 31,2017, down$13.5 millionfrom the capital requirements. 12 monthsendedMarch 31,2016, primarilyduetoincreased income from operations, partiallyoffset byincreased working Cash provided by operating activitiesfor thefiscalyearendedMarch 31,2017, was$321.6 million,up$17.5 millionfrom the CAPITAL AND LIQUIDITY RESOURCES ($ millions) Investing activities ($ millions) Operating activities ($ millions) Financing activities ($ millions)

or thepurposes of calculating thedebtratio isdefinedasequityadvances, accumulated other comprehensive income (loss)and retained earnings at CAPITAL MANAGEMENT PROVIDEDCASH BY (USED IN) FINANCING ACTIVITIES ACTIVITIES USED IN INVESTING CASH PROVIDEDCASH BY OPERATING ACTIVITIES the endof theperiod. Equity f Cash andshort-terminvestments 1 309.4 $ 321.6 $ (17.2) $ 2017 2017 2017 ended March 31, ended March 31, ended March 31, 12 months 12 months 12 months 12 months 12 months 2. 1.)(4.2) (13.5) $ 322.9 $ 5.8 17.5 $ 304.1 $ 49$(21 (169.1) (42.1) $ 24.9 $ March 31, 851.9 $ 1,831.6 $ 06Change 2016 Change 2016 06Change 2016

876.9 141.0 177.1 954.7 47.9% 2017 11.1 773 7. 9.6 74.6 $ 777.3 $ 1672 144 10.5 174.4 $ 1,657.2 $ March 31, 809 1. 1.9 16.0 860.9 195 1. 8.9 11.5 129.5 292 (21 (22.7) (52.1) 229.2 763 184 19.9 158.4 796.3 19 (.)(7.7) (4.0) 51.9% 1. 50 (31.1) (5.0) 16.1 06Change 2016 % % % ended March 31, ended March 31, ended March 31, 15 months 15 months 15 months 370.4 $ 333.6 $ 44.0 $

2016 2016 2016

% SASKTEL 2016/17 ANNUAL REPORT | 37

Wireless 15.0% Wireless Wireline – Other 21.7% Wireline Wireline – Copper 1.8% Wireline Wireline – Copper ■ Wireline ■ Wireless ■ Buildings & Equipment ■ Other $316.1M ($ Millions)

2012 2013 2014 2015/16 2016/17 Wireline – Fibre – Fibre ■ Wireline – Other ■ Wireline ■ IT Infrastructure Development ■ Product 0 50 100 150 200 250 300 350 400 Capital Expenditures Capital Expenditures 2016/17 Capital Expenditures Wireline – Fibre 27.3% – Fibre Wireline 400 350 300 250 200 150 100 50 0 CAPITAL EXPENDITURES CAPITAL in Saskatchewan, network ICT largest the operates SaskTel over 100 for investing in Saskatchewan of result which is a in capital million an additional $316.1 invested years. SaskTel million) – $328.7 2016/17 (2015/16 during expenditures today and create customers’ experience our to improve network enhancements additional to provide opportunities million, Of the $316.1 future. and capabilities in the $259.3 million (2015/16 – $258.1 million) was spent on million (2015/16 – $258.1 $259.3 wireless FTTP, plant and equipment, including; property, Demand, while the & Wi-Fi), and Access LTE, networks (4G, spent million) was (2015/16 – $70.6 million $56.8 remaining such as customer support systems. on intangible assets Development 2.4% 15.5% IT Infrastructure Other 5.3% Product Buildings & Equipment 11.0%

Aaa AA S&P DBRS Moody’s outlook) AA+ (negative AA+ (negative Long-term debt Short-term liabilities A-1+ R-1 (high) Not Rated Besides this credit facility, SaskTel has authority to issue up to SaskTel facility, Besides this credit and long-term debt. short-term million in combined $1,300.0 Credit facilities consist of up to $500.0 million in combined up to $500.0 of facilities consist Credit from institutions and advances with financial credit lines of had SaskTel 31, 2017, At March Saskatchewan. of the Province these facilities. million of $177.1 accessed 31, 2017, March million at $1,029.0 outstanding debt was Total 31, 2016. March million at and $1,006.5 The 2017/18 plan assumes that funding of capital funding of The 2017/18 plan assumes that dividend payments will be and initiatives growth expenditures, funding will be accessed Additional operations. initially from issued through short-term notes and long-term debt through Saskatchewan. of the Province Access to Capital to Access plant in 2017/18 will be property, cash The primary uses of growth and equipment and intangible asset expenditures, payments. and dividend initiatives, The weighted average interest rate on SaskTel’s fixed rate fixed on SaskTel’s rate interest The weighted average and 5.02% 31, 2017, March at 4.87% debt was approximately the of rate interest The weighted average 31, 2016. March at was 0.60% 31, 2017, March at short-term debt outstanding 31, 2016. March at and 0.63% Debt Instruments and long- short-term of consists debt portfolio SaskTel’s by, and guaranteed issued through, Both are term debt. debt is issued at Short-term Saskatchewan. of the Province atLong-term debt is on the issue date. effect in rates market rates. interest fixed 38 | MANAGEMENT’S DISCUSSION AND ANALYSIS the services that SaskTel hastooffer. in existingneighbourhoodsso that customersmayaccess all infrastructure tonew neighbourhoods andincrease capacity The Access Demandprogram isanon-goingprogram toadd (2016/17 million) Demand –$35.4 Access wireless devices without delay. media content andaccess cloud-basedservices ontheir capabilities totraveltheInternet,watch andlistentomulti- impact customerexperience andprovide thespeedsand increased data speeds andimproved coverage that positively available intheprovince. Theseongoinginvestmentsresult in in Saskatchewan, makingitthelargest Wi-Finetwork points inover2,000 locations spread across 23communities the province. SaskTel selectWI-FIprovides over4,200 access network inSaskatchewan andnowcovers 99%of residents in technologies. SaskTel’s wireless LTE networkisthelargest LTE investment ascustomersabandonolderwireless The 4G, LTE, andWi-Fiwireless networksrequire ongoing LTE, Wi-Fi4G, and (2016/17 –$47.4 million) Fibre tothePremises ability tooffer evenfasterspeedsintheyearsto come. services. Astechnologiesevolve,sowillinfiNET withthe need tovisitthecustomer’spremises toactivate orchange to seventelevisionssimultaneouslywhilereducing SaskTel’s to 60MBs,highdefinitionand feature-rich mediaservices enables downloadspeedsupto260MBs,upload Yorkton, andNorthBattleford. Thefibre networkcurrently Moose Jaw, Prince Albert,Weyburn, Estevan,Swift Current, in Saskatchewan’s ninemajorcentres: Saskatoon, Regina, new Fibre Optic Network, righttoourcustomers’doors upgrade broadband facilities andbringinfiNET The Fibre tothePremises program isa12-yearprogram to (2016/17 million) to Premises the Fibre –$54.9 0 5 10 15 20 250,000 0,000 0,000 0,000 0,000 2012 11.3% 128000 160000 32000 64000 96000 0 14.1% 2013 ■ Passed (Homes) ■ 25.3% 2014 Connected 2015/16 34.5% , SaskTel’s 2016/17 45.2% services tonorthernresidents andbusinesses. northern fibre facilitieswhichwillbringhighspeedbandwidth and mobilevoice, videoanddata services; andexpansionof transport infrastructure toaccommodate ruralgrowth of fixed wireline andwireless networks;improvements toourrural improvements include:capacityimprovements toour and continue tosupportthegrowing economy. These meet theneedsof Saskatchewan residents andbusinesses capacity andmodernize key components sothat itcan SaskTel hasinvestedinotherareas of itsnetworktoincrease (2016/17 million) –$70.5 Improvements Network Other them focus onwhat matters most. safe, secure andprofessionally managedenvironment, letting be assured theircritical data andITinfrastructure iskept ina Managed HostingandDisasterRecovery, businesses can Regina. WithSaskTel data centre services, suchasColocation, four locations inRegina, three inSaskatoon, andoneeastof 51,000 square feet in eight different data centre locations with to itsportfolio during2016/17. SaskTel currently hasatotalof technology partners.SaskTel addedtwoTierIIIdata centres and assurance that businesscustomersdemandfrom their technology todeliverservices withthesecurity, availability Tier IIIdata centres are outfittedwithcutting-edge (2016/17 Centres Data III –$27.1Tier million) financial statements. have notyetbeenadopted,and howtheyaffect our as wellproposed changestoaccounting standards that Note 2alsodescribeskey changesinaccounting standards, of financial instruments. assumptions related to pensionobligations; andthefairvalue assets; impairmentof assetsandcashgenerating units; amortization of property, plantandequipmentintangible financial results, including:capitalization anddepreciation or Certain of thesepoliciescould haveasignificantimpacton applicable account inpreparing itsfinancialstatements. policies, estimates andjudgmentsthat SaskTel uses for each specific notes for more information abouttheaccounting applicable tothefinancialstatements asawhole,well statements for accounting policies,estimates andjudgments Note 2-Basisof presentation totheconsolidated financial are contained intheconsolidated financialstatements. See Significant accounting policies,estimates andjudgments International FinancialReporting Standards (IFRS). statements, whichhavebeenprepared inaccordance with results of operations are basedontheconsolidated financial SaskTel’s discussionandanalysisof ourfinancialpositionand ESTIMATES AND JUDGMENTS ACCOUNTINGSIGNIFICANT POLICIES, 100000 120000 140000 160000 20000 40000 60000 80000 0

SASKTEL 2016/17 ANNUAL REPORT | 39 (4.5) 16.4 14.2 10.7 27.6 24.2 2013 2012* 86.8 20.9 2013 2012* 2013 2012* December 31, December 1.7 12 months ended December 31, ended December 12 months 12 months ended December 31, 12 months ended December 41.5 99.0 127.9 138.8 2014 (7.4) (23.1) (22.8) (20.6) 574.7 374.4 166.2 567.3 364.4 155.5 553.1 344.0 153.6 2014 2014 (22.6) (37.2) (32.5) (57.3) 190.6 (21.6) 271.0 275.2 287.5 (15.5) 390.1 361.0 309.9 203.8 147.2 332.5 776.8 581.2 580.9 713.0 747.2 547.0

4.6 7.2 43.6 44.0 2016 (5.9) 2016 2016 (27.3) 704.9 474.8 211.4 166.8 333.6 439.9 216.4 (40.1) 777.3 796.3 (370.4) (279.1) (341.1) (308.4) 1,574.2 1,232.7 1,219.9 1,193.1 1,407.4 1,133.7 1,092.0 1,054.3 1,594.3 1,511.6 1,451.5 1,335.2 March 31, March 15 months 15 months $ 1,569.6 $ 1,231.0 $ 1,205.7 $ 1,182.4 $ 8.9 $ 24.4 $ 3.5 $ 8.0 $ 218.9 $ 167.2 $ 181.2 $ 148.6 $ 16.1 $ 8.9 $ 24.4 $ 3.5 $ 2,253.1$ $ 463.1 2,068.9 $ $ 1,993.7 375.3 $ 1,793.7 $ 518.1 $ 333.3 $ 2,253.1 $ 2,068.9 $ 1,993.7 $ 1,793.7 $ 126.7 $ 76.4 $ 90.7 $ 106.3 $ 120.8 $ 19.1 $ 281.3 $ 84.7 ended March 31,ended March ended March 31,ended March

10.1 38.4 (5.0) 2017 2017 2017 53.5 321.6 468.4 561.8 380.6 163.0 851.9 165.6 169.4 (17.2) (25.9) (34.6) 954.7 (309.4) 1,693.2 1,287.3 1,117.9 March 31,March March 31,March March 31,March

12 months 12 months $ 1,277.2 $ 16.1 $ 232.9 $ 11.1 $ 2,394.5 $ 422.3 $ 2,394.5 $ 134.8 $ 188.3

ended ended

Salaries, wages and benefits Depreciation Amortization Internal labour capitalized Goods and services purchased Goods and services ($ millions) Revenue ($ millions) Cash and cash equivalents, beginning of period Cash and cash equivalents, beginning of activities by operating Cash provided As at ($ millions) *Amounts do not represent retrospective adoption of change in accounting policy for directory revenue recognition. revenue directory policy for change in accounting adoption of retrospective *Amounts do not represent Consolidated Statement of Cash Flows of Statement Consolidated Consolidated Statement of Financial Position of Statement Consolidated FIVE YEAR RECORD OF SERVICE YEARFIVE RECORD Income Other Comprehensive Income and of Statement Consolidated Cash used in investing activities Property, plant and equipment Property, Current assets Current Other income by (used in) financing activities Cash provided Other long-term assets Increase (decrease) in cash (decrease) Increase Expenses period Cash and cash equivalents, end of Total assets Total liabilities Current debt Long-term Other long-term liabilities Results from operating activities operating from Results Net finance expense Net finance Province of Saskatchewan equity Saskatchewan of Province Total liabilities and Province of Saskatchewan’s equity Saskatchewan’s of liabilities and Province Total Net income Other comprehensive income (loss) income Other comprehensive Total comprehensive income comprehensive Total 40 | MANAGEMENT’S DISCUSSION AND ANALYSIS Total comprehensive income (loss) Other comprehensive income (loss) Net income Net finance expense Results from operating activities Expenses Other income Revenue *Amounts donotrepresent retrospective adoptionof changeinaccounting policyfor directory revenue recognition. * DoesnotincludeSaskTel internaluse. Total accesses Max subscribers Internet (includesMax) Wireline* Wireless* Customer Accesses As at Annual Operating Statistics ($ millions) Consolidated Statement of IncomeandComprehensive Income(Loss) Financial Indicators Capital Expenditures Dividends paid Dividends declared Debt ratio Return onequity ($ millions) Total employees Employees andpayroll Salaries earned(000s) Internal labourcapitalized Amortization Depreciation Salaries, wagesandbenefits Goods andservices purchased

2016/17 63.5 $ 53.3 $ 333.5 $ 341.3 279.6 138.1 (8.4) (6.8) 10.2 39.9 98.7 61.7 9.7 7.8 Q4 2016/17 92$3. 45$(42 30$2. 14$15.1 $ 61.4 $ 25.6 $ 43.0 $ (24.2) $ 24.5 $ 31.0 $ 69.2 $ . 61$3. $2. 26 64$2. 20.9 $ 27.9 $ 36.4 $ 12.6 $ 29.0 $ 35.9 $ 36.1 $ 9.5 $ 1. 1. 0. 1. 1. 1. 1. 304.8 $ 317.4 $ 314.2 $ 317.5 $ 315.7 $ 309.6 $ 316.2 $ 317.9 $ ended (51 (.) 43 (.) 73 98 (25 (3.0) (12.5) (9.8) (7.3) (7.3) (4.3) (6.8) (15.1) 226245 7. 8. 9. 6. 7. 281.4 278.4 269.8 297.1 280.7 271.2 274.5 292.6 372 1. 314 1. 1. 1. 388305.3 318.8 316.0 317.0 317.1 311.4 317.4 317.2 5. 3. 3. 3. 6. 3. 3. 135.3 136.4 137.1 162.6 133.5 130.4 139.9 153.4 5. (.)(14 (32 3. (08 3. (5.8) 33.5 (10.8) 30.4 (53.2) (11.4) (5.1) 59.7 2. 294. 631. 624. 23.9 40.4 46.2 19.9 36.3 40.2 42.9 24.6 (.) 61 (.) 55 (.) 51 (.)(4.8) (5.3) (5.1) (6.6) (5.5) (6.4) (6.1) (6.6) 4. 3. 4. 4. 3. 4. 4. 43.8 44.0 41.7 39.7 42.2 42.1 39.5 41.5 9. 9. 9. 1089. 8. 3598.8 93.5 89.4 92.3 100.8 95.3 91.7 94.9 (.) . 18 . (.) . . 0.5 1.4 1.8 (0.5) 1.4 1.8 1.2 (0.7) ended 94 . 98 97 . 67 . 8.3 9.8 6.7 9.1 9.7 9.8 9.5 9.4 Q3 Q3 326,761 $ 12 months 12 months 1,390,373 March 31, March 31, 316.1 30.0 $ 30.0 $ $ 110,591 275,381 388,519 615,882 12 months 12 months March 31, March 31, 2016/17 3,916 2017 2017 47.9% 15.4% 2017 Q2 Q2

March 31,

ended March 31, ended March 31, ended March 31, ended March 31, 2016/17 6,6 2,7 1,9 295,714 $ 314,390 $ 322,173 $ 361,265 $ 7. 8. 5. 329.9 106.2 84.3 $ $ $ 355.8 73.6 $ 81.1 $ $ 282.7 83.7 $ 53.3 $ $ 378.0 30.0 $ 37.5 $ $ Q1 Q1 15 months 15 months 15 months 15 months ,9,9 ,2,7 ,3,3 1,445,941 1,436,736 1,422,975 1,398,790 6,9 5,0 5,5 248,234 492,786 607,659 253,256 466,639 615,694 258,705 442,471 618,083 264,196 413,052 614,221 0,2 0,1 0,4 97,262 101,147 103,716 107,321 19 28 91 51.3% 19.0% 49.1% 14.0% 52.8% 10.5% 51.9% 16.8% ,5 ,9 ,7 4,031 4,079 3,999 3,956 2016 2016 2016 2015/16

Q5 Q5 2015/16 2014 2014 Q4 Q4 2014 12 monthsendedDecember 31, 12 monthsendedDecember 31,

2015/16 December 31, Q3 Q3

2013 2013 032012* 2013 2015/16 Q2 Q2

2015/16 2012 2012 Q1 Q1

SASKTEL 2016/17 ANNUAL REPORT | 41

The management of data, which involves securely involves securely which data, of The management Hosting: and applications IT services and maintaining storing, serving customers. for access plus): A 4G technology (high-speed packet HSPA+ data wireless manufacturer-rated delivering capable of 4 to speeds of up to 21 Mbps (typical download speeds of can double technology dual-cell 6 Mbps expected). HSPA+ those download speeds. uniquely identifiable A network of Things (IoT): Internet of human interact without that end points (or things) network. over a wireless intervention, most commonly in real and act on information analyze These systems collect, smart of to enable the creation time and can be deployed businesses, homes, cars and cities. connected delivering for protocol A packet-based IP (Internet protocol): networks. across data network: A network designed using IP and QoS IP-based and efficiently technology to reliably service) (quality of data including voice, traffic, customer support all types of IP devicesa variety of and video. An IP-based network allows a single over to communicate applications and advanced network. common IP TV television): A television service protocol (Internet a signal sent through broadcast uses a two-way digital that to a connection broadband a streamed network by way of set-top box. dedicated evolution): A 4G mobile (long-term LTE telecommunications technology that is the leading technology that telecommunications industry standard. global wireless and networked M2M (machine-to-machine): Technologies and perform information able to exchange are that devices actions without any human assistance. The federal regulator for radio and television for regulator The federal Telecommunications services that allow the that services Telecommunications A collective term for any broadband any broadband term for to the x): A collective (fibre FTTx all or partreplace to using optical fibre network architecture to the fibre local loops. FTTH denotes the existing copper of and FTTN denotes node or home, FTTP denotes premises neighbourhood. Hair-thin glass fibres along which light pulses network: Hair-thin glass fibres Fibre used to transmit networks are Optical fibre transmitted. are between locations. data amounts of large A wireless radio A wireless optimized): EVDO (evolution data up download speeds of delivers data that protocol broadband EVDO standards. family of the CDMA It is part of Mbps. to 2.4 Mbps. up to 3.1 download speeds of A delivers data Revision A facility for hosted applications and data hosted applications A facility for centre: Data storage and management. broadcasters and cable-TV and telecommunications broadcasters in Canada. companies CRTC (Canadian Radio-television and Telecommunications Radio-television and Telecommunications (Canadian CRTC Commission): A system in which software, data and data Cloud computing: A system in which software, over the Internet accessed centres in data reside services device. any connected from A wireless technology A wireless CDMA (code division multiple access): than is larger band that frequency a signal over a spreads that band by a common the use of to enable the signal in order and privacy. many users and achieve signal security simultaneous high-speed transmission of voice, data and data voice, transmission of simultaneous high-speed Mbps and above. 1.5 speeds of video at Broadband: Broadband: AWS (advanced wireless services) spectrum: Spectrum in services) wireless (advanced AWS is used in North ranges that 2.1 GHz frequency and the 1.7 in urban and used It is commonly 4G services. America for suburban areas. ADSL (asymmetric digital subscriber line): An IP technology digital subscriber ADSL (asymmetric lines to carry voice, telephone existing copper allows that video simultaneous and video, and enables three data into a home. streams GLOSSARY wireless of The generation generation): 4G (fourth as advanced, LTE and LTE includes HSPA+, that technologies Union. Telecommunications the International defined by

SASKTEL 2016/17 ANNUAL REPORT | 43 SASKTEL 2016/17 ANNUAL REPORT | 43 er Charlene Gavel Chief Financial Offic

esident and Pr Ron Styles Ron Officer Chief Executive 2017 May 26, The consolidated financial statements have been audited by the independent firm of KPMG LLP of independent firm have been audited by the financial statements The consolidated as appointed by the Lieutenant Governor in Council and Accountants, Professional Chartered Saskatchewan. of Investments Corporation by Crown approved The Board of Directors fulfills its responsibility with regard to the financial statements principally through its Audit and principally through to the financial statements regard responsibility with fulfills its Directors of The Board as well as with the which meets periodically with management outside directors, of Risk Committee, consisting the engaging or re-appointing for and Risk Committee is responsible internal and external auditors. The Audit to this committee access auditors have free Both the internal and external the external auditor. of services financial of and the quality internal controls on the adequacy of to discuss their audit work, their opinion the met with management and the external auditor to review The Audit and Risk Committee has reporting. for of Directors prior to submission to the Board financial statements consolidated annual Corporation’s final approval. To ensure the integrity and objectivity of the financial data, management maintains a comprehensive system of internal controls controls of internal system comprehensive management maintains a the financial data, integrity and objectivity of the ensure To internal audit duties and a comprehensive segregates that structure an organizational and procedures, including written policies with compliance in and executed recorded transactions are that assurance reasonable provide These measures program. maintained. are records financial and reliable safeguarded properly assets are authority, and required legislation The accompanying consolidated financial statements, included in the annual report of Saskatchewan Telecommunications of Saskatchewan report included in the annual financial statements, consolidated The accompanying approved of management and have been responsibility the are 31, 2017, the fiscal year ended March for Holding Corporation International with in accordance financial statements the consolidated has prepared Management Directors. of by the Board The policies set out have been Board. Standards Accounting (IFRS), as issued by the International Standards Financial Reporting in this elsewhere presented information unless otherwise noted. The financial applied to all the periods presented consistently in the financial statements. with that is consistent annual report MANAGEMENT’S RESPONSIBILITY STATEMENTS FINANCIAL FOR Consolidated FinancialStatements 44 | CONSOLIDATED FINANCIAL STATEMENTS AND NOTES May 26 Chief Executive Officer Pr Ron Styles and I, CharleneGavel,theChiefFinancialOfficer ofSaskTel, certifythe following: I, Ron Styles,thePresident andChiefExecutive Officer ofSaskatchewan Telecommunications HoldingCorporation (SaskTel), CONTROL INTERNAL ON OVER FINANCIAL MANAGEMENT REPORTING OF REPORT d. That SaskTel conducted itsassessmentof theeffectiveness of the corporation’s internal controls overfinancial reporting c. That SaskTel isresponsible for establishingandmaintainingeffective internal control overfinancial reporting,whichincludes b. That basedonourknowledge,havingexercised reasonable diligence, thefinancialstatements includedintheannual report a. That wehavereviewed thefinancialstatements includedintheannual report of SaskTel. Basedonourknowledge,having esident and operation of theinternalcontrols overfinancial reporting. reporting asof March 31,2017, were operating effectively andnomaterial weaknesseswere found inthedesignor and, basedontheresults of thisassessment,SaskTel canprovide reasonable assurance that internalcontrols overfinancial over financial reporting that are appropriate tothecircumstances of SaskTel. safeguarding of assetsandcompliance withapplicablelegislative authorities;andSaskTel hasdesignedinternalcontrols stated orthat isnecessary tomake astatement notmisleadinginlightof thecircumstances underwhichitwasmade. of SaskTel donotcontain anyuntruestatements of material fact,oromittostate amaterial factthat iseitherrequired tobe financial statements. the financial condition, results of operations, andcashflows,as ofMarch 31,2017, and fortheperiods presented inthe exercised reasonable diligence, thefinancialstatements includedintheAnnual Report, fairlypresent, inallmaterial respects, , 2017

Chief FinancialOffic Charlene Gavel er SASKTEL 2016/17 ANNUAL REPORT | 45

cordance with Canadian generally accepted auditing standards. Those standards require that we comply with we comply that require Those standards standards. auditing with Canadian generally accepted cordance

KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG Cooperative KPMG International with affiliated of independent member firms network of the KPMG LLP is a Canadian limited liability partnership and a member firm KPMG LLP. to KPMG services Canada provides KPMG entity. a Swiss International”), our audit in ac Chartered Professional Accountants Professional Chartered 2017 May 26, Regina, Canada We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.provide a basis to is sufficient and appropriate we have obtained the audit evidence that believe We Opinion financial position consolidated respects, the of in all material fairly, present financial statements In our opinion, the consolidated and financial performance its consolidated and 31, 2017, March as at Holding Corporation Telecommunications Saskatchewan Reporting Standards. Financial with International for the year then ended in accordance cash flows its consolidated An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated about the amounts and disclosures evidence to obtain audit procedures An audit involves performing of materialof the risks selected depend on our judgment, including the assessment procedures The financial statements. making those risk assessments, we In whether due to fraud or error. financial statements, the consolidated of misstatement in financial statements the consolidated of and fair presentation to the entity’s preparation relevant internal control consider an opinion expressing the purpose of but not for in the circumstances, appropriate are that to design audit procedures order policiesof accounting the appropriateness An audit also includes evaluating control. of the entity’s internal on the effectiveness of the overall presentation made by management, as well as evaluating estimates accounting of used and the reasonableness financial statements.the consolidated or error. or error. Auditors’ Responsibility conducted We on our audit. based statements financial an opinion on these consolidated is to express Our responsibility financial about whether the consolidated assurance the audit to obtain reasonable and plan and perform ethical requirements misstatement. material from free are statements We have audited the accompanying consolidated financial statements of Saskatchewan Telecommunications HoldingTelecommunications of Saskatchewan financial statements consolidated accompanying have audited the We statementsconsolidated the 31, 2017, at March as financial position of statement consolidated the which comprise Corporation comprising and notes, the year then ended, for and cash flows changes in equity income, other comprehensive and income of information. explanatory policies and other significant accounting of a summary Financial Statements for the Consolidated Management’s Responsibility in accordance financial statements these consolidated of and fair presentation the preparation for Management is responsible to is necessary as management determines such internal control and for Standards, Financial Reporting with International whether due to fraud misstatement, material from free are that financial statements consolidated of enable the preparation INDEPENDENT AUDITORS’ REPORTINDEPENDENTAUDITORS’ Saskatchewan of Province Assembly, the Legislative of The Members To 46 | CONSOLIDATED FINANCIAL STATEMENTS AND NOTES Balance March 31,2016 Balance at April1,2016 Dividends declared See Accompanying Notes Total comprehensive income (loss)for thefiscalperiod Other comprehensive loss Balance March 31,2017 Dividends declared Total comprehensive incomeforthefiscalyear Other comprehensive income Net income Thousands of dollars Consolidated Statement ofChangesinEquity See Accompanying Notes All netincome andtotalcomprehensive income are attributable toCrown InvestmentsCorporation of Saskatchewan. Total comprehensive income Other comprehensive income(loss) Net income Net financeexpense Results from operating activities Expenses Other income Revenue Thousands of dollars Consolidated Statement ofIncomeandOtherComprehensive Net income Balance at January1,2015 Actuarial gains(losses)onemployeebenefitplans Items that willneverbereclassified tonetincome Internal labourcapitalized Amortization Depreciation Salaries, wagesandbenefits Goods andservices purchased Note 18 18 5,0 $(505 0,7 $796,344 $ 601,379 $ (55,035) $ 250,000 $ 5,0 $(,4)$7628 954,672 $ 706,218 $ (1,546) $ 250,000 $ 5,0 $(505 0,7 $796,344 $ 601,379 $ (55,035) $ 250,000 $ 5,0 $(919 1,7 $713,022 $ 512,171 $ (49,149) $ 250,000 $ advances Equity – – – – – – – – Note 18 10 comprehensive 4 9 3 3 income (loss) Accumulated 349 3,3 188,328 134,839 53,489 53,489 586 2,0 120,822 126,708 (5,886) (5,886) March 31,2017 other months ended For thetwelve –3,0 30,000 30,000 134,839 – 134,839 – –3,0 37,500 37,500 – –1678 126,708 126,708 – $1,277,151 188,328 $ 1,117,861 1,287,280 (25,921) 134,839 169,419 163,025 380,582 561,786 53,489 34,580 38,389 10,129 Retained earnings –53,489 – –(5,886) – March 31,2016 months ended For thefifteen $1,569,637 120,822 $ 1,407,400 1,574,177 126,708 166,777 211,410 474,779 704,928 (27,311) 40,069 43,594 (5,886) equity 4,540 Total SASKTEL 2016/17 ANNUAL REPORT | 47

2016 7,500 9,322 24,627 68,126 10,417 45,336 38,117 132,788 (55,035) 229,231 463,047 218,850 301,054 129,497 777,256 167,880 250,000 601,379 796,344 1,594,338 1,456,717 $ 16,099 $ 158,190 $2,253,061 $2,253,061

2017 8,055 7,500 8,542 25,462 68,525 51,371 38,237 (1,546) 144,990 422,279 177,105 232,890 318,832 141,033 851,949 119,339 250,000 954,672 706,218 1,693,234 1,693,234 1,439,859 1,439,859 $ 11,067 $ 169,149 2,394,531 $2,394,531 2,394,531 $2,394,531 5 6 7 8 9 15 14 16 10 11 12 13 17 18 23 19 Note ylvestre Glenys S

Cash Trade and other receivables Trade Inventories Prepaid expenses Prepaid Dividend payable Other liabilities Notes payable Trade and other payables and Trade Equity advance Accumulated other comprehensive loss other comprehensive Accumulated Retained earnings Retained Assets assets Current Grant Kook Grant Kook 2017 May 26, On behalf of the Board On behalf of See Accompanying Notes See Accompanying Consolidated Statement of Financial Position of Financial Statement Consolidated 31, March As at dollars of Thousands Deferred revenue Deferred Deferred income – government funding Deferred Property, plant and equipment Property, Intangible assets Sinking funds Other assets Liabilities and Province's equity Liabilities and Province's liabilities Current Long-term debt Employee benefit obligations Commitments and contingencies equity Saskatchewan's of Province 48 | CONSOLIDATED FINANCIAL STATEMENTS AND NOTES Government funding Intangible assetexpenditures Property, plantandequipmentexpenditures Investing activities Net changeinnon-cashworkingcapital See Accompanying Notes Cash, endof fiscalperiod Cash, beginningof fiscalperiod Increase (decrease) incash Dividends paid Sinking fundinstallments Net proceeds (repayment) of notes payable Proceeds from long-termdebt Financing activities Adjustments toreconcile netincome tocashprovided byoperating activities: Net income Operating activities Thousands of dollars Consolidated Statement ofCashFlows Other Amortization of governmentfunding Interest received Interest paid Net finance expense Depreciation andamortization Note 9, 10 20 16 11 17 4 March 31,2017 months ended For thetwelve 11,067 $ 134,839 $ (261,559) (309,426) (54,576) (10,560) (41,113) (17,207) (30,000) (52,126) 321,601 201,414 (5,739) (5,032) (9,366) 34,580 16,099 74,285 2,402 5,778 6,709 March 31,2016 months ended For thefifteen 16,099 $ 126,708 $ (296,952) (370,441) 333,625 255,004 (78,054) (48,178) (49,775) (30,000) (11,966) 40,069 43,967 85,933 (6,459) 9,533 6,723 4,565 7,151 8,948 – SASKTEL 2016/17 ANNUAL REPORT | 49

Transaction costs, other than those associated with the issue of debt or equity securities, that the Corporation incurs in the Corporation debt or equity securities, that with the issue of other than those associated costs, Transaction expensed as incurred. are with a business combination connection The Corporation elects on a transaction-by-transaction basis whether to measure non-controlling interest at its fair value, or at at interest non-controlling elects on a transaction-by-transaction basis whether to measure The Corporation at the acquisition date. the identifiable net assets, of amount the recognized of share its proportionate Basis of consolidation Basis of Accounting policies Business combinations including the recognized transferred the consideration of goodwill as the fair value measures For acquisitions, the Corporation the identifiable amount (generally fair value) of less the net recognized in the acquiree, interest any non-controlling amount of purchase a bargain is negative, When the excess the acquisition date. as of and liabilities assumed, all measured assets acquired in net income. immediately gain is recognized The accounting policies, estimates and judgments included in this section relate to the consolidated financial statements, as financial statements, to the consolidated and judgments included in this section relate policies, estimates The accounting all periods and its subsidiaries throughout by the Corporation consistently policies have been applied a whole. Accounting unless otherwise indicated. presented Accounting policies, estimates and judgments and Accounting policies, estimates The consolidated financial statements have been prepared on the historical cost basis, except for certain items that are not are certain items that for cost basis, except on the historical have been prepared financial statements The consolidated policies. as noted in specific accounting historical cost carried at year end Change of government to change its fiscal year provincial end by the was directed fiscal period, the Corporation for the previous Effective of the 15 months consisted fiscal period complete The first Saskatchewan. of the Province of that with 31 to coincide to March of 12 months ending fiscal year on the current discussion focuses included in the following Information 31, 2016. ending March contained in information result, As a 31, 2016. to the fifteen-month fiscal period ending March as compared 31, 2017, March reported information. comparable with previously may not be financial statements these consolidated currency Functional functional currency. in Canadian dollars, which is the Corporation’s presented are financial statements The consolidated These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards Financial International with in accordance have been prepared financial statements These consolidated (IASB). Board Standards Accounting (IFRS), as issued by the International Certain of the Corporation’s accounting policies that relate to the consolidated financial statements as well as estimates and as well as estimates financial statements to the consolidated relate that policies accounting the Corporation’s Certain of are financial statements, in the consolidated has made and how they impact amounts reported judgments the Corporation or judgment is applicable to a specific note to the accounts, estimate policy, an accounting in this section. Where incorporated either were that or interpretations amendments note. This note also describes new standards, the policy is described within that effective. not yet were fiscal period, or that the current during and applied by the Corporation effective Note 2 – Basis of presentation Saskatchewan Telecommunications Holding Corporation (the Corporation) is a corporation located in Canada. The address The address in Canada. located is a corporation (the Corporation) Corporation Holding Telecommunications Saskatchewan is a Saskatchewan Corporation SK, S4P 3Y2. The Regina, Drive, Saskatchewan is 2121 office registered the Corporation’s of Corporation Holding Telecommunications The Saskatchewan the authority of under operating corporation Crown Provincial taxes income to Federal or Provincial not subject subsidiaries are and its wholly owned the Corporation Act and, as such, and online equipment, print entertainment, Internet, data, voice, wireless, of and supplies a range markets The Corporation and services. products and consulting software advertising, security, Notes to Consolidated Financial Statements Financial to Consolidated Notes General information Note 1 – by the Canadian Radio- is regulated (SaskTel) Telecommunications subsidiaries, Saskatchewan the Corporation’s One of (Canada). Act under the Telecommunications (CRTC) Commission television and Telecommunications , the Corporation has been designated as a subsidiary of Crown Investments Crown as a subsidiary of has been designated Act, 1993, the Corporation Corporations The Crown By virtue of consolidated in the included are of the Corporation results the financial (CIC). Accordingly, Saskatchewan of Corporation corporation. Crown a Provincial CIC, of financial statements in Canada. 50 | CONSOLIDATED FINANCIAL STATEMENTS AND NOTES variability of returns from theCorporation’s involvementwiththeinvestee. members; therighttodirect theinvesteetoenterintotransactionsfor theCorporation’s benefit;andtheexposure, orrights,to other shareholders; theextentof participation bythoseshareholders inappointingkey managementpersonnelorboard activities of theinvestee.Consideration isgivento:votingrights;therelative size anddispersionof thevotingrightsheldby Judgment involvesassessingcontrol, whichentailsdeterminingwhethertheCorporation hasthepowertodirect therelevant Accounting estimates andjudgments eliminated inpreparing theconsolidated financialstatements. Inter-company balances andtransactions,anyincome andexpensesarisingfrom inter-company transactions,are Transactions eliminated onconsolidation consolidated entity. Throughout thesefinancialstatements, thephrase“theCorporation” isusedto collectively describetheactivities of the be impaired, thentherecoverable amountisdeterminedfor theCGU towhichthecorporate assetbelongs. The Corporation’s corporate assetsdonot generate separate cashinflows. Ifthere isanindication that a corporate assetmay operating segmentceiling testandreflects thelowestlevel at whichthat goodwillismonitored for internal reporting purposes. CGU, orthegroup of CGUs, that is expectedtobenefitfrom thesynergies of the combination. Thisallocation issubjecttoan to theasset.Forpurposesof goodwillimpairmenttesting,acquired inabusinesscombination isallocated tothe value usingapre-tax discount rate that reflects current market assessments of thetimevalue of moneyandtherisksspecific use anditsfairvaluelesscosts tosell.Inassessingvalueinuse,theestimated future cash flowsare discounted totheirpresent groups of assets(the cash-generating unitortheCGU). Therecoverable amountof anassetorCGU isthegreater of itsvaluein of assets that generates cashinflows from continuing usethat are largelyor independent of thecashinflows ofotherassets For thepurposeof impairmenttesting,assetsthat cannotbetested individually are grouped together into thesmallestgroup lives, todeterminewhetherthere isanyindication that theyhavesuffered animpairmentloss. the carryingamountsof itsassetsinuse,includingproperty, plantandequipmentidentifiableintangibleassets withfinite if eventsorcircumstances indicate there may beanimpairment.Attheendof eachreporting period,theCorporation reviews are notsubjecttoamortization andare testedat leastannuallyfor impairment(typicallyinthethird quarter),ormore frequently Assets that haveanindefiniteusefullife (i.e.spectrumlicences andgoodwill)orintangibleassetsthat are notyet ready for use Accounting policies Impairment testing financial statements, are prepared and released publicly: Separate auditedfinancialstatements for each of theundernotedwhollyowned corporations, whichare consolidated inthese commences untilthedate onwhichcontrol ceases. The financialstatements of subsidiariesare includedinthe consolidated financialstatements from the date onwhich control through itspower overtheentity. is exposedto,orhasrightsvariablereturns from itsinvolvementwiththeentityandhasabilitytoaffect those returns A subsidiaryisanentitythat iscontrolled byanotherentity, knownastheparent. TheCorporation controls anentitywhenit The consolidated financialstatements includethefinancialstatements oftheCorporation anditssubsidiaries. Subsidiaries Note 2–Basisof presentation, continued SecurTek MonitoringSolutionsInc.(SecurTek) DirectWest Corporation (DirectWest) (SaskTel International) Saskatchewan Telecommunications International, Inc. Saskatchewan Telecommunications (SaskTel) Subsidiary

Security monitoring Marketing Services andconsulting Telecommunications software solutions Telecommunications Principal Activity

SASKTEL 2016/17 ANNUAL REPORT | 51 alues based on quoted prices in markets that are not active or model inputs that are observable either directly or observable either directly are not active or model inputs that are that in markets alues based on quoted prices alues based on prices or valuation techniques that require inputs which are both unobservable and significant to both inputs which are require techniques that or valuation alues based on prices alues based on unadjusted quoted prices in active markets that are accessible at the measurement date for date the measurement at accessible are that in active markets alues based on unadjusted quoted prices V or liability. the asset substantially the full term of for indirectly V the overall fair value measurement. identical assets or liabilities. V evel 2 - evel 3 - evel 1 - L L L

Foreign currency transactions currency Foreign Accounting policies the dates at rates exchange at the Corporation of functional currency to the translated are currencies in foreign Transactions to the translated are date the reporting at currencies in foreign the transactions. Monetary assets and liabilities denominated of gain or loss on monetary items is the difference currency The foreign date. that at rate the exchange at functional currency and payments interest effective the period, adjusted for the beginning of at in the functional currency cost between amortized period. the reporting the end of at rate the exchange at translated currency in foreign cost during the period, and the amortized rate using the exchange translated are currency in a foreign cost historical in terms of measured are Non-monetary items that the transaction. of the date at Accounting estimates and judgments Accounting estimates or other conditions periods due to market and may change in subsequent reporting a point-in-time at are value estimates Fair values) reasonable can be determined using multiple methods, which can cause values (or a range of factors. Estimates rates, and inflation discount liquidity, volatility, price, assumptions about future require may In addition, estimates to differ. realized. could be the amounts that reflect fair value may not accurately of variables. The estimates defaults and other relevant significant to the fair value are inputs that assessment of is based on the Corporation’s the level hierarchy of Determination and judgment. and is subject to estimation measurement The three levels of the fair value hierarchy are: hierarchy the fair value levels of The three Fair value Fair Accounting policies between transaction a liability in an orderly to sell an asset or paid to transfer received would be that value is the price Fair using another observable or estimated is directly price that whether of regardless date, the measurement participants at market Level 1, 2 or 3 based on the into categorized are reporting purposes, fair value measurements financial technique. For valuation of the inputs. The Corporation’s observable and the significance are to which the inputs to the fair value measurement degree fair value. techniques used to measure the inputs to valuation prioritizes fair value hierarchy The Corporation cannot predict if specific events that potentially trigger impairment will occur, when they may occur or may occur when they impairment will occur, potentially trigger that if specific events cannot predict The Corporation cash flow potential or significant unanticipated future asset amounts. Unexpected declines in reported how they may affect impairment. impact carrying values and the potential for technology changes could An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior losses recognized other assets, impairment of In respect is not reversed. goodwill of loss in respect An impairment exists. An impairment or no longer the loss has decreased that any indications for date each reporting assessed at periods are loss amount. An impairment used to determine the recoverable a change in the estimates has been if there loss is reversed would have been the carrying amount that amount does not exceed the asset’s carrying that only to the extent is reversed impairment loss had been recognized. if no or amortization, depreciation determined, net of and judgments Accounting estimates assessing value in for rate discount determining the appropriate asset or CGU; the appropriate Judgment involves identifying CGUs. of the assets or life conditions over the long-term cash flows and market about future use; and making assumptions Note 2 – Basis of presentation, continued presentation, of 2 – Basis Note amount. recoverable its estimated exceeds or its CGU an asset of amount the carrying if loss is recognized An impairment reduce to first allocated are CGUs of in respect recognized Impairment losses in net income. recognized losses are Impairment in the the other assets of the carrying amounts reduce units, and then to to the allocated any goodwill amount of the carrying basis. rata on a pro units) of unit (group 52 | CONSOLIDATED FINANCIAL STATEMENTS AND NOTES amendments that were appliedbytheCorporation. The IASBandtheInternational FinancialReporting Interpretations Committee(IFRIC)issued thefollowing standards and Application of revised International FinancialReportingStandards related financialdisclosures. Additional significantaccounting policies,estimates andjudgmentsare disclosedthroughout the following noteswiththe Additional accountingpolicies adopted for thecurrent fiscalperiod. Certain of the2015/16comparative figures havebeen reclassified to conform withthefinancial statement presentation Comparative figures Note 2–Basisof presentation, continued arrangements Amendments toIFRS11,Joint equipment andIAS38, Intangibleassets Amendments toIAS16, Property, plantand financial statements Amendments toIAS1,Presentation of Standard oeTopic Note 0Intangibleassets 10 14 13 Otherassets 12 1Sinkingfunds 11 Prepaid expenses 8 6 9 e iac xes X Netfinance expense 4 3 Cash 5 Inventories 7 receivables Trade andother income Revenue andother Notes payable payables Trade andother equipment Property, plantand Accounting Accounting Policies X X X X X X X X X the acquisitionof aninterest inajointoperation. Issued toprovide additionalguidance onaccounting for amortization. Issued toclarifyacceptable methodsof depreciation and reducing immaterial disclosures. and disclosure infinancial reports, withtheobjective of Issued toimprove theeffectiveness of presentation Description Accounting Judgments Estimates and 56 X 59 X 57 56 X X Page 56 54 55 62 62 62 61 57 oeTopic Note 20 23 22 8Epoe eeisX Employee benefits 18 16 19 5Otherliabilities 15 21 7Long-term debt 17 funding government Deferred income – capital disclosures Equity advances and contingencies Commitments and transactions Related party management and related risk instruments Financial capital Non-cash working material impactonthefinancialstatements. The adoptionof theseamendmentshashadno material impactonthefinancialstatements. The adoptionof theseamendmentshashadno material impactonthefinancialstatements. The adoptionof theseamendmentshashadno Impact

Accounting Policies X X X X Accounting Judgments Estimates and 63 X 65 X 75 X Page 62 64 74 70 69 70 SASKTEL 2016/17 ANNUAL REPORT | 53 Fiscal years beginning on orFiscal years beginning applied January 1, 2017, after prospectively. Fiscal years beginning on or applied January 1, 2018, after with certain retrospectively practical expedients available. Early adoption is permitted. Fiscal years beginning on or applied January 1, 2019, after with certain retrospectively practical expedients available. Early adoption is permitted. Fiscal years beginning on orFiscal years beginning on applied January 1, 2018, after with certain retrospectively Early adoption isexceptions. permitted. The Corporation plans to early adopt IFRS in 2017, April 1, 9 effective paragraph with accordance by the standard of 7.2.15 the difference recognizing carrying between the previous amounts and the carrying the beginning ofamounts at 2017/18the Corporation’s retained fiscal year in opening April 1, 2017. earnings at Effective Date Effective Impact IFRS 15 will primarily impact the timing of of the classification recognition, revenue and services, between products revenues to obtain and fulfil costs for and accounting contracts. Under multiple-element arrangements, recognized although the total revenue will be largely a contract during the term of to revenue allocated a the unaffected, item will no longer be limited delivered amount. This mayto the non-contingent ahead revenue of the recognition accelerate result in and cash inflows the associated of on asset recorded contract a corresponding over the sheet, to be realized the balance the customer contract. term of Significant judgments will need to be made rights and when defining the enforceable in determining a contract, of obligations to deliver goods or whether a promise distinct, and to is considered services determine when the customer obtains the distinct good or service. of control plan is being A detailed implementation in necessary established which will result changes throughout system and process 2017 and 2018 to determine the impact financial 2018/19 on the Corporation’s metrics, performance and key statements and determine the impact on historical it is not As a result, information. comparative theyet possible to determine the impact of financial on the Corporation’s new standard the Corporation however, statements, impacts will the most significant anticipates While total wireless services. be on wireless a customer from recognized revenues change significantly, will not likely contract for will be accelerated recognition revenue and a greater customer contracts certain as will be reclassified revenue of proportion equipment revenue. The Corporation is currently evaluating is currently The Corporation these amendments on thethe impact of but does not anticipatefinancial statements, from a significant impact on operations adoption. the classification, IFRS 16 may affect leases. of and valuation measurement evaluating is currently The Corporation financial IFRS 16 on the the impact of statements. The Corporation has determined that certain has determined that The Corporation reclassified be financial instruments will or loss to fair profit fair value through from income other comprehensive value through will this reclassification (OCI). The impact of net recognized previously be to reclassify in the amountfair value gains and losses Earnings to Retained million from $5.2 of OCI. Accumulated

ormance obligations in obligations ormance te the transaction price to thete the transaction price ecognize revenue when (or as) the entity revenue ecognize Alloca in the contract obligations performance the contract Identify the perf R obligation a performance satisfies Description 3. Determine the transaction price Determine 3. 4. guidance also provides The new standard the and for costs to contract relating gains and of and recognition measurement non-financial assets certain losses on the sale of and equipment. Additional such as property under the will also be required disclosures 5. 5. new standard. Issued to require a reconciliation of the opening of a reconciliation Issued to require an entity’s part of form and closing liabilities that both changesfinancing activities, including changes. cash flows and non-cash arising from Under the new standard all leases will beUnder the new standard sheets. IFRS balance onto companies’ brought of leases as the classification 16 also removes the leases (for leases or finance either operating all leases as lessee—the lease customer), treating leases. finance recognizing and measuring financial assets, recognizing contracts to buy financial liabilities and some It also has modifiedand sell non-financial items. to better link model the hedge accounting with the risk management of the economics hedges. of treatment accounting This standard establishes principles to record principles to record establishes This standard goods sale of the for contracts from revenues in the are unless the contracts or services, revenue other IFRSs. Under IFRS 15, of scope the reflects an amount that at is recognized in exchange receivable expected consideration to a customer, goods or services transferring for five steps: applying the following with a customer 1. Identify the contract 2. Amendments to IAS 7, to IAS 7, Amendments cash flows of Statement Standard IFRS 16 Leases IFRS 9 Financial instruments for sets out the requirements The standard IFRS 15 Revenue from from IFRS 15 Revenue with customers contracts Note 2 – Basis of presentation, continued presentation, of 2 – Basis Note yet adopted not and interpretations standards New are that by the IASB or IFRIC issued were standards amendments to existing and interpretations standards, Certain new These include: 31, 2017. after March periods beginning fiscal for mandatory 54 | CONSOLIDATED FINANCIAL STATEMENTS AND NOTES Corporation’s revenue recognition policies. services, are assessed todeterminetheappropriate revenue recognition for theproducts orservices provided, basedonthe to theCorporation’s networkbasedonnon-standard termsorconditions, orbasedonspecifically contracted products or are recognized asrevenue whenthecustomerisconnected tothenetwork.Othercontributions, eitherrelated toaccess Customer contributions specifically related toaccess totheCorporation’s network,basedonstandard termsand conditions, accrual basisbyapplyingtherate tothenumberof residential networkaccess linesservedduringtheperiodinHCSAs. service areas (HCSAs). TheCRTC hassettherate perline andbandfor allLECs. TheCorporation recognizes therevenue onan subsidize Local Exchange Carriers(LECs), like theCorporation, that provide service toresidential customerslocated inhighcost The CanadianRadio-televisionandTelecommunications Commission(CRTC) hasestablishedaNational SubsidyFund to completion method.Amountsbilledorpaidinadvance of services provided are recorded asdeferred revenue. of thecontract. Revenues for customized software projects andconsulting services are recognized usingthepercentage-of- element arrangementsare recognized asservices are rendered. Supportandmaintenance fees are recognized over theterm items andcompletion costs are reliably measurable. Feesfor professional services, otherthaninthecontext of multiple elements are notessentialtothefunctionalityof thelicence, theCorporation hasevidence of fairvaluefor alltheundelivered arrangement includesmultipleelements,perpetuallicence revenues are recognized ondelivery, provided theundelivered Revenues for perpetual licences are recognized ondeliveryoraccording tothetermsof thelicence agreement. Where the with thedisplaydate. Amountsbilledinadvance for advertisingare deferred andrecognized overthelife of thecontract. accordance withthecontractual termswiththeadvertisers,onamonthlybasisover thelife of the advertising,commencing Revenues are earnedthrough thesaleof printandon-lineadvertising.Advertisingrevenues are generallyrecognized, in rebates), theconsideration isrecorded asareduction of revenue rather thanasanexpense. When theCorporation receives noidentifiable,separablebenefit for consideration giventoacustomer(e.g.discounts and amount allocated tothat delivered itemislimitedtothenon-contingent amount. to adelivered itemiscontingent uponthedeliveryof additionalitemsormeetingspecifiedperformance conditions, the the accounting units.Therelevant revenue recognition policiesare appliedtoeachaccounting unit.Whenanamountallocated periods of time.Themultipleservices are separated intotheirrespective accounting unitsandconsideration isallocated among Customer solutionsmayinvolvethedeliveryof multipleservices andproducts that occur at different pointsandoverdifferent received inadvance are recorded asdeferred revenue until theproduct or service isdelivered. transaction at thereporting date. Thestageof completion isassessedbyreference tosurveysof workperformed. Payments accepted bythecustomer. Revenues for longertermcontracts are recognized inproportion tothestageof completion of the risks andrewards of ownershipof thegoodsare transferred tothebuyer, typicallywhentheequipmentisdelivered toand usage orrate plansintheperiodservice isprovided. Revenues from equipmentsalesare recognized whenthesignificant expected termof thecustomerrelationship. Revenues from longdistance andwireless airtimeare recognized basedonthe connection charges andactivation fees, alongwithcorresponding costs are deferred andrecognized overtheaverage to theCorporation’s networkandfacilitiesat therate plansineffect duringtheperiodservice isprovided. Certainservice Revenues from localtelecommunications, data, Internet,entertainmentandsecurityservices are recognized basedonaccess from revenue. Where theCorporation actsasanagentinatransaction,amountscollected onbehalfof theprincipalare excluded transferred tothebuyer. to theCorporation and,inthecaseof equipmentsales,whenthesignificantrisksand rewards of ownership of thegoodsare amount of revenue canbemeasured reliably, itisprobable that theeconomic benefitsassociated withthetransactionwillflow the periodservices are provided ortheequipmentissold,whenthere ispersuasiveevidence that anarrangementexists, the of discounts, volumerebates andsalestaxes. Revenue from therendering of services andsaleof equipmentisrecognized in Revenue represents thefairvalueof theconsideration received orreceivable for theservices provided andequipmentsales,net Accounting policies Note 3–Revenue andotherincome

SASKTEL 2016/17 ANNUAL REPORT | 55 1,840 3,082 7,235 8,962 6,459 3,671 4,540 4.30% (7,290) (8,042) (6,723) 44,517 54,834 (5,590) 81,325 58,883 50,315 28,511 28,873 (14,765) 406,042 290,198 1,569,637 $ 49,967 $ 40,069 $ 616,528 $1,574,177 For the fifteen For the fifteen For the fifteen For the fifteen months ended months ended months ended months ended March 31, 2016 March March 31, 2016 March 932 1,339 5,945 7,883 5,739 4.05% 36,583 43,460 (5,579) (5,778) (8,880) 60,259 41,989 37,051 24,513 32,561 10,666 10,129 (6,276) (3,102) 337,494 214,496 $ 40,823 $ 34,580 1,277,151 1,277,151 $ 520,905 $1,287,280 For the twelve For the twelve For the twelve months ended months ended months ended months ended March 31, 2017 March March 31, 2017 March 11 18 11 16 Note Note Net loss on retirement or disposal of property, plant and equipment property, or disposal of Net loss on retirement , Internet and data services , Internet and data maxTV services and enhanced Local Equipment services distance Long Advertising services Security monitoring services services and consulting software International Other services Other Wireless Amortization of government funding of Amortization Interest on long-term debt Interest Other income net income in consolidated Recognized on short-term advances Interest capitalized Interest Thousands of dollars Thousands of Services revenue Supporting information expense Net interest Finance expenses are comprised of interest expense on borrowings, changes in the fair value of financial assets at fair value financial assets fair value of changes in the expense on borrowings, interest of comprised expenses are Finance the net defined benefit expense on on financial assets and the net interest recognized losses or loss, impairment profit through form a qualifying asset of or production to the acquisition, construction attributable directly are that costs Borrowing liability. as an expense. recognized are costs asset. Other borrowing that of the cost part of Accounting policies at fair value through assets financial on funds invested, changes in fair value of income interest of is comprised income Finance on the net defined benefit asset. income or loss and net interest profit Note 4 – Net finance expense Sinking fund market value losses Sinking fund market on defined benefit liability Net interest expense Finance Sinking fund earnings Net finance expense rate capitalization Interest Thousands of dollars of Thousands Note 3 – Revenue and other income, continued other income, and 3 – Revenue Note information Supporting Interest income on loans and receivables income Interest income Finance 56 | CONSOLIDATED FINANCIAL STATEMENTS AND NOTES Other High cost servingarea subsidy Thousands of dollars As at March 31, Supporting information Judgment involvesdeterminingtheappropriate measure of netrealizable value. Accounting estimates andjudgments purchased andexpensedorcapitalized whenused. supplies inventoryonhandwillbecome obsoleteduetochangesintechnology. Othersupplies are charged toinventorywhen In establishingtheappropriate provision for suppliesinventoryobsolescence, managementestimates thelikelihood that valued at thelowerof averagecost andreplacement cost. Inventories for resale are valuedat thelowerof weighted averagecost andnetrealizable value.Othersuppliesinventoriesare Accounting policies Note 7–Inventories Accounts receivables Thousands of dollars As at March 31, Supporting information for doubtfulaccounts willbeincreased byrecording anadditionalexpense. expected collection trends. Ifeconomic conditions orspecificindustrytrends become worsethananticipated, the allowance are basedonthelikelihood of collecting accounts receivable basedonpastexperience, takingintoconsideration current and Determining whenamountsare deemeduncollectible requires judgment.Estimates of theallowance for doubtfulaccounts Accounting estimates andjudgments such that theactuallossesare likely tobegreater orlessthansuggestedbyhistoricaltrends. the amountof lossincurred, adjustedfor management’sjudgmentastowhethercurrent economic andcredit conditions are In assessingcollective impairment,theCorporation useshistoricaltrends of theprobability of default,timingof recoveries and individually significantare collectively assessed for impairmentbygrouping together receivables withsimilarriskcharacteristics. impaired are thencollectively assessedfor anyimpairmentthat hasbeenincurred butnotyetidentified. Receivables that are not significant receivables are assessed for specificimpairment.Allindividuallysignificant receivables foundnottobespecifically The Corporation considers evidence of impairmentfor receivables at bothaspecificassetand collective level.Allindividually provision for impairmentlossesof tradeaccounts receivable. to initialrecognition, tradeandotherreceivables are measured at amortized cost usingtheeffective interest method,lessany The Corporation initiallyrecognizes tradeandotherreceivables at fairvalueonthedate that theyare originated. Subsequent Accounting policies Note 6–Trade andotherreceivables measured at fairvaluewithrevaluation gainsandlossesincludedinnetincome intheperiodwhichgainsandlossesarise. instruments through profit andloss.Subsequenttoinitial recognition, financialassets atfairvaluethrough profitare orloss The Corporation classifiescashandequivalents,includingamountswithamaturity of 90daysorless,asfinancial Accounting policies Note 5–Cash Materials andsupplies Inventories for resale Allowance for doubtfulaccounts Accrued receivables –customer Customer accounts receivable Note 21 21 144,990 $ 83,416 $ 25,462 $ 24,173 $ (2,384) 84,629 57,941 3,597 2,420 1,289 2017 2017 132,788 $ 86,279 $ 24,627 $ 21,822 $ 86,267 43,813 (2,227) 2,215 2,708 2,805 2016 2016 SASKTEL 2016/17 ANNUAL REPORT | 57 2016 3,940 3,483 $ 37,913 $ 45,336

2017 3,323 5,287 $ 42,761 $ 51,371 3–17 years 3–50 years 20–75 years Estimated useful life Estimated Plant and equipment and equipment furniture Office Asset Buildings and improvements Prepaid expenses Prepaid Deferred service connection charges connection service Deferred incentives Short-term customer Depreciation is recognized in net income on the straight-line basis over the estimated useful life of each part of an item of each part of of useful life on the straight-line basis over the estimated in net income is recognized Depreciation plant and equipment as follows: property, Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less cost, an asset, or other amount substituted for of amount, which is the cost over the depreciable is calculated Depreciation value. its residual When property, plant and equipment is disposed of or retired, the related cost and accumulated depreciation is eliminated from from is eliminated depreciation and accumulated cost the related or retired, plant and equipment is disposed of When property, of and the carrying amount between the sale proceeds gain or loss, determined as the difference Any resulting the accounts. period. for the fiscal in net income the asset, is reflected and adjusted if appropriate. reporting date each financial at reviewed values are methods, useful lives and residual Depreciation and judgments Accounting estimates timing for appropriate costs); (e.g., labour and related attributable directly are Judgment involves determining: which costs normally predetermined in which the asset is to be operated, the circumstances considering capitalization, cost of cessation for individual components (for componentization level of to functionality; the appropriate by management with reference constitute betterments, repairs and maintenance which appropriate); are methods or rates depreciation which different and the be depreciated; should over which such costs life or functionality; the appropriate in extended asset life resulting depreciation. method of The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is the item in the carrying amount of is recognized plant and equipment property, an item of part of replacing of The cost cost can be measured and its benefits embodied within the part will flow to the Corporation economic the future that probable and plant property, the day-to-day servicing of of The costs part is derecognized. the replaced The carrying amount of reliably. as incurred. in net income recognized equipment are Accounting policies impairment and any accumulated depreciation less accumulated cost, at measured plant and equipment are Property, their intended for to bringing the assets to a working condition attributable directly are that losses. Cost includes expenditures Borrowing costs. attributable labour and directly direct services, assets includes materials, self-constructed of use. The cost period. Assets under during the construction capitalized are with major capital and development projects associated costs to transferred which time they are use, at for and available operational until they are as in progress recorded are construction plant and equipment. property, Note 9 – Property, plant and equipment Note 9 – Property, $0.1 million (2015/16 – $0.9 million). $0.9 million (2015/16 – $0.1 Note 8 – Prepaid expenses Note 8 – 31, March As at dollars Thousands of For the fiscal period ended March 31, 2017, write-downs of inventory to net realizable value amounted to value amounted realizable net of inventory to write-downs 31, 2017, period ended March For the fiscal Note 7 – Inventories, continued 7 – Inventories, Note million). – $98.3 (2015/16 million $76.9 period was the fiscal during an expense as recognized inventories of The cost 58 | CONSOLIDATED FINANCIAL STATEMENTS AND NOTES At March 31,2016 At January1,2015 At March 31,2017 At April1,2016 amounts Carrying Balance at March 31,2016 Retirements anddisposals Depreciation Balance at January1,2015 Balance at March 31,2017 Retirements, disposalsandadjustments Depreciation Balance at April1,2016 Accumulated depreciation Balance at March 31,2016 Retirements anddisposals Transfers Additions Balance at January1,2015 Balance at March 31,2017 Retirements, disposalsandadjustments Transfers Additions Balance at April1,2016 Cost Thousands of dollars Supporting information related technologies.Theimpactsare asfollows: During thefiscalperiodCorporation adjustedtheusefullives of certain assetsto coincide withthe revised exitdates for the Change inaccountingestimate impairments orchangestodepreciation expenseinfuture periods,particularlyifusefullivesare significantly reduced. of future technologies.Changesintheseassumptionscould result inmaterial adjustmentstoestimates, whichcould result in of benefit,prospective changesare madetotheir remaining usefullives.Uncertainties are inherent inestimating theimpact the endof eachreporting period.Whenitisdeterminedthat assignedassetlivesdonotreflect theexpected remaining period The Corporation assessesitsexistingassetsandtheirusefullivesinconnection withthereview of networkoperating plansat accounting estimates. are accounted for bychangingthedepreciation periodormethodasappropriate, andare treated aschangesin in theexpectedusefullife ortheexpectedpattern of consumption of future economic benefitsembodiedintheasset Asset residual values andusefullivesare reviewed and adjustedifappropriate, at theendof eachreporting period.Changes Note 9–Property, plant andequipment, continued Depreciation expense Millions of dollars increase (decrease) ,9,9 $3508 973 4,3 $3,4 $1,693,234 $ 1,594,338 38,344 $ $ 37,507 $ 145,736 $ 148,707 $ 59,733 $ 58,744 $ 355,028 $ 324,192 $ 1,094,393 $ 1,025,188 $ ,3,5 $1738 1,0 $ $ $2,706,915 $ – $ – $ 116,503 $ 157,358 $ 2,433,054 $ ,5,5 $1676 927 – – 2,605,175 $ – $ – $ 99,207 $ 146,716 $ 2,359,252 $ ,2,4 $5236 7,3 $1576 834 4,400,149 $ 38,344 $ 145,736 $ 176,236 $ 512,386 $ 3,527,447 $ ,8,4 $4098 5,5 $1877 757 4,199,513 $ 37,507 $ 148,707 $ 157,951 $ 470,908 $ 3,384,440 $ ,2,8 $3412 874 4,0 $3,0 $1,594,338 $ 37,507 $ 148,707 $ 58,744 $ 324,192 $ 1,025,188 $ 9083 1,7 $5,2 $1999 604 1,511,600 $ 36,054 $ 139,989 $ 56,321 $ 318,373 $ $960,863 $ ,5,5 $1676 927 – – 2,605,175 $ – $ – $ 99,207 $ 146,716 $ 2,359,252 $ ,1,1 $1504 951 – – 2,452,476 $ – $ – $ 99,551 $ 135,014 $ 2,217,911 $ ,8,4 $4098 5,5 $1877 757 4,199,513 $ 37,507 $ 148,707 $ 157,951 $ 470,908 $ 3,384,440 $ ,7,7 $4337 5,7 $1999 604 3,964,076 $ 36,054 $ 139,989 $ 155,872 $ 453,387 $ 3,178,774 $ equipment Plant and (58,042) (55,254) 3,4 1,1 19,969 11,212 131,844 4,3 38,808 148,534 7,0 1,1 26,796 13,311 171,303 2,6)(,0)(27,140) (1,609) (29,962) 8,4 19,675 182,345 3,8)(,5)(27,621) (2,455) (35,680) 49,727 59,001 improvements Buildings and Buildings and ,4 1,0 1640 1 259,329 917 186,430 18,608 3,647 50 (2,673) (570) 97 (2,398) (977) 0 2,2 219,487 22,420 301 95 65 56 18 43$9.1 $ 14.3 $ (1.8) $ (5.6) $ (6.5) $ (9.5) $ 0721 0922 2021 2020 2019 2018 2017 and equipment Office furniture ,7 (8,0)(16) (189,401) 2,075 ,8 (1,6)1,469 (210,769) 7,280 Fiscal periodendingMarch 31, osrcinLand construction Plant under – – – 6)(58,693) (64) – – – – 1)(65,772) (16) – – (61,285) – – 163,025 – – (58,711) – – 211,410 – – 301,209 –

2022 and

beyond Total

– – SASKTEL 2016/17 ANNUAL REPORT | 59

1–10 years 2–13 years Estimated useful life Estimated Asset Software Customer accounts Amortization is recognized in net income on a straight-line basis over the estimated useful lives of the assets as follows: useful lives of estimated on a straight-line basis over the in net income is recognized Amortization Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets. For measurement of goodwill at initial goodwill at of For measurement subsidiaries is included in intangible assets. the acquisition of arises upon Goodwill that impairment less any accumulated cost at . Subsequently goodwill is measured consolidation 2 – Basis of see Note recognition, losses. Goodwill is not amortized. Spectrum licences have been classified as indefinite-life intangible assets due to the current licencing terms, the most licencing intangible assets due to the current have been classified as indefinite-life Spectrum licences Should theserevocation. licence of material precedent regulatory fees and no renewal minimal are of which significant cost less any at recorded have been reassessed. Spectrum licences will be of indefinite-life factors change, the classification impairment losses. accumulated Customer accounts, acquired individually, with a group of other assets, or through the Corporation’s authorized dealers are dealers are authorized the Corporation’s other assets, or through of with a group individually, acquired Customer accounts, losses. impairment and any accumulated amortization less accumulated cost at measured Costs associated with maintaining software as well as expenditures on research activities, undertaken with the prospect of prospect with the activities, undertaken on research as well as expenditures maintaining software with Costs associated as an expense as incurred. recognized and understanding, are gaining new scientific or technical knowledge Capitalized software is measured at cost less accumulated amortization and any accumulated impairment losses. and any accumulated amortization less accumulated cost at is measured software Capitalized Software development activities involve a plan or design for the production of new or substantially improved products and products improved new or substantially of the production design for development activities involve a plan or Software or product the reliably, be measured can costs only if development capitalized are Development expenditures processes. to and intends the Corporation and probable, benefits are economic future feasible, is technically and commercially process cost include the capitalized asset. The expenditures development and to use or sell the complete to resources has sufficient its intended use. Borrowing the asset for to preparing attributable directly are that costs related labour and direct materials, of in net recognized are Other development expenditures capitalized. are qualifying assets of to the development related costs as incurred. income Intangible assets are recorded initially at cost of acquisition or development and relate primarily to software, customer software, primarily to and relate or development acquisition of cost initially at recorded assets are Intangible intangible An primarily to software. relate intangible assets Internally generated and goodwill. licences spectrum accounts, to the asset will flow to theattributable benefits economic the expected future that when it is probable asset is recognized reliably. measured the asset can be of and the cost Corporation Note 10 – Intangible assets 10 – Intangible Note policies Accounting by controlled and to the Corporation economic benefits to bring future identifiable, able defined as being assets are Intangible contractual rights. from it is separable or arises criterion when meets the identifiability it. An asset Goodwill is allocated to CGUs or groups of CGUs for the purpose of impairment testing based on the level at which it is the level at impairment testing based on the purpose of for CGUs of or groups to CGUs Goodwill is allocated or is made to those CGUs segment. The allocation a level higher than an operating by management, and not at monitored in which the goodwill arose. combination the business expected to benefit from CGUs of groups Estimation is applied to determine expected useful lives used in the amortization of intangible assets with finite lives. Changes intangible assets with finite of is applied to determine expected useful lives used in the amortization Estimation into an asset (taken of consumption of or the expected pattern changes in useful life from can result estimates in accounting period or method, as appropriate). by changing the amortization account Accounting estimates and judgments Accounting estimates the amortization, the method of capitalization, eligible for Judgment is applied to determine non-tangible expenditures certain intangible assets as indefinite-life of and classification capitalization cost of cessation timing for appropriate intangible assets. 60 | CONSOLIDATED FINANCIAL STATEMENTS AND NOTES Acquisitions –internallydeveloped Acquisitions Retirements anddisposals Balance at January1,2015 Disposals Transfers Balance at April1,2016 Cost Transfers Balance at March 31,2016 reflect theexpected return andrisk for the CGU. plan, aswellterminalvaluecapitalization. Theexpectedcashflowsandterminalvaluewere thendiscounted at arate to Management hasappliedthevalueinusevaluation methodologyfor theCGU usingtheBoard-approved 2018–2022 financial which isnothigherthantheCorporation’s operating segments. DirectWest. ThisisthelowestlevelwithinCorporation at whichgoodwillismonitored for internalmanagementpurposes, For thepurposeof impairmenttesting,goodwillandaportionof finite-life assetsunderdevelopmentare allocated toone CGU: under development Impairment testingforthecash-generating unitcontaininggoodwillandrecoverability testingof finite-lifeintangibleassets Acquisitions –internallydeveloped Balance at March 31,2017 Thousands of dollars Supporting information Note 10–Intangible assets,continued Amortization Acquisitions Balance at January1,2015 Disposals Balance at April1,2016 Accumulated amortization Balance at March 31,2017 Reversal of impairmentlosses Amortization Disposals At January1,2015 Balance at March 31,2016 At March 31,2017 At March 31,2016 At April1,2016 amounts Carrying Goodwill ,7 $3477 205 0,3 $710 538,666 $ 7,180 $ 108,738 $ 92,035 $ 324,737 $ 5,976 $ ,7 $3032 0,7 $1878 147 594,704 $ 21,497 $ 108,738 $ 108,171 $ 350,322 $ 5,976 $ – 7,8 $6,3 $ – 237,612 $ – $ – $ 60,231 $ 177,381 $ – $ – 0,7 $6,9 $ $ $275,872 $ – $ – $ 66,794 $ 209,078 $ – $ ,7 $1124 137 0,3 $2,9 $318,832 $ 21,497 $ 108,738 $ 41,377 $ 141,244 $ 5,976 $ ,7 4,5 $3,0 $1878 ,8 $301,054 $ 7,180 $ 108,738 $ 31,804 $ 147,356 $ 5,976 $ ,7 $2422 585 358 593 465,594 $ 55,933 $ 73,538 $ 85,865 $ 244,282 $ 5,976 $ ,7 $3477 205 0,3 $710 538,666 $ 7,180 $ 108,738 $ 92,035 $ 324,737 $ 5,976 $ – 4,6 $5,3 $ $ $196,292 $ – $ – $ 52,831 $ 143,461 $ – $ ,7 $1081 304 358 593 269,302 $ 55,933 $ 73,538 $ 33,034 $ 100,821 $ 5,976 $ – 7,8 $6,3 $ $ $237,612 $ – $ – $ 60,231 $ 177,381 $ – $ ,7 $1736 184 0,3 $710 301,054 $ 7,180 $ 108,738 $ 31,804 $ 147,356 $ 5,976 $ – 261 16,136 1,974 12,681 – – – (766) 11,696 – – – 186 6,563 31,826 – – (129) – – (3,713) – – 74,081 – – 2,226 – – ,6 610 520 120 60,461 11,230 35,200 6,170 7,861 – – 814 7,400 (2,000) 38,194 – – – (2,274) – Software Customer accounts – – – – – – – – – Spectrum licences – 533 54,140 25,323 – – – (11,696) – – – – – (74,081) – – – 408 16,324 14,098 – – – – development Under 9 2,664 690 – (766) – – 38,389 – – (129) – – (3,713) – – (2,000) 45,594 – – – (2,274) – Total – – SASKTEL 2016/17 ANNUAL REPORT | 61 2016 8,042 (3,082) 11,966

$ 112,571 $ 129,497 2017 (932) 9,366 3,102 $ 141,033 $ 129,497

6,375 10,641 10,641 10,641 of dollars of -2% 21% 16% $ 10,641 Thousands Fiscal years ending 31, March 2018 2019 2020 2021 2022 Discount rate Discount Terminal value capitalization Terminal Growth rate Growth Installments Earnings Valuation adjustment Valuation Sinking fund instalments due in each of the next five fiscal years ending March 31 are as follows: are as 31 the next five fiscal years ending March Sinking fund instalments due in each of As at March 31, March As at dollars Thousands of The changes in the carrying amount of sinking funds are as follows: sinking funds are The changes in the carrying amount of Supporting information to pay annually into sinking funds, administered is required to the long-term debt, the Corporation attached Under conditions the debt outstanding. The fund includes the of 1% to 2% amounts representing Finance, Ministry of by the Saskatchewan gains or losses. revaluation of share earnings and its proportional of share its proportional contributions, required Corporation’s Note 11 – Sinking funds Accounting policies manages these investments or loss because the Corporation profit as fair value through Sinking funds have been designated based on their fair value in accordance and sale decisions purchase who makes Finance Ministry of the Saskatchewan through financial Subsequent to initial recognition, documented risk management and investment strategy. with the Corporation’s in gains and losses included in net income revaluation at fair value with measured or loss are profit fair value through assets at arise. the period in which the gains and losses Sinking funds, beginning of fiscal period Sinking funds, beginning of Note 10 – Intangible assets, continued assets, 10 – Intangible Note the to values assigned The set out below. are amount the recoverable of estimation used in the assumptions material The key from data based on historical and have been in the industry trends future of management’s assessment represent assumptions and internal sources. both external Impairment testing for cash-generating unit containing indefinite-life intangible assets and recoverability testing of testing recoverability assets and unit containing indefinite-life intangible for cash-generating Impairment testing Impairment testing indicated no impairment at March 31, 2017. March at no impairment Impairment testing indicated The Corporation’s CGU impairment tests were based on fair value less costs to sell using comparable companies that are are that companies to sell using comparable based on fair value less costs impairment tests were CGU The Corporation’s (EV) to to derive an Enterprise Value used were these companies for prices actively traded. Share and are listed on exchanges a demonstrable minority was then adjusted for that ratio (EBITDA) and amortization depreciation taxes, interest, earnings before was then applied to the estimated ratio adjusted The resulting prices. with these publicly traded share associated discount no impairment at unit. Impairment testing indicated the amount of unit to determine the recoverable the of 2016/17 EBITDA 31, 2017. March finite-life intangible assets under development finite-life intangible intangibleof finite-life and a portion assets (spectrum licences) intangible impairment testing, indefinite-life For the purpose of which indefinite-life at the Corporation This is the lowest level within to SaskTel. allocated are assets under development which isfor internal management purposes, monitored assets under development are intangible finite-life intangible assets and segments. operating Corporation’s not higher than the 62 | CONSOLIDATED FINANCIAL STATEMENTS AND NOTES Thousands of dollars As at March 31, Note 15–Otherliabilities from April2,2017, toJuly18, 2017, andhaveaweightedaverageeffective interest rate of 0.60% (2015/16– 0.63%). Notes payableare duetotheProvince of Saskatchewan’s GeneralRevenue Fund (GRF).Thesenoteshavevaryingmaturities Supporting information The Corporation derecognizes afinancial liabilitywhenits contractual obligations are discharged orcancelled, orexpire. liabilities are measured at amortized cost usingtheeffective interest method. recognized initiallyat fairvalueplusany directly attributable transactioncosts. Subsequenttoinitialrecognition, thesefinancial The Corporation initiallyrecognizes debt securitiesissuedonthedate that theyare originated. Suchfinancialliabilitiesare Accounting policies Note 14 –Notespayable Other Payroll andotheremployee-related liabilities Trade payablesandaccrued liabilities Thousands of dollars As at March 31, Supporting information The Corporation derecognizes afinancialliabilitywhenits contractual obligations are discharged orcancelled, orexpire. the effective interest method. attributable transactioncosts. Subsequenttoinitialrecognition, thesefinancialliabilities are measured at amortized cost using to thecontractual provisions of theinstrument.Suchfinancialliabilitiesare recognized initially at fairvalueplusanydirectly The Corporation initiallyrecognizes tradeandotherpayablesonthedate at whichtheCorporation becomes aparty Accounting policies Note 13–Trade andotherpayables Other Financing leases Long-term customerincentives Deferred service connection charges Thousands of dollars As at March 31, Note 12–Otherassets Risk managementliabilities Customer deposits Current portionof deferred income Deferred customeractivation andconnection fees Advance billings – governmentfunding Note 16 21 169,149 $ 127,374 $ 54,623 $ 68,525 $ 8,542 $ 3,501 $ 32,242 5,525 4,023 4,290 2017 9,533 3,004 2,026 2017 2017 64 11 158,190 $ 116,237 $ 53,538 $ 68,126 $ 9,322 $ 4,952 $ 31,490 10,463 3,056 1,300 5,069 4,627 4,892 2016 2016 2016 14 – SASKTEL 2016/17 ANNUAL REPORT | 63

Total 2016 4,565 6,459 5,069 49,645 43,186

$ 45,080 $ 38,117

– 5,525 44 5,739 2017 – – – – 4,077 2,238 6,315 RIP SCN FNSIP FNS&H CCDN FTFN Total 4,285 440 500 239 231 4,285 45 500 239 456 26,371 708 6,395 6,262 7,527 2,238 49,501 22,086 268 5,895 6,023 7,296 2,194 43,762 $ 26,371 $ 708 $ 6,395 $ 6,262 $ 3,450 $ – $ 43,186 $ 17,801 $ 223 $ 5,395 $ 5,784 $ 6,840 $ 2,194 $ 38,237 In conjunction with an AANDC funding agreement, the Corporation has received funding of $2.2 million to provide dedicated $2.2 million to provide funding of has received the Corporation AANDC funding agreement, with an In conjunction $0.1 million of included expenditures To date, offices (FTFN). Tribal Council and offices First Nation to specific Internet service expenditures. operating capital and combined Through the Connecting Canadians program (CCDN) sponsored by Innovation, Science and Economic Development Canada, and Economic Science by Innovation, sponsored (CCDN) the Connecting Canadians program Through Saskatchewan. parts of to high speed Internet in rural and remote access partial funding to provide receives the Corporation million to operating and $0.2 has been applied to capital expenditures million $7.1 accrued, million has been $7.5 date, To in the next fiscal year. will be applied against expenditures The balance expenditures. In conjunction with the Aboriginal Affairs and Northern Development Canada (AANDC) funding agreement, the Corporation Aboriginal Affairs and Northern Development Canada (AANDC) funding agreement, with the In conjunction in Saskatchewan schools and health facilities to selected First Nations Internet service million for $17.1 funding of has received (FNSIP). Project Improvement Service Nations with the First million in conjunction (FNS&H), as well as $8.8 $1.3 million in funding for distance education hardware upgrades: $0.5 million has been applied to capital expenditures million has been applied to capital expenditures upgrades: $0.5 hardware education distance $1.3 million in funding for expenditures. million to operating and $0.8 As part of the transfer of the satellite distribution and communication assets of Saskatchewan Communications Network Communications Saskatchewan assets of distribution and communication the satellite of the transfer As part of has provided Education the Ministry of through Saskatchewan of the Province the Corporation, (SCN) to Corporation Supporting information CIC as partial funding of through Saskatchewan of the Province from million in funding $55.0 received The Corporation operating million to and $5.8 capital expenditures million has been applied to (RIP): $49.2 Program the Rural Infrastructure expenditures. Note 16 – Deferred income – government funding government – income 16 – Deferred Note policies Accounting will be received they that assurance is reasonable when there income initially as deferred recognized grants are Government for the Corporation compensate grant. Grants that with the associated with the conditions will comply and the Corporation on a systematic income comprehensive and other income of statement in the consolidated recognized are incurred expenses an of cost the for Corporation the compensate that Grants recognized. the expenses are same period in which basis in the the basis over a systematic on income comprehensive and other income of statement consolidated in the recognized asset are the asset. of useful life and judgments Accounting estimates acting in their capacity as a funding is a transaction with the shareholder whether certain in determining Judgment is required its purpose (i.e. is the government acting in a specific parties for the funding would be available to other or whether shareholder as a government). or capacity as shareholder As at March 31, March As at dollars Thousands of Balance, beginning Balance, Funding Amortization Current portion Current 64 | CONSOLIDATED FINANCIAL STATEMENTS AND NOTES Principal repayments eebr21 June2048 Total duetoProvince of Saskatchewan June2045 December 2016 December 2013 eray21 February2042 February 2012 March 1999 December 2025 March 1999 December 2010 December 2020 May 2014 November 1990 July 2010 maturity, onanetbasis(seeNote 11–Sinkingfunds). 2% of theoriginalissue.Thecumulative annualpaymentsplusinterest earnedare usedfor theretirement of debtissuesupon There isarequirement attached toaboveadvances tomake annualpaymentsintosinkingfundsinamountsrepresenting 1%to years were asfollows: The Corporation’s long-termdebtisunsecured. Asat March 31,2017, principalrepayments dueineachof thenextfivefiscal on June2,2048. Saskatchewan Ministryof Finance. Thedebtissuehasacoupon rate of 3.30%, aneffective interest rate of 3.35%, andmatures On December 6, 2016, theCorporation issued$75millionof long-termdebtat adiscount of $0.7 millionthrough the Issue date Thousands of dollars Unsecured advancesfrom theProvince of Saskatchewan Long-term debt,beginningof fiscalperiod Thousands of dollars As at March 31, Supporting information recognition, thesefinancialliabilitiesare measured at amortized cost usingtheeffective interest method. These financialliabilitiesare recognized initially at fairvalueplusanydirectly attributable transaction costs. Subsequenttoinitial The Corporation initiallyrecognizes debtsecuritiesissuedandsubordinated liabilitiesonthedate that theyare originated. Accounting policies Note 17–Long-termdebt Millions of dollars Amoritiza L ong-term debtissues tion of debtdiscounts netof premiums March 2029 March 2029 June 2024 July 2020 Maturity date Effective interest rate (%) 01 1.8 126,600 10.08 10.18 .9 .0 5,0 (4,852) 75,000 150,000 3.30 3.90 3.35 4.09 .9 .0 5,0 (2,106) (1,377) 150,000 35,000 75,000 3.40 50,000 5.60 50,000 5.75 3.49 (503) 4.15 $ 5.18 3.20 5.97 150,000 $ 4.15 3.90 3.11 4.01 Coupon rate (%) 0821 0022 2022 2021 2020 2019 2018 6,0 $(9,651) $ 861,600 $ 7. – $ 276.6 $ – $ – $ – $ value Par Unamortized Fiscal periodendingMarch 31, (discounts) premiums (712) (379) 278 – – 777,256 $ 851,949 $ 74,285 851,949 $ 149,497 $ 2017 408 145,148 147,894 126,221 74,288 35,000 73,623 50,000 50,278 Outstanding amount 2017 March 31, 777,256 $ 149,359 $ 776,780 $ 777,256 $ 145,057 147,841 126,141 35,000 73,545 50,000 50,313 2016 2016 476 – – SASKTEL 2016/17 ANNUAL REPORT | 65 The Corporation determines the appropriate discount rates at the end of every year. Changes in the discount rate could have could rate Changes in the discount every year. the end of at rates discount determines the appropriate The Corporation results in rate discount A lower projected benefit obligation. effect on the an cash flows through on the Corporation’s an effect to the plan. additional contributions some point require at which could a higher obligation, The most significant assumption used to calculate the net employee benefit plan’s obligation is the discount rate. The discount is the discount the net employee benefit plan’s obligation The most significant assumption used to calculate expects will be the Corporation cash flows that the future value of used to determine the present rate is the interest rate income fixed corporate of long-term, high-quality, It is based on the yield to settle employee benefit obligations. required members. of the plan the profile investments with terms reflecting Termination benefits are expensed at the earlier of when the Corporation can no longer withdraw the offer of those benefitsoffer no longer withdraw the can of when the Corporation at the earlier expensed benefits are Termination not expected to be settled wholly within 12 If benefits are a restructuring. for costs recognizes and when the Corporation value. to their present discounted period, then they are the reporting months of and judgments Accounting estimates These rates. age, longevity and termination retirement rates, to determine discount required and judgments are Estimates independent actuaries. annually by the Corporation’s reviewed determined by management and are assumptions are Short-term benefits and termination benefits Short-term benefits and termination for the amount recognized A liability is is provided. service related expensed as the are Short-term employee benefit obligations pastof to pay this amount as a result obligation legal or constructive has a present expected to be paid if the Corporation can be estimated. by the employee and the obligations provided service Defined contribution plans (Plan C) Defined contribution contributions into a separatefixed plan is a post-employment benefit under which an entity pays contribution A defined to the defined contributions for to pay further amounts. Obligations obligation entity and will have no legal or constructive and otherof income statement consolidated as an employee benefit expense in the recognized plan are pension contribution recognized are contributions Prepaid by employees. rendered are in the periods during which services income comprehensive payments is available. in future or a reduction a cash refund as an asset to the extent that The Corporation’s net obligation in respect of Plan B is calculated by estimating the amount of future benefit that employees benefit that future the amount of by estimating Plan B is calculated of in respect obligation net The Corporation’s the defined benefit of amount. The calculation that and discounting in prior periods their service for have earned in return method. unit credit actuary using the projected annually by a qualified is performed obligation When the benefits of the plan are changed or when the plan is curtailed, the resulting change in benefit that relates to past relates resulting change in benefit that changed or when the plan is curtailed, the the plan are of When the benefits gains and recognizes The Corporation income. in net immediately loss on curtailment is recognized or the gain or service occurs. the defined benefit plan when the settlement losses on the settlement of Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets return actuarial gains and losses, the comprise which benefit liability, the net defined of Remeasurements in other immediately recognized are interest), excluding any, ceiling (if of the asset and the effect interest) (excluding on the net defined liability (asset) expense (income) determines the net interest (OCI). The Corporation income comprehensive of the annual at the beginning the defined benefit obligation used to measure rate the period by applying the discount for in the net defined liability (asset) during any changes account liability (asset), taking into period to the then-net defined benefit to the definedrelated expenses expense and other and benefit payments. Net interest contributions of the period as a result in net income. recognized benefit plan are The calculation of the net defined benefit obligation is performed annually by a qualified actuary using the projected unit the annually by a qualified actuary using is performed net defined benefit obligation the of The calculation asset is limited to the recognized the Corporation, asset for in a potential results calculation method. When the credit reductions in future the plan or from refunds of any future form benefits available in the economic value of the present given to any applicable is consideration benefits, economic of value the present calculate to the plan. To contributions minimum funding requirements. Note 18 – Employee benefits 18 – Employee Note defined B), and a plan (Plan benefit defined recognition service A), a plan (Plan pension benefit has: a defined The Corporation C). pension plan (Plan contribution policies Accounting A & B) benefit plans (Plans Defined employees benefit that future amount of the by estimating Plan A is calculated of in respect net obligation The Corporation’s value of amount and deducting the fair that and prior periods; discounting in the current their service for have earned in return plan assets. 66 | CONSOLIDATED FINANCIAL STATEMENTS AND NOTES Plan Bisunfunded. TheCorporation expectstopay$1.3millioninthenext fiscalyear related toPlan B. not required. funding actuarialvaluation. Underthegoingconcern actuarialvaluation theplanisinasurplusandtherefore contributions are funding requirements basedonthegoingconcern actuarialvaluation versustheformer requirement tousethesolvency During 2013, provisions of ThePensionBenefitsRegulations, 1993were amendedtoallowthepensionplandetermine determine theactuarialpresent valueof theaccrued pensionbenefit. plan. Asaresult, employercurrent service contributions havealsoceased. Avaluation isperformed at leasteverythree yearsto All planmembershavereached themaximumyearsof pensionableservice andare nolongerrequired tocontribute tothe was performed asof December 31,2013. actuarial valuation for accounting purposeswasperformed at December 31,2013. Thelatest valuation for fundingpurposes contributions reflect actuarialassumptionsaboutfuture investment returns, salaryprojections andfutureAn service benefits. The Corporation isresponsible for adequately fundingPlanA.Contributionsare determinedbyactuarialvaluations. The Funding service recognition defined benefit program wascurtailed effective March 19,2005. is payableonretirement. BasedontheCollectiveAgreement betweentheCorporation andUnifor, ratified April22,2005, the Plan B, theservice recognition definedbenefitplan provided a retiringallowance oftwodayssalaryperyear ofservice which contribution andindexation policies)of thedefinedbenefitpensionplan. the bestinterests of thedefinedbenefitpensionplanparticipantsandis responsible forsetting certainpolicies (e.g. investment, representatives, twounionrepresentatives andanindependentchair. TheSaskTel Pension Board isrequired bylawtoactin The definedbenefitpensionplanisadministered byafive-memberboard (SaskTel PensionBoard), consisting oftwoemployer per year. pension maybepayable.Pensions are subjecttoannualindexingwiththeConsumerPrice Index(CPI)uptoamaximumof 2% For employeeswhoretire before theageof 65, butmeetotherageplusservice requirements, eitherareduced orunreduced opted for ifcertain ageandyearsof service criteriaare met. pensionable earningstimesthenumberof yearsof service uptoamaximumof 35yearsof service. Areduced pensionmaybe upon completion of 35yearsof service. Thepensioniscalculated tobe2%timestheaverageof thehighestthree yearsof The SaskTel definedbenefitpensionplan provides afullpension atage 65,or atage60with atleast20years ofservice financial statements for thedefinedbenefitplan are prepared and releasedpublicly. Canada, andregulated bytheFinancialandConsumerAffairsAuthority of Saskatchewan – Pensions Division.Separate audited SaskTel definedbenefitpensionplanis registered underThePensionandBenefitAct,1992,Saskatchewan, theIncome Tax Act, Plan A,thedefinedbenefitpensionplanisgovernedbySaskTel andhasbeenclosedtonewmembershipsince 1977. The Defined benefitplans(PlansA&B) Supporting information Note 18–Employeebenefits,continued SASKTEL 2016/17 ANNUAL REPORT | 67 – – 50,831 (152,359) Decrease – 3.00% – 10.1 years 2.50% 3.60% 3.20% Plan A Plan B 2016 – maximum of 2% maximum of 100% of CPI to a CPI to a 100% of Increase Defined benefit obligation (120,174) $ (118,879) $ 143,995 Canadian Pensioner 2014 – 2014 – Canadian Pensioner Private Sector Mortality Table Table Sector Mortality Private at 100% for males and 110% for males and 110% for 100% for at with CPM improvement Scale B improvement with CPM females projected generationally generationally projected females – – 3.00% – 9.6 years 3.50%2.50% 3.10% – Plan A Plan B 2017 maximum of 2% maximum of 100% of CPI to a CPI to a 100% of Canadian Pensioner 2014 – – Canadian Pensioner 2014 Private Sector Mortality Table Mortality Table Sector Private at 100% for males and 110% for at with CPM improvement Scale B with CPM improvement females projected generationally generationally females projected Future mortality Future Expected salary increase index Post-retirement Discount rate – end of period – end of rate Discount rate Inflation Inflation (1% movement) Inflation Sensitivity analysis certain actuarial assumptions while holding allof changing of the plans on the obligations the effect illustrates The following other assumptions constant: The actuarial assumptions are based on management’s expectations, independent actuarial advice and guidance provided by provided and guidance independent actuarial advice expectations, based on management’s The actuarial assumptions are bonds that on AA credit-rated reporting date at the which is the yield rate The most significant assumption is the discount IFRS. the obligations. the terms of approximating dates have maturity At March 31, 2017, the weighted average duration of the defined benefit obligation was 11.6 years (2015/16 – 11.8 years). years (2015/16 – 11.8 was 11.6 benefit obligation the defined of weighted average duration the 31, 2017, At March Estimated average remaining employee service life employee service average remaining Estimated As at March 31, March As at Note 18 – Employee benefits, continued benefits, 18 – Employee Note benefit obligation Defined Actuarial assumptions uses management’s and benefit increases, and ad hoc uncommitted for includes a provision actuarial valuation The accounting courses and planned circumstances of economic set probable the most reflect that based on assumptions best estimates major The the estimate. from materially may differ the actual amount that involves risks therefore, estimate, action. The of as follows: are the valuations assumptions used in As at March 31, 2017 March As at dollars Thousands of (1% movement) rate Discount indexing (1% movement) Future 68 | CONSOLIDATED FINANCIAL STATEMENTS AND NOTES Total investments US equities Canadian equities Short-term investments Investments undersecuritieslending program Pooled bondfunds Bonds Non-North Americanpooledequityfunds Net definedbenefitliability(PlanB) Net definedbenefitliability(PlanA) Represented by: Balance, endof fiscalperiod US pooledequityfund US equities Benefits paid Other Canadian pooledequityfunds Canadian equities Remeasurement loss(gain): Included inOCI Pooled real estate Interest cost (income) Balance, beginningof fiscalperiod Short-term investments Asset Category Thousands of dollars As at March 31, The assetallocation of thedefinedbenefitpensionplanisas follows: Plan assets liability anditscomponents. The following tableshowsareconciliation from theopeningbalances totheclosingbalances for thenetdefinedbenefit Movement inthepresent valueof thedefinedbenefitobligation Note 18–Employeebenefits,continued Thousands of dollars Current service cost Included innetincome - - R financial assumptions Actuarial lossarisingfr excluding interest income eturn onplanassets om 1,149,585 $ 1,165,200 $ March 31,2017 months ended For thetwelve eie eei biainFi au fpa sesNetdefinedbenefitliability Fairvalue ofplanassets Defined benefitobligation (68,944) 12,697 12,697 40,632 40,632 – – March 31,2016 months ended For thefifteen 1,165,200 $ 1,173,570 $ (87,683) 25,790 25,790 53,523 53,523 – – (1,030,246) $ $ March 31,2017 months ended For thetwelve (997,320) (66,186) (66,186) (34,327) (34,687) 67,587 360 – March 31,2016 months ended For thefifteen (997,320) $ $(1,017,399) (45,858) (19,904) (19,904) (46,288) 85,841 430 – 100,997 $ 119,339 $ 119,339 $ 167,880 $ March 31,2017 $1,030,259 14,315 $ months ended For thetwelve 983,246 393,737 212,639 129,920 152,776 47,013 45,773 10,124 69,283 1,240 2017 (53,489) (66,186) 452 (1,357) 18,342 12,697 – – 6,305 5,945 360 March 31,2016 months ended For thefifteen 997,483 $ 9,737 $ 148,558 $ 167,880 $ 167,880 $ 156,171 $ (19,904) 947,673 367,981 202,653 116,737 141,327 19,322 25,790 (1,842) 49,810 38,706 19,353 82,004 7,665 5,886 7,235 7,568 3,536 7,129 2016 430 752 SASKTEL 2016/17 ANNUAL REPORT | 69 45% 15% 40% 45% 15% 40% Range Target Actual 40–50% 10–20% 30–50% Real estate Real income Fixed Equities Asset category The Corporation reviews the debt ratio targets of all its subsidiaries on an annual basis to ensure consistency with industry consistency all its subsidiaries on an annual basis to ensure of targets the debt ratio reviews The Corporation subsidiaries are for debt ratios capital spending. The target plans for includes subsidiary corporations’ This review standards. the for a weighted average debt to equity ratio to compile debt ratios uses targeted The Corporation by the Board. approved 2016/17 was 50.8%. for ratio The target entity. consolidated Too high a ratio relative to target indicates an excessive debt burden that may impair the Corporation’s ability to withstand may impair the Corporation’s that debt burden an excessive indicates to target relative high a ratio Too at as net debt divided by capitalization is calculated The ratio payment obligations. and still meet fixed downturns in revenues the fiscal period. the end of The Corporation closely monitors its debt level utilizing the debt ratio as a primary indicator of financial health. The debt ratio of as a primary indicator closely monitors its debt level utilizing the debt ratio The Corporation assessing the extent of in uses this measure The Corporation capital structure. debt in a corporation’s the amount of measures financial leverage and in turn, its financial flexibility. Due to its ownership structure, the Corporation has no access to capital markets for internal equity. Equity advances in Equity advances internal equity. for to capital markets has no access the Corporation Due to its ownership structure, the determined through on an annual basis. Dividends to CIC are determined by the shareholder are the Corporation on an annual basis. budget process Provincial Saskatchewan Supporting information equity investment in the an are The advances its equity capitalization. CIC to form from advances has received The Corporation by CIC. Corporation Accounting policies to determine is first analyzed Funding CIC. and sole equity holder, its parent funding from receives periodically The Corporation e.g. equity injection, or whether the equity holder in their capacity as an equity holder, whether the funding is a transaction with certaincomply with to requirement is no purpose. If there a specific parties for the funding would be available to other must If the Corporation as an equity advance. is recorded the funding entity, the activities of to the operating relating conditions be and the funding could the Corporation, activities of the operating to relating conditions past or future with certain comply income – Deferred 16 as a government grant (see Note recorded a specific purpose, the funding is available to other parties for funding). – government Note 19 – Equity advance and capital disclosures Note 19 – Equity advance and capital Defined contribution plans (Plan C) Defined contribution earningsof employees’ pensionable 7.45% contribute to the Corporation requires contribution pension plan, the defined Plan C, contribution plan is the defined for pensionable earnings. The total cost of 4.45% a minimum of and employees to contribute the Public for and employer contributions cost pension The Corporation’s contribution. required equal to the Corporation’s million). 31, 2017 (2015/16 – $27.1 fiscal period ended March the $22.3 million for are Plan Employees Pension The SaskTel Pension Board employs a pension risk management strategy that addresses continued capital market volatility and volatility capital market continued addresses that a pension risk management strategy employs Board Pension The SaskTel the defined benefit pension plan assets of the strives to ensure the plan. This approach for the overall demographic trends the plan. of the liabilities evolve to match The defined benefit pension plan’s investment policy provides a framework for the prudent investment and administration for the prudent framework provides a pension plan’s investment policy The defined benefit a written the investment managers with provides managing capital assets. The policy the purpose of for Fund the Pension of the it is meeting re-visited annually to ensure The policy is return standards. of and rate quantity quality, specific of statement obligations. meet all pension plan’s capital management to ultimately the defined benefit pension objectives of Taking into consideration the investment and risk philosophy of the defined benefit pension plan, the following range and target following range the benefit pension plan, the defined of and risk philosophy the investment into consideration Taking has been established: asset mix Note 18 – Employee benefits, continued benefits, 18 – Employee Note installment warrants, rights, (including equities Canadian include investments permissible plan’s pension benefit The defined mortgages, real short-term securities, Canadian issuers, of equities, bonds US and international shares), and capital receipts Board. Pension SaskTel the of without prior approval is not permitted investment type of funds. Any other and pooled estate 70 | CONSOLIDATED FINANCIAL STATEMENTS AND NOTES Capitaliza Equity (a) Net debt Debt ratio and settletheliabilitysimultaneously. when, theCorporation hasalegal righttooffset theamountsandintendseithertosettleonanet basisorto realize theasset Financial assetsandliabilitiesare offset andthenet amountpresented inthestatement of financialpositionwhen,andonly retained bytheCorporation isrecognized asaseparate assetor liability. risks andrewards of ownershipof the financialassetare transferred. Anyinterest intransferred financialassetsthat is or created transfers therightstoreceive thecontractual cashflowsonthefinancialassetinatransactionwhichsubstantiallyall The Corporation derecognizes afinancialassetwhenthe contractual rightstothecashflows from theassetexpire,it or each reporting date and changesinthefairvalueare recorded ineithernetincome orOCI. assets are accounted for onthe trade date. Financialinstrumentsrecorded at fairvalueonanongoingbasisare remeasured at at fair valuethrough profit orlossare recognized immediately innetincome. Regular waypurchases andsales of financial (normally thetransactionprice) adjustedfor transactioncosts. Transaction costs related tofinancialassetsorliabilities The Corporation initiallyrecognizes financialassetsandliabilitiesinthe consolidated financial statements atfairvalue Accounting policies Note 21–Financialinstrumentsandrelated riskmanagement Net changeinnon-cashworkingcapitalbalancesrelated tooperations Thousands of dollars Note 20–Non-cashworkingcapital a) Equityincludesequityadvances, accumulated othercomprehensive income (loss)andretained earningsat theendof theperiod. Less: Sinkingfunds Notes payable Long-term debt Thousands of dollars As at March 31, The debtratio isasfollows: The Corporation madenochangestoitsapproach tocapitalmanagementduringthefiscalperiod. Saskatchewan’s strong credit rating andreceive financing at attractive interest rates. the Saskatchewan Ministryof Finance. Thistypeof borrowing allowstheCorporation totake advantageof theProvince of The Corporation raisesmostof itscapitalrequirements through internaloperating activitiesandlong-termdebtthrough Note 19–Equityadvanceandcapitaldisclosures,continued Other Deferred revenues Other liabilities Trade andotherpayables Prepaid expenses Inventories Trade andotherreceivables Cash tion Note 11 17 March 31,2017 months ended For thetwelve $1,831,626 851,949 $ (12,597) $ (10,560) $ 954,672 876,954 141,033 177,105 11,067 (2,361) (6,035) 10,959 47.9% (835) 2017 (90) 399 March 31,2016 months ended For thefifteen $1,657,235 777,256 $ $(15,856) $(48,178) 796,344 860,891 129,497 229,231 (19,786) 16,099 (7,207) (8,831) 51.9% 2,891 1,483 2016 (872) SASKTEL 2016/17 ANNUAL REPORT | 71

Sinking funds are invested in Provincial and Federal government bonds. As such, the related credit risk associated with these risk associated credit and Federal government bonds. As such, the related invested in Provincial Sinking funds are low. investments is considered Credit risk Credit and cause the other party to incur a an obligation one party to a transaction will fail to discharge risk is the risk that Credit or have similar economic counterparties that of customers or to groups relates risk of credit financial loss. Concentration in economic by changes to be similarly affected obligations cause their ability to meet contractual industry characteristics that to trade risk relates credit risk. Current credit of concentrations not have material does The Corporation or other conditions. receivable. sinking funds and interest and unbilled revenue, and other receivables Foreign currency risk currency Foreign suppliers and short-term transactions with foreign risk, primarily US dollars, through to currency is exposed The Corporation of 15.0% in excess fluctuations currency 31, 2017, March at constant remain Assuming all other variables commitments. foreign in the Canadian dollar weakening 15.0% a Specifically, of the Corporation. impact on the cash flow would have a material strengthening 15.0% on cash flow while a effect million unfavourable have a $15.6 could rate dollar exchange versus the U.S. financial of derivative combination uses a The Corporation on cash flow. million favourable effect have a $15.6 could currency had foreign the Corporation 31, 2017, At March when deemed appropriate. instruments to manage these exposures does not The Corporation 2017. up to September 29, million with maturities $34.2 values of outstanding with face derivatives financial instruments. actively trade derivative The Corporation has on deposit with the Province of Saskatchewan, under the administration of the Ministry of Finance, the Ministry of of under the administration Saskatchewan, of on deposit with the Province has The Corporation rate interest current in the its long-term debt. However, of risk on the maturity rate be exposed to interest may The Corporation interest offset to contracts in place has no financial the Corporation As a result, low. considered these risks are environment, changes on rate interest of the impact a sensitivity analysis of has not provided The Corporation 31, 2017. March risk as of rate of 2020 and beyond. with maturities 31, 2017, at March rates fixed debt is at the Corporation’s all of as substantially net income Interest rate risk rate Interest rate to interest related financial instruments value of changes in the loss from the potential for risk represents rate Interest debt refinancing. sinking fund investments and primarily impacts the value of risk rate movements. Interest 31, 2017, long-term debt issues. At March certain for is required million) in sinking funds, which million (2015/16 – $129.5 $141.0 with to coincide and Federal government bonds with varying maturities in Provincial the GRF has invested these funds primarily may beconditions. The Corporation and market profile managed based on this maturity and they are debt maturities related a yield curve 31, 2017, March at constant on the sinking funds. Assuming all other variables remain risk rate exposed to interest (or bond rates in interest weakening a 1.0% Specifically, impact on net income. have a material could 1.0% of shift in excess would have a 11.2% strengthening while a 1.0% on net income million) favourable effect ($11.7 have a 11.2% yields) could on net income. effect million) unfavourable ($11.7 Market risk Market affected Value can be by financial instruments. of changes in the value loss from the potential for risk represents Market prices. and equity rates exchange foreign rates, changes in interest Supporting information Supporting of a number utilizes The Corporation rates. interest and rates exchange foreign in is exposed to fluctuations The Corporation instruments financial these with associated risk the mitigates Corporation The exposures. these manage to instruments financial to reporting monitoring, and compliance internal exposure, of policies, limits on use and amount Board-approved through prior period. from the risks have not changed significantly financial The Corporation’s and the Board. senior management Note 21 – Financial instruments and related risk management, continued management, risk and related instruments 21 – Financial Note their economic when derivatives as separate treated and are host instruments in other be embedded may Derivatives has derivative when the embedded the host instrument, of to those and closely related not clearly and risks are characteristics fairat or designated is not held-for-trading contract and the combined derivative, a stand-alone terms as those of the same in net income. recognized subsequent changes fair value with at measured are embedded derivatives value. These 72 | CONSOLIDATED FINANCIAL STATEMENTS AND NOTES Thousands of dollars As at March 31, Customer accountsreceivable Thousands of dollars As at March 31, Allowance fordoubtfulaccounts The allowance for doubtfulaccounts andtheagingof customeraccounts receivable are detailedasfollows: uncollectible. on ananalysisof theagingof customeraccounts receivable andanestimate of outstandingamountsthat are considered tobe The allowance for doubtfulaccounts, whichprovides anindication of potentialimpairmentlosses,isreviewed regularly based Sinking funds Trade andotherreceivables Cash Thousands of dollars As at March 31, financial transactions.Thecarryingamount of financialassets represents themaximum credit exposure as follows: In addition,theCorporation maintainscredit policiesandlimitsinrespect toshort-terminvestmentsandcounterparties to primarily throughout Saskatchewan. Trade andotherreceivables andunbilledrevenue are diversifiedamongmany residential, farmand commercial customers Note 21–Financialinstruments andrelated riskmanagement, continued Net customeraccounts receivable Allowance for doubtfulaccounts Gross customeraccounts receivable Greater than90days 61–90 days 30–60 days Current Ending balance Provisions for losses Recoveries Less: accounts writtenoff Opening balance Note 11 6 Note 6 6 297,090 $ 11,067 $ 81,032 $ 67,399 $ 2,384 $ 2,227 $ 141,033 144,990 (14,791) (2,384) 83,416 10,355 2017 3,200 2,462 7,784 7,164 2017 2017 278,384 $ 16,099 $ 84,052 $ 70,876 $ 2,227 $ 1,716 $ 129,497 132,788 (13,304) 86,279 11,274 (2,227) 1,620 2,509 7,671 6,144 2016 2016 2016 SASKTEL 2016/17 ANNUAL REPORT | 73 – – – – – Fair Fair value 5 years More than than More 2016 – – – – – 3–5 years amount 777,256 923,203 229,231 229,231 158,190 158,190 129,497 129,497 132,788 132,788 Carrying Carrying $ 16,099 $ 16,099 – – 1–2 64 years Fair Fair value

Contractual Cash Flows – – 2017 – 7–12 months amount 851,949 972,359 177,105 177,105 169,149 169,149 141,033 141,033 144,990 144,990 Carrying Carrying $ 11,067 $ 11,067 0–6 0–6

months $ 20,991 $ 20,992 $ 41,984 $ 376,850 $ 941,420 $ 367,401 $ 20,992 $ 41,984 $ 376,850 $ 941,420 N/A N/A Level 2 Level Level 1 Level Fair value Fair heirarchy (b) heirarchy Total OL FVTPL 1 Level Classification (a) Classification amount 229,231 229,378 229,378 158,190 158,190 158,190 177,105 177,261 177,261 – – 169,149 169,149 169,149 – – Carrying 6 LAR 17 OL 13 OL 11 FVTPL 2 Level $ 777,256 $1,290,096 $ 19,754 $ 19,754 $ 39,509 $ 388,036 $ 823,043 $ 1,164,677 $1,677,664 $ 407,322 $ 19,754 $ 39,509 $ 388,036 $ 823,043 $ 851,949 $1,402,237 $1,198,203 $1,748,647 Note tion details are: tion details are: Classifica FVTPL – fair value through profit or loss LAR – loans and receivables OL – other liabilities receivables or loss LAR – loans and profit FVTPL – fair value through Derivative financial instruments Derivative liability derivative exchange Foreign 15 FVTPL 2 Level Long-term debt Long-term Notes payable Financial liabilities and other payables Trade (a) for discussion of the policies related to fair value measurements. the policies related discussion of for presentation 2 – Basis of (b) See Note As at March 31, March As at Investments – sinking funds Fair value Fair based between willing parties be exchanged could which financial instruments at amounts approximate values are Fair values Fair maturities. principal and remaining instruments with similar characteristics, such as risk, for markets on current assumptions used by the affected significantly techniques which are and other valuation value using present estimates are of risk. reflect varying degrees that rates cash flows and discount future estimated the amount and timing of concerning not be interpreted fair value amounts should aggregate information, judgment and future-oriented due to the use of Therefore, the instruments. settlement of in an immediate as being realizable financial assets and liabilities of value Fair a) Contractual cash flows for long-term debt include principal and interest payments but exclude sinking fund instalments. sinking payments but exclude for long-term debt include principal and interest a) Contractual cash flows Thousands of dollars Thousands of 31, 2017 March As at The following summarizes the contractual maturities of the Corporation’s financial liabilities: the Corporation’s of maturities the contractual summarizes The following Sufficient operating cash flows are expected to be generated to fund the short-term contractual obligations and contractual obligations to fund the short-term expected to be generated are the cash flows operating Sufficient debt upon maturity. long-term able to refinance it will be anticipates Corporation Note 21 – Financial instruments and related risk management, continued management, risk and related instruments 21 – Financial Note risk Liquidity Corporation due. The become commitments as they to meet its financial is unable the Corporation is the risk that Liquidity risk Finance. Ministry of the Saskatchewan through markets to capital has access and as such corporation Crown is a Provincial Long-term debt (a) Long-term Thousands of dollars Thousands of Financial assets Cash and other receivables Trade Notes payable Trade and other payables Trade As at March 31, 2016 March As at debt (a) Long-term Notes payable Trade and other payables and Trade 74 | CONSOLIDATED FINANCIAL STATEMENTS AND NOTES Derivatives usedtomanage: Nil), 10.7% of operating expenses(2015/16 –10.3%) and0.8% of property, plantandequipmentexpenditures (2015/16 –1.1%). with othergovernment-related entitiesare approximately 6.4% of revenues (2015/16 –7.4%), 36.2% of otherincome (2015/16– at theexchange amount.Forthefiscalperiod endedMarch 31,2017, theaggregate amount of theCorporation’s transactions Routine operating transactionswithrelated partieswere conducted inthenormalcourse of business andwere accounted for disclosures aboutrelated partytransactions withgovernmentorothergovernment-related entities. take apartialexemption underIAS24 Related PartyDisclosures, whichallowsgovernment-related entities tolimittheextentof by theGovernmentof Saskatchewan (collectively referred toas“government-related entities”).TheCorporation haselectedto Government of Saskatchewan andnon-Crown corporations andenterprisessubjectto jointcontrol andsignificantinfluence corporations, ministries,agencies,boards andcommissions related totheCorporation byvirtueof common control bythe parent, CIC. Includedintheseconsolidated financialstatements are transactionswithvariousSaskatchewan Crown The Corporation isindirectly controlled bytheGovernmentof Saskatchewan through itsownershipof theCorporation’s Note 22–Related partytransactions The Corporation hadnocontracts withembeddedderivatives asat March 31,2016, andMarch 31,2017. Embedded derivatives As at March 31, as follows: Derivative financialinstrumentsthat are measured at fairvalueona recurring basissubsequenttoinitial recognition, are Derivatives in 2015/16or2016/17. There were noitemsmeasured at fairvalueusinglevel3inputsin2015/16or2016/17andnoitemstransferred betweenlevels dollar versusU.S. dollarforward exchange rate asat thestatement of financialpositiondates). financial instruments of similarmaturities subjecttosimilarrisks(suchfairvalueestimates beinglargely basedontheCanadian for financialinstruments of similarmaturity, aswelldiscounted future cash flowsdeterminedusingcurrent rates forsimilar upon quotedmarket prices inactivemarkets for thesameorsimilarfinancialinstrumentsoncurrent rates offeredus to The fairvalueof derivative financialinstrumentsthat are usedtomanage foreign currency exposure risksare estimated based Derivative financialinstruments interest for theequivalentProvince of Saskatchewan debtinstruments. The fairvalueof long-termdebtisdeterminedbythepresent valueof future cashflows,discounted at themarket rate of Long-term debt due totheshort-termmaturity of thesefinancialinstruments. The carryingvaluesof tradeandotherreceivables, tradeandotherpayablesnotespayableapproximate theirfairvalues Trade andother receivables, tradeandother payablesandnotes payable Financial instrumentsmeasured at amortized cost these securities. Finance usinginformation provided byinvestmentdealers.To theextentpossible,valuations reflect secondary pricing for The fairvalueof sinkingfunds,classifiedasfairvaluethrough profitof andloss,isdeterminedbytheSaskatchewan Ministry Investments carriedat fairvaluethrough profit orloss The carryingvaluesof cashisassumedtoapproximate fairvalue. Cash Financial instrumentsmeasured at fairvalue Note 21–Financialinstruments andrelated riskmanagement, continued Thousands of dollars denomina Curr ency riskarisingfrom U.S. dollar ted purchases etme 07$34,195 $ September 2017 maturity date Maximum 2017 Notional amount carrying value carrying Fair valueand 64 $ Notional amount – $ 2016 carrying value Fair valueand – $

SASKTEL 2016/17 ANNUAL REPORT | 75 462 2016 19,644 10,075 $ 6,321 $ 6,783 $ 8,429 $ 38,148 For the fifteen For the fifteen months ended months ended March 31, 2016 March 2017 8,338 17,939 247 $ 8,411 $ 34,688 $ 4,882 $ 5,129 For the twelve For the twelve months ended months ended March 31, 2017 March ojects $10.2 million (2015/16 – $40.4 million) million (2015/16 – $40.4 ojects $10.2 ting activities $60.8 million (2015/16 – $171.0 million) million (2015/16 – $171.0 ting activities $60.8 eign currency contracts $34.2 million (2015/16 – Nil). $34.2 contracts eign currency For Opera Capital pr

• • • Less than 1 year Less Between 1 and 5 years Greater than 5 years Greater Short-term employee benefits Short-term employee Supporting information against several Canadian wireless was brought (Saskatchewan) under the Class Actions Act a proceeding 2004, On August 9, and Saskatchewan Holding Corporation Telecommunications including Saskatchewan providers, service and cellular providers. service communications wireless from the defendant seek unquantified damages The Plaintiffs Telecommunications. 17, 2007, provincial jurisdictions. On September counsel in other Plaintiffs’ of, or on behalf have been filed by, Similar proceedings of unjust enrichment respect to an allegation as a class action with proceeding the Plaintiff’s certified court the Saskatchewan 2008. being February 13, order the certification of and the date April 1, 1987, customers during the period of wireless only for in the usual fashion of will now proceed The matter 31, 2014. The class action period has now been extended to March to the defenses it has strong continues to believe that to trial. The Corporation pleadings, document and oral discovery finalized in the 2004 action. as certified allegations Contingencies and judgments Accounting estimates business. Prediction of course in the ordinary matters and regulatory involved in various litigation becomes The Corporation of or undeterminable), determination remote probable, being virtually certain, events (i.e. such uncertain of the outcome of financialof potential and estimation required is financial statements in the consolidated or disclosure whether recognition may be and disclosure contingent such amounts are recognized, no amounts are for judgment. Where matters are effects impact on the have a material could these estimates liabilities exists and therefore large the potential for however, appropriate, financial statements. consolidated Corporation’s During the fiscal year ended March 31, 2017, the Corporation recognized $14.4 million (2015/16 – $17.6 million) as rent expense million) as million (2015/16 – $17.6 $14.4 recognized the Corporation 31, 2017, During the fiscal year ended March leases. to operating related As at March 31, March As at dollars Thousands of Non-cancellable operating lease commitments are as follows: are lease commitments operating Non-cancellable Note 23 – Commitments and contingencies Note 23 – Commitments Commitments Supporting information commitments: significant following has the Corporation the 31, 2017, March As at Thousands of dollars Thousands of Key management personnel compensation is comprised of: is comprised personnel compensation management Key Note 22 – Related party transactions, continued transactions, party 22 – Related Note personnel compensation management Key eitherofficers, a and executive to directors non-cash benefits also provides Corporation the to their remuneration, In addition pension. defined benefit recognition pension, and a service contribution defined pension or a defined benefit Post-employment benefits – defined contribution plans – defined benefits Post-employment 76 | CONSOLIDATED FINANCIAL STATEMENTS AND NOTES results of operations. management that theirresolution willnothaveamaterial adverseeffector ontheCorporation’s consolidated financialposition outcome withrespect toclaimsandlitigation pendingat March 31,2017, cannotbepredicted withcertainty, itistheopinionof In thenormalcourse of operations, theCorporation becomes involvedinvariousclaimsandlitigation. Whilethefinal Corporation’s liabilityinsurer. TheCorporation believesthere isnomerittotheclaimanddefending it. or otherafflictions allegedlycausedby cellphoneuse.Thisclaimisbeingdefended byexternallegal counsel retainedbythe manufacturers. The claimisprimarilyoneof product liabilityinvolvingallegations bywireless customerswhohavehadcancer seek unquantifieddamagesfrom thedefendant wireless communications service providers andmostknownwireless device On February6, 2013, theCorporation wasservedwithaclaimoutof theSupreme Courtof BritishColumbia.ThePlaintiffs (details) of theallegations initsclaims. a classaction.TheCorporation iswaitingfor adecisionof theCourtonitsapplication for thePlaintifftoprovide particulars to handlethismatter. Adate hasyettobefinalized as for ahearing of amotiontodetermineifthisclaimshouldbe certified that ithasstrong defenses totheclaimandwillbedefending it.Externallegalcounsel hasbeenretained bytheCorporation The Plaintiffsseekunquantifieddamages from thedefendant communications service providers. TheCorporation believes negligence, collusion, unjustenrichmentandbreach of statutory obligations concerning fees andcharges paidfor 9-1-1service. Telecommunications. Theproceeding involvesallegations bywireless customersof breach of contract, misrepresentation, wireless andcellular service providers, includingSaskatchewan Telecommunications HoldingCorporation andSaskatchewan On June26, 2008, aproceeding underTheClassActionsAct(Saskatchewan) wasbrought againstseveralCanadianwireline, Note 23–Commitments andcontingencies, continued SASKTEL 2016/17 ANNUAL REPORT | 77 of Directors and serves on the Directors of Police of Albert Board Prince Commissioners as Chairperson. He has also served on the Prince Directors of Board Albert Tourism and Advisor and as President Northern Lights Casino Pow for Wow. the studied at Richard Indian Federated Saskatchewan Douglas College and has a P.A. Management& Associates Renoof a University certificate, Nevada Gaming Management and a Queens School certificate certificate. Business Executive of enjoys spending time Richard with his family and is a collector vintage history books and warof plane memorabilia. Hockey Championship, Director Director Championship, Hockey Chair Horton’s Brier, 2012 Tim of CIS University 2014 2013 and of Member of Board Cup, and past Hockey the new Saskatchewan Fame. Hall of the of Grant is a recipient Order 2013 Saskatchewan Merit, 2012 Queenof Elizabeth II Diamond Jubilee and Medal, Commemorative the for Medal Commemorative Saskatchewan. Centennial of the 2014 of He is the recipient Leadership Tourism Saskatoon Brith – We the 2008 B’nai award, Ernst & Award, You of Proud are Entrepreneur for nominee Young and 2003, in 1998 the Year of in 2008 and was recognized Most the Province’s as one of Men by Saskatchewan Influential Business Magazine. schooling and youth mentorship. for In 2012, he was recognized his outstanding contributions province within his community, the and received and country, Queen Elizabeth II Diamond Distinction.Jubilee Medal of safety, workplace Recognizing in was instrumental Richard the Prince taking the lead for Charter signing Albert mini Safety for advocate and is a strong Mission Zero. closely has also worked Richard Society Cross with the Red as a the province throughout Member and Board Volunteer, now Chairperson. He is also an active member of presently CAA Board the Saskatchewan Cross and 3sHealth Shared Shared and 3sHealth Cross and Saskatchewan, Services Teachers’ the Saskatchewan InvestmentFederation pastCommittee. He is the the Canadian of President Vice Capital and Private Venture (CVCA), Equity Association the World past member of Association, Entrepreneurs theof and was the Co-chair AdvisorySaskatchewan-Asia manyCouncil. He is active in organizations, community including serving as Voluntary the Children’s Past Chair of of Hospital Foundation Executive Saskatchewan, theCommittee Member of Miracle Golf Drive for Weir Mike theKids, Sponsorship Chair for Cup Vanier 2006 PotashCorp and 2004 Canadian Nokia Brier, Sponsorship of President Vice Junior 2010 Canadian World for

A proud member of the member of A proud Mr. First Nation, Ahtahkakoop has been appointed Ahenakew to serve on the Ahtahkakoop Developments Board, Cree insight to business offering and community strategies He has also served oninitiatives. Chamber of the Saskatchewan over eight years, for Commerce beingand has the distinction of of First Nations the first President appointed to the background a Chamber Board, Saskatchewan milestone within Canada. In 2011, Saskatchewan Richard presented Polytechnic with an honorary diploma his work to promote recognizing studies, post-secondary and institutional investors inand institutional investment range of a broad Saskatchewan’sfunds, including Fund, Capital Venture Retail first FundGolden Opportunities is also the Fund Inc. Westcap on aManager to HeadStart Métis and Home, First Nations Business First Nations Fund, and a highDevelopment Fund Buyoutnet worth Management is also President Kook Mr. Fund. of Officer and Chief Executive Group Cheung On Investments investor an international Ltd., has and Fund, syndicated and Chief been the President of the Ramada Officer Executive and Saskatoon) Hotels (Regina 1992. since serves on the boards Kook Mr. and private numerous of publicly traded companies, Blueincluding Saskatchewan

Richard Ahenakew is the General Ahenakew Richard the NorthernManager of Albert,Lights Casino in Prince in there beginning his career and holding a variety of 1996, positions within the organization role. assuming his current before Richard Ahenakew Board Member Grant J. Kook is Founder, is Founder, Kook Grant J. Officer Chief Executive President, Mgt. Ltd., Westcap and Chair of capital and a leading venture equity fund managerprivate with over half a billion in assets under management. Founded has over 25 years ago, Westcap vision to an uncompromising retail build long-term value for Grant Kook

Chair of the Board Chair of Board of Directors of Board 78 | BOARD OF DIRECTORS in 2006. the Universityof Saskatchewan Distinction) andLawdegrees at completing hisCommerce (with his articlesinRegina after 2008. Priortothis,hecompleted having initiallyjoinedthefirmin firm in Swift Current since 2013, with Anderson&Companylaw Joel Friesen hasbeenapartner Board Member Joel Friesen through technology. results andenablingbusiness improvement, measured creative thinking,continuous Rachel isastrong believerin 20 yearsexperience inICT. manager andstrategist with She isanexperienced executive, management andmarketing. in technology, innovation, transformation specializing in businessstrategy and Rachel Heidecker isaleader Board Member Rachel Heidecker leading ITservices companies. American membershipof 350 industry association withaNorth Trust XAlliance, whichisan IT WBM isachartermemberof the across Western Canada. technology solutions annually and deliverover $70millionin employ 219teammembers in BC, AlbertaandSaskatchewan buyout. Today, WBM’s four offices completed amanagement Bailey andBobHardy, JoeAnne in 2008, alongwithpartnersBrett first joined WBM in1996, and, of WBM Technologies Inc.She JoeAnne Hardy isthe President Board Member JoeAnne Hardy

Library Board. Joelhasalsobeen Appeal Board andSwift Current committees, includingtheWater numerous otherboards and In thepast,hehasservedon Party ConstituencyAssociation. the Swift Current Saskatchewan He alsoservesasthePresident of minor hockey inSwift Current. Elmwood GolfClubandcoaches the Board of Directors for the Mr. Friesen currently serveson for continuous improvement of overseeing teamsresponsible University of Saskatchewan director andmanagerat the Rachel waspreviously a University of Calgary. Software Technology from the post graduate diploma(PgD)in of Saskatchewan andreceived a B.Sc. graduate of theUniversity Canada. SheisanM.B.A. and and theConference Board of through McMasterUniversity from TheDirectors College Director (C.Dir.) designation Rachel obtainedherChartered Executive Committee. as Director andChairof the Committee andcurrently serves the Economic Development Directors in2015, servedon a memberof theBoard of Association (NSBA),shebecame North Saskatoon Business As alongtimememberof the IT inCanada. as oneof thetop10womenin recognized byCDNMagazine JoeAnne hasalsobeen three consecutive terms. as NorthAmericanPresident for including leadingtheorganization leadership roles withinTrust X, JoeAnne hasservedinvarious

and basketball. coaching kids’hockey, lacrosse active inthelocalcommunity performances around Saskatoon. in avarietyof flamenco dance about theartsandmaybeseen Saskatchewan. Sheispassionate is currently aresident of Osler, Rachel grew upinRegina and the Edwards Schoolof Business. and strategic decision-makingat instructor of businessstrategy & Marketing courses asan She hastaughtManagement search anddiscovery systems. learning systemsandlibrary and development,teaching shared services, webapplications bicycles andrunningshoes! an ever-growing collection of children, Lauren andMatt; and husband, Bob;theirtwoadult JoeAnne enjoystimewith her of Saskatoon mostweekends, and enjoyingthebeautifulcity Regina duringtheworkweek Saskatoon, Vancouver and Residing betweenCalgary, School of Business. Program through theEdwards Directors Director’s Education as theInstituteof Corporate Ivey Schoolof Business,aswell Quantum ShiftProgram at the and successfully completed the In 2016, JoeAnnewasnominated SASKTEL 2016/17 ANNUAL REPORT | 79 Basketball Association and the Association Basketball Saskatchewan. Arthritis Society of of a Director She is currently Capital Corp., a private Lex equity management company, theand served as Co-chair for the Committee for Volunteer Basketball National CIS Women’s Championships hosted by the in 2009. Regina University of School, and formerly Sun West Canterra Seeds of as a Director three She is mother of Ltd. and a very proud adult children two grandsonsgrandmother of She and one granddaughter. has been an active member in and coaching the community, in various sports asparticipating well as entertaining with musical and supportingcontributions many events promoting and fund- programs community raising events. including the Inaugural GolfShooting Stars Foundation hosted by Jamie Tournament Sillinger. and Mike Heward has a Professional Darrell Business Management certificate and a Business Administration Lethbridge diploma from Community College.

with a diploma in Orthoptics the University Hospital from Ophthalmology. Department of She went on to open the the PasquaOrthoptic Clinic at She is also aHospital in Regina. Quantum Shift Ivey of graduate Western Business at School of University and Certified Director ‘The of graduate Director’s Board College’ c/o Conference Canada. of Gayle has served as a community of on the board representative woman to achieve partnership in thewith McDougall Ready firm’s 100-plus-year history. Pamela practised with the firm to electing 13 years before for on her second concentrate raising as a homemaker career two daughters. of is a Past President Ms. Lothian and Bar Association the Regina Community Regina of a Director Ms. Hoback has worked as an worked has Ms. Hoback variety in a wide accountant including sectors industry of large a for services assurance firm, oil and public accounting manufacturing, gas, electronics services. and financial University of a Jerri is currently as well Senator, Saskatchewan Member for as a Board Albert Electoralthe Prince District Association. Sales as the Territory he worked Manager for and Marketing Adidas Golf. TaylorMade Member is a Board Kennedy Mr. Masonry the Saskatchewan of Institute and the Regina Home Buildersand Region He is a long-timeAssociation. Royal the Member at Board Golf Club and hasRegina many golf tournaments, chaired

Gayle MacDonald Board Member Gayle MacDonald is an independent business owner. She manages a farm operation and is a in the Kindersley area for Source partner in Supreme She is also Sports in Kindersley. involved as an equity investor in other business ventures. Ms. MacDonald was born and Saskatchewan. raised in Plenty, the University of She attended and graduated Saskatchewan Pamela Lothian Board Member of is a graduate Pamela Lothian Saskatchewan the University of Artsobtaining a Bachelor of in 1982, degree Science) (Political She in 1985. and a law degree articled with and then joined of McDougallthe law firm (now McDougall Gauley Ready the first becoming LLP), later Darrell Kennedy Darrell Board Member is the owner Kennedy Darrell Timberstone Distribution,of stucco, a wholesale masonry, siding, landscaping and flooring withdistribution company Western across locations Canada. He also owns Discovery ad and a corporate Marketing, Prior to that, company. apparel Jerri Hoback Jerri Member Board has earned severalJerri Hoback receiving since designations Commerce of her Bachelor the University from degree including Saskatchewan, of Managementthe Certified the from designation Accountant and the Alberta CMA society of designation Director Chartered McMaster University. from 80 | BOARD OF DIRECTORS Jerri Hoback,Member Rick Orr, Member John Ritchie,Member Gayle MacDonald,Member Darrell Kennedy, Member Glenys Sylvestre, Chair Audit Committee Board Committees Commission, PA Community Committee, PA DistrictPlanning of Economic Development 2016. Hehasbeenamember October 2012to Albert for onetermfrom Ward 2intheCityof Prince elected tocitycouncil for Improvement District.Hewas Albert DowntownBusiness Executive Director of thePrince Rick Orriscurrently the Board Member Rick Orr manager at Deloitte&Touche. she wasanauditandassurance employment withtheUniversity, School of Business.Priortoher instructor withthePaulJ. Hill serving asAssociate Deanand for over16years,previously She hasbeenwiththeUof R at theUniversityof Regina. Director, UniversityGovernance, Glenys Sylvestre isExecutive Board Member Glenys Sylvestre Saskatchewan operation four- of service, havinggrown the Wood Gundyafter 46years Investment Advisorfor CIBC President, BranchManagerand John Ritchieretired asFirstVice Board Member John Ritchie Jerri Hoback,Member Joel Friesen, Member JoeAnne Hardy, Member Rachel Heidecker, Member John Ritchie,Chair Technology Committee Corporate Growth and

the Chartered Director program. completed allfivemodules of Finance Committee.Hehas Risk CommitteeandAudit Human Resources Committee, member of theGovernance and serving for nineyearsasa SGI Board of Directors in2008, Mr. Orrwasappointedtothe various othercommittees. Development Association and Board, PA DowntownBusiness Committee, Pehonan Parkway Futures, HeritageandMuseums numerous organizations on development sessionsfor and executive trainingand Glenys facilitates board designation in2011. obtained theChartered Director as President andChair. Shealso Saskatchewan, includingservice of Chartered Accountants of a CouncillorwiththeInstitute 2007. Sheservedfor sixyearsas was awarded Fellowshipin Professional Accountant, and Ms. Sylvestre isaChartered Previously, hehaschaired the Open SquashChampionships. Chair of theSaskatchewan Regina, andCo-founder and Vice Chairof Skate Canada, Mr. Ritchiehasservedas financial performance. fold bydeliveringexcellent Richard Ahenakew, Member Rick Orr, Member JoeAnne Hardy, Member Glenys Sylvestre, Member Pam Lothian, Chair Resources Committee Environment andHuman volunteer activities. community organizations and is activelyinvolvedinmany Albert withhiswife, Kathy, and Saskatoon. RicklivesinPrince at SIASTKelsey Institutein and spent10yearsworking and cableindustryfor 20years the television,radio,electronic industry. Previously heworked in 15 yearsinthereal estate Rick retired after workingfor Limited (Evraz Place). of Regina ExhibitionAssociation currently servesontheBoard Community Association. She Gymnastics ClubandArcola East Club, QueenCityKinsmen Regina PiranhasSummerSwim community boards including has servedonseveralRegina financial performance. She information andmonitoring interpretation of financial accounting, riskmanagement, topics suchasfundamentalsof of Saskatchewan. Member for Potash Corporation and hasservedasaBoard Regina UnitedWay (Division), of Saskatchewan andthe Investment DealersAssociation Richard Ahenakew Rachel Heidecker, Member Pam Lothian, Member Joel Friesen, Member Darrell Kennedy, Member Gayle MacDonald,Chair Governance Committee

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Distinction from the University Distinction from as well as a CPA, Regina, of He is a(CHRP) designation. the Law Societymember of and also Saskatchewan, of Member for serves as a Board the Wicihitowin Foundation, DirectWest, SecurTek, Junior International, SaskTel Achievement and WestWind Aviation. Doug was born and raised and is active in hisin Regina He enjoys sports of community. andany kind, particularly water snow skiing. SaskTel of serves as the CEO a fully ownedInternational, Saskatchewan subsidiary of Telecommunications, to providing solutions providers service communication operators and network service world-wide. Jim was born, raised and loves in Saskatchewan, educated active in and remains life cottage the family farm. CMA designation. He is theCMA designation. Junior Achievement governor for Northern Saskatchewan of the of and sits on the board Common Ground Saskatchewan (SCGA). Alliance in reside and his family Kevin actively and are Saskatoon, involved in the community. of Regina, and has held Regina, of boards a number of positions on includingand associations, Inc., Discoveries Phenomenome Bio and the Ag West SaskFerco, Canada. of Board Conference serves as Chair for he Currently, International, SaskTel DirectWest, he is a In addition, and SecurTek. Council the Leader’s member of Regina’s of the University for Business Hill School of Paul J. Polytechnic’s and Saskatchewan Advisory Council. President

in every facet of business. During of in every facet on several this time, he worked as well projects, international to Human advice as providing & Industrial Relations. Resources he Prior to joining SaskTel, from practised law in Regina 1983 to 1989. ArtsDoug holds a Bachelor of the University of from degree Laws a Bachelor of Regina, the University of from degree and a CertifiedSaskatchewan, Professional Human Resources operation the Saskatchewan by delivering excellent four-fold financial performance. his 30-year Throughout in the Information career Jim industry, Technology has also held positions with GovernmentSaskatchewan Saskatchewan Insurance, Compensation Workers and Co-operators Board, Limited. He also Services Data dispatch, provincial workforce workforce provincial dispatch, management, provincial He and operations. construction and, in finance, has also worked prior to his appointment as Vice of was the Director President, Regina. for Customer Services In addition to his extensive in the Customerexperience department, Mr. Services Adair also holds a Bachelor with degree Administration of SaskHousing, as well asSaskHousing, Minister at Deputy Associate andMunicipal Government In Services. Community at Public of the Institute 2014, – Canada of Administration recognized (IPAC) Saskatchewan exceptional his him for inleadership and contribution the with public administration Lieutenant Governor’s prestigious Gold Medal. Arts degree Master of has a Ron the University from (Economics)

Jim Dundas Officer Chief Information in Prior to joining SaskTel Jim Dundas November 2013, President Vice was Regional he had overall where CGI, for for responsibility executive in Saskatchewan. operations the Dundas received Mr. Builder Award CGI prestigious leadership exceptional for achievements, having grown Doug Burnett Human ResourcesVice President, Services & Corporate for Doug Burnett is responsible Services, Corporate SaskTel’s Industrial Human Resources, as well as its Health, Relations and Environment Safety, Diversity areas. at Burnett began his career Mr. in 1990 as Corporate SaskTel legal advice Counsel providing to the corporation and services Kevin Adair Kevin Customer of Vice President Services – Operations at his career Adair began Kevin in 1996 as a summer SaskTel student in the Customer Services department as a Customer (CST). He Technician Services positionshas held a variety of in the Customer Services CST positions department from to management positions in President and Chief Executive Officer Chief Executive and President the role Styles assumed Ron and Chief President as SaskTel 2010. in August Officer Executive prior to joiningImmediately Styles served as Mr. SaskTel, and Chief Executive President Crown Investments of Officer Saskatchewan. of Corporation include roles His previous and Finance Deputy Minister of Highways and Transportation, of and SaskWater of President Ron Styles SaskTel Executive SaskTel 82 | SASKTEL EXECUTIVE variety of senior leadership variety of seniorleadership experience andhashelda Ms. Gavelhasextensive for corporate security. strategies. Sheisalsoresponsible in thedevelopmentof financial activities andprovides leadership for thecorporation’s financial Charlene Gavelisresponsible Chief FinancialOfficer Charlene Gavel by SaskTel. designed, builtandoperated in advanced data centers— advanced networksandhosted over Saskatchewan’s most communication professionals experienced certified ITand and assured byGreg’s teamof These services are delivered SaskTel’s businesscustomers. based infrastructure services for network, hostedandpremise- advanced suiteof security, Delivery &Assurance of the Sales–Marketing, alongwith team responsible for Business Greg MeisterleadstheSaskTel and Solutions Vice President, BusinessSales Greg Meister the corporation. community relations for customer relations and internal communications, accountable for mediarelations, SaskTel, Darcee MacFarlane is Government Relations for Communications and As Vice President of Corporate Government Relations Vice President, Corporate and Darcee MacFarlane International assignments Mr. Godfrey’s SaskTel Development andStentor. SaskTel International, Business Planning andProvisioning, senior positionsinNetwork Technology Officer, includes career withSaskTel asChief Daryl Godfrey’s 33-year Chief Technology Officer Godfrey Daryl

Vice President of Finance Chief FinancialOfficer and Services Corporation (ISC)as Services, andat Information and Vice President of Financial Region asChiefFinancialOfficer the Regina Qu’AppelleHealth that, sheheldpositionswith SaskTel International. Priorto and ChiefFinancialOfficerat most recently, Vice President positions throughout hercareer, Commerce degree from the Greg holdsaBachelorof and Saskatoon. Albert, NorthBattleford communities of Regina, Prince to liveandparticipate inthe allowing himandhisfamily Marketing, Sales,andOperations, in 1993, hehasheldpositionsin Beginning hiscareer withSaskTel construction of facilities. and repair services, andthe networks, deliveryof installation the corporation’s advanced where hewasresponsible for Customer Services–Operations, Vice President of SaskTel’s Sales &Solutions,Greg was as Vice President, Business Prior tohisappointment a PublicRelations certificate Bachelor of Artsdegree and in Saskatchewan. Shehasa Darcee wasbornandraised Government Relations. Internal Communications and Relations, CommunityRelations, Media Relations, Customer Marketing Communications, held avarietyof positionsin years withSaskTel, andhas Ms. MacFarlane hasover25 and AppliedScience. He Regina Faculty of Engineering Board for theUniversityof a memberof theAdvisory board of TRLabs.Heiscurrently Engineering Societyandonthe past positionsintheRegina Company. Darylhasheld Tanzania Telecommunications Chief Technology Officer for Director inLeicester, UK,and included NetworkServices

Improvement District. Regina DowntownBusiness SecurTek, DirectWest andthe of SaskTel International, currently servesontheboards and Administration. Charlene and daughterCassidy. Warman withhiswife Nadine in thegrowing community of Saskatchewan, Greg enjoysliving Born, raisedandeducated in the NorthernAdvisoryBoard. Skeet ShootingCorp,andsitson Director withSaskatchewan of theSaskatoon GunClub, Crimestoppers, Vice President President of Saskatchewan volunteer, Greg iscurrently University. Asadedicated British ColumbiaandQueen’s programs from theUniversityof received certificates for extension Finance andMarketing. Greg has where hefocused intheareas of University of Saskatchewan, for Computersfor Schools. serves ontheBoard of Directors of BusinessCommunicators) and IABC (International Association addition, sheisamemberof the the Universityof Toronto. In Responsibility certificate from as wellaCorporate Social from theUniversityof Regina, Saskatchewan (APEGS). Engineers andGeoscientistsof of theAssociation of Professional Saskatchewan andisamember P. Eng,from theUniversityof Mechanical Engineeringdegree, has aBachelorof Science,

SASKTEL 2016/17 ANNUAL REPORT | 83

Katrine earned a Bachelor of Katrine the from degree Commerce Saskatchewan University of Queens from and a certificate She serves Program. Marketing Regina on the Hospitals of is a group and Board Foundation She is Fitness. Evolution leader at and children, married with three loves to travel and spend time at the lake. is currently a Board Member a Board is currently and held that position until he position that and held his current to was appointed position. John 2000, In December Counsel the Queen’s received He is a(QC) designation. Canadian Bar the member of the Law Society and Association He serves Saskatchewan. of DirectWest, of on the boards International, SaskTel SecurTek, Regina and the University of Rams Football Club. Member of is a past Board Stacey Wireless the Canadian SecurTek, and the Association Telecom SheRCMP Foundation. DirectWest. of wireline phone service. She is phone service. wireline the industry- for also accountable leading sales, customer service and support channels. Prior to this, Ms. White held positions witha number of at accountability increasing Mobility in the and SaskTel SaskTel and business consumer of areas management, advertising product customerand communications, planning.loyalty and strategic regulatory policy matters, as well matters, policy regulatory department. legal as SaskTel’s five Meldrum worked Mr. the corporation summers with Universitywhile attending his receiving after and, in 1977, from degree Laws Bachelor of Saskatchewan, of the University in the as a solicitor joined SaskTel 1984, of legal department. In May CounselJohn became General in Secretary; and Corporate ViceSeptember 1986 he became Counsel Corporate President, Service Strategy, Marketing Development, Corporate and Brand Prioritization Program Management. holds a Bachelor of Stacey degree Business Administration Regina the University of from and a Masters in Business Ellis from degree Administration College, New York.

As the Vice President of President As the Vice Consumer Sales and Solutions, White leads the teamKatrine all sales, for responsible for and operations marketing market. consumer SaskTel’s This includes the development SaskTel’s and management of services, and data voice wireless and , Internet products maxTV Katrine White Katrine Consumer SalesVice President, and Solutions Stacey Sandison Stacey Officer Chief Strategy an Sandison has had Stacey SaskTel, at extensive career leadership with successful in marketing, responsibilities divisions.sales and operations as the Chief Strategy Currently, Ms. Sandison is Officer, Corporate for accountable Planning, Corporate Strategic John Meldrum John Counsel Corporate Vice President, and Regulatory& Chief Affairs Privacy Officer Corporate of President As Vice Affairs, Regulatory Counsel and portfolio John Meldrum’s legal of provision includes the and services advice, guidance, also He is to the corporation. the areas for responsible Carrier Carrier Relations, of Land and EasementsServices, Affairs, including and Regulatory

SASKTELSASKTEL 2016/17 2016/17 ANNUAL ANNUAL REPORT REPORT| | 85 85

beneficial. Although SaskTel is not required to comply withcomply to required is not Although SaskTel beneficial. used has the Corporation guidelines, the CSA governance in practices governance its corporate them to benchmark section. the following amendments the CSA announced 2014, On October 15, Corporate of Instrument 58-101 Disclosure to National 31, 2014. December effective Practices Governance or explain” a “comply The amendments implement the representation model regarding disclosure officer in executive and women on boards of selection process. positions and the director any not introduce The amendments do They are quotas or targets. mandatory transparency intended to increase of the representation regarding in and women on boards senior management. There no sanctions for are non-compliance.

On June 30, 2005, the Canadian Securities Administrators 2005, On June 30, Governance 58-201 on Corporate Policy (CSA) National Instrument 58-101 on Governance Guidelines and National The CSA standards Rules came into effect. Disclosure Corporate Stock Exchange supersede the Toronto used previously Guidelines, which the Board Governance has Committee The Governance to assess its practices. adapting the Board’s the Guidelines with a view of reviewed and effective to the guidelines, where practices governance The SaskTel Board has implemented a comprehensive set of has implemented a comprehensive Board The SaskTel to clear disclosure and is committed practices governance best with current in accordance practices its governance of standards. disclosure practice CORPORATE GOVERNANCE PRACTICES GOVERNANCE CORPORATE The Board discharges its responsibilities directly, by directly, its responsibilities discharges The Board Committees of and through to management delegation the Board: Committees of four are There the Board. Growth the Audit and Risk Committee; the Corporate & Human Committee; the Environment and Technology Committee. Committee; and the Governance Resources KEY ACCOUNTABILITIES supervising the for is responsible Directors of The Board focusing While of the Corporation. management and affairs the Board the Corporation, of leadership on the strategic to management and holds operations day-to-day delegates performance. Corporation’s the for them accountable The Lieutenant Governor in Council appoints members ofThe Lieutenant Governor in Council appoints Subject Chair. the Chair and Vice and designates the Board, a fixed appointed for are directors to applicable legislation, expiry. at term and their appointments can be renewed twelve (12) members on the Board. are There BOARD APPOINTMENTS BOARD Through the Chair, who is an independent director, director, who is an independent the Chair, Through to the Minister is accountable Directors of the Board is a The Minister Responsible SaskTel. for Responsible CIC, link between the Corporation, communications key and the public. Cabinet, the Legislature AUTHORITY governed by The corporation is a Crown SaskTel Corporation Holding Telecommunications Saskatchewan The Crown of Act, and subject to the provisions Corporation Investments Act, 1993. The Crown Corporation for as the holding company (CIC), Saskatchewan of has corporations, Crown commercial Saskatchewan’s to certain related SaskTel for direction authority to establish set out in legislation. matters Corporate Governance Statement 86 | CORPORATE GOVERNANCE STATEMENT NI 58-101F1 58-101F1 NI Instrument, Disclosure and 58-201, NP Policy, Governance Corporate CSA 1(a) NI 58-101F1,sections1(a)to(d) 3.1 NP 58-201,section3.1 COMPOSITION OFTHEBOARD (d) (c) (b)

is areporting issuer. director of anyotherissuerthat Disclose whetheradir and o Disclose whetherthemajority the basisfor that determination; who are notindependentand Disclose theidentityo who are independent; Disclose theidentityo directors. majority of independent The boar f directors are independent; (Summary) d shouldhavea f directors f directors ector isa

Grant Kook, Chair:INDEPENDENT independent. The majorityof directors ontheSaskTel Board (12 out of 12)are Richard Ahenakew: INDEPENDENT Discussion and Comments and isnotanissuer. Section 1(d)doesnotapplytoSaskTel asSaskTel doesnothaveshare capital, * Mr. 9 Mr. Reichert wasaBoard memberuntilNov. 24, 2016 8 Mr. OrrwasappointedtotheBoard February 1,2017 7 Mr. KachurwasaBoard memberuntil Nov. 24, 2016 6 Mr. Howard wasaBoard memberuntilSeptember 1,2015 5 Ms.Hardy wasappointedtotheBoard Nov. 24, 2016 4 Ms.Friesen wasaBoard memberuntilNov. 24, 2016 3 Mr. Friesen wasappointedtotheBoard Nov. 24, 2016 2 1 Mr. Ahenakew wasappointedtotheBoard Nov. 24, 2016 52-110, Audit Committees. and isbasedonanassessmentof therequirements inMultilateral Instrument The determination of independence ismadebytheGovernance Committee Glenys Sylvestre: INDEPENDENT etired, former SaskTel employee John Ritchie:INDEPENDENT etired Reichert:NOTGarry INDEPENDENT* Rick Orr Gayle MacDonald Pam Lothian:INDEPENDENT Darrell Kennedy: INDEPENDENT OO, CanadianDigitalNetwork Randy Kachur:INDEPENDENT Jerri Hoback:INDEPENDENT esident, WBMSaskatoon Reg Howard:INDEPENDENT Rachel Heidecker: INDEPENDENT JoAnne Hardy:INDEPENDENT Pat Friesen: INDEPENDENT Joel Friesen: INDEPENDENT Mark Bogares: INDEPENDENT Mr. Borgares wasaBoard memberuntilFebruary1,2017 Mr . Borgares wasappointedtotheBoard Nov. 24, 2016 superannuation plan. R – Ex – R – R – R – IndependentBusinessOwner – Lawyer – Entr – Partner – Ac – C – Dir – Pr – Consultant,Suc – Lawyer – – GeneralManager – Pr eichert isaretired seniormanagerof SaskTel, and,iscurrently amemberof theSaskTel Celero SolutionsInc Senior Vic etired : INDEPENDENT esident andCEO, Westcap Mgt.Ltd. ecutive Lead, UniversityGovernance at theUniversityof Regina countant ector, Universityof Saskatchewan epreneur –BusinessOwner , AndersonandCompany , RusnakBalacko KachurLawFirm e President andChiefTechnology Officer, : INDEPENDENT cess BusinessConsulting , NorthernLightsCasino 8 4 3 6 2 7 5 1 9 SaskTel align? compliance Substantial Does Does Yes SASKTEL 2016/17 ANNUAL REPORT | 87 Yes Yes Yes Does SaskTel align? SaskTel ttendance and encouraging full participation by full participation and encouraging ttendance O and the Corporate Secretary to set Board to set Board Secretary O and the Corporate f the Board and ensuring meetings are properly properly and ensuring meetings are f the Board ommittee chairs to maintain effective communications communications ommittee chairs to maintain effective ole in assessing and addressing any concerns related to related any concerns ole in assessing and addressing ectors to achieve full utilization of individual abilities individual of ectors to achieve full utilization onjunction with the CEO, developing productive relationships and relationships developing productive onjunction with the CEO, omoting an open and constructive working relationship between working relationship omoting an open and constructive and senior management to the CEO and counsel oviding advice ommunicating with directors between meetings with directors ommunicating epresenting the shareholder’s interests and perspective to and perspective interests the shareholder’s epresenting and division of responsibilities and division of in c working with the CE monitoring meeting a meetings at directors c taking a lead r performance director or committee Board, assisting dir pr senior management and the Board working with c pr r management’s views to the shareholder management, and representing stakeholders key and with the shareholder the Corporation representing chairing meetings o legally is conducted and business convened meeting schedules and establish agendas

• • • • • • • • • • • Comments and Discussion leadership who provides independent director is an the Board The Chair of serves as liaison renewal, and effectiveness processes, organization, in Board agendas reflect Board and ensures shareholder and the Board between the of management. and that of the Board role between the balance an effective director. and he is an independent the Board is the Chair of Grant Kook and is to the shareholder and ultimately Board to the The Chair reports the and ensuring that the Board over meetings of presiding for responsible primary responsibilities. The Chair’s and legal its fiduciary discharges Board duties include: As a Standing Agenda item, the Board holds an in camera session without holds an in camera As a Standing Agenda item, the Board All directors Board. the meeting of each regular at management present with an has a conflict a director where in the sessions, except participate item under discussion.

f ectors f the board should f the board (Summary) Disclose whether the chair o Disclose whether the The chair o who director be an independent of the leader is the effective the that and who ensures board agenda will enable it to board’s duties. carry out its successfully is an independent the board of disclose the identity director; the role the chair and describe the chair. of The independent dir should hold regularly scheduled should hold regularly which non- meetings at and independent directors management are members of not present.

NP 58-201, section 3.2 NP 58-201, 3.2 1(f)NI 58-101F1, sections 1(f) NP 58-201,and Disclosure Instrument, CSA Corporate Governance Policy, NI 58-101F1 MEETINGS OF INDEPENDENT DIRECTORS NP 58-201, section 3.3 3.3 88 | CORPORATE GOVERNANCE STATEMENT NI 58-101F1 58-101F1 NI Instrument, Disclosure and 58-201, NP Policy, Governance Corporate CSA 1(g) NI 58-101F1,sections1(g) 1(e) NI 58-101F1,sections1(e)

Disclose thea independent directors. and candiddiscussionamong board doestofacilitate open are notheld,disclosewhat the 12 months;ifsuchmeetings meetings heldintheprevious disclose thenumberof such management are notpresent; at whichmembersof regularly scheduledmeetings independent dir Disclose whetherthe financial year. most recently completed board meetingsheldinthe record of eachdirector for (Summary) ttendance ectors hold

Mark Borgares Rachel Heidecker R Jerri Hoback Pat Friesen Rick Orr Gayle MacDonald Pam L Darr Glenys S John Ritchie JoAnne Har Joel F Garry R independent judgementbydirectors include: Board practices that facilitate openandcandiddiscussionamong including alldirectors were held. regular meetings,incamerasessionswithoutmanagementpresent but There were ten(10)Board meetingsheldin2016/17, andduringallten decisions inthebestinterests of theCorporation andtheshareholder. discussion anddebate andthat itretains theindependence of mindtomake The Board issatisfied that itsgovernance practices foster fullandopen Discussion and Comments 5 4 3 2 1 ** * Richard Ahenakew Grant Kook, Chair Director attended byeachdirector in2016/17issetoutbelow. The Board heldten(10)meetingsin2016/17. Thenumberof Board meetings Randy Kachur

eg Howard

• • • • Mr Mr Mr was aBoar was appointedtotheBoar individual wasaBoard member Figur present. For thepurposeso

ell Kennedy management pr clearly delinea having anindependentdir encouraged toraiseanyissuesof concern holding incamerasessionso . OrrwasappointedtotheBoard February1,2017 . Borgares wasaBoard memberuntilFebruary1,2017 . Howard wasaBoard memberuntilSeptember1,2016 riesen othian oviding for theBoard/directors toaccess externaladvice es inbrackets represent themaximumnumberof meetingsfor theperiodinwhich eichert 5

ylvestre

2 d memberuntilNovember24, 2016

dy 1 3

2 1 1,4 2

f thisreport, memberswhoattended meetingsinpartwere considered tobe

1 ting thedivisionof responsibilities betweenBoard and

d November24, 2016 ector asChairof theBoard f nofixed duration where directors are Meetings A ttended* 10 (10) 10 (10) 10 (10) 10 (10) 10 (10)** 9 (10) 9 (10) 9 (10) 1(2) 8 (8) 8 (8) 8 (8) 6 (6) 2 (2) 2 (2) 0 (1) 1 (1)

SaskTel align? Does Does Yes Yes SASKTEL 2016/17 ANNUAL REPORT | 89 Yes Does Substantial compliance SaskTel align? SaskTel f the Corporation’s internal control and control internal f the Corporation’s ocesses to enable effective communication with communication to enable effective ocesses O, evaluate the performance of senior management and of the performance evaluate O, te in identifying the principal risks of the business in which the the business in which the risks of te in identifying the principal ovide leadership in setting the Corporation’s long-range strategic long-range strategic the Corporation’s ovide leadership in setting pr plan overall strategic the Corporation’s and annually approve direction participa appropriate of and oversee the implementation is engaged Corporation risks systems to manage the appoint the CE planning processes succession effective ensure adopt policies and pr and the public stakeholders the shareholder, monitor the integrity o systems management information

• • • • • The Board has approved Terms of Reference for Directors where the where Directors for Reference of Terms has approved The Board delineated. are individual directors of and responsibilities expectations to obtain surveys internal and external stakeholders regularly SaskTel in a participates the Board The Chair of activities. about Corporate feedback all subsidiary the chairs of of which is composed established by CIC, forum and of mutual interest issues where CIC officials, and senior boards Crown shared. are concern Reference of Terms not specifically identified in the the Policy Elements of has established (a), the Board include (a) and (g). Respecting the Board for (see discussion ethical business conduct of a culture promote that practices has to (g), the Board NP 58-201). With respect of under section 3.8 Committee to oversee the to the Governance responsibility delegated governance. to corporate approach Corporation’s Comments and Discussion The Board has written Terms of Reference that contain the majority of the of the majority contain that Reference of has written Terms The Board Board’s outline the Reference of The Terms the Policy. by elements required function as to including the responsibility principal duties and responsibilities, and to: the Corporation of stewards The Board’s principal responsibilities are described above. The text of the described above. The text of are principal responsibilities The Board’s the Corporate can be obtained by contacting Reference of Terms Board’s to the Board. Secretary

tisfying f the board’s f the board’s orporation’s orporation’s tegic planning f the corporation’s f the corporation’s ommunications ommunications tion of the principal tion of d should adopt a d should adopt (Summary) cession planning, cession internal control and internal control management information systems; and developing the c to corporate approach including a set governance, principles and guidelines of corporation. specific to the including appointing, training and monitoring senior management; adopting a c the corporation; policy for the integrity o identifica suc adopting a stra least at and approving process plan which annually a strategic among into account, takes other things, the opportunities the business; and risks of the corporation’s risks of business and ensuring the appropriate of implementation systems to manage these risks; to the extent possible, sa to the extent possible, the of itself as to the integrity and that and executive CEO a culture they have created the integrity throughout of organization; The boar which written mandate explicitly acknowledges the for responsibility the corporation of stewardship for: and responsibility Disclose the text o written mandate.

(f) (g) (e) (c) (d) (b) (a) The written mandate should also The written mandate receiving for measures address (for stakeholders from feedback stakeholders for example, a process independent directors); to contact and and the expectations including directors, of responsibilities meetings and basic duties to attend in advance. materials review BOARD MANDATE BOARD section 3.4 NP 58-201, 3.4 NP 58-201,and Disclosure Instrument, CSA Corporate Governance Policy, NI 58-101F1 NI 58-101F1, section 2 2 90 | CORPORATE GOVERNANCE STATEMENT NI 58-101F1 58-101F1 NI Instrument, Disclosure and 58-201, NP Policy, Governance Corporate CSA 3.7 3.6 NP 58-201,sections3.6 and3.7 CONTINUING EDUCATION ORIENTATION & 3(a) NI 58-101F1,sections3(a)and(b) 3.5 NP 58-201,section3.5 POSITION DESCRIPTIONS (b)

business iscurrent. knowledge of thecorporation’s abilities andensure their to enhance theirskillsand opportunities for all directors continuing education of thebusiness. and thenature andoperation directors are expectedto make the contribution individual of theboard andcommittees, and fullyunderstandtherole comprehensive orientation new directors receive for theCEO. written positiondescription and CEO havedevelopeda Disclose whethertheboar such position. and responsibilities of each board delineates therole if not,describehowthe each board committee and, the board andthechairof descriptions for thechairof has developedwrittenposition Disclose whethertheboar responsible tomeet. objectives that theCEO is approve corporate goalsand responsibilities; developor CEO delineating management’s a positiondescriptionfor the together withtheCEO, develop chair of eachboard committee; the chairof theboard andthe clear positiondescriptionsfor The boar The boar The boar (Summary) d shouldprovide d shouldensure d should:develop d d

opportunities madeavailabletodirectors are describedbelow. processes andbestpractices incorporate governance. Otherdevelopment focuses ontheskillsthat directors needtodotheirjobs,effective board to thebusinessandindustry. CICdeliversatrainingprogram that Management provides newdirectors withacomprehensive orientation Board, theChairof eachCommitteeandtheCEO. The Board hasdevelopedwrittenpositiondescriptions for theChairof the plan andtomeetanyothertargets assignedbytheBoard. The CEO isresponsible toseethat theCorporation achievesthebusiness that includesCorporate objectives,prioritiesandperformance indicators. that are approved by the Board. The Board annually approves a business plan performance indicators for theCorporation andpersonalgoalsfor theCEO The Environment &HumanResources Committeeannuallyrecommends delegates othermatters tomanagement. monetary matters, setsoutthosematters that require Board approval and duties, andaFinalAuthorization Policy, applicabletomonetaryandnon- and responsibilities. TheBoard Terms of Reference address management The CEO’s Position DescriptionsetsouttheCEO’s primaryaccountabilities directors andhasadoptedaPosition Descriptionfor theCEO. the Board, theChairof eachCommittee,Committee andindividual The Board hasapproved Terms of Reference for theBoard, theChairof Comments and Discussion and Comments SaskTel align? Does Does Yes Yes Yes SASKTEL 2016/17 ANNUAL REPORT | 91 Yes Yes Does SaskTel align? SaskTel , and new directors receive receive Manual, and new directors Reference Directors’ , which Conduct of Code with the Directors’ comply members must Board all its subsidiary Crown of was developed by CIC and applies to the directors and its subsidiaries must of the Corporation and employees Officers boards. , which includes a whistle- Business Conduct of Code with SaskTel’s comply blowing policy. deter wrongdoing, integrity and designed to promote Both Codes are and corporation to a Crown as they apply the Policy the elements of address behavior. illegal or unethical a mechanism to report provide Comments and Discussion with a to the Board all members appointed provides The Corporation comprehensive an orientation session delivered by management. The orientation session The orientation by management. session delivered an orientation the critical business risks and challenges, trends, industry key addresses senior staff. of and responsibilities structure plan, organizational strategic learn with senior managers to able to meet informally are New directors meetings, outside experts in Board to some regular about the business. Prior invited to speak to the industry are the telecommunications various aspects of educational has also delivered and senior management. Management Board the business. technical aspects of to explain sessions to directors directors for program education CIC sponsors a comprehensive Each year, roles on the key has focused The program boards. CIC subsidiary Crown of the skills directors and directors, committees boards, of and responsibilities and and best practices responsibilities their discharge need to effectively in can participate Directors governance. corporate new developments in where their duties as directors to external development opportunities related or the Board. by the Corporation authorized

es taken to es taken to es taken d should adopt a (Summary) otection and proper otection and proper onfidentiality of onfidentiality security orporation’s with laws, rules ompliance onflicts of interest, including of interest, onflicts eporting of illegal or eporting of c r unethical behavior. pr assets corporate use of and opportunities; c information; corporate fair dealing with the c holders, customers, suppliers, and employees; competitors and and regulations; c The boar transactions and agreements has a or officer a director where interest; material written code of business of written code and ethics applicable conduct and officers to directors, the corporation employees of integrity designed to promote The and deter wrongdoing. should address: code Describe the measur Describe the measur Describe the to the role directors orient new and committees the board, of of and to the nature directors business. the corporation’s education continuing provide all directors. opportunities for

(c) (d) (e) (f) (b) (a) (b) 4(a) CODE OF BUSINESS CONDUCT OF BUSINESS CONDUCT CODE AND ETHICS NP 58-201, section 3.8 3.8 NP 58-101F1, sections 4(a) and (b) sections 4(a) and NP 58-101F1, NP 58-201,and Disclosure Instrument, CSA Corporate Governance Policy, NI 58-101F1 92 | CORPORATE GOVERNANCE STATEMENT NI 58-101F1 58-101F1 NI Instrument, Disclosure and 58-201, NP Policy, Governance Corporate CSA 5(b) NI 58-101F1,sections5(b) 3.9 NP 58-201,section3.9 5(a) NI 58-101F1,sections5(a)

officer hasa material interest. agreements where adirector or considering transactionsand independent judgementin to ensure directors exercise details of thematerial change. officers shoulddisclosefull the code for anydirectors or for amaterial departure from board committee. Anywaivers granted bytheboard ora executive officers shouldbe the benefit of directors and and anywaiversgrantedfor compliance withthecode form theCode. that constitutes adeparture conduct of adirector orofficer financial year relating toany report inthemostrecent reference anymaterial change compliance withtheCode;and Code; howtheboard monitors how toobtainacopy of the employees of thecorporation; for thedirectors, officers and of ethicalbusinessconduct has adoptedawrittencode Disclose whethertheboar Describe stepstheboar The boar (Summary) d shouldmonitor d takes d

may haveamaterial interest andsuchitemsare notdistributed tothedirector. Management monitorsagendaitems toidentifyanyissueswhere adirector assist theminproactively addressing potentialconflict of interests. the Governance Committee, theCorporate Secretary andtheiradvisorsto services availabletothegeneralpublic. Thecompleted form isprovided to or itssubsidiaries.Therequired information excludes theacquisitionof SaskTel andanymaterial contracts theymayhaveentered intowith SaskTel their knowledgeof thebusinesstheirassociates haveormaytransactwith their directorships onandmaterial interests inbusinessesotherthanSaskTel, In 2005, theBoard adoptedadisclosure form toenabledirectors todeclare and nottoparticipate indiscussionsaboutorvoteonthematter. to declare anysuchinterest at themeetingwhere thematter isconsidered transaction beingconsidered bytheCorporation, thedirector isresponsible Where adirector has,ormaybeperceived tohave,apersonalinterest ina 2016/17. No waiversfrom eitherCodehavebeengrantedtoanydirector orofficer in dealt withpursuanttotheCodesfullBoard. compliance withtheCodesof Conduct.TheCommitteesreport anyissues The Board hasdelegated toitsCommitteestheresponsibility tomonitor material changereports havebeenfiled. SaskTel doesnothaveshare capitalandisnotanissuer. Therefore, no meeting of theBoard. reports anyissuesraisedat theCommitteeleveltoBoard at eachregular with related policies,legislation andregulations. TheChairof theCommittee reports from managementthat address, amongotherthings,compliance including compliance withtheBusinessCode.TheCommitteereceives with environmental, healthandsafety andhumanresource programs, The Environment &HumanResources Committeemonitorscompliance and alldirectors receive summaries of riskmanagementreports. Board at eachregular meetinganysuchissuesaddressed bytheCommittee, reports related tolegalrisks.TheChairof theCommitteereports tothe The AuditCommitteereceives quarterlyriskmanagementreports, including things, anyinstances of illegalorimproper treatment of Corporate assets. external auditors,whoreport totheCommitteeconcerning, amongother and accountability. TheCommitteeinteractsdirectly withtheinternaland accounting andfinancial reporting, riskmanagement,internal controls Corporation andassiststheBoard tomeetitsresponsibilities respecting The AuditandRiskCommitteemonitorsthefinancialperformance of the regarding compliance withtheDirectors’ Code. addressed bytheCommittee,andsubmitsanannualreport totheBoard Committee reports totheBoard at eachregular meetinganysuchissues administer, monitorandenforce theDirectors’ Code . TheChairof the with Corporate donation andsponsorshippoliciesisresponsible to and theBusinessCode.TheGovernance Committeemonitorscompliance Committees of theBoard monitorcompliance withtheDirectors’ Code contacting SaskTel. CIC. Acopy of theCode of BusinessConduct canbeobtainedby A copy of theDirectors’ Code of Conduct canbeobtainedbycontacting Comments and Discussion and Comments SaskTel align? Does Does Yes Yes Yes SASKTEL 2016/17 ANNUAL REPORT | 93 Yes Yes Does Substantial Compliance SaskTel align? SaskTel The Board encourages and promotes a culture of ethical business conduct business conduct ethical of a culture promotes and encourages The Board practices These governance. corporate in practices best current following by issues at about business and honest discussion by open reinforced are and between the Board gatherings informal meetings and at Board senior management. ethically in its business dealings, in expects management to act The Board Business Conduct of the Code with all applicable legislation, accordance the In 2005, or the shareholder. the Board of or policies and any directives a whistle-blowing to incorporate was revised Business Conduct of Code Issues concern. issues of by employees of reporting mechanism to facilitate to and monitored reported are Business Conduct of arising under the Code Committee and management Resources & Human by the Environment have significant issues that Committee respecting to the Governance reports may Whistle-blowing reports whistle-blowing policy. arisen pursuant to the Committee. the Governance the Chair of to also be made directly All committee. Committee functions as the nominating The Governance including the Committee Committee, the Governance six (6) members of independent directors. are Chair, made by the a decision are SaskTel of Directors Appointments of Committee in Council. The Governance an Order Government through recommend committee, as nominating their responsibility through may, and to have consideration for Board qualified nominees to the SaskTel and to the CIC Board consideration for those nominees be recommended the Government. ultimately the composition Committee, reviews the Governance through The Board, annually with a view to maintaining an appropriate directors and skill sets of to support the and diversity on the Board expertise, experience mix of the Corporation. needs of and operating direction strategic identifying the skill sets for Committee is responsible The Governance that developing and maintaining a skills profile needed on the Board, any skill gaps, and identifies directors current of the competencies delineates any nominees who have the to the Board while seeking and recommending competencies to fill identified gaps. In addition to competencies required the of diversity in the composition encourage practices and skills, current recommendations the Committee may receive In seeking candidates, Board. Potential senior management and the shareholder. the directors, from may be interviewed to determine their overall fit with the needs candidates participation their effective would preclude that conflicts any the Board, of work. The Committee and whether they have the time to devote to board each vacant position to the Board, for candidates a list of may recommend approval. for to the shareholder candidates which in turn would recommend appointments. Board authority to make has the legislative The shareholder to Board related best practices following The Committee believes that who candidates and recruiting appointments, maintaining a skills matrix, diversity and skills, background of combination possess the required decision-making supports an objective to add value to Corporate process. nomination Comments and Discussion

d ocess ocess d should appoint (Summary) d takes to encourage and to encourage d takes by which the board by which the board identifies new candidates nomination. board for Disclose whether the boar The boar Describe the pr committee has a nominating of entirely composed and, independent directors if not, describe the steps the an to encourage takes board process. objective nomination a nominating committee committee a nominating entirely of composed independent directors. promote a culture of ethical of a culture promote business conduct. Describe other steps the Describe other boar

(b) NOMINATION OF DIRECTORS NOMINATION NP 58-201, section 3.10 3.10 NI 58-101F1, sections 5(c) NI 58-101F1, 5(c) NI 58-101F1, sections 6(a) and (b) 6(a) NP 58-201,and Disclosure Instrument, CSA Corporate Governance Policy, NI 58-101F1 94 | CORPORATE GOVERNANCE STATEMENT 6(c) NI 58-101F1,sections6(c) 3.13 NP 58-201,section3.13 3.12 NP 58-201,section3.12 NI 58-101F1 58-101F1 NI Instrument, Disclosure and 58-201, NP Policy, Governance Corporate CSA 3.11 NP 58-201,section3.11

the newdirector nominees. and recommending totheboard to become newboard members identifying individualsqualified should beresponsible for The nomina the nominating committee. consider theadvice andinputof decision-making, andshould board, withaviewtoeffective the appropriate size of the board shouldalsoconsider qualities of eachdirector. The the personalityandother director; andconsiders possessed byeachexisting competencies andskills as awhole;assessesthe and skillsof theboard considers thecompetencies nomination process which The boar operation of thecommittee. responsibilities, powersand committee, describethe If theboar committee. of anindependentnominating need notinvolvetheapproval nomination of thosedirectors directors, theselectionand has alegalrighttonominate out itswork.Where athird party necessary topermititcarry compensate outsideadvisors authority toengageand committee shouldbegiven In addition,thenominating of reporting totheboard. or subcommittees) andmanner delegate toindividualdirectors (including anyauthorityto structure andoperations appointment andremoval, member qualifications, member purpose, responsibilities, establishing thecommittee’s should haveawrittencharter The nomina (Summary) d shouldadopta d hasanominating ting committee ting committee ting committee

decision madebytheGovernmentthrough anOrder inCouncil. the Board. Theidentification andappointment of Directors of SaskTel are a The Governance Committeeidentifiestheskillssetsthat are required for decision-making. the Committeemakes recommendations topromote timelyandeffective Committee responsible for theBoard’s approach tocorporate governance, By legislation, theBoard iscomposed of amaximum of 12directors. Asthe guidelines of theInstrument. The Board’s nomination process isdescribedabove,anditmeets the can beobtainedbycontacting theCorporate Secretary totheBoard. within itsarea of responsibility. Acopy of theCommittee’sTerms of Reference serves inanadvisorycapacityandmaymake recommendations totheBoard and operation of theCommittee.TheCommitteeisappointedbyBoard, committee, anditsTerms of Reference describetheresponsibilities, powers The Governance Committeeperforms thefunctionsof anominating nominate candidates for appointmenttotheBoard. subject totheapproval of theBoard. Theshareholder hastherightto has authoritytoengageoutsideadvisorsassistitinperforming itsduties, member qualifications andtheabilitytodelegate tasks.TheCommittee appointment to the Board, as well as the other elements of the Policy except responsibility toleadtheprocess of recruiting andnominating candidates for its purposeandprincipalresponsibilities, whichaddress theCommittee’s The Governance CommitteehaswrittenTerms of Reference settingout Comments and Discussion and Comments SaskTel align? compliance compliance Substantial Partial Does Does Yes Yes SASKTEL 2016/17 ANNUAL REPORT | 95 Yes Yes Yes Does SaskTel align? SaskTel 750.00 ,500.00 3 2,500.00 25,000.00 40,000.00

$ $ $ $ $ Director Remuneration Schedule Remuneration Director Other Committee Chair retainer Board Chair retainer Board member retainer Board Committee member meeting fee day $750 (Meeting Fees = Full Half day $375 – less than 4 hours) Audit & Risk Committee Chair retainer The Environment & Human Resources (EHR) Committee performs the (EHR) Committee performs & Human Resources The Environment of five (5) the five (5) Currently committee. a compensation functions of are Committee Chair, the EHR Committee, including the members of independent directors. & Human Resources the Environment members of The majority of independent are committee, Committee, which serves as the compensation directors. levels and set expense remuneration authority to fix CIC has the legislative Committee has authority to The Governance directors. guidelines for to CIC) adjustments to directors’ (and the Board to the Board recommend the respecting quarterly reports The Committee receives compensation. any anomalies and reports the Board, by members of received remuneration to the Board. The member. acting as a Board for an annual retainer receives Each director set are the Board members of levels established by CIC for remuneration out below. Comments and Discussion set that with complies Committee the Governance by followed The process above. and is described out in the Policy A copy of CIC’s remuneration and expense guidelines for directors can be directors and expense guidelines for CIC’s remuneration of A copy to the Board. Secretary the Corporate obtained by contacting and the Board compensation, executive CIC has established a framework for framework. The Board packages within that compensation can approve and making recommendations addressing for responsibility has delegated & issues to the Environment management compensation concerning Committee. Human Resources and Committee reviews & Human Resources The Environment the Corporation’s changes to the design of to the Board: recommends compensation and benefits plans; management overall compensation compensation performance industry standards; reflect packages that including a sub-set used indicators, and annual Corporate programs; In senior management. for compensation to determine performance external has the ability to retain this function, the Committee discharging by the Board. advisors, subject to approval

d ocess by ocess ecommendations ecommendations d should appoint a (Summary) which the board determines which the board the directors for compensation corporation. of the and officers Disclose whether the boar Describe the pr has a compensation composed committee independent of entirely and, if not, describe directors takes the steps the board an objective to ensure determining for process such compensation. the nominating committee committee the nominating the should consider: that and skills competencies necessary considers the board to as a whole the board for possess; the competencies directors; existing and skills of skills of and the competencies each nominee; and whether devote each new nominee can to resources sufficient time and work. board The boar committee compensation of entirely composed independent directors. In making its r In making its

(b) NP 58-201, section 3.14 NP 58-201, 3.14 COMPENSATION NP 58-201, section 3.15 3.15 NI 58-101F1, sections 7(a) and (b) 7(a) NP 58-201,and Disclosure Instrument, CSA Corporate Governance Policy, NI 58-101F1 96 | CORPORATE GOVERNANCE STATEMENT (c) NI 58-101F1,sections7(c) 3.17 NP 58-201,section3.17 NI 58-101F1 58-101F1 NI Instrument, Disclosure and 58-201, NP Policy, Governance Corporate CSA 3.16 NP 58-201,section3.16

disclosure. compensation priortopublic and reviewing executive plans andequity-basedplans; incentive-compensation and director compensation, respecting non-CEO officer recommendations totheboard on theevaluation; making compensation levelbased and determiningtheCEO’s corporate goalsandobjectives, performance inlightof those evaluating theCEO’s relevant toCEO compensation, corporate goalsandobjectives reviewing andapproving should beresponsible for: The c operation of thecommittee. responsibilities, powersand committee, describethe If theboar out itswork. necessary topermititcarry compensate outsideadvisors authority toengageand committee shouldbegiven addition, thecompensation of reporting totheboard. In subcommittees) andmanner to individualdirectors or any authoritytodelegate structure, operations (including appointment andremoval, member qualifications, member purpose, responsibilities, establishing thecommittee’s should haveawrittencharter The c ompensation committee ompensation committee (Summary) d hasacompensation

executive compensation reports priortopublicdisclosure. publication of Crown payeereports. TheCommitteedoesnotreview Executive compensation information isavailable tothepublicthrough Director compensation isdeterminedbyCIC. by CIC. AsaCrown corporation, SaskTel does nothaveequity-basedplans. Executive compensation decisionsare subjecttoanyguidelinesestablished eligibility for performance compensation. and theextenttowhichtargets are achieveddeterminesmanagement’s Board reviews andapproves theachievementof Corporate targets annually performance compensation programs andannualperformance targets. The for recommending totheBoard managementcompensation packages, Respecting non-CEO officer compensation, theCommitteeis responsible used indeterminingcompensation. results of theCEO’s performance are approved bythefullBoard, andare the establishedCorporate objectivesandtheCEO’s individualtargets. The evaluation process for theCEO. TheCEO’s performance is assessed against the Board theCEO’s performance targets, andleadstheannualperformance The Environment &HumanResources Committeeannuallyrecommends to the Board. of Reference canbeobtainedbycontacting theCorporate Secretary to the Board withinitsarea of responsibility. Acopy of theCommittee’sTerms the Board, servesinanadvisorycapacityandmakes recommendations to powers andoperation of theCommittee.TheCommitteeisappointedby Committee’s responsibilities respecting compensation issues,aswellthe compensation committee, anditsTerms of Reference describethe The Environment &HumanResources Committeeservesasthe approval of theBoard. to engageoutsideadvisorsassistitinperforming itsduties,subjecttothe qualifications andtheabilitytodelegate tasks.TheCommitteehasauthority compensation, aswelltheotherelementsof thePolicy except member which addresses theCommittee’sresponsibilities withrespect to The Board hasapproved Terms of Reference for theE&HRCommittee, Comments and Discussion and Comments SaskTel align? compliance compliance Substantial Substantial Does Does Yes SASKTEL 2016/17 ANNUAL REPORT | 97 Yes Yes Yes Does SaskTel align? SaskTel Board, Board Chair, Committee Chair and Committee evaluations as well Committee Chair and Committee evaluations Chair, Board Board, annually on a 2 year cycle, with performed peer assessments are as director one being conducted Chair evaluations and Board Board comprehensive being Committee Chair and Committee evaluations peer, and director year, the into consideration take The evaluations year. the following conducted the policy. elements of conducted. were Chair evaluations and Board Directors of Board In 2016, the above of Committee oversees the implementation The Governance survey-based, using an instrument are The evaluations processes. evaluation and with outside consultant with an developed by CIC in consultation members. board Crown against the is measured performance Committee and director Chair, Board, and Reference of Terms set out in their respective duties and expectations The purpose instruments. outlined in the evaluation the specific standards Chair Committee, the Board, where is to identify areas the evaluations of may benefit from that is managing well and to highlight areas or director and attention. additional focus in writing on the feedback surveys to provide complete Directors Committees, Chairs and of the Board, contribution and effectiveness up the party may follow Chair or a third The Board individual directors. or to elicit additional concerns directors with interviews of written responses improvement. suggestions for outlining the evaluation reports Committee prepares The Governance and approval. review for submitted to the Board which are results, as a result action required follow-up The Committee recommends and tracks reports, made in the evaluation recommendations of any action items. of implementation Comments and Discussion & Human Environment and Governance to the Audit and Risk, In addition & Growth has a Corporate also Board Committees, the Resources (CGT) Committee. Technology to develop a growth Committee: works with management The CGT investments and and recommends reviews policies; and related strategy the performance respecting to the Board reports monitors and divestitures; the concerning recommendations and makes investments; and reviews of strategies long-term technology in the Corporation, technology evolution of Reference of the Committee’s Terms of A copy and technology investments. to the Board. Secretary the Corporate can be obtained by contacting

d, d has standing d has standing d, its committees (Summary) Disclose whether the boar and each individual director and each individual director assessed. should be regularly An assessment should consider: or to the board with respect or its mandate committees, to an charter; with respect the applicable individual director, position description(s), as well and skillsas the competencies brings each individual director to the board. and individual its committees regularly are directors to assessed with respect and their effectiveness and, if yes, contribution used. describe the process The boar If the boar other the board, of committees than audit, compensation committees, and nominating and identify the committees describe their function.

OTHER BOARD COMMITTEES BOARD OTHER section 8 NI 58-101F1, 8 ASSESSMENTS BOARD NP 58-201, section 3.18 3.18 NI 58-101F1, section 9 9 NP 58-201,and Disclosure Instrument, CSA Corporate Governance Policy, NI 58-101F1 98 | CORPORATE GOVERNANCE STATEMENT 12 NI 58-101F1 58-101F1 NI Instrument, Disclosure and 58-201, NP Policy, Governance Corporate CSA 11(a) 10 Governance Practices Disclosure ofCorporate CSA National Policy58-101 (b)

(iv) (iii) (ii) (i) reasons for not doingso. board, disclosetheissuer’s election orre-election tothe nominating candidates for the board inidentifyingand representation of womenon not consider thelevelof the board. Iftheissuerdoes for electionorre-election to and nominating candidates on theboard inidentifying of representation of women committee considers thelevel how theboar Disclose whetherand,ifso, the policy: the following inrespect of policy referred toin(a),disclose If anissuerhasadopteda r has adoptedawrittenpolicy Disclose whethertheissuer disclose whyithasnotdoneso. mechanisms of board renewal, director termlimitsorother If theissuerhasnotadopted mechanisms of board renewal. director termlimitsorother include adescriptionof those of board renewal and,ifso, board orothermechanisms limits f the issuerhasadoptedterm Disclose whetherornot why ithasnotdoneso. adopted suchapolicy, disclose directors. Iftheissuerhasnot and nomination of women elating totheidentification

effectiveness of thepolicy. committee measures the the boar whether and,ifso,how the policy, and achieving theobjectivesof progress bytheissuerin annual andcumula implemented, has beeneffectively ensure that thepolicy the measur provisions, its objectivesandkey a shortsummaryo (Summary) or thedirectors onits d oritsnominating d ornominating es taken to f tive

representation of womenontheBoard. It istheresponsibility of Executive Counciltoconsider thelevelof composed of six(6)womenoutof atotalof twelve(12)members(50%). a totalof twelve(12)members(50%).Asof March 31,2017, theBoard was As of December 31,2015, theBoard wascomposed of six(6)womenoutof skill setsrequired for theBoard anddiversitystatistics. when Board appointmentdecisionsare made.Theinformation includesthe Annually, CICforwards information totheshareholder tobeconsidered progress madeinthepercentage of womenservingonCrown Boards. CIC maintainsstatistics regarding diversityof eachCrown Board, including not subjecttotermlimits. Telecommunications HoldingCorporation Act.Director appointmentsare the LieutenantGovernorinCouncilpursuanttoTheSaskatchewan The appointmentandremoval of Directors istheprerogative of Comments and Discussion and Comments women, Aboriginalpersons,andvisibleminorities. term “diversitycandidates” isnotdefinedbutitinterpreted asincluding Directors, itrequires Crown Boards toinclude“diversitycandidates.” The does notspecifically refer totheidentification andnomination of female CIC hasawritten“Board of Directors’ AppointmentPolicy.” Whilethepolicy SaskTel align? Compliance Compliance Compliance Partial Partial Partial Does Does No SASKTEL 2016/17 ANNUAL REPORT | 99 No Yes Yes Yes Yes Does SaskTel align? SaskTel The Board currently comprises twelve (12) members, six (6) of whom are whom are twelve (12) members, six (6) of comprises currently The Board women (50%). are women. Officers the 13 (thirteen) Executive (4) of four Currently, On August 13, 2015, SaskTel adopted a policy to provide a target regarding regarding a target adopted a policy to provide SaskTel 2015, On August 13, positions. Officer women in Executive positions least 40% women in Executive is to have at target The current by 2020. Although the CIC policy requires Crown Board to include “diversity to include Board Crown requires Although the CIC policy for policy does not adopt a specific target the CIC candidates,” Board. women on the of representation Comments and Discussion Executive Officer appointments are made by the CEO in consultation with consultation CEO in made by the are appointments Officer Executive of representation the level of to consideration gives The CEO the Board. relevant factors, along with other positions, Officer women in Executive appointments. Officer Executive when making

tive get regarding get regarding get regarding onsiders the onsiders the f this Item, get, and (Summary) progress of the issuer in of progress achieving the target. the tar the annual and cumula get referred to in either (b) or get referred

oportion (in percentage oportion (in percentage oportion (in percentage oportion (in percentage

terms) of executive officers of officers executive terms) of including all major the issuer, who the issuer, subsidiaries of women. are Disclose the number and pr on the directors terms) of women. are who issuer’s board Disclose the number and pr If the issuer has adopted a tar (c), disclose: women on the issuer’s board. women on the issuer’s board. If the issuer has not adopted a disclose why it has not target, done so. Disclose whether the issuer has adopted a tar officer women in executive If the the issuer. positions of issuer has not adopted a target, disclose why it has not done so. Disclose whether the issuer has adopted a tar For purposes o means a number a “target” or a range or percentage, numbers or percentages, of adopted by the issuer of or women on the issuer’s board of positions officer in executive the issuer by a specific date. level of representation of of representation level of officer women in executive positions when making appointments. officer executive consider If the issuer does not of representation the level of officer women in executive positions when making appointments, officer executive for disclose the issuer’s reasons not doing so. Disclose whether and, if so, Disclose whether c how the issuer (ii) (i)

(b) (b) (d) 14(c) 15(a) 13 14(a) NP 58-201,and Disclosure Instrument, CSA Corporate Governance Policy, NI 58-101F1

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