Creating World-Leading Internet Experiences

Rogers Communications Inc. 2012 Annual Report

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ACCESS AM ACCESS AM UP UP RogersSTRE CommunicationsAMIN Inc. is a diversifiedG Canadian communicationsCO and media company engaged STREAMING CO M M

in the telecom and media businesses. Wireless is ’s largest wirelessLI voice and data LI

LO communications services provider and the country’s only national carrier operating on the combined LO G G RF RF FE FE D D SS SS + NN NN INSPIRworld standard GSM/HSPA /LTE technologyE platforms. RogersKING Cable is a leading Canadian cable services INSPIRE KING

AD provider, offering cable television, high- Internet access, and telephony products, and together with AD ST RE ST RE TA TA SU SU AC RELI AC RELI XT XT

Rogers Business Solutions, provides business telecom, data networking andST IP solutions to small, ST FREEDO FREEDO SU SU EC EC medium and large enterprise, government and carrier customers. RogersCE Media is Canada’s premier CE TH TH SE SE RELIABLEST RE RELIABLEST RE group of category-leading broadcast, specialty, print and online media assets, with businesses in radio CE SECURE CE SECURE

UPLOAD YL UPLOAD YL AB AB CONNand televisionEC Tbroadcasting, televised shopping, sports entertainment,EA magazine and trade journal CONNECT EA T T RF RF

ACRE CEINSPIR SS ACRE CEINSPIR SS publishing and digital media. We are publicly traded on both the TSX and NYSE stock exchanges andC areONN ECT CONNECT BR AC BR AC SS SS CURE CURE NE NE LE LE

LIincludedVE in the S&P/TSX 60 Index of the largest publicly traded companies inE Canada. INSPIRELIVE E INSPIRE LIABLE LIABLE T UNES AMIN T UNES AMIN RELIUP ABLE POST RELIUP ABLE POST INSPIRDELIVERINGE COMMITMENTS IN 2012 INSPIRE LIFESTYLE LO INSPIRE LIFESTYLE LO INSPIRE AD AD Free Cash Flow Dividend Share Top-line XT XT OWNGENERATIONLOAD Increases Buybacks Growth OWNLOAD VE VE E E G G

What We Said: Deliver another What We Said: Increase REWhat WLIABLEe Said: Return What We Said: Leverage CURE RELIABLE CURE year of significant consolidated cash returns to shareholders additional cash to shareholders networks, channels and brands LI LI INSP INSP INSPIRpre-tax free cash flow. E consistently over time. NETWby repurchasingOR RogersK sharesTUNE TUNE to deliverS continued revenue INSPIRE NETWORK TUNETUNE S on the open market. growth. What We Did: Generated What We Did: Increased

REEDOMCONNECT NE REEDOMCONNECT NE SE SE $2.0 billion of pre-tax free cash annualizedRE dividendLIABLE per SEWhatCURE We Did: Repurchased What We Did: Delivered 1% LI RELIABLE SECURE LI flow in 2012, supporting the share 11% from $1.42 to 9.6 million Rogers Class B shares consolidated top-line growth significant cash we returned to $1.58 in 2012. CONNfor $350 million.ECT with 2% growth in adjusted CONNECT

INSPIRE ACCESS VE INSPIRE ACCESS VE SURFshareholders during the year. operating profit.SECURESURF SECURE INSPIRE INSPIRE SECURE IR CONNECSECURE IR CONNEC CONNOperatingEC EFFICIENCIEST Fast and Reliable POWirelessST Data Higher Value CONNECT POST S S Networks Revenue Growth E Wireless Subscribers E LI LI

INSPIRSE What We Said: ImplementE cost What We Said: Maintain TUNEWhat We Said: GenerateS LI What We SaINSPIRid: Continue the EINSPIRSE E TUNES LI INSPIRE containment initiatives to capture Rogers’ leadership in network double-digit wirelessC data rapid growth in our C G G

FE FAST FE FAST operating efficiencies. technologySE and innovation.CURE growth to support continued subscriber base to drive wireless SECURE CURE CURE ONN ONN

ARPU leadership. FE data revenue and ARPU. FE What We Did: Reduced operating What We Did: Deployed INSPIRexpenses for the combined Wireless Canada’sE first LTE wireless What We Did: GrewIN wireless What We Did: Activated nearly INSPIRE IN ST CONNECT ST CONNECT and Cable segments, excluding network and completed the data revenue by 17% with data SE2.9 million ,CU helping RE SECURE the cost of wireless equipment deployment of 150Mbps as a percent of network revenue bring smartphone penetration ST ST

sales, by approximately 1% Internet speedsINSPIR across +90% E increasing to 41%AK from 35% to 69% of postpaid subscriber INSPIRE AK YL from 2011 levels. of our cable TV footprint. in 2011. BRbase.EATHTAKING YL BREATHTAKING RELIABLE LIFESTYLE XT RELIABLE LIFESTYLE XT EC EC YL YL E E

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EA POST EA POST E E SECURE T RELIABLE SECURE T RELIABLE BR BR Table of Contents INSPIRE NE LIFESTYLE TUNE INSPIRE NE LIFESTYLE TUNE ONNE 2 Letter to SharehCTolders 22 Management’s Discussion and Analysis 84 Consolidated Statements of ONNECT Financial Position 5 Strategic Objectives andRE Value DriversLIABLE 81 Management’s Responsibility for RELIABLE

Financial Reporting 85 Consolidated Statements of INSPIR INSPIR LI LI C TUNES C TUNES INSPIR 6 Creating World-LeadingE NE TWORK STREAMINChanges in Shareholders’ Equity GINSPIRE NETWORK STREAMING Internet Experiences 81 Independent Auditors’ Report of T T ONN ONN

FE Registered Public Accounting Firm 86 Consolidated Statements of Cash FlowsLIFESTY FE LIFESTY 14 CorporateBREA Social THTResponsibilityAKINGSHARE BREATHTAKINGSHARE 82 Consolidated Statements of Income 87 Notes to Consolidated Financial 16 Corporate Governance EC EC ST Statements CONN ST CONN 83 Consolidated Statements of 18 Directors and Senior Executive Officers SURF SURF Comprehensive Income 116 Corporate and Shareholder Information EC EC YL 20 DOWNLOWhy Invest in Rogers AD YL DOWNLOAD

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UP ACCESS UP UP CO CO G AMIN STRE STREAMING CO G AMIN STRE M M M LI LI 2012 Consolidated Revenue and Operating Profit Profile LI LO LO LO

G REVENUE G ADJUSTED OPERATING PROFIT G RF RF RF FE FE D D FE D SS SS SS NN NN NN KING KING E INSPIR INSPIRE KING E INSPIR WIRELESS 58% WIRELESS 62% AD AD AD ST RE ST RE ST RE TA TA TA SU SU SU RELI AC RELI AC AC RELI XT XT XT ST ST ST FREEDO FREEDO CABLE 26% FREEDO SU SU SU EC EC EC CE CE CE CABLE 32% TH TH TH SE SE SE ST RE ST RE $12.5 ST RE $4.8 LIABLE RE RELIABLEBILLION BILLION LIABLE RE CE CE E R CU SE E R CU SE CE SECURE

YL AD LO UP YL AD LO UP UPLOAD YL AB AB AB EA EA T EC ONN C CONNECT MEDIA 13% EA T EC ONN C T T

T MEDIA 4% RF RF RF INSPIR RE INSPIR RE SS CE AC ACRE CEINSPIR SS SS CE AC T EC ONN C T EC ONN C Business solutions 3% Business solutioCnONNs 2% ECT AC BR AC BR BR AC SS SS CURE CURE SS CURE NE NE NE LE LE LE E E E INSPIR VE LI LIE VEINSPIR E INSPIRVE ELI LIABLE LIABLE AMIN AMIN LIABLE UNES TT UNES AMIN UNES T UP UP T S PO LE AB RELI T S PO LE RELIUP AB ABRELI LE POST FINANCIAL HIGHLIGHTS 2012 For a detailed discussion of our financial and operating metrics and results, E INSPIR INSPIRE please see the accompanying MD&A laE ter in this report. INSPIR LO LO E INSPIR E YL ST FE LI FESTYLE E LO INSPIRINSPIR E E YL ST FE LI AD AD XT XT AD AD LO WN OO WNFLOinancialAD Highlights IFRS Cdn GAAP AD XT LO WN O VE VE VE E E G G E (In millions of dollars, except per share, Subscriber and employG ee data) 2012 2011 2010 2009 2008 CURE CURE LIABLE RE LIABLE RERE LIABLE CURE Revenue $ 12,486 $ 12,346 $ 11,999 $ 11,537 $ 11,110 LI LI LI INSP INSP INSP TUNE TUNE S TUNE K OR TW NE E INSPIR INSPIRES TUNE K OR NETW TWNE ORK TUNETUNE SE INSPIR Adjusted operating profit 4,834 4,739 4,668 4,407 4,075 Adjusted operating profit margin 39% 38% 39% 38% 37% NE NE T EC ONN C M DO EE R T EC ONN C NE M DO EE R

SE REEDOSE MCONNECT SE LI LI CURE SE LIABLE RE Adjusted net income RELIABLECURE 1,788SE SE CURE1,736 LIABLE 1,704RE 1,569 1,272 LI Adjusted diluted earnings per share 3.43 3.17 2.94 2.53 1.99 T EC ONN C Annualized dividend rate at year-end T EC 1.58ONN C C ONN1.42EC T 1.28 1.16 1.00 VE VE SS CE AC E INSPIR RF SU RF INSPIRE ACCESS SS CE AC E VE INSPIR RF SU E R CU SE E R Total assetsCU SE 19,618 18,362 17,033 17,018SE CU17,082 RE E INSPIR Long-term debt (includes current portion) E 10,789INSPIR INSPIR 10,034 E 8,654 8,464 8,507 IR IR CURE SE CURE IR CURE SE C E NN CO C E Shareholders’NN equityCO 3,768 3,572 3,760 4,273CO NN4,716 EC ST PO T EC ONN C CONNMarketEC capitalizationT of equity ST 23,346PO PO 20,736ST 19,435 19,476 T 23,679EC ONN C S S S E E Wireless subscribers (000s) 9,437 9,335 E 8,977 8,494 7,942 Cable subscribers (000s) 2,214 2,297 2,305 2,296 2,320 LI LI LI LI SE LI SE E INSPIR S TUNE E INSPIRINSPIR E SE E INSPIR S TUNETUNE S LI INSPIRE EINSPIR C C

Internet subscribers (000s) 1,864 1,793 C 1,686 1,619 1,571 Cable telephony subscribers (000s) 1,074 1,052 1,003 937 840 G G G

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FE Number of employees FE 26,801 28,745 27,971 28,985 29,200 FE IN IN E INSPIR INSPIRE IN E INSPIR ST ST E R CU SE T EC NN CO ST E R CU SE CONNECT T EC NN CO SECURE ST ST ST AK AK E INSPIR INSPIRE E AK INSPIR YL YL G IN AK THT EA BR YL G IN AK THT EA BR

XT XT BREATHTAKING E YL ST FE LI LIABLE RE RETotal ShareholderLIABLE Return LIFESTYLE E XT YL ST FE LI LIABLE RE EC EC YL YL EC YL E E E Ten-Year Comparative Total Return: 2003–2012 ONE-Year Comparative Total Return: 2012 THT THT AD DOWNLO AD DOWNLO THT DOWNLOAD AD LO UP UPLOAD AD LO UP T EC ONN C CURE SE SE654%CURET 141%EC 99%ONN C 254% 109% 20% 7% C16%ONN12%ECT18%CURE SE EA EA T S PO T S PO EA POST E E E T T RELIABLE CURE SESE CURE RELIABLE T RELIABLE CURE SE BR BR BR NE NE E N TU E YL ST FE LI E INSPIR E N TU E YL INSPIRST FE LI E E NE LIFESTINSPIR YLE TUNE LIABLE RE CT ONNE CTRELIABLE LIABLE RE CT ONNE INSPIR INSPIR INSPIR

S TUNE LI C S TUNE LI C LI G REAMIN ST K OR TW NE E INSPIR INSPIRC G E NETWORK TUNEREAMIN S STST REAMINK OR TW NE E GINSPIR T T T ONN ONN ONN FE FE Y ST FE LI E SHAR G IN AK THT EA BR Y ST FE FE BRLI EATHTAKINGSHAREE SHAR G IN AK THT EA LIBR FESTY RCI.b S&P/TSX S&P 500 TSX S&P 500 RCI.b S&P/TSX S&P 500 TSX S&P 500 on TSX COMPOSITE INDEX Telecom TELECOM on TSX COMPOSITE INDEX Telecom TELECOM EC EC EC ST ST ONN C ST ONN C CONN RF SU INDEX IndeRF x INDEX SU SURFINDEX Index INDEX EC EC EC YL YL AD DOWNLO YL DOWNLOAD AD DOWNLO CURE CURE U C SE LIABLE RE U C SE LIABLE RE RELIABLE CURE SECU 2012 ANNUAL REPORT INC. 01 E E E ONN ONN ONN E E T T E N N CO T N N CO CONN SE SE C C SE SS CE AC G AMIN STRE STREAMINSS CE GAC ACG CESSAMIN C STRE A W E SE CO LI WA FE ST N AMIN

NETWORK SHARE NL C NN I ST SURF TC ONN EC Rogers Communications Inc. At a Glance YL DOWNLOAD RELIABLE CURE C T OA E INSP H AC

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LIVE E INSPIRE LIABLE T UNES AMIN RELIUP ABLE POST INSPIRROGERS ECOMMUNICATIONS WIRELESS LO INSPIRE LIFESTRogersYL CommunicationsE (TSX: RCI; NYSE: RCI) is a diversified Canadian provides wireless voice and data communications communications and media company. As discussed in the following services across Canada to more than 9 million customers under the AD XT OWNpages,LO RogersAD Communications is engaged in the telecom and media Rogers Wireless, Fido and brands. Rogers Wireless is Canada’s VE E businesses through its primary operating segmentsG Rogers Wireless, largest wireless provider and the only national carrier operating on the RELIABLE CURE , Rogers Business Solutions and Rogers Media. combined global standard GSM/HSPA+/LTE technology platforms.

Rogers Wireless is Canada’s leaderLI in innovative wireless voice and data INSP INSPIRE NETWORK TUNETUNE S services, and provides customers with the best and latest wireless Rogers Communications

REEDOMCONNECT devices and applications. Rogers Wireless also providesNE seamless SE RELIABLE SECURE LI wireless roaming across the U.S. and more than 200 other countries, CONNand isEC the CanadianT leader in the deployment of mobile commerce

INSPIRE ACCESS VE SURF and machine-to-machine communications. Wireless Cable BUSINESS SOLUTIONS Media SECURE INSPIRE SECURE IR CONNECT POST CONNEC S E REVENUE ADJUSTED OPERATING PROFIT REVENUE ADJUSTED OPERATING PROFIT ($ in billions) ($ in billions) ($ in billions) ($ in billions) LI

INSPIRSE E TUNES LI INSPIRE C 12.0 12.3 12.5 4.7 4.7 4.8 7.0 7.1 7.3 3.2 3.0 3.1 G

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2010 2011 2012 2010 2011 2012 2010 2011 E 2012 2010 2011 2012 SECURE T RELIABLE BR

INSPIRE NE ONNECT LIFESTYLE TUNE FY2012 REVENUE: FY2012 REVENUE: RELIABLE$12.5 billion $7.3 billion INSPIR INSPIRC LI E NETWORK TUNES STREAMING WIRELESS 58% POSTPAID VOICE 52% T ONN

FE LIFESTY BR$12.5EATHTAKINCABLEG 26%SHARE $7.3 BILLION BILLION DATA 37% EC ST CONN MEDIA 13% SURF EQUIPMENT 8% EC YL DOWNLOAD Business Solutions 3% PREPAID VOICE 3% RELIABLE CURE SECU E ONN E T CONN SE STREAMINGACCESS C A W E SE CO LI WA FE ST N AMIN

NETWORK SHARE NL C NN I ST SURF TC ONN At a Glance EC YL DOWNLOAD RELIABLE CURE C T OA E INSP H AC

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LIVE E INSPIRE LIABLE T UNES AMIN RELIUP ABLE POST INSPIRCABLE AND BUESINESS SOLUTIONS MEDIA LO INSPIRE LIRogersFE CableST is a YLleading CanadianE cable services provider, whose Rogers Media is Canada’s premier combination of category-leading radio territory covers approximately 3.8 million homes in , New and television broadcasting, sports entertainment, publishing, and AD XT OWNBrunswick LOand Newfoundland.AD Our advanced digital two-way hybrid digital media properties. Television properties include the multi-station VE E fibre-coax network provides the leading and most innovativeG City network, its five multicultural stations, Rogers RELIABLE CURE selection of digital television and online viewing, high-speed and specialty sports television services, which

broadband Internet access, telephony services, and home monitoring provide sports programming across Canada,LI and The Shopping Channel, INSP INSPIRE NETWORK TUNETUNE S and automation solutions. Together with Rogers Business Solutions, Canada’s only nationally televised shopping service. It’s Radio group

REEit providesDO scalableM businessCONN telecom, dataEC networking,T and IP operates 55 radio stations across Canada, while its Publishing groupNE SE RELIABLE SECURE LI connectivity and solutions to small, medium and large enterprise, produces more than 50 well-known consumer magazines and trade government and carrier customers. Cpublications.ONN MediaEC ownsT the Blue Jays Baseball Club and Rogers

INSPIRE ACCESS VE SURF Centre, Canada’s largest sports and entertainment facility.SE RogersCU also RE INSPIRholds a 37.5% investmentE in Maple Leaf Sports & Entertainment. SECURE IR CONNECT POST CONNEC S E REVENUE ADJUSTED OPERATING PROFIT REVENUE ADJUSTED OPERATING PROFIT ($ in billions) ($ in billions) ($ in billions) ($ in billions) LI

INSPIRSE E TUNES LI INSPIRE C 3.6 3.7 3.7 1.5 1.6 1.7 1.46 1.61 1.62 0.13 0.18 0.19 G

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2010 2011 2012 2010 2011 2012 2010 2011 2012 E 2010 2011 2012 SECURE T RELIABLE BR

INSPIRE NE ONNECT LIFESTYLE TUNE FY2012 REVENUE: FY2012 REVENUE: RE$3.7 billionLIABLE $1.62 billion INSPIR INSPIRC LI E NETWORK TUNES STREAMING TELEVISION 51% Television 40% T ONN Sports entertainment 13%

FE INTERNET 27% LIFESTY $3.7BREATHTAKINGSHARE $1.62 Radio 14% BILLION BILLION HOME PHONE 13% EC ST CONN SURFThe shopping channel 16% BUSINESS SOLUTIONS 9% EC YL DOWNLOAD Publishing 14% CURE SECU RELIABLEDigital 3% E ONN E T CONN SE STREAMINGACCESS C A W E SE CO LI WA FE ST N AMIN

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LIVE E INSPIRE LIABLE T UNES AMIN RELIUP ABLE POST INSPIRE Nadir Mohamed, fca LO LIFERogersST hasYL alwaysE demonstrated the distinct ability to grow andINSPIR adapt to a rapidly PROGRESS AGAEINST OUR changing business environment – 2012 definitely put those qualities to the test. STRATEGIC IMPERATIVES AD OWNAnd,LO in spiteAD of the challenging competitive landscape, we continued to build on During 2012, we made significant progressXT VE E our long track record of growth and innovation.G Our 2012 results demonstrated our against our strategic objectives across all

staying power and the strength of our asset mix, and send us intoRE 2013 withLIABLE a segments of our business. CURE reinvigorated growth trajectory. LI INSP INSPIRE NETWORK TUNEDeliverTUNE DifferentiatedS End-to-End Customer Experiences

REEDOMCONNECT NE SE RELIABLE SECUREIn support of our leading wireless networks, LI DELIVERING RESULTS no shortage of challenges, it was one where Rogers continues to offer the largest selection In 2012, we grew revenues to a record $12.5 we grew stronger as the year progressed and CONNECT of LTE devices, putting the industry’s newest

INSPIRE ACCESS VE SUbillionRF and adjusted operating profit to a new we are now well positioned for 2013. and fastest technology in SEthe hands ofCU our RE height of $4.8 billion. As a result of the INSPIREcustomers. We launched another industry SEcontinuedCURE top-line growth, combined with A FOCUSED STRATEGY FOR IR first, Rogers One Number, an IP-based service significant efficiency gains, our margins CONTINUED GROWTH CONNEC that offers Canadians the opportunity to CONNexpanded, pre-taxEC freeT cash flow exceeded At Rogers, our purposePO is to easily connectST S

extendE their Rogers wireless phone number to $2.0 billion, and adjusted earnings per share customers with what matters most by their computer, tablet and home phone, grew by 8%. We also met or exceeded all of leading the enablement of seamless, easy- LI

INSPIRSE E TUNES allowingLI them to text, talkINSPIR and video chat E our financial guidance targets that were set to-use communications, entertainment, C information and transactional experiences with other Rogers One Number users from G

FE FAST early in the year. SECURE CURE ONN anywhere. And our new Rogers Anyplace TV across any device, place or time. FE Our healthy cash flow enabled us to INSPIRE IN Mobile app gives customers access to an even

ST Our commitment to innovation, to being comfortably make the capital investments CONNECT wider rangeSE of news, sports,CU movies, episodicR E necessary to maintain our network first, and to having superior networks has

andST children’s video content on their Rogers

INSPIRalways been the foundationE of Rogers’ AK YL leadership position and for our Board to raise smartphoneBR or tablet.EATHTAKING ourRE quarterly dividendLIABLE by 11% early in 2012. success – and I’m as convinced as ever,XT We also partnered with SAP to wirelessly and In all, Rogers returned more than $1.2 billion LIlookingFE STout atYL the continuedE wave of EC YL E technology advances that are changing broadly deploy enterprise applications that of cash to shareholders during the year in a THT DOWNLOAD UPalmostLO every aspectAD of life today, that leverage SAP’s mobile platform. This exclusive SEcombination ofCURE dividends and share C ONNECT bringing innovation to our customers is what new offering will help simplify the way buybacks. And, in February 2013, our Board EA POST organizations mobilize their workforce by

the future of this company is all about. E authorized a further 10% dividend increase, T RELIABLE SECURE helping employees gain real-time access to

effective immediately. As I illustrate in the chart at the end of thisBR INSPIRE NE enterprise mobile applications on tablets and letter, there are six key long-term strategic LIFESTYLE TUNE At the same time, the underlying trends of smartphones that were once limited to ONNECT objectives that form the pillars of our growth in our business continued unabated desktop computers. with smartphone sales, wireless data usage mandate: 1) Deliver differentiated end-to-end RELIABLE We significantly evolved our TV offering with and our broadband customer base all customer experiences; 2) Expand our services INSPIR

C LI TUNES INSPIRE NETWORKreach; 3) Maintain industry-leadingST networks;REAMIN the launch of our NextBox 2.0 suite of cable G growing to record levels. Overall, our results television features and upgraded set-top box 4) Strengthen the customer experience; 5) T ONN in 2012 reflect healthy continued subscriber FE capabilities. These redefine the home LIFESTY and financialBR EAgrowth,THT and the returnAK of INGImproveSHAR productivity andE cost structure; and entertainment experience and give customers significant amounts of cash to our 6) Drive future growth opportunities. EC

ST full control over where, when and how they shareholders. While it was a year with CONN SURFview their favourite live and recorded EC YL DOWNLOAD RELIABLE CURE SECU 02 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT E ONN E T CONN SE STREAMINGACCESS C A W E SE CO LI WA FE ST N AMIN

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”Overall, our results in 2012 LI REFLECT HEALTHY continued

LO subscriber and financial growth, and the return of G

Fellow RF FE D SS NN INSPIREsignificant amountKING s of cash to our shareholders. AD

While it was a year with no shortage of challeST RE nges, TA SU AC RELI

Shareholders, XT it was one where we grew ST stronger as the year FREEDO SU EC CE TH SE RELIABLEST RE progressed and are now well positioned for 2013.” CE SECURE

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LIVE E INSPIRE LIABLE T UNES AMIN RELIUP ABLE POST INSPIRE LO LIFESTprogramming.YL AsE well, customers now have a generation wirelessINSPIR technology that enables With these acquisitionsE and agreements in significantly enhanced interactive program unparalleled connectivity, capable of speeds place, City’s television reach has increased to AD OWNguideLO and ADsearch functionality, access to of up to 150 Mbps. more than 80% of Canadian households.XT VE E whole home PVR capabilities, and the ability G In our cable business, we again Strengthen the Customer Experience to experience live TV streamed to a tablet RELIABLE CURE demonstrated Rogers’ commitment to To enhance customer flexibility, we anywhere in the home. LI INSP INSPIRE bringing world leadingNE TWInternet experiencesORK TUNEintroducedTUNE Rogers’S new FLEXtab wireless We continued to enhance our online video to Canadians by leveraging our DOCSIS 3.0 device upgrade program. FLEXtab gives

REEDOMCONNECT NE SE offering, Rogers Anyplace TV, bringing moreRE LIABLEtechnology investments.SE WeCURE turbo-charged postpaid subscribers more flexibility than ever LI live-streaming sports, local, movie and our market-leading broadband Internet to opt for an early wireless device upgrade by episodic programming than ever before to speeds across our serviceCONN tiers, includingEC T simply paying unamortized subsidy at any SURF INSPIRE ACCESS VE Rogers customers on their computers, doubling our Ultimate tier to up to 150Mbps, point during their contractSE term. CUWe also RE smartphones or tablets wherever they are. which is available toINSPIR more than 90% of ourE significantly redesigned and simplified our SECURE IR Further expanding Rogers’ “TV everywhere” cable customers today. wireless offerings andCO pricing tiers,NN reducing EC multi-screen video viewing experience, we CONNECT Overall, 2012 was anPO important yearST in complexity for our customers and improving launched an exclusive multi-screen soccer S further cementing our wireless and E the efficiency of our sales and service teams. experience through Rogers Anyplace TV and broadband network superiority, again These new wireless data-centric plans

LI , and launched Canada’s first INSPIRSE E TUNES LI INSPIRE generally offer a range of wireless data usage assuring that Rogers’ networks are amongC over-the-top sports subscription service, allowance and data plan sharing options, G

FE FAST SEtheCURE best and fastest in the world. CURE Sportsnet World Online. ONN combined with unlimited voice and text, to Expand Our Services Reach FE INSPIRFor the business customer, we launchedE IN meet the varying needs of our increasingly ST CONNECT During 2012, we expanded Canada’s first Internet-centricSE customerCU base. RE Session Initiated Protocol Trunking, a new wireless LTE 4G broadband network to IP-based voice solution for enterprises ST To further strengthen the customer INSPIRapproximately 60%E of the Canadian AK YL designed to complement our fibre-based experience,BR weEA recentlyTHT launched twoAK highlyIN G RELIABLE population, a footprint which we’llXT continue Internet and WAN connectivity services. By LIFEto rapidlyST expandYLE in 2013. successful new programs, Rogers TechXpert

merging voice services with a business data EC YL E and Rogers Move Concierge. TechXpert is a

THT DOWNLOAD network, SIP Trunking solutions dynamically UPWeLO also embarkedAD on a strategic initiative to 24/7 premium technology support service for SEallocate bandwidth,CURE as needed, to support fully migrate our broadband cable network C ONNECT our customers’ computers and other

EA POST voice and/or data needs, depending upon to all digital, and ultimately to all IP. This is connected devices – including products and E T RELIABLE SECUREcapacity requirements during peak hours, and part of our roadmap to providing even richer software that are built and sold by other BR

also provide a platformINSPIR for next generation customer experiences,E such as significantlyNE manufacturersLIFE orST retailers.YL A personalE TU NE IP-based video, mobile and productivity more high-definition content, even faster technology expert is instantly available by ONNEapplicationsCT and services. Internet, and other future IP-based services, phone or online chat who can remotely to more customers and to more screens Maintain Industry-LeadingRE NetworksLIABLE access customers’ computers and other and devices.

In our wireless business, we made great devices to identify and resolveINSPIR typical but INSPIRC LI E NETWORK TUNES STREAMING strides implementing the strategic network In our Media group, we took a number of often frustrating issues. Concierge is a free T ONN FE transformationBREA weTHT set in motionAK late INin 2010G decisive steps to geographically expand City service that gives customers a dedicatedLI FESTY to an all IP infrastructure. At the core of this SHARtelevision network acrossE Canada. We go-to point of contact during the moving

transformation, and as mentioned above, is launched City , signed long- process to make sure all theirEC Rogers services ST CONN the continuing deployment of Canada’s first term affiliate agreements SUin Western Canada,RF are up and running in their new home. LTE network. LTE is a highly advanced next and most recently launched City Montréal. EC YL DOWNLOAD RELIABLE CURE SECU 2012 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 03 E ONN E T CONN SE STREAMINGACCESS C Letter to Shareholders continued

At the same time, to energize the Rogers co-operate on global M2M business GIVING BACK shopping experience for our wireless and initiatives supporting a single, global Delivering value for our customers and cable customers, we unveiled a new platform that multinational customers can shareholders is critically important, and store design for our stores that’s leverage to enable connected devices in giving back to the communities where we do centered on a more personalized and multiple countries. business is one of our core values. Early in 2012, we launched Rogers Youth Fund, an integrated service approach. To deepen our multi-product presence in important initiative in support of Canadian While we have made significant strides in millions of Canadian homes, we’ve also youth and education. This represents Rogers’ strengthening the customer experience developed and commercialized Rogers Smart national commitment to help Canada’s at Rogers, we have much more to do to Home Monitoring, an advanced real-time at-risk youth overcome barriers to education, consistently deliver a simple and flawless home monitoring, automation and security empowering them to succeed in the experience for our customers, and this is a service. Smart Home Monitoring, which classroom and beyond. Later in the year, we journey we’re committed to. leverages our wireless and broadband further supported this initiative with the Improve Productivity and Cost Structure networks for redundant connectivity, allows launch of Rogers’ new Employee Volunteer We successfully implemented a number of for remote access, monitoring and control of Program, which provides a company- cost management and productivity the home from Internet-connected sponsored opportunity for everyone at improvement initiatives across the business computers and smartphones, as well as real- Rogers to get behind volunteering and the during 2012. These initiatives enabled us to time alerts and remote video viewing. Rogers Youth Fund. make significant additional investments in We also had good success growing our wired While we made tremendous strides in our our customers, while at the same time telephony revenues from the business business during 2012, it was a tough year expanding margins and operating leverage. segment, where we grew Internet and and no one felt that more than the The priority was on intelligent efficiency telephony revenues from the small business thousands of talented, hardworking gains and focused execution, including segment by 24% and the on-net next employees across Rogers. I’d like to express reducing the number of initiatives we generation portion of our enterprise segment my gratitude to each of them for their undertake, consolidating work and reducing revenues by 27% in RBS. And we launched incredible efforts and dedication. duplication, tightening our entire supply unique solutions to support these customers, A few weeks ago, Rogers was recognized at chain, eliminating calls into the call centre, such as the exclusive availability of OutRank, the prestigious 2013 Investor Relations and enhancing our discipline around a best-in-class online marketing solution that Magazine Canada Awards with the award discretionary spending. This is an ongoing simply and affordably helps small businesses for Best Investor Relations by a Technology or process that will allow us to invest in develop an online presence with website Telecommunications Company. We work strengthening the value we deliver to our development, paid search marketing, search hard at Rogers to be transparent and customers. engine optimization and a performance responsive with the investment community, dashboard. We continue to invest in a and take pride in this recognition – which I Drive Future Growth Opportunities number of other cross-platform believe is a measure of our sincere We made solid steps in continuing to develop opportunities to take advantage of the shift commitment to long-term value creation and deploy products and services under our in advertising dollars that is occurring from on behalf of our shareholders. growth initiatives, including the historic first traditional to digital forms of media. SIM-based mobile payment transaction ever As we announced in February 2013, after processed in Canada. Together with CIBC, We took another large step forward in our 13 years at Rogers and more than 30 years we established Canada’s first mobile strategy of being Canada’s sports content in the telecom industry, I will be retiring as payment solution. This allows Canadians to leader with our 37.5% investment in Maple the President and CEO in 2014. The Rogers Board has undertaken a process to appoint pay for purchases with their CIBC credit card Leaf Sports & Entertainment Ltd. MLSE owns a successor, I fully expect a smooth and at the checkout counter of businesses across the NHL Maple Leafs, NBA Raptors, MLS seamless transition, and right now I am the country where contactless credit card Toronto FC and a number of other iconic wholly focused on the continued execution payments are already accepted using a NFC- sports related assets, and the investment of our plan during 2013. enabled Rogers smartphone. greatly advances our strategy of delivering highly sought-after content anywhere, I am as enthusiastic as ever about the Rogers has also been at the forefront of anytime, on any platform across our future for Rogers and, on behalf of Rogers’ laying the foundation and developing the broadband and wireless networks. employees, management and Board of ecosystem to allow M2M wireless We quickly followed the MLSE investment Directors, thank you for your continued communications to continue to rapidly investment and support. expand in Canada. To turbo-charge the with the acquisition of theScore Television already significant M2M opportunity, we Network - a national specialty TV service and formed an alliance with international mobile Canada’s third-largest specialty sports channel operators KPN, NTT Docomo, SingTel, that provides sports news, information and Telefónica, Telstra and Vimpelcom to highlights, and live event programming.

Nadir Mohamed, FCA President and Chief Executive Officer Rogers Communications Inc.

04 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT Strategic Objectives and Value Drivers

At Rogers, our purpose is to easily connect customers with what matters most. Our vision is to be known for leading the enablement of seamless, customer-driven communications, entertainment, information and transactional experiences across any device, place or time.

DELIVER INDUSTRY-LEADING SHAREHOLDER RETURNS

Our mandate is to deliver long-term value and industry-leading shareholder returns. To sustain our lead as the top integrated communications and media company in Canada, our actions and investments are guided by the following six long-term strategic objectives:

DELIVER DIFFERENTIATED MAINTAIN INDUSTRY-LEADING EXPAND OUR SERVICES REACH END-TO-END CUSTOMER NETWORKS EXPERIENCES

Focus on evolving our cross-device Reinforce our fastest and most reliable Expand the reach of our networks and integration to enable seamless, reliable networks by expanding our LTE services through new construction and and easy-to-use experiences anytime, network to a wider proportion of the targeted acquisition that complement anyplace and anywhere; on delivering Canadian population, continuing to our existing platforms; by more widely a differentiated range of devices and increase broadband Internet speeds, deploying products and services; and device-related services; and on enabling and further enhancing our TV platform by expanding the reach of key media greater integration of our media assets with next generation features and brands nationally and across our digital across screens. functionality. platforms.

STRENGTHEN THE IMPROVE PRODUCTIVITY DRIVE FUTURE GROWTH CUSTOMER EXPERIENCE AND COST STRUCTURE OPPORTUNITIES

Constantly improve the experience Continue to focus on cost-optimization Continue to develop targeted new that customers have using our products initiatives and organizational efficiency growth areas of our business, including and services by making it easier for by improving service delivery; reducing machine-to-machine communications, them; providing the tools and resources complexity; focusing on fewer, more mobile commerce and video, sports, customers need to use our products impactful projects; managing expenses, business communications services, local with confidence; being attuned to and working closely with key suppliers. and digital media services, and home our customers’ evolving needs; and automation. continuing to simplify our product offerings.

For a detailed discussion of our strategic goals and objectives, see the “Our Strategy” section in the accompanying MD&A later in the report.

2012 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 05 06 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT Experience... Being boundlessly connected

Rogers knows that no matter where its customers are, being in touch with friends, family and colleagues makes their lives more connected. And being connected anytime, anywhere, to the information and entertainment that matters most makes life easier and more enjoyable.

That’s why, around the city or around the world, millions of Canadians rely on Rogers to keep them connected, and to put the Internet in their pockets with the most advanced wireless services, blistering-fast speeds, and seamless coverage.

With Canada’s first next-generation LTE wireless network – the global gold standard in wireless network technology – Rogers makes “place-shifting” a reality so customers can connect to their communications, information and entertainment from almost anywhere, easily and seamlessly. Rogers is enabling a shift to where watching TV on the train, conducting a virtual white-boarding session from the beach, disarming a home monitoring system from a smartphone, or answering a home phone from 5,000 kilometres away are becoming everyday activities. With Rogers, customers no longer have to pick up the phone to check their voicemail; they don’t need to be in town to catch their local news; and they don’t have to be at their PCs to access their e-mail.

Businesses no longer need to work in traditional offices, because Rogers helps them to quickly set up virtual workspaces, with complete access to customers, colleagues, files and corporate applications, so they are as productive on the road as they are in the office.

Customers know that Rogers makes it seamless and easy to connect with the same personalized information, communications and entertainment experiences no matter where they are – at work, at home and away, travelling to any of more than 200 countries around the world. And they know that only Rogers is there first with innovative new services, such as Rogers One Number, which allows them to switch calls among their wireless device, computer, and home phone without interruption; manage e-mails, text messages and voicemail; hold live video chats; and combine and sync contacts from across multiple devices – no matter where they are.

HOME WIRELESS SMARTPHONES MOBILE & BUSINESS VOICE & DATA & TABLETS INTERNET TELEPHONY

REMOTE HOME SOCIAL MEDIA ANYWHERE MOBILE MONITORING & & NETWORKING TV VIEWING COMMERCE AUTOMATION

2012 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 07 Experience... THE CONNECTED HOME OF TOMORROW, TODAY

Rogers continues to define how families come together and connect with their world. Millions of Canadians depend on Rogers to keep them informed, connected and entertained with a combination of the fastest Internet speeds and the most innovative television, telephony and home monitoring solutions available.

At the core of Rogers’ connected home strategy is providing customers blistering-fast broadband connections together with the ability to seamlessly shift – to shift time, to shift screens and to shift places so they access what they want, when they want, on the screen of their preference.

Rogers offers the best in on-demand, sports and movies and episodic, specialty, multicultural and high-definition programming. Customers can then schedule, pause, rewind and view content on demand, search content and control their PVR remotely from their smartphone, and stream programming to their tablet anywhere in their home. And they can access television and movie content on demand from anywhere by laptop or smartphone using the Rogers Anyplace TV app.

Television has never been this good, this easy, or this much in customers’ control. And it’s even better when combined with innovative Rogers features, such as the ability to screen phone calls on the TV screen, listen to voicemail on the tablet, or receive talking text messages on the home phone. Wireless customers can also use Rogers One Number to switch calls among their computer, home phone and wireless device without interruption; manage e-mails; text messages and voicemail; hold live video chats; and combine and sync contacts from across multiple devices.

When they’re not at home, customers now also rely on Rogers Smart Home Monitoring, a complete monitoring, automation and security solution that includes the most innovative technology and features available. Smart Home Monitoring lets customers monitor, control and receive alerts by smartphone or online, staying connected to their home from almost anywhere, and enjoying the peace of mind that comes with having the most reliable monitoring solution available. Smart Home Monitoring also gives customers the ability to automate lights, appliances, thermostats and more, so they know their homes are not only secure but more energy-efficient and convenient, too.

BROADBAND HOME WHOLE HOME HOME & INTERNET TELEPHONY PVR MOBILE E-MAIL

CATEGORY- ON-DEMAND HOME ANY SCREEN LEADING MEDIA DIGITAL MONITORING TV CONTENT CONTENT & AUTOMATION

08 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT 2012 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 09 10 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT Experience... BUSINESS WHEN TIME AND DISTANCE BECOME MEANINGLESS

In today’s fast-paced digital world of business, the ability to communicate and access information anytime, anyplace is a competitive advantage that business professionals look to Rogers to provide. Rogers helps businesses define how to win in the digital world and ensures the information that drives commerce forward is always on hand. Rogers provides a single reliable source for advanced business-focused voice, Internet and data networking solutions designed specifically for the most demanding of wireless and wired commercial requirements.

Businesses across Canada rely on Rogers for its national wireless network, world-leading LTE technology, seamless global connectivity, and the broadest array of wireless applications and devices, because they know that their mobility and remote connectivity needs are always covered with the most advanced solutions available. Because Rogers knows how businesses work, we also offer an array of specifically designed plans and options that allow users to share buckets of voice and data, connect directly with team members, establish wireless backup for point-of-sale and other systems, and roam frequently with cost certainty.

For hundreds of thousands of smaller businesses located in and around Rogers’ cable footprint, Rogers offers a compelling set of wired telephony and Internet solutions that provide enterprise-grade dependability and value. With voice, data, hosting and online security solutions built specifically for business, Rogers provides a single reliable source for innovative, dependable communications solutions that are backed up by around-the-clock live agent support.

Larger enterprises also increasingly rely on Rogers to deliver corporate-critical voice, Internet and data networking solutions across its fibre optic network that connects thousands of commercial and municipal buildings. These next generation on-net services for enterprise customers are backed by dedicated, around-the-clock support and connectivity to Rogers’ high-speed national fibre optic backbone that provides redundancy as well as seamless connectivity into the United States and Europe.

Businesses across Canada also connect with customers through Rogers’ leading broadcast and print media brands as their one-stop solution for all their local and national radio, television, online and print advertising needs.

ADVERTISING WIRELESS BUSINESS MOBILE INTERNET MEDIA VOICE & DATA TELEPHONY & E-MAIL SOLUTIONS

VIRTUAL VIDEO BUSINESS IP DATA OFFICE CONFERENCING SOLUTIONS NETWORKING

2012 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 11 Experience... INNOVATION AT THE SPEED OF LIFE

Innovation and a drive to be first to deliver the most advanced communications and entertainment services available is at the very core of what Rogers stands for. As one of the first carriers in the world to offer the communications “quadruple play” of wireless, television, Internet and telephony services over its own networks, few have more experience or success in enabling subscribers to seamlessly shift their experience across screens.

Canadians know to expect the fastest, coolest and most innovative technology and services from Rogers. With the combination of our advanced next generation national wireless network, our powerful broadband cable infrastructure connecting millions of homes, and our array of category-leading media assets, Rogers is in a unique position to continue to define how Canadians connect.

Rogers has a long history of firsts, including the first cellular call in Canada, the first high-speed cable modem service in the world, the first digital cellular network in North America, the nation’s first video on-demand service, Canada’s first HSPA and LTE networks, and many more.

Recently, Rogers launched another first with its One Number service that enables customers to switch calls among their wireless device, computer, and home phone without interruption; manage e-mails, text messages and voicemail; hold live video chats; and combine and sync contacts from across multiple devices. And Rogers’ new Smart Home Monitoring service provides a complete monitoring, automation and security solution featuring the most innovative technology and features available anywhere in Canada, so customers can monitor, control and receive alerts by smartphone, staying connected to their home from almost anywhere.

Rogers continues to lead the way, introducing wireless and broadband technologies and services that fundamentally change the way customers stay in touch, informed and entertained – at home, at work and on the go – with the fastest speeds, hottest devices and most innovative applications.

Whether we’re deploying Canada’s first next generation LTE wireless networks and services, turbo-charging the broadband pipe into homes and businesses with DOCSIS cable technology, or opening up the world of digital media, Canadians know there’s one thing to be certain of – if they’re with Rogers, they’ll never miss a thing.

LEADING NEXT MACHINE-TO- MOBILE DIGITAL GENERATION MACHINE COMMERCE MEDIA NETWORKS COMMUNICATIONS

CONVERGED MOBILE HOME ADVANCED IP WIRELESS/ TELEVISION AUTOMATION SOLUTIONS WIRELINE

12 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT 2012 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 13 14 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT Experience... A CARING, SUSTAINABLE APPROACH

Rogers is committed to a broad array of community and sustainability initiatives, and is an Imagine Canada Caring Company, committing at least 1% of net earnings before taxes annually to charities and non-profit organizations through cash and in-kind donations. As one of Canada’s largest employers, caring for and giving back to our communities is vital. We support programs that are dedicated to keeping children and families nourished, safe and active – children’s education and sports, the recovery of lost children, local food banks and community safety.

Over the past year we have proudly introduced Rogers Youth Fund, a corporate initiative that supports and empowers at-risk Canadian youth through education. This represents Rogers‘ national commitment to help Canada’s youth overcome barriers to education, inspiring them to succeed in the classroom and beyond through an innovative range of educational programs that provide academic support, including after-school homework clubs, tutoring and mentoring programs, alternative schooling, and other essential tools.

We also sponsor a range of community events in support of organizations such as the Toronto Hospital for Sick Children, Easter Seals and many more. Our 39 Rogers TV cable stations produce thousands of hours of local programming involving over 29,000 community groups, donating coverage of local charitable events as well as advertising resources. And we sponsor a variety of arts and culture initiatives that highlight Canada’s artistic talent through our support of art galleries, film and television festivals, and literary awards.

As a particularly large purchaser of electronics and paper, we pay special attention to minimizing potential environmental issues. In the procurement supply chain, Rogers continually works with its partners through its agreements, relationships and code of conduct to ensure the adherence to, and enhancement of, sound sourcing, production and recycling standards. And, as a service provider to millions of customers each month, we’ve been an early and strong proponent of driving the adoption of paperless electronic billing.

Our objective is simple – to ensure the responsible, efficient use of natural resources while reducing environmental impacts and ensuring regulatory compliance wherever we and our partners operate. We also measure our own carbon footprint and undertake initiatives to reduce our greenhouse emissions where possible.

For a complete description of Rogers’ corporate social responsibility (CSR) vision, priorities, strategy and results, go to rogers.com/csr.

YOUTH LOCAL SHELTERS COMMUNITY ARTS & CULTURE EDUCATION & FOOD BANKS TELEVISION

ENVIRONMENTAL SUPPLIER CODE RESPONSIBLE WIRELESS DEVICE STEWARDSHIP OF CONDUCT SOURCING RECYCLING

2012 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 15 A W E SE CO LI WA FE ST N AMIN

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FE LIFESTY are outlinedBR inEA the tableTHT above andAK on the INfollowingG page.SHAR As well, we ECorporate Governance Committee assists the Board in developing, make detailed information on our governance structures and practices – recommending and establishing corporate governance policies and EC ST practices and leads the Board in its periodic review of the performanceC ONN of theSU Board and its committees.RF EC YL DOWNLOAD RELIABLE CURE SECU 16 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT E ONN E T CONN SE STREAMINGACCESS C A W E SE CO LI WA FE ST N AMIN

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Rogers Communications, has excellent positions in growing markets, powerful brands that stand for innovation, proven management, a long record of driving growth and shareholder value, and the financial strength to continue to deliver long-term growth.

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

Canada’s largest wireless carrier and A leading provider of communications Unique and complementary collection a leading cable television provider, and entertainment products and of leading broadcast radio and offering a “quadruple play” of wireless, services that are increasingly utilized television, specialty TV, sports television, Internet and telephony and becoming integrated and entertainment, publishing and services to consumers and businesses. necessities in today’s world. digital media assets.

SUPERIOR ASSET MIX Terrific franchises Leading NETWORKs and POWERFUL BRANDS and innovative products

Majority of revenue and cash flow is Strong franchises with nationally Leading wireless and broadband generated from wireless and broadband recognized and highly respected network platforms that deliver the services, the fastest growing segments brands that stand solidly in Canada most innovative communications, of the communications industry. for innovation, entrepreneurial spirit, information and entertainment choice and value. services.

PROVEN LEADERSHIP AND FINANCIAL STRength HEALTHY LIQUIDITY engaged employee base and flexibIlity AND growing DIVIDENDS

Experienced, performance-oriented Financially strong with an investment RCI common stock actively trades on management and operating teams grade balance sheet, conservative the TSX and NYSE, with average daily with solid industry expertise, debt leverage, significant available trading volume of approximately supported by the spirit of innovation liquidity and no material near-term 1.5 million shares. Each share pays and an entrepreneurial culture. debt maturities. an annualized dividend of $1.74 per share in 2013.

AnnualiZed dividends per share: 2007–2012 Adjusted net income AND earnings per share $3.43 Adjusted Net Income ($ IN BILLIONS) $1.58 $3.17 $1.42 Adjusted EARNINGS PER SHARE $2.94 $1.28 $2.53 $1.16 $1.00 $1.99 $1.66 $1.8 $1.6 $1.7 $1.7 $1.3 $0.50 $1.1

2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012

20 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT FINANCIAL SECTION CONTENTS

22 MANAGEMENT’S DISCUSSION AND ANALYSIS 71 Additional Financial Information 71 Related Party Transactions 23 Executive Summary 72 Five-Year Summary of Consolidated Financial Results 24 2012 Financial Highlights 73 Controls and Procedures 24 Consolidated Operating Highlights and Other Significant 73 Key Performance Indicators and Non-GAAP Measures Developments in 2012 77 Summary of Financial Results of Long-Term Debt Guarantors 26 Corporate Overview 26 Our Business 78 Glossary of Selected Terms 28 Our Network Capabilities 78 Glossary 29 Our Strategy 31 2012 Performance Against Targets 81 MANAGEMENT’S RESPONSIBILITY FOR 32 2013 Financial Outlook and Targets FINANCIAL REPORTING 81 INDEPENDENT AUDITORS’ REPORT OF REGISTERED 32 Financial and Operating Results PUBLIC ACCOUNTING FIRM 33 Consolidated Financial Results 82 CONSOLIDATED STATEMENTS OF INCOME 34 Segment Review 83 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 34 Wireless 84 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 38 Cable 85 CONSOLIDATED STATEMENTS OF CHANGES IN 41 RBS SHAREHOLDERS’ EQUITY 43 Media 86 CONSOLIDATED STATEMENTS OF CASH FLOWS 44 Corporate 87 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 45 Consolidated Analysis 87 Note 1: Nature of the Business 47 Additions to PP&E 87 Note 2: Significant Accounting Policies 48 Employees 94 Note 3: Segmented Information 49 Summary of Quarterly Results and Key Performance 95 Note 4: Operating Costs Indicators 95 Note 5: Finance Costs 95 Note 6: Discontinued Operations 51 Consolidated Liquidity and Financing 95 Note 7: Business Combinations and Divestitures 51 Liquidity and Capital Resources 96 Note 8: Integration, Restructuring and Acquisition Costs 54 Dividends on RCI Equity Securities 97 Note 9: Income Taxes 54 Interest Rate and Foreign Exchange Management 98 Note 10: Earnings per Share 55 Outstanding Common Share Data 98 Note 11: Other Current Assets 98 Note 12: Property, Plant and Equipment 56 Commitments and Other Contractual Obligations 99 Note 13: Goodwill and Intangible Assets 56 Off-Balance Sheet Arrangements 101 Note 14: Investments 57 Operating Environment 101 Note 15: Other Long-Term Assets 101 Note 16: Provisions 57 Government Regulation and Regulatory Developments 102 Note 17: Long-Term Debt 58 Wireless Regulation and Regulatory Developments 103 Note 18: Capital Risk Management 59 Cable Regulation and Regulatory Developments 103 Note 19: Financial Risk Management and Financial 59 Media Regulation and Regulatory Developments Instruments 60 Competition in our Businesses 107 Note 20: Other Long-Term Liabilities 61 Corporate Governance 107 Note 21: Pensions 62 Corporate Social Responsibility 109 Note 22: Shareholders’ Equity 63 Enterprise Risk Management 110 Note 23: Stock Options, Share Units and Share Purchase Plans 63 Risks and Uncertainties Affecting Our Business 111 Note 24: Related Party Transactions 112 Note 25: Guarantees 68 Accounting Policies 113 Note 26: Commitments and Contingent Liabilities 68 Critical Accounting Estimates 114 Note 27: Subsequent Events 69 New Accounting Standards 116 CORPORATE AND SHAREHOLDER INFORMATION 70 Recent Accounting Pronouncements

2012 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 21 MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2012

In this Management’s Discussion and Analysis (“MD&A”), we include “assume”, “believe”, “intend”, “estimate”, “plan”, “project”, the results of operations of Rogers Communications and its “guidance” and similar expressions are intended to identify subsidiaries. The terms “we”, “us”, “our”, “Rogers”, “Rogers statements containing forward-looking information, although not all Communications” and “the Company” refer to Rogers forward-looking statements include such words. Conclusions, Communications Inc. and our subsidiaries. “RCI” refers to the legal forecasts and projections set out in forward-looking information are entity Rogers Communications Inc., excluding our subsidiaries. We based on our current objectives and strategies and on estimates and refer to and report the results of our operations in four segments as other factors and expectations and assumptions, most of which are follows: confidential and proprietary, that we believe to be reasonable at the time applied but may prove to be incorrect, including, but not limited • “Wireless”, which refers to our wireless communications to, general economic and industry growth rates, currency exchange operations, carried on by our wholly owned subsidiary Rogers rates, product pricing levels and competitive intensity, subscriber Communications Partnership (“RCP”); growth, usage and churn rates, changes in government regulation, • “Cable”, which refers to our cable communications operations, technology deployment, device availability, the timing of new including cable television, Internet and cable telephony, carried on product launches, content and equipment costs, the integration of by RCP; acquisitions and industry structure and stability.

• “Business Solutions” (“RBS”), which refers to our operations that Except as otherwise indicated, this MD&A and our forward-looking offer wired telephony, data networking and IP services for statements do not reflect the potential impact of any non-recurring Canadian businesses and governments, as well as making some of or other special items or of any dispositions, monetizations, mergers, these offerings available on a wholesale basis to other acquisitions, other business combinations or other transactions that telecommunications providers, carried on by RCP; and may be considered or announced or may occur after the date the statement containing the forward-looking information is made. • “Media”, which refers to our wholly owned subsidiary Rogers Media Inc. and its subsidiaries, including Rogers Broadcasting, We caution that all forward-looking information, including any which owns a group of 55 radio stations, the City television statement regarding our current objectives, strategies and intentions, network, the Sportsnet, Sportsnet ONE, Sportsnet World television and any factor, assumptions, estimate or expectation underlying the networks, The Shopping Channel, the OMNI television stations, forward-looking information, is inherently subject to change and Canadian specialty channels, including Outdoor Life Network, The uncertainty and that actual results may differ materially from those Biography Channel (Canada), G4 Canada, FX (Canada), and expressed or implied by the forward-looking information. A number CityNews Channel; Digital Media, which provides digital advertising of risks, uncertainties and other factors could cause actual results and solutions to various websites; Rogers Publishing, which produces events to differ materially from those expressed or implied in the more than 50 consumer magazines and professional publications; forward-looking information or could cause our current objectives, and Rogers Sports Entertainment, which owns the Toronto Blue strategies and intentions to change, including but not limited to new Jays Baseball Club (“Blue Jays”) and . Media also interpretations and new accounting standards from accounting holds ownership interests in entities involved in specialty television standards bodies, economic conditions, technological change, the content, television production and broadcast sales. integration of acquisitions, unanticipated changes in content or equipment costs, changing conditions in the entertainment, This MD&A should be read in conjunction with our 2012 Audited information and communications industries, regulatory changes, Consolidated Financial Statements and Notes. The following financial litigation and tax matters, the level of competitive intensity, and the information has been prepared in accordance with International emergence of new opportunities. Financial Reporting Standards (“IFRS”) and is expressed in Canadian dollars, unless otherwise stated. This MD&A is current as of Many of these factors are beyond our control and current expectation February 14, 2013 and was approved by the Board of Directors. or knowledge. Should one or more of these risks, uncertainties or other factors materialize, our objectives, strategies or intentions Throughout this MD&A, all percentage changes are calculated using change, or any other factors or assumptions underlying the forward- the rounded numbers as they appear in the tables. Charts, graphs and looking information prove incorrect, our actual results and our plans diagrams are included for ease of reference only and do not form could vary significantly from what we currently foresee. Accordingly, part of management’s discussion and analysis. we warn investors to exercise caution when considering statements containing forward-looking information and that it would be CAUTION REGARDING FORWARD-LOOKING STATEMENTS, RISKS unreasonable to rely on such statements as creating legal rights AND ASSUMPTIONS regarding our future results or plans. We are under no obligation This MD&A includes “forward-looking information” within the (and we expressly disclaim any such obligation) to update or alter any meaning of applicable securities laws and assumptions concerning, statements containing forward-looking information or the factors or among other things, our business, its operations and its financial assumptions underlying them, whether as a result of new performance and condition approved by management on the date of information, future events, or otherwise, except as required by law. this MD&A. This forward-looking information and these assumptions All of the forward-looking information in this MD&A is qualified by include, but are not limited to, statements with respect to our the cautionary statements herein. objectives and strategies to achieve those objectives, as well as Before making any investment decisions and for a detailed discussion statements with respect to our beliefs, plans, expectations, of the risks, uncertainties and environment associated with our anticipations, estimates or intentions. This forward-looking business, fully review the “Operating Environment” section of this information also includes, but is not limited to, guidance and MD&A, including the sections titled “Risks and Uncertainties Affecting forecasts relating to revenue, adjusted operating profit, property, our Businesses” and “Government Regulation and Regulatory plant and equipment expenditures, cash income tax payments, free Developments”. Our annual and quarterly reports can be found cash flow, dividend payments, expected growth in subscribers and the online at rogers.com/investors, sedar.com and sec.gov or are available services to which they subscribe, the cost of acquiring subscribers and directly from Rogers by e-mailing a request to the deployment of new services, and all other statements that are not [email protected]. historical facts. The words “could”, “expect”, “may”, “anticipate”,

22 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 23 4% 2% 32%

RBS MEDIA CABLE ROGERS COMMUNICATIONS INC. BILLION $4.8 2012 ANNUAL REPORT 62%

, in 2012, revenue increased modestly from 2011, primarily , in 2012, revenue was positively impacted by growth to our , in 2012, 27% growth of next-generation revenue was offset 2012 CONSOLIDATED ADJUSTED OPERATING PROFIT BY SEGMENT (%) WIRELESS websites are notAdditional a information part ofreporting on and and Rogers’ notcommunications corporate incorporated corporate and into social governance, media thisrogers.com/investors. responsibility along MD&A. industry terms, with can a also glossary be found of at To drive future growth opportunitiesfor aligned advanced with mobile consumer demand Imperial data applications, Bank together ofmobile with the payment Commerce Canadian solution. (“CIBC”),with It we their allows CIBC launched consumerssmartphone. credit to Canada’s This card pay is first using one forthe of a world. purchases the compatible first Rogers solutions NFC-enabled of itsAt kind Cable anywhere in Internet subscriberdeclines. base, The whichpromotional increase was programs designedand partially in Internet to subscribers offset to encourage Cable term contracts movement by and higher-end revenue ofCable tiers. market cable demonstrated reflects itsexperiences our to commitment Canadians to mix90% by bringing of increasing of speeds its leadingtier across footprint, Internet to approximately including 150 doubling MbpsHome the and edition speed unveiling application of NextBox forTV 2.0 our tablets and and providing Internet Ultimate experience. Rogers a anyplace seamless converged TV At RBS by a 32% plannedRBS decline revenue in legacy of revenue 13%.services for The enabled an shift RBS overall decline toprofit. to in Focusing higher generate on margin 3% the next-generation higherSIP growth margin Trunking IP in voice IP solution services, adjusted for RBS operating its launched enterprise a customers. new At Media driven by growthcontinued weakness in in ourfrom economic the softness sports and advertising shifting properties. sales trends in Media market advertiserMedia spending. that experienced made stemmed a purchasing further theScore investments televisionseason network in and all-star completing first-class calibrepositioned several content player off- to offerings, acquisitionsenvironment. at monetize the on BlueWe Jays, have future a to healthy balance changesperspective. be sheet from With both in a anDecember leverage and 31, investment the a 2012, liquidity grade ourtimes debt-to-adjusted-operating-profit economic rating and ratio we for is have available 2.3 in the liquidity of cash, year $3.1 $900 billion, ended million withsecuritization $213 available million program, through and ourmulti-year all bank new credit accounts of facility available receivable our at December $2.0 31, 2012. billion fully committed 3% 26% 13%

RBS CABLE MEDIA BILLION $12.5 , in 2012, strong data service growth and ongoing 58%

2012 CONSOLIDATED REVENUE BY SEGMENT (%) WIRELESS Our strategy requiresservice continued offerings capital to maintain investmentsbe our and industry the innovative leadership first andend-to-end in continue supported to experiences Canada to our to customers. deliver seamless,At easy-to-use Wireless and reliable increases to ouryear subscriber base, over resulted year.bringing in Wireless smartphone revenue penetration growth activated tobase. of nearly 69% 2% of 2.9 the million postpaid subscriber smartphones, We continue to focusdesires on of innovation our to customers meetproviding as the customers technology changing with evolves. needs ground-breakingart We and solutions are and products committed state-of-the- at to fastest home Wireless and technologywith for available the in businesses. expansion of the Weof our hands television put LTE of network, and the ourAnyplace created Internet newest advanced TV, customers experiences conversion and made withdeliver significant Nextbox investments the 2.0 togeneration and fastest our IP Rogers based Cable Internet solutions networkwe to speeds our to completed enterprise the available, customers. jointEntertainment In addition, to acquisition offered further of enhancing more our 37.5% sports of content next- Maple offerings. Leaf Sports & We are onemedia companies. of Through Canada’s ourCable, RBS four leading and operating Media diversified – segmentsand we – communications provide wired a Wireless, broad and voice rangespeed of and services: Internet, wireless dataservices telephony, communications, to cable wired businesses. television,broadcasting, televised telecom We high- shopping, sports are and entertainment,and digital also consumer, media, data trade active and networking operations professional in and publications. sales television Almost are all indiversified and workforce of Canada, approximately supported our radio 24,500 by employees a strong. highly skilledThe and Canadian telecommunicationssubject to and various mediadiscussed regulatory later industries in controls this are MD&A. andseen Over the competitive both past a dynamics few years,generation as the shift industry has wireless towardtelecommunications services vertical and technologies premiumtraditional media integration, content and and across newly a both our developed innovations migration corporate platforms. strategy Wefocusing to to to continue on to thrive next growing evolve deliver revenue in areas this and of operating our smartphoneservices aligned business, environment penetration, with including transforming by consumer and wireless demands. data offering products and 1. EXECUTIVE SUMMARY ADDITIONAL INFORMATION Additional information relating toCircular, Rogers, including Annual our Information quarterly Information results, Form,sedar.com and may or sec.gov. discussions Information be contained of in found or connected our to online these 2012 at rogers.com/investors, MANAGEMENT’S DISCUSSION AND ANALYSIS

2012 FINANCIAL HIGHLIGHTS CONSOLIDATED OPERATING HIGHLIGHTS AND OTHER SIGNIFICANT DEVELOPMENTS IN 2012 Years ended December 31, In 2012, we continued to focus on achieving our strategic objectives. (In millions of dollars, except per share amounts) 2012 2011 % Chg The following operating highlights are on a consolidated basis. Detailed operating highlights for each of our business segments are Consolidated provided in their respective sections later in this MD&A. Revenue $ 12,486 $ 12,346 1 Adjusted operating profit(1) 4,834 4,739 2 • Generated moderate revenue growth of 2% in the Wireless Adjusted operating profit margin(1) 38.7% 38.4% segment, 1% in the Cable segment and 1% in the Media segment, with consolidated annual revenue increase of 1% led by strong Net income from continuing data revenue increases at Wireless and Internet revenue increases operations 1,732 1,590 9 at Cable. Adjusted operating profit rose 2% to $4,834 million, with Adjusted net income(1) 1,788 1,736 3 adjusted operating profit margins of 39% resulting from revenue Diluted earnings per share - increase and cost efficiencies. continuing operations 3.32 2.91 14 • Revenues from wireless data services increased 17% to $2,722 Adjusted diluted earnings per million, from $2,325 million in 2011. share(1) 3.43 3.17 8 • Postpaid wireless subscriber growth continued with net additions (1) Pre-tax free cash flow 2,029 1,973 3 of 268,000. After-tax free cash flow(1) 1,649 1,874 (12) • Cable grew high-speed Internet subscribers by 71,000 and cable Wireless telephony lines by 22,000, while basic television and digital cable Revenue $ 7,280 $ 7,138 2 households decreased by 83,000 and 9,000, respectively compared Adjusted operating profit(1) 3,063 3,036 1 to 2011. Adjusted operating profit margin • Increased pre-tax free cash flow, defined as adjusted operating as a% of network revenue(1) 45.6% 46.0% profit less property, plant and equipment (“PP&E”) expenditures, Cable and interest on long-term debt (net of capitalization), by 3% from Revenue $ 3,358 $ 3,309 1 2011 levels to $2 billion due to a 2% increase in adjusted operating Adjusted operating profit(1) 1,605 1,549 4 profit offset by modestly higher PP&E expenditures. Adjusted operating profit margin(1) 47.8% 46.8% • Completed the joint acquisition of a net 75% equity interest in RBS Maple Leaf & Sports Entertainment (“MLSE”) from the Ontario Revenue $ 351 $ 405 (13) Teachers’ Pension Plan. MLSE is one of Canada’s largest sports and entertainment companies which owns and operates the Air Canada Adjusted operating profit(1) 89 86 3 Centre, the NHL’s Toronto Maple Leafs, the NBA’s Toronto Raptors, Media the MLS’ Toronto FC, the AHL’s and other real Revenue $ 1,620 $ 1,611 1 estate and entertainment assets. Rogers’ net cash investment was Adjusted operating profit(1) 190 180 6 $540 million, representing a 37.5% equity interest in MLSE.

(1) As defined. See the section “Key Performance Indicators and Non-GAAP Measures”. Non-GAAP measures should not be considered as a substitute or alternative for ADJUSTED EPS operating income, net income or earnings per share in each case determined in ($) accordance with IFRS.

$2.96 $3.20 $3.45

2010 2011 2012

24 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 25 Media Cable & RBS 131 180 190 3,1731,459 3,036 1,635 3,063 1,694 2010 2011 2012 2010 2011 2012 $1,821 $2,127 $2,142 ROGERS COMMUNICATIONS INC. ADJUSTED OPERATING ADJUSTED OPERATING PROFIT BY SEGMENT (In millions dollars) of ADDITIONS TO CONSOLIDATED PP&E (In millions dollars) of Wireless Media 2012 ANNUAL REPORT RBS Cable 452 405 351 6,9733,190 7,1381,461 3,309 7,280 1,611 3,358 1,620 2010 2011 2012 2010 2011 2012 $17,033 $18,362 $19,618 REVENUE BY SEGMENT REVENUE BY (In millions dollars) of CONSOLIDATED TOTAL ASSETS (In millions dollars) of Wireless nd rate by 11% from $1.42 to $1.58 per Class Apaying Voting out and $803 Class million incancellation B dividends 9.6 Non-Voting during 2012. share million Also,returning in Class purchased $1,153 for February million B to 2012, Non-Voting shareholders during shares the year. for $350 million, 3.0% Senior Notes due 2017due and 2022. $600 The million of netamounts 4.0% proceeds Senior from outstanding Notes the under offeringgeneral Rogers’ were corporate used purposes, bank to includingin credit repay funding MLSE. facility Rogers’ investment and for December 31,sources 2012, of secured furtherfunding funding was supplementing by received up on ouryear-end. January to 14, $900 liquidity 2013, subsequent million to and and the the 2012 initial facility that will maturecredit in July facility 2017. ItDecember replaces that 31, Rogers’ 2012, prior was there bank werebank no scheduled advances credit outstanding to underequivalents the facility expire and which, inaccounts the together July committed with 2013.$3.1 receivable billion funding our of At available liquidity. cash securitization available and under program, cash the of 10% provided inClass the A for annualized Voting and dividend Classto B rate Non-Voting be from share, paid effective $1.58 in immediately, has to quarterly $1.74 amounts approved of per repurchase $0.435. of In a up addition, to the $500over renewed the million Board following of twelve RCI share months. shares on the buyback open market programtransaction with for (“Shaw”)cable the to acquire Shaw’s systempurchase in Shaw’s Hamilton,holdings Advanced in Ontario 2014. Wireless We and willspecialty also Service channel sell secure to (“AWS”) TVtropolis Shawprovision an our and spectrum one-third of interest enter option certain in intoinvestment services to negotiations in is Western expected foraspects Canada. to the of Rogers’ the total transactions net approximately are cash approved. $700 million if all and Chief Executive Officer,in Nadir January Mohamed, 2014. has Mr. decided Mohamedof to has retire Directors agreed to to workcontinue with ensure to the lead a Board theappoint seamless company a in and 2013. search orderly The committeeinternational Board search. transition and of and select Directors a will to search firm to begin an • Increased the annualized divide • Issued $1.1 billion of debt securities consisting of $500 million of • Entered into an accounts receivable securitization program on • Entered into a new, five-year $2.0 billion syndicated bank credit • In February 2013, Rogers’ Board of Directors approved an increase • On January 14, 2013, we announced a multipart strategic • On February 14, 2013, we announced that the Company’s President MANAGEMENT’S DISCUSSION AND ANALYSIS

2. CORPORATE OVERVIEW

OUR BUSINESS Established in 1960, Rogers is one of Canada’s leading diversified Our vision is to be known for leading the enablement and communications and media companies. We are publicly traded on the delivery of seamless, customer-driven communications, Toronto Stock Exchange (TSX: RCI.a and RCI.b) and on the New York entertainment, information and transactional experiences Stock Exchange (NYSE: RCI). The following chart illustrates our across any device, place or time. primary operating segments:

ROGERS COMMUNICATIONS INC.

WIRELESS CABLE BUSINESS SOLUTIONS MEDIA

We report our 2012 results by our four lines of business – Wireless, Cable, RBS and Media – which reflects how we manage our operations and measure our performance.

The following is an overview of our products and services in the four segments:

WIRELESS CABLE BUSINESS SOLUTIONS MEDIA

• Wireless products and • Programming of high- • Ethernet services over fibre • 55 radio stations services via Rogers Wireless, definition television (“HDTV”) and cable • City network Fido and chatr • On-demand programming, • Optical wave connectivity • 5 OMNI multicultural TV • Mobile Internet access including movies • Wireless access services for stations • Mobile video • Television series and events primary, bridging and back-up • Specialty channels connectivity • Application downloading • Personal video recorders • Sportsnet, featuring • Video calling (“PVRs”) • Large scale business Internet Sportsnet One, Sportsnet connectivity, including • Mobile social media • Time-shifted programming World dedicated and usage-based • Digital specialty, multicultural • The Shopping Channel • Text messaging billing services and sports programming • More than 50 consumer • E-mail • IP-hosted virtual contact • Internet services magazines and trade • Machine-to-machine centre services • Rogers Anyplace TV publications wireless applications • IP voice services leverage • • Home phone services session initiated protocol • Rogers Centre • Home monitoring • Network acceleration services

WIRELESS Wireless Products and Services

Wireless Business Wireless is Canada’s largest wireless communications service provider, 2012 WIRELESS REVENUE MIX (%) with approximately 9.4 million subscribers, representing approximately 34% share of the Canadian wireless market as of December 31, 2012. Wireless operates on the Global System for Mobile communications/High-Speed Packet Access Plus/Long-Term Evolution (“GSM/HSPA+/LTE”) wireless network technology platforms. DATA 37% Wireless is the Canadian leader in the deployment of innovative new wireless network technologies, devices and services, including being POSTPAID VOICE 52% $7.3 the first in Canada to deploy an LTE ultra high speed network that BILLION now reaches roughly 60% of the Canadian population. This, EQUIPMENT 8% combined with roaming agreements with international carriers in more than 200 other countries, helps ensure that Wireless’ customers PREPAID VOICE 3% have one of the broadest reaches of network coverage. Wireless offers voice and high-speed data services, as well as mobile devices and accessories across Canada. Services are available under either postpaid or prepaid options. Wireless’ networks provide customers with advanced high-speed wireless data services. Wireless markets and sells its services and products under the Rogers, Fido and chatr brands. An extensive distribution network across Canada includes an independent dealer network, Company-owned Rogers stores, Fido and chatr retail stores, major retail chains and convenience stores. Wireless also offers many of its services and

26 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 27 14% 13% 14% 16%

RADIO THE SHOPPING CHANNEL PUBLISHING SPORTS ENTERTAINMENT ROGERS COMMUNICATIONS INC. ble service territories. As at services to Canadian businesses rts and entertainment facility; and onal 17,600 near-net buildings. BILLION $1.6 2012 ANNUAL REPORT 40%

3%

professional publications. multicultural OMNI stations,services Sportsnet, and a specialty number of sports other specialty television channels; service; 2012 MEDIA REVENUE MIX (%) TELEVISION DIGITAL • More than 50 well-known consumer magazines and trade and MEDIA Media Business Media is Canada’s premier combinationand of category-leading radio television broadcasting,publishing and televised digital media shopping, properties. Media operates: sports• entertainment, 55 radio stations across Canada; • Several television properties, including the City• network, The Shopping five Channel, Canada’s only nationally televised shopping • The Toronto Blue Jays Baseball• Club; Rogers Centre, Canada’s largest spo Media Products and Services RBS Products and Services RBS provides voice, data,and IP and large Ethernet businesses, solutionsoffers to a governments comprehensive small, multi-service medium andover suite of financial next an generation institutions.network services extensive backbone. RBS Services national areforce, sold high-speed through a wholesale fiber, directchannel enterprise carrier cable sales partners. and network Contractscustomers on wireless 1 for services to 5 services year team terms. areOptical and Wave, typically Internet, third-party signed Ethernet(“MPLS”) and with services Multi-Protocol Labelservices are Switching provide all scalablenetworking marketed and that enable under secure and interconnect Metrofor the critical businesses business and that applications RBS have Wide oneof or brand. Area presence multiple (as offices, private These data well centres asare or cloud backed points applications) by across Canada. comprehensiveproduct RBS Service offerings services Level include Agreements. innovativeCable, Recent offerings SIP RBS such (“Session asVirtual Ethernet Contact Initiated Centre. over Protocol”) Trunking andAll cloud RBS based servicesdevices that are allow deployed customersNetworking, to over scale and a Internet, addseamlessly multiservice services IP such scale customer as to Private access Voicebusiness address applications. increasing (SIP) demands of and today’s real-time Cloud solutions that delivers leading-edge communications principally inDecember and 31, around 2012,buildings, Rogers’ RBS a Ca growth servesfibre of passes over 4% adjacent to 5,500 over an additi the on-net previous fibre year. connected In addition, RBS’ 30% 14%

INTERNET HOME PHONE cated, enterprise-focused unit ned retail locations. Accordingly, etworking and Internet protocol Current and prior period results enterprises, the public sector and ed as discontinued operations for nclude our Video business and the ffered DVD and video game rentals BILLION $3.3 56%

(%) 2012 CABLE SERVICE REVENUE MIX TELEVISION (“IP”) solutions to medium andcarrier large market segments. This dedi RBS provides business telecom, data n RBS RBS Business Cable offers aoffering, richly including a featured comprehensive and rangeand of advanced highly television features programming competitive likeonline HDTV. digital destination Rogers video Anyplace for TV, specialtyweb-only Canada’s TV first extras, programming, is movies,with sports offered Cable and customers to getting additional allcontent access based Rogers to specialty on customers andsubscribers their movie across to cable access Canada, TV subscription. programmingstream online This new and releases service for and users allows an tocarte extensive Cable rent library basis, and of all titles of onlinecomputers, on which tablets an and can à smartphones. be la accessed viaCable most also Internet-connected offersbroadband, Internet differentiated services principally withmonthly by multiple bandwidth tiers usage capabilities oftelephony and high-speed allowances. service forpackages Rogers residences include competitive and features Home such smallthree-way as calling, caller businesses. Phone in ID, addition voice-mail A to and long-distance is variety service. Cable of our markets andowned voice sells retail its stores,network services of Rogers and third products authorizedThese party through retail stores dealers locations Rogers- provide andfeatures across customers its an Rogers’ with network extensive wirelessdistribution footprint. a and channels single, cabletelemarketing, direct include and door-to products channel door rogers.com, agents. that and call services. centres, Other outbound Cable Products and Services During the secondVideo quarter store of operations, which 2012, had we o completed the closure of our and sales in manyour of consolidated our corporate-ow results no longer i accounting and reportinghave been purposes. restated to reflect this change. Cable is one of Canada’sspeed largest Internet providers access. of As cabletelevision of television and December subscribers, high- 31, representing 2012,television Cable subscribers approximately had in 2.2 31%subscribers. million Canada, of Cable and all is 1.9companies, also million cable an high-speed alternative Internet providing1.1 to million customers the under home traditional the Rogers telephone Home phone Phone brand. services to approximately products on the rogers.com,websites fido.ca and and through call chatrwireless.com centres e-business and outbound telemarketing. CABLE Cable Business results of that business are now treat MANAGEMENT’S DISCUSSION AND ANALYSIS

Media offers a diverse portfolio of products and services in five key For a glossary of industry and technology terms to complement the areas: following discussion, see the section “Glossary of Selected Terms” at the end of this MD&A. • Radio Media’s Broadcasting Group operates 55 radio stations in markets Wireless Networks and Spectrum across Canada, including popular radio brands such as 98.1 CHFI, Wireless has one of the most extensive and advanced independent 680 News, Sportsnet 590 The FAN, KISS 92.5, JACK FM and SONiC. wireless networks in Canada.

• Television In recent years, Rogers has embarked upon a strategic transformation Media’s Broadcasting Group also operates a number of to create an infrastructure that is all IP for all of our services. conventional and specialty television stations, including: Advances in technology have transformed the way Rogers’ customers interact and how they use the variety of tools that are available to • City network, which together with affiliated stations, has a them in their personal and professional lives. In addition, technology distribution to approximately 80% of Canadian households; has also changed the way businesses operate. • OMNI multicultural television stations; Wireless has invested in several areas to serve the changing needs of • Specialty channels that include Outdoor Life Network, The its customers. Wireless network nodes are interconnected using fibre- Biography Channel (Canada), G4 Canada, FX (Canada), and optic and broadband microwave transmission. New technologies have CityNews Channel; been deployed to enable unique new services, such as Rogers One Number, which makes wireless services available to subscribers on • Sportsnet, featuring Sportsnet One, Sportsnet World, and their computer, tablet, smartphone or home phone. Users enjoy the Sportsnet HD; and same services and features across the coverage area, thanks to the seamless integrated nature of the Rogers network and those of its • The Shopping Channel, Canada’s only national televised roaming partners. shopping channel with a significant and growing portion of its revenues generated from online sales. The network currently provides national coverage for HSPA+ (3. High-Speed Packet Access) with speeds up to 42 Megabits per second • Publishing (“Mbps”), and an ever-increasing coverage using LTE (4G Long-Term Media’s publishing division (“Publishing”) produces more than 50 Evolution) technology with speeds up to 150+ Mbps. The deployment publications – including many well-known consumer magazines of 4G LTE started in 2011 and provides speeds that are about four such as Maclean’s, Chatelaine, Flare, Hello! Canada and Canadian times faster than 3.5G HSPA+. Where we have deployed 4G LTE, the Business – and is a leading publisher of marketing, medical, cost to provide each megabyte of wireless data services is significantly financial and trade publications. Publishing also has a broad digital lower, and the relative capacity of the network is increased in order presence with a number of online publications and continues to to better serve the increasing base of high-end smartphones and the extend its content through new platforms. growing use of wireless data.

• Digital Media Our wireless services are supported by Wireless’ significant spectrum To support and grow the above noted aspects of the portfolio, position. Wireless currently holds: (i) 25 MHz of 850 MHz and 60 MHz Media has also invested significantly in digital media properties, of 1900 MHz spectrum used to serve 3.5G and subscribers across achieving a more than 100% year-over-year increase in unique Canada; (ii) 50 MHz of 1900 MHz spectrum in southwest Ontario, visitors, making it one of the fastest-growing Canadian networks. northern , and the Northwest Territories; (iii) 20 MHz Media is committed to growing its digital media presence by of Advanced Wireless Services (“AWS”) spectrum across Canada, extending audience engagement across online and mobile which operates in the 1700/2100 MHz range; and (iv) 40 MHz of 2600 platforms through investments in user experience and content, MHz spectrum across the majority of the country. The AWS spectrum, delivering advertising solutions for our clients, and investing in e- together with the 2600 MHz spectrum that Wireless owns, is used to commerce. provide 4G LTE services. Wireless expects to participate in an upcoming auction by the Canadian government of 700 MHz spectrum • Sports Entertainment during 2013 or 2014, which is a frequency band also used for LTE in Media’s Sports Entertainment division comprises Canada’s only Major North America. League Baseball team, the Toronto Blue Jays, as well as the Rogers Centre event venue, which hosts the Toronto Blue Jays’ home games Together with through a joint venture called Inukshuk, and other professional league games, concerts, trade shows and Wireless also owns fixed broadband spectrum in the 2300 MHz and special events. 3500 MHz range. This joint venture previously included 2500 MHz spectrum, which was distributed to the venture partners late in 2012.

OUR NETWORK CAPABILITIES Rogers previously implemented a network-sharing arrangement with Telecom Services (“MTS”) for a 3.5G HSPA+ network At Rogers, we work hard to maintain our position covering 96 percent of the population (“POPs”) across Manitoba. In as a leader in wireless and broadband networks by addition, Rogers also has a network-sharing arrangement with that allows our combined base of customers to get 3.5G continuing to invest in speed, reliability, and next HSPA+ services across Tbaytel’s northwest Ontario territory. generation features and functionality. In January 2013, Rogers announced a multipart strategic transaction with Shaw to secure an option to purchase Shaw’s AWS spectrum Our strategy is to provide long-term value to customers and holdings in 2014. shareholders by always being first in Canada to bring seamless, easy- to-use and reliable end-to-end supported experiences that leverage our network, content and assets. Our networks are critical to achieving this strategy.

28 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 29 Demonstrate our Focus on ongoing Maintain our position Select and nurture future ROGERS COMMUNICATIONS INC. Bring our LTE and Cable networks, to ensure we deliver on our mandate: 2012 ANNUAL REPORT Deliver differentiated end-to-endLeverage customer our experiences: LTEacross a and range of Cableto-use devices customer networks, experiences to anytime, enable anyplace services and seamless, anywhere. and reliableMaintain and content industry-leading easy- networks: as a leader ininvesting wireless in and broadbandgeneration speed, features networks and by functionality. reliability continually andExpand our the services reach: enablementservices of and next population content to throughupgrades, a partnerships and network greater strategic acquisitions. portion andStrengthen of service the theongoing Canadian expansion customer commitment to experience: our and customers product offerings, by retail channels, continually service investing and support. Improve in productivity and costcost structure: optimizationinitiatives and aimed atmanagement productivity and cost simplification, management. improvements streamlining, supplyDrive through future chain growth opportunities: growth opportunities thatservices leverage and content our delivery. strengthspartners Work internally in and network, to withcommunications strategic and entertainment be services inin Canada, at the including areas of the machine-to-machinelocal (“M2M”), mobile services, forefront commerce, homeservices. of automation, digital future media information, and business conservative borrowing leverage andliquidity over as $3.1 of December billion 31, of 2012. available innovative products and services. provide unique content for our communications products. across Canada, and we havewe a market our broad products. retail presence through which expertise and ourperformance based. executive compensation programs are heavily Our Capabilities to Deliver onOur Our capabilities and Strategic resources Objectives thatobjectives support include: execution on our strategic • We have an investment grade balance• Our sheet modern wireless with and broadband relatively networks allow• us to Our deploy Canadian broadcast, sports, print• and The digital Rogers media brand assets is extremely well• recognized and Our senior management respected team has significant industry and technical Media Networks Media’s principalstudios, network radio and assets televisionand transmission digital consist facilities media infrastructure. andCanadian This primarily a audiences network distribution coast allows to of Rogers coast. to reach broadcast OUR STRATEGY Our mandateshareholder is returns to by beingeasy-to-use deliver the and first long-term in reliablecustomers. Canada value to end-to-end and deliver supported seamless, industry-leading experiencesOur to actions and our investmentsstrategic are objectives that guided will by help the following1. six long-term 2. 3. 4. 5. 6. In certain cases, where Cableconnect does directly not have to its a ownprovided business local under customer’s facilities a premises, that third party the wholesale local arrangement. service is growing usage of wireless data services; significant backhaul capacity between all of its network nodes; and functionality. Cable’s expansive fibre and hybridprovides fibre coaxial consumers, (“HFC”) businesses infrastructure Brunswick and and governmentsservices, Newfoundland in Ontario, including withnetworking. New a video, range broadband ofCable’s Internet, network communications is architected voice toand optimize performance and to and reliability Internet allow data to for a consumer’soptic the premises network simultaneous over is ahighly delivery generally single concentrated configured of platform. distribution in Thecan video, fibre- rings hubs result from voice that to fibre cuts interconnect minimize and and other its disruptions events. Each that group of homesnode. is This served is commonly by calledthe a Fibre-to-the-Feeder capability fibre-connected (“FTTF”), of optical and utilizing it network 860and has MHz broadband of services to spectrum that to group deliver of video, homes. voice The network isperformance continually upgraded and toexample, introduce improve Cable capacity, continues new enhance optical to features nodes invest to in: and reducesegment; (i) the functionality. the number “segmentation” (ii) of For (iii) of homes its switched served MPEG4 in digitaldemand a for video particular capacity; (“SDV”) improvedSpecification for and (“DOCSIS”) increased video 3.0speeds channel (iv) now signal up and for to Data 150 on- increasingly Mbps compression; across Over faster 90%In of 2012, our Internet, Cable footprint. Cable began with signals transitioning Service over customers its still analog Interface broadcast receivingso channels television frees to up all-digital significant services.features cable Doing network and capacity services. for Somehome enabling recent additional PVR, offerings launched remotecontent include PVR, whole guides next andvariety search generation functionality, set-top of and boxes,consoles. video screens enhanced streaming on including a Cable’s tablets, voice-over-cable smartphones telephonyadvanced services and are broadband provisionedPacket gaming IP Cable over and multimedia an DOCSIS standards,well including network as network multi-hour redundancy network layer, and as customer premises utilizing backupOn powering. the behalf of Wireless andtranscontinental RBS, fibre-optic Cable network also operateskilometers that a extends North to over American 38,000footprint. provide route This a allowswhile Rogers also significant to reaching Northvoice key connect traffic, U.S. Canada’s American also markets known largestcoast for as geographic markets, to the peering. In coast exchange Canada,includes from of the local data Victoria, network and regional and extends B.C., fibre,hubs, to transmission electronics POPs St. and and John’s, systems, extends Newfoundland switching to and infrastructure. Additionally, theManitoba-Minnesota the U.S., border network through fromChicago; and Minneapolis, Vancouver from Milwaukee south TorontoAlbany to and through to New York Buffalo City. Seattle; andnetwork Cable has , from also with through connected the itsNew Europe North York American City. through international gateway switches in Cable and RBS Networks As part of itssignificant network capital investments strategy, to: Wireless expects to continue• making acquire additional wireless spectrum needed to support the rapidly • expand its fibre and microwave• transport network introduce to maintain innovative new network-enabled features and MANAGEMENT’S DISCUSSION AND ANALYSIS

• Our Board of Directors is aligned with and supportive of our multi-screen soccer experience through Rogers Anyplace TV and strategic plans. The Board oversees the systems and controls that Sportsnet World, and launched Canada’s first over-the-top sports we have put in place to help realize our strategic plans and the subscription service “Sportsnet World Online”. safeguarding of our assets. Media developed applications to allow Toronto Raptors fans to watch live regular season games from Sportsnet on their computers or Progress against Our Strategy and Scorecard in 2012 smartphones. In 2012, we made significant progress against each of our strategic objectives across all business divisions. Media announced the acquisition of theScore Television Network and related television assets. theScore is a national specialty TV service 1. Deliver Differentiated End-to-End Customer Experiences that provides sports news, information, highlights and live event In Wireless, we continued to offer the largest selection of LTE devices programming and is Canada’s third-largest specialty sports channel in Canada, putting the industry’s newest and fastest technology into with 6.6 million television subscribers. The acquisition builds on the hands of our customers. In addition to offering the latest in Rogers’ rich history in sports broadcasting and reinforces our iPhone, Android and BlackBerry products, our relationship with commitment to delivering premium sports content to audiences on Microsoft for Windows 8 in Canada allowed us to offer consumers their platform of choice. Media expects to take control of theScore and businesses an exclusive selection of Windows 8 Phone devices and following final regulatory approval from the Canadian Radio- the first Windows 8 tablet. television and Telecommunications Commission (“CRTC”), anticipated in the first half of 2013, and the network will be rebranded under the Wireless launched another industry first, Rogers One Number, an IP- Sportsnet umbrella. based service that allows Canadians to extend their Rogers Wireless phone number to their computer, tablet and home phone. Available Rogers completed a 37.5% investment in MLSE, advancing our exclusively to Rogers Wireless customers, this unique service lets strategy of delivering highly sought-after sports content while customers text, talk and video chat with other Rogers One Number strengthening the value of our Sportsnet brand. users, all using their wireless number. This seamless, easy-to-use solution simplifies how Canadians connect with family and friends 2. Maintain Industry-Leading Networks from anywhere they find convenient. In Wireless, we have embarked on a strategic network transformation Rogers and Wavefront opened the doors to a new Rogers Wireless to create an infrastructure that enables all IP services and accordingly, Innovation Centre in Vancouver, Toronto and Montreal. The Centre we continue to upgrade our network to LTE technology. LTE is a next fosters excellence in wireless commercialization by helping developers generation wireless technology that enables unparalleled get to market faster with innovative applications for connected connectivity, capable of speeds that are about four times faster than devices. By working with Canadian wireless application developers, HSPA+ with peak download rates of up to 150 Mbps. Rogers is able to provide new tools to enable rapid delivery of next Cable demonstrated Rogers’ commitment to bringing leading Internet generation connected devices. The Centre also serves as a learning experiences to Canadians by leveraging our DOCSIS 3.0 technology to facility, where business customers and developers can discover and increase speeds across all Rogers Hi-Speed Internet service tiers, experience the latest M2M technology and enterprise mobility including doubling our Ultimate tier up to 150 Mbps. applications.

With Wireless’ launch of the Rogers Anyplace TV Mobile app, 3. Expand Our Services Reach subscribers have access to a wide range of video content on their We expanded Canada’s first wireless 4G LTE network to cover Rogers smartphone or tablet, including CityNews, Blue Jays baseball approximately 60% of the Canadian population, complemented by games and children’s content. the largest selection of LTE devices of any carrier in Canada. Cable unveiled NextBox 2.0, a suite of new features and upgraded We announced plans to deploy enterprise mobile applications that set-top box capabilities for the Rogers’ home television entertainment leverage the SAP mobile platform. This exclusive new offering will experience that gives customers control over where, when and how help simplify the way organizations mobilize their workforce by they view their favourite live and recorded programming. NextBox 2.0 helping employees gain real-time access to enterprise mobile provides customers with a significantly enhanced interactive program applications on tablets and smartphones that are traditionally used guide and search functionality, access to whole home PVR capabilities on desktop computers. that allow people to access live and recorded TV programs from any room in the home, and the ability to experience live TV streamed to a Following its acquisition of Saskatchewan Communications Network, tablet anywhere in the home. Rogers Media launched “City Saskatchewan”. This marked another step in City television’s recent geographic expansion towards a Cable enhanced its online video offering, Rogers Anyplace TV, national footprint. With the regulatory approval of Media’s bringing even more sports, movies and episodic streamed acquisition of CJNT-TV Montreal (“Metro 14 Montreal”), City has programming to customers on their computer, smartphone or tablet expanded further into the key Quebec market. Media also announced wherever they are. that City and Broadcast Group signed long-term affiliate Cable announced the availability of Session Initiated Protocol (“SIP”) agreements that will deliver City programming to audiences on all Trunking, a new IP-based voice solution for enterprises designed to three of Pattison’s television stations in western Canada. With these complement our fibre-based Internet and WAN connectivity services. acquisitions and agreements, City’s reach will increase by more than By merging voice services with a business data network, SIP Trunking 20% to over 80% of Canadian households. solutions dynamically allocate bandwidth as needed to support voice Rogers Media launched another industry first with Sportsnews, a and/or data needs depending upon capacity requirements during channel available to Rogers digital cable customers at no additional peak hours, and also provide a platform for next generation IP-based charge that promotes sports services and content available on Rogers video, mobile and productivity applications and services. Cable. Sportsnews helps customers get more from their sports Further supporting Rogers’ commitment to the “TV everywhere” programming while providing sports related scores, statistics and multi-screen video viewing experience, Media delivered an exclusive breaking news.

30 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 31 ✓ ✓ ✓ + 2012 Missed X Guidance Achievement ROGERS COMMUNICATIONS INC. experience and engagement across nancial and operating metrics versus s the guidance ranges that we nts across web and mobile platforms. + 2,142 2,0752,029 to 1,950 2,175 to 2,050 2012 Actual $ 4,834 $ 4,730 to $ 4,915 Exceeded 2012 ANNUAL REPORT (2) ✓ (1) (3) Measures”. expenditures. See the section “Additions to PP&E”. and interest on long-termunder IFRS. debt (net of capitalization), and is not defined term flow profit Additions to PP&E Pre-tax free cash Cash income taxes 380 425 to 475 Adjusted operating Achieved Additions to PP&E To maintain ourexpanding our network LTE leadership,increasing wireless we our 4G broadband invested network.television cable Our in Internet platform focus speeds significantly to wasAnywhere” and experience. on more enhancing further our seamlessly provide a four-screen “TV Full-Year 2012 Guidance (In millions of dollars) Consolidated Guidance (1) As defined.(2) See the Includes section additions(3) “Key to Performance Wireless, Pre-tax Indicators cash flow Cable, and is defined Media, Non-GAAP as adjusted RBS, operating profit less and PP&E expenditures CorporateAdjusted Operating PP&E Profit We leveraged our leadingan networks, channels increase andcompared brands to in to 2011, deliver whichthe consolidated falls 2012 approximately guidance adjusted we in providedour the at revenue middle operating the range growth start of of trajectorydue profit the was year. generally Early to of lower inindustry. 2012, than competitive We 2% anticipated took intensity immediatemanagement action initiatives in to aimed accelerateand at the a also number offsetting put Canadian ofgrowth. in the We cost place drove top-line communications initiatives cost pressures, efficienciesand to across reaccelerate the business the reducing by rateexperience streamlining of by revenue complexity, deliveringand seamless, while reliable support. andexpenses, excluding In strengthening easy-to-use the cost services so offrom equipment the 2011 sales, levels doing, by and approximately grew 2% customer consolidated we margins to 39%. reduced consolidated operating 2012 PERFORMANCE AGAINST TARGETS The followingestablished for scorecard selected full yearactual show fi results: committed to providingrapid the delivery enterprise of tools nextand generation and market M2M platforms connectivity segments. forCorporation across We industries the that also announced willcomplexity an around accelerate alliance the theBusinesses with development and deployment developers Axeda of can and accessdeploy M2M the enterprise reduce Axeda M2M solutions Platform applications. to the in build Canada. and Our 2012 revenue growthCable of broadband 23.9% Internet in and the telephonygeneration and small 27% business in segment RBS enterprise of demonstrate on-net that next Cable and segment RBSin are these positioned areas. revenues for During continued 2012,technology growth we and compared enterprise grew mobility 37% application or business $13 segment. to millionWe in our have 2011 M2M madecontinued cross-platform advancements investme inOur our focus Digital is on Mediaour improving various properties, operations the as well user with as the back end infrastructure. a’s first mobile payment solution. ld-communication-enabled Rogers nts are already accepted. Rogers has ilable at businesses across the country 6. Drive Future Growth Opportunities Together with CIBC, we launched Canad It allows consumers to paycheckout for purchases with counter their CIBCBlackBerry. credit using This card service at the a will be ava near-fie 5. Improve Productivity and CostWe Structure successfully implementedefficiency a improvement initiatives numberwas across of on the cost intelligent Company. efficiencyreducing management The gains the and priority and number focusedand of execution, initiatives reducing including wetightening duplication, execute, our consolidating managing entirecentre, work our supply discretionary chain, andadministrative spending. eliminating spending, This calls enhancing isto an into invest ongoing in process the strengthening our that the will value call we allow deliver discipline us to our customers. around general and where contactless credit card payme been at theecosystem forefront to allow of mobileone of laying commerce the first to the solutions flourish of foundation its in kind anywhere and Canada,We in the and announced developing world. the this the exclusive is class availability of online OutRank,Canadians marketing a new, search solution best-in- onlineCanadian for for small small localbusinesses businesses businesses. services, have Millions a yetoptimization a of less and website, website. a thanprice. OutRank With performance paid 45% this offers dashboard, of solution,and search local all achieve business a owners for positive can return marketing, an on attract their new marketing affordable We investment. search customers announced an engine allianceNTT with Docomo, SingTel, international Telefónica, mobile Telstrawill operators and Vimpelcom. KPN, co-operate The alliance single, on global global platform thatenable M2M multinational connected customers business can devicesoperations initiatives leverage in to supporting and multiple a countries reduce to costs. better Rogers manage is Canada’s M2M leader, 4. Strengthen the Customer Experience We introduced “FLEXtab”,allows a postpaid wireless customers to devicepaying get upgrade the an unamortized program early subsidy wireless that their at device contract any upgrade term. point by after one month during We also redesignedtiers, and making simplified itreducing our easier the wireless complexity for offers andteams. customers service and Our times to pricing new foralong use our data-centric with our sales a plans and services rangemeet support offer the of and varying unlimited data needs also of usage voice our and customers. and dataWe unveiled plan text a sharing new options retailstores. store to concept The and new design stores forapproach, our include which Rogers a Plus is personalized parthow and of we service integrated a and service larger sell to retail our transformation customers. Cable to enhance continuedbandwidth to to repatriatethrough provide additional its HD content, abased analog faster services. Internet richer channels speeds and customer future to IP- Media experience, continued free to enhance including up Rogers’investing engagement in with sports additional fansthe payroll by for Buffalo newcontracts Blue Bills for Jays in players, distributionSlam extending of of Toronto NHL and NFL launching hockey a new series, games, eventsThrough division. purchasing signing our Grand efforts new tooverall strengthen customer long-term satisfaction the and customeryear-over-year. problem experience resolution in scores 2012, improved MANAGEMENT’S DISCUSSION AND ANALYSIS

Pre-tax Free Cash Flow As discussed in the section “Our Strategy”, we plan to meet our 2013 Largely as a result of the adjusted operating profit growth and financial targets by executing the following six long-term strategic additions to PP&E results discussed above, we delivered consolidated objectives: pre-tax free cash flow of $2.0 billion. This was within our 2012 1. Deliver differentiated end-to-end customer experiences guidance range and represented a 3% increase from 2011. This free Focus on evolving our cross-device integration to enable cash flow generation supported the $1,153 million of cash that we seamless, reliable and easy-to-use customer experiences anytime, returned to shareholders in the form of $803 million of dividends and anyplace and anywhere. Deliver a differentiated range of share buybacks totalling $350 million. devices and device-related services. Enable greater integration of our media assets across screen types. Cash Income Taxes Cash income taxes were below the low end of our targeted 2012 2. Maintain industry-leading networks range due to income tax planning and containment strategies. These Expand our LTE network to a wider proportion of the Canadian savings further contributed to consolidated free cash flow generation, population. Continue to increase broadband Internet speeds and which totalled $1.6 billion on an after-tax basis. migrate cable Internet subscribers to DOCSIS 3.0 technology. Further enhance our TV platform with next generation features 2013 FINANCIAL OUTLOOK AND TARGETS and functionality. The following table outlines guidance ranges and assumptions for 3. Expand our services reach selected 2013 financial metrics, which takes into consideration our Expand the reach of our networks and services through new strategic priorities and current outlook. This information is forward- construction, by more widely deploying products such as the looking and should be read in conjunction with the section “Caution Rogers One Number service, and by expanding the reach of key Regarding Forward-Looking Statements, Risks and Assumptions” and media brands through our digital platforms. the related disclosures; various economic, competitive and regulatory assumptions, factors and risks may cause actual future financial and 4. Strengthen the customer experience operating results to differ from those currently expected. Widely deploy Rogers’ new retail store design and service approach across our network of Rogers Plus stores. Continue to We provide annual guidance ranges on a consolidated full year basis improve our Rogers Concierge service and simplify our product and are consistent with annual full year board-approved plans. In our offerings. fourth quarter earnings release at the start of each year, we also provide full year supplemental forecast details at the operating 5. Improve productivity and cost structure segment level for both revenue and adjusted operating profit that is Continue to focus on cost optimization initiatives aimed at not part of our formal 2013 guidance and is provided for information further improving organizational efficiency, by reducing purposes only. Any updates to our full year financial guidance over complexity, focusing on fewer, more impactful projects, the course of the year would be made only to the consolidated level managing expenses and working closely with key suppliers. guidance ranges that appear below. 6. Drive future growth opportunities Full Year 2013 Guidance Continue to grow and nurture promising new growth areas of 2012 2013 (In millions of dollars) Actual Guidance our business, including M2M communications, mobile commerce, local and digital media services, home automation and business Consolidated Guidance communications services. Adjusted operating profit(1)(4) $ 4,834 $ 4,865 to $ 5,050 Additions to PP&E(2) 2,142 2,150 to 2,250 Pre-tax free cash flow(3)(4) 2,029 2,030 to 2,090 Cash income taxes 380 650 to 700

(1) As defined. See the section “Key Performance Indicators and Non-GAAP Measures”. (2) Includes additions to Wireless, Cable, Media, RBS, and Corporate PP&E expenditures. (3) Pre-tax free cash flow is defined as adjusted operating profit less PP&E expenditures and interest on long-term debt (net of capitalization), and is not a defined term under IFRS. (4) Assumes Mountain Cable and theScore close mid-year 2013.

3. FINANCIAL AND OPERATING RESULTS

For important accounting policies and estimates as they relate to the following discussion of our operating and financial results, please refer to the sections in this MD&A “Accounting Policies”, “Critical Accounting Estimates” and “New Accounting Standards”, as well as the Notes to our 2012 Audited Consolidated Financial Statements.

We measure the success of our strategies in the ongoing management of our business using a number of key performance indicators, as outlined in the section “Key Performance Indicators and Non-GAAP Measures”. Many of these key performance indicators are not measurements in accordance with IFRS and should not be considered as alternative measures to net income or any other financial measure of performance under IFRS. The non-GAAP measures presented in this MD&A include, among other measures, operating profit, free cash flow and the “adjusted” amounts. We believe that the non-GAAP financial measures (which generally exclude: (i) stock-based compensation expense (recovery); (ii) integration, restructuring and acquisition expenses; (iii) settlement of pension obligations; and (iv) in respect of net income and earnings per share, loss on repayment of long-term debt, impairment of assets, gain on spectrum distribution and the related income tax impacts of the preceding items and legislative change) provide for a more effective and actionable analysis of our operating performance.

32 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 33 7 (71) 1 n/m 17 n/m n/m – n/m 86 3 (64)(56) 20 64 (11) n/m (27) 19 405 (13) 180 6 2.912.882.86 14 14 14 (629) (8) (117) 5 (112) 1 (639) 4 (738) (10) (545) 14 2011 % Chg 3,036 1 1,549 4 1,874 (12) 3,309 1 4,608 1 2,365 – 1,611 1 2,865 (3) 2,135 10 1,590 9 (1,743) 4 (1,743) 4 $ 3.20 8 $ 7,138 2 $ 2,127 1 $ 2.93 14 operating income or net cember 31, 2012. 2 – 89 15 15 (77) (92) (80) (32) 351 190 235 3.43 3.17 8 3.32 3.28 3.26 (580) (123) (113) (664) (664) (620) 2012 3,063 1,605 2,0291,649 1,973 3 3,358 4,665 4,834 4,739 2 2,368 1,620 2,766 2,352 1,732 (1,819) (1,819) 12,486 12,346 1 $ 1,788 $$ 1,736 3.45 3 $ 4,834 $ 4,739 2 $ 7,280 $ 2,142 $ 1,700 $$ 1,563 3.34 9 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT (1)(2) (1) (1) (1)(3) (1) (1) (1) (1) (1) (1) (1) income, in each case determined in accordance with IFRS. Wireless Cable RBS Cable Wireless RBS Media Corporate items and intercompany eliminations Media Corporate items and intercompany eliminations Adjusted diluted earnings per share Adjusted basic earnings per share Adjusted operating profit Stock-based compensation expense Integration, restructuring and acquisition expenses Settlement of pension obligations Operating profit Years ended December 31, (In millions of dollars, except per share amounts) After-tax free cash flow Operating revenue Depreciation and amortization Adjusted net income before income taxes Adjusted net income Depreciation and amortization Adjusted income tax expense Total operating revenue Adjusted operating profit Adjusted operating profit Finance costs excluding loss on repayment of long-term debt Impairment of assets Operating income Other income, net Share of the income of associates and joint ventures excluding gain on spectrum distribution Finance costs Share of the income of associates and jointIncome ventures before income taxes Other income, net Income tax expense Pre-tax free cash flow Net income from continuing operations Diluted earnings per share – continuing operations Basic earnings per share Diluted earnings per share Total additions to PP&E Loss from discontinued operations Net income Basic earnings per share – continuing operations (2)(3) Represents the income ofnm: associates Represents and income joint tax ventures not expense of meaningful. of $235 $620 million million less less the $40 gain million on related spectrum to distribution income of tax $233 on million, adjusted for items, the for year the ended year De ended December 31, 2012. (1) See the section “Key Performance Indicators and Non-GAAP Measures”. Operating profit should not be considered as a substitute or alternative for CONSOLIDATED FINANCIAL RESULTS MANAGEMENT’S DISCUSSION AND ANALYSIS

Each of our four business lines reports financial results, from Pre-tax free cash flow is defined as adjusted operating profit less operating revenue and adjusted operating profit to various operating PP&E expenditures and interest on long-term debt (net of metrics, associated with their respective businesses. Please refer to the capitalization). For details on the determination of pre-tax free cash relevant sections in this MD&A for details. flow, which is a non-GAAP measure, see the section “Key Performance Indicators and Non-GAAP Measures”. Consolidated Revenue Of the $140 million year-over-year increase in our consolidated SEGMENT REVIEW revenue, Wireless contributed $142 million, Cable contributed $49 million and Media contributed $9 million, partially offset by decreases WIRELESS in revenue of $54 million in RBS and in corporate items and intercompany eliminations of $6 million. The increase was due to overall higher subscriber levels, data revenue and equipment sales at Wireless Industry Trends Wireless and higher Internet revenue at Cable, partially offset by lower overall revenue at RBS due to the phased exit of the legacy > Focus on Customer Retention services business. The wireless communications industry’s current market penetration in Canada is estimated to be 78% of the population, compared to Consolidated Adjusted Operating Profit approximately 109% in the U.S. and approximately 123% in the Of the $95 million year-over-year increase in our consolidated United Kingdom. We expect market penetration in Canada to grow adjusted operating profit, Wireless contributed $27 million, Cable by approximately 4% over each of the next several years. As market contributed $56 million, RBS contributed $3 million, and Media penetration deepens and competition intensifies, a strategic focus is contributed $10 million, partially offset by a decrease in corporate required on strengthening the customer experience, promoting new items and intercompany eliminations of $1 million. The increases at data and voice services to existing customers, and retaining customers Wireless and Cable were due to the revenue growth described above through enhanced service, subsidized handset upgrades and other combined with cost efficiencies. value-added capabilities.

Adjusted operating profit for 2012 and 2011, respectively, excludes: > Demand for Sophisticated Data Applications (i) stock-based compensation expense of $77 million and $64 million; The ongoing development of more sophisticated wireless networks, (ii) integration, restructuring and acquisition expenses of $92 million devices and applications has created increased data functionality. At and $56 million; and (iii) settlement of pension obligations of $nil and the same time, it has enabled Canadians to access – and demand – an $11 million. ever-expanding array of content, from popular apps to high-quality For details on the determination of adjusted operating profit, which streaming video, music and television programming. Wireless believes is a non-GAAP measure, see the section “Key Performance Indicators that the rapid introduction of such new technologies and capabilities and Non-GAAP Measures”. will continue to drive the growth of wireless data services into the future. Consolidated Adjusted Net Income On a consolidated basis, adjusted net income increased to $1,788 > Convergence of Technologies million from $1,736 million, primarily due to increased year-over-year Technologies across wireless and wireline platforms have been adjusted operating profits of 2%. increasingly converging over recent years. This convergence has Adjusted net income for 2012 and 2011, respectively, excludes: enabled Wireless to launch new applications for customers, such as an (i) stock-based compensation expense of $77 million and $64 million; application where the user can manage their recordings from a (ii) integration, restructuring and acquisition expenses of $92 million smartphone or a tablet, and a live TV content streaming application and $56 million; (iii) settlement of pension obligations of $nil and $11 to smartphones and tablets. million; (iv) loss on repayment of long-term debt of $nil and $99 million; (v) impairment of assets of $80 million and $nil; (vi) gain on > Increased Competition from Other Wireless Operators spectrum distribution of $233 million and $nil; (vii) the related income Wireless faces intensive competition from incumbent national and tax recovery of the aforementioned items of $14 million and $56 regional wireless operators as well as a number of smaller, relatively million; and (viii) the income tax impact of legislative tax change of new entrants in the Canadian wireless market. This trend is $54 million and a recovery of $28 million. elaborated in the “Competition in Our Businesses” section of this MD&A. Over the past three years, the smaller new entrants have For a discussion of consolidated reconciling items from adjusted introduced unlimited usage pricing plans and extremely aggressive operating profit to net income and adjusted net income, please refer pricing and promotions. This has resulted in downward price to the section “Consolidated Analysis”. adjustments, particularly for wireless voice services, as well as increases in customer churn. Adjusted Basic and Diluted Earnings Per Share On a consolidated basis, both adjusted basic and diluted earnings per > Migration to Next Generation Wireless Technology share increased 8%, year-over-year. The increases were primarily Advances in wireless data transmission technologies, combined with attributable to increased adjusted net income of 3% year-over-year customer demand for more sophisticated wireless services and data and the effect of our share buybacks. functionality, have led wireless providers to migrate towards the next For details on the determination of adjusted basic and diluted generation of broadband wireless data networks, such as LTE and earnings per share, which are non-GAAP measures, see the section HSPA+. These networks enable far higher data transmission speeds “Key Performance Indicators and Non-GAAP Measures”. with increased efficiency, low latency and enhanced video streaming capabilities. Additionally, these networks support a variety of Pre-tax Free Cash Flow increasingly advanced data applications – among them, broadband The year-over-year increase in our consolidated pre-tax cash flow was Internet access, multimedia services and seamless access to corporate primarily attributed to 2% growth of adjusted operating profit, information systems, including desktop, client and server-based partially offset by higher additions to PP&E. applications, on a local, national or international basis. Wireless has

34 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 35 537 4 35% 2011 % Chg 7,138 2 (1,425)(2,677) 11 (4,102) (2) 3 46.0% $ 2,325 17 $ 6,601 2 $ 1,192 (6) $ 3,036 1 561 41% 2012 7,280 (2,632) (1,585) (4,217) 45.6% ROGERS COMMUNICATIONS INC. $ 2,722 $ 6,719 $ 1,123 $ 3,063 (2) (2) 2012 ANNUAL REPORT (1) subsidies. Measures”. reflect amanagement initiatives, modest partially offset by growthassociated the with upfront investments in aupgrades, record subscribers combined number of andAdjusted with smartphone operating a successful activations profitrevenue continued and for cost the margin decline year was as 45.6%, in essentially a flat voice to 2011 percentage levels. ARPU. ofof network 268,000, while postpaidto churn 1.32% was in 2011. reduced to 1.29% compared from $2,325 million in 2011network and revenue represented compared approximately to 41% 35% of in 2011. $70.26 in 2011. This reflectsdeclines the in impact of roaming competitive and intensitythe and out-of-plan significant growth usage in revenues, wirelessdeterioration which data experienced revenue. offset at The trend theyear of start ARPU went of the onquarter. year and reversed as ended the with growth of 1.6% in the fourth Cost of equipment revenue Equipment sales revenue Network revenue % of network revenue Other operating expenses Operating expenses Data revenue as % of network Total operating revenue Data revenue included in network Operating revenue Adjusted operating profit margin as Adjusted operating profit (1) Cost of(2) equipment includes the As cost defined. of equipment See sales the and direct sectionWireless Operating channel “Key Highlights for Performance 2012 • Indicators The and increases Non-GAAP in Wireless revenue and adjusted operating profit • Postpaid subscriber growth continued in 2012, with net additions • Revenues from wireless data services grew 17% to $2,722 million • Postpaid monthly ARPU decreased 1.4% to $69.30 compared to Summarized Wireless Financial Results Years ended December 31, (In millions of dollars, except margin) Additions to PP&E commerce capabilities and adoption in Canada. commerce Rogers Wireless is leading the way in driving mobile Despite increased competitivemarket intensity as entrants aproviders, and result Wireless of network generatedrevenue new a and at wireless an modest deviceincluding accelerating increase rate cost parity in overhowever, of year-over-year the by year. due equipment incumbent Operating togenerated sales, expenses, an successful also increase costData increased in management revenues year-over-year; year-over-year initiatives,smartphone adjusted customers’ continue we demands operating for to data also profit. availability increase. grow at double-digit rates as our Wireless Operating and Financial Results been a leader inwith the deployment digital of cellular, nextwhich generation then we technology, will with first continue HSPA+ to expand and during more 2013. LTE recently with is LTE, deployment around the the world mostmain today. generations In of most significant technology cases,HSPA+ paths the broadband in and previous the two Code wireless wireless industry(“CDMA/EVDO”) Division – – Multiple are GSM/ technology now Access/Evolution converging. Data in Optimized LTE is the worldwide GSMbroadband community’s new fourth wireless generationtechnology (“4G”) using technology. a newdivision An modulation scheme multiplexing), (orthogonalefficiency, all-IP-based frequency- LTE lower wireless costsservices is and available data specifically enhance viamakes the mobile use designed range broadband ofother of to new wireless open technology spectrum voice networks. standards. improve allocations As andto It a and 4G build data also technology, better LTE on iswhich integrates and designed is with the be earlier fully worldand the standard backwards prior for standard compatible upon mobile with which broadband Wireless UMTS/HSPA+, wireless alsoWiFi operates. (the IEEEequipped devices, 802.11) such as is laptopto computers, a tablets connect and to wireless smartphones, autilize standard local unlicenced that area spectrum, wireless andonly allows within access the a suitably point. wireless local These connection areaaccess radius point. access is of The points effective approximately access 50–100area points metres provide network of speeds the (“LAN”) similar environment.an to unmanaged a As wired service WiFi local designedaccess technology for points is in-building must wireless primarily be access, deployedarea to many and cover must the selected alsosupply local be geographic the interconnected connectivity with torange a the of broadband Internet. network WiFi Future to serviceprovide enhancements and to the complementary the networkingmunicipal of opportunities WiFi WiFi access forcapacity network points and may coverage operators wireless under the in appropriate operators circumstances. the or future, each providing MANAGEMENT’S DISCUSSION AND ANALYSIS

• Wireless activated and upgraded nearly 2.9 million smartphones, leverage the SAP mobile platform. This exclusive new offering will predominantly iPhone, Android and BlackBerry devices, helping help simplify the way organizations mobilize their workforce, bring smartphone penetration to 69% of the postpaid subscriber giving employees real-time access to enterprise mobile applications base. on tablets and smartphones that are traditionally used on desktop computers. • Wireless expanded Canada’s first LTE 4G broadband network to cover approximately 60% of the population of the country, and continued to offer the largest selection of LTE devices of any carrier WIRELESS NETWORK WIRELESS ADJUSTED REVENUE OPERATING PROFIT in Canada. (In millions of dollars) (In millions of dollars)

• Together with CIBC, Rogers pioneered the first point-of-sale mobile $6,526 $6,601 $6,719 $3,173 $3,036 $3,063 credit card solution in Canada. The service allows Canadians to pay for purchases with their CIBC credit card wirelessly using the secure SIM card inside an NFC-enabled Rogers BlackBerry. This historic first – enabled by Rogers’ innovative network platform – has put Canada on the world stage as a leader in mobile commerce innovation.

• Wireless introduced the “FLEXtab” wireless device upgrade program. It gives postpaid customers more flexibility than ever to opt for an early wireless device upgrade by simply paying a prorated portion of the unamortized subsidy at any point during their contract term.

• Wireless redesigned and simplified its wireless offers and pricing tiers, reducing the complexity and service times for our sales and 2010 2011 2012 2010 2011 2012 support teams. These new plans offer unlimited voice and text and a range of wireless data usage and device sharing options to meet the needs of our increasingly data-centric customer base. Summarized Wireless Subscriber Results • Wireless launched another industry first, Rogers One Number, an The following table summarizes our Wireless subscriber results for IP-based service that allows Canadians to extend their Rogers 2012 and 2011. Wireless phone number to their computer, tablet or home phone. Available exclusively to Rogers Wireless customers, the unique Years ended December 31, (Subscriber statistics in thousands, except service lets customers text, talk and video chat with other Rogers ARPU and churn) 2012 2011 Chg One Number users from their various devices, all using their Rogers Postpaid Wireless cellular number. This seamless, easy-to-use solution is Gross additions 1,457 1,449 8 simplifying how Canadians connect with family and friends. Net additions 268 269 (1) • Rogers and Wavefront opened the doors to a new Rogers Wireless Total postpaid subscribers(1) 7,846 7,574 272 Innovation Centre in Vancouver, Toronto and Montreal. The Centre Monthly churn 1.29% 1.32% (0.03) pts will support current and emerging developers to get to market Monthly average revenue faster with innovative applications for connected devices to per user (“ARPU”)(2) $ 69.30 $ 70.26 $(0.96) strengthen the wireless developer ecosystem in Canada, as well as educate companies about the benefits of M2M technology. Prepaid Gross additions 627 845 (218) • Wireless announced an alliance with international mobile Net additions(losses) (170) 109 (279) operators KPN, NTT Docomo, SingTel, Telefónica, Telstra and Total prepaid subscribers 1,591 1,761 (170) Vimpelcom to co-operate on global M2M business initiatives. The intent is to support a single, global platform that multinational Monthly churn 3.98% 3.64% 0.34 pts customers can leverage to enable connected devices in multiple ARPU(2) $ 15.84 $ 16.02 $(0.18) countries to better manage operations and reduce costs. Rogers is Blended ARPU(2) $ 59.79 $ 60.20 $(0.41) Canada’s M2M leader, committed to providing the enterprise tools Data ARPU 24.22 21.21 3.01 and platforms for rapid delivery of next generation M2M Voice ARPU 35.57 38.99 (3.42) connectivity across industries and market segments. (1) On August 29, 2012, Wireless completed the acquisition of a customer base from • Wireless announced an alliance with Axeda Corporation that will a third-party reseller, which increased Wireless’ subscriber base by 4,000 accelerate the deployment and reduce the complexity around the subscribers. development of M2M solutions in Canada. Rogers and SAP (2) As defined. See the section “Key Performance Indicators and Non-GAAP Measures”. announced plans to deploy enterprise mobile applications that

36 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 37 2010 2011 2012 28.1% 35.2% 40.5% ROGERS COMMUNICATIONS INC. DATA REVENUE PERCENT DATA REVENUE ARPU OF BLENDED (%) 2012 ANNUAL REPORT 2010 2011 2012 $1,832 $2,325 $2,722 WIRELESS DATA REVENUE (In millions dollars) of Wireless Equipment Sales Equipment sales, net ofthe subsidies, consist sale, of generally revenueagents generated and at retailers, from and or directlyWireless’ to customer below subscribers service through groups, our fulfillment websitesin by and cost telesales. revenue The to increase fromactivation independent equipment fees dealers, sales andsmartphone net for of activations 2012 equipmentWireless, versus as to subsidies, previously 2011, noted. reflects the including growth highest in levelsWireless Operating ever Expenses For reported assessing business by performance,segregated Wireless’ operating between expenses are wireless cost handset of andwhich include equipment, device expenses incurred costs, whichday to and operate basis, is the other business service composedsubscribers. on operating existing a day-to- of expenses, subscriber relationships andThe $160 attract million increase new inprimarily cost the of equipment result comparedsmartphone to of users. 2011 an was A increase largesubscribers number in became of eligible both existing for hardware iPhone subsidizedsecond device and upgrades upgrades half BlackBerry and during of the 2012. and We 16%this more also was smartphones activated overall the andexpenses. than upgraded largest Wireless during 39% views factor 2011investments more these and behind in costs thesubscribers, as year-over-year as the net these increase customers acquisition presentwho tend in subscribe value to to and be multi-year positive usage. lower term retention contracts churning and customers consume of higher data higherTotal retention ARPU spending,increased including to $942 subsidies million, on upfrom from handset $813 higher million upgrades, volumes insmartphones. 2011. of This Increased smartphones stemmed spending and is a part mix of of our retention more strategy expensive in Year-over-year blended ARPUdecline dropped in by thedue wireless 1%, to voice driven competitive component by intensity14.2% of increase an in blended in wireless this 8.8% ARPU data market, primarily ARPU. significantly offset by a 2010 2011 2012 41.0% 56.0% 69.0% (%) SMARTPHONES AS A PERCENT SMARTPHONES SUBSCRIBERS OF POSTPAID Prepaid 7,3251,652 7,574 1,761 7,846 1,591 2010 2011 2012 WIRELESS POSTPAID SUBSCRIBERS AND PREPAID thousands) (In Postpaid The increase induring the 2012 number is ofWireless primarily gross the postpaid activated resultsmartphones, subscriber compared of additions to and demand approximatelysmartphones for 2.5 were smartphones million upgraded predominately in as devices, 2011. iPhone, approximately These of Androidsubscribers. and which 2.9 This BlackBerry approximatelyactivations and million is new 33% smartphone the customerever additions reported. were that At largest Wireless year-end, has subscribers for69% with number of smartphones the represented new overall of postpaid2011. subscriber These Wireless base, annual subscribers versus generally 56% commitand at smartphone to typically the multi-year generate end significantly term of higher contracts ARPU. Overall, netconsistent additions withcompetitive of 2011 intensity, levels, postpaid offsetchurn. which by The subscribers year-over-year a primarily decreaseadditions continued primarily were in reflects reflects reduction overall an increase in heightened relatively prepaidwith in subscriber heightened the postpaid level net competitive of intensity, churnof associated the particularly wireless at market where the the lower prepaid product end Network is most penetrated. revenue includesservices revenue fromdistance derived postpaid charges, from monthly optionalroaming voice service fees, charges and charges, airtime, andairtime, data inbound data data and certain and outbound usage, fees,roaming. other ancillary as long charges well such as asThe long prepaid distance increase and usage incontinued for growth network of revenueadoption Wireless’ and compared subscriber usage todecrease of base in 2011 wireless voice and ARPU reflects dataintensity. the due services, the in escalating partially large part offset to byWireless heightened data a competitive revenue increased byThis 17% from growth 2011, to reflectstablets $2,722 million. the and continuingconsumption wireless proliferation laptop of ofwireless devices, apps, smartphones, all mobile dataapproximately of video, 41% which services. text ofin are 2011. total messaging expanding In network and revenue, 2012, other compared to data 35% revenue represented Wireless Subscribers and Network Revenue MANAGEMENT’S DISCUSSION AND ANALYSIS

light of customer demand for more sophisticated data applications > Growth of Internet Protocol-Based Services and devices. Telephony over the Internet has become a direct competitor to The modest year-over-year decrease in other operating expenses, Canadian cable systems and the incumbent telephone providers we excluding the retention spending increase, was driven by the growth primarily compete against. Voice over Internet Protocol (“VoIP”) in the Wireless’ subscriber base. This growth meant higher customer telephony services are being provided by non-facilities-based care costs for serving our expanding postpaid subscriber base and providers, such as Skype and Vonage, which market VoIP services to supporting more sophisticated devices and services, combined with individuals who already subscribe to high-speed Internet services over increased spending on advertising and promotion. However, such which their VoIP products operate. In addition, certain television and increased expenses were predominately offset by savings related to movie content is more prevalent than ever over the Internet. strategic cost management and productivity initiatives. Wireless Traditional TV viewing has been increasingly augmented by these and continues to focus on implementing a program of permanent cost other emerging options such as over-the-top television offerings as reduction and efficiency improvement initiatives to control the and Apple TV. overall operating expense structure and derive scale efficiencies across various functions, in line with our strategy to improve our cost > Increasing Availability of Online and Wireless Access to Cable structure and drive ongoing productivity. TV Content Cable and content providers throughout North America continue to Wireless Adjusted Operating Profit create platforms that provide online and wireless access to increasing The 1% year-over-year increase in Wireless’ adjusted operating profit amounts of television content. These platforms, including Rogers and the 45.6% adjusted operating profit margin on network revenue Anyplace TV, generally provide authentication features controlling (which excludes equipment sales revenue) for 2012 primarily reflects and limiting access to specific content subscribed to at the user’s the modest increases in network and equipment revenue, partially residence. The launch and development of these online content offset by an increase in total operating expenses, driven by the record platforms are still in the early stages and subject to ongoing high volume of smartphone activations and upgrades as discussed in discussions between content providers and cable companies with the preceding section. respect to how to access on-demand versions of traditionally televised WIRELESS POSTPAID WIRELESS POSTPAID content is granted, controlled and monetized. MONTHLY ARPU MONTHLY CHURN ($) (%) In addition, cable providers in the U.S. and Canada, including Rogers, have increasingly focused on developing streaming video applications $72.62 $70.26 $69.30 1.18% 1.32% 1.29% for smartphones, tablets and gaming devices. As well, Cable also now provides applications for smartphones and tablets that enable customers to remotely search content and remotely program their Rogers PVR from their wireless device.

> Facilities-Based Telephony Services Competitors For several years, competition has been strong in the long distance telephony service markets, with the average price per minute generally continuing to decline each year. Competition in the local telephone market also continues between Cable, Incumbent Local Exchange Carriers (“ILECs”) and various VoIP providers, as discussed above.

2010 2011 2012 2010 2011 2012 > Increased Competition from Non-Facilities-Based Internet Service Providers (“ISPs”) CABLE Internet services delivered by non-facilities-based service providers that take advantage of regulated wholesale pricing is an increasing Cable Industry Trends threat. These service providers offer unlimited Internet usage at > Investment in Improved Cable Networks and Expanded Service significantly lower prices and are attracting a growing number of Offerings subscribers. In recent years, North American cable companies have made substantial investments in: (i) the installation of fibre-optic cable, Demand generally continues to grow for Cable’s services, particularly including initiatives to push fibre closer to the home; (ii) electronics in Internet, digital television and cable telephony. The variable costs their respective networks; and (iii) the development of Internet, associated with supporting this growth, such as the cost of additional digital cable and voice-over-cable telephony services. These content, commissions for subscriber activations and the fixed costs of investments have enabled cable companies to offer expanded acquiring new subscribers, are material. Accordingly, fluctuations in packages of digital cable television services (such as VOD and SVOD, the number of activations of new subscribers from period to period pay television packages, PVR and HDTV programming, and streaming result in fluctuations in costs associated with sales, marketing and video to multiple non-TV devices), increasingly fast tiers of Internet field services. access and widespread home phone services to residential and small business customers. Over the past two years, the competitive intensity in Cable’s territory has escalated significantly. This reflects the increasing availability of a > Increased Competition from Alternative Broadcasting competing IPTV television offering from Cable’s primary ILEC Distribution Undertakings (“BDUs”) competitor that is increasingly being offered at deeply discounted As fully described in the section “Competition in Our Businesses”, promotional pricing to attract new customers. This has resulted in a Canadian cable television systems generally face legal and illegal slowing of customer acquisition volumes at Cable and an increase in competition from several alternative multi-channel broadcasting promotional and retention pricing offers, both of which have served distribution systems. to dampen Cable’s revenue growth rates.

38 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 39 Home Phone 45 (22) 83 (10) 39 (46) (14) (69) 114 (101) 2011 Chg 1,052 22 3,754 56 1,777 (9) 1,793 71 5,142 10 2,297 (83) Internet (7) 13 23 73 (83) 2012 1,074 3,810 1,768 1,864 5,152 2,214 848506 926 478 998 477 1,803 1,878 1,868 2010 2011 2012 ROGERS COMMUNICATIONS INC. CABLE SERVICE REVENUE BREAKDOWN dollars) of millions (In Television (1) (1) (2) 2012 ANNUAL REPORT (1) (1) in reductions of 2,000and Cable 1,000 Internet subscribers, cable 2,000additions, telephony digital but cable are lines. households reflectedended These December in 31, adjustments the 2012. ending are total not balance reflected fortelephony the in lines. twelve net months subscribers Households, net additions (losses) Total digital cable households 2010 2011 2012 $3,190 $3,309 $3,358 of oursignificant Ultimate network tierspeeds investments to available to to the 150 most deliver homes. Mbps. the Cable fastest continues Internet to make CABLE TOTAL REVENUE dollars) of millions (In Net additions Net losses Net additions Net additions and migrations Total cable service units Total cable telephony lines Total cable high-speed Internet Total television subscribers Digital cable Total cable service units (1) During the fourth quarter of 2012, we made internal adjustments which resulted (2) Total cable service units consist of television subscribers, Internet subscribers and Summarized Subscriber Results The following table summarizesyears ended our December 31, Cable 2012 subscriber andYears 2011. results ended December for 31, (Subscriber the statistics in thousands) Cable homes passed Television Cable high-speed Internet Cable telephony lines 27 (44) (29) (31) 926478 8 – 2011 % Chg 3,309 1 3,282 2 (1,731)(1,760) – – 46.8% $ 1,878 (1) $ 748 11 $ 1,549 4 15 (20) 998 477 2012 3,358 3,343 (1,733) (1,753) 47.8% $ 1,868 $ 832 $ 1,605 (1) (1) Measures”. telephony lines by 22,000,by while 9,000. digital cable households declined television subscriber basecable and networks. 49% In ofapproximately 80% the addition, of television homes digital households. passed penetration by now our represents year withtelephony just lines, under whichtelephony lines to brought 1.1 49% of the television million subscribers. total residential penetration of voice-over-cable functionality cable forexperience that the gives customers controlthey Rogers’ over where, view when their and home how favouritethe live year, television and Cable recordedthe entertainment further programming. new enhanced During Rogers the AnyplaceIt TV NextBox Home 2.0 edition provides platform applicationcustomers for with a to tablets. watch seamlessdevices. TV Rogers TV anywhere is in theto and first their Canadian offer home, internet telecommunicationsstreaming an across company experience experience multiple on integrated tablets. allowing remote PVR management andexperiences live TV approximately to 90% of its Canadians footprint, including doubling the by speed increasing speeds across Cost of equipment sales Other operating expenses Equipment sales Internet Home Phone Service revenue Cable Television Operating expenses Adjusted operating profit Total Cable operating revenue Operating revenue • Cable grew high-speed Internet subscribers by 71,000 and• cable Cable’s Internet penetration is now approximately 84% of our • The cable telephony subscriber base continued to grow, ending the • Cable unveiled NextBox 2.0, a suite of new features and • Cable demonstrated its commitment to bringing leading Internet (1) As defined. See the sectionCable Operating “Key Highlights for Performance 2012 Indicators and Non-GAAP Adjusted operating profit margin Additions to PP&E Years ended December 31, (In millions of dollars, except margin) Cable Operating and Financial Results Summarized Cable Financial Results Cable’s operating revenue into total increases grew in year-over-year Internet primarilya revenue. due Cable result Television revenue ofDespite declined as our ongoing expandingPhone competitive base revenues pressures of were relatively home indivestiture flat telephone year-over-year, the of subscribers, as cable aassociated Home the customer result base industry. of circuit in the 2011.essentially Operating switched flat expenses due have to telephony been ourinitiatives; held strategic which operations cost has management enabled and and us productivity adjusted to operating deliver its profit. a year-over-year increase in MANAGEMENT’S DISCUSSION AND ANALYSIS

CABLE ADJUSTED OPERATING CABLE SUBSCRIBER DIGITAL HOUSEHOLDS AND HIGH-DEFINITION PROFIT AND ADJUSTED PROFIT BREAKDOWN PENETRATION OF TELEVISION HOUSEHOLDS MARGIN (In millions of dollars) (In thousands) CUSTOMERS (In thousands) (In thousands)

$1,419 $1,549 $1,605 2,305 2,297 2,214 1,733 1,777 1,768 850 942 1,039 1,733 1,777 1,768 1,686 1,793 1,864

1,003 1,052 1,074 80% 77% 75%

47.8% 46.8% 44.5%

2010 2011 2012 2010 2011 2012 2010 2011 2012 2010 2011 2012

Television Digital Internet Home Phone Internet Revenue Internet revenue includes monthly and additional use service revenues from residential, small business and wholesale Internet Cable Television Revenue access subscribers and modem rental fees. Cable Television revenue includes revenue derived from: (i) analog cable service, consisting of basic cable service fees plus extended basic Internet revenue increased in 2012 primarily due to the growth in (or tier) service fees and access fees for use of channel capacity by Internet subscribers, combined with Internet services price changes third and related parties; (ii) digital cable service revenue, consisting made over the previous 12 months. Also impacting the increase was of digital channel service fees, including premium and specialty the timing and mix of promotional programs, a general movement by service subscription fees, pay per view service fees and video on subscribers towards higher-end tiers offering faster speeds and larger demand service fees; and (iii) rental of digital cable set-top terminals. monthly usage limits, a modest increase in revenue from additional usage, and a mix of retail and wholesale subscribers. The decrease in Cable Television revenue in 2012 reflects the increased competitive intensity in our operating territory, which has With the high-speed Internet customer base at approximately 1.9 led to increased retention and promotional pricing activity and a million subscribers, Internet penetration is now at approximately 84% partial erosion of our basic Television subscriber base. Cable of our television subscriber base and 49% of the homes passed by our Television revenue includes the effect of annual pricing changes that cable networks, compared to penetration of approximately 78% of took place in March 2012 and March 2011. Cable continues to offer our television subscriber base and 48% of the homes passed by our competitive strategic bundling and retention initiatives to transition cable network at the end of 2011. portions of the subscriber base to term contracts. INTERNET SUBSCRIBERS The digital cable subscriber base now represents 80% of television AND PENETRATION households passed by our cable networks, compared to 77% at the OF HOMES PASSED (In thousands) end of 2011. Increased demand from subscribers for the larger selection of digital content, video on demand, and HDTV and PVR 1,686 1,793 1,864 equipment continues to contribute to the growth in digital services into our Television subscriber base.

Cable began a substantial conversion of the remaining analog cable customers onto its digital cable platform during 2012. This strategic migration will further strengthen the customer experience, enable 49% the reclamation of significant amounts of network capacity, and 48% reduce network operating and maintenance costs going forward. The 45% analog to digital migration, expected through 2013, entails incremental PP&E and operating costs as each of the remaining analog homes are fitted with digital converters and various analog filtering equipment is removed.

2010 2011 2012

40 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 41 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT > Proliferation of Big Data With theaccess increased services, speed in anddemand conjunction with reliability cloud cost affordedequipped effective than by computing and ever powerful before fibre-based volumes to of on- resources, data assemble captured and fromThis organizations analyze a enables seemingly incredibly endless organizations large number areeffectiveness of to inputs. of dramatically better their enhance businessanalyze the intelligence. strategies quality This and and allowsthroughout businesses the drive to organization, tacticalresources be to it, decision support for makingservice micro-market example, in strategies and focusing or loyalty. sales real-time improvingcaptured and The by customer increased organizations, volume andand and the the detail rise Internet-based of of applicationsdata information multimedia, will demand for social drive the media, exponential foreseeable future. growth in > Data Centre Consolidation andThe Virtualization rapid change inpower data density, centre technologies, virtualizationdynamic particularly in and regarding the security, colocationgovernment market. are has Large undergoing enterprises led dramaticinfrastructure and transformations to to all to levels consolidate a gain of costs, better changing simplify efficiencies management andRecent and scale data improve centre in security acquisitions ordergreater and in breadth to the performance. and save carriersolution depth space requirements have of are enabled service moving far of offerings. into data Similarly, the storage physical enterprise and andSaaS, hosting and virtual Software realm for Defined advanced Networking (“SDN”). service offeringsThe like IaaS, increasing acceptancevirtualization in through the organizations proliferation ofto to cloud drive services embrace more will advanced and continue develop network model functionality robust, and require scalableinfrastructures. carriers services to and supportive dynamic network RBS RBS Industry Trends > Growth of InternetIn Protocol-Based Services the enterprise market,services there and is a a growing continuingfrom adoption shift of to time-division VoIP IP-based and multiplexing based there cable (“TDM”) telephony is services a based shiftrelay protocols. from services asynchronous Similarly, to Ethernet transfer IP-based mode services. (“ATM”) and frame > Investment in ImprovedOfferings Networks and Expanded Service Over the pasttowards several dismantling years, or carriersnetworks significantly of in all consolidating favour sizes their ofnetwork have TDM more begun reliable platforms. legacy and toservice Carriers scalable lean convergence IP are of Nextdistribution voice, Generation investing and data access in network and platform. video networks solutionsTraditionally, to all services that onto enable were one separatedhave across monolithic been platforms convergingapplications have been to proliferating across IPseveral the industry. such and RBS launched applications, EthernetVirtual including and Call SIP Centre examplesconsolidate voice services service of over services a that such single along Ethernet allows and with IP end a platform. users to virtualize and 28% (In thousands) (In 28% 27% 1,003 1,052 1,074 2010 2011 2012 CABLE TELEPHONY SUBSCRIBERS CABLE TELEPHONY SUBSCRIBERS PENETRATION AND OF HOMES PASSED The year-over-year growth inthe adjusted operating profit revenue wasprofit driven increases, margins by of resulting 47.8% in 2012, in compared to expanded 46.8% in 2011. adjusted operating Cable Adjusted Operating Profit Cable Operating Expenses Cable’s operatingcategories expenses for management’s(i) are assessment cost segregated of ofInternet modem business equipment into equipment performance: sales, costs;other the (ii) expenses namely incurred programming to costs; cable following operateservice and the existing digital (iii) business subscriber on all relationships set-top a and day-to-day attract box basis, new subscribers. and Cable’s operating expenseshelped for by 2012productivity strategic were and initiatives flat lowerincremental to compared new retention subscriber to improve costs additions, 2011, digital our and partially costs cost conversion. offset associated by program structure with Cable of the and continues analog permanentinitiatives to to to cost control the reduction focus overall growth and in on efficiency operating expenses. implementing improvement a Cable Equipment Sales Equipment sales include revenuescable generated set-top terminals from and the Internet modems. sale ofThe digital year-over-year decrease inthe equipment mix revenue of foradditions. sales 2012 versus reflects rentals, as well as fewer digital cable gross Home Phone Revenue Home Phone revenuebusiness includes local telephony revenues service, calling fromcall features waiting, residential such and as and long-distance. voicemail and small Home Phone revenuePhone for subscriber base 2012 and wasof pricing changes flat. the were divestiture An offset ofoperations, by increase which our the occurred in impact legacy during our 2011. circuit switched Home telephonyCable base telephony and lines inrepresented service 49% grew of 2%passed last Television year, subscribers by andrespectively, and by at our year-end the 28% end of of cable 2011. the networks, homes compared to 46% and 28%, MANAGEMENT’S DISCUSSION AND ANALYSIS

RBS Operating and Financial Results In comparison, the higher margin next generation business was up 27% year-over-year. Summarized RBS Financial Results RBS’ total operating revenue declined due to the continued planned exit of the legacy business. However, operating expenses were RBS SERVICE REVENUE MIX reduced for the same reason, as well as a result of our strategic cost (In millions of dollars) management and productivity improvement initiatives; which enabled RBS to deliver a year-over-year increase in adjusted operating 128162 profit. 271183 Years ended December 31, (In millions of dollars, except margin) 2012 2011(1) % Chg Operating revenue Next generation $ 162 $ 128 27 Legacy 183 271 (32) Service revenue 345 399 (14) Equipment sales 6 6–

Total operating revenue 351 405 (13)

Operating expenses (262) (319) (18)

Adjusted operating profit(2) $89$863 2011 2012

Adjusted operating profit margin(2) 25.4% 21.2% Next Generation Legacy Additions to PP&E $61$5511

(1) The operating results of Atria Networks LP are included in the RBS results of RBS Operating Expenses operations from the date of its acquisition on January 4, 2011. (2) As defined. See the section “Key Performance Indicators and Non-GAAP RBS’ operating expenses consist of: (i) telecom and data networking Measures”. equipment costs; and (ii) all other expenses incurred to operate the business on a day-to-day basis, service existing customer relationships RBS Operating Highlights for 2012 and attract new subscribers. RBS continues to focus on achieving our strategic objectives as Operating expenses decreased last year as a result of a planned discussed earlier and noted the following operating highlights for the decrease in the legacy service-related costs (e.g., lower leased facility year ended December 31, 2012: costs), lower volumes and customer support-related spending levels, • Underlying the 13% year-over-year overall decline in RBS revenues and strategic initiatives to improve RBS’ cost structure and was a strong 27% growth of revenue associated with the on-net productivity. RBS continues to implement permanent cost and next generation IP-based services portions of the business. This management and efficiency improvement initiatives to control its shift to higher margin on-net services enabled RBS to generate 3% overall cost structure. growth in adjusted operating profit while expanding adjusted operating profit margins by 420 basis points year-over-year. RBS Adjusted Operating Profit The year-over-year growth in adjusted operating profit reflects RBS’ • RBS announced the availability of SIP Trunking, a new IP-based focus on growing its on-net next generation data revenue. This voice solution for enterprises designed to complement its fibre- strategic shift has more than offset the planned declines in the lower based Internet and WAN connectivity services. By merging voice margin legacy voice and data services. Cost reductions and efficiency services with a business data network, SIP Trunking solutions initiatives across various functions have also contributed to higher dynamically allocate bandwidth as needed to support voice and/or operating profit margins. data needs depending upon capacity requirements during peak hours and also provide a platform for next generation IP-based RBS ADJUSTED OPERATING video, mobile and productivity applications and services. PROFIT (In millions of dollars) RBS Revenue RBS’ revenues are generated from telephony, data networking and $40 $86 $89 access services used by enterprise and government customers, and the sale of services on a wholesale basis to other telecommunications carriers.

The year-over-year decrease in RBS’ revenue for the year ended December 31, 2012 largely reflects the planned decline in certain categories of the lower margin off-net legacy business, offset by continued strong growth in the next generation IP and other on-net services. RBS’ focus is primarily on IP-based services and increasingly on leveraging higher margin on-net and near-net revenue opportunities utilizing its own and Cable’s network facilities to expand offerings to the medium and large-sized enterprise, public sector and carrier markets. The lower margin off-net legacy business, which includes long distance, local and certain legacy data services, 2010 2011 2012 continues to decline as expected and was down 32% year-over-year.

42 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 43 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT 2010 2011 2012 $1,461 $1,611 $1,620 network into the largestacquisitions portion and of agreements the puthas Quebec in place market. increased during With 2012, the households. by City’s reach more than 20% torelated over television assets 80%the into CRTC. of a theScore trust Canadian issports pending a news, final national information, approval specialty highlightsIt TV from and is service Canada’s live that third-largest event provides television specialty programming. subscribers. sports The channel acquisition within builds 6.6 sports on million broadcasting Rogers’ and rich reinforcespremium history our commitment sports to content delivering toSubject audiences on to theiranticipated final platform early of regulatory in choice. will the approval be first rebranded from under half the of Sportsnet the umbrella. 2013, CRTC, the television which network sports is contentstrengthening the anywhere, valuefurther enhanced of by anytime, its Rogers’ 37.5% sports investment in brand, MLSE. on Sportsnet, which anyplayer is acquisitions platform andteam’s depth. other by moves that significantly boost the MEDIA REVENUE dollars) of millions (In Media Revenue Media’s revenue(ii) circulation mainly revenue;sales; (iii) consists subscription and revenue;concession (v) of: (iv) sales associated ticket retail with Rogers product (i) sales, Sports Entertainment. receiptsMedia’s advertising revenue of increased MLB revenue; revenue modestly revenue from growth 2011, sharingincreased primarily in by and driven 10% due by ouroverall to the sports distribution strength ofaddition, properties. the growth revenue Sportsnet franchise Subscription in on and increased Sports revenue our revenue Entertainment grew related otherevents 17% to at as specialty the the Rogers a Centre. Torontocontinued channels. result These increases Blue of slow-growing In were Jays partiallysectors offset advertising and by in a successful the market facecreated across of economic ongoing most softnessadvertising and industry volatility declines global in uncertainty the inrecently that later concluded NHL part advertising player of lockout. the spending, year associated as with the well as • Media closed the acquisition of theScore Television Network and • Media advanced Rogers’ strategy of delivering highly sought-after • The Toronto Blue Jays made several off-season all-star calibre 2011 % Chg (1,431) – 11.2% $ 180 6 $ 1,611 1 $ 61 (10) 2012 (1,430) 11.7% $ 190 $ 1,620 $55 (1) (1) Measures”. the acquisitionmarking another of stepnational in Saskatchewan footprint. City’sPattison geographic Media Communications Broadcast expansion also Group towards Network, that a announced signed will long-term deliver thatPattison’s affiliate City television stations City programming agreements in western to and Canada. audiences Jim on all three14 of Montreal andwhich the will enable station the was further expansion relaunched of as the City City broadcast Montreal, TV Operating revenue Media Operating Highlights for 2012 • Media launched the City Saskatchewan television station following • On February 4, 2013, Media closed the agreement to acquire Metro (1) As defined. See the section “Key Performance Indicators and Non-GAAP Years ended December 31, (In millions of dollars, except margin) The following table summarizesended Media’s December financial 31, 2012 results and in 2011. the years Media Operating and Financial Results Summarized Media Financial Results The Canadian medianumber industry of isresources. In competitors highly-competitive, recent years, withtraditional having there media a has assets been significant small majority increased across of consolidation the scale players of have Canadianenable become the and media more acquisition and vertically landscape. monetization financial integrated The of to premium content. better Consumers have also beendigital shifting media, their mobile media device consumptioncaused usage towards and new on-demand content.portions business This of their has models spending to to digital platforms. emergeMedia’s ongoing and success depends, advertisersto among secure to other popular things, broadcasting shift prices; on programs to its and ability maintain contentindustry; its at to favourable high leverage distributionacross level its multiple within premium platforms; thetowards content, to publishing digital brands adapt advertising; and tobroadcasting. and capabilities and to leverage participate its in leadership theThe in shift Canadian sports retailrecessionary industry pressures. isdirect Media’s competition inherently televised with cyclicalInternet traditional shopping and retailers, retail network stores, subject directand catalogue faces other marketing to discount retailers, retailers, retailers. Theretrend mail is towards also online order a shopping, rapidly companies Media’s which growing has consumer televised been shopping aretailers historic network. strength A now of risingcompetition offer number in of the online sector. traditional shopping options,The success further of the intensifying team Sports performance Entertainment and business fan-based depends loyalty.professional league Media heavily teams competes on for with fan-base other and audience. MEDIA Media Industry Trends > Increased Competition Additions to PP&E Adjusted operating profit margin Operating expenses Adjusted operating profit MANAGEMENT’S DISCUSSION AND ANALYSIS

Media Operating Expenses obtained, at which point control over theScore Media business will Media’s operating expenses mainly consist of: (i) the cost of retail transfer to Rogers. owns theScore Television Network, a products sold by The Shopping Channel and Sports Entertainment; national specialty TV service providing sports news, information, (ii) broadcast content costs; (iii) Blue Jays player payroll; and (iv) other highlights and live event programming across Canada. Upon final expenses incurred to operate the business on a day-to-day basis. regulatory approval, which is anticipated in the first half of 2013, Rogers will wholly own and control theScore Television Network and Media’s operating costs decreased modestly from 2011. This was due its related television assets, and expects to rebrand it under the to lower publishing costs, lower sports programming costs and Sportsnet brand. significant cost efficiencies achieved across most of Media’s divisions. The lower sports programming costs were primarily related to the On February 4, 2013, Media closed the agreement to acquire Metro14 NHL player lockout, as no NHL games were produced or aired during Montreal for approximately $10 million. the first half of the 2012-2013 season. The decreased costs were partially offset by planned increases in conventional television Other Media Developments programming, as Media continues to secure rights to premium and The Toronto Blue Jays made several off-season all-star calibre player exclusive content on its broadcast and digital platforms to improve acquisitions and other moves that will significantly boost the team’s audience ratings in key demographics. Excluding the impact of the depth. The 2012 season demonstrated a renewed appetite for NHL player lockout, operating expenses would have increased by baseball in the city of Toronto, with increased ticket sales, approximately 3% year-over-year. merchandise sales and viewership. The growing revenue helped enable the off-season investments, which are consistent with Rogers Media Adjusted Operating Profit Media’s sports-focused strategy to significantly improve game The increase in Media’s adjusted operating profit for 2012, compared attendance, merchandising and Sportsnet ratings. to 2011, primarily reflects the revenue and expense changes discussed in the preceding sections, including an estimated $30 million of net VIDEO positive impact of the NHL player lockout. As of June 2012, Rogers’ retail stores no longer rent or sell DVDs and games and now focus exclusively on sales and service relating to MEDIA ADJUSTED Rogers’ wireless and cable products. The second quarter of 2012 was OPERATING PROFIT the last period for operations of the Video sub-segment of the Cable (In millions of dollars) segment, with the remnants of that business now treated as

$131 $180 $190 discontinued operations for accounting and reporting purposes.

CORPORATE

Acquisitions and New Initiatives In an ongoing effort to maximize subscribers, operating profit and return on invested capital as part of our strategy to be Canada’s leading diversified communications and media company, Rogers initiated or completed the following acquisitions and initiatives during 2012:

> Investment in Maple Leaf Sports & Entertainment On August 22, 2012, along with BCE Inc., we closed the joint acquisition of a net 75% equity interest in MLSE from the Ontario 2010 2011 2012 Teachers’ Pension Plan. MLSE is one of Canada’s largest sports and entertainment companies which owns and operates the Air Canada Centre, the NHL’s Toronto Maple Leafs, the NBA’s Toronto Raptors, 2012 MEDIA ADJUSTED OPERATING PROFIT MIX the MLS’ Toronto FC, the AHL’s Toronto Marlies and other real estate (%) and entertainment assets. Rogers’ net cash investment was $540 million, representing a 37.5% equity interest in MLSE.

> Banking Licence In 2011, we applied for a banking licence as required under the TELEVISION 43% federal Bank Act to enable Rogers to engage in credit card and other $0.19 RADIO 35% mobile payment services. During 2012, key management with BILLION extensive experience in credit card operations joined the company and third party vendors were selected to support the operations. We PUBLISHING 13% expect to receive our licence from the Office of the Superintendent of THE SHOPPING Financial Institutions (OSFI) in mid-2013.

CHANNEL 9%

> Rogers Smart Home Monitoring Media Acquisitions Rogers Smart Home Monitoring is an advanced real-time home In October 2012, Media completed the purchase of 100% of the monitoring, automation and security service. It allows for remote outstanding shares of Score Media Inc. for $167 million. The shares of access, monitoring and control from Internet-connected computers Score Media were transferred to an interim CRTC-approved trust and smartphones, as well as real-time alerts and remote viewing. which is responsible for the independent management of the business Rogers is in the early stage of developing and deploying this product. in the normal course of operations until CRTC final approval is The product is generally marketed and installed by Cable.

44 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 45 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT Settlement of Pension Obligations During 2011, wepension incurred obligations a oflump-sum non-cash approximately contribution loss $11 of from approximatelyplans, million $18 the following resulting million settlement which from to$68 of the a our million pension of pension annuities planswho from had purchased insurance retired approximately companies betweenthe for section January all below 1, “Pension employees Plans 2009 Purchase and of Annuities”. January 1, 2011.Depreciation and See Amortization Expense The year-over-year increase inan depreciation and increase amortization in reflects acceleration depreciation of on depreciation PP&Eand on the that certain timing of is network readinessincluding largely transmission of the launch certain related assets of network our and towas LTE system mostly network the offset initiatives, in by various a municipalities.due decrease This in to depreciation an expense of increasecertain $90 in network million and the information estimated technology assets. useful life made inImpairment July of 2012 Assets of Late in 2012, weMedia recorded segment, an consisting $80broadcast of million $67 impairment licences million chargecombination in in and goodwill, the of $8 $5methodologies million value with in pre-tax million discount in ratesrecoverable of in approximately amounts use 10%. of The program andprimarily the cash due rights, fair generating tomarkets. using units value There the was declined no weakening a less impairment in of of 2012 assets costs during advertising 2011. to revenue in sell certain Stock-based compensation expense increased tomillion $77 million, in from 2011, $64 during mainly 2012. related The to expenseby the in the stock a vested price given optionsApproximately period increase $47 and is million of units of generally valued $5.91 in the determined market at expense value the of was RCI current related stock to market compared the to price. At December change December 31, 31, 2011. 2012, wemillion) had a related liability of tovalue, $195 million including stock-based (2011 stock – compensationshare $194 units. options, recorded During restricted 2012, atholders $76 share million its of (2011 units – stock fair andunits $45 options, upon million) deferred exercise. was restricted All paid of sharethe to the stock units election option and exercisesoptional were of deferred executed at share the sharederivative option appreciation instruments from holders right timemarket-based through to (“SAR”) fluctuations time in the to our feature. stock-based manage compensation exercise our expense. We exposure of to may the Integration, use Restructuring and Acquisition Expenses During 2012, weand incurred $92 acquisitionimproving million our expenses of cost integration, structurewith related associated restructuring the to: (i) targeted with severance restructuringand costs (ii) of acquisition associated initiatives our transaction costs employeeof incurred acquired aimed base and businesses the ($89 ($3 integration million). million); at costs During 2011, weand incurred acquisition $56 expensescost million associated of with structure integration, initiativestargeted related restructuring to to: improve restructuring our (ii) (i) severance acquisition ofacquired costs transaction businesses our associated costs ($4 million);stores with incurred and and employee lease (iii) the exit and the costs ($10 base closure the million). of certain integration ($42 retail of million); – n/m 17 n/m n/m (27) 19 (64) 20 (56) 64 (11) n/m (545) 14 (738) (10) 2011 % Chg 1,590 9 2,135 10 2,865 (3) 4,608 1 (1,743) 4 $ 1,563 9 $ 4,739 2 – 15 (32) (77) (80) (92) 235 (620) (664) 2012 1,732 2,352 2,766 4,665 (1,819) $ 4,834 (1) (1) Measures”. operations and joint ventures acquisition expenses Loss from discontinued operations Net income $ 1,700 Net income from continuing Income tax expense Share of the income of associates Income before income taxes Other income, net Finance costs Stock-based compensation expense Depreciation and amortization Impairment of assets Operating income Adjusted operating profit Integration, restructuring and Settlement of pension obligations Operating profit Stock-Based Compensation The year-over-yearprimarily increase attributable in toToronto Stock our the Exchange (“TSX”), rise which stock-basedvalue is of in used our compensation in stock-based the determining compensation the liability is RCI.b fair at year-end. stock price on the Adjusted Operating Profit As discussed above, theRBS adjusted and operating Media profit increasedof in for the Wireless, 2012 results compared Cable, to ofrespective segment 2011. operations discussions. For of discussions each of theseConsolidated segments, adjusted refer to operatingfrom the profit $4,739 million climbed2011, in to respectively, the exclude: $4,834 prior (i)$77 year. million, stock-based These million compensation amounts expenseacquisition for and of 2012 $64 and expenses(iii) settlement million; of pension of obligations (ii) of $nil and $92 integration, $11 million. restructuring million and and $56 million; and (1) As defined. See the section “Key Performance Indicators and Non-GAAP Years ended December 31, (In millions of dollars) CONSOLIDATED ANALYSIS We reviewoperating the profit on a results consolidated basis. of the following items below adjusted > OutRank We announced thenew, exclusive best-in-class availabilitycurrently online of without a OutRank marketing web in presence.easily solution With Canada, OutRank, local for a get businessesoptimization can small and a businesses aprice. The website, performance service helps dashboard, small paidand businesses all e-mails generate by inbound for marketing search phone themfor calls an online where affordable marketing, their consumers are searching AdWords services. search Premier OutRank SMB engine and was Partner operated company selected Program, in the the program. by first Google Canadian-owned to join the MANAGEMENT’S DISCUSSION AND ANALYSIS

Finance Costs Share of the Income of Associates and Joint Ventures The finance costs are as follows: During 2012, we acquired certain 2500 MHz spectrum from Inukshuk, Years ended December 31, a 50% owned joint venture. As a result, we recorded a gain of $233 (In millions of dollars) 2012 2011 % Chg million, being the portion of the gain that related to the spectrum Interest on long-term debt $ (691) $ (668) 3 licences sold to the non-related venturer. The remaining income of Loss on repayment of long-term debt – (99) n/m $2 million was primarily due to our equity interest in various investments, offset by the equity loss in MLSE. Foreign exchange (loss) gain 9 (6) n/m Change in fair value of derivative instruments (1) 14 n/m Income Tax Expense Our effective income tax rate for 2012 and 2011 was 26.4% and Capitalized interest 28 29 (3) 25.5%, respectively. The 2012 effective income tax rate did not differ Other (9) (8) 13 from the 2012 statutory income tax rate of 26.4%. This is primarily Total finance costs $ (664) $ (738) (10) due to several offsetting adjustments to our 2012 tax expense. The most significant favourable adjustments resulted from the realization The $23 million increase in interest expense during 2012 reflects a of capital gains, only 50% of which are taxable, and the utilization of comparative increase in the principal amount of long-term debt losses that were not previously recognized. These amounts were partially offset by the comparative decrease in the weighted average offset by a tax charge relating to the revaluation of our net deferred interest rate on long-term debt compared to the previous year. The tax liability to reflect an increase in tax rates and adjustments in change in principal and weighted-average interest rate primarily respect of non-deductible expenses. reflects the refinancing activities completed in the second quarter of The 2011 effective income tax rate was less than the 2011 statutory 2012. See the section below “Liquidity and Capital Resources”. income tax rate of 28.0%, primarily due to income tax recoveries of During 2011, we recorded a loss upon the early repayment of long- $28 million and $31 million relating to tax rate changes. term debt of $99 million, consisting of: (i) redemption premiums of In 2012, we paid $380 million in income taxes, up from $99 million in $76 million related to the redemption of two public debt issues; (ii) a the previous year. With respect to cash income tax payments as net loss on the termination of the related cross-currency interest rate opposed to accounting income tax expense, we utilized substantially exchange agreements (“Debt Derivatives”) of $22 million; and (iii) a all of our remaining non-capital income tax loss carryforwards in write-off of deferred transaction costs of $2 million. This was partially 2012. This combined with legislative changes to eliminate the deferral offset by a gain of $1 million relating to the non-cash write-down of of partnership income led to the sizeable increase last year in our cash the fair value increment of long-term debt. (See the section below income tax payment, a trend we estimate will continue during 2013 “Debt Issuances and Redemptions”) as detailed in the section “2013 Financial Outlook and Targets”. While During 2012, the Canadian dollar strengthened by 2.2 cents versus the both of these items impact the timing of cash taxes, neither is U.S. dollar, resulting in a foreign exchange gain of $9 million, expected to have a material impact on our income tax expense for primarily related to our US$350 million of Senior Notes due 2038 for accounting purposes. which the associated Debt Derivatives have not been designated as Income tax expense varies from the amounts that would be computed hedges for accounting purposes. Much of this foreign exchange gain by applying the statutory income tax rate to income before income is offset by the coincident change in the fair value of the associated taxes for the following reasons: Debt Derivatives as discussed below. During 2011, the Canadian dollar Years ended December 31, weakened by 2.2 cents versus the U.S. dollar, resulting in a foreign (In millions of dollars, except tax rate) 2012 2011 exchange loss of $6 million, primarily related to our US$350 million of Statutory income tax rate 26.4% 28.0% Senior Notes due 2038 for which the associated Debt Derivatives have not been designated as hedges for accounting purposes. Income before income taxes $ 2,352 $ 2,135 The expense for the change in the fair value of derivative instruments Computed income tax expense $ 621 $ 598 during 2012 was primarily the result of (i) a non-cash gain on the Increase (decrease) in income taxes resulting change in fair value of the Debt Derivatives hedging our US$350 from: million Senior Notes due 2038 that have not been designated as hedges for accounting purposes combined with (ii) a non-cash loss Recognition of previously unrecognized pertaining to an estimate of the relative hedge ineffectiveness of deferred tax assets (22) (12) Debt Derivatives that have been designated as hedges for accounting Non-taxable portion of capital gains (61) – purposes. Revaluation of deferred tax balances due to legislative changes 54 (28) Other Income, Net Tax rate differential on origination and Other income of $15 million in 2012 was primarily associated with reversal of temporary differences – (31) investment income and expenses from certain investments, compared Impairment on goodwill and intangible to income of $1 million in 2011. assets 11 – Stock-based compensation 9 4 Other items 8 14

Income tax expense $ 620 $ 545

Effective income tax rate 26.4% 25.5%

46 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 47 556171 11 (10) – 748 11 2011 % Chg $1,192 (6) $2,127 1 61 55 71 832 2012 $ 1,123 $2,142 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT 2010 2011 2012 $1,704 $1,736 $1,788 CONSOLIDATED ADJUSTED CONSOLIDATED NET INCOME dollars) of millions (In Wireless Cable RBS Media Corporate Additions to PP&E Total additions to PP&E ADDITIONS TO PP&E Additions to PP&E includeplacing those costs our associatedbusiness with PP&E requires acquiring extensive into and including and service. continual investment investment Becausegeographical in reach equipment, in the andand telecommunications capacity, new management additions focuses continually technologiesmanagement to of on PP&E these the and are expenditures. planning,on significant Our managing funding expansion management additions and focus toamortization is PP&E of expense more than because on additions managing toon PP&E depreciation our have and a cash directcash flow, impact accounting measures whereas required depreciation under IFRS. and amortizationThe are additions non- tocapital PP&E represent before related PP&EAccordingly, changes that for to we purposes non-cash actually ofthat comparing working took our additions title PP&E to to outlays, PP&Ecapital we in best before believe the reflect related period. our changesaccurate cost determination to of for non-cash period-to-period PP&E comparisons. working in a period,Additions and to PP&E provide for a the more differentYears segments ended are December described 31, (In below: millions of dollars) Discontinued Operations As discussed in the Cablewas segment section, the the secondremnants quarter last of of 2012 period whichaccounting are and of reporting now purposes. operations treated as for discontinued operations our for Video business, the –– n/m n/m 6456 20 11 64 99 n/m n/m (56) (75) (27) 19 (28) n/m 3.17 8 2011 % Chg 1,563 9 $ 1,590 9 $ 1,590 9 $ 1,736$ 3.20 3 8 – – 77 92 80 54 (14) (32) 3.43 (233) 2012 1,700 $ 1,732 $ 1,732 $ 1,788 $ 3.45 (1) (1) (1) acquisition expenses debt Stock-based compensation expense Integration, restructuring and Settlement of pension obligations Loss on repayment of long-term Impairment of assets operations Gain on spectrum distribution tax change operations Add (deduct): Net income from continuing Income tax impact of above items Income tax adjustment, legislative Loss from discontinued operations Net income Adjusted net income Adjusted basic earnings per share Adjusted diluted earnings per share Net income from continuing The $142continuing million operations is year-over-yearprofit due of to increase $95million the in and million, growth the in the decrease net$99 adjusted in million, gain loss partially operating income on offset on$80 by repayment spectrum from an of increase distribution long-term million, inrestructuring debt of impairment costs of of of $233 depreciation assets $36million. of million and and an income amortization taxExcluding expense of non-recurring of $75 adjusted items, $76 net last income year’soperating million, profit is of $52 $95 million primarily million$49 and decrease due increase in million, income to in amortization tax of expense the $76 partially of million. growth offset in adjusted by increase in depreciation and (1) See the section “Key Performance Indicators and Non-GAAP Measures”. Net Income from Continuing OperationsThe and table Adjusted below Net reconciles Income netadjusted net income income: from continuing operationsYears to ended December 31, (In millions of dollars, except per share amounts) MANAGEMENT’S DISCUSSION AND ANALYSIS

Wireless Additions to PP&E Cable Additions to PP&E Wireless PP&E additions for 2012 reflect our strategy to maintain our The Cable segment capital expenditures increased year-over-year by leadership in Wireless network deployment, with spending to extend $84 million, or 11%, during 2012 to $832 million, and accordingly, our LTE footprint, improve the user experience and network Cable’s capital intensity increased to 25% from 23% in 2011. This reliability. increase was driven by continued investments in the cable network to enhance the customer experience through increased speed and Wireless segment capital expenditures decreased year-over-year by performance of our Internet service and capacity enhancements to 6%, or $69 million, to $1,123 million and Wireless capital intensity our digital network to allow for incremental HD and on-demand improved to 17%, from 18% in 2011. The decrease in Wireless services to be added. Higher analog to digital subscriber migration additions to PP&E is attributable to increased spending on the activity and investments in customer premise equipment related to continued deployment of our LTE network, offset by lower HSPA+ the Next Box 2.0 program also contributed to the increase in capacity investments and the timing of spend on cell site construction, additions to PP&E, partially offset by timing of spend on projects customer billing systems and the development costs of the Rogers related to customer billing systems. One Number service incurred in the prior year.

RBS Additions to PP&E 2012 ADDITIONS TO PP&E The increase in RBS PP&E additions for 2012 reflects increased activity (%) and timing of expenditures on customer networks and support capital.

Media Additions to PP&E Media’s PP&E additions during 2012 primarily reflects expenditures on digital and broadcast systems and infrastructure upgrades for Sports WIRELESS 52% $2.1 CABLE 39% Entertainment facilities. BILLION

RBS 3% EMPLOYEES MEDIA 3% Employee salaries and benefits represent a material portion of our CORPORATE 3% expenses. At December 31, 2012, we had 26,801 (2011 – 28,745) employees across all of our operating groups, including our shared services organization and corporate office. Total salaries and benefits for employees (both full and part-time) in 2012 was approximately $1,813 million, up from $1,742 million in 2011. This was due to higher baseball player costs, higher employee benefit costs and an increase in stock-based compensation expense compared to 2011 due to a larger increase in our stock price.

48 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 49 2011 ROGERS COMMUNICATIONS INC. ––––– ––––– ––––– 1 (6) – 5 2 731–3 27 8645611 6 3499 20 (19) – 3 – 15 41 10 – – 17 8 11 – 4 – 99 86 20 19 21 26 (56)(28) (11) (28) (4) – (13) (28) – – (27) (8) (6) (3) (10) (64)(56) (34)(11) (20) 19 – (15) (41) (17) – (8) (4) (11) – 180 44 55 91 (10) 405 93 96 100 116 Full (545) (97) (162) (157) (129) (738) (158) (146) (166) (268) (112) (36) (29) (26) (21) (117) (30) (30) (31) (26) Year Q4 Q3 Q2 Q1 2,135 432 659 570 474 4,739 1,101 1,227 1,2444,608 1,167 1,0472,865 1,231 1,175 593 1,155 804 731 737 1,549 403 367 397 382 3,036 670 815 761 790 3,3091,611 838 428 826 407 832 437 813 339 (1,743) (454) (427) (444) (418) 12,346 3,155 3,131 3,097 2,963 $ 1,590 $$ 335 1,563 $ $ 497 327 $ $$$ 413 2.93 491 $ $ $ 2.91 $$ 0.63 345 410 $$ 0.63 $ 2.88 $ $ 0.92$ 2.86 $ 335 $ 0.88 1,563 0.61 $ $ $ 0.76 0.61 $$ $ 0.75 0.91 327 $ 1,590 $ $ 0.62 $ 0.87 $ 0.62 0.75 491 335 $ $ 0.74 $ $ 0.60 410 497 0.60 $ $ 335 413 $ 345 $ 1,736 $ 350 $ 489 $ 469 $ 428 $$ 3.20 $ 3.17$ $ 2,127$ 0.66 $ $ 1,973 0.66 $ $ 0.90 653 $ $ 0.90 289 $ $ 0.86 559 $ 0.85 $ 510 $ $ 0.77 520 0.77 $ 564 $ 395 610 $ 7,138 $ 1,826 $ 1,832 $ 1,759 $ 1,721 2012 ANNUAL REPORT 2012 –––– – –––– – –––– – 54 – – 54 – 32 –7792 – 5780 10 13 26 80 7 (12) 19 – 33 6 – 42 – 52 5 15424 89 27 22 22 18 (14) 12 (4) (10) (12) (32) – – (13) (19) (77)(92) (57) (10) (26)(80) (7) 12 (80) (33) (6) – (42) – – 235 237 (8) 3 3 190 75 50 79 (14) 351 88 86 90 87 Full (233) (233) – – – (620) (112) (177) (224) (107) (664) (176) (169) (159) (160) (113) (34) (30) (24) (25) (123) (33) (29) (32) (29) Year Q4 Q3 Q2 Q1 2,352 641 643 637 431 2,766 576 818 789 583 4,834 1,176 1,288 1,2764,665 1,094 1,109 1,255 1,255 1,046 1,605 421 403 403 378 3,063 687 843 796 737 3,3581,620 852 434 838 392 843 440 825 354 (1,819) (453) (437) (466) (463) $ 1,732 $ 529 $ 466$ $$ 413 3.34 $ $ 3.32$ $ 1.03$ $ 324 1.02 3.28 $$ $ 0.90 3.26 $ $ 0.90 1,700 1.03 $ $ $ 0.79$ 1.02 $ $ 0.77 0.90 529 $ 1,732 $ $ $ 0.90 0.62 $ 0.77 0.61 466 529 $ $ 0.75 $ $ 0.58 400 466 $ $ 0.57 413 305 $ 324 $ 1,788 $ 455 $ 495 $ 478 $ 360 $$ 3.43 $ 2,142 $ 0.88 $ 707 $ 0.96 $ 528 0.91 $ $ 458 $ 0.68 449 $ 3.45 $ 0.88 $ 0.96 $ 0.92 $ 0.69 $ 7,280 $ 1,920 $ 1,889 $ 1,765 $ 1,706 (1) (1) (1) (1) : (1) eliminations eliminations Basic Diluted Basic Diluted (recovery) expenses RBS Media Corporate items and intercompany Diluted Basic Cable Wireless Wireless Cable RBS Media Corporate items and intercompany change Gain on spectrum distribution operations: Stock-based compensation expense Integration, restructuring and acquisition Settlement of pension obligations Loss on repayment of long-termImpairment debt of assets operations recovery expenses ventures Total operating revenue 12,486 3,261 3,176 3,106 2,943 Income tax adjustment, legislative tax Adjusted net income Income tax impact of above items Income tax expense Net income from continuing operations Loss from discontinued operations Net incomeEarnings per share from continuing Earnings per share: Net income Loss from discontinued operations Net income from continuingAdd operations (deduct): $ 1,700 $ 529 $ 466 $ 400 $ 305 Net income before income taxes Adjusted earnings per share from continuing Stock-based compensation (expense) Integration, restructuring and acquisition Settlement of pension obligations Operating profit Depreciation and amortization Impairment of assets Operating income Finance costs Share of income (loss) of associates and joint Other income (expense), net Adjusted operating profit Additions to PP&E Pre-tax free cash flow $ 2,029 $ 296 $ 589 $ 656 $ 488 (1) As defined. See the section “Key Performance Indicators and Non-GAAP Measures”. Adjusted operating profit (loss) (In millions of dollars, except per share amounts) Operating revenue SUMMARY OF QUARTERLY RESULTSThe following AND table KEY contains our PERFORMANCE quarterly INDICATORS consolidated financial resultsQuarterly and Consolidated key Financial performance Summary indicators for 2012 and 2011. MANAGEMENT’S DISCUSSION AND ANALYSIS

Summary of Fourth Quarter 2012 Results The quarterly trends in RBS operating profit margin primarily reflect In the fourth quarter of 2012, consolidated operating revenue the ongoing shift from lower-margin off-net legacy long distance and increased by 3% to $3,261 million, compared to $3,155 million in the data services to higher-margin on-net next generation IP-based same period in 2011. We experienced revenue growth of 5% in services. Wireless, 2% in Cable and 1% in Media, partially offset by the 5% The quarterly trends in Media’s results are generally attributable to decline in RBS revenue. Consolidated fourth quarter adjusted continual investment in prime-time programming, increased operating profit increased 7% year-over-year to $1,176 million, with subscriber fees and fluctuations in advertising and consumer market 3% growth at Wireless, 4% growth at Cable, 70% growth at Media conditions. and 35% growth at RBS. The fourth quarter results generally reflect improvements made over the year to enhance our cost structure and to reaccelerate the rate of revenue growth. The results also reflect a Impact of Seasonality on Quarterly Results temporary net benefit at Media due to the recently resolved NHL Our operating results are subject to seasonal fluctuations that player lockout, which contributed to reductions in sports materially impact quarter-to-quarter operating results. As a result, broadcasting costs as no NHL games were produced or aired in the one quarter’s operating results are not necessarily indicative of what fourth quarter. a subsequent quarter’s operating results will be. Wireless, Cable and Media each have unique seasonal aspects to their businesses: During the fourth quarter of 2012, we recorded net income from continuing operations of $529 million, with basic and diluted • Wireless’ operating results are influenced by the timing of our earnings per share from continuing operations of $1.03 and $1.02, marketing/promotional expenditures and higher levels of respectively, compared to a net income from continuing operations of subscriber additions and subsidies, resulting in higher subscriber $335 million, with basic and diluted earnings per share from acquisition and activation-related expenses in certain periods. Such continuing operations of $0.63, respectively, in the corresponding heightened activity generally occurs during the third and fourth period of 2011. quarters, and can also occur or be accentuated by the launch of popular new wireless handset models.

Impact of Trends on Quarterly Results • Cable’s operating results are subject to modest seasonal In addition to the seasonal trends described above, revenue and fluctuations in subscriber additions and disconnections. Typically, operating profit across all of our businesses can fluctuate from this is caused by movements of university and college students and changes in general economic conditions. individuals temporarily suspending service for extended vacations or seasonal relocations, as well as our concentrated marketing The quarterly trends in Wireless revenue and operating profit reflect efforts generally conducted during the fourth quarter. the growing number of wireless voice and data subscribers, increased handset subsidies driven by the consumer shift towards smartphones, • The seasonality at Media is a result of fluctuations in advertising and a modest decrease in blended ARPU reflective of ongoing and related retail cycles related to periods of increased consumer changes in wireless voice pricing. Wireless has continued its strategy activity and to the Major League Baseball season, where revenues of targeting higher value postpaid subscribers, which has also and expenses are concentrated in the spring, summer and fall contributed to the significantly heavier mix of postpaid versus months. prepaid subscribers. Growth in both our customer base and overall market penetration have been accompanied by coincident increases RBS does not generally have any unique seasonal aspects to its over time in customer service, retention, credit and collection costs. business. However, much of these cost increases have been offset by operating efficiency gains. Other fluctuations in net income from quarter-to-quarter can also be attributed to losses on the repayment of debt, foreign exchange gains The quarterly trends in Cable services revenue and operating profit or losses, changes in the fair value of derivative instruments, other increases are primarily due to greater penetration and usage of its income and expenses, impairment of assets and changes in income tax Internet, digital and telephony products and services, combined with expense, as described above. pricing changes made over the past year.

50 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 51 8 $73 $250 ility: c 6 $90 it fa d $2,00 hts: re g c $350 er 4 1 d itures: $ ram ri d g other net investments: d 03 osts: 8 c $ s: d tion hase of shares: c c en itions to pro uisitions an d 2010 2011 2012 6.68% 6.22% 6.06% cq dd ROGERS COMMUNICATIONS INC. ash PP&E expen WEIGHTED AVERAGE COST OF LONG-TERM DEBT (%) C Net repayments un Repur Divi A A Transa 2 1 20 2012 ANNUAL REPORT H S ollars) d OF CA S E S 1 2 U 1 2010 2011 2012 $2,181 $1,973 $2,029 $4,25 PRE-TAX FREE CASH FLOW dollars) of millions (In 20 (In millions of Bank Credit Facilities In Julysyndicated 2012, bank Rogers creditRogers’ entered prior facility $2.4 into billion maturingJuly bank a 2013, credit in extending facility Rogers’ new, that July long-termfacility was liquidity. is five-year set 2017. used The for to new $2.0 general It bank expire corporate credit in purposes. billion replaces At December 31,this 2012, facility there and our were cashtogether no and with cash advances equivalents the outstanding werereceivable committed $213 under funding million securitization that, available$3.1 under billion program the of available accounts liquidity. discussed below, provides for Taking into account thebeginning opening bank of advances 2012 ofcash $57 and equivalents million the at at December activities the 31, 2012 described were above, $213 million. the cash and (972) (67) 2011 % Chg (2,831) – $ (12) n/m $ 3,791 (10) (317) 2012 (2,834) $ 270 $ 3,421 shares; and 37.5% interest in MLSE; and related changes in non-cash working capital; $79 million from 2011.in These other items assets include primarily a dueprepaids $131 to million and the increase increase a inaccrued inventory liabilities; $140 and and other million decrease in accounts payable2011, as and a resultloss carryforwards. of using nearly all of our remaining income tax Cash used in investing activities Cash used in financing activities Change in cash and cash equivalents Less: Cash provided by operating activities • $803 million payment of dividends. Cash Used in Financing Activities Cash used in financingmillion activities in was 2011, and $317 includes: million, compared to• $972 $1.1 billion in proceeds from issuance• of long-term $250 debt; million net repayment of bank• debt; $350 million for purchase for cancellation of Class B Non-Voting • net investments of $707 million for• acquiring payments of theScore program and rights and our other investments of $121 million. Cash used in$2,831 in investing 2011, and activities includes: was• $2,834 million, additions compared to to PP&E of $2,006 million, including $136 million of Cash Used in Investing Activities For 2012, cashoperating provided items, which by is calculated operationscash by items before removing the from changes effect net ofmillion in income, all increased non- non-cash to in $4,729operating million, 2011. working from capital $4,698 Taking items,for income taxes into paid 2012, and accountcompared interest cash to paid $3,791 the million generated incapital changes 2011. and The other from increase items in in for non-cash operations 2012 primarily working non-cash includes: • was cash $3,421 used for million, non-cash working capital items of $248 million, up • income taxes paid of $380 million, an increase of $281 million over Cash Provided by Operating Activities The following table shows the summaryYears of ended consolidated December cash 31, (In flows: millions of dollars) 4. CONSOLIDATED LIQUIDITY AND FINANCING LIQUIDITY AND CAPITAL RESOURCES MANAGEMENT’S DISCUSSION AND ANALYSIS

Accounts Receivable Securitization Program Share Repurchases On December 31, 2012 we entered into an accounts receivable In February 2012, we renewed our normal course issuer bid (“NCIB”) securitization program. It enables us to sell certain trade receivables to repurchase Class B Non-Voting shares of RCI for a further one-year into the program with the proceeds recorded in current liabilities as period. This allows us to purchase up to the lesser of 36.8 million Class revolving floating rate loans of up to $900 million. We will continue B Non-Voting shares, representing approximately 9% of the then- to service these accounts receivables and they will continue to be issued and outstanding Class B Non-Voting shares, and that number recorded in current assets on our Statement of Financial Position. of Class B Non-Voting shares that can be purchased under the NCIB for an aggregate purchase price of $1.0 billion. The terms of the Company’s accounts receivable securitization program are committed until its expiry on December 31, 2015. Initial During 2012, we purchased for cancellation 9,637,230 Class B Non- funding was received on January 14, 2013. The buyer’s interest in Voting shares for $350 million. All of these shares were purchased these trade receivables ranks ahead of the Company’s interest. The directly under the NCIB. buyer of the Company’s trade receivables has no further claim on any During 2011, we purchased for cancellation 30,942,824 Class B Non- of our other assets. Voting shares for $1,099 million. Of these shares, 21,942,824 were Debt Issuances and Redemptions purchased for cancellation directly under the NCIB for $814 million, In June 2012, we issued $500 million of 3.0% Senior Notes due 2017 and the remaining 9,000,000 were purchased for cancellation (the “2017 Notes”) and $600 million of 4.0% Senior Notes due 2022 pursuant to private agreements with arm’s-length third party sellers (the “2022 Notes”). The net proceeds from the offering were $1,091 for $285 million. million after deducting the original issue discount and debt issuance In February 2013, RCI filed a notice with the TSX of our intention to costs. The net proceeds were used to repay outstanding advances renew our NCIB for our Class B Non-Voting shares for a further one- under our bank credit facility and for general corporate purposes, year period. Subject to acceptance by the TSX, the TSX notice provides which included funding a portion of our ownership interest in MLSE. that RCI may, during the twelve-month period, commencing In March 2011, we issued $1,450 million of 5.34% Senior Notes due February 25, 2013 and ending February 24, 2014, purchase on the TSX, 2021 and $400 million of 6.56% Senior Notes due 2041. The net the New York Stock Exchange (“NYSE”) and/or alternate trading proceeds from the offerings were approximately $1,840 million after systems up to the lesser of 35.8 million Class B Non-Voting shares and deducting the original issue discount and debt issuance costs. The net that number of Class B Non-Voting shares that can be purchased proceeds were used to fund the March 2011 redemption of two under the NCIB for an aggregate purchase price of $500 million. public debt issues maturing in 2012, together with the termination of The actual number of Class B Non-Voting shares purchased under the the associated Debt Derivatives and to partially repay outstanding NCIB and the timing of such purchases will be determined by advances under our bank credit facility. management considering market conditions, stock prices, our cash In March 2011, we also redeemed the outstanding principal amount position and other factors. of our US$350 million 7.875% Senior Notes due 2012 and the outstanding principal amount of our US$470 million 7.25% Senior Capital Resources Notes due 2012. Concurrently with the redemptions of these senior Our capital resources consist primarily of cash flow from operations, notes, we terminated the associated Debt Derivatives. The total cash cash and cash equivalents, available lines of credit, accounts expenditure was approximately $1,208 million, consisting of $878 receivable securitization and long-term debt issuances. million for the redemption of the senior notes and $330 million to This information is forward-looking and should be read in terminate the Debt Derivatives. conjunction with the section “Caution Regarding Forward-Looking Statements, Risks and Assumptions” and the related disclosures for RATIO OF DEBT TO ADJUSTED OPERATING PROFIT the various economic, competitive and regulatory assumptions, factors and risks that could cause actual future financial and operating results to differ from those currently expected. 2.1x 2.2x 2.3x On a consolidated basis, we anticipate that we will generate a net cash surplus in 2013 from our operations. We expect that we will have sufficient capital resources to satisfy our cash funding requirements in 2013, including the funding of dividends on our common shares, taking into account cash from operations and the amount available under our $2.0 billion bank credit facility and our $900 million accounts receivable securitization program. At December 31, 2012, there were no restrictions on the flow of funds between subsidiary companies or between RCI and any of its subsidiaries.

In the event that we require additional funding, we believe that any such funding requirements may be satisfied by issuing additional debt financing, which may include the restructuring of our existing bank credit facility or issuing public or private debt or amending the terms 2010 2011 2012 of our accounts receivable securitization program or issuing equity, all depending on market conditions. In addition, we may refinance a portion of existing debt subject to market conditions and other factors. There is no assurance that this will or can be done.

52 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 53 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT Pension Plans Purchase of Annuities From time tocontributions to time our thehave pension Company purchased plans has and, annuitiespension in made from benefit turn, additional insurance thepension obligations lump-sum plans. pension companies for The plans toresponsibility certain purchase for, fund of retired and the the eliminatesaccrued employees annuities benefit significant relieves obligation in risk for us associated the the retired of with, employees. the primary In 2012, we didour not pension make plans and anyannuities. the additional pension lump-sum plans contributions did to not purchaseIn additional 2011, wepension made plans, a followingmillion lump-sum of contribution which annuities of the frompension $18 insurance pension plans companies million plans forJanuary to who employees purchased our 1, in $68 had the settlement 2011. of retired pension The obligations was between $11 non-cash million. January settlement loss 1, arising 2009 from and this Employee Benefit Plan Funding Our pensionDecember 31, plans 2012 ofto had approximately $334 have a million, aConsequently, and are deficiency deficiency in expected onmaking on addition certain a minimum to a solvency monthlysolvency special our basis solvency payments deficiency. at to regularcontributions eliminate basis December associated contributions, the In with 31, at weapproximately benefits 2013. 2012, paid are $10 from therequirements million. the are plans, In expected special totalled toannual 2013, be adjustments payments, our $96 thereafter million,staffing based total including and assumptions. on estimated will various be funding market subject factors to As and further discussedchanges in in factors the such section asincrease the “Critical discount and rate, Accounting the theaccrued rate Estimates”, of benefit expected compensation obligation, returnplan pension assets on over expense accrued plan obligations and in the assets the future. can deficiency of impact the recommendations to purchase, hold orsuch sell ratings the rated provide securities, comment norparticular do as investor. to There market isin no price effect assurance or for that suitability anyrevised any for given or rating a period withdrawn will of entirely remain by time,judgment a or circumstances rating that so agency any in warrant.of rating the The BBB future will ratings if from not on in Standard be all RCI’s its & represent senior investment Poor’s grade debt and ratings. Fitch and of Baa1 from Moody’s Credit Ratings The following information relating toit our credit relates ratings is toratings provided as may our affect financingfinancing our and costs the ability terms andratings to of on liquidity. obtain such our financing. debt Specifically, short-termbelow by A and the investment credit reduction rating in long-term grade agencies,financing the ratings, particularly and credit a our could access downgrade to adversely sources affect of liquidityIn our and capital. cost May of corporate 2012, credit Standard ratingsenior for & unsecured RCI debt Poor’s toassigned to its be BBB be Ratings rating BBB to BBB, each Services and each of the the withIn affirmed 2017 May rating Notes a 2012, and for the Fitch the stable Ratings 2022 RCI’s be affirmed outlook, Notes. BBB the and and issuer the default rating ratingwith for for a RCI’s RCI stable to senior outlook, unsecured andNotes debt assigned and to its the be BBB 2022 BBB, Notes. rating each to each ofIn the May 2017 2012, Moody’srating Investor for Service RCI affirmeddebt to the to be corporate be Baa1 credit and Baa1,rating to each the each of with rating the for a 2017 Notes RCI’s stable andCredit outlook, senior the ratings 2022 and unsecured Notes. are assigned intendedmeasure its to provide Baa1 of investors credit withinstruments quality an range independent of along an aPoor’s scale issue and from of Fitch, AAA, or securities. in Aaa,highest the Ratings in case quality for the of case of debt Standard ofPoor’s, & securities Moody’s, C, which rated, in represents to the the Fitch, case D, of which in Moody’s, represents the andcredit Substantial case the Risk, of lowest in Standard ratings the quality case & of of assigned securities rated. The by the rating agencies are not Rogers hasregulators to two qualify debt outstanding$4 securities billion of of shelf debt RCI, securities oneto in prospectuses US$4 for Canada billion the and in the sale with the otherexpires of U.S. for in up the and January securities sale 2014. to Ontario. of Each up of the shelf prospectuses Shelf Prospectuses Covenant Compliance We are currently indebt compliance instruments. with At allleverage of December covenants the in 31, covenants effectcredit 2012, under other our facility there than those were (seeFinancial pursuant no Note to Statements). our financial 17(h)covenants, bank Based to we theapproximately on would 2012 $10.9 our Audited haveDecember 31, Consolidated 2012. most billion had restrictive the of leverage capacity additional to long-term issue debt up at to MANAGEMENT’S DISCUSSION AND ANALYSIS

DIVIDENDS ON RCI EQUITY SECURITIES rate from $1.42 to $1.58 per Class A Voting and Class B Non-Voting In February 2013, Rogers’ Board of Directors approved an annualized shares in February 2012. dividend rate of $1.74 per Class A Voting and Class B Non-Voting In 2012, we declared and paid dividends on each of our outstanding share, effective immediately, to be paid in quarterly amounts of Class A Voting and Class B Non-Voting shares. We paid an aggregate $0.435. Such quarterly dividends are only payable as and when amount of $803 million in cash dividends, an increase of $45 million declared by our Board and there is no entitlement to any dividend from 2011. prior thereto. This follows the increase to our annualized dividend

We have declared and paid dividends on each of our outstanding Class A Voting and Class B Non-Voting shares during the past two years, as follows:

Dividend Dividends paid Declaration date Record date Payment date per share (in millions) February 15, 2011 March 18, 2011 April 1, 2011 $ 0.355 $ 195 April 27, 2011 June 15, 2011 July 4, 2011 $ 0.355 $ 194 August 17, 2011 September 15, 2011 October 3, 2011 $ 0.355 $ 190 October 26, 2011 December 15, 2011 January 4, 2012 $ 0.355 $ 187

February 21, 2012 March 19, 2012 April 2, 2012 $ 0.395 $ 207 April 25, 2012 June 15, 2012 July 3, 2012 $ 0.395 $ 205 August 15, 2012 September 14, 2012 October 3, 2012 $ 0.395 $ 204 October 24, 2012 December 14, 2012 January 2, 2013 $ 0.395 $ 204

We currently expect that the dividend record and payment dates for Derivatives are used for risk-management purposes only. The the 2013 declaration of dividends, subject to the declaration by our Canadian dollar equivalent of our U.S. dollar-denominated long-term Board each quarter at their sole discretion, would be as follows: debt illustrated in the table below reflects the contracted foreign exchange rate for all of our Debt Derivatives, regardless of Record date Payment date qualifications for accounting purposes as a hedge. March 15, 2013 April 2, 2013 At December 31, 2012, 100% of our U.S. dollar-denominated debt June 14, 2013 July 3, 2013 was hedged on an economic basis, while 91.7% of our U.S. dollar- September 13, 2013 October 2, 2013 denominated debt was hedged on an accounting basis. The Debt December 13, 2013 January 2, 2014 Derivatives hedging our US$350 million Senior Notes due 2038 do not qualify as hedges for accounting purposes. INTEREST RATE AND FOREIGN EXCHANGE MANAGEMENT RATIO OF ADJUSTED OPERATING PROFIT TO INTEREST Foreign Currency Forward Contracts In July 2011, we entered into an aggregate US$720 million of foreign 7.0x 7.1x 6.8x currency forward contracts to hedge the foreign exchange risk on certain forecast expenditures (“Expenditure Derivatives”, and together with Debt Derivatives, “Derivatives”). The Expenditure Derivatives fix the exchange rate on an aggregate US$20 million per month of our forecast expenditures at an average exchange rate of Cdn$0.9643/US$1 from August 2011 through July 2014. As at December 31, 2012, US$380 million of these Expenditure Derivatives remain outstanding, all of which qualify for and have been designated as hedges for accounting purposes.

Economic Hedge Analysis For the purposes of our discussion on the hedged portion of long- term debt, we have used non-GAAP measures given that we include all Debt Derivatives hedging our U.S. dollar-denominated debt, 2010 2011 2012 whether or not they qualify as hedges for accounting purposes. Debt

54 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 55 Fair (524) (511) (136) value 97.6% 6.22% 1.1340 . dollar- 100.0% $ (375) 5,716,945 10,689,099 112,462,014 412,395,406 524,857,420 Cdn $ cember 31, 2011, RCI U.S. $U.S. $ 4,230 4,230 Cdn $ 10,347 Cdn $ 10,597 notional December 31, 2011 December 31, 2011 rate 6.06% 1.1340 ROGERS COMMUNICATIONS INC. Exchange 100.0% 100.0% 8,734,028 4,638,496 112,462,014 402,788,156 515,250,170 350 1.0258 359380 0.9643 3 366 13 U.S. $ 2,280 1.2270 2,798 (561) U.S. $U.S. $ 4,230 4,230 Cdn $ 11,447 Cdn $ 11,447 notional December 31, 2012 December 31, 2012 $ 1,600 1.0252 $ 1,640 $ 34 2012 ANNUAL REPORT (1) attend meetings ofstipulated by our stock shareholders exchanges,offer are but, is not except entitled maderequirement under to as applicable to vote law required or at purchasemade RCI’s such by constating for outstanding meetings. documents law that If the an Classprotection or an offer outstanding be available A as Class to Votingoffer B shareholders is shares, Non-Voting under made thereshares, shares to RCI’s the purchase is and constating offer both for there documents. no than Class the the If is A offer Class to an A no Voting the Voting holders shares other of shares and Class may B Class be Non-Voting shares. made B on Non-Voting different terms Class B Non-Voting shares exercisable (1) Holders of RCI’s Class B Non-Voting shares are entitled to receive notice of and to Weighted average numberpurpose of of the shares“Key earnings Performance outstanding Indicators per and is Non-GAAP share Measures”. used calculation; refer for to the the section Class A Voting estimated credit-adjusted valueschanges of in theDecember credit Derivatives 31, 2012, spreads are detailsare of subject as of follows: the to derivative Rogers instruments net and liability its counterparties. At Common shares Class B Non-Voting Total common shares Options to purchase Outstanding options Outstanding options $ 10,601 $ 10,102 $ 499 December 31, 2011 (2) $ 11,382 $ 10,858 $ 524 December 31, 2012 (2) (1) (1) deferred transaction costs. accounted for 91.7% of its Debt Derivatives as hedges against designated U.S. dollar-denominated debt. As a result, on December 31, 2012, 91.7% of U.S denominated debt is hedged for accounting purposes compared to 100% on an economic basis. for Debt Derivatives As assets As liabilities As assets As assets Percent hedged Net derivative liabilities Total Percent of long-term debt fixed Weighted average interest rate on long-term debt OUTSTANDING COMMON SHARE DATA Set out below isend for our 2012 outstanding and 2011. commonClass In share 2012, B we data Non-Voting purchased at an sharesapproximately aggregate fiscal for 9,637,230 year- $350 cancellation pursuantNote million. to 21 our For NCIB to additional for our information, 2012 refer Audited to Consolidated Financial Statements. Long-term debt (1) Before deducting(2) fair value decrement arising Includes current from and long-term purchase portions. accounting and (In millions of dollars) Long-Term Debt Plus Net DebtThe Derivative Liabilities aggregateliabilities of at the our estimated credit-adjustedcalculated mark-to-market long-term as valuation follows: is debt plus net Debt Derivative Total long-term debt at fixed rates (In millions of dollars) Debt Derivatives accounted for as cash flow hedges: Mark-to-Market Value of Derivatives In accordance with IFRS,estimated we credit-adjusted have mark-to-market recordedrelated our valuation discount Derivatives using rates usingthe together treasury- an with relevant an estimated term bond spread and for counterparty for each Derivative. The (1) Pursuant to the requirements for hedge accounting under IAS 39, Financial Instruments: Recognition and Measurement, on December 31, 2012, and De U.S. dollar-denominated long-term debt Hedged with Debt Derivatives Hedged exchange rate Amount of long-term debt at fixedTotal rates: long-term debt Debt Derivatives not accounted for as hedges: Net mark-to-market liability Debt Derivatives Expenditure Derivatives accounted for as cash flow hedges: Total Less net current liability portion Net long-term liability portion Consolidated Hedged Debt Position (In millions of dollars, except percentages) (2) Long-term debt includes the effect of the Debt Derivatives. MANAGEMENT’S DISCUSSION AND ANALYSIS

TOTAL COMMON SHARES ANNUALIZED DIVIDENDS 2012 CASH RETURNED TO SHAREHOLDERS OUTSTANDING PER SHARE AT YEAR END (In millions of dollars) (In millions)

443.1 412.4 402.8 $1.28 $1.42 $1.58 112.5 112.5 112.5 Share buybacks: $350

$1,153

Dividends: $803

2010 2011 2012 2010 2011 2012 2012

Class B Non-Voting Class A Voting

COMMITMENTS AND OTHER CONTRACTUAL OBLIGATIONS

Contractual Obligations Our material obligations under firm contractual arrangements as at December 31, 2012 are summarized below. See also Notes 17, 19 and 26 to our 2012 Audited Consolidated Financial Statements.

Material Obligations under Firm Contractual Arrangements (In millions of dollars) Less Than 1 Year 1-3 Years 4-5 Years After 5 Years Total Long-term debt(1) $ 348 $ 1,373 $ 2,047 $ 7,090 $ 10,858 Debt Derivative instruments(2) 112 418 – 59 589 Operating leases 123 171 79 73 446 Player contracts 112 200 52 10 374 Purchase obligations(3) 1,683 1,988 136 73 3,880 Program rights 327 281 201 289 1,098 Pension obligation(4) 96 – – – 96 Other long-term liabilities – 17 10 6 33 Total $ 2,801 $ 4,448 $ 2,525 $ 7,600 $ 17,374

(1) Amounts reflect principal obligations due at maturity. (2) Amounts reflect net disbursements due at maturity. U.S. dollar amounts have been translated into Canadian dollars at the Bank of Canada year-end rate. (3) Purchase obligations consist of agreements to purchase goods and services that are enforceable and legally binding and that specify all significant terms, including fixed or minimum quantities to be purchased, price provisions and timing of the transaction. In addition, we incur expenditures for other items that are volume-dependent. (4) Represents expected contributions to our pension plans in 2013. Contributions for the year ended December 31, 2014 and beyond cannot be reasonably estimated, as they will depend on future economic conditions and may be impacted by future government legislation.

OFF-BALANCE SHEET ARRANGEMENTS Derivative Instruments As previously discussed, we use derivative instruments to manage our Guarantees exposure to interest rate and foreign currency risks. We do not use As a regular part of our business, we enter into agreements that derivative instruments for speculative purposes. provide for indemnification and guarantees to counterparties in transactions involving business sale and business combination Operating Leases agreements, sales of services and purchases and development of assets. We have entered into operating leases for the rental of premises, Due to the nature of these indemnifications, we are unable to make a distribution facilities, equipment and wireless towers and other reasonable estimate of the maximum potential amount we could be contracts. The effect of terminating any one lease agreement would required to pay counterparties. Historically, we have not made any not have an adverse effect on us as a whole. Refer to the section significant payment under these indemnifications or guarantees. Refer “Contractual Obligations” and Note 26 to our 2012 Audited to Note 25 to our 2012 Audited Consolidated Financial Statements. Consolidated Financial Statements.

56 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 57 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT cell phones and mobile devices; Billing and Contracts with Customers In October 2012, theCanadians’ views CRTC on launched a new aphones code public and for retail consultation other wireless personal to services, such obtain devices, as cell that hearing willpublically culminate in with encouraged, a February willwireless 2013. establish service providers a The to addresswireless mandatory proceeding, the code clarity service and which for content contractsspecifically, of the mobile Rogers mobile and proceeding will address related the following issues points: • for The consumers. terms and More conditions that should be• addressed by To a whom the code code for should apply; • How the code should be enforced;• and How the code’s effectiveness should beThe assessed. proceedingcustomers. could result inThe amendments Quebec Consumer to2010, Protection introduced contracts new Act provisionsInternet amendments, with applicable service effective to contracts. wireless, June the These wireline and amendments content includecancellation new of fees that rules can such be on deposits charged to contracts, and customers, the the the useThe cancellation of and security amendments determination renewal alsoprepaid rights of cards of and established the the the disclosure new of consumers. early related provisions costs. on the sale of Restrictions on Non-Canadian Ownership andNon-Canadians Control are permitted to ownup and to control directly 33.3% or of indirectly company the that voting has shares a subsidiary andBroadcasting operating Act. the In company related addition, licenced votes up underrelated of to the votes a 20% of of holding the thecontrolled voting operating shares directly licencee and company or the maylimits indirectly can be enable by owned effective non-Canadians. control and of Combined, up to these The 46.7%. chief executive officerDirectors and of 80% the of operating the licenceeare members must no be of restrictions resident the Canadians. on Boardheld There the of by number non-Canadians ofcompany non-voting at level. shares either that Neither theotherwise may the be controlled holding-company Canadian in or carrier factthe licencee- nor by federal its Cabinet, non-Canadians. parent the Subjectquestion CRTC may to of has appeal be the to factCanadians. jurisdiction to whether determine a as a givenPursuant licencee to the is Telecommunicationsthe same Act controlled rules and apply by to associatedthere Canadian regulations, non- is carriers no such as requirement Wireless,Canadian. that except the that chief executive officer beOn a resident June 29,passed 2012, Bill into C-38companies amending with law. less the than The Telecommunicationsmarket 10% of Act measured amendments total by CanadianCompanies telecommunications revenue exempt that from telecommunications areexcess foreign of successful investment 10% of restrictions. in totalother Canadian growing telecommunications than market revenues their byexempt from market way the restrictions. of shares merger in or acquisitions will continue to be (the Copyright Act (Canada) (the “Telecommunications Act”) (the “Broadcasting Act”). Radiocommunication Act (Canada) Broadcasting Act (Canada) and the The following discussion relates toregulatory government regulation developments and recent discussion that of regulatory affectWireless, Cable, matters RBS Rogers and and Media segments developments overall. follows this specificSubstantially discussion. Additional to all the broadcasting of operations of Media, our aremore subject business to of regulation by activities,Industry, one the or on except following: behalf of for“Industry (i) the Minister the the of Canada”);Telecommunications Industry Canadian non- (Canada) Act Federal (collectively, and (Canada) Department of (ii) the CRTC under both the 5. OPERATING ENVIRONMENT GOVERNMENT REGULATION AND REGULATORY DEVELOPMENTS Accordingly, our results ofchanges operations in could regulations be and materially by affected the by decisions ofCanadian these regulators. broadcasting operationssystems, – radio including andlicenced our (or television operated cable pursuant stations, toby television and an the exemption CRTC specialty order) under andregulating services the regulated and Broadcasting – supervising Act. are The allsystem CRTC aspects with is of responsible the aobjectives for enunciated Canadian in view broadcasting that legislation. to implementingThe CRTC certain is broadcastingthe also responsible policy regulation under ofregulation the of telecommunications Telecommunications Wireless’ Act carriers, mobileInternet for voice which and and telephone data includes services. operationsfrom The the and CRTC regulating Cable’s has the certainindividual power services carriers. to forebear If or theprovided CRTC classes by finds of that a a servicessufficient carrier service to provided is or protect class by subjectforebear of the from to services regulating interests a those of services degreelikely unless users, such of an the to order competition would CRTCcompetitive that be unduly market is is for required impair thosea to services. the Policy The Minister Direction of establishment thatthe Industry instructs maximum issued or the extent CRTC feasible continuance toregulate, under if rely the needed, on of Telecommunications in market Act athe forces and a manner to that interferes withtelecommunications minimum market forces retail to servicesregulation. extent However, are regulations noconditions necessary. can under longer which and we offer subject do these All services. affect toThe the technical price aspects of terms of the and the operation frequency-related of operations radio our of and the televisionthe cable stations, television awarding Cable networks and andmessaging and regulatory other and radio-telecommunications supervision systemssubject in of Canada are to spectrumCanada. for the Industry cellular, licencing Canadatelecommunications requirements can under and and(the does the “Radiocommunication oversight set Act”) and of technical the Telecommunications standards Act. Industry for The Copyright Board ofbody Canada established (“Copyright Board”)“Copyright pursuant Act”) is to a oversee to the regulatory royalties collective in the administration Canada of and copyright of to certain establish copyrighted the works. royaltiesthe The payable review, for Copyright the consideration Board use payable is and responsible approval for of toundertakings, copyright including cable, tariff radio, copyright television royalties and specialty services. collectives by Canadian broadcasting MANAGEMENT’S DISCUSSION AND ANALYSIS

Amendments to the Manitoba Consumer Protection Act took effect in • Industry Canada will use Tier 2 licence areas, which consist of 14 September 2012 and parallel the changes to the Quebec Consumer large service areas covering all of Canada, that generally are the Protection Act. Similar legislation also came into effect in September same size as individual provinces. 2012 in Newfoundland and Labrador and has been tabled in Nova • The auction is expected to occur in the second half of 2013. Scotia. A private member’s bill proposing similar legislation has been introduced in . A decision on the matters to be addressed in the subsequent consultation noted above is expected in the first quarter of 2013. In April 2012, the Ontario government announced that it would be introducing legislation addressing wireless bills and contracts. The These are the key aspects of the policy regarding the 2500-2690 MHz legislation seeks to ensure that contracts are written in plain spectrum: language and spell out which services come with the basic fee and • Industry Canada adopted a spectrum cap (not an auction cap like in which would result in a higher bill. It requires providers to obtain the 700 MHz auction). No carrier participating in the auction may consent in writing before they renew or amend a contract. The possess more than 40 MHz of 2500-2690 MHz spectrum. Rogers is legislation also seeks a cap on the cost of cancelling a fixed-term grandfathered with respect to our holdings in those situations contract that would vary depending on the circumstances of the where we already hold more than 40 MHz of this spectrum. We will contract. The proposed legislation, which would affect new contracts, not be required to return spectrum. would take effect six months after being passed and would also cover • The status of associated entities will be decided in an upcoming existing agreements that are amended, renewed or extended after consultation. that date. This initiative ceased for the time being when the Ontario Legislature was prorogued in October 2012. • There is no special roll-out requirement for 2500-2690 MHz spectrum. A general roll-out rule will be determined in the next WIRELESS REGULATION AND REGULATORY consultation. DEVELOPMENTS • The auction is expected to occur in 2014. Consultation on the Renewal of Cellular and Personal In October 2012, Industry Canada released its consultation paper Communications Services (“PCS”) Spectrum Licences seeking comments on licencing considerations related to auction In March 2011, Industry Canada released its decisions regarding the format, rules and processes, as well as on conditions of licence for renewal process for cellular and PCS licences that began expiring that spectrum in the 2500-2690 MHz band. month. The fundamental determinations were as follows: Roaming and Network Sharing Policy • At the end of the current licence term and where licencees are in Industry Canada’s policy framework for the AWS compliance with all conditions of licence, new cellular and PCS prescribes that all carriers are allowed to roam on the networks of licences will be issued with a term of 20 years; and other carriers outside of their licenced territories at commercial rates. • The previously existing annual fee of $0.0351 per MHz per New entrants are able to roam at commercial rates on the networks population of the licenced area will continue to apply to all cellular of incumbent carriers for five years within their licenced territories and PCS licences, including those initially assigned by auction. The and for 10 years nationally. National new entrant licencees are Minister of Industry Canada may review and amend the fees during entitled to five years of roaming and a further five years if they the licence term after further consultation with licencees. comply with specified roll-out requirements. Roaming privileges A determination regarding existing research and development enable new entrants, which are defined as carriers with less than 10% conditions of licence was not released at this time and will be of Canadian wireless revenue, to potentially enter the market on a released separately. A decision has not been made to date, and until broader geographic scale more quickly. such a time, the current conditions of licence remain in effect. We have entered into roaming agreements with a number of new entrants at commercially negotiated rates. Industry Canada also Consultations on Policy and Technical Frameworks for the mandated antenna tower and site sharing for all holders of spectrum Auction of 700 MHz Band and 2500-2690 MHz Bands licences, radio licences and broadcasting certificates. All of these entities In March 2012, Industry Canada released its policy and technical must share towers and antenna sites, where technically feasible, at framework for the auction of spectrum in the 700 MHz and 2500-2690 commercial rates. We have reached commercial agreements for antenna MHz spectrum bands. tower and site sharing with several new entrants. These are the key aspects of the policy regarding the 700 MHz The roaming capabilities must provide connectivity for digital voice spectrum: and data services regardless of the spectrum band or underlying • Industry Canada did not establish a set-aside as it did in the 2008 technology used. In addition, a host network carrier is neither Advanced Wireless Services (“AWS”) spectrum auction, and instead required to provide a roamer with a service that the carrier does not adopted an auction cap. There are four blocks of spectrum that are provide to its own subscribers, nor to provide a roamer with a service, considered “prime”. Large domestic wireless carriers are restricted or level of service, that the roamer’s network carrier does not provide. to a single block of “prime” spectrum, while all other carriers are The policy does not require seamless communications handover. held to two such blocks. Rogers, Bell and will be considered In February 2012, Industry Canada began a consultation on large carriers nationally, while SaskTel and MTS will be considered mandatory roaming and tower sharing. It currently makes the such in Saskatchewan and Manitoba, respectively. following proposals: • Bidders designated as associated entities are not allowed to bid • Industry Canada proposes expanding mandatory roaming. Any separately in the auction. The definition of “associated entities” licencee can ask any other licencee to roam on their network will be determined in an upcoming consultation. whether they have spectrum in territory or not. The duration is • To encourage rural deployments, single carriers who win two indefinite. paired blocks, or two carriers who share their two paired blocks, • Industry Canada proposes to keep the current seamless handover are required to use their 700 MHz spectrum to provide coverage to rules and not require seamless handover. 90% of their HSPA+ territory within five years and 97% within seven years. Industry Canada will also draft general roll-out • Rates would continue to be determined by commercial requirements under their next consultation. negotiations.

58 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 59 ROGERS COMMUNICATIONS INC. arge. The new rate structure came e installation and maintenance fees 2012 ANNUAL REPORT In December 2011, Rogersto and Bell purchase Canada a announced 75%approval an by agreement interest the in Competition MLSE.whether Bureau, This which it reviewed transaction would it wascompetition. to result subject determine in As to a parteffective substantial of lessening control, this ortelevision jointly prevention purchase of with licences, ofunlaunched Bell MLSE, Leafs Category we Canada, 2 TV, alsoChannel. services, of In Raptors acquired Mainstream three May SportsLetter TV 2012, Category and the to and Live 2 CompetitionCompetition Music Bell GolfTV Bureau (“Commissioner”) issued and and a would Rogers No-Action two indicating not that contest the the Commissioner proposed of MEDIA REGULATION AND REGULATORY DEVELOPMENTS Licence Renewals The CRTCspecialty) considers licence group-based renewalincluding (conventional applications Rogers for and Media. majorOMNI discretionary media The conventional companies, RogersCanada, television group Outdoor Life includes stations Network,(Canada) The the and Biography and City Channel specialty CityNews (Canada),stations and FX were Channel. services given In2014, three-year G4 with licence July terms renewals that 2011, recognizedin expiring the the August comparison different 31, situation Rogers to ofbroadcast the the groups, Media Bell group three Media, Corus other Entertainment and large Shaw English-language Media. Canadian Distant Signals Conventional television stations mustlocal consent signals to into the carriage distantto of markets. carry their Under time-shifted this U.S. regime,the signals BDUs must three that get large want prior English-languageand consent networks City) from besides each to CBC of carrycurrently (CTV, their Global in signals in negotiationsdistant those signals. with time zones. various Rogers distributors Media is for carriageRegulatory Approval of of Recent Acquisitions will apply in additioninto to effect the in usage February ch 2012. Applications toincreasing the the CRTCoriginally requested usage-based to were filed by wholesale reviewBell Videotron, and Shaw and and fees MTS Rogers Allstream. andseeking The vary by closer lower reselling rates. ISPs Decisions the to have on also the applications decision filed the remain applications pending. by rates CRTC Network Interconnection Decision In January 2012, theso CRTC that altered in thecarrier wireless order (“CLEC”) interconnection to a rules wirelessCLEC become carrier a obligations is wireless no relatedlistings longer competitive to to required other local to equal LECs.and exchange meet A access the keep, wireless and CLECinterconnection, and is supply the local entitled CRTC of touses interconnection determined shared-cost, directory that IP bill arrangements. in tounaffiliated areas Regarding where provider, transfer IP a it telephone carrier other must provide calls provider a tocommercial similar that arrangement either agreement to asks within anagreement any cannot six affiliated for be months orrequest reached it. of an within a Companies siximplementation months, formal CRTC must or either request. partyagreement negotiate If significant has may been intervention. a negotiated. progresswill The be implementation within favourable of to the Theefficient Rogers, a decision technology as for it IP year allows interconnection. the Commission after Company to use an a more anticipates the reselling ISP was put inof place. the A reselling fixed ISP monthly as access well fee as per one-tim end user nternet services whereby reselling esale fee based on the capacity of t Service Pricing and Usage- the facilities-based wholesaler and traffic volumes. In place of these exclusive basis to their mobilebroadcast or Internet on subscribers. television, Anyevents, program including must hockey bereasonable games terms. made and available other to live competitors underor fair mobile customers and provided thatInternet portal it or is a produced mobile specifically device. for an and ensure all distributors,services broadcasters negotiate in and good onlinea faith. programming To protect television Canadianscontinue from to losing service provide thecontinue to during service offer it in to question negotiations, their subscribers. and distributors broadcasters must on must how they haveservices provided that consumers they with can morepay subscribe flexibility to models. in through, In the formarket its example, trial pick-and- April it report, conductedprogramming Rogers in flexibility presented to London, consumers. the Ontario results providing of additional a after 60 days instead of 90. In February 2011, thedecisions CRTC on initiated the a pricing proceeding of to wholesale review I its previous CRTC Review of Wholesale Interne Based Billing ISPs would beexceeded specific subject bandwidth caps. to InTelecom November 2011, additional Regulatory the CRTC chargescharges Policy released when based 2011-703, on their rejecting specific end end-user additional users wholesale Review of Broadcasting Regulations In November 2012, thehave the Supreme authority Court to implement ruledin the that value Broadcasting the for signal CRTCcontinue Decision regime did to outlined 2010-167. not chargeunder As rates the a to existing broadcastingwith result, regulatory the distribution framework. recommendations broadcasters put undertakings The forward will by decision Rogers. is consistent charges, a monthly usage-based whol New Media Proceeding Follow-Up With regard to the CRTC’sto authority to fund levy a the taxFebruary from creation 2012 ISPs like and the Rogers decision promotion Supreme that Court of ISPs cannot of Canadian bea Canada regulated “webisodes”, under result, upheld the in a Broadcasting ISPsoffering Act. lower As are connectivity court not tocannot considered be regulated television under to the and Broadcasting be Act. movie acting websites, as and broadcasters by they the interconnecting facility between The CRTC’s Broadcastingsets Regulatory out Policy the CRTC Commission’svertical 2011-601 decisions (“Policy”) integration on in itsrefers the regulatory framework broadcasting to for programming sector. services, Vertical the such as integration conventionaland ownership television specialty stations, or services or pay systems as or well control direct-to-home as (“DTH”)the following: distribution by satellite services, services. The one such Policy as• does entity cable Prohibits of companies both from offering television programs on an • Allows companies to offer exclusive programming to their Internet • Adopts a code of conduct to prevent anti-competitive behaviour • Directed the vertically integrated entities to report by April 2012 CABLE REGULATION AND REGULATORY DEVELOPMENTS • Parties to arbitration would be able to refer toA negotiation decision failures on these matters is expected in the first quarter of 2013. MANAGEMENT’S DISCUSSION AND ANALYSIS

acquisition. In July 2012, the CRTC approved the transfer of the five Rogers was the first carrier to launch LTE in Canada in 2011. In 2011 television licences held by MLSE in which Rogers subsequently Bell Canada launched LTE, and in 2012 both TELUS and MTS launched completed a 37.5% investment. LTE networks. The Bell Canada, TELUS, and MTS launches of LTE enable these companies to provide a wider selection of wireless In the first quarter of 2012, Rogers Media announced an agreement devices and to compete for customers who desire the increased to purchase the Saskatchewan Communications Network, an over-the- capacity and speed that LTE provides, and this is expected to grow air broadcast station. In June 2012, the CRTC approved the over time as LTE expands around the world. acquisition.

In August 2012, Rogers announced that it had entered into an Cable Competition agreement to purchase 100% of the outstanding shares of Score Canadian cable television systems face competition from several Media Inc. for $167 million. As part of this transaction, Rogers also alternative Canadian multi-channel BDUs including Bell TV (previously received a 10% interest in Score Media’s digital media assets, which Bell ExpressVu), Shaw Direct (previously Star Choice) satellite TV has been spun out as a separate entity called Score Digital. Score services and telephone company IPTV services, as well as from the Media Inc. includes theScore Television Network, a national specialty direct reception by antenna of over-the-air local and regional TV service providing sports news, information, highlights and live broadcast television signals. There is also competition from the illegal event programming across Canada. This transaction is subject to reception of U.S. direct broadcast satellite services. In addition, the regulatory approval, anticipated in the first half of 2013, following availability of television shows and movies streaming over the which Rogers will wholly own and control theScore Television Internet through providers such as Netflix has become a direct Network and its related television assets. competitor to Canadian cable television systems. Further in regard to theScore Media Inc. transaction in October of Cable’s Internet access services compete with a number of other ISPs 2012, the $167 million purchase price was paid and the shares of offering residential and commercial dial-up and high-speed Internet Score Media were transferred to an interim CRTC-approved trust that access services. Rogers Hi-Speed Internet services, where available, is responsible for the independent management of the business in the compete directly with Bell’s DSL Internet service in the Internet normal course of operations until CRTC approval is obtained. The market in Ontario, with the DSL Internet services of in New ultimate control over theScore Media business will not transfer to Brunswick and Newfoundland and various resellers using wholesale Rogers until such approval is obtained. In addition, Rogers holds telco DSL and cable Third Party Internet Access services in local approximately 11.8% of the outstanding shares of Score Digital, markets. which includes 10% that will be issued in connection with this transaction and approximately 1.8% of the shares of Score Digital Cable’s Home Phone services compete with Bell’s wireline phone received by Rogers as partial payment for our shareholdings in Score service in Ontario and with Bell Aliant’s wireline phone service in New Media prior to the acquisition. Brunswick and Newfoundland and Labrador. In addition, Home Phone service competes with ILEC local loop resellers (such as Primus) COMPETITION IN OUR BUSINESSES as well as VoIP service providers (such as Vonage and Primus) riding We currently face significant competition in each of our Wireless, over the services of ISPs. Cable, RBS and Media businesses from entities that provide similar services. Each of our segments also faces competition from entities Internet delivery is becoming a direct threat to voice and video service that use alternative communications and transmission technologies delivery. Younger generations increasingly use the Internet as a and may face competition from other technologies being developed substitute for traditional wireline telephone and television services. or to be developed in the future. This section contains a discussion of The use of mobile phones among younger generations has resulted in the specific competition facing each of our Wireless, Cable, RBS and some abandonment of wireline telephone service. The number of Media businesses. wireless-only households is increasing, although the large majority of homes today continue to use wireline telephone service. In addition, Wireless Competition wireless Internet service is increasing in popularity, although is With approximately 27 million subscribers, Canada’s wireless industry generally more expensive and not as fast as wired broadband. is highly competitive. Competition for wireless subscribers is based on price, quality of service, scope of services, network coverage, RBS Competition sophistication of wireless technology, breadth of distribution, The Canadian market for enterprise network and communications selection of devices, branding and marketing. Wireless also competes services features a wide variety of players, with competitors often with its rivals for dealers and retail distribution outlets. focusing on individual geographic markets where their respective network assets are most extensive. Although each market presents its In the wireless voice and data market, Wireless competes nationally own challenges, with competitors investing in maintaining market with Bell and TELUS, as well as newer entrants, various regional share in these target areas, there are relatively few national players, resellers, and other emerging providers that use alternative providers. wireless technologies, such as WiFi “hotspots”. As previously noted, parity of Wireless networks and handset devices In the wireline voice and data market, RBS competes with facilities has dramatically transformed the competitive landscape. This and non-facilities-based telecommunications service providers. In competition is expected to continue and even intensify. Consolidation markets where Rogers owns fibre and cable infrastructure, direct among new entrants or with incumbent carriers could provide greater competition is with incumbent fibre-based providers. In Ontario, RBS competition to Wireless on a regional or national basis. As previously products and services compete with Bell, Data Services and discussed, in 2013 and 2014, auctions of 700 MHz and 2500-2690 MHz Allstream. In Quebec, competition is predominantly with Bell and spectrum respectively, are expected to be held. Rogers will not be Videotron, and with Bell Alliant and in Atlantic Canada. allowed to participate in the auction of the 2,500-2,690 MHz spectrum, because the company already holds more than the Media Competition maximum 40 MHz of spectrum limit to bid in this auction. The Rogers’ radio stations compete with the other stations in their outcomes of both of these auctions may serve to increase competition respective markets as well as with other media, such as newspapers, at Wireless. magazines, television, outdoor advertising and digital properties.

60 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 61 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT The Rogersgovernance Communications system Boardstructures is believes and procedures in that effective place. the andWe Company’s that make detailed therepractices – information including are our on completepractices, statement appropriate our of our corporate governance governance codesand structures of Board conduct and member andGovernance biographies ethics, full – section committee easilywebsite within charters, available at rogers.com/governance. the in Also theportion in Investor the Corporate of Corporate Relations our Governance between website, section you the of will NYSEbased find our corporate companies a and governance summaryissuer our of rules that governance is the applicable listed practices differences on to the as NYSE. U.S.- aThe non-U.S.-based Audit Committee reviewspractices, the the Company’s integrity accounting of policies theand and Company’s financial procedures reporting processes andpublic disclosures the to be financialalso provided to assists statements the the public. andwith Board The legal Audit in other and Committee regulatory its requirements relevant and oversight relating assesses to of the financial systems reporting the ofand Company’s internal the accounting compliance qualifications, and independenceand financial internal controls and auditors. work of external auditors Therecommendations Corporate to the Boarddeveloped Governance to appropriate ensure systems the andto Board Committee procedures of exercise to Directors and enable has Corporate assists discharge the Governance its Board Committee responsibilities.recommending and assists To and the carry establishingpractices, Board this makes corporate out, in governance and the developing, policiesperformance of leads and the Board and the its committees. BoardThe Nominating Committee in identifiesfor prospective its election Director by nominees periodic theand shareholders also review and recommends forincluding of nominees each appointment committee’s by for Chair. the the each Board committeeThe of Compensation thereviewing Board Committee and assistspractices. approving the compensation Therecommending Board and senior management benefit in compensation and Compensationsuccession policies for monitoring, planning monitoring with and respect Committee to senior executives. The is Executiveresponsibilities responsible Committee in assistsincluding for the intervals the toauthorized between Board act at meetings a in inmatters of concerning preceding the such the Company discharging meeting that may of Board, arise areas its from theThe time to Finance as Board time. Committee and reviews specificallyrelating and to to reports the designated consider to Company’s investment theequity strategies Board structure. and and on general debt matters and The PensionCompany’s pension Committee plans andperformance supervises of reviews the the Company’s provisions pension the plans. and investment administrationFor more information, ofdescription go of to the Rogers’ rogers.com/governance corporatebiographical for governance a information structure complete of andinformation our practices, circular Directors and proxy. and copies of our annual CORPORATE GOVERNANCE Rogers’ Board ofgovernance Directors and is continuallybenchmarks fully reviews committed them itslegislation. to We against governance sound are a corporate practicesand acknowledged family-founded take and and leaders pride family-controlledensuring company in and our thatdeserving proactive evolving of Rogers’ and the confidence disciplined of governance the approach public capital structures towards markets. With the and December 2008 practices passingRogers, his of voting Company’s are control founder of andof Rogers CEO which Communications Ted passed members toholds a of trust the voting Rogers controlsuccessive family of generations are of Rogers the beneficiaries. Rogers Communications This family. trust for theAs benefit substantial of stakeholdersequity who of the owned Company approximatelyrepresented as of 27% on December of our 31,oversight 2012, the Board the and Rogers and family value bringshaving is creation. a outside At long-term DirectorsNorth the commitment America. who same to are time, experienced we business benefit leaders from in Competition within the radioin broadcasting individual industry market areas occurslevel, among primarily individual Media’s stations.operators, On radio a including division national Media Canadian and competesstation Broadcasting Corus with clusters Entertainment, in Corporation, other marketsonline which web across Astral large information Canada. own services, Newplayers music radio and technologies downloading, and portable such online operate media as stations’ music audience radio share. streaming services also compete forThe Shopping radio Channel competesretailers, with various Internet retail retailers stores,products. catalogue and On direct awith mail broadcasting level, retailers other The forattention Shopping sales television Channel and of competes loyalty,products its channels on and television. for particularly with channel infomercialsThe placement, that Canadian sell viewer companies magazine competingcompetition industry comes from for other Canadian ismostly magazines both U.S., and from titles highly foreign, that readersinformation sell and in competitive, entertainment and significant websites quantitiesmagazine compete with publications in with for advertisers. Canada. the readership Online and Canadian revenue. This Rogers’ conventionalprincipally for television viewers andstations advertisers and with that other broadcast specialty Canadiangreater television in national services their coverage, localother specialty compete markets, distant channels some Canadian and oftime-shifting increasingly capacity signals which available with and have toavailable digital U.S. for subscribers. viewing border Various and content downloading stationscompetition via for the given share internet of also the viewership. represent Sports Entertainmentteams competes for with audience.League The other Baseball Blue teams Toronto Jays forcompetes with players also other professional local and compete sporting fan and with special base. event other The venues. Major Rogers Centre MANAGEMENT’S DISCUSSION AND ANALYSIS

CHAIR MEMBER BOARD OF DIRECTORS AND ITS COMMITTEES

AS OF FEBRUARY 14, 2013 AUDIT CORPORATE NOMINATINGCOMPENSATION EXECUTIVE FINANCEPENSION GOVERNANCE

Alan D. Horn, CA

Peter C. Godsoe, O.C., O. Ont.

C. William D. Birchall

Stephen A. Burch

John H. Clappison, FCA

Thomas I. Hull

Philip B. Lind, CM

John A. MacDonald

Isabelle Marcoux

Nadir H. Mohamed, FCA

The Hon. David R. Peterson, PC, QC

Edward S. Rogers

Loretta A. Rogers

Martha L. Rogers

Melinda M. Rogers

Dr. Charles Sirois

John H. Tory, O. Ont.

CORPORATE SOCIAL RESPONSIBILITY • Community investment: We stand by the principles of corporate As a responsible corporate citizen, we strive to be a sustainable citizenship and benchmarks for community investment established business and contribute to a better world. From developing by Imagine Canada, committing at least 1% of our net earnings responsible products to engaging employees, investing in before taxes annually to charities and non-profit organizations. communities and tackling climate change, Rogers is firmly committed Every year, Rogers invests in many worthy causes to help create to corporate social responsibility (“CSR”). In fact, CSR is becoming vibrant, healthy, talent-rich communities. Our flagship program, ever more important to our growth, competitive advantage and Rogers Youth Fund, supports educational opportunities for at-risk engagement with all of our key stakeholders. Canadian youth.

Our CSR focus areas include: • Environmental responsibility: We continue to proactively manage the environmental aspects of our business. Each year we measure • Product stewardship: Across the product life cycle – from design, our carbon footprint and undertake a wide range of initiatives to manufacturing and transport to packaging, usage and end-of-life – increase our energy efficiency, reduce paper use and divert we take health, safety, the environment and other issues into materials from our operations from landfills. In addition, we are account. We focus on ensuring our offerings meet customer and focused on building environmental awareness and engagement community expectations, as well as our own criteria for quality, among our employees, customers and communities. social responsibility and environmental respect. • Ethical supply chain: Rogers is a large purchaser, with over 37,000 • Employee engagement: We want Rogers to be a place in which suppliers across Canada and internationally. An ethical supply chain employees feel proud, where they look forward to making a is pivotal to our reputation and success. We pay special attention to contribution, and where each has the chance to do their best work sound sourcing, production and delivery of supplier products and every day. To achieve that, we work hard to create a culture of services, and have set strong expectations of corporate social employee engagement, encourage and respect diversity and responsibility throughout our supply chain, including compliance provide leading workplace initiatives, from far-reaching benefits to with the Rogers Supplier Code of Conduct. customized training, development and personal assistance programs.

To learn more about our social, environmental and community contributions and performance, read our annual CSR report at rogers.com/csr. YOUTH LOCAL SHELTERS COMMUNITY ARTS & CULTURE EDUCATION & FOOD BANKS TELEVISION

ENVIRONMENTAL SUPPLIER CODE RESPONSIBLE WIRELESS DEVICE STEWARDSHIP OF CONDUCT SOURCING RECYCLING

62 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 63 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT We Face Substantial Competition The competition facing“Competition in our our businesses Businesses”.current There is can or be described future nothose in assurance competitors we that the provide, will our or section notindustry at trends provide lower or prices, changing services market adaptwhich requirements, superior more enter we quickly the to market to operate, in factors evolving could or reduce introduce ourWireless market competing share or services. anticipates revenues, Any orsubscriber increase base of some churn. as these lowerextended ongoing pricing offered to to re-pricingpenetration attract of or new the of population customersgenerate requested deepens, is lower the average new monthly by wireless revenuesexisting customers than existing customers, those may which existing generated could from slow revenue customers. growth. Wireless As couldchanges face wireless to increased foreigncould ownership competition result and as control inCanadian of a foreign wireless communications wireless telecommunication market, result licences. througheither companies the This of wireless acquisition entering licences of or recent the athe holder of market wireless licences.resources of The than entry Rogers such into couldWireless’ reduce companies Wireless’ market with revenues share“Restrictions and significantly cause to on greater“Government Regulation capital decrease Non-Canadian and Regulatory Developments”. Ownership significantly. and See Control” the under section The Senior Leadership Teamthe and identification, Line assessment, Management management and areunit monitoring responsible level of for risks business impactingthe Executive strategy Leadership and Team and business Enterprise plans Risk Management. andEnterprise reporting Risk to Management supportsBoard’s the responsibility Audit for CommitteeAssessment risk and process. the by In facilitating addition,assessment Internal a to Audit formal conducts Strategicstatement identify a fraud Risk fraud those could risk occurrisks areas and to of in ensurecontrols. that this which any Rogers identified significant nature fraud policies financial Enterprise are enable mitigated Riskmanagement, which a by Management relies on documented consistent methodologyemployees the to and expertise and and identify of verified risk our risks measurable mitigation management and strategies and as opportunities required. approach as to well asRISKS risk implement AND UNCERTAINTIES AFFECTINGBUSINESS OUR This section describes thehave principal a material risks adverse and effectthe uncertainties on Company that the and could its business subsidiaries. and financial results of We Are Subject to GeneralOur Economic Conditions businesses areconsumer confidence affected and spending. byactivity Recessions, and general declines economic in economic uncertaintyconfidence economic and can conditions reduce erode discretionary and consumer consumerfactors spending. and Any may of business these negativelyproducts and affect services, usprofitability, including decreased through increased advertising, lowersignificant revenue churn proportion demand and of Media’s and for Broadcasting,revenues Publishing our higher are and Digital derived baddependent from on general the debt economic conditions. sale expense. ofPoor economic advertising, A conditions whichplans, may is as also there highly have isassumed no an rate assurance impact of that on return. thechanges our As plans in well, will pension the be market-driven discount able changes ratesRogers to may and being earn result other required the in variables to that makesignificantly would contributions result in in the from futureincorporated that into the differ the actuarial valuation process. current contributions and assumptions The Boardmanagement is with respect responsible, to itsrisks in responsibility for and identifying its principal forprocesses governance to the role, manage these implementationBoard for through risks. of its overseeing The responsibility Audit appropriateassessment to and Committee discuss risk risk policies supports management. with In the assessment responsible respect addition, to the for risk Audit Committee assistingwith is the legal Board andreviews in regulatory the requirements. with oversight Thecontrols senior Audit of that Committee compliance management have also unauthorized been the use, adopted to to adequacythe prevent, safeguard of deter accuracy assets and from of thesteps detect loss the fraud and internal financial adopted and recordsdeficiencies to that and in might verify be review identified. light any special ofThe audit Executive Leadership material Team isrisk responsible for weaknesses policies approving and enterprise for orkey the risks that identification, significant impact assessment thealso and Company’s responsible mitigation ability to of for meetongoing its basis. monitoring objectives. It key is risks and action plans on an Risk Governance Risk Management Process A Strategic Risk Assessment processidentify is conducted and on an assess annualimpact basis the to on key the risksinputs achievement facing into of Rogersindustry the this and Company’s their assessment benchmarks, strategic potential owners include risk and plans. a prior Key formal management riskincluded survey risk interviews with in management. and Emerging the with risksrisk assessment, audit are assessment key and criteria. reports, risks risk are prioritized usingResults standard ofCompany’s the senior management StrategicBoard. and to Enterprise Risk the Riskmanagement Audit Assessment Management plans Committee for of monitors are keymanagement. the the risks reported and progress reports of to on risk the the These status key to risks senior arefunctional used and as the operationallevel. basis A risk for formal pushing management riskfrom down at survey management the is the on focus conductedassist of the business in bi-annually key the unit to identification risks of get emerging facing risks. feedback the organizationThe and corporate to andthe operational related functions risk mitigation monitor activitiesthat the on the an key risk ongoing mitigation risks basisRegular to strategies and be are updates certain effective inmitigation on managing the the risk. activitiesManagement key and the risks responsible Senior are Leadership and Team. theRisk communicated related assessment is ongoing beingplanning, to formally business risk planning incorporated and into internal audit Enterprise Rogers’ planning strategic processes. Risk ENTERPRISE RISK MANAGEMENT Rogers iscapabilities to protect committed and enhancerisk shareholder value. management to The is purpose of notbetween strengthening risk to and return eliminate to risk its maximize value but to to the riskThe organization. optimize Enterprise trade-offs Risk management Managementthat program there is at consistency Rogers tomanaging, seeks the methods to used monitoring ensure in identifying,Company and assessing, and communicating thatCompany’s vision, risks risk mission, values, management throughout strategic and efforts business the objectives. are aligned with the MANAGEMENT’S DISCUSSION AND ANALYSIS

In addition, the CRTC Broadcasting Distribution Regulations do not we cannot access these facilities, as a result of a natural or manmade allow Cable or its competitors to obtain exclusive contracts in disaster or otherwise, our operations may be significantly affected buildings where it is technically feasible to install two or more and may result in a condition that is beyond the scope of our ability systems. to recover without significant service interruption and commensurate revenue and customer loss. We Are Subject to Various Risks from Competing Technologies There are several technologies that may impact the way in which our Network Failures Could Reduce Revenue and Impact Customer services are delivered. These technologies include broadband, IP- Service based voice, data and video delivery services; the mass market The failure of our networks or key network components could, in deployment of optical fibre technologies to the residential and some circumstances, result in an indefinite loss of service for our business markets; the deployment of broadband wireless access and customers and could adversely impact our financial results and wireless services using a radio frequency spectrum to which we may position. In addition, we rely on business partners to carry certain of have limited access. These technologies may result in significantly our customers’ traffic. The failure of one of these carriers might also different cost structures for the users of the technologies and may cause an interruption in service for our customers that would last consequently affect the long-term viability of certain of our currently until we could reroute the traffic to an alternative carrier. deployed technologies. Some of these new technologies may allow competitors to enter our markets with similar products or services Changes in Government Regulations Could Adversely Affect Our that may have lower cost structures. Some of these competitors may Results be larger, with greater access to financial resources than we have. As described in the section of this MD&A “Government Regulation and Regulatory Developments”, substantially all of our business Improvements in the quality of streaming video over the Internet, activities are regulated by Industry Canada and/or the CRTC. As such, coupled with the increasing availability of television shows and regulatory changes or decisions made by these regulators could movies online increases competition to Canadian cable television adversely impact our results of operations on a consolidated basis. systems. If changes in technology are made to any alternative This regulation relates to, among other things, licencing, competition, Canadian multi-channel broadcasting distribution system, the cable television programming services that we must distribute, competition with our cable services may increase. In addition, as wireless and wireline interconnection agreements, the rates we may improvements in technology are made with respect to wireless charge to provide access to our network by third parties, the resale of Internet, it increasingly becomes a substitute for the traditional our networks and roaming on our networks, our operation and wireline Internet service. ownership of communications systems and our ability to acquire an interest in other communications systems. In addition, the costs of The increasing utilization of PVRs could influence Media’s capability providing services may be increased from time-to-time as a result of to generate television advertising revenues, as viewers are provided compliance with industry or legislative initiatives to address consumer with the opportunity to skip advertising aired on the television protection concerns or such Internet-related issues as copyright networks. The emergence of subscriber-based satellite and digital infringement, unsolicited commercial e-mail, cybercrime and lawful radio products could change radio audience listening habits and access. Our cable, wireless and broadcasting licences may not negatively impact the results of Media’s radio stations. Certain generally be transferred without regulatory approval. audiences are also migrating to the Internet as more video and audio content becomes available. Generally, our licences are granted for a specified term and are subject to conditions on the maintenance of these licences. These We Are Highly Dependent upon Our Information Technology licencing conditions may be modified at any time by the regulators. Systems The regulators may decide not to renew a licence when it expires, and The day-to-day operations of our businesses are highly dependent on any failure by us to comply with the conditions on the maintenance their information technology systems. An inability to operate or of a licence could result in a revocation or forfeiture of any of our enhance information technology systems to accommodate additional licences or the imposition of fines. customer growth and support new products and services could have The licences include conditions requiring us to comply with Canadian an adverse impact on our ability to acquire new subscribers, manage ownership restrictions of the applicable legislation. We are currently subscriber churn, produce accurate and timely subscriber invoices, in compliance with all of these Canadian ownership and control generate revenue growth and manage operating expenses, all of requirements. However, if these requirements are violated, we would which could adversely impact our financial results and position. be subject to various penalties, possibly including, in the extreme case, the loss of a licence. In addition, we use industry-standard network and information technology security, survivability and disaster recovery practices. Our ongoing success is in part dependent on the protection of our We May Fail to Achieve Expected Revenue Growth from New and corporate-business-sensitive data, including our customers’ as well as Advanced Services employees’ personal information. This information is considered We expect that a substantial portion of our future revenue growth company intellectual property and it needs to be protected from may be achieved from new and advanced services. Accordingly, we unauthorized access and compromise for which we rely on policies have invested and continue to invest significant capital resources in and procedures as well as IT systems. Failure to secure our data and the development of our networks in order to offer these services. the privacy of our customer information may result in non-compliance However, there may not be sufficient consumer demand for these with regulatory standards and may lead to negative publicity, new and advanced services. Alternatively, we may fail to anticipate or litigation and reputation damage, any of which may result in satisfy demand for certain products and services, or may not be able customer losses, financial losses and an erosion of public confidence. to offer or market these new products and services successfully to subscribers. The failure to profitably attract subscribers to new Most of our employees and critical elements of the network products and services, or failure to keep pace with changing infrastructure and information technology systems are concentrated consumer preferences for products and services, would slow revenue in three Ontario locations: our corporate offices in Toronto and growth and increase churn and could have a materially adverse effect Brampton, and an operations facility in Markham. In the event that on our business, results of operations and financial condition.

64 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 65 , asserting the Class Actions Act Class Proceedings Act ROGERS COMMUNICATIONS INC. Class Actions Act (Saskatchewan) 2012 ANNUAL REPORT was commenced against providers of wireless Business Practices and Consumer Protection Act . The plaintiffs are seeking unquantified damages was commenced against providers of wireless Copyright tariff pressures continueto to increase, affect they our could services. negatively impact If our fees results were of operations. We Are and Will ContinueIn to Be Involved August in(Saskatchewan) Litigation 2004, a proceeding under the We haveliabilities recorded and significantdetermined based income amounts upon substantively of enacted taxin future effect income deferred expense. tax at rates the incomecould These have time. a tax A material amounts impact legislative on change the have amounts inWe recorded. these have been income also tax recordedmore rates the likely benefit than ofmeasured not income of at tax being positions thesettlement sustained that with upon amount the are taxation examination expected authorities.audits, and Our to the tax are filings results be areactual of subject realized to which income could uponindirect materially tax ultimate taxes change payable expense, or the receivableliabilities amount income and and of deferred could, taxes income in taxof certain assets payable interest circumstances, or and result penalties. or in the receivable, assessment The Changing Competitive Landscape Requireson Heightened Organizational Focus Structure and Talent The telecommunications industry is generallyto competitive with attracting respect andemployees retaining a or skilledrestructuring changes workforce. could, in in The certain lossprofitability. circumstances, morale impact of our as certain revenue and a result ofCopyright Tariff Increases events Could Adversely suchOperations Affect Results as of communications in Canada relatingby to wireless the system carriers accessseeking to fee unspecified charged some damagesreimbursement and of punitive of their damages, the customers.2007, effectively the The system the Saskatchewan plaintiffs accesshave Court are the fees granted proceeding certified the collected. asnational, plaintiffs’ a In application national, “opt-in” to September class “opt-in”Saskatchewan action. As a must classproceeding. In take action, Februarybased specific on 2008, the arbitration our affected clause stepsgranted in motion our and wireless to to customers service agreements stayrespect the was of participate the the Saskatchewan outside certification proceeding ofof Court in the plaintiffs action, those directed would customers exclude the who from that are the bound class by itsIn an arbitration order, clause. August in proceeding 2009, under counsel the same for claims the as theordered plaintiffs original conditionally commenced proceeding. stayed Thiswas in a an second December abuse proceeding second of 2009 process. was on theThe basis Company’s appeal that of it theby 2007 certification the decision was Saskatchewan dismissed Supreme Court Court of of Canada Appeal waspresently denied seeking and in to leave June extend 2012.the to “opt-in” The the decision plaintiffs appeal of time are the to withinrecorded Saskatchewan for the Court. which this No contingency. they liability has can been appeal In December 2011,(British a Columbia) proceedingcommunications under in the Canada relatingby to the wireless system accessinvolves, carriers fee to charged amongcontrary some other of to things,(British their the Columbia) allegations customers.and The of restitution. No proceeding liability misrepresentations has been recorded for this contingency. from operations tounder the our payment debt,business purposes; of which would interest reduce and funds principal available due forconditions; other our business and the industry in which we operate; competitors that have less financial leverage; or fund workinggeneral capital corporate purposes. and capital expenditures and for other Income and Indirect Tax AmountsAmounts May Expected Materially Differ fromWe the collect, pay and accruetaxes significant for amounts and of to income various andadequately taxation indirect authorities and provided believecomplexity that we for of have our suchrequired business in operations amounts. interpreting and taxmay the legislation be However, significant materially and different judgment regulations, than due expected. tax amounts to the Our debt may have important consequences, such as: • Making it more difficult to satisfy• our financial obligations; Requiring us to dedicate a substantial portion of any cash flow • Increasing our vulnerability to adverse• economic Limiting our and flexibility industry in planning for, or• reacting to, Placing changes us at in a competitive disadvantage compared to some• of our Constraining our ability to obtain additional financing required to Our ability to satisfyoperating our performance financial and obligations on dependsother on economic, factors, our financial, many future competitivemay of and not which generate are sufficientbe cash beyond flow our and available control. futureobligations financings Our to or may to business not successfully provide execute our business sufficient strategy. net proceeds to meet these We Have Debt and InterestRestrict Payment Our Requirements Future That Operations May andOur Impair Financial Our Obligations Ability to Meet Through outsourcingessential arrangements, components third ofand parties our business provide operationsmanagement customers, certain to functions, our callservice including employees centre support, technicians, certain certaininvoice payroll, installation printing. information and Interruptions technologyour in certain ability functions, to these service services our and customers. facilities/property can adversely affect We Are Reliant on ThirdOutsourcing Party Arrangements Service Providers through Our Businesses Are Complex Our businesses, technologies, processescomplex and systems are and operationally properly increasingly may lead interconnected.increased churn to and A loss negative of revenue. failure customer experiences, to resulting execute in We May Engage in UnsuccessfulInvestments Acquisitions, Divestitures or Acquiring complementary businessesstrategic alliances and and technologies, divestingour developing portions overall business of strategy. ourbusinesses Services, business technologies, of are key acquired part personnel companiesinto of or may our not business be orsuccessful. effectively service assimilated We offerings, anddivestitures on may our satisfactory alliances terms, not may ifreduction in at not our all. be be total Divestitures revenues may and able result net in income. a to successfully complete any MANAGEMENT’S DISCUSSION AND ANALYSIS

In June 2008, a proceeding was commenced in Saskatchewan under companies controlled by the Rogers Control Trust together owned that province’s Class Actions Act against providers of wireless approximately 90.9% of the outstanding RCI Class A Voting shares, communications services in Canada. The proceeding involves which is the only class of issued shares carrying the right to vote in allegations of, among other things, breach of contract, most circumstances, and approximately 9.8% of the RCI Class B Non- misrepresentation and false advertising in relation to the 911 fee Voting shares. Accordingly, the Rogers Control Trust is able to elect all charged by us and the other wireless communication providers in of our Board of Directors and to control the vote on matters Canada. The plaintiffs are seeking unquantified damages and submitted to a vote of our shareholders. restitution. The plaintiffs intend to seek an order certifying the proceeding as a national class action in Saskatchewan. No liability has Spectrum Fees May Increase been recorded for this contingency. Changes to spectrum fees could significantly increase Rogers’ payments and, as a result, could materially reduce our operating profit. The We believe that we have adequately provided for income and indirect timing of fee increases (if any) are unknown, but increases may impact taxes based on all of the information that is currently available. The our current accounting policies under which the spectrum licences are calculation of applicable taxes in many cases, however, requires treated as an indefinite life intangible asset and are not amortized. significant judgment in interpreting tax rules and regulations. Our tax filings are subject to audits, which could materially change the amount of current and deferred income tax assets and liabilities and There Is No Guarantee That Wireless’ Service Revenue Will Exceed provisions, and could, in certain circumstances, result in the Increased Handset Subsidies assessment of interest and penalties. Wireless’ business model, as is generally the case for other North American wireless carriers, is substantially based on subsidizing the There exist certain other claims and potential claims against us, none cost of the handset to the customer to reduce the barrier to entry, of which is expected to have a materially adverse effect on our while in return requiring a term commitment from the customer. For consolidated financial position. certain handsets and smartphone devices, Wireless will commit with the supplier to a minimum subsidy. Wireless’ business could be The outcome of all the proceedings and claims against us, including materially adversely affected if, by virtue of law or regulation or the matters described above, is subject to future resolution that negative customer behaviour, Wireless is unable, or is significantly includes the uncertainties of litigation. Based on information restricted in its ability, to require term commitments or early currently known to us, we believe that it is not probable that the cancellation fees from its customers or does not receive the service ultimate resolution of any such proceedings and claims, individually revenues that it anticipates from the customer term commitment. or in the aggregate, will have a material adverse effect on our consolidated financial position or results of operations. If it becomes probable that we are liable, a provision will be recorded in the period The National Wireless Tower Policy Could Increase Wireless’ Costs in which the change in probability occurs, and such a provision could or Delay the Expansion of Wireless’ Networks be material to our consolidated financial position and results of The policy affects all parties that plan to install or modify an antenna operations. system, including PCS, cellular and broadcasting service providers. Among other things, the policy requires that antenna proponents must consider the use of existing antenna structures before proposing Our Structure May Limit Our Ability to Meet new structures and that owners of existing systems must respond to Our Financial Obligations sharing requests. Antenna proponents must also undertake public As a holding company, our ability to meet our financial obligations is notification using defined processes and must address local dependent primarily upon the receipt of interest and principal requirements and concerns. Certain types of antenna installations are payments on intercompany advances, rental payments, cash dividends excluded from the requirement to consult with local authorities and and other payments from our subsidiaries, together with proceeds the public. raised by us through the issuance of equity and debt and from the sale of assets. Wireless Is Dependent on Certain Key Infrastructure and Handset Substantially all of our business activities are operated by our Vendors, Which Could Impact the Quality of Wireless’ Services or subsidiaries. All of our subsidiaries are distinct legal entities and have Impede Network Development and Expansion no obligation, contingent or otherwise, to make funds available to us Wireless has relationships with a small number of essential network whether by dividends, interest payments, loans, advances or other infrastructure and handset vendors, over which it has no operational payments, subject to payment arrangements on intercompany or financial control and only limited influence in how the vendors advances. In addition, the payment of dividends and the making of conduct their businesses with Wireless. The failure of one of our loans, advances and other payments to us by these subsidiaries are network infrastructure suppliers could delay programs to provide subject to statutory or contractual restrictions, are contingent upon additional network capacity or new capabilities and services across the earnings of those subsidiaries, and are subject to various the business. Handsets and network infrastructure suppliers may, businesses and other considerations. among other things, extend delivery times, raise prices and limit supply due to their own shortages and business requirements. If these We Are Controlled by One Shareholder suppliers fail to deliver products and services on a timely basis or fail Prior to his death in December 2008, Edward S. “Ted” Rogers to develop and deliver handsets that satisfy Wireless’ customers’ controlled a majority ownership of RCI through a private holding demands, this could have a material adverse effect on Wireless’ company. Under his estate arrangements, the voting shares of that business, financial condition and results of operations. Similarly, company, and, consequently, voting control of RCI and its interruptions in the supply of equipment for our networks could subsidiaries, passed to the Rogers Control Trust, of which the trust impact the quality of Wireless’ service or impede network company subsidiary of a Canadian chartered bank is trustee and development and expansion. members of the family of the late Mr. Rogers are beneficiaries. The Rogers Control Trust holds voting control of the Rogers group of Concerns about Radio Frequency Emissions May Adversely Affect companies for the benefit of successive generations of the Rogers Our Business family and deals with RCI on the company’s long-term strategy and Occasionally, the media and other reports have highlighted alleged direction. As of December 31, 2012, private Rogers family holding links between radio frequency emissions from wireless handsets and

66 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 67 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT A Loss in Media’s MarketMagazine Position Readership in Could Radio, Adversely Television ImpactVolumes or Media’s and Sales Advertising Rates It isproperties well that are established leaderswhen in that advertising their respective budgets advertising markets areradio, and dollars tightened. television categories Although and migrate mosttheir magazine of respective to properties markets, Media’s currently media suchfuture. perform performance well may Advertisers in notdecisions continue base on in statistics a the industry such substantial associations as and ratingsratings part agencies. or and magazine of If readership readershipMedia’s generated Media’s levels their were by advertising radio to purchasing and decreaseadvertisers sales could substantially, television be volumes adversely affected. and the ratesBlue Jays that Player Contract and itAffect Other Media’s Activity Results charges Could of Adversely Operations The addition of newand players, the release injury of of Bluecould players, Jays have or players an the adverse before termination effect the on Media’s end results. of the contract term Cable’s Business Telephony Operations AreFacilities Highly and Dependent Services on of theCable’s ILECs out-of-territorydependent business on the telephony availabilityincumbent of operations telecom facilities and are operators, servicesthese pursuant acquired highly from to rulesbusinesses. CRTC could rules. Changes severely to affect thePressures Regarding Channel cost Placement Couldthe Negatively of Tier Impact Status of operating CertainUnfavourable of channel Media’s these Channels placementof could The negatively Shopping affect Channel,and Sportsnet, the SportsnetONE, results our Sportsnet World, specialtyBiography Channel channels, (Canada), including G4Channel. Canada, Outdoor FX (Canada), Life and CityNews Network, The Risk of Migrating from ConventionalAdversely to Impact New Media’s Media Operating Could Results Many industries in whichmigration our Media from businessdriving operates conventional are major subject to developments to and in digital mobile the alternatives media. quality tohave This and conventional been media. accessibility migration To shifting ofresults limit is data our this could risk, focus we capturing towards be the shift the negatively in digitalplatforms. advertising impacted dollars market. from Media’s if conventional to we digital are unsuccessful in Cable’s single most significantacquiring purchasing commitment is programming.significantly the in cost recent of years, particularly Programminggrowth in connection in with the costsprogramming recent subscriptions costs within to the haveoperating industry results digital could if Cable adversely increased is specialty affectto unable Cable’s its to subscribers. channels. pass such programming Increasing costs on Increasing Programming Costs Could AdverselyResults Affect of Cable’s Operations Cable uses vendor developed andprotect supported encryption its technology to cableprogramming access signals based from onencryption subscription unauthorized and packages. security access Cable technologiesto also and to uses its prevent to Internet unauthorized service. control able access There can to besignals effectively no or assurance Internet prevent that accesscable Cable in unauthorized will access the be decoding future. withlevels If for of our Cable digital is encryption television and programming, unable technology, Internet including to control premium service Cable’sdecline VOD revenues in subscription and Cable’s may revenues. SVOD, decline, which could result in a If Cable Is Unable toPrevent Maintain Unauthorized Sustainable Access Security to Measures DigitalModems, to Boxes Cable or Could Internet Experience a Decline in Revenues Failure to Obtain Access toRights Support of Structures Way and Could Municipal IncreaseOur Cable’s Business Costs and AdverselyCable Affect requires accessway to in support order to structuresway deploy cannot and facilities. be municipal secured, Where Cable access rightsof may to apply access of municipal to under the rights the CRTCCourt of to Telecommunications obtain of Act. a However, right Canadajurisdiction the ruled Supreme to in establishpoles 2003 the of that hydroelectric terms companies. theaccess and As to CRTC a conditions hydroelectric result does company of offrom poles not the this access is Ontario decision, have Energy obtained to Cable’s Board pursuantBoard. the and the to the orders New Brunswick Public Utilities various healthvarious concerns, medical includingWhile devices, cancer, there including and arehealth hearing interference no issues aids with definitive areconcerns directly reports and over attributable or radio pacemakers. to studieswireless frequency radio emissions stating handsets frequency may that emissions, possible or discourage such that the future expose regulatory use actionsmore us of may result restrictive to in standards thepowered potential imposition on of devices, litigation. radio such frequencypredict It the as emissions nature is or wireless from extent of also low- handsets. any such Wireless potential restrictions. is unable to MANAGEMENT’S DISCUSSION AND ANALYSIS

6. ACCOUNTING POLICIES

This MD&A has been prepared with reference to our 2012 Audited lives to ensure they match the anticipated life of the technology from Consolidated Financial Statements and Notes thereto, which have a revenue-producing perspective. If technological change happens been prepared in accordance with IFRS. The Audit Committee of the more quickly or in a different way than anticipated, we might have to Board reviews our accounting policies, reviews all quarterly and reduce the estimated life of PP&E, which could result in a higher annual filings, and recommends approval of our annual financial depreciation expense in future periods or an impairment charge to statements to the Board. For a detailed discussion of our accounting write down the value of PP&E. policies, see Note 2 to our 2012 Audited Consolidated Financial We amortize the cost of finite-lived intangible assets over their Statements. In addition, a discussion of new accounting standards estimated useful lives. These estimates of useful lives involve adopted by us and critical accounting estimates are discussed in the considerable judgment. Our acquisitions have resulted in significant sections “New Accounting Standards” and “Critical Accounting increases to our intangible asset balances. Judgment is also involved Estimates”, respectively. in determining that spectrum and broadcast licences have indefinite CRITICAL ACCOUNTING ESTIMATES lives and are therefore not amortized. The preparation of our financial statements requires management to The determination of the estimated useful lives of brand names make estimates and assumptions that affect the reported amounts of involves historical experience, marketing considerations and the assets, liabilities, revenues and expenses and the related disclosure of nature of the industries in which we operate. The useful lives of contingent assets and liabilities. These estimates are based on subscriber bases are based on the historical churn rates of the management’s experience and various other assumptions that are underlying subscribers and judgments as to the applicability of these believed to be reasonable under the circumstances, the results of rates going forward. The useful lives of roaming agreements are which form the basis for making judgments about the reported based on estimates of the useful lives of the related network amounts of assets, liabilities, revenue and expenses that are not equipment. The useful lives of wholesale agreements and dealer readily apparent from other sources. Actual results could differ from networks are based on the underlying contractual lives. The useful life those estimates. We believe that the accounting estimates discussed of the marketing agreement is based on historical customer lives. The following are critical to our business operations and an determination of the estimated useful lives of intangible assets understanding of our results of operations or may involve additional impacts amortization expense in the current period as well as future management judgment due to the sensitivity of the methods and periods. The impact on net income on a full year basis of changing assumptions necessary in determining the related asset, liability, the useful lives of the finite-lived intangible assets by one year is revenue and expense amounts. shown in the following chart. Increase in Decrease in Allowance for Doubtful Accounts Net Income Net Income if Life if Life A significant portion of our revenue is earned from selling on credit Amortization Increased Decreased to individual consumers and business customers. The allowance for (In millions of dollars) Period by 1 year by 1 year doubtful accounts is calculated by taking into account factors such as Brand Names 7 – 20 years $ 1 $ (1) our historical collection and write-off experience, the number of days Customer Relationships 3 – 5 years $ 12 $ (19) the customer is past due and the status of the customer’s account Roaming Agreements 12 years $ 3 $ (4) with respect to whether or not the customer is continuing to receive Marketing Agreements 3 years $ 1 $ (2) service. As a result, fluctuations in the aging of subscriber accounts will directly impact the reported amount of bad debt expense. For Capitalization of Direct Labour, Overhead and Interest example, events or circumstances that result in a deterioration in the Certain direct labour and indirect costs associated with the aging of subscriber accounts will in turn increase the reported acquisition, construction, development or betterment of our networks amount of bad debt expense. Conversely, as circumstances improve are capitalized to PP&E. The capitalized amounts are calculated based and customer accounts are adjusted and brought current, the on estimated costs of projects that are capital in nature, and are reported bad debt expense will decline. generally based on a rate per hour. In addition, interest costs are Determining the Fair Values of Assets Acquired and Liabilities capitalized during construction and development of certain PP&E. Assumed Capitalized amounts increase the cost of the asset and result in a The determination of the fair values of the tangible and intangible higher amortization expense in future periods. assets acquired and the liabilities assumed in an acquisition involves Impairment of Assets considerable judgment. Among other things, the determination of Indefinite-lived intangible assets, including goodwill and spectrum/ these fair values involves the use of discounted cash flow analyses, broadcast licences, as well as definite life assets, including PP&E and estimated future margins, estimated future subscribers, estimated other intangible assets, are assessed for impairment on an annual future royalty rates and the use of information available in the basis or more often if events or circumstances warrant. A cash financial markets. Should actual rates, cash flows, costs and other generating unit (“CGU”) is the smallest identifiable group of assets items differ from our estimates, this may necessitate revisions to the that generates cash inflows that are largely independent of the cash carrying value of the related assets and liabilities acquired, including inflows from other assets or groups of assets. Goodwill and indefinite revisions that may impact net income in future periods. life intangible assets are allocated to CGUs for the impairment testing Useful Lives of Assets based on the level at which management monitors it, which is not We depreciate the cost of PP&E over their respective estimated useful higher than an operating segment. These analyses involve estimates lives. These estimates of useful lives involve considerable judgment. In of future cash flows, estimated periods of use and applicable discount determining the estimates of these useful lives, we take into account rates. If key estimates were to differ unfavourably in the future, we industry trends and company-specific factors, including changing could experience impairment charges that could decrease net income. technologies and expectations for the in-service period of certain During 2012, we recorded an impairment charge of $80 million assets. On an annual basis, we reassess our existing estimates of useful related to certain of our assets, due to the challenging economic

68 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 69 Fiscal 2012 Pension Expense of Fiscal 2012 Accrued Benefit ROGERS COMMUNICATIONS INC. Obligation at End 2012 ANNUAL REPORT 1% decrease0.25% decrease1% decrease 223 (17) 12 N/A (5) (7) Impact of: 1% increaseImpact of: 0.25% increaseImpact of: $ 1% increase (188) $ $ 17 (12) $ N/A 6 $ 7 NEW ACCOUNTING STANDARDS IFRS 7, Financial Instruments: Disclosures In October 2010,Disclosures the IASB (“IFRSrequirements amended to aid IFRS financial 7”). statement 7,of, users in Financial and evaluating This the Instruments: risks nature derecognized associated financial amendment with assets. an Thisinterim amendment entity’s enhances and was continuing effective annualJanuary involvement for disclosure 1, consolidated our in 2012, financial andto was statements the applied consolidated commencing prospectively. financial statements There upon was adoption. no impact IAS 12, Deferred Tax: RecoveryIn of December Underlying 2010, Assets theof IASB amended IAS Underlying 12,presumption Deferred Tax: Assets Recovery whichdepreciable (“IAS determines component of 12”). thatthe an fair IAS investment the value propertybased 12 model measured deferred on from using its includes taxstandard IAS carrying has amount 40, a on also being Investmentdeferred been recovered the rebuttal Property through amended should tax arevaluation to be model sale. include in on IAS The the 16,measured Property, requirement on Plant non-depreciable and the that Equipment sale shouldinterim assets be basis. and This new annual measuredJanuary standard 1, consolidated was 2012, using financial effective andto for was statements the our applied the consolidated commencing prospectively. financial statements There upon was adoption. no impact significantly fromincorporated into the the actuarial valuation process. currentThe following contributions table illustratesbenefit the obligation and increase and (decrease) pensionassumptions expense assumptions in and for the estimates: changes accrued in these primary (In millions of dollars) Discount rateRate of compensation increaseExpected rate of return on assets 3.00%Stock-Based Compensation 4.50%Our employee 3.00% appreciation N/A rights stockoptions. (“SARs”) The option SAR to featurein 5.50% allows all plans cash the option an new holder amountthe attach to equal option and elect to and to the previously cash-settled receive acquiring 6.75% stock intrinsic Class options granted value, B are share instead Non-Votingvalue, classified of shares. measured as exercising All using liabilities outstanding optionto-market and pricing in are models. each carried The period liability at andvesting is is their approach marked- amortized fair to over expenseservices using are the rendered a or, graded period asemployee applicable, is in over eligible the to which retire, period whichever the to is the shorter. related dateThe an liability employee for stock-basedon compensation expense the is recorded fairparagraph. based The value expense in ofthe each price period the is of options, impactedoption. RCI’s by as Class the change B described in Non-Voting in shares the during preceding the life of the When accounting for definedmade benefit pension in plans, determining assumptionsfuture are the performance valuation of ofestimates benefit plan include obligations assets. theassets and discount The the and rate, primary theprimary the assumptions assumptions rate expected and and ofpension return estimates compensation asset would on impact and increase.current plan pension economic liability, Changes conditions expense, and may to alsoplan other have because these an there comprehensive impact is onthe income. no assumed our assurance rate pension The that of return. thein As plan changes well, will in market-driven be changes the may able discountin result to rates us and earn being other variables required that to would make result contributions in the future that differ Pension Plans Provisions are recordedreasonably if we estimated. believeexpenditure a Provisions required loss are to is settlemost probable measured reliable the and evidence present at can available obligation,risks be at the based the on and reporting estimated the Provisions date, uncertainties including are the determined associatedflows by at a discounting with pre-tax the ratetime the that value expected of reflects future money current present and market cash the assessments risks of obligation. specific the Decommissioning to and the liability. restoration coststhe are identified calculated on costs the forthe basis future the of based current on financialprices, management’s best year, inflation estimates extrapolated of and into value. future trends other Forecasts in factors, areconditions and or revised technological are in requirements. discounted light to ofIf estimates present future differ changes from management’smaterial in over expectations, or there business understatement could in be liabilities. a Accrued Liabilities Income Tax Estimates We provide for income taxesin based on each currently of available information theincome taxes jurisdictions in many in cases, whichinterpreting however, requires tax we significant rules operate. judgment in and Theaudits, regulations. calculation which Our of could taxdeferred materially filings income are change subjectcircumstances, tax the result to in amount assets the assessment of of and interest current andAdditionally, liabilities, penalties. and estimation and of thethe could, income recoverability provisions in includes of evaluating deferredthe certain tax ability assets to basedexpire use on against the our future underlying assessment taxableexisting future of income. tax tax Our laws, deductions assessmentstrategies. estimates before is Deferred of they based tax future upon assetsmore profitability are and likely recognized to tax thanwhich the planning the not extent deferred that tax that assets it can taxable is be utilized. profit will be available against The fair valuescredit-adjusted of mark-to-market valuation. our In Derivatives thean case are of asset Derivatives recorded in using positionspread an for (i.e., the estimated the bankrate to counterparty counterparty determine is the owes addedDerivatives estimated in to credit-adjusted Rogers) a the value. liability the In risk-freeour position the discount (i.e., credit case credit Rogers of owesestimated spread the credit-adjusted counterparty), values is of Derivativesin are added credit subject spreads to to of changes differ Rogers materially the and from its management risk-freecould counterparties. impact expectations, net If discount fair income these or value hedging estimates rate. changes reserves. The conditions, weakeningadvertising revenues. industry expectations andFinancial a Instruments decline in MANAGEMENT’S DISCUSSION AND ANALYSIS

IAS 1, Presentation of Financial Statements IAS 19, Employee Benefits In June 2011, the IASB amended IAS 1, Presentation of Financial In June 2011, the IASB amended IAS 19, Employee Benefits (“IAS 19”). Statements (“IAS 1”). This amendment requires an entity to separately This amendment eliminates the concept of return on plan assets and present the items of OCI as items that may or may not be reclassified interest cost and replaces them with a net interest cost that is to profit and loss. This classification has been presented on the calculated by multiplying the discount rate by the net liability (asset). Statements of Other Comprehensive Income for the years ended The amendment also eliminates the use of the “corridor” approach December 31, 2012 and 2011. and mandates all re-measurement impacts be recognized in OCI. It also enhances the disclosure requirements, providing better RECENT ACCOUNTING PRONOUNCEMENTS information about the characteristics of defined benefit plans and the risk that entities are exposed to through participation in those plans. IFRS 10, Consolidated Financial Statements The adoption of the amended standard will result in an increase in In May 2011, the IASB issued IFRS 10, Consolidated Financial pension expense of $7 million for the year ended December 31, 2012 Statements (“IFRS 10”). IFRS 10, which replaces the consolidation upon retrospective application when the amended standard is requirements of SIC-12 Consolidation-Special Purpose Entities and adopted beginning January 1, 2013. IAS 27 Consolidated and Separate Financial Statements, establishes principles for the presentation and preparation of consolidated IAS 27, Separate Financial Statements financial statements when an entity controls one or more other In May 2011, the IASB amended IAS 27, Separate Financial Statements entities. This new standard is effective for our interim and annual (“IAS 27”). This amendment removes the requirements for consolidated financial statements commencing January 1, 2013. We consolidated statements from IAS 27 and moves it over to IFRS 10, are assessing the impact of this new standard on our consolidated Consolidated Financial Statements. The amendment mandates that financial statements. when a company prepares separate financial statements, investment in subsidiaries, associates and jointly controlled entities are to be IFRS 11, Joint Arrangements accounted for either using the cost method or in accordance with In May 2011, the IASB issued IFRS 11, Joint Arrangements (“IFRS 11”). IFRS 9, Financial Instruments. In addition, this amendment determines IFRS 11, which replaces the guidance in IAS 31, Interests in Joint the treatment for recognizing dividends, the treatment of certain Ventures, provides for a more realistic reflection of joint group reorganizations and some disclosure requirements. This arrangements by focusing on the rights and obligations of the amendment is effective for our interim and annual consolidated arrangement rather than its legal form (as is currently the case). The financial statements commencing January 1, 2013. We are assessing standard addresses inconsistencies in the reporting of joint the impact of this amended standard on our consolidated financial arrangements by requiring interests in jointly controlled entities to be statements. accounted for under the equity method. This new standard is effective for our interim and annual consolidated financial statements IAS 28, Investments in Associates and Joint Ventures commencing January 1, 2013. We are assessing the impact of this new In May 2011, the IASB amended IAS 28, Investments in Associates and standard on our consolidated financial statements. Joint Ventures (“IAS 28”). This amendment requires any retained portion of an investment in an associate or joint venture that has not IFRS 12, Disclosure of Interests in Other Entities been classified as held for sale to be measured using the equity In May 2011, the IASB issued IFRS 12, Disclosure of Interests in Other method until disposal. After disposal, if the retained interest Entities (“IFRS 12”). IFRS 12 establishes new and comprehensive continues to be an associate or joint venture, the amendment disclosure requirements for all forms of interests in other entities, requires it to continue to be accounted for under the equity method. including subsidiaries, joint arrangements, associates and The amendment also disallows the re-measurement of any retained unconsolidated structured entities. This new standard is effective for interest in an investment upon the cessation of significant influence our interim and annual consolidated financial statements or joint control. This amended standard is effective for our interim commencing January 1, 2013. We are assessing the impact of this new and annual consolidated financial statements commencing January 1, standard on our consolidated financial statements. 2013. We are assessing the impact of this amended standard on our consolidated financial statements. IFRS 13, Fair Value Measurement In May 2011, the IASB issued IFRS 13, Fair Value Measurement IFRS 9, Financial Instruments (“IFRS 13”). IFRS 13 replaces the fair value guidance contained in In October 2010, the IASB issued IFRS 9, Financial Instruments individual IFRS with a single source of fair value measurement (“IFRS 9”). IFRS 9, which replaces IAS 39, Financial Instruments: guidance. The standard also requires disclosures that enable users to Recognition and Measurement, establishes principles for the financial assess the methods and inputs used to develop fair value reporting of financial assets and financial liabilities that will present measurements. This new standard is effective for our interim and relevant and useful information to users of financial statements for annual consolidated financial statements commencing January 1, their assessment of the amounts, timing and uncertainty of an entity’s 2013. We are assessing the impact of this new standard on our future cash flows. This new standard is effective for our interim and consolidated financial statements. annual consolidated financial statements commencing January 1, 2015. We are assessing the impact of this new standard on our consolidated financial statements.

70 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 71 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT We haveshareholder entered and into thesubject certain companies to it transactions formalTotal controls. with amounts agreements paid These approved to our transactionsoccasional these by related controlling are parties business the forservices, charges Audit use were to less Committee. Rogers than of $1 for million for aircraft, 2012 and 2011 net combined. These transactions of are measured otheramount at agreed the administrative exchange to amount,Audit by Committee being and the the are at related market terms parties and and conditions. are reviewed by the 2011 % Chg 2011 % Chg $41 – $1$ – 51 (25) 2012 2012 $43 $1 $38 paid on premiums for insurance coverage Printing, legal services and commission Revenues Purchases We havepartners entered or senior into officers ofsubsidiary which certain are companies. Directors transactions Total ofdirectly Rogers amounts or with and/or indirectly, our paid are companies, as to follows: the these related parties, Years ended December 31, (In millions of dollars) Years ended December 31, (In millions of dollars) We have enteredbusiness into with certain related parties transactions inamounts which in paid we to the these have parties an normal are equity as course interest. follows: The of 7. ADDITIONAL FINANCIAL INFORMATION RELATED PARTY TRANSACTIONS MANAGEMENT’S DISCUSSION AND ANALYSIS

FIVE-YEAR SUMMARY OF CONSOLIDATED FINANCIAL RESULTS IFRS Canadian GAAP Years Ended December 31, (In millions of dollars, except per share amounts) 2012 2011 2010 2009 2008

Income and Cash Flow: Revenue Wireless $ 7,280 $ 7,138 $ 6,973 $ 6,685 $ 6,343 Cable 3,358 3,309 3,190 3,074 2,877 RBS 351 405 452 446 474 Media 1,620 1,611 1,461 1,407 1,496 Corporate items and intercompany eliminations (123) (117) (77) (75) (80)

$ 12,486 $ 12,346 $ 11,999 $ 11,537 $ 11,110 Adjusted operating profit(1) Wireless $ 3,063 $ 3,036 $ 3,173 $ 3,067 $ 2,818 Cable 1,605 1,549 1,419 1,300 1,171 RBS 89 86 40 35 59 Media 190 180 131 119 142 Corporate items and intercompany eliminations (113) (112) (95) (114) (115)

$ 4,834 $ 4,739 $ 4,668 $ 4,407 $ 4,075

Net income from continuing operations $ 1,732 $ 1,590 $ 1,532 $ 1,499 $ 1,016 Adjusted net income from continuing operations(1) $ 1,788 $ 1,736 $ 1,704 $ 1,569 $ 1,272

Pre-tax free cash flow(1) $ 2,029 $ 1,973 $ 2,181 $ 1,919 $ 1,500 Property, plant and equipment expenditures $ 2,142 $ 2,127 $ 1,821 $ 1,841 $ 2,000 Earnings per share from continuing operations: Basic $ 3.34 $ 2.93 $ 2.66 $ 2.41 $ 1.59 Diluted 3.32 2.91 2.64 2.41 1.59 Adjusted net income per share from continuing operations: Basic $ 3.45 $ 3.20 $ 2.96 $ 2.53 $ 1.99 Diluted 3.43 3.17 2.94 2.53 1.99

Balance Sheet: Assets Property, plant and equipment, net $ 9,576 $ 9,114 $ 8,437 $ 8,197 $ 7,898 Goodwill 3,215 3,280 3,108 3,018 3,024 Intangible assets 2,951 2,721 2,591 2,643 2,761 Investments 1,484 1,107 933 563 343 Other assets 2,392 2,140 1,964 2,597 3,056

$ 19,618 $ 18,362 $ 17,033 $ 17,018 $ 17,082 Liabilities and Shareholders’ Equity Long-term debt (including current portion) $ 10,789 $ 10,034 $ 8,654 $ 8,464 $ 8,507 Accounts payable and other liabilities 5,061 4,756 4,619 4,281 3,859 Total liabilities 15,850 14,790 13,273 12,745 12,366 Shareholders’ equity 3,768 3,572 3,760 4,273 4,716

$ 19,618 $ 18,362 $ 17,033 $ 17,018 $ 17,082

Ratios: Revenue growth 1% 3% 4% 4% 11% Adjusted operating profit growth 2% 2% 6% 8% 10% Debt/adjusted operating profit(2) 2.3 2.2 2.1 2.1 2.1 Dividends declared per share $ 1.58 $ 1.42 $ 1.28 $ 1.16 $ 1.00

Key business indicators: Blended ARPU $ 59.79 $ 60.20 $ 62.62 $ 63.59 $ 64.34 Wireless subscribers 9,437 9,335 8,977 8,494 7,942 Total television subscribers 2,214 2,297 2,305 2,296 2,320 Total cable high-speed internet subscribers 1,864 1,793 1,686 1,619 1,571 Total cable telephony lines 1,074 1,052 1,003 937 840

(1) As defined. See the section “Key Performance Indicators and Non-GAAP Measures”. (2) Debt includes net derivative liabilities at the credit-adjusted mark-to-market value and is net of cash as applicable.

72 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 73 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT Average Revenue per User Average Revenue per UserFor (“ARPU”) is any calculated particular on month,by a ARPU monthly the represents basis. average monthly numberof revenue of Wireless, divided ARPU subscribers represents during monthlyaverage the network revenue month. number divided In by the the ofconnection case subscribers with during amonthly the revenue particular month. generated typeaverage When number from of of those those used subscribers subscriber,reported subscribers during in the for ARPU divided month. a When represents by period usedmonthly or greater the average than of one theARPU ARPU month, helps calculations ARPU to for represents identify the the successful trends period. in and We attracting believe to and indicate retaining higher whether value we subscribers. have been subscribers are representedunits by in line one counts.with dwelling, In cable such the service, asincluded whether case an in invoiced of apartment his individually multiple building,Institutional or or units, each such her having tenant as rent, services be hospitals is or hotels, counted one arevoluntarily as each or considered an subscriber. involuntarily to individual forbe subscriber. non-payment, deactivations When in they the areprepaid subscribers period considered the subscribers to services are are arefrom considered discontinued. the date Wireless active deactivated, of their for last revenue-generating either a usage. We period of report 180prepaid. wireless days Postpaid subscribers andonly prepaid in subscribers, include and two voice-only subscribersvoice and with subscribers, categories: data. service data- postpaid plans integrating and both Internet, Homesubscribers Phone with andexcludes service those RBS subscribers installed, whowhom have subscribers installation operating subscribed of to the include and the service was service still only but on pending. for those billingSubscriber Churn and Subscriber churn is calculatedmonth, on a subscriber monthlynumber churn basis. of For for any subscribersaggregate particular Wireless deactivating number of and inWhen subscribers the Cable used at month representssubscriber or the divided churn beginning the reported by represents ofdeactivating for the the the for a sum month. eachaggregate of period period number the greater of incurred numberincurred. than subscribers divided of at subscribers by one the the month, beginning sum of of each the period Subscriber Counts We determine theactive number of subscribers. subscribersidentifiable A to our wireless telephonesubscribers services subscriber are based number. represented on is by Cable a represented dwelling unit, Television by and cable each and telephony Internet Key Performance Indicators We measure theperformance success indicators, which of areperformance outlined our indicators below. are strategies The not following measurements usingand in key accordance should a with not IFRS number beother considered of measure as of key performance an under alternative IFRS. to net income or any KEY PERFORMANCE INDICATORS ANDMEASURES NON-GAAP There have beenreporting no changes during inreasonably our 2012 internal likely controlsfinancial to over that reporting. financial materially have affect, materially our internal affected, controls or over are Changes in Internal Control overDisclosure Financial Controls Reporting and and Procedures The managementmaintaining of adequate internal Rogers controlsinternal over control is financial system was reporting. responsible designedto Our to our for provide management and reasonable Board assurance establishingand of fair Directors regarding presentation and the of preparation with published financial generally statements in acceptedsystems, accordance accounting no principles. matterTherefore, All even how those internal systems well determinedonly control to designed, be effective have reasonable canpreparation inherent provide and assurance presentation. limitations. withOur respect management tointended maintains to financial ensure a that transactionsmanagement’s statement comprehensive are authorization, executed system in assets accordancerecords of are with are safeguarded, controls andinformation reliable. and financial communication Managementperformance, flows including also are performance of effective takes internal and control procedures. to stepsManagement monitor assessed to the effectivenessfinancial see reporting of as our that of internalforth December control 31, in 2012, over based theCommittee on of the Internal Sponsoring criteria Organizations set Control-Integrated of(“COSO”). the Based Framework Treadway on Commission this issued assessment,as management by of has December concluded the 31, that, 2012,is our effective. internal Our control independent overreport auditor, financial stating reporting KPMG LLP, that has weinternal issued maintained, control an in audit over allbased financial material respects, on reporting effective asFramework the issued of by the criteria December COSO. 31, established 2012, in Internal Control-Integrated Management’s Report on Internal ControlReporting over Financial CONTROLS AND PROCEDURES Disclosure Controls and Procedures As of the endDate”), of we conducted the an periodthe evaluation covered participation (under by the of this supervision ourOfficer report and management, (the with including and “Evaluation thepromulgated Chief under Chief the Executive Securities Exchange Financialof Act the of Officer), 1934, effectiveness ascontrols of amended, and pursuant procedures. the Based on design toOfficer this and evaluation, our and Rule operation Chief Executive Evaluation of Chief 13a-15 our Date, disclosure Financialeffective. such Officer disclosure concluded controls that, and as procedures of were the MANAGEMENT’S DISCUSSION AND ANALYSIS

Average Revenue per User Calculations – Wireless Non-GAAP Measures We have included certain non-GAAP financial measures that we Years ended December 31, believe provide useful information to management and readers of (In millions of dollars, subscribers in thousands, except ARPU figures) 2012 2011 this MD&A in measuring our financial performance. These measures, Postpaid ARPU (monthly) which include operating profit, operating profit margin, adjusted operating profit, adjusted operating profit margin, adjusted net Postpaid (voice and data) revenue $ 6,402 $ 6,275 income, adjusted basic and diluted earnings per share and free cash Divided by: average postpaid wireless flow, do not have a standardized meaning under GAAP and, voice and data subscribers 7,698 7,443 therefore, may not be comparable to similarly titled measures Divided by: twelve months for the year 12 12 presented by other publicly traded companies, nor should they be $ 69.30 $ 70.26 construed as an alternative to other financial measures determined in accordance with GAAP. Prepaid ARPU (monthly) Prepaid (voice and data) revenue $ 317 $ 326 We believe that these non-GAAP financial measures may provide for a Divided by: average prepaid subscribers 1,667 1,695 more effective analysis of our operating performance. These measures are also used by investors and lending institutions as an indicator of Divided by: twelve months for the year 12 12 our operating performance, our ability to incur and service debt, and $ 15.84 $ 16.02 as a valuation metric. In addition, the items mentioned in the preceding paragraph could potentially distort the analysis of trends Blended ARPU (monthly) due to the fact that they are volatile and can vary widely from Voice and data revenue $ 6,719 $ 6,601 company to company, thereby impairing comparability. The exclusion Divided by: average wireless voice and of these items does not mean that they are unusual, infrequent or data subscribers 9,365 9,138 non-recurring. Divided by: twelve months for the year 12 12 We use these non-GAAP measures internally to make strategic $ 59.79 $ 60.20 decisions, forecast future results and evaluate our performance from period to period and compare to forecasts on a consistent basis. We believe that these measures present trends that are useful in Operating Expenses managing our business and in allowing investors and analysts to Operating expenses are segregated into two categories for assessing assess the underlying changes in our business over time. business performance:

• Cost of equipment sales; and Operating Profit and Operating Profit Margin We define operating profit as net income from continuing operations • Other operating expenses. before depreciation and amortization, income taxes and non- operating items, which include finance costs (such as interest on long- In the Wireless and Cable industries in Canada, the demand for term debt, loss on repayment of long-term debt, foreign exchange services continues to grow, and the variable costs, such as gains (losses), change in fair value of derivative instruments, commissions paid for subscriber activations, as well as the fixed costs capitalized interest and amortization of deferred transaction costs), of acquiring new subscribers, are significant. Fluctuations in the impairment of assets, share of income in associates and joint ventures number of activations of new subscribers from period-to-period and and other income. Operating profit is a standard measure used in the the seasonal nature of both wireless and cable subscriber additions communications industry to assist in understanding and comparing result in fluctuations in sales- and marketing-related expenses and operating results and is often referred to by our peers and accordingly, in the overall level of operating expenses. In our Media competitors as EBITDA (earnings before interest, taxes, depreciation business, sales and marketing related expenses may be significant to and amortization) or OIBDA (operating income before depreciation promote publishing, radio and television properties, which in turn and amortization). We believe this is an important measure, as it attract advertisers, viewers, listeners and readers. allows us to assess our ongoing businesses without the impact of depreciation or amortization expenses as well as non-operating Capital Intensity factors. It is intended to indicate our ability to incur or service debt Capital intensity provides a comparative basis on the level of PP&E and invest in PP&E and allows us to compare the Company to our additions within the industry. It is computed as the total additions to peers and competitors who may have different capital or PP&E divided by the total operating revenue. In case of Wireless, organizational structures. This measure is not a defined term under capital intensity represents the total additions to PP&E divided by the IFRS. total network revenue.

74 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 75 405 2011 6,601 3,309 1,611 38.4% 46.0% 46.8% 11.2% 21.2% 12,346 $ 3,036 $ 1,549 $86 $ 180 $ 4,739 351 2012 6,719 3,358 1,620 38.7% 45.6% 47.8% 11.7% 25.4% 12,486 $ 3,063 $ 1,605 $89 $ 190 $ 4,834 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT Adjusted operating profit Adjusted operating profit Adjusted operating profit Divided by network revenue margin Divided by revenue Divided by revenue Divided by revenue operating profit margin Adjusted operating profit Divided by total revenue Adjusted operating profit RCI adjusted operating profit margin WIRELESS: CABLE: ROGERS BUSINESS SOLUTIONS: Wireless adjusted operating profit Cable adjusted operating profit margin Media adjusted operating profit margin Rogers Business Solutions adjusted MEDIA: Adjusted Operating Profit Margin Calculations Years ended December 31, (In millions of dollars, except for margins) RCI: sted Operating Profit Margin, Adjusted Net Income, Adjusted BasicShare, and and Diluted Pre-tax Earnings Free per Cash Flow Adjusted Operating Profit, Adju We define adjusted(i) operating stock-based profit compensation asand expense; operating acquisition (ii) expenses; profit integration, and excluding: In (iii) restructuring addition, settlement of adjustedexcludes pension net loss obligations. on income repaymentgain and of on long-term adjusted spectrum debt, distribution, earnings impairmentthe and preceding of per the items assets, related share and income thefree tax legislative impacts cash tax of change. flow Weand define as interest pre-tax on adjusted long-term debt operating (net of profit capitalization). Adjusted less PP&E operating expenditures profitwhich and are adjusted reviewedDirectors, are operating regularly also useful profit bydecisions in margins, assessing regarding management our the performance and ongoingability and to our in operations generate making of cash Board flows. the of business andThese non-GAAP the measures should benot viewed a as substitute a for, supplementreconciliation our to, results and of of operations theseprofit, reported net non-GAAP under income IFRS. financial and A under measures earnings “Adjusted per to Operating shareand operating is Profit, Free Cash included Net Flow in Calculations”. Income, this Earnings section We Per calculate Share adjustedoperating operating profit profit by margin totalWireless, by revenue, adjusted dividing except in operating adjusted theadjusted profit case operating margin of profit is Wireless.used For by calculated in network by dividing revenue. therevenue Network calculation better revenue instead reflects is wireless Wireless’ of core total services. business revenueoperating activity because The profit of network margin providing Media. following calculations for table Wireless, illustrates Cable, RBS the and adjusted MANAGEMENT’S DISCUSSION AND ANALYSIS

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

Years ended December 31, (In millions of dollars, except per share amounts; number of shares outstanding in millions) 2012 2011 Operating income $ 2,766 $ 2,865 Add: Depreciation and amortization 1,819 1,743 Impairment of assets 80 – Operating profit $ 4,665 $ 4,608 Add (deduct): Stock-based compensation expense 77 64 Integration, restructuring and acquisition expenses 92 56 Settlement of pension obligations – 11 Adjusted operating profit $ 4,834 $ 4,739 Net income from continuing operations $ 1,732 $ 1,590 Add (deduct): Stock-based compensation expense 77 64 Integration, restructuring and acquisition expenses 92 56 Settlement of pension obligations – 11 Loss on repayment of long-term debt – 99 Impairment of assets 80 – Gain on spectrum distribution (233) – Income tax impact of above items (14) (56) Income tax adjustment, legislative tax change 54 (28) Adjusted net income $ 1,788 $ 1,736 Adjusted basic earnings per share: Adjusted net income $ 1,788 $ 1,736 Divided by: weighted average number of shares outstanding 519 543 Adjusted basic earnings per share $ 3.45 $ 3.20 Adjusted diluted earnings per share: Adjusted net income $ 1,788 $ 1,736 Divided by: diluted weighted average number of shares outstanding 522 547 Adjusted diluted earnings per share $ 3.43 $ 3.17 Basic earnings per share: Net income from continuing operations $ 1,732 $ 1,590 Net income $ 1,700 $ 1,563 Divided by: weighted average number of shares outstanding 519 543 Basic earnings per share - continuing operations $ 3.34 $ 2.93 Basic earnings per share $ 3.28 $ 2.88 Diluted earnings per share: Net income from continuing operations $ 1,732 $ 1,590 Effect on net income of dilutive securities – – Diluted net income from continuing operations $ 1,732 $ 1,590 Net income $ 1,700 $ 1,563 Effect on net income of dilutive securities – – Diluted net income $ 1,700 $ 1,563 Divided by: diluted weighted average number of shares outstanding 522 547 Diluted earnings per share - continuing operations $ 3.32 $ 2.91 Diluted earnings per share $ 3.26 $ 2.86 Free Cash Flow Adjusted operating profit $ 4,834 $ 4,739 Add (deduct): PP&E expenditures (2,142) (2,127) Interest on long-term debt, net of capitalization (663) (639) Pre-tax free cash flow 2,029 1,973 Cash income taxes (380) (99) After-tax free cash flow $ 1,649 $ 1,874

76 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 77 2011 2011 2,549 1,563 2,865 Dec. 31 Dec. 31 12,241 16,450 $ 1,912 $ 12,346 Amounts Amounts 2012 2012 3,002 1,700 2,766 Dec. 31 Dec. 31 Total Consolidated Total Consolidated 12,848 17,397 $ 2,221 $ 12,486 r or co-obligor, as the case may (68) 154 2011 2011 (2) (2) Dec. 31 Dec. 31 (5,691) (3,781) ROGERS COMMUNICATIONS INC. (23,964) $ (5,694) $ (252) (71) 149 2012 2012 Consolidating Consolidating Adjustments Adjustments Dec. 31 Dec. 31 (3,707) (10,620) (28,865) $ (9,575) $ (155) 2012 ANNUAL REPORT 188 868 861 107 2011 2011 (2) (2) 5,681 Dec. 31 Dec. 31 $ 1,608 $ 1,674 Other Other 44 179 778 2012 2012 Subsidiaries Subsidiaries 1,129 6,642 Dec. 31 Dec. 31 $ 1,905 $ 1,666 The following tablesummary sets forth financial the informationbelow, selected presented unaudited for with consolidating a RCInon-guarantor separate column for subsidiaries for the (i)basis; (“Other RCI; periods (iv) (ii) Subsidiaries”) RCP; consolidating identified (iii)amounts. on adjustments; our and a (v) combined the total consolidated 259 2011 2011 Years ended December 31 (unaudited) 1,834 2,920 2,995 As at period end December 31 (unaudited) Dec. 31 Dec. 31 11,350 $ 5,288 $ 10,819 (1)(2) (1)(2) RCP RCP 438 2012 2012 2,776 2,929 2,959 Dec. 31 Dec. 31 12,232 $ 8,209 $ 10,970 2011 2011 (169) 5,538 1,563 Dec. 31 Dec. 31 11,640 23,383 $ 710 $ 105 (1)(2) (1)(2) RCI RCI 2012 2012 (166) 9,717 1,700 Dec. 31 Dec. 31 12,082 27,388 $ 1,682 $5 be, under any of RCI’s long-term debt. Non-current liabilities Current liabilities Net income (loss) Non-current assets Operating income (loss) period end): Current assets Revenue (1)(2) For the purposes of this Amounts table, recorded investments in in current subsidiary liabilities companies and are non-current accounted liabilities for for by RCP the do equity not method. include any obligations arising as a result of being a guaranto (In millions of dollars) Balance Sheet Data (at Statement of Income Data: (In millions of dollars) SUMMARY OF FINANCIAL RESULTSDEBT OF GUARANTORS LONG-TERM Our outstanding publicDerivatives are debt, unsecured $2.0 obligationsco-obligor of billion or guarantor, RCI, as bank as applicable. credit obligor, and facility RCP, and as MANAGEMENT’S DISCUSSION AND ANALYSIS

8. GLOSSARY OF SELECTED TERMS

• 2G (Second Generation Wireless): 2G cellular wireless technology • Broadband: High-speed electronic data transmission. The term is converts voice to digital data for transmission over the air and then commonly used to refer to communications services which allow back to voice. 2G data services were based on circuit switched data transmission of voice, data and video simultaneously at rates of connections where each connection was dedicated to the user for 1.544 Mbps and above. the duration of each session. Circuit switched data was slow, • CDMA (Code Division Multiple Access): A type of 2G wireless protocol typically providing 9.6-14.4 Kbps. 2G technologies included Code used so that more voice and data can be transmitted on the same Division Multiple Access (CDMA), Time Division Multiple Access frequency. CDMA is a spread spectrum technology in which calls are (TDMA), and GSM (Global System for Mobile communications). assigned a pseudo-random code to encode digital bit streams. CDMA • 3G (Third Generation Wireless): 3G is the third generation of allows the communications of many wireless users to simultaneously standards and technology. It is based on standards occupy a wide radio channel and, using the pseudo-random code, be from the International Telecommunication Union and the Third separated at the receiving end of the transmission link. Generation Partnership Project (3GPP). A key aim of 3G standards • Churn: The term used to describe the disconnect rate of customers was to enable mobile broadband data speeds above 384 Kbps. 3G to a telecommunications service. Usually expressed as a percentage networks enable network operators to offer users a wider range of and calculated as the number of subscriber units disconnecting in a more advanced services while achieving greater network capacity one month period divided by the opening number of units on the through improved spectral efficiency. Advanced services include network. It is a measure of customer turnover and is often at least video and multimedia messaging, and broadband wireless data, all partially reflective of service quality and competitive intensity. in a mobile environment. 3G technologies include Wideband- CDMA (W-CDMA), cdma2000 and TD/SCDMA. • Circuit Switched: A switching technique that establishes a dedicated transmission path between originating and terminating • 3.5G (Enhanced Third Generation Cellular Wireless): 3.5G refers to points and holds that path open for the duration of a voice call or evolutionary upgrades to 3G services that provide significantly data exchange. enhanced broadband wireless data performance to enable multi- megabit data speeds. The key 3.5G technologies in North America • CLEC (Competitive Local Exchange Carrier): A telecommunications are High-Speed Packet Access Plus (HSPA+) and CDMA EV-DO. provider company that competes with other, long-established carriers in offering facilities-based telecommunications services. • 4G (Fourth Generation Wireless): The latest generation of wireless technology. 4G technology offers increased voice, video and • CRTC (Canadian Radio-television and Telecommunications multimedia capabilities, a higher network capacity, improved spectral Commission): The federal regulator for radio and television efficiency and high-speed data rates over current 3G standards. broadcasters, and cable-TV and telecommunications companies in Canada. • Android phone: A type of smartphone that uses the Android, Linux-based operating system. • Digital: A method of storing, processing and transmitting information through the use of distant electronic or optical pulses that represent • ARPU (Average Revenue per User): Average revenue per user, or the binary digits 0 and 1. Digital transmission and switching subscriber, expressed as a dollar rate per month for a given technologies employ a sequence of discrete, distinct pulses to measurement period. The measure is predominantly used in the represent information, as opposed to the continuous variable analog wireless and cable industries to describe the revenue generated per signal. Digital signals are easier to recreate, compress, manipulate and customer per month. ARPU is an important indicator of a wireless verify, thereby enabling more information to fit into a given space or cable business’ operating performance. with fewer errors creeping into a transmission.

• ATM (Asynchronous Transfer Mode): A high-speed data switching • DOCSIS (Data over Cable Service Interface Specification): A non- protocol that packs digital information into cells that are switched proprietary industry standard developed by Cable Labs that allows throughout a network over virtual circuits. ATM can be used to for equipment interoperability from the CMTS (located at the head route voice, data and video at high speeds over the same network. end) to the CPE (located at the home). DOCSIS specifies downstream • AWS (Advanced Wireless Services): The bi-directional wireless traffic transfer rates up to 36 Mbps over a radio frequency 6 MHz telecommunications spectrum band at the 1900 MHz/2100 MHz channel. The latest version (DOCSIS 3.0) enables bonding of multiple frequency ranges that is used for wireless voice, data, messaging channels to allow for +100 Mbps or greater transmission speeds services and multimedia in North America. depending upon how many channels are bonded together. Other devices that utilize the DOCSIS standard include DOCSIS enabled • Bandwidth: Bandwidth can have two different meanings: (i) a band video set-top boxes, Tru2Way TV’s and PacketCable devices (such as or block of radio frequencies measured in cycles per second, or enhanced voice over cable telephony modems). hertz; (ii) an amount or unit of capacity in a telecommunications transmission network. In general terms, bandwidth and is the • DSL (Digital Subscriber Line): A family of broadband technologies that available space to carry a signal: the greater the bandwidth, the offers always-on, relatively high-bandwidth (usually asymmetrical) greater the information-carrying capacity. transmission over an existing twisted-pair copper telephone line. DSL shares the same phone line as the telephone service, but it uses a • Bps (Bits per Second): A measurement of data transmission speed different part of the phone line’s bandwidth. It generally does not used for measuring the amount of data transferred in a second interfere with normal phone service because there is a significant between two telecommunications points or within network amount of unused capacity in current phone wires. Sometimes the devices. Kbps (kilobits per second) is thousands of bits per second; term is shown as xDSL. The “x” represents a variety of possible Mbps (megabits per second) is millions; Gbps (gigabits per second) information rates and methods that can be handled through the is billions; and Tbps (terabits per second) is trillions. digital subscriber loop, such as ADSL, HDSL, SDSL, VDSL, etc.

78 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS 79 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT linking a varietyservers and of printers datadefined so building devices, or that geographic they area. such can as share personal files, all computers, technology housed in (also a knownimproves spectral as efficiency, 4G).most lowers importantly, Compared costs, allows to improvesbeing for deployed higher services HSPA/UMTS and data is and, designed LTE with rates. to further LTE deliver increases at over technology speeds time. is up to 150Mbps devices, networks and everydayinterpreting objects data while that communicating canunderlying be and technology acted that enables upon solutions inand at a the enables enterprise timely level manner. aconsumer The world. growing number of connected solutionsone in megahertz equal to the one thousand kilohertz. operates theToronto Toronto FC and the Maple Toronto Marlies. Leafs, the Torontothrough Raptors, wireless handheld the devicespersonal such digital as assistants. cellular telephones and the standards forvideo multimedia files. transmission,decompression The including format itself music term such as and MPEG-2, can MPEG-3 or MPEG-4. also referbetween to devices like smartphones the or tablets. file compression/ facilities-based network. network providers. is delivered overMultiplexing technology. an optical network using Wavelength Division frequency competitivecellular wireless networks. technology Whereas900 cellular to MHz typically operates first range,typically in requires PCS generation that the cells operates be 800- smaller in and closer the together. 1.8-1.9 GHzto the range, percentage which ofwireless population network. residing in a market covered by a where a subscriberportion of pays services and a theconsuming the usage fixed services. is Usually billed monthly arranged in on arrears, a fee subsequent term to contract for basis. asubscribers significant pay a separate fee for each program viewed. subscriber to prepayactual for usage. Generally, a a subscriber’s setthe prepaid time account amount is of of debited usage at amount airtime so until that an in additional actual prepayment advance usage is cannot made. of exceed the prepaid • LAN (Local Area Network): A private data communications network • LTE (Long-Term Evolution): A fourth generation cellular wireless • M2M (machine-to-machine): a technology that connects people, • Megahertz (MHz): Millions of hertz. A measure of• frequency, with MLSE: Maple Leaf Sports and Entertainment, which• owns Mobile and commerce: The buying and selling of goods and• services MPEG (Moving Pictures Experts Group): The group that has defined • Near-field-communication: A form of contactless• communication Near-net: Buildings that are geographically close• to Off-net: our existing Buildings that are• serviced On-net: Buildings that by are serviced by• other our facilities-based Optical network. wave facilities-based connectivity: A point-to-point private line service that • PCS (Personal Communications Service): A lower powered, higher • POPs (Percentage of Population): A wireless industry term referring • Postpaid: A conventional method of payment for wireless service • PPV (Pay per View): Pay television• programming for Prepaid: which A cable method of payment for wireless service that allows a rrier): Typically the traditional hange carrier in a given market. Coaxial cables are normally used Evolution Data Optimized is partand of the is CDMA2000 family a ofdata standards wireless rates radio of broadbandspecification. up CDMA protocol is to a that generally 3.1 North delivers America Mbps specific download in standard. its commonly deployed Revision A company that largelyservices to owns their customers. the network upon which theyvideo or sell data)hair-thin in filaments which of glass light calledcapacity fibre-optic is of cables. modulated The fibre-optic bandwidth andwire cable transmitted is and over much lightwithout greater can than the travel that relatively needconnections of long copper for must distances be amplification.interconnected through with networking converted In glass equipment. to many electrical cases, connections fibre-optic todata be transfer between LANs. Fibre to the Nodefor (FTTN) the terminal networks. network segment (from the node to the end-user). gigabyte equals one thousand megabytes. one thousand megahertz. and a member ofmobile the so-called protocols. “second GSM generation”Europe (2G) is and family deployed around of the widely1900 world, across MHz especially frequency at North bands. the America, frequency When 850, delivered 900, band, in 1800 and the GSMCommunications 1800/1900 is Services). MHz sometimes referred to as PCS (Personal that of standard-definition television. that enables atraffic cable television for network extremelyhome to phone carry fast service) and two-way, hundreds Internet of digital channels access, of digital cable television. telephonycafé, (i.e., trainconference centre. station, airport, commercialenhancement office to property WCDMAbroadband packet data technology or services over that 3G networks. provides high-speed phone company and original local exc protocol that all machinescan on the communicate Internet with mustswitching know one and so another. routing that rules IP they into that is specify packets how basically and information acomputers. is how set cut up they of data are addressed for delivery between accepts transmissions fromtransmissions computers over and shielded terminals coaxialpair and telephone cable wire. delivers or over shielded twisted • Facilities-Based Service, Network or Provider: telecom• services Fibre-Optics: A method for the transmission of information (voice, • Frame relay: A standardized WAN technology used• for voice FTTF and (Fibre-to-the-Feeder): A term typically used to describe• CATV Gigabyte (GB): A measure of• computer Gigahertz storage (GHz): A capacity. measure One of frequency.• One gigahertz GSM (Global equals System for Mobile): GSM is a TDMA-based technology • HD (high definition): A resolution that is substantially• higher than HFC (Hybrid Fibre Coax): An advanced cable network architecture • Hotspot: The WiFi wireless access point in a public place such as• a HSPA+ (): An• IP-based ILEC (Incumbent packet-data Local Exchange Ca • IP (Internet Protocol): The packet-based computer network • EV-DO (Evolution Data Optimized): Full name CDMA 2000 EV-DO, • Ethernet: A local area data communications network protocol that MANAGEMENT’S DISCUSSION AND ANALYSIS

• PVR (Personal Video Recorder): A consumer electronics device or accessed. With switched video, the unwatched channels do not application software that records video in a digital format to a disk need to be sent. Instead, a subscribers’ digital box sends a channel drive, USB flash drive, SD memory card or other local or networked request signal back to the distribution hub and if a channel is not mass storage device. The term includes set-top boxes with direct to currently being transmitted on the coaxial line, the distribution disk recording facility, portable media players with recording, hub allocates a new channel and transmits the requested channel recorders such as camcorders that record onto secure digital to the coaxial cable via the fibre-optic node. By sending the digital memory cards and software for personal computers which enables video in this more efficient manner, additional uses may be made video capture and playback to and from a hard disk. of the freed up bandwidth.

• SAP: A provider of enterprise application software. • VOD (Video on Demand): A cable service that allows a customer to select and order movies and shows at any time from a library of • Set-top box: A stand-alone analog or digital device that receives thousands of titles. The content, which is stored on large servers and decodes programming so that it may be displayed on a connected to the cable network, is then delivered via a dedicated television. Set-top boxes may be used to receive broadcast, cable stream to the viewer set up by the network upon request. Viewers and satellite programming. can then pause, fast forward or rewind the content. VOD enables a • SIP (Session Initiation Protocol): A protocol typically used to set up cable operator to offer significantly more content than if it had to telephone calls and other real-time communications between users broadcast every show in its library separately to all subscribers. over the Internet and to and from the PSTN. • VoIP (Voice over IP): The technology used to transmit real time • Smartphone: An advanced wireless mobile device or personal voice conversations in data packets over a data network using digital assistant (PDA) that provides text messaging, e-mail, Internet Protocol. Such data networks include telephone company Internet access, multimedia downloads and social networking networks, cable TV networks, wireless networks, corporate functionality in addition to voice. intranets and the Internet.

• Spectrum: A term generally applied to electromagnetic radio • VPN (Virtual Private Network): A private data network in which frequencies used in the transmission of sound, data and video. some of the links between nodes are carried on an open or shared Various portions of spectrum are designated for cellular service, network (such as the Internet) instead of by dedicated circuits. VPN television, FM radio, satellite transmissions, etc. traffic over the open or shared network is typically encapsulated and encrypted (sometimes referred to as “tunnelled”) to ensure • Streaming media: The process that allows audio or video content to privacy and security is maintained. start playing on your computer screen before the entire file is downloaded to your machine. Prior to streaming media, users • WAN (Wide Area Network): A data network extending/ needed the entire audio or video file on their computer in order to interconnecting multiple local area network LANs using wireline or play. wireless telecommunications. • SVOD (Subscription Video on Demand): Offers, for a monthly • WiFi (802.11): WiFi is the commercial name for a networking charge, access to specific programming with unlimited viewing on technology standard for wireless LANs. Wireless LANs essentially an on-demand basis. provide the same service as wired networks, but at lower speeds. • Switched digital video: A cable network technology that enables WiFi allows any user with a WiFi enabled device to connect to a the carrier to make all channels available to all subscribers while wireless access point at multi-megabit speeds, typically between not having to physically broadcast every available channel. As only 11 Mbps and 50 Mbps depending upon the type of technology a percentage of homes on a network node are actively watching a chosen and how many users are using the network at a given time. given channel at a given time, rarely are all channels being

80 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT CONSOLIDATED FINANCIAL STATEMENTS 81 ROGERS COMMUNICATIONS INC. Anthony Staffieri, FCA Executive Vice President and Chief Financial Officer 2012 ANNUAL REPORT Chartered Accountants, Licensed Public Accountants Toronto, Canada February 14, 2013 Nadir H. Mohamed, FCA President and Chief Executive Officer Opinion In our opinion, theall consolidated financial material statements present respects,Communications fairly, in the Inc. consolidatedconsolidated as financial financial at position performancefor December of and the 31, years Rogers its endedInternational 2012 consolidated December 31, and cash 2012 Financial flows International 2011, and Accounting 2011 Standards and Reporting in Board. accordance its with Standards as issued by the consolidated financial statements,making whether those due risk toto assessments, fraud the we or entity’s consider error. preparationfinancial internal In and control statements fair relevant presentation inappropriate of in order the the consolidated tothe circumstances. design An audit auditreasonableness appropriateness procedures also of includes that accountingwell of evaluating are estimates as madefinancial accounting evaluating statements. by the management, policies as overallWe believe presentation used that the ofsufficient audit and evidence appropriate and the we to provide have consolidated a obtained basis in the for our our audits audit opinion. is The Audit Committee meets periodicallythe with internal management, as and wellthe external as auditors, financial toreporting discuss reporting issues; internaldischarging process, controls to over auditing itsDiscussion and satisfy matters Analysis, the responsibilities; consolidatedexternal itself and financial auditors’ statements report. and and that The financial the the Audit Committee Board each to reports itsconsolidated of findings party review financial to Directors statementsThe is for Management’s for Audit its properly issuance CommitteeDirectors consideration to and also when the approval considers,appointment shareholders. approving by of the for the the external shareholders, auditors. review the by engagementThe the or consolidated re- Board financialLLP, statements of the have externalaccepted been auditing audited auditors, standards and by in theAccounting KPMG standards accordance of the Oversight with Publicshareholders. Company Canadian Board KPMG generally Committee. (United LLP States) has full on and behalf free ofFebruary access 14, 2013 the to the Audit TERED PUBLIC ACCOUNTING FIRM S INC.: S COMMUNICATION IBILITY FOR FINANCIAL REPORTING S S ’ REPORT OF REGI S PON S OF ROGER RE S S HAREHOLDER S tatements Auditors’ Responsibility Our responsibility isfinancial statements to based on expressaccordance our with audits. an Canadian We generally conducted opinionthe accepted our auditing audits standards on standards in of and these(United States). the consolidated Those Public standardsrequirements require Company and that plan Accounting weassurance and comply Oversight about perform with Board whether the ethical free audit from the material to consolidated misstatement. obtain financial reasonable statementsAn are audit involvesabout performing the proceduresstatements. amounts to obtain The andincluding audit disclosures procedures the evidence assessment in of selected the the risks depend of consolidated material on misstatement financial of the our judgment, Management is responsible forof the preparation these andInternational fair presentation consolidated FinancialInternational financial Accounting Reporting statementscontrol Standards Standards in as Board,preparation as accordance and management of consolidated for determinesmaterial with issued financial misstatement, such whether statements is due that by to internal fraud are necessary or error. free the to from enable the Management’s Responsibility for theS Consolidated Financial TO THE We have audited the accompanyingof consolidated financial Rogers statements statements Communications of Inc., financialthe position which as consolidated comprise atchanges December the statements in 31, shareholders’ consolidated 2012December of equity and 31, and 2011, income, 2012 cashsignificant and flows accounting comprehensive policies 2011, for and and the other income, explanatory years notes, information. ended comprising a summary of INDEPENDENT AUDITOR MANAGEMENT’ December 31, 2012 The accompanyingCommunications Inc. consolidated andManagement’s financial its subsidiaries Discussion statements andmanagement and and all have of been the approved Analysis by information Rogers the in are BoardThe of Directors. the consolidatedmanagement responsibility financial in of accordanceStandards. statements with The have Internationalamounts consolidated Financial that been Reporting financial aremanagement prepared based and, statements onrespects, in by include the Rogers their certain Communications bestoperations opinion, lnc.’s estimates and present financial cash andinformation fairly, position, flows. judgments presented Management results in of has of elsewhereAnalysis all prepared and in material the has Management’s financial financial ensured statements. Discussion that it and is consistentManagement with of the Rogersintegrity consolidated Communications of Inc., the consolidated inmaintains financial furtherance statements, a has of system developedinternal the and of audit internal function.provide controls, Management which believes is reasonableauthorized the supported and internal by recorded, assurance controls proper the financial basis for records that theand are preparation that reliable of Rogers transactions consolidated and Communicationsfor financial lnc.’s form statements assets are a are andmanagement’s properly communication accounted properly safeguarded. toethical employees business of conduct. The policies that internal govern The Board control ofresponsibility Directors for processes is financial reportingreviewing responsible include and and for is approving overseeing ultimatelyBoard the responsible management’s carries consolidated out for this financial responsibility through statements. its The Audit Committee. CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF INCOME (IN MILLIONS OF CANADIAN DOLLARS, EXCEPT PER SHARE AMOUNTS)

Years ended December 31, Note 2012 2011

Operating revenue 3(b) $ 12,486 $ 12,346

Operating expenses: Operating costs 4 7,729 7,682 Integration, restructuring and acquisition costs 8 92 56 Depreciation and amortization 12, 13 1,819 1,743 Impairment of assets 13 80 –

Operating income 2,766 2,865

Finance costs 5 (664) (738) Other income, net 15 1 Share of the income of associates and joint ventures 24 235 7

Income before income taxes 2,352 2,135

Income tax expense 9 (620) (545)

Net income from continuing operations 1,732 1,590

Loss from discontinued operations, net of tax 6 (32) (27)

Net income for the year $ 1,700 $ 1,563

Earnings per share – basic: Earnings per share from continuing operations 10 $ 3.34 $ 2.93 Loss per share from discontinued operations 10 (0.06) (0.05)

Earnings per share – basic $ 3.28 $ 2.88

Earnings per share – diluted: Earnings per share from continuing operations 10 $ 3.32 $ 2.91 Loss per share from discontinued operations 10 (0.06) (0.05)

Earnings per share – diluted $ 3.26 $ 2.86

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

82 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT CONSOLIDATED FINANCIAL STATEMENTS 83 22 33 22 69 30 (73) (21) (89) (67) (22) 174 152 182 115 2011 $ 1,563 $ 1,678 – (8) 64 85 61 35 26 ROGERS COMMUNICATIONS INC. (244) (180) (216) (190) (103) (155) (335) 2012 $ 1,700 $ 1,365 21 21 Note 2012 ANNUAL REPORT f cross-currency interest rate exchange agreements Reclassification to net income due to settlement o Reclassification to net income for foreign exchange (loss)/gain on long-term debt Reclassification to net income of accrued interest Related income tax expense Actuarial loss Related income tax recovery Increase (decrease) in fair value Related income tax recovery (expense) Change in fair value of derivative instruments Defined benefit pension plans Change in fair value of available-for-sale investments Cash flow hedging derivative instruments The accompanying notes are an integral part of the consolidated financial statements. Net income for the year CONSOLIDATED STATEMENTS OF COMPREHENSIVE(IN MILLIONS INCOME OF CANADIAN DOLLARS) Years ended December 31, Other comprehensive income (loss): Items that will not be reclassified to income: Items that will not be reclassified to net income Items that may subsequently be reclassified to income: Items that may subsequently be reclassified to net income Other comprehensive income (loss) for the year Comprehensive income for the year CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (IN MILLIONS OF CANADIAN DOLLARS)

December 31, Note 2012 2011 Assets Current assets: Cash and cash equivalents $ 213 $– Accounts receivable 1,536 1,574 Other current assets 11 464 322 Current portion of derivative instruments 19 8 16

2,221 1,912

Property, plant and equipment 12 9,576 9,114 Goodwill 13 3,215 3,280 Intangible assets 13 2,951 2,721 Investments 14 1,484 1,107 Derivative instruments 19 42 64 Other long-term assets 15 98 134 Deferred tax assets 9 31 30

$ 19,618 $ 18,362

Liabilities and Shareholders’ Equity Current liabilities: Bank advances $–$57 Accounts payable and accrued liabilities 2,135 2,085 Income tax payable 24 – Current portion of provisions 16 7 35 Current portion of long-term debt 17 348 – Current portion of derivative instruments 19 144 37 Unearned revenue 344 335

3,002 2,549

Provisions 16 31 38 Long-term debt 17 10,441 10,034 Derivative instruments 19 417 503 Other long-term liabilities 20 458 276 Deferred tax liabilities 9 1,501 1,390

15,850 14,790

Shareholders’ equity 22 3,768 3,572

$ 19,618 $ 18,362

Guarantees 25 Commitments and contingent liabilities 26 Subsequent events 27 The accompanying notes are an integral part of the consolidated financial statements.

On behalf of the Board:

Alan D. Horn, CA John H. Clappison, FCA Director Director

84 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT CONSOLIDATED FINANCIAL STATEMENTS 85 Total Total equity equity shareholders’ shareholders’ reserve reserve Hedging Hedging financial financial ROGERS COMMUNICATIONS INC. assets reserve assets reserve Available-for-sale Available-for-sale earnings earnings Retained Retained 2012 ANNUAL REPORT Share Share premium premium (000s) (000s) shares shares Number of Number of Class B Class B Non-Voting shares Non-Voting shares (000s) Amount (000s) Amount shares shares Number of Number of Class A Class A – –– (30) – (30,943) (870) – (199) – – – – (11) (1,099) – – (11) – – (10) (9,637) (243) (97) – – (350) Voting shares Voting shares Amount (note 7) (note 22(c)) (note 22(c)) Dividends declaredShares issued on exercise of stockAcquisition options of non-controlling interests – – – 10 – 266 – – – – – – (766) – – 10 – (766) Defined benefit pension plans, net ofAvailable-for-sale tax investments, net of taxDerivative instruments, net of tax – – –directly in equity: – –Repurchase of Class B Non-Voting shares – – – – – – – – – (67) – – – – 152 – – – (67) 152 30 30 directly in equity: Repurchase of Class B Non-Voting shares Dividends declaredShares issued on exercise of stock options – – – 1 – 30 – – – – – (820) – – – 1 – (820) Defined benefit pension plans, net ofAvailable-for-sale tax investments, net of taxDerivative instruments, net of tax – – – – – – – – – – – – – – (180) – – – – (190) – – (180) – (190) 35 35 The accompanying notes are an integral part of the consolidated financial statements. Total transactions with shareholdersBalances, December 31, 2011 – $ 72 – 112,462 $ (20) 406 (30,677) 412,395 $ (870) 243 $ (976) 2,443 $ 433 $ – (25) $ 3,572 – (1,866) Balances, January 1, 2011Net income for the yearOther comprehensive income (loss): Total $ other comprehensive income 72Comprehensive income for 112,462 the yearTransactions with shareholders, $ recorded – 426 – 443,072 $ – 1,113 – $ 1,923 – – – $ 281 – $ (55) – $ – 3,760 – – – 1,563 – – (67) 1,496 – 152 152 – 30 30 1,563 115 1,678 Total other comprehensive lossComprehensive income for the yearTransactions with shareholders, recorded – –Total transactions with shareholders –Balances, – December 31, 2012 – – – $ 72 – – – 112,462 $ – – 397 (9) 402,788 1,520 (9,607) (180) $ (243) – $ (917) (190) 3,046 (190) 35 35 $ 243 1,365 (335) $ – 10 $ – 3,768 (1,169) Years ended December 31, 2012 and 2011Balances, January 1, 2012Net income for the yearOther comprehensive income (loss): Amount $ 72 112,462 $ – 406 412,395 $ – 243 $ 2,443 – $ 433 $ (25) – $ 3,572 – 1,700 – – 1,700 CONSOLIDATED STATEMENTS OF CHANGES(IN MILLIONS IN OF CANADIAN SHAREHOLDERS’ DOLLARS) EQUITY CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CASH FLOWS (IN MILLIONS OF CANADIAN DOLLARS)

Years ended December 31, Note 2012 2011 Cash provided by (used in): Operating activities: Net income for the year $ 1,700 $ 1,563 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 12,13 1,819 1,743 Impairment of assets 13 80 – Program rights amortization 73 83 Finance costs 5 664 738 Income tax expense 9 610 535 Pension contributions, net of expense 21 (36) (41) Settlement of pension obligations 21 – 11 Stock-based compensation expense 23 77 64 Share of the income of associates and joint ventures 24(c) (235) (7) Other (23) 9

4,729 4,698 Change in non-cash operating working capital items (248) (169)

4,481 4,529 Income taxes paid (380) (99) Interest paid (680) (639)

Cash provided by operating activities 3,421 3,791

Investing activities: Additions to property, plant and equipment (“PP&E”) 12 (2,142) (2,127) Change in non-cash working capital items related to PP&E 136 (89) Acquisitions, net of cash and cash equivalents acquired – (532) Investments 14 (707) – Additions to program rights (90) (56) Other (31) (27)

Cash used in investing activities (2,834) (2,831)

Financing activities: Issuance of long-term debt 2,090 4,100 Repayment of long-term debt (1,240) (2,802) Premium on repayment of long-term debt – (76) Payment on settlement of cross-currency interest rate exchange agreement and forward contracts – (1,208) Proceeds on settlement of cross-currency interest rate exchange agreement and forward contracts – 878 Transaction costs incurred related to long-term debt (14) (10) Repurchase of Class B Non-Voting shares 22(c) (350) (1,099) Proceeds received on exercise of stock options – 3 Dividends paid 22(b) (803) (758)

Cash used in financing activities (317) (972)

Change in cash and cash equivalents 270 (12) Cash and cash equivalents, beginning of year (57) (45)

Cash and cash equivalents, end of year $ 213 $ (57)

The change in non-cash operating working capital items is as follows: Accounts receivable $15 $ (86) Other current assets (131) (33) Accounts payable and accrued liabilities (140) (46) Unearned revenue 8 (4)

$ (248) $ (169)

Supplemental cash flow disclosure: Non-cash acquisition of spectrum licenses 13 $ 360 $–

Cash and cash equivalents (bank advances) are defined as cash and short-term deposits, which have an original maturity of less than 90 days, less bank advances. The accompanying notes are an integral part of the consolidated financial statements.

86 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 87 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT assessment of creditallowance for risk doubtful accounts (note and 19(a)); theconsideration determination of of inputsvalue the in the ofcombinations determination (note 2(c)(ii)); of assets the and fair consideration of liabilities industrydetermination trends acquired of the and useful lives other in of factors PP&E (notecapitalization in 2(r)(ii)); business of the direct labour,to overhead PP&E (note and 2(r)(i)); interest costs IAS 12, Deferred Tax: RecoveryIn of Underlying December Assets 2010,Recovery the of IASB Underlyingrebuttal amended presumption Assets which IAS determines (“IAS thatthe 12, the depreciable 12”). deferred component Deferred tax of IAS on an Tax: using investment 12 property the measured includes fairshould a be value based on model itsa from carrying amount sale. IAS being recovered The 40, through requirement Investment standard that Property hasmeasured also using deferred the been revaluationand model amended tax Equipment in (“IAS to IAS 16”) 16, on include shouldThe Property, be Plant Company the measured non-depreciable has on thethere assessed sale is assets the no basis. impact impact on of the consolidated this financial statements. amendment and (i) (ii) (iii) (iv) In June 2011, theStatements IASB amended (“IAS IAS 1, 1”).separately Presentation of This present Financial amendment the(“OCI”) as requires items items an of thatprofit may other entity or and comprehensive may to loss. notstatements income The need to Company of be hasDecember reclassified comprehensive 31, to presented 2012 and the income 2011 using consolidated this for approach. IFRS 7, the Financial Instruments: Disclosures In years October 2010, ended the IASBDisclosures amended IFRS 7, (“IFRS Financial Instruments: requirements 7”). to aid This financialnature amendment statement of, users enhances ininvolvement and evaluating in disclosure the derecognized risks financialeffective associated assets. The for with, amendment is thefinancial an statements Company’s commencing entity’s interim January 1,has continuing and 2012. assessed The annual Company the consolidated impact on impact the consolidated of financial statements. this amendment and there is no flow analyses,subscribers, estimated and futuremarkets. Acquisition use earnings, transaction costs are of estimated expensed as incurred. future information available in financial IAS 1, Presentation of Financial Statements (e) UseThe of estimates preparation and judgments: ofmake financial judgments, statementsapplication requires estimates of managementassets, accounting and to liabilities, policies revenue assumptionsassumptions, and and including the expenses. that those Significantand reported with changes affect cash amounts respect in toamounts. of flows, the the Actual future results could could business differ from plans these materially estimates. Key change areas of thefollowing: estimation recorded that carrying are inherently uncertain include the (d) New accounting pronouncements effective in 2012: (i)Subsidiaries Subsidiaries: arefinancial entities statements controlledconsolidated financial of by statementscommences subsidiaries the from until the the Company. aretransactions and date date balances are The that included eliminated that on control consolidation. control in(ii) ceases. Intercompany the BusinessThe combinations: acquisition method ofacquisition accounting of is subsidiaries. used to account for the The fair valuefair of value consideration transferred ofliabilities is the measured incurred assets asIdentifiable given, the assets or acquired equity and assumed liabilitiesat instruments assumed their issued are fair at measured values and the at fair the the values acquisition of date. date assetsconsiderable The acquired determination estimates and of of in liabilities assumed the involves exchange. development of discounted cash (c) Basis of consolidation: (b) BasisThe of presentation: consolidatedhistorical financial cost basis, statements except forfor have certain cash-settled financial been share-based instruments, payments liabilities liability, prepared and the on which netapplicable a are deferred notes. pension The measured consolidated financialin at statements millions are presented fair ofcurrency. Canadian value dollars, as which is described the in Company’s functional the These consolidated financialprepared statements of in theStandards Company have accordance been (“IFRS”)Standards with Board as (“IASB”). International issued FinancialThese consolidated by Reporting financial statements of theended the December Company 31, for International the 2012Directors years and on Accounting February 2011 14, were 2013. approved by the Board of 2. SIGNIFICANT ACCOUNTING POLICIES: (a) Statement of compliance: 1. NATURE OF THE BUSINESS: Rogers Communicationscommunications and Inc. mediasubstantially company, (“RCI”) incorporated all in of issubsidiary Canada, its with a companies operations and“Company”. are diversified The sales Company’s collectively in Canadian registeredStreet Canada. East, office referred Toronto, is RCI Ontario, located M4W to and 1G9. at its 333 hereinAs Bloor of as December 31,segments: the 2012, Wireless, the Company Cable,Through reported Wireless, Business the the Company results Solutions iscommunications of engaged (“RBS”), four services. in wireless and Through voiceCompany and its Media. data Cable provides andaccess, cable RBS and segments, television telephonyThrough the services its services, Media totelevision high-speed segment, broadcasting, both the digital Internet media, consumers Company televisedand is shopping, and distribution, publication and engaged businesses. sports in entertainment. radio and The Company is publiclyRCI.a traded and on RCI.b) the and Toronto on the Stock New Exchange York (TSX: Stock Exchange (NYSE: RCI). NOTES TO CONSOLIDATED FINANCIAL(TABULAR AMOUNTS STATEMENTS IN MILLIONS OF CANADIAN DOLLARS, EXCEPT PER SHARE AMOUNTS) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(v) determination of the recoverable amount in assessing (vii) the Toronto Blue Jays Baseball Club’s (“Blue Jays”) revenue impairment of non-financial assets (note 2(u)(iii)); from home game admission and concessions is recognized as the related games are played during the baseball season. (vi) measurement of provisions (note 2(p)); Revenue from radio and television agreements is recorded (vii) evaluating the recoverability of deferred tax assets (note at the time the related games are aired. The Blue Jays also 2(i)); and receive revenue from the Major League Baseball Revenue Sharing Agreement, which distributes funds to and from (viii) measurement of the fair value of derivative instruments member clubs, based on each club’s revenues. This revenue (note 19(e)), pension obligation (note 21) and stock-based is recognized when determined; and compensation liabilities (note 23). (viii) awards granted to customers through customer loyalty In addition to the key areas of estimation, areas involving significant programs are considered a separately identifiable judgment include the following: component of the sales transactions, and are deferred until recognized as operating revenue when the awards are (i) the Company’s determination of cash generating units for redeemed by the customer and the goods or services are the purpose of impairment testing (note 13); provided by the Company. The portion allocated to the (ii) the Company’s choice to depreciate cable and wireless award credit is estimated based on the fair value of the network on a straight-line basis as it believes this method is right to the future goods and services. The amount of most representative of the economic substance of the use revenue recognized is based on the number of award of the underlying assets (note 2(r)(ii)); credits redeemed relative to the total number of award credits that are expected to be redeemed. (iii) the Company’s view that its Spectrum licenses will likely be renewed in the foreseeable future and therefore have been The Company offers certain products and services as part of multiple designated an indefinite useful life and are not subject to deliverable arrangements, and divides these products and services amortization (note 2(t)(ii)); into separate units of accounting. Components of multiple deliverable arrangements are separately accounted for provided the (iv) the Company’s interpretation of tax rules and regulations delivered elements have stand-alone value to the customers and the in calculating income taxes (note 9); and fair value of any undelivered elements can be objectively and reliably (v) the Company’s determination of the probability of loss in determined. Consideration for these units is measured and allocated assessing contingent liabilities (note 26). amongst the accounting units based upon their relative fair values and the Company’s relevant revenue recognition policies are applied (f) Revenue recognition: to them. In addition to applying the criteria noted below, revenue is recognized when the amount is estimable and collectability is The Company records payments received in advance of providing reasonably assured. The Company’s principal sources of revenues and goods or services as unearned revenue, which includes subscriber recognition of these revenues, net of discounts, for financial deposits, cable installation fees and amounts received from statement purposes are as follows: subscribers related to services and subscriptions that will be provided in future periods. (i) monthly subscriber fees in connection with wireless, cable, telephony and Internet services, rental of equipment, (g) Subscriber acquisition and retention costs: network services and media subscriptions are recorded as The Company expenses the costs related to the acquisition or revenue as the service is provided; retention of subscribers as incurred, except as described in note 2(f)(iv) as it relates to cable installation costs. (ii) revenue from airtime, data services, roaming, long-distance and optional services, pay-per-use services and other sales (h) Stock-based compensation and other stock-based payments: of products are recorded as revenue as the services or The Company’s employee stock option plans, which are described in products are delivered; note 23(a), attach cash-settled share appreciation rights (“SARs”) to all stock options granted. This feature allows the option holder to (iii) revenue from the sale of wireless and cable equipment is elect to receive in cash an amount equal to the intrinsic value of the recorded when the equipment is delivered and accepted by option, being the excess of the market price of the Class B Non- the independent dealer or subscriber in direct sales. Voting share over the exercise price of the option at the exercise date, Equipment subsidies related to new and existing subscribers instead of exercising the option and acquiring Class B Non-Voting are recorded as a reduction of equipment revenues upon shares. All outstanding stock options are classified as liabilities and activation of the equipment; are carried at their fair value, measured using option valuation techniques that are compliant with IFRS 2, Share-based Payment (iv) installation fees and activation fees charged to subscribers (“IFRS 2”). The fair value of the liability is remeasured each period do not meet the criteria as a separate unit of accounting. In and is amortized to net income using the shorter of graded vesting Wireless, these fees are recorded as part of equipment over the four year vesting period, or over the period to the date an revenue. In Cable, they are deferred and amortized over employee is eligible to retire. the related service period, which is approximately three years; The Company has a restricted share unit (“RSU”) plan, which is described in note 23(b). RSUs are recorded as liabilities. The (v) advertising revenue is recorded in the period the measurement of the liability and compensation costs for these awards advertising airs on the Company’s radio or television are based on the fair value of the award and recorded as a charge to stations; is featured in the Company’s publications; or is net income over the vesting period of the award. Changes in the displayed on the Company’s digital properties; Company’s liability subsequent to the grant of the award and prior to (vi) monthly subscription revenues received by television the settlement date are due to changes in fair value of the award and stations for subscriptions from cable and satellite providers are recorded as a charge to net income in the year incurred. The are recorded in the month in which they are earned; payment amount is established as of the vesting date of the award.

88 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 89 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT (a) Available-for-sale financialAvailable-for-sale assets: financial assetspublicly traded include and private theare investments. These Company’s carried investments attributable at to the fair acquisitionconsolidated value of the statements plus financial of assetchanges transaction financial on the in position. costs Subsequent fairrecorded directly value, in OCI. other Atof, than the impairment time the the losses,related investments cumulative are are to fair disposed theconsolidated value statement disposed of income. investment change is recorded reclassified in(b) to OCI the Loans andUpon receivables: initialreceivables, comprised recognition ofaccounts cash the receivable, andtransaction cash Company’s are costs equivalents directly measured attributable and the loans to financial the at asset acquisition and cost and of fair subsequently using carried valuerecorded the at through net plus amortized effective income. interest method,(c) with changes Other financialAll liabilities: of the Company’sclassified non-derivative financial as liabilitiesmeasured are other at financialdirectly fair attributable liabilities to value the issuance andSubsequent of plus the to financial are transaction liability. thethese initially costs initial non-derivative that recognition financialamortized and are liabilities cost measurement, using areliabilities the measured include effective at interestaccrued bank liabilities, method. and advances, long-term Such debt. accounts payable and (i)In Recognition: addition to applyinginitially the recognizes criteria noted cashsubordinated below, liabilities and the Company on receivables,financial assets the and debt financial date liabilities securitiesthe are they trade initially and recognized originate. date on contractual at All provision which of other the the instrument. Company becomes a(ii) party to the ClassificationFor and measurement: measurement purposesinto financial classes instruments atindividual initial are recognition grouped instruments. basedfinancial All on assets the of are purposereceivables, classified of the and as the non-derivative Company’s available-for-sale financialas or other non-derivative liabilities financial loans liabilities. are and classified (iii) Fair value: Fair value estimates areon made at relevant afinancial market specific point instruments. information in These time,and and estimates based involve are information uncertainties subjectiveChanges about and in in matters assumptions the nature could of significantly affect significant the judgment. estimates. (iv) Current andFinancial non-current assets classification: and liabilities dueone in year part from or thedates in consolidated whole are statements more of considered than financialand to position liabilities are be recognized as non-current. current. Other financial assets recognized inconsolidated the statements consolidated of comprehensiveis statements income, if part of theexchange instrument of income gains a or orcertain losses qualifying in long-term debt. are cash the primarily related flow to hedging the(k) translation relationship. of Financial Foreign instruments: Monetary assets andcurrency monetary are liabilities translated into denominatedeffect Canadian at in dollars the at a date of the foreign Non-monetary the exchange consolidated rate statements in of financialdepreciation assets, position. andhistorical non-monetary amortization exchangedepreciation expenses liabilities and amortization, rates. are are translatedthe into Revenue Canadian and translated dollars average at and atrecorded. rate Exchange related gains expenses, the for or losses the other on translating month long-term than debt in are which the transaction was (j) Foreign currency translation: (i)Income Income taxes: tax expense iscalculation comprised of of current incomerules and taxes deferred and requires taxes.recognized The judgment regulations. in in the Currentextent consolidated interpreting that statements they tax and relate of todirectly a income deferred in business except equity combination, or or to tax in items OCI. the recognized expensesCurrent tax are expense ison the the taxable expected income taxsubstantively or payable loss enacted or for at receivable the thetax based year, payable using reporting in tax respect date, rates of and enacted previous years. or anyDeferred adjustment to tax assetsincome tax and consequences liabilitiesfinancial statement attributable are carrying to amountsand recognized of differences their existing for respective between assets tax andmeasured the the liabilities bases. using future Deferred enacted tax orto assets substantively apply and enacted to liabilities taxdifferences taxable are rates are expected income expected to inare reverse. the Deferred offset tax if years assets there inliabilities and is liabilities which and a those assets legallysame enforceable and temporary authority right on they the to relate same offsetwhere taxable to current these entity, or tax income entities on intend taxes differenton to tax levied entities settle a by current netsimultaneously. tax the A liabilities basis deferred and or tax assets tax asset credits their is and deductible recognized taxis temporary for probable assets differences unused that to losses, future and the taxablethey extent income liabilities that can will it be be will available utilized.the against be Significant recoverability which estimates of realized deferred are taxbased required assets. on in The existing evaluating Company’s tax assessmentplanning is strategies. laws, estimates of future profitability,In and determining tax the amount oftakes current into and account deferred the tax, impactadditional the of Company taxes uncertain and tax positionsestimates interest and may whether and be assumptions.available due. The If to assessmentadequacy new relies change on information ofincome were the existing tax expense to in tax Company’s the become period liabilities, that judgement such a such determination regarding is made. changes the would impact The Companydescribed has a in deferredmeasurement note of share the 23(c). unitvalue liability of for (“DSU”) DSUs the these award plan,liability are awards at which subsequent the is recorded date to based is settlement of date on the are grant. as due the Changes grant toare fair in changes liabilities. in of the recorded the Company’s fair The as the valuepayment a of amount award the is charge established award and as and to of prior the net exerciseThe to date income of Company the the in award. has thedescribed an in year note employee 23(d). incurred. Theemployees share The employee to share accumulation accumulation voluntarily plan plan, participate allows the in which terms a is of share thespecified purchase plan, plan. percentage Under employees of ofpayroll their the regular Company deductions earnings cancontribution to contribute matches, and the a which planin are the the through recorded year made. as Company compensation expense makes certain defined NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(v) Offsetting financial assets and liabilities: (p) Provisions: Financial assets and liabilities are offset and the net amount Provisions are recognized when a present obligation as a result of a presented in the statement of financial position when the past event will lead to a probable outflow of economic resources Company has a legal right to offset the amount and intends to from the Company and the amount of that outflow can be estimated settle on a net basis or realize the asset and liability reliably. The timing or amount of the outflow may still be uncertain. simultaneously. A present obligation arises from the presence of a legal or constructive obligation that has resulted from past events, for (l) Derivative instruments: example, legal disputes or onerous contracts. The Company uses derivative instruments to manage risks from fluctuations in exchange rates with respect to long-term debt (“Debt Significant estimates are used in measuring provisions. Provisions are Derivatives”) and to manage risks from fluctuations in exchange rates measured at the estimated expenditure required to settle the present on certain forecasted expenditures (“Expenditure Derivatives” and, obligation, based on the most reliable evidence available at the together with Debt Derivatives, “Derivatives”). From time to time, reporting date, including the risks and uncertainties associated with these instruments include cross-currency interest rate exchange the present obligation. Provisions are determined by discounting the agreements, interest rate exchange agreements, foreign exchange expected future cash flows at a pre-tax rate that reflects current forward contracts and foreign exchange option agreements. All such market assessments of the time value of money and the risks specific instruments are only used for risk management purposes. The to the liability. Company does not use derivative instruments for speculative purposes. (i) Decommissioning and restoration costs: In the course of the Company’s activities, network and other All derivatives are measured at fair value, with changes in fair value assets are utilized on leased premises that are expected to have recorded in the consolidated statements of income unless they are costs associated with decommissioning these assets and restoring effective cash flow hedging derivatives and designated as such for the location where these assets are situated upon exiting those accounting purposes. The Company assesses whether an embedded premises. derivative is required to be separated from the host contract and accounted for as a derivative when the Company first becomes a These decommissioning and restoration costs are calculated on party to the contract. The changes in fair value of cash flow hedging the basis of the identified costs for the current financial year, derivatives are recorded in the hedging reserve, a component of extrapolated into the future based on management’s best equity, to the extent effective, until the variability of cash flows estimates of future trends in prices, inflation, and other factors, relating to the hedged asset or liability are recognized in net income. and are discounted to present value. Forecasts are revised in Any hedge ineffectiveness is recognized in net income immediately. light of future changes in business conditions or technological requirements. On initial designation of a derivative instrument as a hedging instrument, the Company formally documents the relationship The Company records these decommissioning and restoration between the hedging instrument and hedged item, including the risk costs as property, plant and equipment and subsequently management objectives and strategy in undertaking the hedge allocates them to depreciation expense based on the related transaction and the hedged risk, together with the methods that will asset’s useful life, and records the accretion of the liability as a be used to assess the effectiveness of the hedging relationship. The charge to finance costs. Company assesses at the inception of the hedging relationship and on (ii) Restructuring: an ongoing basis, whether the hedging instruments are expected to A provision for restructuring is recognized when the Company be highly effective in offsetting the changes in the fair value or cash has approved a detailed and formal restructuring plan, and flows of the respective hedged items attributable to the hedged risk. either the restructuring has commenced or management has (m) Earnings per share: announced the plan’s main features to those affected by it. The Company presents basic and diluted earnings per share data. (iii) Onerous contracts: Basic earnings per share is calculated by dividing the net income or A provision for onerous contracts is recognized when the loss attributable to Class A and B shareholders of the Company by the unavoidable costs of meeting the obligation under the contract weighted average number of Class A and B shares outstanding during exceed the expected benefits to be derived by the Company. The the year. The diluted earnings per share is determined by adjusting provision is measured at the present value of the lower of the the net income or loss attributable to Class A and B shareholders and expected cost of terminating the contract and the expected cost the weighted average number of Class A and B shares outstanding for of continuing with the contract. Before a provision is the effects of all dilutive potential common shares. The Company uses established, the Company recognizes any impairment loss on the the treasury stock method for calculating diluted earnings per share. assets associated with the contract. The diluted earnings per share calculation considers the impact of employee stock options and other potentially dilutive instruments, as (q) Employee benefits: disclosed in note 10. (i) Pension benefits: The Company provides both contributory and non-contributory (n) Inventories: defined benefit pension plans, which provide employees with a Inventories, including handsets, digital cable equipment and lifetime monthly pension upon retirement. The Company’s net merchandise for resale, are primarily measured at the lower of cost, obligation in respect of defined benefit pension plans is determined on a first-in, first-out basis, and net realizable value. calculated separately for each plan by estimating the amount of Previous write downs to net realizable value are reversed if there is a future benefits that employees have earned in return for their subsequent increase in the value of the related inventories. service in the current and prior years; that benefit is discounted (o) Deferred transaction costs: to determine its present value. The Company accrues its pension Costs incurred in connection with the issuance of long-term debt and plan obligations as employees render the services necessary to direct costs paid to lenders to obtain revolving credit facilities are earn the pension. The Company uses a discount rate determined deferred and amortized using the effective interest method over the by reference to market yields at the measurement date on high life of the long-term debt to which they relate. quality corporate bonds to measure the accrued pension benefit

90 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 91 useful life and lease term ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT (i)Goodwill Goodwill: istransferred, measured includingcontrolling if the interest of the recognized the acquiree,of is the amount greater fair than identifiable the of net fairthe value assets value any difference acquired. If of isstatements non- the of recognized excess income. consideration is immediately negative, in the consolidated (i)Items Recognition and measurement: ofdepreciation and accumulated PP&E impairment losses. areCost includes measured expenditures thatacquisition at are of directly cost attributableincludes the the to cost asset. the less ofdirectly The materials and accumulated attributable cost direct labour,condition of any to for other self-constructed their costs bringingremoving intended assets the use, the the itemslocated, costs assets and of restoring to and dismantling thedetermination and site of a borrowing directly onmanagement working attributable which costs estimates. costs they involves These are labour on significant estimates include and qualifying certainconstruction, direct direct development assets.network or costs The are betterment capitalized associatedcapitalized to of PP&E, during the with andPP&E. construction Company’s interest the costs and which development acquisition, are The of cost of certain new cableto subscriber cable installation and costs wireless are networklives capitalized and of is the depreciated related overdisconnections the assets. useful Costs are ofinstallation other expensed, cable costs connections except related and are to deferred for to reconnect the extent direct Cable of reconnect customers, installation incremental Gains revenues. which and losses onby disposal of comparing an item theamount of of PP&E proceeds PP&E, are and determined from areconsolidated recognized statements disposal of within income. other with income in the the carrying (ii) TerminationTermination benefits: benefits areCompany recognized as is anwithdrawal, to expense a when formal committedbefore detailed the the plan normal to retirement without terminate date. employment realistic possibility of (t) Goodwill and intangible assets: are recorded onwhen the the licence consolidated periodand statements begins and is of the amortized financialstatements program is to position of available other income forranges use external over from purchases the onerelated in to expected program the five exhibition years. consolidated rightsOtherwise, period, they If are which are programs subject consideredas are to intangible non-financial not impaired assets asset scheduled, impairment with andyear testing the finite written sports useful lives. off. programmingwhen Program the rights arrangements games for are are aired. multi- expensed as incurred, (r) Property, plant and equipment: Basis Estimated useful life for the purpose ofplan calculating assets, those the assets expected are valued return at on fairpast value; service and costs from planimmediately amendments in are the expensed consolidatedto statements the of income extentpast that they service are costsstraight-line already basis are vested. over deferred Unvested theperiod. and Contributions average to remaining amortized defined contribution vesting recognized on plans are as a anstatement employee of benefitrelated income services expense are in rendered by in employees. the the periods during which the cost of pensions isinto actuarially account determined and the takes expectedinstance, rates as of the salary basis increases, for future for benefit increases; (b) (c) (a) Asset BuildingsCable and wireless networkComputer equipment and softwareCustomer premise equipmentLeasehold improvementsEquipment and vehiclesComponents of an itemThe of PP&E selection may have ofrequires different depreciation useful significant lives. methods, estimates rates,trends and that and company-specific factors. take useful Depreciationand methods, lives into residual rates values account are reviewedare industry at changes least in annually circumstances, or Straight-line andestimated when revised there useful if the life currentestimated method, previously. or The Straight-line effect residual ofthe such value consolidated changes statements of is is income recognized Straight-line prospectively. different in fromDevelopment that expenditurescriteria are for recognition capitalized as Straight-line antheir if asset. The expected assets they Diminishing are balance useful amortizedResearch meet over expenditures, lives the as oncecosts, are expensed well they as Diminishing incurred. balance as are maintenance available and for training use. 4 to 10 years Over shorter of estimated 3 to 30 years 3 to 5 5 years to 25 years 3 to 20 years Contributions to defined contribution plansemployee are recognized benefit as an expenseincome in in the periods the duringby which employees. consolidated related services statements are rendered of (ii) Depreciation: Depreciation is charged to the consolidated statements of income over the estimated useful lives of the PP&E as follows: obligation. Actuarial gains andof losses the are year determined in at connectionrecognized the with in end the OCI valuation and of retained the earnings. plans and are The Company uses thepension accounting following associated methods with its and defined assumptions benefit plans: for (s) AcquiredProgram program rights: rightsparties represent to broadcast contractual televisionaccumulated rights programs amortization. and Program acquired are rights carried and from at the third cost related less liabilities NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(ii) Intangible assets: than an operating segment. The allocation involves significant Intangible assets acquired in a business combination are estimates and considerable management judgment, and is made recorded at their fair values. Intangible assets with finite useful to those CGUs that are expected to benefit from the synergies of lives are amortized over their estimated useful lives and are the business combination. tested for impairment, as described in note 2(u). Useful lives, (iii) Non-financial assets with finite useful lives: residual values and amortization methods for intangible assets The carrying values of CGUs with other non-financial assets with with finite useful lives are reviewed at least annually. finite useful lives, such as PP&E and intangible assets with finite Intangible assets having an indefinite life, which consist of useful lives, are assessed for impairment whenever events or spectrum and broadcast licences, are not amortized but are changes in circumstances indicate that their carrying amounts tested for impairment on an annual basis, as described in note may not be recoverable. If any such indication exists, the 2(u). Spectrum licences and broadcast licences are indefinite life recoverable amount of the asset must be determined. Such intangible assets because there is no foreseeable limit to the assets are impaired if their recoverable amount is lower than period over which these assets are expected to generate net cash their carrying amount. If it is not possible to estimate the inflows for the Company. The determination of these assets’ recoverable amount of an individual asset, the recoverable indefinite life is based on judgment that includes an analysis of amount of the CGU to which the asset belongs is tested for all relevant factors, including the expected usage of the asset, impairment. the typical life cycle of the asset and anticipated changes in the (iv) Recognition of impairment charge: market demand for the products and services that the asset The recoverable amount is the higher of an asset’s or CGU’s fair helps generate. value less costs to sell (“FVLCTS”) or its value in use. The Intangible assets with finite useful lives are amortized on a determination of the recoverable amount requires the use of straight-line basis over their estimated useful lives as follows: significant management estimates such as the estimated future cash flows, terminal growth rate and discount rate applied. If Brand names 7 to 20 years the recoverable amount of an asset or CGU is estimated to be Customer relationships 3 to 5 years less than its carrying amount, the carrying amount of the asset Roaming agreements 12 years or CGU is reduced to its recoverable amount. The resulting Marketing agreements 3 years impairment loss is recognized in the consolidated statements of income. An impairment loss is reversed if there has been a (u) Impairment: change in the estimates used to determine the recoverable (i) Financial assets: amount. When an impairment loss is subsequently reversed, the A financial asset is considered impaired if objective evidence carrying amount of the asset or CGU is increased to the revised indicates that one or more events have had a negative effect on estimate of its recoverable amount so that the increased carrying the estimated future cash flow of that asset that can be amount does not exceed the carrying amount that would have estimated reliably. Individually significant financial assets are been recorded had no impairment losses been recognized for tested for impairment on an individual basis. The remaining the asset or CGU in prior years. Impairment losses recognized for financial assets are assessed collectively based on the nature of goodwill are not reversed. the asset. In assessing value in use, the estimated future cash flows are An impairment loss on loans and receivables is measured as the discounted to their present value using a pre-tax rate that difference between the assets carrying amount and the present reflects current market assessments of the time value of money value of the future cash flows expected to be derived from the and the risks specific to that asset. The cash flows used reflect asset. The carrying value is reduced through the use of an management assumptions and are supported by external sources allowance for doubtful accounts, with the loss recognized in net of information. income. In assessing FVLCTS, the fair value is based on the best An impairment loss on available-for-sale financial assets is information available to reflect the amount that could be recognized by reclassifying the losses accumulated in the fair obtained from the disposal of the asset in an arm’s length value reserve in equity to the consolidated statements of transaction between knowledgeable and willing parties, net of income. The cumulative loss that is reclassified from equity to estimates of the costs of disposal. the consolidated statements of income is the difference between (v) Investments: the acquisition cost less any impairment loss previously (i) Investments in associates and joint ventures: recognized and the current fair value. The Company’s interests in investments in associates and joint An impairment loss in respect of an equity-accounted investment ventures are accounted for using the equity method of is measured by comparing the recoverable amount of the accounting. Associates are those entities in which the Company investment with its carrying amount in accordance with note has significant influence, but not control, over the financial and 2(u)(iv). operating policies. Significant influence is presumed to exist when the Company holds between 20% and 50% of the voting (ii) Goodwill and indefinite-life intangible assets: power of another entity. Joint ventures are those entities over The carrying values of identifiable intangible assets with whose activities the Company has joint control, established by indefinite lives and goodwill are tested annually for impairment contractual agreement and requiring unanimous consent for or more frequently if there are indicators of impairment. A cash strategic financial and operating decisions. generating unit (“CGU”) is the smallest identifiable group of assets that generates cash inflows that are largely independent The investments in associates and joint ventures are initially of the cash inflows from other assets or groups of assets. recognized at cost. The carrying amount is increased or Goodwill and indefinite life intangible assets are allocated to decreased to recognize, in net income, the Company’s share of CGUs for the purpose of impairment testing based on the level the income or loss of the investee after the date of acquisition. at which management monitors goodwill, which is not higher Distributions received from an investee reduce the carrying

92 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 93 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT IAS 28, Investments in AssociatesIn and May Joint 2011, Ventures the IASBJoint amended IAS Ventures 28, (“IAS Investmentsportion in of 28”). Associates an and investment This inbeen an amendment classified associate or requires as jointmethod any venture held that retained until has for not continues sale disposal. to to Afterrequires be be it to measured disposal, an continue usingThe to associate if be amendment the accounted also or for equity the underinterest disallows the joint in the retained equity an method. remeasurement venture, investmentor interest of upon joint the control. the any cessation retained amendment of significantThe influence followingCompany’s accounting interimcommencing pronouncement and January 1, annual is 2015. Thethe consolidated pronouncement Company effective on is its financial assessing consolidated the for financial impact statements statements: of IFRS the 9, Financial Instruments In October(“IFRS 2010, 9”). theRecognition IFRS and IASB Measurement, 9, establishes issued principlesreporting which for of IFRS the replaces financial financial assets 9,relevant IAS and and financial Financial 39, useful liabilities informationtheir Instruments that Financial assessment to of will the users Instruments: present amounts, offuture timing cash and financial flows. uncertainty statements of an for entity’s IFRS 13, Fair Value Measurement In May(“IFRS 2011, 13”). the IFRSindividual IASB 13 IFRS issued replacesguidance. the IFRS with The fair standard 13, a value alsoassess Fair requires single guidance disclosures Value contained source that the enablemeasurements. in Measurement of users methods to fair and valueIAS measurement 19, inputs Employee Benefits In used June 2011, the to IASBThis amended amendment IAS eliminates develop 19, Employee theinterest Benefits concept (“IAS cost fair of 19”). (income) return and onis value replaces plan them calculated assets with and a by(asset). net interest multiplying The cost the amendment that approach discount also and mandates rate eliminates allOCI. remeasurement by the impacts It use the be also recognized of netinformation in enhances about the liability the the characteristics “corridor” of disclosurerisk defined that requirements, benefit plans entities providing and are the The better exposed to adoption through of participation thepension in expense amended those of plans. standard $7 willupon million result for the in retrospective year anadopted ended beginning application increase December January in 31, 1, 2013. 2012 when theIAS 27, Separate amended Financial Statements In standard May 2011, the is IASB(“IAS amended IAS 27, 27”). Separateconsolidated Financial Statements statements This from IASConsolidated 27, Financial amendment and Statements. moveswhen The removes a it amendment company over prepares to mandatesin the separate IFRS that subsidiaries, financial 10, statements, associates, requirementsaccounted investment and for jointly for usingIFRS controlled either 9, entities Financial the Instruments. are cost Inthe addition, to method treatment this or be amendment for determines group in reorganizations, recognizing accordance and some dividends, with disclosure requirements. the treatment of certain represents a separate major line of business; is part of a singlemajor coordinated line plan of to business; or dispose of a separate is a subsidiary acquired exclusively with a view to re-sale. (i) (ii) (iii) amount oftransactions the with investment.against equity the Unrealized accounted investment toin investees gains the the extent are arising of investee.unrealized the eliminated Unrealized gains, Company’s from but losses only interest toof are the impairment. extent eliminated that there the is no same evidence as (ii) InvestmentsPublicly in publicly traded traded and privateinfluence investments companies: exists where areand no classified are control recorded as atInvestments or available-for-sale fair in private value investments significant companies based whereinfluence on no control publicly exists or quoted are significant determined prices. also using accounted well forprojected established at income fair marketappropriately value, or valuation which to asset techniques, is operating based, each and or which profitability investmentthese prospects. are depending investments Changes are applied in oninvestments fair recorded are its value in disposed of OCIare future of considered until impaired or when such there becomedecline is time in a impaired. fair significant as value Investments or below prolonged the cost. In May 2011, theEntities IASB issued (“IFRS IFRS 12,disclosure 12”). Disclosure requirements of IFRS Interests forincluding in 12 all Other establishes forms ofunconsolidated new subsidiaries, structured interests entities. and in comprehensive other joint entities, arrangements, associates and IFRS 12, Disclosure of Interests in Other Entities IFRS 11, Joint Arrangements In May 2011, the IASBIFRS issued 11, IFRS 11, which JointVentures, Arrangements replaces (“IFRS the 11”). providesarrangements guidance by in for IASarrangement, focusing rather 31, a than on its Interestsstandard legal the in form more (as rights Joint addresses isarrangements currently and realistic by the requiring inconsistencies case). obligations interests The in reflectionaccounted jointly of for controlled in using entities the the of to equity be method. the joint reporting of joint IFRS 10, Consolidated Financial Statements In MayStatements 2011, (“IFRS the 10”).requirements IFRS IASB of 10, SIC-12IAS issued which 27 Consolidation-Special IFRS replaces Consolidated Purposeprinciples and the 10, Entities Separate for consolidation and Financial Consolidatedfinancial the Statements, statements Financial presentation establishes whenentities. and an preparation entity of controls one consolidated or more other (x) RecentThe accounting pronouncements: followingCompany’s accounting interim pronouncementscommencing and are January 1, annual effective 2013. Thethese consolidated pronouncements Company for on is its financial assessing the consolidated the financial impact statements statements: of When an operationcomparative statements is of income classified andpresented comprehensive as as if income the are a operation re- the had discontinued comparative been year. discontinued operation, from the the start of (w) Discontinued operations: A discontinued operation isthe a operations component of and the cashfrom Company’s the flows business, rest of of the which Company can and which: be clearly distinguished NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. SEGMENTED INFORMATION:

(a) The Company’s chief operating decision makers are the CEO and segment and for purposes of making decisions on resource CFO. They review the operations and performance of the allocations. Adjusted operating profit is income before Company by segments, which include Wireless, Cable, RBS and integration, restructuring and acquisition costs, stock-based Media. Segment results that are reported to the Company’s chief compensation expense, settlement of pension obligations, decision makers include items directly attributable to a segment depreciation and amortization, impairment of assets, finance as well as those that can be allocated on a reasonable basis. costs, other income, share of income of associates and joint ventures, and income taxes. This measure of segment operating The accounting policies of the segments are the same as those results differs from operating income in the consolidated described in note 2 to the Company’s consolidated financial statements of income. All of the Company’s reportable segments statements. The chief operating decision makers review adjusted are substantially in Canada. operating profit as a key measure of performance for each

Information by reportable segments is as follows, which is regularly reported to the chief operating decision makers:

Corporate items and Consolidated Year ended December 31, 2012 Wireless Cable RBS Media Eliminations Totals

Operating revenue $ 7,280 $ 3,358 $ 351 $ 1,620 $ (123) $ 12,486 Operating costs(1) 4,217 1,753 262 1,430 (10) 7,652

Adjusted operating profit 3,063 1,605 89 190 (113) 4,834 Integration, restructuring and acquisition costs 92 Stock-based compensation expense(1) 77 Depreciation and amortization 1,819 Impairment of assets 80

Operating income 2,766 Finance costs (664) Other income, net 15 Share of the income of associates and joint ventures 235

Income before income taxes $ 2,352

Additions to PP&E $ 1,123 $ 832 $ 61 $ 55 $ 71 $ 2,142

Goodwill $ 1,146 $ 1,000 $ 215 $ 854 $ – $ 3,215

Total assets $ 9,769 $ 4,719 $ 835 $ 2,157 $ 2,138 $ 19,618

(1) Included with operating costs in consolidated statements of income. Corporate items and Consolidated Year ended December 31, 2011 Wireless Cable RBS Media eliminations totals

Operating revenue $ 7,138 $ 3,309 $ 405 $ 1,611 $ (117) $ 12,346 Operating costs(1) 4,102 1,760 319 1,431 (5) 7,607

Adjusted operating profit 3,036 1,549 86 180 (112) 4,739 Integration, restructuring and acquisition costs 56 Stock-based compensation expense(1) 64 Settlement of pension obligations(1) 11 Depreciation and amortization 1,743

Operating income 2,865 Finance costs (738) Other income, net 1 Share of the income of associates and joint ventures 7

Income before income taxes $ 2,135

Additions to PP&E $ 1,192 $ 748 $ 55 $ 61 $ 71 $ 2,127

Goodwill $ 1,146 $ 1,000 $ 215 $ 919 $ – $ 3,280

Total assets $ 9,184 $ 4,619 $ 924 $ 1,947 $ 1,688 $ 18,362

(1) Included with operating costs in consolidated statements of income.

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

94 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 95 10 (14) (37) (23) 2011 (105) $ (27) $82 10 (30) (42) (30) (12) 2012 $ (32) $18 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT DIVESTITURES: a 100%consideration of interest $426owns million. in Atria, and based Atria operatesOntario, in delivering Kitchener, one premier Networks business Ontario, Internet ofacquisition and LP data the will services. The augment largestbusiness (“Atria”) RBS’s fibre-optic offerings small by for networkscentric business enhancing services in its within and cash and ability medium-sized adjacent to to Cable’s deliver footprint. on-net data all of the(CHBN-FM) for cash assets consideration of ofthis $22 radio million. Edmonton, station The was acquisition Albertathe made of Edmonton to market. radio increase the station Company’s presence BOUNCE in all of the assetsFM), of for London, cash Ontario considerationradio radio station of was station, $16 made BOB-FM to million. (CHST- enter The into the acquisition London, of Ontario market. this acquire all of thefor assets cash of Compton considerationtelevision, Cable Internet of T.V. and Ltd. $40and telephony (“Compton”) the million. services surrounding Compton area. inthe The Port Port provides acquisition Perry, Perry, was Ontario cable market made Ontario footprint. and to is enter adjacent into to the existing Cable Loss from discontinued operations for the year The Video segment didat not have December any 31, significantdiscontinued assets 2012. or Video Cash liabilities segment flows as forwere from $2 the operating million year activities (2011 endedany – for December $1 cash the 31, million). flows 2012 Theended Video December from 31, segment investing 2012 did and not or 2011. have financing activities for the years Loss before income taxes Income tax recovery Integration, restructuring and acquisition costs 7. BUSINESS COMBINATIONS AND There weredivestitures during no 2012. individually materialDuring 2011, business the Company made combinations the following acquisitions: or • On January 4, 2011, the Company closed an agreement to purchase • On January 31, 2011, the Company closed an agreement to acquire • On January 31, 2011, the Company closed an agreement to acquire • On February 28, 2011, the Company closed an agreement to 6. DISCONTINUED OPERATIONS: During the secondVideo quarter segment. Accordingly, of the 2012,have Video segment the been results Company of reportedRogers’ operations discontinued as stores its no discontinued longerany operations. offered of As video its andcustomers’ of retail game wireless locations. June rentals and Certain or 2012, cableoperations of sales are needs. as these at The follows: stores results continue of the to discontinued serve Operating revenue Operating costs 6 8 6 99 11 27 (14) (29) 171 326 537 926 478 128 271 399 405 816 241 272 282 2011 2011 2011 (117) 4,304 1,742 6,601 7,138 1,878 3,282 3,309 1,611 $ 668 $ 738 $ 1,454 $ 7,682 $ 12,346 $ 6,275 – – 6 9 1 (9) 15 (28) 173 351 317 561 998 477 162 183 345 784 264 276 296 2012 2012 2012 (123) 4,138 1,813 6,719 7,280 1,868 3,343 3,358 1,620 $ 691 $ 664 $ 1,605 $ 7,729 $ 12,486 $ 6,402 Revenue by product is as follows: (note 17) subsidies Prepaid Cable television Internet Home phone Next generation Legacy Advertising Subscription Retail Other eliminations Postpaid instruments Foreign exchange loss (gain) Merchandise for resale Interest on long-term debt Loss on repayment of long-term debt 5. FINANCE COSTS: Cost of equipment sales and direct channel 4. OPERATING COSTS: Other external purchases Employee salaries and benefits Settlement of pension obligations (note 21) Total RBS Network revenue Equipment sales Total Wireless Cable: Service revenue Equipment sales Total Cable RBS: Service revenue Equipment sales Media: Total Media Corporate items and intercompany (b) Wireless: Capitalized interest Other Change in fair value of derivative NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The final fair values of the assets acquired and liabilities assumed for Broadcast and spectrum licenses are indefinite life intangible assets. all acquisitions during 2011 are summarized as follows: The other assets acquired are being amortized over their expected Atria BOUNCE BOB-FM Compton useful lives of 3 years to 5 years. Goodwill represents the expected operational synergies with the acquiree and/or intangible assets that Fair value of consideration do not qualify for separate recognition. The goodwill is tax transferred $ 426 $ 22 $ 16 $ 40 deductible except for the goodwill acquired from Atria Networks LP. Current assets 10 1 1 1 Total transaction costs incurred were $4 million, which have been PP&E 132 – – 10 recorded in integration, restructuring and acquisition costs in the consolidated statement of income. Customer relationships 200 – – 23 Broadcast licence – 11 6 – During the year ended December 31, 2011, the Company increased its Brand name – 1 1 – ownership interest in a subsidiary from 53% to 100% for cash Spectrum licence 4 – – – consideration of $11 million. The Company recognized this increase in Current liabilities (17) – – (1) the ownership interest of a previously controlled entity as a decrease Deferred tax liabilities (52) – – – in retained earnings of $11 million because the carrying amount of non-controlling interest was insignificant. Fair value of net identifiable assets acquired and During the year ended December 31, 2011, the Company made an liabilities assumed 277 13 8 33 acquisition for cash consideration of approximately $16 million, which has been recorded as customer relationships. The customer Goodwill $ 149 $ 9 $ 8 $ 7 relationships are being amortized over a period of five years.

Segment RBS Media Media Cable

8. INTEGRATION, RESTRUCTURING AND ACQUISITION COSTS:

During 2012, the Company incurred:

(a) $89 million (2011 – $52 million) of restructuring expenses related to severances resulting from the targeted restructuring of its employee base and to improve the Company’s cost structure; and

(b) $3 million (2011 – $4 million) of acquisition related transaction costs for business combinations and integration expenses related to previously acquired businesses and related restructuring.

The additions to the liabilities related to the integration, restructuring and acquisition activities and payments made against such liabilities during 2012 are as follows: As at As at December 31, December 31, 2011 Additions Payments 2012

Severances resulting from the targeted restructuring of the Company’s employee base $ 46 $ 89 $ (85) $50 Acquisition transaction costs and integration of acquired businesses 2 3 (2) 3

$ 48 $ 92 $ (87) $53

The remaining liability of $53 million as at December 31, 2012, which is included in accounts payable and accrued liabilities, is expected to be paid over the next two years.

96 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – – 4 97 45 45 14 (12) (28) (31) 2011 2011 2011 (1,390) 28.0% $ 131 $41 $ 545 $ 598 $30 $ (1,360) – 9 8 45 34 11 54 (22) (61) 2012 2012 2012 26.4% $ 123 $44 $ 620 $ 621 (1,501) $31 $ (1,470) ROGERS COMMUNICATIONS INC. Non-capital carryforwards Other Total income tax loss reserve partnership Stub period income and 2012 ANNUAL REPORT Goodwill and other intangibles (2) (53) – 3 (3) (55) deferred tax assets reversal of temporary differences legislative changes jurisdictions Impairment of goodwill and intangible assets Recognition of previously unrecognized Stock-based compensation Tax rate differential on origination and Non-taxable portion of capital gain Other items from: Revaluation of deferred tax balances due to Inventory PP&E and Deductible temporary differences in foreign The Company hasinvestment taxable temporary in differences associated Canadian with its domestic subsidiaries. No deferred tax Income tax expense from continuing operations Due to Canadian federal andrate provincial enacted changes, corporate incomedecreased tax the from 28.0% in statutory 2011 to 26.4% income in 2012. tax rate for the Company Deferred tax liabilities Net deferred tax liability Capital losses in Canada Tax losses in foreign jurisdictions Computed income tax expense (b) DeferredThe tax net assets deferred and tax liabilities: liability consists of the following: Deferred tax assets As at December 31, 2012recognized and in respect 2011, of deferred the tax following assets items: have not been Income taxamounts expense that from would betax continuing rate computed to by operations income applying before varies income the taxes statutory for from the income following the reasons: Statutory income tax rate Increase (decrease) in income taxes resulting (28) (12) (10) 721 681 545 2011 $ (136) $ 535 Year ended December 31, 54 (22) (10) 160 192 620 2012 $ 428 $ 610 Year ended December 31, differences due to legislative changes unrecognized deferred tax assets Origination and reversal of temporary Revaluation of deferred tax balances Recognition of previously Deferred tax expense (benefit): Current income tax expense (benefit) Total deferred tax expense operations operations (note 6) The movement of net deferred tax assets and liabilities are summarized as follows: As at December 31, 2012,carryforwards the Company had Canadian ofcarryforwards non-capital loss of $75 $50Canadian million. million, and IfDecember foreign not 31, and 2012, utilized, tax theavailable capital the Company foreign losses losses had to majority offset will approximately future of non-capital $44 capital gains. expire million the of loss after 2025. As at January 1, 2011Benefit (expense) in net incomeBenefit (expense) in OCIAcquisitions Benefit (expense) in net incomeBenefit (expense) in OCIDecember 31, 2012 (18) $ (8) (464) – $ (360) (117) (669) $ (138) – 61 47 – $ $ 54 (601) – 72 $ (33) $ 305 (360) $ – (681) $ (603) (735) (79) – – (129) $ (21) 25 (192) $ 201 (21) $ – (1,470) 82 82 Deferred tax assets (liabilities) December 31, 2011 (484) (421) (807) 104 248 (1,360) Continuing operations: Income tax expense from continuing Income tax expense from discontinued Total income tax expense The components of incomeDecember tax 31, expense 2012 (benefit) and for 2011 were the as years follows: ended 9. INCOME TAXES: (a) Income tax expense (benefit): NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

liabilities have been provided with respect to such temporary Furthermore, reversal of such temporary differences, if it occurs, could differences where the Company is able to control the timing of the be implemented without any significant tax implications. reversal and such reversal is not probable in the foreseeable future.

10. EARNINGS PER SHARE:

The following table sets forth the calculation of basic and diluted earnings per share for the years ended December 31, 2012 and 2011: 2012 2011 2012 2011 Numerator: Earnings per share – basic: Net income for the year from continuing Earnings per share from continuing operations $ 3.34 $ 2.93 operations $ 1,732 $ 1,590 Loss per share from discontinued operations (0.06) (0.05) Loss from discontinued operations (32) (27) Earnings per share $ 3.28 $ 2.88 Net income for the year $ 1,700 $ 1,563

Earnings per share – diluted: Denominator (in millions): Earnings per share from continuing operations $ 3.32 $ 2.91 Weighted average number of shares outstanding – basic 519 543 Loss per share from discontinued operations (0.06) (0.05)

Effect of dilutive securities: Earnings per share $ 3.26 $ 2.86 Employee stock options 3 4 The total number of anti-dilutive options that were out of the money Weighted average number of shares and therefore excluded from the calculation for the year ended outstanding – diluted 522 547 December 31, 2012 was 17,240 (2011 – 1,570,760).

11. OTHER CURRENT ASSETS:

2012 2011 Inventories $ 293 $ 206 Prepaid expenses 126 108 Income tax receivable 39 – Other 6 8

$ 464 $ 322

Cost of equipment sales and merchandise for resale includes $1,778 million (2011 – $1,625 million) of inventory costs.

12. PROPERTY, PLANT AND EQUIPMENT

Details of PP&E and accumulated depreciation are as follows:

December 31, 2012 December 31, 2011 Accumulated Net book Accumulated Net book Cost depreciation value Cost depreciation value Land and buildings $ 894 $ 260 $ 634 $ 865 $ 230 $ 635 Cable and wireless network 16,805 10,138 6,667 15,776 9,375 6,401 Computer equipment and software 3,972 2,644 1,328 3,574 2,358 1,216 Customer premise equipment 1,764 1,319 445 1,592 1,228 364 Leasehold improvements 407 248 159 392 239 153 Equipment and vehicles 1,055 712 343 1,006 661 345

$ 24,897 $ 15,321 $ 9,576 $ 23,205 $ 14,091 $ 9,114

Depreciation expense for 2012 amounted to $1,678 million (2011 – During the year, the Company reviewed depreciation rates for all of $1,595 million). PP&E not yet in service and, therefore, not its PP&E. This review resulted in changes in estimates of useful lives of depreciated at December 31, 2012 amounted to $917 million certain network, customer premise equipment, computer equipment (December 31, 2011 – $1,371 million). Capitalized interest on PP&E and software assets. As a result, cable and wireless network is was at an interest rate of approximately 5.8% (2011 – 5.9%). amortized on a straight-line basis at rates between 3 and 30 years, customer premise equipment is amortized on a straight-line basis

98 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 99 Net 445 159 343 2012 2011 book value value value 6,667 1,328 Net book Net book $ 9,576 $ 634 December 31, December 31, December 31, 2011 losses ((b)(ii)) Other Other impairment Disposals/ Disposals/ Accumulated ROGERS COMMUNICATIONS INC. amortization Accumulated 62 50 – 12 Cost 207436 –523 222132 91 313 14 56 116 – 200 – 210 76 losses 1,875 – – 1,875 1,309 1,0774,544 – 1,718 232 105 2,721 prior to $ 3,434 $ – $ 154 $ 3,280 $ 7,978 $ 1,718 $ 259 $ 6,001 impairment 2012 ANNUAL REPORT Net book value 2011 2010 value Additions Acquisitions Depreciation value Additions Acquisitions Depreciation December 31, 2012 losses ((b)(ii)) Net book Net book $ 9,114 $ 2,142 $ – $ (1,678) $ (2) $ 8,437 $ 2,127 $ 142 $ (1,595) $ 3 $ 9,114 resulted in a decreasemillion of in depreciation 2012 expense andfiscal of also 2013. approximately a $90 decrease of approximately $180 million in December 31, December 31, impairment Accumulated amortization Accumulated 63 59 – 4 Cost 209 – 99 110 437523 240162 357 14 63 – 183 5 166 94 losses 2,231 – – 2,231 1,310 1,1474,935 – 1,866 163 118 2,951 prior to $ 3,436 $ – $ 221 $ 3,215 $ 8,371 $ 1,866 $ 339 $ 6,166 impairment Spectrum licences Broadcast licences Brand names Customer relationships Roaming agreements Marketing agreements Acquired program rights Computer equipment and softwareCustomer premise equipmentLeasehold improvementsEquipment and vehicles 1,216 407 364 153 255 – 345 27 (293) – 69 (2) – (175) –Indefinite life 1 intangible assets: (21) (70) – (1) Cable and wireless network 6,401 1,354 – (1,090) 2 Goodwill Finite life intangible assets: Total intangible assets Total goodwill and intangible assets Details of goodwill and intangible assets are as follows: 13. GOODWILL AND INTANGIBLE ASSETS (a) Goodwill and intangible assets: Land and buildingsCable and wireless networkComputer equipment and softwareCustomer premise equipmentLeasehold improvementsEquipment and vehicles 1,059 5,891 $ 467 618 383 1,354 $ 160 51 171 3 136 326 $ 12 1 (309) (979) 1 72 $ (4) (1) (29) 1 (187) $ – (6) 1,216 6,401 (4) $ (22) 635 (69) 364 2 16 153 345 Changes in the net carrying amounts of property, plant and equipment can be summarized as follows: Land and buildings $ 635 $ 30 $ – $ (29) $ (2) between 3 andamortized 5 on years, a andThe straight-line computer basis impact at equipment of rates and these between software changes 4 is was and 10 accounted years. for prospectively and NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Changes in the net carrying amounts of goodwill and intangible assets are as follows: December 31, December 31, 2011 2012 Net book Net Additions Current period Net book value Acquisitions and Disposals Amortization impairment loss (b)(ii) value

Goodwill $ 3,280 $ – $ 2 $ – $ (67) $ 3,215 Spectrum licences 1,875 360 (4) – – 2,231 Broadcast licences 116 – 2 – (8) 110 Brand names 200 – 1 (18) – 183 Customer relationships 232 – 1 (70) – 163 Roaming agreements 210 – – (44) – 166 Marketing agreements 12 – 1 (9) – 4 Acquired program rights 76 – 87 (64) (5) 94

$ 6,001 $ 360 $ 90 $ (205) $ (80) $ 6,166

December 31, December 31, 2010 2011 Net book Net Additions Current period Net book value Acquisitions and Disposals Amortization impairment loss (b)(ii) value

Goodwill $ 3,108 $ 172 $ – $ – $ – $ 3,280 Spectrum licences 1,871 4 – – – 1,875 Broadcast licences 99 17 – – – 116 Brand names 215 2 – (17) – 200 Customer relationships 61 241 – (70) – 232 Roaming agreements 254 – – (44) – 210 Marketing agreements 14 – 10 (12) – 12 Acquired program rights 77 – 56 (57) – 76

$ 5,699 $ 436 $ 66 $ (200) $ – $ 6,001

During the year ended December 31, 2012, no significant changes ratios and certain risk premiums. The terminal value is the value were made in estimated useful lives compared to 2011. attributed to the CGU’s operations beyond the projected time period of the cash flows using a perpetuity rate based on Amortization of brand names, customer relationships, roaming expected economic conditions and a general outlook for the agreements, and marketing agreements amounted to $141 million in industry. 2012 (2011 – $143 million). Amortization of these intangible assets with finite lives is included in depreciation and amortization expense Under the market approach, the Company estimates the in the consolidated statements of income. recoverable amount of the CGU using multiples of operating performance of comparable entities and precedent transactions The costs of acquired program rights are amortized to other external in the respective industry. purchases in operating costs in the consolidated statements of income The Company has made certain assumptions for the discount over the expected performances of the related programs and and terminal growth rates to reflect variations in expected amounted to $64 million in 2012 (2011 – $57 million). future cash flows. These assumptions may differ or change During 2012, the Company acquired certain 2500 MHz spectrum from quickly depending on economic conditions or other events. Inukshuk Limited Partnership (“Inukshuk”), a 50% owned joint Therefore, it is possible that future changes in assumptions may venture, which resulted in a non-cash increase of Spectrum licenses of negatively impact future valuations of CGUs and goodwill, which $360 million (see note 14). would result in further impairment losses. The following table gives an overview of the methods and (b) Impairment: assumptions used to determine recoverable amounts for CGUs (i) Goodwill and indefinite life intangible assets: with allocated goodwill or indefinite life intangible assets that The Company tests CGUs with goodwill and indefinite life are significant to the Company: intangible assets for impairment during 2012 and 2011 as at Periods Terminal Pre-tax October 1 of each calendar year. In assessing whether or not Spectrum Recoverable used growth Discount there is impairment, the Company determines the recoverable Goodwill licences Method (years) rates % rates % amount of a CGU based on the greater of value in use and Wireless $ 1,146 $ 2,231 Value in use 5 0.5 8.3 FVLCTS. FVLCTS is determined either by analysis of the Cable 1,000 – Value in use 5 1.0 9.2 discounted cash flows or market approaches. The Company estimates the discounted future cash flows for (ii) Impairment losses: periods of three to eight years, depending on the CGU and During the year ended December 31, 2012, the Company valuation method for determining the recoverable amount, and recorded an aggregate $80 million impairment charge for a terminal value. The future cash flows are based on the various CGUs in the Media segment, consisting of $67 million in Company’s estimates and include consideration for expected goodwill, $8 million in broadcast licences and $5 million in future operating results, economic conditions and a general program rights. The recoverable amounts of the CGUs declined outlook for the industry in which the CGU operates. The in 2012 primarily due to the weakening of advertising revenue discount rates used by the Company consider debt to equity in certain markets.

100 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 12 33 10 23 15 59 16 62 101 172 2011 2011 2011 $68 $ 134 $ 231 $25 9 9 8 81 13 16 19 2012 484 616 2012 2012 $85 $98 $24 $ 1,100 Onerous contracts Other Total ROGERS COMMUNICATIONS INC. Asset retirement obligations 2012 ANNUAL REPORT provisions 2 – (4) (2) Deferred pension asset (note 21) Deferred compensation Other Deferred installation costs Net assets Cash surrender value of life insurance 16. PROVISIONS: Details of provisions and classificationare between as current follows: and long-term December 31, 2011AdditionsAdjustment to existing Amounts usedDecember 31, 2012 $ 26CurrentLong-term $ 24 $In the course of 23 thearise Company’s when activities, a 1 asset number $ $ retirementexpected of obligations sites to and have 26 73 other costsThe PP&E (3) associated assets extent with are exiting of used and thatthese restoration $ are ceasing sites work is their 5 that uncertain. use. contracts The will (28) provisions that 1 ultimately for have be onerous coststo contracts required to relate $ be fulfill for to in obtained. $expected (11) excess These 11 of 3 to include the be economic non-cancellableinclude $ benefits 7 product contracts, completed 19 guarantee which provisions within (42) and 38 are legal two provisions. years. $ The 9 other provisions – 1 $ – 11 $ 7 31 Statements of financial position: Assets Liabilities Statements of income: Revenues 15. OTHER LONG-TERM ASSETS: Indefeasible right of use agreements Long-term receivables The following presents theCompany’s summarized financial portion informationCompany of of as investments the accounted joint for using the ventures equity method: that are recorded by the Expenses 36 221 2011 value Carrying $ 1,107 $ 850 629 231 2012 value Carrying $ 1,484 $ 624 s and associates companies: During the year ended Decemberrecord 31, an 2011, impairment the charge CompanyCGUs did as exceeded not the their recoverable carrying amounts value. of the share of the Inukshuknon-related gain venturer; relating to the assets sold to the other paid in 2011 toblocks the other of non-relatedrepresenting venturer spectrum, the to acquire and fairshare certain of value the network Inukshuk of gain; equipment and the assets of purchased $13 lessrepresenting the million Rogers carrying value of the assets sold. In August 2012, theacquisition Company, of along a withEntertainment Ltd. BCE net (“MLSE”) Inc., from 75% the closedMLSE Ontario equity the is Teachers’ Pension one joint interest Plan. ofwhich Canada’s in owns largest Maple and sports and operatesMaple Leaf entertainment the Leafs, companies Sports Air the Canada & AHL’s NBA’s Centre, the Toronto Toronto NHL’s Raptors, Marlies Toronto investment, the following and a MLS’ leveraged other Toronto recapitalizationmillion, FC, of representing assets. a MLSE, the The 37.5% was equity $540 in Company’s interest MLSE in is net accounted MLSE. for The cash using investment the equityIn method. December 2012, Inukshuk,sold a certain joint spectrum venture licensesat owned and fair 50% market network by value. equipment Rogers, purchased Rogers to and 50% its the owners of othermillion non-related the venturer and assets each having arecorded: a carrying fair value market of value• $250 of $1,181 million. A gain As on a investment result, of Rogers $233 million representing• Rogers 50% Spectrum licences of $360 million, which includes a $15 million fee • A decrease of $125 million in its investment in Inukshuk (b) Investments in joint venture (a) PrivateIn companies: October 2012,outstanding shares Media of Score completed MediaScore the Inc. for Media purchase $167 million. werewhich of The is shares transferred responsible 100% of for to the ofin independent management an the of the the interim business normalobtained, CRTC-approved at course trust which oftransfer point to control operations Rogers. over Score untilnational Media theScore owns Media CRTC specialty theScore business Television finalhighlights TV will Network, and a approval service live is regulatory providing event approval, sports programming whichRogers news, across is will Canada. wholly information, anticipated own Upon inits and related control final the television theScore first Television assetsthe half Network and Sportsnet and brand. expects of to 2013, rebrand the service under Publicly traded companies Investments in joint ventures and associates 14. INVESTMENTS: Private companies NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17. LONG-TERM DEBT: Due Principal Interest December 31, December 31, date amount rate 2012 2011 Bank credit facility Floating $–$ 250 Senior Notes(1) 2013 $ U.S. 350 6.25% 348 356 Senior Notes(2) 2014 U.S. 750 6.375% 746 763 Senior Notes(1) 2014 U.S. 350 5.50% 348 356 Senior Notes(2) 2015 U.S. 550 7.50% 547 559 Senior Notes(1) 2015 U.S. 280 6.75% 279 285 Senior Notes 2016 1,000 5.80% 1,000 1,000 Senior Notes 2017 500 3.00% 500 – Senior Notes 2018 U.S. 1,400 6.80% 1,393 1,424 Senior Notes 2019 500 5.38% 500 500 Senior Notes 2020 900 4.70% 900 900 Senior Notes 2021 1,450 5.34% 1,450 1,450 Senior Notes 2022 600 4.00% 600 – Senior Debentures(1) 2032 U.S. 200 8.75% 199 203 Senior Notes 2038 U.S. 350 7.50% 348 356 Senior Notes 2039 500 6.68% 500 500 Senior Notes 2040 800 6.11% 800 800 Senior Notes 2041 400 6.56% 400 400 10,858 10,102

Fair value decrement arising from purchase accounting (1) (4) Deferred transaction costs and discounts (68) (64) Less current portion (348) –

$ 10,441 $ 10,034

(1) Denotes Senior Notes and debentures originally issued by Rogers Cable Inc. which are now unsecured obligations of RCI and for which Rogers Communications Partnership (“RCP”) is an unsecured guarantor. (2) Denotes Senior Notes originally issued by Rogers Wireless Inc. which are now unsecured obligations of RCI and for which RCP is an unsecured co-obligor.

(a) Bank credit facility: costs in the carrying value of the long-term debt, and are being In July 2012, the Company entered into a new five-year $2.0 billion amortized using the effective interest method. bank credit facility maturing in July 2017 with a consortium of financial institutions. This new bank credit facility replaces the 2011 Issuances: Company’s prior $2.4 billion bank credit facility that was set to expire In March 2011, the Company issued $1,450 million of 5.34% Senior in July 2013. Notes that mature on March 22, 2021 and $400 million of 6.56% Senior Notes that mature on March 22, 2041. The net proceeds from The bank credit facility is available on a fully revolving basis until the offering were approximately $1,840 million after the deduction of maturity on July 20, 2017 and there are no scheduled reductions prior the original issue discount and debt issuance costs. Debt issuance costs to maturity. The interest rate charged on the bank credit facility of $10 million related to these debt issuances are included as deferred ranges from nil to 1.25% per annum over the bank prime rate or base transaction costs in the carrying value of the long-term debt, and are rate or 1.00% to 2.25% over the bankers’ acceptance rate or London being amortized using the effective interest method. Inter-Bank Offered Rate. The Company’s bank credit facility is unsecured and ranks pari passu with the Company’s senior public (d) Redemption of Senior Notes: debt and Debt Derivatives. 2011 Redemptions: In March 2011, the Company redeemed the outstanding principal (b) Senior Notes: amount of its U.S. $350 million ($342 million) 7.875% Senior Notes Interest is paid semi-annually on all of the Company’s Senior Notes due 2012 at the prescribed redemption price of 107.882% of the and Senior Debentures. principal amount effective on that date. The Company incurred a loss Each of the Company’s Senior Notes and Senior Debentures are on the repayment of the Senior Notes aggregating $42 million, redeemable, in whole or in part, at the Company’s option, at any including redemption premiums of $27 million, a net loss on the time, subject to a certain prepayment premium. termination of the associated Debt Derivatives of $14 million and a write-off of deferred transaction costs of $1 million. Concurrent with (c) Issuance of Senior Notes: this redemption, on March 21, 2011, the Company terminated the 2012 Issuances: associated U.S. $350 million notional principal amount of Debt In June 2012, the Company issued $500 million of 3.00% Senior Notes Derivatives, resulting in a payment of approximately $219 million. that mature on June 6, 2017 and $600 million of 4.00% Senior Notes that mature on June 6, 2022. The net proceeds from the offering In March 2011, the Company redeemed the outstanding principal were approximately $1,091 million after the deduction of the original amount of its U.S. $470 million ($460 million) 7.25% Senior Notes due issue discount and debt issuance costs. Debt issuance costs of $9 2012 at the prescribed redemption price of 110.735% of the principal million related to these notes are included as deferred transaction amount effective on that date. The Company incurred a loss on the

102 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 103 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT FINANCIAL INSTRUMENTS: 19. FINANCIAL RISK MANAGEMENT AND The Company is exposedThe to Company’s credit primary risk,income liquidity risk risk management and and objective marketmanagement cash is risk. to strategies, flows protectimplemented its to and, as ensure the ultimately, Company’s discussedare risks consistent and shareholder with the below, its related business value. exposures objectives are and Risk risk tolerance. (a) designed and CreditCredit risk: risk representsexperience if the a financial counterpartyCompany has loss to an a amount that owing financialits from the instrument, the obligations counterparty, in Company failed in which tocontracts would meet with the accordance the Company. with the termsThe and Company’s conditions creditreceivable. of risk The its amounts is disclosedfinancial primarily in position are the attributable net consolidatedis to of statements allowances its of for estimated doubtful accounts experience accounts, and by which an assessmentSignificant the of the management current Company’s economicallowance environment. estimates management for areaccounts based doubtful is used on calculatedCompany’s accounts. historical to by prior collection The taking and determineof write-off into days experience, allowance the the the account number counterpartyThe for factors is Company past such doubtful believes due,sufficient as and that the the to its statusCompany’s of allowance reflect the accounts for account. the receivable. doubtfulaccounts The related receivable accounts concentration is is credit limited ofbase. due At credit risk December to 31, risk the 2012,$1,536 associated Company’s of the Company broad million with had customer accountsallowance (December the receivable for of doubtful 31, accounts of$129 2011 $119 million million). – (December 31, At 2011 $1,574 – December million), 31, net 2012, of $492 million an (December 31, 18. CAPITAL RISK MANAGEMENT: The Company’s objectives in managingliquidity capital are to to ensure pursuestrategic sufficient its acquisitions strategyCompany to of defines provide organic capital(which returns growth that combined to is it with earnings, its comprised manages shareholders. hedging of asreserve) The and reserve issued shareholders’ long-term debt. equity and capital, share available-for-saleThe Company premium, financial manages its retained capital assets it structure in and makes light adjustments ofthe to general economic underlying conditions,requirements. In the order risk assets to characteristicsCompany, maintain of upon or and adjust approval itsrepay from capital long-term its the structure, debt, the Board issueor of shares, Company’s repurchase undertake Directors, shares, mayspecific other pay working issue circumstances. dividends activities or Theany Board capital as of material Directors deemed transactionsincluding reviews appropriate and out proposals approves under of ondivestitures, as the acquisitions the well as ordinary or annual capital other course and operating major ofThe budgets. investments business, Company or management monitors of liquidityfuture debt development and of the leverage shareholders’ business. return ratiosThe and to as Company sustain requirements part and is of itsmanagement remains not overall unchanged the from strategy2011. the subject year with ended respect December to 31, to capital externally risk imposed capital $ 10,858 e interest rate: (h) Terms andThe conditions: provisions ofdescribed earlier the impose Company’sactivities certain of $2.0 the restrictions Company, billion onrelated the maintenance the most bank tests. significant operations credit of and which facility are leverage In addition,Debentures certain described earlier of (including2013 the and the 8.75% 6.25% Senior Company’s Debentures Seniortests due as Notes Senior 2032) well contain due as debt Notes restrictions incurrence and upon additional payment and investments, of sales Senior of dividends,the assets public all debt of securities whichleast are two assigned are of investment suspended three grade specified in ratings2012, credit by the all rating at agencies. of event As thesegrade at public December rating debt 31, by each securities of wereaccordingly, the assigned three these an specified credit restrictions investment ratingsuch have agencies investment and, been grade ratings suspendedSenior are for Notes maintained. do so Therelated not long Company’s credit contain other ratings. as any such restrictions, regardlessIn of addition the toagreements the may foregoing, be accelerated theCompany. if repayment there is dates a of change certain in controlAt debt December of 31, the 2012 andall 2011, the Company financial was inconditions compliance of covenants, with its long-term financial debt agreements. ratios and all the terms and (g) WeightedThe averag Company’s effectivedebt, weighted as at averageassociated Debt December rate Derivative instruments, 31, on was 6.06% 2012, all (2011 – including 6.22%). long-term the effect of all of the (f) ForeignDuring exchange: 2012, foreignlong-term exchange debt gains recordedtotalled related in $9 to million the (2011 the – consolidated $6 translation statements million loss). of of income As at December 31, 2012,next principal five repayments years due and within thereafter each on of all the long-term debt2013 are as follows: 2014201520162017Thereafter $ 348 1,094 826 1,000 7,090 500 (e) Principal repayments: repayment of theredemption Senior Notes premiumstermination aggregating of $57 of million, $49Concurrent including the with million this associatedterminated redemption, and on Debt the March aamount 21, Derivatives of associated 2011, net Debt the Derivatives, of U.S.$111 Company resulting loss million. in $8 a $470 on payment of million. million approximately the As notional a result principal $878 of million, these including redemptions, approximatelyand the $802 $76 Company million million paid principalredemptions. approximately for amount the In premiumsCompany addition, incurred in terminated concurrent connectionprincipal with the with amount the the associated ofapproximately $330 redemptions, million. U.S. Debt the Derivatives, $820 resulting millionThe in total loss notional a onrecorded repayment payment in of finance the of costs for Senior the Notes year was ended December $99 31, million 2011. and NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2011 – $478 million) of accounts receivable are considered past due, is assessed in order to minimize the risk of counterparty default under which is defined as amounts outstanding beyond normal credit terms the agreements. All of the portfolio is held by financial institutions and conditions for the respective customers. with a Standard & Poor’s rating (or the equivalent) ranging from A- to AA-. The Company does not require collateral or other security to The Company has established various internal controls, such as credit support the credit risk associated with its Derivatives due to the checks, deposits on account and billing in advance, designed to Company’s assessment of the creditworthiness of the counterparties. mitigate credit risk and has also established procedures to suspend the availability of services when customers have fully utilized (b) Liquidity risk: approved credit limits or have violated established payment terms. Liquidity risk is the risk that the Company will not be able to meet its While the Company’s credit controls and processes have been financial obligations as they fall due. The Company manages liquidity effective in managing credit risk, these controls cannot eliminate risk through the management of its capital structure and financial credit risk and there can be no assurance that these controls will leverage, as outlined in note 18. It also manages liquidity risk by continue to be effective or that the Company’s current credit loss continually monitoring actual and projected cash flows to ensure that experience will continue. it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable Credit risk related to the Company’s Debt Derivatives and Expenditure losses or risking damage to the Company’s reputation. Derivatives arises from the possibility that the counterparties to the agreements may default on their respective obligations under the The following are the undiscounted contractual maturities of the agreements in instances where these agreements are in an asset Company’s financial liabilities at December 31, 2012 and 2011: position for the Company. The creditworthiness of the counterparties

Carrying Contractual Less than 1to3 4to5 More than December 31, 2012 amount cash flows 1 year years years 5 years Accounts payable and accrued liabilities $ 2,135 $ 2,135 $ 2,135 $ – $ – $ – Long-term debt 10,789 10,858 348 1,920 1,500 7,090 Other long-term liabilities 33 33 – 17 10 6 Expenditure Derivative instruments: Cash outflow (Canadian dollar) – 366 231 135 – – Cash inflow (Canadian dollar equivalent of U.S. dollar) – (378) (239) (139) – – Debt Derivative instruments: Cash outflow (Canadian dollar) – 4,797 460 2,338 – 1,999 Cash inflow (Canadian dollar equivalent of U.S. dollar) – (4,208)(1) (348)(1) (1,920)(1) – (1,940)(1) Net carrying amount of derivatives 511

$ 13,468 $ 13,603 $ 2,587 $ 2,351 $ 1,510 $ 7,155

Carrying Contractual Less than 1to3 4to5 More than December 31, 2011 amount cash flows 1 year years years 5 years Bank advances $ 57 $ 57 $ 57 $ – $ – $ – Accounts payable and accrued liabilities 2,085 2,085 2,085 – – – Long-term debt 10,034 10,102 – 1,725 1,844 6,533 Other long-term liabilities 37 37 – 20 9 8 Expenditure Derivative instruments: Cash outflow (Canadian dollar) – 598 232 366 – – Cash inflow (Canadian dollar equivalent of U.S. dollar) – (630) (244) (386) – – Debt Derivative instruments: Cash outflow (Canadian dollar) – 4,797 – 1,806 992 1,999 Cash inflow (Canadian dollar equivalent of U.S. dollar) – (4,302)(1) – (1,475)(1) (844)(1) (1,983)(1) Net carrying amount of derivatives 460

$ 12,673 $ 12,744 $ 2,130 $ 2,056 $ 2,001 $ 6,557

(1) Represents Canadian dollar equivalent amount of U.S. dollar inflows matched to an equal amount of U.S. dollar maturities in long-term debt for Debt Derivatives.

In addition to the amounts noted above, at December 31, 2012 and (c) Market risk: 2011, net interest payments over the life of the long-term debt, Market risk is the risk that changes in market prices, such as including the impact of the associated Debt Derivatives are as follows: fluctuations in the market prices of the Company’s publicly traded Less than 1to3 4to5 More than investments, the Company’s share price, foreign exchange rates and December 31, 2012 1 year years years 5 years interest rates, will affect the Company’s income, cash flows or the Interest payments $ 686 $ 1,168 $ 901 $ 3,929 value of its financial instruments. (i) Publicly traded investments: Less than 1to3 4to5 More than The Company manages its risk related to fluctuations in the December 31, 2011 1 year years years 5 years market prices of its publicly traded investments by regularly Interest payments $ 663 $ 1,219 $ 920 $ 4,229 conducting financial reviews of publicly available information related to these investments to ensure that any risks are within established levels of risk tolerance. The Company does not

104 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 64 80 105 Fair (37) 2011 (503) (540) value $ (460) $16 42 50 2012 Cdn. $ (144) (417) (561) notional $ (511) $8 rate Exchange ROGERS COMMUNICATIONS INC. U.S. $ notional 2012 ANNUAL REPORT December 31, 2012, with changesthe in hedging fair value reserve, beingDerivatives a recorded in component fix of themillion equity. per exchange month The of rate Expenditure average the Company’s on exchange forecast expenditures an ratethrough at aggregate an of July 2014. U.S. C$0.9643/U.S.$1 Atthese $20 Expenditure from December Derivatives remain 31, August outstanding. 2012, 2011 U.S.A $380 million portion of ofpayable the and Company’s accrued accountshowever, liabilities receivable due is to and their denominated accounts market short-term risk in arising nature, from U.S. there fluctuations in is dollars; foreign no exchange significant rates. for as cash flow hedges: As assetsAs liabilitiesaccounted for as hedges: As assetsDebt $ Derivatives 1,600 2,280 1.0252 1.2270 $accounted for as cash 1,640 flow hedges: $ 2,798As assets 34 (561) 350 1.0258 359 3 380 0.9643 (524) 366 13 Current liability Net mark-to-market liability In 2012, amillion increase) $4 related million tonet income. hedge decrease ineffectiveness in was recognized estimated in fair value (2011 – $6 Long-term liability Long-term asset Current asset (d) DerivativeAt instruments: Decemberdenominated 31, long-term 2012,fluctuations debt in 91.7% foreign instrumentsDecember exchange of 31, were 2012, rates details the for ofas hedged the follows: accounting Derivatives Company’s net purposes. against liability At U.S. position are dollar- December 31, 2012 Debt Derivatives accounted Debt Derivatives not Net mark-to-market liability Expenditure Derivatives Net mark-to-market liabilityThe netcomprised mark-to-market of: derivative liability of the Derivatives is $ (511) routinely engage in riskderivatives management practices or such as shortinvestments. hedging, selling with respect toAt its December 31, publicly 2012, a traded of $1 change in the the marketresulted Company’s price per in share publiclycomprehensive a income, traded net of $14 income investments taxes of million would $2(ii) million. change have in Stock-basedThe compensation: liability the related Company’s tomarket stock-based each other compensation period, isimpacted and marked-to- by stock the based changeNon-Voting compensation shares in expense during the is the priceRSUs and life of DSUs. of the an Company’s award, Class includingAt B SARs, December 31, 2012,Company’s a Class $1 B change Non-Votingchange in of shares $6 the would million market in have net price resulted income. of inThe the a Company may useits derivatives from exposure time to toexpense. fluctuations time to with manage its stock-based compensation (iii) Foreign exchangeThe and Company interest uses rates: derivative financialrisks instruments to from manage fluctuations its associated in with its foreign U.S. dollar exchangesuch denominated agreements and debt instruments. are interest All and used rates are for designated riskeconomic as management purposes. hedges purposes The of only Companyinstruments specific also debt uses to instruments derivativeoperations. for financial All manage such agreementspurposes the only, are and, used in foreign certain forcertain cases, risk are exchange designated management as of hedgesCompany risk for does the in notpurposes. Company’s use its derivative Frominstruments operational instruments time for include expenditures.agreements, speculative to foreign cross-currency The exchange time,exchange option forward interest agreements. these contracts rate and derivativeAt foreign exchange December 31, financial 2012,at all fixed of interest the rates Company’s excluding long-term the credit debt facility. was U.S. $350 millionlong-term of debt thepurposes instruments Company’s and, are therefore, U.S.dollar not a dollar-denominated relative hedged one$4 to cent for million change the accounting change inDecember U.S. in the 31, dollar the Canadian 2012. carrying$3 would In value addition, have million of this$1 resulted would change long-term million. have There debt in in would resulted have at the a been in net a carrying a similar, offsetting value income, changeDerivatives of in with net a the similar associated of offsetting impact U.S. on income net $350In income. million taxes July of of Debt forward 2011, contracts the toforecasted manage Company foreign expenditures. exchange entered Allwere risk into of on accounted certain these foreign Expenditure exchange for Derivatives as hedges during the year ended NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2011, 91.7% of the Company’s U.S. dollar- investment depending on its future operating and profitability denominated long-term debt instruments were hedged against prospects. fluctuations in foreign exchange rates for accounting purposes. At The carrying value of the bank credit facility approximates its fair December 31, 2011, details of the Derivatives net liability position are value because the interest rates approximate current market rates. as follows: The fair values of each of the Company’s public debt instruments are U.S. $ Exchange Cdn. $ Fair December 31, 2011 notional rate notional value based on the year-end trading values. The fair values of the Company’s Derivatives are determined using an estimated credit- Debt Derivatives accounted adjusted mark-to-market valuation. In the case of Derivatives in an for as cash flow hedges: asset position, the credit spread for the financial institution As assets $ 1,975 1.0252 $ 2,025 $ 39 counterparty is added to the risk-free discount rate to determine the As liabilities 1,905 1.2668 2,413 (540) estimated credit-adjusted value for each derivative. In the case of Derivatives in a liability position, the Company’s credit spread is Debt Derivatives not added to the risk-free discount rate for each derivative. accounted for as hedges: The change in fair value of Derivatives not designated as hedges for As assets 350 1.0258 359 2 accounting purposes are recorded immediately in the consolidated Net mark-to-market liability statements of income. Debt Derivatives (499) Fair value estimates are made at a specific point in time based on Expenditure Derivatives relevant market information and information about the financial accounted for as cash flow instruments. The estimates are subjective in nature and involve hedges: uncertainties and matters of judgment. As assets 620 0.9643 598 39 The Company provides disclosure of the three-level hierarchy that Net mark-to-market liability $ (460) reflects the significance of the inputs used in making the fair value measurements. Fair value of financial assets and financial liabilities (e) Fair values: included in Level 1 are determined by reference to quoted prices in The carrying value of accounts receivable, bank advances and active markets for identical assets and liabilities. Financial assets and accounts payable and accrued liabilities approximate their fair values financial liabilities in Level 2 include valuations using inputs based on because of the short-term nature of these financial instruments. observable market data, either directly or indirectly, other than the quoted prices. Level 3 valuations are based on inputs that are not The fair value of the Company’s publicly traded investments is based on observable market data. There were no material financial determined by quoted market values for each of the investments. The instruments categorized in Level 3 (valuation technique using non- fair value of the Company’s private investments are determined by observable market inputs) as at December 31, 2012 and 2011. management using well established market, asset based or projected Financial instruments carried at fair value by valuation method are as income valuation techniques that are applied appropriately to each follows: Fair value measurements at reporting date Carrying value Level 1(1) Level 2(2) Dec. 31, Dec. 31, Dec. 31, 2012 2011 2012 2011 2012 2011 Financial assets

Available-for-sale, measured at fair value: Investments in publicly traded companies $ 624 $ 850 $ 624 $ 850 $–$– Held-for-trading: Debt Derivatives not accounted for as hedges 3 2 – – 3 2 Expenditure Derivatives accounted for as cash flow hedges 13 39 – – 13 39

$ 640 $ 891 $ 624 $ 850 $16$41 Financial liabilities

Held-for-trading: Debt Derivatives accounted for as cash flow hedges $ 527 $ 501 $–$–$ 527 $ 501

(1) Level 1 classification comprises of financial assets and financial liabilities that are carried at fair value determined by quoted market prices. (2) Level 2 classification comprises of financial assets and financial liabilities that are carried at fair value determined by valuation technique using observable market inputs.

The Company’s long-term debt is initially measured at fair value and (f) Accounts receivable securitization: then subsequently measured at amortized cost using the effective On December 31, 2012 the Company entered into an accounts interest method, as follows: receivable securitization program with a Canadian financial 2012 2011 institution which will enable it to sell certain trade receivables into Carrying Fair Carrying Fair the program with the proceeds recorded in current liabilities as amount value amount value revolving floating rate loans of up to $900 million, secured by those Long-term debt $ 10,441 $ 12,603 $ 10,034 $ 11,471 trade receivables. The Company will continue to service these accounts receivable and they will continue to be recorded in current The Company did not have any non-derivative held-to-maturity assets on the consolidated statement of financial position. financial assets during the years ended December 31, 2012 and 2011.

106 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 73 20 80 20 44 44 36 44 36 11 107 (57) (27) (68) (27) (17) (44) 2011 2011 2011 $36 $47 $ 817 $ 684 $ 652 $ 728 – – – 48 45 (45) 24 85 30 23 48 45 42 2012 (34) (34) 270 2012 2012 $45 $42 $ 833 $ 684 $ 1,167 $ 817 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT comprehensive income and equity comprehensive income and equity Net pension expense Expected return on plan assets Plan settlements statements of income Service cost Interest cost Plan settlements Net pension expense,benefits expense, which is outlined is below: included in employee salaries and Accrued benefit obligations, December 31 Actuarial loss recognized in other Plan settlements Plan assets, December 31 Benefits paid Accrued benefitoutlined obligations below for arising the years ended from December 31, funded 2012 and 2011: obligations are Contributions by employees Contributions by employer Benefits paid Actuarial gain (loss) recognized in other Interest cost Contributions by employees Total pension cost recognized in the consolidated Plan cost: The Company also providesto supplemental unfunded certain pension benefits executives.these supplemental The plans accrued amountedDecember to 31, benefit 2012 approximately (December obligations $45 31,expense million 2011 relating – at for $39 to million), 2012 andwith was the these related $4 plans, $5 million millionrecorded (2011 (2011 directly – to – $1 OCI million) $4 and of retained actuarial million). earnings. losses were InCertain connection subsidiariespension have expense of definedincluded $2 in million contribution employee salaries in and plans benefits 2012 expense. (2011 with – $2 total million), which is Plan assets, January 1 Expected return on plan assets Accrued benefit obligations, January 1 Service cost The followingmeasured information at December 31, is 2012 and 2011, provided for the years on then ended: pension fund assets 9 5 5 (1) 39 24 15 12 817 2011 2011 (133) (167) $ 684 $ (134) $33 $ 167 $ (134) $ 276 – 9 9 5 6 45 28 13 2012 2012 (334) (343) 1,167 $ 343 $ 458 $ (334) $9 $ 833 $ (334) obligations Deferred pension asset Deferred pension liability Deficiency of plan assets over accrued benefit Accrued benefit obligations Net deferred pension liability Consists of: Plan assets, at fair value 21. PENSIONS: The Companydefined maintains benefit pension both plansplans contributory that cover and provide mostcontributions of non-contributory and its pensions earnings. employees. The The pension Company based does not post on providesupplemental any unfunded retirement pension non- years benefits to benefits. certain executives. ofSignificant The estimates are service, used Company inbalances. the years Actuarial determination also of estimates pension are of related compensation provides based levels on at projections thebenefits of time are employees’ of primarily based retirement.certain upon Maximum career retirement average adjustments. earnings,completed subject The as to at January most 1, 2012, for recent theThe Company’s plans. actuarial estimated valuationsestimated present market were value valuethese of of benefits for the the accruedand Company’s net 2011 funded plan are assets plans as at follows: available benefits December to 31, and 2012 provide the for 20. OTHER LONG-TERM LIABILITIES: Deferred pension liability (note 21) The termsprogram are of committed until the itsinitial expiry funding on was Company’s December completed 31, on 20152012 accounts January and 14, the year-end 2013, receivable subsequentreceivables to (note ranks the securitization ahead 27(d)). ofhas the The Company’s buyer’s interest andcollateralization provided interest the in Company the in formthe various of purchase these price reserves from and the trade the deferral credit sale proceeds. of term From a month of portion toamounts enhancements the month of over securitization collected program,interests through the from in buyer certain these of willbuyer over- the reinvest of Company’s receivables the the on-going Company’s trade trade byof receivables. receivables the Company’s has The buying other no assets. further claim additional on any Supplemental executive retirement plan (note 21) Restricted share units Deferred compensation CRTC commitments Stock appreciation rights Effect of asset ceiling limit Net deferred pension liability Program rights liability Other NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(a) Actuarial assumptions: 2012 2011 Weighted average discount rate used to determine: Accrued benefit obligation 4.5% 5.5% Pension expense 5.5% 6.0% Weighted average rate of compensation increase used to determine: Accrued benefit obligation 3.0% 3.0% Pension expense 3.0% 3.0% Weighted average expected long-term rate of return used to determine: Pension expense 6.7% 6.8%

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

(b) Allocation of plan assets:

Percentage of plan assets Target asset December 31, December 31, allocation Asset category 2012 2011 percentage Equity securities: Domestic 19.3% 19.0% 10% to 29% International 38.3% 37.7% 29% to 48% Debt securities 41.8% 42.4% 38% to 47% Other – cash 0.6% 0.9% 0% to 2%

100.0% 100.0%

Plan assets are comprised primarily of pooled funds that invest in responsibility for, and eliminates significant risk associated with, the common stocks and bonds. The pooled Canadian equity fund has accrued benefit obligations for the retired employees. This investments in the Company’s equity securities comprising transaction resulted in a non-cash loss from the settlement of pension approximately 1% of the pooled fund. This results in approximately obligations of approximately $11 million recorded in operating costs $2 million (2011 – $1 million) of the plans’ assets being indirectly on the consolidated statement of income. invested in the Company’s equity securities. (e) Historical information: The Company makes contributions to the plans to secure the benefits History of annual experience (gains) and losses: of plan members and invests in permitted investments using the 2012 2011 2010 target ranges established by the Pension Committee of the Company. Funded plan: The Pension Committee reviews actuarial assumptions on an annual Actuarial loss on plan liabilities $ 240 $90$82 basis. Effect of asset ceiling limit (1) (2) (4) (c) Actual contributions to the plans for the years ended December 31 are as follows: Total loss recognized in OCI 239 88 78 Employer Employee Total Unfunded plan: 2012 $ 85 $ 23 $ 108 Total loss recognized in OCI 5 12 2011 80 20 100 Loss recognized in OCI, before tax recovery 244 89 80 Expected contributions by the Company in 2013 are estimated to be Related income tax recovery (64) (22) (21) $96 million. Loss recognized in OCI, net of tax $ 180 $67$59 Employee contributions for 2013 are assumed to be at levels similar to 2012 on the assumption staffing levels in the Company will remain The cumulative loss recognized in OCI was $306 million at the same on a year-over-year basis. December 31, 2012 (December 31, 2011 – $126 million). (d) Settlement of pension obligations: Actual return on plan assets was $75 million in 2012 (2011 – During 2011, the Company made a lump-sum contribution of $18 $27 million). million to its pension plans, following which the pension plans purchased annuities from insurance companies for all employees who The Company’s experience loss on funded plan liabilities was $50 had retired during the period from January 1, 2009 to January 1, million in 2012 (2011 – $16 million). The Company’s experience loss on 2011. The purchase of the annuities relieves the Company of primary unfunded plan liabilities was $nil in 2012 (2011 – $1 million).

108 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 109 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT (d) Available-for-saleAvailable-for-sale financial assets reserve: investmentsconsolidated are statements of carriedvalue financial recorded at position, inthrough with fair the OCI, fair changes value until value inimpaired such reserve fair and on time as the as change a the statements in the component of fair income. investments value of is are equity, recorded disposed in of the(e) consolidated or HedgingAll reserve: derivativesstatements are of financial measured position,flow at with hedging changes fair derivatives incomponent of fair value recorded equity, value in on to ofhedged the asset cash- the the or extent liability fair effectiveof consolidated is through income. value recognized OCI, in reserve until the the consolidated as statements (f) a DefinedThe benefit Company’s pension defined plans: benefitdetermined pension plan at obligation isimmediately in actuarially the retained earnings. end of the year with changes recognized (c) NormalIn course February issuer 2012, bid: the Companybid renewed (“NCIB”). its prior During normal the2012 course 12-month issuer and period ending commencing Februarythe February TSX, 23, 24, the 2013, NYSE theof and/or Company 36.8 alternative million may trading Class systems purchase B10% up on Non-Voting of to shares, the the representing approximately lesser thenand that issued number and of outstandingunder Class Class B the Non-Voting B NCIB shares Non-Voting foractual that shares, number an can of be aggregate Class purchased purchase Btiming Non-Voting price shares of of purchased, if $1.0 such any,considering billion. and purchases the The market will conditions,other be factors. share determined prices, by its theIn cash Company 2012, position, by the and Non-Voting Company shares purchased for a forreduction purchase cancellation price to of 9,637,230 stated $350 capital, Class$10 million, share million, B resulting $243 premium in million and a andB retained $97 earnings million, Non-Voting respectively. of Alldirectly shares of under the the Class purchased NCIB. forIn cancellation 2011, were the CompanyNon-Voting purchased shares purchased for for a cancellationa purchase reduction 30,942,824 price to Class of stated $1,099 B capital,$30 million, share million, premium resulting $870 and in million retained andNon-Voting earnings $199 of million, shares respectively. purchased Ofshares the for Class were B cancellation, purchased$814 for 21,942,824 million, cancellation of and the directly these cancellation remaining under 9,000,000 pursuant the shares to were NCIBand private purchased arm’s-length for for agreements third-party between sellerswere the for made $285 Company under million. issuer TheseSecurities bid purchases Commission and exemption were orders includedClass issued in calculating B by the Non-Voting the number Ontario of sharesthe NCIB. that the Company purchased pursuant to Dividend per share $ 1.42 $ 1.58 –– 684 652 2011 2010 $ (39) $ (36) $39$36 $ (133) $ (76) $ 817 $ 728 – 833 2012 $ (45) $45 $ (334) $ 1,167 Fair value of plan assets Benefit obligation Fair value of plan assets Benefit obligation Deficit Unfunded plan: Deficit February 21, 2012April 25, 2012August 15, 2012October 24, 2012 April 2, 2012The holders of Class Julyrate 3, A October of 2012 3, shares up 2012 are to January entitledof five 2, to cents 2013 five receive per cents dividends shareshares. at but per the Thereafter, only share after the have dividends Classparticipate at been equally A the as paid voting rate $ to dividends. or and Class set 0.395 B aside non-voting on shares the Class B 0.395 0.395 0.395 Date declaredFebruary 15, 2011April 27, 2011August 17, 2011October 26, 2011 April 1, 2011 Date paid July 4, October 2011 3, 2011 January 4, 2012 $ 0.355 0.355 0.355 0.355 During 2012 and 2011, thedividends Company on declared each and of paidVoting its the shares: outstanding following Class A Voting and Class B Non- (b) Dividends: There are 400 millionissuable authorized in preferred series, shares with withoutthe rights par Board and value, of terms Directors ofshares prior have each to no series the rights to to issue vote of be at such fixed any series. general by There meeting The are of preferred the 112,474,388 Company. authorizedvalue. Class Each A Class voting Avoting shares shares voting are without share convertible par is onVoting shares. a entitled one-for-one to basis 50 into Class votes. B The Non- There Class are 1.4 A billon authorizedvalue. Class B Non-Voting shares without par The Articles of Continuance(British of Columbia) the impose Company restrictions under onof the the transfer, Company the voting Act and Class issue ensure that A the Voting Company remainsrequired and to qualified carry to Class on hold certain or B of obtain its Non-Voting licences business undertakingsThe shares in Canada. Company in is ordershares of authorized to the to Companyto to refuse any ensure person to that whoreferred register is the to not in Company transfers a the remains Canadian preceding of paragraph. in qualified any order to hold the licences 22. SHAREHOLDERS’ EQUITY: (a) Capital stock: History of obligation and assets: Funded plan: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

23. STOCK OPTIONS, SHARE UNITS AND SHARE difference between the strike price of the share-based awards and PURCHASE PLANS: the trading price of the RCI Class B Non-Voting shares for all vested share-based awards at December 31, 2012 was $109 million (December 31, 2011 – $124 million). Stock-based compensation to employees is measured at fair value. Fair value is determined using the Company’s Class B Non-Voting (a) Stock options: share price, and the Black-Scholes option pricing model (“Black- (i) Stock option plans: Scholes model”) or trinomial option pricing models, depending on Options to purchase Class B Non-Voting shares of the Company the nature of the share-based award. on a one-for-one basis may be granted to employees, directors and officers of the Company by the Board of Directors or by the A summary of stock-based compensation expense, which is included Company’s Management Compensation Committee. There are in employee salaries and benefits expense, is as follows: 65 million options authorized under various plans. The term of 2012 2011 each option is seven to ten years and the vesting period is Stock-based compensation: generally graded vesting over four years but may be adjusted by the Management Compensation Committee on the date of Stock options (a) $35 $29 grant. The exercise price for options is equal to the fair market Restricted share units (b) 35 26 value of the Class B Non-Voting shares determined as the five- Deferred share units (c) 7 9 day average before the grant date as quoted on the TSX. $77 $64 (ii) Performance options: During the year ended December 31, 2012, the Company granted At December 31, 2012, the Company had a liability of $195 million 806,100 performance-based options (2011 – 581,300) to certain key (December 31, 2011 – $194 million), of which $158 million (December executives. These options vest on a graded basis over four years 31, 2011 – $161 million) is a current liability related to stock-based provided that certain targeted stock prices are met on or after each compensation recorded at its fair value, including stock options, RSUs anniversary date. At December 31, 2012, 5,435,555 performance and DSUs. The total intrinsic value of vested liabilities, which is the options (December 31, 2011 – 5,056,430) were outstanding.

(iii) Summary of stock options: A summary of the stock option plans, which includes performance options, is as follows:

2012 2011 Weighted Weighted Number of average Number of average options exercise price options exercise price Outstanding, beginning of year 10,689,099 $ 28.59 11,841,680 $ 26.42 Granted 1,397,751 37.86 1,133,600 34.35 Exercised (3,075,879) 21.53 (1,778,783) 15.96 Forfeited (276,943) 35.53 (507,398) 35.20

Outstanding, end of year 8,734,028 $ 32.34 10,689,099 $ 28.59

Exercisable, end of year 4,638,496 $ 28.94 5,716,945 $ 22.81

At December 31, 2012, the range of exercise prices, the weighted average exercise price and the weighted average remaining contractual life are as follows:

Options outstanding Options exercisable Weighted average Number remaining contractual Weighted average Number Weighted average Range of exercise prices outstanding life (years) exercise price exercisable exercise price $ 4.83 – $ 9.99 240,735 0.53 $ 7.52 240,735 $ 7.52 $ 10.00 – $ 18.99 558,532 1.06 11.22 558,532 11.22 $ 19.00 – $ 24.99 758,158 0.16 22.61 758,158 22.61 $ 25.00 – $ 29.99 1,132,836 3.06 29.40 710,467 29.40 $ 30.00 – $ 37.99 3,443,864 5.09 35.52 805,081 33.68 $ 38.00 – $ 46.94 2,599,903 1.54 39.07 1,565,523 38.98

8,734,028 2.96 $ 32.34 4,638,496 $ 28.94

Unrecognized stock-based compensation expense at Company. Under the terms of the plan, RSUs are issued to the December 31, 2012 related to stock-option plans was $11 million participant and the units issued will cliff vest over a period not (2011 – $9 million), and will be recorded in the consolidated to exceed three years from the grant date. statements of income over the next four years as the options On the vesting date, the Company shall redeem all of the vest. participants’ RSUs in cash or by issuing one Class B Non-Voting (b) Restricted share units: share for each RSU. The Company has reserved 4,000,000 Class B (i) RSU plan: Non-Voting shares for issuance under this plan. During the year The RSU plan enables employees, officers and directors of the ended December 31, 2012, the Company granted 721,005 RSUs Company to participate in the growth and development of the (2011 – 738,973).

110 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 50 27 111 2.6 2011 2011 2011 $3 3.6% 2.8% 4.0% $11 $38 29.0% 7.0 years 2.4 years 5.4 years $ 7.25 December 31, 35 2012 2012 $1 $45 $10 50 2.6 2012 Balance outstanding, 3.9% 1.6% 4.0% 28.1% 6.9 years 2.4 years 5.4 years $ 7.51 2011 $41 ROGERS COMMUNICATIONS INC. 2012 Transaction value $43 2012 ANNUAL REPORT commission paid on premiums for insurance coverage employee benefits Stock-based compensation expense (ii) Transactions: The Companycompanies, has the partners or enteredof senior the officers into Company, of as which summarized are business below: Directors transactions with Printing, legal services and Certain directors of theExecutive Officer Company of are: a firm thecoverage; that Chairman is Senior paid and commissions Chief provides for Partner insurance and legalprovides Chairman services; printing services. of and a Chairman law of firm that a company that (i)The Compensation: compensation expense associated withemployee key management services for benefits as was follows: included in employeeSalaries, pension and salaries other short-term and Employee exit rate Suboptimal exercise factor Lattice steps Weighted average time to expiry Weighted average time to vest Volatility has been estimatedthe based Company’s on Class the B actual Non-Voting trading shares. statistics of For Trinomial option pricing model only: (b) Transactions withKey management key personnel management include personnel: theCorporate Directors Officers and the of most the Senior planning, Company directing who and are controlling primarily the Company’s responsible business for activities. Weighted average fair value Risk-free interest rate Dividend yield Volatility of Class B Non-Voting shares 24. RELATED PARTY TRANSACTIONS: (a) ControllingThe shareholder: ultimate controllingControl shareholder of Trust theCompany. Company (“the The is beneficiaries the Trust”) offamily. Rogers the which Trust The are holdsExecutives members and Rogers Corporate of voting Officers the of the family Rogers control Company. The is of Company the represented enteredcontrolling into shareholder as of certainholding the Directors, transactions companies Company with controlled and Senior Company. by the private These the transactions, Rogers’ ultimate as controlling family summarizedthe shareholder below, amount were of recorded agreed the at toterms by and the conditions relatedCommittee. of parties formal and agreements are approved subject to by the the Audit Weighted average expected life 2011 928,544 (416,146) (139,813) 1,616,370 1,988,955 2012 Number of units 893,784 (159,843) (467,738) 1,988,955 2,255,158 Outstanding, beginning of year Granted Exercised Forfeited Outstanding, end of year UnrecognizedDecember stock-based 31,(2011 2012, – related $32 compensation million)statements to of and income these over will the RSUs next expense be three years was recorded as the in $37 RSUs vest. the at million consolidated (ii) PerformanceDuring RSUs: thegranted year 172,779 ended performance-basedcertain RSUs key December executives. (2011 The 31, numberpaid – of three units 189,571) 2012, years that to vest from50% the and the will to grant Company be 150% dateachievement will of of be the certain within initial annualmarket a targets. range and number of cumulative granted three-year based non- upon(iii) the Summary ofA RSUs: summary of the RSU plans is as follows: (e) Assumptions: Significant management estimatesvalue are of used stockvalue to options, of stock determine RSUs options and2012 the granted and during DSUs. fair the 2011, The yearsBlack-Scholes and weighted-average ended the December fair 31, principal modeldetermine assumptions their used fair and value in at grant applying date trinomial the were as follows: option pricing models to (d) EmployeeThe share accumulation plan: employeevoluntarily participate share in athe accumulation share plan, purchase plan plan. employeespercentage Under of of their the allows regular terms thedesignated earnings of through administrator employees Company payroll of deductions. can thebasis, The to Class plan contribute B then Non-Voting aon purchases, shares of behalf on specified the of a Company themakes monthly on employee. a the At open contribution the market of endin 25% of to each the 50% month, of theadministrator month, the Company then employee’s which uses contribution thisthe is amount Company to on recorded purchase behalf of additional as the shares employee. of compensationCompensation expense expense. related The toplan amounted the to employee $26 share(2011 million – accumulation for $23 the million) year and is ended included December in 31, employee 2012 salaries and benefits. (c) DeferredThe share unit DSU plan: planCompany enables to elect directors towhich and receive are certain certain classified key typesfinancial as position. of executives a remuneration liability of in on the DSUs, theDuring consolidated the statements year of 115,964 ended DSUs (2011 December –(2011 31, 154,937). 2012, At – December thecompensation 31, Company 751,903) related 2012, granted 741,423 to were DSUs when DSUs, granted. since outstanding. these awards There vest immediately is no unrecognized NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

These transactions are recorded at the amount agreed to by the month from the date of the transaction. There are no significant related parties and are reviewed by the Audit Committee. The outstanding balances with these related parties at December 31, outstanding balances owed to these related parties are 2012. unsecured, interest-free and due for payment in cash within one

(c) Subsidiaries and joint ventures: The following are the significant subsidiaries and joint ventures and associates of the Company: Ownership interest Jurisdiction of incorporation 2012 2011 Subsidiaries: Rogers Holdings Inc. Canada – 100% Rogers Media Inc. Canada 100% 100% Inc. Canada 100% 100% Rogers Communications Partnership Canada 100% 100% Rogers Broadcasting Limited Canada 100% 100% Rogers Publishing Limited Canada 100% 100% Blue Jays Holdco Inc. Canada 100% 100%

Joint ventures and associates: Inc. Canada 50% 50% Dome Productions Inc. Canada 50% 50% Maple Leaf Sports & Entertainment Canada 37.5% –

The annual financial statement reporting period of the Company is 25. GUARANTEES: the same as the annual financial statement reporting periods of all its subsidiaries and joint ventures, with the exception of MLSE. When The Company has the following guarantees at December 31, 2012 and necessary, adjustments are made to conform the accounting policies 2011, in the normal course of business: with those of the Company. There are no significant restrictions on the ability of subsidiaries, joint ventures and associates to transfer (a) Business sale and business combination agreements: funds to the Company in the form of cash dividends or to repay loans As part of transactions involving business dispositions, sales of assets or advances. or other business combinations, the Company may be required to pay counterparties for costs and losses incurred as a result of breaches of The following business transactions were carried out with the representations and warranties, intellectual property right Company’s joint ventures and associates. Transactions between the infringement, loss or damages to property, environmental liabilities, Company and its subsidiaries have been eliminated on consolidation changes in laws and regulations (including tax legislation), litigation and are not disclosed in this note. against the counterparties, contingent liabilities of a disposed Transaction value business or reassessments of previous tax filings of the corporation 2012 2011 that carries on the business. Revenues $1$1 (b) Sales of services: Purchases $38 $51 As part of transactions involving sales of services, the Company may be required to pay counterparties for costs and losses incurred as a The sales to and purchases from the Company’s joint ventures and result of breaches of representations and warranties, changes in laws associates are made at terms equivalent to those that prevail in arm’s and regulations (including tax legislation) or litigation against the length transactions. Outstanding balances at the year-end are counterparties. unsecured and interest-free and settlement occurs in cash. The outstanding balances with these related parties relating to similar (c) Purchases and development of assets: business transactions as at December 31, 2012, was $1 million payable As part of transactions involving purchases and development of (December 31, 2011 – $5 million payable). assets, the Company may be required to pay counterparties for costs and losses incurred as a result of breaches of representations and During 2012, the Company acquired certain network assets and 2500 warranties, loss or damages to property, changes in laws and MHz spectrum from Inukshuk, a 50% owned joint venture. As a result, regulations (including tax legislation) or litigation against the a gain of $233 million was recorded in the consolidated statement of counterparties. income, being the portion of the excess of fair value over carrying value related to the other non-related venturer’s 50% interest in the (d) Indemnifications: spectrum licences (note 14). The remaining share of income of The Company indemnifies its directors, officers and employees against associates and joint ventures was $2 million (2011 – $7 million) due claims reasonably incurred and resulting from the performance of primarily to the Company’s equity interest in various investments. their services to the Company, and maintains liability insurance for its directors and officers as well as those of its subsidiaries.

The Company is unable to make a reasonable estimate of the maximum potential amount it would be required to pay counterparties. The amount also depends on the outcome of future events and conditions, which cannot be predicted. No amount has been accrued in the consolidated statements of financial position relating to these types of indemnifications or guarantees at December 31, 2012 or 2011. Historically, the Company has not made any significant payments under these indemnifications or guarantees.

112 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 113 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT In DecemberProceedings Act (British 2011, Columbia)providers was of commenced a wireless against communicationsthe in proceeding Canada system relating access to feeof under charged their by customers. the wireless Thethings, carriers proceeding allegations to involves, Class some of amongBusiness other misrepresentations Practices contrary andplaintiffs Consumer to Protection the Actrestitution. are (BC). The Nocontingency. seeking liability unquantified hasIn been damages JuneSaskatchewan recorded and under 2008, foragainst that providers this a province’s ofCanada. wireless Class The proceeding communications proceedingother Actions services involves was things, Act in allegations breachfalse advertising commenced of, of in among relation contract,Company to in and misrepresentation the the 911 and otherin fee Canada. wireless charged The communication by plaintiffs providers are the and seeking unquantified restitution. damages certifying The plaintiffs theSaskatchewan. intend proceeding to as Nocontingency. seek a liability an national has order class beenThe action recorded Company in believes for thatincome it and this has indirect adequately taxesthat provided based for is on all currentlytaxes of in available. many the cases, information The however,in requires calculation significant interpreting judgment of taxtax applicable rules filings and are regulations.change The subject the Company’s to amountassets of audits, and current which liabilitiescircumstances, and and could deferred provisions, result materially income andpenalties. in could, tax the in certain assessment ofThere interest existsagainst and certain the Company, other nonematerial of claims which is adverse and expectedposition to of effect have potential the Company. a on claims the consolidated financial (ii) (iii) (iv) (v) The outcome of allincluding the proceedings the and matters claims describedthat against above, the is includes Company, subject the tocurrently future uncertainties known resolution to of theprobable Company, litigation. management that Based believes the that onclaims, it ultimate is information individually resolution not or of ineffect any the on aggregate, such the will consolidated proceedingsIf have financial and it a position becomes material or probable adverse resultsrecorded that of in the operations. the Company period is insuch liable, which a the a provision change will in provisionposition be probability and results occurs, could of and operations. be material to the consolidated financial After 5 years Total 1 year 1-3 years 4-5 years Less than $ 2,245 $ 2,640 $ 468 $ 445 $ 5,798 In August 2004, a(Saskatchewan) proceeding under was thewireless Class communications commenced Actions in Act Canadaaccess against relating fee to providers charged thecustomers. system by The of plaintiffs wireless areand carriers punitive seeking damages, to unspecified effectively damages somesystem the reimbursement access of of fees all their Saskatchewan ever Court collected. granted Inhave the September the plaintiffs’ 2007, proceeding application the certifiedaction. to as a As national,customers “opt-in” outside a Saskatchewan class must national, takebe specific able steps to “opt-in” to participatethe in class Company’s the motion proceeding. to action, In stayarbitration the February proceeding clause 2008, affected based on ingranted the its and wirelessorder, the service in Saskatchewan agreements respectexclude of was Court from the the directed class certification ofbound of plaintiffs that by those the an customers arbitration its action, who clause. are would In August 2009,second counsel for proceeding(Saskatchewan) the asserting plaintiffs the commencedproceeding. under same a claims as the Thisconditionally stayed the in original December Class secondwas 2009 an abuse on of the process. Actions proceeding basis thatThe it Act was Company’s appealwas of ordered dismissed the byleave 2007 the Saskatchewan to certification Court decision appealdenied of in to Appeal June and theextend the 2012. Supreme time within The Court whichdecision plaintiffs they of of can are the appeal Canadarecorded the Saskatchewan now for “opt-in” Court. was this seeking contingency. No to liability has been Rent expense for$172 2012 million). amounted to $189 millionOperating (2011 leases – are foracross office the premises country andranging retail with from outlets the fiveBlue to majority Jays ten of players’ years. theentered Player salary into lease and contracts contracts is terms relate contractually thatobligations obligated to relate to the pay. to Company Purchase contractualproduct has obligations under and service, committed handset to for contracts athas least that entered the into next agreements five the toto years. acquire The programs Company broadcasting Company and rights has filmstotal for costs at of these least commitmentsthe the preceding have next table. all five been years. disclosed in The The future minimum paymentsother under contractual operating leases arrangements and atas follows: December 31, 2012 are (i) (In millions of dollars) Operating leasesPlayer contracts $Purchase obligationsProgram 123 rights $ 1,683 171 $ 112 1,988 79 $ 136 200 327 73 $ 73 52 446 281 3,880 10 201 289 374 1,098 (i) (b) Contingent liabilities: 26. COMMITMENTS AND CONTINGENT LIABILITIES: (a) Commitments: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

27. SUBSEQUENT EVENTS:

(a) On January 14, 2013 the Company announced a multipart Non-Voting shares purchased, if any, and the timing of such strategic transaction with Shaw Communications (“Shaw”) to purchases will be determined by the Company considering acquire Shaw’s cable system in Hamilton, Ontario and secure an market conditions, share prices, its cash position, and other option to purchase Shaw’s Advanced Wireless Services (“AWS”) factors. spectrum holdings in 2014. The Company is also to sell Rogers’ (c) In February 2013, the Company’s Board increased the annualized one-third interest in specialty channel TVtropolis to Shaw and dividend rate from $1.58 to $1.74 per Class A Voting and Class B enters into negotiations with Shaw for the provision of certain Non-Voting share effective immediately to be paid in quarterly services in Western Canada. Rogers’ net cash investment is amounts of $0.435 per share. Such quarterly dividends are expected to total approximately $700 million if all aspects of the payable only as and when declared by the Board and there is no transactions are approved. entitlement to any dividends prior thereto. (b) In February 2013, the Company filed a notice with the TSX of its In addition, on February 14, 2013, the Board declared a quarterly intention to renew its prior NCIB for a further one-year period. dividend totalling $0.435 per share on each of its outstanding Subject to acceptance by the TSX, the TSX notice provides that Class A Voting and Class B Non-Voting shares, such dividend to the Company may, during the twelve-month period commencing be paid on April 2, 2013, to shareholders of record on March 15, February 25, 2013 and ending February 24, 2014, purchase on 2013, and is the first quarterly dividend to reflect the newly the TSX, the NYSE and/or alternate trading systems up to the increased $1.74 per share annual dividend level. lesser of 35.8 million Class B Non-Voting shares, representing approximately 10% of the issued and outstanding Class B Non- (d) On January 14, 2013 the Company received initial funding on Voting shares, and that number of Class B Non-Voting shares the accounts receivable securitization program of $400 million that can be purchased under the NCIB for an aggregate (note 19(f)). purchase price of $500 million. The actual number of Class B

114 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT NOTES 115 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT NOTES CORPORATE AND SHAREHOLDER INFORMATION

CORPORATE OFFICES STOCK EXCHANGE LISTINGS CO MMON STOCK TRADING AND Rogers Communications Inc. Toronto Stock Exchange (TSX): DIVIDEND INFORMATION 333 Bloor Street East, 10th Floor RCI.b – Class B Non-Voting shares Dividends Closing Price RCI.b on TSX Declared Toronto, Ontario M4W 1G9 (CUSIP # 775109200) 2012 H high Low Close per Share 416-935-7777 RCI.a – Class A Voting shares First Quarter $39.77 $37.47 $39.60 $0.395 (CUSIP # 775109101) CUSTOMER SERVICE AND Second Quarter $40.06 $35.07 $36.91 $0.395 PRODUCT INFORMATION New York Stock Exchange (NYSE): Third Quarter $40.78 $37.24 $39.80 $0.395 888-764-3771 or rogers.com RCI – Class B Non-Voting shares Fourth Quarter $45.28 $39.52 $45.16 $0.395 (CUSIP # 775109200) SHAREHOLDER SERVICES If you are a registered shareholder and Equity Index Inclusions: Shares Outstanding at December 31, 2012 have inquiries regarding your account, wish Dow Jones Canada Titans 60 Index Class B 402,788,156 to change your name or address, or have Dow Jones Telecom Titans 30 Index Class A 112,462,014 questions about lost stock certificates, share FTSE Global Telecoms Index transfers, estate settlements or dividends, FTSE All-World Index Series 2013 Expected Dividend Dates please contact our transfer agent and registrar: FTSE4Good Global Index Jantzi Social Index Record Date*: Payment Date*: Canadian Stock Transfer S&P/TSX 60 Index March 15, 2013 April 2, 2013 P.O. Box 700, Postal Station B S&P/TSX Composite Dividend Index June 14, 2013 July 3, 2013 Montreal, QC H3B 3K3, Canada S&P/TSX Composite Index September 13, 2013 October 2, 2013 416-682-3860 or 800-387-0825 S&P/TSX Telecom Services Index December 13, 2013 January 2, 2014 [email protected] * Subject to Board approval Duplicate Mailings If you receive duplicate shareholder mailings Unless indicated otherwise, all dividends paid by Rogers Communications are designated from Rogers Communications, please as “eligible” dividends for the purposes of the contact Canadian Stock Transfer as detailed DEBT SECURITIES Income Tax Act (Canada) and any similar above to consolidate your accounts. For details of the public debt securities of the provincial legislation. INVESTOR RELATIONS Rogers companies, please refer to the “Debt Institutional investors, securities analysts Securities” section under rogers.com/investors DIRECT DEPOSIT SERVICE Shareholders may have dividends deposited and others requiring additional financial INDEPENDENT AUDITORS directly into accounts held at financial institutions. information can visit rogers.com/investors KPMG LLP or contact: To arrange direct deposit service, please contact ON-LINE INFORMATION Canadian Stock Transfer as detailed earlier on Bruce M. Mann, CPA Rogers is committed to open and full financial this page. Vice President, Investor Relations disclosure and best practices in corporate DIVIDEND REINVESTMENT PLAN (“DRIP”) 416-935-3532 or governance. We invite you to visit the Investor Rogers offers a convenient dividend reinvestment [email protected] Relations section of rogers.com/investors where program for eligible shareholders to purchase you will find additional information about our Dan R. Coombes additional Rogers Communications shares by business, including events and presentations, Director, Investor Relations reinvesting their cash dividends without incurring news releases, regulatory filings, governance 416-935-3550 or brokerage fees or administration fees. For plan practices, corporate social responsibility and our [email protected] information and enrolment materials or to learn continuous disclosure materials, including quarterly more about Rogers’ DRIP, please visit rogers.com/ financial releases, annual information forms and Media inquiries: 416-935-7777 investors or canstockta.com/investorServices.do or management information circulars. You may also contact Canadian Stock Transfer as detailed earlier Corporate philanthropy subscribe to our news by e-mail or RSS feeds on this page. For information relating to Rogers’ to automatically receive Rogers’ news releases various philanthropic endeavours, refer to electronically. ELECTRONIC DELIVERY OF the “About Rogers” section of rogers.com SHAREHOLDER MATERIALS FOLLOW ROGERS THROUGH THESE Registered shareholders can receive electronic GLOSSARY OF TERMS SOCIAL MEDIA LINKS For a comprehensive glossary of industry and notice of financial reports and proxy materials technology terms, go to rogers.com/glossary FACEBOOK and utilize the Internet to submit proxies on-line facebook.com/rogers by registering at rogers.com/electronicdelivery. This approach gets information to shareholders TWITTER more quickly than conventional mail and helps twitter.com/rogersbuzz Rogers protect the environment and reduce Scan THIS GOOGLE + printing and postage costs. to learn more google.com/+Rogers SUSTAINABILITY rogers.com/investors REDBOARD Rogers is committed to continuing to grow Stay up-to-date redboard.rogers.com responsibly and we focus our social and with the latest Rogers environmental sustainability efforts where we investor information SOCIAL can make the most meaningful impacts on both. http://social.rogers.com To learn more, please visit rogers.com/csr

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

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116 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT So what’s next? If you’re with Rogers, you’ll be the first to know. rogers.com

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