6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

under the Securities Exchange Act of 1934

For the month of February, 2017

Commission File Number 001-10805

ROGERS COMMUNICATIONS INC.

(Translation of registrant’s name into English)

333 Bloor Street East

10th Floor

Toronto, Ontario M4W 1G9

Canada

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  ☐                  Form 40-F  ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes  ☐                  No  ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes  ☐                  No  ☒

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ROGERS COMMUNICATIONS INC.
By:	/s/ Anthony Staffieri
	Name:    Anthony Staffieri
	Title:      Chief Financial Officer

Date: February 9, 2017

Exhibit Index

Exhibit Number	Description of Document
99.1	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AND CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016, TOGETHER WITH THE REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.

EX-99.1

MANAGEMENT’S DISCUSSION AND ANALYSIS

Management’s Discussion and Analysis

This Management’s Discussion and Analysis (MD&A) contains important information about our business and our performance for the year ended December 31, 2016. This MD&A should be read in conjunction with our 2016 Audited Consolidated Financial Statements, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

All dollar amounts are in Canadian dollars unless otherwise stated. All percentage changes are calculated using the rounded numbers as they appear in the tables. Charts, graphs, and diagrams are included for reference; however, they do not form part of this MD&A. This MD&A is current as at February 9, 2017 and was approved by the Rogers Communications Inc. Board of Directors (the Board). This MD&A includes forward-looking statements and assumptions. See “About Forward-Looking Information” for more information.

We, us, our, Rogers, Rogers Communications, and the Company refer to Rogers Communications Inc. and our subsidiaries. RCI refers to the legal entity Rogers Communications Inc., not including our subsidiaries. Rogers also holds interests in various investments and ventures.

We are publicly traded on the Toronto Stock Exchange (TSX: RCI.A and RCI.B) and on the New York Stock Exchange (NYSE: RCI).

In this MD&A, this year refers to the year ended December 31, 2016, and last year refers to the year ended December 31, 2015. All results commentary is compared to the equivalent period in 2015 or as at December 31, 2015, unless otherwise indicated.

ABOUT FORWARD-LOOKING INFORMATION

This MD&A includes “forward-looking information” and “forward-looking statements” within the meaning of applicable securities laws (collectively “forward-looking information”), and assumptions about, among other things, our business, operations, and financial performance and condition approved by our management on the date of this MD&A. This forward-looking information and these assumptions include, but are not limited to, statements about our objectives and strategies to achieve those objectives, and about our beliefs, plans, expectations, anticipations, estimates, or intentions.

Forward-looking information:

• typically includes words like could, expect, may, anticipate, assume, believe, intend, estimate, plan, project, guidance, outlook, target, and similar expressions, although not all forward-looking information includes them;

• includes conclusions, forecasts, and projections based on our current objectives and strategies and on estimates, expectations, assumptions, and other factors, most of which are confidential and proprietary and that we believe to have been reasonable at the time they were applied but may prove to be incorrect; and

• was approved by our management on the date of this MD&A.

Our forward-looking information and statements include forecasts and projections related to the following items, some of which are non-GAAP measures (see “Non-GAAP Measures” for more information), among others:

• revenue;

• total service revenue;

• adjusted operating profit;

• additions to property, plant and equipment;

• cash income taxes;

• free cash flow;

• dividend payments;

• the growth of new products and services;

• expected growth in subscribers and the services to which they subscribe;

• the cost of acquiring and retaining subscribers and deployment of new services;

• continued cost reductions and efficiency improvements;

• traction against our ratio of adjusted net debt / adjusted operating profit; and

• all other statements that are not historical facts.

Specific forward-looking information included or incorporated in this document includes, but is not limited to, our information and statements under “Financial and Operating Guidance” relating to our 2017 consolidated guidance on revenue, adjusted operating profit, additions to property, plant and equipment, and free cash flow. All other statements that are not historical facts are forward-looking statements.

We base our conclusions, forecasts, and projections (including the aforementioned guidance) on the following factors, among others:

• general economic and industry growth rates;

• currency exchange rates and interest rates;

• product pricing levels and competitive intensity;

• subscriber growth;

• pricing, usage, and churn rates;

• changes in government regulation;

• technology deployment;

• availability of devices;

• timing of new product launches;

• content and equipment costs;

• the integration of acquisitions; and

• industry structure and stability.

Except as otherwise indicated, this MD&A and our forward-looking statements do not reflect the potential impact of any non-recurring or other special items or of any dispositions, monetizations, mergers, acquisitions, other business combinations, or other transactions that may be considered or announced or may occur after the date the statement containing the forward-looking information is made.

24    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

RISKS AND UNCERTAINTIES

Actual events and results can be substantially different from what is expressed or implied by forward-looking information because of risks, uncertainties, and other factors, many of which are beyond our control, including but not limited to:

• regulatory changes;

• technological changes;

• economic conditions;

• unanticipated changes in content or equipment costs;

• changing conditions in the communications, entertainment, and/or information industries;

• the integration of acquisitions;

• litigation and tax matters;

• the level of competitive intensity;

• the emergence of new opportunities; and

• new interpretations and new accounting standards from accounting standards bodies.

These factors can also affect our objectives, strategies, and intentions. Many of these factors are beyond our control or our current expectations or knowledge. Should one or more of these risks, uncertainties, or other factors materialize, our objectives, strategies, or intentions change, or any other factors or assumptions underlying the forward-looking information prove incorrect, our actual results and our plans could vary significantly from what we currently foresee.

Accordingly, we warn investors to exercise caution when considering statements containing forward-looking information and caution them that it would be unreasonable to rely on such statements as creating legal rights regarding our future results or

plans. We are under no obligation (and we expressly disclaim any such obligation) to update or alter any statements containing forward-looking information or the factors or assumptions underlying them, whether as a result of new information, future events, or otherwise, except as required by law. All of the forward-looking information in this MD&A is qualified by the cautionary statements herein.

BEFORE MAKING AN INVESTMENT DECISION

Before making any investment decisions and for a detailed discussion of the risks, uncertainties, and environment associated with our business, fully review the sections in this MD&A entitled “Regulation in Our Industry” and “Governance and Risk Management”, as well as our various other filings with Canadian and US securities regulators which can be found at sedar.com and sec.gov, respectively.

FOR MORE INFORMATION

You can find more information about us, including our Annual Information Form, on our website (rogers.com/investors), on SEDAR (sedar.com), and on EDGAR (sec.gov), or you can e-mail us at investor.relations@rci.rogers.com. Information on or connected to these and any other websites referenced in this document does not constitute part of this MD&A.

You can also go to rogers.com/investors for information about our governance practices, corporate social responsibility reporting, a glossary of communications and media industry terms, and additional information about our business.

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    25

MANAGEMENT’S DISCUSSION AND ANALYSIS

Executive Summary

ABOUT ROGERS

Rogers is a leading diversified Canadian communications and media company.

Rogers is a leading diversified Canadian communications and media company that’s working to deliver a great experience to our customers every day. We are Canada’s largest provider of wireless communications services and one of Canada’s leading providers of cable television, high-speed Internet, information technology, and telephony services to consumers and businesses. Through Rogers Media, we are engaged in radio and television broadcasting, sports, televised and online shopping, magazines, and digital media.

Almost all of our operations and sales are in Canada. We have a highly skilled and diversified workforce of approximately 25,200 employees. Our head office is in Toronto, Ontario and we have numerous offices across Canada.

FOUR REPORTING SEGMENTS

We report our results of operations in four reporting segments. Each segment and the nature of its business are as follows:

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

26    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

2016 HIGHLIGHTS

KEY FINANCIAL INFORMATION

	Years ended December 31
(In millions of dollars, except margins and per share amounts)	2016		2015		% Chg
Consolidated
Total revenue		13,702		13,414		2
Total service revenue 1		13,027		12,649		3
Adjusted operating profit 2		5,092		5,032		1
Adjusted operating profit margin 2		37.2%		37.5%		(0.3 pts	)
Net income 3		835		1,342		(38	)
Adjusted net income 2, 3		1,481		1,479		–
Basic earnings per share 3	$	1.62	$	2.61		(38	)
Adjusted basic earnings per share 2, 3	$	2.88	$	2.87		–
Cash provided by operating activities		3,957		3,747		6
Free cash flow 2		1,705		1,676		2
Wireless
Revenue		7,916		7,651		3
Adjusted operating profit		3,285		3,239		1
Adjusted operating profit margin as a % of service revenue		45.3%		46.9%		(1.6 pts	)
Cable
Revenue		3,449		3,465		–
Adjusted operating profit		1,674		1,658		1
Adjusted operating profit margin		48.5%		47.8%		0.7 pts
Business Solutions
Revenue		384		377		2
Adjusted operating profit		123		116		6
Adjusted operating profit margin		32.0%		30.8%		1.2 pts
Media
Revenue		2,146		2,079		3
Adjusted operating profit		169		172		(2	)
Adjusted operating profit margin		7.9%		8.3%		(0.4 pts	)

¹ As defined. See “Key Performance Indicators”.

²  Adjusted operating profit, adjusted operating profit margin, adjusted net income, adjusted basic earnings per share, and free cash flow are non-GAAP measures and should not be considered substitutes or alternatives for GAAP measures. These are not defined terms under IFRS and do not have standard meanings, so may not be a reliable way to compare us to other companies. See “Non-GAAP Measures” for information about these measures, including how we calculate them.

³  As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See “Accounting Policies” for more information.

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    27

MANAGEMENT’S DISCUSSION AND ANALYSIS

KEY PERFORMANCE INDICATORS

	As at or years ended December 31
	2016			2015			Chg
Subscriber count results (000s) 1
Wireless postpaid net additions		286			106			180
Wireless prepaid net additions		111			75			36
Wireless subscribers		10,274			9,877			397
Internet net additions		97			37			60
Internet subscribers		2,145			2,048			97
Television net losses		(76	)		(128	)		52
Television subscribers		1,820			1,896			(76	)
Phone net additions (losses)		4			(60	)		64
Phone subscribers		1,094			1,090			4
Additional Wireless metrics 1
Postpaid churn (monthly)		1.23%			1.27%			(0.04 pts	)
Postpaid ARPA (monthly)	$	117.37		$	110.74		$	6.63
Blended ARPU (monthly)	$	60.42		$	59.71		$	0.71
Ratios
Capital intensity 1		17.2%			18.2%			(1.0 pts	)
Dividend payout ratio of net income 1, 2		118.0%			74.0%			44.0 pts
Dividend payout ratio of free cash flow 1, 3		57.9%			58.9%			(1.0 pts	)
Return on assets 1, 2		2.9%			4.6%			(1.7 pts	)
Adjusted net debt / adjusted operating profit 3		3.0			3.1			(0.1	)
Employee-related information
Total active employees (approximate)		25,200			26,200			(1,000	)

¹  As defined. See “Key Performance Indicators”.

²  As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See “Accounting Policies” for more information.

³  Dividend payout ratio of free cash flow and adjusted net debt / adjusted operating profit are non-GAAP measures and should not be considered substitutes or alternatives for GAAP measures. These are not defined terms under IFRS and do not have standard meanings, so may not be a reliable way to compare us to other companies. See “Non-GAAP Measures” for information about these measures, including how we calculate them.

28    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

FINANCIAL HIGHLIGHTS

REVENUE AND ADJUSTED OPERATING PROFIT

• Revenue increased by 2% this year, primarily driven by Wireless service revenue growth of 5%.

• Wireless service revenue increased largely as a result of a larger subscriber base and the continued adoption of higher-postpaid-ARPA-generating Rogers Share Everything plans and the increase in data usage on these plans.

• Cable revenue decreased marginally as the 11% increase in Internet revenue from the larger subscriber base and movement of customers to higher-end speed and usage tiers was offset by lower Television and Phone revenue, primarily due to Television subscriber losses over the past year and the impact of Phone pricing packages. We reported positive Cable total service unit net additions in 2016, driven by Internet net additions of 97,000, up 60,000 year on year, and improved Television net losses. We continue to see an ongoing shift in product mix to higher-margin Internet services, with 46% of our residential Internet base now on plans with download speeds of 100 megabits per second or higher.

• Business Solutions revenue increased this year primarily as a result of the growth in on-net next generation services (including our data centre businesses), which more than offset the continued planned reduction in lower margin, off-net legacy revenue.

• Media revenue increased as a result of higher sports-related revenue, driven by the strength of Sportsnet and the success of the Toronto Blue Jays, partially offset by continued softness in publishing and radio advertising.

• Adjusted operating profit increased 1% this year, with a consolidated adjusted operating profit margin of 37.2%, resulting from higher adjusted operating profit in Wireless, Cable, and Business Solutions, partially offset by lower adjusted operating profit in Media.

NET INCOME

• Net income decreased 38% to $835 million, primarily as a result of the impairment and related charges we recognized on our Internet Protocol television (IPTV) product because of our decision to discontinue developing this product and develop a long-term relationship with Comcast Corporation (Comcast) and deploy their X1 IP-based video platform, along with higher restructuring, acquisition and other costs and higher equity losses associated with the wind down of shomi. See “Review of Consolidated Performance” for more information.

CASH FLOW

• Our substantial cash flow generation enabled us to reduce outstanding debt, continue to make investments in our network, and return substantial dividends to shareholders. We paid $988 million in dividends in 2016.

• Our cash provided by operating activities increased 6% this year to $3,957 million as a result of higher net funding provided by non-cash working capital and lower interest paid. Free cash flow increased 2% this year to $1,705 million as a result of higher adjusted operating profit and lower additions to property, plant and equipment, partially offset by higher cash income taxes.

LIQUIDITY POSITION

• Ended the year with approximately $2.7 billion of available liquidity (2015 – $3.3 billion), comprised of nil cash on hand (2015 – $0.01 billion), $2.4 billion available under our bank credit facilities (2015 – $3.0 billion), and $0.25 billion available under our $1.05 billion accounts receivable securitization program (2015 – $0.25 billion available under our $1.05 billion accounts receivable securitization program).

• Our adjusted net debt / adjusted operating profit ratio improved to 3.0 as at December 31, 2016 from 3.1 as at December 31, 2015.

• Issued US$500 million ($671 million) of 2.9% senior notes due 2026.

• Our overall weighted average cost of borrowings was 4.72% as at December 31, 2016 (2015 – 4.82%) and our overall weighted average term to maturity on our debt was 10.6 years as at December 31, 2016 (2015 – 10.8 years).

OTHER SIGNIFICANT DEVELOPMENTS

• We announced our intention to hire Joseph Natale as President and Chief Executive Officer, effective July 2017. Alan Horn is currently acting as our Interim President and Chief Executive Officer.

• Late in 2016, we announced a long-term agreement with Comcast to bring their X1 IP-based video platform to our customers in early 2018. Customers will benefit from Comcast’s substantial research and development investments and their continuing commitment to innovation.

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    29

MANAGEMENT’S DISCUSSION AND ANALYSIS

Understanding Our Business

Rogers is a leading diversified Canadian communications and media company. We report our results based on four reporting segments, as follows:

Wireless provides wireless voice and data communication services to individual consumers, businesses, governments, and other telecommunications service providers. Our wireless network is one of the most extensive and advanced independent high-speed wireless data networks in Canada, capable of supporting wireless services on smartphones, tablets, computers, and a broad variety of machine-to-machine and specialized devices. See “Capability to Deliver Results” for more information about our extensive wireless network and significant spectrum position.

Cable provides high-speed Internet, television, and voice communication services to consumers, businesses, governments, and wholesale resellers, leveraging our expansive fibre and hybrid fibre-coaxial network infrastructure in Ontario, New Brunswick, and Newfoundland and Labrador. See “Capability to Deliver Results” for more information about our expansive cable networks.

Business Solutions provides voice and data communications and advanced services, including data centres and cloud computing, to the enterprise, public sector, and carrier wholesale markets over our fibre network facilities.

Media provides services in sports media and entertainment (including both the Toronto Blue Jays and our 12-year, exclusive national licensing agreement (NHL Agreement) with the National Hockey League (NHL) to broadcast all nationally televised live NHL hockey games within Canada on multiple platforms), television and radio broadcasting, multi-platform shopping experiences, digital media, and publishing.

During the year, our Wireless, Cable, and Business Solutions reporting segments were operated by our wholly-owned subsidiary, Rogers Communications Canada Inc. (RCCI). In 2015, those segments were operated by Rogers Communications Partnership (RCP), and certain other wholly-owned subsidiaries. Our Media reporting segment is operated by our wholly-owned subsidiary, Rogers Media Inc., and its subsidiaries.

On January 1, 2016, Fido Solutions Inc., a subsidiary of RCI, transferred its partnership interest in RCP to Rogers Cable and Data Centres Inc. (RCDCI), a subsidiary of RCI, leaving RCDCI as the sole partner of RCP, thereby causing RCP to cease to exist. RCDCI became the owner of all the assets and assumed all the liabilities previously held by RCP. Subsequent to the reorganization, RCDCI changed its name to Rogers Communications Canada Inc.

PRODUCTS AND SERVICES

WIRELESS

Rogers is a Canadian leader in innovative wireless network technologies and services. We provide postpaid and prepaid wireless services under the Rogers, Fido, and chatr brands, and provide consumers and businesses with the latest wireless devices, services, and applications including:

• mobile and fixed high-speed Internet access;

• wireless voice and enhanced voice features;

• wireless home phone;

• device protection;

• text messaging;

• e-mail;

• global voice and data roaming, including Roam Like Home and Fido Roam;

• bridging landline phones with wireless phones;

• machine-to-machine solutions; and

• advanced wireless solutions for businesses.

CABLE

Our cable network provides an innovative and leading selection of high-speed broadband Internet access, digital television and online viewing, phone, and advanced home Wi-Fi services to consumers and businesses in Ontario, New Brunswick, and Newfoundland and Labrador.

Internet services include:

• Internet access (including basic and unlimited usage packages), security solutions, and e-mail;

• access speeds of up to one gigabit per second (Gbps), covering our entire Cable footprint;

• Rogers Ignite unlimited packages, combining fast and reliable speeds with the freedom of unlimited usage; and

• plans available under both the Rogers and Fido brands.

Television services include:

• local and network TV, including starter and premium channel packages along with à la carte channels;

• on-demand television;

• personal video recorders (PVRs), including Whole Home PVRs and a 4K PVR;

• linear and time-shifted programming;

• digital specialty channels;

• 4K television programming, including all 2016 and 2017 regular season Toronto Blue Jays home games and select marquee NHL and National Basketball Association (NBA) games; and

• Rogers Anyplace TV, televised content delivered on smartphones, tablets, and personal computers.

Phone services include:

• residential and small business local telephony service; and

• calling features such as voicemail, call waiting, and long distance.

30    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

BUSINESS SOLUTIONS

Our services aim to meet the increasing demands of today’s critical business applications. These services include:

• voice, data networking, Internet protocol (IP), and Ethernet services over multiservice customer access devices that allow customers to scale and add services, such as private networking, Internet, IP voice, and cloud solutions, which blend seamlessly to grow with their business requirements;

• optical wave, Internet, Ethernet, and multi-protocol label switching services, providing scalable and secure metro and wide area private networking that enables and interconnects critical business applications for businesses that have one or many offices, data centres, or points of presence (as well as cloud applications) across Canada;

• simplified “leapfrog” information technology (IT) and network technologies with security-embedded, cloud-based, professionally-managed solutions, including:

• Managed Wi-Fi, which allows customers to remotely monitor their networks at any site and view network performance analytics via a web portal; this allows customers to better understand how their network is being used, from almost anywhere; and

• Rogers Public Cloud, which enables businesses to manage their IT infrastructure in the cloud securely and cost effectively; and

• extensive wireless and cable access networks services for primary, bridging, and back-up connectivity.

MEDIA

Our portfolio of Media assets reaches Canadians from coast to coast.

In Television, we operate several conventional and specialty television networks:

• Sportsnet’s four regional stations, Sportsnet ONE, Sportsnet 360, and Sportsnet World;

• City network, which, together with affiliated stations, has broadcast distribution to approximately 86% of Canadian households;

• OMNI multicultural broadcast television stations;

• specialty channels that include FX (Canada), FXX (Canada), Outdoor Life Network, VICELAND, and G4 Canada; and

• The Shopping Channel (TSC), Canada’s only nationally televised shopping channel, which generates a significant and growing portion of its revenue from online sales.

In Radio, we operate more than 50 AM and FM radio stations in markets across Canada, including popular radio brands such as 98.1 CHFI, 680 NEWS, Sportsnet The FAN, KiSS, JACK FM, and SONiC.

As part of our strategic change to focus on digital media, our services and products include:

• our digital sports-related assets, including Rogers NHL GameCentre LIVE and Sportsnet NOW;

• many well-known consumer brands, such as Maclean’s, Chatelaine, Today’s Parent, Flare, and Hello! Canada;

• Texture by Next Issue, our digital magazine service, which offers unlimited access to a catalogue of over 230 premium Canadian and US magazine titles; and

• a broad digital presence that continues the extension of content across new and existing platforms.

In Sports Media and Entertainment, we own the Toronto Blue Jays, Canada’s only Major League Baseball (MLB) team, and the Rogers Centre event venue, which hosts the Toronto Blue Jays’ home games, concerts, trade shows, and special events.

Our NHL Agreement, which began with the 2014-2015 NHL season, allows us to deliver unprecedented coverage of professional hockey, with more than 1,200 regular season games per season streamed across television, smartphones, tablets, and the Internet, both through traditional streaming services as well as Rogers NHL GameCentre Live. Our NHL Agreement also grants Rogers national rights on those platforms to the NHL playoffs and Stanley Cup Final, all NHL-related special events and non-game events (such as the NHL All-Star Game and the NHL Draft), and rights to sublicense broadcasting rights to TVA and the Canadian Broadcasting Corporation (CBC) and to use the Hockey Night In Canada brand through a sublicense agreement.

OTHER

Other services we offer to consumers and businesses include:

• Rogers Smart Home Monitoring and Smart Business Monitoring, an innovative home or business monitoring, security, and automation system; and

• Rogers Platinum MasterCard and Fido MasterCard, credit cards that allow customers to earn cashback rewards points on credit card spending.

OTHER INVESTMENTS

We hold interests in a number of associates and joint arrangements, some of which include:

• our 37.5% ownership interest in Maple Leaf Sports & Entertainment Ltd. (MLSE), which owns the Toronto Maple Leafs, the Toronto Raptors, Toronto FC, and the Toronto Marlies, as well as various associated real estate holdings; and

• our 50% ownership interest in Glentel Inc. (Glentel), a large provider of multicarrier wireless and wireline products and services with several hundred Canadian retail distribution outlets.

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    31

MANAGEMENT’S DISCUSSION AND ANALYSIS

COMPETITION

Competition in the wireless industry from national and regional operators and resellers has led to a highly competitive environment, as consumers have considerable choice in service providers and plan offerings across a wide array of pricing and service points. This puts downward pressure on pricing, potentially reducing profit margins, and could also affect our customer churn.

Traditional wireline telephone and television services are now offered over the Internet. This has allowed more non-traditional providers to enter the market and has changed how traditional providers compete. This is changing the mix of packages and pricing that service providers offer and could affect customer churn levels.

In the media industry, there continues to be a shift towards digital and online media consumption by consumers, which in turn drives advertisers to direct more advertising dollars to digital and online versus traditional media. In addition, the number of competitors has increased as more digital and online media companies, including large global companies, enter the market.

WIRELESS

We compete on customer experience, quality of service, scope of services, network coverage, sophistication of wireless technology, breadth of distribution, selection of devices, branding and positioning, and price.

• Wireless technology — our extensive long-term evolution (LTE) network caters to customers seeking the increased capacity and speed it provides. We compete with Bell, Telus, Shaw, MTS, Videotron, SaskTel, and Eastlink, all of whom operate LTE networks. We also compete with these providers on high-speed packet access (HSPA) and global system for mobile communications (GSM) networks and with providers that use alternative wireless technologies, like Wi-Fi “hotspots” and mobile virtual network operators (MVNO), such as President’s Choice Mobile and Primus.

• Product, branding, and pricing — we compete nationally with Bell, Telus, and Shaw, including their discount brands Virgin Mobile (Bell), Koodo (Telus), and Freedom Mobile (Shaw). We also compete with various regional players and resellers.

• Distribution of services and devices — we compete with other service providers for dealers, prime locations for our own stores, and third-party retail distribution shelf space.

• Wireless networks — consolidation amongst regional players, or with incumbent carriers, could alter the regional or national competitive landscapes for Wireless.

• Inbound roaming — we compete with other major national carriers to provide service to international operators who have customers who roam while in Canada.

• Spectrum — Innovation, Science and Economic Development Canada (ISED Canada), formerly known as Industry Canada, has announced a future 600 MHz spectrum auction, expected to take place in the next two to three years. The outcome of this auction may increase competition.

CABLE

Internet

We compete with other Internet Service Providers (ISPs) that offer residential and commercial high-speed Internet access services. Rogers and Fido high-speed Internet services compete directly with:

• Bell and Cogeco’s Internet service in Ontario;

• Bell Aliant’s Internet services in New Brunswick and Newfoundland and Labrador; and

• various resellers using wholesale telecommunication company digital subscriber line (DSL) and cable Third-Party Internet Access (TPIA) services in local markets.

Television

We compete with:

• other Canadian multi-channel Broadcast Distribution Undertakings (BDUs) including Bell, Shaw, other alternative satellite TV services, and IPTV;

• over-the-top (OTT) video offerings through providers like Netflix, YouTube, Apple, Amazon Prime Video, Google, and other channels streaming their own content; and

• over-the-air local and regional broadcast television signals received directly through antennas, and the illegal reception of US direct broadcast satellite services.

Phone

We compete with:

• Bell and Bell Aliant’s wireline phone service in Ontario, New Brunswick, and Newfoundland and Labrador;

• Incumbent Local Exchange Carrier (ILEC) local loop resellers and Voice over IP (VoIP) service providers (such as Primus and Comwave), other VoIP-only service providers (such as Vonage and Skype), and other voice applications riding over the Internet access services of ISPs; and

• substitution of wireline for wireless products, including mobile phones and wireless home phone products.

BUSINESS SOLUTIONS

A number of different players in the Canadian market compete for enterprise network and communications services. There are relatively few national providers, but each market has its own competitors that usually focus on the geographic markets where they have the most extensive networks.

In the wireline voice and data market, we compete with facilities- and non-facilities-based telecommunications service providers. In markets where we own network infrastructure, we compete with incumbent fibre-based providers. Our main competitors are as follows, but there are also regional competitors:

• Ontario – Bell, Cogeco Data Services, and Zayo;

• Quebec – Bell, Telus, and Videotron;

• Atlantic Canada – Bell Aliant and Eastlink; and

• Western Canada – Shaw and Telus.

32    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

MEDIA

Television and specialty services compete for viewers and advertisers with:

• other Canadian television stations that broadcast in their local markets, including those owned and operated by the CBC, Bell Media, and Corus Entertainment, some of which have greater national coverage;

• other specialty channels;

• distant Canadian signals and US border stations, given the time-shifting capability available to subscribers;

• other media, including newspapers, magazines, radio, and outdoor advertising; and

• content available on the Internet, such as web-based streaming services.

Our radio stations compete mainly with individual stations in local markets, but they also compete:

• nationally with other large radio operators, including the CBC, Bell Media, Corus Entertainment, and satellite radio operator SiriusXM;

• with other media, including newspapers, magazines, television, and outdoor advertising; and

• with new technologies, such as online web information services, music downloading, portable media players, and online music streaming services.

TSC competes with:

• retail stores;

• catalogue, Internet, and direct mail retailers;

• infomercials that sell products on television; and

• other television channels, for channel placement, viewer attention, and loyalty.

Our publishing products compete for readership and advertisers with:

• other Canadian magazines, both digital and printed;

• foreign, mostly US, titles that sell directly into Canada, both digital and printed; and

• online information and entertainment websites.

Competition in Sports Media and Entertainment includes other:

• televised and online sports programming;

• Toronto professional teams, for attendance at Toronto Blue Jays games;

• MLB teams, for Toronto Blue Jays players and fans;

• local sporting and special event venues; and

• professional sports teams, for merchandise sales revenue.

Our digital media assets compete with:

• other content available on the Internet, including news services, streaming services, and portals; and

• traditional media, including TV, radio, and publishing.

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    33

MANAGEMENT’S DISCUSSION AND ANALYSIS

INDUSTRY TRENDS

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

WIRELESS TRENDS	CABLE TRENDS
More sophisticated wireless networks and devices and the rise of multimedia and Internet-based applications are making it easier and faster to receive data, driving growth in wireless data services. Consumer demand for mobile devices, digital media, and on-demand content is pushing providers to build networks that can support the expanded use of applications, mobile video, messaging, and other wireless data. Wireless providers are investing in the next generation of broadband wireless data networks, such as LTE and future 5G technologies, to support the growing data demand. Wireless market penetration in Canada is approximately 83% of the population and is expected to grow at an estimated 0.9% annually over the next four years, per International Data Corporation. The Canadian Radio-television and Telecommunications Commission (CRTC) Wireless Code has limited consumer wireless term contracts to two years from three years, which has resulted in a greater number of customers completing and renewing contracts at any given time. Shorter-term contracts allow less time for carriers to recover subsidies. Subscribers are increasingly bringing their own devices or keeping their existing devices longer and therefore may not enter into term contracts for wireless services. This may negatively impact our subscriber churn, but may create gross addition subscriber opportunities as a result of increased churn from other carriers. This also may negatively impact the monthly service fees charged to subscribers. Wireless providers are collaborating with OTT services to offer their customers unique, value-added benefits and service options. Mobile commerce continues to increase as more devices and platforms adopt secure technology to facilitate wireless transactions.	The Internet and social media are increasingly being used as a substitute for wireline telephone services, and televised content is increasingly available online. Downward Television tier migration (cord shaving) and Television cancellation with the intent of substitution (cord cutting) appear to be on the rise with increased adoption of OTT services, such as Apple TV, Netflix, and Android-based TV boxes. The CRTC’s decision to lower wholesale Internet access rates may also adversely affect companies that wholesale Internet services. Broadcast television technology continues to improve with 4K TV broadcasts and high dynamic range (HDR) for higher resolution and improved motion video. The CRTC Let’s Talk TV guidance requires service providers to offer customers with pick-and-pay choices, small reasonably priced packages, and affordable entry-level TV channel options that may negatively impact the industry. In 2016, the CRTC established several criteria to increase Internet access for Canadian residents and businesses. As a result, subscribers should have access to speeds of at least 50 Mbps and a service with unlimited data allowance. Our digital cable and VoIP telephony services compete with competitor IPTV deployments and non-facilities-based service providers, respectively, which continue to increase competitive intensity that have and may continue to negatively impact the industry. Cable and wireline companies are expanding their service offerings to include faster broadband Internet. Canadian companies, including Rogers, are increasingly offering download speeds of 1 Gbps and Internet offerings with unlimited bandwidth in response to the perceived “need for speed”. Consumers are demanding ever-faster speeds for streaming online media, playing online video games, and for their ever-growing number of Internet-capable devices. In order to help facilitate these speeds, cable and wireline companies are shifting their networks towards higher speed and capacity data over cable service interface specifications (DOCSIS) 3.0/3.1 and fibre-to-the-home (FTTH) technologies. These technologies provide faster potential data communication speeds, allowing both television and Internet signals to reach consumers more quickly in order to sustain reliable speeds to address the increasing number of Internet-capable devices.
BUSINESS SOLUTIONS TRENDS	MEDIA TRENDS
Companies are using fibre-based access and cloud computing to capture and share information in more secure and accessible environments. This, combined with the rise of multimedia and Internet-based business applications, is driving exponential growth in data demand. Enterprises and all levels of government are transforming data centre infrastructure by moving toward virtual data storage and hosting. This is driving demand for more advanced network functionality, robust, scalable services, and supportive dynamic network infrastructure. Carriers are dismantling legacy networks and investing in next generation platforms and data centres that combine voice, data, and video solutions onto a single distribution and access platform. As next generation platforms become more popular, our competition will begin to include systems integrators and manufacturers. Companies are using third parties to increase security for their data and information to address cyber threats and other information security risks. Devices and machines are becoming more interconnected and there is more reliance on the Internet and other networks to facilitate updates and track usage.	Consumer demand for digital media, mobile devices, and on-demand content is increasing and media products, such as magazines, have experienced significant digital uptake, requiring industry players to increase their efforts in digital content and capabilities in order to compete. This trend is also causing advertisers to shift their spending from conventional TV and print publishing to digital platforms. Competition has changed and traditional media assets in Canada are increasingly being controlled by a small number of competitors with significant scale and financial resources. Technology has allowed new entrants and even individuals to become media players in their own right. Some players have become more vertically integrated across both traditional and emerging platforms. Relationships between providers and purchasers of content have become more complex. Global aggregators have also emerged and are competing for both content and viewers. Access to live sports and other premium content has become even more important for acquiring and retaining audiences that in turn attract advertisers and subscribers. Therefore, ownership of content and/or long-term agreements with content owners has also become increasingly important to media companies. Leagues, teams, and networks are also experimenting with the delivery of live sports content through online, social, and virtual platforms, while non-traditional sports are also growing in mindshare.

34    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

Our Strategy, Key Performance Drivers, and Strategic Highlights

As part of our overall strategy and related priorities, we set new corporate objectives each year to progress on our long-term strategic priorities and address short-term opportunities and risks.

OUR STRATEGIC PRIORITIES

We announced our new set of strategic priorities in May 2014. This strategy builds on our many strengths, including a unique mix of network and media assets, and focuses on how we can reaccelerate our growth relative to our industry peers, increase the focus around the customer, reinvigorate our brands, continue our network and innovation leadership, and create an enhanced working environment for our employees.

To achieve these goals, we established strategic priorities as follows:

• Be a Strong Canadian Growth Company

• Overhaul the Customer Experience

• Drive Growth in the Business Market

• Invest in and Develop our People

• Deliver Compelling Content Everywhere

• Focus on Innovation and Network Leadership

• Go to Market as One Rogers

BE A STRONG CANADIAN GROWTH COMPANY

The overarching goal of our strategy is to accelerate revenue growth in a sustainable way and translate this revenue growth into strong margins, adjusted operating profit, free cash flow, an increasing return on assets, and returns to shareholders.

OVERHAUL THE CUSTOMER EXPERIENCE

Improving customer experience is core to our strategy. We believe that we can improve significantly in this area and have started on that journey. Our goal is to make it easy for customers to interact with Rogers when, how, and where they want, with a focus on becoming a leader in self-serve options. This means simplifying our processes and policies and integrating them into our IT systems and front-line employee training.

DRIVE GROWTH IN THE BUSINESS MARKET

The Canadian business market for communications services was valued in September 2016 by International Data Corporation Canada at an estimated $22 billion for 2017. We believe Rogers is currently under-indexed in this market. Currently, we provide our business customers with core telecommunication services such as wireless, broadband, next generation IP, and data centre services, and have begun offering emerging services, such as unified communications and collaboration, security, cloud, and Internet of Things (IoT). We believe our strategy of being first-to-market with business service innovation, supported by an aligned and execution-focused organization, will deliver new opportunities for Rogers in the business market. These opportunities will be a key focus of ours as we strive to attract and serve more business customers.

INVEST IN AND DEVELOP OUR PEOPLE

Our employees are the heart and soul of Rogers and their passion for our company and our customers is world-class. Our strategy is to invest more in our people by updating our onboarding, training, and development programs and establishing clear accountabilities for all employees. We strive to provide our people, particularly our front-line employees, with the training, tools, and support they need. We believe that providing better training and tools to empower our employees will lead to increasingly positive experiences for our customers.

DELIVER COMPELLING CONTENT EVERYWHERE

The ways in which Canadians consume content continue to evolve. The new expectation is that content will be available “on demand”. Whether it is watching the latest episode of their favourite TV program at home or streaming a live sporting event on their mobile device, Canadians now expect to be able to consume any content they want, when and where they want, and on the device that they want.

Rogers has some of the most sought-after media assets in Canada, with a deep roster of leading sports assets, top radio stations, iconic periodicals, and award-winning television programming. We will continue to invest in compelling content for our customers and focus on enhancing the cooperation between our Wireless, Cable, Business Solutions, and Media teams so we can fully leverage our highly popular content and make it available wherever our customers want to consume it.

FOCUS ON INNOVATION AND NETWORK LEADERSHIP

Innovation has always been a part of our identity. Whether it is bringing to market new products or the latest network technologies, Rogers has led the way with many “firsts”.

We will continue to invest in our wireless and cable networks and innovative new products that run across them. We will aim to meet the growing demand for data with the highest quality of service while maintaining our network speed advantage. We will continue to generate and develop technologies and services that support our core product offerings.

GO TO MARKET AS ONE ROGERS

One Rogers is our plan for all of our employees, network, content, and brand assets to work much more closely together. To operate as One Rogers, we must remove barriers to collaboration, cooperation, and agility across the organization. This allows for assets and expertise in one part of the company to be easily shared with other parts of the company to the benefit of our customers. We will work as One Rogers across our business segments to deliver enriched experiences across our product sets and customer base.

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    35

MANAGEMENT’S DISCUSSION AND ANALYSIS

2016 OBJECTIVES

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

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

KEY PERFORMANCE DRIVERS AND 2016 STRATEGIC HIGHLIGHTS

The following achievements display the progress we made towards meeting our 2016 objectives we set last year.

   BE A STRONG CANADIAN GROWTH COMPANY

• 100% achievement of our 2016 guidance on selected full-year metrics and achieved our best subscriber metrics in recent years. See “Financial and Operating Guidance” for more information.

  OVERHAUL THE CUSTOMER EXPERIENCE

• Launched a number of tools and offerings with a focus on becoming a leader in self-serve options. We saw a 56% increase in self-serve transactions on the Rogers brand and a 9% increase on the Fido brand this year.

• Expanded Roam Like Home to over 100 destinations in Europe, Asia, Mexico, South America, and Latin America, further simplifying how Wireless consumers use the Internet, make calls, and send texts and e-mails. Customers have access to their Canadian plan features while traveling, all at a relatively low cost. Furthermore, we broadened the availability of Roam Like Home by making it available on most consumer Wireless plans.

• Introduced Fido Roam, allowing customers to use existing data, talk, and text from their Fido Pulse plans while traveling, for a low daily price. Fido Roam covers all of the US along with destinations in Europe, the Caribbean, South and Central America, the Middle East, Oceania, South Africa, and Asia.

• Launched Data Manager, a new tool that gives families the ability to manage their wireless data in real-time and provide worry-free control.

• Launched Rogers EnRoute and Fido EnRoute, tools that save our customers time by giving them the ability to track, in real-time, when a technician will arrive for an installation or service call.

• Launched DeviceAdvice and Message Me for our Fido customers. DeviceAdvice is a tool allowing customers to self-diagnose device issues and receive quick, personalized advice so they can maximize the performance of their device. Message Me allows customers to contact Fido customer representatives via Facebook Messenger on their mobile or desktop device.

• Launched Rogers Assist, an app that allows all Rogers employees to submit an issue to customer care on behalf of their friends, family, and acquaintances.

• Collaborated with a Canadian app creator that helps people with cognitive special needs, to create how-to videos for using a wireless device. Rogers.com now features five videos with easy-to-follow instructions and closed-captioning that explain how to perform key functions related to your Rogers wireless device like sending a text or picture, connecting to a Wi-Fi network, and making a phone call.

• Expanded our Connected for Success program to more communities across Ontario, New Brunswick, and Newfoundland and Labrador. This program provides affordable Internet services to people that live in non-profit housing. This expansion more than doubled the number of eligible households across the country to up to 150,000.

• Released Rogers’ 2016 Transparency Report, our annual report on how we share customer information in response to requests from legal authorities. We are committed to protecting our customers’ privacy and fulfilling our obligation as a good corporate citizen to follow the law and contribute to public safety.

36    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

  DRIVE GROWTH IN THE BUSINESS MARKET

• Launched Rogers Unison, a new mobile solution that brings the features of a traditional landline office phone to one’s mobile phone. We were the first telecommunications provider in North America to launch such a solution. This solution allows our customers to stay connected across multiple devices regardless of their location, allowing them to better serve their customers.

• Launched Rogers Public Cloud, a new data sovereign, cloud infrastructure as-a-service solution that lets businesses securely manage critical data, applications, servers, systems software, and network resources over the Internet.

• Launched Rogers Ignite Gigabit Internet to small business customers in Ontario, enabling them to leverage blazing-fast Internet speeds and unlimited data usage to improve productivity with faster file transfers, real-time data backup for business continuity, and high-quality video conferencing. The increased bandwidth also means businesses can connect more users online simultaneously, without compromising Internet performance.

• Announced certain IoT as-a-service offerings to simplify the process of managing complex IoT solutions. Two of the first solutions being offered as a service include Farm & Food Monitoring and Level Monitoring.

• Launched Business App Market, a new platform for small businesses to manage multiple cloud-based applications.

  INVEST IN AND DEVELOP OUR PEOPLE

• Recognized again as a Top Employer for 2017 in November 2016 and as a Top Employer for Young People in January 2017 by the editors of Canada’s Top 100 Employers.

• Selected as one of Canada’s Best Diversity Employers for 2016 in a report released by Mediacorp Inc. in March 2016 for recognition of our efforts to promote diversity and inclusion in the workplace.

• Named one of Canada’s Greenest Employers for 2016 by the editors of Canada’s Top 100 Employers in April 2016, an award that recognizes employers with innovative environmental programs and earth-friendly policies that actively involve their employees.

• Named one of the 50 Best Corporate Citizens in Canada by Corporate Knights in June 2016, an award that recognizes employers that incorporate social, economic, and ecological benefits and costs in their normal course of business.

• Launched an intensive leadership program for more than 160 executives.

• Expanded our national onboarding program to include 1,400 call centre employees and launched a mobile onboarding solution for part-time employees.

• Continued to modernize our workplace to help us be more productive to better serve our customers.

 DRIVE COMPELLING CONTENT EVERYWHERE

• For the second consecutive year, Sportsnet solidified its position as the destination for Canadian sports fans by closing out 2016 as Canada’s number-one sports media brand. Sportsnet won eight months in 2016 and has widened the gap from its closest competitor with a 42% lead in average minute audience and a 39% lead in audience share. Sportsnet.ca reached an all-time high with 4.25 million unique visitors in October 2016, which

beats our closest English-language competitor, and marks a 7% increase year on year. The 2016 Blue Jays regular season was the most-watched Blue Jays season in network history, reaching 20 million Canadians. In November 2016, Sportsnet delivered its largest World Series audience ever, with an average audience of 2.66 million viewers, which more than doubled Sportsnet’s previous all-time most-watched World Series game. Furthermore, Sportsnet achieved great success with the World Cup of Hockey, with an average audience of 1.1 million viewers for the entire tournament, and reached 15.5 million Canadians throughout the tournament.

• Launched Sportsnet NOW, one of the first mainstream sports TV channels in North America to be available direct to consumers, as well as Sportsnet 4K, which delivered all regular season Toronto Blue Jays home games in 4K. This will continue in 2017, during which we plan to bring sports fans more than 100 Blue Jays, NHL, and NBA games in 4K.

• Broadcast the first live NBA, NHL, and MLB games in 4K.

• Introduced the new NextBox 4K PVR, giving customers the ability to record up to eight 4K programs at one time and store up to 90 hours of 4K entertainment.

• Added six new programs to the 2016/2017 schedule for Canadian specialty channel VICELAND, including the network’s first-ever scripted series, Nirvana The Band The Show. This new original programming series is produced by VICE Media Canada Inc. (VICE) through VICE Studio Canada.

• Successfully completed the second year of our exclusive 12-year national NHL Agreement while bringing the NHL to more Canadians than ever before. Rogers Hometown Hockey returned for a third season during the 2016-2017 NHL season with hockey festivities and entertainment.

• Continued our commitment to deliver world-class Canadian content by adding two new original scripted series to our City lineup, with the millennial-focused comedy Second Jen and drama Bad Blood: The Vito Rizzuto Story.

 FOCUS ON INNOVATION AND NETWORK LEADERSHIP

• Extended our Ignite Gigabit Internet coverage to cover Rogers’ entire cable footprint, such that we offer the fastest widely available Internet speeds in our marketplace.

• Announced the long-term strategic partnership with Comcast Corporation to bring our customers a world-class IPTV service with the most advanced features available in the market today by deploying Comcast’s X1 IP-based video platform.

• Extended our 700 MHz LTE network reach to 91% of Canada’s population in 2016, compared to 78% in 2015. Extended our overall LTE network reach to 95% of Canada’s population in 2016, compared to 93% in 2015.

• Installed a new suite of technology and enterprise solutions to enable the most connected arena in Canada, the Rogers Place in Edmonton.

 GO TO MARKET AS ONE ROGERS

• Successfully worked as one company, showing we can bring our entire team together to achieve our goals. We demonstrated this by bringing Rogers Hometown Hockey to 150,000 Canadians, introducing low-cost Internet for more community housing residents, and bringing viewers our strongest primetime lineup ever, while delivering a strong year of NHL and Sportsnet.

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    37

MANAGEMENT’S DISCUSSION AND ANALYSIS

2017 OBJECTIVES

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

38    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

FINANCIAL AND OPERATING GUIDANCE

We provide consolidated annual guidance ranges for selected financial metrics on a consolidated basis consistent with the annual plans approved by our Board.

2016 ACHIEVEMENTS AGAINST GUIDANCE

The following table outlines guidance ranges that we had previously provided and our actual results and achievements for the selected full-year 2016 financial metrics.

(In millions of dollars, except percentages)	2015 Actuals		2016 Guidance Ranges		2016 Actuals			Achievement
Consolidated Guidance 1
Revenue		13,414		Increase of 1% to 3%		13,702	2.1%		✓
Adjusted operating profit 2		5,032		Increase of 1% to 3%		5,092	1.2%		✓
Additions to property, plant and equipment 3		2,440		2,300 to 2,400		2,352	n/m		✓
Free cash flow 2		1,676		Increase of 1% to 3%		1,705	1.7%		✓

Missed ×        Achieved ✓

n/m – not meaningful

¹  The table outlines guidance ranges for selected full-year 2016 consolidated financial metrics provided in our January 27, 2016 earnings release. Guidance ranges presented as percentages reflect percentage increases over 2015 actual results.

²  Adjusted operating profit and free cash flow are non-GAAP measures and should not be considered substitutes or alternatives for GAAP measures. These are not defined terms under IFRS and do not have standard meanings, so they may not be a reliable way to compare us to other companies. See “Non-GAAP Measures” for information about these measures, including how we calculate them.

³  Includes additions to property, plant and equipment for the Wireless, Cable, Business Solutions, Media, and Corporate segments and does not include expenditures on spectrum licences.

2017 FULL-YEAR CONSOLIDATED GUIDANCE

We expect steady growth in revenue and adjusted operating profit and lower additions to property, plant and equipment to drive higher free cash flow. We expect to have the financial flexibility to maintain our network advantages, to further reduce debt, and to continue to return cash to shareholders.

(In millions of dollars, except percentages)	2016 Actuals		2017 Guidance Ranges 1
Consolidated Guidance
Revenue		13,702		Increase of 3% to 5%
Adjusted operating profit 2		5,092		Increase of 2% to 4%
Additions to property, plant and equipment, net 3		2,352		2,250 to 2,350
Free cash flow 2		1,705		Increase of 2% to 4%

¹  Guidance ranges presented as percentages reflect percentage increases over full-year 2016 actual results.

²  Adjusted operating profit and free cash flow are non-GAAP measures and should not be considered substitutes or alternatives for GAAP measures. These are not defined terms under IFRS and do not have standard meanings, so may not be a reliable way to compare us to other companies. See “Non-GAAP Measures” for information about these measures, including how we calculate them.

³  Includes additions to property, plant and equipment for the Wireless, Cable, Business Solutions, Media, and Corporate segments net of proceeds on disposition, but does not include expenditures for spectrum licences.

The above table outlines guidance ranges for selected full-year 2017 consolidated financial metrics. These ranges take into consideration our current outlook and our actual results for 2016.

The purpose of the financial outlook is to assist investors, shareholders, and others in understanding certain financial metrics relating to expected 2017 financial results for evaluating the performance of our business. This information may not be appropriate for other purposes. Information about our guidance, including the various assumptions underlying it, is forward-looking and should be read in conjunction with “About Forward-Looking Information”, “Risks and Uncertainties Affecting Our Business”, and the related disclosure and information about various economic, competitive, and regulatory assumptions, factors, and risks that may cause our actual future financial and operating results to differ from what we currently expect.

We provide annual guidance ranges on a consolidated full-year basis that are consistent with annual full-year Board-approved plans. Any updates to our full-year financial guidance over the course of the year would only be made to the consolidated guidance ranges that appear above.

Key underlying assumptions

Our 2017 guidance ranges above are based on many assumptions including, but not limited to, the following material assumptions:

• continued intense competition consistent with our experience during the full-year 2016 in all segments in which we operate;

• a substantial portion of our US dollar-denominated expenditures for 2017 is hedged at an average exchange rate of $1.33/US$;

• key interest rates remain relatively stable throughout 2017;

• no significant additional regulatory developments, shifts in economic condition, or macro changes in the competitive environment affecting our business activities. We note that regulatory decisions expected during 2017 could materially alter underlying assumptions around our 2017 Wireless, Cable, Business Solutions, and/or Media results in the current and future years, the impacts of which are currently unknown and not factored into our guidance;

• the CRTC decision to require distributors to offer a basic entry-level television package capped at $25 per month, as well as channels above the basic tier on an “à la carte” basis and in smaller, reasonably priced packages, is not expected to materially impact our Cable revenue;

• the CRTC decision to significantly reduce interim rates for the capacity charge tariff component of wholesale high-speed access service pending approval of final rates is expected to have an impact on our Cable revenue;

• Wireless customers will continue to adopt, and upgrade to, higher-value smartphones and a similar proportion of customers will remain on term contracts;

• overall wireless market penetration in Canada is expected to grow in 2017 at a similar rate as in 2016;

• our relative market share in Wireless and Cable will not be negatively impacted;

• continued subscriber growth in Wireless and Cable Internet; moderating net losses in Cable Television subscribers; and a relatively stable Phone subscriber base;

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    39

MANAGEMENT’S DISCUSSION AND ANALYSIS

• in Business Solutions, continued declines in our legacy and off-net business, and the continued execution of our plan to grow higher-margin next generation IP- and cloud-based services;

• in Media, continued growth in Sportsnet and declines in our traditional media businesses, including our print publishing offerings; and

• with respect to additions to property, plant and equipment:

• we have rolled out LTE across the majority of our coverage area as well as deployed newly-acquired 700 MHz and AWS-1 spectrum; and

• we will make expenditures to prepare our network for our anticipated rollout of the Comcast X1 IPTV platform in early 2018.

Capability to Deliver Results

LEADING NETWORKS

WIRELESS

Rogers has one of the most extensive and advanced wireless networks in Canada, which:

• was the first LTE high-speed network in Canada;

• reached approximately 95% of the Canadian population as at December 31, 2016 on our LTE network alone;

• is supported by voice and data roaming agreements with international carriers in more than 200 destinations, including a growing number of LTE roaming operators; and

• includes network sharing arrangements with three regional wireless operators that operate in urban and rural parts of Canada.

We are continuously enhancing our IP service infrastructure for all of our wireless services. Advances in technology have transformed how our customers interact and how they use the variety of tools that are available to them in their personal and professional lives. Technology has also changed the way businesses operate.

Significant spectrum position

Our wireless services are supported by our significant wireless spectrum holdings in both high-band and low-band frequency ranges. As part of our network strategy, we expect to continue making significant capital investments in spectrum to:

• support the rapidly growing usage of wireless data services; and

• introduce new innovative network-enabled features and functionality.

Our spectrum holdings as at December 31, 2016 include:

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

40    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

We also have access to additional spectrum through the following network sharing agreements:

Type of spectrum	Kind of venture	Who it supports
2.3 GHz/3.5 GHz range	Inukshuk Wireless Partnership is a joint operation with BCE Inc. in which Rogers holds a 50% interest. Inukshuk holds 30 MHz (of which 20 MHz is usable) of FDD 2.3 GHz spectrum primarily in eastern Canada, including certain population centres in southern and eastern Ontario, southern Quebec, and smaller holdings in New Brunswick, Manitoba, Alberta, and British Columbia. Inukshuk also holds 3.5 GHz TDD licences (between 50-175 MHz) in most of the major population centres across Canada. The current fixed wireless LTE national network utilizes the jointly held 2.3 GHz and 3.5 GHz spectrum bands.	Mobile and fixed wireless subscribers.
850 MHz, 1900 MHz AWS spectrum	Three network-sharing arrangements to enhance coverage and network capabilities:
	•   with Manitoba Telecom Services, which covers 96% of the population across Manitoba;	3.5G / 4G HSPA+, 4G LTE subscribers.
	•   with TBayTel, that covers the combined base of customers in northwestern Ontario; and	3.5G / 4G HSPA+ subscribers.
	•   with Quebecor (Videotron) to provide LTE services across the province of Quebec.	3.5G / 4G LTE subscribers.

We have an option arrangement to buy additional spectrum, subject to commercial terms and regulatory approvals, as follows:

Type of spectrum	Transaction	Who it will support
AWS-1 spectrum	Part of a larger strategic transaction with Videotron, which could lead to the acquisition of Videotron’s Tier 3 Toronto AWS-1 spectrum.	4G LTE subscribers.

CABLE

Our expansive fibre and hybrid fibre-coaxial infrastructure delivers services to consumers and businesses in Ontario, New Brunswick, and Newfoundland and Labrador. We also operate a transcontinental fibre-optic network that extends over 46,000 route kilometres and is used to service enterprise customers, including government and other telecommunications service providers. We also use our extensive fibre network for backhaul for wireless cell site traffic. In Canada, the network extends coast-to-coast and includes local and regional fibre, transmission electronics and systems, hubs, points of presence, and IP routing and switching infrastructure. The network also extends to the US from Vancouver south to Seattle; from the Manitoba-Minnesota border through Minneapolis, Milwaukee, and Chicago; from Toronto through Buffalo; and from Montreal through Albany to New York City and Ashburn, allowing us to connect Canada’s largest markets, while also reaching key US markets for the exchange of data and voice traffic.

The network is structured to optimize performance and reliability and to allow for the simultaneous delivery of video, voice, and Internet over a single platform. It is generally constructed in rings that interconnect with distribution hubs, minimizing disruptions that can result from fibre cuts and other events.

Homes and commercial buildings are connected to our network through hybrid fibre-coaxial nodes. We connect the node to the network using fibre optic cable and the home to the node using coaxial cable. Using 860 MHz and 750 MHz of shared cable spectrum in Ontario and Atlantic Canada, respectively, we deliver video, voice, and broadband services to our customers. Hybrid fibre-coaxial node segmentation increases bandwidth per home passed by reducing the number of customers that share the cable spectrum.

We continually upgrade the network to improve capacity, enhance performance and reliability, reduce operating costs, and introduce new features and functionality. For example, we invest in:

• further segmenting our network nodes to reduce the number of homes sharing spectrum in each node;

• improving video signal compression by moving to more advanced video protocols;

• improving channel and on-demand capacity through switched digital video; and

• increasing the FTTH footprint by connecting more homes directly to fibre.

In early 2016, we completed the transitioning of customers receiving television signals over our analog broadcast channels to all-digital services, freeing up significant cable network capacity for additional features and services.

The analog-to-digital subscriber migration strengthened the customer experience and, in addition to allowing us to reclaim significant amounts of network capacity, enabled us to reduce future network operating and maintenance costs. The migration from analog to digital required additional spending as it involved fitting analog homes with digital converters and removing existing analog filtering equipment.

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    41

MANAGEMENT’S DISCUSSION AND ANALYSIS

Broadband Internet service is provided using a DOCSIS CCAP 3.0/3.1 platform, which combines multiple radio frequency channels onto one access point at the customer premise, delivering exceptional performance. The bandwidth of our Internet service offerings has increased 55-fold in the last 10 years as we bring new technologies to market when they become available. This track record of investing in our networks and demonstrating the capability to deploy best-in-class service is one of our key strategies for ensuring that we stay competitive with other service providers that provide Internet service into homes and businesses over copper facilities. As at December 31, 2016, 100% of our cable network has been upgraded to DOCSIS CCAP technology supporting DOCSIS 3.1 and Ignite Gigabit Internet.

We continue to invest in and improve our cable network; for example, with technology to support gigabit Internet speeds, Rogers 4K TV, our 4K PVR set-top box, and a significant commitment to live broadcasting in 4K, including all regular season Toronto Blue Jays home games in 2017 and numerous NHL and NBA games.

Voice-over-cable telephony services are provided over a dedicated DOCSIS network. Our offerings ensure a high quality of service by including network redundancy as well as network and customer premise backup powering. Our phone service includes a rich set of features, such as TV Call Display, three-way calling, and advanced voicemail features that allow customers to be notified of, and listen to, their home voicemail on their wireless phone or over the Internet.

BUSINESS SOLUTIONS

We own and operate some of the most advanced networks and data centres in Canada. We leverage our national fibre, cable, and wireless networks and data centre infrastructure to enable businesses to deliver greater value to their customers through proactive network monitoring and problem resolution with enterprise-level reliability, security, and performance. We operate our own robust, facilities-based, transcontinental network with 100% digital fibre optic backbone and strategic interconnect points to the US and overseas for cross-border and international coverage. Our primary and secondary Network Operation Centres proactively monitor Rogers’ networks to mitigate the risk of service interruptions and allow for rapid responses to any outages.

Our data centres provide guaranteed uptime and expertise in collocation, cloud, and managed services solutions. We own and operate 16 state-of-the-art, highly reliable, certified data centres across Canada, including:

• Canada’s first Tier III Design and Construction certified multi-tenant facility, opened in 2012 in Toronto;

• Alberta’s first Tier III certified data centre, opened in 2014; and

• a third Tier III certified data centre in Ottawa, opened in 2015.

POWERFUL BRANDS

The Rogers brand has strong national recognition through our:

• established networks;

• extensive distribution;

• recognizable media content and programming;

• advertising;

• event sponsorships, including the Rogers Cup;

• community investment, including Rogers Youth Fund; and

• naming rights to some of Canada’s landmark buildings.

We also own or utilize some of Canada’s most recognized brands including:

• the wireless brands of Rogers, Fido, and chatr;

• over 20 TV stations and specialty channels, including Sportsnet, FX (Canada) and FXX (Canada), OMNI, VICELAND, and City;

• publications, including Maclean’s, Chatelaine, Today’s Parent, Flare, and Hello! Canada;

• Texture by Next Issue, with a catalogue of over 230 premium Canadian and US magazine titles;

• over 50 radio stations, including 98.1 CHFI, 680 NEWS, Sportsnet The FAN, KiSS, JACK FM, and SONiC;

• major league sports teams, including the Toronto Blue Jays, and teams owned by MLSE, such as the Toronto Maple Leafs, the Toronto Raptors, and Toronto FC;

• an exclusive 12-year agreement with the NHL that allows us to deliver unprecedented coverage of professional hockey;

• TSC, the leading nationally broadcast, interactive, multi-channel Canadian retailer; and

• VICE, a global youth media company that produces and distributes global online video and text content.

WIDESPREAD PRODUCT DISTRIBUTION

WIRELESS

We distribute our wireless products nationally using various channels, including:

• an extensive independent dealer network;

• company-owned Rogers, Fido, and chatr retail stores;

• major retail chains and convenience stores;

• other distribution channels, such as WOW! mobile boutique, as well as Wireless Wave and TBooth Wireless through our ownership interest in Glentel;

• customer self-serve using rogers.com, fido.ca, chatrwireless.com, and e-commerce sites;

• our call centres; and

• outbound telemarketing.

CABLE

We distribute our cable products using various channels, including:

• company-owned Rogers and Fido retail stores;

• customer self-serve using rogers.com and fido.ca;

• our call centres, outbound telemarketing, and door-to-door agents;

• major retail chains; and

• an extensive network of third-party retail locations.

BUSINESS SOLUTIONS

Our sales team and third-party retailers sell Business Solutions services to the enterprise, public sector, and carrier wholesale markets. An extensive network of third-party channel distributors deals with IT integrators, consultants, local service providers, and other indirect sales relationships. This diverse approach gives greater breadth of coverage and allows for strong sales growth for next generation services.

42    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

FIRST CLASS MEDIA CONTENT

We deliver highly sought-after sports content enhanced by the following initiatives:

• an exclusive national 12-year agreement with the NHL, which began with the 2014-2015 NHL season and allows us to deliver unprecedented coverage of North American professional hockey across television, smartphones, tablets, and the Internet;

• Rogers NHL GameCentre LIVE, an upgraded online destination for enhancing NHL action on any screen;

• GamePlus, an innovative and interactive experience within Rogers NHL GameCentre LIVE that includes revolutionary camera angles, exclusive interviews and analysis, and original video-on-demand content;

• Rogers Hometown Hockey Tour, which brings hockey-themed festivities and outdoor viewing parties to 24 communities across Canada over the 2016-2017 NHL season;

• the MLB Network, a 24-hour network dedicated to baseball, brought to Canada for the first time on Rogers digital cable;

• an 8-year, multi-platform broadcast rights agreement with MLB Properties and MLB Advanced Media to show live and in-progress games and highlights within Canada through 2021;

• a 10-year multi-platform agreement that commenced in August 2014, which makes Rogers the exclusive wholesaler and a distributor of World Wrestling Entertainment’s (WWE) flagship programming in Canada;

• exclusive broadcasting and distribution rights of the Toronto Blue Jays through our ownership of the team; and

• delivery of our exclusive Canadian English language broadcast and mobile rights for the 2016 World Cup of Hockey.

CUSTOMER EXPERIENCE

We are committed to providing our customers with the best experience possible. To do this, we have invested in several different methods, such as:

• contact centres located throughout Canada;

• an innovative Integrated Voice Response (IVR) system that can take calls in four languages, including English, French, Mandarin, and Cantonese;

• self-serve options, including:

• the ability for Fido and Rogers consumer customers to complete price plan changes and hardware upgrades online;

• simplified login, allowing Fido customers to log in to their accounts online or through the Fido MyAccount app using their Facebook login credentials, eliminating the need to remember multiple login credentials and making self-service easier to access;

• the ability for customers to install their Internet and TV products without the need for a technician visiting their residence; and

• Rogers EnRoute, a new tool that saves customers time by giving them the ability to track on their phone when a technician will arrive for an installation or service call;

• customer care available over Facebook Messenger (a global first for a telecommunications company) and Twitter (among the first globally);

• Family Data Manager, a data manager tool that allows Wireless customers to manage and customize their data usage in real-time through MyRogers;

• a simplified mobile bill, making it easier for customers to read and understand their monthly charges;

• Roam Like Home and Fido Roam, worry-free wireless roaming allowing Canadians to use their wireless plan like they do at home when traveling to included destinations; and

• Rogers Assist, an app that allows all Rogers employees to submit an issue to customer care on behalf of their friends, family, and acquaintances.

ENGAGED PEOPLE

For our team of approximately 25,200 employees, we strive to create a great workplace, focusing on all aspects of the employee experience, which include:

• engaging employees and building high-performing teams through initiatives including engagement surveys and leadership development programs;

• aiming to attract and retain top talent through effective training and development, performance-driven employee recognition programs, and career progression programs for front-line employees;

• maintaining our commitment to diversity and inclusion; and

• providing a safe, collaborative, and agile workplace that provides employees the tools and training to be successful.

FINANCIAL STRENGTH AND FLEXIBILITY

We have an investment-grade balance sheet, conservative debt leverage, and substantial available liquidity of $2.7 billion as at December 31, 2016. Our capital resources consist primarily of cash provided by operating activities, cash and cash equivalents, available lines of credit, funds available under our accounts receivable securitization program, and issuances of long-term debt. We also own approximately $1,047 million of marketable equity securities in publicly-traded companies as at December 31, 2016.

The following information is forward-looking and should be read in conjunction with “About Forward-Looking Information”, “Financial and Operating Guidance”, “Risks and Uncertainties Affecting Our Business”, and our other disclosures about various economic, competitive, and regulatory assumptions, factors, and risks that could cause our actual future financial and operating results to differ from those currently expected.

Similar to 2016, we anticipate generating a net cash surplus in 2017 from our cash provided by operating activities. We expect that we will have sufficient capital resources to satisfy our cash funding requirements in 2017, including the funding of dividends on our common shares, repayment of maturing long-term debt, and other financing activities, investing activities, and other requirements. This takes into account our opening bank advance balance, cash provided by operating activities, the amount available under our $2.8 billion bank credit facilities, our accounts receivable securitization program, and funds available to us from the issuance of other bank, publicly issued, or private placement debt from time to time. As at December 31, 2016, there were no significant restrictions on the flow of funds between Rogers and its subsidiary companies.

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    43

MANAGEMENT’S DISCUSSION AND ANALYSIS

We believe we can satisfy foreseeable additional funding requirements by issuing additional debt financing, which, depending on market conditions, could include restructuring our existing bank credit and letter of credit facilities, entering into new bank credit facilities, issuing public or private debt, amending the terms of our accounts receivable securitization program, or issuing equity. We may also opportunistically refinance a portion of existing debt depending on market conditions and other factors. There is no assurance, however, that these financing initiatives will or can be done as they become necessary.

HEALTHY TRADING VOLUMES AND DIVIDENDS

Our Class B Non-Voting common shares actively trade on the TSX and NYSE with a combined average daily trading volume of approximately 1.1 million shares in 2016. In addition, our Class A Voting common shares trade on the TSX. Dividends are the same on both classes of shares. In 2016, each share paid an annualized dividend of $1.92.

44    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

2016 Financial Results

See “Accounting Policies” in this MD&A and the notes to our 2016 Audited Consolidated Financial Statements for important accounting policies and estimates as they relate to the following discussion.

We use several key performance indicators to measure our performance against our strategy and the results of our peers and

competitors. Many of these are not defined terms under IFRS and should not be considered alternative measures to net income or any other financial measure of performance under IFRS. See “Key Performance Indicators” and “Non-GAAP Measures” for more information.

SUMMARY OF CONSOLIDATED RESULTS

	Years ended December 31
(In millions of dollars, except margins and per share amounts)	2016			2015			% Chg
Revenue
Wireless		7,916			7,651			3
Cable		3,449			3,465			–
Business Solutions		384			377			2
Media		2,146			2,079			3
Corporate items and intercompany eliminations		(193	)		(158	)		22
Revenue		13,702			13,414			2
Adjusted operating profit
Wireless		3,285			3,239			1
Cable		1,674			1,658			1
Business Solutions		123			116			6
Media		169			172			(2	)
Corporate items and intercompany eliminations		(159	)		(153	)		4
Adjusted operating profit 1		5,092			5,032			1
Adjusted operating profit margin 1		37.2%			37.5%			(0.3 pts	)
Net income 2		835			1,342			(38	)
Basic earnings per share 2	$	1.62		$	2.61			(38	)
Diluted earnings per share 2	$	1.62		$	2.60			(38	)
Adjusted net income 1, 2		1,481			1,479			–
Adjusted basic earnings per share 1, 2	$	2.88		$	2.87			–
Adjusted diluted earnings per share 1, 2	$	2.86		$	2.86			–
Additions to property, plant and equipment		2,352			2,440			(4	)
Cash provided by operating activities		3,957			3,747			6
Free cash flow 1		1,705			1,676			2
Total service revenue 3		13,027			12,649			3

¹  Adjusted operating profit, adjusted operating profit margin, adjusted net income, adjusted basic and diluted earnings per share, and free cash flow are non-GAAP measures and should not be considered substitutes or alternatives for GAAP measures. These are not defined terms under IFRS and do not have standard meanings, so may not be a reliable way to compare us to other companies. See “Non-GAAP Measures” for information about these measures, including how we calculate them.

²  As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See “Accounting Policies” for more information.

³ As defined. See “Key Performance Indicators”.

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    45

MANAGEMENT’S DISCUSSION AND ANALYSIS

KEY CHANGES IN FINANCIAL RESULTS THIS YEAR COMPARED TO 2015

REVENUE

Wireless service revenue increased this year primarily as a result of a larger subscriber base and the continued adoption of higher-postpaid-ARPA-generating Rogers Share Everything plans.

Cable revenue decreased marginally this year as the impacts of a higher subscriber base for our Internet products and the movement of customers to higher-end speed and usage tiers were more than offset by Television subscriber losses and the impact of Phone pricing packages.

Business Solutions revenue increased this year primarily as a result of the growth in on-net next generation services, including our data centre businesses, which more than offset the continued reduction in lower margin, off-net legacy revenue.

Media revenue increased this year primarily as a result of higher sports-related revenue, driven by the success of Sportsnet and the Toronto Blue Jays, partially offset by continued softness in publishing and radio advertising.

ADJUSTED OPERATING PROFIT

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

Cable adjusted operating profit increased this year as a result of lower operating expenses.

Business Solutions adjusted operating profit increased this year as a result of the increase in revenues described above.

Media adjusted operating profit decreased this year primarily as a result of higher sports-related costs, partially offset by lower conventional broadcast TV, publishing, and radio costs and the higher revenue described above.

NET INCOME AND ADJUSTED NET INCOME

Net income decreased this year primarily as a result of a $484 million charge recognized on our IPTV product, a $140 million loss associated with the writedown of our shomi joint venture, and higher restructuring, acquisition and other costs.

Adjusted net income increased marginally this year as a result of higher adjusted operating profit, partially offset by higher other expense and higher income tax expense.

46    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

  WIRELESS

ROGERS IS CANADA’S LARGEST PROVIDER OF WIRELESS COMMUNICATIONS SERVICES

As at December 31, 2016, we had:

• approximately 10.3 million subscribers; and

• approximately 34% subscriber share and 33% revenue share of the Canadian wireless market.

WIRELESS FINANCIAL RESULTS

	Years ended December 31
(In millions of dollars, except margins)	2016		2015 1		% Chg
Revenue
Service revenue		7,258		6,902		5
Equipment revenue		658		749		(12	)
Revenue		7,916		7,651		3
Operating expenses
Cost of equipment 2		1,947		1,845		6
Other operating expenses		2,684		2,567		5
Operating expenses		4,631		4,412		5
Adjusted operating profit		3,285		3,239		1
Adjusted operating profit margin as a % of service revenue		45.3%		46.9%		(1.6 pts	)
Additions to property, plant and equipment		702		866		(19	)

¹  The operating results of Mobilicity are included in the Wireless results of operations from the date of acquisition on July 2, 2015.

²  Includes the cost of equipment revenue and direct channel subsidies.

WIRELESS SUBSCRIBER RESULTS ¹

(In thousands, except churn, postpaid ARPA, and blended ARPU)	Years ended December 31
	2016		2015		Chg
Postpaid
Gross additions		1,521		1,354		167
Net additions		286		106		180
Total postpaid subscribers 2		8,557		8,271		286
Churn (monthly)		1.23%		1.27%		(0.04 pts	)
ARPA (monthly)	$	117.37	$	110.74	$	6.63
Prepaid
Gross additions		761		677		84
Net additions		111		75		36
Total prepaid subscribers 2, 3		1,717		1,606		111
Churn (monthly)		3.32%		3.45%		(0.13 pts	)
Blended ARPU (monthly)	$	60.42	$	59.71	$	0.71

¹  Subscriber counts, subscriber churn, postpaid ARPA, and blended ARPU are key performance indicators. See “Key Performance Indicators”.

²  As at end of period.

³  On July 2, 2015, we acquired approximately 154,000 Wireless prepaid subscribers as a result of our acquisition of Mobilicity, which are not included in net additions, but do appear in the ending total balance for December 31, 2015.

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    47

MANAGEMENT’S DISCUSSION AND ANALYSIS

REVENUE

Our revenue depends on the size of our subscriber base, the revenue per account, the revenue from the sale of wireless devices, and other equipment revenue.

Service revenue

Service revenue includes revenue derived from voice and data services from:

• postpaid and prepaid monthly fees;

• data usage;

• airtime;

• long distance charges;

• essential services charges;

• inbound and outbound roaming charges; and

• certain fees.

The 5% increase in service revenue this year was a result of:

• larger postpaid and prepaid subscriber bases. The overall increase in service revenue pertaining to the increased prepaid subscriber base was partially a result of our mid-2015 acquisition of Mobilicity; and

• the continued adoption of customer-friendly Rogers Share Everything plans and the general increase in data usage noted on these types of plans. These plans generate higher postpaid ARPA, bundle in various calling features and long distance, provide the ability to pool and manage data usage across multiple devices, and grant access to our other offerings, such as Roam Like Home, Rogers NHL GameCentre LIVE, Spotify, and Texture by Next Issue.

The 6% increase in postpaid ARPA was a result of the continued adoption of Rogers Share Everything plans relative to the number of subscriber accounts as customers have increasingly utilized the advantages of premium offerings and access their shareable plans with multiple devices on the same account.

The 1% increase in blended ARPU this year was a result of:

• increased service revenue as discussed above; partially offset by

• the impact of expanding our lower-blended-ARPU-generating prepaid subscriber base relative to our total subscriber base as a result of our acquisition of Mobilicity and the general increase in prepaid net additions over the past year.

We believe the increases in gross and net additions to our postpaid subscriber base and the lower postpaid churn this year were results of our strategic focus on enhancing the customer experience by providing higher-value offerings, such as our Share Everything plans, improving our customer service, and continually increasing the quality of our network. We believe the increases in gross and net additions to our prepaid subscriber base and the lower prepaid churn were a result of our continued focus on the promotion of our chatr offerings.

Equipment revenue

Equipment revenue (net of subsidies) includes revenue from sales to:

• independent dealers, agents, and retailers; and

• subscribers through fulfillment by Wireless’ customer service groups, websites, telesales, and corporate stores.

The 12% decrease in revenue from equipment revenue this year was a result of:

• larger average subsidies given to customers who purchased devices; and

• a 4% decrease in device upgrades by existing subscribers; partially offset by

• higher gross additions.

48    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

OPERATING EXPENSES

We assess operating expenses in two categories:

• the cost of wireless handsets and equipment; and

• all other expenses involved in day-to-day operations, to service existing subscriber relationships, and to attract new subscribers.

The 6% increase in the cost of equipment this year was a result of:

• a shift in the product mix of device sales towards higher-cost smartphones; and

• higher gross additions; partially offset by

• the decrease in device upgrades by existing subscribers, as discussed above.

The 5% increase in other operating expenses this year was a result of:

• higher service costs to support the higher service revenue discussed above; and

• higher advertising costs; partially offset by

• lower commissions.

ADJUSTED OPERATING PROFIT

The marginal increase in adjusted operating profit this year was a result of higher revenue, partially offset by higher operating expenses, as discussed above.

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    49

MANAGEMENT’S DISCUSSION AND ANALYSIS

  CABLE

ONE OF CANADA’S LEADING PROVIDERS OF HIGH-SPEED INTERNET, CABLE TELEVISION, AND PHONE SERVICES

As at December 31, 2016, we had:

• approximately 2.1 million high-speed Internet subscribers;

• approximately 1.8 million Television subscribers – approximately 31% of Canadian cable television subscribers;

• approximately 1.1 million Phone subscribers; and

• a network passing approximately 4.2 million homes in Ontario, New Brunswick, and Newfoundland and Labrador.

CABLE FINANCIAL RESULTS

	Years ended December 31
(In millions of dollars, except margins)	2016		2015		% Chg
Revenue
Internet		1,495		1,343		11
Television		1,562		1,669		(6	)
Phone		386		445		(13	)
Service revenue		3,443		3,457		–
Equipment revenue		6		8		(25	)
Revenue		3,449		3,465		–
Operating expenses
Cost of equipment		3		4		(25	)
Other operating expenses		1,772		1,803		(2	)
Operating expenses		1,775		1,807		(2	)
Adjusted operating profit		1,674		1,658		1
Adjusted operating profit margin		48.5%		47.8%		0.7 pts
Additions to property, plant and equipment		1,085		1,030		5

CABLE SUBSCRIBER RESULTS ¹

	Years ended December 31
(In thousands)	2016			2015			Chg
Internet
Net additions		97			37			60
Total Internet subscribers 2		2,145			2,048			97
Television
Net losses		(76	)		(128	)		52
Total Television subscribers 2		1,820			1,896			(76	)
Phone
Net additions (losses)		4			(60	)		64
Total Phone subscribers 2		1,094			1,090			4
Cable homes passed 2		4,241			4,153			88
Total service units 3
Net additions (losses)		25			(151	)		176
Total service units 2		5,059			5,034			25

¹  Subscriber count is a key performance indicator. See “Key Performance Indicators”.

²  As at end of period.

³  Includes Internet, Television, and Phone subscribers.

REVENUE

Internet revenue includes:

• monthly subscription and additional use service revenue from residential, small business, and wholesale Internet access subscribers; and

• modem rental fees.

Television revenue includes:

• digital and analog cable services – comprised of:

• basic cable service fees;

• tier service fees;

• access fees for use of channel capacity by third parties; and

• premium and specialty service subscription fees, including pay-per-view service fees and video-on-demand service fees; and

• rentals of digital cable set-top boxes.

50    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

Phone revenue includes revenue from residential and small business local telephony service from:

• monthly service fees;

• calling features such as voicemail, call waiting, and caller ID; and

• long distance calling.

The marginal decrease in revenue this year was a result of:

• Television subscriber losses over the past year; partially offset by

• the impact and timing of general pricing increases implemented over the past year, net of promotional pricing;

• a higher subscriber base for our Internet products; and

• the movement of Internet customers to higher speed and usage tiers.

Internet revenue

The 11% increase in Internet revenue this year was a result of:

• a larger Internet subscriber base;

• general movement of customers to higher speed and usage tiers of our Ignite broadband Internet offerings; and

• the net impact of changes in Internet service pricing; partially offset by

• a decline in additional usage-based revenue as portions of the subscriber base move to higher-value, unlimited usage plans; and

• lower wholesale revenue as a result of a CRTC decision that reduced access service rates.

Television revenue

The 6% decrease in Television revenue this year was a result of:

• the decline in Television subscribers over the past year primarily associated with the changing television consumption environment; partially offset by

• the impact and timing of general pricing increases implemented over the past year, net of promotional pricing.

Phone revenue

The 13% decrease in Phone revenue this year was a result of:

• the impact of pricing packages; partially offset by

• less promotional pricing provided to subscribers as a result of the pricing packages described above.

Equipment revenue

Equipment revenue includes revenue generated from the sale of digital cable set-top boxes and Internet modems.

• The decrease in equipment revenue this year was a result of a decrease in cable set-top box sales compared to the prior year.

OPERATING EXPENSES

We assess Cable operating expenses in three categories:

• the cost of programming;

• the cost of equipment revenue (cable digital set-top boxes and Internet modem equipment); and

• all other expenses involved in day-to-day operations, to service and retain existing subscriber relationships, and to attract new subscribers.

The 2% decrease in operating expenses this year was a result of:

• lower service and programming costs, partially due to a vendor credit received this year;

• relative shifts in product mix to higher-margin Internet from conventional Television broadcasting; and

• various cost efficiency and productivity initiatives; partially offset by

• increased advertising, partially related to our Ignite Internet and 4K TV offerings.

ADJUSTED OPERATING PROFIT

The 1% increase in adjusted operating profit this year was a result of the revenue and expense changes described above.

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    51

MANAGEMENT’S DISCUSSION AND ANALYSIS

  BUSINESS SOLUTIONS

LEADING-EDGE WIRELINE TELECOM AND DATA COMMUNICATIONS SERVICES TO CANADIAN BUSINESSES

As at December 31, 2016, Business Solutions:

• sold to enterprises and public sector;

• sold to other carriers on a wholesale basis;

• had 9,300 on-net fibre connected buildings; and

• had fibre passing close to an additional 24,500 near-net buildings.

BUSINESS SOLUTIONS FINANCIAL RESULTS

	Years ended December 31
(In millions of dollars, except margins)	2016		2015		% Chg
Revenue
Next generation		307		288		7
Legacy		71		85		(16	)
Service revenue		378		373		1
Equipment revenue		6		4		50
Revenue		384		377		2
Operating expenses		261		261		–
Adjusted operating profit		123		116		6
Adjusted operating profit margin		32.0%		30.8%		1.2pts
Additions to property, plant and equipment		146		187		(22	)

Business Solutions generates revenue from the provision of wireline communications services and the sale of related equipment to enterprises and public sector at retail rates and to other telecommunications carriers on a wholesale basis.

Next generation revenue is generated by the provision of high-speed, high-reliability data and voice communications, provided on Rogers’ advanced IP, Ethernet, and cloud platforms, and mainly through Rogers’ extensive communications network and data centre infrastructure.

Legacy revenue is generated mainly by circuit-switched local and long distance voice services and legacy data services, provided over time-division multiplexing (TDM) and prior generation data platforms, with client access often delivered using leased third-party network elements and tariffed ILEC services.

Business Solutions continues to focus primarily on next generation IP-based services, leveraging higher margin on-net and near-net service revenue opportunities, and using existing network facilities to expand offerings to the enterprise, public sector, and carrier wholesale markets. Business Solutions also provides voice and data communications and advanced services, including data centres, cloud computing, fibre networking, and professional services.

REVENUE

The 1% increase in service revenue this year was a result of:

• the continuing execution of our plan to grow higher margin, next generation on-net and near-net IP-based services revenue; partially offset by

• the continued decline in the legacy and off-net voice business, a trend we expect to continue as we focus the business on next generation on-net and near-net opportunities and customers move to more advanced and cost-effective IP-based services and solutions.

Next generation services, which include our data centre operations, represented 81% (2015 – 77%) of total service revenue during the year.

OPERATING EXPENSES

Operating expenses this year were in line with 2015.

ADJUSTED OPERATING PROFIT

The 6% increase in adjusted operating profit this year was a result of the revenue changes discussed above.

52    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

  MEDIA

DIVERSIFIED CANADIAN MEDIA COMPANY

We have a broad portfolio of media properties, which most significantly includes:

• sports media and entertainment, such as the Toronto Blue Jays;

• our exclusive national 12-year NHL Agreement;

• category-leading television and radio broadcasting properties;

• multi-platform televised and online shopping;

• digital media; and

• publishing.

MEDIA FINANCIAL RESULTS

	Years ended December 31
(In millions of dollars, except margins)	2016		2015		% Chg
Revenue		2,146		2,079		3
Operating expenses		1,977		1,907		4
Adjusted operating profit		169		172		(2	)
Adjusted operating profit margin		7.9%		8.3%		(0.4pts	)
Additions to property, plant and equipment		62		60		3

REVENUE

Media revenue is earned from:

• advertising sales across its television, radio, publishing, and digital media properties;

• subscriptions to televised products;

• retail product sales;

• ticket sales, receipts of MLB revenue sharing, and concession sales; and

• circulation of published products.

The 3% increase in revenue this year was a result of:

• higher sports-related revenue driven by the strength of Sportsnet and the success of the Toronto Blue Jays; and

• higher digital advertising revenue; partially offset by

• lower advertising revenues across publishing and radio.

OPERATING EXPENSES

We assess Media operating expenses by:

• the cost of broadcast content, including sports programming and production;

• the cost of retail products sold by TSC and Sports Media and Entertainment;

• Toronto Blue Jays player payroll; and

• all other expenses involved in day-to-day operations.

The 4% increase in operating expenses this year was a result of:

• higher sports-related costs; and

• higher digital media costs; partially offset by

• lower conventional broadcast TV and radio costs, partially due to cost savings from operating efficiencies and job cuts during the first half of 2016; and

• lower publishing costs due to the strategic shift related to magazine content announced earlier this year.

ADJUSTED OPERATING PROFIT

The 2% decrease in adjusted operating profit this year was a result of the revenue and expense changes described above.

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    53

MANAGEMENT’S DISCUSSION AND ANALYSIS

ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT

Additions to property, plant and equipment include costs associated with acquiring property, plant and equipment and placing it into service. The telecommunications business requires extensive and continual investments, including investment in new technologies and the expansion of capacity and geographical reach. The expenditures related to the acquisition of spectrum licences are not included in additions to property, plant and equipment and do not factor into the calculation of free cash flow or capital intensity. See “Managing Our Liquidity and Financial Resources”, “Key Performance Indicators”, and “Non-GAAP Measures” for more information.

Additions to property, plant and equipment are significant and have a material impact on our cash flows, therefore our management teams focus on planning, funding, and managing them.

Additions to property, plant and equipment before related changes to non-cash working capital represent capital assets to which we took title. We believe this measure best reflects our cost of property, plant and equipment in a given period and is a simpler measure for comparing between periods.

	Years ended December 31
(In millions of dollars, except capital intensity)	2016		2015		% Chg
Additions to property, plant and equipment
Wireless		702		866		(19	)
Cable		1,085		1,030		5
Business Solutions		146		187		(22	)
Media		62		60		3
Corporate		357		297		20
Total additions to property, plant and equipment 1		2,352		2,440		(4	)
Capital intensity 2		17.2%		18.2%		(1.0 pts	)

¹  Additions to property, plant and equipment do not include expenditures on spectrum licences.

²  As defined. See “Key Performance Indicators”.

WIRELESS

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

CABLE

The increase in additions to property, plant and equipment in Cable this year was a result of greater investment in network infrastructure to further improve the reliability and quality of the network and to improve the capacity of our Internet platform to deliver gigabit Internet speeds, partially offset by lower purchases of our next generation NextBox digital set-top box along with lower investment in information technology compared to last year.

BUSINESS SOLUTIONS

The decrease in additions to property, plant and equipment in Business Solutions this year was a result of greater investments to our network and data centre last year.

MEDIA

The increase in additions to property, plant and equipment in Media this year was a result of higher investments made to our broadcast facilities and IT infrastructure.

CORPORATE

The increase in additions to property, plant and equipment in Corporate this year was a result of higher information technology costs as well as higher spending on premise improvements at our various offices.

CAPITAL INTENSITY

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

54    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

REVIEW OF CONSOLIDATED PERFORMANCE

This section discusses our net income and other expenses that do not form part of the segment discussions above.

	Years ended December 31
(In millions of dollars)	2016		2015			% Chg
Adjusted operating profit 1		5,092		5,032			1
Deduct (add):
Stock-based compensation		61		55			11
Depreciation and amortization		2,276		2,277			–
Impairment of assets and related onerous contract charges		484		–			–
Restructuring, acquisition and other		160		111			44
Finance costs		761		774			(2	)
Other expense (income) 2		191		(4	)		n/m
Income tax expense 2		324		477			(32	)
Net income 2		835		1,342			(38	)

¹  Adjusted operating profit is a non-GAAP measure and should not be considered a substitute or alternative for GAAP measures. It is not a defined term under IFRS and does not have a standard meaning, so may not be a reliable way to compare us to other companies. See “Non-GAAP Measures” for information about this measure, including how we calculate it.

²  As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See “Accounting Policies” for more information.

ADJUSTED OPERATING PROFIT

See “Key Changes in Financial Results This Year Compared to 2015” for a discussion of the increase in adjusted operating profit this year.

STOCK-BASED COMPENSATION

Our stock-based compensation, which includes stock options (with stock appreciation rights), restricted share units (RSUs), and deferred share units (DSUs), is generally determined by:

• the vesting of stock options and share units; and

• changes in the market price of RCI Class B shares; offset by

• the impact of certain derivative instruments to hedge a portion of the stock price appreciation risk for our stock-based compensation program. See “Financial Risk Management” for information about equity derivatives.

	Years ended December 31
(In millions of dollars)	2016			2015
Impact of vesting		70			57
Impact of change in price		24			20
Equity derivatives, net of interest receipt		(33	)		(22	)
Total stock-based compensation		61			55

Stock-based compensation increased to $61 million in 2016 (2015 – $55 million) primarily as a result of the vesting of additional stock-based compensation to employees, directors, and key executives.

We had a liability of $189 million as at December 31, 2016 (2015 – $157 million) related to stock-based compensation recorded at its fair value, including stock options, RSUs, and DSUs.

We paid $69 million in 2016 (2015 – $73 million) to holders of stock options, RSUs, and DSUs upon exercise.

DEPRECIATION AND AMORTIZATION

	Years ended December 31
(In millions of dollars)	2016		2015		% Chg
Depreciation		2,183		2,117		3
Amortization		93		160		(42	)
Total depreciation and amortization		2,276		2,277		–

Depreciation and amortization was stable this year primarily as a result of:

• the overall increase in additions to property, plant and equipment over the last several years, which has resulted in more depreciable assets; offset by

• certain intangible assets that were fully amortized; and

• ceasing amortization on certain brand name assets in 2016.

IMPAIRMENT OF ASSETS AND RELATED ONEROUS CONTRACT CHARGES

During the year ended December 31, 2016, we recorded an aggregate $484 million impairment charge and onerous contract charge related to our IPTV product.

(In millions of dollars)	Year ended December 31, 2016
Impairment of property, plant and equipment		412
Onerous contracts and other		72
Total impairment of assets and related onerous contract charges		484

These charges related to our decision to discontinue developing our IPTV product as a result of our decision to develop a long-term relationship with Comcast and deploy their X1 IP-based video platform. The onerous contract charges primarily relate to the remaining contractual liabilities for the development of our IPTV product and were recognized in accounts payable and accrued liabilities. We did not record an impairment charge in 2015.

RESTRUCTURING, ACQUISITION AND OTHER

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

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    55

MANAGEMENT’S DISCUSSION AND ANALYSIS

FINANCE COSTS

	Years ended December 31
(In millions of dollars)	2016			2015			% Chg
Interest on borrowings 1		758			761			–
Interest on post-employment benefits liability		9			11			(18	)
Loss on repayment of long-term debt		–			7			(100	)
Loss on foreign exchange		13			11			18
Change in fair value of derivatives		(16	)		3			n/m
Capitalized interest		(18	)		(29	)		(38	)
Other		15			10			50
Total finance costs		761			774			(2	)

¹  Borrowings include long-term debt and short-term borrowings associated with our accounts receivable securitization program.

Interest on borrowings

Interest on borrowings decreased this year as a result of a lower amount of debt outstanding compared to 2015. See “Managing Our Liquidity and Financial Resources” for more information about our debt and related finance costs.

Loss on repayment of long-term debt

We recognized a $7 million loss on repayment of long-term debt in 2015 related to debt derivatives associated with the repayment or repurchase of certain senior notes in March 2015. These losses were deferred in the hedging reserve until maturity of the notes and were then recognized in net income. The loss relates to transactions in 2013 wherein foreign exchange rates on the related debt derivatives were updated to then-current rates.

Loss on foreign exchange

During 2016, all of our US dollar-denominated senior notes and debentures were hedged for accounting purposes. Foreign exchange losses recognized in 2016 were primarily related to our US dollar-denominated credit facility borrowings, which were not designated as hedges for accounting purposes due to the short-term nature of the borrowings. Foreign exchange losses recognized in 2015 were primarily related to the impact of fluctuations in the value of the Canadian dollar relative to the US dollar on working capital, consisting mainly of the unhedged portion of our US dollar-denominated accounts payable.

See “Managing Our Liquidity and Financial Resources” for more information about our debt and related finance costs.

OTHER EXPENSE (INCOME)

The increase in other expense this year was primarily a result of equity losses recognized on certain of our joint ventures. During the year, we announced the decision to wind down our shomi joint venture and recognized a loss of $140 million associated with the writedown of the investment and our share of the estimated cost of the remaining obligations of shomi. Additionally, we recognized a net loss of $11 million this year on divestitures pertaining to investments. In 2015, we recognized a $74 million gain on our acquisition of Mobilicity, partially offset by a $72 million loss related to our share of an obligation to purchase at fair value the non-controlling interest in one of our joint ventures.

INCOME TAX EXPENSE

The table below shows the difference between income tax expense computed by applying the statutory income tax rate to income before income tax expense and the actual income tax expense for the year:

	Years ended December 31
(In millions of dollars, except tax rates)	2016			2015
Statutory income tax rate		26.6%			26.5%
Income before income tax expense 1		1,159			1,819
Computed income tax expense 1		308			482
Increase (decrease) in income tax expense resulting from:
Non-deductible stock-based compensation		5			5
Non-deductible portion of equity losses		18			11
Income tax adjustment, legislative tax change		3			6
Non-taxable gain on acquisition 1		–			(20	)
Non-taxable portion of capital gain		(7	)		–
Other items		(3	)		(7	)
Total income tax expense 1		324			477
Effective income tax rate 1		28.0%			26.2%
Cash income taxes paid		295			184

¹  As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See “Accounting Policies” for more information.

Our effective income tax rate this year was 28.0% compared to 26.2% for 2015. The effective income tax rate for 2016 was higher than the statutory tax rate primarily as a result of non-deductible equity losses recognized on certain of our investments, partially offset by the non-taxable portion of capital gains on the sale of investments.

Cash income taxes paid increased this year as a result of applying non-capital losses from the Mobilicity transaction to offset our 2015 liability.

NET INCOME

Net income was 38% lower than last year. See “Key Changes in Financial Results This Year Compared to 2015” for more information.

	Years ended December 31
(In millions of dollars, except per share amounts)	2016		2015		% Chg
Net income 1		835		1,342		(38	)
Basic earnings per share 1	$	1.62	$	2.61		(38	)
Diluted earnings per share 1	$	1.62	$	2.60		(38	)

¹  As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See “Accounting Policies” for more information.

56    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

ADJUSTED NET INCOME

Adjusted net income was marginally higher compared to 2015, primarily as a result of higher adjusted operating profit and lower finance costs, partially offset by higher other expense (income) and higher income tax expense.

	Years ended December 31
(In millions of dollars, except per share amounts)	2016		2015			% Chg
Adjusted operating profit 1		5,092		5,032			1
Deduct (add):
Depreciation and amortization		2,276		2,277			–
Finance costs 2		761		767			(1	)
Other expense (income) 3		40		(2	)		n/m
Income tax expense 4, 5		534		511			5
Adjusted net income 1		1,481		1,479			–
Adjusted basic earnings per share 1	$	2.88	$	2.87			–
Adjusted diluted earnings per share 1	$	2.86	$	2.86			–

¹  Adjusted operating profit, adjusted net income, and adjusted basic and diluted earnings per share are non-GAAP measures and should not be considered as substitutes or alternatives for GAAP measures. These are not defined terms under IFRS, and do not have standard meanings, so may not be a reliable way to compare us to other companies. See “Non-GAAP Measures” for information about these measures, including how we calculate them.

²  Finance costs exclude the $7 million loss on repayment of long-term debt for the year ended December 31, 2015.

³  Other expense for 2016 excludes an $11 million net loss on divestitures pertaining to investments and a $140 million loss on the wind down of our shomi joint venture. For 2015, other income excludes a $74 million gain on acquisition of Mobilicity and a $72 million loss related to our share of an obligation to purchase at fair value the non-controlling interest in one of our joint ventures.

⁴  Income tax expense excludes the $213 million recovery (2015 – $40 million recovery) for the year ended December 31, 2016 related to the income tax impact for adjusted items. For 2016, income tax expense also excludes the $3 million expense (2015 – $6 million expense) for the revaluation of deferred tax balances as a result of legislative income tax rate changes.

⁵ As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See “Accounting Policies” for more information.

EMPLOYEES

Employee salaries and benefits represent a material portion of our expenses. As at December 31, 2016, we had approximately 25,200 employees (2015 – 26,200) across all of our operating groups, including shared services and the corporate office. Total salaries and benefits for full-time employees and part-time employees in 2016 were approximately $2,073 million (2015 – $1,975 million). The increase was mainly a result of higher Toronto Blue Jays player salaries and higher pension expenses.

2015 FULL YEAR RESULTS COMPARED TO 2014

Revenue

Consolidated revenue increased by 4% in 2015, reflecting revenue growth of 5% in Wireless and 14% in Media, while Cable revenue was stable. Wireless revenue increased as a result of the continued adoption of higher-postpaid-ARPA-generating Rogers Share Everything plans, partially offset by the introduction of lower-priced roaming plans. Cable revenue was stable as the increase in Internet revenue was offset by decreases in Television and Phone revenue. Media revenue increased as a result of the NHL Agreement, growth at Sportsnet, and higher revenue at the Toronto Blue Jays, partially offset by continued softness in conventional TV and print advertising, as well as lower consumer retail sales at TSC.

Adjusted operating profit

Consolidated adjusted operating profit increased in 2015 to $5,032 million, reflecting increases in Media of $41 million, partially offset by decreases in Business Solutions of $6 million. Wireless adjusted operating profit decreased marginally as a result of higher net unit costs for equipment and a greater number of upgrades, partially offset by the continued adoption of higher-postpaid-ARPA-generating service plans and higher equipment revenue. Cable adjusted operating profit was stable in 2015 as a result of higher investments in customer care, network, and customer value enhancement-related costs, offset by various efficiency and productivity initiatives. The decrease in Business Solutions was a result of continued declines in the legacy, off-net business, partially offset by continued growth in the higher-margin on-net, next generation business improvements. Media adjusted operating profit increased primarily as a result of the success of the Toronto Blue Jays.

Net income and adjusted net income

Net income increased to $1,342 million in 2015 from $1,341 million in 2014 primarily as a result of lower restructuring, acquisition and other costs, lower finance costs, lower income tax expense, and higher other income, partially offset by higher depreciation and amortization. Net income has been retrospectively amended as a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes. See “Accounting Policies” for more information.

Adjusted net income decreased to $1,479 million in 2015 from $1,532 million in 2014 as a result of higher depreciation and amortization and higher other expense, partially offset by higher adjusted operating profit and lower income tax expense. Adjusted net income has been retrospectively amended as a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes. See “Accounting Policies” for more information.

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    57

MANAGEMENT’S DISCUSSION AND ANALYSIS

QUARTERLY RESULTS

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

QUARTERLY CONSOLIDATED FINANCIAL SUMMARY

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

¹  Adjusted operating profit, adjusted net income, adjusted basic and diluted earnings per share, and free cash flow are non-GAAP measures and should not be considered as substitutes or alternatives for GAAP measures. These are not defined terms under IFRS, and do not have standard meanings, so may not be a reliable way to compare us to other companies. See “Non-GAAP Measures” for information about these measures, including how we calculate them.

²  As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See “Accounting Policies” for more information.

³ As defined. See “Key Performance Indicators”.

58    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

FOURTH QUARTER 2016 RESULTS

Results commentary in “Fourth Quarter 2016 Results” compares the fourth quarter of 2016 with the fourth quarter of 2015.

Higher revenue

Consolidated revenue increased 2% in the fourth quarter, largely driven by Wireless service revenue growth of 6%.

Wireless service revenue increased 6% in the fourth quarter primarily as a result of a larger subscriber base and the continued adoption of higher-postpaid-ARPA-generating Rogers Share Everything plans and the increase in data usage on these plans.

Cable revenue increased marginally in the fourth quarter as strong Internet revenue growth of 9% was largely offset by the decline in Television and Phone revenue. We continue to see an ongoing shift in product mix to higher-margin Internet services.

Media revenue decreased 2% in the fourth quarter primarily as a result of fewer postseason Toronto Blue Jays games compared to last year, lower overall advertising revenue, and lower circulation revenue within publishing, partially offset by higher sales at TSC.

Higher adjusted operating profit

Higher consolidated adjusted operating profit in the fourth quarter reflects an increase in Wireless adjusted operating profit as a result of the strong flow through of top line growth described above and improved Cable performance due to the shift in product mix to higher-margin Internet services.

Net loss and higher adjusted net income

The net loss of $9 million in the fourth quarter was primarily a result of the $484 million impairment and other charges we recognized related to the discontinued investment in our IPTV product. See “Review of Consolidated Performance” for more information. Adjusted net income increased in the fourth quarter as a result of higher adjusted operating profit, lower depreciation and amortization, and lower finance costs, partially offset by higher income tax expense.

QUARTERLY TRENDS AND SEASONALITY

Our operating results generally vary from quarter to quarter as a result of changes in general economic conditions and seasonal fluctuations, among other things, in each of our reporting segments. This means our results in one quarter are not necessarily a good indication of how we will perform in a future quarter. Wireless, Cable, and Media each have unique seasonal aspects to, and certain other historical trends in, their businesses.

Fluctuations in net income from quarter to quarter can also be attributed to losses on the repayment of debt, foreign exchange gains or losses, changes in the fair value of derivative instruments, other income and expenses, impairment of assets, and changes in income tax expense.

Wireless

The trends in Wireless revenue and adjusted operating profit reflect:

• the growing number of wireless voice and data subscribers;

• higher usage of wireless data;

• higher handset sales as more consumers shift to smartphones; and

• stable postpaid churn, which we believe is beginning to reflect the realization of our enhanced customer service efforts; partially offset by

• decreasing voice revenue as rate plans increasingly incorporate more monthly minutes and calling features, such as long distance; and

• lower roaming revenue as more subscribers are taking advantage of value-added roaming plans, such as Roam Like Home and Fido Roam. Peak travel seasons typically impact roaming usage and vary over the course of a calendar year.

The trends in Wireless adjusted operating profit reflect:

• higher handset subsidies that offset the higher handset sales as more consumers shift to smartphones; and

• higher voice and data costs related to the increasing number of subscribers.

We continue to target organic growth in higher-value postpaid subscribers. We have maintained a stable mix of postpaid and prepaid subscribers. Prepaid plans are evolving to have properties similar to those of traditional postpaid plans. We believe this evolution provides Canadians with greater choice of subscribing to a postpaid or prepaid service plan. Growth in our customer base over time has resulted in higher costs for customer service, retention, credit, and collection; however, most of the cost increases have been offset by gains in operating efficiencies.

Wireless operating results are influenced by the timing of our marketing and promotional expenditures and higher levels of subscriber additions and related subsidies, resulting in higher subscriber acquisition- and activation-related expenses, typically in the third and fourth quarters. The third and fourth quarters typically experience this activity as a result of “back to school” and holiday season-related consumer behaviour. The launch of popular new wireless handset models can also affect the level of subscriber additions. Highly-anticipated device launches typically occur in the fall season of each year. We typically see lower subscriber additions in the first quarter of the year, which is a direct impact of the higher additions around the fourth quarter holiday season. Wireless roaming revenue is dependent on customer travel volumes, which is impacted by the value of the foreign exchange rate of the Canadian dollar and general economic conditions.

Cable

The trends in Cable service revenue primarily reflect:

• higher Internet subscription fees as customers increasingly upgrade to higher-tier speed plans, including those with unlimited usage; and

• general pricing increases; offset by

• competitive losses of Television subscribers;

• Television subscribers downgrading their service plans; and

• lower additional usage of Internet, Television, and Phone products and services as service plans are increasingly bundling more features, such as unlimited bandwidth or a greater number of TV channels.

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    59

MANAGEMENT’S DISCUSSION AND ANALYSIS

The trends in Cable adjusted operating profit primarily reflect:

• higher Internet operating expenses, in line with the increased Internet subscription fees; and

• higher premium supplier fees in Television as a result of bundling more value-added offerings into our Cable products; offset by

• lower general Television and Phone operating expenses.

Cable’s operating results are affected by modest seasonal fluctuations in subscriber additions and disconnections, typically caused by:

• university and college students who live in residences moving out early in the second quarter and canceling their service as well as students moving in late in the third quarter and signing up for cable service;

• individuals temporarily suspending service for extended vacations or seasonal relocations; and

• the concentrated marketing we generally conduct in our fourth quarter.

Cable operating results are also influenced by trends in cord shaving and cord cutting, which has resulted in fewer subscribers watching traditional cable television, as well as a lower number of Television subscribers. In addition, trends in the use of wireless products and Internet or social media to substitute for traditional home phone products have resulted in fewer Phone subscribers.

Business Solutions

The trends in Business Solutions operating profit margin primarily reflect the ongoing shift from lower-margin, off-net legacy long distance and data services to higher-margin, next generation services and data centre businesses.

Business Solutions does not generally have any unique seasonal aspects to its business.

Media

The trends in Media’s results are generally the result of:

• fluctuations in advertising and consumer market conditions;

• subscriber rate increases;

• higher sports and rights costs, including increases as we move further along in our NHL Agreement; and

• continual investment in primetime and specialty programming relating to both our broadcast networks (such as City) and our specialty channels (such as FX (Canada)).

Seasonal fluctuations relate to:

• periods of increased consumer activity and their impact on advertising and related retail cycles, which tend to be most active in the fourth quarter due to holiday spending and slower in the first quarter;

• the MLB season, where:

• games played are concentrated in the spring, summer, and fall months (generally the second and third quarters of the year);

• revenue related to game day ticket sales, merchandise sales, and advertising are concentrated in the spring, summer, and fall months (generally the second and third quarters of the year), with postseason games commanding a premium in advertising revenue and additional revenue from game day ticket sales and merchandise sales, if and when the Toronto Blue Jays play in the postseason; and

• programming and production costs and player payroll are expensed based on the number of games aired; and

• the NHL season, where:

• regular season games are concentrated in the fall and winter months (generally the first and fourth quarters of the year) and playoff games are concentrated in the spring months (generally the second quarter of the year). We expect a correlation between the quality of revenue and earnings and the extent of Canadian teams’ presence during the playoffs;

• programming and production costs are expensed based on the timing of when the rights are aired or are expected to be consumed; and

• advertising revenue and programming expenses are concentrated in the fall, winter, and spring months, with playoff games commanding a premium in advertising revenue.

Other expenses

Depreciation and amortization has been trending upward over the past several years as a result of an increase in our general depreciable asset base, related significantly to our recent rollout and expansion of our wireless network. This is a direct result of increasing additions to property, plant and equipment in previous and current years as we worked to upgrade our wireless network, purchase NextBox set-top boxes, and roll out Ignite Gigabit Internet and 4K TV to our Cable footprint. We expect depreciation and amortization to be relatively stable for the next several years as our additions to property, plant and equipment moderate and certain intangible assets become fully amortized.

60    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

OVERVIEW OF FINANCIAL POSITION

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at December 31 (In millions of dollars)	2016		2015		$ Chg			% Chg			Explanation of significant changes
Assets
Current assets:
Cash and cash equivalents		–		11		(11	)		(100	)	See “Managing Our Liquidity and Financial Resources” for more information.
Accounts receivable		1,949		1,792		157			9		Reflects an increase in trade receivables driven by increased revenue.
Inventories		315		318		(3	)		(1	)	n/m
Other current assets		215		303		(88	)		(29	)	Primarily reflects the reduction of a receivable pertaining to the divestiture of Glentel’s international operations.
Current portion of derivative instruments		91		198		(107	)		(54	)	Reflects changes in market values of debt derivatives and expenditure derivatives primarily as a result of the difference between the year-end exchange rate and the hedged rate on our outstanding derivatives, as well as the settlement and maturity of certain derivatives discussed in “Financial Risk Management”.
Total current assets		2,570		2,622		(52	)		(2	)
Property, plant and equipment		10,749		10,997		(248	)		(2	)	Reflects the impairment of our IPTV-related assets as well as annual depreciation, partially offset by additions to property, plant and equipment. See “Additions to Property, Plant and Equipment” for more information.
Intangible assets		7,130		7,243		(113	)		(2	)	Reflects amortization of intangible assets.
Investments		2,174		2,271		(97	)		(4	)	Reflects lower carrying values as a result of certain divestitures and the wind down of shomi, partially offset by fair value increases for publicly-traded investments.
Derivative instruments		1,708		1,992		(284	)		(14	)	See “Current portion of derivative instruments” for more information.
Other long-term assets		98		150		(52	)		(35	)	Reflects a reclassification of long-term receivables to current.
Deferred tax assets		8		9		(1	)		(11	)	n/m
Goodwill 1		3,905		3,905		–			–		n/m
Total assets		28,342		29,189		(847	)		(3	)
Liabilities and shareholders’ equity
Current liabilities:
Bank advances		71		–		71			n/m		See “Managing Our Liquidity and Financial Resources” for more information.
Short-term borrowings		800		800		–			–		n/m
Accounts payable and accrued liabilities		2,783		2,708		75			3		Primarily reflects increased liabilities pertaining to onerous contract charges recorded relating to our IPTV product and an overall increase in trade payables as a result of the timing of payments made, partially offset by the reduction of a payable pertaining to the divestiture of Glentel’s international operations.
Income tax payable		186		96		90			94		Reflects the timing of tax installments.
Current portion of provisions		134		10		124			n/m		Primarily reflects a provision related to our share of remaining obligations expected to be incurred in our shomi joint venture.
Unearned revenue		367		388		(21	)		(5	)	Reflects a decrease pertaining to a loyalty program, partially offset by increases in customer deposits at the Toronto Blue Jays.
Current portion of long-term debt		750		1,000		(250	)		(25	)	Reflects the upcoming maturity of our $250 million and $500 million senior notes in 2017, partially offset by the repayment of $1,000 million of senior notes during the year.
Current portion of derivative instruments		22		15		7			47		Reflects changes in market values of equity and expenditure derivatives. See “Financial Risk Management” for more information.
Total current liabilities		5,113		5,017		96			2
Provisions		33		50		(17	)		(34	)	n/m
Long-term debt		15,330		15,870		(540	)		(3	)	Primarily reflects revaluation from the appreciation of the Cdn$ relative to the US$, the upcoming maturity of $750 million in senior notes in early 2017 that are now classified as current, and a decrease in our credit facility borrowings. See “Sources and Uses of Cash” for more information.
Derivative instruments		118		95		23			24		Reflects changes in market values of bond forwards and debt derivatives, primarily as a result of the appreciation of the Cdn$ relative to the US$. See “Financial Risk Management” for more information.
Other long-term liabilities		562		455		107			24		Reflects an increase in long-term pension obligations.
Deferred tax liabilities 1		1,917		2,066		(149	)		(7	)	Primarily reflects the reversal of certain temporary differences.
Total liabilities		23,073		23,553		(480	)		(2	)
Shareholders’ equity 1		5,269		5,636		(367	)		(7	)	Reflects changes in retained earnings and equity reserves.
Total liabilities and shareholders’ equity		28,342		29,189		(847	)		(3	)

¹  As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See “Accounting Policies” for more information.

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    61

MANAGEMENT’S DISCUSSION AND ANALYSIS

Managing Our Liquidity and Financial Resources

SOURCES AND USES OF CASH

OPERATING, INVESTING AND FINANCING ACTIVITIES

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

OPERATING ACTIVITIES

The 6% increase in cash provided by operating activities this year was a result of higher net funding provided by non-cash working capital and lower interest paid, partially offset by higher cash income taxes paid.

INVESTING ACTIVITIES

Additions to property, plant and equipment

We spent $2,352 million this year on property, plant and equipment before related changes in non-cash working capital items, which was 4% lower than 2015. See “Additions to Property, Plant and Equipment” for more information.

Acquisitions and other strategic transactions

Expenditures in 2015 included $129 million for the acquisition of our 2500 MHz spectrum licences and Shaw spectrum licences (including $2 million of related transaction costs) and $948 million related to the acquisitions of Mobilicity, our investment in Glentel, and certain dealer stores.

FINANCING ACTIVITIES

Accounts receivable securitization

Below is a summary of the activity relating to our accounts receivable securitization program for the quarter and year to date:

	Years ended December 31
(In millions of dollars)	2016			2015
Short-term borrowings
Proceeds received on short-term borrowings		295			294
Repayment of short-term borrowings		(295	)		(336	)
Net repayments on short-term borrowings		–			(42	)

62    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

As at December 31, 2016, our total funding under the securitization program was $800 million (2015 – $800 million) and the program was committed to fund up to a maximum of $1,050 million (2015 – $1,050 million). In July 2016, we amended the terms of the accounts receivable securitization program to, among other things, extend the expiry date from January 1, 2018 to January 1, 2019.

We continue to service and retain substantially all of the risks and rewards relating to the accounts receivables we sell, and therefore, the receivables remain recognized on our consolidated statements of financial position and the funding received is recorded as short-term borrowings. The buyer’s interest in these trade receivables ranks ahead of our interest. The program restricts us from using the receivables as collateral for any other purpose. The buyer of our trade receivables has no claim on any of our other assets.

Bank and letter of credit facilities

In April 2015, we borrowed the full amount of a new $1.0 billion bank credit facility (non-revolving credit facility) that was established in addition to our existing $2.5 billion revolving credit facility. The non-revolving credit facility is available on a non-revolving basis and matures in April 2018 with no scheduled principal repayments prior to maturity. In December 2015, we amended our non-revolving bank credit facility to allow partial, temporary repayment from December 2015 through May 2016; the maximum credit limit remained $1.0 billion. As a result of repayments made during the year, we reduced the amount of borrowings available under our non-revolving credit facility from $1.0 billion to $301 million. The interest rate charged on borrowings under the non-revolving credit facility falls within the range of pricing indicated for our revolving credit facility.

Below is a summary of the activity relating to our revolving and non-revolving bank credit facilities for 2015 and 2016:

	Year ended December 31, 2016
(In millions of dollars, except exchange rates)	Notional (US$)			Exchange rate		Notional (Cdn$)
Issuance of US dollar long-term debt		2,188			1.31		2,877
Issuance of Canadian dollar long-term debt							1,140
Total long-term debt issued							4,017
Repayment of US dollar long-term debt		(2,038	)		1.32		(2,686	)
Repayment of Canadian dollar long-term debt							(1,540	)
Total long-term debt repaid							(4,226	)

	Year ended December 31, 2015
(In millions of dollars, except exchange rates)	Notional (US$)		Exchange rate		Notional (Cdn$)
Issuance of Canadian dollar long-term debt		–		–		6,025
Repayment of Canadian dollar long-term debt		–		–		(5,525	)

As at December 31, 2016, we had $301 million ($100 million and US$150 million) of borrowings outstanding under our revolving and non-revolving credit facilities (2015 – $500 million). Certain funds were borrowed in US dollars to take advantage of a favourable interest rate spread; we have entered into debt derivatives related to these borrowings to convert all the interest and principal payment obligations to Canadian dollars. See “Financial Risk Management” for more information.

As at December 31, 2016, we had available liquidity under our bank credit facilities of $2.4 billion, as illustrated below. Each of these facilities is unsecured and guaranteed by RCCI and ranks equally with all of our senior notes and debentures.

	As at December 31
(In millions of dollars)	2016			2015
Total revolving & non-revolving credit and letter of credit facilities		2,860			3,568
Add (deduct):
Outstanding letters of credit		(68	)		(68	)
Borrowings		(301	)		(500	)
Bank advances		(71	)		–
Available liquidity – bank credit facilities		2,420			3,000

Effective April 1, 2016, we amended our $2.5 billion revolving credit facility to, among other things, extend the maturity date from July 2019 to September 2020. At the same time, we also amended the $1.0 billion non-revolving credit facility to, among other things, extend the maturity date from April 2017 to April 2018.

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    63

MANAGEMENT’S DISCUSSION AND ANALYSIS

Issuance of senior notes and related debt derivatives

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

(In millions of dollars, except interest rates and discounts)
Date Issued	Principal amount		Due date		Interest rate			Discount/premium at issuance			Total gross proceeds 1 (Cdn$)		Transaction costs and discounts 2 (Cdn$)
2016 issuances
November 4, 2016		US     500		2026		2.900	%		98.354	%		671		17
2015 issuances
December 8, 2015		US     700		2025		3.625	%		99.252	%		937
December 8, 2015		US     300		2044		5.000	%		101.700	%		401
Total for 2015												1,338		13

¹  Gross proceeds before transaction costs, discounts, and premiums.

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

The 2016 and 2015 senior notes were issued pursuant to public offerings in the US.

Concurrent with the 2016 and 2015 issuances, we entered into debt derivatives to convert all interest and principal payment obligations to Canadian dollars. See “Financial Risk Management” for more information.

All the notes issued are unsecured and guaranteed by RCCI, ranking equally with all of our other unsecured senior notes and debentures, bank credit facilities, and letter of credit facilities.

Repayment of senior notes and related derivative settlements

The table below provides a summary of the repayment of our senior notes during 2016 and 2015.

(In millions of dollars)
Maturity date	Notional amount (US$)		Notional amount (Cdn$)
2016 repayments
May 26, 2016		–		1,000
2015 repayments
March 15, 2015		550		702
March 15, 2015		280		357
Total for 2015		830		1,059

There were no debt derivatives associated with the 2016 repayment. The associated debt derivatives for the 2015 repayments were settled at maturity. See “Financial Risk Management” for more information.

Dividends

In 2016, we declared and paid dividends on each of our outstanding Class A Voting and Class B Non-Voting shares. We paid $988 million in cash dividends, an increase of $11 million from 2015. See “Dividends and Share Information” for more information.

Shelf prospectuses

We have two shelf prospectuses that qualify the offering of debt securities from time to time. One shelf prospectus qualifies the public offering of up to $4 billion of our debt securities in each of the provinces of Canada (Canadian Shelf) and the other shelf prospectus (together with a corresponding registration statement filed with the US Securities and Exchange Commission) qualifies the public offering of up to US$4 billion of our debt securities in the United States and Ontario (US Shelf). Both the Canadian Shelf and the US Shelf will expire in April 2018. In November 2016, we issued US$500 million ($671 million) of debt securities under the US Shelf.

Dissolution of RCP

As a result of the dissolution of RCP on January 1, 2016, RCP is no longer a guarantor, or co-obligor, as applicable, for the Company’s bank credit and letter of credit facilities, senior notes and debentures, and derivative instruments. Effective January 1, 2016, RCI continues to be the obligor in respect of each of these, while RCCI remains either a co-obligor or guarantor for the senior notes and debentures and a guarantor, as applicable, for the bank credit and letter of credit facilities and derivative instruments. See “Understanding Our Business” and “Summary of Financial Results of Long-Term Debt Guarantor” for more information.

64    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

FREE CASH FLOW

	Years ended December 31
(In millions of dollars)	2016		2015		% Chg
Adjusted operating profit 1		5,092		5,032		1
Deduct (add):
Additions to property, plant and equipment 2		2,352		2,440		(4	)
Interest on borrowings, net of capitalized interest		740		732		1
Cash income taxes 3		295		184		60
Free cash flow 1		1,705		1,676		2

¹  Adjusted operating profit and free cash flow are non-GAAP measures and should not be considered as substitutes or alternatives for GAAP measures. These are not defined terms under IFRS, and do not have standard meanings, so may not be a reliable way to compare us to other companies. See “Non-GAAP Measures” for information about these measures, including how we calculate them.

²  Additions to property, plant and equipment do not include expenditures for spectrum licences.

³  Cash income taxes are net of refunds received.

The 2% increase in free cash flow this year was primarily a result of:

• higher adjusted operating profit; and

• lower additions to property, plant and equipment; partially offset by

• higher cash income tax payments as a result of applying non-capital losses from the Mobilicity transaction during the same period in 2015.

FINANCIAL CONDITION

LIQUIDITY

	As at December 31
(In millions of dollars)	2016		2015
Cash and cash equivalents		–		11
Bank credit facilities		2,420		3,000
Accounts receivable securitization program		250		250
Total available liquidity		2,670		3,261

In addition to the noted sources of available liquidity, we held $1,047 million of marketable securities in publicly-traded companies as at December 31, 2016 (2015 – $966 million).

Weighted average cost of borrowings

Our borrowings had a weighted average cost of 4.72% as at December 31, 2016 (2015 – 4.82%) and a weighted average term to maturity of 10.6 years (2015 – 10.8 years). This comparatively favourable decline in our 2016 weighted average interest rate reflects the combined effects of:

• greater utilization of our bank credit facilities;

• our issuance of senior notes in November 2016 at comparatively lower interest rates; and

• the scheduled repayments and repurchases of comparatively more expensive senior notes made in March 2015 and May 2016.

COVENANTS

The provisions of our $2.5 billion revolving and $301 million non-revolving bank credit facilities described above impose certain restrictions on our operations and activities, the most significant of which are leverage-related maintenance tests. As at December 31, 2016 and 2015, we were in compliance with all financial covenants, financial ratios, and all of the terms and conditions of our debt agreements. Throughout 2016, these covenants did not impose restrictions of any material consequence on our operations.

CREDIT RATINGS

Credit ratings provide an independent measure of credit quality of an issue of securities and can affect our ability to obtain short-term and long-term financing and the terms of the financing. If rating agencies lower the credit ratings on our debt, particularly a downgrade below investment-grade, it could adversely affect our cost of financing and access to liquidity and capital.

We have engaged each of Standard & Poor’s Ratings Services (Standard & Poor’s), Fitch Ratings (Fitch), and Moody’s Investors Service (Moody’s) to rate our public debt issues. As at December 31, 2016, the credit ratings on RCI’s outstanding senior notes and debentures were as follows:

• Standard & Poor’s affirmed RCI’s senior unsecured debt at BBB+ with a stable outlook;

• Fitch affirmed its BBB+ rating with a stable outlook; and

• Moody’s affirmed its comparably equivalent rating of Baa1 with a stable outlook.

The table below shows the credit ratings on our borrowings received from the rating agencies as at December 31, 2016:

Issuance	Standard & Poor’s	Fitch	Moody’s
Corporate credit issuer default rating	BBB+ with a stable outlook	BBB+ with a stable outlook	Baa1 with a stable outlook
Senior unsecured debt	BBB+ with a stable outlook	BBB+ with a stable outlook	Baa1 with a stable outlook

Ratings for debt instruments across the universe of composite rates range from AAA (Standard & Poor’s and Fitch) or Aaa (Moody’s) representing the highest quality of securities rated, to D (Standard & Poor’s), Substantial Risk (Fitch), and C (Moody’s) for

the lowest quality of securities rated. Investment-grade credit ratings are generally considered to range from BBB- (Standard & Poor’s and Fitch) or Baa3 (Moody’s) to AAA (Standard & Poor’s and Fitch) or Aaa (Moody’s).

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    65

MANAGEMENT’S DISCUSSION AND ANALYSIS

Credit ratings are not recommendations for investors to purchase, hold, or sell the rated securities, nor are they a comment on market price or investor suitability. There is no assurance that a rating will remain in effect for a given period, or that a rating will not be revised or withdrawn entirely by a rating agency if it believes circumstances warrant it. The ratings on our senior debt provided by Standard & Poor’s, Fitch, and Moody’s are investment-grade ratings.

PENSION OBLIGATIONS

Our retiree pension plans had a funding deficit of approximately $387 million as at December 31, 2016 (2015 – $281 million). During 2016, our funding deficit increased by $106 million primarily as a result of a decrease in the discount rate we used to measure these obligations and increased participation in our defined benefit pension plan prior to its closure to new members in 2016.

We made a total of $125 million (2015 – $118 million) of contributions to our pension plans. We expect our total estimated

funding requirements to be $144 million in 2017 and to be adjusted annually thereafter based on various market factors, such as interest rates, expected returns, and staffing assumptions.

Changes in factors such as the discount rate, participation rates, increases in compensation, and the expected return on plan assets can affect the accrued benefit obligation, pension expense, and the deficiency of plan assets over accrued obligations in the future. See “Accounting Policies” for more information. In order to manage the rising cost of our pension plans, effective June 30, 2016, the Rogers Defined Benefit Pension Plan was closed to new enrolment. Beginning July 1, 2016, employees not participating in the Rogers Defined Benefit Pension Plan became eligible for enrolment into a new Defined Contribution Pension Plan.

Purchase of annuities

From time to time, we have made additional lump-sum contributions to our pension plans, and the pension plans have purchased annuities from insurance companies to fund the pension benefit obligations for certain groups of retired employees in the plans. Purchasing the annuities relieves us of our primary responsibility for that portion of the accrued benefit obligations for the retired employees and eliminates the significant risk associated with the obligations.

We did not make any additional lump-sum contributions to our pension plans in 2016 or 2015, and the pension plans did not purchase additional annuities.

FINANCIAL RISK MANAGEMENT

We use derivative instruments from time to time to manage risks related to our business activities, summarized as follows:

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

We also manage our exposure to fluctuating interest rates and we have fixed the interest rate on 91.2% (2015 – 90.3%) of our debt, including short-term borrowings, as at December 31, 2016.

We designate the debt derivatives related to our senior notes and debentures as hedges for accounting purposes against the foreign exchange risk associated with specific debt instruments. We do not designate the debt derivatives related to our credit facility borrowings as hedges for accounting purposes. Our bond forwards and expenditure derivatives are also designated as hedges for accounting purposes.

66    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

DEBT DERIVATIVES

We use cross-currency interest rate exchange agreements (debt derivatives) to hedge the foreign exchange risk on all of the interest and principal payment obligations of our US dollar-denominated senior notes and debentures.

New debt derivatives to hedge new senior notes issued

			US				Hedging effect
(In millions of dollars, except interest rates) Effective date	Principal/ Notional amount (US$)		Maturity date		Coupon rate		Fixed hedged Cdn$ interest rate 1		Equivalent (Cdn$)
November 4, 2016		500		2026		2.900%		2.834%		671
December 8, 2015		700		2025		3.625%		3.566%		937
December 8, 2015		300		2044		5.000%		5.145%		401

¹  Converting from a fixed US$ coupon rate to a weighted average Cdn$ fixed rate.

Matured debt derivatives

(In millions of dollars) Maturity date	Notional amount (US$)		Net cash (proceeds) settlement (Cdn$)
March 15, 2015		550		(106	)
March 15, 2015		280		(48	)
Total		830		(154	)

During the year, we entered into debt derivatives related to our credit facility borrowings as a result of a favourable interest rate spread obtained from borrowing funds in US dollars. We used these derivatives to offset the foreign exchange and interest rate risk on our US dollar-denominated credit facility borrowings. As a result of the short-term nature of these debt derivatives related to our credit facility borrowings, we have not designated them as hedges for accounting purposes.

During 2016, we entered into and settled debt derivatives related to our credit facility borrowings as follows:

	Year ended December 31, 2016
(In millions of dollars, except exchange rates)	Notional (US$)		Exchange rate		Notional (Cdn$)
Debt derivatives entered		8,683		1.31		11,360
Debt derivatives settled		8,533		1.31		11,159
Net cash received						8

We did not enter into any debt derivatives related to our credit facility borrowings during 2015.

As at December 31, 2016, we had US$6.7 billion of US dollar-denominated senior notes and debentures, all of which were hedged using debt derivatives.

	As at December 31
(In millions of dollars, except exchange rates, percentages, and years)	2016		2015
US dollar-denominated long-term debt 1	US$	6,700	US$	6,200
Hedged with debt derivatives	US$	6,700	US$	6,200
Hedged exchange rate		1.1070		1.0882
Percent hedged 2		100.0%		100.0%
Amount of borrowings at fixed rates 3
Total borrowings	$	15,418	$	15,947
Total borrowings at fixed rates	$	14,067	$	14,397
Percent of borrowings at fixed rates		91.2%		90.3%
Weighted average interest rate on borrowings		4.72%		4.82%
Weighted average term to maturity		10.6 years		10.8 years

¹  US dollar-denominated long-term debt reflects the hedged exchange rate and the hedged interest rate.

²  Pursuant to the requirements for hedge accounting under IAS 39, Financial Instruments: Recognition and Measurement, on December 31, 2016, and December 31, 2015, RCI accounted for 100% of its debt derivatives as hedges against designated US dollar-denominated debt. As a result, on December 31, 2016 and 2015, 100% of our US dollar-denominated debt is hedged for accounting and economic purposes.

³  Borrowings include long-term debt, including the impact of debt derivatives, and short-term borrowings associated with our accounts receivable securitization program.

BOND FORWARDS

From time to time, we use extendible bond forward derivatives (bond forwards) to hedge interest rate risk on the debt instruments we expect to issue in the future. As at December 31, 2016, approximately $5.9 billion of our outstanding public debt matures over the next five years (2015 – $5.5 billion) and we anticipate that we will issue public debt over that time to fund at least a portion of those maturities together with other general corporate funding requirements. We use bond forwards for risk management purposes only. The bond forwards noted below have been designated as hedges for accounting purposes.

During 2014, we entered into bond forwards to hedge the underlying Government of Canada (GoC) interest rate risk that will comprise a portion of the interest rate risk associated with our anticipated future debt issuances. As a result of these bond forwards, we hedged the underlying GoC 10-year rate on $1.5 billion notional amount for anticipated future debt issuances from 2015 to 2018 and the underlying GoC 30-year rate on $0.4 billion notional amount for December 31, 2018. The bond forwards are effective from December 2014.

On November 4, 2016, we exercised a $500 million notional bond forward due January 4, 2017 in relation to the issuance of the US$500 million senior notes due 2026 and paid $53 million to settle the derivative. The amount paid represents the fair value of the bond forward at the time of settlement and will be recycled into finance costs from the hedging reserve using the effective interest rate method over the life of the US$500 million senior notes due 2026.

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    67

MANAGEMENT’S DISCUSSION AND ANALYSIS

On December 8, 2015, we exercised a $500 million notional bond forward due December 31, 2015 in relation to the issuance of the US$700 million senior notes due 2025 and paid $25 million to settle the derivative. The amount paid represents the fair value of

the bond forward at the time of settlement and will be recycled into finance costs from the hedging reserve using the effective interest rate method over the life of the US$700 million senior notes due 2025.

As at December 31, 2016 we had $900 million notional amount of bond forwards outstanding (2015 – $1,400 million), all of which were designated as hedges for accounting purposes.

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

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

EXPENDITURE DERIVATIVES

We use foreign currency forward contracts (expenditure derivatives) to hedge the foreign exchange risk on the notional amount of certain

forecasted US dollar-denominated expenditures. The table below shows the expenditure derivatives into which we entered to manage foreign exchange risk related to certain forecasted expenditures.

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

The expenditure derivatives noted above have been designated as hedges for accounting purposes.

As at December 31, 2016, we had US$1,290 million of expenditure derivatives outstanding (2015 – US$1,140 million), at an average rate of $1.32/US$ (2015 – $1.24/US$), with terms to maturity ranging from January 2017 to December 2018 (2015 – January 2016 to December 2017). Our outstanding expenditure derivatives maturing in 2017 are hedged at an average exchange rate of $1.33/US$.

EQUITY DERIVATIVES

We use stock-based compensation derivatives (equity derivatives) to hedge the market price appreciation risk of the RCI Class B shares granted under our stock-based compensation programs. As at December 31, 2016, we had equity derivatives for 5.4 million RCI

Class B shares with a weighted average price of $50.30. These derivatives have not been designated as hedges for accounting purposes. We record changes in their fair value as a stock-based compensation expense, or offset thereto, which serves to offset a substantial portion of the impact of changes in the market price of RCI Class B shares on the accrued value of the stock-based compensation liability for our stock-based compensation programs. In April 2016, we executed extension agreements for each of our equity derivative contracts under substantially the same terms and conditions with revised expiry dates to April 2017 (from April 2016).

In August 2016, we settled 0.3 million equity derivatives at a weighted average price of $58.16 as a result of a reduction in the number of share-based compensation units outstanding.

68    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

MARK-TO-MARKET VALUE

We record our derivatives using an estimated credit-adjusted, mark-to-market valuation, calculated in accordance with IFRS.

	As at December 31, 2016
(In millions of dollars, except exchange rates)	Notional amount (US$)		Exchange rate		Notional amount (Cdn$)		Fair value (Cdn$)
Debt derivatives accounted for as cash flow hedges:
As assets		5,200		1.0401		5,409		1,751
As liabilities		1,500		1.3388		2,008		(68	)
Short-term debt derivatives not accounted for as hedges:
As liabilities		150		1.3407		201		–
Net mark-to-market debt derivative asset								1,683
Bond forwards accounted for as cash flow hedges:
As liabilities						900		(51	)
Expenditure derivatives accounted for as cash flow hedges:
As assets		990		1.2967		1,284		40
As liabilities		300		1.4129		424		(21	)
Net mark-to-market expenditure derivative asset								19
Equity derivatives not accounted for as hedges:
As assets						270		8
Net mark-to-market asset								1,659

	As at December 31, 2015
(In millions of dollars, except exchange rates)	Notional amount (US$)		Exchange rate		Notional amount (Cdn$)		Fair value (Cdn$)
Debt derivatives accounted for as cash flow hedges:
As assets		5,900		1.0755		6,345		2,032
As liabilities		300		1.3367		401		(4	)
Net mark-to-market debt derivative asset								2,028
Bond forwards accounted for as cash flow hedges:
As liabilities		–		–		1,400		(91	)
Expenditure derivatives accounted for as cash flow hedges:
As assets		1,140		1.2410		1,415		158
Equity derivatives not accounted for as hedges:
As liabilities		–		–		286		(15	)
Net mark-to-market asset								2,080

ADJUSTED NET DEBT AND ADJUSTED NET DEBT / ADJUSTED OPERATING PROFIT

We use adjusted net debt and adjusted net debt / adjusted operating profit to conduct valuation-related analysis and make capital structure-related decisions. Adjusted net debt includes long-term debt, net debt derivative assets or liabilities, short-term borrowings, and cash and cash equivalents.

	As at December 31
(In millions of dollars, except ratios)	2016			2015
Long-term debt 1		16,197			16,981
Net debt derivative assets valued without any adjustment for credit risk		(1,740	)		(2,180	)
Short-term borrowings		800			800
Bank advances (cash and cash equivalents)		71			(11	)
Adjusted net debt 2		15,328			15,590
Adjusted net debt / adjusted operating profit 2,3		3.0			3.1

¹  Includes current and long-term portion of long-term debt before deferred transaction costs and discounts. See “Reconciliation of adjusted net debt” in the section “Non-GAAP Measures” for the calculation of this amount.

²  Adjusted net debt and adjusted net debt / adjusted operating profit are non-GAAP measures and should not be considered substitutes or alternatives for GAAP measures. These are not defined terms under IFRS and do not have standard meanings, so may not be a reliable way to compare us to other companies. See “Non-GAAP Measures” for information about these measures, including how we calculate them.

³  Adjusted net debt / adjusted operating profit is measured using adjusted operating profit for the last twelve consecutive months.

In addition to the cash and cash equivalents as at December 31, 2016 and December 31, 2015 noted above, we held $1,047 million of marketable securities in publicly-traded companies (2015 – $966 million).

Our adjusted net debt decreased by $0.26 billion from December 31, 2015 primarily as a result of a decrease in our outstanding long-term debt, partially offset by a reduction in the fair value of our net debt derivative asset. See “Overview of Financial Position” for more information.

2016 ANNUAL REPORT    ROGERS COMMUNICATIONS INC.    69

MANAGEMENT’S DISCUSSION AND ANALYSIS

DIVIDENDS AND SHARE INFORMATION

DIVIDENDS

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

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

In January 2017, the Board declared a quarterly dividend of $0.48 per Class A Voting share and Class B Non-Voting share, to be paid on April 3, 2017, to shareholders of record on March 13, 2017.

We currently expect that the remaining record and payment dates for the 2017 declaration of dividends will be as follows, subject to the declaration by our Board each quarter at its sole discretion:

Record date	Payment date
June 12, 2017	July 4, 2017
September 15, 2017	October 3, 2017
December 11, 2017	January 2, 2018

OUTSTANDING COMMON SHARES

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

¹  Holders of our Class B Non-Voting shares are entitled to receive notice of and to attend shareholder meetings; however, they are not entitled to vote at these meetings except as required by law or stipulated by stock exchanges. If an offer is made to purchase outstanding Class A Voting shares, there is no requirement under applicable law or our constating documents that an offer be made for the outstanding Class B Non-Voting shares, and there is no other protection available to shareholders under our constating documents. If an offer is made to purchase both classes of shares, the offer for the Class A Voting shares may be made on different terms than the offer to the holders of Class B Non-Voting shares.

We use the weighted average number of shares outstanding to calculate earnings per share and adjusted earnings per share.

	Years ended December 31
(Number of shares in millions)	2016		2015
Basic weighted average number of shares outstanding		515		515
Diluted weighted average number of shares outstanding		517		517

70    ROGERS COMMUNICATIONS INC.    2016 ANNUAL REPORT

COMMITMENTS AND CONTRACTUAL OBLIGATIONS

CONTRACTUAL OBLIGATIONS

The table below shows a summary of our obligations under firm contractual arrangements as at December 31, 2016. See notes 3, 21, and 28 to our 2016 Audited Consolidated Financial Statements for more information.

(In millions of dollars)	Less than 1 Year			1-3 Years	4-5 Years	After 5 Years	Total
Short-term borrowings		800	</