Rogers Communications Reports Third Quarter 2021 Results

• Strong execution across our business delivers solid operational improvements led by Wireless recovery
  
• Wireless postpaid net subscriber additions of 175,000; positive Wireless service revenue growth of 3% and adjusted EBITDA up 2%
  • Record Q3 postpaid churn of 0.95%; blended ARPU of $51.31 up 4% sequentially
• Increased Cable revenue by 3%; grew adjusted EBITDA by 2%
  • Internet net subscriber additions include 17,000 net new broadband subscribers; Ignite TV net subscriber additions of 64,000
• Media returns to positive adjusted EBITDA of $33 million

TORONTO, Oct. 21, 2021 (GLOBE NEWSWIRE) -- Rogers Communications Inc. today announced its unaudited financial and operating results for the third quarter ended September 30, 2021.

Consolidated Financial Highlights

1 As defined. See "Key Performance Indicators".
2 As defined. See "Non-GAAP Measures and Related Performance Measures". These measures 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.

"Our Rogers team delivered strong results in the third quarter led by an ongoing recovery in our wireless business," said Joe Natale, President and CEO. "Each of our businesses is benefitting from the ongoing opening of the economy, and we expect to maintain this momentum as we finish the year. Throughout the pandemic, we have continued to make significant investments in our customers and Canada, which has positioned us well to drive sustainable long-term growth. As we come together with Shaw, we will build on this foundation to bring next-generation connectivity to communities across Western Canada, helping to create jobs, attract investment, and increase economic growth."

Operating Environment and Strategic Highlights

COVID-19 continues to significantly impact Canadians and economies around the world. For much of 2021, extensive public health restrictions have been in place to varying degrees across the country. This quarter, provinces generally began relaxing certain public health restrictions implemented in the first half of 2021 as vaccines became more widely available in Canada and vaccination rates continued to increase across the country. We remain focused on keeping our employees safe and our customers connected. While COVID-19 continues to have a significant worldwide impact, we remain confident we have the right team, a strong balance sheet, and the world-class networks that will allow us to get through the pandemic having maintained our long-term focus on growth and doing the right thing for our customers.

Our six company priorities guide our work and decision-making as we further improve our operational execution and make well-timed investments to grow our core businesses and deliver increased shareholder value. Below are some highlights for the quarter.

Create best-in-class customer experiences by putting our customers first in everything we do

• Achieved Wireless postpaid churn of 0.95%, our best third-quarter churn result ever.
• Partnered with Disney to exclusively offer six months of Disney+ with select Rogers Infinite™ plans, and up to 12 months of Disney+ with select Ignite TV™ and Ignite™ SmartStream™ plans.
• Expanded Rogers Pro On-the-Go™ to Barrie and London. Pro On-the-Go™ is now available in 13 communities, including Greater Vancouver, Calgary, Edmonton, Hamilton, Kitchener, Waterloo, Guelph, Brantford, Cambridge, Ottawa, and the Greater Toronto Area.
• Continued to accelerate our digital-first plan to make it easier for customers, with digital adoption at 86.5% and virtual assistant conversations up 23% since last year.
• Expanded the Ignite WiFi™ Hub app with enhanced Active Time Details and Advanced Security to give customers greater control over their home WiFi.
• Launched Express Pickup through our customer care channels, a free service that allows customers to purchase a new device through a customer care agent and pick up it up the same day in-store.
• Launched Toober on Ignite TV and Ignite SmartStream, enhancing the platform's industry-leading selection of streaming services.
• Reduced payment-related calls by 23% year-over-year as a result of new initiatives like automated notifications and an increase in auto pay adoption.
• Introduced an online appointment booking tool that allows customers to conveniently schedule an appointment to speak to a Rogers expert at a specific store and time.
  

Invest in our networks and technology to deliver leading performance, reliability, and coverage

• Expanded Canada's largest and most reliable 5G network, which now reaches more than 850 communities. We will extend our 5G network to more than 1,000 communities, reaching over 70% of the Canadian population, by the end of 2021.
• Announced that we are investing $3.3 billion in 3500 MHz band spectrum, covering 99.4% of the Canadian population, to enhance and accelerate the expansion of Canada's first, largest, and most reliable 5G network. This investment positions Rogers as the largest single investor in 5G spectrum in the country across rural, suburban, and urban markets.
• Awarded number one in the country for 5G Reach, 5G Availability, 5G Voice App Experience, and 5G Games Experience, and tied for first for 5G Upload Speed, by data analytics firm Opensignal in their August 2021 5G Experience Report.
• Recognized in October as Canada's most consistent national wireless and broadband provider for the fifth quarter in a row, with the fastest Internet in Ontario, New Brunswick, and Newfoundland and Labrador, by Ookla, the global leader in fixed broadband and mobile network testing applications.
• Announced that we will invest over $140 million to connect more than 20,000 homes and businesses to reliable high-speed connectivity across the communities of Quinte West, Belleville, and Prince Edward County.
• Announced that we have been awarded funding from the Canadian Radio-television and Telecommunications Commission's (CRTC) Broadband Fund to bring high-speed connectivity to more than 450 homes in the Storeytown area and the Village of Doaktown, New Brunswick.
  

Drive market-leading growth in each of our lines of business

• Acquired Seaside Communications, a leading, locally operated telecommunications company based in Sydney, Nova Scotia.
• Launched new Internet of Things (IoT) Smart Buildings solutions as part of the Rogers for Business™ IoT portfolio, which includes a water leak detection solution in partnership with Eddy Solutions.
• Expanded our portfolio of fleet management solutions for businesses, which enables remote vehicle tracking and management for public transit fleets and mixed fleets used in construction, oil and gas, and public sector organizations.
• Introduced Operator Connect for Microsoft Teams, which allows Rogers for Business customers to easily integrate their Rogers service with Microsoft.
• Transformed 71 retail stores into dual-door locations that offer both Rogers™ and Fido™ brands, growing our distribution footprint nationally, such that we now have a total of 127 dual-brand locations.
• Relaunched Sportsnet's direct-to-consumer streaming service, SN NOW™, in partnership with Deltatre and Firstlight Media, delivering world-class stream quality and reliability.
• Premiered Citytv's fall TV programming, seeing a 9% year-on-year increase in primetime viewing during premiere week. Citytv™ is the only Canadian conventional television network to experience year-on-year audience growth in the coveted 25-54 age demographic.
  

Drive best-in-class financial outcomes for our shareholders

• Attracted 175,000 net Wireless postpaid subscribers (our best result in 13 years), 17,000 net broadband subscribers, and 64,000 net Ignite TV subscribers.
• Grew total service revenue by 2%.
• Generated free cash flow of $507 million and cash flow from operating activities of $1,319 million.
  

Develop our people, drive engagement, and build a high-performing and inclusive culture

• Continued our commitment to our 2021 Inclusion & Diversity action plan, including focused events and programming marking Caribbean Carnival, Emancipation Day, and National Day for Truth and Reconciliation.
• Launched a voluntary Return to Workplace Pilot Program with around 600 team members across Canada.
• Announced vaccinations or rapid testing will be required for team members entering workplace sites starting October 18, including those serving customers in retail stores and in the field.
  

Be a strong, socially and environmentally responsible leader in our communities

• Expanded our ESG Report and introduced an interactive multimedia Social Impact Report, celebrating and tracking our impact on the environment and our communities. We now disclose information in accordance with the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), and Task Force on Climate-Related Financial Disclosures (TCFD) standards, and committed to supporting the United Nations Sustainable Development Goals.
• Launched a new Orange Shirt Day campaign in support of Indigenous communities across the country. Over the past two years, the Orange Shirt Day campaign has raised $250,000 for the Orange Shirt Society and the Indian Residential School Survivors Society (IRSSS). The new 2021 Orange Shirts are available on Today's Shopping Choice™, with proceeds being divided between the Orange Shirt Society and the IRSSS.
• Awarded $7.5 million in funding through Rogers Group of Funds to support Canadian storytellers and content creators through the Rogers Cable Network and Documentary Funds, with a focus on supporting projects from equity-seeking creators.
• Supported the launch of a portal, through Rogers Group of Funds and Canadian Independent Screen Fund for BPOC Creators, for Black and People of Colour creators to apply for funding from a first-of-its-kind $750,000 Canadian Script development fund. The fund supports creators' projects for networks, studios, cable, and streaming platforms.
• Continued our back-to-school backpack drive, assembling and distributing backpacks filled with school supplies to vulnerable equity-seeking youth across Canada, in partnership with youth organizations and school boards from coast-to-coast.
• Launched our new corporate responsibility brand, Generation Possible™, the youth and education pillar focused on giving the next generation the chance they need to succeed through Ted Rogers Scholarships, Community Grants, and Jays Care™ Foundation. Team Possible is about our team and partners' commitment to making a meaningful impact in communities through volunteering, bridging the digital divide, and partnering with organizations like Women's Shelters Canada.
• Fido continued to show support for the LGBTQ2S+ community as the platinum partner of Vancouver Pride for the sixth year in a row and as a major partner of Fierté Montréal.
  

Quarterly Financial Highlights

Our solid financial position enables us to prioritize the actions we need to take as a result of COVID-19, continue to make high priority investments in our network, and ensure customers stay connected during this critical time.

Revenue
Total revenue was stable this quarter, as a result of service revenue growth in our Wireless and Cable businesses, offset by lower Media revenue and lower Wireless equipment revenue.

Wireless service revenue increased by 3% this quarter, mainly as a result of a larger postpaid subscriber base and higher roaming revenue, as global travel restrictions were generally less strict than last year at the onset of COVID-19. Wireless equipment revenue decreased as a result of lower device upgrades by existing subscribers and fewer devices purchased by new subscribers.

Cable revenue increased by 3% this quarter as a result of the movement of Internet customers to higher speed and usage tiers in our Ignite Internet™ offerings, increases in our Internet and Ignite TV subscriber bases, disciplined promotional activity, and service pricing changes in late 2020.

Media revenue decreased by 3% this quarter, primarily as a result of the NHL and NBA completing their seasons late in the third quarter last year due to COVID-19, when traditionally they conclude in the second quarter, partially offset by higher Toronto Blue Jays™ game day revenue as COVID-19 restrictions eased and partial fan attendance was permitted.

Adjusted EBITDA and margins
Consolidated adjusted EBITDA decreased 2% this quarter and our adjusted EBITDA margin decreased by 110 basis points driven by the impact of Media.

Wireless adjusted EBITDA increased by 2%, primarily as a result of the flow-through of service revenue growth. This gave rise to an adjusted EBITDA service margin of 64.9%.

Cable adjusted EBITDA increased by 2% this quarter, primarily as a result of higher service revenue, as discussed above. This gave rise to an adjusted EBITDA margin of 50.8% this quarter.

Media adjusted EBITDA decreased by 63%, or $56 million this quarter, primarily due to higher Toronto Blue Jays player payroll and lower Media revenue as discussed above, partially offset by lower sports programming and production costs associated with the timing of the NHL season last year.

Net income and adjusted net income
Net income and adjusted net income decreased this quarter by 4% and 2%, respectively, primarily as a result of lower adjusted EBITDA.

Cash flow and available liquidity
This quarter, we generated cash flow from operating activities of $1,319 million, up 34%, as a result of cash provided by net operating assets, and free cash flow of $507 million, down 42%, as a result of increases in capital expenditures and cash income taxes.

As at September 30, 2021, we had $6.4 billion of available liquidity, including $1.6 billion in cash and cash equivalents and a combined $4.9 billion available under our bank credit facilities and receivables securitization program.

We also returned $253 million in dividends to shareholders this quarter and we declared a $0.50 per share dividend on October 20, 2021.

Shaw Transaction

On March 15, 2021, we announced an agreement with Shaw Communications Inc. (Shaw) to acquire all of Shaw's issued and outstanding Class A Participating Shares and Class B Non-Voting Participating Shares for a price of $40.50 per share in cash, with the exception of the shares held by the Shaw Family Living Trust, the controlling shareholder of Shaw, and related persons (Shaw Family Shareholders). The Shaw Family Shareholders will receive 60% of the consideration for their shares in the form of RCI Class B Non-Voting common shares on the basis of the volume-weighted average trading price for such shares for the ten trading days ended March 12, 2021, and the balance in cash. The acquisition (Transaction) is valued at approximately $26 billion, including the assumption of approximately $6 billion of Shaw debt.

The Transaction will be implemented through a court-approved plan of arrangement under the Business Corporations Act (Alberta). On May 20, 2021, Shaw shareholders voted to approve the Transaction at a special shareholders meeting. The Court of Queen's Bench of Alberta issued a final order approving the Transaction on May 25, 2021. The Transaction is subject to other customary closing conditions, including receipt of applicable approvals and expiry of certain waiting periods under the Broadcasting Act (Canada), the Competition Act (Canada), and the Radiocommunication Act (Canada) (collectively, Key Regulatory Approvals). Subject to receipt of all required approvals, the Transaction is expected to close in the first half of 2022.

The combined entity will have the scale, assets, and capabilities needed to deliver unprecedented wireline and wireless broadband and network investments, innovation, and growth in new telecommunications services, and greater choice for Canadian consumers and businesses. As part of the Transaction, the combined company will invest $2.5 billion to build 5G networks across Western Canada over the next five years and Rogers will commit to establishing a new $1 billion Rogers Rural and Indigenous Connectivity Fund dedicated to connecting rural, remote, and indigenous communities across Western Canada to high-speed Internet and closing critical connectivity gaps faster for underserved areas.

In connection with the Transaction, we entered into a binding commitment letter for a committed credit facility with a syndicate of banks in an original amount up to $19 billion. During the second quarter, we entered into a $6 billion non-revolving credit facility (Shaw term loan facility), which served to reduce the amount available under the committed credit facility to $13 billion. See "Managing Our Liquidity and Financial Resources" in our Third Quarter 2021 Management's Discussion and Analysis (MD&A) for more information on the committed facility and the Shaw term loan facility. We also expect that RCI will either assume Shaw's senior notes or provide a guarantee of Shaw's payment obligations under those senior notes upon closing the Transaction and, in either case, Rogers Communications Canada Inc. (RCCI) will guarantee Shaw's payment obligations under those senior notes.

The Transaction is subject to a number of additional risks. For more information, see "Updates to Risks and Uncertainties - Shaw Transaction" in our Third Quarter 2021 MD&A.

About Rogers

Rogers is a proud Canadian company dedicated to making more possible for Canadians each and every day. Our founder, Ted Rogers, purchased his first radio station, CHFI™, in 1960. We have grown to become a leading technology and media company that strives to provide the very best in wireless, residential, sports, and media to Canadians and Canadian businesses. Our shares are publicly traded on the Toronto Stock Exchange (TSX: RCI.A and RCI.B) and on the New York Stock Exchange (NYSE: RCI).

Quarterly Investment Community Teleconference

Our third quarter 2021 results teleconference with the investment community will be held on:

• October 21, 2021
• 8:00 a.m. Eastern Time
• webcast available at investors.rogers.com
• media are welcome to participate on a listen-only basis

A rebroadcast will be available at investors.rogers.com for at least two weeks following the teleconference. Additionally, investors should note that from time to time, Rogers' management presents at brokerage-sponsored investor conferences. Most often, but not always, these conferences are webcast by the hosting brokerage firm, and when they are webcast, links are made available on Rogers' website at investors.rogers.com.

For More Information

You can find more information relating to us on our website (investors.rogers.com), 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 earnings release is not part of, or incorporated into, this earnings release.

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

About this Earnings Release

This earnings release contains important information about our business and our performance for the three and nine months ended September 30, 2021, as well as forward-looking information about future periods. This earnings release should be read in conjunction with our Third Quarter 2021 Interim Condensed Consolidated Financial Statements and notes thereto, which have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB); our 2020 Annual MD&A; our 2020 Annual Audited Consolidated Financial Statements and notes thereto, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the IASB; and our other recent filings with Canadian and US securities regulatory authorities, including our Annual Information Form, which are available on SEDAR at sedar.com or EDGAR at sec.gov, respectively.

For more information about Rogers, including product and service offerings, competitive market and industry trends, our overarching strategy, key performance drivers, and objectives, see "Understanding Our Business", "Our Strategy, Key Performance Drivers, and Strategic Highlights", and "Capability to Deliver Results" in our 2020 Annual MD&A.

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

All dollar amounts in this earnings release are in Canadian dollars unless otherwise stated and are unaudited. All percentage changes are calculated using the rounded numbers as they appear in the tables. This earnings release is current as at October 20, 2021 and was approved by RCI's Board of Directors (the Board) on that date. This earnings release includes forward-looking statements and assumptions. See "About Forward-Looking Information" for more information.

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 earnings release, this quarter, the quarter, or third quarter refer to the three months ended September 30, 2021, the first quarter refers to the three months ended March 31, 2021, the second quarter refers to the three months ended June 30, 2021, and year to date refers to the nine months ended September 30, 2021 unless the context indicates otherwise. All results commentary is compared to the equivalent period in 2020 or as at December 31, 2020, as applicable, unless otherwise indicated. Sequentially refers to the current quarter's results compared to the immediately preceding quarter's results. References to COVID-19 are to the pandemic from the outbreak of this virus and to its associated impacts in the jurisdictions in which we operate and globally, as applicable.

™Rogers and related marks are trademarks of Rogers Communications Inc. or an affiliate, used under licence. All other brand names, logos, and marks are trademarks and/or copyright of their respective owners. ©2021 Rogers Communications

Reportable segments

We report our results of operations in three reportable segments. Each segment and the nature of its business is as follows:

Wireless and Cable are operated by our wholly owned subsidiary, RCCI, and certain of our other wholly owned subsidiaries. Media is operated by our wholly owned subsidiary, Rogers Media Inc., and its subsidiaries.

Summary of Consolidated Financial Results

n/m - not meaningful
1 As defined. See "Key Performance Indicators".
2 Adjusted EBITDA, adjusted net income, 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 and Related Performance Measures" for information about these measures, including how we calculate them and the ratios in which they are used.

Results of our Reportable Segments

WIRELESS

Wireless Financial Results

1 Calculated using service revenue.
2 Calculated using total revenue.

Wireless Subscriber Results1

1 Subscriber counts, subscriber churn, blended ABPU, and blended ARPU are key performance indicators. See "Key Performance Indicators".
2 As at end of period.

Service revenue
The 3% increase in service revenue and the stable blended ARPU this quarter was primarily a result of:

• a larger postpaid subscriber base; and
• higher roaming revenue as global travel restrictions were generally less strict than last year at the onset of COVID-19.

The stable service revenue and the 2% decrease in blended ARPU year to date was affected by lower overage revenue as a result of strong customer adoption of our Rogers Infinite unlimited data plans and lower roaming revenue as stricter travel restrictions were in place for the first quarter of 2021, offset by higher postpaid gross additions.

The 2% increase in blended ABPU this quarter was a result of the increased roaming revenue. The 1% decrease year to date was primarily a result of the declines in overage and roaming revenue, partially offset by a general ongoing shift as subscribers finance new, higher-value device purchases.

The increase in postpaid gross additions, the higher postpaid net additions, and the improved postpaid churn this quarter and year to date were a result of strong execution and an increase in market activity by Canadians with the ongoing opening of the economy.

Equipment revenue
The 12% decrease in equipment revenue this quarter was a result of:

• lower device upgrades by existing customers; and
• fewer of our new subscribers purchasing devices.

The year to date equipment revenue increase of 10% was primarily a result of higher device upgrades by existing customers and higher gross additions.

Operating expenses
Cost of equipment
The 10% decrease in the cost of equipment this quarter and 12% increase year to date were a result of the same factors discussed in equipment revenue above.

The ongoing long-term shift to customers financing their device purchases is reflected in the general trend of improvement in our equipment margin.

Other operating expenses
The 5% increase in other operating expenses this quarter was primarily a result of lower employee-related costs last year associated with COVID-19. The 7% decrease year to date was a result of lower bad debt expense as we recorded a provision in the prior year due to the economic uncertainty relating to COVID-19.

Adjusted EBITDA
The 2% increase in adjusted EBITDA this quarter and 3% increase year to date were a result of the revenue and expense changes discussed above.

CABLE

Cable Financial Results

Cable Subscriber Results 1

1 Subscriber results are key performance indicators. See "Key Performance Indicators".
2 Internet subscriber results include Smart Home Monitoring subscribers.
3 As at end of period.
4 On September 1, 2021, we acquired approximately 18,000 Internet subscribers and 20,000 customer relationships as a result of our acquisition of Seaside Communications, which are not included in net additions, but do appear in the ending total balance for September 30, 2021.

Service revenue
The 2% increase in service revenue this quarter and 4% increase year to date were a result of:

• the movement of Internet customers to higher speed and usage tiers in our Ignite Internet offerings and the increase in total customer relationships over the past year, due to growth in our Internet and Ignite TV subscriber bases; and
• a marginal and 3% increase this quarter and year to date, respectively, in ARPA as a result of disciplined promotional activity and Internet service pricing changes in late 2020; partially offset by
• declines in our legacy television and home phone subscriber bases.
  

We remain focused on our Connected Home roadmap, driven by our Ignite TV product. During the past year, we have achieved significant growth in our Ignite TV subscriber base. The next steps on our roadmap to help keep our customers connected include adding more apps and content to Ignite TV and launching more new products.

Operating expenses
The 4% increase in operating expenses this quarter and 3% increase year to date were a result of higher costs related to the increased revenue.

Adjusted EBITDA
The 2% increase in adjusted EBITDA this quarter and 6% increase year to date were a result of the service revenue and expense changes discussed above.

MEDIA

Media Financial Results

Revenue
The 3% decrease in revenue this quarter was a result of:

• lower advertising and broadcasting revenue as a result of the NHL and NBA completing their seasons late in the third quarter last year due to COVID-19, when traditionally they conclude in the second quarter; partially offset by
• higher Toronto Blue Jays attendance-related game day revenue as COVID-19 restrictions eased and fans were permitted to attend games on a limited basis.

Year to date revenue increased 22% primarily as a result of higher sports-related revenues as COVID-19 restrictions eased and higher Today's Shopping Choice revenue.

Operating expenses
The 10% increase in operating expenses this quarter was a result of:

• higher Toronto Blue Jays player payroll and higher game day costs, primarily as a result of the shortened 2020 MLB season; partially offset by
• lower programming and production costs as a result of the prior year timing of major sports leagues' return to play.

The 27% increase in operating expenses year to date was a result of:

• higher Toronto Blue Jays player payroll and higher game day costs, primarily as a result of the shortened 2020 MLB season;
• higher programming and production costs due to the timing of the resumption of live sports; and
• higher Today's Shopping Choice cost of sales in line with higher revenue as discussed above.
  

Adjusted EBITDA
The decreases in adjusted EBITDA this quarter and year to date were a result of the revenue and expense changes discussed above.

CAPITAL EXPENDITURES

1 Includes additions to property, plant and equipment net of proceeds on disposition, but does not include expenditures for spectrum licences or additions to right-of-use assets.
2 As defined. See "Key Performance Indicators".

Wireless
The increases in capital expenditures in Wireless this quarter and year to date were a result of investments made to upgrade our wireless network to continue delivering reliable performance for our customers. We continued to emphasize our 5G deployments in the 600 MHz band and other bands as we have deployed our 5G network in more than 850 communities and we continued rolling out our 5G standalone core network in Montreal, Ottawa, Toronto, and Vancouver.

Cable
The increase in capital expenditures in Cable this quarter was a result of higher investments in our network infrastructure. The year to date decrease was due to the recognition of capital efficiencies and improved capital intensity. We have continued upgrading our network infrastructure, including additional fibre deployments to increase our fibre-to-the-home and fibre-to-the-curb distribution. These upgrades will lower the number of homes passed per node and incorporate the latest technologies to help deliver more bandwidth and an even more reliable customer experience as we progress in our Connected Home roadmap, including service footprint expansion and upgrades to our DOCSIS 3.1 platform to offer increased download speeds over time.

Media
The increases in capital expenditures in Media this quarter and year to date were primarily a result of higher broadcast infrastructure expenditures, including investments in new production studios.

Corporate
The increases in corporate capital expenditures this quarter and year to date were a result of higher investments in our information technology.

Capital intensity
The increases in capital intensity this quarter and year to date were a result of the revenue and capital expenditure changes discussed above.

Regulatory Developments

See our 2020 Annual MD&A for a discussion of the significant regulations that affected our operations as at March 4, 2021. The following are the significant regulatory developments since that date.

3500 MHz spectrum licence band
Innovation, Science and Economic Development (ISED) Canada's 3500 MHz spectrum auction began on June 15, 2021 and ended on July 23, 2021. The results were publicly released on July 29, 2021. Twenty-three companies participated in the auction and 1,495 of 1,504 licences were awarded to fifteen of those participants, with a total value of $8.91 billion. We won 325 licences across the country at a cost of $3.3 billion. We made our first deposit of $665 million on August 13, 2021 and had expected to make final payment and receive the spectrum licences on October 4, 2021.

On September 22, 2021, due to concerns of possible interference between the frequency bands used for 5G communications and the bands used for certain aviation navigation tools, ISED Canada published its Addendum to Consultation on Amendments to SRSP-520, Technical Requirements for Fixed and/or Mobile Systems, Including Flexible Use Broadband Systems, in the Band 3450-3650 MHz, thereby delaying the issuance of, and final payment for, the spectrum licences. ISED Canada expects to publish an amended version of SRSP-520, if required, in late October 2021, after which ISED Canada will set a revised date for final payment and issuance of the spectrum licences.

We will take possession of these licences after making final payment. Additional information about our spectrum licence holdings is provided in our 2020 Annual MD&A.

Copyright retransmission of distant signals
Pursuant to section 31(2) of the Copyright Act, television service providers are permitted to retransmit programming within distant over-the-air television signals as part of a compulsory licensing regime. Rates for the distribution of the programming are established through negotiation or set by the Copyright Board. Distributors and content providers (the Collectives) were unable to agree on a new rate for the distribution of distant signals after the expiration of the then-current agreement in 2013. A proceeding was initiated by the Copyright Board in 2015 and a decision was rendered on December 18, 2018. The decision increased the rate paid by broadcast distribution undertakings (BDUs) by approximately 8% for 2014, a further 7.5% for 2015, and a further 2.5% for 2016, with 2017 and 2018 held constant at the 2016 rate. For the period of 2019 to 2023, an interim rate was set at the 2016 rate of $1.17.

The Collectives appealed the Copyright Board's decision on the 2014 to 2018 rates, seeking to have the rates increased to an average of approximately $2.20 for the five-year period. On July 22, 2021, the Federal Court of Appeal (Court) released a decision in which it determined the 2014 and 2015 rates would be final but agreed with the Collectives that errors were made with respect to the 2016 to 2018 rates. The Copyright Board could hold a new proceeding as soon as early 2022 to determine the rates from 2016 onwards. In the meantime, the BDUs, including Rogers, have filed a motion for Leave to Appeal the Court's decision with the Supreme Court of Canada. Due to the significant uncertainty surrounding both the outcome and the amount, if any, we might have to pay, we have not recorded a liability for this contingency at this time. The fees we currently pay the Collectives are not material.

CRTC review of mobile wireless services
On April 15, 2021 the CRTC issued Telecom Regulatory Policy 2021-130, Review of mobile wireless services. The CRTC mandated wholesale mobile virtual network operator (MVNO) access, seamless handoff for mandated wholesale roaming, and new mandatory low-cost and occasional-use retail rate plans; however, mandated MVNO access will only be provided if certain conditions are met as described briefly below.

The CRTC decided that mandated wholesale MVNO access must be offered by the national carriers, and SaskTel in Saskatchewan, but only made available to eligible regional wireless carriers that hold mobile spectrum licences, and only in the areas that are covered by their licences. The terms and conditions associated with mandated MVNO access must be approved by the CRTC, while rates will be subject to commercial negotiation, backstopped by final offer arbitration, with the CRTC acting as arbitrator. Mandated MVNO access will be limited to a seven-year period commencing on the date the CRTC finalizes the terms and conditions. This time limit is intended to provide the regional carriers sufficient time to expand their networks while maintaining investment incentives.

The national wireless carriers must also provide seamless handoff as part of the mandatory roaming they must offer to the regional wireless carriers. Seamless handoff will ensure that calls in progress are not dropped when customers travel outside their home network coverage and into the coverage of their roaming provider. The CRTC also directed the national wireless carriers to offer 5G roaming where the roaming network offers 5G service on its own network and to file proposed revised terms and conditions within 90 days for CRTC approval.

Finally, the CRTC mandated retail rate plans for low-cost and occasional use. These plans were implemented on July 14, 2021.

Wholesale Internet costing and pricing
In August 2019, in Telecom Order CRTC 2019-288, Follow-up to Telecom Orders 2016-396 and 2016-448 - Final rates for aggregated wholesale high-speed access services (2019 Order), the CRTC set final rates for facilities-based carriers' wholesale high-speed access services, including Rogers' third-party Internet access (TPIA) service. The 2019 Order set final rates for Rogers that were significantly lower than the interim rates that were previously billed and it further determined that these final rates would have applied retroactively to March 31, 2016. On May 27, 2021, the CRTC released Telecom Decision CRTC 2021-181 Requests to review and vary Telecom Order 2019-288 regarding final rates for aggregated wholesale high-speed access services (2021 Decision) in which it adopted the interim rates in effect prior to the 2019 Order as the final rates, with certain modifications, including the removal of the supplementary markup of 10% for incumbent local exchange carriers.

On May 28, 2021, a wholesale Internet Service Provider (ISP) petitioned the Governor in Council to, among other things, restore the 2019 Order and make the rates established in that order final. In addition, on June 28, 2021, the same wholesale ISP filed a motion seeking leave to appeal the 2021 Decision to the Federal Court of Appeal, which was granted in September 2021. We, along with several other cable companies, have intervened in these matters.

Key Performance Indicators

We measure the success of our strategy using a number of key performance indicators that are defined and discussed in our 2020 Annual MD&A and this earnings release. We believe these key performance indicators allow us to appropriately measure our performance against our operating strategy and against the results of our peers and competitors. The following key performance indicators are not measurements in accordance with IFRS and should not be considered alternatives to net income or any other measure of performance under IFRS. They include:

Non-GAAP Measures and Related Performance Measures

We use the following non-GAAP measures and related performance measures. These are reviewed regularly by management and the Board in assessing our performance and making decisions regarding the ongoing operations of our business and its ability to generate cash flows. Some or all of these measures may also be used by investors, lending institutions, and credit rating agencies as indicators of our operating performance, of our ability to incur and service debt, and as measurements to value companies in the telecommunications sector. These are not recognized measures under GAAP and do not have standard meanings under IFRS, so may not be reliable ways to compare us to other companies.

Reconciliation of adjusted EBITDA

Reconciliation of adjusted EBITDA margin

Reconciliation of adjusted net income

Reconciliation of adjusted earnings per share

Reconciliation of free cash flow

Reconciliation of adjusted net debt and debt leverage ratio

Rogers Communications Inc.
Interim Condensed Consolidated Statements of Income
(In millions of Canadian dollars, except per share amounts, unaudited)

Rogers Communications Inc.
Interim Condensed Consolidated Statements of Financial Position
(In millions of Canadian dollars, unaudited)

Rogers Communications Inc.
Interim Condensed Consolidated Statements of Cash Flows
(In millions of Canadian dollars, unaudited)

About Forward-Looking Information

This earnings release 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 earnings release. 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;
• includes conclusions, forecasts, and projections that are based on our current objectives and strategies and on estimates, expectations, assumptions, and other factors 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 earnings release.
  

Our forward-looking information includes forecasts and projections related to the following items, some of which are non-GAAP measures (see "Non-GAAP Measures and Related Performance Measures"), among others:

Our conclusions, forecasts, and projections are based on a number of estimates, expectations, assumptions, and other factors, including, among others:

Except as otherwise indicated, this earnings release and our forward-looking information 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 on which the statement containing the forward-looking information is made.

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

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 earnings release 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, its operations, and its financial performance and condition, fully review the sections of this earnings release entitled "Updates to Risks and Uncertainties" and "Regulatory Developments" and fully review the sections in our 2020 Annual 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. Information on or connected to sedar.com, sec.gov, our website, or any other website referenced in this document is not part of or incorporated into this earnings release.