Rogers
2021
Annual
Report
Rogers Communications Inc.
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About the Company
Our Purpose
To connect
Canadians to what
matters most in
their lives.
08
Executive
Leadership
Team
04
A Message
from
Tony
10
2021
Financial
Report
06
A Message
from
Edward
146
Corporate and
shareholder
information
03
About
Rogers
09
Directors
2
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ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
About Rogers
We are a team of
proud Canadians
dedicated to delivering
world-class networks,
communications services,
and entertainment to
millions of customers
across Canada.
Our founder, Ted Rogers, believed
in the power of communication to
enrich, entertain, and embolden
Canadians. He followed in his father’s
footsteps, and at the age of 27,
purchased his first radio station, CHFI.
From our modest beginnings,
Rogers has grown to become a
leading Canadian technology and
media company, providing world-
class services in wireless, cable,
sports, and media to Canadians and
Canadian businesses on our award-
winning networks.
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ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT A Message
from Tony
My fellow shareholders,
It is a privilege and an honour to serve you, our Board
and Rogers in my new role with this company. This
year will be one of the most significant and exciting
for our business since it was founded by Ted Rogers
more than 60 years ago.
As a company, we continue to have the best wireless,
cable and media assets in the industry. And this year,
we will come together with Shaw to create a truly
national network operator that will offer Canadians
more choice in more places, and allow us to compete
more effectively in the Canadian marketplace. Our
entrepreneurial roots have always encouraged us to
make bold investments in our business and in this
country, and we are continuing that legacy.
Importantly, the country and our businesses are now
emerging from the significant impacts of the COVID-
19 pandemic. These last two years have been difficult
for many, but the start of the recovery is positive and
encouraging for all Canadians. All around us we see
signs of economic growth that provide a meaningful
and encouraging backdrop for our own growth
aspirations.
Our priorities will be centred on creating meaningful
long-term growth in shareholder value. To achieve
this, our strategy will be focused on continuing
investments to ensure network leadership combined
with leading customer service. We know we have work
to do in these areas in the near term, and our priorities
are clear.
Network leadership
We are proud of our leading network position and
in 2022 we will increase investments in our award-
winning networks that are critical to our long-term
growth and success.
We were the first to bring 5G connectivity to
Canadians and today, our 5G network is the largest
and most reliable in the country. We will continue
to enhance and expand our 5G network, utilizing
our spectrum licences to the fullest, including our
recently acquired national 3500 MHz spectrum
licences, critical to 5G advancements that will
introduce a new generation of 5G innovation and
services.
Our investments in our cable business will also
ramp up this year as we continue to collaborate
with CableLabs to bring the 10G initiative to life,
with DOCSIS 4.0 technology coming to market
soon. Combined with our Ignite customer interface
platform, we will continue to deliver industry-leading
value propositions to Canadians across our entire
cable footprint.
Furthermore, we appreciate the role we play in
expanding our network to all Canadians and
bridging the digital divide. Too many homes and
businesses today are without adequate Internet. Our
Shaw transaction will be an important enabler for
this agenda, allowing us to reach more Canadians
through our wireless and cable networks. But in
addition to this transaction, we are increasing our
investments in expanding fibre and fixed wireless
access to cover more homes across the nation, and in
particular those in rural and isolated communities.
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ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT Improve customer experience and execution across
our business
To win in the marketplace, we know our leading
assets alone won’t be enough. We can and will deliver
better customer service and improve our execution
throughout our business. On this front, we are already
investing in more resources to serve our customers in
the manner they choose, including more call centre
representatives and improving the experience for
customers browsing and transacting online.
Our vision continues to be having the largest and
most reliable networks, combined with meaningful
value propositions for our customers, delivered
as easily and as simply as possible. Our capital
allocations will be focused on realizing this vision with
meaningful improvements as early as this year.
A talented and committed team
Underpinning our success will be our 23,000 talented,
entrepreneurial, and motivated employees across
Canada. Despite the ongoing challenges of the
pandemic, I have admired our team’s commitment to
our customers and our communities. As we move to
capitalize on the opportunities ahead of us, I know we
are all excited about evolving our performance-based
culture – taking the best of our talents and putting
them together to create tangible and meaningful
outcomes for our customers. Importantly, I am proud
of our strong new leadership team – collectively they
bring deep industry and company experience, and a
proven ability to drive operational improvements and
results.
Rogers and Shaw
The combination of Rogers and Shaw builds on
the strong legacy of two family-founded Canadian
companies. The combined company will have the
scale, assets, and capabilities needed to make
the levels of investment that Canada's digital
infrastructure needs, create jobs across Canada, offer
greater choice and competition, build on our shared
legacy of giving back to communities, and help
Canada lead in the global digital economy.
investing more in 5G and cable networks throughout
our nation, including funds dedicated to connecting
rural, remote and Indigenous communities across
Western Canada. As wireless and cable networks
converge to provide more efficiency and better
access and value for all Canadians, the merits of the
transaction are compelling and clear.
Teams from Rogers and Shaw have been working
constructively with regulators to ensure they have
the information they need to assess the significant
benefits the combined company will bring to
Canadians and the Canadian economy. We are also
progressing our integration plans to make sure we
hit the ground running following the close of the
transaction, to the extent permitted by our regulatory
process. Finally, we continue to meaningfully
strengthen our balance sheet so that we are prepared
for the closing of the transaction and the significant
investments we will continue to make in our business.
As we come together with Shaw, renew our focus
on execution, and build on the momentum across
our businesses, I am confident that we will drive
sustainable growth and increase value for our
shareholders.
In closing, while we ended 2021 with improving
execution, increasing momentum, and solid
fundamentals, we know we need to perform better
for our customers and our shareholders. I am
confident that through our resetting of priorities
for 2022, together with increased investments
in our networks, enhancements to our customer
experience, improvements in our execution, and the
realization of meaningful cost efficiencies across our
businesses, we will be well positioned to translate
our revenue growth into increased profitability and
more value for our shareholders. This is reflected in
our 2022 guidance for stronger growth across all our
businesses.
I would like to thank our employees, customers, and
you, our shareholders, for your continued support.
You can count on all of us here at Rogers to make you
proud of our next phase of evolution and growth.
Simply put, Rogers and Shaw can do more together
than each company can do on its own. This includes
Tony Staffieri
President and Chief Executive Officer
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ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
5
A Message
from Edward
My fellow shareholders,
At Rogers we are proud to be continuing the
legacy my father began more than 60 years ago.
Rogers is committed to ensuring the best for our
customers, our employees, all Canadians, and all our
shareholders.
From the start, building this company has been about
making the long-term investments in the assets
our business needs and bringing them to life for
Canadians. Throughout our history, from our very first
radio station, to the first mobile phone call in 1985,
to the latest in wireless 5G and cable DOCSIS 4.0
technology, the importance of our role in connecting
Canadians together has never been clearer.
The coming together of Rogers and Shaw this year
is another bold step that will give us the scale and
capabilities to accelerate much-needed investment in
our networks across Western Canada, increase choice
for consumers and businesses, and bridge the digital
divide between rural and urban communities.
We believe passionately that Rogers and Shaw
together, two storied entrepreneurial Canadian
companies with the same vision, will contribute
to a stronger future for Canada. There is fulsome
stakeholder value associated with this transaction,
and we have made extensive and meaningful
commitments to ensure this transaction benefits
Canadians.
Making progress, striving for better
As a board, our focus is on the long-term success of
our business, enabled by the right investments and
decisions to drive both future growth, and strong
results over the short and medium term.
That is why we took important strategic steps in 2021
designed to capture the significant and exciting
opportunities ahead for Rogers. In addition to
announcing our agreement with Shaw, we made
changes to our Board and management team to
ensure we are well placed to improve the overall
performance of our business and deliver the full
benefits of the transaction.
I have full confidence in our Board of Directors,
our new CEO, our management team, our 23,000
talented employees and the durable foundation we
are building for the future together.
With our renewed focus on performance and
execution, our results are showing encouraging signs
of improvement and momentum continues to build
across our businesses.
As we look ahead, our prospects are strong, and our
future is bright. We are committed to completing
the transformational transaction with Shaw, driving
growth across our lines of business, making the right
long-term investments in our networks and customer
experience, and generating strong returns for
shareholders.
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ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT Investing for the future
When we invest in our networks, we are investing in
the long-term future of our company and our country.
We remain committed to maintaining our network
leadership position and offering consumers and
businesses access to world-class wireless and cable
networks.
Over two years ago, Rogers was the first Canadian
carrier to launch 5G, and today we have the largest
and most reliable 5G network in Canada. In our cable
business, working with CableLabs, our 10G initiative
will allow us to launch DOCSIS 4.0, delivering the best
experiences for our customers, wherever they live,
work, learn and play. We are continually innovating to
ensure our assets, products, and services are amongst
the best in the world. And our investment history
supports that commitment.
Our investment strategy for this year also prioritizes
expanding our reach to underserved communities
and regions. We invested more than any other
competitor in 3500 MHz spectrum licences across
Canada, which will bring forward a new generation
of 5G applications and services. The enhancement
and expansion of our 5G and cable networks will
enable us to advance our plans to bridge the digital
divide between rural and urban areas. While there
is much more to do, I am proud of our efforts so far,
and we will continue to partner with governments and
communities at every level in this vital work.
Supporting our communities
In 2021, our commitment to the communities we
serve was unwavering. We expanded eligibility for
Connected for Success, enabling more than 750,000
Canadians to access this low-cost, high-speed Internet
program to connect to government services, learning,
employment, and loved ones.
Furthermore, as part of our efforts focused on
giving the next generation the chance to get ahead,
we helped hundreds of young people realize the
opportunity for post-secondary studies with Ted
Rogers Scholarships. We also awarded almost one
hundred Ted Rogers Community Grants across
Canada to support organizations making a difference
in the lives of thousands of young Canadians.
Looking Ahead
From our new CEO and management team to our
strong focus on performance and execution, and a
historic opportunity to unite with Shaw, we have put
in place the building blocks which we expect will
deliver sustainable growth over the long term and to
generate better returns for our shareholders.
I would like to thank our Board, our management
team, and our employees for their commitment and
hard work that made the above possible. Finally, I
also want to thank our shareholders for your ongoing
support.
Edward S. Rogers
Chair of the Board
Rogers Communications Inc.
ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
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Executive Leadership Team
As at March 3, 2022
1. Tony Staffieri
President and
Chief Executive Officer
2. Glenn A. Brandt
Chief Financial Officer
3. Robert Dépatie
President and Chief Operating
Officer, Home & Business Division
4. Lisa L. Durocher
Executive Vice President, Financial
and Emerging Services
5. Jorge Fernandes
Chief Technology and
Information Officer
6. Phil J. Hartling
President, Wireless
7. Bret D. Leech
Chief Human Resources Officer
8. Colette S. Watson
President, Rogers Sports & Media
9. Mahes S. Wickramasinghe
Chief Administrative Officer
10. Ted Woodhead
Chief Regulatory Officer and
Government Affairs
11. Marisa L. Wyse
Chief Legal Officer and
Corporate Secretary
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ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
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Directors
As at March 3, 2022
1. Edward S. Rogers
Chair of the Board
Chair of the Finance, Nominating,
and Executive Committees
2. Jack L. Cockwell, C.M.
3. Michael J. Cooper
4.
Ivan Fecan
Chair of the Human Resources
Committee
5. Robert J. Gemmell
Lead Director
Chair of the Corporate
Governance and Audit and Risk
Committees
6. Alan D. Horn, CPA, CA
Chair of the Pension Committee
7. Jan L. Innes
8. John (Jake) C. Kerr
C.M., O.B.C.
9. Philip B. Lind, C.M.
Vice Chair
10. Loretta A. Rogers
11. Martha L. Rogers
Chair of the ESG Committee
12.
Melinda M. Rogers-Hixon
Deputy Chair
13. Tony Staffieri
President and
Chief Executive Officer
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ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
9
MANAGEMENT’S DISCUSSION AND ANALYSIS
2021 Financial Report
11 MANAGEMENT’S DISCUSSION AND ANALYSIS
44 Managing our Liquidity and Financial Resources
44 Sources and Uses of Cash
47 Financial Condition
49 Financial Risk Management
52 Dividends and Share Information
54 Commitments and Contractual Obligations
54 Off-Balance Sheet Arrangements
55 Environmental, Social, and Governance (ESG)
55 Environmental and Social
57 Governance at Rogers
59
Income Tax and Other Government Payments
60 Risk Management
60 Risks and Uncertainties Affecting our Business
69 Controls and Procedures
70 Regulation in our Industry
72 Wireless
74 Cable
77 Other Information
77 Accounting Policies
81 Key Performance Indicators
83 Non-GAAP and Other Financial Measures
85 Summary of Financial Results of Long-Term Debt
Guarantor
86 Five-Year Summary of Consolidated Financial Results
13 Executive Summary
13 About Rogers
13 2021 Highlights
15 Financial Highlights
16 Shaw Transaction
17 Understanding Our Business
17 Products and Services
18 Competition
20
Industry Trends
22 Our Strategy, Key Performance Drivers, and Strategic
Highlights
22 2021 Objectives
22 Key Performance Drivers and 2021 Strategic Highlights
24 2022 Focus Areas
24 Financial and Operating Guidance
26 Capability to Deliver Results
26 Leading Networks
28 Customer Experience
29 Powerful Brands
29 Widespread Product Distribution
29 First-Class Media Content
29 Engaged People
29 Financial Strength and Flexibility
30 Widespread Shareholder Base and Dividends
31 2021 Financial Results
31 Summary of Consolidated Results
32 Key Changes in Financial Results Year Over Year
33 Wireless
34 Cable
35 Media
36 Capital Expenditures
37 Review of Consolidated Performance
40 Quarterly Results
43 Overview of Financial Position
10
| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
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, 2021. This MD&A should be read in
conjunction with our 2021 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. This MD&A is current as at March 3,
2022 and was approved by RCI’s 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 its subsidiaries. RCI refers
to the legal entity Rogers Communications Inc., not including its
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).
Effective January 1, 2022, we will be changing the way in which we
report certain subscriber metrics in both our Wireless and Cable
segments. Commencing in the first quarter of 2022, we will begin
presenting postpaid mobile phone subscribers, prepaid mobile
phone subscribers, and mobile phone ARPU in our Wireless
segment. We will also no longer report blended average billings
per unit (ABPU). In Cable, we will begin presenting retail Internet
subscribers among other product metrics. These changes are a
result of shifts in the ways in which we manage our business,
including the significant adoption of our wireless device financing
program, and to better align with industry practices. See “Key
Performance Indicators” for more information.
In this MD&A, first quarter refers to the three months ended
March 31, 2021, second quarter refers to the three months ended
June 30, 2021, third quarter refers to the three months ended
September 30, 2021, fourth quarter refers to the three months
ended December 31, 2021, this year refers to the twelve months
ended December 31, 2021, and last year refers to the twelve
months ended December 31, 2020. All results commentary is
compared to the equivalent periods in 2020 or as at December 31,
2020, as applicable, unless otherwise indicated.
related marks are
™Rogers and
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. ©2022 Rogers Communications
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
M
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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, likely, intend, estimate, plan, project, predict,
potential, guidance, outlook, target, and similar expressions,
although not all forward-looking information includes them;
• 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 MD&A.
Our forward-looking information includes conclusions, forecasts,
and projections related to the following items, among others:
• revenue;
• total service revenue;
• adjusted EBITDA;
• capital expenditures;
• cash income tax payments;
• 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;
• our debt leverage ratio;
• statements relating to plans we have implemented in response
to the COVID-19 pandemic (COVID-19) and its impact on us;
• the expected
timing and completion of
acquisition of Shaw Communications Inc. (Shaw) (Transaction);
• the benefits expected to result from the Transaction, including
corporate, operational, scale, and other synergies, and their
anticipated timing; and
the proposed
• all other statements that are not historical facts.
included
in this MD&A
information
Specific forward-looking
includes, but is not limited to, information and statements under
“Financial and Operating Guidance” relating
to our 2022
consolidated guidance on total service revenue, adjusted EBITDA,
capital expenditures, and free cash flow. All other statements that
are not historical facts are forward-looking information.
We base our conclusions, forecasts, and projections (including the
aforementioned guidance) on a number of estimates,
expectations, assumptions, and other factors, including, 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;
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 11
intentions. Many of
These risks, uncertainties, and other factors can also affect our
these risks,
objectives, strategies, and
uncertainties, and other 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,
factors or
strategies, or
assumptions underlying the forward-looking information prove
incorrect, our actual results and our plans could vary significantly
from what we currently foresee.
intentions change, or any other
investors
to exercise caution when
Accordingly, we warn
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
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.
information or
the
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,
in this MD&A entitled
“Regulation in our Industry” and “Environmental, Social, and
Governance (ESG)”, as well as our various other filings with
Canadian and US securities regulators, which can be found at
sedar.com and sec.gov, respectively.
fully review the sections
FOR MORE INFORMATION
You can find more information about us, including our Annual
Information Form, 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 document does
not constitute part of this MD&A.
You can also find information about our governance practices,
reporting, a glossary of
corporate
social
industry terms, and additional
communications and media
information about our business at investors.rogers.com.
responsibility
MANAGEMENT’S DISCUSSION AND ANALYSIS
• technology and network deployment;
• availability of devices;
• timing of new product launches;
• content and equipment costs;
• the integration of acquisitions;
• industry structure and stability; and
• the impact of COVID-19 on our operations, liquidity, financial
condition, or results.
Except as otherwise indicated, this MD&A and our forward-looking
information do not reflect the potential impact of any non-recurring
or other special items or of any dispositions, monetization events,
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:
• regulatory changes;
• technological changes;
• economic, geopolitical, and other conditions affecting
commercial activity;
• unanticipated changes in content or equipment costs;
• changing conditions in the entertainment, information, and/or
communications industries;
• sports-related work stoppages or cancellations and labour
disputes;
• the integration of acquisitions;
• litigation and tax matters;
• the level of competitive intensity;
• the emergence of new opportunities;
• external threats, such as epidemics, pandemics, and other public
health crises, natural disasters, the effects of climate change, or
cyberattacks, among others;
• risks related to the Transaction, including the timing, receipt, and
conditions related to the 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); satisfaction of
the various conditions to close the Transaction; financing the
Transaction; and
the anticipated benefits and successful
integration of the businesses and operations of Rogers and
Shaw; and the other risks outlined in “Risks and Uncertainties
Affecting our Business – Shaw Transaction” in this MD&A; and
• new
interpretations and new accounting standards
from
accounting standards bodies.
12
| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
Executive Summary
ABOUT ROGERS
Rogers is a leading Canadian technology and media company that
provides world-class communications services and entertainment
to consumers and businesses on our award-winning networks. Our
founder, Ted Rogers, purchased his first radio station, CHFI, in
1960. Today we are dedicated to providing industry-leading
wireless, cable, sports, and media to millions of customers across
Canada. 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).
2021 HIGHLIGHTS
KEY FINANCIAL INFORMATION
(In millions of dollars, except margins and per share amounts)
Consolidated
Total revenue
Total service revenue 1
Adjusted EBITDA 2
Adjusted EBITDA margin 2
Net income
Adjusted net income 2
Basic earnings per share
Adjusted basic earnings per share 2
Capital expenditures 3
Cash provided by operating activities
Free cash flow 2
Wireless
Service revenue
Revenue
Adjusted EBITDA
Adjusted EBITDA service margin 4
Adjusted EBITDA margin 5
Cable
Revenue
Adjusted EBITDA
Adjusted EBITDA margin
Media
Revenue
Adjusted EBITDA
Adjusted EBITDA margin
Almost all of our operations and sales are in Canada. We have a
highly skilled and diversified workforce of approximately 23,000
employees. Our head office is in Toronto, Ontario and we have
numerous offices across Canada. We report our results of
operations in three reportable segments. See “Understanding Our
Business” for more information.
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Years ended December 31
2021
2020 % Chg
14,655
12,533
5,887
40.2%
13,916
11,955
5,857
42.1%
5
5
1
(1.9 pts)
1,558
1,803
1,592
1,725
$ 3.09 $ 3.15
$ 3.57 $ 3.42
2,788
4,161
1,671
2,312
4,321
2,366
(2)
5
(2)
4
21
(4)
(29)
6,666
8,768
4,214
63.2%
48.1%
6,579
8,530
4,067
61.8%
47.7%
1
3
4
1.4 pts
0.4 pts
4,072
2,013
49.4%
3,946
1,935
49.0%
3
4
0.4 pts
1,975
(127)
(6.4)%
1,606
51
3.2%
23
n/m
(9.6 pts)
n/m – not meaningful
1 As defined. See “Key Performance Indicators”.
2 Adjusted EBITDA is a total of segments measure. Adjusted EBITDA margin is a supplementary financial measure. Adjusted basic earnings per share is a non-GAAP ratio. Adjusted
net income is a non-GAAP financial measure and is a component of adjusted basic earnings per share. Free cash flow is a capital management measure. These are not
standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other companies. See “Non-GAAP and Other Financial
Measures” for more information about these measures.
3 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.
4 Calculated using Wireless service revenue.
5 Calculated using Wireless total revenue.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 13
MANAGEMENT’S DISCUSSION AND ANALYSIS
KEY PERFORMANCE INDICATORS
Subscriber results (in thousands) 1
Wireless postpaid net additions
Wireless prepaid net losses
Wireless subscribers
Internet net additions
Internet subscribers 2
Ignite TV net additions
Total Ignite TV subscribers
Customer relationships net additions
Total customer relationships 2
Additional Wireless metrics 1
Postpaid churn (monthly)
Blended ARPU (monthly) 1,3
Additional Cable metrics 1
ARPA (monthly) 1,3
Penetration
Ratios
Capital intensity 1,3
Dividend payout ratio of net income 1,3
Dividend payout ratio of free cash flow 1,3
Return on assets 1,3
Debt leverage ratio 4
Employee-related information
Total active employees
As at or years ended December 31
2021
2020
Chg
448
(94)
11,297
245
(142)
10,943
49
2,665
57
2,598
244
788
218
544
31
2,581
12
2,530
203
48
354
(8)
67
26
244
19
51
0.95%
1.00%
$ 50.26 $ 50.75
(0.05 pts)
0.49)
($
$132.58 $130.70
55.3%
54.9%
$
1.88
(0.4 pts)
19.0%
64.8%
60.4%
3.7%
3.4
16.6%
63.4%
42.7%
4.1%
3.0
2.4 pts
1.4 pts
17.7 pts
(0.4 pts)
0.4
23,000
24,000
(1,000)
1 As defined. See “Key Performance Indicators”.
2 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 December 31, 2021.
3 Blended ARPU, ARPA, capital intensity, dividend payout ratio of net income, dividend payout ratio of free cash flow, and return on assets are supplementary financial measures.
See “Non-GAAP and Other Financial Measures” for an explanation as to the composition of these measures.
4 Debt leverage ratio is a capital management measure. As a result of our issuance of subordinated notes in December 2021 (see “Managing our Liquidity and Financial
Resources”), we have amended our definition of this measure. See “Non-GAAP and Other Financial Measures” and “Financial Condition” for more information about this
measure.
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| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
FINANCIAL HIGHLIGHTS
Our stable financial position throughout this year enabled us to
prioritize the actions we needed to take as a result of COVID-19,
continue to make high priority investments in our network, and
ensure customers stayed connected during this critical time.
REVENUE
Revenue increased by 5% this year, driven by a 1% increase in
Wireless service revenue, a 3% increase in Cable revenue, and a
23% increase in Media revenue.
Wireless service revenue increased by 1% this year, largely as a
result of a larger postpaid subscriber base and higher roaming
restrictions were
revenue, as COVID-19-related global
generally less strict than in 2020, partially offset by lower overage
revenue. Wireless equipment revenue increased by 8% as a result
of higher device upgrades by existing customers and a shift in the
product mix towards higher-value devices, partially offset by fewer
of our new subscribers purchasing devices.
travel
Cable revenue increased by 3% this year as a result of the
movement of Internet customers to higher speed and usage tiers,
the increases in our Internet and Ignite TV subscriber bases, and
Internet service pricing
disciplined promotional activity and
changes in late 2020, partially offset by declines in our legacy
television and home phone subscriber bases.
Media revenue increased by 23% this year, primarily as a result of
the postponement of the start of the 2020-2021 NHL and NBA
seasons, shifting revenue to 2021, and higher Toronto Blue Jays™
attendance-related revenue as COVID-19 restrictions eased and
fan attendance was permitted.
ADJUSTED EBITDA
Adjusted EBITDA increased 1% this year, primarily due to 4%
increases in Wireless and Cable adjusted EBITDA, partially offset by
the decrease in Media adjusted EBITDA, with a consolidated
adjusted EBITDA margin of 40%.
Wireless adjusted EBITDA increased 4% this year, as a result of the
flow-through impact of the aforementioned increases in revenue
and lower bad debt expense. Although a decrease from 2020, the
ongoing long-term shift to customers financing their device
purchases
in our
in the general
equipment margin.
improvement
is reflected
Cable adjusted EBITDA increased 4% this year, primarily as a result
of higher revenue, as discussed above.
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Media adjusted EBITDA decreased by $178 million this year,
primarily due to higher programming and production costs as a
result of the postponement of the start of the 2020-2021 NHL and
NBA seasons, higher general operating costs as a result of the
resumption of sports and
increased activities as COVID-19
restrictions eased, and higher Toronto Blue Jays player payroll and
game day costs, partially offset by higher revenue as discussed
above.
NET INCOME AND ADJUSTED NET INCOME
Adjusted net income increased 5% this year, primarily as a result of
the increase in adjusted EBITDA and lower finance costs. Net
income decreased 2%, and was also affected by higher
restructuring, acquisition and other costs attributable to the
Transaction. See “Review of Consolidated Performance” for more
information.
CASH FLOW AND AVAILABLE LIQUIDITY
We returned substantial cash to shareholders this year through the
payment of $1.01 billion in dividends. In addition, we declared a
$0.50 per share dividend on January 26, 2022.
Our cash provided by operating activities decreased by 4% this
year, primarily affected by higher income taxes paid and higher
restructuring, acquisition and other costs paid associated with the
Transaction. Although free cash flow decreased 29% this year, we
continued to generate substantial free cash flow of $1,671 million.
The decrease was primarily as a result of higher capital
expenditures to support increased network investments and higher
cash income taxes due to our transition to a device financing
business model.
Our debt leverage ratio was 3.4 as at December 31, 2021, up from
3.0 as at December 31, 2020, driven by higher adjusted net debt,
primarily due to an increase in our short-term borrowings from our
non-revolving credit facilities used to pay for 3500 MHz spectrum
licences and the issuance of $2 billion of subordinated notes in
December 2021.
Our overall weighted average cost of borrowings was 3.95% as at
December 31, 2021 (2020 – 4.09%) and our overall weighted
average term to maturity on our debt was 11.6 years as at
December 31, 2021 (2020 – 12.8 years).
We ended the year with approximately $4.2 billion of available
liquidity1 (2020 – $5.7 billion), including $3.1 billion (2020 – $2.6
billion) available under our bank and letter of credit facilities,
$0.4 billion (2020 – $0.6 billion) available under our $1.2 billion
receivables securitization program, and $0.7 billion (2020 – $2.5
billion) in cash and cash equivalents.
1 Available liquidity is a capital management measure. See “Non-GAAP and Other
Financial Measures” for more information about this measure.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 15
MANAGEMENT’S DISCUSSION AND ANALYSIS
Shaw Transaction
On March 15, 2021, we announced an agreement with Shaw to
acquire all of Shaw’s issued and outstanding Class A Participating
Shares and Class B Non-Voting Participating Shares (collectively,
Shaw Shares) for a price of $40.50 per share. The Shaw Family
Living Trust, the controlling shareholder of Shaw, and certain
members of the Shaw family and certain related persons (Shaw
Family Shareholders) will
in cash and
receive
(ii) 0.417206775 Class B Non-Voting Shares of Rogers per Shaw
Share held by the Shaw Family Shareholders. The Transaction is
valued at approximately $26 billion, including the assumption of
approximately $6 billion of Shaw debt.
(i) $16.20
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 Key Regulatory
Approvals. Subject to receipt of all required approvals and
satisfaction of other conditions prior to closing, the Transaction is
expected to close in the first half of 2022. Rogers has extended the
outside date for closing the Transaction from March 15, 2022 to
June 13, 2022 in accordance with the terms of the arrangement
agreement.
The combined entity will build on the strong legacy of two family-
founded Canadian companies. It 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.
The combination will also accelerate the delivery of critical 5G
service across Western Canada, from rural areas to dense cities,
more quickly than either company could achieve on its own, by
bringing together the expertise and assets of both companies.
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 year, 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” for more information on the
committed credit 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.
In connection with our application for Canadian Radio-Television
and Telecommunications Commission (CRTC) approval to acquire
Shaw’s licensed broadcasting assets, the CRTC held an oral hearing
from November 22 to 26, 2021, during which Rogers, Shaw, and
31 intervenors (including Canada Public Affairs Channel Inc.
(CPAC) as an interested party) had an opportunity to comment on
from the CRTC regarding the
and respond to questions
application. Final written submissions from
intervenors were
accepted until December 13, 2021, and Rogers and CPAC
submitted final replies on December 20, 2021.
In accordance with the terms of the arrangement agreement,
Rogers and Shaw filed pre-merger notifications pursuant to Part IX
of the Competition Act to trigger the Competition Bureau’s review
of the Transaction. Rogers and Shaw have worked cooperatively
and constructively to respond to further requests for information, as
required under the arrangement agreement. On September 28,
2021, the Competition Bureau
issued a public request for
information to help further gather and assess facts about the
Transaction. The Competition Bureau invited interested parties to
share
information or experiences confidentially by
October 29, 2021. The Federal Court also issued orders requiring
Xplornet Communications Inc., BCE Inc., TELUS Corporation, and
Quebecor Inc. to produce records and written information related
to mobile wireless services that are relevant to the Competition
Bureau’s review of the Transaction, which is ongoing.
their
In accordance with the conditions of Shaw’s spectrum licences,
Rogers and Shaw filed joint applications with Innovation, Science
and Economic Development Canada (ISED Canada) for approval of
the indirect transfer of those spectrum licences by the Minister of
Innovation, Science and Industry. ISED Canada’s review is ongoing.
The Transaction is subject to a number of additional risks. For more
information, see “Risks and Uncertainties Affecting our Business –
Shaw Transaction”.
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| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
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Understanding Our Business
Rogers is a leading Canadian technology and media company.
• wireless home phone;
• advanced wireless solutions for businesses, including wireless
THREE REPORTABLE SEGMENTS
We report our results of operations in three reportable segments.
Each segment and the nature of its business are as follows:
private network services;
• bridging landline phones with wireless phones; and
• machine-to-machine solutions and Internet of Things (IoT)
Segment
Principal activities
Wireless Wireless telecommunications operations for
Canadian consumers and businesses.
Cable
Media
Cable telecommunications operations, including
Internet, television, telephony (phone), and smart
home monitoring services for Canadian
consumers and businesses, and 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 business, public sector, and carrier wholesale
markets.
A diversified portfolio of media properties,
including sports media and entertainment,
television and radio broadcasting, specialty
channels, multi-platform shopping, and digital
media.
See “Capability to Deliver Results” for more information about our
extensive wireless and cable networks and significant wireless
spectrum position.
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.
PRODUCTS AND SERVICES
WIRELESS
Rogers is a Canadian leader in delivering a range of innovative
wireless network technologies and services. We were the first
Canadian carrier to launch a 5G network and we have the largest
5G network in Canada, serving over 1,500 communities and 70% of
the Canadian population as at December 31, 2021. Our postpaid
and prepaid wireless services are offered under the Rogers™,
Fido™, and chatr™ brands, and provide consumers and businesses
with the latest wireless devices, services, and applications including:
including our Rogers
Internet access,
• mobile high-speed
Infinite™ unlimited data plans;
• wireless voice and enhanced voice features;
• Rogers Pro On-the-Go™, a personalized service experience for
device delivery and setup to a customer’s location of choice
within the service area;
• Express Pickup, a convenient service for purchasing devices
online or through a customer care agent, with the ability to pick
up in-store as soon as the same day;
• direct device shipping to the customer’s location of choice;
• device and accessory financing;
• device protection;
• in-store expert device repair service;
• global voice and data roaming, including Roam Like Home™
and Fido Roam™;
solutions.
CABLE
We are one of the largest cable providers in Canada. Our cable
network provides an innovative and leading selection of high-
speed broadband Internet access, digital television and online
viewing, phone, smart home monitoring, and advanced home WiFi
services to consumers in Ontario, New Brunswick, Nova Scotia, and
on the island of Newfoundland. We also provide services to
businesses across Canada that aim to meet the increasing needs of
today’s critical business applications.
In 2020, in response to COVID-19, we launched customer self-
installation capabilities within Cable as a safe, easy, no-contact way
for our customers to install our Ignite Internet™ and Ignite TV™
services. Since launching in late March 2020, over 86% of our Cable
installations have been through the self-install program. We also
launched Blitzz™, a remote visual assistance tool that enables
customers to access support virtually and reduces the need to
deploy field technicians for installation and service calls.
In 2021, we launched Ignite Internet Gigabit 1.5 in select areas,
giving customers access to even faster Internet service. We also
expanded the Ignite WiFi™ Hub app with enhanced Active Time
Details and Advanced Security to give customers greater control
over their home WiFi.
Internet services include:
• Internet access through broadband and fixed wireless 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, with some areas able to receive
access speeds of up to 1.5 Gbps;
• Rogers Ignite™ and Fido Internet unlimited packages, combining
fast and reliable speeds with the freedom of unlimited usage
and options for self-installation;
• Rogers Ignite WiFi Hub, offering a personalized WiFi experience
with a simple digital dashboard for customers to manage their
home WiFi network, providing visibility and control over family
usage; and
• Rogers™ Smart Home Monitoring, offering services such as
monitoring, security, automation, energy efficiency, and smart
control through a smartphone app.
Television services include:
• local and network TV, made available through traditional digital
or IP-based Ignite TV, including starter and premium channel
packages along with à la carte channels;
• on-demand television;
• cloud-based digital video recorders (DVRs) available with Ignite
TV services;
• voice-activated remote controls, restart features, and integrated
apps such as YouTube, Netflix, Sportsnet NOW™, Amazon Prime
Video, and Disney+ on Ignite TV;
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 17
MANAGEMENT’S DISCUSSION AND ANALYSIS
• personal video recorders (PVRs), including Whole Home PVR
and 4K PVR capabilities;
• an Ignite TV app, giving customers the ability to experience
Ignite TV (including setting recordings) on their smartphone,
tablet, laptop, or computer;
• IgniteTM SmartStreamTM , an entertainment add-on for Ignite
Internet customers, giving them access to their favourite
streaming services in one place;
• Download and Go, the ability to download recorded programs
onto your smartphone or tablet to watch at a later time using the
Ignite TV app;
• linear and time-shifted programming;
• digital specialty channels; and
• 4K television programming, including regular season Toronto
Blue Jays home games and select marquee National Hockey
League (NHL) and National Basketball Association (NBA) games.
Phone services include:
• residential and small business local telephony service; and
• calling features such as voicemail, call waiting, and long distance.
Enterprise services include:
• voice, data networking, IP, and Ethernet services over multi-
service 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;
In Television, we operate several conventional and specialty
television networks, including:
• Sportsnet’s four regional stations along with Sportsnet ONE™,
Sportsnet 360™, andSportsnet
World™;
•Citytv ™ network, which, together with affiliated stations, has
broadcast distribution to approximately 76% of Canadian
individuals;
•OMNI ™ multicultural broadcast television stations, including
OMNI Regional, which provide multilingual newscasts nationally
to all digital basic television subscribers;
• specialty channels that include FX™ (Canada), FXX™ (Canada),
and OLN™ (formerly Outdoor Life Network); and
• Today’s Shopping Choice™, Canada’s only nationally televised
shopping channel, which generates a significant and growing
portion of its revenue from online sales.
In Radio, we operate 54 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™.
We also offer a range of digital services and products, including:
• our digital sports-related assets, including NHL LIVE and SN
NOW™;
• other digital assets, including Citytv NOW™; and
• a range of other websites, apps, podcasts, and digital products
associated with our various brands and businesses.
• 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 information technology (IT) and network technology
offerings with security-embedded, cloud-based, professionally
managed solutions;
• extensive cable access network services for primary, bridging,
and back-up (including through our wireless network,
if
applicable) connectivity; and
• specialized telecommunications technical consulting for Internet
service providers (ISPs).
MEDIA
Our portfolio of Media assets, with a focus on sports and regional
TV and radio programming, reaches Canadians from coast to
coast.
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 agreement with the NHL (NHL Agreement), which runs
through the 2025-2026 NHL season, allows us to deliver more than
1,300 regular season games during a typical season across
television, smartphones,
tablets, personal computers, and
streaming devices, both through traditional streaming services as
well as through NHL LIVE™. It also grants Rogers national rights on
those platforms to the Stanley Cup 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.
18
| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
OTHER
We offer several credit cards, including the Rogers™ World Elite
Mastercard, Rogers™ Platinum Mastercard, and t he Fido™
Mastercard, which allow customers to earn cashback rewards points
on credit card spending.
in a number of associates and
joint
OTHER INVESTMENTS
We hold
arrangements, some of which include:
• our 37.5% ownership
interests
interest
in Maple Leaf Sports &
Entertainment Ltd. (MLSE), which owns the Toronto Maple Leafs,
the Toronto Raptors, Toronto FC, the Toronto Argonauts, 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.
We also hold a number of interests in marketable securities of
publicly traded companies, including Cogeco Inc. and Cogeco
Communications Inc.
COMPETITION
The telecommunications industry is a highly competitive industry
served by many national, regional, and reseller players giving
consumers a broad choice in service providers and plan offerings.
The industry is very capital intensive and requires meaningful,
continual investments to implement next-generation technology
and to support existing infrastructure. Given the highly regulated
nature of the industry, the already competitive dynamic could be
further influenced by regulatory change (see “Regulation in our
Industry” for more information).
Traditional wireline telephony and television services are now
offered over the Internet. Consumers continue to change how they
choose to communicate or watch video, including with a growing
selection of over-the-top (OTT) services, and this is changing the
mix of packages and pricing that service providers offer and could
affect churn levels.
In the media industry, consumer viewing habits continue to shift
towards digital and online media consumption and advertisers are
directing more advertising dollars to those media channels. In
addition, we now compete with a range of digital and online media
companies, including large global companies.
WIRELESS
We compete on customer experience, price, quality of service,
scope of services, network coverage, sophistication of wireless
technology, breadth of distribution, selection of devices, branding,
and positioning.
• Wireless technology – our extensive long-term evolution (LTE)
network caters to customers seeking the increased capacity and
speed it provides. We are also expanding our 5G network to
further these capabilities. We compete with BCE Inc. (Bell) and
TELUS Corporation (Telus) at a national level, and with Vidéotron
ltée (Videotron), Saskatchewan Telecommunications (SaskTel),
and Xplornet Communications Inc. (Xplornet) at a regional level,
all of whom operate 5G networks, and with Shaw at a national
level and Eastlink Inc. (Eastlink) at a regional level, each 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, such as WiFi “hotspots” and
mobile virtual network operators (MVNO), such as Primus.
• Product, branding, and pricing – we compete nationally with Bell,
Telus, and Shaw, including their flanker brands Virgin Plus (Bell),
Lucky Mobile (Bell), Koodo (Telus), Public Mobile (Telus), and
Freedom Mobile (Shaw). We also compete with various regional
players and resellers.
• Distribution of services and devices – we have one of the largest
distribution networks in the country, and compete with other
service providers for dealers, prime locations for our own stores,
and third-party retail distribution shelf space. We also compete
with other service providers on the quality and ease of use of our
self-serve options and other digital capabilities.
• Wireless networks – consolidation amongst regional players, or with
incumbent carriers, could alter the regional or national competitive
landscapes for Wireless. Additionally, certain service providers that
currently do not offer wireless products or services have purchased
spectrum licences and could enter the market in the future.
• Spectrum – we currently have the largest spectrum position in the
country, including the spectrum licences we obtained through the
3500 MHz auction held in 2021. On August 27, 2020, ISED
Canada launched a consultation, proposing changes to the
spectrum utilization of the 3800 MHz band, making 250 MHz of
the spectrum available for 5G. On May 21, 2021, ISED Canada
announced the decision to repurpose the 3800 MHz spectrum
band to support 5G services. The 3800 MHz spectrum licence
auction is expected to take place in early 2023. The 3800 MHz
spectrum licences, along with other frequency bands, are essential
to the deployment of 5G networks. The outcome of this auction
may increase competition. See “Regulation in our Industry” for
more information.
CABLE
Internet
We compete with other ISPs that offer fixed-connection residential
high-speed Internet access services. Rogers and Fido high-speed
Internet services compete directly with, among others:
• Bell’s Internet services in Ontario, New Brunswick, Nova Scotia,
and on the island of Newfoundland, including Virgin Plus; and
• various resellers using wholesale telecommunication company
digital subscriber line (DSL) and cable third-party Internet access
(TPIA) services in local markets.
A number of different players in the Canadian market also
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 areas in
which they have the most extensive networks. In the enterprise
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:
• Ontario – Bell, Cogeco Data Services, and Digital Colony;
• Quebec – Bell, Telus, and Videotron;
• Atlantic Canada – Bell and Eastlink; and
• Western Canada – Shaw and Telus.
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Television
We compete with:
• other Canadian multi-channel
distribution
undertakings (BDUs), including Bell, Shaw, and other satellite
and IPTV providers;
broadcast
• OTT video offerings through providers like Netflix, YouTube,
Apple, Amazon Prime Video, Crave, Google, Disney+, and other
channels streaming their own content; and
• over-the-air local and regional broadcast television signals
received directly through antennas, the illegal distribution of
Canadian and international channels via video streaming boxes,
and the illegal reception of US direct broadcast satellite services.
Phone
While Phone represents a small portion of our business, we
compete with other telephony service providers, including:
• Bell’s wireline phone service in Ontario, New Brunswick, Nova
Scotia, and on the island of Newfoundland;
IP
• incumbent local exchange carrier (ILEC) local loop resellers and
voice over
(such as Primus
(VoIP) service providers
Telecommunications Canada Inc. and Comwave Networks Inc.),
other VoIP-only service providers (such as Vonage and Skype),
and other voice applications that use the Internet access services
of ISPs (such as Facebook and WhatsApp); and
• substitution of wireline for wireless products, including mobile
phones and wireless home phone products.
MEDIA
Competition in Sports Media and Entertainment includes other:
• televised and online sports broadcasters;
• 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;
• professional sports teams, for merchandise sales revenue; and
• new digital sports media companies.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 19
MANAGEMENT’S DISCUSSION AND ANALYSIS
Television and Radio, both of which are focused on local and
regional content, compete for audiences and advertisers with:
• other Canadian television and radio stations, including those
owned and operated by the CBC, Bell Media, and Corus
Entertainment;
Wireless providers continue to invest in the next generation of
technologies, like 5G, to meet increasing data demands. New
products and applications on the wireless network will continue to
rely on ultra-reliable, low latency transport networks, capable of
supporting both wireless and wireline traffic.
• OTT video offerings through providers like Netflix, YouTube,
Apple, Amazon Prime Video, Crave, Google, Disney+, and other
channels streaming their own content;
• OTT radio offerings, such as iHeartRadio, Apple Music, Spotify,
Pandora, and Radioplayer Canada;
• other media, including newspapers, magazines, and outdoor
advertising; and
• other technologies available on the Internet or through the
cloud, such as social media platforms, online web information
services, digital assistants, music downloading, and portable
media players.
Today’s Shopping Choice’s model of live, hosted-video sales
content and its robust online shopping experience competes with:
• pure play e-commerce retailers servicing Canada;
• select branded retailers in Canada and their related e-commerce
websites;
• other available television-shopping channels and infomercials
that sell products on television; and
• direct-to-consumer livestream video shopping events, social
commerce, and shoppable video technologies that are rapidly
emerging online.
Our digital media products compete for readership and advertisers
with:
• online
information and entertainment websites and apps,
including digital news services, streaming services, and content
available via social networking services;
magazines, both digital and printed; and
•
• other traditional media, such as TV and radio.
INDUSTRY TRENDS
The telecommunications industry in Canada is very capital intensive
and highly regulated. Our reportable segments are affected by
various overarching trends relating to changing technologies,
consumer demands, economic conditions, and
regulatory
developments, all of which could limit essential future investments
in the Canadian marketplace. See “Risks and Uncertainties
Affecting our Business” and “Regulation in our Industry” for more
information. Below is a summary of the industry trends affecting our
specific reportable segments.
WIRELESS TRENDS
The ongoing extensive investment made by Canadian wireless
providers has created far-reaching and sophisticated wireless
networks that have enabled consumers and businesses to utilize
fast multimedia capabilities
through 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. Mobile commerce continues
to
increase as more devices and platforms adopt secure
technology to facilitate wireless transactions.
In January 2020, we were the first Canadian carrier to launch a 5G
network and, in December 2020, the first Canadian carrier to begin
rolling out a 5G standalone core network. Our 5G network is the
largest 5G network
in Canada, reaching more than 1,500
communities and 70% of the Canadian population as at
December 31, 2021.
To help make the cost of new wireless devices more affordable for
consumers, Rogers and other Canadian wireless carriers offer
wireless device financing programs, whereby consumers can
finance up to the full cost of the device over a 24-month term at 0%
interest. We believe being able to finance devices over 24 months
helps reduce subscriber churn.
In addition to the wireless device financing plans now available,
subscribers are increasingly bringing their own devices or keeping
their existing devices longer and therefore may not enter into term
contracts
impact
for wireless services. This may negatively
subscriber churn, but may also create gross addition subscriber
opportunities as a result of increased churn from other carriers. This
trend may also negatively impact the monthly service fees charged
to subscribers as they shop for plans that best meet their needs.
Wireless market penetration in Canada is approximately 98% of the
population (compared to penetration of 129% in the US) and is
expected to continue growing, per the Bank of America Merrill
Lynch October 2021 Global Wireless Matrix.
CABLE TRENDS
Technology advancement, non-traditional competitors, consumer
behaviours, and regulatory developments are key areas influencing
Cable. This market is very capital intensive, and a strong Internet
offering
is the backbone to effectively serving this market.
Applications on the Internet 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) have been growing with increased
adoption of OTT services.
include faster broadband
Cable and wireline companies are expanding their service offerings
to
Internet. Canadian companies,
including Rogers, are increasingly offering download speeds of 1
to 1.5 Gbps and Internet offerings with unlimited bandwidth.
Consumers are demanding faster-than-ever speeds for streaming
online media, uploading personal content, and playing online
video games, and for their ever-growing number of connected
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)
3.1 and fibre-to-the-home (FTTH) technologies and they are
starting to evolve their networks to be DOCSIS 4.0-capable. These
technologies provide faster potential data communication speeds
than earlier technologies, allowing both television and Internet
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signals to reach consumers more quickly in order to sustain reliable
speeds to address the increasing number of Internet-capable
devices.
We offer fixed wireless Internet access services in rural and remote
areas and expect this offering to continue to grow as we work
towards closing the digital divide.
COVID-19 has required many people to work or study from home
simultaneously, and workplaces have also started to shift to partial
or fully remote work, further establishing the need for strong cable
networks that are able to handle increased capacity than previously
existed. Cable and wireline companies have needed to continue
adding capacity and managing
to continue reliably
supporting the needs of Canadians.
traffic
Our business customers use fibre-based access and cloud
computing to capture and share information in more secure and
accessible environments. This, combined with
rise of
multimedia and Internet-based business applications, is driving
exponential growth in data demand.
the
Businesses 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.
Canadian wireline companies are dismantling legacy networks and
investing in next-generation platforms 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
integrators and
manufacturers.
include systems
Devices and machines are becoming more interconnected and
there is more reliance on the Internet and other networks to
facilitate updates and track usage.
Broadcast television technology continues to improve with 4K TV
broadcasts and high dynamic range (HDR) for higher resolution
and improved video image colour and saturation.
MEDIA TRENDS
Consumer viewing behaviours are continually evolving and the
industry continues to adjust to these changes. 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, networks, and
new digital entrants 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.
Consumer demand for digital media, content on mobile devices,
and on-demand content is increasing and media products have
experienced significant digital uptake, requiring industry players to
increase their efforts in digital content and capabilities in order to
compete. In response to this trend, advertisers are shifting their
spending to premium video and audio products on global digital
platforms and social media that enable marketers to narrowly
target specific audiences instead of the previous mass marketing
approach. This results in lower use of traditional advertising
methods and may require a shift in focus.
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 of our competitors 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.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 21
MANAGEMENT’S DISCUSSION AND ANALYSIS
Our Strategy, Key Performance Drivers, and Strategic Highlights
As part of our long-term vision to become number one, we set annual objectives to measure progress and to address short-term
opportunities and risks.
2021 OBJECTIVES
Priority
Create best-in-class customer experiences by putting our
customers first in everything we do
Invest in our networks and technology to deliver leading
performance, reliability, and coverage
Drive market-leading growth in each of our lines of business
Drive best-in-class financial outcomes for our shareholders
Develop our people, drive engagement, and build a high-
performing and inclusive culture
Be a strong, socially and environmentally responsible leader in our
communities
2021 Objectives
Accelerate digital and self-serve adoption by building on
momentum generated during COVID-19; reinvent experiences
across all channels to optimize customer
journeys; solve
customer problems the first time, or even before, they contact
us; and invest in tools, capabilities, and our team to create
frictionless digital and frontline experiences.
Invest in our cable and wireless networks to deliver industry-
leading connectivity to our customers; grow our leadership in 5G
and reestablish leadership in IoT; expand our network footprint
and product reach to connect underserved communities; and
modernize our systems by leveraging cloud and data capabilities.
Enhance our marketing and sales capabilities to propel
consistent and sustainable customer additions; grow our
business in key regional markets across Canada; create products,
services, and content that customers will love; and anchor our
Media strategy in sports and diversify into digital and sports-
related growth areas.
Improve financial performance and drive cost and productivity
improvements across Rogers.
Ensure the safety and well-being of our employees and evolve
our ways of working; build a culture of inclusion for our team
members, customers, and communities; and attract top and
diverse talent and develop our team as we build our future
workforce.
Partner with communities across Canada
to deepen
engagement and increase impact; grow our presence in a
sustainable and environmentally responsible manner; and build
our culture and reputation as a great Canadian company.
KEY PERFORMANCE DRIVERS AND 2021 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. In the third 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. Late in
the fourth quarter, the Omicron variant re-accelerated the spread of
COVID-19 and many Canadian provinces reintroduced various
restrictions, including, amongst others, placing capacity limits on
organized gatherings and retail stores. 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.
The following achievements display the progress we made towards
meeting the objectives we set for 2021, as discussed above.
CREATE BEST-IN-CLASS CUSTOMER EXPERIENCES BY
PUTTING OUR CUSTOMERS FIRST IN EVERYTHING WE DO
• Improved Wireless postpaid churn by 5 basis points to 0.95%.
• Continued to accelerate our digital-first plan to make it easier for
customers, with digital adoption at 86.1%, up from 84.0% in 2020.
• Rogers Pro On-the-Go service has continued expanding across
the country, bringing our device delivery and set-up support
program access to more than 16 million Canadians.
• Transformed 130 retail stores into dual-door locations that offer
both Rogers and Fido brands, growing our distribution footprint
nationally to a total of 140 dual-door locations, including our
flagship store at Yonge and Dundas in Toronto.
• 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 it up the same day in-store.
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• Launched certified walk-in repairs in select Rogers and Fido
locations, offering our customers fast and reliable service to fix
batteries, screens, cameras, audio, software, and more.
• Expanded our Fido Payment Program so mobile customers can
get accessories for $0 down and 0% interest, and no taxes
upfront.
INVEST IN OUR NETWORKS AND TECHNOLOGY TO
DELIVER LEADING PERFORMANCE, RELIABILITY AND
COVERAGE
• Expanded Canada’s largest and most reliable 5G network which
reached more than 1,500 communities and 70% of the
Canadian population as at December 31, 2021.
• Invested $3.3 billion in 3500 MHz spectrum licences, 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 Best In Test and recognized as Canada’s most reliable
4G and 5G network by umlaut, the global leader in mobile
network benchmarking, for the third year in a row in July, and
ranked number one in 5G Reach, 5G Availability, 5G Voice App
Experience, 5G Games Experience, and tied first for 5G Upload
Speed in Canada by OpenSignal in August.
• Recognized as Canada’s most consistent national wireless and
broadband provider by Ookla for Q4 2021, with the fastest fixed
in Ontario, New Brunswick, and
broadband
Newfoundland and Labrador.
Internet
• Completed the rollout of Canada’s first national standalone 5G
core to help bring the best of 5G to our customers and achieved
the first 5G standalone device certification in Canada.
• Announced a multi-year partnership with Coastal First Nations in
British Columbia, which includes a commitment to build five new
cell towers, provide more than 100 kilometres of new service
coverage along Highway 16 on Graham Island, and improve
wireless connectivity throughout Haida Gwaii.
• Announced a $300 million agreement, alongside
the
Government of Canada, the Province of Ontario, and the Eastern
Ontario Regional Network, to expand wireless connectivity in
rural and remote communities throughout eastern Ontario, the
largest wireless private-public partnership in Canadian history.
• Announced investments of over $350 million to connect almost
50,000 homes and businesses in Ontario, New Brunswick, and
Newfoundland and Labrador, fully funded by Rogers.
• In partnership with the Governments of Canada and British
Columbia, we announced 12 new cell tower sites to enhance
wireless coverage along Highway 16 between Prince George
and Prince Rupert; we broke ground on the first tower in
December 2021.
• Announced the construction of seven new towers along
Highway 14 from Sooke to Port Renfrew in partnership with the
Governments of Canada and British Columbia, and more than
90 kilometres of new coverage along Highways 95 and 97 in
partnership with the government of British Columbia.
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DRIVE MARKET-LEADING GROWTH IN EACH OF OUR LINES
OF BUSINESS
• Launched Ignite Internet Gigabit 1.5 to eligible customers,
giving customers access to even faster Internet service.
• Launched the first “Wireless Private Network” managed solution
nationally in Canada, through Rogers for Business™, enabling
large enterprises to transform their digital capabilities and drive
innovation in their business.
• Unveiled Sportsnet’s new state-of-the-art NHL Studio, one of the
first entirely IP-based sports studios in North America, capable of
delivering
through
augmented and virtual reality, real-time data and statistics, and
in-broadcast versatility.
interactive and
immersive
content
• Launched eight streaming services on our Ignite TV and Ignite
including Disney+ and Spotify,
industry-leading selection of streaming
SmartStream platforms,
enhancing Rogers
services.
• Relaunched Sportsnet NOW, delivering world-class stream
quality and reliability combined with new pricing and packaging
that gives customers more flexibility and choice; paid subscriber
growth is up over 175% year-on-year.
• Launched a Cloud Unified Communications product in Rogers
for Business, a feature-rich, cloud-based phone system for
enterprise business customers with complex needs.
DRIVE BEST-IN-CLASS FINANCIAL OUTCOMES FOR OUR
SHAREHOLDERS
• Earned total service revenue of $12,533 million, up 5%.
• Attracted 448,000 net Wireless postpaid subscribers, 49,000 net
Internet subscribers, and 244,000 net Ignite TV subscribers.
• Generated free cash flow of $1,671 million and cash provided by
operating activities of $4,161 million.
• Paid dividends of $1,010 million to our shareholders.
DEVELOP OUR PEOPLE, DRIVE ENGAGEMENT, AND BUILD
A HIGH-PERFORMING AND INCLUSIVE CULTURE
• Awarded Canada’s Top 100 Employers, including in the Greater
Toronto Area, for Young People, Best Diversity Employer, and
Greenest Employers by MediaCorp Canada Inc. in November
2021; LinkedIn Canada’s Top 25 Companies in April 2021; and
Canada’s Most Admired Corporate Cultures by Waterstone
Human Capital in October 2021.
• Announced and implemented mandatory vaccinations or rapid
testing for anyone entering our workplace sites, including all
team members, contractors, and visitors.
• Achieved a score of 89% for employee pride in our employee
pulse survey in June 2021.
BE A STRONG, SOCIALLY AND ENVIRONMENTALLY
RESPONSIBLE LEADER IN OUR COMMUNITIES
• Awarded 90 Ted Rogers Community Grants across Canada in
2021, to organizations supporting Canadian youth. Nearly 400
Ted Rogers Community Grants have been awarded since 2017.
• Awarded Ted Rogers Scholarships to 375 young Canadians for
post-secondary studies. Nearly three quarters of all scholarships
in the Class of 2021 were awarded to youth from equity-
deserving communities.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 23
MANAGEMENT’S DISCUSSION AND ANALYSIS
• 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 we committed to supporting the United Nations
Sustainable Development Goals.
• Launched a 2021 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).
• 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.
• Expanded eligibility for Connected for Success™, so even more
Canadians can connect to social services, learning, employment,
and loved ones. Now available to upwards of 750,000 Canadian
households,
Internet
program is available across our Internet footprint in Ontario, New
Brunswick, and Newfoundland to eligible customers receiving
disability, seniors’ or
income support, and through rent-
geared-to-income community housing partners.
low-cost high-speed
the expanded
2022 FOCUS AREAS
While we ended 2021 with improving execution, increasing
momentum, and solid fundamentals, we want to perform better for
our customers and our shareholders. To achieve this, we have set
the following focus areas for 2022:
1. Successfully complete
the Shaw acquisition and
2.
3.
4.
integration
Invest in our networks to deliver world-class connectivity to
Canadian consumers and business
Invest in our customer experience to deliver timely, high-
quality customer service consistently to our customers
Improve execution and deliver
performance across all lines of business
financial
strong
FINANCIAL AND OPERATING GUIDANCE
2022 FULL-YEAR CONSOLIDATED GUIDANCE
For the full-year 2022, we expect growth in service revenue and
adjusted EBITDA will drive higher free cash flow. In 2022, we expect
to have the financial flexibility to maintain our network advantages
and to continue to return cash to shareholders. We are providing a
guidance range for total service revenue this year as this metric
more closely reflects our core business with our customers.
(In millions of dollars, except
percentages)
Total service revenue
Adjusted EBITDA
Capital expenditures 2
Free cash flow
2021
Actual
12,533
5,887
2,788
1,671
2022 Guidance Ranges 1
Increase of 4% to increase of 6%
Increase of 6% to increase of 8%
2,800 to 3,000
1,800 to 2,000
1 Guidance ranges presented as percentages reflect percentage increases over full-
year 2021 results.
2 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.
The above table outlines guidance ranges for selected full-year
2022 consolidated financial metrics without giving effect to the
Transaction (see “Shaw Transaction”), the associated financing, or
any other associated transactions or expenses. These ranges take
into consideration our current outlook and our 2021 results. The
purpose of the financial outlook is to assist investors, shareholders,
and others in understanding certain financial metrics relating to
expected 2022 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”, the material assumptions
listed below under “Key underlying assumptions”, 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. Guidance ranges will be
reassessed once the Transaction has closed.
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Key underlying assumptions
Our 2022 guidance
in “2022 Full-Year
ranges presented
Consolidated Guidance” are based on many assumptions
including, but not limited to, the following material assumptions for
the full-year 2022:
• a gradual improvement in the general COVID-19 environment
throughout 2022, including the continued reopening of the
economy, and no further significant restrictions, such as border
closures and travel restrictions, capacity restrictions and sports
venue closures, or stay-at-home orders and no material negative
impact resulting from global supply chain interruptions;
• continued competitive intensity in all segments in which we
operate consistent with levels experienced in 2021;
• no significant additional legal or regulatory developments, other
in the
in economic conditions, or macro changes
shifts
competitive environment affecting our business activities;
• Wireless customers continue to adopt, and upgrade to, higher-
value smartphones at similar rates in 2022 compared to 2021;
• overall wireless market penetration in Canada grows in 2022 at a
similar rate as in 2021;
• continued subscriber growth in Internet;
• declining Television subscribers,
impact of
customers migrating to Ignite TV from our legacy product, as
including
the
subscription streaming services and other over-the-top providers
continue to grow in popularity;
• in Media, continued growth in sports and relative stability in
other traditional media businesses;
• no significant sports-related work stoppages or cancellations will
occur and the current MLB lockout between the owners and the
players’ union will be resolved;
• with respect to the increase in capital expenditures:
• we continue to invest to ensure we have competitive wireless
and cable networks through (i) expanding our 5G wireless
network, including building on Canada’s first standalone 5G
core network and using our 3500 MHz spectrum licences to
introduce new 5G innovation and services and (ii) upgrading
our hybrid fibre-coaxial network to lower the number of
homes passed per node, utilize the latest technologies, and
deliver an even more reliable customer experience; and
• we continue to make expenditures related to our connected
home roadmap in 2022 and we make progress on our service
footprint expansion projects;
• a substantial portion of our 2022 US dollar-denominated
expenditures is hedged at an average exchange rate of
$1.29/US$;
• key interest rates remain relatively stable throughout 2022; and
• we retain our investment-grade credit ratings.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
Capability to Deliver Results
LEADING NETWORKS
WIRELESS
Rogers has one of the most extensive and advanced mobile
broadband wireless networks in Canada, which:
• is the only national network in Canada fully owned by a single
operator;
• was the first LTE high-speed network in Canada, reaching 96% of
the Canadian population as at December 31, 2021 on our LTE
network alone;
• was the first 5G network in Canada, reaching over 70% of the
Canadian population as at December 31, 2021 on our 5G
network alone;
• is supported by voice and data roaming agreements with
domestic and
than 200
destinations, including LTE and a growing number of 5G
roaming operators; and
international carriers
in more
•includes
network sharing arrangements with two regional
wireless operators that operate in urban and rural parts of
Canada.
We are continuously enhancing our IP service infrastructure for all
our wireless services. Advances in technology have transformed the
ways in which our customers interact and use the variety of tools
available to them
lives.
Technology has also changed the way businesses operate.
in their personal and professional
In early 2020, we launched our 5G network commercially in
downtown Vancouver, Toronto, Ottawa, and Montreal and reached
over 1,500 communities across Canada as at December 31, 2021.
We also became a founding member of the global 5G Future
Forum, a first-of-its-kind 5G and mobile edge computing forum that
currently includes Verizon, Vodafone, Telstra, KT, and América Móvil.
Our spectrum holdings as at December 31, 2021 include:
Type of spectrum
Rogers licences
Our 5G network currently uses a combination of the 2500 MHz,
AWS, and 600 MHz spectrum bands, and is also aggregated with
our LTE spectrum bands. 600 MHz spectrum is best suited to carry
wireless data across long distances and through buildings, creating
more consistent and higher-quality coverage in both remote and
urban areas and in smart cities. We have deployed dynamic
spectrum sharing, which allows our existing spectrum supporting
4G to also be used for 5G networks. In the future, we will deploy
3.5 GHz spectrum for 5G to add additional capacity to the network.
A number of future investments will be required to successfully
operate and maintain our 5G network, including, but not limited to:
• refarming spectrum currently used for 2G and 3G to LTE and 5G;
• densifying our wireless network with additional macro and small
cells in key markets; and
• purchasing incremental 5G-ready radio network equipment with
lower unit and operational costs, and the ability to aggregate
more radio carriers and achieve greater spectral efficiency.
Significant spectrum position
Our wireless services are supported by our significant wireless
spectrum licence holdings in low-band, mid-band, and high-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 broadband wireless data
services;
• support the expansion and maintenance of our 5G network; and
• introduce new
features and
functionality.
innovative network-enabled
600 MHz
700 MHz
20 to 40 MHz across Canada, covering 100% of the Canadian
population.
Who the licences support
4G / 4.5G LTE, and 5G subscribers.
24 MHz in Canada’s major geographic markets, covering 95% of
the Canadian population.
4G / 4.5G LTE subscribers; future 5G
subscribers.
850 MHz
25 MHz across Canada.
1900 MHz
AWS 1700/2100 MHz
2500 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.
40 MHz in British Columbia and Alberta, 30 MHz in southern
Ontario, an additional 10 MHz in the Greater Toronto Area, and
20 MHz in the rest of Canada.
40 MHz FDD across the majority of Canada except 20 MHz in
parts of Quebec and no holdings in Nunavut and the Northwest
Territories. Rogers also holds an additional 25 MHz TDD in key
population areas in Quebec, Ontario, and British Columbia.
2G GSM, 3G HSPA, 4G / 4.5G LTE
subscribers; future 5G subscribers.
4G / 4.5G LTE, and 5G subscribers.
4G / 4.5G LTE, and 5G subscribers.
4G / 4.5G LTE, and 5G subscribers.
3500 MHz
Between 20 MHz and 30 MHz across the majority of the
Canadian population.
Fixed wireless subscribers; future 5G
mobile subscribers.
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We also have access to additional spectrum through the following network sharing agreements:
Type of spectrum
Type of network venture
2300 MHz
850 MHz, 1900 MHz
AWS spectrum,
700 MHz,
2500 MHz FDD
Orion Wireless Partnership (Orion) is a joint operation with Bell in
which Rogers holds a 50% interest. Orion holds licences for
30 MHz of FDD 2300 MHz spectrum (of which 20 MHz is usable),
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. The Orion fixed wireless LTE national network utilizes
the jointly held 2300 MHz bands.
Two network-sharing arrangements to enhance coverage and
network capabilities:
• with Bell MTS, which covers 98% of the population across
Manitoba; and
• with Videotron to provide HSPA and LTE services across the
province of Quebec and Ottawa.
Who it supports
4G subscribers.
3.5G / 4G HSPA+, 4G LTE, 5G
subscribers.
4G LTE subscribers.
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CABLE
Our expansive inter-city and intra-city fibre and hybrid fibre-coaxial
(HFC) infrastructure delivers services to consumers and businesses
in Ontario, New Brunswick, Nova Scotia, and on the island of
Newfoundland. We also operate a transcontinental, facilities-based
fibre-optic network with 81,000 kilometres of fibre optic cable that
is used to service business 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, providing redundancy to
minimize disruptions that can result from fibre cuts and other
events.
Homes and commercial buildings are connected to our network
through HFC nodes or FTTH. We connect the HFC node to the
network using fibre optic cable and the home to the node using
coaxial cable or fibre. Using 1.2GHz, 860 MHz, and 750 MHz of
cable spectrum in Ontario and Atlantic Canada, respectively, we
deliver video, voice, and broadband services to our customers. HFC
node segmentation reduces the number of homes passed per
HFC node, thereby increasing the bandwidth and capacity per
subscriber.
We continually upgrade the network to improve capacity, enhance
performance and reliability, reduce operating costs, and introduce
new features and functionality. Our investments are focused on:
• uplifting our HFC network to 1.2 GHz (and, over time, 1.8 GHz)
while at the same time improving network performance, quality,
and reliability by deploying digital fibre optics, removing radio
frequency amplifiers, and reducing homes passed per node to
an average of 60;
• increasing capacity per subscriber by enabling the 1.2 GHz (and,
over time, 1.8 GHz) of spectrum with additional DOCSIS 3.1
downstream and upstream capacity and deploying DOCSIS 4.0
that, over time, are expected to support downstream speeds up
to 10 gigabits per second (Gbps);
• improving video signal compression by moving to more
advanced video protocols;
• improving channel and on-demand capacity through switched
digital video; and
• increasing our FTTH footprint by connecting more homes,
multiple dwelling unit buildings, and business premises directly
to fibre.
segmentation, along with analog-to-DTV
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. Over the last 20 years, HFC
node
spectrum
repurposing and evolution from DOCSIS 1.0 to DOCSIS 3.1, has
increased downstream and upstream capacity by approximately
1,000 and 200 times, respectively. This track record of investing in
our networks and demonstrating the capability to cost-effectively
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. By
the end of 2016, 100% of our cable network had been upgraded
to DOCSIS CCAP technology supporting DOCSIS 3.1 and Ignite
Gigabit Internet.
Fixed wireless access services and expanding our cable footprint is
a key priority for connecting all areas of Canada, including rural and
underserved areas. We are actively investing in the expansion of
our network in both Wireless and Cable to leverage what’s needed
to offer fixed wireless Internet access. We are investing in the next
generation of broadband wireless data networks, such as 5G
technologies, to support the growing data demand and new
products and applications. This requires a strong network, capable
of supporting both wireline and wireless data at low latencies to
ensure new products and applications operate as intended.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 27
MANAGEMENT’S DISCUSSION AND ANALYSIS
foundation
We have been deploying 1 GHz fibre-to-the-curb (FTTC) in new
development areas and transitioning to FTTH since 2005. In 2018,
we began upgrading our HFC network to a mix of 1.2 GHz FTTC
and FTTH. FTTC provides
for subsequent
the
generations of DOCSIS, including Remote PHY and DOCSIS 4.0,
which will improve high-speed Internet accessibility, quality, and
tier speed attainability, while increasing the capacity of our HFC
network. Rogers FTTH is based on ten gigabit symmetrical passive
optical network
that can support
symmetrical downstream/upstream speeds up to 10 Gbps per
node in select neighbourhoods, with the ability to upgrade the
opto-electronics to support even higher speeds in the future as
required to meet demand for additional bandwidth.
(XGS-PON)
technology
We continue to invest in and improve our cable network services;
for example, with technology to support gigabit Internet speeds,
Ignite TV, Rogers 4K TV, our 4K PVR set-top box, and a significant
commitment to live broadcasting in 4K, including regular season
Toronto Blue Jays home games for 2022 and numerous NHL and
NBA games.
Voice-over-cable telephony services are also served using the
DOCSIS network. Our offerings ensure a high quality of service by
including geographic redundancy and network backup powering.
Our phone service includes a rich set of features, such as TV Call
Display (available on our NextBox™ set-top boxes), 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.
We own and operate some of the most advanced networks and
data centres in Canada. Our data centres provide guaranteed
uptime and expertise in collocation, cloud, and managed services
solutions. We own and operate nine state-of-the-art, highly reliable,
certified data centres across Canada, including:
• Canada’s first Tier III Design and Construction certified multi-
tenant facility in Toronto;
• Alberta’s first Tier III certified data centre; and
• a third Tier III certified data centre in Ottawa.
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. Our primary and secondary Network Operation
Centres proactively monitor Rogers’ networks to mitigate the risk of
service interruptions and to allow for rapid responses to any
outages.
CUSTOMER EXPERIENCE
We are committed to providing our customers with the best
experience possible. To do this, we have invested in several areas to
make it easier and more convenient for customers to interact with
us, such as:
• live customer support handled by customer solution specialists
located entirely within Canada;
• 24/7 customer support handled by virtual assistant tools that
provide customers the option for live chat or scheduled
callbacks;
• an innovative Integrated Voice Response (IVR) system that can
take calls in English, French, Mandarin, and Cantonese;
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| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
• voice authentication technology across all of our contact centres
that automatically identifies our registered customers by their
voice,
from
increasing security and protecting customers
potential fraud;
• self-serve options, including:
• the ability for Fido and Rogers customers to complete price
plan changes and hardware upgrades online;
• a 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, TV, home
phone, smart home monitoring, and Ignite SmartStream
products at their convenience, without the need for a
technician visiting their residence;
• Rogers EnRoute™, a tool that gives customers the ability to
track on their phone when a technician will arrive for an
installation or service call; and
• the ability for chatr customers to use SMS to easily review
account information, balance details, and top up their account;
• customer care available over Facebook Messenger, Twitter, and
online chat through our websites;
• Rogers Infinite unlimited data plans with no overage charges;
• 24-month, $0 down, interest-free wireless device financing on
Rogers Infinite plans and through our Fido Payment Program;
• Rogers Pro On-the-Go, a personalized retail service whereby
within hours of ordering a new wireless device, a connected
solutions professional will meet a customer at their time and
location of choice (within the service area) and set up their device
based on their preferences;
• Ignite WiFi Hub for all Ignite TV customers to give them ultimate
control over their WiFi experience;
• Family Data Manager, a data manager tool, and Data Top Ups,
both of which allow Wireless customers to manage and
customize their data usage in real-time through MyRogers;
• Fido 5 Extra Hours, which grant Fido customers an additional five
hours of data, per billing cycle, at no extra charge;
•Fido X TRA™, a program that gives Fido postpaid Wireless and
Internet customers free access to new perks every Thursday, such
as deals and giveaways from leading brands on food, drinks,
apparel, entertainment, and more;
• a simple online 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;
•DAY P ASS™, a flexible daily payment option for chatr customers;
• Top Up as a Guest, which allows chatr customers to top up an
account without signing in;
• Advantage Mobility™ and Advantage Security™, business-grade
solutions offered by Rogers for Business to support small- and
medium-sized Canadian enterprises with reliable connectivity
and network security;
• a Premium Device Protection™ program, including AppleCare
services for Rogers and Fido customers, offering customers more
protection and choice;
• Express Pickup, a free service that allows customers to purchase a
new device online or through a customer care agent and pick up
it up the same day in-store;
• an online appointment booking tool, allowing customers to
conveniently schedule an appointment to speak to a Rogers
expert at a specific store and time; and
• Certified Walk-in Repairs, a fast and reliable phone repair service
offering customers more convenience, flexibility, and reliability,
in 15 cities across Ontario.
POWERFUL BRANDS
The Rogers brand has strong national recognition through our:
• established networks;
• extensive distribution;
• recognizable media content and programming;
• advertising;
• event and venue sponsorships;
• community investment, including the Ted Rogers Scholarship
Fund and Ted Rogers Community Grants; 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;
• the residential brands of Rogers and Fido;
• 23 TV stations and specialty channels, including Sportsnet,
• our contact centres, outbound telemarketing, and door-to-door
agents; and
• major retail chains.
Our sales team and third-party retailers sell services to the business,
public sector, and carrier wholesale markets. An extensive network
IT
of third-party channel distributors deals with
integrators,
consultants,
indirect sales
local service providers, and other
relationships. This diverse approach gives greater breadth of
coverage and allows for strong sales growth for next-generation
services.
FIRST-CLASS MEDIA CONTENT
We deliver highly sought-after sports content enhanced by the
following initiatives:
• an exclusive 12-year agreement with the NHL, which runs
through the 2025-2026 season, that allows us to deliver
coverage of professional hockey in Canada across television,
smartphones, tablets, and the Internet;
• exclusive broadcasting and distribution rights of the Toronto
Blue Jays in Canada through our ownership of the team;
• NHL LIVE, an online OTT destination for NHL action on any
screen;
Omni, Citytv, FX (Canada), and FXX (Canada);
• SN NOW, Canada’s first OTT sports service, offering 24/7 access
• 54 radio stations, including 98.1 CHFI, 680 NEWS, Sportsnet The
to Sportsnet’s TV content;
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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, Toronto FC, and the Toronto Argonauts;
• an exclusive 12-year agreement with the NHL, which runs
through the 2025-2026 season, that allows us to deliver
coverage of professional hockey in Canada; and
• Today’s Shopping Choice, a premium online and TV shopping
retailer.
WIDESPREAD PRODUCT DISTRIBUTION
WIRELESS
We have an extensive national distribution network and offer our
wireless products nationally through multiple channels, including:
• company-owned Rogers, Fido, and chatr retail stores;
• customer self-serve using rogers.com, fido.ca, chatrwireless.com,
and e-commerce sites;
• an extensive independent dealer network;
• 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;
• our contact centres;
• outbound telemarketing; and
• Rogers Pro On-the-Go, a personalized retail service that delivers
and sets up new wireless devices to the customer’s location of
choice within the service area.
CABLE
We distribute our residential cable products using various channels,
including:
• company-owned Rogers and Fido retail stores;
• customer self-serve using rogers.com and fido.ca;
• the MLB Network, a 24-hour network dedicated to baseball,
brought to Canada on Rogers television services; and
• a 10-year, multi-platform agreement that runs through August
2024, which makes Rogers the exclusive wholesaler and
Canadian distributor of World Wrestling Entertainment’s (WWE)
flagship programming.
ENGAGED PEOPLE
For our team of approximately 23,000 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 and substantial
available liquidity of $4.2 billion as at December 31, 2021. Our
capital resources consist primarily of cash balances, cash provided
by operating activities, available lines of credit, funds available
under our receivables securitization program, issuances of US
dollar-denominated commercial paper (US CP) under our US CP
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 29
MANAGEMENT’S DISCUSSION AND ANALYSIS
program, and long-term debt. We also owned approximately
$1,581 million of marketable equity securities in publicly traded
companies as at December 31, 2021.
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.
The Transaction will have a significant impact on our capital
structure as we anticipate issuing significant debt in order to
consummate the Transaction; however, we expect we will have
sufficient capital resources to satisfy our anticipated cash funding
requirements in 2022, including the Transaction, funding of
dividends on our common shares, repayment of maturing short-
term borrowings and long-term debt, and other financing and
investing activities. This takes into account our opening cash
balance, cash provided by operating activities, and funds available
to us under credit facilities, our receivables securitization program,
our US CP program, and other bank facilities or debt issued,
including, for the purposes of the Transaction as necessary, the
$13 billion committed credit facility and the $6 billion Shaw term
loan facility. As at December 31, 2021, there were no significant
restrictions on the flow of funds between RCI and its subsidiary
companies.
foreseeable additional
We believe we can satisfy
funding
requirements through additional 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 long-term or short-term debt, amending the terms
of our receivables securitization or US CP programs, 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.
WIDESPREAD SHAREHOLDER BASE AND
DIVIDENDS
RCI’s Class B Non-Voting common shares (Class B Non-Voting
Shares) are widely held and actively trade on the TSX and the NYSE
with a combined average daily trading volume of approximately
1.9 million shares in 2021. In addition, RCI’s Class A Voting
common shares (Class A Shares) trade on the TSX. At the discretion
of the Board, we pay an equal dividend on both classes of shares.
In 2021, each share paid an annualized dividend of $2.00.
30
| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
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2021 Financial Results
See “Accounting Policies” in this MD&A and the notes to our 2021
Audited Consolidated Financial Statements
important
accounting policies and estimates as they relate to the following
discussion.
for
We use several key performance indicators to measure our
performance against our strategy and the results of our peers and
SUMMARY OF CONSOLIDATED RESULTS
(In millions of dollars, except margins and per share amounts)
Revenue
Wireless
Cable
Media
Corporate items and intercompany eliminations
Revenue
Total service revenue
Adjusted EBITDA
Wireless
Cable
Media
Corporate items and intercompany eliminations
Adjusted EBITDA
Adjusted EBITDA margin
Net income
Basic earnings per share
Diluted earnings per share
Adjusted net income
Adjusted basic earnings per share
Adjusted diluted earnings per share 1
Capital expenditures
Cash provided by operating activities
Free cash flow
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 and Other Financial
Measures” for more information.
Years ended December 31
2021
2020 % Chg
8,768
4,072
1,975
(160)
8,530
3,946
1,606
(166)
14,655
12,533
13,916
11,955
3
3
23
(4)
5
5
4,214
2,013
(127)
(213)
4,067
1,935
51
(196)
4
4
n/m
9
5,887
40.2%
1
5,857
42.1% (1.9 pts)
1,558
1,592
$ 3.09 $ 3.15
$ 3.07 $ 3.13
1,803
1,725
$ 3.57 $ 3.42
$ 3.56 $ 3.40
2,788
4,161
1,671
2,312
4,321
2,366
(2)
(2)
(2)
5
4
5
21
(4)
(29)
1 Adjusted diluted earnings per share is a non-GAAP ratio. Adjusted net income, a non-GAAP financial measure, is a component of adjusted diluted earnings per share. These are
not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other companies. See “Non-GAAP and Other Financial
Measures” for more information about these measures.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 31
ADJUSTED EBITDA
Adjusted EBITDA increased this year, primarily due to increases in
Wireless and Cable adjusted EBITDA, partially offset by the
decrease in Media adjusted EBITDA, which led to an adjusted
EBITDA margin of 40%.
Wireless adjusted EBITDA increased this year primarily as a result of
the flow-through impact of the aforementioned increases in
revenue and lower bad debt expense. This gave rise to a Wireless
adjusted EBITDA margin of 48.1%. Although a decrease from 2020,
the ongoing long-term shift to customers financing their device
purchases
in our
in the general
equipment margin.
improvement
is reflected
Cable adjusted EBITDA increased this year as a result of the
revenue growth as discussed above, which led to a Cable adjusted
EBITDA margin of 49.4%.
Media adjusted EBITDA decreased this year primarily as a result of
higher programming and production costs as a result of the
postponement of the start of the 2020-2021 NHL and NBA
seasons, higher general operating costs, and higher Toronto Blue
Jays player payroll and game day costs, partially offset by higher
revenue as discussed above.
NET INCOME AND ADJUSTED NET INCOME
Net
income decreased as a result of higher restructuring,
acquisition and other costs attributable to the Transaction.
Adjusted net income increased this year primarily as a result of
higher adjusted EBITDA and lower finance costs.
MANAGEMENT’S DISCUSSION AND ANALYSIS
KEY CHANGES IN FINANCIAL RESULTS YEAR
OVER YEAR
REVENUE
Wireless service revenue increased this year as a result of a larger
postpaid subscriber base and higher roaming revenue as
COVID-19-related global travel restrictions were generally less strict
than last year, partially offset by lower overage revenue. Wireless
equipment revenue increased this year as a result of higher device
upgrades by existing customers and a shift in the product mix
towards higher-value devices, partially offset by fewer of our new
subscribers purchasing devices.
Cable revenue increased this year as 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 disciplined promotional activity and Internet
service pricing changes in late 2020, partially offset by declines in
our legacy television and home phone subscriber bases.
Media revenue increased this year as a result of the postponement
of the start of the 2020-2021 NHL and NBA seasons, shifting
revenue to 2021, and higher Toronto Blue Jays attendance-related
revenue as COVID-19 restrictions eased and fan attendance was
permitted.
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WIRELESS
ROGERS IS CANADA’S LARGEST PROVIDER OF
WIRELESS COMMUNICATIONS SERVICES
As at December 31, 2021, we had:
• approximately 11.3 million wireless subscribers; and
• approximately 31% subscriber and revenue share of the
Canadian wireless market.
WIRELESS FINANCIAL RESULTS
(In millions of dollars, except margins)
2021
2020
% Chg
Years ended December 31
Revenue
Service revenue
Equipment revenue
Revenue
Operating expenses
Cost of equipment
Other operating expenses
Operating expenses
Adjusted EBITDA
Adjusted EBITDA service margin 1
Adjusted EBITDA margin 2
Capital expenditures
1 Calculated using service revenue.
2 Calculated using total revenue.
WIRELESS SUBSCRIBER RESULTS 1
(In thousands, except churn, blended
ABPU, and blended ARPU)
Postpaid
Gross additions
Net additions
Total postpaid subscribers 2
Churn (monthly)
Prepaid
Gross additions
Net losses
Total prepaid subscribers 2
Churn (monthly)
Blended ARPU (monthly)
Blended ABPU (monthly) 3
6,666
2,102
6,579
1,951
8,768
8,530
2,142
2,412
1,932
2,531
4,554
4,463
4,214
4,067
63.2%
48.1%
1,515
61.8%
47.7%
1,100
1
8
3
11
(5)
2
4
1.4 pts
0.4 pts
38
1,565
448
10,131
0.95%
1,381
245
9,683
1.00%
184
203
448
(0.05 pts)
512
(94)
1,166
4.20%
$ 50.26
$ 63.45
550
(142)
1,260
4.38%
$ 50.75
$ 63.24
(38)
48
(94)
(0.18 pts)
0.49)
0.21
($
$
1 Subscriber counts and subscriber churn are key performance indicators. See “Key
Performance Indicators”.
2 As at end of period.
3 Blended ABPU is a non-GAAP ratio. Adjusted Wireless service revenue is a non-GAAP
financial measure and is a component of blended ABPU. This is not a standardized
financial measure under IFRS and might not be comparable to similar financial
measures disclosed by other companies. See “Non-GAAP and Other Financial
Measures” for more information about this measure.
REVENUE
Our revenue depends on the size of our subscriber base, the
revenue per user, the revenue from the sale of wireless devices, and
other equipment revenue.
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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 other fees and charges.
The 1% increase in service revenue this year was a result of:
• a larger postpaid subscriber base; and
• higher
travel
roaming revenue as COVID-19-related global
restrictions were generally less strict than last year; partially offset by
• a decrease in overage revenue as a result of strong customer
adoption of our Rogers Infinite unlimited data plans.
The 1% decrease in blended ARPU was primarily a result of an
increase in our subscribers on lower monthly price plans.
The stable blended ABPU was primarily a result of the increased
roaming revenue offset by the decline in overage revenue.
We believe the increases in gross and net additions to our postpaid
subscriber base and the improved postpaid churn this year were a
result of strong execution and an increase in market activity by
Canadians with the ongoing opening of the economy.
Equipment revenue
Equipment revenue includes revenue from sales of mobile devices
to subscribers through fulfillment by Wireless’ customer service
groups, websites, telesales, corporate stores, and independent
dealers, agents, and retailers.
offset by
• fewer of our new subscribers purchasing devices.
OPERATING EXPENSES
We record operating expenses in two categories:
• the cost of wireless devices and equipment; and
• all other expenses involved in day-to-day operations, to service
existing subscriber relationships, and to attract new subscribers.
The 11% increase in the cost of equipment this year was a result of
the same factors discussed in equipment revenue above.
Although a decrease from 2020, the ongoing long-term shift to
customers financing their device purchases is reflected in the
general improvement in our equipment margin.
The 5% decrease in other operating expenses this year was a result of:
• lower bad debt expense as we recorded a provision last year
due to the economic uncertainty relating to COVID-19; and
• various cost efficiencies and productivity initiatives; partially offset by
• higher advertising and channel costs.
ADJUSTED EBITDA
The 4% increase in adjusted EBITDA this year was a result of the
revenue and expense changes discussed above.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 33
Years ended December 31
2021
2020
Chg
The 8% increase in equipment revenue this year was a result of:
• higher device upgrades by existing customers; and
• a shift in the product mix towards higher-value devices; partially
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, 2021, we had:
• approximately 2.7 million high-speed Internet subscribers;
• approximately 0.8 million Ignite TV subscribers; and
• a network passing approximately 4.7 million homes in
Ontario, New Brunswick, Nova Scotia, and on the island of
Newfoundland.
CABLE FINANCIAL RESULTS
(In millions of dollars, except margins)
2021
2020 % Chg
Years ended December 31
REVENUE
Service revenue
Service revenue includes revenue derived from:
• monthly subscription and additional use service revenue from
residential, small business, enterprise, public sector, and
wholesale Internet access subscribers;
• monthly service revenue from our smart home monitoring
products;
• modem, television set-top box, and other equipment rental fees;
• IPTV and digital cable services, such as:
• basic 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;
• monthly service fees;
• calling features, such as voicemail, call waiting, and caller ID; and
• long distance calling.
Revenue
Service revenue
Equipment revenue
Revenue
Operating expenses
Adjusted EBITDA
Adjusted EBITDA margin
Capital expenditures
4,052
20
3,936
10
3
100
4,072
3,946
2,059
2,011
2,013
1,935
3
2
4
49.4%
913
49.0%
940
0.4 pts
(3)
The 3% increase in Cable service revenue this year was 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 1% increase 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.
CABLE SUBSCRIBER RESULTS 1
(In thousands, except ARPA and
penetration)
Internet 2
Net additions
Total Internet subscribers 3,4
Ignite TV
Net additions
Total Ignite TV subscribers 3
Homes passed 3
Customer relationships
Net additions
Total customer relationships 3,4
ARPA (monthly)
Penetration 3
Years ended December 31
2021
2020
Chg
49
2,665
57
2,598
244
788
218
544
4,700
4,578
(8)
67
26
244
122
31
2,581
$132.58
54.9%
12
2,530
$130.70
55.3%
19
51
$ 1.88
(0.4 pts)
1
Subscriber counts 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
result of our acquisition of Seaside
Communications, which are not included in net additions, but do appear in the
ending total balance for December 31, 2021.
relationships as a
Equipment revenue
Equipment revenue includes revenue generated from the sale of
television set-top boxes, Internet modems and other equipment,
in
and smart home monitoring equipment. The
equipment revenue this year was a result of higher Ignite
equipment sales.
increase
OPERATING EXPENSES
We record Cable operating expenses in three categories:
• the cost of programming;
• the cost of equipment revenue (television set-top boxes, Internet
modem and other equipment, and smart home monitoring
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% increase in operating expenses this year was a result of:
• higher customer care costs; partially offset by
• various cost efficiencies and productivity initiatives.
ADJUSTED EBITDA
The 4% increase in adjusted EBITDA this year was a result of the
revenue and expense changes described above.
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The 23% increase in revenue this year was a result of:
• higher advertising and subscription revenue, primarily as a result
of the delayed starts of the 2020-2021 NHL and NBA seasons;
and
• higher Toronto Blue Jays attendance-related revenue as
COVID-19 restrictions eased and fan attendance was permitted.
OPERATING EXPENSES
We record Media operating expenses in four primary categories:
• the cost of broadcast content, including sports programming
and production;
• Toronto Blue Jays player compensation;
• the cost of retail products sold; and
• all other expenses involved in day-to-day operations.
The 35% increase in operating expenses this year was a result of:
• higher programming and production costs as a result of the
delayed starts of the 2020-2021 NHL and NBA seasons;
• higher other general operating costs as a result of the
resumption of sports and increased activities as COVID-19
restrictions eased; and
• higher Toronto Blue Jays player payroll and game day costs,
primarily as a result of the shortened 2020 MLB season.
ADJUSTED EBITDA
The decrease in adjusted EBITDA this year was a result of the
revenue and expense changes described above.
MEDIA
DIVERSIFIED CANADIAN MEDIA COMPANY
We have a broad portfolio of media properties, which most
significantly includes:
• sports media and entertainment, such as Sportsnet and the
Toronto Blue Jays;
• our exclusive national 12-year NHL Agreement, which runs
through the 2025-2026 season;
• category-leading
television
and
radio broadcasting
properties;
• multi-platform televised and online shopping; and
• digital media.
MEDIA FINANCIAL RESULTS
(In millions of dollars, except margins)
2021
2020 % Chg
Years ended December 31
Revenue
Operating expenses
Adjusted EBITDA
Adjusted EBITDA margin
Capital expenditures
1,975
2,102
1,606
1,555
23
35
(127)
51
n/m
(6.4)%
115
3.2%
79
(9.6 pts)
46
REVENUE
Media revenue is earned from:
• advertising sales across its television, radio, and digital media
properties;
• subscriptions to televised and OTT products;
• ticket sales, fund redistribution and other distributions from MLB,
and concession sales; and
• retail product sales.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 35
MANAGEMENT’S DISCUSSION AND ANALYSIS
CAPITAL EXPENDITURES
Capital expenditures 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. Expenditures
related to the acquisition of spectrum licences and additions to
right-of-use assets are not included in capital expenditures 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 and Other Financial
Measures” for more information.
Capital expenditures are significant and have a material impact on
our cash flows; therefore, our management teams focus on
planning, funding, and managing them. 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.
(In millions of dollars, except capital
intensity)
Years ended December 31
2021
2020 % Chg
Wireless
Cable
Media
Corporate
Capital expenditures 1
Capital intensity
1,515
913
115
245
1,100
940
79
193
2,788
2,312
38
(3)
46
27
21
19.0% 16.6% 2.4 pts
WIRELESS
The increase in capital expenditures in Wireless this year was 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 1,500 communities and we continued rolling out our 5G
standalone core network in Montreal, Ottawa, Toronto, and
Vancouver.
CABLE
The decrease in capital expenditures in Cable this year was a result
of the recognition of capital efficiencies and improved capital
intensity. We have continued upgrading our network infrastructure,
including additional fibre deployments to increase our FTTH and
FTTC 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 evolve to DOCSIS 4.0, to offer increased download
speeds over time.
MEDIA
The increase in capital expenditures this year was primarily a result
of higher broadcast
including
investments in new production studios, partially offset by lower
stadium and facility investments at the Toronto Blue Jays.
infrastructure 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.
CORPORATE
The increase in corporate capital expenditures this year was a result
of higher investments in our information technology.
CAPITAL INTENSITY
Capital intensity increased this year as a result of higher capital
expenditures, partially offset by higher revenue, as discussed
above.
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REVIEW OF CONSOLIDATED PERFORMANCE
FINANCE COSTS
This section discusses our net income and other expenses that do
not form part of the segment discussions above.
(In millions of dollars)
2021
2020 % Chg
Years ended December 31
Interest on borrowings 1
Interest on lease liabilities
Interest on post-employment
benefits liability
Loss on foreign exchange
Change in fair value of derivative
instruments
Capitalized interest
Other
Total finance costs
745
74
14
10
(6)
(17)
29
780
70
13
107
(97)
(19)
27
(4)
6
8
(91)
(94)
(11)
7
849
881
(4)
1 Interest on borrowings includes interest on short-term borrowings and on long-term
debt.
The 4% decrease in finance costs this year was primarily a result of
lower interest on borrowings due to the repayment of our
$1.45 billion senior notes at maturity in March 2021.
Foreign exchange and change in fair value of derivative instruments
We recognized $10 million in net foreign exchange losses in 2021
(2020 – $107 million in net losses). These losses were primarily
attributed to our US CP program borrowings.
These foreign exchange losses were offset by the $6 million gain
related to the change in fair value of derivatives (2020 – $97 million
gain) that was primarily attributed to the debt derivatives, which
were not designated as hedges for accounting purposes, we used
to substantially offset the foreign exchange risk related to these US
dollar-denominated borrowings.
See “Managing our Liquidity and Financial Resources” for more
information about our debt and related finance costs.
Years ended December 31
(In millions of dollars)
2021
2020 % Chg
Adjusted EBITDA
Deduct (add):
Depreciation and amortization
Restructuring, acquisition and
other
Finance costs
Other expense
Income tax expense
Net income
5,887
5,857
2,585
2,618
324
849
2
569
185
881
1
580
1,558
1,592
1
(1)
75
(4)
100
(2)
(2)
ADJUSTED EBITDA
See “Key Changes in Financial Results Year Over Year” for a
discussion of the increase in adjusted EBITDA this year.
DEPRECIATION AND AMORTIZATION
Years ended December 31
(In millions of dollars)
2021
2020 % Chg
Depreciation of property, plant and
equipment
Depreciation of right-of-use assets
Amortization
2,322
246
17
2,390
217
11
Total depreciation and amortization
2,585
2,618
(3)
13
55
(1)
Total depreciation and amortization decreased this year, primarily
as a result of certain assets becoming fully amortized, partially offset
by, of the cumulative impact of increasing capital expenditures and
additions to right-of-use assets over the past several years. See
“Capital Expenditures” for more information.
RESTRUCTURING, ACQUISITION AND OTHER
During the year ended December 31, 2021, we
incurred
$324 million (2020 – $185 million) in restructuring, acquisition and
other expenses, which included $137 million (2020 – nil) of certain
costs relating to the Transaction, including certain costs related to
the committed credit facility and other costs incurred directly
related to the Transaction. The remaining costs in 2021 were
primarily severance costs associated with the targeted restructuring
of our employee base, certain contract termination costs,
incremental, temporary costs incurred in response to COVID-19,
and other costs. In 2020, these costs were primarily incremental,
temporary employee compensation and other costs incurred in
response to COVID-19 as well as severance costs associated with
the targeted restructuring of our employee base.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 37
MANAGEMENT’S DISCUSSION AND ANALYSIS
INCOME TAX EXPENSE
Below is a summary of 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.
ADJUSTED NET INCOME
Adjusted net income was 5% higher compared to 2020, primarily
as a result of higher adjusted EBITDA, lower depreciation and
amortization, and lower finance costs, partially offset by higher
income tax expense.
(In millions of dollars, except tax rates)
2021
2020
Years ended December 31
(In millions of dollars, except per
share amounts)
Statutory income tax rate
Income before income tax expense
26.5%
2,127
26.6%
2,172
Adjusted EBITDA
Deduct (add):
Years ended December 31
2021
2020 % Chg
5,887
5,857
1
Computed income tax expense
Increase (decrease) in income tax
expense resulting from:
Non-deductible stock-based
compensation
Non-deductible portion of equity
losses
Income tax adjustment, legislative
tax change
Non-taxable income from security
investments
Other items
Total income tax expense
Effective income tax rate
Cash income taxes paid
(1)
(4)
100
3
5
4
5
564
578
Depreciation and amortization
Finance costs
Other expense
Income tax expense 1
–
Adjusted net income
2,585
849
2
648
2,618
881
1
632
1,803
1,725
1
12
–
(11)
3
569
26.8%
700
26.7%
418
10
(3)
(10)
5
580
Adjusted basic earnings per share
Adjusted diluted earnings per share
$ 3.57 $ 3.42
$ 3.56 $ 3.40
1 Income tax expense above excludes a $79 million recovery (2020 – $52 million
recovery) for the year ended December 31, 2021 related to the income tax impact for
adjusted items.
EMPLOYEES
Employee salaries and benefits represent a material portion of our
expenses. As at December 31, 2021, we had approximately 23,000
employees (2020 – 24,000) across all of our operating groups,
including shared services and the corporate office. Total salaries
and benefits for full-time and part-time employees in 2021 were
$2,181 million (2020 – $1,847 million).
Our effective income tax rate this year was 26.8% compared to
26.7% for 2020. The effective income tax rate for 2021 and 2020
approximated the statutory income tax rate.
Cash income taxes paid increased this year primarily as a result of
the timing of installment payments. Our transition to a device
financing business model in 2020 resulted in earlier recognition of
equipment revenue for income tax purposes. As a result, our cash
income taxes for 2021 increased by approximately $300 million,
reflecting our final 2020 tax installment.
NET INCOME
Net income was 2% lower than last year. See “Key Changes in
Financial Results Year Over Year” for more information.
(In millions of dollars, except per
share amounts)
Net income
Basic earnings per share
Diluted earnings per share
Years ended December 31
2021
2020 % Chg
1,558
1,592
$ 3.09 $ 3.15
$ 3.07 $ 3.13
(2)
(2)
(2)
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| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
2020 FULL-YEAR RESULTS COMPARED TO 2019
(In millions of dollars, except margins)
2020
2019 % Chg
Years ended December 31
Revenue
Wireless
Cable
Media
Corporate items and
8,530
3,946
1,606
9,250
3,954
2,072
(8)
–
(22)
intercompany eliminations
(166)
(203)
(18)
Revenue
Total service revenue
Adjusted EBITDA
Wireless
Cable
Media
Corporate items and
13,916 15,073
11,955 12,965
4,067
1,935
51
4,345
1,919
140
(8)
(8)
(6)
1
(64)
intercompany eliminations
(196)
(192)
2
Adjusted EBITDA
Adjusted EBITDA margin
Net income
Adjusted net income
5,857
(6)
6,212
42.1% 41.2% 0.9 pts
1,592
1,725
2,043
2,135
(22)
(19)
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Revenue
Consolidated revenue decreased in 2020, reflecting a revenue
decline of 8% in Wireless and decline of 22% in Media.
Wireless service revenue decreased as a result of lower roaming
revenue due to global travel restrictions during COVID-19 and
lower overage revenue as a result of the continued adoption of our
Rogers Infinite unlimited data plans.
Cable revenue was in line with 2019.
Media revenue decreased by 22% as a result of lower sports-
related revenues, including at the Toronto Blue Jays, due to the
impact of COVID-19, the suspension of major sports leagues from
mid-March until the third quarter, and the postponed start of the
2020-2021 NHL and NBA seasons, which traditionally start early in
the fourth quarter, as well as lower advertising revenue related to
softness in the advertising market, partially offset by higher
revenues at Today’s Shopping Choice.
Adjusted EBITDA
Consolidated adjusted EBITDA decreased
to
$5,857 million, reflecting decreases in Wireless and Media, partially
offset by an increase in Cable.
in 2020
Wireless adjusted EBITDA decreased 6% as a result of the decrease
in service revenue as discussed above, partially offset by the shift to
device
improved the Wireless
equipment margin, and various cost efficiencies and productivity
initiatives.
financing, which significantly
Cable adjusted EBITDA increased by 1% in 2020 as a result of
various cost efficiencies.
Media adjusted EBITDA decreased 64% primarily as a result of
decreased revenue as discussed above, partially offset by lower
sports-related costs due to the suspension of major sports leagues
from mid-March until the third quarter and the postponed start of
the 2020-2021 NHL and NBA seasons.
Net income and adjusted net income
Net income and adjusted net income both decreased in 2020
primarily as a result of lower adjusted EBITDA. Net income
decreased to $1,592 million in 2020 from $2,043 million in 2019
and adjusted net income decreased to $1,725 million in 2020 from
$2,135 million in 2019.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 39
MANAGEMENT’S DISCUSSION AND ANALYSIS
QUARTERLY RESULTS
Below is a summary of our quarterly consolidated financial results and key performance indicators for 2021 and 2020.
QUARTERLY CONSOLIDATED FINANCIAL SUMMARY
(In millions of dollars, except per share amounts)
Full Year
Q4
Q3
Q2
Q1 Full Year
Q4
Q3
Q2
Q1
2021
2020
Revenue
Wireless
Cable
Media
Corporate items and intercompany eliminations
8,768 2,415 2,215 2,064 2,074
4,072 1,023 1,016 1,013 1,020
440
473
1,975
(46)
(38)
(160)
546
(41)
516
(35)
8,530 2,291 2,228 1,934 2,077
973
988
3,946 1,019
412
489
409
1,606
(46)
(40)
(39)
(166)
966
296
(41)
Total revenue
Total service revenue
14,655 3,919 3,666 3,582 3,488
12,533 3,232 3,149 3,131 3,021
13,916 3,680 3,665 3,155 3,416
11,955 3,023 3,086 2,797 3,049
Adjusted EBITDA
Wireless
Cable
Media
Corporate items and intercompany eliminations
Adjusted EBITDA
Deduct (add):
Depreciation and amortization
Restructuring, acquisition and other
Finance costs
Other expense (income)
Net income before income tax expense
Income tax expense
Net income
Earnings per share:
Basic
Diluted
Net income
Add (deduct):
4,214 1,086 1,107 1,008 1,013
487
516
2,013
(59)
33
(127)
(50)
(56)
(213)
492
(75)
(51)
518
(26)
(56)
4,067 1,034 1,089
508
520
1,935
89
82
51
(48)
(46)
(196)
918 1,026
453
454
(85)
(35)
(59)
(43)
5,887 1,522 1,600 1,374 1,391
5,857 1,590 1,638 1,294 1,335
2,585
324
849
2
2,127
569
1,558
658
101
218
(12)
557
152
405
642
63
207
20
668
178
490
647
115
206
(7)
413
111
302
638
45
218
1
489
128
361
2,618
185
881
1
2,172
580
1,592
666
73
228
2
621
172
449
663
49
219
6
701
189
512
650
42
214
7
381
102
279
639
21
220
(14)
469
117
352
$ 3.09 $ 0.80 $ 0.97 $ 0.60 $ 0.71
$ 3.07 $ 0.80 $ 0.94 $ 0.60 $ 0.70
$ 3.15 $ 0.89 $ 1.01 $ 0.55 $ 0.70
$ 3.13 $ 0.89 $ 1.01 $ 0.54 $ 0.68
1,558
405
490
302
361
1,592
449
512
279
352
Restructuring, acquisition and other
Income tax impact of above items
324
(79)
101
(20)
63
(17)
115
(30)
45
(12)
185
(52)
73
(22)
49
(13)
42
(11)
21
(6)
Adjusted net income
1,803
486
536
387
394
1,725
500
548
310
367
$ 3.57 $ 0.96 $ 1.06 $ 0.77 $ 0.78 $ 3.42 $ 0.99 $ 1.09 $ 0.61 $ 0.73
$ 3.56 $ 0.96 $ 1.03 $ 0.76 $ 0.77 $ 3.40 $ 0.99 $ 1.08 $ 0.60 $ 0.71
593
959
462
2,788
719
4,161 1,147 1,319 1,016
302
1,671
504
559
986 1,429
468
868
2,312
4,321
2,366
484
679
394
656
947
568
507
739
846
468
Adjusted earnings per share:
Basic
Diluted
Capital expenditures
Cash provided by operating activities
Free cash flow
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FOURTH QUARTER 2021 RESULTS
Results commentary in “Fourth Quarter 2021 Results” compares
the fourth quarter of 2021 with the fourth quarter of 2020.
Revenue
Total revenue and total service revenue increased by 6% and 7%,
respectively, in the fourth quarter, driven by revenue growth in our
Wireless and Media businesses.
Wireless service revenue increased by 6% in the fourth quarter,
mainly as a result of larger postpaid subscriber base and higher
roaming revenue, as COVID-19-related global travel restrictions
were generally less strict than last year. Wireless equipment
revenue increased by 4%, as a result of higher device upgrades by
existing subscribers, and higher gross additions, partially offset by
increased promotional activity during key selling periods.
roaming revenue. In Media, major professional sports leagues
postponed their 2019-20 seasons between March and July 2020 and
recommenced with contracted seasons from July to September
2020. The NBA and NHL also postponed and condensed their
2020-21 seasons to late December 2020 and early January 2021,
respectively. These changes caused sports-related revenue and
expenses, such as programming rights amortization, to be
recognized at different points in time than is typical. Furthermore, the
effect of the Toronto Blue Jays being able to allow limited game-day
attendance this year and play a full season compared to the stricter
public health restrictions in the prior year has resulted in increased
revenue and operating expenses this year.
We expect COVID-19 will continue to affect our operating results in
2022 and there is continued uncertainty surrounding the duration
and potential outcomes of COVID-19.
Cable revenue was stable in the fourth quarter, primarily as a result
of the movement of Internet customers to higher speed and usage
tiers in our Ignite Internet offerings and the increases in our Internet
and Ignite TV subscriber bases, offset by declines in our legacy
television and home phone subscriber bases.
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, restructuring, acquisition and other
costs, impairment of assets, and changes in income tax expense.
Media revenue increased by 26% in the fourth quarter, primarily as
2020 was impacted by the postponement of the start of the 2020
2021 NHL and NBA seasons.
Adjusted EBITDA and margins
Consolidated adjusted EBITDA decreased 4% in the fourth quarter
and our adjusted EBITDA margin decreased by 440 basis points
driven by the impact of Media.
Wireless
Trends affecting both Wireless revenue and adjusted EBITDA
reflect:
• the growing number of wireless subscribers;
• greater usage of wireless data;
• higher wireless equipment revenue as more consumers shift to
financing higher-value devices, along with ongoing disciplined
promotional activity; and
Wireless adjusted EBITDA increased by 5%, primarily as a result of
the flow-through of revenue growth. This gave rise to a Wireless
adjusted EBITDA service margin of 62.6%.
• decreasing postpaid churn, which we believe is beginning to
reflect the realization of our enhanced customer service efforts;
partially offset by
Cable adjusted EBITDA was in line with last year, resulting in a
Cable adjusted EBITDA margin of 50.6% in the fourth quarter.
Media adjusted EBITDA decreased by $108 million in the fourth
quarter, primarily due to higher sports programming and
production costs as a result of the postponement of the start of the
2020-2021 NHL and NBA seasons, partially offset by higher
revenue as discussed above.
Net income and adjusted net income
Net income and adjusted net income decreased in the fourth
quarter by 10% and 3%, respectively, primarily as a result of lower
adjusted EBITDA.
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 reportable
segments. This means our results in one quarter are not necessarily
indicative 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.
COVID-19 significantly affected our operating results in 2020 and
2021 in addition to the typical seasonal fluctuations in our business
that are described below. In Wireless, the decline in customer travel
due to global travel restrictions resulted in lower-than-pre-pandemic
• lower overage revenue as customers continue to adopt our
unlimited data plans.
Additional trends affecting Wireless adjusted EBITDA reflect higher
costs related to the increasing number of subscribers.
We continue to target organic growth in higher-value postpaid
subscribers, reflected in the increasing proportion of postpaid
subscribers relative to prepaid subscribers. Prepaid plans are
evolving to have properties similar to those of traditional postpaid
plans. We believe this evolution provides consumers 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, resulting in higher subscriber acquisition- and
activation-related expenses, typically
in the third and fourth
quarters. Conversely, periods with higher activity may adversely
impact subscriber churn metrics as a result of heightened
fourth quarters typically
competitive activity. The third and
experience higher volumes of activity as a result of “back to school”
and holiday season-related consumer behaviour. Aggressive
promotional offers are often advertised during these periods and
also contribute to the impact on subscriber metrics. In contrast, we
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 41
MANAGEMENT’S DISCUSSION AND ANALYSIS
typically see lower subscriber additions in the first quarter of the
year.
The launch of popular new wireless device models can also affect
the level of subscriber activity. Highly anticipated device launches
typically occur in the spring and fall seasons of each year. Wireless
roaming revenue is dependent on customer travel volumes and
timing, which is affected by the foreign exchange rate of the
Canadian dollar and general economic conditions.
Cable
Trends affecting Cable service revenue primarily reflect:
• higher Internet subscription fees as customers increasingly
upgrade to higher-tier speed plans, including those with
unlimited usage;
• customers adopting Ignite TV;
• general service pricing increases; and
• the shift of business customers from lower-margin, off-net legacy
long distance and data services to higher-margin, next-
generation services and data centre businesses; partially offset
by
• competitive losses of legacy Television and Phone subscribers;
• Television subscribers downgrading their service plans; and
• lower additional usage of our products and services as service
plans are increasingly bundling more features, such as unlimited
usage or a greater number of TV channels.
Trends affecting Cable adjusted EBITDA primarily reflect:
• higher Internet operating margins, as a result of the shift from
conventional Television to Internet services; and
• the shift to a self-install model for most of our Cable products;
partially offset by
• higher premium supplier fees in Television as a result of
bundling more value-added offerings into our Cable products.
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 residence moving out
early in the second quarter and cancelling 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;
• the timing of service pricing changes; and
• the focused 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 as substitutes for traditional
home phone products have resulted in fewer Phone subscribers.
Cable results from our business customers do not generally have
any unique seasonal aspects.
Media
Trends affecting Media revenue and adjusted EBITDA 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;
• general cord shaving and cord cutting by television subscribers
regardless of service provider; and
• continual investment in primetime and specialty programming
relating to both our broadcast networks (such as Citytv) 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 (in the fourth quarter of the
year); and
• programming and production costs and player payroll are
expensed based on the number of games aired or played, as
applicable; 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 trails capital expenditures and, in
recent years, has been trending upward as a result of an increase in
our general depreciable asset base, related significantly to the
ongoing expansions of our wireless and cable networks. The
increasing trend is a direct result of increasing capital expenditures
in previous years as we worked to upgrade our wireless network for
the launch of 5G services and roll out Ignite TV, Ignite Gigabit
Internet, and 4K TV to our Cable footprint. We expect future
depreciation and amortization to align with ongoing capital
expenditures and additions to right-of-use assets.
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| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
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OVERVIEW OF FINANCIAL POSITION
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at December 31
(In millions of dollars)
Assets
Current assets:
Cash and cash equivalents
Accounts receivable
Inventories
2021 2020 $ Chg % Chg
Explanation of significant changes
Current portion of contract assets
Other current assets
Current portion of derivative instruments
115
497
120
533
516
61
(418)
(19)
59
715 2,484 (1,769)
991
56
3,847 2,856
479
535
(71) See “Managing our Liquidity and Financial Resources”.
35
12 Reflects an increase in Wireless devices to mitigate the risk of the COVID-19
Primarily reflects the increase in financing receivables.
impact on supply chains.
(78) Reflects our transition of consumer offerings to device financing agreements.
(4) n/m
97
Primarily reflects changes in the market value of certain interest rate derivatives as
a result of changes in the interest rate environment.
Total current assets
Property, plant and equipment
5,829 6,929 (1,100)
648
14,666 14,018
(16)
5
Intangible assets
Investments
Derivative instruments
12,281 8,926 3,355
(43)
53
2,493 2,536
1,431 1,378
38
(2) n/m
4
Primarily reflects capital expenditures and additions to right-of-use assets
partially offset by depreciation expense.
Primarily reflects the acquisition of 3500 MHz spectrum licences.
Primarily reflects changes in the market values of certain debt derivatives as a
result of changes in the interest rate environment.
Financing receivables
854
748
106
14 Reflects our continued transition of consumer offerings to device financing
Other long-term assets
Goodwill
Total assets
Liabilities and shareholders’ equity
Current liabilities:
Short-term borrowings
385
346
4,024 3,973
39
51
41,963 38,854 3,109
11
1
8
agreements.
n/m
n/m
2,200 1,221
979
80 Reflects an increase in borrowings under our receivables securitization program,
US CP program, and non-revolving credit facilities.
Accounts payable and accrued liabilities
Income tax payable
3,416 2,714
344
115
702
(229)
26 Reflects increased spending as the economy recovered from COVID-19.
(67) Reflects a decrease in taxes owed as a result of the final 2020 installment
Other current liabilities
607
243
364
150
Contract liabilities
Current portion of long-term debt
394
336
1,551 1,450
58
101
Current portion of lease liabilities
336
278
58
Total current liabilities
Provisions
Long-term debt
8,619 6,586 2,033
8
386
42
17,137 16,751
50
Lease liabilities
Other long-term liabilities
1,621 1,557
565 1,149
64
(584)
Deferred tax liabilities
3,439 3,196
243
Total liabilities
Shareholders’ equity
31,431 29,281 2,150
959
10,532 9,573
payment.
Primarily reflects changes in the market value of certain interest rate derivatives as
a result of changes in the interest rate environment.
n/m
17
7 Reflects the reclassifications to current of our US$750 million senior notes due
March 2022 and our $600 million senior notes due June 2022, including the
impact of foreign exchange on the US dollar-denominated debt, partially offset
by the repayment of $1,450 million senior notes in March 2021.
21 Reflects liabilities related to the current portion of new leases entered.
31
19
n/m
2 Reflects the issuance of our $2 billion subordinated notes, partially offset by
reclassifications to current of our US$750 million senior notes due March 2022
and our $600 million senior notes due June 2022.
4 Reflects liabilities related to new leases entered.
(51) Primarily reflects changes in market values of certain debt derivatives as a result
of changes in the Canadian and US interest rate environment.
Primarily reflects an increase in temporary differences between the accounting
and tax bases for certain assets and liabilities.
8
7
10 Reflects changes in retained earnings and equity reserves.
Total liabilities and shareholders’ equity
41,963 38,854 3,109
8
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 43
MANAGEMENT’S DISCUSSION AND ANALYSIS
Managing our Liquidity and Financial Resources
SOURCES AND USES OF CASH
OPERATING, INVESTING, AND FINANCING ACTIVITIES
(In millions of dollars)
Cash provided by operating activities before changes in net operating assets and liabilities, income taxes paid,
Years ended December 31
2021
2020
and interest paid
Change in net operating assets and liabilities
Income taxes paid
Interest paid
Cash provided by operating activities
Investing activities:
Capital expenditures
Additions to program rights
Changes in non-cash working capital related to capital expenditures and intangible assets
Acquisitions and other strategic transactions, net of cash acquired
Other
Cash used in investing activities
Financing activities:
Net proceeds received from (repayment of) short-term borrowings
Net issuance of long-term debt
Net (payments) proceeds on settlement of debt derivatives and forward contracts
Transaction costs incurred
Principal payments of lease liabilities
Dividends paid
5,626
37
(700)
(802)
5,880
(333)
(418)
(808)
4,161
4,321
(2,788)
(54)
67
(3,404)
46
(2,312)
(57)
(37)
(103)
(49)
(6,133)
(2,558)
971
550
(8)
(31)
(269)
(1,010)
203
(1,769)
2,484
715
(1,146)
2,540
80
(23)
(213)
(1,011)
227
1,990
494
2,484
Cash provided by financing activities
Change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
OPERATING ACTIVITIES
The 4% decrease in cash provided by operating activities this year
was primarily affected by higher income taxes paid.
INVESTING ACTIVITIES
Capital expenditures
We spent $2,788 million this year on property, plant and
equipment before related changes in non-cash working capital
items, which was 21% higher
than 2020. See “Capital
Expenditures” for more information.
Acquisitions and other strategic transactions
This year, we paid $3.3 billion for the acquisition of 3500 MHz
spectrum licences. We also made four individually immaterial
acquisitions complementary to our existing lines of business in
Cable and Media.
44
| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
FINANCING ACTIVITIES
This year, we received net amounts of $1,482 million (2020 –
received net amounts of $1,451 million) on our short-term
long-term debt, and related derivatives, net of
borrowings,
transaction costs. See “Financial Risk Management” for more
information on the cash flows relating to our derivative instruments.
Short-term borrowings
Our short-term borrowings consist of amounts outstanding under
our receivables securitization program, our short-term non-revolving
credit facilities, and our US CP program. Below is a summary of our
short-term borrowings as at December 31, 2021 and 2020.
Years ended December 31
(In millions of dollars)
Receivables securitization program
US commercial paper program (net of
the discount on issuance)
Non-revolving credit facility borrowings
2021
800
893
507
2020
650
571
–
Total short-term borrowings
2,200
1,221
The table below summarizes the activity relating to our short-term borrowings for the years ended December 31, 2021 and 2020.
(In millions of dollars, except exchange rates)
Proceeds received from receivables securitization
Net proceeds received from receivables securitization
Proceeds received from US commercial paper
Repayment of US commercial paper
Net proceeds received from (repayment of) US commercial paper
Proceeds received from non-revolving credit facilities (US$)
Repayment of non-revolving credit facilities (US$)
1,200
(800)
1.253
1.254
2,568
(2,314)
1.260
1.259
Net proceeds received from non-revolving credit facilities
Net proceeds received from (repayment of) short-term borrowings
We have a US CP program that allows us to issue up to a maximum
aggregate principal amount of US$1.5 billion. Funds can be
borrowed under this program with terms to maturity ranging from
1 to 397 days, subject to ongoing market conditions. Any issuances
made under the US CP program will be issued at a discount. The
obligations of RCI under the US CP program are unsecured and
guaranteed by RCCI, and rank equally in right of payment with all
our senior notes and debentures. See “Financial Condition” for
more information.
Concurrent with our US CP issuances and non-revolving credit
facility borrowings, we entered into debt derivatives to hedge the
foreign currency risk associated with the principal and interest
components of the borrowings. See “Financial Risk Management”
for more information.
In June 2021, we entered into non-revolving credit facilities with an
aggregate limit of US$1.6 billion that mature in June 2022. Any
borrowings under these facilities will be recorded as short-term
borrowings as they will be due within 12 months. Borrowings under
the facilities are unsecured, guaranteed by RCCI, and rank equally
in right of payment with all of our senior notes and debentures. In
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Year ended December 31, 2021
Year ended December 31, 2020
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
150
150
3,235
(2,914)
321
1,503
(1,003)
500
971
3,316
(4,098)
1.329
1.355
–
–
–
–
–
–
4,406
(5,552)
(1,146)
–
–
–
(1,146)
December 2021, we terminated the undrawn non-revolving credit
facilities with an aggregate limit of US$1.2 billion. In February 2022,
we repaid the outstanding US$400 million and terminated the
facility.
including, without
In March 2021, in connection with the Transaction, we entered into
a binding commitment letter for a committed credit facility with a
syndicate of banks
in an amount up to $19 billion. The
commitment remains subject to the satisfaction of conditions to
effectiveness and drawing,
limitation, the
in
completion of credit documentation
respect of such
the Transaction. The
the completion of
commitment and
committed facility cannot be drawn upon until the closing date of
the Transaction. It is only available to be drawn to fund part of the
acquisition cost of the Transaction and to pay fees and expenses
related to the Transaction. If drawn, any drawings must be repaid
within 364 days. If undrawn, the facility terminates on the closing
date of the acquisition. As a result of entering into the Shaw term
loan facility (see “Long-term debt” below), the maximum amount
we can draw on this committed facility decreased to $13 billion.
Long-term debt
Our long-term debt consists of amounts outstanding under our bank and letter of credit facilities and the senior notes, debentures, and
subordinated notes we have issued. The tables below summarize the activity relating to our long-term debt for the years ended
December 31, 2021 and 2020.
(In millions of dollars, except exchange rates)
Credit facility borrowings (US$)
Credit facility repayments (US$)
Net borrowings under credit facilities
Senior note issuances (Cdn$)
Senior note issuances (US$)
Total senior note issuances
Senior note repayments (Cdn$)
Net (repayment) issuance of senior notes
Subordinated note issuances (Cdn$)
Net issuance of long-term debt
Year ended December 31, 2021
Year ended December 31, 2020
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
–
–
–
–
–
–
–
–
–
–
–
–
(1,450)
(1,450)
2,000
550
970
(970)
1.428
1.406
1,385
(1,364)
750
1.359
21
1,500
1,019
2,519
–
2,519
–
2,540
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 45
MANAGEMENT’S DISCUSSION AND ANALYSIS
(In millions of dollars)
Long-term debt net of transaction costs, beginning of year
Net issuance of long-term debt
Gain on foreign exchange
Deferred transaction costs incurred
Amortization of deferred transaction costs
Long-term debt net of transaction costs, end of year
Years ended December 31
2021
2020
18,201
550
(50)
(31)
18
15,967
2,540
(297)
(23)
14
18,688
18,201
The revolving credit facility is unsecured, guaranteed by RCCI, and
ranks equally with all of our senior notes and debentures.
over the bank prime rate or base rate, or 0.65% to 2.25% over the
bankers’ acceptance rate or London Inter-Bank Offered Rate.
In April 2021, we entered into a $6 billion Shaw term loan facility
consisting of three tranches of $2 billion each. The facility cannot be
drawn upon until the closing date of the Transaction. The first tranche
matures three years after the Transaction closing date and
subsequent tranches mature in years four and five thereafter,
respectively. At tranche maturity, any outstanding borrowings under
that tranche must be repaid. The interest rate charged on borrowings
from the Shaw term loan facility ranges from nil to 1.25% per annum
In April 2021, we amended our revolving credit facility to, among
other things, increase the total credit limit and extend the maturity
dates. We increased the total credit limit from $3.2 billion to
$4 billion by increasing the limits of the two tranches to $3 billion
and $1 billion (from $2.5 billion and $700 million), respectively. We
also extended the maturity date of the $3 billion tranche from
September 2023 to April 2026 and the $1 billion tranche from
September 2022 to April 2024.
Issuance of senior and subordinated notes and related debt derivatives
Below is a summary of the senior and subordinated notes that we issued in 2021 and 2020. In 2021, the proceeds were used to partially
fund the purchase of 3500 MHz spectrum licences. In 2020, the proceeds were used to repay outstanding US CP and bank credit facility
borrowings, and for general corporate purposes.
(In millions of dollars, except interest rates and discounts)
Date issued
2021 issuance
December 17, 2021 (subordinated) 3
2020 issuances
March 31, 2020 (senior)
June 22, 2020 (senior)
Principal
amount Due date
Interest rate
Discount/
premium at
issuance
Total gross
proceeds 1
(Cdn$)
Transaction costs
and discounts 2
(Cdn$)
2,000
2081
5.000%
At par
2,000
1,500
US 750
2027
3.650%
2022 USD LIBOR + 0.60%
99.511%
At par
1,500
1,019
20
16
5
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.
3 Deferred transaction costs and discounts in the carrying value of the subordinated notes are recognized in net income using the effective interest method over a five-year period.
The US dollar-denominated senior notes issued in 2020 were
issued pursuant to a public offering in the US. The Canadian dollar-
denominated senior notes issued in 2020 were issued pursuant to
a public offering in Canada.
Concurrent with the US dollar-denominated issuances, we entered
into debt derivatives to convert all interest and principal payment
obligations on the senior notes to Canadian dollars at a fixed
interest
for more
information.
rate. See “Financial Risk Management”
The issued senior notes 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.
In December 2021, we issued $2 billion subordinated notes due
2081 with an initial coupon of 5% for the first five years.
Concurrently, we terminated the $750 million bond forwards
entered into in July 2021 to hedge the interest rate risk associated
with future debt issuances. We used the proceeds to partially fund
the remaining payment required to obtain the 3500 MHz spectrum
licences.
In February 2022, we issued US$750 million subordinated notes
due 2082 with an initial coupon of 5.25% for the first five years.
Concurrently, we terminated $950 million of interest rate derivatives
entered into in 2021 to hedge the interest rate risk associated with
future debt issuances. We received net proceeds of US$740 million
($938 million) from the issuance.
Each of the subordinated notes can be redeemed at par on their
respective five-year anniversary or on any subsequent interest
payment date. The subordinated notes are unsecured and
subordinated obligations of RCI. Payment on these notes will,
under certain circumstances, be subordinated to the prior payment
in full of all of our senior indebtedness, including our senior notes,
debentures, and bank credit facilities. In addition, upon the
occurrence of certain events involving a bankruptcy or insolvency of
RCI, the outstanding principal and interest of such subordinated
notes would automatically convert into preferred shares. We
understand that S&P Global Ratings Services (S&P), Moody’s
Investors Service (Moody’s), and Fitch Ratings (Fitch) will only
include 50% of the outstanding principal amount of these
subordinated notes in their leverage ratio calculation for at least the
first five years after their issuance.
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| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
In connection with these issuances, the Board approved the creation
of new Series I and Series II preferred shares, respectively. Series I and
Series II have been authorized for up to 3.3 million and 1.4 million
preferred shares, respectively, have no voting rights, have par values
of $1,000 per share, and will be issued automatically upon the
occurrence of certain events involving a bankruptcy or insolvency of
RCI to holders of the respective subordinated notes.
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 expire in May 2022. We have issued nil under the Canadian
Shelf and an aggregate of US$750 million of securities under the US
Shelf. The subordinated notes we issued in December 2021 and
February 2022 were not issued under the Canadian Shelf or US Shelf,
respectively.
Repayment of senior notes and related derivative settlements
During the year ended December 31, 2021, we repaid the entire
outstanding principal amount of our $1.45 billion 5.34% senior notes
at maturity. There were no derivatives associated with these senior
notes. We did not repay any senior notes or settle any related debt
derivatives during the year ended December 31, 2020.
Dividends
In 2021, we declared and paid dividends on each of RCI’s
outstanding Class A Shares and Class B Non-Voting Shares. We
paid $1,010 million in cash dividends. See “Dividends and Share
Information” for more information.
FREE CASH FLOW
(In millions of dollars)
Adjusted EBITDA
Deduct (add):
Capital expenditures 1
Interest on borrowings, net of
capitalized interest
Cash income taxes 2
Free cash flow
Years ended December 31
2021
2020 % Chg
5,887
5,857
2,788
2,312
728
700
761
418
1,671
2,366
1
21
(4)
67
(29)
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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
FINANCIAL CONDITION
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 Cash income taxes are net of refunds received.
The 29% decrease in free cash flow this year was primarily a result
of higher cash income taxes due to our transition to a device
financing business model and higher capital expenditures.
AVAILABLE LIQUIDITY
Below is a summary of our total available liquidity from our cash and cash equivalents, bank credit facilities, letters of credit facilities, and
short-term borrowings.
As at December 31, 2021
(In millions of dollars)
Cash and cash equivalents
Bank credit facilities 2:
Revolving
Non-revolving
Outstanding letters of credit
Receivables securitization 2
Total
Total sources
Drawn Letters of credit US CP program 1 Net available
715
4,000
507
72
1,200
6,494
–
–
507
–
800
1,307
–
8
–
72
–
80
–
894
–
–
–
894
715
3,098
–
–
400
4,213
1 The US CP program amounts are gross of the discount on issuance.
2 The total liquidity sources under our bank credit facilities and receivables securitization represents the total credit limits per the relevant agreements. The amount drawn and letters
of credit are currently outstanding under those agreements. The US CP program amount represents our currently outstanding US CP borrowings that are backstopped by our
revolving credit facility.
As at December 31, 2020
(In millions of dollars)
Cash and cash equivalents
Bank credit facilities 2:
Revolving
Outstanding letters of credit
Receivables securitization 2
Total
Total sources
Drawn Letters of credit US CP program 1 Net available
2,484
3,200
101
1,200
6,985
–
–
–
650
650
–
8
101
–
109
–
573
–
–
573
2,484
2,619
–
550
5,653
1 The US CP program amounts are gross of the discount on issuance.
2 The total liquidity sources under our bank credit facilities and receivables securitization represents the total credit limits per the relevant agreements. The amount drawn and letters
of credit are currently outstanding under those agreements. The US CP program amount represents our currently outstanding US CP borrowings that are backstopped by our
revolving credit facility.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 47
MANAGEMENT’S DISCUSSION AND ANALYSIS
Subsequent to the final payment for the 3500 MHz spectrum
licence acquisition in December 2021, we cancelled $360 million
of letters of credit and US$1.2 billion of non-revolving credit
facilities, which reduced total liquidity sources to $6.5 billion as at
December 31, 2021.
In addition to the sources of available liquidity noted above, we
held $1,581 million of marketable securities in publicly traded
companies as at December 31, 2021 (2020 – $1,535 million).
Weighted average cost of borrowings
Our borrowings had a weighted average cost of 3.95% as at
December 31, 2021 (2020 – 4.09%) and a weighted average term
to maturity of 11.6 years (2020 – 12.8 years). These figures reflect
the repayment of our subordinated notes on the five-year
anniversary.
in “Sources and Uses of Cash”
COVENANTS
The provisions of our $4.0 billion revolving bank credit facility
impose certain
described
restrictions on our operations and activities, the most significant of
which are leverage-related maintenance tests. As at December 31,
2021 and 2020, we were in compliance with all financial covenants,
financial ratios, and all of the terms and conditions of our debt
agreements. Throughout 2021, 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 S&P, Moody’s, and Fitch to rate certain
of our public debt issues. Below is a summary of the credit ratings
on RCI’s outstanding senior and subordinated notes and
debentures (long-term) and US CP (short-term) as at December 31,
2021.
Issuance
S&P
Moody’s
Fitch
Corporate credit
issuer default
rating
Senior unsecured
debt
Subordinated
debt
US commercial
paper
BBB+ Rating
Watch Negative
Baa1 under
review
BBB+ Rating
Watch Negative
BBB+ Rating
Watch Negative
BBB- Credit
Watch Negative
A-2 Rating
Watch Negative
Baa1 under
review
Baa3 under
review
P-2 under
review
BBB+ Rating
Watch Negative
BBB- Rating
Watch Negative
N/A 1
1 We have not sought a rating from Fitch for our short-term obligations.
As a result of our agreement to acquire Shaw and the related
commitments in connection with the Transaction, both S&P and
Fitch have placed us on credit watch with negative implications.
Moody’s has placed our credit ratings on review for downgrade.
We expect S&P, Moody’s, and Fitch to complete their reviews upon
closing of the Transaction. See “Shaw Transaction” and “Risks and
Uncertainties Affecting our Business – Shaw Transaction” for more
information on our agreement with Shaw and the Transaction.
Ratings for long-term debt instruments across the universe of
composite rates range from AAA (S&P and Fitch) or Aaa (Moody’s),
representing the highest quality of securities rated, to D (S&P),
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- (S&P and Fitch) or Baa3 (Moody’s)
to AAA (S&P and Fitch) or Aaa (Moody’s).
Ratings for short-term debt instruments across the universe of
composite rates ranges from A-1+ (S&P), F1+ (Fitch), or P-1
(Moody’s), representing the highest quality of securities rated, to C
(S&P and Fitch), and not prime (Moody’s) for the lowest quality of
securities rated. Investment-grade credit ratings are generally
considered to be ratings of at least A-3 (S&P), F3 (Fitch), or P-3
(Moody’s) quality or higher.
Credit ratings are not recommendations to purchase, hold, or sell
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 S&P, Fitch, and
Moody’s are investment-grade ratings.
ADJUSTED NET DEBT AND DEBT LEVERAGE RATIO
We use adjusted net debt and debt leverage ratio 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, lease liabilities,
and cash and cash equivalents.
(In millions of dollars, except
ratios)
Long-term debt 1
Subordinated notes adjustment 2
Net debt derivative assets valued
without any adjustment for
credit risk 3
Short-term borrowings
Lease liabilities
Cash and cash equivalents
Adjusted net debt 2,4
Divided by: trailing 12-month
adjusted EBITDA
Debt leverage ratio
As at
December 31
As at
December 31
2021
18,873
(1,000)
(1,278)
2,200
1,957
(715)
2020
18,373
–
(1,101)
1,221
1,835
(2,484)
20,037
17,844
5,887
3.4
5,857
3.0
1 Includes current and
long-term portion of
long-term debt before deferred
transaction costs and discounts.
2 For the purposes of calculating adjusted net debt and debt leverage ratio, we believe
adjusting 50% of the value of our subordinated notes is appropriate as this
methodology factors in certain circumstances with respect to priority for payment and
this approach is commonly used to evaluate debt leverage by rating agencies.
3 For purposes of calculating adjusted net debt and debt leverage ratio, we believe
including debt derivatives valued without adjustment for credit risk is commonly used
to evaluate debt leverage and for market valuation and transactional purposes.
4 Adjusted net debt is a capital management measure. See “Non-GAAP and Other
Financial Measures” for more information about this measure.
48
| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
In addition, as at December 31, 2021, we held $1,581 million of
marketable securities in publicly traded companies (2020 – $1,535
million).
pension asset increased by $592 million primarily as a result of a
net decrease in the plan obligations resulting from higher discount
rates and the return earned on the plan assets.
increased by $2,193 million
Our adjusted net debt
December 31, 2020 as a result of:
• an increase in short-term borrowings from our non-revolving
credit facilities, US CP program, and receivables securitization
program;
from
• a decrease in our net cash position; and
• an increase in long-term debt from subordinated note issuances.
See “Overview of Financial Position” for more information.
PENSION OBLIGATIONS
Our defined benefit pension plans were in a net asset position of
approximately $18 million as at December 31, 2021 (2020 – net
liability position of $574 million). During 2021, our net deferred
FINANCIAL RISK MANAGEMENT
We made a total of $177 million (2020 – $150 million) of
contributions to our funded defined benefit pension plans this
year. We expect our total estimated funding requirements for our
funded defined benefit pension plans to be $134 million in 2022
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.
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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
for US dollar-
interest payments
denominated senior and subordinated notes and
debentures, credit facility borrowings, commercial
paper borrowings, and certain lease liabilities
Cross-currency interest rate exchange agreements
Forward cross-currency interest rate exchange
agreements
Forward foreign exchange agreements
Interest rate derivatives
Impact of fluctuations in market interest rates on
forecast interest payments for expected long-term
debt
Forward interest rate agreements
Interest rate swap agreements
Bond forwards
Expenditure derivatives
Impact of fluctuations in foreign exchange rates on
forecast US dollar-denominated expenditures
Forward foreign exchange agreements and
foreign exchange option 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 89.3% (2020 – 93.6%) of our debt,
including short-term borrowings, as at December 31, 2021.
DEBT DERIVATIVES
We use cross-currency interest rate agreements and forward foreign exchange agreements (collectively, debt derivatives) to manage risks
from fluctuations in foreign exchange rates and interest rates associated with our US dollar-denominated senior notes and debentures,
lease liabilities, credit facility borrowings, and US CP borrowings. We designate the debt derivatives related to our senior notes,
debentures, and lease liabilities as hedges for accounting purposes against the foreign exchange risk or interest rate risk associated with
specific issued and forecast debt instruments. Debt derivatives related to our credit facility and US CP borrowings have not been
designated as hedges for accounting purposes.
Issuance of debt derivatives related to senior notes
We did not enter into any debt derivatives in 2021 on issued senior notes. We entered into US$2 billion of forward starting cross-currency
swaps to hedge the foreign exchange and interest risk associated with debt instruments we expect to issue in the future related to the
Transaction. These derivatives have been designated as hedges for accounting purposes.
(In millions of dollars, except for coupon and interest rates)
US$
Hedging effect
Effective date
2020 issuances
June 22, 2020
Principal/Notional
amount (US$)
Maturity date
Coupon rate
Fixed hedged (Cdn$)
interest rate 1
Equivalent (Cdn$)
750
2022 USD LIBOR + 0.60%
0.955%
1,019
1 Converting from a fixed US$ coupon rate to a weighted average Cdn$ fixed rate.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 49
MANAGEMENT’S DISCUSSION AND ANALYSIS
Settlement of debt derivatives related to senior notes
We did not settle any debt derivatives related to senior notes during 2021 and 2020.
As at December 31, 2021, we had US$9,050 million of US dollar-denominated senior notes and debentures, all of which were hedged
using debt derivatives.
(In millions of dollars, except exchange rates, percentages, and years)
US dollar-denominated long-term debt 1
Hedged with debt derivatives
Hedged exchange rate
Percent hedged 2
Amount of borrowings at fixed rates 3
Total borrowings
Total borrowings at fixed rates
Percent of borrowings at fixed rates
Weighted average interest rate on borrowings
Weighted average term to maturity
As at December 31
2021
2020
US$ 9,050 US$ 9,050
US$ 9,050 US$ 9,050
1.2069
100.0%
1.2069
100.0%
$
$
20,514
18,323
89.3%
3.95%
11.6 years
$
$
18,994
17,773
93.6%
4.09%
12.8 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 IFRS 9, Financial instruments, as at December 31, 2021 and December 31, 2020, RCI accounted for 100% of its debt
derivatives related to senior notes as hedges against designated US dollar-denominated debt. As a result, as at December 31, 2021 and 2020, 100% of our US dollar-
denominated senior notes and debentures are 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 US CP program, receivables securitization program,
and non-revolving credit facilities.
Debt derivatives related to credit facilities and US CP
During the year, we entered into debt derivatives related to our credit facility and US CP 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 and commercial paper borrowings.
Below is a summary of the debt derivatives we entered and settled related to our credit facility borrowings and US CP program during
2021 and 2020.
(In millions of dollars, except exchange rates)
Credit facilities
Debt derivatives entered
Debt derivatives settled
Net cash paid on settlement
US commercial paper program
Debt derivatives entered
Debt derivatives settled
Net cash (paid) received on settlement
Year ended December 31, 2021
Year ended December 31, 2020
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
1,200
800
1.253
1.254
2,568
2,312
1.260
1.259
1,503
1,003
(2)
3,235
2,911
(15)
970
970
1.428
1.406
3,316
4,091
1.329
1.330
1,385
1,364
(21)
4,406
5,441
101
Lease liabilities
Below is a summary of the debt derivatives we entered and settled related to our outstanding lease liabilities during 2021 and 2020.
(In millions of dollars, except exchange rates)
Debt derivatives entered
Debt derivatives settled
Year ended December 31, 2021
Year ended December 31, 2020
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
132
81
1.273
1.333
168
108
115
43
1.374
1.372
158
59
As at December 31, 2021, we had US$193 million notional amount of debt derivatives outstanding related to our outstanding lease
liabilities (2020 – US$142 million) with terms to maturity ranging from January 2022 to December 2024 (2020 – January 2021 to December
2023), at an average rate of $1.301/US$ (2020 – $1.352/US$).
See “Mark-to-market value” for more information about our debt derivatives.
50
| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
INTEREST RATE DERIVATIVES
From time to time, we use bond forward derivatives or interest rate
swap derivatives (collectively, interest rate derivatives) to hedge
interest rate risk on current and future debt instruments. Our
interest rate derivatives are designated as hedges for accounting
purposes.
We have entered into interest rate swap derivatives during the year
ended December 31, 2021, including:
• $1,250 million bond
forwards to hedge the underlying
Government of Canada (GoC) interest rate risk that will form a
portion of the interest rate risk associated with anticipated future
debt issuances;
• interest rate swap derivatives to hedge the interest rate risk on an
additional $3.25 billion of debt instruments we expect to issue in
the future; and
• interest rate swap derivatives to hedge the interest rate risk on
US$2 billion of debt instruments we expect to issue in the future.
Concurrent with our issuance of $2 billion subordinated notes in
December 2021, we terminated $750 million of bond forwards and
received $9 million upon settlement. As at December 31, 2021, we
had $500 million of bond forwards outstanding.
Concurrent with our issuance of US$750 million subordinated
notes in February 2022, we terminated $950 million of interest rate
swap derivatives and received $33 million upon settlement.
EXPENDITURE DERIVATIVES
We use foreign currency derivative contracts (expenditure derivatives) to hedge the foreign exchange risk on the notional amount of
certain forecast US dollar-denominated expenditures. Below is a summary of the expenditure derivatives we entered and settled to
manage foreign exchange risk related to certain forecast expenditures.
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Expenditure derivatives entered
Expenditure derivatives settled
Year ended December 31, 2021
Year ended December 31, 2020
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
438
960
1.244
1.360
545
1,306
1,560
940
1.343
1.299
2,095
1,221
The expenditure derivatives noted above have been designated as hedges for accounting purposes.
As at December 31, 2021, we had US$1,068 million of expenditure derivatives outstanding (2020 – US$1,590 million), at an average rate
of $1.287/US$ (2020 – $1.342/US$), with terms to maturity ranging from January 2022 to December 2023 (2020 – January 2021 to
December 2022). As at December 31, 2021, our outstanding expenditure derivatives maturing in 2022 are hedged at an average
exchange rate of $1.292/US$.
EQUITY DERIVATIVES
We use stock-based compensation derivatives (equity derivatives)
to hedge the market price appreciation risk of the Class B
Non-Voting Shares granted under our stock-based compensation
programs. As at December 31, 2021, we had equity derivatives for
5.0 million (2020 – 4.6 million) Class B Non-Voting Shares with a
weighted average price of $53.10 (2020 – $51.82). 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
Class B Non-Voting Shares on the accrued value of the stock-based
compensation
stock-based compensation
programs.
for our
liability
During the year ended December 31, 2021, we entered into
0.4 million equity derivatives (2020 – 0.3 million) with a weighted
average price of $60.98 (2020 – $56.08).
During the year ended December 31, 2021, we reset the weighted
average price to $59.64 (2020 – $54.16) on 0.5 million (2020 –
0.5 million) equity derivatives and received net proceeds of
$3 million (2020 – made net payments of $1 million). At the same
time in 2021, we reset the expiry dates to April 2023 (from April
2021).
Additionally, we executed extension agreements for the remainder
of our equity derivative contracts under substantially the same
commitment terms and conditions with revised expiry dates to
April 2022 (from April 2021).
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 51
MANAGEMENT’S DISCUSSION AND ANALYSIS
MARK-TO-MARKET VALUE
We record our derivatives using an estimated credit-adjusted,
mark-to-market valuation, calculated in accordance with IFRS.
(In millions of dollars, except
exchange rates)
Debt derivatives accounted for
as cash flow hedges:
As at December 31, 2021
Notional
amount
(US$)
Exchange
rate
Notional
amount
(Cdn$)
Fair
value
(Cdn$)
As at December 31, 2020
Notional
amount
(US$)
Exchange
rate
Notional
amount
(Cdn$)
Fair
value
(Cdn$)
(In millions of dollars, except
exchange rates)
Debt derivatives accounted for
as cash flow hedges:
As assets
As liabilities
5,859
5,383
1.1369
1.3025
6,661 1,453
7,011
(343)
As assets
As liabilities
4,550
4,642
1.0795
1.3358
4,912 1,405
(307)
6,201
Short-term debt derivatives not
accounted for as hedges:
Short-term debt derivatives not
accounted for as hedges:
As assets
1,104
1.2578
1,389
11
As liabilities
449
1.2995
583
(12)
Net mark-to-market debt
derivative asset
Interest rate derivatives
accounted for as cash flow
hedges:
As assets (Cdn$)
As liabilities (Cdn$)
As liabilities (US$)
Net mark-to-market interest rate
derivative liability
Expenditure derivatives
accounted for as cash flow
hedges:
Net mark-to-market debt
1,121
derivative asset
1,086
–
–
2,000
–
–
–
3,250
500
–
40
(6)
(277)
Expenditure derivatives
accounted for as cash flow
hedges:
As liabilities
Equity derivatives not
accounted for as hedges:
As assets
1,590
1.3421
2,134
(109)
—
—
238
34
(243)
Net mark-to-market asset
1,011
As assets
As liabilities
438
630
1.2453
1.3151
545
829
Net mark-to-market
expenditure derivative liability
Equity derivatives not accounted
for as hedges:
As assets
Net mark-to-market asset
–
–
265
11
(30)
(19)
36
895
DIVIDENDS AND SHARE INFORMATION
DIVIDENDS
Below is a summary of the dividends that have been declared and paid o n RCI’s outstanding Class A Shares and Class B Non-Voting Shares.
Declaration date
Record date
January 27, 2021
April 20, 2021
July 20, 2021
October 20, 2021
January 21, 2020
April 21, 2020
July 21, 2020
October 21, 2020
March 10, 2021
June 10, 2021
September 9, 2021
December 10, 2021
March 10, 2020
June 10, 2020
September 9, 2020
December 10, 2020
Payment date
April 1, 2021
July 2, 2021
October 1, 2021
January 4, 2022
April 1, 2020
July 2, 2020
October 1, 2020
January 4, 2021
Dividend per
share (dollars)
Dividends paid
(in millions of dollars)
0.50
0.50
0.50
0.50
0.50
0.50
0.50
0.50
252
253
253
252
252
253
253
252
On January 26, 2022, the Board declared a quarterly dividend of
$0.50 per Class A Voting Share and Class B Non-Voting Share, to
be paid on April 1, 2022, to shareholders of record on March 10,
2022.
We currently expect that the remaining record and payment dates
for the 2022 declaration of dividends will be as follows, subject to
the declaration by the Board each quarter at its sole discretion:
Declaration date
Record date
Payment date
April 19, 2022
June 9, 2022
November 8, 2022
June 10, 2022
September 9, 2022
December 9, 2022
July 4, 2022
October 3, 2022
January 3, 2023
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NORMAL COURSE ISSUER BID
In April 2020, the TSX accepted a notice of our intention to
commence a normal course issuer bid (NCIB) program (2020
NCIB) that allows us to purchase, between April 24, 2020 and
April 23, 2021, the lesser of 34.9 million Class B Non-Voting Shares
and that number of Class B Non-Voting Shares that can be
purchased under the 2020 NCIB for an aggregate purchase price
of $500 million. Rogers security holders may obtain a copy of this
notice, without charge, by contacting us. We did not purchase any
Class B Non-Voting Shares under the 2020 NCIB during the years
ended December 31, 2021 and December 31, 2020.
OUTSTANDING COMMON SHARES
As at February 28, 2022, 111,153,411 Class A Shares, 393,771,907
Class B Non-Voting Shares, and 6,412,258 options to purchase
Class B Non-Voting Shares were outstanding.
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)
2021
2020
Basic weighted average number of
shares outstanding
Diluted weighted average number of
shares outstanding
505
506
505
506
PREFERRED SHARES
In relation to our issuances of subordinated notes in December
2021 and February 2022, the Board approved the creation of new
Series I and Series II preferred shares, respectively. Series I has been
authorized for up to 3.3 million preferred shares and Series II has
been authorized for up to 1.4 million preferred shares. Both series
have no voting rights, par values of $1,000 per share, and will be
issued automatically upon the occurrence of certain events
involving a bankruptcy or insolvency of RCI to holders of the
respective subordinated notes.
As at December 31
2021
2020
Common shares outstanding 1
Class A Voting
Class B Non-Voting
111,153,411 111,154,811
393,771,907 393,770,507
Total common shares
504,925,318 504,925,318
Options to purchase Class B
Non-Voting Shares
Outstanding options
Outstanding options
exercisable
6,494,001
4,726,634
2,373,717
1,470,383
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 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 Shares may be made on different terms
than the offer to the holders of Class B Non-Voting Shares.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 53
MANAGEMENT’S DISCUSSION AND ANALYSIS
COMMITMENTS AND CONTRACTUAL OBLIGATIONS
CONTRACTUAL OBLIGATIONS
Below is a summary of our obligations under firm contractual arrangements as at December 31, 2021. See notes 3, 17, and 28 to our 2021
Audited Consolidated Financial Statements for more information. In addition to the below, our share of commitments relating to
associates and joint ventures is $387 million.
(In millions of dollars)
Short-term borrowings
Long-term debt 1,2
Net interest payments
Lease liabilities
Debt derivative instruments 3
Expenditure derivative instruments 3
Interest rate derivatives 3
Player contracts 4
Purchase obligations 5
Property, plant and equipment
Intangible assets
Program rights 6
Other long-term liabilities
Total
Less than
1 Year
1-3 Years
4-5 Years
2,200
1,551
804
336
213
23
243
129
327
82
21
659
–
6,588
–
2,312
1,444
677
(318)
(3)
–
204
192
85
–
1,151
7
5,751
–
3,520
1,321
308
86
–
–
222
85
42
–
824
2
6,410
After
5 Years
–
11,490
7,789
1,177
(385)
–
–
–
19
–
–
1
5
Total
2,200
18,873
11,358
2,498
(404)
20
243
555
623
209
21
2,635
14
20,096
38,845
1 Principal obligations of long-term debt (including current portion) due at maturity.
2 Reflects repayment of the subordinated notes issued in December 2021 on the five-year anniversary.
3 Net (receipts) disbursements due at maturity. US dollar amounts have been translated into Canadian dollars at the Bank of Canada year-end rate.
4 Toronto Blue Jays players’ salary contracts into which we have entered and are contractually obligated to pay.
5 Contractual obligations under service, product, and wireless device contracts to which we have committed.
6 Agreements into which we have entered to acquire broadcasting rights for sports broadcasting programs and films for periods in excess of one year at contract inception.
OFF-BALANCE SHEET ARRANGEMENTS
GUARANTEES
As a regular part of our business, we enter into agreements that
provide for indemnification and guarantees to counterparties in
transactions involving business sale and business combination
agreements, sales of services, and purchases and development of
assets. Due to the nature of these indemnifications, we are unable
to make a reasonable estimate of the maximum potential amount
we could be required to pay counterparties. Historically, we have
not made any significant payment under these indemnifications or
guarantees. See note 27 to our 2021 Audited Consolidated
Financial Statements.
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Environmental, Social, and Governance (ESG)
ENVIRONMENTAL AND SOCIAL
Our purpose is to connect Canadians to a world of possibilities,
and the moments that matter most. For more than 60 years,
through the vision of our founder, Ted Rogers, we are committed
to being a good corporate citizen and making a positive impact in
the communities we serve.
In 2021, as COVID-19 evolved, we continued to adapt aspects of
our operations to keep our customers connected and our
employees safe. We also
launched our new corporate
responsibility brand, Generation Possible and Team Possible.
Generation Possible focuses on giving the next generation the
chance they need to succeed through Ted Rogers Scholarships,
Ted Rogers Community Grants, and Jays Care Foundation. Team
Possible is about our team’s and partners’ commitment to make a
meaningful
in communities through areas such as
volunteering, bridging the digital divide, and partnering with
organizations like Women’s Shelters Canada to provide critical
digital lifelines.
impact
We are focused on growing in a socially and environmentally
responsible manner through an environmental, social, and
governance program, building on our reputation as a great
Canadian company.
The material aspects of our ESG platform are grouped into six
focus areas that are listed below, along with our approaches in
addressing them:
EMPLOYEE EXPERIENCE
• Employee Experience: We were recognized as one of the best
places to work in Canada across numerous awards in 2021,
including: Canada’s Top 100 Employers, Greater Toronto Area
Top Employers, Top Employers for Young People, Best Diversity
Employer, and Greenest Employers. We reclaimed certification
for Canada’s Most Admired Corporate Cultures 2021 and Jim
Reid, our former Chief Human Resources Officer (CHRO), was
recognized as one of Canada’s 50 Best Executives in the Globe &
Mail Report on Business.
• Talent Management: It is our goal to invest in building the skills,
capabilities, and careers of our people to support their success
and to make Rogers the best place to work in Canada. It is
important we live our values, develop our teams, and continue to
support our employees on their career journeys. Our CHRO
oversees talent management, while the Human Resources
Committee assists the Board in monitoring, reviewing, and
approving compensation and benefit policies and practices.
launched
• Inclusion and Diversity: We continued to deliver on the five-year
Inclusion & Diversity strategy we
in 2020. We
recognized and celebrated days of significance for equity-
deserving groups, evolved structure and governance of our I&D
Council to accelerate our plan, developed and introduced new
training and resources
including Allyship,
Psychological Safety, Unconscious Bias, and Inclusive Hiring, and
hosted over 100 safe talk sessions with 3,200 participants across
our teams.
to our teams
• Safety and Well-being: We are committed to supporting our
employees’ safety and well-being holistically, focusing on the
whole employee, including their safety and physical and mental
health at work and in their lives. Our top priority throughout the
pandemic has been the safety and well-being of our team. To
increase our support, we gave employees and their families
access to additional benefits like increased mental health
coverage and virtual healthcare. We regularly host company-
wide information sessions on COVID-19 and bring in well-being
and medical experts to share their knowledge. On average,
almost 4,000 team members join these sessions with an average
effectiveness score of 94%. We continuously share ongoing
updates from our CHRO on our policies, safety procedures
guided by Canada Public Health, and resources on mental
health and well-being. We launched a voluntary Return to
Workplace Pilot Program with more than 600 team members
across Canada and announced mandatory vaccinations or rapid
testing will be required for anyone entering workplace sites,
including team members, contractors, and visitors. We also
introduced a new Flexible Benefits Program to all benefits-
eligible team members to provide more personalization and
choice to meet the diverse needs of our team and implemented
dedicated mental health and well-being campaigns to drive
adoption of self-care and resilience.
• We are also committed to providing and maintaining safe
working environments for employees, volunteers, contractors,
visitors, and members of the public who may be affected by our
activity. We have a robust, risk-based safety management system
that is focused on identifying our greatest safety risks, preventing
injuries through multi-faceted programs, and auditing our
performance to ensure continuous improvement over time. Our
results show significant improvements in areas of focus and this
approach will continue in years to come.
CUSTOMER EXPERIENCE
• Customer Service and Transparency: We believe in putting
customers first
in everything we do to deliver the best
experience, regardless of how customers choose to interact with
us. We continue to focus on self-serve options for our customers
and invest in training and tools for our customer-facing teams.
• Network Leadership and Innovation: Innovation is part of our
DNA, whether it is bringing new products or the latest network
technologies to market. In 2021, we invested $2.8 billion in
capital expenditures, with much of that investment going to our
wireless and cable networks. We focus on core performance and
reliability and invest in our wireless network to build and maintain
our 5G network.
• Product Responsibility: We have programs and policies in place
to manage a range of product responsibility issues. For example,
we have policies in place to comply with all relevant safety
regulations and codes, we have programs and teams to manage
and advise on our accessibility offerings, and we operate
stewardship programs to manage the proper disposal and
recycling of our used products, including Rogers Trade-Up and
FidoTrade™.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 55
MANAGEMENT’S DISCUSSION AND ANALYSIS
• Customer Privacy and Information Security: We actively work to
improve transparency and we strive to be an industry leader in
the privacy space. Our Privacy Policy outlines our responsibilities
and practices regarding
the protection of the personal
information of our employees and customers. Our Chief Privacy
Officer oversees our compliance with this policy and all
applicable laws, and responds to requests from law enforcement
for customer data.
COMMUNITY INVESTMENT
Giving back and supporting the communities where we live and
work was especially important in 2021. In 2021, we provided
$70 million in cash and in-kind donations to support various
organizations and causes.
Below are some of the impacts Rogers had on communities in
2021 through Generation Possible and Team Possible.
Generation Possible
• Continued to invest in the next generation of leaders and
change makers, awarding Ted Rogers Scholarships to more than
375 young Canadians for their post-secondary studies. Nearly
three quarters of all scholarships in the Class of 2021 were
awarded to youth from equity-deserving communities (BIPOC,
LGBTQ2S+, and women). With the Class of 2021, almost 1,800
students have received a Ted Rogers Scholarship since the
program launched in 2017.
• Awarded 90 Ted Rogers Community Grants across Canada in
2021, to support organizations that are making a meaningful
difference in the lives of thousands of Canadian youth. With
more funding across more communities this year than ever
before, nearly 400 Ted Rogers Community Grants have been
awarded since launching the program in 2017.
Team Possible
• Rogers Group of Funds and Creative BC, with the support of the
Indigenous Screen Office, announced a new $1 million multi-
year fund to support Indigenous storytellers in British Columbia.
The fund will further enable Indigenous screen content with
representation across all aspects of production and it will amplify
Indigenous voices within Canada’s motion picture industry for a
rapidly expanding audience at home and around the world.
Independent Screen Fund
• Rogers Group of Funds, the Black Screen Office, and the
Canadian
for BPOC Creators
launched a first-of-its-kind $750,000 script development fund for
Black and People of Colour creators across Canada. The fund
supports creators’ projects for networks, studios, cable, and
streaming platforms with the first 16 recipients announced in Fall
2021.
• 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-deserving creators.
• Rogers employees successfully completed the 60,000 Hours
Volunteer Challenge in July 2021, contributing almost 22,000
volunteer hours in 2021. Through our annual Give Together
Month, employees had the opportunity to donate to the charity
of their choice in November 2021, with Rogers matching up to
$1,000 per employee. This helped our team contribute to over
1,000 charities last year.
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• Continued to bridge the digital divide by expanding Connected
for Success eligibility so even more Canadians can connect to
social services, learning, employment, and loved ones. Now
available to over 750,000 Canadian households, the expanded
low-cost high-speed Internet program is available across our
Internet footprint in Ontario, New Brunswick, and Newfoundland
to eligible customers receiving disability, seniors’ or income
support, and
rent-geared-to-income community
housing partners.
through
• Extended our goodwill devices and plans donation program to
provide thousands of phones and plans as digital lifelines to
more than 325 shelters and transition houses across Canada.
These devices help women and their children safely escape
violence and abuse, connect youth to mentors, and support
LGBTQ2S+ youth and allies.
• Committed to donating $1 million through a multi-year
partnership with the B.C. Search and Rescue Association
(BCSARA) to support immediate disaster relief in the province
and provide long-term support to critical services following the
devastating floods in British Columbia. It also supports the
organization’s legacy fund and new technology and specialized
equipment for the 79 local teams and 3,000 professional
volunteers.
• Supported Indigenous communities across the country with our
2021 Orange Shirt Day campaign. Since 2020, 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 were available on Today’s Shopping
Choice, with proceeds being divided between the Orange Shirt
Society and the IRSSS.
ENVIRONMENTAL RESPONSIBILITY
• Environmental Policy: We maintain a formal Environmental Policy
that sets out how we conduct business in an environmentally
responsible manner. Rogers also maintains an Environmental
Management System, including 25 separate procedures to
support our Environmental Policy and manage environmental
risks across our operations.
• Oversight: We have an Energy Executive Council and an
Environmental Compliance Committee to manage and govern
our energy utilization and environmental risks, respectively,
supporting decision-making to advance our strategies and
program effectiveness in both areas. In addition, the ESG
Committee assists
its oversight
responsibilities of relevant environmental sustainability, social
responsibility, and governance policies, strategies, and programs
and the actions we can take to be a responsible corporate
citizen.
the Board
fulfilling
in
• Energy Use and Climate Change: We recognize the implications
of our energy use and the potential climate change impacts
associated with increasing worldwide energy usage (such as
droughts, water shortages and quality, extreme weather events,
flooding, wildfires, social inequities, etc.). We are committed to
managing our operations in order to reduce our impact on the
environment, strive to ensure stakeholder satisfaction, and
maintain investor confidence. Annually, we measure and disclose
details on our energy use and greenhouse gas (GHG) emissions
across our buildings and retail stores, cell transmission sites,
power supply stations, data centres, fleet, employee travel and
commuting, and the operations of the Toronto Blue Jays and
Rogers Centre. We continue to invest in programs that reduce
energy and associated GHG emissions, including LED lighting
retrofits, cooling optimization strategies across our headends,
and decommissioning equipment
for better energy
performance and space utilization. To drive continuous
improvement in our performance, we also have targets to reduce
our GHG emissions and energy use by 2025 based on 2011
levels.
• Waste Reduction: Reducing the amount of waste we produce is
another important way in which we manage our environmental
footprint. To reduce and responsibly manage the waste we
produce, we look for opportunities to avoid waste generation
through collaboration with our supply chain, run programs to
recycle and reuse end of life materials and equipment, and work
to increase employees’ recycling behaviours through our “Get
Up and Get Green” program.
2021 (2020 – 29%) through its ownership of a combined total of
147 million (2020 – 147 million) Class A Shares and Class B
Non-Voting Shares. As a result, the Trust is able to elect all
members of the Board and to control the vote on most matters
submitted to shareholders, whether through a shareholder
meeting or a written consent resolution.
The Board is currently made up of four members of the Rogers
family and another nine directors who bring a rich mix of
experience as business leaders in North America. Each of our
directors is firmly committed to effective governance, strong
oversight, and the ongoing creation of shareholder value. The
Board as a whole is committed to sound corporate governance and
continually reviews its governance practices and benchmarks them
against acknowledged leaders and evolving legislation. The Board
believes that Rogers’ governance system is effective and that there
are appropriate structures and procedures in place.
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ECONOMY AND SOCIETY
• Economic Performance: We strive to offer innovative solutions for
customers, create diverse and well-paying jobs, support small
businesses, pay taxes to all levels of government, and deliver
dividends to shareholders. In 2021, we directly contributed
$14.3 billion to the Canadian economy and, as at December 31,
2021, employed 23,000 team members across the country.
Beyond these direct economic
impacts, our performance
produces indirect economic benefits, including locally procured
goods and services and significant charitable donations.
• Supply Chain Management: Suppliers are key to our success,
which is why we ensure we have strong supplier selection
processes and management, and we strive to conduct business
with socially and environmentally responsible companies that
share our values. We have strong, sound procurement processes
and demand that our suppliers adhere to our Supplier Code of
Conduct. This code sets out expectations for our suppliers in
terms of ethical, social,
labour, health and safety, and
environmental behaviours. We continue to support inclusion and
diversity in our communities through the development and
implementation of our supplier diversity program and through
collaboration with non-profit organizations.
See our 2020 ESG report on our website (about.rogers.com/
our-impact) for more information about our social, environmental,
and governance performance. We expect to release our 2021 ESG
report in the coming months.
GOVERNANCE AT ROGERS
Rogers is a family-founded, family-controlled company and we take
pride in our proactive and disciplined approach to ensuring that
our governance structure and practices instill confidence in our
shareholders.
Voting control of Rogers Communications Inc. is held by the
Rogers Control Trust (the Trust), the beneficiaries of which are
members of the Rogers family. The Trust holds voting control of RCI
for the benefit of successive generations of the Rogers family via
the Trust’s ownership of 98% of the outstanding Class A Shares of
RCI (2020 – 98%). The Rogers family are substantial stakeholders
and owned approximately 29% of our equity as at December 31,
GOVERNANCE BEST PRACTICES
We have adopted many best practices for effective governance,
including:
• separation of the CEO and Chair roles;
• an independent lead director;
• formal corporate governance policies and charters;
• a code of business conduct and whistleblower hotline;
• director share ownership requirements;
• Board and committee in camera discussions;
• annual reviews of Board and Committee performance;
• Audit and Risk Committee meetings with internal and external
auditors;
• an orientation program for new directors;
• regular Board and committee education sessions;
• committee authority to retain independent advisors; and
• director material relationship standards.
We comply with all relevant corporate governance guidelines and
standards as a Canadian public company listed on the TSX and as a
foreign private issuer listed on the NYSE in the US.
BOARD OVERSIGHT
The Board delegates certain responsibilities to its eight standing
committees to ensure proper oversight and accountability:
• Audit and Risk Committee – reviews our accounting policies and
practices, the integrity of our financial reporting processes and
procedures, and the financial statements and other relevant
disclosure for release to shareholders and the public. It assists
the Board in its oversight of our compliance with legal and
regulatory requirements for financial reporting, assesses our
accounting and financial control systems, and evaluates the
qualifications, independence, and work of our internal and
external auditors. It also reviews risk management policies and
associated processes used to manage major risk exposures.
• Corporate Governance Committee – assists the Board to ensure
it has appropriate systems and procedures for carrying out its
responsibilities. This committee develops governance policies
and practices, recommends them to the Board for approval, and
leads the Board in its periodic review of Board and committee
performance.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 57
MANAGEMENT’S DISCUSSION AND ANALYSIS
• Nominating Committee – identifies prospective candidates to
serve on the Board. Nominated directors can be elected by
shareholders at a meeting, appointed by the Board, or
appointed by written consent resolution. The committee also
recommends nominees for each Board committee, including
each committee chair.
• Human Resources Committee – assists the Board in monitoring,
reviewing, and approving compensation and benefit policies
and practices. It is also responsible for recommending the
compensation of senior management and monitoring senior
executive succession planning.
• ESG Committee – assists the Board in fulfilling its oversight
responsibilities of relevant environmental sustainability, social
responsibility, and governance policies, strategies, and programs
and the actions we can take to be a responsible corporate
citizen.
• Executive Committee – assists the Board in discharging its
responsibilities between meetings, including acting in such areas
as are specifically designated and authorized at a preceding
Board meeting to consider matters that may arise from time to
time.
• Finance Committee – reviews our investment strategies, general
debt, and equity structure and reports on them to the Board.
• Pension Committee – oversees the administration of our retiree
pension plans and reviews the investment performance and
provisions of the plans.
You can find more details about governance at Rogers on our
Investor Relations website (investors.rogers.com), including:
• a complete statement of our corporate governance practices;
• our codes of conduct and ethics;
• charters for each of the Board’s standing committees;
• director biographies; and
• a summary of the differences between the NYSE corporate
governance rules that apply to US-based companies and our
governance practices as a non-US-based issuer listed on the
NYSE.
Board of Directors and its Standing Committees
Chair
Member
Audit and
Risk
Corporate
Governance
ESG
Executive
Finance
Human
Resources
Nominating
Pension
As at March 3, 2022
Edward S. Rogers 1
Jack L. Cockwell, C.M.
Michael J. Cooper
Ivan Fecan
Robert J. Gemmell 2
Alan D. Horn, CPA, CA
Jan L. Innes
John (Jake) C. Kerr, C.M. O.B.C
Philip B. Lind, C.M.
Loretta A. Rogers
Martha L. Rogers
Melinda M. Rogers-Hixon
Tony Staffieri
1 Chair of the Board
2 Lead Director
the Board was
CORPORATE GOVERNANCE UPDATES
the
In October 2021,
appointment of Jack L. Cockwell, Michael J. Cooper, Ivan Fecan,
Jan L. Innes, and John C. Kerr. The Board appointed Robert J.
Gemmell, an independent director, as Lead Director in November
2021.
reconstituted with
In November 2021, Tony Staffieri was appointed Interim President
and CEO and subsequently, in January 2022, appointed President
and CEO and a member of the Board. He had previously served as
Chief Financial Officer. In September 2021, Paulina Molnar was
appointed Interim Chief Financial Officer. In January 2022, Glenn
Brandt was appointed Chief Financial Officer.
As a result of the above changes, the Board now consists of six
independent directors and seven non-independent directors.
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As outlined in the table below, the total cost to Rogers of these
payments in 2021 was $1,384 million.
(In millions of dollars)
Income taxes paid
Add:
Unrecoverable sales taxes paid
Payroll taxes paid
Regulatory and spectrum fees
paid 1
Property and business taxes paid
Years ended December 31
2021
700
9
135
490
50
2020
418
8
137
492
50
Taxes paid and other government
payments 2
1,384
1,105
1 Includes an allocation of $252 million relating to the $3.3 billion, $24 million, and
$1.7 billion we paid for the acquisition of spectrum licences in 2014, 2015, and 2019
respectively.
2 Taxes paid and other government payments is a non-GAAP financial measure. This is
not a standardized financial measure under IFRS and might not be comparable to
similar financial measures disclosed by other companies. See “Non-GAAP and Other
Financial Measures” for more information about this measure.
We also collected on behalf of the government $1,995 million in
sales taxes on our products and services and $667 million in
employee payroll taxes.
INCOME TAX AND OTHER GOVERNMENT
PAYMENTS
We proactively manage our tax affairs to enhance our business
decisions and optimize after-tax free cash flow available for
investment in our business and shareholder returns. We have
comprehensive policies and procedures to ensure we are compliant
with all tax laws and reporting requirements, including filing and
making all income and sales tax returns and payments on a timely
basis. As a part of this process, we pursue open and cooperative
relationships with revenue authorities to minimize audit effort and
reduce tax uncertainty. We also engage with government policy
makers on taxation matters that affect Rogers and its shareholders,
employees, customers, and other stakeholders.
INCOME TAX PAYMENTS
Our total income tax expense of $569 million in 2021 is close to the
expense computed on our accounting income at the statutory rate
of 26.5%. Cash income tax payments totaled $700 million in 2021.
The primary reason our cash income tax is higher than our income
tax expense is due to the timing of installment payments and our
transition to a device financing business model, which results in
earlier recognition of equipment revenue for income tax purposes.
OTHER GOVERNMENT PAYMENTS
In addition to paying income tax on the profits we earn, we
contribute significantly to Canadians by paying taxes and fees to
federal, provincial, and municipal governments, including:
• various taxes on the salaries and wages we pay (payroll taxes) to
approximately 23,000 employees;
• property and business taxes;
• unrecoverable sales taxes and custom duties; and
• broadcast, spectrum, and other regulatory fees.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 59
MANAGEMENT’S DISCUSSION AND ANALYSIS
Risk Management
We strive
to continually strengthen our risk management
capabilities to protect and enhance shareholder value. The
purpose of risk management is not to eliminate risk but to optimize
trade-offs between risk and return to maximize value to the
organization. As such, Rogers will knowingly take certain risks in
order to generate earnings and encourage innovation that advance
us as a customer-centric market leader. To maintain our reputation
and trust, we will always work to ensure the impacts (financial,
operational, strategic, regulatory, privacy, and cybersecurity) of our
risk-taking activities are understood and are in line with our strategic
objectives and company values.
RISK GOVERNANCE
The Board has overall responsibility for risk governance and
oversees management in identifying the key risks we face in our
business and implementing appropriate risk assessment processes
to manage these risks. It delegates certain risk oversight and
management duties to the Audit and Risk Committee.
The Audit and Risk Committee discusses risk policies with
management and the Board and assists the Board in overseeing
our compliance with legal and regulatory requirements.
The Audit and Risk Committee also reviews:
• the adequacy of the internal controls that have been adopted to
safeguard assets from loss and unauthorized use, to prevent,
deter, and detect fraud, and to ensure the accuracy of the
financial records;
• the processes for identifying, assessing, and managing risks;
• our exposure to major risks and trends and management’s
implementation of risk policies and actions to monitor and
including cybersecurity, privacy,
control
technology, and environmental;
these exposures,
• the implementation of new major systems and changes to
existing major systems;
• our business continuity and disaster recovery plans;
• any special audit steps adopted due to material weaknesses or
significant deficiencies that may be identified; and
• other risk management matters from time to time as determined
by the Audit and Risk Committee or directed by the Board.
ENTERPRISE RISK MANAGEMENT
Our Enterprise Risk Management (ERM) program uses the “3 Lines
of Defence” framework to identify, assess, manage, monitor, and
communicate risks. Our business units and departments, led by the
Executive Leadership Team, are the first line of defence and are
accountable for managing or accepting the risks. Together, they
identify and assess key risks, define controls and action plans to
minimize these risks, and enhance our ability to meet our business
objectives.
ERM is the second line of defence. ERM helps management
identify the key and emerging risks in meeting our corporate and
business unit objectives in line with our risk appetite. At the
business unit and department level, ERM works with management
to provide governance and advice in managing the key risks and
associated controls to mitigate these risks. Business Continuity is a
function within ERM which also assists the business in mitigating
key risks. Specifically, the Business Continuity function oversees
incident management and planning to maintain customer service,
operation of our network and businesses in the event of threats and
natural disasters. Such threats include cyberattacks or equipment
failures that could cause various degrees of network outages;
supply chain disruptions; natural disaster threats; epidemics;
pandemics; and political
instability. Our ERM program also
includes
insurance coverage allowing us to transfer certain
risks. Lastly, ERM works with Internal Audit to monitor the adequacy
and effectiveness of controls to reduce risks to an acceptable level.
Annually, ERM carries out a corporate risk assessment. The
assessment includes reviewing risk and audit reports and industry
benchmarks and, conducting an annual risk survey of all senior
leaders. Based on the survey results, ERM, in consultation with
senior management, identifies the key risks to achieving our
corporate objectives. ERM reports the results of the annual
corporate risk assessment to the Executive Leadership Team, the
Audit and Risk Committee, and the Board and provides quarterly
risk updates.
ERM also facilitates management’s completion of the financial
statement fraud risk assessment which aims to ensure there is no
potential fraud or misstatement in our financial statements and
disclosures and to assess whether controls are adequately
designed and operating effectively to mitigate financial statement
fraud risk.
Internal Audit is the third line of defence. Internal Audit is an
independent and objective assurance function that evaluates the
design and operational effectiveness of internal controls and risk
management processes supporting the mitigation of risks that may
affect the achievement of our objectives.
The Executive Leadership Team and the Audit and Risk Committee
are responsible for approving our enterprise risk policies. Our ERM
methodology and policies
the expertise of our
management and employees to identify risks and opportunities
and implement risk mitigation strategies as required.
rely on
RISKS AND UNCERTAINTIES AFFECTING OUR
BUSINESS
This section describes the principal risks and uncertainties that
could have a material adverse effect on our business and financial
results. Any discussion about risks should be read in conjunction
with “About Forward-Looking Information”.
SHAW TRANSACTION
The Transaction with Shaw is subject to a number of risks, many of
which are outside the control of Rogers and Shaw. These are
described below.
Key Regulatory Approvals and other conditions
To complete the Transaction, each of Rogers and Shaw must make
certain filings with, and obtain certain consents and approvals from,
various governmental and regulatory authorities, including the
Competition Bureau, ISED Canada, and the CRTC. Rogers and
Shaw have not yet obtained the Key Regulatory Approvals, all of
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which are required to complete the Transaction. In addition,
governmental or regulatory agencies could deny permission for, or
seek to block or challenge, the Transaction or the transfer or
deemed transfer of specific assets, including spectrum licences, or
impose material conditions relating to the Transaction or any such
transfer. If any one of the Key Regulatory Approvals is not obtained,
or any applicable law or order is in effect which makes the
consummation of the Transaction illegal, the Transaction will not be
completed.
In addition, a substantial delay in obtaining the Key Regulatory
Approvals could result in the Transaction not being completed. In
particular, if the Transaction is not completed by June 13, 2022,
either Rogers or Shaw may terminate the arrangement agreement,
in which case the Transaction will not be completed. Rogers has
extended the outside date for closing the Transaction from
March 15, 2022 to June 13, 2022 in accordance with the terms of
the arrangement agreement.
Under certain circumstances, if the Key Regulatory Approvals are
not obtained, or any law or order relating to the Key Regulatory
Approvals or the Competition Act is in effect that would make the
consummation of the Transaction illegal, and the failure to obtain
the Key Regulatory Approvals is not caused by, and is not a result
of, the failure by Shaw to perform in all material respects any of its
covenants or agreements under the arrangement agreement, we
would be obligated to pay a $1.2 billion reverse termination fee to
Shaw (see “Termination of the arrangement agreement, costs, and
termination fee” below). We would also be responsible to
reimburse Shaw for certain costs relating to the May 2021 exercise
of our right to require Shaw to redeem its issued and outstanding
preferred shares.
The completion of the Transaction is subject to a number of other
conditions precedent, some of which are outside of the control of
Rogers and Shaw, including there not having occurred a Material
Adverse Effect or Purchaser Material Adverse Effect (as such terms
are defined in the arrangement agreement) and the satisfaction of
certain other customary closing conditions.
There can be no certainty, nor can Rogers or Shaw provide any
assurance, that all conditions precedent to the Transaction will be
satisfied or waived, nor can there be any certainty of the timing of
their satisfaction or waiver.
Termination of the arrangement agreement, costs, and termination
fee
The arrangement agreement may be terminated by Rogers or
Shaw in certain circumstances, in which case the Transaction will
not be completed. Accordingly, there is no certainty, nor can we
provide any assurance, that the arrangement agreement will not be
terminated by us or Shaw prior to completion of the Transaction.
We must pay certain costs relating to the Transaction, such as legal,
accounting, tax, and financing-related fees, even if the Transaction
is not completed, which may be significant. In addition, if the
Transaction is not completed for certain reasons, we may be
required to pay a reverse termination fee of $1.2 billion to Shaw
and certain costs relating to the May 2021 exercise of our right to
require Shaw to redeem its issued and outstanding preferred
shares, the result of which could have a material adverse effect on
our business, results of operations, financial position, and our ability
to fund growth prospects and current operations.
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If the Transaction is not completed or is delayed, our share price
and future business and financial results could be negatively
affected. Any non-completion or delay of the Transaction may also
negatively impact the relationships we have with our employees
(including a potential lack of focus on our business), suppliers,
vendors, distributors, retailers, dealers, or customers, including that
such groups could cease doing business with us or curtail their
activities with us.
Financing and potential credit rating consequences
The arrangement agreement does not contain a financing condition.
Although we have a binding commitment letter for a committed
credit facility of up to $13 billion and have entered into the $6 billion
Shaw term loan facility in order to finance the Transaction, the
obligation of the lenders under each of the committed facility and
the Shaw term loan facility to provide the financing is subject to
certain conditions, including, in the case of the committed credit
facility, the completion of credit documentation in respect of such
commitment. In the event the Transaction cannot be completed due
to a failure to obtain the financing required to close the Transaction,
either because the conditions to the committed credit facility and/or
the Shaw term loan facility are not satisfied or other events arise which
prevent us from consummating the debt financing, we may be
unable to fund the consideration required to complete the
Transaction, in which case we would be required to pay the reverse
termination fee of $1.2 billion and certain costs relating to the May
2021 exercise of our right to require Shaw to redeem its issued and
outstanding preferred shares.
In addition to assuming approximately $6 billion of existing Shaw
debt, we expect to issue up to $19 billion in new debt to finance
the Transaction. As a result, we anticipate the combined company
will have over $40 billion of consolidated debt upon closing. The
increased level of debt could decrease our flexibility in responding
to changing business and economic conditions, increase our
interest expense, and potentially make it more difficult to obtain
additional financing or refinance existing financing. The increase in
our debt service obligations could adversely affect our results,
financial condition, and our ability to fund growth prospects and
could reduce our funds available for other business purposes.
including
the potential
Additionally, as a result of the significant increase in outstanding
debt, there is a risk that our credit ratings could be adversely
affected,
for a downgrade below
investment-grade. A downgrade in our credit ratings could result in
difficulty issuing debt in the future or higher borrowing costs and
may otherwise affect our share price. If Shaw’s existing senior notes
are subject to a downgrade below investment-grade constituting a
“change of control trigger event” (as defined in Shaw’s senior note
indenture), Shaw would be required to offer to purchase its senior
notes at 101% of their principal amount plus accrued interest
following closing of the Transaction, potentially having an adverse
impact on the combined company’s financial condition.
Expected synergies and integration
Achieving the anticipated benefits of the Transaction depends on
our ability to consolidate and
integrate Shaw’s businesses,
operations, and workforce in a manner that facilitates growth
opportunities and achieves the projected cost savings and revenue
growth without adversely affecting the combined company’s
current operations. Even
integrate Shaw’s
businesses, the anticipated benefits of the Transaction may not be
fully realized or they could take longer to realize than expected.
if we successfully
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 61
MANAGEMENT’S DISCUSSION AND ANALYSIS
In addition to the day-to-day operations of Rogers, management
will need to focus on the Transaction and all related activities,
including integration. If completion of the Transaction is delayed,
there could be adverse effects on our business, results of
operations, or financial condition.
Shaw actions prior to closing
The arrangement agreement restricts Shaw from taking certain
actions outside of the ordinary course of business while the
Transaction is pending, including, among other things, certain
acquisitions or dispositions of businesses and assets, entering into
or amending certain contracts, repurchasing or issuing securities,
making
incurring
indebtedness, in each case subject to certain exceptions. As a
result of these restrictions, Shaw may not have the flexibility to
appropriately respond to certain events, which may result in us
recognizing lower-than-expected synergies once the Transaction
closes.
expenditures,
significant
capital
and
OUTBREAK OF COVID-19 AND RELATED PANDEMIC
As COVID-19 continues to significantly impact the well-being of
individuals and
the Canadian and global economies, we
maintained our programs to help employees manage through
COVID-19 and provide support and services to our customers and
audiences. We are focused on operating and maintaining our
wireless and cable networks, our media operations, and the key
business operations required to ensure service continuity for
customers. We have continued work-from-home arrangements for
employees while we review and follow directions from the
government to ensure the safety of our team and to provide us
time to implement necessary safeguards to accommodate a
gradual approach in reopening our sites to employees.
Public and private sector regulations, policies, and other measures
aimed at reducing the transmission of COVID-19 include the
imposition of business closures, travel restrictions, the promotion of
physical distancing, and the adoption of work-from-home and
online education by companies, schools, and institutions. These
measures are
impacting how customers use our networks,
products, and services, the manner or extent to which we can offer
certain products and services, and the ability of certain suppliers
and vendors to provide products and services to us. Notably, due
to travel restrictions and advisories, roaming revenue has decreased
from pre-pandemic
levels. Additionally, our cable network
experienced a significant increase in data usage as employers
shifted to work-from-home models and as schools shifted to online
education.
In early 2021, public health restrictions that were implemented in
late 2020 were lifted to certain extents across the country. In March
2021, several Canadian provinces declared a third wave of
COVID-19 had commenced and provinces adjusted restrictions. In
the third 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
increased across the country. In August 2021, Canada entered a
fourth wave of COVID-19 and several Canadian provinces
introduced proof of
to access
non-essential businesses and services. Late in the fourth quarter,
the Omicron variant re-accelerated the spread of COVID-19 and
restrictions,
many Canadian provinces
reintroduced various
requirements
vaccination
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amongst others, including placing capacity limits on organized
gatherings and retail stores.
Additionally, COVID-19 has caused a global semiconductor chip
shortage due to supply chain disruptions and an increase in demand
for electronics. Although we are taking proactive steps to minimize its
impacts, this has resulted, and could continue to result, in increased
lead times on our network equipment and wireless devices.
The full future extent and impact of COVID-19 is unknown.
Potential adverse impacts of the pandemic include, but are not
limited to:
• the risk of a material reduction in demand for our products and
services due to businesses closing or downsizing, job losses and
associated financial hardship, or, more generally, a declining
level of retail activity, which may lead to a decline in revenue as a
result of:
• lower Wireless subscriber activity, including lower equipment
revenue;
• lower roaming and overage revenue as customers are unable
or unwilling to travel and continue to stay home;
• customers downgrading or cancelling their services;
• the restriction of fan attendance at major sports league
games, the potential suspension or shortening of future major
television
sports
programming; and/or
league seasons, and
the associated
• a decrease in population growth resulting from lower levels of
immigration due to travel and border restrictions;
• an increase in delinquent or unpaid bills, which could lead to
increased bad debt expense;
• issues delivering certain products and services, or maintaining or
upgrading our networks, due to store closures and supply chain
disruptions; and
• additional capital expenditures to maintain or expand our
networks in order to accommodate substantially increased
network usage.
While we expect certain cost savings to offset some of the lower
revenue, we also cannot predict the extent to which they would be
offset.
Due to the uncertainty surrounding the duration and potential
outcomes of COVID-19, including the results of measures taken to
slow the spread and the broader impact COVID-19 may have on
the Canadian and global economies or financial markets, it is
difficult to predict the overall impact on our operations, liquidity,
financial condition, or results; however, COVID-19 has had, and
may continue to have, a material, adverse impact on our results.
Any future epidemic, pandemic, or other public health crisis that
occurs in the future may pose similar risks to us.
CYBERSECURITY
Our industry is vulnerable to cybersecurity risks that are growing in
both frequency and complexity. Rogers, along with our suppliers,
employs systems and network infrastructure that are subject to
cyberattacks, which may include theft of assets, unauthorized
access to proprietary or sensitive information, destruction or
corruption of data, ransomware attacks, or operational disruption.
A significant cyberattack against our, or our suppliers’, critical
network infrastructure and supporting information systems could
result in service disruptions, litigation, loss of customers, incurring
significant costs, and/or reputational damage.
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Management has committed to an information and cybersecurity
program designed to reinforce the importance of remaining a
secure, vigilant, and resilient organization. Our ongoing success
depends on protecting our sensitive data, including personal
information about our customers and employees. We rely on
security awareness training, policies, procedures, and IT systems to
protect this
information. Success also depends on Rogers
continuing to monitor these risks, leveraging external threat
intelligence, internal monitoring, reviewing best practices, and
implementing controls as required to mitigate them. We have
to
insurance coverage against certain damages
cybersecurity breaches, intrusions, and attacks, amongst other
things.
related
External threats to the network and our business generally are
constantly changing and there is no assurance we will be able to
protect the network from all future threats. The impact of such
attacks may affect our customer service or our financial results.
PRIVACY
In the evolving digital world, privacy and how organizations are
handling personal information is becoming an increasing priority
for consumers. Ensuring appropriate governance over this data has
become even more critical. As the move to digital transactions has
been accelerated by COVID-19, companies continue to gain
greater amounts of data on customers and employees. The nature
of the products and services we offer our customers means we are
entrusted with a significant amount of personal information. This
means that ensuring there are appropriate safeguards and privacy
protections in place is a priority for us. We are the stewards of this
data and this responsibility is of the utmost importance to us. If a
privacy breach were to occur and personal information was made
public, there could be a material adverse effect on our reputation
and our business.
TECHNOLOGY
New technologies
Our network plans assume the availability of new technology for
both wireless and wireline networks, including 5G technology in
the wireless industry and future DOCSIS enhancements and
evolutions in the wireline industry. While we work with industry
standards bodies and our vendors to ensure timely delivery of new
technology, there are no assurances these technologies will be
available as and when required.
As new technologies become available, we expect a substantial
portion of our future revenue growth may come from new and
advanced services, and companies such as Rogers will need to
continue to invest significant capital resources to develop our
networks and implement in an agile framework to meet customers
and business timelines. It is possible, however, that there may not
be sufficient consumer demand, or that we may not anticipate or
satisfy demand for certain products and services or be able to offer
or market these new products and services successfully to
subscribers. If we do not attract subscribers to new products and
services profitably or keep pace with changing consumer
preferences, we could experience slower revenue growth and
increased churn. This could have a material adverse effect on our
business, results of operations, and financial condition.
Several technologies have affected the way our services are
delivered, including:
• broadband;
• IP-based voice, data, and video delivery services;
• increased use of optical fibre technologies to businesses and
residences;
• broadband wireless access and wireless services using a radio
frequency spectrum to which we may have limited or no access;
and
• applications and services using cloud-based
independent of carrier or physical connectivity.
technology,
These technologies may also lead to significantly different cost
structures for users and therefore affect the long-term viability of
some of our current technologies. Some of these technologies
have allowed competitors to enter our markets with similar
products or services at lower costs. These competitors may also be
larger, have greater access to financial resources, and/or have fewer
regulatory restrictions than Rogers. Additional competitors with
advances in technology, such as high-speed Internet service from
low Earth orbit satellite operators like Starlink, have entered the
Canadian market and could potentially have a material adverse
impact on our operations and results.
The continued emergence and growth of subscriber-based satellite
and digital radio products could affect AM and FM radio audience
listening habits and have a negative effect on the results of our
radio stations. Certain audiences are also migrating away from
traditional broadcast platforms to the Internet as more video and
audio content streaming becomes available.
infrastructure and
Reliance on technology
Our technologies, processes, and systems are operationally
complex and increasingly interconnected. Further, our businesses
depend on IT systems for day-to-day operations and critical
elements of our network
IT systems are
concentrated in various physical facilities. If we are unable to
operate our systems, make enhancements to accommodate
customer growth and new products and services, or if our systems
experience disruptions or failures, it could have an adverse effect
on our ability to acquire new subscribers, service customers,
manage subscriber churn, produce accurate and timely subscriber
invoices, generate revenue growth, and manage operating
expenses. This could have an adverse impact on our results and
financial position.
Impact of failures on customer service
Customers have high expectations of reliable and consistent
performance of our networks. Failure to maintain high service levels
and to effectively manage network traffic could have an impact on
the customer experience, potentially resulting in an increase in
customer churn. Due to the increased demand and traffic on our
networks, there could be capacity and congestion pressures. If our
networks or key network components fail, it could, in some
circumstances, result in a loss of service for our customers for
certain periods and have an adverse effect on our results and our
financial position.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 63
MANAGEMENT’S DISCUSSION AND ANALYSIS
We work to protect our networks and our service from the impact
of natural disasters and major weather events such as ice storms,
wind storms, forest fires, flooding, earthquakes, or landslides where
it is necessary and feasible to do so. There are no assurances that a
future event will not cause service outages and that such outages
would not affect our results. Service disruptions or outages could
also affect our operations if not quickly resolved, potentially causing
a risk of billing delays or errors. If we fail to have appropriate
response strategies and protocols in place to handle service
outages in the face of these types of events, they could have an
impact on our revenue and our customer experience. Recovering
from these disasters could require significant resources and
remediation costs, which are difficult to estimate.
COMPETITIVE INTENSITY
Competitive behaviour and market dynamics are continuously
changing in our fast-paced industry. There is no assurance that our
current or future competitors will not provide services that are
superior to ours or at lower prices, adapt more quickly to evolving
industry trends or changing market requirements, enter markets in
which we operate, or introduce competing services. The federal
government also continues
to promote competition and
affordability, and is committed to universal high-speed Internet for
every Canadian by 2030. Any of these factors could increase churn
or reduce our business market share or revenue.
The strategic offering of unlimited wireless plans continues to offer
greater value to our customers and has helped us take a significant
step towards simplifying our products and services. However,
depending on economic conditions and the response from our
competitors and/or current and potential customers, we may need
to extend lower wireless pricing offers to attract new customers and
retain existing subscribers. As wireless penetration of
the
population deepens, new wireless customers may generate lower
average monthly revenue, which could slow revenue growth.
Global technology giants continue to ramp up content spending
into new markets such as sports media, resulting in increased
competition for our Media and Cable segments. This may result in
an increase in subscriber churn as customers now have additional
choices of supplementary sources of media content.
linear
traditional
Competition is increasing for content programming rights from
television broadcasters and online
both
competitors. Online providers are moving towards self-made, self-
hosted exclusive content, and may compete for rights more
aggressively than expected, such that traditional broadcasters may
not gain access to desirable programming. Overall increased
competition for content will likely increase costs of programming
rights. As broadcasters and distributors sign
longer-term
agreements to secure programming rights, this could affect the
availability of desirable programming rights and result in lower
revenue due to a lack of access to these rights. Lower revenue in
turn could adversely affect the operating results of our business if
we are unable to recover programming investments through
advertising revenue and subscription fee increases that reflect the
market.
In addition, the CRTC Broadcasting Distribution Regulations do not
allow cable operators to obtain exclusive contracts in buildings
where it is technically feasible to install two or more transmission
systems.
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Continued deployments of fibre networks by competitors may lead
to an increase in the reach, speed, and stability of their wireline
related services. This could result in an increase in churn pertaining
to our wireline business segment services.
Improvements in the quality of streaming video over the Internet,
coupled with increasing availability of television shows and movies
online through OTT content providers, has resulted in competition
for viewership and increased competition for Canadian cable
television service providers. As a result, we have noticed an increase
in cord cutting and cord shaving as consumers continue to
withdraw from traditional cable services. If advances in technology
are made to any alternative Canadian multi-channel broadcasting
distribution system, our cable services may
increased
competition. In addition, as the technology for wireless Internet
continues to develop, it is, in some instances, replacing traditional
wireline Internet.
face
REGULATORY RISKS
Changes in government regulations
Substantially all of our business activities are regulated by ISED
Canada and/or the CRTC. Any regulatory changes or decisions
could adversely affect our consolidated results of operations. The
most significant outstanding regulatory proceedings to our
business are various appeals related to the wholesale Internet
costing and pricing regime (see “Regulation in our Industry” and
“Litigation Risks”).
Regulatory changes or decisions made by these regulators could
adversely
impact our results on a consolidated basis. This
regulation relates to, among other things, licensing and related
fees, competition, the cable television programming services we
must distribute, wireless and wireline interconnection agreements,
the rates we may charge to provide access to our networks by third
parties, the resale of our networks and roaming on our networks,
our operation and ownership of communications systems, and our
ability to acquire an interest in other communications systems. In
addition, the costs of providing services may be increased from
time to time as a result of compliance with industry or legislative
initiatives to address consumer protection concerns or such
Internet-related
infringement, unsolicited
commercial e-mail, cybercrime, and lawful access.
issues as copyright
Generally, our licences are granted for a specified term and are
subject to conditions on the maintenance of these licences. These
licensing conditions and related fees may be modified at any time
by the regulators. The regulators may decide not to renew a licence
when it expires, and any failure by us to comply with the conditions
on the maintenance of a licence could result in a revocation or
forfeiture of any of our licences or the imposition of fines. Our
cable, wireless, and broadcasting licences generally may not be
transferred without regulatory approval.
The licences include conditions requiring us to comply with
Canadian ownership restrictions of the applicable legislation. We
are currently in compliance with all of these Canadian ownership
and control requirements. If these requirements were violated, we
would be subject to various penalties, possibly including, in the
extreme case, the loss of a licence.
Spectrum
Radio spectrum is one of the fundamental assets required to carry
on our Wireless business. Our ability to continue to offer and
improve current services and to offer new services depends on,
among other factors, continued access to, and deployment of,
adequate spectrum, including the ability to both renew current
spectrum licences and acquire new spectrum licences.
If we cannot acquire and retain needed spectrum, whether due to
the government providing favourable spectrum auctions for
regional carriers through set asides and lower rates, through
increased costs for us to purchase spectrum licences at auction, or
otherwise, we may not be able to continue to offer and improve
our current services and deploy new services on a timely basis,
including providing competitive data speeds our customers want.
As a result, our ability to attract and retain customers could be
adversely affected. In addition, an inability to acquire and retain
needed spectrum could affect network quality and result in higher
capital expenditures.
Changes to government spectrum fees could significantly increase
our payments and therefore materially reduce our net income.
Radio frequency emissions
From time to time, media and other reports have highlighted
alleged links between radio frequency emissions from wireless
devices (including new 5G technology) and various health
concerns, including cancer, and interference with various medical
devices,
including hearing aids and pacemakers. This may
discourage the use of wireless devices or expose us to potential
litigation even though there are no definitive reports or studies
stating that these health issues are directly attributable to radio
frequency emissions. Future regulatory actions may result in more
from
restrictive
low-powered devices like wireless devices. We cannot predict the
nature or extent of any restrictions.
frequency emissions
standards on
radio
Obtaining access to support structures and municipal rights of
way
To build and support the rollout of 5G, and to continue upgrading
our cable network, we must continue to have access to support
structures and municipal rights of way to install equipment on
municipal poles and buildings, and on First Nations land. We can
apply to the CRTC to obtain a right of access under the
Telecommunications Act in areas where we cannot secure access
to municipal rights of way. Failure to obtain access could increase
our costs and adversely affect our business.
The Supreme Court of Canada ruled in 2003, however, that the
CRTC does not have the jurisdiction to establish the terms and
conditions of accessing the poles of hydroelectric companies. As a
result, we normally obtain access under terms established by the
provincial utility boards.
On October 30, 2020, the CRTC launched consultations 2020-366
regarding potential regulatory measures to make access to poles
owned by Canadian carriers more efficient. The CRTC expressed
concerns that untimely and costly access to poles owned by
Canadian carriers has negative impacts on the deployment of
efficient broadband-capable networks, particularly in areas of
Canada with limited or no access to such networks. Therefore, the
CRTC initiated a proceeding to identify and implement regulatory
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measures that will make access to such poles more efficient. We
are actively participating in the process.
On December 10, 2021, a regulation was filed under Part VI.1 of
the Ontario Energy Board Act, O. Reg. 842/21 requiring the
Ontario Energy Board (OEB) to establish a generic, province-wide
pole attachment charge for 2022. The Regulation further requires
the OEB to set the charge for 2023 and subsequent years by
adjusting the prior year’s charge for inflation, resulting in the
calculation of the charge becoming a mechanistic exercise. On
December 16, 2021, the OEB published Decision and Order
EB-2021-0302, Wireline Pole Attachment Charge. The OEB
calculated the charge for 2022 at $34.76 per attacher per year per
pole, in accordance with the directions set out in O. Reg. 842/21.
The 2021 charge was $44.50. This charge applies to every
distributor that is required as a condition of licence to provide
access to telecom attachments and to charge the amount
approved by the OEB.
is an
CUSTOMER EXPERIENCE
Creating best-in-class customer experiences
important
strategic priority for us, as we understand that great customer
experience is key to our long-term success. Our customers’ loyalty
and their likelihood to recommend Rogers are both dependent
upon our ability to provide a service experience that meets or
exceeds their expectations. We handle many customer interactions
annually, ranging from potential new customers making in-store
purchases to existing customers calling for technical support and
everything in between. We understand that every time a customer
uses one of our services, such as making a call on their wireless
device, browsing the Internet or watching their favourite show using
their Internet or television services, or listening to one of our radio
stations, their experience affects all future interactions with the
Rogers brand. If our products do not deliver the usage experience
our customers expect from us, and if we do not have clear, simple,
and fair interactions with our customers, it could cause confusion
and frustrate our customers. This could result in the potential for
lost sales opportunities and increased churn, both of which could
have negative effects on our reputation, results of operations, and
financial condition.
RESULTS PERFORMANCE
We strive to drive profitable growth in all markets we serve. This
means we will focus on core growth drivers in each of our
businesses, including increasing subscribers and reducing churn,
expanding products in our enterprise business, and stabilizing our
Media performance. At the same time, our goal is to continue to
develop strong capabilities in cost management to support
investments that will fuel our future. If we are not successful in
achieving these goals, as a result of economic conditions or the
competitive landscape, this could negatively impact confidence
with investors and external stakeholders, and ultimately our stock
price.
TALENT ACQUISITION AND RETENTION
A significant transformation is underway in our industry, and as
competition for talent increases, our success is highly dependent
on our ability to attract and retain a high-performing, diverse, and
engaged workforce, including in key growth areas, such as the
network, IT, and digital fields. Our focus must be on providing
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 65
MANAGEMENT’S DISCUSSION AND ANALYSIS
career and development opportunities, competitive compensation
and benefits, fostering an inclusive and diverse workplace, and a
great employee experience. Failure to maintain and achieve this
focus, and changes to our workforce as a result of factors such as
turnover and restructuring, failing to develop internal succession,
cost reduction initiatives, ongoing union negotiations, or other
events, could have an adverse effect on the customer experience,
and as a result our revenue and profitability.
RELIANCE ON SUPPLY CHAIN AND THIRD PARTIES
We have outsourcing, managed
supplier
service, and
arrangements with third parties to provide certain essential
components of our business operations to our employees and
customers. These include, but are not limited to, certain critical
infrastructure components and devices; facilities or property
management functions; contact centre support; installation and
service technicians; network and IT functions; and invoice printing.
Some of these essential suppliers are relatively small in number and
we have limited operational or financial control over them. If
interruptions in these services or at these suppliers occur, including
due to the ongoing global supply chain issues, it could adversely
affect our ability to service our customers. Additionally, in the
course of
third-party service
providers must ensure our information is appropriately protected
and safeguarded. Failure to do so may affect Rogers through
increased regulatory risk, reputational damage, and damage to the
customer experience.
fulfilling service arrangements,
FINANCIAL RISKS
Capital commitments, liquidity, debt, and interest payments
Our capital commitments and financing obligations could have
important consequences, including:
• requiring us to dedicate a substantial portion of cash provided
by operating activities to pay interest, principal amounts, and
dividends, which reduces funds available for other business
purposes, including other financial operations;
• making us more vulnerable to adverse economic and industry
conditions;
• limiting our flexibility in planning for, and reacting to, changes in
our business and industry;
• putting us at a competitive disadvantage compared
to
competitors who may have more financial resources and/or less
financial leverage; or
• restricting our ability to obtain additional financing to fund
working capital and capital expenditures and for other general
corporate purposes.
Our ability to satisfy our financial obligations depends on our future
operating performance and on economic, financial, competitive,
and other factors, many of which are beyond our control. Our
business may not generate sufficient cash flow in the future and
financings may not be available to provide sufficient net proceeds
to meet our obligations or to successfully execute our business
strategy.
Credit ratings
Credit ratings provide an independent measure of credit quality of
a securities issuer and can affect our ability to obtain short- 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.
Capital markets
External capital market conditions could affect our ability to make
strategic
funding
investments and meet ongoing capital
requirements. Risk factors include a reduction in lending activity,
disruptions in capital markets, and regulatory requirements for an
increase in bank capitalization, which could either reduce the
availability, or increase the cost of capital.
Income taxes and other taxes
We collect, pay, and accrue significant amounts of income and
other taxes, such as federal and provincial sales, employment, and
property taxes.
We have recorded significant amounts of deferred and current
income tax liabilities and expense, and calculated these amounts
based on substantively enacted income tax rates in effect at the
relevant time. A legislative change in these rates could have a
material effect on the amounts recorded and payable in the future.
We provide for income and other taxes based on all currently
information and believe that we have adequately
available
provided for these items. The calculation of applicable taxes in
many cases, however, requires significant judgment in interpreting
tax rules and regulations. Our tax filings are subject to audits, which
could materially change the amount of current and deferred
income tax assets, liabilities, and expense, and could, in certain
circumstances, result in the assessment of interest and penalties.
While we believe we have paid and provided for adequate
amounts of tax, our business is complex and significant judgment is
required in interpreting how tax legislation and regulations apply to
us.
OTHER RISKS
Economic conditions
Our businesses are affected by general economic conditions and
consumer confidence and spending. Recessions, declines in
economic activity, and economic uncertainty can erode consumer
and business confidence and reduce discretionary spending. Any
of these factors can negatively affect us through reduced
advertising,
for our products and services,
decreased revenue and profitability, and higher churn and bad
debt expense. A significant portion of our broadcasting and digital
revenue comes from the sale of advertising and is affected by the
strength of the economy.
lower demand
Strategy and business plans
Our strategy is vital to our long-term success. Changing strategic
priorities or adding new strategic priorities could compromise
existing initiatives and could have a material adverse effect on our
business, results of operations, and financial condition.
We develop business plans, execute projects, and launch new
ventures to grow our business. If the expected benefits from these
do not materialize, this could have a material adverse effect on our
business, results of operations, and financial condition.
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Our products, services, and networks rely, in part, on certain
vendors. Should our vendors not deliver solutions that operate as
intended, our business and financial results could be adversely
affected. This may result in subscriber losses, lower revenue, and
unfavourable customer satisfaction.
Monitoring and controlling fraudulent activities
As a large company with tens of thousands of employees and a
range of desirable and valuable products and services, fraud
prevention requires a disciplined program covering governance,
exposure identification and assessment, prevention, detection, and
reporting. This program must consider corruption and
misappropriation of assets by employees and/or external parties.
Fraud events can result in financial loss and brand degradation. In
addition to unauthorized access to digital boxes and Internet
modems, a sample of potential examples of fraud relevant to us
include (i) inappropriate use of our cable or wireless networks,
(ii) subscription fraud and fraudulent account takeovers for purpose
of hardware theft or SIM swapping, (iii) intentional manipulation of
financial statements by employees and/or external parties, and
(iv) copyright theft and other forms of unauthorized use that
undermine the exclusivity of our content offerings.
Unauthorized access to digital boxes or Internet modems
With a significant number of Canadians purchasing
illegal
pre-loaded set-top boxes and illegally streaming our television
products, cord-shaving, cord-cutting and customer churn rates
could increase. To address this, we use encryption technology
developed and supported by our vendors to protect our cable
signals from unauthorized access and to control access to
programming based on subscription packages. We also use
encryption and security technologies to prevent unauthorized
access to our Internet service.
There is no assurance that we will be able to effectively prevent
unauthorized decoding of television signals or Internet access in
the future. If we are unable to control cable access with our
encryption technology, and subscriptions to digital programming,
including
subscription
video-on-demand, this could result in a decline in our Cable
revenue.
video-on-demand
premium
and
Legal and ethical compliance
We rely on our employees, officers, Board, suppliers, and other
business partners to behave consistently with applicable legal and
ethical standards in all jurisdictions in which we operate, including,
but not limited to, anti-bribery laws and regulations. Situations
where individuals or others, whether inadvertently or intentionally,
do not adhere to our policies, applicable laws and regulations, or
contractual obligations may expose us to litigation and the
possibility of damages, sanctions, and fines, or of being disqualified
from bidding on contracts. This may have an adverse effect on our
results, financial position, reputation, and brand.
Acquisitions, divestitures, or investments
technologies,
complementary businesses
Acquiring
developing strategic alliances, and divesting portions of our
business are often required to optimally execute our business
strategy. Some areas of our operations (and adjacent businesses)
are subject to rapidly evolving technologies and consumer usage
and
and demand trends. It is possible that we may not effectively
forecast the value of consumer demand or risk of competing
technologies resulting in higher valuations for acquisitions or
missed opportunities.
Services, technologies, key personnel, or businesses of companies
we acquire may not be effectively integrated into our business or
service offerings, or our alliances may not be successful. We also
may not be able to successfully complete certain divestitures on
satisfactory terms, if at all.
Decline of television subscribers in Canada (cord-cutting and
cord-shaving)
The number of households that subscribe to television service in
Canada continues to decline. Other video offerings available to
consumers (for example, direct-to-consumer subscription and free
services), as well as piracy, have contributed to this trend. If this
decline continues, it could have a material adverse effect on our
results of operations.
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focus
towards
the digital market.
Migrating from conventional to digital media
Our Media business operates in many industries that can be
affected by customers migrating from conventional to digital
media, which is driving shifts in the quality and accessibility of data
and mobile alternatives to conventional media. We have been
shifting our
Increasing
competition for advertising revenue from digital platforms, such as
search engines, social networks, and digital content alternatives,
has resulted in advertising dollars migrating from conventional
television broadcasters to digital platforms. The impact is greater
on conventional over-the-air broadcast networks, such as Citytv and
OMNI, which do not have a second revenue stream from
subscription revenue. Our Media results could be adversely
affected if we are unsuccessful in shifting advertising dollars from
conventional to digital platforms.
Our market position in radio and television
Advertising dollars typically migrate to media properties that are
leaders in their respective markets and categories, particularly when
advertising budgets are tight. Our radio and television properties
may not continue performing how they currently perform.
Advertisers base a substantial part of their purchasing decisions on
ratings data generated by industry associations and agencies. If our
radio and television ratings decrease substantially, our advertising
sales volumes and the rates that we charge advertisers could be
adversely affected.
Climate change
Climate change is an increasingly important consideration in all
businesses, including the telecommunications business. Failure of
climate change mitigation and adaptation efforts could affect our
business through potential disruption of our operations or supply
chains, damage to our infrastructure, and the effects on the
communities we serve. The physical risk to our infrastructure caused
by extreme weather disturbances related to climate change can
significantly affect our ability to maintain secure communication
services to all our customers, including governments and health
and emergency services.
Climate change and the environment are drawing more attention
through evolving public interest. Many aspects of our operations
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 67
MANAGEMENT’S DISCUSSION AND ANALYSIS
are subject to evolving and increasingly stringent federal, provincial,
and local environmental, health, and safety laws and regulations.
Such laws and regulations impose requirements with respect to
matters such as the release of substances into the environment,
corrective and remedial action concerning such releases, and the
proper handling and management of substances. These evolving
considerations and more stringent laws and regulations could lead
to increased costs for compliance and rising costs of utilities. Failure
to recognize and adequately respond could result in fines,
regulatory scrutiny, or damage to our reputation or brand.
Controlling shareholder ownership risk
Rogers is a family-founded, family-controlled company. Voting
control of Rogers Communications Inc. is held by the Trust for the
benefit of successive generations of the Rogers family and, as a
result, the Trust is able to elect all members of the Board and to
control the vote on most matters submitted to shareholders,
whether through a shareholder meeting or a written consent
resolution. The beneficiaries of the Trust are a small group of
individuals who are members of the Rogers family, several of whom
are also directors of the Board. The trustee is the trust company
subsidiary of a Canadian chartered bank.
As at December 31, 2021, private Rogers
family holding
companies controlled by the Trust owned approximately 98% of
our outstanding Class A Shares (2020 – 98%) and approximately
10% of our Class B Non-Voting Shares (2020 – 10%), or in total
approximately 29% of the total shares outstanding (2020 – 29%).
Only Class A Shares carry the right to vote in most circumstances.
LITIGATION RISKS
Wholesale Internet costing and pricing
On August 15, 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 (Order), the
CRTC set final rates for facilities-based carriers’ wholesale high-
speed access services, including Rogers’ TPIA service. The Order
set final rates for Rogers that are significantly lower than the interim
rates that were previously billed and it further determined that
these final rates will apply retroactively to March 31, 2016.
We did not believe the final rates set by the CRTC were just and
reasonable as required by the Telecommunications Act as we
believed they were below cost. 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. The CRTC decided to adopt
the interim rates in effect prior to the Order as the final rates, with
certain modifications, including the removal of the supplementary
markup of 10% for incumbent local exchange carriers.
The final rates are lower than the rates we previously billed to the
resellers for the period of March 31, 2016 to October 6, 2016. We
have recognized a refund of amounts previously billed to the
resellers of approximately $25 million, representing the impact on
a retroactive basis for that period.
On May 28, 2021 a wholesale 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 on September 15, 2021. We, along with several other
cable companies, have intervened in these matters.
System access fee – Saskatchewan
In 2004, a class action was commenced against providers of
wireless communications in Canada under the Class Actions Act
(Saskatchewan). The class action relates to the system access fee
wireless carriers charge to some of their customers. The plaintiffs
are seeking unspecified damages and punitive damages, which
would effectively be a reimbursement of all system access fees
collected.
In 2007, the Saskatchewan Court granted the plaintiffs’ application
to have the proceeding certified as a national, “opt-in” class action
where affected customers outside Saskatchewan must take specific
steps to participate in the proceeding. In 2008, our motion to stay
the proceeding based on the arbitration clause in our wireless
service agreements was granted. The Saskatchewan Court directed
that its order, in respect of the certification of the action, would
exclude customers who are bound by an arbitration clause from
the class of plaintiffs.
In 2009, counsel for the plaintiffs began a second proceeding
under the Class Actions Act (Saskatchewan) asserting the same
claims as the original proceeding. If successful, this second class
action would be an “opt-out” class proceeding. This second
proceeding was ordered conditionally stayed on the basis that it
was an abuse of process.
At the time the Saskatchewan class action was commenced,
corresponding claims were filed in multiple jurisdictions across
Canada. The claims in all provinces other than Saskatchewan have
now been dismissed or discontinued. We have not recognized a
liability for this contingency.
911 fee
In June 2008, a class action was launched in Saskatchewan against
providers of wireless communications services in Canada. It involves
allegations of breach of contract, misrepresentation, and false
advertising, among other things, in relation to the 911 fee that had
been charged by us and the other wireless telecommunication
providers in Canada. The plaintiffs are seeking unspecified damages
and restitution. The plaintiffs intend to seek an order certifying the
proceeding as a national class action in Saskatchewan. We have not
recognized a liability for this contingency.
Videotron Ltd.
On October 29, 2021, Videotron Ltd. launched a lawsuit against
Rogers in the Quebec Superior Court, in connection with the
agreement entered into by the parties in 2013 for the development
and operation of a joint LTE network in the province of Quebec.
The lawsuit involves allegations by Videotron Ltd. that Rogers has
breached its contractual obligations by developing its own network
in the territory. Videotron is seeking compensatory damages in the
amount of $850 million. We intend to vigorously defend this
lawsuit. We have not recognized a liability for this contingency.
Other claims
There are certain other claims and potential claims against us. We
do not expect any of these, individually or in the aggregate, to have
a material adverse effect on our financial results.
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Outcome of proceedings
The outcome of all the proceedings and claims against us,
including the matters described above, is subject to future
resolution that includes the uncertainties of litigation. It is not
possible for us to predict the result or magnitude of the claims due
to the various factors and uncertainties involved in the legal
process. Based on information currently known to us, we believe it
is not probable that the ultimate resolution of any of these
proceedings and claims, individually or in total, will have a material
adverse effect on our business, financial results, or financial
condition. If circumstances change and it becomes probable that
we will be held liable for claims against us and such claim is
estimable, we will recognize a provision during the period in which
the change in probability occurs, which could be material to our
Consolidated Statements of Income or Consolidated Statements
of Financial Position.
CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
We conducted an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures as at
December 31, 2021, under the supervision and with the
participation of our management, including the Chief Executive
Officer and Chief Financial Officer, pursuant to Rule 13a-15
promulgated under the US Securities Exchange Act of 1934, as
amended. Based on this evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that our disclosure controls and
procedures were effective at that date.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING
Management is responsible for establishing and maintaining
adequate internal controls over financial reporting.
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Our internal control system is designed to give management and
the Board reasonable assurance that our financial statements are
prepared and fairly presented in accordance with IFRS as issued by
the IASB. The system is intended to provide reasonable assurance
that transactions are authorized, assets are safeguarded, and
financial records are reliable. Management also takes steps to
assure the flow of information and communication is effective, and
monitors performance and our internal control procedures.
Management assessed the effectiveness of our internal control over
financial reporting as at December 31, 2021, based on the criteria
set out in the Internal Control – Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), and concluded that it was effective at that
date. Our independent auditors, KPMG LLP, have issued an
unqualified opinion on the effectiveness of the Company’s internal
control over financial reporting as of December 31, 2021. This
report is included in our 2021 Audited Consolidated Financial
Statements filed on SEDAR (sedar.com).
All internal control systems, however, no matter how well designed,
have inherent limitations, and even systems that have been
determined to be effective can only provide reasonable assurance
about the preparation and presentation of financial statements.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL
REPORTING AND DISCLOSURE CONTROLS AND
PROCEDURES
There have been no changes in 2021 that materially affected, or are
reasonably likely to materially affect, our internal controls over
financial reporting.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 69
MANAGEMENT’S DISCUSSION AND ANALYSIS
Regulation in our Industry
Our business, except for the non-broadcasting operations of
Media, is regulated by two groups:
• ISED Canada on behalf of the Minister of Innovation, Science
and Industry; and
• the CRTC, under
Broadcasting Act.
the Telecommunications Act and
the
Regulation relates to the following, among other things:
• wireless spectrum and broadcasting licensing;
• competition;
• the cable television programming services we must, and can,
distribute;
• wireless and wireline interconnection agreements;
• rates we can charge third parties for access to our network;
• the resale of services on our networks;
• roaming on our networks and the networks of others;
• ownership and operation of our communications systems; and
• our ability to acquire an interest in other communications
systems.
Regulatory changes or decisions can adversely affect our results of
operations.
Our costs of providing services may increase from time to time as
we comply with industry or legislative initiatives to address
consumer protection concerns or
like
copyright infringement, unsolicited commercial e-mail, cybercrime,
and lawful access.
Internet-related
issues
Generally, our spectrum and broadcast licences are granted for a
specified term and are subject to conditions for maintaining these
licences. Regulators can modify these licensing conditions at any
time, and they can decide not to renew a licence when it expires. If
we do not comply with the conditions, a licence may be forfeited or
revoked, or we may be fined.
The licences have conditions that require us, amongst other things,
to comply with Canadian ownership restrictions of the applicable
legislation. We are currently in compliance with these conditions. If
we violate the requirements, we would be subject to various
penalties, including the loss of a licence in extreme cases.
Cable, wireless, and broadcasting licences generally cannot be
transferred without regulatory approval.
CANADIAN BROADCASTING AND
TELECOMMUNICATIONS OPERATIONS
The CRTC is responsible for regulating and supervising all aspects
of the Canadian broadcasting and telecommunications system.
Our Canadian broadcasting operations – including our cable
television systems, radio and television stations, and specialty
services – are licensed (or operated under an exemption order) and
regulated by the CRTC under the Broadcasting Act.
The CRTC is also responsible under the Telecommunications Act
for the regulation of telecommunications carriers, including:
• Wireless’ mobile voice and data operations; and
• Cable’s Internet and telephone services.
Our cable and telecommunications retail services are not currently
subject to price regulation, other than our affordable entry-level
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basic cable television service ordered by the CRTC and introduced
in 2016, as the CRTC believes there is enough competition for
these services provided by other carriers to protect the interests of
users and has forborne from regulating them. Regulations can and
do, however, affect the terms and conditions under which we offer
these services.
SPECTRUM LICENCES
ISED Canada sets technical standards for telecommunications under
the Radiocommunication Act (Canada) (Radiocommunication Act)
and the Telecommunications Act. It licences and oversees:
• the technical aspects of the operation of radio and television
stations;
• the frequency-related operations of cable television networks;
and
• spectrum for wireless communications systems in Canada.
ROYALTIES
The Copyright Board of Canada (Copyright Board) oversees the
administration of copyright royalties in Canada and establishes the
royalties to be paid for the use of certain copyrighted works. It sets
that Canadian broadcasting
the copyright
undertakings, including cable, radio, television, and specialty
services, pay to copyright collectives.
royalties
tariff
BILLING AND CONTRACTS
Manitoba, Newfoundland and Labrador, Ontario, and Quebec
have enacted consumer protection legislation for wireless, wireline,
and Internet service contracts. This legislation addresses the
content of such contracts, the determination of the early
cancellation fees that can be charged to customers, the use of
security deposits, the cancellation and renewal rights of customers,
the sale of prepaid cards, and the disclosure of related costs.
Rogers is also currently subject to the CRTC Wireless Code, the
CRTC Television Service Provider Code of Conduct that became
effective on September 1, 2017, and the CRTC Internet Code that
became effective on January 31, 2020. See “CRTC Wireless Code
of Conduct” and “CRTC Internet Code” for more information.
FOREIGN OWNERSHIP AND CONTROL
Non-Canadians can own and control, directly or indirectly:
• up to 33.3% of the voting shares and the related votes of a
holding company that has a subsidiary operating company
licenced under the Broadcasting Act, and
• up to 20% of the voting shares and the related votes of the
operating licensee company may be owned and controlled
directly or indirectly by non-Canadians.
Combined, these limits can enable effective foreign control of up
to 46.7%.
The chief executive officer and 80% of the members of the board
of directors of the operating licensee must be resident Canadians.
There are no restrictions on the number of non-voting shares that
may be held by non-Canadians at either the holding company or
the licensee company level. Neither the Canadian carrier nor its
parent may be otherwise controlled in fact by non-Canadians.
Subject to appeal to the federal Cabinet, the CRTC has the
jurisdiction to determine as a question of fact whether a given
licensee is controlled by non-Canadians.
to
same
the Telecommunications Act and associated
Pursuant
to Canadian
the
regulations,
telecommunications carriers such as Wireless, except that there is
no requirement that the chief executive officer be a resident
Canadian. We believe we are in compliance with the foregoing
foreign ownership and control requirements.
rules also apply
less
On June 29, 2012, Bill C-38 amending the Telecommunications Act
passed into law. The amendments exempt telecommunications
companies with
total Canadian
telecommunications market measured by revenue from foreign
investment restrictions. Companies that are successful in growing
their market shares
total Canadian
telecommunications market revenue other than by way of merger
or acquisitions will continue to be exempt from the restrictions.
in excess of 10% of
10% of
than
an
extensive
proceeding
CRTC REVIEW OF BASIC TELECOMMUNICATIONS SERVICES
After
which
telecommunications services Canadians require to participate
meaningfully in the digital economy and the CRTC’s role in
ensuring the availability of affordable basic telecommunications
services to all Canadians, the CRTC released Telecom Regulatory
Policy CRTC 2016-496, Modern telecommunications services – The
path forward for Canada’s digital economy, on December 21, 2016.
examining
The CRTC set as its universal service objective that Canadians, in
urban areas as well as in rural and remote areas, have access to
voice services and broadband Internet access services, on both
fixed and mobile wireless networks. To measure the successful
achievement of this objective, the CRTC has established several
criteria, including:
• 90% of Canadian residential and business fixed broadband
Internet access service subscribers should be able to access
speeds of at least 50 Mbps download and 10 Mbps upload, and
to subscribe to a service offering with an unlimited data
allowance by 2021, with the remaining 10% of the population
receiving such service by 2031; and
• the latest generally deployed mobile wireless technology should
be available not only in Canadian homes and businesses, but on
as many major transportation roads as possible in Canada.
To help attain the universal service objective, the CRTC will begin to
shift the focus of its regulatory frameworks from wireline voice
services to broadband Internet access services. As such, the
following services that form part of the universal service objective
are considered basic telecommunications services within the
meaning of subsection 46.5(1) of the Telecommunications Act:
• fixed and mobile wireless broadband Internet access services;
and
• fixed and mobile wireless voice services.
To assist in extending broadband into under-served rural and
remote locations, the CRTC stated that it would establish a new
broadband fund to which all entities providing Internet services in
Canada must contribute. The specifics of the fund, including
guiding principles, fund design, and assessment criteria, were
established
in Telecom Regulatory Policy CRTC 2018-377,
Development of the Commission’s Broadband Fund, released on
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September 27, 2018. Two calls for applications occurred in 2019.
2020 marks the first year of payments into the fund, with a
maximum funding level of $100 million in the first year of
implementation. This level will increase by $25 million annually over
the following four years to reach an annual cap of $200 million, with
the incremental increases in years four and five contingent on a
review of the fund in the third year to ensure it is being managed
efficiently and is achieving its intended purpose.
A percent of revenue levy has been applied on wireline and
wireless voice revenues since 2000 to support providing voice
service to designated high-cost local voice serving area and to
provide a national video relay service (VRS). In 2019, a 0.52% levy
on wireline and wireless voice revenues generated $94.2 million in
subsidies. The voice service subsidy component is declining year-
over-year because in Telecom Regulatory Policy CRTC 2018-213,
Phase-out of the local voice service subsidy regime, the CRTC
determined that the current $115 million local service subsidy for
incumbent local telephone company high-cost serving areas would
be phased out in six equal increments between 2019 and 2021
such that the voice subsidy will be eliminated by the end of 2021.
For 2020, the $100 million funding requirements of the Broadband
Fund will be added to the voice and VRS requirements, resulting in
an increased projected subsidy requirement of $170.7 million per
Telecom Decision CRTC 2019-395, Final 2019 revenue-percent
charge and related matters, released on December 4, 2019. The
percent of revenue levy currently applied to wireline and wireless
voice revenues will be extended to also apply to Internet and
texting revenue and is set for 2020 on an interim basis at 0.45% on
this expanded revenue base, subject to finalization based on actual
revenues in late 2020.
legislation was passed
CANADA’S ANTI-SPAM LEGISLATION
Canada’s anti-spam
law on
December 15, 2010 and came into force on July 1, 2014. Sections
of such
installation of
computer programs or software came into force on January 15,
2015. A private right of action that was to come into place under
the legislation effective July 1, 2017 was deferred. We believe we
are in compliance with this legislation.
legislation related to the unsolicited
into
MANDATORY NOTIFICATION OF PRIVACY BREACHES
On June 18, 2015, Bill S-4 – the Digital Privacy Act was passed into
law. It made several amendments to PIPEDA, including the
introduction of mandatory breach notification rules that came into
force on November 1, 2018. Businesses must now notify impacted
individuals and the federal Privacy Commissioner of a privacy
breach where it is reasonable to believe the breach creates a real
risk of significant harm to the individual. Notification must be
completed as soon as feasible after it is determined a breach
occurred. Businesses must also keep records of breaches and
provide these records to the Privacy Commissioner upon request.
The Privacy Commissioner may also launch an investigation or audit
based on the information contained in the breach report. Failure to
provide notification or maintain records could result in fines up to
$100,000 per violation. In late 2019, the Privacy Commissioner
reporting among seven
conducted a
telecommunications services providers,
issuing a report with
recommendations for best practices for industry.
review of breach
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 71
MANAGEMENT’S DISCUSSION AND ANALYSIS
GOVERNMENT OF CANADA REVIEW OF THE
BROADCASTING ACT
On February 2, 2022, the Federal Government introduced Bill C-11,
the Online Streaming Act. Bill C-11 will amend the Broadcasting
Act and make related and consequential amendments to other
acts. The goal of Bill C-11 is to support Canada’s cultural policy
objectives of producing Canadian stories in the midst of a
changing broadcasting landscape. The main amendments would
subject online streaming services to CRTC regulation and require
specific investment in Canadian cultural enterprises and include
diverse programming, including Indigenous content. The CRTC will
decide how the new regulatory regime is to be implemented
subject to the guidance that would be provided by the
Government in a policy direction to be issued when (and if) the Bill
is passed.
WIRELESS
3500 AND 3800 MHZ SPECTRUM LICENCE BANDS
The 3500 MHz band is key spectrum needed to support 5G
technologies. To align with international standards, ISED Canada
moved to implement a fundamental reallocation to allow flexible
use of both mobile and fixed services in the band.
On June 6, 2019, ISED Canada released its Decision (2019
Decision) on its Consultation on Revisions to the 3500 MHz Band to
Accommodate Flexible Use and Preliminary Consultation on
Changes to the 3800 MHz Band. The 2019 Decision determined
that ISED Canada would issue flexible use licences in a 200 MHz
frequency range from 3450-3650 MHz. Existing wireless licensees
in this range that meet all of their conditions of licence were
eligible to be issued flexible use licences covering the same
geographic area for the following spectrum amounts:
• any licensee that holds 75 MHz of existing spectrum or more will
be eligible to apply for 60 MHz;
• any licensee that holds 50 MHz of existing spectrum will be
eligible to apply for 50 MHz; and
• all other licensees will be eligible to apply for 20 MHz.
Rogers and Bell previously held 3500 MHz spectrum licences
across the country in Inukshuk™, a partnership between the two
companies. Inukshuk held between 100-175 MHz of 3500 MHz
spectrum in most major urban markets in Canada. Because
Inukshuk held 75 or more MHz of 3500 MHz spectrum in each of
the top 10 service areas in Canada by population, it was eligible to
retain 60 MHz in those areas. In September 2020, Rogers and Bell
unwound Inukshuk and transferred to each partner 50% of
Inukshuk’s 3500 MHz holdings. As such, in accordance with the
Decision and the transfer, Rogers in effect, will retain 30 MHz of
3500 MHz spectrum licences for re-designation to flexible use
licences in each of the top 10 service areas in Canada by
population.
Because much of the 3500 MHz spectrum band is currently in use,
the 2019 Decision set out a transition process to protect existing
users and new licensees from interference as they transition to new
flexible use licences. The transition process will follow a six-month
cycle and last approximately five years.
ISED Canada’s 3500 MHz spectrum licence auction began on
June 15, 2021 and ended on July 23, 2021. The results were
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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.
In November 2021, ISED Canada published an updated version of
SRSP-520, which imposes measures to address the protection of
certain aviation navigation tools from interference. The revised date
for final payment and issuance of the spectrum licences was
December 17, 2021. We took possession of these licences after
making final payment.
On August 27, 2020, ISED Canada launched its Consultation on
the Technical and Policy Framework for the 3650-4200 MHz Band
and Changes to the Frequency Allocation of the 3500-3650 MHz
Band to address potential changes to the spectrum utilization
policy, band plans, and the technical and policy considerations to
optimize the use of the 3700-4200 MHz bands to support 5G
wireless technologies deployment. On May 21, 2021, ISED Canada
released its Decision on the Technical and Policy Framework for the
3650-4200 MHz Band and Changes to the Frequency Allocation of
the 3500-3650 MHz Band, announcing the decision to repurpose
the 3800 MHz spectrum band to support 5G services. On
December 17, 2021,
follow-up
ISED Canada
proceeding, Consultation on a Policy and Licensing Framework for
Spectrum in the 3800 MHz band, to determine the auction format
and rules. Initial comments were due on February 15, 2022. The
3800 MHz auction is expected to take place in early 2023.
launched a
it reviews spectrum
TRANSFERS, DIVISIONS, AND SUBORDINATE LICENSING
OF SPECTRUM LICENCES
In June 2013, ISED Canada released Framework Relating to
Transfers, Divisions and Subordinate Licensing of Spectrum
Licences for Commercial Mobile Spectrum. The Framework lays
out the criteria ISED Canada will consider and the processes it will
including
use when
prospective transfers that could arise from purchase or sale options
and other agreements. Key items to note are that:
• ISED Canada will review all spectrum transfer requests, and will
not allow any that result in “undue spectrum concentration” and
reduced competition. Decisions will be made on a case-by-case
basis and will be issued publicly to increase transparency; and
• licensees must ask for a review within 15 days of entering into
any agreement that could lead to a prospective transfer. ISED
Canada will review the agreement as though the licence transfer
that could arise from it has been made.
transfers,
licence
CRTC WIRELESS CODE OF CONDUCT
In June 2013, the CRTC issued its Wireless Code of Conduct
(Wireless Code) that came into effect in December 2013. The
Wireless Code imposes several obligations on wireless carriers,
including maximum contract term length, roaming bill caps, device
unlocking requirements, and contract summaries. It also lays out
the rules for device subsidies and early cancellation fees. Under the
Wireless Code, if a customer cancels a contract early, carriers can
only charge the outstanding balance of the device subsidy they
received, which decreases by an equal amount every month over
no more than 24 months.
On June 15, 2017, the CRTC released its decision on the three-year
review of the Wireless Code (Telecom Regulatory Policy CRTC
2017-200, Review of the Wireless Code). The CRTC determined
that as of December 1, 2017, all individual and small business
wireless service customers will have the right to have their cellular
phones and other mobile devices unlocked, free of charge, upon
request. In addition, all newly purchased devices must be provided
unlocked from that day forward. The CRTC also determined that for
family or shared plans (multi-line plans), the account holder must,
by default, be the one who consents to data overage and data
roaming charges beyond the established caps ($50 and $100 per
month, respectively). Wireless service providers may, however, allow
account holders to authorize other users on a family or shared plan
to consent to additional charges. The CRTC also made clear that in
all instances, the caps apply on a per account basis, regardless of
the number of devices, for multi-line plans and individual lines on
the account.
introduced wireless device
In July 2019, Rogers
financing
agreements with both 24- and 36-month terms. On August 30,
2019, the CRTC initiated Telecom Notice of Consultation CRTC
2019-309, Show cause proceeding and call for comments – The
Wireless Code – Device financing plans, to consider whether device
financing plans, including those with terms longer than 24 months,
are compliant with the Wireless Code. We voluntarily ceased
offering device financing arrangements with terms greater than 24
months at that time. Final reply submissions were filed on
October 29, 2019. On March 4, 2021, the CRTC released Telecom
Decision CRTC 2021-98, Wireless Code – Application to device
financing plans, confirming that the Wireless Code does apply to
device financing plans sold with a wireless service plan and that
device financing plans must comply with all relevant protections of
the Wireless Code. The CRTC also established that device financing
plans are similar to device subsidies when determining early
cancellation fees under the Wireless Code.
TOWER SHARING POLICY
In March 2013, ISED Canada released Revised Frameworks for
Mandatory Roaming and Antenna Tower and Site Sharing,
concluding a consultation initiated in 2012. It sets out the current
rules for tower and site sharing, among other things. The key terms
of the tower and site sharing rules are:
• all holders of spectrum
licences, and
broadcasting certificates must share towers and antenna sites,
where technically feasible, at commercial rates; and
licences,
radio
• the timeframe for negotiating agreements is 60 days, after which
arbitration according to ISED Canada arbitration rules will begin.
In Telecom Regulatory Policy 2015-177, Regulatory framework for
wholesale mobile wireless services, released in May 2015, the CRTC
determined that
it would not mandate or require general
wholesale tariffs for tower and site sharing. At the same time, it
determined that its existing powers and processes are sufficient to
address tower and site sharing disputes related to rates, terms, and
conditions. As a result, carriers may use the arbitration process
established by ISED Canada, or they may request the CRTC to
intervene in the event that tower and site sharing negotiations fail.
to
the CRTC on
POLICY DIRECTION TO THE CRTC ON
TELECOMMUNICATIONS
On February 26, 2019, the Minister of Innovation, Science and
Economic Development tabled a Proposed Order Issuing a
the Canadian
Direction
Telecommunications Policy Objectives to Promote Competition,
Affordability, Consumer Interests and Innovation. The Direction
signals the government’s intention to require the CRTC to consider
competition, affordability, consumer interests, and innovation in its
telecommunications decisions and to demonstrate to Canadians in
those decisions that it has done so.
Implementing
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On June 17, 2019, the Order Issuing a Direction to the CRTC on
Implementing the Canadian Telecommunications Policy Objectives
to Promote Competition, Affordability, Consumer Interests and
Innovation came into effect after review and revision. It requires the
CRTC to consider competition, affordability, consumer interests,
and
its telecommunications decisions and to
demonstrate to Canadians in those decisions that it has done so.
innovation
in
CRTC REVIEW OF MOBILE WIRELESS SERVICES
On February 28, 2019, through Telecom Notice of Consultation
CRTC 2019-57, Review of mobile wireless services, the CRTC
initiated its five-year review to examine the state of the mobile
wireless market and to determine whether further action is required
to improve choice and affordability for Canadians. After extensive
written submissions were filed in 2019, a two-week oral hearing
began on February 18, 2020. Final written submissions were filed
on July 15, 2020.
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.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 73
MANAGEMENT’S DISCUSSION AND ANALYSIS
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.
CABLE
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.
DIFFERENTIAL PRICING RELATED TO INTERNET DATA
PLANS
On April 20, 2017, the CRTC released Telecom Regulatory Policy
CRTC 2017-104, Framework for assessing the differential pricing
practices of Internet service providers, setting out the evaluation
criteria it will apply to determine whether a specific differential
pricing practice complies with subsection 27(2) of
the
Telecommunications Act on a case-by-case basis, as follows:
• the degree to which the treatment of data is agnostic (i.e., data is
Of these criteria, the degree to which data is treated agnostically
will generally carry the most weight. The overriding expectation is
that all content and applications will be treated in a neutral manner.
Zero-rating of account management functions (e.g., monitoring of
Internet data usage or the payment of bills online) will generally be
permitted.
WHOLESALE INTERNET COSTING AND PRICING
On August 15, 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 HAS,
including Rogers’ TPIA service. The 2019 Order set final rates for
Rogers that are significantly lower than the interim rates that were
previously billed and it further determined that these final rates will
apply retroactively to March 31, 2016. We do not believe the final
rates set by the CRTC are just and reasonable as required by the
Telecommunications Act as we believe they are below cost.
to Appeal pursuant
to Section 64(1) of
On September 13, 2019, Rogers, in conjunction with the other
large Canadian cable companies (Cable Carriers), filed a motion for
Leave
the
Telecommunications Act with the Federal Court of Appeal (Court)
and an associated motion for an interlocutory Stay of the 2019
Order. On November 22, 2019, the Court granted Leave to Appeal
and an interlocutory Stay of the 2019 Order. On September 10,
2020, the Court dismissed the Cable Carriers’ appeal and
simultaneously vacated the interlocutory Stay previously granted.
to Section 12(1) of
On November 13, 2019, Rogers, again in conjunction with the
other Cable Carriers, filed an appeal of the 2019 Order with the
Federal Cabinet, pursuant
the
Telecommunications Act, asking the Cabinet to order the CRTC to
reconsider its August 15, 2019 decision in conjunction with the
CRTC’s previously announced review of the entire wholesale
regulatory framework. On August 15, 2020, the Federal Cabinet
recognized that the final rates did not always appropriately balance
the policy objectives of the wholesale network and were concerned
that they would undermine investment in high-quality networks.
They however decided not to refer the matter back to the CRTC,
given that the matter was already before them as a result of the
review and vary application filed by Rogers and the other Cable
Carriers.
of
and
Rules
Procedure,
On December 13, 2019, Rogers, again in conjunction with the
other Cable Carriers, filed an Application with the CRTC seeking
review and variance and stay of the 2019 Order pursuant to
sections 27(1), 61(2), and 62 of the Telecommunications Act, Part 1
the Canadian Radio-television and Telecommunications
of
Commission
a nd
Practice
Telecommunications Information Bulletin CRTC 2011-214, Revised
Guidelines for review and vary applications. Specifically, we seek:
a)
review and variance of the methodology and the resulting
rates approved for the Cable Carriers’ aggregated wholesale
HAS in the 2019 Order in conjunction with the CRTC’s
planned review of its approach to setting the rates for
wholesale telecommunications services generally;
review and variance of the determination in the 2019 Order
regarding retroactivity such that any new wholesale rates for
Cable Carrier HAS services apply only on a prospective basis;
and
treated equally regardless of its source or nature);
• whether the offering is exclusive to certain customers or certain
b)
content providers;
• the impact on Internet openness and innovation; and
• whether there is financial compensation involved.
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c)
in the event that the interlocutory stay of the 2019 Order
granted by the Federal Court of Appeal is terminated or
varied, an interim stay of the 2019 Order pending completion
of the Commission’s determinations in respect of both (a) and
(b) above.
On September 28, 2020, the CRTC issued a Stay of Order
2019-288 pending review of the appropriateness of the rates
established in the 2019 Order. On November 12, 2020, Rogers,
again in conjunction with the other Cable Carriers, filed a motion
for Leave to Appeal the Court’s decision with the Supreme Court of
Canada. The Supreme Court of Canada dismissed the request for
Leave on February 25, 2021 without reasons.
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 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 on September 15, 2021. We, along with several other
cable companies, have intervened in these matters.
CRTC INTERNET CODE
On July 31, 2019, the CRTC released Telecom Regulatory Policy
CRTC 2019-269, The Internet Code, establishing a mandatory code
of conduct (Code) for large facilities-based ISPs that applies to the
companies’ provision of fixed wireline Internet access services to
individual customers. As is the case for the Wireless, Deposit and
Disconnection, and Television Service Provider Codes already in
place, the Commission for Complaints for Telecom-television
Services Inc. (CCTS) will administer the Code. The Code came into
effect on January 31, 2020.
On September 20, 2016, the CRTC released Telecom Decision
CRTC 2016-379, Follow-up to Telecom Regulatory Policy 2015-326
– Implementation of a disaggregated wholesale high-speed access
service,
including over fibre-to-the premises access facilities,
addressing the technical implementation of new, disaggregated,
high-speed access TPIA, a service that will provide access to FTTP
facilities as ordered in the CRTC’s July 22, 2015 ruling. The decision
is consistent with the positions submitted by Rogers in our filings.
Proposed tariffs and supporting cost studies for the new service
were filed on January 9, 2017, with further information filed later in
2017 and 2018. A decision on final rates was anticipated in 2020
but was temporarily suspended on June 11, 2020 by CRTC
Telecom Notice of Consultation 2020-187, Call for comments –
Appropriate network configuration for disaggregated wholesale
high-speed access services. Initial comments for this proceeding
were filed on October 5, 2020 and reply comments were filed on
December 7, 2020.
CRTC REVIEW OF LOCAL AND COMMUNITY
PROGRAMMING
On June 15, 2016, the CRTC released Broadcasting Regulatory
Policy CRTC 2016-224, Policy framework for local and community
television. The CRTC created a new model for BDU contributions to
Canadian programming that took effect on September 1, 2017.
Annual contributions will
remain at 5% of annual gross
broadcasting revenues; however, of that amount, in all licensed
cable systems, up to 1.5% (rather than the previous 2%) can be
used to fund community channel programming. Of this revenue,
0.3% must now go to a newly created Independent Local News
Fund for independently owned local TV stations, and the remaining
funding will continue to go to the Canada Media Fund and
independent production funds. This decision provides the flexibility
for BDUs that operate community channels in large markets
(Montreal, Toronto, Edmonton, Calgary, and Vancouver) to now
direct their community channel revenues from those markets to
fund either community channel programming in smaller markets,
or to fund local news on TV stations (such as Citytv, in the case of
Rogers). Rogers has closed its Greater Toronto Area community
channels and redirected these revenues.
CRTC REVIEW OF WHOLESALE WIRELINE
TELECOMMUNICATIONS SERVICES
On July 22, 2015, the CRTC released its decision on the regulatory
framework for wholesale wireline services (Telecom Regulatory
Policy 2015-326, Review of wholesale wireline services and
associated policies), determining which wireline services, and under
what terms and conditions, facilities-based telecommunications
carriers must make available to other telecommunications service
providers, such as resellers. The CRTC determined that wholesale
high-speed access services, which are used to support retail
competition for services, such as local phone, television, and
Internet access, would continue to be mandated. The provision of
provincially aggregated services, however, would no longer be
mandated and would be phased out in conjunction with the
implementation of a disaggregated service with connections at
telephone company central offices and cable company head-ends.
The requirement to implement disaggregated wholesale high-
speed access services will include making them available over
fibre-to-the-premises (FTTP) access facilities. Regulated rates will
continue to be based on long-run increment cost studies.
TELEVISION SERVICES DISTRIBUTION
On March 19, 2015, the CRTC released the third of its decisions
related to its Let’s Talk TV proceeding. The CRTC ordered
distributors to offer customers an option for a small basic service
consisting only of Canadian local channels (local radio is optional),
national mandatory services, community and provincial legislature
channels, and, should they wish, US 4+1 networks beginning
March 1, 2016. The retail rate for this entry-level service will be
capped at $25 per month (excluding equipment). Effective
March 1, 2016, we began offering a small basic service consisting
local channels, national mandatory services,
of Canadian
community and provincial legislature channels, and the US 4+1
networks.
The CRTC also adopted phased-in requirements for selling
channels to customers “à la carte” and as part of “pick-packs”. All
channels above the basic tier must be offered on an à la carte basis
and in smaller, reasonably priced packages as of December 2016.
As a BDU, we are permitted to continue to offer our existing basic
service and programming packages. The CRTC also revised its
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 75
distribution undertakings, the CRTC renewed Rogers’ Broadcasting
Distribution Undertaking licences in Ontario and Atlantic Canada
for a full seven-year licence term with conditions substantially
consistent with Rogers’ application.
CRTC PROCEEDING ON FUTURE PROGRAMMING
DISTRIBUTION MODELS
On October 12, 2017, prompted by Order in Council P.C. 2017
1195, the CRTC initiated a proceeding (Broadcasting Notice of
Consultation CRTC 2017-359, Call for comments on the Governor
in Council’s request for a report on future programming distribution
models) to report on the distribution model or models of
programming that are likely to exist in the future; how and through
whom Canadians will access that programming; and the extent to
which these models will ensure a vibrant domestic market that is
capable of supporting the continued creation, production, and
distribution of Canadian programming, in both official languages,
including original entertainment and information programming.
issued
its report on future
On May 30, 2018, the CRTC
programming distribution models requested by the government in
September 2017 through Order in Council P.C. 2017-1195. The
report proposes new tools and regulatory approaches to support
the production and promotion of audio and video content made
by and for Canadians. The report will inform the government’s
review of the Broadcasting Act and Telecommunications Act.
MANAGEMENT’S DISCUSSION AND ANALYSIS
existing “preponderance” rule so that consumers will have to be
offered, but will not have to receive, a majority of Canadian services.
A number of changes to the Wholesale Code (formerly the Vertical
Integration
(VI) Code) addressing, amongst other matters,
penetration-based rate cards and minimum guarantees were also
made. All licensed programmers and BDUs are to comply with the
Wholesale Code, which came into effect on January 22, 2016.
for distribution
The decision also addressed rules for distribution of foreign
including
services authorized
requirements that foreign services make their channels available “à
la carte” and in “pick-packs” or in smaller pre-assembled packages
and abide by the Wholesale Code. Access rules for VI-owned
services and
independent services, channel packaging, and
buy-through rules for multicultural services were also addressed.
in Canada,
On March 26, 2015, in the final decision related to Let’s Talk TV, the
CRTC announced plans to establish a Television Service Provider
(TVSP) Code of Conduct to govern certain aspects of the
relationship between TVSPs and their customers as well as to allow
consumers to complain to the Commissioner for Complaints for
Telecommunications Services about their providers which came
into effect on September 1, 2017.
ROGERS CABLE TV LICENCE RENEWALS
On August 2, 2018, in Broadcasting Decision CRTC 2018-265,
Rogers – Licence renewal for various terrestrial broadcasting
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Other Information
ACCOUNTING POLICIES
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
Management makes judgments, estimates, and assumptions that
affect how accounting policies are applied, the amounts we report
in assets, liabilities, revenue, and expenses, and our related
disclosure about contingent assets and
liabilities. Significant
changes in our assumptions, including those related to our future
business plans and cash flows, could materially change the
amounts we record. Actual results could be different from these
estimates.
These estimates are critical to our business operations and
understanding our results of operations. We may need to use
additional judgment because of the sensitivity of the methods and
assumptions used in determining the asset, liability, revenue, and
expense amounts.
ESTIMATES
REVENUE FROM CONTRACTS WITH CUSTOMERS
Determining the transaction price
The transaction price is the amount of consideration that is
enforceable and to which we expect to be entitled in exchange for
the goods and services we have promised to our customer. We
determine the transaction price by considering the terms of the
contract and business practices that are customary within that
particular line of business. Discounts, rebates, refunds, credits, price
concessions, incentives, penalties, and other similar items are
reflected in the transaction price at contract inception.
Determining the stand-alone selling price and the allocation of the
transaction price
The transaction price is allocated to performance obligations based
on the relative stand-alone selling prices of the distinct goods or
services in the contract. The best evidence of a stand-alone selling
price is the observable price of a good or service when the entity
sells that good or service separately in similar circumstances and to
similar customers. If a stand-alone selling price is not directly
observable, we estimate the stand-alone selling price taking into
account reasonably available information relating to the market
conditions, entity-specific factors, and the class of customer.
In determining the stand-alone selling price, we allocate revenue
between performance obligations based on expected minimum
enforceable amounts to which Rogers is entitled. Any amounts
above the minimum enforceable amounts are recognized as
revenue as they are earned.
LEASES
We estimate the
lease term by considering the facts and
circumstances that can create an economic incentive to exercise an
extension option, or not exercise a termination option. We make
certain qualitative and quantitative assumptions when deriving the
value of the economic incentive.
USEFUL LIVES
We depreciate the cost of property, plant and equipment over their
estimated useful lives by considering industry trends and company-
specific factors, including changing technologies and expectations
for the in-service period of certain assets at the time. We reassess
our estimates of useful lives annually, or when circumstances
change, to ensure they match the anticipated life of the technology
from a revenue-producing perspective. If technological change
happens more quickly, or in a different way, than anticipated, we
might have to reduce the estimated life of property, plant and
equipment, which could result in a higher depreciation expense in
future periods or an impairment charge to write down the value.
We monitor and review our depreciation rates and asset useful lives
at least once a year and change them if they are different from our
previous estimates. We recognize the effect of changes in
estimates in net income prospectively.
CAPITALIZING DIRECT LABOUR, OVERHEAD, AND
INTEREST
Certain direct labour, overhead, and interest costs associated with
the acquisition, construction, development, or improvement of our
networks are capitalized to property, plant and equipment. The
capitalized amounts are calculated based on estimated costs of
projects that are capital in nature, and are generally based on a
per-hour rate. In addition, interest costs are capitalized during
development and construction of certain property, plant and
equipment. Capitalized amounts increase the cost of the asset and
result in a higher depreciation expense in future periods.
IMPAIRMENT OF ASSETS
Indefinite-life intangible assets (including goodwill and spectrum
and/or broadcast licences) are assessed for impairment on an
annual basis, or more often if events or circumstances warrant, and
finite-life assets (including property, plant and equipment and
other intangible assets) are assessed for impairment if events or
circumstances warrant. The recoverable amount of a cash-
generating unit (CGU) involves significant estimates such as future
cash flows, terminal growth rates, and discount rates. If key
estimates differ unfavourably in the future, we could experience
impairment charges that could decrease net income.
FAIR VALUE
We use estimates to determine the fair value of assets acquired and
liabilities assumed in an acquisition, using the best available
information, including information from financial markets. These
estimates include key assumptions such as discount rates, attrition
rates, and terminal growth rates for performing discounted cash
flow analyses.
FINANCIAL INSTRUMENTS
The fair values of our derivatives are recorded using an estimated
credit-adjusted mark-to-market valuation. If the derivatives are in an
asset position (i.e. the counterparty owes Rogers), the credit spread
for the bank counterparty is added to the risk-free discount rate to
determine the estimated credit-adjusted value. If the derivatives are in
a liability position (i.e. Rogers owes the counterparty), our credit
spread is added to the risk-free discount rate. The estimated credit
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 77
MANAGEMENT’S DISCUSSION AND ANALYSIS
adjusted value of derivatives requires assessment of the credit risk of
the parties to the instruments and the instruments’ discount rates.
For all derivative instruments where hedge accounting is applied,
we are required to ensure that the hedging relationships meet
hedge effectiveness criteria. Hedge effectiveness testing requires
the use of both judgments and estimates.
PENSION BENEFITS
When we account for defined benefit pension plans, assumptions
are made in determining the valuation of benefit obligations.
Assumptions and estimates include the discount rate, the rate of
future compensation increase, and the mortality rate. Changes to
these primary assumptions and estimates would affect the pension
expense, pension asset and liability, and other comprehensive
income. Changes in economic conditions, including financial
markets and interest rates, may also have an impact on our pension
plans, as there is no assurance that the plans will be able to earn
the assumed rate of return. Market-driven changes may also result
in changes in the discount rates and other variables that could
require us to make contributions in the future that differ significantly
from the current contributions and assumptions incorporated into
the actuarial valuation process.
Below is a summary of the effect an increase or decrease in the
primary assumptions and estimates would have had on our
accrued benefit obligation as at December 31, 2021.
(In millions of dollars)
Discount rate
Impact of 0.5% increase
Impact of 0.5% decrease
Rate of future compensation increase
Impact of 0.25% increase
Impact of 0.25% decrease
Mortality rate
Impact of 1 year increase
Impact of 1 year decrease
Increase (decrease)
in accrued
benefit obligation
(251)
285
17
(17)
67
(72)
STOCK-BASED COMPENSATION
Stock option plans
Our employee stock option plans attach cash-settled share
appreciation rights (SARs) to all new and previously granted
options. The SAR feature allows the option holder to elect to
receive a cash payment equal to the intrinsic value of the option,
instead of exercising the option and acquiring Class B Non-Voting
Shares. We measure stock-based compensation to employees at
fair value. We determine the fair value of options using our Class B
Non-Voting Share price and option pricing models, and record all
outstanding stock options as liabilities. The liability is marked to
market each period and is amortized to expense using a graded
vesting approach over the period during which employee services
are rendered, or over the period to the date an employee is
eligible to retire, whichever is shorter. The expense in each period
is affected by the change in the price of our Class B Non-Voting
Shares during the period.
Restricted share unit (RSU) and deferred share unit (DSU) plans
We recognize outstanding RSUs and DSUs as liabilities, measuring
the liabilities and compensation costs based on the awards’ fair
values, which are based on the market price of the Class B
Non-Voting Shares, and recognizing them as charges to operating
costs over the vesting period of the awards. If an award’s fair value
changes after it has been granted and before the exercise date, we
recognize the resulting changes in the liability within operating
costs in the year the change occurs. For RSUs, the payment amount
is established as of the vesting date. For DSUs, the payment
amount is established as of the exercise date.
JUDGMENTS
REVENUE FROM CONTRACTS WITH CUSTOMERS
Distinct goods and services
We make judgments in determining whether a promise to deliver
goods or services is considered distinct. We account for individual
products and services separately if they are distinct (i.e. if a product
or service is separately identifiable from other items in the bundled
package and if the customer can benefit from it). The consideration
is allocated between separate products and services in a bundle
based on their stand-alone selling prices. For items we do not sell
separately, we estimate stand-alone selling prices using the
adjusted market assessment approach.
Determining costs to obtain or fulfill a contract
Determining the costs we incur to obtain or fulfill a contract that
meet the deferral criteria within IFRS 15 requires us to make
significant judgments. We expect incremental commission fees
paid to internal and external representatives as a result of obtaining
contracts with customers to be recoverable.
Residual value arrangements
Under certain customer offers, we allow customers to defer a
component of the device cost until contract termination. We use
judgment in determining whether these arrangements constitute
In making this
revenue-generating arrangements or
determination, we use judgment to assess the extent of control
over the devices that passes to our customer, including whether the
customer has a significant economic incentive at contract inception
to return the device at contract termination.
leases.
LEASES
We make judgments in determining whether a contract contains
an identified asset. The identified asset should be physically distinct
or represent substantially all of the capacity of the asset, and should
provide us with the right to substantially all of the economic
benefits from the use of the asset.
We also make judgments in determining whether or not we have
the right to control the use of the identified asset. We have that
right when we have the decision-making rights that are most
relevant to changing how and for what purpose the asset is used. In
rare cases where the decisions about how and for what purpose
the asset is used are predetermined, we have the right to direct the
use of the asset if we have the right to operate the asset or if we
designed the asset in a way that predetermines how and for what
purpose the asset will be used.
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We make judgments in determining the incremental borrowing
rate used to measure our lease liability for each lease contract,
including an estimate of the asset-specific security impact. The
incremental borrowing rate should reflect the interest that we
would have to pay to borrow at a similar term and with a similar
security.
lessor. At
Certain of our leases contain extension or renewal options that are
exercisable only by us and not by the
lease
commencement, we assess whether we are reasonably certain to
exercise any of the extension options based on our expected
economic return from the lease. We typically exercise extension
options on our leases, especially related to our networks, primarily
due to the significant cost that would be required to relocate our
network towers and related equipment. We periodically reassess
whether we are reasonably certain to exercise the options and
account for any changes at the date of the reassessment.
USEFUL LIVES AND DEPRECIATION AND AMORTIZATION
METHODS
We make significant
for
depreciating our property, plant and equipment that we believe
most accurately represent the consumption of benefits derived
from those assets and are most representative of the economic
substance of the intended use of the underlying assets.
in choosing methods
judgments
We amortize the cost of intangible assets with finite lives over their
estimated useful lives. We review their useful lives, residual values,
and the amortization methods at least once a year.
We do not amortize intangible assets with indefinite lives (spectrum
licences, broadcast licences, and certain brand names) as there is
no foreseeable limit to the period over which these assets are
expected to generate net cash inflows for us. We make judgments
to determine that these assets have indefinite lives, analyzing all
relevant factors, including the expected usage of the asset, the
typical life cycle of the asset, and anticipated changes in the market
demand for the products and services the asset helps generate.
After review of the competitive, legal, regulatory, and other factors,
it is our view that these factors do not limit the useful lives of our
spectrum licences, broadcast licences, and certain brand names.
Judgment is also applied in choosing methods for amortizing our
intangible assets and program rights that we believe most
accurately represent the consumption of those assets and are most
representative of the economic substance of the intended use of
the underlying assets.
testing. The allocation of goodwill
IMPAIRMENT OF ASSETS
We make judgments in determining CGUs and the allocation of
goodwill to CGUs or groups of CGUs for the purpose of
impairment
involves
considerable management judgment in determining the CGUs (or
groups of CGUs) that are expected to benefit from the synergies of
a business combination. A CGU is the smallest identifiable group
of assets that generates cash inflows that are largely independent
of the cash inflows from other assets or groups of assets. Goodwill
and indefinite-life intangible assets are allocated to CGUs (or
groups of CGUs) based on the level at which management
monitors goodwill, which is not higher than an operating segment.
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RESTRUCTURING, ACQUISITION AND OTHER COSTS
We make significant judgments in determining the appropriate
classification of costs to be included in restructuring, acquisition
and other.
HEDGE ACCOUNTING
We make significant judgments in determining whether our
financial instruments qualify for hedge accounting, including our
determination of hedge effectiveness. These judgments include
assessing whether the forecast transactions designated as hedged
items in hedging relationships will materialize as forecast, whether
the hedging relationships designated as effective hedges for
accounting purposes continue to qualitatively be effective, and
determining the methodology to determine the fair values used in
testing the effectiveness of hedging relationships.
SEGMENTS
We make significant judgments in determining our operating
segments. These are components that engage in business activities
from which they may earn revenue and incur expenses, for which
operating results are regularly reviewed by our chief operating
decision makers to make decisions about resources to be allocated
and to assess component performance, and for which discrete
financial information is available.
INCOME TAXES AND OTHER TAXES
We accrue income and other tax provisions based on information
currently available in each of the jurisdictions in which we operate.
While we believe we have paid and provided for adequate
amounts of tax, our business is complex and significant judgment is
required in interpreting how tax legislation and regulations apply to
us. Our tax filings are subject to audit by the relevant government
revenue authorities and the results of the government audit could
materially change the amount of our actual income tax expense,
income tax payable or receivable, other taxes payable or
receivable, and deferred income tax assets and liabilities and could,
in certain circumstances, result in the assessment of interest and
penalties.
is
judgment
CONTINGENCIES
Considerable
in the determination of
involved
contingent liabilities. Our judgment is based on information
currently known to us, and the probability of the ultimate resolution
of the contingencies. If it becomes probable that a contingent
liability will result in an outflow of economic resources, we will
record a provision in the period the change in probability occurs.
The amount of the loss involves judgment based on information
available at that time. Any provision recognized for a contingent
liability could be material to our consolidated financial position and
results of operations.
ONEROUS CONTRACTS
Significant judgment is required to determine when we are subject
to unavoidable costs arising from onerous contracts. These
judgments may include, for example, whether a certain promise is
legally binding or whether we may be successful in negotiations
with the counterparty.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 79
MANAGEMENT’S DISCUSSION AND ANALYSIS
TRANSACTIONS WITH RELATED PARTIES
We have entered into certain transactions in the normal course of
business with related parties in which we have an equity interest,
being primarily MLSE (primarily broadcasting rights) and Glentel
(Wireless distribution support). The amounts received from or paid
to these parties were as follows:
(In millions of dollars)
Revenue
Purchases
Years ended December 31
2021
2020 % Chg
31
180
26
121
19
49
We have entered into business transactions with Transcontinental
Inc., a company that provides us with printing and prepress
services.
is chair of the board of
Transcontinental Inc. and was a Director of RCI until June 2021.
Isabelle Marcoux, C.M.,
(In millions of dollars)
Printing and prepress services
Years ended December 31
2021
2020
3
4
We have also entered into business transactions with companies
controlled by our Directors Michael J. Cooper and John C. Kerr,
which, as a result of the Board reconstitution in October 2021, are
now related parties. These companies include Dream Unlimited
Corp. and Vancouver Professional Baseball LLP, respectively.
Dream Unlimited Corp. is a real estate company that rents spaces
in office and residential buildings. Vancouver Professional Baseball
LLP controls the Vancouver Canadians, the Toronto Blue Jays’
High-A affiliate minor league team. Total amounts paid to these
related parties during the period from October 2021 to December
2021 were nominal.
We have also entered into certain transactions with the Trust and
companies it controls. These transactions are subject to formal
agreements approved by the Audit and Risk Committee. Total
amounts paid to these related parties generally reflect the charges
to Rogers for occasional business use of aircraft, net of other
administrative services, and were less than $1 million for each of
2021 and 2020.
These transactions are measured at the amount agreed to by the
related parties, which are also reviewed by the Audit and Risk
Committee. The amounts owing are unsecured, interest-free, and
due for payment in cash within one month from the date of the
transaction.
NEW ACCOUNTING PRONOUNCEMENTS ADOPTED IN
2021
We adopted the following IFRS amendments in 2021. They did not
have a material effect on our financial statements.
• Interest Rate Benchmark Reform – Phase 2 (Amendments to
IFRS 9, IAS 39, and IFRS 7), addressing issues that might affect
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| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
financial reporting after the reform of an interest rate benchmark.
There is significant uncertainty over the timing of when the
replacements for IBORs will be effective and what those
replacements will be. We will actively monitor the IBOR reform
and consider circumstances as we renew or enter into new
financial instruments.
• Amendments to IFRS 16, Leases, allowing lessees to not assess
lease
whether a COVID-19-related rent concession
modification.
is a
RECENT ACCOUNTING PRONOUNCEMENTS NOT YET
ADOPTED
The IASB has issued the following new standard and amendments
that will become effective in future years and could have an impact
on our consolidated financial statements in future periods:
• IFRS 17, Insurance Contracts, a replacement of IFRS 4, Insurance
Contracts, that aims to provide consistency in the application of
accounting for insurance contracts (January 1, 2023).
• Amendments to IFRS 3, Business Combinations – Updating a
Reference to the Conceptual Framework, updating a reference in
IFRS 3 to now refer to the Conceptual Framework (January 1,
2022).
• Amendments to
IAS 16, Property, Plant and Equipment:
Proceeds before intended use, prohibiting reducing the cost of
property, plant and equipment by proceeds while bringing an
asset to capable operations (January 1, 2022).
• Amendments to IAS 37, Provisions, Contingent Liabilities and
Contingent Assets – Onerous Contracts, specifying costs an entity
should include in determining the “cost of fulfilling” a potential
onerous contract (January 1, 2022).
• Amendments to IAS 1, Presentation of Financial Statements –
Classification of Liabilities as Current or Non-current, clarifying the
classification requirements in the standard for liabilities as current
or non-current (January 1, 2023).
• Amendments to IAS 1, Presentation of Financial Statements –
Disclosure of Accounting Policies, requiring entities to disclose
material, instead of significant, accounting policy information
(January 1, 2023).
• Amendments to IAS 8, Accounting Policies – Changes in
Accounting Estimates and Errors, clarifying the definition of
“accounting policies” and “accounting estimates” (January 1,
2023).
• Amendments to IAS 12, Income Taxes – Deferred Tax related to
Assets and Liabilities arising from a Single Transaction, narrowing
the scope for exemption when recognizing deferred taxes
(January 1, 2023).
IFRS 17,
Insurance Contracts, or
We do not expect
the
amendments effective January 1, 2022, will have an effect on our
consolidated financial statements. We are assessing the impacts, if
any, the remaining amendments will have on our consolidated
financial statements; however we currently do not expect any
material impacts.
KEY PERFORMANCE INDICATORS
We measure the success of our strategy using a number of key
performance indicators, which are outlined below. 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:
• subscriber counts;
• Wireless;
•Cable; and
• homes passed (Cable);
• Wireless subscriber churn (churn);
• Wireless blended average billings per user (ABPU);
• Wireless blended average revenue per user (ARPU);
• Cable average revenue per account (ARPA);
• Cable customer relationships;
• Cable market penetration (penetration);
• capital intensity;
• total service revenue;
• dividend payout ratios; and
• return on assets.
SUBSCRIBER COUNTS
We determine the number of subscribers to our services based on
active subscribers. When subscribers are deactivated, either
voluntarily or involuntarily for non-payment, they are considered
deactivations in the period the services are discontinued. We use
subscriber counts to measure our core business performance and
ability to benefit from recurring revenue streams. We use homes
passed (Cable) as a measure for our potential market penetration
within a defined geographical area.
Subscriber count (Wireless)
• A wireless subscriber
telephone number.
is represented by each identifiable
• We report wireless subscribers in two categories: postpaid and
prepaid. Postpaid and prepaid include voice-only subscribers,
data-only subscribers, and subscribers with service plans
integrating both voice and data.
• Usage and overage charges for postpaid subscribers are billed a
month in arrears. Prepaid subscribers cannot incur usage and/or
overage charges in excess of their plan limits or account balance.
• Wireless prepaid subscribers are considered active for a period
of 90 days from the date of their last revenue-generating usage.
Subscriber count (Cable)
• Cable Ignite TV and Internet subscribers are represented by a
dwelling unit.
• When there is more than one unit in a single dwelling, such as an
apartment building, each tenant with cable service is counted as
an
invoiced
separately or included in the tenant’s rent. Institutional units,
such as hospitals or hotels, are each considered one subscriber.
individual subscriber, whether the service
is
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• Cable Ignite TV and Internet subscribers include only those
subscribers who have service installed and operating, and who
are being billed accordingly.
• Subscriber counts exclude certain business services delivered
over our fibre network and data centre infrastructure, and circuit-
switched local and long distance voice services and legacy data
services where access is delivered using leased third-party
network elements and tariffed ILEC services.
Homes passed (Cable)
Homes passed are represented by the total number of addresses
that either are Cable subscribers or are non-subscribers, but have
the ability to access our cable services, within a defined
geographical area. When there is more than one unit in a single
dwelling, such as an apartment building, each unit that is a Cable
subscriber, or has the ability to access our cable services, is counted
as an individual home passed. Institutional or commercial units,
such as hospitals or hotels, are each considered one home passed.
SUBSCRIBER CHURN
Subscriber churn (churn) is a measure of the number of subscribers
that deactivated during a period as a percentage of the total
subscriber base, usually calculated on a monthly basis. Subscriber
churn measures our success in retaining our subscribers. We
calculate it by dividing the number of Wireless subscribers that
deactivated (usually in a month) by the aggregate numbers of
subscribers at the beginning of the period. When used or reported
for a period greater than one month, subscriber churn represents
the sum of the number of subscribers deactivating for each period
divided by the sum of the aggregate number of subscribers at the
beginning of each period.
BLENDED AVERAGE BILLINGS PER USER (WIRELESS)
We use blended ABPU as a measure that approximates the
average amount we invoice an individual subscriber on a monthly
basis. Blended ABPU helps us identify trends and measure our
in attracting and retaining higher-value subscribers.
success
Blended ABPU is also a non-GAAP ratio. See “Non-GAAP and
Other Financial Measures” for more
information about this
measure.
BLENDED AVERAGE REVENUE PER USER (WIRELESS)
Blended ARPU helps us identify trends and measure our success in
attracting and retaining higher-value subscribers. Blended ARPU is
a supplementary financial measure. See “Non-GAAP and Other
Financial Measures” for an explanation as to the composition of this
measure.
AVERAGE REVENUE PER ACCOUNT (CABLE)
Average revenue per account (ARPA) measures total average
spending by a single customer account on Cable products. We use
it to identify trends and measure our success in attracting and
retaining multiple-service accounts. ARPA is also a supplementary
financial measure. See “Non-GAAP and Other Financial Measures”
for an explanation as to the composition of this measure.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 81
MANAGEMENT’S DISCUSSION AND ANALYSIS
CUSTOMER RELATIONSHIPS
Customer relationships are represented by dwelling units where at
least one of our Cable services (i.e. Internet, legacy television or
Ignite TV, and/or home phone) are installed and operating, and the
service or services are billed accordingly. When there is more than
one unit in one dwelling, such as an apartment building, each
tenant with at least one of our Cable services is counted as an
individual customer relationship, whether the service is invoiced
separately or included in the tenant’s rent. Institutional units, like
hospitals or hotels, are each considered one customer relationship.
MARKET PENETRATION
Market penetration
(penetration) measures our success at
attracting new households to our brands and products within our
network footprint. Market penetration is calculated by dividing
customer relationships by homes passed. An increasing market
penetration rate reflects more new customer relationships than
new homes passed.
CAPITAL INTENSITY
Capital intensity allows us to compare the level of our capital
expenditures to that of other companies within the same industry.
Our capital expenditures do not include expenditures on spectrum
licences or additions to right-of-use assets. We use it to evaluate the
performance of our assets and when making decisions about
capital expenditures. We believe that certain investors and analysts
use capital
intensity to measure the performance of asset
purchases and construction in relation to revenue. Capital intensity
is also a supplementary financial measure. See “Non-GAAP and
Other Financial Measures” for an explanation as to the composition
of this measure.
TOTAL SERVICE REVENUE
We use total service revenue to measure our core business
performance from the provision of services to our customers
separate from revenue generated from the sale of equipment we
have acquired from device manufacturers and resold. Included in
this metric is our retail revenue from Today’s Shopping Choice and
the Toronto Blue Jays, which are also core to our business. We
calculate total service revenue by subtracting equipment revenue
from total revenue.
DIVIDEND PAYOUT RATIOS
We calculate the dividend payout ratio by dividing dividends
declared for the year by net income or free cash flow for the year.
We use dividends as a percentage of net income and free cash
flow to conduct analysis and assist with determining the dividends
we should pay. Dividend payout ratio of net income and dividend
payout ratio of free cash flow are also supplementary financial
measures. See “Non-GAAP and Other Financial Measures” for an
explanation as to the composition of these measures.
RETURN ON ASSETS
We use return on assets to measure our efficiency in using our
assets to generate net income. Return on assets is also a
supplementary financial measure. See “Non-GAAP and Other
Financial Measures” for an explanation as to the composition of this
measure.
2022 KEY PERFORMANCE INDICATOR CHANGES
Effective January 1, 2022, we will begin disclosing mobile phone
subscribers in Wireless, which will represent devices with voice-only
or voice-and-data plans. Our current definition includes devices on
data-only plans and customers who subscribe to our wireless home
phone service. As a result, our definition of ARPU will also shift to
mobile phone ARPU. We will also no longer report ABPU given the
significant adoption of our wireless device financing program
resulting in this metric being less meaningful.
In Cable, we will adjust our definition of an Internet subscriber such
that it will only include retail Internet subscribers, which will
represent customers who have Internet service installed and
operating, and are being billed directly by us. Our current
definition includes TPIA subscribers and Smart Home Monitoring
subscribers.
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NON-GAAP AND OTHER FINANCIAL MEASURES
We use the following “non-GAAP financial measures” and other “specified financial measures” (each within the meaning of applicable
Canadian securities laws). 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 standardized measures under
IFRS, so may not be reliable ways to compare us to other companies.
Non-GAAP financial measures
Specified financial
measure
Adjusted net
income
How it is useful
• To assess the performance of our businesses before the effects of the
noted items, because they affect the comparability of our financial
results and could potentially distort the analysis of trends in business
performance. Excluding these items does not imply that they are
non-recurring.
Taxes paid and other
government
payments
• To assess how much cash we pay in taxes and fees to federal,
provincial, and municipal governments.
Adjusted Wireless
service revenue
• To facilitate the calculation of Wireless blended average billings per
user (see Non-GAAP ratios).
Most directly
comparable
IFRS financial
measure
Net income
Income taxes paid
Wireless service
revenue
How we calculate it
Net income
add (deduct)
restructuring, acquisition and other;
loss (recovery) on sale or wind down
of investments; loss (gain) on
disposition of property, plant and
equipment; (gain) on acquisitions;
loss on non-controlling interest
purchase obligations; loss on
repayment of long-term debt; loss
on bond forward derivatives; and
income tax adjustments on these
items, including adjustments as a
result of legislative changes.
Income taxes paid
add
unrecoverable sales taxes paid;
payroll taxes paid, regulatory and
spectrum fees paid; and property
and business taxes paid.
Wireless service revenue
add (deduct)
amortization of contract assets and
contract liabilities to accounts
receivable; and financing receivable
billings.
Non-GAAP ratios
How it is useful
How we calculate it
• To assess the performance of our businesses before the effects
of the noted items, because they affect the comparability of our
financial results and could potentially distort the analysis of
trends in business performance. Excluding these items does not
imply that they are non-recurring.
Specified financial
measure
Adjusted basic
earnings per
share
Adjusted diluted
earnings per
share
Wireless blended
average billings per
user (ABPU)
• To help us identify trends in our total monthly billings per
subscriber and to measure our success in attracting and
retaining higher-value subscribers.
Adjusted net income
divided by
basic weighted average shares outstanding.
Adjusted net income including the dilutive effect of stock-based
compensation
divided by
diluted weighted average shares outstanding.
Adjusted Wireless service revenue
divided by
average total number of Wireless subscribers for the relevant
period.
Specified financial
measure
Most directly comparable IFRS financial measure
Adjusted EBITDA
Net income
Total of segments measures
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 83
MANAGEMENT’S DISCUSSION AND ANALYSIS
Specified financial
measure
How it is useful
Capital management measures
Free cash flow
• To show how much cash we generate that is available to repay debt and reinvest in our company, which is an important indicator of
our financial strength and performance.
• We believe that some investors and analysts use free cash flow to value a business and its underlying assets.
Adjusted net debt
• We believe this helps investors and analysts analyze our debt and cash balances while taking into account the impact of debt
derivatives on our US dollar-denominated debt.
Debt leverage ratio
• We believe this helps investors and analysts analyze our ability to service our debt obligations.
Available liquidity
• To help determine if we are able to meet all of our commitments, to execute our business plan, and to mitigate the risk of economic
downturns.
How we calculate it
Adjusted EBITDA
divided by
revenue.
Supplementary financial measures
Wireless service revenue
divided by
average total number of Wireless subscribers for the relevant period.
Cable service revenue
divided by
average total number of customer relationships for the relevant period.
Capital expenditures
divided by
revenue.
Net income
divided by
total assets.
Dividends declared
divided by
net income.
Specified financial
measure
Adjusted EBITDA
margin
Wireless blended
average revenue per
user (ARPU)
Cable average
revenue per account
(ARPA)
Capital intensity
Return on assets
Dividend payout
ratio of net income
Dividend payout
ratio of free cash flow
Dividends declared for the year
divided by
free cash flow (defined above).
RECONCILIATION OF ADJUSTED EBITDA
(In millions of dollars)
Net income
Add (deduct):
Income tax expense
Other expense
Finance costs
Restructuring, acquisition and other
Depreciation and amortization
Adjusted EBITDA
Years ended December 31
2021
1,558
569
2
849
324
2,585
5,887
2020
1,592
580
1
881
185
2,618
5,857
RECONCILIATION OF ADJUSTED NET INCOME
RECONCILIATION OF ADJUSTED WIRELESS SERVICE
REVENUE AND BLENDED ABPU
(In millions of dollars. except subscribers (in 000s)
and months)
Wireless service revenue
Add (deduct):
Amortization of contract assets and contract
liabilities to accounts receivable
Financing receivable billings
Adjusted Wireless service revenue
Divided by:
Average Wireless subscribers
Months per period
Years ended December 31
2021
6,666
362
1,388
8,416
2020
6,579
1,209
410
8,198
11,054
12
10,804
12
$
63.45
$
63.24
Years ended December 31
Blended ABPU
(In millions of dollars)
Net income
Add (deduct):
Restructuring, acquisition and other
Income tax impact of above items
2021
1,558
324
(79)
2020
1,592
185
(52)
Adjusted net income
1,803
1,725
84
| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
SUMMARY OF FINANCIAL RESULTS OF LONG-TERM DEBT GUARANTOR
Our outstanding public debt, amounts drawn on our $4.6 billion bank credit and letter of credit facilities, and derivatives are unsecured
obligations of RCI, as obligor, and RCCI, as either co-obligor or guarantor, as applicable.
The selected unaudited consolidating summary financial information for RCI for the periods identified below, presented with a separate
column for: (i) RCI, (ii) RCCI, (iii) our non-guarantor subsidiaries on a combined basis, (iv) consolidating adjustments, and (v) the total
consolidated amounts, is set forth as follows:
Years ended December 31
(unaudited)
(In millions of dollars)
Selected Statements of Income data measure:
Revenue
Net income (loss)
As at December 31
(unaudited)
(In millions of dollars)
RCI 1
RCCI 1
Non-guarantor
subsidiaries 1
Consolidating
adjustments 1
Total
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
—
1,558
— 12,769
1,528
1,592
12,400
1,316
2,073
105
1,703
171
(187)
(1,633)
(187) 14,655
1,558
(1,487)
13,916
1,592
RCI 1
RCCI 1,2
Non-guarantor
subsidiaries 1
Consolidating
adjustments 1
Total
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Selected Statements of Financial Position data measure:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
29,982
33,290
30,993
18,943
27,186 28,825
31,184 28,959
27,264 32,942
4,960
18,740
26,326 10,089
3,717
24,835
9,378
28,167
181
5,080
9,929
3,650
9,294
152
(63,067)
(29,832)
(64,694)
(1,272)
(56,512)
5,829
(27,744) 36,134
8,619
(58,139)
(1,278) 22,812
6,929
31,925
6,586
22,694
1 For the purposes of this table, investments in subsidiary companies are accounted for by the equity method.
2 Amounts recorded in current liabilities and non-current liabilities for RCCI do not include any obligations arising as a result of being a guarantor or co-obligor, as the case may be,
under any of RCI’s long-term debt.
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2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 85
MANAGEMENT’S DISCUSSION AND ANALYSIS
FIVE-YEAR SUMMARY OF CONSOLIDATED FINANCIAL RESULTS
(In millions of dollars, except per share amounts, subscriber count
results, churn, ARPU, ARPA, percentages, and ratios)
2021
2020
2019
2018 1
2017 2
As at or years ended December 31
Revenue
Wireless
Cable
Media
Corporate items and intercompany eliminations
Total revenue
Total service revenue
Adjusted EBITDA
Wireless
Cable
Media
Corporate items and intercompany eliminations
Total adjusted EBITDA
Net income
Adjusted net income
Cash provided by operating activities
Free cash flow
Capital expenditures
Earnings per share
Basic
Diluted
Adjusted earnings per share
Basic
Diluted
Statements of Financial Position:
Assets
Property, plant and equipment
Goodwill
Intangible assets
Investments
Other assets
Total assets
Liabilities and Shareholders’ Equity
Long-term liabilities
Current liabilities
Total liabilities
Shareholders’ equity
Total liabilities and shareholders’ equity
Subscriber count results (in thousands) 3
Wireless subscribers 4
Internet subscribers 5,6
Ignite TV subscribers 7
Customer relationships 6,7
Additional Wireless metrics 3
Postpaid churn (monthly)
Blended ARPU (monthly)
Additional Cable metrics
ARPA (monthly) 7
Penetration 7
Additional consolidated metrics
Revenue growth
Adjusted EBITDA growth
Dividends declared per share
Dividend payout ratio of net income 3
Dividend payout ratio of free cash flow 3
Return on assets 3
Debt leverage ratio
8,768
4,072
1,975
(160)
14,655
12,533
4,214
2,013
(127)
(213)
5,887
1,558
1,803
4,161
1,671
2,788
$ 3.09
$ 3.07
$ 3.57
$ 3.56
14,666
4,024
12,281
2,493
8,499
41,963
22,812
8,619
31,431
10,532
41,963
11,297
2,665
788
2,581
0.95%
$ 50.26
$132.58
54.9%
5%
1%
$ 2.00
64.8%
60.4%
3.7%
3.4
8,530
3,946
1,606
(166)
13,916
11,955
4,067
1,935
51
(196)
5,857
1,592
1,725
4,321
2,366
2,312
$ 3.15
$ 3.13
$ 3.42
$ 3.40
14,018
3,973
8,926
2,536
9,401
38,854
22,695
6,586
29,281
9,573
38,854
10,943
2,598
544
2,530
1.00%
$ 50.75
$130.70
55.3%
(8)%
(6)%
$ 2.00
63.4%
42.7%
4.1%
3.0
9,250
3,954
2,072
(203)
15,073
12,965
4,345
1,919
140
(192)
6,212
2,043
2,135
4,526
2,278
2,807
$ 3.99
$ 3.97
$ 4.17
$ 4.15
13,934
3,923
8,905
2,830
7,427
37,019
21,639
5,964
27,603
9,416
37,019
10,840
2,534
326
2,510
1.11%
$ 55.49
$131.71
56.1%
–%
4%
$ 2.00
50.0%
44.9%
5.5%
2.9
9,200
3,932
2,168
(204)
15,096
12,974
4,090
1,874
196
(177)
5,983
2,059
2,241
4,288
2,134
2,790
$ 4.00
$ 3.99
$ 4.35
$ 4.34
11,780
3,905
7,205
2,134
6,894
31,918
16,903
6,836
23,739
8,179
31,918
10,783
2,430
n/a
n/a
8,569
3,894
2,153
(247)
14,369
12,550
3,726
1,819
127
(170)
5,502
1,845
1,902
3,938
1,685
2,436
$ 3.58
$ 3.57
$ 3.69
$ 3.68
11,143
3,905
7,244
2,561
5,637
30,490
16,111
6,883
22,994
7,496
30,490
10,482
2,321
n/a
n/a
1.10%
$ 55.64
1.20%
$ 54.23
n/a
n/a
5%
9%
$ 1.92
48.0%
55.8%
6.5%
2.5
n/a
n/a
5%
9%
$ 1.92
53.6%
58.6%
6.1%
2.7
1 2018 and prior reported figures have not been restated applying IFRS 16.
2 2017 reported figures have been restated applying IFRS 15.
3 As defined. See “Key Performance Indicators”.
4 Effective October 1, 2019, and on a prospective basis, we reduced our Wireless postpaid subscriber base by 53,000 subscribers to remove a low-ARPU public services customer that was in the process of migrating
to another service provider. We believe adjusting our base for a customer of this size that migrates off our network provides a more meaningful reflection of the underlying organic performance of our Wireless
business. Effective April 1, 2019, we adjusted our Wireless prepaid subscriber base to remove 127,000 subscribers as a result of a change to our deactivation policy from 180 days to 90 days to be more consistent
within the industry.
Internet subscriber results include Smart Home Monitoring subscribers.
5
6 On September 30, 2020, we acquired approximately 2,000 Internet subscribers and customer relationships as a result of our acquisition of Ruralwave Inc., which are not included in net additions, but do appear in
the ending total balance for 2020. On October 1, 2020, we acquired approximately 5,000 Internet subscribers and 6,000 customer relationships as a result of our acquisition of Cable Cable Inc., which are not
included in net additions, but do appear in the ending total balance for December 31, 2020. 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 December 31, 2021.
Ignite TV subscribers, customer relationships, ARPA, and penetration have not been presented for periods prior to 2018. We commenced using the aforementioned measures as key performance indicators in the
first quarter of 2020. See “Key Performance Indicators”.
7
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Management’s Responsibility for Financial Reporting
December 31, 2021
The accompanying consolidated financial statements of Rogers
Communications Inc. and its subsidiaries and all the information in
Management’s Discussion and Analysis
the
responsibility of management and have been approved by the
Board of Directors.
(MD&A)
are
Management has prepared the consolidated financial statements
in accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board. The
consolidated financial statements include certain amounts that are
based on management’s best estimates and judgments and, in
their opinion, present fairly, in all material respects, Rogers
Communications Inc.’s financial position, results of operations, and
cash flows. Management has prepared the financial information
presented elsewhere in MD&A and has ensured that it is consistent
with the consolidated financial statements.
Management has developed and maintains a system of internal
controls that further enhances the integrity of the consolidated
financial statements. The system of internal controls is supported by
includes management
the
communication to employees about its policies on ethical business
conduct.
internal audit
function and
Management believes these internal controls provide reasonable
assurance that:
• transactions are properly authorized and recorded;
• financial records are reliable and form a proper basis for the
preparation of consolidated financial statements; and
• the assets of Rogers Communications Inc. and its subsidiaries are
properly accounted for and safeguarded.
The Board of Directors is responsible for overseeing management’s
responsibility for financial reporting and is ultimately responsible for
reviewing and approving the consolidated financial statements. The
Board of Directors carries out this responsibility through its Audit
and Risk Committee.
its responsibilities; and
The Audit and Risk Committee meets regularly with management,
as well as the internal and external auditors, to discuss internal
controls over the financial reporting process, auditing matters, and
financial reporting issues; to satisfy itself that each party is properly
discharging
the
consolidated financial statements, and the external auditors’ report.
The Audit and Risk Committee reports its findings to the Board of
Directors for its consideration when approving the consolidated
financial statements for issuance to the shareholders. The Audit and
Risk Committee also considers the engagement or re-appointment
of the external auditors before submitting its recommendation to
the Board of Directors for review and for shareholder approval.
to review MD&A,
The consolidated financial statements have been audited by KPMG
LLP, the external auditors, in accordance with the standards of the
Public Company Accounting Oversight Board (United States) on
behalf of the shareholders. Our internal control over financial
reporting as of December 31, 2021 has been audited by KPMG
LLP, in accordance with the standards of the Public Company
Accountability Oversight Board (United States). KPMG LLP has full
and free access to the Audit and Risk Committee.
March 3, 2022
Tony Staffieri
President and Chief Executive Officer
Glenn Brandt
Chief Financial Officer
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 87
CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
the Shareholders and Board of Directors of Rogers
To
Communications Inc.
income, changes
income, comprehensive
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of
financial position of Rogers Communications Inc. (the Company) as
of December 31, 2021 and 2020, the related consolidated
statements of
in
shareholders’ equity, and cash flows for each of the years in the
two-year period ended December 31, 2021, and the related notes
(collectively, the consolidated financial statements). In our opinion,
the consolidated financial statements present fairly, in all material
respects, the financial position of the Company as of December 31,
2021 and 2020, and its financial performance and its cash flows for
each of the years in the two-year period ended December 31,
2021,
International Financial Reporting
Standards as issued by the International Accounting Standards
Board.
in conformity with
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as
of December 31, 2021, based on criteria established in Internal
Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission, and our
report dated March 3, 2022 expressed an unqualified opinion on
the effectiveness of the Company’s internal control over financial
reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of
the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
to obtain
reasonable assurance about whether
We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the
the
audit
consolidated financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing
procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud,
and performing procedures that respond to those risks. Such
procedures
included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audits
provide a reasonable basis for our opinion.
88
| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
required
that was communicated or
Critical Audit Matter
The critical audit matter communicated below is a matter arising
from the current period audit of the consolidated financial
statements
to be
communicated to the Audit and Risk Committee and that:
(1) relates to accounts or disclosures that are material to the
consolidated financial statements and (2) involved our especially
challenging,
The
communication of critical audit matters does not alter in any way
our opinion on the consolidated financial statements, taken as a
whole, and we are not, by communicating the critical audit matter
below, providing a separate opinion on the critical audit matter or
on the accounts or disclosures to which it relates.
judgments.
subjective,
complex
or
judgments
Recoverability of the carrying value of goodwill in the Media
segment
As discussed in Note 9 to the consolidated financial statements, the
Company tests goodwill for impairment once per year as of
October 1, or more frequently if they identify indicators of
impairment. Goodwill is impaired if the recoverable amount of a
cash-generating unit (CGU) or group of cash-generating units
(CGUs) that contain goodwill is less than the carrying amount. The
in determining CGUs and the
Company makes
allocation of goodwill for the purpose of impairment testing.
Goodwill is monitored at an operating segment level in the Media
segment. The goodwill balance in the Media segment as of
December 31, 2021 was $969 million. A number of businesses
within the Company’s Media segment are partially reliant on
traditional advertising revenues, are subject to a highly competitive
environment and continue to have profitability challenges due to
declining advertising revenue growth rates and increasing costs of
the
producing and/or providing content. The estimate of
recoverable amount, which is determined based on the higher of
fair value less costs to sell and value in use, is based on significant
estimates developed by the Company relating to future cash flows,
the terminal growth rate, and the discount rate applied in its
valuation model.
We identified the assessment of the recoverability of the carrying
value of goodwill in the Media segment as a critical audit matter.
There was a high degree of auditor judgment applied in assessing
the level at which goodwill was tested and in evaluating the key
assumptions used in the valuation models, which included the
CGUs’ future cash flows, the discount rate and the terminal growth
rate.
The following are the primary procedures we performed to address
this critical audit matter. We evaluated the design and tested the
operating effectiveness of certain internal controls related to the
Company’s impairment testing process, including controls related
to the determination that goodwill should be tested at the Media
segment level and the key assumptions used in estimating the
recoverable amount of the Media segment. We compared the
Company’s historical cash flow forecasts to actual results achieved
industry data. We
to assess the Company’s ability to accurately forecast financial
results. We compared the cash flow forecasts used to estimate the
recoverable amount
to approved plans. We assessed the
assumptions used to determine the Media segment’s future cash
flows by comparing to underlying documentation and external
involved valuation
market and relevant
professionals with specialized skills and knowledge, who assisted in
evaluating the discount rate, by comparing the Company’s inputs
to the discount rate to publicly available data for comparable
entities, independently developing a range of reasonable discount
rates and comparing those to the Company’s rate, and the terminal
growth rate for the Media segment, by comparing to underlying
documentation and publicly available market data. We performed
sensitivity analyses over the Company’s key assumptions used to
determine the recoverable amount to assess the impact of changes
in those assumptions on the Company’s determination of the
recoverable amount.
Chartered Professional Accountants, Licensed Public Accountants
We have served as the Company’s auditor since 1969.
Toronto, Canada
March 3, 2022
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2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 89
CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
the Shareholders and Board of Directors of Rogers
To
Communications Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Rogers Communications Inc.’s internal control
over financial reporting as of December 31, 2021, based on criteria
established in Internal Control – Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the
Treadway Commission. In our opinion, Rogers Communications
Inc. (the Company) maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2021,
based on criteria established in Internal Control – Integrated
issued by the Committee of Sponsoring
Framework (2013)
Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated statements of financial position of the
Company as of December 31, 2021 and 2020, the related
consolidated statements of
income,
changes in shareholders’ equity, and cash flows for each of the
years in the two-year period ended December 31, 2021, and the
related notes (collectively, the consolidated financial statements),
and our report dated March 3, 2022 expressed an unqualified
opinion on those consolidated financial statements.
income, comprehensive
Basis for Opinion
is responsible for maintaining
The Company’s management
effective
internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial
reporting, included under the heading Management’s Report on
Internal Control over Financial Reporting contained within
Management’s Discussion and Analysis for the year ended
December 31, 2021. Our responsibility is to express an opinion on
the Company’s internal control over financial reporting based on
our audit. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all
material respects. Our audit of internal control over financial
reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our
audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial
Reporting
A company’s internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes
in accordance with generally accepted
accounting principles. A company’s internal control over financial
reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of
the company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are
being made only
in accordance with authorizations of
management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Chartered Professional Accountants, Licensed Public Accountants
Toronto, Canada
March 3, 2022
90
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Consolidated Statements of Income
(In millions of Canadian dollars, except per share amounts)
Years ended December 31
Revenue
Operating expenses:
Operating costs
Depreciation and amortization
Restructuring, acquisition and other
Finance costs
Other expense
Income before income tax expense
Income tax expense
Net income for the year
Earnings per share:
Basic
Diluted
The accompanying notes are an integral part of the consolidated financial statements.
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Note
2021
5
14,655
2020
13,916
6
7, 8, 9
10
11
12
13
14
14
8,768
2,585
324
849
2
2,127
569
1,558
8,059
2,618
185
881
1
2,172
580
1,592
$ 3.09
$ 3.07
$ 3.15
$ 3.13
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 91
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statements of Comprehensive Income
(In millions of Canadian dollars)
Years ended December 31
Net income for the year
Other comprehensive income (loss):
Items that will not be reclassified to net income:
Defined benefit pension plans:
Remeasurements
Related income tax (expense) recovery
Defined benefit pension plans
Equity investments measured at fair value through other comprehensive income (FVTOCI):
Increase (decrease) in fair value
Related income tax (expense) recovery
Equity investments measured at FVTOCI
Items that will not be reclassified to net income
Items that may subsequently be reclassified to net income:
Cash flow hedging derivative instruments:
Unrealized loss in fair value of derivative instruments
Reclassification to net income of loss on debt derivatives
Reclassification to net income or property, plant and equipment of loss (gain) on
expenditure derivatives
Reclassification to net income for accrued interest
Related income tax recovery
Cash flow hedging derivative instruments
Share of other comprehensive income (loss) of equity-accounted investments, net of tax
Items that may subsequently be reclassified to net income
Other comprehensive income (loss) for the year
Comprehensive income for the year
The accompanying notes are an integral part of the consolidated financial statements.
Note
2021
1,558
2020
1,592
23
18
592
(157)
435
10
(3)
7
442
(210)
50
100
(15)
42
(33)
2
(31)
411
1,969
(121)
32
(89)
(302)
40
(262)
(351)
(320)
286
(36)
(49)
50
(69)
(5)
(74)
(425)
1,167
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Consolidated Statements of Financial Position
(In millions of Canadian dollars)
Assets
Current assets:
Cash and cash equivalents
Accounts receivable
Inventories
Current portion of contract assets
Other current assets
Current portion of derivative instruments
Total current assets
Property, plant and equipment
Intangible assets
Investments
Derivative instruments
Financing receivables
Other long-term assets
Goodwill
Total assets
Liabilities and shareholders’ equity
Current liabilities:
Short-term borrowings
Accounts payable and accrued liabilities
Income tax payable
Other current liabilities
Contract liabilities
Current portion of long-term debt
Current portion of lease liabilities
Total current liabilities
Provisions
Long-term debt
Lease liabilities
Other long-term liabilities
Deferred tax liabilities
Total liabilities
Shareholders’ equity
Total liabilities and shareholders’ equity
Guarantees
Commitments and contingent liabilities
Subsequent events
The accompanying notes are an integral part of the consolidated financial statements.
On behalf of the Board of Directors:
Edward S. Rogers
Director
Robert J. Gemmell
Director
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S
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A
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M
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As at
December 31
As at
December 31
Note
2021
2020
715
3,847
535
115
497
120
5,829
14,666
12,281
2,493
1,431
854
385
4,024
41,963
2,200
3,416
115
607
394
1,551
336
8,619
50
17,137
1,621
565
3,439
31,431
10,532
41,963
2,484
2,856
479
533
516
61
6,929
14,018
8,926
2,536
1,378
748
346
3,973
38,854
1,221
2,714
344
243
336
1,450
278
6,586
42
16,751
1,557
1,149
3,196
29,281
9,573
38,854
15
16
5
17
7, 8
9
18
17
15
5
9
19
17, 20
5
21
8
20
21
8
22
13
24
27
28
17, 21, 24, 30
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 93
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statements of Changes in Shareholders’ Equity
(In millions of Canadian dollars, except number of shares)
Class A
Voting Shares
Class B
Non-Voting Shares
Year ended December 31, 2021
Amount
(000s) Amount
Number
of shares
Number
of shares
(000s)
Retained
earnings
FVTOCI
investment
reserve
Hedging
reserve
Equity
investment
reserve
Total
shareholders’
equity
Balances, January 1, 2021
Net income for the year
Other comprehensive income (loss):
Defined benefit pension plans, net of tax
FVTOCI investments, net of tax
Derivative instruments accounted for as
hedges, net of tax
Share of equity-accounted investments, net
of tax
Total other comprehensive income (loss)
Comprehensive income (loss) for the year
Reclassification to retained earnings for
disposition of FVTOCI investments
Transactions with shareholders recorded directly
in equity:
Dividends declared
Share class exchange
Total transactions with shareholders
71 111,154
397 393,771
7,916
999
194
(4)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(1)
(1)
—
—
—
—
—
—
—
—
—
—
—
—
—
7
—
—
7
7
—
1,558
435
—
—
—
435
1,993
—
—
—
—
—
—
—
—
1
1
13
(13)
(1,010)
—
(1,010)
—
—
—
—
—
—
(33)
—
(33)
(33)
—
—
—
—
—
—
—
—
2
2
2
—
—
—
—
9,573
1,558
435
7
(33)
2
411
1,969
—
(1,010)
—
(1,010)
Balances, December 31, 2021
71 111,153
397 393,772
8,912
993
161
(2)
10,532
Class A
Voting Shares
Class B
Non-Voting Shares
Year ended December 31, 2020
Amount
(000s) Amount
Number
of shares
Number
of shares
(000s)
Retained
earnings
FVTOCI
investment
reserve
Hedging
reserve
Equity
investment
reserve
Total
shareholders’
equity
Balances, January 1, 2020
Net income for the period
Other comprehensive (loss) income:
Defined benefit pension plans, net of tax
FVTOCI investments, net of tax
Derivative instruments accounted for as
hedges, net of tax
Share of equity-accounted investments, net
of tax
Total other comprehensive (loss) income
Comprehensive income (loss) for the year
Reclassification to retained earnings for
disposition of FVTOCI investments
Transactions with shareholders recorded directly
in equity:
Dividends declared
Total transactions with shareholders
71 111,154
397 393,771
7,419
1,265
263
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,592
—
—
—
—
—
—
—
—
—
—
(89)
—
—
(262)
—
—
—
—
(89)
1,503
(262)
(262)
4
(4)
(1,010)
(1,010)
—
—
—
—
—
(69)
—
(69)
(69)
—
—
—
Balances, December 31, 2020
71 111,154
397 393,771
7,916
999
194
1
—
—
—
—
(5)
(5)
(5)
—
—
—
(4)
9,416
1,592
(89)
(262)
(69)
(5)
(425)
1,167
—
(1,010)
(1,010)
9,573
The accompanying notes are an integral part of the consolidated financial statements.
94
| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
Consolidated Statements of Cash Flows
(In millions of Canadian dollars)
Years ended December 31
Operating activities:
Net income for the year
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization
Program rights amortization
Finance costs
Income tax expense
Post-employment benefits contributions, net of expense
Other
Cash provided by operating activities before changes in net operating assets and
liabilities, income taxes paid, and interest paid
Change in net operating assets and liabilities
Income taxes paid
Interest paid
Cash provided by operating activities
Investing activities:
Capital expenditures
Additions to program rights
Changes in non-cash working capital related to capital expenditures and intangible
assets
Acquisitions and other strategic transactions, net of cash acquired
Other
Cash used in investing activities
Financing activities:
Net proceeds received from (repayment of) short-term borrowings
Net issuance of long-term debt
Net (payments) proceeds on settlement of debt derivatives and forward contracts
Transaction costs incurred
Principal payments of lease liabilities
Dividends paid
Cash provided by financing activities
Change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
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Note
2021
2020
7, 8, 9
9
11
13
23
29
7, 29
9
9
19
21
17
21
8
24
1,558
2,585
68
849
569
(5)
2
5,626
37
(700)
(802)
4,161
(2,788)
(54)
67
(3,404)
46
(6,133)
971
550
(8)
(31)
(269)
(1,010)
203
(1,769)
2,484
715
1,592
2,618
77
881
580
13
119
5,880
(333)
(418)
(808)
4,321
(2,312)
(57)
(37)
(103)
(49)
(2,558)
(1,146)
2,540
80
(23)
(213)
(1,011)
227
1,990
494
2,484
Cash and cash equivalents are defined as cash and short-term deposits that have an original maturity of less than 90 days, less bank
advances.
The accompanying notes are an integral part of the consolidated financial statements.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 95
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes to Consolidated Financial Statements
We, us, our, Rogers, Rogers Communications, and the Company refer to Rogers Communications Inc. and its subsidiaries. RCI refers to the
legal entity Rogers Communications Inc., not including its subsidiaries. Rogers also holds interests in various investments and ventures.
Page
Note
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Significant Accounting Policies
Capital Risk Management
Segmented Information
Revenue
Note 1 Nature of the Business
Note 2
Note 3
Note 4
Note 5
Note 6 Operating Costs
Note 7
Note 8
Note 9
Note 10 Restructuring, Acquisition and Other
Note 11 Finance Costs
Note 12 Other Expense
Note 13
Note 14 Earnings Per Share
Note 15 Accounts Receivable
Inventories
Note 16
Property, Plant and Equipment
Leases
Intangible Assets and Goodwill
Income Taxes
Page
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136
137
139
140
141
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Note
Note 17 Financial Risk Management and
Financial Instruments
Note 18
Investments
Note 19 Short-Term Borrowings
Note 20 Provisions
Note 21 Long-Term Debt
Note 22 Other Long-Term Liabilities
Note 23 Post-Employment Benefits
Note 24 Shareholders’ Equity
Note 25 Stock-Based Compensation
Note 26 Related Party Transactions
Note 27 Guarantees
Note 28 Commitments and Contingent Liabilities
Note 29 Supplemental Cash Flow Information
Note 30 Shaw Transaction
NOTE 1: NATURE OF THE BUSINESS
Inc.
Rogers Communications
is a diversified Canadian
communications and media company. Substantially all of our
operations and sales are in Canada. RCI is incorporated in Canada
and its registered office is located at 333 Bloor Street East, Toronto,
Ontario, M4W 1G9. RCI’s shares are publicly traded on the Toronto
Stock Exchange (TSX: RCI.A and RCI.B) and on the New York Stock
Exchange (NYSE: RCI).
We report our results of operations in three reportable segments.
Each segment and the nature of its business is as follows:
Segment
Wireless
Cable
Media
Principal activities
Wireless telecommunications operations
for Canadian consumers and businesses.
Cable telecommunications operations,
including Internet, television, telephony
(phone), and smart home monitoring
services for Canadian consumers and
businesses, and 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 business, public sector,
and carrier wholesale markets.
A diversified portfolio of media properties,
including sports media and entertainment,
television and radio broadcasting,
specialty channels, multi-platform
shopping, and digital media.
During the year ended December 31, 2021, Wireless and Cable
were operated by our wholly owned subsidiary, Rogers
Communications Canada Inc. (RCCI), and certain other wholly
owned subsidiaries. Media was operated by our wholly owned
subsidiary, Rogers Media Inc., and its subsidiaries.
See note 4 for more information about our reportable operating
segments.
BUSINESS 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 reportable
segments. This means our results in one quarter are not necessarily
indicative 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, which are
described below. Fluctuations in net income from quarter to
quarter can also be attributed to losses on the repayment of debt,
other income and expenses, impairment of assets, restructuring,
acquisition and other costs, and changes in income tax expense.
The COVID-19 pandemic (COVID-19) significantly affected our
operating results in 2020 and 2021 in addition to the typical
seasonal fluctuations in our business that are described below. In
Wireless, the decline in customer travel due to global travel
restrictions resulted in lower-than-pre-pandemic roaming revenue. In
Media, major professional sports leagues postponed their 2019-20
seasons between March and July 2020 and recommenced with
contracted seasons from July to September 2020. The NBA and NHL
also postponed and condensed their 2020-21 seasons to late
December 2020 and early January 2021, respectively. These changes
caused sports-related revenue and expenses, such as programming
rights amortization, to be recognized at different points in time than
is typical. Furthermore, the effect of the Toronto Blue Jays being able
to allow limited game-day attendance this year and play a full season
compared to the stricter public health restrictions in the prior year
has resulted in increased revenue and operating expenses this year.
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| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
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Wireless
Wireless operating results are influenced by the timing of our
marketing and promotional expenditures and higher levels of
subscriber additions, resulting in higher subscriber acquisition- and
activation-related expenses, typically
in the third and fourth
quarters. The third and fourth quarters typically experience higher
volumes of activity as a result of “back to school” and holiday
season-related consumer behaviour. Aggressive promotional offers
are often advertised during these periods. In contrast, we typically
see lower subscriber-related activity in the first quarter of the year.
• revenue related to game day ticket sales, merchandise sales,
and advertising is concentrated when games are played, 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 (in the fourth quarter of the year); and
• programming and production costs and player payroll are
expensed based on the number of games aired or played, as
applicable; and
• the National Hockey League (NHL) season, where:
The launch of new products and services, including popular new
wireless device models, can also affect the level of subscriber
activity. Highly anticipated device launches typically occur in the
spring and fall seasons of each year. Wireless roaming revenue is
dependent on customer travel volumes and timing, and is also
impacted by foreign exchange rates and general economic
conditions.
Cable
Cable’s operating results are affected by modest seasonal
fluctuations, 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;
• the timing of service pricing changes; and
• the concentrated marketing we generally conduct in our fourth
quarter.
Cable results from our enterprise customers do not generally have
any unique seasonal aspects.
Media
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 Major League Baseball season, where:
• games played are concentrated in the spring, summer, and
fall months (generally the second and third quarters of the
year);
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
• 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 when games are played, with playoff games
commanding a premium in advertising revenue.
ESTIMATION UNCERTAINTY
Due to the uncertainty surrounding the duration and potential
outcomes of COVID-19, and the unpredictable and continuously
changing impacts and related government responses, there is
more uncertainty associated with our assumptions, expectations,
and estimates. We believe the most significantly affected estimates
are related to our expected credit losses and allowance for
doubtful accounts and as a
the year ended
December 31, 2020, we recognized an incremental $90 million in
allowance for doubtful accounts expense on our accounts
receivable, financing receivables, and contract assets based on
changing economic conditions.
result,
for
STATEMENT OF COMPLIANCE
We prepared our consolidated financial statements in accordance
with International Financial Reporting Standards (IFRS) as issued by
the International Accounting Standards Board (IASB). The Board of
Directors (the Board) authorized these consolidated financial
statements for issue on March 3, 2022.
(a) BASIS OF PRESENTATION
All amounts are in Canadian dollars unless otherwise noted. Our
functional currency is the Canadian dollar. We prepare the
consolidated financial statements on a historical cost basis, except
for:
• certain financial instruments as disclosed in note 17, which are
(b) BASIS OF CONSOLIDATION
Subsidiaries are entities we control. We include the financial
statements of our subsidiaries
in our consolidated financial
statements from the date we gain control of them until our control
ceases. We eliminate all intercompany transactions and balances
between our subsidiaries on consolidation.
measured at fair value;
• the net deferred pension
described in note 23; and
liability, which
is measured as
• liabilities for stock-based compensation, which are measured at
fair value as disclosed in note 25.
(c) FOREIGN CURRENCY TRANSLATION
We translate amounts denominated in foreign currencies into
Canadian dollars as follows:
• monetary assets and liabilities – at the exchange rate in effect as at
the date of the Consolidated Statements of Financial Position;
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 97
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
• non-monetary assets and liabilities, and related depreciation and
amortization – at the historical exchange rates; and
• revenue and expenses other than depreciation and amortization
– at the average rate for the month in which the transaction was
recognized.
(d) BUSINESS COMBINATIONS
We account for business combinations using the acquisition
method of accounting. Only acquisitions that result in our gaining
control over the acquired businesses are accounted for as business
combinations. We possess control over an entity when we
conclude we are exposed to variable returns from our involvement
with the acquired entity and we have the ability to affect those
returns through our power over the acquired entity.
We calculate the fair value of the consideration paid as the sum of
the fair value at the date of acquisition of the assets we transferred,
the equity interests we issued, and the liabilities we incurred to
former owners of the subsidiary.
We measure goodwill as the fair value of the consideration
transferred less the net recognized amount of the identifiable assets
acquired and liabilities assumed, which are generally measured at
fair value as of the acquisition date. When the excess is negative, a
gain on acquisition is recognized immediately in net income.
We expense the transaction costs associated with acquisitions as
we incur them.
During the year ended December 31, 2021, we made several individually
immaterial acquisitions and recognized $51 million of related goodwill,
$37 million of which has been allocated to our Cable operating segment
and $14 million of which has been allocated to our Media operating
segment. During the year ended December 31, 2020, we made several
individually immaterial acquisitions and recognized $50 million in related
goodwill, all of which was allocated to our Cable operating segment.
(e) GOVERNMENT GRANTS
We recognize government financial assistance when there is
reasonable assurance that we will comply with the conditions of the
assistance and the assistance will be received. Assistance related to
expenses is recognized as a reduction of the related expense;
assistance related to assets is recognized as a reduction to the
carrying amount of the asset. During the year ended December 31,
2020, we qualified for $91 million of funding associated with the
Canada Emergency Wage Subsidy (CEWS) program, a federal
government initiative offered to eligible employers who kept
individuals employed during COVID-19.
(f) NEW ACCOUNTING PRONOUNCEMENTS ADOPTED IN
2021
We adopted the following IFRS amendments in 2021. They did not
have a material effect on our consolidated financial statements.
• Interest Rate Benchmark Reform – Phase 2 (Amendments to
IFRS 9, IAS 39, and IFRS 7), addressing issues that might affect
financial reporting after the reform of an interest rate benchmark.
There is significant uncertainty over the timing of when the
replacements for IBORs will be effective and what those
replacements will be. We will actively monitor the IBOR reform
and consider circumstances as we renew or enter into new
financial instruments.
• Amendments to IFRS 16, Leases, allowing lessees to not assess
lease
whether a COVID-19-related rent concession
modification.
is a
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| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
(g) RECENT ACCOUNTING PRONOUNCEMENTS NOT YET
ADOPTED
The IASB has issued the following new standard and amendments
that will become effective in a future year and could have an impact
on our consolidated financial statements in future periods:
• IFRS 17, Insurance Contracts, a replacement of IFRS 4, Insurance
Contracts, that aims to provide consistency in the application of
accounting for insurance contracts (January 1, 2023).
• Amendments to IFRS 3, Business Combinations – Updating a
Reference to the Conceptual Framework, updating a reference in
IFRS 3 to now refer to the Conceptual Framework (January 1,
2022).
• Amendments to IAS 16, Property, Plant and Equipment:
Proceeds before intended use, prohibiting reducing the cost of
property, plant and equipment by proceeds while bringing an
asset to capable operations (January 1, 2022).
• Amendments to IAS 37, Provisions, Contingent Liabilities and
Contingent Assets – Onerous Contracts, specifying costs an entity
should include in determining the “cost of fulfilling” a potential
onerous contract (January 1, 2022).
• Amendments to IAS 1, Presentation of Financial Statements –
Classification of Liabilities as Current or Non-current, clarifying the
classification requirements in the standard for liabilities as current
or non-current (January 1, 2023).
• Amendments to IAS 1, Presentation of Financial Statements –
Disclosure of Accounting Policies, requiring entities to disclose
material, instead of significant, accounting policy information
(January 1, 2023).
• Amendments to IAS 8, Accounting Policies – Changes in
Accounting Estimates and Errors, clarifying the definition of
“accounting policies” and “accounting estimates” (January 1,
2023).
• Amendments to IAS 12, Income Taxes – Deferred Tax related to
Assets and Liabilities arising from a Single Transaction, narrowing
the scope for exemption when recognizing deferred taxes
(January 1, 2023).
IFRS 17,
Insurance Contracts, or
the
We do not expect
amendments effective January 1, 2022, will have an effect on our
consolidated financial statements. We are assessing the impacts, if
any, the remaining amendments will have on our consolidated
financial statements; however we currently do not expect any
material impacts.
financial
consolidated
(h) ADDITIONAL SIGNIFICANT ACCOUNTING POLICIES,
ESTIMATES, AND JUDGMENTS
statements,
When preparing our
management makes judgments, estimates, and assumptions that
affect how accounting policies are applied and the amounts we
report as assets, liabilities, revenue, and expenses. Our significant
accounting policies, estimates, and judgments are identified in this
note or disclosed throughout the notes as identified in the table
below, including:
• information about assumptions and estimation uncertainties that
have a significant risk of resulting in a material adjustment to the
amounts recognized in the consolidated financial statements;
• information about judgments made in applying accounting
policies that have the most significant effect on the amounts
recognized in the consolidated financial statements; and
• information on our significant accounting policies.
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Page Accounting Policy Use of Estimates Use of Judgments
4
5
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8
9
10
13
14
15
16
17
18
20
23
25
28
Reportable Segments
Revenue Recognition
Property, Plant and Equipment
Leases
Intangible Assets and Goodwill
Restructuring, Acquisition and Other
Income Taxes
Earnings Per Share
Accounts Receivable
Inventories
Financial Instruments
Investments
Provisions
Post-Employment Benefits
Stock-Based Compensation
Commitments and Contingent Liabilities
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NOTE 3: CAPITAL RISK MANAGEMENT
Our objectives in managing capital are to ensure we have sufficient
available liquidity to meet all of our commitments and to execute
our business plan. We define capital that we manage as
shareholders’ equity, indebtedness (including the current portion
of our long-term debt, long-term debt, short-term borrowings, the
current portion of our lease liabilities, and lease liabilities), cash and
cash equivalents, and derivative instruments.
We manage our capital structure, commitments, and maturities
and make adjustments based on general economic conditions,
financial markets, operating risks, our investment priorities, and
working capital requirements. To maintain or adjust our capital
structure, we may, with approval from the Board as necessary, issue
or repay debt and/or short-term borrowings, issue or repurchase
shares, pay dividends, or undertake other activities as deemed
appropriate under the circumstances. The Board reviews and
approves the annual capital and operating budgets, as well as any
material transactions that are not part of the ordinary course of
business, including proposals for acquisitions or other major
financing transactions, investments, or divestitures.
The wholly owned subsidiary through which our credit card
programs are operated
is regulated by the Office of the
Superintendent of Financial Institutions, which requires that a
minimum level of regulatory capital be maintained. Rogers’
subsidiary was
in compliance with that requirement as at
December 31, 2021 and 2020. The capital requirements are not
the Company as at December 31, 2021 or
to
material
December 31, 2020.
With the exception of our credit card programs and the subsidiary
through which they are operated, we are not subject to externally
imposed capital requirements.
KEY METRICS AND RATIOS
We monitor adjusted net debt, debt leverage ratio, free cash flow,
and available liquidity to manage our capital structure and related
risks. These are not standardized financial measures under IFRS and
might not be comparable to similar capital management measures
disclosed by other companies. A summary of our key metrics and
ratios follows, along with a reconciliation between each of these
measures and the items presented in the consolidated financial
statements.
Adjusted net debt and debt leverage ratio
We monitor adjusted net debt and debt leverage ratio as part of
the management of liquidity to sustain future development of our
business, conduct valuation-related analyses, and make decisions
about capital. In so doing, we typically aim to have an adjusted net
debt and debt leverage ratio that allow us to maintain investment-
grade credit ratings, which allows us strong access to capital
markets. Our debt leverage ratio can increase due to strategic,
long-term investments (for example, to obtain new spectrum
licences or to consummate an acquisition) and we work to lower
the ratio over time. As at December 31, 2021 and 2020, we met
our objectives for these metrics.
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 (collectively, Shaw Shares) for a price of $40.50
per share (Transaction). The Transaction is valued at approximately
$26 billion, including the assumption of approximately $6 billion of
Shaw debt. See note 30 for more
information about the
Transaction.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 99
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We expect to raise up to $19 billion in new debt to finance the
Transaction. To address this risk and requirement, we entered into a
binding commitment letter for a committed credit facility with a
syndicate of banks in an amount up to $19 billion (see note 19) in
March 2021 and a $6 billion term loan facility (Shaw term loan
facility, see note 21) in April 2021, as a result of which, the
maximum amount we can draw on this committed credit facility
decreased to $13 billion. We anticipate adjusted net debt will
increase correspondingly with any debt issued or drawn and our
debt leverage ratio will increase significantly in the short-
to
medium-term.
Free cash flow
We use free cash flow to understand how much cash we generate
that is available to repay debt or reinvest in our business, which is
an important indicator of our financial strength and performance.
(In millions of dollars)
Adjusted EBITDA
Deduct (add):
Capital expenditures 1
Interest on borrowings, net of
Note
4
7
11
Years ended December 31
2021
5,887
2020
5,857
2,788
2,312
728
700
761
418
1,671
2,366
As at
December 31
As at
December 31
capitalized interest
Cash income taxes 2
2020
Free cash flow
2021
1,551
17,137
1,450
16,751
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.
185
172
2 Cash income taxes are net of refunds received.
(In millions of dollars)
Note
Cash provided by operating activities
Add (deduct):
Capital expenditures
Interest on borrowings, net of
capitalized interest
Interest paid
Restructuring, acquisition and other
Program rights amortization
Change in net operating assets and
liabilities
Other adjustments 1
Years ended December 31
2021
4,161
2020
4,321
7
(2,788)
(2,312)
11
10
9
29
12, 23
(728)
802
324
(68)
(37)
5
(761)
808
185
(77)
333
(131)
Free cash flow
1,671
2,366
1 Other adjustments consists of post-employment benefit contributions, net of
expense, cash flows relating to other operating activities, and other expense from our
financial statements.
Available liquidity
Available liquidity fluctuates based on business circumstances. We
continually manage, and aim to have sufficient, available liquidity at
all times to help protect our ability to meet all of our commitments
(operationally and for maturing debt obligations), to execute our
business plan
licences or
consummate acquisitions), to mitigate the risk of economic
downturns, and
for other unforeseen circumstances. As at
December 31, 2021 and 2020, we had sufficient liquidity available
to us to meet this objective.
to acquire spectrum
(including
(In millions of dollars)
Current portion of long-term debt
Long-term debt
Deferred transaction costs and
discounts
Note
21
21
21
Add (deduct):
Subordinated notes adjustment 1
Net debt derivative assets 2
Credit risk adjustment related to
net debt derivative assets 3
Short-term borrowings
Current portion of lease liabilities
Lease liabilities
Cash and cash equivalents
19
8
8
18,873
18,373
(1,000)
(1,260)
(18)
2,200
336
1,621
(715)
–
(1,086)
(15)
1,221
278
1,557
(2,484)
Adjusted net debt
20,037
17,844
As at
December 31
As at
December 31
(In millions of dollars, except ratios)
Note
2021
2020
Adjusted net debt
Divided by: trailing 12-month
adjusted EBITDA
Debt leverage ratio
20,037
17,844
4
5,887
3.4
5,857
3.0
1 For the purposes of calculating adjusted net debt, we believe adjusting 50% of the
value of our subordinated notes is appropriate as this methodology factors in certain
circumstances with respect to priority for payment and this approach is commonly
used to evaluate debt leverage by rating agencies.
2 Net debt derivative assets consists of the net fair value of our debt derivatives on
issued debt accounted for as hedges.
3 For accounting purposes in accordance with IFRS, we recognize the fair values of our
debt derivatives using an estimated credit-adjusted mark-to-market valuation by
discounting cash flows to the measurement date. For purposes of calculating
adjusted net debt, we believe including debt derivatives valued without adjustment
for credit risk is commonly used to evaluate debt leverage and for market valuation
and transactional purposes.
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Below is a summary of our total available liquidity from our cash and cash equivalents, bank credit facilities, letters of credit facilities, and
short-term borrowings, including our receivables securitization program and our US dollar-denominated commercial paper (US CP)
program.
As at December 31, 2021
(In millions of dollars)
Cash and cash equivalents
Bank credit facilities 2:
Revolving
Non-revolving
Outstanding letters of credit
Receivables securitization 2
Total
Note Total sources Drawn Letters of credit US CP program 1 Net available
21
19
21
19
715
–
4,000
507
72
1,200
–
507
–
800
6,494
1,307
–
8
–
72
–
80
–
894
–
–
–
894
715
3,098
–
–
400
4,213
1 The US CP program amounts are gross of the discount on issuance.
2 The total liquidity sources under our bank credit facilities and receivables securitization represents the total credit limits per the relevant agreements. The amount drawn and letters
of credit are currently outstanding under those agreements. The US CP program amount represents our currently outstanding US CP borrowings that are backstopped by our
revolving credit facility.
As at December 31, 2020
(In millions of dollars)
Cash and cash equivalents
Bank credit facilities 2:
Revolving
Outstanding letters of credit
Receivables securitization 2
Total
Note Total sources Drawn Letters of credit US CP program 1 Net available
21
21
19
2,484
–
3,200
101
1,200
6,985
–
–
650
650
–
8
101
–
109
–
2,484
573
–
–
573
2,619
–
550
5,653
1 The US CP program amounts are gross of the discount on issuance.
2 The total liquidity sources under our bank credit facilities and receivables securitization represents the total credit limits per the relevant agreements. The amount drawn and letters
of credit are currently outstanding under those agreements. The US CP program amount represents our currently outstanding US CP borrowings that are backstopped by our
revolving credit facility.
Subsequent to the final payment for the 3500 MHz spectrum
licence acquisition in December 2021 (see note 9), we cancelled
$360 million of letters of credit and US$1.2 billion of non-revolving
credit facilities, which reduced total liquidity sources to $6.5 billion
as at December 31, 2021.
NOTE 4: SEGMENTED INFORMATION
ACCOUNTING POLICY
Reportable segments
We determine our reportable segments based on, among other
things, how our chief operating decision maker, the Chief Executive
Officer and Chief Financial Officer of RCI, regularly review our
operations and performance. They review adjusted EBITDA as the
key measure of profit for the purpose of assessing performance of
each segment and to make decisions about the allocation of
resources, as they believe adjusted EBITDA reflects segment and
consolidated profitability. Adjusted EBITDA is defined as income
before depreciation and amortization; (gain) loss on disposition of
property, plant and equipment; restructuring, acquisition and other;
finance costs; other expense (income); and income tax expense.
We follow the same accounting policies for our segments as those
described in the notes to our consolidated financial statements.
We account for transactions between reportable segments in the
same way we account for transactions with external parties, but
eliminate them on consolidation.
JUDGMENTS
We make significant judgments in determining our operating
segments. These are components that engage in business activities
from which they may earn revenue and incur expenses, for which
operating results are regularly reviewed by our chief operating
decision maker to make decisions about resources to be allocated
and assess component performance, and for which discrete
financial information is available.
REPORTABLE SEGMENTS
Our reportable segments are Wireless, Cable, and Media (see note
1). All three segments operate substantially in Canada. Corporate
items and eliminations include our interests in businesses that are
not reportable operating segments, corporate administrative
functions, and eliminations of inter-segment revenue and costs.
Segment results include items directly attributable to a segment as
well as those that can be allocated on a reasonable basis.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 101
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INFORMATION BY SEGMENT
Year ended December 31, 2021
(In millions of dollars)
Revenue
Operating costs
Adjusted EBITDA
Depreciation and amortization
Restructuring, acquisition and other
Finance costs
Other expense
Income before income tax expense
Capital expenditures
Goodwill
Total assets
Year ended December 31, 2020
(In millions of dollars)
Revenue
Operating costs
Adjusted EBITDA
Depreciation and amortization
Restructuring, acquisition and other
Finance costs
Other expense
Income before income tax expense
Capital expenditures
Goodwill
Total assets
NOTE 5: REVENUE
ACCOUNTING POLICY
Contracts with customers
We record revenue from contracts with customers in accordance
with the five steps in IFRS 15, Revenue from contracts with
customers as follows:
identify the contract with a customer;
identify the performance obligations in the contract;
1.
2.
3. determine the transaction price, which
consideration provided by the customer;
is the total
4. allocate the transaction price among the performance
obligations in the contract based on their relative fair
values; and
recognize revenue when the relevant criteria are met for
each performance obligation.
5.
Many of our products and services are sold
in bundled
arrangements (e.g. wireless devices and voice and data services).
Items in these arrangements are accounted for as separate
performance obligations if the item meets the definition of a
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| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
Note Wireless Cable Media
Corporate
items and
eliminations
Consolidated
totals
5
6
8,768 4,072
4,554 2,059
1,975
2,102
4,214 2,013
(127)
(160)
53
(213)
7, 8, 9
10
11
12
7
9
1,515
913
1,160 1,895
25,247 7,887
115
969
2,665
245
—
6,164
14,655
8,768
5,887
2,585
324
849
2
2,127
2,788
4,024
41,963
Note Wireless Cable Media
Corporate
items and
eliminations
Consolidated
totals
5
6
8,530 3,946
4,463 2,011
1,606
1,555
4,067 1,935
51
(166)
30
(196)
7, 8, 9
10
11
12
7
9
1,100
940
1,160 1,858
20,639 7,877
79
955
2,569
193
—
7,769
13,916
8,059
5,857
2,618
185
881
1
2,172
2,312
3,973
38,854
distinct good or service. We also determine whether a customer
can modify their contract within predefined terms such that we are
not able to enforce the transaction price agreed to, but can only
contractually enforce a lower amount. In situations such as these,
we allocate revenue between performance obligations using the
minimum enforceable rights and obligations and any excess
amount is recognized as revenue as it is earned.
Revenue for each performance obligation is recognized either over
time (e.g. services) or at a point in time (e.g. equipment). For
performance obligations satisfied over time, revenue is recognized
as the services are provided. These services are typically provided,
and thus revenue is typically recognized, on a monthly basis.
Revenue for performance obligations satisfied at a point in time is
recognized when control of the item (or service) transfers to the
customer. Typically, this is when the customer activates the goods
(e.g. in the case of a wireless device) or has physical possession of
the goods (e.g. other equipment).
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The table below summarizes the nature of the various performance obligations in our contracts with customers and when we recognize
performance on those obligations.
Performance obligations from contracts with customers
Timing of satisfaction of the performance obligation
Wireless airtime, data, and other services; television, telephony,
Internet, and smart home monitoring services; network services;
media subscriptions; and rental of equipment
As the service is provided (usually monthly)
Roaming, long-distance, and other optional or non-subscription
services, and pay-per-use services
As the service is provided
Wireless devices and related equipment
Upon activation or purchase by the end customer
Installation services for Cable subscribers
When the services are performed
Advertising
When the advertising airs on our radio or television stations or is
displayed on our digital properties
Subscriptions by television stations for subscriptions from cable
and satellite providers
When the services are delivered to cable and satellite providers’
subscribers (usually monthly)
Toronto Blue Jays’ home game admission and concessions
Toronto Blue Jays revenue from the Major League Baseball
Revenue Sharing Agreement, which redistributes funds between
member clubs based on each club’s relative revenue, and other
league revenue sharing
When the related games are played during the baseball season
and when goods are sold
In the applicable period, when the amount is determinable
Today’s Shopping Choice and Toronto Blue Jays merchandise
When the goods are sold to the end customer
Radio and television broadcast agreements
When the related programs are aired
Sublicensing of program rights
Over the course of the applicable licence period
We also recognize interest revenue on credit card receivables using
the effective interest method in accordance with IFRS 9, Financial
Instruments.
Payment for Wireless and Cable monthly service fees is typically
due 30 days after billing. Payment for Wireless and Cable
equipment is typically due either upon receipt of the equipment or
over the subsequent 24 months (when equipment is financed
through our equipment financing plans). Payment terms for typical
Media performance obligations range from
immediate (e.g.
Toronto Blue Jays tickets) to 30 days (e.g. advertising contracts).
Contract assets and liabilities
We record a contract asset when we have provided goods and
services to our customer but our right to related consideration for
the performance obligation is conditional on satisfying other
performance obligations. Contract assets primarily relate to our
rights to consideration for the transfer of wireless devices. Our long
term contract assets are grouped into “other long-term assets” on
our Consolidated Statements of Financial Position.
We record a contract liability when we receive payment from a
customer in advance of providing goods and services. This includes
subscriber deposits, deposits related to Toronto Blue Jays ticket
sales, and amounts subscribers pay for services and subscriptions
that will be provided in future periods. Our long-term contract
liabilities are grouped into “other long-term liabilities” on our
Consolidated Statements of Financial Position.
A portion of our contract liabilities relates to discounts provided to
customers on our device financing contracts (see note 15). Due to
the allocation of the transaction price to the performance
obligations, the financing receivable we recognize is greater than
the related equipment revenue. As a result, we recognize a
contract liability simultaneously with the financing receivable and
equipment revenue and subsequently reduce the contract liability
on a monthly basis.
for contract assets and
We account
liabilities on a
contract-by-contract basis, with each contract presented as either a
net contract asset or a net contract liability accordingly.
Deferred commission cost assets
We defer, to the extent recoverable, the incremental costs we incur
to obtain or fulfill a contract with a customer and amortize them
over their expected period of benefit. These costs include certain
commissions paid to internal and external representatives that we
believe to be recoverable through the revenue earned from the
related contracts. We therefore defer them as deferred commission
cost assets in other assets and amortize them to operating costs
over the pattern of the transfer of goods and services to the
customer, which is typically evenly over 24 consecutive months.
ESTIMATES
We use estimates in the following key areas:
• determining the transaction price of our contracts requires
estimating the amount of revenue we expect to be entitled to for
delivering the performance obligations within a contract; and
• determining the stand-alone selling price of performance
obligations and the allocation of the transaction price between
performance obligations.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 103
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Determining the transaction price
The transaction price is the amount of consideration that is
enforceable and to which we expect to be entitled in exchange for
the goods and services we have promised to our customer. We
determine the transaction price by considering the terms of the
contract and business practices that are customary within that
particular line of business. Discounts, rebates, refunds, credits, price
concessions, incentives, penalties, and other similar items are
reflected in the transaction price at contract inception.
Determining the stand-alone selling price and the allocation of the
transaction price
The transaction price is allocated to performance obligations based
on the relative stand-alone selling prices of the distinct goods or
services in the contract. The best evidence of a stand-alone selling
price is the observable price of a good or service when the entity
sells that good or service separately in similar circumstances and to
similar customers. If a stand-alone selling price is not directly
observable, we estimate the stand-alone selling price taking into
account reasonably available information relating to the market
conditions, entity-specific factors, and the class of customer.
In determining the stand-alone selling price, we allocate revenue
between performance obligations based on expected minimum
enforceable amounts to which Rogers is entitled. Any amounts
above the minimum enforceable amounts are recognized as
revenue as they are earned.
JUDGMENTS
We make significant judgments in determining whether a promise
to deliver goods or services is considered distinct, in determining
the costs that are incremental to obtaining or fulfilling a contract
with a customer, and in determining whether our residual value
arrangements constitute revenue-generating arrangements or
leases.
Distinct goods and services
We make judgments in determining whether a promise to deliver
goods or services is considered distinct. We account for individual
products and services separately if they are distinct (i.e. if a product
or service is separately identifiable from other items in the bundled
package and if the customer can benefit from it). The consideration
is allocated between separate products and services in a bundle
based on their stand-alone selling prices. For items we do not sell
separately, we estimate stand-alone selling prices using the
adjusted market assessment approach.
Determining costs to obtain or fulfill a contract
Determining the costs we incur to obtain or fulfill a contract that
meet the deferral criteria within IFRS 15 requires us to make
significant judgments. We expect incremental commission fees
paid to internal and external representatives as a result of obtaining
contracts with customers to be recoverable.
the devices that passes to our customer, including whether the
customer has a significant economic incentive at contract inception
to return the device at contract termination.
CONTRACT ASSETS
Below is a summary of our contract assets from contracts with
customers and the significant changes in those balances during the
years ended December 31, 2021 and 2020.
(In millions of dollars)
Balance, beginning of year
Additions from new contracts with
customers, net of terminations and
renewals
Amortization of contract assets to
accounts receivable
Balance, end of year
Current
Long-term
Balance, end of year
Years ended December 31
2021
621
2020
1,791
121
104
(538)
(1,274)
204
115
89
204
621
533
88
621
CONTRACT LIABILITIES
Below is a summary of our contract liabilities from contracts with
customers and the significant changes in those balances during the
years ended December 31, 2021 and 2020.
(In millions of dollars)
Balance, beginning of year
Revenue deferred in previous year
and recognized as revenue in
current year
Net additions from contracts with
customers
Balance, end of year
Current
Long-term
Balance, end of year
Years ended December 31
2021
405
2020
224
(393)
(184)
434
446
394
52
446
365
405
336
69
405
Residual value arrangements
Under certain customer offers, we allow customers to defer a
component of the device cost until contract termination. We use
judgment in determining whether these arrangements constitute
revenue-generating arrangements or
this
determination, we use judgment to assess the extent of control over
In making
leases.
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DEFERRED COMMISSION COST ASSETS
Below is a summary of the changes in the deferred commission
cost assets recognized from the incremental costs incurred to
obtain contracts with customers during
the years ended
December 31, 2021 and 2020. The deferred commission cost
assets are presented within other current assets (when they will be
amortized into net income within twelve months of the date of the
financial statements) or other long-term assets.
We have elected to utilize the following practical expedients and
not disclose:
• the unsatisfied portions of performance obligations related to
contracts with a duration of one year or less; or
• the unsatisfied portions of performance obligations where the
revenue we recognize corresponds with the amount invoiced to
the customer.
DISAGGREGATION OF REVENUE
(In millions of dollars)
2021
2020
Years ended December 31
Wireless
Service revenue
Equipment revenue
Total Wireless
Cable
Service revenue
Equipment revenue
Total Cable
Total Media
Corporate items and intercompany
eliminations
Total revenue
Total service revenue
Total equipment revenue
Total revenue
6,666
2,102
8,768
4,052
20
4,072
1,975
6,579
1,951
8,530
3,936
10
3,946
1,606
(160)
(166)
14,655
13,916
12,533
2,122
11,955
1,961
14,655
13,916
(In millions of dollars)
Balance, beginning of year
Additions to deferred commission
cost assets
Amortization recognized on
Years ended December 31
2021
262
315
2020
305
248
deferred commission cost assets
(265)
(291)
Balance, end of year
Current
Long-term
Balance, end of year
312
219
93
312
262
194
68
262
UNSATISFIED PORTIONS OF PERFORMANCE OBLIGATIONS
The table below shows the revenue we expect to recognize in the
future related to unsatisfied or partially satisfied performance
obligations as at December 31, 2021. The unsatisfied portion of the
transaction price of the performance obligations relates to monthly
services; we expect to recognize it over the next three to five years.
(In millions of dollars)
2022 2023 2024 Thereafter Total
Telecommunications
service
2,045
795
218
181 3,239
NOTE 6: OPERATING COSTS
(In millions of dollars)
Cost of equipment sales
Merchandise for resale
Other external purchases
Employee salaries, benefits, and
stock-based compensation 1
Total operating costs
1 Net of government grants received (see note 2).
Years ended December 31
2021
2,161
271
4,155
2,181
8,768
2020
1,946
261
4,005
1,847
8,059
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 105
We capitalize development expenditures if they meet the criteria
for recognition as an asset and amortize them over their expected
useful lives once the assets to which they relate are available for use.
We expense research expenditures, maintenance costs, and
training costs as incurred.
Impairment testing, including recognition and measurement of an
impairment charge
See “Impairment Testing” in note 9 for our policies relating to
impairment testing and the related recognition and measurement
of impairment charges. The impairment policies for property, plant
and equipment are similar to the impairment policies for intangible
assets with finite useful lives.
ESTIMATES
Components of an item of property, plant and equipment may
have different useful lives. We make significant estimates when
determining depreciation rates and asset useful lives, which require
taking into account company-specific factors, such as our past
experience and expected use, and industry trends, such as
technological advancements. We monitor and review residual
values, depreciation rates, and asset useful lives at least once a year
and change them if they are different from our previous estimates.
We recognize the effect of changes in estimates in net income
prospectively.
We use estimates to determine certain costs that are directly
attributable to self-constructed assets. These estimates primarily
include certain internal and external direct labour, overhead, and
interest costs associated with
the acquisition, construction,
development, or betterment of our networks.
Furthermore, we use estimates in determining the recoverable
amount of property, plant and equipment. See “Estimates” in
note 9 for how we use estimates to determine the recoverable
amount of property, plant and equipment.
judgments
JUDGMENTS
We make significant
for
depreciating our property, plant and equipment that we believe
most accurately represent the consumption of benefits derived
from those assets and are most representative of the economic
substance of the intended use of the underlying assets.
in choosing methods
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7: PROPERTY, PLANT AND EQUIPMENT
ACCOUNTING POLICY
The following accounting policy applies to property, plant and
equipment excluding right-of-use assets recognized under IFRS 16.
Our accounting policy for right-of-use assets is included in note 8.
Recognition and measurement, including depreciation
We measure property, plant and equipment upon
initial
recognition at cost and begin recognizing depreciation when the
asset is ready for its intended use. Subsequently, property, plant
and equipment is carried at cost less accumulated depreciation
and accumulated impairment losses.
Cost includes expenditures (capital expenditures) that are directly
attributable to the acquisition of the asset. The cost of self-
constructed assets includes:
• the cost of materials and direct labour;
• costs directly associated with bringing the assets to a working
condition for their intended use;
• expected costs of decommissioning the items and restoring the
sites on which they are located (see note 20); and
• borrowing costs on qualifying assets.
We depreciate property, plant and equipment over its estimated
useful life by charging depreciation expense to net income as
follows:
Asset
Basis
Estimated
useful life
Buildings
Cable and wireless network
Computer equipment and
software
Customer premise equipment Straight-line
Straight-line
Leasehold improvements
Diminishing balance 15 to 40 years
Straight-line
Straight-line
3 to 40 years
4 to 10 years
3 to 6 years
Over shorter of
estimated useful
life or lease term
Equipment and vehicles
Diminishing balance 3 to 20 years
We calculate gains and losses on the disposal of property, plant
and equipment by comparing the proceeds from the disposal with
the item’s carrying amount and recognize the gain or loss in net
income.
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DETAILS OF PROPERTY, PLANT AND EQUIPMENT
The tables below summarize our property, plant and equipment as at December 31, 2021 and 2020.
(In millions of dollars)
Cost
As at January 1, 2021
Additions and transfers
Acquisitions from business
combinations
Disposals and other
Land and
buildings
Cable and
wireless
networks
Computer
equipment
and software
Customer
premise
equipment
Leasehold
improvements
Equipment
and vehicles
Construction
in process
Total
owned
assets
Right-of-
use assets
(note 8)
Total
property,
plant and
equipment
1,210
29
21,913
1,167
6,078
849
1,954
142
618
62
1,230
57
848 33,851
482 2,788
2,248
380
36,099
3,168
2
–
29
(802)
1
(321)
6
(147)
–
–
3
(37)
–
41
– (1,307)
–
(2)
41
(1,309)
As at December 31, 2021
1,241 22,307
6,607
1,955
680
1,253
1,330 35,373
2,626
37,999
Accumulated depreciation
As at January 1, 2021
Depreciation
Disposals and other
496
35
–
14,268
1,170
(796)
4,253
751
(322)
1,515
245
(156)
As at December 31, 2021
531 14,642
4,682
1,604
Net carrying amount
As at January 1, 2021
As at December 31, 2021
714
710
7,645
7,665
1,825
1,925
439
351
313
41
(1)
353
305
327
839
80
(39)
880
391
373
– 21,684
– 2,322
– (1,314)
397
246
(2)
22,081
2,568
(1,316)
– 22,692
641
23,333
848 12,167
1,330 12,681
1,851
1,985
14,018
14,666
(In millions of dollars)
Cost
As at January 1, 2020
Additions and transfers
Acquisitions from business
combinations
Disposals and other
Land and
buildings
Cable and
wireless
networks
Computer
equipment
and software
Customer
premise
equipment
Leasehold
improvements
Equipment
and vehicles
Construction
in process
Total
owned
assets
Right-of-
use assets
(note 8)
Total
property,
plant and
equipment
1,179
31
20,804
1,863
5,653
620
1,939
168
587
34
1,184
68
1,320 32,666
(472) 2,312
1,911
337
34,577
2,649
–
–
4
(758)
37
(232)
–
(153)
1
(4)
1
(23)
–
43
– (1,170)
–
–
43
(1,170)
As at December 31, 2020
1,210
21,913
6,078
1,954
618
1,230
848 33,851
2,248
36,099
Accumulated depreciation
As at January 1, 2020
Depreciation
Disposals and other
461
37
(2)
13,814
1,196
(742)
3,749
747
(243)
1,387
288
(160)
As at December 31, 2020
496
14,268
4,253
1,515
Net carrying amount
As at January 1, 2020
As at December 31, 2020
718
714
6,990
7,645
1,904
1,825
552
439
281
36
(4)
313
306
305
776
86
(23)
839
408
391
– 20,468
– 2,390
– (1,174)
175
217
5
20,643
2,607
(1,169)
– 21,684
397
22,081
1,320 12,198
848 12,167
1,736
1,851
13,934
14,018
During 2021, we recognized capitalized interest on property, plant
and equipment at a weighted average rate of approximately 3.4%
(2020 – 3.7%).
Annually, we perform an analysis to identify fully depreciated assets
that have been disposed of. In 2021, this resulted in an adjustment
to cost and accumulated depreciation of $1,157 million (2020 –
$978 million). The disposals had nil impact on the Consolidated
Statements of Income.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 107
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8: LEASES
ACCOUNTING POLICY
At inception of a contract, we assess whether that contract is, or
contains, a lease. A contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset for a
period of time in exchange for consideration. To assess whether a
contract conveys the right to control the use of an identified asset,
we assess whether:
• the contract involves the use of an identified asset;
• we have the right to obtain substantially all of the economic
benefits from use of the identified asset throughout the period
of use; and
• we have the right to direct the use of the asset.
The lease liability is remeasured when there is a change in future
lease payments arising from a change in an index or rate, if there is
a change in our estimate of the amount expected to be payable
under a residual value guarantee, or if we change our assessment
of whether or not we will exercise a purchase, extension, or
termination option. When the lease liability is remeasured in this
way, a corresponding adjustment is made to the carrying amount
of the right-of-use asset. The lease liability is also remeasured when
the underlying lease contract is amended.
We have elected not to separate fixed non-lease components and
account for the lease and any fixed non-lease components as a
single lease component.
LESSEE ACCOUNTING
We record a right-of-use asset and a lease liability at the lease
commencement date. The right-of-use asset is initially measured at
cost, consisting of:
• the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date; plus
• any initial direct costs incurred; and
• an estimate of costs to dismantle and remove the underlying
asset or restore the site on which it is located; less
• any lease incentives received.
The right-of-use asset is depreciated on a straight-line basis over
the lease term, unless we expect to obtain ownership of the leased
asset at the end of the lease. The lease term consists of:
• the non-cancellable period of the lease;
• periods covered by options to extend the lease, where we are
reasonably certain to exercise the option; and
• periods covered by options to terminate the lease, where we are
reasonably certain not to exercise the option.
If we expect to obtain ownership of the leased asset at the end of
the lease, we depreciate the right-of-use asset over the underlying
asset’s estimated useful life. In addition, the right-of-use asset is
periodically reduced by impairment losses, if any, and adjusted for
certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of lease
payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that rate
cannot be readily determined, our incremental borrowing rate. We
generally use our incremental borrowing rate as the interest rate
implicit in our leases cannot be readily determined. The lease
liability is subsequently measured at amortized cost using the
effective interest rate method.
Lease payments included in the measurement of the lease liability
include:
• fixed payments, including in-substance fixed payments;
• variable lease payments that depend on an index or rate;
• amounts expected to be payable under a residual value
guarantee; and
• the exercise price under a purchase option that we are
reasonably certain to exercise, lease payments in an optional
renewal period if we are reasonably certain to exercise an
extension option, and penalties for early termination of a lease
unless we are reasonably certain not to terminate early.
Variable lease payments
Certain leases contain provisions that result in differing lease
payments over the term as a result of market rate reviews or
changes in the Consumer Price Index (CPI) or other similar indices.
We reassess the lease liabilities related to these leases when the
index or other data is available to calculate the change in lease
payments.
Certain leases require us to make payments that relate to property
taxes, insurance, and other non-rental costs. These non-rental costs
are typically variable and are not included in the calculation of the
right-of-use asset or lease liability.
LESSOR ACCOUNTING
When we act as a lessor, we determine at lease inception whether
each lease is a finance lease or an operating lease.
In order to classify each lease as either finance or operating, we
make an overall assessment of whether the lease transfers to the
lessee substantially all of the risks and rewards incidental to
ownership of the underlying asset. If it does, the lease is a finance
lease; if not, it is an operating lease.
regulatory
We act as the lessor on certain collocation leases, whereby, due to
certain
requirements, we must allow other
telecommunication companies to lease space on our wireless
network towers. We do not believe we transfer substantially all of
the risks and rewards incidental to ownership of the underlying
leased asset to the lessee and therefore classify these leases as
operating leases.
If an arrangement contains both lease and non-lease components,
we apply IFRS 15 to allocate the consideration in the contract
between the lease and the non-lease components.
We recognize lease payments received under operating leases into
income on a straight-line basis. All of the leases for which we act as
lessor are classified as operating leases.
ESTIMATES
We estimate the
lease term by considering the facts and
circumstances that can create an economic incentive to exercise an
extension option, or not exercise a termination option. We make
certain qualitative and quantitative assumptions when deriving the
value of the economic incentive.
108
| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
JUDGMENTS
Lessee
We make judgments in determining whether a contract is or
contains a lease, which involves assessing whether a contract
contains an identified asset (either a physically distinct asset or a
capacity portion that represents substantially all of the capacity of
the asset). Additionally, the contract should provide us with the
right to substantially all of the economic benefits from the use of
the asset.
We also make judgments in determining whether we have the right
to control the use of the identified asset. We have that right when
we have the decision-making rights that are most relevant to
changing how and for what purpose the asset is used. In rare cases
where the decisions about how and for what purpose the asset is
used are predetermined, we have the right to direct the use of the
asset if we have the right to operate the asset or if we designed the
asset in a way that predetermines how and for what purpose the
asset will be used.
We make judgments in determining the incremental borrowing
rate used to measure our lease liability for each lease contract,
including an estimate of the asset-specific security impact. The
incremental borrowing rate should reflect the interest that we
would have to pay to borrow the funds necessary to obtain a similar
asset at a similar term, with a similar security, in a similar economic
environment.
lessor. At
Certain of our leases contain extension or renewal options that are
lease
exercisable only by us and not by the
commencement, we assess whether we are reasonably certain to
exercise any of the extension options based on our expected
economic return from the lease. We are typically reasonably certain
of exercising extension options on our leases, especially related to
our networks, primarily due to the significant cost that would be
required to relocate our network towers and related equipment.
We reassess whether we are reasonably certain to exercise the
options if there is a significant event or significant change in
circumstance within our control and account for any changes at the
date of the reassessment.
NOTE 9: INTANGIBLE ASSETS AND GOODWILL
ACCOUNTING POLICY
RECOGNITION AND MEASUREMENT, INCLUDING
AMORTIZATION
Upon initial recognition, we measure intangible assets at cost
unless they are acquired through a business combination, in which
case they are measured at fair value. We begin amortizing
intangible assets with finite useful lives when the asset is ready for
its intended use. Subsequently, the asset is carried at cost less
accumulated amortization and accumulated impairment losses.
Cost includes expenditures that are directly attributable to the
acquisition of the asset. The cost of a separately acquired intangible
asset comprises:
• its purchase price, including import duties and non-refundable
purchase taxes, after deducting trade discounts and rebates;
and
• any directly attributable cost of preparing the asset for its
intended use.
N
O
T
E
S
T
O
C
O
N
S
O
L
I
D
A
T
E
D
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
Lessor
We make judgments in determining whether a lease should be
classified as an operating lease or a finance lease based on if the
agreement transfers substantially all the risks and rewards incidental
to ownership of the underlying asset.
LEASE LIABILITIES
We primarily lease land and buildings relating to our wireless and
cable networks, our retail store presence, and certain of our offices
and other corporate buildings, as well as customer premise
equipment. The non-cancellable contract periods for our leases
typically range from five to fifteen years. Variable lease payments
during 2021 were $21 million (2020 – $23 million).
Below is a summary of the activity related to our lease liabilities for
the twelve months ended December 31, 2021. Certain of our lease
liabilities are secured by the underlying right-of-use assets; the
underlying right-of-use assets have a net carrying amount of
$338 million as at December 31, 2021 (2020 – $240 million).
Years ended December 31
(In millions of dollars)
Lease liabilities, beginning of year
Net additions
Interest expense on lease liabilities
Interest payments on lease
liabilities
Principal payments of lease
liabilities
Lease liabilities, end of year
Current liability
Long-term liability
Lease liabilities
2021
2020
1,835 1,725
320
70
386
74
(69)
(67)
(269)
(213)
1,957 1,835
336
278
1,621 1,557
1,957 1,835
Indefinite useful lives
We do not amortize intangible assets with indefinite lives, including
spectrum licences, broadcast licences, and the Rogers and Fido
brand names.
Finite useful lives
We amortize intangible assets with finite useful lives, other than
acquired program rights, into depreciation and amortization on the
Consolidated Statements of Income on a straight-line basis over
their estimated useful lives as noted in the table below. We monitor
and review the useful lives, residual values, and amortization
methods at least once per year and change them if they are
different from our previous estimates. We recognize the effects of
changes in estimates in net income prospectively.
Intangible asset
Estimated useful life
Customer relationships
3 to 10 years
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 109
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Acquired program rights
Program rights are contractual rights we acquire from third parties
to broadcast programs, including rights to broadcast live sporting
events. We recognize them at cost less accumulated amortization
and accumulated impairment losses. We capitalize program rights
on the Consolidated Statements of Financial Position when the
licence period begins and the program is available for use and
amortize them to other external purchases in operating costs on
the Consolidated Statements of Income over the expected
exhibition period. If we have no intention to air programs, we
consider the related program rights impaired and write them off.
Otherwise, we test them for impairment as intangible assets with
finite useful lives.
If our estimate of the asset’s or CGU’s recoverable amount is less
than its carrying amount, we reduce its carrying amount to the
recoverable amount and recognize the loss in net income
immediately.
We reverse a previously recognized impairment loss, except in
respect of goodwill, if our estimate of the recoverable amount of a
previously impaired asset or CGU has increased such that the
impairment recognized in a previous year has reversed. The
reversal is recognized by increasing the asset’s or CGU’s carrying
amount to our new estimate of its recoverable amount. The
carrying amount of the asset or CGU subsequent to the reversal
cannot be greater than its carrying amount had we not recognized
an impairment loss in previous years.
in which
the pattern
The costs for multi-year sports and television broadcast rights
agreements are recognized in operating expenses during the
applicable seasons based on
the
programming is aired or rights are expected to be consumed. To
the extent that prepayments are made at the commencement of a
multi-year contract towards
fees, these
prepayments are recognized as intangible assets and amortized to
operating expenses over the contract term. To the extent that
prepayments are made for annual contractual fees within a season,
they are included in other current assets on our Consolidated
Statements of Financial Position, as the rights will be consumed
within the next twelve months.
future years’ rights
Goodwill
We recognize goodwill arising from business combinations when
the fair value of the separately identifiable assets we acquired and
liabilities we assumed is lower than the consideration we paid
(including the recognized amount of the non-controlling interest, if
any). If the fair value of the consideration transferred is lower than
that of
liabilities, we
immediately recognize the difference as a gain in net income.
identified assets and
the separately
IMPAIRMENT TESTING
We test intangible assets with finite useful lives for impairment
whenever an event or change in circumstances indicates that their
carrying amounts may not be recoverable. We test indefinite-life
intangible assets and goodwill for impairment annually as at
October 1, or more frequently
indicators of
impairment.
identify
if we
If we cannot estimate the recoverable amount of an individual
intangible asset because it does not generate independent cash
inflows, we test the entire cash-generating unit (CGU) to which it
belongs for impairment.
Goodwill is allocated to CGUs (or groups of CGUs) based on the
level at which management monitors goodwill, which cannot be
higher than an operating segment. The allocation of goodwill is
made to CGUs (or groups of CGUs) that are expected to benefit
from the synergies and future growth of the business combination
from which the goodwill arose.
Recognition and measurement of an impairment charge
An intangible asset or goodwill is impaired if the recoverable
amount is less than the carrying amount. The recoverable amount
of a CGU or asset is the higher of its:
• fair value less costs to sell; and
• value in use.
110
| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
ESTIMATES
We use estimates in determining the recoverable amount of long-
lived assets. The determination of the recoverable amount for the
purpose of impairment testing requires the use of significant
estimates, such as:
• future cash flows;
• terminal growth rates; and
• discount rates.
We estimate value in use for impairment tests by discounting
estimated future cash flows to their present value. We estimate the
discounted future cash flows for periods of up to five years,
depending on the CGU, and a terminal value. The future cash flows
are based on our estimates and expected future operating results
of the CGU after considering economic conditions and a general
outlook for the CGU’s industry. Our discount rates consider market
rates of return, debt to equity ratios, and certain risk premiums,
among other things. The terminal value is the value attributed to
the CGU’s operations beyond the projected time period of the
cash flows using a perpetuity rate based on expected economic
conditions and a general outlook for the industry.
We determine fair value less costs to sell in one of the following two
ways:
• analyzing discounted cash flows – we estimate the discounted
future cash flows for five-year periods and a terminal value,
similar to the value in use methodology described above, while
applying assumptions consistent with those a market participant
would make. Future cash flows are based on our estimates of
expected future operating results of the CGU. Our estimates of
future cash flows, terminal values, and discount rates consider
similar factors to those described above for value in use
estimates; or
• using a market approach – we estimate the recoverable amount
of the CGU using multiples of operating performance of
comparable entities and precedent transactions in that industry.
We make certain assumptions when deriving expected future cash
flows, which may include assumptions pertaining to discount and
terminal growth rates. These assumptions may differ or change
quickly depending on economic conditions or other events. It is
therefore possible that future changes
in assumptions may
negatively affect future valuations of CGUs and goodwill, which
could result in impairment losses.
JUDGMENTS
We make significant judgments that affect the measurement of our
intangible assets and goodwill.
generate. After review of the competitive, legal, regulatory, and
other factors, it is our view that these factors do not limit the useful
lives of our spectrum and broadcast licences.
Judgment is applied when deciding to designate our spectrum
and broadcast licences as assets with indefinite useful lives since we
believe the licences are likely to be renewed for the foreseeable
future such that there is no limit to the period over which these
assets are expected to generate net cash inflows. We make
judgments to determine that these assets have indefinite lives,
analyzing all relevant factors, including the expected usage of the
asset, the typical life cycle of the asset, and anticipated changes in
the market demand for the products and services the asset helps
Judgment is also applied in choosing methods of amortizing our
intangible assets and program rights that we believe most
accurately represent the consumption of those assets and are most
representative of the economic substance of the intended use of
the underlying assets.
Finally, we make judgments in determining CGUs and the
allocation of goodwill to CGUs or groups of CGUs for the purpose
of impairment testing.
DETAILS OF INTANGIBLE ASSETS
The tables below summarize our intangible assets as at December 31, 2021 and 2020.
(In millions of dollars)
Indefinite-life
Finite-life
N
O
T
E
S
T
O
C
O
N
S
O
L
I
D
A
T
E
D
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
Cost
As at January 1, 2021
Accumulated impairment losses
Cost, net of impairment losses
Additions
Disposals and other 1
As at December 31, 2021
Accumulated amortization
As at January 1, 2021
Amortization 2
Disposals and other 1
As at December 31, 2021
Net carrying amount
As at January 1, 2021
As at December 31, 2021
Spectrum
licences
Broadcast
licences
Brand
names
Customer
relationships
Acquired
program
rights
Total
intangible
assets Goodwill
Total
intangible
assets and
goodwill
8,371
–
8,371
3,343
–
11,714
–
–
–
–
333
(99)
234
–
(3)
231
–
–
–
–
8,371
11,714
234
231
420
(14)
406
–
–
406
270
–
–
270
136
136
1,623
–
1,623
46
–
1,669
1,589
17
–
1,606
34
63
233
(5)
228
54
(77)
205
77
68
(77)
68
151
137
10,980
(118)
10,862
3,443
(80)
14,225
1,936
85
(77)
1,944
4,194
(221)
3,973
51
–
4,024
–
–
–
–
15,174
(339)
14,835
3,494
(80)
18,249
1,936
85
(77)
1,944
8,926
12,281
3,973
4,024
12,899
16,305
1 Includes disposals, impairments, reclassifications, and other adjustments.
2 Of the $85 million of total amortization, $68 million related to acquired program rights is included in other external purchases in operating costs (see note 6), and $17 million in
depreciation and amortization on the Consolidated Statements of Income.
(In millions of dollars)
Indefinite-life
Finite-life
Cost
As at January 1, 2020
Accumulated impairment losses
Cost, net of impairment losses
Additions
Disposals and other 1
As at December 31, 2020
Accumulated amortization
As at January 1, 2020
Amortization 2
Disposals and other 1
As at December 31, 2020
Net carrying amount
As at January 1, 2020
As at December 31, 2020
Spectrum
licences
Broadcast
licences
Brand
names
Customer
relationships
Acquired
program
rights
Total
intangible
assets Goodwill
Total
intangible
assets and
goodwill
8,331
–
8,331
40
–
8,371
–
–
–
–
333
(99)
234
–
–
234
–
–
–
–
8,331
8,371
234
234
420
(14)
406
–
–
406
270
–
–
270
136
136
1,611
–
1,611
12
–
1,623
1,578
11
–
1,589
33
34
253
(5)
248
57
(77)
228
77
77
(77)
77
171
151
10,948
(118)
10,830
109
(77)
10,862
1,925
88
(77)
1,936
8,905
8,926
4,144
(221)
3,923
50
–
3,973
–
–
–
–
15,092
(339)
14,753
159
(77)
14,835
1,925
88
(77)
1,936
3,923
3,973
12,828
12,899
1 Includes disposals, impairments, reclassifications, and other adjustments.
2 Of the $88 million of total amortization, $77 million related to acquired program rights is included in other external purchases in operating costs (see note 6), and $11 million in
depreciation and amortization on the Consolidated Statements of Income.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 111
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In July 2021, Innovation, Science and Economic Development
Canada announced the results of the 3500 MHz spectrum licence
auction that began in June 2021. We were awarded 325 spectrum
licences covering the vast majority of the Canadian population at a
total cost of $3.3 billion. In December 2021, we made the final
payment and obtained these licences.
ANNUAL IMPAIRMENT TESTING
For purposes of testing goodwill for impairment, our CGUs, or groups of CGUs, correspond to our operating segments as disclosed in
note 4.
Below is an overview of the methods and key assumptions we used in 2021, as of October 1, to determine recoverable amounts for CGUs,
or groups of CGUs, with indefinite-life intangible assets or goodwill that we consider significant.
(In millions of dollars, except periods used and rates)
Carrying value
of goodwill
Carrying value
of indefinite-life
intangible assets
Recoverable
amount method
Period of
projected cash
flows (years)
Terminal growth
rates (%)
Pre-tax discount
rates (%)
Wireless
Cable
Media
1,160
1,895
969
8,517 Value in use
– Value in use
232 Fair value less cost to sell
5
5
5
2.0
1.5
2.0
8.5
8.0
10.6
Our fair value measurement for Media is classified as Level 3 in the
fair value hierarchy.
We did not recognize an impairment charge related to our
goodwill or intangible assets in 2021 or 2020 because the
recoverable amounts of the CGUs, or groups of CGUs, exceeded
their carrying values.
NOTE 10: RESTRUCTURING, ACQUISITION AND OTHER
ACCOUNTING POLICY
We define restructuring costs as employee costs associated with
the targeted restructuring of our employee base, or other costs
associated with significant changes in either the scope of business
activities or the manner in which business is conducted. Acquisition
and integration costs are directly attributable to investigating or
completing an acquisition or to integrating an acquired business.
Other costs are costs that, in management’s judgment about their
nature, should be segregated from ongoing operating expenses.
RESTRUCTURING, ACQUISITION AND OTHER COSTS
Years ended December 31
(In millions of dollars)
Note
2021
2020
Restructuring and other
Shaw acquisition-related costs
Total restructuring, acquisition and other
30
187
137
324
185
—
185
JUDGMENTS
We make significant judgments in determining the appropriate
classification of costs to be included in restructuring, acquisition
and other.
NOTE 11: FINANCE COSTS
(In millions of dollars)
Note
2021
2020
Years ended December 31
Interest on borrowings 1
Interest on lease liabilities
Interest on post-employment benefits
liability
Loss on foreign exchange
Change in fair value of derivative
instruments
Capitalized interest
Other
Total finance costs
8
23
745
74
14
10
(6)
(17)
29
780
70
13
107
(97)
(19)
27
849
881
1 Interest on borrowings includes interest on short-term borrowings and on long-term
debt.
112
| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
The restructuring and other costs in 2021 primarily consisted of
severance costs associated with the targeted restructuring of our
employee base, certain contract termination costs, incremental,
temporary costs incurred in response to COVID-19, and other costs.
In 2020, these costs were primarily incremental, temporary employee
compensation and other costs incurred in response to COVID-19 as
well as severance costs associated with the targeted restructuring of
our employee base. The Shaw acquisition-related costs primarily
consist of costs related to a committed credit facility (see note 19)
and other costs incurred directly related to the Transaction.
FOREIGN EXCHANGE AND CHANGE IN FAIR VALUE OF
DERIVATIVE INSTRUMENTS
We recognized $10 million in net foreign exchange losses in 2021
(2020 – $107 million in net losses). These losses were primarily
attributed to our US CP program borrowings (see note 17).
These foreign exchange losses were offset by the $6 million gain
related to the change in fair value of derivatives (2020 – $97 million
gain) that was primarily attributed to the debt derivatives, which
were not designated as hedges for accounting purposes, we used
to substantially offset the foreign exchange risk related to these
US dollar-denominated borrowings.
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NOTE 12: OTHER EXPENSE
Years ended December 31
(In millions of dollars)
Note
2021
2020
Losses from associates and joint
ventures
Other investment income
Total other expense
18
44
(42)
2
40
(39)
1
NOTE 13: INCOME TAXES
ACCOUNTING POLICY
Income tax expense includes both current and deferred taxes. We
recognize income tax expense in net income unless it relates to an
item recognized directly in equity or other comprehensive income.
We provide for income taxes based on all of the information that is
currently available.
Current tax expense is tax we expect to pay or receive based on
our taxable income or loss during the year. We calculate the
current tax expense using tax rates enacted or substantively
enacted as at the reporting date, including any adjustment to taxes
payable or receivable related to previous years.
Deferred tax assets and liabilities arise from temporary differences
between the carrying amounts of the assets and liabilities we
recognize on our Consolidated Statements of Financial Position
and their respective tax bases. We calculate deferred tax assets and
liabilities using enacted or substantively enacted tax rates that will
apply in the years in which the temporary differences are expected
to reverse.
Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax assets and liabilities and they
relate to income taxes levied by the same authority on:
•the same taxable entity; or
• different taxable entities where these entities intend to settle
current tax assets and liabilities on a net basis or the tax assets
and liabilities will be realized and settled simultaneously.
We recognize a deferred tax asset for unused losses, tax credits,
and deductible temporary differences to the extent it is probable
that future taxable income will be available to use the asset.
JUDGMENTS
We make significant judgments in interpreting tax rules and
regulations when we calculate income tax expense. We make
judgments to evaluate whether we can recover a deferred tax asset
based on our assessment of existing tax laws, estimates of future
profitability, and tax planning strategies.
INCOME TAX EXPENSE
(In millions of dollars)
Total current tax expense
Deferred tax expense (recovery):
Origination (reversal) of temporary
differences
Revaluation of deferred tax balances
due to legislative changes
Total deferred tax expense (recovery)
Total income tax expense
Years ended December 31
2021
458
111
–
111
569
2020
712
(129)
(3)
(132)
580
Below is a summary of 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.
(In millions of dollars, except tax rates)
Statutory income tax rate
Income before income tax expense
Computed income tax expense
Increase (decrease) in income tax expense
resulting from:
Non-deductible stock-based
compensation
Non-deductible portion of equity
losses
Income tax adjustment, legislative tax
change
Non-taxable income from security
investments
Other
Total income tax expense
Effective income tax r ate
Years ended December 31
2021
26.5%
2,127
564
2020
26.6%
2,172
578
1
12
–
(11)
3
–
10
(3)
(10)
5
569
26.8%
580
26.7%
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 113
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DEFERRED TAX ASSETS AND LIABILITIES
Below is a summary of the movement of net deferred tax assets and liabilities during 2021 and 2020.
Deferred tax assets (liabilities)
(In millions of dollars)
December 31, 2020
(Expense) recovery in net income
(Expense) in other comprehensive income
Acquisitions
December 31, 2021
Deferred tax assets (liabilities)
(In millions of dollars)
December 31, 2019
(Expense) recovery in net income
Recovery in other comprehensive income
Acquisitions
December 31, 2020
Property,
plant and
equipment
and inventory
Goodwill
and other
intangibles
Non-capital
loss
carryforwards
Contract and
deferred
commission
cost assets
Investments
(1,484)
(122)
–
(2)
(1,450)
(116)
–
(12)
(1,608)
(1,578)
(130)
(2)
(3)
–
(135)
16
8
–
–
24
(183)
59
–
–
(124)
Property,
plant and
equipment
and inventory
Goodwill
and other
intangibles
Investments
Non-capital
loss
carryforwards
Contract and
deferred
commission
cost assets
(1,366)
(108)
–
(10)
(1,484)
(1,318)
(129)
–
(3)
(1,450)
(168)
(2)
40
–
(130)
12
4
–
–
16
(570)
387
–
–
(183)
Other
Total
35
62
(115)
–
(3,196)
(111)
(118)
(14)
(18)
(3,439)
Other
Total
(27)
(20)
82
–
35
(3,437)
132
122
(13)
(3,196)
We have not recognized deferred tax assets for the following items:
(In millions of dollars)
Realized and accrued capital losses in
Canada that can be applied against future
capital gains
Tax losses in foreign jurisdictions that expire
between 2023 and 2040
Deductible temporary differences in foreign
jurisdictions
As at December 31
2021
2020
75
68
40
82
67
43
Total unrecognized temporary differences
183
192
NOTE 14: EARNINGS PER SHARE
ACCOUNTING POLICY
We calculate basic earnings per share by dividing the net income
or loss attributable to our RCI Class A Voting and RCI Class B
Non-Voting shareholders by the weighted average number of RCI
Class A Voting and RCI Class B Non-Voting shares (Class A Shares
and Class B Non-Voting Shares, respectively) outstanding during
the year.
We calculate diluted earnings per share by adjusting the net income
or loss attributable to Class A and Class B Non-Voting shareholders
and the weighted average number of Class A Shares and Class B
Non-Voting Shares outstanding for the effect of all dilutive potential
common shares. We use the treasury stock method for calculating
diluted earnings per share, which considers the impact of employee
stock options and other potentially dilutive instruments.
Options with tandem stock appreciation rights or cash payment
alternatives are accounted for as cash-settled awards. As these
awards can be exchanged for common shares of RCI, they are
considered potentially dilutive and are included in the calculation
of our diluted net earnings per share if they have a dilutive impact
in the period.
114
| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
There are taxable temporary differences associated with our
investments
in Canadian domestic subsidiaries. We do not
recognize deferred tax liabilities for these temporary differences
because we are able to control the timing of the reversal and the
reversal is not probable in the foreseeable future. Reversing these
taxable temporary differences is not expected to result in any
significant tax implications.
EARNINGS PER SHARE CALCULATION
(In millions of dollars,
except per share amounts)
Years ended December 31
2021
2020
Numerator (basic) – Net income for
the year
Denominator – Number of shares (in
millions):
Weighted average number of
shares outstanding – basic
Effect of dilutive securities (in millions):
Employee stock options and
restricted share units
Weighted average number of shares
outstanding – diluted
Earnings per share:
Basic
Diluted
1,558
1,592
505
505
1
1
506
506
$ 3.09
$ 3.07
$ 3.15
$ 3.13
For the years ended December 31, 2021 and 2020, accounting for
outstanding share-based payments using
the equity-settled
method for stock-based compensation was determined to be
more dilutive than using the cash-settled method. As a result, net
income for the year ended December 31, 2021 was reduced by
$3 million (2020 – $7 million) in the diluted earnings per share
calculation.
NOTE 15: ACCOUNTS RECEIVABLE
ACCOUNTING POLICY
Accounts receivable represent amounts owing to us that are
currently due and collectible, as well as amounts owed to us under
device or accessory financing agreements that have not yet been
billed. We initially recognize accounts receivable on the date they
originate. We measure accounts receivable initially at fair value, and
subsequently at amortized cost, with changes recognized in net
income. We measure an impairment loss for accounts receivable as
the excess of the carrying amount over the present value of future
cash flows we expect to derive from it, if any. The excess is allocated
to an allowance for doubtful accounts and recognized as a loss in
net income.
NOTE 16: INVENTORIES
inventories,
ACCOUNTING POLICY
We measure
including wireless devices and
merchandise for resale, at the lower of cost (determined on a
weighted average cost basis for wireless devices and accessories
and a first-in, first-out basis for other finished goods and
merchandise) and net realizable value. We reverse a previous
writedown to net realizable value, not to exceed the original
recognized cost, if the inventories later increase in value.
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For the year ended December 31, 2021, there were 4,148,549
options out of the money (2020 – 3,895,948) for purposes of the
calculation of earnings per share. These options were excluded
from the calculation of the effect of dilutive securities because they
were anti-dilutive.
ACCOUNTS RECEIVABLE BY TYPE
(In millions of dollars)
Customer accounts receivable
Other accounts receivable
Allowance for doubtful accounts
Total accounts receivable
Current
Long-term
Total accounts receivable
As at December 31
Note 2021
2020
4,150 3,170
656
(222)
791
(240)
17
4,701 3,604
3,847 2,856
748
854
4,701 3,604
The long-term portion of our accounts receivable is recorded within
“financing receivables” on our Consolidated Statements of
Financial Position and is composed of our financing receivables
that will be billed to customers beyond the next 12 months.
INVENTORIES BY TYPE
(In millions of dollars)
Wireless devices and accessories
Other finished goods and merchandise
Total inventories
As at December 31
2021
2020
436
99
535
399
80
479
Cost of equipment sales and merchandise for resale includes
$2,432 million of inventory costs for 2021 (2020 – $2,207 million).
NOTE 17: FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
ACCOUNTING POLICY
Recognition
We initially recognize cash and cash equivalents, bank advances, accounts receivable, financing receivables, debt securities, and accounts
payable and accrued liabilities on the date they originate. All other financial assets and financial liabilities are initially recognized on the
trade date when we become a party to the contractual provisions of the instrument.
Classification and measurement
We measure financial instruments by grouping them into classes upon initial recognition, based on the purpose of the individual
instruments. We initially measure all financial instruments at fair value plus, in the case of our financial instruments not classified as fair value
through profit and loss (FVTPL) or FVTOCI, transaction costs that are directly attributable to the acquisition or issuance of the financial
instruments. For derivatives designated as cash flow hedges for accounting purposes, the effective portion of the hedge is recognized in
accumulated other comprehensive income and the ineffective portion of the hedge is recognized immediately into net income.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 115
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The classifications and methods of measurement subsequent to initial recognition of our financial assets and financial liabilities are as
follows:
Financial instrument
Financial assets
Cash and cash equivalents
Accounts receivable
Financing receivables
Investments, measured at FVTOCI
Financial liabilities
Bank advances
Short-term borrowings
Accounts payable
Accrued liabilities
Long-term debt
Lease liabilities
Derivatives 2
Debt derivatives 3
Interest rate derivatives
Expenditure derivatives
Equity derivatives
Classification and measurement method
Amortized cost
Amortized cost
Amortized cost
FVTOCI with no reclassification to net income 1
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
FVTOCI and FVTPL
FVTOCI
FVTOCI
FVTPL 4
1 Subsequently measured at fair value with changes recognized in the FVTOCI investment reserve.
2 Derivatives can be in an asset or liability position at a point in time historically or in the future.
3 Debt derivatives related to our credit facility and commercial paper borrowings have not been designated as hedges for accounting purposes and are measured at FVTPL. Debt
derivatives related to our senior notes and debentures are designated as hedges for accounting purposes and are measured at FVTOCI.
4 Subsequent changes are offset against stock-based compensation expense or recovery in operating costs.
Offsetting financial assets and financial liabilities
We offset financial assets and financial liabilities and present the net amount on the Consolidated Statements of Financial Position when
we have a legal right to offset them and intend to settle on a net basis or realize the asset and liability simultaneously.
Derivative instruments
We use derivative instruments to manage risks related to certain activities in which we are involved. They include:
Derivatives
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 senior and subordinated notes and
debentures, credit facility borrowings, commercial
paper borrowings, and certain lease liabilities
Cross-currency interest rate exchange agreements
Forward cross-currency interest rate exchange
agreements
Forward foreign exchange agreements
Interest rate derivatives
Impact of fluctuations in market interest rates on
forecast interest payments for expected long-term
debt
Forward interest rate agreements
Interest rate swap agreements
Bond forwards
Expenditure derivatives
Impact of fluctuations in foreign exchange rates on
forecast US dollar-denominated expenditures
Forward foreign exchange agreements and foreign
exchange option agreements
Equity derivatives
Impact of fluctuations in share price on stock-based
compensation expense
Total return swap agreements
We use derivatives only to manage risk, and not for speculative
purposes.
When we designate a derivative
instrument as a hedging
instrument for accounting purposes, we first determine that the
hedging instrument will be highly effective in offsetting the
changes in fair value or cash flows of the item it is hedging. We
then formally document the relationship between the hedging
instrument and hedged item, including the risk management
objectives and strategy and the methods we will use to assess the
ongoing effectiveness of the hedging relationship.
We assess, on a quarterly basis, whether each hedging instrument
continues to be highly effective in offsetting the changes in the fair
value or cash flows of the item it is hedging.
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| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
We assess host contracts in order to identify embedded derivatives.
Embedded derivatives are separated from the host contract and
accounted for as separate derivatives if the host contract is not a
financial asset and certain criteria are met.
Hedge ratio
Our policy is to hedge 100% of the foreign currency risk arising
from principal and interest payment obligations on US dollar-
denominated senior notes and debentures using debt derivatives.
We also hedge up to 100% of the remaining lease payments when
we enter into debt derivatives on our US dollar-denominated lease
liabilities. We typically hedge up to 100% of forecast foreign
currency expenditures net of foreign currency cash inflows using
expenditure derivatives. From time to time, we hedge up to 100%
of the interest rate risk on forecast future senior note issuances
using interest rate derivatives.
Hedging reserve
The hedging reserve represents the accumulated change in fair
value of our derivative instruments to the extent they were effective
hedges for accounting purposes, less accumulated amounts
reclassified into net income.
Deferred transaction costs and discounts
We defer transaction costs and discounts associated with issuing
long-term debt and direct costs we pay to lenders to obtain certain
credit facilities and amortize them using the effective interest
method over the life of the related instrument.
FVTOCI investment reserve
The FVTOCI
investment reserve represents the accumulated
change in fair value of our equity investments that are measured at
losses related to the
FVTOCI
investments and accumulated amounts reclassified into equity.
less accumulated
impairment
Impairment (expected credit losses)
We consider the credit risk of a financial asset at initial recognition
and at each reporting period thereafter until it is derecognized. For
a financial asset that is determined to have low credit risk at the
reporting date and that has not had significant increases in credit
risk since initial recognition, we measure any impairment loss based
on the credit losses we expect to recognize over the next twelve
months. For other financial assets, we will measure an impairment
loss based on the lifetime expected credit losses. Certain assets,
such as trade receivables, financing receivables, and contract assets
without significant financing components, must always be recorded
at lifetime expected credit losses.
Lifetime expected credit losses are estimates of all possible default
events over the expected life of a financial instrument. Twelve
month expected credit losses are estimates of all possible default
events within twelve months of the reporting date or over the
expected life of a financial instrument, whichever is shorter.
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Financial assets that are significant in value are assessed individually.
All other financial assets are assessed collectively based on the
nature of each asset.
We measure impairment for financial assets as follows:
• contract assets – we measure an impairment loss for contract
assets based on the lifetime expected credit losses, which is
allocated to an allowance for doubtful accounts and recognized
as a loss in net income (see note 5);
• accounts receivable – we measure an impairment loss for
accounts receivable based on the lifetime expected credit losses,
which is allocated to an allowance for doubtful accounts and
recognized as a loss in net income (see note 15);
• financing receivables – we measure an impairment loss for
financing receivables based on the lifetime expected credit
losses, which is allocated to an allowance for doubtful accounts
and recognized as a loss in net income (see note 15); and
• investments measured at FVTOCI – we measure an impairment
loss for equity investments measured at FVTOCI as the excess of
the cost to acquire the asset (less any impairment loss we have
previously recognized) over its current fair value, if any. The
difference is recognized in the FVTOCI investment reserve.
We consider financial assets to be in default when, in the case of
contract assets, accounts receivable, and financing receivables, the
counterparty is unlikely to satisfy its obligations to us in full. Our
investments measured at FVTOCI cannot default. To determine if
our financial assets are in default, we consider the amount of time
for which it has been outstanding, the reason for the amount being
outstanding (for example, if the customer has ongoing service or, if
they have been deactivated, whether voluntarily or involuntarily),
and the risk profile of the underlying customers. We typically write
off accounts receivable when they have been outstanding for a
significant period of time.
ESTIMATES
Fair value estimates related to our derivatives are made at a specific
point in time based on relevant market information and information
about the underlying financial instruments. These estimates require
assessment of the credit risk of the parties to the instruments and
the instruments’ discount rates. These fair values and underlying
estimates are also used in the tests of effectiveness of our hedging
relationships.
instruments qualify
JUDGMENTS
We make significant judgments in determining whether our
for hedge accounting. These
financial
judgments include assessing whether the forecast transactions
in hedging relationships will
designated as hedged
materialize as
relationships
designated as effective hedges for accounting purposes continue
to qualitatively be effective, and determining the methodology to
determine the fair values used in testing the effectiveness of
hedging relationships.
forecast, whether
the hedging
items
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 117
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL RISKS
We are exposed to credit, liquidity, market price, foreign exchange,
and interest rate risks. Our primary risk management objective is to
protect our income, cash flows, and, ultimately, shareholder value.
We design and implement the risk management strategies
discussed below to ensure our risks and the related exposures are
consistent with our business objectives and risk tolerance. Below is
a summary of our potential risk exposures by financial instrument.
with our accounts receivable. As at December 31, 2021,
$442 million (2020 – $435 million) of gross accounts receivable are
considered past due, which is defined as amounts outstanding
beyond normal credit terms and conditions for the respective
customers.
Below is a summary of the aging of our customer accounts
receivable, including financing receivables, net of the respective
allowances for doubtful accounts.
Financial instrument
Financial risks
Financial assets
Cash and cash equivalents
Accounts receivable
Financing receivables
Investments, measured at
FVTOCI
Credit and foreign exchange
Credit and foreign exchange
Credit
Liquidity, market price, and
foreign exchange
Financial liabilities
Bank advances
Short-term borrowings
Accounts payable
Accrued liabilities
Long-term debt
Lease liabilities
Derivatives 1
Debt derivatives
Interest rate derivatives
Expenditure derivatives
Equity derivatives
Liquidity
Liquidity, foreign exchange,
and interest rate
Liquidity
Liquidity
Liquidity, foreign exchange,
and interest rate
Liquidity and foreign
exchange
Credit, liquidity, and foreign
exchange
Credit, liquidity, and interest
rate
Credit, liquidity, and foreign
exchange
Credit, liquidity, and market
price
1 Derivatives can be in an asset or liability position at a point in time historically or in the
future.
CREDIT RISK
Credit risk represents the financial loss we could experience if a
counterparty to a financial instrument, from whom we have an
amount owing, failed to meet its obligations under the terms and
conditions of its contracts with us.
Our credit risk exposure is primarily attributable to our accounts
receivable, our financing receivables, and to our debt, interest rate,
expenditure, and equity derivatives. Our broad customer base
limits the concentration of this risk. Our accounts receivable and
financing receivables on the Consolidated Statements of Financial
Position are net of allowances for doubtful accounts.
Accounts receivable
Our accounts receivable do not contain significant financing
components as defined by IFRS 15 and therefore we measure our
allowance for doubtful accounts using lifetime expected credit
losses related to our accounts receivable. We believe the allowance
for doubtful accounts sufficiently reflects the credit risk associated
(In millions of dollars)
Customer accounts receivable
As at December 31
2021
2020
Unbilled financing receivables
Less than 30 days past billing date
30-60 days past billing date
61-90 days past billing date
Greater than 90 days past billing date
2,646
895
214
89
66
1,806
793
207
66
76
Total customer accounts receivable (net of
allowances of $240 and $222, respectively)
3,910
2,948
Total contract assets (net of allowance of $3
and $28, respectively)
204
621
Total customer accounts receivable and
contract assets
4,114
3,569
Below is a summary of the activity related to our allowance for
doubtful accounts on total customer accounts receivable and
contract assets.
(In millions of dollars)
Balance, beginning of year
Allowance for doubtful accounts
expense
Net use
Balance, end of year
Years ended December 31
2021
250
155
(162)
243
2020
114
307
(171)
250
We use various controls and processes, such as credit checks,
deposits on account, and billing in advance, to mitigate credit risk.
We monitor and take appropriate action to suspend services when
customers have fully used their approved credit limits or violated
established payment terms. While our credit controls and
processes have been effective in managing credit risk, they cannot
eliminate credit risk and there can be no assurance that these
controls will continue to be effective or that our current credit loss
experience will continue.
Derivative instruments
Credit risk related to our debt derivatives, interest rate derivatives,
expenditure derivatives, and equity derivatives arises from the
possibility that the counterparties to the agreements may default
on their obligations. We assess the creditworthiness of the
counterparties to minimize the risk of counterparty default and do
not require collateral or other security to support the credit risk
associated with these derivatives. Counterparties to the entire
portfolio of our derivatives are financial institutions with a S&P
Global Ratings (or the equivalent) ranging from A to AA-.
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| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
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LIQUIDITY RISK
Liquidity risk is the risk that we will not be able to meet our financial
obligations as they fall due. We manage liquidity risk by managing
our commitments and maturities, capital structure, and financial
leverage (see note 3). We also manage liquidity risk by continually
monitoring actual and projected cash flows to ensure we will have
sufficient liquidity to meet our liabilities when due, under both
normal and stressed conditions, without incurring unacceptable
losses or risking damage to our reputation.
Below is a summary of the undiscounted contractual maturities of our financial liabilities and the receivable components of our derivatives
as at December 31, 2021 and 2020.
December 31, 2021
(In millions of dollars)
Carrying
amount
Contractual
cash flows
Less than
1 year
Short-term borrowings
Accounts payable and accrued liabilities
Long-term debt 1
Lease liabilities
Other long-term financial liabilities
Expenditure derivative instruments:
Cash outflow (Canadian dollar)
Cash inflow (Canadian dollar equivalent of US dollar)
Equity derivative instruments
Debt derivative instruments accounted for as hedges:
Cash outflow (Canadian dollar)
Cash inflow (Canadian dollar equivalent of US dollar) 2
Debt derivative instruments not accounted for as hedges:
Cash outflow (Canadian dollar)
Cash inflow (Canadian dollar equivalent of US dollar) 2
Interest rate derivatives
Net carrying amount of derivatives (asset)
2,200
3,416
18,688
1,957
14
–
–
–
–
–
–
–
–
(895)
2,200
3,416
18,873
2,498
14
2,200
3,416
1,551
336
–
1,374
(1,354)
(36)
1,240
(1,217)
(36)
1 to 3
years
–
–
2,312
677
7
134
(137)
–
4 to 5
years
More than
5 years
–
–
3,520
308
2
–
–
–
–
–
11,490
1,177
5
–
–
–
11,313
(11,717)
1,297
(1,084)
1,504
(1,822)
1,607
(1,521)
6,905
(7,290)
1,390
(1,401)
243
1,390
(1,401)
243
–
–
–
–
–
–
–
–
–
1 Reflects repayment of the subordinated notes issued in December 2021 on the five-year anniversary.
2 Represents Canadian dollar equivalent amount of US dollar inflows matched to an equal amount of US dollar maturities in long-term debt for debt derivatives.
25,380
26,813
7,935
2,675
3,916
12,287
December 31, 2020
(In millions of dollars)
Carrying
amount
Contractual
cash flows
Less than
1 year
Short-term borrowings
Accounts payable and accrued liabilities
Long-term debt
Lease liabilities
Other long-term financial liabilities
Expenditure derivative instruments:
Cash outflow (Canadian dollar)
Cash inflow (Canadian dollar equivalent of US dollar)
Equity derivative instruments
Debt derivative instruments accounted for as hedges:
Cash outflow (Canadian dollar)
Cash inflow (Canadian dollar equivalent of US dollar) 1
Debt derivative instruments not accounted for as hedges:
Cash outflow (Canadian dollar)
Cash inflow (Canadian dollar equivalent of US dollar) 1
Net carrying amount of derivatives (asset)
1,221
2,714
18,201
1,835
22
–
–
–
–
–
–
–
(1,011)
1,221
2,714
18,373
2,353
22
1,221
2,714
1,450
278
–
2,134
(2,024)
(34)
1,305
(1,222)
(34)
1 to 3
years
–
–
3,274
647
14
829
(802)
–
4 to 5
years
More than
5 years
–
–
1,490
300
2
–
–
–
–
–
12,159
1,128
6
–
–
–
11,114
(11,702)
86
(81)
2,516
(2,772)
937
(891)
7,575
(7,958)
585
(573)
585
(573)
–
–
–
–
–
–
1 Represents Canadian dollar equivalent amount of US dollar inflows matched to an equal amount of US dollar maturities in long-term debt for debt derivatives.
22,982
24,183
5,729
3,706
1,838
12,910
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Below is a summary of the net interest payments over the life of the
long-term debt, including the impact of the associated debt
derivatives, as at December 31, 2021 and 2020.
December 31, 2021
(In millions of dollars)
Less than
1 year
1 to 3
years
4 to 5
years
More than
5 years
Net interest payments
804
1,444
1,321
7,789
December 31, 2020
(In millions of dollars)
Less than
1 year
1 to 3
years
4 to 5
years
More than
5 years
the
foreign exchange risk
hedges for accounting purposes. We use expenditure derivatives
to manage
in our operations,
designating them as hedges for certain of our forecast operational
and capital expenditures. As at December 31, 2021, all of our US
dollar-denominated long-term debt, short-term borrowings, and
in foreign
lease
exchange rates using debt derivatives. With respect to our long
term debt and US CP program, as a result of our debt derivatives, a
one-cent change in the Canadian dollar relative to the US dollar
would have no effect on net income.
liabilities were hedged against fluctuations
Net interest payments
747
1,322
1,167
8,331
MARKET PRICE RISK
Market price risk is the risk that changes in market prices, such as
fluctuations in the market prices of our investments measured at
FVTOCI or our share price will affect our income, cash flows, or the
value of our financial instruments. The derivative instruments we use
to manage this risk are described in this note.
Market price risk – publicly traded investments
We manage risk related to fluctuations in the market prices of our
investments in publicly traded companies by regularly reviewing
publicly available information related to these investments to
ensure that any risks are within our established levels of risk
tolerance. We do not engage in risk management practices such as
hedging, derivatives, or short selling with respect to our publicly
traded investments.
Market price risk – Class B Non-Voting Shares
Our liability related to stock-based compensation is remeasured at
fair value each period. Stock-based compensation expense is
affected by changes in the price of our Class B Non-Voting Shares
during the life of an award, including stock options, restricted share
units (RSUs), and deferred share units (DSUs). We use equity
derivatives from time to time to manage the exposure in our stock-
based compensation liability. As a result of our equity derivatives, a
one-dollar change in the price of a Class B Non-Voting Share
would not have a material effect on net income.
FOREIGN EXCHANGE RISK
We use debt derivatives to manage risks from fluctuations in
foreign exchange rates associated with our US dollar-denominated
long-term debt, short-term borrowings, and lease liabilities. We
designate the debt derivatives related to our senior notes and
debentures and lease liabilities as hedges for accounting purposes
against the foreign exchange risk associated with specific debt
instruments and
lease contracts, respectively. We have not
designated the debt derivatives related to our US CP program as
A portion of our accounts receivable and accounts payable and
accrued liabilities is denominated in US dollars. Due to the short-
term nature of these receivables and payables, they carry no
significant risk from fluctuations in foreign exchange rates as at
December 31, 2021.
INTEREST RATE RISK
We are exposed to risk of changes in market interest rates due to
the impact this has on interest expense for our short-term
borrowings and bank credit facilities. As at December 31, 2021,
89.3% of our outstanding
long-term debt and short-term
borrowings was at fixed interest rates (2020 – 93.6%).
Sensitivity analysis
Below is a sensitivity analysis for significant exposures with respect
to our publicly traded investments, expenditure derivatives, debt
derivatives, interest rate derivatives, short-term borrowings, senior
notes, and bank credit facilities as at December 31, 2021 and 2020
with all other variables held constant. It shows how net income and
other comprehensive income would have been affected by
changes in the relevant risk variables.
(Change in millions of dollars)
Share price of publicly traded
investments
$1 change
Debt derivatives
0.1% change in interest rates
Interest rate derivatives
0.1% change in interest rates
Expenditure derivatives – change in
foreign exchange rate
$0.01 change in Cdn$ relative to US$
Floating interest rate senior notes
1% change in interest rates
Short-term borrowings
1% change in interest rates
Other
comprehensive
income
2020
Net income
2021 2020 2021
–
––
––
–
7
16
–
17
14
46
76
8
–
–
–
–
12
–
–
–
7
9
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DERIVATIVE INSTRUMENTS
As at December 31, 2021 and 2020, all of our US dollar-
denominated long-term debt instruments were hedged against
fluctuations in foreign exchange rates for accounting purposes.
Below is a summary of our net asset (liability) position for our
various derivatives.
(In millions of dollars, except
exchange rates)
Debt derivatives accounted for
as cash flow hedges:
As at December 31, 2020
Notional
amount
(US$)
Exchange
rate
Notional
amount
(Cdn$)
Fair
value
(Cdn$)
As at December 31, 2021
Notional
amount
(US$)
Exchange
rate
Notional
amount
(Cdn$)
Fair
value
(Cdn$)
(In millions of dollars, except
exchange rates)
Debt derivatives accounted for
as cash flow hedges:
As assets
As liabilities
5,859
5,383
1.1369
1.3025
6,661
7,011
1,453
(343)
Short-term debt derivatives not
accounted for as hedges:
As assets
1,104
1.2578
1,389
11
Net mark-to-market debt
derivative asset
Interest rate derivatives
accounted for as cash flow
hedges:
As assets (Cdn$)
As liabilities (Cdn$)
As liabilities (US$)
Net mark-to-market interest rate
derivative liability
Expenditure derivatives
accounted for as cash flow
hedges:
–
–
2,000
–
–
–
3,250
500
–
As assets
As liabilities
438
630
1.2453
1.3151
545
829
Net mark-to-market expenditure
derivative liability
Equity derivatives not accounted
for as hedges:
As assets
Net mark-to-market asset
–
–
265
1,121
40
(6)
(277)
(243)
11
(30)
(19)
36
895
As assets
As liabilities
4,550
4,642
1.0795
1.3358
4,912
6,201
1,405
(307)
Short-term debt derivatives not
accounted for as hedges:
As liabilities
449
1.2995
583
(12)
Net mark-to-market debt
derivative asset
Expenditure derivatives
accounted for as cash flow
hedges:
1,086
As liabilities
1,590
1.3421
2,134
(109)
Equity derivatives not accounted
for as hedges:
As assets
Net mark-to-market asset
–
–
238
34
1,011
Below is a summary of the net cash (payments) proceeds on debt
derivatives.
(In millions of dollars)
Proceeds on debt derivatives related to US
commercial paper
Proceeds on debt derivatives related to
credit facility borrowings
Total proceeds on debt derivatives
Payments on debt derivatives related to
Years ended December 31
2021
2020
2,911
5,542
1,003
3,914
1,364
6,906
US commercial paper
(2,926)
(5,441)
Payments on debt derivatives related to
credit facility borrowings
Total payments on debt derivatives
Net (payments) proceeds on settlement of
(1,005)
(1,385)
(3,931)
(6,826)
debt derivatives
(17)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Below is a summary of the changes in fair value of our derivative instruments for 2021 and 2020.
Year ended December 31, 2021
(In millions of dollars)
Derivative instruments, beginning of year
Proceeds received from settlement of derivatives
Payment on derivatives settled
Increase (decrease) in fair value of derivatives
Derivative instruments, end of year
Mark-to-market asset
Mark-to-market liability
Mark-to-market asset (liability)
Debt
derivatives
(hedged)
Debt
derivatives
(unhedged)
Interest rate
derivatives
Expenditure
derivatives
Equity
derivatives
Total
instruments
1,098
–
–
12
1,110
1,453
(343)
1,110
(12)
(3,914)
3,931
6
11
11
–
11
–
(9)
–
(234)
(243)
40
(283)
(243)
(109)
(1,201)
1,305
(14)
(19)
11
(30)
(19)
34
(3)
–
5
36
36
–
36
1,011
(5,127)
5,236
(225)
895
1,551
(656)
895
Year ended December 31, 2020
(In millions of dollars)
Derivative instruments, beginning of year
Proceeds received from settlement of derivatives
Payment on derivatives settled
(Decrease) increase in fair value of derivatives
Derivative instruments, end of year
Mark-to-market asset
Mark-to-market liability
Mark-to-market asset (liability)
Debt
derivatives
(hedged)
Debt
derivatives
(unhedged)
Expenditure
derivatives
Equity
derivatives
Total
instruments
1,412
–
–
(314)
1,098
1,405
(307)
1,098
(29)
(6,906)
6,826
97
(12)
–
(12)
(12)
1
(1,261)
1,221
(70)
(109)
–
(109)
(109)
55
1
–
(22)
34
34
–
34
1,439
(8,166)
8,047
(309)
1,011
1,439
(428)
1,011
Below is a summary of the derivative instruments assets and
derivative instruments liabilities reflected on our Consolidated
Statements of Financial Position.
2021, 100% of our outstanding expenditure derivatives and interest
rate derivatives have been designated as hedges for accounting
purposes
(2020 – 100% of our outstanding expenditure
derivatives).
(In millions of dollars)
Current asset
Long-term asset
Current liability
Long-term liability
Net mark-to-market asset
As at December 31
2021
120
1,431
1,551
(467)
(189)
(656)
895
2020
61
1,378
1,439
(110)
(318)
(428)
1,011
As at December 31, 2021, US$11.2 billion notional amount of our
outstanding debt derivatives have been designated as hedges for
accounting purposes (2020 – US$9.2 billion). As at December 31,
Debt derivatives
We use cross-currency interest rate agreements and foreign
exchange forward agreements (collectively, debt derivatives) to
manage risks from fluctuations in foreign exchange rates and
interest rates associated with our US dollar-denominated senior
notes and debentures, lease liabilities, credit facility borrowings,
and US CP borrowings (see note 19). We designate the debt
derivatives related to our senior notes, debentures, and lease
liabilities as hedges for accounting purposes against the foreign
exchange risk or interest rate risk associated with specific issued
and forecast debt instruments. Debt derivatives related to our
credit facility and US CP borrowings have not been designated as
hedges for accounting purposes.
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During 2021 and 2020, we entered and settled debt derivatives related to our credit facility borrowings and US CP program as follows:
(In millions of dollars, except exchange rates)
Credit facilities
Debt derivatives entered
Debt derivatives settled
Net cash paid on settlement
US commercial paper program
Debt derivatives entered
Debt derivatives settled
Net cash (paid) received on settlement
Year ended
December 31, 2021
Year ended
December 31, 2020
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
1,200
800
1.253
1.254
2,568
2,312
1.260
1.259
1,503
1,003
(2)
3,235
2,911
(15)
970
970
1.428
1.406
3,316
4,091
1.329
1.330
1,385
1,364
(21)
4,406
5,441
101
We did not enter into any debt derivatives in 2021 on issued senior notes. We entered into US$2 billion of forward starting cross-currency
swaps to hedge the foreign exchange and interest risk associated with debt instruments we expect to issue in the future related to the
Transaction.
In 2020, we entered into debt derivatives to hedge the foreign currency risk associated with the principal and interest components of the
US dollar-denominated senior notes issued (see note 21). Below is a summary of the debt derivatives we entered to hedge senior notes
issued during 2020.
(In millions of dollars, except for coupon and
interest rates)
Effective date
2020 issuances
June 22, 2020
Principal/Notional
Fixed hedged (Cdn$)
amount (US$) Maturity date
Coupon rate
interest rate 1 Equivalent (Cdn$)
US$
Hedging effect
750
2022 USD LIBOR + 0.60%
0.955%
1,019
1 Converting from a fixed US$ coupon rate to a weighted average Cdn$ fixed rate.
During 2021 and 2020, we entered and settled debt derivatives related to our outstanding lease liabilities as follows:
(In millions of dollars, except exchange rates)
Debt derivatives entered
Debt derivatives settled
As at December 31, 2021, we had US$193 million notional amount
of debt derivatives outstanding related to our outstanding lease
liabilities (2020 – US$142 million) with terms to maturity ranging
from January 2022 to December 2024 (2020 – January 2021 to
December 2023), at an average rate of $1.301/US$ (2020 –
$1.352/US$).
Interest rate derivatives
From time to time, we use bond forward derivatives or interest rate
swap derivatives (collectively, interest rate derivatives) to hedge
interest rate risk on current and future debt instruments. Our
interest rate derivatives are designated as hedges for accounting
purposes.
We have entered into interest rate swap derivatives during the year
ended December 31, 2021, including:
• $1,250 million bond
forwards to hedge the underlying
Government of Canada (GoC) interest rate risk that will form a
portion of the interest rate risk associated with anticipated future
debt issuances;
Year ended
December 31, 2021
Year ended
December 31, 2020
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
132
81
1.273
1.333
168
108
115
43
1.374
1.372
158
59
• interest rate swap derivatives to hedge the interest rate risk on an
additional $3.25 billion of debt instruments we expect to issue in
the future; and
• interest rate swap derivatives to hedge the interest rate risk on
US$2 billion of debt instruments we expect to issue in the future.
Concurrent with our issuance of $2 billion subordinated notes in
December 2021 (see note 21), we terminated $750 million of
bond forwards and received $9 million upon settlement. As at
December 31, 2021, we had $500 million of bond forwards
outstanding.
Concurrent with our issuance of US$750 million subordinated
notes in February 2022 (see note 21), we terminated $950 million
of interest rate swap derivatives and received $33 million upon
settlement.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 123
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Expenditure derivatives
Below is a summary of the expenditure derivatives we entered and settled during 2021 and 2020 to manage foreign exchange risk related
to certain forecast expenditures.
Year ended
December 31, 2021
Year ended
December 31, 2020
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
438
960
1.244
1.360
545
1,306
1,560
940
1.343
1.299
2,095
1,221
value of our private investments by using implied valuations from
follow-on financing rounds, third-party sale negotiations, or market-
based approaches. These are applied appropriately to each
investment depending on its future operating and profitability
prospects.
The fair values of each of our public debt instruments are based on
the period-end estimated market yields, or period-end trading
values, where available. We determine the fair values of our debt
derivatives and expenditure derivatives using an estimated credit-
adjusted mark-to-market valuation by discounting cash flows to the
measurement date. In the case of debt derivatives and expenditure
derivatives in an asset position, the credit spread for the financial
institution counterparty is added to the risk-free discount rate to
determine the estimated credit-adjusted value for each derivative.
For these debt derivatives and expenditure derivatives in a liability
position, our credit spread is added to the risk-free discount rate for
each derivative.
The fair values of our equity derivatives are based on the
period-end quoted market value of Class B Non-Voting Shares.
Our disclosure of the three-level fair value hierarchy reflects the
significance of the inputs used in measuring fair value:
• financial assets and financial liabilities in Level 1 are valued by
referring to quoted prices in active markets for identical assets
and liabilities;
• financial assets and financial liabilities in Level 2 are valued using
inputs based on observable market data, either directly or
indirectly, other than the quoted prices; and
• Level 3 valuations are based on inputs that are not based on
observable market data.
There were no material financial instruments categorized in Level 3
as at December 31, 2021 and 2020 and there were no transfers
between Level 1, Level 2, or Level 3 during the respective periods.
(In millions of dollars, except exchange rates)
Expenditure derivatives entered
Expenditure derivatives settled
As at December 31, 2021, we had US$1,068 million of expenditure
derivatives outstanding (2020 – US$1,590 million), at an average
rate of $1.287/US$ (2020 – $1.342/US$), with terms to maturity
ranging from January 2022 to December 2023 (2020 – January
2021 to December 2022). As at December 31, 2021, our
outstanding expenditure derivatives maturing
in 2022 were
hedged at an average exchange rate of $1.292/US$.
Equity derivatives
We have equity derivatives to hedge market price appreciation risk
associated with Class B Non-Voting Shares that have been granted
under our stock-based compensation programs (see note 25). The
equity derivatives were originally entered into at a weighted
average price of $50.37 with terms to maturity of one year,
extendible for further one-year periods with the consent of the
hedge counterparties. The equity derivatives have not been
designated as hedges for accounting purposes.
As at December 31, 2021, we had equity derivatives outstanding
for 5.0 million (2020 – 4.6 million) Class B Non-Voting Shares with a
weighted average price of $53.10 (2020 – $51.82).
During the year ended December 31, 2021, we entered into
0.4 million equity derivatives (2020 – 0.3 million) with a weighted
average price of $60.98 (2020 – $56.08).
During the year ended December 31, 2021, we reset the weighted
average price to $59.64 and reset the expiry dates to April 2023
(from April 2021) on 0.5 million equity derivatives and received net
proceeds of $3 million.
During the year ended December 31, 2020, we reset the weighted
average price to $54.16 and reset the expiry dates to April 2021
(from April 2020) on 0.5 million equity derivatives and made net
payments of $1 million.
Additionally, we executed extension agreements for the remainder
of our equity derivative contracts under substantially the same
commitment terms and conditions with revised expiry dates to
April 2022 (from April 2021).
FAIR VALUES OF FINANCIAL INSTRUMENTS
The carrying values of cash and cash equivalents, accounts
receivable, bank advances, short-term borrowings, and accounts
payable and accrued liabilities approximate their fair values
because of the short-term natures of these financial instruments.
The carrying values of our financing receivables also approximate
their fair values based on our recognition of an expected credit loss
allowance.
We determine the fair value of each of our publicly traded
investments using quoted market values. We determine the fair
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Below is a summary of the financial instruments carried at fair value.
(In millions of dollars)
Financial assets
Investments, measured at FVTOCI:
As at December 31
Carrying value
Fair value (Level 1)
Fair value (Level 2)
2021
2020
2021
2020
2021
2020
Investments in publicly traded companies
1,581 1,535
1,581
1,535
–
–
Held-for-trading:
Debt derivatives accounted for as cash flow hedges
Debt derivatives not accounted for as cash flow hedges
Interest rate derivatives accounted for as cash flow hedges
Expenditure derivatives accounted for as cash flow hedges
Equity derivatives not accounted for as cash flow hedges
Total financial assets
Financial liabilities
Held-for-trading:
1,453 1,405
–
–
–
34
11
40
11
36
–
–
–
–
–
–
–
–
–
–
1,453
11
40
11
36
1,405
–
–
–
34
3,132 2,974
1,581
1,535
1,551
1,439
Debt derivatives accounted for as cash flow hedges
Debt derivatives not accounted for as hedges
Interest rate derivatives accounted for as cash flow hedges
Expenditure derivatives accounted for as cash flow hedges
Total financial liabilities
343
–
283
30
656
307
12
–
109
428
–
–
–
–
–
–
–
–
–
–
343
–
283
30
656
307
12
–
109
428
Below is a summary of the fair value of our long-term debt.
(In millions of dollars)
As at December 31
2021
2020
Carrying amount Fair value 1 Carrying amount Fair value 1
Long-term debt (including current portion)
18,688
20,790
18,201
22,006
1 Long-term debt (including current portion) is measured at Level 2 in the three-level fair value hierarchy, based on year-end trading values.
We did not have any non-derivative held-to-maturity financial assets during the years ended December 31, 2021 and 2020.
NOTE 18: INVESTMENTS
irrevocably classify our
ACCOUNTING POLICY
Investments in publicly traded and private companies
in
We have elected to
companies over which we do not have control or significant
influence as FVTOCI with no subsequent reclassification to net
income because we do not hold these investments with the intent
of short-term trading. We account for them as follows:
• publicly
traded companies – at fair value based on publicly
investments
quoted prices; and
• private companies – at fair value using implied valuations from
follow-on financing rounds, third-party sale negotiations, or
market-based approaches.
Investments in associates and joint arrangements
An entity is an associate when we have significant influence over the
entity’s financial and operating policies but do not control the
entity. We are generally presumed to have significant influence
over an entity when we hold more than 20% of the voting power.
A joint arrangement exists when there is a contractual agreement
that establishes joint control over activities and requires unanimous
consent for strategic financial and operating decisions. We classify
our interests in joint arrangements into one of two categories:
• joint ventures – when we have the rights to the net assets of the
arrangement; and
• joint operations – when we have the rights to the assets and
obligations for the liabilities related to the arrangement.
We use the equity method to account for our investments in
associates and joint ventures; we recognize our proportionate
interest in the assets, liabilities, revenue, and expenses of our joint
operations.
We initially recognize our investments in associates and joint
ventures at cost and subsequently increase or decrease the
carrying amounts based on our share of each entity’s income or
loss. Distributions we receive from these entities reduce the
carrying amounts of our investments.
We eliminate unrealized gains and losses from our investments in
associates or joint ventures against our investments, up to the
amount of our interest in the entities.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 125
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Impairment in associates and joint ventures
At the end of each reporting period, we assess whether there is
objective evidence that impairment exists in our investments in
associates and joint ventures. If objective evidence exists, we
compare the carrying amount of the investment to its recoverable
amount and recognize the excess over the recoverable amount, if
any, as a loss in net income.
Toronto Raptors, MLS’ Toronto FC, the CFL’s Toronto Argonauts,
the AHL’s Toronto Marlies, and other assets. We, along with BCE
Inc. (BCE), jointly own an indirect net 75% equity interest in MLSE
with our portion representing a 37.5% equity interest in MLSE. Our
investment in MLSE is accounted for as a joint venture using the
equity method.
INVESTMENTS BY TYPE
(In millions of dollars)
Investments in:
Publicly traded companies
Private companies
Investments, measured at FVTOCI
Investments, associates and joint ventures
As at December 31
2021
2020
1,581
53
1,634
859
1,535
97
1,632
904
Glentel
Glentel is a large, multicarrier mobile phone retailer with several
hundred Canadian wireless retail distribution outlets. We own a
50% equity interest in Glentel, with the remaining 50% interest
owned by BCE. Our investment in Glentel is accounted for as a joint
venture using the equity method.
Below is a summary of financial information pertaining to our
significant associates and joint ventures and our portions thereof.
As at or years ended December 31
Total investments
2,493
2,536
(In millions of dollars)
Current assets
Long-term assets
Current liabilities
Long-term liabilities
Total net assets
Our share of net assets
Revenue
Expenses
Net loss
Our share of net loss
2021
537
3,254
(990)
(1,177)
1,624
855
1,805
(1,912)
(107)
(44)
2020
512
3,409
(857)
(1,358)
1,706
900
1,310
(1,410)
(100)
(40)
One of our joint ventures has a non-controlling interest that has a
right to require our joint venture to purchase that non-controlling
interest at a future date at fair value.
INVESTMENTS, MEASURED AT FAIR VALUE THROUGH
OTHER COMPREHENSIVE INCOME
Publicly traded companies
We hold a number of interests in publicly traded companies,
including Cogeco Inc. and Cogeco Communications Inc. This year,
we recognized realized losses of nil and unrealized gains of
$17 million (2020 – nil of realized losses and $296 million of
unrealized losses) in other comprehensive income.
INVESTMENTS, ASSOCIATES AND JOINT VENTURES
We have interests in a number of associates and joint ventures,
some of which include:
Maple Leaf Sports and Entertainment Limited (MLSE)
MLSE, a sports and entertainment company, owns and operates
the Scotiabank Arena, the NHL’s Toronto Maple Leafs, the NBA’s
NOTE 19: SHORT-TERM BORROWINGS
is a summary of our short-term borrowings as at
Below
December 31, 2021 and 2020.
(In millions of dollars)
Receivables securitization program
US commercial paper program (net of the
discount on issuance)
Non-revolving credit facility borrowings
As at December 31
2021
2020
800
893
507
650
571
–
Total short-term borrowings
2,200
1,221
126
| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
Below is a summary of the activity relating to our short-term borrowings for the years ended December 31, 2021 and 2020.
Year ended December 31, 2021
Year ended December 31, 2020
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
(In millions of dollars, except exchange rates)
Proceeds received from receivables securitization
Net proceeds received from receivables securitization
150
150
Proceeds received from US commercial paper
Repayment of US commercial paper
2,568
(2,314)
1.260
1.259
3,235
(2,914)
3,316
(4,098)
1.329
1.355
Net proceeds received from (repayment of) US commercial paper
321
Proceeds received from non-revolving credit facilities (US$)
Repayment of non-revolving credit facilities (US$)
1,200
(800)
1.253
1.254
1,503
(1,003)
–
–
–
–
Net proceeds received from non-revolving credit facilities
Net proceeds received from (repayment of) short-term borrowings
500
971
–
–
4,406
(5,552)
(1,146)
–
–
–
(1,146)
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RECEIVABLES SECURITIZATION PROGRAM
We participate in a receivables securitization program with a
Canadian financial
institution that allows us to sell certain
receivables into the program.
As at December 31, 2021, the proceeds of the sales were
committed up to a maximum of $1,200 million (2020 – $1,200
million) and the program has a term of three years, ending on
December 22, 2023.
We continue to service and retain substantially all of the risks and
rewards relating to the receivables we sell, and therefore, the
receivables remain recognized on our Consolidated Statements of
Financial Position and the funding received is recognized 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.
(In millions of dollars)
Receivables sold to buyer as security
Short-term borrowings from buyer
Overcollateralization
(In millions of dollars)
Receivables securitization program,
beginning of year
Net proceeds received from
receivables securitization
Receivables securitization program,
end of year
As at December 31
2021
2,679
(800)
1,879
2020
2,130
(650)
1,480
Years ended December 31
2021
2020
US COMMERCIAL PAPER PROGRAM
We have a US CP program that allows us to issue up to a maximum
aggregate principal amount of US$1.5 billion. Funds can be
borrowed under this program with terms to maturity ranging from
1 to 397 days, subject to ongoing market conditions. Issuances
made under the US CP program are issued at a discount.
Borrowings under our US CP program are classified as short-term
borrowings on our Consolidated Statements of Financial Position
when they are due within one year from the date of the financial
statements.
650
150
800
650
–
650
Below is a summary of the activity relating to our US CP program for the years ended December 31, 2021 and 2020.
(In millions of dollars, except exchange rates)
US commercial paper, beginning of year
Net proceeds received from (repayment of) US commercial
paper
Discounts on issuance 1
(Gain) loss on foreign exchange 1
US commercial paper, end of year
n/m – not meaningful
1 Included in finance costs.
Year ended December 31, 2021
Year ended December 31, 2020
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
449
1.272
571
1,223
1.298
1,588
254
1
1.264
n/m
704
1.268
321
2
(1)
893
(782)
8
1.465
1.250
(1,146)
10
119
449
1.272
571
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 127
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Concurrent with the US CP borrowings, we entered into debt
derivatives to hedge the foreign currency risk associated with the
principal and interest components of the borrowings under the US
CP program (see note 17). We have not designated these debt
derivatives as hedges for accounting purposes.
NON-REVOLVING CREDIT FACILITY
In June 2021, we entered into non-revolving credit facilities with an
aggregate limit of US$1.6 billion that mature in June 2022. Any
borrowings under these facilities will be recorded as short-term
borrowings as they will be due within 12 months. Borrowings under
the facilities are unsecured, guaranteed by RCCI, and rank equally
in right of payment with all of our senior notes and debentures. In
December 2021, we terminated the undrawn non-revolving credit
facilities with an aggregate limit of US$1.2 billion. In February 2022,
we repaid the outstanding US$400 million and terminated the
facility.
Below is a summary of the activity relating to our non-revolving credit facilities for the year ended December 31, 2021.
(In millions of dollars, except exchange rates)
Non-revolving credit facility, beginning of year
Net proceeds received from non-revolving credit facilities
Loss on foreign exchange 1
Non-revolving credit facility, end of year
1 Included in finance costs.
Year ended December 31, 2021
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
–
400
–
1.250
400
1.268
–
500
7
507
COMMITTED CREDIT FACILITY
In March 2021, in connection with the Transaction (see note 30), we
entered into a binding commitment letter for a committed credit
facility with a syndicate of banks in an amount up to $19 billion. The
commitment remains subject to the satisfaction of conditions to
limitation, the
effectiveness and drawing,
completion of credit documentation in respect of such commitment
and the completion of the Transaction. The committed facility
including, without
cannot be drawn upon until the closing date of the Transaction. It is
only available to be drawn to fund part of the acquisition cost of the
Transaction and to pay fees and expenses related to the
Transaction. If drawn, any drawings must be repaid within 364 days.
If undrawn, the facility terminates on the closing date of the
acquisition. As a result of entering into the Shaw term loan facility
(see note 21), the maximum amount we can draw on this
committed facility decreased to $13 billion.
NOTE 20: PROVISIONS
ACCOUNTING POLICY
Decommissioning and restoration costs
We use network and other assets on leased premises in some of
our business activities. We expect to exit these premises in the
future and we therefore make provisions for the costs associated
with decommissioning the assets and restoring the locations to
their original conditions when we have a legal or constructive
obligation to do so. We calculate these costs based on a current
estimate of the costs that will be incurred, project those costs into
the future based on management’s best estimates of future trends
in prices, inflation, and other factors, and discount them to their
present value. We revise our forecasts when business conditions or
technological requirements change.
When we recognize a decommissioning liability, we recognize a
corresponding asset
in property, plant and equipment (as
property, plant and equipment or a right-of-use asset, as applicable
based on the underlying asset) and depreciate the asset based on
the corresponding asset’s useful life following our depreciation
policies for property, plant and equipment and right-of-use assets,
as applicable. We recognize the accretion of the liability as a
charge to finance costs on the Consolidated Statements of Income.
Restructuring
We make provisions for restructuring when we have approved a
detailed and formal restructuring plan and either the restructuring
has started or management has announced the plan’s main
features to the employees affected by it. Restructuring obligations
that have uncertain timing or amounts are recognized as
provisions; otherwise they are recognized as accrued liabilities. All
charges are recognized in restructuring, acquisition and other on
the Consolidated Statements of Income (see note 10).
Onerous contracts
We make provisions for onerous contracts when the unavoidable
costs of meeting our obligation under a contract exceed the
benefits we expect to realize from it. We measure these provisions
at the present value of
the expected cost of
the lower of
terminating the contract or the expected cost of continuing with
the contract. We recognize any impairment loss on the assets
associated with the contract before we make the provision.
ESTIMATES
We recognize a provision when a past event creates a legal or
constructive obligation that can be reasonably estimated and is
likely to result in an outflow of economic resources. We recognize a
provision even when the timing or amount of the obligation may
be uncertain, which can require us to use significant estimates.
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JUDGMENTS
Significant judgment is required to determine when we are subject
to unavoidable costs arising from onerous contracts. These
judgments may include, for example, whether a certain promise is
legally binding or whether we may be successful in negotiations
with the counterparty.
Decommissioning and restoration costs
Cash outflows associated with our decommissioning liabilities are
generally expected to occur at the decommissioning dates of the
assets to which they relate, which are long-term in nature. The
timing and extent of restoration work that will ultimately be
required for these sites is uncertain.
PROVISIONS DETAILS
(In millions of dollars)
December 31, 2020
Additions
December 31, 2021
Current (recorded in “other
current liabilities”)
Long-term
Decommissioning
Liabilities Other Total
45
7
52
3
49
1
–
1
–
1
46
7
53
3
50
NOTE 21: LONG-TERM DEBT
(In millions of dollars, except interest rates)
Senior notes
Senior notes
Senior notes
Senior notes
Senior notes
Senior notes
Senior notes
Senior notes
Senior notes
Senior notes
Senior debentures 1
Senior notes
Senior notes
Senior notes
Senior notes
Senior notes
Senior notes
Senior notes
Senior notes
Senior notes
Senior notes
Subordinated notes 2
Deferred transaction costs and discounts
Less current portion
Total long-term debt
Due
date
2021
2022
2022
2023
2023
2024
2025
2026
2027
2029
2032
2038
2039
2040
2041
2043
2043
2044
2048
2049
2049
2081
Principal
amount
1,450
600
US 750
US 500
US 850
600
US 700
US 500
1,500
1,000
US 200
US 350
500
800
400
US 500
US 650
US 1,050
US 750
US 1,250
US 1,000
2,000
Interest
rate
5.340%
4.000%
Floating
3.000%
4.100%
4.000%
3.625%
2.900%
3.650%
3.250%
8.750%
7.500%
6.680%
6.110%
6.560%
4.500%
5.450%
5.000%
4.300%
4.350%
3.700%
5.000%
As at December 31
2021
—
600
951
634
1,078
600
886
634
1,500
1,000
254
444
500
800
400
634
823
1,331
951
1,585
1,268
2,000
2020
1,450
600
955
637
1,082
600
890
637
1,500
1,000
255
446
500
800
400
637
827
1,337
955
1,592
1,273
—
18,873
(185)
(1,551)
18,373
(172)
(1,450)
17,137
16,751
1 Senior debentures originally issued by Rogers Cable Inc. which are unsecured obligations of RCI and for which RCCI was an unsecured guarantor as at December 31, 2021 and
2020.
2 The subordinated notes can be redeemed at par on the five-year anniversary or on any subsequent interest payment date.
Each of the above senior notes and debentures are unsecured and,
as at December 31, 2021, were guaranteed by RCCI, ranking
equally with all of RCI’s other senior notes, debentures, bank credit
facilities, and letter of credit facilities. We use derivatives to hedge
the foreign exchange risk associated with the principal and interest
components of all of our US dollar-denominated senior notes and
debentures (see note 17).
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 129
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The tables below summarize the activity relating to our long-term debt for the years ended December 31, 2021 and 2020.
(In millions of dollars, except exchange rates)
Credit facility borrowings (US$)
Credit facility repayments (US$)
Net borrowings under credit facilities
Senior note issuances (Cdn$)
Senior note issuances (US$)
Total senior note issuances
Senior note repayments (Cdn$)
Net (repayment) issuance of senior notes
Subordinated note issuances (Cdn$)
Net issuance of long-term debt
(In millions of dollars)
Long-term debt net of transaction
costs, beginning of year
Net issuance of long-term debt
Gain on foreign exchange
Deferred transaction costs incurred
Amortization of deferred transaction
costs
Long-term debt net of transaction
Years ended December 31
2021
2020
18,201
550
(50)
(31)
15,967
2,540
(297)
(23)
18
14
costs, end of year
18,688
18,201
In April 2021, we entered into a $6 billion Shaw term loan facility
consisting of three tranches of $2 billion each. The facility cannot
be drawn upon until the closing date of the Transaction. The first
tranche matures three years after the Transaction closing date and
subsequent tranches mature in years four and five thereafter,
respectively. At tranche maturity, any outstanding borrowings
under that tranche must be repaid. The interest rate charged on
borrowings from the Shaw term loan facility ranges from nil to
1.25% per annum over the bank prime rate or base rate, or 0.65%
to 2.25% over the bankers’ acceptance rate or London Inter-Bank
Offered Rate.
WEIGHTED AVERAGE INTEREST RATE
As at December 31, 2021, our effective weighted average interest
rate on all debt and short-term borrowings, including the effect of
all of the associated debt derivatives and interest rate derivatives,
was 3.95% (2020 – 4.09%).
Year ended December 31, 2021
Year ended December 31, 2020
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
Notional
(US$)
Exchange
rate
Notional
(Cdn$)
–
–
–
–
–
–
–
–
–
–
–
–
(1,450)
(1,450)
2,000
550
970
(970)
1.428
1.406
1,385
(1,364)
750
1.359
21
1,500
1,019
2,519
–
2,519
–
2,540
BANK CREDIT AND LETTER OF CREDIT FACILITIES
Our $4.0 billion revolving credit facility is available on a fully
revolving basis until maturity and there are no scheduled
reductions prior to maturity. The
interest rate charged on
borrowings from the revolving credit facility ranges from nil to
1.25% per annum over the bank prime rate or base rate, or 0.85%
to 2.25% over the bankers’ acceptance rate or London Inter-Bank
Offered Rate.
In 2021, we amended our revolving credit facility to, among other
things, increase the total credit limit and extend the maturity dates.
We increased the total credit limit from $3.2 billion to $4 billion by
increasing the limits of the two tranches to $3 billion and $1 billion
(from $2.5 billion and $700 million), respectively. We also extended
the maturity date of the $3 billion tranche from September 2023 to
April 2026 and the $1 billion tranche from September 2022 to April
2024.
SENIOR AND SUBORDINATED NOTES AND
DEBENTURES
We pay interest on all of our fixed-rate senior and subordinated
notes and debentures on a semi-annual basis.
We have the option to redeem each of our fixed-rate senior notes
and debentures, in whole or in part, at any time, if we pay the
premiums specified in the corresponding agreements.
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| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
Issuance of senior and subordinated notes
Below is a summary of the senior and subordinated notes that we issued in 2021 and 2020.
(In millions of dollars, except interest rates and discounts)
Date issued
2021 issuance
Principal
amount Due date
Discount/
premium at
issuance
Total gross
proceeds
1
(Cdn$)
Interest rate
December 17, 2021 (subordinated) 3
2,000
2081
5.000%
At par
2,000
2020 issuances
March 31, 2020 (senior)
June 22, 2020 (senior)
1,500
750
US
2027
3.650%
2022 USD LIBOR + 0.60%
99.511%
At par
1,500
1,019
Transaction
costs and
2
(Cdn$)
discounts
20
16
5
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.
3 Deferred transaction costs and discounts in the carrying value of the subordinated notes are recognized in net income using the effective interest method over a five-year period.
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Concurrent with the 2020 US dollar-denominated issuances, we
entered into debt derivatives to convert all interest and principal
payment obligations to Canadian dollars (see note 17).
During the year ended December 31, 2021, we issued $2 billion
subordinated notes due 2081 with an initial coupon of 5% for the
first five years. Concurrently, we terminated the $750 million bond
forwards entered into in July 2021 to hedge the interest rate risk
associated with future debt issuances. We used the proceeds to
partially fund the remaining payment required to obtain the 3500
MHz spectrum licences.
In February 2022, we issued US$750 million subordinated notes
due 2082 with an initial coupon of 5.25% for the first five years.
Concurrently, we terminated $950 million of interest rate derivatives
entered into in 2021 to hedge the interest rate risk associated with
future debt issuances. We received net proceeds of US$740 million
($938 million) from the issuance.
Each of the subordinated notes can be redeemed at par on their
respective five-year anniversary or on any subsequent interest
payment date. The subordinated notes are unsecured and
subordinated obligations of RCI. Payment on these notes will,
under certain circumstances, be subordinated to the prior payment
in full of all of our senior indebtedness, including our senior notes,
debentures, and bank credit facilities. In addition, upon the
occurrence of certain events involving a bankruptcy or insolvency of
RCI, the outstanding principal and interest of such subordinated
notes would automatically convert into preferred shares. We
understand that S&P Global Ratings Services (S&P), Moody’s
Investors Service (Moody’s), and Fitch Ratings (Fitch) will only
include 50% of the outstanding principal amount of these
subordinated notes in their leverage ratio calculation for at least the
first five years after their issuance.
In connection with these issuances, the Board approved the creation
of new Series I and Series II preferred shares, respectively. Series I
and Series II have been authorized for up to 3.3 million and
1.4 million preferred shares, respectively, have no voting rights, have
par values of $1,000 per share, and will be issued automatically upon
the occurrence of certain events involving a bankruptcy or insolvency
of RCI to holders of the respective subordinated notes.
Repayment of senior notes and related derivative settlements
During the year ended December 31, 2021, we repaid the entire
outstanding principal amount of our $1.45 billion 5.34% senior
notes at maturity. There were no derivatives associated with these
senior notes. We did not repay any senior notes or settle any
related debt derivatives during the year ended December 31,
2020.
PRINCIPAL REPAYMENTS
Below is a summary of the principal repayments on our long-term
debt due in each of the next five years and thereafter as at
December 31, 2021.
(In millions of dollars)
2022
2023
2024
2025
2026 1
Thereafter
Total long-term debt
1,551
1,712
600
886
2,634
11,490
18,873
1 Reflects repayment of the subordinated notes issued in December 2021 on the five-
year anniversary.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 131
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TERMS AND CONDITIONS
As at December 31, 2021 and 2020, we were in compliance with all
financial covenants, financial ratios, and all of the terms and
conditions of our long-term debt agreements. There were no
financial leverage covenants in effect other than those under our
bank credit and letter of credit facilities.
The 8.75% debentures due in 2032 contain debt incurrence tests
and restrictions on additional investments, sales of assets, and
payment of dividends, all of which are suspended in the event the
public debt securities are assigned investment-grade ratings by at
least two of three specified credit rating agencies. As at
December 31, 2021, these public debt securities were assigned an
investment-grade rating by each of the three specified credit rating
agencies and, accordingly, these restrictions have been suspended
as long as the investment-grade ratings are maintained. Our other
senior notes do not have any of these restrictions, regardless of the
related credit ratings. The repayment dates of certain debt
agreements can also be accelerated if there is a change in control
of RCI.
NOTE 22: OTHER LONG-TERM LIABILITIES
As at December 31
(In millions of dollars)
Note
2021
2020
Deferred pension liability
Supplemental executive retirement
plan
Stock-based compensation
Derivative instruments
Contract liabilities
Other
Total other long-term liabilities
23
23
25
17
5
3
590
96
49
189
52
176
565
92
39
318
69
41
1,149
NOTE 23: POST-EMPLOYMENT BENEFITS
ACCOUNTING POLICY
Post-employment benefits – defined benefit pension plans
We offer contributory and non-contributory defined benefit
pension plans that provide employees with a lifetime monthly
pension on retirement.
We separately calculate our net obligation for each defined benefit
pension plan by estimating the amount of future benefits employees
have earned in return for their service in the current and prior years
and discounting those benefits to determine their present value.
We accrue our pension plan obligations as employees provide the
services necessary to earn the pension. We use a discount rate
based on market yields on high-quality corporate bonds at the
measurement date to calculate the accrued pension benefit
obligation. Remeasurements of the accrued pension benefit
obligation are determined at the end of the year and include
actuarial gains and losses, returns on plan assets in excess of interest
income, and any change in the effect of the asset ceiling. These are
recognized in other comprehensive income and retained earnings.
The cost of pensions is actuarially determined and takes into
account the following assumptions and methods for pension
accounting related to our defined benefit pension plans:
•
expected rates of salary increases for calculating increases in
future benefits;
• mortality rates for calculating the life expectancy of plan members;
and
• past service costs from plan amendments are immediately
expensed in net income.
We recognize our net pension expense for our defined benefit
pension plans and contributions to defined contribution plans as an
132
| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
employee benefit expense in operating costs on the Consolidated
Statements of Income in the periods the employees provide the
related services.
Post-employment benefits – defined contribution pension plan
In 2016, we closed the defined benefit pension plans to new
members and introduced a defined contribution pension plan. This
change did not impact current defined benefit members at the
time; any employee enrolled in any of the defined benefit pension
plans at that date continues to earn pension benefits and credited
service in their respective plan.
We recognize a pension expense in relation to our contributions to
the defined contribution pension plan when the employee
provides service to the Company.
Termination benefits
We recognize termination benefits as an expense when we are
committed to a formal detailed plan to terminate employment
before the normal retirement date and it is not realistic that we will
withdraw it.
ESTIMATES
Detailed below are the significant assumptions used in the actuarial
calculations used to determine the amount of the defined benefit
pension obligation and related expense.
Significant estimates are involved in determining pension-related
balances. Actuarial estimates are based on projections of
employees’ compensation
levels at the time of retirement.
Retirement benefits are primarily based on career average
earnings, subject to certain adjustments. The most recent actuarial
funding valuations were completed as at January 1, 2021.
Principal actuarial assumptions
Weighted average of significant
assumptions:
Defined benefit obligation
Discount rate
Rate of compensation
increase
Mortality rate
Pension expense
Discount rate
Rate of compensation
increase
Mortality rate
2021
2020
3.3%
2.7%
1.0% to 4.5%, 1.0% to 4.5%,
based on
employee age
CPM2014Priv
with Scale
CPM-B
based on
employee age
CPM2014Priv
with Scale
CPM-B
2.7%
3.2%
1.0% to 4.5%, 1.0% to 4.5%,
based on
employee age
CPM2014Priv
with Scale
CPM-B
based on
employee age
CPM2014Priv
with Scale
CPM-B
Sensitivity of key assumptions
In the sensitivity analysis shown below, we determine the defined
benefit obligation for our funded plans using the same method
used to calculate the defined benefit obligation we recognize on the
Consolidated Statements of Financial Position. We calculate
sensitivity by changing one assumption while holding the others
constant. This leads to limitations in the analysis as the actual change
in defined benefit obligation will likely be different from that shown
in the table, since it is likely that more than one assumption will
change at a time, and that some assumptions are correlated.
(In millions of dollars)
Discount rate
Impact of 0.5% increase
Impact of 0.5% decrease
Rate of future compensation increase
Impact of 0.25% increase
Impact of 0.25% decrease
Mortality rate
Impact of 1 year increase
Impact of 1 year decrease
Increase (decrease) in
accrued benefit obligation
2021
2020
(251)
285
(279)
319
17
(17)
67
(72)
20
(20)
76
(80)
POST-EMPLOYMENT BENEFITS STRATEGY AND POLICY
We sponsor a number of contributory and non-contributory
pension arrangements for employees, including defined benefit
and defined contributions plans. We do not provide any
non-pension post-retirement benefits. We also provide unfunded
supplemental pension benefits to certain executives.
The Rogers Defined Benefit Pension Plan provides a defined
pension based on years of service and earnings, with no increases
in retirement for inflation. The plan was closed to new members in
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in the plan was voluntary and enrolled
2016. Participation
employees are required to make regular contributions into the
plan. An unfunded supplemental pension plan is provided to
certain senior executives to provide benefits in excess of amounts
that can be provided from the defined benefit pension plan under
the Income Tax Act (Canada)’s maximum pension limits.
We also sponsor smaller defined benefit pension plans in addition
to the Rogers Defined Benefit Pension Plan. The Pension Plan for
Employees of Rogers Communications Inc. and the Rogers
Pension Plan for Selkirk Employees are closed legacy defined
benefit pension plans. The Pension Plan for Certain Federally
Regulated Employees of Rogers Cable Communications Inc. is
similar to the main pension plan but only federally regulated
employees from the Cable business were eligible to participate;
this plan was closed to new members in 2016.
In addition to the defined benefit pension plans, we provide
various defined contribution plans to certain groups of employees
of the Company and to employees hired after March 31, 2016 who
choose to join. Additionally, we provide other tax-deferred savings
arrangements, including a Group RRSP and a Group TFSA
program, which are accounted for as deferred contribution
arrangements.
The Pension Committee of the Board oversees the administration
of our registered pension plans, which includes the following
principal areas:
• overseeing the funding, administration, communication, and
investment management of the plans;
• selecting and monitoring the performance of all third parties
performing duties in respect of the plans, including audit,
actuarial, and investment management services;
• proposing, considering, and approving amendments to the
plans;
• proposing, considering, and approving amendments to the
Statement of Investment Policies and Procedures;
• reviewing management and actuarial reports prepared
in
respect of the administration of the pension plans; and
• reviewing and approving the audited financial statements of the
pension plan funds.
The assets of the defined benefit pension plans are held in
segregated accounts that are isolated from our assets. They are
invested and managed following all applicable regulations and the
Statement of Investment Policies and Procedures with the objective
of having adequate funds to pay the benefits promised by the
plans. Investment and market return risk is managed by:
•
contracting professional investment managers to execute the
investment strategy following the Statement of Investment
Policies and Procedures and regulatory requirements;
• specifying the kinds of investments that can be held in the plans
and monitoring compliance;
• using asset allocation and diversification strategies; and
• purchasing annuities from time to time.
The defined benefit pension plans are registered with the Office of
the Superintendent of Financial Institutions and are subject to the
Federal Pension Benefits Standards Act. Two of the defined
contribution pension plans are registered with the Financial Services
Regulatory Authority, subject to the Ontario Pension Benefits Act.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 133
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The plans are also registered with the Canada Revenue Agency and
are subject to the Income Tax Act (Canada). The benefits provided
under the plans and the contributions to the plans are funded and
administered in accordance with all applicable legislation and
regulations.
to contribution
The defined benefit pension plans are subject to certain risks
related
inadequate plan surplus,
increases,
unfunded obligations, and market rates of return, which we
mitigate through the governance described above. Any significant
changes to these items may affect our future cash flows.
POST-EMPLOYMENT BENEFIT PLAN DETAILS
Below is a summary of the estimated present value of accrued plan
benefits and the estimated market value of the net assets available
to provide these benefits for our funded defined benefit pension
plans.
As at December 31
(In millions of dollars)
Note
2021
2020
Plan assets, at fair value
Accrued benefit obligations
3,198
(3,171)
2,791
(3,365)
Surplus (deficiency) of plan assets over
accrued benefit obligations
Effect of asset ceiling limit
Net deferred pension asset (liability)
Consists of:
Deferred pension asset
Deferred pension liability
Net deferred pension asset (liability)
27
(9)
18
21
(3)
18
(574)
—
(574)
16
(590)
(574)
22
Below is a summary of our pension fund assets.
Years ended December 31
Below is a summary of the accrued benefit obligations arising from
funded obligations.
(In millions of dollars)
2021
2020
Years ended December 31
Accrued benefit obligations, beginning
of year
Current service cost
Interest cost
Benefits paid
Contributions by employees
Remeasurements, recognized in other
comprehensive income and equity
Accrued benefit obligations, end of
3,365
156
89
(99)
32
2,900
146
91
(82)
34
(372)
276
year
3,171
3,365
Plan assets comprise mainly pooled funds that invest in common
stocks and bonds that are traded in an active market. Below is a
summary of the fair value of the total pension plan assets by major
category.
(In millions of dollars)
Equity securities
Debt securities
Other – cash
Total fair value of plan assets
As at December 31
2021
1,879
1,302
17
3,198
2020
1,689
1,087
15
2,791
Below is a summary of our net pension expense. Net interest cost is
included in finance costs; other pension expenses are included in
the
salaries and benefits expense
Consolidated Statements of Income.
in operating costs on
(In millions of dollars)
Plan assets, beginning of year
Interest income
Remeasurements, recognized in other
comprehensive income and equity
Contributions by employees
Contributions by employer
Benefits paid
Administrative expenses paid from
plan assets
2021
2,791
78
223
32
177
(99)
(4)
2020
2,449
81
163
34
150
(82)
(In millions of dollars)
Plan cost:
Current service cost
Net interest cost
Net pension expense
Administrative expense
Total pension cost recognized in net
(4)
income
Years ended December 31
2021
2020
156
11
167
4
171
146
10
156
4
160
Plan assets, end of year
3,198
2,791
Net interest cost, a component of the plan cost above, is included
in finance costs and is outlined as follows:
(In millions of dollars)
Interest income on plan assets
Interest cost on plan obligation
Net interest cost, recognized in
finance costs
Years ended December 31
2021
2020
(78)
89
11
(81)
91
10
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The remeasurement recognized in the Consolidated Statements of
Comprehensive Income is determined as follows:
(In millions of dollars)
2021
2020
Years ended December 31
Plan assets consist primarily of pooled funds that invest in common
stocks and bonds. The pooled funds have investments in our equity
securities. As a result, approximately $12 million
(2020 –
$10 million) of plan assets are indirectly invested in our own
securities under our defined benefit plans.
We make contributions to the plans to secure the benefits of plan
members and invest in permitted investments using the target
ranges established by our Pension Committee, which reviews
actuarial assumptions on an annual basis.
Below is a summary of the actual contributions to the plans.
223
390
(18)
(9)
163
(272)
(4)
–
Return on plan assets (excluding
interest income)
Change in financial assumptions
Effect of experience adjustments
Change in asset ceiling
Remeasurement gain (loss),
recognized in other
comprehensive income and equity
586
(113)
(In millions of dollars)
We also provide supplemental unfunded defined benefit pensions
to certain executives. Below is a summary of our accrued benefit
obligations, pension expense included in employee salaries and
benefits, net interest cost, remeasurements, and benefits paid.
Employer contribution
Employee contribution
Total contribution
Years ended December 31
2021
2020
177
32
209
150
34
184
We estimate our 2022 employer contributions to our funded plans
to be $134 million. The actual value will depend on the results of
the 2022 actuarial funding valuations. The average duration of the
defined benefit obligation as at December 31, 2021 is 17 years
(2020 – 18 years).
Plan assets recognized an actual net gain of $297 million in 2021
(2020 – $240 million net gain).
We have recognized a cumulative loss in other comprehensive
income and retained earnings of $157 million as at December 31,
2021 (2020 – $592 million) associated with post-retirement benefit
plans.
(In millions of dollars)
2021
2020
Years ended December 31
Accrued benefit obligation,
beginning of year
Pension expense, recognized in
employee salaries and benefits
expense
Net interest cost, recognized in
finance costs
Remeasurements, recognized in
other comprehensive income
Benefits paid
Accrued benefit obligation, end of
year
92
12
3
(7)
(4)
96
73
13
3
8
(5)
92
We also have defined contribution plans with total pension
expense of $18 million in 2021 (2020 – $15 million), which is
included in employee salaries and benefits expense.
ALLOCATION OF PLAN ASSETS
Equity securities:
Domestic
International
Debt securities
Other – cash
Allocation of plan assets
2021
2020
Target asset
allocation
percentage
11.8%
47.0%
40.7%
0.5%
11.9%
8% to 18%
48.6% 37% to 67%
39.0% 25% to 45%
0% to 2%
0.5%
Total
100.0%
100.0%
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 135
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 24: SHAREHOLDERS’ EQUITY
CAPITAL STOCK
Share class
Preferred shares
RCI Class A Voting Shares
112,474,388
Number of shares
authorized for issue
Features
400,000,000
• Without par value
• Issuable in series, with rights
and terms of each series to
be fixed by the Board prior
to the issue of any series
• Without par value
• Each share can be converted
into one Class B Non-Voting
share
Voting rights
•N one
• Each share entitled to 50
votes
RCI Class B Non-Voting Shares
1,400,000,000
• Without par value
• None
Class B Non-Voting Shares. Class A Shares and Class B Non-Voting
Shares therefore participate equally in dividends above $0.05 per
share.
On January 26, 2022, the Board declared a quarterly dividend of
$0.50 per Class A Voting Share and Class B Non-Voting Share, to
be paid on April 1, 2022, to shareholders of record on March 10,
2022.
NORMAL COURSE ISSUER BID
In April 2020, the TSX accepted a notice of our intention to
commence a normal course issuer bid (NCIB) program (2020
NCIB) that allows us to purchase, between April 24, 2020 and
April 23, 2021, the lesser of 34.9 million Class B Non-Voting Shares
and that number of Class B Non-Voting Shares that can be
purchased for an aggregate purchase price of $500 million. Rogers
security holders may obtain a copy of this notice, without charge,
by contacting us. We did not purchase any Class B Non-Voting
Shares under
the years ended
December 31, 2021 or 2020.
the 2020 NCIB during
RCI’s Articles of Continuance under the Business Corporations Act
(British Columbia) impose restrictions on the transfer, voting, and
issue of Class A Shares and Class B Non-Voting Shares to ensure
we remain qualified to hold or obtain licences required to carry on
certain of our business undertakings in Canada. We are authorized
to refuse to register transfers of any of our shares to any person
who is not a Canadian, as defined in RCI’s Articles of Continuance,
in order to ensure that Rogers remains qualified to hold the
licences referred to above.
In relation to our issuances of subordinated notes in December
2021 and February 2022 (see note 21), the Board approved the
creation of new Series I and Series II preferred shares, respectively.
Series I has been authorized for up to 3.3 million preferred shares
and Series II has been authorized for up to 1.4 million preferred
shares. Both series have no voting rights, par values of $1,000 per
share, and will be issued automatically upon the occurrence of
certain events involving a bankruptcy or insolvency of RCI to holders
of the respective subordinated notes.
DIVIDENDS
We declared and paid the following dividends on our outstanding
Class A Shares and Class B Non-Voting Shares:
Date declared
Date paid
January 27, 2021
April 20, 2021
July 20, 2021
October 20, 2021
April 1, 2021
July 2, 2021
October 1, 2021
January 4, 2022
January 21, 2020
April 21, 2020
July 21, 2020
October 21, 2020
April 1, 2020
July 2, 2020
October 1, 2020
January 4, 2021
Dividend per share
(dollars)
0.50
0.50
0.50
0.50
2.00
0.50
0.50
0.50
0.50
2.00
The holders of Class A Shares are entitled to receive dividends at
the rate of up to five cents per share but only after dividends at the
rate of five cents per share have been paid or set aside on the
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NOTE 25: STOCK-BASED COMPENSATION
ACCOUNTING POLICY
Stock option plans
Cash-settled share appreciation rights (SARs) are attached to all
stock options granted under our employee stock option plan. This
feature allows the option holder to choose to receive a cash
payment equal to the intrinsic value of the option (the amount by
which the market price of the Class B Non-Voting Share exceeds
the exercise price of the option on the exercise date) instead of
exercising the option to acquire Class B Non-Voting Shares. We
classify all outstanding stock options with cash settlement features
as liabilities and carry them at their fair value, determined using the
Black-Scholes option pricing model or a trinomial option pricing
model, depending on the nature of the share-based award. We
remeasure the fair value of the liability each period and amortize it
to operating costs using graded vesting, either over the vesting
period or to the date an employee is eligible to retire (whichever is
shorter).
Restricted share unit (RSU) and deferred share unit (DSU) plans
We recognize outstanding RSUs and DSUs as liabilities, measuring
the liabilities and compensation costs based on the awards’ fair
values, which are based on the market price of the Class B
Non-Voting Shares, and recognizing them as charges to operating
costs over the vesting period of the awards. If an award’s fair value
changes after it has been granted and before the exercise date, we
recognize the resulting changes in the liability within operating
costs in the year the change occurs. For RSUs, the payment amount
is established as of the vesting date. For DSUs, the payment
amount is established as of the exercise date.
Employee share accumulation plan
Employees voluntarily participate in the share accumulation plan by
contributing a specified percentage of their regular earnings. We
match employee contributions up to a certain amount and
recognize our contributions as a compensation expense in the year
we make them. Expenses relating to the employee share
accumulation plan are included in operating costs.
ESTIMATES
Significant management estimates are used to determine the fair
value of stock options, RSUs, and DSUs. The table below shows the
weighted average fair value of stock options granted during 2021
and 2020 and the principal assumptions used in applying the
Black-Scholes model for non-performance-based options, to
determine their fair value at the grant date.
Weighted average fair value
Risk-free interest rate
Dividend yield
Volatility of Class B Non-Voting Shares
Weighted average expected life
Years ended December 31
2021
2020
$
7.46
0.3%
3.4%
23.1%
5.1 years
$
5.86
1.7%
3.4%
16.1%
5.5 years
No performance-based options were issued during the years
ended December 31, 2021 and December 31, 2020.
Volatility has been estimated based on the actual trading statistics
of our Class B Non-Voting Shares.
STOCK-BASED COMPENSATION EXPENSE
Below is a summary of our stock-based compensation expense,
which is included in employee salaries and benefits expense.
(In millions of dollars)
Stock options
Restricted share units
Deferred share units
Equity derivative effect, net of interest
receipt
Total stock-based compensation
expense
Years ended December 31
2021
2020
3
57
6
(6)
60
(1)
49
(3)
15
60
As at December 31, 2021, we had a total liability recognized at its
fair value of $199 million (2020 – $204 million) related to stock-
based compensation, including stock options, RSUs, and DSUs.
The current portion of this is $150 million (2020 – $165 million) and
is included in accounts payable and accrued liabilities. The long
term portion of this is $49 million (2020 – $39 million) and is
included in other long-term liabilities (see note 22).
The total intrinsic value of vested liabilities, which is the difference
between the exercise price of the share-based awards and the
trading price of the Class B Non-Voting Shares for all vested share-
based awards, as at December 31, 2021 was $95 million (2020 –
$103 million).
We paid $76 million in 2021 (2020 – $60 million) to holders of
stock options, RSUs, and DSUs upon exercise using the cash
settlement feature, representing a weighted average share price on
the date of exercise of $57.52 (2020 – $60.00).
STOCK OPTIONS
Options to purchase our Class B Non-Voting Shares on a
one-for-one basis may be granted to our employees, directors, and
officers by the Board or our Management Compensation
Committee. There are 65 million options authorized under various
plans; each option has a term of seven to ten years. The vesting
period is generally graded vesting over four years; however, the
Management Compensation Committee may adjust the vesting
terms on the grant date. The exercise price is equal to the fair
market value of the Class B Non-Voting Shares, determined as the
five-day average before the grant date as quoted on the TSX.
Performance options
We granted no performance-based options to certain key executives
in 2021 or 2020. These options vest on a graded basis over four
years provided that certain targeted stock prices are met on or after
each anniversary date. As at December 31, 2021, we had 1,068,776
performance options (2020 – 1,068,776) outstanding.
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 137
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Summary of stock options
Below is a summary of the stock option plans, including performance options.
(In number of units, except prices)
Number of options
exercise price Number of options
Weighted average
Weighted average
exercise price
Year ended December 31, 2021
Year ended December 31, 2020
Outstanding, beginning of year
Granted
Exercised
Forfeited
Outstanding, end of year
Exercisable, end of year
4,726,634
1,848,655
(10,988)
(70,300)
6,494,001
2,373,717
$62.10
$60.61
$58.45
$67.58
$61.62
$59.68
3,154,795
1,598,590
(17,230)
(9,521)
4,726,634
1,470,383
$61.82
$62.56
$54.80
$58.45
$62.10
$56.75
Below is a summary of the range of exercise prices, the weighted average exercise price, and the weighted average remaining contractual
life as at December 31, 2021.
Range of exercise prices
$42.85 – $44.99
$45.00 – $49.99
$55.00 – $59.99
$60.00 – $64.99
$65.00 – $73.00
Options outstanding
Weighted average
remaining contractual
life (years)
Options exercisable
Weighted average
exercise price
Number
exercisable
Weighted average
exercise price
2.82
2.00
7.65
7.98
6.55
7.06
$44.24
$48.87
$58.35
$62.48
$72.22
153,937
499,844
597,601
545,941
576,394
$61.62
2,373,717
$44.24
$48.87
$57.93
$62.66
$72.16
$59.68
Number
outstanding
153,937
499,844
1,691,671
3,014,614
1,133,935
6,494,001
Unrecognized
stock-based compensation expense as at
December 31, 2021 related to stock-option plans was $11 million
(2020 – $5 million) and will be recognized in net income over the
next four years as the options vest.
Summary of RSUs
Below is a summary of the RSUs outstanding, including performance
RSUs.
RESTRICTED SHARE UNITS
The RSU plan allows employees, directors, and officers to
participate in the growth and development of Rogers. Under the
terms of the plan, RSUs are issued to the participant and the units
issued vest over a period of up to three years from the grant date.
On the vesting date, we will redeem all of the participants’ RSUs in
cash or by issuing one Class B Non-Voting Share for each RSU. We
have reserved 4,000,000 Class B Non-Voting Shares for issue under
this plan.
Performance RSUs
We granted 295,958 performance-based RSUs to certain key
executives in 2021 (2020 – 219,493). The number of units that vest
and will be paid three years from the grant date will be within 30%
initial number granted based upon the
to 170% of the
achievement of certain annual and cumulative
three-year
non-market targets.
(In number of units)
2021
2020
Years ended December 31
Outstanding, beginning of year
Granted and reinvested dividends
Exercised
Forfeited
2,573,894 2,472,774
1,341,801 1,026,067
(803,266)
(1,041,890)
(121,681)
(182,517)
Outstanding, end of year
2,691,288 2,573,894
Unrecognized
stock-based compensation expense as at
December 31, 2021 related to these RSUs was $64 million (2020 –
$50 million) and will be recognized in net income over the next
three years as the RSUs vest.
DEFERRED SHARE UNITS
The DSU plan allows directors, certain key executives, and other
types of
senior management
compensation in DSUs. Under the terms of the plan, DSUs are
issued to the participant and the units issued cliff vest over a period
of up to three years from the grant date.
receive certain
to elect
to
Performance DSUs
We granted 7,517 performance-based DSUs to certain key
executives in 2021 (2020 – 10,513). The number of units that vest
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and may be redeemed by the holder three years from the grant
date will be within 50% to 150% of the initial number granted
based upon the achievement of certain annual and cumulative
three-year non-market targets.
Summary of DSUs
Below
performance DSUs.
is a summary of
the DSUs outstanding,
including
(In number of units)
Outstanding, beginning of year
Granted and reinvested dividends
Exercised
Forfeited
Years ended December 31
2021
2020
1,619,941 1,741,884
80,252
(192,718)
(9,477)
78,939
(277,439)
(99)
Outstanding, end of year
1,421,342 1,619,941
stock-based compensation expense as at
Unrecognized
December 31, 2021 related to these DSUs was nil (2020 – nil) and
will be recognized in net income over the next three years as the
executive DSUs vest. All other DSUs are fully vested.
NOTE 26: RELATED PARTY TRANSACTIONS
CONTROLLING SHAREHOLDER
Voting control of Rogers Communications Inc. is held by the Rogers
Control Trust (the Trust) for the benefit of successive generations of
the Rogers family and, as a result, the Trust is able to elect all
members of the Board and to control the vote on most matters
submitted to shareholders, whether through a shareholder meeting
or a written consent resolution. The beneficiaries of the Trust are a
small group of individuals who are members of the Rogers family,
several of whom are also directors of the Board. The trustee is the
trust company subsidiary of a Canadian chartered bank.
We entered into certain transactions with private Rogers family
holding companies controlled by the Trust. These transactions
were recognized at the amount agreed to by the related parties
and are subject to the terms and conditions of formal agreements
approved by the Audit and Risk Committee. The totals received or
paid were less than $1 million for each of 2021 and 2020.
EMPLOYEE SHARE ACCUMULATION PLAN
Participation in the plan is voluntary. Employees can contribute up
to 15% of their regular earnings through payroll deductions (up to
an annual maximum contribution of $25 thousand). The plan
administrator purchases Class B Non-Voting Shares on a monthly
basis on the open market on behalf of the employee. At the end of
each month, we make a contribution of 25% to 50% of the
employee’s contribution that month and the plan administrator
uses this amount to purchase additional shares on behalf of the
recognize our contributions made as a
employee. We
compensation expense.
Compensation expense
related
accumulation plan was $52 million in 2021 (2020 – $51 million).
the employee
to
share
EQUITY DERIVATIVES
We have entered into equity derivatives to hedge a portion of our
stock-based compensation expense (see note 17) and recognized
a $6 million recovery (2020 – $15 million expense) in stock-based
compensation expense for these derivatives.
Compensation
Compensation expense for key management personnel included
in “employee salaries, benefits, and stock-based compensation”
and “restructuring, acquisition and other” was as follows:
(In millions of dollars)
2021
2020
Years ended December 31
Salaries and other short-term
employee benefits
Post-employment benefits
Stock-based compensation 1
Total compensation
19
4
21
44
11
2
19
32
1 Stock-based compensation does not include the effect of changes in fair value of
Class B Non-Voting Shares or equity derivatives.
TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
Key management personnel include the directors and our most
senior corporate officers, who are primarily responsible for
planning, directing, and controlling our business activities.
Transactions
We have entered into business transactions with Transcontinental
Inc., a company that provides us with printing and prepress
services.
is chair of the board of
Transcontinental Inc. and was a Director of RCI until June 2021.
Isabelle Marcoux, C.M.,
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 139
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We recognize these transactions at the amount agreed to by the
related parties, which are also reviewed by the Audit and Risk
Committee. The amounts owing for these services were unsecured,
interest-free, and due for payment in cash within one month of the
date of the transaction. Below is a summary of related party activity
for the business transactions described above.
(In millions of dollars)
Years ended
December 31
Outstanding
balance as at
December 31
2021 2020
2021 2020
Printing and prepress services
3
4
n/a
1
We have also entered into business transactions with companies
controlled by our Directors Michael J. Cooper and John C. Kerr,
which, as a result of the Board reconstitution in October 2021, are
now related parties. These companies include Dream Unlimited
Corp. and Vancouver Professional Baseball LLP, respectively.
Dream Unlimited Corp. is a real estate company that rents spaces
in office and residential buildings. Vancouver Professional Baseball
LLP controls the Vancouver Canadians, the Toronto Blue Jays’
High-A affiliate minor league team. Total amounts paid to these
related parties during the period from October 2021 to December
2021 were nominal.
We have 100% ownership interest in these subsidiaries. They are
incorporated in Canada and have the same reporting period for
annual financial statements reporting.
When necessary, adjustments are made to conform the accounting
policies of the subsidiaries to those of RCI. There are no significant
restrictions on the ability of subsidiaries, joint arrangements, and
associates to transfer funds to Rogers as cash dividends or to repay
loans or advances, subject to the approval of other shareholders
where applicable.
We carried out the following business transactions with our
associates and
joint arrangements, being primarily MLSE
(broadcasting rights) and Glentel (Wireless distribution support).
Transactions between us and our subsidiaries have been
eliminated on consolidation and are not disclosed in this note.
(In millions of dollars)
Revenue
Purchases
Years ended December 31
2021
31
180
2020
26
121
Outstanding balances at year-end are unsecured, interest-free, and
settled in cash.
SUBSIDIARIES, ASSOCIATES, AND JOINT
ARRANGEMENTS
We have the following material operating subsidiaries as at
December 31, 2021 and 2020:
• Rogers Communications Canada Inc.; and
• Rogers Media Inc.
(In millions of dollars)
Accounts receivable
Accounts payable and accrued
liabilities
As at December 31
2021
112
95
2020
92
59
NOTE 27: GUARANTEES
We had the following guarantees as at December 31, 2021 and
2020 as part of our normal course of business:
BUSINESS SALE AND BUSINESS COMBINATION
AGREEMENTS
As part of transactions involving business dispositions, sales of
assets, or other business combinations, we may be required to pay
counterparties for costs and losses incurred as a result of breaches
of representations and warranties,
intellectual property right
infringement, loss or damages to property, environmental liabilities,
changes in laws and regulations (including tax legislation), litigation
against the counterparties, contingent liabilities of a disposed
business, or reassessments of previous tax filings of the corporation
that carries on the business.
SALES OF SERVICES
As part of transactions involving sales of services, we may be
required to make payments to counterparties as a result of
breaches of representations and warranties, changes in laws and
regulations (including tax legislation), or litigation against the
counterparties.
PURCHASES AND DEVELOPMENT OF ASSETS
As part of transactions involving purchases and development of
assets, we may be required to pay counterparties for costs and
losses incurred as a result of breaches of representations and
warranties, loss or damages to property, changes in laws and
regulations (including tax legislation), or litigation against the
counterparties.
INDEMNIFICATIONS
We indemnify our directors, officers, and employees against claims
reasonably incurred and resulting from the performance of their
services to Rogers. We have liability insurance for our directors and
officers and those of our subsidiaries.
No amount has been accrued in the Consolidated Statements of
Financial Position relating to these types of indemnifications or
guarantees as at December 31, 2021 or 2020. Historically, we have
not made any significant payments under these indemnifications or
guarantees.
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NOTE 28: COMMITMENTS AND CONTINGENT LIABILITIES
ACCOUNTING POLICY
Contingent liabilities are liabilities of uncertain timing or amount
and are not recognized until we have a present obligation as a
result of a past event, it is probable that we will experience an
outflow of resources embodying economic benefits to settle the
obligation, and a reliable estimate can be made of the amount of
the obligation.
We disclose our contingent liabilities unless the possibility of an
outflow of resources in settlement is remote.
JUDGMENTS
We are exposed to possible losses related to various claims and
lawsuits against us for which the outcome is not yet known. We
the
therefore make significant
probability of loss when we assess contingent liabilities.
in determining
judgments
SUMMARY OF COMMITMENTS
Below is a summary of the future minimum payments for our
contractual commitments that are not recognized as liabilities as at
December 31, 2021.
(In millions of dollars)
Player contracts 1
Purchase obligations 2
Program rights 3
Total commitments
Less than
1 Year
129
327
659
1,115
1-3 Years
4-5 Years
After 5 Years
204
192
1,151
1,547
222
85
824
1,131
–
19
1
20
Total
555
623
2,635
3,813
1 Toronto Blue Jays players’ salary contracts into which we have entered and are contractually obligated to pay.
2 Contractual obligations under service, product, and wireless device contracts to which we have committed.
3 Agreements into which we have entered to acquire broadcasting rights for sports broadcasting programs and films for periods in excess of one year at contract inception.
Below is a summary of our other contractual commitments that are
not included in the table above.
(In millions of dollars)
Acquisition of property, plant and
equipment
Acquisition of intangible assets
Our share of commitments related to
associates and joint ventures
Total other commitments
As at December 31
2021
209
21
387
617
CONTINGENT LIABILITIES
We have the following contingent liabilities as at December 31,
2021:
Wholesale Internet costing and pricing
On August 15, 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 (Order), the
Canadian Radio-television and Telecommunications Commission
(CRTC) set final rates for facilities-based carriers’ wholesale high-
speed access services, including Rogers’ third-party Internet access
service. The Order set final rates for Rogers that are significantly
lower than the interim rates that were previously billed and it further
determined that these final rates will apply retroactively to
March 31, 2016.
We did not believe the final rates set by the CRTC were just and
reasonable as required by the Telecommunications Act as we
believed they were below cost. 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. The CRTC decided to adopt
the interim rates in effect prior to the Order as the final rates, with
certain modifications, including the removal of the supplementary
markup of 10% for incumbent local exchange carriers.
The final rates are lower than the rates we previously billed to the
resellers for the period of March 31, 2016 to October 6, 2016. We
have recognized a refund of amounts previously billed to the
resellers of approximately $25 million, representing the impact on
a retroactive basis for that period.
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 on September 15, 2021. We, along with
several other cable companies, have intervened in these matters.
Videotron Ltd.
On October 29, 2021, Videotron Ltd. launched a lawsuit against
Rogers in the Quebec Superior Court, in connection with the
agreement entered into by the parties in 2013 for the development
and operation of a joint LTE network in the province of Quebec.
The lawsuit involves allegations by Videotron Ltd. that Rogers has
breached its contractual obligations by developing its own network
in the territory. Videotron is seeking compensatory damages in the
amount of $850 million. We intend to vigorously defend this
lawsuit. We have not recognized a liability for this contingency.
System access fee – Saskatchewan
In 2004, a class action was commenced against providers of wireless
communications
the Class Actions Act
(Saskatchewan). The class action relates to the system access fee
wireless carriers charge to some of their customers. The plaintiffs are
seeking unspecified damages and punitive damages, which would
effectively be a reimbursement of all system access fees collected.
in Canada under
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 141
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In 2007, the Saskatchewan Court granted the plaintiffs’ application
to have the proceeding certified as a national, “opt-in” class action
where affected customers outside Saskatchewan must take specific
steps to participate in the proceeding. In 2008, our motion to stay
the proceeding based on the arbitration clause in our wireless
service agreements was granted. The Saskatchewan Court directed
that its order, in respect of the certification of the action, would
exclude customers who are bound by an arbitration clause from
the class of plaintiffs.
In 2009, counsel for the plaintiffs began a second proceeding
under the Class Actions Act (Saskatchewan) asserting the same
claims as the original proceeding. If successful, this second class
action would be an “opt-out” class proceeding. This second
proceeding was ordered conditionally stayed on the basis that it
was an abuse of process.
At the time the Saskatchewan class action was commenced,
corresponding claims were filed in multiple jurisdictions across
Canada. The claims in all provinces other than Saskatchewan have
now been dismissed or discontinued. We have not recognized a
liability for this contingency.
911 fee
In June 2008, a class action was launched in Saskatchewan against
providers of wireless communications services in Canada. It involves
allegations of breach of contract, misrepresentation, and false
advertising, among other things, in relation to the 911 fee that had
been charged by us and the other wireless telecommunication
in Canada. The plaintiffs are seeking unspecified
providers
damages and restitution. The plaintiffs intend to seek an order
in
certifying
Saskatchewan. We have not recognized a
for this
contingency.
the proceeding as a national class action
liability
Income taxes
We provide for income taxes based on all of the information that is
currently available and believe that we have adequately provided
for these items. The calculation of applicable taxes in many cases,
however, requires significant judgment (see note 13) in interpreting
tax rules and regulations. Our tax filings are subject to audits, which
could materially change the amount of current and deferred
income tax assets and liabilities and provisions, and could, in
certain circumstances, result in the assessment of interest and
penalties.
Other claims
There are certain other claims and potential claims against us. We
do not expect any of these, individually or in the aggregate, to have
a material adverse effect on our financial results.
Outcome of proceedings
The outcome of all the proceedings and claims against us,
including the matters described above, is subject to future
resolution that includes the uncertainties of litigation. It is not
possible for us to predict the result or magnitude of the claims due
to the various factors and uncertainties involved in the legal
process. Based on information currently known to us, we believe it
is not probable that the ultimate resolution of any of these
proceedings and claims, individually or in total, will have a material
adverse effect on our business, financial results, or financial
condition. If circumstances change and it becomes probable that
we will be held liable for claims against us and such claim is
estimable, we will recognize a provision during the period in which
the change in probability occurs, which could be material to our
Consolidated Statements of Income or Consolidated Statements
of Financial Position.
NOTE 29: SUPPLEMENTAL CASH FLOW INFORMATION
CHANGE IN NET OPERATING ASSETS AND LIABILITIES
(In millions of dollars)
2021
2020
Years ended December 31
Accounts receivable, excluding financing
receivables
Financing receivables
Contract assets
Inventories
Other current assets
Accounts payable and accrued liabilities
Contract and other liabilities
Total change in net operating assets and
(78)
(840)
417
(56)
13
556
25
455
(1,658)
1,170
(19)
(132)
(326)
177
liabilities
37
(333)
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NOTE 30: SHAW TRANSACTION
On March 15, 2021, we announced an agreement with Shaw to
acquire all of Shaw’s issued and outstanding Class A Participating
Shares and Class B Non-Voting Participating Shares (collectively,
Shaw Shares) for a price of $40.50 per share. The Shaw Family
Living Trust, the controlling shareholder of Shaw, and certain
members of the Shaw family and certain related persons (Shaw
Family Shareholders) will receive (i) $16.20 in cash and (ii)
0.417206775 Class B Non-Voting Shares of Rogers per Shaw Share
held by the Shaw Family Shareholders. The Transaction is valued at
approximately $26 billion,
the assumption of
approximately $6 billion of Shaw debt.
including
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 (see note 19). During
the year ended December 31, 2021, we entered into the $6 billion
Shaw term loan facility (see note 21), which served to reduce the
amount available under the committed credit facility to $13 billion.
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, RCCI
will guarantee Shaw’s payment obligations under those senior
notes.
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 and
satisfaction of other conditions prior to closing, the Transaction is
expected to close in the first half of 2022. Rogers has extended the
outside date for closing the Transaction from March 15, 2022 to
June 13, 2022 in accordance with the terms of the arrangement
agreement.
Under certain circumstances, if the Key Regulatory Approvals are
not obtained, or any law or order relating to the Key Regulatory
Approvals or the Competition Act is in effect that would make the
consummation of the Transaction illegal, and the failure to obtain
the Key Regulatory Approvals is not caused by, and is not a result
of, the failure by Shaw to perform in all material respects any of its
covenants or agreements under the arrangement agreement, we
would be obligated to pay a $1.2 billion reverse termination fee to
Shaw. We would also be responsible to reimburse Shaw for certain
costs relating to the May 2021 exercise of our right to require Shaw
to redeem its issued and outstanding preferred shares.
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Glossary of selected industry terms
and helpful links
3G (Third Generation Wireless): The third
generation of mobile phone standards and
technology. A key goal of 3G standards was to
enable mobile broadband data speeds above 384
Kbps. 3G networks enable network operators to offer
users a wider range of more advanced services while
achieving greater network capacity through improved
spectral efficiency. Advanced services include video
and multimedia messaging and broadband wireless
data, all in a mobile environment.
3.5G (Enhanced Third Generation Wireless):
Evolutionary upgrades to 3G services that provide
significantly enhanced broadband wireless data
performance to enable multi-megabit data speeds.
The key 3.5G technologies in North America are
HSPA and CDMA EV-DO.
4G (Fourth Generation Wireless): A technology that
offers increased voice, video, and multimedia
capabilities, a higher network capacity, improved
spectral efficiency, and high-speed data rates over
current 3G benchmarks. Also referred to as LTE.
4.5G (Enhanced Fourth Generation Wireless):
Evolutionary upgrades to 4G services that enables
two to three times the download speeds of 4G
technology. 4.5G technology has been designed to
support virtual and augmented reality, 4K streaming,
and other emerging services.
5G (Fifth Generation Wireless): The proposed next
generation of wireless telecommunications
standards. We expect 5G technology to result in
significantly reduced latency compared to LTE,
improvements in signalling efficiency and coverage,
and the ability to connect to more devices at once
than ever before.
4K—Ultra-High Definition Video: Denotes a specific
television display resolution of 4096x2160 pixels.
1920x1080 resolution full-HD televisions present an
image of around 2 megapixels, while the 4K
generation of screens displays an 8 megapixel
image.
ABPU (Average Billings per User): This business
performance measure, expressed as a dollar rate per
month, is predominantly used in the wireless industry
to describe the average amount billed to customers
per month. ABPU is an indicator of a business’
operating performance.
ARPA (Average Revenue per Account): This
business performance measure, expressed as a dollar
rate per month, is predominantly used in wireless and
cable industries to describe the revenue generated
per customer account per month. ARPA is an
indicator of a wireless and cable business’ operating
performance.
ARPU (Average Revenue per User): This business
performance measure, expressed as a dollar rate per
month, is predominantly used in the wireless and
cable industries to describe the revenue generated
per customer per month. ARPU is an indicator of a
wireless or cable business’ operating performance.
AWS (Advanced Wireless Services): The wireless
telecommunications spectrum band that is used for
wireless voice, data, messaging services, and
multimedia.
Bandwidth: Bandwidth can have two different
meanings: (1) a band or block of radio frequencies
measured in cycles per second, or Hertz; or (2) an
amount or unit of capacity in a telecommunications
transmission network. In general, bandwidth is the
available space to carry a signal. The greater the
bandwidth, the greater the information-carrying
capacity.
BDU (Broadcast Distribution Undertaking): An
undertaking for the reception of broadcasting and
the retransmission thereof by radio waves or other
means of telecommunication to more than one
permanent or temporary residence or dwelling unit
or to another such undertaking.
bps (Bits per Second): A measurement of data
transmission speed used for measuring the amount
of data that is transferred in a second between two
telecommunications points or within network devices.
Kbps (kilobits per second) is thousands of bps; Mbps
(megabits per second) is millions of bps; Gbps
(gigabits per second) is billions of bps; and Tbps
(terabits per second) is trillions of bps.
Broadband: Communications service that allows for
the high-speed transmission of voice, data, and video
simultaneously at rates of 1.544 Mbps and above.
Bundling: Refers to the coupling of independent
products or services offered into one retail package.
BYOD (Bring Your Own Device): Refers to the action
that customers are able to sign up for wireless
services on a personally purchased device, as
opposed to the traditional means of acquiring one
through a term contract.
Cable Telephony (Phone): The transmission of real-
time voice communications over a cable network.
Churn: This business performance measure is used to
describe the disconnect rate of customers to a
telecommunications service. It is a measure of
customer turnover and is often at least partially
reflective of service quality and competitive intensity. It
is usually expressed as a percentage and calculated
as the number of subscriber units disconnecting in a
period divided by the average number of units on the
network in the same period.
CLEC (Competitive Local Exchange Carrier): A
telecommunications provider company that
competes with other, already established carriers,
generally the ILEC.
Cloud Computing: The ability to run a program or
application on many connected computers
simultaneously as the software, data, and services
reside in data centres.
CPE (Customer Premise Equipment):
Telecommunications hardware, such as a modem or
set-top box, that is located at the home or business of
a customer.
CRTC (Canadian Radio-television and
Telecommunications Commission): The federal
regulator for radio and television broadcasters and
cable TV and telecommunications companies in
Canada.
Customer Relationships: This Cable metric refers
dwelling units where at least one of our Cable
services is installed and operating and the service(s)
are billed accordingly. When there is more than one
unit in one dwelling, such as an apartment building,
each tenant with at least one of our Cable services is
counted as an individual customer relationship,
whether the service is invoiced separately or included
in the tenant’s rent. Institutional units, like hospitals or
hotels, are each considered one customer
relationship.
Data Centre: A facility used to house computer
systems and associated components, such as
telecommunications and storage systems. It generally
includes redundant or backup power supplies,
redundant data communications connections,
environmental controls (e.g., air conditioning, fire
suppression), and security controls.
DOCSIS (Data Over Cable Service Interface
Specification): A non-proprietary industry standard
developed by CableLabs that allows for equipment
interoperability from the headend to the CPE. The
latest version (DOCSIS 3.1) enables bonding of
multiple channels to allow for download speeds up
to 10 Gbps and upload speeds up to 2 Gbps,
depending upon how many channels are bonded
together.
DSL (Digital Subscriber Line): A family of broadband
technologies that offers always-on, high-bandwidth
(usually asymmetrical) transmission over an existing
twisted-pair copper telephone line. DSL shares the
same phone line as the telephone service but uses a
different part of the phone line’s bandwidth.
Edge Computing: The process of obtaining,
processing, and analyzing data close to the source of
its creation, Edge computing eliminates the need for
data to travel through a distant server, reducing
latency and bandwidth usage.
Fibre Optics: A method for the transmission of
information (voice, video, or data) in which light is
modulated and transmitted over hair-thin filaments of
glass called fibre optic cables. The bandwidth
capacity of fibre optic cable is much greater than that
of copper wire and light can travel relatively long
distances through glass without the need for
amplification.
FTTH (Fibre-to-the-Home)/FTTP (Fibre-to-the-
Premise): Represents fibre optic cable that reaches
the boundary of the home or premise, such as a box
on the outside wall of a home or business.
GSM (Global System for Mobile Communications):
A TDMA-based technology and a member of the
“second generation” (2G) family of mobile protocols
that is deployed widely around the world, especially
at the 850, 900, 1800, and 1900 MHz frequency
bands.
Hardware Upgrade (HUP): The act of an existing
wireless customer upgrading to a new wireless
device.
HDR (High Dynamic Range): An imaging technique
used to reproduce a greater dynamic range of
luminosity than is possible with standard digital
imaging or photographic techniques.
Hertz: A unit of frequency defined as one cycle per
second. It is commonly used to describe the speeds
at which electronics are driven in the radio industry.
MHz (megahertz) is millions of hertz; GHz (gigahertz)
is billions of hertz; and THz (terahertz) is trillions of
hertz.
Homes Passed: Total number of homes that have the
potential for being connected to a cable system in a
defined geographic area.
Hosting (Web Hosting): The business of housing,
serving, and maintaining files for one or more
websites or e-mail accounts. Using a hosting service
allows many companies to share the cost of a high-
speed Internet connection for serving files, as well as
other Internet infrastructure and management costs.
Hotspot: A Wi-Fi access point in a public place, such
as a café, train station, airport, commercial office
property, or conference centre.
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HSPA (High-Speed Packet Access): HSPA is an
IP-based packet-data enhancement technology that
provides high-speed broadband packet data services
over 3G networks. HSPA+ provides high-speed
broadband packet data services at even faster speeds
than HSPA over 4G networks.
Hybrid Fibre-Coaxial Network Architecture (HFC):
A technology in which fibre optic cable and coaxial
cable are used in different portions of a network to
carry broadband content (such as video, voice, and
data) from a distribution facility to a subscriber
premise.
ILEC (Incumbent Local Exchange Carrier): The
dominant telecommunications company providing
local telephone service in a given geographic area
when competition began. Typically, an ILEC is the
traditional phone company and the original local
exchange carrier in a given market.
IoT (Internet of Things): The concept of connecting
everyday objects and devices (e.g., appliances and
cellular phones) to the Internet and each other. This
allows them to sense their environment and
communicate between themselves, allowing for the
seamless flow of data.
IP (Internet Protocol): The packet-based computer
network protocol that all machines on the Internet
must know so they can communicate with one
another. IP is a set of data switching and routing rules
that specify how information is cut up into packets
and how they are addressed for delivery between
computers.
IPTV (Internet Protocol Television): A system where
a digital television signal is delivered using IP. Unlike
broadcasting, viewers receive only the stream of
content they have requested (by surfing channels or
ordering video on demand).
ISED Canada (Innovation, Science and Economic
Development Canada): The Canadian federal
government department responsible for, amongst
other things, the regulation, management, and
allocation of radio spectrum and establishing
technical requirements for various wireless systems.
ISP (Internet Service Provider): A provider of Internet
access service to consumers and/or businesses.
LAN (Local Area Network): A network created via
linked computers within a small area, such as a single
site or building.
LTE (Long-Term Evolution): A fourth generation
cellular wireless technology (also known as 4G) that
has evolved and enhanced the UMTS/HSPA+ mobile
phone standards. LTE improves spectral efficiency,
lowers costs, improves services, and, most
importantly, allows for higher data rates. LTE
technology is designed to deliver speeds up to 300
Mbps.
LTE Advanced (LTE-A): A mobile communication
standard that represents a major enhancement of the
LTE standard. With a peak data rate of 1 Gbps, LTE
Advanced also offers faster switching between power
states and improved performance at the cell edge.
Machine-to-Machine (M2M): The wireless inter
connection of physical devices or objects that are
seamlessly integrated into an information network to
become active participants in business processes.
Services are available to interact with these ‘smart
objects’ over the Internet, query, change their state,
and capture any information associated with them.
MVNO (Mobile Virtual Network Operator): A
wireless communications service provider that does
not own the wireless network infrastructure through
which it provides services to its customers.
Off-net: Customer location(s) where network
infrastructure is not readily available, necessitating the
use of a third-party leased access for connectivity to
the premises.
On-net: Customer location(s) where network
infrastructure is in place to provide connectivity to the
premises without further builds or third-party leases.
An on-net customer can be readily provisioned.
OTT (Over-the-Top): Audio, visual, or alternative
media distributed via the Internet or other
non-traditional media.
Penetration: The degree to which a product or
service has been sold into, or adopted by, the base of
potential customers or subscribers in a given
geographic area. This value is typically expressed as a
percentage.
Postpaid: A conventional method of payment for
wireless service where a subscriber pays a fixed
monthly fee for a significant portion of services.
Usage (e.g. long distance) and overages are billed in
arrears, subsequent to consuming the services. The
fees are often arranged on a term contract basis.
Prepaid: A method of payment for wireless service
that requires a subscriber to prepay for a set amount
of airtime or data usage in advance of actual usage.
Generally, a subscriber’s prepaid account is debited
at the time of usage so that actual usage cannot
exceed the prepaid amount until an additional
prepayment is made.
PVR (Personal Video Recorder): A consumer
electronics device or application software that records
video in a digital format. The term includes set-top
boxes with direct-to-disk recording capabilities, which
enables video capture and playback to and from a
hard disk.
Set-Top Box: A standalone device that receives and
decodes programming so that it may be displayed
on a television. Set-top boxes may be used to receive
broadcast, cable, and satellite programming.
Spectrum: A term generally applied to
electromagnetic radio frequencies used in the
transmission of sound, data, and video. Various
portions of spectrum are designated for use in
cellular service, television, FM radio, and satellite
transmissions.
Subscription Video-on-Demand (SVOD): Refers to a
service that offers, for a monthly charge, access to
specific programming with unlimited viewing on an
on-demand basis.
TPIA (Third-Party Internet Access): Wholesale high-
speed access services of large cable carriers that
enable independent service providers to offer retail
Internet services to their own end-users.
Video-on-Demand (VOD): A cable service that allows
a customer to select and view movies and shows at
any time from a library of thousands of titles.
VoIP (Voice over IP): The technology used to
transmit real-time voice conversations in data packets
over a data network using IP. Such data networks
include telephone company networks, cable TV
networks, wireless networks, corporate intranets, and
the Internet.
VoLTE (Voice over LTE): A platform to provide voice
services to wireless customers over LTE wireless
networks. The LTE standard only supports packet
switching, as it is all IP-based technology. Voice calls
in GSM are circuit switched, so with the adoption of
LTE, carriers are required to re-engineer their voice
call network, while providing continuity for traditional
circuit-switched networks on 2G and 3G networks.
at lower speeds. Wi-Fi allows any user with a
Wi-Fi-enabled device to connect to a wireless access
point.
Helpful links
Canadian Radio-Television and
Telecommunications Commission (CRTC)
The CRTC is an independent public organization that
regulates and supervises the Canadian broadcasting
and telecommunications systems. It reports to
Parliament through the Minister of Canadian
Heritage. www.crtc.gc.ca
Innovation, Science and Economic Development
Canada (ISED Canada)
ISED Canada is a ministry of the federal government
whose mission is to foster a growing, competitive,
knowledge-based Canadian economy. It also works
with Canadians throughout the economy and in all
parts of the country to improve conditions for
investment, improve Canada’s innovation
performance, increase Canada’s share of global
trade, and build an efficient and competitive
marketplace. www.ic.gc.ca
Federal Communications Commission (FCC)
The FCC is an independent United States
government agency. The FCC was established by the
Communications Act of 1934 and is charged with
regulating interstate and international
communications by radio, television, wire, satellite,
and cable. The FCC’s jurisdiction covers the 50 states,
the District of Columbia, and U.S. territories.
www.fcc.gov
Canadian Wireless Telecommunications
Association (CWTA)
The CWTA is the industry trade organization and
authority on wireless issues, developments, and
trends in Canada. It represents wireless service
providers as well as companies that develop and
produce products and services for the industry,
including handset and equipment manufacturers,
content and application creators, and
business-to-business service providers. www.cwta.ca
The Wireless Association (CTIA)
The CTIA is an international non-profit membership
organization, founded in 1984, representing wireless
carriers and their suppliers, as well as providers and
manufacturers of wireless data services and products.
The CTIA advocates on their behalf before all levels of
government. www.ctia.org
GSM Association (GSMA)
The GSMA is a global trade association representing
nearly 800 operators with more than 300 companies
in the broader mobile ecosystem, including handset
and device makers, software companies, equipment
providers, and Internet companies, as well as
organizations in adjacent industry sectors. In addition,
more than 180 manufacturers and suppliers support
the Association’s initiatives as associate members.
The GSMA works on projects and initiatives that
address the collective interests of the mobile industry,
and of mobile operators in particular.
www.gsma.com
Commission for Complaints for Telecom-television
Services (CCTS)
An independent organization dedicated to working
with consumers and service providers to resolve
complaints about telephone, television, and Internet
services. Its structure and mandate were approved by
the CRTC. www.ccts-cprst.ca
Near-net: Customer location(s) adjacent to network
infrastructure allowing connectivity to the premises to
be extended with relative ease.
Wi-Fi: The commercial name for a networking
technology standard for wireless LANs that essentially
provide the same connectivity as wired networks, but
For a more comprehensive glossary
of industry and technology terms,
go to rogers.com/glossary
2021 ANNUAL REPORT ROGERS COMMUNICATIONS INC. | 145
Corporate and shareholder information
CORPORATE OFFICES
Rogers Communications Inc.
333 Bloor Street East,
Toronto, ON M4W 1G9
416.935.7777
CUSTOMER SERVICE AND
PRODUCT INFORMATION
888.764.3771 or rogers.com
SHAREHOLDER SERVICES
If you are a registered shareholder and have inquiries
regarding your account, wish to change your name or
address, or have questions about lost stock
certificates, share transfers, estate settlements or
dividends, please contact our transfer agent and
registrar:
TSX Trust Company
P.O. Box 700, Postal Station B
Montreal, QC H3B 3K3, Canada
416.682.3860 or 800.387.0825
shareholderinquiries@tmx.com
Duplicate Mailings
If you receive duplicate shareholder mailings from
Rogers Communications, please contact TSX Trust
Company as detailed above to consolidate your
accounts.
INVESTOR RELATIONS
Institutional investors, securities analysts and others
requiring additional financial information can visit
investors.rogers.com or contact us at:
647.435.6470 or
416.935.7777 (outside North America)
or investor.relations@rci.rogers.com
CORPORATE PHILANTHROPY
For information relating to Rogers’ various
philanthropic endeavours, refer to the “About
Rogers” section of rogers.com
SUSTAINABILITY
Rogers is committed to continuing to grow
responsibly and we focus our social and
environmental sustainability efforts where we can
make the most meaningful impacts on both. To learn
more, please visit about.rogers.com/our-impact
STOCK EXCHANGE LISTINGS
Toronto Stock Exchange (TSX):
RCI.A – Class A Voting shares
(CUSIP # 775109101)
RCI.B – Class B Non-Voting shares
(CUSIP # 775109200)
New York Stock Exchange (NYSE):
RCI – Class B Non-Voting shares
(CUSIP # 775109200)
DEBT SECURITIES
For details of the public debt securities of the Rogers
companies, please refer to the “Debt Securities”
section under investors.rogers.com
INDEPENDENT AUDITORS
KPMG LLP
ONLINE INFORMATION
Rogers is committed to open and full financial
disclosure and best practices in corporate
governance. We invite you to visit
investors.rogers.com where you will find additional
information about our business, including events and
presentations, news releases, regulatory filings,
governance practices, corporate social responsibility
and our continuous disclosure materials, including
quarterly financial releases, annual information forms,
and management information circulars. You may also
subscribe to our news by email or RSS feeds to
automatically receive Rogers news releases
electronically.
DIRECT DEPOSIT SERVICE
Shareholders may have dividends deposited directly
into accounts held at financial institutions. To arrange
direct deposit service, please contact TSX Trust
Company as detailed earlier on this page.
COMMON STOCK TRADING AND
DIVIDEND INFORMATION
2021
Price RCI.B on TSX Dividends
Declared
per Share
Low Close
High
First Quarter
$65.72 $54.69 $57.95
Second Quarter $66.08 $57.90 $65.90
$67.59 $58.58 $59.15
Third Quarter
Fourth Quarter $62.38 $56.00 $60.23
$0.50
$0.50
$0.50
$0.50
Shares Outstanding at December 31,
2021
Class A Voting
Class B Non-Voting
111,153,411
393,771,907
2022 Expected Dividend Dates
Record Date*:
Payment Date*:
March 10, 2022
June 10, 2022
September 9, 2022
December 9, 2022
* Subject to Board approval
April 1, 2022
July 4, 2022
October 3, 2022
January 3, 2023
Unless indicated otherwise, all dividends paid by
Rogers Communications are designated as “eligible”
dividends for the purposes of the Income Tax Act
(Canada) and any similar provincial legislation.
DIVIDEND REINVESTMENT PLAN (DRIP)
Rogers offers a convenient dividend reinvestment
program for eligible shareholders to purchase
additional Rogers Communications shares by
reinvesting their cash dividends without incurring
brokerage fees or administration fees. For plan
information and enrolment materials or to learn more
about Rogers’ DRIP, please visit https://tsxtrust.com/
a/investor-hub or contact TSX Trust Company as
detailed earlier on this page.
ELECTRONIC DELIVERY OF
SHAREHOLDER MATERIALS
Registered shareholders can receive electronic notice
of financial reports and proxy materials by registering
at https://tsxtrust.com/edelivery. This approach gets
information to shareholders faster than conventional
mail and helps Rogers protect the environment and
reduce printing and postage costs.
CAUTION REGARDING FORWARD-LOOKING INFORMATION AND OTHER RISKS
This annual report includes forward-looking statements about the financial condition and
prospects of Rogers Communications that involve significant risks and uncertainties that are
detailed in the “Risks and Uncertainties Affecting our Business” and “About Forward-Looking
Information” sections of the MD&A contained herein, which should be read in conjunction with
all sections of this annual report.
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© 2022 Rogers Communications Inc.
Other registered trademarks that appear are the property of the respective owners.
146
| ROGERS COMMUNICATIONS INC. 2021 ANNUAL REPORT
The best is yet to come.