Rogers Communications Reports Second Quarter 2016 Results lof16 unicati Rogers Communications Inc. Rogers Communications Inc. Rogers Communications Reports Second Quarter 2016 Results Ju 21.2016 - Rogers 3.0 plan delivers solid ?nancial and operating metrics 0 Continued revenue growth of 2% primarily driven by Wireless service revenue growth of 5% 0 Wireless postpaid net additions of 65,000, an improvement of 41.000 year on year 0 Wireless postpaid churn improved 5 basis points; third consecutive quarter of year on year improvement a internet revenue growth of 15% with net additions of 12,000. an improvement of 8, 000 year on ?year a Media revenue growth of 6% and improved adjusted operating profit year on year driven by the higher revenue from Sportsnet and success of the Toronto Blue Jays 0 1 Gigabit lntemet service now available to "2 million homes; on track to offer to our entire Cable footprint by the end of 2016, well ahead of our competitors TORONTO. July 21. 2016 - Rogers Communications Inc.. a leading diversi?ed Canadian communications and media company. today announced its unaudited financial and operating results for the second quarter ended June 30. 2016. Consolidated Financial Highlights Three months ended June 30 (In millions of Canadian dollars. except per share amounts. unaudited) 2016 2015 Total revenue 3.455 3.403 As adjusted 1: Operating pro?t 1,347 1.337 Net income 427 412 Basic earnings per share 0.83 0.80 Net income 394 363 Basic earnings per share 0.77 0.70 Free cash flow 1 495 476 Cash provided by operating activities 1.121 1.114 Adjusted amounts and free cash ?ow are measures and should not be considered substitutes or alternatives for GAAP measures. These are not de?ned terms under IFRS and do not have standard meanings, so may not be a reliable way to compare us to other companies. See Measures" for information about these measures. including how we calculate them. "We posted strong results in the second quarter, delivering solid revenue growth whilst attracting more customers across our Wireless and Internet businesses." said Guy Laurence. President and Chief Executive Of?cer. "We continued to make meaningful improvements to the customer experience. delivering our third straight quarter of Wireless postpaid churn improvement. We expanded our roaming leadership with the launch of Fido Roam. continued the rollout of our Gigabit Internet service to almost half our cable footprint. and introduced two innovative leapfrog solutions to Canadian businesses. Overall. we're making good headway on our Rogers 3.0 strategy." Key Financial Highlights Higher revenue Consolidated revenue increased 2% this quarter. re?ecting revenue growth of 1% in Wireless, 6% in Media. and 3% in Business Solutions, with stable revenue in Cable. Wireless service revenue increased by 5% primarily as a result of a larger subscriber base and the continued adoption of Rogers Share Everything plans. Cable revenue was stable as continued double-digit Internet revenue growth of 15% fully offset the ongoing decline in Television and Phone revenue. We continue to see an ongoing shift in product mix to higher-margin Internet services. Media revenue increased primarily due to the continued success of our sports-related assets. mainly from the Toronto Blue Jays and the strength of 'Sportsnet. partially offset by lower advertising revenue in conventional broadcast television. publishing. and radio. Higher adjusted operating profit Higher consolidated adjusted operating pro?t this quarter largely re?ects an increase in Wireless adjusted operating pro?t as a result of higher service revenue. Higher net income and adjusted net income Net income and adjusted net income increased this quarter primarily as a result of higher adjusted operating pro?t and lower other PM Rogers Communications Reports Second Quarter 2016 Results 20f 16 rogers .mediaroom .com/ 20 6-07-2 1 -Rogers? Comm unicati expense. partially offset by higher depreciation and amortization. Net income also bene?tted from lower restructuring costs. Substantial free cash flow affords financial flexibility This quarter. we continued to generate substantial cash ?ow from operating activities and free cash flow of $1 ,121 million and $495 million. respectively. Higher free cash flow reflects an increase in adjusted operating pro?t and lower cash tax payments. partially offset by higher additions to property. plant and equipment. Our solid ?nancial results enabled us to reduce outstanding debt, continue to make investments in our network. and still return substantial capital to shareholders. We paid $247 million in dividends this quarter. Rogers 3.0 Our Rogers 3.0 plan is a multi-year plan intended to: - re-accelerate revenue growth in a sustainable way; and 0 continue our track record of translating revenue into strong margins and free cash ?ow. a solid return on assets, and ultimately increasing returns to shareholders. There are a number of opportunities we expect will help drive improved performance going forward, including: a further improving the customer experience; - maintaining leadership and momentum in Wireless: - strengthening our Cable offerings: and a driving growth in the business market. Improving the Customer Experience Our improvements to the customer experience are a key driver in lowering our Wireless postpaid churn. This quarter. we improved postpaid churn by 5 basis points to 1.14%. which represents our lowest churn in the past two years and the third quarter in a row in which we posted an improvement to this metric. We are committed to enhancing our self-serve options. which we expect will further decrease the need for customers to contact us. During the quarter. self-serve transactions on the Rogers brand increased by 56% year on year. We also reduced the number of times our customers contacted us by 8% from the same quarter last year. The latest example of Rogers' commitment to self-serve technology is Data Top-Ups, which allow Wireless customers to manage their data consumption on a month-by?month basis and purchase extra data if needed. We continue to introduce innovative services. This quarter. we extended our Roam Like Home model to our Fido customers as Fido Roam. Due to the success of Roam Like Home. roaming-related complaints from Rogers customers to the Commissioner for Complaints for Telecommunications Services are on track to decrease by 90% this year from the 2012-13 results. We expect Fido Roam to be successful as well. Maintaining Leadership and Momentum in Wireless Our compelling value propositions. improving customer experience. and best-in-class network continue to drive momentum in our Wireless segment. We reported strong service revenue growth this quarter and improved adjusted operating pro?t year on year. For the fourth quarter in a row. we signi?cantly increased postpaid net additions year on year. This quarter. we saw an increase of over 170 percent. or 41.000. to 65.000 net additions. Strengthening Our Cable Offerings Subscriber trends are improving in our Cable segment and we are well positioned to improve further based on: the strong popularity of IGNITE Internet. including our recent launch of one gigabit speeds; and - enhanced TV offerings. including an improved legacy user interface. 4K TV. and the launch of Internet Protocol Television (IPTV). which is expected at the end of this year. lntemet Our Cable product mix continues to shift to higher-margin Internet services. We continued to generate double-digit Internet revenue growth in the quarter at 15% and tripled Internet net additions to 12.000 from the same quarter last year. We have made gigabit Internet speeds available to approximately two million homes and are well on track with our plan to deliver gigabit Internet speeds to our entire cable footprint of over four million homes by the end of 2016 at an incremental in-year capital cost of less than $50 per home. We will increase capacity as the demand for speed grows with further annual success-based capital investments. positioning us well to earn attractive returns on investment for our shareholders. TV offerin Consumerqinterest in 4K TV continues to grow. By the end of 2016. we expect to have delivered over 100 live sporting events in 4K. To achieve the high quality 4K resolution, as well as to support our anticipated IPTV introduction. high levels of bandwidth are required. Our hybrid ?bre-coaxial cable network already has the capability to deliver the required bandwidth. With more 4K television sets and video streaming devices in the home. the high bit rate requirement further emphasizes the speed and capacity advantages of Rogers' hybrid ?bre-coaxial cable network over the legacy networks of our telecommunication competitors. PM Rogers Communications Reports Second Quarter 2016 Results 30f l6 6?07-2 l?Rogers-Communicati . .. Driving Growth in the Business Market Rogers is currently under-indexed in this growing market. Recently, we launched two more leapfrog solutions for Canadian enterprises. Rogers Unison is a business collaboration solution that enables small businesses to forego landlines by offering the features of a traditional desk phone on a smartphone. We also introduced the ?rst of a new portfolio of cloud-based solutions. The Rogers Public Cloud enables businesses to manage their iT infrastructure in the cloud securely and cost effectively. These are the latest in our ongoing rollout of services for business customers. it will take time to educate and penetrate the market on these new offerings. but we look forward to the contribution from these longer-term growth opportunities. About measures This earnings release contains measures such as adjusted operating profit. adjusted operating pro?t margin. adjusted net income, free cash ?ow, adjusted net debt. adjusted net debt I adjusted operating pro?t. and adjusted basic and diluted earnings per share. These measures should not be considered substitutes or alternatives for GAAP measures. These are not de?ned terms under International Financial Reporting Standards (IFRS). and do not have standard meanings. so may not be a reliable way to compare us to other companies. See Measures? in this earnings release for information about these measures, including how we calculate them. About Rogers Rogers Communications is a leading diversi?ed public Canadian communications and media company. We are Canada's largest provider of wireless communications services and one of Canada?s leading providers of cable television. high-speed Internet. and telephony services to consumers and businesses. Through Rogers Media. we are engaged in radio and television broadcasting, televised shopping. magazines and trade publications. sports entertainment, and digital media. Our stock is publicly traded on the Toronto Stock Exchange (TSX: RCI.A and RCI.B) and on the New York Stock Exchange (NYSE: RCI). For further information about the Rogers group of companies. please visit rogers.com. lnfonnation on or connected to our website is not part of or incorporated into this earnings release. Quarterly Investment Community Teleconference Our second quarter 2016 results teleconference with the investment community will be held on: a July 21. 2016 8:30 am. Eastern Time 0 webcast available at rogers.comfwebcast - media are welcome to participate on a listen-only basis A rebroadcast will be available at on the Events and Presentations page for at least two weeks following the teleconference. Additionally. investors should note that from time to time. Rogers' management presents at brokerage-sponsored investor conferences. Most often. but not always. these conferences are webcast by the hosting brokerage ?rm. and when they are webcast, links are made available on Rogers' website at rogers.comfevents and are generally placed there at least two days before the conference. For More Information You can ?nd more information relating to us on our website (rogerscomfinvestors). on SEDAR (sedancom). and on EDGAR (secgov). or you can e-mail us at information on or connected to these and any other websites referenced in this earnings release is not part of. or incorporated into. this earnings release. You can also go to rogers.comfinvestors for information about our governance practices. corporate social responsibility reporting, a glossary of communications and media industry terms. and additional information about our business. This earnings release contains important information about our business and our performance for the three and six months ended June 30. 2016. as well as forward-looking information about future periods. This earnings release should be read in conjunction with our Second Quarter 2016 our Second Quarter 2016 Interim Condensed Consolidated Financial Statements and notes thereto. which have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting. as issued by the International Accounting Standards Board our 2015 Annual our 2015 Audited Consolidated Financial Statements and notes thereto. which have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the and our other recent ?lings with Canadian and US securities regulatory authorities. which are available on SEDAR at sedar.com or EDGAR at secgov, respectively. For more information about Rogers. including product and service offerings. competitive market and industry trends. and our overarching strategy. see "Understanding Our Business". "Our Strategy". and "Capability to Deliver Results" in our 2015 Annual For our key performance drivers and objectives, see "Key Performance Drivers and Strategic Highlights" in our 2015 Annual and "Key Financial Highlights" and "Rogers 3.0" on pages 2 to 4 of our Second Quarter 2016 earnings release. All dollar amounts are in Canadian dollars unless othenlvise stated. All percentage changes are calculated using the rounded numbers as they appear in the tables. This earnings release is current as at July 20. 2016 and was approved by the Audit and Risk Committee of our Board of Directors (the Board) on that date. This earnings release includes fonivard-looking statements and assumptions. See "About Fonivard-Lcoking Information" for more information. 7/21/16. 12:57 PM Rogers Communications Reports Second Quarter 2016 Results 40f l6 http://rogers .mediaroom com/20 1 6-07-2 -Rogers?Communicati We, us, our, Rogers, Rogers Communications, and the Company refer to Rogers Communications Inc. and its subsidiaries. refers to the legal entity Rogers Communications Inc., not including its subsidiaries. RCI also holds interests in various investments and ventures. We are publicly traded on the Toronto Stock Exchange (TSX: RCI.A and RCI.B) and on the New York Stock Exchange (NYSE: RCI). In this earnings release, this quarter refers to the three months ended June 30, 2016 and year to date refers to the six months ended June 30, 2016. All results commentary is compared to the equivalent periods in 2015 or as at December 31, 2015, as applicable. unless otherwise indicated. Summary of Consolidated Financial Results Three months ended June 30 Six months ended June 30 (In millions of dollars, except margins and per share amounts) 2016 2015 2016 2015 Revenue Wireless 1 ,931 1,903 1 3,821 3,697 3 Cable 870 869 - 1,726 1,739 (1) Business Solutions 97 94 3 193 188 3 Media 615 582 6 1,063 1,046 2 Corporate items and intercompany eliminations (58) (45) 29 (103) (92) 12 Revenue 3,455 3,403 2 6,700 6,578 2 Adjusted operating pro?t Wireless 846 841 1 1 ,609 1 .606 - Cable 415 414 - 808 816 (1) Business Solutions 31 27 15 62 55 13 Media 90 90 - 41 58 (29) Corporate items and intercompany eliminations (35) (35) - (72) (74) (3) Adjusted operating pro?t 1 1,347 1.337 1 2,443 2,461 (1) Adjusted operating pro?t margin 1 39.0% 39.3% (0.3 pts) 36.5% 37.4% (0.9 pts) Net income 394 363 9 642 618 4 Basic earnings per share 0.77 0.70 10 1.25 1.20 4 Diluted earnings per share 0.76 0.70 9 1.24 1.19 4 Adjusted net income Adjusted basic earnings per share 1 0.83 0.80 4 1.34 1.33 1 Adjusted diluted earnings per share 1 0.33 0.80 4 1.33 1.33 Additions to property, plant and equipment 647 621 4 1,199 1,096 9 Free cash flow 1 495 476 4 715 742 (4) Cash provided by operatingactivities 1,121 1,114 1 1,719 1,341 28 Adjusted operating pro?t, adjusted operating pro?t margin, adjusted net income. adjusted basic and diluted earnings per share, and free cash ?ow are measures and should not be considered substitutes or alternatives for GAAP measures. These are not de?ned terms under and do not have standard meanings. so may not be a reliable way to compare us to other companies. See Measures" for information about these measures, including how we calculate them. Key Changes in Financial Results Compared to 2015 Reve ue Wireless service revenue increased 5% this quarter and 4% year to date as a result of a larger subscriber base and the continued adoption of Rogers Share Everything plans. Cable revenue was stable this quarter due to Internet subscriber growth, movement of Internet subscribers to higher speed and usage tiers, and the impact of pricing changes across most product types, offset by TV and Phone subscriber losses over the past year. Year to date, Cable revenue decreased 1% due to lowerTV and Phone subscriber bases. Business Solutions revenue increased this quarter and year to date as the growth in on-net next generation services, including our data centre businesses, more than offset the continued planned reduction in lower-margin, off-net legacy revenue. Media revenue increased this quarter and year to date primarily as a result of the continued growth of sports-related revenue, partially offset by lower advertising revenue in conventional broadcast television, publishing, and radio. Adjusted operating profit 7/21/16, 12:57 PM Rogers Communications Reports Second Quarter 2016 Results Wireless adjusted operating pro?t increased this quarter and year to date from service revenue growth as described above. partially offset by higher costs associated with increased volumes and subsidy rates of devices. Cable adjusted operating pro?t was stable this quarter as a result of stable revenue and operating expenses. Year to date. Cable adjusted operating pro?t decreased marginally as a result of the decrease in revenue discussed above. Business Solutions adjusted operating pro?t increased this quarter and year to date as a result of higher revenue and lower service costs. Media adjusted operating pro?t was stable this quarter as a result of increased revenue as described above. offset by increased operating expenses. Year to date. adjusted operating pro?t decreased 29% primarily as a result of lower conventional advertising revenue in the ?rst quarter of 2016. Results of our Reporting Segments WIRELESS Wireless Financial Results Three months ended June 30 Six months ended June 30 (In millions of dollars, except margins) 2016 1 2015 2016 1 2015 Revenue Service revenue 1,788 1,707 5 3.522 3.379 4 Equipment revenue 143 196 (27) 299 318 (6) Revenue 1,931 1.903 1 3,821 3.697 3 Operating expenses Cost of equipment 434 423 3 894 816 10 Other operating expenses 651 639 2 1,318 1.275 3 Operating expenses 1,085 1.062 2 2,212 2.091 6 Adjusted operating pro?t 846 841 1 1,609 1,606 - Adjusted cperating pro?t margin as a of service revenue 47.3% 49.3% (2 pts) 45.7% 47.5% (1.8 pts) Additions to property. plant and equipment 207 256 (19) 368 436 (11) 1 The operating results of Mobilicity are included in the Wireless results of operations from the date of acquisition on July 2, 2015. Wireless Subscriber Results 1 Three months ended June 30 Six months ended June 30 (In thousands. except churn. postpaid ARPA. and blended ARPU) 2016 2015 2016 2015 Postpaid Gross additions 349 313 36 653 590 63 Net additions (lossesTotal postpaid subscribers 2 3,350 8.163 137 8,350 8.163 137 Churn 1.14% 1.19% (0.05 pts) 1.16% 1.22% (0.06 pts) ARPA 116.06 110.14 5.92 114.13 108.79 5.34 Prepaid Gross additions 194 154 40 351 280 71 Net additions (losses) 25 8 17 6 (29) 35 Total prepaid subscribers 2-3 1,612 1.343 264 1,612 1.343 264 Churn 3.57% 3.63% (0.06 pts) 3.61 3.81% (0.20 pts) Blended ARPU 60.18 60.01 0.17 59.35 59.38 0.03) 1 Subscriber counts. subscriber churn, postpaid ARPA. and blended ARPU are key performance indicators. See "Key Performance Indicators". As at end of period. 3 On July 2. 2015. we acquired approximately 154,000 Wireless prepaid subscribers as a result of our acquisition of Mobilicity. Service revenue The 5% increase in service revenue this quarter and 4% increase year to date were a result of: a larger postpaid and prepaid subscriber base; and I - the continued adoption of customer-friendly Rogers Share Everything plans. These plans generate higher postpald ARPA, bundle in of 16 PM Rogers Communications Reports Second Quarter 2016 Results 60f16 http://rogers .mediaroom com/201 6-07-21 -Rogers-Communicati various calling features and long distance. provide the ability to pool data usage across multiple devices. and grant access to our other offerings, such as Roam Like Home. Rogers NHL GameCentre LIVE. Spotify, shomi. and Texture by Next Issue. The 5% increases in postpaid ARPA this quarter and year to date were the result of the continued adoption of Rogers Share Everything plans relative to the number of subscriber accounts as customers have increasingly utilized the advantages of premium offerings and access their shareable plans with multiple devices on the same account. The stable blended ARPU this quarter and year to date was a result of: - increased service revenue as discussed above; offset by - the impact of expanding our ower-blended-ARPU-generating prepaid subscriber base relative to our total subscriber base as a result of our acquisition of MObilicity; and the general increase in prepaid net additions over the past year. Excluding the impact of the addition of Mobilicity. blended ARPU would have increased by 1% this quarter and year to date. We believe the increases in gross and net additions to our subscriber base this quarter and year to date. as well as the lower churn. were results of our strategic focus on enhancing the customer experience by providing higher-value offerings. such as our Share Everything plans, improving our customer service. and continually increasing the quality of our network. Equipment revenue The 27% decrease in equipment revenue this quarter and 6% decrease year to date were a result of: 0 larger average subsidies given to customers who purchased devices; partially offset by 0 higher gross additions; and a greater number of device upgrades by existing subscribers. The increase in device upgrades this quarter was Operating expenses Cost of equipment The 3% increase in the cost of equipment this quarter and 10% increase year to date were a result of: - increased equipment sales volumes primarily from our higher gross additions; and I the increase in device upgrades by existing subscribers. as discussed above. The year to date increase was also affected by a shift in the product mix of device sales towards higher-cost smartphones. Other operating expenses The 2% increase in other operating expenses this quarter and 3% increase year to date were a result of: - higher service costs. partially as a result of our value-add offerings; - incremental costs as a result of our acquisition of Mobilicity; and 0 higher advertising costs; partially offset by a lower commissions resulting from improvements in our sales channels; and a various cost ef?ciency and productivity initiatives. Adjusted operating profit The increases in adjusted operating pro?t this quarter and year to date were a result of the revenue and expense changes discussed above. CABLE Cable Financial Results Three months ended June 30 Six months ended June 30 (In millions of dollars. except margins) 2016 2015 2016 2015 Revenue Internet 376 327 15 736 651 13 Television 394 425 (7) 789 851 (7) Phone 99 115 (14) 1 98 233 (15) Service revenue 869 867 - 1,723 1.735 (1) Equipment revenue 1 2 (50) 3 4 (25) Revenue 870 869 - 1,726 1.739 (1) Operating expenses Cost of equipment 1 1 - 2 2 7/21/16, 12:57 PM Rogers Communications Reports Second Quarter 2016 Results Other operating expenses 454 454 - 916 921 (1) Operating expenses 455 455 - 918 923 (1) Adjusted operating pro?t 415 414 808 816 (1) Adjusted operating pro?t margin 47.7% 47.6% 0.1 46.8% 46.9% (0.1 pts) Additions to property, plant and equipment 300 254 18 546 478 14 Cable Subscriber Results 1 Three months ended June 30 Six months ended June 30 (In thousands) 2016 2015 2016 2015 Internet Net additions (lossesTotal Internet subscribers 2 2,076 2,008 68 2,076 2,008 68 Television Net losses (23) (32) 9 (49) (73) 24 Total television subscribers 2 1,847 1,951 (104) 1,847 1,951 (104) Phone Net additions (losses) 5 (11) 16 (5) (31) 26 Total phone subscribers 2 1,085 1,119 (34) 1,085 1,119 (34) Cable homes passed 2 4,173 4,106 67 4,173 4.106 67 Total service units 3 Net losses (6) (39) 33 (26) (107) 81 Total service units 2 5,008 5,078 (70) 5,008 5.078 (70) 1 Subscriber counts are key performance indicators. See "Key Performance Indicators" 2 As at end of period. 3 Includes Internet, Television, and Phone subscribers. Revenue The stable revenue this quarter and 1% decrease year to date were primarily a result of: a higher subscriber base for our Internet products; and the impact of pricing changes implemented over the past year; offset by 0 Television and Phone subscriber losses over the past year. Internet revenue The 15% increase in Internet revenue this quarter and 13% increase year to date were a result of: - general movement of customers to higher speed and usage tiers of our IGNITE broadband Internet offerings; a larger Internet subscriber base; and the impact of changes in Internet service pricing; partially offset by I a decline in additional usage-based revenue as portions of the subscriber base move to the higher-value, unlimited usage plans. Television revenue The 7% decreases in Television revenue this quarter and year to date were a result of: the decline in Television subscribers over the past year; and more promotional pricing provided to subscribers: partially offset by 0 the impact of Television service pricing changes implemented over the past year. Phone revenue The 14% decrease in Phone revenue this quarter and 15% decrease year to date were a result of: the impact of pricing packages, primarily related to IGNITE multi-product bundles; and a smaller subscriber base. Operating expenses 7 of 16 7/21/16, 12:57 PM Rogers Communications Reports Second Quarter 2016 Results The stable operating expenses this quarter and 1% decrease year to date were a result of: 0 lower service costs; a relative shifts in product mix to higher-margin Internet from conventional Television broadcasting; and I various cost ef?ciency and productivity initiatives; offset by I increased advertising, partially related to our launch of 4K TV. Adjusted operating profit The stable adjusted operating pro?t this quarter and the marginal decrease year to date were a result of the revenue and expense changes discussed above. BUSINESS SOLUTIONS Business Solutions Financial Results Three months ended June 30 Six months ended June 30 (I_n millions of dollars, except margins) 2016 1 2015 2016 1 2015 Revenue Next generation 78 73 7 153 143 7 Legacy 17 20 (15) 37 43 (14) Service revenue 95 93 2 190 186 2 Equipment revenue 2 1 100 3 2 50 Revenue 97 94 3 193 188 3 Operating expenses 66 67 (1) 131 133 (2) Adjusted operating proAdjusted operating pro?t margin 32.0% 28.7% 3.3 32.1% 29.3% 2.8 Additions to property, plant and equipment 36 48 (21) 76 81 (6) The operating results of Internetworking Atlantic Inc. are included in the Business Solutions results of Operations from the date 'of acquisition on November 30, 2015. Revenue The 2% increases in service revenue this quarter and year to date were a result of: a the continued execution of our plan to grow higher-margin, next generation on?net and near-net IP-based services revenue; partially offset by the continued decline in our legacy and off-net voice business, a trend we expect to continue as we focus the business on next generation on-net and near-net opportunities and customers move to more advanced and cost-effective IP-based services and solutions. Next generation services, which include our data centre operations, represented 82% of total service revenue in the quarter (2015 - 76%) and 81% year to date (2015 - Operating expenses The 1% decrease in operating expenses this quarter and 2% decrease year to date were a result of lower service costs, primarily due to the shift in costs as customers move from lower-margin legacy products to higher-margin next generation products. Adjusted operating profit The 15% increase in adjusted operating pro?t this quarter and 13% increase year to date were a result of the revenue and expense changes discussed above. MEDIA Media Financial Results Three months ended June 30 Six months ended June 30 (In millions of dollars, except margins) 2016 2015 2016 2015 Revenue 615 582 6 1 ,063 1,046 2 Operating expenses 525 492 7 1 .022 988 3 8 of 16 7/21/16, 12:57 PM Rogers Communications Reports Second Quarter 2016 Results 9of16 Adjusted operating pro?t 90 90 - 41 58 (29) Adjusted operating pro?t margin 14.6% 15.5% (0.9 pts) 3.9% 5.5% (1.6 pts) Additions to property. plant and equipment 13 11 18 31 20 55 Revenue The 6% increase in revenue this quarter and 2% increase year to date were a result of: a higher sports-related revenue. driven by the strength of Sportsnet and success of the Toronto Blue Jays: partially offset by a lower advertising revenues across radlo. publishing. and broadcast TV. Operating expenses The 7% increase in operating expenses this quarter and 3% increase year to date were a result of: 0 higher sports-related costs; partially offset by 0 lower conventional broadcast TV and radio costs. partly due to cost savings from previously announced job cuts. Adjusted operating pro?t The stable adjusted operating pro?t this quarter was a re3ult of the increase in sports-related revenue. offset by higher related expenses. Year to date. the 29% decrease was primarily a result of lower conventional advertising revenue in the first quarter of 2016. ADDITIONS T0 PROPERTY, PLANT AND EQUIPMENT Three months ended June 30 Six months ended June 30 (In millions of dollars. except capital intensity) 2016 2015 2016 2015 Additions to property. plant and equipment Wireless 207 256 (1 9) 388 436 (1 1 Cable 300 254 18 546 478 14 Business Solutions 38 48 (21) 76 81 (6) Media 13 11 18 31 20 55 Corporate 89 52 71 158 81 95 Total additions to property. plant and equipment 1 647 621 4 1,199 1,096 9 Capital intensity 2 18.7% 18.2% 0.5 17.9% 16.7% 1.2 1 Additions to pmperty. plant and equipment do not include expenditures for spectrum licences. 2 Capital intensity is a key performance indicator. See "Key Performance Indicators". Wireless The decreases in additions to property. plant and equipment in Wireless this quarter and year to date were primarily a result of higher LTE network investments incurred last year relative to this year to enhance network coverage and the quality of our network. Deployment of our 700 LTE network has reached 89% of Canada's population as at June 30, 2016 (December 31, 2015 - The 700 LTE network offers improved signal quality in basements. elevators. and buildings with thick concrete walls. Deployment of our overall LTE network has reached approximately 94% of Canada's population as at June 30. 2016 (December 31. 2015 - Cable The increases in additions to property. plant and equipment in Cable this quarter and year to date were a result of greater investment in network infrastructure to further improve the reliability and quality of our network. We believe this allows us to keep ahead of customer data demands. to increase the capacity of our Internet platform to deliver gigabit Internet speeds across our Cable footprint by the end of the year. and to support our anticipated introduction of IPTV later this year. Year to date. this increase was partially offset by lower information technology infrastructure and customer premise equipment-related expenditures. Business Solutions The decreases in additions to property. plant and equipment in Business Solutions this quarter and year to date were the result of investments in our data centres last year. Media The increases in additions to property. plant and equipment in Media this quarter and year to date re?ect greater current year investments made to our digital platforms and broadcast facilities. Corporate The increases in additions to property. plant and equipment in Corporate this quarter and year to date were a result of higher spending on 7/21/16. 12:57 PM Rogers Communications Reports Second Quarter 2016 Results premise improvements at our various of?ces as well as higher information technology investments. Capital intensity Capital intensity increased this quarter and year to date as a result of higher additions to property, plant and equipment due to the timing of investments in our network as described above relative to the increase in revenue described previously. Consistent with our guidance. which we announced on January 27. 2016. we continue to expect lower additions to property. plant and equipment this year. Financial Guidance There are no changes at this time to the consolidated guidance ranges for revenue. adjusted operating pro?t. free cash ?ow. or additions to property. plant and equipment. which were provided on January 27. 2016. See "About Forward-Looking Information" in this earnings release and in our 2015 Annual Adjusted operating pro?t and free cash ?ow are measures and should not be considered substitutes or alternatives for GAAP measures. They are not defined terms under and do not have standard meanings. so may not be a reliable way to compare us to other companies. See Measures" for information about these measures. including how we calculate them. Key Performance Indicators We measure the success of our strategy using a number of key performance indicators that are de?ned and discussed in our 2015 Annual and this earnings release. We believe these key performance indicators allow us to appropriately measure our performance against our operating strategy as well as against the results of our peers and competitors. The following key performance indicators are not measurements in accordance with and should not be considered an alternative to net income or any other measure of performance under IFRS. They include: I Subscriber counts; 0 Subscriber churn; - Postpaid average revenue per account - Blended average revenue per user and 0 Capital intensity. Measures We use the following measures. These are reviewed regularly by management and our Board in assessing our performance and making decisions regarding the ongoing operations of our business and its ability to generate cash flows. Some or all of these measures may also be used by investors, lending institutions. and credit rating agencies as indicators of our operating performance, of our ability to incur and service debt. and as measurements to value companies in the telecommunications sector. These are not recognized measures under GAAP and do not have standard meanings under IFRS, so may not be reliable ways to compare us to other companies. Most comparable Why we use it How we calculate it IFRS ?nancial measure measure Adjusted Adjusted operating pro?t: Net income operating pro?t Net income Adjuswd 0 To evaluate the performance of our add (deduct) operating pro?t businesses- and when making decisions about income taxes. other expense (income). ?nance margin ?d costs. restructuring. acquisition and other. a we believe that certain investors and depreciation and amortization. stock-based adjusted ?Emmi? measure compensation and impairment of assets. ability to service debt and to meet other payment obligations. Adjusted Operating pro?t margin: 0 We also use it as one component In Adjusted operating pro?t determining short-term incentive compensation divided for all management employees. I Revenue (service revenue for Wireless). Adjusted net TD we? the ?Mam 0'0? businesses Adjusted net income: Net income earnings per share before the effects ofthe noted items. because Excluding these items does not imply that they are non-recurring. income may am the of our?nanda. Net income and diluted Adjusted basic results and could potentially distort the add (deduct) per share and diluted i? bum? memncf? stock-based compensation. restru ctun'ng. acquisition and other. impairment of assets. (gain) on sale of investments. (gain) on acquisitions. loss on non-controlling interest purchase obligations. loss on repayment of long-term debt. and income tax adjustments on these items. including adjustments as a result of legislative changes. Adjusted basic and diluted earnings per share: Adjusted net income divided by basic and diluted weighted average shares outstanding. 7/21/16, 12:57 PM Rogers Communications Reports Second Quarter 2016 Results Iiof16 -Rogers?C0mmunicati . .. To show how much cash we have available to repay debt and reinvest in our company, which is an important indicator of our ?nancial strength and performance. we believe that some investors and use free cash ?ow to value a business and its undenving assets. Free cash ?ow Adjusted operating pro?t deduct additions to property. plant and equipment, interest on borrowings net of capitalized interest. and cash income taxes. Cash provided by operating activities Adjusted net Total long-term debt Long-ten'n debt debt add (deduct) I To ccnductvatuaticn-related analysis and current Portion Of long-term debt? deferred make decisions about capital structure, transaction costs and discounts, net debt derivative we belies. this heir-,5 jnvedstors-and (assets) liabilities, credit risk adjustment related to a" "my "a "a and net debt derivatives, bank advances (cash and cash equivalents), and short-term borrowings. Adjusted net Adjusted net debt (de?ned above) Long-term debt . I . . . . . debt adjusted . We believe ?a helps ?Em and drwded by dwided by net operating pro?t analyze our enterprise and equity value and assess our leverage. 12-month trailing adjusted operating pro?t (de?ned above). income Reconciliation of adjusted operating pro?t Three months ended June 30 Six onths ended June 30 (In millions of dollars) 2016 2015 2016 2015 Net income 394 363 642 618 Add (deduct): Income taxes 141 148 202 230 Other expense (income) 9 26 (25) 23 Finance costs 189 182 385 392 Restructuring, acquisition and other 27 42 71 51 Depreciation and amortization 572 562 1,146 1,121 Stock-based compensation 15 14 27 26 Adjusted operating pro?t 1,347 1,337 2,448 2,461 Reconciliation of adjusted operating profit ma_r_gin Three months ended June 30 Six months ended June 30 (In millions of dollars, except percentages) 2016 2015 2016 2015 Adjusted operating pro?t margin: Adjusted operating pro?t 1,347 1,337 2,448 2,461 Divided by: total revenue 3,455 3,403 6,700 6,578 Adjusted operating pro?t margin 39.0% 39.3% 36.5% 37.4% Reconciliation of adjusted net income Three months ended June 30 Six months ended June 30 (in millions of dollars) 2016 2015 2016 2015 Net income 394 363 642 618 Add (deduct): Stock-based compensation 15 14 27 26 Restructuring. acquisition and other 27 42 71 51 Loss on repayment of long-tenn debt - - - 7 Gain on sale of investment a - (39) - Income tax impact of above items (9) (13) (14) (21) income tax adjustment, legislative tax change - 6 3 6 Adjusted net income 427 412 690 687 Reconciliation of adjusted earnings per share 7/21/16, 12:57 PM Rogers Communications Reports Second Quarter 2016 Results .. 1201? 16 (In millions of dollars. except per share amounts; -Rogers-Communicati Three months ended June 30 Six months ended June 30 number of shares outstanding in millions) 2016 2015 2016 2015 Adjusted basic earnings per share: Adjusted net income 427 412 690 687 Divided by: Weighted average number of shares outstanding 515 515 51 5 515 Adjusted basic earnings per share 0.83 0.80 5 1.34 1.33 Adjusted diluted earnings per share: Adjusted net income 427 412 690 687 Divided by: Diluted weighted average number of shares outstanding 517 516 517 517 Adjusted diluted earnings per share 0.83 0.80 1.33 1.33 Reconciliation of free cash ?ow Three months ended June 30 Six months ended June 30 (In millions of dollars) 2016 2015 2016 2015 Cash provided by operating activities 1,121 1.114 1,719 1.341 Add (deduct): Additions to property, plant and equipment (647) (621) (1,199) (1.096) Interest on borrowings, net of capitalized interest (187) (179) (379) (367) Restructuring, acquisition and other 27 42 71 51 Interest paid 154 141 392 404 Change in non-cash working capital (35) 44 85 394 Other adjustments 52 (65) 26 15 Free cash flow 495 476 715 742 Reconciliation of adjusted net debt and adjusted net debt adjusted operatinmfit As at As at June 30 December 31 (in millions of dollars) 2016 2015 Current portion of long-term debt 750 1,000 Long-term debt 15,239 15,870 Deferred transaction costs and discounts 106 111 16,095 16.981 Add (deduct): Net debt derivative assets (1,651) (2.028) Credit risk adjustment related to net debt derivative assets (73) (152) Short-term borrowings 1,050 800 Bank advances (cash and cash equivalents) 143 (11) Adjusted net debt 15,564 15.590 As at As at June 30 December 31 (In millions of dollars. except ratios) 2016 2015 Adjusted net debt I adjusted operating profit Adjusted net debt 15,564 15,590 Divided by: trailing 12-month adjusted operating pro?t 5,019 5,032 Adjusted net debt I adjusted operating pro?t 3.1 3.1 Rogers Communications Inc. Interim Condensed Consolidated Statements of Income (In millions of Canadian dollars. except per share amounts. unaudited) Three months ended June 30 Six months ended June 30 7/21/16, 12:57 PM Rogers Communications Reports Second Quarter 2016 Results 13 of 16 -Rogers?Communicati 2016 2015 2016 2015 Revenue 3.455 3.403 6,700 6.578 Operating expenses: Operating costs 2,123 2.080 4,279 4.143 Depreciation and amortization 572 562 1,146 1.121 Restructuring. acquisition and other 27 42 71 51 Finance costs 189 182 385 392 Other expense (income) 9 26 (25) 23 Income before income taxes 535 511 844 848 Income taxes 141 148 202 230 Net income for the period 394 363 642 618 Earnings per share: Basic 0.77 $0.70 1.25 $1.20 Diluted 0.76 $0.70 1.24 $1.19 Rogers Communications Inc. Interim Condensed Consolidated Statements of Financial Position (In millions of Canadian dollars. unaudited) As at As at June 30 December 31 2016 2015 Assets Current assets: Cash and cash equivalents - 11 Accounts receivable 1,811 1,792 Inventories 239 31 8 Other current assets 373 303 Current portion of derivative instruments 92 198 Total current assets 2,515 2.622 Property. plant and equipment 11,097 10,997 Intangible assets 7,173 7.243 Investments 2,346 2,271 Derivative instruments 1,681 1 .992 Other long-term assets 136 150 Deferred tax assets 8 9 Goodwill 3,891 3,891 Total assets 28,847 29,175 Liabilities and shareholders' equity Current liabilities: Bank advances 143 - Short-term borrowings 1,050 800 Accounts payable and accrued liabilities 2,584 2,708 Income tax payable 234 96 Current portion of provisions 27 10 Unearned revenue 371 388 Current portion of long-term debt 750 1.000 Current portion of derivative instruments 90 15 Total current liabilities 5,249 5.017 Provisions 30 50 Long-term debt 15,239 15,870 Derivative instruments 226 95 Other long-term liabilities 383 455 7/21/16, 12:57 PM Rogers Communications Reports Second Quarter 2016 Results 14 of 16 l?Rogers-Communicati Deferred tax liabilities 1,795 1.943 Total liabilities 22,922 23,430 Shareholders' equity 5,925 5,745 Total liabilities and shareholders' equity 28,847 29,175 Rogers Communications Inc. Interim Condensed Consolidated Statements of Cash Flows (In millions of Canadian dollars. unaudited) Three months ended June 30 Six months ended June 30 2016 2015 2016 2015 Operating activities: Net income for the period 394 363 642 618 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 572 562 1,146 1.121 Program rights amortization 18 21 39 43 Finance costs 169 182 385 392 Income taxes 141 148 202 230 Stock-based compensation 15 14 27 26 Post-employment bene?ts contributions, net of expense (71) 24 (61) (71) Gain on sale of investment - (39) - Other 46 10 36 Cash provided by operating activities before changes in non-cash working capital items. income taxes paid. and interest paid 1,258 1.360 2,351 2,395 Change in non?cash operating working capital items 35 (44) (85) (394) Cash provided by operating activities before income taxes paid and interest paid 1,293 1.316 2,266 2,001 Income taxes paid (18) (61) (155) (256) Interest paid (1 54) (141) (392) (404) Cash provided by operating activities 1,121 1,114 1,719 1,341 Investing activities: Additions to property, plant and equipment (647) (621) (1,199) (1.096) Additions to program rights (14) (6) (24) (18) Changes in non-cash working capital related to property, plant and equipment and intangible assets 32 (46) (105) (138) Acquisitions and other strategic transactions, net of cash acquired - (601) - (601) Other 47 (22) 7 (34) Cash used in investing activities (582) (1,296) (1,321) (1.887) Financing activities: Proceeds received on short-term borrowings 45 38 295 246 Repayment of short-term borrowings - (56) (45) (71) Issuance of long?term debt 1.354 1.792 2.052 3.450 Repayment of long-term debt (1,749) (1.310) (2.313) (2.919) Proceeds on settlement of debt derivatives and fonlvard contracts 3,302 - 3,757 1,059 Payments on settlement of debt derivatives and fonivard contracts (3,325) - (3,799) (905) Dividends paid (247) (248) I494) (433) Cash (used in) provided by ?nancing activities (610) 216 (552) 377 Change in cash and cash equivalents (71) 34 (154) (169) (Bank advances) cash and cash equivalents. beginning of period (72) (27) 11 176 _(Bank advances) cash and cash equivalents, end of period (143) 7 (143) 7 About Fomrard-Looking Information This earnings release includes "forward-looking information" and "forward-looking statements" within the meaning of applicable securities laws (collectively, 'Tonmard-Iooking information"). and assumptions about, among other things. our business. operations, and l?nancnal performance and condition approved by our management on the date of this earnings release. This forward-looking information and these 7/21/16, 12:57 PM Rogers Communications Reports Second Quarter 2016 Results 15 of 16 http: l/rogers .mediaroom com/201 6-07?21 -Rogcrs-Communicati assumptions include, but are not limited to, statements about our objectives and strategies to achieve those objectives, and about our beliefs, plans. expectations, anticipations, estimates, or intentions. Forward-looking information I typically includes words like could, expect, may, anticipate, assume, believe, intend, estimate. plan, project, guidance, outlook, and similar expressions, although not all fonivard-looking information includes them; I includes conclusions, forecasts, and projections that are based on our current objectives and strategies and on estimates, expectations, assumptions, and other factors, most of which are con?dential and proprietary and that we believe to have been reasonable at the time they were applied but may prove to be incorrect; and I was approved by our management on the date of this earnings release. Our forward-looking information includes forecasts and projections related to the following items, among others: - revenue; I adjusted operating pro?t; I additions to property. plant and equipment; I cash income tax payments; I free cash ?ow; I dividend payments; I the growth of new products and services; I expected growth in subscribers and the services to which they subscribe; I the cost of acquiring subscribers and deployment of new services; I continued cost reductions and ef?ciency improvements; and I all other statements that are not historical facts. We base our conclusions, forecasts, and projections on the following factors, among others: I general economic and industry growth rates; I currency exchange rates and interest rates; I product pricing levels and competitive intensity; - subscribergrowth; I pricing, usage, and churn rates; I changes in government regulation; I technology deployment; I availability of devices; I timing of new product launches; content and equipment costs; the integration of acquisitions; and industry structure and stability. Except as othenlvise indicated, this earnings release and our fonrvard-looking information do not re?ect the potential impact of any non-recurring or other special items or of any dispositions, monetizations, mergers, acquisitions, other business combinations, or other transactions that may be considered or announced or may occur after the date on which the statement containing the fonivard-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; I technological changes; I economic conditions; - unanticipated changes in content or equipment costs; I changing conditions in the entertainment, information, and communications industries; I the integration of acquisitions; I litigation and tax matters; I the level of competitive intensity; I the emergence of new opportunities; and I new interpretations and new accounting standards from accounting standards bodies. These factors can also affect our objectives, strategies, and intentions. Many of these factors are beyond our control or our current expectations or knowledge. Should one or more of these risks, uncertainties, or other factors materialize, our objectives, strategies, or intentions change, or any other factors or assumptions underlying the forward-looking information prove incorrect, our actual results and our plans could vary signi?cantly from what we currently foresee. Accordingly, we warn investors to exercise caution when considering statements containing fonlvard-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 fonlvard-looking information or the factors or assumptions underlying them, whether as a result of new information, future events, or othenivise, except as required by iaw. All 7/21/16, 12:57 PM Rogers Communications Reports Second Quarter 2016 Results of the forward-looking information in this earnings release is quali?ed by the cautionary statements herein. Before making an investment decision Before making any investment decisions and for a detailed discussion of the risks. uncertainties and environment associated with our business. fully review the sections of our Second Quarter 2016 entitled "Updates to Risks and Uncertainties" and "Regulatory Developments" and fully review the sections in our 2015 Annual entitled "Regulation in Our Industry" and ?Governance and Risk Management". as well as our various other ?lings with Canadian and US securities regulators, which can be found at sedarcom and sec.gov. respectively. SOURCE Rogers Communications Canada Inc. - English For further information: Investment community contact: W7. amy.schwalm@rci.rogers.oom; Media contact: Terrie Twaddle. 416.935.4727. terrie.tweddie@rci.roge .com http?rogersmed iaroom.comr'201 6-07-21 6-Results 16 of 16 7/21/16, 12:57 PM