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

	23			MANAGEMENT’S DISCUSSION AND ANALYSIS
	25			Executive Summary
				25		About Rogers
				25		2020 Highlights
				27		Financial Highlights
	28			Understanding Our Business
				28		Products and Services
				29		Competition
				31		Industry Trends
	33			Our Strategy, Key Performance Drivers, and Strategic Highlights
				33		Our Strategic Priorities
				34		2020 Objectives
				34		Key Performance Drivers and 2020 Strategic Highlights
				37		2021 Objectives
				37		Financial and Operating Guidance
	38			Capability to Deliver Results
				38		Leading Networks
				40		Powerful Brands
				40		Widespread Product Distribution
				40		First-Class Media Content
				41		Customer Experience
				41		Engaged People
				41		Financial Strength and Flexibility
				42		Widespread Shareholder Base and Dividends
	43			2020 Financial Results
				43		Summary of Consolidated Results
				44		Key Changes in Financial Results This Year Compared to 2019
				45		Wireless
				46		Cable
				47		Media
				48		Capital Expenditures
				49		Review of Consolidated Performance
				52		Quarterly Results
				55		Overview of Financial Position

	56			Managing Our Liquidity and Financial Resources
				56		Sources and Uses of Cash
				59		Financial Condition
				60		Financial Risk Management
				63		Dividends and Share Information
				65		Commitments and Contractual Obligations
				65		Off-Balance Sheet Arrangements
	66			Governance and Risk Management
				66		Governance at Rogers
				67		Corporate Responsibility
				69		Income Tax and Other Government Payments
				69		Risk Management
				70		Risks and Uncertainties Affecting Our Business
				77		Controls and Procedures
	78			Regulation In Our Industry
				80		Wireless
				82		Cable
	85			Other Information
				85		Accounting Policies
				88		Key Performance Indicators
				91		Non-GAAP Measures and Related Performance Measures
				93		Summary of Financial Results of Long-Term Debt Guarantor
				94		Five-Year Summary of Consolidated Financial Results

 

This Management’s Discussion and Analysis (MD&A) contains important information about our business and our performance for the year ended December 31, 2020. This MD&A should be read in conjunction with our 2020 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 4, 2021 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).

In this MD&A, first quarter refers to the three months ended March 31, 2020, second quarter refers to the three months ended June 30, 2020, third quarter refers to the three months ended September 30, 2020, fourth quarter refers to the three months ended December 31, 2020, this year refers to the twelve months ended December 31, 2020, and last year refers to the twelve months ended December 31, 2019. All results commentary is compared to the equivalent periods in 2019 or as at December 31, 2019, as applicable, unless otherwise indicated.

Effective January 1, 2020, we updated our Cable segment financial and key performance indicator disclosures such that we began presenting Cable average revenue per account (ARPA), customer relationships, and market penetration. We also amended our subscriber reporting to report Internet and Ignite TV^™ subscribers, removing legacy Television subscribers and Phone subscribers. In addition to the changes to our key performance indicators, we no longer report revenue by our Cable sub-products (i.e. Internet, Television, and Phone) and instead, we present a single “service revenue” amount. These changes are a result of the way in which we manage our business due to the ongoing convergence of the technology used to deliver Internet and television services and represent the key metrics against which we will measure growth in our Cable segment. See “Results of our Reportable Segments – Cable” and “Key Performance Indicators” for more information.

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

ABOUT FORWARD-LOOKING INFORMATION

This MD&A includes “forward-looking information” and “forward-looking statements” within the meaning of applicable securities laws (collectively, “forward-looking information”), and assumptions

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

Forward-looking information:

•

typically includes words like could, expect, may, anticipate, assume, believe, 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, most of which are confidential and proprietary, 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, some of which are non-GAAP measures (see “Non-GAAP Measures and Related Performance Measures”), 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;

•

the COVID-19 pandemic (COVID-19) and its impact on us; and

•

all other statements that are not historical facts.

We base our conclusions, forecasts, and projections on the following factors, among others:

•

general economic and industry growth rates;

•

currency exchange rates and interest rates;

•

product pricing levels and competitive intensity;

•

subscriber growth;

•

pricing, usage, and churn rates;

•

changes in government regulation;

•

technology deployment;

•

availability of devices;

•

timing of new product launches;

•

content and equipment costs;

•

the integration of acquisitions;

•

industry structure and stability; and

•

the anticipated 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;

•

the integration of acquisitions;

•

changing consumer habits and preferences;

•

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; and

•

new interpretations and new accounting standards from accounting standards bodies.

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

Accordingly, we warn investors to exercise caution when considering statements containing forward-looking information and caution them that it would be unreasonable to rely on such statements as creating legal rights regarding our future results or plans. We are under no obligation (and we expressly disclaim any such obligation) to update or alter any statements containing forward-looking information or the factors or assumptions underlying them, whether as a result of new information, future events, or otherwise, except as required by law. All of the forward-looking information in this MD&A is qualified by the cautionary statements herein.

BEFORE MAKING AN INVESTMENT DECISION

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

FOR MORE INFORMATION

You can find more information about us, including our Annual Information Form, on our website (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, corporate social responsibility reporting, a glossary of communications and media industry terms, and additional information about our business at investors.rogers.com.

 

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

 

Almost all of our operations and sales are in Canada. We have a highly skilled and diversified workforce of approximately 23,500 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.

 

FINANCIAL HIGHLIGHTS

Our solid 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 decreased by 8% this year, largely driven by an 8% decrease in Wireless service revenue and a 22% decrease in Media revenue.

Wireless service revenue decreased by 8% this year, largely as a result of lower roaming revenue due to global travel restrictions during COVID-19, and lower overage revenue, primarily as a result of the continued adoption of our Rogers Infinite^™ unlimited data plans. Wireless equipment revenue decreased as a result of lower gross additions and lower device upgrades by existing customers during COVID-19.

Cable revenue was in line with 2019. We remain focused on our Connected Home roadmap, driven by our Ignite TV product, with significant growth in our Ignite TV subscriber base during the past year.

Media revenue decreased by 22% this year, primarily as a result of lower sports-related revenue, 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

Adjusted EBITDA decreased 6% this year, primarily due to a 6% decrease in Wireless adjusted EBITDA, with a consolidated adjusted EBITDA margin of 42.1%, an expansion of 90 basis points.

Wireless adjusted EBITDA decreased 6% this year as a result of the flow-through impact of the aforementioned decreases in revenue, partially offset by the shift to device financing, which has significantly improved our Wireless equipment margin, and various cost efficiencies and productivity initiatives.

Cable adjusted EBITDA increased 1% this year, primarily as a result of various cost efficiencies.

Media adjusted EBITDA decreased 64% this year primarily due to lower sports and advertising revenue, as discussed above, partially offset by lower sports programming and operating 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 decreased 22% and adjusted net income decreased 19% this year, primarily as a result of the decrease in adjusted EBITDA. See “Review of Consolidated Performance” for more information.

SUBSTANTIAL FREE CASH FLOW SUPPORTS FINANCIAL FLEXIBILITY

We returned substantial cash to shareholders this year through the payment of $1,011 million in dividends. In addition, we declared a $0.50 per share dividend on January 27, 2021.

Our cash provided by operating activities decreased by 5% this year, primarily as a result of lower adjusted EBITDA. Free cash flow increased 4% this year to $2,366 million, primarily as a result of lower capital expenditures, partially offset by lower adjusted EBITDA.

Our debt leverage ratio was 3.0 as at December 31, 2020, up from 2.9 as at December 31, 2019, driven by lower adjusted EBITDA.

Our overall weighted average cost of borrowings was 4.09% as at December 31, 2020 (2019 – 4.30%) and our overall weighted average term to maturity on our debt was 12.8 years as at December 31, 2020 (2019 – 14.1 years).

We ended the year with approximately $5.7 billion of available liquidity (2019 – $2.5 billion), including $2.6 billion (2019 – $1.6 billion) available under our bank and letter of credit facilities, $0.6 billion (2019 – $0.4 billion) available under our $1.2 billion receivables securitization program, and $2.5 billion (2019 – $0.5 billion) in cash and cash equivalents.

 

Rogers is a leading Canadian technology and media company.

THREE REPORTABLE SEGMENTS

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

 

Segment		Principal activities
Wireless		Wireless telecommunications operations for Canadian consumers and businesses.
Cable		Cable telecommunications operations, including Internet, television, 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.
Media		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, Rogers Communications Canada Inc. (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, in January 2020, and we have the largest 5G network in Canada, serving over 160 communities and 45% of the Canadian population as at December 31, 2020. 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:

•

mobile high-speed Internet access, including our Rogers 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, with the ability to pick up in-store as soon as the same day;

•

device and accessory financing;

•

wireless home phone;

•

device protection;

•

in-store expert device repair service;

•

text messaging;

•

e-mail;

•

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

•

bridging landline phones with wireless phones through products like Rogers Unison™;

•

machine-to-machine solutions and Internet of Things (IoT) solutions; and

•

advanced wireless solutions for businesses.

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, 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 2019, we adopted Comcast’s new WiFi solution as a next step on our innovation roadmap. This whole-home networking solution provides customers with a simple, fast, and intuitive way to control and manage their connected devices. The cloud-based platform links to Data Over Cable Service Interface Specifications (DOCSIS) 3.1 WiFi gateway devices to deliver fast, reliable connectivity in the home and allows customers to easily add and control devices and pair Ignite WiFi^™ pods that boost signal strength, and use voice controls to see who is on the network, all in a safe and secure manner.

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, over 93% 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.

Internet services include:

•

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

•

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

•

Rogers Ignite™ 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™, and Amazon Prime Video on Ignite TV;

•

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 InternetTM 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;

•

4K television programming, including regular season Toronto Blue Jays™ home games and select marquee National Hockey League (NHL) and National Basketball Association (NBA) games; and

•

televised content delivered on smartphones, tablets, and personal computers through the Rogers Anyplace TV™ app.

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;

•

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; and

•

extensive cable access network services for primary, bridging, and back-up (including through our wireless network, if applicable) connectivity.

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 1,200 regular season games during a typical season across television, smartphones, tablets, and personal computers, 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.

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

•

Sportsnet’s four regional stations along with Sportsnet ONE™, Sportsnet 360™, and Sportsnet World™;

•

Citytv™ network, which, together with affiliated stations, has broadcast distribution to approximately 79% 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 55 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, Sportsnet NOW™, and Sportsnet NOW+™;

•

other digital assets including FXNOW™ and Citytv NOW™; and

•

a range of other websites, apps, podcasts, and digital products associated with our various brands and businesses.

OTHER

We offer several credit cards, including the Rogers^™ World Elite Mastercard, Rogers^™ Platinum Mastercard, and the Fido^™ Mastercard, which allow customers to earn cashback rewards points on credit card spending.

OTHER INVESTMENTS

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

•

our 37.5% ownership interest in Maple Leaf Sports & Entertainment Ltd. (MLSE), which owns the Toronto Maple Leafs, the Toronto Raptors, Toronto FC, 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, and this is changing the mix of packages and pricing that service providers offer and could affect churn levels.

In the media industry, there also continues to be a shift in consumer viewing habits 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 working to expand 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) at a regional level, all of whom operate 5G networks, and with Shaw Communications Inc. (Shaw), Saskatchewan Telecommunications (SaskTel), Xplornet Communications Inc. (Xplornet), and Eastlink Inc. (Eastlink) at a regional level, all of whom operate LTE networks. We also compete with these providers on high-speed packet access (HSPA) and global system for mobile communications (GSM) networks and with providers that use alternative wireless technologies, 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 Mobile (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.

•

Spectrum – we currently have the largest spectrum position in the country. Innovation, Science and Economic Development Canada (ISED Canada) has announced that flexible use licences in a 200 MHz frequency range from 3450-3650 MHz will be issued to both existing and new wireless licensees, with an auction of the 3500 MHz spectrum not retained by existing licensees to occur in June 2021. The 3500 MHz spectrum, along with other frequency bands, is essential to the deployment of 5G

networks. 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. The outcome of these auctions may increase competition. See “Regulation In Our Industry” for more information.

CABLE

Internet

We compete with other Internet service providers (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, and on the island of Newfoundland, including Virgin Mobile; 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.

Television

We compete with:

•

other Canadian multi-channel broadcast distribution undertakings (BDUs), including Bell, Shaw, and other satellite and IPTV providers;

•

over-the-top (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, and on the island of Newfoundland;

•

incumbent local exchange carrier (ILEC) local loop resellers and voice over IP (VoIP) service providers (such as Primus 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.

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;

•

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 competes with:

•

web-only e-commerce sites, including social commerce;

•

retail stores and their related e-commerce websites;

•

infomercials that sell products on television; and

•

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

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, in particular, 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.

Wireless providers are investing in the next generation of broadband wireless data networks, such as Licensed Assisted Access and 5G technologies, to support the growing data demand and new products and applications.

In 2019, we were the first national carrier in Canada to launch unlimited data plans. Following Rogers, certain other wireless carriers in Canada have introduced new unlimited wireless data plans that are simpler for customers to understand, allow for increased consumer data usage, and eliminate overage fees that were being incurred on legacy plans. As at December 31, 2020, we had 2.5 million subscribers on our Rogers Infinite unlimited data plans. 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 170 communities and 45% of the Canadian population.

To help make the cost of new wireless devices more affordable for consumers, Rogers and other Canadian wireless carriers have also introduced wireless device financing, 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 will 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 for wireless services. This may negatively impact 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 92% of the population and is expected to continue growing, per the Bank of America Merrill Lynch October 2020 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. The Canadian Radio-television and Telecommunications Commission’s (CRTC) decision to lower wholesale Internet access rates may also adversely affect companies that offer wholesale Internet services (see “Regulation In Our Industry” for more information).

Cable and wireline companies are expanding their service offerings to include faster broadband Internet. Canadian companies, including Rogers, are increasingly offering download speeds of 1 Gbps or higher 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 DOCSIS 3.1 and fibre-to-the-home (FTTH) technologies. These technologies provide faster potential data communication speeds than earlier technologies, allowing both television and Internet signals to reach consumers more quickly in order to sustain reliable speeds to address the increasing number of Internet-capable devices.

COVID-19 has required many people to work or study from home simultaneously, 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 quickly add capacity and manage traffic to continue reliably supporting the needs of Canadians.

Our business customers use fibre-based access and cloud computing to capture and share information in more secure and accessible environments. This, combined with the rise of multimedia and Internet-based business applications, is driving exponential growth in data demand.

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 include systems integrators and manufacturers.

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.

The CRTC Basic Telecommunications Services decision in 2016 established several criteria to improve Internet access for Canadian residents and businesses. As a result, the CRTC believes fixed broadband subscribers should have access to speeds of at least 50 Mbps download and 10 Mbps upload, and access to a service with an unlimited data allowance.

The CRTC has created a new code of conduct for Internet services, which came into effect on January 31, 2020, in order to establish guidelines for consumer interactions with their ISPs.

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, such as magazines, have experienced significant digital uptake, requiring industry players to increase their efforts in digital content and capabilities in order to compete. This trend is also causing advertisers to shift their spending from conventional TV and print publishing to digital platforms.

Competition has changed and traditional media assets in Canada are increasingly being controlled by a small number of competitors with significant scale and financial resources. Technology has allowed new entrants and even individuals to become media players in their own right.

Some 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.

 

Our long-term vision builds on our many strengths, including our unique mix of technology and media assets. Our focus is clear: deliver best-in-class engagement, a best-in-class customer experience, and industry-leading shareholder value.

To achieve this vision, our strategic priorities are as follows:

•

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 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; and

•

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

CREATE BEST-IN-CLASS CUSTOMER EXPERIENCES BY PUTTING OUR CUSTOMERS FIRST IN EVERYTHING WE DO

Everything starts and ends with our customers, so improving their experience is core to our strategy. We obsess over our customers’ end-to-end service experiences by listening carefully to the voices of our customers and our frontline. We will continue to focus on eliminating customer friction and being clear, simple, and fair for our customers while we evolve our channel strategy as consumer behaviours continue to change. We continue to build our digital and self-serve capabilities with expanded service channel options so our customers have reliable, consistent, and seamless experiences across our channels.

INVEST IN OUR NETWORKS AND TECHNOLOGY TO DELIVER LEADING PERFORMANCE, RELIABILITY AND COVERAGE

We believe that networks are the lifeblood of our business and world-class performance is critical to our future. Our plan is to deliver high-performing network services with a focus on core performance, reliability, and coverage. In Wireless, as we continue to roll out Canada’s first and largest 5G network and as our customers’ data demands keep growing, our investments to deliver the best wireless experience in Canada will remain critical. Our investments in our cable network will allow us to continue to improve Cable Internet performance and reliability. Additionally, expanding our network footprint and product reach will help us connect underserved communities and grow our customer base. Underpinning everything are our IT systems, which we continue to modernize, leveraging cloud and data capabilities.

DRIVE GROWTH IN EACH OF OUR LINES OF BUSINESS

Growth and innovation have always been a part of our DNA. We strive to deliver compelling content that our customers will love and innovative products, services, and solutions that make their lives easier and drive market growth. We will execute product roadmaps and leverage proven technologies and remarkable innovations from across the globe, making them more cost-effective for us. Our goal is to be a relevant and respected provider in each region of our country, and we will exploit opportunities to continue to grow in the various regions of Canada. In Media, we will diversify our digital and sports-related growth areas.

DRIVE BEST-IN-CLASS FINANCIAL OUTCOMES FOR OUR SHAREHOLDERS

The overarching goal of our strategy is to accelerate revenue growth in a sustainable way and to translate it into strong margins, profit, free cash flow, return on assets, and returns to shareholders. Our focus is on our core growth drivers with a strong capability in cost and productivity management to support future investments.

DEVELOP OUR PEOPLE, DRIVE ENGAGEMENT, AND BUILD A HIGH-PERFORMING AND INCLUSIVE CULTURE

Our people and our culture are the heart and soul of our success, and their passion for our customers and our company is remarkable. First and foremost, our priority is to ensure their safety and well-being. A high-performing and inclusive culture is integral to our success and that starts by investing in our team and their experience as employees. We are working to strengthen our employment brand so that Rogers remains a destination for top talent and reflects the rich diversity of our country. This means fostering an open, diverse, and inclusive workplace grounded in accountability and performance.

BE A STRONG, SOCIALLY AND ENVIRONMENTALLY RESPONSIBLE LEADER IN OUR COMMUNITIES

Giving back where we live and work is an important part of who we are. We strive to partner with communities and community groups across Canada to deepen our engagement and impact at the local level. We are also focused on growing in a socially and environmentally responsible fashion through an Environmental, Social, and Governance program, continuing to build our reputation as a great Canadian company.

 

COVID-19 continues to significantly impact Canadians and economies around the world as a second wave affects Canada and other locations globally. As a critical service provider during this time, it is of utmost importance to ensure our customers stay connected and that our customers and employees remain safe. This has not changed since the onset of the pandemic, when we quickly shifted priorities to keep our team members safe and customers connected.

In March 2020, we took swift action to protect our customers and employees during the pandemic, including temporarily closing the majority of our retail stores across Canada and enabling approximately 90% of our employees to work from home. We also took steps to ensure our customers could stay connected to the world around them, including temporarily providing free services (offering a rotating selection of premium television channels), waiving certain fees for a designated period of time (for example international roaming fees and long distance voice calling fees), and adding network capacity and managing traffic.

In 2020, we also implemented compensation- and health and safety-related programs to help our employees get through this challenging time, including supporting employees unable to work. As provinces relaxed certain public health restrictions, we reopened most of our retail stores throughout the fall, while implementing public health and safety measures. We also launched several community initiatives to support vulnerable Canadians, including partnerships with several organizations to provide digital lifelines to Canadians in need and a historic partnership with Food Banks Canada to support their largest ever food drive.

In the third quarter, live sports, which were suspended in March, resumed (although with no in-person attendance) and allowed our broadcast teams to provide coverage to Canadians despite continued restricted attendance at live sports events. As public health restrictions were lifted to certain extents across the country, we maintained our focus on keeping our employees safe and our customers connected during this time.

In late September, several Canadian provinces declared a second wave of COVID-19 had commenced and provinces have adjusted restrictions, including mandatory closures of certain types of businesses and introducing stricter limits on social gatherings. As an essential service, almost all our retail stores remained open to serve customers, even as lockdowns were reintroduced in certain areas in the fourth quarter. As the fourth quarter progressed, the second wave of COVID-19 accelerated, resulting in lower-than-normal consumer activity during key selling periods. While COVID-19 continues to have a significant worldwide impact, we remain confident we have the right team, a strong balance sheet, and 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 our strategic priorities and the objectives we set along with them, as discussed above.

 

CREATE BEST-IN-CLASS CUSTOMER EXPERIENCES BY PUTTING OUR CUSTOMERS FIRST IN EVERYTHING WE DO

•

Improved Wireless postpaid churn by 11 basis points to 1.00%.

•

Accelerated our digital-first plan and added self-serve options during COVID-19, with overall digital adoption up 6 points to 84% and virtual assistant conversations up over 130%.

•

Moved to 100% Canada-based customer care specialists and opened our Kelowna customer solution centre virtually.

•

Introduced an Ignite self-installation program, including a Drop & Go option, as a safe, easy, no-contact way for customers to install our Ignite Internet and Ignite TV services, with over 93% of customers easily installing their products themselves since the beginning of April.

•

Launched Blitzz, a remote visual assistance tool, with our technical support team to enable prompt virtual assistance and reduce the need to deploy field technicians for installation and service calls.

•

Launched Express Pickup, making us the only national carrier to give customers the convenience of ordering online and picking up in-store on the same day.

•

Launched WeFix, a new smartphone repair service at select retail locations allowing customers to get their devices repaired within hours.

•

Expanded Pro On-the-Go to cities across Canada, including Vancouver, Calgary, Edmonton, and Ottawa, a Canadian telecommunications exclusive that brings the store to the customer’s door, as soon as the same day, with free phone delivery and one-on-one expert setup support.

•

Expanded financing to device accessories to make the latest accessories affordable for Rogers customers, including AirPods, Google Nest products, cases, screen protectors, chargers, smart bulbs, and more.

•

Increased adoption of 5G-ready Rogers Infinite unlimited data plans to over 2.5 million subscribers, the largest unlimited customer base in Canada.

•

Grew adoption of Fido Data Overage Protection plans to two-thirds of Fido customers.

•

Launched chatr credit cards to help more Canadian residents build or rebuild their credit, facilitating participation in the digital economy.

•

Launched DAY PASS™, a daily payment option, and Top Up as a Guest, which allows customers to top up an account without signing in, on chatr, both new features focused on affordability and flexibility.

•

Supported customers with goodwill measures at the onset of COVID-19 by waiving pay-per-use international roaming fees in all available destinations until April 30, 2020 and long-distance voice calling fees across Canada until June 30, 2020.

•

Implemented flexible payment options for customers facing financial uncertainty as a result of COVID-19, with no account suspensions or disconnections for a designated period of time.

•

Appointed a Chief Customer Officer as a member of our Executive Leadership Team to strengthen the voice of our customers and frontline teams and launched Connecting with our Customers, where people leaders spend a day with frontline teams to strengthen their understanding of the customer experience and customer improvement processes.

INVEST IN OUR NETWORKS AND TECHNOLOGY TO DELIVER LEADING PERFORMANCE AND RELIABILITY

•

Launched and expanded Canada’s first and largest 5G network serving over 170 cities and towns.

•

Started rolling out Canada’s first 5G standalone core network in Montreal, Ottawa, Toronto, and Vancouver to be ready to support future devices and chipsets as they become available.

•

Awarded best wireless network in Canada for the second year in a row, in July, by umlaut, the global leader in mobile network benchmarking, and earned the number one spot in the Canada Wireless Network Quality Study by J.D. Power in the West and Ontario, in April.

•

Ranked fastest broadband Internet provider in Ontario and New Brunswick and Canada’s most consistent national wireless network and Internet provider in the fourth quarter, according to Ookla’s Speedtest results.

•

Evolved our 5G partner ecosystem and 5G research and development, including through the launch of Canada’s first 5G smart city in Kelowna in partnership with the University of British Columbia and the launch of the 5G Create Lab at Communitech to develop leading 5G solutions.

•

Became a founding member of the 5G Future Forum, which is focused on developing interoperable 5G standards across key geographic regions, including the Americas, Asia-Pacific, and Europe.

•

Strengthened our Advanced Services portfolio to help make it easier for businesses and governments to serve their customers and citizens, including with new IoT collaborations, and established the Rogers Internet of Things Chair with the University of Calgary to advance IoT research.

•

Expanded our cable network through the acquisition of Cable Cable Inc. and Ruralwave Inc., local telecommunications companies in the Ontario Kawartha Lakes region, and announced a partnership with Southwestern Integrated Fibre Technology (SWIFT) to bring services to underserved communities in the Regional Municipality of Waterloo and Dufferin, Norfolk, Oxford, and Simcoe counties in Ontario.

•

Started rolling out wireless home broadband Internet service to more than 100 communities in Southwestern Ontario as part of our commitment to expand connectivity to rural and remote areas.

•

Added capacity and managed traffic where needed to ensure customers stayed connected during COVID-19, with total traffic on our wireline networks up by over 50% during the first months of COVID-19 as more people started working from home.

•

Launched and added capacity for government 1-800 numbers to serve citizens during the public health crisis and enabled temporary COVID-19 health assessment centres.

DELIVER INNOVATIVE SOLUTIONS AND COMPELLING CONTENT THAT OUR CUSTOMERS WILL LOVE

•

Launched Ignite SmartStream, an entertainment add-on for Ignite Internet customers, to give customers access to their favourite streaming services in one place.

•

Launched an exclusive offer in Canada to provide the first six months free when signing up to Apple Music for customers on select Rogers Infinite plans, delivering more value to our customers.

•

Launched 14 new apps and subscription video on-demand services on Ignite TV and expanded free content on Ignite TV with the introduction of new apps, including Fun at Home and Health at Home, tubi, XITE, and zone-ify; launched access to

 

Amazon Music so customers can listen to their favourite music, as well as thousands of playlists and stations.

•

Launched Rogers Smart Community™ in partnership with 1VALET to deliver a new platform that consolidates building and management activities into one seamless experience for multi-residential communities and condominiums.

•

Leveraged our media assets to advance inclusion and diversity, including a prime-time special Ending Racism: What Will it Take?, a new digital series LIVE: #Cityline Real on Race, and a new Sportsnet interview series Top of HER Game™.

•

Launched two new national daily newscasts in Arabic and Filipino on OMNI Television™ to reflect these communities and shed light on underreported topics and issues.

•

Brought gender equality in sports to the forefront with the first all-female broadcast team to call an NHL game, a week-long national programming campaign shining the spotlight on female sports game-changers, and partnered with Ryerson University on the Sportsnet Diversity & Gender Equity program.

•

Provided free access for our customers to a rotating selection of channels for a select period of time during COVID-19 and temporarily removed data usage caps for customers on limited home Internet plans so they could stream, surf, and connect during the initial phase of the pandemic.

•

Created original content and programming for Sportsnet viewers with the suspension of live sports during COVID-19.

•

Delivered industry-leading coverage with the return of live sports, with Sportsnet™ the most-watched sports media brand in Canada in 2020 and Sportsnet National the number-one Canadian network overall in primetime in August.

DRIVE PROFITABLE GROWTH IN ALL THE MARKETS WE SERVE

•

Expanded consolidated adjusted EBITDA margin by 90 basis points.

•

Attracted 245,000 net Wireless postpaid subscribers, 57,000 net Internet subscribers, and 218,000 net Ignite TV subscribers.

•

Generated free cash flow of $2,366 million, up 4%.

DEVELOP OUR PEOPLE AND A HIGH PERFORMANCE CULTURE

•

Achieved an all-time high employee engagement score of 87% in our annual employee survey, up two points from 2019 and seven points above best-in-class.

•

Achieved an all-time high score of 93% for employee pride in a company-wide pulse survey during the first months of COVID-19, six points above best-in-class.

•

Received Canada’s Top 100 Employers Award (2021) for the eighth year in a row, by Mediacorp Canada Inc., including Top Employers in the Greater Toronto Area (2021), Top Employers for Young People in Canada (2021), and Best Diversity Employers in Canada (2020).

•

Reclaimed certification for Canada’s Most Admired Corporate Cultures by Waterstone Human Capital in 2020.

•

Accelerated progress during COVID-19 on our plan to offer increased flexibility to our employees through work-from-home programs across the company, with 90% of employees currently working remotely, including approximately 7,000 customer solution specialists.

•

Delivered enhanced programs and employee communications to ensure employees were supported and informed during

COVID-19, with 83% of our teams reporting in our annual employee survey they felt supported on well-being & work-life balance during COVID-19.

•

Extended our employee virtual health care solution in partnership with Sun Life to give employees and their families quick access to health care professionals during COVID-19.

•

Launched a new five-year Inclusion and Diversity (I&D) Strategy with measurable targets, including representation goals for equity-seeking groups across the business, and held 85 I&D events and listening sessions through our Employee Resource Groups.

•

Launched For the Love of Work™, Made Possible by Rogers, a podcast that explores key themes at the heart of a winning employee experience, including resilience, inclusion and diversity, and values, to attract talent and build pride within our team; ranked top 5 in Careers Canada charts on Apple Podcasts from October to December.

BE A STRONG, SOCIALLY RESPONSIBLE LEADER IN OUR COMMUNITIES ACROSS CANADA

•

Partnered with Food Banks Canada (FBC) and Jays Care Foundation for Step Up to the Plate, the largest food hamper program in the organization’s history to distribute eight million meals for Canadian families; launched an awareness campaign across our media and digital assets to raise money for FBC to address acute food shortages during COVID-19; and donated more than one million meals through a corporate donation and employee contributions.

•

Launched the 60,000 Hours Challenge as part of The 60 Project to mark our 60th anniversary in 2020, with employee volunteers supporting over 200 organizations.

•

Announced a $10 million commitment over the next five years in free advertising and creative services to charities and small businesses that support Black, Indigenous and People of Colour (BIPOC) and equity-seeking communities by leveraging our sports and media assets as part of our I&D plan.

•

Raised approximately $1 million through the Hearts and Smiles campaign in support of The Frontline Fund to help Canada’s frontline health care workers during COVID-19.

•

Provided thousands of devices and free voice and data plans as digital lifelines to vulnerable Canadians to help them stay connected, in partnership with Women’s Shelters Canada, National Aboriginal Circle Against Family Violence, Big Brothers Big Sisters of Canada, Pflag Canada, LGBTQ2S+ organizations, seniors’ homes, hospitals, and youth organizations.

•

Provided advertising space across our media and digital assets to promote sheltersafe.ca for women escaping violence and abuse and provided financial support through our Fido brand to national organizations supporting LGBTQ2S+ people.

•

Launched the Team Rogers Community Draft to support families as children return to sport, with assistance toward league fees and access to mentorship.

•

Partnered with the Orange Shirt Society, in its efforts to expand Indigenous education across Canada and raise awareness on Indigenous reconciliation, with a specially designed t-shirt for Orange Shirt Day by Ojibwe artist Patrick Hunter sold on Today’s Shopping Choice and raising nearly $100,000, with all proceeds going to the society.

 

•

Donated $1 million to the Jays Care Foundation to deliver programs to support 35,000 youth across Canada, including virtual summer camps for 10,000 marginalized youth.

•

Awarded scholarships, through the Ted Rogers Scholarship Fund, to over 400 young people to pursue post-secondary education, with an estimated 75% of community recipients from BIPOC.

•

Provided nearly $1 million in community grants for the 2019-2020 year to organizations across Canada that support youth and education.

•

Expanded our low-cost Internet program Connected for Success to reach over 250,000 households with 340 housing partners.

 

FINANCIAL AND OPERATING GUIDANCE

Historically, we have provided consolidated annual guidance ranges for selected financial metrics on a basis consistent with the annual plans approved by the Board.

2020 FINANCIAL GUIDANCE

In April 2020, due to the uncertainty surrounding the duration and potential outcomes of COVID-19, we withdrew the financial guidance originally issued on January 22, 2020. The impact on our operations and our financial results for the year was material. Although COVID-19 has adversely impacted total service revenue and adjusted EBITDA in the short-term, we generated strong free cash flow, which will continue to remain a priority for us. See “Risks and Uncertainties Affecting Our Business” and “About Forward-Looking Information” for more information on COVID-19, including the impacts it has had and may have on our business and the actions we are taking in response.

2021 FULL-YEAR CONSOLIDATED GUIDANCE

Due to the continued uncertainty surrounding the duration and potential outcomes of COVID-19, we are unable at this time to predict the future overall impact on our operations and financial results, but the impact in 2020 was material and could remain material in 2021. It is difficult at this time to reliably estimate our financial results for full-year 2021. We will therefore not provide a financial outlook for 2021 unless and until such a time as we can make a reasonable estimate of our financial results for 2021. See “Risks and Uncertainties Affecting Our Business” and “About Forward-Looking Information” for more information on COVID-19, including the impacts it has had and may have on our business and the actions we are taking in response.

 

WIRELESS

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

•

is the only national network in Canada fully owned by a single carrier;

•

was the first LTE high-speed network in Canada, reaching 96% of the Canadian population as at December 31, 2020 on our LTE network alone;

•

was the first 5G network in Canada, reaching 45% of the Canadian population as at December 31, 2020 on our 5G network alone;

•

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

•

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 in their personal and professional lives. Technology has also changed the way businesses operate.

We are augmenting our existing LTE network with 4.5G technology investments that are designed to migrate to a 5G environment. In 2019, we increased our 5G-related trials across key applications and multiple frequencies in preparation for the launch of our 5G network in January 2020. 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 for 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.

In early 2020, we launched our 5G network commercially in downtown Vancouver, Toronto, Ottawa, and Montreal and now reach over 170 communities. We also became the exclusive Canadian member of the global 5G Future Forum, a first-of-its-kind 5G and mobile edge computing forum that includes Verizon, Vodafone, Telstra, KT, and América Móvil.

Our 5G network uses a combination of the 2500 MHz, AWS, and 600 MHz spectrum bands, and is also aggregated with the LTE spectrum bands. 600 MHz spectrum is best suited to carry wireless data across long distances and through dense urban 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.

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 innovative network-enabled features and functionality.

 

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, and on the island of Newfoundland. We also operate a transcontinental, facilities-based fibre-optic network with 80,000 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 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 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 the FTTH footprint by connecting more homes, multiple dwelling unit buildings, and business premises directly to fibre.

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 segmentation, along with DTV 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.

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 the foundation for subsequent 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 gigabit passive optical network (GPON) technology that can support symmetrical downstream/upstream speeds up to 10 Gbps per node in select neighbourhoods.

 

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 2021 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. 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.

Our data centres provide guaranteed uptime and expertise in collocation, cloud, and managed services solutions. We own and operate 9 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.

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

•

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, Omni, Citytv, FX (Canada), and FXX (Canada);

•

55 radio stations, including 98.1 CHFI™, 680 NEWS™, Sportsnet The FAN™, KiSS™, JACK FM™, and SONiC™;

•

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

•

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 of third-party channel distributors deals with IT integrators, consultants, local service providers, and other indirect sales relationships. This diverse approach gives greater breadth of coverage and allows for strong sales growth for next-generation services.

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;

•

Sportsnet NOW, Canada’s first OTT sports service, offering 24/7 access to Sportsnet’s TV content;

•

Sportsnet NOW+, which offers access to additional content, such as additional NHL and NBA games, the Bundesliga, Premiership Rugby, and the IndyCar Series;

•

the MLB Network, a 24-hour network dedicated to baseball, brought to Canada on Rogers television services;

•

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

 

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;

•

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

•

voice authentication technology across all of our contact centres that automatically identifies our registered customers by their voice, increasing security and protecting customers from 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 and TV products at their convenience, without the need for a technician visiting their residence; and

•

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;

•

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 Pulse customers an additional five hours of data, per billing cycle, at no extra charge;

•

Fido XTRA, 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 PASS™, 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; and

•

customer self-install for Internet, TV, home phone, smart home monitoring, and Ignite SmartStream services.

 

ENGAGED PEOPLE

For our team of approximately 23,500 employees, we strive to create a great workplace, focusing on all aspects of the employee experience, which include:

•

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

•

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

•

maintaining our commitment to diversity and inclusion; and

•

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

FINANCIAL STRENGTH AND FLEXIBILITY

We have an investment-grade balance sheet, conservative debt leverage, and substantial available liquidity of $5.7 billion as at December 31, 2020. 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 program, and long-term debt. We also owned approximately $1,535 million of marketable equity securities in publicly traded companies as at December 31, 2020.

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.

We expect that we will have sufficient capital resources to satisfy our anticipated cash funding requirements in 2021, including the 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, publicly issued, or private placement debt from time to time. As at December 31, 2020, there were no significant restrictions on the flow of funds between RCI and its subsidiary companies.

We believe we can satisfy foreseeable additional funding requirements by issuing 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 public or private 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 1.7 million shares in 2020. 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 2020, each share paid an annualized dividend of $2.00.

 

See “Accounting Policies” in this MD&A and the notes to our 2020 Audited Consolidated Financial Statements for important accounting policies and estimates as they relate to the following discussion.

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

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

 

KEY CHANGES IN FINANCIAL RESULTS THIS YEAR COMPARED TO 2019

REVENUE

Wireless service revenue decreased this year 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 this year 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

Wireless adjusted EBITDA decreased this year primarily as a result of the decrease in service revenue as discussed above, partially offset by the shift to device financing, which has significantly improved the Wireless equipment margin, and various cost efficiencies and productivity initiatives. This gave rise to a margin of 47.7%, up 70 basis points from last year.

Cable adjusted EBITDA increased this year as a result of various cost efficiencies, which led to a margin of 49.0%, up 50 basis points from last year.

Media adjusted EBITDA decreased this year 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, which led to a margin of 3.2%, down 360 basis points from last year.

NET INCOME AND ADJUSTED NET INCOME

Net income and adjusted net income both decreased this year primarily as a result of lower adjusted EBITDA.

 

WIRELESS

ROGERS IS CANADA’S LARGEST PROVIDER OF WIRELESS COMMUNICATIONS SERVICES

As at December 31, 2020, we had:

•

approximately 10.9 million subscribers; and

•

approximately 31% subscriber and revenue share of the Canadian wireless market.

WIRELESS FINANCIAL RESULTS

 

		Years ended December 31
(In millions of dollars, except margins)		2020				2019				% Chg
Revenue
Service revenue			6,579				7,156				(8	)
Equipment revenue			1,951				2,094				(7	)
Revenue			8,530				9,250				(8	)
Operating expenses
Cost of equipment			1,932				2,231				(13	)
Other operating expenses			2,531				2,674				(5	)
Operating expenses			4,463				4,905				(9	)
Adjusted EBITDA			4,067				4,345				(6	)
Adjusted EBITDA service margin 1			61.8%				60.7%				1.1 pts
Adjusted EBITDA margin 2			47.7%				47.0%				0.7 pts
Capital expenditures			1,100				1,320				(17	)

 

1	Calculated using service revenue.

2	Calculated using total revenue.

WIRELESS SUBSCRIBER RESULTS ¹

 

(In thousands, except churn, blended ABPU, and blended ARPU)		Years ended December 31
		2020				2019				Chg
Postpaid
Gross additions			1,381				1,566				(185	)
Net additions			245				334				(89	)
Total postpaid subscribers 2			9,683				9,438				245
Churn (monthly)			1.00%				1.11%				(0.11 pts	)
Prepaid
Gross additions			550				773				(223	)
Net losses			(142	)			(97	)			(45	)
Total prepaid subscribers 2			1,260				1,402				(142	)
Churn (monthly)			4.38%				4.86%				(0.48 pts	)
Blended ABPU (monthly)		$	63.24			$	66.23			($	2.99	)
Blended ARPU (monthly)		$	50.75			$	55.49			($	4.74	)

 

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

2	As at end of period.

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.

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 8% decrease in service revenue this year was a result of:

•

lower roaming revenue, due to global travel restrictions during COVID-19; and

•

a decrease in overage revenue as a result of strong customer adoption of our Rogers Infinite unlimited data plans and lower wireless data usage as customers spent more time at home on WiFi.

The 5% decrease in blended ABPU was primarily a result of the declines in roaming and overage revenue, partially offset by an ongoing shift in subscribers financing new, higher-value device purchases.

We believe the decreases in gross and net additions to our postpaid subscriber base this year were a result of the impacts of COVID-19, with store closures and overall lower market activity by Canadians.

Equipment revenue

Equipment revenue includes revenue from sales to subscribers through fulfillment by Wireless’ customer service groups, websites, telesales, corporate stores, and independent dealers, agents, and retailers.

The 7% decrease in equipment revenue this year was a result of:

•

lower gross additions due to COVID-19; and

•

lower device upgrades by existing customers; partially offset by

•

the shift in product mix towards higher-value devices; and

•

disciplined promotional activity during key selling periods.

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 13% decrease in the cost of equipment this year was a result of the same factors discussed in equipment revenue above. The shift to customers financing their device purchases is reflected in the improvements in our equipment margin.

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

•

lower roaming costs due to COVID-19 travel restrictions; and

•

various cost efficiencies and productivity initiatives; partially offset by

•

higher bad debt expense due to the adverse change in economic conditions during COVID-19.

ADJUSTED EBITDA

The 6% decrease in adjusted EBITDA this year was a result of the revenue and expense changes discussed above.

 

CABLE

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

As at December 31, 2020, we had:

•

approximately 2.6 million high-speed Internet subscribers;

•

approximately 0.5 million Ignite TV subscribers; and

•

a network passing approximately 4.6 million homes in Ontario, New Brunswick, and on the island of Newfoundland.

CABLE FINANCIAL RESULTS

 

		Years ended December 31
(In millions of dollars, except margins)		2020				2019				% Chg
Revenue
Service revenue			3,936				3,940				–
Equipment revenue			10				14				(29	)
Revenue			3,946				3,954				–
Operating expenses			2,011				2,035				(1	)
Adjusted EBITDA			1,935				1,919				1
Adjusted EBITDA margin			49.0%				48.5%				0.5 pts
Capital expenditures			940				1,153				(18	)

CABLE SUBSCRIBER RESULTS ¹

 

(In thousands, except ARPA and penetration)		Years ended December 31
		2020				2019				Chg
Internet
Net additions			57				104				(47	)
Total Internet subscribers 2,3,4			2,598				2,534				64
Ignite TV
Net additions			218				284				(66	)
Total Ignite TV subscribers 2			544				326				218
Homes passed 2			4,578				4,472				106
Customer relationships
Net additions			12				21				(9	)
Total customer relationships 2,3,4			2,530				2,510				20
ARPA (monthly)		$	130.70			$	131.71			($	1.01	)
Penetration 2			55.3%				56.1%				(0.8 pts	)

 

1	Subscriber counts are key performance indicators. See “Key Performance Indicators”.

2	As at end of period.

3	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 December 31, 2020.

4	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.