RCI.A Rogers Communications Inc

• Total service revenue and adjusted operating profit growth of 4% and 6%, respectively
• Continued strong financial and subscriber performance in Wireless
• • Service revenue and adjusted operating profit growth of 7% and 9%, respectively
  • Wireless adjusted operating profit margin expansion of 80 basis points
  • Postpaid net additions of 129,000, up 15,000, and the highest postpaid net additions in 8 years
  • Postpaid churn of 1.16%, improved 10 basis points, and the best third quarter churn rate in 8 years
• Cable revenue and adjusted operating profit growth of 1% and 2%, respectively
• • Cable adjusted operating profit margin expansion of 80 basis points
  • Continued strong Internet revenue growth of 6% and net additions of 27,000
• Increasing full-year 2017 guidance for adjusted operating profit growth to 5% to 6% with plans to invest the incremental profit in our networks for revised total capital expenditures of $2,350 million to $2,450 million; maintaining original free cash flow guidance of 2% to 4% growth

TORONTO, Oct. 19, 2017 /PRNewswire/ - Rogers Communications Inc. today announced its unaudited financial and operating results for the third quarter ended September 30, 2017.

Consolidated Financial Highlights

"Our third quarter results reflect continued momentum with strong top-line growth and flow-through to adjusted operating profit. Our team delivered on all key operating and financial metrics in our largest segment, Wireless. We significantly grew subscribers, revenue, adjusted operating profit, and margins. We are pleased with our postpaid churn result," said Joe Natale, President and CEO. "In a highly competitive quarter, Cable financials were strong thanks to our Internet competitive speed advantage. We continue to focus our efforts to drive customer service and margin improvements."

Key Financial Highlights

Higher revenue
Revenue increased 3% this quarter, largely driven by Wireless service revenue growth of 7%. Wireless service revenue increased primarily as a result of subscriber growth and more higher-rate plans from our various brands, including Rogers Share Everything plans.

Cable revenue increased 1% this quarter due to continued strong Internet revenue growth of 6%. Excluding the impact of the CRTC decision that reduced access service rates, Cable and Internet revenue would have increased 2% and 9%, respectively.

Media revenue decreased 3% this quarter primarily as a result of the success of the World Cup of Hockey in 2016 (not held this year) and lower publishing-related revenue due to the strategic shift to digital media announced late last year.

Higher adjusted operating profit
Adjusted operating profit increased 6% this quarter primarily as a result of Wireless adjusted operating profit growth of 9%, due to the strong flow-through of service revenue growth described above and various cost efficiencies.

Cable adjusted operating profit increased 2% this quarter as a result of the ongoing product mix shift to higher-margin Internet and various cost efficiencies. Excluding the impact of the CRTC decision that reduced access service rates, adjusted operating profit would have increased 5% this quarter.

Media adjusted operating profit decreased 18% this quarter primarily as a result of higher Toronto Blue Jays player payroll (including the impact of foreign exchange) and lower publishing-related revenue due to the strategic shift to digital media announced late last year.

Higher net income and adjusted net income
Net income increased 112% this quarter as a result of higher adjusted operating profit this quarter and prior year losses related to both the wind down of shomi and divestitures pertaining to certain investments.

Adjusted net income increased 22% this quarter primarily due to higher adjusted operating profit and lower depreciation and amortization.

Substantial free cash flow affords financial flexibility
We continued to generate substantial cash flow from operating activities and free cash flow of $1,377 million and $538 million, respectively. Free cash flow decreased as a result of the timing of capital expenditures.

We ended the third quarter with a debt leverage ratio (adjusted net debt / adjusted operating profit) of 2.8, which improved from a ratio of 3.0 as at the end of the same period last year. See "Managing our Liquidity and Financial Resources" in our Third Quarter 2017 Management's Discussion and Analysis (MD&A) for more information.

Our solid financial results enabled us to continue to make investments in our network and still return substantial dividends to shareholders. We paid $247 million in dividends this quarter.

Financial guidance
We are increasing our guidance for full-year 2017 adjusted operating profit growth and net additions to property, plant and equipment from the original ranges provided on January 26, 2017 to reflect the strong growth in our Wireless segment this year and the intended investment of those incremental profits to further enhance the quality of our networks. Our guidance for free cash flow and revenue remains unchanged.

Information about our guidance, including the various assumptions underlying it, is forward-looking and should be read in conjunction with "About Forward-Looking Information" in this earnings release and in our 2016 Annual MD&A and the related disclosure and information about various economic, competitive, and regulatory assumptions, factors and risks that may cause our actual future financial and operating results to differ from what we currently expect.

Strategic Update

Our primary focus remains on growing our core business, where we believe we can generate the most value. We are driving deeper accountability for the end-to-end customer experience and the fundamentals we believe are the key drivers of shareholder value: growth in revenue, adjusted operating profit, margins, free cash flow, and return on investment.

The following priorities guide our actions and decision-making as we further improve our operational execution and make disciplined investments to deliver increased shareholder value:

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

• Listen carefully to the voice of our customers and the voice of our front line
• Obsess over our customers' end-to-end service experiences and innovate across every interaction
• Focus on making things clear, simple, and fair for our customers and build this into our products and services
• Build digital capabilities so our customers have a reliable and consistent experience across channels

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

• Reinforce the belief that networks are the lifeblood of our business and world-class performance is critical to our future
• Deliver high-performing, worry-free network service to our customers

Deliver innovative solutions and compelling content that our customers will love

• Be relentless in leveraging proven technologies and remarkable innovations from across the globe
• Invest in and own the content our audiences want most and bring it to them on their screen of choice
• Focus on solutions, not products

Drive profitable growth in all the markets we serve

• Focus on the core growth drivers in wireless, cable, enterprise, and media
• Develop a strong capability in cost management to support investments that will fuel our future

Develop our people and a high performing culture

• Invest in building the skills, capabilities, and careers of our people to support their success
• Make Rogers a top employer that is known for attracting and retaining the best talent
• Create an open, trusting, and diverse workplace that is grounded in accountability and performance

Be a strong, socially responsible leader in our communities across Canada

• Be a relevant and respected community leader in each region of our country
• Leverage our strong local teams to become active and engaged volunteers in our communities

About Rogers

Rogers is a leading diversified Canadian communications and media company that's working to deliver a great experience to our customers every day. We are Canada's largest provider of wireless communications services and one of Canada's leading providers of cable television, high-speed Internet, information technology, and telephony services to consumers and businesses. Through Rogers Media, we are engaged in radio and television broadcasting, sports, televised and online shopping, magazines, and digital media. Our shares are publicly traded on the Toronto Stock Exchange (TSX: RCI.A and RCI.B) and on the New York Stock Exchange (NYSE: RCI).

Quarterly Investment Community Teleconference

Our third quarter 2017 results teleconference with the investment community will be held on:

• October 19, 2017
• 8:00 a.m. Eastern Time
• webcast available at investors.rogers.com
• media are welcome to participate on a listen-only basis

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

For More Information

You can find more information relating to us on our website (investors.rogers.com), on SEDAR (sedar.com), and on EDGAR (sec.gov), or you can e-mail us at investor.relations@rci.rogers.com. Information on or connected to these and any other websites referenced in this earnings release is not part of, or incorporated into, this earnings release.

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

About this Earnings Release

This earnings release contains important information about our business and our performance for the three and nine months ended September 30, 2017, as well as forward-looking information about future periods. This earnings release should be read in conjunction with our Third Quarter 2017 MD&A; our Third Quarter 2017 Interim Condensed Consolidated Financial Statements and notes thereto, which have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB); our 2016 Annual MD&A; our 2016 Audited Consolidated Financial Statements and notes thereto, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the IASB; and our other recent filings with Canadian and US securities regulatory authorities, including our Annual Information Form, which are available on SEDAR at sedar.com or EDGAR at sec.gov, respectively. We draw attention to our 2016 Annual MD&A where we disclosed that certain comparative figures were retrospectively amended as a result of the IFRS Interpretations Committee's agenda decision relating to IAS 12, Income Taxes.

For more information about Rogers, including product and service offerings, competitive market and industry trends, our overarching strategy, key performance drivers, and objectives, see "Understanding Our Business", "Our Strategy, Key Performance Drivers, and Strategic Highlights", and "Capability to Deliver Results" in our 2016 Annual MD&A.

All dollar amounts are in Canadian dollars unless otherwise stated and are unaudited. All percentage changes are calculated using the rounded numbers as they appear in the tables. Information is current as at October 18, 2017 and was approved by the Audit and Risk Committee of our Board of Directors (Board) on that date. This earnings release 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.

In this earnings release, this quarter, the quarter, or the third quarter refer to the three months ended September 30, 2017, the first quarter refers to the three months ended March 31, 2017, the second quarter refers to the three months ended June 30, 2017, and year to date refers to the nine months ended September 30, 2017 unless the context indicates otherwise. All results commentary is compared to the equivalent periods in 2016 or as at December 31, 2016, as applicable, unless otherwise indicated.

Summary of Consolidated Financial Results

Results of our Reporting Segments

WIRELESS

Wireless Financial Results

Wireless Subscriber Results ¹

Service revenue

The 7% increases in service revenue this quarter and year to date were a result of:

• larger postpaid and prepaid subscriber bases; and
• higher blended ARPU as a result of the increased mix of higher-rate plans from our various brands, which includes the customer-friendly Rogers Share Everything plans, and increased data usage. Our higher-rate plans typically generate higher ARPU, may allow users to pool and manage their data usage across multiple devices, and provide access to some of our other offerings, such as Roam Like Home, Fido Roam, Rogers NHL LIVE, Fido Data Bytes, and Spotify.

The 6% increase in postpaid ARPA this quarter and 7% increase year to date were primarily a result of subscribers increasingly adding new lines to existing accounts, including through the continued adoption of Rogers Share Everything plans. Customers on Share Everything plans have increasingly utilized the advantages of premium offerings and access their shareable plans with multiple devices on the same account. In addition, increases in postpaid accounts this quarter and year to date contributed to the postpaid ARPA increases.

The 2% increase in blended ARPU this quarter and 3% increase year to date were a result of the increased service revenue as discussed above.

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

Equipment revenue
The 20% decrease in equipment revenue this quarter and 19% decrease year to date were a result of:

• larger average investments in higher-blended-ARPU-generating customers who purchased devices under term contracts; and
• a 2% decrease in device upgrades by existing subscribers this quarter and 7% decrease year to date; partially offset by
• higher postpaid gross additions.

Operating expenses
Cost of equipment
The 3% increase in the cost of equipment this quarter and 2% increase year to date were a result of:

• a continued shift in the product mix of device sales towards higher-cost smartphones as we continue to invest in higher-blended-ARPU-generating customers; and
• higher postpaid gross additions; partially offset by
• the decrease in device upgrades by existing subscribers as discussed above.

Other operating expenses
The 1% increase in other operating expenses this quarter and 3% increase year to date were a result of:

• higher costs of service, as a result of our growing subscriber bases; and
• higher commissions, as a result of our higher postpaid gross additions; partially offset by
• various cost and productivity initiatives.

Adjusted operating profit
The 9% increase in adjusted operating profit this quarter and 8% increase year to date were a result of the strong flow-through of service revenue growth discussed above.

CABLE

Cable Financial Results

Cable Subscriber Results ¹

Revenue
The 1% increase in revenue this quarter and marginal increase year to date were primarily a result of:

• a higher subscriber base for our Internet products; partially offset by
• the impact of service pricing changes;
• Television subscriber losses over the past year; and
• lower wholesale revenue as a result of a CRTC decision that reduced access service rates.

Excluding the impact of the CRTC decision, Cable revenue would have increased by 2% this quarter and 1% year to date.

Internet revenue
The 6% increase in Internet revenue this quarter and 7% increase year to date were a result of:

• a larger Internet subscriber base;
• general movement of customers to higher speed and usage tiers of our Ignite Internet offerings; and
• the impact of Internet service pricing changes; partially offset by
• more promotional pricing provided to subscribers; and
• lower wholesale revenue as a result of a CRTC decision that reduced access service rates. Excluding this impact, Internet revenue would have increased by 9% this quarter and 10% year to date.

Television revenue
The 3% decrease in Television revenue this quarter and 4% decrease year to date were a result of:

• the decline in Television subscribers over the past year; partially offset by
• the impact of Television service pricing changes, net of discounts.

Phone revenue
The 7% decrease in Phone revenue this quarter and 8% decrease year to date were a result of the impact of pricing packages.

Operating expenses
The 1% decreases in operating expenses this quarter and year to date were a result of:

• relative shifts in product mix to higher-margin Internet offerings from conventional Television broadcasting; and
• various cost efficiencies and productivity initiatives.

Adjusted operating profit
The 2% increases in adjusted operating profit this quarter and year to date were a result of the revenue and expense changes discussed above. Excluding the impact of the CRTC decision that reduced access service rates, adjusted operating profit would have increased by 5% this quarter and 4% year to date.

BUSINESS SOLUTIONS

Business Solutions Financial Results

Revenue
The 1% increase in service revenue this quarter was a result of the increase in higher-margin, next generation on-net and near-net IP-based services revenue, partially offset by the continued decline in our legacy and off-net voice business.

The 1% decrease in service revenue year to date was a result a larger relative decline in our legacy service revenue in comparison to our next generation service revenue over the course of the year.

We expect legacy service revenue will continue to decrease as we focus on migrating customers to more advanced, cost-effective IP-based services and solutions. Next generation services, which include our data centre operations, represented 85% of service revenue in the quarter (2016 - 82%) and 84% year to date (2016 - 81%).

Operating expenses
The stable operating expenses this quarter and 2% decrease year to date were a result of:

• lower service costs related to the continued decline in our legacy and off-net voice business; and
• cost efficiencies and productivity initiatives; partially offset by
• higher service costs related to our next generation on-net and near-net IP-based offerings.

Adjusted operating profit
The 6% increase in adjusted operating profit this quarter and 3% increase year to date were a result of the revenue and expense changes discussed above.

MEDIA

Media Financial Results

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

• the success of the World Cup of Hockey last year, which was not held this year; and
• lower publishing-related advertising and circulation revenue due to the strategic shift to digital media announced last year; partially offset by
• higher TSC merchandise sales; and
• higher conventional broadcast TV advertising revenue.

In addition, the 2% increase year to date was a result of:

• higher sports-related revenue, including a distribution in the first quarter to the Toronto Blue Jays from Major League Baseball.

Operating expenses
The 1% decrease in operating expenses this quarter was a result of:

• lower sports-related programming and production costs, primarily due to the World Cup of Hockey held last year;
• lower publishing costs due to the strategic shift as discussed above; partially offset by
• higher Toronto Blue Jays player payroll (including the impact of foreign exchange); and
• higher TSC merchandise costs.

The 3% increase year to date was also a result of higher Toronto Blue Jays player payroll (including the impact of foreign exchange) over the course of the year.

Adjusted operating profit
The 18% decrease in adjusted operating profit this quarter and 17% decrease year to date were a result of the revenue and expense changes discussed above.

ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT, NET

Wireless
The increase in additions to property, plant and equipment in Wireless this quarter was a result of greater investment in network infrastructure in 2017 to further enhance the quality of our wireless network.

The decrease in additions to property, plant and equipment in Wireless year to date was primarily a result of higher LTE network investments in 2016 to enhance network coverage and the quality of our network.

Deployment of our 700 MHz LTE network reached 92% of Canada's population as at September 30, 2017. The 700 MHz LTE network offers improved signal quality in basements, elevators, and buildings with thick concrete walls. Deployment of our overall LTE network reached approximately 95% of Canada's population as at September 30, 2017.

Cable
The increase in additions to property, plant and equipment in Cable this quarter was a result of higher investments in network infrastructure, partially related to our forthcoming X1 IP-based video platform, and higher customer premise equipment additions in 2017.

The decrease in additions to property, plant and equipment in Cable year to date was a result of investments associated with delivering Ignite Gigabit Internet across our Cable footprint in 2016, as well as costs related to development of our legacy IPTV product in 2016.

Business Solutions
The decreases in additions to property, plant and equipment in Business Solutions this quarter and year to date were a result of higher investments in network infrastructure in 2016.

Media
The increases in additions to property, plant and equipment this quarter and year to date reflect higher investments in our broadcast infrastructure and the Rogers Centre this year, partially offset by greater investments in digital platforms in 2016.

Corporate
The decreases in additions to property, plant and equipment in Corporate this quarter and year to date were a result of higher investments in information technology infrastructure and premise improvements at our various offices in 2016.

Proceeds from disposition of property, plant and equipment
We sold certain real estate assets in the second quarter for total proceeds of $74 million.

Capital intensity
Capital intensity increased this quarter as a result of higher net additions to property, plant and equipment as discussed above, partially offset by higher total revenue. Capital intensity decreased year to date due to lower net additions to property, plant and equipment over the course of the year.

Key Performance Indicators

We measure the success of our strategy using a number of key performance indicators that are defined and discussed in our 2016 Annual MD&A and this earnings release. We believe these key performance indicators allow us to appropriately measure our performance against our operating strategy as well as against the results of our peers and competitors. The following key performance indicators are not measurements in accordance with IFRS and should not be considered an alternative to net income or any other measure of performance under IFRS. They include:

• Subscriber counts;
• Subscriber churn (churn);
• Postpaid average revenue per account (ARPA);
• Blended average revenue per user (ARPU);
• Capital intensity; and
• Total service revenue.

Non-GAAP Measures

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

Reconciliation of adjusted operating profit

Reconciliation of adjusted operating profit margin

Reconciliation of adjusted net income

Reconciliation of adjusted earnings per share

Reconciliation of free cash flow

Reconciliation of adjusted net debt and debt leverage ratio

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

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

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