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 Rogers Communications Reports Fourth Quarter 2016 Results
   Thursday, January 26, 2017 6:53:00 AM ET

-- Rogers closes 2016 with continued strong revenue growth and solid flow through to adjusted operating profit and free cash flow:

-- Total service revenue and adjusted operating profit both up 3%

-- Wireless service revenue growth of 6% and adjusted operating profit growth of 5%

-- Wireless postpaid net additions of 93,000, up 62,000 year on year, with steady churn of 1.35% year on year

-- Cable revenue up slightly and adjusted operating profit growth of 2% as higher-margin Internet represents a greater proportion of total Cable revenue

-- Positive Cable total service unit net additions for the second quarter in a row, driven by Internet net additions of 30,000, up 14,000 year on year

-- Achieved 2016 growth targets and announced a stronger growth profile for 2017 guidance



-- Announced a long-term agreement with Comcast to bring X1 IPTV to our customers, expected in early 2018; net income impacted by a $484 million charge due to discontinued investment in our own IPTV product

-- Over 45% of Rogers’ residential Internet base is on speeds of 100 Mbps or higher and Ignite Gigabit Internet service is now available to our entire footprint of over 4 million homes

Rogers Communications Inc. today announced its unaudited financial and operating results for the fourth quarter ended December 31, 2016.

Consolidated Financial Highlights

                                                   Three months ended December 31    Twelve months ended December 31
(In millions of Canadian dollars, except per share 2016       2015       % Chg       2016       2015       % Chg
amounts, unaudited)
Total revenue                                      3,510      3,452      2           13,702     13,414     2
Adjusted operating profit 1                        1,259      1,226      3           5,092      5,032      1
Net income (loss) 2                                (9)        299        n/m         835        1,342      (38)
Adjusted net income 1,2                            382        331        15          1,481      1,479      --
Basic earnings (loss) per share 2                  ($0.02)    $0.58      n/m         $1.62      $2.61      (38)
Adjusted basic earnings per share 1,2              $0.74      $0.64      16          $2.88      $2.87      --
Cash provided by operating activities              1,053      950        11          3,957      3,747      6
Free cash flow 1                                   392        274        43          1,705      1,676      2
1 Adjusted operating profit, adjusted net income, adjusted basic earnings per share, and free cash flow are non-GAAP measures and should not be considered substitutes or alternatives for GAAP measures. These are not defined terms under IFRS and do not have standard meanings, so may not be a reliable way to compare us to other companies. See "Non-GAAP Measures" for information about these measures, including how we calculate them.
2 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See "Accounting Changes" for more information.

"We ended 2016 with continued momentum and strong operating performance in the fourth quarter. We maintained robust Wireless revenue growth, underpinned by strong subscriber metrics, and translated this to healthy adjusted operating profit. Internet results showed sustained strength as Rogers offers customers the fastest widely available Internet speeds in our marketplace," said Alan Horn, Chairman and Interim President and CEO. "Our momentum to date as well as our commitment to further improve the customer experience, and enhance our execution, position us well to achieve our stronger growth targets for 2017."

Key Financial Highlights

Higher revenue Revenue increased 2% this quarter, largely driven by Wireless service revenue growth of 6%.

Wireless service revenue increased primarily as a result of a larger subscriber base and the continued adoption of higher-value Share Everything plans and the increase in data usage on these plans.

Cable revenue increased marginally as strong Internet revenue growth of 9% was largely offset by the decline in Television and Phone revenue. We continue to see an ongoing shift in product mix to higher-margin Internet services. Excluding the impact of lower wholesale Internet revenue as a result of the CRTC decision that reduced interim access service rates, Cable and Internet revenue would have increased by 2% and 12%, respectively.

Media revenue decreased as a result of fewer postseason Toronto Blue Jays games compared to last year, lower overall advertising revenue, and lower circulation revenue within publishing, partially offset by higher sales at The Shopping Channel (TSC).

Higher adjusted operating profit Higher adjusted operating profit this quarter reflects an increase in Wireless adjusted operating profit due to the strong flow through of top line growth described above and improved Cable performance due to the shift in product mix to higher-margin Internet services. Excluding the impact from the CRTC decision to reduce wholesale Internet interim access service rates described above, Cable adjusted operating profit growth would have been 5%.

Net loss and higher adjusted net income We recorded a net loss of $9 million this quarter, primarily as a result of the $484 million impairment and other charges we recognized related to the discontinued investment in our Internet Protocol Television (IPTV) product. See "Review of Consolidated Performance" for more information. Adjusted net income increased this quarter as a result of higher adjusted operating profit, lower depreciation and amortization, and lower finance costs, partially offset by higher income tax expense.

Substantial free cash flow affords financial flexibility This quarter, we continued to generate substantial cash flow from operating activities and free cash flow of $1,053 million and $392 million, respectively. Free cash flow was higher this quarter as a result of increased adjusted operating profit and lower additions to property, plant and equipment, partially offset by higher cash income taxes.

We ended the fourth quarter with an adjusted net debt / adjusted operating profit ratio of 3.0. Strong operating cash flow allowed us to repay a net amount of more than $300 million of debt in the quarter. See "Managing our Liquidity and Financial Resources" for more information.

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

Achieved 2016 Guidance

The following table outlines guidance ranges that we had previously provided and our actual results and shows 100% achievement for the selected full-year 2016 financial metrics:

(In millions of dollars, except percentages)                        2015   2016                     2016        Achievement
                                                                    Actual Guidance Ranges          Actual
Consolidated Guidance 1
                       Revenue                                      13,414 Increase of 1% to  3%    13,702 2.1% ?^s
                       Adjusted operating profit 2                  5,032  Increase of 1% to  3%    5,092  1.2% ?^s
                       Additions to property, plant and equipment 3 2,440  2,300          to  2,400 2,352  n/m  ?^s
                       Free cash flow 2                             1,676  Increase of 1% to  3%    1,705  1.7% ?^s
Missed x                                                                   Achieved ?^s
1 The above table outlines guidance ranges for selected full-year 2016 consolidated financial metrics provided in our January 27, 2016 earnings release. Guidance ranges presented as percentages reflect percentage increases over 2015 actual results.
2 Adjusted operating profit and free cash flow are non-GAAP measures and should not be considered substitutes or alternatives for GAAP measures. These are not defined terms under IFRS and do not have standard meanings, so may not be a reliable way to compare us to other companies. See "Non-GAAP Measures" for information about these measures, including how we calculate them.
3 Includes additions to property, plant and equipment for the Wireless, Cable, Business Solutions, Media, and Corporate segments and does not include expenditures on spectrum licences.

2017 Outlook

As noted in the guidance ranges in the table below, we anticipate an even stronger growth profile in 2017. We expect to have the financial flexibility to maintain our network advantages, continue reducing debt, and return cash to shareholders.

                                                                         2016   2017 Guidance
                                                                         Actual Ranges 1
(In millions of dollars, except percentages)
Consolidated Guidance
                       Revenue                                           13,702 Increase of 3% to  5%
                       Adjusted operating profit 2                       5,092  Increase of 2% to  4%
                       Additions to property, plant and equipment, net 3 2,352  2,250          to  2,350
                       Free cash flow 2                                  1,705  Increase of 2% to  4%
1 Guidance ranges presented as percentages reflect percentage increases over full-year 2016 actual results.
2 Adjusted operating profit and free cash flow are non-GAAP measures and should not be considered substitutes or alternatives for GAAP measures. These are not defined terms under IFRS and do not have standard meanings, so may not be a reliable way to compare us to other companies. See "Non-GAAP Measures" for information about these measures, including how we calculate them.
3 Includes additions to property, plant and equipment for the Wireless, Cable, Business Solutions, Media, and Corporate segments net of proceeds on disposition, but does not include expenditures for spectrum licences.

The above table outlines guidance ranges for selected full-year 2017 consolidated financial metrics. These ranges take into consideration our current outlook and our actual results for 2016. The purpose of the financial outlook is to assist investors, shareholders, and others in understanding certain financial metrics relating to expected 2017 financial results for evaluating the performance of our business. This information may not be appropriate for other purposes. Information about our guidance, including the various assumptions underlying it, is forward-looking and should be read in conjunction with "About Forward-Looking Information" and the related disclosure and information about various economic, competitive, and regulatory assumptions, factors, and risks that may cause our actual future financial and operating results to differ from what we currently expect.

We provide annual guidance ranges on a consolidated full-year basis, which are consistent with annual full-year Board-approved plans. Any updates to our full-year financial guidance over the course of the year would only be made to the consolidated guidance ranges that appear above.

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 (RCI ).

Quarterly Investment Community Teleconference

Our fourth quarter 2016 results teleconference with the investment community will be held on:

-- January 26, 2017

-- 8:00 a.m. Eastern Time

-- webcast available at rogers.com/webcast

-- media are welcome to participate on a listen-only basis

A rebroadcast will be available at rogers.com/investors on the Events and Presentations page for at least two weeks following the teleconference. Additionally, investors should note that from time to time, Rogers’ management presents at brokerage-sponsored investor conferences. Most often, but not always, these conferences are webcast by the hosting brokerage firm, and when they are webcast, links are made available on Rogers’ website at rogers.com/events and are generally placed there at least two days before the conference.

For More Information

You can find more information relating to us on our website (rogers.com/investors), 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 rogers.com/investors 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 twelve months ended December 31, 2016, as well as forward-looking information about future periods. This earnings release should be used as preparation for reading our forthcoming Management’s Discussion and Analysis (MD&A) and Audited Consolidated Financial Statements for the year ended December 31, 2016, which we intend to file with securities regulators in Canada and the US in the next few weeks. These statements will be made available on the rogers.com/investors, sedar.com, and sec.gov websites or mailed upon request.

The financial information contained in this earnings release is prepared using International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. This earnings release should be read in conjunction with our 2015 Annual MD&A and our 2015 Audited Consolidated Financial Statements, our 2016 First, Second, and Third Quarter MD&A and Interim Condensed Consolidated Financial Statements, and our other recent filings with Canadian and US securities regulatory authorities, which are available on SEDAR at sedar.com or EDGAR at sec.gov, respectively.

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 January 25, 2017 and was approved by our Board of Directors (Board). 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 refers to the three months ended December 31, 2016 and year to date or full-year refer to the twelve months ended December 31, 2016. All results commentary is compared to the equivalent periods in 2015 or as at December 31, 2015, as applicable, unless otherwise indicated.

Reporting Segments We report our results of operations in four reporting segments. Each segment and the nature of its business is as follows:

Segment            Principal activities
Wireless           Wireless telecommunications operations for Canadian consumers and businesses.
Cable              Cable telecommunications operations, including Internet, television, and telephony (phone) services for Canadian consumers and businesses.
Business Solutions 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 enterprise, 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, publishing, and digital media.

Wireless, Cable, and Business Solutions 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.

Strategic Update

Rogers’ strategy is designed to re-accelerate revenue growth in a sustainable way and translate this revenue growth into strong margins, adjusted operating profit, free cash flow, an increasing return on assets, and returns to shareholders.

Our fourth quarter and full-year 2016 results reflect solid execution of our strategy and the value inherent in our unique asset portfolio, including our best-in-class wireless and cable networks.

In 2017, we plan to further enhance our financial flexibility and execution, as well as capture cost and productivity improvements we see throughout our business. We believe this will position us well to translate our revenue growth into increased profitability and free cash flow.

Improving the Customer Experience Our priority is to offer the products and services our customers want and need for the best experience. With that in mind, we launched a number of tools and offerings in 2016 with a focus on becoming a leader in self-serve options. For instance, we expanded worry-free wireless roaming, simplified mobile-first billing, and introduced a tool that allows families to manage their wireless data usage in real time. In 2015, we were the first telecommunications company in the world to launch customer care via Facebook Messenger, and this year, we were among the first globally to launch on Twitter. Our latest example of a self-serve option was the launch of Rogers EnRoute in the fourth quarter. This tool allows customers to track on their phone when a technician will arrive for an installation or service call. Our approach is resonating with customers, as we saw 42% more self-service transactions on the Rogers brand this quarter year on year and 56% more for the full-year 2016.

We look forward to doing more for our customers in 2017, including offering more self-serve options and new ways to interact with us digitally.

Maintaining Leadership and Momentum in Wireless Despite an intense competitive backdrop, our fourth quarter results built on the strong momentum we have seen over the past year and we closed 2016 with the best Wireless service revenue growth and subscriber performance in many years. These results reflected a strong translation to adjusted operating profit, with fourth quarter growth of 5%. Fourth quarter Wireless service revenue growth of 6% was the highest since 2010 and postpaid net additions of 93,000 were the highest of any fourth quarter since 2009. On an annual basis, Wireless service revenue growth of 5% was the highest since 2009 and postpaid net additions of 286,000, up 180,000, were the highest since 2010.

Postpaid Wireless churn remained stable year on year in the fourth quarter and decreased four basis points in 2016 for the lowest postpaid churn rate since 2010. We will strive to make further improvements to churn going forward with our focus on further improving the customer experience.

We continued to make investments to enhance wireless network coverage and the quality of our network. Deployment of our prime 700 MHz LTE network has reached about 91% of Canada’s population at the end of 2016. Deployment of our overall LTE network has reached about 95% of Canada’s population at year-end.

Improving Cable on the Strength of Internet and our Partnership with Comcast Subscriber trends have been improving in our Cable segment on the popularity of Ignite Internet, as Rogers offers the fastest widely available Internet speeds in our marketplace. For the second quarter in a row, we reported positive Cable total service unit net additions, driven by Internet net additions of 30,000, up 14,000 year on year.

Our Cable product mix continued to shift to higher-margin Internet services, driving overall Cable adjusted operating profit growth of 2% in the fourth quarter. We generated Internet revenue growth of 9% this quarter and double-digit Internet revenue growth of 11% in 2016. Excluding the impact of lower wholesale revenue as a result of the CRTC’s decision to reduce interim access service rates, Cable revenue and adjusted operating profit growth this quarter were 2% and 5%, respectively. Similarly, Internet revenue growth increases to double-digit growth of 12% from 9% in the quarter, excluding this same impact.

Approximately 46% of our residential Internet base is on plans of 100 megabits per second or higher. We now offer Ignite Gigabit Internet service to our entire Cable footprint of over four million homes. Our hybrid fibre-coaxial cable network allows us to make incremental success-based investments as the demand for greater speed and capacity grows. We believe this positions us well to earn attractive returns on investment for our shareholders.

Late in 2016, Rogers announced a long-term agreement with Comcast Corporation (Comcast) to bring our customers a best-in-class TV product and expect to deploy Comcast’s X1 IP-based video platform in early 2018. We are moving to this hosted platform to ensure we will have access to the scale and technical roadmap needed to meet the ongoing pace of IPTV innovation. Customers will benefit from Comcast’s substantial research and development investments and their continuing commitment to innovation. Comcast attributes the transformative X1 platform to improving Xfinity TV subscriber performance, reducing churn, and increasing engagement for customers.

Our adoption of the X1 platform not only includes access to the most advanced IPTV solution, but also to Comcast’s state-of-the-art customer premise equipment, including advanced DOCSIS 3.1 Wi-Fi gateways, Wi-Fi extenders, and wireless set-top boxes as well as the ability to send video to other third party companion devices (such as tablets and smartphones).

By mid-2017, Rogers plans to bring its customers the new advanced DOCSIS 3.1 Wi-Fi gateway, which is capable of delivering up to nine gigabits per second over Wi-Fi within the home, supports voice, home monitoring, and automation applications, and can act as the core in-home gateway for video and data applications. Throughout 2017, we also intend to provide our customers with further enhancements to our existing TV platform, including more 4K content.

First on the innovation roadmap, we intend to adopt Comcast’s new Digital Home solution. This whole-home networking solution will provide customers with a simple, fast, and intuitive way to control and manage their connected devices. The cloud-based platform will link to the new DOCSIS 3.1 Wi-Fi gateway devices to deliver fast, reliable connectivity in the home and will allow people to easily add or pause devices, pair Wi-Fi extenders that boost signal strength, and use voice controls to see who is on the network, all in a safe and secure manner. This should help support the broader adoption of connected devices and the Internet of Things (IoT).

The all-IP combination of voice, data, video, smart home monitoring, and IoT using a combination of the most extensive DOCSIS 3.1-based, gigabit-capable network in Canada, along with Rogers and Comcast technology, will provide our customers with a best-in-class next generation residential service suite in Canada.

Media Focused on Sports Media remains focused on our strong portfolio of live sports entertainment, including our ownership of the Toronto Blue Jays, our exclusive NHL agreement, and our joint venture interest in MLSE. For the second year in a row, Sportsnet was the number-one sports media brand in Canada and the gap has widened. Sportsnet plans to deliver more than 100 live sporting events in 4K in 2017. Consumer interest in 4K TV continues to grow as evidenced by leading manufacturer expectations for 4K TV sales to top 50% of all TV sales in 2017. To achieve the high quality 4K resolution, significantly higher bandwidths are required. With more 4K television sets and video streaming devices in the home, the high bit rate requirement further emphasizes the speed and capacity advantages of Rogers’ hybrid fibre-coaxial cable network over the legacy networks of our telecommunication competitors.

In the fourth quarter of 2016, we committed to accelerating our shift from print to digital media in order to keep pace with changing audience demands. Since then, we have been realigning resources and developing the roadmap that will drive innovation and new content ideas while increasing digital audiences and revenue. A particular focus in 2017 will be the launch of some new initiatives that will help solidify our position in the digital space.

Corporate Developments We intend to hire Joseph Natale as President and CEO effective July 2017. Alan Horn is currently acting as our Interim President and CEO.

Summary of Consolidated Financial Results

                                                                              Three months ended December 31  Twelve months ended December 31
(In millions of dollars, except margins and per share amounts)                2016     2015    % Chg          2016    2015    % Chg
Revenue
                                Wireless                                      2,058    1,981   4              7,916   7,651   3
                                Cable                                         858      855     --             3,449   3,465   --
                                Business Solutions                            96       95      1              384     377     2
                                Media                                         550      560     (2)            2,146   2,079   3
                                Corporate items and intercompany eliminations (52)     (39)    33             (193)   (158)   22
Revenue                                                                       3,510    3,452   2              13,702  13,414  2
Adjusted operating profit
                                Wireless                                      792      754     5              3,285   3,239   1
                                Cable                                         435      426     2              1,674   1,658   1
                                Business Solutions                            30       30      --             123     116     6
                                Media                                         49       56      (13)           169     172     (2)
                                Corporate items and intercompany eliminations (47)     (40)    18             (159)   (153)   4
Adjusted operating profit 1                                                   1,259    1,226   3              5,092   5,032   1
Adjusted operating profit margin 1                                            35.9%    35.5%   0.4pts         37.2%   37.5%   (0.3pts)
Net (loss) income 2                                                           (9)      299     n/m            835     1,342   (38)
Basic (loss) earnings per share 2                                             ($0.02)  $0.58   n/m            $1.62   $2.61   (38)
Diluted (loss) earnings per share 2                                           ($0.04)  $0.58   n/m            $1.62   $2.60   (38)
Adjusted net income 1,2                                                       382      331     15             1,481   1,479   --
Adjusted basic earnings per share 1,2                                         $0.74    $0.64   16             $2.88   $2.87   --
Adjusted diluted earnings per share 1,2                                       $0.74    $0.64   16             $2.86   $2.86   --
Additions to property, plant and equipment                                    604      773     (22)           2,352   2,440   (4)
Cash provided by operating activities                                         1,053    950     11             3,957   3,747   6
Free cash flow 1                                                              392      274     43             1,705   1,676   2
Total service revenue 3                                                       3,306    3,214   3              13,027  12,649  3
n/m - not meaningful
1          Adjusted operating profit, adjusted operating profit margin, adjusted net income, adjusted basic and diluted earnings per share, and free cash flow are non-GAAP measures and should not be considered substitutes or alternatives for GAAP measures. These are not defined terms under IFRS and do not have standard meanings, so may not be a reliable way to compare us to other companies. See "Non-GAAP Measures" for information about these measures, including how we calculate them.
2          As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See "Accounting Changes" for more information.
3          As defined. See "Key Performance Indicators".

Results of our Reporting Segments

WIRELESS

Wireless Financial Results

                                                            Three months ended December 31  Twelve months ended December 31
(In millions of dollars, except margins)                    2016   2015 1  % Chg            2016   2015 1  % Chg
Revenue
                              Service revenue               1,858  1,747   6                7,258  6,902   5
                              Equipment revenue             200    234     (15)             658    749     (12)
Revenue                                                     2,058  1,981   4                7,916  7,651   3
Operating expenses
                              Cost of equipment             584    569     3                1,947  1,845   6
                              Other operating expenses      682    658     4                2,684  2,567   5
Operating expenses                                          1,266  1,227   3                4,631  4,412   5
Adjusted operating profit                                   792    754     5                3,285  3,239   1
Adjusted operating profit margin as a % of service revenue  42.6%  43.2%   (0.6 pts)        45.3%  46.9%   (1.6 pts)
Additions to property, plant and equipment                  153    235     (35)             702    866     (19)
1 The operating results of Mobilicity are included in the Wireless results of operations from the date of acquisition on July 2, 2015.

Wireless Subscriber Results 1

                                                              Three months ended December 31 Twelve months ended December 31
(In thousands, except churn, postpaid ARPA, and blended ARPU) 2016     2015     Chg          2016     2015     Chg
Postpaid
                               Gross additions                436      365      71           1,521    1,354    167
                               Net additions                  93       31       62           286      106      180
                               Total postpaid subscribers 2   8,557    8,271    286          8,557    8,271    286
                               Churn (monthly)                1.35%    1.35%    --           1.23%    1.27%    (0.04 pts)
                               ARPA (monthly)                 $119.90  $112.07  $7.83        $117.37  $110.74  $6.63
Prepaid
                               Gross additions                172      179      (7)          761      677      84
                               Net additions                  38       27       11           111      75       36
                               Total prepaid subscribers 2,3  1,717    1,606    111          1,717    1,606    111
                               Churn (monthly)                2.62%    3.17%    (0.55 pts)   3.32%    3.45%    (0.13 pts)
Blended ARPU (monthly)                                        $60.72   $59.16   $1.56        $60.42   $59.71   $0.71
1 Subscriber counts, subscriber churn, postpaid ARPA, and blended ARPU are key performance indicators. See "Key Performance Indicators".
2 As at end of period.
3 On July 2, 2015, we acquired approximately 154,000 Wireless prepaid subscribers as a result of our acquisition of Mobilicity, which are not included in the 2015 net additions above.

Service revenue The 6% increase in service revenue this quarter was a result of:

-- larger postpaid and prepaid subscriber bases; and

-- the continued adoption of customer-friendly Rogers Share Everything plans and the general increase in data usage noted on these types of plans. These plans generate higher postpaid ARPA, bundle in various calling features and long distance, provide the ability to pool and manage data usage across multiple devices, and grant access to our other offerings, such as Roam Like Home, Rogers NHL GameCentre LIVE, Spotify, and Texture by Next Issue.

The 7% increase in postpaid ARPA this quarter was the result of the continued adoption of Rogers Share Everything plans relative to the number of subscriber accounts as customers have increasingly utilized the advantages of premium offerings and access their shareable plans with multiple devices on the same account.

The 3% increase in blended ARPU this quarter was a result of:

-- increased service revenue as discussed above; partially offset by

-- the general increase in prepaid net additions over the past year.

We believe the increases in gross and net additions to our postpaid subscriber base and the stable postpaid churn this quarter 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 15% decrease in equipment revenue this quarter was a result of:

-- an 11% decrease in device upgrades by existing subscribers; and

-- larger average subsidies given to customers who purchased devices; partially offset by

-- higher postpaid gross additions.

Operating expenses Cost of equipment The 3% increase in the cost of equipment this quarter was a result of:

-- a shift in the product mix of device sales towards higher-cost smartphones; and

-- higher postpaid gross additions; partially offset by

-- the decrease in device upgrades by existing subscribers, as discussed above.

Other operating expenses

The 4% increase in other operating expenses this quarter was a result of:

-- higher commissions, primarily as a result of our higher postpaid gross additions; and

-- higher marketing and advertising costs.

Adjusted operating profit The 5% increase in adjusted operating profit this quarter was a result of the revenue and expense changes discussed above.

CABLE

Cable Financial Results

                                               Three months ended December 31  Twelve months ended December 31
(In millions of dollars, except margins)       2016   2015   % Chg             2016   2015   % Chg
Revenue
                      Internet                 378    348    9                 1,495  1,343  11
                      Television               386    403    (4)               1,562  1,669  (6)
                      Phone                    93     102    (9)               386    445    (13)
                      Service revenue          857    853    --                3,443  3,457  --
                      Equipment revenue        1      2      (50)              6      8      (25)
Revenue                                        858    855    --                3,449  3,465  --
Operating expenses
                      Cost of equipment        1      2      (50)              3      4      (25)
                      Other operating expenses 422    427    (1)               1,772  1,803  (2)
Operating expenses                             423    429    (1)               1,775  1,807  (2)
Adjusted operating profit                      435    426    2                 1,674  1,658  1
Adjusted operating profit margin               50.7%  49.8%  0.9 pts           48.5%  47.8%  0.7 pts
Additions to property, plant and equipment     284    308    (8)               1,085  1,030  5

Cable Subscriber Results 1

                                          Three months ended December 31  Twelve months ended December 31
(In thousands)                            2016   2015   Chg               2016   2015   Chg
Internet
           Net additions                  30     16     14                97     37     60
           Total Internet subscribers 2   2,145  2,048  97                2,145  2,048  97
Television
           Net losses                     (13)   (24)   11                (76)   (128)  52
           Total television subscribers 2 1,820  1,896  (76)              1,820  1,896  (76)
Phone
           Net additions (losses)         4      (15)   19                4      (60)   64
           Total phone subscribers 2      1,094  1,090  4                 1,094  1,090  4
Cable homes passed 2                      4,241  4,153  88                4,241  4,153  88
Total service units 3
           Net additions (losses)         21     (23)   44                25     (151)  176
           Total service units 2          5,059  5,034  25                5,059  5,034  25
1  Subscriber counts are key performance indicators. See "Key Performance Indicators".
2  As at end of period.
3  Includes Internet, Television, and Phone subscribers.

Revenue The marginal increase in revenue this quarter was a result of:

-- a higher subscriber base for our Internet products; and

-- the net impact of pricing changes implemented over the past year; partially offset by

-- Television subscriber losses over the past year.

Internet revenue The 9% increase in Internet revenue this quarter was a result of:

-- a larger Internet subscriber base;

-- general movement of customers to higher speed and usage tiers of our Ignite broadband Internet offerings; and

-- the net impact of changes in Internet service pricing; partially offset by

-- lower wholesale revenue as a result of a CRTC decision that reduced access service rates.

Television revenue The 4% decrease in Television revenue this quarter was a result of:

-- the decline in Television subscribers over the past year; and

-- more promotional pricing provided to subscribers; partially offset by

-- the impact of Television service pricing changes implemented over the past year.

Phone revenue The 9% decrease in Phone revenue this quarter was a result of:

-- the impact of pricing packages, primarily related to Ignite multi-product bundles; partially offset by

-- less promotional pricing provided to subscribers as a result of the pricing packages described above.

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

-- relative shifts in product mix to higher-margin Internet from conventional Television broadcasting; and

-- lower service and programming costs.

Adjusted operating profit The 2% increase in adjusted operating profit this quarter was a result of the revenue and expense changes discussed above.

BUSINESS SOLUTIONS

Business Solutions Financial Results

                                            Three months ended December 31  Twelve months ended December 31
(In millions of dollars, except margins)    2016   2015 1  % Chg            2016   2015 1  % Chg
Revenue
                      Next generation       77     74      4                307    288     7
                      Legacy                17     20      (15)             71     85      (16)
                      Service revenue       94     94      --               378    373     1
                      Equipment revenue     2      1       100              6      4       50
Revenue                                     96     95      1                384    377     2
Operating expenses                          66     65      2                261    261     --
Adjusted operating profit                   30     30      --               123    116     6
Adjusted operating profit margin            31.3%  31.6%   (0.3 pts)        32.0%  30.8%   1.2 pts
Additions to property, plant and equipment  37     65      (43)             146    187     (22)
1 The operating results of Internetworking Atlantic Inc. are included in the Business Solutions results of operations from the date of acquisition on November 30, 2015.

Revenue The stable service revenue this quarter was a result of the continued execution of our plan to grow higher-margin, next generation on-net and near-net IP-based services revenue, offset by the continued decline in our legacy and off-net voice business. We expect this trend to continue 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 82% of total service revenue in the quarter (2015 - 79%).

Operating expenses Operating expenses this quarter were in line with fourth quarter operating expenses of 2015.

Adjusted operating profit Adjusted operating profit was stable this quarter as a result of the marginal increases in revenue and operating expenses this quarter.

MEDIA

Media Financial Results

                                           Three months ended December 31  Twelve months ended December 31
(In millions of dollars, except margins)   2016   2015   % Chg             2016   2015   % Chg
Revenue                                    550    560    (2)               2,146  2,079  3
Operating expenses                         501    504    (1)               1,977  1,907  4
Adjusted operating profit                  49     56     (13)              169    172    (2)
Adjusted operating profit margin           8.9%   10.0%  (1.1 pts)         7.9%   8.3%   (0.4 pts)
Additions to property, plant and equipment 19     28     (32)              62     60     3

Revenue The 2% decrease in revenue this quarter was a result of:

-- fewer postseason Toronto Blue Jays games compared to 2015;

-- lower overall advertising revenue; and

-- lower circulation revenue within publishing, partly due to the sale of certain brands; partially offset by

-- higher sales at TSC.

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

-- lower publishing costs due to revenue softness and the strategic shift related to magazine content announced earlier in the year; partially offset by

-- higher TSC merchandise costs; and

-- higher digital media costs.

Adjusted operating profit The 13% decrease in adjusted operating profit this quarter was primarily a result of the revenue and expense changes discussed above.

ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT

                                                    Three months ended December 31  Twelve months ended December 31
(In millions of dollars, except capital intensity)  2016   2015   % Chg             2016   2015   % Chg
Additions to property, plant and equipment
                          Wireless                  153    235    (35)              702    866    (19)
                          Cable                     284    308    (8)               1,085  1,030  5
                          Business Solutions        37     65     (43)              146    187    (22)
                          Media                     19     28     (32)              62     60     3
                          Corporate                 111    137    (19)              357    297    20
Total additions to property, plant and equipment 1  604    773    (22)              2,352  2,440  (4)
Capital intensity 2                                 17.2%  22.4%  (5.2 pts)         17.2%  18.2%  (1.0 pts)
1  Additions to property, plant and equipment do not include expenditures for spectrum licences.
2  As defined. See "Key Performance Indicators".

Wireless The decrease in additions to property, plant and equipment in Wireless this quarter was primarily a result of higher LTE network investments incurred in the fourth quarter of 2015 relative to 2016 to enhance network coverage and the quality of our network. Deployment of our 700 MHz LTE network has reached 91% of Canada’s population as at December 31, 2016 (December 31, 2015 - 78%). The 700 MHz LTE network offers improved signal quality in basements, elevators, and buildings with thick concrete walls. Deployment of our overall LTE network has reached approximately 95% of Canada’s population as at December 31, 2016 (December 31, 2015 - 93%).

Cable The decrease in additions to property, plant and equipment in Cable this quarter was primarily a result of higher investment in information technology infrastructure incurred in the fourth quarter of 2015 relative to 2016 to improve the capacity of our Internet platform to deliver gigabit Internet speeds. We believe this has allowed us to keep ahead of customer data demands, which allowed us to deliver Ignite Gigabit Internet across our Cable footprint by the end of 2016.

Business Solutions The decrease in additions to property, plant and equipment in Business Solutions this quarter was a result of higher investments in our data centres in the fourth quarter of 2015 relative to 2016.

Media The decrease in additions to property, plant and equipment in Media this quarter was a result of higher investments incurred in the fourth quarter of 2015 relative to 2016 for conventional television, digital assets, and at TSC.

Corporate The decrease in additions to property, plant and equipment in Corporate this quarter was a result of higher investments incurred in the fourth quarter of 2015 relative to 2016 in relation to premise improvements at our various offices, as well as higher information technology investments.

Capital intensity Capital intensity decreased this quarter as a result of lower additions to property, plant and equipment in all our segments as discussed above, partially offset by higher revenue.

Review of Consolidated Performance

This section discusses our consolidated net income and other expenses that do not form part of the segment discussions above.

                                                                        Three months ended December 31  Twelve months ended December 31
(In millions of dollars)                                                2016   2015   % Chg             2016   2015   % Chg
Adjusted operating profit 1                                             1,259  1,226  3                 5,092  5,032  1
Deduct (add):
              Stock-based compensation                                  16     16     --                61     55     11
              Depreciation and amortization                             555    580    (4)               2,276  2,277  --
              Impairment of assets and related onerous contract charges 484    --     n/m               484    --     n/m
              Restructuring, acquisition and other                      34     23     48                160    111    44
              Finance costs                                             188    192    (2)               761    774    (2)
              Other (income) expense 2                                  (4)    4      n/m               191    (4)    n/m
              Income tax (recovery) expense 2                           (5)    112    n/m               324    477    (32)
Net (loss) income 2                                                     (9)    299    n/m               835    1,342  (38)
1 Adjusted operating profit is a non-GAAP measure and should not be considered a substitute or alternative for GAAP measures. It is not a defined term under IFRS and does not have a standard meaning, so may not be a reliable way to compare us to other companies. See "Non-GAAP Measures" for information about this measure, including how we calculate it.
2 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended.  See "Accounting Changes" for more information.

Stock-based compensation Our stock-based compensation, which includes stock options (with stock appreciation rights), restricted share units, and deferred share units, is generally driven by:

-- the vesting of stock options and share units; and

-- changes in the market price of RCI Class B shares; offset by

-- the impact of certain equity derivative instruments designed to hedge a portion of the stock price appreciation risk for our stock-based compensation programs. See "Financial Risk Management" for more information about equity derivatives.

                                            Three months ended December 31  Twelve months ended December 31
(In millions of dollars)                    2016     2015                   2016     2015
Impact of vesting                           19       14                     70       57
Impact of change in price                   (22)     14                     24       20
Equity derivatives, net of interest receipt 19       (12)                   (33)     (22)
Total stock-based compensation              16       16                     61       55

Depreciation and amortization

                                    Three months ended December 31  Twelve months ended December 31
(In millions of dollars)            2016   2015   % Chg             2016   2015   % Chg
Depreciation                        538    541    (1)               2,183  2,117  3
Amortization                        17     39     (56)              93     160    (42)
Total depreciation and amortization 555    580    (4)               2,276  2,277  --

Total depreciation and amortization decreased this quarter as a result of the effect of ceasing amortization on certain brand name assets in 2016.

Impairment of assets and related onerous contract charges During the quarter, we recorded a total charge of $484 million for asset impairment and onerous contracts related to our decision to discontinue developing our IPTV product as a result of our decision to develop a long-term relationship with Comcast and deploy their X1 IP-based video platform. See "Strategic Update" for more information. The onerous contracts charges primarily relate to the remaining contractual liabilities for the development of our IPTV product based on our best estimate of the expected future costs.

Restructuring, acquisition and other This quarter, we incurred $34 million (2015 - $23 million) in restructuring, acquisition and other expenses. The costs this quarter were primarily a result of severance costs associated with the targeted restructuring of our employee base and costs related to integrating certain businesses.

Finance costs

                                               Three months ended December 31  Twelve months ended December 31
(In millions of dollars)                       2016   2015   % Chg             2016   2015   % Chg
Interest on borrowings 1                       185    190    (3)               758    761    --
Interest on post-employment benefits liability 2      3      (33)              9      11     (18)
Loss on repayment of long-term debt            --     --     --                --     7      (100)
Loss on foreign exchange                       32     2      n/m               13     11     18
Change in fair value of derivatives            (34)   (1)    n/m               (16)   3      n/m
Capitalized interest                           (3)    (5)    (40)              (18)   (29)   (38)
Other                                          6      3      100               15     10     50
Total finance costs                            188    192    (2)               761    774    (2)
1 Interest on borrowings includes interest on long-term debt and on short-term borrowings associated with our accounts receivable securitization program.

Interest on borrowings Interest on borrowings decreased this quarter as a result of a decrease in the principal of our outstanding debt and lower interest rates on our bank credit facilities. See "Managing our Liquidity and Financial Resources" and "Financial Condition" for more information about our debt and related finance costs.

Income tax (recovery) expense 1

                                                                                     Three months ended December 31             Twelve months ended December 31
(In millions of dollars, except tax rates)                                           2016                 2015                  2016                 2015
Statutory income tax rate                                                            26.6               % 26.5               %  26.6               % 26.5               %
(Loss) income before income tax (recovery) expense                                   (14)                 411                   1,159                1,819
Computed income tax (recovery) expense                                               (4)                  109                   308                  482
Increase (decrease) in income tax (recovery) expense resulting from:
                                   Non-(taxable) deductible stock-based compensation (2)                  3                     5                    5
                                   Non-deductible (taxable) portion of equity losses 2                    (2)                   18                   11
                                   Income tax adjustment, legislative tax change     --                   --                    3                    6
                                   Non-taxable gain on acquisition                   --                   --                    --                   (20)
                                   Non-taxable portion of capital gain               --                   --                    (7)                  --
                                   Other items                                       (1)                  2                     (3)                  (7)
Total income tax (recovery) expense                                                  (5)                  112                   324                  477
Effective income tax rate                                                            35.7               % 27.3               %  28.0               % 26.2               %
Cash income taxes paid (received)                                                    81                   (6)                   295                  184
1 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See "Accounting Changes" for more information.

Cash income taxes paid increased this quarter as a result of applying non-capital losses from the Mobilicity transaction to offset our 2015 tax liability.

Net (loss) income 1

                                                   Three months ended December 31  Twelve months ended December 31
(In millions of dollars, except per share amounts) 2016    2015     % Chg          2016    2015    % Chg
Net (loss) income                                  (9)     299      n/m            835     1,342   (38)
Basic (loss) earnings per share                    ($0.02) $0.58    n/m            $1.62   $2.61   (38)
Diluted (loss) earnings per share                  ($0.04) $0.58    n/m            $1.62   $2.60   (38)
1 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See "Accounting Changes" for more information.

Adjusted net income We calculate adjusted net income from adjusted operating profit as follows:

                                                        Three months ended December 31  Twelve months ended December 31
(In millions of dollars, except per share amounts)      2016   2015   % Chg             2016   2015   % Chg
Adjusted operating profit 1                             1,259  1,226  3                 5,092  5,032  1
Deduct:
                          Depreciation and amortization 555    580    (4)               2,276  2,277  --
                          Finance costs 2               188    192    (2)               761    767    (1)
                          Other (income) expense 3,4    (4)    4      n/m               40     (2)    n/m
                          Income tax expense 4,5        138    119    16                534    511    5
Adjusted net income 1,4                                 382    331    15                1,481  1,479  --
Adjusted basic earnings per share 1,4                   $0.74  $0.64  16                $2.88  $2.87  --
Adjusted diluted earnings per share 1,4                 $0.74  $0.64  16                $2.86  $2.86  --
1 Adjusted operating profit, adjusted net income, and adjusted basic and diluted earnings per share are non-GAAP measures and should not be considered substitutes or alternatives for GAAP measures. These are not defined terms under IFRS and do not have standard meanings, so may not be a reliable way to compare us to other companies. See "Non-GAAP Measures" for information about these measures, including how we calculate them.
2 Finance costs exclude a $7 million loss on repayment of long-term debt for the twelve months ended December 31, 2015.
3 Other expense for the twelve months ended December 31, 2016 excludes an $11 million net loss on divestitures pertaining to investments and a $140 million loss on the wind down of our shomi joint venture. Other income for the twelve months ended December 31, 2015 excludes a $74 million gain on acquisition of Mobilicity and a $72 million loss related to our share of an obligation to purchase at fair value the non-controlling interest in one of our joint ventures.
4 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See "Accounting Changes" for more information.
5 Income tax expense excludes a $143 million recovery (2015 - $7 million recovery) for the quarter and a $213 million recovery (2015 - $40 million recovery) for the year to date related to the income tax impact for adjusted items. Income tax expense also excludes expenses as a result of legislative tax changes of $3 million (2015 - $6 million) for the year to date.

Managing our Liquidity and Financial Resources

Operating, investing, and financing activities

                                                                                                     Three months ended December 31  Twelve months ended December 31
(In millions of dollars)                                                                             2016     2015                   2016     2015
Cash provided by operating activities before changes in non-cash                                     1,276    1,264                  4,994    5,004
working capital items, income taxes paid, and interest paid
                                 Change in non-cash operating working capital items                  (18)     (187)                  14       (302)
Cash provided by operating activities before income taxes paid                                       1,258    1,077                  5,008    4,702
and interest paid
                                 Income taxes (paid) received                                        (81)     6                      (295)    (184)
                                 Interest paid                                                       (124)    (133)                  (756)    (771)
Cash provided by operating activities                                                                1,053    950                    3,957    3,747
Investing activities:
                                 Additions to property, plant and equipment                          (604)    (773)                  (2,352)  (2,440)
                                 Additions to program rights                                         (3)      (27)                   (46)     (64)
                                 Changes in non-cash working capital related to property, plant and  44       167                    (103)    (116)
                                 equipment and intangible assets
                                 Acquisitions and other strategic transactions, net of cash acquired --       (5)                    --       (1,077)
                                 Other                                                               49       (32)                   45       (70)
Cash used in investing activities                                                                    (514)    (670)                  (2,456)  (3,767)
Financing activities:
                                 Net repayments on short-term borrowings                             (250)    (59)                   --       (42)
                                 Net (repayment) issuance of long-term debt                          (57)     82                     (538)    754
                                 Net (payments) proceeds on settlement of debt derivatives and       (28)     (25)                   (45)     129
                                 forward contracts
                                 Transaction costs incurred                                          (17)     (9)                    (17)     (9)
                                 Dividends paid                                                      (247)    (247)                  (988)    (977)
                                 Other                                                               --       --                     5        --
Cash used in financing activities                                                                    (599)    (258)                  (1,583)  (145)
Change in cash and cash equivalents                                                                  (60)     22                     (82)     (165)
(Bank advances) cash and cash equivalents, beginning of period                                       (11)     (11)                   11       176
(Bank advances) cash and cash equivalents, end of period                                             (71)     11                     (71)     11

Operating activities The 11% increase in cash provided by operating activities this quarter was primarily a result of a lower net investment in non-cash working capital, partially offset by higher cash income taxes as a result of the timing of installment payments.

Investing activities

Additions to property, plant and equipment We spent $604 million this quarter on additions to property, plant and equipment before changes in non-cash working capital items, which was lower than the same period in 2015. See "Additions to Property, Plant and Equipment" for more information.

Financing activities

Accounts receivable securitization Below is a summary of the activity relating to our accounts receivable securitization program for the quarter and year to date:

                                                                         Three months ended December 31  Twelve months ended December 31
(In millions of dollars)                                                 2016     2015                   2016     2015
Short-term borrowings
                              Proceeds received on short-term borrowings --       22                     295      294
                              Repayment of short-term borrowings         (250)    (81)                   (295)    (336)
Net (repayments) proceeds received on short-term borrowings              (250)    (59)                   --       (42)

As at December 31, 2016, our total funding under the securitization program was $800 million (December 31, 2015 - $800 million).

In July 2016, we amended the terms of the accounts receivable securitization program to, among other things, extend the expiry date from January 1, 2018 to January 1, 2019.

Bank and letter of credit facilities Below is a summary of the activity relating to our revolving and non-revolving bank credit facilities for the quarter and year to date:

                                                Three months ended            Twelve months ended
                                                December 31, 2016             December 31, 2016
                                                Notional  Exchange  Notional  Notional  Exchange  Notional
(In millions of dollars, except exchange rates) (US$)     rate      (Cdn$)    (US$)     rate      (Cdn$)
Issuance of US dollar long-term debt            303       1.31      398       2,188     1.31      2,877
Issuance of Canadian dollar long-term debt                          325                           1,140
Total long-term debt issued                                         723                           4,017
Repayment of US dollar long-term debt           (914)     1.34      (1,226)   (2,038)   1.32      (2,686)
Repayment of Canadian dollar long-term debt                         (225)                         (1,540)
Total long-term debt repaid                                         (1,451)                       (4,226)
                                                Three months ended            Twelve months ended
                                                December 31, 2015             December 31, 2015
                                                Notional  Exchange  Notional  Notional  Exchange  Notional
(In millions of dollars, except exchange rates) (US$)     rate      (Cdn$)    (US$)     rate      (Cdn$)
Issuance of Canadian dollar long-term debt                          1,190                         6,025
Repayment of Canadian dollar long-term debt                         (2,440)                       (5,525)

As at December 31, 2016, we had $301 million ($100 million and US$150 million) of borrowings outstanding under our revolving and non-revolving credit facilities (December 31, 2015 - $500 million). Certain funds were borrowed in US dollars to take advantage of a favourable interest rate spread; we have entered into debt derivatives related to these borrowings to convert all the interest and principal payment obligations to Canadian dollars. See "Financial Risk Management" for more information.

As at December 31, 2016, we had available liquidity under our bank credit facilities of $2.4 billion, as illustrated below. Each of these facilities is unsecured and guaranteed by RCCI and ranks equally with all of our senior notes and debentures.

                                                                         As at        As at
                                                                         December 31  December 31
(In millions of dollars)                                                 2016         2015
Total revolving & non-revolving credit and letter of credit facilities   2,860        3,567
Add (deduct):
                                    Outstanding letters of credit        (68)         (68)
                                    Borrowings                           (301)        (500)
                                    Bank advances                        (71)         --
Available liquidity - bank credit facilities                             2,420        2,999

Effective April 1, 2016, we amended our $2.5 billion revolving credit facility to, among other things, extend the maturity date from July 2019 to September 2020. At the same time, we also amended the $1.0 billion non-revolving credit facility to, among other things, extend the maturity date from April 2017 to April 2018. As a result of repayments made during the quarter, we reduced the amount of borrowings available under our non-revolving credit facility from $1.0 billion to $301 million.

Senior notes The table below provides a summary of the issuance of our senior notes for the three months ended December 31, 2016 and 2015.

(In millions of dollars, except interest rates and discounts)
Date Issued                      Principal  Due date Interest rate   Discount/    Total gross  Transaction
                                 amount                              premium at   proceeds 1   costs and
                                                                     issuance     (Cdn$)       discounts 2
                                                                                               (Cdn$)
2016 issuances
        November 4, 2016  US     500        2026     2.900         % 98.354     % 671          17
2015 issuances
        December 8, 2015  US     700        2025     3.625         % 99.252     % 937
        December 8, 2015  US     300        2044     5.000         % 101.700    % 401
Total for 2015                                                                    1,338        13
1 Gross proceeds before transaction costs and discounts.
2 Transaction costs and discounts are included as deferred transaction costs and discounts in the carrying value of the long-term debt, and recognized in net income using the effective interest method.

Concurrent with the 2016 and 2015 issuances, we entered into debt derivatives to hedge the foreign currency risk associated with the principal and interest components of the US dollar-denominated senior notes.

The tables below provide a summary of the repayment of our senior notes for the three and twelve months ended December 31, 2016 and 2015.

                          Three months ended           Twelve months ended
                          December 31, 2016            December 31, 2016
(In millions of dollars)  Notional      Notional       Notional      Notional
Maturity date             amount (US$)  amount (Cdn$)  amount (US$)  amount (Cdn$)
May 26, 2016              --            --             --            1,000
                          Three months ended           Twelve months ended
                          December 31, 2015            December 31, 2015
(In millions of dollars)  Notional      Notional       Notional      Notional
Maturity date             amount (US$)  amount (Cdn$)  amount (US$)  amount (Cdn$)
March 15, 2015            --            --             550           702
March 15, 2015            --            --             280           357
Total                     --            --             830           1,059

Dividends The table below shows when dividends were declared and paid on both classes of our shares.

Declaration date  Record date         Payment date    Dividend per     Dividends paid
                                                      share (dollars)  (in millions of dollars)
January 27, 2016  March 13, 2016      April 1, 2016   0.48             247
April 18, 2016    June 12, 2016       July 4, 2016    0.48             247
August 11, 2016   September 11, 2016  October 3, 2016 0.48             247
October 20, 2016  December 12, 2016   January 3, 2017 0.48             247
January 28, 2015  March 13, 2015      April 1, 2015   0.48             248
April 21, 2015    June 12, 2015       July 2, 2015    0.48             247
August 13, 2015   September 11, 2015  October 1, 2015 0.48             247
October 22, 2015  December 11, 2015   January 4, 2016 0.48             247

Free cash flow

                                                                  Three months ended December 31  Twelve months ended December 31
(In millions of dollars)                                          2016   2015   % Chg             2016   2015   % Chg
Adjusted operating profit 1                                       1,259  1,226  3                 5,092  5,032  1
Deduct (add):
              Additions to property, plant and equipment 2        604    773    (22)              2,352  2,440  (4)
              Interest on borrowings, net of capitalized interest 182    185    (2)               740    732    1
              Cash income taxes 3                                 81     (6)    n/m               295    184    60
Free cash flow 1                                                  392    274    43                1,705  1,676  2
1 Adjusted operating profit and free cash flow are non-GAAP measures and should not be considered substitutes or alternatives for GAAP measures. These are not defined terms under IFRS and do not have standard meanings, so may not be a reliable way to compare us to other companies. See "Non-GAAP Measures" for information about these measures, including how we calculate them.
2 Additions to property, plant and equipment do not include expenditures for spectrum licences.
3 Cash income taxes are net of refunds received.

The 43% increase in free cash flow this quarter was a result of higher adjusted operating profit and lower additions to property, plant and equipment, partially offset by higher cash income taxes as a result of applying non-capital losses from the Mobilicity transaction during the same period in 2015.

Financial Condition

                                            As at        As at
                                            December 31  December 31
(In millions of dollars)                    2016         2015
Cash and cash equivalents                   --           11
Bank credit facilities                      2,420        3,000
Accounts receivable securitization program  250          250
Total available liquidity                   2,670        3,261

In addition to the sources of available liquidity noted above, we held $1,047 million of marketable securities in publicly traded companies as at December 31, 2016 (December 31, 2015 - $966 million).

Our borrowings had a weighted average cost of financing of 4.72% as at December 31, 2016 (December 31, 2015 - 4.82%) and a weighted average term to maturity of 10.6 years (December 31, 2015 - 10.8 years). This comparative decline in our weighted average interest rate reflects the combined effects of:

-- the issuance of senior notes in November 2016 at comparatively lower interest rates; and

-- the repayment of senior notes in May 2016 that were issued at comparatively higher interest rates.

As at December 31, 2016, the credit ratings on RCI’s outstanding senior notes and debentures were as follows:

-- Moody’s Ratings Services: Baa1 with a stable outlook (unchanged in the quarter);

-- Standard and Poor’s Ratings Services: BBB+ with a stable outlook (unchanged in the quarter); and

-- Fitch Ratings: BBB+ with a stable outlook (unchanged in the quarter).

Financial Risk Management

This section should be read in conjunction with "Financial Risk Management" in our 2015 Annual MD&A. We use derivative instruments to manage financial risks related to our business activities. We only use derivatives to manage risk and not for speculative purposes. We also manage our exposure to both fixed and fluctuating interest rates and had fixed the interest rate on 91.2% of our outstanding debt, including short-term borrowings, as at December 31, 2016 (December 31, 2015 - 90.3%).

Debt derivatives We entered into the following new debt derivatives during the three and twelve months ended December 31, 2016 and 2015 in conjunction with the issuance of our senior notes:

(In millions of dollars, except for coupon and interest rates)
                                              US$                          Hedging effect
Effective date            Principal/notional  Maturity date Coupon rate    Fixed hedged Cdn$      Equivalent Cdn$
                          amount (US$)                                     interest rate 1
2016 issuances
         November 4, 2016 500                 2026          2.900       %  2.834             %    671
2015 issuances
         December 8, 2015 700                 2025          3.625       %  3.566             %    937
         December 8, 2015 300                 2044          5.000       %  5.145             %    401
Total for 2015            1,000                                                                   1,338
1 Converting from a fixed US$ coupon rate to a weighted average Cdn$ fixed rate.

During the quarter, we entered into debt derivatives related to our credit facility borrowings as a result of a favourable interest rate spread obtained from borrowing funds in US dollars. We used these derivatives to offset the foreign exchange and interest rate risk on our US dollar-denominated credit facility borrowings. As a result of the short-term nature of these debt derivatives related to our credit facility borrowings, we have not designated them as hedges for accounting purposes.

This quarter and year to date, we entered into and settled debt derivatives related to our credit facility borrowings as follows:

                                                Three months ended             Twelve months ended
                                                December 31, 2016              December 31, 2016
(In millions of dollars, except exchange rates) Notional  Exchange  Notional   Notional  Exchange  Notional
                                                (US$)     rate      (Cdn$)     (US$)     rate      (Cdn$)
Debt derivatives entered                        1,947     1.33      2,583      8,683     1.31      11,360
Debt derivatives settled                        2,558     1.32      3,385      8,533     1.31      11,159
Net cash received                                                   25                             8

We did not enter into any debt derivatives related to our credit facility borrowings during the three and twelve months ended December 31, 2015. See "Mark-to-market value" for more information about our debt derivatives.

Bond forwards We did not enter into any new bond forwards this quarter.

On November 4, 2016, we exercised a $500 million notional bond forward due January 4, 2017 in relation to the issuance of the US$500 million senior notes due 2026 and paid $53 million to settle the derivative. The amount paid represents the fair value of the bond forward at the time of settlement and will be recycled into finance costs from the hedging reserve using the effective interest rate method over the life of the US$500 million senior notes due 2026.

See "Mark-to-market value" for more information about our bond forwards.

Expenditure derivatives As at December 31, 2016, our outstanding expenditure derivatives had terms to maturity ranging from January 2017 to December 2018 at an average exchange rate of $1.32/US$ (December 31, 2015 - January 2016 to December 2017 at an average exchange rate of $1.24/US$). Our outstanding expenditure derivatives maturing in 2017 are hedged at an average exchange rate of $1.33/US$.

Below is a summary of the activity relating to our expenditure derivatives for the quarter and year to date.

                                                Three months ended            Twelve months ended
                                                December 31, 2016             December 31, 2016
(In millions of dollars, except exchange rates) Notional  Exchange  Notional  Notional  Exchange  Notional
                                                (US$)     rate      (Cdn$)    (US$)     rate      (Cdn$)
Expenditure derivatives entered                 240       1.32      316       990       1.33      1,318
Expenditure derivatives settled                 210       1.21      255       840       1.22      1,025
                                                Three months ended            Twelve months ended
                                                December 31, 2015             December 31, 2015
(In millions of dollars, except exchange rates) Notional  Exchange  Notional  Notional  Exchange  Notional
                                                (US$)     rate      (Cdn$)    (US$)     rate      (Cdn$)
Expenditure derivatives entered                 300       1.30      390       990       1.28      1,266
Expenditure derivatives settled                 225       1.12      252       810       1.11      902

See "Mark-to-market value" for more information about our expenditure derivatives.

Equity derivatives As at December 31, 2016, we had equity derivatives for 5.4 million (December 31, 2015 - 5.7 million) RCI Class B shares with a weighted average price of $50.30 (December 31, 2015 - $50.37).

In August 2016, we settled 0.3 million equity derivatives at a weighted average price of $58.16 as a result of a reduction in the number of share-based compensation units outstanding.

In April 2016, we executed extension agreements for each of our equity derivative contracts under substantially the same terms and conditions with revised expiry dates to April 2017 (from April 2016).

See "Mark-to-market value" for more information about our equity derivatives.

Mark-to-market value We record our derivatives using an estimated credit-adjusted, mark-to-market valuation, calculated in accordance with IFRS.

                                                            As at December 31, 2016
(In millions of dollars, except exchange rates)             Notional  Exchange  Notional  Fair value
                                                            amount    rate      amount    (Cdn$)
                                                            (US$)               (Cdn$)
Debt derivatives accounted for as cash flow hedges:
                              As assets                     5,200     1.0401    5,409     1,751
                              As liabilities                1,500     1.3388    2,008     (68)
Short-term debt derivatives not accounted for as hedges:
                              As liabilities                150       1.3407    201       --
Net mark-to-market debt derivative asset                                                  1,683
Bond forwards accounted for as cash flow hedges:
                              As liabilities                                    900       (51)
Expenditure derivatives accounted for as cash flow hedges:
                              As assets                     990       1.2967    1,284     40
                              As liabilities                300       1.4129    424       (21)
Net mark-to-market expenditure derivative asset                                           19
Equity derivatives not accounted for as hedges:
                              As assets                                         270       8
Net mark-to-market asset                                                                  1,659
                                                            As at December 31, 2015
(In millions of dollars, except exchange rates)             Notional  Exchange  Notional  Fair value
                                                            amount    rate      amount    (Cdn$)
                                                            (US$)               (Cdn$)
Debt derivatives accounted for as cash flow hedges:
                              As assets                     5,900     1.0755    6,345     2,032
                              As liabilities                300       1.3367    401       (4)
Net mark-to-market debt derivative asset                                                  2,028
Bond forwards accounted for as cash flow hedges:
                              As liabilities                --        --        1,400     (91)
Expenditure derivatives accounted for as cash flow hedges:
                              As assets                     1,140     1.2410    1,415     158
Equity derivatives not accounted for as hedges:
                              As liabilities                --        --        286       (15)
Net mark-to-market asset                                                                  2,080

Adjusted net debt and adjusted net debt / adjusted operating profit We use adjusted net debt and adjusted net debt / adjusted operating profit to conduct valuation-related analysis and make capital structure-related decisions. Adjusted net debt includes long-term debt, net debt derivative assets or liabilities, short-term borrowings, and cash and cash equivalents or bank advances.

                                                                          As at        As at
                                                                          December 31  December 31
(In millions of dollars, except ratios)                                   2016         2015
Long-term debt 1                                                          16,197       16,981
Net debt derivative assets valued without any adjustment for credit risk  (1,740)      (2,180)
Short-term borrowings                                                     800          800
Bank advances (cash and cash equivalents)                                 71           (11)
Adjusted net debt 2                                                       15,328       15,590
Adjusted net debt / adjusted operating profit 2,3                         3.0          3.1
1 Includes current and long-term portion of long-term debt before deferred transaction costs and discounts. See "Reconciliation of adjusted net debt" in the section "Non-GAAP Measures" for the calculation of this amount.
2 Adjusted net debt and adjusted net debt / adjusted operating profit are non-GAAP measures and should not be considered substitutes or alternatives for GAAP measures. These are not defined terms under IFRS and do not have standard meanings, so may not be a reliable way to compare us to other companies. See "Non-GAAP Measures" for information about these measures, including how we calculate them.
3 Adjusted net debt / adjusted operating profit is measured using adjusted operating profit for the last twelve consecutive months.

In addition to the cash and cash equivalents as at December 31, 2016 and December 31, 2015 noted above, we held $1,047 million of marketable securities in publicly traded companies (December 31, 2015 - $966 million).

Our adjusted net debt decreased by $0.3 billion from December 31, 2015 primarily as a result of a decrease in our outstanding long-term debt, partially offset by a reduction in the fair value of our net debt derivative asset.

Outstanding common shares

                                                         As at        As at
                                                         December 31  December 31
                                                         2016         2015
Common shares outstanding 1
                       Class A Voting                    112,411,992  112,438,692
                       Class B Non-Voting                402,396,133  402,307,976
Total common shares                                      514,808,125  514,746,668
Options to purchase Class B Non-Voting shares
                       Outstanding options               3,732,524    4,873,940
                       Outstanding options exercisable   1,770,784    2,457,005
1 Holders of our Class B Non-Voting shares are entitled to receive notice of and to attend shareholder meetings; however, they are not entitled to vote at these meetings except as required by law or stipulated by stock exchanges. If an offer is made to purchase outstanding Class A Voting shares, there is no requirement under applicable law or our constating documents that an offer be made for the outstanding Class B Non-Voting shares, and there is no other protection available to shareholders under our constating documents. If an offer is made to purchase both classes of shares, the offer for the Class A Voting shares may be made on different terms than the offer for the Class B Non-Voting shares.

Accounting Changes

We adopted the following amendments to accounting standards that were effective for our interim and annual consolidated financial statements commencing January 1, 2016. These changes did not have a material impact on our financial results.

-- Amendments to IAS 16, Property, Plant and Equipment and IAS 38, Intangible Assets

-- Amendments to IFRS 11, Joint Arrangements

In addition, following the November 2016 publication of the IFRS Interpretations Committee’s agenda decision addressing the expected manner of recovery of intangible assets with indefinite useful lives for the purposes of measuring deferred tax, we have retrospectively changed our related accounting policy. The IFRS Interpretations Committee observed that in applying International Accounting Standard 12, an entity determines its expected manner of recovery of the carrying amount of the intangible asset with an indefinite useful life, and reflects the tax consequences that follow from that expected manner of recovery. Previously, we measured deferred taxes on temporary differences arising from the portion of indefinite-life intangible assets with no initial associated underlying tax basis using a capital gains tax rate based upon the notion that recovery would result solely from sales of the assets. Consequently, we have adopted an accounting policy to measure deferred taxes on temporary differences arising from indefinite-life intangible assets based upon the tax consequences that follow from the expected manner of recovery of the assets.

This accounting policy has been applied in preparing this earnings release as at and for the year ended December 31, 2016 and the comparative information presented as at and for the three and twelve months ended December 31, 2015. The adjustment to previously reported amounts as a result of the change in the accounting policy are stated below.

Adjustments to Consolidated Statements of Income for the year ended December 31, 2015

(In millions of dollars, except per share amounts)   Previously reported  Adjustments  Amended for the year ended
                                                     for the year ended                December 31, 2015
                                                     December 31, 2015
Other (income) expense                               (32)                 28           (4)
Income tax expense                                   466                  11           477
Net income                                           1,381                (39)         1,342
Earnings per share
                          Basic                      $2.68                ($0.07)      $2.61
                          Diluted                    $2.67                ($0.07)      $2.60

Adjustments to Consolidated Statements of Income for the quarter ended March 31, 2016

(In millions of dollars, except per share amounts)  Previously reported    Adjustments  Amended for the quarter ended
                                                    for the quarter ended               March 31, 2016
                                                    March 31, 2016
Income tax expense                                  61                     18           79
Net income                                          248                    (18)         230
Earnings per share
                          Basic                     $0.48                  ($0.03)      $0.45
                          Diluted                   $0.48                  ($0.04)      $0.44

Adjustments to the Consolidated Statements of Financial Position as at January 1, 2015

(In millions of dollars)                   Previously reported as at  Adjustments  Amended as at
                                           January 1, 2015                         January 1, 2015
Goodwill 1                                 3,883                      14           3,897
Total assets 1                             26,522                     14           26,536
Deferred tax liabilities                   1,769                      84           1,853
Shareholders’ equity                       5,481                      (70)         5,411
Total liabilities and shareholders’ equity 26,522                     14           26,536
1 The adjustment relating to total assets and goodwill was recognized entirely within our Media reportable segment.

Adjustments to the Consolidated Statements of Financial Position as at December 31, 2015

(In millions of dollars)                   Previously reported as at  Adjustments as at  Adjustments         Amended as at
                                           December 31, 2015          January 1, 2015    for the year ended  December 31, 2015
                                                                                         December 31, 2015
Goodwill 1                                 3,891                      14                 --                  3,905
Total assets 1                             29,175                     14                 --                  29,189
Deferred tax liabilities                   1,943                      84                 39                  2,066
Shareholders’ equity                       5,745                      (70)               (39)                5,636
Total liabilities and shareholders’ equity 29,175                     14                 --                  29,189
1 The adjustment relating to total assets and goodwill was recognized entirely within our Media reportable segment.

Key Performance Indicators

We measure the success of our strategy using a number of key performance indicators that are defined and discussed in our 2015 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;

-- Postpaid average revenue per account (ARPA);

-- Blended average revenue per user (ARPU);

-- Capital intensity; and

-- Total service revenue.

Total service revenue Commencing in the fourth quarter of 2016, we began disclosing total service revenue as one of our key performance indicators. We use total service revenue to measure our core business performance from the provision of services to our customers separate from revenue from the sale of equipment we have acquired from device manufacturers and resold. Included in this metric is our retail revenue from TSC and the Toronto Blue Jays, which are also core to our business. We calculate total service revenue by subtracting equipment revenue in Wireless, Cable, Business Solutions, and Corporate from total revenue.

                                                  Three months ended December 31  Twelve months ended December 31
(In millions of dollars)                          2016        2015                2016        2015
Total revenue                                     3,510       3,452               13,702      13,414
Deduct:
             Wireless equipment revenue           200         234                 658         749
             Cable equipment revenue              1           2                   6           8
             Business Solutions equipment revenue 2           1                   6           4
             Corporate equipment revenue          1           1                   5           4
Total service revenue                             3,306       3,214               13,027      12,649

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.

Non-GAAP measure Why we use it                                                                                   How we calculate it                                 Most
                                                                                                                                                                     comparable IFRS financial
                                                                                                                                                                     measure
Adjusted         ?"?                                          To evaluate the performance of our businesses,     Adjusted operating profit:                          Net income
operating profit                                              and when making decisions about the ongoing        Net income
Adjusted                                                      operations of the business and our ability to      add (deduct)
operating profit                                              generate cash flows.                               income tax expense (recovery), other expense
margin                                                                                                           (income), finance costs, restructuring, acquisition
                                                                                                                 and other, depreciation and amortization,
                                                                                                                 stock-based compensation, and impairment of
                                                                                                                 assets and related onerous contract charges.
                                                                                                                 Adjusted operating profit margin:
                                                                                                                 Adjusted operating profit
                                                                                                                 divided by
                                                                                                                 revenue (service revenue for Wireless).
                 ?"?                                          We believe that certain investors and analysts
                                                              use adjusted operating profit to measure our
                                                              ability to service debt and to meet other
                                                              payment obligations.
                 ?"?                                          We also use it as one component in determining
                                                              short-term incentive compensation for all
                                                              management employees.
Adjusted net     ?"?                                          To assess the performance of our businesses        Adjusted net income:                                Net income
income                                                        before the effects of the noted items, because     Net income                                          Basic and
Adjusted basic                                                they affect the comparability of our financial     add (deduct)                                        diluted
and diluted                                                   results and could potentially distort the analysis stock-based compensation, restructuring,            earnings per
earnings per                                                  of trends in business performance. Excluding       acquisition and other, impairment of assets         share
share                                                         these items does not imply that they are           and related onerous contract charges, loss (gain)
                                                              non-recurring.                                     on sale or wind down of investments, (gain) on
                                                                                                                 acquisitions, loss on non-controlling interest
                                                                                                                 purchase obligations, loss on repayment of
                                                                                                                 long-term debt, and income tax adjustments
                                                                                                                 on these items, including adjustments as a
                                                                                                                 result of legislative changes.
                                                                                                                 Adjusted basic and diluted earnings per share:
                                                                                                                 Adjusted net income
                                                                                                                 divided by
                                                                                                                 basic and diluted weighted average shares
                                                                                                                 outstanding.
Free cash flow   ?"?                                          To show how much cash we have available to         Adjusted operating profit                           Cash provided
                                                              repay debt and reinvest in our company, which is   deduct                                              by operating
                                                              an important indicator of our financial strength   additions to property, plant and equipment net      activities
                                                              and performance.                                   of proceeds on disposition, interest on
                                                                                                                 borrowings net of capitalized interest, and
                                                                                                                 cash income taxes.
                 ?"?                                          We believe that some investors and analysts
                                                              use free cash flow to value a business and its
                                                              underlying assets.
Adjusted net     ?"?                                          To conduct valuation-related analysis and make     Total long-term debt                                Long-term debt
debt                                                          decisions about capital structure.                 add (deduct)
                                                                                                                 current portion of long-term debt, deferred
                                                                                                                 transaction costs and discounts, net debt
                                                                                                                 derivative (assets) liabilities, credit risk
                                                                                                                 adjustment related to net debt derivatives,
                                                                                                                 bank advances (cash and cash equivalents),
                                                                                                                 and short-term borrowings.
?"?              We believe this helps investors and analysts
                 analyze our enterprise and equity value and
                 assess our leverage.
Adjusted net     ?"?                                          To conduct valuation-related analysis and make     Adjusted net debt (defined above)                   Long-term debt
debt / adjusted                                               decisions about capital structure.                 divided by                                          divided by net
operating profit                                                                                                 12-month trailing adjusted operating profit         income
                                                                                                                 (defined above).
                 ?"?                                          We believe this helps investors and analysts
                                                              analyze our enterprise and equity value and
                                                              assess our leverage.

Reconciliation of adjusted operating profit

                                                                       Three months ended December 31  Twelve months ended December 31
(In millions of dollars)                                               2016        2015                2016        2015
Net (loss) income 1                                                    (9)         299                 835         1,342
Add (deduct):
             Income tax (recovery) expense 1                           (5)         112                 324         477
             Other (income) expense 1                                  (4)         4                   191         (4)
             Finance costs                                             188         192                 761         774
             Restructuring, acquisition and other                      34          23                  160         111
             Depreciation and amortization                             555         580                 2,276       2,277
             Impairment of assets and related onerous contract charges 484         --                  484         --
             Stock-based compensation                                  16          16                  61          55
Adjusted operating profit                                              1,259       1,226               5,092       5,032
1 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See "Accounting Changes" for more information.

Reconciliation of adjusted operating profit margin

                                                  Three months ended December 31  Twelve months ended December 31
(In millions of dollars, except percentages)      2016      2015                  2016      2015
Adjusted operating profit margin:
                       Adjusted operating profit  1,259     1,226                 5,092     5,032
                       Divided by: total revenue  3,510     3,452                 13,702    13,414
Adjusted operating profit margin                  35.9    % 35.5    %             37.2    % 37.5    %

Reconciliation of adjusted net income

                                                                       Three months ended December 31  Twelve months ended December 31
(In millions of dollars)                                               2016        2015                2016        2015
Net (loss) income 1                                                    (9)         299                 835         1,342
Add (deduct):
             Stock-based compensation                                  16          16                  61          55
             Restructuring, acquisition and other                      34          23                  160         111
             Loss on repayment of long-term debt                       --          --                  --          7
             Net loss on divestitures pertaining to investments        --          --                  11          --
             Gain on acquisition of Mobilicity 1                       --          --                  --          (74)
             Loss on non-controlling interest purchase obligation      --          --                  --          72
             Loss on wind down of shomi                                --          --                  140         --
             Impairment of assets and related onerous contract charges 484         --                  484         --
             Income tax impact of above items                          (143)       (7)                 (213)       (40)
             Income tax adjustment, legislative tax change             --          --                  3           6
Adjusted net income 1                                                  382         331                 1,481       1,479
1 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See "Accounting Changes" for more information.

Reconciliation of adjusted earnings per share

(In millions of dollars, except per share amounts; number                                     Three months ended December 31  Twelve months ended December 31
of shares outstanding in millions)
                                                                                              2016        2015                2016        2015
Adjusted basic earnings per share:
                    Adjusted net income 1                                                     382         331                 1,481       1,479
                    Divided by:
                                        Weighted average number of shares outstanding         515         515                 515         515
Adjusted basic earnings per share                                                             $0.74       $0.64               $2.88       $2.87
Adjusted diluted earnings per share:
                    Adjusted net income 1                                                     382         331                 1,481       1,479
                    Divided by:
                                        Diluted weighted average number of shares outstanding 517         517                 517         517
Adjusted diluted earnings per share 1                                                         $0.74       $0.64               $2.86       $2.86
1 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See "Accounting Changes" for more information.

Reconciliation of free cash flow

                                                                       Three months ended December 31  Twelve months ended December 31
(In millions of dollars)                                               2016        2015                2016        2015
Cash provided by operating activities                                  1,053       950                 3,957       3,747
Add (deduct):
                   Additions to property, plant and equipment          (604)       (773)               (2,352)     (2,440)
                   Interest on borrowings, net of capitalized interest (182)       (185)               (740)       (732)
                   Restructuring, acquisition and other                34          23                  160         111
                   Interest paid                                       124         133                 756         771
                   Change in non-cash working capital                  18          187                 (14)        302
                   Other adjustments                                   (51)        (61)                (62)        (83)
Free cash flow                                                         392         274                 1,705       1,676

Reconciliation of adjusted net debt and adjusted net debt / adjusted operating profit

                                                                                     As at        As at
                                                                                     December 31  December 31
(In millions of dollars)                                                             2016         2015
Current portion of long-term debt                                                    750          1,000
Long-term debt                                                                       15,330       15,870
Deferred transaction costs and discounts                                             117          111
                                                                                     16,197       16,981
Add (deduct):
                       Net debt derivative assets                                    (1,683)      (2,028)
                       Credit risk adjustment related to net debt derivative assets  (57)         (152)
                       Short-term borrowings                                         800          800
                       Bank advances (cash and cash equivalents)                     71           (11)
Adjusted net debt                                                                    15,328       15,590
                                                                                     As at        As at
                                                                                     December 31  December 31
(In millions of dollars, except ratios)                                              2016         2015
Adjusted net debt / adjusted operating profit
                       Adjusted net debt                                             15,328       15,590
                       Divided by: trailing 12-month adjusted operating profit       5,092        5,032
Adjusted net debt / adjusted operating profit                                        3.0          3.1

Other Information

Consolidated financial results - quarterly summary

The table below shows our consolidated results for the past eight quarters.

                                                                                       2016                                     2015
(In millions of dollars, except per share amounts)                                     Full Year  Q4       Q3     Q2     Q1     Full Year  Q4     Q3     Q2     Q1
Revenue
                             Wireless                                                  7,916      2,058    2,037  1,931  1,890  7,651      1,981  1,973  1,903  1,794
                             Cable                                                     3,449      858      865    870    856    3,465      855    871    869    870
                             Business Solutions                                        384        96       95     97     96     377        95     94     94     94
                             Media                                                     2,146      550      533    615    448    2,079      560    473    582    464
                             Corporate items and intercompany eliminations             (193)      (52)     (38)   (58)   (45)   (158)      (39)   (27)   (45)   (47)
Total revenue                                                                          13,702     3,510    3,492  3,455  3,245  13,414     3,452  3,384  3,403  3,175
Adjusted operating profit (loss)
                             Wireless                                                  3,285      792      884    846    763    3,239      754    879    841    765
                             Cable                                                     1,674      435      431    415    393    1,658      426    416    414    402
                             Business Solutions                                        123        30       31     31     31     116        30     31     27     28
                             Media                                                     169        49       79     90     (49)   172        56     58     90     (32)
                             Corporate items and intercompany eliminations             (159)      (47)     (40)   (35)   (37)   (153)      (40)   (39)   (35)   (39)
Adjusted operating profit 1                                                            5,092      1,259    1,385  1,347  1,101  5,032      1,226  1,345  1,337  1,124
Deduct (add):
                             Stock-based compensation                                  61         16       18     15     12     55         16     13     14     12
                             Depreciation and amortization                             2,276      555      575    572    574    2,277      580    576    562    559
                             Impairment of assets and related onerous contract charges 484        484      --     --     --     --         --     --     --     --
                             Restructuring, acquisition and other                      160        34       55     27     44     111        23     37     42     9
                             Finance costs                                             761        188      188    189    196    774        192    190    182    210
                             Other expense (income) 2                                  191        (4)      220    9      (34)   (4)        4      (31)   26     (3)
Net income (loss) before income tax expense (recovery) 2                               1,159      (14)     329    535    309    1,819      411    560    511    337
                             Income tax expense (recovery) 2                           324        (5)      109    141    79     477        112    135    148    82
Net income (loss) 2                                                                    835        (9)      220    394    230    1,342      299    425    363    255
Earnings (loss) per share 2:
                             Basic                                                     $1.62      ($0.02)  $0.43  $0.77  $0.45  $2.61      $0.58  $0.83  $0.70  $0.50
                             Diluted                                                   $1.62      ($0.04)  $0.43  $0.76  $0.44  $2.60      $0.58  $0.82  $0.70  $0.48
Net income (loss) 2                                                                    835        (9)      220    394    230    1,342      299    425    363    255
Add (deduct):
                             Stock-based compensation                                  61         16       18     15     12     55         16     13     14     12
                             Restructuring, acquisition and other                      160        34       55     27     44     111        23     37     42     9
                             Gain on acquisition of Mobilicity 2                       --         --       --     --     --     (74)       --     (74)   --     --
                             Loss on non-controlling interest purchase obligation      --         --       --     --     --     72         --     72     --     --
                             Loss on repayment of long-term debt                       --         --       --     --     --     7          --     --     --     7
                             Loss on wind down of shomi                                140        --       140    --     --     --         --     --     --     --
                             Net loss (gain) on divestitures pertaining to investments 11         --       50     --     (39)   --         --     --     --     --
                             Impairment of assets and related onerous contract charges 484        484      --     --     --     --         --     --     --     --
                             Income tax impact of above items 2                        (213)      (143)    (56)   (9)    (5)    (40)       (7)    (12)   (13)   (8)
                             Income tax adjustment, legislative tax change             3          --       --     --     3      6          --     --     6      --
Adjusted net income 1,2                                                                1,481      382      427    427    245    1,479      331    461    412    275
Adjusted earnings per share 1,2:
                             Basic                                                     $2.88      $0.74    $0.83  $0.83  $0.48  $2.87      $0.64  $0.90  $0.80  $0.53
                             Diluted                                                   $2.86      $0.74    $0.83  $0.83  $0.47  $2.86      $0.64  $0.89  $0.80  $0.53
Additions to property, plant and equipment                                             2,352      604      549    647    552    2,440      773    571    621    475
Cash provided by operating activities                                                  3,957      1,053    1,185  1,121  598    3,747      950    1,456  1,114  227
Free cash flow 1                                                                       1,705      392      598    495    220    1,676      274    660    476    266
Total service revenue 3                                                                13,027     3,306    3,328  3,308  3,085  12,649     3,214  3,183  3,204  3,048
1 Adjusted operating profit, adjusted net income, adjusted basic and diluted earnings per share, and free cash flow are non-GAAP measures and should not be considered substitutes or alternatives for GAAP measures. These are not defined terms under IFRS and do not have standard meanings, so may not be a reliable way to compare us to other companies. See "Non-GAAP Measures" for information about these measures, including how we calculate them.
2 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See "Accounting Changes" for more information.
3 As defined. See "Key Performance Indicators".

Supplementary Information

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

                                                         Three months ended  Twelve months ended
                                                         December 31         December 31
                                                         2016     2015       2016    2015
Revenue                                                  3,510    3,452      13,702  13,414
Operating expenses:
                   Operating costs                       2,267    2,242      8,671   8,437
                   Depreciation and amortization         555      580        2,276   2,277
                   Impairment of assets and related      484      --         484     --
                   onerous contract charges
                   Restructuring, acquisition and other  34       23         160     111
Finance costs                                            188      192        761     774
Other (income) expense 1                                 (4)      4          191     (4)
(Loss) income before income tax (recovery) expense 1     (14)     411        1,159   1,819
Income tax (recovery) expense 1                          (5)      112        324     477
Net (loss) income 1                                      (9)      299        835     1,342
(Loss) earnings per share 1:
                   Basic                                 ($0.02)  $0.58      $1.62   $2.61
                   Diluted                               ($0.04)  $0.58      $1.62   $2.60
1 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See "Accounting Changes" for more information.

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

                                                                    As at        As at
                                                                    December 31  December 31
                                                                    2016         2015
Assets
Current assets:
                       Cash and cash equivalents                    --           11
                       Accounts receivable                          1,949        1,792
                       Inventories                                  315          318
                       Other current assets                         215          303
                       Current portion of derivative instruments    91           198
Total current assets                                                2,570        2,622
Property, plant and equipment                                       10,749       10,997
Intangible assets                                                   7,130        7,243
Investments                                                         2,174        2,271
Derivative instruments                                              1,708        1,992
Other long-term assets                                              98           150
Deferred tax assets                                                 8            9
Goodwill 1                                                          3,905        3,905
Total assets 1                                                      28,342       29,189
Liabilities and shareholders’ equity
Current liabilities:
                       Bank advances                                71           --
                       Short-term borrowings                        800          800
                       Accounts payable and accrued liabilities     2,783        2,708
                       Income tax payable                           186          96
                       Current portion of provisions                134          10
                       Unearned revenue                             367          388
                       Current portion of long-term debt            750          1,000
                       Current portion of derivative instruments    22           15
Total current liabilities                                           5,113        5,017
Provisions                                                          33           50
Long-term debt                                                      15,330       15,870
Derivative instruments                                              118          95
Other long-term liabilities                                         562          455
Deferred tax liabilities 1                                          1,917        2,066
Total liabilities 1                                                 23,073       23,553
Shareholders’ equity 1                                              5,269        5,636
Total liabilities and shareholders’ equity 1                        28,342       29,189
1 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See "Accounting Changes" for more information.

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

                                                                                                                 Three months ended December 31  Twelve months ended December 31
                                                                                                                 2016        2015                2016        2015
Operating activities:
                     Net (loss) income for the period 1                                                          (9)         299                 835         1,342
                     Adjustments to reconcile net (loss) income to cash provided by
                     operating activities:
                                                       Depreciation and amortization                             555         580                 2,276       2,277
                                                       Program rights amortization                               17          21                  71          87
                                                       Finance costs                                             188         192                 761         774
                                                       Income tax (recovery) expense 1                           (5)         112                 324         477
                                                       Stock-based compensation                                  16          16                  61          55
                                                       Post-employment benefits contributions, net of expense    28          31                  (3)         (16)
                                                       Net loss on divestitures pertaining to investments        --          --                  11          --
                                                       Loss on wind down of shomi                                --          --                  140         --
                                                       Impairment of assets and related onerous contract charges 484         --                  484         --
                                                       Gain on acquisition of Mobilicity 1                       --          --                  --          (74)
                                                       Other                                                     2           13                  34          82
                     Cash provided by operating activities before changes in non-cash                            1,276       1,264               4,994       5,004
                     working capital items, income taxes paid, and interest paid
                     Change in non-cash operating working capital items                                          (18)        (187)               14          (302)
                     Cash provided by operating activities before income taxes paid                              1,258       1,077               5,008       4,702
                     and interest paid
                     Income taxes (paid) received                                                                (81)        6                   (295)       (184)
                     Interest paid                                                                               (124)       (133)               (756)       (771)
Cash provided by operating activities                                                                            1,053       950                 3,957       3,747
Investing activities:
                     Additions to property, plant and equipment                                                  (604)       (773)               (2,352)     (2,440)
                     Additions to program rights                                                                 (3)         (27)                (46)        (64)
                     Changes in non-cash working capital related to property, plant and                          44          167                 (103)       (116)
                     equipment and intangible assets
                     Acquisitions and other strategic transactions, net of cash acquired                         --          (5)                 --          (1,077)
                     Other                                                                                       49          (32)                45          (70)
Cash used in investing activities                                                                                (514)       (670)               (2,456)     (3,767)
Financing activities:
                     Net repayment on short-term borrowings                                                      (250)       (59)                --          (42)
                     Net (repayment) issuance of long-term debt                                                  (57)        82                  (538)       754
                     Net (payment) proceeds on settlement of debt derivatives and                                (28)        (25)                (45)        129
                     forward contracts
                     Transaction costs incurred                                                                  (17)        (9)                 (17)        (9)
                     Dividends paid                                                                              (247)       (247)               (988)       (977)
                     Other                                                                                       --          --                  5           --
Cash used in financing activities                                                                                (599)       (258)               (1,583)     (145)
Change in cash and cash equivalents                                                                              (60)        22                  (82)        (165)
(Bank advances) cash and cash equivalents, beginning of period                                                   (11)        (11)                11          176
(Bank advances) cash and cash equivalents, end of period                                                         (71)        11                  (71)        11
1 As a result of the IFRS Interpretations Committee’s agenda decision relating to IAS 12 Income Taxes, certain amounts have been retrospectively amended. See "Accounting Changes" for more information.

Investments

                                                   As at        As at
                                                   December 31  December 31
(In millions of dollars)                           2016         2015
Investments in:
                      Publicly traded companies    1,047        966
                      Private companies            169          212
Investments, available-for-sale                    1,216        1,178
Investments, associates and joint ventures         958          1,093
Total investments                                  2,174        2,271

Long-Term Debt

                                                            Principal  Interest   As at       As at
                                                            amount     rate       December 31 December 31
(In millions of dollars, except interest rates) Due date                          2016        2015
Bank credit facilities                                                 Floating   100         500
Bank credit facilities                                   US 150        Floating   201         --
Senior notes                                    2016        1,000      5.800 %    --          1,000
Senior notes                                    2017        500        3.000 %    500         500
Senior notes                                    2017        250        Floating   250         250
Senior notes                                    2018     US 1,400      6.800 %    1,880       1,938
Senior notes                                    2019        400        2.800 %    400         400
Senior notes                                    2019        500        5.380 %    500         500
Senior notes                                    2020        900        4.700 %    900         900
Senior notes                                    2021        1,450      5.340 %    1,450       1,450
Senior notes                                    2022        600        4.000 %    600         600
Senior notes                                    2023     US 500        3.000 %    671         692
Senior notes                                    2023     US 850        4.100 %    1,141       1,176
Senior notes                                    2024        600        4.000 %    600         600
Senior notes                                    2025     US 700        3.625 %    940         969
Senior notes                                    2026     US 500        2.900 %    671         --
Senior debentures 1                             2032     US 200        8.750 %    269         277
Senior notes                                    2038     US 350        7.500 %    470         484
Senior notes                                    2039        500        6.680 %    500         500
Senior notes                                    2040        800        6.110 %    800         800
Senior notes                                    2041        400        6.560 %    400         400
Senior notes                                    2043     US 500        4.500 %    671         692
Senior notes                                    2043     US 650        5.450 %    873         900
Senior notes                                    2044     US 1,050      5.000 %    1,410       1,453
                                                                                  16,197      16,981
Deferred transaction costs and discounts                                          (117)       (111)
Less current portion                                                              (750)       (1,000)
Total long-term debt                                                              15,330      15,870
1 Senior debentures originally issued by Rogers Cable Inc. which are unsecured obligations of RCI and for which RCCI was an unsecured guarantor as at December 31, 2016 and for which Rogers Communications Partnership was an unsecured guarantor as at December 31, 2015.

About Forward-Looking Information

This earnings release includes "forward-looking information" and "forward-looking statements" within the meaning of applicable securities laws (collectively, "forward-looking information"), and assumptions about, among other things, our business, operations, and financial performance and condition approved by our management on the date of this earnings release. This forward-looking information and these assumptions include, but are not limited to, statements about our objectives and strategies to achieve those objectives, and about our beliefs, plans, expectations, anticipations, estimates, or intentions.

Forward-looking information

-- typically includes words like could, expect, may, anticipate, assume, believe, intend, estimate, plan, project, guidance, outlook, target, and similar expressions, 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 and that we believe to have been reasonable at the time they were applied but may prove to be incorrect; and

-- was approved by our management on the date of this earnings release.

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

-- revenue;

-- adjusted operating profit;

-- additions to property, plant and equipment;

-- 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; and

-- all other statements that are not historical facts.

Specific forward-looking information included or incorporated in this document include, but is not limited to, our information and statements under "2017 Outlook" relating to our 2017 consolidated guidance on revenue, adjusted operating profit, additions to property, plant and equipment, and free cash flow. All other statements that are not historical facts are forward-looking statements.

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; and

-- industry structure and stability.

Except as otherwise indicated, this earnings release and our forward-looking information do not reflect the potential impact of any non-recurring or other special items or of any dispositions, monetizations, mergers, acquisitions, other business combinations, or other transactions that may be considered or announced or may occur after the date on which the statement containing the forward-looking information is made.

Risks and uncertaintiesActual 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;

-- economic conditions;

-- unanticipated changes in content or equipment costs;

-- changing conditions in the entertainment, information, and communications industries;

-- the integration of acquisitions;

-- litigation and tax matters;

-- technological changes;

-- the level of competitive intensity;

-- the emergence of new opportunities; and

-- new interpretations and new accounting standards from accounting standards bodies.

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

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

Key assumptions underlying our 2017 guidanceOur 2017 guidance ranges under "2017 Outlook" are based on many assumptions including, but not limited to, the following material assumptions:

-- continued intense competition consistent with our experience during the full-year 2016 in all segments in which we operate;

-- a substantial portion of our US dollar-denominated expenditures for 2017 is hedged at an average exchange rate of $1.33/US$;

-- key interest rates remain relatively stable throughout 2017;

-- no significant additional regulatory developments, shifts in economic condition, or macro changes in the competitive environment affecting our business activities. We note that regulatory decisions expected during 2017 could materially alter underlying assumptions around our 2017 Wireless, Cable, Business Solutions, and/or Media results in the current and future years, the impacts of which are currently unknown and not factored into our guidance;

-- the CRTC decision to require distributors to offer a basic entry-level television package capped at $25 per month, as well as channels above the basic tier on an "? la carte" basis and in smaller, reasonably priced packages, is not expected to materially impact our Cable revenue;

-- the CRTC decision to significantly reduce interim rates for the capacity charge tariff component of wholesale high-speed access service pending approval of final rates is expected to have an impact on our Cable revenue;

-- Wireless customers will continue to adopt, and upgrade to, higher-value smartphones and a similar proportion of customers will remain on term contracts;

-- overall wireless market penetration in Canada is expected to grow in 2017 at a similar rate as in 2016;

-- our relative market share in Wireless and Cable will not be negatively impacted;

-- continued subscriber growth in Wireless and Cable Internet; moderating net losses in Cable Television subscribers; and a relatively stable Phone subscriber base;

-- in Business Solutions, continued declines in our legacy and off-net business, and the continued execution of our plan to grow higher-margin next generation IP- and cloud-based services;

-- in Media, continued growth in Sportsnet and declines in our traditional media businesses, including our print publishing offerings; and

-- with respect to additions to property, plant and equipment:

-- we have rolled out LTE across the majority of our coverage area as well as deployed newly-acquired 700 MHz and AWS-1 spectrum; and

-- we will make expenditures to prepare our network for our anticipated rollout of the Comcast X1 IPTV platform in early 2018.

Before making an investment decisionBefore making any investment decisions and for a detailed discussion of the risks, uncertainties, and environment associated with our business, fully review the sections in our 2015 Annual MD&A entitled "Regulation in Our Industry" and "Governance and Risk Management", as well as our various other filings with Canadian and US securities regulators, which can be found at sedar.com and sec.gov, respectively. Information on or connected to our website is not part of or incorporated into this earnings release.

SOURCE Rogers Communications Canada Inc. - English

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