Rogers Communications Reports Fourth Quarter and Full-Year 2021 Results; Announces 2022 Financial Guidance
Rogers Communications reported solid operational improvements in Q4 2021, driven by a strong recovery in its Wireless segment, posting 141,000 new postpaid subscribers and a 6% rise in service revenue. Adjusted EBITDA grew 5% alongside a blended ARPU increase to $51.47. The Cable segment remained stable with 21,000 new broadband subscribers. Media revenue surged 26% due to live sports broadcasting. For 2022, revenue is expected to grow 4% to 6% and adjusted EBITDA 6% to 8%, with capital expenditures projected at $2.8 to $3.0 billion.
- Wireless postpaid net subscriber additions of 141,000 in Q4 2021.
- Wireless service revenue growth of 6% driven by increased subscribers and roaming revenue.
- Adjusted EBITDA grew by 5%, improving operational efficiency.
- Media revenue increased by 26%, reflecting a recovery in live sports advertising.
- Full-year 2022 guidance projects total service revenue growth of 4% to 6% and adjusted EBITDA growth of 6% to 8%.
- Net income declined by 10% in Q4 2021 compared to Q4 2020.
- Adjusted EBITDA decreased by 4% primarily driven by increased sports programming costs in the Media segment.
- Free cash flow fell by 18%, mainly due to higher capital expenditures.
- Strong execution delivers solid operational improvements led by Wireless recovery
- Wireless postpaid net subscriber additions includes phone additions of 141,000; Wireless service revenue growth of
6% and adjusted EBITDA up5% - Blended ARPU1 of
$51.47 up3% ; improved Q4 postpaid churn by 4 basis points to1.15%
- Blended ARPU1 of
- Stable financial results in Cable; Internet net subscriber additions include 21,000 net new retail broadband subscribers
- Media revenue growth up
26% reflects the return of live sports broadcasting advertising - Full-year 2022 guidance2 pre-Shaw transaction reflects improving economy, greater focus on execution, and accelerating investments in 5G and network expansion
- Total service revenue growth range of
4% to6% - Adjusted EBITDA growth range of
6% to8% - Capital expenditures of
$2.8 billion to$3.0 billion - Free cash flow of
$1.8 billion to$2.0 billion
- Total service revenue growth range of
- Shaw transaction remains on track to close in the first half of 2022
TORONTO, Jan. 27, 2022 (GLOBE NEWSWIRE) -- Rogers Communications Inc. today announced its unaudited financial and operating results for the fourth quarter ended December 31, 2021.
Consolidated Financial Highlights
| Three months ended December 31 | Twelve months ended December 31 | ||||||||||||
| (In millions of Canadian dollars, except per share amounts, unaudited) | 2021 | 2020 | % Chg | 2021 | 2020 | % Chg | |||||||
| Total revenue | 3,919 | 3,680 | 6 | 14,655 | 13,916 | 5 | |||||||
| Total service revenue | 3,232 | 3,023 | 7 | 12,533 | 11,955 | 5 | |||||||
| Adjusted EBITDA 1 | 1,522 | 1,590 | (4 | ) | 5,887 | 5,857 | 1 | ||||||
| Net income | 405 | 449 | (10 | ) | 1,558 | 1,592 | (2 | ) | |||||
| Adjusted net income 1 | 486 | 500 | (3 | ) | 1,803 | 1,725 | 5 | ||||||
| Diluted earnings per share | $0.80 | (10 | ) | $3.07 | (2 | ) | |||||||
| Adjusted diluted earnings per share 1 | $0.96 | (3 | ) | $3.56 | 5 | ||||||||
| Cash provided by operating activities | 1,147 | 947 | 21 | 4,161 | 4,321 | (4 | ) | ||||||
| Free cash flow 1 | 468 | 568 | (18 | ) | 1,671 | 2,366 | (29 | ) | |||||
"We delivered strong results in our fourth quarter, led by accelerating revenue growth and solid net subscriber additions in our Wireless business," said Tony Staffieri, President and CEO. "This is a critical year for Rogers and the changes we are making to drive a renewed focus on execution, along with strategic investments in our networks and customer experience, should help drive long-term growth and increase shareholder value. We will accelerate the momentum across our business as we come together with Shaw to expand our next-generation networks nationally, offer customers more choice, and enable Canada to thrive in the global digital economy."
____________
1 Blended ARPU is a supplementary financial measure. Adjusted EBITDA is a total of segments measure. Free cash flow is a capital management measure. Adjusted diluted earnings per share is a non-GAAP ratio. Adjusted net income is a non-GAAP financial measure and is a component of adjusted diluted earnings per share. See "Non-GAAP and Other Financial Measures" for more information about each of these measures. None of these measures is a standardized financial measure under IFRS and they might not be comparable to similar financial measures disclosed by other companies.
2 See "2022 Outlook".
Operating Environment and Quarterly Financial Highlights
Our solid financial position enables us to prioritize the actions we need to take as a result of the COVID-19 pandemic (COVID-19), continue to make high priority investments in our network, and ensure customers stay connected during this critical time. COVID-19 continues to significantly impact Canadians and economies around the world. Late in the fourth quarter, the Omicron variant re-accelerated the spread of COVID-19 and many Canadian provinces reintroduced various restrictions, including placing capacity limits on organized gatherings and retail stores. We remain focused on keeping our employees safe and our customers connected. While COVID-19 continues to have a significant worldwide impact, we remain confident we have the right team, a strong balance sheet, and the world-class networks that will allow us to get through the pandemic having maintained our long-term focus on growth and doing the right thing for our customers.
Revenue
Total revenue and total service revenue increased by
Wireless service revenue increased by
Cable revenue was stable this quarter, primarily as a result of the movement of Internet customers to higher speed and usage tiers in our Ignite Internet™ offerings and the increases in our Internet and Ignite TV™ subscriber bases, offset by declines in our legacy television and home phone subscriber bases.
Media revenue increased by
Adjusted EBITDA and margins
Consolidated adjusted EBITDA decreased
Wireless adjusted EBITDA increased by
Cable adjusted EBITDA was in line with last year, resulting in an adjusted EBITDA margin of
Media adjusted EBITDA decreased by
Net income and adjusted net income
Net income and adjusted net income decreased this quarter by
Cash flow and available liquidity
This quarter, we generated cash flow from operating activities of
This quarter, we issued
As at December 31, 2021, we had
We also returned
____________
3 Available liquidity is a capital management measure. See "Non-GAAP and Other Financial Measures" and "Financial Condition" for more information about this measure.
2022 Outlook
For the full-year 2022, we expect growth in service revenue and adjusted EBITDA will drive higher free cash flow. In 2022, we expect to have the financial flexibility to maintain our network advantages and to continue to return cash to shareholders. We are providing a guidance range for total service revenue this year as this metric more closely reflects our core business with our customers.
| 2021 Actual | 2022 Guidance Ranges 1 | ||||
| (In millions of dollars, except percentages; unaudited) | |||||
| Consolidated Guidance | |||||
| Total service revenue | 12,533 | Increase of | to | increase of | |
| Adjusted EBITDA | 5,887 | Increase of | to | increase of | |
| Capital expenditures 2 | 2,788 | 2,800 | to | 3,000 | |
| Free cash flow | 1,671 | 1,800 | to | 2,000 | |
1 Guidance ranges presented as percentages reflect percentage increases over full-year 2021 results.
2 Includes additions to property, plant and equipment net of proceeds on disposition, but does not include expenditures for spectrum licences or additions to right-of-use assets.
The above table outlines guidance ranges for selected full-year 2022 consolidated financial metrics without giving effect to the acquisition of Shaw (Transaction, see "Shaw Transaction"), the associated financing, or any other associated transactions or expenses. These ranges take into consideration our current outlook and our 2021 results. The purpose of the financial outlook is to assist investors, shareholders, and others in understanding certain financial metrics relating to expected 2022 financial results for evaluating the performance of our business. This information may not be appropriate for other purposes. Information about our guidance, including the various assumptions underlying it, is forward-looking and should be read in conjunction with "About Forward-Looking Information" (including the material assumptions listed under the heading "Key assumptions underlying our full-year 2022 guidance") and the related disclosure and information about various economic, competitive, and regulatory assumptions, factors, and risks that may cause our actual future financial and operating results to differ from what we currently expect.
We provide annual guidance ranges on a consolidated full-year basis that are consistent with annual full-year Board of Directors-approved plans. Any updates to our full-year financial guidance over the course of the year would only be made to the consolidated guidance ranges that appear above. Guidance ranges will be reassessed once the Transaction has closed.
Shaw Transaction
On March 15, 2021, we announced an agreement with Shaw Communications Inc. (Shaw) to acquire all of Shaw's issued and outstanding Class A Participating Shares and Class B Non-Voting Participating Shares for a price of
The Transaction will be implemented through a court-approved plan of arrangement under the Business Corporations Act (Alberta). On May 20, 2021, Shaw shareholders voted to approve the Transaction at a special shareholders meeting. The Court of Queen's Bench of Alberta issued a final order approving the Transaction on May 25, 2021. The Transaction is subject to other customary closing conditions, including receipt of applicable approvals and expiry of certain waiting periods under the Broadcasting Act (Canada), the Competition Act (Canada), and the Radiocommunication Act (Canada) (collectively, Key Regulatory Approvals). Subject to receipt of all required approvals and satisfaction of other conditions prior to closing, the Transaction is expected to close in the first half of 2022.
The combined entity will have the scale, assets, and capabilities needed to deliver unprecedented wireline and wireless broadband and network investments, innovation, and growth in new telecommunications services, and greater choice for Canadian consumers and businesses. As part of the Transaction, the combined company will invest
In connection with the Transaction, we entered into a binding commitment letter for a committed credit facility with a syndicate of banks in an original amount up to
In connection with our application for Canadian Radio-Television and Telecommunications Commission (CRTC) approval to acquire Shaw's licensed broadcasting assets, the CRTC held an oral hearing from November 22 to 26, 2021, during which Rogers, Shaw, and 31 intervenors (including Canada Public Affairs Channel Inc. (CPAC) as an interested party) had an opportunity to comment on and respond to questions from the CRTC regarding the application. Final written submissions from intervenors were accepted until December 13, 2021, and Rogers and CPAC submitted final replies on December 20, 2021.
In accordance with the terms of the arrangement agreement, Rogers and Shaw filed pre-merger notifications pursuant to Part IX of the Competition Act to trigger the Competition Bureau's review of the Transaction. Rogers and Shaw have worked cooperatively and constructively to respond to further requests for information, as required under the arrangement agreement. On September 28, 2021, the Competition Bureau issued a public request for information to help further gather and assess facts about the Transaction. The Competition Bureau invited interested parties to share their information or experiences confidentially by October 29, 2021. The Federal Court also issued orders requiring Xplornet Communications Inc., BCE Inc., TELUS Corporation, and Quebecor Inc. to produce records and written information related to mobile wireless services that are relevant to the Competition Bureau's review of the Transaction, which is ongoing.
In accordance with the conditions of Shaw's spectrum licences, Rogers and Shaw filed joint applications with Innovation, Science and Economic Development Canada (ISED Canada) for approval of the indirect transfer of those spectrum licences by the Minister of Innovation, Science and Industry. ISED Canada's review is ongoing.
The Transaction is subject to a number of additional risks. For more information, see "Updates to Risks and Uncertainties - Shaw Transaction".
About Rogers
Rogers is a proud Canadian company dedicated to making more possible for Canadians every day. Our founder, Ted Rogers, purchased his first radio station, CHFI™, in 1960. We have grown to become a leading technology and media company that strives to provide the very best in wireless, residential, sports, and media to Canadians and Canadian businesses. Our shares are publicly traded on the Toronto Stock Exchange (TSX: RCI.A and RCI.B) and on the New York Stock Exchange (NYSE: RCI).
| Investment community contact | Media contact |
| Paul Carpino | Andrew Garas |
| 647.435.6470 | 647.242.7924 |
| paul.carpino@rci.rogers.com | andrew.garas@rci.rogers.com |
Quarterly Investment Community Teleconference
Our fourth quarter 2021 results teleconference with the investment community will be held on:
- January 27, 2022
- 8:00 a.m. Eastern Time
- webcast available at investors.rogers.com
- media are welcome to participate on a listen-only basis
A rebroadcast will be available at investors.rogers.com for at least two weeks following the teleconference. Additionally, investors should note that from time to time, Rogers' management presents at brokerage-sponsored investor conferences. Most often, but not always, these conferences are webcast by the hosting brokerage firm, and when they are webcast, links are made available on Rogers' website at investors.rogers.com.
For More Information
You can find more information relating to us on our website (investors.rogers.com), on SEDAR (sedar.com), and on EDGAR (sec.gov), or you can e-mail us at investor.relations@rci.rogers.com. Information on or connected to these and any other websites referenced in this earnings release is not part of, or incorporated into, this earnings release.
You can also go to investors.rogers.com for information about our governance practices, environmental, social, and governance (ESG) 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, 2021, 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, 2021, which we intend to file with securities regulators in Canada and the US in the coming weeks. These documents will be made available at investors.rogers.com, sedar.com, and sec.gov 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 2020 Annual MD&A, our 2020 Audited Consolidated Financial Statements, our 2021 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.
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.
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 26, 2022 and was approved by RCI's Board of Directors (the Board). This earnings release includes forward-looking statements and assumptions. See "About Forward-Looking Information" for more information.
We are publicly traded on the Toronto Stock Exchange (TSX: RCI.A and RCI.B) and on the New York Stock Exchange (NYSE: RCI).
In this earnings release, this quarter, the quarter, or fourth quarter refer to the three months ended December 31, 2021, first quarter refers to the three months ended March 31, 2021, second quarter refers to the three months ended June 30, 2021, third quarter refers to the three months ended September 30, 2021, and year to date or full-year refer to the twelve months ended December 31, 2021. All results commentary is compared to the equivalent periods in 2020 or as at December 31, 2020, as applicable, unless otherwise indicated.
™Rogers and related marks are trademarks of Rogers Communications Inc. or an affiliate, used under licence. All other brand names, logos, and marks are trademarks and/or copyright of their respective owners. ©2022 Rogers Communications
Reportable segments
We report our results of operations in three reportable 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, telephony (phone), and smart home monitoring services for Canadian consumers and businesses, and network connectivity through our fibre network and data centre assets to support a range of voice, data, networking, hosting, and cloud-based services for the business, public sector, and carrier wholesale markets. |
| Media | A diversified portfolio of media properties, including sports media and entertainment, television and radio broadcasting, specialty channels, multi-platform shopping, and digital media. |
Wireless and Cable are operated by our wholly owned subsidiary, RCCI, and certain of our other wholly owned subsidiaries. Media is operated by our wholly owned subsidiary, Rogers Media Inc., and its subsidiaries.
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) | 2021 | 2020 | % Chg | 2021 | 2020 | % Chg | |||||||||||
| Revenue | |||||||||||||||||
| Wireless | 2,415 | 2,291 | 5 | 8,768 | 8,530 | 3 | |||||||||||
| Cable | 1,023 | 1,019 | — | 4,072 | 3,946 | 3 | |||||||||||
| Media | 516 | 409 | 26 | 1,975 | 1,606 | 23 | |||||||||||
| Corporate items and intercompany eliminations | (35 | ) | (39 | ) | (10 | ) | (160 | ) | (166 | ) | (4 | ) | |||||
| Revenue | 3,919 | 3,680 | 6 | 14,655 | 13,916 | 5 | |||||||||||
| Total service revenue 1 | 3,232 | 3,023 | 7 | 12,533 | 11,955 | 5 | |||||||||||
| Adjusted EBITDA | |||||||||||||||||
| Wireless | 1,086 | 1,034 | 5 | 4,214 | 4,067 | 4 | |||||||||||
| Cable | 518 | 520 | — | 2,013 | 1,935 | 4 | |||||||||||
| Media | (26 | ) | 82 | n/m | (127 | ) | 51 | n/m | |||||||||
| Corporate items and intercompany eliminations | (56 | ) | (46 | ) | 22 | (213 | ) | (196 | ) | 9 | |||||||
| Adjusted EBITDA | 1,522 | 1,590 | (4 | ) | 5,887 | 5,857 | 1 | ||||||||||
| Adjusted EBITDA margin 2 | 38.8 | % | 43.2 | % | (4.4 pts) | 40.2 | % | 42.1 | % | (1.9 pts) | |||||||
| Net income | 405 | 449 | (10 | ) | 1,558 | 1,592 | (2 | ) | |||||||||
| Basic earnings per share | $0.80 | (10 | ) | $3.09 | (2 | ) | |||||||||||
| Diluted earnings per share | $0.80 | (10 | ) | $3.07 | (2 | ) | |||||||||||
| Adjusted net income 3 | 486 | 500 | (3 | ) | 1,803 | 1,725 | 5 | ||||||||||
| Adjusted basic earnings per share 3 | $0.96 | (3 | ) | $3.57 | 4 | ||||||||||||
| Adjusted diluted earnings per share | $0.96 | (3 | ) | $3.56 | 5 | ||||||||||||
| Capital expenditures | 846 | 656 | 29 | 2,788 | 2,312 | 21 | |||||||||||
| Cash provided by operating activities | 1,147 | 947 | 21 | 4,161 | 4,321 | (4 | ) | ||||||||||
| Free cash flow | 468 | 568 | (18 | ) | 1,671 | 2,366 | (29 | ) | |||||||||
n/m - not meaningful
1 As defined. See "Key Performance Indicators".
2 Adjusted EBITDA margin is a supplementary financial measure. See "Non-GAAP and Other Financial Measures" for an explanation as to the composition of this measure.
3 Adjusted basic earnings per share is a non-GAAP ratio. Adjusted net income is a non-GAAP financial measure and is a component of adjusted basic earnings per share. This is not standardized financial measure under IFRS and might not be comparable to similar financial measures disclosed by other companies. See "Non-GAAP and Other Financial Measures" for more information about this measure.
Results of our Reportable Segments
WIRELESS
Wireless Financial Results
| Three months ended December 31 | Twelve months ended December 31 | |||||||||||
| (In millions of dollars, except margins) | 2021 | 2020 | % Chg | 2021 | 2020 | % Chg | ||||||
| Revenue | ||||||||||||
| Service revenue | 1,735 | 1,637 | 6 | 6,666 | 6,579 | 1 | ||||||
| Equipment revenue | 680 | 654 | 4 | 2,102 | 1,951 | 8 | ||||||
| Revenue | 2,415 | 2,291 | 5 | 8,768 | 8,530 | 3 | ||||||
| Operating expenses | ||||||||||||
| Cost of equipment | 713 | 654 | 9 | 2,142 | 1,932 | 11 | ||||||
| Other operating expenses | 616 | 603 | 2 | 2,412 | 2,531 | (5 | ) | |||||
| Operating expenses | 1,329 | 1,257 | 6 | 4,554 | 4,463 | 2 | ||||||
| Adjusted EBITDA | 1,086 | 1,034 | 5 | 4,214 | 4,067 | 4 | ||||||
| Adjusted EBITDA service margin 1 | 62.6 | % | 63.2 | % | (0.6 pts) | 63.2 | % | 61.8 | % | 1.4 pts | ||
| Adjusted EBITDA margin 2 | 45.0 | % | 45.1 | % | (0.1 pts) | 48.1 | % | 47.7 | % | 0.4 pts | ||
| Capital expenditures | 501 | 337 | 49 | 1,515 | 1,100 | 38 | ||||||
1 Calculated using service revenue.
2 Calculated using total revenue.
Wireless Subscriber Results 1
| (In thousands, except churn, blended ABPU, and blended ARPU) | Three months ended December 31 | Twelve months ended December 31 | |||||||||||||||||
| 2021 | 2020 | Chg | 2021 | 2020 | Chg | ||||||||||||||
| Postpaid | |||||||||||||||||||
| Gross additions | 476 | 458 | 18 | 1,565 | 1,381 | 184 | |||||||||||||
| Net additions | 130 | 114 | 16 | 448 | 245 | 203 | |||||||||||||
| Total postpaid subscribers 2 | 10,131 | 9,683 | 448 | 10,131 | 9,683 | 448 | |||||||||||||
| Churn (monthly) | 1.15 | % | 1.19 | % | (0.04 pts) | 0.95 | % | 1.00 | % | (0.05 pts) | |||||||||
| Prepaid | |||||||||||||||||||
| Gross additions | 145 | 127 | 18 | 512 | 550 | (38 | ) | ||||||||||||
| Net losses | (21 | ) | (40 | ) | 19 | (94 | ) | (142 | ) | 48 | |||||||||
| Total prepaid subscribers 2 | 1,166 | 1,260 | (94 | ) | 1,166 | 1,260 | (94 | ) | |||||||||||
| Churn (monthly) | 4.66 | % | 4.31 | % | 0.35 pts | 4.20 | % | 4.38 | % | (0.18 pts) | |||||||||
| Blended ABPU (monthly) 3 | $64.62 | $63.45 | |||||||||||||||||
| Blended ARPU (monthly) 4 | $51.47 | $50.26 | ( | ) | |||||||||||||||
1 Subscriber counts and subscriber churn are key performance indicators. See "Key Performance Indicators".
2 As at end of period.
3 Blended ABPU is a non-GAAP ratio. Adjusted Wireless service revenue is a non-GAAP financial measure and is a component of blended ABPU. This is not a standardized financial measure under IFRS and might not be comparable to similar financial measures disclosed by other companies. See "Non-GAAP and Other Financial Measures" for more information about this measure.
4 Blended ARPU is a supplementary financial measure. See "Non-GAAP and Other Financial Measures" for an explanation as to the composition of this measure.
Service revenue
The
- a larger postpaid subscriber base; and
- higher roaming revenue as COVID-19-related global travel restrictions were generally less strict than last year.
The
The increase in postpaid gross additions, the higher postpaid net additions, and the improved postpaid churn this quarter were a result of strong execution and an increase in market activity by Canadians with the ongoing opening of the economy.
Equipment revenue
The
- higher device upgrades by existing customers; and
- higher gross additions; partially offset by
- increased promotional activity during key selling periods due to increased market activity.
Operating expenses
Cost of equipment
The
- higher device upgrades by existing customers; and
- higher gross additions.
Other operating expenses
The
Adjusted EBITDA
The
CABLE
Cable Financial Results
| Three months ended December 31 | Twelve months ended December 31 | |||||||||||
| (In millions of dollars, except margins) | 2021 | 2020 | % Chg | 2021 | 2020 | % Chg | ||||||
| Revenue | ||||||||||||
| Service revenue | 1,016 | 1,016 | — | 4,052 | 3,936 | 3 | ||||||
| Equipment revenue | 7 | 3 | 133 | 20 | 10 | 100 | ||||||
| Revenue | 1,023 | 1,019 | — | 4,072 | 3,946 | 3 | ||||||
| Operating expenses | 505 | 499 | 1 | 2,059 | 2,011 | 2 | ||||||
| Adjusted EBITDA | 518 | 520 | — | 2,013 | 1,935 | 4 | ||||||
| Adjusted EBITDA margin | 50.6 | % | 51.0 | % | (0.4 pts) | 49.4 | % | 49.0 | % | 0.4 pts | ||
| Capital expenditures | 237 | 227 | 4 | 913 | 940 | (3 | ) | |||||
Cable Subscriber Results 1
| Three months ended December 31 | Twelve months ended December 31 | ||||||||||||||||||
| (In thousands, except ARPA and penetration) | 2021 | 2020 | Chg | 2021 | 2020 | Chg | |||||||||||||
| Internet 2 | |||||||||||||||||||
| Net additions | 14 | 19 | (5 | ) | 49 | 57 | (8 | ) | |||||||||||
| Total Internet subscribers 3,4 | 2,665 | 2,598 | 67 | 2,665 | 2,598 | 67 | |||||||||||||
| Ignite TV | |||||||||||||||||||
| Net additions | 56 | 71 | (15 | ) | 244 | 218 | 26 | ||||||||||||
| Total Ignite TV subscribers 3 | 788 | 544 | 244 | 788 | 544 | 244 | |||||||||||||
| Homes passed 3 | 4,700 | 4,578 | 122 | 4,700 | 4,578 | 122 | |||||||||||||
| Customer relationships | |||||||||||||||||||
| Net additions | 10 | 11 | (1 | ) | 31 | 12 | 19 | ||||||||||||
| Total customer relationships 3,4 | 2,581 | 2,530 | 51 | 2,581 | 2,530 | 51 | |||||||||||||
| ARPA (monthly) 5 | $131.63 | ( | ) | $132.58 | |||||||||||||||
| Penetration 3 | 54.9 | % | 55.3 | % | (0.4 pts) | 54.9 | % | 55.3 | % | (0.4 pts) | |||||||||
1 Subscriber results are key performance indicators. See "Key Performance Indicators".
2 Internet subscriber results include Smart Home Monitoring subscribers.
3 As at end of period.
4 On September 1, 2021, we acquired approximately 18,000 Internet subscribers and 20,000 customer relationships as a result of our acquisition of Seaside Communications, which are not included in net additions, but do appear in the ending total balance for December 31, 2021.
5 ARPA is a supplementary financial measure. See "Non-GAAP and Other Financial Measures" for an explanation as to the composition of this measure.
Service revenue
The stable service revenue and
- the movement of Internet customers to higher speed and usage tiers in our Ignite Internet offerings and the increase in total customer relationships over the past year, due to growth in our Internet and Ignite TV subscriber bases; offset by
- declines in our legacy television and home phone subscriber bases.
We remain focused on our Connected Home roadmap, driven by our Ignite TV product. During the past year, we achieved significant growth in our Ignite TV subscriber base. The next steps on our roadmap to help keep our customers connected include adding more apps and content to Ignite TV and launching more new products.
Operating expenses
The
Adjusted EBITDA
The stable adjusted EBITDA this quarter was a result of the service revenue and expense changes discussed above.
MEDIA
Media Financial Results
| Three months ended December 31 | Twelve months ended December 31 | ||||||||||
| (In millions of dollars, except margins) | 2021 | 2020 | % Chg | 2021 | 2020 | % Chg | |||||
| Revenue | 516 | 409 | 26 | 1,975 | 1,606 | 23 | |||||
| Operating expenses | 542 | 327 | 66 | 2,102 | 1,555 | 35 | |||||
| Adjusted EBITDA | (26 | ) | 82 | n/m | (127 | ) | 51 | n/m | |||
| Adjusted EBITDA margin | (5.0)% | 20.0 | % | (25.0 pts) | (6.4)% | 3.2 | % | (9.6 pts) | |||
| Capital expenditures | 38 | 36 | 6 | 115 | 79 | 46 | |||||
Revenue
The
- higher advertising and subscription revenue, primarily as a result of the delayed starts of the 2020-2021 NHL and NBA seasons; partially offset by
- lower Today's Shopping Choice™ revenue.
Operating expenses
The
- higher programming and production costs as a result of the delayed starts of the 2020-2021 NHL and NBA seasons; and
- higher other general operating costs as a result of the resumption of sports and increased activities as COVID-19 restrictions eased.
Adjusted EBITDA
The decrease in adjusted EBITDA this quarter was a result of the revenue and expense changes discussed above.
CAPITAL EXPENDITURES
| Three months ended December 31 | Twelve months ended December 31 | |||||||||||
| (In millions of dollars, except capital intensity) | 2021 | 2020 | % Chg | 2021 | 2020 | % Chg | ||||||
| Wireless | 501 | 337 | 49 | 1,515 | 1,100 | 38 | ||||||
| Cable | 237 | 227 | 4 | 913 | 940 | (3 | ) | |||||
| Media | 38 | 36 | 6 | 115 | 79 | 46 | ||||||
| Corporate | 70 | 56 | 25 | 245 | 193 | 27 | ||||||
| Capital expenditures 1 | 846 | 656 | 29 | 2,788 | 2,312 | 21 | ||||||
| Capital intensity 2 | 21.6 | % | 17.8 | % | 3.8 pts | 19.0 | % | 16.6 | % | 2.4 pts | ||
1 Includes additions to property, plant and equipment net of proceeds on disposition, but does not include expenditures for spectrum licences or additions to right-of-use assets.
2 Capital intensity is a supplementary financial measure. See "Non-GAAP and Other Financial Measures" for an explanation as to the composition of this measure.
Wireless
The increase in capital expenditures in Wireless this quarter was a result of investments made to upgrade our wireless network to continue to deliver reliable performance for our customers. We continued to emphasize our 5G deployments in the 600 MHz band and other bands as we have deployed our 5G network in more than 1,500 communities and we completed the roll out of our 5G standalone core network in Montreal, Ottawa, Toronto, and Vancouver.
Cable
The increase in capital expenditures in Cable this quarter reflects continued investments in our network infrastructure, including additional fibre deployments to increase our fibre-to-the-home and fibre-to-the-curb distribution. These upgrades will lower the number of homes passed per node and incorporate the latest technologies to help deliver more bandwidth and an even more reliable customer experience as we progress in our Connected Home roadmap, including service footprint expansion and upgrades to our DOCSIS 3.1 platform to offer increased download speeds over time.
Media
The increase in capital expenditures in Media this quarter was primarily a result of higher broadcast infrastructure expenditures, partially offset by lower stadium and facility investments at the Toronto Blue Jays™ and lower investments in new production studios as we completed our new Sportsnet™ NHL Studio prior to the start of the 2021-22 NHL season this quarter.
Corporate
The increase in corporate capital expenditures this quarter was a result of higher investments in our real estate facilities.
Capital intensity
Capital intensity increased this quarter as a result of higher capital expenditures, partially offset by higher revenue, as discussed above.
Review of Consolidated Performance
This section discusses our consolidated net income and other income and 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) | 2021 | 2020 | % Chg | 2021 | 2020 | % Chg | ||||
| Adjusted EBITDA | 1,522 | 1,590 | (4 | ) | 5,887 | 5,857 | 1 | |||
| Deduct (add): | ||||||||||
| Depreciation and amortization | 658 | 666 | (1 | ) | 2,585 | 2,618 | (1 | ) | ||
| Restructuring, acquisition and other | 101 | 73 | 38 | 324 | 185 | 75 | ||||
| Finance costs | 218 | 228 | (4 | ) | 849 | 881 | (4 | ) | ||
| Other (income) expense | (12 | ) | 2 | n/m | 2 | 1 | 100 | |||
| Income tax expense | 152 | 172 | (12 | ) | 569 | 580 | (2 | ) | ||
| Net income | 405 | 449 | (10 | ) | 1,558 | 1,592 | (2 | ) | ||
Depreciation and amortization
| Three months ended December 31 | Twelve months ended December 31 | ||||||||
| (In millions of dollars) | 2021 | 2020 | % Chg | 2021 | 2020 | % Chg | |||
| Depreciation of property, plant and equipment | 586 | 605 | (3 | ) | 2,322 | 2,390 | (3 | ) | |
| Depreciation of right-of-use assets | 66 | 58 | 14 | 246 | 217 | 13 | |||
| Amortization | 6 | 3 | 100 | 17 | 11 | 55 | |||
| Total depreciation and amortization | 658 | 666 | (1 | ) | 2,585 | 2,618 | (1 | ) | |
Restructuring, acquisition and other
This quarter, we incurred
Finance costs
| Three months ended December 31 | Twelve months ended December 31 | ||||||||||||
| (In millions of dollars) | 2021 | 2020 | % Chg | 2021 | 2020 | % Chg | |||||||
| Interest on borrowings 1 | 188 | 195 | (4 | ) | 745 | 780 | (4 | ) | |||||
| Interest on lease liabilities | 20 | 18 | 11 | 74 | 70 | 6 | |||||||
| Interest on post-employment benefits liability | 3 | 3 | — | 14 | 13 | 8 | |||||||
| Loss (gain) on foreign exchange | 1 | (8 | ) | n/m | 10 | 107 | (91 | ) | |||||
| Change in fair value of derivative instruments | 3 | 16 | (81 | ) | (6 | ) | (97 | ) | (94 | ) | |||
| Capitalized interest | (5 | ) | (4 | ) | 25 | (17 | ) | (19 | ) | (11 | ) | ||
| Other | 8 | 8 | — | 29 | 27 | 7 | |||||||
| Total finance costs | 218 | 228 | (4 | ) | 849 | 881 | (4 | ) | |||||
1 Interest on borrowings includes interest on short-term borrowings and on long-term debt.
The
Income tax expense
| Three months ended December 31 | Twelve months ended December 31 | ||||||||
| (In millions of dollars, except tax rates) | 2021 | 2020 | 2021 | 2020 | |||||
| Statutory income tax rate | 26.5 | % | 26.6 | % | 26.5 | % | 26.6 | % | |
| Income before income tax expense | 557 | 621 | 2,127 | 2,172 | |||||
| Computed income tax expense | 148 | 165 | 564 | 578 | |||||
| Increase (decrease) in income tax expense resulting from: | |||||||||
| Non-deductible stock-based compensation | 1 | 3 | 1 | — | |||||
| Non-deductible portion of equity losses | — | 3 | 12 | 10 | |||||
| Income tax adjustment, legislative tax change | — | (3 | ) | — | (3 | ) | |||
| Non-taxable income from security investments | (3 | ) | (3 | ) | (11 | ) | (10 | ) | |
| Other items | 6 | 7 | 3 | 5 | |||||
| Total income tax expense | 152 | 172 | 569 | 580 | |||||
| Effective income tax rate | 27.3 | % | 27.7 | % | 26.8 | % | 26.7 | % | |
| Cash income taxes paid | 25 | 175 | 700 | 418 | |||||
Cash income taxes decreased this quarter due to the timing of installment payments.
Net income
| Three months ended December 31 | Twelve months ended December 31 | ||||||||||||
| (In millions of dollars, except per share amounts) | 2021 | 2020 | % Chg | 2021 | 2020 | % Chg | |||||||
| Net income | 405 | 449 | (10 | ) | 1,558 | 1,592 | (2 | ) | |||||
| Basic earnings per share | $0.80 | (10 | ) | $3.09 | (2 | ) | |||||||
| Diluted earnings per share | $0.80 | (10 | ) | $3.07 | (2 | ) | |||||||
Adjusted net income
We calculate adjusted net income from adjusted EBITDA as follows:
| Three months ended December 31 | Twelve months ended December 31 | |||||||||||||
| (In millions of dollars, except per share amounts) | 2021 | 2020 | % Chg | 2021 | 2020 | % Chg | ||||||||
| Adjusted EBITDA | 1,522 | 1,590 | (4 | ) | 5,887 | 5,857 | 1 | |||||||
| Deduct: | ||||||||||||||
| Depreciation and amortization | 658 | 666 | (1 | ) | 2,585 | 2,618 | (1 | ) | ||||||
| Finance costs | 218 | 228 | (4 | ) | 849 | 881 | (4 | ) | ||||||
| Other (income) expense | (12 | ) | 2 | n/m | 2 | 1 | 100 | |||||||
| Income tax expense 1 | 172 | 194 | (11 | ) | 648 | 632 | 3 | |||||||
| Adjusted net income | 486 | 500 | (3 | ) | 1,803 | 1,725 | 5 | |||||||
| Adjusted basic earnings per share | $0.96 | (3 | ) | $3.57 | 4 | |||||||||
| Adjusted diluted earnings per share | $0.96 | (3 | ) | $3.56 | 5 | |||||||||
1 Income tax expense excludes recoveries of
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) | 2021 | 2020 | 2021 | 2020 | |||||
| Cash provided by operating activities before changes in net operating assets and liabilities, income taxes paid, and interest paid | 1,453 | 1,581 | 5,626 | 5,880 | |||||
| Change in net operating assets and liabilities | (50 | ) | (265 | ) | 37 | (333 | ) | ||
| Income taxes paid | (25 | ) | (175 | ) | (700 | ) | (418 | ) | |
| Interest paid | (231 | ) | (194 | ) | (802 | ) | (808 | ) | |
| Cash provided by operating activities | 1,147 | 947 | 4,161 | 4,321 | |||||
| Investing activities: | |||||||||
| Capital expenditures | (846 | ) | (656 | ) | (2,788 | ) | (2,312 | ) | |
| Additions to program rights | (13 | ) | (12 | ) | (54 | ) | (57 | ) | |
| Changes in non-cash working capital related to capital expenditures and intangible assets | 12 | 97 | 67 | (37 | ) | ||||
| Acquisitions and other strategic transactions, net of cash acquired | (2,661 | ) | (95 | ) | (3,404 | ) | (103 | ) | |
| Other | 16 | 11 | 46 | (49 | ) | ||||
| Cash used in investing activities | (3,492 | ) | (655 | ) | (6,133 | ) | (2,558 | ) | |
| Financing activities: | |||||||||
| Net (repayment of) proceeds received from short-term borrowings | (172 | ) | 256 | 971 | (1,146 | ) | |||
| Net issuance of long-term debt | 2,000 | — | 550 | 2,540 | |||||
| Net proceeds (payments) on settlement of debt derivatives and forward contracts | 8 | — | (8 | ) | 80 | ||||
| Transaction costs incurred | (20 | ) | (1 | ) | (31 | ) | (23 | ) | |
| Principal payments of lease liabilities | (75 | ) | (58 | ) | (269 | ) | (213 | ) | |
| Dividends paid | (253 | ) | (253 | ) | (1,010 | ) | (1,011 | ) | |
| Cash provided by (used in) financing activities | 1,488 | (56 | ) | 203 | 227 | ||||
| Change in cash and cash equivalents | (857 | ) | 236 | (1,769 | ) | 1,990 | |||
| Cash and cash equivalents, beginning of period | 1,572 | 2,248 | 2,484 | 494 | |||||
| Cash and cash equivalents, end of period | 715 | 2,484 | 715 | 2,484 | |||||
Operating activities
The
Investing activities
Capital expenditures
During the quarter, we incurred
Acquisitions and other strategic transactions
This quarter, we made the final payment of
Financing activities
During the quarter, we received net amounts of
Short-term borrowings
Our short-term borrowings consist of amounts outstanding under our receivables securitization program, our short-term non-revolving credit facilities, and our US dollar-denominated commercial paper (US CP) program. Below is a summary of our short-term borrowings as at December 31, 2021 and December 31, 2020.
| As at December 31 | As at December 31 | |
| (In millions of dollars) | 2021 | 2020 |
| Receivables securitization program | 800 | 650 |
| Non-revolving credit facility borrowings | 507 | — |
| US commercial paper program (net of the discount on issuance) | 893 | 571 |
| Total short-term borrowings | 2,200 | 1,221 |
The tables below summarize the activity relating to our short-term borrowings for the three and twelve months ended December 31, 2021 and 2020.
| Three months ended December 31, 2021 | Twelve months ended December 31, 2021 | ||||||||||
| Notional | Exchange | Notional | Notional | Exchange | Notional | ||||||
| (In millions of dollars, except exchange rates) | (US$) | rate | (Cdn$) | (US$) | rate | (Cdn$) | |||||
| Proceeds received from US commercial paper | 611 | 1.257 | 768 | 2,568 | 1.260 | 3,235 | |||||
| Repayment of US commercial paper | (744 | ) | 1.261 | (938 | ) | (2,314 | ) | 1.259 | (2,914 | ) | |
| Net (repayment of) proceeds received from US commercial paper | (170 | ) | 321 | ||||||||
| Proceeds received from non-revolving credit facilities (US$) | 800 | 1.251 | 1,001 | 1,200 | 1.253 | 1,503 | |||||
| Repayment of non-revolving credit facilities (US$) | (800 | ) | 1.254 | (1,003 | ) | (800 | ) | 1.254 | (1,003 | ) | |
| Net (repayment of) proceeds received from non-revolving credit facilities | (2 | ) | 500 | ||||||||
| Proceeds received from receivables securitization | — | 150 | |||||||||
| Net proceeds received from receivables securitization | — | 150 | |||||||||
| Net (repayment of) proceeds received from short-term borrowings | (172 | ) | 971 | ||||||||
| Three months ended December 31, 2020 | Twelve months ended December 31, 2020 | ||||||||
| Notional | Exchange | Notional | Notional | Exchange | Notional | ||||
| (In millions of dollars, except exchange rates) | (US$) | rate | (Cdn$) | (US$) | rate | (Cdn$) | |||
| Proceeds received from US commercial paper | 200 | 1.280 | 256 | 3,316 | 1.329 | 4,406 | |||
| Repayment of US commercial paper | — | — | — | (4,098 | ) | 1.355 | (5,552 | ) | |
| Net proceeds received from (repayment of) US commercial paper | 256 | (1,146 | ) | ||||||
| Net proceeds received from (repayment of) short-term borrowings | 256 | (1,146 | ) | ||||||
Concurrent with our US CP issuances and non-revolving credit facility borrowings, we entered into debt derivatives to hedge the foreign currency risk associated with the principal and interest components of the borrowings. See "Financial Risk Management" for more information.
In June 2021, we entered into non-revolving credit facilities with an aggregate limit of US
In March 2021, in connection with the Transaction, we entered into a binding commitment letter for a committed credit facility with a syndicate of banks in an amount up to
Long-term debt
Our long-term debt consists of amounts outstanding under our bank and letter of credit facilities and the senior notes, debentures, and subordinated notes we have issued. The tables below summarize the activity relating to our long-term debt for the three and twelve months ended December 31, 2021 and 2020.
| Three months ended December 31, 2021 | Twelve months ended December 31, 2021 | |||||||
| (In millions of dollars, except exchange rates) | Notional | Exchange | Notional | Notional | Exchange | Notional | ||
| (US$) | rate | (Cdn$) | (US$) | rate | (Cdn$) | |||
| Senior note repayments (Cdn$) | — | (1,450 | ) | |||||
| Subordinated note issuances (Cdn$) | 2,000 | 2,000 | ||||||
| Net issuance of long-term debt | 2,000 | 550 | ||||||
| Three months ended December 31, 2020 | Twelve months ended December 31, 2020 | ||||||||
| (In millions of dollars, except exchange rates) | Notional | Exchange | Notional | Notional | Exchange | Notional | |||
| (US$) | rate | (Cdn$) | (US$) | rate | (Cdn$) | ||||
| Credit facility borrowings (US$) | — | — | — | 970 | 1.428 | 1,385 | |||
| Credit facility repayments (US$) | — | — | — | (970 | ) | 1.406 | (1,364 | ) | |
| Net borrowings under credit facilities | — | 21 | |||||||
| Senior note issuances (Cdn$) | — | 1,500 | |||||||
| Senior note issuances (US$) | — | — | — | 750 | 1.359 | 1,019 | |||
| Net issuance of senior notes | — | 2,519 | |||||||
| Net issuance of long-term debt | — | 2,540 | |||||||
| Three months ended December 31 | Twelve months ended December 31 | ||||||||
| (In millions of dollars) | 2021 | 2020 | 2021 | 2020 | |||||
| Long-term debt net of transaction costs, beginning of period | 16,761 | 18,747 | 18,201 | 15,967 | |||||
| Net issuance of long-term debt | 2,000 | — | 550 | 2,540 | |||||
| Gain on foreign exchange | (58 | ) | (549 | ) | (50 | ) | (297 | ) | |
| Deferred transaction costs incurred | (20 | ) | (1 | ) | (31 | ) | (23 | ) | |
| Amortization of deferred transaction costs | 5 | 4 | 18 | 14 | |||||
| Long-term debt net of transaction costs, end of period | 18,688 | 18,201 | 18,688 | 18,201 | |||||
In April 2021, we entered into a
In April 2021, we amended our revolving credit facility to, among other things, increase the total credit limit and extend the maturity dates. We increased the total credit limit from
Issuance of senior and subordinated notes and related debt derivatives
Below is a summary of the senior and subordinated notes we issued this quarter. We did not issue senior or subordinated notes in the three months ended December 31, 2020.
| (In millions of dollars, except interest rates and discounts) | ||||||||
| Date issued | Principal amount | Due date | Interest rate | Discount/ premium at issuance | Total gross proceeds 1 (Cdn$) | Transaction costs and discounts 2 (Cdn$) | ||
| 2021 issuances | ||||||||
| December 17, 2021 | 2,000 | 2081 | 5.000 | % | At par | 2,000 | 20 | |
1 Gross proceeds before transaction costs, discounts, and premiums.
2 Transaction costs, discounts, and premiums are included as deferred transaction costs and discounts in the carrying value of the long-term debt, and recognized in net income using the effective interest method over a five-year period.
In December 2021, we issued
Dividends
Below is a summary of the dividends declared and paid on RCI's outstanding Class A Voting common shares (Class A Shares) and Class B Non-Voting common shares (Class B Non-Voting Shares) in 2021 and 2020. On January 26, 2022, the Board declared a dividend of
| Declaration date | Record date | Payment date | Dividend per share (dollars) | Dividends paid (in millions of dollars) |
| January 27, 2021 | March 10, 2021 | April 1, 2021 | 0.50 | 252 |
| April 20, 2021 | June 10, 2021 | July 2, 2021 | 0.50 | 253 |
| July 20, 2021 | September 9, 2021 | October 1, 2021 | 0.50 | 253 |
| October 20, 2021 | December 10, 2021 | January 4, 2022 | 0.50 | 252 |
| January 21, 2020 | March 10, 2020 | April 1, 2020 | 0.50 | 252 |
| April 21, 2020 | June 10, 2020 | July 2, 2020 | 0.50 | 253 |
| July 21, 2020 | September 9, 2020 | October 1, 2020 | 0.50 | 253 |
| October 21, 2020 | December 10, 2020 | January 4, 2021 | 0.50 | 252 |
Free cash flow
| Three months ended December 31 | Twelve months ended December 31 | ||||||||
| (In millions of dollars) | 2021 | 2020 | % Chg | 2021 | 2020 | % Chg | |||
| Adjusted EBITDA | 1,522 | 1,590 | (4 | ) | 5,887 | 5,857 | 1 | ||
| Deduct: | |||||||||
| Capital expenditures 1 | 846 | 656 | 29 | 2,788 | 2,312 | 21 | |||
| Interest on borrowings, net of capitalized interest | 183 | 191 | (4 | ) | 728 | 761 | (4 | ) | |
| Cash income taxes 2 | 25 | 175 | (86 | ) | 700 | 418 | 67 | ||
| Free cash flow | 468 | 568 | (18 | ) | 1,671 | 2,366 | (29 | ) | |
1 Includes additions to property, plant and equipment net of proceeds on disposition, but does not include expenditures for spectrum licences or additions to right-of-use assets.
2 Cash income taxes are net of refunds received.
Free cash flow decreased this quarter as a result of higher capital expenditures and lower adjusted EBITDA, partially offset by lower cash income taxes.
Financial Condition
Available liquidity
Below is a summary of our available liquidity from our cash and cash equivalents, bank credit facilities, letter of credit facilities, and short-term borrowings as at December 31, 2021 and December 31, 2020.
| As at December 31, 2021 | Total sources | Drawn | Letters of credit | US CP program 1 | Net available |
| (In millions of dollars) | |||||
| Cash and cash equivalents | 715 | — | — | — | 715 |
| Bank credit facilities 2: | |||||
| Revolving | 4,000 | — | 8 | 894 | 3,098 |
| Non-revolving | 507 | 507 | — | — | — |
| Outstanding letters of credit | 72 | — | 72 | — | — |
| Receivables securitization 2 | 1,200 | 800 | — | — | 400 |
| Total | 6,494 | 1,307 | 80 | 894 | 4,213 |
1 The US CP program amounts are gross of the discount on issuance.
2 The total liquidity sources under our bank credit facilities and receivables securitization represents the total credit limits per the relevant agreements. The amount drawn and letters of credit are currently outstanding under those agreements. The US CP program amount represents our currently outstanding US CP borrowings that are backstopped by our revolving credit facility.
| As at December 31, 2020 | Total sources | Drawn | Letters of credit | US CP program 1 | Net available |
| (In millions of dollars) | |||||
| Cash and cash equivalents | 2,484 | — | — | — | 2,484 |
| Bank credit facilities 2: | |||||
| Revolving | 3,200 | — | 8 | 573 | 2,619 |
| Outstanding letters of credit | 101 | — | 101 | — | — |
| Receivables securitization 2 | 1,200 | 650 | — | — | 550 |
| Total | 6,985 | 650 | 109 | 573 | 5,653 |
1 The US CP program amounts are gross of the discount on issuance.
2 The total liquidity sources under our bank credit facilities and receivables securitization represents the total credit limits per the relevant agreements. The amount drawn and letters of credit are currently outstanding under those agreements. The US CP program amount represents our currently outstanding US CP borrowings that are backstopped by our revolving credit facility.
Subsequent to the final payment for the 3500 MHz spectrum licence acquisition in December 2021, we cancelled
In addition to the sources of available liquidity noted above, we held
Weighted average cost of borrowings
Our weighted average cost of borrowings was
Credit ratings
Below is a summary of the credit ratings on RCI's outstanding senior notes and debentures (long-term) and US CP (short-term) as at December 31, 2021.
| Issuance | S&P | Moody's | Fitch |
| Corporate credit issuer default rating | BBB+ Rating Watch Negative | Baa1 under review | BBB+ Rating Watch Negative |
| Senior unsecured debt | BBB+ Rating Watch Negative | Baa1 under review | BBB+ Rating Watch Negative |
| Subordinated debt | BBB- Credit Watch Negative | Baa3 under review | BBB- Rating Watch Negative |
| US commercial paper | A-2 Rating Watch Negative | P-2 under review | N/A 1 |
1 We have not sought a rating from Fitch for our short-term obligations.
As a result of our agreement to acquire Shaw and the related commitments in connection with the Transaction, both S&P and Fitch have placed us on credit watch with negative implications. Moody's has placed our credit ratings on review for downgrade. We expect S&P, Moody's, and Fitch to complete their reviews upon closing of the Transaction. See "Shaw Transaction" and "Updates to Risks and Uncertainties - Shaw Transaction" for more information on our agreement with Shaw and the Transaction.
Adjusted net debt and debt leverage ratio
We use adjusted net debt and debt leverage ratio to conduct valuation-related analysis and make capital structure-related decisions. Adjusted net debt includes long-term debt, net debt derivative assets or liabilities, short-term borrowings, lease liabilities, and cash and cash equivalents or bank advances.
| As at December 31 | As at December 31 | |||
| (In millions of dollars, except ratios) | 2021 | 2020 | ||
| Long-term debt 1 | 18,873 | 18,373 | ||
| Subordinated notes adjustment 2 | (1,000 | ) | — | |
| Net debt derivative assets valued without any adjustment for credit risk 3 | (1,278 | ) | (1,101 | ) |
| Short-term borrowings | 2,200 | 1,221 | ||
| Lease liabilities | 1,957 | 1,835 | ||
| Cash and cash equivalents | (715 | ) | (2,484 | ) |
| Adjusted net debt 2,4 | 20,037 | 17,844 | ||
| Divided by: trailing 12-month adjusted EBITDA | 5,887 | 5,857 | ||
| Debt leverage ratio 4 | 3.4 | 3.0 | ||
1 Includes current and long-term portion of long-term debt before deferred transaction costs and discounts. See "Reconciliation of adjusted net debt" in "Non-GAAP and Other Financial Measures" for the calculation of this amount.
2 For the purposes of calculating adjusted net debt and debt leverage ratio, we believe adjusting
3 For purposes of calculating adjusted net debt and debt leverage ratio, we believe including debt derivatives valued without adjustment for credit risk is commonly used to evaluate debt leverage and for market valuation and transactional purposes.
4 Adjusted net debt and debt leverage ratio are capital management measures. See "Non-GAAP and Other Financial Measures" for more information about these measures.
Outstanding common shares
| As at December 31 | As at December 31 | |
| 2021 | 2020 | |
| Common shares outstanding 1 | ||
| Class A Voting Shares | 111,153,411 | 111,154,811 |
| Class B Non-Voting Shares | 393,771,907 | 393,770,507 |
| Total common shares | 504,925,318 | 504,925,318 |
| Options to purchase Class B Non-Voting Shares | ||
| Outstanding options | 6,494,001 | 4,726,634 |
| Outstanding options exercisable | 2,373,717 | 1,470,383 |
1 Holders of Class B Non-Voting Shares are entitled to receive notice of and to attend shareholder meetings; however, they are not entitled to vote at these meetings except as required by law or stipulated by stock exchanges. If an offer is made to purchase outstanding Class A Shares, there is no requirement under applicable law or our constating documents that an offer be made for the outstanding Class B Non-Voting Shares, and there is no other protection available to shareholders under our constating documents. If an offer is made to purchase both classes of shares, the offer for the Class A Shares may be made on different terms than the offer to the holders of Class B Non-Voting Shares.
Financial Risk Management
This section should be read in conjunction with "Financial Risk Management" in our 2020 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
Debt derivatives
We use cross-currency interest rate agreements and foreign exchange forward agreements (collectively, debt derivatives) to manage risks from fluctuations in foreign exchange rates and interest rates associated with our US dollar-denominated senior notes and debentures, lease liabilities, credit facility borrowings, and US CP borrowings. We designate the debt derivatives related to our senior notes, debentures, and lease liabilities as hedges for accounting purposes against the foreign exchange risk or interest rate risk associated with specific issued and forecast debt instruments. Debt derivatives related to our credit facility and US CP borrowings have not been designated as hedges for accounting purposes.
Credit facilities and US CP
Below is a summary of the debt derivatives we entered and settled related to our credit facilities and US CP program during the three and twelve months ended December 31, 2021 and 2020.
| Three months ended December 31, 2021 | Twelve months ended December 31, 2021 | ||||||||
| (In millions of dollars, except exchange rates) | Notional (US$) | Exchange rate | Notional (Cdn$) | Notional (US$) | Exchange rate | Notional (Cdn$) | |||
| Credit facilities | |||||||||
| Debt derivatives entered | 800 | 1.251 | 1,001 | 1,200 | 1.253 | 1,503 | |||
| Debt derivatives settled | 800 | 1.254 | 1,003 | 800 | 1.254 | 1,003 | |||
| Net cash paid on settlement | (2 | ) | (2 | ) | |||||
| US commercial paper program | |||||||||
| Debt derivatives entered | 612 | 1.255 | 768 | 2,568 | 1.260 | 3,235 | |||
| Debt derivatives settled | 744 | 1.259 | 937 | 2,312 | 1.259 | 2,911 | |||
| Net cash received (paid) on settlement | 1 | (15 | ) | ||||||
| Three months ended December 31, 2020 | Twelve months ended December 31, 2020 | |||||||
| (In millions of dollars, except exchange rates) | Notional (US$) | Exchange rate | Notional (Cdn$) | Notional (US$) | Exchange rate | Notional (Cdn$) | ||
| Credit facilities | ||||||||
| Debt derivatives entered | — | — | — | 970 | 1.428 | 1,385 | ||
| Debt derivatives settled | — | — | — | 970 | 1.406 | 1,364 | ||
| Net cash paid on settlement | — | (21 | ) | |||||
| US commercial paper program | ||||||||
| Debt derivatives entered | 200 | 1.280 | 256 | 3,316 | 1.329 | 4,406 | ||
| Debt derivatives settled | — | — | — | 4,091 | 1.330 | 5,441 | ||
| Net cash received on settlement | — | 101 | ||||||
As at December 31, 2021, we had US
Senior notes
Below is a summary of the debt derivatives we entered into related to senior notes last year. We did not enter into any debt derivatives related to senior notes issued this year.
| (In millions of dollars, except interest rates) | |||||||
| US$ | Hedging effect | ||||||
| Effective date | Principal/Notional amount (US$) | Maturity date | Coupon rate | Fixed hedged (Cdn$) interest rate 1 | Equivalent (Cdn$) | ||
| 2020 issuances | |||||||
| June 22, 2020 | 750 | 2022 | USD LIBOR + | 0.955 | % | 1,019 | |
1 Converting from a fixed or floating US$ coupon rate to a weighted average Cdn$ fixed rate.
As at December 31, 2021, we had US
This year, we also entered into forward starting cross-currency swaps to hedge the foreign exchange risk on US
Lease liabilities
Below is a summary of the debt derivatives we entered into and settled related to our outstanding lease liabilities for the three and twelve months ended December 31, 2021 and 2020.
| Three months ended December 31, 2021 | Twelve months ended December 31, 2021 | ||||||
| (In millions of dollars, except exchange rates) | Notional (US$) | Exchange rate | Notional (Cdn$) | Notional (US$) | Exchange rate | Notional (Cdn$) | |
| Debt derivatives entered | 33 | 1.333 | 44 | 132 | 1.273 | 168 | |
| Debt derivatives settled | 25 | 1.320 | 33 | 81 | 1.333 | 108 | |
| Three months ended December 31, 2020 | Twelve months ended December 31, 2020 | ||||||
| (In millions of dollars, except exchange rates) | Notional (US$) | Exchange rate | Notional (Cdn$) | Notional (US$) | Exchange rate | Notional (Cdn$) | |
| Debt derivatives entered | 25 | 1.280 | 32 | 115 | 1.374 | 158 | |
| Debt derivatives settled | 13 | 1.462 | 19 | 43 | 1.372 | 59 | |
As at December 31, 2021, we had US
See "Mark-to-market value" for more information about our debt derivatives.
Interest rate derivatives
From time to time, we use bond forward derivatives or interest rate swap derivatives (collectively, interest rate derivatives) to hedge interest rate risk on current and future debt instruments. Our interest rate derivatives are designated as hedges for accounting purposes.
We entered into interest rate swap derivatives this year associated with the Transaction, including:
$1,250 million bond forwards to hedge the underlying Government of Canada (GoC) interest rate risk that will form a portion of the interest rate risk associated with anticipated future debt issuances;- interest rate swap derivatives to hedge the interest rate risk on an additional
$3.25 billion of debt instruments we expect to issue in the future; and - interest rate swap derivatives to hedge the interest rate risk on US
$2 billion of debt instruments we expect to issue in the future.
Concurrent with our issuance of
See "Mark-to-market value" for more information about our interest rate derivatives.
Expenditure derivatives
We use foreign currency forward contracts (expenditure derivatives) to manage the foreign exchange risk in our operations, designating them as hedges for accounting purposes for certain of our forecast operational and capital expenditures.
Below is a summary of the expenditure derivatives we entered and settled during the three and twelve months ended December 31, 2021 and 2020.
| Three months ended December 31, 2021 | Twelve months ended December 31, 2021 | ||||||
| (In millions of dollars, except exchange rates) | Notional (US$) | Exchange rate | Notional (Cdn$) | Notional (US$) | Exchange rate | Notional (Cdn$) | |
| Expenditure derivatives entered | 108 | 1.241 | 134 | 438 | 1.244 | 545 | |
| Expenditure derivatives settled | 225 | 1.360 | 306 | 960 | 1.360 | 1,306 | |
| Three months ended December 31, 2020 | Twelve months ended December 31, 2020 | ||||||
| (In millions of dollars, except exchange rates) | Notional (US$) | Exchange rate | Notional (Cdn$) | Notional (US$) | Exchange rate | Notional (Cdn$) | |
| Expenditure derivatives entered | 294 | 1.286 | 378 | 1,560 | 1.343 | 2,095 | |
| Expenditure derivatives settled | 205 | 1.298 | 266 | 940 | 1.299 | 1,221 | |
As at December 31, 2021, we had US
See "Mark-to-market value" for more information about our expenditure derivatives.
Equity derivatives
We use total return swaps (equity derivatives) to hedge the market price appreciation risk of the Class B Non-Voting Shares granted under our stock-based compensation programs. The equity derivatives have not been designated as hedges for accounting purposes.
As at December 31, 2021, we had equity derivatives outstanding for 5.0 million (December 31, 2020 - 4.6 million) Class B Non-Voting Shares with a weighted average price of
We did not enter into or settle any equity derivatives during the three months ended December 31, 2021 or 2020.
See "Mark-to-market value" for more information about our equity derivatives.
Mark-to-market value
We record our derivatives using an estimated credit-adjusted, mark-to-market valuation, calculated in accordance with IFRS.
| As at December 31, 2021 | |||||
| (In millions of dollars, except exchange rates) | Notional amount (US$) | Exchange rate | Notional amount (Cdn$) | Fair value (Cdn$) | |
| Debt derivatives accounted for as cash flow hedges: | |||||
| As assets | 5,859 | 1.1369 | 6,661 | 1,453 | |
| As liabilities | 5,383 | 1.3025 | 7,011 | (343 | ) |
| Short-term debt derivatives not accounted for as hedges: | |||||
| As assets | 1,104 | 1.2578 | 1,389 | 11 | |
| Net mark-to-market debt derivative asset | 1,121 | ||||
| Interest rate derivatives accounted for as cash flow hedges: | |||||
| As assets (Cdn$) | — | — | 3,250 | 40 | |
| As liabilities (Cdn$) | — | — | 500 | (6 | ) |
| As liabilities (US$) | 2,000 | — | — | (277 | ) |
| Net mark-to-market interest rate derivative liability | (243 | ) | |||
| Expenditure derivatives accounted for as cash flow hedges: | |||||
| As assets | 438 | 1.2453 | 545 | 11 | |
| As liabilities | 630 | 1.3151 | 829 | (30 | ) |
| Net mark-to-market expenditure derivative liability | (19 | ) | |||
| Equity derivatives not accounted for as hedges: | |||||
| As assets | — | — | 265 | 36 | |
| Net mark-to-market asset | 895 | ||||
| As at December 31, 2020 | |||||
| (In millions of dollars, except exchange rates) | Notional amount (US$) | Exchange rate | Notional amount (Cdn$) | Fair value (Cdn$) | |
| Debt derivatives accounted for as cash flow hedges: | |||||
| As assets | 4,550 | 1.0795 | 4,912 | 1,405 | |
| As liabilities | 4,642 | 1.3358 | 6,201 | (307 | ) |
| Short-term debt derivatives not accounted for as hedges: | |||||
| As liabilities | 449 | 1.2995 | 583 | (12 | ) |
| Net mark-to-market debt derivative asset | 1,086 | ||||
| Expenditure derivatives accounted for as cash flow hedges: | |||||
| As liabilities | 1,590 | 1.3421 | 2,134 | (109 | ) |
| Equity derivatives not accounted for as hedges: | |||||
| As assets | — | — | 238 | 34 | |
| Net mark-to-market asset | 1,011 | ||||
Updates to Risks and Uncertainties
See our 2020 Annual MD&A for a discussion of the principal risks and uncertainties that could have a material adverse effect on our business and financial results as at March 4, 2021, which should be reviewed in conjunction with this earnings release. The following factors may contribute to those risks and uncertainties.
Outbreak of COVID-19 and related pandemic
In early 2021, public health restrictions that were implemented in late 2020 were lifted to certain extents across the country. In March, several Canadian provinces declared a third wave of COVID-19 had commenced and provinces adjusted restrictions. In the third quarter, provinces generally began relaxing certain public health restrictions implemented in the first half of 2021 as vaccines became more widely available in Canada and vaccination rates continued to increase across the country. In August 2021, Canada entered a fourth wave of COVID-19 and several Canadian provinces introduced proof of vaccination requirements to access non-essential businesses and services. Late in the fourth quarter, the Omicron variant re-accelerated the spread of COVID-19 and many Canadian provinces reintroduced various restrictions, including placing capacity limits on organized gatherings and retail stores.
Additionally, COVID-19 has caused a global semiconductor chip shortage due to supply chain disruptions and an increase in demand for electronics. Although we are taking proactive steps to minimize its impacts, this has resulted, and could continue to result, in increased lead times on our network equipment and wireless devices.
Due to the uncertainty surrounding the duration and potential outcomes of COVID-19, including the results of measures taken to slow the spread and the broader impact COVID-19 may have on the Canadian and global economies or financial markets, it is difficult to predict the overall impact on our operations, liquidity, financial condition, or results; however, it has had, and may continue to have, a material, adverse impact on our results. Any future epidemic, pandemic, or other public health crisis may pose similar risks to us.
Wholesale Internet costing and pricing
In August 2019, in Telecom Order CRTC 2019-288, Follow-up to Telecom Orders 2016-396 and 2016-448 - Final rates for aggregated wholesale high-speed access services (2019 Order), the CRTC set final rates for facilities-based carriers' wholesale high-speed access services, including Rogers' third-party Internet access (TPIA) service. The 2019 Order set final rates for Rogers that were significantly lower than the interim rates that were previously billed and it further determined that these final rates would have applied retroactively to March 31, 2016.
We did not believe the final rates set by the CRTC were just and reasonable as required by the Telecommunications Act as we believe they were below cost. On May 27, 2021, the CRTC released Telecom Decision CRTC 2021-181 Requests to review and vary Telecom Order 2019-288 regarding final rates for aggregated wholesale high-speed access services (2021 Decision). The CRTC decided to adopt the interim rates in effect prior to the 2019 Order as the final rates, with certain modifications, including the removal of the supplementary markup of
The final rates are lower than the rates we previously billed to the resellers for the period of March 31, 2016 to October 6, 2016. We have recognized a refund of amounts previously billed to the resellers of approximately
On May 28, 2021, a wholesale Internet Service Provider (ISP) petitioned the Governor in Council to, among other things, restore the 2019 Order and make the rates established in that order final. In addition, on June 28, 2021, the same wholesale ISP filed a motion seeking leave to appeal the 2021 Decision to the Federal Court of Appeal, which was granted in September 2021. We, along with several other cable companies, have intervened in these matters.
Videotron Ltd.
In October 2021, Videotron Ltd. launched a lawsuit against Rogers in the Quebec Superior Court, in connection with the agreement entered into by the parties in 2013 for the development and operation of a joint LTE network in the province of Quebec. The lawsuit involves allegations by Videotron Ltd. that Rogers has breached its contractual obligations by developing its own network in the territory. Videotron is seeking compensatory damages in the amount of
Outcome of proceedings
The outcome of all the proceedings and claims against us, including the matters described above, is subject to future resolution that includes the uncertainties of litigation. It is not possible for us to predict the result or magnitude of the claims due to the various factors and uncertainties involved in the legal process. Based on information currently known to us, we believe it is not probable that the ultimate resolution of any of these proceedings and claims, individually or in total, will have a material adverse effect on our business, financial results, or financial condition. If circumstances change and it becomes probable that we will be held liable for claims against us and such claim is estimable, we will recognize a provision during the period in which the change in probability occurs, which could be material to our Consolidated Statements of Income or Consolidated Statements of Financial Position.
Shaw Transaction
The Transaction with Shaw is subject to a number of additional risks not otherwise described in our 2020 Annual MD&A, many of which are outside the control of Rogers and Shaw. These risks are described below.
Key Regulatory Approvals and other conditions
To complete the Transaction, each of Rogers and Shaw must make certain filings with, and obtain certain consents and approvals from, various governmental and regulatory authorities, including the Competition Bureau, ISED Canada, and the CRTC. Rogers and Shaw have not yet obtained the Key Regulatory Approvals, all of which are required to complete the Transaction. In addition, governmental or regulatory agencies could deny permission for, or seek to block or challenge, the Transaction or the transfer or deemed transfer of specific assets, including spectrum licences, or impose material conditions relating to the Transaction or any such transfer. If any one of the Key Regulatory Approvals is not obtained, or any applicable law or order is in effect which makes the consummation of the Transaction illegal, the Transaction will not be completed.
In addition, a substantial delay in obtaining the Key Regulatory Approvals could result in the Transaction not being completed. In particular, if the Transaction is not completed by March 15, 2022 (subject to an extension of up to 90 days in certain circumstances), either Rogers or Shaw may terminate the arrangement agreement, in which case the Transaction may not be completed.
Under certain circumstances, if the Key Regulatory Approvals are not obtained, or any law or order relating to the Key Regulatory Approvals or the Competition Act is in effect that would make the consummation of the Transaction illegal, and the failure to obtain the Key Regulatory Approvals is not caused by, and is not a result of, the failure by Shaw to perform in all material respects any of its covenants or agreements under the arrangement agreement, we would be obligated to pay a
The completion of the Transaction is subject to a number of other conditions precedent, some of which are outside of the control of Rogers and Shaw, including there not having occurred a Material Adverse Effect or Purchaser Material Adverse Effect (as such terms are defined in the arrangement agreement) and the satisfaction of certain other customary closing conditions.
There can be no certainty, nor can Rogers or Shaw provide any assurance, that all conditions precedent to the Transaction will be satisfied or waived, nor can there be any certainty of the timing of their satisfaction or waiver.
Termination of the arrangement agreement, costs, and termination fee
The arrangement agreement may be terminated by Rogers or Shaw in certain circumstances, in which case the Transaction will not be completed. Accordingly, there is no certainty, nor can we provide any assurance, that the arrangement agreement will not be terminated by us or Shaw prior to completion of the Transaction.
We must pay certain costs relating to the Transaction, such as legal, accounting, tax, and financing-related fees, even if the Transaction is not completed, which may be significant. In addition, if the Transaction is not completed for certain reasons, we may be required to pay a reverse termination fee of
If the Transaction is not completed or is delayed, our share price and future business and financial results could be negatively affected. Any non-completion or delay of the Transaction may also negatively impact the relationships we have with our employees (including a potential lack of focus on our business), suppliers, vendors, distributors, retailers, dealers, or customers, including that such groups could cease doing business with us or curtail their activities with us.
Financing and potential credit rating consequences
The arrangement agreement does not contain a financing condition. Although we have a binding commitment letter for a committed credit facility of up to
In addition to assuming approximately
Additionally, as a result of the significant increase in outstanding debt, there is a risk that our credit ratings could be adversely affected, including the potential for a downgrade below investment-grade. A downgrade in our credit ratings could result in difficulty issuing debt in the future or higher borrowing costs and may otherwise affect our share price. If Shaw's existing senior notes are subject to a downgrade below investment-grade constituting a "change of control trigger event" (as defined in Shaw's senior note indenture), Shaw would be required to offer to purchase its senior notes at
Expected synergies and integration
Achieving the anticipated benefits of the Transaction depends on our ability to consolidate and integrate Shaw's businesses, operations, and workforce in a manner that facilitates growth opportunities and achieves the projected cost savings and revenue growth without adversely affecting the combined company's current operations. Even if we successfully integrate Shaw's businesses, the anticipated benefits of the Transaction may not be fully realized or they could take longer to realize than expected.
In addition to the day-to-day operations of Rogers, management will need to focus on the Transaction and all related activities, including integration. If completion of the Transaction is delayed, there could be adverse effects on our business, results of operations, or financial condition.
Shaw actions prior to closing
The arrangement agreement restricts Shaw from taking certain actions outside of the ordinary course of business while the Transaction is pending, including, among other things, certain acquisitions or dispositions of businesses and assets, entering into or amending certain contracts, repurchasing or issuing securities, making significant capital expenditures, and incurring indebtedness, in each case subject to certain exceptions. As a result of these restrictions, Shaw may not have the flexibility to appropriately respond to certain events, which may result in us recognizing lower-than-expected synergies once the Transaction closes.
Corporate Governance Updates
On October 22, 2021, the Board was reconstituted with the appointment of Jack Cockwell, Michael Cooper, Ivan Fecan, Jan Innes, and John Kerr. In addition, on November 16, 2021, Tony Staffieri was appointed as Interim President and Chief Executive Officer and subsequently, on January 10, 2022, appointed as President and Chief Executive Officer and as a member of the Board.
Key Performance Indicators
We measure the success of our strategy using a number of key performance indicators that are defined and discussed in our 2020 Annual MD&A and this earnings release. We believe these key performance indicators allow us to appropriately measure our performance against our operating strategy and against the results of our peers and competitors. The following key performance indicators, some of which are non-GAAP or other financial measures (see "Non-GAAP and Other Financial Measures"), are not measurements in accordance with IFRS and should not be considered alternatives to net income or any other measure of performance under IFRS. They include:
- subscriber counts;
- Wireless;
- Cable; and
- homes passed (Cable);
- Wireless subscriber churn (churn);
- Wireless blended average billings per user (ABPU);
- Wireless blended average revenue per user (ARPU);
- Cable average revenue per account (ARPA);
- Cable customer relationships;
- Cable market penetration (penetration);
- capital intensity; and
- total service revenue.
Non-GAAP and Other Financial Measures
We use the following non-GAAP and other financial measures. These are reviewed regularly by management and the Board in assessing our performance and making decisions regarding the ongoing operations of our business and its ability to generate cash flows. Some or all of these measures may also be used by investors, lending institutions, and credit rating agencies as indicators of our operating performance, of our ability to incur and service debt, and as measurements to value companies in the telecommunications sector. These are not standardized measures under IFRS, so may not be reliable ways to compare us to other companies.
| Non-GAAP financial measures | |||||
| Specified financial measure | How it is useful | How we calculate it | Most directly comparable IFRS financial measure | ||
| Adjusted net income | ● | To assess the performance of our businesses before the effects of the noted items, because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding these items does not imply that they are non-recurring. | Net income add (deduct) restructuring, acquisition and other; loss (recovery) on sale or wind down of investments; loss (gain) on disposition of property, plant and equipment; (gain) on acquisitions; loss on non-controlling interest purchase obligations; loss on repayment of long-term debt; loss on bond forward derivatives; and income tax adjustments on these items, including adjustments as a result of legislative changes. | Net income | |
| Adjusted Wireless service revenue | ● | To facilitate the calculation of Wireless blended average billings per user (see Non-GAAP ratios). | Wireless service revenue add (deduct) amortization of contract assets and contract liabilities to accounts receivable; and financing receivable billings. | Wireless service revenue | |
| Non-GAAP ratios | |||||
| Specified financial measure | How it is useful | How we calculate it | |||
| Adjusted basic earnings per share Adjusted diluted earnings per share | ● | To assess the performance of our businesses before the effects of the noted items, because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding these items does not imply that they are non-recurring. | Adjusted net income divided by basic weighted average shares outstanding. Adjusted net income including the dilutive effect of stock-based compensation divided by diluted weighted average shares outstanding. | ||
| Wireless blended average billings per user (ABPU) | ● | To help us identify trends in our total monthly billings per subscriber and to measure our success in attracting and retaining higher-value subscribers. | Adjusted Wireless service revenue divided by average total number of Wireless subscribers for the relevant period. | ||
| Total of segments measures | |||||
| Specified financial measure | Most directly comparable IFRS financial measure | ||||
| Adjusted EBITDA | Net income | ||||
| Capital management measures | |||||
| Specified financial measure | How it is useful | ||||
| Free cash flow | ● | To show how much cash we generate that is available to repay debt and reinvest in our company, which is an important indicator of our financial strength and performance. | |||
| ● | We believe that some investors and analysts use free cash flow to value a business and its underlying assets. | ||||
| Adjusted net debt | ● | We believe this helps investors and analysts analyze our debt and cash balances while taking into account the impact of debt derivatives on our US dollar-denominated debt. | |||
| Debt leverage ratio | ● | We believe this helps investors and analysts analyze our ability to service our debt obligations. | |||
| Available liquidity | ● | To help determine if we are able to meet all of our commitments, to execute our business plan, and to mitigate the risk of economic downturns. | |||
| Supplementary financial measures | |||||
| Specified financial measure | How we calculate it | ||||
| Adjusted EBITDA margin | Adjusted EBITDA divided by revenue. | ||||
| Wireless blended average revenue per user (ARPU) | Wireless service revenue divided by average total number of Wireless subscribers for the relevant period. | ||||
| Cable average revenue per account (ARPA) | Cable service revenue divided by average total number of customer relationships for the relevant period. | ||||
| Capital intensity | Capital expenditures divided by revenue. | ||||
Reconciliation of adjusted EBITDA
| Three months ended December 31 | Twelve months ended December 31 | ||||||
| (In millions of dollars) | 2021 | 2020 | 2021 | 2020 | |||
| Net income | 405 | 449 | 1,558 | 1,592 | |||
| Add: | |||||||
| Income tax expense | 152 | 172 | 569 | 580 | |||
| Finance costs | 218 | 228 | 849 | 881 | |||
| Depreciation and amortization | 658 | 666 | 2,585 | 2,618 | |||
| EBITDA | 1,433 | 1,515 | 5,561 | 5,671 | |||
| Add (deduct): | |||||||
| Other (income) expense | (12 | ) | 2 | 2 | 1 | ||
| Restructuring, acquisition and other | 101 | 73 | 324 | 185 | |||
| Adjusted EBITDA | 1,522 | 1,590 | 5,887 | 5,857 | |||
Reconciliation of adjusted net income
| Three months ended December 31 | Twelve months ended December 31 | ||||||||
| (In millions of dollars) | 2021 | 2020 | 2021 | 2020 | |||||
| Net income | 405 | 449 | 1,558 | 1,592 | |||||
| Add (deduct): | |||||||||
| Restructuring, acquisition and other | 101 | 73 | 324 | 185 | |||||
| Income tax impact of above items | (20 | ) | (22 | ) | (79 | ) | (52 | ) | |
| Adjusted net income | 486 | 500 | 1,803 | 1,725 | |||||
Reconciliation of free cash flow
| Three months ended December 31 | Twelve months ended December 31 | ||||||||
| (In millions of dollars) | 2021 | 2020 | 2021 | 2020 | |||||
| Cash provided by operating activities | 1,147 | 947 | 4,161 | 4,321 | |||||
| Add (deduct): | |||||||||
| Capital expenditures | (846 | ) | (656 | ) | (2,788 | ) | (2,312 | ) | |
| Interest on borrowings, net of capitalized interest | (183 | ) | (191 | ) | (728 | ) | (761 | ) | |
| Interest paid | 231 | 194 | 802 | 808 | |||||
| Restructuring, acquisition and other | 101 | 73 | 324 | 185 | |||||
| Program rights amortization | (22 | ) | (23 | ) | (68 | ) | (77 | ) | |
| Change in net operating assets and liabilities | 50 | 265 | (37 | ) | 333 | ||||
| Other adjustments 1 | (10 | ) | (41 | ) | 5 | (131 | ) | ||
| Free cash flow | 468 | 568 | 1,671 | 2,366 | |||||
1 Other adjustments consists of post-employment benefit contributions, net of expense, cash flows relating to other operating activities, and other (income) expense from our financial statements.
Reconciliation of adjusted net debt
| As at December 31 | As at December 31 | |||
| (In millions of dollars) | 2021 | 2020 | ||
| Current portion of long-term debt | 1,551 | 1,450 | ||
| Long-term debt | 17,137 | 16,751 | ||
| Deferred transaction costs and discounts | 185 | 172 | ||
| 18,873 | 18,373 | |||
| Add (deduct): | ||||
| Subordinated notes adjustment 1 | (1,000 | ) | — | |
| Net debt derivative assets 2 | (1,260 | ) | (1,086 | ) |
| Credit risk adjustment related to net debt derivative assets 3 | (18 | ) | (15 | ) |
| Short-term borrowings | 2,200 | 1,221 | ||
| Current portion of lease liabilities | 336 | 278 | ||
| Lease liabilities | 1,621 | 1,557 | ||
| Cash and cash equivalents | (715 | ) | (2,484 | ) |
| Adjusted net debt | 20,037 | 17,844 | ||
1 For the purposes of calculating adjusted net debt, we believe adjusting
2 Net debt derivative assets consists of the net fair value of our debt derivatives on issued debt accounted for as hedges.
3 For accounting purposes in accordance with IFRS, we recognize the fair values of our debt derivatives using an estimated credit-adjusted mark-to-market valuation by discounting cash flows to measurement date. For purposes of calculating adjusted net debt, we believe including debt derivatives valued without adjustment for credit risk is commonly used to evaluate debt leverage and for market valuation and transactional purposes.
Reconciliation of adjusted Wireless service revenue and blended ABPU
| Three months ended December 31 | Twelve months ended December 31 | ||||||||
| (In millions of dollars. except subscribers (in 000s) and months) | 2021 | 2020 | 2021 | 2020 | |||||
| Wireless service revenue | 1,735 | 1,637 | 6,666 | 6,579 | |||||
| Add (deduct): | |||||||||
| Amortization of contract assets and contract liabilities to accounts receivable | 16 | 222 | 362 | 1,209 | |||||
| Financing receivable billings | 428 | 197 | 1,388 | 410 | |||||
| Adjusted Wireless service revenue | 2,179 | 2,056 | 8,416 | 8,198 | |||||
| Divided by: | |||||||||
| Average Wireless subscribers | 11,239 | 10,909 | 11,054 | 10,804 | |||||
| Months per period | 3 | 3 | 12 | 12 | |||||
| Blended ABPU | $64.62 | $63.45 | |||||||
Other Information
Consolidated financial results - quarterly summary
Below is a summary of our consolidated results for the past eight quarters.
| (In millions of dollars, except per share amounts) | 2021 | 2020 | |||||||||||||||||||||||
| Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||
| Revenue | |||||||||||||||||||||||||
| Wireless | 2,415 | 2,215 | 2,064 | 2,074 | 2,291 | 2,228 | 1,934 | 2,077 | |||||||||||||||||
| Cable | 1,023 | 1,016 | 1,013 | 1,020 | 1,019 | 988 | 966 | 973 | |||||||||||||||||
| Media | 516 | 473 | 546 | 440 | 409 | 489 | 296 | 412 | |||||||||||||||||
| Corporate items and intercompany eliminations | (35 | ) | (38 | ) | (41 | ) | (46 | ) | (39 | ) | (40 | ) | (41 | ) | (46 | ) | |||||||||
| Total revenue | 3,919 | 3,666 | 3,582 | 3,488 | 3,680 | 3,665 | 3,155 | 3,416 | |||||||||||||||||
| Total service revenue 1 | 3,232 | 3,149 | 3,131 | 3,021 | 3,023 | 3,086 | 2,797 | 3,049 | |||||||||||||||||
| Adjusted EBITDA | |||||||||||||||||||||||||
| Wireless | 1,086 | 1,107 | 1,008 | 1,013 | 1,034 | 1,089 | 918 | 1,026 | |||||||||||||||||
| Cable | 518 | 516 | 492 | 487 | 520 | 508 | 454 | 453 | |||||||||||||||||
| Media | (26 | ) | 33 | (75 | ) | (59 | ) | 82 | 89 | (35 | ) | (85 | ) | ||||||||||||
| Corporate items and intercompany eliminations | (56 | ) | (56 | ) | (51 | ) | (50 | ) | (46 | ) | (48 | ) | (43 | ) | (59 | ) | |||||||||
| Adjusted EBITDA | 1,522 | 1,600 | 1,374 | 1,391 | 1,590 | 1,638 | 1,294 | 1,335 | |||||||||||||||||
| Deduct (add): | |||||||||||||||||||||||||
| Depreciation and amortization | 658 | 642 | 647 | 638 | 666 | 663 | 650 | 639 | |||||||||||||||||
| Restructuring, acquisition and other | 101 | 63 | 115 | 45 | 73 | 49 | 42 | 21 | |||||||||||||||||
| Finance costs | 218 | 207 | 206 | 218 | 228 | 219 | 214 | 220 | |||||||||||||||||
| Other (income) expense | (12 | ) | 20 | (7 | ) | 1 | 2 | 6 | 7 | (14 | ) | ||||||||||||||
| Net income before income tax expense | 557 | 668 | 413 | 489 | 621 | 701 | 381 | 469 | |||||||||||||||||
| Income tax expense | 152 | 178 | 111 | 128 | 172 | 189 | 102 | 117 | |||||||||||||||||
| Net income | 405 | 490 | 302 | 361 | 449 | 512 | 279 | 352 | |||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||||
| Basic | $0.80 | ||||||||||||||||||||||||
| Diluted | $0.80 | ||||||||||||||||||||||||
| Net income | 405 | 490 | 302 | 361 | 449 | 512 | 279 | 352 | |||||||||||||||||
| Add (deduct): | |||||||||||||||||||||||||
| Restructuring, acquisition and other | 101 | 63 | 115 | 45 | 73 | 49 | 42 | 21 | |||||||||||||||||
| Income tax impact of above items | (20 | ) | (17 | ) | (30 | ) | (12 | ) | (19 | ) | (13 | ) | (11 | ) | (6 | ) | |||||||||
| Income tax adjustment, legislative tax change | — | — | — | — | (3 | ) | — | — | — | ||||||||||||||||
| Adjusted net income | 486 | 536 | 387 | 394 | 500 | 548 | 310 | 367 | |||||||||||||||||
| Adjusted earnings per share: | |||||||||||||||||||||||||
| Basic | $0.96 | ||||||||||||||||||||||||
| Diluted | $0.96 | ||||||||||||||||||||||||
| Capital expenditures | 846 | 739 | 719 | 484 | 656 | 504 | 559 | 593 | |||||||||||||||||
| Cash provided by operating activities | 1,147 | 1,319 | 1,016 | 679 | 947 | 986 | 1,429 | 959 | |||||||||||||||||
| Free cash flow | 468 | 507 | 302 | 394 | 568 | 868 | 468 | 462 | |||||||||||||||||
1 As defined. See "Key Performance Indicators".
Supplementary Information
Rogers Communications Inc.
Interim Condensed Consolidated Statements of Income
(In millions of dollars, except for per share amounts, unaudited)
| Three months ended December 31 | Twelve months ended December 31 | |||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||
| Revenue | 3,919 | 3,680 | 14,655 | 13,916 | ||||||
| Operating expenses: | ||||||||||
| Operating costs | 2,397 | 2,090 | 8,768 | 8,059 | ||||||
| Depreciation and amortization | 658 | 666 | 2,585 | 2,618 | ||||||
| Restructuring, acquisition and other | 101 | 73 | 324 | 185 | ||||||
| Finance costs | 218 | 228 | 849 | 881 | ||||||
| Other (income) expense | (12 | ) | 2 | 2 | 1 | |||||
| Income before income tax expense | 557 | 621 | 2,127 | 2,172 | ||||||
| Income tax expense | 152 | 172 | 569 | 580 | ||||||
| Net income for the period | 405 | 449 | 1,558 | 1,592 | ||||||
| Earnings per share: | ||||||||||
| Basic | $0.80 | $3.09 | ||||||||
| Diluted | $0.80 | $3.07 | ||||||||
Rogers Communications Inc.
Interim Condensed Consolidated Statements of Financial Position
(In millions of dollars, unaudited)
| As at December 31 | As at December 31 | |
| 2021 | 2020 | |
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | 715 | 2,484 |
| Accounts receivable | 3,847 | 2,856 |
| Inventories | 535 | 479 |
| Current portion of contract assets | 115 | 533 |
| Other current assets | 497 | 516 |
| Current portion of derivative instruments | 120 | 61 |
| Total current assets | 5,829 | 6,929 |
| Property, plant and equipment | 14,666 | 14,018 |
| Intangible assets | 12,281 | 8,926 |
| Investments | 2,493 | 2,536 |
| Derivative instruments | 1,431 | 1,378 |
| Financing receivables | 854 | 748 |
| Other long-term assets | 385 | 346 |
| Goodwill | 4,024 | 3,973 |
| Total assets | 41,963 | 38,854 |
| Liabilities and shareholders' equity | ||
| Current liabilities: | ||
| Short-term borrowings | 2,200 | 1,221 |
| Accounts payable and accrued liabilities | 3,416 | 2,714 |
| Income tax payable | 115 | 344 |
| Other current liabilities | 607 | 243 |
| Contract liabilities | 394 | 336 |
| Current portion of long-term debt | 1,551 | 1,450 |
| Current portion of lease liabilities | 336 | 278 |
| Total current liabilities | 8,619 | 6,586 |
| Provisions | 50 | 42 |
| Long-term debt | 17,137 | 16,751 |
| Lease liabilities | 1,621 | 1,557 |
| Other long-term liabilities | 565 | 1,149 |
| Deferred tax liabilities | 3,439 | 3,196 |
| Total liabilities | 31,431 | 29,281 |
| Shareholders' equity | 10,532 | 9,573 |
| Total liabilities and shareholders' equity | 41,963 | 38,854 |
Rogers Communications Inc.
Interim Condensed Consolidated Statements of Cash Flows
(In millions of dollars, unaudited)
| Three months ended December 31 | Twelve months ended December 31 | ||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||
| Operating activities: | |||||||||
| Net income for the period | 405 | 449 | 1,558 | 1,592 | |||||
| Adjustments to reconcile net income to cash provided by operating activities: | |||||||||
| Depreciation and amortization | 658 | 666 | 2,585 | 2,618 | |||||
| Program rights amortization | 22 | 23 | 68 | 77 | |||||
| Finance costs | 218 | 228 | 849 | 881 | |||||
| Income tax expense | 152 | 172 | 569 | 580 | |||||
| Post-employment benefits contributions, net of expense | 42 | 39 | (5 | ) | 13 | ||||
| Other | (44 | ) | 4 | 2 | 119 | ||||
| Cash provided by operating activities before changes in net operating assets and liabilities, income taxes paid, and interest paid | 1,453 | 1,581 | 5,626 | 5,880 | |||||
| Change in net operating assets and liabilities | (50 | ) | (265 | ) | 37 | (333 | ) | ||
| Income taxes paid | (25 | ) | (175 | ) | (700 | ) | (418 | ) | |
| Interest paid | (231 | ) | (194 | ) | (802 | ) | (808 | ) | |
| Cash provided by operating activities | 1,147 | 947 | 4,161 | 4,321 | |||||
| Investing activities: | |||||||||
| Capital expenditures | (846 | ) | (656 | ) | (2,788 | ) | (2,312 | ) | |
| Additions to program rights | (13 | ) | (12 | ) | (54 | ) | (57 | ) | |
| Changes in non-cash working capital related to capital expenditures and intangible assets | 12 | 97 | 67 | (37 | ) | ||||
| Acquisitions and other strategic transactions, net of cash acquired | (2,661 | ) | (95 | ) | (3,404 | ) | (103 | ) | |
| Other | 16 | 11 | 46 | (49 | ) | ||||
| Cash used in investing activities | (3,492 | ) | (655 | ) | (6,133 | ) | (2,558 | ) | |
| Financing activities: | |||||||||
| Net (repayment of) proceeds received from short-term borrowings | (172 | ) | 256 | 971 | (1,146 | ) | |||
| Net issuance of long-term debt | 2,000 | — | 550 | 2,540 | |||||
| Net proceeds (payments) on settlement of debt derivatives and forward contracts | 8 | — | (8 | ) | 80 | ||||
| Transaction costs incurred | (20 | ) | (1 | ) | (31 | ) | (23 | ) | |
| Principal payments of lease liabilities | (75 | ) | (58 | ) | (269 | ) | (213 | ) | |
| Dividends paid | (253 | ) | (253 | ) | (1,010 | ) | (1,011 | ) | |
| Cash provided by (used in) financing activities | 1,488 | (56 | ) | 203 | 227 | ||||
| Change in cash and cash equivalents | (857 | ) | 236 | (1,769 | ) | 1,990 | |||
| Cash and cash equivalents, beginning of period | 1,572 | 2,248 | 2,484 | 494 | |||||
| Cash and cash equivalents, end of period | 715 | 2,484 | 715 | 2,484 | |||||
Change in net operating assets and liabilities
| Three months ended December 31 | Twelve months ended December 31 | ||||||||
| (In millions of dollars) | 2021 | 2020 | 2021 | 2020 | |||||
| Accounts receivable, excluding financing receivables | (125 | ) | 30 | (78 | ) | 455 | |||
| Financing receivables | (306 | ) | (540 | ) | (840 | ) | (1,658 | ) | |
| Contract assets | 36 | 256 | 417 | 1,170 | |||||
| Inventories | (139 | ) | (17 | ) | (56 | ) | (19 | ) | |
| Other current assets | 21 | (60 | ) | 13 | (132 | ) | |||
| Accounts payable and accrued liabilities | 424 | 15 | 556 | (326 | ) | ||||
| Other liabilities | 39 | 51 | 25 | 177 | |||||
| Total change in net operating assets and liabilities | (50 | ) | (265 | ) | 37 | (333 | ) | ||
Investments
| As at December 31 | As at December 31 | |
| (In millions of dollars) | 2021 | 2020 |
| Investments in: | ||
| Publicly traded companies | 1,581 | 1,535 |
| Private companies | 53 | 97 |
| Investments, measured at fair value through other comprehensive income | 1,634 | 1,632 |
| Investments, associates and joint ventures | 859 | 904 |
| Total investments | 2,493 | 2,536 |
Long-term debt
| Principal amount | Interest rate | As at December 31 | As at December 31 | ||||||
| (In millions of dollars, except interest rates) | Due date | 2021 | 2020 | ||||||
| Senior notes | 2021 | 1,450 | 5.340 | % | — | 1,450 | |||
| Senior notes | 2022 | 600 | 4.000 | % | 600 | 600 | |||
| Senior notes | 2022 | US | 750 | Floating | 951 | 955 | |||
| Senior notes | 2023 | US | 500 | 3.000 | % | 634 | 637 | ||
| Senior notes | 2023 | US | 850 | 4.100 | % | 1,078 | 1,082 | ||
| Senior notes | 2024 | 600 | 4.000 | % | 600 | 600 | |||
| Senior notes | 2025 | US | 700 | 3.625 | % | 886 | 890 | ||
| Senior notes | 2026 | US | 500 | 2.900 | % | 634 | 637 | ||
| Senior notes | 2027 | 1,500 | 3.650 | % | 1,500 | 1,500 | |||
| Senior notes | 2029 | 1,000 | 3.250 | % | 1,000 | 1,000 | |||
| Senior debentures 1 | 2032 | US | 200 | 8.750 | % | 254 | 255 | ||
| Senior notes | 2038 | US | 350 | 7.500 | % | 444 | 446 | ||
| 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 | % | 634 | 637 | ||
| Senior notes | 2043 | US | 650 | 5.450 | % | 823 | 827 | ||
| Senior notes | 2044 | US | 1,050 | 5.000 | % | 1,331 | 1,337 | ||
| Senior notes | 2048 | US | 750 | 4.300 | % | 951 | 955 | ||
| Senior notes | 2049 | US | 1,250 | 4.350 | % | 1,585 | 1,592 | ||
| Senior notes | 2049 | US | 1,000 | 3.700 | % | 1,268 | 1,273 | ||
| Subordinated notes 2 | 2081 | 2,000 | 5.000 | % | 2,000 | — | |||
| 18,873 | 18,373 | ||||||||
| Deferred transaction costs and discounts | (185 | ) | (172 | ) | |||||
| Less current portion | (1,551 | ) | (1,450 | ) | |||||
| Total long-term debt | 17,137 | 16,751 | |||||||
1 Senior debentures originally issued by Rogers Cable Inc. which are unsecured obligations of RCI and for which RCCI was an unsecured guarantor as at December 31, 2021 and December 31, 2020.
2 The subordinated notes can be redeemed at par on the five-year anniversary or on any subsequent interest payment date.
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;
- includes conclusions, forecasts, and projections that are based on our current objectives and strategies and on estimates, expectations, assumptions, and other factors that we believe to have been reasonable at the time they were applied but may prove to be incorrect; and
- was approved by our management on the date of this earnings release.
Our forward-looking information includes forecasts and projections related to the following items, among others:
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Specific forward-looking information included in this document includes, but is not limited to, information and statements under "2022 Outlook" relating to our 2022 consolidated guidance on total service revenue, adjusted EBITDA, capital expenditures, and free cash flow. All other statements that are not historical facts are forward-looking statements.
Our conclusions, forecasts, and projections are based on a number of estimates, expectations, assumptions, and other factors, including, among others:
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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 uncertainties
Actual events and results can be substantially different from what is expressed or implied by forward-looking information as a result of risks, uncertainties, and other factors, many of which are beyond our control, including, but not limited to:
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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 full-year 2022 guidance
Our 2022 guidance ranges presented in "2022 Outlook" are based on many assumptions including, but not limited to, the following material assumptions for the full-year 2022:
- a gradual improvement in the general COVID-19 environment throughout 2022, including the continued reopening of the economy, and no further significant restrictions, such as border closures and travel restrictions, capacity restrictions and sports venue closures, or stay-at-home orders and no material negative impact resulting from global supply chain interruptions;
- continued competitive intensity in all segments in which we operate consistent with levels experienced in 2021;
- no significant additional legal or regulatory developments, other shifts in economic conditions, or macro changes in the competitive environment affecting our business activities;
- Wireless customers continue to adopt, and upgrade to, higher-value smartphones at similar rates in 2022 compared to 2021;
- overall wireless market penetration in Canada grows in 2022 at a similar rate as in 2021;
- continued subscriber growth in Internet;
- declining Television subscribers, including the impact of customers migrating to Ignite TV from our legacy product, as subscription streaming services and other over-the-top providers continue to grow in popularity;
- in Media, continued growth in sports and relative stability in other traditional media businesses;
- no significant sports-related work stoppages or cancellations will occur and the current MLB lockout between the owners and the players' union will be resolved;
- with respect to the increase in capital expenditures:
- we continue to invest to ensure we have competitive wireless and cable networks through (i) expanding our 5G wireless network and (ii) upgrading our hybrid fibre-coaxial network to lower the number of homes passed per node, utilize the latest technologies, and deliver an even more reliable customer experience; and
- we continue to make expenditures related to our Connected Home roadmap in 2022 and we make progress on our service footprint expansion projects;
- a substantial portion of our 2022 US dollar-denominated expenditures is hedged at an average exchange rate of
$1.29 /US$; - key interest rates remain relatively stable throughout 2022; and
- we retain our investment-grade credit ratings.
Before making an investment decision
Before making any investment decisions and for a detailed discussion of the risks, uncertainties, and environment associated with our business, its operations, and its financial performance and condition, fully review the "Updates to Risks and Uncertainties" section in this earnings release and fully review the sections in our 2020 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 sedar.com, sec.gov, our website, or any other website referenced in this document is not part of or incorporated into this earnings release.
FAQ
What were Rogers Communications' Q4 2021 revenue results?
How many new postpaid subscribers did Rogers add in Q4 2021?
What is the adjusted EBITDA growth for Rogers in 2021?
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Did Rogers Communications experience any declines in their financial results?
