Rogers Communications(RCI) - 2022 Q3 - Quarterly Report

Management's Discussion and Analysis Introduction This MD&A provides business performance information for the three and nine months ended September 30, 2022, including forward-looking statements Report Overview and Scope This MD&A covers the company's business performance for the three and nine months ended September 30, 2022, and includes forward-looking information - MD&A covers business performance and future forward-looking information for the three and nine months ended September 30, 2022[2] - All amounts are in Canadian dollars, unaudited, with percentage changes calculated based on rounded figures[6] - Company shares are publicly traded on the Toronto Stock Exchange (TSX: RCI.A and RCI.B) and the New York Stock Exchange (NYSE: RCI)[7] Key Reporting Changes Effective January 1, 2022, the company adjusted certain subscriber metrics for wireless and cable to align with business management and industry practices - Effective January 1, 2022, wireless business reports postpaid/prepaid mobile phone subscribers and mobile phone ARPU, no longer reporting blended average billing per user (ABPU)[3] - Cable business began reporting retail internet, video, smart home monitoring, and home phone subscribers[3] - These changes aim to better align with industry practices and reflect significant adoption of wireless device financing plans[3] Operating Environment and Strategic Highlights The company navigates a recovering economy with inflation, addresses a major network outage, and pursues strategic goals including the Shaw acquisition Economic and Industry Context Canada's economy shows moderate recovery with increased travel, but rising inflation and central bank policies suggest a mild recession in early 2023 - Canadian economy moderately recovered due to increased immigration and lifted COVID-19 restrictions, leading to higher roaming revenue from increased travel[12] - Rising inflation and central bank policies led economists to predict a mild recession in Canada during the first half of 2023[13] July Network Outage Impact and Response A July 8, 2022, network outage led to a CAD 150 million credit issuance and a CAD 20 billion investment plan to enhance network resilience - A network outage occurred on July 8, 2022, affecting wireless and cable services[14] - The company issued approximately CAD 150 million in credits (July network outage-related credits), resulting in reduced wireless and cable revenue this quarter[14] - The company committed to investing CAD 20 billion over the next five years to enhance network resilience and signed a memorandum of understanding for emergency roaming, mutual assistance, and communication protocols with other major telecom operators[19] Strategic Focus Areas and Achievements Strategic priorities include the Shaw acquisition, network investment, customer experience enhancement, and strong financial performance, with key achievements in 5G expansion and media - Strategic focus areas include successful completion of the Shaw acquisition and integration, investment in world-class networks, enhanced customer experience, and strong financial performance[15][16][17][18] - Reached a definitive agreement with Shaw and Quebecor for the divestiture of Freedom Mobile, subject to regulatory approvals[19] - Expanded Canada's largest 5G network, covering over 1,800 communities, and launched a Wi-Fi 6E modem[19] - The 2022 Blue Jays™ season was the highest-rated since 2016, and the company renewed naming rights for Rogers Arena and the exclusive regional TV and radio partnership for Sportsnet[19] Quarterly Financial Highlights The quarter saw mixed financial results with revenue growth, but declines in adjusted EBITDA and net income, alongside reduced cash flow Revenue Performance Total revenue and service revenue grew by 2% and 3% respectively, driven by wireless and media, despite the impact of July network outage credits 2022 Q3 Revenue Performance (Year-over-Year) | Indicator | 2022 Q3 (CAD millions) | 2021 Q3 (CAD millions) | YoY Change (%) | YoY Change Excluding Outage Impact (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | 3,743 | 3,666 | 2 | 6 | | Total Service Revenue | 3,230 | 3,149 | 3 | 7 | | Wireless Service Revenue | 1,761 | 1,706 | 3 | 9 | | Wireless Equipment Revenue | 506 | 509 | (1) | - | | Cable Service Revenue | 968 | 1,008 | (4) | 2 | | Media Revenue | 530 | 473 | 12 | 12 | Adjusted EBITDA and Margins Consolidated adjusted EBITDA decreased by 1%, with a 130 basis point margin decline, primarily due to impacts on wireless and cable segments 2022 Q3 Adjusted EBITDA Performance (Year-over-Year) | Indicator | 2022 Q3 (CAD millions) | 2021 Q3 (CAD millions) | YoY Change (%) | YoY Change Excluding Outage Impact (%) | | :--- | :--- | :--- | :--- | :--- | | Consolidated Adjusted EBITDA | 1,583 | 1,600 | (1) | 8 | | Consolidated Adjusted EBITDA Margin | 42.3% | 43.6% | (1.3 pts) | 0.9 pts | | Wireless Adjusted EBITDA | 1,093 | 1,107 | (1) | 7 | | Wireless Adjusted EBITDA Service Margin | 62.1% | 64.9% | (2.8 pts) | - | | Cable Adjusted EBITDA | 465 | 516 | (10) | 2 | | Cable Adjusted EBITDA Margin | 47.7% | 50.8% | (3.1 pts) | - | | Media Adjusted EBITDA | 76 | 33 | 130 | 130 | Net Income and Adjusted Net Income Net income and adjusted net income decreased by 24% and 19% respectively, mainly due to higher finance costs and network outage credits 2022 Q3 Net Income Performance (Year-over-Year) | Indicator | 2022 Q3 (CAD millions) | 2021 Q3 (CAD millions) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Net Income | 371 | 490 | (24) | | Adjusted Net Income | 436 | 536 | (19) | - Net income and adjusted net income decline primarily due to higher finance costs from Shaw senior notes financing and the impact of July network outage-related credits[27] Cash Flow and Available Liquidity Operating cash flow decreased by 8%, and free cash flow by 45%, influenced by increased capital expenditures and higher interest expenses 2022 Q3 Cash Flow Performance (Year-over-Year) | Indicator | 2022 Q3 (CAD millions) | 2021 Q3 (CAD millions) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Cash Flow from Operating Activities | 1,216 | 1,319 | (8) | | Free Cash Flow | 279 | 507 | (45) | - Free cash flow decreased primarily due to increased capital expenditures and higher interest on borrowings[28] - As of September 30, 2022, available liquidity was CAD 3.7 billion, including CAD 700 million in cash and cash equivalents and CAD 3.0 billion in bank credit facilities[28] - Held CAD 12.8 billion in restricted cash and cash equivalents, intended to partially fund the cash consideration for the Shaw transaction[28] Shaw Transaction The company's acquisition of Shaw for approximately CAD 26 billion faces ongoing regulatory scrutiny and financing complexities Transaction Overview and Valuation The company announced the acquisition of Shaw for CAD 40.50 per share, totaling approximately CAD 26 billion including assumed debt - The company announced the acquisition of Shaw on March 15, 2021, for a total value of approximately CAD 26 billion, including the assumption of approximately CAD 6.0 billion of Shaw's debt[30] - Shaw family shareholders will receive consideration in the form of 60% RCI Class B non-voting common shares and 40% cash[30] - The transaction requires key regulatory approvals under the Competition Act (Canada) and the Radiocommunication Act (Canada)[31] Financing Details Shaw transaction financing involved issuing CAD 7.05 billion and CAD 4.25 billion senior notes, with CAD 12.8 billion restricted cash for the cash consideration - Issued CAD 7.05 billion and CAD 4.25 billion in senior notes, and terminated a CAD 19.0 billion committed credit facility[32] - Approximately CAD 12.8 billion in funds were classified as "restricted cash and cash equivalents" to fund the cash consideration for the transaction[32] - The special mandatory redemption deadline for the senior notes was extended to December 31, 2023, with an initial consent fee of CAD 551 million paid to noteholders[33] Regulatory Approval Status CRTC approved the Shaw broadcast services acquisition, but the Competition Bureau opposes the deal, leading to ongoing tribunal proceedings and ISED Canada's conditional approval for Freedom Mobile's spectrum transfer - CRTC approved the acquisition of Shaw's broadcasting services on March 24, 2022, but the Competition Bureau filed an application opposing the transaction on May 9, 2022[35][36] - The company announced an agreement with Shaw and Quebecor to divest Freedom Mobile (Freedom Transaction) on June 17, 2022, to address competition concerns[37] - Innovation, Science and Economic Development Canada (ISED Canada) rejected the request to transfer Freedom spectrum licenses to Rogers on October 25, 2022, and set conditions for their transfer to Videotron[40] - Competition Tribunal proceedings commenced on November 7, 2022, after mediation with the Competition Bureau failed to reach a settlement[41] Summary of Consolidated Financial Results Consolidated financial results show a 2% revenue increase, a 1% adjusted EBITDA decrease, and a 24% net income decline for the quarter Consolidated Financial Performance The company reported a 2% increase in total revenue, a 1% decrease in adjusted EBITDA, and a 24% drop in net income for the quarter 2022 Q3 Consolidated Financial Results Summary | Indicator | 2022 Q3 (CAD millions) | 2021 Q3 (CAD millions) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 3,743 | 3,666 | 2 | | Total Service Revenue | 3,230 | 3,149 | 3 | | Adjusted EBITDA | 1,583 | 1,600 | (1) | | Adjusted EBITDA Margin | 42.3% | 43.6% | (1.3 pts) | | Net Income | 371 | 490 | (24) | | Basic Earnings Per Share | $0.73 | $0.97 | (25) | | Adjusted Net Income | 436 | 536 | (19) | | Capital Expenditures | 872 | 739 | 18 | | Cash Flow from Operating Activities | 1,216 | 1,319 | (8) | | Free Cash Flow | 279 | 507 | (45) | | Free Cash Flow (Excluding Shaw Financing) | 347 | 507 | (32) | - Excluding July network outage-related credits, total revenue and total service revenue would have increased by 6% and 7% respectively, and adjusted EBITDA would have increased by 8%[44] Results of our Reportable Segments Performance varied across segments, with wireless service revenue growth, cable service revenue decline, and strong media revenue growth Wireless Wireless service revenue grew 3%, but adjusted EBITDA declined 1% due to network outage credits, while postpaid mobile phone net additions remained strong 2022 Q3 Wireless Financial Results (Year-over-Year) | Indicator | 2022 Q3 (CAD millions) | 2021 Q3 (CAD millions) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Service Revenue | 1,761 | 1,706 | 3 | | Equipment Revenue | 506 | 509 | (1) | | Total Revenue | 2,267 | 2,215 | 2 | | Adjusted EBITDA | 1,093 | 1,107 | (1) | | Adjusted EBITDA Service Margin | 62.1% | 64.9% | (2.8 pts) | | Capital Expenditures | 543 | 365 | 49 | 2022 Q3 Wireless Subscriber Data (Year-over-Year) | Indicator | 2022 Q3 (thousands) | 2021 Q3 (thousands) | Change (thousands) | | :--- | :--- | :--- | :--- | | Postpaid Mobile Phone Net Additions | 164 | 180 | (16) | | Total Postpaid Mobile Phone Subscribers | 9,199 | 8,706 | 493 | | Postpaid Churn Rate (Monthly) | 0.97% | 0.85% | 0.12 pts | | Prepaid Mobile Phone Net Additions | 57 | 11 | 46 | | Total Prepaid Mobile Phone Subscribers | 1,262 | 1,187 | 75 | | Mobile Phone ARPU (Monthly) | $56.82 | $58.13 | ($1.31) | - Service revenue growth was primarily driven by increased roaming revenue and a larger mobile phone subscriber base, partially offset by July network outage-related credits[47][48] - Equipment revenue decreased due to fewer existing subscribers upgrading devices and fewer new subscribers purchasing devices[50][52] Cable Cable service revenue decreased by 4% and adjusted EBITDA by 10%, impacted by network outage credits, competitive promotions, and subscriber losses 2022 Q3 Cable Financial Results (Year-over-Year) | Indicator | 2022 Q3 (CAD millions) | 2021 Q3 (CAD millions) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Service Revenue | 968 | 1,008 | (4) | | Equipment Revenue | 7 | 8 | (13) | | Total Revenue | 975 | 1,016 | (4) | | Adjusted EBITDA | 465 | 516 | (10) | | Adjusted EBITDA Margin | 47.7% | 50.8% | (3.1 pts) | | Capital Expenditures | 259 | 237 | 9 | 2022 Q3 Cable Subscriber Data (Year-over-Year) | Indicator | 2022 Q3 (thousands) | 2021 Q3 (thousands) | Change (thousands) | | :--- | :--- | :--- | :--- | | Customer Relationship Net (Loss) Additions | (7) | 8 | (15) | | Total Customer Relationships | 2,596 | 2,571 | 25 | | ARPA (Monthly) | $124.34 | $131.79 | ($7.45) | | Retail Internet Net Additions | 6 | 20 | (14) | | Total Retail Internet Subscribers | 2,277 | 2,208 | 69 | | Video Net Additions (Loss) | 7 | 2 | 5 | | Total Video Subscribers | 1,535 | 1,486 | 49 | | Home Phone Net Losses | (18) | (20) | 2 | - Service revenue decline primarily due to July network outage-related credits, competitive promotional activities, and a decrease in home phone and smart home monitoring subscriber bases[55] - Net customer relationship losses, reduced retail internet net additions, and ARPA decline are results of the July network outage and increased competition[56] Media Media revenue increased by 12% and adjusted EBITDA by 130%, driven by higher Toronto Blue Jays revenue and lower programming costs 2022 Q3 Media Financial Results (Year-over-Year) | Indicator | 2022 Q3 (CAD millions) | 2021 Q3 (CAD millions) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 530 | 473 | 12 | | Adjusted EBITDA | 76 | 33 | 130 | | Adjusted EBITDA Margin | 14.3% | 7.0% | 7.3 pts | | Capital Expenditures | 28 | 23 | 22 | - Revenue growth primarily due to increased Toronto Blue Jays revenue as Rogers Centre audience capacity was restored[61] - Adjusted EBITDA growth primarily due to increased revenue, associated cost increases, and lower programming costs resulting from the timing of NHL playoff games[62][63] Capital Expenditures Total capital expenditures increased by 18% to CAD 872 million, reflecting strategic investments in 5G, fiber deployment, and network resilience Overall Capital Expenditure Trends Total capital expenditures increased by 18% to CAD 872 million, with capital intensity rising to 23.3%, driven by network investments 2022 Q3 Capital Expenditures (Year-over-Year) | Indicator | 2022 Q3 (CAD millions) | 2021 Q3 (CAD millions) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total Capital Expenditures | 872 | 739 | 18 | | Capital Intensity | 23.3% | 20.2% | 3.1 pts | - The company plans to invest more in wireless and cable networks to deploy 5G, expand fiber deployment (including FTTH), and enhance network resilience[64][65] Wireless Capital Expenditures Wireless capital expenditures increased by 49% to upgrade the network and deploy 3500 MHz spectrum for enhanced 5G capacity and resilience - Wireless capital expenditures increased by 49%, primarily for upgrading the wireless network, including deploying 3500 MHz spectrum licenses in multiple Canadian cities to enhance 5G network capacity and resilience[66] Cable Capital Expenditures Cable capital expenditures increased by 9%, reflecting ongoing investments in fiber deployment and DOCSIS platform upgrades for network resilience and speed - Cable capital expenditures increased by 9%, reflecting ongoing investments in network infrastructure, including increased fiber deployment to enhance FTTH coverage and upgrading the DOCSIS 3.1 platform to DOCSIS 4.0 for stronger network resilience and faster download speeds[67] Media Capital Expenditures Media capital expenditures increased by 22%, primarily due to infrastructure spending for the Toronto Blue Jays stadium - Media capital expenditures increased by 22%, primarily due to increased infrastructure spending for the Toronto Blue Jays stadium, partially offset by lower Sportsnet digital infrastructure costs[68] Corporate Capital Expenditures Corporate capital expenditures decreased by 63%, mainly due to reduced investments in the company's information technology infrastructure - Corporate capital expenditures decreased by 63%, primarily due to reduced investments in the company's information technology infrastructure[69] Review of Consolidated Performance This section reviews key consolidated financial performance metrics including depreciation, restructuring costs, finance costs, and net income Depreciation and Amortization Total depreciation and amortization remained flat at CAD 644 million, with varying trends across property, plant, equipment, and right-of-use assets 2022 Q3 Depreciation and Amortization (Year-over-Year) | Indicator | 2022 Q3 (CAD millions) | 2021 Q3 (CAD millions) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Depreciation of Property, Plant and Equipment | 567 | 577 | (2) | | Depreciation of Right-of-Use Assets | 71 | 61 | 16 | | Amortization | 6 | 4 | 50 | | Total Depreciation and Amortization | 644 | 642 | — | Restructuring, Acquisition and Other Expenses Restructuring, acquisition, and other expenses increased by 35% to CAD 85 million, primarily due to Shaw transaction costs and employee severance 2022 Q3 Restructuring, Acquisition and Other Expenses (Year-over-Year) | Indicator | 2022 Q3 (CAD millions) | 2021 Q3 (CAD millions) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Restructuring, Acquisition and Other Expenses | 85 | 63 | 35 | | Of which: Incremental Transaction-Related Costs | 54 | 45 | 20 | - Remaining costs primarily relate to severance for employee restructuring[75] Finance Costs Finance costs increased by 60% to CAD 331 million, driven by higher interest on new debt, partially offset by interest income from restricted cash 2022 Q3 Finance Costs (Year-over-Year) | Indicator | 2022 Q3 (CAD millions) | 2021 Q3 (CAD millions) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Interest on Borrowings | 227 | 184 | 23 | | Interest on Shaw Senior Notes Financing | 139 | — | — | | Total Interest on Borrowings | 366 | 184 | 99 | | Interest Income on Restricted Cash and Cash Equivalents | (71) | — | — | | Net Interest on Borrowings | 295 | 184 | 60 | | Interest on Lease Liabilities | 21 | 18 | 17 | | Foreign Exchange Loss | 127 | 19 | n/m | | Total Finance Costs | 331 | 207 | 60 | - Significant increase in finance costs primarily due to new debt issuances, including CAD 2.0 billion subordinated notes issued in December 2021, CAD 750 million subordinated notes issued in February 2022, and CAD 4.25 billion and CAD 7.05 billion senior notes issued in March 2022[77][79] Income Tax Expense Income tax expense decreased by 25% to CAD 133 million, with a 26.4% effective tax rate, and lower cash tax payments due to installment timing 2022 Q3 Income Tax Expense (Year-over-Year) | Indicator | 2022 Q3 (CAD millions) | 2021 Q3 (CAD millions) | | :--- | :--- | :--- | | Income Tax Expense | 133 | 178 | | Effective Income Tax Rate | 26.4% | 26.6% | | Cash Income Tax Paid | 145 | 175 | - Cash income tax paid decreased primarily due to the timing of installment payments, and 2021 included final tax amounts from the 2020 equipment financing business model transition[78] Net Income and Adjusted Net Income Net income decreased by 24% to CAD 371 million, and adjusted net income by 19% to CAD 436 million, impacting earnings per share 2022 Q3 Net Income and Adjusted Net Income (Year-over-Year) | Indicator | 2022 Q3 (CAD millions) | 2021 Q3 (CAD millions) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Net Income | 371 | 490 | (24) | | Basic Earnings Per Share | $0.73 | $0.97 | (25) | | Adjusted Net Income | 436 | 536 | (19) | | Adjusted Basic Earnings Per Share | $0.86 | $1.06 | (19) | Managing our Liquidity and Financial Resources This section details cash flow from operating, investing, and financing activities, along with short-term and long-term debt management Operating, Investing, and Financing Activities Overview Operating cash flow decreased by 8%, while investing and financing activities saw significant outflows, impacting overall cash and restricted cash 2022 Q3 Cash Flow Statement Summary (Year-over-Year) | Indicator | 2022 Q3 (CAD millions) | 2021 Q3 (CAD millions) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Cash Flow from Operating Activities | 1,216 | 1,319 | (8) | | Cash Outflow from Investing Activities | (759) | (1,463) | (48) | | Cash (Outflow) Inflow from Financing Activities | (729) | 811 | n/m | | Change in Cash and Cash Equivalents and Restricted Cash and Cash Equivalents | (272) | 667 | n/m | | Cash and Cash Equivalents and Restricted Cash and Cash Equivalents, End of Period | 13,524 | 1,572 | 760 | - Cash flow from operating activities decreased primarily due to higher interest payments, partially offset by funds provided by net operating assets[83] - Cash outflow from financing activities primarily impacted by transaction costs and dividend payments[86] Short-term Borrowings Short-term borrowings increased by 37% to CAD 3.015 billion, primarily from the accounts receivable securitization program and US commercial paper program Short-term Borrowings Balance (As of Period End) | Indicator | Sep 30, 2022 (CAD millions) | Dec 31, 2021 (CAD millions) | | :--- | :--- | :--- | | Accounts Receivable Securitization Program | 2,000 | 800 | | US Commercial Paper Program | 1,015 | 893 | | Non-Revolving Credit Facility Borrowings | — | 507 | | Total Short-term Borrowings | 3,015 | 2,200 | - The maximum potential proceeds from the accounts receivable securitization program have been increased to CAD 2.4 billion and extended to April 25, 2024[90][91] Long-term Debt Net long-term debt significantly increased to CAD 32.235 billion, driven by CAD 12.711 billion in new debt issued for Shaw transaction financing Net Long-term Debt (Net of Transaction Costs, As of Period End) | Indicator | Sep 30, 2022 (CAD millions) | Dec 31, 2021 (CAD millions) | | :--- | :--- | :--- | | Net Long-term Debt (Net of Transaction Costs) | 32,235 | 16,761 | - CAD 12.711 billion in new long-term debt was issued this year, primarily to finance the Shaw transaction[96] - The draw period for the CAD 6.0 billion term loan has been extended to December 31, 2023[97] - The revolving credit facility has been amended, increasing the total facility to CAD 4.0 billion and extending its maturity date[98] Issuance of Senior and Subordinated Notes and Related Debt Derivatives The company issued CAD 750 million in subordinated notes and significant senior notes for Shaw transaction financing, extending redemption deadlines with consent fees 2022 Senior and Subordinated Notes Issuance Summary | Issue Date | Note Type | Principal Amount (millions) | Maturity Date | Interest Rate | | :--- | :--- | :--- | :--- | :--- | | Feb 11, 2022 | Subordinated | US$750 | 2082 | 5.250% | | Mar 11, 2022 | Senior | US$1,000 | 2025 | 2.950% | | Mar 11, 2022 | Senior | Cdn$1,250 | 2025 | 3.100% | | Mar 11, 2022 | Senior | US$1,300 | 2027 | 3.200% | | Mar 11, 2022 | Senior | Cdn$1,000 | 2029 | 3.750% | | Mar 11, 2022 | Senior | US$2,000 | 2032 | 3.800% | | Mar 11, 2022 | Senior | Cdn$1,000 | 2032 | 4.250% | | Mar 11, 2022 | Senior | US$750 | 2042 | 4.500% | | Mar 11, 2022 | Senior | US$2,000 | 2052 | 4.550% | | Mar 11, 2022 | Senior | Cdn$1,000 | 2052 | 5.250% | - To extend the special mandatory redemption deadline for the senior notes, the company paid an initial consent fee of CAD 557 million in August 2022[102] Repayment of Senior Notes and Related Derivative Settlements The company repaid CAD 600 million in 4.00% senior notes and CAD 750 million in floating rate senior notes, including derivative settlements - Repaid CAD 600 million of 4.00% senior notes in June 2022[104] - Repaid CAD 750 million of floating rate senior notes and related debt derivatives in March 2022, totaling CAD 1.019 billion paid[104] Dividends The company paid CAD 253 million in dividends to shareholders this quarter and declared a CAD 0.50 per share dividend for January 2023 2022 Dividend Payments Summary | Declaration Date | Record Date | Payment Date | Dividend Per Share (CAD) | Dividends Paid (CAD millions) | | :--- | :--- | :--- | :--- | :--- | | Jan 26, 2022 | Mar 10, 2022 | Apr 1, 2022 | 0.50 | 252 | | Apr 19, 2022 | Jun 10, 2022 | Jul 4, 2022 | 0.50 | 253 | | Jul 26, 2022 | Sep 9, 2022 | Oct 3, 2022 | 0.50 | 253 | - On November 8, 2022, the Board of Directors declared a dividend of CAD 0.50 per share, payable on January 3, 2023[106] Free Cash Flow Free cash flow decreased by 45% to CAD 279 million, primarily due to increased capital expenditures and higher interest expenses 2022 Q3 Free Cash Flow (Year-over-Year) | Indicator | 2022 Q3 (CAD millions) | 2021 Q3 (CAD millions) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | 1,583 | 1,600 | (1) | | Capital Expenditures | (872) | (739) | 18 | | Net Interest on Borrowings and Capitalized Interest | (287) | (179) | 60 | | Cash Income Taxes | (145) | (175) | (17) | | Free Cash Flow | 279 | 507 | (45) | | Free Cash Flow (Excluding Shaw Financing) | 347 | 507 | (32) | - Free cash flow decreased primarily due to increased capital expenditures and higher interest on borrowings, partially offset by lower cash income taxes[108] Overview of Financial Position The company's total assets increased by 31% to CAD 54.783 billion, driven by restricted cash, while total liabilities rose by 44% Consolidated Statements of Financial Position Total assets increased by 31% to CAD 54.783 billion, with a significant rise in restricted cash and long-term debt, while shareholders' equity decreased Consolidated Statements of Financial Position Summary (As of Period End) | Indicator | Sep 30, 2022 (CAD millions) | Dec 31, 2021 (CAD millions) | Change (CAD millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Assets | 54,783 | 41,963 | 12,820 | 31 | | Cash and Cash Equivalents | 687 | 715 | (28) | (4) | | Restricted Cash and Cash Equivalents | 12,837 | — | 12,837 | — | | Property, Plant and Equipment | 15,325 | 14,666 | 659 | 4 | | Investments | 1,995 | 2,493 | (498) | (20) | | Total Liabilities | 45,121 | 31,431 | 13,690 | 44 | | Short-term Borrowings | 3,015 | 2,200 | 815 | 37 | | Long-term Debt | 31,550 | 17,137 | 14,413 | 84 | | Shareholders' Equity | 9,662 | 10,532 | (870) | (8) | - Restricted cash and cash equivalents increased by CAD 12.837 billion, reflecting the restricted use of proceeds from Shaw senior notes financing[109] - Long-term debt significantly increased by 84%, primarily due to the issuance of subordinated and senior notes[109] Financial Condition This section details available liquidity, weighted average cost of borrowings, credit ratings, adjusted net debt, and outstanding common shares Available Liquidity Available liquidity stood at CAD 3.661 billion, comprising cash and cash equivalents and revolving bank credit facilities, excluding restricted cash for the Shaw transaction Available Liquidity Summary (As of Sep 30, 2022) | Source | Total Facility (CAD millions) | Drawn (CAD millions) | Letters of Credit (CAD millions) | US Commercial Paper Program (CAD millions) | Net Available (CAD millions) | | :--- | :--- | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 687 | — | — | — | 687 | | Bank Credit Facilities: | | | | | | | Revolving | 4,000 | — | 8 | 1,018 | 2,974 | | Accounts Receivable Securitization | 2,000 | 2,000 | — | — | — | | Total | 6,759 | 2,000 | 80 | 1,018 | 3,661 | - Restricted cash and cash equivalents and the CAD 6.0 billion term loan related to the Shaw transaction are not included in available liquidity due to their specific use restrictions[112] Weighted Average Cost of Borrowings The weighted average cost of borrowings increased to 4.41%, with a weighted average term to maturity of 12.0 years - As of September 30, 2022, the weighted average cost of borrowings was 4.41% (3.95% as of December 31, 2021), with a weighted average term to maturity of 12.0 years (11.6 years as of December 31, 2021)[113] Credit Ratings The company's senior unsecured debt credit ratings are under review by S&P, Moody's, Fitch, and DBRS Morningstar due to the Shaw acquisition Credit Ratings Summary (As of Sep 30, 2022) | Issue Type | S&P Global Ratings Services | Moody's | Fitch | DBRS Morningstar | | :--- | :--- | :--- | :--- | :--- | | Corporate Credit Issuer Default Rating | BBB+ CreditWatch Negative | Baa1 under review | BBB+ Rating Watch Negative | BBB (high), Under Review with Negative Implications | | Senior Unsecured Debt | BBB+ CreditWatch Negative | Baa1 under review | BBB+ Rating Watch Negative | BBB (high), Under Review with Negative Implications | | Subordinated Debt | BBB- CreditWatch Negative | Baa3 under review | BBB- Rating Watch Negative | BBB (high), Under Review with Negative Implications | | US Commercial Paper | A-2 CreditWatch Negative | P-2 under review | N/A | N/A | - All ratings are under review due to the Shaw acquisition agreement and related commitments[115] Adjusted Net Debt and Debt Leverage Ratios Adjusted net debt was CAD 21.639 billion, with a debt leverage ratio of 3.5x, used for valuation and capital structure decisions Adjusted Net Debt and Debt Leverage Ratios (As of Period End) | Indicator | Sep 30, 2022 (CAD millions) | Dec 31, 2021 (CAD millions) | | :--- | :--- | :--- | | Adjusted Net Debt | 21,639 | 20,037 | | Debt Leverage Ratio | 3.5 | 3.4 | | Adjusted Net Debt (Excluding Shaw Financing) | 19,680 | 20,037 | | Debt Leverage Ratio (Excluding Shaw Financing) | 3.2 | 3.4 | - Adjusted net debt and debt leverage ratios are used for valuation analysis and capital structure decisions[117] - Metrics excluding Shaw financing are used to analyze debt and cash balances without the impact of Shaw senior notes financing[118] Outstanding Common Shares As of September 30, 2022, the company had 505 million common shares outstanding, including 111 million Class A voting and 394 million Class B non-voting shares Outstanding Common Shares (As of Period End) | Share Type | Sep 30, 2022 (shares) | Dec 31, 2021 (shares) | | :--- | :--- | :--- | | Class A Voting Shares | 111,152,011 | 111,153,411 | | Class B Non-Voting Shares | 393,773,307 | 393,771,907 | | Total Common Shares | 504,925,318 | 504,925,318 | | Outstanding Options | 9,957,051 | 6,494,001 | Financial Risk Management The company employs various derivative instruments to manage foreign exchange, interest rate, and equity market risks associated with its debt and operations Debt Derivatives The company uses cross-currency interest rate swaps and forward foreign exchange agreements to manage foreign exchange and interest rate risks on its USD-denominated debt - The company uses cross-currency interest rate swaps, forward cross-currency interest rate swaps, and forward foreign exchange agreements (collectively, debt derivatives) to manage foreign exchange and interest rate fluctuation risks associated with USD-denominated senior notes, subordinated notes, lease liabilities, credit facility borrowings, and US commercial paper borrowings[121] - As of September 30, 2022, the associated foreign exchange risk for all USD-denominated senior notes and subordinated notes was economically hedged through debt derivatives[127] Interest Rate Derivatives The company uses interest rate derivatives to hedge interest rate risk on debt instruments, with several terminations in Q1 and Q2 2022, and no outstanding positions as of Q3 - The company uses bond forward derivatives or interest rate swap derivatives (collectively, interest rate derivatives) to hedge interest rate risk on current and future debt instruments[132] - In February 2022, the company terminated CAD 950 million of interest rate swap derivatives, receiving a settlement of CAD 33 million[132] - In March 2022, the company terminated CAD 2.0 billion and CAD 2.3 billion of interest rate swap derivatives, paying CAD 165 million and receiving CAD 80 million in settlements, respectively[133][139] - As of September 30, 2022, the company had no outstanding interest rate derivatives[133] Expenditure Derivatives The company uses forward foreign exchange contracts to manage foreign exchange risk on anticipated operating and capital expenditures - The company uses forward foreign exchange contracts (expenditure derivatives) to manage foreign exchange risk in its operations, designating them as hedging instruments for certain anticipated operating and capital expenditures[135] - As of September 30, 2022, the company had CAD 1.185 billion notional amount of outstanding expenditure derivatives, with maturities ranging from October 2022 to December 2023, at an average exchange rate of CAD 1.259/USD[136] Equity Derivatives The company uses total return swaps to hedge market price appreciation risk for Class B non-voting shares granted under equity compensation plans - The company uses total return swaps (equity derivatives) to hedge the market price appreciation risk of Class B non-voting shares granted under its equity compensation plans[138] - As of September 30, 2022, the company had outstanding equity derivatives for 5.0 million Class B non-voting shares at a weighted average price of CAD 53.10[138] Mark-to-Market Value The company records derivatives at estimated credit-adjusted fair value, reporting CAD 1.54 billion in total net mark-to-market assets as of September 30, 2022 Net Mark-to-Market Derivative Assets (As of Sep 30, 2022) | Derivative Type | Net Mark-to-Market Assets (CAD millions) | | :--- | :--- | | Debt Derivatives | 1,414 | | Expenditure Derivatives | 126 | | Equity Derivatives | — | | Total Net Mark-to-Market Assets | 1,540 | - The company records derivatives using estimated credit-adjusted fair value measurements in accordance with IFRS[144] Commitments and Contractual Obligations No significant changes to other material contractual obligations have occurred since December 31, 2021, with details available in the 2021 annual MD&A - No other material contractual obligations not disclosed in this MD&A have significantly changed since December 31, 2021[148] - For detailed information, refer to the 2021 annual MD&A and Notes 17, 21, and 28 to the 2021 annual audited consolidated financial statements[147] Regulatory Developments This section covers ISED Canada's review of the Shaw transaction, network outage responses, 3800 MHz spectrum auction, and Competition Bureau and CRTC reviews ISED Canada Review of the Transaction ISED Canada rejected the transfer of Freedom spectrum licenses to Rogers and set conditions for their transfer to Videotron, with the Freedom transaction still under review - The Minister of ISED Canada rejected the request to transfer Freedom spectrum licenses to Rogers on October 25, 2022, and set conditions for the transfer of Freedom spectrum licenses to Videotron[150] - The Freedom transaction remains under review by ISED Canada[150] Matters Associated with Network Outage Following the July 2022 network outage, ISED Canada mandated improved network resilience, leading to a signed emergency roaming and mutual assistance agreement - The Minister of ISED Canada directed major telecommunications companies to improve network resilience within 60 days, including emergency roaming, mutual assistance during outages, and communication protocols[151] - The company signed a formal Memorandum of Understanding regarding emergency roaming, mutual assistance, and communication protocols on September 7, 2022[151] - CRTC and the House of Commons Standing Committee on Industry and Technology have reviewed and investigated the network outage incident[152][154] 3800 MHz Spectrum Licence Auction ISED Canada released the 3800 MHz spectrum policy and licensing framework, setting rules for the auction expected in October 2023 - ISED Canada released the 3800 MHz band spectrum policy and licensing framework on June 30, 2022, setting rules for the auction expected to begin in October 2023[155] - Rules include a 100 MHz cap for large national carriers, 150 MHz reserved for smaller competitors, and stringent deployment requirements[155] Competition Bureau Review of the Transaction The Competition Bureau opposes the Shaw transaction, leading to a proposed Freedom Mobile divestiture and ongoing Competition Tribunal proceedings - The Competition Bureau filed an application with the Competition Tribunal on May 9, 2022, opposing the Shaw transaction due to concerns about reduced competition in wireless services[156] - The company proposed divesting Freedom Mobile to maintain a fourth wireless carrier[156] - A second mediation with the Competition Bureau failed to reach a settlement, and Competition Tribunal proceedings commenced on November 7, 2022[159] CRTC Review of the Transaction CRTC approved the acquisition of Shaw's broadcasting services with conditions, including financial contributions and commitments to local news and independent programming - CRTC approved the company's acquisition of Shaw's broadcasting services on March 24, 2022, but with several conditions and modifications[160][162] - Conditions include a CAD 27.2 million contribution to the broadcasting system, annual reporting on local news support, distribution of at least 45 independent English and French language services, and ensuring cable TV provider service capability[162] Updates to Risks and Uncertainties This section highlights updated risks related to the Shaw transaction's regulatory approvals and potential liabilities from the July 2022 network outage Shaw Transaction Risks The Shaw transaction faces significant regulatory uncertainty, including the Competition Bureau's opposition, potentially leading to delays, failure, and additional fees - The Shaw transaction faces multiple additional risks, including uncertainty regarding key regulatory approvals, with the Competition Bureau indicating no intention to approve the combined Freedom and Shaw transactions, significantly reducing the likelihood of a settlement[165] - The outcome of the Tribunal hearing and any appeals carries inherent uncertainty, potentially leading to delays or complete failure of the transaction, which could have a material adverse effect on the company's business, financial condition, and cash flows[166][167] - If the transaction is not completed by December 31, 2022, the company will be required to pay an additional consent fee of approximately CAD 254 million to SMR noteholders[168] July 2022 Network Outage Risks The July 2022 network outage led to class action applications in Quebec, posing potential significant liabilities that are currently unassessable - The July 2022 network outage resulted in two applications to the Quebec Superior Court seeking authorization to institute class action lawsuits (one has been withdrawn)[169] - Claims include contractual damages, loss of profits, and punitive damages[169] - The company cannot currently assess the likelihood of success or the potential magnitude of liabilities from these applications, which, if successful, could have a material adverse effect on its business, financial performance, or financial condition[170] Critical Accounting Policies and Estimates This section discusses new accounting pronouncements adopted in 2022, those not yet adopted, related party transactions, and internal controls New Accounting Pronouncements Adopted in 2022 The company adopted IFRS 3, IAS 16, and IAS 37 amendments on January 1, 2022, with no significant impact on financial performance - The company adopted amendments to IFRS 3, IAS 16, and IAS 37 on January 1, 2022[173][178] - These amendments did not have a significant impact on the company's financial performance[173] Recent Accounting Pronouncements Not Yet Adopted Upcoming IFRS 17 and amendments to IAS 1, IAS 8, IAS 12, and IFRS 16 are not expected to significantly impact the consolidated financial statements - The IASB has issued IFRS 17 (Insurance Contracts) and amendments to IAS 1, IAS 8, IAS 12, and IFRS 16, which will become effective in the future[174][178] - The company does not expect IFRS 17 or the amendments to existing standards to have any significant impact on its consolidated financial statements[174] Transactions with Related Parties Transactions with related parties like Dream Unlimited Corp. and Vancouver Professional Baseball LLP were insignificant and approved by the Audit and Risk Committee - The company engaged in business transactions with related parties such as Dream Unlimited Corp. and Vancouver Professional Baseball LLP, with immaterial payment amounts for the quarter and year-to-date[175] - Transactions with the controlling shareholder and companies controlled by them were also less than CAD 1 million and approved by the Audit and Risk Committee[176][177] Controls and Procedures No significant changes occurred in the company's internal controls over financial reporting during the quarter - No significant changes occurred in the company's internal controls over financial reporting during the quarter, nor were there any changes that could materially affect internal controls over financial reporting[178] Seasonality The company's operating results vary quarterly due to economic conditions and unique seasonal characteristics across its wireless, cable, and media segments - Operating results typically vary quarter-to-quarter due to general economic conditions and seasonal fluctuations[179] - Each reportable segment has unique seasonal characteristics and historical trends[179] Key Performance Indicators This section defines key performance indicators including subscriber counts, mobile phone ARPU, cable ARPA, and capital intensity, reflecting recent reporting changes Subscriber Counts Wireless subscriber reporting now focuses on mobile phone users, while cable reports retail internet, video, smart home monitoring, and home phone users separately - Effective January 1, 2022, wireless business discloses mobile phone subscribers (including voice or voice + data plans), no longer including data-only plan subscribers and wireless home phone service subscribers[180] - Cable business adjusted its internet subscriber definition to include only retail internet subscribers and began separately reporting video, smart home monitoring, and home phone subscribers[181] - Wireless subscribers are categorized as postpaid mobile phone and prepaid mobile phone, with prepaid subscribers considered active for 90 days from their last revenue-generating usage[184] Mobile Phone Average Revenue Per User (ARPU) Mobile phone ARPU is a key metric for attracting and retaining high-value subscribers, calculated by dividing wireless service revenue by average mobile phone subscribers - Mobile phone ARPU is a key indicator of the company's success in attracting and retaining high-value subscribers[183] - Calculated as wireless service revenue divided by the average total mobile phone subscribers for the relevant period[187] Cable Average Revenue Per Account (ARPA) Cable ARPA measures average revenue per customer relationship, calculated by dividing cable service revenue by the average total customer relationships - Cable ARPA measures the average revenue the company earns from each customer relationship[187] - Calculated as cable service revenue divided by the average total customer relationships for the relevant period[187] Capital Intensity Capital intensity measures the company's capital expenditures relative to revenue, calculated as capital expenditures divided by revenue - Capital intensity measures the company's capital expenditures relative to revenue[187] - Calculated as capital expenditures divided by revenue[187] Non-GAAP and Other Financial Measures The company uses various non-GAAP financial measures and ratios to assess performance and solvency, which are not standardized by IFRS Non-GAAP Financial Measures Non-GAAP financial measures like adjusted net income and free cash flow excluding Shaw financing are used for performance assessment and valuation, but are not IFRS standardized - The company uses non-GAAP financial measures such as adjusted net income, free cash flow excluding Shaw financing, adjusted net debt excluding Shaw financing, and revenue, total service revenue, and adjusted EBITDA excluding July network outage-related credits[186] - These metrics are used to assess business performance, ability to generate cash flow, and for valuation analysis, but are not IFRS standardized measures[185][186] Non-GAAP Ratios Non-GAAP ratios such as adjusted basic EPS and debt leverage excluding Shaw financing are used to evaluate performance and solvency, but are not IFRS standardized - The company uses non-GAAP ratios such as adjusted basic earnings per share, adjusted diluted earnings per share, debt leverage ratio excluding Shaw financing, and adjusted EBITDA margin excluding July network outage-related credits[187] - These ratios are used to evaluate business performance and solvency, but are not IFRS standardized measures[187] Reconciliation of Adjusted EBITDA and Adjusted EBITDA Excluding July Network Outage-Related Credits Adjusted EBITDA for the quarter was CAD 1.583 billion, which would be CAD 1.733 billion excluding the CAD 150 million impact of July network outage credits 2022 Q3 Reconciliation of Adjusted EBITDA (Year-over-Year) | Indicator | 2022 Q3 (CAD millions) | 2021 Q3 (CAD millions) | | :--- | :--- | :--- | | Net Income | 371 | 490 | | Add: Income Tax Expense | 133 | 178 | | Add: Finance Costs | 331 | 207 | | Add: Depreciation and Amortization | 644 | 642 | | EBITDA | 1,479 | 1,517 | | Add (Deduct): Other Expenses (Income) | 19 | 20 | | Add: Restructuring, Acquisition and Other | 85 | 63 | | Adjusted EBITDA | 1,583 | 1,600 | | Add (Deduct): July Network Outage-Related Credits | 150 | — | | Adjusted EBITDA Excluding Network Outage Credits | 1,733 | 1,600 | Reconciliation of Adjusted Net Income Net income was CAD 371 million, and after adjusting for restructuring, acquisition, and other expenses, adjusted net income was CAD 436 million 2022 Q3 Reconciliation of Adjusted Net Income (Year-over-Year) | Indicator | 2022 Q3 (CAD millions) | 2021 Q3 (CAD millions) | | :--- | :--- | :--- | | Net Income | 371 | 490 | | Add (Deduct): Restructuring, Acquisition and Other | 85 | 63 | | Deduct: Income Tax Impact of Above Items | (20) | (17) | | Adjusted Net Income | 436 | 536 | Reconciliation of Free Cash Flow Excluding Shaw Financing Free cash flow was CAD 279 million, and after adjusting for Shaw financing interest and restricted cash interest income, it was CAD 347 million 2022 Q3 Reconciliation of Free Cash Flow Excluding Shaw Financing (Year-over-Year) | Indicator | 2022 Q3 (CAD millions) | 2021 Q3 (CAD millions) | | :--- | :--- | :--- | | Cash Flow from Operating Activities | 1,216 | 1,319 | | Deduct: Capital Expenditures | (872) | (739) | | Deduct: Net Interest on Borrowings and Capitalized Interest | (287) | (179) | | Deduct: Cash Income Taxes | (145) | (175) | | Add: Interest Payments | 326 | 157 | | Add: Restructuring, Acquisition and Other | 85 | 63 | | Deduct: Amortization of Program Rights | (10) | (10) | | Deduct: Change in Net Operating Assets and Liabilities | (154) | (80) | | Deduct: Other Adjustments | (25) | (24) | | Free Cash Flow | 279 | 507 | | Add (Deduct): Interest on Shaw Senior Notes Financing | 139 | — | | Deduct: Interest Income on Restricted Cash and Cash Equivalents | (71) | — | | Free Cash Flow Excluding Shaw Financing | 347 | 507 | Other Information This section provides a quarterly summary of consolidated financial results and a summary of financial information for long-term debt guarantors Consolidated Financial Results - Quarterly Summary A summary of consolidated financial results for the past eight quarters is provided, including key metrics like revenue, adjusted EBITDA, and cash flow Past Eight Quarters Consolidated Financial Results Summary (CAD millions) | Indicator | 2022 Q3 | 2022 Q2 | 2022 Q1 | 2021 Q4 | 2021 Q3 | 2021 Q2 | 2021 Q1 | 2020 Q4 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenue | 3,743 | 3,868 | 3,619 | 3,919 | 3,666 | 3,582 | 3,488 | 3,680 | | Adjusted EBITDA | 1,583 | 1,592 | 1,539 | 1,522 | 1,600 | 1,374 | 1,391 | 1,590 | | Net Income | 371 | 409 | 392 | 405 | 490 | 302 | 361 | 449 | | Basic Earnings Per Share | $0.73 | $0.81 | $0.78 | $0.80 | $0.97 | $0.60 | $0.71 | $0.89 | | Capital Expenditures | 872 | 778 | 649 | 846 | 739 | 719 | 484 | 656 | | Cash Flow from Operating Activities | 1,216 | 1,319 | 813 | 1,147 | 1,319 | 1,016 | 679 | 947 | | Free Cash Flow | 279 | 344 | 515 | 468 | 507 | 302 | 394 | 568 | Summary of Financial Information of Long-Term Debt Guarantor This summary provides unaudited consolidated financial information for RCI, RCCI, and non-guarantor subsidiaries, detailing assets, liabilities, and income - RCI's outstanding public debt, bank credit facility drawings, and derivatives are unsecured obligations of RCI as the debtor, with RCCI as co-debtor or guarantor[194] RCI, RCCI, and Non-Guarantor Subsidiaries Consolidated Financial Information Summary (As of Sep 30, 2022) | Indicator | RCI (2022) | RCCI (2022) | Non-Guarantor Subsidiaries (2022) | Consolidating Adjustments (2022) | Total (2022) | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue (CAD millions) | — | 3,226 | 559 | (42) | 3,743 | | Net Income (Loss) (CAD millions) | 371 | 325 | 179 | (504) | 371 | | Current Assets (CAD millions) | 43,757 | 29,981 | 10,309 | (65,398) | 18,649 | | Non-Current Assets (CAD millions) | 34,198 | 29,547 | 3,822 | (31,433) | 36,134 | | Current Liabilities (CAD millions) | 32,087 | 33,378 | 9,366 | (67,026) | 7,805 | | Non-Current Liabilities (CAD millions) | 33,391 | 5,118 | 190 | (1,383) | 37,316 | About Forward-Looking Information This section outlines forward-looking statements regarding business performance, financial projections, and the Shaw transaction, along with associated risks and uncertainties Forward-Looking Information This MD&A contains forward-looking information on business, operations, and financial performance, including projections for revenue, EBITDA, capital expenditures, and the Shaw transaction - Forward-looking information includes projections for revenue, adjusted EBITDA, capital expenditures, cash flow, dividend payments, subscriber growth, cost reductions, and debt leverage ratios[197] - Also includes projections for the expected timing, completion, and anticipated benefits of the Shaw transaction and Freedom transaction[197] - These projections are based on management's current estimates, expectations, assumptions, and other factors[197] Risks and Uncertainties Actual events and results may differ significantly from forward-looking information, due to various risks, including economic conditions, regulatory changes, competition, and the Shaw transaction - Actual results and events may differ materially from forward-looking information due to various risks, uncertainties, and other factors[198] - Risk factors include economic and industry conditions, foreign exchange and interest rates, intensity of competition, changes in government regulation, technological changes, acquisition integration, litigation and tax matters, external threats (such as cyberattacks), and risks related to the Shaw transaction[199][200] - The company cautions investors to exercise care in considering forward-looking information and states no obligation to update or revise such information unless required by law[202][203] Before Making an Investment Decision Investors should thoroughly review the "Updates to Risks and Uncertainties" and "Regulatory Developments" sections, along with other company filings, before making investment decisions - Before making any investment decision, investors should thoroughly review the "Updates to Risks and Uncertainties" and "Regulatory Developments" sections in this MD&A[204] - Also review the "Industry Regulation" and "Environmental, Social and Governance (ESG)" sections in the 2021 annual MD&A, and other documents filed by the company with Canadian and US securities regulatory authorities[204]