Rogers 2014 Annual Report Download - page 54

MANAGEMENT’S DISCUSSION AND ANALYSIS
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
Additions to property, plant and equipment include costs associated
with acquiring and placing property, plant and equipment into service.
The telecommunications business requires extensive and continual
investments, including investment in new technologies and the
expansion of capacity and geographical reach. The expenditure
related to the $3.3 billion acquisition of 700 MHz spectrum licences is
not included in additions to property, plant and equipment and does
not factor into the calculation of free cash flow or capital intensity.
Please see “Managing Our Liquidity and Financial Resources”, “Key
Performance Indicators” and “Non-GAAP Measures” for more
information.
Our management focuses on the planning, funding and management
of additions to property, plant and equipment, because they are
significant, and have a material impact on our cash flow.
Additions to property, plant and equipment before related changes to
non-cash working capital represent capital assets that we actually took
title to and were ready for use in the period. We believe that this
measure best reflects our cost of property, plant and equipment in a
given period, and is a simpler measure for comparing between
periods.
Years ended December 31
(In millions of dollars, except capital intensity 1)2014 2013 % Chg
Additions to property, plant and equipment
Wireless 978 865 13
Cable 1,055 1,105 (5)
Business Solutions 146 107 36
Media 94 79 19
Corporate 93 84 11
Total additions to property, plant and equipment 2,366 2,240 6
Capital intensity 118.4% 17.6% 0.8 pts
1Capital intensity is a key performance indicator. See “Key Performance Indicators”.
WIRELESS
Wireless property, plant and equipment additions in 2014 were
primarily related to LTE deployment and capacity investments and site
build activity to further enhance network coverage and the initial
deployment of our newly acquired 700 MHz spectrum. Deployment of
the LTE network has now reached approximately 84% of Canada’s
population as at December 31, 2014.
(%)
2014 ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
WIRELESS 41%
CABLE 45%
BUSINESS SOLUTIONS 6%
CORPORATE 4%
MEDIA 4%
$2.4
BILLION
CABLE
Investments this year were made to improve the capacity of our
Internet platform, improve the reliability and quality of the network and
continued development work related to next generation IP-based
videoservice.Wealsoinvestedincustomerequipmentrelatedtothe
continued roll out of our next generation NextBox digital set-top boxes
and for subscribers migrating from analog to digital. The reduction in
expenditures year-over-year primarily reflects a higher volume of new
NextBox digital set-top box deployments last year when the latest
generation of this product was launched.
Migrating subscribers from analog to digital will continue to strengthen
the customer experience and is allowing us to reclaim significant
amounts of network capacity and reduce network operating and
maintenance costs. This effort requires additional spending because it
involves fitting analog homes with digital converters and removing
existing analog filtering equipment from the network.
BUSINESS SOLUTIONS
Business Solutions property, plant and equipment additions increased
this year as a result of network expansion to reach additional customers
and sites and data centre investments.
MEDIA
Media property, plant and equipment additions increased this year as
a result of investments made to our IT infrastructure and NHL
broadcast facilities.
50 ROGERS COMMUNICATIONS INC. 2014 ANNUAL REPORT