Rogers 2015 Annual Report Download - page 51

MANAGEMENT’S DISCUSSION AND ANALYSIS
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
Additions to property, plant and equipment include costs
associated with acquiring property, plant and equipment and
placing it into service. The telecommunications business requires
extensive and continual investments, including investment in new
technologies and the expansion of capacity and geographical
reach. The expenditures related to the acquisition of spectrum
licences are not included in additions to property, plant and
equipment and do 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.
Additions to property, plant and equipment are significant and
have a material impact on our cash flows, therefore our
management teams focus on planning, funding, and managing
them.
Additions to property, plant and equipment before related
changes to non-cash working capital represent capital assets to
which we took title. We believe 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) 2015 2014 % Chg
Additions to property, plant and equipment
Wireless 866 978 (11)
Cable 1,030 1,055 (2)
Business Solutions 187 146 28
Media 60 94 (36)
Corporate 297 93 n/m
Total additions to property, plant and equipment 12,440 2,366 3
Capital intensity 218.2% 18.4% (0.2 pts)
1Additions to property, plant and equipment do not include expenditures on
spectrum licences.
2Capital intensity is a key performance indicator. See “Key Performance Indicators”.
n/m: not meaningful.
(IN MILLIONS OF DOLLARS)
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
2015
2014
2013
$2,440
$2,366
$2,240
(%)
2015 ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
CABLE 42%
WIRELESS 36%
CORPORATE 12%
MEDIA 2%
BUSINESS SOLUTIONS 8%
$2.4
BILLION
WIRELESS
The decrease in additions to property, plant and equipment in
Wireless this year was a result of lower expenditures on our wireless
network, partially offset by higher software and information
technology costs from the deployment of the spectrum
acquisitions made this year. As at December 31, 2015, our LTE
network reached approximately 93% of Canada’s population
(2014 – 84%).
CABLE
The decrease in additions to property, plant and equipment in
Cable this year was a result of lower purchases of our next
generation NextBox digital set-top box compared to last year,
partially offset by greater investment in network and information
technology infrastructure to further improve the reliability and
quality of the network and to improve the capacity of our Internet
platform to deliver gigabit Internet speeds. We also continued to
expand our bandwidth towards the development of our next
generation IP-based video service and digital television guides.
BUSINESS SOLUTIONS
The increase in additions to property, plant and equipment in
Business Solutions this year was a result of data centre investments
and network expansion to reach additional customers and sites.
MEDIA
The decrease in additions to property, plant and equipment in
Media this year was a result of greater prior year investments made
to our broadcast facilities and IT infrastructure.
CORPORATE
The increase in additions to property, plant and equipment in
Corporate this year was a result of higher spending on premise
improvements at our various offices as well as higher information
technology costs.
CAPITAL INTENSITY
Capital intensity decreased this year as the increase in additions to
property, plant and equipment as described above was more than
offset by the increase in revenue described previously in this
MD&A.
2015 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 49