MANAGEMENT’S DISCUSSION AND ANALYSIS retrospectively. We are assessing the impact of this amendment on our consolidated financial statements. Subscriber churn is a measure of the number of subscribers that deactivated as a percentage of the total subscriber base, usually calculated on a monthly basis. Subscriber churn tells us our success in retaining our subscribers. We calculate it by dividing the number of Wireless subscribers that deactivated (usually in a month) by the aggregate numbers of subscribers at the beginning of the period. When used or reported for a period greater than one month, subscriber churn represents the sum of the number of subscribers deactivating for each period incurred divided by the sum of the aggregate number of subscribers at the beginning of each period incurred. We measure the success of our strategy using a number of key performance indicators, which are outlined below. We believe these key performance indicators allow us to appropriately measure our performance against our operating strategy as well as against the results of our peers and competitors. The following key performance indicators are not measurements in accordance with IFRS and should not be considered as an alternative to net income or any other measure of performance under IFRS. S ubscriber Counts We determine the number of subscribers to our services based on active subscribers. When subscribers are deactivated, either voluntarily or involuntarily for non-payment, they are considered to be deactivations in the period the services are discontinued. Average Revenue per User (ARPU) helps us identify trends and measure our success in attracting and retaining higher value subscribers. We calculate it by dividing revenue (usually monthly) by the average number of subscribers in the period. For Wireless, ARPU is calculated using network revenue. When used in connection with a particular type of subscriber, ARPU is monthly revenue generated from those subscribers, divided by the average number of those subscribers during the month. GLYPH<129> IFRIC 21, Levies (IFRIC 21) – In May 2013, the IASB issued a new accounting guidance IFRIC 21, which provides guidance on when to recognize a liability for a levy imposed by a government, both for levies that are accounted for in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and those where the timing and amount of the levy is certain. The Interpretation identifies the obligating event for the recognition of a liability as the activity that triggers the payment of the levy in accordance with the relevant legislation. It provides the following guidance on recognition of a liability to pay levies (i) the liability is recognized progressively if the obligating event occurs over a period of time, and (ii) if an obligation is triggered on reaching a minimum threshold, the liability is recognized when that minimum threshold is reached. The standard is effective for annual periods beginning on or after January 1, 2014, with early adoption permitted. We are assessing the impact of this new standard on our consolidated financial statements. GLYPH<129> IFRS 9, Financial Instruments (IFRS 9) – In October 2010, the IASB issued IFRS 9, which replaces IAS 39, Financial Instruments: Recognition and Measurement, establishes principles for the financial reporting of financial assets and financial liabilities that will present relevant and useful information to users of financial statements for their assessment of the amounts, timing and uncertainty of an entity’s future cash flows. This new standard also includes a new general hedge accounting standard which will align hedge accounting more closely with risk management. It does not fundamentally change the types of hedging relationships or the requirement to measure and recognize ineffectiveness, however it will provide more hedging strategies that are used for risk management to qualify for hedge accounting and introduce more judgment to assess the effectiveness of a hedging relationship. The mandatory effective date of IFRS 9 has not yet been communicated by the IASB. We are assessing the impact of this new standard on its consolidated financial statements. GLYPH<129> A wireless subscriber is represented by each identifiable telephone number. GLYPH<129> We report wireless subscribers in two categories: postpaid and prepaid. Postpaid and prepaid include voice-only subscribers, data- only subscribers, and subscribers with service plans integrating both voice and data. GLYPH<129> Wireless prepaid subscribers are considered active for a period of 180 days from the date of their last revenue-generating usage. GLYPH<129> Cable Television and Internet subscribers are represented by a dwelling unit, and cable Phone subscribers are represented by line counts. GLYPH<129> When there is more than one unit in one dwelling, like an apartment building, each tenant with cable service is counted as an individual subscriber, whether the service is invoiced separately or included in the tenant’s rent. Institutional units, like hospitals or hotels, are each considered to be one subscriber. GLYPH<129> Cable Television, Internet, and Phone subscribers include only those subscribers who have service installed and operating, and who are being billed accordingly. KEY PERFORMANCE INDICATORS Wireless S ubscriber Churn Cable Average Revenue per User Average Revenue per User Calculations – Wireless (In millions of dollars, subscribers in thousands, except ARPU figures and adjusted operating profit margin) Years ended December 31 2013 2012 Postpaid ARPU (monthly) Postpaid (voice and data) revenue $ 6,470 $ 6,402 Divided by: average postpaid wireless voice and data subscribers 7,957 7,698 Divided by: twelve months for the year 12 12 $ 67.76 $ 69.30 Prepaid ARPU (monthly) Prepaid (voice and data) revenue $ 278 $ 317 Divided by: average prepaid subscribers 1,481 1,667 Divided by: twelve months for the year 12 12 $ 15.64 $ 15.84 Blended ARPU (monthly) Voice and data revenue $ 6,748 $ 6,719 Divided by: average wireless voice and data subscribers 9,438 9,365 Divided by: twelve months for the year 12 12 $ 59.58 $ 59.79 82 ROGERS COMMUNICATIONS INC. 2013 ANNUAL REPORT