Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Rogers Communications Q4 2016 Results Analyst Call Conference. [Operator Instructions] I would like to remind everyone that this conference call is being recorded on Thursday, January 26, 2017, at 8 a.m. Eastern Time. I will now turn the conference over to Ms. Amy Schwalm with the Rogers Communications management team. Please go ahead.

Good morning, everyone, and thanks for joining us. I'm here with our Chairman and Interim President and Chief Executive Officer, Alan Horn; and our Chief Financial Officer, Tony Staffieri. As always, today's discussion will include estimates and other forward-looking information, from which our actual results could differ. Please review the cautionary language in today's earnings report and in our 2015 annual report regarding the various factors, assumptions and risks that could cause our actual results to differ. With that, let me turn it over to Alan to begin.

Okay. Thanks, Amy, and good morning, everyone. Thanks for joining us, and thanks for all your support. I'll be brief, and then I'll pass it on to Tony to speak in more detail. So earlier this morning, we released our Q4 results and 2017 guidance. Our results reflect strong continued operating momentum and are a real testament to our executive team and 25,000 employees who haven't missed a beat in terms of executing on our plan. For the year, we achieved all our growth targets. We were faced with some tough decisions in 2016, and we believe we made the right long-term choices to drive the most value for our customers and shareholders going forward. We are, of course, excited over our recently announced partnership with Comcast, which will bring our customers a best-in-class IPTV experience as well as a continuous stream of industry-leading innovations. The agreement builds on Rogers' Internet leadership and follows our strategy to deliver all IP services in the home. The financial impact of this on our Q4 statements were significant, triggering a write-off of $484 million and eliminating in our IFRS bottom line, but we have no doubt it is the right decision for the long term for Rogers. On the CEO transition, as most of you know, last quarter, we announced our intention to hire Joe Natale as President and CEO of Rogers. We are looking forward to welcoming Joe in July. In the interim, we are confident in our ability to build on the momentum you see reflected in our fourth quarter results. In 2017, we will continue to drive revenue growth, but we are also committed to improving our cost structure and gaining productivity improvements you see throughout our businesses. This will position us well to translate strong revenue growth into increased profitability and free cash flow. As such, our 2017 guidance reflects a stronger outlook than our growth achievements in 2016, reflecting a plan designed to deliver increasing shareholder value and of course, value that is sustainable over the long term. So a good quarter. And with that, I'll turn it over to Tony to get into the details.

Thank you, Alan, and good morning, everyone. Overall, we're very pleased with our operating performance this quarter. We reported strong consolidated service revenue growth of 3%, underpinned by robust subscriber metrics and translated this to solid adjusted operating profit growth of 3%. We continue to execute well against our plan with further sequential improvements in key financial and operating metrics. We'll always have work to do, but we're excited about 2017 with the momentum we have and the upside ahead. Looking at Wireless, our largest segment, we maintained strong service revenue growth of 6%, which reflected a combination of both subscriber growth and meaningful ARPU growth. Blended ARPU and ARPA increased 3% and 7%, respectively, as we drive growth in our premium value brands and data usage. Notably, we translated this performance into adjusted operating profit growth of 5%, the healthiest AOP growth we have seen in a number of quarters while still posting strong net adds. Q4 postpaid net subscriber additions of 93,000, which is up 62,000 year-on-year, was driven by a record gross additions and steady churn. We maintained stable churn in the fourth quarter despite unprecedented promotional activity in the market, which we only selectively matched. Of course, the competitive environment will continue to play a part, but we're focused on further reducing churn in 2017 as we improve customer experience. Turning to Cable. We're making good progress as this business returns to growth. Our total service unit net subscriber additions were positive for the second consecutive quarter, driven by Internet net additions of 30,000, up 14,000 year-on-year. Cable revenue was up slightly with adjusted operating profit growth of 2%, primarily driven by the ongoing shift in product mix for higher-margin Internet services. Our Cable results were impacted in the quarter by the CRTC decision to reduce…

[Operator Instructions] We'll now take the first question from the line of Jeff Fan with Scotia Capital.

Tony, if I could just ask you to elaborate on a couple of things. First is on the Wireless ARPU and ARPA. You called out data usage as one of the components. Wondering if you can just talk a little bit about that and whether you're seeing an acceleration perhaps in consumption and growth in your customer base and whether you see that as a sustainable trend into 2017? And then the second question is around the Digital Home comment that you made. Wondering if you can just again elaborate a little bit more on some of the potential services and differentiation that you see coming? And then secondly, just on the license fee to Comcast whether that one license fee covers the services beyond video and includes some of these Digital Home enhancements that you expect to deploy?

Thanks for the question, Jeff. So just going in order, I'll start with the first one in terms of Wireless ARPU and ARPA. As you said, data usage has been a significant driver of that. Our overall data usage increases when you look at it each month in the 40% to 50% range, but when you look at it on a per user basis, it's consistently in the 30% to 40% range. Driver of that is really 2 things. Obviously, the applications that drive data usage continues to explode. But significantly, we see more and more customers coming in on our premium value bands that give them better, larger data buckets and therefore, makes them more comfortable to use data in a number of different ways. And so I think it's a number of factors, but if I had to summarize kind of the key drivers I think it's, as I said, the use case continues to increase and the ability to get certainty and control over data charges is improving, particularly -- excuse me, Jeff, particularly with things like our data manager tool that enables that kind of certainty. Your other question was to expand on -- a little bit on the Digital Home and talk a little bit about that. The Digital Home solution from Comcast dovetails nicely with what we're looking to deliver. It's about owning the home and creating a strong multiproduct sticky customer. Comcast has indicated to us it's going to be available for syndication in 2017, and we intend to launch it with X1 in early 2018. As the whole home networking solution it's going to provide customers with a simple, fast, intuitive way to control and manage their connected IoT devices, it's going to significantly move the agenda on self-install. It allows customers…

We'll now take our next question from the line of Vince Valentini with TD Newcrest.

Yes. If I can stay on ARPU for a second and in Wireless. So you've seen an uptick in your growth every quarter this year, obviously, getting to a PTR 2.6% blended ARPU growth in the fourth quarter. You talked about the data usage. I just wonder is there any reason you wouldn't expect these trends to continue as you're gradually getting more and more higher-end customers loaded on your network, and we see this uploading get better every quarter? Or is there anything unusual or onetime in nature that could cause ARPU growth trends to reverse? And as part of that, could you maybe just clarify for us where we're at with Roam Like Home and what kind of impact we may be seeing, if any, in these quarterly results now?

Excellent question, Vince. There isn't -- in terms of the ARPU trends, as you'd expect, when we look at them over the last several quarters, in fact, over the last 8 quarters, you see a good continuation in the data usage and the movement up the value band to the higher premium buckets. We do, with Share Everything, see a good mix of added devices coming in, things like pathways, which generally would have a smaller ARPU. But because they're part of that Share Everything, the total ARPU continues to grow. And so there isn't anything obvious to us that would suggest that, that trend should not continue and so we're confident in what we see there. In terms of Roam Like Home, that continues to do well. When you look at the number of users that are now on it, it's up year-on-year by 34%, so it's been extremely popular with customers and is a good vehicle to move them to the Share Everything construct. In terms of impact on our ARPU and overall results, if you look at postpaid revenue, it had an impact in the quarter in terms of a negative drag of almost 1 percentage point. And if you were to look at blended ARPU, same thing, just over 0.5 percentage point in terms of the impact. So it still continues to have, notwithstanding the increased usage, a bit of melt in terms of roaming revenue. But we continue to see it kind of post flat and the opportunity for that to start to grow in coming quarters.

We'll now take the next question from the line of Drew McReynolds with RBC.

Tony, just wanted to talk about the Wireless operating leverage that you got in Q4. Obviously, it's something that you struggled with as 2016 played out, but we got a little bit of a pop here in Q4. Can you just talk about the dynamics there, and what your expectations is implied in the 2017 guidance? And then a second question, obviously, good postpaid Wireless net adds and Internet net adds. Can you just talk about a little bit of the mix there on the Wireless side, just what kind of Unison contribution you got? And then on the Internet side, what kind of SMB or wholesale contribution you're getting there?

Okay. Thanks for the question. In terms of when you think about Wireless operating margins that you saw in the fourth quarter as well as for 2016, I'd say in general, I'll start with a summary that when you look to 2017, we see them as continuing somewhat stable as we head into 2017. Certainly, when you look at 2016, the investment that not only we but the industry has made in handset subsidies continues to climb, but I think it's important to know it's been commensurate with the increase in revenue and ARPU. And so I would say I'm pleased overall that we've been able to continue to monetize that investment into higher revenue in ARPU, and so we see that continuing into 2017. We've gotten better at being disciplined in time the amount of subsidy to the plan that the customers are coming in on. Certainly, you saw that in the fourth quarter, and a lot of the headline was $0 iPhone 7s. It was really only available on premium value bands. And so there is -- there's that construct and discipline that we seem to be getting better at. In terms of the net adds mix, I would say there is a healthy mix across the spectrum in terms of premium value and additional devices coming in on Share Everything. Having said that, Share Everything ARPU specifically continues to grow. So not only is ARPA growing but ARPU for Share Everything continues to grow, and so that's healthy. When we look at our ARPU coming in, in the quarter, ARPU gain continues to grow year-on-year, and so that's a healthy mix as well. So I think overall, the quality of the net adds that we see, we're pleased with. Same thing on the Internet side. I talked about the almost half of our base is on speed of 100 megabits or higher and the vast majority of new customers coming in are coming in at those speeds as well. And so you see in the revenue growth that translates to healthy ARPU growth for Internet. Wholesale has never been a significant part of our business, and it continues to not be very significant. And so the amount of the impact on net adds in the quarter for wholesale Internet was negligible.

Okay. Tony, and just if I could just have a follow-up here just quick one. Obviously, you're trying to make some business market headwinds just with respect to your final comments on net adds, Unison or the SMB market penetration on the Internet side just kind of give us an update on how that's progressing?

A couple of things. I don't want to provide too much detail in terms of the various markets. As you know, it's been a focus for us, and it's included in the numbers that you see. So I don't want to get too far ahead of ourselves in terms of the specific segments within the overall Wireless. You will have seen that -- if the question is relating to our new Rogers Unison product, I would say that one is early days, and it's not a material part of the numbers that you see resonating well in the marketplace but again, very early days on that one.

We'll now take our next question from the line of Tim Casey with BMO.

Tony, I apologize, I was late getting on the call, but in your guidance, you've signaled a little bit of margin erosion with your revenues growing slightly faster than your EBITDA projections for the year. Could you talk a little bit about where you see some investment spending there within the major operating groups? And one other one. You noted that you intend to bring Joe Natale in, in July. Are you -- are there still ongoing discussions with TELUS? Is there a chance there's an acceleration of that time line? Or should we assume that's a hard number?

So Tim, I'll start with the first one in terms of margins. The operating -- the revenue guidance we provided was total revenue as we did in the past, and it includes equipment revenue. If you were to translate that to service revenue and then look at AOP in that context, we see margins generally stable. We're being careful in making sure that we've got the room we need on the Comcast implementation. That's going to be a mix of CapEx but is also going to bring in the short term some OpEx as well. And so we wanted to make sure we have the capacity within our guidance to deal with that. And so -- but I think the headline for you is margins overall and within each of our key segments to be relatively stable as we head into 2017.

And Tim, this is Alan Horn. On Joe, July is the timing.

We'll now take our next question from the line of Phillip Huang with Barclays.

We all thank you [ph] in driving key strong Q4 results and guidance. Maybe first a modeling question. I apologize I haven't read your entire release. I was wondering what we should assume for cash taxes for 2017. And then second, a question on the cable business. Just wanted to first, if you could give us an update on the pricing environment? And then a follow-on to an earlier question on the wholesale broadband market. Certainly, we understand it's an impact on the industry's wholesale revenues. But you said that the impact on the subs on the quarter were relatively negligible. But should -- do you see this as an opportunity going forward, the flip side of it being potential to accelerate wholesale subscriber growth?

Well, so a couple of things I'll go through. I hope I got questions right, you didn't come across that clear but I think the first is one related to cash taxes and what we could or what you should expect for 2017. The cash taxes in the guidance numbers we gave, but generally, we've always talked about cash taxes doing the right thing there in terms of making sure we have the right tax planning, et cetera. It has been, and we continue to see it in the range of about 8% of adjusted operating profit as a barometer. As you know, that's not the way it's calculated, but from a cash tax point of view, that's generally the range that we see it coming in at and has been coming in at. Your second question related to the pricing environment we saw in Q4. I think I would say that certainly not different than any other Q4. It was the quarter of competitive intensity. You get Black Friday. You get boxing week. Probably the one notable change that we're seeing is with customers are more and more in tune with waiting for those periods. And so we're seeing much more start, peaks and valleys in terms of when the volumes are coming in. And so that combined with us being better at anticipating that and being competitive in the marketplace with our own offerings. We generally, continue to be centered around the handset subsidies. And as I said, we're comfortable with that given that the ARPU ends that they're driving and the base reprice upward that they're driving as well. So on balance, that continues to hold well. And then the last part of your question, I think related to the wholesale Internet market, and we see that happening in the impact. As I said, for us, wholesale Internet continues to be a very small part of our business. The -- as you're aware, the interim pricing that's happened at the wholesale level is a concern for us in the sense that it is below full cost of providing that service. And so we're confident over the long term the right thing's going to happen in terms of those rates, but we continue to see that as again a very small part of our Internet mix.

That's very helpful. And actually the update on the pricing environment, I was actually making reference to the Cable side of the business. I was wondering if you could give us an update on that?

Sure. On the Cable side, I mean, it's generally a continuation of what you saw in Q3 on that front. The promotional activity generally centered around the whole home and the bundled offerings with Internet being our key product. We're being very careful to ensure that we're getting the right value in the way we price Internet and the way we bundle it in the pricing for the whole home. And so I would say, overall -- and you see that coming through when you look at Internet revenue and Internet ARPU. And so while the individual products sort of go up and down on a consolidated whole home basis, we don't disclose, what I can tell you is ARPA continues to move in a positive direction for the whole home.

We'll now take our next question from the line of Simon Flannery with Morgan Stanley.

So I wonder if you -- Tony, you just talked about the balance sheet to delever in the quarter and in the year back to 3.0, but it looks like you're holding the dividend again for now. So how are you thinking about dividend policy and deleveraging and when you might be in a position to revisit the annual dividend? And also on the Wireless adds, another strong quarter. It looks like you're expecting a good 2017. How would you attribute your subs to overall market reacceleration versus improved shares? Is it sort of a 50-50? Or does it mean more one way or the other?

Okay. Simon, I'll start with the second part of the question and then get to the first one. In terms of the Wireless adds in the market, we've seen over the last -- if you look at the total industry and the total market over the last several quarters, there's been an uptick and depending on how do you measure it, it's anywhere from 3.5% to about 4.5% increase in total size of the net add market. Our expectation is, and we'll see once everyone reports but our expectation is that, that continued on into Q4. That would be our best guess of -- based on what we see in the marketplace. And so our strong net add position that you saw in the fourth quarter certainly reflects the continuation of that larger market size, but more significantly for us, we see it as moving -- continuing to move into a strong market share position of nets. Again, a continuation of the position we saw -- you saw in Q3. Our expectation is we continue to track nicely into Q4 in terms of market share. On your first question in terms of dividends, nothing new there. We've said that we really focused on 2 things. First and foremost, getting a business that is growing cash flow on a sustainable business, and that's coming in nicely, and we wanted to direct that cash flow in the short term to paying down debt and getting our leverage down. And so while we've seen good trending in 2016, we still got work to do and want to continue to see it moving towards 2.5%. We're in the middle of a CEO transition. So as most of you noted, it's kind of a bit impractical for us to make a long-term decision on dividends during this time period. And so we sort of -- the commonsense approach is to not do it right now, and that's what you see there. In terms of when we do it, I don't want to get too far ahead of ourselves, but I think the metrics to keep watching our cash flow growth and movement on the balance sheet as the key ones.

And Simon, just to add to that, obviously, one of the things that we've seen over the last number of years is an increasing trajectory in terms of debt-to-EBITDA. And I think 2016 is a good year in terms of reversing that trajectory, which is something that we've been looking for. It's early days, and there's obviously a lot of movement for us, but it's something that the management and the board will be looking at going forward.

Right. And no spectrum auctions on the horizon in your view?

We don't see the -- we don't see it in the near term. I mean, it -- we'll wait to see. I think what we're hearing is that probably not in 2017, and the probability for a 2018, we think, remains low. But that's as best as we can estimate right now.

We'll now take the next question from Greg MacDonald with Macquarie.

I wanted to ask a bit of a follow-on to Simon's question on the gross add numbers. Tony, you made reference to the fact that the market has lifted nicely. You've implied that you've taken some share, that's nice to see, but these are very big gross add numbers that we're seeing, and we have, at least in the last few quarters, seen these types of numbers out of your competitors as well. Can you talk a little bit about what you think is driving that and whether it's a bit of a cyclical thing, the last year or maybe last 1.5 years that should tail off or whether you think there's some sustainability and more interesting and what your assumptions on that gross add number are going into your guidance for 2017 if you can say whether you're actually assuming growth or not on that postpaid gross adds?

Thanks, Greg. There's a couple of things, it's -- I'll start with the last part. It's always hard to estimate forward-looking in terms of where the market is going to go. So be cautious on that. I think we're optimistic that the reasons for the growth that we saw over the last several quarters, including the fourth quarter, should sustain into 2017, but we're cautious about it as well. If we did stick to Q3, Q4 specifically in the fourth quarter, as you said, good, healthy gross add uptick. Our postpaid gross adds were up 19% year-on-year, and that's up from the 8% you saw in Q3. It's also interesting to note that prepaid continues to do well also in the marketplace. And so while we focus on postpaid, the prepaid segment continues to come in nicely in and of itself, and it continues to be a good segment, which migrates to postpaid afterwards and so those pieces are working well. In terms of the contributors, it's a number of factors, but I think we kind of hone in on a few of them. The attractiveness of some of the handset pricing, we think, makes it easier for folks to get into the higher end of smartphones. And so access -- increased access is certainly part of it. I think with some of the tools and the bigger buckets that are there, customers are more and more comfortable adding devices, most notably on the Share Everything plans. So you have more devices, more family members coming in. And so what we see is what we would describe as the mid- to a bottom end of the market kind of filling in nicely also, and that's contributing to the ARPA. Could go on with a number of other things, but I think those are probably some of the key drivers, we think, that drove the total size of the market in the second half of 2016.

So from your comments, I'm to assume that you're also including prepaid in that right on the gross side, on the lower to mid? Or is that segment different? Do you have different views on what's happening there?

No. My comment with respect to lower to mid, we're seeing that -- my comments were in the postpaid. So as I say, it's a good, healthy mix that we're seeing coming through, and it's a good, balanced mix that you would have seen in previous quarters as well. Separately on the prepaid side, that market continues to do well, not only in terms of size, but if you were to look at prepaid ARPU in and of itself, that continues to move in a positive direction. And so I think it's good to see both segments, postpaid and prepaid markets growing nicely.

And on the prepaid side, would that be just more devices being added on as well, tablets, for example?

Sorry, if you can repeat that, Greg. On the postpaid side? On the prepaid?

On the prepaid side.

No, I wouldn't attribute it necessarily to tablets. It's what you would expect a varied range of devices on prepaid.

And you [Audio Gap].

We'll now move on to the next question from the line of Aravinda Galappatthige with Canaccord Genuity.

Tony, just wanted to touch on Cable CapEx. Obviously, you're pointing towards broadly lower CapEx in 2017, is that predominantly coming from the Cable side of things? And can you maybe just talk to sort of the magnitude of the reductions that we can expect for '17? Obviously, your peers are in the low 20s in terms of -- low- to mid-20s in terms of intensity. So there's a little bit of room for a reduction in CapEx there on the Cable side. Can you just touch on that? And secondly, with respect to the X1 launch, can you just maybe discuss what are the main milestones from here on up until the launch some of the main humps that you had to kind of get through before you're able to roll the product out?

Aravinda, 2 -- of the 2 questions, I'll start with CapEx. So in the guidance we provided for 2017, you'll see that in the range we provided, the top end of the range 2.35 is where we were in 2016 in terms of actuals, and so you can sort of cross read on that, that will be the high watermark for 2017 and an opportunity to continue to bring it down as you saw in '16 coming from '15. So I think from a total envelope, capital intensity continues to come down nicely. In terms of the specific pieces of it that you see there, 2016, as you would expect, investments in continued LTE and 700 deployment, and that has started to come down on LTE, now reaching 95% of the population now and on the 700 deployment, at over 91%. So as that starts to come down, you'll see Wireless CapEx continuing to come down. On the Cable side, I think you referenced specifically, 2017 is going to be -- while we had expected it to come down, moving the Comcast X1 into 2017 causes us to be roughly flat, maybe down a little bit in Cable CapEx, but it is a onetime item. And so longer term on Cable, we expect once we get past the implementation phase and into 2018, we expect cable to continue to come down significantly. And that's going to be getting past the IP launch but also a much better CPE profile as we tap into Comcast's ecosystem on both the set-top box configuration but also on the modem and gateway side as well. And so that piece of it will come in nicely. And then we'll continue on segmentation as you would expect, and that largely is success based. And so as…

We'll now take our next question from the line of Maher Yaghi with Desjardins.

Tony, I wanted to just in terms of 45% of your residential Internet base is now on speeds higher than 100 megabytes per second. That has driven your Internet revenue growth quite nicely. Can you talk about what your expectation of your -- of that metric? It's likely not all clients will take 100 megs, but how much further can we expect this metric to improve and continue to boost your Internet revenue line?

All right. The -- for some of the discussion we had on the Wireless side I think the ingredients that have pushed Internet speeds and capacity up continue to be there. The use cases continue to go up. If you look at number of connected devices in the home, saw a stat that it's at about 11 today, and just 2 years ago, it would have been a number significantly under that. So as the use case continues to go up, as video continues to move to IP and the size of the base continues to increase -- if you look at the size of our market, it continues to grow at over 2% consistently every quarter year-on-year. And so all the metrics for growth are there. And so that -- we continue to see that, and it plays well to our competitive advantage in terms of speed and capacity. And so as we said, almost half, greater than 100 megabits. Again, if you were to look at where we were 2 years ago and where the industry was 2 years ago, it just continues to move exponentially. And so we don't see a reason as to why that would otherwise have to flat line at 100 or anything much more higher than that.

Okay, great. And just to follow-up on the Cable, I noticed the absolute decrease from the wholesale decision was not equal on the revenue and EBITDA. There -- it seems like there are some additional cost that were -- that got in there because of that decision. Can you talk about that? And also when I look at your cable pricing, we've seen recently Dow increased pricing in your territory quite a bit. Can you talk about your pricing strategy for 2017? And if you announced any price increases for your subscriber base?

So on the first one, in terms of -- can you repeat the first question -- part of the question, Maher?

In terms of the wholesale level by default, it looks like it went down by $14 million on revenue but $12 million on EBITDA. So I'm trying to figure out where's the additional cost coming from here.

Yes. I think if you work it through in terms of the wholesale piece of it, the impact I think the $14 million is a little high. And if you flow it through, it actually -- what you'll see is expansion of Cable margins. And so you get the full flow-through, but we're picking up the benefit of the mix in Cable of having more Internet, which as you know, is significantly higher margin for us. So we can actually see is an improvement in Cable margins. And so I'd be happy to kind of walk you through that. And Amy will walk you through -- can walk you through that after the call. And then the second part of the question was on pricing strategy, and obviously, that's something we're not going to talk about.

We'll now take our next question from the line of John Hodulik with UBS.

It's Lisa Friedman for John. I just wanted to turn back to video. I see that the losses have been getting better over the past, I would say, 8 quarters. And I'm wondering if we should expect those losses to be stable this year? If you have any plans in place to kind of keep the lid on subscriber defections versus you expect any disruption in markets now your competitors know that you're not going to be rolling out your own IP product and that won't be here until 2018? And then is there a point where video gets back to growth as you implement X1?

Okay. Thanks for the question, Lisa. I think a couple of things. So in terms of, we see on our legacy platform, you're right. If you look at the subscriber numbers for video alone, they continue to get better quarter-on-quarter. We continue to make investments in improving that product, improving stability, improving some of the functionality of it, including mobile and TV Anywhere type of applications. And so what we're seeing is that's improving the product and when you combine that in a bundle with the superior Internet, I think that is accounting for some of the drag along as well. So we do continue to see improving trend, and we expect that trend to continue as we continue to make the investments in that legacy platform. And then Lisa, I think you have a second part of your -- go ahead.

I was just going to say, also has there been much impact from the changes in terms of pick-and-pay now that, that has been fully implemented as of December 1?

So on the pick-and-pay piece coming in, we've been watching it. The impact has been very small in terms of the impact. The other part of your question that I was getting to was, do we expect video to grow, particularly as we get into X1? And absolutely, and that's why we're making the investment. As I said, we're extremely encouraged by the experience that we've seen Comcast has in the U.S. with the X1 product where there is growth there. So as you've said, when you combine the X1 together with the Internet advantage that we have, we think there's a real opportunity for growth. And I should add, you see that in the proxy numbers as well. So when you see their numbers postimplementation are excellent, seems to be a very good growth story for them as well.

We'll now take our next question from Rob Goff with Echelon Wealth Partners.

Well, my question would be on the Cable side. Could you talk in general terms to the per household CPE trending when you look at the upgrade to the DOCSIS 3.1 with a WiFi gateway, in particular?

Sure, Rob. In terms of the -- I think you're getting sort of the specifically the CPE cost structure, and I would describe it as generally stable over the last 6 to 9 months as we had enabled more speed. You saw modems over the last year increase, but we sort of see the opportunity for that to flat line and frankly, start to decrease again as we move on to the Comcast gateway road map DOCSIS 3.1-enabled gateways. We see that continuing to improve in terms of per-unit cost metrics.

We have time for 2 additional questions today. The first will come from the line of Richard Choe with JPMorgan.

Great. I just wanted to follow-up on the CapEx guidance and commentary. Wireless CapEx is now under 10% in revenue, and it's gone down kind of year-over-year with growing subscribers and usage. Can we stay at these levels? And can you talk about what efficiencies you are seeing with the CapEx coming or being so low relative to historical levels?

Thanks for the question, Richard. The -- I'd caution on the Wireless CapEx. You'll see ebbs and flows, and so while you see it come down, I don't think sub-10% is a long-term number for it. I think generally, you've seen it in the 11% to 12% range, and so we continue to think that that's a healthy CapEx level for Wireless.

And on the Cable side, with the losses coming down, how much of the losses do you think are competitive versus just over the top, any sense on the mix there?

It's tough for us to estimate that. I mean, we [indiscernible] that based on total size of the market, but because the market keeps growing, it's really tough to know, and so I prefer not to speculate on the call.

We'll now take our last question in the queue, which comes from the line of David McFadgen with Cormark Securities.

Two questions, if I may. So the first one is just regarding the dividend and the potential 600 megahertz auction in 2018. If it does turn out that there will be an auction in 2018, do you think that you will just hold off and any dividend decision given the potential to spend a lot of money for that spectrum? And then secondly, on EBITDA guidance, I was wondering if you can give us a little bit of color on where the growth will come from? I would imagine it's from primarily Wireless driven, but if you could give us any color on where that growth would come from, that will be helpful.

So David, on the spectrum and again in terms of timing of it, don't know. I probably add to the comments that I previously made, the 600 megahertz auction is still going on in the U.S., and so we suspect that probably needs to be concluded before it starts up in Canada. And so again, we see it as unlikely over the next few years but we'll see how that plays out. In terms of the impact that's going to have on the dividend, I think it's just too premature for us to speculate. Right now, it's obviously going to depend on by the time we get to the 600, where our balance sheet is going to be and our cash flow -- what our cash flow growth looks like, and so not a lot I can say about that now. And then in terms of the AOP growth that we provided in our guidance of 2% to 4%, it'd be helpful, I would say, we see it in all parts of our business. And so on the Wireless side, we're looking to -- and again, principle is kind of saying it like before a good margin and I talked about that. And I think one of the things you'll see improve is our fall-through rate on Wireless revenue growth, and so we're focused there. And then secondarily on Cable, I think, you'll see stable, possibly improving margins on Cable but I don't want to get too far ahead of ourselves. The mix advantage that you see is certainly helping us but as we move to the X1 platform, then we rotate some back to video. And so there's a lot of moving pieces. And so I think a reasonable outlook is stable margins on Cable. Then finally, on Media, the core sports product there continues to do well and we see stable margins there as well. So again, the growth will come from all key segments of our asset portfolio.

Ladies and gentlemen, this will conclude the conference call for today. Thank you for participating, and you may now disconnect your lines.