Q3 2020 BCE Inc Earnings Call
Good morning, ladies and gentlemen, welcome to the <unk> Q3, Twentytwenty results conference call.
I'd like to turn the meeting over to Mr. Thane Fotopoulos. Please go ahead Mr. fotopoulos. Thank you Donna and good morning, everyone as usual participating on the call today are mark.
Pcs, President and CEO and our CFO before we begin I want to draw your attention to our safe Harbor statement remind listeners that the slide presentation and remarks made during the call. Today will include forward looking information and therefore are subject to risks and uncertainties results could differ materially we disclaim any obligation to update forward looking statements except.
As required by law. Please refer to the company's publicly filed documents for more details on assumptions and risks and as always our earnings materials are available on the Investor Relations Web page of the BCD website Marco over to you <unk>.
Thank you Dana and good morning, everyone.
Our focus in Q3 was all about building momentum back into the business.
Although the affects of coal that are still obviously present I'm very pleased with our progress to date as we experienced a notable improvement in our operating performance this quarter due to the success of our broadband strategy.
Opening of retail stores, the step up in economic activity the return of live sports programming.
And overall disciplined execution in a competitive market.
This contributed to stronger financial results across all Bell operating segments in Q3 compared to the previous quarter.
We continue to grow broadband market share and deliver 210000 total <unk> wireless retail internet and IP TV customer additions in Q3 and.
Consistent with our focus on profitable wireless subscriber growth, we added 128000, new net postpaid and prepaid customers. This quarter comprised entirely of Newbuild smartphone subscriptions and.
We delivered very strong wireline subscriber results within the industry, leading combined 82000 retail internet and IP TV net adds.
We also generated over $1 billion of free cash flow this quarter.
Year to date cash generation to more than $3.25 billion, 14% higher than last year.
We expect free cash flow to moderate in Q4, as we further step up capital spending and as accounts receivable and inventory levels growth with an increase in sales activity.
This contributed to maintaining a very healthy liquidity position of $5.2 billion at the end of Q3, which does not include the approximate $940 million in net cash proceeds received from the recently concluded sale availed editing cell data centers to equity.
[noise] I'll turn over to slide four of our presentation Slide four provides a quick update on the continued progress we're making on advancing our strategic imperatives. In Q3, we equipped 140000, new locations with direct fiber, bringing the coverage level to 56% of our total high speed broadband footprint. This.
This is enabling more and more Canadians to access the fastest internet speeds in the market today at 1.5, Gigabits per second and to benefit from the related customer experience enhancement fiber brings we.
We remain very enthusiastic about fiber and the resulting significant financial and subscriber growth and the customer experience benefits the strategy delivers.
The broadband footprint advantage that we are building.
With the fastest fiber internet and wireless from internet speeds in the market today, but.
Missions us extremely well in both our consumer and business segments over the long term to grow Internet revenue, which increased three grew a strong 10%.
We also announced a further acceleration in our wireless home Internet build out that will approach, 50% of our targeted footprint by the end of the year with the addition of another 80000 homes in rural Canada.
We also now expect to cover more than 350000 rural Rural homes up from 300000 previously with enhanced 50, megabit download and 10 megabit upload speeds by yearend.
These leases these latest announcements build on several other initiatives this year, including the special project that <unk> wireless home Internet to 137000 more rural locations than expected in response to increased demand during the cobot crisis.
Our announcement that we would double internet download speeds from 25 to 50 Megs.
The roll up to 200000 rural households in Atlantic, Canada, When we recently announced which will be built out over two years and our plan to begin deployment in Manitoba next year.
These investments are establishing the foundation for our continued success.
Immediately stepping up for Canadian everywhere across our operating territories in the face of coated.
I'll now turn to wireless.
Just last month.
Canada's networks were recognized by open signal as being the fastest in the world.
In fact, the average fourg LTE download speeds were not only faster than the network speeds are the top carriers in the U.S., but also significantly outpaced the second fastest country in the World South Korea.
On their fully fledged Fiveg network.
Put these results into perspective, the global average for download speed experience across all operators analyze was just above 22 megabits per second while the same speeds for candidates big three national wireless operators were more than two to three times faster than the global average. This is the clear outcome of supportive facilities.
Based government and regulatory policies.
Bell's Fiveg network continues to rapidly expand and as Canada's fastest.
We provide download speeds up to 1.7 gigabits per second.
And our footprint will continue to grow into 2021 and beyond that's true Standalone Fiveg networks are deployed using mid band 3500 megahertz spectrum.
It's still early days and the.
The full benefits of Fiveg technology won't be realized until more spectrum and new applications become available data usage. Among early fiveg device users is twice as high as non fiveg subscribers with.
With monthly recurring revenue that is nearly 20% higher.
On customer experience, which is also one of our key strategic imperatives were making significant progress with fewer CCTS complaints by bell customers improved digital functionality and self serve capabilities.
Our most recent initiative is move out late.
This is a new course year service for customers in Quebec, and Ontario, we're moving homes to transfer their belts services seamlessly to their new residents. Just another example of an initiative that puts customers front and center.
We also remain keenly focused on making the online in App based sales experience easier for consumers.
Directly as a result of our investments to improve digital functionality, 56% of all customer service transactions were executed online in Q3.
Up from 50% just last quarter.
Another initiative, we're working on to deliver ever better customer experience is full self install which we launched in October for homes connected with direct fiber.
The important point here is that as we deploy more fiber in our network and as more homes are connected with fiber we have the ability to offer full self install to a larger customer base will only have to connect the modem to a fiber Jack and power supply.
This will drive a step function improvement in customer satisfaction and deliver cost savings.
So yeah, we're really pleased with the company wide focus on championing the customer experience.
I'm going to turn now to slide five gives you a quick overview of some key operating metrics start first with wireless.
Friends showed good sequential improvement in Q3 with stronger customer activity, including ongoing steady traction for digital channels continued low churn and then the habit who decline that is moderating.
Store traffic improved noticeably with the reopening of all our stores and sales ex sales activity steadily picked up with each passing week at the level of competitive intensity and number of promotional offers increased.
We added 133000, new smartphone customers this quarter.
Unlike some others in the market basically our net adds this quarter did not include any mobile connected devices such as tablets.
Is the bottom line, we're focused on driving service revenue growth through accretive smartphone transactions and despite a more muted back to school period because of Covance postpaid mobile smartphone ads in Q3 were very good and largely similar to last year.
Also supporting our 88000 total postpaid net adds this quarter was lower customer churn, which improved eight basis points over last year to $1 or 4%.
And in prepaid we added 41000, new customers another very good quarter, which we believe led the industry once again.
Blended ARPU decreased 6%. This result is a notable improvement over Q2, even as lower roaming volumes and data overage contraction from increased customer adoption of unlimited plans remain headwinds in fact, these two factors accounted for approximately 80% of the App who declined this quarter.
Now, let me move to Bell wireline then.
The need for fast and reliable internet conductivity, particularly in the current Corbin environment together with lower customer churn drove strong broadband results. We delivered 63000 Internet net adds that's 8% higher than last year. We believe this was industry leading in Q3.
We also added another 81000, FTT h. subscribers this quarter, bringing the total number of direct fiber customers to more than 1.6 million and that's up 17% overlap.
Over last year.
TV, we added 19000 net new IP TV subscribers supported by our new App based Virgin TV service and significant customer churn improvement.
All in all.
Pretty solid results, given given a mature Canadian TV market and some ongoing pandemic related constraints.
We also continued to see strong progress with satellite TV and home phone customer losses, which improved 29% and 24% respectively. As Canadians continue to stay in work from home during the pandemic.
And certainly anytime the rates of decline slow for these high margin services, that's important to us from a cash flow perspective.
So despite ongoing cobot impacts on customer activity really was a strong quarter from NRG perspective with positive total retail net adds in our wireline footprint of 16000, that's an increase of 22000 over last year backed its only the second quarter in the past five years, where we've achieved positive wireline retail.
Net ads, including NAS and satellite TV.
I'll turn now to Bell media.
TV advertising demand picked up in several key categories, especially with the return of live sports and increased spending by advertisers.
Radio one out of home advertising have been slower to rebound on.
On radio radio Listenership, it's declined during the pandemic and some key out of home advertising faces as well such as restaurants airports those have been severely impacted by lock down measures, but we're seeing momentum returns outdoor categories, such as street furniture and billboards.
On the subscriber front TSN and Rds have remained largely stable, particularly with live sports coming back in Q3 as have subscribers across all Bell media TV properties since that Covance situation again.
TSN remains the number one ranked sports channel for the latest broadcast year that just ended on August 30, Onest and year to date Rds viewership has outpaced our largest French language competitor by 32%.
On crave it continued to deliver with strong direct to consumer growth, 3% year over year increase in total subscribers for crazy over.
Overall, the subscriber results speak to the quality and depth of our programming, which is frankly second to none in the marketplace.
And a couple of other items in the quarter that I wanted to mention regarding.
Regarding media to coincide with the fall season up New TV programming Bell media launched a new all in one digital video streaming platforms for CTV content essentially.
CTV Avon service. So now viewers can access all live and on demand CTV content at no additional cost directly from CTV Dot CA and the CTV app on mobile and smart Tvs and other connected devices. So it's a single hub. It offers advertisers a compelling way to reach our digital audiences and easy way for.
Viewers to watch our content, it's 100% AD supported and it was built using the same technology that powers crave.
And at the end of August Bell media rebranded our newly acquired French language conventional TV network TV, the new brand is and.
Our goal is to make new war broader and fully integrated conventional TV destination with multiple points of contact for video content.
We're already seeing results from that strategy with significant gains in primetime viewership and AD sales. This fall season, and that's expected to continue this broadcast year.
So I'm going to turn it over to Glenn and just a moment.
Before I do I want to emphasize the following.
Q3 was all about building momentum back into the business and delivering the consistent results. We said we would deliver despite.
Despite cold we continue to push forward with the deployment of high speed broadband fiber wireless from Internet and Ken is underserved rural communities and mobile Fiveg technology.
We're keeping our eyes fixed firmly on the long term.
The same time, we're maintaining operational excellence in the short term to steer us through the pandemic recovery period and to generate even greater momentum with each successive quarter.
We're competitively well positioned to succeed with significant liquidity and the financial flexibility to drive both our national investment strategy and BCS common share dividend, which we just announced this morning for Q4.
And on that let me turn it over to Glen.
Thank you Marco and good morning, everyone.
With the easing of cobot restrictions beginning in the latter stages of Q2 consumer and commercial activity gradually picked up gaining steady momentum throughout the summer.
Despite the continued.
Effects of coal that all bell operating segments delivered better performance trajectory is with improved year over year revenue and EBITDA declines in Q3 that contributed to strong ongoing free cash flow generation.
Consolidated revenue was down 2.6% year over year, which translated into a 4.4% decline in adjusted EBITDA.
We estimate that the total incremental corporate related costs in the quarter, you would have been approximately $40 million down from $85 million last quarter. Excluding these direct cobot related costs, our consolidated EBITDA margin was stable year over year.
Net earnings for Q3 were down 19.7%. This was a result of lower year over year, EBITDA and a noncash net mark to market equity derivative loss, resulting from the decrease in BC share price this quarter compared to a gain last year.
We invested over 1 billion in Capex in Q3. This represents a notable step up in spending from last quarter, reflecting both the seasonal increase in construction activity during the summer months and the resumption of usual business operations. Following a slower pace of spending during the initial stages of coal, but when certain.
Hi, just could not be executed we expect capital expenditures to ramp up further in Q4.
Despite the softer year over year earnings we generated over $1 billion of free cash flow this quarter, even with lower EBITDA flow through at higher cash taxes, which were expected.
Let's turn it over to slide eight on wireless financials Q3 marked the return to positive revenue growth for Bell wireless.
As the year over year decline in service revenue improved sequentially and product sales rebounded with a pickup in retail sales activity.
Service revenue was down 4.3% year over year.
The result of covert related impacts.
Primarily from an approximate 70% decline in roaming due to global traveler sections as well as lower data overage, driven mainly by customer rate plan optimization and ongoing adoption of unlimited plans.
On a year over year basis, lower roaming volumes and data overage accounted for more than the entire decline in service revenue this quarter and are expected to remain headwinds for the foreseeable future.
Product revenue was up 11.9% year over year benefiting from a mix shift away from tablets.
New higher value devices, as well as stronger year over year consumer electronic sales at the source driven by the increased online shopping during the pandemic.
Consistent with the year over year loss of high margin roaming an overage revenue EBITDA was down 4.4% in Q3, a significant improvement from the 9% decline we reported last quarter.
Let's flip over to slide nine and wireline financials total revenue was down 8.8% versus last year slight improvement over the previous quarter, which speaks to the resiliency of our wireline operations and the strong demand for our leading connectivity service in the current cobot environment.
Residential wireline growth in Q2 Q3 was positive. This result was driven by a strong 10% year over year increase in Internet revenue combined with an improved rate of voice decline as fewer customers disconnect home phone services during the pandemic.
In business wireline well results this quarter reflected slower customer spending on business service solutions, and data equipment, which declined 5% and 10% respectively in the quarter.
Overall performance continued to hold up well, despite coven and although small business in certain industries have been hit really hard closures and bankruptcies have been better so far than we feared.
Wireline EBITDA decreased 1.6%. This represents a notable sequential quarterly improvement as operating costs were stable year over year, despite the cobot related cost impact.
Referenced earlier, which included a modest increase in our bad debt expense provision to reflect the increased risk environment, particularly in the SMB segment.
Let's flip over to slide 10 on media financials, a much better quarter for Bell media as advertising demands improved across all media platforms.
With the resumption of live sports programming and gradually the gradual reopening of the economy.
This resulted in a smaller year over year decline the revenue decline of 16% compared to 31 last quarter.
Advertising revenue decreased 22% in Q3, a significant recovery from the 51% decline we saw in Q2 with the biggest improvements coming in TV, most notably sports Entertainment and news.
Operating costs were down 14% over last year, driven in large part by the lower cost of revenue because of TV production shutdowns and delays as well as the elimination of discretionary spending.
This contribute to a sequential improvement in EBITDA, which declined 21% year over year.
Adjusted EPS on Slide 11 provides our usual walk down of the key components of adjusted EPS, which was 79 cents per share in Q3 down 12 cents versus last year.
Lower EBIT to drove three quarters of this decline while the remaining amount can be attributed to a volume impact of higher depreciation expense due to the growth of our capital asset base and lower year over year tax adjustments.
Over on slide 12 on free cash flow as I mentioned earlier, we generated over $1 billion of free cash flow in the quarter down 11.5% over last year.
As Marco said this brought year to date cash generation to more than $3.25 billion or 14% higher than last year. Very strong result that was achieved despite a significant cobot driven decline in EBITDA and without cutting back on critical capital investments.
This quarter's results also reflected the expected increase in cash taxes due to the deferral of corporate income tax installment payments from the first half of the year into the second half.
As well as higher interest paid due to mainly to the timing of debt service payments on our MTN debentures working.
Working capital improvement we enjoyed in Q3 can be attributed to the timing of supplier payments.
Well it will largely reverse out next quarter. This together with the build up the new wireless handset inventory ahead of the busy holiday selling period growth in accounts receivable as sales activity picks up further and accelerated capital spending will result in free cash flow drag.
In the coming quarter.
Over on slide 13, maintaining our financial strength and flexibility is our key priority.
He is liquidity position remains very strong at $5.2 billion and available cash at the end of September. Additionally, our balance sheet is well structured with long term maturities.
Low interest the interest rates on our outstanding debt.
Our debt leverage ratio also remains manageable at 2.9 times adjusted EBITDA with no expected improvements in the foreseeable future given the number of wireless spectrum auctions on the horizon.
We also recently strengthened our liquidity position by raising an additional $750 million of seven year funds.
At an effective yield of only 1.65%.
Proceeds of this MTN issue were used too early redeem higher cost public debenture debt more importantly, we have no near term financing requirements as our next material public debt maturity does not occur until Q4 of two.
22.
Lastly, Bell Canada's defined benefit pension plan continues to remain fully funded despite the unfavorable impact of lower discount rates.
This speaks volumes to the success of the actions we have taken over the many years to secure the financial position of all of our plants.
That does it for my formal remarks on the quarter I would like to turn it back over to saying and the operator to begin questions. Greg. Thanks, Glen So before we start the Q inane in an effort to make the call as efficient as possible as always please limit yourselves to one question. One brief follow up if you must so we can get to everybody in the queue at the time, we have left so thanks for your cooperation in advance.
Donna we are ready to begin with our first question.
Thank you we will now take questions from the telephone lines. If you have a question on your Sweeney Speakerphone. Please pick up your handset before making your selection. If you have a question. Please press star one on your devices keypad.
You wish to cancel a question. Please press the pound Frank Please press star one at this time if you have a question there will be a brief pause for participants register thank you for your patience.
And the first question is from Jeff fan from Scotia Bank. Please go ahead.
Hi, good morning, everyone.
I'll start with wireless.
I'm wondering if you guys can help characterize.
Because there's a lot of other examples but ultimately it is an incredibly competitive market.
I'd say from from the Bell perspective, Here's the approach we take in here, what kind of customers and shareholders are going to get from US number one will always be competitive.
Two I mean I emphasize this in my.
In my opening comments, we are focused on high quality smartphone loadings, because that's what drives service revenue growth and you can see the very positive results of that strategy in our Q3 numbers. What we're doing is we're deemphasizing tablets, we're going to let.
Others Chase that segment will obviously plane and the tablets segment when it's when it's accretive.
But otherwise our focus is squarely on high quality loadings, and then back to your.
Kind of question on.
Some of the promotional intensity and we've got to take a step back a little bit and then with the move to installment plans like what was the vision.
We were.
Part of the vision is to deliver ultimate transparency for for the customer you pay for your rig plant you pay for your handset. There's a variety of handsets you pick the one that delivers the features you want at the price that you want to pay so when you have that that that total transparency in that sense and you are offering all kinds of.
Of of of handsets, just kind of don't.
Don't understand why we would continue as an industry to continue engaging.
In deep deep discounting of handsets like we like we used to and we put a lot of effort into building. The it systems around installments, we all put a lot of effort into changing the way we sell not naive I've said, all along since installments, where launch if there would be periods of time of year, where they would continue to be intense promotion.
Oneall activity, but.
I'm personally a little bit disappointed and the pace of subsidy reduction I think we can do a whole lot better.
But hey, I mean, there was the total lockdown in queue to you asked about Black Friday in the holiday season that remains to be seen and we're in the midst of a second wave.
Jeff.
But on the other hand, you've got the the iPhone that's just launched.
Our digital functionalities are so much better than than they were so we'll be ready however, black Friday turns out and however, the holiday season turns out in terms of sales activity, we're ready to capitalize.
Just a quick follow up on the on your comment about high quality loading Uhm is nice to see you disclose 130000, plus like phone or smartphone ads.
Uhm is this a number that you expect to.
Systematically report in your reporting so that kind of <unk>.
Exclude the tablets and then just a quick clarification your wireless home Internet ads are those in your wireless sides or those in your wireline Internet ad.
So on the last one.
The wireless home internet or in the Internet numbers Glen over to you on on the tablets versus smartphone loadings.
Good morning, Jeff Yeah, I'll look, it's a logical approach, especially as we shift increase.
Increasingly to five G and our focus is merkle said is on high value subscriber loadings.
I think it makes it makes a lot of sense to look at this reporting and I know I know.
One of our competitors has has switched to this reporting and I'm seriously considering giving that's making the reporting changed for next year. So stay tuned but it makes a lot of sense, it's illogical approached up.
Okay. Thanks, a lot.
Thank you the.
The next question is from June Mcreynolds from RBC. Please go ahead.
Yeah. Thanks, so thanks very much good morning.
Murko, you're clearly seeing the success and saw an expanded fiber to the home footprint and you're keeping your foot on the gas here this year and really seeing some some pretty good momentum.
And that's whether it's orange, you use or or the 10% increase your internet revenues. When you know you're not going to give guidance.
For 2021 or beyond the thematic quake.
I just need your updated thoughts on accelerating not fiber to the home deployment is everyone's pretty eyes wide open up some momentum that I think the telcos are gaining on the cable comes with it.
And secondly quickly on Bell media would like to get your updated thoughts on what was tabled or will be cable. That's proposed amendments to the broadcasting Act and just your initial thoughts on the impact there for about media. Thank you.
That's true Okay first on the.
On broadband so.
Reiterate what I also set in my at the end of my opening comments, and where where got her eyes fixed firmly on.
The long term future.
In the long term future is underpinned by.
Our strategic imperatives, one of one of the key ones is building the best networks, We don't we don't veer from the strategy.
And we can see as you pointed out drew that it's having a positive impact on our financials for wired the wireline segment and clearly on our on our operating metrics. So it's significant and I want as much fiber as possible and urban and suburban markets and frankly I want to connect as many under.
Serve homes in rural areas as we possibly can as fast as possible.
And when you're not.
Not going to give forward looking guidance as he said, but when you look ahead and right now and I hope. It continues we have favorable regulatory environment with with positive signals, having been recently been sent by the federal government that.
Facilities based competition matters and investment in facilities matters. So when you put that altogether I think it's clearly a case to be made for accelerating the pace of rollout I certainly want to do it. It's Y 2021, Covid first hit us at the beginning of the year. We said we are not scaling back on the strategic investments we have to can.
<unk> going so not going to not going to give guidance for 2021, but it's going to continue to be a very important point of emphasis for us.
And on on the regulatory side with the with the announcement on Tuesday.
Say that I have to kind.
Kind of tip of the hot to the Minister mutable for we're putting forward the amendments that that they did on on Tuesday, I think it was and to really important points there.
And the points of principle, but they are really important one is we do the recognition that there needs to be a level playing field and Canadian broadcasting is between our domestic players large and small and.
Internet Global Internet Giants very very important principle, we've been asking for the recognition of regulatory cemetery and level playing field for a long time. So that's really important the second the second one that I want to highlight is the recognition of the importance of local news that's going to be built into.
Broadcasting Act also very important so those are two real positive steps again tip of the hat to the government for that however, what's really going to matter is.
How all this how how these important principles are going to be implemented because that's where the rubber hits the road and that remains to be seen like what will the policy directions from the government look like to the Crt's seen how will the crt's heck generally apply these principles is going to matter and another thing that's really going to matters, we don't have time.
We've got to move fast and implementing those principles. If we're still here debating how the principles are going to be implemented in two years it'll.
That will be a shame.
Alex access or is it actually just pricing increases net over the past year. Thanks.
Hi, Vince on on the first one on Fiveg in wireless it's it's an MRC issue new monthly recurring charges.
Our driving that that growth that you're seeing with the fiveg customer base and on not on Internet. It's a function of a number of things.
Kind of the.
Co bid.
The cobot effect in terms of promotional intensity.
Really pricing, reflecting the value that we are delivering to customers with with fiber networks its customers choosing higher plans with higher speeds given the working.
Working from home.
And staying at home more that's why you're seeing that impact on the wireline side bins.
Thank you.
Thank you. The next question so much David Barden from Bank of America. Please go ahead.
Hey, guys. Thanks for taking my question.
I guess my question is relating to the Aptwo.
Situation could you elaborate a little bit on.
How much.
Or what percentage are you through the overage.
Headwind.
On the business and then at the same time.
From an overall standpoint, he said it was down 70% year over year at what rate is that improving.
And when do you think that these two kind of.
Headwinds start to abate. Thanks.
All I'll start and then Glenn you can you can pick up I'll start just first with a comment on the on the overall decline.
The decline improved.
In Q3 compared to Q2 and.
Again, I'm a bit of a broken record on this one since.
Since unlimited plans were launched.
Our focus is.
Is to continue to do what I consider to be a very good job managing that that decline.
We don't try to force migrate customers as you know, we obviously have unlimited plans and they are being chosen by customers, but as the customers choice frankly is not optimal financially to force migrate customers. So we're not going to do with its all about good subscriber base management and that's going to continue so yes over to decline.
<unk> continues to be a headwind and we continue to manage it and that rate of decline actually improved in Q3 over Q2, I'll stop there and then.
Glenn you can fill in the blank thanks, Marc I'll add a little more color Merkel said, we did have a 3% improvement in sequential quarters, albeit we continue to be down year over year, but if you look at the back of the press the decline year over year, 80% of the decline year over year is driven by the roaming and data over.
Revenue that we've spoken about the other 20% is mainly driven by higher prepaid mix.
If I if I Peel the onion, a little further as I mentioned in my previous remarks roaming revenue is still down.
Virtually 70% with and to put that in absolute terms, we were down about $60 million in Q2.
And were down 58 million in Q3, so virtually no change in Morocco.
Marco just that it and I've said it a few times.
Unfortunately, we believe that.
Global travel restrictions are likely to remain in place for some time and I don't see a complete rebound in global or our domestic roaming to occur and they in the coming quarters. So I think for the foreseeable future.
This remains a remains a challenge thank you David.
Thanks, guys.
Thank you Nick.
Your next question is from Richard Choe from Jpmorgan. Please go ahead.
Hi, just wanted to get an update on your transition to unlimited and what do you expect going into the house the season with the transition. There are you still looking for a measured pace I'm more is this an opportunities kind of maybe.
Due a higher uptake rig on unlimited plans.
Yes, like I am.
Thinking in response to David we.
And we're continuing to manage the overall decline in the pace of that decline and we're not going to force migrate customers, but unlimited plans are here to stay they are delivering.
Significant value to customers and customers are going to be choosing those plants. So thats going to continue but we're going to manage that decline.
And I'm just like we have since the beginning since mid or mid summer 2019.
Into Q4, and look beyond that or do you kind of expected to be.
Maybe appeared a flatness or maybe even further decline before recovering on the 21 and then as a follow up with respect to the comments on free cash flow for Q4 and for the full year. I was wondering if you can just talk to the Tailwinds that you expect to receive from lower handset cost when you look at it from full year basis.
I'll leave it there thank you.
Okay. So I'll answer the first one Glenn.
I'm pleased with the with our performance in the enterprise segment, and we do serve the largest Canadian corporations. The largest the most stable can incorporation. So that's it's also our stability is also a function of the stability of our enterprise customer base.
Thanks, Margo, yeah free cash flow and and the comments I made earlier on the headwinds that that for facing with free cash flow in the coming quarter.
Refinancing taking lower rates of terming out your maturities, how you know thinking about your overall leverage targets over the medium term, you've obviously just monetize their data centers, but the spectrum auctions coming up next year. You know you I think in the past you've talked to two two and a half times here a little bit above that right now what's the the right way to think about.
You know a longer term goes in this environment.
Morningside and as I said in my opening remarks that I did not I do not see a material change in our leverage for the foreseeable future. We do have multiple spectrum auctions in front of US absolutely Paramount that we participate in as as you know, we'll participate incredibly important spectrum coming of age.
Global.
We did just divested the data center and that certainly gives us a a <unk>.
Additional cash to invest in the business, including investment and spectrum.
I do not see a material change the public policy of $2 five times, we're above that have been for some time.
Very hard to see.
And aggressive.
Repayment of that in the in the interest rate environment that set an all time low so I think a prudent responsible approached a to a balance sheet as to to stay generally in the.
Leverage vicinity, we are now with with respecting the current credit rating that we have so in other words, not taking actions that jeopardize that but I'm not in a rush to to reduce it either I think the most important thing for us is to have the liquidity and the balance sheet strength to ensure that the spectrum auctions are very successful for <unk>.
<unk>.
Great I, just real quick follow up on the iPhone Psycho. We've seen you know some U S carries talk about what we could start to the the iPhone sales process and and there's some talk about maybe a super cycle that people been holding onto the handsets for a longer than normal.
How are you thinking irrespective of the combative environment, but just is there a pent up demand to get a new phone here and we might see a bigger than normal cycle over the next six months.
Oh, it's hard it's hard to tell I mean.
So far so good on on on five G and on and on my phone and.
Black Friday, the holiday season will will be more more indicative and we'll see what that brings and then.
We look into next year and when we were got the 3500 megahertz spectrum when we're into true five G.
[music].
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Opinion, not because it had medical sales to tell me to pick on consumer spending and see.
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Okay opinion, that's because it took us to tell me.
And our Cushing with funding.
You are lined up this time thank you.
Sort of opinion, not just said that I was gonna say I don't sit down my knee C to prepare her cause she about finding nothing.
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She even perpignan Nutcase medical say don't sit down many seafood pick out cause she was feeling iffy.
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