Q2 2021 BCE Inc Earnings Call
Initial impacts and early 2020 total BCE revenue and adjusted EBITDA growth accelerated this quarter, increasing by more than 6% over last year as we let all national wireless carriers and reported service revenue adjusted EBITDA and Abbott and <unk> growth.
Of note, we've recovered 99% of our pre pandemic wireless service revenues and our wireless adjusted EBITDA has fully recovered despite the lack of a recovery and high margin roaming revenue. It is an impressive result by the bell mobility team.
Our results for Q2 included a $44 million regulatory charge related to the CRT and <unk> recent decision to lower wholesale internet rates, even further to the benefit of resellers were it not for this 1 time retroactive impact total revenue and adjusted EBITDA would have increased 7.2% and 8.1% risk.
<unk>.
We leveraged our broadband networks and improved customer service tools to deliver 115916 total mobile phone mobile connected device retail internet and IP TV net subscriber additions in Q2 and increase of 75% over last year.
Against the backdrop of continued government support for an investment to drive the country's COVID-19 recovery and propel Canada's global leadership and next generation digital infrastructure, we stepped up capital spending in Q2 investing over $1.2 billion on new fiber and wireless home Internet connections further expanding mobile <unk> coverage.
And augmenting network capacity to manage core IP traffic volume, which grew another 20% compared to last year when demand surged during the early stages of Covid.
And our strong financial position with $5.3 billion and available liquidity at the end of Q2 bolstered by more than $1.2 billion of free cash flow generation this quarter puts us and <unk>, leading position to execute on our Upsized capital acceleration plan wireless spectrum purchases and BCE higher common share.
And for 2021.
And I also want to highlight the recent launch of Bell for better and initiative that encapsulates our ESG strategy and provides a framework for all actions, we are taking to create better outcomes for all stakeholders, including Canadian communities employees customers as well as BCE shareholders and bondholders with our broadband connectivity commit.
<unk> from the smallest rural communities for the largest cities investments and mental health initiatives, environmental sustainability, and and engage and diverse workplace. We're looking to create a thriving prosperous and more connected world for Canadians across the country.
In terms of notable ESG developments. This past quarter, we are adopting science based targets to reduce greenhouse gas emissions by 2030 in line with the Paris climate agreement and we successfully completed an inaugural $500 million sustainability bond offering the first ever for North American Telecom company, we will be using them.
Proceeds to finance Green and social investments with a focus on energy efficiency and affordable infrastructure projects. The offering was very popular with investors receiving total orders for more than 6 times, the amount issued which enabled us to price the issue at a lower cost of debt and for regular bonds.
Let's turn to slide 4 of our presentation for an update on our strategic priorities for 2021.
We secured 30% of the $3.5 gigahertz spectrum available to national wireless carriers at the recently concluded auction.
And for a price of $2.7 billion.
This included an additional 30 megahertz and each of the top 3 markets and an incremental 22 megahertz and our rural wireless to the home markets.
Together with existing holdings Bell now possesses 37% or a weighted average of approximately 50 megahertz of the total spectrum there was available to the incumbent national wireless carriers.
Wired at an industry low average blended cost of $1.25 per megahertz pop.
That said given how the government designed the auction it was the most expensive auction in Canadian history.
Key factor that requires careful consideration and future assessments on.
Auction frameworks and on future assessments of wireless pricing by the government.
With significant high capacity $3.5 gigahertz spectrum at our disposal, we have the mid band spectrum necessary to drive the rollout of <unk> across Canada and extend our leadership position.
Since the beginning of the year, we've launched service and more than 80, new markets nationally, including the first <unk> service in Newfoundland and Labrador introduce Canada's first <unk> roaming for the U S and entered into new <unk> strategic partnerships. Our <unk> footprint coverage is now above 40% and remains on track to reach 70% of the Canadian pop.
For <unk> by year end.
Success, and 5 G and Iot depends on a number of factors beyond just coverage.
It's about delivering the fastest speeds and lowest latency leveraging network points of presence presence such as central offices for multi access edge computing that support product development and establishing deep relationships with the biggest Canadian companies.
And whichever element you look at bell as the industry leader, we lead and speed offering the fastest data speeds of up to $1.7 gigabit per second and consistently win third party speed Test awards, including most recently from Uccle, who ranked bell <unk> Canada's fastest.
We lead and latency owing to our deep fiber deployment now at 94% of all mobile mobility cell sites fiberize as well as our ability to bring computing power processing and storage to the edge of the network closer to the customer.
We lead and network points of presence with over 2700 locations across our wireline footprint.
Our partnership with Amazon Web services, and our strategic technology partnership with Google Cloud will integrate their technology with <unk> to move data processing to the network's edge, thereby minimizing latency and powering <unk> use cases, such as immersive gaming Ultra HD video streaming and smart <unk>.
Factoring AI and distance learning.
By combining all of those ingredients, we can deliver the superior functionality that will allow developers to design apps and next generation solutions and Iot services that leverage the best <unk> network in Canada, and Thats, how we intend to take a leading share and <unk> services and capture the sizable revenue growth opportunities beyond mere.
Network connectivity and.
And we're already beginning to do that as you saw by innovative with innovative applications, such as TSN and Rds and <unk>.
Now over to wireline and the first 6 months of the year, we have equipped 347000 homes and businesses with either direct fiber or fixed wireless Internet technology, and also launched wireless home Internet service and Manitoba. This past June.
This progress together with another 257000 locations that are currently under construction and keep us on track to deliver between 850000 and 900000, new premises by year end.
And at a time when network connectivity is more important than ever as we all know bell. Once again was recognized by PC magazine and annual study as the fastest ISP and for provinces.
It's a testament to the significant investments and the hard work significant investment, we're making and the hard work, we have and the field and our networks.
Moving to slide 5 for an overview of some key operating metrics for Q2, let's start again with wireless the clear highlight of the quarter was <unk> 5.8% service revenue growth, which led all national peers, delivering an industry best 3.3% increase and NAPCO.
Again, and excellent results, representing our first quarter of growth since Q3 of 2019 when unlimited data plans were first introduced in Canada.
This strong rebound reflects our focus on higher value smartphone loadings, including a growing base of customers on device financing plans and the lapping of Covid related pressures from roaming data overage and the waiving of certain fees to support customers during the crisis.
Although retail traffic and store capacities were impacted by the third wave of Covid and overall customer activity ramped up.
We added more than 44000, new net mobile postpaid phone subs this quarter up 45000 compared to last year.
This result was driven by 35% increase and gross activations, reflecting higher direct and digital channel sales volumes and balanced ongoing retail store restrictions as well as pent up customer demand.
And our mobile phone churn remained well below 1% at <unk>.
And 83% for postpaid a strong performance that reflects our improving digital capabilities and leading networks for.
For connected devices, we realized 47000 net adds a year over year increase of 22% driven by continuing strong demand for Bell's Iot solutions and in fact, we added 74000, new Iot subscriptions up 2.5 times over last year.
And similar to the previous few quarters prepaid net adds of 2000 were impacted by lower market activity attributable to reduced retail store traffic and a slowdown and immigration and international travel of course because of Covid.
Let's move to wireline.
We're showing again that our fiber strategy is working and we.
We added more than 27000, new net retail fiber customers, which is an increase of 80% versus last year.
At approximately $1.9 million residential fiber customers now represent over 50% of our total retail internet customer base.
Taking into account the competitive loss of legacy DSL subscribers and bells non fiber footprint. We delivered 18000 total retail internet net adds this quarter. This compares well to last year, when we experienced a surge and demand as COVID-19 restrictions were put in place.
Our growing base of 5 customers combined with higher revenue per user driven by speed upgrades and and improving tier mix given fiber superior experience drove a majority of the 12% year over year increase and residential Internet revenue. This quarter. This consistently strong revenue growth quarter after quarter together with the benefits we see in <unk>.
Market share gains customer lifetime value and lower operating costs are the reasons why we're pushing hard on the accelerated expansion of our broadband footprint.
And in TV, and we continue to leverage our multiple brand strategy to drive 5000, IP TV net additions this quarter and Thats up 8000 from Q2 of last year.
Satellite net customer losses improved 21% to 9000 and that represents the seventh consecutive quarter of year over year improvement.
And home phone customer net losses remained essentially stable adjusted around 50000 and.
So all in all a very solid quarter of wireline subscriber results and what is typically a seasonally slow quarter.
I'll now turn to Bell media.
The first notable highlights for Bell Media's advertiser demand, which rebounded across our media platforms this quarter.
However, a more robust recovery, particularly for radio and out of home was muted by the pandemic third wave.
TV advertising was up 70%, reflecting stronger bookings due to the return of live sports and TV Productions. This helped TSN and Rds maintained their number 1 sports channel rankings for the current broadcast year to date and for CTV to achieve a milestone 20th year as Canada's most watched network.
And Quebec Nouvel also make further gains and viewership versus its French language competitors with year to date audience is up 10% that drove a 2 point increase and market share.
And more notably at our virtual upfront presentation in June we unveiled our fall programming lineup with the most programming inventory and 5 years for CTV and more than 70 original productions planned. This was our most successful upfront upfront season ever.
With bookings, 19% ahead of our previous forward sales record in 2019 and more than double last year, a very encouraging result that bodes well for the upcoming broadcast year.
The second highlight of the quarter for Bell media was the strong growth and our digital platforms demonstrating that our strategic pivot to a digital first media company is bearing fruit.
Digital revenues increased an impressive 57% and now represent 19% of total Bell media revenue and Thats up from 16% last year.
Underpinning the standout performance was growth and crave and TSN direct streaming subscribers.
Crave subs increased 6% over last year and is now approaching the 3 million Mark while TSN direct more than doubled its subscriber base. Thanks in part to the Euro Cup, where the final game was 1 of the most watched broadcast of the year and TSMC biggest live streaming audience ever.
We also continue to scale CTV dot CA, our all in 1 digital video streaming App, which has now become the top <unk> platform and the country and.
And Bell Media's innovative Sam television sales tool that connects advertisers and other marketers with the right audiences on the right media platforms is more has more than tripled its 2020 sales revenue and the first 6 months of 2021.
And on that I'll hand, the call over to Glenn for a more detailed review of our financials.
Thank you Marco and good morning, everyone.
I'll begin on slide 7.
As Merkle said exceptional financial performance this quarter with strong consolidated revenue and EBITDA growth acceleration as we lapped the significant COVID-19 impacts from Q2 of last year normalizing for the $44 million regulatory impact referenced.
Referenced earlier total revenue was up 7.2%, while EBITDA increased 8.1% standout results driven by year over year increases at all Bell operating segments, even though wireless roaming media advertising and business wireline revenues have yet to return to pre.
Covid levels.
Net earnings were up significantly increasing 150% year over year on strong flow through of higher EBITDA lower non cash media asset impairment charges as well as higher other income largely from net mark to market gains on our equity derivative hedge contracts.
Despite the sharp increase in earnings free cash flow was down 23% compared to last year. The decline was expected and the result of higher planned spending under our 2 year capital investment acceleration program. That's a further step up and Capex this quarter and more than $1.2 billion, let's turn to.
Slide 8.
Bell Wireless service revenue was up a very healthy 5.8%, representing the first quarter of year over year growth since the start of the pandemic.
This strong result reflects our strategic focus on high value smartphone activations and the associated economic benefits in terms of lifetime value and EBITDA growth as well as the non recurrence of certain COVID-19 related impacts from last year.
Although the recovery enrollment was marginal this quarter as travel restrictions remain in place and borders closed it is no longer causing for year over year drag on financial results.
Product revenue was up 27, 7%, reflecting increased customer transaction volumes, a greater mix of premium mobile phones and improved year over year consumer electronics sales at the source driven by the reopening of.
<unk> retail stores.
Due to the flow through of significantly higher year over year revenues wireless EBITDA returned to positive growth this year, increasing a very impressive 10, 1%.
Moving to slide 9 our wireline financial results. This quarter included a $44 million regulatory charge, excluding for the onetime impact we delivered service revenue growth of <unk>, 6 and 4.5% higher EBITDA, which drove a 1.9 point margin increased to $43.9.
This margin improvement and.
Essentially equal in magnitude to the decline we experienced in Q2 of last year, when we absorbed significant incremental costs because of Covid.
Residential led the way growing revenue by a healthy 3.2 to 3.6% on the back of continued strong fiber customer and <unk> growth that contributed another 12% quarterly increase and internet revenue.
However business wireline was softer given the surge in customer demand we experienced at the start of Covid crisis last year for things like conferencing services voice connectivity as Canadian businesses and act in a work from home policy for their employees.
Product revenue, which can be lumpy.
Also decreased year over year due to the timing of data equipment sales to the government sector.
Although overall telecom spending by large enterprise customers continues to be impacted by Covid business services solutions revenue grew approximately 3% year over year, a very positive indicator for when economic recovery.
It takes hold more fully.
Over to Bell media on slide 10, strong year over year rebound and marked by higher customer spending across all advertising flat platforms and continued excellent digital growth that generated revenue growth of 34% and 23, 7% higher EBITDA.
Advertising revenue grew 65% year over year, reflecting stronger advertiser bookings driven by the reopening of the economy. The return of live sports and more original television programming compared to last year subscriber.
<unk> revenue was up 6.2% on strong crave and TSN direct streaming growth as Murko detailed earlier consistent with the year over year increase and revenue operating costs were up 33% okay.
And this was due to higher programming and production costs, reflecting the return to live sports and airing of original television productions as well as the non recurrence of CDW and funding received in Q2 of last year.
Slide 11 provides you with a high level walk down of the main components of adjusted EPS, which was <unk> 83 per share this quarter up 20 compared to last year.
Even with a <unk> <unk> per share hit from the wholesale Internet regulatory decision EBITDA growth drove 60% of the year over year increase and adjusted EPS, while decreased financing costs higher tax adjustments and lower other expense essentially accounted for the balance.
Let's turn to slide 12 on free cash flow as I mentioned earlier, we generated $1.2.5 billion and free cash flow and the quarter, a very respectable result, even with $300 million year over year step up and cap capex are reduced and reduce cash from working capital due mainly to higher accounts receivable from <unk>.
<unk> sales activity as the Covid recovery strengthens. This quarter's result, also reflected higher severance pay and due to a workforce reduction and undertaken earlier this year.
And higher cash taxes due to the delayed tax installment payments last year because of the government Covid relief measures.
And for our balance sheet, we ended the quarter with $5.3 billion of available liquidity, which provides us ample cash resources to execute on our Upsized capital acceleration plan and to fund. The recent acquisition of highly valued 3.5 gigahertz wireless spectrum.
No form of this spectrum and investment.
Our net debt leverage ratio remains manageable and the lowest among Canadian direct peers at approximately 3.1 times adjusted EBITDA.
To conclude on slide 13 industry fundamentals remain sound.
<unk> activity is improving as the economy rebounds from this pandemic and bce's competitive competitive position is as good as ever if not better strengthened by our rapidly growing broadband and fiber footprint substantial mid band wireless spectrum holdings that reinforce valves <unk> industry leaders.
Chip and market, leading media assets that are poised to capture significant opportunity emerging and digital advertising.
With 2 quarters of strong consolidated growth already reported we remain firmly on track to deliver on the financial guidance targets that we provided in February for the full year 2021 on that I will turn the call back over to <unk> and the operator to begin the Q&A portion of the call. Thanks, Glen So before we start the Q&A.
Period I'm sensitive to the time, we have left so I would please ask that you limit yourselves to 1 question and 1 brief follow up so we can get to everybody in the queue with the time, we have left and so with that just now we are ready to take our first question.
Thank you.
First question is from Vince Valentini from TD Securities.
Please go ahead.
Thanks very much.
And I guess I should ask about RFP win for them first.
A tremendous result on wireless service revenue growth.
Can you help us unpack it a bit more I mean, you said and roaming was not a year over year drag I assume it wasn't a tailwind either and then the other component of it is there a bit of overage coming back temporarily is and there is some benefit from lower equipment subsidies.
Or just churn a solid improvement and the mix of your subscribers over the past year flowing through and if you can help us out with that would be great.
And thank you Vince.
Kick it off on that 1 I'll start with first principles really and when you have a clearly defined strategy and each product segment, obviously and this case, we're talking about wireless and you're kind of discipline, we execute with them.
A lot of discipline against that strategy youre going to get the results. So if you kind of let let's now with that context, and what have been and what have we been doing for for the past 2 years or year and a half we focused on quality mobile phone loadings and.
And so the numbers and we share with you in terms of net adds that are all mobile phones and all high quality.
We've benefited from a strong brand mix.
We're managing the data overage just like we have from the moment that.
Unlimited plans were launched in the marketplace in 2019, so we're managing the base like we always have and that overage decline is at the same levels as we shared with you and the past our prepaid <unk> been quite strong, particularly for for Lucky.
And that's why you see those impressive results that you mentioned, Vince and basically we're not we're not chasing loadings for the sake of chasing loadings and we're not after low churn for the sake of low churn and we really want to hit that sweet spot between <unk> net and the financial results, we deliver for shareholders.
Just to add 2 to Marco.
<unk> Vince you asked and you said, it's no longer a headwind no.
It's not we actually saw modest improvement and the roaming I told you previous quarters that.
Since the pandemic roaming is down roughly $60 million a quarter and we saw approximately $5 million improvement and that so very modest but.
Like all of US we remain hopeful and optimistic that the second half of the year is going to see borders opening and and Canadians moving and we expect that to start a steady improvement.
And Glenn just on the equipment installment plans and the delayed impact of that drive for adds 15 accounting is that something and is starting to be meaningful within these service revenue numbers are still not.
I'm not sure 100% understood the question Vince.
If you have if you lower equipment subsidy by $200 on average and some of that gets booked upfront and our French 15, and some of it gets amortized over the 24 months, so and effectively flows through as higher service revenue overtime. So as that's been building and the pipeline for the past year and a half as it is it starting to become a tailwind.
And you are at this point, it's a modest tailwind I would not say that it's something that's having significant impact and I guess that speaks to itself when youll see 3.3% growth and the quarter and so.
And I apologize for not to understand and the first part of your question, but small tailwind not overly problematic is at this point.
Thank you Vince.
Thank you.
The next question is from Ravi and Doug <unk> from Canaccord Genuity. Please go ahead.
Good morning, Thanks for taking my questions.
Wanted to focus on <unk> to be obviously, you're having good numbers on the wireline residential front so.
And the trajectory on <unk> would tell us a bit about.
But for wireline.
Can you just talk.
Also about the various components of it and b to be that.
And for lack of a better word could.
Could have the potential for structural growth as you'd think that instead of a post pandemic.
Post pandemic backdrop, and how you sort of see the next couple of quarters and shape out when you consider the movements and equipment.
Equipment sales as well thank you.
And so look on the enterprise side, and so I'll start with with.
Indicating.
A little bit obvious but.
And the enterprise segment is lapping a very tough.
Comp for Q2.2020, when there was very high demand at the beginning of the pandemic for voice video and bandwidth services. So we are lapping a very good Q2 and 2020 in that regard what we're seeing.
In the next couple of quarters.
3234 quarters based on on what we're seeing right now with some enterprise solution revenue is coming back it's improving so that's a good sign for us as the economy reopens, because we're well positioned to capture the rebound in solutions revenue and professional and managed services.
Revenue on top of connectivity revenue.
And like I said as the economy reopens and if you look further out.
And I think you said kind of structural opportunities or structural revenue opportunities going forward.
As you look to.
A world of converged fiber and 5 G and then I'm going to repeat what I said in my opening comments, but in a world of converged fiber and and 5 G where we lead in terms of the best networks and we have the distribution strength I think theres a lot of structural growth opportunity in <unk> and Iot.
And multi access edge computing net revenues.
And we're positioning ourselves now to capture that growth.
Thank you and.
Quick follow up.
Absolute Glenn.
And kind of given what the residential growth number was not sure. If you can disclose at this time just wanted to just wanted to check. Thank you.
So yes, the residential growth is 12% net revenue I had said that in my opening remarks, so yes very pleased.
And the Internet Internet Internet net yes, I meant the whole array for wildfire.
Right.
I I think I said that in my opening remarks, just checking my notes here I think it's 3.6% I said was the was the growth for total residential okay, sorry, I missed that thanks for the Internet.
It was also what we mentioned thanks, Sarah and thank you.
Thank you.
Our next question is from Jeff fan from Scotia Bank. Please go ahead.
Thank you and good morning.
First as a clarification just on the wireless service revenue and <unk>.
In your opening remarks, Macquarie and you highlighted Iot unit growth being very strong I'm just wondering.
And the best 5 G network is planning forging ahead aggressively on fiber building, the kind of Iot platforms, and it's going to our.
Our enterprise customers to manage their Iot needs.
On top of the Bell net work using and and I.
Our platform.
And and of course as you saw strategically we entered into.
To Ah quite strategic agreements, 1 with AWS and the other with Google Cloud, which is going to put us and the lead position in terms of innovation and the space.
Thank you.
Thank you.
Our next question is from drew and my <unk> from RBC. Please go ahead and.
Yeah. Thank you very much and good morning. Thanks for taking the question for a code just following up on a bunch of questions on for.
<unk> B I O T T.
Can you just speak to the demand side of this and obviously B C is the biggest enterprise player my wide margin and Canada. So presumably gives you.
Little bit of a leg up in terms of seeing how your enterprise customers want to evolve in terms of use cases.
The specific question is you know.
And how fast and.
Accelerating are these compensations in terms and moving.
Moving real B B I T I O T use cases forward.
And then the second question just on Bell media just Fabulous.
And a strategic and tactical execution, I think and Bell media and not just obviously this quarter, but last few years, what what kind of long longer term growth and margin profile should and and.
<unk> expect from from this segment, obviously not looking for a specific guidance just more goalposts. Thank you.
[noise], Okay. So I'll I'll take the second 1 first drew and thanks for the 2 questions on the Bill media saw and and as you look for in terms of growth margin expansion.
T V T V I'll I'll start first with kind of and near term and and and that kind of though.
And the traditional business, we've been and which television advertising is starting to come back you saw reflected and the results and and and my comments.
As as businesses get back to the office and some manner shape or form and the months to come and that's going to bode well for radio advertising and had a home advertising coming back so.
I feel good about that and and the quarters ahead losses and well.
And they pick up kind of a wider lens to the question I think our digital first pivot is where the real growth is going to come and that it's really exciting and the team is really executing on that as well.
Because just grabbing a bigger share of digital advertising spend.
Speaks to a lot of potential growth and.
And the quarters and the years to come for Bell media, because we're well positioned with the content and with the digital assets and we're building kind of a pop guns for advertisers for 1 stop shopping so really excited about that.
On the first question drew I think in terms of went when cut.
Customer demand and when when revenue streams will come and so to speak.
It depends on the segment, you're talking about is hard to predict when that when the growth will really hit and you kind of have to unpack. It so subject to subject to glenn's caveat and his answer to suggest question and <unk> revenues Iot, we are getting revenues today, and that's going to scale and I think that's going to scale. The most the most most quickly.
And potentially most rapidly in the near term on Mirc revenue and we're just in the early very early innings of that we're getting ourselves set up.
And then we kind of have to go hunt for the revenue once once you're set up for that on on 5 G broadband and fixed sorry, and fiber broadband needs of our customers and and a converged world of course, and we've been we've been doing that for.
For for decades for a century.
Our networks are being revolutionized in terms of the step up and the technology. So we're obviously hunting that revenue and a meaningful way today and as we have more 5 G. And has we have deeper fibre penetration and to enterprise markets that just going to continue to growth.
Super Thanks very much.
Thank you are.
Our next question is from Simon and suddenly from Morgan Stanley. Please go ahead.
Thank you good morning, Glenn.
I noted your comments about the balance she's with the leverage being the lowest of the peer group I was just wondering how you are thinking about the leverage over the cycle of the Capex plans and we've got to sleep and auctions and 18 months how are you thinking about.
And where that's going to go over the next few quarters and how that plays into the dividend model and the the payout ratio for the dividend to swallow and if you've had any discussions with the writing and interesting since the auction. Thanks.
Good morning assignment and thanks for your question.
Firstly over the last year, we've been very opportunistically refinancing our debt.
And.
We've actually increased our average majority tenure from from 11.8 years, a year ago to $12 and 7 now we've also reduced or after tax cost of that from 299 to 289, so managing our our outstanding debt extremely well by taking advantage of this low into.
Just right environment.
Low interest rate environment.
Gives me comfort of where we sit with leverage our balance sheet strong and our leverage as I said earlier. This morning was below our peers.
We no longer have free cash flow headwind from our pension plans.
And frankly, we feel there is no better use of excess free cash flow and and investing and fiber and <unk> infrastructure, including spectrum.
These investments will deliver the free cash flow growth and the future that will support our dividend growth model. So I remain comfortable with where we're at we believe we're doing the right thing with our with our excess free cash flow.
As you know.
And I've said many times before we have regular and frequent contact with the rating agencies, we have open dialogue and.
And I remain confident and the and the investment grade credit rating that we hold today and the actions that were taken.
To support the future dividend growth model.
Great. Thanks, a lot. Thank you Simon.
Thank you.
Our next question and he's from Jerome Dubai for them does that down and he's gone ahead.
You have good morning, Thanks for for taking my question, just and some of the some areas are are back to almost normal and with the reopening.
And the happening what are the top learnings about the reopening you've made so far especially on the B 2 b front, a reopener is like restaurants.
Taking plans that are similar to what they used to take credit Covid and then a quick follow up 1 of your tears discuss and the fiber rollout provided unfortunately and score for real estate up the musician would that also be the case for for a B C. Thanks.
Good morning, Jerome and I'll, just make a couple of comments before murko jumps and the small business side of.
Of of our business has been.
Impacted quite substantially as you could appreciate this this pandemic is probably hurt small business owners more than anyone and Merkle said something on our last call. He said it was better than we feared not as good as we hoped I guess, that's where it kind of remains we've seen disconnect.
A small business says unfortunately, many small businesses didn't survive this but.
As we start to come out of this we're starting to see new formations of businesses. Although it's limited at this time, we're excited to see and acceleration of of businesses that I guess, new formations of businesses and the services that they are taking or.
Many of the small businesses cut back and the services they had their ramping off too.
The same type of service offerings, they had historically so.
It's a segment of the business that.
And we really we really feel for but frankly.
There is a light at the end of the tunnel and we're starting to see the activations and pick up and that segment for us and Merkel.
Okay. Thank you guidance so Jerome on.
On the fiber part of the question so.
I'll start with this for for US our the real estate that we own and that we have that is inextricably tied to our networks is very strategic.
So I mean, it's a way of saying that when I when I.
Consider our fiber strategy and and kind of the top things that I want to make sure we deliver with the fiber strategy.
What I'm seeing and what I'm focused on.
Is penetration growing.
<unk> growing it's lifetime value improving its churn being significantly lower and it's 40% lower annual service and support costs for our customers per customer for fiber versus copper like those are the things. We're we're looking and of course here and deliver that.
The revenue and EBITDA growth, so kind of real estate savings and linked directly to fibre penetration or fiber expansion is and kind of a top list of things. We're looking to do now of course, we have kind of a cost reduction program and place that we look at very carefully.
But it's not in respect of real estate, that's fundamentally tied to our network.
Thank you.
Thank you and.
And the next question and he's from Sebastiano Patty from J P. Morgan. Please go ahead and.
Hi, Thanks for taking my question I think and then just some clarification of follow up questions I think and the prepared remarks and your valued noted that 50 per cent of your residential customer base is now and fiber to the home.
Would you would you be possible to get and a view on maybe where that was 1 year and 2 years ago, and then just sticking with fiber and if you could provide us.
And maybe just.
What you're seeing in the market.
And not only the new expansion territories, but as well and some of the older perhaps cohorts for lack of and better terms in terms of just overall fibre penetration.
And how you see the competitive environment progressing today.
Yes, 1 on the first part of the question in terms of where we were at on a total.
Total fiber yoki.
A year ago, and 2 years ago, I think fame and we'll have to follow up with you I don't have that at my fingertips.
And what we're seeing.
Tremendous growth and net adds where we have fiber footprint.
And you saw the outstanding growth and Q2 of this year year over year and thank 80% and then you also I called out the total retail and and that adds of 18000 and so.
There there is some competitive fresh well, there's some consumer and competitive pressure, where we don't have fiber and it's it's customers.
Wanting to get the highest quality network wherever they are and if there happens to be a competitor and that has gigabit speeds and we have legacy copper DSL and that's gonna have a competitive impact for us, which which speaks to the importance of us continuing to accelerate the fiber buildout the importance.
Participating and government subsidy programs.
Ross the country and are operating footprints and it's good for those communities.
And and it's good for us to and therefore, it's good for our shareholders. So I think that's what you're kind of seeing on the competitive puts and takes fiber versus DSL footprint and.
Now I've answered and that contact is also our wireless home Internet footprint, where we continue to grow the network and and are continuing to to grow share and those markets as well I shouldn't I shouldn't.
I have to mention that.
Great and just to fall on wireless loading any update you could perhaps give us here and 3 Q, obviously huge retail presence among peers in terms of your wireless.
Retail locations. So what are you seeing if anything in terms of the pickup and activity there as well yeah, obviously, you've been quite successful and digital and direct channels ugly, so any update on loading and particularly as it pertains to perhaps the retail.
Portion as well thanks for thanks for that thanks.
Thanks for asking that 1.
We've we've improved our digital and direct capabilities massively over the last year and we're going to continue to maintain our momentum in that regard so.
Kind of accept that and then his <expletive> stores have fully reopened for Q3, I think our natural distribution advantage in that regard is going to swing back our way and it's gonna allow us to to scale loadings.
So and then you've got.
Other factors to play that we can take advantage of like back to school back to office pent up demand.
And we're also expecting.
Some some prepaid improvement so I think things bode well for Q3.
And Scott.
Thank you.
The next question and he's from David Barton from Bank of America. Please go ahead.
Hey, guys and thanks for taking my question so.
And that's you know if we look back a year ago, you know the big worry was regulatory.
Obviously this first half we've kind of gotten some clarity on wholesale broadband on and you know it was and we've had a little time to see where those.
Conclusions are leading if you could come and give us a little color on how your relationship with the wholesalers.
Is evolving and light of the ruling regarding Siroky sees resetting and then.
You've been approached or to the degree you're being approached on facility center can be you know there'll be an interesting day to point and then the second question would be just.
I just know that you were unable to coordinate around 3.5 blocks and now that it's done and you can kind of look at the lay of the land.
With respect to the to the networks for a relationship and I would tell us what is your.
Happiness level with how things shook out like on a scale of your and 10 that'd be kind of interesting to know thank you.
And all of us.
We're very we're very very pleased with the network sharing agreement and how it's delivered.
Over and over the years, which is 1 more than 12 years now and I'm.
I'm I'm I'm hopeful that our partner feels the same way and not going to speak for them. So I'll leave the network sharing.
Issue, there quite happy with it and I think it allows us to build higher quality networks faster and more with more capital efficiency. So that's really good on.
On the regulatory environment like we've.
And I've been saying for years and years and years it's per.
Pretty simple right you get you get positive regulatory decisions or not only positive development positive or and conducive to investment you will get more investment and you'll get regulatory and public policy decisions that create disincentives for investment that's what's going to happen and so we were really pleased to be able to upsize even more.
And our capital acceleration program and the face of the following the 2 regulatory decisions you speak up and I think in terms of just general relationship with government. If you think of what their objectives are quality, we're delivering on it.
Yes, we're delivering on it in terms of and can talk about access in terms of price prices prices are going down and.
And coverage well, we are certainly delivering on it and they are stepping up as well with subsidy programs and we're a strong partner of theirs and that regard. So I think we're and we're in the right space, there and and the competitive relationship the competitive relationships and the relationships in terms of supplier customer with with resellers or potential and beyond.
I'm not going to comment on on that here.
David I hope for for reasons you can appreciate.
Understood. Thank you guys.
Thank you.
And the next question and he's from just sign up for him Scotiabank. Please go ahead.
Thank you for squeezing me and for a quick follow up the <unk> performance.
I just wanted to maybe take it a little bit into that because of the differences between you and your peers.
We are there any geographical differences and trends that you saw and ought to particularly what you saw and Quebec.
Oh versus Ontario versus Western Canada, where shall has been participating and maybe Manitoba just wanted to get a sense as to where there might be some more strength and where there may be some weakness wondering if mixes factoring into the the performance between you and your peers. Thanks a lot.
Good morning, Vince I'll make a couple of coffees or excuse me, Jeff I'll make a couple comments here.
Yes mix does play a role and this and the other is always geographical.
Differences that occur and any different quarter as competitive intensity can ebb and flow and 1 thing that that Merkel mentioned, Jeff was that our focus on high value broadband adds and.
As you know, we're not focusing on on low or who things like tablets that that really drove drag your <unk> down and we've really moved away from that and I think that that is having an impact on some others and and their implications and their impact on.
80 to grow Apple.
Other thing that Jeff outside of just Abu that draw your attention to and just as the quality of earnings and it's difficult and I said, a very impressive 10, 2 per cent growth and and our earnings this quarter and.
And it is impressive but it's hard to really.
To look at comparable and growth rates, when you're coming off 2020 that was so.
So impacted by this pandemic, particularly Q too. So 1 thing that we spend a lot of energy and focusing here is is looking at pre COVID-19.
Earning and where are we and the fact that and Q2 of 2021 were now back to 99% of the service revenue, we had and Q2 of 2019 were at 100% of the EBITDA. We're we're at 2019, yet, we're still roughly 60 million down and and roaming.
I mean, I think that speaks to how well our wireless team is executed over the past 24 months and and.
And and it comes from focusing on the right loads and and the high value smartphones and I think if you looked at the industry you would see that those numbers I just quoted for how well we've performed.
Over the last 24 months or free Covid would be industry, leading a couple quick things just just to add to that so on mix. So there's the geographic mix and there there are of course is pre.
Missing differences by geography, but we maintain the same strategy.
And all of the regions, our our execution may may differ slightly and some regions, but the strategy remains the same it's basically building off of Glenn's answer and then the other aspect of mix is brand mix.
And we've put a sharp focus on that too and and it pain, it's paying dividends.
Great. Thank you. Thank you Jeff.
Thank you.
There are no further questions and we just stood at this time I would now like to turn anything back to Mister for that type of us. Thank you just a nurse so I want to thank everybody today for their participation on the call as usual I'll be available throughout the day for any follow ups and clarification and so on that have a good rest of the day and take care.
Thank you everyone.
The conference has no and it please just gonna come and a nice at this time and we thank you for your participation.