Q2 2022 BCE Inc Earnings Call
The conference is now ready to begin.
Good morning, ladies and gentlemen, and welcome to the BCE Q2, 2022 results conference call.
I would now like turn the meeting over to Mr. Fotopoulos.
Please go ahead Mr Fotopoulos.
You, Paul and good morning, everyone and thank you for joining our call today as usual I'm here with Mercury.
He is president and CEO and our CFO .
You can find all our Q2 disclosure documents on the Investor Relations page of the website.
Morning.
But before we begin I want to draw your attention to our safe Harbor statement on slide two of the.
A presentation remind you that today's.
Remarks made during the call 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 Rick.
Please refer to a couple of things.
Occupants for more details on our assumptions and risks that I will turn the call over to Marco.
Thank you Shane and good morning, everyone.
The Bell team continues to deliver for all the stakeholders we serve.
We remain focused on our strategic plan is working.
Two marked another quarter of consistent operational execution with a disciplined focus on balancing market share growth and financial performance.
Our approach drove consolidated service revenue.
That EBITDA growth of three 8% and $4.
6% respectively.
These strong results are underpinned by our extensive and unprecedented network investments that are building unmatched broadband fiber and fiber.
Restructure in Canada, and frankly, if not the world by the end of this year, we will have invested more than $14 billion since 2020.
Highest ever over a three year period by Canadian Telecom. This includes planned Capex for 2022 of approximately $5 billion, which also represents peak spending by Canadian telco in one single year.
These massive investments have focused primarily on our F GTH and five G wireless networks, our ongoing expansion into rural and remote communities.
Considerable spending.
And on resiliency.
With approximately 900000 more U F. T. P connections deployed this year, 80% of our midterm broadband Internet Buildout plan, comprising 10 million residential and business locations will be completed.
<unk> G LTE network service will be available to more than 80% of Canadians.
And recent events are illustrated the vital importance of communications networks and the role they play as an integral part in the lives of all Canadians.
They've also illustrated the relevance of our corporate purpose, which as you know is to advance how Canadians connect with each other in the world. It's this purpose that guides us in how we design and how we build our networks to keep our customers at the forefront of all that we do.
So I want to take a couple of moments now to make one thing, especially clear bell.
Bell wireless and wireline networks use different network infrastructures and they are configured such that a major disruption on the wireline network does not take down the national wireline wireless network excuse me since 2013.
We have protected our cores from the internet through the use among other things a multiple geographic zones to route traffic.
Moreover, in the amount of a localized outage, we have built an automated customer notification system, starting first in Quebec and Ontario.
Now, it's clear that no network as perfect or no network is immune to outages, but network architecture, clearly doesn't make a difference.
At the start of the pandemic and including planned spending for 2022, we will have invested on average close to $800 per retail subscriber, which is more than any other Canadian operator.
This unmatched spending has not been limited to access.
In other words to coverage.
Over 60% of total core network investment in our three year period since Covid has been directed towards capacity modernization robustness and outage detection.
Since COVID-19 that we've actually invested approximately $1 billion in our wireless and our wireline cores to increase capacity hardened security improved resiliency and redundancy and build automatic outage notification.
And we're not standing still.
As you've seen from recent announcements, including in this morning's press release, we're continuing to launch new products and services last week, we inaugurated the next evolution of five G. In Canada with the launch of our mobile <unk> plus network that will offer peak data download speeds of three gigabits per second.
<unk> plus will be deployed across the country and as a result of our investment in mid band $3 five gigahertz spectrum.
Currently available in Toronto and surrounding areas Dallas five G. Plus network is expected to cover approximately 60% of the addressable population by year end and this will include areas like the GTA Halifax, St John's and Sherbrooke.
We also continue to raise the bar on delivering the most advanced Internet and Wi Fi services to Canadians in September we're launching in eight gigabit symmetrical Internet service. So that's symmetrical upload and download and select areas of Toronto that will offer data download speeds five times faster than cable.
And data upload speeds at least 250 times faster than cable.
And we're introducing Wi Fi six <unk> technology, which enables better in home coverage and speeds to get connected devices that are two times faster than previously so eight gigs upload and download symmetrical in Wi Fi succeed really are game changers.
More concrete examples of our plan.
Our plans really kind of coming together as you can see from these concrete examples and basically better wireless speeds unmatched internet upload and download with best in home Wi Fi and network architecture that offers the best resiliency in the industry.
On the TV front, we're making the IP TV experience, even better by bringing together live and on demand streaming content and thousands of apps all in one place.
Our new five TV service powered by Android TV technology features access to Google play store, Universal search as well as voice remote and cloud DVR capabilities.
In wireless our focus on high value mobile phone loadings and customer base management continue to pay off with another set of excellent operating results. This past quarter highlighted by more than two fold increase in total mobile phone net adds to approximately 111000.
Record postpaid churn and continued strong service revenue and EBITDA growth.
We achieved these results against the backdrop of relatively stable year over year wireless prices, despite surging inflation across the Canadian economy.
According to the most recent stats can data the price of all goods and services in aggregate across the Canadian economy has increased eight 1% over the past year compared to another decline for cellular services.
In fact, if you kind of compare <unk> today to back in 2019, we're not back to 2019.
Basically we're delivering far more value today as declining prices in.
In residential wireline, we added 36473, new net retail fiber customers. This quarter, an increase of $19, 5% versus last year, which contributed to strong residential internet revenue growth of 8%.
Turning to media now and our digital first strategy, we continued our strong momentum across our streaming streaming and digital platforms as evidenced by outstanding 55% growth in total digital revenues.
Digital now represents 27% of total Bell media revenue up from 19% last year.
Underpinning the very strong performance was crave, which grew direct streaming subs by 8%, while total subs were up 2% compared to last year. When we experienced strong demand due to COVID-19. So a good result, considering tougher year over year Comparables.
And revenue from Sam TV, our advertising sales team sales tool platform was up more than fourfold versus last year generating approximately 60% of total digital advertising revenue in the quarter.
On the customer experience front, we continue our momentum with more than 85% of customers now mainly interacting with bell online. Our digital strategy is basically playing a significant role in our imperative to champion customer experience.
Our ongoing investments in digital functionality as well as the quality and reliability of our networks are driving better customer satisfaction and retention results as reflected in our third consecutive quarter of improved wireless residential internet and <unk> TV churn.
We also continue to enhance apps and online support tools with features like virtual repair enhanced self install automatic top up enrollment and personalized templates that improve the clarity of communications with our valuable customers.
These initiatives are big reason, while bell customer satisfaction scores continue to improve and why our suite of apps continue to be the highest rated telecom apps in the country.
In terms of recent notable ESG developments Bell was named the top Telecom company in the World and the fourth overall in Canada for 2022 on the best 50, corporate citizens list compiled by corporate Knights.
That was also the first communications company in North America to receive ISO 5001 certification for energy management, which has been renewed for a third consecutive year and.
And we were recognized as one of the one of Canada's greenest employers for a sixth straight year with our ambitious commitments to reduce G. H G emissions and to recover and recycle mobile devices through the balance of loot box program.
I'll now turn to slide six for a synopsis of some of our key operating metrics in Q2.
Start with wireless as you can see we added 83197, new net postpaid mobile phone subscribers up a very very strong 80, 787% compared to last year.
And this was driven by a number of multiple a number of factors so greater retail store traffic five G momentum improved business customer demand immigration growth more focus on bundling wireless with residential Internet and outstanding customer base management as you can see by our best ever quarterly churn rate of 75.
Sent in the quarter.
Similarly for prepaid net adds were up meaningfully year over year growing to 27564 as market activity picked up significantly with increased immigration and travel to Canada.
This represents our best quarterly prepay result in almost two years.
<unk> was up three 8% our fifth consecutive quarter of year over year growth.
And this was driven by a sharp increase in roaming revenue as Glenn will detail when he speaks in more customers on premium rate plans and this reflects our laser focus on higher value subscriber loadings across all our mobile brands.
Consistently quarter after quarter, a majority of our new postpaid customers are subscribing to unlimited plans and of these 87% are in monthly data plans greater than 10 gigs.
And theres more upside given that we're still in the early stages of the consumer upgrade cycle to five G with only 27% of postpaid subscribers now on a five G enabled device. So it's five gene momentum keeps building subscribers will migrate up the rate curve and that will serve as a catalyst. We think for continued strong <unk> and serve.
This revenue growth.
Now turning to Bell wireline.
We added 22620 total new net retail internet customers up 28% versus last year and that includes the competitive losses of legacy DSL subscribers, where we do not have fiber.
If we look at our performance just within our fiber footprint. It paints, an even stronger picture, where we added over 36000, new subscribers and this importantly was achieved.
With a fiber cable overlap of only 56%.
So it's demonstrating a very clear way the market share gains, we're making where we have fiber and also we still have another 44% of our wireline footprint to go with cable cable overlap. So a lot of runway left.
We also added around 4000, net new IP TV subscribers, which is essentially stable versus last year. Despite the level of promotional offer intensity returning closer to pre pandemic levels, while satellite TV and home phone net customer losses, both increased compared to Q2 of last year, when we experienced fewer customer deactivation.
Due of course to Covid.
At Bell media total advertising revenue was up 5% over last year. This was supported by continued strong digital growth improved radio went out of her performance and increases across our specialty TV sports and news channels.
TSN and Rds again maintained their number one rankings for the current broadcast year to date and we benefited largely from the return of the F. One Canadian Grand Prix, which was the most watched formula one race on record across all Bell media properties.
Notably we also concluded negotiations with the NFL for a multi year expansion of our media rights agreement.
And this now includes live coverage of all NFL International series games.
And the new agreement ensures that Bell media will continue to be the exclusive television broadcast partner of the NFL in Canada for a number of years.
As for our Quebec media strategy, It really continues to hunt.
<unk> has outpaced all other French language conventional TV competitors in viewership growth with year to date primetime audiences that are off a leading 5%.
Despite this relatively strong overall performance television advertising demand in Q2 softened a bit given the current macro environment of surging inflation, a potential recession or supply chain issues in certain key consumer good verticals. We did however, see the return of some advertising dollars back into radio and out of home.
That had moved to TV during the height of the pandemic.
Notwithstanding the broader economic backdrop, we did have one of our most successful upfront sales seasons ever shattering the record for first day bookings with a content funnel that includes 100 original TV production is planned for the upcoming broadcast year, a 75% increase compared to 2021.
In summary consistently strong execution by the bell team within our well defined strategy allowed us to deliver excellent overall operating results in Q2 supporting sustainable value creation for all the stakeholders. We serve so Glenn I'll turn it over to you in just a second but before I do I Sadly want to act.
Knowledge, the recent passing of <unk>.
Visionary leader and former Bell, Canada, President and CEO is not economically under his management and 19 seventies and early eighties Bell built its telecommunications leadership position with positive growth across our many business segments misfire that got paid led to the formation of BCE and 1983.
And we're now at $23 billion company, delivering delivering industry, leading employee infrastructure R&D and community investment.
So on behalf of all members of the Bell team I would like to extend my deepest condolences to the gut the opposite family and my sincere. Thanks for his exceptional contributions to BCE to Quebec and to Canada.
Glen.
Thank you Marco and good morning, everyone.
Our financial performance continues to demonstrate the Bell's team consistent execution and disciplined focus on profitable customer growth as evidenced by another quarter of strong consolidated revenue and adjusted EBITDA growth, which remain in line with the 2022.
Guidance targets, we announced last February .
Service revenue was up a very solid three 8%, which drove $4, 6% higher adjusted EBITDA delivering 0.7 point margin increase to 44, 2%.
As a result of the strong EBIT contribution from operations and the lower year over year pension financing costs due to the high net asset surplus position of our DB pension plans.
Adjusted EPS was up four 8% to 87 per share.
However, net earnings and statutory EPS were down compared to last year correctly as a result of a noncash mark to market equity derivative losses from a decrease in the bce's share price during the quarter.
Notably our net earnings results. This quarter also included an asset impairment charge related to the consolidation of real estate pace space Post Covid.
As we shift increasingly to a hybrid work model and.
And aggressively execute on our multiyear plan to reduce real estate costs.
We anticipate taking further noncash impairment charges as we vacate other leased properties.
We are confident that over the next five to seven years, we can rationalize our physical footprint.
By up to 3 million square feet.
Which will generate cumulative cash savings in the range of $250 million to $300 million.
As for Capex spending in the quarter. It was up year over year with a total investment of more than $1 2 billion as we continue to expand our network leadership with.
With advanced spending on the rollout.
Of the fiber and <unk> consistent with our two year capital acceleration program.
And free cash flow was notably strong increasing seven 1% over last year to 1.33 billion on the back of higher EBITDA lower severance costs reduced.
Our pension cash funding due to the conservation holiday that started this quarter.
Let's turn to our detailed financial results of our three operating segments and start with wireless on slide nine.
Just another great quarter.
Was led by excellent service revenue growth of seven 8%.
Which excludes low margin equipment revenue that declined 9% year over year, reflecting consumers' behavior towards longer upgrade cycles and pre owned device activations.
This standout performance was the result of our clear and consistent focus on higher value subscriber growth, particularly on the Bell brand.
Also effective customer base management in a very pronounced roaming recovery in the quarter as consumer travel accelerated with revenue rebounding to 98% of pre pandemic levels.
Due to the flow through of the high margin service revenues together with promotional offer disciplined wireless EBITDA grew a very strong eight 3%, yielding a one two percentage point increase in margin.
246, 7%.
Let's move over to slide 10 on wireline.
An improved topline performance trajectory this quarter with total revenue down <unk>, 3% compared to a decline of 2.2 in the previous quarter.
Underlying this sequential improvement was continued strong residential internet revenue growth, which grew 8% year over year.
As we continue to drive further market share gains and higher ARPA from customers, who are moving to higher speed tiers and recognizing the value.
Dependability of Bell superior pure fiber based services compared to cable.
On the BD front, although near term revenue headwinds continued this quarter from the sale of Korea Tech in March.
And ongoing global data equipment shortages that drove a 23, 2% decline in total wireline product sales as well as related delays in spending on service solutions by large enterprise customers. We saw some moderation in the rate of year over year revenue declines this giving.
You attributed to improved performance, particularly in the small and medium business space.
As customers resume more normal operations post COVID-19, so definitely some encouraging signs as we enter the second half of the year, but pressures are expected to persist given the current macroeconomic backdrop.
Notwithstanding lower year over year revenue wireline EBITDA was up one 7% on the back of one 8% reduction in operating costs.
This was achieved despite unusually high storm related costs and inflationary impacts on fuel and labor that we absorbed this quarter, which we estimate total in excess of $20 million. We expect these inflationary pressures to persist for the remainder of the year.
Let's move over to slide 11 on Bell media another good quarter with total revenue up eight 7% year over year, which as Marco said benefited from the return of the F. One Canadian Grand Prix in June .
Advertising growth, including a strong contribution from digital as well as a three 5% increase in subscriber revenue reflecting ongoing.
Great streaming growth advertising.
<unk> revenue grew four 7%, reflecting year over year increases across our specialty TV sports, a new services as well as strong radio and out of home advertising demand as Covid recovery continues.
Consistent with the increase in total revenue.
Media EBITDA was up five 6% year over year. This was achieved even with a 10% step up in operating costs, reflecting the return of the F. One Canadian Grand Prix and an increase in overall marketing and sales activity back to more normal levels.
And lastly on slide 12, we have the financial strength and flexibility to execute on our business plan and our capital market priorities for 2022.
Our balance sheet remains healthy with approximately $3 1 billion in available liquidity at the end of Q2 that are supported by substantial recurring free cash flow generation and a relatively stable and manageable net debt to EBITDA ratio of 3.1.
And excluding the impact of the three five spectrum licenses, we acquired last summer.
Leverage ratio would be two nine times.
And with 85% of fixed rate debt currently.
Favorable long term debt maturity schedule that has an average term of approximately four years 14 years.
No near term debt refinancing requirements.
And an interest coverage ratio that is well above our target policy of nine times adjusted EBITDA, we have good predictability over our debt service costs as well as a high degree of protection from interest rate volatility.
Then on top of all of this our defined benefit pension plans are stronger than ever.
And average solvency pension position.
And average solvency position of 115%, which has enabled us to begin taking the contribution holidays on current service cost payments that I've been talking about previous quarters and on that I'll turn the call back over to you thing and an operator to begin Q&A great. Thank you Glenn So we are prepared and ready to.
Take our first question. So please explain to the participants how to queue up.
Thank you we.
We will now take questions from the telephone lines.
You have a question and you are using a speaker phone.
Please lift your handset before making a selection if you have a question. Please press star one on the devices keypad you may cancel your question at any time.
<unk> started to.
So please press star one at this time if your other question there will be a brief pause while the participants register.
We thank you for your patience.
The first question is from.
<unk> from Scotiabank. Please go ahead your line is open.
Yeah.
Thank you guys for taking my questions.
And very nice quarter in wireless I, just wanted to maybe start on the wireline side.
Continued very strong cost containment beyond the equipment impact on profitability because the year on year decline in equipment sales.
What do you.
Expect where do you expect these cost savings to continue to carry your growth in wireline over the next couple of quarters Glenn on the wireless side wanted to ask you. If you had seen any impact on customer loading.
Since the network issues that <unk> had witness then if these impacts have continued up to now or where are they.
Mostly.
Early days I'll be and just on the churn.
Can you maybe unpack the improvement in churn.
That's a very very low churn here are how.
How much of it is due to bundling or.
Or other reasons can you if you can name them. Please thank you.
Good morning America, Glen I'll start with the first part of the question here look I don't think its a surprise to anyone that.
We continue to show exceptional cost discipline and cost control that is.
Something that I think is.
Been ongoing with us in this management team for many many years now of course, we were able to achieve as I said in my opening remarks of <unk>, 7% margin expansion, despite absorbing what turned out to be about $7 million in fuel cost pressures.
That to be probably more like $20 million on a full year basis Les.
The labor pressures.
We compete for hot skills resulted in approximately $5 million of wage pressure in the quarter I don't see that going anywhere anytime soon so we're going to we certainly are feeling inflationary pressures I mentioned in my opening remarks, we had a higher than normal storm costs.
That was approximately 10 million. So all together we were able to two.
To improve margins by <unk>, 7%, while absorbing that due to just general cost discipline and I can assure you that we will give it.
If things change with inflation and we start to see additional inflationary pressures beyond what we've felt so far then we'll be more aggressive in doing what we need to do to protect margins into the future. So I don't think it's a surprise to anyone marrow that we will take the necessary steps to manage our costs and our wireline business and for that matter in our entire.
Business.
Hi, Good morning, Meyer I'll take the next two which kind of I'll put pulled together.
The loadings that you're expecting us to see in Q3.
Kind of my interpretation of your question of course, the associated churn so.
I kind of.
Take your question a more general way and obviously, we're pleased with our results across the board and we're continuing the momentum we've shown the last 567 quarters based on executing against our pretty clear strategy.
And really kind of all anchored off of our best networks customer value proposition, which is really resonating.
So that's kind of a very general answer your question more specifically I think the market dynamics that supported our performance in Q2, we see continuing in Q3, so things like retail store traffic coming back or continued scaling of our digital and direct sales, which we got a lot better at during Covid five G grow.
<unk>.
Immigration travel those elements of course on the financial side there is the roaming Taylor.
<unk>.
And.
Last but certainly not least our network superiority.
The best networks value proposition is certainly standing out in the in Q3 and that speeds of course, everybody talks about speeds on both on the wireless and wireline side.
And then on the wireline side veering away from your wireless focus question, but on the wire line side.
Upload.
Speeds are really starting to become a key competitive differentiator just any kind of an interesting.
Back to <unk> for all of you on the call.
We are seeing Sai on the wireline side, we're seeing kind of meaningful material loadings on the higher speed plans and we're finding that customers who are on the higher speed plans have 20% to 30% more connected devices in their homes and their upload consumption is three times higher so uploaded.
We're going to continue to be a big big deal for customers and we're unbeatable in that regard and of course reliability and resiliency is now at the forefront of customers purchasing.
Decisions and again Thats why I spent quite.
Quite a bit of time in my opening remarks on packing, how we architected our network. So really back to your question market dynamics. In addition to our network superiority is going to continue to give us momentum in Q3 and on churn number of factors.
And of course customer experience improvements have have a big impact back to the best networks, that's having a big impact in that number obviously related to customer experience.
We're also benefiting from devices are lasting longer so once customers arent switching both.
We're not having to.
To provide new handsets are just like I guess, what I'm trying to say, even though devices are lasting longer we're managing to keep customers on our network with the customer experience improvements and network superiority and yesterday. The combining of offers that include residential internet and wireless or improve.
Improving churn as well, we're seeing better churn for customers, who have more than one product with us.
Thank you Michael and just have you seen any initial.
Bump up in <unk>.
The Rogers network.
Issues.
Yes, because customers are choosing bell.
Yes.
Thank you next question please.
Thank you.
The next question is from drew Mick Reynolds from RBC capital markets. Please go ahead. Your line is open.
Yes, thanks very much good morning.
Maybe for you Glen probably just on the macro side not just people looking at telecom, but just looking more broadly.
Everyone's wondering what we're in for as we move forward here in D. C. Certainly is a.
A wide variety of touch points here with the economy are you seeing.
Are there any incremental inflation and from a macro standpoint any problems with receivables.
You made some commentary on the AD market being a little thoughts just as we get here a little bit deeper into the summer or anything.
Post quarter that you would flag it and then secondly.
Maybe back to you Marco Thanks for some of the data points on the fiber to the home.
Market share just curious.
How fiber performs.
Versus DOCSIS.
But then versus other fiber competitors cause presumably those fiber footprints of competitors will grow over time as we've seen globally and may see increasingly board here in Canada.
Just wondering what your experience would be there. Thank you.
Good morning drew.
Your question on what we're seeing in the macroeconomic.
Oh look look to be very honest I unpacked, what we're seeing in inflation quite specifically in the past quarter, but other than that we're not really seeing material issues in Bali.
Economic growth is slowing it remains relatively strong and the labor market remains robust.
Specifically you asked a question on customer payment, we have not experienced a material change in customer payment patterns.
As a result, there has been no related increase in bad debts, nor are we increasing provisions at this time or having a extended payment terms. So that you know.
Frankly, it's been it's been quite manageable despite as I said on packing a fewer inflationary pressures that are specific to our industry.
Having a large fleet like we have obviously the <unk>.
Escalating fuel prices and of course attacking hot skills, and ensuring we retain and attract the right people some pressure there.
And then the final comment I'll make is that you brought up is yeah. We were monitoring media closely and what impacts might be on TV advertising due to the macroeconomic pressures we are seeing globally.
As I said put this past quarter, we're quite pleased we had the F. One to lean on we have at <unk>.
World Cup of soccer coming up so we're excited about that but but I think it's an area of the business that we tend to see.
Rick pressures hit his first so we're monitoring that so thanks drew.
Drew good morning, a question so on fiber.
Where we're seeing growth in all of our <unk>.
Fiber geographies.
So that's that's real positive so that's been the case for quarter after quarter after quarter.
In terms of fiber competition.
It's kind of difficult to answer your question because right now you don't really have very many areas where you have.
Two fiber operators competing against each other and that actually the same geography that fiber overlap is really minimal to date.
And it will take.
Cost of multiple operators, whether or not they're small fiber pure play operators or the cable companies. It will literally take years and billions of dollars of capex for for them to materially overlap our fiber footprint and then while that's going on.
And I say this from direct experience right being having been at bell for our entire fiber journey I know how long it takes and how much money it takes and sort of you.
And Meanwhile, while that while that May go on with our competitors. We shall see here. We are today with three gigabit per second internet speeds symmetrical to lids right now today to literally millions of households across our footprint and only growing and.
We just announced the eight gig launch.
Starting of course like next month in September in the GTA.
Stating the obvious the largest market and other areas in the back half of this year in Ontario, and Quebec and in a very short period of time I'm talking about two or three years, we will have eight gigabits per second to.
Upwards of 6 million locations passed so in a very short period of time, So I guess, what I'm, saying is while others are going to try to catch up or potentially over multiple years billions of capex, where we're pushing forward quite aggressively and if you take a step back and how our accelerated Capex program is all coming together.
This quarter alone 250000, additional locations passed a meaningful growth in locations passed in the back half of this year.
Wireless <unk> plus 260% of the addressable population increased resiliency and a new TV product. So you can see how that accelerated.
Capex program has really allowed us to take a significant lead in the collection of services that ride on our fiber networks.
Thank you next question please.
Thank you.
The next question is from David Barden from Bank of America. Please go ahead. Your line is open.
Hey, good morning, its Matt sitting in for Dave. Thanks for taking the question. This morning.
Just first on the wireline and the large enterprise and supply chain related.
The delay in some of the business I mean do you have any visibility on when those supply chain related delays will resolve and then on the back side of it is there capacity enough to you know for us to see a bump up in delivery.
Delivery on that kind of backlog or should we expect a pretty smooth.
Hum.
Return to business once the supply chain you know clears.
Then maybe secondly, just on the kind.
Real estate opportunity that you highlighted it it sounded like that was mostly related to workers in their office and office space.
And I'm just trying to relate the real estate opportunity to maybe what you can do with central offices do you have any kind of additional color on.
What that potential might be and maybe just a general timeline for when that can be oh for which it can be realized.
I'll handle the back half first Matt and Marco will talk about <unk> supply chain, but yes, the real estate.
I gave you today is really focused on leased real estate space, where we would have traditional office workers and naturally like most in this country or globally or we're moving to more of a hybrid.
Central offices is a bigger question to unpack I mean, obviously as we look to the future and copper decommissioning, we were going to see how we rationalize their central offices, but for now the numbers I quoted today are really focused on office and as we get a better understanding and are further along the copper decommission named.
Path will be able to give better insights on what.
What central office opportunities will happen with that over to Marco.
Matt.
<unk>. So you see the trajectory is improving sequentially.
So that's a positive and like I said in Q1, continuing continued in Q2 and up to date and one month into Q3, we haven't seen cancellation of projects, which is another positive sign but revenues obviously are delayed for the reasons that you highlighted which is largely supply chain.
I do think that we will be poised to capitalize reasonably quickly when the supply chain stabilizes to answer your question a fairly directly and on the on the small and medium segment. We are gaining momentum there. So we're seeing volumes come back which is a positive and we're seeing some some revenue growth there which is also another positive.
As you look into 2023 and beyond we remain.
Quite optimistic about <unk> growth.
<unk> is all the all the components are now being put together so that's something that's another positive.
Thanks, so much.
Very helpful. Thank you.
Thank you.
The next question is from Vince Valentini from TD Securities. Please go ahead. Your line is open.
So much and congrats as well on a very strong quarter.
<unk>.
EBITDA growth in the first half of the year is five 5% you're still sticking with your.
Your 2% to 5% guidance it seems like Theres, a lot of tailwind and especially on the wireless side. So I'm wondering is there something specific you are seeing on <unk>.
The developments in the second half or some unforeseen costs too.
To keep you.
At that guidance and not even talking about the high end of that that guidance range or is it just conservatism.
Good morning, Vince I think I kind of unpack this already when I talked about in a higher inflation and escalating fuel costs and labor are wage pressures as we attack and retain hot skills.
And under our organization I mentioned about media and Thats, something we really have to monitor with TV advertising due to the macroeconomic pressures. So it's really it's no more than that.
We're extremely pleased with the front front end of their first six months and the performance we've had but I remain committed to the guidance range I provided for you in February .
So specifically on as we're getting into back to school period, there's nothing you're seeing that's alarming you on a.
Let's say a resurgence of competitive intensity, you're seeing similar trends in Q3 to the second quarter, you said earlier.
Well I'll say on so on wireless yes.
Seeing the same same trends plus we.
And back to the answer earlier around kind of the best network superiority resiliency redundancy, which is obviously benefiting us on the wireline side, there's a little bit more promotional intensity.
A little bit more like the days pre COVID-19 and look at.
When I when I when I think of that question and I look at the dynamics and I observe the higher promotional intensity on the on the wireline side compared to wireless I guess it doesn't surprise me.
Some of our competitors are under are under pressure given given the products we have out there in our network and.
That's to be expected and we're going to we're not going to let up how is that we're not going to let up.
Have the better we have the better network with better services and.
And we're going to keep pushing and but it's still early we're only one month into Q3.
And Michael just to confirm you said the digital fixed line, where you're maybe seeing a bit of an escalation.
Yes fixed line wireless seems to be pretty stable as it has been for quite a while in terms of things like promotional intensity and handset discounting those kinds of things.
And one last one quick Glenn.
98% roaming revenue figure from pre pandemic can you give any color on the volume that is attached to that like is it in the range of 75% of volume leading to that kind of revenue traction.
Our events are great question, 89% is where we're at at the end of June for volume recovery, 98% of revenue obviously the differential as rate. We were much later introducing rate increases in some of our competitors where it was July .
I believe before our rate increases went in so.
Thank you.
Welcome.
Thank you.
The next question is from Stephanie price from CIBC. Please go ahead. Your line is open.
Thank you.
The wireless and wireline bundling offerings have picked up across Dothan, Michelle and the Virgin brand can you share any early learnings with bundling and did you have any longer term targets.
Well.
I think it's just a reflection of.
It's a reflection of wanting to to.
To serve the households to serve the consumer rather than being.
No.
Pretending that theres two different customer bases, one for wireless one for wireline. It really is the same consumer the same household. So when you when you go to market with that with that mindset.
It's going to lead to two combined offers and we are seeing higher lifetime value.
Lower churn as a result of that and.
It's Ben.
It's been in place in the industry for quite some time, and maybe youre seeing a little bit more activity from us as we focus a little bit more on it but there are huge benefits for us to do so.
And that's been playing capabilities become more important how do you think about your competitive positioning in the west what do you consider wholesale let me just fixed wireless is an option that's part of the strategy.
Look on that on that when youre thinking about kind of for potentially up to four product bundling.
Competition or do a trios and quads.
In a very good competitive position compared to any others is we have owner economics and 75% of the country.
And that puts us in a better position than anyone else, it's difficult to compete effectively unless you have owner economics, and that's really what's going to to play in our favor and unlike almost any other we also have.
A vast array of content services that we can offer.
To our customers and you're kind of seeing it in the wireless side today right not even talking about bundling across the country, but just in wireless today on our ultimate.
Plans, where we include crave is a competitive differentiator again, having owner economics on content play.
<unk> to our strengths no other provider can really meaningfully have owner economics on content within their overall bundles.
That makes sense and then just finally for me with I said looking for all the telco to work together to keep emergency services working in the event of an outage do you see any additional capex or potentially.
Potentially I think timna.
For us.
And that's why I did spend.
Quite some time this morning outlining how much we've invested over over the last few years on things like that we are well positioned.
In that regard Stephanie.
Beyond the very specific question, we'll obviously work with with all the other providers.
To to serve Canadians in to help each other.
We always have and to be fair.
When we when we run into the occasional spot.
Others are quick to help us as well so that's always been the culture within the industry.
Great. Thank you very much.
Thank you. The next question is from David Joyce from Barclays. Please go ahead. Your line is open.
Thank you.
The upgrade cycle.
The eight that you mentioned, but the 56%.
Fiber and cable overlap the metric.
Wanted to kind.
Kind of.
Since check how that's progressing what was that.
That's the figure around 30% that you mentioned in the first quarter.
And I just wanted to see if you could update us on how many fiber home passes you you expect to be at at year end.
And when do you expect to be completed on that yeah. So on <unk> by year for the year 2022.
Prior year 2022, we still expect to be very close to 900000 900000 additional fiber locations passed that will put us at around $7 1 million total fiber locations.
Past. So we're right on track I did mentioned 250000 locations passed in Q2, but for the entire year it will be 900000 and on.
On fiber cable overlap we're at 56% we were I mean, we're more today than we were last quarter, but we were not last year, but we werent at 30% last year, we're somewhere slightly above 50% last year.
So that's progressing well so 56% cable overlap really good got 44% to go so a lot of upside so.
Lots of promise there.
Alright, and is it still roughly a three year time frame when you expect to be fully upgraded so we want to we want to be at 10 million broadband locations high speed broadband locations passed by the end of 2024, that's been our medium term broadband build out plans for $1 million of those 10 million locations will be.
Or are already done with wireless home Internet and so we're looking to have 9 million fiber locations passed by the end of 2025 and will be at $714 million or so by the end of this year seven to maybe so that leaves $1 8 million or $1 9 million fiber locations could go.
Over the years 'twenty three 'twenty four 'twenty five.
Okay, great. Thank you.
Yes.
Yeah.
Thank you. The next question is from zero <unk> from digital.
Please go ahead your line is open.
Yes. Thank you for taking my question, it's been running in the one so the first one is on the eight gigabit per second definitely impressive and will future proof your network for sure.
If you can share maybe what percentage of your internet customer base and your fiber footprint that are already taking your highest speed tier.
I'm trying to get a sense here of the the potential attractiveness of.
This new product.
Yes.
Yes.
I'm not going to give you the exact figures, but I will I will tell you that I will say that subscribers, who are on 500, Meg and above is quite material like very high.
And those who are one five gigs and above quite high as well.
Three gigs just launched.
Couple of a couple of months ago, and eight gigs hasn't launched yet so those numbers are smaller but interesting successes on three gigs to date frankly so.
Customers.
The majority of customers are not buying the lower speed plans.
And like I said earlier the.
Upload speed is going to be a game changer Wi Fi succeed an absolute game changer, because Wi Fi <unk> is going to give you very high speed Wi Fi throughout the house very consistent quality of service. So that's going to be really good as well and I already shared with you how those customers who.
By the richer plans are using more and have more connected devices and that's not going to change I mean I.
We've all everyone in the industry has been in meetings over over the last 10 15 years, where you every single time under estimate how much bandwidth consumption, there will be and how much consumers are going to make use of higher speeds and and I think that's what's going to happen with three gigs and eight gig.
As well.
Okay, and then on the NFL deal.
We've seen a sports rights continue increasing in prices. So has there been a significant change in the cost of this contract and also do you fully allocate these costs.
To media.
Yes, the cost Jerome yes, the costs are fully allocated to media, but I'm not going to disclose.
What are the contract details are on the NFL contract suffice to say that you just unpack that is all sports packages and renewals are up in price, but we are comfortable with the economics of the contract or we wouldn't have signed it.
Great. Thank you Youre.
Youre welcome.
Thank you. The next question is from Betsy <unk> from UBS. Please go ahead. Your line is open great.
Great. Thank you a follow up on the wireless side can you provide an update on what percent of your postpaid base has the unlimited premium plan.
Now I believe that was 20% last quarter and along with roaming rate increases you mentioned should we expect mid single digit ARPA growth can continue into the second half and just a quick question on the cost side wireless you mentioned acquisition retention is pretty steady any inflationary impact on.
The other part of costs that we should bake in record second half for wireless. Thank you.
Good morning, no on the cost side, we're seeing stability in handset pricing, we're not seeing any supply chain issues there.
So nothing to speak of specifically at this time.
You asked us to unpack roaming look I gave some specifics of roaming we're at about 89%.
Of our pre Covid.
<unk>.
Volume so I do anticipate continued.
Increases in roaming which will will.
Support of our approved but not to the same extent.
The rebound you saw enrolling in Q2, so yes.
<unk> will be supported by continued roaming improvements into the future, but probably not to the same degree as well.
We've enjoyed in the past few quarters.
Your first question.
Was on on the unlimited premium mix their.
Their subscriber base, yes, we haven't disclosed that.
Mix of customers, who are on those specific plans, we have set at 27% of our basis on <unk> enabled devices, and therefore, <unk> plants, but we haven't broken that down further into into the specifics you are requesting and we're not going to do that right now.
Got it. Thank you. Thank you so Paul I think we've timed out so I think we'll end the conference call on that question.
Thanks again for everybody's participation on call. This morning, as usual I will be available throughout the day for any follow ups and.
And clarification, so on that have a great rest of the day.
Thank you everyone and have a good day.
Okay.
Thank you. The conference has now ended please disconnect your lines at this time, we thank you for your participation.