Q2 2022 BCE Inc Earnings Call
Wireline wireless network excuse me since 2013.
We have protected our cores from the internet through the use among other things of 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 in Ontario.
Now it's clear that no network is perfect for a no network is immune to outages, but network architecture, clearly does make a difference.
Since 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 improve 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 <unk> in Canada with the launch of our mobile <unk> plus network that will offer peak data download speeds of three gigabits per second <unk>.
<unk> plus will be deployed across the country and as a result of our investment in mid band three five gigahertz spectrum.
Currently available in Toronto and surrounding areas Bell's <unk> 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 thats 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 on Wi Fi <unk> really are game changers.
More concrete examples of our plan.
Our plan is really 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 PBR 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.
<unk> 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 occur.
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.
And in fact, if you kind of compare <unk> today to back in 2019, we're not back to 2019 levels basically we're delivering far more value today as declining prices.
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 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 or digital strategies 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 improved 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.
<unk> is 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 we were recognized as one of the one of Canada's greenest employers for our sixth straight year with our ambitious commitments to reduce <unk> emissions and to recover and recycle mobile devices through the Bell Blue box program.
I'll now turn to slide six for a synopsis of some of our key operating metrics in Q2.
Lets 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 <unk> 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 <unk> 75.
Percent in the quarter.
Similarly for prepaid net adds were up meaningfully year over year growing to 27564 as the market activity picked up significantly with increased immigration and travel to Canada.
This represents our best quarterly prepaid 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 on monthly data plans greater than 10 gigs.
And there is more upside given that we're still in the early stages of the consumer upgrade cycle to <unk> with only 27% of postpaid subscribers now on a <unk> enabled device. So it's <unk> momentum keeps building subscribers will migrate up the rate plan curve and that will serve as a catalyst. We think for continued strong <unk> and <unk>.
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 and out of home performance and increases across our specialty TV sports and news channels.
TSN and Rds again maintain 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 up 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 and 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 sadly want to act.
Knowledge the recent passing.
A visionary leader and former Bell, Canada, President and CEO is not economically under his management.
Management, and 19 seventies and early eighties Bell built its telecommunications leadership position with positive growth across our many business segments <unk> pay led 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 opposite family and my sincere. Thanks for his exceptional contributions to BCE to Quebec and to Canada overdue Glenn.
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.
<unk> targets, we announced last February .
Service revenue was up a very solid three 8%, which drove four 6% higher adjusted EBITDA delivering at seven 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 <unk> 87 per share.
However, net earnings in statutory EPS were down compared to last year directly 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 aggressively execute on our multi year 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 was up year over year with a total investment of more than $1 2 billion as we continue to expand our network leadership with advanced spending on the rollout of.
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 133 billion on the back of higher EBITDA.
Lower severance costs reduced.
Pension cash funding due to the conservation holiday that started this quarter.
Let's turn to the detailed financial results of our three operating segments and start with wireless on slide nine.
Just another great quarter.
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 3% compared to a decline of two two 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 <unk> from customers, who are moving to higher speed tiers.
And recognizing the value and dependability.
Of Bell superior pure fiber based services compared to cable.
On the <unk> front, although near term revenue headwinds continued this quarter from the sale of <unk> in March and.
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 can.
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.
Crave streaming growth.
Advertising 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 three one.
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 now.
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.
That on top of all of this our defined benefit pension plans are stronger than ever with an 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 will 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.
Our first question Stefan.
Turning to the participants how to queue up.
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The first question is from.
From Scotiabank. Please go ahead your line is open.
Thank you guys for taking my questions.
And very nice quarter in wireless I, just wanted to maybe start on the wireline side.
Yeah.
Continued very strong cost containment beyond the equipment.
On profitability because the year on year decline in equipment sales.
What do you.
Expect where do you expect these cost savings will 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 Rogers had witness then if these impacts have continued up to now or where they are.
Mostly.
Early days only.
And just on the churn can you maybe unpack the improvement in churn.
Very very low churn here.
How much of it is due to bundling.
Or other reasons 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 has 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, a <unk>, 7% margin expansion, despite absorbing what turned out to be about $7 million in fuel cost pressures.
Specced ought to be.
More like $20 million on a full year basis.
Labor pressures as 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 certainly are feeling inflationary pressure as 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 get to.
To improve margins by <unk>, 7%, while absorbing that due to just general cost discipline and I can assure you that we will.
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 its a surprise to anyone mirror that.
We will take the necessary steps to manage our costs and our wireline business and for that matter in our entire business.
Good morning, Meyer I will take the next two which kind of output pulled together really 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, 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 and really kind of it's all anchored off of.
<unk> networks customer value proposition, which is really resonating.
So thats 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.
G growth.
Immigration travel those elements of course on the financial side, there is a the roaming.
<unk>.
<unk>.
Last but certainly not least network superiority.
The best networks value proposition is certainly standing out in in Q3, and Thats speeds of course, everybody talks about speeds, while 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 in a kind of an interesting.
Back to <unk> for all of you on the call.
We're seeing <unk> 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 uploaded assumption is three times higher so up.
<unk> is going to continue to be a big big deal for customers and for unfeasible in that regard and of course reliability and resiliency is now.
The forefront of customers purchasing.
Decisions and again Thats why spend.
Quite a bit of time in my opening remarks on how we Architected our network. So really back to your question market. Dynamic addition to our network superiority is going to continue to give us momentum 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.
Big impact in that number obviously related to customer experience.
We're also benefiting from devices.
<unk> longer so once customers arent switching both.
And we're not having to to provide new handsets or just I guess, what I'm trying to 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 are.
Improving churn as well, we're seeing better churn for customers, who have more than one product with us.
Great. Thank you Michael and just have you seen any initial bump.
Bump up in <unk>.
The Rogers network.
Issues.
Customers are choosing belt.
Yes.
Thank you next question please.
Thank you.
Our next question is from 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 is wondering what we're in for as we move forward here and BCE certainly is a.
In a wide variety of touch points here with the economy are you seeing.
Are there any incremental inflation and from a macro standpoint, any qualms 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.
<unk> quarter that you would flag 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 is presumably those fiber footprints of competitors will grow over time as we've seen globally and may see increasingly born 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.
<unk> look to be very honest.
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 Raleigh.
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 extended payment terms. So.
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 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 yes, we're monitoring media closely and what impacts might be on TV advertising due to the macroeconomic pressures we are seeing globally.
As I said book this past quarter, we're quite pleased we had the F. One to lean on we have.
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.
Macroeconomic pressures hit hit first so we're monitoring that but 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 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 that fiber overlap is really minimal to date.
And it will take.
Across the 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.
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 accelerate 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 products. 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.
Sure.
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.
Apply 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.
See a bump up in <unk>.
Delivery on that kind of backlog or should we expect a pretty smooth.
<unk>.
Return to business with the supply chain clears.
And maybe secondly, just on the.
I had a real estate opportunity that you highlighted it sounded like that was mostly related to workers in their office and office space and 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 the general timeline for when that can be.
Over which it can be realized.
I'll handle the back half first Matt and Marco will talk about <unk> supply chain, but the real estate numbers. 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're 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.
<unk> Ming path will be able to give better insights on what.
What central office opportunities, we will have with that over to Marco.
Thanks, Matt on <unk>. So you see the trajectory is improving sequentially.
So that's a positive and 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 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.
Coming as all the all the components are now being put together so that's another positive.
Thanks Thats very.
Very helpful. Thank you.
Thank you.
The next question is from Vince Valentini from TD Securities. Please go ahead. Your line is open.
Yes, thanks very much.
First of all in a very strong quarter.
The.
EBITDA growth in the first half of the year is five 5% Youre 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>.
Competitive developments in the second half or some unforeseen costs.
To keep you.
At that guidance and not even talking about the high end of 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.
A tracking onto our organization I mentioned about media and that's something we really have to monitor with TV advertising due to the macroeconomic pressures. So it's really it's no more than that.
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 .
Yes.
So specifically on as we're getting into back to school period, Theres, nothing Youre seeing thats alarm you on.
Let's say a resurgence of competitive intensity, you're seeing similar trends in Q3 to the second quarter, you said earlier.
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.
Feels a little bit more like the days pre COVID-19 and look at.
Sure.
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.
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.
We have the better we have the better network with the better services and.
And we're going to keep pushing and but it's still early we're only one month into Q3.
And Mark 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 the 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.
Sure Vince 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.
Sure.
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 the bell and the Virgin brand can you share any early learnings with bundling and if 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.
Yes.
Pretending that theres two different customer bases, one for wireless one for wireline. It really is the same consumer the same households, so when you when you go to market with that with that mindset.
It's going to 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 is.
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's huge benefits for us to do so.
And assembling capabilities become more important how do you think about your competitive positioning in the west what do you think your wholesale let me be fixed wireless as an option as part of the strategy.
Look on that on that when youre thinking about kind of for potentially up to four product bundling.
Competition or dual trios and quads.
We are 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 thats really whats going to to play in our favor and unlike almost any other we also have.
A vast array of content services, we can offer to our.
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 plays to our strengths.
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'd said looking for all the telco to work together to keep emergency services working in the event of an outage do you pay any additional capex requirements.
I think from that.
Not for us.
And Thats 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.
Two to serve Canadians in to help each other.
We always have and to be fair.
When we when we run into the occasional.
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.
Yes.
Upgrade cycle I appreciate that you mentioned, the 56% with fiber and cable overlap metric.
Wanted to.
Since check and how thats progressing.
The figure of around 30% that you had.
As mentioned in the first quarter.
And just wanted to see if you could update us on how many fiber home passes you expect to be at at year end.
And when do you expect to be completed on that.
So on <unk> by year for the year 2022, the entire 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.
So we're right on track I did mentioned 250000 locations passed in Q2, but for the entire year. It will be 900000 in on.
On fiber cable overlap we're at 56% we were.
We are more today than we were last quarter, but we were not where last year. We went up 30% last year, we're somewhere slightly above 50% last year.
So that's progressing well so 56% cable overlap really good at 44% to go so a lot of upside.
Lots of promise there.
Alright and is it still roughly.
Three year timeframe, when you expect to be fully upgraded and so we want it we want to be at 10 million broadband locations high speed broadband locations passed by the end of 2024 and Thats been our medium term broadband buildout plans of $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 to go over the years 'twenty three 'twenty four 'twenty five.
Okay, great. Thank you.
Yes.
Okay.
Thank you. The next question is from <unk> <unk> from <unk>. Please go ahead. Your line is open.
Yes, thank you for.
Taking my questions. Good morning, everyone. So the first one is on the eight gigabit per second definitely impressive.
We will enter broker 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.
New product.
Yes.
So 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 a 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 plant.
And like I said earlier.
The upload speed is going to be a game changer Wi Fi <unk>, 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.
Those customers, who buy the richer plans are using more and have more connected devices and thats not going to change overnight.
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 <unk>.
And I think that's what's going to happen with three gigs and eight gates as well.
Okay, and then on the NFL deal.
We've seen 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.
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 in 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.
Alright, thank you.
Youre welcome.
Thank you. The next question is from <unk> Levy 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.
As of 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 in the second half.
Quick question on the cost side wireless you mentioned.
Acquisition retention is pretty steady any inflationary impact on the other part of cost that we should bake in 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 you asked us to unpack roaming look I gave some specifics of roaming around about 89%.
Pre COVID-19.
<unk>.
Volume so I do anticipate continued.
Increases enrolling which will we 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 we've enjoyed in the past few quarters.
Your first question was.
Was on on the unlimited premium.
Okay subscriber base, yes, we haven't disclosed the.
The mix of customers, who are on those specific plans we.
We have set a 27% of our basis on <unk> enabled devices, and therefore, <unk> clients, but we haven't broken that down further into into the specifics you're requesting and we're not going to do that right now.
Got it thank you.
So Paul I think we've time dose. So I think we'll end the conference call on that question.
So thanks again for everybody's participation on the call. This morning.
As usual I will be available throughout the day for any follow ups.
And clarifications on that have a great rest of the day.
Thank you everyone and have a good day.
Thank you. The conference has now ended please disconnect your lines at this time.
We thank you for your participation.
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