Q2 2023 BCE Inc Earnings Call
A recorded so it's close to the homes that don't have as you see.
Please standby your meeting is ready to begin.
Good morning, ladies and gentleman and welcome to the BCE Q2, 'twenty 'twenty troopers all conference call.
I would like to start.
Mr. Fotopoulos. Please go ahead Mr Fotopoulos.
Good morning, everyone and thank you for joining our call today I'm here with Merck.
Our current CFO Glen Leblanc, our future incoming CFO Curtis milot.
You can find all of our Q2 disclosure documents on the Investor Relations page of the B C C.
Web site, which we posted.
Before we begin I'd like to draw your attention to our safe Harbor statement on slide two reminding you that todays slide presentation.
<unk> 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 required by law. Please refer to Bce's publicly filed documents for more details on our assumptions and risks I'll turn the call over to Marco.
Thank you and good morning, everyone.
Our Q2.
<unk> released this morning show.
Operating performance remains resilient benefiting from the teams consistent execution and customer centric approach our significant investments in broadband infrastructure product bundling quality subscriber loading and disciplined cost management.
Against this backdrop, we see delivered strong three 5% growth in consolidated revenue for Q2, and a notable sequential improvement in adjusted EBITDA, which increased two 1% over last year.
We continued to front end load our capex spending a further one 3 billion in new capital this quarter, which keeps us firmly on track to expand ballast pure fiber network to 650000 new locations.
To grow our service footprint to 85% of the country, while also enabling Standalone <unk> plus service.
Almost half of all Canadians.
Bell wireless and Bell pure fiber ranked as candidates fastest mobile internet and Wi Fi services in Nucor's latest network performance report.
With previous recognitions won by Bell, where candidates most awarded in mobile and Internet services provider such third party recognition reinforces both developed technology leadership and customer value proposition to offer the best networks at affordable prices.
We leveraged our leading broadband networks and services to deliver a record Q2 number of total wireless mobile phone mobile connected device retail internet and IP TV net subscriber additions, which increased 76, 5% over last year to 241500 <unk>.
<unk>.
Of course.
In wireless we reached a notable milestone in the quarter, surpassing 10 million mobile phone stops on the back of our highest Q2 postpaid net add in 18 years.
Collectively total mobile phone and connected device net activations were up 86% over last year to 205076, driving healthy service revenue growth of four 4%.
Going forward population growth penetration headroom.
Ongoing transition to five G and bundling wireless with Internet service should continue to support strong subscriber base expansion not just for bell.
For the entire industry.
And we're also serving new Canadians more effectively by expanding our retail channel presence in neighborhoods with a large immigrant presence offering customer care and direct marketing services in more languages partnering with companies such as Air Canada in the Institute for Canadian citizenship to provide newcomers with Bell Telecom services.
And offering unlimited nationwide data usage plans with five G access at affordable prices.
Rebranded Virgin.
Yes.
A particular note regarding Virginia, we recently completed the repositioning of the brand as I mentioned, which includes a fresh new look a new value prop.
<unk> pillars of affordability member rewards inclusiveness and network quality.
In residential wireline as our footprint advantage keeps expanding.
We're expecting we're driving stronger subscriber loadings.
We added 52148, new net fiber to the home customers in Q2, that's up 38% over last year.
And of these approximately.
Approximately 70% subscribed to gigabit plus the speed tiers and in fact, 20% of all new fiber customers in the month of June activated three gigabit plan driven by successful successful F. One racing campaign in Quebec.
All demonstrating once again that speed matters to consumers.
This is a major competitive differentiator that keeps us sustainably ahead of our competitors.
Our growing base of fiber customers, which now accounts for more than 60% of those retail residential internet customer base combined with speed upgrades in an improving share mix given <unk>.
Our superior customer experience contributed to 7% Internet revenue growth in Q2.
Notably we achieved these wireless and internet subscriber results against the backdrop of declining prices demonstrating that our industry is delivering the highest quality services at a decreasing prices despite persistent inflation.
According to the most recent stats can data the price of all goods and services in aggregate across the Canadian economy has increased two 8% over the past year, while the cost of cellular and Internet access services has declined 14, 7% and three 2% respectively.
I'll now turn to media <unk>.
Despite an advertising recession across North America continues to affect advertiser demand and spending we've weathered near term pressures relatively better than peers as a result of our leading platforms and content.
And focused execution of our digital first media strategy.
Digital revenues were up 20% over last year and now comprise 33% of total Bell media revenue compared to 27% last year, that's an encouraging result, especially given current market conditions.
Notably our upfront presentation in June we announced a number of major additions and expansions to our AD offerings, including the launch just last week of an AD supported subscription tier for crave and the introduction of addressable advertising later this year initially for viewers on our five TV, we're the first Canadian Broadcom.
Cost or to bring addressable TV on the linear channels to market through a btu.
This will enable advertisers to target ads to specific households, or devices based on demographic and behavioral data across on demand live streaming and linear content.
In addition to creative an addressable TV ads. We've also introduced a new analytics products Bell attribution insights, which provides advertisers with interactive reporting on campaign effectiveness across bell media platforms as well as further enhancements to our Sam sales tool, which grew revenue 30% this quarter.
On the customer service front now.
We leverage innovative bell apps and online support tools, including mood valet self install and manage your appointment to deliver improving customer experiences, particularly during the very busy July move period in the province of Quebec.
These digital low touch and low cost solutions are a big reason why bell customer satisfaction scores continue to improve and why our suite of customer service apps continue to be the most awarded and highest rated telco apps in Canada.
Now I'm going to turn over to slide five for those following the data for an overview of some key operating metrics for Q2.
Let's begin with Bell wireless where do you see we've added 111 to one.
111282, new net postpaid mobile phone subscribers, that's about 30%, 34% excuse me.
Up 34% from last year, and as I mentioned, a little bit earlier that is our best Q2 performance in 18 years and it was a clear highlight in the quarter.
That result was driven by a 30% higher gross activations.
That reflects robust immigration growth continued five gene multi product bundling momentum increased penetration of second line subscriptions and we effectively executed our promotional offers and I think what was a competitive market.
You'll see that our customer churn was up year over year, but that reflects greater market activity with the step up in competitive intensity, but our churn remains well below pre pandemic levels at plus 94%.
Our ARPA was essentially unchanged compared to last year and that's a good result, given some of the competitive pricing pressures. We saw in Q2, particularly on larger capacity data appliance, which drove lower overage revenue.
And the financial impact of more customers on installment plans.
Although roaming was a positive contributor again this quarter as expected and as we mentioned earlier the year over year lift wasn't as significant as during the post COVID-19 recovery period.
Notably the monthly recurring charge portion of our pool remains stable.
The direct result of more subscribers on premium five G rate plans and at the end of Q2, 47% of postpaid customers once <unk> capable devices and that's up from 30% just last year.
For mobile connected devices, we realized a 79537, new net activations and that's a year over year increase of nearly 80000.
<unk> strong customer demand for Bell Iot solutions, including business solutions and connected car subscriptions.
Now, let's move to wireline.
We delivered yes, we delivered our highest Q2 retail internet net adds since 2007.
It's up 10, 2% over last year to almost 25000 and that reflects a higher number of legacy DSL subscriber losses in our copper service areas.
However, as I mentioned earlier.
Look just at the performance within our F T th footprint.
See the net adds of 52000 demonstrates very very clearly the market share gains, we're making wherever we have fiber.
And it was also another very good quarter for Bell TV, which added 11506 net new subscribers. That's three times higher than last year as we continue to benefit from the pull through effect of pure fiber internet.
And of course, our TV product leadership.
Satellite TV net customer losses increased as you see driven by higher competitive promotional offer intensity at home phone net losses improved 6%.
Now with that back to Bell media just for a brief moment as I referenced advertising market remained difficult to get in the quarter. While digital growth was strong underpinning the digital growth was crave and TSM streaming subscribers as well as a 30% increase in revenue from our sand sales tool.
With respect to create specifically our subscribers were up 5% over last year to approximately $3 2 million.
That was supported by 27% increase in direct to consumer streaming subscribers, while T S and direct and Rds direct collectively grew subscribers by 85%.
Thanks in large part to the 2023 Formula One Canadian Grand Prix, which had the highest affluent audience on record across all Bell media platforms.
Our CTV goes it continued to perform ahead of plan, marking its 22nd consecutive year as the number one network in prime time and expanding its audience advantage in the spring broadcast season by approximately 30% over our closest competitor.
See decisions regarding our fiber investments.
And further developments regarding bills C 11 and <unk>.
Further on the media front.
More needs to be done by the Crt's see faster.
The ecosystem in Canada is under severe stress and requires urgent government assistance.
Massive U S companies with global scale and global footprints are having extreme difficulty contending with the difficult advertising markets you have to ask a Canadian broadcasters are expected to navigate it when the regulatory playing field is not does not presented an environment, where the same rules apply to all those.
Though it's encouraging to see the federal government trying to help out on the news side of things in the industry at large pushing back against the very <unk>.
Aggressive moves by madder, and Google more needs to be done.
Before closing I wanted to address recent media reports out of the U S concerning led covered cables and legacy telco copper networks.
This makes up a very small percentage of bells overall wireline infrastructure with only 0.36% of our network still containing let.
Belle transitioned away from installing led covered copper cables in the 19 sixties, when we began to deploy plastic polymers in place of led for the majority of our cable deployment.
Since the mid two thousands bell has also been replacing these copper cables with fiber.
As we upgrade our network from copper to pure fibre, we have been removing any led containing components inactive construction areas, where feasible and safe to do so in line with established safe handling protocol.
With that.
And for the last time before he retired CFO at the end of the month I'll turn the call over now to Glenn will provide more details on our queue to financial results on behalf of all members of the Bell team I'd.
I'd like to think Glen once again and to extend my heartfelt gratitude for all of your contributions are leadership Glen and your invaluable council and helping this great company.
Move forward year after year, you will be sorely missed.
Good morning.
Inning, everyone and thank you America for your kind words.
I'm proud and honored to have been part of such an amazing organization for 30 years.
I have witnessed the transformation of this great company from a legacy telco into a tech services powerhouse and the best is yet to come.
It will be keenly watching from the sidelines sidelines is the next generation of leaders take bell to the next level.
And now for the last time, a CFR onto the results.
And what has become a hallmark for the company another quarter of consistent and focused execution that delivered strong three 5% consolidated revenue growth and 2.1% higher adjusted EBITDA.
This was achieved despite ongoing media advertising headwinds merkle mentioned in the step up and competitive intensity across all our consumer product lines and a b b b sector that is not yet fully recovered from the global supply chain disruptions experienced over the past couple of years.
Despite the positive EBIT contributions from operations net earnings and statutory EPS were down year over year due to a $377 million non-cash loss on BCE share of an obligation to repurchase at fair value. The minority interest in a joint venture equity investment.
As profiled in our quarterly budget for 2023, adjusted EPS was also down this quarter decreasing 9.2%.
This was driven by an expected increase in interest expense due to higher rates as well as well as higher depreciation and amortization.
Reflecting the rapid growth and our broadband capital assets.
As for free cash flows down approximately $300 million a year over year, mainly on the timing of working capital, which as I mentioned last quarter will largely reverse out by year end and higher Capex as we advanced some spending earmarked for later in the year given favorable construction conditions. This past spring.
In line with our internal forecasts and consistent with our guidance target for 2023, we expect a much stronger free cash flow trajectory in the back half of the year with a minimum $600 million favorable year over year swing coming from just Capex alone.
Let's turn to our balance Cts segment on slide eight where total revenue was up a very healthy for 3%. This quarter. A strong result that was driven by a 7% increase in residential internet revenue and a $4, 4% higher wireless service revenue, which were fueled on the back.
Some of the best Q2, mobile phone and retail Internet subscriber.
Matrix is merkle mentioned and well over 15 years.
The year over year growth in revenue also reflect on a much improved <unk> performance trajectory.
Supported by the increased project spending by large enterprise customers, which strengthened as a result of the improvement and data equipment availability compared to the shortages that we experienced last year as well as the financial contribution from a recent acquisition of cloud services provider.
X innovation.
Ongoing recovery in the business data equipment sales together with increased sales of higher value mobile phones yielded a 21.5% growth in bell CTX <unk>.
Product revenue this quarter.
The combined impact of the continued consumer strength across our wireless in residential home services together with improved business wireline results in lower year over year weather related pressures drove improved EBIT growth.
Of 2.8% this quarter.
Let's move over to Belle media on slide nine and.
Let's move over to Belle media on slide nine and.
Against the backdrop of the ongoing AD recession in North America Bell Media's revenue declined in Q2 was still only 1.9%.
This represents a much better performance in our media appears which is a testament to the team strong execution.
Are diversified asset mix programming strength and the success of our digital first media strategy.
Advertising revenue was down 9% owing to a continued soft advertising advertiser demand and spending across all traditional media platforms.
This was moderated by a robust digital advertising growth of 19%.
Subscriber revenue increased 3.9% year over year, driven by continued strong crave and sports direct to consumers streaming growth.
Consistent with the year over year decline in advertising this quarter EBITDA decreased 5.3%.
Below that may appear to be a decent result under current economic conditions, we enter industry continue to be greatly impacted by a number of challenges, including operating losses across our news divisions, a prolonged advertising slump with no signs of immediate recovery the shift of advertising revenue to foreign digital platform.
Ms <unk>.
Content cost inflation and more challenging regulatory environment that is not not adapted to the new realities facing media.
This is required us the right size are operating cost structure, an asset portfolio to align with the expected revenue potential of our media business.
Going forward, we will need to continue doing so in order to deliver for our shareholders and this unconstructive economic and regulatory environment.
Let's turn to slide 10 for a brief update on our balance sheet and our liquidity position.
We we remain quite well positioned with more than four $4 billion of available liquidity at the end of the queue to which is bolstered by a U S $850 million public debt issuance during the quarter.
That majority schedule also remains well structured with an average debt to majority of approximately 12 years and then after tax cost of that is well below prevailing interest rates at just under 3%.
Moreover, we have no outstanding financing requirements for the balance of this year is all 2023 debt maturities have already been pre financed.
And with a strong pension solvency surplus of totaling $3.5 billion in free cash flow that is growing organically year over year, we have the financial strength against the current macroeconomic backdrop to execute on our strategic and capital market priorities for 2023, including the C band spectra.
<unk> later this year.
Lastly, I wanted to highlight bells continued leadership and ESG financing structures with the launch of our first sustainability linked derivatives. This past may this follows the announcement of our sustainable financing framework in April of 21.
<unk> $500 million sustainability bond offering in May of 2001, and the conversion of our $3.5 billion committed facilities to a sustainability linked loan last November we look forward to a follow on instance, sustainability bond issuance in the future when the right mix and size of eligibility.
<unk> investments within our framework are available.
Let's wrap up on slide 11, with consolidated financial results delivered and the first two quarters that are in line with budget together was a strong projected EBITDA in free cash flow trajectories in the second half of the year that are underpinned by our strong operating momentum across the business and are consistent proven execution in a <unk>.
Pettitte of marketplace I am Reconfirming, all our guidance targets for 2023 on that note I'll turn the call back over to you. Thank thank you Glenn so to keep the call as efficient as possible limit yourselves to one question in a brief follow up so that we can get to as many of the questions in the queue as possible with the time, we have left.
However, before I hand, it over to the operator I just wanted to take the opportunity to.
<unk> and what a privilege and pleasure it's been to work with you you were a great leader and mentor and I'm grateful for all the guidance support and encouragement you have provided but above all when I had valued most is your kindness trust and friendship with Thatcher, though we're ready to take our first question.
Thank you.
If you had a question.
Okay.
Two.
Okay.
Yeah.
Thank you.
Okay.
Yankee.
Great. Thank you for taking my questions and I do want to say Glen. Thank you for all your support over the many years that we've known each other.
You will definitely be missed.
So maybe I'll start with my.
First question.
Merkel I recognize that B C as in the middle of it and that's a whole regarding in Vietnam with Kibet core.
But I'm interested in getting your reaction to the announced M b and the looming.
You see on the Rogers and <unk> M. B a note terrace.
More specifically on the basis and precedents that the C. R. D. C has chosen to arrive at this therapy calculation.
And it's costing analysis and just the follow up question on pre Castro.
Then I guess.
D. C has delivered year after year on its guidance targets, so I'm not implying any issues here, but when I observe your free cash flow generation, it's down 46% in the first half.
And your outlook for growth substitute the 10 per cent lots of moving parts I'm sure Capex as you mentioned is a big.
<unk> bitcoin here in the recovery, but could you help us bridge the results the date and.
And how we're going to get to the two to 10 per cent growth. Thank you.
Okay, I'll start, Maryland, and thank you for your remarks.
As I sat in my in my opening statement, we will spend more than.
$600 million spending in the back half, but less than last year. So if you look at our spending trend in 2022, we spend over $3 billion in the back half of 2022 and that will be more than $600 million lower add to that the associated impacts to working capital that lower spending will.
Do we have lower cash tax installments in the back up like we are confident that we will deliver on the guidance provided so I know that.
Historically, we probably have a smoother free cash flow profile. Then we have this year, but it really was a product of us taking the opportunity to spend heavily in the front half of this year to really.
Heard me say before you make in this business when the Sunshine. So that's where we're I remain confident mayor and over to America for the second.
Part of the question Thanks, Glenn Good morning.
So on the on the <unk> decision I think you're probably referring to the while I know you're referring to the <unk> decision recently handed down relating to two other.
Other providers it's hard.
It's hard to comment because I mean, we obviously don't know the rates.
That were at play or the offers that were made in that final offer arbitration because of the details are confidential. So it's kind of hard to to kind of.
Make any predictions as to what what comes next I would say there were some.
I'll call it attention grabbing.
References in the decision on how.
Costing was arrived at or how the the winning offer was chosen and I think their attention grabbing in my mind because.
They do break from kind.
How things have been done in the past, but but my sense of it is that it for those comments must have been made.
Within the confines of the facts.
Presented to the Crt's C. In the sense of the offers made because.
Because otherwise if we're to read those comments on appropriate costing as a signal for what will more broadly calm.
In the future.
I think the.
Implications of that could be pretty far reaching and again I know veering from August pivot from wireless to wire line.
We spend so much time quarter after quarter after quarter.
And all of our public communications talking about R accelerated Capex program and trying to get to the.
Close to 9 million fiber locations done by.
By 2025, and you're kind of repeat that over and over again, it almost kind of start thinking that that the job is done at the end of 2025 and I think the problem here is the job is not done at the end of 2025, because even when we have.
Close to 9 million locations done it will be 5 million locations, mostly households in bells operating footprint. So that's just from Manitoba to Newfoundland $5 million locations left to cover and that's what really worries me and that's what the at risk so fundamentally I'm veering off in a bit.
On a bit of a tangent here Marvin but I think the public policy government and regulators in Canada is really going to have to decide what what the priority is it to get the job done for all Canadians in terms of coverage.
Or is it to continue to.
Lament.
Decisions with the view draw.
Driving down pricing even further.
Overall environment, where pricing has been well handled by market forces frankly, if you look at the directional did.
The direction of pricing and quality over the last very short period of time.
Stop there.
Oh, you're actually right, where I wanted <unk> cause fiber to the home is essential for your future growth. So.
Thank you for those remarks.
Ooh.
Next question please.
Next question is.
Drew.
B C.
Yeah, Thanks, very much and good morning, and all the best Gwen.
I wish you well.
Couple for me just first time Bell media actually.
Merkel you made a lot of progress digitizing this asset.
The asset clearly.
Punches above its way certainly in the media landscape here in Canada. When you look at the digital revenue contribution how do you how do you want that to kind of trend, let's say over the next two to three years I know, there's a ton of moving parts, but just what what are your expectations. There and then secondly shifting the wireless.
We've seen and you mentioned a bunch of initiatives to better.
Service immigrants into the country.
Just wondering what your expectation there is in terms of incremental traction and success in doing that and whether we saw some of that in Q2. Thank you.
On the on the wireless side and clearly there is.
A population surge in Canada, that's not about to abate anytime soon so.
We.
We certainly do well in the premium segment and in terms of Ah. So thats months category, we do really well and we do quite well in the switch or market for lack of a better way of putting on customers who are going to switch from one provider to another we do we I think we do quite well in that segment.
On the.
The newcomers to Canada segment.
We're doing okay. I think we we need to do better and we will do better and.
We've been pretty open about some of the initiatives we put in place to.
To get a bigger share of that segment of the market and and that's just the early days on some of those new initiatives. So I don't I don't think you're really seeing.
And a very strong results, we presented in queue to.
Really the cruising we're not a cruising altitude, let's just say on those initiatives. So there's more upside there.
Kind of a relaunch of Virginia, plus and while it's early days, it's only a couple of weeks.
Some positive momentum and just two weeks.
On the verge and relaunch, although that's that's a Q3 phenomenon because it was down in July so.
I'll leave it at that drew on on those elements on media.
I think I think the direction is.
Where do I want to end up here and we Wanna, We Wanna continue to pivot very strongly towards digital.
And I like you know we've been talking about this for about three years and I really liked the momentum were delivery were driving here on that strategy. So the pillars really where do we drive of revenues, we derive our revenues from subscription.
Advertising on the advertising front, we've put in place a lot of tools to enable.
Advertisers to choose us for their.
For their digital and targeted.
It needs and that's only going to get better with addressable television and on the subscription side of things again, it's making sure. We always have the very best premium content and making sure those that content is available on the digital platforms that we have that we're going to continue to improve from user experience.
<unk> perspective, so the growth pillars for Bell media going forward are really going to be <unk>.
Crave, the CTV and Nouvel apps, and TSN and Rvs direct those are the growth pillars.
That's great. Thank you.
Thank you.
C I B C.
Hi, good morning.
Hoping you could talk a little bit I bet, the sustainability of service from any grad assistant head into the back half of the year. Just curious how you think about it the more competitive school and holiday periods.
And then just my follow up just curious, but how we should think about the enterprise pieces of business heading into that account there. It sounds like the equipment availability, maybe try to improve with an ear.
Yeah.
Backup on enterprise.
Stephanie it's Glenn.
We're feeling pretty good we're actually starting to see projects from large enterprise customers.
Back into full gear again as you said part of that is because we have the availability of product, albeit not what it was pre pre pandemic a heck of a lot better than it's been in the last number of years. So we're feeling pretty good about the momentum we're seeing there.
I don't see any signs of slowdown that would.
The Canary in the coal mine things you see when people start talking about recession, we're not seeing any of that projects are are are kicking off your seeing it in our product revenue growth that we had in this quarter. So I remain pretty confident that that the back half, we'll see some additional momentum that the first half of it didn't.
Yeah, and then on the broader.
Competitive landscape and revenue growth, which interpretive service revenue growth Stephanie.
Okay. I think if you look at what we delivered in Q2 with the very strong mobile phone in retail Internet subscriber growth, you'll see that came with.
Quite healthy service revenue growth on resident residential internet at 7% in wireless service revenues at $4, 4%. So those those are strong numbers in fact quite similar to the past three quarters, which is really a good result, if you think about some of the more intense promotional pricing that we saw in.
Q too.
Won't repeat with Glenn.
Glenn said to any great degree on the.
On the on the business side, we are also seeing.
Service solution.
Revenue.
Strength decent strength there. So you put all those things together and then you look ahead to the back half of the year.
I think we're going to continue to deliver strong service revenues and particularly as were lapping the return to.
Pre COVID-19 levels of promotional activity that we saw at the back half of last year, particularly during the Black Friday period.
Great. Thank you very much and can <unk>. Thank you.
Thank you. The next question is.
Let's go ahead.
Yeah, Thanks very much.
Best Best to you Glenn in in your future.
Two things if I kept one I'll call clarification, you you gave a good answer on free cash flow earlier, but I have no doubt you'll you'll hit your guidance you always do but can we assume that the high end of that guidance range is starting to look a little out of reach given what we saw in the first half of them free cash flow and the second one.
Spectrum thing, we see you paid $145 million to subordinate some spectrum from exploring Quebec.
Given that it was 3500 band I assume it adds to your cap for the upcoming auction and can you clarify that and maybe tell us how many megahertz you but.
Yes, it does it does add to our cat.
Yeah, and Vince on the free cash flow.
As I provided the answer earlier significant reduced a year over year Capex spend.
And a fairly sizeable differ.
Difference in timing of installment payments and acceleration of earnings you know, we have a higher earnings profile EBIT profile on the back half of our business than we do in the front half.
All of that leads me to be very confident and as you said, we will deliver on our guidance now I would say suffice to say.
Don't see us at the high end will deliver on the guidance.
Thank you and the number of megahertz is it 20 megahertz from explore.
It varies across across the different resistant.
Okay. Thanks.
Thank you. The next question is from David.
Bank of America, Yes go ahead.
Oh, Hi, guys. Thanks for taking out of the question and it's not just sending in for Davis morning, and then Glen just wishing you all the best in retirement as well.
Mmm.
The first question is just on the strategy with the emerging plus I know, the vilanch and particularly around inclusion of five G. Plans <unk>, you mentioned that you're doing well in the premium segment.
And so I'm wondering how this.
The new version strategy and kind of helps AD or how you see it added to that or just any color would be really helpful. And then on the <unk> side. You know overage was you know a bit of a headwind as people move to a higher plan Nicholas overage I was wondering if you could put some context to that if there's how much might be remaining or how much.
How how quickly that is dissipating as people move it would just be helpful to get contacts. Thank you.
I'm at <unk> I'll I'll take the the Virgin.
Launch a question.
So really what we're trying to do a little bit building on the prior answer.
To re energize the Virgin brand recognizing that we do really well on the belt brand in the premium segment. We also want to re energize the Virgin brand in the strategy, there was making the brand more appealing and relevant to a broader base of customers, particularly newcomer. So I mean, I think that's the simplest way to.
Put it as.
<unk> five G. Just just no. It's fine now we have plans available on Virginia on five G as well as four G not.
<unk> five G plus.
It was really not much of a secret.
That we don't.
One of our competitors was willing to launch five G. On its brand. So it's always being mindful of what's to come competitively and positioning ourselves.
In that regard and and of course, there's still a price gap between the Virginia Bell brand, particularly given the premium offering that.
Belle brand continues to have.
But it's Glenn.
On your your question on our first of all I'll say I'm actually very pleased with how well our boot held up a couple of things I'll unpack. Therefore, you. We are at the point that we're no longer enjoying the tailwind of roaming that we we were I mentioned that roaming revenues drop last quarter, I think 74% I said in this quarter of their own.
Up about 35% we've reached the point now that Ah number I quoted in Q1 was that roaming revenues were now at 124% of pre COVID-19 levels, while they're at 125% this quarter. So you're seeing a slowing there it's impacting our poop as far as data overage I would say <unk>.
Modest increase.
Increase or in the decline we are down about $12 million a year over year in the quarter versus 10 in the first quarter. So it's it's not overly material when I look to the future on our ability. What gives me confidence is only 47% of postpaid subscribers are currently on our five G capable device.
As you know that we.
We see quite a double the usage.
When when people move to the five G device from from LTE. So.
That's a great opportunity for monetization and gives us confidence in the.
The growth of our poop for the future and thank you for your remarks.
Alright. Thank you so much for the answers.
Thank you.
Thank you very much good morning, unplanned best wishes for your retirement I Wonder if we could come back to fiber.
Perhaps you to your reference to 9 million target for 25 could you just update us on the the Passings here today, and I mean look and how that plays into the Capex timing and then strong that adds on the fiber site, maybe give us a sense of what bedroom here is somehow the cohorts have been behavior and what sort of penetration rates.
Are still left to get in those markets such you've been building over the last several years before they reach terminal penetration.
Thanks.
There's no material change in our long term fibre plans Simon as we said we'd get too.
The past approximately nine and a half a million homes of R 12, plus million dollars and then we have our wireless to the home footprint.
I think on on the capital side of things just to remind you.
2022 is the high watermark in spending and we'd see a natural decline through twenty-three, which you're starting to see her you will particularly see in the back up.
Decline will continue through 25, four and five.
So.
Ultimately see ourselves, reaching a point where will will reach what our strategic objective of fiber homeless past will be by the end of 25 and then your your sub 17 C I and maybe sub that 26.
And on the the penetration levels.
Well dependent now the penetration levels I mean, you can <unk>.
Like you can without getting into the specific.
Penetration levels by tenure, which which.
Quite competitive in terms of information I would say that if you look at the healthy loadings, we've had like 52000 fiber subscribers.
Really really strong or we have fiber.
And assume that our penetration.
Is very healthy where we have fiber, particularly in markets, where we've had fibre for quite a bit of time, we're getting close to kind of the the.
The objective we set for ourselves in terms of market share in each and every community.
In terms of.
How we're tracking to.
Said, we've always said for the year that we wanted to reach approximately 650000 locations and we are well on our way in the first half given the investments we've made.
And the first six months of the year and then more broadly to strategically now again.
Again, we have well articulated accelerated capex billed plan from now from really from 2021% to 2025.
We hit our targets every year since we launched the or initiated the accelerated capex billed plan.
And.
<unk> 2025, all else being equal 2025 were clearly not going to stop building, but we're going to go back to.
Build run rate that you.
You would have been used to seeing from us prior to 2019.
So that would be the plan in anywhere well on track on all of it.
The only thing that might bump us off of that plan.
As I look forward would be public policy and regulatory rulings.
Alright, Thanks, a lot.
Thanks Ma'am.
Okay.
The next question is.
Did something.
Yeah.
Thank you good morning, everyone like with the comments congrats on your tenure Glenn.
Again on the guidance, we we've talked a lot about the the pre castle guidance, but I Wanna buy a bit more on the EBITDA guidance.
You said, you're expecting catch up in the second half if you can maybe describe.
What are the drivers of that and improvement in the second half and if you can maybe specify what what's the expected and backup maybe storms and natural disasters and that.
That you have taken your guidance and versus what they seem so far.
Yeah, certainly I'll give you some some color commentary on a couple of things. One you will recall that we incurred substantive storm costs in the back off of last year.
The majority of it being Fiona about $34 million with it so that.
That.
Let's hope that that's behind US just in this quarter alone we saw quite an improvement in storm related costs, we incurred about $2 million in this quarter versus about seven or nine for the same period last yourself with a $7 million improvement.
You heard in her opening remarks that we took on a very aggressive workforce reduction program.
In the second quarter of this year naturally the benefits of that will flow in the back off and not in queue too. So that is another area of improvement and trajectory or cost.
Cost trajectory.
Inflation, we're starting to see a slowdown or at least the lapping I should say of inflationary pressures about $13 million inflationary pressures in this quarter compared to about 12 last year when I look out to the back half of this year and what we incurred last year I actually see potential for modest improvement as opposed to a headwind that we've been <unk>.
Variance in for 12 months.
And then the.
Continued fiber technology as we build fiber, we have a lower cost structure digital transformation lower cost structure.
Real estate rationalization lower cost structure handset discounting has been better with B Y O D. So all in all I think it's all hands on deck. We're we're excited about the momentum we see in the business right. Now we're excited about the health of growth in this country Merkel mentioned immigration so you'll get it from that perspective.
Back that we expect revenue growth and remain solid and I see some some pretty nice momentum in place for the cost containment that will enjoy in the second half of the year.
Great. Thank you you're welcome.
Thank you. The next question is from <unk>.
Yes.
Great. Thank you all the best for Diane as well.
One on the new loading they've been very strong can you talk about the pay grade for bundled offer as diverse as the base and the impact that you're saying Chang and on the claws transformation from media should we assume that that's fully implemented and will start to provide some outside in the second half of us will there be more elements too.
As we move ahead and <unk> can we see media margin head back to May 20 per cent.
That transformation. Thank you.
Yeah.
Costs.
Initiatives that we've taken on we're really done in the latter part of a Q too. So we really haven't enjoyed any benefits are though so <unk>.
Absolutely, we expect those benefits to kick in particularly through Q3 and absolutely in queue for to help improving media.
The media margins will return.
What we're doing in our media businesses is true transformation in the move to digital Digitization that we've already talked about advertising will return and when it does return we're going to have our assets positioned to capture.
Larger share of the marketplace than ever before I.
I remain bullish on media margins, but we're still in an advertising headwind advertisers are right now reluctant, but when I believe when that returns. We will have use this time wisely to right the ship and focus on the.
A broad suite of assets that allow us to capture greater share and over to Mark all on the front end.
On the bundling.
Pretty clear that the market is evolving more and more towards.
One where.
The customer value prop is for many customers defined by the.
The bundle and I think we're really well.
Physician when it comes to that with an ever growing fiber footprint and fibers to internet superiority and a national.
Wireless network on five G. Five G plus where were rated as the best on both those front so right there.
Attractive pricing put all those things together and it's pretty compelling.
Rice, the quality and the overlapping footprints on we keep growing the percentage of our internet customers, who take mobile and the percentage of mobile customers, who take internet and the percentage of new customers were taking both of those at the same time from us from the outset that that continues to grow it's been one of our focus areas and we have a lot of upside there.
So that's another area of opportunity for for the Bell family and brands are the BCE family of brands.
To be more precise.
Alright got it thank you.
Thank you.
Once again, please press Taiwan.
That if you have a question.
Next question.
<unk>.
Please go ahead.
Yeah. Thanks, very much for the follow up here Glenn couldn't let you go without a pension question sorry about that on the on.
On the pension solvency surplus like we we all know on this call bells in.
Or he used to put a lot of money in the into the plan because of just the punitive decline in interest rates in the solvency calculation, obviously, we're in a slightly different environment and it may get even more.
Interesting going forward. So a question is do you have give any ability to get back some of that surplus over time is there a mechanism or process, where the three and a half billion. If it gets to four $4 billion 5 billion.
Do you have any access to that question well.
All through I appreciate you letting me take one last victory.
After a career of deficits and the necessary funding to get to this position.
Curtis can thank me later.
We're in a surplus position so.
What the mechanism is easy drew is that we're allowed to take contribution holidays and and the BCE plan. The Bell, Canada plan, including D. C. So it's not just defined benefit benefit it's defined contribution as well. So the mechanism is easy we can continue to take holidays and with a deficit or excuse me a surplus the size of what we have.
116% 3.5 billion.
Have an opportunity to take surpluses for the foreseeable future.
And if your projections are true and it climbs beyond three and a half into for then.
But then I think the Curtis will be retired with a big surplus in decades ahead. So again drew thank you for everything and and thank you for giving me one last chance to brag about pensions [laughter] awesome. Thank you.
Thank you. The next question is I live in.
Kenneth.
Yeah.
Good morning, Thank you and let me off of my best wishes to Glenn as well I had a question on on the on the enterprise will be to be cited in general.
Having closed the effects innovation acquisition.
<unk> what are your thoughts on so that the.
The the headroom to make similar acquisitions and that brought us space or perhaps even your appetite and maybe connect that to save you a strategy to taking that.
The that'd be to be segment back.
Intentionally to growth at some point, maybe an update on those on those elements. Thank you.
Okay. Thank you for the questions. So.
Look I mean, our strategy on our focus and the <unk> segment is.
Really kind of three three core pillars there.
Continue to improve the customer experience for enterprise customers would be one another one would be kind of to continue to put a sharp focus on the cost structure.
That we carry to support our legacy services, which clearly our high margin, but but but declining in many respects on the legacy side. So.
And that's R.
We do that we'll be even stronger in our areas of traditional strength given our superiority in our connectivity in our distribution strength and the relationships. We have at the same time, we're going to continue to to put a focus on on future growth factors in the enterprise space and in particular.
<unk>.
Five G Iot private networks and call it the.
A little bit of a combination of the cloud business and being advisors.
Advisers, so to speak for lack of a better word being partners with our large customers and their own digital transformation journeys and that's where FX comes in so so we have we're quite optimistic about the potential in all those areas we.
Have a right to play in.
In the segments that I, just mentioned because of our core strength and connectivity and our distribution strength in our in our in our deep and long standing relationships.
<unk> plays a very important part in that in that strategy, particularly in our customers move their own moves does.
Digitally into the cloud and then we're going to keep growing that business. That's certainly what we're gonna do and we're gonna use the the effects business based here in Montreal.
As as the launchpad for future growth.
Thank you.
Thank you for that question.
I would now like to.
Thank you Giselle and thank you again to all who participated on the call. This morning as usual the IR team will be available throughout the day for any follow up questions and.
Certifications, so with that have a good rest of the day.
Thank you everyone. Thank you.
Right.
Thank you.
<unk>.
Lines of this time.
<unk>.
[noise] yeah.
One moment please.