Q2 2023 BCE Inc Earnings Call

Mirko Bibic: 5G+ service for almost half of all Canadians. Bell Wireless and Bell Pure Fibre ranked as Canada's fastest mobile internet and Wi-Fi services in Ookla's latest network performance report. With previous recognitions won by Bell, we are Canada's most awarded mobile and internet services provider. Such third-party recognition reinforces both Bell's 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 IPTV net subscriber additions, which increased 76.5% over last year to 241,516. More specifically now on wireless, we reached a notable milestone in the quarter, surpassing 10 million mobile phone subs on the back of our highest Q2 postpaid net add in 18 years.

Half of all Canadians.

Bell wireless and Bell pure fiber ranked as candidates fastest mobile internet and Wi Fi services in new clubs latest network performance report.

With previous recognitions won by Bell, where Canada's 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 241560.

<unk>.

More specifically now on wireless we reached a notable milestone in the quarter, surpassing 10 million mobile phone subs on the back of our highest Q2 postpaid net adds in 18 years.

Mirko Bibic: Collectively, total mobile phone and connected device net activations were up 86% over last year to 205,076, driving healthy service revenue growth of 4.4%. Going forward, population growth, penetration headroom, the ongoing transition to 5G and bundling wireless with internet service should continue to support strong subscriber-based expansion, not just for Bell, but for the entire industry. 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 and the Institute for Canadian Citizenship to provide newcomers with Bell telecom services, and offering unlimited nationwide data usage plans with 5G access at affordable prices on the newly rebranded Virgin Plus.

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, the ongoing transition to five G and bundling wireless with Internet service should continue to support strong subscriber base expansion not just for bell.

But 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 on the newly rebranded Virgin plus.

Mirko Bibic: Of particular note regarding Virgin, we recently completed the repositioning of the brand, as I mentioned, which includes a fresh new look and new value prop centered around pillars of affordability, member rewards, inclusiveness, and network quality. In residential wireline, as our footprint advantage keeps expanding, we're driving stronger subscriber loadings. We added 52,148 new net fiber to the home customers in Q2. That's up 38% over last year. Of these, approximately 70% subscribe to Gigabit+ speed tiers. In fact, 20% of all new fiber customers in the month of June activated a 3 Gigabit plan driven by successful F1 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.

A particular note regarding Virgin we recently completed the repositioning of the brand as I mentioned, which includes a fresh new look a new value prop centered around pillars of affordability member rewards inclusiveness and network quality.

In residential wireline as our footprint advantage keeps expanding where expect 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 approx.

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.

Mirko Bibic: Our growing base of fibre customers, which now accounts for more than 60% of Bell's retail residential internet customer base, combined with speed upgrades and an improving tier mix, given fibre's 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 decreasing prices despite persistent inflation. According to the most recent StatsCan data, the price of all goods and services in aggregate across the Canadian economy has increased 2.8% over the past year, while the cost of cellular and internet access services has declined 14.7% and 3.2% respectively. I'll now turn to media.

Our growing base of fiber customers, which now accounts for more than 60% of Bell's retail residential internet customer base combined with speed upgrades and an improving tier mix given <unk>.

Fiber superior customer experience contributed to 7% Internet revenue growth in Q2.

And 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 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.

Mirko Bibic: Despite an advertising recession across North America that 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. More notably, at our upfront presentation in June, we announced a number of major additions and expansions to our ad offering, 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 Fibe TV app. We're the first Canadian broadcaster to bring addressable TV on linear channels to market through a BDU.

Despite an advertising recession across North America that 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 at 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 App were the first Canadian Broadcom.

Foster to bring addressable TV on linear channels to market through a btu.

Mirko Bibic: 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 Crave and addressable TV ads, we've also introduced a new analytics product, 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 Move 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.

This will enable advertisers to target ads to specific household 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 product Bell attribution insights, which provides advertisers with interactive reporting on campaign effectiveness across bell media platforms as well as further enhancements to our SaaS sales tool, which grew revenue 30% this quarter.

On the customer service front now we leverage.

<unk> innovative bell apps and online support tools, including move 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.

Mirko Bibic: 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 deck for an overview of some key operating metrics for Q2. Let's begin with Bell Wireless, where you see we've added 111,282 new net postpaid mobile phone subscribers. That's up 34%, excuse me, up 34% from last year. As I mentioned a little bit earlier, that's our best Q2 performance in 18 years, and it's a clear highlight in the quarter. That result was driven by 30% higher gross activations.

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 deck for an overview of some key operating metrics for Q2, let's.

Let's begin with Bell wireless where you see we have added 111 to.

111282, new net postpaid mobile phone subscribers, that's up 30%, 34% excuse me.

Up 34% from last year, and as I mentioned, a little bit earlier Thats, our best Q2 performance in 18 years and its a clear highlight in the quarter.

That result was driven by a 30% higher gross activations again that reflects robust immigration growth continued five gene multi product bundling momentum increased penetration of second line subscriptions and we effectively executed on promotional offers in what was a competitive market.

Mirko Bibic: Again, that reflects robust immigration growth, continued 5G and multi-product bundling momentum, increased penetration of second-line subscriptions, and we effectively executed on promotional offers in what was a competitive market. You'll see that our customer churn was up year over year, but that reflects greater market activity with a step up in competitive intensity. Our churn remains well below pre-pandemic levels at 0.94%. Our ARPU 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 plans, 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 recovery period.

Youll 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 94%.

Our <unk> was essentially unchanged compared to last year and Thats. A good result, given some of the competitive pricing pressures. We saw in Q2, particularly on larger capacity data plans, 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.

Mirko Bibic: Notably, the monthly recurring charge portion of ARPU remained stable, the direct result of more subscribers on premium 5G rate plans. At the end of Q2, 47% of postpaid customers were on 5G capable devices, and that's up from 30% just last year. For mobile connected devices, we realized 79,537 new net activations, and that's a year-over-year increase of nearly 80,000, showing strong customer demand for Bell IoT solutions, including business solutions and connected car subscriptions. Let's move to wireline. Again, we delivered our highest Q2 retail internet net add since 2007. That's up 10.2% over last year to almost 25,000, and that reflects a higher number of legacy DSL subscriber losses in our copper service areas.

Notably the monthly recurring charge portion of <unk> remained stable.

The direct result of more subscribers on premium $5 rate plans and at the end of Q2, 47% of postpaid customers were <unk> capable devices and thats up from 30% just last year.

For mobile connected devices, we realized 79537, new net activations and Thats a year over year increase of nearly 80000 <unk>.

<unk> strong customer demand for Bell Iot solutions, including business solutions and connected car subscriptions.

Now, let's move to wireline.

We delivered again, we delivered our highest Q2 retail internet net adds since 2007.

That'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.

Mirko Bibic: However, as I mentioned earlier, if we look just at the performance within our FTTH footprint, you'll see the net add of 52,000 demonstrates very clearly the market share gains we're making wherever we have fiber. It was also another very good quarter for Bell IPTV, which added 11,506 net new subscribers. That's three times higher than last year as we continue to benefit from the pull-through effect of Bell Pure Fibre internet and of course, our TV product leadership. Satellite TV net customer losses increased, as you see, driven by higher competitive promotional offer intensity and home phone net losses improved 6%. Now back to Bell Media, just for a brief moment. As I referenced, advertising market remained difficult again in the quarter, while digital growth was strong.

However, as I mentioned earlier.

And it was also another very good quarter for Bell IP, 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 and home phone net losses improved 6%.

Now back to Bell media just for a brief moment.

As I referenced advertising market remained difficult again 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.

Mirko Bibic: Underpinning the digital growth was Crave and TSN streaming subscribers, as well as a 30% increase in revenue from our SAM sales tool. With respect to Crave specifically, our subscribers were up 5% over last year to approximately 3.2 million. That was supported by a 27% increase in direct-to-consumer streaming subscribers, while TSN 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 F1 audience on record across all Bell Media platforms. As far as 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.

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 TSN 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 F. One audience on record across all Bell media platforms.

Mirko Bibic: On the French language TV front, Noovo saw a significant 17% increase in full-day audiences in the key 25 to 54 demographic in Q2, even as the overall French conventional TV market declined 10%. Net, that drove a five-point market share gain for Noovo over our competitors, and RDS was once again the top-ranked non-news specialty channel among all viewers benefiting, as I mentioned, from the Canadian Grand Prix as well as the Memorial Cup hockey tournament. In summary, I want to thank the Bell team for their efforts in Q2. Our performance demonstrates that the game-changing investments that we've been making over the last several years, together with a laser-sharp focus on our core business where further meaningful growth opportunities await, are bearing fruit.

Mirko Bibic: That said, we need to continually focus on day-to-day execution, which includes, in particular, aligning our cost structure with the revenue profiles of each of our operating segments. At the same time, we'll closely monitor developments in the regulatory arena as they relate to policy decisions regarding our fiber investments and further developments regarding Bill C-11 and C-18. Further on the media front, more needs to be done by the CRTC faster. The ecosystem in Canada is under severe stress and requires urgent government assistance. When massive US companies with global scale and global footprints are having extreme difficulty contending with the difficult advertising markets, you have to ask how Canadian broadcasters are expected to navigate it when the regulatory playing field does not present an environment where the same rules apply to all.

We need to continually focus on day to day execution, which includes in particular aligning our cost structure with the revenue profiles of each of our operating segments.

And at the same time will closely monitor developments in the regulatory arena as they relate to policy 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.

Mirko Bibic: Though it's encouraging to see the federal government trying to help out on the news side of things and the industry at large pushing back against the very aggressive moves by Meta and Google, more needs to be done. Before closing, I wanted to address recent media reports out of the US concerning lead-covered cables and legacy telco copper networks. This makes up a very small percentage of Bell's overall wireline infrastructure, with only 0.36% of our network still containing lead. Bell transitioned away from installing lead-covered copper cables in the 1960s when we began to deploy plastic polymers in place of lead for the majority of our cable deployment. Since the mid-2000s, Bell has also been replacing these copper cables with fiber.

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>.

Crescive 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 <unk>.

Since the mid two thousands bell has also been replacing these copper cables with fiber.

Mirko Bibic: As we upgrade our network from copper to pure fiber, we have been removing any lead-containing components in active construction areas where feasible and safe to do so, in line with established safe handling protocols. With that, and for the last time before he retires as CFO at the end of the month, I'll turn the call over now to Glen, who will provide more details on our Q2 financial results. On behalf of all members of the Bell team, I'd like to thank Glen once again and to extend my heartfelt gratitude for all your contributions, your leadership, Glen, and your invaluable counsel in helping this great company move forward year after year. You'll be sorely missed.

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 protocols.

With that in.

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 decline in your invaluable council and helping this great company.

Move forward year after year, you will be sorely missed.

Glen LeBlanc: Good morning, everyone, thank you, Mirko, 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. I will be keenly watching from the sidelines as the next generation of leaders take Bell to the next level. Now for the last time as CFO, on to the results. In what has become a hallmark for the company, another quarter of consistent and focused execution that delivered strong 3.5% consolidated revenue growth and 2.1% higher adjusted EBITDA.

Good morning, 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.

I 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 $3, 5% consolidated revenue growth and 2.1% higher adjusted EBITDA.

Glen LeBlanc: This was achieved despite ongoing media advertising headwinds Mirko mentioned, and a step up in competitive intensity across all our consumer product lines, and a B2B sector that has not yet fully recovered from the global supply chain disruptions experienced over the past couple of years. Despite the positive EBITDA contributions from operations, net earnings and statutory EPS were down year-over-year due to a CAD 377 million non-cash loss on BCE's 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 higher depreciation and amortization, reflecting the rapid growth in our broadband capital assets.

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.

Glen LeBlanc: As for free cash flow, it was down approximately CAD 300 million 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 advance some spending earmarked for later in the year given favorable construction conditions this past spring. In line with our internal forecast and consistent with our guidance target for 2023, we expect a much stronger free cash flow trajectory in H2, with a minimum CAD 300 million favorable year-over-year swing coming from just CapEx alone.

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.

Glen LeBlanc: Let's turn to our Bell CTS segment on slide eight, where total revenue was up a very healthy 4.3% 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 of some of the best Q2 mobile phone and retail internet subscriber metrics, as Mirko mentioned, in well over 15 years. The year-over-year growth in revenue also reflected a much improved B2B performance trajectory supported by the increased project spending by large enterprise customers, which strengthened as a result of the improvement in data equipment availability compared to the shortages that we experienced last year, as well as the financial contribution from our recent acquisition of cloud services provider, FX Innovation.

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.

Metrics as Merkel mentioned and well over 15 years.

The year over year growth in revenue also reflect on a much improved <unk> performance trajectory <unk>.

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 FX innovation.

Glen LeBlanc: The ongoing recovery in the business data equipment sales, together with increased sales of higher-valued mobile phones, yielded a 21.5% growth in Bell CTS product revenue this quarter. The combined impact of the continued consumer strength across our wireless and residential home services, together with improved business wireline results and lower year-over-year weather-related pressures, drove improved EBITDA growth of 2.8% this quarter. Let's move over to Bell Media on slide 9. Against the backdrop of the ongoing ad recession in North America, Bell Media's revenue decline in Q2 was still only 1.9%. This represents a much better performance than our media peers, which is a testament to the team's strong execution, our diversified asset mix, programming strength, and the success of our digital-first media strategy.

The 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 the proved 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.

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 than 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.

Glen LeBlanc: Advertising revenue was down 9% owing to a continued soft 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-consumer streaming growth. Consistent with the year-over-year decline in advertising this quarter, EBITDA decreased 5.3%. Although that may appear to be a decent result under current economic conditions, we in our 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 platforms, content cost inflation, and a more challenging regulatory environment that is not adapted to the new realities facing media.

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 platforms.

Content cost inflation and more challenging regulatory environment that is not not adapted to the new realities facing media.

Glen LeBlanc: This has required us to rightsize our operating cost structure and 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 in 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 remain quite well-positioned with more than CAD 4.4 billion of available liquidity at the end of Q2, which is bolstered by a US $850 million public debt issuance during the quarter. Our debt maturity schedule also remains well-structured, with an average debt to maturity of approximately 12 years and an after-tax cost of debt that is well below prevailing interest rates at just under 3%.

This is required us to 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%.

Glen LeBlanc: Moreover, we have no outstanding financing requirements for the balance of this year, as all 2023 debt maturities have already been pre-financed. With a strong pension solvency surplus totaling CAD 3.5 billion and 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 spectrum auction later this year. Lastly, I wanted to highlight Bell's continued leadership in ESG financing structures with the launch of our first sustainability-linked derivative this past May. This follows the announcement of our sustainable financing framework in April 2021, Bell's inaugural CAD 500 million sustainability bond offering in May 2021, and the conversion of our CAD 3.5 billion committed facilities to a sustainability-linked loan last November.

Moreover, we have no outstanding financing requirements for the balance of this year is all 2023 that maturity's have already been pre financed.

And with a strong pension solvency surpluses 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.

Glen LeBlanc: We look forward to a follow-on sustainability bond issuance in the future when the right mix and size of eligibility investments within our framework are available. Let's wrap up on slide 11 with consolidated financial results delivered in the first 2 quarters that are in line with budget, together with the strong projected EBITDA and free cash flow trajectories in the H2 that are underpinned by our strong operating momentum across the business and our consistent proven execution in a competitive marketplace. I am reconfirming all our guidance targets for 2023. On that note, I'll turn the call back over to you, Zain.

80 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 with the strong projected EBITDA and 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>.

Editor 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.

Thane Fotopoulos: Thank you, Glen. To keep the call as efficient as possible, please limit yourselves to one question and 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. Before I hand it over to the operator, I just wanted to take the opportunity to say to Glen what a privilege and pleasure it's been to work with you. You are a great leader and mentor, and I'm grateful for all the guidance, support, and encouragement you have provided. Above all, what I have valued most is your kindness, trust, and friendship. With that, Giselle, we're ready to take our first question.

However, before I hand, it over to the operator I just wanted to take the opportunity to say to Glenwood, a privilege and pleasure. It's been to work with you you are a great leader and mentor and I'm grateful for all the guidance support and encouragement you have provided but above all when I have valued most is your kindness trust and friendship with Thatcher result, we're ready to take our first question.

Operator: Thank you. We will now take questions from the telephone lines. If you have a question and you are using a speakerphone, please leave your handset before making your selection. If you have a question, please press star one on your device's keypad. You may cancel your question at any time by pressing star two. Please press star one at this time if you have a question. There will be a brief pause while participants register for questions. Thank you for your patience. The first question is from Maher Yaghi from Scotiabank. Please go ahead.

Thank you.

If you had a question.

Okay.

Yeah.

Yeah.

Two.

Okay.

Yeah.

Okay.

Yankee.

Please go ahead.

Maher Yaghi: Great. Thank you for taking my questions. I do want to say, Glen, thank you for all your support over the many years that we've known each other. You'll definitely be missed. Maybe I'll start with my first question. Mirko, I recognize that BCE is in the middle of an FAO regarding MVNO with Quebecor, but I'm interested in getting your reaction to the announced MVNO ruling by the CRTC on the Rogers and Quebecor MVNO tariff. More specifically, on the basis and precedent that the CRTC has chosen to arrive at this tariff calculation and its costing analysis. Just a follow-up question on free cash flow to Glen, I guess.

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 E as in the middle of <unk> regarding <unk>.

But I'm interested in getting your reaction to the announced M. B a no looming.

C. R D C on the Rogers and Khirbet Gore M. B a note terrace.

More specifically on the basis and precedents that the C. R. D. C has chosen to arrive at the status calculation.

And it's costing analysis and just the follow up question on free cash flow the Glen I guess.

Maher Yaghi: BCE has delivered year after year on its guidance targets. I'm not implying any issues here. When I observe your free cash flow generation, it's down 46% in H1, and your outlook is for growth of 2% to 10%. Lots of moving parts, I'm sure. CapEx, as you mentioned, is a big point here in the recovery. Could you help us bridge the results to date and how we're going to get to the 2% to 10% growth? Thank you.

B 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, that's down 46% in the first half.

And your outlook for growth substitute the 10% lots of moving parts I'm sure Capex as you mentioned is a big.

Bitcoin here and 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.

Glen LeBlanc: Yeah, I'll start, Maher, and thank you for your remarks. As I said in my opening statement, we will spend more than CAD 600 million spending in H2, but less than last year. If you look at our spending trend in 2022, we spent over CAD 3 billion in H2 2022, and that'll be more than CAD 600 million lower. Add to that the associated impacts to working capital that that lower spend will do. We have lower cash tax installments in H2. We are confident that we will deliver on the guidance provided.

Yeah, I'll start <unk> and thank you for your remarks.

As I said in my in my opening statement, we will spend more than.

$600 million spending in the back half 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.

Glen LeBlanc: I know that historically we probably have a smoother free cash flow profile than we have this year, but it really was a product of us taking the opportunity to spend heavily on the H1 of this year to really, you've heard me say it before, you make hay in this business when the sun shines. That's where we're at. I remain confident, Maher, and over to Mirko for the second part of the question.

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.

<unk> before you make in this business when the Sunshine. So that's where we're at I remain confident mayor and over to Morocco for the second.

Mirko Bibic: Good. Thanks, Glen. Good morning. On the MVNO decision, Well, I know you're referring to the MVNO decision recently handed down relating to two other providers. Maher, it's hard to comment because we obviously don't know the rates that were at play or the offers that were made in that final offer arbitration, because the details are confidential. It's kind of hard to make any predictions as to 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 winning offer was chosen, and I think they're attention-grabbing in my mind because they do break from how things have been done in the past.

Part of the question Thanks, Glenn Good morning.

So on the on the envy of no decision I think you're probably referring to these while I know you're referring to the <unk> decision recently handed down relating to too.

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.

Kind of how things have been done in the past, but but my sense of it is that it for those comments must have been made.

Mirko Bibic: My sense of it is that those comments must have been made within the confines of the facts presented to the CRTC in the sense of the offers made. Otherwise, if we're to read those comments on appropriate costing as a signal for what will more broadly come in the future, I think the implications of that could be pretty far-reaching. Again, now I'm going to pivot from wireless to wireline. We spent so much time quarter after quarter, and in all our public communications, talking about our accelerated CapEx program and trying to get to close to 9 million fiber locations done by 2025. You kind of repeat that over and over again. It almost kind of start thinking that the job is done at the end of 2025.

Within the confines of the facts.

Presented to the Crt's C. In the sense of the offers made.

Because otherwise if it were to read those comments on appropriate costing as a signal for.

Well 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 and all of our public communications talking about R accelerated Capex programme 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 <unk>.

Mirko Bibic: 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, there will be 5 million locations, mostly households in Bell's operating footprint. That's just from Manitoba to Newfoundland, 5 million locations left to cover, and that's what really worries me, and that's what's at risk. Fundamentally, I'm veering off on a bit of a tangent here, Maher, but I think the public policy government and regulators in Canada are really going to have to decide what the priority is.

$9 million locations done it will be 5 million locations, mostly households in bells operating footprint. So that's just for Manitoba, and 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 of a.

On a bit of a tangent here Marvin but I think the public policy government and regulators in Canada really going to have to decide what what the priority is it to get the job done for all Canadians in terms of coverage.

Mirko Bibic: Is it to get the job done for all Canadians in terms of coverage, or is it to continue to implement decisions with the view of driving down pricing even further, but in an overall environment where pricing has been well handled by market forces, frankly, if you look at the direction of pricing and quality over the last very short period of time? I'll stop there.

Or is it to continue to.

Implement.

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 the direction of pricing and quality over the last very short period of time.

I'll stop there.

Maher Yaghi: No, you actually veered right where I wanted you to veer, because fiber to the home is essential for your future growth. Thank you for those remarks.

Oh, you're actually right, where I wanted to put <unk> cause fiber to the home is essential for your future growth. So thank you for those remarks. Thank.

Mirko Bibic: Thank you.

Glen LeBlanc: Next question, please.

Thank you.

Next question please.

Operator: Thank you. Next question is from Drew McReynolds from RBC. Please go ahead.

Thank you.

Next question is.

True.

B C.

Drew McReynolds: Thanks very much, good morning and all the best, Glen. I wish you well. Couple for me. Just first on Bell Media, actually. Mirko, you made a lot of progress digitizing this asset, the asset clearly punches above its weight, certainly in the media landscape here in Canada. When you look at the digital revenue contribution, how do you want that to trend, let's say, over the next two to three years? I know there's a ton of moving parts, just what are your expectations there? Secondly, shifting to wireless. We've seen, 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 whether we saw some of that in Q2. Thank you.

Yeah, Thanks, very much and good morning, and all the best Glenn.

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.

Mirko Bibic: Yes. On the wireless side, clearly there's a population surge in Canada that's not about to abate anytime soon. We certainly do well in the premium segment. That's one category we do really well in. We do quite well in the switcher market, for lack of a better way of putting it. Customers who are going to switch from one provider to another. I think we do quite well in that segment. On the newcomers to Canada segment, we're doing okay. I think we need to do better, and we will do better. We've been pretty open about some of the initiatives we've put in place to get a bigger share of that segment of the market. That's just the early days on some of those new initiatives.

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 so thats months category, we do really well and we do quite well in the switch.

Which are 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 newcomers to Canada segment.

We're doing okay.

We we need to do better and we will do better and we.

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.

Mirko Bibic: I don't think you're really seeing in the very strong results we presented in Q2, really the cruising. We're not at cruising altitude, let's just say, on those initiatives, there's more upside there. Part of that is the relaunch of Virgin Plus. While it's early days, it's only a couple of weeks, some positive momentum in just 2 weeks on the Virgin relaunch, although that's a Q3 phenomenon because it was done in July. I'll leave it at that, Drew, on those elements. On media, look, I think the direction is, where do I want to end up here? We want to continue to pivot very strongly towards digital. We've been talking about this for about 3 years, and I really like the momentum we're driving here on that strategy. The pillars really, where do we derive our revenues?

And a very strong results we presented in Q2.

Really the cruising we're not at cruising altitude, let's just say on those initiatives. So there's more upside there.

And part of that is.

Kind of a relaunch of Virginia, plus and while it's early days, it's only a couple of weeks.

Positive momentum and just two weeks.

On the Virgin relaunch, although that's that's the 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 want to.

You want to 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 our revenues we derive our revenues from subscription.

Mirko Bibic: We derive our revenues from subscription and advertising. On the advertising front, we've put in place a lot of tools to enable advertisers to choose us for their digital and targeted ad needs, and that's only going to get better with addressable TV. On the subscription side of things, again, it's making sure we always have the very best premium content and making sure that content is available on the digital platforms that we have, that we're going to continue to improve from a user experience perspective. The growth pillars for Bell Media going forward are really going to be Crave, the CTV and Noovo apps, and TSN and RDS Direct. Those are the growth pillars.

And 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.

Add 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 Rds direct those are the growth pillars.

Drew McReynolds: That's great. Thank you.

That's great. Thank you.

Operator: Thank you. The next question is from Stephanie Price, CIBC. Please go ahead.

Thank you.

C I B C.

Stephanie Price: Hi. Good morning. Just hoping you could talk a little bit about the sustainability of service revenue growth as we head into the back half of the year. Just curious how you think about the more competitive back to school and the holiday periods. Just my follow-up, just curious about how we should think about the enterprise piece of the business heading into the back half of the year. It sounds like the equipment availability has maybe started to improve a bit here.

Hi, good morning.

Hoping you could talk a little bit I bet. This is the ability of service from any grass.

The back half of the year.

How you think about the more competitive school and holiday periods.

And then just my follow up just curious about how we should think about the enterprise.

Heading into that kind of fear it sounds like the equipment to availabilities, maybe trying to improve with an ear.

Glen LeBlanc: Yeah, I'll handle the H2 on enterprise. Stephanie, it's Glen. Yeah, we're feeling pretty good. We're actually starting to see projects from our large enterprise customers get 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-pandemic, a heck of a lot better than it's been in the last number of years. 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 kicking off. You're seeing it in our product revenue growth that we had in this quarter. I remain pretty confident that the H2 will see some additional momentum that the H1 didn't.

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 and when people start talking about recession, we're not seeing any of that projects 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 didn't.

Mirko Bibic: Yeah. On the broader kind of competitive landscape and revenue growth, which I am going to interpret as service revenue growth, Stephanie, look, I think if you look at what we delivered in Q2 with the very strong mobile phone and retail internet subscriber growth, you'll see that that came with quite healthy service revenue growth on residential internet at 7% and wireless service revenues at 4.4%. Those are strong numbers and 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 Q2. I won't repeat what Glen said to any great degree on the business side. We are also seeing service solution revenue strength, decent strength there.

And then on the broader.

Competitive landscape and revenue growth, which interpret a service revenue growth Stephanie.

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 <unk>.

Service solution.

Revenue.

Mirko Bibic: You put all those things together and then you look ahead to H2 of the year, I think we're going to continue to deliver strong service revenues, and particularly as we're lapping the return to pre-COVID levels of promotional activity that we saw at H2 of last year, particularly during the Black Friday period.

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 <unk>.

Pre COVID-19 levels of promotional activity that we saw at the back half of last year, particularly during the Black Friday period.

Stephanie Price: Great. Thank you very much, and congrats Glen, on the retirement.

Great. Thank you very much and congrats on the retirement thank.

Glen LeBlanc: Thank you.

Operator: Thank you. Next question is from Vince Valentini, TD Cowen. Please go ahead.

Thank you.

Thank you. The next question is.

Okay.

Vince Valentini: Yeah, thanks very much, and best to you, Glen, in your future. Two things, if I can. One, I'll call a clarification. You gave a good answer on free cash flow earlier, but I have no doubt 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 H1 on free cash flow? The second one, this spectrum thing. We see you paid CAD 145 million to subordinate some spectrum from Xplor in Quebec. Given that it was 3,500 band, I assume it adds to your cap for the upcoming auction. Can you clarify that and maybe tell us how many megahertz you bought?

Yeah, Thanks very much.

Best Best to you Glenn 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.

The spectrum thing, we see you paid $145 million.

To subordinate some spectrum from exploring Quebec given.

Given that it was 3500 band I assume it adds to your cap for the upcoming auction can you clarify that and maybe tell us how many megahertz schmuck.

Mirko Bibic: Yes, it does add to our CapEx.

Yes, it does it does add to our cat.

Glen LeBlanc: Yeah. Vince, on the free cash flow, as I provided the answer earlier, significant reduced year-over-year CapEx spend, a fairly sizable difference in timing of installment payments and acceleration of earnings. You know we have a higher earnings profile, EBITDA profile in the H2 of our business than we do in the H1. All of that leads me to be very confident, as you said, we will deliver on our guidance. Now I would say, suffice to say, I don't see us at the high end, but we'll deliver on the guidance.

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 have 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.

Vince Valentini: Thank you. The number of MHz, is it 20 MHz from Xplornet?

Thank you and the number of megahertz or is it 20 megahertz from explore.

Mirko Bibic: It varies across the different regions, Vince.

Mhm.

Across across the different resistant.

Vince Valentini: Okay, thanks.

Okay. Thanks.

Operator: Thank you. The next question is from David Barden, Bank of America. Please go ahead.

Thank you. The next question is from David.

Bank of America, Okay, Let's go ahead.

Matthew Griffiths: Hi, guys. Thanks for taking the question. It's Matt, just subbing in for Dave this morning. Glen, just wishing you all the best in retirement as well.

Oh, hi, guys. Thanks for taking out of the question.

Just studying and for Davis morning, and then Glen just wishing you all the best in retirement as well.

Glen LeBlanc: Thank you.

Matthew Griffiths: My first question is just on the strategy with Virgin Plus and the relaunch, and particularly around the inclusion of 5G plans. I know Mirko, you mentioned that you're doing well in the premium segment. I'm wondering how the new Virgin strategy kind of helps that, or how you see it adding to that, or just any color would be really helpful. On the ARPU side, overage was a bit of a headwind as people move to higher plans and they have less overage. I was wondering if you could put some context to that. How much might be remaining, or how quickly that is dissipating as people move? It would just be helpful to get context. Thank you.

Mmm.

The first question is just on the strategy with the emerging plus the Vilanch and.

Lee around inclusion of five G plans.

<unk> you mentioned that you are doing well in the premium segment.

And so I'm wondering how this.

The new version strategy kind of helps AD or how you see it added to that or just any color would be really helpful. And then on the inside you know.

Overage was a bit of a headwind as people move to a higher plan may bless overage I was wondering if you could put some context to that if there is 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.

Mirko Bibic: Hi Matt, Mirko. I'll take the Virgin relaunch question. Really what we're trying to do, a little bit building on the prior answer, it's to reenergize the Virgin brand, recognizing that we do really well on the Bell brand in the premium segment here. We also want to reenergize the Virgin brand. The strategy there was making the brand more appealing and relevant to a broader base of customers, particularly newcomers. I think that's the simplest way to put it. As for 5G, just note, now we have plans available on Virgin on 5G as well as 4G. Not 5G+. It was really not much of a secret that one of our competitors was going to launch 5G on its brand. It's always being mindful of what's to come competitively and positioning ourselves in that regard.

<unk> I'll I'll take the Virgin relaunch.

Question.

So really what we're trying to do a little bit building on the prior answer it's 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 newcomers so I mean, I think that's the simplest way to put it.

As for five G. Just just no. It's fine now we have plans available on Virginia on five G as well as four G.

Not five G plus and it was really not much of a secret.

That.

One of our competitors was going to launch.

Five G on on its brand so it's always being mindful of what's to come competitively and positioning ourselves.

Mirko Bibic: Of course, there's still a price gap between the Virgin and the Bell brand, particularly given the premium offering that the Bell brand continues to have.

In that regard.

And of course, there's still a price gap between the Virginia Bell brand, particularly given the premium offering that at the Bell brand continues to have.

Glen LeBlanc: Matt, it's Glen. On your question on ARPU, first of all, I'll say I'm actually very pleased with how well ARPU held up. A couple things I'll unpack there for you. We are at the point that we're no longer enjoying the tailwind of roaming that we were. I mentioned that roaming revenues are up. Last quarter, I think 74%, I said, and this quarter they're only up about 35%. We've reached the point now that a number I quoted in Q1 was that roaming revenues were now at 124% of pre-COVID levels. Well, they're at 125% this quarter. You're seeing a slowing there that's impacting ARPU. As far as data overage, I would say a modest increase or in the decline. We are down about CAD 12 million year-over-year in the quarter versus CAD 10 million in Q1. It's not overly material.

God, It's Glenn.

On your <unk>.

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 along packed. 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 there were only 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 a modest.

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 Boo and what gives me confidence is only 47% of postpaid subscribers are currently on our five G capable device and.

Glen LeBlanc: When I look out to the future on ARPU and what gives me confidence is only 47% of postpaid subscribers are currently on a 5G capable device. As you know, we see quite double the usage when people move to the 5G device from LTE. That's a great opportunity for monetization and gives us confidence in the growth of ARPU for the future. Thank you for your remarks, Matt.

As you know that.

We see quite a double the usage.

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 in the growth of our approved for the future.

And thank you for your remarks.

Matthew Griffiths: All right. Thank you so much for the answers.

Alright. Thank you so much for the answers.

Operator: Thank you. Next participant, Simon Flannery from Morgan Stanley. Please go ahead.

Okay.

Thank you.

Please.

Simon Flannery: Thank you very much. Good morning. Glen, best wishes for your retirement. I wonder if we could come back to fibre. Perhaps you referenced the 9 million target for 2025. Could you just update us on the passings here to date and the outlook and how that plays into the CapEx timing? Strong net adds on the fibre side. Maybe give us a sense of what the headroom here is and how the cohorts have been behaving, what sort of penetration rates are still left to get in those markets that you've been building over the last several years before they reach terminal penetration. Thanks.

Thank you very much good morning, unplanned best wishes for your retirement I Wonder if we could come back to fiber.

Perhaps you 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 side maybe.

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.

Glen LeBlanc: There's no material change in our long-term fiber plans, Simon. As we said, we get to pass approximately nine and a half million homes of our 12+ million, and then we have our wireless to the home footprint. I think on the capital side of things, just to remind you, 2022 was the high water mark on spending, and we'd see a natural decline through 2023, which you're starting to see, or you will particularly see in the back half. That decline will continue through 2024 and 2025. We ultimately see ourselves reaching a point where we'll reach what our strategic objective of fiber homes passed will be by the end of 2025. Your sub 17 CI and maybe sub that in 2026.

Thanks.

There is no material change in our long term.

Fibre plans Simon as we said, we'd get to the past approximately nine and a half.

And homes of R 12, plus million dollars and then we have our wireless to the home footprint.

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 are starting to see her you will particularly fee and the backup.

And decline will continue through 25, four and five.

So.

We 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, Ci and maybe sub that 26.

Simon Flannery: On the penetration levels?

And on the penetration levels.

Glen LeBlanc: Well, the penetration levels, without getting into the specific penetration levels by tenure, which is quite competitive in terms of information.

Dependent on the penetration levels I mean.

We can without getting into the specific penetration.

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.

Mirko Bibic: I would say that if you look at the healthy loadings we've had, like 52,000 Fibre subscribers and really strong where we have Fibre, you can assume that our penetration is very healthy where we have Fibre, particularly in markets where we've had Fibre for quite a bit of time. We're getting close to the objective we set for ourselves in terms of market share in each and every community. In terms of how we're tracking, we've always said for the year that we wanted to reach approximately 650,000 locations, we're well on our way in H1, given the investments we've made in the first six months of the year. More broadly, just strategically now, again, we have well-articulated accelerated CapEx build plan from now, really from 2021 to 2025.

Really really strong or we have fiber.

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.

Of how we're tracking to we 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, we have well articulated accelerated capex billed plan from now from really from 2021% to 2025.

Mirko Bibic: We've hit our targets every year since we launched or initiated the accelerated CapEx build plan. Post 2025, all else being equal, post 2025, we're clearly not going to stop building, but we're going to go back to a build run rate that you would've been used to seeing from us prior to 2019. That would be the plan, and I think we're 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.

We've hit our targets every year since we launched the or initiated the accelerated capex billed plan.

And.

Post 2025, all of being equal of 2025 were clearly not going to stop building, but we're going to go back to.

Build run rate that.

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.

Only thing that might bump us off of that plan.

As I look forward would be public policy and regulatory rulings.

Simon Flannery: Okay. Thanks a lot.

Alright, Thanks, a lot.

Mirko Bibic: Thanks, Sam.

Operator: Thank you. The next question is from Jérôme Dubreuil, Desjardins. Please go ahead.

Thanks Ma'am.

Mhm.

Next question is.

Okay. Let's go ahead.

Jérôme Dubreuil: Thank you. Good morning, everyone. I'll echo the comments. Congrats on your tenure, Glen. On the guidance, we've talked a lot about the free cash flow guidance, but I want to dive a bit more on the EBITDA guidance. You said you're expecting catch-up in H2. If you can maybe describe what are the drivers of that improvement in H2, and if you can maybe specify what's the expected impact of maybe storms and natural disasters that you have baked in your guidance and versus what we've seen so far.

Thank you good morning, everyone local to comments congrats on your tenure Glenn.

Again 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 an improvement in the second half and if you can maybe specify what what's the expected and bags of maybe storms and natural disasters that you have taken your guidance and versus what they seem so far.

Glen LeBlanc: Yeah. Certainly, I'll give you some color commentary on that. A couple things. One, you will recall that we incurred substantive storm costs in the H2 of last year, with the vast majority of it being Fiona, about CAD 34 million with it. Let's hope that that's behind us. Just in Q2 alone, we saw quite an improvement in storm-related costs. We incurred about CAD 2 million in Q2 versus about CAD 7 million or CAD 9 million for the same period last year, so about a CAD 7 million improvement. You heard in our opening remarks that we took on a very aggressive workforce reduction program in Q2 of this year. Naturally, the benefits of that will flow in the H2 and not in Q2. That is another area of improvement in trajectory or cost trajectory.

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 vast majority of it being Fiona about $34 million with it so.

That.

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 year, so about a $7 million improvement.

You heard in our 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 on the back off and not in queue too. So that is another area of improvement and trajectory or costs.

Mirko Bibic: Inflation, we're starting to see a slowdown or at least a lapping, I should say, of inflationary pressures, about CAD 13 million inflationary pressures in this quarter compared to about CAD 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 headwind that we've been experiencing for 12 months. 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 BYOD. All in all, I think it's all hands on deck. We're excited about the momentum we see in the business right now. We're excited about the health of growth in this country, as Mirko mentioned immigration.

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 experience.

For 12 months.

And then.

The continued fiber technology as we build fiber we have a lower cost structure, the 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 were excited about the momentum we see in the business right. Now we're excited about the health of growth in this country is merkle mentioned immigration. So you get it from that person.

Glen LeBlanc: You get it from that perspective, we expect revenue growth to remain solid, and I see some pretty nice momentum in place for the cost containment that we'll enjoy in the H2 of the year.

Specter of we expect revenue growth and remained 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.

Jérôme Dubreuil: Great. Thank you.

Glen LeBlanc: You're welcome.

Great. Thank you you're welcome.

Operator: Thank you. The next question is from Batya Levy from UBS. Please go ahead.

Thank you. The next question is from <unk>.

Uhm.

Batya Levi: Great. Thank you. All the best for Glenn as well. Two questions. One on the new loadings. They've been very strong. Can you talk about the take rate for bundled offers versus the base and the impact that you're seeing on churn? On the cost transformation for media, should we assume that that's fully implemented and will start to provide some upside in the H2, or will there be more elements to it as we move ahead? Can we see media margins head back to mid-20% with that transformation? Thank you.

Uh-huh.

Great. Thank you all the best for Brian as well.

One on the new loading there've been various John can you talk about the pay grade for bundled offer as diverse as the base and the impact that you're seeing Chang and on the claws transformation from media can 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.

As we move ahead and <unk> can we see media margin head back to May 20 per cent.

That transformation. Thank you.

Glen LeBlanc: Yeah. The cost initiatives that we've taken on were really done in the latter part of Q2, so we really haven't enjoyed any benefits of those. Absolutely, we expect those benefits to kick in, particularly through Q3 and absolutely in Q4 to help improving media. The media margins will return. What we're doing in our media business is true transformation and the move to digitization that we've already talked about. Advertising will return, and when it does return, we are going to have our assets positioned to capture a larger share of the marketplace than ever before. I remain bullish on media margins, but we're still in an advertising headwind. Advertisers are right now reluctant, but I believe when that returns, we will have used this time wisely to right the ship and focus on a broad suite of assets that allow us to capture greater share.

Yes.

Costs initial.

Initiatives that we've taken on we're really done.

Latter part of Q2, so we really haven't enjoyed any benefit 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 that.

Larger share of the marketplace than ever before.

I remain bullish on media margins, but we're still in an advertising headwind advertisers are right now reluctant, but when I believe with that returns. We will have used 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 on the front end.

Glen LeBlanc: Over to Mirko on the front end.

Mirko Bibic: Yeah, on the bundling, it's pretty clear that the market is evolving more and more towards one where the customer value prop is, for many customers, defined by the bundle. I think we're really well-positioned when it comes to that, with an ever-growing Fibre footprint and Fibre internet superiority and a national wireless network on 5G and 5G+, where we're rated as the best on both those fronts. Right there, and with attractive pricing. You put all those things together, and it's pretty compelling. The price, the quality, and the overlapping footprints. 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 who are taking both of those at the same time from us from the outset. That continues to grow.

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.

Positioned 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. Claws were were rated as the best on both those front so right there.

Attractive pricing put all those things together and it's pretty compelling.

The price the quality and the overlapping footprints on we keep growing the percentage of our internet customers, who would 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 are.

Mirko Bibic: It's been one of our focus areas, and we have a lot of upside there. That's another area of opportunity for the Bell family of brands, or the BCE family of brands, to be more precise.

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.

Batya Levi: All right. Got it. Thank you.

Alright got it thank you.

Operator: Thank you. Once again, please press star one on your device keypad if you have a question. The next question is from Drew McReynolds, RBC. Please go ahead.

Thank you.

Once again, please press Taiwan.

If you have a question.

Next question.

<unk>.

Please go ahead.

Drew McReynolds: Yeah, thanks very much for the follow-up here. Glen, couldn't let you go without a pension question. Sorry about that. On the pension solvency surplus, like we all know on this call, Bell's been, or used to put a lot of money into the plan because of just the punitive decline in interest rates on the solvency calculation. Obviously, we're in a slightly different environment, and it may get even more interesting going forward. Question is: do you have any ability to get back some of that surplus over time? Is there a mechanism or a process where that CAD 3.5 billion, if it gets to CAD 4 billion, CAD 4.5 billion, CAD 5 billion, do you have any access to that, is the question?

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 do you have any ability to get back some of that surplus over time is there a mechanism or a process where that three and a half billion. If it gets to four $4 billion 5 billion.

Do you have any access to that question.

Glen LeBlanc: Well, Drew, I appreciate you letting me take one last victory lap on pension. 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. The mechanism is easy, Drew. Is that we're allowed to take contribution holidays and in the BCE plan, the Bell Canada plan, including DC. It's not just defined benefit, it's defined contribution as well. The mechanism is easy. We can continue to take holidays with a deficit, or excuse me, a surplus the size of what we have, 116%, CAD 3.5 billion, we'll have an opportunity to take surpluses for the foreseeable future. If your projections are true and it climbs beyond 3.5 into 4, I think that Curtis will be retiring with a big surplus in decades ahead.

Well 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.

But 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.

We will 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.

Then the Curtis will be retired with the big surplus in decades ahead. So again drew thank you for everything and thank you for giving me one last chance to brag about pensions [laughter] awesome. Thank you.

Glen LeBlanc: Again, Drew, thank you for everything, and thank you for giving me one last chance to brag about pensions.

Drew McReynolds: Awesome. Thank you.

Operator: Thank you. The next question is from Aravinda Galappatthige, Canaccord Genuity. Please go ahead.

Thank you. The next question is I haven't.

Kenneth.

Okay.

Aravinda Galappatthige: Good morning. Thank you. Let me offer my best wishes to Glen as well. I had a question on the enterprise or B2B side in general. Having closed the FX Innovation acquisition, Mirko, what are your thoughts on sort of the headroom to make similar acquisitions in that broader space or/and perhaps even your appetite? Maybe connect that to sort of your strategy to taking that, sort of the B2B segment back potentially to growth at some point. Maybe an update on those elements. Thank you.

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 beside in general having closed the effects innovation acquisition.

<unk> what are your thoughts on so that 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.

Tends to lead to growth at some point, maybe an update on those on those elements. Thank you.

Mirko Bibic: Okay. Thank you for the question. Look, our strategy on our focus and the B2B segment is really kind of three core pillars there. Continue to improve the customer experience for enterprise customers would be one. Another one would be to continue to put a sharp focus on the cost structure that we carry to support our legacy services, which clearly are high margin, but declining in many respects on the legacy side. If we do that, we'll be even stronger in our areas of traditional strength, given our superiority, our connectivity, our distribution strength, and the relationships we have.

Okay. Thank you for the questions. So.

Look I mean, our strategy on our focus and the Btb's 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 focus on on future growth factors in the enterprise space and in particular.

Mirko Bibic: At the same time, we're going to continue to put a focus on future growth vectors in the enterprise space, in particular 5G, IoT, private networks, a little bit of the combination of the cloud business and being advisors, so to speak, for lack of a better word, being partners with our large customers in their own digital transformation journeys. That's where FX comes in. We're quite optimistic about the potential in all those areas. We have a right to play in the segments that I just mentioned because of our core strength in connectivity, our distribution strength, and our deep and longstanding relationships. FX plays a very important part in that strategy, particularly in our customers' own moves digitally into the cloud. We're going to keep growing that business.

<unk>.

Five G Iot private networks and call it the.

A little bit of a combination of the cloud business and being.

Advisers, so to speak or lack of a better word being partners with our large customers in their own digital transformation journeys and that's where FX comes in so so we have we're quite optimistic about the potential and all of those areas.

We have a right to play 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 FX plays a very important part in that in that strategy, particularly in our.

Commercial move their own moves.

Digitally into the cloud and then we're going to keep growing that business that certainly what we're gonna do and we're going to use the the effects business based here in Montreal.

Mirko Bibic: That's certainly what we're going to do, and we're going to use the FX business based here in Montreal as the launchpad for future growth.

As as the launchpad for future growth.

Aravinda Galappatthige: Thank you.

Thank you.

Operator: Thank you. There are no further questions registered at this time. I would now like to turn the meeting over to Mr. Fotopoulos.

Thank you.

Question.

I would now like.

Tell me stuff.

Thane Fotopoulos: 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 clarifications. With that, have a good rest of the day.

Thank you Giselle and thank you again to all who participated on the call. This morning as usual the IRL team will be available throughout the day for any follow up questions and.

Our invitations so with that have a good rest of the day.

Mirko Bibic: Thank you, everyone.

Aravinda Galappatthige: Thank you.

Thank you everyone. Thank you.

Operator: Thank you. The conference has now ended. Please disconnect your lines at this time. Thank you for your participation. Giselle? One moment, please.

Right.

Thank you.

<unk>.

Lines of this time.

<unk>.

Yeah.

One moment please.

[music].

[music].

[music].