Q3 2023 BCE Inc Earnings Call
You are in listen only mode. If you wish to ask a question dial Star One three results conference call I would now like to turn the meeting over to Mr. Fain Fotopoulos. Please go ahead Sir.
Thank you Matthew and good morning, everyone and thank you for joining our call today I'm here with Miracle Beberg, President and C. O B C E and our new CFO Curtis Mellon you can find all of our Q3 disclosure documents on the Investor Relations page of B C. Dot C. A website, which we posted.
Earlier this morning before we begin I want to draw your attention to our safe Harbor statement on slide two reminding you that todays slide presentation and remarks made during the call will include forward looking information and therefore are subject to certain risks and uncertainties results could differ materially we disclaim any obligation to update forward looking statements except as required.
Wired by law. Please refer to Bce's publicly filed documents for more details on our assumptions and risks with that I'll turn the call over to Miracle. Thank you Zee and good morning, everyone.
I'm proud of the belt team's accomplishments in our performance in the third quarter.
These results reflect reflect the outcome of significant and consistent investments in broadband networks and services continued strong momentum in our core telecom business operations promotional off our discipline with an emphasis on multi product bundling and the streamlining of costs we.
We delivered consolidated adjusted adjusted EBITA growth of three 1%, representing our best quarterly results. Since Q2 of 2022. This was achieved while confronting ongoing media advertising headwinds and a more active pricing environment across all consumer products.
<unk> margin expanded 0.9 percentage points to 43, 9% demonstrating our proven ability to drive cost out of the business and to effectively balance growth with profitability in a highly competitive marketplace.
With all new targeted fiber locations for 2023, now either completed or under construction with.
With five G coverage chart targets well on track and.
And with continued regulatory uncertainty on a number of files, we reduced capex spending in Q3, all of which contributed to stronger free cash flow growth this quarter as profiled in our budget for 2023.
This will accelerate even more profoundly in Q4, keeping us on track to achieve our free cash flow guidance of 2% or higher growth for 2023.
The strong performance of our Cts segment. This quarter is underpinned by our leading broadband networks, which are consistently recognized by third parties for unmatched symmetrical fiber Internet service.
Justice five G speeds breadth of coverage and affordable prices as well as increased customer bundling that serves an important churn management tool.
In wireless we delivered 231212, new mobile phone and connected device net activations, which is our second best quarter ever. It is a great result, even when comparing to last year's record performance and taking into consideration. The notable step up in competitive intensity this year.
Particularly during the back to school period, given the new competitive landscape.
Consumer wireless service revenue was up a healthy four 7%.
Afflicting, our focus on high quality premium brand customer loadings, and careful management of our pricing plans.
This is being supported by a growing base of postpaid customers on five G capable devices.
Vast majority of whom are subscribing to premium unlimited data plans at the end of Q3 half of all postpaid customers, who are on five G capable devices, which is up from 35% of last year.
In residential wireline, we continue to win even more broadband customers in fiber areas as we faced sustained competitive activity from the cable codes in our DSL copper footprint.
We added a quarterly record of 104159, new net fiber to the home customers in Q3.
That's up seven 9% over last year.
And of these 71% signed up for gigabit or higher speed tiers.
Or 22%.
Here than Q3 2022.
Customers are continuing to move to higher end of that speed tiers, recognizing the superior performance of Bell <unk> pure fiber network there.
Compelling value of symmetrical speeds and the value and reliability of our multiple product offerings as evidenced by the 24% year over year increase in new customers, who are subscribing to mobility and Internet service bundles.
Our rapidly growing base of internet customers on gigabit or higher speed tiers, which now represent 52% of bels total fiber to the home subscriber base contributed to strong six 1% residential internet revenue growth this quarter.
And I'd like to point out that Bell continues to deliver world, leading broadband services at declining prices.
The latest that scan data shows that the price of all goods and services in aggregate across the Canadian economy has increased three 8% over the past year.
While the cost of cellular and Internet access services have declined seven 2%.
And seven 8% respectively.
I'll turn to media now.
Digital and direct to consumer continued to grow strongly helping to offset much of the secular pressures from traditional media platforms.
Digital revenues were up 26% over last year, and now comprise 39% of media revenues compared to 30% last year. That's an impressive result, given the current industry backdrop.
Driving this performance was crave, which grew direct streaming subscribers by 13% over last year on the back of market leading content.
Customer usage of our Sam television advertising tool also grew.
Sales revenue increased by nearly 50% this quarter and.
And with the recent introduction of AD supported.
Cheers on crave as well as the launch of addressable TV and audio advertising, which will enable advertisers to target ads to specific households are devices Bell media is well positioned to capture a higher share of industry digital AD market revenue going forward.
As we consistently execute on our quarterly business plan objectives, we're continuing in the background to transform bell from a traditional telco to a tech services and digital media leader within a new environment marked by more competition macroeconomic challenges and increased regulatory activity and regulatory uncertainty.
T.
Our sharp focus on operational efficiencies and cost optimization is being unlocked by our multiyear fiber journey, Inc.
Increased levels of Digitization and automation across the organization real estate consolidation copper decommissioning as well as other initiatives, we are undertaking to become more efficient, including just as an example, moving fiber TV to a single platform and reducing the number of billing platforms.
Vestments that we're making in these cost efficiency initiatives are allowing us to accelerate our well progressed plans to digitally revolutionize our business and to significantly cut operating costs investments need to be made to drive this agenda, and we will make them but.
But importantly.
These investments will support a stronger EBITDA growth trajectory.
In the medium to long term margin accretion and free cash flow expansion in the years ahead that will help support our dividend growth objectives.
I'll turn now I'll turn now to slide five of our presentation I'm going to review some of the key operating metrics with you for Q3.
Starting with Bell wireless.
We added 142886, new net postpaid mobile phone subscribers, bringing total year to date net adds to more than 297000 or four 3% higher than 2022. It is a strong result in fact, it's our second highest Q3 results since 2010 and.
This was a function of an 8% increase in gross Activations. This quarter as churn was consistent with pre pandemic Q3 levels at one 1%.
Our <unk> remained stable year over year, even as roaming <unk> moderated significantly due to lapping the post COVID-19 recovery.
And Thats, a testament through effective customer base management, and our focus again on premium value subscriber loadings.
We also reported mobile connected device net adds of 64282 that's.
31% over last year.
This reflects continued strong momentum for <unk>, and Iot and <unk> solutions included including sorry connected car subscriptions that will be an even bigger driver of revenue growth in the future.
Now turning to the wireline side of our Cts segment.
Consumer Internet is having a record year fiber net adds were up year over year exceeding 100000 for the first time ever and recall that Q3, 2022 was a record quarter before that when including the competitive loss of DSL subscribers and our non pure fiber footprint total retail internet net adds.
We're 79327, that's down 11, 5%.
But the consolidated result, actually reflects a higher number of customer deactivation and our copper service areas and overall, what it's demonstrating quite clearly is the competitive advantages and importance of fiber.
And it was also another solid quarter for Bell IP, TV, where gross Activations grew 11% year over year, reflecting the pull through benefit of fiber internet and our TV product leadership.
However, due to higher customer D. Activations on our five <unk> streaming service, which typically occurs following the exploration of previous year's promotional offers total net activations were down 2100 versus last year and are at 36000.
And rounding out our wireline subscriber results satellite TV net customer losses increased driven by higher competitor promotional offer intensity, while home phone net losses improved two 5%.
Taken altogether total retail residential net customer ads, including satellite and local phone increased a very healthy 42662.
This represents our second best ever result, after last year's record performance and again, that's a tribute to the bell team's focused execution.
Moving now to Bell media.
While the advertising market remained challenging television sports advertising revenue increase in the quarter driven by our broadcast of FIFA Women's World Cup soccer.
F. One Grand Prix racing Wimbledon, and NFL and CFL football underscoring the value of premium content to advertisers and this helped TSN and Rds assume their ranking as a top English and French language sports channels in Q3.
Digital revenues as I mentioned continued to accelerate growing 26% over last year benefiting from strong crave and sports direct to consumer streaming growth as well as bell Media's programmatic advertising marketplace and.
And CTV remain candidates top network in Prime time in the summer broadcast season and for the first time ever all for CTV branded specialty stations ranked in the top 10, including three of the top five and the number one channel CTV comedy.
And on the non sports French language front Bell media was ranked number one in full day viewership in the entertainment and space pay specialty market in the key 25 to 54 demographic, while nouvel maintained stable market share over competitors.
In summary, I am pleased overall with our progress and our momentum in Q3 subscriber.
Subscriber growth was helped healthy across the board and the generational investments in leading a long life infrastructure assets. We have made will continue to support meaningful growth going forward and meaningful cost reduction opportunities across the company.
With that and for his first time as CEO I'm going to turn the call over to Curtis to provide more detail on Q3 financial results.
Thank you Marco and good morning, everyone. It's a real honor to assume the role of CFO of this iconic company I look forward to delivering up to the highest standards set by my predecessor, Glenn Loblaw and working with all of you in the years ahead.
Turning to slide seven our consolidated financial performance for Q3 demonstrates the bell teams consistent execution and focus on profitable subscriber growth and cost discipline in the face of ongoing media advertising challenges and increased competitive intensity across all about consumer products.
Total service revenue was up a solid $1, 7%, while operating costs improved nearly 1%. This collectively delivered three 1% growth in adjusted EBITDA and a strong 90 basis point increase in margin.
Although mark already pointed this out it bears repeating that this was all represents our best consolidated EBITDA growth rate in well over a year.
Despite higher EBITDA net earnings and adjusted EPS were down versus last year as anticipated and profiles in our quarterly budget for 'twenty. Three this was the result of higher financing costs due to higher rates and more debt outstanding from investments in our growth strategy.
Depreciation and amortization expense from rapid growth in our broadband capital asset base and higher income taxes. As Q3 2022 benefited from an approximate $80 million tax provision reversal related to our acquisition of MTS in 2016.
Capex was down $158 million this quarter as we front end loaded our spending this year given favorable construction conditions during the winter and spring seasons, and realized even better fiber and fiber build out efficiencies than originally expected.
Declining capex together with the flow through of strong EBITDA growth drove a 17% increase in free cash flow this quarter.
In line with our internal forecast and consistent with our guidance target for 2023, we project, a $900 million or better year over year improvement in Q4 free cash flow.
This comprised of several things, but including approximately $500 million favorable swing in capex versus last year lower cash taxes positive change in working capital distributable largely to the timing of supplier payments and a further sequential step up in our EBITDA growth.
Moving to slide eight to discuss Bell Cts.
Service revenue growth improved sequentially this quarter increase and a 2%. This was supported by a six 1% increase in residential internet revenue.
And continued healthy wireless growth, reflecting our focus on premium subs and higher year over year roaming revenue.
We also benefited from a stronger <unk> performance trajectory driven by higher sales of security and cloud focused managed and professional services, which will be key growth drivers for us going forward and the financial contribution from the FX that we acquired in June.
In fact, even when excluding the favorable impact of that acquisition organic service revenue growth was positive.
Forums and more challenging regulatory environment, there's not yet adapted to the new reality.
This collectively drove a 103 per cent decline in total media revenue this quarter respectable results under the circumstances, which is a tribute to our broad mixed up assets premium content and successful execution of our digital first media strategy.
The year over year rate of decline in advertising revenue improve sequentially. This quarter to five dot two compared to 9% in queue to benefiting from strong digital advertising growth of 34 per cent.
Further moderated by a $2 nine per cent increase in subscriber revenue driven by a continued strong <unk> crave and sports streaming growth.
In light of this revenue backdrop, we maintained a key I on cost savings and adjusted our operating cost structure in order to support margins and cash flow generation.
This enabled us to deliver EBITDA growth of 11.5% and a strong $3 three point increase in margin to 28 dot six per cent.
Turning to the balance sheet on slide 10.
We ended two three with four and a half billion dollars of available liquidity, which included the proceeds of a billion dollar public debt issuance in August and approximately three dot 8 billion in available and available excuse me revolving bank credit and other committed facilities.
Given a relatively strong Q3 financial performance are that leverage ratio remains stable at three dot five times adjusted EBITDA.
Are weighted average after tax cost of all borings also remains below prevailing interest rates at around 3% and our average term to maturity is approximately 12 and a half years.
At these levels together with a manageable demetris schedule in 24, no further interest rate hikes expected in the immediate term a sizeable pants insolvency surplus and substantial recurring free cash flow generation. We're in a very good financial position heading into next year.
To conclude on slide 11, with a year to date consolidated financial results in line with budget and even stronger EBITDA in free cash flow growth trajectories projected for Q4, I'm Reconfirming all of our financial guidance targets for a full year of 2023.
I'll now turn the call back over to <unk> and to the operator to begin to you in a great. Thanks Curtis So before we start to keep the call as efficient as possible. Please limit yourself to one question and a brief follow up so we can get to everybody in the queue. There's additional time at the animals circle back for more questions with that Matthew we are ready to take our first question.
Thank you <unk>.
The first question is from David Barton from Bank of America. Please go ahead.
Hey, guys. Thanks, so much for taking the questions appreciate it [noise] I guess.
<unk> I think that this quarter, especially kind of in the prepared remarks in the text you you kept calling out the.
The competitive pressures facing I think, especially the wireless industry with the or put down about 0.2% year over year. Obviously, you know investors have been closely watching the space and the aftermath of the Roger Shaw merger clothes, and and freedoms acquisition by <unk>.
And and and we're trying to get a level set as to what the competitive intensity of this industry now is and what it might be as we look into 2024 and I was wondering if you could kind of maybe elaborate a little bit on kind of how different you feel the competitive intensity is from say a year ago and is your budget.
2024, what do you think we should all be expecting will happen. Thanks.
Thank you David look I.
You know there's been a number of.
So there there are.
Kind of the macroeconomic environment, something we have to keep an eye on as we head into 2024.
The competitive dynamic of course, we have to.
It should be mindful of as well as as well as as changes in the regulatory potential changes in the regulatory environment right. So those are the three things.
At a macro level that we're keeping a close eye on as we get ready for Ah well into Q4, but as we as we manage our way through Q4 and look forward to 2024, I would say no.
More specifically to your question and perhaps with a with a focus on the more near term of Q for I can and and the the back half of Q3.
What we're going to do is continue to be.
Disciplined has as we have been in this environment and our focus and I said it a couple of times in my opening remarks, our focus is gonna be on premium accretive smartphone loadings and multi product loading. So it's about the fine balance between quantity of loads and the quality of loads.
And that's what you're going to continue to see from US. Another thing is an aside as we're going to continue to improve the the Virgin brand, Virginia, plus brand and I'm pretty pleased with the trajectory of that brand, especially since we we relaunched it in July and if you think about back to school.
Things that I've said publicly before it was competitive.
Mm not unreasonably, so alright, thank yous off less in the in the form of hardware discounting and more in the form of data buckets, which I think is a good thing, but it was competitive discounting was reasonable and as we came out of back to school I think that discipline remained and we expect that to continue.
Throughout two four and we're certainly going to continue to behave in will operate not behave operate in that in that disciplined fashion balancing the quality of loads and the quantity of loads and I'll just end by saying like you know saw the government's announcement yesterday I think there's still going to be healthy immigration. This country and that should be you know that should be lift.
<unk> all boats as we as we look ahead.
Great. Thank you next question please.
Thank you. The next question is from drew Mcdonald from RBC capital markets. We'd go ahead.
Yeah. Thank you very much good morning, just to high levels for me <unk> back to you with all the focus on T. P. I E.
Wondering if you could provide us with first any update you could have on the timing of that decision and then in terms of implications for B C. E. What are what are you most focused on with this decision and framework and and what are some of the ways. You can respond to that and then secondly, just maybe for you Curtis.
Uhm welcome aboard and get to see you in the seats just wondering what your priorities are as C. S O in in what you're focused on as you look into 2024. Thank you.
Thanks Drew I'll go first alright.
I don't know I don't I don't really I don't have much insight into when the T. P. I, a or fiber access wholesale decision is coming out drew but yeah.
There's there's a sense that it's it's sooner rather than later, but I don't really know what the timing is but more fundamentally in terms of implications.
[laughter] I've been doing this a long time, now and and and I've always said because I fundamentally believe that <unk>.
<unk> three fundamental points at all related number one is regulatory uncertainty.
Has impacts on investment.
Two regulatory decisions, which create disincentives to investment will obviously lead to a reduction in investment and Conversely regulatory decisions that promote investment where are going to lead to increases in investment certainly that's how we behave that's how I operate a C E O.
And how we're going to manage.
This company.
No I I I mentioned it right at the top of my opening remarks, and we we got a head start in the first six months of this year on our fiber build and we're well on track to hitting the targets. We had established for ourselves for 2023, and we well new within queue to that that where we we.
Would not have a problem here.
Hitting our targets and that's why you know when Glenn last spoke to this group he indicated.
In the face of a number of questions that we were going to hit our free cash flow guidance for the year cause we we knew that we'd had our head start and and when you with the Capex profiling was going to be for the back half of the year in fact, we had some.
You know some wiggle room, there have given that we have such a headstart, we could've kept going and actually built more than what was in our target plan for 2023, but we decided not to because of the the regulatory uncertainty that's that's out there <unk>.
And so I mean, if the if the decision is in favorable from a fiber perspective or from a wholesale access perspective, you're going to see us slowed down the billed as as early as next year, it's as simple as that and and that would be unfortunate because when we.
Enter a community with fiber, we actually increase competition, because we all know that D. S. L. As in competitive with with cable boxes. Conversely, we all know the cable DOCSIS actually isn't competitive with fiber, so where we enter with fiber we increase competition.
Against the cable company and then the cable company knows that in time it needs to upgrade its networks build fiber of its own which actually further increases competition and you see the results were we enter the customer gets better service better value lower prices and that's what we're that's what's being put at stake here with with the conversation that word.
Generally having.
And the regulatory proceedings around T P I a access.
Hope that answers the question.
<unk> <unk>. Thanks. Thanks for your other question Uhm I'd say my focus is pretty straightforward is how do we continue to drive free capsule. So that we can keep growing our dividend funding our dividend and.
And then the second focus I'd say is you know we're on a path you have digital transformation in evolution is marcos that into a into a typo I think that has pretty significant ramifications for our company are free cash flow potential as well as our customers and the services that we can provide so as we.
Get more efficient and flexible it allows us to to to meet our customers in a digital world in and drive free castle growth for for shareholders. So I think if I had to call out to focus focus areas that there'll be those too.
Alright.
Okay next question. Please thank.
Thank you. The next question is from <unk> from Scotiabank. Please go ahead.
Great. Thank you for taking my questions I wanted to go back to the wireline side.
Merkel you talked about.
Five or to the home being very competitive against coax and we certainly saw the result fiber to the home in your results. This this morning very strong loading Kenny.
Can you discuss a little bit where you're taking share from recently on a regional basis and the pricing.
And in the marketplace, how competitive it is right now compared to let's say coupla three six months ago.
And your your strategy to continue to grab market share you know is it price based competition or more technology. So <unk> and also on wireless I wanted to ask you.
You discussed your views on on the on the on the competitive marketplace I just wanted to.
Ask you in terms of expectations for our pool in Q4.
Where do we stand what are the puts and takes that will drive our pool growth or decline that we should think about thank you.
In terms of how about your thanks for the question in terms of wireline ultimately on a on a regional basis, it's really where we have five or right I mean, ultimately fiber fiber in Quebec, and Ontario, and about 104000 loads. It's it's strong performance call it everywhere.
And ultimately, it's not solely driven by pricing I mean, our pricing as competitive as competitive market, but ultimately the network advantage speed advantage of the the up and down Uhm speed advantage that we have is what we are leveraging in the market and then you start to combine that in a more bundled world where we have more.
Fiber footprint more wireline footprint were driving mobility and internet bundled sobs as well so it's a combination of a few of those things.
On on wire on wireless like I think <unk> performance was was pretty good in Q3, right. We kept we kept <unk> stable in.
In the environment that that that we had and I think that puts and takes our <unk> service revenues <unk> roaming growth did slow down I called that out it's slowed down year over year in sequentially and data overage continues to decline as customers continue to move to a larger unlimited plans, but.
You know our monthly recurring charges Barbara accounted for 85 per cent of our service revenue growth also a big driver of of our our <unk> performance and that's a good thing and it shows the.
The focus that we have on premium loadings on on five G and I think as you look forward to queue for just.
I'm Gonna repeat what I, what I said in response to to David's question, but I would in terms of our approach you're going to continue to see us manage that balance between.
Quantity and quality so that we can deliver what what you all expect of US both the strong subscriber performance, but a strong financial performance.
Thank you. The next question is from Tim Casey from BMO capital markets. Please go ahead.
<unk> <unk> given the the free cash flow profile you vote lined.
But you know you did recently make an acquisition you've got a spectrum auction coming up and as you highlighted there are some economic concerns.
How do you put that all together with a shareholder base continues to expect dividend increases in light of <unk> you know, how how should we think about that going into next year.
Like I, just I I'd say I'd say this we we know what investors seek from us right now.
And I've said this time and again, it's stability of the dividend first and foremost in his free cash flow growth supporting that they have been and we're going to continue to be laser focused on that.
We have said for a couple of years now quite clearly we telegraph that we would be operating at an elevated payout ratios. So that we could do the things that are strategically important to this company and to shareholders for the medium and long term and and you're seeing us deliver on on those <unk>.
<unk> and and that roadmap and at the same time, we're gonna continue to to take significant costs out of the business you know I've I've highlighted that in the past I've reiterated it today. So is Curtis. So again all these things that that were doing Tim they're they're gonna pay off in the medium.
Term pay dividends literally another way to put it and and at the same time <unk> when when these opportunities come up like tuck in acquisitions, you know when you saw the one last week, we're gonna we're gonna take advantage of those.
Because of their strategically important so.
When you when you take a step back and you know our priorities for capital allocation the.
The dividend fiber build spectrum and investments in digital <unk> and efficiency enhancing initiatives, that's what we're gonna do.
Thank you. The next question is from <unk> from UBS. Please go ahead.
Great.
Mm question on media can you provide a bit more color on the proposed acquisition of Outfront and how that would change the <unk> file of the media and that's and if we should think it's think about any synergies that could come with that thank you.
Yeah, how about you. Thanks for the question so out front at a home I mean, we announced last week, obviously, we don't have approvals yet.
Expect to pick those up in the first half of next year I would say, it's a relatively small talk and acquisition, but it isn't an actual growth area for a media business transaction is accretive immediately but again quite small.
Say the assets are complimentary two hours it allows us and our auto home footprints will be truly national we will drive as soon as you. There. There are some cost synergies also some strategic benefits, but again in terms of changing the overall trajectory, it's not it's not that big of an impact.
Thank you. The next question is from <unk> from 10 Accord Genuity. Please go ahead.
Good morning, Thanks for taking my question Luckily I just wanted to go back to the comments you made in your prepared remarks about.
You know delivering strong Epitomic wrote you know through through you know cost management and the efficiency initiatives that you've kind of outlined how should we think of bells brought a digital transformation initiative you talked about like where are you where are you in that <unk>, you know, which.
<unk> I guess is what I'm asking tried to get a sense of what we can expect them to for you to compare to sort of the the periodic cost reductions you didn't have that in the past.
Yeah. So there there there are periodic cost reductions we do we've done in the past including in in June of.
Of this year, which which allow you to to to change the cost structure and then there are the types of initiatives that I teed up in my opening remarks, but I think you're asking about which both reduce your costs, but also kind of transform the way we operate in as Curtis mentioned actually enhance the customer experience. So I can give you. Some example.
<unk>, that's just to to.
Put a bit more flesh on on the bun. So yeah, we have we did undertake.
Working for the past little while on.
Integrating multiple multiple billing systems that we've had in in our company down to two one. So for example on the <unk> in the consumer segment, particularly in Ontario, and Quebec, We typically had five legacy builders and we've collapse those into one biller and then we're starting to.
Migrate customers from the old system to the new system, and and and that will lead to.
Two consumer goodness that would be just one example, another example is continuing to evolve our digital platforms in our in our self serve apps, which are already rated best in class and will continue to make those even more even better and more intuitive for our customers, there's real estate optimization, which we've talked about the <unk>.
Four we've launched a customer self install which we've which we've improved overtime and is more cost more locations get actually physically connected to fiber. It increases the number of eligible homes to which we can offer self install of course.
With the expansion of fiber, there's the copper decommissioning journey that we've talked about you know, it's it's things like that and then the hard periodic blocking and tackling like streamlining sponsorships discretionary expense management vendor consolidation all of these things are the things we're going to do.
To ensure that we can continue to deliver longer term margin expansion and of course, the whole transition to the cloud we are and we amount we announced our Google cloud and AWS deals about two years ago and I have a significant portion of those deals is moving some of our own workloads to the cloud, which will which will create some some efficiencies for us in some customer.
Service improvements I mean, I'll stop there I don't want to give you a full laundry list, but I think those 678 items gives you a sense.
Thank you. Our next question is from Simon Flattery for Morgan Stanley. Please go ahead.
Alright. Good morning, Thanks for your time, so I wonder if we could come back to the fiber to the home obviously, some great momentum there there's been a lot of concern about just increasing costs to build and it'd be great to just get any color on what you're seeing out there in the marketplace and how you're seeing the returns on that investment.
As well as any benefits on the <unk> side and on this sort of a lower cost of repair and maintenance going for it. Thanks.
I just wanted to thank you for the question I'd say on the fiber to the home side, we actually have not seen an increasing cost to build I think ultimately you know, we're we're mitigating inflationary riskier with just more efficiency and and frankly, we've been doing this over a decade now so we just keep getting better and better at building.
Five or so we're we're not really seeing an increase in costs, we're seeing an increase in efficiency.
And some of the some of the benchmarks I look at it in terms of the the metrics churn does remain.
Quite a bit lower than fiber territory than not you can actually see it in in the numbers at 804000 Fibernet ads about 79000 total net at the churn is lower by Yeah, I I've set in the past 30 to 35 basis points lifetime value of a fiber customer significantly higher in service and support costs.
I've said time and again you can expect it to be about 40 per cent lower on fiber than on copper and that number is generally remains generally the same.
Thank you. Our next question is from <unk> My Security. Please go ahead.
Thank you and good morning, everyone. So thanks for taking my questions. The first one I I have is on the wireless environment, you know with the <unk> decisions. When you have high large date of buckets now we have the lucky and burden brands being sold at Bell locations do you do we find ourselves in a market.
Where the wireless services is a bit more commoditized, maybe than they used to be and if so what would that mean in terms of how how you upgrade the business going forward.
No I think they're still.
First of all there's a there's a lot of there's a lot of growth potential in the wireless environment now, let's start there so population growth penetration headroom the transition to five G again people, who customers who migrate to five G spend more and use the service more consume more data there's goodness.
For in particular on our side with the Multiproduct household where I've said in the past, we've we're underpenetrated compared to some of our peers and and we're closing those gaps and of course, the the immigration tailwind. So all of that leads to leads to growth in terms of.
The other part of your question I would say that they're still points of differentiation that we're going to we're going to leverage and we're going to use against our competitors. So you know the fact that we have the best network is is a value proposition that customers are well aware of and even in terms of our our own brands like Lucky's <unk>.
Not at all the same as as a Virgin or Bell in terms of the value proposition and Bell and Virgin are still separated in terms of value problems. So five G plus on Bell no five G plus on Virgin multi gig on bell on the Internet and and and not so on on Virgin Wifi <unk>.
<unk> not so on Virginia.
<unk> Internet and mobility discounts not so on Virgin so, they're they're still they're still value differentiation, there and uhm, we're managing we're managing all three brands quite well.
Thank you. Our next question is from Stephanie price from CIBC. Please go ahead.
Good morning, hoping you could take a little bit more in <unk> B Y R D and the like if I sign up some trend that we're seeing in Marquette can you talk a little bit about how it's impacting financing and and what do you think this device upgrade wait till it typically low in the future and related question, what you're seeing in terms of getting an iPhone how much in that any application 19.
Two four.
I'd, rather specific comment on the I iPhone launch to share as far as as far as B Y O D.
Obviously, that's that's financially accretive if we can if we if <unk> you know put asked the customer to pay for the cost of the of the handset. It's a good thing and as we improve the network and customer service. We can we can lower that transaction intensity without <unk> shortly.
Lower the level of discounting on handsets, while at the same time not increasing the level of transaction intensity. So if you can keep churn low because of the superior product offering we have while not having to subsidise deeply discounted the devices that that's a good thing all around things.
The trend is in the right direction there.
And generally positive, but I think there's there's more we can do to make it even better.
Thank you there are no further questions registered at this time I would now like to turn the meeting over to Mister <unk>.
Thanks, Matthew and thank you again to everybody for attending our call. This morning, the <unk> the I R. T. Neither Richard or myself will be available throughout the day for clarification and follow up on that I wish everybody a great day. Thank you everyone. Thank you have a good day.
Please stand by and enjoy this music if you wish to Q desk, a question dial star one.
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