Q1 2024 BCE Inc Earnings Call
Thank you Matthew and good morning, everyone and thank you for joining our call I'm sure as usual this call America pressed.
President and CEO of BC, and our CFO Cardinal selling you can find all of our Q1 disclosure documents on the Investor Relations page of the BC dossier web site, which we posted.
Before we begin I want to draw your attention to our safe Harbor statement on slide to remind you that today's slide presentation and remarks made during the call will include forward looking information and therefore are subject to risks and uncertainties results could differ materially we disclaim any obligation to update forward looking statements, except as required by law.
Please refer to BC publicly filed documents for more details on our assumptions and risks with that I'll turn the call over to America.
Thank you, Steve and good morning, everyone.
So backed by the bell teams consistent execution, leading networks and products and cost discipline, we effectively navigated a dynamic competitive environment and a sluggish economy to achieve operational results in line with our internal plan for the quarter.
And as expected and as we profiled in our quarterly budget at the start of the year revenue was down slightly year over year. This was the result of a favorable one time revenue adjustment at Bell media in Q1 of 2023 that did not repeat this year and some marginal revenue loss at the source is certain stores began their transition to bestbuy Express which we've.
In the past normalizing normalizing for these two items revenue was basically flat this quarter.
Notably adjusted EBITDA and margin for Q1 were higher than forecasted Bce's margin expanded eight percentage points to 42, 7%, which demonstrates the team's focus on driving operational efficiencies across the organization realignment cost to address near term competitive and economic pressures and effectively.
Balancing growth with profitability in a highly competitive marketplace.
So in terms of operating results fiber continues to be on a role we're gaining share in all our markets because we have a superior product with a symmetrical speed advantage over cable and that drove our best Q1 retail Internet net additions in 17 years and has contributed to a 22% year over year increase in households, subscribing to mobile.
<unk> and Internet service bundles, where we have fiber.
On wireless we did a great job striking the right balance between volume growth and economics, and what was a very competitive Q1. This is evidenced by strong growth in total gross mobile phone activations, which increased 25% over last year together with healthy consumer service revenue growth of 4%, reflecting our focus on premium brand.
Customer loadings and careful price plan management.
Of note our industry delivering the highest quality services are decreasing prices. Despite persistent inflation. The latest stats can data shows that the price of all goods and services in aggregate across the Canadian economy has increased two 9% over the past year, while the cost of cellular and Internet access services up.
And 26, 2% and 15, 5%, respectively and this downward trend was also corroborated by this week's federal government annual price study and we're continuing to bring more affordable wireless options to Canadians Bell recently entered into a retail partnership with loblaw to launch no named mobile.
And no frills grocery stores across the country, which is being powered by PC mobile and will run on bells network and.
In business enterprise, we're continuing to invest in new products and services to significantly advance our capabilities in the growth sectors I've been talking about recently, namely clarification security and manage it automation.
And the growth strategy has accelerated with our acquisition of affects innovation last year and partnerships with service now Google, Microsoft AWS and Palo Alto networks, you can see it in our results in fact, when excluding the favorable acquisition impact of FX innovation, our business solutions that services revenue grew 12% organic.
This quarter.
Building on this we recently announced new partnerships with Microsoft to bring barrels voice network to Microsoft teams and with Sentinel won a global leader in AI powered security to provide advanced data protection services for Canadian businesses, and just a couple of weeks ago, We announced the launch of Google Cloud contact Center, AI, which is a.
Cutting edge suite of AI solutions for contact center transformations that enables intelligent customer and agent experience leveraging generative AI infused technology. These are just the latest building blocks and strengthening <unk> position as a tech services leader for enterprise customers in Canada.
I'll turn now to media, we have weathered near term pressures relatively better than peers. As you can see by positive year over year advertising revenue growth for Bell media this quarter and underpinning. This result, our bell media's leading assets and our focus on live sports content.
And more importantly, we're the only Canadian media company, that's pivoting to digital at scale, which is reflected in the impressive 72% increase in digital AD revenue in Q1.
This strong performance was fueled by Bell Media's programmatic advertising marketplace, we're growing customer usage of our expanded MTV sales tool led to a doubling of revenue this quarter as well as by our AD supported subscription tiers on crave.
And our addressable TV functionality.
And investments to sustain the strategic shift to digital our continuing with an expanded distribution footprint for crave on Amazon Prime video, where initial sales have been very strong and the recent launch of 10 fast channels spending news sports and entertainment.
I'm not going to turn to slide five of our presentation.
We added 45247, new net postpaid mobile phone subscribers, that's up four 5% from last year and that represents our best Q1 performance in six years. It is a strong result, considering the competitive environment, where we balanced market share with economics, demonstrating our network quality and distribution.
Brand strength, rather than promotional discounting to drive the subscriber acquisition.
This disciplined approach can be seen in our results as well, which remained stable year over year. It's a good outcome, especially in light of the more aggressive pricing we saw in the market during the quarter.
Further expansion of our <unk> customer base is also helping us to support our two at the end of Q1, 56% of all postpaid customers were on <unk> capable devices and that's up from 44% last year.
Now over to wireline it was another strong <unk> quarter, we delivered our highest Q1 retail internet net adds since 2007 up 13, 9% versus last year to 31078 in particular, we saw very strong market share growth in Quebec, Moreover, where we.
Have fiber or bundled sales continue to grow and they exceeded our internal budget targets in Q1 alone new customers subscribing to mobility and Internet service bundles increased 39% year over year.
It was also another very good quarter for Bell IP, TV, which added 14174 net new subscribers, that's up 30% from last year.
This strong performance reflects the pull through benefit of fiber internet or TV product leadership, and our strategy of making content available where the consumer demands it as evidenced by our five app streaming service, which delivered its highest number of Q1 activations since launch.
And rounding out our wireline subscriber results.
Net losses improved six 3%, reflecting fewer customer activations as that customer base gets smaller over time.
And also note that starting this quarter, we are no longer reporting satellite TV subscribers as that business is not financially material in the overall context of BCE.
Lastly, turning to Bell media as I have already mentioned total advertising revenue was up year over year on the strength of digital marking our first quarter of growth since Q4, 2022, and although Q1 was better than we anticipated the AD market improvement is expected to be uneven.
Digital revenues increased 33% now comprise 41% of media revenues compared to 29% last year.
And underpinning the strong result was strong growth in usage of our programmatic AD marketplace as well as continued expansion of our crave direct to consumer streaming subscriber base.
TSN and Rds maintained their number one rankings in Q1. Thanks in part to this year's Super Bowl, which had record AD sales and viewership underscoring the value of premium content to advertisers.
<unk> also remained candidates top networking winter, while on the French language side Bell media led all competitors in the entertainment and pay specialty market and new loans continued to grow market share with full day audiences, increasing 4% over Q1 of last year.
In summary, our performance this quarter reflects a focused company in the midst of transition with financial results for Q1 that we are on plan. We remain laser focused on day to day execution to serve our customers to grow subscribers profitably and to prudently manage costs. As we said we would at the beginning of the year and with that.
I turn the call over to Curtis will provide more details on our financial results.
Thank you Rocco and good morning, everyone.
Curtis: Again on slide seven with <unk> consolidated financial results.
Adjusted EBITDA was up one, 1%, which drove an 80 point Laurence.
3% reduction in Rins.
Total revenue was down zero to up 7%.
If you adjust for the loss on retro benefit of Bell media last year and loss of revenue from <unk>. This year revenue was flat.
You have actually a number of cost and efficiency initiatives.
Including a sizable workforce restructuring that remains on track to generate savings of $150 million to $200 million.
Of this total only a small amount was realized in Q1.
As these opex benefits ramp up progressively and are fully realized we anticipate stronger EBITDA growth in the back half of 2020.
Despite higher EBITDA net earnings declined in Q1.
Curtis: Reflecting a large severance charge related to the workforce restructuring as well as a noncash mark to market equity derivative loss due to the decrease in Bce's share price this quarter.
With our guidance assumptions for the year adjusted EPS was down versus last year.
This was the result of higher financing cost increased depreciation and amortization expense due to a higher comparable asset base and over $50 million and gains from sale of land in Q1 of 2023 related to our real estate optimization strategy.
In line with our plan to reduce capital investments by $500 million in 2020 for Capex was down $84 million this quarter.
The year over year quarterly step down in spending will be more pronounced for the rest of the year as we advance spending in Q1, given favorable construction conditions. This winter.
Our Q1 free cash flow was flat compared to last year, reflecting higher EBITDA lower capex and a related positive change in working capital attributable to lower supplier agreements.
These factors were offset by the timing of cash tax installment and severance paid to employees, who are part of the company in Q1.
Curtis: Turning to Bell Cts on slide eight.
Service revenue was fueled by some of the highest Q1 mobile phone and retail Internet net subscriber loaded in years, which drove both wireless and residential internet revenue growth of 3%.
We also saw continued business solutions strategy supported by our acquisition of FX intervention.
When excluding the favorable impact of that acquisition business solutions revenues still grew a strong 12% organic great.
Great result speaks to our market momentum in the key growth areas.
Cloud based computing managed automation and security solutions.
However, overall revenue performance in the quarter was moderated by aggressive wireless rate plan pricing and higher residential service bundle discounts, reflecting a more competitive market environment compared to last year.
Wireline product revenue was down notably this quarter decreasing 35% of sales volumes normalized following an exceptional year in 2003 due to the global supply chain.
Cts EBITA grew one 7%, yielding a 45, 5% margin that's an increase of 70 points over last year.
Direct result of our focus on cost management and disciplined customer group.
Over to Bell media on slide nine.
Curtis: Total advertising revenue was up one 6%.
This performance was better than our peers can be attributed in large part to bell Media's first of all I'd add some niche which comprises out of home and radio properties that returned to growth this quarter.
Premium programming, such as live sports content and strong execution of our digital first media strategy.
Curtis: Notwithstanding the advertising improvement the total media revenue was down seven 1% and EBITDA decreased 11, 4% due mainly to the onetime retroactive subscriber fee adjustments in Q1 of 'twenty three excluding this onetime item Q1, EBITDA was up 15% over last year.
Notably Opex was down six 2% in Q1, mainly on our structural cost savings and lower TV programming costs all of our content costs are expected to increase in future quarters with the normalization of content deliveries from the major U S Studios now that the Hollywood strikes have been settled.
Turning to slide 10.
Balance sheet is healthy with $4 7 billion of available liquidity.
<unk> planned solvency surpluses totaling close to $3 9 billion at the end of June.
Our debt maturity schedule also remained well structured with an average currency maturity of approximately $13 two years and an after tax cost of debt remains below current interest rates at around three 2%.
In February we took advantage of strong market conditions to tap the public debt raise.
Curtis: Raising the Canadian equivalent of approximately $1 9 billion.
Which effectively completed our refinancing requirements for 2020 maturities.
Our leverage ratio remains manageable at $3 six times adjusted EBITDA.
We updated our internal target leverage policy to three times adjusted EBITDA. We believe this new target objective is reflective of our operational size and strength and optimized cost of capital and is aligned with your expectations.
While currently in excess of this level is consistent with a strong balance sheet ample financial flexibility and investment grade credit ratings.
To wrap up on slide 11, we remained confident in our proven ability to deliver under any circumstances backed by the best networks and products are digital transformation journeys consistent operational execution and cost discipline.
With Q1 consolidated financial results that met our internal plan by Reconfirming all of our financial guidance targets for 2020.
Speaker Change: I will now turn the call back over to the operator to begin the Q&A portion.
Thanks, Curtis said before we start I want to remind everyone that due to time constraints. This morning, because of our annual general meeting that's taking place right. After this call to please limit yourselves to one question.
So that we can get to as many achievements possible.
Matthew we're ready to take our first question.
Thank you. The first question is from Tim Casey from BMO capital markets. Please go ahead.
Speaker Change: Yes.
Thanks, Good morning.
Could you talk a little bit about <unk>.
Margins as they flowed through the quarter.
Because it looked like you had.
Some some pretty good cost control.
But in light of.
Speaker Change: Your comments that.
The benefits of the restructuring not really in the numbers yet how should we think about.
That kind of cadence through the rest of the year.
Alright. Thank you Tim for the question and good morning, I'm going to pass it over to Curtis answer for you.
And as we've said Tuesday, so I do think the team did a pretty good job of driving margin expansion in Q1 as you mentioned in this competitive pricing environment in Europe, and you're correct.
The workforce restructuring.
Is underway, it's not complete but we haven't seen much of a benefit in Q1. So the estimate on our side is that as we continue to.
Kind of finish that.
That project will continue to ramp up some cost savings over time.
And I would add that there was a bit of a separate issue, but related to managing the business carefully and.
Speaker Change: And with a particular focus on margins.
We talked last on the last call about some of the transformation initiatives that are that have been underway for a couple of years and that will not stop that are intended to drive results right now, but keep keep improving as we go on and it's largely about digitizing.
Digitizing and automating.
And we were going to continue to accelerate that transformation, whether or not it's moving all core consumer products to a single ordering and billing Arctic architecture, improving the customer experience through digital platforms things like virtual repair and customer.
Self install using generative AI as best we can to offer.
Offer better.
Offer in rate plan personalization all these things.
We're going to continue to do tend to have a very very sharp focus on margins.
Speaker Change: Thank you.
Okay.
Next question please.
Thank you. The next question is from Mario <unk> from Scotia Bank. Please go ahead.
Great. Thank you for taking my question.
Merkle I wanted to ask you general view on wireless.
Canada, we've seen churn ramp up really significantly.
Over the last couple of quarters.
More and more customers are <unk> and are taking advantage of the very strong offers.
You guys are making in the marketplace.
Longer term, what's your view if churn remains elevated like this.
How that will impact your overall wireless margins and the cost to operate in that business.
More specifically can you discuss what's causing that churn elevation is it specific to any provinces in how youre doing in Quebec.
Speaker Change: Wireless thank you.
Okay. Thank you for the question.
So actually a really good question and it's the.
The churn issue is.
And I said this last quarter as well I believe that it's it's.
It's concerning for sure and because of that it remains an area of focus but before I.
Speaker Change: Hi dive into kind of.
Giving specific answers to the elements of your question just take a step back right on how we are operating in this highly competitive wireless marketplace, we delivered.
Our best postpaid results for Q1 in six years.
In a lower price environment, we're continuing to drive consumer wireless service revenue growth at 4%.
Better product margins and that what that tells you is that as we execute we're not overspending to deliver the results.
That.
Investors expect of us so we're going after the right loadings.
The majority of our wireless loadings or on the Bell brand and at the same time, we've seen very strong flanker growth.
On Virgin plus.
So we are we are managing all the levers very well and we're going after the bundled household which is something I highlighted in my opening remarks, that's because with a bundled household we get better churn results and better lifetime.
Value so back to the specific elements of your question now.
Speaker Change: I think you've identified it right now.
Speaker Change: In the near term and in the near past.
<unk> seen a customer that is.
Fueling the pinch from a struggling economy in its shopping for deals you have.
Kind of aggressive.
Speaker Change: Price activity by certain of our competitors in the marketplace. So that's encouraging.
Consumers too.
Switch from amongst those carrier. So those carriers are basically swapping customers and I'm not sure anyone is particularly winning so that's why we're saying we're going to take a different approach, which is to focus on the premium loadings and on the household bundles over time, you asked me about it in the long term, we're going to continue doing what we're doing so it's the premium product premium low.
<unk> strategy, it's a household bundle bundling, it's better personalization continuing to drive a better customer experience, which has been.
Core focus of ours for the last four five years and I think it's working you can see it again in the latest Cts results and and the last thing I'll say.
As we have by far the.
The best Internet product in the marketplace customers, who are choosing fiber churn at a lower rate customers, who are on gig plus gig plus speeds are churning at a lower rate than customers, who are buying gig plus speeds and mobility from us are turning at a lower rate. So that's how we're going to continue to manage this.
Oh, yes.
Yes.
Just on the Quebec.
<unk>.
Okay.
Speaker Change: Yes, so on the Quebec market. Thank you for that I didn't say it in my opening statement as well as my opening remarks as well so.
Deploy everything that I said were certainly.
Executing the same playbook in the province of Quebec, and seeing the results.
Fiber is on fiber in Quebec has been the star of the show for Q1.
Speaker Change: Our fiber Internet net adds.
Okay.
Very very strong in the province of Quebec, and there has been we've punched through now in terms of creating a general consumer awareness that fiber is better than cable and that comes through the promotional work that we've been doing both in terms of advertising and in terms of pricing or distribution.
<unk> has been added.
Strong so when you have the better product, it's very strong.
Distribution, a very focused strategy on winning household.
And you are communicating that and again I'm going to go back to customer experience. Our NPS results in the province of Quebec have improved significantly and then youre seeing that in our in our subscriber results. So again, Quebec on fiber Internet the star of the show this quarter.
Thank you.
Thank you. Our next question is from David Barden from Bank of America. Please go ahead.
Okay, Hey, guys. Thank you so much for taking the question.
I guess, if I could.
Speaker Change: Sorry.
Growth.
Two a decline and yet in the first quarter, you were able to hold our <unk> flat year over year.
We noticed that it does seem that pricing activity in the market is related a little bit so could.
Could you talk about kind of how you expect the pricing environment to maybe evolve over the course of the year.
That would that would get you to that kind of assumption of negative ARPA growth.
And then if I could just do a quick follow up which is.
It's a weird time in the world to be raising leverage targets Marco.
Could you talk about why now was the right time to stop trying to get to two to two and a half and why three years now the goal line.
Okay. Thank you. Thank you David.
<unk>.
On <unk> I could just a reflection of the fact that we are in the lowest pricing.
Environment basically in the history of wireless in Canada, and so what.
Speaker Change: Yes.
That's.
Kind of what you are getting from us in terms of the release.
With <unk> on the references to <unk> and we've got a very dynamic pricing environment. It's in flux, it's still too early to make a call fully on the direction of <unk> I think you have seen some stabilization on pricing in the past couple of weeks as you've mentioned, but we don't know how long that's going to last so it's a bit.
Related to the question Amir asked me, which is we're going to continue to focus on the <unk>.
Premium.
Subscriber loadings and on the bundling in order to generate.
Good household revenue and improve the lifetime value of the bundled customer that's how we're going to approach. It. So I would say a little bit of focus on on service revenue given that we're operating in a pricing environment that we can't fully fully control and leverage I'll turn it over to Curtis.
Sequentially.
As you noted we did update our leverage targets.
And as you say, it's an increase.
Frankly, we're at three six times.
I would say is a stale dated policy.
Times leverage we think is appropriate it does reflect strong.
With strong investment grade credit ratings and the other thing I'll note is.
At the time was we instituted that original policy, we had a significant pension deficit and we're now looking at a pension surplus thats north of $3 billion.
So we think it's appropriate for our size in Australia.
Okay helpful color. Thank you guys.
Thank you.
Our next question is from <unk> <unk> from Canaccord Genuity. Please go ahead.
And a reminder out at 3%.
Hi, Robyn.
<unk>, sorry to interrupt, but we didn't hear you Jeff alright, Okay I'll repeat it so the main questions on Internet revenue growth.
Speaker Change: Of note at 3%, which.
Seems a bit lower than I think the number that you've been citing in your presentation in the last couple of quarters.
Maybe just talk to that element I know that there was some price adjustments.
It happened at the beginning of the year I'm not sure how exactly the timing of that plays out perhaps sort of steps up again in Q2, but I wanted to get some thoughts on that and a quick follow up Mark on your business solutions organic growth number can you are you able to give us a sense of how much of a base. We're talking about so we can assess the significance of it.
Speaker Change: So on thank you for that on on the Internet revenue growth.
Speaker Change: My answer is going to be along the same lines as.
Speaker Change: Couple of answers I've already given our event.
Internet revenue growth reflects the impact of residential service bundle discounts as we pursue.
This whole bundling strategy. We are also focused and have been very very transparent over many quarters about this next point we are focused.
Speaker Change: Where we are underpenetrated in our fiber market share.
We're going to be focused on loading the network and make sure that we get to share that we deserve given the superiority.
Of our product and one of the geographies, where we've traditionally been underpenetrated has been in the province of Quebec and that has that is changing.
So youre seeing youre.
Youre seeing the impacts of that strategy, which I've been very clear about for some time.
Speaker Change: Bundled discounts that are having a temporary impact on revenue do drive better subscriber lifetime value, which I've also mentioned and it's improved retention long term. So it has a positive churn impact. So that's the story really on the on the Internet revenue growth I'm very pleased I'm pleased with the market share gains we're making.
Speaker Change: I'm pleased with the market share that we've been able to achieve over time in the other geographies and I'm very happy with.
Speaker Change: With the success of our bundling strategy, which is something we've highlighted in the materials. This morning.
Speaker Change: Yes.
Speaker Change: And the.
Speaker Change: The business solutions revenue its pretty its pretty significant would be over five $500 million annually.
Speaker Change: Thank you that's helpful.
Speaker Change: Thank you.
Speaker Change: Question is from Stephanie price from CIBC World markets. Please go ahead.
Stephanie Doris Price: I was hoping you could give us an update on the restructuring in terms of the timing of the cost synergies and how we should think about them rolling out through the year and upside you see as you as you continue to see the restructuring.
Stephanie Doris Price: And looked at.
Stephanie Doris Price: Yeah, Hi, thanks, Thanks for the question.
Speaker Change: As mentioned in the prepared remarks, so we've executed a good portion of the of the workforce restructuring we're not all of it.
Speaker Change: Haven't captured much of anything in terms of benefits in Q1, So I would say.
Speaker Change: It's a little bit lumpy, but grows over time.
Speaker Change: And.
Speaker Change: Given all of more than half has already taken place I'd assume it's fair to assume that next quarter, we will start seeing kind of propel.
Speaker Change: Proportionate upside in that space.
Speaker Change: Space and then as the program termination across the end of the year continues to ramp up.
Speaker Change: If that's helpful.
Speaker Change: Yeah.
Speaker Change: That is thank you and then just on the partnership with Google Cloud that was announced to power their AI contact centers. Just curious how we should think about opportunities around managed services for BCE and maybe more broadly how we should think about opportunities in the enterprise business at this point.
Speaker Change: Yeah. So we are adopting a strategy in the enterprise marketplace, where.
Speaker Change: The.
Speaker Change: <unk> innovative deployments that were while the innovative solutions that we're deploying internally to improve our business as part of our internal transformation, where we intend to.
Speaker Change: To go to market.
Speaker Change: And generate revenue with our customers. So as we undertake our own pretty significant digital transformation. The expertise. We are developing as a result of that we are then going to monetize with our large enterprise customer base. So the Google.
Speaker Change: Our cloud contact center AI is one perfect example of that we're deploying that.
Speaker Change: And that solution in that infrastructure internally at bell to improve the <unk>.
Speaker Change: Customer experience and we're also partnering with Google on a go to market basis. So over time, that's going to that's an example.
Speaker Change: Of how we're going to continue to organically grow our business solutions revenues and we have other examples in service bridge would be with service now is another very good example.
Speaker Change: Sentinel One example from the.
Speaker Change: From.
Speaker Change: In my opening remarks will be a third example, but that's that's not a significant.
Speaker Change: Art Bell.
Speaker Change: Bell business markets.
Speaker Change: Strategy.
Speaker Change: Thank you. Our next question is from Sebastiano Petti from Jpmorgan. Please go ahead.
Sebastiano Carmine Petti: Good question.
Sebastiano Carmine Petti: Hi, Thank you just one question on business.
Sebastiano Carmine Petti: <unk> for a second I mean Mercury you talked about.
Sebastiano Carmine Petti: Some of the different levers that are perhaps from a competitive perspective impacting maybe the consumer side any update perhaps you can give us on what youre seeing from a business perspective.
Sebastiano Carmine Petti: Whether it's.
Speaker Change: Some yes.
Speaker Change: Mines being perhaps.
Speaker Change: Some competition or maybe some lines being.
Speaker Change: Dropped because of workforce rationalization from some of your peers there in Canada, and then separately on the leverage target.
Speaker Change: Three six times today any any new in terms of the glide path down to that three point over time.
Speaker Change: And then one last housekeeping question.
Speaker Change: Mercury I think you talked about 22% increase in bundled subs on the fiber and wireless where fiber is available and I think if im not mistaken quebecker things at 39% increase.
Speaker Change: Maybe you can update us on where those numbers were perhaps maybe a year ago as we kind of think about the success that <unk> seen in this converged bundle strategy over the last 12 months or so thank you.
Speaker Change: Yes.
Speaker Change: Okay. So on on the last question in terms of.
Speaker Change: The bundled the percentage increases in bundled households by geography, I'll, probably leave that to.
Speaker Change: To feign for another time.
Speaker Change: On.
Speaker Change: No problem. Thank you for the question so the Seattle on.
Speaker Change: On.
Speaker Change: On business wireless growth I think that was.
Speaker Change: So on wireless and particularly your question around business wireless.
Speaker Change: I'd say in the Big picture was.
Speaker Change: One of the softer areas Judah.
Speaker Change: Due to slower subscriber growth on the revenue side.
Speaker Change: And that reflects lower demand.
Speaker Change: Can you kind of identify them in your questions in this channel there as our customers are undertaking.
Speaker Change: Workforce rationalization programs of their own.
Speaker Change: Also other cost rationalization initiatives, which are affecting price.
Speaker Change: That's a reflection of the general economic uncertainty. There has also been a leveling off and roaming due to lower travel as you can imagine is as our customers look to control their own discretionary.
Speaker Change: Expenses and and data overage continues to be something we're managing well, but continues to be in decline, including in the business segment.
Speaker Change: Oh, one on leverage.
Speaker Change: Yes.
Speaker Change: On leverage ratio three dano.
Speaker Change: Targeted leverage now ultimately as a matter of driving free cash flow growth, which we're focused on a handful.
Speaker Change: Handful of different ways Sebastian so its revenue growth as we leverage and monetize our fiber assets and funding strategy has worked well for us too.
Speaker Change: It's continued cost transformation leveraging digital transformation.
Speaker Change: And ultimately as Capex comes down following.
Speaker Change: Our heavy fiber builds period, we will look to drive more positive free cash flow delever and reduce our payout ratio.
Speaker Change: Yes and on.
Speaker Change: So just on page five of our deck. So the 39% reference its mobility and the Internet sales growth, we're not in that spot sales growth and Thats overall, not just in any one particular province, our nets.
Speaker Change: It's not on page five.
Speaker Change: Combined mobility and the Internet bundle nets have increased.
Speaker Change: And 2% year over year. So it shows you that.
Speaker Change: The traction we're getting with that strategy.
Speaker Change: Thank you perhaps.
Speaker Change: Thank you.
Speaker Change: Next question is from drew Mcreynolds from RBC capital markets. Please go ahead.
Drew Mcreynolds: Thanks Bert.
Drew Mcreynolds: Thanks, very much good morning, just two for me.
Drew Mcreynolds: Berkeley in your commentary you alluded to the advertising kind of recovery, which is great to see just being uneven can you just unpack that a little bit.
Drew Mcreynolds: For us in terms of where kind of pockets of strengths and weaknesses are and how Q2 looks for you and then secondly, one of your competitors just commenting on.
Drew Mcreynolds: Still continued relative kind a robust wireless market expansion here in 2024, obviously, we see that continuation in Q1, just what are your expectations for the remainder of the year and how is bell doing to certainly improve its share of duty due to Canada population growth. Thank you.
Speaker Change: Okay. Thank you two questions. So I'll start with the second one we do continue to see.
Speaker Change: Strong market expansion and were taking part in that quite successfully.
Speaker Change: By the way we're going to.
Speaker Change: Take advantage of that growth whether it's.
Speaker Change: Our music category or new to Canada.
Speaker Change: Is that through our very strong distribution. So we're quite pleased with that.
Speaker Change: Results were seeing from the Staples partnership we have.
Speaker Change: Which has been in place for for a year now and that continues to improve.
Speaker Change: <unk>.
Speaker Change: The other best buy.
Speaker Change: <unk> is going to start kicking in in the latter part.
Speaker Change: Of this year, and we see that as being a high potential distribution channel.
Speaker Change: And.
Speaker Change: The other one that I mentioned, which is very recent with some no name mobile.
Speaker Change: Program I think we're going to see some strong success, there and all of those.
Speaker Change: Particularly the last one I think plays very nicely in terms of our desire to get a bigger share or better share.
Speaker Change: New to Canada category, and we've made strong progress in that segment.
Speaker Change: We're not where I want to be.
Speaker Change: Again, we've been very transparent.
Speaker Change: About that but when we put our focus on something we tend to execute really well so youre seeing the building blocks being put in place and youre going to see us.
Speaker Change: Rather a more appropriate share in that segment and on the advertising market on the media side I think in terms of pockets of strength.
Speaker Change: Really where we saw good growth was in radio advertising revenue and in the out of home segment as well was up nicely television advertising revenue.
Speaker Change: Not not.
Speaker Change: Not as strong as the growth in radio and out of home.
Speaker Change: But but certainly an improvement over what we've seen.
Speaker Change: Recently.
Speaker Change: And so when you put all those together television advertising radio advertising out of home.
Speaker Change: We saw.
Speaker Change: For the first time in a while so that's great. We're one of the only ones who have been able to to pull that off.
Speaker Change: Hard on your question about what I see for Q2 and going forward.
Speaker Change: It's hard to answer I don't want to Dodge. Your question is just.
Speaker Change: It's too choppy to call on the conventional side there are some challenges remain on the digital side. It's good.
Speaker Change: So we will just keep keep managing it and we've got to just continue to.
Speaker Change: I believe in the strategy that we put in place several years ago, which is the hard pivot to digital so having the very best content on all of the platforms that customers actually want to use to view our content and that's how that's how we're going to drive growth in this business and we're seeing the early green shoots.
Speaker Change: I'm pretty optimistic.
Speaker Change: Thank you very much.
Speaker Change: Thank you. Our next question is from Simon Flannery from Morgan Stanley. Please go ahead.
Simon Flannery: Could you give us a little bit more color on your fiber passing is and where the pacings going obviously, the capex is down but I think you referenced a positive winter weather condition. So where are we looking at for past since this year end.
Simon Flannery: Give us some sense if you could have the loading upside that you still have with the penetration rates youre seeing in your mature markets.
Simon Flannery: How much room you have in some of these other markets to get there and then fixed wireless is something that we've seen a lot in the U S and at Rogers has been talking about recently what are you seeing in the market in terms of competition from fixed wireless and are you thinking more about expanding that beyond sort of more rural areas into parts of the country, where perhaps hearing off the.
Speaker Change: Operator thanks.
Speaker Change: Thank you for that Simon so on the fixed wireless first we're not seeing.
Speaker Change: Any.
Simon Flannery: <unk> impact to our core internet business from fixed wireless competition.
Speaker Change: As I've said in the past and I firmly believe I don't think the fixed wireless product is going to be a competitive substitute.
Speaker Change: In urban markets, where there is fiber of which which is by far the superior technology and tier one premium cable.
Speaker Change: I don't think I don't think its going to be a product that we.
Speaker Change: We don't intend to.
Speaker Change: The increase the <unk>.
Speaker Change: Footprint of our fixed wireless product, we were the first to launch fixed wireless internet at scale.
Speaker Change: And it works well as I've said before in rural areas, where there is.
Speaker Change: No broadband option or low speed broadband.
Speaker Change: And that's where we're going to continue to focus.
Speaker Change: With our products and on.
Speaker Change: On fiber passing the first question.
Speaker Change: In that in our on our February call, we moved away from.
Speaker Change: Giving projections on an annual basis and I'll stick with our plan now is to.
Speaker Change: Yeah.
Speaker Change: Past eight 3 million locations by the end of 2025 that was once a target of 9 million locations by the end of 2025, we've taken that down as a result of.
Speaker Change: Recent regulatory decisions and Thats.
Speaker Change: As a result, we've also taken the capex down from <unk>.
Speaker Change: $1 billion over 2024 and 2025, so if you take capex down to that degree you can take down your fiber pass sales.
Speaker Change: <unk> targets. So eight three remain we remain on track for that eight three in and we will get there over the rest of this year in 2025, and we still have a.
Speaker Change: Strong fiber penetration growth that we expect across our entire footprint, we're not where we want to be on market share yet.
Speaker Change: And Thats from Manitoba, all the way to you from that.
Speaker Change: Alright, thank you.
Speaker Change: Thank you. Our next question is from Jonas <unk> from <unk> Securities. Please go ahead.
Jonas: Hi, Thanks for taking my questions. Two from me first one I think we all know the answer but I.
Jonas: I think it would be beneficial to have it out there any chance that the dividend in 2024 is not what has been communicated for the rest of the year and then the second question are there assets that you think you might lag that you might acquire that can help you maybe puts you in a position to generate maybe accelerated sustainable top line growth. Thank you.
Jonas: So on on further assets.
Speaker Change: I'm going to not comment just because any.
Speaker Change: Any deliberations, we have internally on those kinds of things are strategically and competitively sensitive but I do appreciate.
Speaker Change: The question and it's something that as.
Speaker Change: As we we deliberate strategically you always think about things like that so I understand and appreciate the question, but I just don't think we should answer it and the dividend the dividend is as for 2020 for the dividend is that stated as was stated in February that's the dividend.
Speaker Change: Yes.
Speaker Change: Good.
Speaker Change: As though we are timing that we need to transit to our AGM location, we will call. It a day on the conference call. So thank you very much for your participation as usual the IR team will be available throughout todays call.
Speaker Change: Verification.
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Speaker Change: Meeting has ended goodbye.