Q1 2024 BCE Inc Earnings Call

May 2, 2024

Mirko Bibic: 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 load and careful price plan management. Of note, our industry is delivering the highest quality services at decreasing prices despite persistent inflation. The latest StatsCan data shows that the price of all goods and services in aggregate across the Canadian economy has increased 2.9% over the past year, while the cost of cellular and Internet access services has declined 26.2% and 15.5%, respectively. And this downward trend was also corroborated by this week's federal government annual price study.

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 at 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 have declined 26, 2% and 15, 5% respectively and this downward trend was also corroborated.

By this week's federal.

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.

Mirko Bibic: And we're continuing to bring more affordable wireless options to Canadians. Bell recently entered into a retail partnership with Loblaw to launch No Name Mobile in No Frills grocery stores across the country, which is being powered by PC Mobile and will run on Bell's network. In business enterprise, we're continuing to invest in new IT products and services to significantly advance our capabilities and the growth vectors I've been talking about recently, namely cloudification, security, and managed automation. And the growth strategy has accelerated with our acquisition of FX Innovation last year and partnerships with ServiceNow, Google, Microsoft, AWS, and Palo Alto Networks. You can see it in our results.

In business enterprise, we're continuing to invest in new products and services to significantly advance our capabilities in the growth vectors I've been talking about recently, namely cloud application security and manage it automation.

And the growth strategy has accelerated with our acquisition of effects 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.

Mirko Bibic: In fact, when excluding the favorable acquisition impact of FX Innovation, our Business Solutions services revenue grew 12% organically this quarter. Building on this, we recently announced new partnerships with Microsoft to bring Bell's Voice Network to Microsoft Teams and with SentinelOne, 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 enable intelligent customer and agent experiences leveraging generative AI-infused technology.

This quarter.

Building on this we recently announced new partnerships with Microsoft to bring balance 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 <unk>.

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.

Mirko Bibic: These are just the latest building blocks in strengthening Bell's position as a tech services leader for enterprise customers in Canada. I'll turn now to the 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 are 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.

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 as 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 Sam TV sales.

Mirko Bibic: This strong performance was fueled by Bell Media's programmatic advertising marketplace, where growing customer usage of our expanded Sam TV sales tool led to a doubling of revenue, as well as by ad-supported subscription tiers on Crave and our addressable TV functionality. And investments to sustain the strategic shift to digital are 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 spanning news, sports, and entertainment. I'm now going to turn to slide five of our presentation.

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 or 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 channel spending news sports and entertainment.

I'm not going to turn to slide five of our presentation.

Mirko Bibic: We added 45,247 new net postpaid mobile phone subscribers. That's up 4.5% from last year, and that represents our best Q1 performance in six years. It's a strong result, considering the competitive environment where we balance market share with economics, demonstrating our network quality and distribution and brand strength rather than promotional discounting to drive subscriber acquisition. And this disciplined approach can be seen in our pool results as well, which remain stable year over year.

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.

And 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.

Mirko Bibic: 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 5G customer base is also helping us to support ARPU. At the end of Q1, 56% of all postpaid customers were on 5G-capable devices, and that's up from 44% last year. Now over to Wireline.

Further expansion of our <unk> customer base is also helping us to support our <unk> at the end of Q1, 56% of all postpaid customers were on <unk> capable devices and thats up from 44% last year.

Mirko Bibic: It was another strong RGU quarter. We delivered our highest Q1 retail internet net ads since 2007, up 13.9% versus last year to 31,078. In particular, we saw very strong market share growth in Quebec. Moreover, where we have fiber, our bundle sales continue to grow, and they exceed 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 IPTV, which added 14,174 net new subscribers.

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.

Mirko Bibic: That's up 30% from last year. This strong performance reflects the pull-through benefit of Fiber Internet, our 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. In rounding out our wireline subscriber results, home phone net loss has improved 6.3%, reflecting fewer customer deactivations as that customer base gets smaller over time.

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 apps streaming service, which delivered its highest number of Q1 activations since launch.

And rounding out our wireline subscriber results home phone net losses improved six 3%, reflecting fewer customer deactivation as that customer base gets smaller over time.

Mirko Bibic: 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've already mentioned, total advertising revenue is 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.

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.

Mirko Bibic: Digital revenues increased 33% and now comprise 41% of media revenues compared to 29% last year, underpinning the strong results with 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.

Digital revenues increased 33% now comprised 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.

<unk> 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.

Mirko Bibic: CTV also remained Canada's top network in winter, while on the French-language side, Bell Media let all competitors in the entertainment and pay specialty market, and Nouveau 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 were 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'm going to turn the call over to Curtis, who will provide more details on our financial results.

CTV 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 Nouvel 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'm going to turn the call over to Curtis who will provide more details on our financial results.

Curtis Millen: Thank you, Mirko, and good morning, everyone. I'll begin on slide seven with Bce's consolidated financial results, and Justin Gimito is up 1.1%, which drove an 80.1%... 2% reduction in operating costs. Total revenue was down 0.7%. If you adjust for the one-time retro benefit of Bell Media last year and loss of revenue from sources this year, revenue was. We've implemented a number of cost and efficiency initiatives, including a sizable workforce restructuring that remains on track to generate in-year savings of $150 to $200 million. However, of this total, only a small amount was realized in Q1. As these offense benefits ripen up progressively and are fully realized, we anticipate stronger even-dog growth in the back half of 2020.

Thank you Marco and good morning, everyone.

Curtis: On slide seven with <unk> consolidated financial results.

Curtis: Adjusted EBITDA was up one, 1%, which drove an 81.

Curtis: 2% reduction in online.

Total revenue was down zero about 7%.

Curtis: If you adjust for the onetime retro benefit of Bell media last year and loss of revenue from <unk>. This year revenue was flat.

Curtis: You have actually a number of cost and efficiency initiatives.

Curtis: Including a sizable workforce restructuring that remains on track to generate annual savings of $150 million to $200 million.

Curtis: Of this total only a small amount was realized in Q1.

Curtis: As these opex benefits ramp up progressively and are fully realized anticipates stronger EBITDA growth in the back half of 2020.

Curtis Millen: Despite higher Aravinda, net earnings declined in Q1, reflecting a large severance charge related to the workforce restructuring, as well as a non-cash mark-to-market equity derivative loss due to the decrease in BC's share price. Consistent with our guidance assumptions for the year, adjusted EPS was down versus lost. This was the result of higher financing costs, increased depreciation and amortization spends due to a higher capital asset base, and over $50 million in gains from the 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 2024, CapEx was down $84 million.

Curtis: Despite higher EBITDA net earnings declined in Q1, 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.

Curtis: Consistent with our guidance assumptions for the year adjusted EPS was down versus last year.

Curtis: This was the result of higher financing cost increased depreciation and amortization expense due to a higher capital asset base and over $50 million and gains from sale of land in Q1 of 2023 related to our real estate optimization strategy.

Curtis: In line with our plan to reduce capital investments by $500 million in 2020 for Capex was down $84 million this quarter.

Curtis Millen: 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. 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 due to lower supplier pay. These factors were all set by the timing of cash tax installments and sevens paid to employees who departed the company in Q1. Turn to Bell CTS on slide 8.

Curtis: 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.

Curtis: 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 due to lower supplier.

These factors were offset by the timing of cash tax installments incentives paid to employees, who are part of the company in Q1.

Curtis: Turning to the balance Cts on slide eight.

Curtis Millen: Service revenue was fueled by some of the highest Q1 mobile phone and retail internet net subscriber loadings in years, which drove both wireless and residential internet revenue growth of 3%. We also saw continued business solutions strength supported by our acquisition of AptX Innovation. When excluding the favorable impact of that acquisition, Business Solutions revenue still grew a strong 12% organically, a great result that speaks to our market momentum in the key growth areas of cloud-based computing, managed automation, and security solutions.

Curtis: Service revenue was fueled by some of the highest Q1 mobile phone and retail Internet net subscriber loadings in years, which drove both wireless and residential internet revenue growth of 3%.

Curtis: We also saw continued business solutions strategy supported by our acquisition of FX inhibition.

Curtis: When excluding the favorable impact of that acquisition business solutions revenue still grew a strong 12% organically.

Curtis: Great result that speaks to our market momentum in the key growth areas of cloud based computing managed automation and security solutions.

Curtis Millen: However, overall revenue performance in the quarter was moderated by aggressive wireless rate plan pricing and higher residential service bundle discounts, reflecting a more intense competitive market environment compared to Wireline product revenue is down notably this quarter, decreasing 35% as sales volumes normalize following an exceptional year at 23 due to the global supply chain. CTS EBITDA grew 1.7%, yielding a 45.5% margin. That's an increase of 70 points over last year and a direct result of our focus on cost management and disciplined customer service. Over to Bell Media on slide 9.

Curtis: However, overall revenue performance in the quarter was moderated by aggressive wireless rate plan pricing at Hyatt residential service bundled discount, reflecting a more intense competitive market environment compared to last year.

Curtis: Wireline product revenue was down notably this quarter decreasing 35% of sales volumes normalized following an exceptional year of 23 due to the global supply chain.

Curtis: Cts EBITA grew one 7%, yielding a 45, 5% margin that's an increase of 70 points over last year.

Curtis: The direct result of our focus on cost management and disciplined customer.

Curtis: Over to Bell media on slide nine.

Curtis Millen: Total advertising revenue was up 1.6%. This performance, for the betterment of our peers, can be attributed, in large part, to Bell Media's diversified ads, which comprises out-of-home and renewal properties that return to growth as well as premium programming such as live sports content, and strong execution of our digital-first media. Notwithstanding the advertising improvement, total media revenue was down 7.1%, and EBITDA decreased 11.4%, due mainly to the one-time retroactive subscriber fee adjustments in Q1 of 2020.

Curtis: Total advertising revenue was up one 6%.

Curtis: This performance was better than our peers can be attributed in large part to bell Media's diversified estimates, which comprises out of home and radio properties and returned to growth this quarter.

Curtis: Premium programming, such as live sports content as strong execution of our digital first media strategy.

Curtis: Notwithstanding advertising improving total media revenue was down seven 1% and EBITDA decreased 11, 4% due mainly to the onetime retroactive subscriber fee adjustment in Q1 of 'twenty three excluding this onetime item in Q1, EBITDA was up 15% over last year.

Curtis Millen: Excluding this one-time item, Q1 EBITDA was up 15% over last year. Notably, OPEX was down 6.2% in Q1, mainly due to restructuring cost savings and lower TD program. However, 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 begun.

Curtis Millen: Excluding this one-time item, Q1 EBITDA was up 15% over last year. Notably, OPEX was down 6.2% in Q1, mainly on restructuring cost savings and lower TD program. However, 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 begun. Turning to slide 10.

Curtis: Notably Opex was down six 2% in Q1, mainly on restructuring cost savings and lower TV programming costs 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.

Curtis Millen: Turning to slide 10, the balance sheet is healthy, with $4.7 billion available... and pension plan solvency surpluses totaling close to $3.9 billion at the end of 2020. The debt maturity schedule also remains well-structured, with an average currency maturity of approximately 13.2 years, and an after-tax cost of debt that remains below current interest rates at around 3.2%. In February, we took advantage of strong market conditions to tap U.S. public democrats, raising the Canadian equivalent of approximately $1.9 billion, which effectively completed our refinancing requirements for 2024.

Curtis: Turning to slide 10.

Curtis Millen: The balance sheet is healthy, with $4.7 billion in available... and pension plan solvency surpluses totaling close to $3.9 billion at the end of 2020. The debt maturity schedule also remains well-structured, with an average currency maturity of approximately 13.2 years and an after-tax cost of debt that remains below current interest rates at around 3.2%. In February, we took advantage of strong market conditions to tap U.S. public democrats, raising the Canadian equivalent of approximately $1.9 billion, which effectively completed our refinancing requirements for 2024.

Curtis: Our balance sheet is healthy with $4 7 billion of available liquidity and.

Curtis: And pension plan solvency surpluses totaling close to $3 9 billion at the end of Q.

Curtis: Our debt maturity schedule also remained well structured with an average turn to maturity of approximately $13 two years and an after tax cost of debt remains below current interest rates at around three 2%.

Curtis: In February we took advantage of strong market conditions to tap the U S public debt markets raising the Canadian equivalent of approximately $1 9 billion.

Curtis: Which effectively completed our refinancing requirements for 2024 maturities.

Curtis Millen: Our leverage ratio remains manageable at 3.6 times adjusted eventually. We updated our internal target leverage policy to three times adjusted even. We believe this new target objective is reflective of our operational size and strength, an optimized cost of capital, and is aligned with our expectations. While currently in excess of this level, it is consistent with a strong balance sheet, ample financial flexibility, and investment-grade credit. To wrap up on slide 11, we remain confident in our proven ability to deliver under any circumstances.

Curtis: Our leverage ratio remains manageable at $3 six times adjusted EBITDA.

Curtis: We updated our internal target leverage policy to three times adjusted EBITDA. We believe this new target objective as a function of our operational signs of strength and optimized cost of capital and is aligned with your expectations.

Curtis: While currently in excess of this level is consistent with a strong balance sheet ample financial flexibility and investment grade credit ratings.

Curtis: To wrap up on slide 11, we remain 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.

Curtis Millen: Backed by the best networks and products, a digital transformation journey, consistent operational execution, and cost distribution. With Q1 consolidated financial results that met our internal plan, I'm reconfirming all of our financial guidance targets for 2020. I will now turn the call back over to Thane, to the operator, to begin the Q&A portion of the call. Thanks, Curtis.

Curtis Millen: Backed by the best networks and products, a digital transformation journey, consistent operational execution, and cost distribution. With Q1 consolidated financial results that met our internal plan, I'm reconfirming all of our financial guidance targets for 2020. I will now turn the call back over to Thane, the operator, to begin the Q&A portion of the call. Thanks, Curtis.

Curtis: With Q1 consolidated financial results that met our internal plan and Reconfirming all of our financial guidance targets for 2024.

Speaker Change: I will now turn the call back over to the operator to begin the Q&A portion of this.

Thane Fotopoulos: Thanks, Curtis. So 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, so please limit yourselves to one question and a brief follow-up so that we can get to as many of them as we can. With that, Matthew, we're ready to take our first question. Thank you.

Operator: Thanks, Curtis said before we start I want to remind everyone that due to time constraints. This morning, because of our annual general meeting.

Operator: Taking place right. After this call to please limit yourselves to one question.

Operator: So that we can get to as many as possible with that math, we were ready to take our first question.

Operator: Thank you. The first question is from Tim Casey from BMO Capital Markets. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Our first question is from Tim Casey from BMO capital markets. Please go ahead.

Speaker Change: Yes.

Tim Casey: Thanks, Good morning, Marco could you talk a little bit about.

Tim Casey: Margins as they flowed through the quarter.

Tim Casey: Because it looked like.

Speaker Change: <unk> had some pretty good cost control.

Speaker Change: But in light of your comments.

Speaker Change: The benefits of the restructuring not really in the numbers yet how should we think about.

Speaker Change: That kind of cadence through the rest of the year.

Tim Casey: Thanks. Good morning.

Speaker Change: Alright. Thank you Tim for the question and good morning, I'm going to pass it over to Curtis answer for you.

Curtis: And as we said two things 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. So the workforce restructuring.

Tim Casey: Mirko, could you talk a little bit about margins as they flow through the quarter? Because it looked like you had some pretty good cost control. But in light of your comments that, you know, the benefits of the restructure are not really in the numbers yet, how should we think about, um... that kind of cadence through the rest?

Mirko Bibic: Mirko, could you talk a little bit about margins as they flow through the quarter? Because it looked like you had some pretty good cost control. But in light of your comments that, you know, the benefits of the restructure are not really in the numbers yet, how should we think about, um... that kind of cadence through the rest?

Mirko Bibic: Thank you, Tim, for the question, and good morning. I'm going to pass it over to Curtis to answer it for you.

Curtis: Is underway, it's not complete but we haven't seen much of a benefit in Q1.

Curtis Millen: Hi Tim. And as you said, there are two things. 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. And you're correct. So the workforce restructuring is underway. It's not complete, but we haven't seen much of a benefit yet in Q1. So the estimate on our side is that as we continue to kind of finish that project, we'll continue to ramp up some cost savings over time. And I'd add that, you know, it was a bit of a separate issue.

Curtis: The estimate on our side is that as we continue to.

Curtis: Kind of finish that.

Curtis: That project will continue to ramp up some cost savings over time.

Curtis Millen: And I'd add that, you know, it was a bit of a separate issue, but related to managing the business carefully and with a particular focus on margins. You know, we talked on the last call about some of the transformation initiatives that have been underway for a couple of years, and that will not stop, that are intended to drive results right now but keep improving as we go on. It's largely about digitizing and automating.

Curtis: And I'd add that there's a bit of a separate issue, but related to managing the business carefully 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.

Curtis: As we go on and it's largely about.

Curtis: Digitizing and automating.

Curtis Millen: And, you know, we were going to continue to accelerate that transformation, whether or not it's moving all core consumer products to a single ordering and building 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 better, you know, offer and re-plan personalization, all these things. We're going to continue to tend to have a very, very sharp focus on margins.

Curtis: We're going to continue to accelerate that transformation, whether or not it's moving all core consumer products to a single ordering and billing our architecture, improving the customer experience through digital platforms things like virtual repair and customer.

Curtis: Self install using generating of AI as best we can to offer better.

Curtis: Offering rate plan personalization all these things.

Curtis: We're going to continue to do tend to have a very very sharp focus on margins.

Speaker Change: Thank you.

Operator: Next question, please. Thank you. The next question is from Maher Yaghi from Scotiabank. Please go ahead.

Speaker Change: Next question. Please. Thank you. The next question is from Maher Yaghi from Scotiabank. Please go ahead.

Maher Yaghi: Thank you for taking my question. Mirko, I wanted to ask you a general view on wireless in Canada. We've seen churn ramp up really significantly over the last couple of quarters. More and more customers are BYOD 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 will that impact your overall wireless margin? And more specifically, can you discuss what's causing that elevation? Is it specific to any provinces and how you're doing in Quebec on wireless? Thank you.

Maher Yaghi: Great. Thank you for taking my question.

Merkle I wanted to ask you general view on wireless.

Maher Yaghi: In Canada, we've seen churn ramp.

Maher Yaghi: <unk> really significantly over.

Maher Yaghi: Over the last couple of quarters.

Maher Yaghi: More and more customers are <unk> and are taking advantage of the very strong offers.

Maher Yaghi: You guys are making in the marketplace.

Maher Yaghi: Longer term, what's your view churn remains elevated like this.

Maher Yaghi: How that will impact your <unk>.

Maher Yaghi: Overall wireless margins.

Maher Yaghi: And the costs to upgrade in that business.

More specifically can you discuss what's causing that.

Maher Yaghi: Elevation is it.

Maher Yaghi: Any provinces in how youre going in Quebec in wireless.

Mirko Bibic: Okay, thank you for the question, Mayor. It's actually a really good question and it's, you know, the churn issue is, I mean, I said this last quarter as well, I believe that it's concerning for sure, and because of that, it remains an area of focus. But before I dive into kind of giving specific answers to the elements of your question, let's take a step back, right, on how we are operating in this highly competitive wireless marketplace.

Maher Yaghi: Sure.

Speaker Change: Okay. Thank you for the question it merits a actually a really good question and it's.

Speaker Change: The churn issue is.

Speaker Change: I mean, I said this last quarter as well I believe that it's it's.

Speaker Change: It's concerning for sure and because of that it remains an area of focus but before I.

Speaker Change: I dive into kind of.

Speaker Change: Giving specific answers to the elements of your question just take a step back on how we are operating in this highly competitive wireless marketplace. We delivered our best postpaid results for Q1 in six years.

Mirko Bibic: We delivered our best post-paid result for Q1 in six years, in a lower price environment where it continued to drive consumer wireless service revenue growth at 4% and better product margins. And that tells you 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 are on the Bell brand, and at the same time, we've seen very strong flanker growth on Virgin Plus. So we are managing all the levers very well.

Speaker Change: In a lower price environment, we're continuing to drive consumer wireless service revenue growth at 4%.

Speaker Change: Better product margins and that what that tells you is as we execute we're not over spending to deliver the results.

Speaker Change: That.

Speaker Change: Investors expect of us so we're going after the right loadings.

Speaker Change: The majority of our wireless loadings are on the Bell brand and at the same time, we've seen very strong flanker growth.

Speaker Change: On Virgin plus.

Speaker Change: 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.

Mirko Bibic: 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 values. So, you know, back to the specific elements of your question now.

Speaker Change: Value so back to the specific elements of your question now.

Mirko Bibic: I think you've identified it right now, in the near term and in the near past, you've seen a customer that is, you know, feeling the pinch from a struggling economy and is shopping for deals. You have aggressive price activity by certain of our competitors in the marketplace. So that's encouraging consumers to switch from amongst those carriers. So those carriers are basically swapping customers, and I'm not sure anyone is particularly winning.

Speaker Change: I think you've identified it right now.

Speaker Change: In the near term and in the near past.

Speaker Change: <unk> seen a customer that is.

Speaker Change: Feeling the pinch from a struggling economy in its shopping for deals you have.

Speaker Change: Aggressive.

Speaker Change: Price activity by certain of our competitors in the marketplace. So that's encouraging.

Speaker Change: Consumers too.

Speaker Change: 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 load.

Mirko Bibic: 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, but in the long term, we're going to continue doing what we're doing. So it's the premium product, the premium loading strategy, it's the household bundling, it's better personalization, continuing to drive a better customer experience, which has been And the last thing I'll say, as we have by far the best internet product in the marketplace, customers who are choosing fiber churn at a lower rate.

Speaker Change: <unk> strategy is the household bundle bundling, it's better personalization continuing to drive a better customer experience, which has been.

Speaker Change: 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.

Speaker Change: As we have by far the.

Speaker Change: 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.

Mirko Bibic: Customers who are on gig plus speeds are churning at a lower rate, and customers who are buying gig plus speeds and mobility from us are churning at a lower rate. So that's how we're going to continue to manage. Oh, I'll go back. Thank you, guys.

Speaker Change: Oh on Quebec, Thank you guys.

Mirko Bibic: Yeah, go ahead, come back here. Yeah, Sean, come back.

Operator: Yeah, go ahead, come back here. Yeah, Sean, come back.

Cathy: Yes go ahead Cathy.

Cathy: So I'll go back.

Mirko Bibic: Yeah, so on the Quebec market.

Operator: Yeah, so on the Quebec market.

Mirko Bibic: Yeah, so on the Quebec market, thank you for that. I didn't reference that in my opening statement as well, in my opening remarks as well.

Yeah. So on the Quebec market. Thank you for that I didn't reference that in my opening statement as well in my opening remarks as well so.

Mirko Bibic: So we're deploying everything that I said, and we're certainly executing the same playbook in the province of Quebec and seeing the results, and Fibre is on. Fibre in Quebec has been the star of the show for Q1. Our fiber internet ads were, like, very, very strong in the province of Quebec. And there's been, you know, we've punched through now in terms of creating a general consumer awareness that fiber is better than cable.

Cathy: We're deploy everything that I said were certainly.

Cathy: Executing the same playbook in the province of Quebec, and seeing the results and.

Cathy: Fiber is on fiber in Quebec has been the star of the show for Q1.

Cathy: Our fiber Internet net adds.

Cathy: We're.

Cathy: 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 distribute.

Mirko Bibic: And that comes through the promotional work that we've been doing, both in terms of advertising and in terms of pricing. And our distribution has been quite strong. So when you have the better product, very strong distribution, a very focused strategy on winning the household, and you communicate that, and again I'm going to go back to customer experience, our NPS results in the province of Quebec have improved significantly, and you're seeing that in our subscriber results. So again, Quebec on Fibre Internet is the star of the show this quarter.

Cathy: <unk> has been quite.

Cathy: Quite strong so when you have the better product.

Cathy: Very strong distribution, a very focused strategy on winning household and you're 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 in this quarter.

Speaker Change: Thank you.

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

Speaker Change: Thank you. Our next question is from David Barden from Bank of America. Please go ahead.

David William Barden: Hey, hey guys, thank you so much for taking that question. Um, I guess if I could, I noticed in the release, you guys have changed your assumption for ARPU growth for 2024 from decelerating growth to a decline. And yet, in the first quarter, you were able to hold ARPU flat year-over-year. We noticed that it does seem that pricing activity in the market has eased a little bit. So, could you talk about kind of how you expect the pricing environment to maybe evolve over the course of the year that would get you to that kind of assumption of negative ARPU growth?

David William Barden: Okay, Hey, guys. Thank you so much for taking the question.

David William Barden: I guess, if I could.

David William Barden: Dart the.

David William Barden: I noticed in the release you guys have changed your assumption for <unk> growth for 2024 from.

Decelerating.

David William Barden: Growth too.

David William Barden: Two a decline and yet in the first quarter you were able to hold.

David William Barden: That year over year.

David William Barden: We noticed that it does seem that pricing activity in the market has relented a little bit could.

David William Barden: Could you talk about kind of how you expect the pricing environment to maybe evolve over the course of the year.

David William Barden: That would get you to that kind of assumption of negative ARPA growth.

Speaker Change: Then if I could just two quick follow up which is.

David William Barden: 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, Mirko. Could you talk about why now is the right time to stop trying to get to 2 to 2.5 and why 3 is now the goal line? Thanks.

Speaker Change: 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 <unk> is now the goal line. Thanks.

Mirko Bibic: Okay, thank you. Thank you, David.

Speaker Change: Okay. Thank you. Thank you David.

Mirko Bibic: On ARPU, I could just be a reflection of the fact that we're in the lowest pricing environment, basically, in the history of wireless in Canada. And so what we're, you know, that's, and what you're getting from us in terms of the release with ARPU on the references to ARPU. And we've got a very dynamic pricing environment. It's in flux.

Marco: 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.

Marco: What we're doing.

Marco: That's that's.

Marco: Kind of what you are getting from us in terms of the release.

Marco: With <unk> on the references to <unk> and we've got a very dynamic pricing environment. It's influx, 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 is as you've mentioned, but we don't know how long that's going to last so it's a bit really.

Mirko Bibic: It's still too early to make a call fully on the direction of ARPU. I think you have seen some stabilization in pricing in the past couple of weeks, as you mentioned, but we don't know how long that's going to last. So it's a bit related to the question that Mayor asked me, which is that we're going to continue to focus on the premium subscriber loadings and on bundling in order to generate good household revenue and improve the lifetime value of the bundled customer.

Marco: To the question asked me, which is we're going to continue to focus on the premium subscriber loadings and on the bundling in order to generate.

Kind of 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 on leverage I'll turn it over to Curtis.

Mirko Bibic: That's how we're going to approach it. So I'd say a little bit of focus on service revenue, given that we're operating in a pricing environment that we can't fully, fully control. And on leverage, I'll turn it over to Curtis. Thanks, Dave.

Curtis: The question is.

Curtis: As noted we did update our leverage target to three <unk>.

Curtis Millen: and as you say, it's an increase, but frankly, we're at 3.6 times. That, I would say, is a stale dated policy, three times leverage we think is appropriate. It does reflect strong investment-grade credit ratings. And the other thing I'll note is that at the time we instituted that original policy, we had a significant pension deficit, and we're now looking at a pension surplus that's north of $3 billion. So we think it's appropriate for our size and strength.

And as you say, it's an increase.

Curtis: And frankly, we're at three six times.

Curtis: I would say is a stale dated policy three times leverage we think is appropriate it does reflect strong.

Curtis: The strong investment grade credit ratings and the other thing I'll note is at the time, we instituted that original policy, we had a significant pension deficit and we're now looked at on a pension surplus thats north of $3 billion.

Curtis: So we think it's appropriate for our size and strength.

David William Barden: Okay, helpful coverage. Thank you, guys.

Curtis: Okay.

Curtis: Yes.

Speaker Change: Thank you.

Operator: Our next question is from Aravinda Galappatthige from Canaccord Genuity. Please go ahead.

Speaker Change: Our next question is from <unk> <unk> from Canaccord Genuity. Please go ahead.

Speaker Change: Yeah.

Aravinda Suranimala Galappatthige: Aravinda, you know that three percent.

Operator: Aravinda, you know that three percent.

Speaker Change: A reminder, that 3% <unk>.

Operator: Aravinda, sorry to interrupt, but we didn't hear you. Start again.

Speaker Change: <unk>, sorry to interrupt, but we didn't hear you you have to start again, okay. Okay I'll repeat it so the main questions on Internet revenue growth.

Aravinda Suranimala Galappatthige: Okay. Okay. I'll repeat it. So the main questions on internet revenue growth, you noted 3%, which seems a bit lower than I think the number that you've been citing in your presentations in the last couple of quarters. Maybe just talk about that element.

Speaker Change: You've noted 3% with chop.

Canaccord Genuity: Seems a bit lower than I think the number that you've been citing in your presentation in the last couple of quarters.

Speaker Change: Maybe just talk to that element I know that there was some price adjustments that happen 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.

Aravinda Suranimala Galappatthige: I know that there were some price adjustments that happened at the beginning of the year, but I'm not sure how exactly the timing of that plays out. Perhaps it sort of steps up again in Q2, but I wanted to get some thoughts on that. And a quick follow-up, Mirko, on your business solutions and organic growth numbers. Are you able to give us a sense of how much of a base we're talking about so we can assess its significance?

Mirko Bibic: I know that there were some price adjustments that happened at the beginning of the year, but I'm not sure how exactly the timing of that plays out. Perhaps it sort of steps up again in Q2, but I wanted to get some thoughts on that. And a quick follow-up, Mirko, on your business solutions and organic growth numbers. Are you able to give us a sense of how much of a base we're talking about so we can assess its significance?

Speaker Change: And your business solutions organic growth number can you.

Speaker Change: Able to give us a sense of how much of the base. We're talking about so we can assess the significance of it.

Mirko Bibic: So, thank you for that. On internet revenue growth, my answer is going to be along the same lines as a couple of answers I've already given Aravinda. That internet revenue growth reflects the impact of residential service bundle discounts as we pursue a household bundling strategy. We're also focused, and I've been very, very transparent over many quarters about this next point. We are focused where we are underpenetrated in our fiber market share.

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.

Speaker Change: That internet revenue growth reflects the impact of residential service bundle discounts as we pursue our household 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.

Mirko Bibic: We're going to be focused on loading the network and making sure that we get the 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 is changing. So, you're seeing the impacts of that strategy, which I've been very clear about for some time. But the bundle discounts that are having a temporary impact on revenue do drive better subscriber lifetime value, which I've also mentioned, and it improves retention long term, so it has a positive churn impact.

Speaker Change: We're going to be focused on loading the network and make sure that we get to share that we deserve given the superiority.

Speaker Change: 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.

Speaker Change: So youre seeing.

Speaker Change: Youre seeing the impacts of that strategy, which I've been very clear about for some time, but the 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 impacts so thats the story really on the.

Mirko Bibic: So, that's the story, really, of internet revenue growth. I'm very pleased. I'm pleased with the market share gains we're making in one province. 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 the success of the bundling strategy, which is something we highlighted in the materials this morning. And the business solutions revenue is pretty significant; it would be over $500 million annually.

Speaker Change: On the Internet revenue growth I'm very pleased I'm pleased with the market share gains we're making.

Speaker Change: In the one province.

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 the bundling strategy, which is something we've highlighted in our materials. This morning.

Speaker Change: Okay.

Speaker Change: And the.

Speaker Change: The business solutions revenue its pretty its pretty significant G would be over five $500 million annually.

Mirko Bibic: Thank you. That's very helpful.

Speaker Change: Thank you that's that's helpful.

Operator: Thank you, that's helpful. Thank you. Our next question is from Stephanie Price from CIBC World Markets. Please go ahead.

Operator: Thank you. Our next question is from Stephanie Price from CIBC World Markets. Please go ahead.

Speaker Change: Thank you. Our next 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 the upside you see as you continue to do the restructuring and look to...

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 do the restructuring and.

Stephanie Doris Price: And looked at.

Curtis Millen: Yeah, hi Stephanie. Thanks. Thanks for the question. And, as mentioned in the prepared remarks, we've executed a good portion of the workforce restructuring, but not all of it. And we haven't captured much of anything in terms of benefits in Q1. So I'd say it's a little bit lumpy, but it grows over time. And given more than half has already taken place, I'd assume it's fair to assume that next quarter we'll start seeing kind of a proportionate upside in that kind of space. And then, as the program terminates across the end of the year, it continues to ramp up, if that's helpful.

Speaker Change: Yes, hi, Stephanie thanks, Thanks for the question.

Speaker Change: So as mentioned in the prepared remarks, so we've executed a good portion of the of the workforce restructuring will not all of it and we 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 given all of the more than half has already taken place I'd assume it's fair to assume that next quarter, we will start seeing kind of.

Speaker Change: Proportionate upside in that space.

Speaker Change: Space and then as the program terminate so across the end of the year and continues to ramp up.

Speaker Change: If that's helpful.

Mirko Bibic: And then just in 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 within the enterprise business at this point.

Speaker Change: That is thank you and then just on the partnership with Google Cloud.

Speaker Change: Was announced to power their 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.

Mirko Bibic: Yes, so we're adopting a strategy in the enterprise marketplace where the, you know, the innovative deployments that we're doing well, the innovative solutions that we're deploying internally to improve our business as part of our internal transformation, where we intend to go to market and generate revenue with our customers. So as we undertake our own pretty significant digital transformation, the expertise we're developing, as a result of that, we're then going to monetize with our large enterprise customer base.

Speaker Change: Yes, 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.

Speaker Change: 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.

Mirko Bibic: So the Google Cloud Contact Center AI is one perfect example of that. We're deploying that solution and that infrastructure internally at Bell to improve the customer experience, and we're also partnering with Google on a go-to-market basis, so over time, that's going to be an example of how we're going to continue to organically grow our business solutions revenues, and we have other examples, ServiceBridge with ServiceNow is another very good example, the Sentinel One example from the, you know, my opening remarks Thank you very much.

Speaker Change: Our cloud contact center AI is one perfect example of that we're deploying that.

Speaker Change: That solution in that infrastructure internally at bell to improve.

Speaker Change: The 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: <unk>.

Speaker Change: 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 now significant.

Speaker Change: Part of the Bell business markets.

Speaker Change: Strategy.

Speaker Change: Thank you very much.

Operator: Thank you. Our next question is from Sebastiano Petti from J.P. Morgan. Please go ahead.

Speaker Change: Thank you. Our next question is from Sebastiano Petti from Jpmorgan. Please go ahead.

Sebastiano Carmine Petti: Quick question.

Sebastiano Carmine Petti: Hi, thank you. Just one question about business. Why all of this for a second?

Sebastiano Carmine Petti: Hi, Thank you just one question on business.

Sebastiano Carmine Petti: Wireless for a second I mean look when you talked about some.

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.

Sebastiano Carmine Petti: Some.

Sebastiano Carmine Petti: Mines being perhaps.

Sebastiano Carmine Petti: Some competition or maybe some lines being you know.

Sebastiano Carmine Petti: Dropped because of workforce rationalization from some of your peers there in Canada, and then separately on the leverage target.

Sebastiano Carmine Petti: I mean, Mirko, you talked about 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 you're seeing from a business perspective, you know, whether it's, you know, some minds being perhaps, you know, maybe some competition or maybe some lines being, you know, dropped because of, you know, workforce rationalization from some of your peers there in Canada?

Sebastiano Carmine Petti: And then separately on the leverage target, I mean, at 3.6 times today, any view in terms of the glide path down to, you know, that 3.0 over time? And then one last housekeeping question. Mirko, I think you talked about a 22% increase in bundled subs on fiber and wireless where fiber is available. And I think, if I'm not mistaken, Quebec; I think you said a 39% increase. Maybe you can update us on where those numbers were perhaps, maybe a year ago as we kind of think about the success that you've seen in this, you know, converged bundle strategy over the last 12 months or so. Thank you.

Sebastiano Carmine Petti: At three six times today any any view in terms of the glide path down to that three point out overtime.

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 I'm not mistaken quebecker things at 39% increase.

Sebastiano Carmine Petti: Maybe you can update us on where those numbers were perhaps maybe a year ago as we kind of think about the success that you've seen in this converged bundle strategy over the last 12 months or so thank you.

Mirko Bibic: Okay, so on the last question in terms of, you know, the bundled, the percentage increases in bundled households by geography, I'll probably leave that to Thane for another time. Okay, thank you. No, no problem. Thank you for the question, Sebastiano. On business wireless growth, I think that was a wireless in particular question around business wireless. I'd say, in the big picture, it was one of the softer areas due to slower subscriber growth on the revenue side, and that reflects lower demand.

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.

Speaker Change: To feign for another time.

Speaker Change: On on non mobile.

Speaker Change: Thank you for the question set of channel on.

Sebastiano Carmine Petti: On.

Sebastiano Carmine Petti: On business wireless growth I think that was.

Sebastiano Carmine Petti: Okay. So on wireless in particular your question around business wireless I would say.

Sebastiano Carmine Petti: <unk>.

Sebastiano Carmine Petti: And the Big picture was.

Sebastiano Carmine Petti: One of the softer areas.

Sebastiano Carmine Petti: Due to slower subscriber growth on the revenue side and that reflects lower demand and you kind of identified them in your questions. In this channel there as our customers are undertaking.

Mirko Bibic: And you kind of identified them in your questions, Sebastiano. Our customers are undertaking workforce rationalization programs of their own, and also other cost rationalization initiatives which are affecting prices, and that's a reflection of the general economic uncertainty. There's also been a leveling off in roaming due to lower travel, as you can imagine, as our customers look to control their own discretionary spending.

Sebastiano Carmine Petti: Workforce rationalization programs of their own.

Sebastiano Carmine Petti: Also other cost rationalization initiatives, which are affecting price.

Sebastiano Carmine Petti: And that's a reflection of the general economic uncertainty. There has also been a leveling off enrollment due to lower travel as you can imagine as us as our customers look to control their own discretionary.

Sebastiano Carmine Petti: Expenses and and data overage continues to be something we're managing well, but continues to be in decline, including in the business segment.

Sebastiano Carmine Petti: Oh, one on leverage.

Curtis Millen: Yeah, and on leverage, right, so at a 3.0 target of leverage. Now, ultimately, it's a matter of driving free cash flow growth, which we're focused on, right? And you get there in a handful of different ways, Sebastian.

Speaker Change: Yes, and on the leverage ratio three nano.

Curtis Millen: So it's revenue growth as we leverage and monetize our fiber asset and bundling strategy, as Mirko referred to. It's continued cost transformation, leveraging digital transformation. Ultimately, as CapEx comes down following our heavy fiber build period, we'll look to drive more positive free cash flow, de-lever, and reduce our pay-over ratio. Yes, and on...

Sebastiano Carmine Petti: Targeted leverage now ultimately its a matter of driving free cash flow growth, which we're focused on right. When you got there a handful of different ways Sebastian so its revenue growth as we leverage and monetize our fiber assets and the strategy has worked well for us too.

Sebastiano Carmine Petti: It's continued cost transformation leveraging digital transformation.

Sebastiano Carmine Petti: And ultimately as Capex comes down following our heavy fiber build period, we will look to drive more positive free cash flow to delever and reduce our payout ratio.

Sebastiano Carmine Petti: Yes.

Thane Fotopoulos: Sebastiano, just on page 5 of our deck, so the 39% reference is for mobility and internet sales growth, not nets, but sales growth, and that's overall, not just in any one particular province. You know, it's not on page 5, but the combined mobility and internet bundle nets have increased 100% year-over-year. So it shows you the..., the traction we're getting with that strategy.

Sebastian: So Shannon just on page five of our deck. So the 39% reference its mobility and internet sales growth with net sales growth and Thats overall, not just in any one particular province, our nets.

Sebastiano Carmine Petti: Yes.

Shannon: On page five but they combined.

Sebastiano Carmine Petti: <unk> mobility and the Internet bundle nets have increased.

Sebastiano Carmine Petti: And 2% year over year. So it shows you that.

Sebastiano Carmine Petti: The traction we're getting with that strategy.

Speaker Change: Thank you for that.

Operator: Thank you. Our next question is from Drew McReynolds from RBC Capital Markets. Please go ahead.

Speaker Change: Thank you. Our 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: Mercury 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: Fourth 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 annuity new to Canada population growth. Thank you.

Drew McReynolds: to the advertising recovery, which is great to see, just being uneven. Can you just unpack that a little bit for us in terms of where pockets of strength and weaknesses are and how Q2 looks for you? And then secondly, one of your competitors just commented on the still relatively continued relative kind of 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 new to Canada population growth? Thank you. Thank you for the questions. So I'll start with

Mirko Bibic: Thank you. You have two good questions, so I'll start with the second one.

Speaker Change: Okay. Thank you two questions. So I'll start with the second one we do continue to see.

Mirko Bibic: We do continue to see strong market expansion, and we're taking part in that quite successfully. The way we're going to take advantage of that growth, whether it's new to the category or new to Canada, is through our very strong distribution. So we're quite pleased with the results we're seeing from the Staples partnership we have, which has been in place for a year now, and that continues to improve. The other Best Buy Express is going to start kicking in in the latter part of this year, and we see that as being a high potential distribution channel.

Drew McReynolds: Strong market expansion and were taking part in that quite successfully.

Drew McReynolds: The way we're going to.

Speaker Change: Take advantage of that growth whether it's.

Speaker Change: Music category or new to Canada.

Speaker Change: Is that through our very strong distribution. So we're quite pleased with the results we're 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 express 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.

Mirko Bibic: And the other one that I mentioned, which is very recent with the No Name Mobile, program, I think we're going to see some strong success there. And all of those, particularly the last one, I think plays very nicely in terms of our desire to get a bigger share or better share in the new to Canada category. And we've made strong progress in that segment. We're not where I want to be. Aravinda Galappatthige, Maher Yaghi, Jerome Dubreuil, Mirko Bibic, Glen LeBlanc, Simon Flannery, Thane Fotopoulos, Tim Casey, Thane Fotopoulos, Drew McReynolds, Simon Flannery, Drew McReynolds, Thane Fotopoulos, Tim Casey, Thane Fotopoulos, Jerome Dubreuil, Batya Levi, Drew McReynolds, Tim Casey, Thane Fotopoulos, Tim Casey, Thane Fotopoulos, Jerome Dubreuil, and in the out-of-home segment as well was up nicely.

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 in new to Canada category and we've made strong progress in that segment. We're.

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 gather a more appropriate share in that segment.

Speaker Change: 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.

Mirko Bibic: TV advertising revenue was not as strong as the growth in radio and out-of-home, but certainly an improvement over what we've seen recently. And so when you put all those together, TV advertising, radio advertising, out-of-home, we saw growth for the first time in a while. So that's great. We're one of the only ones who've been able to pull that off.

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, and so when you put all those together television advertising radio advertising out of home.

Speaker Change: We saw growth 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.

Mirko Bibic: It's hard for me to answer your question about what I see for Q2 and going forward. It's hard to answer. I don't want to dodge your question. It's just... It's too choppy to call.

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.

Mirko Bibic: On the conventional side, some challenges remain. On the digital side, it's good. So we'll just keep managing it, and we've got to just continue to believe in the strategy that we put in place several years ago, which is the hard pivot to digital. So we have the very best content on all the platforms that customers actually want to use to view our content. And that's how we're going to drive growth in this business. And we're seeing the early green shoots, so I'm pretty optimistic.

Speaker Change: So we'll just keep keep managing it and we've got to just continue to believe in the strategy that we put in place several years ago, which is the hard pivot to.

Speaker Change: 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 are seeing.

Speaker Change: The early green shoots so I'm pretty optimistic.

Speaker Change: Thank you very much.

Operator: Thank you. Our next question is from Simon Flannery from Morgan Stanley. Please go ahead.

Speaker Change: Thank you. Our next question is from Simon Flannery from Morgan Stanley. Please go ahead.

Simon William Flannery: Good morning. I wonder if I could continue on the broadband theme. Could you give us a little bit more color on your fiber passings and where the pacing is going? Obviously, the CapEx is down, but I think you referenced a positive winter weather condition. So where are we looking at for fiber passings this year?

Simon William Flannery: Good morning, I Wonder if I could continue on the broadband theme could.

Simon William Flannery: Could you give us a little bit more color on your fiber pass things and where the pacing is going obviously, the capex is down but I think you referenced.

Simon William Flannery: Positive winter weather condition, so where are we looking at for passing this year.

Mirko Bibic: And give us some sense, if you could, of the load upside that you still have with the penetration rates you're seeing in your mature markets and 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 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 some more rural areas into parts of the country where perhaps you're not the wireline operator? Thanks. Thank you for that, Simon.

Simon William 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 William 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 Roger 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.

Simon William Flannery: Operator.

Mirko Bibic: Thank you for that, Simon. So, on fixed wireless first, we're not seeing any competitive impacts on our core internet business from fixed wireless competition. 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 in urban markets where there is fiber, which is by far the superior technology and a tier one premium cable. I don't think it's going to be a product that hunts.

Roger: Thank you for that Simon so on the fixed wireless first we're not seeing.

Roger: Any competitive impact to our core internet business from fixed wireless competition.

Roger: 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.

Roger: In urban markets, where there is fiber, which which is by far the superior technology and tier one premium cable.

Roger: I don't think I don't think its going to be a product that we.

Mirko Bibic: We don't intend to increase the footprint of our fixed wireless product. We were the first to launch fixed wireless internet at scale, and it works well, as I've said before, in rural areas where there is no broadband option or low speed broadband.

Roger: We don't intend to.

Roger: Increase the footprint of our.

Roger: Fixed wireless product, we were the first to launch fixed wireless internet at scale and it works well as I've said before in rural areas, where there is.

Roger: No broadband option or low speed broadband.

Mirko Bibic: And that's where we're going to continue to focus. With our product and on fiber passings, the first question we asked on our February call was to move away from giving projections on an annual basis. And I'll stick with our plan now to past 8.3 million locations by the end of 2025. That was once a target of nine million locations by the end of 2025. We've taken that down as a result of, you know, recent regulatory decisions.

Roger: And that's where we're going to continue to focus.

Roger: With our product and on.

Roger: On fiber passing the first question.

Roger: In that in our on our February call, we moved away from from giving projections on an annual basis and I'll stick with our plan now is to.

Roger: Past $8 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.

Mirko Bibic: And that's, and we, as a result, have also taken the CapEx down by, you know, by a billion dollars over 2024 and 2025. So if you take CapEx down to that degree, you can take down your fiber passing targets. So 8.3 remains; we remain on track for that 8.3. And, and we'll get there over the rest of this year in 2025. And we still have strong fiber penetration growth that we expect across our entire footprint. We're not where we want to be in terms of market share yet. And that's from Manitoba all the way to Newfoundland.

Roger: Recent regulatory decisions and Thats.

Roger: As a result, we've also taken the capex down from by.

Roger: By $1 billion over 2024, and 2025, so if you take capex down to that degree you can take down your fiber passing target.

Roger: <unk> targets. So eight three remain we remain on track for that $8 3 million.

Roger: And we will get there over the rest of this year in 2025, and we still have a.

Roger: Strong fiber penetration growth that we expect across our entire footprint, we're not where we want to be on market share yet.

Roger: And Thats from Manitoba, all the way to you from that.

Speaker Change: Alright, thank you.

Operator: Thank you. Our next question is from Jerome Dubreuil from Desjardins Securities. Please go ahead.

Roger: Thank you. Our next question is from Mr. Holmes from Vishal <unk> Securities. Please go ahead.

Jerome Dubreuil: Hi, thanks for taking my questions. Two for me.

Roger: Hi.

Holmes: Hi, Thanks for taking my questions. Two from me first one I think we all know the answer but.

Mr. Holmes: 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 could help you maybe puts you in a position to generate maybe accelerated sustainable top line growth. Thank you.

Mr. Holmes: So on on further assets.

Speaker Change: Im going to not comment just because any.

Roger: 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 as I stated as was stated in February that's the dividend.

Speaker Change: Thank you.

Speaker Change: Good.

Speaker Change: As though we're 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 today, a follow up question and clarification.

Speaker Change: Great day, Thank you everyone for everyone.

Speaker Change: Yes.

Speaker Change: Yeah.

Speaker Change: Okay.

Q1 2024 BCE Inc Earnings Call

Request a DemoDemo

BCE

Bce

Earnings