Q3 2024 BCE Inc Earnings Call

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Unknown Executive: Welcome to the BCE Q3 2024 Results Conference Call.

Mr. Fotopoulos: Welcome to the BCE Q3, 2024 results conference call I would now like to turn the meeting over to Mr. Fotopoulos. Please go ahead. Mr. Fotopoulos. Thank you Matthew good morning, everyone and thank you for joining our call with me here today as usual are miracle Vivek, President and CEO of BCE and our CFO Curtis Mellon you can find all of our Q3 disclosure.

Unknown Executive: I would now like to turn the meeting over to Mr. Thane Fotopoulos. Please go ahead, Mr. Fotopoulos.

Thane Fotopoulos: Thank you, Matthew.

Thane Fotopoulos: Good morning, everyone, and thank you for joining our call with me here today. As usual, our Mirko Bibic, President and CEO of BCE and our CFO, Curtis Millen. You can find all of our Q3 disclosure documents on the investor relations page of the bce.ca website, which we posted earlier this morning.

Documents on the Investor Relations page of the BC. He got to see a website, which we posted earlier. This morning before we begin I'll draw your attention to the safe Harbor on slide to remind you that today's slide presentation and remarks made during the call will include forward looking statements.

Thane Fotopoulos: Before we begin, I'll draw your attention to the safe harbor on slide two, reminding you that today's slide presentation and remarks made during the call will include forward-looking statements and information and therefore are subject to risks and uncertainties. Results could differ materially. We disclaim any obligation to update forward-looking statements, except as required by law. Please refer to BCE's publicly filed documents for more details on our assumptions and risks.

Mr. Fotopoulos: Information and therefore are subject to risks and uncertainties results could differ materially we disclaim any obligation to update forward looking statements, except as required by law. Please refer to Bce's publicly filed documents for more details on our assumptions and risks with that over to Marco.

Mirko Bibic: With that, over to Mirko. Thank you, Thane and good morning, everyone. Our operating results for the third quarter demonstrate that we're pursuing growth in a financially disciplined and responsible manner in what's arguably been the most competitively intense market we've seen. Against this backdrop, we remain focused on better quality long term margin accretive subscriber acquisition and reducing costs to help offset short term revenue impacts from sustained competitive pricing pressures. Unexpected revenue losses from the source, which we've discussed in the past, slow economic growth in a media advertising market that's still in transition, pardon me, particularly on the linear side.

Mr. Fotopoulos: Thin and good morning, everyone.

Marco: Our operating results for the third quarter demonstrate that we're pursuing growth in a financially disciplined and responsible manner and what's arguably been the most competitively intense market we've seen.

Marco: Against this backdrop, we remain focused on better quality long term margin accretive subscriber acquisition and.

Marco: And reducing costs to help offset short term revenue impacts from sustained competitive pricing pressures expected revenue losses from the source, which we've discussed in the past slow economic growth in our media advertising market. That's still in tradition transition pardon me, particularly on the on the linear side this focus on.

Mirko Bibic: This focus on disciplined customer growth and ongoing efforts to drive cost savings across the organization through our advanced broadband networks, expanded digital and AI capabilities, as well as other transformation work streams, is reflected in our Q3 consolidated EBITDA growth of 2.1% and a 1.7 point margin increase to 45.6%. Notably, this was our best quarterly margin performance in over 30 years. This contributed to 10.3% higher free cash flow in Q3, which was in line with our plan as profiled in our quarterly budget at the start of the year. So really good execution by the Bell team and a highly competitive marketplace.

Marco: <unk> customer growth and ongoing efforts to drive cost savings across the organization through our advanced broadband networks expanded digital and AI capabilities as well as other transformation work streams is reflected in our Q3 consolidated EBITDA growth of two 1% and a one seven point.

Margin increased to 45, 6%.

Marco: Notably this was our best quarterly margin performance in over 30 years. This contributed to 10, 3% higher free cash flow in Q3, which was in line with our plan as profiled in our quarterly budget at the start of the year. So really good execution by the bell team and a highly competitive marketplace.

Mirko Bibic: I'm going to move now to our operating results. Starting first with wireless, you'll see combined mobile phone and connected device net ads in Q3 totaled 158,412. Our objective was to strike a balance between subscriber loadings and economics. We also tried to reset rate plan pricing to more rational levels, reflective of the tremendous value our services provide to customers. Despite some green shoots, those didn't stick throughout the quarter. Nevertheless, we held firm to our strategy and we chose not to match every promotional offer just for the sake of capturing a higher number of subscriber activation. Rather, as I said, our focus was on acquiring margin accretive customers and increasing our service bundle penetration, given its importance as a churn management and value driver tool.

Marco: I'm going to move now to our operating results.

Marco: Starting first with wireless Youll see combined mobile phone and connected device net adds in Q3 totaled 1150 8412, our objective was to strike a balance between subscriber loadings and economics. We also tried to reset rate plan pricing to more rational levels reflective of the tremendous value of our <unk>.

Marco: Services provide to customers. Despite some green shoots those didn't stick throughout the quarter.

Marco: Nevertheless, we held firm to our strategy and we chose not to match every promotional offer just for the sake of capturing a higher number of subscriber activations rather as I said, our focus was on acquiring margin accretive customers and increasing our service bundle penetration given its importance as a churn management and value driver tool.

Mirko Bibic: In fact, all of our new post-paid customer net activations this quarter were on the main Bell branch.

Marco: In fact, all of our new postpaid customer net Activations. This quarter were on the main Bell brand.

Mirko Bibic: Moreover, in an effort to strike a better pricing tier balance between our various brands, we stopped selling prepaid service on Virgin Plus at the end of September and we plan to discontinue Bell-branded prepaid service in Q4.

Marco: Moreover, in an effort to strike a better pricing tier balance between our various brands, we stopped selling prepaid serving on prepaid service on Virgin plus at the end of September and we plan to discontinue Bell branded prepaid service in Q4.

Mirko Bibic: Now on to residential wireline. Not surprisingly, fiber continues to anchor new internet subscriber growth and drive higher multiproduct penetration, contributing to a 15% increase in households subscribing to mobility and internet service where we have fiber. Notably, internet revenue growth improved to around 5%, which represents our best quarterly results since Q2 of 2023, and it's a direct reflection, again, of our balanced approach to broadband market share growth and disciplined pricing.

Marco: Now onto residential wireline.

Marco: Not surprisingly fiber continues to anchor new internet subscriber growth and drive higher multi product penetration contributing to a 15% increase in household subscribing to mobility and Internet service, where we have fiber.

Marco: Notably Internet revenue growth improved to around 5%, which represents our best quarterly result, since Q2 of 2023, and it's a direct reflection again of our balanced approach to broadband market share growth and disciplined pricing.

Mirko Bibic: Now I'll talk about media. Digital revenues were up 19% over last year, and that helped to offset the secular pressures in traditional media platforms. And digital now comprises 42% of total media revenue. This result was driven by continued growth in products such as Crave with Ads and Connected TV, strong client demand for Bell Media's advanced advertising solutions, and ongoing direct-to-consumer streaming growth. And investments to sustain the strategic shift to digital are continuing with the availability of TSN and RDS content on Amazon Prime Video channels in Canada. and the expansion of Bell Media's existing licensing agreement with Warner Brothers Discovery announced in 2023 to extend Cray for multiple years as the exclusive home of HBO and of Max Compton.

Marco: Now I'll talk about media digital revenues were up 19% over last year and that helped to offset the secular pressures in traditional media platforms.

Marco: And digital now comprises 42% of total media revenues. This result was driven by continued growth in products, such as Craig with ads and connected TV strong client demand for Bell media as advanced advertising solutions and ongoing direct to consumer streaming growth.

Marco: And investments to sustain the strategic shift to digital or continuing with the availability of TSN and Rds content on Amazon Prime video channels in Canada.

Marco: And the expansion of Bell medias existing licensing agreement with Warner Brothers Discovery announced in 2023 to extend crave for multiple years as the exclusive home of HBO and of Max content.

Mirko Bibic: Bell Media also recently secured a content and licensing agreement with NBCUniversal to bring USA Network and Oxygen True Crime cable channels to Canada for the first time. Discovery Canada will be rebranded as USA Network at the start of next year.

Marco: Bell Media also recently secured a content and licensing agreement with NBC Universal to bring USA network and oxygen true crime cable channels to Canada for the first time.

Marco: Discovery candidate will be rebranded as USA network at the start of the year of next year.

Mirko Bibic: As for our transformation initiatives, we're making significant progress modernizing how we operate across the company by leveraging technology, automation, and simplification in a way that's more agile, digital, and lower cost. And all this is designed to drive significant capex and operating cost efficiency. Although these initiatives have required upfront investments, and more investments will be made as we further accelerate this transformation, we're already seeing the benefit in terms of CapEx efficiency. In fact, we're ahead of plan in decreasing CapEx by more than $1 billion over the 2024-2025 time frame, including a year-to-date reduction this year of more than $600 million while working towards our fiber bill target of 8.3 million locations by the end of next year.

Marco: As for our transformation initiatives, we're making significant process progress modernizing how we operate across the company by leveraging technology automation and simplification in a way that's more agile digital and lower cost and all of this is designed to drive significant capex and operating cost efficiencies although.

Marco: These initiatives have required upfront investments and more investments will be made as we further accelerate this transformation, we're already seeing the benefit in terms of Capex efficiencies. In fact, we're ahead of plan and decreasing capex by more than $1 billion over the 2020 for 2025 timeframe, including a year to date.

Marco: A reduction this year of more than $600 million, while working towards our fiber build target of $8 3 million locations by the end of next year.

Mirko Bibic: However, as we move more workloads to the cloud, it will result in a shift of dollars from CapEx to OpEx that will moderate margin expansion in the short term, but this will be meaningfully cash-cost-decretive longer term. And we remain on track to deliver in-year savings of approximately $200 million from workforce reductions announced in February. These are just a few examples of the initiatives and workstreams currently underway at Bell that are contributing to better efficiencies and lower costs.

Marco: However, as we move more workloads to the cloud. It will result in a shift of dollars from Capex to Opex that will moderate margin expansion in the short term, but this will be meaningfully cash cost accretive longer term.

Marco: And we remain on track to deliver in year savings of approximately $200 million from workforce reductions announced in February.

Marco: These are just a few examples of the initiatives and work streams currently underway at bell that are contributing to better efficiencies and lower costs.

Mirko Bibic: We also continue to advance our transformation to a tech services leader in the B2B space with FX Innovation's acquisition last month of HGC Technologies, a leading ServiceNow managed services provider based in Montreal. This investment builds on our purchase in July of Cloud Kettle, based in Halifax, to further strengthen FXI's expertise in process automation, cloud technologies and digital transformation. and in line with our strategic goal to become a cybersecurity managed services leader in Canada and North America. Complimenting our acquisition of tech services company Stratagem in July, we expanded our relationship with Palo Alto Networks in a first-of-its-kind partnership to offer their full suite of managed security services.

Marco: We also continued to advance our transformation to a tech services leader in the <unk> space with FX innovations acquisition last month of <unk> technologies, a leading service now managed services provider based in Montreal. This investment builds on our purchase in July of cloud Curdle based in Halifax to further.

Marco: Strength in FX size expertise and process automation cloud technologies and digital transformation.

Marco: And in line with our strategic goal to become a cyber security managed services leader in Canada, and North America.

Marco: Complementing our acquisition of Tech services company Strategem in July we expanded our relationship with Palo Alto networks and a first of its kind partnership to offer their full suite of managed security services.

Mirko Bibic: This agreement directly supports our Bell Business Markets growth agenda and is already evident in key wins with some of our largest Canadian customers.

Marco: This agreement directly supports our bell business markets growth agenda and is already evident in key wins with some of our largest Canadian customers.

Mirko Bibic: Against the backdrop of these investments, on Monday we announced our acquisition of Ziply Fiber, the largest broadband and fiber internet provider in the U.S. Pacific Northwest. The acquisition marks a bold milestone in Bell's history. It's a significant investment that will help us take our competitive edge beyond Canada and it will enhance long-term growth for Bell by providing us with a foothold in the under-penetrated U.S. fiber market while increasing our scale, diversifying our operating footprint, and establishing a platform for further expansion opportunities. The acquisition is immediately accretive to cash flow from operations, enhancing BC's financial growth profile.

Marco: The backdrop of these investments.

Marco: On Monday, we announced our acquisition of simply fiber the largest broadband and fiber internet provider in the U S Pacific Northwest.

Marco: The acquisition marks a bold milestone in <unk> history, it's a significant investment that will help us take our competitive edge beyond Canada, and it will enhance long term growth for bell by providing us with a foothold in the Underpenetrated U S fiber market, while increasing our scale diversifying our operating footprint.

Marco: And establishing a platform for further expansion opportunities.

Marco: The acquisition is immediately accretive to cash flow from operations enhancing BCS financial growth profile, we expect the transaction to be free cash flow accretive post the completion of simply fibers planned fiber build out to more than 3 million locations. All in it will help to support our long term capital market.

Mirko Bibic: We expect the transaction to be free, cashflow-creative post the completion of Zimply Fibre's planned fibre build-out to more than 3 million locations. All in, it will help to support our long-term capital markets objectives. We intend to finance a transaction largely with the $4.2 billion of net proceeds from the pending sale of MLS. Effectively, what we're doing is monetizing an asset with no impact on BC's operating results to fund the acquisition of an asset aligned with our core business and our fiber growth strategy, which is, again, very strategic, growth-focused, redeployment of capital, and one that will be accretive to free cash flow in the long term.

Marco: Objectives.

Marco: We intend to finance the transaction largely with the $4 $2 billion of net proceeds from the pending sale of MLC effectively what we're doing is monetizing an asset with no impact on <unk> operating results to fund the acquisition of an asset aligned with our core business and our fiber growth strategy, which is again very.

Marco: Strategic growth focused redeployment of capital and one that will be accretive to free cash flow in the long term.

Mirko Bibic: Importantly, as part of the condition of sale of MLSE, as you all know, Bell Media secured access to content rights for the Maple Leafs and Raptors for the next 20 years, and that will solidify TSN's position as Canada's sports leader.

Marco: Importantly, as part of the condition of sale of MLC as you all know Bell media secured access to content rights for the Maple Leafs and Raptors for the next 20 years and that will solidify <unk> position as Canada Sports leader.

Mirko Bibic: The pending sale of Northwestel that we announced earlier this year is another clear indication that we'll take seriously any opportunity to monetize assets where and when it makes sense.

Marco: The pending sale of northwest held that we announced earlier. This year is another clear indication that we will take seriously any opportunity to monetize assets, where and when it makes sense.

Mirko Bibic: Turning now to slide 5, reviewing with you some key operating metrics for the quarter, again starting first with wireless. We added 102,196 new net mobile phone subscribers in Q3, down from 167,000 in Q3 of last year. Although post-paid net ads of 33,111 were down compared to an exceptionally strong prior year, consistent with our operating strategy to focus on margin accretive subscriber ads and disciplined device subsidization, like I said at the beginning, all new customers were on our main bell brand. While post-paid churn this quarter was up against the backdrop of elevated competitive activity relative to seasonal trends and higher than we'd like, it did represent a third consecutive quarter of deceleration in the year-over-year rate of income.

Marco: I'm, turning now to slide five our reviewing with you some key operating metrics for the quarter again, starting first with wireless we added 102196, new net mobile phone subscribers in Q3 down from 167000 in Q3 of last year.

Marco: Although postpaid net adds of 33111 were down compared to an exceptionally strong prior year consistent with our operating strategy to focus on margin accretive subscriber adds and disciplined device subsidization like I said at the beginning all new customers were on our main Bell brand.

Marco: While postpaid churn this quarter was up against the backdrop of elevated competitive activity relative to seasonal trends and higher than we'd like it did represent a third consecutive quarter of deceleration in the year over year rate of increase so we're moving in the right direction when it comes to churn.

Mirko Bibic: So we're moving in the right direction when it comes to churning. Prepaid net ads were up considerably versus last year, increasing to 69,085. This represents our best quarterly results since Q3 2019, and it's a direct reflection of the strategy to increasingly address the flanker and newcomer market with our prepaid brand. Close off on wireless, ARPU was down 3.4%. As expected, this result represents the accumulation of excessive rate plan discounting and promotional offer intensity over the past year. Until prices stabilize, we'll continue to focus our efforts on delivering enhanced customer experiences and value and on improving wireless ARPU and margin.

Marco: Prepaid net adds were up considerably versus last year, increasing to 69085.

Marco: This represents our best quarterly results since Q3, 2019, and it's a direct reflection of the strategy to increasingly address the flanker and Nu Mark newcomer market with our prepaid brand.

Marco: To close off on wireless <unk> was down three 4%.

Marco: As expected. This result represents the accumulation of excessive rate plan discounting and promotional offer intensity over the past year.

Marco: Until prices stabilize we'll continue to focus our offer our efforts on delivering enhanced customer experiences and value and an improving wireless ARPA and margins.

Mirko Bibic: Although we believe that Q3 should be the peak quarter of decline, the magnitude and timing of ARPU recovery will depend on how aggressive Black Friday and holiday promotions will be.

Marco: Although we believe that Q3 should be the peak quarter of decline the magnitude and timing of <unk> recovery will depend on how aggressive black Friday and holiday promotions will be this year.

Mirko Bibic: Now to Wireline. In Internet, we delivered 42,415 new net retail subs. Although the environment remains ultra-competitive and overall industry growth is slowing, we continue to capture the majority of new growth in our markets. because of our Superior Fiber Internet Service Office. We also added around 9,200 new NetITTV subscribers.

Marco: Now to wireline and Internet, we delivered 42415, new net retail subs.

Marco: Although the environment remains ultra competitive and overall industry growth is slowing we continue to capture the majority of new growth in our markets.

Marco: Because of our superior fiber Internet service offering.

Marco: We also added around 9200, new net IP TV subscribers.

Mirko Bibic: And lastly, I'll turn to Bell Media. Total advertising revenue increase for a third consecutive quarter on the strength of digital, the strength of life sports, and our acquisition of OutEdge that we completed in June. Crave subscribers were up an impressive 12% to more than 3.4 million, driven by a 34% increase in direct-to-consumer streaming subscribers. TSN and RDS digital subscriptions collectively grew subscribers by 45% thanks to premium sports content including the President's Cup, Euro Cup, Soccer, Copa America, and the Summer Olympics which helped TSN and RDS retain their number one rankings in Q3 yet again. Bell Media once again let all competitors in the French-language entertainment and pay specialty market, while Nouveau continued to grow market share, with primetime audiences increasing 4% compared to the same fall-to-date period last year.

Marco: And lastly, I'll turn to Bell media.

Marco: Total advertising revenue increased for a third consecutive quarter on the strength of digital the strength of live sports and our acquisition of our edge that we completed in June.

Marco: Crave subscribers were up an impressive 12% to more than $3 4 million driven by a 34% increase in direct to consumer streaming subscribers Tia.

Marco: TSN and Rds digital subscriptions collectively grew subscribers by 45%.

Marco: To premium sports content, including the President's Cup Euro Cup Soccer Copa America, and the Summer Olympics, which helped TSN and Rds retained the number one rankings in Q3, yet again.

Marco: Bell media once again led all competitors in the French language entertainment and pay specialty market, while new vault continue to grow market share with primetime audiences, increasing 4% compared to the same fall to date period last year.

Mirko Bibic: In summary, the Bell team continues to consistently execute our plan with discipline in the most competitive market we've seen in years to grow subscribers responsibly, to serve our customers with the best pure fiber and mobile 5G network. and of course the reduced cost to align with the revenue profiles of each of our segments.

Marco: In summary, the.

Marco: The Bell team continues to consistently execute our plan with discipline in the most competitive market. We've seen in years to grow subscribers responsibly to serve our customers with the best pure fiber and mobile <unk> networks to further improve the customer experience through digitization and of course to reduce costs to align.

Marco: With the revenue profiles of each of our segments Jude.

Mirko Bibic: Due to top-line pressures in the first three quarters of the year stemming mainly from lower than anticipated product sales, which Curtis will discuss, as well as an unconstructive wireless pricing environment, we're revising BCE revenue guidance for 2024, and again, Curtis will cover that with you in a second.

Marco: Judah topline pressures in the first three quarters of the year stemming mainly from lower than anticipated product sales, which Curtis will discuss as well as an unconstructive wireless pricing environment. We're revising BCE revenue guidance for 2024, and again Curtis will cover that with you in a second on that I will turn the call over to him for the.

Mirko Bibic: On that, I'll turn the call over to him. Thanks for the time, everyone, and looking forward to the Q&A after Curtis presents. Great.

Speaker Change: Time, everyone and.

Speaker Change: And looking forward to the Q&A after Curtis presents great. Thank you Marco and good morning, everyone.

Curtis Millen: Thank you, Mirko.

Curtis Millen: And good morning, everyone. I'll begin on slide seven with BC's consolidated financial results. We delivered positive service revenue growth for a second straight quarter on the back of stronger internet revenue growth, as well as the continued successful execution of our B2B tech services and digital-first media strategy. Total revenue was down 1.8%. Similar to the last quarter, this was due to a 14.3% decrease in low-margin wireless and wireline products. which included the loss of revenue from the source foreclosures and conversions to Best Buy. A positive service revenue result was achieved despite an intensely competitive pricing environment, particularly in wire.

Marco: I'll begin on slide seven with Bce's consolidated financial results.

Marco: We delivered positive service revenue growth for a second straight quarter on the back of stronger Internet revenue growth as well as the continued successful execution of our <unk> services and digital first media strategies.

Marco: Total revenue was down one 8% similar to the last quarter. This was due to a $14, 3% decrease in low margin wireless and wireline product sales, which included the loss of revenue from the <unk> store closures and conversions to best buy express.

Marco: Our positive service revenue result was achieved despite an intensely competitive pricing environment, particularly in wireless where we intentionally slowed down subscriber acquisition to strike a better balance between volume growth and economics, so as to not lock end customers on low <unk> contracts.

Curtis Millen: where we intentionally slowed down subscriber acquisition to strike a better balance between volume growth and economics, so as to not lock in customers on low ARPU contracts. Against this competitive backdrop, the transformation investments Mirko described are helping to drive very meaningful OPEC savings, as evidenced by a 4.8% reduction in operating costs this This drove a 1.7 point improvement in margin to 45.6.

Speaker Change: Against this competitive backdrop the transformation investments Marco described are helping to drive very meaningful opex savings as evidenced by a $4 8% reduction in operating costs. This quarter. This drove a $1 seven point improvement in margin to 45, 6%, which bears repeating was our best result in well over 30 years.

Curtis Millen: Spares repeating was our best result in well over Net Earnings and Statutory EPS declined in Q3. This resulted from approximately $2.1 billion in non-cash asset impairment charges, mainly for Bell Media's TV and radio properties, to reflect continued market-related pressures on the traditional advertising. Advertising EPS was down six cents versus last year. This was due to higher financing costs and depreciation and amortization expense as profiled in our plan at the beginning of the Consistent with our plan to reduce capital spending by at least $500 million in 2024, CapEx was down $205 million in Q3, bringing year-to-date CapEx savings to more than $600 million.

Marco: Net earnings and statutory EPS declined in Q3. This resulted from approximately $2 $1 billion in noncash asset impairment charges, mainly for Bell media as television and radio properties to reflect continued market related pressures on the traditional advertising ecosystem.

Marco: Advertising EPS was down <unk> <unk> versus last year.

Marco: This was due to higher financing costs, and depreciation and amortization expense as profiled in our plan at the beginning of the year.

Marco: Consistent with our plan to reduce capital spending by at least $500 million in 2020 for Capex was down $205 million in Q3, bringing year to date capex savings to more than $600 million.

Curtis Millen: This helped drive a 10.3% increase in free cash flow for The greater year-to-date CapEx savings can be attributed to the realization of efficiencies from our prior investments in digital transformation initiatives. And most importantly, these efficiencies will enable us to operate at lower capital intensity levels in future years while continuing to invest in key strategic areas.

Marco: This helped drive a 10, 3% increase in free cash flow for Q3.

Marco: The greater year to date Capex savings can be attributed to the realization of efficiencies from our prior investments in digital transformation initiatives. Importantly, these efficiencies will enable us to operate at lower capital intensity levels in future years, while continuing to invest in key strategic areas.

Curtis Millen: Turning the bell CTS on slide eight. Product revenue was down notably this quarter, decreasing by $114 million compared to Q3 2023. More than half of the year-over-year decline was due to lower sales at the source that I just referenced. The remainder can be attributed to lower mobile phone transaction volumes, which are down 25%, and the timing of mobile and data equipment sales to large enterprise clients, particularly in the government. And importantly, the EBITDA impact was non-material, as these product revenues are very low material. Internet revenue is up approximately 5% representing our best quarterly growth rate since Q2 2023.

Speaker Change: Turning to Bell Cts on slide eight.

Speaker Change: Product revenue was down notably this quarter decreasing by $114 million compared to Q3 2023.

Speaker Change: More than half of the year over year decline was due to lower sales at the source that I just referenced.

Speaker Change: The remainder can be attributed to lower mobile phone transaction volumes, which are down 25% and the timing of mobile and data equipment sales to large enterprise clients, particularly on the government sector.

Speaker Change: Accordingly, the EBITDA impact was not material as these product revenues are very low margin.

Speaker Change: Internet revenue was up approximately 5%, representing our best quarterly growth rate since Q2 2023 and.

Curtis Millen: An encouraging result that shows we are striking a responsible balance between broadband market share. and subscriber profitability. The decrease in wireless service revenue this quarter was largely expected given sustained price compression over the past year, which has had a significant cumulative impact on Quarters performance also reflects a step up in data overage decline and lower outbound roaming revenue as customers continue to move to larger capacity in North American data We also saw continued strength in business solutions, where revenue grew 10% over last year as our enterprise strategy further progressed. This was driven by higher sales of cloud-based computing, managed automation, and security services.

Speaker Change: An encouraging result that shows we are striking a responsible balance between broadband market share.

Speaker Change: Subscriber profitability.

Speaker Change: The decrease in wireless service revenue this quarter was largely expected given sustained price compression over the past year, which has had a significant cumulative impact on arco.

Speaker Change: This quarter's performance also reflects a step up in data overage decline and lower outbound roaming revenue as customers continue to move to larger capacity in North American data flash.

Speaker Change: We also saw continued strength in business solutions, where revenue grew 10% over last year as our enterprise strategy. Further progresses. This was driven by higher sales of cloud based computing managed automation and security services as well as our recent acquisitions of strategy and cloud Kettle, which complement our acquisition of <unk>.

Curtis Millen: as well as our recent acquisitions of Stratagem and Cloud. which complement our acquisition of FX Innovation Lab. In fact, when excluding the favorable impact of those acquisitions, Business Solutions revenue still grew a strong 7% organically. Bell's CTF EBITDA was positive, growing by 0.2%, to yield a strong margin of 46.7%. That's a 160 point increase over last year, and the direct results of our significant and ongoing focus on cost management, as evidenced by a 6.2% reduction in operating costs.

Speaker Change: X innovation last year.

Speaker Change: In fact, when excluding the favorable impact of those acquisitions business solutions revenue still grew a strong 7% organically.

Speaker Change: Bell Cts EBITDA was positive growing by 2% to yield a strong margin of $46, 7% at $160 increase over last year and a direct result of our significant and ongoing focus on cost management as evidenced by a $6, 2% reduction in operating costs this quarter.

Curtis Millen: Over to Bell Media on slide 9. Strong financial performance marked by a second consecutive quarter of revenue and EBITDA growth. Total advertising revenue is up 7.9% Driven by Stronger TV Sports Specialty Performance, Continued Robust Digital Advertising Growth, and our acquisition of OutEdge. Describer revenue growth of 13.5% reflected retroactive adjustments related to contract renewals for certain Canadian TV distributors, as well as continued D2C craze and sports streaming growth. Consistent with the increase in revenue, media EBITDA was up 25.1%, driving a substantial 3.9 point increase in margins to 32.5%. Even when normalizing for the retroactive revenue Belmida Ibata was up a very solid 5%.

Speaker Change: Over to Bell media on slide nine.

Speaker Change: Strong financial performance marked by a second consecutive quarter of revenue and EBITDA growth.

Speaker Change: Total advertising revenue was up seven 9% driven by stronger TV or specialty performance continued robust digital advertising growth and our acquisition of outer edge media.

Speaker Change: Subscriber revenue growth of 13, 5% reflected retroactive adjustments related to contract renewals with certain Canadian TV distributors as well as continued D to C crave and sports streaming growth.

Speaker Change: Consistent with the increase in revenue media EBITDA was up 25, 1% driving a substantial 309 point increase in margin to 32, 5%.

Speaker Change: Even when normalizing for the retroactive revenue adjustments Bell media EBITDA was up a very solid 5% this quarter.

Curtis Millen: Turning to slide 10, balance sheet remains quite well positioned with $4.4 billion of available liquidity, a well-structured debt maturity schedule, and a strong solvency surplus of $4.1 billion for all BC defined benefit pensions. At 3.7x adjusted EBITDA, our debt leverage ratio is essentially unchanged compared to Q2, even with the recent acquisitions of OutEdge, Stratagem, and CloudKey. Importantly, the funding for our planned acquisition of ZipliFiber is being structured to maintain our net debt leverage ratio relatively unchanged and our credit ratings investment growth. No incremental debt will be required to finance this transaction. Rather, we intend to fund with MLSC net sale proceeds totaling $4.2 billion, together with cash generated from implementation of a discounted Treasury DRIP program that is commencing with BC's Q4 2024 Common Share Dividend In the event that Ziply Fiber acquisition is completed before sale of MLSE, we have secured a fully committed delayed draw term loan facility to meet the cash funding requirement at close time.

Speaker Change: Turning to slide 10 balance sheet remains quite well positioned with $4 4 billion of available liquidity, a well structured debt maturity schedule and our strong solvency surplus of $4 1 billion for all BCE defined benefit pension plans.

Speaker Change: At $3 seven times adjusted EBITDA, our debt leverage ratio was essentially unchanged compared to Q2, even with the recent acquisitions of <unk> strategy and cloud cattle.

Speaker Change: Importantly, the funding for our planned acquisition of simply fiber is being structured to maintain our net debt leverage ratio relatively unchanged and our credit ratings are investment grade.

Speaker Change: No incremental debt will be required to finance this transaction.

Speaker Change: Rather we intend to fund with <unk> net sale proceeds totaling $4 2 billion together with cash generated from implementation of a discounted treasury drip program that is commencing with Bce's Q4, 2020 for common share dividend payment.

Speaker Change: In the event that typically fiber acquisition is completed before sale of MLC. We have secured a fully committed delayed draw term loan facility to meet the cash funding requirement at closing.

Curtis Millen: Lastly, on slide 11, as you read in our press release this morning, we are revising our revenue guidance target for 2020. As I referenced earlier, Bell CTS product revenues are down approximately $200 million a year to date.

Speaker Change: Lastly on slide 11, as you read in our press release. This morning, we are revising our revenue guidance target for 2024.

Speaker Change: As I referenced earlier Bill Bell Cts product revenues are down approximately $200 million year to date, which is substantially more than anticipated at the start of the year.

Curtis Millen: Thank you all. Thank you. Moreover, we have been facing sustained wireless price compression over the past year, which has increasingly put pressure on ARPU and wireless service revenue. As a result of these near-term top-line pressures, We now expect total BC revenue to decline by approximately 1.5%. down from our previous expectation of 0 to 4%. Importantly, all other financial guidance targets for 2024 as announced in February remain unchanged. We believe this revised revenue outlook is appropriate and responsible, given the current competitive and economic environments that we are currently navigating, and provides an appropriate amount of flexibility to make the right business decisions for the long-term outcome.

Speaker Change: Moreover, we have been facing sustained wireless price compression over the past year, which is increasingly put pressure on <unk> wireless service revenue growth as.

Speaker Change: As a result of these near term top line pressures. We now expect total <unk> revenue to decline by approximately one 5% this year down from our previous expectation of zero to 4% growth.

Speaker Change: Importantly, all other financial guidance targets for 2024 as announced in February remain unchanged.

Speaker Change: We believe this revised revenue outlook is appropriate and responsible given the current competitive and economic environments that we're currently navigating and provides an appropriate amount of flexibility to make the right business decisions for the long term health of the company on that I will now hand, the call back to <unk> and the operator to begin Q&A great. Thanks Curtis are before we start so we can get.

Thane Fotopoulos: On that, I'll now hand the call back to Thane and the operator to begin Q&A. Great. Thanks, Curtis.

Unknown Executive: So before we start, so we can get to everybody in the queue, I would ask to please limit yourselves to one question and a brief follow up. So with that, Matthew, we are ready to take our first. Thank you.

Speaker Change: To everybody in the queue I would ask to please limit yourselves to one question and a brief follow up so with that Matthew we are ready to take our first question.

Sebastiano Petti: Our first question is from Sebastiano Petti from JP Morgan. Please go ahead. Hi, thank you. Mirko, obviously, you know, Ziply's EBITDA, you know, pro forma for Ziply, you know, that would only constitute, you know, call it a low to mid single digit percentage of BC's current EBITDA.

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

Speaker Change: Okay.

Sebastiano Petti: Hi, Thank you Marco.

Speaker Change: Yes, obviously simply EBITDA.

Speaker Change: Pro forma for example that would only constitute.

Speaker Change: Call it low to mid single digit percentage of Bce's current EBITDA.

Mirko Bibic: As you think about, you know, the PC's new, you know, let's call it a US based strategy, how should we gauge, you know, the company's appetite for further M&A in the in the US long term? How meaningful of a contribution could this US fiber strategy be to consolidated financials over, call it, you know, the medium long term? You know, maybe said differently, is this a one off opportunity to pursue high growth assets that just happen to be in the US? Or do you think the US, you know, become could become a more meaningful driver of BCE's growth algorithm over time?

Speaker Change: As you think about.

Speaker Change: In Dcs new much.

Speaker Change: Let's call it a U S based strategy, how should we gauge the company's appetite for further M&A in the U S long term.

Speaker Change: How meaningful of a contribution could this U S fiber strategy be to consolidated financials over call. It the medium long term maybe said differently.

Speaker Change: Is this a one off opportunity to pursue high growth assets that just happened to be in the U S or do you think the U S.

Speaker Change: Could become a more meaningful driver of Bce's growth algorithm over time.

Mirko Bibic: Thank you. Thank you for the questions.

Speaker Change: Thank you.

Speaker Change: Thank you for the question John.

Mirko Bibic: Maybe I'll start by First Principles, and then work down to the specific question, if you... https://www.youtube.com or the link in the video description. https://www.youtube.com Sorry about that, if you could hear me, I'll start again, Sebastiano, I was partially on mute there. You know, we're a fibre-first company and fibre is at the heart of what we do and fibre is the superior technology compared to anything else out there. So you know, we start with that premise and you can, we've invested billions in Canada on becoming a fibre-first company and you can see it quarter after quarter, the performance that we're delivering, including, you know, this most recent quarter that we're reporting on in a very, very competitive environment.

Speaker Change: So maybe I'll start by.

Speaker Change: And the basic first first principles and then work down to the specific question if you.

Speaker Change: The highest level.

Speaker Change: Fiber fiber is at the core of what we do we turn ourselves into a fiber one.

Speaker Change: Companies fiber is a superior technology to anything else that is out there.

Speaker Change: Sorry about that if you can hear me I'll start again as the best channel.

Speaker Change: Partially on mute there.

Speaker Change: We're a fiber first company and fibers at the heart of what we do in fibers that are superior technology compared to anything else out there. So we start with that premise and you can we've invested billions in Canada on becoming a fiber first company and you can see it quarter after quarter.

Speaker Change: The performance that we're delivering including.

Speaker Change: This most recent quarter that we're reporting on it.

Speaker Change: Very very competitive environment, we're generating 5% internet revenue growth and positive.

Mirko Bibic: We're generating 5% internet revenue growth and positive ARPUs. So it keeps winning and then, you know, if you're based on that becoming a, having been and becoming, having become a fibre-first company, you kind of look at where the growth opportunities are and when we looked at the U.S., like I said on Monday, you know, we're so much further ahead in Canada in terms of how much fibre has been built and in terms of the value being delivered to customers here on a price and value perspective. And you know, the U.S. is just behind us. So it's a, it's a great growth opportunity that's right in our swim lane.

Speaker Change: <unk> so.

Speaker Change: It keeps winning and then.

Speaker Change: Based on that becoming having been in becoming having become a fiber one company you kind of look at where the growth opportunities are and one when we looked at the U S. Like I said on Monday, we are so much further ahead in Canada in terms of how much fiber has been built and in terms of the <unk>.

Speaker Change: Value being delivered to customers here on our price and value perspective, and the U S is just behind US. So it's a it's a great growth opportunity that's right in our swim lane and so now ZIP lease specifically there is a high growth potential within the App.

Mirko Bibic: And so now on Ziply specifically, there is a high growth potential within the asset itself, particularly in those kind of IGDP attractive customer kind of states. But it also had, you know, the Ziply management team has done a tremendous job transforming what was a legacy asset into a modern asset, not just from a fibre network perspective, but how they serve the customer and their IT stack. So as we look at other opportunities, if other opportunities come up, we'll take a look. And what Ziply Fibre has built would allow us, if there were other opportunities that came along to, you know, to include those within the Ziply Fibre platform and be able to kind of.

Speaker Change: That itself, particularly in those kind of GDP.

Speaker Change: Tractive customer kind of states.

Speaker Change: But it also had the ZIP lean management team has done a tremendous job transforming what was our legacy asset into a modern asset not just from our fiber network perspective, but how they serve the customer and their it stack. So as we look at other opportunities if other opportunities come up we'll take a look and what.

Speaker Change: ZIP lead fiber has built would allow us if there were other opportunities that came along too.

Speaker Change: Two to include those within the ZIP lead plat simply fiber platform.

Speaker Change: And be able to kind of.

Mirko Bibic: Consolidate and merge other assets into what ZipliFibre has built in an elegant way. So I think all to say, if there are other opportunities where we can turbocharge the already high ZipliFibre growth, we'll take a look.

Speaker Change: Consolidate and merge other assets into what simply fiber's built in in an elegant way. So I think I would also say if there are other opportunities where we can turbocharge the already high simply fiber growth, we'll take a look.

Speaker Change: Thank you.

Vince Valentini: Thank you. Our next question is from Vince Valentini from TD Securities.

Speaker Change: Thank you. Our next question is from Vince Valentini from TD Securities. Please go ahead.

Vince Valentini: Please go ahead. Hi, thanks very much.

Vince Valentini: Alright, thanks very much.

Vince Valentini: Can I come back to your core business and try to clarify a couple of things the First of all, they write down on TPIA subs. So 106,000 customers in your footprint are currently writing on cable TPIA, so you have to shut down that business and do you have to turn off the customers or you just don't count them in your sub-base anymore? And a second part of that, would you not fully intend to try to just migrate those to your own networks because you have a network to every home in these regions?

Vince Valentini: Come back to your core business and try to clarify a couple of things.

Vince Valentini: First of all the write down on Tpa subs. So 106000 customers in your footprint are currently riding on cable Tpa. So you have to you.

Vince Valentini: Cut down that business and do you have to turn off the customers or are you just don't count them in your sub base anymore.

Speaker Change: Second part of that.

Speaker Change: Would you not fully intend to try to just migrate those to your own networks thing is you have a network and to every home in these regions.

Vince Valentini: I'm a little surprised why you'd need to take the subscriber right down there and what's gonna happen to these customers going forward. Similar on the prepaid, if you can just clarify, if you take out 78,000 for Virgin prepaid, I assume you'll take another sub right down in Q4. If you're gonna shut down the Bell prepaid, can you just level set us on what that does to ARPU? I assume that should mean that ARPU mathematically will get a little bit better in Q4 and Q1. Thanks.

Speaker Change: Modal surprised why you would need to take their subscriber right down there and what's going to happen to these customers going forward.

Speaker Change: On the prepaid if you can just clarify if you take out 78000 for Virgin prepaid icing will take another sub write down in Q4, if youre going to shut down the <unk> prepaid can you just level set us on what that does to <unk> I assume that should mean that our Peru mathematically, we will get a little bit better.

Speaker Change: In Q4 and Q1.

Mirko Bibic: So I'll start first on the TPIA resale business and Curtis will cover the wireless question. Vince, good morning. Look, on the on the resale business, the reseller business, it's the ruling from the CRTC essentially puts a stop to that resale business. So the reason for the subscriber modification is that we can we can no longer add subscribers on TPIA as part of that collection of brands that we were operating, you know, Distributel, etc. The hundred six thousand customers that that are that are ours today under those various brands that operate on that that are served off of the cable network, we can continue to serve them for as long as they choose to remain our subscribers on those networks because they are grandfathered, but we cannot add new subscribers.

Speaker Change: So I'll start first on the GPI resale business and Curtis will cover the wireless question Vince Good morning.

Vince Valentini: Look on the.

Vince Valentini: On the resell business the reseller business, it's the ruling from the CRT see essentially.

Vince Valentini: Puts a stop to that resell business so the.

Vince Valentini: The reason for the subscriber modification is that we can.

Vince Valentini: We can no longer add subscribers on tpa as part of that collection of brands that we were operating distributed et cetera. The 106000 customers that are that are that are ours today under those various brands that operate on that are served off of the cable networks.

Vince Valentini: We can continue to serve them for as long as they choose to remain our subscribers on those networks because they are grandfathered, but we cannot add new subscribers on tpa. So that that business is essentially shut down now on on the migration from from cable to fiber.

Mirko Bibic: So that business is essentially shut down. Now on the migration from cable to fiber, that was the business, one of the significant elements of the business case of those acquisitions all along was migrating. Where we have fiber footprint, migrating those subscribers to fiber, and we've done quite a bit of that already. So I don't have off the top of my head how many of the 106,000 customers are also in fiber footprint, but for those that are, we'll continue to migrate them. And where we don't have fiber, we're going to keep them on TPIA for as long as they remain our subscribers or our customers.

Vince Valentini: That was the business one of the significant elements of the business case of those acquisitions, all along was migrating where we have fiber footprint migrating those subscribers to fiber.

Vince Valentini: And we've done quite a bit of that already so so I don't have off the top of my head how many of the 106000 customers are also on fiber footprint, but for those that are we will continue to migrate them and where we don't have fiber, we're going to keep them on tpa for as long as they remain our subscribers, so where our customers. So that's the answer on that one.

Curtis Millen: So that's the answer on that one, Vince, and I'll turn it over to Curtis for wireless. Then, Vince, on the second one, you're right. So in terms of the prepaid stop sell on Bell, so we'll stop selling that service on Bell, and you're right, it's a very small impact, but there will be a small benefit to our group. Thank you.

Speaker Change: Vince I'll turn it over to Curtis for wireless and then Vince on the second one youre right. So in terms of.

Vince Valentini: Prepaid stop sale on balance we'll stop selling.

Vince Valentini: That service on on Bell and Youre right. Its a very small impact, but there will be a small benefit to ARPA.

Speaker Change: Thank you.

David Barden: Our next question is from David Barden from Bank of America.

Speaker Change: Thank you.

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

David Barden: Please go ahead.

David Barden: Oh, good morning. Thanks for taking the question. It's Matt sitting in for Dave this morning. I just wanted to ask about the broadband business. I think you've referenced in your remarks, or maybe it was just in the press release, higher deactivations, you know, due to promotions and competition and so on. But there's also reference to, you know, success and, you know, increasing the percentage of subscribers who are bundled, which usually would have, I would think, you know, a churn benefit. So maybe if you can put those into context, and maybe, you know, share, you know, what the what, you know, kind of churn reduction, or, you know, other benefits you're getting from bundling these subscribers together.

Speaker Change: Oh good morning, Thanks for taking my question, it's Matt sitting in for David This morning.

Speaker Change: Just wanted to.

Speaker Change: Ask about the broadband business I think you referenced in your remarks or maybe it was just in the press release higher deactivation.

Speaker Change: Due to promotions and competition and so on but there is also reference to succession.

Speaker Change: Increasing the percentage of subscribers, who are bundled which usually would have I would think a churn benefit. So maybe if you can put those into context and maybe.

Speaker Change: Sure.

Speaker Change: What kind of churn reduction or other benefits you're getting from bundling these subscribers together.

Mirko Bibic: It'd be helpful. Thanks. So it's what you're seeing is, you know, the general market is generally slowing whether or not it's on the wireline or the wireless side. And there's a number of factors there. One is population growth, particularly newcomer growth is going to be, you know, more more sustained than what we would have thought given new policies, you know, that that has an impact on housing starts, and that's penetration increases in both segments, you'll just kind of see a slowing of market growth, although the markets are continuing to grow. In that environment, we're continuing on wireline.

Speaker Change: It would be helpful. Thanks.

Speaker Change: So it's.

Speaker Change: What youre seeing is the general market is generally slowing whether or not it's on the wireline or the wireless side and there's a number of factors. There. One is population growth, particularly newcomer growth is going to be.

Speaker Change: More more sustained than what we would've thought given new policies.

Speaker Change: As an impact on housing starts and that penetration increases in both segments, you'll just kind of <unk>.

Speaker Change: A slowing of market growth, although the markets are continuing to grow in that environment, where continue on wireline side continuing to take.

Speaker Change: Share away from our competitors or taking a larger share of new market growth and that's because of our product superiority with with fiber.

Speaker Change: And we have a particularly strong mix of customers coming in on the high speed tiers now it is a highly competitive pricing environment right now our game again, both in wireless and wireline so youre seeing when you're talking about the Activations youre seeing the impact of some of our competitors choose.

Speaker Change: To protect market share at any and all costs and youre seeing that in some of the results of our of our peers, where we're particularly since you asked me about wireline youre seeing serious.

Mirko Bibic: Our go-to-market approach, Matt, we're bloating customers in at the high-speed tiers, which has higher ARPU. We are being very diligent in the customers we're bringing in on the premium brand, so always favoring Bell over Virgin, and that applies both to internet and wireless. And of course, there's the benefit of lower churn for customers who buy more than one product from us. that you got to be really disciplined in an environment like this, getting the right loads on the right brands and not chasing every single load at all costs, because that's not a winning formula. And, you know, we made we made that call.

Speaker Change: I said it probably five times in my opening remarks.

Speaker Change: Is that you got to be really disciplined and in an environment like this getting the right loads on the right brands and not chasing every single load at all cost because that's not a winning formula.

Speaker Change: And when we made that call and I think you see it in the in the margin expansion.

Mirko Bibic: And I think you see it in the in the margin expansion. And I think in the long run, it's going to help us particularly as prices stabilize, because they're going to have to.

Speaker Change: And I think in the long run.

Speaker Change: It's going to help us, particularly as prices stabilize because they're going to have to.

Mirko Bibic: Thanks, and maybe a quick follow up is your views on convergence. I mean, there's some who view it as a more of a defensive strategy. But you're you're kind of referencing your share gains and so on. Like for Bell, are you looking at your converged offering as more of an offensive strategy? Or is it you know, defensive to protect what you have. It's, well, we're doing we're doing both. And it's just kind of managing the entire kind of portfolio across the board. Now, our mix of customers who buy both either the you know, an existing wireless adding internet or an existing internet adding wireless or a new to Bell buying both at the same time, that's increasing.

Speaker Change: Thanks, and maybe a quick follow up.

Speaker Change: Your views on convergence I mean, theres, some who view it as a more of a defensive strategy but.

Speaker Change: Sure.

Speaker Change: You referenced your share gains and so on like for Bell are you looking at your converged offering has more of an offensive strategy or is it.

Speaker Change: Defensive to protect what you have.

Speaker Change: It's well we're doing we're doing both and it's just kind of imagine the entire kind of portfolio across the board now.

Speaker Change: Our mix of customers, who buy both.

Speaker Change: Either.

Speaker Change: An existing wireless, adding internet or an existing internet, adding wireless or are new to bell buying both at the same time, that's increasing so.

Mirko Bibic: So that mix is increasing. But if you look at our overall base, you know, the bundled customer is still the minority of customers. in terms of the overall mix.

Speaker Change: So that mix is increasing but if you look at our overall base.

Speaker Change: The bundled customer is still.

Speaker Change: The minority of customers.

Speaker Change: In terms of the overall mix.

Unknown Executive: Thank you so much.

Speaker Change: Alright, thank you so much.

Unknown Executive: Thank you.

Drew Mcreynolds: Our next question is from Drew McReynolds from RBC Capital Markets.

Speaker Change: Thank you.

Speaker Change: Our next question is from drew Mcreynolds from RBC capital markets. Please go ahead.

Drew Mcreynolds: Please go ahead. Yeah, thanks very much.

Drew Mcreynolds: Yes, thanks very much good morning.

Drew Mcreynolds: Good morning. For you, Marko, a big big picture question, and it just kind of ties, I think, a lot of the earlier questions together. And it's on the outlook for industry growth in Canada. And within that, just trying to kind of gauge an EBITDA growth profile for BCE. You know, you have the revenue headwinds this year, which you characterize as transitory. They're holding the line on 2% consolidated EBITDA and doing, you know, great work on lowering the cost to serve. So the two questions is, do you see industry revenue growth in Canada staying positive, given all the kind of maturity, competitive, substitution, regulatory dynamics?

Drew Mcreynolds: Thank you Marco.

Speaker Change: Big picture question, and just kind of tires I think a lot of the earlier questions together.

Speaker Change: And it's on the outlook for industry growth in Canada, and within that just trying to kind of gauge and EBITDA growth profile for BCE.

Speaker Change: Yes, the revenue headwind headwinds this year, which you characterized as transitory.

Speaker Change: So we're holding the line on 2% consolidated EBITDA and doing great work on lowering the cost to serve so thank.

Speaker Change: Two questions is do you see industry revenue growth in Canada same positive given all the kind of maturity competitive substitution regulatory dynamics and then second.

Drew Mcreynolds: And then second, are you able to, within that environment, sustain positive EBITDA growth on the core business here in Canada?

Speaker Change: Are you able to within that environment and sustain positive EBITDA growth on the core business here in Canada.

Mirko Bibic: Good question. Thank you. Look on the, if you break down the revenue, like Thank you This is It's understandable, and of course, it's low-margin, so the flow-through impacts are relatively small. On the service side, it really is a question of needing the pricing to more appropriately align to the value that we are delivering to customers, and kind of give you some examples. We've had to, and I mentioned this, I think, at the last quarter, making sure that there's proper stratification across repaid and postpaid, and across the various brands, therefore, and also across the two brands in postpaid.

Speaker Change: A good question. Thank you look on the if you break down the revenue.

Speaker Change: Two two chunks product and service on the product side, we really have.

Speaker Change: The impact of that as Curtis said.

Speaker Change: The shutdown and conversion of the sore stores and there hasnt been and also lower phone sales generally as customers have shifted too.

Speaker Change: Bring your own device and in our case, so on the wireline side we've had.

Speaker Change: Some.

Speaker Change: Wireline equipment.

Speaker Change: Revenue declines and there's been some timing issues on January on recognizing some of the revenue on the wireline side, So that's a product which which.

Speaker Change: It's understandable and of course, it's low margin so the flow through impacts of relatively small on the on the service side. It really is a question of needing the pricing to more appropriately aligned to the value that we're delivering to two customers and kind of give you some math.

Speaker Change: Some examples like we've had two.

Speaker Change: And I mentioned this I think at the last quarter, making sure that there's proper stratification across repaid in postpaid.

Speaker Change: And across the various brands, therefore and also across.

Speaker Change: The two brands in postpaid.

Mirko Bibic: And I think everyone lost its way in that regard in the early part of this year. And so that's why I spent some time in my remarks talking about that. Now if you look at October, October pricing was lower year over year, but better than what we saw in Q1 and Q2. And part of that is kind of that proper stratification across prepaid, flanker postpaid, and premium postpaid. Is there going to be growth going forward? Yeah, I think so. I think pricing is gonna need to stabilize, number one, and then we'll get through some of the other impacts that we're seeing.

Speaker Change: And I think everyone lost its way in that regard in the early part of this year.

Speaker Change: And so that's why I spent some time in my remarks talking about that.

Speaker Change: Now if you look at October.

Speaker Change: October pricing was lower year over year.

Speaker Change: But better than what we saw in Q1 and Q2.

Speaker Change: And part of that is kind of that proper stratification across prepaid flanker postpaid and premium postpaid.

Speaker Change: <unk>.

Speaker Change: Is there <unk>.

Speaker Change: <unk> to be growth going forward, yes, I think so I think it's <unk>.

Speaker Change: Pricing is going to need to stabilize number one and then we will get through some of the some of the other impacts that we're seeing in our case data overage decline like we manage our data overage very very tightly over the last four five years.

Mirko Bibic: In our case, data overage decline. We've managed our data overage very, very tightly over the last four or five years. So our data overage decline has been over a much longer period of time than some of our competitors, and that was a good thing. And then we'll get through the outbound roaming pressures. But I think I would focus on the areas of growth. The areas of growth are the key things, that's what you've got to do.

Speaker Change: So our data overage decline has been over a much longer period of time some of our competitors and that was a good thing.

Speaker Change: And then we will get through the outbound roaming pressures, but so I think I would focus on the areas of growth.

Speaker Change: The areas of growth are the key things that's what you've got to do so in our case it's fiber.

Mirko Bibic: So in our case, it's fiber. 5G wireless is going to grow. It's just, you know, the pricing environment's got to stabilize. Business solutions revenue, which is another growth factor for us, some impressive growth, as Curtis mentioned, and that hardcore pivot in media from traditional broadcasting to digital, it's paying off now. And you can see it in the results. So it's continue to invest in those growth areas. And I've talked about this throughout the entire year, like, you've got to align your cost structure in those segments that are declining to align the cost to the revenues.

Speaker Change: <unk> wireless is going to grow it just the pricing environment has got a stabilized business solutions revenue, which is another growth vector for us some impressive growth as.

Mirko Bibic: And if the declining some assets are going to perpetually decline, we might we might shed those lines of business like some of the radio stations. So we're being pretty diligent in managing the declining segments in order to continue to kind of harvest those in an accretive fashion. And we're continuing to invest aggressively in the growth areas. And Monday was an example. Thanks.

Unknown Executive: That's a great compliment.

Unknown Executive: Thank you.

Maher Yaghi: Our next question is from Maher Yaghi from Scotiabank.

Maher Yaghi: Please go ahead. Thank you for taking my question. Low-profit wireless subs is the right strategy.

Maher Yaghi: But it's hard to extirpate yourself from this long term, because you are a national incumbent player. And if you don't stay competitive, it could lead to material market share loss.

Maher Yaghi: So how should we think about the strategy going into 2025? As we look at these issues, and it And, you know, how can you take, how can you solve these issues if we're not seeing a clear sign that the competition which is pressuring those prices is looking to change their approach to the marketplace? So I'm just, you know, because when we headed into 2024, you're seeing And, you know, decent wireless pricing and strong subscriber loading. And as we head into 2025, we're seeing negative pricing and. declining momentum in subscriber loading, very, very low subscriber growth at all.

Maher Yaghi: So how can we generate revenue growth in 2025 in that approach, in that approach, the strategy that you're taking?

Mirko Bibic: Thank you.

Mirko Bibic: Thanks, Mayor. Simple on fiber continues to grow, so our market share is growing, our revenue is growing, our ARPU is growing. So continue to invest there on wireless, on the Bell brand. The market share is strong and the market share is stable to growing, so we're going to continue to focus on the Bell brand. So I am looking at the numbers behind the numbers, and like I said, all the loadings were on the premium Bell brand, and that's a good thing, and that sustains market share. The significant growth that we've had on prepaid, particularly on the Lucky Brand for us, means you bring the customers in, and then we're going to have to focus on life cycle management and get the customers from, migrate them from the prepaid, their entry point, over to the premium brand over time.

Mirko Bibic: So that's going to sustain growth and market share stability.

Mirko Bibic: And the third element to that is lower the cost of service. and you do those things, we'll be okay. to your point or maybe underlying kind of what you're what you're saying in your question.

Mirko Bibic: There is no hiding for from the fact and this is an industry point that I'm going to make now there is no hiding from the fact that The impacts of low pricing will be felt. for Quarters in the future, right? So. you feel. feel the impact of a low pricing environment, six, nine and 12 months later, there's a trailing effect on that. And some are going to feel that more dramatically than others based on chasing low accretive loads at all costs.

Mirko Bibic: And just following up on this point, when you look at the post-pay churn that you had in the quarter, what's your expectation about that API? Can you solve it through proactive measures that you can take to protect your own subscribers or it's more an industry-wide phenomenon that it's hard to bring down? I think it's a bit of both, Mayor. I'm not happy with where Churn is.

Mirko Bibic: Like, comment, share and subscribe! would be given given the numbers. However, look, I'm also pleased with the improving trajectory. So kind of two sides of that coin. It is a reality, a marketplace reality that consumers are continuing to shop for deals given the sustained aggressive promotional offers that are in the marketplace. So because of that, you're going to see a lot of switching activity. That said, there are a number of tools at our disposal to minimize that churn. That's why we've seen an improving trajectory. I'm not going to outline chapter and verse of all the things we're doing because it's competitive.

Mirko Bibic: But some of the things we're doing are taking hold and you're seeing the improving trajectory, which I've now said a couple of times. And we're going to continue to focus on that to make sure that that improving trajectory continues to improve. But yeah, I mean, churn is where it's at. We've got to get it lower.

Simon Flannery: Our next question is from Simon Flannery from Morgan Stanley.

Simon Flannery: Please go ahead. Thanks very much. Good morning. I wanted to just talk about the balance sheet again, if I could. Obviously, MLSC brought in a lot of or will bring in a lot of liquidity. And then you're reinvesting that and Ziply getting more production on the EBITDA line and the growth line.

Simon Flannery: Could you just talk about other ways to enhance the balance sheet? What are your thoughts given these deals around tower monetization, additional real estate monetization, and some of these structured equity deals that some of your peers are looking at? Thanks.

Mirko Bibic: Yeah, hi, Simon. Thanks for the for the question. And so a couple of things there. One, you're right, we, you know, we announced the acquisition of Ziply Fibre shortly on the heels of announcing MLSC. So ultimately, we're, we're selling off a sports asset at a great value that that didn't contribute to our financials, and acquiring a fast growth fibre company that will expand our footprint and drive, as you say, EBITDA and free cash flow. So leverage neutral, basically, there, I think that's just good capital allocation. And then in terms of other asset sales, you know, we're, we're constantly reviewing opportunities to improve our asset portfolio.

Mirko Bibic: And if there's an opportunity to unlock value or capture a growth opportunity, then then for sure, we're going to look at it. And you know, Towers is one that you mentioned, you know, asset securitizations, you know, we'll look at it, it's all a matter of use of proceeds. And fundamentally, is it a better allocation of capital? And does it drive EBITDA and free cash flow growth for our shareholders?

Aravinda Galappatthige: Our next question is from Aravinda Galappatthige from Canaccord Genuity. Please go ahead. Good morning. Thanks for taking my question.

Aravinda Galappatthige: On the CapEx outlook, Mirko, I think that you'd sort of indicated at some of the public conference calls that, you know, there's perhaps even more downside as we kind of look to 2025 and beyond. You know, given the US venture and obviously the incremental CapEx that comes with that, do you think that there's even more room to sort of readjust the capital spend in the Canadian market in light of sort of those commitments and try and perhaps, you know, manage the balance sheet and free cash flow payout ratio factors? That was my first time to have a follow-up.

Mirko Bibic: Thank you for that, Aravinda. So on CapEx, a couple of things. So for this year, we're trending to be within our guidance for CapEx, which is essentially around a 16.5% capital intensity ratio. And we'd said in the past that Bell, as it is today, Bell CapEx can get to less than 15%. And that continues to be the plan. And we're doing that through a number of things. First of all, modernizing our operations, getting more efficient on delivery, moving workloads to the cloud. And it's things like implementing self-install capabilities, virtual repair, contact centers in the cloud.

Mirko Bibic: All these things that we're doing to streamline and modernize our operations and become more efficient is allowing us to run our business at a lower cap, you know, with a lower CapEx budget. Then we're going to get to the end of our 2025 fiber build-out target, you know, essentially in 12 months or so. Of course, we hope to, and we will continue to build in Canada, but we're going to determine where we can get a reasonable return on investment from those continued fiber investments going forward. But all of that, that CapEx efficiency and allowing us to run in Canada at less than 15% is going to give us the room to accelerate the Zibley fiber build program and still operate BCE pro forma the U.S.

Mirko Bibic: at probably around 16.5% consolidated CapEx. And, you know, when we embarked on our accelerated CapEx build in Canada over the last four years, you know, in some years we were over 20%. will be able to do the accelerated build and simply fiber footprint and maintain BC at consolidated 16.5. So I think that's a very good news, both for growth and the efficiency of the investment. Yeah, thanks, Mirko.

Mirko Bibic: Maybe I'll just use my follow up differently for the for your with respect to the comments you just made about the 16 and a half pro forma number. Should we translate that 16 and a half as more of a steady state number? Or, you know, or, you know, I'm trying to understand whether at the peak of the rollout in the US, you know, I suspect it goes a lot higher than that. Or am I wrong? No, no, no. So in terms of that, in terms of the information we shared on Monday, which is that we plan to go from, you know, Ziply currently, Ziply Fibre currently has 1.3 million households passed and we'd like to get to over 3 million by 2028.

Mirko Bibic: That would be done with the consolidated 16.5% is my expectation. I mean, more information to come as we close, but that would be the, that would be the expectation. That's what I was I was trying to convey in my longer answer at the beginning. Thank you.

Jerome Dubreuil: Our next question is from Jerome Dubreuil from Desjardins Securities.

Jerome Dubreuil: Please go ahead. Yes, thanks.

Mirko Bibic: Good morning. First, first, you know, you mentioned the preferred remarks that you continue to make investments in digitization modernization of Bell. I'm wondering how much further operational improvement you are seeing in the Bell business as it stands right now? Can we maybe be expecting a program similar to what you announced earlier this year? Maybe this this could happen every every second year or something? Is this a magnitude that would make sense going forward? Oh, well, we're, um...

Mirko Bibic: Okay, so thank you, Jerome, so let me break that up into two parts. The transformation work or journey continues, right, because we're in the early days of some of the programs to harness the benefits of technology. So moving all our core consumer products to a single ordering and billing architecture, and we're in the process of doing that in Ontario and Quebec, and then there's other regions to bring on board over time and other business segments beyond the consumer business over time. So that's going to bring benefits as we migrate more of our business lines and more of our regions onto a modernized ordering and billing architecture.

Mirko Bibic: So that was just one example, you know, the digital platforms and the self-serve apps and virtual agents and contact centers in the cloud and all the benefits we'll get there from churn reduction, sales increase, and the cost to serve, that's in the early days. So that's going to ramp. Customer self-install has been quite successful, but again, early days, the more fiber homes we have connected, the more we can enable full self-install in the future, continuing to move, you know, the hundreds, the apps that we have on prem to the cloud, you know, we're in the early innings of that journey as well.

Mirko Bibic: So I could go on. So that's that part of it. You know, we're in the early to mid-innings. More to come. That said, like the one thing I didn't mention in my opening remarks, as we move more of our workloads to the cloud, there's going to be a shift from CapEx to OpEx. And so that's going to have some, you know, temporary impact on further margin expansion.

Mirko Bibic: And then on, on programs like the one we announced in February, you know, we continue to kind of, we continue to recalibrate Unknown Executive, Jerome Dubreuil, Martin Cossette, Tim Casey, Mirko Bibic, Thane Fotopoulos, So that's how we're going to approach it. Thank you.

Batya Levi: Our next question is from Batya Levi from UBS.

Batya Levi: Please go ahead. Great, thank you.

Batya Levi: A couple of follow-ups. First, you mentioned that in October you saw a bit of pricing stability. Do you think that we've seen the worst in terms of the output declines and 4Q? Can we start to see maybe just better trends from here? And then same question on churn. Still high, but you're lapping a much higher churn level from last year. So can we expect at least churn to improve annually in the fourth quarter?

Mirko Bibic: Thank you. Yeah, I mean, I'm sure, like I said in response to the mayor, It we'd like to get it lower and we're going to continue to work on getting it lower, but we're happy, pleased with the improving trajectory on ARPU. It's going to depend on Black Friday. and and the holiday period. I think I think rather than rather than making I'll just highlight the obvious, which is, um, you know, if, uh, Black Friday and the holiday period is relatively stable. I'm recognizing that those are heavier promotional periods. by design, I suppose, then we'll be okay.

Mirko Bibic: And if to the extent promotions are more focused on hardware than rate plans, then that'll bode well for service revenue and margin. And maybe, can you maybe just touch on what the guidance assumes in terms of our expectations for ARPU? On revenues, it's in the revised guidance that Curtis, I highlighted earlier in during his remarks. Right. Continuation of service. Got it.

Lauren Bonham: Our next question is from Lauren Bonham from Barclays. Please go ahead. Hi, thanks for taking the question. I wanted to ask about immigration impact on wireless net ads and see how much of the change in trends that we've seen this quarter, usually we have the sequential net ad uplift in in three Q.

Speaker Change: Thank you. Our next question is from Lauren <unk> from Barclays. Please go ahead.

Speaker Change: Hi, Thanks for taking the question.

Speaker Change: I wanted to ask about.

Speaker Change: Immigration impact on wireless.

Speaker Change: And.

Speaker Change: How much of that change.

Speaker Change: <unk> seen this quarter usually.

Speaker Change: You all know that uplift in <unk>, so how much of that change, it's just from being more targeted promotion really as we've talked about burst from the decline in foreign students and how you sort of expect those lower immigration expectation.

Lauren Bonham: So how much of that changes just from being more targeted promotionally, as we've talked about birth from the decline in foreign students, and how you sort of expect those lower immigration expectations to impact industry growth next year, and beyond. Yeah, thank you. Thank you for the question. I think I think there are a couple of trends here. One, you know, immigration levels are still positive, but they are going to slow down year over year. And I think we're continuing to see the benefit of our in our increased focus and distribution channels. So we're doing quite well in this market on a relative basis.

Speaker Change: Industry growth next year.

Speaker Change: Okay.

Speaker Change: Distribution channels, so we're doing quite well in this market on a relative basis, but you're right. The overall pie is shrinking but for us.

Unknown Executive: But you're right, the overall pie is shrinking. But for us, it's not a big, not as big an impact, because we are increasing our share in that market on a historical Thank you. Thank you.

Speaker Change: It's not a big not.

Speaker Change: Not as big an impact because we are.

Speaker Change: Increasing our share in that market on a historical basis, you can see it in the prepaid in the prepaid results.

Speaker Change: Thank you.

Speaker Change: Thank you.

Unknown Executive: There are no further registered questions at this time.

Speaker Change: Thank you there are no further registered questions at this time I would now like to turn the meeting over to Mr. Fotopoulos. Thanks.

Thane Fotopoulos: I would now like to turn the meeting over to Mr. Fotopoulos. Thanks, Matthew. So thank you again to everybody for their participation on the call. As usual, the RR team is available throughout the day for any follow ups, questions and clarification. Have a good rest of the day. Thank you.

Mr. Fotopoulos: Thanks, Matthew so thank you again to everybody for their participation on the call as usual the IR team is available throughout the day for any follow ups questions and clarifications have a good rest of the day. Thank you. Thanks, everyone. Thank you.

Unknown Executive: The conference has now ended. Please disconnect your lines at this time and we thank you for your participation. https://www.youtube.com.uk https://www.youtube.com.uk Meeting has ended.

Speaker Change: Thank you. The conference has now ended please disconnect your lines at this time and we thank you for your participation.

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Speaker Change: Meeting has ended goodbye.

Goodbye.