All participants, please standby. Your conference is ready to begin. Good morning, ladies and gentlemen. Welcome to the BCE Q1 2022 Results Conference Call. I would now like to turn the meeting over to Mr. Thane Fotopoulos. Please go ahead, Mr. Fotopoulos.

Thank you, Elena and good morning to everybody. It's good to be back with all of you this quarter hosting today's conference call. As usual, here with me today are Mirko Bibic, BCE's President and CEO; and our CFO, Glen LeBlanc. You can find all of the relevant Q1 documents on the Investor Relations page of the bce.ca website which we posted earlier this morning. However, before we begin, I'd like to draw your attention to our safe harbor statement 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 our publicly filed documents for more details on assumptions and risks. With that out of the way, I will hand it over to Mirko.

Thank you, Thane and good morning, everyone. We've had a very positive start to the year. Our dedicated Bell team once again delivered strong operational and financial results, driven by consistent and disciplined execution leading broadband networks and services and a focus on service excellence, all underpinned by a set of strategic initiatives that have guided us over the past two years, as you know and that will continue to guide us in 2022 and beyond. Although Omicron undoubtedly is causing some near-term disruption, notably for Bell Business Markets and media advertising, we achieved robust total revenue and adjusted EBITDA growth of 2.5% and 6.4%, respectively, in Q1. This represents the first quarter in which our consolidated financial results surpassed pre-COVID levels. The second year of our historic CapEx acceleration program is in full swing with close to $1 billion in new capital spent in the quarter. We remain on pace to deliver approximately 900,000 new direct fiber connections and further expand our 5G service footprint to more Canadians while also launching a stand-alone 5G core, notably on 3.5 gigahertz spectrum. With our midterm broadband Internet build-out plan, 80% completed and 5G network service available to more than 80% of Canadians by year-end, we expect CapEx to begin decreasing starting in 2023. Bell's wireless performance in Q1 was a highlight as we continue to balance market share growth with operating profitability. We led the industry once again this quarter in service revenue, ARPU and EBITDA growth. In fact, at 8.7%, we delivered our best quarterly wireless service revenue growth rate in 11 years. This is reflective of our consistent focus on high-value postpaid growth and effective subscriber base management. And our new unlimited ultimate plans introduced in February truly demonstrate the value prop of 5G and highlight Bell Mobility's differentiated…

Thank you, Mirko and good morning, everyone. Another quarter of great execution by the Bell team to deliver a strong set of consolidated financial results in Q1. Adjusted EBITDA was a highlight, growing 6.4% on year-over-year increases across all operating segments despite some COVID related headwinds at Bell business markets which affected data product sales in the quarter. Service revenue growth accelerated to 4.2% on strong wireless residential Internet and media results which drove a notable 1.6 points increase in margin to 44.2%. Further transparency, our results this quarter included a onetime retroactive adjustment to Bell Media subscriber revenue. Normalizing for this onetime retroactive adjustment, consolidated EBITDA growth for Q1 would have remained quite healthy at 3.5%. Net earnings increased 35% on the flow-through of strong EBITDA growth as well as higher other income driven by a onetime gain from the sale of Createch in March and a noncash mark-to-market equity derivative gain as a result of BCE share price appreciation in the quarter. Similarly, adjusted EPS was up 14.1% year-over-year to $0.89, reflecting a high EBITDA contribution from operations and lower year-over-year pension financing costs reflecting the strong net surplus position of our post-employment benefit plans, I never get tired of saying that surplus position. CapEx this quarter was down slightly year-over-year due to the timing of spend. We remain firmly on pace to invest around $5 billion in total this year. As free cash flow -- as for free cash flow, our Q1 result was in line with plan and reflected lower cash from working capital due mainly to timing of supplier payments which should reverse out next quarter as well as an increase in interest paid on the higher level of outstanding long-term debt. Let's turn to Wireless on Slide 9. Another set of exceptional financial results…

Great. Thanks, Glen. So before we begin, I want to remind everyone that due to some time constraints this morning because of our AGM that's taking place shortly after this call to please limit yourselves to one question and a brief follow-up, if you must. So we can get to as many of you as possible in the queue. With that said, Elena, we're ready to take our first question.

[Operator Instructions] The first question is from Drew McReynolds with RBC.

Just a great set of results and Glen I'll say surplus position just because you want to say it a little bit more frequently, so congratulations that. A quick one for me. Just it's a data consumption question. Maybe starting with you, Mirko, can you just give us an update on Internet data consumption, household consumption and where you see demand for those bigger, high-speed gig plans going? And then just an equivalent question on what you're observing with 5G handsets and data consumption there as obviously, you want to migrate folks up to the larger data unlimited plans.

Thanks, Drew. Look, I'll start with 5G. We're definitely at the beginning of the upgrade cycle from 4G to 5G and it's going well. Customers on using 5G handsets with 5G plans are definitely consuming significantly more data and therefore, the monthly recurring revenue is higher from that base of customers. So that's quite encouraging. And also especially encouraging to my mind anyway and well, it's a pretty obvious point I'm going to make. So it's not just in my mind. It's especially encouraging that steps are being taken in the marketplace to really monetize 5G because we're making some massive investments here to cover the entirety of the country with 5G. It's capital intensive. We've also spent $9 billion as industry for that spectrum. So we obviously have to monetize it. And you've seen steps being taken particularly by us but by some of the others. So you've got the unlimited ultimate plans which are trying to encourage customers to subscribe to the higher, higher-value unlimited plans in early days but working and you see some moves like speed tier [ph] along that unlimited package set of plans. So that's very positive. On Wireline, look, I don't have to tip to my finger at my fingertips the exact amount of household data that's being consumed but I have quite a bit of confidence that there will be significant demand for the higher speed tiers as we launch those more ubiquitously, 3 gigabits per second upload and download frankly from us on fiber is just the beginning. We're going to continue to be aggressive on that because we really do want to continue to lead on network superiority. It works for us. And we, as I said before, I mean cable technologies just can't match what we'll be able to offer on speed. So as those become more ubiquitous, as applications and usage becomes more prevalent, usage grows even more in the home, those plans are going to have ever more value for customers. And as I've been talking here, Drew, it's the average household usage per month is around over 400 gigs.

The next question is from David Barden with Bank of America.

It's [indiscernible] sitting in for Dave. So I just wanted to circle back maybe to the onetime item that is in the media segment. If you could just maybe elaborate on how much that was in the quarter and what it related to exactly? And then there was a comment made about CapEx decreasing in 2023 which obviously is the year when you're rolling off of the accelerated program. But are you also referring to the kind of base rate capital intensity of '17. Has the potential of stepping down in that year as well. I just wanted to make sure I'm accounting for the decrease correctly.

It's Glen. I'll handle the first part. I think Mirko will make some comments on your questions regarding capital intensity. In the quarter, we recorded approximately a $70 million retroactive BDU adjustment which related to content that Bell Media sells to another BDU. And if I normalize for that on a consolidated basis, the service revenue that we reported at 4.2% would be 2.9%. I mentioned in my opening remarks, consolidated EBITDA would be 3.5. Now this affects our medium segment. So if I look at media, 15.7% revenue growth in the quarter, normalizing for this it would be about $6 million. And again, as I mentioned in my opening remarks, although the EBITDA is a staggering 45%, if I normalize for this $70 million, it would be slightly negative which is what we would have mentioned in Q1. We expected recovery with radio and out-of-home. It's been a little slower due to Omicron than we would have liked. So all in all, a tremendous quarter across the board despite this retroactive BDU adjustment.

Okay. On the CapEx question, I'm not going to give guidance for future years either on the absolute CapEx spend or the capital intensity but I'll give you a directional answer which I hope is helpful. So in the kind of shortish term, we're trying to -- or shortish horizon, we're trying to get to 10 million locations in our operating footprint with next-generation broadband. And I'd like that split to be around 9 million fiber homes and the 1 million wireless home Internet homes that we've already made our service available to. So that's how you'd get to 10. At the end of this year, with the accelerated CapEx program, we'll be in and around 7.1 million fiber locations. So there's kind of a 1.8 million to 1.9 million more fiber locations yet to do. And we'd like to get those done by the end of 2025. So that kind of gives you a sense of the plan. So what I can tell you on CapEx spend is the $5 billion or so that we're spending this year is our peak CapEx year. And then it's going to start coming down by. How much, we'll have more to say on that as next year comes. But you have a sense of our -- of what our journey is. And the strategy is working and this is why we're doing this and really in a fairly short period of time with 9 million fiber locations and 1 million wireless home Internet locations, we really are building kind of long-life fiber infrastructure. And to me, investors should be very pleased with that. We have a clear strategy, we're making the investments to support it. I already talked about the -- in answering Drew's question, I already talked about fiber superiority to cable technology, so I won't repeat that. But not only do we have a structural advantage over cable but we also are miles ahead of U.S. telcos on that journey. And at the end of that 10 million location build that I've been talking about, there's going to be some pretty strong free cash flow upside.

The next question is from Stephanie Price with CIBC.

Just following up on the last question. Just curious, the U.S. telecom companies basically highlighted the fact that they're seeing more growth from fixed wireless. And I was hoping to get your updated cost on fixed wireless and whether Bell considering a broader rollout of the technology beyond the $1 million you've already talked about?

I think the 1 million -- the 1 million locations for us is kind of the right footprint. Can it go up on the margins or down on the margins as we do some fiber overlying some communities, sure. But kind of 1 million is the right one. It's a service that's really, in our minds, directed to better use or better utilized for rural and remote locations that otherwise would have access to fiber broadband in the near to medium term. So that's where it really does hunt. I would not put wireless home Internet up against fiber. I certainly wouldn't. So fiber is the long -- the short-, medium- and long-term goal here for us and again, reemphasize the benefit to investors over the very long term for Bell to have built long-life fiber infrastructure. I can't underestimate the value of that for the long term.

Great. And just to follow up on the enterprise business. I wonder if you can quantify the impacts on the supply chain issues. And maybe give us a bit more an update on how you think about that rolling out for the rest of the year?

Look, we're not immune to the supply chain challenges, that's for sure. I mean we've managed the handset supply on the consumer side fairly well. So that hasn't been an issue. But on business data equipment, it has had an impact. There are some long delivery cycles that we're having to contend with. And Glen mentioned that in his opening remarks. So we're expecting that to continue for the balance of the year. The current delays on order fulfillment probably isn't going to subside in the near term. The good news is that's also having an impact on follow-on service revenue that will be associated with business equipment that we'd otherwise be supplying. But it's not a competitive issue which is the really good news. I mean it's not like business is going through competitors, it certainly is not. We're just going to have to tough it out through the delays on fulfillment and then the revenues will come both on the product and the follow-on service revenue side.

The next question is from Vince Valentini with TD Securities.

Question on wireline revenue. So in your commentary, you said higher acquisition retention and bundled discounts on residential services was one of the factors for the service revenue decline. Can we flesh that out a bit more? Are we just sort of pendulum bouncing back to close to the middle after the pandemic when there wasn't much customer activity and therefore, not as much sort of promotional cost within your revenue? Or are we actually talking about elevated levels of competition starting to creep back into the battle between you and the cable companies? And if so, or if not, is there any major difference by region or by province in that competitive battle.

Vince, it's Glen. I'll make a few comments here. I know Mirko wants to add anything but your information is perfect. This isn't a significant step-up in promotional activity. It's more of a return to historical norms after we went through such a quiet period of promotional activity during the pandemic. So I would say there's nothing alarming events in our eyes. It's more of a return to historical norm.

That's great, Glen. Maybe a quick -- because that was a quick answer. I'll do a quick follow-up. The 91% figure, I'm still a bit fuzzy on what it means. 91% of your customers that take Internet and TV are on fiber-to-the-home. Is that just within areas where fiber is available? Or are you saying that's across your entire footprint, even though 40% -- 35% or 40% of your homes still don't have access to fiber.

No, it's the former, Vince. So it's 91% of TV and Internet customers in fiber footprint are on a fiber network completely. And therefore, that kind of speaks to -- there's [indiscernible] there in fiber footprint that we need to migrate from some type of copper service might be home phone to fiber and then on the copper decommissioning journey that I introduced or hinted at it to last quarter and that we're really looking at very closely this year in terms of a planning year so that we can kind of attack copper decommissioning at scale, I guess, for a better word -- for lack of a better word, in 2023 and beyond.

And the 91% was the same as last quarter but I assume that's just because the fiber footprint is growing. You're still migrating people but the denominator is changing.

Got it. You've got it.

The next question is from Jerome Dubreuil with Desjardins.

First one is on the ARPU trend. During the quarter, obviously, we have the data for the whole quarter but I'm trying to assess the impact of January with Omicron here. Was there a material difference between the period during which there were restrictions and when the economy was more reopened? And then second, in terms of your guidance, you had a broader range than usual. The pandemic is now better understood. We've seen a competitor increasing its guidance. Would it be fair to assume you maybe now expect EBITDA to land toward the higher end of your guided range now?

Jerome, it's Glen. I'll handle the last first and the guidance ranges that we provided, I reconfirmed this morning. We remain very comfortable with those ranges, an accurate depiction of where we'll end up and I'm not going guide with more specificity on where we fit into that guidance.

And on ARPU growth, January versus February versus March, I mean I don't really have much to add there. There's not much frankly deviation between the three months. But let me -- since you raised ARPU, let me provide a little bit more color on our ARPU growth. Certainly, the roaming rebound was a factor there. But it accounted for just about half or slightly more than half of the ARPU growth. So nowhere near the full growth is accounted for by roaming. I'm really pleased with that because it really demonstrates a healthy mix in the business. We've got roaming that was part of it but nowhere near the entirety of it. So you're really talking about some strong organic growth there in terms of showing that the strategy that we are on is working.

The next question is from David Joyce with Barclays.

Just a question on the EBOX acquisition. What should we expect from a product and subscriber road map from this? And what is the leveragability of this asset into other geographies? If you could please provide some more color on that.

Yes. So you asked some pretty important strategic questions there which kind of I'm not going to disclose on a call for competitive reasons. I'll just leave it at -- kind of repeat what I said in my opening remarks, it was an important strategic acquisition for us because it will allow us to be that even more competitive than we currently are, particularly in the kind of value-conscious segment of the Quebec market. So we're going to continue to be competitive and put the pressure on in the province of Quebec, both with our aggressive fiber expansion and the continuation of the EBOX service and the EBOX brand.

The next question is from Simon Flannery with Morgan Stanley.

The churn was very impressive, down about 10 basis points year-over-year. If we looked at the U.S. guys, they were up a couple of basis points year-over-year. So it'd be great to just unpack that a little bit in terms of what you're seeing involuntary, voluntary churn and how we should think about your ability to sustain or even improve from here?

Well, maybe I'll take the very last part of it. And Glen, if you have anything to add, please do. So sustainability, I think -- well, I hope it is. I mean because we're doing -- we're doing a number of things. We've been doing a number of things strategically to get churn down. So clearly, the customer-first approach that we're on is working, so we have better customer experience overall. We are offering tremendous overall value, right, whether or not it's on pricing on quality, 5G, et cetera. And certainly, we're at the forefront of that. But the industry is doing a tremendous job overall. Installment plans, the launch of those a couple of years ago certainly has helped churn in my view and devices are lasting longer which is helping churn. And then, on -- the involuntary churn is stable and voluntary churn is down.

Exactly. Simon, just as Mirko said, we're seeing lower transactions in the industry and that obviously benefits all in churn. And to your point, incredibly pleased with our postpaid churn in the quarter at 0.79% and the improvements quarter-over-quarter and year-over-year.

The next question is from Sebastiano Petti with JPMorgan.

Just following up on the wireline segment. I think, Glen, you talked about OpEx down 4% there on a year-on-year basis. Outside of perhaps the lower margin kind of product sales that perhaps didn't come through, anything else that unpack there, what you're seeing perhaps related to Vince's question on the network commissioning. Any underlying drivers we should be thinking about there as it pertains to the rest of the year outside of perhaps the product sales impact?

No. I mean, obviously, when we have low product sales, both in our wireless segment and in our wireline segment, you're starting to see that play out in margin expansion, low-margin product sales not there. So naturally, the consolidated margin improves. Couple that with in our Wireless segment, we had a significant flow-through of roaming which comes at extremely high margin. So that drives margin expansion on the consolidated business as well. You've mentioned copper decommissioning. These are early days. It's a little early for that. The more we continue to roll out fiber though, everywhere we roll out fiber, we start to see reduced truck rolls, improved operating and I mentioned 4%. 4% is our net improvement when you consider that we are absorbing inflationary pressures which affect both wages and benefits. And in our business, fuel probably will cost us $15 million to $20 million more this year than normal -- than last year due to the escalating prices. But that 4% is even more impressive. So it's really just blocking and tackling, being cost conscious as we always are trying to find improvements, reducing calls into our contact centers, doing a really good job with self-serve and fiber is that just keeps on giving. Everywhere we expand fiber, we have lower cost to operate. And as Mirko mentioned earlier, with our aggressive fiber program, go forward, I'm pretty excited about the future and what that's going to do for us on cost benefit.

Yes. And to be pretty blunt, I mean, the copper decommissioning journey has pretty much not started. So that's not -- the benefits you're seeing in this quarter aren't because of copper decommissioning, although it's a very important and significant future tailwind. That's for sure.

Great. And so maybe we're getting some of the lower customer service costs as the business migrate to fiber customers but the decommissioning still later, longer-dated kind of benefit. Anything on the wireless postpaid loading environment. Obviously, the trends seem to be pretty solid across the industry. Any update perhaps on 2Q and how you're thinking on a full year basis?

I think on postpaid loading, we're pleased with Q1. That's for sure. The team executed very well. And as you've heard me say before, including this morning, we're very targeted on the high-value smartphone category. And I would say, getting even more targeted in that category itself. And you can see the benefits in our financial results. I mean there's a -- looking forward, I think -- if you look back a couple -- the last couple of quarters including this one that we're reporting on the operating momentum has been good and it's clearly continuing and it looks like good growth across the industry. So we continue to have things like integration upside and the easing-of-the-score constraints and early 5G momentum and the roaming bounce back and hazard to say [ph] that competitive intensity between two potential emerging parties isn't quite there as it used to be and that's probably benefiting the entire industry. So I'd say those are the elements that I look at to see how things are going to go in future quarters and it's looking good.

The next question is from David McFadgen with Cormark Securities.

Just a question on the retail Internet. So when I look at your presentation, you had 38,000 fiber-to-the-home net adds but the total retail Internet net adds are 26 [ph], you lost 12 in DSL. Just wondering how would that compare to the prior year, like in terms of DSL subscriber losses? And then quickly, just on EBOX. Can you just confirm that most of their subs are around Videotron and I guess it would be logical that over time, you try and move those subs from Videotron to your network?

So the exact -- I don't have at my fingertips the exact ratio of this quarter compared to previous quarters on DSL versus fiber but it has been a trend for several quarters that a consistent trend that our fiber loadings are higher than the net loadings you see and we are gaining in fiber footprint and we're losing subscribers in copper footprint. So that continues to be the case. On EBOX, not to give precise numbers, I won't do that. But yes, strategically, those EBOX subscribers that are on a competitor's network, will migrate over time to our network.

The next question is from Aravinda Galappatthige with Canaccord Genuity.

I want to start off with a follow-up. Mirko, you talked about sort of which you've described as the beginning of the upgrade cycle from 4G to 5G. Thinking about the consumer side, you've already launched TSN 5G. But I wanted to get a sense of what your visibility is around the sophistication of sort of consumer level applications that are in the horizon because it's sort of more, I guess, advanced applications that would sort of really kind of push that migration along. I wanted to get your thoughts on that. And then, on a more general level than wireless, I mean some of the U.S. telecoms have kind of talked about some impact from the economic clouds that we started to see, including in-store traffic and maybe some other items as well. I just wanted to get a sense of looking at April, maybe are you seeing any hints of that at all in Canada.

Aravinda, I'll handle the last part before Mirko discusses the migration from 4G to 5G. But no is the short answer. We're not seeing any economic impacts even in April, the challenges of inflation or the strong economy is not impacting. And I think we're still, in many regards, coming out of COVID, albeit it feels at times, it's two step forward and one step back, store traffic and I think consumer confidence to start moving around again is I think driving more of an impact than any economic headwind is. So the short answer is, not feeling any impacts and that would be true with April as well. I think most importantly, as Canadians get more and more confident, we're excited that we'll see more foot traffic back in our stores to more pre-pandemic levels.

And on the 4G to 5G upgrade cycle, Aravinda, I mean in the early days, really what's driving it likely just a better experience on the network faster, lower latency, better more powerful handsets. I think that's what's driving the initial upgrade cycle. And we are doing our part trying to create consumer awareness and buzz around the power of 5G and you referenced TSN and RDS 5G view. And that certainly has worked to elevate the brand, the awareness of the power of 5G and the brand awareness of Bell as being a premium 5G network. In terms of what's next, well, I think the limits probably our imagination is the limit. It will be a bit like 10, 15 years ago when we moved to 4G and who would have foreseen at the very, very, very beginning the extent of the apps that would be unveiled for the consuming public to enjoy on their handsets and I'm expecting the same kind of seeing with 5G. And I'm also expecting it on the enterprise side in a completely different way. But with 5G -- low latency converged fiber and 5G with MEC, cloud, et cetera. So I think there's a lot of potential there on both the consumer side and the business side, of course.

There are no further questions registered at this time. I will now turn the meeting back over to Mr. Fotopoulos.

Thank you, Elena. So I want to thank everybody for their participation on the call this morning. That said, I will be available throughout the day for any follow-up questions or clarification. So have a great rest of the day, everybody.

Thank you, everyone.

Thank you.

Thank you. The conference has now ended. Please disconnect your lines at this time. And we thank you for your participation.