Good morning, ladies and gentlemen. Welcome to BCE's First Quarter 2012 Results Conference Call. I would now like to turn the meeting over to Mr. Thane Fotopoulos. Please go ahead.

Thank you, Jenny. Good morning, everybody. Joining me as usual today, I have Bell's President and CEO, George Cope, as well as Siim Vanaselja, our CFO. Our call this morning will focus on BCE's first quarter results that we announced earlier this morning. Our news release supplementary information package as well as our slide presentation can be found on our corporate BCE website. Following the review of the slide presentation, George will speak [indiscernible] we'll move to Q&A. However, I want to caution that because of our AGM this morning that will take place right after the call at 9:30, we must end the call at or shortly before 9:00 a.m. this morning. However, before we begin, I want to remind you that today's remarks will certain forward-looking statements with respect to items such as revenue, EBITDA, adjusted EPS, free cash flow and capital intensity. Several assumptions were made by us in preparing these forward-looking statements, and there are risks that our actual results will differ materially from those contemplated by the forward-looking statements. For additional information on such risks and assumptions, please consult BCE's 2011 Annual MD&A as updated in BCE's 2012 Q1 MD&A and BCE's press release dated May 3, 2012 announcing our financial results for the first quarter of 2012, all filed with the Canadian Securities Commission and with the SEC and which are also available on BCE's website. Any forward-looking statements made represent BCE's expectations as of today and, accordingly, are subject to change after such date. Except as maybe required by Canadian securities laws, we do not undertake any obligation to update or revise any forward-looking statement whether as a result of new information, future events or otherwise. And I am making this cautionary statement on behalf of both George and Siim, whose remarks today will contain certain forward-looking statements. On that note, I'll hand it over to George.

Great. Thanks, Thane. Good morning, everyone, and thank you for joining us. I'm going to begin on Slide 4 and start with Wireless and then review some points. In terms of our Wireless results, really, a very strong quarter for the company. Most importantly, all of the key financial metrics are moving in the right direction. Our net adds are 63,000 on postpaid. Although down year-over-year, it was a much better mix of postpaid clients. We continue to target our objective of 33% plus incumbent market share. And as noted, our postpaid smartphone mix is now at 52%. And importantly, that means we have 48% to migrate through, and we continue to see higher ARPU from client who migrate to smartphones. Our postpaid and our over -- postpaid focus is driving the ARPU growth. We saw data revenue growth of 31%. And with our blended ARPU up 4.2% year-over-year, our focus in terms of the postpaid market continues to pay off significantly for us. Importantly also is our business subscriber base and our strategy of improving our performance in Western Canada is beginning to pay dividends, as you can see, both those bases up nicely year-over-year on the slide. Importantly as well is we have begun to see a reduction in our postpaid churn of 1.35% in Q1 versus 1.41% last year. And we found in March the churn was better, was at the best month of those 3 months in the quarter. And we anticipate some improvement as we go into Q2 as well. The net new entry ports have reduced significantly over the last year on a year-over-year basis. We're not on par yet with the new entrants, but interestingly enough in some cases, we are. So that impact on our churn has begun to be positive for…

Thanks, George, and good morning to everyone on the call. I'll begin with a quick summary of our financial results on Slide 10 of the deck. Our execution in the first quarter, I'm happy to say, demonstrated a solid start for the year, highlighted by strong Wireless performance, stabilizing business markets performance, some ongoing promotional discounting in the residential marketplace and media results that delivered a strong contribution to earnings and free cash flow. Total revenue growth at Bell was 11.6%. That reflects the final quarter of incremental revenue contribution from the acquisition of CTV, which, as you know, we began reporting in the Bell Media segment starting in the second quarter of 2011. Excluding Bell Media, Bell's revenues were essentially unchanged year-over-year. But I would say that if normalizing for the reclassification of our portal business to Bell Media, Bell revenues, excluding CTV, actually increased about 1%. EBITDA was up 6.6% in the quarter. Excluding Bell Media, Bell's EBITDA increased 1.3%, and that was driven by the standout Wireless EBITDA growth that we experienced of 13%. And that was achieved while activating a higher volume of smartphones year-over-year. We anticipate having captured greater than 1/3 market share of incumbent postpaid subscribers in the quarter. CapEx accelerated this quarter. That was on continued broadband fiber deployment and network conditioning and support of IPTV. Also, Wireless spending increased year-over-year with the ongoing buildout of our 4G LTE wireless network in urban markets. In the quarter, we generated higher year-over-year net earnings and a significant increase in free cash flow, which, together with our strong balance sheet, supports the ongoing execution of our business plan and capital structure objectives for 2012. Adjusted EPS increased $0.03 per share over last year to $0.75. In addition to the contributions from higher year-over-year EBITDA, the…

Great. [Operator Instructions] Jenny, we're ready to proceed.

[Operator Instructions] Our first question is from Maher Yaghi from Desjardins Capital.

I just wanted to ask you on the Wireless side, I was quite surprised by seeing your usage per subscriber going up from 256 minutes to 285 minutes in the quarter. Can you maybe talk a little bit about what's driving this higher usage in Wireless? And on the ARPU, of the 4.2% increase in ARPU, how much of that is because of your prepaid has declined year-on-year? I mean, just trying to understand what's driving this increase. Is it mainly on the back of postpaid ARPU increases, or the mix is helping the ARPU increase?

Sure. So on the usage, it really would be the growth in our overall postpaid base and also the continued growth we're seeing on the business side and winning back some market share business we would have lost a number of years ago when we didn't have things like global roaming, et cetera. So I think that's driving it. In terms of our overall ARPU, we're, as you know, trying to now report the mixed ARPU only, but to help answer the question for analysts, both our postpaid and prepaid ARPU were up year-over-year. But at the same time, because we're doing more postpaid, the overall mix has helped as well. To give you a little more color, you saw our data revenue growth. Our voice ARPU was down about 4.9% a year, and the data growth you'll see on what we reported, so hopefully that will help all the analysts get a sense of what -- where we were in total.

The following question is from Phillip Huang from UBS.

I wanted to touch on something that George mentioned earlier. Given your Fibe TV footprint is still rapidly expanding, can you maybe talk a bit about when we could look forward to a reversal of the dilutive effects to ARPU and margins from the current 6-month acquisition primarily [ph] on Fibe? I believe in TELUS' case, you had said it would be around 500,000 subscriber mark. I'm just wondering if that's a similar rough -- similar benchmark that we should use?

I can't really comment on to what our competitor would say. What I would say is one of the things we did change, we've tried to go from 12-month promotions to 6-month promotions. And the real reason we're doing that is we're finding, and I think people would get it from a customer perspective, after 12 months, it feels much less like a promotion and more like a rate plan. And so it becomes much more expensive at the call center in terms of customers calling in on month 13 because, in fairness, they'd forgotten they had a 12-month promotion. So we're trying to front-end-load as much of the discounts in a 6-month basis, a little more like the Wireless model. The Wireless has never had 12-month type of promotions before. So that's what we've been trying to do. In terms of the ARPU flow-through, we definitely will see a maturing of the IPTV base after the 6 months, and that helps. But as to growth, to your point of IPTV subs, the pace of that, of course, has some impact. But overall, the most important part for us in the quarter is, in the territories where we had IPTV, we were actually RGU positive for the quarter. And we see the footprint growth -- as we said, we're going to go from the 2 million to the 3.3 million at the end of this year. All of that, we think, bodes well for us in terms of getting the Wireline as we go through that continual challenge on Wireline as a way to help moderate that with the growth on the IPTV. Hopefully, that's helpful.

The following question is from Greg MacDonald from Macquarie Securities.

Big postpaid versus prepaid mix over the last couple of years, a big change in that mix. And it was evidenced, I think this morning, George, when you were talking about the 8% postpaid revenue growth relative to the 6% overall. I'm guessing this is positive for EBITDA, because the EBITDA margin this quarter surprised me a bit to the upside. And I know 1Q is the strongest Q for margin. I know there are a lot of moving parts. But I wonder if you just might comment directionally, what's the normalized margin outlook for postpaid -- or sorry, for the business based on where the postpaid mix is going? Is it 39%, 40% as -- I mean I don't know others, but that's kind of what I've been looking at. Or is it more 43%, what you're showing currently in the 1Q?

Yes. So a lot behind the question, so I'll try to keep it brief. I think what I would say is it's very clear. And you're right, where our focus is on the postpaid side, from a distribution perspective, we believe we need to be in the prepaid segment. I've struggled from my 20 years in the industry to understand whether or not anyone's making in the prepaid space at the ARPUs that we see. So why our focus is on postpaid, we see that's where the value for our shareholders are -- is. In terms of margin, I think Siim tried to touch on it. I want to be careful of giving margin guidance, but I think it would be fair to say that we think with the postpaid mix we're seeing, that an overall margin on service revenue north of 40% for 2012, we think, would be something we would like to see happen if that's helpful a little bit for everyone. And I think as Siim said, I think it's probably fair to say we now believe Wireless margins will be a little stronger than we may have anticipated in October, November. Wireline margins impacted a little more because of IPTV growth, IPTV growth. But on balance, I think as Siim has said, we expect the margins to be stable year-over-year, excluding, of course, the media business, which is great free cash flow, but generates, as everyone knows, a lower EBITDA margin.

And just a quick follow-on, just a quick follow-on. What's contributing to the stronger margin outlook for Wireless? Is it costs on devices that are, let's call them, non-iPhone devices? Or where is the industry standing right now on flowing that potential cost benefit to the consumer?

Well, we've struggled with the concept that we're going to see any significant reductions there just because of the success of particular smartphone brands that we're seeing. But for us, it's mix, and it's also an incredible discipline in our organization on cost. I mean, our employee resources on the mobility business were 500 people less at the end of Q1 than at the end of Q4. I mean, we are driving costs across organization culturally, not just in the Wireline business, and so that with the mix of postpaid -- and I think most important, Greg, is the growth in ARPU, right, and the reduction in churn. And if we continue to see the growth in ARPU and some stabilization or improvement in churn, that, as everyone knows on the line, is when the model really flows. And that's what we hope will happen, and therefore, no guarantees, but that's why we're thinking margins may be a little better than 40%.

The following question is from Jeff Fan from Scotia Capital.

My question is on the Wireline side. Early this year, I believe, you guys put through some price increases on the Wireline businesses on the residential side. I'm wondering if you can just talk around this. You had price increases, and your margin was stable in the quarter. Going forward, unless we see more price increases, I'm just wondering what your assumptions are behind keeping Wireline margin stable going forward. Is it all coming through cost cuts?

That's a good question. I think it's fair to say you're right where there were price increases in the marketplace on our side in the first quarter. Based on a number of announcements from competitors, we anticipate price increases from them in the second quarter. And from one sense that should help us from a subscriber perspective in the marketplace, keeping us competitive. I think it's fair to say that some of the aggressive promotions we've seen really, generally, I believe, offset the price increases, if you really look through our numbers. And so that's why we're really try to say is we think the Wireline margins are clearly a little bit less than what would have been expected, and I think it's fair to say the Wireless are a little better. And so we're trying to do, without getting into specific guidance on 2 margins, our outlook is the same. Our guidance is the same, and we think our Wireless and Wireline margin combined will be stable year-over-year. Because it is moving parts. Your growth in IPTV yet better margins in Wireless is what we want to see happen. And that's how we're managing the businesses. And I keep telling in every meeting with investors, we are managing the company on a consolidated EBITDA basis. We just -- we have to do that to drive the dividend growth.

The following question is from Drew McReynolds from RBC Capital Markets.

Just a question on the net TV sub adds. When you look at your satellite business, can you just give some additional commentary on satellite migration versus the intensifying cable competition? As you roll out the IPTV footprint, do you think the migration rate, or call it cannibalization rate, stays stable? And a follow-up question for Siim, just on the NCIB or share repurchases going forward, if you're not doing voluntary pension contributions, just where does share buyback fit in your free cash flow priorities?

Sure, let me handle the first one. I think stable on satellite's a harder one for us to actually know as it rolls out. There's definitely an early propensity. People who have been Bell customers, knowing we have this great new leading technology, of course, asking, and many of those are on satellite services. But in terms of our migration numbers, if the analysts assume a 15% to 20% of our IPTV over time, that might be a safe number to use. And we're learning as we go, here. But overall, we're obviously thrilled with the growth, because it's also the pull-through we're getting on the Internet and the NAS. Something in that range might be a reasonable number, and we'll try to update people every quarter we go through this process.

And with respect to your question on share buybacks, those are certainly an objective within our capital structure objectives for the company. For 2012, we've completed the $250 million in the first quarter that we've been targeting. With the announced acquisitions of MLSE and the pending closing of that, the closing of the acquisition of Astral later in the year, we will be using our surplus free cash flow post common dividends towards those acquisitions. So there won't be further buybacks through the course of 2012. We will look at our surplus cash objectives and priorities for 2013 and provide our guidance early in 2013 on that.

I just want to add something. Thane has said to me, I thought I'd said one thing, and he tells me I said the other. On the satellite, I would think the analyst should be using 15% to 20%. If I said 10% to 15%, I apologize. I thought I had actually said 15% to 20% on the satellite versus IPTV. We think that's a reasonable outlook as we go forward, and we will update as we can every quarter on that.

The following question is from Vince Valentini from TD Securities.

I think you did say 15% to 20%, but I got to say I'm not sure what that means. Are you saying that 15% to 20% of your DTH base will switch to IPTV over time?

What we're saying is if you look at what we're seeing on the -- look, we're going through this as we see it. It's accretive because of the pull-through of the Internet. But if we look at the previous quarter and what's been happening, we think at the moment, it's reasonable to assume if we add 40,000 IPTV subs in the quarter, we're thinking we may get anywhere from 15% to 20% of those migrating from satellite.

Okay, that make sense. My question was really on the Media side. This battle you're having on the subscription fees, it seems like all of the integrated carriers who own content have agreed to the rate increases that TSN and others were charging. But in the -- all the others, call them independents, haven't. Is the worst-case scenario here depending on this sort of regulatory battle that you get the same rate increase from all the independents that you got from the integrates? And in a better-case scenario, you get even more? Or is it possible you're getting even a lower rate increase for the next round of BDUs than you got from the first round?

Well, first of all, we have settled, actually, with many who are not in the vertical integrated part of the industry. But you are right, there are some major players who aren't vertically integrated who a lot of this issue has surrounded. We were quite encouraged by the recent CRTC direction, which recognized the fact that anything that happens here will be retroactive right to the beginning of these discussions. And so, we're -- we would anticipate that, given that the volume of business we do with some of the suppliers we've already -- some of our customers we've already met agreements with, that these other companies who are smaller would obviously not get prices below what other larger players would see. We'll see how all this unfolds. As we look at it from our organization perspective, we're unable to accrue any of those revenues, obviously, until we settle those arrangements. When we settle those arrangements, it will flow into our revenue over the coming 3, 4 years. And we'll come back with an update when we get those settled.

The following question is from Glen Campbell from Merrill Lynch.

Wireless retention spending was very low, as you mentioned. We're seeing a lot of the U.S. operators who are getting up to sort of 70% or 80% of handsets sold now being smartphones. I wonder if you can give us that figure for Bell? And if not, could you give us a sense of whether you're at a sort of stable level now or whether you expect the mix to continue to move towards smartphones and whether there were -- likewise, whether you think the replacement rate is now at a fairly stable level or whether there's upside risk?

Glen, I don't have the number top of head, so if I misquote, Thane will come back to you on that. But I mean literally more than 100% of our net adds are smartphones. Almost all of our upgrades are smartphones. For us, we're just working through the base. I think actually our base of smartphones might be even a little higher than some of the bigger U.S. carriers. Again, I might be off a little bit, but it's pretty close. And so we just continue every -- we went from low-30s last year to 50 now. It would seem to me that type of pace, Glen, should continue, if not accelerate. And we continue to see an improvement in ARPU when people move from voice-only products to smartphone products, obviously not at the rate of the early adopters, because they were the heaviest users, but it is ARPU-accretive for us. So -- but look, we'll give you the exact numbers. I'm happy to have Thane afterwards take you offline and talk you through it.

The following question is from Adam Shine from National Bank Financial.

George, I don't want you to give away any secrets, obviously, on the IPTV front. But you've started expanding beyond the core Toronto and Montréal regions, and you've started to see some better traction on IPTV in Q1. Can you give us a sense as to maybe where the traction is being seen? Is it more in suburbia than, necessarily, in the core Toronto and/or Montréal City centers? Or is it more, for example, in MDUs versus homes? Any further color on that would be appreciated.

Yes, you're right. It's a little tricky from a competitive perspective, your question. We are opening new markets. Ottawa will be in the fourth quarter of this year to give a sense of where we're going. Québec City, because of the Fibe, we're really seeing traction there early on, but it's only 2 months into the launch in Québec City. And on balance, probably a little more momentum in Québec than Ontario. But part of that reason is our footprint initially was larger in Québec than it was in Ontario. I think what's most important for us is every month and every week, we see an increase in our sales on IPTV. And as you know, Karen at Bell Aliant is seeing the same thing, so consolidated between both companies, a pretty strong quarter on TV growth.

You referenced Karen. Obviously, she discloses, obviously, the bundle in terms of very robust figure in regards to the triple play. As we get beyond the 6-month promotions, do you have a sense as to what that triple-play ARPU might be?

I don't top of head. I mean, it's not a secret, because it will be a commercial rate plan. I'm happy to have Thane talk to you what happens after that. But clearly, what we're trying to do in our strategy is our competitors have put the discount on the voice side, which was our strong base. And we've tended to put more of the discount on the TV side, because that was where their stronger base is. Overall, we mentioned that our IPTV ARPU at $60, we're actually quite pleased with that this early in the process, given that that's triple -- most of those are triple-play products.

The following question is from Blair Abernethy from Stifel, Nicolaus.

George, I wonder if you could just expand a bit on your comment about the business market being slightly ahead of where you thought. And in line with that, your business NAS losses were a little worse than last year. What sort of changes are taking place there?

Sure. Yes, on the business side, what we've seen is there -- the last couple of years and consistently every quarter, we've talked about the fact that, that business really provides significant cash flow but has not been growing. It would be fair to say that was the same in the first quarter. But we -- the rate, if you will, of decline in that business from a financial perspective, revenue and EBITDA, improved a little better than we thought it would do. So we're beginning to see some signs there of stability on that side. But we continue to believe that until we see job growth, particularly for us in Ontario and Québec, and we see GDP above 2%, that asset is so driven by the economy, because if employment's not growing, it's hard for us to see growth, as you can imagine, on any of our access parts of the business. And we continue to see that even as we're going forward. But it was a little stronger on the data side. And Siim had mentioned in some of our professional services and managed services were a little better.

Yes, IP Broadband is up. Professional services, managed services, some of the work that we're doing in unified communications, where we're still seeing a lot of pressure in the business segment as in NAS losses and the SMB sector.

And that's more ins, as we call it, it's a term we use at Bell. That's new businesses trading calling us to set up their business. We continue to find that slower, though, over the last couple of years than we had seen previously. We don't think that's about the first customer choosing a competitor, because the mass majority of the market starts -- calls us and we just -- the ins are what we've really seen hard to come by, and particularly, more in Ontario than even in Québec.

Your last question is from Maher Yaghi from Desjardins Capital Markets.

Just wanted to ask on the DSL and Internet net adds. You mentioned that you have a high bundles on IPTV sales and with the triple play. So I'm trying to understand a little bit what's causing the continued stubborn high churn on DSL Internet lines? Can -- what kind of changes can you make to improve that number?

Yes, there's a few things attached to that. It's a really fair question. I mean, part of it is definitely where we have FTTN versus DSL. So that's not where we have IPTV, but where we have FTTN or fiber versus where we have just the DSL product. It's more competitive challenge for us where we just have DSL. But the other issue is there have been very, very aggressive promotions in Ontario by one of our competitors, where it's been 50% off on Internet for 12 months. And that has market share implications and, obviously, EBITDA implications for competitors as well. And we'll see how that unfolds in the marketplace. That's been one of the challenges that we're seeing, and we don't think those are long-term sustainable things in the marketplace. So we just continue to put our head down, execute IPTV and look for the pull-through on the Internet product from that.

Okay, very good. So thank you again for your participation this morning.

Thanks, everyone.

And following the AGM, I'll be available for clarifications and follow-ups. Thank you.

Thank you, gentlemen. This concludes today's conference call. Please disconnect your lines, and thank you for your participation.