Good morning, ladies and gentlemen. Welcome to BCE's Second Quarter 2014 Results Conference Call. I would now like to turn the meeting over to Mr. Thane Fotopoulos. Please go ahead.

Thank you, Wayne, and good morning to everybody on the call and webcast. As usual, I'm joined here today by -- with George Cope, Bell's President and CEO; as well as Siim Vanaselja, our CFO. We did release our second quarter results earlier this morning. All the usual information, including the news release and slide presentation for this call are available on BCE's website. And following the review of the slide presentation by both George and Siim, we'll move on to the Q&A portion. However, as usual, before we begin, I also like to remind all listeners that today's presentation and remarks by both George and Siim will contain certain forward-looking statements that represent our expectation as of today and accordingly are subject to change. We do not undertake any obligation to update any forward-looking statement, except as may be required by Canadian securities laws. A number of assumptions were made by us in preparing these forward-looking statements, which are subject to risks. Results may differ materially. Except as may be required by Canadian securities laws, we do not undertake any obligation to update or revise any forward-looking statements. For additional information on such risks and assumptions, please consult BCE's 2013 Annual MD&A as updated in our Q1 and Q2 2014 MD&As, as well as our news release of today, announcing our financial results for the second quarter of 2014, all of which are filed with the Canadian Securities Commission and are also available on our website. So with that, over to George to begin the review of the quarter.

Great. Thanks, Thane, and good morning, everyone. Thank you for joining us today. Let me turn to Slide 4 and just start with a quick overview of the quarter. The company certainly had a good quarter and we are on plan for the year and met our expectations. The EBITDA growth of 4.9%, obviously supporting our growth model, but importantly from my perspective is holding our consolidated margins consistent year-over-year, it's 39.4%. The strong 5.7% Wireless service revenue growth drove the 9.5% EBITDA growth that we saw in the quarter and based on all results, now the leading EBITDA growth in the industry in Canada. So really pleased with that. The Wireline EBITDA decline continues to improve year-over-year as we grow the residential services side and we expect that improvement in Wireline EBITDA to continue through the second half of this year. It was a third consecutive quarter of positive residential service revenue growth. We also continued to see significant cash flow contribution from our the Bell Media division with an increase of 27% year-over-year driven, of course, by the inclusion of the Astral acquisition. Strategy continues to be to expand our fiber footprint and launch as many new LTE markets as we can, as quickly as we can. As everyone on the call knows, we announced the privatization plan for Bell Aliant on July 23. This transaction, as we mentioned, will be accretive to BCE earnings and our free cash flow and supports our dividend growth model for 2015 and forward. Important this morning, I want to announce that we've received Competition Act clearance that was obtained on August 5, and you may recall, because it's a company that we already controlled, there was no industry candidate or CRTC approvals required. The one approval required was the Competition Act…

Thank you, George. Good morning, everyone. I'll begin with a review of our consolidated second quarter financial results. And I'll first bring to your attention a terminology change in our financial reporting starting this quarter. So consistent with the recent requirement of Canadian securities administrators, going forward, you will see us replace the term EBITDA with the new term adjusted EBITDA. There's no change, however, to how we calculate or define that term and no change to previously reported numbers, just that we will now refer to it as adjusted EBITDA. Beginning on Slide 12. In the second quarter, we grew service revenues at Bell by 5.8%, that was driven by our growth services, which collectively increased 7.7% year-over-year. Revenue performance was led by Astral's contribution to Bell Media, accelerated Wireless revenue growth and as George said, a third consecutive quarter of positive Wireline residential service revenue growth. Bell adjusted EBITDA increased 4.9% this quarter, reflecting the inclusion of Astral, a strong contribution from Bell Wireless as well, which delivered year-over-year growth of 9.5%. Our Wireline segment had a fifth consecutive quarter of year-over-year improvement in the rate of adjusted EBITDA decline. Bell's consolidated adjusted EBITDA margin remained stable at 39.4% as the contribution from Wireless and Wireline growth services offset the decline in higher-margin wireline voice business and the lower-margin media contribution from Astral. The higher adjusted EBITDA drove 6.5% growth in adjusted EPS from $0.82 -- from -- to $0.82 from -- sorry, to $0.82 from $0.77 in the second quarter of 2013, and that was the key contributor to free cash flow generation of $815 million this quarter. Consistent with our plan for the year, capital spending stepped up in the second quarter as we continue to expand our IPTV footprint, increased Internet and Wireless network capacity…

Thanks, Siim. Wayne, if you can now provide instructions to the participants. We're ready to open up the queue to questions.

[Operator Instructions] Our first question is from Simon Flannery from Morgan Stanley.

Very nice results, particularly on the Wireless side. Impressive churn reduction, Wireless margins. Can you just talk through the sustainability of that? Because we've seen it at other carriers, both north and south of the border. Is this really reflecting the fact, as you said, that there's no new devices, we've got a big iPhone upgrade coming here? Or do you think we've got a maturing of this industry where some of these churn gains are going to be more sustainable? And anything you can add on tablets or other broadband devices and what they're contributing here as well, it would be great.

Yes. So on the second point, the tablets are very, very small shares still of our net adds. Our's are literally almost all smartphone net add penetration. So that's also what's driving the improvement in our ARPU. And on the churn side, I mean, part of it from our perspective is an enormous investment in the last 6 years in our service agenda to the customer base. We see it in our customer service satisfaction metrics and they're just improved dramatically on our Wireless business and the tools we put in our customers' hands has also, in terms of service applications, has really helped us on the service side. And then the other point, I think part of the structure, I mean the LTE networks that we're offering in the Canadian market place are second to none in the world. I think customer satisfaction is probably at a high level, and structurally in the industry, I think that's also what we're seeing. Hard to forecast where the industry will go on churn, but our expectations is that churn will be -- continue to be quite positive on the postpaid side.

The following question is from Richard Choe from JPMorgan.

On the Wireline side, just wanted to confirm you think that revenue and EBITDA is going to be up in the second half and given a little bit of the slowdown, both in high-speed Internet and video, what makes you confident in the reacceleration of that growth?

Yes. And I think it's important to note, in the second half of the year we do expect as I've seen both Wireline revenue and EBITDA to breakthrough positive and in my own instincts, you'll see it build in the third quarter, into the fourth quarter. So the second half will be positive. And frankly, it's just the continual growth of our TV and Internet business, that growing against that NAS base being a smaller proportion. Some improvement, as Siim talked about on our business side, where we're seeing the rate of improvement on the EBITDA, even still, there's work to do there, there's been improvements there. So we believe in the second half of the year. It's important for the analysts between quarter-to-quarter, second half of the year that Wireline EBITDA will breakthrough and be positive. And part of that is, as I've said, just the growth we're seeing. And the seasonality in the second half of the year, you see on ins on what you see in the second quarter on Internet, you see the benefits of our Internet and Fibe TV in the second half of the year when the -- on the student return market.

I guess the build, the Fibe TV slowed a little bit, are we still on pace to hit that 5 million number by year end?

The household coverage we're on, the Fibe TV, definitely a little slower in Québec than we had wanted and part of that, quite frankly, was tactical given what we saw some pricing responses and once people saw our previous quarter results, we had positive growth in Ontario and the ARPU, of course, between the provinces are a little bit different and we will continue to see the footprint expansion.

The following question is from Dvai Ghose from Cannacord Genuity.

As you know, you've had 10, I think, dividend increases since you became CEO, which has been really positive. The concern going forward is that you're overly reliant on acquisitions incrementally for free cash flow and dividend growth and overly reliant on Wireless. It's encouraging to hear your Wireline comments, I assume you believe in 2015 you should produce some pretty decent Wireline EBITDA growth. My questions really are on Wireless and media. On the Wireless side, as you know, the significant concern amongst my peers is that you may not be able to increase Wireless EBITDA or if there is a 4 or 3 capitalized player. Do you believe that? And last but not least, you considered media is still to be a growth asset? Do you think there is room for pro forma EBITDA growth next year with Astral and CTV combined?

Okay. Thanks, Dvai. I didn't know -- as you know, I'm not going into 2015 guidance, but I'll give -- let me give some context to of your question. I think, if you look at the mix of our portfolio and the growth on the free cash flow, we've talked about the integration of Bell Aliant and investing in telecom assets to grow that and that's the privatization of Bell Aliant, which will be free cash flow accretive next year. I mean, I think our track record on free cash flow generation keeping our payout ratio at around 70% speaks for itself. And so I think the Street's expectation for our ability to manage that is our responsibility and we expect to continue to do that. In terms of the Wireless marketplace, I think the one comment I will drive for investors, it's important to note that 18 of Canada's top 20 markets today have 4 carriers. And so there is some confusion here, at least I pick up, people keep writing that we're suddenly going to have a new fourth carrier. We've had a fourth carrier in those 18 markets for 6 years and the results that we're reporting reflect that. How they're capitalized, how they're not capitalized, how they're successful in execution will just remain to be seen in the marketplace, but I did want to mention that. I think it's important that there are 4 players in those markets in what we've seen. So that's really the one comment on that. And then overall, the media business, as we go forward, we talked about for sure, there's some challenges there in terms of the rate of rapid growth we've seen historically and we don't think we'll see that pace on the Wireline side. You'll see improvement in the second half, we'd like to see that to continue to drive the cash flow on the Wireless, I think the results speak for themselves.

The following question is from Maher Yaghi from Desjardins.

A follow-up question on the Wireless. More on the long-term perspective here. Overall, I mean we're seeing declines and continued declines on growth activation in this sector, especially on postpaid and this is not just seen by Bell, but also by Telefon Rogers. So you have been benefiting from the lower churn rate and improving ARPU, which continues to build into probably next year and that's going to help you next year. But when you look longer-term, what can you do as an industry to increase penetration of wireless in Canada and if you can't, I mean, if you suspect wireless growth is coming down, how will you be able to replace that growth in the healthier consolidated results?

Yes. Well a part of it of course is the portfolio we have of assets. But you know specifically, on the wireless industry side, my own opinion and we're seeing it is, the Canadian consumers adoption of smartphones and uses of these devices, and as I mentioned, the improvement in our speed of our LTE by 50% over the next 4 or 5 weeks, that is only going to drive a more and more demand for usage of the product. The ARPU price -- the ARPU that we're seeing in the marketplace is not from price increases, it's generally from pricing discipline, but also just the increased usage of the products. So I think that provides further growth. In terms of penetration, I think we're the -- one of the interesting things for Canada, of course, is, because we still have penetration in front of us, probably haven't been as aggressive in things like the tablet market or what have you, I think you'll see that evolve and start over time, start to look probably a little more like the U.S. So there's incremental revenue there. And I probably, this is optimistic today in our Wireless growth as they have been over the last 10 years. I still think it's early days for this industry.

The following question is from Jeff Fan from Scotiabank.

Perhaps 2 quick ones on both Wireless. The installment plan we're seeing in the U.S. seems to be very popular. Wondering if you have any renewed thoughts on whether you see that as an opportunity for Canada? And then secondly, the BYOD, the bring your own device. Wondering if that's becoming a bigger portion of your activations, of customers bringing their own device and going on to month-to-month plan?

Sure. And then just to add, one thing I didn't mention on Wireless is we're seeing in our results and I'll come back to that is, the tools we're using with our customer services is driving costs out of running the operations as well, because customers quite frankly want to use smartphone for service and not necessarily call into call centers and that is driving some of the margin flow-through that we're seeing. In terms of bring your own device, yes, there is no doubt, we've seen some of that in Canada, for sure. People moving from carrier to carrier and bringing the device with them. So that is helping obviously the things, such as cost of acquisition, what have you. For sure, we've seen that. And on the installment plans, we're watching the developments in the U.S. and we'll see. I have no comment on a competitive or a market launch, other than making sure we clearly understand the true cash flow costs of those programs as opposed to what they might do from an accounting perspective. They really want to know what the cost are from a cash perspective. If it was going to accelerate net present value for our shareholders, we'd obviously take a serious look at it.

The following question is from Glen Campbell from Bank of America Merrill Lynch.

So a metric that you probably take a look at and we don't get to see is, how the ARPU for your incoming customers compares to your base across your services, and leaving aside, say, the temporary promotional discounts. My sense is that in Wireless it may have flip-flopped, so that your new customers maybe now be generating better ARPU than your existing. My sense is on TV that you're probably lower, because your basic package is actually quite a generous TV package. And on Internet, I'm not sure. Could you give us a bit of color directionally on what that might look like?

Sure. Yes, we use the term, Glen, vintage of our customer base to look at that. So your insights are frankly on the Wireless, pretty accurate. I mean, what we are starting to see now, part of that, as you know, we moved to 3 to 2-year contracts and handset prices didn't really change in Canada. But postpaid base and entry-level prices did change and so we're clearly seeing customers coming on using LTE, by the way, which drives a higher usage and drives higher ARPU and seeing, as a result of that, the new customers coming on generating some better ARPU. On the Internet side, it's really about people migrating to higher speeds. So what we see there is revenue growth, not as much as you do the base in the net adds for us, for the industry aren't significant, but we are seeing as customers wanting higher speeds and that is ultimately they migrate up little higher speeds that drives ARPU. And on the Fibe TV side, the real answer there is, we continue to see a little over $60 ARPU on our Fibe TV product. But really in most of that service offering, we do it on a triple or a double and the discount is on the total package. But we're continuing to see IPTV north of $60 on the ARPU side.

And just to confirm that $60 would be clean of any discounts? Or is the discount built in there?

That would actually -- that would be actually be our monthly ARPU with the discounts in them. So -- and, of course, it's a bit of a numerator-denominator issue because the more net new adds you have, so we, over time that number will grow as those promos as a percent of our base come off.

Okay. And just a quick follow-up, just roughly speaking what, proportion of your Internet subs would be on the 25 and up plans?

You know what, Glen, for competitive reasons, I'm not going to give that, but we are seeing a migration to people wanting to use higher speed products.

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

George, just 2 questions from me. First one, you've done a great job with mobile TV with the 1.5 million subscribers, just wondering if you can shed some light on usage underneath the hood, just the types of programming that folks are watching? Do you see any negative effects on usage due to Wi-Fi? The second question, just want to circle back on the comment you made on the Bell Aliant call, just in terms of the benefits of Wireline and Wireless integration. Is this about strengthening the Wireless back haul to improve your LTE performance? Or are there other financial strategic benefits that come into play from integrating the networks?

Okay. So on mobile TV, let's deal with that first. I don't have a streaming number to give you, but I can tell you the volume was up significantly. As always, it's -- a lot of it's starting even in this quarter, when you see things like the World Cup, it is very, very event driven. Mobile TV. So people add it to their base plan, it can be $5 for the 10 hours and you'll have a period of time where people aren't using it much and there will be some type of event, a world event and it can be a positive sport event, it can be some of the other political events and then we see an explosion in usage for those type of events. So it's an event driven service, which makes sense given the way we product, the product size, et cetera in the marketplace. And we continue to see that accelerate that growth and it adds to the LTE experience for our customer base. And we think it's great differentiation in the market and we now hear some of our competitors want to enter that space. So we're happy to have that leadership position. In terms of Bell Aliant and Bell, I mean, the comments, really, what we've said, if you look out and you think about the bundling market on the consumer side in Eastern Canada, although we've been able to do it, it's always been a little tricky with 2 public companies than the ability to bundle in now IPTV with Wireless when it's all one organization. So those are really -- there's an example, one of the strategic benefits that we'll get of that, you make the point on the backbone and access, but the reality is we've had that, we've always been buying that access from Bell Aliant. So I guess from an integrator perspective, we'll be there. And there are a lot of articles -- lot of -- some people wrote this was all done as a result of something to do with the fourth wireless carrier and I frankly, that was not any of the strategic intent on doing this. The strategic intent we talked about was the things we took the group through, free cash flow accretive for our shareholders. We don't need 2 public stubs. If we look at the Fibe footprints and now IPTV growth off that platform that will help putting it together, those are really the driving reasons. Just one number, our streaming, for instance, is up 61% year-over-year on our mobile TV. So...

6%.

They just handed me note. Up 6% year-over-year on the streaming and I know in the month of World Cup, the guys were really pleased with the results.

The following question is from Vince Valentini from TD Securities.

Questions on Wireline CapEx. So the intensity of 23.9% this quarter, a bit elevated. Can you give me a more detail on some of the buckets of where you're spending and maybe some directional comments for the future, it seems like that number is a bit above where you'd want to be longer-term?

Well, the real issue is it's an annual number with us and we're trying to accelerate IPTV as quick as we can. But the best way to guide is the CapEx guidance that we've given for the year will be right in that range and I think we are in a 16 to -- what's the range thing that we're kind of on that guidance?

Yes, 16 to 17.

So we'll be raising the 16 to 17 or [indiscernible]. And the Wireline side is obviously, where the capital is being accelerated as quickly as we can. But the lumpiness in the free cash flow, just quarter-to-quarter, we are really trying to get IPTV done as fast as we can, because it's so present value accretive for us. But there's no change in the outlook of our CapEx.

So the last question is from David MacFadgen from Cormark Securities.

When I look at your Wireless business, you are lowering your operating costs, increasing your margins, which is pretty good. In your opinion, is there a kind of a theoretical threshold where you could take the Wireless service margin to?

No. There isn't-- there will be some number obviously, so I don't mean to say it that way. But there's not really a -- our goal is, as we've said, just strategically for us on Wireless is to make sure we exceed the 33% of the postpaid market share that ultimately we close the gap and I think, we now have with our competitors and capture a leading position of EBITDA growth in the industry. We're doing that and we think we're executing. The margins, of course, can change pretty quickly in this business up and down depending on new handsets. And you know, I think, one of the things, we'll -- we're not so much on margins, but there are some new smartphone devices coming in the latter half of the year, and maybe that helps to see some acceleration on the subscriber side for the whole industry. We'll just have to wait and see.

Very good. So on that, thank you so much for participating in the call today. I'm available throughout the day for any clarifications and follow-ups. So thanks again. Have a good day.

Thank you. That concludes today's conference call. Please disconnect your lines at this time, and we thank you for your participation.