All participants, please standby, your conference is ready to begin. Good morning, ladies and gentlemen. Welcome to the BCE Q1 2019 Results Conference Call. I would now like to turn the meeting over to Mr. Thane Fotopoulos. Please go ahead Mr. Fotopoulos.

Thank you, Laurie. Good morning everyone. With me here this morning as usual are George Cope, BCE's President and CEO; and Glen LeBlanc, our CFO. As a reminder, our first quarter results package and other disclosure documents, including today's slide presentation are available on BCE's Investor Relations webpage. Exceptionally in this quarter because our Annual General Shareholder Meeting is taking place starting at 9:30 this morning, we'll be ending the call earlier than usual at 8:45. However, before we get started, I want to draw your attention to the Safe Harbor statement on slide 2. Information in this presentation and remarks made by the speakers today will contain statements about expected future events and financial results that are forward-looking and therefore subject to risks and uncertainties. These forward-looking statements represent our expectations as of today and accordingly are subject to change. We disclaim any obligation to update forward-looking statements except as required by law. Factors that make such future results are contained in BCE's filings with both the Canadian Securities Commission and the SEC and are also available on our corporate website. With that, I'll turn the call over to George.

Great. Thanks, Thane. Good morning everyone, and thank you for joining us. I'll just begin with a quick overview. Our revenue momentum did continue in the quarter with 2.6% growth and Bell as you've seen reported strong EBITDA results of 6.9%, driven by our revenue growth and the IFRS 16 accounting changes. Importantly though, we have positive EBITDA growth for all Bell operating units, excluding the impact of IFRS 16. The company enjoyed strong financial results from wireless and excellent wireline broadband retail subscriber growth with 44,000 combined retail Internet and IPTV net adds up 37% year-over-year. We have positive top line growth across all wireline units producing 1.8% year-over-year growth. Bell had a second -- another sorry, -- another strong quarter and second quarter of positive TV advertising revenue growth, and cost savings, which drove material EBITDA growth year-over-year. The strong organic results in the quarter and the declining capital intensity drove 20% year-over-year increase in free cash flow. Given it's our Annual Shareholders Meeting this morning, it's notable that overall the company enjoyed its 54th consecutive quarter of year-over-year EBITDA growth or 13.5 years of uninterrupted consistent EBITDA growth. Turning to wireless, on the growth total our gross activations for us were slightly up year-over-year. Postpaid net adds were 50,000 in the quarter and the reduction year-over-year mostly impacted as the federal government contract starts to mature out in our net adds. We had our best quarter of postpaid churn in 15 years and in fact the Bell branded churn was under 1% at 0.98% in the first quarter, and certainly, I don't ever recall that happening on the -- in the wireless side for us. The blended ARPU increased 1.2% year-over-year to $67.35, although, I think it's important, I call out if you exclude the government contract…

Thanks George and good morning everyone. Before I begin, I would like to remind everyone that starting this quarter; we are reporting financial results in accordance with IFRS 16 accounting standards for leases. Prior periods were not adjusted. In addition, we made another reporting change with our operating results of The Source which are now fully included within our Bell Wireless segment as we primarily managed The Source as a distribution channel for our wireless business. For comparability, we have restated our 2018 quarterly Bell Wireless and Wireline segment results to reflect this change. With that, let's move to the summary highlights of Q1 on slide 10. We delivered a strong quarter consistent with plan, reflecting continued healthy wireless financial results, further broadband market share growth, improved wireline business performance as well as higher year-over-year TV advertising revenue. This all contributed to total revenue growth of 2.6%, which together with the favorable impact from IFRS 16 drove 6.9% increase in adjusted EBITDA. Normalizing for IFRS 16, consolidated adjusted EBITDA was in line with our historical average growth rate of 2% to 4%, reflecting year-over-year increases in all Bell operating segments. Consistent with the growth in EBITDA and our net mark-to-market gain on equity derivative contracts resulting from an increase in BCE share price in the quarter, net earnings increased 11.6%. However, adjusted EBITDA was down $0.03 versus last year, mainly due to lower year-over-year tax adjustments and incremental depreciation and interest expense recognized because of IFRS 16 accounting. Lastly free cash flow as George mentioned grew 19.6% on the flow through of strong EBITDA growth and lower capital intensity ratio of 14.8%. That reflected slower construction activity this winter compared to last year as well as lower overall planned spending for 2019. Let's turn to the Bell Wireless results on…

Thanks Glen. So before we start the Q&A I want to remind participants our time constraints this morning. So please limit yourselves to one question and a very brief follow-up if you need to so we can get to as many of you in the queue as possible. So with that, Valerie we're ready to take our first question. Hello?

Thank you. [Operator Instructions] Thank you for your patience. The first question is from Richard Choe from JPMorgan. Please go ahead. Q – Richard Choe: Hi, given the lack of spectrum purchase, in the most recent auction do you feel comfortable with your CapEx spend both on the wireless and I guess wireline side to support the networks and the migration to 5G? A – George Cope: Yeah, yeah, we're very comfortable. It actually doesn't change our capital program really in any way that the investors would say we change our capital intensity. We had actually modeled in a high likelihood that we would participate in the auction, consistent with two of our peers in the U.S. based on the fact that doing some cell splitting. That we know we need to do in anticipation of 5G, gives us the incremental capacity and we ran that math against in this particular spectrum band, it wasn't for us. Cost-effective to purchase it versus doing cell splitting that we knew we were going to have to do. And of course that we probably beat a dead horse on this, but with the fiber piece in the position in the marketplace already that helps us a little more from an intensity perspective. So I feel really quite positive about it. Obviously the 3.5 spectrum auction is much more strategic for us. As I think, all of our peers have mentioned that's a core band to the rollout of 5G. We expect that auction in Canada next year and of course that deployment of 5G in terms of the real evolution path of 5G will begin at that point. And if the auction happens next year, we'll probably see it in the marketplace pretty quickly after that. Q – Richard Choe: Great, thank you.

Thank you. The next question is from Maher Yaghi from Desjardins. Please go ahead.

Thanks for taking my question. So nice improvement in wireless pricing. First, I just wanted to if you can provide us a level of detail on the adjustments first on the government contract adjustment impact and the reclassification of your subscriber base in prepaid and postpaid that you did in the first quarter and how those affected your results. But apart from that again, improvement in the year-on-year growth net of those, what do you say -- what are the main reasons for this improvement and is this sustainable in your view?

Yeah. So in terms of the adjustments I did call out the overall impact is we still had underlying 0.8% ARPU revenue growth. The changes were obviously by taking a more aggressive stance on churning prepaid subs off in 90 days. We took some zero base prepaid subs out which is -- obviously gives actually investors a much more transparent way to see what our true ARPU is. And then we had -- as I noted in there we had some subs that came off the network because of the shutdown of CDMA and of course they weren't really generating any revenue at all either. So in one sense, you could say, it's a cleaner outlook on terms of the ARPU, but we'll get the real run rate year-over-year now going forward. We'll make sure we keep everybody informed, but as we did in this quarter it was really 0.8% underneath it all. And then in terms of overall I think one of the things probably we are definitely seeing a better mix of the Bell branded postpaid versus the version. Traditionally, that mix has -- it's swung a little bit in our favor, the Bell churn rate being as low as we talked about and that tends to be our heavier users clientele with a lower churn profile. I think that's it. We continue to grow on the business side and I think probably the pace of acceleration of users that we've seen a few years ago and that obviously stalled out somewhat last year. There was an impact on the year-over-year growth. Now we haven't really seen the buckets increasing yet another significant amount from that period. So that's really what's underlying the results. We're really pleased with the prepaid gross adds, really happy with this new distribution and feel generally fairly positive to the start on the wireless side.

George, also on the wireline, why did you decide to remove the wholesale subscribers from your subscriber base? It's still 15% of the subscriber base total. What drove this decision at this point in time?

Yeah, it's interesting. It was one of the things we did the last year if you watch I was very, very transparent with the investment community in talking to our retail subscriber base. The revenue will always be in our revenue. Wholesale subscribers are not strategic for us. It's not a market we approach, it's not a market that we have frankly interest in pursuing other than regulatory requirements. The ARPU from that base is literally 32% of what it is for retail. And so to compare that net add to any of our actual performance from our perspective in the whole industry creates bad behavior in terms of creating subs that aren't of value for investors. And so from our perspective, we'll be always reporting retail net adds consistently going forward. Of course, it's always in our revenue numbers in wireline, so it's there, but the subscriber information. And finally, given so immaterial from a revenue perspective we quite frankly don't want our competitors to know what's happening in the wholesale sector through us.

Okay. Thank you.

Thank you. The next question is from Phillip Huang from Barclays Capital. Please go ahead.

Hi. Good quarter. Good quarter. Just wanted to ask you a little bit more on the overall wireless market. Both BCE and your peers have reported so far -- all the peers have reported so far a bigger seasonal slowdown in the wireless activity. So just wanted to get your thoughts on the reasons behind that. We certainly did observe fewer promotions relative to the spillover that we saw last year, but your postpaid churn is also lowest in 15 years and it seems like consumers are holding onto their smartphones longer. So I was wondering if you're -- if you do see a overall less active wireless market in general for 2019 as the industry appears to be focusing more on retention relative to gross adds and as consumers are less excited by release of new handsets.

Yeah. I mean, I would -- there is a few things and it's hard -- it's one quarter end of the year. I mean, we all know first quarter is seasonally low, but of course what you're asking is on a relative year-over-year basis, which is the right way to go at the question. I mean a lot of our impact is the federal government contract -- in terms of some of our net add reductions that you've seen year-over-year. And I think there is some commentary for sure that the life of the handset is being extended and as the life of the handset extends of course that helps us from a churn perspective. And also we fundamentally believe there is no network like ours other than maybe one other country in the world and we think when you shop for a network there isn't something that's faster or better in Canada. So we think it's why we are seeing some of the churn results. But once you have the entire year unfolds going forward, I think, what I liked about the quarter the underlying metrics for value creation of churn and ARPU granted normalized out of 0.8% move the right direction and in the old accounting world which we -- which is three years ago now in the true pure service revenue growth side it felt stronger than it's felt in a while as well. So let's hope that's an underlying trend. We'll find out as the quarters evolve.

Yeah. That's very helpful. On your ARPU point, certainly we are positively surprised by the turn excluding the CDMA and government contracts, but should we assume that growth for the remainder of the year from this point on? And also how many government subs are left to be migrated for Q2? Thanks.

Well, the second answer all I'll say is not a lot. That's not really material but I won't give you the number, but there's not a lot left to go. We have one more quarter and then it really almost normalizes out for the investment community. And then in terms of we'd had an objective a couple of years ago one of the things -- we thought we might see lease CPI, ARPU improvements. We didn't see that last year. I think it's a reasonable expectation we might get to that this year. That's what we're -- and that's what we're hoping on. We'll see. How it feels? If you look at our first quarter, on a reported ARPU that's almost roughly where we were I think. And so let's see what happens in the next three quarters. You normalize that at the 0.8%. So obviously anything gets us 0.8% to 1% would be positive. So I'd only give a forecast but it felt just a little better than it's felt last year. That's all I'll say.

Great. Thanks very much.

Thank you. The next question is from Simon Flannery from Morgan Stanley. Please go ahead.

Thank you. Good morning. George, some good Internet numbers 51,000 fiber-to-the-home. Could you just give us a little bit more color on what's going on in the five markets? Where is penetration in some of the markets you've had opened for a little while? And what's the opportunity as you continue to build out those markets and then I think you're seeing on usage on those customers? Thanks.

Yeah. I think the positive thing we're seeing on fiber is the longer in these markets and the word of mouth and frankly, if you're in some of our markets on the Canadian side we're so consistently advertising the benefits of fiber. I think, we are always now in the buying decision for it and I think that's what we're starting to see the benefit of. I think our Alt TV strategy, which is a non-set-top box TV strategy with two streams as I've said on the call, significant discount to traditional TV but helps us pull-through the Internet are two things that we're seeing. When we get underneath our results say in Southern Ontario, we think we captured literally 60% to 70% of incremental household revenue in the quarter year-over-year and we think that's overall on the wireline side. And I think that really comes from slowly, but surely seeing some momentum on the fiber side that gets us into that objective of trying to get to that one out of two customers moving to our Internet service and then we'll drive it from there going forward. The other side I should mention which I haven't because you're asking the question on fiber. On the business side, I think one of the reasons we continue to see some of the results from our Business Markets team and they were handing me some notes yesterday on this as well that the client base the corporate client base is really now much more interested in fiber for their businesses. National retailers in Canada not just in urban markets are doing some rural builds for fiber for very specific clients. The competitive dynamics in retail today and banking as well there are structural changes going on in banking. Many of the branches are upgrading themselves for technology-friendly solutions for clients. And so we're starting to see some underlying demand for fiber on the wireline business side that I would tell you two or three years ago would have been us trying to convince the client. Now it's us trying to manage some of that demand with the client. So we think that may be giving us some of the reasons for the under -- the stronger growth that we've seen on wireline business. It's the first time we've seen it as many of you on the call know for years and years and years. So at any time that's positive. That's a big positive for our wireline business.

Great. Thank you.

The next question is from Vince Valentini from TD Securities. Please go ahead.

Yes, thanks. Let me see if I can get quite a bit of your time here. Two sort of questions for you Glen. The Source impact it looks like Q1 last year wireless was restated down $11 million when you include The Source. So is that -- can we assume there is a normal seasonal loss that would be buried in your wireless EBITDA you reported for Q1 of 2019 as well? And then on top of that, can you give us any more granularity on how much IFRS 16 impacted the wireless division? How much of that growth was just from the accounting change versus core?

Good morning, Vince. Yeah. On your first question the answer is yes, you have that approximately right on the decline that would have been resulted from The Source. Just to remind everyone as I think you picked up, we restated last year so comparability for each of our segments is there. On your second question IFRS 16 when we provided the guidance on the last call, I reminded everyone and I did it again today that the 5% to 7% guidance we provided on EBITDA normalized for IFRS 16 is more like 2% to 4%. So there is a 3% year-over-year value to what IFRS 16 is driving into EBITDA. If I look at it by segment about a third of it is -- relates to our media segment. A little less than half 45% to our wireless segment and then 20% to 25% of that is in your wireline, so in any given quarter, but that 3% is going to move around a little Vince but cross the year, it's a 3% and that's how it relates to each segment.

Thank you.

You’re welcome.

Thank you. The next question is from Jeff Fan from Scotiabank. Please go ahead.

Thanks and good morning. I'm going to focus on wireless. The nice acceleration in the service revenue for wireless this quarter, I know there is a lot of factors that drive it ABPU subscribers, but if we just focus on service revenue grew 3.6% this quarter. Last quarter it was 2.2% and so a really good start. And I'm just wondering if you can just provide some color on what you think is really driving this inflection point from last quarter to this quarter?

So Glen why don't talk about the one item? There is the one item year-over-year on the wholesale adjustment on the wireless side.

Yeah. So last year that's an item that occurred in 2014, Jeff. So it's in the results -- excuse me, 2018. So the -- it's around $14 million that we lapped. So obviously that results in some improvement there. And George?

Yeah. So just to remind everyone there was that decision a year ago where we had to go back so there is about $14 million in there. But even underlying that the ARPU growth that I talked about, we saw and now it's just a function of the competitive marketplace. The other one for us overall in service revenue growth, we had always had this -- as you've heard me talk about we had this negative prepaid revenue growth and that turn for us at the back half of last year and of course it's turning for us now I think with the negative growth in the quarter, of course we are seeing better ARPU on prepaid because the product is a little different and much more focused for us. So if we can take for our business what's been a negative story and have it positive like it was the last half of last year that just overall -- it was an overall contribution to service revenue growth. And so we had seen some -- for me some confidence building around a little bit on underlying strength there on the overall service revenue. Look it's the first quarter, we had a lot of work to do on the year and it's a pretty competitive market but it will take the first 90 days and put it in the bank.

Okay, great. Thanks.

Thank you. The next question is from Batya Levi from UBS. Please go ahead.

Great, thank you. Can you talk a little bit more about the competitive environment you're seeing in broadband and video? And you mentioned your Alt TV product, but that -- how that's differentiating you from the others? And also as some of the competitors expand the rollout of the new services do you -- are you anticipating a change going forward in this year?

Yeah. I think there is a lot of things we are doing on the media side and on the TV side to adjust to the consumer buying behavior being different and the demand for the products being different right? I mean if you look on the Bell Media side, Crave in Canada is quite frankly for us has now become quite a success story. We're seeing top line revenue growth. We've got the business EBITDA positive and we are seeing positive EBITDA growth and some really nice subscriber growth on it given that we've combined it with all the original series of HBO et cetera. So that's one of the strategic tenants what we're doing on the change of your behavior. Alt TV is exactly recognizing that there is a client base that's interested in some of the content not the full TV package as we've seen in the past, don't require the set-top box. We don't have to do the truck roll. Its two streams, so really it's a TV streaming services meeting all the TV license requirements in the marketplace. It's significantly less expensive than traditional TV, but of course, restricted by the number of streams and of course, you need a broadband connection for that. And we really are seeing that. And when you – we talk about the type of subscriber growth in IPTV a lot of that is also being driven by the strategy around Alt. So those are the two key things, I would say we're doing in trying to address the change of consumer – consumption of media content.

Thank you.

Thank you. The next question is from David Barden from Bank of America. Please go ahead.

Hey, guys. Thanks for taking the question. Just as you lap the government contract from a subscriber sampling, could you talk about what the potential lift to the ABPU comparisons would be as that kind of cycles through the base?

Well, I think as George mentioned in the previous remarks that we think that after we lap the government contract CPI is probably a good indicator of where we'll be. And this – the government contract is playing less and less of a role as we're – the number of subscribers are dwindling now. So, less and less of a role of a normalization of the ABPU. So 1.2% reported this quarter 0.8%, if you normalize for the subscriber and government adjustments. I think as we look forward somewhere in that CPI 0.8% to 1% number seems reasonable.

The analysts will know this. One of the things of course you've got to watch in our case too is because prepaid becoming a more successful part of our business, it's a weighted average issue on the blended ABPU. Of course what everyone on the phone really cares about is the absolute service revenue growth. So, if obviously prepaid does better it can have an impact on that blended number, but we'll be obviously going forward transparent on that so that you really can see the pure service revenue growth number. To me the biggest strategic issue for us on the wireless side was getting a negative growth story to be positive on prepaid. And secondly, to see some stabilization on the postpaid ABPU side and those two things seem to be just holding on. As I said, it's the first quarter. We've got three to go.

And – thank you so much. And if I could just follow up the – I think part of the strategy of getting into prepaid was to try to take those subscribers and groom them into the postpaid base. Is there some part of that strategy that we saw kind of support the postpaid subscriber growth in the quarter?

Yeah. We saw a little bit actually. It's true. We did see some little pickup over the previous year. And of course, we've got a long way to go to get our base at the size and scale of one of our larger peers, but hopefully, if we do that, we'll see some of that migration as well.

Thank you so much.

Thank you. The next question is from Tim Casey from BMO. Please go ahead.

Thanks, George. Just wanted to return to the spectrum auction topic for a moment and obviously you've set expectations that 3.5G is core and strategic. What are your expectations, if you're allowed to share them on how the ISED will approach the Inukshuk spectrum and the use you'll be – that will be availed to you of that going forward? Thanks.

Yeah. So the Inukshuk spectrum just for the investors that aren't aware that is 3.5 spectrum that we have a significant holding of as does our partner to Inukshuk. Rogers has a significant holdings. Industry – the ISED folks we are going to say Industry Canada, the ISED folks will come back shortly and tell us how much of that we are able to hold and how much of that we need to return for the purposes of the auction. The amount that we're allowed to hold, of course we'll then use for our mobility business combined with what we acquire in the auction. So we need clarification on what they're asking us to return and that should be – obviously have to come ahead of the auction. And we don't actually have that answer yet and when we do we'll share it with the Street right away. And we've obviously filed, because we are a user of that 3.5 spectrum for some of our fixed business. We have filed and obviously asked if we're able to maintain a significant share of that. You can imagine some of our peers have a different view and so we'll let ISED as they do lay down the rules and then we'll act accordingly.

Thank you.

Thank you. The next question is from Aravinda Galappatthige from Canaccord. Please go ahead.

Good morning. Thanks for taking my question. George, just a follow-up on your comments on enterprise. You talked about some of the elements that you think are driving that trend that we've seen for a couple of quarters now. Could you give us a sense of how much visibility do you have? I mean is it just a couple of quarters at this point or is it longer than that? Trying to get a sense of the sustainability And a really quick follow-up for Glen, on the IFRS 16 impact, we have a sense of what the annual number is. Was Q1 sort of over or under-indexed, what would be sort of 25% of that or -- just wanted to get a little bit more clarity on the underlying growth rates? Thank you.

I'll answer the no. No, 25% is reasonable for the quarter. As I said, 3% for the year and in the quarters although there will be one side or the other at 3% it's not material. First quarter was not over-indexed or under-indexed.

I can't hope myself it is just me, but free cash flow tells the whole story anyway for everyone, as you all know. It's all there, right? So that's the -- on the enterprise side, I think, we've had -- I want to make sure, if I've got it right. Three quarters I’m feeling pretty good about that business, some strength. But I have to be honest with the investors, it's a little bit -- it's very hard for us to say we now see a trend. If my team from Business Markets were on the call, they're feeling more positive about the business. Even this quarter, as we get into the second quarter, I think they're feeling like they've got some momentum. But it's really very hard to say we have something we can trend into the business yet. And so -- and that's being as transparent as I possibly could be on the file. There's definitely some underlying strength. I would say, our team's been together -- now this group that's running that for a number of years, and we think they're executing very well competitively in the marketplace. We like to think they are maybe taking some share, which is a challenge given our share, but we think that that's also benefiting the company overall in terms of what they've been doing. Sorry, I don't have any more on that. I apologize, but that's really as far as I can go, because we're like you wait and see if it continues.

Okay, great. Laurie, in the interest of time, this will be our last question.

Thank you. The last question is from Drew Reynolds from RBC. Please go ahead.

Yeah. Thanks very much. Thanks for fitting me in here. Just on -- maybe a question for you George. We've talked a lot about the ABPU growth and growth expectation for the year. On postpaid market expansion, just for the industry, relative to the 1.5% or 1.6% that we did last year, and frankly, after two years of pretty good growth and two years of not so good growth prior to that. Just wanted to get an update on your expectation for 2019 and 2020 and kind of changes in the moving parts underpinning that? Thank you.

Yeah. That's a tough one. In one sense, I want to almost turn it back to everyone on the line or the analysts, and say what you guys using as your penetration gains for the year is probably what we're probably using consistently as well in our own outlook. I mean, I think some of the questions people have asked about the life cycle of the customers, we're in it every day, and I can't give you much more transparent. Maybe we see improved churn on the year, and less activity of flipping and that adds some pretty significant profit for the space. At the same time, last time we saw that dramatic acceleration. We had to be honest on the call and say, we didn't see it coming. So -- but certainly, I think people have guidance on the Street on our subs. They work with all the industry and with Thane. And certainly we're not calling off any of what the analysts have been saying that generates EBITDA growth for us. But it's hard for me to go beyond that, because frankly we’re going to leave these quarters-by-quarters to see.

Okay. Thank you.

It’s good, great. So on that, thank you for your participation this morning. As always, I'll be available for follow-ups and clarifications later today after our Annual General Meeting. So on that, have a great day. Thanks.

Thanks everyone.

Thank you. All wraps.

Thank you. The conference is now ended. Please disconnect your lines at this time, and we thank you for your participation.