Good morning, ladies and gentlemen and welcome to the BCE Q4 2022 Results and 2023 Guidance Conference Call. I would now like to turn the meeting over to Mr. Thane Fotopoulos. Please go ahead, sir.

Thank you, Mode. Good morning, everybody and thank you for joining our call at this unusually, but unavoidable early start time. With me here today are Mirko Bibic, BCE’s President and CEO and our CFO, Glen LeBlanc. You can find all our Q4 disclosure documents, including our Safe Harbor notice concerning forward-looking statements for 2023 on the Investor Relations page on bce.ca website, which we posted earlier this morning. We have lot of material to get through this morning on this call. However, before we begin, I want to draw your attention to our Safe Harbor statement on Slide 2 of the presentation. With that out of the way, I will turn the call over to Mirko.

Thank you, Thane and good morning everyone. Our 2022 accomplishments are anchored to the operational priorities we set back in 2020 and the Bell team’s unwavering commitment to all our stakeholders. These priorities remain the foundation for Bell’s future success. With a strategic roadmap, including a historic multiyear transformational accelerate CapEx program that is well advanced and already paying off with subscriber loadings and improved end-to-end customer experience, leading self-serve apps and consistently strong execution, the Bell team delivered great results across all operating segments this past year. In terms of overall financial performance for 2022, we essentially achieved the midpoint of guidance for both revenue and EBITDA growth despite unprecedented cost pressures from inflation and record storms an expensive and highly competitive Black Friday and media advertising softness. Normalizing for $87 million in largely unplanned inflation and storm-related costs this year, EBITDA growth was actually 4%. We are making massive investments to build the highest quality networks and they are consistently being recognized by third-parties such as PCMag, Ookla and OpenSignal as being the fastest. Our customer value proposition is to offer the best networks at affordable prices. And we are loading these networks profitably while maintaining margin stable in a highly competitive marketplace. It’s a notable achievement. Since 2020, we have accelerated CapEx, investing more than $14 billion, the highest ever over a 3-year period by Canadian Communications company and we are doing it to forge ahead aggressively on constructing the broadest fiber footprint in North America, opening up Wireless Home Internet to 1 million rural homes in rural communities and building our mobile 5G networks faster. In the past 3 years alone, we have delivered over 2.6 million new customer-ready broadband Internet locations, including a record 854,000 direct fiber connections in 2022. We have expanded mobile 5G…

Thank you, Mirko and good morning everyone. Q4 marked another quarter of consistent and focused execution with a 3.7% increase in consolidated revenues that was driven by year-over-year growth at all Bell operating segments despite economic conditions that continue to pressure media advertising and our B2B sector. I am quite pleased that we delivered positive EBITDA growth this quarter even while absorbing $26 million in incremental storm recovery and inflationary cost pressures, higher media programming costs and a very expensive and highly competitive Black Friday period. If I take a wider lens view of 2022, the accelerated CapEx investments we are making are paying off with some of the highest wireless Internet and TV subscriber loadings we have enjoyed in over a decade. That said, all of the work we do on cost and the strength of our balance sheet prepared us financially to be able to afford the subscribers that we acquired. And despite a step-up in competitive intensity, exceptional cost pressures and other economic challenges impacting our business, we still landed 2022 with a stable margin. Why? Because no one is better at managing costs. That core competency will continue to serve us well as we go forward. Net earnings and statutory EPS in Q4 were down year-over-year due to non-cash asset impairment charges, mainly for Bell Media’s French language TV properties to reflect market conditions economic-related pressures on current advertising. Although adjusted EPS was up 5% for the full year, it was down this quarter, decreasing 6.6% to $0.71, due mainly to increased interest expense because of higher rates. And despite a historical year for CapEx with total spending in excess of $5.1 billion, free cash flow was up 2.9%. Notably, our reported CapEx number includes cash amounts received upfront from the Quebec provincial government as a…

Thanks, Glen. So given the volume of information we presented this morning, I’m sensitive to the time we have left for Q&A. And usually, this quarter, one of our peers is hosting I will call 8 a.m., so respecting all of your time in that of our competitors. [Operator Instructions] So with that Mode, we are ready to take our first question.

Thank you. [Operator Instructions] Our first question is from Maher Yaghi from Scotiabank. Please go ahead.

Yes, good morning. I know it’s early. So we appreciate the help that you guys are going to have both companies called run different – on different times. I wanted to maybe start by asking you, Mirko, about the guidance that you provided for ‘23, one to five on revenue, two to five on EBITDA exactly the same as you had in ‘22, which is quite impressive, given all the macroeconomic changes that we’re seeing right now. But I wanted to ask you what’s underpinning that guidance when it comes to macroeconomic view as well as competitiveness in the marketplace in case we see a large transaction close during ‘23, which a lot of people, investors are wondering what it can or can’t do to the competitive intensity in the market? And maybe if I can, just a follow-up on the regulatory side, we have seen a new change at the CRTC level. What’s your take in terms of what we should expect from regulatory body that is looking more and more on improving prices for Canadians as discussed in the media recently? Could that change the environment for you and participants in the industry? Thank you.

Thanks, Maher. Good morning and good questions. So what I’ll do – Glen, maybe you can unpack the guidance. I might have a few things to add on the guidance question, and then I’ll continue with the regulatory question.

Absolutely. Good morning, Maher. As I said in my opening remarks, I mean our guidance speaks volumes to the confidence we have in our business and the resiliency of our business. When we – absolutely, we expect there to be a recession, albeit I personally believe it will be short and shallow. The guidance we provided here takes into consideration that recession. We haven’t seen any changes at this time to consumer demand. The market remains active and healthy and proof points are in our results, record postpaid mobile phone, gross activations, best Internet ads in 16 years, a strong wireless service and residential Internet revenue growth. And in fact, consumers are upgrading to higher service tiers rather than downgrading. On a B2B front, there is been no indications of pause in new orders or customers looking to cut spend. So I think when we look at the health of our business and some of the challenges we face in calendar ‘22, Mirko mentioned $87 million, $44 million in inflationary pressures that we experience this year and $43 million of costs – or excuse me, storm costs. A typical year, a good year, maybe a $5 million in storm costs with changing weather patterns. That’s probably been closer to $10 million in recent history. $43 million is extraordinary, and I knock on wood, something we don’t repeat. And although I don’t think we are out of the woods completely on inflation. Of the $44 million, about $21 million of that’s labor, $16 million fuel and about $7 million utilities. The labor started really in the back half. So, I would suspect that, that type of pressure continues into ‘22 as we have another half year before we start lapping that, but I don’t anticipate the same pressure on fuel or utilities. So all-in-all, I think the 2022 results were pretty strong considering we had that. And with those headwinds behind us, I am very confident in the guidance we provide. Thanks. Mirko, you are going to make some comments?

Yes. Just – I am not going to repeat any of that because that was very good. I will just add the following. So, at the highest level, Maher, I think the investors – our investors should have confidence like we have a clear strategy, we have articulated that strategy, and we are funding it and executing against it. So, we have a diversified revenue streams and our fiber strategy is working. We have good wireless momentum. And while the media industry is pressured right now, we are taking share because our digital strategy has traction. And then you alluded to – so that’s a bit of a summation, what Glen said, you alluded to price competition as well, and we kind of see some of that – we saw some of that during the Black Friday period and you foreshadow potentially more of that for 2023. On that, I will say the following. We have the room to compete on price if anyone wants to take us there. And we have the room because we are really good at managing costs and because of the scale of our fiber network, which – and then the bundling strategy. And all of that’s delivering lower churn, lower cost structure, higher lifetime value of our subscribers. Look, we have invested billions and billions to build North American leading networks. We are going to load those networks, and we can compete on price if we are taken there. And then that kind of segues into the regulatory question that you asked me. And look, it’s a bit early, like we are looking forward to sharing our thoughts with the new CRTC leadership on how competitive our industry is, and we shared those thoughts on these calls, obviously, quarter-after-quarter, but there is new CRTC leadership. So, we are looking forward to those conversations. And in particular, really looking forward to highlight and reiterate the importance of the massive investments that need to be made in communications networks to drive the country forward. So, a couple of other things just on that prices are declining. It’s actually undeniable. And communications networks are pretty central to everything we want to accomplish as a country in terms of economic growth and productivity and maybe I will leave it with this last point. Does everyone in the country want better networks, yes. Do we want more coverage, yes. Do we want prices that keep declining, of course. Does local TV content matter, yes, it does. Do we want better customer experience, yes we do. Do we want more innovation, more jobs, yes, yes and yes. But there is one common element that underpins all of those and its investment. So, we can’t lose sight of that. And I will leave it there.

Mode, next question please.

Thank you. The following question is from Stephanie Price from CIBC. Please go ahead.

Hi. Good morning. For 2023, fiber homes decreased from 900,000 to a plan of 650,000, but CapEx stayed relatively elevated at $4.8 billion. Just curious about the other buckets of investment besides the mid-band and fiber that you are looking at? And maybe related, how do you think about a longer term view and what a more normalized run rate could look like for CapEx as you ramp down fiber initiatives?

Yes. So, on that, we have been – I have tried to consistently articulate where we were going with this, right. Starting in February 2021, we said we are going to start elevating CapEx to accelerate fiber and 5G build, and we are doing that. We said 2022 was going to be the peak year, and you can see that $5.1 billion spent in 2022 is $300 million higher than the guidance we are giving you for 2023. So, we did say that each year after 2022 CapEx would start to glide down for – ‘23 lower than ‘22, ‘24 lower than ‘23, etcetera, until we get to the end of 2025. And then you will – you should expect CapEx to get closer to what you were used to seeing from us in terms of capital intensity ratio prior to COVID. 650,000, the reason we dropped CapEx by $300 million from ‘23 to ‘22 is because we are going from 854,000 locations passed on fiber to 650,000, and that’s the bulk of the reason for the decline.

Okay. Thank you very much.

Thank you. Following question is from Jérôme Dubreuil from Desjardins. Please go ahead. Jérôme Dubreuil: Hi. Thanks. Thanks for taking my question. Can you talk a bit about 5G plus? We have in mind that maybe this could mean a bit of dilution for the 5G brand overall, but at the same time I understand you want to maintain a differentiation. And then the second one, I think it’s fair to say that you have been using promotions in a different way than in the past recently, would you say that it’s a new way of doing business overall, or this is more something that is done to rapidly ramp up your market share on newly deployed fiber? Thank you.

I will take the fiber question first. We – actually, on the fiber – look, what we are doing here is we – like I said, we spend – we are spending billions of dollars to build the best networks, and we have an undeniable structural product superiority advantage. So, the telco network traditionally was structurally disadvantaged from a technology point of view, with copper in years past. Now, the telco advantage is structurally – there is a structural telco advantage with fiber. So, you have a structural technology advantage, you have product superiority and differentiation, and you spend billions of dollars to get that. The next step is to load the network and we are taking share. And frankly, we are resetting the benchmark for what consumers believe broadband should be. That’s a key thing. It’s a competitive differentiator that’s going to last for a few years, in my view, resetting the benchmark for what consumers believe broadband should be. If you look at our sales in Q4, 70% of our Internet activations on fiber, we are on speeds at a gig or above. And 38% of our fiber Internet base is now in speed of a gig and above. So, we are loading the network, and we are shielding our customer base by resetting that broadband benchmark. And it’s a potent combination, right. You have fiber with symmetrical upload and download speeds that competitors can’t match, a gigabit modem with WiFi 6E, and we have a new Android powered TV service, basically the new evolution of 5TV, which is pretty powerful. On wireless and on 5G, we are just kind of – I am really pleased that industry-wide, actually, the 5G pricing structure has remained intact where we were – we have delineated, there is clear demarcation between 5G and 5G plus and 4G and other services with the pricing that comes with it. And so far, frankly, that’s held. And as I mentioned in my opening remarks, 41% of our subscriber base is on 5G devices. 5G customers continue to use more and spend more and there is room for growth there. And then I might add on both our wireless loadings and our market share gains on fiber, we are doing that despite some promotional intensity, we are doing that while maintaining margins stable, which is quite an accomplishment. And the reason we are able to do that, one of the big reasons is with the fiber scale, our cost structure comes down. Jérôme Dubreuil: Thank you.

Thank you. Following question is from Tim Casey from BMO Capital Markets. Please go ahead.

Thanks Mirko. Can we follow-up on that discussion on your fiber leadership and talk about what you are seeing in the marketplace? And you have mentioned that your – you have the ability to match costs. I am just wondering how that plays out in the wireline market. And with respect to your – as you say, the competitive advantage you have with products. Could you just talk a little bit about the dynamics you are seeing in the marketplace there? Thanks.

Yes. So, we are seeing – I mean essentially, the short story, Tim, is you see I mean you see the pretty – our loadings are quite strong, right. And we are at best TV results in 7 years on overall wireline, our consumer RGUs, best results in 2005. And best Internet, and that’s in 18 years. I think again, those – so when we talk about the fiber advantage, but they are just not idle words because you are seeing the results follow what we are seeing, right. And just to give you another data point, so we had 63,500 Internet nets or thereabouts, but we had 78,000 Internet nets and fiber territory. So, I mean I have been pretty transparent about this too. We do lose Internet customers where we don’t have fiber, we are gaining big share where we do have fiber. And I think that’s the key thing. 80% of our target broadband build is done, we will be at 85% done. I have shared in my opening remarks, the vast footprint that we will have that has 3 gigabit or 8 gigabit speeds, like those are phenomenal speeds. And as we reset what the benchmark is for acceptable broadband and we reset the bar to a gig or above, that becomes a powerful competitive proposition.

Yes. And Tim and as you have heard us say time and time again, the gift that keeps on giving is fiber, not only does it allow us to deliver a superior product to our customers, a superior product over our competitors, but it’s a network that allows – it’s cheaper to operate. And it’s reducing our cost of operating, which – you see in our margins, despite the challenges I spoke about earlier, we are maintaining stable margins and a big part of that is the cost advantage that fiber gives us.

Thank you.

Thanks Tim.

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

Great. Thank you. As you look at your new reporting structure, do you anticipate more cost rationalization when you combine the wireline and wireless expense buckets, or has that already been aligned last year? And from here on, it will be more business as usual cost efficiencies? And you did mention some incremental spending this year. Is there a way to quantify them or the timing on when they will show up? Thank you.

I will attack the first part of your question. I am not sure what your last part was referring to. Look, we combined our internal structure for wireless and wireline this year, and we did enjoy cost efficiencies in doing so. And as I have said in my opening remarks, it’s become a core competency of Bell. We are always attacking costs and looking for more effective and efficient ways to deliver service, and that’s not going to change. And again, to the opening remarks that Maher made about how are you able to deliver stable guidance over 2022, and that’s part of it. It’s focusing on our cost, finding efficiencies, leveraging the ability that fiber gives us for taking costs. So, on the second part of your question, I am not sure.

I think you mentioned that you would like to make some internal investments this year to digitize some capabilities and some efficiencies. So, I was wondering if there is sort of a quantification or the pacing of that or is it also more sort of business as usual investments?

It’s – yes, so we won’t unpack that specifically. But since 2020, particularly since we got completely shutdown in 2020 during COVID, we have made a concerted effort to improve our digital capabilities, both those that are customer-facing and continue to automate some of the processes in the operations of our business. And that’s continuing because it’s important and it’s driving better customer experience and lower cost structure. So, we are going to keep doing that, and that’s within the CapEx, the guidance that you see.

Okay, thank you.

Thank you.

Thank you. Following question is from Vince Valentini from TD Securities. Please go ahead.

Yes. Thanks very much. Just a comment first, look, I am just not happy about getting rid of the segmented EBITDA, it makes our lives very difficult. I am sure you have internal ideas as to what wireline versus wireless is and you are not going to change based on what I say. But I want to get that on record, but it’s not helpful to us. My question is on the guidance. The range is reasonably wide at 2% to 5% on EBITDA, Glen. And as you have articulated, competition seems to be escalating. You seem to be willing to lean in and load up your new networks and fight on price if you have to. I am just wondering how the high end of the range is possible. What kind of factors would you need to see some sort of big economic improvement or some sort of improvement in the competitive environment versus the current pacing? Maybe you can talk a bit about the pros and cons – or the gives and takes at the high end versus low end of the guidance?

Well, first of all, Vince, the – how wide the range is, it’s the same range as in ‘22. And we are now approaching $25 billion revenue company and north of $10 billion in EBITDA. And I don’t feel that range is all that wide when you consider the size of our organization. Yes, we provide a range because there are all kinds of uncertainties that can happen in our business. We have talked a number of times on this call about recession. And I think that, that although I personally believe will be short and shallow, I certainly could be wrong, and many people on this call probably have a different opinion than I. Barring recessionary impacts, the continued momentum we have in our fiber and our 5G strategy, recovery in our media business. Those are the type of things that I think drive us towards the higher end or past the midpoint of our guidance range. I mean, for me to be able to give you insights on what drives you to the high end, you know it as well as I do, low promotion activity, continuing to load the network, avoiding a recession, recovery of advertising advancement of our digital-first strategy and media, those are the things that we’re focused on. But I believe the guidance range is prudent. I think it takes into consideration the potential challenges plus the upside and it is not inconsistent to what you have seen from us before. But thanks for your question, Vince, and duly noted on segment reporting.

Thanks.

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

Great. Thank you very much. Good morning. Glen, I wonder if we could talk about roaming revenue. You have obviously, had a very nice recovery during 2022, but you are pointing to a further recovery in ‘23. Perhaps just help us understand where we are in the recovery cycle and what sort of benefit are you anticipating in your guidance next year on a year-over-year basis versus this year? And when do we get to sort of a new run rate?

Certainly, Simon. Mirko mentioned that we are at 112% of what pre-pandemic roaming revenue is. And to unpack that for you about – on a volume basis, we are pretty much flat. We are back to pre-pandemic. So, the additional 12% is all related to price, so your P versus Q. I said in our opening remarks, one of us said that we don’t anticipate the same tailwind on roaming that we enjoyed this year. Naturally, this was a year of true recovery as I think Canadians and we are starting to gain confidence to move again post the challenge of this pandemic. I would say some of the price increases that we implemented in calendar 2022, were done through the year. So, we get to enjoy the half year of those, coupled with – I think you are starting to see Canadian confidence continue on moving around again and enjoying the ability to travel. So, I think the short answer is the improvement from ‘21 to ‘22 will not repeat itself, but there is still a bit of a tailwind there for ‘22 to ‘23.

Alright. Thank you.

You’re welcome Simon.

Mode. Any more questions?

We have no further questions registered at this time. So, back to you, Mr. Fotopoulos.

Great. Thank you very much. So, as usual, I will be available throughout the day to take your follow-up questions and for any clarifications. So, you have a few minutes to get ready for your next call. So, have a great day, everybody.

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