Good morning, ladies and gentlemen. Welcome to the BCE Q3 2024 Results Conference Call. I would now like to turn the meeting over to Mr. Thane Fotopoulos. Please go ahead, Mr. Fotopoulos.

Thank you, Matthew. Good morning, everyone, and thank you for joining our call. With me here today, as usual, are Mirko Bibic, President and CEO of BCE; and our CFO, Curtis Millen. You can find all of our Q3 disclosure documents on the Investor Relations page of the bce.ca website, which we posted earlier this morning. Before we begin, I'll draw your attention to the safe harbor on Slide 2, reminding you that today's slide presentation and remarks made during the call will include forward-looking statements and information and therefore, are subject to risks and uncertainties. Results could differ materially. We disclaim any obligation to update forward-looking statements, except as required by law. Please refer to BCE's publicly filed documents for more details on our assumptions and risks. With that, over to Mirko.

Thank you, Thane, and good morning, everyone. Our operating results for the third quarter demonstrate that we're pursuing growth in a financially disciplined and responsible manner in what's arguably been the most competitively intense market we've seen. Against this backdrop, we remain focused on better quality, long-term margin-accretive subscriber acquisition and reducing costs to help offset short-term revenue impacts from sustained competitive pricing pressures, expected revenue losses from the source, which we've discussed in the past, slow economic growth in a media advertising market that's still in transition, pardon me, particularly on the linear side. This focus on disciplined customer growth and ongoing efforts to drive cost savings across the organization through our advanced broadband networks, expanded digital and AI capabilities as well as other transformation work streams is reflected in our Q3 consolidated EBITDA growth of 2.1% and a 1.7 point margin increase to 45.6%. Notably, this was our best quarterly margin performance in over 30 years. This contributed to 10.3% higher free cash flow in Q3, which was in line with our plan as profiled in our quarterly budget at the start of the year. So really good execution by the Bell team in a highly competitive marketplace. I'm going to move now to our operating results. Starting first with wireless. You'll see combined mobile phone and connected device net adds in Q3 totaled 158,412. Our objective was to strike a balance between subscriber loadings and economics. We also tried to reset rate plan pricing to more rational levels, reflective of the tremendous value our services provide to customers. Despite some green shoots, those didn't stick throughout the quarter. Nevertheless, we held firm to our strategy, and we chose not to match every promotional offer just for the sake of capturing a higher number of subscriber activations. Rather,…

Great. Thank you, Mirko, and good morning, everyone. I'll begin on Slide 7 with BCE's consolidated financial results. We delivered positive service revenue growth for a second straight quarter on the back of stronger Internet revenue growth as well as the continued successful execution of our B2B tech services and digital-first media strategies. Total revenue was down 1.8%. Similar to last quarter, this was due to a 14.3% decrease in low-margin wireless and wireline product sales. which included the loss of revenue from the source store closures and conversions to Best Buy Express. Our positive service revenue result was achieved despite an intensely competitive pricing environment, particularly in wireless, where we intentionally slowed down subscriber acquisition to strike a better balance between volume growth and economics so as to not lock in customers on low ARPU contracts. Against this competitive backdrop, the transformation investments Mirko described are helping to drive very meaningful OpEx savings as evidenced by a 4.8% reduction in operating costs this quarter. This drove a 1.7 point improvement in margin to 45.6%, which bears repeating was our best result in well over 30 years. Net earnings and statutory EPS declined in Q3. This resulted from approximately $2.1 billion in noncash asset impairment charges, mainly for Bell Media's TV and radio properties to reflect continued market-related pressures on the traditional advertising ecosystem. Advertising EPS was down $0.06 versus last year. This was due to higher financing costs and depreciation and amortization expense as profiled in our plan at the beginning of the year. Consistent with our plan to reduce capital spending by at least $500 million in 2024, CapEx was down $205 million in Q3, bringing year-to-date CapEx savings to more than $600 million. This helped drive a 10.3% increase in free cash flow for Q3. The greater…

Great. Thanks, Curtis. So before we start, so we can get to everybody in the queue, I would ask to please limit yourselves to one question and a brief follow-up. So with that, Matthew, we are ready to take our first question.

Our first question is from Sebastiano Petti from JPMorgan. Please go ahead.

Hi. Thank you. Mirko, obviously, Ziply's EBITDA pro forma for Ziply, that would only constitute, call it, low to mid-single-digit percentage of BCE's current EBITDA. As you think about BCE's new, let's call it, a U.S.-based strategy, how should we gauge the company's appetite for further M&A in the U.S. long-term? How meaningful of a contribution could this U.S. fiber strategy be to consolidated financials over, call it, the medium, long term? Maybe said differently, is this a one-off opportunity to pursue high-growth assets that just happen to be in the U.S.? Or do you think the U.S. could become a more meaningful driver of BCE's growth algorithm over time? Thank you.

Thank you for the question, Sebastiano. So maybe I'll start by kind of basic first principles and then work down to the specific question. If you - at the highest level, fiber is at the core of what we do. We've turned ourselves into a fiber-first Fiber is a superior technology to anything else that's out there. And sorry about that. If you could hear me, I'll start again, Sebastiano. I was partially on mute there. We're a fiber-first company and fiber is at the heart of what we do, and fiber is the superior technology, compared to anything else out there. So we start with that premise and you can - we've invested billions in Canada on becoming a fiber-first company. And you can see it quarter after quarter, the performance that we're delivering, including this most recent quarter that we're reporting on in a very, very competitive environment. We're generating 5% Internet revenue growth and positive ARPU. So it keeps winning. And then if you - based on that, becoming - having been and becoming - having become a fiber-first company, you kind of look at where the growth opportunities are. And when we looked at the U.S., like I said on Monday, we are so much further ahead in Canada in terms of how much fiber has been built and in terms, of the value being delivered to customers here on a price and value perspective. And the U.S. is just behind us. So it's a great growth opportunity that's right in our swim lane. And so now on Ziply specifically, there is a high growth potential within the asset itself, particularly in those kind of high GDP attractive customer kind of states. But it also had - the Ziply management team has done a tremendous job transforming what was a legacy asset into a modern asset, not just from a fiber network perspective, but how they serve the customer and their IT stack. So as we look at other opportunities, if other opportunities come up, we'll take a look. And what Ziply fiber has built would allow us if there were other opportunities that came along to include those within the Ziply fiber platform and be able to kind of consolidate and merge other assets into what Ziply fiber has built in an elegant way. So I think all to say, if there are other opportunities where we can turbocharge the already high Ziply fiber growth, we'll take a look.

Thank you.

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

Hi. Thanks very much. Can I come back to your core business and try to clarify a couple of things. The -- first of all, the write-down on TPIA subs. So 106,000 customers in your footprint are currently riding on cable TPIA, so you have to shut down that business and do you have to turn off the customers? Or you just don't count them in your sub base anymore? And a second part of that, would you not fully intend to try to just migrate those to your own networks and as you have a network in to every home in these regions? I'm a little surprised why you need to take the subscriber write-down there and what's going to happen to these customers going forward. Similar on the prepaid, if you can just clarify, if you take out $78,000 for Virgin prepaid, I assume you'll take another sub write-down in Q4. If you're going to shut down the Bell prepaid. Can you just level set us on what that does to ARPU? I assume that should mean that ARPU mathematically will get a little bit better in Q4 and Q1? Thanks.

Okay. So I'll start first on the TPIA resale business, and Curtis will cover the wireless question, Vince, good morning. Look, on the resale business, the reseller business, it's -- the ruling from the CRTC essentially puts a stop to that resell business. So the reason for the subscriber modification is that we can no longer add subscribers on TPIA as part of that collection of brands that we were operating, Distributel, et cetera. The 106,000 customers that are ours today under those various brands that operate on -- that are served off of the cable network, we can continue to serve them for as long as they choose to remain our subscribers on those networks because they are grandfathered, but we cannot add new subscribers on TPIA. So that business is essentially shut down. Now on the migration from cable to fiber. That was the business -- one of the significant elements of the business case of those acquisitions all along was migrating where we have fiber footprint, migrating those subscribers to fiber. And we've done quite a bit of that already. So I don't have off the top of my head how many of the 106,000 customers are also in fiber footprint. But for those that are, we'll continue to migrate them. And where we don't have fiber, we're going to keep them on TPIA for as long as they remain our subscribers or our customers. So that's the answer on that one, Vince, and I'll turn it over to Curtis for wireless.

Then Vince, on the second one, you're right. So in terms of the prepaid stop-sell on Bell, so we'll stop selling that service on Bell. And you're right, it's a very small impact, but there will be a small benefit to ARPU.

Thank you.

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

Good morning. Thanks for taking the question. It's Matt sitting in for Dave this morning. I just wanted to ask about the broadband business. I think you referenced in your remarks or maybe it was just in the press release, higher deactivations due to promotions and competition and so on. But there's also reference to success in increasing the percentage of subscribers who are bundled, which usually would have, I would think, a churn benefit. So maybe if you can put those into context and maybe share what kind of churn reduction or other benefits you're getting from bundling these subscribers together, it would be helpful? Thanks.

No. So it's - what you're seeing is the general market is generally slowing, whether or not it's on the wireline or the wireless side. And there's a number of factors there. One is population growth, particularly newcomer growth is going to be more sustained than what we would have thought given new policies that has an impact on housing starts. And as penetration increases in both segments, you'll just kind of see a slowing of market growth, although the markets are continuing to grow. In that environment, we're continuing -- on wireline side, we're continuing to take share away from our competitors or taking a larger share of new market growth, and that's because of our product superiority with fiber. And we have a particularly strong mix of customers coming in on the high-speed tiers. Now it is a highly competitive pricing environment right now, again, both in wireless and wireline. So you're seeing when you're talking about the activations, you're seeing the impact of some of our competitors choosing to protect market share at any and all costs, and you're seeing that in some results of our peers, where particularly since you asked me about wireline, you're seeing serious compression on both revenues and ARPU on the wireline side. We're doing it differently. As you can see, our revenue growth is growing nicely on our Internet ARPU has been growing. And that's a factor of our go-to-market approach, Matt, we have - we're loading customers in at the high-speed tiers, which has higher ARPU. We are being very diligent in the customers we're bringing in on the premium brands, so always favoring Bell over Virgin. And that applies both to Internet and wireless. And of course, there's the benefit of lower churn for customers who buy more than one product from us. So I said it probably five times in my opening remarks, it's that you got to be really disciplined in an environment like this, getting the right loads on the right brands and not chasing every single load at all costs, because that's not a winning formula. And we made that call. And I think you see it in the margin expansion. And I think in the long run, it's going to help us, particularly as prices stabilize because they're going to have to.

And maybe a quick follow-up because your views on convergence, I mean, there's some who view it as more of a defensive strategy, but you kind of referenced your share gains and so on. Like for Bell, are you looking at your converged offering as more of an offensive strategy? Or is it defensive to protect what you have?

It's - well, we're doing both, and it's just kind of managing the entire kind of portfolio across the board. Now our mix of customers who buy both either the - an existing wireless adding Internet or an existing Internet adding wireless or a new to Bell buying both at the same time, that's increasing. So that mix is increasing. But if you look at our overall base, the bundled customer is still the minority of customers in terms of the overall mix.

All right, thank you so much.

Thank you. Our next question is from Drew McReynolds from RBC Capital Markets. Please go ahead.

Yes, thanks very much. Good morning. For you Mirko, a big picture question, and it just kind of ties, I think, a lot of the earlier questions together. And it's on the outlook for industry growth in Canada. And within that, just trying to kind of gauge an EBITDA growth profile for BCE. You had the revenue headwinds this year, which you characterized as transitory. They're holding the line on 2% consolidated EBITDA and doing great work on lowering the cost to serve. So the 2 questions is, do you see industry revenue growth in Canada staying positive given all the kind of maturity competitive substitution regulatory dynamics? And then second, are you able to, within that environment, sustain positive EBITDA growth on the core business here in Canada?

Good question. Thank you. Look, on the - if you break down the revenue like 2 chunks, product and service. On the product side, we really have the impact of, as Curtis said, the shutdown and conversion of the source stores, and there has been also lower phone sales generally as customers have shifted to bring your own device. And in our case, on the wireline side, we've had some wireline equipment revenue declines. And there's been some timing issues on recognizing some of the revenue on the wireline side. So that's product which it's understandable. And of course, it's low margin. So the flow-through impacts are relatively small. On the service side, it really is a question of needing the pricing that we are to customers and kind of give you some examples like we've had to - we've been - and I mentioned this. I think, at the last quarter, making sure that there's proper stratification across prepaid and postpaid and across and also across the two brands in postpaid. And I think everyone lost its way in that regard in the early part of this year. And so that's why I've spent some time in my remarks talking about that. Now if you look at October, October pricing was lower year-over-year, but better than what we saw in Q1 and Q2. And part of that is kind of that proper stratification across prepaid, flanker postpaid and premium postpaid. Is there going to be growth going forward? Yes, I think so. I think pricing is going to need to stabilize, number one. And then we'll get through some of the other impacts that we're seeing. In our case, data overage decline. Like we've managed our data overage very, very tightly over the last four, five years. So our…

Thanks, that's great context.

Thank you. Our next question is from Maher Yaghi from Scotia Bank. Please go ahead.

Great. Thank you for taking my question. I believe that stepping back from loading low-profit wireless subs is the right strategy. But it's hard to extrapolate yourself from this long term because you are a national incumbent player. And if you don't stay competitive, it could lead to a material market share loss. So how should we think about this strategy going into 2025 as you look at these issues? And how can you take - how can you solve these issues if we're not seeing a clear sign that the competition, which is pressuring those prices is looking to change their approach to the marketplace. So I'm just - because when we headed into 2024, you're seeing decent wireless pricing and strong subscriber loading. And as we head into 2025, we're seeing negative pricing and declining momentum in subscriber loading, very low subscriber growth at all. So how can we generate revenue growth in 2025 in that approach, in that approach that you - the strategy that you're taking? Thank you.

Thanks, Maher. Simple on fiber continues to grow. So our market share is growing, our revenue is growing, our ARPU is growing. So we continue to invest there. On wireless, on the Bell brand, the market share is strong and the market share is stable to growing. So we're going to continue to focus on the Bell brand. So I'm looking at the numbers behind the numbers. And like I said, all the loadings were on the premium Bell brand, and that's a good thing, and that sustains market share. The significant growth that we've had on prepaid, particularly on the Lucky brand for us, means you bring the customers in and then we're going to have to focus on life cycle management and get the customers from - migrate them from the prepaid their entry point over to the premium brand over time. So that's going to sustain kind of growth and market share stability. And the third element to that is lower the cost to serve. And you do those things, we'll be okay. But like to your point or maybe underlying kind of what you're saying in your question, there is no hiding from the fact, and this is an industry point that I'm going to make. Now there is no hiding from the fact that the impacts of low pricing will be felt for quarters in the future, right? So you feel the impacts of a low pricing environment six, nine and 12 months later. There's a trailing effect on that. And some are going to feel that more dramatically than others based on chasing low accretive loads at all costs.

Yes. And just following up on this point. When you look at the postpaid churn that you had in the quarter, what's your expectation about that KPI? Can you solve it through proactive measures that you can take to protect your own subscribers? Or it's more an industry-wide phenomenon that it's hard to bring down?

I think it's a bit of both, Maher. Look, I'm not happy with where churn is. I don't think anyone would be given the numbers. However, look, I'm also pleased with the improving trajectory. So kind of two sides of that coin. It is a reality, a marketplace reality that consumers are continuing to shop for deals given the sustained aggressive promotional offers that are in the marketplace. So because of that, you're going to see a lot of switching activity. That said, there are a number of tools at our disposal to minimize that churn. That's why we've seen an improving trajectory. I'm not going to outline chapter and verse of all the things we're doing because it's competitive. But some of the things we're doing are taking hold and you're seeing the improving trajectory, which I've now said a couple of times. And we're going to continue to focus on that to make sure that, that improving trajectory continues to improve. But yes, I mean, churn is where it's at, and we've got to get it lower.

Thank you.

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

Thanks very much. Good morning. I wanted to just talk about the balance sheet again, if I could. Obviously, MLSC brought in a lot of - or will bring in a lot of liquidity and then you're reinvesting that in Ziply getting more production on the EBITDA line and the growth line. Could you just talk about other ways to enhance the balance sheet? What are your thoughts given these deals around tower monetization, additional real estate monetization and some of these structured equity deals that some of your peers are looking at?

Yes. Simon, thanks for the question. So a couple of things there. One, you're right. We announced the acquisition of Ziply Fiber shortly on the heels of announcing MLSE. So ultimately, we're selling off a sports asset at a great value that didn't contribute to our financials. And acquiring a fast-growth fiber company that will expand our footprint and drive, as you say, EBITDA and free cash flow. So leverage neutral basically there. I think that's just good capital allocation. And then in terms of other asset sales, we're constantly reviewing opportunities to improve our asset portfolio. And if there's an opportunity to unlock value or capture growth opportunity, then for sure, we're going to look at it. Towers is one that you mentioned. Asset securitizations, we'll look at it. It's all a matter of use of proceeds and fundamentally, is it a better allocation of capital? And does it drive EBITDA and free cash flow growth for our shareholders.

Thank you.

Thank you. Our next question is from Aravinda Galappatthige from Canaccord Genuity.

Good Morning. Thanks for taking my question. On the CapEx outlook, Mirko, I think that you'd sort of indicated that sort of at public conference calls that there's perhaps even more downside as we kind of look to 2025 and beyond. Given the U.S. venture and obviously, the incremental CapEx that comes with that, do you think that there is even more room to sort of readjust the capital spend in the Canadian market in light of sort of those commitments and try and perhaps sort of manage the balance sheet and free cash flow payout ratio factors? That was my first, and I have a follow-up.

Thank you for that, Aravinda. So on CapEx, a couple of things. So for this year, we're trending to be within our guidance for CapEx, which is essentially around 16.5% capital intensity ratio. And we've said in the past that Bell kind of as it is today, Bell CapEx can get to less than 15%, and that continues to be the plan. And we're doing that through a number of things, right? First of all, modernizing our operations, getting more efficient on delivery. moving workloads to the cloud, and it's things like implementing self-install capabilities, virtual repair, contact centers in the cloud. All these things that we're doing to streamline and modernize our operations and become more efficient is allowing us to run our business at a lower - with a lower CapEx budget. Then we're going to get to the end of our 2025 fiber build-out target essentially in 12 months or so. Of course, we hope to and we will continue to build in Canada to determine where we can get a reasonable return on investment from those. But all of that, like that and allowing us to run in Canada at less than 15% is going to give us the room to accelerate the Ziply fiber build program and still operate BCE the U.S. at probably around 16.5% consolidated CapEx. And when we embarked on our accelerated CapEx build in Canada over the last four years, in some years, we were over 20%. We'll be able to do the accelerated build and simply fiber footprint and maintain BC at consolidated 16.5%. So I think that's very good news, both for growth and the efficiency of the investment.

Thanks. Maybe I'll just use my follow-up differently for you with respect to the comments you just made about the 16.5% pro forma number. Should we translate that 16.5% as sort of more of a steady-state number? Or I'm trying to understand whether at the peak of the rollout in the U.S., I suspect it goes a lot higher than that. Or am I wrong?

No, no. So in terms of the information we shared on Monday, which is that we plan to go from Ziply currently - Simply Fiber currently has 1.3 million households passed, and we'd like to get to over 3 million by 2028. That would be done with the consolidated 16.5% is my expectation. I mean more information to come as we close, but that would be the expectation. That's what I was trying to convey in my longer answer at the beginning.

Thank you.

Thank you. Our next question is from Jerome Dubreuil from Desjardins Securities. Please go ahead.

Yes, thanks. Good morning. First, you mentioned in the prepared remarks that you continue to make investments in digitization and modernization of Bell. I'm wondering how much further operational improvement you are seeing in the Bell business as it stands right now? Can we maybe be expecting a program similar to what you announced earlier this year? Maybe this could happen every second year or something? Is this a magnitude that would make sense going forward?

Well, we're - okay. So - thank you, Jerome. Look, we're - so let me break that up into two parts. The transformation work or journey continues, right, because we're in the early days of some of the programs to harness the benefits of technology. So moving all our core consumer products to a single ordering and billing architecture, we're in the process of doing that in Ontario and Quebec, and then there's other regions to bring on board over time and other business segments beyond the consumer business over time. So that's going to bring benefits as we migrate more of our business lines and more of our regions onto a modernized ordering and billing architecture. So that would be just one example. The digital platforms and the self-serve apps and virtual agents and contact centers in the cloud and all the benefits we'll get there from churn reduction, sales increase and cost to serve, that's in the early days. So that's going to ramp. Customer self-install has been quite successful, but again, early days. The more fiber homes we have connected, the more we can enable full self-install in the future, continuing to move the hundreds of the apps that we have on-prem to the cloud, we're in the early innings of that journey as well. So I could go on. So on that part of it, we're in the early to mid-innings - so more to come. That said, like the one thing I didn't mention in my opening remarks, as we move more of our workloads to the cloud, there's going to be a shift from CapEx to OpEx. And so that's going to have some temporary impact on further margin expansion. And then on programs like the one we announced in February, we continue to recalibrate the workforce. So we're going to continue to hire aggressively in growth areas. To the extent we shed lines of business, either through closing them down or selling, that obviously has those positions move with the buyer. In other areas, we're going to continue to align our cost structure to revenue streams. We have to do that. So that's how we're going to approach it.

Thank you.

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

Great. Thank you. A couple of follow-ups. First, you mentioned that in October, you saw a bit of pricing stability. Do you think that we've seen the worst in terms of the ARPU declines in 4Q, can we start to see maybe just better trends from here? And then same question on churn, still high, but you're lapping a much higher churn level from last year. So can we expect at least churn to improve annually in the fourth quarter?

Yes. I mean on churn, like I said in response to Meyer, we'd like to get it lower, and we're going to continue to work on getting it lower, but we're happy, pleased with the improving trajectory. On ARPU, it's going to depend on Black Friday and the holiday period. I think rather than making prediction on where it's going to go, I'll just highlight the obvious, which is if Black Friday and the holiday period is relatively stable, recognizing that those are heavier promotional periods by design, I suppose, then we'll be okay. And if to the extent promotions are more focused on hardware than rate plans, and that will bode well for service revenue and margins and ARPU.

And can you maybe just touch on what the guidance assumes in terms of our expectations for ARPU?

Well, on revenues, it's in the revised guidance that Curtis I highlighted earlier during his remarks.

Right. Continuation of service revenue.

Correct.

Got it. Thank you.

Thank you. Our next question is from Lauren Bonham from Barclays. Please go ahead.

Hi. Thanks for taking the question. I wanted to just ask about immigration impact on wireless net adds and how much of the change in trends that we've seen this quarter, usually, we have the sequential net add uplift in 3Q. So how much of that change is just from being more targeted promotionally as we've talked about versus from the decline in foreign students and how you sort of expect those lower immigration expectations to impact industry growth next year and beyond?

Yes. Thank you for the question. I think there are a couple of trends here. One, immigration levels are still positive, but they are going to slow down year-over-year. And I think we're continuing to see the benefit of our increased focus and distribution channels. So we're doing quite well in this market on a relative basis. But you're right, the overall pie is shrinking. But for us, it's not a big -- not as big an impact because we are increasing our share in that market on a historical basis.

You can see it in the prepaid results.

Thank you.

Thank you. There are no further registered questions at this time. I would now like to turn the meeting over to Mr. Fotopoulos.

Thanks, Matthew. So thank you again to everybody for their participation on the call. As usual, the IR team is available throughout the day for any follow-ups, questions and clarifications. Have a good rest of the day. Thank you.

Thank you.

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