BCE, Inc.

Good morning, ladies and gentlemen, and welcome to the BCE Q2 2022 results conference call. I would now like to turn the meeting over to Mr. Thayne Fotopoulos. Please go ahead, Mr. Fotopoulos.

Thank you, Paul, and good morning, everyone, and thank you for joining our call today. As usual, I'm here with Marco Bibic, BC's President and CEO, and our CFO, Glenn LeBlanc. You can find all our Q2 disclosure documents on the investor relations page of the bce.ca website, which we posted earlier this morning. However, before we begin, I want to draw your attention to our safe harbor statement on slide two of the presentation, reminding you that today's remarks made during the call will include forward-looking 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 our publicly filed documents for more details on our assumptions and risks. With that, I'll turn the call over to Mirko.

Thank you, Thayne, and good morning, everyone. The Bell team continues to deliver for all the stakeholders we serve. We remain focused on our strategic plan. It's working. Q2 marked another quarter of consistent operational execution with a disciplined focus on balancing market share growth and financial performance. Our approach drove consolidated service revenue and adjusted EBITDA growth of 3.8% and 4.6%, respectively. These strong results are underpinned by our extensive and unprecedented network investments that are building unmatched broadband fiber and 5G infrastructure in Canada and, frankly, if not the world. By the end of this year, we'll have invested more than $14 billion since 2020, the highest ever over a three-year period by Canadian telecom This includes planned CapEx for 2022 of approximately $5 billion, which also represents peak spending by Canadian Telco in one single year. These massive investments have focused primarily on our FTTH and 5G wireless networks, our ongoing expansion into rural and remote communities, and considerable spending on capacity and on resiliency. With approximately 900,000 more new FTTP connections deployed this year, 80% of our mid-term broadband internet build-out plan, comprising 10 million residential and business locations, will be completed, and 5G LTE network service will be available to more than 80% of Canadians. And recent events have illustrated the vital importance of communications networks and the role they play as an integral part in the lives of all Canadians. They have also illustrated the relevance of our corporate purpose, which as you know, is to advance how Canadians connect with each other and the world. It's this purpose that guides us in how we design and how we build our networks to keep our customers at the forefront of all that we do. So I want to take a couple of moments now to make one thing especially clear. Bell's wireless and wireline networks use different network infrastructures, and they are configured such that a major disruption on the wireline network does not take down the national wireless network. Since 2013, we have protected our cores from the internet through the use among other things of multiple geographic zones to route traffic. Moreover, in the event of a localized outage, we have built an automated customer notification system starting first in Quebec and then Ontario. Now it's clear that no network is perfect or no network is immune to outages but network architecture clearly does make a difference. Since the start of the pandemic and including planned spending for 2022, we will have invested on average close to $800 per retail subscriber, which is more than any other Canadian operator. This unmatched spending has not been limited to access, in other words, to coverage. Over 60% of total core network investment in our three-year period since COVID has been directed towards capacity, modernization, robustness, and outage detection. Since COVID, we've actually invested approximately $1 billion in our wireless and our wireline cores to increase capacity, harden security, improve resiliency and redundancy, and build automatic outage notification. And we're not standing still. As you've seen from recent announcements, including in this morning's press release, we're continuing to launch new products and services. Last week, we inaugurated the next evolution of 5G in Canada with the launch of our mobile 5G Plus network that will offer peak data download speeds of 3 gigabits per second. 5G Plus will be deployed across the country and is the result of our investment in mid-band 3.5 gigahertz spectrum. Currently available in Toronto and surrounding areas, Bell's 5G Plus network is expected to cover approximately 60% of the addressable population by year-end, and this will include areas like the GTA, Halifax, St. John's, and Sherbrooke. We also continue to raise the bar on delivering the most advanced internet and Wi-Fi services to Canadians. In September, we're launching an 8 gigabit symmetrical internet service, so that's symmetrical upload and download, in select areas of Toronto that will offer data download speeds five times faster than cable and data upload speeds at least 250 times faster than cable. And we're introducing Wi-Fi 6E technology, which enables better in-home coverage and speeds to connected devices that are two times faster than previously. So 8 gigs upload and download symmetrical on Wi-Fi 6E really are game changers. More concrete examples of our plan. Our plan is really coming together as you can see from these concrete examples and basically better wireless speeds, unmatched internet upload and download with best in-home Wi-Fi and network architecture that offers the best resiliency in the industry. On the TV front, we're making the IPTV experience even better by bringing together live and on-demand streaming content and thousands of apps all in one place. Our new 5TV service powered by Android TV technology, features access to Google Play Store, universal search, as well as voice remote and cloud PVR capabilities. In wireless, our focus on high-value mobile phone loadings and customer-based management continue to pay off, with another set of excellent operating results this past quarter, highlighted by a more than two-fold increase in total mobile phone net ads to approximately 111,000, record post-pay churn, and continued strong service revenue, ARPUF, and EBITDA growth. We achieved these results against the backdrop of relatively stable year-over-year wireless prices despite surging inflation across the Canadian economy. According to the most recent StatsCan data, the price of all goods and services in aggregate across the Canadian economy has increased 8.1% over the past year, compared to another decline for cellular services. And in fact, kind of compare ARPUs today to back in 2019, we're not back to 2019 levels. Basically, we're delivering far more value today at declining prices. In residential wireline, we added 36,473 new net retail fiber customers this quarter, an increase of 19.5% versus last year, which contributed to strong residential internet revenue growth of 8%. Turning to media now and our digital first strategy, we continued our strong momentum across our streaming and digital platforms, as evidenced by outstanding 55% growth in total digital revenues. Digital now represents 27% of total Bell Media revenue, up from 19% last year. Underpinning the very strong performance was Crave, which grew direct streaming subs by 8%, while total subs were up 2% compared to last year when we experienced strong demand due to COVID. So a good result, considering tougher year-over-year comparables. And revenue from SamTV, our advertising sales tool platform, was up more than four-fold versus last year, generating approximately 60% of total digital advertising revenue in the quarter. On the customer experience front, we continue our momentum. With more than 85% of customers now mainly interacting with Bell Online, our digital strategy is basically playing a significant role in our imperative to champion customer experience. Our ongoing investments in digital functionality as well as the quality and reliability of our networks are driving better customer satisfaction and retention results as reflected in a third consecutive quarter of improved wireless, residential internet, and 5 TV churn. We also continue to enhance apps and online support tools with features like virtual repair, enhanced self-install, automatic top-up enrollment, and personalized templates that improve the clarity of communications with our valuable customers. These initiatives are a big reason why Bell customer satisfaction scores continue to improve and why our suite of apps continue to be the highest-rated telecom apps in the country. In terms of recent notable ESG developments, Bell was named the top telecom company in the world and the fourth overall in Canada for 2022 on the best 50 corporate citizens list compiled by Corporate Knights. Bell is also the first communications company in North America to receive ISO 5001 certification for energy management, which has been renewed for a third consecutive year. And we were recognized as one of Canada's greenest employers for a sixth straight year with our ambitious commitments to reduce GHG emissions and to recover and recycle mobile devices through the Bell Blue Box program. I'll now turn to slide six for a synopsis of some of our key operating metrics in Q2. Let's start with wireless. As you can see, we added 83,197 new net postpaid mobile phone subscribers up a very, very strong 87% compared to last year. And this was driven by a number of factors, so greater retail store traffic, 5G momentum, improved business customer demand, immigration growth, more focus on bundling wireless with residential internet, and outstanding customer base management, as you can see by our best ever quarterly churn rate of 0.75% in the quarters. Similarly, for prepaid, net ads were up meaningfully year over year, growing to 27,564 as market activity picked up significantly with increased immigration and travel to Canada. This represents our best quarterly prepaid result in almost two years. ARPU was up 3.8%, our fifth consecutive quarter of year over year growth. And this was driven by a sharp increase in roaming revenue, as Glenn will detail when he speaks, and more customers on premium rate plans. And this reflects our laser focus on higher value subscriber loadings across all our mobile brands. Consistently, quarter after quarter, a majority of our new postpaid customers are subscribing to unlimited plans. And of these, 87% are on monthly data plans greater than 10 gigs. And there's more upside, given that we're still in the early stages of the consumer upgrade cycle to 5G, with only 27% of post-based subscribers now on a 5G-enabled device. So as 5G momentum keeps building, subscribers will migrate up the rate plan curve, and that'll serve as a catalyst, we think, for continued strong ARPU and service revenue growth. Now turning to Bell Wireline. We added 22,620 total new net retail internet customers, up 28% versus last year. And that includes the competitive losses of legacy DSL subscribers where we do not have fiber. If we look at our performance just within our fiber footprint, it paints an even stronger picture where we added over 36,000 new subscribers. And this, importantly, was achieved with a fiber cable overlap of only 56%. So it's demonstrating in a very clear way the market share gains we're making where we have fiber and also We still have another 44% of our wireline footprint to go with cable overlap, so a lot of runway left. We also added around 4,000 net new IPTV subscribers, which is essentially stable versus last year, despite the level of promotional offer intensity returning closer to pre-pandemic levels, while satellite TV and home phone net customer losses both increased compared to Q2 of last year, when we experienced fewer customer deactivations due, of course, to COVID. At Bell Media, total advertising revenue was up 5% over last year. This was supported by continued strong digital growth, improved radio and out-of-home performance, and increases across our specialty TV sports and news channels. TSN and RDS, again, maintained their number one rankings for the current broadcast year to date, and we benefited largely from the return of the F1 Canadian Grand Prix, which was the most watched Formula One race on record across all Bell Media properties. Notably, we also concluded negotiations with the NFL for a multi-year expansion of our media rights agreement, and this now includes live coverage of all NFL international series games, and the new agreement ensures that Bell Media will continue to be the exclusive television broadcast partner of the NFL in Canada for a number of years. As for our Quebec media strategy, it really continues to hunt. Nouveau has outpaced all other French-language conventional TV competitors in viewership growth with year-to-date primetime audiences that are up a leading 5%. Despite this relatively strong overall performance, TV advertising demand in Q2 softened a bit given the current macro environment of surging inflation, a potential recession and supply chain issues and certain key consumer good verticals. We did, however, see the return of some advertising dollars back into radio and out of home that had moved to TV during the height of the pandemic. Notwithstanding the broader economic backdrop, we did have one of our most successful upfront sales seasons ever, shattering the record for first-day bookings with a content funnel that includes 100 original TV productions planned for the upcoming broadcast year, a 75% increase compared to 2021. In summary, Consistently strong execution by the Bell team within our well-defined strategy allowed us to deliver excellent overall operating results in Q2, supporting sustainable value creation for all the stakeholders we serve. So, Glenn, I'll turn it over to you in just a second. But before I do, I sadly want to acknowledge the recent passing of visionary leader and former Bell Canada president and CEO, Jean de Grandpré. Under his management in the 1970s and early 80s, Bell built its telecommunications leadership position with positive growth across our many business segments. Monsieur de Grandpré led the formation of BCE in 1983, and we're now a $23 billion company delivering industry-leading employee, infrastructure, R&D, and community investment. So on behalf of all members of the Bell team, I would like to extend my deepest condolences to the de Grandpré family and my sincere thanks for his exceptional contributions to BCE, to Quebec, and to Canada. Over to you, Glenn.

Thank you, Mirko, and good morning, everyone. Our financial performance continues to demonstrate the Bell's team's consistent execution and disciplined focus on profitable customer growth as evidenced by another quarter of strong consolidated revenue and adjusted EBITDA growth, which remain in line with the 2022 guidance targets we announced last February. Service revenue was up a very solid 3.8%, which drove 4.6% higher adjusted EBITDA, delivering a 0.7 point margin increase to 44.2%. As a result of the strong EBITDA contribution from operations and the lower year over year pension financing costs, due to the high net asset surplus position of our DB pension plans. Adjusted EPS was up 4.8% to $0.87 per share. However, net earnings and statutory EPS were down compared to last year, directly as a result of a non-cash mark-to-market equity derivative losses from a decrease in the BCE's share price during the quarter. Notably, our net earnings results this quarter also included an asset impairment charge related to the consolidation of real estate space post-COVID as we shift increasingly to a hybrid work model and aggressively execute on a multi-year plan to reduce real estate costs. We anticipate taking further non-cash impairment charges as we vacate other leased properties. We are confident that over the next five to seven years, we can rationalize our physical footprint by up to 3 million square feet, which will generate cumulative cash savings in the range of $250 to $300 million. As for CapEx spending in the quarter, it was up year over year with a total investment of more than $1.2 billion as we continue to expand our network leadership with advanced spending on the rollout of the Fibre and 5G consistent with our two-year capital acceleration program. And free cash flow is notably strong, increasing 7.1% over last year to $1.33 billion on the back of higher EBITDA, lower severance costs, reduced pension cash funding due to the contravation holiday that started this quarter. Let's turn to detailed financial results of our three operating segments and start with wireless on slide nine. Just another great quarter. It was led by excellent service revenue growth of 7.8%, which excludes low margin equipment revenue that declined 0.9% year over year, reflecting consumer's behavior towards longer upgrade cycles and pre-owned device activations. This standout performance was the result of our clear and consistent focus on higher value subscriber growth, particularly on the Bell brand. Also, effective customer base management and a very pronounced roaming recovery in the quarter as consumer travel accelerated with revenue rebounding to 98% of pre-pandemic levels. Due to the flow through of the high margin service revenues together with promotional offer discipline, wireless EBITDA grew a very strong 8.3%, yielding a 1.2 percentage point increase in margin to 46.7%. Let's move over to slide 10 on wireline. An improved top line performance trajectory this quarter with total revenue down 0.3% compared to a decline of 2.2%. in the previous quarter. Underlining this sequential improvement was continued strong residential internet revenue growth which grew 8% year-over-year as we continue to drive further market share gains and higher ARPU from customers who are moving to higher speed tiers and recognizing the value and dependability of Bell's superior pure fiber-based services compared to cable. On the B2B front, although near-term revenue headwinds continued this quarter from the sale of CREATEC in March, and ongoing global data equipment shortages that drove a 23.2% decline in total wireline product sales, as well as related delays in spending on service solutions by large enterprise customers, we saw some moderation in the rate of year-over-year revenue declines. This can be attributed to improved performance, particularly in the small and medium business space, as customers resume more normal operations post-COVID. So definitely some encouraging signs as we enter the second half of the year, but pressures are expected to persist given the current macroeconomic backdrop. Notwithstanding lower year-over-year revenue, wireline EBITDA was up 1.7% on the back of 1.8% reduction in operating costs. This was achieved despite unusually high storm-related costs and inflationary impacts on fuel and labor that we absorbed this quarter, which we estimate totaled in excess of $20 million. We expect these inflationary pressures to persist for the remainder of the year. Let's move over to slide 11. On Bell Media, another good quarter with total revenue up 8.7% year-over-year, which, as Mirko said, benefited from the return of the F1 Canadian Grand Prix in June. Advertising growth, including a strong contribution from digital, as well as a 3.5% increase in subscriber revenue, reflecting ongoing Crave streaming growth. Advertising revenue grew 4.7%, reflecting year-over-year increases across our specialty TV sports and news services, as well as strong radio and out-of-home advertising demand as COVID recovery continues. Consistent with the increase in total revenue, media EBITDA was up 5.6% year-over-year. This was achieved even with a 10% step-up in operating costs, reflecting the return of the F1 Canadian Grand Prix. and an increase in overall marketing and sales activity back to more normal levels. And lastly, on slide 12, we have the financial strength and flexibility to execute on our business plan and our capital market priorities for 2022. Our balance sheet remains healthy with approximately $3.1 billion in available liquidity at the end of Q2 that is supported by substantial recurring free cash flow generation. and a relatively stable and manageable net debt to EBITDA ratio of 3.1. And excluding the impact of the 3.5 spectrum licenses we acquired last summer, our leverage ratio would be 2.9 times. And with 85% of fixed rate debt currently, a favorable long-term debt maturity schedule that has an average term of approximately 14 years, no near-term debt refinancing requirements, and an interest coverage ratio that is well above our target policy of nine times adjusted EBITDA, we have good predictability over our debt service costs, as well as a high degree of protection from interest rate volatility. Then on top of all of this, our defined benefit pension plans are stronger than ever, with an average solvency pension position an average solvency position of 115%, which has enabled us to begin taking the contribution holidays on current service cost payments that I've been talking about previous quarters. And on that, I'll turn the call back over to you, Thane, and an operator to begin Q&A.

Great. Thank you, Glenn. So we are prepared and ready to take our first question. So Paul, please explain to the participants how to queue up.

Thank you. We will now take questions from the telephone lines. If you have a question and you are using a speakerphone, please lift your handset before making your selection. If you have a question, please press star 1 on the device's keypad. You may cancel your question at any time by pressing star 2. So please press star 1 at this time if you have a question. There will be a brief pause while the participants register. We thank you for your patience. The first question is from from Scotiabank. Please go ahead. Your line is open.

Thank you, guys, for taking my questions. And very nice quarter in wireless. I just wanted to first maybe start on the wireline side. Continued very strong cost containment. Beyond the equipment impact on profitability because of the year-on-year decline in equipment sales, where do you expect these cost savings to continue to carry your growth in wireline over the next couple of quarters, Glenn? And on wireless, I wanted to ask you if you have seen any impact on customer loadings since the network issues that Rogers had witnessed and if these impacts have continued up to now or were they mostly in the early days only. And just on the churn, can you maybe unpack the improvement in churn, you know, very low churn here. How much of it is due to bundling or other reasons, if you can name them, please. Thank you.

Good morning, Mayor. Glenn, I'll start with the first part of the question here. Look, I don't think it's a surprise to anyone that we continue to show exceptional cost discipline and cost control. That has been something that I think has been ongoing with us and this management team for many, many years. Now, of course, we were able to achieve, as I said in my opening remarks, a 0.7% margin expansion despite absorbing What turned out to be about $7 million in fuel cost pressures, I expect that to be probably more like $20 million on a full-year basis. Labor pressures as we compete for hot skills resulted in approximately $5 million of wage pressure in the quarter. I don't see that going anywhere anytime soon. So we certainly are feeling inflationary pressures. I mentioned in my opening remarks we had higher than normal storm costs. That was approximately $10 million. So altogether, we were able to improve margins by 0.7% while absorbing that due to just general cost discipline. And I can assure you that if things change with inflation, we start to see additional inflationary pressures beyond what we've felt so far, then we'll be more aggressive in doing what we need to do to protect margins into the future. So I don't think it's a surprise to anyone Mayor, that we will take the necessary steps to manage our costs in our wireline business and for that matter in our entire business.

Good morning, Mayor. I'll take the next two, which kind of I'll pull together really kind of the loadings that you're expecting us to see in Q3. Kind of my interpretation of your question, of course, the associated churn. So I kind of Take your question in a more general way. Obviously, we're pleased with our results across the board, and we're continuing the momentum we've shown the last five, six, seven quarters based on executing against our pretty clear strategy. And really, it's all anchored off of a best networks customer value proposition, which is really resonating. So that's kind of a very general answer to your question. More specifically, I think The market dynamics that supported our performance in Q2 we see continuing in Q3, so things like retail store traffic coming back, our continued scaling of our digital and direct sales, which we got a lot better at during COVID, 5G growth, immigration, travel, those elements. Of course, on the financial side, there's the roaming tailwinds. And last but certainly not least, network superiority. and that best networks value proposition is certainly standing out in Q3 and that's speeds of course everybody talks about speeds both on the wireless and wireline side and then on the wireline side veering away from your wireless focus question but on the wireline side upload speeds are really starting to become a key competitive differentiator just in a kind of an interesting fact for all of you on the call. On the wireline side, we're seeing meaningful material loadings on the higher speed plans, and we're finding that customers who are on the higher speed plans have 20 to 30% more connected devices in their homes, and their upload consumption is three times higher. So upload is going to continue to be a big deal for customers, and we're unbeatable in that regard. And, of course, reliability and resiliency is now at the forefront of customers' purchasing decisions. And, again, that's why I spent quite a bit of time in my opening remarks on how we architected our network. So really back to your question, market dynamic in addition to our network superiority is going to continue to give us momentum. And on churn, a number of factors. Of course, customer experience improvements have a big impact. Back to the best networks, that's having a big impact, and that's obviously related to customer experience. We're also benefiting from devices lasting longer, so when customers aren't switching, and we're not having to to provide new handsets. Even though devices are lasting longer, we're managing to keep customers on our network with the customer experience improvements and network superiority. And yes, the combining of offers that include residential internet and wireless are improving churn as well. We're seeing better churn for customers who have more than one product with

Thank you, Mirko. And just on, have you seen any initial bump up in loading due to the Rogers network issues?

Customers are choosing Bell. Yes.

Thank you. Next question, please.

Thank you. The next question is from Drew McReynolds from RBC Capital Markets. Please go ahead. Your line is open.

Yeah, thanks very much. Good morning. Maybe for you, Glenn, probably just on the macro side, not just people looking at telecom, but just looking more broadly, everyone's wondering what we're in for as we move forward here. And BCE certainly has a a wide variety of touch points here with the economy. Are you seeing either any incremental inflation and from a macro standpoint, any problems with receivables? You made some commentary on the ad market being a little soft. Just as we get here a little bit deeper into the summer, anything post-quarter that you would flag? And then secondly, maybe back to you, Mirko, thanks for some of the data points on the Fiber to the Home market share. Just curious how fiber performs versus DOCSIS, but then versus other fiber competitors, because presumably those fiber footprints of competitors will grow over time as we've seen globally and may see increasingly more here in Canada. Just wondering what your experience would be there. Thank you.

Good morning, Drew. Yeah, your question on what we're seeing in the macroeconomic outlook. Look, to be very honest, I unpacked what we're seeing in inflation quite specifically in the past quarter. But other than that, we're not really seeing material issues. And while the economic growth is slowing, it remains relatively strong and the labor market remains robust. Specifically, you asked a question on customer payment. We have not experienced a material change in customer payment patterns. As a result, there's been no related increase in bad debts, nor are we increasing provisions at this time or having extended payment terms. So, frankly, it's been quite manageable despite, as I said, unpacking a few inflationary pressures that are specific to to our industry, having a large fleet like we have obviously, the escalating fuel prices and of course attacking hot skills and ensuring we retain and attract the right people, some pressure there. And then the final comment I'll make that you brought up is, yeah, we're monitoring media closely and what impacts might be on TV advertising due to the macroeconomic pressures we are seeing globally. As I said this past quarter, we're quite pleased. We had the F1 to lean on. We have World Cup of Soccer coming up, so we're excited about that. But I think it's an area of the business that we tend to see macroeconomic pressures hit first, so we're monitoring that. So thanks, Drew.

Drew, good morning. Question. So on fiber, look, we're seeing growth in all of our fiber geographies. So that's real positive. That's been the case for quarter after quarter after quarter. In terms of fiber competition, it's kind of difficult to answer your question because right now you don't really have very many areas where you have two fiber operators competing against each other in actually the same geography. That fiber overlap is really minimal to date. And it will take across the multiple operators, whether or not they're small fiber pure play operators or the cable companies, it will literally take years and billions of dollars of capex for them to materially overlap our fiber footprint. And then while that's going on, and I say this from direct experience, having been at Bell for our entire fiber journey, I know how long it takes and how much money it takes, and so do you. And meanwhile, while that may go on with our competitors, we shall see. Here we are today with 3 gigabit per second internet speeds symmetrical to right now, today, to literally millions of households across our footprint and only growing. And we just announced the 8 gig launch starting, of course, next month in September in the GTA, stating the obvious, the largest market, and other areas in the back half of this year in Ontario and Quebec. And in a very short period of time, I'm talking about two or three years, we'll have eight gigabits per second to upwards of six million locations passed. So in a very short period of time. So I guess what I'm saying is while others are going to try to catch up potentially over multiple years, billions of CapEx, we're pushing forward quite aggressively. And if you're Take a step back at how our Accelerate CAPEX program is all coming together. This quarter alone, 250,000 additional locations passed. A meaningful growth in locations passed in the back half of this year. Wireless 5G plus to 60% of the addressable population, increased resiliency, and a new TV product. So you can see how that accelerated, you know, CapEx program has really allowed us to take a significant lead in the collection of services that ride on our fiber networks.

Thank you. Next question, please.

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

Hey, good morning. It's Matt sitting in for Dave. Thanks for taking the question this morning. Just first on Wireline and the kind of large enterprise supply chain related delay in some of the business. I mean, do you have any visibility on when those supply chain related delays will resolve? And then on the back side of it, is there capacity enough for us to see a bump up in delivery on that kind of backlog? smooth return to business once the supply chain clears. And then maybe secondly, just on the kind of real estate opportunity that you highlighted, it sounded like that was mostly related to workers in their office and office space. And just trying to relate the real estate opportunity to maybe what you can do with central offices. Do you have any kind of additional color on what that potential might be and maybe just a general timeline for when that can be, over which it can be realized. Thanks.

I'll handle the back half first, Matt. And Mirko will talk about B2B supply chain. But yeah, the real estate numbers I gave you today is really focused on least real estate space where we would have traditional office workers. And naturally, like most in this country or globally, we're moving to more of a hybrid space. central offices is a bigger question to unpack I mean obviously as we look to the future and copper decommissioning we're going to see how we rationalize our central offices but for now the numbers I quoted today are really focused on office and as we get a better understanding and are further along the copper decommissioning path we'll be able to give better insights on what central office opportunities will have and with that I'll over to Mirko

Thanks, Matt. On B2B, so you see the trajectory is improving sequentially. So that's a positive. And like I said in Q1, and it's continuing in Q2 and up to date in one month and into Q3, we haven't seen cancellation of projects, which is another positive sign. But revenues obviously are delayed for the reasons that you've highlighted, which is largely supply chain. I do think that we will be poised to capitalize reasonably quickly when the supply chain stabilizes to answer your question fairly directly. And on the small and medium segment, we are gaining momentum there. So we're seeing volumes come back, which is a positive, and we're seeing some revenue growth there, which is also another positive. And then as you look into 2023 and beyond, we remain quite optimistic about 5G B2B growth coming as all the components are now being put together. So that's another positive.

Thanks. Very helpful. Thank you.

Thank you. The next question is from Vince Valentini from TD Securities. Please go ahead. Your line is open.

Yeah, thanks very much. And congrats as well on a very strong quarter. The EBITDA growth in the first half of the year is 5.5%. you're still sticking with your 2% to 5% guidance. It seems like there's a lot of tailwinds, especially on the wireless side. So I'm wondering, is there something specific you're seeing on competitive developments in the second half or some unforeseen costs to keep you at that guidance and not even talking about the high end of that guidance range, or is it just conservatism?

Good morning, Vince. I think I kind of unpacked this. Already when I talked about higher inflation and escalating fuel costs and wage pressures as we attack and retain hot skills, attracting them to our organization, I mentioned about media, and that's something we really have to monitor with TV advertising due to the macroeconomic pressures. So it's really no more than that. We're extremely pleased with the front end, their first six months and the performance we've had. but I remain committed to the guidance range I provided for you in February.

So specifically as we're getting into back-to-school period, there's nothing you're seeing that's alarming you on, let's say, a resurgence of competitive intensity? You're seeing similar trends in Q3 to the second quarter you said earlier?

Well, I'll say on wireless, yes. Seeing the same trends, plus, you know, we... Back to the answer earlier around the best network superiority, resiliency, redundancy, which is obviously benefiting us. On the wireline side, there's a little bit more promotional intensity. It feels a little bit more like the days pre-COVID. And look, when I think of that question and I look at the dynamics and I observe the higher promotional intensity on the wireline side compared to wireless, I guess it doesn't surprise me. Some of our competitors are under pressure given the products we have out there in our network, and that's to be expected, and we're not going to let up. How's that? We're not going to let up. We have the better network, we have the better services, and we're going to keep pushing. But it's still early, right? We're only one month into Q3.

And, Mirko, just to confirm, you said that it's the fixed line where you may be seeing a bit of an escalation.

Yes, fixed line. Wireless seems to be pretty stable as it has been for quite a while in terms of things like promotional intensity and handset discounting, those kinds of things. Cool.

And one last one quick, Glenn. The 98% roaming revenue figure from pre-pandemic, can you give any color on the volume that is attached to that? Like, is it in the range of 75% of volume leading to that kind of revenue traction?

Sure, Vince. Great question. 89% is where we're at at the end of June for volume recovery. 98% of revenue, obviously the differential is rate. We were much later introducing rate increases than some of our competitors were. It was July, I believe, before our rate increases went in. Thank you. You're welcome.

Thank you. The next question is from Stephanie Price from CIBC. Please go ahead. Your line is open.

Thank you. The wireless and wireline bundling offerings have picked up across both in the Bell and the Virgin brand. Can you share any early learnings with bundling and if you have any longer-term targets around bundling?

Well, I think it's just a reflection of wanting to serve the household, to serve the consumer. rather than pretending that there's two different customer bases, one for wireless, one for wireless, and it really is the same consumer, the same household. So when you go to market with that mindset, it's going to lead to combined offers. And we are seeing higher lifetime value and lower churn as a result of that, and it's been... It's been in place in the industry for quite some time, and maybe you're seeing a little bit more activity from us as we focus a little bit more on it, but there are huge benefits for us to doing so.

And as bundling capabilities become more important, how do you think about your competitive positioning in the West? Would you consider wholesale or maybe fixed wireless as an option as part of the strategy?

Look, on that, when you're thinking about kind of potentially up to four product bundling competition or duo trios and quads we are in a very good competitive position compared to any others as we have owner economics in 75% of the country and that puts us in a better position than anyone else it's difficult to compete effectively unless you have owner economics and that's really what's going to play in our favor and unlike almost any other we also have vast array of content services that we can offer to our customers and you're kind of seeing it in the wireless side today right not even talking about funding across the country but just in wireless today on our ultimate plans where we include Crave as a competitive differentiator again having owner economics on content plays to our strengths no other provider can really meaningfully have owner economics on content within their overall bundles that makes sense and just finally for me with I said looking for all the telco to work together to keep emergency services working in the event of an outage do you see any additional capex requirements potentially arising from this not for us and that that's why I did spend quite some time this morning outlining how much we've invested over the last few years on things like that. We are well positioned in that regard, Stephanie, and beyond the very specific question, we'll obviously work with all the other providers to serve Canadians and to help each other. We always have, and to be fair, when we run into the occasional

others are quick to help us as well so that's always been the culture within the industry great thank you very much thank you the next question is from David Joyce from Barclays please go ahead your line is open thank you on the

Upgrade cycle. I appreciate that you mentioned about the 56% fiber and cable overlap metric. I just wanted to kind of sense check how that's progressing. Was that the figure around 30% that you had mentioned in the first quarter? And I just wanted to see if you could update us on how many fiber home passes you expect to be at at year end. and when you expect to be completed on that.

Thanks. Yeah, so for the year 2022, the entire year 2022, we still expect to be very close to 900,000 additional fiber locations passed. That'll put us at around 7.1 million total fiber locations passed. So we're right on track. I did mention 250,000 locations passed in Q2, but for the entire year, it'll be 900,000. And on fiber cable overlap, we're at 56%. We're more today than we were last quarter, or last year, but we weren't at 30% last year. We're somewhere slightly above 50% last year. So that's progressing well. So 56% cable overlap, really good. Got 44% to go, so a lot of upside. So lots of promise there.

And is it still roughly a three-year time frame when you expect to be fully upgraded?

Yeah, so we want to be at 10 million broadband locations, high-speed broadband locations passed by the end of 2024. That's been our medium-term broadband build-out plan. So a million of those 10 million locations will be or are already done with wireless home internet. And so we're looking to have 9 million fiber locations passed by the end of 2025, and we'll be at 7.1 million or so by the end of this year, 7.2 maybe. So that leaves 1.8 million or 1.9 million fiber locations to go over the years 23, 24, 25. Okay, great.

Thank you.

Thank you. The next question is from Jerome Dubreuil from Desjardins. Please go ahead. Your line is open.

Yeah, thank you for taking my questions. Good morning, everyone. So the first one is on the 8 gigabits per second. Definitely impressive and will future-proof your network for sure. If you can share maybe what percentage of your Internet customer base and your fiber footprint that are already taking your highest speed tier. I'm trying to get a sense here of the potential attractiveness of this new product in the coming months.

Yeah, so I'm not going to give you the exact figures, but I will tell you that I will say that, you know, subscribers who are on 500 megs and above is quite material, like very high. And those who are 1.5 gigs and above, quite high as well. You know, 3 gigs just launched. couple of a couple of months ago and eight gigs hasn't launched yet so those numbers are smaller but interesting successes on three gigs to date frankly so you know customers the majority of customers are not buying the lower speed plans and and like I said earlier the You know, the upload speed is going to be a game changer. Wi-Fi 6E, an absolute game changer because Wi-Fi 6E is going to give you very high speed Wi-Fi throughout the house, very consistent quality of service. So that's going to be really good as well. And, you know, I already shared with you how those customers who buy the richer plans are using more and have more connected devices. And that's not going to change. I mean, we've all, everyone in the industry has been in, meetings over over the last 10-15 years where you every single time underestimate how much bandwidth consumption there will be and how much consumers are going to make use of higher speeds and and I think that's what's going to happen with three gigs and eight gigs as well right and then on the NFL deal

You know, we've seen sports rights continue increasing in prices, so has there been a significant change in the cost of this contract? And also, do you fully allocate these costs to media?

Yeah, the cost, Jerome, yes, the costs are fully allocated to media, but I'm not going to disclose what our contract details are in the NFL contract. Suffice to say that you just unpacked it as all sports packages and renewals are are up in price, but we are comfortable with the economics of the contract, or we wouldn't have signed it.

Great. Thank you.

You're welcome.

Thank you. The next question is from Batya Levy from UBS. Please go ahead. Your line is open.

Great, thank you. A follow-up on the wireless ARPU side. Can you provide an update on what percent of your post-paid base has the unlimited premium plan as of now? I believe that was 20% last quarter. And along with roaming rate increases you mentioned, should we expect mid-single-digit ARPU growth can continue in the second half? And just a quick question on the cost side. Wireless, you mentioned acquisition retention is pretty steady. Any inflationary impact on the other part of cost that we should bake in for second half for wireless? Thank you.

Good morning. No, on the cost side, we're seeing stability and handset pricing. We're not seeing any supply chain issues there. So nothing to speak of specifically at this time. You asked us to unpack roaming. Look, I gave some specifics of roaming. We're at about 89%. of pre-COVID volume. So I do anticipate continued increases in roaming, which will support our ARPU, but not to the same extent of the rebound you saw in roaming in Q2. So yes, ARPU will be supported by continued roaming improvements into the future, but probably not to the same degree as we've enjoyed in the past few quarters.

I think your first question was on... On the unlimited premium mix of your subscriber base.

Yeah, we haven't disclosed the mix of customers who are on those specific plans. We have said that 27% of our base is on 5G-enabled devices and therefore 5G plans. but we haven't broken that down further into the specifics you're requesting, and we're not going to do that right now.

Got it. Thank you.

Thank you. So, Paul, I think we've timed out, so I think we'll end the conference call on that question. So thanks again for everybody's participation on the call this morning. As usual, I will be available throughout the day for any follow-ups and clarifications. So on that, have a great rest of the day.

Thank you, everyone. Have a good day.

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