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spk08: I'll turn the call over now to Glenn who will provide more details on our Q2 financial results. On behalf of all members of the Bell team, I'd like to thank Glenn once again and to extend my heartfelt gratitude for all your contributions, your leadership, Glenn, and your invaluable counsel in helping this great company move forward year after year. You'll be sorely missed.
spk07: Good morning everyone and thank you, Mirko, for your kind words. I'm proud and honored to have been part of such an amazing organization for 30 years. I have witnessed the transformation of this great company from a legacy telco into a tech services powerhouse, and the best is yet to come. I will be keenly watching from the sidelines as the next generation of leaders take Bell to the next level. And now, for the last time as CFO, on to the results. In what has become a hallmark for the company, another quarter of consistent and focused execution that delivered strong 3.5% consolidated revenue growth and 2.1% higher adjusted EBITDA. This was achieved despite ongoing media advertising headwinds Merkle mentioned and a step up in competitive intensity across all our consumer product lines. and a B2B sector that has not yet fully recovered from the global supply chain disruptions experienced over the past couple of years. Despite the positive EBITDA contributions from operations, net earnings in statutory EPS were down year over year due to a $377 million non-cash loss on BCE's share of an obligation to repurchase at fair value the minority interest in a joint venture equity investment. As profiled in our quarterly budget for 2023, adjusted EPS was also down this quarter, decreasing 9.2%. This was driven by an expected increase in interest expense due to higher rates, as well as higher depreciation and amortization, reflecting the rapid growth in our broadband capital assets. As for free cash flow, it was down approximately $300 million year over year, mainly on the timing of working capital, which as I mentioned last quarter, will largely reverse out by year end, and higher capex as we advance some spending earmarked for later in the year, given favorable construction conditions this past spring. In line with our internal forecast and consistent with our guidance target for 2023, we expect a much stronger free cash flow trajectory in the back half of the year, with a minimum $600 million favorable year-over-year swing coming from just capex alone. Let's turn to our Bell CTS segment on slide 8, where total revenue was up a very healthy 4.3% this quarter, a strong result that was driven by a 7% increase in residential internet revenue and a 4.4% higher wireless service revenue, which were fueled on the back of some of the best Q2 mobile phone and retail internet subscriber metrics, as Mirko mentioned, in well over 15 years. The year-over-year growth in revenue also reflected a much improved B2B performance trajectory, supported by the increased project spending by large enterprise customers, which strengthened as a result of the improvement in data equipment availability compared to the shortages that we experienced last year, as well as the financial contribution from our recent acquisition of cloud services provider, FX Innovation. The ongoing recovery in the business data equipment sales together with increased sales of higher valued mobile phones yielded a 21.5% growth in Bell CTX product revenue this quarter. The combined impact of the continued consumer strength across our wireless and residential home services together with improved business wireline results and lower year-over-year weather-related pressures drove improved EBITDA growth of 2.8% this quarter. Let's move over to Bell Media on slide 9. Against the backdrop of the ongoing ad recession in North America, Bell Media's revenue decline in Q2 was still only 1.9%. This represents a much better performance than our media peers, which is a testament to the team's strong execution, our diversified asset mix, programming strength, and the success of our digital-first media strategy. Advertising revenue was down 9% owing to a continued soft advertiser demand and spending across all traditional media platforms. This was moderated by a robust digital advertising growth of 19%. Subscriber revenue increased 3.9% year-over-year, driven by continued strong crave and sports direct-to-consumer streaming growth. Consistent with the year-over-year decline in advertising this quarter, EBITDA decreased 5.3%. Although that may appear to be a decent result under current economic conditions, we in our industry continue to be greatly impacted by a number of challenges, including operating losses across our news divisions, a prolonged advertising slump with no signs of immediate recovery, the shift of advertising revenue to foreign digital platforms, content costs, inflation and more challenging regulatory environment that is not adapted to the new realities facing media. This has required us to right-size our operating cost structure and asset portfolio to align with the expected revenue potential of our media business. Going forward, we will need to continue doing so in order to deliver for our shareholders in this unconstructive economic and regulatory environment. Let's turn to slide 10 for a brief update on our balance sheet and our liquidity position. We remain quite well positioned with more than $4.4 billion of available liquidity at the end of Q2, which is bolstered by a US $850 million public debt issuance during the quarter. Our debt maturity schedule also remains well structured with an average debt to maturity of approximately 12 years and an after-tax cost of debt that is well below prevailing interest rates at just under 3%. Moreover, we have no outstanding financing requirements for the balance of this year as all 2023 debt maturities have already been pre-financed. And with a strong pension solvency surplus of totaling $3.5 billion in free cash flow that is growing organically year over year, we have the financial strength against the current macroeconomic backdrop to execute on our strategic and capital market priorities for 2023 including the C-band spectrum auction later this year. Lastly, I wanted to highlight Bell's continued leadership in ESG financing structures with the launch of our first sustainability link derivatives this past May. This follows the announcement of our sustainable financing framework in April of 21, Bell's inaugural $500 million sustainability bond offering in May of 21, and the conversion of our $3.5 billion committed facilities to a sustainability linked loan last November. We look forward to a follow-on sustainability bond issuance in the future when the right mix and size of eligibility investments within our framework are available. Let's wrap up on slide 11. With consolidated financial results delivered in the first two quarters that are in line with budget, together with a strong projected EBITDA and free cash flow trajectories in the second half of the year, that are underpinned by our strong operating momentum across the business and our consistent, proven execution in a competitive marketplace, I am reconfirming all our guidance targets for 2023.
spk06: On that note, I'll turn the call back over to you, Thayne. Thank you, Glenn. So to keep the call as efficient as possible, please limit yourselves to one question and a brief follow-up so that we can get to as many of the questions in the queue as possible with the time we have left. However, before I hand it over to the operator, I just wanted to take the opportunity to say to Glenn what a privilege and pleasure it's been to work with you. You are a great leader and mentor, and I'm grateful for all the guidance, support, and encouragement you have provided. But above all, what I have valued most is your kindness, trust, and friendship. With that, Giselle, we're ready to take our first question.
spk00: Thank you. We will now take questions from the telephone lines. If you have a question and you're using a speakerphone, please leave your answer before making your selection. If you have a question, please press star 1 on your devices keypad. You may cancel your question at any time by pressing star 2. Please press star 1 at this time if you have a question. There will be a brief pause while participants register for questions. Thank you for your patience. The first question is from Mayor Yagi from Scotiabank. Please go ahead.
spk10: Great. Thank you for taking my questions. And I do want to say, Glenn, thank you for all your support over the many years that we've known each other. You'll definitely be missed. So maybe I'll start with my first question. Mirko, I recognize that BCE is in the middle of an FAO regarding MVNO with Quebecorps. But I'm interested in getting your reaction to the announced MVNO ruling by the CRTC on the Rogers and Quebec Core MVNO tariff. More specifically, on the basis and precedence that the CRTC has chosen to arrive at its tariff calculation and its costing analysis. And just a follow-up question on free cash flow. Glenn I guess you know BCE has delivered year after year on its guidance target so I'm not implying any issues here but when I observe your free cash flow generation it's down 46% in the first half and your outlook is for growth of 2 to 10% lots of moving parts I'm sure capex as you mentioned is a big big big point here in the recovery but could you help us bridge the results to date and how we're going to get to the 2% to 10% growth. Thank you.
spk07: I'll start, Mayor, and thank you for your remarks. As I said in my opening statement, we will spend more than $600 million spending in the back half, but less than last year. If you look at our spending trend in 2022, we spent over $3 billion in the back half of 2022. and that will be more than $600 million lower. Add to that the associated impacts to working capital that that lower spend will do. We have lower cash tax installments in the back half. We are confident that we will deliver on the guidance provided. I know that historically we probably have a smoother free cash flow profile than we have this year, but it really was a product of us taking the opportunity to spend heavily in the front half of this year to really, you know, if you've heard me say it before, you make hay in this business when the sun shines. So that's where we're at. I remain confident, Mayor, and over to Mirko for the second part of the question.
spk08: Good. Thanks, Glenn. Good morning. So on the MVNO decision, I think you're probably referring to the – well, I know you're referring to the MVNO decision recently handed down relating to two other providers. It's hard – Myra, it's hard to comment because, I mean, we obviously don't know the rates that were at play or the offers that were made in that final offer arbitration because the details are confidential. So it's kind of hard to kind of make any predictions as to what comes next. I would say that we're some, I'll call it attention grabbing references in the decision on how costing was arrived at or how the winning offer was chosen. And I think they're attention grabbing in my mind because they do break from kind of how things have been done in the past. But my sense of it is that those comments must have been made within the confines of the facts presented to the CRTC in the sense of the offers made. Because otherwise, if we're to read those comments on appropriate costing as a signal for what will more broadly come in the future, I think the implications of that could be pretty far-reaching. And again, now I'm veering from, I'm going to pivot from wireless to wireline. You know, we spent so much time quarter after quarter after quarter and in all our public communications talking about our accelerated CapEx program and trying to get to, you know, close to 9 million fiber locations done by 2025. And, you know, you kind of repeat that over and over again and almost kind of start thinking that the job is done at the end of 2025. And I think the problem here is the job is not done at the end of 2025 because even when we have close to 9 million locations done, there will be 5 million locations, mostly households, in Bell's operating footprint. So that's just from Manitoba to Newfoundland. 5 million locations left to cover. And that's what really worries me, and that's what's at risk. So fundamentally, I mean, I'm veering off on a bit of a tangent here, Mar, but I think the public policy... government and regulators in Canada are really going to have to decide what the priority is. Is it to get the job done for all Canadians in terms of coverage, or is it to continue to implement decisions with the view of driving down pricing even further, but in an overall environment where pricing has been well handled by market forces, frankly, if you look at the directional the direction of pricing and quality over the last very short period of time. I'll stop there.
spk10: No, you actually veered right where I wanted you to veer, because fiber to the home is essential for your future growth. So thank you for those remarks.
spk06: Thank you. Next question, please.
spk00: Thank you. Next question is from Drew McReynolds from RBC. Please go ahead.
spk11: Yeah, thanks very much, and good morning, and all the best, Glenn. I wish you well. A couple for me, just first on Bell Media, actually. Mirko, you made a lot of progress digitizing this asset, and the asset clearly punches above its weight, certainly in the media landscape here in Canada. When you look at the digital revenue contribution, how do you want that to kind of trend, let's say, over the next two to three years? I know there's a ton of moving parts, but just what are your expectations there? And then secondly, shifting to wireless, we've seen, and you mentioned a bunch of initiatives to better service immigrants into the country. Just wondering what your expectation there is in terms of incremental traction and success in doing that and whether we saw some of that in Q2. Thank you.
spk08: On the wireless side, and clearly there's a population surge in Canada that's not about to abate anytime soon. We certainly do well in the premium segment. That's one category we do really well in. we do quite well in the switcher market for lack of a better way to put it. Customers are going to switch from one provider to another. I think we do quite well in that segment. On the newcomers to Canada segment, we're doing okay. I think we need to do better and we will do better and we've been pretty open about some of the initiatives we've put in place to get a bigger share of that segment of the market and And that's just the early days on some of those new initiatives. So I don't think you're really seeing in the very strong results we presented in Q2, you know, really the cruising. We're not at cruising altitude, let's just say, on those initiatives. So there's more upside there. And part of that is the kind of relaunch of Virgin+. And while it's early days, it's only a couple of weeks, some positive momentum in just two weeks on the Virgin relaunch, although that's a Q3 phenomenon because it was done in July. So I'll leave it at that, Drew, on those elements. On media, look, I think the direction is where do I want to end up here? We want to We want to continue to pivot very strongly towards digital, and we've been talking about this for about three years, and I really like the momentum we're driving here on that strategy. So the pillars really, where do we drive our revenues? We drive our revenues from subscription and advertising. On the advertising front, we've put in place a lot of tools to enable advertisers to choose us for their – for their digital and targeted ad needs, and that's only going to get better with addressable TV. And on the subscription side of things, again, it's making sure we always have the very best premium content and making sure that content is available on the digital platforms that we have that we're going to continue to improve from a user experience perspective. So the growth pillars for Bell Media going forward are really going to be crave, the CTV and Nouveau apps, and TSN and RDS direct. Those are the growth pillars.
spk11: That's great. Thank you.
spk00: Thank you. The next question is from Stephanie Price, CIBC. Please go ahead.
spk03: Hi. Good morning. Hoping you could talk a little bit about the sustainability of service revenue growth as we head into the back half of the year. Just curious how you think about the more competitive back-to-school and holiday periods. And then just my follow-up, just curious about how we should think about the enterprise piece of the business heading into the back half of the year. It sounds like the equipment availability has maybe started to improve a bit here.
spk07: Yeah, I'll handle the back half on enterprise. It's Stephanie, it's Glenn. Yeah, we're feeling pretty good. We're actually starting to see projects from our large enterprise customers get back into full gear again. As you said, part of that is because we have the availability of product. albeit not what it was pre-pandemic, a heck of a lot better than it's been in the last number of years. So we're feeling pretty good about the momentum we're seeing there. I don't see any signs of slowdown that would, you know, the canary in the coal mine things you see when people start talking about recession. We're not seeing any of that. Projects are kicking off. You're seeing it in our product revenue growth that we had in this quarter. So I remain pretty confident that... that the back half will see some additional momentum that the first half didn't.
spk08: And then on the broader kind of competitive landscape and revenue growth, which I can interpret as service revenue growth, Stephanie, I think if you look at what we delivered in Q2 with the very strong mobile phone and retail Internet subscriber growth, you'll see that that came with. quite healthy service revenue growth on residential internet at 7% and wireless service revenues at 4.4%. So those are strong numbers and, in fact, quite similar to the past three quarters, which is really a good result if you think about some of the more intense promotional pricing that we saw in Q2. And I won't repeat what Glenn said to any great degree on the – On the business side, we are also seeing service solution revenue strength, decent strength there. So you put all those things together, and then you look ahead to the back half of the year. I think we're going to continue to deliver strong service revenues, and particularly as we're lapping the return to pre-COVID levels of promotional activity that we saw at the back half of last year, particularly during the Black Friday period.
spk03: Great. Thank you very much, and congrats, Glenn, on the retirement.
spk07: Thank you.
spk00: Thank you. Next question is from Vance Valentini, TD Cohen. Please go ahead.
spk09: Yeah, thanks very much, and best to you, Glenn, in your future. Two things, if I can. One, I'll call a clarification. You gave a good answer on free cash flow earlier, but I have no doubt you'll hit your guidance. You always do, but Can we assume that the high end of that guidance range is starting to look a little out of reach, given what we saw in the first half on free cash flow? And the second one, the spectrum thing, we see you paid $145 million to subordinate some spectrum from Explore in Quebec. Given that it was $3,500 banned, I assume it adds to your cap for the upcoming auction. Can you clarify that and maybe tell us how many megahertz you bought?
spk08: Yes, it does add to our cap.
spk07: Yeah, and Vince, on the free cash flow, as I provided the answer earlier, significant reduced year-over-year CapEx spend, a fairly sizable difference in timing of installment payments, and acceleration of earnings. You know we have a higher earnings profile, EBITDA profile, in the back half of our business than we do in the front half. All of that leads me to be very confident, as you said, we will deliver on our guidance. Now, I would say, suffice to say, I don't see us at the high end, but we'll deliver on the guidance. Thank you.
spk09: And the number of megahertz, is it 20 megahertz from Explore?
spk12: It varies across the different regions, Vince.
spk09: Okay. Thanks.
spk00: Thank you. The next question is from David Barden, Bank of America. Please go ahead.
spk02: Oh, hi, guys. Thanks for taking the question. And Matt, just subbing in for Dave this morning. And Glenn, just wishing you all the best in retirement as well. The first question is just on the strategy with the Virgin Plus and the relaunch, and particularly around the inclusion of 5G plans. I know, Mirko, you mentioned that you're doing well in the premium segment. And so I'm wondering how this how the new Virgin strategy kind of helps that or how you see it adding to that or just any color would be really helpful. And then on the ARPU side, you know, overage was, you know, a bit of a headwind as people move to higher plans and they have less overage. I was wondering if you could put some context to that, if there's how much might be remaining or how much, how quickly that is dissipating as people move, it would just be helpful to get context. Thank you.
spk08: Hi Matt, it's Mirko. I'll take the Virgin relaunch question. So really what we're trying to do, a little bit building on the prior answer, it's to re-energize the Virgin brand, recognizing that we do really well on the Bell brand in the premium segment. We also want to re-energize the Virgin brand and the strategy there was making the brand more appealing and relevant to a broader base of customers, particularly newcomers. So I mean, I think that's the simplest way to put it. As for 5G, just note, now we have plans available on Virgin on 5G as well as 4G, not 5G+. And it was really not much of a secret that one of our competitors was going to launch 5G on its brand, so it's always being mindful of what's to come competitively and positioning ourselves in that regard. Of course, there's still a price gap between the Virgin and the Bell brand, particularly given the premium offering that the Bell brand continues to have.
spk07: Matt, it's Glenn. On your question on ARPU, first of all, I'll say I'm actually very pleased with how well ARPU held up. A couple things I'll unpack there for you. We are at the point that we're no longer enjoying the tailwind of roaming that we were. I mentioned that roaming revenues were up last quarter, I think 74%, I said, and this quarter they're only up about 35%. We've reached the point now that A number I quoted in Q1 was that roaming revenues were now at 124% of pre-COVID levels. Well, they're at 125% this quarter. So you're seeing a slowing there. It's impacting ARPU. As far as data overage, I would say a modest increase in the decline. We are down about 12 million year-over-year in the quarter versus 10 in the first quarter. So it's not overly material. When I look out to the future on ARPU and what gives me confidence is only 47% of post-based subscribers are currently on a 5G-capable device. And as you know, we see quite a double the usage when people move to the 5G device from LTE. So that's a great opportunity for monetization and gives us confidence in the growth of ARPU for the future. And thank you for your remarks, Matt.
spk02: All right, thank you so much for the answers.
spk00: Thank you. Next participant, Simon Flannery from Morgan Stanley. Please go ahead.
spk01: Thank you very much. Good morning, and Glenn, best wishes for your retirement. I wonder if we could come back to fiber. Perhaps you referenced the 9 million target for 2025. Could you just update us on the passings year-to-date and the outlook and how that plays into the CapEx timing? And then strong net ads on the fiber side. Maybe give us a sense of what the headroom here is and how the cohorts have been behaving, what sort of penetration rates are still left to get in those markets that you've been building over the last several years before they reach terminal penetration. Thanks.
spk07: There's no material change in our long-term fiber plans. Simon, as we said, we'd get to pass approximately 9.5 million homes of our 12 plus million, and then we have our wireless to the home footprint. I mean, I think on the capital side of things, just to remind you, 2022 is the high watermark on spending, and we'd see a natural decline through 23, which you're starting to see, or you will particularly see in the back half. That decline will continue through 25, 4 and 5. know we're we ultimately see ourselves reaching a point where we'll we'll reach what our strategic objective of fiber home is passed will be by the end of 25 and then your your sub 17 ci and and maybe sub that in 26. and on the the penetration levels well the pendant now the penetration levels i mean you can
spk08: Without getting into the specific penetration levels by tenure, which is quite competitive in terms of information, I would say that if you look at the healthy loadings we've had, like 52,000 fibre subscribers and really, really strong where we have fibre, you can assume that our penetration is very healthy where we have fiber particularly in markets where we've had fiber for quite a bit of time. We're getting close to kind of the objective we set for ourselves in terms of market share in each and every community. In terms of how we're tracking to We've always said for the year that we wanted to reach approximately 650,000 locations, and we're well on our way in the first half given the investments we've made in the first six months of the year. And then more broadly, just strategically now, again, we have a well-articulated, accelerated CapEx build plan from 2021 to 2025. We've hit our targets. every year since we launched or initiated the accelerated CapEx build plan. Post 2025, all else being equal, we're clearly not going to stop building, but we're going to go back to a build run rate that you would have been used to seeing from us prior to 2019. So that would be the plan, and I think we're well on track on all of it. I mean, the only thing that might bump us off of that plan as I look forward would be public policy and regulatory rules.
spk01: Thanks a lot. Thanks, ma'am.
spk00: Thank you. The next question is from Jérôme Dubreuil Desjardins. Please go ahead.
spk12: Thank you. Good morning, everyone. I'll let go of the comments. Congrats on your tenure, Glenn. Again, on the guidance, we've talked a lot about the free cash flow guidance, but I want to dive a bit more on the EBITDA guidance. You said you're expecting catch-up in the second half. If you can maybe describe... What are the drivers of that improvement in the second half? And if you can maybe specify what's the expected impact of maybe storms and natural disasters that you have based on your guidance versus what we've seen so far.
spk07: Yes, certainly I'll give you some color commentary on that. A couple things. One, you will recall that we incurred substantive storm costs in the back half of last year with the vast majority of it being Fiona, but $34 million with it. So let's hope that that's behind us. Just in this quarter alone, we saw quite an improvement in storm-related costs. We incurred about $2 million in this quarter versus about $7 million, or $9 million for the same period last year, so about a $7 million improvement. You heard in our opening remarks that we took on a very aggressive workforce reduction program. in the second quarter of this year. Naturally, the benefits of that will flow in the back half and not in Q2. So that is another area of improvement in trajectory or cost trajectory. Inflation, we're starting to see a slowdown or at least a lapping, I should say, of inflationary pressures, about $13 million inflationary pressures in this quarter compared to about 12 last year. When I look out to the back half of this year and what we incurred last year, I actually see potential for modest improvement as opposed to headwind that we've been experiencing for 12 months. Then the continued fiber technology. As we build fiber, we have a lower cost structure. Digital transformation, lower cost structure. Real estate rationalization, lower cost structure. Handset discounting has been better with BYOD. All in all, I think it's all hands on deck. We're excited about the momentum we see in the business right now. We're excited about the health of growth in this country. As Marco mentioned, immigration. So you get it from that perspective. We expect revenue growth to remain solid. And I see some pretty nice momentum in place for the cost containment that we'll enjoy in the second half of the year.
spk12: Great. Thank you.
spk07: You're welcome.
spk00: Thank you. The next question is from Batia Levy from UBS. Please go ahead.
spk04: Great. Thank you. All the best for Glenn as well. Two questions. One on the new loadings. They've been very strong. Can you talk about the take rate for bundled offers versus the base and the impact that you're seeing on churns? And on the cost transformation for media, should we assume that that's fully implemented and we'll start to provide some upside in the second half, or will there be more elements to it as we move ahead? And can we see media margins head back to mid-20% with that transformation? Thank you.
spk07: Yeah, the cost initiatives that we've taken on were really done in the latter part of Q2, so we really haven't enjoyed any benefits of those, so Absolutely, we expect those benefits to kick in, particularly through Q3 and absolutely in Q4 to help improving media. The media margins will return. What we're doing in our media business is true transformation and the move to digitization that we've already talked about. Advertising will return and when it does return, we are going to have our assets positioned to capture a larger share of the marketplace than ever before. I remain bullish on media margins, but we're still in an advertising headwind. Advertisers are right now reluctant, but I believe when that returns, we will have used this time wisely to right the ship and focus on a broad suite of assets that allow us to capture greater share. And over to Mirko on the front end.
spk08: On the bundling, it's pretty clear that the market is evolving more and more towards one where the customer value prop is, for many customers, defined by the bundle. And I think we're really well positioned when it comes to that with an ever-growing fiber footprint and fiber internet superiority and a national market. wireless network on 5G and 5G+, where we're rated as the best on both those fronts. So right there, and with attractive pricing, you put all those things together, and it's pretty compelling, the price, the quality, and the overlapping footprints. We keep growing the percentage of our internet customers who take mobile and the percentage of mobile customers who take internet and the percentage of new customers we're taking both of those at the same time from us from the outset that that continues to grow it's been one of our focus areas and we have a lot of upside there so you know that's another area of opportunity for for the Bell family of brands or the BCE family of brands to be more precise all right got it thank you thank you once again please press star one on your device keypad if you have a question
spk00: The next question is from Drew McReynolds, RBC. Please go ahead.
spk11: Yeah, thanks very much for the follow-up here. Glenn, couldn't let you go without a pension question. Sorry about that. On the pension solvency surplus, like we all know on this call, Bell's been... or used to put a lot of money into the plan because of just the punitive decline in interest rates and the solvency calculation. Obviously, we're in a slightly different environment, and it may get even more interesting going forward. So the question is, do you have any ability to get back some of that surplus over time? Is there a mechanism or a process where that $3.5 billion, if it gets to $4, $4.5 billion, $5 billion, Do you have any access to that is the question.
spk07: Well, Drew, I appreciate you letting me take one last victory lap. After a career of deficits and necessary funding to get to this position, Curtis can thank me later, but we're in a surplus position. So the mechanism is easy, Drew, is that we're allowed to take contribution holidays, and in the BCE plan, the Bell Canada plan, including D.C., So it's not just defined benefit, it's defined contribution as well. So the mechanism is easy. We can continue to take holidays, and with a surplus the size of what we have, 116%, 3.5 billion, we'll have an opportunity to take surpluses for the foreseeable future. And if your projections are true and it climbs beyond three and a half into four, then Curtis will be retiring with a big surplus in decades ahead. Again, Drew, thank you for everything, and thank you for giving me one last chance to brag about pensions.
spk11: Awesome. Thank you.
spk00: Thank you. The next question is from Aravinda Galapatidj. Can I call Janite? Please go ahead.
spk05: Good morning. Thank you, and let me offer my best wishes to Glenn as well. I had a question on the enterprise or B2B side in general. You know, having closed the FX innovation acquisition, Marco, what are your thoughts on sort of the headroom to make similar acquisitions in that broader space or perhaps even your appetite and maybe connect that to sort of your strategy to taking that, you know, sort of the B2B segment back potentially to growth at some point? maybe an update on those elements. Thank you.
spk08: Okay, thank you for the question. So, look, our strategy on our focus and the B2B segment is really kind of three core pillars there. Continue to improve the customer experience for enterprise customers would be one. Another one would be kind of to continue to put a sharp focus on the cost structure that we carry to support our legacy services, which clearly are high margin but declining in many respects on the legacy side. If we do that, we'll be even stronger in our areas of traditional strength given our superiority in our connectivity and our distribution strength and the relationships we have. At the same time, we're going to continue to put a focus on future growth vectors in the enterprise space, and in particular, 5G, IoT, private networks, and call it the little bit of a combination of the cloud business and being advisors, so to speak, for lack of a better word, being partners with our large customers in their own digital transformation journeys, and that's where FX comes in. So we're quite optimistic about the potential in all those areas. We have a right to play in the segments that I just mentioned because of our core strength and connectivity and our distribution strength and our deep and long-standing relationships. plays a very important part in that strategy, particularly in our customers move their own moves digitally into the cloud. And we're going to keep growing that business. That's certainly what we're going to do. And we're going to use the FX business based here in Montreal as the launchpad for future growth.
spk05: Thank you.
spk00: Thank you. There are no further questions registered at this time. I would now like to turn the meeting over to Mr. Fotopoulos.
spk06: Thank you, Giselle, and thank you again to all who participated on the call this morning. As usual, the IR team will be available throughout the day for any follow-up questions and notifications. So with that, have a good rest of the day.
spk08: Thank you, everyone. Thank you.
spk00: Thank you. The conference has now ended. Please disconnect your lines at this time. Thank you for your participation.
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