BCE Inc.

Please stand by. Your meeting is about to begin. Good morning, ladies and gentlemen. Welcome to the BCE Q2 2019 Results Conference Call. I would like to turn the meeting over to Mr. Thayne Fotopoulos. Please go ahead, Mr. Fotopoulos.

Thank you, Donna, and good morning to all on the call. With me here, as usual, are George Kofi, the President and CEO, and Glenn LeBlanc, our CFO. Also joining us this quarter and going forward on all quarterly conference calls is Bell's COO, Mirko Bibic. As a reminder, our Q2 results package and other disclosure documents, including today's slide presentation, are available on BC's Investor Relations webpage. However, before we get started, I want to draw your attention to our safe harbor statement on slide two. Information in this presentation and remarks made by the speakers today will contain statements about expected future events and financial results that are forward-looking and therefore subject to risks and uncertainties. These forward-looking statements represent our expectations as of today and therefore are subject to change. We disclaim any obligation to update forward-looking statements except as required by law. So with that, over to George.

Great. Thanks, Thayne. Good morning, everyone. Hope everyone's enjoying the summer. I'm going to flip to page four. Just before I begin, I want to welcome Mirko to our call today. As I think everyone knows, Mirko is currently our Chief Operating Officer and will become CEO at BCE on January 6th. on my retirement from BCE on the 5th of January next year. Mirko and I have worked side by side for the past years, both strategically and operationally. Our company and your company will be in great hands going forward as we continue this evolution to being Canada's broadband leader. We're going to also get a chance this morning to hear from Mirko on our results in a few minutes. It's turning to a few highlights. Broadband net ads for the company were very strong, up 25% year over year. We had record wireless net ads up 30% year over year. Our fiber footprint acceleration and strategy continues to pay off, where we saw growth in fiber net additions up 10% year over year. Our footprint has now surpassed 50% of our overall fiber rollout at 4.9 million locations. Media had a very strong quarter, up close to 24% from an EBITDA perspective. And overall, truly strong profitability growth, adding to that is the declining capital intensity ratio we talked about a year ago, driving free cash flow up 10% in the quarter in year-to-date 13. In my opinion, we had an exceptional quarter. I frankly was trying to remember. I cannot recall when the company has actually beat the street on estimates of revenue, EBITDA, EPS, free cash flow, and net additions all in one quarter. And just to round it out that it has not happened before, it also includes an NBA championship to top it all off. So with that, let me turn it over to Mirko to take you through the highlights of the quarter.

Thanks, George, and good morning, everyone. Very pleased to be on this, my first quarterly analyst call since the announcement that I'll be assuming the position of CEO next January. And it goes without saying, but I need to say that it is a profound honor to lead this great company, and I'm grateful for the confidence that our board, George, and the Bell executive team have shown in me, and for the opportunity to have partnered with a CEO as esteemed as George all these years. I'm certainly excited for the opportunity to work with the Bell team across the country to keep propelling our company forward. I also look forward to meeting and collaborating with both the analysts and buy-side communities in the quarters and years to come. Before Glenn goes over the financial results for the quarter, I will provide a quick overview of our Q2 operating metrics by segment. I'm going to start on slide six with wireless. Really excellent wireless operating results overall. We delivered our best Q2 subscriber performance in 18 years with 149,000 new net customers added. Postpaid net ads totaled 103,000. The year-over-year reduction was a direct result of fewer customer additions from our long-term federal government contract. But excluding the federal government contract, postpaid net ads were higher compared to last year, reflecting Bell Mobility's network leadership strong sales channel execution, and lower post-paid churn. In fact, Bell branded churn was under 1% for a second consecutive quarter. It's clear that our investments in customer retention and the quality of our mobile services are resonating with Canadians. On the prepaid side, we continue to see great results. Both Lucky Mobile and our new exclusive retail distribution deal with Dollarama are doing what we expected them to do strategically in the market. helping to drive 46,000 net ads this quarter. This compares to a loss of 8,000 last year. Clearly, we're taking market share in this segment, and over time, we hope to convert many of these customers over to post-paid service. Blended Appu increased a healthy 1.6%, and this reflects growth from customers selecting higher-value rate plans and having more premium smartphones in the sales mix. I'll turn a little bit, a couple of comments on the network side. We continue to roll out LTE Advanced Service, now available to 94% of Canadians, and notably 60% of the population will have access to speeds of up to 750 megabits per second, but enjoying more typical speeds in the range of 25 to 220 megabits per second, which is really incredible by any global standard. It's now well recognized and acknowledged that we have globally leading networks, and this is a key reason why. I'm also pleased to report that Virgin Mobile topped every wireless carrier in Canada from a J.D. Power ranking perspective for a third consecutive year as number one in overall customer service in the eyes of consumers, a very strong result, and congrats to our Virgin Mobile team. On the 5G side, testing is well underway with network trials. We're very well positioned given our wireline fiber investment with 85%. of all our urban and rural cell sites having high-speed fiber backhaul capability by the end of this year. But as everyone knows, we also need 3,500 megahertz spectrum to bring Canada into the true 5G world. And as you all know, that auction is scheduled for 2020. I'm going to turn now to slide seven and wireline. We're pleased with total retail internet net ads of just over 19,000 in what is a seasonally low quarter for the consumer wireline business. That's up 52% over last year. And in terms of new FTTH customers, we saw 10% growth with 52,000 new ads. So we're really seeing the strategic benefit of our direct fiber investments. We're offering the fastest internet speeds of 1.5 gigs. We're growing our broadband market share, and we have better customer retention. In fact, our speed advantage has been confirmed in independent testing by PCMag. who recently ranked the Bell companies as Canada's fastest ISPs for a second year in a row. On network as well, wireline network, our deployment is tracking the plan. Year to date, we've added 400,000 new FTTP and wireless to the home customer locations, and we're targeting 700,000 locations this year. Hoping to do better than that while keeping within the same capital envelope, that's what our current plan is calling for. We also had a good quarter from a TV perspective. We added 17,000 net new IPTV subs in Q2 as we can continue to see that market mature and minimal new footprint growths. All TV continued to contribute positively to IPTV as customers increasingly embraced the consumption of content on alternative platforms. In satellite TV, we continue to see a slowing in the rate of subscriber decline. Net losses improved by more than 5% over last year to 14,000. And that, of course, helps from an overall revenue and cash flow perspective. Lastly, as it relates to slide six, although there's no specific reference to it, I think that it's worthwhile calling out for investors that our business markets unit continued to perform exceptionally well with a fourth consecutive quarter of revenue growth, which is reflective of a growing economy, effective reprice management, and increasing customer demand for fiber and for bandwidth. Although business wireline isn't quite yet EBITDA positive, we continue to see steady improvement in the rate of year-over-year decline. Turning to slide eight, Bell Media, as George said, a very strong quarter. Glenn's going to go through the very strong financial performance with you in a few moments, but we have seen a continuation of positive trends on the TV advertising front with a fourth consecutive quarter of year-over-year growth. Our top 10 advertisers spent 20% more than last year, and spending from our five largest online marketplace advertisers was up almost threefold. CTV, once again the number one network in the country for an 18th year in a row, and we secured a strong lineup going into the fall season with 13 new shows and more than 70 original English language programs in production. Notably, We were the only Canadian media company with year-over-year audience growth in all key demos, which speaks to the quality and breadth of our programming and on-demand content. TSN remained Canada's leading sports network and top specialty channel overall for the 2018-19 broadcast year to date. In fact, TSN grew viewership in the second quarter by 21% over last year, supported by our broadcast of the NBA playoffs, including the championship run, as well as FIFA Women's World Cup Soccer. The championship game for the Toronto Raptors was the most watched NBA game ever in Canada and the biggest broadcast of the year on any channel with an average audience of 7.9 million viewers. Strong quarter as well for specialty entertainment TV where viewership increased 16% over last year. And the final season of HBO's Game of Thrones was the most watched season in specialty and pay TV history in Canada, which helped to drive Crave linear and direct-to-consumer subscriptions to more than 2.7 million this quarter. So really strong growth for Crave this year with, quite frankly, unparalleled content available to consumers. Lastly, we're also really excited about our proposed acquisition of the French-language conventional TV network Vee, and related digital assets. Although it's a very small transaction financially by Bell standards, the acquisition reinforces choice for French language viewers, it will strengthen the Quebec television system, and it highlights our commitment at Bell Media to provide engaging French language content on traditional and innovative platforms. And with that, I'll turn it over to Glenn.

Thanks, Mirko, and good morning, everyone. I'll begin on slide 10 with a review of our Q2 consolidated results. Our financial performance in the quarter demonstrated a disciplined focus on profitable subscriber acquisition as evidenced by our continued healthy revenue and adjusted EBITDA growth across all Bell operating segments. Margin expansion as well as higher earnings and free cash flow, all of which are consistent with our 2019 guidance targets we provided in February. Total BCE revenue was up 2.5% year-over-year, which together with the favorable impact of IFRS 16 accounting led to strong 6.8% increase in adjusted EBITDA. Consistent with this growth in EBITDA, net earnings were up 8.2%, which drove a 9.3% year-over-year increase in adjusted EPS to $0.94. And we had a very strong quarter of cash generation with positive and higher year-over-year contributions from all three Bell operating segments. This combined with the declining capital intensity ratio drove a 10% year-over-year increase in free cash flow in the quarter. Turning to the detailed financial results of our segments, starting with Bell Wireless in slide 11. Total revenue was up 3.2% on continued strong post-paid subscriber growth, a third consecutive quarter of positive year-over-year financial contribution from prepaid, and a higher sales mix of premium handsets that drove a 5.2% increase in product revenue. Wireless EBITDA grew 9.9%, yielding a 2.7 point margin increase to 44.8%. This was driven by strong revenue flow through to EBITDA and a 1.6% decline in operating costs, which included the favorable impact of IFRS 16. And although we continued to maintain a low capital intensity ratio of 7.7% in the quarter, we did not slow down our investment on the deployment of small cells and increasing data backhaul capacity as we prepare for 5G. Moving on to our wireline segment on slide 12. Total operating revenue increased 0.9% on combined internet and TV growth of 4%, and a fourth consecutive quarter of higher year-over-year revenue at Bell Business Markets, as Mirko mentioned earlier. However, our overall growth in the quarter was moderated by the non-recurrence of revenues generated in Q2 of last year from the G7 Summit and the Ontario general election, which totaled approximately $15 million. Normalizing for these items, wireline revenue grew 1.4%. In terms of operating profitability and increasing broadband scale, improved business market results and stable year-over-year operating costs that reflected the benefit of IFRS 16, as well as the savings realized from workforce reductions undertaken last year, and other fiber related operating efficiencies. Adjusted EBITDA was up 2.1%. This drove a 60 basis point increase in our industry leading margin to 44.1, which provides more than sufficient operating leverage to fully cover our planned 2 billion broadband fiber capital investments in 2019. Let's turn to slide 13 on media financials. As Mirko said, Bell Media had its best set of quarterly financials in a number of years, delivering outstanding revenue, adjusted EBITDA, and cash flow growth in Q2. Total revenues up 6.4%, reflecting both higher year-over-year advertising and subscriber revenue. Advertising revenue increased 5.7% year-over-year on a fourth consecutive quarter of TVV growth and continued out-of-home strength. Conventional TV saw improved performance, growing advertising revenue by more than 4%, reflecting stronger overall customer demand. And specialty TV was up 12% over last year on strong entertainment, sports and news performance, reflecting better audience growth, better pricing flexibility, and incremental advertising from the Toronto Raptors championship run. Subscriber revenue increased 7%, reflecting growth in customer subscriptions due to the broadcast of the final season of Game of Thrones on HBO this quarter and the launch of our enhanced Cray streaming service last November. Adjusted EBITDA growth was exceptional, increasing 23.9% year-over-year. This was driven by the flow-through of the strong revenue growth combined with operating costs that remain largely flat year-over-year. and as the positive benefits of IFRS 616 was effectively offset by higher programming costs due to the ongoing CRAVE content expansion. Adjusted EPS, slide 14 summarizes the main components of adjusted EPS, which was 94 cents per share in the quarter, up eight cents over last year. Higher adjusted EBITDA drove 13 cents of that growth. In addition, tax adjustments contributed positively to earnings totaling 4 cents per share this quarter. This is consistent with our guidance assumptions for 2019 that is calling for 7 cents of tax recovery down from approximately 9 cents in 2018. Adjusted EPS also reflected lower year-over-year losses from our minority interest equity investments due in part from improved group performance at MLSC because of the Raptors. These favorable factors were partially offset by an expected year-over-year step-up in depreciation and interest expense due to the event of IFRS 16 accounting at the beginning of the year. In aggregate, IFRS 16 had an approximate $0.02 unfavorable impact on EPS in the quarter. Turning to slide 15, we generated $1.1 billion of free cash flow in Q2, up 10% over last year. This was driven by strong EBITDA bit of growth and lower capital spending. This quarter's results also reflected higher interest paid due primarily to the imputed interest on the lease liabilities under IFRS 16 accounting and the reduction in cash from working capital resulted from the timing of supplier payments and higher accounts receivable driven by strong advertising sales at Bell Media. We also took advantage of the favorable market conditions to complete two public debt offerings in Q2. The first is six-year, $600 million issuance and a second of $600 million in 30-year U.S. dollar debentures. These two new issuance effectively satisfy the refinancing needs of near-term maturities through to April of 21 and maintain our weighted average after-tax cost of debt at a historic low, 3.1%, while increasing the average term to maturity to almost 12 years from around 10 years previously. So with year-to-date free cash flow of more than $1.7 billion, we remain on track to achieve our 2019 growth target of 7% to 12%. This together with a positive financial outlook as we look out to the end of the year positions us well to maintain our dividend growth model into 2020. Let's wrap up on slide 16. We continue to leverage our advanced broadband networks and services to deliver higher wireless postpaid and residential wireline net customer additions in a financially disciplined manner during a seasonably slower quarter, providing the foundation for sustained financial performance going forward. Our consistently strong operational execution and favorable financial profile across all of our operating segments as we move into the second half of the year provides us with considerable flexibility to execute our strategy and achieve our 2019 guidance targets, all of which I'm reconfirming here today. On that, I'd like to turn the call back over to Thay and the operator to begin Q&A.

Great. Thanks, Glenn. So, before we start the Q&A period, just to keep the call as efficient as possible, I would ask that you limit yourself to one question and a brief follow-up if you must, so we can get to as many in the queue as possible in the time we have left. So, on that, Donna, we're ready to take our first question.

Thank you. If you have a question and you're using a speaker phone, please lift your handset before making your selection. If you have a question, please press star 1 on your telephone keypad. To cancel the question, please press the pound sign. Please press star 1 at this time if you have a question. There will be a brief pause. The participants register. Thank you for your patience. And the first question is from David Barden from Bank of America. Please go ahead.

Hey, guys. Thanks so much for taking the questions. Marco, welcome. to the call. Tough to argue with the quarter, you know, with strength across all the different units. I guess two questions, if I could. One would be how you guys would describe for us the impact of the Unlimited Plan launch in 2Q and kind of the shape of the ABPU or ARPU that we're going to see in the second half of the year and into 2020. And then I guess my follow-up just on the strength and prepay, if you could kind of – do some performance attribution and where you think the market strength is coming from. Is it on the Lucky Mobile brand, the distribution platform, the pricing, the positioning? It would be helpful to get some color on that. Thank you.

Let me take the first one, and Mirko will take the second one. So, yes, it is we had a tremendous quarter literally across the board on the unlimited data plans. A lot talked about, obviously. Clearly, this was not a move initiated by Bell. in the marketplace, but one that we obviously followed as we will always be competitive in the market. The impact on ARPU will all take time for us to all see. I think it's fair to say that structurally the change does ultimately moderate ARPU growth in the industry. From our position this year, we believe we will and our outlook still continues to expect I say this with the harmonization and simplification of the rate plans across all carriers. The key point of differentiation, which Mirko talked about, truly now becomes a network performance because it actually, in one sense, brings that focus much more into the eyes of the consumer. And on that front, as everyone knows, we come out way ahead of the competitor who led this change. and think we're in an excellent position then to continue to move market share. And that's really my view on that. And then, Mirko, do you want to maybe pick up the second one? Yeah, sure. Hi, David.

On the second one, I think shows you clearly the results show you how competitive we're becoming in the prepaid segment. I think Lucky Mobile, certainly the brand, is a big driver of that performance. We certainly have a distribution advantage there and the Dollarama relationship there. which as you know is an exclusive relationship, was working really well and fundamentally that brand, Lucky Mobile, is resonating with consumers in that segment of the marketplace.

Great. Thank you guys.

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

Good morning. Thanks for taking the question. George, congrats on a stellar career. Been a pleasure working with you. And Mirko, congrats on your new role. My question to start off with is also on wireless. You've made some recent moves, I guess, in reaction to what your competitor had done to Unlimited. First, you came out and matched the 75, but then it went up to 85. And then on the equipment financing, it looks like you're keeping that option for customers available. So I'm wondering if you can just talk a little bit about the rationale behind those moves. And then a quick follow-up for Mirko, if I may. This is the first time you're on the call, so wondering if you can just give those on the call and investors some early high-level thoughts on maybe areas that you may think about focusing on. Thanks.

Let me pick up, first of all, the questions on pricing in the marketplace. Competitive market will always be competitive, and our rate plans will reflect that and have in terms of our move to the unlimited data plan. So that's really what I'll say around that and address it earlier. Moving into the equipment financing programs in the market where folks are getting the handset and paying for it over time. Again, that was another development in the industry which we will clearly participate in. We're in that space now. We think one of the programs to have that financing over the years is an intelligent move for the consumer market and one that you'll probably ultimately see us roll out with as well as we're currently at the 24 months. And part of this from our end, of course, is just reacting at a pace to the competitive change there. And then in terms of having both choices, that's just something we'll reflect on as the market stays competitive. Some competitors have gone one way. One of the competitors has gone another way, and we're, Frank, at this point making sure consumers have maximum choice, and we'll see how that unfolds. And then over to Mirko. By the way, thank you for the comments. You do have to put up with me on one more call, everybody, but I really appreciate the kind comments you have put. You know, over to Mirko on what he's thinking next year. My instincts tell me he's going to tell you about that next year, not today, but over to Mirko.

You're right, George. So, Jeff, thank you for the comments as well. Look, there'll be lots of time next year when I take over as CEO to discuss my vision. And I'll say one high-level thing right now, which is we will continue on our quest to be the broadband leader in Canada. So that's clear. I'll leave it at that.

Thank you.

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

Great. Good morning, and thanks very much. Congrats, Mirko, and best of luck, George. It's been great working with you. Maybe following up on that last point, Mirko, on broadband, you continue to make great progress in pushing out fiber to the prem. Can you just talk about what sort of speeds you're seeing people taking and what sort of penetration levels you're getting on first pass, and as that's been in the market for a couple of years, the potential as we you know, see that program come to completion. Thanks.

As you heard from George, you know, we have strong coverage now at over 50% of our broadband footprint, and that's going to continue to grow, and we're seeing strong demand where we do have fiber again. Both George and I mentioned the growth in our fiber footprint. In that footprint, we have more subscribers, so more subscribers in fiber to the home, and in that geography where we do have fiber, we're seeing an increasing mix of subscriber take-up on the higher speed tier. So that's all very good. As well, we also consider our wireless to the home program. It's part of our broadband and next-generation broadband deployment. And there, too, while early days on wireless, we're seeing strong customer demand, quite pleased with the response. Clearly, the service meets the need in those areas, which we're more than delighted to fill. So strategies working, strong execution, and we're quite pleased with the progress.

Thank you.

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

Good morning. Thanks for taking my questions, and I also want to offer my congratulations to George and Mirko. My question is on wireless. I've been seeing, both in Q1 and Q2, pretty good wireless epidaurals. I mean, even if I kind of move out IFRS 16, I think in Q2, I got a number that's closer to 7% on 2.5% service revenue growth. I was wondering if you can offer a little bit more color on that. I was wondering if there's any movement on the equipment margins or perhaps any additional cost reductions that would have facilitated that.

Thanks. Just a couple quick things on it. I talked about it last quarter. It's so hard to see now because of all the accounting changes the last few years, so I know every investor knows just follow the sources and uses and you can figure it all out. But underlying service revenue growth for us has been a very positive for six months of the year. As Merkle talked about, to change the trajectory on prepaid, small in one sense, but as we've said on a couple of calls, much more positive in another sense because it takes something that's negative and makes it into a positive. And we've seen, again, a blended improvement in our ARPU as clients have migrated to more and more smartphones, as Merkle just mentioned. We did do a cost restructuring last year at the end of the fourth quarter, and that was across the entire organization. And we're really trying to be as careful as we can with the cost of upgrades, et cetera, through the cost structure. So a lot of things that we weren't exactly okay with last year, we're not totally thrilled with, we think we've got some of that wind at our back again on some of those key metrics.

Great. Thank you very, very much.

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

Yeah, thanks very much. Coming back to the strength in broadband, which is clearly impressive, can I ask about the video component of that? Do you still think we should look at video subscribers as a key performance metric going forward, or is it really just a bundling tool to help you get broadband? I'd note in particular in your recent back-to-school offer, You want to get Internet customers, but you throw in all TV for $10. I can't imagine that's profitable video subscriber growth, and I don't really care. It's driving better broadband sub-ads. It's all good by me. But do you really think video subs as a volume indicator is a key thing you should be pushing on going forward?

Yeah, that's a great question. I'd say we would still say yes, absolutely, for sure. Promos, you know, we'll call on promos. Everybody ought to understand we don't do anything that doesn't make money. So that's for sure. And some of those old programs would have just conventional with no operating cost to us. Absolutely on the right track that underneath all that, everything we do, of course, is to drive broadband subscriptions. We've talked about this for a long time that, you know, the value proposition on the broadband from fiber is where there's going to be more revenue growth than we're going to see across our overall video platform. But our strategy of Alt and IPTV is to continue to take share and then use the Internet to using the video as that pull-through. But I still think it's an important metric for us and one that we're paying a lot of attention to. And there's no doubt TV without set box with all the different cost structures doing what we want it to do, and we're learning as we go. I mean, we've just got to keep trying to drive that. And, of course, don't forget with the ownership of Bell Media, we bring eyeballs through the TV business that helps Bell Media on the advertising side. And so it's still important to us.

And seeing as you mentioned advertising, I'll try to avoid Thane's wrath with a follow-up that's somewhat linked. On the Bell Media side, you're lapping, you've said four quarters in a row of positive TV advertising revenue growth. So when you get into Q3, you'll be lapping a quarter where you're already positive last year. Can you give us any sense of does that make year-over-year comps tough and you may not be able to keep growing TV ad revenue or do you have some sense that the market's still strong and bookings at this point would indicate you can maintain that positive trajectory.

Thanks. Let's bring Glenn into this call because he's got to work this morning.

I figured he'd put me to work at some point. So, hi, Vince. Good morning. Look, we're delighted with our performance in the media business and our funnel looking forward. Very, very strong. Advertising can be strong. Merkle mentioned our lineup in the fall, very, very strong. Now, the quarter we just experienced 6.4% revenue growth, truly outstanding. you know, a portion of that, a third of that propped up by just the incredible run from the Raptors. So do I think the future is going to look as rosy as the past? Probably not. But are we continuing to be bullish and extremely excited about our media operations and its performance? The answer to that is a resounding yes. Thank you.

Thank you. The next question is from Mayor Yagi from DeJarvan. Please go ahead.

Thanks for taking my question. Again, congrats Mirko and George. I wanted to just go back on your discussion about wireless ARPU growth. When you talked about ARPU eventually turning positive, were you referring this about the ARPU including the GOC government contract or excluding that contract?

Well, our ARPU includes everything. We have had, may I get the question quite right? We've got ARPU positive year today. We expect to see ARPU growth in the second half of the year continue to be positive, and we'll see what that amount is. So I'm not sure, did we get the question right? Or maybe...

Yeah, no, I just wanted to just understand exactly, I mean, what your reference point is.

We put all of our numbers and all of our sums in our metrics, which is a little different, I know, than other people and how they treat the government account.

Okay, just wanted to clear that up. So when you look at the wireless markets with all the changes that we are seeing, you know, a lot of, you know, the companies are still trying to find the place where they are going to sit eventually. How long do you expect the negative impact on ARPU to take place over the next couple of quarters until we see the full implementation of the plan in your ARPU numbers related to overage? In terms of profitability, how should we track your performance in terms of if you don't have a full removal of the subsidy model from your base, do you think you can offset the overage impact on your top line profitability-wise?

Okay. I guess what I'm going to say is what I said almost at the beginning, which is, you know, we – I think people ought to focus attention on our cash flow generation off the entire enterprise, off the wireless business. We'll be competitive with what the peers are doing in the marketplace. And I talked about, you know, there'll be some moderation of ARPU as a result of this change in the industry. But we're not going to go beyond what I said. Obviously, we've got to see how the market's competitive and you see us responding in the market. And then on the other, on the installment programs, that could turn out to be a positive for investors and consumers. It could turn out to be neutral. We're just going to have to see how it unfolds. There's a lot of experience in the U.S. to take a look at now that we're in that space. And we'll adjust accordingly, again, to make sure we're always generating, which we have historically, leading free cash flow in the wireless space. That'll be our focus.

Okay. The reason I'm asking is just trying to get your sense about the end game in terms of moving the market to an unlimited plan and there's always going to be some arbitrage for consumers to take the unlimited plan and try to get subsidy from the companies that are offering these unlimited plans. So I'm trying to understand if both can be at the same time implemented and still not impact the bottom line. Just trying to understand it from your perspective.

Well, it's what I said earlier. First of all, The movement on unlimited plans, we think, puts an enormous focus on your network and your network's performance, and our superior network now should turn out to be even that much more of a competitive advantage going forward. And then I think, as Merkel has reminded me, there's a general view that certainly within the call centers, call lengths should drop. We should see some of that just because, again, for a customer buying, it's a clearer view. rate plan, less rate plans in the market. But, you know, we haven't changed our guidance today as a result of any of this. We're very positive on the outlook. You know, I think some of these questions around this, I think you probably ought to direct at the companies that are leading this stuff, and we're always going to be competitive in following it.

Right, and I would say that, you know, you've got in one swim lane, you've got the installment plans. In the other swim lane, you have the subsidy plans, and the price points are different between those two swim lanes.

Okay, thank you.

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

Yeah, Mirko, could you just walk through your comments again on what you're talking about with respect to business revenues? And I think you're saying EBITDA growth is not yet positive, but the declines are. So could you just sort of walk through what you're seeing on the business side and what your expectations are into next year and Could you frame for investors your perspective of the regulatory environment now, I mean, in the context of a general election coming where sometimes it can get a bit noisy and then into the wireless review next year?

Thanks. Okay. So on business markets, as I mentioned and as you mentioned as well, I think revenues are up year over year, and that's great. That's a fourth consecutive quarter of positive revenue growth. So what we're seeing is basically strong performance, strong execution, and the fiber strategy working in strong demand in that customer base for bandwidth. And expect that to continue. And essentially, as I mentioned in my opening remarks, we're seeing a slowing rate of decline on the EBITDA side. So a positive trajectory. On regulatory, the big issue coming up is you – as you mentioned, is the MVNO proceeding with a hearing in January. And here's what I'll say. We have the best speeds globally in Canada. We have amazing coverage. We have intense price competition. Clearly, we've been talking about some of that on the call here. And we are on the cusp of 5G and investments that that will require. And we have the regional carriers doing what the regional carriers are doing. And we have also prepaid site segments gotten a whole lot more competitive and certainly meets the need of that lower cost segment in the marketplace. So if you put all those things together, say government and regulators ought to factor all that in quite seriously and not interfere with a market that's functioning really, really well. So I'll leave it at that on the regulatory front as being the biggest item coming up. Thank you.

Thank you. Once again, please press star 1 if you have a question. And the next question is from Drew McReynolds from RBC. Please go ahead.

Yeah, thanks very much. And just to reiterate, congrats to you, George, and to you, Marco. Two follow-ups for me. First, maybe, George, get your view. You've talked a lot on the potential impact of Unlimited in the IPs. I know you're not kind of steering things here out there in the market, but there's been a lot of discussion on whether what everyone has observed and witnessed in the U.S. is a relevant kind of benchmark or blueprint for what will unfold here in Canada. I would love to get your high-level thoughts on that one. And then second, I will bring Glen back into the conversation. Glen, I know your pension funding is fully funded, just wondering you know, if and when you're kind of crossing that threshold to lower annual pension funding. I think you've quantified that as potentially a $200 million free cash flow at tailwind. Thank you.

Yeah, well, first of all, thank you for the comments from both Mirko and I. You know, I think on the unlimited and on the EPPs, we've made our comments. We'll see how the market unfolds. But there's no doubt. I mean, other markets that have moved to both these types of structured markets, uh programs there are lessons to be learned and you can rest assured that we're obviously looking at those to make sure uh if there were positive things done we make sure we try to do those things that people they hadn't done we'll obviously try to steer away from those i mean i know they're common sense answers uh but at the same time that's really what we're gonna we're gonna have to do and want to do uh within that space so we'll stay stay competitive We've got a great strategy on prepaid that's got growth. We've got a leading postpaid network. We've got the lowest capital intensity in wireless. So we think we're in a tremendous position for whatever the market brings us.

Good morning, Drew. It's Glenn. I'll talk a little bit about pension funding. As you know, for years we've predicted that a rising interest rate environment would put us in that enviable position of having to take contribution holidays. And although we continuously see ourselves migrating towards that path, the solvency discount rates, as fast as they start rising, slip away and go the other direction on us, which I think has been my entire career I've been saying that. Great news, though, on our pension funding is despite the fact that solvency discount rates have actually come down since the last six months, our pension plans still find themselves in a fully funded position. And that's really a product of the asset mix, great returns that we're experiencing in that fund. So I couldn't be happier to find ourselves north of 100. Ultimately, getting to that date of having the contribution holiday of up to a couple hundred million dollars is really a product of discount rates. And, you know, unfortunately, they slipped on us this year. So let's hope for a rebound.

Okay. Thank you.

Thank you. There are no further questions registered at this time. I'd like to turn the meeting back over to Mr. Catopoulos.

There is a question. I just see one.

Oh, thank you. The next question is from Adam Scheinfling from National Bank Financial. Please go ahead.

Thanks a lot. Thanks for squeezing me in. So congratulations to both of you as well. Maybe, George, one issue around a topic that we see a lot of headlines about, as you can imagine, is the Huawei issue. And you've yet to put out your RRFP, I presume, for the next phase of 5G. But at some point as we watch... you know, the rhetoric from this government that could be the same government coming out of the election. It doesn't seem to be great quick movement on this issue. Can you speak to, you know, your views on when you need to get going with this, when a certain amount of urgency sort of sets in, you know, beyond the fall in regards to moving forward on that RFP?

Yeah, if we look at the timing, well, first of all, of course, always follow whatever the guidelines are in the country. And we've talked about that in the past. So we'll have to see how that unfolds. We've clearly listened to some of the public announcements from Ottawa, and obviously we have dialogue, very positive dialogue, I would say, of sharing proper information between ourselves and also the government. We have an expectation that post the election we'll get clarity, and we think that works within the timing of some of our plans. around appointments of who the vendors would be going forward. So some resolution of this shortly after the election would fit within our strategic timeframes, and we'll work on that at the end of it. And we've said before, however this unfolds, we see it not having a material impact on us, although we love the fact of having multiple vendor choices, but we'll follow whatever the rules are in the country.

Super. Thanks a lot.

Thank you. There are no further questions. Back to you, Metopolis.

Thank you, Donna. Yes, I think that the tightness of the Q&A is definitely a reflection of the strength of our results this quarter and the clarity and transparency of our disclosure. I'd like to think so. So on that, thanks again to all for your participation on the call. I will be available throughout the day, as usual, for follow-up questions and clarification. So thanks to all. Have a great day. Thank you.

Thank you.

Thank you, conference. Thank you.

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