BCE Inc.

Please stand by. Your meeting is about to begin. Good morning, ladies and gentlemen. Welcome to the BCE Q3 2020 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, everyone. As usual, participating on the call today are Marco Bibic, BC's president and CEO, and our CFO, Glenn LeBlanc. Before we begin, I want to draw your attention to our safe harbor statement reminding listeners that the slide presentation and remarks made during the call today will include forward-looking information and therefore is 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 the company's publicly filed documents for more details on assumptions and risks. And as always, our earnings materials are available on the Investor Relations webpage of the BCE website.

So with that, Marco, over to you. Thank you, Thayne, and good morning, everyone. Our focus in Q3 was all about building momentum back into the business. And although the effects of COVID are still obviously present, I'm very pleased with our progress to date as we experienced a notable improvement in our operating performance this quarter due to the success of our broadband strategy, the reopening of retail stores, the step up in economic activity, the return of live sports programming, and overall disciplined execution in a competitive market. This contributed to stronger financial results across all Bell operating segments in Q3 compared to the previous quarter. We continue to grow broadband market share. We delivered 210,000 total net wireless, retail internet, and IPTV customer additions in Q3. And consistent with our focus on profitable wireless subscriber growth, we added 128,000 new net postpaid and prepaid customers this quarter, comprised entirely of mobile smartphone subscriptions. And we delivered very strong wireline subscriber results with an industry-leading combined 82,000 retail internet and IPTV net ads. We also generated over $1 billion of free cash flow this quarter, bringing year-to-date cash generation to more than $3.25 billion, 14% higher than last year. We expect free cash flow to moderate in Q4 as we further step up capital spending and as accounts receivable and inventory levels grow with an increase in sales activity. This contributed to maintaining a very healthy liquidity position of $5.2 billion at the end of Q3, which does not include the approximate $940 million in net cash proceeds received from the recently concluded sale of Bell Data Centers to Equinox. I'll turn over to slide four of our presentation. Slide four provides a quick update on the continued progress we're making on advancing our strategic imperatives. In Q3, we equipped 140,000 new locations with direct fiber, bringing the coverage level to 56% of our total high-speed broadband footprint. This is enabling more and more Canadians to access the fastest internet speeds in the market today of 1.5 gigabits per second and to benefit from the related customer experience enhancement that fiber brings. We remain very enthusiastic about fiber and the resulting significant financial and subscriber growth and the customer experience benefits the strategy delivers. The broadband footprint advantage that we are building with the fastest fiber internet and wireless home internet speeds in the market today positions us extremely well in both our consumer and business segments over the long term to grow internet revenue, which in Q3 grew a strong 10%. We also announced a further acceleration in our wireless home internet build-out that will approach 50% of our target footprint by the end of the year, with the addition of another 80,000 homes in rural Canada. We also now expect to cover more than 350,000 rural homes, up from 300,000 previously, with enhanced 50 megabit download and 10 megabit upload speeds by year-end. These latest announcements build on several other initiatives this year. including a special project that brought wireless home internet to 137,000 more rural locations than expected in response to increased demand during the COVID crisis, our announcement that we would double internet download speeds from 25 to 50 megs, the rollout to 200,000 rural households in Atlantic Canada, which we recently announced, which will be built out over two years, and our plan to begin deployment in Manitoba next year. These investments are establishing the foundation for our continued success while immediately stepping up for Canadians everywhere across our operating territories in the face of COVID. I'll now turn to wireless. Just last month, Canada's networks were recognized by OpenSignal as being the fastest in the world. In fact, the average 4G LTE download speeds were not only faster than the network speeds of the top carriers in the U.S., but also significantly outpaced the second fastest country in the world, South Korea, on their fully fledged 5G network. To put these results into perspective, the global average for download speed experience across all operators analyzed was just above 22 megabits per second, while the same speeds for Canada's big three national wireless operators were more than two to three times faster than the global average. This is the clear outcome of supportive facilities-based government and regulatory policies. Bell's 5G network continues to rapidly expand and is Canada's fastest. We provide download speeds up to 1.7 gigabits per second. And our footprint will continue to grow into 2021 and beyond as true standalone 5G networks are deployed using mid-band 3500 megahertz spectrum. It's still early days. And the full benefits of 5G technology won't be realized until more spectrum and new applications become available, but data usage among early 5G device users is twice as high as non-5G subscribers, with monthly recurring revenue that is nearly 20% higher. On customer experience, which is also one of our key strategic imperatives, we're making significant progress with fewer CCTS complaints by Bell customers, improved digital functionality, and self-serve capabilities. Our most recent initiative is Move Valet. This is a new concierge service for customers in Quebec and Ontario who are moving homes to transfer their bell services seamlessly to their new residents. Just another example of an initiative that puts customers front and center. We also remain keenly focused on making the online and app-based sales experience easier for consumers. Directly as a result of our investments to improve digital functionality, 56% of all customer service transactions were executed online in Q3, up from 50% just last quarter. Another initiative we're working on to deliver ever better customer experience is full self-install, which we launched in October for homes connected with direct fiber. The important point here is that as we deploy more fiber in our network and as more homes are connected with fiber, we have the ability to offer full self-install to a larger customer base We'll only have to connect a modem to a fiber jack and power supply. This will drive a step function improvement in customer satisfaction and deliver cost savings. So we're really pleased with the company-wide focus on championing the customer experience. I'm going to turn now to slide five, give you a quick overview of some key operating metrics. Start first with wireless. Trends showed good sequential improvement in Q3 with stronger customer activity, including ongoing steady traction for digital channels, continued low churn, and an Abbott Poo decline that is moderating. Store traffic improved noticeably with the reopening of all our stores and sales activity steadily picked up with each passing week as the level of competitive intensity and number of promotional offers increased. We added 133,000 new smartphone customers this quarter. Unlike some others in the market, basically our net ads this quarter did not include any mobile connected devices such as tablets. Here's the bottom line. We're focused on driving service revenue growth through accretive smartphone transactions. And despite a more muted back to school period because of COVID, postpaid mobile smartphone ads in Q3 were very good and largely similar to last year. Also supporting our 88,000 total post-pay net add this quarter was lower customer churn, which improved eight basis points over last year to 1.04%. And in prepaid, we added 41,000 new customers, another very good quarter, which we believe led the industry once again. Blended APU decreased 6%. This result is a notable improvement over Q2. even as lower roaming volumes and data over contraction from increased customer adoption of unlimited plans remained headwinds. In fact, these two factors accounted for approximately 80% of the ABPU decline this quarter. Now let me move to Bell Wireline. The need for fast and reliable internet connectivity, particularly in the current COVID environment, together with lower customer churn, drove strong broadband results. We delivered 63,000 internet net ads, That's 8% higher than last year. We believe this was industry leading in Q3. We also added another 81,000 FTTH subscribers this quarter, bringing the total number of direct fiber customers to more than 1.6 million, and that's up 17% over last year. In TV, we added 19,000 net new IPTV subscribers, supported by our new app-based Virgin TV service, and significant customer churn improvement. All in all, a pretty solid result given a mature Canadian TV market and some ongoing pandemic-related constraints. We also continue to see strong progress with satellite TV and home phone customer losses, which improved 29% and 24% respectively, as Canadians continue to stay and work from home during the pandemic. And certainly any time the rates have declined slow for these high-margin services, That's important to us from a cash flow perspective. So despite ongoing COVID impacts on customer activity, really was a strong quarter from an RGU perspective with positive total retail net ads in our wireline footprint of 16,000. That's an increase of 22,000 over last year. In fact, it's only the second quarter in the past five years where we've achieved positive wireline retail net ads, including NAS and satellite TV. I'll turn now to Bell Media. TV advertising demand picked up in several key categories, especially with the return of live sports and increased spending by advertisers. Radio and out-of-home advertising have been slower to rebound. On radio listenership, it's declined during the pandemic, and some key out-of-home advertising phases as well, such as restaurants, airports, those have been severely impacted by lockdown measures. But we're seeing momentum return to outdoor categories, such as street furniture and billboards. On the subscriber front, TSN and RDS have remained largely stable, particularly with live sports coming back in Q3, as have subscribers across all Bell Media TV properties since the COVID situation began. TSN remains the number one ranked sports channel for the latest broadcast year that just ended on August 31st, and year-to-date RDS viewership has outpaced our largest French language competitor by 32%. On Crave, It continued to deliver with strong direct-to-consumer growth, 3% year-over-year increase in total subscribers for Crave. Overall, these subscriber results speak to the quality and depth of our programming, which is frankly second to none in the marketplace. And a couple of other items in the quarter that I wanted to mention. regarding media. To coincide with the fall season of new TV programming, Bell Media launched a new all-in-one digital video streaming platform for CTV content, essentially a CTV AVOD service. So now viewers can access all live and on-demand CTV content at no additional cost directly from ctv.ca and the CTV app on mobile and smart TVs and other connected devices. So it's a single hub. It offers advertisers a compelling way to reach our digital audience. audiences and an easy way for viewers to watch our content. It's 100% ad supported and it was built using the same technology that powers crave. And at the end of August, Bell Media rebranded our newly acquired French language conventional TV network V. The new brand is Nouveau. Our goal is to make Nouveau a broader and fully integrated conventional TV destination with multiple points of contact for video content. We're already seeing results from that strategy with significant gains in primetime viewership and ad sales this fall season, and that's expected to continue this broadcast year. So I'm going to turn it over to Glenn in just a moment, but before I do, I want to emphasize the following. Q3 was all about building momentum back into the business and delivering the consistent results we said we would deliver. Despite COVID, we continue to push forward with the deployment of high-speed broadband fiber, wireless home internet in Canada's underserved rural communities and mobile 5G technology. We're keeping our eyes fixed firmly on the long term. At the same time, we're maintaining operational excellence in the short term to steer us through the pandemic recovery period and to generate even greater momentum with each successive quarter. We're competitively well positioned to succeed with significant liquidity and the financial flexibility to drive both our national investment strategy and BC's common share dividend, which we just announced this morning for Q4. And on that, let me turn it over to Glenn.