BCE Inc.

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

Thank you, Paul, and good morning, everyone, and thank you for joining our call today. As usual, I'm here with Marco Bibic, BC's President and CEO, and our CFO, Glenn LeBlanc. You can find all our Q2 disclosure documents on the investor relations page of the bce.ca website, which we posted earlier this morning. However, before we begin, I want to draw your attention to our safe harbor statement on slide two of the presentation, reminding you that today's remarks made during the call will include forward-looking information and therefore are subject to risks and uncertainties. Results could differ materially. We disclaim any obligation to update forward-looking statements except as required by law. Please refer to our publicly filed documents for more details on our assumptions and risks. With that, I'll turn the call over to Mirko.

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