BCE Inc.

Good morning, ladies and gentlemen. Welcome to the BCE Q2 2024 results conference call. I would now like to turn the meeting over to Mr. Thayne Fotopoulos. Please go ahead, Mr. Fotopoulos.

Thank you, Matthew. Good morning, everyone, and thank you for joining our call. With me here today are Mirko Bibic, President and CEO of BC, and our CFO, Curtis Millen. You can find our Q2 disclosure documents on the investor relations page of the bce.ca website, which we posted earlier this morning. Before we begin, I want to draw your attention to our safe harbor statement on slide two of the analyst presentation, reminding you that today's Presentation and 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 VCE's publicly filed documents for more details on our assumptions and risks. With that, I'll turn it over to Mirko.

Thank you, Thayne, and good morning, everyone. So looking at our overall second quarter operating results, the Bell team managed well, and we executed with financial discipline against the backdrop of a highly competitive marketplace. We have a clear vision for how we're competing now and into the future, combined with our proven trademark consistent execution. While consolidated top-line growth continued to be impacted by sustained competitive pricing pressures and expected revenue loss from the source, We remain laser focused on profitable margin accretive subscriber growth and driving costs out of the organization, as you can see by 2% EBITDA growth in Q2 and a 1.3 point increase in BC's margin to 44.9%. Both of these results were higher than forecasted, demonstrating our success in driving efficiencies and reducing costs to offset near-term competitive and economic pressures. This contributed to $1.1 billion of free cash flow being delivered in Q2, which represents an increase of 8% over last year and aligns with the expectations we shared with you on our Q1 conference call in May for higher free cash flow generation as profiled in our quarterly budget at the start of the year. As for operating results, our CTS segment subscriber metrics continue to be underpinned by leading broadband fiber network that is consistently recognized by third parties for its best-in-class performance and customer experience, by mobile 5G speed that are being further enhanced with deployment of 3800 MHz spectrum, as well as increased customer bundling of mobility and internet that serves as an important turn management and value driver tool. In wireless, we were arguably the most disciplined in striking the right balance between volume growth and economics in a heightened competitive pricing environment. We managed our promotional offers prudently to deliver a healthy step-up in new subscriber activations that focused on higher quality main brand loadings. In fact, Bell has led the charge on more rational pricing behavior, increasing the rates on a number of Bell Mobility and Virgin Plus plans at the beginning of July, while continuing to deliver exceptional value to our customers. Collectively, total postpaid and prepaid mobile phone net ads in Q2 were up 4.4% to 131,043. And with robust Canadian population growth projections and even greater focus on bundling wireless and consumer internet service, we see good runway for continued growth. Mobile subscriber growth also included connected device net ads of approximately 88,000. That's up 10.5% over the prior year and reflects continued strong momentum for our 5G and IoT B2B solutions. In residential wireline, we continue to gain a significant share of new internet subscriber growth, and that's fueled by our fiber network's superior symmetrical speeds and overall customer experience, which drove our highest Q2 consumer retail internet net ads in 17 years and an 18% increase in households subscribing to mobility and internet service bundles, and that's where we have fiber. Notably, 41% of our new internet customers this quarter subscribe to a service bundle with wireless, which should help drive better subscriber lifetime value and improved retention longer term. Turning now to media, Bell Media continues to transform from a traditional broadcaster to a digital media and content leader. And a prime example of that is the advanced advertising solutions for clients powered by Bell first-party data, including Bell Analytics, the SAM TV sales tool, Bell DSP, Addressable TV, and Crave with Ads, which collectively drove a 35% increase in digital advertising revenues this quarter. And investments to sustain the strategic shift to digital will continue. We announced a number of new partnerships and additions to our ad offerings at our upfront presentation in June. These included a new self-serve buying platform for advertisers looking to reach local audiences, strategic sales partnerships with TikTok's premium advertising product, Pulse Premier, as well as DotDash Meredith, the largest digital and print publisher in the U.S., and expanded distribution for our 10 new fast channels, which we launched in April. Our momentum also continues to build in the business enterprise space as our expanding capabilities in cloudification, security, and managed automation have led to increasing customer wins and the expansion of existing relationships, all of which drove strong business solution services revenue growth of 22% this quarter. Building on this growth strategy, we recently acquired leading technical services companies at Stratagem and CloudKettle. These acquisitions complement our acquisition of FX Innovation last year by immediately strengthening Bell's cybersecurity and Salesforce workflow automation know-how for enterprises and enriching the range of capabilities available to manage customers' public and hybrid cloud environments with the world's leading cloud providers. We can now deliver customer solutions across the two leading platform software companies, ServiceNow and Salesforce, in addition to our new advanced managed security solution. And regarding ServiceNow, we recently entered into an expanded partnership with them to accelerate Bell's digital transformation and, importantly, the digital transformation of our enterprise customers. ServiceNow's applications will streamline several areas of our business including network, customer, and field service operations. resulting in a more efficient experience for technicians leveraging AI-driven insights to automate scheduling, improve customer service, and reduce drive time. Also, to enhance customer support with powerful automation capabilities to streamline case handling and drive faster service deliveries using solutions that ensure customers get the services they want and require in a matter of hours or days. While these investments in partnerships in technology and automation will enable us to unlock even greater operation efficiencies going forward, we're already benefiting from advanced AI and machine learning capabilities to improve the Bell customer experience and, importantly, take costs out of our business, which contributed to $20 million in labor cost savings across our customer operations this quarter. Here are some examples of how our AI leadership is setting us apart. We pioneered a self-serve virtual repair tool for technical troubleshooting of internet and TV issues, and that eliminated call wait times and technician visits. We launched the first Google AI-powered Infobot in Canada, offering instant answers to customer questions and directing them to self-serve options and links. Our implementation of the full Google Call Center AI platform is a world first for a contact center of this scale. The virtual assistant we've implemented first for Lucky Mobile Chat and now for our Bell and Virgin brands has resulted in over 1.1 million virtual assistant interactions year-to-date across the three brands. We've also implemented AI-powered agent support models that leverage real-time transcription. We analyze calls in our contact centers through our Speech AI solution, and that enables us to identify cross-sell opportunities where appropriate. We also use AI-enabled dynamic call routing to pair incoming customer calls with the agent who has the right skill set to optimize that customer's experience. And we're also using generative AI for call quality assurance, monitoring aspects like time on hold and manager escalations, and to automatically generate retention offers in real time all of which is designed to vastly improve the customer experience, drive operating efficiencies, lower churn, and generate higher customer lifetime value. And against the backdrop of these accelerating investments in key growth areas, we entered into a transaction to sell Northwest Tel to a consortium of Indigenous communities for up to $1 billion in cash. This was a unique opportunity that emerged to surface good value for a standalone BCE asset at a fair valuation, and to use those proceeds to proactively manage our balance sheet and to pay down debt. And consistent with our strategy to reduce focus on non-core businesses, we took the next step in the transition of 167 of the source stores to Best Buy Express with the opening of our first store in June. That marks the beginning of a phased rollout with all stores expected to be open by the end of this year. All remaining 107 of the source stores are now closed, and they're no longer in operation. I'm going to turn now to slide 5 for a brief review of some of the operating metrics by segment, and I'll start with wireless, of course. We added 131,043 new net mobile phone subscribers in Q2. That's up 4.4% from last year. and that was a function of a 14.4% increase in gross activations, which outpaced peers who have already reported by a wide margin and a second consecutive quarter of deceleration in the year-over-year rate of churn increase. Now, the churn does remain elevated, and it's clearly not at a level that I'm satisfied with, but it's down sequentially from Q1 both in absolute churns and in the magnitude of increase when compared to the prior year. Although post-paid net ads of $78,500 were down versus Q2 of last year on what was a relatively strong prior year, importantly and quite deliberately, the vast majority of our new customers continue to be on our main premium brand, which is fundamental to our operating strategy. This result reflects our focus on better quality, profitable, and margin-accretive subscriber acquisition. We plan to continue with this consistent and disciplined approach, which balances subscriber growth with financial performance rather than just buying loads, as we progress through the balance of 2024 and beyond. Prepaid net additions were up meaningfully over last year, growing to 52,543, as we benefited from the launch of no-name mobile and lucky mobile marketing initiatives. This represents our best quarterly prepaid result in almost two years. Having led the market in prepaid growth this quarter, it shows that we've made the massive strides in breaking into the Canadian newcomer market in a relatively short period of time. To close off on wireless, ARPU was down 1.9% year over year. This result doesn't come as a surprise given that we've been facing the lowest pricing environment in the history of wireless in Canada for much of the past year. However, we did see an improvement in June. And although encouraging, given the current dynamic pricing environment that's in flux as we enter the back-to-school period, it's still too early to make a call on the direction of ARPU for the balance of this year. I'm going to turn over to Wireline now. We had 23,841 new retail internet additions. We delivered our second-best Q2 results since 2007 after Q2 2023, which was an exceptional year. Moreover, where we have fiber, our bundle sales continue to grow. In Q2 alone, new customers subscribing to mobility and internet service bundles increased 23% compared to last year and now comprise 48% of our total residential households. And we had another solid quarter for our Bell-branded IPTV service, which added 3% more new net subscribers in Q2 2023. However, gross activations on our 5TV app streaming service were down considerably this quarter, and that was due to a $5 rate increase in May for new subscribers, and it resulted in a 12,800 year-over-year decrease in total IPTV net additions. Lastly, I'm going to turn over to media. Total advertising revenue was up on the strength of digital and live sports, and although this result represents our second consecutive quarter of growth, the ad market improvement is expected to be uneven for the balance of this year. Digital and direct-to-consumer continued to grow strongly, helping to offset the secular pressures from traditional media platforms. Digital revenues were up 23% over last year, and they now comprise 41% of media revenue compared to 33% last year. Driving this performance was Crave. which grew direct streaming subscribers by 21% in Q2 on the back of market-leading content, as well as strong growth in usage of our programmatic ad marketplace, including our SamTV advertising tool, which increased sales revenue by 43% this quarter. TSN and RDS directed consumer streaming subscribers more than doubled over last year, and that was on the back of EuroCup soccer and record-breaking audiences for the Copa America tournament. For the current broadcast season to date, CTV remains Canada's most watched network for a 23rd consecutive year. On the French language side, Bell Media led all competitors in the entertainment and pay specialty market, and Nouveau was the conventional TV market network with the largest growth in full-day audiences, increasing 8% over Q2 of last year. In summary... Our performance for Q2 reflects the team's consistent execution in a highly competitive and evolving marketplace with financial results that demonstrated a prudent balancing of subscriber growth with profitability and a continued sharp focus on cost efficiency and effectiveness. I'll now turn the call over to Curtis, who's going to provide more details on our financial results.