BCE Inc.

GOOD MORNING, LADIES AND GENTLEMEN. WELCOME TO THE BCE Q4 2024 RESULTS AND 2025 GUIDANCE CALL. I WOULD NOW LIKE TO TURN THE MEETING OVER TO MR. THAYNE FOTOPOLOS. PLEASE GO AHEAD, MR. FOTOPOLOS.

THANK YOU, MATTHEW, AND GOOD MORNING TO EVERYONE ON THE CALL, AND THANK YOU FOR JOINING US. WITH ME HERE TODAY ARE MIRAKO BIBIC, BC'S PRESIDENT AND CEO, AND OUR CFO, CURTIS MILLEN. YOU CAN FIND ALL OF OUR Q4 DISCLOSURE DOCUMENTS, INCLUDING THE SAFE HARBOR NOTICE CONCERNING FORWARD-LOOKING STATEMENTS FOR 2025. AND OUR FINANCIAL GUIDANCE TARGETS FOR THIS YEAR ON THE INVESTOR RELATIONS PAGE OF THE BCE.CA WEBSITE, WHICH WE POSTED EARLIER THIS MORNING. WE HAVE A LOT OF MATERIAL TO GET THROUGH ON THIS CALL. HOWEVER, BEFORE WE BEGIN, I'D LIKE TO DRAW YOUR ATTENTION TO OUR SAFE HARBOR STATEMENT ON SLIDE TWO, REMINDING YOU THAT TODAY'S SLIDE 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 our publicly filed documents for more details on assumptions and risks. With that out of the way, I'll turn the call over to Mirko.

Thank you, Thayne, and good morning, everyone. Our financial results in Q4 and in 2024 demonstrate our disciplined execution in an ultra-competitive market. as we took the necessary near-term actions to balance growth with profitability and to reduce costs to achieve our target objectives. In terms of overall consolidated financial performance, we achieved all our non-revenue targets for 2024. We were also within our revised revenue guidance objective, notwithstanding sustained aggressive wireless pricing in Q4 and continued softness in the traditional media advertising market. Notably, our consolidated EBITDA margin increased 1.2 points to 43.4%, our highest annual margin performance in over 30 years. A few other select operating highlights for 2024, and I'll start with wireless. We delivered positive wireless service revenue growth despite the most pricing intense market we've ever seen. THIS IS A DIRECT REFLECTION OF OUR FOCUS ON PREMIUM BRAND CUSTOMER LOADINGS AND MANAGING OUR PROMOTIONAL OFFERS RESPONSIBLY. IN FACT, ALL OUR NEW POST-PAID CUSTOMER NET ACTIVATIONS IN 2024 WERE ON THE MAIN BELL BRAND, WHICH SHOULD HELP IMPROVE ARPU GOING FORWARD. WE GREW BROADBAND INTERNET MARKET SHARE AND DROVE HIGHER MULTIPRODUCT PENETRATION. THIS CONTRIBUTED TO INTERNET REVENUE GROWTH OF 3.3% AND A 12% INCREASE IN HOUSEHOLDS THAT SUBSCRIBE TO MOBILITY AND INTERNET SERVICE BUNDLES WHERE WE HAVE FIBER. We now have 3 million residential internet customers on our FTTH network, and that's up 10% in 2024. Our speed advantage and quality gap over cable shows in these results, and that will continue to grow over time. Turning to media, we grew digital revenue 19% over last year, helping to offset the secular pressures in traditional media, Digital now comprises 42% of total media revenue, and that's up from 35% in 2023. And this strategic shift to digital will be supported going forward with investments we made this past year, including the availability of Crave, TSN and RDS content on Amazon Prime Video channels in Canada, the newly launched Crave, TSN and RDS bundles, a new self-serve buying platform for advertisers looking to reach local audiences, Bell Media's multi-year extension of Crave's partnership with Warner Brothers Discovery for HBO and Max content, and the launch of 10 new fast channels. We also made further progress in advancing our BCE transformation agenda by continuing to leverage technology, automation, and simplification to drive meaningful CapEx and meaningful operating cost efficiencies. These transformation initiatives, together with savings realized from our workforce reduction program, delivered well over $200 million in cost savings in 2024. We're also seeing the benefit in terms of lowering CapEx, which declined $684 million in 2024 to approximately $3.9 billion. And our momentum to advance our position as a tech services leader in the business enterprise space also continued to ramp up in 2024. with strong business solution services revenue growth of 18%. In summary, our performance in 2024 reflects a focused company in the midst of transformation, while at the same time driving day-to-day execution to serve our customers, grow subscribers profitably, and prudently manage costs. Now I'm going to turn to slide four of our presentation. Bell's an iconic company that's delivering on its purpose to advance how Canadians connect with each other and the world. At the same time, we're operating in an environment with the lowest pricing we've ever seen, as I mentioned, and with continued macroeconomic and regulatory pressures. This has resulted in revenue declines. In this context, it's incumbent on us to develop a business strategy that will generate revenue growth. And critical to the successful execution of this strategic plan is prudent management of our balance sheet and capital allocation priorities. We've spent considerable time with our shareholders, and we've heard their perspectives. So let me outline very clearly our plan of action that will carry us for years to come that focuses on our customers and on creating value for shareholders. It plays to our strengths and it prioritizes the following core elements. Putting the customer first. Offering the best internet and wireless networks and services. Business technology services leadership. And fourth, building a digital media and content powerhouse. There's a fifth pillar as well, and that's to continue to transform our business by leveraging technology, automation and simplification in a way that's more agile, lower touch and digital to drive even more meaningful capex and operating cost efficiencies than we've already delivered. I'll now go through each element of the plan. Let's go to slide five. As you can see, it begins and ends with the customer. Customers are our top priority. They're looking to access faster, easier experiences on their terms. We strive to make it easy for our customers to do business with us, whether that's doing what we say we'll do, getting you the right help fast, offering bill accuracy and transparency, making it right if we fall short, or providing the same information whether you call us, visit us, or go to a store or go online. This approach drives significant cost savings and a massively improved customer experience, which results in better customer satisfaction, lower churn and ultimately revenue growth and higher customer lifetime value. Bell is the first Canadian telecom company to name a dedicated chief customer experience officer with a mandate to create best-in-class experiences for our customers in every encounter across all channels. The new role is responsible for the entire customer experience from end-to-end sales, installation, billing, support, managing changes to plans and packages and technology changes. WE'RE PRIORITIZING DIGITAL INTERACTIONS TO CREATE SMOOTHER AND MORE SEAMLESS PROCESSES FOR CUSTOMERS, WHETHER THEY WANT TO PURCHASE NEW SERVICES, CHANGE THEIR PLAN OR SIMPLY GET SUPPORT WITH A TECHNICAL OR BILLING ISSUE. AND WE'LL CONTINUE TO TAKE ADVANTAGE OF THE AWARD-WINNING MYBELL APP, VIRTUAL REPAIR AND SELF-INSTALL TOOLS. BUT WE KNOW THAT EVERYONE HAS A DIFFERENT LEVEL OF COMFORT WITH TECHNOLOGY, SO WE'LL ALWAYS PROVIDE OPTIONS TO THOSE WHO PREFER TO SPEAK TO A CUSTOMER SERVICE AGENT ON THE PHONE. NOW LET'S GO TO SLIDE 6. AS I SAID, Our plan is to create sustained revenue growth that will benefit customers and investors now and well into the future. Our broadband internet and wireless networks are the foundation of our business. Fiber is the future. It's the winning strategy offering the fastest internet technology and providing a more durable alternative to copper, cable, or fixed wireless. We've been transforming ourselves into a fiber-first company, and that is going to continue. And our fiber growth will be supercharged with the acquisition of Ziply Fiber, the largest broadband and fiber internet provider in the U.S. Pacific Northwest. This strategic acquisition will grow BC's position as North America's third largest fiber internet provider. By year end 2028, we expect to have approximately 12 million fiber passings in North America. This will accelerate subscriber revenue and EBITDA growth for Bell, generating long-term value for our customers and shareholders. And as we announced previously, we intend to finance the Ziply fiber deal largely with the net proceeds from the pending sale of MLSC. This is a very strategic redeployment of capital into our core business and a clear indication that we will act on compelling opportunities to monetize non-core assets. Next, we have wireless. It's a tough environment right now in Canada as the industry is going through a period of unprecedented price competition. But as that stabilizes and as we continue to focus on costs and operational simplification, wireless will remain a key growth vector. We're going to continue to focus on value accretion, delivering better quality margin accretive subscriber loadings on our main Bell brand and increasing service bundle penetration and multi-line sales while managing pricing and churn. The third key area of focus to generate revenue growth is technology solutions leadership in enterprise. WE'VE SET AN AMBITIOUS GOAL TO GENERATE $1 BILLION IN ANNUAL REVENUE BY 2030. OUR ENTERPRISE CUSTOMERS ARE TRANSFORMING THEIR BUSINESSES AND THEY WANT OUR HELP. BELL HAS CREATED A LEADING IT SERVICES AND CYBERSECURITY BUSINESS ACCELERATED BY THE ACQUISITIONS OF FX INNOVATION, HGC TECHNOLOGIES, STRATEGEM AND CLOUD KETTLE. We're going to deliver among the best technology solutions in end-to-end cloud, IT, workflow automation and security, leveraging our strong partnerships with AWS, Azure, Google Cloud, Salesforce, ServiceNow, Palo Alto and others that are complementary to those acquisitions and important to our success going forward. This supports our goal to become the IT systems integrator and managed services provider of choice to key industry verticals. The fourth big opportunity is continuing Bell Media's momentum and pivoting from a traditional broadcaster to a digital media and content powerhouse. That journey is well underway with 42 percent of our media revenue now coming from digital sources. That's up from just 17 percent in 2020. And here's something I haven't shared with you before. About half of that $1.3 billion in annual revenue is new digital revenue from products including direct-to-consumer streaming, crave with ads, connected TV, and other ad-supported streaming options such as fast channels. Notably, the other half of our digital revenue comes from advertisers buying ads on our traditional platforms and who use Bell Media's digitally-enabled sales tools to optimize their ad campaigns. BELL FIRST PARTY DATA TO OPTIMIZE ADVERTISING PLACEMENT ON OUR TRADITIONAL CHANNELS AND BELL ANALYTICS TO MEASURE THE SUCCESS OF THAT ADVERTISING. IMPORTANTLY, THIS ALLOWS US TO PROTECT A LARGE PORTION OF OUR TRADITIONAL REVENUE BECAUSE OF THE CUSTOMER EXPERIENCE AND VALUE OUT OF OUR DIGITAL TOOLS. The fifth key pillars outlined on slide seven of our presentation. As I mentioned, our execution will continue to be supported by our ongoing business transformation from a traditional telco to a techco. And what I really mean by that is modernizing and simplifying how we do business and how we operate. Our goal is to generate $1 billion in cost savings by 2028, if not sooner. We have a number of focused initiatives underway. INCLUDING CONSOLIDATING OUR CONSUMER ORDER AND BILLING SYSTEMS, AUTOMATING MANUAL BACK OFFICE FUNCTIONS, DEPLOYING CLOUD-BASED WORKFLOW MANAGEMENT AND CRM PLATFORMS, DEPLOYING A CLOUD-BASED TV SERVICE, PRIORITIZING DIGITAL INTERACTIONS, ENABLING MORE SELF-INSTALL AND OF COURSE MIGRATING CUSTOMERS FROM COPPER TO FIBER SO WE CAN DECOMMISSION COPPER. WE STARTED THIS BUSINESS TRANSFORMATION IN 2022 AND AT THE END OF 2024 WE WERE HALFWAY TOWARDS OUR STATED GOAL. I'LL NOW TURN TO SLIDE 8 AND ADDRESS OUR BALANCE SHEET MANAGEMENT AND CAPITAL ALLOCATION STRATEGY. OUR APPROACH TO CAPITAL ALLOCATION IS TO BALANCE LONG-TERM INVESTMENT TO GENERATE GROWTH WHILE STRENGTHENING THE BALANCE SHEET AND OPTIMIZING OUR COST OF CAPITAL. WE REMAIN FOCUSED ON MAINTAINING INVESTMENT GRADE CREDIT RATINGS FOR OUR SENIOR DEBT AND LOWERING OUR LEVERAGE RATIO CLOSER TO OUR TARGET POLICY OF THREE TIMES ADJUSTED EBITDA. REGARDING OUR DIVIDEND. We recognize that we have an elevated payout ratio that is outside our policy range. That's reflected in BC's share price and dividend yield, which we are disappointed with. BC's dividend and dividend policy will continue to be reviewed by the Board, taking into consideration the competitive macroeconomic and regulatory environments, as well as the progress being made on the initiatives being discussed today. I also want to make clear that the discounted DRP, the DRIP, is in place for now. AS OPPORTUNITIES ARISE TO MONETIZE NONCORE ASSETS, ACCESS THE HYBRID DEBT MARKET, AND ESTABLISH MORE CAPITAL EFFICIENT WAYS TO FUND OUR U.S. FIBER BUILD, ALL OF WHICH WOULD DRIVE A LOWER COST OF CAPITAL, THEN WE WOULD LOOK TO TURN OFF THE DRIP PROGRAM. IN TERMS OF CAPITAL INVESTMENT, WE CONTINUE TO LOWER CAPEX AND CAPITAL INTENSITY WHILE CONTINUING TO INVEST SIGNIFICANTLY IN OUR BUSINESS JUST AS WE SAID WE WOULD BACK IN 2021 WHEN WE FIRST ANNOUNCED OUR ACCELERATED CAPEX PROGRAM. LAST FEBRUARY, WE SAID THAT OUR PLAN WAS TO REDUCE CAPEX BY MORE THAN $1 BILLION OVER THE 2024-2025 TIME FRAME. IN FACT, WE'RE AHEAD OF PLAN, HAVING ACHIEVED NEARLY 70% OF THAT OBJECTIVE BY THE END OF 2024. HOWEVER, BECAUSE OF THE CRTC'S REJECTION ON MONDAY OF A GOVERNOR AND COUNCIL REQUEST TO RECONSIDER ITS NOVEMBER 2023 DECISION THAT PROVIDED TELUS AND OTHER LARGE CARRIERS TEMPORARY WHOLESALE TARIFF ACCESS TO OUR FTTH we are cutting capex by more than we anticipated would be the case for 2025. And with that, our capital intensity ratio will be approximately 14% in 2025. This reduction is clearly greater than what we would have done otherwise. Consequently, we will not be delivering our fiber build-out target of 8.3 million homes by the end of this year. So what originally began as a 9 million deployment plan in 2021 will now be less than 8.3 million. THIS DECREASE IN OUR FIBER BUILDOUT IS A DIRECT RESULT OF THE CRTC'S REFUSAL TO BAN TELUS AND OTHER LARGE CARRIERS FROM RESELLING THE FTTP NETWORK WE'VE BUILT. WE WILL REVISIT OUR BUILDOUT PLAN IF THE CRTC REVERSES ITS DECISION. OUR POSITION ON THIS ISSUE HAS BEEN STATED MANY TIMES. THE CRTC'S DECISION IS IN OUR VIEW MISGUIDED AS IT GOES AGAINST ITS LONGSTANDING FACILITIES-BASED COMPETITION POLICIES WHICH HAVE CLEARLY ENCOURAGED PRIVATE INVESTMENT. THESE POLICIES HAVE ENABLED OUR SIGNIFICANT NETWORK INVESTMENTS THAT BROUGHT FIBER TO MILLIONS OF HOMES AND BUSINESSES FOR THE BENEFIT OF CANADIANS. POST-2025, BC'S CAPITAL INTENSITY RATIO, INCLUDING ZIPLY FIBER, IS PROJECTED TO BE AT MOST 16.5%, WHILE BELL STAND-ALONE CAPITAL INTENSITY IS PROJECTED TO DROP BELOW 14%. REGARDING ZIPLY FIBER, That acquisition allows us to move capital to an asset that will drive significant growth in our core fiber business in a leverage-neutral manner. We forecast very compelling IRRs for the targeted 3.3 million homes to be passed by Ziply Fiber by the end of 2028. We would review other potential opportunities to grow that fiber footprint, but only with a build-out structure that would bring third-party capital to invest alongside Bell, effectively reducing BCE's funding requirements. TURNING TO DEBT, WE APPRECIATE THAT MANY SHAREHOLDERS WOULD LIKE US TO FOCUS ON DELEVERAGING. WE'RE CAREFULLY REVIEWING OUR NONCORE ASSETS AND WILL CONTINUE TO CAPITALIZE ON OPPORTUNITIES TO MONETIZE THEM WHERE IT MAKES FINANCIAL AND STRATEGIC SENSE. THIS REVIEW PROCESS HAS ALREADY RESULTED IN THE PLANNED DIVESTITURES OF NORTHWEST TEL AND MLSC. ADDITIONAL NONCORE ASSETS HAVE BEEN IDENTIFIED AND ANY PROCEEDS OF THEIR SALE ARE EXPECTED TO BE USED TO STRENGTHEN OUR BALANCE SHEET, IMPROVE OUR LEVERAGE RATIO, AND OPTIMIZE OUR COST OF CAPITAL. BETWEEN NORTHWEST TEL, MLSC, AND POTENTIAL OTHER NONCORE ASSET DIVESTITURES, WE SEE UP TO $7 BILLION BEING GENERATED. IN ADDITION, THERE'S A SIGNIFICANT AMOUNT OF UNTAPPED VALUE THAT EXISTS IN OUR TELECOM INFRASTRUCTURE, AND WE'RE ASSESSING THE BEST WAYS TO SURFACE THAT VALUE. Financial advisors have been retained to assist in this regard, given the importance of such potential transactions. In conclusion, the strategic and operational roadmap I've shared in detail today will guide our actions for 2025 and beyond. To quickly recap and to summarize the main elements of that roadmap, here's what we're going to do. Put the customer first in our decisions. Continue to execute in a disciplined manner in Canada. Focusing on margin accretive subscriber growth using our fiber and 5G wireless network advantages. Work towards building a billion dollar plus revenue technology services business. Rapidly accelerate Bell Media's digital revenue mix. Generate $500 million in further transformation savings to reach $1 billion by 2028. CONSIDER DIVESTING UP TO $7 BILLION IN NON-CORE ASSETS INCLUSIVE OF OUR PENDING SALES OF NORTHWEST TEL AND MLSC AND OPTIMIZE OUR COST OF CAPITAL AS WE CONTINUE TO FOCUS ON MAINTAINING INVESTMENT GRADE CREDIT RATINGS FOR OUR SENIOR DEBT. WE WILL SHARE OUR PROGRESS ON THESE VARIOUS ELEMENTS WITH THE INVESTMENT COMMUNITY TRANSPARENTLY AND REGULARLY. AND BEFORE I HAND IT OVER TO CURTIS FOR A REVIEW OF OUR Q4 OPERATING RESULTS AND FINANCIAL GUIDANCE TARGETS FOR 2025, LET ME conclude with a couple of thank yous. First, to the entire Bell team for your perseverance, dedication, and resourcefulness in a challenging environment. And second, Jethane, as this is his last analyst call after many years of outstanding service to our company, which we greatly appreciate. And with that, Curtis, over to you.