Executives: Thane Fotopoulos - IR George Cope - President & CEO Glen LeBlanc -

CFO
Analysts: Phillip Huang - Barclays Simon Flannery - Morgan Stanley Greg MacDonald - Macquarie Maher Yaghi - Desjardins Capital Markets Drew McReynolds - RBC Capital Markets Batia Levy - UBS Securities Jeff Fan - Scotia Aravinda Galappatthige - Canaccord Genuity Richard Choe - JPMorgan Rob Peters - Credit Suisse Bentley Cross - TD

Securities
Operator: Welcome to Bce's Q1 2016 Results Conference Call. I would now like to turn the meeting over to Mr. Thane Fotopoulos. Please go ahead. Thane Fotopoulos Thank you, Wayne.

Good morning to everyone on the call. With me here today as usual are George Cope, our President and CEO as well as Glen LeBlanc our CFO. As a reminder our first quarter results package another disclosure documents including today's slide presentation are available on BCE's investor relations web page. Also because of our annual general meeting that is taking place this morning, we'll be ending the call a little bit earlier than usual but so we'll take as my questions as time permits after George and Glen are done with their formal remarks. However before we get started I'd like to draw your attention to the Safe Harbor statement on slide 2.

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 are subject to risks and uncertainties. These forward-looking statements represent our expectations as of today and accordingly are subject to change. Results may differ materially. We disclaim any obligation to update forward-looking statements except as required by law, a discussion of these factors that may affect future results is contained in BCE's filings with both the Canadian Securities and Commission and the SEC and are available on our corporate website. So with that over to George.

George Cope: Good morning. Thank you, Thane and thanks everyone for joining us. I'm on to our first slide called Q1 review. In terms of the quarter, the service revenue growth of 1.3% and the focus on cost management delivered are very positive, 3.3% increase in BCE's EBITDA in the quarter and also very pleased with the margin expansion of the company to overall 41%. Pleased with our share of broadband customer growth in the first quarter with the 93,000 total combined wireless postpaid IPTV and Internet net subscriber additions.

Particularly on the Internet side where we saw pretty intense competition in the last month of the quarter and I'll comment on that in a moment and on the other results. The wireless financials once again were excellent with 5.3% service revenue growth and 6.9% growth in EBITDA and there as well driving margin expansion on service revenue to 48.2%. On the wire line side for the 7th consecutive quarter we had positive EBITDA growth of 1.3% as a 3.4% decline in operating costs also gave us the head way for an expanded margin to 42% providing us ample room for our fiber investments that we're making across our footprint. Media had a very strong quarter with EBITDA up 2.8% on revenue growth of 2.1%, driven also through some significant restructuring that we did in the fourth quarter and in fact even without some of the small acquisitions we had organic EBITDA growth. And I think most positively for us is the continued progress on the service agenda where we saw churn reduced on all three of our portfolios and we're doing that and as we go through the market with the investments we're seeing a reduction in our operating costs through those improvements.

All in all, all three of the divisions positive EBITDA growth in the quarter and that is our expectation on the entire year that all three groups should remain EBITDA positive in 2016. It's our 42nd consecutive year over year quarterly growth of EBITDA, and the first quarter although a long way from year-end is consistent with our dividend growth model and the strong cash flow in the quarter certainly gives us confidence that we're heading in the right direction for the continuation of our dividend growth model into 2017. Turning to wireless, very pleased with the 26,000 net adds in the seasonally slow quarter of the first quarter of wireless, roughly almost two times that of our largest competitor. Also pleased again as I mentioned that our churn improved in the quarter down to 1.15%, and we continue to see strong ARPU growth of 3.6% as customers continue to migrate to our LTE network and we continue to manage our prices in a disciplined way in the marketplace. Cost of acquisition was up 9.3% in the quarter, part of that driven through the postpaid mix which is really where our focus is and of course the weaker Canadian dollar.

I'm particularly pleased that our retention spend held stable year over year at 11.8% of service revenue even though we're within that 12 month window of the double cohort and we actually even holding that number constant as a percent of revenue were able to see a reduction in churn. Our LTE advance services are now available for 49% of Canadians providing speeds effectively of 25 to a 100 mig and at the end of the year 75% of the population will have that access on LTE advanced. Turning to wire line results, I mentioned we had 20,000 internet net ads in the quarter where we particularly saw it softer was on the wholesale side, in fact, a large part of the impact in the quarter was in the wholesale marketplace and so we're fine with it because quite frankly, the consumer direct retail is clearly where more of the margin is for us and you can see that in the note that residential ARPU was up 10% year over year on the Internet side. 48,000 IPTV net adds very pleased with and I thought it was important to draw out that we actually had 20,000 net ads in our footprint on TV and so the satellite launch is, obviously, a significant number of those were outside of the wire line footprint and we would expect that to continue. The [indiscernible] losses improved slightly year over year.

As I mentioned on the media side, strong quarter continued leadership in audiences both on the conventional side and for the Top 10 specialty channels on the English side of the marketplace. Very pleased that TSN, RDS were the most watched English and French language sports networks in the first quarter of the year given how important that quarter typically is in the hockey area where clearly that's not all of our content and also those two channels were number one in specialty in both of their markets. We rolled out TNM National as we talked about last quarter on March 1 so off to a strong start there and on to that that consolidation I think we literally added possibly one to three resources in terms of additional employees. In Canada, continue to lead quite frankly in North America from 4K production we're in a pretty good competitive battle, that's a benefit to the consumers where from our perspective we did our first broadcast in 4K of a raptor game in January. We carried the first ever North American award show broadcast on the June owes and also carried the masters in 4K.

We launched Crave Direct to consumers as everyone knows in January in the first 90 days we surpassed a 10,000 customers and we now know - into this quarter we have 100,000 paying subscribers as well. So off to a pretty good start there on the direct side and remember everyone that is to complement our distribution strategy through our RBDU [ph] partners who also sell the product in the marketplace. Turning to slide 8, just a couple comments on our continued service progress and we see two key things happening here. As we make the investments our service metrics improve and costs come out of the operation. Calls in the quarter down 14% year over year, cell service up 30 million visits in Q1 over a year ago.

Customer complaints down 16%. Importantly residential assurance down 29%, assurance would mean repairs and where we particularly are seeing the benefits are as we roll out five now that we’re at 2.5 million footprint the amount of work required on assurance drops significantly. Residential churn down on 5TV, Internet churn down and wireless postpaid churn down and our network ranked our wireless network ranked by three independent organizations as the fastest in Canada. So all of the customer service metrics moving the right way and the best evidence of that is quite frankly our reduction in churn across the board. With that, let me turn the presentation over to Glen.

Glen LeBlanc: Thank you, George and good morning everyone. I'll start with a quick high level review of our first quarter consolidated results on slide 10. A very solid start to the year with continued industry leading wireless financial performance, steady wire line growth and media results that contribute positively to the healthy EBITDA and free cash flow growth that was in line with our plan. Service revenue was up 1.3% driven by our growth services which collectively increased 3.1% year over year. Product revenues were down 31 million or 8% compared to Q1 of last year.

This is was a result of the intensely competitive promotional handset offers particularly in the second half of the quarter and reduced spending by large enterprise customers. Of course these revenues carry little to no margins. As George mentioned but I can't help but mention it again EBITDA increased a very healthy 3.3% on positive year over year growth, at all three Bell segments. This yielded a 1 percentage point increase in our consolidated margins to 41% which was driven by exceptional service revenue flow through to EBITDA of 112% that reflected strong wireless ARPU growth, higher revenue per household and well controlled operating costs. Adjusted EPS of $0.85 per share was in-line with plan up 1.2% year over year, while free cash flow increased $187 million to $418 million, even with a 3% increase in capital spending this quarter.

So overall, a very solid quarter financially and consistent with our guidance targets we provided in February underscoring our continued focus on subscriber profitability and price discipline. Turning to slide 11 on our wireless segment, service revenues was up 5.3% on strong data revenue growth and reflected increase smart phone penetration, greater LTE data usage and a higher percentage of customers on two year contracts. This drove industry leading ARPU growth of 3.6% making our 25th consecutive quarter of year over year growth, a truly remarkable achievement. Product revenue decreased 18.1% due to the competitor's rich promotional handset offers in the quarter that we matched and fewer year over year customer upgrades. Wireless EBITDA was the financial highlight of the quarter growing 6.9% and delivering a 70 basis point increase in service revenue margin to 48.2%.

This result was driven not only on the back of higher ARPU but also by spending discipline as evidenced by our operating costs which were essentially stable in the quarter, even with the 23 million in higher year over year spending on customer retention and CLA. Bell wireless also continued to contribute significantly to overall BCE free cash flow generation in Q1 with growth in EBITDA less CapEx of 6.8% as we maintained the industry best capital intensity ratio of 9.6% so another excellent quarter of wireless results for Bell Wireless leading the industry once again on all key financial metrics. Moving to Bell wireline on slide 12, similar to Q4, total revenues decreased 1.5% as our business markets results continued to be impacted by competitive pricing pressures and reduced customer spending on service solutions and data products as a result of the soft economy. This was partly offset by the solid performance of our residential services unit which delivered revenue growth of 1% our 10th consecutive quarter of year over year growth. Internet and TV revenue combined was up 6.6% in Q1 driven by continued market leading broadband subscriber growth and higher household ARPU.

However, overall growth was moderated by the cable competitors very aggressive promotional bundle offers and a $13 million loss in revenue from a sale of a call center subsidiary last September. Normalizing for this residential revenue was closer to 2%. Wireline EBITDA increased a steady 1.3% that represents our seventh consecutive quarter of positive year over year growth. This yielded a strong 1.1 percentage point improvement in margin to an industry best 42.1% reflecting a 3.4% decline in operating costs that was driven by savings from organizational restructuring initiatives taken in Q4 service improvements, as well as a Bell line integration savings that is now expected to reach a $150 million compared to our original estimates of $100 million. Turning to Bell media on slide 13, overall a very good set of Q1 results highlighted by the trifecta of positive revenue, EBITDA, and simple free cash flow growth.

Total revenue up 2.1% mainly on the strength of subscriber revenues and year over year growth of Astral out of home. Subscriber revenues increased 7% driven mainly by the national expansion of the movie network in Western Canada on March 1st as well as continued CraveTV and TV Everywhere growth. Consistent with our expectations advertising revenue was down a modest 1.6% in the quarter. Q1 performance was impacted by general office in the TV advertising market reduced spending by some of our key customer segments and stronger ratings for the World Junior Hockey in Q1 of 2015 as that event was held in Canada last year. Radio advertising also declined year over year due mainly to weaker economy in Western Canada, labor savings from work force reductions in Q4 moderated overall operating costs growth for Bell Media in the quarter contributing to a year over year EBITDA growth of 2.8% in Q1.

Slide 14 provides the main components of adjusted EPS which was in line with plan for Q1 at $0.85 per share higher EBITDA across all Bell operating segments drove a $0.06 year over year increase in EPS. Also contributing to higher EPS this quarter was the net pension financing cost which decreased year over year mainly as a result of the voluntary $250 million contribution we made at the end of 2015 that reduced our overall pension obligation. As expected, depreciation and amortization expense increased versus last year due to a higher capital asset base in service while tax adjustments totaled it $0.2 per share down from $0.3 in Q1 of 2015. Adjusted EPS also reflected dilution of around $0.03 per share this quarter due to the higher share count as a result of our 863 million equity issuance last December. Lastly, we also recognize a $0.08 per share market to market gain in equity derivative contracts resulting from the increase in BCE share price in the quarter.

However, this was offset by a foreign exchange loss on currency hedges related to our U.S. dollar denominated expenditures reflecting the recent share appreciation in the Canadian dollar. While those forward contracts do not qualify for hedge counting all of BCE's U.S. denominated spending for 2016 has been hedged and around well, the majority of 2017 spending has been economically hedged as well effectively insulating our free cash flow exposure from foreign exchange movements. Turning to slide 15, you will see that we generated free cash flow of $418 million this quarter, up $187 million compared to last year.

This was driven primarily by higher EBITDA, a positive change in working capital attributable to the timing of supplier payments and reduced inventory. And a decrease in cash taxes due to a lower final installment payment made for the 2015 tax year. This was partly offset by higher severance payments related to work force reductions in Q4 and higher planned CapEx. Free cash flow and working capital in particular tends to be seasonably low in Q1 so our performance this quarter was consistent with our planned cash flow generation and remains on track with guidance for the year. We also took advantage of the favorable market conditions and sustained low interest rates to further bring down our average cost of debt and to achieve preferred share dividend savings.

On February 29th, we issued 750 million 10 year debenture with an after tax coupon of approximately 2.6% that brought our overall average after tax cost of debt to under 3.4%, and effectively completed our 2016 refinancing requirements. The net proceeds of that debt issuance were used to fund the earlier redemption of MTN debt maturing in April and September savings BCE $6 million in annualized interest costs. With respect to our preferred shares we have reset the six dividend rate on two different series of preferred shares so far in 2016. That brought the average dividend rate on these two series down from 4.4% to approximately 2.7 resulting in an annual savings of around $10 million. We also will be resetting the fixed dividend rate on three other series of preferred shares having a total face value of $1.2 billion between now and the end of the year.

Finally, on pension, we have been very prudent in making voluntary contributions to our pension plans to address funding risk. Looking forward, an increase in interest rates in the range of 50 to a 100 basis points would effectively eliminate BCE's solvency deficit and significantly derisk future cash flow requirements of our DB [ph] pension plan. Should we get to a surplus position there would be an opportunity to reduce ongoing pension funding requirements by approximately 200 million as we would not be obligated to pay the annual current service cost of our plans. That would be a meaningful upside to free cash flow. To wrap up on slide 16 with another good start to the year, no fundamental changes in our overall outlook, a business that has competitively well positioned across all services and in all markets and our continued expectations for positive wireless, wire line, and media EBITDA growth for the full year of 2016.

I'm reconfirming all of our financial guidance for the year. That concludes our formal remarks and I'll now turn the call back over to Thane and the operator to begin Q&A.

Thane Fotopoulos: Thanks, Glen. So before we start the Q&A period I just want to remind participants of our time constraints this morning so please keep your questions short and focused so we can get to as many questions as possible. So Wayne we’re ready to take our first question.

Operator: [Operator Instructions]. Our first question is from Phillip Huang from Barclays. Please go ahead.

Phillip Huang: I'm pleasantry surprised how strong the wireless margin was particularly given how competitive March was and both your postpaid churns and net adds were quite strong. But my question's is actually on the fixed line side.

How would you characterize the competitive environment in Ontario and Quebec right now? Anecdotally we are seeing increased promotions from both Rogers and Bell [ph] in Toronto in Q1 and they seem to be extending into Q2. I was just wondering if you can give us an update on the development in Toronto and also whether the competitive intensity is similar in Quebec and then as a quick follow on to that question you have $800 million to a $1 billion in excess cash flow after dividends every year under what circumstances would it make sense to accelerate your fiber to the node expansion plans? Thanks.

George Cope: Certainly two very different questions. First of all, all the markets are clearly competitive in Quebec and Ontario and it certainly does move from quarter to quarter, sometimes month to month on the wire line, a business side between the provinces, while we clearly saw some very aggressive pricing in the market, my view is that's evident in the financial results of our peers and we're going to be competitive in the marketplace and we'll continue to make sure we're competitive in the marketplace and leverage our advantage of having the best cost structure in telecom in North America as a result of our service improvements. So for investors, we'll go at it any way in the marketplace required, having said that given we he have a superior TV product in the market it's evidenced by our TV growth.

We're going to continue to position that as the superior product in the market. With the pull through of the broad band as our strategy consistently what we have done in the last three or four years and of course, the broad band piece will become even a more prominent piece of our strategy as we continue to roll out one gig fiber rate to the home. So in terms of the second part of the question, I don't think - we're not looking at an acceleration of that program. We talked about this year's guidance still keeping the capital intensity at approximately the 17% across the three groups. If we saw an acceleration in demand, that would he be very positive.

Of course, that would take additional capital as well so it would be hard for me to see an acceleration in footprint. Having said that, if the metrics were as strong as we've seen in some of our Bell line territories we have really mature fiber markets, then clearly we could look at something but currently that's not in our plans or

outlook
Operator: The following question is from Simon Flannery from Morgan Stanley. Please go ahead.

Simon Flannery: George, you were talking about your leadership on 4K and a number of other initiatives, LTE advance etcetera, how about 5G? We're hearing a lot more about potential applications for fixed, wireless etcetera, what are your network guys saying about the potential there?

George Cope: I would say from our perspective, as I think most of the analysts have read and even some of our peers around the world, it's certainly early days where part of what's going on a global basis when we look at it, the rollout now of the - and has LTE and the speeds we're providing and the fact that we've done fiber back-haul to literally all of our cell sites we think we're extremely well positioned. The commercialization of 5G, the debate will go on as to when will we really see that, is it 18, 19, 20, 21 it's a hard read at this point.

As seen in Canada, Canada continues to lead the world on wireless technology. So if it becomes commercially something that is in the marketplace, clearly it's something that we will look at and, of course, on the small cell capability if you look at our footprints and our history of our other assets, we think that will be a very important strategic piece for us of having a wire line and wireless integrated company as 5G evolves and of course, one of the - [indiscernible] is 5G allows - Wayne I'm sorry I think we can hear you can you put your phone on mute. Thank you. On the other issue on 5G it looks it will be an incredible technology in the rural markets but the challenge is there of course is can you get to the cell site density, so we'll see over the years on that but thanks for the question.

Operator: The following question is from Greg MacDonald from Macquarie.

Please go ahead.

Greg MacDonald: So this is the first quarter in a couple of years that we've seen albeit a slight decrease in gross ads on the postpaid side on a year over year basis. So, I'll acknowledge George you commented certainly that 1Q is a lower quality read through and we actually did see some price increases go through in the quarter so that could be the impact there alone. We also saw a decrease in churn in the quarter and so I guess as a broad question what I'm going to ask is have we kind of seen the top of industry gross add growth which is going to force a shift toward churn as a greater focus for net add, gross overall and if that's the case, it still seems like you guys have some downside on churn as a stretch target is it safe to say that a sub-1% postpaid churn target is something that you could achieve over time? Thanks.

George Cope: If we did achieve post 1% the financial results would, obviously, be materially different than they are now and as you know, they're top in North America in terms of what we're performing on.

My perspective on the gross adds and we were down 1.3% year over year and I think we did see some gross market share in March move but we can see that we're able to manage our churn down. I do think though philosophically it's about managing the basis that you now have relative to 26,000 is a nice net ad number but on the perspective side of our base clearly our investment has to be on how do we drive the churn numbers down. I think geographically one of our challenges of course is some of our markets have more players in some of our larger markets and it makes it a little trickier to get it down to sub-one. I will tell you that the Bell brand is quite frankly down 1% on postpaid churn so it again gets weighted in a little bit by the numbers that we do through our positioning of the Virgin brand

Greg MacDonald: And just as a quick follow onto that, is it safe to say the majority of your gross ads on postpaid are the Bell brands still or has that now shifted toward the fiber brands?

George Cope: It's actually been both. We don't split it out.

We clearly see quarter to quarter different times the year where the consumer market will very stronger take a fourth quarter and there's no doubt there's a waiting some of the Virgin type brands and that type of mix in the Q4 and the first quarter where you don't see as much consumer activity our core differences will be a little bit more B2B focused and that's literally a 100% Bell brand.

Operator: The following question is from Maher Yaghi from Desjardins Capital Markets. Please go ahead.

Maher Yaghi: George, I wanted to just go back to a comment you made on the wholesale side on Internet. What's driving this pressure, is it Rogers giving away more discounts to wholesalers to get more subs, I mean what's really the bottom line of those sub-losses because likely you get a better profitability on your residential side with multiple products sold to them rather than just Internet or home phone; right?

George Cope: Yes.

I mean it was a competitive market in the quarter on wholesale. We won't comment much more on that - the ARPUs for us on a wholesale customer because we're wholesaling it would be 50% of our retail and so clearly different in the churn metrics on wholesale are so dramatically worse relative to retail and of course, there's no bundling of the product. So that's one of the reasons I talked to it on the quarter that - and why our consumer revenue that Glen talked about was so strong, because really it's broad band growth of IPTV and Internet on the retail side where our focus has to be. We like getting wholesale customers but clearly we saw an impact in the quarter on that.

Maher Yaghi: How much more should we expect to see on that side in the next couple of quarters and maybe what's really driving this shift?

George Cope: Yes.

You know it's a hard one, one we wouldn't give a forecast. You know, it does seem to bounce around quarter to quarter. I think sometimes the wholesale market will, quite frankly, will see churn probably go up at cable and go down at us and goes up at us and down over there. It can reverse back and forth we have some quite frankly some switching going on by wholesalers in the marketplace. We've seen that for a period of time and we certainly saw it go against us in the first quarter.

But the money for return on investment we need for the country to have on broad band all comes from having a retail structure in the marketplace and the bundles are able to get to the consumer.

Operator: The following question is from Drew McReynolds from RBC Capital Markets. Please go ahead.

Drew McReynolds: George just on the wire line side, I saw a little bit more revenue pressure in the quarter but, obviously offsetting that with pretty impressive cost efficiencies, can you just comment on the key drivers of those cost efficiencies and are they changing and how is home fiber feeding into your ability to take cost. Thank you.

Glen LeBlanc: So on the revenue side important again for everyone to separate the hardware, obviously, from the service revenue as Glen talked, the hardware really there's nothing in it for us other than pulling through some additional services. And then on cost structure it's across the board. We really do see as we’ve talked about the telco of the future and what we're evolving to with the service tools we are putting in the hands of our customers and what fiber is doing in terms of what we call dropping the assurance rate which again for everyone on the call will be the amount of times when your truck rolls for repair. Those numbers continue to drop and as a result our costs continue to drop. And as you improve service of course the calls in the call center go down and satisfaction goes up so it's a very interesting circle if you will in terms of what we're seeing.

As a result our costs continue to come down to deliver the service which is what we need in order to make the CapEx investments we're going to make on fiber and I think what to me was most encouraging was the margins we're producing give us the head room for the capital intensity levels we need to make sure the country has the best broad band networks and that's what we're positioning on. But we think we - you know, the margins are hard to say they'll go up but what's most important is the cost of delivering some of the services come down as we improve service to the customer and this is really the fourth or fifth year in a row we have seen this. The last thing I should add as Glen mentioned we are seeing continued benefits of the Bell Aliant Bell coming together just synergies across the board and not necessarily all on the East Coast but consolidating operations no matter where they're consolidated seeing the benefits there as well.

Operator: The following question is from Batia Levy from UBS Securities. Please go ahead.

Batia Levy: I want to ask something about the wireless segment, retention expense came down but cost of acquisition went up a little bit as you mentioned there were more handset promotions toward the end of the quarter. How should we think about those two levers into the second quarter?

George Cope: The retention spend was actually an absolute dollars it was up but it was flat as a percent of revenue at 11.8 so I think that's a fair if you look at our year over year numbers you might almost want to model in last year's. But as a percent of revenue so we tend to think if our revenue went up 50 million in a quarter, our service revenue then we multiply that by roughly 12% in the quarter and say that's where you might see the increase in retention we're hoping we can keep it there. It can get pretty volatile. The cost per gross add was up 9.3% year over year.

And that is really two things. We had more postpaid gross sales than pee paid which is a much higher cost for us and secondly the dollar had an impact on our subs at this. So that actually went up but I think you had mentioned it went down so I want to make sure we're clear but the total gross sales of postpaid dropped 1.3 it wouldn't have been enough to take down our total COA. If you take COA and COM, the $23 million that Glen talked about out of our cost of wireless or other operating costs clearly dropped year over year pretty significantly.

Batia Levy: Right.

COA I noticed that it went up and you mentioned there were more promotions also from competitors. Do you expect that to continue into the second quarter?

George Cope: For my lifetime.

Operator: The following question is from Jeff Fan from Scotia. Please go ahead.

Jeff Fan: I want to clarify the residential ARPU was up 10%, great number.

Just wondering what the absolute dollar is roughly on the residential ARPU and then just a quick follow on related to that. You're overbuilding fiber in a lot of your fiber to the note areas. I'm wondering given the early results whether you're getting the incremental ARPU you think is necessary to kind of drive the return on fiber and also, you know, along with that on the ARPU side whether customers are actually looking at a double play service on STPH versus a triple play just because there's less emphasis on phone and if they have a big broad band - they probably don't need TV. Just wondering if you can comment on that.

George Cope: Yes.

A couple points, one we're not going to give our ARPU out on the consumer side. We just don't disclose that. Secondly, on, you know, we have the align experience Quebec City experience most people as we said a dramatic number always taking a double and on the triple it's about 63% in total. And then in terms of the return on capital, we're just going where the market's going this debate seems to be raised over and over. With our margins, capital intensity numbers, our free cash flow, EBITDA minus - is by far the most superior in North America.

And as a result, for our shareholders, it gives us the read room to go where the market's going which is going to be one gig services. And as we roll these services out it will is your pass 1 gig services and our competitors will have to make capital investments to do those but the metrics we get out of the markets we've done fiber are lower churn than - lower assurance levels better ARPU and better penetration of subscriber results. And then all of our markets where we're FTTN or FTTH we’re positive RG use every single quarter and so the investment to us is, quite frankly a bit of a no-brainer.

Operator: The following question is from Aravinda Galappatthige from Canaccord Genuity. Please go ahead.

Aravinda Galappatthige: Obviously, a little while ago we Raj has made the decision to sort of take sports net over the top. You know, with respect to TSN, what variables would you be looking at in terms of making a similar decision, I was wondering if you can share the pros and cons in your mind with respect to that. Thanks.

George Cope: I think it's a bit of a strategic careful so be careful we can clearly watch what was done by our competitor. We clearly watched the pricing on that which I think is, obviously, something that was thought through in the marketplace and we see that.

We at the moment are very, very happy with the distributors we have carrying our product and the method they distribute the product and so at the moment we're not looking to compete with our distributors on TSN and we think that's a competitive advantage not competing with our distributors who are really, really important customers for us. As the market evolves, we'll evolve with it and clearly that's one of the as buying preferences evolve over time and as we build fiber [indiscernible] clearly some of our core products have the ability to go into that OTT world we started that with our Crave product and, you know, that's really what that approach has been.

Operator: The following question is from Richard Choe from JPMorgan. Please go ahead.

Richard Choe: I wanted to follow up on the churn question.

It's the first time in about a year where it's actually been down year over year versus being up over 10 basis points generally. Are we through the double cohort or is it more effective retention or is it just lesser customer activity, any color on that would be great. Thank you.

George Cope: You know I actually think the three you hit are kind of what we saw happen I mean double cohorts further along, first quarter does generally just the amount of consumer activity can be less so you get the benefits of that and clearly these services that came out from three independent organizations that said our network's the fastest in the country, that's real and it helps you keep customers and you know we are the only I think other than two other countries in the world, Bell's the only one who has Cat 9 devices that means they're the fastest phones available literally on the planet and that leadership of course we use on our sales and we think that’s part of what we get in seeing some improvement in churn. I mean I don’t want to overplay that wasn’t dramatically improvement but it's certainly moving the right direction.

And, you know, the one other comment just as we earlier were talking about the fiber, we do have the fiber to the cell sights build out as well and, of course, those fiber investments to us through the home are all a function of what we're doing now in the urban markets because we got to compete and the expansion of that in the rural markets also become a function of making sure we have the right environment from a wholesale pricing perspective and everyone knows we've appealed that particular decision to [indiscernible] on the response to that decision.

Operator: The following question is from Rob Peters from Credit Suisse. Please go ahead.

Rob Peters: I just wanted to kind of circle back. We've seen pick and pay in the market for almost two months now.

I'm just curious what the initial feedback you've seen on both the wire line and media side of things particularly some comments have indicated that if they have - if you have seen subscribers switch to pick and pay it's generally been a very niche segment and they've been focused not necessarily on the sports side of things. I'm wondering if you've seen that from any subscriber that you may see move over to the plans as well as kind of what you’re seeing on the media side of things.

George Cope: I think you're correct. It's a service we have in the marketplaces but when you start customers start to build packages up, the way we've packaged our traditional products is trying to meet the demands of customers anyway so it has been generally a niche product so far and not really that significant an impact on Bell media or overall, and Bell is just an additional choice and some customers want that kind of price point that we brought to the marketplace to have that capability to purchase those products but people's appetite for all the different media content we have now is really what's driving it. It is worth noting the Canadian TV ARPU on general in the country $60 or $70 does run about $20 less than in the U.S.

already. And so we have a very competitive TV market and sometimes, you know, that's lost in all this that Canadian's are paying roughly $20 less a month for their TV billing in the United States based on publicly available ARPU under the U.S. TV providers.

Operator: The following question is from Bentley Cross from TD Securities. Please go ahead.

Bentley Cross: I wanted to ask a question on acquisitions, obviously, we continue to see Bell lines synergies run through. Just curious if you guys follow the same play book how far astray might you be willing to go from the quarter next time around, obviously, in the U.S. we're seeing those guys go further and further from conventional telco and wondering what your thoughts are there. Thanks.

George Cope: We think there's ample opportunity in Canada with our fiber investment and our wireless business.

So our focus is head down making sure our shareholders are executing well in Canada.

Operator: So the last question will be from [indiscernible]. Please go ahead.

Unidentified Analyst: Just curious. As you think about ARPU performance in the postpaid market over time, what's your internal methodology to think about how that can grow? Do you look at it as an inflation business, is it based on some analysis of usage that you do and you can see where the average customer's going maybe versus your most active customers.

If you can give us some insight into how you look at that and then is there any updates on other regulatory issues that are going on in Canada, you know, for example the wholesale rate in wireless or on the fiber side. Thank you.

George Cope: So on the first one the one regulatory file as people I think know but just in case they don't we have made an appeal to Canada on our fiber investment asking that they not be mandated resale to the new fiber network that we're building and we're awaiting that response from Canada [ph] over the next number of months whether or not they'll send that to the CRTC and ask them to take another look at that because quite frankly I think most people understand the urban investments would happen but on a national broadband strategy that we're focused on in the country pretty hard to get returns on capital appropriate for the people on this phone and rural markets if you're also forced to resell those services. So that's a decision we're watching and we'll wait to see how that comes out. And I'm sorry.

The first question was?

Unidentified Analyst: On the ARPU side when you think of modeling your postpaid ARPU, the analog that you use for that whether it's an inflation based methodology or if you look at your early adopters in terms of usage and think about how your average customer's going to migrate towards that over time.

George Cope: Yes I'd say certainly less on the inflation side, a lot of our pricing strategies are now more of larger bundles and less variable out of the bucket for the customer base and particularly that's also as we see the movement to Wi-Fi making sure we're getting the right ARPU returns from a fixed perspective from the investments that we're making. And then what we really just continue to see is from a Bell perspective usage growing as customers migrate to these advanced networks. That’s why we're trying to lead on LTE advanced because we see a higher usage and secondly in our positioning in the marketplace on the business market side and the SB market making sure we're gaining market share there where actually the ARPU and term metrics can be stronger so that's really what our focus is. We don’t really particularly do it so much on a CPI basis certainly not yet, of course if the industry starts to mature and we're getting there and will probably be a spot we'll start to look at.

Thane Fotopoulos: Great. So thank you to all who participated this morning I'll be available after later today after 8 for any follow-up and questions and clarifications. So thanks again. Have a great day.

Operator: Thank you.

That concludes today's conference call. Please disconnect your lines at this time.