Executives: Thane Fotopoulos - Vice-President, IR George Cope - President and CEO Glen Leblanc - Chief Financial

Officer
Analysts: Richard Choe - JPMorgan Simon Flannery - Morgan Stanley Greg MacDonald - Macquarie Maher Yaghi - Desjardins Capital Market Phillip Huang - Barclays Batya Levi - UBS Securities Jeff Fan - Scotiabank Aravinda Galappatthige - Canaccord Genuity Drew McReynolds - RBC Capital Markets Adam Ilkowitz - Citi Rob Goff - Echelon Wealth

Partners
Operator: All participants please standby, your conference is ready to begin. Good morning, ladies and gentlemen. Welcome to the BCE First Quarter 2017 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 everybody on the call. Joining me this morning as usual are George Cope, BCE's President and CEO; as well as Glen Leblanc, our CFO. As a reminder, our first quarter results package updated 2017 financial guidance targets and other disclosure documents, including today's slide presentation are available on BCE's Investor Relations webpage.

In addition for today because our annual general meeting that will be taking place later this morning in Ottawa, we will be ending the call a few minutes earlier than usual, so we will take as many questions as time permit, after George and Glen had completed their formal remarks. Before we get started, I want to draw your attention to the Safe Harbor statement on slide two. 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, subject to risks and uncertainties. These forward-looking statements represent our expectation 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. Factors that may affect future results are contained in BCE's filings with both the Canadian Securities Commission and the SEC and are also available on our corporate website. So, with that, over to George.

George Cope: Thanks. Good morning, everyone.

Thank you for joining us. We turn now to the presentation. The company had 2.9% service revenue growth in the quarter and as people would have seen this morning driving a 2.4% increase in BCE’s adjusted EBITDA. I think it’s worth calling out though that we were impacted also by about $35 million of one-time regulatory impacts, so really quite a strong financial quarter, considering that impact to our EBITDA on a year-over-year basis. Wireless continued to have excellent financial performance as can be seen in the metrics and strong wireless postpaid growth.

Our continued disciplined focus in the marketplace drove 37,000 Internet and IPTV net adds and we enjoyed our 11th consecutive quarter of wireline adjusted EBITDA growth. We announced the continuation of our fibre rollout with announcement in the first quarter of a plant to build out the City of Montréal and our Media business had actually quite a reasonable quarter with one impact, which Glen will address, which was the Super Bowl sim-sub decision that had an impact on the EBITDA of our Media business. And most importantly strategically in the quarter as we had forecasted, we were able to close successfully the MTS acquisition. We just quickly look at the MTS acquisition strategically for us and it moves our ILEC footprint now to 73% of Canadian households or 11.2 million of the 15.4 million households in the country. And also if you look at household starts in Canada at about 200,000 a year, that’s about 150,000 household starts in our footprint now.

And of course, therefore, over a five-year period will be closed to 12 million households covered. We have 3.7 million Internet subs today, so quite a broadband opportunity for us going forward with this acquisition. We turned to looking at the scale we’ve been unable to achieve by adding MTS to our organization. We picked up about 700,000 wireless, Internet and IPTV subscribers. We’ve become the number one wireless provider in the province of Manitoba.

We’ve added 6.6% to our Internet base and over almost 8% to our IPTV customer base. We expect the transaction will be free cash flow accretive this year and Glen will address that in his presentation. We also have increased our synergies, as we reported earlier from expected $50 million to $100 million, and those have been driven by completion of our due diligence, which showed additional opportunities. I’ll just call out one particular area, being a national carrier, of course, we can now move traffic that would have upper turn now on our competitor’s networks, which will now be on the Bell network, a good example would be we have already moved all of the MTS wireless customers. We would have rolled on our largest competitor in Canada, now roll on us and that was done within the first few weeks of the integration.

Overall the network, traffic moving between wireless from wireline will generate about $25 million of the synergies within the first 12 months. And in total, of course, the transaction being cash flow accretive will continue to drive our industry leading free cash flow margins, continuing to contribute to the capital required for our fibre build and dividend growth strategy. Turning to page seven, service revenue growth of $127 million in the quarter, was actually of the highest absolute dollar growth in the history of Bell mobility and that was driven through the subscriber growth and the continued increase and strong average revenue per customer. We saw an uptick in usage year-over-year on our LTE subscriber base of 37% and the speed that we’re bringing to the marketplace is clearly now driving usage and that continues to drive increase in ARPU, increase in revenue and as you can see an increase in net adds, up 38% year-over-year. Our churn would have been flat year-over-year, not for the remaining removal of corporate customer that we talked about in the fourth quarter.

That customer was an ARPU of about $30, but did impact our churn on a year-over-year basis and we generated a simple free cash flow margin in the wireless business of 38% in the quarter, really quite a strong financial results for the organization. Our wireless network investments continue. At the end of the year, we had 98% of the country covered with LTE. At the end of ‘16, we were 74% on LTE Advanced and as we exit ‘17, 87% of the country will have access to LTE Advanced services. We also just last week announced as the first carrier in North America to deliver Quad Band speed and so combining now four carrier -- combining four different spectrums together combined with what is known as 256 QAM technology will give our subscriber speeds on average of between 22 megabits and 174 megabits, and speeds actually up to as much as 750 megabits.

We already have 650 sites deployed for the new Galaxy S8 and S8+ product enables this technology to work, so we will clearly have the fastest wireless network in the country and in North America with a rollout of this handset in this new technology. As I’ve reported before, 95% of our cell sites now have high-speed fibre backhaul, so there is no bottleneck there and as we look through ‘17, we will through this year and exit the year with the fastest wireless network in all major cities in the country. Turning to the wireline, in the quarter, we added 37,000 Internet and IPTV net adds. Internet net adds were 15,000 in total, 24.3000 net adds in our IPTV footprint. On the IPTV side, we added 22.4000 net adds, clearly seeing a maturing as our footprint expansion is not as aggressive as it had been in the past and absolutely seeing some of the TV subscription OTT substitution.

We will address the OTT substitution market in the coming weeks with the new innovative products for the marketplace, which the street will hear about over the next four weeks to six weeks. Turning to our investment in fibre, just an update for our investors, in the quarter we announced an $850 million investment to deploy fibre in the City of Montréal. That is 1.1 million businesses and homes, positive from an investment perspective. This is a unique build as it will be 90% aerial and only 10% buried versus Toronto, which has a much more buried versus aerial ratio relative to the Montréal situation. In terms of Toronto, we are on track.

We will have the majority of the city completed by the end of this year, so we’ll have the ability to mass market fibre in the Toronto market as we enter 2018. Just a few metrics for our investors who have been asking us, in the quarter, about 40,000 subscribers were added to our fibre footprint. If we are in the line where I hope you will be, we should be close to about a 1 million customers on our fibre footprint by the end of the year. At this point, over 60% of those customers have over 300 meg services, by the summer of 80%, we’ll have 300 meg plus services and 100% will be over 150 meg and we’re seeing an average ARPU on that customer base of about $125 and that’s a blend of those who would have TV, Internet, some would have triples, some would have simply even TV with Internet in their bundling. So that’s where we are in terms of the fibre, but very positive quarter and we can see the momentum and there is absolutely no doubt in our mind the launch of fibre in Toronto will be a game changer for our company going forward.

Turning to Media, reasonable quarter, continue to be number one in conventional TV. Also from a sports perspective saw 13% increase in viewership at TSN, driven by the success of the Toronto Raptors and also on the Tennis side, you see a 45% increase year-over-year. So, some strong results there, continuously growth on CraveTV and I’ll turn it over to Glen, and he will take you through some of the financial impacts of the Super Bowl for us in the quarter. With that, let me turn it over to Glen.

Glen Leblanc: Thanks, George, and good morning, everyone.

Let me begin with the quick summary of our Q1 financial results on slide 13. We had a very solid start to the year, reflecting Bell’s teams consistent execution of our focused commitment to deliver profitable subscriber acquisition, control our costs and invest in advanced broadband networks to drive future growth. Although, the MTS acquisition was completed on March 17th, MTS financial contribution in Q1 was relatively smaller in terms of revenue and EBITDA, and therefore, immaterial to overall consolidated and operating segment results this quarter. Service revenue grew a very respectable 2.9%, led by the accelerated topline growth in wireless, higher year-over-year wireline residential revenue in the quarter, which saw a notable step-up in the competitive intensity and positive growth for Bell Media, adjusted EBITDA also up a healthy 2.4% yielding a higher year-over-year margin of 41.1%. This was achieved despite the $35 million George mentioned earlier in regulatory related impacts absorbed in the quarter from wholesale Internet tariff free rates, mandated customer refunds for cancelled services and the loss of simultaneous substitution advertising rates for the Super Bowl.

Higher adjusted EBITDA drilled 2.4% growth in adjusted EPS to $0.87 per share and a 17% increase in the free cash flow, which grew $489 million this quarter. The statutory EPS was down 4% over last year to $0.78, year-over-year decline was mainly the result of higher severance, acquisition and other costs related to the MTS acquisition. That does refer overall consolidator for financial results. So, let me turn to our operating segments starting with wireless on slide 14, another excellent quarter financial performance with service revenue that continued to trend higher, increasing 8.0% on the back of the strong ARPU and postpaid subscriber growth, as George detailed earlier. This drove adjusted EBITDA growth of an impressive 7.5% and high service revenue margins of 47.7% even as we spend $35 million on postpaid customer acquisition and retention compared to last year.

This higher spend was principally the result of a sustained high level of market activity in the quarter, as well as higher handset prices that reflected a richer smartphone device mix and the impact of the weaker Canadian dollar, which accounted for approximately 30% of that increase. Lastly, in terms of cash generation, Bell Wireless continue to provide a strong contribution to BCE consolidated free cash flow, delivering growth and adjusted EBITDA less CapEx of 13.9%, even as we continue to spend significantly on carrier spectrum aggregation and deployment of small cell technology to further enhance our network leadership position. Moving to the wireline segment on slide 15, we saw a notable improvement in Bell’s wireline service revenue performance trajectory in Q1, increasing 0.7% year-over-year, compared to a 0.3% decline last year. This represents our best results in almost two years and was realized despite the significant competitive and regulatory pressures that existed in the quarter. Our residential services unit led the way with 6.3% year-over-year increase in household ARPU driven by Internet and IPTV customer growth and pricing discipline.

Overall, business market performance also improved with lower year-over-year rates of revenue and EBITDA decline supported by our Q9 acquisition. However, reduced customer spending by large enterprise customers on core connectivity, business service solutions and data products due to the slow economy continue to cause some variability on overall results, as did the lower CRTC mandated wholesale Internet rates, which negatively impacted our wholesale performance once again this quarter. With respect to operating profitability, wireline adjusted EBITDA increased 0.4% on a 0.5% reduction in operating costs even with $19 million in year-over-year at regulatory impacts absorbed in the quarter. Lastly, our wireline adjusted EBITDA margin expanded a further 20 basis points to an industry-leading 42.3%, yielding a best-in-class simple free cash flow margin, the flow through margin of 19%, which provides us ample operating leverage to self-fund our broadband fibre build-out going forward. Turning to slide 16, revenue was up 1.3% in Q1 on the strength of higher year-over-year subscriber revenues, which grew 10.1%.

This was driven by the national expansion of the Movie Network contract renewals with several large TV distributors, as well as the continued CraveTV and TV Everywhere GO. Advertising revenues were down 4.7% in this quarter, mainly as a result of the declines in conventional TV and radio. Consisting with ongoing industry changes and consumer media viewing behavior, the overall advertising market remained soft. Additionally, advertising demand in Q1 was impacted by the CRTC’s decision to ban simultaneous substitution for the Super Bowl, which resulted in an estimated loss for us of around $11 million. This was partly offset by improved specialty sports and news channel performance compared to last year, as well as continued strong growth in our outdoor advertising.

Mainly as a result of the flow through of the loss Super Bowl revenue, Bell’s Media adjusted EBITDA decreased 7.6% or $11 million. Normalizing for this impact, EBITDA was flat year-over-year. Slide 17 provides a breakdown of the parts of adjusted EPS for Q1, which was $0.87 per share or 2.5% higher year-over-year. Higher adjusted EBITDA contributed $0.04 to EPS growth. Also contributing to the higher EPS this quarter was lower year-over-year preferred share dividends, reflecting the impact of lower interest rates on rate resets and floating rate payments, as well as our higher other income that was driven by a pickup in equity income from one of our minority interest investment and mark-to-market foreign exchange gains and currency hedges.

And in addition to all of our U.S. dollar denominate spending for 2017, our U.S. exposure for 2018 has now been economically hedged through Q3 2018 at a blended rate of $1.30. These factors were partially offset by higher year-over-year depreciation and amortization expense, and increased the net interest expense reflecting more long-term debt outstanding due to our MTS acquisition. Moreover, there were no favorable tax provisions adjusted for this quarter compared to $0.01 per share last year.

Lastly, adjusted EPS growth was impacted in Q1 by a higher share count due to the issuance of 27.6 million new BCE common shares as part of the consideration for the MTS acquisition. This resulted in a dilution of approximately $0.01 per share this quarter. Turning to 18, we generated free cash flow of $489 million this quarter, up 17% compared to last year, driven by higher adjusted EBITDA and improvement in working capital, lower severance paid as last year’s results reflected payments related to workforce restructuring initiatives undertaken at Bell Media and Bell Wireline in Q4 of ‘15. We also took advantage of favorable market conditions and a sustained low interest rate environment during the quarter to successfully complete a $1.5 billion dual tranche public debt offering on February 27. The proceeds, of which were used to put in place permanent financing for the MTS acquisition.

This brought down our weighted average cost of debt to 3.23% from 3.33%, while maintaining our average term to maturity of just over nine years. This quarter’s free cash flow result also reflected a planned step-up in cash taxes due mainly to higher installment payments for ‘17. However, this amount did not reflect the benefit of MTS tax loss carry forwards that we intend to utilize over the next few years starting in Q2 of ‘17. Finally, turning to our updated financial guidance targets of 2017 as summarized on slide 19. With the inclusion of MTS in our wireline and wireless operating results for essentially nine months this year, we are increasing both BCE’s consolidated revenue and adjusted EBITDA guidance for the full year 2017 to a range of 4% to 6%.

This increased adjusted EBITDA guidance also reflects the benefit of approximately $30 million in operating synergies for 2017. Obviously the $400 million of annualized run rate saving is going to take a few years to achieve. Our adjusted EPS guidance for 2017 is being lowered to a range of $3.30 per share to $3.40 per share from the $3.42 per share to $3.52 per share previous. To reflect an approximate $0.04 non-cash charge for the amortization of fair value increment of the acquired MTS assets that related mainly to customer relationships, as well as the dilution of around $0.10 per share from the BCE common shares issued to MTS shareholders in March. Lastly, as I outlined last May, when we announced the acquisition, MTS will be immediately accretive to BCE’s free cash flow, benefiting from both sizeable operating synergies and tax losses, with a total estimated value of $300 million, of which $60 million will be utilized this year.

However, we expect to incur cash severance and other MTS related acquisition and integration costs this year. This, in addition to our planned CapEx spending in Manitoba, as well as higher cash interest payments from more than $900 million in MTS debentures and short-term debt being assumed, we’ll moderate MTS’ overall contribution to BCE’s consolidated free cash flow growth in calendar year ‘17. As a result, taking all of these puts and takes into account we are increasing our free cash flow guidance for 2017 to the range of $3.375 billion to $3.55 billion. That’s strong growth of approximately 5% to 10%, which fully supports our 5.1% dividend increase and our $4 billion capital investment program for ‘17. Slides 20 and slide 21 are for your reference, they summarize the key financial assumptions underpinning our revised guidance targets.

And with that, I’ll turn the call back over to Thane and the operator to begin our Q&A period.

Thane Fotopoulos: Great. Thanks, Glen. So, before we start the Q&A, just want to remind participants of our time constraint this morning, so please keep your questions as brief as possible, so we can get to as many of you as we can. Wayne, with that, we can take our first question, please.

Operator: Thank you. [Operator Instructions] The first question is from Richard Choe from JPMorgan. Please go ahead.

Richard Choe: Okay. Thank you.

Just wanted to kind of get a little bit more color on the competition from cable, it seems like it’s been very robust in terms of the video and broadband side. Has that abated at all and how should we think about video and broadband going forward as you go down to Toronto and Montréal?

George Cope: Great. Thanks for the question, Richard. First of all, I’m trying to, with investors give you a little bit of insight of what’s happening in the fibre territory and you can see quite strong results there. In terms in the quarter, yes sir, we’re -- clearly as we indicated in some of the notes, very aggressive acquisition offers in the marketplace by our competitors, plus repositioning in advance of the technology advantages we will be bringing to the market, that maybe what we’ve seen.

We have seen a little mitigation or change of some of those programs in the marketplace as we’ve entered into the second quarter and saw some pricing changes in the marketplace, as well as we enter into the second quarter. So, we’ll have to see how that bodes for results going forward. But clearly, it was an aggressive quarter, interesting for us. We saw gross adds actually up in some of those segments, but actually still had the net add results what we reported this morning and we think that was some of the pricing in the marketplace. But outside of that very positive overall for the company with the direction we’re in and the results we’re seeing where we’re making the investments to set us up for the future, but thanks for the question.

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

Simon Flannery: Okay. Thanks so much.

Good morning. George, perhaps, you could just update us on the MTS acquisition so far the integration and perhaps you could compare it with where you are at this stage on Bell Aliant. And given this deal, where do you think you are in terms of your assets, we’ve seen a lot of deal making in the U.S. more to come. Do you feel like you have what you need to be successful over the long-term or might we see more acquisitions, more divestitures going forward?

George Cope: Yeah.

So, I’ll, it’s always hard to comment on M&A. Well, we would say from our perspective it’s now about executing on this strong asset pool that we have from one vertically integrated and two, now as I talked about the footprint that we picked up as a result of MTS, which benefits not just our consumer business, but our B2B business, we’re off in that track before it would have been obviously with a different carrier. So, that piece strategically, I think, we’re well-positioned with the assets that we have in the marketplace. Let’s not to comment on the future but we know now it’s about executing what we have here. And on the -- it’s early days on the integration, but we have done a number of transactions as people know over the years and probably as a result we have a somewhat of a rhythm to what we want to have happen.

We’re off to the race there with good strong start. I mentioned some of the early benefits already, the fact is that in the first few weeks, we migrated the entire subscriber base to be on our network versus our competitors, picks us up some early synergies, there’ll be other benefits like that going forward, as wholesale agreements that MTS would have obviously purchased it’s access from Zayo in the past, as those contracts from dual cores will migrate them to Bell and then services even in the province of Manitoba, that MTS may have purchased from other carriers, such as Zayo will obviously will make sure, we supply those through Bell. So those are some of the early benefits, and of course, the other side from our perspective is to bring to Manitoba all the benefits of our Fibe TV product, quite frankly that product was -- it’s probably fair to say not invested as robustly as our product portfolio has been, so we’re bringing that to the marketplace. We’ll will be taking LTE Advanced to that marketplace and so we’re quite positive on the positioning and in terms of delivering on the expense pieces, we’re obviously 100% confident in that, because we’ve done this many times in the past.

Simon Flannery: Great.

Thank you.

Operator: Thank you. The following question is from Greg MacDonald from Macquarie. Please go ahead.

Greg MacDonald: Thanks.

George, I’d like to jump back to video for a second if I could. You made some comments on competition and thanks for that. You also made some comments on an OTT product that you have prepared or is coming to address that risk. Is there -- is that to imply that there is growth in OTT cord cutting type activity. Can you comment what’s happening overall in that segment? And then, as well on the satellite side, so we’ve looked at sort of high 30,000 declines per on subscribers on a per quarter basis.

Could you comment on what the current urban versus rural mix is there? There could be some mix change as time goes on where we’re assuming that you are losing urban customers and I’m wondering at some point, do we get some stability or greater stability in that subscriber number as time goes on? Thanks.

George Cope: Yeah. Let me start with that the end of the question. I would agree with your view on that. I don’t have at top of head, I certainly think happy to give a little bit of color to you on some of that.

Clearly, it’s as urban footprints have been more competitive with other services, ultimately our satellite business I’ve said in the past will be more in the rural markets and at some point, we would expect some stabilization of that, at least a reduction in the rate of decline. And so we are obviously aren’t seeing it yet, but you would think that’s what, what happened and that would be our expectations would align with yours on that. In terms of the OTT, I won’t comment much as obviously I mentioned it, so it’s a fair question. We will enter that marketplace in the -- in a short period of time. There is clearly growth there.

There are customers who are choosing OTT as the way they want to look -- view video and so we want to make sure we’re playing in that. That’s important for our TV product. It’s important for our media assets and it’s important for our drive towards internet subscriptions. So, on all three businesses for us strategically it fits and of course it can even enhance our wireless position. And so you’ll see us pursuing that market and we’ll be coming back to the marketplace with someone else that’s in the coming weeks to make sure we capture our growing market there as well.

Greg MacDonald: Thank you.

Operator: Thank you. The following question is from Maher Yaghi from Desjardins Capital Market. Please go ahead.

Maher Yaghi: Yes.

Thank you for taking my question. And this, I want to follow-up on what you just said, George. In light of the recent decision by the CRTC on net neutrality, can you discuss your views on future product development in wireless and does it change how you might see wireless data buckets in the market? We have seen a move in many countries to launch unlimited plans. Does it make sense in Canada with its relative lower density in population?

George Cope: Well, I would -- let me just say our -- the strategy we will -- we’re going forward with will absolutely recognize the rules that have been put in place in the country. So that is how our product rollouts will look going forward.

Clearly, a number of years ago we had a mobility TV product that we thought was unique in the world and it did -- it was impacted a number of years ago by really a confirmation of that acquisition just a couple weeks ago. But in terms of the new product rollouts that we’ll see in the marketplace, such as the ones we’re talking about they are completely align with all the broadcast rules in the country and the Internet rules in the country. Yet at the same time allows us to we can creatively address the growing marketplace in Canada for our BCE shareholders.

Maher Yaghi: Great. Thank you.

George Cope: Next question, please?

Operator: Thank you. The following question is from Phillip Huang from Barclays. Please go ahead.

Phillip Huang: Yes. Thanks.

Good morning. Just wanted to follow-up on the fibre-to-the-premise build in Toronto. With the warmer weather, many of us living in the city deserve some construction activities from your services partners including some of the prime neighborhoods, with more traditional detached houses and yards, I assume that these neighborhoods have buried infrastructure and so, I was wondering what’s the reception from residence have been like for the construction and whether the cost and time incurred so far are in line with your expectations? Thanks.

George Cope: Yeah. Great question.

You’re right. We are very, very active in Toronto right now. We obviously there are neighborhoods that are buried versus aerial. I would say the customer reception has exceeded our expectations, when we notified people that were in the neighborhood and we’re doing fibre and would you like just even do a pre-connect, a much higher percent of customers are saying, yes, we want to the pre-connect. I think there’s a recognition that if you can get glass to your premise or fibre to your home, you don’t want to be at a home that doesn’t have that capability and so we’re seeing that.

In terms of our costs and the work yeah, it is a lot of work and it is costly, but it’s consistent with what we’ve shared with you in terms of guidance. As I mentioned our goal is to end ‘17 to have the majority of the city completed. Although, we will have work to do into ‘18 as well. We should have and we will have an enough critical mass to begin you know mass advertising that product and obviously, we’re selling it now in the areas where we are building. And you’re correct that in Canada the spring, summer and fall seasons are really important to those builds to get little tougher, obviously would vary when you doing with the winter.

Phillip Huang: So even though if I’m not a customer, you’re coming to my door and you’re seeing basically a lot of people just saying, yes, come and do the work anyway?

George Cope: Extremely high. Yeah. Very pleased.

Phillip Huang: Okay.

George Cope: It doesn’t mean, doesn’t mean, you become a subscriber that moment, so I will make sure, I caveat that with investors, but it does mean the home has the capability and people are wanting us to do it.

And I want to say everyone is, but it’s clearly that’s, if we had an expectation and that’s above that internal expectations at the moment.

Phillip Huang: Okay.

George Cope: Which is good news because over time it helps us to save capital, we don’t have to go back then to that all.

Phillip Huang: Great. Thanks very much.

Operator: Thank you. The following question is from Batya Levi from UBS Securities. Please go ahead.

Batya Levi: Great. Thank you.

Looking at your guidance, you finished the quarter at the high-end of your prior guidance excluding MTS. Just want to ask if there was any upside to the legacy footprint within the new guidance? And then just one question on the OTT, strategically will you use this product as a retention tool or do you think about it more extensively and if you could provide some color on the returns on your fibre investment under an OTT model versus linear TV.

George Cope: Okay. Let me, I probably won’t be able to answer all of those to that level of detail. What I’d like to do is, maybe differ some of the questions in the OTT Tower in the marketplace, but let me just backup.

There is clearly a cord cut and cord shave marketplace. I think we’ve seen that, not just in Canada, but in North America. And given that we are the leading TV provider in the country and a leading media company in the country, we want to make sure we’re playing in that space, in the footprints that we provide TV marketplace today. And so, you’ll see us doing that going forward. And frankly, in terms of whether or not people will migrate from one product to another, that’s a hard early call other than the save, there are customers who are cutting the cord from our TV service or another TV service, part of the strategy around this approach will clearly be to make sure we’re in the marketplace to have an offer for that customer.

And then Glen, the first question.

Glen Leblanc: Yeah. On your guidance, obviously, I can’t provide any further specificity or insight into guidance. What I will say is the new guidance we provided today, truly is reflective of the acquisition we made in MTS and we’re very, very pleased to be able to provide that guidance and demonstrate 4% to 6% revenue and EBITDA growth and free cash flow growth that shows the accretiveness of that transaction of 5% to 10%. But beyond that I can’t give you any more guidance specificity.

Batya Levi: Okay. Thank you.

Operator: Thank you. The following question is from Jeff Fan from Scotiabank. Please go ahead.

Jeff Fan: Thanks. Good morning. Just a few follow ups, first on the ARPU with respect to your fibre-to-the-prem. If I’ve heard you correctly George, I think you said $125 is the ARPU that you’re getting in on the fibre-to-the-home customers, wondering if I heard that correctly and if you can just compare that to what you’re getting currently in some of your fibre-to-the-node ARPU to see if what that difference could be? The other question is related to your guidance. If I take a look at your free cash flow, certainly there is -- it’s accretive on a total dollar basis.

Wondering if is it still accretive, if you’re looking it on a per share basis? And then on the tax losses, Glen, you said you’re going to utilize those in the next couple of years. So, how do we think about how you’re going to use that tax loss? Is it essentially something that you have that you can use to help you satisfy the dividend growth strategy given it’s a pretty significant amount and perhaps give us a little bit of how much you’re actually using in 2017 of that $300 million that will be helpful? Thanks.

George Cope: Thank you for one question. With that, Glen, why don’t you answer the questions and I’ll end on the last.

Glen Leblanc: Yes.

Sure, Jeff. Yeah. You rattled off a lot there, so I’ll start with the tail-end of that on the tax losses. I have mentioned that’s just $300 million of tax losses. We’ll use those over the next 24 months with $60 million of it will be used in calendar ‘17 and I’m not going to give further guidance beyond that, but we’ll use them in 24 months $60 million in calendar ‘17.

Free cash flow guidance you asked on that -- on a per share basis, yes, it’s accretive on both in absolute and a per share basis. And I...

George Cope: And other than that, I think, it clearly helps drive our dividend growth, because it’s a tax cash savings over time. So, that’s clearly helpful. And then in terms of the ARPUs, really what we did is shared the fibre ARPU that we’re getting through the household and we’re not going to disclose the other numbers for competitive reasons, it really was to make sure investors understood the speed that our customers are using, which is clearly a very high number in terms of the base that literally 80% will be at 300 and 100% at 150 by the summer and that we’re seeing obviously quite positive conversion to the fibre footprint.

Jeff Fan: So $125 was the fibre-to-the-prime ARPU that you‘re getting today?

George Cope: Yeah. That’s exactly correct.

Jeff Fan: Okay. Great. Thank you.

George Cope: Remember, that’s a mix. You could have people near to that triples, you’ve got people near to that doubles, you could even have someone in that has a single, who simply has chosen a full Internet package or has chosen a TV package, but generally of course that would be rare.

Jeff Fan: Great. That’s helpful. Thanks.

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

Aravinda Galappatthige: Good morning. Thanks for taking my question.

I just wanted to touch on the TV platform. Obviously, you’re going to face potentially tougher competition a year down the road, as your cable competitor launches X1. From that perspective, obviously, you’ve talked about the improvements to your IPTV platform, the Home Hub, the stronger Wi-Fi power, et cetera. But I was wondering what can we expect in the next 12 months to 24 months, as you look at the sort of the improvements on the interface side, functionality side, are you satisfied with the enhancements that’s been envisaged and what are your options on that front? Thanks.

George Cope: Yeah.

Yeah. Thanks for the question. As we have said in the past, our restart TV, our trending on TV, the only one with a total wireless set-top box for TV the Netflix on it. All the product differentiations we have on Fibe TV, a number of those will even be maintained with the competitive response that we see coming. And second, we expect to have the superior TV product in the marketplace next year, even with the competitive offering.

We’ll be making product announcements to that effect over the next coming months. But, clearly, we’re premature to announce those now and allow the competitive marketplace to get ready

Aravinda Galappatthige: Thank you.

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

Drew McReynolds: Thanks. Good morning. George, big picture question just shifting to wireless, obviously, another good quarter for you. On the technology side, you did highlight some of the Quad Band technology you’re rolling out. We’re seeing in the U.S.

some question about whether superior network technologies really moving the needle with consumer demand and market share just with T-Mobile doing what it’s doing in the U.S. I know it’s a different environment up here, but you do too seem to have that network leadership. Can you just talk to does that still drive consumer demand, the network performance and can you kind of rank that relative to things like customer service, distribution, price, et cetera? Thank you.

George Cope: Well, we think, the -- first of all, the other three you mentioned are core. You don’t have the distribution and service.

You have other issues that clearly our financial results and our metrics they’re supporting the right results there. Turning to the network, it’s very clear for us. We’ll just continue to see the financial results that drive the rationale for the investments of these networks. Canadians use these devices, the better the speed and that probably, I have indicated a 37% increase in usage, probably you would have seen there, it looks like in the quarter, we had a more significant increase in average revenue for customer than our largest competitor and we think that’s driven by the superior network offering that we have in the marketplace. And if we look at the demand for video, which is going to continue to really grow in wireless, when you get into speeds of 22 to 174.

And most days, for those who are on the line using a Bell Mobility phone in some of the markets, you know you’re getting 60 meg to 80 meg now on your headset and so, as a result, people are using the product more and more. I think that’s the key differentiator for us is that we attract customers who are heavy users, therefore obviously a valuable subscriber base. And also it’s going to continue to be positioning for us with what our technology teams done on carrier aggregation, it’s really quite remarkable and it’s positioned us in Toronto, Montréal, Vancouver, Halifax and another major cities to have the fastest wireless network and we think that’s going to make a difference and particularly with the backhaul work we’ve done. We think that’s really important strategically and we don’t talk about it a lot, but since you’ve asked the question as we rollout fibre, of course, the fibre-to-the-home that we’re doing, we think sets us up really nicely as technologies evolve to smaller and smaller cell sites, people are talk about 5G, the fact that we’ll have all those areas laid with fibre. I think, at some point it will help amortize back into our wireless cost or help amortize the fibre cost, I guess, is another way to think about it.

But it’s really early days there for that. Hopefully that’s helpful.

Drew McReynolds: Yeah. Thank you.

Operator: Thank you.

The following question is from Adam Ilkowitz from Citi. Please go ahead.

Adam Ilkowitz: Thank you. On the wireless side, just wanted to ask about gross add share, obviously you’re up 7.7% I think it was on the postpaid side. The competitor was up a little bit more so far as reported, wondering if you’re seeing any share shifts besides the market expansion that we’re seeing? Thank you.

George Cope: It’s hard to know. We have to see everyone’s reporting. We don’t -- our prepaid to postpaid migrations don’t count in our gross adds, I think, one of our other companies does count in gross adds, so you better know. I think we -- you’ve just got to be careful there, we tend to look at service revenue growth in the quarter as just for us driving, okay, are we driving a fair share of that growth, I think, we did in fairness we think sorted our competitor who has reported and that will just remains to be seen as other company’s report. So, we’re pleased with where we were in the quarter, probably we had the right balance and obviously a tremendous leverage from a financial perspective seeing the network growth that we’re seeing.

Adam Ilkowitz: Thank you.

Thane Fotopoulos: Wayne, I see there’s one last question in the queue, so that will be our last question given our time constrains this morning.

Operator: Thank you. So, the last question is from Rob Goff from Echelon Wealth Partners. Please go ahead.

George Cope: Good morning, Rob.

Rob Goff: Good morning and thank you for taking my question. My question would be on the wireless side where we’ve seen consistent market outperformance. Is that in part being driven by device per account that is technology actually driving that device per account?

George Cope: Yeah. What’s interesting, we’ve talked about this before and we understand it is the difference maybe between the U.S.

and Canada. Clearly the multiple device growth is happening. I think many on the phone there if you’re in Canada you may have two devices, one business one personal. Certainly, if you look at the population 24 and 35, a lot of that population and the employment base now carry two devices. So, that’s clearly adding some subscriber growth in the Canadian marketplace and I guess that’s different by market, but I think that’s been a benefit to all carriers in Canada.

Does that helpful?

Rob Goff: That’s great. Thank you.

Thane Fotopoulos: So, once again, thank you to everybody who participated this morning.

George Cope: Thank you.

Thane Fotopoulos: I’ll be available later today following our AGM for any follow-ups and clarifications.

So, with that, have a good rest of the day everybody. Thank you.

Operator: Thank you. That concludes today’s conference call. Please disconnect your lines at this time and we thank you for your participation.