Executives: Thane Fotopoulos - VP, IR George Cope - President and CEO Glen Leblanc -

CFO
Analysts: Richard Choe - JPMorgan Simon Flannery - Morgan Stanley Phillip Huang - UBS Investment Bank Greg MacDonald - Macquarie Maher Yaghi - Desjardins Capital Markets Jeffrey Fan - Scotiabank Vince Valentini - TD Securities Tim Casey - BMO Capital

Markets
Operator: Good morning, ladies and gentlemen. Welcome to the BCE Second Quarter 2017 Results Conference Call. I would now like to turn the meeting over to Mr. Thane Fotopoulos. Please go ahead Mr.

Fotopoulos.

Thane Fotopoulos: Thank you, Mode. Good morning to everybody. Joining me here today as always are George Cope, our CEO; and Glen Leblanc, our BCE's CFO. As a reminder, our second quarter results package and other disclosure documents, including today’s slide presentation are available on BCE's Investor Relations webpage.

An audio replay and transcript of the call will also be made available later today or tomorrow morning on our Web site. However, before we get started, I’d like to draw your attention to the Safe Harbor statement as always 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 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 Web site. So, with that, over to George for Q2 overview.

George Cope: Great. Thanks, Thane.

Good morning, everyone, and thank you for joining us in the middle of the summer. This morning we reported 7% service revenue growth and 5% higher EBITDA growth. This was driven by the strong financial contribution of MTS and the excellent wireless results we reported this morning. We added 106,000 broadband customers, which is traditionally for us a soft quarter in terms of overall broadband net adds. The company continued its track record of strong wireless postpaid momentum and best-in-class financial results.

Wireline EBITDA was up 2.6% year-over-year and our North American leading margin continued at 41.8%. Strategically we now expect to service more than 3.7 million FTTH locations by the end of this year, up about 100,000 households and businesses and resulting in approximately 40% of our entire long-term fiber program being completed by the end of this calendar year. Also on the strategic side, a new innovative app based live TV streaming service was launched on May 15, branded All TV targeting cord cutters and cord nevers. Bell Media produced a stable financial results in the quarter with 2.2% revenue growth and positive EBITDA, and MTS is meeting all of our financial expectations. In fact -- on the good news side, we now expect the MTS EBITDA 2018 will surpass the presale of the TELUS wireless business that would've been 2016.

So the synergies are really significant across our wireline and wireless business. The 17% free cash flow growth in the quarter continues to support our strategy of investing in broadband wireline and wireless networks. Turning to wireless, we saw an approximate 27% increase year-over-year on our postpaid additions and as well reported turn of 1.08% on the postpaid side. And that is our lowest reported quarterly churn rate in 11 years. Also on the churn side, on our overall LTE network, we saw postpaid churn at 1.03%.

So clearly moving the right direction on that metric. It was the strongest absolute dollar service revenue growth in the history of our wireless business. Of course that is combined with the strong organic growth of Bell Mobility and the MTS wireless acquisition. Average revenue per customer is up 4.6% and that is driven again by the continued high users we're seeing of our LTE-A network, as we -- over the entire base we saw 26% year-over-year increase in broadband usage on our wireless network. Our investment clearly in the Quad Band network is paying off.

We're now on 47 markets, 8 provinces, combining that with the 256 QAM technology, enabling customers to see speeds on average of 25 to 220. And if anyone does a speed test any day in any one of the major cities in the country, you will see sometimes you’re getting 90, 120 services or higher on our wireless network. Also pleased to report and quite proud to report that Virgin topped every wireless carrier from a J.D. Power ranking perspective this year surpassing our competitor Rogers, Telus, Fido and Koodo as the number one service in the eyes of the customer. So very strong result from Virgin Mobile.

On the wireline side, we added 16.4000 IPTV net adds. We saw a decline in our satellite losses of about 10% year-over-year. I’d expect our satellite loss to continue to improve now that we have MTS selling the satellite services in their footprint. Alliant is actually seeing some positive growth as well on some of their rural footprint. And a significant growth of the IPTV footprints by the Telcos is obviously slowed.

So we hopefully we will see that trend continue there. On the Internet side, we added a little over a 1,000 in the quarter and what is a seasonally slow quarter for us with the University outs at the end of the quarter. However, from a strategic standpoint, very positive we added 17.4000 net Internet additions in our fiber footprint. We also -- as we go forward the second half of the year, we'd expect stronger Internet additions, particularly as our fiber footprint continues to rollout. On the residential side, we saw an improvement in losses year-over-year.

I thought the most interesting to me in the quarter was where we actually had the fiber footprint. we literally had no NAS losses. So it's really quite interesting what that -- the power of that is and of course it's probably little bit where that geography is as well. And the one call, which we don't do very often on the business side -- small business had a good quarter. We are seeing some momentum from an RGU perspective there, and also probably a little bit of the stronger Canadian economy helping our small business wireline group.

Turning to our product page on IPTV. The product continued to be the most innovative in the marketplace. Just in July, we launched another addition to, or product enhancement, where our customers can watch their PVR recordings on a laptop, smartphone, tablet if they have access to our live TV app. And so for anyone who is in our footprint, particularly, on the investment side, if you’re not familiar with the app, you really should download it, use it to understand what a competitive -- for us how competitive this product is in the marketplace. Also coming in August, we will integrate Google's YouTube app into our 4K PVR and no set top box upgrade will be required for these additional features.

I think the most strategic thing we undertook in the quarter was the launch of Alt TV. As I mentioned, it's a new app based live TV streaming service that was launched late in May, targeting cord cutters and cord nevers. Its available in our five TV footprint, so it's a licensed service, but it requires no set-top box. Its limited to two streams per location, be a laptop, smartphone, tablet, a or smart TV. It's the identical content of five TV, but the monthly price is at a discount basically reflecting the fact no truck rolls required and no set-top box required.

In some cases, customers can save up to 40% on a traditional TV service with this service, and we're indifferent between the two from a cost perspective. And also when we step back now, look at these two portfolios, it also opens up additional revenue streams for our media assets and quite frankly other Canadian companies media assets, because we will be able to monetize advertising dollars through streaming services on Alt TV, and over time we would expect to see competitor responses to that as well in the marketplace. Turning to Bell Media, we had an excellent strategic quarter. CTV once again was the number one network in the country for the 16th year in a row. We secured a strong lineup going into the fall.

We extended NFL broadcast deals. So now on a linear TV, we’ve all of the linear rights across all the NFL, and of course have the digital rights as well on those games that we carry. Also happy to welcome the Montréal Canadians back to our English network on TSN for 50 regional games next year. We obviously have the games on our RDS on the French side. Very important for us in the Alliant footprint, where TSM will then will have access to those games, and a number of other key strategic things in the quarter driving -- I think quite good financial results given some of the challenges in that particular part of the industry.

With that, let me turn it over to Glen.

Glen Leblanc: Thanks, George, and good morning, everyone. I will start on Slide 10 with our consolidated financial performance for Q2. As George said, but certainly worth repeating, service revenue was strong up 7%. This represents a significantly higher year-over-year growth rate than previous quarters due to the acquisition of MTS completed on March 17.

In addition to MTS, financial contribution revenue was up this quarter on strong organic wireless top line growth, higher wireline residential revenue and improved year-over-year performance at Bell Media. Adjusted EBITDA increased 5%, again benefiting from the inclusion of Bell MTS, as well as our excellent wireless financial metrics. Margin was down year-over-year, but remained a very healthy 41.8%. The decline was largely a result of $25 million in CRTC related impacts absorbed in the quarter from the wholesale Internet tariff rerates and the mandated customer refunds for canceled services. Despite higher EBITDA, statutory and adjusted EPS were down $0.05 and $0.06 per share, respectively, due to the mark to market equity derivative gains realized in Q2 of 2016.

That was driven by a rather sharp increase in BCE's share price that year, and a number of MTS acquisition related impacts that I will detail later in my presentation. We generated approximately $1.1 billion of free cash flow in Q2, $160 million higher year-over-year. That stellar performance was achieved even with a planned step up in CapEx spending this quarter. So on balance, a good quarter of consolidated financial performance, consistent with full-year guidance targets including MTS, as we continue to face intense levels of competition and pricing pressure across all lines of business. With that overview, let's turn to the detailed results of our Bell Wireless segment for Q2, seen on Slide 11.

Another great set of financial results with service revenues up 12.8%, driven by continued strong postpaid subscriber and ARPU growth, as well as the incremental contribution from Bell MTS. Adjusted EBITDA was another major highlight of the quarter, growing an exceptional 10.2%, which yielded a very healthy service revenue margin of 46.6%. More impressively, this was achieved even with $75 million year-over-year increase in total combined spending on customer retention, and new subscriber acquisition. Lastly, wireless EBITDA less CapEx provided a continued strong contribution to BCE's overall free cash flow, increasing 12.1% year-over-year. And although we maintained a low capital intensity ratio of 9.7% this quarter, we did not slow down investment on advancing mobile coverage and data speeds through expansion of our Dual, Tri, and Quad band LTE advanced network footprints.

Moving to Wireline segment on Slide 12. Service revenue growth accelerated in Q2 increasing 5.3% year-over-year. This was driven by a combined impact of Internet and IPTV customer base growth together with strong 5.5% increase in household ARPU, improved year-over-year business market's performance supported by Q9 and a full quarter of the financial contribution from MTS. Once again, this quarter, overall, top line -- wireline top line growth was moderated by the regulator related impacts totaling $22 million, as well as the competitive pricing pressure across our residential business and wholesale markets, and lower year-over-year data product sales. Wireline adjusted EBITDA was up a solid 2.6%, reflecting the flow-through of strong service revenue growth even as operating cost increased 6.4%.

The higher operating costs was due mainly to the addition of the incremental expenses from the acquisition of MTS, increased marketing spend to support residential subscriber acquisition and retention and higher year-over-year customer service support costs. Excluding the regulatory impacts in the quarter, wireline EBITDA in Q2 grew a very healthy 4.3%. Turning to Slide 13 and Bell Media overall, a solid quarter of results with positive revenue, adjusted EBITDA, and cash flow growth. Revenue was up 2.2% reflecting both higher year-over-year advertising and subscriber revenue and although advertising revenue -- the advertising demand in conventional TV and radio remained soft across most sectors. Total advertising still increased 2.3%.

This was driven by growth in outdoor advertising at Astral Out of Home and higher year-over-year revenues from Bell Media's digital properties. Sport specialty TV was down year-over-year, as a result of -- in Q2 of 2016 benefited from higher audience levels for TSN and RDS, given the Raptors deep playoff run and € Cup soccer. Subscriber revenue in Q2 continue to reflect steady Crave TV and TV Everywhere growth, increasing 1.4% as the year-over-year upside we have enjoyed from the past from the TMN national expansion into Western Canada lapped on March 1. Lastly for Bell Media, despite ongoing Crave TV programming expansion, increased HBO and Showtime content investment and higher year-over-year expenses at Astral Out of Home from acquisitions and outdoor advertising contract wins, we collectively drove which all collectively drove a 2.9% increase in operating costs. Bell Media generated positive EBITDA growth of .4% this quarter.

Slide 14 provides the key components of adjusted EPS, which was in line with plan for Q2 at $0.88 per share, but down $0.06 compared to last year. Higher adjusted EBITDA reflecting Bell's -- MTS's incremental contribution in the quarter, drove $0.10 of EPS growth in Q2, also contributing positively to EPS this quarter with higher other income reflecting a pickup of equity income from one of our minority interest investments. However, these favorable impacts were more than offset by higher year-over-year depreciation and net interest expense related directly to MTS. Dilution from the higher share count to the -- due to the issuance of 27.6 million new BCE common shares for the MTS acquisition, which negatively impacted EPS by $0.03 per share this quarter. And as I mentioned earlier, mark-to-market equity derivative gain of $0.03 per share realized in Q2 of '16, which did not for this year.

Through the first half of the year, adjusted EPS stands at $1.75 per share, which keeps us comfortably on track to achieve our full-year 2017 guidance of $3.30 to $3.40 per share. Let's move to Slide 15, free cash flow. Strong cash generation of approximately $1.1 billion or 17.1% higher compared to last year. This was driven primarily by higher EBITDA and the improvement in our working capital position. This quarter's results also reflected accelerated capital spending as I mentioned earlier, higher cash interest paid due to more than $900 million in MTS debenture and short-term debt soon with the acquisition, as well as year-over-year step up in cash taxes consistent with our guidance assumptions for full-year 2017.

With respect to cash taxes in Q2, we realized a $10 million benefit from partial utilization of MTS tax loss carry forwards in the quarter, and we expect a further $60 million tax benefit to be monetized in the second half of this year. Finally, given the Bank of Canada's recent move to increase interest rates and the market expectation for further heights over the medium-term. I'd like to remind investors that BCE is uniquely positioned and naturally hedged in a rising interest rate environment. As I’ve said in the past, BCE's solvency deficit would be eliminated if the discount rate increases a further 75 to 100 basis points. Should that happen, there would be an opportunity to significantly reduce our annual pension funding requirements by as much as $200 million to $250 million through a contribution holiday as we would not be obligated to pay annual service -- current service costs of our plans.

This would occur once the surplus position of our plan exceeded $105 million. And that would add meaningful upside to our annual free cash flow generation. The funded status of the aggregated -- of the aggregate of BCE's defined benefit pension plans remain strong. The end of Q2, our solvency ratio was about 95%. In the past, we have been very prudent in making voluntary contributions to address the potential DB pension plan funding risks as a result of historically low interest rates.

In fact, we’ve used nearly $4 billion of excess free cash flow over the past eight years to pre-fund future obligations. However, given the pension plans current strong valuation position and the market expectation for higher interest rates, I don't anticipate further material deficit funding going forward. And lastly, I'd like to add that BCE's $1 billion in annual U.S dollar denominated spending has now been economically hedged through Q2 of 2019, effectively insulating our free cash flow exposure from U.S dollar purchases until that time. So to wrap up, on Slide 16, with the financial performance we reported in the first half of 2017, the addition of MTS, which is performing in line with our acquisition expectations, and a business that is completely -- that is competitively well-positioned and getting stronger with growing scale and rapid deployment of advanced broadband fiber and wireless technologies to drive better subscriber acquisition and retention. We see good momentum to take us forward for the remainder of 2017 and in the next year.

As a result, we remain confident in our ability to deliver our financial plan with strong free cash flow generation in the back half of the year that fully supports higher plan capital spending, all of this providing a strong foundation for continued execution of our dividend growth objective going into 2018. Given this outlook, I am reconfirming all of our 2017 guidance targets. That concludes our formal remarks. I will now turn the call back over to Thane and the operator to begin the Q&A portion of the call.

Thane Fotopoulos: Thanks, Glen.

So before we do start the Q&A period, I just want to keep the call as efficient as possible, so I’d please ask if you can limit yourself to one question and a brief follow-up. If then we have time, we will circle back at the end of the call for more question. So with that, Mode, can you please let the participants know how to queue up?

Operator: Certainly. Thank you, Mr. Fotopoulos.

[Operator Instructions] Our first question is from Richard Choe from JPMorgan. Please go ahead.

Richard Choe: Great. Thank you. Two quick ones.

One, on wireless ARPU continues to be strong with speeds and usage going up. Should we expect that to continue? And then in wireline not quite a follow-up, but a quick one in terms of the build out increase, what are you seeing that is enabling the build to be a little faster and have there been any negative hiccups in that build?

Fabian Garcia: Hey so, okay. Thank you. On the ARPU side, obviously we have a very strong quarter and driven really almost all through the significant usage of customers as opposed to some type of price increases in the marketplace. So people are using the product more.

We would expect increased ARPU throughout this year. At that type of number that's probably pretty high. So which to the analysts I wouldn’t model in those type of numbers for the rest of the year, but to see ARPU growth from us the remainder of this year we would certainly expect that. I’m not going to talk about the following year on this call. In terms of the fiber expansion, it's just we're on a pace and the pace now looks like we’re going to be able to be ahead of where we thought we'd be at the end of the year, which is very good news and our capital intensity ratio stay within the capital intensity ratio we had outlined.

So we are just getting a little bit more done than we expected and sometimes it's -- some of markets that are little more aerial are just a little bit easier to do and so we can get those done quicker, we are just working as fast as the team can go to get this program executed on. And obviously the quicker we go based on the results, the better the outcome will be for investors in our company.

Richard Choe: Great. thank you.

George Cope: Thank you.

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

Simon Flannery: Thanks. Thanks very much.

Good morning. George, good churn performance again across the industry, across North America. Any perspective on whether you think we're seeing a little bit of I know Tim Cook had talked about maybe a pause, a lull, ahead of a potential iconic device launch. Is this looking like a normal cycle or do you think we might see a bigger cycle here and hence this is a little bit of a calm before the storm or -- and more activity in the latter part of the year?

George Cope: Yes, well, I mean it's obviously hard for us to comment on a product launch, so that will be the companies and the timing of that. But there's no doubt the duration of the handset is extending, because the products do so much now with the ones that people have and a part of that is being created by a pent-up demand for some new products coming from our suppliers, absolutely you could then see some expectation for probably retention spending, be it in our retention spending was fairly high in the quarter.

Now we left this quarter, the two-year double cohort issue, so clients who would come on that two years, so we saw some jump in upgrades in June. Whether or not all of our peers in and out, we can't be sure till other folks have reported. But clearly the churn number is quite positive and we will have to just see when the new products come, but typically when that’s happened you do to see some jump in churn in the industry, because of the -- those new products we will just have to [multiple speakers].

Simon Flannery: But generally people will hold their phones longer, than they had done in the past?

George Cope: Clearly. We are clearly seeing that.

Simon Flannery: Great. Thank you.

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

Phillip Huang: Hi. Good morning. Question on the fixed line side, you mentioned in the press release that there is been increased churn from intensified competition in areas where you don’t have fiber to the premise yet. First, I was wondering if you could maybe provide some color around which regions you are seeing the most intense competition or the delta on the competition? And then, secondly, I was wondering if you could provide us any details on how the subscriber performance differs in your fiber to the premise versus non-fiber to the premise footprint, and how quickly we are going to start to see the subscriber growth reaccelerate, if the current intense cable compensation sustains? Thanks.

George Cope: Yes.

There is a lot in that question. If I can -- I'd say this -- one of the things we are doing, we are doing some bonding in some markets where we don’t have the fiber to the home on the map as quickly as some of the other markets are going to. So that’s allowing us to have speeds of up to 100 in some of those areas. That’s part of our strategy. In terms of geographically, it's funny, it's so different market-by-market.

I mean, so it's hard to call out Quebec over Ontario. I mean, my [indiscernible] view, we are seeing some maturity of the growth on the East Coast strong numbers, but not as strong a growth as we would have seen in the past there, because we’re so well penetrated there on the broadband side, because we’ve had the fiber there for a number of years. That might be one area to call out. But I think it really is just about the footprint expansion. Caught a little bit, quite frankly, in the quarter.

We had some real tough weather issues here in June, and frankly, the wet weather across our footprint had quite an impact on the repair side. And so we think that pushed out some of our install work near the end of the quarter that we had to catch up on in July. We saw a little bit of that come back in July. So that may had a little bit to do with the quarter, because moisture with -- on the copper side is not the easiest thing to deal with. So, it was particularly a tough spring that way for the industry, certainly on the Telco side.

So a little bit of that, but we are extremely bullish on what we're doing on the TV side, what we're seeing on the fiber side. So it's just this pace of investment, and I think I'm most pleased with this morning is the Alt TV in the place now, which will help drive broadband; and also the acceleration on the fiber -- even an extra 100,000 households drives it quicker than where we thought we would be.

Phillip Huang: Thanks. And in terms of the actual -- in every neighborhood in Toronto for instance as you’re passing for fiber to the premise, are you -- what types of uptick are you seeing initially, can you maybe provide some color around that?

George Cope: We can give you more on that, but I’d say when we go pass a home, we do ask people, do they want us to preconnect or they want us to come back, and we’re getting a much higher take rate on people saying connect now. That doesn’t mean they’ve taken the service, but it means we’ve run rate to the whole on a much higher rate than we initially anticipated.

Makes our capital little higher at the beginning going in, but it means we come back, we can just turn the service on versus have to run the line right into the home. And so that’s been more positive than we had anticipated. But we will start coming back with some results. We’ve given you our total fiber results in this resolve to try to let investors understand the distinct differences we are seeing. Hope that’s helpful.

Phillip Huang: Great. Thanks so much.

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

Greg MacDonald: Thanks. Good morning, guys. George, you spoke a little bit about the slowing IPTV adds in the quarter. And the press release references the high number of customers with expiring price promos coming off. What’s interesting is also Rogers has also promo priced the market.

I'm wondering if you could talk little bit about the dynamic there? Is this a new overall pricing level that we can think about here relative to the sticker prices that we see advertised? And this is an issue that could have an impact on subscriber growth going forward as well. So just trying to define the risk profile here a little bit more, if you could add some color on that, that will be good. Thanks.

George Cope: Yes, actually we’re actually quite pleased with it. When we look at the relative TV performance of our cable peers, we are really pleased with the IPTV growth.

We think the Alt TV product is going to be a nice addition to our TV portfolio, because it does focus on part of the markets that clearly where we're seeing decline in overall TV subscription. This product is targeting that, so hopefully we will see some pull-through from that. And of course that will hopefully be as IPTV has been as a pull-through on the Internet side. On the pricing side, it's hard to comment on the promotions and impact of them. Clearly and our focus has been to try to have the promotional pricing a short period of time, so there is not confusion with the consumer that after 90 days or 120 days then they go to normal pricing where we think the industry puts itself under problem is when it gives things like 12, and 24 month promotional pricing, well to a consumer, in fairness, that becomes -- well, that would be my normal price in the marketplace.

So some of that has happened in the past, and so we're trying to get certainly from a Bell perspective to get the promotions to be 6 -- 3, 6 months, people see, then they know there is a price increase that comes after the promotional period. So that's been a little more of strategy -- a little different than some of our cable competitors in that area. So maybe that's what you’re commenting on.

Greg MacDonald: Yes, I’m. And then, you’re suggesting then the die is not cast.

Rogers has another relatively high-end product coming out in 2018. So you still think there's an opportunity to maintain these relatively high prices, is that true?

George Cope: Well, I don't know -- relatively high prices are -- its a tricky question, because if you look at our financial results we saw some reasonable residential revenue growth on a year-over-year basis. But it is important to remember that in Canada the average TV pay subscription is about $60 and the US it's about US$85 to US$90. So there is quite a significant difference already on pricing in Canada on TV, I think that's maybe one of the reasons we’ve seen a little less cord cutting here. And I think why I’m so positive about that is, if you take a CAD$60, you put that in U.S dollars and then you look at our Alt TV offering in Canada.

I like how that’s positioned in Canadian companies vis-à-vis any of the other OTT service we may see come to the country. I think it gives us significant opportunity here, given the traditional TV services in Canada have been less expensive than south of the border.

Greg MacDonald: Great. And quick follow on, the FTTH product at plus 17,000 customers in the quarter. You recognized that as a positive.

That’s a relatively low number to the 3 million or so homes that you're marketing to or you might be marketing to less than that. Can you give us -- I think that's the first time you mentioned that number, can you can give us some color on that?

George Cope: Yes, actually we're really -- we are thrilled with the number. So don’t think its low and frankly wish I had 9 million households covered with that type of footprint, you multiple that by three. So, we are really please with it. I think what’s more important is the IPTV pull-through we are getting as I talk about and I thought one of the more interesting thing is the NAS losses seem to be significantly less than that footprint as well.

I mean, it's just clearly -- just -- its just so vastly the superior product that we’re going to have in the market. And the speed issue goes away for customers and we just think it puts us in a competitive position we never had as a Telco before [technical difficulty].

Greg MacDonald: Okay. Thanks for the context.

Operator: Thank you.

A following question is from Maher Yaghi from Desjardins Capital Markets. Please go ahead.

Maher Yaghi: Thank you for taking my question. I wanted to get back to wireless ARPU and wanted to see just your view on the potential continued growth in that number, what 85% of your postpaid subscribers on LTE now, how much more update can we expect from subscribers on the LTE to continue to take higher and higher data buckets? Can you talk about the momentum you are seeing in your LTE customers with their ARPU and not take the whole subscriber base, just on the LTE base subscribers?

George Cope: Yes, it's hard to break it down, but because we managing that 85% of our postpaid subs are on LTE and you can rest assure the ARPU growth we are seeing is on LTE, you can probably do some math on the analyst side to realize that the overall ARPU at LTE would be higher than the 4.6. but what we are seeing, one of the great things from an investment perspective for us is, we know now that the investments in the speed on the wireless side giving us really I think other than maybe -- I think other than South Korea the fastest wireless network maybe on the globe or one of the fastest that consumers will use the product and use it for a lot more video and as a result that's what’s driving the -- for us to increase in usage.

So I think it's really important because it's not pricing issue. It's the marketplace using the product. So we would anticipate average builds to continue to grow as people use it more, but not at that pace in the second half of the year. It may happen, but it's certainly the analyst I would not model that in, because those are -- let's face it 4.6 is an extraordinary number and 26% usage, it's hard to imagine that pace continuing at the pace we’ve been on. If it does, that’s fantastic for investors and obviously impacts for the customers, because they’re using the product more.

But I wouldn’t model the 4.6.

Maher Yaghi: And -- thank you. And just a follow-up on the wireline. Even though in Western Canada, companies didn't usually charge for overage on wireline Internet access, removing this -- maximum allowable download bandwidth from the equation, do you see the potential for that to happen in Eastern Canada now that somebody has set a mark in the marketplace here with this removal. And maybe can you talk about your exposure to this unlimited Internet access bandwidth, if it were to happen?

George Cope: Well, I would say this.

We have many of our customers today who purchase unlimited bandwidth. Literally I’ve Thane share the number with some analysts later on. I don’t have it top ahead, but a lot -- there is no reason not to disclose a lot of our customers take the unlimited number. It's over 60%, he just handed me a note of customers purchase unlimited already and under our packages out there from quarter-to-quarter from our competitors and from us sometimes have limited, if you take more of a bundle et cetera. So we’ve seem both.

Generally people pay 10 -- $5, $10, $15 for an additional unlimited usage package and a lot of consumers find that the way to purchase. And that’s why we made that product available, but that’s been in the market for a number years here. We do definitely have metered billing for folks who don't want to purchase through that, but a lot more people are now just buying the unlimited packaging, and as do our competitors offer that is well in the market. So I think it's already here.

Maher Yaghi: So if a competitor removes this impediment or data cap from his product line, why would somebody continue to pay that $10 or $5 unlimited usage with BCE?

George Cope: Well, first of all, if its -- if there's no -- that’s just a competitive pricing issue and you’re really asking just a pricing issue in the marketplace, what’s included in the packages, that’s really what you’re asking us.

And in our packaging, we have unlimited available for customers who pay a premium for that and that give them the insurance on usage, that’s really what we’ve done in the market. And I think you’re seeing the market evolve more and more to that, so I think our exposure on it is actually quite limited, because we're -- as clients are upgrading to higher-speed, sometimes it includes more usage and that’s really protecting the consumer that way and protecting us financially.

Maher Yaghi: Okay. Thank you.

George Cope: Yes, thanks for the question.

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

Jeffrey Fan: Thanks. Good morning and thanks for taking the questions.

Just very quick follow-up on ARPU on wireless. One of the key drivers I think for you and for the industry is the prepaid, postpaid mix. This continues to go up on the postpaid mix side. How far do you think this can go maybe for BCE or even for the industry, your sub 10% now I think on prepaid, wondering if that can continue? And then the second quick question is really just on the fixed Internet side. With the wholesale market kind of going through a bit of a change with some of the tariffs from last fall, wondering if you’re seeing any changes in the reseller ISP market, whether activities have picked up? Wondering if you can talk a little bit about?

George Cope: Yes.

For the first question was on the -- yes, there is no doubt, because on the math issue, clearly, because we're stronger on the post paid side. The prepaid and the ARPUs are so distinctly different if your mix suppose pays higher than your blended ARPU growth is just that much stronger, that’s a certainty. I think the prepaid market for us, we play in that market. I think we will probably look over the coming months, too, and I want to pick that share up a little bit more. We think there is some growth there.

We don’t plane it to any real significant way, but sometimes it's just a nice way to migrate customers from pre to postpaid if you have a base there. So we are kind of paying attention to that space. But overall, you’re right, it's a mix, it's a denominator, numerator math issue and because we’re so postpaid focused. But clearly it have that growth in our ARPU, its postpaid ARPU growth that’s happening overall. And then the second question -- that’s really a dramatic change in the market other than a very unfortunate reprice just hand it to organizations who weren't investing any capital.

But obviously if you seen in our financials and then strategically from our perspective we are in the market with the Virgin internet, which is really a product that’s really compete, if you will, in the discount area of the internet market. And I think one of our competitors on the cable side has a brand as well in the market competing there. And so we’re making sure that we through our assets are able to serve all customer requirements across different pricing portfolios.

Jeffrey Fan: Okay. Thanks.

Operator: Thank you. A following question is from Vince Valentini from TD Securities. Please go ahead.

Vince Valentini: Yes, thanks very much. Hopefully I can get a clarification in before my question.

The Alt TV, did you count those as IPTV subscribers?

George Cope: Yes, absolutely.

Vince Valentini: Okay. Is it materially adding …

George Cope: I mean, we just launched, so its immaterial now, but overall, yes, it will be totally in our TV sub satellite Alt TV and IPTV will be in our TV subs. The BDU license TV service for us. I think the most strategic thing for that service is its clear how we’re going after the cord cutter market and also in the -- as you probably I called out, on the limit of two streams per billing, which obviously maintains what we’re really trying to target here versus our traditional IPTV.

Vince Valentini: Okay. Thanks for that, George. The other question, MTS, I was, to be honest, a bit disappointed. I thought there might be a bit more clarification in your MD&A or the call on what was organic versus MTS in virtually all your numbers. So if you are able to parse out at all that wireline/wireless revenue and EBITDA growth, if you didn’t have MTS in there and also some of the key metrics? And one specifically is you said COA and COR costs combined were up $75 million.

Is that an organic number, or is that partially driven just by adding in whatever MTS, COA and COR would have been? Thanks.

George Cope: It's all adding in MTS. It is actually -- its pretty small number in terms of there, but would have been in the numbers. There's some disclosure in our financials, I think, on a couple of things that you guys can go back to the notes on, but we’ve done 15 acquisitions over the years and we will always report our combined results going forward. And one of the other reasons is, quite frankly, the synergies that we are getting across the two businesses are across both businesses, not across the unit we only acquired.

So that’s kind of our view. And frankly, the investors see the free cash flows, and our competitors see the specific separated details. So we are not going to provide it to our competitors. That’s why it's not out there.

Vince Valentini: Okay.

Thanks.

Operator: Thank you. Our next question is from Tim Casey from BMO. Please go ahead.

Tim Casey: Thanks, George.

You called out your SME success, I’m wondering if you could give a little more color there on, I guess on two things. How much of that do you think is attributable to a pickup in economy in the overall economy and I noticed you didn’t reference that for enterprise. So could you just talk about business conditions there? And as a follow-on, could you -- maybe talk a little bit about the competitive landscape from the perspective that the Canadian cable companies just don't seem to be moving the dial on SME like U.S companies do. I’m just wondering what are you -- what is Bell doing to combat that threat that theoretically has been out there, but doesn’t seem to have materialized? Thanks.

George Cope: Yes, it is.

So I will separate both. So let's go to the tougher side of that, which is on the large enterprise side continues to be a challenging business for us. Market share continues to be stable, but reprice and substitution technologies and what have you for us really I don’t think look any different than any other global trends you're seeing at the other telcos. So strong market share, nice cash flow, but still not a growing business for us. And that’s continued and I would say no real change in that even with a little stronger economy that we've seen here in terms of that asset.

Little better results than last year, but helped a little bit in fairness through the Q9 acquisition as well. On the small side of business, we’re seeing some better results. We did some restructuring a year-ago in that group in terms of that started to have a work much closer with our consumer business on the wireline side. I think that's helping from a packaging perspective and we are starting to do is recognize with products like Alt TV and IPTV. Many companies obviously have TV services.

Adding that into our portfolio gives us the relationship on TV therefore disconnects the cable and helps us protect the Internet. So that's really our focus. And starting to see a little better results there. I mean, it's not victory lap, but any time that trend starts to get a little more positive, given we’ve been on the phone for years telling investors we’re seeing nothing there. We thought we’d highlight it and feel more positive about that.

Hard to comment on difference between the U.S and Canada market, but clearly the economic conditions in Canada, if they do continue to strengthen that's one area that we might just start to see a little bit of positive growth on as we go into '18, let's hope so. I wouldn’t say we’re planning on it yet, but we’re hoping for it.

Tim Casey: Thank you.

Operator: Thank you. We have no further questions register at this time.

I would now like to turn the meeting back over to Mr. Fotopoulos.

Thane Fotopoulos: Thank you, Mode. So once again thank you everybody for participating this morning. As usual, I will be available today for follow-ups and clarification.

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

Operator: Thank you. The conference has now ended. Please disconnect your lines at this time and we thank you for your participation.