Operator: Good morning, ladies and gentlemen. Welcome to the BCE Q4 2018 Results and 2019 Earnings Conference Call. I would now like to turn the meeting over to Mr. Thane Fotopoulos. Please go ahead, Mr.

Fotopoulos.

Thane Fotopoulos: Thank you, Valerie. Good morning to everyone. With me here this morning are George Cope, BCE’s President and CEO as well as Glen LeBlanc, our CFO. As a reminder, our Q4 results package, 2019 financial guidance and targets and other disclosure documents, including today’s slide presentation, are available on BCE’s Investor Relations webpage.

However, before we get started, I want to draw your attention to our 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 subject to risks and uncertainties. Additional information on such risks and assumptions, please consult BCE’s Safe Harbor notice concerning the forward-looking statements date February 07, 2019 that is filed with both the Canadian Securities Commissions and with the SEC and which is also available on our corporate website. These forward-looking statements represent our expectations as of today and therefore are subject to change. We disclaim any obligation to update forward-looking statements except as required by law.

So, with that done, over to George.

George Cope: Great. Good morning, everyone. Thank you for joining us. I’ll just start on the presentation, give you a quick over view and then turn it over to Glen.

Certainly we ended the year on a positive note, with all three of our operating segments reporting revenue growth and important EBITDA growth across the three groups. From the wireline perspective, the 2.4% revenue growth being our strongest organic revenue growth in over 10% years there, driving the 1.3% wireline EBITDA growth and the growth in market share of internet and IPTV combined with net adds up 11% year-over-year. On the wireless side, I thought it was a balanced quarter with a 143,000 total postpaid and prepaid net adds, generating the revenue and EBITDA growth we reported this morning. I think one of the highlights of the quarter on top of the wireline revenue growth was the media’s financial performance up 1.9% revenue and adjusted EBITDA growth of 2.9 and generating free cash flow growth in the quarter. Turning to the next page, just stepping back and looking at the year; I think it was a very positive from a broadband perspective for the company, approximately 700,000 subscribers added during the year up 32% year-over-year, excellent wireless growth with 480,000 net adds up 44%, year-over-year, of course a large part of that driven through the change in direction or trajectory of our prepaid business from negative to positive with the launch of the Lucky brand, and the fiber rollout continues to benefit us with 219,000 internet and IPTV net adds in the year up approximately 12% and about 233,000 additional customers now on our fiber footprint, up 40%.

So some obviously strong growth numbers for the year and our investment thesis that we put in place a number of years ago starting to pay off with some broadband growth across all segments. Returning to the wireless business, good quarter, 122,000 postpaid net adds. Just for investors, it’s just worth noting that we did lap the federal government in the fourth quarter. So there were some net adds last year in the fourth quarter as there were issues where the other quarters would have no federal government net adds from a year-over-year comparison. So pleased with that relative to our largest peer, postpaid churn coming down 9 points, obviously a valuable metric for us, prepaid having its second positive quarter in a row and clearly we took market share in that segment and importantly for us, as I mentioned, just taking what’s been a negative revenue growth story for us for a number of years and turning that into something that’s positive and adding a little bit of subscriber growth and giving it stability to migrate overtime some of those customers to postpaid.

We continue to maintain the highest ARPU in the industry. Worth noting, we take out the feather (inaudible) and we were up slightly 0.3% in the fourth quarter on our average revenue, I guess ARPU now the term that we use for the quarter. Overall, for the year, the EBITDA growth and the margin of 42.3 combined with the capital intensity ratio of under 8% is obviously driving significant free cash flow margin and quite healthy free cash flow margin for the company, enabling it to invest as it is in the fiber network in our LTE advanced network. Take a look at our network for next year 2019 on the wireless side, we’d expect to end 2019 at around 94% of the country coupled with LTE advanced providing Canadians and 60% of the population speeds of up to 750, but enjoying typical speeds of 222 megabytes which is really as everyone knows on the call incredible from a wireless perspective by any global standard. On the 5G side, we continue to do trials and continue to prepare ultimately for the launch of 5G mobility.

Just make a couple of comments from a supplier perspective there’s a lot being talked about these days, about Huawei has been a supplier in our radio access layer for 3G and 4G mobile networks for a number of years with of course Canadian government support. We do not use Huawei’s network in our core. As everyone knows, the government is conducting a cyber security review on whether to permit the continued use of Huawei equipment for 5G. We clearly recognize the issues of play and we’ll manage those appropriately going forward and of course follow the law. For investors important to note, we made no selection yet of our 5G vendor, and if there was a ban or if we chose a different supplier than Huawei for 5G, we’re quite comfortable, all those development would be addressed within our traditional capital intensity envelope and therefore no impact from a capital expenditure program outlook and nor do we think whatever the outcome is would it in any way impact our timing in the market for 5G.

The other point I want to draw out is our wireline fiber investment continues to truly benefit our wireless business that’s why you’re seeing capital intensity levels at historical low levels for us now and our expectation for 2019 at approximately 7%. At the end of ’19, 85% of our combined urban and now rural cell sites will also have fiber backhaul in place, nearly 90% of our capacity will have fiber backhaul and we think that positions us well against any competitor in the Canadian market perspective in terms of network quality and speed. Turn to wireline, we added about 65,000 new fiber customers in the fourth quarter, 1.2 million at the end of the year in total. Pleased with the internet adds of 33,000, retail up 15% year-over-year. I mentioned in the last quarter and I’ll mention again this quarter, we’re not focused on the hotel segment, the revenue stream and the profitability of that stream is really not worth pursuing strategically, and it’s a regulatory obligation we will meet, but it’s not a strategy of the company.

On the TV side, 36,000 net adds of 12%, clearly all TV are streaming TV service that does not require set top box is available at a maximum of two stream is clearly helping us drive some additional TV and internet pull-through growth with 14,000 overall TV net adds up and our wireline foot prints were up 27% year-over-year. And those number highlighted from a product perspective we’ll pursue this year as you can see on the page which makes us quite excited going in the next few year that our leadership and broadband in the market place and our investments will continue to help grow the company. If you take a look at our wireline footprint, on the next slide, really pleased with 2018, many investments were recalled that we had a target to add 800,000 to our footprint from a fiber perspective. In fact we got closer to 900,000 still within the same capital envelope we had, so really pleased with that outcome. For this year, going forward, we were targeting 700,000 that includes our fiber and our wireless to the home program.

Again we’ll hope we do better than that, but that’s what our current plan would show and over to our engineering team to trying to exceed that and do within the same cost envelopes. We will surpass a fiber milestone. This we will go over 50% of our fiber foot print completed, which of course is part of our long term strategy and just to continue to grow our broadband share. And I want to announce this morning that we’ve decided to take our wireless-to-the-home program up from 800,000 homes was the plan. The 1.2 million and that is really a 50% increase, and that is particularly driven by the recently announced Canadian government program which allows for an acceleration of our capital cost allowance, helping us from a tax perspective which Glen will talk about and us then reinvesting that capital in rural markets where we, one, they are underserved and secondly we think represent a significant market share opportunity for Bell.

We’re in those market, we’d be anywhere, maybe as high as 15% share and sometimes as low as 5. So that rollout will continue, it will be much more significant as I mentioned. For the next year for the analyst it will continue to be the 200,000 households with 28 communities getting access to that new service. On the media side, I mentioned best quarter for us in a number of quarter, fourth quarter of ’16 was the last time we saw these numbers, driven by a great growth in the last year a little bit on our sports network side where we return to being the number sports network in the country, some really nice growth metrics. Our investment in the Raptors’ are certainly paying off, not just in wining but in ratings, where the ratings are up 71% year-over-year.

We’re also really excited about the relaunch of Crave, about 2.3 million now linear and direct customers on that service. For our American friends, our investors on the phone, it’s really quite a unique product at $20 Canadian. You have access to HBO Showtime, you can stream a Game of Throne or any product or you can get it through additional TV provider and at $20 Canadian, we think it’s quite frankly one of the best if not the best as (inaudible) servers in the world in terms of what’s available from a content perspective and we’re seeing some nice early growth on that as well. Just want to call out, not talk about much, our out-of-home business that we also own. That just had a strong quarter, mid-single digit growth from a revenue perspective.

We are now the second largest outdoor advertising company in the country with over 31,000 advertising faces and we are growing our digital footprint in digital advertising. Outdoor of course is excellent for us from an integration perspective because of all that backhaul required for that of course runs on our own infrastructure. Turning to the dividend announcement this morning, obviously really pleased, management is very pleased again to announce a 5% dividend increase to three points, $3.17 per share. It is our 11th consecutive year of 5% or higher dividend increase, and again that will be done within our payout ratio, targeted payout ratio of 65% to 75%. Glen will comment on this, but I just want to call out that got all these changes in accounting rules.

If you were to ignore those changes in accounting rules we’re probably close to the high end of that payout ratio and if you take the new IFRS 16, we’re kind of in the midpoint of that payout ratio, either way we’re within the bounds of the payout ratio. So 53rd consecutive quarter of EBITDA growth and of course that’s given us the ability to announce this dividend increase this morning and the financial results that we just reported on. Let me turn it over to Glen.

Glen LeBlanc: Thank you George and good morning everyone. I’m going to begin on slide 13 with a review of the consolidated results.

The fourth quarter capped off another successful year financially with growth in revenue, EBITDA, adjusted EPS and free cash flow in line with our guidance targets for calendar ’18. Revenue was up 3% in Q4 reflecting strong year-over-year organic growth across all segments. This drove a 2.8% increase in adjusted EBITDA with a relative stable year-over-year revenue margin, as we balance subscriber growth with pricing discipline in an intensely competitive market place. Adjusted EPS increased $0.07 over last year to $0.89 per share mainly the result of higher EBITDA and pick up of some equity income. However, Q4 statutory EPS was down year-over-year due to a $190 million in non-cash impairment charges in Bell Media, related mainly to its French language specialty in its Pay TV properties.

This was to reflect revenue pressure from ongoing audiences and cyber declines. Lastly, we generated over 1 billion of free cash flow this quarter, bringing total cash generation for 2018 to approximately 3.6 billion or 4.4% higher year-over-year. This exceptionally strong growth we saw in Q4 was a result of a planned decrease in capital spending, lower cash taxes paid due to the timing of some income tax instalments as well as favorable reversal of working capital from Q3, driven primarily by the timing of customer receivable collections. Let’s turn to slide 14 in Bell wireless, overall a good set of financial results once again this quarter, reflecting our consistent discipline focus on subscriber profitability and cash flow generation. Total revenue was up 4.6% driven by a continued healthy subscriber based growth and a higher proportion postpaid customers choosing plans with ledger data allotments as well as an increased sales of more expensive smartphones compared to last year.

In terms of operating profitability, wireless adjusted EBITDA increased a very solid 5.1%, while margin as up 10 basis points to 39.5. This was driven by a combined impact of a higher revenue flow-through to EBITDA and spending discipline on both new postpaid subscriber acquisitions and customer upgrades during the seasonally busy holiday period. Turning to slide 15, revenue growth accelerated to 2.4% in our wireline unit driven by a positive top line growth across all of our wire line units. This result represents our best organic quarterly performance in more than a decade. Residential revenue was up approximately 2% year-over-year on combined topline and TV growth of around 4%.

In business wireline, Bell business markets reported a second consecutive quarter of positive revenue growth from the back higher IP broadband connectivity and professional service solutions revenue, as well as a higher year-over-year data product sales to large enterprise customers. All of which was indicative of a better economic growth trends in the quarter. With steadily increasing broadband scale, improved business financial performance and the flow-through of cost savings realized from work force reductions and other productivity improvements, wireline adjusted EBITDA increased a healthy 1.3% in Q4. However, due partly to stronger year-over-year growth and lower margin, product revenue this quarter our wireline margin decreased by 50 basis points to 40.3. In terms of cash generation, Bell Wireline provided a strong contribution to consolidated free cash flow in 2018, delivering growth and adjusted EBITDA less CapEx of 2.9% with 2.1 billion of simple free cash flow generated our higher year-over-year fiber capital spending was fully supportive.

Turning now to slide 16, as George mentioned, Bell Media had its best financial results in two years, delivering positive revenue, adjusted EBITDA and simple free cash flow growth in Q4. Total revenue of 1.9% driven by 2.8% growth in advertising, advertising revenue increased year-over-year on stronger specialty TV entertainment and sports performance that reflected audience growth in higher advertising rates, improved conventional TV ad sales from a strong fall programing lineup, as well as higher year-over-year out-of-home advertising and digital growth. Subscriber revenue was essentially flat year-over-year, as Pay TV subscriber decline were offset by growth in our direct-to-consumer trade and sports streaming services. Adjusted EBITDA grew an impressive 2.9%, this was achieved despite operating cost growth of 1.7%, driven mainly by sports broadcast rights and ongoing creative programing expansion. With that, I’ll leave my comments on 2018 and move on to 2019.

Our 2019 financial guidance targets are summarized on slide 17. These targets have been prepared in accordance with IFRS 16 accounting standards and take in to consideration our current outlook, as well as our 2018 consolidated financial results which will not be restated to reflect the application of IFRS 16. For those of you who are not familiar with IFRS 16, it is the new accounting standard for operating leases that became affective in January 1 of this year. Going forward, many operating leases will now be recognized on the balance sheet as right of use assets and debt, similar to capital leases. With related expenses recorded as depreciation and interest expense, rather than operating cost on the P&L.

As a result, adjusted EBITDA is positively impacted revenue is not affected. Over the term of the lease, the total expense recognized under IFRS 16 will be equal to the previous accounting standard of course; however the timing of the expense recognition will change. Under IFRS 16 interest expense will be higher at the beginning of the lease term and decrease overtime as the liability decreases. Accordingly, the per lease expense is now more front end loaded, resulting in a negative year-over-year impact on net earnings and adjusted EPS in calendar ’19. Regarding the impact of reported free cash flow, the portion of the operating lease payments relating to the principal will now be recorded as a finance activity below free cash flow.

However, the impudent interest component remains in free cash flow, as a result, the absolute dollar impact of IFRS 16 on free cash flow is lower than the non-cash benefit to adjusted EBITDA. Our consolidated 2019 financial guidance targets are under pinned by a favorable financial profile for all three operating segments, building on the operational progress we’ve made in 2018 and reflecting our consistent and disciplined financial execution in a competitive market place. With healthy projected adjusted EBITDA growth contributing to higher year-over-year free cash flow generation, our financial foundation remains stable and strong, amply supporting a consolidated capital intensity ratio of approximately 16.5% for ’19 as well as the 5% increase in BCE’s common share that was announced this morning. Slide 18, provides some perspectives on our revenue and adjusted EBITDA outlook for ’19. We are targeting consolidated revenue growth of 1% to 3% which is consistent to our 2018 financial guidance when normalizing for MTS one quarter of incremental financial contribution last year.

This is predicated on our expectation for continued healthy wireless subscriber based growth, further internet TV market share gains, driven by our ongoing expansion of our FTTP and rural fixed wireless broadband footprints and higher residential household ARPU. We also anticipate a narrowing of the wireline business revenue declines on the back of higher telecom spending by large enterprise customers as GDP growth strengthens. On the media front, we expect revenue trends to stabilize despite the non-recurrence of the revenue from the 2018 FIFA World Cup and no simsub for this year’ Super Bowl broadcast. We also expect to benefit from the continued growth in Crave and our out-of-home advertising as well as a recalibration of media spending allocations by advertising towards linear TV given its broader and more targeted customer reach. With respect to adjusted EBITDA, because of the continued strong wireless and wireline operating profitability, together with savings from a number of cost containment initiatives, we’ve outlined our Q3 results call, as we outlined in our Q3 results call in November, we are projecting adjusted EBITDA growth of 5% to 7% for calendar ’19.

As I reference earlier, this growth range reflects a favorable non-cash impact from the application of IFRS 16. Excluding IFRS 16, consolidated adjusted EBITDA growth for 2019 is projected to be in line with BCE’s historical average growth rate of 2% to 4%. Turning to pension funding on slide 19; we made a $240 million voluntary contribution in December mainly to align the funded status of several of BCEs subsidiary defined benefit pension plans with a strong solvency position of Bell Canada brand, and to substantially reduce the use of letters of credit for funding purposes. With this contribution together with a higher solvency discount rate at the end of ’18, reflecting an increase in government bond yields, the average solvency ratio across the aggregate all BCE plans is now essentially in a fully funded position right around the 100% market. Given this strong valuation position and the markets expectation for higher interest rates going forward, no additional voluntary pension cash funding is currently anticipated for 2019.

As for BCE’s total normal course pension - cash pension funding for ’19 that is expected to remain stable year-over-year at around 375 million. As per the Bell Canada plan, it continues moving closer to a surplus position of over a 105%, at which point the contribution holiday can be taken on the annual current service cost. That opportunity to reduce BCEs annual cash pension funding of up to 200 million is becoming more and more tangible. Moving to our tax outlook on slide 20, the statutory tax rate for ’19 remains unchanged at 27%, while our projected P&L affective tax rate of approximately 25% reflects lower year-over-year tax adjustments totaling around $0.02 per share. We also expect cash taxes in 2019 to be maintained at roughly the same level as ’18 and around 650 million to 700 million.

This stable year-over-year outlook reflects the benefit of 100 million in additional MTS related tax losses this year, as well as the tax savings of approximately 75 million enabled by the new federal government investment incentive program that allows for accelerated expensing of capital expenditures. As a result of that program, we anticipate to generate savings in the range of 100 million to 200 million annually for the four years following ’19, which should help to significantly moderate the expected increase in cash taxes during that period. Slide 21, summarizes our adjusted EPS outlook for 2019, which we project to be 348 to 358 per share. This includes a negative non-cash impact on earnings totaling approximately $0.05 per share due to the difference between previously reported operating lease expense and the timing of depreciation interest expense under the new IFRS accounting standard for operating leases as I mentioned before. Excluding the financial impact of IFRS, adjusted EPS is expected to grow approximately 1% to 3% in ’19.

BCE’s free cash flow for 2019 is projected to be in the range of 3.8 billion to 4 billion. That represents year-over-year growth of 7% to 12% reflecting a flow-through of higher EBITDA as overall capital expenditures, pension funding and cash taxes remain relatively unchanged year-over-year. As I stated earlier, this growth range reflects a favorable non-cash impact from the application of IFRS 16 net of the incremental interest component related to the newly designed capital leases, as the portion of the lease payment relating to the principal are being recorded below free cash flow and finance activities. Excluding IFRS 16, free cash flow growth is expected to be consistent with our 2018 guidance range of 3% to7%, which fully supports the 5% common dividend increase for 2019 at the high end of our target payout ratio of 65 to 75. Lastly on slide 23, a quick update on our balance sheet and cash resources heading in to ’19.

As we begin the year, we have access to 1.8 billion of liquidity together with the capital structure that provides good overall financial flexibility to execute on our 2019 business plan in our capital market objectives. Our strong investment grade credit ratings, all have stable outlooks and our net debt leverage ratio is projected to improve gradually over the next several years, with steady growth in EBITDA and applying excess free cash flow to net debt reduction. Our leverage ratio in 2019 will reflect a one-time negative impact of approximately 15 basis points due to the adoption of IFRS 16, as we added approximately 2.3 billion capital leases to net debt on the balance sheet on January 1. As a result of this IFRS 16 impact, we are increasing our targeted net debt leverage ratio policy from the previous 1.75 to 2.25 adjusted EBITDA to now 2.0 to 2.5 times adjusted EBITDA. This range better aligns with our BBB plus credit rating and is consistent with the target ratios of our direct peers.

Our interest coverage is unaffected by the adoption of IFRS 16 and therefore remains unchanged. Also highlighted on the slide is BCEs favorable long term debt maturity schedule that now has an average term of 11 years and a historically low average tax cost of public debt of just 3.1% and no debt refinancing requirement in 2019. Finally, I would like to add that BCE’s approximately 1 billion in annual US dollar expenditures has been fully hedged in the 2020, affectively insulating our free cash flow exposure until that time. To conclude BCE’s fundamentals and competitive positions are strong as evidenced by our 2018 operating results. In 2019, we intend to build on that progress consistent with our financial guidance targets we announced today.

And with that I’ll turn the call back over to Thane and the operator to begin the questions period.

Thane Fotopoulos: Thanks Glen. So before we start the Q&A to keep the call as efficient as possible given the time we have left, I ask that you ask one question and one very brief follow-up to get to as many people as possible. So with that Valerie we’re ready to take our first question.

Operator: [Operator Instructions] our first question is from the line of David Barden with Bank of America.

Please go ahead.

David Barden: Maybe just on the fiber buildout George, I guess now you’ve gotten to 50% coverage, what is the cadence of the incremental expansion that you see and kind of the capital that you’re willing to put to work on the fiber side of that build. And then just a follow-up, kind of have you seen any effect from the Ignite TV rollout in the market place and then how its affected your go-to-market approach?

George Cope: So on the fiber side, our overall program for ’19 is pretty much consistent with ’18, I think we called it out on slide 9 I forgot the right slide there I think. At about $2 billion a year that does include part of the wireless to the prem build out as well, although on a cost per home not as significant as fiber in terms of the build. The cadence, we obviously don’t give guidance up for the year, after year after year, but the fact to look we’re doing 500,000 hopefully a little better on fiber the next year and a couple of 100,000 on wireless would be probably the safe thing to moderate that in to some type of model.

Now they’re over the 50% number and everybody can do the math what 0.5 million means. We get further and further in that footprint being – to starting to touch some of the real markets ultimately in natural Wireless to the Home. If you take our total chart there it shows FTTN or FTTH and our wireless footprint at 9.8 as of the end of ’19 and if you’re in a rollout on top of that another million Wireless to the Home premises, you start to get our footprint being fully competitive as we overlay the FTTN with FTTH, so hopefully that gives people a sense of where we are. And we don’t think you’re going to see acceleration in that program, we think it will be consistent over the next while and that’s why when we mentioned on the call last quarter, the mix issue of wireless being more of our business and the stable wirelines allowed Glen to give some guidance a little more precise on a capital intensity to roughly 16.5 this year, which (inaudible) we know slightly different than where we’ve been historically.

David Barden: And to assist on the Ignite TV?

George Cope: Sorry, on the Ignite TV in the market place competing with us, we would say it’s a competitive market there.

Clearly that product had some success in the US so it’s going to keep us on our toes, but we’re pleased with our TV results and we’re just going to have to compete with that in the market. We’re really confident. We think the one place where maybe slightly different on that approach is our Alt TV product being also a product without a set top box saves us the cost there so we can sell it at a different price, focused particularly in the condominium markets where we now have fiber and two streams and that’s probably a little more of our competitive focus as well as IPTV traditional business competing against Ignite. So in the market place earlier show may be not a dramatic impact, but I’m sure but they are out there competing with us every quarter.

Operator: Our next question is from Phillip Huang with Barclays.

Please go ahead.

Phillip Huang: I wanted to ask about your wireline growth outlook, just given the investment gain growth in 10 years in Q4. Obviously your ongoing expansion in fiber and fixed wireless is going to be very supportive of that growth. There is also contribution from strength in Bell business market and product revenues which I assume could be potentially lumpy. So, just trying to assess if the strong growth in Q4 is an indication of that business is venturing in a period of faster growth or should we still think that the growth would be more consistent with the prior couple of years from now?

George Cope: It’s a great question, and giving a very precise answer, we’d love to give you exactly, obviously we are really pleased with seeing a couple of quarters on the wireline side of this type of revenue growth and flowing through to a little better EBITDA growth than we would have told you a few quarters ago on the wireline side and so the overall guidance, I don’t want to go down that range, other than to say BBM is clearly doing better in the market place, whether it’s going to be economics and market share, we’re not sure which of the two completely but certainly it’s a more positive view.

And if that were to continue than the wireline business does end up obviously in the stronger position, but two quarters doesn’t make for a long term model so we just got to keep executing and I hate to do this here, but frankly it’s just all within our overall guidance, but to be complete, finally to be transparent, we are very pleased at that type of topline and wireline growth above our expectations for a couple of quarters.

Phillip Huang: And then just a follow-up on the fixed wireless broadband expansion, I was wondering if you could talk a little bit about some of the areas that you've deployed the technology already and if there are any early indicators of customer adoption or feedback to the product itself?

George Cope: It’s very early, we’ve done a few markets and in those markets one was to make sure we really understood the cost, the technology, the line of sight that we’re going to do what we want it to do, that we could use our mobility sights and also get the backhaul in place for the fiber because you got to have the fiber backhaul. But in those markets we launched it was enough to convince us to have this type of a dramatic change in our approach to take it from nothing to 800,000 and now with CapEx, honorary capital to cost allowance to 1 million or 2 million. And in those markets as I mentioned, some of those markets we had 5% internet share, in some markets will be 15 and we saw not huge absolute numbers, but we saw households move to Bell that we haven’t had in a while. If you combine that with our satellite, as someone has local phone still then it gives a pack that we’ve not had, because suddenly people are getting speeds that frankly are just not available in those markets.

And so what’s got us making this investment, I think it’s a great way to grow our competitive footprint and if more markets were under 15% share, and if we can take that number up obviously that’s going to be good for everyone here on the line whose an investor.

Operator: Our next question is from Jeff Fan with Scotia Bank. Please go ahead.

Jeff Fan: First question is on wireline, the revenue was definitely stronger than expected. I was wondering if you can comment a little bit on the margins with respect to wireline, as we look a little bit forward and how or whether cost cutting if any is going to start to, should we start to think about that as a key contributor 2019? And then the second question is on the wireless side, great churn numbers, but I think what we’re seeing some moving parts compared to last year given the competitive activities that happened in Q4 ’17 with the promos.

I am wondering if you can talk a little bit about some outlook with respect to how churn and ARPU and then ads may look for 2019, because I think we are at least it seems like based on the results that we’ve seen so far and I know TELUS is going to report next week, but it just feels like there’s a little bit of moving activity in wireless more so than what we’ve seen maybe in the last couple of years.

George Cope: On the margin side, I think Glen called that out on the --.

Glen LeBlanc: I heard wireless margins.

George Cope: Excuse me wireline margins if you look at them from a calendar year, Jeff our record is very stable. They move around, in this quarter it was down a little bit, we had higher volume of product sales and as was mentioned earlier in the call they can be lumpy.

As we look forward we see stability in margins and I think 2018 is quite indicative of what we see going forward. Cost initiatives and cost efficiency that’s just part of what we do and execute on every bit? So not really subtle change there, and then on the wireless side, I think it’s an overall question, I mean for the company, certainly this years’ quarter we’re happy with the net adds, happy in terms of the swing on the prepaid and overall. Clearly last year’s fourth quarter has a bit of a unique happening in the market place and some of that share moved our way again it’s one of our largest competitors in a pretty dramatic way. But to us, I think as I said a little more normal quarter I guess is what I would say in terms of that, and then that’s in our results. From a churn perspective, we saw a decline year-over-year and we’ll see how that unfolds as we go forward.

And the issues on the ARPU as we mentioned, I think people are seeing the flattening of our ARPU here versus ARPU growth and that is frankly reflected of the competitive intensity that we’ve seen in the market place. And then on the wireless free cash flow, obviously the fact that our capital intensity is significantly below certainly one of our peers gives us the investment horizon that we needed to keep generating the free cash flow growth for shareholders on the wireless side. But clearly you know the (inaudible) are building out, the more competitive and that’s why we’re going in to other segments as well to try to pick up revenue and obviously making significant investments in IOT opportunities that will be as I mentioned large volumes of units and very small incremental dollars, but all adding up to something to help us on the cumulative front over time. I hope that helps answers Jeff.

Operator: Our next question is from Simon Flannery with Morgan Stanley.

Please go ahead.

Unidentified Analyst: This is [Langdon Park] on for Simon. Just wanted to quickly touch on the ARPU outlook on both the wireless and broadband side and if maybe you can also just talk about what you think about Crave profitability and penetration as well?

George Cope: On wireline ARPU, as people migrate to higher speeds on the broadband side, we will continue to anticipate to see ARPU growth in that space, because it’s the mix of clients moving to 1 gig to 1.5 gig generate for us some incremental ARPU growth on that product portfolio. On the wireless side as I’ve said we’ve seen, we saw flat really on a year-over-year basis and so now for us one of the thing that we’ll get in to later on with the analyst community, but of course prepaid growth is a mix of ours. I know there’s a denominator, a numerator map there, but we’re not going to forecast ARPU, we’re basically giving you our guidance on the consolidated basis and we’re just going to have to see because it’s pretty hard to predict last year up and down in terms of what was happening competitively.

And we do as Thane just handed me a note, this wasn’t my idea, but we’re laughing at the Government of Canada contract this year and as we get later in to the year.

Unidentified Analyst: When should that start rolling off there?

George Cope: Probably as we get in to the second half I was just told. Second half of the year. And so the other question was --.

Unidentified Analyst: Crave TV profitability.

George Cope: The consolidation of Crave is profitable because we’ve obviously combined it with our – we’ve now combined it with our linear business and OTT business, repackaged for our traditional Linear TV subscribers and as OTT product and the OTT product at $20 when you are on a TV subscription or over the top provides us a profitable business model going forward and obviously our goal here is putting some of these kinds that traditionally was only available through linear and not over the top we think will also help us improve our mix of over the top subscribers which for us of course had more profitability to BCE overall because the margins stays within the house at a 100% on that side. So now it’s just about subscribers’ growth, but it’s been well received in Canada at $20 Canadian. It’s quite a product and an amazing content having obviously the HBO and show time content in it, and now some of our growing subs there.

Operator: Our next question is from Aravinda Galappatthige with Canaccord Genuity. Please go ahead.

Aravinda Galappatthige: George I wanted to ask you about, sort of your early experience following the GTA fiber-to-the-premise roll out? Obviously you started more active marketing around it around April, May last year. Can you just talk a little bit about the market share shifts that you are seeing there and the competitive counter activity? I suspect it’s fair to say that much of the gains from the enhanced product is still ahead of us. But I was wondering how you just kind of saw the initial months in terms of market share shifts following that rollout?

George Cope: Well overall as we mentioned retail wise in the back half of the year we had growth overall net adds. We think that is – we know it’s a 100% driven by our total fiber footprint and fairly it’s not just Toronto. It’s our total fiber foot print that’s getting us that growth there’s no doubt about that.

Toronto itself is highly competitive also from the wholesale market perspective that’s one of the reasons we have Virgin brand as well in the market place selling there. When we step back and look at revenue growth, the share of revenue growth in the last six months of the year, we saw ourselves in some cases exceeding more than 50% of the net revenue growth in the industry in segments where we had fiber and that’s starts to bode well for us, we really want these investment pieces to go. We’re likely to be both subscriber and revenue growth, but clearly there’s been price activity in the wholesale side that works against that, but we’re – we’ve got to have the fiber footprint, we see it in the last half of the year and I was just overtime executing in that with the 1.5 speed that we have in the market.

Aravinda Galappatthige: And just quickly to follow-up on the comments you made earlier about media and improvements in the advertising front. I just wanted to get your thought as to sort of your view how material advanced solutions on the advertising front or what you call ad tech would be down the road to sort of help maintain that stabilization and any initiatives you can kind of talk about right now?

George Cope: We have initiatives, we are actually executing now in the market place with our clients at Bell Media.

There’s some other technology work to take that to another level because we know that’s where we need to take that product portfolio to, and its early days, if I have Randy on the line with us, he would be telling some early wins that we’re seeing, but we’ve got some technology evolutions there to do as well to help it. I would in fairness not say that really had the impact on the fourth quarter results. So just overall strength in the overall business and as one, I guess businesses are feeling better about their own organizations are advertising and secondly, I think Glen’s correct, we certainly saw movement back in to this space. Even by company we just sell a lot of their products only in the OTT world advertising a lot on the linear world and Canadians up here watching would have picked that up as well. And the other thing that I thought was positive was one of our peers reported as well, it was just in the media business, a good quarter as well.

So clearly it was something across the market which usually for investors is better than just market share moves for the obvious reason. So let’s hope that there are goals going forward, but its early days in to the new years and we’ll have to see.

Operator: Our next question is from Richard Choe with JP Morgan. Please go ahead.

Richard Choe: On the wireless metrics, the subscriber and topline were a little light, but it seems like profitability was significantly better.

Is there a focus on not worrying about Bell’s customer accounts and more profitable customers? And as a follow-up, it might be too early days, but are you seeing the prepaid to postpaid migrations from the new prepaid product.

George Cope: Yes, so let me start at the end and then go back to the beginning. Prepaid’s very, very small for us so far, literally all of our net adds are coming off of the back of our traditional gross postpaid sales, which as we know is different than one of our peers has done a great job with that and one of the reasons we’re in that prepaid market as we are to ultimately get some of that conversion opportunity. In terms of the market, it’s kind of interesting, if you look at our results versus so far only one of our larger peers as reported, we’re happy with our relative share, our relative results, a pretty normal quarter. If you take away last years’ fourth quarter that all that unique promo, one of our competitors has been quite public about having some execution issues.

So we thought it was a relatively good quarter. We’re really pleased to see the prepaid market share swing our way and that’s where the revenue growth comes. On the cost side, you’re right and that we did execute that cost restructuring the company and that was across the entire organization in the fourth quarter. But I don’t want anyone to call it that somehow we backed off in the fourth quarter. That’s just the market that took place, sets us up well and I think maybe a couple of the analyst won’t fail to take these people through and a little bit offline, but there were some government net adds last year in the fourth quarter, most of it came in the first quarter, there were some.

So if you do a year-over-year, I think the street will say it’s (inaudible), it did all kind of [washing] that some people had in mind.

Operator: Our next question is from Drew McReynolds with RBC. Please go ahead.

Drew McReynolds: George just back on Crave TV as far as a Canadian OTT service goes; you guys have done a great job locking down the premium programing. Just wondering, given the success to date now that you’ve added and enhanced as a platform, any thoughts on do you have enough scale to really grow that [sub-base] that you’re targeting, would you consider bringing in partners strategic or financial to take it to the next level? And a follow-up just on home security, if you could provide an update just on how that business is performing and how its contributing?

George Cope: So on the Crave, first I got to care, but its core development is always something you don’t want to comment on.

But I would say we’re happy with the structure we have on that, we’re really happy with our strategic supplier relationships with HBO, with Show Time, with those relationships and the long term nature of those agreements like HBO. So that’s probably where we are there, it doesn’t mean we’re not going to – the two other – I think we announced something this morning with stars on the content side. That’s not ownership, but it’s another relationship and we do think at $20 Canadian that amount of (inaudible) product and I know for sure, pretty sure online US investors and all the US market place 20 Canadian for Show Time, HBO, OTT product is a very competitive product in the market and is profitable for us combined with our Linear TV. So now it is truly about pursuing those relationships and arming those other global (inaudible) players and leveraging that through our stronger distribution and our BDU partners. I mean one of the things we didn’t mention, but you may be aware if you were in Toronto, our number one competitor here in Toronto has now launched Crave and they are now distributing it, our understanding is they like the product and that’s going to help drive Crave subscribers for us and they make the great margin on that product, so it’s good for them as well.

So we’re feeling that we’re in the right space there to offer competitive, compelling products to the Canadians. And in our home security, actually it is working as we wanted it to. It is helping us with some stickiness on the internet site. That product gets – there’s some little better integration that goes on next year on that product site, so we’ll continue to see some steady growth there. It’s not in our RGU metrics anywhere, so we don’t have it in our internet like some of our peers do, it’s just a standalone business unit.

So I think we’re happy with the first year, product rollout become a little more competitive in terms of integrating in to Bell and I think we’re pretty optimistic that it has given us the right platform. That’s what I would say, but it’s really just – and you guys don’t see some metrics on it, because otherwise you have to roll it in to another number and frankly I don’t think it’s going to help you get a clarity on these other products we’ve got.

Operator: Our next question is from Vince Valentini with TD Securities. Please go ahead.

Vince Valentini: Can I just get a clarification and then a question? From the midpoints of your guidance and the adjustments Glen is it fair to say the EBITDA impact from IFRS 16 is around 196 million and the free cash flow impact is around 160 million?

Glen LeBlanc: No, the actual impact from the changes of IFRS 16 is about $275 million on revenue, a $175 million approximately on free cash flow and then of course the differential of 100 million is interest expense and that would be an interest.

Vince Valentini: 235 you said revenue, but there’s no --.

Glen LeBlanc: Excuse me, EBITDA. 275 EBITDA with a 175 going to free cash flow and a 100 of that is interest.

Vince Valentini: The other question, the announcement yesterday I think it was on the City of Markham and the smart city, it seems very interesting. We’re all chopping in to bits to trying to figure out the revenue upside could be from 5G in the future and how these deals work between the connectivity provider like you and it seems like IBM is the IT provider.

George can you give us any sense as to what kind of revenue you see here and what pathway it gives to may be more low latency 5G and IoT services in the future with these kind of city partners?

George Cope: I would say that we’re like you; we’re chopping on the bit to figure out what the revenue opportunity is going to be, so it’s a great way to describe it. I would suggest we have four now, I think that’s our fourth smart city project we have going, each one of them is a result of having our fiber and our wireless networks as integrated as they are and some of these partnership with IBM and so people will start to see some application rollouts in those communities and start with managed service contract and ultimately hopefully for us recurring revenue streams. It is so early for us to start putting quantified dollars against it, but more importantly we get the low subscriber revenue or a low unit revenue up IoT at some point, we get managed service agreement, and of course it is important for us because these are large wireline clients of ours as well. So we think we’re really well positioned to be in that space, particularly those markets that have the fiber. But you’re right it’s really early to us to put any number against it other than we’re pleased we’ve got communities we’re working with.

Thane Fotopoulos: In interest of time Valerie, this will be our last question.

Operator: Our last question is from Maher Yaghi with Desjardins. Please go ahead.

Maher Yaghi: I wanted to ask you, just so I have a question on wireless ARPU and just a follow-up on IFRS 16. So, on the wireless ARPU is it fair to say that the peak or we should start to see less pressure on year-on-year numbers in Q1 as we start to lap the government contract then.

You talked about the impact on ARPU coming from pressure on over agenda, the fact that the data buckets are getting larger. How much over edge is there still in the ARPU number, or if you don’t want to give a number, how much more pressure are we to expect if let’s if we suppose that the data buckets stay around these levels. Are there still more downside pressure on ARPU just from the change in the over edge year-over-year. And on IFRS 16, what is the discount rate you’re using internally to calculate your interest cost portion of the operating lease cost.

George Cope: I’m definitely not going to answer two (inaudible), I will answer question one.

In terms of the – the second quarter changes (inaudible) know in terms of launch frosting the government contract and then we’ll start to see what quote normalized ARPU is without the impact of the government. So in Q2 we’ll probably know that answer. On your second point frankly you’re on the track of what is driving I think some of the stabilization if that’s the right term in ARPU versus the traditional ARPU growth we’d all seen and that the buckets are absolutely getting larger and so our out of bucket revenue is less than it was a the previous year and that’s where some of that mix change is for sure, and we’ve mentioned every quarter trying to normalize out for the government contract. And then for us the other issue and analyst of course will all know this, if we do more prepaid, even a postpaid will do exactly the same net adds than more prepaid, the math, the numerator, denominator trades that off a little bit, but that doesn’t impact. That’s a positive, that’s an accretion of the cash flow.

So I think at the end of Q2 we can maybe re-ask the questions here what we asked. Q1 is going to be a – because this hasn’t got the governments stuff going full through till we get to Q2.

Glen LeBlanc: It’s Glen on your second question on IFRS 16, I think we did a real good job today laying out all the components and how they impact our results. I mentioned $2.3 billion of leases will be added to our balance sheet, approximately a $100 million that results in $100 million of computed interest expense, so 4.5% approximately is what your rate is. So I think through our remarks today you get a real good handle on how IFRS 16 changes have impacted results.

Maher Yaghi: And have you changed how you account for year-over-year change in capital deployment on handset subsidies in your free cash flow calculation?

Glen LeBlanc: No changes to our free cash flow definition at all.

George Cope: Thanks everyone for your participation this morning on the call. I will be available throughout the day for any follow-up questions and clarification. So have a good rest of the day. Thanks for participating.

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