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Operator: Good morning, ladies and gentlemen and welcome to the BCE Q4 2022 Results and 2023 Guidance Conference Call. I would now like to turn the meeting over to Mr. Thane Fotopoulos. Please go ahead, sir.

Thane Fotopoulos: Thank you, Mode. Good morning, everybody and thank you for joining our call at this unusually, but unavoidable early start time. With me here today are Mirko Bibic, BCE’s President and CEO and our CFO, Glen LeBlanc. You can find all our Q4 disclosure documents, including our Safe Harbor notice concerning forward-looking statements for 2023 on the Investor Relations page on bce.ca website, which we posted earlier this morning. We have lot of material to get through this morning on this call. However, before we begin, I want to draw your attention to our Safe Harbor statement on Slide 2 of the presentation. With that out of the way, I will turn the call over to Mirko.

Mirko Bibic: Thank you, Thane and good morning everyone. Our 2022 accomplishments are anchored to the operational priorities we set back in 2020 and the Bell team’s unwavering commitment to all our stakeholders. These priorities remain the foundation for Bell’s future success. With a strategic roadmap, including a historic multiyear transformational accelerate CapEx program that is well advanced and already paying off with subscriber loadings and improved end-to-end customer experience, leading self-serve apps and consistently strong execution, the Bell team delivered great results across all operating segments this past year. In terms of overall financial performance for 2022, we essentially achieved the midpoint of guidance for both revenue and EBITDA growth despite unprecedented cost pressures from inflation and record storms an expensive and highly competitive Black Friday and media advertising softness.

Normalizing for $87 million in largely unplanned inflation and storm-related costs this year, EBITDA growth was actually 4%. We are making massive investments to build the highest quality networks and they are consistently being recognized by third-parties such as PCMag, Ookla and OpenSignal as being the fastest. Our customer value proposition is to offer the best networks at affordable prices. And we are loading these networks profitably while maintaining margin stable in a highly competitive marketplace. It’s a notable achievement. Since 2020, we have accelerated CapEx, investing more than $14 billion, the highest ever over a 3-year period by Canadian Communications company and we are doing it to forge ahead aggressively on constructing the broadest fiber footprint in North America, opening up Wireless Home Internet to 1 million rural homes in rural communities and building our mobile 5G networks faster.

In the past 3 years alone, we have delivered over 2.6 million new customer-ready broadband Internet locations, including a record 854,000 direct fiber connections in 2022. We have expanded mobile 5G coverage to 82% of Canadians and we have secured a $2.1 billion worth of critical 3.5 gigahertz mid-band spectrum, with which we deployed a standalone 5G plus network. In our Wireless segment, we continued growing our base of high-value mobile phone subscribers, increasing our cross-sell penetration of wireless and Internet households and managing customer churn. Total mobile phone net adds in 2022 were up 66% to $490,000, driving both service revenue and EBITDA growth of more than 7%. With only 41% of postpaid customers currently on 5G-capable devices as well as accelerating immigration levels and a sharp focus on bundling wireless and consumer Internet service, we see good runway for continued growth.

On the wireline front, fueled by our biggest annual fiber build-out ever, we added 201 762,000 new net retail Internet customers in 2022. That was up 33% over 2021 and our best result in 16 years. That drove strong residential Internet revenue growth of 8%. In fact, we capped off 2022 with our best annual residential RGU performance and our first year of positive net adds since 2005. These results are a testament to the power of fiber-based Internet service that provides the fastest dedicated symmetrical speed that cable just can’t match. By the end of this month, multi-gig symmetrical internet speeds of 3 gigs per second or higher will be available in 5 million locations and 1 million of these will have access to 8 gigabits per second. And our acquisitions of EBOX and Distributel also further strengthened our competitive position and support our Internet growth strategy with more service options for value-conscious residential and SMB customers.

Despite a challenging macroeconomic backdrop for advertising, our Media segment performed better than expected driven by continued strong digital revenue growth, which is up 54% in 2022 and now comprises 29% of total Bell Media revenue compared to 20% in 2021. Underpinning this performance was Crave, which grew direct streaming subscribers by 26% in 2022 on the back of market-leading content as well as rapid growth of our SAM TV sales tool, which nearly tripled sales revenue for a second consecutive year. We are also developing a strong customer-first culture. Investments in our people and in the tools they need to support our customers as well as investments in digital functionality, AI and machine learning capabilities, together with the unmatched quality and reliability of our networks, as I have mentioned, all of that is leading to higher NPS scores, lower customer churn and meaningful CCTS performance improvement.

On the ESG front, the Bell for Better initiative, which highlights our leadership in mental health, environmental sustainability and workplace engagement also made notable progress in 2022. We were named by Corporate Knights, the top telecom company and number four in Canada overall on the Best 50 Corporate Citizens list as well as the inaugural Greenhouse Gas Reductions Champion by Clean 50, a National Sustainability organization. And reflecting our ongoing efforts to engage and invest in our people, Bell was named one of Canada’s top 100 employers for the eighth consecutive year by Mediacorp. This latest recognition reflects our success in key areas, including employee benefits, training and skills development and community involvement. And just last week, we proudly launched a new era of Bell Let’s Talk in response to the growing need for mental health services in Canada.

We are committing an additional $10 million towards our goal of $155 million in funding for Canadian mental health programs, replacing the $0.05 per interaction donations made in previous years. Exceeding any previous Bell Let’s Talk Day donation, this funding will help support vitally important mental health projects all year round and it will allow us to put more emphasis on the practical ways we can all make positive change on Bell Let’s Talk Day and throughout the year. Let me turn now to Slide 6. Starting with Bell Wireless, I’ll give you an overview of some key operating segments. We are very pleased with our postpaid wireless loadings. We had a record quarter of gross activations that drove 155,000 new net subscribers and that’s up 41% over 2021 and 148% higher than Q4 2019.

This strong result was achieved even with a higher number of switchers, reflecting aggressive offers from our competitors that we chose to match selectively. For the first time since 2019, Q4 retail foot traffic and shopping activity was unrestricted and back to pre-pandemic levels of competition, particularly during Black Friday €“ that whole Black Friday period actually, which was very promotional intense in 2022 of Q4 €“ Q4 of 2022. That said, all the work we do on cost and the strength of our balance sheet and liquidity position prepared us financially to load the subscribers that we did despite a level of promotional activity that was higher than any of us would have desired. ARPU was up 0.5%, which is our seventh consecutive quarter of growth.

This was supported by higher roaming revenue that was at 112% of pre-COVID levels and our continued focus on higher value subscriber loadings even as higher transaction intensity moderated ARPU growth due to the financial impact of the shift to installment plans. For mobile connected devices, net adds will increase an impressive 168% over last year to $104,000 driven by continued strong demand for all Bell IoT solutions. Let’s turn to wireline, another strong RGU quarter. In fact, we have now delivered positive retail residential net customer adds, including satellite TV and local phone in four of the last six quarters, and I have already mentioned our performance for the full year 2022. Bell Internet added 63,466 new net retail subscribers and that’s 33% higher than 2021, driven by strong growth in every region.

This was our best Q4 performance in 18 years. Notably, 70% of consumer fiber activations in Q4 were on gigabit or higher speeds, bringing our base of gigabit or higher customers to approximately $1 million or 43% of total fiber subscribers at the end of 2022. And it was another great quarter for Bell IPTV with our best quarterly result in almost 7 years as we leveraged our multi-brand customer segmentation approach to drive 40,209 net adds, up 38% versus 2021. At Bell Media, as I said, advertising sales were better than we feared going into the quarter. Q4 ad revenue was up 3.8% over the previous year buoyed by strong demand for the FIFA World Cup, demonstrating the massive popularity and the value that advertisers place on premium sporting events.

This helped TSN and RDS assume they are ranking as the top English and French language sports channels in Q4 and they are also off to a good strong start in 2023, thanks to the World Juniors and the NFL playoffs. Crave also continued to deliver with total subs up 6% over last year, surpassing $3.1 million. This, together with the increased adoption of our advanced advertising platforms and expanded AVOD offerings, contributed to a robust 46% growth in digital revenues in Q4. And our Quebec media strategy continues to hunt as we led all competitors in Q4 in the French language specialty market and that includes news and sports. Let me turn now to Slide 7. Our 2023 business plan is anchored to our strategic framework to build, to execute and to transform.

It’s a prudent plan designed to mitigate the effects of a potential recession, to maintain the generational investments in our networks and in our services and to support our dividend growth model. Although we can’t accurately predict the severity and magnitude of an economic downturn, we know our business is resilient and that our financial position is rock solid to weather potential impacts. As a result, we remain optimistic about our business outlook as you see reflected in our financial guidance targets for 2023. As I said last February, so February 2022, in line with our accelerated capital investment program, CapEx will begin to decrease in 2023 from what we clearly stated would be a peak spend year 2022. We plan to invest around $4.8 billion in 2023 and that’s to support the expansion of our pure fiber footprint to another 650,000 homes and businesses.

Approximately, 85% of our planned broadband build-out program will be done. That comprises approximately 10 million total combined fiber and wireless home Internet locations. By the end of the year, we will have 4 million homes that will be able to access symmetrical Internet speeds of 8 gigabits per second. We will also grow our 5G wireless footprint in 2023 to cover 85% of the national population and will enable low-latency standalone 5G service for 46% of Canadians or 71% of the addressable population. We plan to continue to win the home by leveraging our symmetrical Internet speed advantage over cable, delivering the best WiFi with WiFi 6E and our GigaHub modem and will drive greater cross-sell penetration of higher value, lower churn wireless and Internet households.

In wireless now, we plan to grow mobile phone net adds by capitalizing on our network leadership an accelerating 5G upgrade cycle and higher immigration levels. And building on our retail distribution leadership, you will have seen that earlier this week, we announced an exclusive multiyear distribution agreement with Staples, Canada to sell Bell consumer and small and medium business services and more than 300 of their stores across the country. In our B2B sector, our objective is to build on our improved results from last year. In fact, 2022 represented our best SMB financial performance in over 15 years and we expect to maintain this momentum in 2023 by expanding in key channels and leveraging our fiber footprint. In the large enterprise space, we will continue to put in place the foundation for our advanced products and services portfolio that will drive growth in the medium to long-term.

And at the same time, we are carefully managing our legacy portfolio through a combination of cost discipline and a focus on key legacy products. And at Bell Media, we will continue to drive advanced advertising and digital products like Crave and the CTV and Noovo apps to help offset some of the recessionary pressures we are seeing in advertising, particularly expected in the first half of 2023. Lastly, with respect to our work €“ with respect to our transform work stream, we will continue to focus on end-to-end customer experience improvements that make it easier for customers to do business in south and we will do this by investing in digital self-serve and high-touch interaction. We also intend to drive operational efficiencies through enterprise architecture and agile development, automation tools, product and process simplification, integration of central billing systems and an ongoing attention to our cost structure in order to maintain a stable margin even in the face of a potential recession.

Now, let me turn to my last slide, which is Slide 8 and our dividend announcement from this morning. The financial pillars of our 2023 plan enabled us to execute on BCE’s dividend growth objective, which is a top capital markets priority as you all know. We are increasing the BCE common share dividend by 5.2% for 2023. It’s our 15th uninterrupted year of a 5% or higher increase and my fourth as CEO. Although CapEx will be lower in 2023, it will remain elevated compared to pre-2020 baseline spending and this is why our dividend payout ratio will remain above our historical free cash flow target range of 65% to 75%. We are delivering on the strategic initiatives that we transparently laid out for you 3 years ago. And I am so pleased with how far we have come in such a short period of time, the future-proof this great company competitively in a changing world and this will position us for continued success.

Our unmatched collection of assets, including the best networks and the most innovative products, our digital transformation journey and our customer-first approach will serve as the springboard to deliver the operating metrics and the financial results that all of you and all of our shareholders have come to expect from us. And on that, let me turn it over to Glen.

Glen LeBlanc: Thank you, Mirko and good morning everyone. Q4 marked another quarter of consistent and focused execution with a 3.7% increase in consolidated revenues that was driven by year-over-year growth at all Bell operating segments despite economic conditions that continue to pressure media advertising and our B2B sector. I am quite pleased that we delivered positive EBITDA growth this quarter even while absorbing $26 million in incremental storm recovery and inflationary cost pressures, higher media programming costs and a very expensive and highly competitive Black Friday period. If I take a wider lens view of 2022, the accelerated CapEx investments we are making are paying off with some of the highest wireless Internet and TV subscriber loadings we have enjoyed in over a decade.

That said, all of the work we do on cost and the strength of our balance sheet prepared us financially to be able to afford the subscribers that we acquired. And despite a step-up in competitive intensity, exceptional cost pressures and other economic challenges impacting our business, we still landed 2022 with a stable margin. Why? Because no one is better at managing costs. That core competency will continue to serve us well as we go forward. Net earnings and statutory EPS in Q4 were down year-over-year due to non-cash asset impairment charges, mainly for Bell Media’s French language TV properties to reflect market conditions economic-related pressures on current advertising. Although adjusted EPS was up 5% for the full year, it was down this quarter, decreasing 6.6% to $0.71, due mainly to increased interest expense because of higher rates.

And despite a historical year for CapEx with total spending in excess of $5.1 billion, free cash flow was up 2.9%. Notably, our reported CapEx number includes cash amounts received upfront from the Quebec provincial government as a subsidy for the build-out of high-speed fiber in rural communities, which, as per IFRS rules, must be accounted for as a non-cash increase in capital expenditures. Let’s turn now to Wireless on Slide 11. Overall, a very good set of financial results this quarter. Total revenue up 7.7%, fueled by robust postpaid subscriber growth and a higher proportion of customers on higher-value 5G unlimited plans, strong demand for Bell IoT services, continued roaming improvement and higher year-over-year mobile phone sales transactions that drove an 11.7% increase in product revenue.

Mirko has already pointed out, it was an expensive quarter for postpaid subscriber acquisition. This had a direct impact on EBITDA growth, which increased a solid 4.1% in the quarter. Let’s turn to Slide 12 on Wireline. The second consecutive quarter of positive top line growth with total revenue up 0.5%. This was led by continued strong residential Internet revenue growth of around 9%, higher year-over-year SMB revenue and 17.2% increase in product revenue. A good result given the ongoing legacy declines global data equipment shortages and richer promotional residential bundle offers. Further, to this last point, given our industry-leading wireline margins, broad geographic scale and fiber superior cost structure, we have room to compete on price as multi-product bundling helps drive lower churn and greater customer lifetime value.

Notwithstanding higher revenue, wireline EBITDA was down 0.6% due to $23 million in storm recovery costs and inflationary pressures absorbed in this quarter. Normalized for these costs, underlying EBITDA growth was quite respectable this quarter, increasing 1.1%. Slide 13 on Bell Media, against the backdrop of challenging economic conditions, but contrary to our North American media peers, Bell Media delivered revenue growth of 4.7% in the quarter. Despite soft overall TV and radio advertiser demand, total advertising revenue was still up 3.8%, and this was driven by record sales for the 2022 FIFA World Cup and continued strong out-of-home and digital growth. Subscriber revenue grew 5.4% on the back of strong Crave and TSN direct-to-consumer streaming growth.

These results are a testament to our programming strength, diversified mix of media assets and focused execution of our digital-first strategy. Similar to previous quarter, EBITDA was down 15.7%. This result was anticipated given the broadcast rights cost of the FIFA World Cup and the ongoing normalization of TV €“ of entertainment TV content deliveries. This €“ that does it for the quarterly results. I want to move on and talk about the new reporting segment structure. I want to bring your attention to an important change that we’re making to our segment reporting structure starting this year. As highlighted on Slide 15, beginning with Q1 2023 results, our previous wireless and wireline operating segments are being combined into a single segment called Communications and Technology Services, or CTS.

Bell Media remains a distinct operating segment. Consolidated BCE financial results are unaffected. The reason for this modification is to align with organizational changes we made in calendar €˜22 and to reflect the increasing strategic focus on multi-product sales and our digital transformation. Wireless and wireline service and product revenues will continue to be reported separately, and there will be no change to subscriber-related operating metrics disclosure. However, adjusted EBITDA will now only be reported for the combined Bell CTS operating segment with no split for wireless and wireline. For comparative purposes, we have provided you with our quarterly 2022 segmented results on the new basis of reporting. Slide 16 provides some perspective on our revenue and adjusted EBITDA outlook for 2023.

Guidance ranges are the same as in 2022, with consolidated revenue growth of 1.5%, adjusted EBITDA growth of 2.5%. Given this outlook, we project BCE’s margins to remain stable in the coming year. Based on the latest economic forecasts, we must plan for a potential recession. While we can’t accurately predict the timing and the pace of that economic downturn, the fact that we are maintaining, the same target guidance ranges as last year shows the confidence we have in our business outlook and the strength of our franchise to execute under any circumstances. Underpinning this steady growth is a strong financial contribution from Bell CTS, reflecting continued wireless subscriber momentum driven by 5G acceleration, fast immigration growth and a sharp focus on the multi-product cross-sell.

Further, but more moderate, year-over-year rolling revenue growth and a continued consumer wireline performance as we leverage our fiber and our product leadership in the home as well as our recent acquisitions of EBOX and Distributel to drive a high market share of Internet and TV net additions and revenue. We also expect an improving performance trajectory of our Bell business markets predicated on higher product sales and a resumption of project spending by large enterprise customers as supply constraints ease. Against that backdrop, we will be maintaining a close eye on costs to mitigate the financial impact of ongoing legacy erosion, which continues to slow and of course, macroeconomic pressures. At Bell Media, although we continue to experience soft TV and radio advertising demand in the early stages of €˜23 as the economy impacts advertising budgets.

We do expect a recovery as the year progresses. We also expect to benefit from the continued growth in Crave and out-of-home advertising while also leveraging Bell Media’s advanced advertising platforms and digital capabilities to grow our market share of digital ad spend. Taking all of this into account, we expect to generate positive revenue growth in €˜23 €“ despite the non-recurrence of FIFA World Cup advertising revenue and the one-time retroactive adjustment to subscriber revenue that we recorded in Q1 of €˜22. Lastly, despite a resetting of the cost structure in €˜22 that brought TV and programming and production costs closer to pre-COVID levels, we will be absorbing even higher spending in €˜23. This is due to higher costs for sports rights and other premium contact as well as further program volume normalization, which will weigh on Bell Media’s EBITDA growth this year.

Let’s turn to Slide 17. The funded status of BCE’s defined benefit pension plan remains strong with a weighted average solvency ratio of 117% at the end of €˜22. Our pension plan was in the solvency surplus position when interest rates were at historical lows. Now that rates have increased, it has further strengthened that value duration position. With every DB pension plan now above the required 105% threshold, we will be able to monetize a full contribution holiday in 2023, resulting in cash savings of approximately $230 million versus the $145 million we enjoyed in €˜22. This level of annual cash funding reduction is expected to continue well into the foreseeable future, as we project the solvency ratio to remain above 105%. In fact, with a substantial solvency surplus of $3.3 billion that has a very low sensitivity to interest rate changes, there is little risk that our pension plan ever goes back into a deficit position.

Moving to our tax outlook on Slide 18, the statutory tax rate for €˜23 will remain unchanged at $26.8 million. Our effective tax rate for accounting purposes is also projected to be essentially around that level, reflecting no tax adjustments this year compared to $0.10 per share in 2022. We expect a step-up in cash taxes for €˜23, increasing to a range of $800 million to $900 million, up from $749 million this year, and this is due mainly to higher taxable income projected for the year. Slide 19, despite positive EBITDA growth and lower pension financing costs, we project adjusted EPS to be between 1.10 €“ excuse me, 3.10 and 3.25 per share for calendar €˜23 or 3% to 7% lower compared to €˜22. The year-over-year decline is a direct result of the $0.10 per share year-over-year decrease in tax adjustments that I just referred to.

An approximate $200 million increase in depreciation and amortization expense and a further step-up in interest expense due to higher rates and the higher level of debt outstanding. Over to Slide 20. Slide 20 summarizes our free cash flow outlook, which we project will grow again by 2% to 10% in €˜23. Similar to last year’s growth range and reflects the strong flow-through of our higher EBITDA, lower year-over-year pension funding and an approximate $300 million decrease in CapEx that will drive a lower capital intensity ratio of 19% to 20%. BCE’s free cash flow generation is strong, reliable and well protected from macroeconomic uncertainty due to the recession-resistant nature of the majority of our revenue streams, providing strong support for the 5.2% dividend increase we have announced this morning.

Let’s turn to our balance sheet. I’ll make a few brief comments on Slide 21. We have access to $3.5 billion of liquidity as we begin the year and a balance sheet that provides good overall financial flexibility to execute on the business plan and the strategic priorities of €˜23. Our net debt leverage ratio, while elevated at 3.3x adjusted EBITDA due to several years of generational CapEx spending and critical spectrum investments, is manageable and projected to remain relatively unchanged this year. Our debt capital structure remains very well structured with an average term to maturity of around 13 years, a low after-tax cost of debt of just $2.9 million and a relatively high proportion of fixed rate debt. Additionally, we have no material refinancing requirements this year as $1.1 billion of the 23 maturities was prefinanced and early redeemed in €˜22.

This permits us to be opportunistic in assessing the €“ accessing debt markets this year to further strengthen our liquidity position and extend durations and maturities ahead of the anticipated C-band spectrum auction. Finally, to conclude BCE’s fundamentals and competitive position are strong as ever as evidenced by our 2022 operating results and consistent financial guidance target of €˜23. In 2023, we intend to build on operating momentum underpinned by our proven ability to execute under any competitive or economic conditions and our set of industry-leading assets that will continue growth for years to come. And on that, I will turn the call back over to Thane and the operator for questions.

Thane Fotopoulos: Thanks, Glen. So given the volume of information we presented this morning, I’m sensitive to the time we have left for Q&A. And usually, this quarter, one of our peers is hosting I will call 8 a.m., so respecting all of your time in that of our competitors. So with that Mode, we are ready to take our first question.

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Operator: Thank you. Our first question is from Maher Yaghi from Scotiabank. Please go ahead.

Maher Yaghi: Yes, good morning. I know it’s early. So we appreciate the help that you guys are going to have both companies called run different €“ on different times. I wanted to maybe start by asking you, Mirko, about the guidance that you provided for €˜23, one to five on revenue, two to five on EBITDA exactly the same as you had in €˜22, which is quite impressive, given all the macroeconomic changes that we’re seeing right now. But I wanted to ask you what’s underpinning that guidance when it comes to macroeconomic view as well as competitiveness in the marketplace in case we see a large transaction close during €˜23, which a lot of people, investors are wondering what it can or can’t do to the competitive intensity in the market?

And maybe if I can, just a follow-up on the regulatory side, we have seen a new change at the CRTC level. What’s your take in terms of what we should expect from regulatory body that is looking more and more on improving prices for Canadians as discussed in the media recently? Could that change the environment for you and participants in the industry? Thank you.

Mirko Bibic: Thanks, Maher. Good morning and good questions. So what I’ll do €“ Glen, maybe you can unpack the guidance. I might have a few things to add on the guidance question, and then I’ll continue with the regulatory question.

Glen LeBlanc: Absolutely. Good morning, Maher. As I said in my opening remarks, I mean our guidance speaks volumes to the confidence we have in our business and the resiliency of our business. When we €“ absolutely, we expect there to be a recession, albeit I personally believe it will be short and shallow. The guidance we provided here takes into consideration that recession. We haven’t seen any changes at this time to consumer demand. The market remains active and healthy and proof points are in our results, record postpaid mobile phone, gross activations, best Internet ads in 16 years, a strong wireless service and residential Internet revenue growth. And in fact, consumers are upgrading to higher service tiers rather than downgrading.

On a B2B front, there is been no indications of pause in new orders or customers looking to cut spend. So I think when we look at the health of our business and some of the challenges we face in calendar €˜22, Mirko mentioned $87 million, $44 million in inflationary pressures that we experience this year and $43 million of costs €“ or excuse me, storm costs. A typical year, a good year, maybe a $5 million in storm costs with changing weather patterns. That’s probably been closer to $10 million in recent history. $43 million is extraordinary, and I knock on wood, something we don’t repeat. And although I don’t think we are out of the woods completely on inflation. Of the $44 million, about $21 million of that’s labor, $16 million fuel and about $7 million utilities.

The labor started really in the back half. So, I would suspect that, that type of pressure continues into €˜22 as we have another half year before we start lapping that, but I don’t anticipate the same pressure on fuel or utilities. So all-in-all, I think the 2022 results were pretty strong considering we had that. And with those headwinds behind us, I am very confident in the guidance we provide. Thanks. Mirko, you are going to make some comments?

Mirko Bibic: Yes. Just €“ I am not going to repeat any of that because that was very good. I will just add the following. So, at the highest level, Maher, I think the investors €“ our investors should have confidence like we have a clear strategy, we have articulated that strategy, and we are funding it and executing against it. So, we have a diversified revenue streams and our fiber strategy is working. We have good wireless momentum. And while the media industry is pressured right now, we are taking share because our digital strategy has traction. And then you alluded to €“ so that’s a bit of a summation, what Glen said, you alluded to price competition as well, and we kind of see some of that €“ we saw some of that during the Black Friday period and you foreshadow potentially more of that for 2023.

On that, I will say the following. We have the room to compete on price if anyone wants to take us there. And we have the room because we are really good at managing costs and because of the scale of our fiber network, which €“ and then the bundling strategy. And all of that’s delivering lower churn, lower cost structure, higher lifetime value of our subscribers. Look, we have invested billions and billions to build North American leading networks. We are going to load those networks, and we can compete on price if we are taken there. And then that kind of segues into the regulatory question that you asked me. And look, it’s a bit early, like we are looking forward to sharing our thoughts with the new CRTC leadership on how competitive our industry is, and we shared those thoughts on these calls, obviously, quarter-after-quarter, but there is new CRTC leadership.

So, we are looking forward to those conversations. And in particular, really looking forward to highlight and reiterate the importance of the massive investments that need to be made in communications networks to drive the country forward. So, a couple of other things just on that prices are declining. It’s actually undeniable. And communications networks are pretty central to everything we want to accomplish as a country in terms of economic growth and productivity and maybe I will leave it with this last point. Does everyone in the country want better networks, yes. Do we want more coverage, yes. Do we want prices that keep declining, of course. Does local TV content matter, yes, it does. Do we want better customer experience, yes we do. Do we want more innovation, more jobs, yes, yes and yes.

But there is one common element that underpins all of those and its investment. So, we can’t lose sight of that. And I will leave it there.

Thane Fotopoulos: Mode, next question please.

Operator: Thank you. The following question is from Stephanie Price from CIBC. Please go ahead.

Stephanie Price: Hi. Good morning. For 2023, fiber homes decreased from 900,000 to a plan of 650,000, but CapEx stayed relatively elevated at $4.8 billion. Just curious about the other buckets of investment besides the mid-band and fiber that you are looking at? And maybe related, how do you think about a longer term view and what a more normalized run rate could look like for CapEx as you ramp down fiber initiatives?

Mirko Bibic: Yes. So, on that, we have been €“ I have tried to consistently articulate where we were going with this, right. Starting in February 2021, we said we are going to start elevating CapEx to accelerate fiber and 5G build, and we are doing that. We said 2022 was going to be the peak year, and you can see that $5.1 billion spent in 2022 is $300 million higher than the guidance we are giving you for 2023. So, we did say that each year after 2022 CapEx would start to glide down for €“ €˜23 lower than €˜22, €˜24 lower than €˜23, etcetera, until we get to the end of 2025. And then you will €“ you should expect CapEx to get closer to what you were used to seeing from us in terms of capital intensity ratio prior to COVID. 650,000, the reason we dropped CapEx by $300 million from €˜23 to €˜22 is because we are going from 854,000 locations passed on fiber to 650,000, and that’s the bulk of the reason for the decline.

Stephanie Price: Okay. Thank you very much.

Operator: Thank you. Following question is from Jérôme Dubreuil from Desjardins. Please go ahead.

Jérôme Dubreuil: Hi. Thanks. Thanks for taking my question. Can you talk a bit about 5G plus? We have in mind that maybe this could mean a bit of dilution for the 5G brand overall, but at the same time I understand you want to maintain a differentiation. And then the second one, I think it’s fair to say that you have been using promotions in a different way than in the past recently, would you say that it’s a new way of doing business overall, or this is more something that is done to rapidly ramp up your market share on newly deployed fiber? Thank you.

Mirko Bibic: I will take the fiber question first. We €“ actually, on the fiber €“ look, what we are doing here is we €“ like I said, we spend €“ we are spending billions of dollars to build the best networks, and we have an undeniable structural product superiority advantage. So, the telco network traditionally was structurally disadvantaged from a technology point of view, with copper in years past. Now, the telco advantage is structurally €“ there is a structural telco advantage with fiber. So, you have a structural technology advantage, you have product superiority and differentiation, and you spend billions of dollars to get that. The next step is to load the network and we are taking share. And frankly, we are resetting the benchmark for what consumers believe broadband should be.

That’s a key thing. It’s a competitive differentiator that’s going to last for a few years, in my view, resetting the benchmark for what consumers believe broadband should be. If you look at our sales in Q4, 70% of our Internet activations on fiber, we are on speeds at a gig or above. And 38% of our fiber Internet base is now in speed of a gig and above. So, we are loading the network, and we are shielding our customer base by resetting that broadband benchmark. And it’s a potent combination, right. You have fiber with symmetrical upload and download speeds that competitors can’t match, a gigabit modem with WiFi 6E, and we have a new Android powered TV service, basically the new evolution of 5TV, which is pretty powerful. On wireless and on 5G, we are just kind of €“ I am really pleased that industry-wide, actually, the 5G pricing structure has remained intact where we were €“ we have delineated, there is clear demarcation between 5G and 5G plus and 4G and other services with the pricing that comes with it.

And so far, frankly, that’s held. And as I mentioned in my opening remarks, 41% of our subscriber base is on 5G devices. 5G customers continue to use more and spend more and there is room for growth there. And then I might add on both our wireless loadings and our market share gains on fiber, we are doing that despite some promotional intensity, we are doing that while maintaining margins stable, which is quite an accomplishment. And the reason we are able to do that, one of the big reasons is with the fiber scale, our cost structure comes down.

Jérôme Dubreuil: Thank you.

Operator: Thank you. Following question is from Tim Casey from BMO Capital Markets. Please go ahead.

Tim Casey: Thanks Mirko. Can we follow-up on that discussion on your fiber leadership and talk about what you are seeing in the marketplace? And you have mentioned that your €“ you have the ability to match costs. I am just wondering how that plays out in the wireline market. And with respect to your €“ as you say, the competitive advantage you have with products. Could you just talk a little bit about the dynamics you are seeing in the marketplace there? Thanks.

Mirko Bibic: Yes. So, we are seeing €“ I mean essentially, the short story, Tim, is you see I mean you see the pretty €“ our loadings are quite strong, right. And we are at best TV results in 7 years on overall wireline, our consumer RGUs, best results in 2005. And best Internet, and that’s in 18 years. I think again, those €“ so when we talk about the fiber advantage, but they are just not idle words because you are seeing the results follow what we are seeing, right. And just to give you another data point, so we had 63,500 Internet nets or thereabouts, but we had 78,000 Internet nets and fiber territory. So, I mean I have been pretty transparent about this too. We do lose Internet customers where we don’t have fiber, we are gaining big share where we do have fiber.

And I think that’s the key thing. 80% of our target broadband build is done, we will be at 85% done. I have shared in my opening remarks, the vast footprint that we will have that has 3 gigabit or 8 gigabit speeds, like those are phenomenal speeds. And as we reset what the benchmark is for acceptable broadband and we reset the bar to a gig or above, that becomes a powerful competitive proposition.

Glen LeBlanc: Yes. And Tim and as you have heard us say time and time again, the gift that keeps on giving is fiber, not only does it allow us to deliver a superior product to our customers, a superior product over our competitors, but it’s a network that allows €“ it’s cheaper to operate. And it’s reducing our cost of operating, which €“ you see in our margins, despite the challenges I spoke about earlier, we are maintaining stable margins and a big part of that is the cost advantage that fiber gives us.

Tim Casey: Thank you.

Mirko Bibic: Thanks Tim.

Operator: Thank you. Following question is from Batya Levi from UBS. Please go ahead.

Batya Levi: Great. Thank you. As you look at your new reporting structure, do you anticipate more cost rationalization when you combine the wireline and wireless expense buckets, or has that already been aligned last year? And from here on, it will be more business as usual cost efficiencies? And you did mention some incremental spending this year. Is there a way to quantify them or the timing on when they will show up? Thank you.

Glen LeBlanc: I will attack the first part of your question. I am not sure what your last part was referring to. Look, we combined our internal structure for wireless and wireline this year, and we did enjoy cost efficiencies in doing so. And as I have said in my opening remarks, it’s become a core competency of Bell. We are always attacking costs and looking for more effective and efficient ways to deliver service, and that’s not going to change. And again, to the opening remarks that Maher made about how are you able to deliver stable guidance over 2022, and that’s part of it. It’s focusing on our cost, finding efficiencies, leveraging the ability that fiber gives us for taking costs. So, on the second part of your question, I am not sure.

Batya Levi: I think you mentioned that you would like to make some internal investments this year to digitize some capabilities and some efficiencies. So, I was wondering if there is sort of a quantification or the pacing of that or is it also more sort of business as usual investments?

Mirko Bibic: It’s €“ yes, so we won’t unpack that specifically. But since 2020, particularly since we got completely shutdown in 2020 during COVID, we have made a concerted effort to improve our digital capabilities, both those that are customer-facing and continue to automate some of the processes in the operations of our business. And that’s continuing because it’s important and it’s driving better customer experience and lower cost structure. So, we are going to keep doing that, and that’s within the CapEx, the guidance that you see.

Batya Levi: Okay, thank you.

Mirko Bibic: Thank you.

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

Vince Valentini: Yes. Thanks very much. Just a comment first, look, I am just not happy about getting rid of the segmented EBITDA, it makes our lives very difficult. I am sure you have internal ideas as to what wireline versus wireless is and you are not going to change based on what I say. But I want to get that on record, but it’s not helpful to us. My question is on the guidance. The range is reasonably wide at 2% to 5% on EBITDA, Glen. And as you have articulated, competition seems to be escalating. You seem to be willing to lean in and load up your new networks and fight on price if you have to. I am just wondering how the high end of the range is possible. What kind of factors would you need to see some sort of big economic improvement or some sort of improvement in the competitive environment versus the current pacing? Maybe you can talk a bit about the pros and cons €“ or the gives and takes at the high end versus low end of the guidance?

Glen LeBlanc: Well, first of all, Vince, the €“ how wide the range is, it’s the same range as in €˜22. And we are now approaching $25 billion revenue company and north of $10 billion in EBITDA. And I don’t feel that range is all that wide when you consider the size of our organization. Yes, we provide a range because there are all kinds of uncertainties that can happen in our business. We have talked a number of times on this call about recession. And I think that, that although I personally believe will be short and shallow, I certainly could be wrong, and many people on this call probably have a different opinion than I. Barring recessionary impacts, the continued momentum we have in our fiber and our 5G strategy, recovery in our media business.

Those are the type of things that I think drive us towards the higher end or past the midpoint of our guidance range. I mean, for me to be able to give you insights on what drives you to the high end, you know it as well as I do, low promotion activity, continuing to load the network, avoiding a recession, recovery of advertising advancement of our digital-first strategy and media, those are the things that we’re focused on. But I believe the guidance range is prudent. I think it takes into consideration the potential challenges plus the upside and it is not inconsistent to what you have seen from us before. But thanks for your question, Vince, and duly noted on segment reporting.

Vince Valentini: Thanks.

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

Simon Flannery: Great. Thank you very much. Good morning. Glen, I wonder if we could talk about roaming revenue. You have obviously, had a very nice recovery during 2022, but you are pointing to a further recovery in €˜23. Perhaps just help us understand where we are in the recovery cycle and what sort of benefit are you anticipating in your guidance next year on a year-over-year basis versus this year? And when do we get to sort of a new run rate?

Glen LeBlanc: Certainly, Simon. Mirko mentioned that we are at 112% of what pre-pandemic roaming revenue is. And to unpack that for you about €“ on a volume basis, we are pretty much flat. We are back to pre-pandemic. So, the additional 12% is all related to price, so your P versus Q. I said in our opening remarks, one of us said that we don’t anticipate the same tailwind on roaming that we enjoyed this year. Naturally, this was a year of true recovery as I think Canadians and we are starting to gain confidence to move again post the challenge of this pandemic. I would say some of the price increases that we implemented in calendar 2022, were done through the year. So, we get to enjoy the half year of those, coupled with €“ I think you are starting to see Canadian confidence continue on moving around again and enjoying the ability to travel.

So, I think the short answer is the improvement from €˜21 to €˜22 will not repeat itself, but there is still a bit of a tailwind there for €˜22 to €˜23.

Simon Flannery: Alright. Thank you.

Glen LeBlanc: You’re welcome Simon.

Thane Fotopoulos: Mode. Any more questions?

Operator: We have no further questions registered at this time. So, back to you, Mr. Fotopoulos.

Thane Fotopoulos: Great. Thank you very much. So, as usual, I will be available throughout the day to take your follow-up questions and for any clarifications. So, you have a few minutes to get ready for your next call. So, have a great day, everybody.

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