EX-99.2 3 supp_q317.htm SUPPLEMENTARY FINANCIAL INFORMATION - THIRD QUARTER 2017 Supplementary Financial Information

 

Exhibit 99.2

BCE (1) (2)
Consolidated Operational Data

(In millions of Canadian dollars, except share amounts) (unaudited)   Q3
2017		     Q3
2016		       $ change   % change       YTD
2017		     YTD
2016		       $ change   % change  

Operating revenues

                                                  

Service

   5,322     5,025       297   5.9 %     15,708     14,921       787   5.3 %

Product

   356     382       (26 ) (6.8 %)     1,053     1,096       (43 ) (3.9 %)

Total operating revenues

   5,678     5,407       271   5.0 %     16,761     16,017       744   4.6 %

Operating costs (A)

   (3,248 )   (3,111 )     (137 ) (4.4 %)     (9,622 )   (9,186 )     (436 ) (4.7 %)

Post-employment benefit plans service cost

   (64 )   (60 )     (4 ) (6.7 %)     (178 )   (164 )     (14 ) (8.5 %)

Adjusted EBITDA (3)

   2,366     2,236       130   5.8 %     6,961     6,667       294   4.4 %

Adjusted EBITDA margin (3)

   41.7 %   41.4 %         0.3 pts     41.5 %   41.6 %         (0.1 ) pts

Severance, acquisition and other costs

   (23 )   (25 )     2   8.0 %     (143 )   (124 )     (19 ) (15.3 %)

Depreciation

   (765 )   (706 )     (59 ) (8.4 %)     (2,256 )   (2,158 )     (98 ) (4.5 %)

Amortization

   (208 )   (161 )     (47 ) (29.2 %)     (604 )   (466 )     (138 ) (29.6 %)

Finance costs

                                                  

Interest expense

   (242 )   (227 )     (15 ) (6.6 %)     (714 )   (663 )     (51 ) (7.7 %)

Interest on post-employment benefit obligations

   (18 )   (20 )     2   10.0 %     (54 )   (61 )     7   11.5 %

Other (expense) income

   (56 )   (13 )     (43 ) n.m.       (40 )   51       (91 ) n.m.  

Income taxes

   (237 )   (284 )     47   16.5 %     (797 )   (858 )     61   7.1 %

Net earnings

   817     800       17   2.1 %     2,353     2,388       (35 ) (1.5 %)

Net earnings attributable to:

                                                  

Common shareholders

   770     752       18   2.4 %     2,211     2,237       (26 ) (1.2 %)

Preferred shareholders

   31     32       (1 ) (3.1 %)     94     104       (10 ) (9.6 %)

Non-controlling interest

   16     16       -   -       48     47       1   2.1 %

Net earnings

   817     800       17   2.1 %     2,353     2,388       (35 ) (1.5 %)

Net earnings per common share - basic

 $ 0.86   $ 0.87       (0.01 ) (1.1 %)   $ 2.48   $ 2.58       (0.10 ) (3.9 %)

Net earnings per common share - diluted

 $ 0.86   $ 0.87       (0.01 ) (1.1 %)   $ 2.48   $ 2.58       (0.10 ) (3.9 %)

Dividends per common share

 $ 0.7175   $ 0.6825     $ 0.0350   5.1 %   $ 2.1525   $ 2.0475     $ 0.1050   5.1 %

Average number of common shares outstanding - basic (millions)

   900.4     869.9                   892.2     868.7              

Average number of common shares outstanding - diluted (millions)

   901.1     871.4                   892.9     869.9              

Number of common shares outstanding (millions)

   900.4     870.2                   900.4     870.2              

Adjusted net earnings and EPS

                                                  

Net earnings attributable to common shareholders

   770     752       18   2.4 %     2,211     2,237       (26 ) (1.2 %)

Severance, acquisition and other costs

   17     20       (3 ) (15.0 %)     109     95       14   14.7 %

Net losses (gains) on investments

   -     12       (12 ) (100.0 %)     14     2       12   n.m.  

Early debt redemption costs

   12     -       12   n.m.       15     8       7   87.5 %

Adjusted net earnings (3)

   799     784       15   1.9 %     2,349     2,342       7   0.3 %

Impact on net earnings per share

 $ 0.02   $ 0.04     $ (0.02 ) (50.0 %)   $ 0.15   $ 0.12     $ 0.03   25.0 %

Adjusted EPS (3)

 $ 0.88   $ 0.91     $ (0.03 ) (3.3 %)   $ 2.63   $ 2.70     $ (0.07 ) (2.6 %)

 

(A) Excludes post-employment benefit plans service cost
n.m. : not meaningful

 

BCE Supplementary Financial Information - Third Quarter 2017 Page 2

BCE
Consolidated Operational Data - Historical Trend

(In millions of Canadian dollars, except share amounts) (unaudited)   YTD
2017		       Q3 17     Q2 17     Q1 17       TOTAL
2016		       Q4 16     Q3 16     Q2 16     Q1 16  

Operating revenues

                                                            

Service

   15,708       5,322     5,335     5,051       20,090       5,169     5,025     4,988     4,908  

Product

   1,053       356     364     333       1,629       533     382     352     362  

Total operating revenues

   16,761       5,678     5,699     5,384       21,719       5,702     5,407     5,340     5,270  

Operating costs (A)

   (9,622 )     (3,248 )   (3,254 )   (3,120 )     (12,707 )     (3,521 )   (3,111 )   (3,016 )   (3,059 )

Post-employment benefit plans service cost

   (178 )     (64 )   (64 )   (50 )     (224 )     (60 )   (60 )   (56 )   (48 )

Adjusted EBITDA

   6,961       2,366     2,381     2,214       8,788       2,121     2,236     2,268     2,163  

Adjusted EBITDA margin

   41.5 %     41.7 %   41.8 %   41.1 %     40.5 %     37.2 %   41.4 %   42.5 %   41.0 %

Severance, acquisition and other costs

   (143 )     (23 )   (36 )   (84 )     (135 )     (11 )   (25 )   (57 )   (42 )

Depreciation

   (2,256 )     (765 )   (769 )   (722 )     (2,877 )     (719 )   (706 )   (713 )   (739 )

Amortization

   (604 )     (208 )   (211 )   (185 )     (631 )     (165 )   (161 )   (156 )   (149 )

Finance costs

                                                            

Interest expense

   (714 )     (242 )   (238 )   (234 )     (888 )     (225 )   (227 )   (217 )   (219 )

Interest on post-employment benefit obligations

   (54 )     (18 )   (18 )   (18 )     (81 )     (20 )   (20 )   (21 )   (20 )

Other (expense) income

   (40 )     (56 )   (1 )   17       21       (30 )   (13 )   41     23  

Income taxes

   (797 )     (237 )   (297 )   (263 )     (1,110 )     (252 )   (284 )   (315 )   (259 )

Net earnings

   2,353       817     811     725       3,087       699     800     830     758  

Net earnings attributable to:

                                                            

Common shareholders

   2,211       770     762     679       2,894       657     752     778     707  

Preferred shareholders

   94       31     32     31       137       33     32     35     37  

Non-controlling interest

   48       16     17     15       56       9     16     17     14  

Net earnings

   2,353       817     811     725       3,087       699     800     830     758  

Net earnings per common share - basic

 $ 2.48     $ 0.86   $ 0.84   $ 0.78     $ 3.33     $ 0.75   $ 0.87   $ 0.89   $ 0.82  

Net earnings per common share - diluted

 $ 2.48     $ 0.86   $ 0.84   $ 0.78     $ 3.33     $ 0.75   $ 0.87   $ 0.89   $ 0.82  

Dividends per common share

 $ 2.1525     $ 0.7175   $ 0.7175   $ 0.7175     $ 2.7300     $ 0.6825   $ 0.6825   $ 0.6825   $ 0.6825  

Average number of common shares outstanding - basic (millions)

   892.2       900.4     900.1     875.7       869.1       870.5     869.9     869.1     867.1  

Average number of common shares outstanding - diluted (millions)

   892.9       901.1     901.0     876.6       870.3       871.6     871.4     870.3     868.1  

Number of common shares outstanding (millions)

   900.4       900.4     900.4     899.5       870.7       870.7     870.2     869.5     868.6  

Adjusted net earnings and EPS

                                                            

Net earnings attributable to common shareholders

   2,211       770     762     679       2,894       657     752     778     707  

Severance, acquisition and other costs

   109       17     27     65       104       9     20     44     31  

Net losses (gains) on investments

   14       -     -     14       3       1     12     2     (12 )

Early debt redemption costs

   15       12     3     -       8       -     -     -     8  

Adjusted net earnings

   2,349       799     792     758       3,009       667     784     824     734  

Impact on net earnings per share

 $ 0.15     $ 0.02   $ 0.04   $ 0.09     $ 0.13     $ 0.01   $ 0.04   $ 0.05   $ 0.03  

Adjusted EPS

 $ 2.63     $ 0.88   $ 0.88   $ 0.87     $ 3.46     $ 0.76   $ 0.91   $ 0.94   $ 0.85  

 

(A) Excludes post-employment benefit plans service cost

BCE Supplementary Financial Information - Third Quarter 2017 Page 3

BCE
Segmented Data

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) Q3
2017		   Q3
2016		     $ change  

% change

     YTD
2017		   YTD
2016		     $ change  

% change

  
                                       

Operating revenues

                                      

Bell Wireless

 2,040   1,848     192   10.4 %   5,813   5,276     537   10.2 %

Bell Wireline

 3,092   3,005     87   2.9 %   9,193   8,967     226   2.5 %

Bell Media

 723   716     7   1.0 %   2,270   2,236     34   1.5 %

Inter-segment eliminations

 (177 ) (162 )   (15 ) (9.3 %)   (515 ) (462 )   (53 ) (11.5 %)

Total

 5,678   5,407     271   5.0 %   16,761   16,017     744   4.6 %
                                       

Operating costs

                                      

Bell Wireless

 (1,169 ) (1,052 )   (117 ) (11.1 %)   (3,273 ) (2,947 )   (326 ) (11.1 %)

Bell Wireline

 (1,784 ) (1,752 )   (32 ) (1.8 %)   (5,317 ) (5,184 )   (133 ) (2.6 %)

Bell Media

 (536 ) (529 )   (7 ) (1.3 %)   (1,725 ) (1,681 )   (44 ) (2.6 %)

Inter-segment eliminations

 177   162     15   9.3 %   515   462     53   11.5 %

Total

 (3,312 ) (3,171 )   (141 ) (4.4 %)   (9,800 ) (9,350 )   (450 ) (4.8 %)
                                       

Adjusted EBITDA

                                      

Bell Wireless

 871   796     75   9.4 %   2,540   2,329     211   9.1 %

Margin

 42.7 % 43.1 %       (0.4 ) pts   43.7 % 44.1 %       (0.4 ) pts

Bell Wireline

 1,308   1,253     55   4.4 %   3,876   3,783     93   2.5 %

Margin

 42.3 % 41.7 %       0.6 pts   42.2 % 42.2 %       -  

Bell Media

 187   187     -   -     545   555     (10 ) (1.8 %)

Margin

 25.9 % 26.1 %       (0.2 ) pts   24.0 % 24.8 %       (0.8 ) pts

Total

 2,366   2,236     130   5.8 %   6,961   6,667     294   4.4 %

Margin

 41.7 % 41.4 %       0.3 pts   41.5 % 41.6 %       (0.1 ) pts
                                       

Capital expenditures

                                      

Bell Wireless

 186   195     9   4.6 %   513   540     27   5.0 %

Capital intensity (4)

 9.1 % 10.6 %       1.5 pts   8.8 % 10.2 %       1.4 pts

Bell Wireline

 820   756     (64 ) (8.5 %)   2,329   2,158     (171 ) (7.9 %)

Capital intensity

 26.5 % 25.2 %       (1.3 ) pts   25.3 % 24.1 %       (1.2 ) pts

Bell Media

 34   25     (9 ) (36.0 %)   92   80     (12 ) (15.0 %)

Capital intensity

 4.7 % 3.5 %       (1.2 ) pts   4.1 % 3.6 %       (0.5 ) pts

Total

 1,040   976     (64 ) (6.6 %)   2,934   2,778     (156 ) (5.6 %)

Capital intensity

 18.3 % 18.1 %       (0.2 ) pts   17.5 % 17.3 %       (0.2 ) pts

 

BCE Supplementary Financial Information - Third Quarter 2017 Page 4

BCE
Segmented Data - Historical Trend

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) YTD
2017		     Q3 17   Q2 17   Q1 17     TOTAL
2016		     Q4 16   Q3 16   Q2 16   Q1 16  

 

                                          

Operating revenues

                                          

Bell Wireless

 5,813     2,040   1,959   1,814     7,159     1,883   1,848   1,735   1,693  

Bell Wireline

 9,193     3,092   3,121   2,980     12,104     3,137   3,005   2,979   2,983  

Bell Media

 2,270     723   796   751     3,081     845   716   779   741  

Inter-segment eliminations

 (515 )   (177 ) (177 ) (161 )   (625 )   (163 ) (162 ) (153 ) (147 )

Total

 16,761     5,678   5,699   5,384     21,719     5,702   5,407   5,340   5,270  

 

                                          

Operating costs

                                          

Bell Wireless

 (3,273 )   (1,169 ) (1,108 ) (996 )   (4,156 )   (1,209 ) (1,052 ) (963 ) (932 )

Bell Wireline

 (5,317 )   (1,784 ) (1,815 ) (1,718 )   (7,062 )   (1,878 ) (1,752 ) (1,706 ) (1,726 )

Bell Media

 (1,725 )   (536 ) (572 ) (617 )   (2,338 )   (657 ) (529 ) (556 ) (596 )

Inter-segment eliminations

 515     177   177   161     625     163   162   153   147  

Total

 (9,800 )   (3,312 ) (3,318 ) (3,170 )   (12,931 )   (3,581 ) (3,171 ) (3,072 ) (3,107 )

 

                                          

Adjusted EBITDA

                                          

Bell Wireless

 2,540     871   851   818     3,003     674   796   772   761  

Margin

 43.7 %   42.7 % 43.4 % 45.1 %   41.9 %   35.8 % 43.1 % 44.5 % 44.9 %

Bell Wireline

 3,876     1,308   1,306   1,262     5,042     1,259   1,253   1,273   1,257  

Margin

 42.2 %   42.3 % 41.8 % 42.3 %   41.7 %   40.1 % 41.7 % 42.7 % 42.1 %

Bell Media

 545     187   224   134     743     188   187   223   145  

Margin

 24.0 %   25.9 % 28.1 % 17.8 %   24.1 %   22.2 % 26.1 % 28.6 % 19.6 %

Total

 6,961     2,366   2,381   2,214     8,788     2,121   2,236   2,268   2,163  

Margin

 41.5 %   41.7 % 41.8 % 41.1 %   40.5 %   37.2 % 41.4 % 42.5 % 41.0 %

 

                                          

Capital expenditures

                                          

Bell Wireless

 513     186   191   136     733     193   195   183   162  

Capital intensity

 8.8 %   9.1 % 9.7 % 7.5 %   10.2 %   10.2 % 10.6 % 10.5 % 9.6 %

Bell Wireline

 2,329     820   818   691     2,936     778   756   733   669  

Capital intensity

 25.3 %   26.5 % 26.2 % 23.2 %   24.3 %   24.8 % 25.2 % 24.6 % 22.4 %

Bell Media

 92     34   33   25     102     22   25   34   21  

Capital intensity

 4.1 %   4.7 % 4.1 % 3.3 %   3.3 %   2.6 % 3.5 % 4.4 % 2.8 %

Total

 2,934     1,040   1,042   852     3,771     993   976   950   852  

Capital intensity

 17.5 %   18.3 % 18.3 % 15.8 %   17.4 %   17.4 % 18.1 % 17.8 % 16.2 %

 

BCE Supplementary Financial Information - Third Quarter 2017 Page 5

Bell Wireless (1) (2)

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) Q3
2017		   Q3
2016		    

% change

     YTD
2017		   YTD
2016		    

% change

  

Bell Wireless

                              

Operating revenues

                              

External service revenues

 1,901   1,711     11.1 %   5,424   4,900     10.7 %

Inter-segment service revenues

 12   10     20.0 %   32   29     10.3 %

Total operating service revenues

 1,913   1,721     11.2 %   5,456   4,929     10.7 %

External product revenues

 126   127     (0.8 %)   354   345     2.6 %

Inter-segment product revenues

 1   -     n.m.     3   2     50.0 %

Total operating product revenues

 127   127     -     357   347     2.9 %

Total external revenues

 2,027   1,838     10.3 %   5,778   5,245     10.2 %

Total operating revenues

 2,040   1,848     10.4 %   5,813   5,276     10.2 %

Operating costs

 (1,169 ) (1,052 )   (11.1 %)   (3,273 ) (2,947 )   (11.1 %)

Adjusted EBITDA

 871   796     9.4 %   2,540   2,329     9.1 %

Adjusted EBITDA margin (Total operating revenues)

 42.7 % 43.1 %   (0.4 ) pts   43.7 % 44.1 %   (0.4 ) pts

Adjusted EBITDA margin (Operating service revenues)

 45.5 % 46.3 %   (0.8 ) pts   46.6 % 47.3 %   (0.7 ) pts

Capital expenditures

 186   195     4.6 %   513   540     5.0 %

Capital intensity

 9.1 % 10.6 %   1.5 pts   8.8 % 10.2 %   1.4 pts

Wireless gross activations

 460,053   453,078     1.5 %   1,211,923   1,163,934     4.1 %

Postpaid

 390,985   381,630     2.5 %   1,026,993   974,022     5.4 %

Wireless net activations

 106,982   100,256     6.7 %   174,570   135,118     29.2 %

Postpaid

 117,182   107,265     9.2 %   241,575   202,918     19.1 %

Wireless subscribers end of period (EOP) (A)

 9,008,273   8,380,949     7.5 %   9,008,273   8,380,949     7.5 %

Postpaid (A)

 8,243,446   7,578,334     8.8 %   8,243,446   7,578,334     8.8 %

Average revenue per user (4) (ARPU)($/month)

 69.78   67.76     3.0 %   67.60   65.04     3.9 %

Churn (%) (4) (average per month)

 1.32 % 1.41 %   0.09 pts   1.31 % 1.38 %   0.07 pts

Prepaid

 2.95 % 2.86 %   (0.09 ) pts   3.15 % 3.17 %   0.02 pts

Postpaid

 1.16 % 1.26 %   0.10 pts   1.14 % 1.18 %   0.04 pts

 

(A) As a result of the acquisition of MTS on March 17, 2017, our wireless subscriber base in Q1 2017 increased by 476,932 subscribers (418,427 postpaid). Subsequently, in Q2 2017, Bell’s wireless subscriber base reflected the divestiture of 104,833 postpaid subscribers to TELUS Communications Inc. (TELUS) related to BCE’s acquisition of MTS. Bell’s wireless subscriber base in Q2 2017 also reflected the removal of 7,268 subscribers (2,450 postpaid and 4,818 prepaid), due to the decommissioning of the code division multiple access (CDMA) network in western Canada.

BCE Supplementary Financial Information - Third Quarter 2017 Page 6

Bell Wireless - Historical Trend

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) YTD
2017		     Q3 17   Q2 17   Q1 17     TOTAL
2016		     Q4 16   Q3 16   Q2 16   Q1 16  

Bell Wireless

                                          

Operating revenues

                                          

External service revenues

 5,424     1,901   1,818   1,705     6,602     1,702   1,711   1,610   1,579  

Inter-segment service revenues

 32     12   10   10     40     11   10   10   9  

Total operating service revenues

 5,456     1,913   1,828   1,715     6,642     1,713   1,721   1,620   1,588  

External product revenues

 354     126   129   99     515     170   127   114   104  

Inter-segment product revenues

 3     1   2   -     2     -   -   1   1  

Total operating product revenues

 357     127   131   99     517     170   127   115   105  

Total external revenues

 5,778     2,027   1,947   1,804     7,117     1,872   1,838   1,724   1,683  

Total operating revenues

 5,813     2,040   1,959   1,814     7,159     1,883   1,848   1,735   1,693  

Operating costs

 (3,273 )   (1,169 ) (1,108 ) (996 )   (4,156 )   (1,209 ) (1,052 ) (963 ) (932 )

Adjusted EBITDA

 2,540     871   851   818     3,003     674   796   772   761  

Adjusted EBITDA margin (Total operating revenues)

 43.7 %   42.7 % 43.4 % 45.1 %   41.9 %   35.8 % 43.1 % 44.5 % 44.9 %

Adjusted EBITDA margin (Operating service revenues)

 46.6 %   45.5 % 46.6 % 47.7 %   45.2 %   39.3 % 46.3 % 47.7 % 47.9 %

Capital expenditures

 513     186   191   136     733     193   195   183   162  

Capital intensity

 8.8 %   9.1 % 9.7 % 7.5 %   10.2 %   10.2 % 10.6 % 10.5 % 9.6 %

Wireless gross activations

 1,211,923     460,053   403,418   348,452     1,654,882     490,948   453,078   379,233   331,623  

Postpaid

 1,026,993     390,985   339,392   296,616     1,408,030     434,008   381,630   316,977   275,415  

Wireless net activations (losses)

 174,570     106,982   66,916   672     223,041     87,923   100,256   44,730   (9,868 )

Postpaid

 241,575     117,182   88,611   35,782     315,311     112,393   107,265   69,848   25,805  

Wireless subscribers EOP (A)

 9,008,273     9,008,273   8,901,291   8,946,476     8,468,872     8,468,872   8,380,949   8,280,693   8,235,963  

Postpaid (A)

 8,243,446     8,243,446   8,126,264   8,144,936     7,690,727     7,690,727   7,578,334   7,471,069   7,401,221  

ARPU ($/month)

 67.60     69.78   67.28   65.66     65.46     66.69   67.76   64.32   63.02  

Churn (%)(average per month)

 1.31 %   1.32 % 1.27 % 1.36 %   1.44 %   1.60 % 1.41 % 1.35 % 1.38 %

Prepaid

 3.15 %   2.95 % 3.19 % 3.29 %   3.13 %   3.01 % 2.86 % 3.21 % 3.42 %

Postpaid

 1.14 %   1.16 % 1.08 % 1.17 %   1.25 %   1.45 % 1.26 % 1.15 % 1.15 %

 

(A) As a result of the acquisition of MTS on March 17, 2017, our wireless subscriber base in Q1 2017 increased by 476,932 subscribers (418,427 postpaid). Subsequently, in Q2 2017, Bell’s wireless subscriber base reflected the divestiture of 104,833 postpaid subscribers to TELUS related to BCE’s acquisition of MTS. Bell’s wireless subscriber base in Q2 2017 also reflected the removal of 7,268 subscribers (2,450 postpaid and 4,818 prepaid), due to the decommissioning of the CDMA network in western Canada.

BCE Supplementary Financial Information - Third Quarter 2017 Page 7

Bell Wireline (1) (2)

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) Q3
2017		   Q3
2016		    

% change

     YTD
2017		   YTD
2016		    

% change

  

Bell Wireline

                              

Operating revenues

                              

Data

 1,806   1,704     6.0 %   5,311   5,046     5.3 %

Local & access

 796   766     3.9 %   2,384   2,336     2.1 %

Long distance

 156   189     (17.5 %)   491   563     (12.8 %)

Other services

 53   39     35.9 %   152   137     10.9 %

Total external service revenues

 2,811   2,698     4.2 %   8,338   8,082     3.2 %

Inter-segment service revenues

 49   50     (2.0 %)   148   128     15.6 %

Total operating service revenues

 2,860   2,748     4.1 %   8,486   8,210     3.4 %

Data

 106   129     (17.8 %)   354   388     (8.8 %)

Equipment & other

 123   126     (2.4 %)   345   363     (5.0 %)

Total external product revenues

 229   255     (10.2 %)   699   751     (6.9 %)

Inter-segment product revenues

 3   2     50.0 %   8   6     33.3 %

Total operating product revenues

 232   257     (9.7 %)   707   757     (6.6 %)

Total external revenues

 3,040   2,953     2.9 %   9,037   8,833     2.3 %

Total operating revenues

 3,092   3,005     2.9 %   9,193   8,967     2.5 %

Operating costs

 (1,784 ) (1,752 )   (1.8 %)   (5,317 ) (5,184 )   (2.6 %)

Adjusted EBITDA

 1,308   1,253     4.4 %   3,876   3,783     2.5 %

Adjusted EBITDA margin

 42.3 % 41.7 %   0.6 pts   42.2 % 42.2 %   -  

Capital expenditures

 820   756     (8.5 %)   2,329   2,158     (7.9 %)

Capital intensity

 26.5 % 25.2 %   (1.3 ) pts   25.3 % 24.1 %   (1.2 ) pts

High-speed Internet

                              

High-speed Internet net activations

 44,424   39,375     12.8 %   60,820   66,697     (8.8 %)

High-speed Internet subscribers EOP (A) (B)

 3,763,101   3,458,160     8.8 %   3,763,101   3,458,160     8.8 %

TV

                              

Net subscriber activations (losses)

 1,738   (4,723 )   136.8 %   (27,262 ) 7,377     (469.6 %)

Internet protocol television (IPTV)

 36,399   36,253     0.4 %   75,228   119,248     (36.9 %)

Total subscribers EOP (A)

 2,825,754   2,745,873     2.9 %   2,825,754   2,745,873     2.9 %

IPTV (A)

 1,517,833   1,302,039     16.6 %   1,517,833   1,302,039     16.6 %

Local

                              

Network access services (NAS) (A)

                              

Residential (A)

 3,275,589   3,317,124     (1.3 %)   3,275,589   3,317,124     (1.3 %)

Business (A)

 3,118,964   3,041,238     2.6 %   3,118,964   3,041,238     2.6 %

Total

 6,394,553   6,358,362     0.6 %   6,394,553   6,358,362     0.6 %

NAS net losses

                              

Residential

 (57,387 ) (80,587 )   28.8 %   (197,813 ) (216,608 )   8.7 %

Business

 (27,375 ) (37,734 )   27.5 %   (85,182 ) (98,170 )   13.2 %

Total

 (84,762 ) (118,321 )   28.4 %   (282,995 ) (314,778 )   10.1 %

 

(A) As a result of the acquisition of MTS on March 17, 2017, our high-speed Internet, TV and NAS subscriber bases increased by 229,470, 108,107 (104,661 IPTV) and 419,816 (223,663 residential and 196,153 business) subscribers, respectively.
(B) Following a review of customer accounts by a wholesale reseller, we adjusted our high-speed Internet subscriber base at the beginning of Q1 2017 to remove 3,751 non-revenue generating units.

BCE Supplementary Financial Information - Third Quarter 2017 Page 8

Bell Wireline - Historical Trend

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) YTD
2017		     Q3 17   Q2 17   Q1 17     TOTAL
2016		     Q4 16   Q3 16   Q2 16   Q1 16  

Bell Wireline

                                          

Operating revenues

                                          

Data

 5,311     1,806   1,798   1,707     6,791     1,745   1,704   1,685   1,657  

Local & access

 2,384     796   813   775     3,089     753   766   781   789  

Long distance

 491     156   167   168     741     178   189   183   191  

Other services

 152     53   55   44     182     45   39   51   47  

Total external service revenues

 8,338     2,811   2,833   2,694     10,803     2,721   2,698   2,700   2,684  

Inter-segment service revenues

 148     49   50   49     177     49   50   39   39  

Total operating service revenues

 8,486     2,860   2,883   2,743     10,980     2,770   2,748   2,739   2,723  

Data

 354     106   125   123     559     171   129   122   137  

Equipment & other

 345     123   111   111     555     192   126   116   121  

Total external product revenues

 699     229   236   234     1,114     363   255   238   258  

Inter-segment product revenues

 8     3   2   3     10     4   2   2   2  

Total operating product revenues

 707     232   238   237     1,124     367   257   240   260  

Total external revenues

 9,037     3,040   3,069   2,928     11,917     3,084   2,953   2,938   2,942  

Total operating revenues

 9,193     3,092   3,121   2,980     12,104     3,137   3,005   2,979   2,983  

Operating costs

 (5,317 )   (1,784 ) (1,815 ) (1,718 )   (7,062 )   (1,878 ) (1,752 ) (1,706 ) (1,726 )

Adjusted EBITDA

 3,876     1,308   1,306   1,262     5,042     1,259   1,253   1,273   1,257  

Adjusted EBITDA margin

 42.2 %   42.3 % 41.8 % 42.3 %   41.7 %   40.1 % 41.7 % 42.7 % 42.1 %

Capital expenditures

 2,329     820   818   691     2,936     778   756   733   669  

Capital intensity

 25.3 %   26.5 % 26.2 % 23.2 %   24.3 %   24.8 % 25.2 % 24.6 % 22.4 %

High-speed Internet

                                          

High-speed Internet net activations

 60,820     44,424   1,407   14,989     85,099     18,402   39,375   7,539   19,783  

High-speed Internet subscribers EOP (A) (B)

 3,763,101     3,763,101   3,718,677   3,717,270     3,476,562     3,476,562   3,458,160   3,418,785   3,411,246  

TV

                                          

Net subscriber (losses) activations

 (27,262 )   1,738   (13,337 ) (15,663 )   6,413     (964 ) (4,723 ) 2,101   9,999  

IPTV

 75,228     36,399   16,427   22,402     155,153     35,905   36,253   35,255   47,740  

Total subscribers EOP (A)

 2,825,754     2,825,754   2,824,016   2,837,353     2,744,909     2,744,909   2,745,873   2,750,596   2,748,495  

IPTV (A)

 1,517,833     1,517,833   1,481,434   1,465,007     1,337,944     1,337,944   1,302,039   1,265,786   1,230,531  

Local

                                          

NAS (A)

                                          

Residential (A)

 3,275,589     3,275,589   3,332,976   3,399,981     3,249,739     3,249,739   3,317,124   3,397,711   3,466,304  

Business (A)

 3,118,964     3,118,964   3,146,339   3,174,293     3,007,993     3,007,993   3,041,238   3,078,972   3,099,204  

Total

 6,394,553     6,394,553   6,479,315   6,574,274     6,257,732     6,257,732   6,358,362   6,476,683   6,565,508  

NAS net losses

                                          

Residential

 (197,813 )   (57,387 ) (67,005 ) (73,421 )   (283,993 )   (67,385 ) (80,587 ) (68,593 ) (67,428 )

Business

 (85,182 )   (27,375 ) (27,954 ) (29,853 )   (131,415 )   (33,245 ) (37,734 ) (20,232 ) (40,204 )

Total

 (282,995 )   (84,762 ) (94,959 ) (103,274 )   (415,408 )   (100,630 ) (118,321 ) (88,825 ) (107,632 )

 

(A) As a result of the acquisition of MTS on March 17, 2017, our high-speed Internet, TV and NAS subscriber bases increased by 229,470, 108,107 (104,661 IPTV) and 419,816 (223,663 residential and 196,153 business) subscribers, respectively.
(B) Following a review of customer accounts by a wholesale reseller, we adjusted our high-speed Internet subscriber base at the beginning of Q1 2017 to remove 3,751 non-revenue generating units.

BCE Supplementary Financial Information - Third Quarter 2017 Page 9

BCE (2)
Net debt and other information

BCE - Net debt and preferred shares                
(In millions of Canadian dollars, except where otherwise indicated) (unaudited)                

 

September 30
2017		   June 30
2017		   March 31
2017		   December 31
2016		  

Debt due within one year

 6,083   5,940   6,306   4,887  

Long-term debt

 18,456   17,433   17,757   16,572  

Preferred shares - BCE (A)

 2,002   2,002   2,002   2,002  

Cash and cash equivalents

 (1,979 ) (557 ) (510 ) (853 )

Net debt (3)

 24,562   24,818   25,555   22,608  

Net debt leverage ratio (3)

 2.70   2.77   2.89   2.57  

Adjusted EBITDA /net interest expense ratio (3)

 9.19   9.22   9.27   9.31  

 

                

 

Cash flow information                                  
(In millions of Canadian dollars, except where otherwise indicated) (unaudited) Q3
2017		   Q3
2016		    

$ change

    

% change

     YTD
2017		   YTD
2016		    

$ change

    

% change

  

Free cash flow (FCF) (3)

                                  

Cash flows from operating activities

 2,233   1,943   290   14.9 %   5,700   5,123   577   11.3 %

Capital expenditures

 (1,040 ) (976 ) (64 ) (6.6 %)   (2,934 ) (2,778 ) (156 ) (5.6 %)

Dividends paid on preferred shares

 (21 ) (34 ) 13   38.2 %   (94 ) (105 ) 11   10.5 %

Dividends paid by subsidiaries to non-controlling interest

 (13 ) (13 ) -   -     (34 ) (35 ) 1   2.9 %

Acquisition and other costs paid

 24   31   (7 ) (22.6 %)   128   98   30   30.6 %

FCF

 1,183   951   232   24.4 %   2,766   2,303   463   20.1 %
                                   

 

Cash flow information - Historical trend                                      
(In millions of Canadian dollars, except where otherwise indicated) (unaudited) YTD
2017		   Q3
2017		   Q2
2017		   Q1
2017		     TOTAL
2016		   Q4
2016		   Q3
2016		   Q2
2016		   Q1
2016		  

FCF

                                      

Cash flows from operating activities

 5,700   2,233   2,154   1,313     6,643   1,520   1,943   1,890   1,290  

Capital expenditures

 (2,934 ) (1,040 ) (1,042 ) (852 )   (3,771 ) (993 ) (976 ) (950 ) (852 )

Dividends paid on preferred shares

 (94 ) (21 ) (30 ) (43 )   (126 ) (21 ) (34 ) (35 ) (36 )

Dividends paid by subsidiaries to non-controlling interest

 (34 ) (13 ) (9 ) (12 )   (46 ) (11 ) (13 ) (10 ) (12 )

Acquisition and other costs paid

 128   24   21   83     126   28   31   39   28  

Voluntary defined benefit pension plan contribution

 -   -   -   -     400   400   -   -   -  

FCF

 2,766   1,183   1,094   489     3,226   923   951   934   418  
                                       

 

(A) Net debt includes 50% of preferred shares

BCE Supplementary Financial Information - Third Quarter 2017 Page 10

BCE (2)
Consolidated Statements of Financial Position

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) September 30
2017		     June 30
2017		     March 31
2017		     December 31
2016		  

ASSETS

                      

Current assets

                      

Cash

 1,460     420     439     603  

Cash equivalents

 519     137     71     250  

Trade and other receivables

 2,864     2,845     2,818     2,979  

Inventory

 437     437     428     403  

Prepaid expenses

 494     550     540     420  

Assets held for sale

 -     -     284     -  

Other current assets

 159     121     152     200  

Total current assets

 5,933     4,510     4,732     4,855  

Non-current assets

                      

Property, plant and equipment

 23,754     23,586     23,450     22,346  

Intangible assets

 13,495     13,416     13,356     11,998  

Deferred tax assets

 186     180     171     89  

Investments in associates and joint ventures

 828     883     879     852  

Other non-current assets

 947     634     875     1,010  

Goodwill

 10,422     10,383     10,386     8,958  

Total non-current assets

 49,632     49,082     49,117     45,253  

Total assets

 55,565     53,592     53,849     50,108  

LIABILITIES

                      

Current liabilities

                      

Trade payables and other liabilities

 4,470     4,270     4,044     4,326  

Interest payable

 172     168     177     156  

Dividends payable

 667     656     636     617  

Current tax liabilities

 242     175     62     122  

Debt due within one year

 6,083     5,940     6,306     4,887  

Total current liabilities

 11,634     11,209     11,225     10,108  

Non-current liabilities

                      

Long-term debt

 18,456     17,433     17,757     16,572  

Deferred tax liabilities

 2,403     2,141     2,158     2,192  

Post-employment benefit obligations

 2,169     2,488     2,252     2,105  

Other non-current liabilities

 1,260     1,245     1,264     1,277  

Total non-current liabilities

 24,288     23,307     23,431     22,146  

Total liabilities

 35,922     34,516     34,656     32,254  

EQUITY

                      

Equity attributable to BCE shareholders

                      

Preferred shares

 4,004     4,004     4,004     4,004  

Common shares

 20,066     20,062     20,023     18,370  

Contributed surplus

 1,156     1,145     1,137     1,160  

Accumulated other comprehensive (loss) income

 (35 )   7     37     46  

Deficit

 (5,873 )   (6,466 )   (6,324 )   (6,040 )

Total equity attributable to BCE shareholders

 19,318     18,752     18,877     17,540  

Non-controlling interest

 325     324     316     314  

Total equity

 19,643     19,076     19,193     17,854  

Total liabilities and equity

 55,565     53,592     53,849     50,108  

Number of common shares outstanding (millions)

 900.4     900.4     899.5     870.7  

BCE Supplementary Financial Information - Third Quarter 2017 Page 11

BCE (2)
Consolidated Cash Flow Data

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) Q3
2017		   Q3
2016		     $ change     YTD
2017		   YTD
2016		     $ change  

Net earnings

 817   800     17     2,353   2,388     (35 )

Adjustments to reconcile net earnings to cash flows from operating activities

                              

Severance, acquisition and other costs

 23   25     (2 )   143   124     19  

Depreciation and amortization

 973   867     106     2,860   2,624     236  

Post-employment benefit plans cost

 82   80     2     232   225     7  

Net interest expense

 239   222     17     704   655     49  

Losses (gains) on investments

 -   (34 )   34     12   (48 )   60  

Income taxes

 237   284     (47 )   797   858     (61 )

Contributions to post-employment benefit plans

 (64 ) (78 )   14     (238 ) (248 )   10  

Payments under other post-employment benefit plans

 (20 ) (17 )   (3 )   (58 ) (55 )   (3 )

Severance and other costs paid

 (30 ) (48 )   18     (111 ) (195 )   84  

Interest paid

 (242 ) (219 )   (23 )   (714 ) (661 )   (53 )

Income taxes paid (net of refunds)

 (66 ) (123 )   57     (468 ) (463 )   (5 )

Acquisition and other costs paid

 (24 ) (31 )   7     (128 ) (98 )   (30 )

Net change in operating assets and liabilities

 308   215     93     316   17     299  

Cash flows from operating activities

 2,233   1,943     290     5,700   5,123     577  

Capital expenditures

 (1,040 ) (976 )   (64 )   (2,934 ) (2,778 )   (156 )

Cash dividends paid on preferred shares

 (21 ) (34 )   13     (94 ) (105 )   11  

Cash dividends paid by subsidiaries to non-controlling interest

 (13 ) (13 )   -     (34 ) (35 )   1  

Acquisition and other costs paid

 24   31     (7 )   128   98     30  

Free cash flow

 1,183   951     232     2,766   2,303     463  

Business acquisitions

 -   -     -     (1,635 ) (246 )   (1,389 )

Acquisition and other costs paid

 (24 ) (31 )   7     (128 ) (98 )   (30 )

Business dispositions

 -   2     (2 )   -   20     (20 )

Decrease in investments

 -   22     (22 )   -   22     (22 )

Loan to related party

 -   (510 )   510     -   (510 )   510  

Disposition of intangibles and other assets

 -   -     -     323   -     323  

Other investing activities

 (37 ) (21 )   (16 )   (51 ) (1 )   (50 )

(Decrease) increase in notes payable and bank advances

 (379 ) 4     (383 )   56   902     (846 )

Increase (reduction) in securitized trade receivables

 -   305     (305 )   (10 ) 305     (315 )

Issue of long-term debt

 1,515   1,497     18     3,011   2,244     767  

Repayment of long-term debt

 (142 ) (812 )   670     (1,218 ) (2,392 )   1,174  

Issue of common shares

 4   6     (2 )   93   98     (5 )

Repurchase of shares for settlement of share-based payments

 (38 ) (15 )   (23 )   (179 ) (94 )   (85 )

Cash dividends paid on common shares

 (646 ) (594 )   (52 )   (1,866 ) (1,712 )   (154 )

Other financing activities

 (14 ) (26 )   12     (36 ) (61 )   25  

 

239   (173 )   412     (1,640 ) (1,523 )   (117 )

Net increase in cash and cash equivalents

 1,422   778     644     1,126   780     346  

Cash and cash equivalents at beginning of period

 557   615     (58 )   853   613     240  

Cash and cash equivalents at end of period

 1,979   1,393     586     1,979   1,393     586  

BCE Supplementary Financial Information - Third Quarter 2017 Page 12

BCE
Consolidated Cash Flow Data - Historical Trend

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) YTD
2017		     Q3 17   Q2 17   Q1 17     TOTAL
2016		     Q4 16   Q3 16   Q2 16   Q1 16  

Net earnings

 2,353     817   811   725     3,087     699   800   830   758  

Adjustments to reconcile net earnings to cash flows from operating activities

                                          

Severance, acquisition and other costs

 143     23   36   84     135     11   25   57   42  

Depreciation and amortization

 2,860     973   980   907     3,508     884   867   869   888  

Post-employment benefit plans cost

 232     82   82   68     305     80   80   77   68  

Net interest expense

 704     239   235   230     875     220   222   215   218  

Losses (gains) on investments

 12     -   -   12     (58 )   (10 ) (34 ) 2   (16 )

Income taxes

 797     237   297   263     1,110     252   284   315   259  

Contributions to post-employment benefit plans

 (238 )   (64 ) (86 ) (88 )   (725 )   (477 ) (78 ) (80 ) (90 )

Payments under other post-employment benefit plans

 (58 )   (20 ) (19 ) (19 )   (76 )   (21 ) (17 ) (19 ) (19 )

Severance and other costs paid

 (111 )   (30 ) (40 ) (41 )   (231 )   (36 ) (48 ) (61 ) (86 )

Interest paid

 (714 )   (242 ) (249 ) (223 )   (882 )   (221 ) (219 ) (221 ) (221 )

Income taxes paid (net of refunds)

 (468 )   (66 ) (114 ) (288 )   (565 )   (102 ) (123 ) (102 ) (238 )

Acquisition and other costs paid

 (128 )   (24 ) (21 ) (83 )   (126 )   (28 ) (31 ) (39 ) (28 )

Net change in operating assets and liabilities

 316     308   242   (234 )   286     269   215   47   (245 )

Cash flows from operating activities

 5,700     2,233   2,154   1,313     6,643     1,520   1,943   1,890   1,290  

Capital expenditures

 (2,934 )   (1,040 ) (1,042 ) (852 )   (3,771 )   (993 ) (976 ) (950 ) (852 )

Cash dividends paid on preferred shares

 (94 )   (21 ) (30 ) (43 )   (126 )   (21 ) (34 ) (35 ) (36 )

Cash dividends paid by subsidiaries to non-controlling interest

 (34 )   (13 ) (9 ) (12 )   (46 )   (11 ) (13 ) (10 ) (12 )

Acquisition and other costs paid

 128     24   21   83     126     28   31   39   28  

Voluntary defined benefit pension plan contribution

 -     -   -   -     400     400   -   -   -  

Free cash flow

 2,766     1,183   1,094   489     3,226     923   951   934   418  

Business acquisitions

 (1,635 )   -   -   (1,635 )   (404 )   (158 ) -   (1 ) (245 )

Acquisition and other costs paid

 (128 )   (24 ) (21 ) (83 )   (126 )   (28 ) (31 ) (39 ) (28 )

Voluntary defined benefit pension plan contribution

 -     -   -   -     (400 )   (400 ) -   -   -  

Business dispositions

 -     -   -   -     18     (2 ) 2   2   16  

Decrease in investments

 -     -   -   -     107     85   22   -   -  

Loan to related party

 -     -   -   -     (517 )   (7 ) (510 ) -   -  

Disposition of intangibles and other assets

 323     -   323   -     -     -   -   -   -  

Other investing activities

 (51 )   (37 ) (5 ) (9 )   (17 )   (16 ) (21 ) (15 ) 35  

Increase (decrease) in notes payable and bank advances

 56     (379 ) 127   308     991     89   4   173   725  

(Reduction) increase in securitized trade receivables

 (10 )   -   (360 ) 350     -     (305 ) 305   -   -  

Issue of long-term debt

 3,011     1,515   -   1,496     2,244     -   1,497   -   747  

Repayment of long-term debt

 (1,218 )   (142 ) (472 ) (604 )   (2,516 )   (124 ) (812 ) (270 ) (1,310 )

Issue of common shares

 93     4   41   48     99     1   6   19   73  

Repurchase of shares for settlement of share-based payments

 (179 )   (38 ) (45 ) (96 )   (106 )   (12 ) (15 ) (11 ) (68 )

Cash dividends paid on common shares

 (1,866 )   (646 ) (626 ) (594 )   (2,305 )   (593 ) (594 ) (592 ) (526 )

Other financing activities

 (36 )   (14 ) (9 ) (13 )   (54 )   7   (26 ) (8 ) (27 )

 

(1,640 )   239   (1,047 ) (832 )   (2,986 )   (1,463 ) (173 ) (742 ) (608 )

Net increase (decrease) in cash and cash equivalents

 1,126     1,422   47   (343 )   240     (540 ) 778   192   (190 )

Cash and cash equivalents at beginning of period

 853     557   510   853     613     1,393   615   423   613  

Cash and cash equivalents at end of period

 1,979     1,979   557   510     853     853   1,393   615   423  

BCE Supplementary Financial Information - Third Quarter 2017 Page 13

 

Accompanying Notes

(1)

We report our results in three segments: Bell Wireless, Bell Wireline and Bell Media. Our reporting structure reflects how we manage our business and how we classify our results for planning and measuring performance.

Throughout this report, we, us, our, the company and BCE mean, as the context may require, either BCE Inc. or, collectively, BCE Inc., Bell Canada, their subsidiaries, joint arrangements and associates. Bell means, as the context may require, either Bell Canada or, collectively, Bell Canada, its subsidiaries, joint arrangements and associates. MTS means, as the context may require, until March 17, 2017, either Manitoba Telecom Services Inc. or, collectively, Manitoba Telecom Services Inc. and its subsidiaries and Bell MTS means, from March 17, 2017, the combined operations of MTS and Bell Canada in Manitoba.

 
(2)

On March 17, 2017, BCE acquired all of the issued and outstanding common shares of MTS. Bell MTS offers wireless, Internet, TV, phone services, security systems and information solutions including unified cloud and managed services to residential and business customers in Manitoba. The results from the acquired MTS operations are included in our Bell Wireline and Wireless segments. For further details see note 3, Business acquisitions and dispositions, of the Q3 2017 financial statements.

 
(3)

Non-GAAP Financial Measures

In Q1 2017, we updated our definition of adjusted net earnings and adjusted EPS to also exclude impairment charges as they may affect the comparability of our financial results and could potentially distort the analysis of trends in business performance.

Adjusted EBITDA and adjusted EBITDA margin

The terms adjusted EBITDA and adjusted EBITDA margin do not have any standardized meaning under International Financial Reporting Standards (IFRS). Therefore, they are unlikely to be comparable to similar measures presented by other issuers.

We define adjusted EBITDA as operating revenues less operating costs (including post-employment benefit plans service cost) as shown in BCE’s consolidated income statements. Adjusted EBITDA for BCE’s segments is the same as segment profit as reported in BCE’s consolidated financial statements. We define adjusted EBITDA margin as adjusted EBITDA divided by operating revenues.

We use adjusted EBITDA and adjusted EBITDA margin to evaluate the performance of our businesses as they reflect their ongoing profitability. We believe that certain investors and analysts use adjusted EBITDA to measure a company’s ability to service debt and to meet other payment obligations or as a common measurement to value companies in the telecommunications industry. We believe that certain investors and analysts also use adjusted EBITDA and adjusted EBITDA margin to evaluate the performance of our businesses. Adjusted EBITDA also is one component in the determination of short-term incentive compensation for all management employees.

Adjusted EBITDA and adjusted EBITDA margin have no directly comparable IFRS financial measure. Alternatively, adjusted EBITDA may be reconciled to net earnings as shown in this document.

Adjusted net earnings and adjusted earnings per share (EPS)

The terms adjusted net earnings and adjusted EPS do not have any standardized meaning under IFRS. Therefore, they are unlikely to be comparable to similar measures presented by other issuers.

 

BCE Supplementary Financial Information - Third Quarter 2017 Page 14

 

  We define adjusted net earnings as net earnings attributable to common shareholders before severance, acquisition and other costs, net losses (gains) on investments, impairment charges, and early debt redemption costs. We define adjusted EPS as adjusted net earnings per BCE common share.

We use adjusted net earnings and adjusted EPS, and we believe that certain investors and analysts use these measures, among other ones, to assess the performance of our businesses without the effects of severance, acquisition and other costs, net losses (gains) on investments, impairment charges, and early debt redemption costs, net of tax and non-controlling interest. We exclude these items because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding these items does not imply they are non-recurring.

The most comparable IFRS financial measures are net earnings attributable to common shareholders and EPS, as reconciled in this document.

Free cash flow

The term free cash flow does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other issuers.

We define free cash flow as cash flows from operating activities, excluding acquisition and other costs paid (which include significant litigation costs) and voluntary pension funding, less capital expenditures, preferred share dividends and dividends paid by subsidiaries to non-controlling interest. We exclude acquisition and other costs paid and voluntary pension funding because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding these items does not imply they are non-recurring.

We consider free cash flow to be an important indicator of the financial strength and performance of our businesses because it shows how much cash is available to pay dividends, repay debt and reinvest in our company.

We believe that certain investors and analysts use free cash flow to value a business and its underlying assets and to evaluate the financial strength and performance of our businesses.

The most comparable IFRS financial measure is cash flows from operating activities, as reconciled in this document.

Net debt

The term net debt does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other issuers.

We define net debt as debt due within one year plus long-term debt and 50% of preferred shares, less cash and cash equivalents, as shown in BCE’s consolidated statements of financial position. We include 50% of outstanding preferred shares in our net debt as it is consistent with the treatment by certain credit rating agencies.

We consider net debt to be an important indicator of the company’s financial leverage because it represents the amount of debt that is not covered by available cash and cash equivalents. We believe that certain investors and analysts use net debt to determine a company’s financial leverage.

Net debt has no directly comparable IFRS financial measure, but rather is calculated using several asset and liability categories from the statements of
financial position, as shown in this document.

 

BCE Supplementary Financial Information - Third Quarter 2017 Page 15

 

  Net debt leverage ratio

The net debt leverage ratio does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other issuers. We use, and believe that certain investors and analysts use, the net debt leverage ratio as a measure of financial leverage.

The net debt leverage ratio represents net debt divided by adjusted EBITDA. For the purposes of calculating our net debt leverage ratio, adjusted EBITDA is twelve-month trailing adjusted EBITDA.

Adjusted EBITDA to net interest expense ratio

The ratio of adjusted EBITDA to net interest expense does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other issuers. We use, and believe that certain investors and analysts use, the adjusted EBITDA to net interest expense ratio as a measure of financial health of the company.

The adjusted EBITDA to net interest expense ratio represents adjusted EBITDA divided by net interest expense. For the purposes of calculating our adjusted EBITDA to net interest expense ratio, adjusted EBITDA is twelve-month trailing adjusted EBITDA. Net interest expense is twelve-month trailing net interest expense as shown in our statements of cash flows, plus 50% of declared preferred share dividends as shown in our income statements.

 
(4) Key performance indicators (KPIs)

In addition to the non-GAAP financial measures described previously, we use a number of KPIs to measure the success of our strategic imperatives. These KPIs are not accounting measures and may not be comparable to similar measures presented by other issuers.

Average revenue per user (ARPU) or subscriber is a measure used to track our recurring revenue streams. Wireless blended ARPU is calculated by dividing certain service revenues by the average subscriber base for the specified period and is expressed as a dollar unit per month.

Capital intensity is capital expenditures divided by operating revenues.

Churn is the rate at which existing subscribers cancel their services. It is a measure of our ability to retain our customers. Wireless churn is calculated by dividing the number of deactivations during a given period by the average number of subscribers in the base for the specified period and is expressed as a percentage per month.

Wireless subscriber unit is comprised of an active revenue-generating unit (e.g. mobile device, tablet or wireless Internet products), with a unique identifier (typically International Mobile Equipment Identity (IMEI) number), that has access to our wireless networks. We report wireless subscriber units in two categories: postpaid and prepaid. Prepaid subscriber units are considered active for a period of 120 days following the expiry of the subscriber’s prepaid balance.

Wireline subscriber unit consists of an active revenue-generating unit with access to our services, including Internet, satellite TV, IPTV, and/or NAS. A subscriber is included in our subscriber base when the service has been installed and is operational at the customer premise and a billing relationship has been established.

  • Internet, IPTV and satellite TV subscribers have access to stand-alone services, and are primarily represented by a dwelling unit
  • NAS subscribers are based on a line count and are represented by a unique telephone number

 

BCE Supplementary Financial Information - Third Quarter 2017 Page 16