EX-99.2 3 supp_q417.htm SUPPLEMENTARY FINANCIAL INFORMATION - FOURTH QUARTER 2017 BCE Inc. Supplementary Financial Information – Fourth Quarter 2017

Exhibit 99.2

 

BCE (1) (2)
Consolidated Operational Data

(In millions of Canadian dollars, except share amounts) (unaudited)   Q4
2017		     Q4
2016		      

$ change

   % change       TOTAL
2017		     TOTAL
2016		      

$ change

   % change  

Operating revenues

                                                  

Service

   5,435     5,169       266   5.1 %     21,143     20,090       1,053   5.2 %

Product

   523     533       (10 ) (1.9 %)     1,576     1,629       (53 ) (3.3 %)

Total operating revenues

   5,958     5,702       256   4.5 %     22,719     21,719       1,000   4.6 %

Operating costs (A)

   (3,677 )   (3,521 )     (156 ) (4.4 %)     (13,299 )   (12,707 )     (592 ) (4.7 %)

Post-employment benefit plans service cost

   (64 )   (60 )     (4 ) (6.7 %)     (242 )   (224 )     (18 ) (8.0 %)

Adjusted EBITDA (3)

   2,217     2,121       96   4.5 %     9,178     8,788       390   4.4 %

Adjusted EBITDA margin (3)

   37.2 %   37.2 %         -       40.4 %   40.5 %         (0.1 ) pts

Severance, acquisition and other costs

   (47 )   (11 )     (36 ) n.m.       (190 )   (135 )     (55 ) (40.7 %)

Depreciation

   (781 )   (719 )     (62 ) (8.6 %)     (3,037 )   (2,877 )     (160 ) (5.6 %)

Amortization

   (209 )   (165 )     (44 ) (26.7 %)     (813 )   (631 )     (182 ) (28.8 %)

Finance costs

                                                  

Interest expense

   (241 )   (225 )     (16 ) (7.1 %)     (955 )   (888 )     (67 ) (7.5 %)

Interest on post-employment benefit obligations

   (18 )   (20 )     2   10.0 %     (72 )   (81 )     9   11.1 %

Other (expense) income

   (62 )   (30 )     (32 ) n.m.       (102 )   21       (123 ) n.m.  

Income taxes

   (242 )   (252 )     10   4.0 %     (1,039 )   (1,110 )     71   6.4 %

Net earnings

   617     699       (82 ) (11.7 %)     2,970     3,087       (117 ) (3.8 %)

Net earnings attributable to:

                                                  

Common shareholders

   575     657       (82 ) (12.5 %)     2,786     2,894       (108 ) (3.7 %)

Preferred shareholders

   34     33       1   3.0 %     128     137       (9 ) (6.6 %)

Non-controlling interest

   8     9       (1 ) (11.1 %)     56     56       -   -  

Net earnings

   617     699       (82 ) (11.7 %)     2,970     3,087       (117 ) (3.8 %)

Net earnings per common share - basic

 $ 0.64   $ 0.75       (0.11 ) (14.7 %)   $ 3.12   $ 3.33       (0.21 ) (6.3 %)

Net earnings per common share - diluted

 $ 0.63   $ 0.75       (0.12 ) (16.0 %)   $ 3.11   $ 3.33       (0.22 ) (6.6 %)

Dividends per common share

 $ 0.7175   $ 0.6825     $ 0.0350   5.1 %   $ 2.8700   $ 2.7300     $ 0.1400   5.1 %

Average number of common shares outstanding - basic (millions)

   900.6     870.5                   894.3     869.1              

Average number of common shares outstanding - diluted (millions)

   901.4     871.6                   894.9     870.3              

Number of common shares outstanding (millions)

   901.0     870.7                   901.0     870.7              

Adjusted net earnings and EPS

                                                  

Net earnings attributable to common shareholders

   575     657       (82 ) (12.5 %)     2,786     2,894       (108 ) (3.7 %)

Severance, acquisition and other costs

   34     9       25   n.m.       143     104       39   37.5 %

Net losses on investments

   15     1       14   n.m.       29     3       26   n.m.  

Early debt redemption costs

   -     -       -   -       15     8       7   87.5 %

Impairment charges

   60     -       60   n.m.       60     -       60   n.m.  

Adjusted net earnings (3)

   684     667       17   2.5 %     3,033     3,009       24   0.8 %

Impact on net earnings per share

 $ 0.12   $ 0.01     $ 0.11   n.m.     $ 0.27   $ 0.13     $ 0.14   n.m.  

Adjusted EPS (3)

 $ 0.76   $ 0.76     $ -   -     $ 3.39   $ 3.46     $ (0.07 ) (2.0 %)

 

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

BCE Supplementary Financial Information - Fourth Quarter 2017 Page 2

BCE
Consolidated Operational Data - Historical Trend

(In millions of Canadian dollars, except share amounts) (unaudited)  

TOTAL
2017

       Q4 17     Q3 17     Q2 17     Q1 17       TOTAL
2016		       Q4 16     Q3 16     Q2 16     Q1 16  

Operating revenues

                                                                  

Service

   21,143       5,435     5,322     5,335     5,051       20,090       5,169     5,025     4,988     4,908  

Product

   1,576       523     356     364     333       1,629       533     382     352     362  

Total operating revenues

   22,719       5,958     5,678     5,699     5,384       21,719       5,702     5,407     5,340     5,270  

Operating costs (A)

   (13,299 )     (3,677 )   (3,248 )   (3,254 )   (3,120 )     (12,707 )     (3,521 )   (3,111 )   (3,016 )   (3,059 )

Post-employment benefit plans service cost

   (242 )     (64 )   (64 )   (64 )   (50 )     (224 )     (60 )   (60 )   (56 )   (48 )

Adjusted EBITDA

   9,178       2,217     2,366     2,381     2,214       8,788       2,121     2,236     2,268     2,163  

Adjusted EBITDA margin

   40.4 %     37.2 %   41.7 %   41.8 %   41.1 %     40.5 %     37.2 %   41.4 %   42.5 %   41.0 %

Severance, acquisition and other costs

   (190 )     (47 )   (23 )   (36 )   (84 )     (135 )     (11 )   (25 )   (57 )   (42 )

Depreciation

   (3,037 )     (781 )   (765 )   (769 )   (722 )     (2,877 )     (719 )   (706 )   (713 )   (739 )

Amortization

   (813 )     (209 )   (208 )   (211 )   (185 )     (631 )     (165 )   (161 )   (156 )   (149 )

Finance costs

                                                                  

Interest expense

   (955 )     (241 )   (242 )   (238 )   (234 )     (888 )     (225 )   (227 )   (217 )   (219 )

Interest on post-employment benefit obligations

   (72 )     (18 )   (18 )   (18 )   (18 )     (81 )     (20 )   (20 )   (21 )   (20 )

Other (expense) income

   (102 )     (62 )   (56 )   (1 )   17       21       (30 )   (13 )   41     23  

Income taxes

   (1,039 )     (242 )   (237 )   (297 )   (263 )     (1,110 )     (252 )   (284 )   (315 )   (259 )

Net earnings

   2,970       617     817     811     725       3,087       699     800     830     758  

Net earnings attributable to:

                                                                  

Common shareholders

   2,786       575     770     762     679       2,894       657     752     778     707  

Preferred shareholders

   128       34     31     32     31       137       33     32     35     37  

Non-controlling interest

   56       8     16     17     15       56       9     16     17     14  

Net earnings

   2,970       617     817     811     725       3,087       699     800     830     758  

Net earnings per common share - basic

 $ 3.12     $ 0.64   $ 0.86   $ 0.84   $ 0.78     $ 3.33     $ 0.75   $ 0.87   $ 0.89   $ 0.82  

Net earnings per common share - diluted

 $ 3.11     $ 0.63   $ 0.86   $ 0.84   $ 0.78     $ 3.33     $ 0.75   $ 0.87   $ 0.89   $ 0.82  

Dividends per common share

 $ 2.8700     $ 0.7175   $ 0.7175   $ 0.7175   $ 0.7175     $ 2.7300     $ 0.6825   $ 0.6825   $ 0.6825   $ 0.6825  

Average number of common shares outstanding - basic (millions)

   894.3       900.6     900.4     900.1     875.7       869.1       870.5     869.9     869.1     867.1  

Average number of common shares outstanding - diluted (millions)

   894.9       901.4     901.1     901.0     876.6       870.3       871.6     871.4     870.3     868.1  

Number of common shares outstanding (millions)

   901.0       901.0     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

   2,786       575     770     762     679       2,894       657     752     778     707  

Severance, acquisition and other costs

   143       34     17     27     65       104       9     20     44     31  

Net losses (gains) on investments

   29       15     -     -     14       3       1     12     2     (12 )

Early debt redemption costs

   15       -     12     3     -       8       -     -     -     8  

Impairment charges

   60       60     -     -     -       -       -     -     -     -  

Adjusted net earnings

   3,033       684     799     792     758       3,009       667     784     824     734  

Impact on net earnings per share

 $ 0.27     $ 0.12   $ 0.02   $ 0.04   $ 0.09     $ 0.13     $ 0.01   $ 0.04   $ 0.05   $ 0.03  

Adjusted EPS

 $ 3.39     $ 0.76   $ 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 - Fourth Quarter 2017 Page 3

BCE
Segmented Data

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) Q4
2017		   Q4
2016		     $ change   % change     TOTAL
2017		   TOTAL
2016		     $ change   % change  

 

                                      

Operating revenues

                                      

Bell Wireless

 2,070   1,883     187   9.9 %   7,883   7,159     724   10.1 %

Bell Wireline

 3,222   3,137     85   2.7 %   12,415   12,104     311   2.6 %

Bell Media

 834   845     (11 ) (1.3 %)   3,104   3,081     23   0.7 %

Inter-segment eliminations

 (168 ) (163 )   (5 ) (3.1 %)   (683 ) (625 )   (58 ) (9.3 %)

Total

 5,958   5,702     256   4.5 %   22,719   21,719     1,000   4.6 %

 

                                      

Operating costs

                                      

Bell Wireless

 (1,334 ) (1,209 )   (125 ) (10.3 %)   (4,607 ) (4,156 )   (451 ) (10.9 %)

Bell Wireline

 (1,912 ) (1,878 )   (34 ) (1.8 %)   (7,229 ) (7,062 )   (167 ) (2.4 %)

Bell Media

 (663 ) (657 )   (6 ) (0.9 %)   (2,388 ) (2,338 )   (50 ) (2.1 %)

Inter-segment eliminations

 168   163     5   3.1 %   683   625     58   9.3 %

Total

 (3,741 ) (3,581 )   (160 ) (4.5 %)   (13,541 ) (12,931 )   (610 ) (4.7 %)

 

                                      

Adjusted EBITDA

                                      

Bell Wireless

 736   674     62   9.2 %   3,276   3,003     273   9.1 %

Margin

 35.6 % 35.8 %       (0.2 ) pts   41.6 % 41.9 %       (0.3 ) pts

Bell Wireline

 1,310   1,259     51   4.1 %   5,186   5,042     144   2.9 %

Margin

 40.7 % 40.1 %       0.6  pts   41.8 % 41.7 %       0.1  pts

Bell Media

 171   188     (17 ) (9.0 %)   716   743     (27 ) (3.6 %)

Margin

 20.5 % 22.2 %       (1.7 ) pts   23.1 % 24.1 %       (1.0 ) pts

Total

 2,217   2,121     96   4.5 %   9,178   8,788     390   4.4 %

Margin

 37.2 % 37.2 %       -     40.4 % 40.5 %       (0.1 ) pts

 

                                      

Capital expenditures

                                      

Bell Wireless

 218   193     (25 ) (13.0 %)   731   733     2   0.3 %

Capital intensity (4)

 10.5 % 10.2 %       (0.3 ) pts   9.3 % 10.2 %       0.9  pts

Bell Wireline

 845   778     (67 ) (8.6 %)   3,174   2,936     (238 ) (8.1 %)

Capital intensity

 26.2 % 24.8 %       (1.4 ) pts   25.6 % 24.3 %       (1.3 ) pts

Bell Media

 37   22     (15 ) (68.2 %)   129   102     (27 ) (26.5 %)

Capital intensity

 4.4 % 2.6 %       (1.8 ) pts   4.2 % 3.3 %       (0.9 ) pts

Total

 1,100   993     (107 ) (10.8 %)   4,034   3,771     (263 ) (7.0 %)

Capital intensity

 18.5 % 17.4 %       (1.1 ) pts   17.8 % 17.4 %       (0.4 ) pts

 

BCE Supplementary Financial Information - Fourth Quarter 2017 Page 4

BCE
Segmented Data - Historical Trend

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

 

                                              

Operating revenues

                                              

Bell Wireless

 7,883     2,070   2,040   1,959   1,814     7,159     1,883   1,848   1,735   1,693  

Bell Wireline

 12,415     3,222   3,092   3,121   2,980     12,104     3,137   3,005   2,979   2,983  

Bell Media

 3,104     834   723   796   751     3,081     845   716   779   741  

Inter-segment eliminations

 (683 )   (168 ) (177 ) (177 ) (161 )   (625 )   (163 ) (162 ) (153 ) (147 )

Total

 22,719     5,958   5,678   5,699   5,384     21,719     5,702   5,407   5,340   5,270  

 

                                              

Operating costs

                                              

Bell Wireless

 (4,607 )   (1,334 ) (1,169 ) (1,108 ) (996 )   (4,156 )   (1,209 ) (1,052 ) (963 ) (932 )

Bell Wireline

 (7,229 )   (1,912 ) (1,784 ) (1,815 ) (1,718 )   (7,062 )   (1,878 ) (1,752 ) (1,706 ) (1,726 )

Bell Media

 (2,388 )   (663 ) (536 ) (572 ) (617 )   (2,338 )   (657 ) (529 ) (556 ) (596 )

Inter-segment eliminations

 683     168   177   177   161     625     163   162   153   147  

Total

 (13,541 )   (3,741 ) (3,312 ) (3,318 ) (3,170 )   (12,931 )   (3,581 ) (3,171 ) (3,072 ) (3,107 )

 

                                              

Adjusted EBITDA

                                              

Bell Wireless

 3,276     736   871   851   818     3,003     674   796   772   761  

Margin

 41.6 %   35.6 % 42.7 % 43.4 % 45.1 %   41.9 %   35.8 % 43.1 % 44.5 % 44.9 %

Bell Wireline

 5,186     1,310   1,308   1,306   1,262     5,042     1,259   1,253   1,273   1,257  

Margin

 41.8 %   40.7 % 42.3 % 41.8 % 42.3 %   41.7 %   40.1 % 41.7 % 42.7 % 42.1 %

Bell Media

 716     171   187   224   134     743     188   187   223   145  

Margin

 23.1 %   20.5 % 25.9 % 28.1 % 17.8 %   24.1 %   22.2 % 26.1 % 28.6 % 19.6 %

Total

 9,178     2,217   2,366   2,381   2,214     8,788     2,121   2,236   2,268   2,163  

Margin

 40.4 %   37.2 % 41.7 % 41.8 % 41.1 %   40.5 %   37.2 % 41.4 % 42.5 % 41.0 %

 

                                              

Capital expenditures

                                              

Bell Wireless

 731     218   186   191   136     733     193   195   183   162  

Capital intensity

 9.3 %   10.5 % 9.1 % 9.7 % 7.5 %   10.2 %   10.2 % 10.6 % 10.5 % 9.6 %

Bell Wireline

 3,174     845   820   818   691     2,936     778   756   733   669  

Capital intensity

 25.6 %   26.2 % 26.5 % 26.2 % 23.2 %   24.3 %   24.8 % 25.2 % 24.6 % 22.4 %

Bell Media

 129     37   34   33   25     102     22   25   34   21  

Capital intensity

 4.2 %   4.4 % 4.7 % 4.1 % 3.3 %   3.3 %   2.6 % 3.5 % 4.4 % 2.8 %

Total

 4,034     1,100   1,040   1,042   852     3,771     993   976   950   852  

Capital intensity

 17.8 %   18.5 % 18.3 % 18.3 % 15.8 %   17.4 %   17.4 % 18.1 % 17.8 % 16.2 %

 

BCE Supplementary Financial Information - Fourth Quarter 2017 Page 5

Bell Wireless (1) (2)

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) Q4
2017		   Q4
2016		     % change     TOTAL
2017		   TOTAL
2016		     % change  

Bell Wireless

                              

Operating revenues

                              

External service revenues

 1,884   1,702     10.7 %   7,308   6,602     10.7 %

Inter-segment service revenues

 10   11     (9.1 %)   42   40     5.0 %

Total operating service revenues

 1,894   1,713     10.6 %   7,350   6,642     10.7 %

External product revenues

 176   170     3.5 %   530   515     2.9 %

Inter-segment product revenues

 -   -     -     3   2     50.0 %

Total operating product revenues

 176   170     3.5 %   533   517     3.1 %

Total external revenues

 2,060   1,872     10.0 %   7,838   7,117     10.1 %

Total operating revenues

 2,070   1,883     9.9 %   7,883   7,159     10.1 %

Operating costs

 (1,334 ) (1,209 )   (10.3 %)   (4,607 ) (4,156 )   (10.9 %)

Adjusted EBITDA

 736   674     9.2 %   3,276   3,003     9.1 %

Adjusted EBITDA margin (Total operating revenues)

 35.6 % 35.8 %   (0.2 ) pts   41.6 % 41.9 %   (0.3 ) pts

Adjusted EBITDA margin (Operating service revenues)

 38.9 % 39.3 %   (0.4 ) pts   44.6 % 45.2 %   (0.6 ) pts

Capital expenditures

 218   193     (13.0 %)   731   733     0.3 %

Capital intensity

 10.5 % 10.2 %   (0.3 ) pts   9.3 % 10.2 %   0.9  pts

Wireless gross activations

 568,555   490,948     15.8 %   1,780,478   1,654,882     7.6 %

Postpaid

 505,432   434,008     16.5 %   1,532,425   1,408,030     8.8 %

Wireless net activations

 158,514   87,923     80.3 %   333,084   223,041     49.3 %

Postpaid

 175,204   112,393     55.9 %   416,779   315,311     32.2 %

Wireless subscribers end of period (EOP) (A)

 9,166,787   8,468,872     8.2 %   9,166,787   8,468,872     8.2 %

Postpaid (A)

 8,418,650   7,690,727     9.5 %   8,418,650   7,690,727     9.5 %

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

 68.27   66.69     2.4 %   67.77   65.46     3.5 %

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

 1.51 % 1.60 %   0.09  pts   1.36 % 1.44 %   0.08  pts

Prepaid

 3.25 % 3.01 %   (0.24 ) pts   3.17 % 3.13 %   (0.04 ) pts

Postpaid

 1.35 % 1.45 %   0.10  pts   1.19 % 1.25 %   0.06  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 - Fourth Quarter 2017 Page 6

Bell Wireless - Historical Trend

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

Bell Wireless

                                              

Operating revenues

                                              

External service revenues

 7,308     1,884   1,901   1,818   1,705     6,602     1,702   1,711   1,610   1,579  

Inter-segment service revenues

 42     10   12   10   10     40     11   10   10   9  

Total operating service revenues

 7,350     1,894   1,913   1,828   1,715     6,642     1,713   1,721   1,620   1,588  

External product revenues

 530     176   126   129   99     515     170   127   114   104  

Inter-segment product revenues

 3     -   1   2   -     2     -   -   1   1  

Total operating product revenues

 533     176   127   131   99     517     170   127   115   105  

Total external revenues

 7,838     2,060   2,027   1,947   1,804     7,117     1,872   1,838   1,724   1,683  

Total operating revenues

 7,883     2,070   2,040   1,959   1,814     7,159     1,883   1,848   1,735   1,693  

Operating costs

 (4,607 )   (1,334 ) (1,169 ) (1,108 ) (996 )   (4,156 )   (1,209 ) (1,052 ) (963 ) (932 )

Adjusted EBITDA

 3,276     736   871   851   818     3,003     674   796   772   761  

Adjusted EBITDA margin (Total operating revenues)

 41.6 %   35.6 % 42.7 % 43.4 % 45.1 %   41.9 %   35.8 % 43.1 % 44.5 % 44.9 %

Adjusted EBITDA margin (Operating service revenues)

 44.6 %   38.9 % 45.5 % 46.6 % 47.7 %   45.2 %   39.3 % 46.3 % 47.7 % 47.9 %

Capital expenditures

 731     218   186   191   136     733     193   195   183   162  

Capital intensity

 9.3 %   10.5 % 9.1 % 9.7 % 7.5 %   10.2 %   10.2 % 10.6 % 10.5 % 9.6 %

Wireless gross activations

 1,780,478     568,555   460,053   403,418   348,452     1,654,882     490,948   453,078   379,233   331,623  

Postpaid

 1,532,425     505,432   390,985   339,392   296,616     1,408,030     434,008   381,630   316,977   275,415  

Wireless net activations (losses)

 333,084     158,514   106,982   66,916   672     223,041     87,923   100,256   44,730   (9,868 )

Postpaid

 416,779     175,204   117,182   88,611   35,782     315,311     112,393   107,265   69,848   25,805  

Wireless subscribers EOP (A)

 9,166,787     9,166,787   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)

 8,418,650     8,418,650   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)

 67.77     68.27   69.78   67.28   65.66     65.46     66.69   67.76   64.32   63.02  

Churn (%)(average per month)

 1.36 %   1.51 % 1.32 % 1.27 % 1.36 %   1.44 %   1.60 % 1.41 % 1.35 % 1.38 %

Prepaid

 3.17 %   3.25 % 2.95 % 3.19 % 3.29 %   3.13 %   3.01 % 2.86 % 3.21 % 3.42 %

Postpaid

 1.19 %   1.35 % 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 - Fourth Quarter 2017 Page 7

Bell Wireline (1) (2)

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) Q4
2017		   Q4
2016		    

% change

     TOTAL
2017		   TOTAL
2016		    

% change

  

Bell Wireline

                              

Operating revenues

                              

Data

 1,835   1,745     5.2 %   7,146   6,791     5.2 %

Local & access

 777   753     3.2 %   3,161   3,089     2.3 %

Long distance

 148   178     (16.9 %)   639   741     (13.8 %)

Other services

 61   45     35.6 %   213   182     17.0 %

Total external service revenues

 2,821   2,721     3.7 %   11,159   10,803     3.3 %

Inter-segment service revenues

 50   49     2.0 %   198   177     11.9 %

Total operating service revenues

 2,871   2,770     3.6 %   11,357   10,980     3.4 %

Data

 165   171     (3.5 %)   519   559     (7.2 %)

Equipment & other

 182   192     (5.2 %)   527   555     (5.0 %)

Total external product revenues

 347   363     (4.4 %)   1,046   1,114     (6.1 %)

Inter-segment product revenues

 4   4     -     12   10     20.0 %

Total operating product revenues

 351   367     (4.4 %)   1,058   1,124     (5.9 %)

Total external revenues

 3,168   3,084     2.7 %   12,205   11,917     2.4 %

Total operating revenues

 3,222   3,137     2.7 %   12,415   12,104     2.6 %

Operating costs

 (1,912 ) (1,878 )   (1.8 %)   (7,229 ) (7,062 )   (2.4 %)

Adjusted EBITDA

 1,310   1,259     4.1 %   5,186   5,042     2.9 %

Adjusted EBITDA margin

 40.7 % 40.1 %   0.6  pts   41.8 % 41.7 %   0.1  pts

Capital expenditures

 845   778     (8.6 %)   3,174   2,936     (8.1 %)

Capital intensity

 26.2 % 24.8 %   (1.4 ) pts   25.6 % 24.3 %   (1.3 ) pts

High-speed Internet

                              

High-speed Internet net activations

 27,040   18,402     46.9 %   87,860   85,099     3.2 %

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

 3,790,141   3,476,562     9.0 %   3,790,141   3,476,562     9.0 %

TV

                              

Net subscriber activations (losses)

 6,546   (964 )   779.0 %   (20,716 ) 6,413     (423.0 %)

Internet protocol television (IPTV)

 32,484   35,905     (9.5 %)   107,712   155,153     (30.6 %)

Total subscribers EOP (A)

 2,832,300   2,744,909     3.2 %   2,832,300   2,744,909     3.2 %

IPTV (A)

 1,550,317   1,337,944     15.9 %   1,550,317   1,337,944     15.9 %

Local

                              

Network access services (NAS) (A)

                              

Residential (A)

 3,231,308   3,249,739     (0.6 %)   3,231,308   3,249,739     (0.6 %)

Business (A)

 3,089,175   3,007,993     2.7 %   3,089,175   3,007,993     2.7 %

Total

 6,320,483   6,257,732     1.0 %   6,320,483   6,257,732     1.0 %

NAS net losses

                              

Residential

 (44,281 ) (67,385 )   34.3 %   (242,094 ) (283,993 )   14.8 %

Business

 (29,789 ) (33,245 )   10.4 %   (114,971 ) (131,415 )   12.5 %

Total

 (74,070 ) (100,630 )   26.4 %   (357,065 ) (415,408 )   14.0 %

 

(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 - Fourth Quarter 2017 Page 8

Bell Wireline - Historical Trend

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

Bell Wireline

                                              

Operating revenues

                                              

Data

 7,146     1,835   1,806   1,798   1,707     6,791     1,745   1,704   1,685   1,657  

Local & access

 3,161     777   796   813   775     3,089     753   766   781   789  

Long distance

 639     148   156   167   168     741     178   189   183   191  

Other services

 213     61   53   55   44     182     45   39   51   47  

Total external service revenues

 11,159     2,821   2,811   2,833   2,694     10,803     2,721   2,698   2,700   2,684  

Inter-segment service revenues

 198     50   49   50   49     177     49   50   39   39  

Total operating service revenues

 11,357     2,871   2,860   2,883   2,743     10,980     2,770   2,748   2,739   2,723  

Data

 519     165   106   125   123     559     171   129   122   137  

Equipment & other

 527     182   123   111   111     555     192   126   116   121  

Total external product revenues

 1,046     347   229   236   234     1,114     363   255   238   258  

Inter-segment product revenues

 12     4   3   2   3     10     4   2   2   2  

Total operating product revenues

 1,058     351   232   238   237     1,124     367   257   240   260  

Total external revenues

 12,205     3,168   3,040   3,069   2,928     11,917     3,084   2,953   2,938   2,942  

Total operating revenues

 12,415     3,222   3,092   3,121   2,980     12,104     3,137   3,005   2,979   2,983  

Operating costs

 (7,229 )   (1,912 ) (1,784 ) (1,815 ) (1,718 )   (7,062 )   (1,878 ) (1,752 ) (1,706 ) (1,726 )

Adjusted EBITDA

 5,186     1,310   1,308   1,306   1,262     5,042     1,259   1,253   1,273   1,257  

Adjusted EBITDA margin

 41.8 %   40.7 % 42.3 % 41.8 % 42.3 %   41.7 %   40.1 % 41.7 % 42.7 % 42.1 %

Capital expenditures

 3,174     845   820   818   691     2,936     778   756   733   669  

Capital intensity

 25.6 %   26.2 % 26.5 % 26.2 % 23.2 %   24.3 %   24.8 % 25.2 % 24.6 % 22.4 %

High-speed Internet

                                              

High-speed Internet net activations

 87,860     27,040   44,424   1,407   14,989     85,099     18,402   39,375   7,539   19,783  

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

 3,790,141     3,790,141   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

 (20,716 )   6,546   1,738   (13,337 ) (15,663 )   6,413     (964 ) (4,723 ) 2,101   9,999  

IPTV

 107,712     32,484   36,399   16,427   22,402     155,153     35,905   36,253   35,255   47,740  

Total subscribers EOP (A)

 2,832,300     2,832,300   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)

 1,550,317     1,550,317   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)

 3,231,308     3,231,308   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)

 3,089,175     3,089,175   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

 6,320,483     6,320,483   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

 (242,094 )   (44,281 ) (57,387 ) (67,005 ) (73,421 )   (283,993 )   (67,385 ) (80,587 ) (68,593 ) (67,428 )

Business

 (114,971 )   (29,789 ) (27,375 ) (27,954 ) (29,853 )   (131,415 )   (33,245 ) (37,734 ) (20,232 ) (40,204 )

Total

 (357,065 )   (74,070 ) (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 - Fourth 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)                    

 

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

Debt due within one year

 5,178   6,083   5,940   6,306   4,887  

Long-term debt

 18,215   18,456   17,433   17,757   16,572  

Preferred shares - BCE (A)

 2,002   2,002   2,002   2,002   2,002  

Cash and cash equivalents

 (625 ) (1,979 ) (557 ) (510 ) (853 )

Net debt (3)

 24,770   24,562   24,818   25,555   22,608  

Net debt leverage ratio (3)

 2.70   2.70   2.77   2.89   2.57  

Adjusted EBITDA /net interest expense ratio (3)

 9.12   9.19   9.22   9.27   9.31  

 

                    

 

Cash flow information                                  
(In millions of Canadian dollars, except where otherwise indicated) (unaudited) Q4
2017		   Q4
2016		   $ change  

% change

     TOTAL
2017		   TOTAL
2016		   $ change  

% change

  

Free cash flow (FCF) (3)

                                  

Cash flows from operating activities

 1,658   1,520   138   9.1 %   7,358   6,643   715   10.8 %

Capital expenditures

 (1,100 ) (993 ) (107 ) (10.8 %)   (4,034 ) (3,771 ) (263 ) (7.0 %)

Dividends paid on preferred shares

 (33 ) (21 ) (12 ) (57.1 %)   (127 ) (126 ) (1 ) (0.8 %)

Dividends paid by subsidiaries to non-controlling interest

 -   (11 ) 11   100 %   (34 ) (46 ) 12   26.1 %

Acquisition and other costs paid

 27   28   (1 ) (3.6 %)   155   126   29   23.0 %

Voluntary defined benefit pension plan contribution

 100   400   (300 ) (75.0 %)   100   400   (300 ) (75.0 %)

FCF

 652   923   (271 ) (29.4 %)   3,418   3,226   192   6.0 %

    

                                               

 

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

FCF

                                          

Cash flows from operating activities

 7,358   1,658   2,233   2,154   1,313     6,643   1,520   1,943   1,890   1,290  

Capital expenditures

 (4,034 ) (1,100 ) (1,040 ) (1,042 ) (852 )   (3,771 ) (993 ) (976 ) (950 ) (852 )

Dividends paid on preferred shares

 (127 ) (33 ) (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

 155   27   24   21   83     126   28   31   39   28  

Voluntary defined benefit pension plan contribution

 100   100   -   -   -     400   400   -   -   -  

FCF

 3,418   652   1,183   1,094   489     3,226   923   951   934   418  

 

                                                

 

(A) Net debt includes 50% of preferred shares

BCE Supplementary Financial Information - Fourth Quarter 2017 Page 10

BCE (2)
Consolidated Statements of Financial Position

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

ASSETS

                            

Current assets

                            

Cash

 442     1,460     420     439     603  

Cash equivalents

 183     519     137     71     250  

Trade and other receivables

 3,135     2,864     2,845     2,818     2,979  

Inventory

 380     437     437     428     403  

Prepaid expenses

 375     494     550     540     420  

Assets held for sale

 -     -     -     284     -  

Other current assets

 124     159     121     152     200  

Total current assets

 4,639     5,933     4,510     4,732     4,855  

Non-current assets

                            

Property, plant and equipment

 24,033     23,754     23,586     23,450     22,346  

Intangible assets

 13,305     13,495     13,416     13,356     11,998  

Deferred tax assets

 144     186     180     171     89  

Investments in associates and joint ventures

 814     828     883     879     852  

Other non-current assets

 900     947     634     875     1,010  

Goodwill

 10,428     10,422     10,383     10,386     8,958  

Total non-current assets

 49,624     49,632     49,082     49,117     45,253  

Total assets

 54,263     55,565     53,592     53,849     50,108  

LIABILITIES

                            

Current liabilities

                            

Trade payables and other liabilities

 4,623     4,470     4,270     4,044     4,326  

Interest payable

 168     172     168     177     156  

Dividends payable

 678     667     656     636     617  

Current tax liabilities

 140     242     175     62     122  

Debt due within one year

 5,178     6,083     5,940     6,306     4,887  

Total current liabilities

 10,787     11,634     11,209     11,225     10,108  

Non-current liabilities

                            

Long-term debt

 18,215     18,456     17,433     17,757     16,572  

Deferred tax liabilities

 2,447     2,403     2,141     2,158     2,192  

Post-employment benefit obligations

 2,108     2,169     2,488     2,252     2,105  

Other non-current liabilities

 1,223     1,260     1,245     1,264     1,277  

Total non-current liabilities

 23,993     24,288     23,307     23,431     22,146  

Total liabilities

 34,780     35,922     34,516     34,656     32,254  

EQUITY

                            

Equity attributable to BCE shareholders

                            

Preferred shares

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

Common shares

 20,091     20,066     20,062     20,023     18,370  

Contributed surplus

 1,162     1,156     1,145     1,137     1,160  

Accumulated other comprehensive (loss) income

 (17 )   (35 )   7     37     46  

Deficit

 (6,080 )   (5,873 )   (6,466 )   (6,324 )   (6,040 )

Total equity attributable to BCE shareholders

 19,160     19,318     18,752     18,877     17,540  

Non-controlling interest

 323     325     324     316     314  

Total equity

 19,483     19,643     19,076     19,193     17,854  

Total liabilities and equity

 54,263     55,565     53,592     53,849     50,108  

Number of common shares outstanding (millions)

 901.0     900.4     900.4     899.5     870.7  

 

BCE Supplementary Financial Information - Fourth Quarter 2017 Page 11

BCE (2)
Consolidated Cash Flow Data

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) Q4
2017		   Q4
2016		     $ change     TOTAL
2017		   TOTAL
2016		     $ change  

Net earnings

 617   699     (82 )   2,970   3,087     (117 )

Adjustments to reconcile net earnings to cash flows from operating activities

                              

Severance, acquisition and other costs

 47   11     36     190   135     55  

Depreciation and amortization

 990   884     106     3,850   3,508     342  

Post-employment benefit plans cost

 82   80     2     314   305     9  

Net interest expense

 238   220     18     942   875     67  

(Gains) losses on investments

 (7 ) (10 )   3     5   (58 )   63  

Income taxes

 242   252     (10 )   1,039   1,110     (71 )

Contributions to post-employment benefit plans

 (175 ) (477 )   302     (413 ) (725 )   312  

Payments under other post-employment benefit plans

 (19 ) (21 )   2     (77 ) (76 )   (1 )

Severance and other costs paid

 (36 ) (36 )   -     (147 ) (231 )   84  

Interest paid

 (251 ) (221 )   (30 )   (965 ) (882 )   (83 )

Income taxes paid (net of refunds)

 (207 ) (102 )   (105 )   (675 ) (565 )   (110 )

Acquisition and other costs paid

 (27 ) (28 )   1     (155 ) (126 )   (29 )

Net change in operating assets and liabilities

 164   269     (105 )   480   286     194  

Cash flows from operating activities

 1,658   1,520     138     7,358   6,643     715  

Capital expenditures

 (1,100 ) (993 )   (107 )   (4,034 ) (3,771 )   (263 )

Cash dividends paid on preferred shares

 (33 ) (21 )   (12 )   (127 ) (126 )   (1 )

Cash dividends paid by subsidiaries to non-controlling interest

 -   (11 )   11     (34 ) (46 )   12  

Acquisition and other costs paid

 27   28     (1 )   155   126     29  

Voluntary defined benefit pension plan contribution

 100   400     (300 )   100   400     (300 )

Free cash flow

 652   923     (271 )   3,418   3,226     192  

Business acquisitions

 (14 ) (158 )   144     (1,649 ) (404 )   (1,245 )

Acquisition and other costs paid

 (27 ) (28 )   1     (155 ) (126 )   (29 )

Voluntary defined benefit pension plan contribution

 (100 ) (400 )   300     (100 ) (400 )   300  

Decrease in investments

 6   85     (79 )   6   107     (101 )

Loan to related party

 -   (7 )   7     -   (517 )   517  

Disposition of intangibles and other assets

 -   -     -     323   -     323  

Other investing activities

 (32 ) (18 )   (14 )   (83 ) 1     (84 )

Increase (decrease) in notes payable and bank advances

 277   89     188     333   991     (658 )

(Reduction) increase in securitized trade receivables

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

Issue of long-term debt

 -   -     -     3,011   2,244     767  

Repayment of long-term debt

 (1,435 ) (124 )   (1,311 )   (2,653 ) (2,516 )   (137 )

Issue of common shares

 24   1     23     117   99     18  

Repurchase of shares for settlement of share-based payments

 (45 ) (12 )   (33 )   (224 ) (106 )   (118 )

Cash dividends paid on common shares

 (646 ) (593 )   (53 )   (2,512 ) (2,305 )   (207 )

Other financing activities

 (14 ) 7     (21 )   (50 ) (54 )   4  

 

(2,006 ) (1,463 )   (543 )   (3,646 ) (2,986 )   (660 )

Net (decrease) increase in cash and cash equivalents

 (1,354 ) (540 )   (814 )   (228 ) 240     (468 )

Cash and cash equivalents at beginning of period

 1,979   1,393     586     853   613     240  

Cash and cash equivalents at end of period

 625   853     (228 )   625   853     (228 )

 

BCE Supplementary Financial Information - Fourth Quarter 2017 Page 12

BCE
Consolidated Cash Flow Data - Historical Trend

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

Net earnings

 2,970     617   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

 190     47   23   36   84     135     11   25   57   42  

Depreciation and amortization

 3,850     990   973   980   907     3,508     884   867   869   888  

Post-employment benefit plans cost

 314     82   82   82   68     305     80   80   77   68  

Net interest expense

 942     238   239   235   230     875     220   222   215   218  

Losses (gains) on investments

 5     (7 ) -   -   12     (58 )   (10 ) (34 ) 2   (16 )

Income taxes

 1,039     242   237   297   263     1,110     252   284   315   259  

Contributions to post-employment benefit plans

 (413 )   (175 ) (64 ) (86 ) (88 )   (725 )   (477 ) (78 ) (80 ) (90 )

Payments under other post-employment benefit plans

 (77 )   (19 ) (20 ) (19 ) (19 )   (76 )   (21 ) (17 ) (19 ) (19 )

Severance and other costs paid

 (147 )   (36 ) (30 ) (40 ) (41 )   (231 )   (36 ) (48 ) (61 ) (86 )

Interest paid

 (965 )   (251 ) (242 ) (249 ) (223 )   (882 )   (221 ) (219 ) (221 ) (221 )

Income taxes paid (net of refunds)

 (675 )   (207 ) (66 ) (114 ) (288 )   (565 )   (102 ) (123 ) (102 ) (238 )

Acquisition and other costs paid

 (155 )   (27 ) (24 ) (21 ) (83 )   (126 )   (28 ) (31 ) (39 ) (28 )

Net change in operating assets and liabilities

 480     164   308   242   (234 )   286     269   215   47   (245 )

Cash flows from operating activities

 7,358     1,658   2,233   2,154   1,313     6,643     1,520   1,943   1,890   1,290  

Capital expenditures

 (4,034 )   (1,100 ) (1,040 ) (1,042 ) (852 )   (3,771 )   (993 ) (976 ) (950 ) (852 )

Cash dividends paid on preferred shares

 (127 )   (33 ) (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

 155     27   24   21   83     126     28   31   39   28  

Voluntary defined benefit pension plan contribution

 100     100   -   -   -     400     400   -   -   -  

Free cash flow

 3,418     652   1,183   1,094   489     3,226     923   951   934   418  

Business acquisitions

 (1,649 )   (14 ) -   -   (1,635 )   (404 )   (158 ) -   (1 ) (245 )

Acquisition and other costs paid

 (155 )   (27 ) (24 ) (21 ) (83 )   (126 )   (28 ) (31 ) (39 ) (28 )

Voluntary defined benefit pension plan contribution

 (100 )   (100 ) -   -   -     (400 )   (400 ) -   -   -  

Decrease in investments

 6     6   -   -   -     107     85   22   -   -  

Loan to related party

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

Disposition of intangibles and other assets

 323     -   -   323   -     -     -   -   -   -  

Other investing activities

 (83 )   (32 ) (37 ) (5 ) (9 )   1     (18 ) (19 ) (13 ) 51  

Increase (decrease) in notes payable and bank advances

 333     277   (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

 (2,653 )   (1,435 ) (142 ) (472 ) (604 )   (2,516 )   (124 ) (812 ) (270 ) (1,310 )

Issue of common shares

 117     24   4   41   48     99     1   6   19   73  

Repurchase of shares for settlement of share-based payments

 (224 )   (45 ) (38 ) (45 ) (96 )   (106 )   (12 ) (15 ) (11 ) (68 )

Cash dividends paid on common shares

 (2,512 )   (646 ) (646 ) (626 ) (594 )   (2,305 )   (593 ) (594 ) (592 ) (526 )

Other financing activities

 (50 )   (14 ) (14 ) (9 ) (13 )   (54 )   7   (26 ) (8 ) (27 )

 

(3,646 )   (2,006 ) 239   (1,047 ) (832 )   (2,986 )   (1,463 ) (173 ) (742 ) (608 )

Net (decrease) increase in cash and cash equivalents

 (228 )   (1,354 ) 1,422   47   (343 )   240     (540 ) 778   192   (190 )

Cash and cash equivalents at beginning of period

 853     1,979   557   510   853     613     1,393   615   423   613  

Cash and cash equivalents at end of period

 625     625   1,979   557   510     853     853   1,393   615   423  

 

BCE Supplementary Financial Information - Fourth 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, television (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 2017 annual 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 - Fourth 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 (NCI). 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 NCI. 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 - Fourth 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, Internet protocol television (IPTV), and/or network access services (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 - Fourth Quarter 2017 Page 16