EX-99.2 3 d814708dex992.htm SUPPLEMENTARY FINANCIAL INFORMATION - THIRD QUARTER 2019 SUPPLEMENTARY FINANCIAL INFORMATION - THIRD QUARTER 2019

Exhibit 99.2

 

LOGO

BCE (1) (2) (3)

Consolidated Operational Data

 

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

Q3

2019

     

Q3

2018

          $ change      % change         

YTD

2019

     

YTD

2018

          $ change     % change  
   

Operating revenues

                                 

Service

      5,185         5,117           68         1.3%           15,461         15,210          251       1.7%  

Product

      799         760           39         5.1%             2,187         2,043          144       7.0%  

Total operating revenues

      5,984         5,877           107         1.8%           17,648         17,253          395       2.3%  

Operating costs (A)

     (3,330)        (3,355)          25         0.7%           (9,863)        (9,911 )         48       0.5%  

Post-employment benefit plans service cost

      (60)        (65)          5         7.7%             (187)        (201 )         14       7.0%  

Adjusted EBITDA (4)

     2,594         2,457           137         5.6%           7,598         7,141          457       6.4%  

Adjusted EBITDA margin (4)

     43.3%         41.8%              1.5 pts           43.1%         41.4%            1.7 pts  

Severance, acquisition and other costs

      (23)        (54)          31         57.4%           (86)        (78 )         (8 )      (10.3% ) 

Depreciation

      (861)        (779)          (82)        (10.5%)          (2,631)        (2,346 )         (285 )      (12.1% ) 

Amortization

      (230)        (220)          (10)        (4.5%)          (674)        (653 )         (21 )      (3.2% ) 

Finance costs

                                 

Interest expense

      (282)        (255)          (27)        (10.6%)          (846)        (741 )         (105 )      (14.2% ) 

Interest on post-employment benefit obligations

      (16)        (17)          1         5.9%           (47)        (51 )         4       7.8%  

Other income (expense)

      61         (41)          102         n.m.           106         (190 )         296       n.m.  

Income taxes

      (321)        (224)          (97)        (43.3%)          (890)        (751 )         (139 )      (18.5% ) 

Net earnings

      922         867           55         6.3%           2,530         2,331          199       8.5%  

Net earnings attributable to:

                                       

Common shareholders

      867         814           53         6.5%           2,368         2,179          189       8.7%  

Preferred shareholders

      37         36           1         2.8%           113         107          6       5.6%  

Non-controlling interest

      18         17           1         5.9%           49         45          4       8.9%  

Net earnings

      922         867           55         6.3%           2,530         2,331          199       8.5%  
   

Net earnings per common share - basic and diluted

    $ 0.96       $ 0.90         $ 0.06         6.7%         $ 2.63        $ 2.42        $ 0.21       8.7%  
   

Dividends per common share

    $     0.7925       $     0.7550         $     0.0375         5.0%         $     2.3775       $     2.2650        $     0.1125       5.0%  
   

Weighted average number of common shares outstanding - basic (millions)

      901.4         898.0                   899.8         898.7         

Weighted average number of common shares outstanding - diluted (millions)

      902.2         898.3                   900.2         899.0         

Number of common shares outstanding (millions)

      903.7         898.0                               903.7         898.0                     
   

Adjusted net earnings and EPS

                                                                             

Net earnings attributable to common shareholders

      867         814           53         6.5%           2,368         2,179          189       8.7%  

Severance, acquisition and other costs

      17         39           (22)        (56.4%)          63         56          7       12.5%  

Net mark-to-market (gains) losses on derivatives used to economically hedge equity settled share-based compensation plans

      (64)        5           (69)        n.m.           (146)        83          (229 )      n.m.  

Net losses on investments

      -         -           -         -           57         20          37       n.m.  

Early debt redemption costs

      -         2           (2)        (100.0%)          13         15          (2 )      (13.3% ) 

Impairment charges

      -         1           (1)        (100.0%)          4         4          -       -  

Adjusted net earnings (4)

     820         861           (41)        (4.8%)          2,359         2,357          2       0.1%  

Impact on net earnings per share

    $ (0.05)      $ 0.06         $ (0.11)        n.m.         $ (0.01)      $ 0.20        $ (0.21 )      n.m.  
   

Adjusted EPS (4)

   $ 0.91       $ 0.96         $ (0.05)        (5.2%)        $ 2.62        $ 2.62          -       -  

n.m. : not meaningful

(A) Excludes post-employment benefit plans service cost

 

BCE Supplementary Financial Information - Third Quarter 2019 Page  2

BCE

Consolidated Operational Data - Historical Trend

 

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

YTD

2019

          Q3 19     Q2 19     Q1 19          TOTAL
2018		          Q4 18     Q3 18     Q2 18     Q1 18  

Operating revenues

                            

Service

      15,461          5,185       5,231       5,045          20,441          5,231       5,117       5,129       4,964  

Product

      2,187          799       699       689          3,027          984       760       657       626  

Total operating revenues

      17,648          5,984       5,930       5,734          23,468          6,215       5,877       5,786       5,590  

Operating costs (A)

     (9,863 )         (3,330 )      (3,277 )      (3,256 )         (13,667 )         (3,756 )      (3,355 )      (3,293 )      (3,263 ) 

Post-employment benefit plans service cost

      (187 )         (60 )      (58 )      (69 )         (266 )         (65 )      (65 )      (63 )      (73 ) 

Adjusted EBITDA

      7,598          2,594       2,595       2,409          9,535          2,394       2,457       2,430       2,254  

Adjusted EBITDA margin

      43.1%          43.3%       43.8%       42.0%          40.6%          38.5%       41.8%       42.0%       40.3%  

Severance, acquisition and other costs

      (86 )         (23 )      (39 )      (24 )         (136 )         (58 )      (54 )      (24 )      -  

Depreciation

      (2,631 )         (861 )      (888 )      (882 )         (3,145 )         (799 )      (779 )      (787 )      (780 ) 

Amortization

      (674 )         (230 )      (223 )      (221 )         (869 )         (216 )      (220 )      (221 )      (212 ) 

Finance costs

                            

Interest expense

      (846 )         (282 )      (281 )      (283 )         (1,000 )         (259 )      (255 )      (246 )      (240 ) 

Interest on post-employment benefit obligations

      (47 )         (16 )      (15 )      (16 )         (69 )         (18 )      (17 )      (17 )      (17 ) 

Other income (expense)

      106          61       (56 )      101          (348 )         (158 )      (41 )      (88 )      (61 ) 

Income taxes

      (890 )         (321 )      (276 )      (293 )         (995 )         (244 )      (224 )      (292 )      (235 ) 
Net earnings      2,530          922       817       791          2,973          642       867       755       709  

Net earnings attributable to:

                            

Common shareholders

      2,368          867       761       740          2,785          606       814       704       661  

Preferred shareholders

      113          37       38       38          144          37       36       35       36  

Non-controlling interest

      49          18       18       13          44          (1 )      17       16       12  
Net earnings      2,530          922       817       791          2,973          642       867       755       709  

Net earnings per common share - basic and diluted

    $ 2.63        $ 0.96     $ 0.85     $ 0.82        $ 3.10        $ 0.68     $ 0.90     $ 0.79     $ 0.73  

Dividends per common share

    $     2.3775        $     0.7925     $     0.7925     $     0.7925        $     3.0200        $     0.7550     $     0.7550     $     0.7550     $     0.7550  

Weighted average number of common shares outstanding - basic (millions)

      899.8          901.4       899.5       898.4          898.6          898.1       898.0       898.0       900.2  

Weighted average number of common shares outstanding - diluted (millions)

      900.2          902.2       900.3       898.7          898.9          898.4       898.3       898.3       900.6  

Number of common shares outstanding (millions)

      903.7          903.7       900.1       898.8          898.2          898.2       898.0       898.0       898.0  
Adjusted net earnings and EPS                                                                                  

Net earnings attributable to common shareholders

      2,368          867       761       740          2,785          606       814       704       661  

Severance, acquisition and other costs

      63          17       28       18          100          44       39       18       (1 ) 

Net mark-to-market (gains) losses on derivatives used to economically hedge equity settled share-based compensation plans

      (146 )         (64 )      (9 )      (73 )         58          (25 )      5       22       56  

Net losses on investments

      57          -       53       4          47          27       -       20       -  

Early debt redemption costs

      13          -       13       -          15          -       2       13       -  

Impairment charges

      4          -       1       3          146          142       1       -       3  

Adjusted net earnings

      2,359          820       847       692          3,151          794       861       777       719  
Impact on net earnings per share    $ (0.01 )       $ (0.05 )     $ 0.09     $ (0.05 )       $ 0.41        $ 0.21     $ 0.06     $ 0.07     $ 0.07  
Adjusted EPS    $ 2.62        $ 0.91     $ 0.94     $ 0.77        $ 3.51        $ 0.89     $ 0.96     $ 0.86     $ 0.80  

(A) Excludes post-employment benefit plans service cost

 

BCE Supplementary Financial Information - Third Quarter 2019 Page  3

BCE (1) (2) (3)

Segmented Data

 

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

Q3

2019

     

Q3

2018

           $ change      % change          

YTD

2019

     

YTD

2018

           $ change      % change  

 

      

 

 

    

 

 

    

 

 

      

 

 

  
                             

Operating revenues

                              

Bell Wireless

     2,348         2,269          79         3.5%          6,649         6,411          238         3.7%   

Bell Wireline

     3,066         3,060          6         0.2%          9,218         9,130          88         1.0%   

Bell Media

     751         731          20         2.7%          2,338         2,271          67         3.0%   

Inter-segment eliminations

     (181)        (183)         2         1.1%          (557)        (559)         2         0.4%   
 

 

 

      

 

 

      

 

 

      

 

 

  

Total

     5,984         5,877          107         1.8%          17,648         17,253          395         2.3%   
 

 

 

      

 

 

      

 

 

      

 

 

  
                             

Operating costs

                              

Bell Wireless

     (1,335)        (1,330)         (5)        (0.4%)         (3,751)        (3,769)         18         0.5%   

Bell Wireline

     (1,711)        (1,724)         13         0.8%          (5,163)        (5,148)         (15)        (0.3%)  

Bell Media

     (525)        (549)         24         4.4%          (1,693)        (1,754)         61         3.5%   

Inter-segment eliminations

     181         183          (2)        (1.1%)         557         559          (2)        (0.4%)  
 

 

 

      

 

 

      

 

 

      

 

 

  

Total

         (3,390)            (3,420)         30         0.9%              (10,050)            (10,112)         62         0.6%   
 

 

 

      

 

 

      

 

 

      

 

 

  
                             

Adjusted EBITDA

                              

Bell Wireless

     1,013         939          74         7.9%          2,898         2,642          256         9.7%   

Margin

     43.1%         41.4%             1.7 pts          43.6%         41.2%             2.4 pts   

Bell Wireline

     1,355         1,336          19         1.4%          4,055         3,982          73         1.8%   

Margin

     44.2%         43.7%             0.5 pts          44.0%         43.6%             0.4 pts   

Bell Media

     226         182          44         24.2%          645         517          128         24.8%   

Margin

     30.1%         24.9%             5.2 pts          27.6%         22.8%             4.8 pts   
 

 

 

      

 

 

      

 

 

      

 

 

  

Total

     2,594         2,457          137         5.6%          7,598         7,141          457         6.4%   
 

 

 

      

 

 

      

 

 

      

 

 

  

Margin

     43.3%         41.8%             1.5 pts          43.1%         41.4%             1.7 pts   
                             

Capital expenditures

                              

Bell Wireless

     167         183          16         8.7%          486         531          45         8.5%   

Capital intensity (5)

    7.1%         8.1%             1.0 pts          7.3%         8.3%             1.0 pts   

Bell Wireline

     824         797          (27)        (3.4%)         2,278         2,384          106         4.4%   

Capital intensity

     26.9%         26.0%             (0.9) pts          24.7%         26.1%             1.4 pts   

Bell Media

     22         30          8         26.7%          71         82          11         13.4%   

Capital intensity

     2.9%         4.1%             1.2 pts          3.0%         3.6%             0.6 pts   
 

 

 

      

 

 

      

 

 

      

 

 

  

Total

     1,013         1,010          (3)        (0.3%)         2,835         2,997          162         5.4%   
 

 

 

      

 

 

      

 

 

      

 

 

  

Capital intensity

     16.9%         17.2%             0.3 pts          16.1%         17.4%             1.3 pts   

 

BCE Supplementary Financial Information - Third Quarter 2019 Page  4

BCE

Segmented Data - Historical Trend

 

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

YTD

2019

     Q3 19     Q2 19     Q1 19     TOTAL
2018		     Q4 18     Q3 18     Q2 18     Q1 18  

 

    

 

 

    

 

 

    

 

 

  
                 

Operating revenues

                  

Bell Wireless

     6,649        2,348       2,189       2,112       8,818        2,407       2,269       2,121       2,021  

Bell Wireline

     9,218        3,066       3,088       3,064       12,267        3,137       3,060       3,061       3,009  

Bell Media

     2,338        751       842       745       3,121        850       731       791       749  

Inter-segment eliminations

     (557)       (181 )      (189 )      (187 )      (738)       (179 )      (183 )      (187 )      (189 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Total

     17,648        5,984       5,930       5,734       23,468        6,215       5,877       5,786       5,590  
 

 

 

    

 

 

    

 

 

    

 

 

  
                 

Operating costs

                  

Bell Wireless

     (3,751)       (1,335 )      (1,209 )      (1,207 )      (5,297)       (1,528 )      (1,330 )      (1,229 )      (1,210 ) 

Bell Wireline

     (5,163)       (1,711 )      (1,727 )      (1,725 )      (6,946)       (1,798 )      (1,724 )      (1,728 )      (1,696 ) 

Bell Media

     (1,693)       (525 )      (588 )      (580 )      (2,428)       (674 )      (549 )      (586 )      (619 ) 

Inter-segment eliminations

     557        181       189       187       738        179       183       187       189  
 

 

 

    

 

 

    

 

 

    

 

 

  

Total

     (10,050)       (3,390 )      (3,335 )      (3,325 )      (13,933)       (3,821 )      (3,420 )      (3,356 )      (3,336 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  
                 

Adjusted EBITDA

                  

Bell Wireless

     2,898        1,013       980       905       3,521        879       939       892       811  

Margin

     43.6%        43.1%       44.8%       42.9%       39.9%        36.5%       41.4%       42.1%       40.1%  

Bell Wireline

     4,055        1,355       1,361       1,339       5,321        1,339       1,336       1,333       1,313  

Margin

     44.0%        44.2%       44.1%       43.7%       43.4%        42.7%       43.7%       43.5%       43.6%  

Bell Media

     645        226       254       165       693        176       182       205       130  

Margin

     27.6%        30.1%       30.2%       22.1%       22.2%        20.7%       24.9%       25.9%       17.4%  
 

 

 

    

 

 

    

 

 

    

 

 

  

Total

     7,598        2,594       2,595       2,409       9,535        2,394       2,457       2,430       2,254  
 

 

 

    

 

 

    

 

 

    

 

 

  

Margin

     43.1%        43.3%       43.8%       42.0%       40.6%        38.5%       41.8%       42.0%       40.3%  
                 

Capital expenditures

                  

Bell Wireless

     486        167       168       151       664        133       183       181       167  

Capital intensity

     7.3%        7.1%       7.7%       7.1%       7.5%        5.5%       8.1%       8.5%       8.3%  

Bell Wireline

     2,278        824       780       674       3,193        809       797       843       744  

Capital intensity

     24.7%        26.9%       25.3%       22.0%       26.0%        25.8%       26.0%       27.5%       24.7%  

Bell Media

     71        22       24       25       114        32       30       32       20  

Capital intensity

     3.0%        2.9%       2.9%       3.4%       3.7%        3.8%       4.1%       4.0%       2.7%  
 

 

 

    

 

 

    

 

 

    

 

 

  

Total

     2,835        1,013       972       850       3,971        974       1,010       1,056       931  
 

 

 

    

 

 

    

 

 

    

 

 

  

Capital intensity

             16.1%            16.9%       16.4%       14.8%       16.9%        15.7%       17.2%       18.3%       16.7%  

 

BCE Supplementary Financial Information - Third Quarter 2019 Page  5

Bell Wireless (1) (2) (3)

 

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

Q3

2019

    

Q3

2018

         % change        

YTD

2019

    

YTD

2018

         % change  

Bell Wireless

                      

Operating revenues

                      

External service revenues

     1,660       1,620         2.5%           4,820       4,688         2.8%    

Inter-segment service revenues

     13       12         8.3%           37       36         2.8%    
                                                     

Total operating service revenues

     1,673       1,632         2.5%           4,857       4,724         2.8%    
                                                     

External product revenues

     675       636         6.1%           1,789       1,683         6.3%    

Inter-segment product revenues

     -       1         (100.0%)          3       4         (25.0%)   
                                                     

Total operating product revenues

     675       637         6.0%           1,792       1,687         6.2%    
                                                     

Total external revenues

     2,335       2,256         3.5%           6,609       6,371         3.7%    

Total operating revenues

     2,348       2,269         3.5%           6,649       6,411         3.7%    

Operating costs

     (1,335 )      (1,330 )        (0.4%)          (3,751 )      (3,769 )        0.5%    
                                                     

Adjusted EBITDA

     1,013       939         7.9%           2,898       2,642         9.7%    

Adjusted EBITDA margin (Total operating revenues)

     43.1%       41.4%         1.7 pts           43.6%       41.2%         2.4 pts    

Capital expenditures

     167       183         8.7%           486       531         8.5%    

Capital intensity

     7.1%       8.1%         1.0 pts           7.3%       8.3%         1.0 pts    

Wireless subscriber gross activations (5)

    593,547       535,647         10.8%           1,521,498       1,408,589         8.0%    

Postpaid

     417,966       426,719         (2.1%)          1,113,618       1,168,174         (4.7%)   

Prepaid

     175,581       108,928         61.2%           407,880       240,415         69.7%    

Wireless subscriber net activations

     204,067       177,834         14.8%           391,827       336,697         16.4%    

Postpaid

     127,172       135,323         (6.0%)          280,356       325,902         (14.0%)   

Prepaid

     76,895       42,511         80.9%           111,471       10,795         932.6%    

Wireless subscribers end of period (EOP)(A)

          9,834,380           9,487,368         3.7%                 9,834,380           9,487,368         3.7%    

Postpaid(A)

    9,038,341       8,728,436         3.6%           9,038,341       8,728,436         3.6%    

Prepaid(A)

    796,039       758,932         4.9%           796,039       758,932         4.9%    

Blended average billing per user (ABPU)($/month) (5)(B)

    69.93       69.28         0.9%           68.71       67.86         1.3%    

Churn (%) (average per month) (5)

    1.34%       1.27%             (0.07) pts           1.31%       1.29%         (0.02) pts    

Postpaid

     1.12%       1.14%         0.02 pts           1.08%       1.13%         0.05 pts    

Prepaid

     3.89%       2.76%         (1.13) pts           4.18%       3.17%             (1.01) pts    

 

(A)

At the beginning of Q1 2019, we adjusted our wireless subscriber base to remove 167,929 subscribers (72,231 postpaid and 95,698 prepaid) as follows:

 

  ·

65,798 subscribers (19,195 postpaid and 46,603 prepaid), due to the completion of the shutdown of the code division multiple access (CDMA) network on April 30, 2019

 

  ·

49,095 prepaid subscribers as a result of a change to our deactivation policy, mainly from 120 days for Bell/Virgin Mobile Canada (Virgin Mobile) and 150 days for Lucky Mobile to 90 days

 

  ·

43,670 postpaid subscribers relating to Internet of Things (IoT) due to the further refinement of our subscriber definition as a result of technology evolution

 

  ·

9,366 postpaid fixed wireless Internet subscribers which were transferred to our retail high-speed Internet subscriber base

 

(B)

Our Q1 2018 blended ABPU was adjusted to exclude the unfavourable retroactive impact of the Canadian Radio-television and Telecommunications Commission (CRTC) decision on wireless domestic wholesale roaming rates of $14 million.

 

BCE Supplementary Financial Information - Third Quarter 2019 Page  6

Bell Wireless - Historical Trend

 

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

YTD

2019

      Q3 19      Q2 19      Q1 19      TOTAL
2018		      Q4 18      Q3 18      Q2 18      Q1 18  

 

     

 

 

     

 

 

     

 

 

  

Bell Wireless

                           

Operating revenues

                           

External service revenues

      4,820         1,660         1,606         1,554         6,269         1,581         1,620         1,566         1,502   

Inter-segment service revenues

      37         13         12         12         48         12         12         12         12   
  

 

 

     

 

 

  

Total operating service revenues

      4,857         1,673         1,618         1,566         6,317         1,593         1,632         1,578         1,514   
  

 

 

     

 

 

  

External product revenues

      1,789         675         569         545         2,497         814         636         541         506   

Inter-segment product revenues

      3         -          2         1         4         -          1         2         1   
  

 

 

     

 

 

  

Total operating product revenues

      1,792         675         571         546         2,501         814         637         543         507   
  

 

 

     

 

 

  

Total external revenues

      6,609         2,335         2,175         2,099         8,766         2,395         2,256         2,107         2,008   

Total operating revenues

      6,649         2,348         2,189         2,112         8,818         2,407         2,269         2,121         2,021   

Operating costs

      (3,751)        (1,335)        (1,209)        (1,207)        (5,297)        (1,528)        (1,330)        (1,229)        (1,210)  
  

 

 

     

 

 

     

 

 

     

 

 

  

Adjusted EBITDA

      2,898         1,013         980         905         3,521         879         939         892         811   

Adjusted EBITDA margin (Total operating revenues)

      43.6%         43.1%         44.8%         42.9%         39.9%         36.5%         41.4%         42.1%         40.1%   

Capital expenditures

      486         167         168         151         664         133         183         181         167   

Capital intensity

      7.3%         7.1%         7.7%         7.1%         7.5%         5.5%         8.1%         8.5%         8.3%   

 

     

 

 

     

 

 

     

 

 

  

Wireless subscriber gross activations

      1,521,498         593,547         517,650         410,301         1,954,792         546,203         535,647         468,152         404,790   

Postpaid

      1,113,618         417,966         375,094         320,558         1,615,764         447,590         426,719         394,136         347,319   

Prepaid

      407,880         175,581         142,556         89,743         339,028         98,613         108,928         74,016         57,471   

 

     

 

 

     

 

 

     

 

 

  

Wireless subscriber net activations (losses)

      391,827         204,067         149,478         38,282         479,811         143,114         177,834         114,486         44,377   

Postpaid

      280,356         127,172         102,980         50,204         447,682         121,780         135,323         122,092         68,487   

Prepaid

      111,471         76,895         46,498         (11,922)        32,129         21,334         42,511         (7,606)        (24,110)  

 

     

 

 

  

Wireless subscribers EOP(A)(B)

     9,834,380         9,834,380         9,630,313         9,480,835         9,610,482         9,610,482         9,487,368         9,309,534         9,195,048   

Postpaid(A)(B)

     9,038,341         9,038,341         8,911,169         8,808,189         8,830,216         8,830,216         8,728,436         8,593,113         8,471,021   

Prepaid(A)

     796,039         796,039         719,144         672,646         780,266         780,266         758,932         716,421         724,027   

 

     

 

 

     

 

 

     

 

 

  

Blended ABPU ($/month)(C)

     68.71         69.93         68.79         67.35         67.76         67.46         69.28         67.71         66.56   

 

     

 

 

     

 

 

     

 

 

  

Churn (%)(average per month)

      1.31%         1.34%         1.29%         1.31%         1.32%         1.41%         1.27%         1.28%         1.31%   

Postpaid

      1.08%         1.12%         1.06%         1.07%         1.16%         1.26%         1.14%         1.10%         1.13%   

Prepaid

      4.18%         3.89%         4.20%         4.49%         3.17%         3.18%         2.76%         3.34%         3.40%   

 

     

 

 

     

 

 

     

 

 

  

 

(A)

At the beginning of Q1 2019, we adjusted our wireless subscriber base to remove 167,929 subscribers (72,231 postpaid and 95,698 prepaid) as follows:

 

  ·

65,798 subscribers (19,195 postpaid and 46,603 prepaid), due to the completion of the shutdown of the CDMA network on April 30, 2019

 

  ·

49,095 prepaid subscribers as a result of a change to our deactivation policy, mainly from 120 days for Bell/Virgin Mobile and 150 days for Lucky Mobile to 90 days

 

  ·

43,670 postpaid subscribers relating to IoT due to the further refinement of our subscriber definition as a result of technology evolution

 

  ·

9,366 postpaid fixed wireless Internet subscribers which were transferred to our retail high-speed Internet subscriber base

 

(B)

At the beginning of Q4 2018, we adjusted our postpaid wireless subscriber base to remove 20,000 subscribers that we divested to Xplornet Communications Inc. as a result of BCE’s acquisition of Manitoba Telecom Services Inc.

 

(C)

Our Q1 2018 blended ABPU was adjusted to exclude the unfavourable retroactive impact of the CRTC decision on wireless domestic wholesale roaming rates of $14 million.

 

BCE Supplementary Financial Information - Third Quarter 2019 Page  7

Bell Wireline (1) (2) (3)

 

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

Q3

2019

     

Q3

2018

          % change          

YTD

2019

     

YTD

2018

          % change  

Bell Wireline

                            

Operating revenues

                            

Data

      1,929         1,867           3.3%           5,743         5,556           3.4%   

Voice

      881         948           (7.1%)          2,685         2,849           (5.8%)  

Other services

      61         60           1.7%           182         187           (2.7%)  

Total external service revenues

      2,871         2,875           (0.1%)          8,610         8,592           0.2%   

Inter-segment service revenues

      70         61           14.8%           209         178           17.4%   

Total operating service revenues

      2,941         2,936           0.2%           8,819         8,770           0.6%   

Data

      114         111           2.7%           367         313           17.3%   

Equipment and other

      10         13           (23.1%)          31         47           (34.0%)  

Total external product revenues

      124         124           -           398         360           10.6%   

Inter-segment product revenues

      1         -           n.m.           1         -           n.m.   

Total operating product revenues

      125         124           0.8%           399         360           10.8%   

Total external revenues

      2,995         2,999           (0.1%)            9,008         8,952           0.6%   

Total operating revenues

      3,066         3,060           0.2%           9,218         9,130           1.0%   

Operating costs

      (1,711)        (1,724)          0.8%           (5,163)        (5,148)          (0.3%)  

Adjusted EBITDA

      1,355         1,336           1.4%           4,055         3,982           1.8%   

Adjusted EBITDA margin

      44.2%         43.7%           0.5 pts           44.0%         43.6%           0.4 pts   
   

Capital expenditures

      824         797           (3.4%)          2,278         2,384           4.4%   

Capital intensity

      26.9%         26.0%           (0.9) pts           24.7%         26.1%           1.4 pts   

Retail high-speed Internet subscribers (5)

                           

Retail net activations (A)

     58,137         53,122           9.4%           100,222         84,081           19.2%   

Retail subscribers EOP (A) (B)

      3,519,962         3,377,856           4.2%           3,519,962         3,377,856           4.2%   

Retail TV subscribers (5)

                           

Retail net subscriber activations (losses) (A)

     4,842         13,230           (63.4%)          5,632         8,328           (32.4%)  

Internet protocol television (IPTV)

      31,746         40,091           (20.8%)          69,437         74,317           (6.6%)  

Satellite

      (26,904)        (26,861)          (0.2%)          (63,805)        (65,989)          3.3%   

Total retail subscribers EOP (A)

     2,772,043         2,753,180           0.7%           2,772,043         2,753,180           0.7%   

IPTV

      1,745,143         1,639,233           6.5%           1,745,143         1,639,233           6.5%   

Satellite

      1,026,900         1,113,947           (7.8%)          1,026,900         1,113,947           (7.8%)  

Retail network access services (NAS) (5)

                                 

Retail residential NAS lines (A)

     2,755,593         3,020,819           (8.8%)          2,755,593         3,020,819           (8.8%)  

Retail residential NAS lines net losses (A)

     (65,656)        (73,241)          10.4%           (205,215)        (198,870)          (3.2%)  

n.m. : not meaningful

 

(A)

As of January 1, 2019, we are no longer reporting wholesale subscribers in our Internet, TV, and residential NAS subscriber bases reflecting our focus on the retail market. Consequently, we restated previously reported 2018 subscribers for comparability.

 

(B)

At the beginning of Q1 2019, our retail high-speed Internet subscriber base was increased by 9,366 subscribers due to the transfer of fixed wireless Internet subscribers from our wireless segment.

 

BCE Supplementary Financial Information - Third Quarter 2019 Page  8

Bell Wireline - Historical Trend

 

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

YTD

2019

      Q3 19      Q2 19      Q1 19      TOTAL
2018		      Q4 18      Q3 18      Q2 18      Q1 18  

 

     

 

 

     

 

 

     

 

 

  

Bell Wireline

                           

Operating revenues

                           

Data

      5,743         1,929         1,929         1,885         7,466         1,910         1,867         1,869         1,820   

Voice

      2,685         881         897         907         3,782         933         948         953         948   

Other services

      182         61         62         59         247         60         60         64         63   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total external service revenues

      8,610         2,871         2,888         2,851         11,495         2,903         2,875         2,886         2,831   

Inter-segment service revenues

      209         70         70         69         242         64         61         59         58   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total operating service revenues

      8,819         2,941         2,958         2,920         11,737         2,967         2,936         2,945         2,889   
  

 

 

     

 

 

     

 

 

     

 

 

  

Data

      367         114         120         133         466         153         111         98         104   

Equipment and other

      31         10         10         11         64         17         13         18         16   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total external product revenues

      398         124         130         144         530         170         124         116         120   

Inter-segment product revenues

      1         1         -         -         -         -         -         -         -   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total operating product revenues

      399         125         130         144         530         170         124         116         120   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total external revenues

      9,008         2,995         3,018         2,995         12,025         3,073         2,999         3,002         2,951   

Total operating revenues

      9,218         3,066         3,088         3,064         12,267         3,137         3,060         3,061         3,009   

Operating costs

      (5,163)        (1,711)        (1,727)        (1,725)        (6,946)        (1,798)        (1,724)        (1,728)        (1,696)  
  

 

 

     

 

 

     

 

 

     

 

 

  

Adjusted EBITDA

      4,055         1,355         1,361         1,339         5,321         1,339         1,336         1,333         1,313   

Adjusted EBITDA margin

      44.0%         44.2%         44.1%         43.7%         43.4%         42.7%         43.7%         43.5%         43.6%   

Capital expenditures

      2,278         824         780         674         3,193         809         797         843         744   

Capital intensity

      24.7%         26.9%         25.3%         22.0%         26.0%         25.8%         26.0%         27.5%         24.7%   

Retail high-speed Internet subscribers

                           

Retail net activations (A)

     100,222         58,137         19,414         22,671         116,599         32,518         53,122         12,803         18,156   

Retail subscribers EOP (A) (B)

      3,519,962         3,519,962         3,461,825         3,442,411         3,410,374         3,410,374         3,377,856         3,324,734         3,311,931   

Retail TV subscribers

                           

Retail net subscriber activations (losses) (A)

     5,632         4,842         2,350         (1,560)        21,559         13,231         13,230         5,452         (10,354)  

IPTV

      69,437         31,746         16,775         20,916         110,790         36,473         40,091         20,653         13,573   

Satellite

      (63,805)        (26,904)        (14,425)        (22,476)        (89,231)        (23,242)        (26,861)        (15,201)        (23,927)  

Total retail subscribers EOP (A)

     2,772,043         2,772,043         2,767,201         2,764,851         2,766,411         2,766,411         2,753,180         2,739,950         2,734,498   

IPTV

      1,745,143         1,745,143         1,713,397         1,696,622         1,675,706         1,675,706         1,639,233         1,599,142         1,578,489   

Satellite

      1,026,900         1,026,900         1,053,804         1,068,229         1,090,705         1,090,705         1,113,947         1,140,808         1,156,009   

Retail network access services (NAS)

                           

Retail residential NAS lines (A)

     2,755,593         2,755,593         2,821,249         2,894,029         2,960,808         2,960,808         3,020,819         3,094,060         3,163,618   

Retail residential NAS lines net losses (A)

     (205,215)        (65,656)        (72,780)        (66,779)        (258,881)        (60,011)        (73,241)        (69,558)        (56,071)  

 

(A)

As of January 1, 2019, we are no longer reporting wholesale subscribers in our Internet, TV and residential NAS subscriber bases reflecting our focus on the retail market. Consequently, we restated previously reported 2018 subscribers for comparability.

 

(B)

At the beginning of Q1 2019, our retail high-speed Internet subscriber base was increased by 9,366 subscribers due to the transfer of fixed wireless Internet subscribers from our wireless segment.

 

BCE Supplementary Financial Information - Third Quarter 2019 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
2019		     June 30
2019		     March 31
2019		     December 31
2018		  

Debt due within one year

      4,728       5,676       5,485       4,645  

Long-term debt

      22,445       21,949       22,016       19,760  

50% of preferred shares

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

Cash and cash equivalents

      (966 )      (1,094 )      (668 )      (425 ) 

Net debt (4)

     28,209       28,533       28,835       25,982  
     

Net debt leverage ratio (4)(A)

     2.82       2.90       2.98       2.72  

Adjusted EBITDA /net interest expense ratio (4)

     8.64       8.71       8.80       9.00  
                                  

 

(A)

Our net debt leverage ratio reflects a one-time increase due to the adoption of IFRS 16 which increased net debt by $2,304 million on January 1, 2019. For further details, see section 4.1, Net debt, of the BCE Q3 2019 management’s discussion and analysis (MD&A).

 

Cash flow information                                                                 
(In millions of Canadian dollars, except where otherwise indicated) (unaudited)     
 Q3
2019		  
 		    
 Q3
2018		  
 		   $  change       % change         
 YTD
2019		  
 		    
 YTD
2018		  
 		   $  change       % change  

Free cash flow (FCF) (4)

                                 

Cash flows from operating activities

      2,258       2,043       215       10.5%          5,867       5,596       271       4.8%  

Capital expenditures

      (1,013 )      (1,010 )      (3 )      (0.3%)          (2,835 )      (2,997 )      162       5.4%  

Cash dividends paid on preferred shares

      (47 )      (35 )      (12 )      (34.3%)          (110 )      (103 )      (7 )      (6.8%)  

Cash dividends paid by subsidiaries to non-controlling interest

      (12 )      (3 )      (9 )      n.m.          (51 )      (16 )      (35 )      n.m.  

Acquisition and other costs paid

      3       19       (16 )      (84.2%)          53       65       (12 )      (18.5%)  

FCF

      1,189       1,014       175       17.3%          2,924       2,545       379       14.9%  
                                                                           

 

Cash flow information - Historical trend                                                                
(In millions of Canadian dollars, except where otherwise indicated)
(unaudited)		    YTD
2019		     Q3
2019		     Q2
2019		     Q1
2019		     TOTAL
2018		     Q4
2018		     Q3
2018		     Q2
2018		     Q1
2018		  
FCF                                                       

Cash flows from operating activities

      5,867       2,258       2,093       1,516       7,384       1,788       2,043       2,057       1,496  

Capital expenditures

      (2,835 )      (1,013 )      (972 )      (850 )      (3,971 )      (974 )      (1,010 )      (1,056 )      (931 ) 

Cash dividends paid on preferred shares

      (110 )      (47 )      (37 )      (26 )      (149 )      (46 )      (35 )      (35 )      (33 ) 

Cash dividends paid by subsidiaries to non-controlling interest

      (51 )      (12 )      (12 )      (27 )      (16 )      -       (3 )      -       (13 ) 

Acquisition and other costs paid

      53       3       21       29       79       14       19       28       18  

Voluntary defined benefit pension plan contribution

      -       -       -       -       240       240       -       -       -  

FCF

      2,924       1,189       1,093       642       3,567       1,022       1,014       994       537  
                                                                          

n.m. : not meaningful

 

BCE Supplementary Financial Information - Third Quarter 2019 Page  10

BCE (2)

Consolidated Statements of Financial Position

 

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

September 30  

2019  

        

June 30  

2019  

        

March 31  

2019  

        

December 31  

2018  

ASSETS

                        

Current assets

                        

Cash

       919         719         546         425  

Cash equivalents

       47         375         122         -  

Trade and other receivables

       2,866         2,978         2,937         3,006  

Inventory

       483         487         472         432  

Contract assets

       1,049         1,005         978         987  

Contract costs

       395         387         383         370  

Prepaid expenses

       270         349         350         244  

Other current assets

       226         189         246         329  

Total current assets

       6,255         6,489         6,034         5,793  

Non-current assets

                                    

Contract assets

       495         476         477         506  

Contract costs

       348         350         331         337  

Property, plant and equipment

       27,379         27,415         27,276         24,844  

Intangible assets

       13,463         13,232         13,269         13,205  

Deferred tax assets

       140         137         129         112  

Investments in associates and joint ventures

       706         740         803         798  

Other non-current assets

       1,171         700         864         847  

Goodwill

       10,669         10,674         10,657         10,658  

Total non-current assets

       54,371         53,724         53,806         51,307  

Total assets

       60,626           60,213         59,840         57,100  

LIABILITIES

                        

Current liabilities

                                    

Trade payables and other liabilities

       3,650         3,720         3,610         3,941  

Contract liabilities

       681         708         733         703  

Interest payable

       207         215         203         196  

Dividends payable

       728         736         735         691  

Current tax liabilities

       383         287         218         253  

Debt due within one year

       4,728         5,676         5,485         4,645  

Total current liabilities

       10,377         11,342         10,984         10,429  

Non-current liabilities

                        

Contract liabilities

       206         219         204         196  

Long-term debt

       22,445         21,949         22,016         19,760  

Deferred tax liabilities

       3,425         3,146         3,159         3,163  

Post-employment benefit obligations

       2,038         2,158         1,998         1,866  

Other non-current liabilities

       872         938         941         997  

Total non-current liabilities

       28,986         28,410         28,318         25,982  

Total liabilities

       39,363         39,752         39,302         36,411  

EQUITY

                        

Equity attributable to BCE shareholders

                        

Preferred shares

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

Common shares

       20,350         20,144         20,067         20,036  

Contributed surplus

       1,167         1,165         1,153         1,170  

Accumulated other comprehensive income

       141         14         20         90  

Deficit

       (4,735)        (5,195)        (5,015)        (4,937) 

Total equity attributable to BCE shareholders

       20,927         20,132         20,229         20,363  

Non-controlling interest

       336         329         309         326  

Total equity

       21,263           20,461         20,538         20,689  

Total liabilities and equity

       60,626           60,213         59,840         57,100  

Number of common shares outstanding (millions)

       903.7           900.1         898.8         898.2  

 

BCE Supplementary Financial Information - Third Quarter 2019 Page  11

BCE (2)

Consolidated Cash Flow Data

 

(In millions of Canadian dollars, except where otherwise indicated) (unaudited)    Q3
2019		     Q3
    2018		               $ change         YTD
2019		     YTD
    2018		               $ change

Net earnings

      922     867        55          2,530     2,331        199 

Adjustments to reconcile net earnings to cash flows from operating activities

                             

Severance, acquisition and other costs

      23     54        (31)         86     78        8 

Depreciation and amortization

      1,091     999        92          3,305     2,999        306 

Post-employment benefit plans cost

      76     82        (6)         234     252        (18)

Net interest expense

      275     251        24          826     732        94 

Losses on investments

      -     -        -          4     -        4 

Income taxes

      321     224        97          890     751        139 

Contributions to post-employment benefit plans

      (62 )    (69)       7          (213 )    (230)       17 

Payments under other post-employment benefit plans

      (17 )    (20)       3          (54 )    (58)       4 

Severance and other costs paid

      (46 )    (27)       (19)         (145 )    (95)       (50)

Interest paid

      (286 )    (207)       (79)         (823 )    (695)       (128)

Income taxes paid (net of refunds)

      (88 )    (161)       73          (504 )    (558)       54 

Acquisition and other costs paid

      (3 )    (19)       16          (53 )    (65)       12 

Net change in operating assets and liabilities

      52     69        (17)         (216 )    154        (370)

Cash flows from operating activities

      2,258     2,043        215          5,867     5,596        271 

Capital expenditures

      (1,013 )    (1,010)       (3)         (2,835 )    (2,997)       162 

Cash dividends paid on preferred shares

      (47 )    (35)       (12)         (110 )    (103)       (7)

Cash dividends paid by subsidiaries to non-controlling interest

      (12 )    (3)       (9)         (51 )    (16)       (35)

Acquisition and other costs paid

      3     19        (16)         53     65        (12)

Free cash flow

      1,189     1,014        175          2,924     2,545        379 

Business acquisitions

      (1 )    (151)       150          (51 )    (395)       344 

Acquisition and other costs paid

      (3 )    (19)       16          (53 )    (65)       12 

Acquisition of spectrum licences

      -     (19)       19          -     (55)       55 

Disposition of intangibles and other assets

      -     -        -          -     68        (68)

Other investing activities

      4     (9)       13          12     (64)       76 

(Decrease) increase in notes payable

      (1,066 )    (30)       (1,036)         (222 )    10        (232)

Increase (decrease) in securitized trade receivables

      -     -        -          31     (2)       33 

Issue of long-term debt

      549     1,530        (981)         1,954     2,996        (1,042)

Repayment of long-term debt

      (226 )    (1,134)       908          (2,029 )    (2,375)       346 

Issue of common shares

      161     1        160          225     3        222 

Repurchase of common shares

      -     -        -          -     (175)       175 

Purchase of shares for settlement of share-based payments

      (14 )    (39)       25          (100 )    (176)       76 

Cash dividends paid on common shares

      (713 )    (678)       (35)         (2,103 )    (2,002)       (101)

Return of capital to non-controlling interest

      -     (10)       10          -     (51)       51 

Other financing activities

      (8 )    (20)       12          (47 )    (61)       14 
       (1,317 )    (578)       (739)         (2,383 )    (2,344)       (39)

Net (decrease) increase in cash and cash equivalents

      (128 )    436        (564)         541     201        340 

Cash and cash equivalents at beginning of period

      1,094     390        704          425     625        (200)

Cash and cash equivalents at end of period

      966     826        140          966     826        140 

 

BCE Supplementary Financial Information - Third Quarter 2019 Page  12

BCE

Consolidated Cash Flow Data - Historical Trend

 

(In millions of Canadian dollars, except where otherwise indicated)
(unaudited)		    YTD
2019		     Q3 19     Q2 19     Q1 19     TOTAL
2018		     Q4 18     Q3 18     Q2 18     Q1 18  

 

    

 

 

    

 

 

    

 

 

  

  Net earnings

      2,530       922       817       791       2,973       642       867       755       709  

  Adjustments to reconcile net earnings to cash flows from operating activities

                   

Severance, acquisition and other costs

      86       23       39       24       136       58       54       24       -  

Depreciation and amortization

      3,305       1,091       1,111       1,103       4,014       1,015       999       1,008       992  

Post-employment benefit plans cost

      234       76       73       85       335       83       82       80       90  

Net interest expense

      826       275       273       278       987       255       251       243       238  

Losses on investments

      4       -       -       4       34       34       -       -       -  

Income taxes

      890       321       276       293       995       244       224       292       235  

Contributions to post-employment benefit plans

      (213 )      (62 )      (70 )      (81 )      (539 )      (309 )      (69 )      (74 )      (87 ) 

Payments under other post-employment benefit plans

      (54 )      (17 )      (19 )      (18 )      (75 )      (17 )      (20 )      (19 )      (19 ) 

Severance and other costs paid

      (145 )      (46 )      (33 )      (66 )      (138 )      (43 )      (27 )      (33 )      (35 ) 

Interest paid

      (823 )      (286 )      (270 )      (267 )      (990 )      (295 )      (207 )      (252 )      (236 ) 

Income taxes paid (net of refunds)

      (504 )      (88 )      (127 )      (289 )      (650 )      (92 )      (161 )      (113 )      (284 ) 

Acquisition and other costs paid

      (53 )      (3 )      (21 )      (29 )      (79 )      (14 )      (19 )      (28 )      (18 ) 

Net change in operating assets and liabilities

      (216 )      52       44       (312 )      381       227       69       174       (89 ) 

 

    

 

 

    

 

 

    

 

 

  

  Cash flows from operating activities

      5,867       2,258       2,093       1,516       7,384       1,788       2,043       2,057       1,496  

Capital expenditures

      (2,835 )      (1,013 )      (972 )      (850 )      (3,971 )      (974 )      (1,010 )      (1,056 )      (931 ) 

Cash dividends paid on preferred shares

      (110 )      (47 )      (37 )      (26 )      (149 )      (46 )      (35 )      (35 )      (33 ) 

Cash dividends paid by subsidiaries to non-controlling interest

      (51 )      (12 )      (12 )      (27 )      (16 )      -       (3 )      -       (13 ) 

Acquisition and other costs paid

      53       3       21       29       79       14       19       28       18  

Voluntary defined benefit pension plan contribution

      -       -       -       -       240       240       -       -       -  

 

    

 

 

    

 

 

    

 

 

  

  Free cash flow

      2,924       1,189       1,093       642       3,567       1,022       1,014       994       537  

Business acquisitions

      (51 )      (1 )      (50 )      -       (395 )      -       (151 )      (21 )      (223 ) 

Acquisition and other costs paid

      (53 )      (3 )      (21 )      (29 )      (79 )      (14 )      (19 )      (28 )      (18 ) 

Voluntary defined benefit pension plan contribution

      -       -       -       -       (240 )      (240 )      -       -       -  

Acquisition of spectrum licences

      -       -       -       -       (56 )      (1 )      (19 )      -       (36 ) 

Disposition of intangibles and other assets

      -       -       -       -       68       -       -       -       68  

Other investing activities

      12       4       32       (24 )      (32 )      32       (9 )      (20 )      (35 ) 

(Decrease) increase in notes payable

      (222 )      (1,066 )      277       567       (123 )      (133 )      (30 )      97       (57 ) 

Increase (decrease) in securitized trade receivables

      31       -       -       31       (2 )      -       -       (2 )      -  

Issue of long-term debt

      1,954       549       1,405       -       2,996       -       1,530       -       1,466  

Repayment of long-term debt

      (2,029 )      (226 )      (1,599 )      (204 )      (2,713 )      (338 )      (1,134 )      (1,068 )      (173 ) 

Issue of common shares

      225       161       44       20       11       8       1       1       1  

Repurchase of common shares

      -       -       -       -       (175 )      -       -       -       (175 ) 

Purchase of shares for settlement of share-based payments

      (100 )      (14 )      (10 )      (76 )      (222 )      (46 )      (39 )      (49 )      (88 ) 

Cash dividends paid on common shares

      (2,103 )      (713 )      (712 )      (678 )      (2,679 )      (677 )      (678 )      (678 )      (646 ) 

Return of capital to non-controlling interest

      -       -       -       -       (51 )      -       (10 )      (12 )      (29 ) 

Other financing activities

      (47 )      (8 )      (33 )      (6 )      (75 )      (14 )      (20 )      (23 )      (18 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  
     (2,383 )      (1,317 )      (667 )      (399 )      (3,767 )      (1,423 )      (578 )      (1,803 )      37  

 

    

 

 

    

 

 

    

 

 

  

  Net increase (decrease) in cash and cash equivalents

      541       (128 )      426       243       (200 )      (401 )      436       (809 )      574  

  Cash and cash equivalents at beginning of period

      425       1,094       668       425       625       826       390       1,199       625  
  

 

 

    

 

 

    

 

 

    

 

 

  

  Cash and cash equivalents at end of period

      966       966       1,094       668       425       425       826       390       1,199  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

BCE Supplementary Financial Information - Third Quarter 2019 Page  13

Accompanying Notes

 

(1)

Our results are reported in three segments: Bell Wireless, Bell Wireline and Bell Media. Our segments reflect how we manage our business and how we classify our operations for planning and measuring performance.

Throughout this report, we, us, our, BCE and the company 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.

 

(2)

As required, we adopted International Financial Reporting Standard (IFRS) 16 - Leases effective January 1, 2019. We adopted IFRS 16 using a modified retrospective approach whereby the financial statements of prior periods presented were not restated and continue to be reported under International Accounting Standard (IAS) 17 - Leases, as permitted by the specific transition provisions of IFRS 16. The cumulative effect of the initial adoption of IFRS 16 was reflected as an adjustment to the deficit at January 1, 2019. For further details, see Note 2, Basis of presentation and significant accounting policies and Note 16, Adoption of IFRS 16, of the Q3 2019 consolidated interim financial statements.

Under IFRS 16, most leases are recognized on the statement of financial position as right-of-use assets within property, plant and equipment, with a corresponding lease liability within debt. Under IFRS 16, expenses related to these leases are recorded in depreciation and interest expense, whereas under IAS 17, operating lease expenses were recorded in operating costs. Under IFRS 16, repayments of principal for these leases are recorded in repayment of long-term debt within cash flows from financing activities and the interest component is recorded in interest paid within cash flows from operating activities. Previously, under IAS 17, operating lease payments were recorded within cash flows from operating activities.

 

(3)

To align with changes in how we manage our business and assess performance, the operating results of The Source (Bell) Electronics Inc. (The Source) are now entirely included within our Wireless segment effective January 1, 2019, with prior periods restated for comparative purposes. Previously, The Source’s results were included within our Wireless and Wireline segments.

 

(4)

Non-GAAP Financial Measures

Adjusted EBITDA and adjusted EBITDA margin

The terms adjusted EBITDA and adjusted EBITDA margin do not have any standardized meaning under 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.

 

BCE Supplementary Financial Information – Third Quarter 2019 Page  14

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.

We define adjusted net earnings as net earnings attributable to common shareholders before severance, acquisition and other costs, net mark-to-market losses (gains) on derivatives used to economically hedge equity settled share-based compensation plans, net losses (gains) on investments, early debt redemption costs and impairment charges, net of tax and non-controlling interest (NCI). 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 mark-to-market losses (gains) on derivatives used to economically hedge equity settled share-based compensation plans, net losses (gains) on investments, early debt redemption costs and impairment charges, net of tax and 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 on common shares, 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.

 

BCE Supplementary Financial Information – Third Quarter 2019 Page  15

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.

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.

 

  (5)

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 billing per user (ABPU) or subscriber approximates the average amount billed to customers on a monthly basis, which is used to track our recurring billing streams. Wireless blended ABPU is calculated by dividing certain customer billings 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 90 days (previously 120 to 150 days) following the expiry of the subscriber’s prepaid balance.

 

BCE Supplementary Financial Information – Third Quarter 2019 Page  16

Wireline subscriber unit consists of an active revenue-generating unit with access to our services, including retail 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.

  •  

Retail Internet, IPTV and satellite TV subscribers have access to stand-alone services, and are primarily represented by a dwelling unit

  •  

Retail NAS subscribers are based on a line count and are represented by a unique telephone number

 

BCE Supplementary Financial Information – Third Quarter 2019 Page  17