EX-99.2 3 d45792dex992.htm SUPPLEMENTARY FINANCIAL INFORMATION - THIRD QUARTER 2020 SUPPLEMENTARY FINANCIAL INFORMATION - THIRD QUARTER 2020

Exhibit 99.2

 

   LOGO
 Q3   

Supplementary

Financial Information

Third Quarter 2020

BCE Investor Relations

Thane Fotopoulos

514-870-4619

thane.fotopoulos@bell.ca

    LOGO

BCE (1) (2) (3)

Consolidated Operational Data

 

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

Q3

2020

    

Q3

2019

          $ change     % change         

YTD

2020

    

YTD

2019

          $ change     % change  

Operating revenues

                              

Service

      4,924       5,141          (217 )      (4.2%)          14,742       15,331          (589 )      (3.8%)  

Product

      863       799          64       8.0%          2,039       2,187          (148 )      (6.8%)  

Total operating revenues

      5,787       5,940          (153 )      (2.6%)          16,781       17,518          (737 )      (4.2%)  

Operating costs (A)

      (3,268 )      (3,312 )         44       1.3%          (9,374 )      (9,810 )         436       4.4%  

Post-employment benefit plans service cost

      (65 )      (60 )         (5 )      (8.3%)          (204 )      (186 )         (18 )      (9.7%)  

Adjusted EBITDA (4)

      2,454       2,568          (114 )      (4.4%)          7,203       7,522          (319 )      (4.2%)  
       

Adjusted EBITDA margin (4)

      42.4%       43.2%            (0.8) pts          42.9%       42.9%            -   

Severance, acquisition and other costs

      (26 )      (23 )         (3 )      (13.0%)          (64 )      (86 )         22       25.6%  

Depreciation

      (876 )      (852 )         (24 )      (2.8%)          (2,603 )      (2,604 )         1       -   

Amortization

      (232 )      (225 )         (7 )      (3.1%)          (696 )      (662 )         (34 )      (5.1%)  

Finance costs

                              

Interest expense

      (279 )      (280 )         1       0.4%          (836 )      (840 )         4       0.5%  

Interest on post-employment benefit obligations

      (12 )      (16 )         4       25.0%          (35 )      (47 )         12       25.5%  

Impairment of assets

      (4 )      (1 )         (3 )      n.m.          (460 )      (6 )         (454 )      n.m.  

Other (expense) income

      (29 )      62          (91 )      n.m.          (156 )      113          (269 )      n.m.  

Income taxes

      (262 )      (319 )         57       17.9%          (601 )      (884 )         283       32.0%  

Net earnings from continuing operations

      734       914          (180 )      (19.7%)          1,752       2,506          (754 )      (30.1%)  

Net earnings from discontinued operations

      6       8          (2 )      (25.0%)          15       24          (9 )      (37.5%)  

Net earnings

      740       922          (182 )      (19.7%)          1,767       2,530          (763 )      (30.2%)  
       

Net earnings from continuing operations attributable to:

                              

Common shareholders

      686       859          (173 )      (20.1%)          1,594       2,344          (750 )      (32.0%)  

Preferred shareholders

      32       37          (5 )      (13.5%)          104       113          (9 )      (8.0%)  

Non-controlling interest

      16       18          (2 )      (11.1%)          54       49          5       10.2%  

Net earnings from continuing operations

      734       914          (180 )      (19.7%)          1,752       2,506          (754 )      (30.1%)  
       

Net earnings attributable to:

                              

Common shareholders

      692       867          (175 )      (20.2%)          1,609       2,368          (759 )      (32.1%)  

Preferred shareholders

      32       37          (5 )      (13.5%)          104       113          (9 )      (8.0%)  

Non-controlling interest

      16       18          (2 )      (11.1%)          54       49          5       10.2%  

Net earnings

      740       922          (182 )      (19.7%)          1,767       2,530          (763 )      (30.2%)  
       

Net earnings per common share - basic and diluted

                              

Continuing operations

    $ 0.76     $ 0.96        $ (0.20 )      (20.8%)        $ 1.76     $ 2.61        $ (0.85 )      (32.6%)  

Discontinued operations

    $ 0.01     $ -        $ 0.01       n.m.        $ 0.02     $ 0.02        $ -       -  

Net earnings per common share - basic and diluted

    $ 0.77     $ 0.96        $     (0.19 )      (19.8%)        $ 1.78     $ 2.63        $ (0.85 )      (32.3%)  
       

Dividends per common share

    $     0.8325     $     0.7925        $ 0.04       5.0%        $     2.4975     $     2.3775        $     0.12       5.0%  
       

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

      904.3       901.4                 904.3       899.8         

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

      904.4       902.2                 904.4       900.2         

Number of common shares outstanding (millions)

      904.3       903.7                             904.3       903.7                     
       

Adjusted net earnings and EPS

                                                                          

Net earnings attributable to common shareholders

      692       867          (175 )      (20.2%)          1,609       2,368          (759 )      (32.1%)  

Severance, acquisition and other costs

      19       17          2       11.8%          47       63          (16 )      (25.4%)  
Net mark-to-market losses (gains) on derivatives used to economically hedge equity settled share-based compensation plans      10       (64 )         74       n.m.          37       (146 )         183       n.m.  

Net (gains) losses on investments

      (22 )      -          (22 )      n.m.          (43 )      57          (100 )      n.m.  

Early debt redemption costs

      16       -          16       n.m.          28       13          15       n.m.  

Impairment of assets

      3       -          3       n.m.          336       4          332       n.m.  

Net earnings from discontinued operations

      (6 )      (8 )         2       25.0%          (15 )      (24 )         9       37.5%  
       

Adjusted net earnings (4)

      712       812          (100 )      (12.3%)          1,999       2,335          (336 )      (14.4%)  
       

Impact on net earnings per share

    $ 0.03     $ (0.05 )       $ 0.08       n.m.        $ 0.45     $ (0.01 )       $ 0.46       n.m.  
       

Adjusted EPS (4)

    $ 0.79     $ 0.91        $ (0.12 )      (13.2%)        $ 2.21     $ 2.60        $ (0.39 )      (15.0%)  

n.m. : not meaningful

(A) Excludes post-employment benefit plans service cost

 

BCE Supplementary Financial Information - Third Quarter 2020 Page 2

BCE

Consolidated Operational Data - Historical Trend

 

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

YTD

2020

          Q3 20     Q2 20     Q1 20         

TOTAL

2019

          Q4 19     Q3 19     Q2 19     Q1 19  

Operating revenues

                            

Service

      14,742          4,924       4,800       5,018          20,566          5,235       5,141       5,190       5,000  

Product

      2,039          863       554       622          3,227          1,040       799       699       689  

Total operating revenues

      16,781          5,787       5,354       5,640          23,793          6,275       5,940       5,889       5,689  

Operating costs (A)

      (9,374 )         (3,268 )      (2,959 )      (3,147 )         (13,541 )         (3,731 )      (3,312 )      (3,259 )      (3,239 ) 

Post-employment benefit plans service cost

      (204 )         (65 )      (64 )      (75 )         (246 )         (60 )      (60 )      (58 )      (68 ) 

Adjusted EBITDA

      7,203          2,454       2,331       2,418          10,006          2,484       2,568       2,572       2,382  

Adjusted EBITDA margin

      42.9%          42.4%       43.5%       42.9%          42.1%          39.6%       43.2%       43.7%       41.9%  

Severance, acquisition and other costs

      (64 )         (26 )      (22 )      (16 )         (114 )         (28 )      (23 )      (39 )      (24 ) 

Depreciation

      (2,603 )         (876 )      (869 )      (858 )         (3,458 )         (854 )      (852 )      (879 )      (873 ) 

Amortization

      (696 )         (232 )      (234 )      (230 )         (886 )         (224 )      (225 )      (220 )      (217 ) 

Finance costs

                            

Interest expense

      (836 )         (279 )      (280 )      (277 )         (1,125 )         (285 )      (280 )      (279 )      (281 ) 

Interest on post-employment benefit obligations

      (35 )         (12 )      (11 )      (12 )         (63 )         (16 )      (16 )      (15 )      (16 ) 

Impairment of assets

      (460 )         (4 )      (449 )      (7 )         (102 )         (96 )      (1 )      (1 )      (4 ) 

Other (expense) income

      (156 )         (29 )      (80 )      (47 )         95          (18 )      62       (54 )      105  

Income taxes

      (601 )         (262 )      (96 )      (243 )         (1,129 )         (245 )      (319 )      (275 )      (290 ) 

Net earnings from continuing operations

      1,752          734       290       728          3,224          718       914       810       782  

Net earnings from discontinued operations

      15          6       4       5          29          5       8       7       9  

Net earnings

      1,767          740       294       733          3,253          723       922       817       791  

Net earnings from continuing operations attributable to:

                            

Common shareholders

      1,594          686       233       675          3,011          667       859       754       731  

Preferred shareholders

      104          32       34       38          151          38       37       38       38  

Non-controlling interest

      54          16       23       15          62          13       18       18       13  

Net earnings from continuing operations

      1,752          734       290       728          3,224          718       914       810       782  

Net earnings attributable to:

                            

Common shareholders

      1,609          692       237       680          3,040          672       867       761       740  

Preferred shareholders

      104          32       34       38          151          38       37       38       38  

Non-controlling interest

      54          16       23       15          62          13       18       18       13  

Net earnings

      1,767          740       294       733          3,253          723       922       817       791  

Net earnings per common share - basic and diluted

                            

Continuing operations

    $ 1.76        $ 0.76     $ 0.26     $ 0.74        $ 3.34        $ 0.73     $ 0.96     $ 0.84     $ 0.81  

Discontinued operations

    $ 0.02        $ 0.01     $ -     $ 0.01        $ 0.03        $ 0.01     $ -     $ 0.01     $ 0.01  

Net earnings per common share - basic and diluted

    $ 1.78        $ 0.77     $ 0.26     $ 0.75        $ 3.37        $ 0.74     $ 0.96     $ 0.85     $ 0.82  

Dividends per common share

    $     2.4975        $     0.8325     $     0.8325     $     0.8325        $     3.1700        $     0.7925     $     0.7925     $     0.7925     $     0.7925  
Weighted average number of common shares outstanding - basic (millions)      904.3          904.3       904.3       904.1          900.8          903.8       901.4       899.5       898.4  
Weighted average number of common shares outstanding - diluted (millions)      904.4          904.4       904.4       904.5          901.4          904.8       902.2       900.3       898.7  

Number of common shares outstanding (millions)

      904.3          904.3       904.3       904.3          903.9          903.9       903.7       900.1       898.8  

Adjusted net earnings and EPS

                                                                                  

Net earnings attributable to common shareholders

      1,609          692       237       680          3,040          672       867       761       740  

Severance, acquisition and other costs

      47          19       16       12          83          20       17       28       18  
Net mark-to-market losses (gains) on derivatives used to economically hedge equity settled share-based compensation plans      37          10       7       20          (101 )         45       (64 )      (9 )      (73 ) 

Net (gains) losses on investments

      (43 )         (22 )      (11 )      (10 )         39          (18 )      -       53       4  

Early debt redemption costs

      28          16       -       12          13          -       -       13       -  

Impairment of assets

      336          3       328       5          74          70       -       1       3  

Net earnings from discontinued operations

      (15 )         (6 )      (4 )      (5 )         (29 )         (5 )      (8 )      (7 )      (9 ) 

Adjusted net earnings

      1,999          712       573       714          3,119          784       812       840       683  

Impact on net earnings per share

    $ 0.45        $ 0.03     $ 0.37     $ 0.05        $ 0.12        $ 0.13     $ (0.05 )    $ 0.09     $ (0.05 ) 

Adjusted EPS

    $ 2.21        $ 0.79     $ 0.63     $ 0.79        $ 3.46        $ 0.86     $ 0.91     $ 0.93     $ 0.76  

(A) Excludes post-employment benefit plans service cost

 

BCE Supplementary Financial Information - Third Quarter 2020 Page 3

BCE (1) (2) (3)

Segmented Data

 

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

Q3

2020

    

Q3

2019

          $ change     % change          

YTD

2020

    

YTD

2019

          $ change     % change  
                             

Operating revenues

                              

Bell Wireless

      2,318       2,310          8       0.3%          6,275       6,547          (272 )      (4.2%)  

Bell Wireline

      3,032       3,057          (25 )      (0.8%)          9,111       9,182          (71 )      (0.8%)  

Bell Media

      628       751          (123 )      (16.4%)          1,959       2,338          (379 )      (16.2%)  

Inter-segment eliminations

      (191 )      (178 )         (13 )      (7.3%)          (564 )      (549 )         (15 )      (2.7%)  

Total

      5,787       5,940          (153 )      (2.6%)          16,781       17,518          (737 )      (4.2%)  
                             

Operating costs

                              

Bell Wireless

      (1,362 )      (1,310 )         (52 )      (4.0%)          (3,512 )      (3,687 )         175       4.7%  

Bell Wireline

      (1,712 )      (1,715 )         3       0.2%          (5,177 )      (5,165 )         (12 )      (0.2%)  

Bell Media

      (450 )      (525 )         75       14.3%          (1,453 )      (1,693 )         240       14.2%  

Inter-segment eliminations

      191       178          13       7.3%          564       549          15       2.7%  

Total

      (3,333 )      (3,372 )         39       1.2%          (9,578 )      (9,996 )         418       4.2%  
                             

Adjusted EBITDA

                              

Bell Wireless

      956       1,000          (44 )      (4.4%)          2,763       2,860          (97 )      (3.4%)  

Margin

      41.2%       43.3%            (2.1) pts          44.0%       43.7%            0.3 pts  

Bell Wireline

      1,320       1,342          (22 )      (1.6%)          3,934       4,017          (83 )      (2.1%)  

Margin

      43.5%       43.9%            (0.4) pts          43.2%       43.7%            (0.5) pts  

Bell Media

      178       226          (48 )      (21.2%)          506       645          (139 )      (21.6%)  

Margin

      28.3%       30.1%                  (1.8) pts          25.8%       27.6%                  (1.8) pts  

Total

      2,454       2,568          (114 )      (4.4%)          7,203       7,522          (319 )      (4.2%)  

Margin

      42.4%       43.2%            (0.8) pts          42.9%       42.9%            -   
                             

Capital expenditures

                              

Bell Wireless

      212       161          (51 )      (31.7%)          524       468          (56 )      (12.0%)  

Capital intensity (5)

      9.1%       7.0%            (2.1) pts          8.4%       7.1%            (1.3) pts  

Bell Wireline

      792       826          34       4.1%          2,108       2,285          177       7.7%  

Capital intensity

      26.1%       27.0%            0.9 pts          23.1%       24.9%            1.8 pts  

Bell Media

      27       22          (5 )      (22.7%)          76       71          (5 )      (7.0%)  

Capital intensity

      4.3%       2.9%                  (1.4) pts          3.9%       3.0%                  (0.9) pts  

Total

      1,031       1,009          (22 )      (2.2%)          2,708       2,824          116       4.1%  

Capital intensity

      17.8%       17.0%            (0.8) pts          16.1%       16.1%            -   

 

BCE Supplementary Financial Information - Third Quarter 2020 Page 4

BCE

Segmented Data - Historical Trend

 

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

YTD

2020

         

Q3 20

    

Q2 20

    

Q1 20

         

TOTAL

2019

         

Q4 19

    

Q3 19

    

Q2 19

    

Q1 19

  
                           

Operating revenues

                            

Bell Wireless

      6,275          2,318       1,922       2,035          9,001          2,454       2,310       2,160       2,077  

Bell Wireline

      9,111          3,032       3,043       3,036          12,317          3,135       3,057       3,073       3,052  

Bell Media

      1,959          628       579       752          3,217          879       751       842       745  

Inter-segment eliminations

      (564 )         (191 )      (190 )      (183 )         (742 )         (193 )      (178 )      (186 )      (185 ) 

Total

      16,781          5,787       5,354       5,640          23,793          6,275       5,940       5,889       5,689  
                           

Operating costs

                            

Bell Wireless

      (3,512 )         (1,362 )      (1,043 )      (1,107 )         (5,210 )         (1,523 )      (1,310 )      (1,192 )      (1,185 ) 

Bell Wireline

      (5,177 )         (1,712 )      (1,764 )      (1,701 )         (6,952 )         (1,787 )      (1,715 )      (1,723 )      (1,727 ) 

Bell Media

      (1,453 )         (450 )      (406 )      (597 )         (2,367 )         (674 )      (525 )      (588 )      (580 ) 

Inter-segment eliminations

      564          191       190       183          742          193       178       186       185  

Total

      (9,578 )         (3,333 )      (3,023 )      (3,222 )         (13,787 )         (3,791 )      (3,372 )      (3,317 )      (3,307 ) 
                           

Adjusted EBITDA

                            

Bell Wireless

      2,763          956       879       928          3,791          931       1,000       968       892  

Margin

      44.0%          41.2%       45.7%       45.6%          42.1%          37.9%       43.3%       44.8%       42.9%  

Bell Wireline

      3,934          1,320       1,279       1,335          5,365          1,348       1,342       1,350       1,325  

Margin

      43.2%          43.5%       42.0%       44.0%          43.6%          43.0%       43.9%       43.9%       43.4%  

Bell Media

      506          178       173       155          850          205       226       254       165  

Margin

      25.8%          28.3%       29.9%       20.6%          26.4%          23.3%       30.1%       30.2%       22.1%  

Total

      7,203          2,454       2,331       2,418          10,006          2,484       2,568       2,572       2,382  

Margin

      42.9%          42.4%       43.5%       42.9%          42.1%          39.6%       43.2%       43.7%       41.9%  
                           

Capital expenditures

                            

Bell Wireless

      524          212       182       130          671          203       161       159       148  

Capital intensity

      8.4%          9.1%       9.5%       6.4%          7.5%          8.3%       7.0%       7.4%       7.1%  

Bell Wireline

      2,108          792       694       622          3,195          910       826       784       675  

Capital intensity

      23.1%          26.1%       22.8%       20.5%          25.9%          29.0%       27.0%       25.5%       22.1%  

Bell Media

      76          27       24       25          108          37       22       24       25  

Capital intensity

      3.9%          4.3%       4.1%       3.3%          3.4%          4.2%       2.9%       2.9%       3.4%  

Total

      2,708          1,031       900       777          3,974          1,150       1,009       967       848  

Capital intensity

      16.1%          17.8%       16.8%       13.8%          16.7%          18.3%       17.0%       16.4%       14.9%  

 

BCE Supplementary Financial Information - Third Quarter 2020 Page 5

Bell Wireless (1) (3)

 

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

 Q3

2020

  

 

    

 Q3

2019

  

 

        % change         

 YTD

2020

  

 

    

 YTD

2019

  

 

        % change  

Bell Wireless

                          

Operating revenues

                          

External service revenues

      1,563       1,633          (4.3%)          4,579       4,741          (3.4%)  

Inter-segment service revenues

      12       13          (7.7%)          36       37          (2.7%)  

Total operating service revenues

      1,575       1,646          (4.3%)          4,615       4,778          (3.4%)  

External product revenues

      742       664          11.7%          1,657       1,766          (6.2%)  

Inter-segment product revenues

      1       -          n.m.          3       3          -  

Total operating product revenues

      743       664          11.9%          1,660       1,769          (6.2%)  

Total external revenues

      2,305       2,297          0.3%          6,236       6,507          (4.2%)  

Total operating revenues

      2,318       2,310          0.3%          6,275       6,547          (4.2%)  

Operating costs

      (1,362 )      (1,310 )         (4.0%)          (3,512 )      (3,687 )         4.7%  

Adjusted EBITDA

      956       1,000          (4.4%)          2,763       2,860          (3.4%)  

Adjusted EBITDA margin (Total operating revenues)

      41.2%       43.3%          (2.1) pts          44.0%       43.7%          0.3 pts  
   

Capital expenditures

      212       161          (31.7%)          524       468          (12.0%)  

Capital intensity

      9.1%       7.0%          (2.1) pts          8.4%       7.1%          (1.3) pts  

Wireless subscriber gross activations (5)

      514,384       593,547          (13.3%)          1,293,513       1,521,498          (15.0%)  
   

Postpaid

      365,781       417,966          (12.5%)          891,359       1,113,618          (20.0%)  
   

Prepaid

      148,603       175,581          (15.4%)          402,154       407,880          (1.4%)  

Wireless subscriber net activations

      128,168       204,067          (37.2%)          182,465       391,827          (53.4%)  
   

Postpaid

      87,529       127,172          (31.2%)          132,811       280,356          (52.6%)  
   

Prepaid

      40,639       76,895          (47.2%)          49,654       111,471          (55.5%)  

Wireless subscribers end of period (EOP)

      10,140,427       9,834,380          3.1%          10,140,427       9,834,380          3.1%  
   

Postpaid

      9,292,751       9,038,341          2.8%          9,292,751       9,038,341          2.8%  
   

Prepaid

      847,676       796,039          6.5%          847,676       796,039          6.5%  

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

      65.74       69.94          (6.0%)          64.68       68.71          (5.9%)  

Churn (%) (average per month) (5)

      1.28%       1.34%          0.06 pts          1.24%       1.31%          0.07 pts  
   

Postpaid

      1.04%       1.12%          0.08 pts          0.95%       1.08%          0.13 pts  
   

Prepaid

      3.98%       3.89%          (0.09) pts          4.54%       4.18%          (0.36) pts  

n.m. : not meaningful

 

(A)

In Q1 2020, we updated our definition of ABPU to include monthly billings related to device financing receivables owing from customers on contract. Consequently, we restated previously reported 2019 ABPU for comparability. See Note 5, Key performance indicators (KPIs), for the definition of ABPU.

 

BCE Supplementary Financial Information - Third Quarter 2020 Page 6

Bell Wireless - Historical Trend

 

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

 YTD

2020

  

 

       Q3 20       Q2 20       Q1 20        

 TOTAL

2019

  

 

       Q4 19       Q3 19       Q2 19       Q1 19  

Bell Wireless

                        

Operating revenues

                        

External service revenues

     4,579         1,563       1,481       1,535         6,323         1,582       1,633       1,580       1,528  

Inter-segment service revenues

     36         12       12       12         49         12       13       12       12  

Total operating service revenues

     4,615         1,575       1,493       1,547         6,372         1,594       1,646       1,592       1,540  

External product revenues

     1,657         742       428       487         2,623         857       664       566       536  

Inter-segment product revenues

     3         1       1       1         6         3       -       2       1  

Total operating product revenues

     1,660         743       429       488         2,629         860       664       568       537  

Total external revenues

     6,236         2,305       1,909       2,022         8,946         2,439       2,297       2,146       2,064  

Total operating revenues

     6,275         2,318       1,922       2,035         9,001         2,454       2,310       2,160       2,077  

Operating costs

     (3,512 )        (1,362 )      (1,043 )      (1,107 )        (5,210 )        (1,523 )      (1,310 )      (1,192 )      (1,185 ) 

Adjusted EBITDA

     2,763         956       879       928         3,791         931       1,000       968       892  

Adjusted EBITDA margin (Total operating revenues)

     44.0%         41.2%       45.7%       45.6%         42.1%         37.9%       43.3%       44.8%       42.9%  

Capital expenditures

     524         212       182       130         671         203       161       159       148  

Capital intensity

     8.4%         9.1%       9.5%       6.4%         7.5%         8.3%       7.0%       7.4%       7.1%  

Wireless subscriber gross activations

     1,293,513         514,384       372,710       406,419         2,117,517         596,019       593,547       517,650       410,301  

Postpaid

     891,359         365,781       243,166       282,412         1,568,729         455,111       417,966       375,094       320,558  

Prepaid

     402,154         148,603       129,544       124,007         548,788         140,908       175,581       142,556       89,743  

Wireless subscriber net activations (losses)

     182,465         128,168       34,702       19,595         515,409         123,582       204,067       149,478       38,282  

Postpaid

     132,811         87,529       21,632       23,650         401,955         121,599       127,172       102,980       50,204  

Prepaid

     49,654         40,639       13,070       (4,055 )        113,454         1,983       76,895       46,498       (11,922 ) 

Wireless subscribers EOP

     10,140,427         10,140,427       10,012,259       9,977,557         9,957,962         9,957,962       9,834,380       9,630,313       9,480,835  

Postpaid

     9,292,751         9,292,751       9,205,222       9,183,590         9,159,940         9,159,940       9,038,341       8,911,169       8,808,189  

Prepaid

     847,676         847,676       807,037       793,967         798,022         798,022       796,039       719,144       672,646  

Blended ABPU ($/month)(A)

     64.68         65.74       62.77       65.53         68.36         67.35       69.94       68.79       67.35  

Churn (%)(average per month)

     1.24%         1.28%       1.13%       1.30%         1.39%         1.60%       1.34%       1.29%       1.31%  

Postpaid

     0.95%         1.04%       0.82%       0.97%         1.13%         1.28%       1.12%       1.06%       1.07%  

Prepaid

     4.54%         3.98%       4.63%       5.03%         4.44%         5.14%       3.89%       4.20%       4.49%  

 

(A)

In Q1 2020, we updated our definition of ABPU to include monthly billings related to device financing receivables owing from customers on contract. Consequently, we restated previously reported 2019 ABPU for comparability. See Note 5, Key performance indicators (KPIs), for the definition of ABPU.

 

BCE Supplementary Financial Information - Third Quarter 2020 Page 7

Bell Wireline (1) (2) (3)

 

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

 Q3

2020

  

 

    

 Q3

2019

  

 

        % change       

 YTD

2020

  

 

    

 YTD

2019

  

 

        % change  

Bell Wireline

                        

Operating revenues

                        

Data

      1,931       1,912          1.0%        5,738       5,692          0.8%  

Voice

      839       881          (4.7%)        2,574       2,685          (4.1%)  

Other services

      61       61          -        181       182          (0.5%)  

Total external service revenues

      2,831       2,854          (0.8%)        8,493       8,559          (0.8%)  

Inter-segment service revenues

      80       68          17.6%        236       202          16.8%  

Total operating service revenues

      2,911       2,922          (0.4%)        8,729       8,761          (0.4%)  

Data

      110       125          (12.0%)        346       390          (11.3%)  

Equipment and other

      11       10          10.0%        36       31          16.1%  

Total external product revenues

      121       135          (10.4%)        382       421          (9.3%)  

Inter-segment product revenues

      -       -          -         -       -          -   

Total operating product revenues

      121       135          (10.4%)        382       421          (9.3%)  

Total external revenues

      2,952       2,989          (1.2%)        8,875       8,980          (1.2%)  

Total operating revenues

      3,032       3,057          (0.8%)        9,111       9,182          (0.8%)  

Operating costs

      (1,712 )      (1,715 )         0.2%        (5,177 )      (5,165 )         (0.2%)  

Adjusted EBITDA

      1,320       1,342          (1.6%)        3,934       4,017          (2.1%)  

Adjusted EBITDA margin

      43.5%       43.9%          (0.4) pts        43.2%       43.7%          (0.5) pts  
   

Capital expenditures

      792       826          4.1%        2,108       2,285          7.7%  

Capital intensity

      26.1%       27.0%          0.9 pts        23.1%       24.9%          1.8 pts  

Retail high-speed Internet subscribers (5)

                        

Retail net activations

      62,859       58,137          8.1%        104,477       100,222          4.2%  

Retail subscribers EOP

      3,660,078       3,519,962          4.0%        3,660,078       3,519,962          4.0%  

Retail TV subscribers (5)

                        
   

Retail net subscriber (losses) activations

      (296 )      4,842          (106.1%)        (34,395 )      5,632          (710.7%)  
   

Internet protocol television (IPTV)

      18,837       31,746          (40.7%)        18,085       69,437          (74.0%)  
   

Satellite

      (19,133 )      (26,904 )         28.9%        (52,480 )      (63,805 )         17.7%  
   

Total retail subscribers EOP

      2,738,069       2,772,043          (1.2%)        2,738,069       2,772,043          (1.2%)  
   

IPTV

      1,785,267       1,745,143          2.3%        1,785,267       1,745,143          2.3%  
   

Satellite

      952,802       1,026,900          (7.2%)        952,802       1,026,900          (7.2%)  

Retail residential network access services (NAS) (5)

                        

Retail residential NAS lines net losses

      (49,792 )      (65,656 )         24.2%        (159,792 )      (205,215 )         22.1%  
   

Retail residential NAS lines

      2,537,691       2,755,593          (7.9%)        2,537,691       2,755,593          (7.9%)  

 

BCE Supplementary Financial Information - Third Quarter 2020 Page 8

Bell Wireline - Historical Trend

 

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

 YTD

2020

  

 

    

 

Q3 20

 

  

 

Q2 20

 

  

 

Q1 20

 

      

 TOTAL

2019

  

 

    

 

Q4 19

 

  

 

Q3 19

 

  

 

Q2 19

 

  

 

Q1 19

 

Bell Wireline

                        

Operating revenues

                        

Data

     5,738         1,931       1,916       1,891         7,617         1,925       1,912       1,914       1,866  

Voice

     2,574         839       863       872         3,564         879       881       897       907  

Other services

     181         61       58       62         251         69       61       62       59  

Total external service revenues

     8,493         2,831       2,837       2,825         11,432         2,873       2,854       2,873       2,832  

Inter-segment service revenues

     236         80       80       76         281         79       68       67       67  

Total operating service revenues

     8,729         2,911       2,917       2,901         11,713         2,952       2,922       2,940       2,899  

Data

     346         110       113       123         556         166       125       123       142  

Equipment and other

     36         11       13       12         48         17       10       10       11  

Total external product revenues

     382         121       126       135         604         183       135       133       153  

Inter-segment product revenues

     -         -       -       -         -         -       -       -       -  

Total operating product revenues

     382         121       126       135         604         183       135       133       153  

Total external revenues

     8,875         2,952       2,963       2,960         12,036         3,056       2,989       3,006       2,985  

Total operating revenues

     9,111         3,032       3,043       3,036         12,317         3,135       3,057       3,073       3,052  

Operating costs

     (5,177 )        (1,712 )      (1,764 )      (1,701 )        (6,952 )        (1,787 )      (1,715 )      (1,723 )      (1,727 ) 

Adjusted EBITDA

     3,934         1,320       1,279       1,335         5,365         1,348       1,342       1,350       1,325  

Adjusted EBITDA margin

     43.2%         43.5%       42.0%       44.0%         43.6%         43.0%       43.9%       43.9%       43.4%  

Capital expenditures

     2,108         792       694       622         3,195         910       826       784       675  

Capital intensity

     23.1%         26.1%       22.8%       20.5%         25.9%         29.0%       27.0%       25.5%       22.1%  

Retail high-speed Internet subscribers

                        

Retail net activations

     104,477         62,859       19,023       22,595         135,861         35,639       58,137       19,414       22,671  

Retail subscribers EOP

     3,660,078         3,660,078       3,597,219       3,578,196         3,555,601         3,555,601       3,519,962       3,461,825       3,442,411  

Retail TV subscribers

                        

Retail net subscriber (losses) activations

     (34,395 )        (296 )      (15,544 )      (18,555 )        6,053         421       4,842       2,350       (1,560 ) 

IPTV

     18,085         18,837       (3,604 )      2,852         91,476         22,039       31,746       16,775       20,916  

Satellite

     (52,480 )        (19,133 )      (11,940 )      (21,407 )        (85,423 )        (21,618 )      (26,904 )      (14,425 )      (22,476 ) 

Total retail subscribers EOP

     2,738,069         2,738,069       2,738,365       2,753,909         2,772,464         2,772,464       2,772,043       2,767,201       2,764,851  

IPTV

     1,785,267         1,785,267       1,766,430       1,770,034         1,767,182         1,767,182       1,745,143       1,713,397       1,696,622  

Satellite

     952,802         952,802       971,935       983,875         1,005,282         1,005,282       1,026,900       1,053,804       1,068,229  

Retail residential network access services (NAS)

                        

Retail residential NAS lines net losses

     (159,792 )        (49,792 )      (48,405 )      (61,595 )        (263,325 )        (58,110 )      (65,656 )      (72,780 )      (66,779 ) 

Retail residential NAS lines

     2,537,691         2,537,691       2,587,483       2,635,888         2,697,483         2,697,483       2,755,593       2,821,249       2,894,029  

 

BCE Supplementary Financial Information - Third Quarter 2020 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
2020		  
 		    
 June 30
2020		  
 		    
 March 31
2020		  
 		    
 December 31
2019		  
 
     

Debt due within one year

                  2,904       2,584       4,209       3,881  

Long-term debt

                  24,914       25,024       25,513       22,415  

50% of preferred shares

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

Cash and cash equivalents

                  (1,679 )      (1,547 )      (2,679 )      (145 ) 

Net debt (4)

                  28,141       28,063       29,045       28,153  
     

Net debt leverage ratio (4)

                  2.91       2.86       2.89       2.81  

Adjusted EBITDA /net interest expense ratio (4)

                  8.29       8.36       8.58       8.50  
                                                                                  
                    

Cash flow information

 

        

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

        Q3       Q3             YTD       YTD        
                 2020       2019       $ change       % change         2020       2019       $ change       % change  

Free cash flow (FCF) (4)

                           

Cash flows from operating activities

        2,110       2,258       (148 )      (6.6%)         6,123       5,867       256       4.4%  

Capital expenditures

        (1,031 )      (1,009 )      (22 )      (2.2%)         (2,708 )      (2,824 )      116       4.1%  

Cash dividends paid on preferred shares

        (32 )      (47 )      15       31.9%         (101 )      (110 )      9       8.2%  

Cash dividends paid by subsidiaries to non-controlling interest

        (11 )      (12 )      1       8.3%         (37 )      (51 )      14       27.5%  

Acquisition and other costs paid

        13       3       10       n.m.         33       53       (20 )      (37.7%)  

Cash from discontinued operations (included in cash flows from operating activities)

        (15 )      (24 )      9       37.5%         (54 )      (71 )      17       23.9%  

FCF

        1,034       1,169       (135 )      (11.5%)         3,256       2,864       392       13.7%  
                                                                                  
                    

Cash flow information - Historical trend

 

        

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

      YTD       Q3       Q2       Q1       TOTAL         Q4       Q3       Q2       Q1  
              2020     2020     2020     2020     2019            2019     2019     2019     2019  
     

FCF

                         

Cash flows from operating activities

      6,123       2,110       2,562       1,451       7,958         2,091       2,258       2,093       1,516  

Capital expenditures

      (2,708 )      (1,031 )      (900 )      (777 )      (3,974 )        (1,150 )      (1,009 )      (967 )      (848 ) 

Cash dividends paid on preferred shares

      (101 )      (32 )      (33 )      (36 )      (147 )        (37 )      (47 )      (37 )      (26 ) 

Cash dividends paid by subsidiaries to non-controlling interest

      (37 )      (11 )      (12 )      (14 )      (65 )        (14 )      (12 )      (12 )      (27 ) 

Acquisition and other costs paid

      33       13       11       9       60         7       3       21       29  

Cash from discontinued operations (included in cash flows from operating activities)

      (54 )      (15 )      (17 )      (22 )      (94 )              (23 )      (24 )      (22 )      (25 ) 

FCF

      3,256       1,034       1,611       611       3,738               874       1,169       1,076       619  
                                                                                  

n.m. : not meaningful

 

BCE Supplementary Financial Information - Third Quarter 2020 Page 10

BCE (2)

Consolidated Statements of Financial Position

 

(In millions of Canadian dollars, except where otherwise indicated) (unaudited)        
 September 30
2020		  
 		         
         June 30
2020		  
 		       
         March 31
2020		  
 		       
   December 31
2019		  
 

ASSETS

                     

Current assets

                     

Cash

         1,482          1,297          943          141  

Cash equivalents

         197          250          1,736          4  

Trade and other receivables

         2,945          2,812          2,990          3,038  

Inventory

         425          445          487          427  

Contract assets

         799          921          1,037          1,111  

Contract costs

         401          399          416          415  

Prepaid expenses

         264          301          280          194  

Other current assets

         191          212          419          190  

Assets held for sale

         829          825          -          -  

Total current assets

         7,533          7,462          8,308          5,520  

Non-current assets

                     

Contract assets

         273          328          452          533  

Contract costs

         351          341          363          368  

Property, plant and equipment

         27,057          26,840          27,432          27,636  

Intangible assets

         12,931          12,897          13,513          13,352  

Deferred tax assets

         142          123          90          98  

Investments in associates and joint ventures

         772          718          730          698  

Other non-current assets

         2,011          1,931          3,960          1,274  

Goodwill

         10,552          10,551          10,667          10,667  

Total non-current assets

         54,089          53,729          57,207          54,626  

Total assets

         61,622          61,191          65,515          60,146  

LIABILITIES

                     

Current liabilities

                     

Trade payables and other liabilities

         3,566          3,341          3,335          3,954  

Contract liabilities

         699          723          725          683  

Interest payable

         190          229          192          227  

Dividends payable

         767          766          767          729  

Current tax liabilities

         292          287          186          303  

Debt due within one year

         2,904          2,584          4,209          3,881  

Liabilities held for sale

         159          205          -          -  

Total current liabilities

         8,577          8,135          9,414          9,777  

Non-current liabilities

                     

Contract liabilities

         223          216          211          207  

Long-term debt

         24,914          25,024          25,513          22,415  

Deferred tax liabilities

         3,827          3,765          4,444          3,561  

Post-employment benefit obligations

         1,969          1,980          1,603          1,907  

Other non-current liabilities

         1,032          934          906          871  

Total non-current liabilities

         31,965          31,919          32,677          28,961  

Total liabilities

         40,542          40,054          42,091          38,738  

EQUITY

                     

Equity attributable to BCE shareholders

                     

Preferred shares

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

Common shares

         20,386          20,386          20,386          20,363  

Contributed surplus

         1,168          1,155          1,156          1,178  

Accumulated other comprehensive income

         258          386          528          161  

Deficit

         (5,087 )         (5,142 )         (2,990 )         (4,632 ) 

Total equity attributable to BCE shareholders

         20,729          20,789          23,084          21,074  

Non-controlling interest

         351          348          340          334  

Total equity

         21,080          21,137          23,424          21,408  

Total liabilities and equity

         61,622          61,191          65,515          60,146  

Number of common shares outstanding (millions)

         904.3          904.3          904.3          903.9  

 

BCE Supplementary Financial Information - Third Quarter 2020 Page 11

BCE (2)

Consolidated Cash Flow Data

 

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

     

 Q3

2020

  

 

    

 Q3

2019

  

 

        $ change         

 YTD

2020

  

 

    

 YTD

2019

  

 

        $ change  
   

Net earnings from continuing operations

      734       914          (180 )         1,752       2,506          (754 ) 
   

Adjustments to reconcile net earnings from continuing operations to cash flows from operating activities

                          

Severance, acquisition and other costs

      26       23          3          64       86          (22 ) 

Depreciation and amortization

      1,108       1,077          31          3,299       3,266          33  

Post-employment benefit plans cost

      77       76          1          239       233          6  

Net interest expense

      273       274          (1 )         818       821          (3 ) 

Impairment of assets

      4       1          3          460       6          454  

Losses on investments

      -       -          -          -       4          (4 ) 

Income taxes

      262       319          (57 )         601       884          (283 ) 

Contributions to post-employment benefit plans

      (69 )      (62 )         (7 )         (219 )      (213 )         (6 ) 

Payments under other post-employment benefit plans

      (15 )      (17 )         2          (44 )      (54 )         10  

Severance and other costs paid

      (11 )      (45 )         34          (59 )      (144 )         85  

Interest paid

      (321 )      (284 )         (37 )         (877 )      (818 )         (59 ) 

Income taxes paid (net of refunds)

      (236 )      (88 )         (148 )         (463 )      (504 )         41  

Acquisition and other costs paid

      (13 )      (3 )         (10 )         (33 )      (53 )         20  

Net change in operating assets and liabilities

      276       49          227          531       (224 )         755  

Cash from discontinued operations

      15       24          (9 )         54       71          (17 ) 

Cash flows from operating activities

      2,110       2,258          (148 )         6,123       5,867          256  

Capital expenditures

      (1,031 )      (1,009 )         (22 )         (2,708 )      (2,824 )         116  

Cash dividends paid on preferred shares

      (32 )      (47 )         15          (101 )      (110 )         9  

Cash dividends paid by subsidiaries to non-controlling interest

      (11 )      (12 )         1          (37 )      (51 )         14  

Acquisition and other costs paid

      13       3          10          33       53          (20 ) 

Cash from discontinued operations (included in cash flows from operating activities)

      (15 )      (24 )         9          (54 )      (71 )         17  

Free cash flow

      1,034       1,169          (135 )         3,256       2,864          392  

Cash from discontinued operations (included in cash flows from operating activities)

      15       24          (9 )         54       71          (17 ) 

Business acquisitions

      -       (1 )         1          (23 )      (51 )         28  

Acquisition and other costs paid

      (13 )      (3 )         (10 )         (33 )      (53 )         20  

Acquisition of spectrum licences

      (85 )      -          (85 )         (86 )      -          (86 ) 

Other investing activities

      (49 )      4          (53 )         (67 )      12          (79 ) 

Cash used in discontinued operations (included in cash flows from investing activities)

      (6 )      (4 )         (2 )         (21 )      (11 )         (10 ) 

Increase (decrease) in notes payable

      317       (1,066 )         1,383          (1,117 )      (222 )         (895 ) 

(Decrease) increase in securitized trade receivables

      (23 )      -          (23 )         (23 )      31          (54 ) 

Issue of long-term debt

      750       549          201          6,006       1,954          4,052  

Repayment of long-term debt

      (979 )      (225 )         (754 )         (3,909 )      (2,025 )         (1,884 ) 

Issue of common shares

      -       161          (161 )         22       225          (203 ) 

Purchase of shares for settlement of share-based payments

      (40 )      (14 )         (26 )         (209 )      (100 )         (109 ) 

Cash dividends paid on common shares

      (753 )      (713 )         (40 )         (2,222 )      (2,103 )         (119 ) 

Other financing activities

      (32 )      (8 )         (24 )         (87 )      (47 )         (40 ) 

Cash used in discontinued operations (included in cash flows from financing activities)

      (4 )      (1 )         (3 )         (7 )      (4 )         (3 ) 
       (902 )      (1,297 )         395          (1,722 )      (2,323 )         601  
Net increase (decrease) in cash and cash equivalents      132       (128 )         260          1,534       541          993  
Cash and cash equivalents at beginning of period      1,547       1,094          453          145       425          (280 ) 
Cash and cash equivalents at end of period      1,679       966          713          1,679       966          713  

 

BCE Supplementary Financial Information - Third Quarter 2020 Page 12

BCE

Consolidated Cash Flow Data - Historical Trend

 

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

YTD

2020

          Q3 20     Q2 20     Q1 20         

TOTAL

2019

          Q4 19     Q3 19     Q2 19     Q1 19  

Net earnings from continuing operations

      1,752          734       290       728          3,224          718       914       810       782  

Adjustments to reconcile net earnings from continuing operations to cash flows from operating activities

                            

Severance, acquisition and other costs

      64          26       22       16          114          28       23       39       24  

Depreciation and amortization

      3,299          1,108       1,103       1,088          4,344          1,078       1,077       1,099       1,090  

Post-employment benefit plans cost

      239          77       75       87          309          76       76       73       84  

Net interest expense

      818          273       275       270          1,101          280       274       271       276  

Impairment of assets

      460          4       449       7          102          96       1       1       4  

Losses on investments

      -          -       -       -          (18 )         (22 )      -       -       4  

Income taxes

      601          262       96       243          1,129          245       319       275       290  

Contributions to post-employment benefit plans

      (219 )         (69 )      (71 )      (79 )         (290 )         (77 )      (62 )      (70 )      (81 ) 

Payments under other post-employment benefit plans

      (44 )         (15 )      (12 )      (17 )         (72 )         (18 )      (17 )      (19 )      (18 ) 

Severance and other costs paid

      (59 )         (11 )      (13 )      (35 )         (167 )         (23 )      (45 )      (33 )      (66 ) 

Interest paid

      (877 )         (321 )      (240 )      (316 )         (1,079 )         (261 )      (284 )      (269 )      (265 ) 

Income taxes paid (net of refunds)

      (463 )         (236 )      6       (233 )         (725 )         (221 )      (88 )      (127 )      (289 ) 

Acquisition and other costs paid

      (33 )         (13 )      (11 )      (9 )         (60 )         (7 )      (3 )      (21 )      (29 ) 

Net change in operating assets and liabilities

      531          276       576       (321 )         (48 )         176       49       42       (315 ) 

Cash from discontinued operations

      54          15       17       22          94          23       24       22       25  

Cash flows from operating activities

      6,123          2,110       2,562       1,451          7,958          2,091       2,258       2,093       1,516  

Capital expenditures

      (2,708 )         (1,031 )      (900 )      (777 )         (3,974 )         (1,150 )      (1,009 )      (967 )      (848 ) 

Cash dividends paid on preferred shares

      (101 )         (32 )      (33 )      (36 )         (147 )         (37 )      (47 )      (37 )      (26 ) 

Cash dividends paid by subsidiaries to non-controlling interest

      (37 )         (11 )      (12 )      (14 )         (65 )         (14 )      (12 )      (12 )      (27 ) 

Acquisition and other costs paid

      33          13       11       9          60          7       3       21       29  

Cash from discontinued operations (included in cash flows from operating activities)

      (54 )         (15 )      (17 )      (22 )         (94 )         (23 )      (24 )      (22 )      (25 ) 

Free cash flow

      3,256          1,034       1,611       611          3,738          874       1,169       1,076       619  

Cash from discontinued operations (included in cash flows from operating activities)

      54          15       17       22          94          23       24       22       25  

Business acquisitions

      (23 )         -       (23 )      -          (51 )         -       (1 )      (50 )      -  

Acquisition and other costs paid

      (33 )         (13 )      (11 )      (9 )         (60 )         (7 )      (3 )      (21 )      (29 ) 

Acquisition of spectrum licences

      (86 )         (85 )      -       (1 )         -          -       -       -       -  

Other investing activities

      (67 )         (49 )      (13 )      (5 )         7          (5 )      4       32       (24 ) 

Cash used in discontinued operations (included in cash flows from investing activities)

      (21 )         (6 )      (8 )      (7 )         (18 )         (7 )      (4 )      (5 )      (2 ) 

(Decrease) increase in notes payable

      (1,117 )         317       (1,204 )      (230 )         (1,073 )         (851 )      (1,066 )      277       567  

(Decrease) increase in securitized trade receivables

      (23 )         (23 )      (400 )      400          131          100       -       -       31  

Issue of long-term debt

      6,006          750       1,975       3,281          1,954          -       549       1,405       -  

Repayment of long-term debt

      (3,909 )         (979 )      (2,221 )      (709 )         (2,221 )         (196 )      (225 )      (1,597 )      (203 ) 

Issue of common shares

      22          -       -       22          240          15       161       44       20  

Purchase of shares for settlement of share-based payments

      (209 )         (40 )      (75 )      (94 )         (142 )         (42 )      (14 )      (10 )      (76 ) 

Cash dividends paid on common shares

      (2,222 )         (753 )      (753 )      (716 )         (2,819 )         (716 )      (713 )      (712 )      (678 ) 

Other financing activities

      (87 )         (32 )      (25 )      (30 )         (54 )         (7 )      (8 )      (33 )      (6 ) 

Cash used in discontinued operations (included in cash flows from financing activities)

      (7 )         (4 )      (2 )      (1 )         (6 )         (2 )      (1 )      (2 )      (1 ) 
       (1,722 )         (902 )      (2,743 )      1,923          (4,018 )         (1,695 )      (1,297 )      (650 )      (376 ) 
Net increase (decrease) in cash and cash equivalents      1,534          132       (1,132 )      2,534          (280 )         (821 )      (128 )      426       243  
Cash and cash equivalents at beginning of period      145          1,547       2,679       145          425          966       1,094       668       425  

Cash and cash equivalents at end of period

      1,679          1,679       1,547       2,679          145          145       966       1,094       668  

 

BCE Supplementary Financial Information - Third Quarter 2020 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)

On June 1, 2020, BCE announced that it had entered into an agreement to sell substantially all of its data centre operations in an all-cash transaction valued at $1.04 billion. We have reclassified amounts related to the announced sale for the previous periods to discontinued operations in our consolidated income statements and consolidated statements of cash flows to make them consistent with the presentation for the current period. We have also reclassified the assets and liabilities of the data centre operations to be sold as held for sale in our consolidated statements of financial position at September 30, 2020, measured at their carrying amount, which is lower than the estimated fair value less costs to sell. Property, plant and equipment and intangible assets included in assets held for sale are no longer depreciated or amortized effective June 1, 2020.

 

(3)

To align with changes in how we manage our business and assess performance, the operating results of our public safety land radio network business are now included within our Bell Wireline segment effective January 1, 2020, with prior periods restated for comparative purposes. Previously, these results were included within our Bell Wireless segment. Our public safety land radio network business, which builds and manages land mobile radio networks primarily for the government sector, is now managed by our Bell Business Markets team in order to better serve our customers with end-to-end communications solutions.

 

(4)

Non-GAAP Financial Measures

In Q2 2020, we updated our definitions of adjusted net earnings, adjusted EPS and free cash flow to exclude the impacts of discontinued operations as they may affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. As a result of this change, prior periods have been restated for comparative purposes.

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.

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.

 

BCE Supplementary Financial Information - Third Quarter 2020 Page 14

Adjusted net earnings and adjusted 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, impairment of assets and discontinued operations, 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, impairment of assets and discontinued operations, 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 cash from discontinued operations, 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 cash from discontinued operations, 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.

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

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

 

BCE Supplementary Financial Information - Third Quarter 2020 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.

 

(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, including monthly billings related to device financing receivables owing from customers on contract, 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 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 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 2020 Page 16