5 segment information

General

Operating segments are components of an entity that engage in business activities from which they earn revenues and incur expenses (including revenues and expenses related to transactions with the other component(s)), the operations of which can be clearly distinguished and for which the operating results are regularly reviewed by a chief operating decision-maker to make resource allocation decisions and to assess performance. Effective January 1, 2020, we embarked upon modifying our internal and external reporting processes, systems and internal controls to accommodate the technology convergence-driven cessation of the historical distinction between our wireless and wireline operations at the level of regularly reported discrete performance measures that are provided to our chief operating decision-maker. Prior to the World Health Organization characterizing COVID-19 as a pandemic, we had anticipated transitioning to a new segment reporting structure during 2020, but did not, and do not, anticipate a substantive change to our products and services revenue reporting from such transition; we will continue to report wireless and wireline operations until such transition is substantially completed, but the timing of such transition may be impacted as we prioritize managing through the pandemic.

The wireless segment includes network revenues and equipment sales arising from mobile technologies. The wireline segment includes data revenues (which include internet protocol; television; hosting, managed information technology and cloud-based services; customer care and business services; certain healthcare solutions; and home and business security), voice and other telecommunications services revenues (excluding wireless arising from mobile technologies), and equipment sales. Segmentation has been based on similarities in technology (mobile versus fixed), the technical expertise required to deliver the services and products, customer characteristics, the distribution channels used and regulatory treatment. Intersegment sales are recorded at the exchange value, which is the amount agreed to by the parties.

The segment information regularly reported to our Chief Executive Officer (our chief operating decision-maker), and the reconciliations thereof to our products and services view of revenues, other revenues and income before income taxes, are set out in the following table.


	Wireless				Wireline				Eliminations				Consolidated
Three-month periods ended June 30 (millions)	2020		2019		2020		2019		2020		2019		2020		2019
Operating revenues
External revenues
Service	$	1,485	$	1,534	$	1,765	$	1,552	$	—	$	—	$	3,250	$	3,086
Equipment		347		444		59		57		—		—		406		501
Revenues arising from contracts with customers		1,832		1,978		1,824		1,609		—		—		3,656		3,587
Other operating income		(1)		5		73		5		—		—		72		10
		1,831		1,983		1,897		1,614		—		—		3,728		3,597
Intersegment revenues		15		14		64		60		(79)		(74)		—		—
	$	1,846	$	1,997	$	1,961	$	1,674	$	(79)	$	(74)	$	3,728	$	3,597
EBITDA 1	$	870	$	919	$	489	$	454	$	—	$	—	$	1,359	$	1,373
CAPEX, excluding spectrum licences 2	$	234	$	223	$	522	$	547	$	—	$	—	$	756	$	770


Operating revenues – external (above)	$	3,728	$	3,597
Goods and services purchased		1,458		1,466
Employee benefits expense		911		758
EBITDA (above)		1,359		1,373
Depreciation		505		470
Amortization		220		163
Operating income		634		740
Financing costs		202		189
Income before income taxes	$	432	$	551


Six-month periods ended June 30	Wireless				Wireline				Eliminations				Consolidated
(millions)	2020		2019		2020		2019		2020		2019		2020		2019
Operating revenues
External revenues
Service	$	3,008	$	3,034	$	3,487	$	3,072	$	—	$	—	$	6,495	$	6,106
Equipment		709		863		115		107		—		—		824		970
Revenues arising from contracts with customers		3,717		3,897		3,602		3,179		—		—		7,319		7,076
Other operating income		(2)		10		105		17		—		—		103		27
		3,715		3,907		3,707		3,196		—		—		7,422		7,103
Intersegment revenues		29		27		127		116		(156)		(143)		—		—
	$	3,744	$	3,934	$	3,834	$	3,312	$	(156)	$	(143)	$	7,422	$	7,103
EBITDA 1	$	1,804	$	1,827	$	964	$	925	$	—	$	—	$	2,768	$	2,752
CAPEX, excluding spectrum licences 2	$	428	$	400	$	993	$	1,016	$	—	$	—	$	1,421	$	1,416


Operating revenues – external (above)	$	7,422	$	7,103
Goods and services purchased		2,870		2,887
Employee benefits expense		1,784		1,464
EBITDA (above)		2,768		2,752
Depreciation		1,028		940
Amortization		422		310
Operating income		1,318		1,502
Financing costs		394		357
Income before income taxes	$	924	$	1,145

(1)

Earnings before interest, income taxes, depreciation and amortization (EBITDA) does not have any standardized meaning prescribed by IFRS- IASB and is therefore unlikely to be comparable to similar measures presented by other issuers; we define EBITDA as operating revenues less goods and services purchased and employee benefits expense. We have issued guidance on, and report, EBITDA because it is a key measure that management uses to evaluate the performance of our business, and it is also utilized in measuring compliance with certain debt covenants.

(2)

Total capital expenditures (CAPEX); see Note 31(a) for a reconciliation of capital expenditures, excluding spectrum licences to cash payments for capital assets, excluding spectrum licences reported in the Consolidated statements of cash flows.