EX-99.2 3 supp_q314.htm SUPPLEMENTARY FINANCIAL INFORMATION - THIRD QUARTER 2014 Supplementary Financial Information

Exhibit 99.2

 

BCE (1)
Consolidated Operational Data (2)

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

   Q3
2014		     Q3
2013		       $ change  

% change

       YTD
2014		     YTD
2013		       $ change  

% change

  

Operating revenues

   5,195     5,099       96   1.9 %     15,514     15,018       496   3.3 %

Operating costs (A)

   (3,014 )   (2,962 )     (52 ) (1.8 %)     (9,025 )   (8,707 )     (318 ) (3.7 %)

Post-employment benefit plans service cost

   (66 )   (74 )     8   10.8 %     (208 )   (220 )     12   5.5 %

Adjusted EBITDA (3)

   2,115     2,063       52   2.5 %     6,281     6,091       190   3.1 %

Adjusted EBITDA margin (3)

   40.7 %   40.5 %         0.2 pts     40.5 %   40.6 %         (0.1 ) pts

Severance, acquisition and other costs

   (66 )   (297 )     231   77.8 %     (158 )   (358 )     200   55.9 %

Depreciation

   (739 )   (683 )     (56 ) (8.2 %)     (2,146 )   (2,039 )     (107 ) (5.2 %)

Amortization

   (116 )   (162 )     46   28.4 %     (454 )   (486 )     32   6.6 %

Finance costs

                                                  

Interest expense

   (227 )   (242 )     15   6.2 %     (691 )   (691 )     -   0.0 %

Interest on post-employment benefit obligations

   (25 )   (38 )     13   34.2 %     (76 )   (113 )     37   32.7 %

Other income (expense)

   2     (24 )     26   n.m.       76     (7 )     83   n.m.  

Income taxes

   (241 )   (165 )     (76 ) (46.1 %)     (708 )   (602 )     (106 ) (17.6 %)

Net earnings

   703     452       251   55.5 %     2,124     1,795       329   18.3 %

Net earnings attributable to:

                                                  

Common shareholders

   600     343       257   74.9 %     1,821     1,480       341   23.0 %

Preferred shareholders

   31     32       (1 ) (3.1 %)     97     98       (1 ) (1.0 %)

Non-controlling interest

   72     77       (5 ) (6.5 %)     206     217       (11 ) (5.1 %)

Net earnings

   703     452       251   55.5 %     2,124     1,795       329   18.3 %

Net earnings per common share - basic

 $ 0.77   $ 0.44     $ 0.33   75.0 %   $ 2.34   $ 1.91     $ 0.43   22.5 %

Net earnings per common share - diluted

 $ 0.77   $ 0.44     $ 0.33   75.0 %   $ 2.34   $ 1.91     $ 0.43   22.5 %

Dividends per common share

$

0.6175

 

$

0.5825

 

 

$

0.035

 

6.0

%

 

$

1.8525

 

$

1.7475

 

 

$

0.105

 

6.0

%

Average number of common shares outstanding - basic (millions)

   782.1     775.9                   778.8     775.8              

Average number of common shares outstanding - diluted (millions)

   783.0     776.3                   779.6     776.4              

Number of common shares outstanding (millions)

   828.3     775.9                   828.3     775.9              

Adjusted Net Earnings and EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings attributable to common shareholders

   600     343       257   74.9 %     1,821     1,480       341   23.0 %

Severance, acquisition and other costs

   45     222       (177 ) (79.7 %)     106     266       (160 ) (60.2 %)

Net gains on investments

   -     (2 )     2   100.0 %     (16 )   (5 )     (11 ) n.m.  

Premiums on early redemption of debt

   3     21       (18 ) (85.7 %)     3     36       (33 ) (91.7 %)

Adjusted net earnings (3)

   648     584       64   11.0 %     1,914     1,777       137   7.7 %

Impact on net earnings per share

 $ 0.06   $ 0.31     $ (0.25 ) (80.6 %)   $ 0.12   $ 0.38     $ (0.26 ) (68.4 %)

Adjusted EPS (3)

$

0.83

 

$

0.75

 

 

$

0.08

 

10.7

%

 

$

2.46

 

$

2.29

 

 

$

0.17

 

7.4

%
                                                   

 

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

 

 

BCE Supplementary Financial Information – Third Quarter 2014 Page 2

BCE
Consolidated Operational Data - Historical Trend

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

   YTD
2014		       Q3 14     Q2 14     Q1 14       Total
2013		       Q4 13     Q3 13     Q2 13     Q1 13  

Operating revenues

   15,514       5,195     5,220     5,099       20,400       5,382     5,099     5,000     4,919  

Operating costs (A)

   (9,025 )     (3,014 )   (3,008 )   (3,003 )     (12,019 )     (3,312 )   (2,962 )   (2,865 )   (2,880 )

Post-employment benefit plans service cost

   (208 )     (66 )   (68 )   (74 )     (292 )     (72 )   (74 )   (69 )   (77 )

Adjusted EBITDA

   6,281       2,115     2,144     2,022       8,089       1,998     2,063     2,066     1,962  

Adjusted EBITDA margin

   40.5 %     40.7 %   41.1 %   39.7 %     39.7 %     37.1 %   40.5 %   41.3 %   39.9 %

Severance, acquisition and other costs

   (158 )     (66 )   (54 )   (38 )     (406 )     (48 )   (297 )   (28 )   (33 )

Depreciation

   (2,146 )     (739 )   (708 )   (699 )     (2,734 )     (695 )   (683 )   (681 )   (675 )

Amortization

   (454 )     (116 )   (171 )   (167 )     (646 )     (160 )   (162 )   (161 )   (163 )

Finance costs

                                                            

Interest expense

   (691 )     (227 )   (229 )   (235 )     (931 )     (240 )   (242 )   (228 )   (221 )

Interest on post-employment benefit obligations

   (76 )     (25 )   (26 )   (25 )     (150 )     (37 )   (38 )   (38 )   (37 )

Other income (expense)

   76       2     (13 )   87       (6 )     1     (24 )   (63 )   80  

Income taxes

   (708 )     (241 )   (236 )   (231 )     (828 )     (226 )   (165 )   (196 )   (241 )

Net earnings

   2,124       703     707     714       2,388       593     452     671     672  

Net earnings attributable to:

                                                            

Common shareholders

   1,821       600     606     615       1,975       495     343     571     566  

Preferred shareholders

   97       31     33     33       131       33     32     33     33  

Non-controlling interest

   206       72     68     66       282       65     77     67     73  

Net earnings

   2,124       703     707     714       2,388       593     452     671     672  

Net earnings per common share - basic

 $ 2.34     $ 0.77   $ 0.78   $ 0.79     $ 2.55     $ 0.64   $ 0.44   $ 0.74   $ 0.73  

Net earnings per common share - diluted

 $ 2.34     $ 0.77   $ 0.78   $ 0.79     $ 2.54     $ 0.63   $ 0.44   $ 0.74   $ 0.73  

Dividends per common share

$

1.8525

 

 

$

0.6175

 

$

0.6175

 

$

0.6175

 

 

$

2.3300

 

 

$

0.5825

 

$

0.5825

 

$

0.5825

 

$

0.5825

 

Average number of common shares outstanding - basic (millions)

   778.8       782.1     777.7     776.5       775.8       775.9     775.9     775.9     775.7  

Average number of common shares outstanding - diluted (millions)

   779.6       783.0     778.6     777.2       776.4       776.6     776.3     776.6     776.3  

Number of common shares outstanding (millions)

   828.3       828.3     778.1     777.3       775.9       775.9     775.9     775.9     775.9  

Adjusted Net Earnings and EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings attributable to common shareholders

   1,821       600     606     615       1,975       495     343     571     566  

Severance, acquisition and other costs

   106       45     38     23       299       33     222     21     23  

Net (gains) losses on investments

   (16 )     -     (4 )   (12 )     7       12     (2 )   (1 )   (2 )

Premiums on early redemption of debt

   3       3     -     -       36       -     21     3     12  

Adjusted net earnings

   1,914       648     640     626       2,317       540     584     594     599  

Impact on net earnings per share

 $ 0.12     $ 0.06   $ 0.04   $ 0.02     $ 0.44     $ 0.06   $ 0.31   $ 0.03   $ 0.04  

Adjusted EPS

$

2.46

 

 

$

0.83

 

$

0.82

 

$

0.81

 

 

$

2.99

 

 

$

0.70

 

$

0.75

 

$

0.77

 

$

0.77

 

 

(A) Excludes post-employment benefit plans service cost

 

BCE Supplementary Financial Information – Third Quarter 2014 Page 3

BCE (1)
Segmented Data (2)

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

Q3
2014

 

Q3
2013

 

 

$ change

 

% change

 

 

YTD
2014

 

YTD
2013

 

 

$ change

 

% change

 

Revenues

                                      

Bell Wireless

 1,598   1,493     105   7.0 %   4,592   4,344     248   5.7 %

Bell Wireline

 2,465   2,482     (17 ) (0.7 %)   7,412   7,496     (84 ) (1.1 %)

Bell Media

 665   664     1   0.2 %   2,148   1,736     412   23.7 %

Inter-segment eliminations

 (121 ) (115 )   (6 ) (5.2 %)   (358 ) (280 )   (78 ) (27.9 %)

Total Bell

 4,607   4,524     83   1.8 %   13,794   13,296     498   3.7 %

Bell Aliant

 699   696     3   0.4 %   2,057   2,071     (14 ) (0.7 %)

Inter-segment eliminations

 (111 ) (121 )   10   8.3 %   (337 ) (349 )   12   3.4 %

Total BCE

5,195

 

5,099

 

 

96

 

1.9

%

 

15,514

 

15,018

 

 

496

 

3.3

%

Operating costs

                                      

Bell Wireless

 (914 ) (876 )   (38 ) (4.3 %)   (2,613 ) (2,533 )   (80 ) (3.2 %)

Bell Wireline

 (1,533 ) (1,559 )   26   1.7 %   (4,597 ) (4,636 )   39   0.8 %

Bell Media

 (483 ) (465 )   (18 ) (3.9 %)   (1,606 ) (1,283 )   (323 ) (25.2 %)

Inter-segment eliminations

 121   115     6   5.2 %   358   280     78   27.9 %

Total Bell

 (2,809 ) (2,785 )   (24 ) (0.9 %)   (8,458 ) (8,172 )   (286 ) (3.5 %)

Bell Aliant

 (382 ) (372 )   (10 ) (2.7 %)   (1,112 ) (1,104 )   (8 ) (0.7 %)

Inter-segment eliminations

 111   121     (10 ) (8.3 %)   337   349     (12 ) (3.4 %)

Total BCE

(3,080

)

(3,036

)

 

(44

)

(1.4

%)

 

(9,233

)

(8,927

)

 

(306

)

(3.4

%)

Adjusted EBITDA

                                      

Bell Wireless

 684   617     67   10.9 %   1,979   1,811     168   9.3 %

Margin

 42.8 % 41.3 %       1.5  pts   43.1 % 41.7 %       1.4  pts

Bell Wireline

 932   923     9   1.0 %   2,815   2,860     (45 ) (1.6 %)

Margin

 37.8 % 37.2 %       0.6  pts   38.0 % 38.2 %       (0.2 ) pts

Bell Media

 182   199     (17 ) (8.5 %)   542   453     89   19.6 %

Margin

 27.4 % 30.0 %       (2.6 ) pts   25.2 % 26.1 %       (0.9 ) pts

Total Bell

 1,798   1,739     59   3.4 %   5,336   5,124     212   4.1 %

Margin

 39.0 % 38.4 %       0.6  pts   38.7 % 38.5 %       0.2  pts

Bell Aliant

 317   324     (7 ) (2.2 %)   945   967     (22 ) (2.3 %)

Margin

 45.4 % 46.6 %       (1.2 ) pts   45.9 % 46.7 %       (0.8 ) pts

Total BCE

 2,115   2,063     52   2.5 %   6,281   6,091     190   3.1 %

Margin

40.7

%

40.5

%

 

 

 

0.2

 pts

 

40.5

%

40.6

%

 

 

 

(0.1

) pts

Capital expenditures

                                      

Bell Wireless

 179   157     (22 ) (14.0 %)   460   413     (47 ) (11.4 %)

Capital Intensity (4)

 11.2 % 10.5 %       (0.7 ) pts   10.0 % 9.5 %       (0.5 ) pts

Bell Wireline

 609   562     (47 ) (8.4 %)   1,667   1,545     (122 ) (7.9 %)

Capital Intensity

 24.7 % 22.6 %       (2.1 ) pts   22.5 % 20.6 %       (1.9 ) pts

Bell Media

 37   23     (14 ) (60.9 %)   83   51     (32 ) (62.7 %)

Capital Intensity

 5.6 % 3.5 %       (2.1 ) pts   3.9 % 2.9 %       (1.0 ) pts

Total Bell

 825   742     (83 ) (11.2 %)   2,210   2,009     (201 ) (10.0 %)

Capital Intensity

 17.9 % 16.4 %       (1.5 ) pts   16.0 % 15.1 %       (0.9 ) pts

Bell Aliant

 150   138     (12 ) (8.7 %)   431   423     (8 ) (1.9 %)

Capital Intensity

 21.5 % 19.8 %       (1.7 ) pts   21.0 % 20.4 %       (0.6 ) pts

Total BCE

 975   880     (95 ) (10.8 %)   2,641   2,432     (209 ) (8.6 %)

Capital Intensity

 18.8 % 17.3 %       (1.5 ) pts   17.0 % 16.2 %       (0.8 ) pts

 

BCE Supplementary Financial Information – Third Quarter 2014 Page 4

BCE
Segmented Data - Historical Trend

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

 YTD
2014		     Q3 14   Q2 14   Q1 14     Total
2013		     Q4 13   Q3 13   Q2 13   Q1 13  

Revenues

                                          

Bell Wireless

 4,592     1,598   1,522   1,472     5,849     1,505   1,493   1,442   1,409  

Bell Wireline

 7,412     2,465   2,485   2,462     10,097     2,601   2,482   2,506   2,508  

Bell Media

 2,148     665   761   722     2,557     821   664   559   513  

Inter-segment eliminations

 (358 )   (121 ) (119 ) (118 )   (394 )   (114 ) (115 ) (83 ) (82 )

Total Bell

 13,794     4,607   4,649   4,538     18,109     4,813   4,524   4,424   4,348  

Bell Aliant

 2,057     699   682   676     2,759     688   696   691   684  

Inter-segment eliminations

 (337 )   (111 ) (111 ) (115 )   (468 )   (119 ) (121 ) (115 ) (113 )

Total BCE

15,514

 

 

5,195

 

5,220

 

5,099

 

 

20,400

 

 

5,382

 

5,099

 

5,000

 

4,919

 

Operating costs

                                          

Bell Wireless

 (2,613 )   (914 ) (855 ) (844 )   (3,509 )   (976 ) (876 ) (833 ) (824 )

Bell Wireline

 (4,597 )   (1,533 ) (1,532 ) (1,532 )   (6,303 )   (1,667 ) (1,559 ) (1,527 ) (1,550 )

Bell Media

 (1,606 )   (483 ) (551 ) (572 )   (1,874 )   (591 ) (465 ) (403 ) (415 )

Inter-segment eliminations

 358     121   119   118     394     114   115   83   82  

Total Bell

 (8,458 )   (2,809 ) (2,819 ) (2,830 )   (11,292 )   (3,120 ) (2,785 ) (2,680 ) (2,707 )

Bell Aliant

 (1,112 )   (382 ) (368 ) (362 )   (1,487 )   (383 ) (372 ) (369 ) (363 )

Inter-segment eliminations

 337     111   111   115     468     119   121   115   113  

Total BCE

(9,233

)

 

(3,080

)

(3,076

)

(3,077

)

 

(12,311

)

 

(3,384

)

(3,036

)

(2,934

)

(2,957

)

Adjusted EBITDA

                                          

Bell Wireless

 1,979     684   667   628     2,340     529   617   609   585  

Margin

 43.1 %   42.8 % 43.8 % 42.7 %   40.0 %   35.1 % 41.3 % 42.2 % 41.5 %

Bell Wireline

 2,815     932   953   930     3,794     934   923   979   958  

Margin

 38.0 %   37.8 % 38.4 % 37.8 %   37.6 %   35.9 % 37.2 % 39.1 % 38.2 %

Bell Media

 542     182   210   150     683     230   199   156   98  

Margin

 25.2 %   27.4 % 27.6 % 20.8 %   26.7 %   28.0 % 30.0 % 27.9 % 19.1 %

Total Bell

 5,336     1,798   1,830   1,708     6,817     1,693   1,739   1,744   1,641  

Margin

 38.7 %   39.0 % 39.4 % 37.6 %   37.6 %   35.2 % 38.4 % 39.4 % 37.7 %

Bell Aliant

 945     317   314   314     1,272     305   324   322   321  

Margin

 45.9 %   45.4 % 46.0 % 46.4 %   46.1 %   44.3 % 46.6 % 46.6 % 46.9 %

Total BCE

 6,281     2,115   2,144   2,022     8,089     1,998   2,063   2,066   1,962  

Margin

40.5

%

 

40.7

%

41.1

%

39.7

%

 

39.7

%

 

37.1

%

40.5

%

41.3

%

39.9

%

Capital expenditures

                                          

Bell Wireless

 460     179   164   117     639     226   157   134   122  

Capital Intensity

 10.0 %   11.2 % 10.8 % 7.9 %   10.9 %   15.0 % 10.5 % 9.3 % 8.7 %

Bell Wireline

 1,667     609   595   463     2,247     702   562   523   460  

Capital Intensity

 22.5 %   24.7 % 23.9 % 18.8 %   22.3 %   27.0 % 22.6 % 20.9 % 18.3 %

Bell Media

 83     37   32   14     115     64   23   16   12  

Capital Intensity

 3.9 %   5.6 % 4.2 % 1.9 %   4.5 %   7.8 % 3.5 % 2.9 % 2.3 %

Total Bell

 2,210     825   791   594     3,001     992   742   673   594  

Capital Intensity

 16.0 %   17.9 % 17.0 % 13.1 %   16.6 %   20.6 % 16.4 % 15.2 % 13.7 %

Bell Aliant

 431     150   146   135     570     147   138   157   128  

Capital Intensity

 21.0 %   21.5 % 21.4 % 20.0 %   20.7 %   21.4 % 19.8 % 22.7 % 18.7 %

Total BCE

 2,641     975   937   729     3,571     1,139   880   830   722  

Capital Intensity

 17.0 %   18.8 % 18.0 % 14.3 %   17.5 %   21.2 % 17.3 % 16.6 % 14.7 %

 

BCE Supplementary Financial Information – Third Quarter 2014 Page 5

Bell Wireless (1)

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

 Q3
2014		   Q3
2013		    

% change

     YTD
2014		   YTD
2013		    

% change

  

Bell Wireless

                              

Revenues

                              

Service

 1,468   1,372     7.0 %   4,236   4,003     5.8 %

Product

 117   106     10.4 %   316   298     6.0 %

Total external Bell Wireless revenues

 1,585   1,478     7.2 %   4,552   4,301     5.8 %

Inter-segment

 13   15     (13.3 %)   40   43     (7.0 %)

Total Bell Wireless operating revenues

 1,598   1,493     7.0 %   4,592   4,344     5.7 %

Operating costs

 (914 ) (876 )   (4.3 %)   (2,613 ) (2,533 )   (3.2 %)

Adjusted EBITDA

 684   617     10.9 %   1,979   1,811     9.3 %

Adjusted EBITDA margin (Total revenues)

 42.8 % 41.3 %   1.5  pts   43.1 % 41.7 %   1.4  pts

Adjusted EBITDA margin (Service revenues)

 46.6 % 45.0 %   1.6  pts   46.7 % 45.2 %   1.5  pts
                               

Capital expenditures

179

 

157

 

 

(14.0

%)

 

460

 

413

 

 

(11.4

%)

Capital intensity

 11.2 % 10.5 %   (0.7 ) pts   10.0 % 9.5 %   (0.5 ) pts

Wireless gross activations

 423,833   438,722     (3.4 %)   1,158,907   1,231,586     (5.9 %)

Postpaid

 326,708   333,081     (1.9 %)   893,864   964,269     (7.3 %)

Wireless net activations

 83,106   89,459     (7.1 %)   108,859   124,068     (12.3 %)

Postpaid

 90,976   102,714     (11.4 %)   191,126   258,601     (26.1 %)

Wireless subscribers end of period (EOP)

 7,887,193   7,805,100     1.1 %   7,887,193   7,805,100     1.1 %

Postpaid

 6,868,818   6,683,646     2.8 %   6,868,818   6,683,646     2.8 %

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

 61.73   58.30     5.9 %   59.71   57.03     4.7 %

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

 1.45 % 1.50 %   0.05  pts   1.50 % 1.60 %   0.10  pts

Prepaid

 3.12 % 3.27 %   0.15  pts   3.43 % 3.60 %   0.17  pts

Postpaid

 1.20 % 1.20 %   0.00  pts   1.20 % 1.24 %   0.04  pts

Cost of acquisition (COA) (4) ($/sub)

 421   403     (4.5 %)   422   403     (4.7 %)
                               

 

BCE Supplementary Financial Information – Third Quarter 2014 Page 6

Bell Wireless - Historical Trend

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

 YTD
2014		     Q3 14   Q2 14   Q1 14     Total
2013		     Q4 13   Q3 13   Q2 13   Q1 13  

Bell Wireless

                                          

Revenues

                                          

Service

 4,236     1,468   1,404   1,364     5,362     1,359   1,372   1,328   1,303  

Product

 316     117   105   94     432     134   106   99   93  

Total external Bell Wireless revenues

 4,552     1,585   1,509   1,458     5,794     1,493   1,478   1,427   1,396  

Inter-segment

 40     13   13   14     55     12   15   15   13  

Total Bell Wireless operating revenues

 4,592     1,598   1,522   1,472     5,849     1,505   1,493   1,442   1,409  

Operating costs

 (2,613 )   (914 ) (855 ) (844 )   (3,509 )   (976 ) (876 ) (833 ) (824 )

Adjusted EBITDA

 1,979     684   667   628     2,340     529   617   609   585  

Adjusted EBITDA margin (Total revenues)

 43.1 %   42.8 % 43.8 % 42.7 %   40.0 %   35.1 % 41.3 % 42.2 % 41.5 %

Adjusted EBITDA margin (Service revenues)

 46.7 %   46.6 % 47.5 % 46.0 %   43.6 %   38.9 % 45.0 % 45.9 % 44.9 %
                                           

Capital expenditures

 460     179   164   117     639     226   157   134   122  

Capital intensity

 10.0 %   11.2 % 10.8 % 7.9 %   10.9 %   15.0 % 10.5 % 9.3 % 8.7 %

Wireless gross activations

 1,158,907     423,833   383,345   351,729     1,694,055     462,469   438,722   421,647   371,217  

Postpaid

 893,864     326,708   291,993   275,163     1,332,423     368,154   333,081   336,052   295,136  

Wireless net activations

 108,859     83,106   41,431   (15,678 )   217,768     93,700   89,459   43,566   (8,957 )

Postpaid

 191,126     90,976   66,186   33,964     378,121     119,520   102,714   96,390   59,497  

Wireless subscribers EOP (A)

 7,887,193     7,887,193   7,804,087   7,762,656     7,778,334     7,778,334   7,805,100   7,715,641   7,672,075  

Postpaid (A)

 6,868,818     6,868,818   6,777,842   6,711,656     6,677,692     6,677,692   6,683,646   6,580,932   6,484,542  

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

 59.71     61.73   59.49   57.90     57.25     57.92   58.30   56.85   55.92  

Churn (%)(average per month)

 1.50 %   1.45 % 1.47 % 1.58 %   1.60 %   1.59 % 1.50 % 1.64 % 1.65 %

Prepaid

 3.43 %   3.12 % 3.48 % 3.67 %   3.55 %   3.41 % 3.27 % 3.71 % 3.79 %

Postpaid

 1.20 %   1.20 % 1.16 % 1.24 %   1.25 %   1.29 % 1.20 % 1.27 % 1.25 %

Cost of acquisition (COA)($/sub)

 422     421   403   442     421     468   403   402   404  

 

(A) In Q4 2013, following a review of our wireless subscriber metrics, our 2013 postpaid subscriber base was reduced by 99,098 customers to exclude all machine-to-machine subscribers. Additionally, our postpaid subscriber base was reduced by 18,354 subscribers to adjust for customer deactivations and by 8,022 subscribers subsequent to a review of customer accounts. Our prepaid subscriber base was increased by 5,008 customers subsequent to a review of subscriber metrics.

 

BCE Supplementary Financial Information – Third Quarter 2014 Page 7

Bell Wireline (1)

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

 Q3
2014		   Q3
2013		    

% change

     YTD
2014		   YTD
2013		    

% change

  

Bell Wireline

                              

Data

 1,470   1,426     3.1 %   4,418   4,315     2.4 %

Local & access

 588   613     (4.1 %)   1,786   1,891     (5.6 %)

Long distance

 163   184     (11.4 %)   495   551     (10.2 %)

Equipment & other

 155   168     (7.7 %)   451   485     (7.0 %)

Total external revenues

 2,376   2,391     (0.6 %)   7,150   7,242     (1.3 %)

Inter-segment revenues

 89   91     (2.2 %)   262   254     3.1 %

Total Bell Wireline operating revenues

 2,465   2,482     (0.7 %)   7,412   7,496     (1.1 %)

Operating costs

 (1,533 ) (1,559 )   1.7 %   (4,597 ) (4,636 )   0.8 %

Adjusted EBITDA

 932   923     1.0 %   2,815   2,860     (1.6 %)

Adjusted EBITDA Margin

 37.8 % 37.2 %   0.6  pts   38.0 % 38.2 %   (0.2 ) pts
                               

Capital expenditures

 609   562     (8.4 %)   1,667   1,545     (7.9 %)

Capital intensity

 24.7 % 22.6 %   (2.1 ) pts   22.5 % 20.6 %   (1.9 ) pts

High-speed Internet

                              

High-speed Internet net activations

 49,555   35,634     39.1 %   68,820   42,032     63.7 %

High-speed Internet subscribers EOP

 2,253,363   2,168,853     3.9 %   2,253,363   2,168,853     3.9 %

TV

                              

Net subscriber activations

 24,494   46,685     (47.5 %)   74,015   86,261     (14.2 %)

Fibe TV

 61,519   72,813     (15.5 %)   162,732   170,831     (4.7 %)

Total subscribers EOP

 2,352,448   2,242,244     4.9 %   2,352,448   2,242,244     4.9 %

Fibe TV

 642,162   419,129     53.2 %   642,162   419,129     53.2 %

Local

                              

Network access services (NAS)

                              

Residential

 2,475,649   2,715,710     (8.8 %)   2,475,649   2,715,710     (8.8 %)

Business

 2,484,292   2,622,298     (5.3 %)   2,484,292   2,622,298     (5.3 %)

Total

 4,959,941   5,338,008     (7.1 %)   4,959,941   5,338,008     (7.1 %)

Network access service net (losses)/activations

                              

Residential

 (43,173 ) (58,957 )   26.8 %   (176,780 ) (224,604 )   21.3 %

Business

 (31,854 ) (28,526 )   (11.7 %)   (105,528 ) (82,327 )   (28.2 %)

Total

 (75,027 ) (87,483 )   14.2 %   (282,308 ) (306,931 )   8.0 %

 

BCE Supplementary Financial Information – Third Quarter 2014 Page 8

Bell Wireline - Historical Trend

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

 YTD
2014		     Q3 14   Q2 14   Q1 14     Total
2013		     Q4 13   Q3 13   Q2 13   Q1 13  

Bell Wireline

                                          

Data

 4,418     1,470   1,485   1,463     5,828     1,513   1,426   1,456   1,433  

Local & access

 1,786     588   595   603     2,497     606   613   632   646  

Long distance

 495     163   170   162     722     171   184   183   184  

Equipment & other

 451     155   147   149     707     222   168   153   164  

Total external revenues

 7,150     2,376   2,397   2,377     9,754     2,512   2,391   2,424   2,427  

Inter-segment revenues

 262     89   88   85     343     89   91   82   81  

Total Bell Wireline operating revenues

 7,412     2,465   2,485   2,462     10,097     2,601   2,482   2,506   2,508  

Operating costs

 (4,597 )   (1,533 ) (1,532 ) (1,532 )   (6,303 )   (1,667 ) (1,559 ) (1,527 ) (1,550 )

Adjusted EBITDA

 2,815     932   953   930     3,794     934   923   979   958  

Adjusted EBITDA Margin

 38.0 %   37.8 % 38.4 % 37.8 %   37.6 %   35.9 % 37.2 % 39.1 % 38.2 %
                                           

Capital expenditures

 1,667     609   595   463     2,247     702   562   523   460  

Capital intensity

 22.5 %   24.7 % 23.9 % 18.8 %   22.3 %   27.0 % 22.6 % 20.9 % 18.3 %

High-speed Internet

                                          

High-speed Internet net activations

 68,820     49,555   3,638   15,627     57,722     15,690   35,634   2,446   3,952  

High-speed Internet subscribers EOP

 2,253,363     2,253,363   2,203,808   2,200,170     2,184,543     2,184,543   2,168,853   2,133,219   2,130,773  

TV

                                          

Net subscriber activations

 74,015     24,494   20,960   28,561     122,450     36,189   46,685   25,605   13,971  

Fibe TV

 162,732     61,519   46,533   54,680     231,132     60,301   72,813   50,555   47,463  

Total subscribers EOP

 2,352,448     2,352,448   2,327,954   2,306,994     2,278,433     2,278,433   2,242,244   2,195,559   2,169,954  

Fibe TV

 642,162     642,162   580,643   534,110     479,430     479,430   419,129   346,316   295,761  

Local

                                          

Network access services (NAS)

                                          

Residential

 2,475,649     2,475,649   2,518,822   2,586,791     2,652,429     2,652,429   2,715,710   2,774,667   2,856,757  

Business

 2,484,292     2,484,292   2,516,146   2,554,225     2,589,820     2,589,820   2,622,298   2,650,824   2,679,736  

Total

 4,959,941     4,959,941   5,034,968   5,141,016     5,242,249     5,242,249   5,338,008   5,425,491   5,536,493  

Network access service net (losses)/activations

                                          

Residential

 (176,780 )   (43,173 ) (67,969 ) (65,638 )   (287,885 )   (63,281 ) (58,957 ) (82,090 ) (83,557 )

Business

 (105,528 )   (31,854 ) (38,079 ) (35,595 )   (114,805 )   (32,478 ) (28,526 ) (28,912 ) (24,889 )

Total

 (282,308 )   (75,027 ) (106,048 ) (101,233 )   (402,690 )   (95,759 ) (87,483 ) (111,002 ) (108,446 )

 

BCE Supplementary Financial Information – Third Quarter 2014 Page 9

BCE (1)
Net debt and other information (2)

BCE - Net debt and preferred shares

            

At September 30, 2014

     BCE      

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

            

 

    Bell      

 

Bell   Aliant   BCE  

Debt due within one year

 2,607   587   3,194  

Long-term debt

 15,004   2,384   17,388  

Preferred shares - BCE (A)

 1,918   -   1,918  

Cash and cash equivalents

 (1,336 ) (70 ) (1,406 )

Net debt (3)

 18,193   2,901   21,094  

 

Bell - Net debt and preferred shares

                

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

                

 

September 30,   June 30,   March 31   Dec. 31  

 

2014   2014   2014   2013  

Debt due within one year

 2,607   2,152   2,501   2,286  

Long-term debt

 15,004   13,768   13,784   13,765  

Preferred shares - BCE (A)

 1,918   1,698   1,698   1,698  

Cash and cash equivalents

 (1,336 ) (77 ) (682 ) (319 )

Net Debt

 18,193   17,541   17,301   17,430  
                 

Net Debt / Adjusted EBITDA (4)

 2.54   2.47   2.46   2.49  

Adjusted EBITDA /Net interest expense, excluding interest on post-employment benefit obligations and including 50% of preferred dividends (4)

 8.53   8.31   8.27   8.40  

 

Bell Media Inc. - Proportionate Information

                                        

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

YTD 2014   Q3 2014   Q2 2014   Q1 2014     Total
2013		     Q4 2013   Q3 2013   Q2 2013   Q1 2013  

Proportionate Net Debt

 -   -   14   30     103     103   143   202   206  

Proportionate Adjusted EBITDA

 476   158   189   129     593     209   172   134   78  

 

Cash Flow Information

                                  

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

 Q3
2014		   Q3
2013		   $ change  

% change

     YTD
2014		   YTD
2013		   $ change  

% change

  

Free Cash Flow (FCF) (3)

                                  

Cash from operating activities, excluding acquisition costs paid

 1,644   1,479   165   11.2 %   4,121   3,872   249   6.4 %

Capital expenditures

 (825 ) (742 ) (83 ) (11.2 %)   (2,210 ) (2,009 ) (201 ) (10.0 %)

Dividends paid on preferred shares

 (31 ) (38 ) 7   18.4 %   (94 ) (96 ) 2   2.1 %

Dividends paid by subsidiaries to non-controlling interest

 (1 ) -   (1 ) n.m.     (1 ) (13 ) 12   92.3 %

Bell Aliant dividends to BCE

 47   48   (1 ) (2.1 %)   95   143   (48 ) (33.6 %)

FCF

 834   747   87   11.6 %   1,911   1,897   14   0.7 %
                                    

 

Cash Flow Information - Historical Trend

                                        

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

 YTD
2014		   Q3
2014		   Q2
2014		   Q1
2014		     Total
2013		     Q4
2013		   Q3
2013		   Q2
2013		   Q1
2013		  

Free Cash Flow (FCF)

                                        

Cash from operating activities, excluding acquisition costs paid

 4,121   1,644   1,589   888     5,521     1,649   1,479   1,567   826  

Capital expenditures

 (2,210 ) (825 ) (791 ) (594 )   (3,001 )   (992 ) (742 ) (673 ) (594 )

Dividends paid on preferred shares

 (94 ) (31 ) (31 ) (32 )   (127 )   (31 ) (38 ) (32 ) (26 )

Dividends paid by subsidiaries to non-controlling interest

 (1 ) (1 ) -   -     (13 )   -   -   (6 ) (7 )

Bell Aliant dividends to BCE

 95   47   48   -     191     48   48   47   48  

FCF

 1,911   834   815   262     2,571     674   747   903   247  
                                         

 

(A) Net debt includes 50% of preferred shares
n.m. : not meaningful

 

BCE Supplementary Financial Information – Third Quarter 2014 Page 10

BCE (1)
Consolidated Statements of Financial Position (2)

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

 September 30
2014		     June 30
2014		     March 31
2014		     December 31
2013		  

ASSETS

                      

Current assets

                      

Cash

 141     125     99     220  

Cash equivalents

 1,265     25     621     115  

Trade and other receivables

 2,808     2,860     2,861     3,043  

Inventory

 424     384     380     383  

Prepaid expenses

 435     541     503     415  

Assets held for sale

 -     195     193     719  

Other current assets

 190     131     193     175  

Total current assets

 5,263     4,261     4,850     5,070  

Non-current assets

                      

Property, plant and equipment

 21,215     20,911     20,671     20,743  

Intangible assets

 10,026     10,019     9,526     9,552  

Deferred tax assets

 232     218     199     165  

Investments in associates and joint ventures

 776     771     789     775  

Other non-current assets

 758     679     752     698  

Goodwill

 8,373     8,364     8,376     8,381  

Total non-current assets

 41,380     40,962     40,313     40,314  

Total assets

 46,643     45,223     45,163     45,384  

LIABILITIES

                      

Current liabilities

                      

Trade payables and other liabilities

 3,949     3,798     3,661     4,339  

Interest payable

 145     137     145     147  

Dividends payable

 496     556     555     466  

Current tax liabilities

 330     268     191     367  

Debt due within one year

 3,194     2,736     3,201     2,571  

Total current liabilities

 8,114     7,495     7,753     7,890  

Non-current liabilities

                      

Long-term debt

 17,388     16,150     16,010     16,341  

Deferred tax liabilities

 1,157     1,106     1,217     1,318  

Post-employment benefit obligation

 3,437     3,241     2,744     2,127  

Other non-current liabilities

 1,516     1,480     1,458     1,458  

Total non-current liabilities

 23,498     21,977     21,429     21,244  

Total liabilities

 31,612     29,472     29,182     29,134  

EQUITY

 

 

 

 

 

 

 

 

 

 

 

Equity attributable to BCE shareholders

                      

Preferred shares

 3,836     3,395     3,395     3,395  

Common shares

 16,125     13,726     13,688     13,629  

Contributed surplus

 1,408     2,614     2,605     2,615  

Accumulated other comprehensive income (loss)

 83     (2 )   28     14  

Deficit

 (6,962 )   (5,146 )   (4,933 )   (4,642 )

Total Equity attributable to BCE shareholders

 14,490     14,587     14,783     15,011  

Non-controlling interest

 541     1,164     1,198     1,239  

Total equity

 15,031     15,751     15,981     16,250  

Total liabilities and equity

 46,643     45,223     45,163     45,384  

Number of common shares outstanding

 828.3     778.1     777.3     775.9  

 

BCE Supplementary Financial Information – Third Quarter 2014 Page 11

BCE (1)
Consolidated Cash Flow Data (2)

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

   Q3
2014		     Q3
2013		       $ change       YTD
2014		     YTD
2013		       $ change  

Net earnings

   703     452       251       2,124     1,795       329  

Adjustments to reconcile net earnings to cash flows from operating activities

                                          

Severance, acquisition and other costs

   66     297       (231 )     158     358       (200 )

Depreciation and amortization

   855     845       10       2,600     2,525       75  

Post-employment benefit plans cost

   91     112       (21 )     284     333       (49 )

Net interest expense

   225     240       (15 )     685     685       -  

Gains on investments

   -     (2 )     2       (16 )   (5 )     (11 )

Income taxes

   241     165       76       708     602       106  

Contributions to post-employment benefit plans

   (82 )   (84 )     2       (255 )   (258 )     3  

Payments under other post-employment benefit plans

   (18 )   (19 )     1       (54 )   (55 )     1  

Severance and other costs paid

   (40 )   (44 )     4       (146 )   (138 )     (8 )

Acquisition costs paid

   (33 )   (32 )     (1 )     (63 )   (50 )     (13 )

Interest paid

   (214 )   (246 )     32       (674 )   (648 )     (26 )

Income taxes paid (net of refunds)

   (92 )   (53 )     (39 )     (563 )   (238 )     (325 )

Net change in operating assets and liabilities

   180     99       81       (74 )   (268 )     194  

Cash flows from operating activities

   1,882     1,730       152       4,714     4,638       76  

Bell Aliant dividends paid to BCE

   47     48       (1 )     95     143       (48 )

Capital expenditures

   (975 )   (880 )     (95 )     (2,641 )   (2,432 )     (209 )

Cash dividends paid on preferred shares

   (31 )   (38 )     7       (94 )   (96 )     2  

Cash dividends paid by subsidiaries to non-controlling interest

   (69 )   (68 )     (1 )     (144 )   (215 )     71  

Acquisition costs paid

   33     32       1       63     50       13  

Bell Aliant Free Cash Flow

   (53 )   (77 )     24       (82 )   (191 )     109  

Free Cash Flow (3)

   834     747       87       1,911     1,897       14  

Bell Aliant free cash flow, excluding dividends paid

   6     29       (23 )     (13 )   48       (61 )

Business acquisitions

   (10 )   (2,844 )     2,834       (10 )   (2,849 )     2,839  

Acquisition costs paid

   (33 )   (32 )     (1 )     (63 )   (50 )     (13 )

Business dispositions

   186     -       186       724     1       723  

Increase in investments

   (9 )   (1 )     (8 )     (15 )   (2 )     (13 )

Decrease in investments

   -     -       -       -     5       (5 )

Acquisition of spectrum licences

   -     -       -       (566 )   -       (566 )

Other investing activities

   10     (2 )     12       13     12       1  

Increase in notes payable and bank advances

   443     495       (52 )     601     512       89  

Reduction in securitized trade receivables

   -     -       -       -     (14 )     14  

Issue of long-term debt

   1,243     2,008       (765 )     1,426     4,423       (2,997 )

Repayment of long-term debt

   (117 )   (1,515 )     1,398       (668 )   (2,317 )     1,649  

Premiums on early redemption of debt

   -     (28 )     28       -     (55 )     55  

Cash dividends paid on common shares

   (480 )   (451 )     (29 )     (1,412 )   (1,343 )     (69 )

Privatization of Bell Aliant

   (804 )   -       (804 )     (804 )   -       (804 )

Issue of common shares

   2     -       2       43     13       30  

Issue of equity securities by subsidiaries to non-controlling interest

   -     -       -       -     230       (230 )

Other financing activities

   (15 )   (11 )     (4 )     (96 )   (37 )     (59 )

 

  422     (2,352 )     2,774       (840 )   (1,423 )     583  

Net increase (decrease) in cash and cash equivalents

   1,256     (1,605 )     2,861       1,071     474       597  

Cash and cash equivalents at beginning of period

   150     2,208       (2,058 )     335     129       206  

Cash and cash equivalents at end of period

   1,406     603       803       1,406     603       803  
                                           

Other information

                                          

Free cash flow per share (3)

 $ 1.06   $ 0.97     $ 0.09     $ 2.45   $ 2.45     $

-

  

Annualized cash flow yield (5)

   6.5 %   7.3 %     (0.8 ) pts     6.5 %   7.3 %     (0.8 ) pts
                                           

 

BCE Supplementary Financial Information – Third Quarter 2014 Page 12

BCE
Consolidated Cash Flow Data - Historical Trend

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

   YTD
2014		       Q3 14     Q2 14     Q1 14       Total
2013		       Q4 13     Q3 13     Q2 13     Q1 13  

Net earnings

   2,124       703     707     714       2,388       593     452     671     672  

Adjustments to reconcile net earnings to cash flows from operating activities

                                                            

Severance, acquisition and other costs

   158       66     54     38       406       48     297     28     33  

Depreciation and amortization

   2,600       855     879     866       3,380       855     845     842     838  

Post-employment benefit plans cost

   284       91     94     99       442       109     112     107     114  

Net interest expense

   685       225     226     234       924       239     240     225     220  

(Gains) losses on investments

   (16 )     -     (4 )   (12 )     7       12     (2 )   (1 )   (2 )

Income taxes

   708       241     236     231       828       226     165     196     241  

Contributions to post-employment benefit plans

   (255 )     (82 )   (85 )   (88 )     (341 )     (83 )   (84 )   (76 )   (98 )

Payments under other post-employment benefit plans

   (54 )     (18 )   (18 )   (18 )     (73 )     (18 )   (19 )   (18 )   (18 )

Severance and other costs paid

   (146 )     (40 )   (38 )   (68 )     (203 )     (65 )   (44 )   (45 )   (49 )

Acquisition costs paid

   (63 )     (33 )   (16 )   (14 )     (80 )     (30 )   (32 )   (8 )   (10 )

Interest paid

   (674 )     (214 )   (231 )   (229 )     (879 )     (231 )   (246 )   (206 )   (196 )

Income taxes paid (net of refunds)

   (563 )     (92 )   (110 )   (361 )     (470 )     (232 )   (53 )   (37 )   (148 )

Net change in operating assets and liabilities

   (74 )     180     156     (410 )     147       415     99     190     (557 )

Cash flows from operating activities

   4,714       1,882     1,850     982       6,476       1,838     1,730     1,868     1,040  

Bell Aliant dividends paid to BCE

   95       47     48     -       191       48     48     47     48  

Capital expenditures

   (2,641 )     (975 )   (937 )   (729 )     (3,571 )     (1,139 )   (880 )   (830 )   (722 )

Cash dividends paid on preferred shares

   (94 )     (31 )   (31 )   (32 )     (127 )     (31 )   (38 )   (32 )   (26 )

Cash dividends paid by subsidiaries to non-controlling interest

   (144 )     (69 )   (68 )   (7 )     (283 )     (68 )   (68 )   (74 )   (73 )

Acquisition costs paid

   63       33     16     14       80       30     32     8     10  

Bell Aliant Free Cash Flow

   (82 )     (53 )   (63 )   34       (195 )     (4 )   (77 )   (84 )   (30 )

Free Cash Flow

   1,911       834     815     262       2,571       674     747     903     247  

Bell Aliant free cash flow, excluding dividends paid

   (13 )     6     15     (34 )     4       (44 )   29     37     (18 )

Business acquisitions

   (10 )     (10 )   -     -       (2,850 )     (1 )   (2,844 )   -     (5 )

Acquisition costs paid

   (63 )     (33 )   (16 )   (14 )     (80 )     (30 )   (32 )   (8 )   (10 )

Business dispositions

   724       186     -     538       1       -     -     1     -  

Increase in investments

   (15 )     (9 )   -     (6 )     (3 )     (1 )   (1 )   (1 )   -  

Decrease in investments

   -       -     -     -       10       5     -     3     2  

Acquisition of spectrum licences

   (566 )     -     (453 )   (113 )     -       -     -     -     -  

Other investing activities

   13       10     2     1       12       -     (2 )   14     -  

Increase (decrease) in notes payable and bank advances

   601       443     (443 )   601       272       (240 )   495     (321 )   338  

Reduction in securitized trade receivables

   -       -     -     -       (14 )     -     -     -     (14 )

Issue of long-term debt

   1,426       1,243     150     33       4,438       15     2,008     1,408     1,007  

Repayment of long-term debt

   (668 )     (117 )   (136 )   (415 )     (2,495 )     (178 )   (1,515 )   (513 )   (289 )

Premiums on early redemption of debt

   -       -     -     -       (55 )     -     (28 )   (10 )   (17 )

Cash dividends paid on common shares

   (1,412 )     (480 )   (480 )   (452 )     (1,795 )     (452 )   (451 )   (452 )   (440 )

Privatization of Bell Aliant

   (804 )     (804 )   -     -       -       -     -     -     -  

Issue of common shares

   43       2     9     32       13       -     -     -     13  

Issue of equity securities by subsidiaries to non-controlling interest

   -       -     -     -       230       -     -     -     230  

Other financing activities

   (96 )     (15 )   (33 )   (48 )     (53 )     (16 )   (11 )   (8 )   (18 )

 

  (840 )     422     (1,385 )   123       (2,365 )     (942 )   (2,352 )   150     779  

Net increase (decrease) in cash and cash equivalents

   1,071       1,256     (570 )   385       206       (268 )   (1,605 )   1,053     1,026  

Cash and cash equivalents at beginning of period

   335       150     720     335       129       603     2,208     1,155     129  

Cash and cash equivalents at end of period

   1,406       1,406     150     720       335       335     603     2,208     1,155  

 

                                                            

Other information

                                                            

Free cash flow per share

 $ 2.45     $ 1.06   $ 1.05   $ 0.34     $ 3.31     $ 0.86   $ 0.97   $ 1.16   $ 0.32  

Annualized cash flow yield

   6.5 %     6.5 %   6.6 %   7.0 %     7.2 %     7.2 %   7.3 %   7.3 %   6.4 %

 

BCE Supplementary Financial Information – Third Quarter 2014 Page 13

 

Accompanying Notes

  We report our results of operations in four segments: Bell Wireless, Bell Wireline, Bell Media and Bell Aliant. Our reporting structure reflects how we manage our business and how we classify our operations for planning and measuring performance.
 
(1) Throughout this report, BCE means, as the context may require, either BCE Inc. or, collectively, BCE Inc., its subsidiaries, joint arrangements and associates; Bell means our Bell Wireless, Bell Wireline and Bell Media segments on an aggregate basis; and Bell Aliant means, as the context may require, Bell Aliant Inc. or, collectively, Bell Aliant Inc., its subsidiaries and associates.
 
(2) On July 5, 2013, BCE acquired 100% of the issued and outstanding shares of Astral Media Inc. (Astral) . Astral is a media company that operates specialty and pay TV channels, radio stations, digital media properties and out-of-home advertising platforms.
 
(3) Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted EBITDA margin

Beginning with Q2 2014, we reference Adjusted EBITDA and Adjusted EBITDA margin as non-GAAP financial measures. These terms replace the previously referenced non-GAAP financial measures EBITDA and EBITDA margin. Our definition of Adjusted EBITDA and Adjusted EBITDA margin are unchanged from our former definition of EBITDA and EBITDA margin respectively. Accordingly, this change in terminology has no impact on our reported financial results for prior periods.

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

We define Adjusted EBITDA as operating revenues less operating costs (including post-employment benefit plans service cost). We define Adjusted EBITDA margin as Adjusted EBITDA divided by operating revenues.

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

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

Adjusted net earnings and Adjusted earnings per share (EPS)

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

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

 

BCE Supplementary Financial Information – Third Quarter 2014 Page 14

Accompanying Notes

  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 (gains) losses on investments, and premiums on early redemption of debt, net of tax and non-controlling interest. We exclude these items because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding these items does not imply they are non-recurring.

The most comparable IFRS financial measures are net earnings attributable to common shareholders and EPS.

Free Cash Flow and Free Cash Flow per share

The terms free cash flow and free cash flow per share do not have any standardized meaning under IFRS. Therefore, they are unlikely to be comparable to similar measures presented by other issuers.

We define free cash flow as cash flows from operating activities, excluding acquisition costs paid and voluntary pension funding, plus dividends received from Bell Aliant, less capital expenditures, preferred share dividends, dividends paid by subsidiaries to non-controlling interest and Bell Aliant free cash flow. We define free cash flow per share as follows:

Free cash flow
Average number of common shares outstanding

We consider free cash flow and free cash flow per share to be important indicators of the financial strength and performance of our businesses because they show how much cash is available to pay dividends, repay debt and reinvest in our company.

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

For free cash flow, the most comparable IFRS financial measure is cash flows from operating activities.

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. 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 2014 Page 15

Accompanying Notes

(4) Key Performance Indicators (KPIs)

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.

Capital Intensity is capital expenditures divided by operating revenues.

Average revenue per user or subscriber (ARPU) represents the measurement of certain service revenues divided by the average subscriber base for the specified period.

Churn is the rate at which existing subscribers cancel their services, expressed as a percentage. Churn is calculated as the number of subscribers disconnected divided by the average subscriber base. It is a measure of monthly customer turnover.

Cost of acquisition (COA) is also referred to as subscriber acquisition costs. COA represents the total cost associated with acquiring a customer and includes costs such as hardware discounts, marketing and distribution costs. This measure is expressed per gross activation during the period.

Net debt to Adjusted EBITDA is Bell Net debt divided by Adjusted EBITDA. Net debt is debt due within one year plus long-term debt and 50% of preferred shares less cash and cash equivalents. For the purposes of calculating our net debt to Adjusted EBITDA ratio, Adjusted EBITDA is defined as twelve-month trailing Bell Adjusted EBITDA including dividends from Bell Aliant to BCE.

Adjusted EBITDA to net interest expense is Adjusted EBITDA divided by net interest expense. For the purposes of calculating our Adjusted EBITDA to net interest expense ratio, Adjusted EBITDA is defined as twelve-month trailing Bell Adjusted EBITDA including dividends from Bell Aliant to BCE. Net interest expense is twelve-month trailing Bell interest expense excluding interest on post-employment benefit obligations and including 50% of preferred dividends.
 
(5) Annualized cash flow yield is calculated as follows:

Trailing 12 month free cash flow
Number of common shares outstanding at end of period multiplied by share price at end of period

 

BCE Supplementary Financial Information – Third Quarter 2014 Page 16