EX-99.2 3 supp_enq316.htm SUPPLEMENTARY FINANCIAL INFORMATION - THIRD QUARTER 2016 Supplementary Financial Information

Exhibit 99.2

 

 

BCE (1)
Consolidated Operational Data

(In millions of Canadian dollars, except share amounts) (unaudited)   Q3
2016		     Q3
2015		       $ change   % change       YTD
2016		     YTD
2015		       $ change   % change  

Operating revenues

   5,407     5,345       62   1.2 %     16,017     15,911       106   0.7 %

Operating costs (A)

   (3,111 )   (3,089 )     (22 ) (0.7 %)     (9,186 )   (9,220 )     34   0.4 %

Post-employment benefit plans service cost

   (60 )   (69 )     9   13.0 %     (164 )   (213 )     49   23.0 %

Adjusted EBITDA (2)

   2,236     2,187       49   2.2 %     6,667     6,478       189   2.9 %

Adjusted EBITDA margin (2)

   41.4 %   40.9 %         0.5  pts     41.6 %   40.7 %         0.9  pts

Severance, acquisition and other costs

   (25 )   (46 )     21   45.7 %     (124 )   (294 )     170   57.8 %

Depreciation

   (706 )   (727 )     21   2.9 %     (2,158 )   (2,159 )     1   -  

Amortization

   (161 )   (133 )     (28 ) (21.1 %)     (466 )   (394 )     (72 ) (18.3 %)

Finance costs

                                                  

Interest expense

   (227 )   (227 )     -   -       (663 )   (683 )     20   2.9 %

Interest on post-employment benefit obligations

   (20 )   (27 )     7   25.9 %     (61 )   (82 )     21   25.6 %

Other (expense) income

   (13 )   35       (48 ) n.m.       51     58       (7 ) (12.1 %)

Income taxes

   (284 )   (271 )     (13 ) (4.8 %)     (858 )   (736 )     (122 ) (16.6 %)

Net earnings

   800     791       9   1.1 %     2,388     2,188       200   9.1 %

Net earnings attributable to:

                                                  

Common shareholders

   752     739       13   1.8 %     2,237     2,030       207   10.2 %

Preferred shareholders

   32     38       (6 ) (15.8 %)     104     115       (11 ) (9.6 %)

Non-controlling interest

   16     14       2   14.3 %     47     43       4   9.3 %

Net earnings

   800     791       9   1.1 %     2,388     2,188       200   9.1 %

Net earnings per common share - basic

 $ 0.87   $ 0.87       -   -     $ 2.58   $ 2.40     $ 0.18   7.5 %

Net earnings per common share - diluted

 $ 0.87   $ 0.87       -   -     $ 2.58   $ 2.40     $ 0.18   7.5 %

Dividends per common share

 $ 0.6825   $ 0.6500     $ 0.0325   5.0 %   $ 2.0475   $ 1.9500     $ 0.0975   5.0 %

Average number of common shares outstanding - basic (millions)

   869.9     848.9                   868.7     845.0              

Average number of common shares outstanding - diluted (millions)

   871.4     850.1                   869.9     846.3              

Number of common shares outstanding (millions)

   870.2     849.4                   870.2     849.4              

Adjusted net earnings and EPS

                                                  

Net earnings attributable to common shareholders

   752     739       13   1.8 %     2,237     2,030       207   10.2 %

Severance, acquisition and other costs

   20     35       (15 ) (42.9 %)     95     215       (120 ) (55.8 %)

Net losses (gains) on investments

   12     16       (4 ) (25.0 %)     2     (22 )     24   n.m.  

Early debt redemption costs

   -     -       -   -       8     7       1   14.3 %

Adjusted net earnings (2)

   784     790       (6 ) (0.8 %)     2,342     2,230       112   5.0 %

Impact on net earnings per share

 $ 0.04   $ 0.06     $ (0.02 ) (33.3 %)   $ 0.12   $ 0.24     $ (0.12 ) (50.0 %)

Adjusted EPS (2)

 $ 0.91   $ 0.93     $ (0.02 ) (2.2 %)   $ 2.70   $ 2.64     $ 0.06   2.3 %

 

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

BCE Supplementary Financial Information - Third Quarter 2016 Page 2

BCE
Consolidated Operational Data - Historical Trend

(In millions of Canadian dollars, except share amounts) (unaudited)   YTD
2016		       Q3 16     Q2 16     Q1 16       TOTAL
2015		       Q4 15     Q3 15     Q2 15     Q1 15  

Operating revenues

   16,017       5,407     5,340     5,270       21,514       5,603     5,345     5,326     5,240  

Operating costs (A)

   (9,186 )     (3,111 )   (3,016 )   (3,059 )     (12,682 )     (3,462 )   (3,089 )   (3,061 )   (3,070 )

Post-employment benefit plans service cost

   (164 )     (60 )   (56 )   (48 )     (281 )     (68 )   (69 )   (68 )   (76 )

Adjusted EBITDA

   6,667       2,236     2,268     2,163       8,551       2,073     2,187     2,197     2,094  

Adjusted EBITDA margin

   41.6 %     41.4 %   42.5 %   41.0 %     39.7 %     37.0 %   40.9 %   41.3 %   40.0 %

Severance, acquisition and other costs

   (124 )     (25 )   (57 )   (42 )     (446 )     (152 )   (46 )   (24 )   (224 )

Depreciation

   (2,158 )     (706 )   (713 )   (739 )     (2,890 )     (731 )   (727 )   (720 )   (712 )

Amortization

   (466 )     (161 )   (156 )   (149 )     (530 )     (136 )   (133 )   (134 )   (127 )

Finance costs

                                                            

Interest expense

   (663 )     (227 )   (217 )   (219 )     (909 )     (226 )   (227 )   (230 )   (226 )

Interest on post-employment benefit obligations

   (61 )     (20 )   (21 )   (20 )     (110 )     (28 )   (27 )   (28 )   (27 )

Other income (expense)

   51       (13 )   41     23       (12 )     (70 )   35     43     (20 )

Income taxes

   (858 )     (284 )   (315 )   (259 )     (924 )     (188 )   (271 )   (290 )   (175 )

Net earnings

   2,388       800     830     758       2,730       542     791     814     583  

Net earnings attributable to:

                                                            

Common shareholders

   2,237       752     778     707       2,526       496     739     759     532  

Preferred shareholders

   104       32     35     37       152       37     38     39     38  

Non-controlling interest

   47       16     17     14       52       9     14     16     13  

Net earnings

   2,388       800     830     758       2,730       542     791     814     583  

Net earnings per common share - basic

 $ 2.58     $ 0.87   $ 0.89   $ 0.82     $ 2.98     $ 0.58   $ 0.87   $ 0.90   $ 0.63  

Net earnings per common share - diluted

 $ 2.58     $ 0.87   $ 0.89   $ 0.82     $ 2.98     $ 0.58   $ 0.87   $ 0.90   $ 0.63  

Dividends per common share

 $ 2.0475     $ 0.6825   $ 0.6825   $ 0.6825     $ 2.6000     $ 0.6500   $ 0.6500   $ 0.6500   $ 0.6500  

Average number of common shares outstanding - basic (millions)

   868.7       869.9     869.1     867.1       847.1       853.5     848.9     844.9     841.0  

Average number of common shares outstanding - diluted (millions)

   869.9       871.4     870.3     868.1       848.3       854.9     850.1     846.2     842.6  

Number of common shares outstanding (millions)

   870.2       870.2     869.5     868.6       865.6       865.6     849.4     848.6     841.9  

Adjusted net earnings and EPS

                                                            

Net earnings attributable to common shareholders

   2,237       752     778     707       2,526       496     739     759     532  

Severance, acquisition and other costs

   95       20     44     31       327       112     35     16     164  

Net losses (gains) on investments

   2       12     2     (12 )     (21 )     1     16     (40 )   2  

Early debt redemption costs

   8       -     -     8       13       6     -     -     7  

Adjusted net earnings

   2,342       784     824     734       2,845       615     790     735     705  

Impact on net earnings per share

 $ 0.12     $ 0.04   $ 0.05   $ 0.03     $ 0.38     $ 0.14   $ 0.06   $ (0.03 ) $ 0.21  

Adjusted EPS

 $ 2.70     $ 0.91   $ 0.94   $ 0.85     $ 3.36     $ 0.72   $ 0.93   $ 0.87   $ 0.84  

 

(A) Excludes post-employment benefit plans service cost

BCE Supplementary Financial Information - Third Quarter 2016 Page 3

BCE
Segmented Data

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) Q3
2016		   Q3
2015		     $ change   % change     YTD
2016		   YTD
2015		     $ change   % change  
                                       

Revenues

                                      

Bell Wireless

 1,848   1,772     76   4.3 %   5,276   5,106     170   3.3 %

Bell Wireline

 3,005   3,028     (23 ) (0.8 %)   8,967   9,097     (130 ) (1.4 %)

Bell Media

 716   692     24   3.5 %   2,236   2,158     78   3.6 %

Inter-segment eliminations

 (162 ) (147 )   (15 ) (10.2 %)   (462 ) (450 )   (12 ) (2.7 %)

Total

 5,407   5,345     62   1.2 %   16,017   15,911     106   0.7 %
                                       

Operating costs

                                      

Bell Wireless

 (1,052 ) (1,014 )   (38 ) (3.7 %)   (2,947 ) (2,919 )   (28 ) (1.0 %)

Bell Wireline

 (1,752 ) (1,782 )   30   1.7 %   (5,184 ) (5,345 )   161   3.0 %

Bell Media

 (529 ) (509 )   (20 ) (3.9 %)   (1,681 ) (1,619 )   (62 ) (3.8 %)

Inter-segment eliminations

 162   147     15   10.2 %   462   450     12   2.7 %

Total

 (3,171 ) (3,158 )   (13 ) (0.4 %)   (9,350 ) (9,433 )   83   0.9 %
                                       

Adjusted EBITDA

                                      

Bell Wireless

 796   758     38   5.0 %   2,329   2,187     142   6.5 %

Margin

 43.1 % 42.8 %       0.3  pts   44.1 % 42.8 %       1.3  pts

Bell Wireline

 1,253   1,246     7   0.6 %   3,783   3,752     31   0.8 %

Margin

 41.7 % 41.1 %       0.6  pts   42.2 % 41.2 %       1.0  pts

Bell Media

 187   183     4   2.2 %   555   539     16   3.0 %

Margin

 26.1 % 26.4 %       (0.3 ) pts   24.8 % 25.0 %       (0.2 ) pts

Total

 2,236   2,187     49   2.2 %   6,667   6,478     189   2.9 %

Margin

 41.4 % 40.9 %       0.5  pts   41.6 % 40.7 %       0.9  pts
                                       

Capital expenditures

                                      

Bell Wireless

 195   184     (11 ) (6.0 %)   540   523     (17 ) (3.3 %)

Capital intensity (3)

 10.6 % 10.4 %       (0.2 ) pts   10.2 % 10.2 %       -  

Bell Wireline

 756   716     (40 ) (5.6 %)   2,158   2,068     (90 ) (4.4 %)

Capital intensity

 25.2 % 23.6 %       (1.6 ) pts   24.1 % 22.7 %       (1.4 ) pts

Bell Media

 25   27     2   7.4 %   80   77     (3 ) (3.9 %)

Capital intensity

 3.5 % 3.9 %       0.4  pts   3.6 % 3.6 %       -  

Total

 976   927     (49 ) (5.3 %)   2,778   2,668     (110 ) (4.1 %)

Capital intensity

 18.1 % 17.3 %       (0.8 ) pts   17.3 % 16.8 %       (0.5 ) pts

BCE Supplementary Financial Information - Third Quarter 2016 Page 4

BCE
Segmented Data - Historical Trend

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) YTD
2016		     Q3 16   Q2 16   Q1 16     Total
2015		   Q4 15   Q3 15   Q2 15   Q1 15  
                                         

Revenues

                                        

Bell Wireless

 5,276     1,848   1,735   1,693     6,876   1,770   1,772   1,697   1,637  

Bell Wireline

 8,967     3,005   2,979   2,983     12,258   3,161   3,028   3,042   3,027  

Bell Media

 2,236     716   779   741     2,974   816   692   740   726  

Inter-segment eliminations

 (462 )   (162 ) (153 ) (147 )   (594 ) (144 ) (147 ) (153 ) (150 )

Total

 16,017     5,407   5,340   5,270     21,514   5,603   5,345   5,326   5,240  
                                         

Operating costs

                                        

Bell Wireless

 (2,947 )   (1,052 ) (963 ) (932 )   (4,048 ) (1,129 ) (1,014 ) (980 ) (925 )

Bell Wireline

 (5,184 )   (1,752 ) (1,706 ) (1,726 )   (7,258 ) (1,913 ) (1,782 ) (1,777 ) (1,786 )

Bell Media

 (1,681 )   (529 ) (556 ) (596 )   (2,251 ) (632 ) (509 ) (525 ) (585 )

Inter-segment eliminations

 462     162   153   147     594   144   147   153   150  

Total

 (9,350 )   (3,171 ) (3,072 ) (3,107 )   (12,963 ) (3,530 ) (3,158 ) (3,129 ) (3,146 )
                                         

Adjusted EBITDA

                                        

Bell Wireless

 2,329     796   772   761     2,828   641   758   717   712  

Margin

 44.1 %   43.1 % 44.5 % 44.9 %   41.1 % 36.2 % 42.8 % 42.3 % 43.5 %

Bell Wireline

 3,783     1,253   1,273   1,257     5,000   1,248   1,246   1,265   1,241  

Margin

 42.2 %   41.7 % 42.7 % 42.1 %   40.8 % 39.5 % 41.1 % 41.6 % 41.0 %

Bell Media

 555     187   223   145     723   184   183   215   141  

Margin

 24.8 %   26.1 % 28.6 % 19.6 %   24.3 % 22.5 % 26.4 % 29.1 % 19.4 %

Total

 6,667     2,236   2,268   2,163     8,551   2,073   2,187   2,197   2,094  

Margin

 41.6 %   41.4 % 42.5 % 41.0 %   39.7 % 37.0 % 40.9 % 41.3 % 40.0 %
                                         

Capital expenditures

                                        

Bell Wireless

 540     195   183   162     716   193   184   188   151  

Capital intensity

 10.2 %   10.6 % 10.5 % 9.6 %   10.4 % 10.9 % 10.4 % 11.1 % 9.2 %

Bell Wireline

 2,158     756   733   669     2,809   741   716   696   656  

Capital intensity

 24.1 %   25.2 % 24.6 % 22.4 %   22.9 % 23.4 % 23.6 % 22.9 % 21.7 %

Bell Media

 80     25   34   21     101   24   27   30   20  

Capital intensity

 3.6 %   3.5 % 4.4 % 2.8 %   3.4 % 2.9 % 3.9 % 4.1 % 2.8 %

Total

 2,778     976   950   852     3,626   958   927   914   827  

Capital intensity

 17.3 %   18.1 % 17.8 % 16.2 %   16.9 % 17.1 % 17.3 % 17.2 % 15.8 %

BCE Supplementary Financial Information - Third Quarter 2016 Page 5

Bell Wireless (1)

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) Q3
2016		   Q3
2015		     % change     YTD
2016		   YTD
2015		     % change  

Bell Wireless

                              

Revenues

                              

Service

 1,711   1,619     5.7 %   4,900   4,658     5.2 %

Product

 127   143     (11.2 %)   345   419     (17.7 %)

Total external Bell Wireless revenues

 1,838   1,762     4.3 %   5,245   5,077     3.3 %

Inter-segment

 10   10     -     31   29     6.9 %

Total Bell Wireless operating revenues

 1,848   1,772     4.3 %   5,276   5,106     3.3 %

Operating costs

 (1,052 ) (1,014 )   (3.7 %)   (2,947 ) (2,919 )   (1.0 %)

Adjusted EBITDA

 796   758     5.0 %   2,329   2,187     6.5 %

Adjusted EBITDA margin (Total revenues)

 43.1 % 42.8 %   0.3  pts   44.1 % 42.8 %   1.3  pts

Adjusted EBITDA margin (Service revenues)

 46.5 % 46.8 %   (0.3 ) pts   47.5 % 47.0 %   0.5  pts

Capital expenditures

 195   184     (6.0 %)   540   523     (3.3 %)

Capital intensity

 10.6 % 10.4 %   (0.2 ) pts   10.2 % 10.2 %   -  

Wireless gross activations

 453,078   424,164     6.8 %   1,163,934   1,150,497     1.2 %

Postpaid

 381,630   353,652     7.9 %   974,022   950,445     2.5 %

Wireless net activations

 100,256   58,543     71.3 %   135,118   64,739     108.7 %

Postpaid

 107,265   77,655     38.1 %   202,918   174,061     16.6 %

Wireless subscribers end of period (EOP)

 8,380,949   8,183,367     2.4 %   8,380,949   8,183,367     2.4 %

Postpaid

 7,578,334   7,284,108     4.0 %   7,578,334   7,284,108     4.0 %

Average revenue per user (3) (ARPU)($/month)

 67.76   65.34     3.7 %   65.04   62.89     3.4 %

Churn (%) (3)(average per month)

 1.41 % 1.49 %   0.08  pts   1.38 % 1.49 %   0.11  pts

Prepaid

 2.86 % 2.98 %   0.12  pts   3.17 % 3.36 %   0.19  pts

Postpaid

 1.26 % 1.31 %   0.05  pts   1.18 % 1.24 %   0.06  pts

Cost of acquisition (COA) (3) ($/subscriber)

 459   446     (2.9 %)   475   444     (7.0 %)

BCE Supplementary Financial Information - Third Quarter 2016 Page 6

Bell Wireless - Historical Trend

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) YTD
2016		     Q3 16   Q2 16   Q1 16     TOTAL
2015		     Q4 15   Q3 15   Q2 15   Q1 15  

Bell Wireless

                                          

Revenues

                                          

Service

 4,900     1,711   1,610   1,579     6,246     1,588   1,619   1,539   1,500  

Product

 345     127   114   104     590     171   143   149   127  

Total external Bell Wireless revenues

 5,245     1,838   1,724   1,683     6,836     1,759   1,762   1,688   1,627  

Inter-segment

 31     10   11   10     40     11   10   9   10  

Total Bell Wireless operating revenues

 5,276     1,848   1,735   1,693     6,876     1,770   1,772   1,697   1,637  

Operating costs

 (2,947 )   (1,052 ) (963 ) (932 )   (4,048 )   (1,129 ) (1,014 ) (980 ) (925 )

Adjusted EBITDA

 2,329     796   772   761     2,828     641   758   717   712  

Adjusted EBITDA margin (Total revenues)

 44.1 %   43.1 % 44.5 % 44.9 %   41.1 %   36.2 % 42.8 % 42.3 % 43.5 %

Adjusted EBITDA margin (Service revenues)

 47.5 %   46.5 % 48.0 % 48.2 %   45.3 %   40.4 % 46.8 % 46.6 % 47.5 %

 

Capital expenditures

 540     195   183   162     716     193   184   188   151  

Capital intensity

 10.2 %   10.6 % 10.5 % 9.6 %   10.4 %   10.9 % 10.4 % 11.1 % 9.2 %

Wireless gross activations

 1,163,934     453,078   379,233   331,623     1,600,147     449,650   424,164   384,973   341,360  

Postpaid

 974,022     381,630   316,977   275,415     1,338,141     387,696   353,652   317,809   278,984  

Wireless net activations

 135,118     100,256   44,730   (9,868 )   127,203     62,464   58,543   22,110   (15,914 )

Postpaid

 202,918     107,265   69,848   25,805     265,369     91,308   77,655   61,033   35,373  

Wireless subscribers EOP

 8,380,949     8,380,949   8,280,693   8,235,963     8,245,831     8,245,831   8,183,367   8,124,824   8,102,714  

Postpaid

 7,578,334     7,578,334   7,471,069   7,401,221     7,375,416     7,375,416   7,284,108   7,206,453   7,145,420  

ARPU ($/month)

 65.04     67.76   64.32   63.02     63.09     63.67   65.34   62.48   60.83  

Churn (%)(average per month)

 1.38 %   1.41 % 1.35 % 1.38 %   1.51 %   1.57 % 1.49 % 1.49 % 1.47 %

Prepaid

 3.17 %   2.86 % 3.21 % 3.42 %   3.32 %   3.19 % 2.98 % 3.48 % 3.60 %

Postpaid

 1.18 %   1.26 % 1.15 % 1.15 %   1.28 %   1.38 % 1.31 % 1.23 % 1.18 %

COA ($/subscriber)

 475     459   478   494     467     525   446   434   452  

BCE Supplementary Financial Information - Third Quarter 2016 Page 7

Bell Wireline (1)

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) Q3
2016		   Q3
2015		     % change     YTD
2016		   YTD
2015		     % change  

Bell Wireline

                              

Data

 1,833   1,770     3.6 %   5,434   5,301     2.5 %

Local & access

 766   818     (6.4 %)   2,336   2,469     (5.4 %)

Long distance

 189   207     (8.7 %)   563   627     (10.2 %)

Equipment & other

 165   181     (8.8 %)   500   528     (5.3 %)

Total external revenues

 2,953   2,976     (0.8 %)   8,833   8,925     (1.0 %)

Inter-segment revenues

 52   52     -     134   172     (22.1 %)

Total Bell Wireline operating revenues

 3,005   3,028     (0.8 %)   8,967   9,097     (1.4 %)

Operating costs

 (1,752 ) (1,782 )   1.7 %   (5,184 ) (5,345 )   3.0 %

Adjusted EBITDA

 1,253   1,246     0.6 %   3,783   3,752     0.8 %

Adjusted EBITDA margin

 41.7 % 41.1 %   0.6  pts   42.2 % 41.2 %   1.0  pts

Capital expenditures

 756   716     (5.6 %)   2,158   2,068     (4.4 %)

Capital intensity

 25.2 % 23.6 %   (1.6 ) pts   24.1 % 22.7 %   (1.4 ) pts

High-speed Internet

                              

High-speed Internet net activations

 39,375   57,888     (32.0 %)   66,697   116,144     (42.6 %)

High-speed Internet subscribers EOP (A)

 3,458,160   3,374,239     2.5 %   3,458,160   3,374,239     2.5 %

TV

                              

Net subscriber (losses) activations

 (4,723 ) 25,914     (118.2 %)   7,377   69,594     (89.4 %)

Internet protocol television (IPTV)

 36,253   67,908     (46.6 %)   119,248   179,237     (33.5 %)

Total subscribers EOP

 2,745,873   2,700,710     1.7 %   2,745,873   2,700,710     1.7 %

IPTV

 1,302,039   1,108,699     17.4 %   1,302,039   1,108,699     17.4 %

Local

                              

Network access services (NAS)

                              

Residential

 3,317,124   3,591,813     (7.6 %)   3,317,124   3,591,813     (7.6 %)

Business (A)

 3,041,238   3,203,763     (5.1 %)   3,041,238   3,203,763     (5.1 %)

Total (A)

 6,358,362   6,795,576     (6.4 %)   6,358,362   6,795,576     (6.4 %)

NAS net losses

                              

Residential

 (80,587 ) (78,354 )   (2.8 %)   (216,608 ) (220,043 )   1.6 %

Business

 (37,734 ) (29,722 )   (27.0 %)   (98,170 ) (111,481 )   11.9 %

Total

 (118,321 ) (108,076 )   (9.5 %)   (314,778 ) (331,524 )   5.1 %

 

(A) Our Q1 2016 business Internet and business NAS subscriber bases reflect a beginning of period adjustment to reduce the number of subscribers by 21,684 and 15,526, respectively, in order to align practices as a result of the integration of our former Bell Aliant segment (Bell Aliant).

BCE Supplementary Financial Information - Third Quarter 2016 Page 8

Bell Wireline - Historical Trend

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) YTD
2016		     Q3 16   Q2 16   Q1 16     TOTAL
2015		     Q4 15   Q3 15   Q2 15   Q1 15  

Bell Wireline

                                          

Data

 5,434     1,833   1,807   1,794     7,163     1,862   1,770   1,774   1,757  

Local & access

 2,336     766   781   789     3,271     802   818   827   824  

Long distance

 563     189   183   191     831     204   207   207   213  

Equipment & other

 500     165   167   168     778     250   181   174   173  

Total external revenues

 8,833     2,953   2,938   2,942     12,043     3,118   2,976   2,982   2,967  

Inter-segment revenues

 134     52   41   41     215     43   52   60   60  

Total Bell Wireline operating revenues

 8,967     3,005   2,979   2,983     12,258     3,161   3,028   3,042   3,027  

Operating costs

 (5,184 )   (1,752 ) (1,706 ) (1,726 )   (7,258 )   (1,913 ) (1,782 ) (1,777 ) (1,786 )

Adjusted EBITDA

 3,783     1,253   1,273   1,257     5,000     1,248   1,246   1,265   1,241  

Adjusted EBITDA margin

 42.2 %   41.7 % 42.7 % 42.1 %   40.8 %   39.5 % 41.1 % 41.6 % 41.0 %

Capital expenditures

 2,158     756   733   669     2,809     741   716   696   656  

Capital intensity

 24.1 %   25.2 % 24.6 % 22.4 %   22.9 %   23.4 % 23.6 % 22.9 % 21.7 %

High-speed Internet

                                          

High-speed Internet net activations

 66,697     39,375   7,539   19,783     155,052     38,908   57,888   18,606   39,650  

High-speed Internet subscribers EOP (A)

 3,458,160     3,458,160   3,418,785   3,411,246     3,413,147     3,413,147   3,374,239   3,316,351   3,297,745  

TV

                                          

Net subscriber activations (losses)

 7,377     (4,723 ) 2,101   9,999     107,380     37,786   25,914   16,690   26,990  

IPTV

 119,248     36,253   35,255   47,740     253,329     74,092   67,908   50,466   60,863  

Total subscribers EOP

 2,745,873     2,745,873   2,750,596   2,748,495     2,738,496     2,738,496   2,700,710   2,674,796   2,658,106  

IPTV

 1,302,039     1,302,039   1,265,786   1,230,531     1,182,791     1,182,791   1,108,699   1,040,791   990,325  

Local

                                          

NAS

                                          

Residential

 3,317,124     3,317,124   3,397,711   3,466,304     3,533,732     3,533,732   3,591,813   3,670,167   3,745,986  

Business (A)

 3,041,238     3,041,238   3,078,972   3,099,204     3,154,934     3,154,934   3,203,763   3,233,485   3,271,175  

Total (A)

 6,358,362     6,358,362   6,476,683   6,565,508     6,688,666     6,688,666   6,795,576   6,903,652   7,017,161  

NAS net losses

                                          

Residential

 (216,608 )   (80,587 ) (68,593 ) (67,428 )   (278,124 )   (58,081 ) (78,354 ) (75,819 ) (65,870 )

Business

 (98,170 )   (37,734 ) (20,232 ) (40,204 )   (160,310 )   (48,829 ) (29,722 ) (37,690 ) (44,069 )

Total

 (314,778 )   (118,321 ) (88,825 ) (107,632 )   (438,434 )   (106,910 ) (108,076 ) (113,509 ) (109,939 )

 

(A) Our Q1 2016 business Internet and business NAS subscriber bases reflect a beginning of period adjustment to reduce the number of subscribers by 21,684 and 15,526, respectively, in order to align practices as a result of the integration of Bell Aliant.

BCE Supplementary Financial Information - Third Quarter 2016 Page 9

BCE
Net debt and other information

BCE - Net debt and preferred shares                
(In millions of Canadian dollars, except where otherwise indicated) (unaudited)                

  

September 30
2016		    June 30
2016		   March 31
2016		   December 31
2015		  

Debt due within one year

 4,991   4,532   4,516   4,895  

Long-term debt

 16,505   15,817   15,837   15,390  

Preferred shares - BCE (A)

 2,002   2,002   2,002   2,002  

Cash and cash equivalents

 (1,393 ) (615 ) (423 ) (613 )

Net debt (2)

 22,105   21,736   21,932   21,674  

Net debt leverage ratio (2)

 2.53   2.50   2.54   2.53  

Adjusted EBITDA /net interest expense ratio(2)

 9.21   9.09   8.89   8.76  
                 

 

Cash flow information                                  
(In millions of Canadian dollars, except where otherwise indicated) (unaudited) Q3
2016		   Q3
2015		   $ change   % change     YTD
2016		   YTD
2015		   $ change   % change  

Free cash flow (FCF) (2)

                                  

Cash from operating activities

 1,943   1,878   65   3.5 %   5,123   4,764   359   7.5 %

Capital expenditures

 (976 ) (927 ) (49 ) (5.3 %)   (2,778 ) (2,668 ) (110 ) (4.1 %)

Dividends paid on preferred shares

 (34 ) (37 ) 3   8.1 %   (105 ) (113 ) 8   7.1 %

Dividends paid by subsidiaries to non-controlling interest

 (13 ) (26 ) 13   50.0 %   (35 ) (33 ) (2 ) (6.1 %)

Acquisition and other costs paid

 31   33   (2 ) (6.1 %)   98   133   (35 ) (26.3 %)

FCF

 951   921   30   3.3 %   2,303   2,083   220   10.6 %
                                   

 

Cash flow information - Historical trend                                      
(In millions of Canadian dollars, except where otherwise indicated) (unaudited) YTD
2016		   Q3
2016		   Q2
2016		   Q1
2016		     Total
2015		   Q4
2015		   Q3
2015		   Q2
2015		   Q1
2015		  

FCF

                                      

Cash from operating activities

 5,123   1,943   1,890   1,290     6,274   1,510   1,878   1,841   1,045  

Capital expenditures

 (2,778 ) (976 ) (950 ) (852 )   (3,626 ) (958 ) (927 ) (914 ) (827 )

Dividends paid on preferred shares

 (105 ) (34 ) (35 ) (36 )   (150 ) (37 ) (37 ) (37 ) (39 )

Dividends paid by subsidiaries to non-controlling interest

 (35 ) (13 ) (10 ) (12 )   (41 ) (8 ) (26 ) (7 ) -  

Acquisition and other costs paid

 98   31   39   28     292   159   33   48   52  

Voluntary defined benefit pension plan contribution

 -   -   -   -     250   250   -   -   -  

FCF

 2,303   951   934   418     2,999   916   921   931   231  

 

                                      

 

(A) Net debt includes 50% of preferred shares

BCE Supplementary Financial Information - Third Quarter 2016 Page 10

BCE
Consolidated Statements of Financial Position

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) September 30
2016		     June 30
2016		     March 31
2016		     December 31
2015		  

ASSETS

                      

Current assets

                      

Cash

 740     319     102     100  

Cash equivalents

 653     296     321     513  

Trade and other receivables

 2,710     2,671     2,817     3,009  

Loan to related party

 510     -     -     -  

Inventory

 420     415     414     416  

Prepaid expenses

 461     543     543     393  

Other current assets

 166     197     223     377  

Total current assets

 5,660     4,441     4,420     4,808  

Non-current assets

                      

Property, plant and equipment

 21,878     21,719     21,582     21,630  

Intangible assets

 11,655     11,430     11,334     11,176  

Deferred tax assets

 121     116     105     89  

Investments in associates and joint ventures

 1,033     1,110     1,105     1,119  

Other non-current assets

 784     834     782     794  

Goodwill

 8,618     8,618     8,618     8,377  

Total non-current assets

 44,089     43,827     43,526     43,185  

Total assets

 49,749     48,268     47,946     47,993  

LIABILITIES

                      

Current liabilities

                      

Trade payables and other liabilities

 4,025     3,996     4,077     4,287  

Interest payable

 149     142     146     148  

Dividends payable

 605     606     606     576  

Current tax liabilities

 144     122     37     86  

Debt due within one year

 4,991     4,532     4,516     4,895  

Total current liabilities

 9,914     9,398     9,382     9,992  

Non-current liabilities

                      

Long-term debt

 16,505     15,817     15,837     15,390  

Deferred tax liabilities

 1,603     1,570     1,608     1,824  

Post-employment benefit obligation

 3,579     3,307     2,888     2,038  

Other non-current liabilities

 1,394     1,412     1,411     1,420  

Total non-current liabilities

 23,081     22,106     21,744     20,672  

Total liabilities

 32,995     31,504     31,126     30,664  

EQUITY

                      

Equity attributable to BCE shareholders

                      

Preferred shares

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

Common shares

 18,340     18,300     18,251     18,100  

Contributed surplus

 1,151     1,140     1,124     1,150  

Accumulated other comprehensive income

 32     48     55     119  

Deficit

 (7,086 )   (7,039 )   (6,919 )   (6,350 )

Total equity attributable to BCE shareholders

 16,441     16,453     16,515     17,023  

Non-controlling interest

 313     311     305     306  

Total equity

 16,754     16,764     16,820     17,329  

Total liabilities and equity

 49,749     48,268     47,946     47,993  

Number of common shares outstanding (millions)

 870.2     869.5     868.6     865.6  

BCE Supplementary Financial Information - Third Quarter 2016 Page 11

BCE
Consolidated Cash Flow Data

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) Q3
2016		   Q3
2015		     $ change     YTD
2016		   YTD
2015		     $ change  

Net earnings

 800   791     9     2,388   2,188     200  

Adjustments to reconcile net earnings to cash flows from operating activities

                              

Severance, acquisition and other costs

 25   46     (21 )   124   294     (170 )

Depreciation and amortization

 867   860     7     2,624   2,553     71  

Post-employment benefit plans cost

 80   96     (16 )   225   295     (70 )

Net interest expense

 222   225     (3 )   655   677     (22 )

(Gains) losses on investments

 (34 ) 19     (53 )   (48 ) (73 )   25  

Income taxes

 284   271     13     858   736     122  

Contributions to post-employment benefit plans

 (78 ) (76 )   (2 )   (248 ) (249 )   1  

Payments under other post-employment benefit plans

 (17 ) (18 )   1     (55 ) (56 )   1  

Severance and other costs paid

 (48 ) (45 )   (3 )   (195 ) (146 )   (49 )

Interest paid

 (219 ) (225 )   6     (661 ) (682 )   21  

Income taxes paid (net of refunds)

 (123 ) (66 )   (57 )   (463 ) (518 )   55  

Acquisition and other costs paid

 (31 ) (33 )   2     (98 ) (133 )   35  

Net change in operating assets and liabilities

 215   33     182     17   (122 )   139  

Cash flows from operating activities

 1,943   1,878     65     5,123   4,764     359  

Capital expenditures

 (976 ) (927 )   (49 )   (2,778 ) (2,668 )   (110 )

Cash dividends paid on preferred shares

 (34 ) (37 )   3     (105 ) (113 )   8  

Cash dividends paid by subsidiaries to non-controlling interest

 (13 ) (26 )   13     (35 ) (33 )   (2 )

Acquisition and other costs paid

 31   33     (2 )   98   133     (35 )

Free cash flow

 951   921     30     2,303   2,083     220  

Business acquisitions

 -   (2 )   2     (246 ) (286 )   40  

Acquisition and other costs paid

 (31 ) (33 )   2     (98 ) (133 )   35  

Business dispositions

 2   2     -     20   409     (389 )

Acquisition of spectrum licences

 -   (5 )   5     (1 ) (534 )   533  

Loan to related party

 (510 ) -     (510 )   (510 ) -     (510 )

Other investing activities

 1   (13 )   14     22   (15 )   37  

Increase in notes payable and bank advances

 4   555     (551 )   902   672     230  

Increase (reduction) in securitized trade receivables

 305   (305 )   610     305   10     295  

Issue of long-term debt

 1,497   -     1,497     2,244   502     1,742  

Repayment of long-term debt

 (812 ) (108 )   (704 )   (2,392 ) (977 )   (1,415 )

Issue of common shares

 6   7     (1 )   98   64     34  

Repurchase of shares for settlement of share-based payments

 (15 ) (11 )   (4 )   (94 ) (97 )   3  

Cash dividends paid on common shares

 (594 ) (551 )   (43 )   (1,712 ) (1,617 )   (95 )

Other financing activities

 (26 ) (4 )   (22 )   (61 ) (25 )   (36 )

 

(173 ) (468 )   295     (1,523 ) (2,027 )   504  

Net increase in cash and cash equivalents

 778   453     325     780   56     724  

Cash and cash equivalents at beginning of period

 615   169     446     613   566     47  

Cash and cash equivalents at end of period

 1,393   622     771     1,393   622     771  

  

                                             

BCE Supplementary Financial Information - Third Quarter 2016 Page 12

BCE
Consolidated Cash Flow Data - Historical Trend

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

YTD
2016

     Q3 16   Q2 16   Q1 16     TOTAL
2015		     Q4 15   Q3 15   Q2 15   Q1 15  

Net earnings

 2,388     800   830   758     2,730     542   791   814   583  

Adjustments to reconcile net earnings to cash flows from operating activities

                                          

Severance, acquisition and other costs

 124     25   57   42     446     152   46   24   224  

Depreciation and amortization

 2,624     867   869   888     3,420     867   860   854   839  

Post-employment benefit plans cost

 225     80   77   68     391     96   96   96   103  

Net interest expense

 655     222   215   218     900     223   225   229   223  

(Gains) losses on investments

 (48 )   (34 ) 2   (16 )   (72 )   1   19   (94 ) 2  

Income taxes

 858     284   315   259     924     188   271   290   175  

Contributions to post-employment benefit plans

 (248 )   (78 ) (80 ) (90 )   (566 )   (317 ) (76 ) (92 ) (81 )

Payments under other post-employment benefit plans

 (55 )   (17 ) (19 ) (19 )   (75 )   (19 ) (18 ) (18 ) (20 )

Severance and other costs paid

 (195 )   (48 ) (61 ) (86 )   (190 )   (44 ) (45 ) (52 ) (49 )

Interest paid

 (661 )   (219 ) (221 ) (221 )   (911 )   (229 ) (225 ) (230 ) (227 )

Income taxes paid (net of refunds)

 (463 )   (123 ) (102 ) (238 )   (672 )   (154 ) (66 ) (119 ) (333 )

Acquisition and other costs paid

 (98 )   (31 ) (39 ) (28 )   (292 )   (159 ) (33 ) (48 ) (52 )

Net change in operating assets and liabilities

 17     215   47   (245 )   241     363   33   187   (342 )

Cash flows from operating activities

 5,123     1,943   1,890   1,290     6,274     1,510   1,878   1,841   1,045  

Capital expenditures

 (2,778 )   (976 ) (950 ) (852 )   (3,626 )   (958 ) (927 ) (914 ) (827 )

Cash dividends paid on preferred shares

 (105 )   (34 ) (35 ) (36 )   (150 )   (37 ) (37 ) (37 ) (39 )

Cash dividends paid by subsidiaries to non-controlling interest

 (35 )   (13 ) (10 ) (12 )   (41 )   (8 ) (26 ) (7 ) -  

Acquisition and other costs paid

 98     31   39   28     292     159   33   48   52  

Voluntary defined benefit pension plan contribution

 -     -   -   -     250     250   -   -   -  

Free cash flow

 2,303     951   934   418     2,999     916   921   931   231  

Business acquisitions

 (246 )   -   (1 ) (245 )   (311 )   (25 ) (2 ) (284 ) -  

Acquisition and other costs paid

 (98 )   (31 ) (39 ) (28 )   (292 )   (159 ) (33 ) (48 ) (52 )

Voluntary defined benefit pension plan contribution

 -     -   -   -     (250 )   (250 ) -   -   -  

Business dispositions

 20     2   2   16     409     -   2   407   -  

Acquisition of spectrum licences

 (1 )   -   (1 ) -     (535 )   (1 ) (5 ) (429 ) (100 )

Loan to related party

 (510 )   (510 ) -   -     -     -   -   -   -  

Other investing activities

 22     1   (14 ) 35     (51 )   (36 ) (13 ) (7 ) 5  

Increase (decrease) in notes payable and bank advances

 902     4   173   725     76     (596 ) 555   (574 ) 691  

Increase (reduction) in securitized trade receivables

 305     305   -   -     10     -   (305 ) 315   -  

Issue of long-term debt

 2,244     1,497   -   747     1,498     996   -   -   502  

Repayment of long-term debt

 (2,392 )   (812 ) (270 ) (1,310 )   (2,084 )   (1,107 ) (108 ) (723 ) (146 )

Issue of common shares

 98     6   19   73     952     888   7   19   38  

Common shares issuance cost

 -     -   -   -     (35 )   (35 ) -   -   -  

Repurchase of shares for settlement of share-based payments

 (94 )   (15 ) (11 ) (68 )   (138 )   (41 ) (11 ) (13 ) (73 )

Cash dividends paid on common shares

 (1,712 )   (594 ) (592 ) (526 )   (2,169 )   (552 ) (551 ) (547 ) (519 )

Other financing activities

 (61 )   (26 ) (8 ) (27 )   (32 )   (7 ) (4 ) (3 ) (18 )

 

(1,523 )   (173 ) (742 ) (608 )   (2,952 )   (925 ) (468 ) (1,887 ) 328  

Net increase (decrease) in cash and cash equivalents

 780     778   192   (190 )   47     (9 ) 453   (956 ) 559  

Cash and cash equivalents at beginning of period

 613     615   423   613     566     622   169   1,125   566  

Cash and cash equivalents at end of period

 1,393     1,393   615   423     613     613   622   169   1,125  

BCE Supplementary Financial Information - Third Quarter 2016 Page 13

Accompanying Notes

(1) We report our results in three segments: Bell Wireless, Bell Wireline and Bell Media. Our reporting structure reflects how we manage our business and how we classify our results for planning and measuring performance.

Throughout this report, we, us, our, the company and BCE mean, as the context may require, either BCE Inc. or, collectively, BCE Inc., Bell Canada, their subsidiaries, joint arrangements and associates.
 
(2) Non-GAAP Financial Measures

Adjusted EBITDA and adjusted EBITDA margin

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

We define adjusted EBITDA as operating revenues less operating costs (including post-employment benefit plans service cost) as shown in BCE’s consolidated income statements. Adjusted EBITDA for BCE’s segments is the same as segment profit as reported in BCE’s consolidated financial statements. We define adjusted EBITDA margin as adjusted EBITDA divided by operating revenues.

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

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

Adjusted net earnings and adjusted earnings per share (EPS)

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

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

We use adjusted net earnings and adjusted EPS and we believe that certain investors and analysts use these measures, among other ones, to assess the performance of our businesses without the effects of severance, acquisition and other costs, net (gains) losses on investments, and early debt redemption costs, 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, as reconciled in this document.
 

BCE Supplementary Financial Information - Third Quarter 2016 Page 14

Accompanying Notes

  Free cash flow

The term free cash flow does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other issuers.

We define free cash flow as cash flows from operating activities, excluding acquisition and other costs paid (which include significant litigation costs) and voluntary pension funding, less capital expenditures, preferred share dividends and dividends paid by subsidiaries to non-controlling interest.

We consider free cash flow to be an important indicator of the financial strength and performance of our businesses because it shows how much cash is available to pay dividends, repay debt and reinvest in our company.

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

The most comparable IFRS financial measure is cash flows from operating activities, as reconciled in this document.

Net debt

The term net debt does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other issuers.

We define net debt as debt due within one year plus long-term debt and 50% of preferred shares less cash and cash equivalents, as shown in BCE’s consolidated statements of financial position. We include 50% of outstanding preferred shares in our net debt as it is consistent with the treatment by certain credit rating agencies.

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

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

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.

BCE Supplementary Financial Information - Third Quarter 2016 Page 15

Accompanying Notes

  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.
 
(3) 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.

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 for the specified period. 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.
 

 

BCE Supplementary Financial Information - Third Quarter 2016 Page 16