BCE Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Customer Focus: Self-installed program in Ontario and Quebec successful, with over 1 million self-installs since 2022 and over 90% of new residential customers opting for self-installation. AI-powered tools reduced 1.2 million calls and improved customer satisfaction.
• Fiber and Wireless Networks: Completed acquisition of Ziply Fiber, expanding Bell's fiber footprint by 1.4 million locations. In Canada, 27,000 new FTTH customers added, and wireless saw improved performance with net mobile phone subscribers and reduced postpaid churn.
• Enterprise Growth: Bell Business Markets leveraging AI-powered solutions, with Ateko, cybersecurity, and Bell AI Fabric driving growth. Bell AI Fabric showcases purpose-built AI data centers and partnerships with Cohere.
• Media: Digital momentum continued with Crave's growth and new streaming bundle offers, contributing to 4% revenue increase in Q2.

Segment Performance

• Bell CTS: Internet revenue increased 3% with 27,000 new FTTH customers in Canada. Wireless added 94,479 net mobile phone subscribers in Q2, with postpaid churn improving to 1.06%. Bell Business Markets saw strong revenue growth across core connectivity, Ateko managed services, cybersecurity, and Bell AI Fabric.
• Bell Media: Digital revenue up 9%, making up 43% of total media revenues. Crave saw a 72% increase in direct streaming subscribers, driving the digital pivot.

Guidance

• Consolidated revenue and adjusted EBITDA guidance for 2025 increased to a range of 0% to 2%.
• Adjusted EPS guidance revised to -13% to -10% due to higher depreciation, amortization, and interest expense from the Ziply Fiber acquisition.
• Capital intensity expected to be around 15% in 2025, with free cash flow guidance adjusted to 6% to 11%.
• Ziply Fiber expected to have EBITDA growth exceeding 20% in 2025, outperforming initial investment case.

Risks

• Regulatory risk: Disappointment with federal government's decision on mandatory wholesale access, urging compensation for network builders.
• Macro-economic headwinds: Impact on advertiser demand for Bell Media in the second half of 2025.

Question and Answer

Q: Unpack the guidance a little bit more just in terms of your initial estimates of Ziply, any adjustments to your thoughts and anything outside of Ziply that's included in the revised guidance?

A: Stephanie, on the Ziply side, it continues to outperform our investment case. Revised guidance reflects our current view of the combined company performance, not a straight A plus B.

Q: Your wireless metrics were encouraging this quarter. Could you talk about the market dynamics that drove that for BCE in Q2?

A: Mirko mentioned strong performance due to customer focus, churn reduction, and tiered pricing, leading to improved net mobile phone subscribers and reduced postpaid churn.