Mr. Mirko Bibic reports

BCE REPORTS 2023 Q4 AND FULL-YEAR RESULTS, ANNOUNCES 2024 FINANCIAL TARGETS AND 3.1 per cent ANNUAL DIVIDEND INCREASE TO $3.99 PER SHARE

BCE Inc. has released results for the fourth quarter and full-year 2023, provided financial guidance for 2024, including a 3.1-per-cent (or 12-cent-per-share) increase in the BCE annual common share dividend to $3.99, and planned a work force restructuring initiative, the company's largest in nearly 30 years, reducing approximately 4,800 positions, including 750 contractors, or 9 per cent of all BCE employees.

Highlights:

• All 2023 financial guidance targets achieved;
• 5.3-per-cent consolidated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) growth in Q4 yielded 1.9-percentage-point increase in adjusted EBITDA margin to 39.7 per cent -- best quarterly result since Q1 2022;
• Q4 net earnings of $435-million, down 23.3 per cent, with net earnings attributable to common shareholders of $382-million, down 27.7 per cent, or 42 cents per common share; a 5.7-per-cent increase in adjusted net earnings of $691-million delivered adjusted EPS (earnings per share) of 76 cents, up 7.0 per cent;
• Cash flows from operating activities up 15.4 per cent in Q4 to $2,373-million; free cash flow increased $913-million in Q4 to $1,289-million on lower capital expenditures, timing of cash tax instalments and higher working capital;
• 170,831 total mobile phone and connected device net subscriber activations in Q4 drove 3.9-per-cent wireless service revenue growth and 0.4 per cent higher blended ARPU (average revenue per user);
• 55,591 retail Internet net subscriber activations in Q4 -- second-best Q4 result in nearly two decades -- contributed to 5.4-per-cent residential Internet revenue growth;
• Bell Media adjusted EBITDA up 14.7 per cent in Q4 on lower operating costs, including restructuring initiatives, as total revenue declined 7.5 per cent due to challenging advertising market conditions; digital revenue up 27 per cent as digital platforms and advertising technology drove strong growth;
• Planned minimum $500-million reduction in capital expenditures in 2024 and rollback of fibre network expansion reflect unsupportive federal government policies and CRTC (Canadian Radio-television and Telecommunications Commission) decisions that discourage investment;
• Undertaking largest work force restructuring initiative in nearly 30 years, reducing approximately 4,800 positions, or 9 per cent of all BCE employees, in 2024 and driving in-year cost savings of $150-million to $200-million ($250-million annualized).

"The Bell team has demonstrated strong executional discipline and cost containment this quarter, enabling Bell to deliver solid results in Q4 and throughout 2023," said Mirko Bibic, president and chief executive officer of BCE and Bell Canada.

We continue to see a preference by customers for fibre, contributing to continued strong fibre Internet net subscriber activations and 7.1-per-cent residential Internet revenue growth in 2023. Bell's mobile phone customer base at the end of 2023 was up 3.4 per cent over 2022; and I'm very pleased that we've reduced our share of industry complaints for an eighth consecutive year in the Commission for Complaints for Telecom-television Services (CCTS) 2022-2023 annual report.

"As we close out 2023, our results demonstrate the critical importance of balancing near-term and long-term priorities to deliver for our customers and our shareholders. We took necessary action earlier this year to drive costs out of the business and to align costs to the revenue potential of each business segment. At the same time, we started putting the building blocks in place for our transformation from a traditional telco to a tech services and digital media leader, making some key investments to accelerate this transformation.

"While it's clear that we are continuing to execute with discipline in a competitive marketplace, we need to take additional measures in response to increasingly unsupportive federal government and regulatory decisions, legacy business declines, and a macroeconomic environment with higher interest rates and continued inflation. As our business is hampered by regulatory decisions that discourage investment, we are slowing the pace of our network expansion and capping fibre speeds. We intend to reduce capital expenditures by over $1-billion over the next two years, including a minimum $500-million year-over-year decrease in 2024 alone. In addition, we are undertaking a significant work force restructuring initiative -- our largest in nearly 30 years -- reducing approximately 4,800 positions, or 9 per cent of all BCE employees. I recognize that this decision is difficult for the team members impacted, and I thank each of them for their contributions.

"Today's changes are difficult but necessary to respond to evolving external drivers, accelerate our transformation, and ensure Bell's future health and longevity so that we can continue to advance our purpose to advance how Canadians connect with each other and the world."

Key business developments

Work force restructuring

To position Bell for future success, Bell is taking action to lower its cost structure and align costs to the revenue potential of each business segment. This includes Bell's largest work force restructuring initiative in nearly 30 years, reducing approximately 4,800 positions, or 9 per cent of all BCE employees in 2024, and driving in-year cost savings of $150-million to $200-million ($250-million annualized).

Reducing capital expenditures and fibre expansion

Bell announced its intention to reduce capital expenditures by over $1-billion in 2024 to 2025, including a minimum of $500-million in 2024, and roll back fibre network expansion as a result of federal government policies and the CRTC's wholesale access rate decision that discourages network investment. Bell will also cap fibre speeds at three gigabits per second. In Q4 2023, Bell reduced its capital investment by $105-million more than originally planned as a direct result of this decision.

Channel transformation

Bell announced a partnership with Best Buy Canada to operate 165 The Source consumer electronics stores, rebranded Best Buy Express. Bell will be the exclusive telecommunications provider, selling wireless and wireline (in footprint) services from its Bell, Virgin Plus and Lucky Mobile brands as well as remaining responsible for store operations and labour. Best Buy will assume responsibility for the consumer electronics assortment and procurement as well as branding, marketing and e-commerce. With the strengths of Best Buy's buying power and supply chain, Bell will wind down The Source head office and back-office operations as well as close 107 The Source stores.

Innovative partnerships to deliver for Bell's customers

Bell announced a partnership with global end point security leader SentinelOne to provide extensive data protection services for Bell's enterprise customers -- SentinelOne's first partnership with a major telecommunications company in Canada. Bell also entered into a collaboration with ServiceNow, a digital workflow company, to launch Service Bridge capabilities on the ServiceNow platform, leveraging FX Innovation's deep industry expertise to elevate the end-to-end experience for Bell customers with customized solutions and automation capabilities. In collaboration with Microsoft, Bell expanded its hybrid work solutions for Canadian enterprises with the launch of Bell Operator Connect, pairing Bell's high-quality voice network and Microsoft Teams. Bell is also rolling out Microsoft 365 within its own enterprise IT (information technology) environment. Bell announced a collaboration with Mila Institute in Montreal to study and apply deep learning and AI capabilities on Bell systems to improve business performance and customer experience and accelerate AI innovations with cloud computing.

Champion customer experience

Bell continued to lead national telecom service providers in reducing its share of consumer complaints, according to the 2022-to-2023 annual report from the CCTS. Bell reduced its share of total industry complaints for an eighth consecutive year, decreasing its share of complaints by 6 per cent over the previous year. Bell Fibe TV customers in the Atlantic can now enjoy next-generation capabilities and features, including access to the Google Play app catalogue, cloud PVR (personal video recorder) and unlimited simultaneous streams with the Fibe TV app. Bell reached one million digital repair sessions on its self-serve virtual repair tool and enhanced the tool with new features such as Wi-Fi checkup to help customers simplify the repair process.

5G leadership and the fastest Internet speeds

Bell secured the most 5G+ spectrum nationwide in the federal government's 3,500-megahertz and 3,800-megahertz spectrum auctions, recently securing the acquisition of 939 licences for the 3,800-megahertz spectrum to enhance customers' digital experience nationwide. Bell 5G wireless was ranked Canada's fastest and best 5G network by Global Wireless Solutions for the third consecutive year. GWS also confirmed that Bell 5G+ wireless on the 3,500-megahertz spectrum is the fastest and best in the country. Additionally, Bell pure fibre was ranked Canada's fastest Internet and Wi-Fi for a second time in a row by Ookla in its Q3 to Q4 2023 Speedtest Awards and remains Canada's most awarded Internet service provider.

Delivering the most compelling content

Bell Media announced its intent to divest 45 of its 103 radio stations to seven buyers, subject to CRTC review and other closing conditions. Once these transactions close, it is the company's intention that the divested stations will remain part of iHeartRadio Canada, helping to transform Bell Media's radio operation to an innovative audio business. To reach more audiences, Crave will soon be available on Amazon Prime Video channels in Canada. Two thousand twenty-three was the most-watched year in Crave's streaming history; streams on Crave in Q4 2023 were up 8 per cent year over year, and, in Quebec, it was up 18 per cent year over year. Bell Media's share of Canadian English entertainment specialty channels among ages 25 to 54 was its highest on record, increasing 7 per cent over 2022. CTV Comedy Channel is the No. 1 Canadian English entertainment specialty channel with ages 25 to 54. The 110th Grey Cup was one of the year's biggest television events in Canada for TSN and RDS, attracting an average audience of 3.7 million viewers. TSN and RDS also announced broadcast and media rights agreements for the Professional Women's Hockey League's inaugural season as well as Conmebol Copa America 2024. Bell Media launched its newest campaign, Streets-to-Screens, a multiplatform program that leverages Bell Media's exclusive ad-syncing radio-to-road program where select roadside digital boards synchronize with advertisements on specific radio stations using Bell first party data.

Bell Let's Talk Day

Bell Let's Talk launched its "Let's create real change" campaign, inviting Canadians to take meaningful action in mental health on Bell Let's Talk Day and throughout the year while spotlighting mental health organizations across the country that provide support and services for Canadians experiencing mental health issues.

As part of its continuing commitment to improve access to mental health supports and services in communities across Canada, Bell Let's Talk announced 10 recipients of the Bell Let's Talk Diversity Fund. The Bell Let's Talk Post-Secondary Fund awarded $1-million in grants to 11 Canadian colleges, universities and CEGEPs (colleges of general and professional teaching) to support mental health initiatives, and the 2024 Bell Let's Talk Community Fund is now open for applications.

Bell for Better

Bell and the Toronto Raptors teamed up to support newcomers to Canada, through Bell Inbound Assist, a new program that recognizes and supports community organizations that welcome newcomers to Canada through basketball programming. Three organizations will be selected to receive grants of up to $100,000 in partnership with MLSE Foundation. BCE was ranked the most sustainable communications company in the world in Corporate Knights' Global 100 most sustainable corporations for 2024. Bell Technical Solutions was honoured with an Outstanding Commitment to Employment Equity award in the 2023 Employment Equity Achievement Awards by Employment and Social Development Canada, a department of the government of Canada.

"We had a solid quarter to cap 2023 with 5.3 per cent higher adjusted EBITDA that drove a 1.9-point increase in margin to 39.7 per cent. Residential Internet revenue was up 5.4 per cent, total consumer wireless revenue up 5.5 per cent and digital media revenues up 27 per cent over last year, reflecting continued focused execution on our key priorities and cost discipline on the part of the Bell team," said Curtis Millen, chief financial officer of BCE and Bell Canada.

"BCE is in a good position, having achieved our financial targets for 2023 while having weathered increasing macroeconomic headwinds and an unsupportive public policy environment this past year. Looking ahead, we are increasing BCE's common share dividend by 3.1 per cent for 2024. This will be a transformational year for Bell as we balance growth with financial performance, continue to adapt in the face of external pressures and focus on revenue-generation on our transformation journey to a tech services and digital media leader."

BCE operating revenue in Q4 increased 0.5 per cent over Q4 2022 to $6,473-million, due to 3.6 per cent higher product revenue of $1,125-million, driven by a greater sales mix of higher-value mobile phones and lower year-over-year device discounting during the Black Friday and December holiday sales periods. Service revenue was down 0.1 per cent to $5,348-million as a year-over-year decline at Bell Media was mostly offset by growth at Bell Communication and Technology Services (Bell CTS). For full-year 2023, BCE operating revenue grew 2.1 per cent to $24,673-million with year-over-year increases of 0.9 per cent in service revenue and 9.4 per cent in product revenue.

Net earnings in Q4 decreased 23.3 per cent to $435-million and net earnings attributable to common shareholders totalled $382-million, or 42 cents per share, down 27.7 per cent and 27.6 per cent, respectively. The year-over-year declines were due to higher other expense, which included a $204-million non-cash loss on BCE's share of an obligation to repurchase at fair value the minority interest in one of its joint venture equity investments, higher interest expense, increased depreciation and amortization expense, and higher severance, acquisition and other costs. These factors were partly offset by higher adjusted EBITDA, lower asset impairment charges mainly related to Bell Media's French-language TV properties and broadcast licences, a higher net return on postemployment benefit plans and lower income taxes. For full-year 2023, net earnings decreased 20.5 per cent to $2,327-million and net earnings attributable to common shareholders were $2,076-million, or $2.28 per share, down 23.6 per cent and 23.5 per cent, respectively.

Adjusted net earnings were up 5.7 per cent in Q4 to $691-million, delivering a 7-per-cent increase in adjusted EPS to 76 cents. For full-year 2023, adjusted net earnings were down 4.3 per cent to $2,926-million, resulting in a 4.2-per-cent decrease in adjusted EPS to $3.21.

Adjusted EBITDA was up 5.3 per cent in Q4 to $2,567-million, reflecting increases of 4.8 per cent at Bell CTS and 14.7 per cent at Bell Media. Due to better promotional offer discipline and the flow-through of high-margin service revenue at Bell CTS and a 2.4-per-cent year-over-year improvement in operating costs, driven mainly by lower programming costs at Bell Media, lower storm recovery costs as well as the favourable impact of various cost reduction initiatives and other operating efficiencies across the organization, BCE's consolidated adjusted EBITDA margin increased 1.9 percentage points to 39.7 per cent from 37.8 per cent in Q4 2022. For full-year 2023, adjusted EBITDA grew 2.1 per cent to $10,417-million while BCE's adjusted EBITDA margin remained stable at 42.2 per cent despite 2 per cent higher operating costs.

BCE capital expenditures in Q4 were $1,029-million, down 37.2 per cent from $1,638-million in Q4 last year, corresponding to a capital intensity of 15.9 per cent, compared with 25.4 per cent in Q4 2022. This brought total 2023 capital expenditures to $4,581-million, down from $5,133-million the year before, for a capital intensity of 18.6 per cent, compared with 21.2 per cent in 2022. The year-over-year decrease was due to an unplanned additional $105-million decrease in Q4 as a direct result of the CRTC's decision in November, 2023, to mandate wholesale access to Bell's all-fibre network, in addition to a planned reduction in capital spending on the company's wireless 5G and pure fibre networks, consistent with the company's more modest buildout targets for 2023 compared with 2022.

BCE cash flows from operating activities in Q4 were $2,373-million, up 15.4 per cent from Q4 2022, reflecting lower cash taxes, due mainly to the timing of tax instalment payments, increased cash from working capital and higher adjusted EBITDA, partly offset by higher interest paid and higher severance, acquisition and other costs paid. For full-year 2023, despite higher adjusted EBITDA, BCE cash flows from operating activities totalled $7,946-million, down 5.0 per cent from 2022, due mainly to higher interest paid and lower cash from working capital.

Free cash flow increased $913-million, or 242.8 per cent, in Q4 to $1,289-million from $376-million in Q4 2022, driven by lower capital expenditures and higher cash flows from operating activities excluding acquisition and other costs paid. For full-year 2023, BCE free cash flow grew 2.5 per cent to $3,144-million, up from $3,067-million in 2022.

Common share dividend

BCE's board of directors has declared a quarterly dividend of 99.75 cents per common share, payable on April 15, 2024, to shareholders of record at the close of business on March 15, 2024.

Outlook for 2024

An attached table provides BCE's 2024 financial guidance targets that reflect potential recessionary and competitive pricing pressures as well as the financial impact of BCE's strategic distribution partnership with Best Buy Canada. Directly as a result of federal government policies, BCE plans a significant reduction in 2024 capital expenditures that will lead to a slowdown in the company's pure fibre build and lower spending in highly regulated businesses. BCE expects increased interest expense, higher depreciation and amortization expense, and lower gains on sale of real estate to drive lower adjusted EPS in 2024. For 2024, BCE also expects higher severance payments related to work force restructuring initiatives, higher interest paid and lower cash from working capital to drive lower free cash flow.

Call with financial analysts

BCE will hold a conference call with the financial community to discuss Q4 2023 results and 2024 financial guidance on Thursday, Feb. 8, 2024, at 8 a.m. Eastern Time. Media are welcome to participate on a listen-only basis. To participate, please dial toll-free 1-844-933-2401 or 647-724-5455. A replay will be available until 12 a.m. on March 5, 2024, by dialling 1-877-454-9859 or 647-483-1416 and entering passcode 2327436 followed by the number sign. A live audio webcast of the conference call will be available on BCE's website.

About BCE Inc.

BCE is Canada's largest communications company, providing advanced Bell broadband wireless, Internet, TV, media and business communications services.

Through Bell for Better, the company is investing to create a better today and a better tomorrow by supporting the social and economic prosperity of its communities. This includes the Bell Let's Talk initiative, which promotes Canadian mental health with national awareness and anti-stigma campaigns such as Bell Let's Talk Day and significant Bell financing of community care as well as access, research and workplace initiatives throughout the country.

We seek Safe Harbor.