BCE reports 2012 second quarter results - Common share dividend increased to $2.27 per year - 2012 earnings guidance increased

BCE reports 2012 second quarter results - Common share dividend increased to $2.27 per year - 2012 earnings guidance increased


-- BCE net earnings attributable to common shareholders up 31.0%
in Q2 to $773 million or $1.00 per share; Adjusted earnings per
share(1) of $1.02, up 18.6%
-- Strong 88.3% growth in free cash flow(2) to $804 million
-- Bell EBITDA(3) up 3.7% on industry-leading Bell Wireless and
Bell Media EBITDA growth of 20.9% and 23.6%, respectively;
consolidated Bell EBITDA margin increases 1.6 percentage points
to 39.5% on 3.1% reduction in total operating costs
-- Bell Wireless postpaid net activations of 102,067 and 4.5%
higher ARPU drive wireless revenue growth of 6.7%; best
wireless EBITDA growth in five years supports service margin
expansion to 44.6%
-- Bell Fibe TV growth accelerating with net activations of 38,477
in Q2; maintained wireline EBITDA margin at approximately 40%
-- Strong year-to-date EBITDA, Adjusted EPS and free cash flow
performance supports early $0.10 per-share dividend increase
and accelerated broadband investment

This news release contains forward-looking statements. For a description
of the related risk factors and assumptions please see the section
entitled "Caution Concerning Forward-Looking Statements" later in this
release.


MONTREAL, Aug. 8, 2012 /PRNewswire/ - BCE Inc. (TSX, NYSE: BCE),
Canada's largest communications company, today reported BCE and Bell
results for the second quarter (Q2) of 2012, announcing both a $0.10
per share increase in its annual common share dividend and increased
earnings guidance for 2012.



BCE reported net earnings attributable to common shareholders of $773
million, up 31.0%, compared to $590 million last year, and adjusted net
earnings attributable to common shareholders of $788 million, an
increase of 18.9% compared to $663 million in Q2 2011. Earnings per
share (EPS) of $1.00 per share and Adjusted EPS of $1.02 per share were
up 31.6% and 18.6%, respectively, compared to $0.76 and $0.86 per share
in the second quarter of 2011.



Revenue grew 6.7% at Bell Wireless and 0.9% at Bell Media this quarter,
and decreased 3.9% at Bell Wireline, resulting in a 0.5% decline in
total Bell revenues. Bell EBITDA was up 3.7% in the quarter on growth
of 20.9% at Bell Wireless and 23.6% at Bell Media alongside a 3.1%
reduction in total operating costs. Bell's strong overall operating
performance in the quarter generated $1.9 billion of cash flows from
operating activities (up 37.7%) and substantially higher free cash flow
of $804 million (up 88.3%).



"The Bell team continues to execute our customer-focused growth strategy
across all services, leveraging our multi-billion-dollar investments in
the latest broadband networks to deliver next-generation mobile, TV and
Internet services and the best content across every screen. Bell is
bringing broadband innovation, expanded choice and enhanced competition
to Canadian communications, and these strong results - including
exceptional wireless performance, continued fast growth in Bell Fibe TV
and industry-leading performance at Bell Media - show it's clearly a
strategy with momentum," said George Cope, President and CEO of BCE and
Bell Canada.



"Bell's strong year-to-date operating and financial performance, and the
positive outlook for the balance of the year, enables the dividend
increase and increased 2012 financial guidance announced today. Also
providing support for the early dividend increase is our pending
acquisition of Astral, which we expect to be accretive to overall
earnings and free cash flow in 2013," said Mr. Cope.



Bell is committed to achieving a clear goal - to be recognized by
customers as Canada's leading communications company - through the
execution of 6 Strategic Imperatives: Invest in Broadband Networks and
Services, Accelerate Wireless, Leverage Wireline Momentum, Expand Media
Leadership, Improve Customer Service, and Achieve a Competitive Cost
Structure.



"Bell enjoyed a robust quarter of financial results, highlighted by
exceptional wireless and media EBITDA growth, margin expansion, and
significant increases in earnings and cash flow," said Siim Vanaselja,
Chief Financial Officer of BCE and Bell Canada. "We accelerated
strategic capital investment to extend our broadband wireless and
wireline footprint in support of Bell's future operating performance,
while remaining committed to a strong balance sheet position to
underpin our dividend growth objective. Our operating performance
through the first half of the year, strong free cash flow trajectory
through 2012, and confidence in our business outlook going forward all
provide us with the financial flexibility to execute our strategy and
achieve our 2012 financial guidance targets."


Common share dividend increase

Today's dividend announcement represents BCE's eighth increase to the
annual common share dividend, representing a 55% overall increase,
since the fourth quarter of 2008. The BCE annual common share dividend
will increase from $2.17 to $2.27 per share effective with BCE's Q3
2012 dividend payable on October 15, 2012 to shareholders of record at
the close of business on September 14, 2012. The increase announced
today positions BCE's dividend payout ratio based on 2012 Adjusted EPS
guidance at approximately the mid-point of its policy of 65% to 75% of
Adjusted EPS. Similarly, BCE's dividend coverage using the mid-point of
2012 free cash flow guidance range yields a comparable dividend payout
ratio. The higher dividend is supported by the increased Adjusted EPS
guidance for 2012 and is readily funded from free cash flow.


Bell and Desjardins expand Bell Business Markets relationship

Bell and Desjardins Group, the leading cooperative financial group in
Canada, renewed their broad-ranging strategic business relationship in
the quarter. Under a new 8-year, $800-million agreement, Bell Business
Markets will provide Desjardins with all its communications network
management services. This includes fully managed broadband fibre
network services to the Desjardins caisse network, and new voice and
data infrastructure to support Desjardins enhanced online and mobile
banking, videoconferencing service, e-learning and more.


Bell and London 2012

Bell is delivering the broadest range of live and on-demand content from
the London 2012 Games across its world-leading broadband networks to
smartphones, tablets, TVs and computer screens, getting Canadians
closer to the Games than ever before. During the London 2012 Olympic
Games, Bell Media is offering more than 5,500 hours of TV and digital
coverage. To learn more about Bell's London 2012 programming, please
visit Bell.ca/London2012. As announced at the Games, Bell has extended its support for Canada's
athletes for an additional four years with a new sponsorship of the
Canadian Olympic Committee, encompassing communications services for
athletes and new COC mental health programs in cooperation with Bell
Let's Talk.


Astral acquisition to boost Canadian broadcasting

In March, BCE announced that it would acquire Montréal-based Astral
Media Inc. and its leading specialty and pay television channels, radio
stations, digital media properties, and national out-of-home
advertising platforms. On July 10, BCE announced its proposal to the
Canadian Radio-television and Telecommunications Commission (CRTC) to
contribute tangible benefits valued at $200 million in support of
Canada's broadcasting industry as part of the Astral acquisition. BCE
is also proposing to sell 10 radio stations in various markets to meet
the CRTC's Radio Common Ownership Policy. The transaction is expected
to close in the fourth quarter of 2012, subject to regulatory
approvals.


Maple Leaf Sports and Entertainment (MLSE) transaction

The acquisition by Bell of a portion of Ontario Teachers' Pension Plan
Board's ownership interest in MLSE, announced in December 2011, is
expected to be completed in the third quarter of 2012 subject to CRTC
approval. Bell's financial commitment of $398 million, post the
completion of a leveraged capitalization of MLSE, represents a 28%
equity interest in MLSE. Through a co-investment arrangement with Bell,
the BCE Master Trust Fund, an independent trust that holds and manages
pension fund investments serving the pension obligations of BCE Group
pension plans, will contribute $135 million toward the MLSE
acquisition. Post-closing, Bell and the BCE Master Trust Fund will own
an aggregate 37.5% interest in MLSE, equal to that of Rogers
Communications Inc. The remaining 25% interest in MLSE will be owned by
Kilmer Sports Inc. The acquisition secures on a long-term basis access
to TV, mobile, digital online and radio broadcast rights for both Bell
and Rogers to MLSE's sports teams.


Investment in Q9 Networks

On June 2, 2012, an investor group comprised of BCE, Ontario Teachers'
Pension Plan Board, Providence Equity Partners and Madison Dearborn
Partners announced a planned $1.1 billion acquisition of Q9 Networks,
Canada's leading provider of outsourced data centre solutions. BCE will
contribute 30%, or $180 million, of the equity funding while Teachers',
Providence and Madison Dearborn will contribute the remaining 70%, or
$420 million. New debt financing by Q9 will fund the balance of the
acquisition. Bell looks forward to offering its national business
customer base access to Q9's hosting and co-location services while
delivering Bell's broadband network solutions to Q9's extensive client
roster. The transaction is expected to close before the end of 2012
subject to regulatory approval.


$3 billion Medium Term Notes (MTN) program

Bell announced on June 13, 2012 the reinstatement of its MTN program,
enabling it to offer up to $3 billion of MTN Debentures from time to
time until September 2013. Following this, Bell proceeded with a public
offering of $1 billion Series M-25 MTN Debentures carrying an annual
interest rate coupon of 3.35%, Bell's lowest financing rate in 65
years. The net proceeds of the offering are to be used for general
corporate purposes, including the repayment of outstanding commercial
paper, and funding a portion of the cost of BCE's acquisition of
Astral.


Wi-Fi network footprint expansion

In July, Tim Hortons announced a partnership with Bell Mobility to
provide free wireless network access in more than 2,000 of its
locations across Canada. The largest quick service restaurant chain in
Canada, Tim Hortons chose Bell after a rigorous six-month testing
process with multiple service providers. With national partners
including Indigo, McDonalds and Tim Hortons, Bell operates the largest
Wi-Fi network in Canada.


Bell Q2 operational performance

Bell's operating revenues were $4,340 million in Q2 2012 compared to
$4,362 million or 0.5% lower than in Q2 2011, as increased revenues
from Bell Wireless and Bell Media were offset by declines in local and
access, long distance and equipment and other revenues. Bell's EBITDA
grew 3.7% this quarter to $1,716 million on robust performance by Bell
Wireless and Bell Media.



Bell Wireless EBITDA in Q2 2012 grew 20.9% to $556 million - our best
result since the first quarter of 2007 - and service margin expanded to
44.6% from 39.2% last year even as we continued to spend considerably
on postpaid customer acquisition and customer upgrades to higher-end
smartphones, reflecting solid wireless revenue growth of 6.7% to $1,361
million. Postpaid net activations increased 8.2% to 102,067, while
postpaid customer churn rate improved to 1.3%. Smartphone users
represented 55% of postpaid subscribers up from 38% a year earlier.
This drove significantly higher wireless data usage year over year with
services like Bell Mobile TV, which contributed to strong mobile data
revenue growth of 31.1% and blended ARPU growth of 4.5%. Blended ARPU
was $55.37 per month in Q2 2012, up from $52.99 per month in Q2 2011.



Bell Wireline revenue totalled $2,528 million in the quarter, down 3.9%
from Q2 2011, as a result of the continued decline in traditional voice
and data services and ongoing promotional discounting and aggressive
competitive pricing on residential service bundles. TV revenue growth
driven by steadily increasing Fibe TV penetration, higher IP broadband
connectivity revenues, and increased data product sales to business
customers moderated this decline. Bell Fibe TV added 38,477 net new
subscribers, up from 14,367 in Q2 2011, representing a 168% increase in
total TV net activations year over year. At the end of Q2 2012, Bell's
IPTV footprint encompassed more than 2.4 million households, up from
approximately 1.2 million households at the end of Q2 2011. Although
Bell Wireline EBITDA decreased 5.9% this quarter to $1,008 million due
to lower revenues, margins remained relatively stable at 39.9% compared
to 40.7% in Q2 2011, reflecting a 2.5% improvement in operating costs.



Bell Media reported market-leading financial results this quarter. Bell
Media revenue was up 0.9% to $534 million in Q2 2012, even with
continued softness in advertising markets across Bell Media's
television, radio and digital media properties, due to market-based
rates charged to broadcast distributors through renegotiated agreements
for certain Bell Media specialty sports and non-sports TV services.
Bell Media EBITDA increased 23.6% to $152 million, driven by solid
overall revenue growth and a 5.9% reduction in operating expenses.



Bell invested $776 million in new capital this quarter, a $131 million
increase compared to Q2 2011, to support its sustained and rapid
broadband network infrastructure development. These investments support
the deployment of broadband fibre to residential homes and businesses
in Québec and Ontario and enhancements to Bell's wireline broadband
network to support the roll-out of Fibe TV and Fibe Internet. Capital
investments also increased speed and capacity in our IP backbone
network infrastructure, including increased data hosting capabilities,
and expanded Bell's 4G LTE mobile network and the overall wireless
capacity needed to support growing mobile data consumption.


BCE results

BCE's operating revenue was $4,923 million in the second quarter of
2012, down 0.6% from $4,955 million in the second quarter of 2011, due
to slightly lower revenues at both Bell and Bell Aliant. EBITDA grew
2.8% this quarter to $2,041 million, reflecting higher EBITDA at Bell
driven by the strong contributions of Bell Wireless and Bell Media,
moderated by a year-over-year decrease at Bell Aliant.



BCE's cash flows from operating activities were $1,902 million in Q2
2012, compared to $1,381 million in the same period last year due to
higher EBITDA and positive changes in working capital due, in part, to
the delay in accounts receivable cash collections in Q2 2011 resulting
from the Canada Post strike. Free cash flow available to BCE's common
shareholders increased 88.3% to $804 million in Q2 2012. The
year-over-year improvement was attributable primarily to higher cash
flows from operating activities of $521 million, partly offset by
higher capital expenditures in the quarter as Bell continued the rapid
deployment of new broadband network infrastructure.



BCE's net earnings attributable to common shareholders increased 31.0%
in the second quarter of 2012 to $773 million, or $1.00 per share,
compared to $590 million, or $0.76 per share, in the same quarter last
year. The year-over-year increase in earnings was due primarily to
higher EBITDA, the favourable resolution of various tax matters, and a
$164 million non-recurring charge in Q2 2011 for the CRTC tangible
benefits obligation incurred on the CTV acquisition.



BCE's Adjusted EPS was $1.02 per common share in Q2 2012, compared to
$0.86 per common share in the previous year. The 18.6% increase
reflected higher EBITDA and higher favourable year-over-year resolution
of various tax matters.


Financial Highlights





($ millions except per share amounts) Q2 2012 Q2 2011 % change
(unaudited)

Bell (i)

Operating Revenues 4,340 4,362 (0.5%)

EBITDA 1,716 1,654 3.7%

BCE

Operating Revenues 4,923 4,955 (0.6%)

EBITDA 2,041 1,986 2.8%

Net Earnings Attributable to Common 773 590 31.0%
Shareholders

EPS 1.00 0.76 31.6%

Adjusted EPS 1.02 0.86 18.6%

Cash flows from operating activities 1,902 1,381 37.7%

Free Cash Flow 804 427 88.3%




(i)  Bell includes the Bell Wireless, Bell Wireline and Bell Media
segments.


Bell Wireless

Bell Wireless operating performance continued on a strong upward
trajectory in the second quarter of 2012 with solid and profitable
postpaid subscriber growth, higher data usage, and higher blended ARPU,
which translated into the best wireless EBITDA performance since Q1
2007.



-- Bell Wireless operating revenues increased 6.7% in the second
quarter of 2012 to $1,361 million. Service revenue was up 6.3%
to $1,248 million as a result of a larger postpaid subscriber
base and growth in wireless data usage. Product revenue
increased by 7.6% in the quarter to $99 million, as a result of
higher percentage of smartphones in the sales mix.
-- Blended ARPU was $55.37 per month in Q2 2012, up 4.5% from
$52.99 per month in Q2 2011. Growth in blended ARPU was
primarily the result of increasing data usage as the percentage
of higher-value postpaid customers using smartphones increased.
This was partly offset by declining voice ARPU.
-- Smartphones subscribers increased significantly and represented
55% of the total postpaid base at the end of Q2 2012, compared
to 38% one year earlier.
-- Bell Wireless EBITDA reached $556 million in the second
quarter, up 20.9%. The increase is mainly attributable to
higher wireless operating revenues and lower wireless operating
costs, which improved 1.3% over last year.
-- EBITDA margin as a percentage of wireless service revenue
increased to 44.6% in Q2 2012, from 39.2% in Q2 2011, on solid
service revenue growth.
-- Cost of acquisition (COA) per gross activation decreased 4.8%
to $381 from $400 in Q2 2011 - despite a higher proportion of
postpaid and smartphone customer activations this quarter
compared to Q2 last year - due to disciplined device pricing
and lower spending on advertising and sales promotions.
-- Cost of retention increased to 9.8% of wireless service
revenues from 9.1% in Q2 2011, reflecting a higher mix of
smartphone customer upgrades.
-- Postpaid gross activations totalled 327,335 this quarter
compared to 341,645 in the second quarter of 2011, increasing
our mix of higher-value customers as we continued to focus on
profitable postpaid subscriber growth.
-- Prepaid gross activations decreased to 100,930 in Q2 2012 from
133,255 in Q2 2011, due primarily to aggressive acquisition
offers from our competitors targeted at lower-ARPU subscribers.
-- Blended churn rate improved to 1.7% in the quarter compared to
2.0% in Q2 2011 due to lower postpaid churn. Postpaid churn
decreased to 1.3% this quarter from 1.5%. Prepaid churn
remained stable at 3.7%.
-- Postpaid net activations increased 8.2% this quarter to 102,067
from 94,309 in Q2 2011, due to lower customer churn year over
year.
-- Prepaid net customer losses decreased to 54,859 in Q2 2012 from
57,802 in Q2 2011, mainly as a result of fewer customer
deactivations.
-- The Bell Wireless client base reached 7,453,363 at the end of
Q2 2012, a 2.3% increase over last year.
-- Bell now offers the largest next-generation 4G LTE network in
Canada, covering more than 49% of Canadians across 23 markets
in 7 provinces and territories. Bell continued to expand its 4G
HSPA+ and enhanced 4G HSPA+ DC (Dual Cell) networks, which now
serve more than 97% and more than 80% of the Canadian
population, respectively. Bell introduced these 4G services to
markets across Manitoba on August 1, supported by 4 new Bell
stores, The Source and other partner retail locations.
-- Bell Mobility continues to introduce the industry's leading
superphones, including the 4G LTE Samsung Galaxy S III and HTC
One S in Q2.

Bell Wireline

While Bell Residential services experienced strong customer growth in
Fibe TV, Bell Wireline's overall performance in the quarter continued
to be impacted by declines in traditional voice and data services, as
well as richer upfront promotional discounts and retention credits on
residential service bundles driven by aggressive competitive pricing.
This contributed to lower wireline revenues and EBITDA this quarter,
although margins were maintained around the 40% level given continued
rigorous cost control in the quarter.



-- Bell Wireline revenues totalled $2,528 million in this quarter,
down 3.9% from Q2 2011. The decline reflects a decrease in
local and access, long distance and equipment and other
revenues, partly offset by slightly higher year-over-year data
revenues.
-- Data revenues in Q2 2012 increased 0.1% to $1,395 million.
-- Local and access revenues declined 8.4% in Q2 2012 to $665
million. Total NAS at the end of Q2 was 5,885,581, a 6.8%
decline year over year. This is attributable to competition and
a reduction in access lines and digital circuits, as customers
continue to adopt wireless and IP-based technologies.
-- Long distance revenues declined 9.3% to $206 million this
quarter.
-- Equipment and other revenue decreased 11.1% this quarter to
$185 million.
-- Bell Wireline EBITDA was $1,008 million, down 5.9% from the
second quarter of 2011 due to lower operating revenues, partly
offset by lower operating costs which improved 2.5% in Q2 2012.
EBITDA margin was 39.9% this quarter, compared to 40.7% in Q2
2011.
-- TV net activations totalled 16,758 in Q2 2012, up from 6,292 in
Q2 2011. Bell Fibe TV added 38,477 net new customers this
quarter, reflecting increasing customer demand as we further
expand our Fibe TV footprint and enhance our service bundle
offers in many urban markets to include Fibe TV, Fibe Internet
services and Bell Home Phone. This was moderated by lower
satellite TV net activations this quarter, due to roll-outs of
IPTV service by other competing service providers, aggressive
customer conversion offers from cable competitors, and Bell
customer migrations to Fibe TV.
-- Bell TV subscribers totalled 2,128,433 at the end of Q2 2012,
representing a 3.8% increase since the end of the second
quarter of 2011.
-- The Bell high-speed Internet subscriber base remained
essentially unchanged over Q1 2012 with a net customer loss of
664 this quarter. This compared to net activations in Q2 2011
of 1,275.
-- NAS net losses totalled 119,545 in Q2 2012, compared to net
losses of 100,497 in Q2 2011. Note that the results for Q2 2011
reflected the favourable impact of wholesale residential and
business customer migrations from a cable competitor via a
third-party reseller of telecommunications services, which
began in Q4 2010 and were completed substantially in Q2 2011.
Excluding this impact, total NAS net losses improved 9.7% to
113,597 in Q2 2012 from 125,840 in the second quarter of last
year. This represented 17.1% fewer residential NAS line losses,
offset by 17.3% more business access line losses year over
year. The improvement in residential NAS line losses reflects
the positive pull-through effect of service bundle offers that
include Fibe TV and Fibe Internet, competitive retention offers
and customer winbacks; the increase in business access line
losses was attributable to higher wholesale customer
deactivations.

Bell Media

Bell Media reported market-leading financial results this quarter,
highlighted by the highest revenue and EBITDA growth rates, as well as
strong TV audience ratings and viewership levels.



-- Bell Media's operating revenues were $534 million this quarter,
up 0.9%, due to higher subscriber fee revenue driven primarily
by market-based rates charged to broadcast distributors through
renegotiated agreements for certain Bell Media specialty sports
and non-sports TV services. Lower year-over-year advertising
revenues, due to continued softness in advertising markets
across most industry sectors, largely offset this improvement.
-- Bell Media EBITDA increased 23.6% to $152 million, reflecting
the combined impact of a 5.9% reduction in operating expenses
and revenue growth.
-- Bell Media secured a strong line-up of new programs for its
conventional TV fall and mid-season schedules on its CTV and
CTV Two networks at the annual Los Angeles programming
screenings in May.
-- During the quarter, Bell Media maintained high audience levels
across its conventional and specialty TV channels. CTV won the
Spring season in total viewers and in all key advertising
demographics, delivering 12 of the top 20 programs nationally
among all viewers.
-- TSN and TSN2 viewership increased, year over year, due to
larger audiences for the Euro 2012 Football Championships.
-- Bell Media websites streamed more than 450 million video views
this quarter, supported by the launch of a new
CTV.ca homepage in June 2012.
The site welcomed 14.9 million unique visitors on average each
month, serving up 22 million hours of video and a total of 1.7
billion page views.
-- MuchMusic had its best year ever on social media for the 2012
MMVAs. Twitter mentions roughly doubled over 2011, MMVA trended
in Canada and worldwide during the broadcast, and Facebook
likes increased by 23%
-- CTV News including CTV Two, CP24 and W5, along with several
Bell Media radio stations, won numerous awards at the recent
Radio Television Digital News Association (RTDNA) Awards,
recognizing Canada's best programs, stations, and electronic
newsgathering organizations. Highlights include awards naming
CTV National News with Lisa LaFlamme as the Best Network
Newscast; CTV Barrie's (CTV Two) CTV News at Six repeat win for
Best Newscast, medium market; CP24's prize for Best Spot News;
W5's award for In-Depth/Investigative reporting; and CTV
Edmonton for its market coverage of the Slave Lake disaster.
-- During the London 2012 Olympics Games, Bell Media is offering
more than 5,500 hours of coverage on TV and digital.

Bell Aliant Regional Communications

Bell Aliant's revenues decreased 0.7% to $687 million in the second
quarter of 2012. The continued decline of Bell Aliant's legacy voice
business was offset partly by higher revenues from growth in Internet,
data, TV and wireless, as well as higher equipment and other sales.
Bell Aliant's EBITDA decreased by 2.1% to $325 million, due to lower
operating revenues and higher operating costs.


Common Share Dividend

Consistent with today's announcement of an increase in BCE's annual
common share dividend from $2.17 to $2.27 per share effective with the
payment for Q3 2012, BCE's Board of Directors declared a quarterly
dividend of $0.5675 per common share, payable on October 15, 2012 to
shareholders of record at the close of business on September 14, 2012.


Outlook

Based on the higher-than-expected level of tax adjustments realized in
the second quarter of 2012 and our latest operating outlook for the
balance of the year, BCE has increased its 2012 financial guidance
range for Adjusted EPS, while maintaining its guidance targets for Bell
revenue and EBITDA growth, capital intensity, and free cash flow
generation.



Bell's EBITDA growth is tracking to the higher end of the 2% to 4%
guidance range, driven by strong year-to-date wireless operating
metrics, the full flow-through of specialty channel rate increases at
Bell Media in the second half of the year following the finalization of
rate renewal agreements with all broadcast distributors, and ongoing
operating cost reductions. As a result of weaker wireline revenue
performance in the first half of the year due to a higher
year-over-year voice revenue decline, we expect total Bell revenue
growth for full-year 2012 to be at the lower end of the 3% to 5%
guidance range. As a result of a planned increase in capital spending
in the second half of 2012 compared to 2011, to accelerate the reach of
Bell Fibe TV and broadband fibre, Bell's overall capital intensity is
expected to total approximately 16% of revenues. Despite higher
expected capital expenditures, there is no change to free cash flow
guidance for 2012 given our strong year-to-date generation of cash from
operations and continued cash flow trajectory projected through to the
end of 2012.



BCE's guidance for 2012, as provided on February 9, 2012, and its
updated guidance are as follows:








2012 Guidance February 9 August 8
Guidance Guidance

Bell(i)

Revenue Growth 3% - 5% Lower end

EBITDA Growth 2% - 4% Higher end

Capital Intensity <=16% ~16%

BCE

Adjusted EPS (ii) $3.13 - $3.18 $3.15 - $3.20

Free Cash Flow (iii) $2.35B - $2.5B No change

Annual common dividend per share $2.17 $2.27

Dividend payout ratio (iv)

- Adjusted EPS approx. 69% No change

- Free cash flow approx. 69% No change







(i) Bell's 2012 financial guidance for revenue, EBITDA and capital
intensity is exclusive of Bell Aliant.

(ii) EPS before severance, acquisition and other costs and net
gains/losses on investments.

(iii) Free cash flow before common share dividends and including
dividends from Bell Aliant.

(iv) Calculated using the mid-point of BCE's 2012 Adjusted EPS and
free cash flow guidance ranges.




 


Call with Financial Analysts

BCE will hold a conference call for financial analysts to discuss its
second quarter results on Wednesday, August 8 at 8:00 a.m. (Eastern).
Media are welcome to participate on a listen-only basis. To
participate, please dial toll-free 1-800-952-6845 or 416-695-7848. A
replay will be available for one week by dialing 1-800-408-3053 or
905-694-9451 and entering pass code 4187858#.



There will also be a live audio webcast of the call available on BCE's
website at: http://bce.ca/investors/investorevents/all/show/bce-q2-2012-results-conference-call.The mp3 file will be available for download on this page later in the
day.


Notes

The information contained in this news release is unaudited.






(1) The terms Adjusted net earnings and Adjusted EPS do not have any
standardized meaning according to IFRS. They are therefore unlikely
to be comparable to similar measures presented by other companies.

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

We use Adjusted net earnings and Adjusted EPS, among other
measures, to assess the performance of our businesses without the
effects of severance, acquisition and other costs, and net (gains)
losses on investments, 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. The following table is
a reconciliation of net earnings attributable to common
shareholders and EPS to Adjusted net earnings on a consolidated
basis and per BCE common share (Adjusted EPS), respectively.







($ millions except per share amounts)

Q2 2012 Q2 2011

PER PER
TOTAL SHARE TOTAL SHARE

Net earnings attributable to common
shareholders 773 1.00 590 0.76

Severance, acquisition and other costs 15 0.02 162 0.22

Net gains on investments - - (89) (0.12)

Adjusted net earnings 788 1.02 663 0.86







(2) The term free cash flow does not have any standardized meaning
according to IFRS. It is therefore unlikely to be comparable to
similar measures presented by other companies.

We define free cash flow as cash flows from operating activities,
excluding acquisition costs paid, and dividends/distributions
received from Bell Aliant less capital expenditures, preferred
share dividends, dividends/distributions paid by subsidiaries to
non-controlling interest and Bell Aliant free cash flow.

We consider free cash flow to be an important indicator of the
financial strength and performance of our business because it shows
how much cash is available to repay debt and reinvest in our
company. We present free cash flow consistently from period to
period, which allows us to compare our financial performance on a
consistent basis.

We believe that certain investors and analysts use free cash flow
to value a business and its underlying assets.

The most comparable IFRS financial measure is cash flows from
operating activities. The following table is a reconciliation of
cash flows from operating activities to free cash flow on a
consolidated basis.







($ millions)

Q2 2012 Q2 2011

Cash flows from operating activities 1,902 1,381

Bell Aliant dividend distributions to BCE 47 47

Capital expenditures (952) (800)

Cash dividends paid on preferred shares (34) (28)

Cash dividends/distribution paid by subsidiaries to (91) (77)
non-controlling interest

Acquisition costs paid 32 31

Bell Aliant free cash flow (100) (127)

Free cash flow 804 427







(3) The term EBITDA does not have any standardized meaning under IFRS.
Therefore, it is unlikely to be comparable to similar measures
presented by other companies. We define EBITDA as operating
revenues less operating costs, as shown in BCE's consolidated
income statements

EBITDA for BCE's segments is the same as segment profit as reported
in Note 3 to BCE's Q2 2012 consolidated financial statements.

We use EBITDA to evaluate the performance of our businesses as it
reflects their ongoing profitability. We believe that certain
investors and analysts use 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.
EBITDA also is one component in the determination of short-term
incentive compensation for all management employees. EBITDA has no
directly comparable IFRS financial measure. Alternatively, the
following table provides a reconciliation of net earnings to
EBITDA.







($ millions)

Q2 2012 Q2 2011

Net earnings 879 683

Severance, acquisition and other costs 20 219

Depreciation 664 638

Amortization 178 183

Finance costs

Interest expense 206 226

Interest on employee benefits obligations 242 247

Expected return on pension plan assets (268) (259)

Other expense (53) (145)

Income taxes 173 194

EBITDA 2,041 1,986





Caution Concerning Forward-Looking Statements

Certain statements made in this news release, including, but not limited
to, statements relating to our 2012 financial guidance (including
revenues, EBITDA, capital intensity, Adjusted EPS, and free cash flow),
our business outlook, objectives, plans and strategic priorities, BCE
Inc.'s (BCE) dividend policy and 2012 annualized common share dividendand targeted dividend payout ratios, the expected timing and completion
of BCE's proposed acquisitions of Astral Media Inc. (Astral) and of an
interest in Maple Leaf Sports & Entertainment Ltd (MLSE) and in Q9
Networks Inc. (Q9), and the contractual relationships expected to exist
with Q9 post-closing, the expectation that BCE's acquisition of Astral
will be accretive to overall earnings and free cash flow, our 4G LTE
wireless and IPTV network and broadband fibre deployment plans, and
other statements that are not historical facts, are forward-looking.
Forward-looking statements may include words such as aim, anticipate, assumption, believe, could, expect, goal, guidance,
intend, may, objective, outlook, plan, project, seek, should, strategy,
strive, target and will. All such forward-looking statements are made pursuant to the "safe
harbour" provisions of applicable Canadian securities laws and of the
United States Private Securities Litigation Reform Act of 1995.



Forward-looking statements, by their very nature, are subject to
inherent risks and uncertainties and are based on several assumptions,
both general and specific, which give rise to the possibility that
actual results or events could differ materially from our expectations
expressed in or implied by such forward-looking statements. As a
result, we cannot guarantee that any forward-looking statement will
materialize and you are cautioned not to place undue reliance on these
forward-looking statements. The forward-looking statements contained in
this news release describe our expectations at August 8, 2012 and,
accordingly, are subject to change after such date. Except as may be
required by Canadian securities laws, we do not undertake any
obligation to update or revise any forward-looking statements contained
in this news release, whether as a result of new information, future
events or otherwise. Except as otherwise indicated by BCE,
forward-looking statements do not reflect the potential impact of any
nonrecurring or other special items or of any dispositions,
monetizations, mergers, acquisitions, other business combinations or
other transactions that may be announced or that may occur after August
8, 2012. The financial impact of these transactions and nonrecurring
and other special items can be complex and depends on the facts
particular to each of them. We therefore cannot describe the expected
impact in a meaningful way or in the same way we present known risks
affecting our business. Forward-looking statements are presented for
the purpose of providing information about management's current
expectations and plans relating, in particular, to 2012, and allowing
investors and others to obtain a better understanding of our
anticipated operating environment. Readers are cautioned that such
information may not be appropriate for other purposes.


Material Assumptions

A number of economic, market, operational and financial assumptions were
made by BCE in preparing its forward-looking statements for 2012
contained in this news release, including, but not limited to:


Canadian Economic and Market Assumptions


-- Growth in the Canadian economy of 2.1% in 2012 based on the
Bank of Canada's most recent estimate, a 30 basis point
decrease compared with an earlier estimate of 2.4%;
-- continued weak product sales, reflecting deferred business
customer spending given the slow pace of economic growth;
-- a continued soft advertising market for Bell Media;
-- an ongoing intense level of wireline competition in both
consumer and business markets;
-- higher wireline replacement, due primarily to increasing
wireless and Internet-based technological substitution;
-- wireless industry penetration gain of 4 to 5 basis points in
2012 driven, in particular, by increased competition, the
accelerating adoption of smartphones, tablets and data
applications, as well as by the introduction of more LTE
devices.

Operational Assumptions Concerning Bell Wireline (excluding Bell Aliant)


-- Stabilizing residential NAS line erosion rate as we leverage
our broadband investment in IPTV to drive three-product
household penetration, increase our MDU market share, and
generate higher pull-through attach rates for our residential
Internet and home phone services;
-- in particular, targeted retention and service bundle offers,
customer win backs and better service execution to contribute
to the improvement in residential NAS line losses year over
year, subject to the risk of more aggressive service bundle
offers from our cable TV competitors and marketing actions from
the newer wireless entrants which could lead to higher
residential NAS line losses;
-- increased subscriber acquisition at Bell TV to be driven by
increased customer adoption of Fibe TV, and our ability to seek
greater penetration within the MDU market, capitalize on our
extensive retail distribution network, which includes The
Source, and leverage our market leadership position in high
definition (HD) programming;
-- improved subscriber acquisition at Bell Internet to be driven
by pull-through from Fibe TV and increased adoption of Fibe
Internet packages as we leverage our expanding broadband fibre
network to offer higher-speed service to customers in more
areas;
-- increased business customer spending, new business formation
and higher demand for connectivity and information and
communications technology (ICT) services, as the economy
strengthens and employment rates improve, to result in a
gradual improvement in the performance of our Business Markets
unit, subject to the risk of business customers adopting more
conservative strategies which could result in lower capital
spending requirements, deferral of ICT projects and increased
NAS erosion;
-- cost savings and labour efficiency gains to be achieved from a
reduced management workforce, lower corporate support group
costs, renegotiated contracts with our vendors and outsource
suppliers, client care and field service productivity
improvements, managing content costs and reducing traffic that
is not on our own network;
-- continued customer migration to IP-based systems and
competitive re-price pressures in our business and wholesale
markets;
-- increasing EBITDA contribution from growth services;
-- approximately 3.3 million Bell Fibe TV-ready households by the
end of 2012.

Operational Assumptions Concerning Bell Wireless (excluding Bell Aliant)


-- Bell Wireless to benefit from the flow-through of significant
investments made in 2011 in customer acquisition and retention,
along with continued acceleration in smartphone activations and
data usage;
-- incumbents and newer wireless entrants to continue aggressive
competition in 2012 and newer wireless entrants to continue
enhancing the breadth and reach of their networks, improving
their distribution reach and expanding their device portfolios;
-- wireless revenue growth to be underpinned by ARPU driven by a
higher mix of smartphone and higher-value postpaid customers,
increased distribution in western Canada, new services, and
continued disciplined price management;
-- Bell Wireless to benefit from ongoing technological
improvements by manufacturers in our handset and device lineup
and from faster data speeds that are allowing our clients to
optimize the use of our services;
-- Bell Wireless to maintain a reasonable market share of the
incumbent wireless postpaid market;
-- higher subscriber acquisition and customer retention costs, as
well as the continued deployment of our wireless LTE network in
urban markets while continuing to leverage our wireless
high-speed packet access plus (HSPA+) network.

Operational Assumptions Concerning Bell Media


-- Building and maintaining strategic supply arrangements for
content on four screens, successfully acquiring high-rated
programming and differentiated content to execute on Bell's
multi-screen content strategy, producing and commissioning
high-quality Canadian content, and producing market-leading
news;
-- revenue growth in our sports broadcast operations to be
generated primarily by increased subscription revenue;
-- increased costs to secure content in our sports broadcast
operations as we face greater competition from both new and
established entrants, and as market rates for specialty content
generally increase;
-- investment in programming and marketing in combination with
ongoing investment in high definition services;
-- maintaining our favourable market position in our radio
operations by leveraging strategic investments made in 2011;
-- the achievement of productivity gains and other operating
efficiencies related to Bell Media integration synergies.

Financial Assumptions Concerning Bell (excluding Bell Aliant) and BCE


-- Bell's total pension expense to be approximately $90 million,
based on an estimated accounting discount rate of 5.1% and an
expected return on plan assets of 6.75%, comprised of an
estimated above EBITDA current service pension cost of
approximately $190 million and an estimated below EBITDA net
pension finance return of approximately $100 million;
-- Bell's total pension plan cash funding to be approximately $375
million;
-- Bell's cash taxes to be approximately $300 million;
-- net interest paid to be approximately $675 million;
-- BCE's total pension expense to be approximately $150 million,
including approximately $60 million for Bell Aliant, comprised
of an estimated above EBITDA current service pension cost of
approximately $250 million and an estimated below EBITDA net
pension finance return of approximately $100 million;
-- depreciation and amortization expense approximately $125
million higher compared to 2011;
-- severance, acquisition costs and other of approximately $100
million;
-- an effective tax rate of approximately 22%;
-- tax adjustments (per share) of $0.18; and
-- an annual common share dividend of $2.27 per share.


The foregoing assumptions, although considered reasonable by BCE on
August 8, 2012, may prove to be inaccurate. Accordingly, our actual
results could differ materially from our expectations as set forth in
this news release.


Material Risks

Important risk factors that could cause our assumptions and estimates to
be inaccurate and actual results or events to differ materially from
those expressed in or implied by our forward looking statements,
including our 2012 financial guidance, are listed below. The
realization of our forward-looking statements, including our ability to
meet our 2012 financial guidance, essentially depends on our business
performance which, in turn, is subject to many risks. Accordingly,
readers are cautioned that any of the following risks could have a
material adverse effect on our forward-looking statements. These risks
include, but are not limited to:



-- the intensity of competitive activity, including the increase
in wireless competitive activity resulting from new wireless
entrants and their ability to expand services, and the
resulting impact on our ability to retain existing customers
and attract new ones, as well as on our pricing strategies,
ARPU and financial results;
-- the level of technological substitution contributing to reduced
utilization of traditional wireline voice services and the
increasing number of households that use only wireless
telephone services;
-- the increased adoption by customers of alternative TV services;
-- variability in subscriber acquisition and retention costs based
on subscriber acquisitions, retention volumes, smartphone sales
and subsidy levels;
-- regulatory initiatives or proceedings,litigation, changes in
laws or regulations and tax matters;
-- general economic and financial market conditions, the level of
consumer confidence and spending, and the demand for, and
prices of, our products and services;
-- our ability to implement our strategies and plans in order to
produce the expected benefits, including our ability to
continue to implement our cost reduction initiatives and
contain capital intensity while seeking to improve customer
service;
-- our ability to anticipate and respond to technological change,
upgrade our networks and rapidly offer new products and
services;
-- our failure to maintain network operating performance including
as a result of the significant increase in broadband demand and
in the volume of wireless data driven traffic;
-- events affecting the functionality of, and our ability to
protect, maintain and replace, our networks, equipment,
facilities, IT systems, software and other assets;
-- our failure to implement, on a timely basis, or maintain
effective IT systems and the complexity and costs of our IT
environment;
-- the complexity of our product offerings and pricing plans;
-- events affecting the ability of third-party suppliers to
provide to us, and our ability to purchase, essential products
and services;
-- the quality of our network and customer equipment and the
extent to which they may be subject to manufacturing defects;
-- ineffective management of changes resulting from restructurings
and other corporate initiatives and from the integration of
business units and business acquisitions;
-- increased contributions to employee benefit plans;
-- labour disruptions;
-- capital and other expenditure levels, financing and debt
requirements and our ability to raise the capital we need to
implement our business plan, including for BCE's dividend
payments and to fund capital and other expenditures and
generally meet our financial obligations;
-- our ability to discontinue certain traditional services as
necessary to improve capital and operating efficiencies;
-- launch and in-orbit risks of satellites used by Bell ExpressVu
Limited Partnership;
-- the theft of our satellite television services;
-- Bell Media's significant dependence on continued demand for
advertising, and the potential adverse effect thereon from
challenging economic conditions, cyclical and seasonal
variations and competitive pressures;
-- the adverse effect of new technology and increasing
fragmentation in Bell Media's television and radio markets;
-- royalties payable by Bell Media under licences pursuant to the
Copyright Act may increase;
-- health concerns about radio frequency emissions from wireless
devices;
-- our ability to maintain customer service and our networks
operational in the event of the occurrence of environmental
disasters or epidemics, pandemics and other health risks;
-- employee retention and performance;
-- BCE's dependence on the ability of its subsidiaries, joint
ventures and other companies in which it has an interest to pay
dividends and make other distributions;
-- there can be no certainty that dividends will be declared by
BCE's board of directors or that BCE's dividend policy will be
maintained;
-- stock market volatility;
-- the expected timing and completion of our proposed acquisitions
of Astral and an interest in MLSE and Q9 are subject to closing
conditions, termination rights and other risks and
uncertainties including, without limitation, regulatory
approval; and
-- the benefits expected to result from the proposed acquisition
of Astral are subject to the successful and timely integration
and consolidation of Astral's operations, procedures and
personnel.


We caution that the foregoing list of risk factors is not exhaustive and
other factors could also adversely affect our results.



We encourage investors to also read BCE's 2011 Annual MD&A dated March
8, 2012 (included in the BCE 2011 Annual Report), BCE's 2012 First
Quarter MD&A dated May 3, 2012 and BCE's 2012 Second Quarter MD&A dated
August 7, 2012, for additional information with respect to certain of
these and other assumptions and risks, filed by BCE with the Canadian
securities commissions (available at www.sedar.com) and with the U.S. Securities and Exchange Commission (available at www.sec.gov). These documents are also available on BCE's website at www.bce.ca.


About BCE

BCE is Canada's largest communications company, providing a
comprehensive and innovative suite of broadband communication services
to residential and business customers under the Bell and Bell Aliant
brands. Bell Media is Canada's premier multimedia company with leading
assets in television, radio and digital media, including CTV, Canada's
leading television network, and the country's most-watched specialty
channels.



The Bell Mental Health Initiative is a multi-year charitable program
that promotes mental health across Canada via the Bell Let's Talk
anti-stigma campaign and support for community care, research and
workplace best practices. To learn more, please visit Bell.ca/LetsTalk. For BCE corporate information, please visit BCE.ca. For Bell product and service information, please visit Bell.ca. For Bell Media, please visit BellMedia.ca.  


SOURCE BELL CANADA

BELL CANADA

CONTACT: Media inquiries:
Jean Charles Robillard
Bell Communications
(514) 870-4739
jean_charles.robillard@bell.caInvestor inquiries:
Thane Fotopoulos
BCE Investor Relations
(514) 870-4619
thane.fotopoulos@bell.ca


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