CBCE reports second quarter 2014 results

CBCE reports second quarter 2014 results


-- BCE Q2 net earnings attributable to common shareholders of $606
million, up 6.1%; Adjusted earnings per share of $0.82, up
6.5%; Free cash flow of $815 million on track with 2014
guidance
-- Bell revenue and Adjusted EBITDA up 5.1% and 4.9%,
respectively, yielding stable year-over-year consolidated Bell
Adjusted EBITDA margin of 39.4%
-- Strong 5.7% Bell Wireless service revenue growth drives 9.5%
higher wireless Adjusted EBITDA; Wireless blended ARPU up 4.6%,
reflecting 21% increase in mobile data revenues
-- Bell is Canada's Mobile TV leader with 1,472,000 subscribers,
up 68% year over year
-- Third consecutive quarter of positive wireline residential
services revenue growth fuelled by combined Bell Fibe TV and
Internet net customer activations of 50,171 and 17.2% fewer
residential local access line losses
-- Continued strong contribution to free cash flow from Bell Media
with revenue up 36.1% and Adjusted EBITDA growth of 34.6%,
reflecting inclusion of Astral Media
-- Privatization of Bell Aliant announced July 23 generates strong
free cash flow accretion supporting significant broadband
network investment; Competition Act clearance for transaction
obtained August 5

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. 7, 2014 /PRNewswire/ - BCE Inc. (TSX, NYSE: BCE),
Canada's largest communications company, today reported BCE and Bell
results for the second quarter (Q2) of 2014.






FINANCIAL HIGHLIGHTS

($ millions except per share amounts)
(unaudited) Q2 2014 Q2 2013 % change

Bell(i)

Operating revenues 4,649 4,424 5.1%

Adjusted EBITDA(1) 1,830 1,744 4.9%

BCE

Operating revenues 5,220 5,000 4.4%

Adjusted EBITDA 2,144 2,066 3.8%

Net earnings attributable to common
shareholders 606 571 6.1%

EPS 0.78 0.74 5.4%

Adjusted EPS(2) 0.82 0.77 6.5%

Cash flows from operating activities 1,850 1,868 (1.0%)

Free cash flow(3) 815 903 (9.7%)





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






"Bell's commitment to deliver the best communications networks, service
and content to Canadians everywhere is driving positive momentum across
our wireless, wireline and media operations," said George Cope,
President and CEO of BCE and Bell Canada. "Rapid expansion of our
mobile 4G LTE network, including to hundreds of small towns and rural
communities across Canada, is promoting smartphone use and growing
Bell's lead in mobile TV and other data services. The fast-growing Fibe
TV and Internet footprint is propelling consistent revenue growth in
wireline residential services. And Canada's most popular programming
and new TV Everywhere products are ensuring Bell's continued strength
in the competitive Canadian media marketplace. Our strategy of leading
investment in Canada's communications infrastructure and new customer
service initiatives delivered a quarter of strong financial and
operating results. We look forward to accelerating our momentum further
as we integrate Bell Aliant fully into BCE alongside Bell Canada."



The Bell team is focused on 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 &
Services, Accelerate Wireless, Leverage Wireline Momentum, Expand Media
Leadership, Improve Customer Service, and Achieve a Competitive Cost
Structure.



"Continued disciplined execution of our strategic imperatives in Q2
delivered excellent wireless Adjusted EBITDA growth, improved results
in our wireline operations, and a strong contribution to free cash flow
from Bell Media," said Siim Vanaselja, Chief Financial Officer for BCE
and Bell. "With an outlook of continued strong wireless profitability,
an improving wireline profile, and a continued focus on growing media
audiences while controlling escalating content costs, we are on track
with our 2014 financial plan. We reconfirm today all our Bell and BCE
guidance targets for the full year."



On July 23, BCE announced that it is privatizing its Halifax-based
affiliate Bell Aliant (TSX: BA) by acquiring the interest of public
minority shareholders for approximately $3.95 billion. Privatizing Bell
Aliant, which BCE already controls, will enhance BCE's national
broadband investment strategy and dividend growth objective, generating
an expected approximate $100 million in pre-tax annual synergies and
annual run-rate free cash flow((3)) accretion after common dividends of approximately $200 million a year.



On August 5, BCE obtained Competition Act clearance for the Bell Aliant
transaction. Accordingly, subject to listing requirements of the TSX
and NYSE, all regulatory conditions have been met to complete the
privatization. Closing is expected by November 30, 2014, subject to 50%
of Bell Aliant common shares held by public minority shareholders being
tendered to the offer. For more information, please see the July 23
news release "BCE to privatize affiliate Bell Aliant."


BCE RESULTS

BCE revenue grew 4.4% to $5,220 million and Adjusted EBITDA((1)) was up 3.8% to $2,144 million in Q2 2014, yielding a stable Adjusted
EBITDA margin((1)) of 41.1%. This reflected stronger year-over-year financial performance
at Bell, partly offset by modest year-over-year declines in revenue and
Adjusted EBITDA at Bell Aliant.



BCE reported Q2 2014 net earnings attributable to common shareholders of
$606 million, up 6.1% from $571 million in Q2 2013, and Adjusted net
earnings((2) )of $640 million, up 7.7% from $594 million last year. Net earnings per
share (EPS) of $0.78 and Adjusted EPS of $0.82 were up 5.4% and 6.5%,
respectively, reflecting the flow-through of higher Adjusted EBITDA
from strong growth at Bell Wireless and Bell Media, as well as
continued improvement in the year-over-year rate of Bell Wireline's
Adjusted EBITDA decline.



BCE's cash flows from operating activities were $1,850 million in Q2
2014, compared to $1,868 million in Q2 2013, as higher Adjusted EBITDA
was more than offset by higher cash taxes paid. Free cash flow
generated in the quarter was $815 million compared to $903 million last
year, reflecting greater capital investment consistent with planned
spending for 2014 and a decrease in cash from operating activities.



In Q2 2014, BCE (Bell Canada and Bell Aliant) added 93,811 net new
customers from its growth services (wireless, TV, Internet), up 3.7%
over last year: 67,951 postpaid wireless customers, partly offset by
the loss of 25,053 prepaid customers; 33,369 TV subscribers, reflecting
the addition of 59,132 net new IPTV customers; and 17,544 high-speed
Internet customers. Total net NAS line losses improved 9.3% to 130,920.
At June 30, 2014, BCE served a total of 7,951,494 wireless customers,
up 1.2% from Q2 2013; total TV subscribers of 2,562,840, up 7.8%
(including 783,023 IPTV customers, an increase of 58.2%); 3,180,762
Internet subscribers, up 3.7%; and total NAS lines of 7,331,909, a
decrease of 6.6%.


BELL RESULTS

Bell operating revenues increased 5.1% to $4,649 million. This was
driven by 5.8% growth in service revenues, reflecting increases at both
Bell Wireless and Bell Media, including Astral's contribution to Bell
Media results, as well as a third consecutive quarter of positive
Wireline residential revenue growth. Total revenues generated by Bell's
growth services (Wireless, TV, Internet, other Wireline broadband, and
Media) grew $275 million, a 7.7% increase over last year.



Bell Adjusted EBITDA grew 4.9% to $1,830 million, reflecting increases
of 9.5% at Bell Wireless and 34.6% at Bell Media, moderated by a 2.7%
decrease at Bell Wireline. Bell's consolidated Adjusted EBITDA margin
remained unchanged at 39.4% in Q2 2014, due to higher Wireless average
revenue per user (ARPU)((4)), disciplined spending on new subscriber acquisitions, diminishing
Wireline voice erosion, and cost control.



Bell invested $791 million in next generation broadband networks and
service platforms in Q2 2014, up 17.5% year over year. This reflects
the continued rollout of the latest wireline fibre and wireless
technology to support the ongoing footprint expansion of Fibe TV and
mobile 4G LTE, greater Internet bandwidth usage, and rapid growth in
mobile data consumption.



In conjunction with the announcement of the Bell Aliant privatization,
BCE launched several new investment initiatives to support ongoing
growth and competiveness in Atlantic Canada. BCE plans capital
investment of $2.1 billion across the region over the next 5 years to
enable the continued rollout of broadband wireline and wireless for
consumers and business users. The next phase of Bell Mobility's massive
national buildout of mobile 4G LTE service will be in Atlantic Canada,
with more than 100 additional small towns and rural locations across
the region to benefit from enhanced mobile service by the end of 2015.
Additionally, Bell has acquired 2 new call centres in New Brunswick to
improve customer service and bring 700 more jobs into the Bell team
(Bell has launched or acquired a total of 7 new call centres in Canada
since 2010).


BELL OPERATING RESULTS BY SEGMENT

Bell Wireless

Bell Wireless operating revenues increased 5.5% to $1,522 million in Q2
2014 from $1,442 million last year. Service revenues grew 5.7% to
$1,404 million, driven by a higher postpaid subscriber mix and strong
growth in blended ARPU due to greater data usage and higher average
rate plan pricing resulting from the elimination of 3-year contracts.
Wireless data revenue increased 21.0%, reflecting increased adoption
and usage of smartphones. Product revenues were up 6.1% in Q2 as a
result of more handset upgrades.



Bell Wireless Adjusted EBITDA increased 9.5% to $667 million on strong
ARPU growth. As a result of the high flow-through of revenue to
Adjusted EBITDA in Q2 2014, Bell Wireless service revenue margin
increased 1.6 percentage points to 47.5%.



-- Postpaid net additions totalled 66,186 compared to 96,390 last
year. This reflected a 13.3% decrease in gross activations
attributable mainly to slower overall market growth resulting
from the elimination of lower-priced 3-year contracts as
mandated by the new federal Wireless Code of Conduct.

-- The percentage of postpaid subscribers with smartphones
increased to 75%, compared to 67% at the end of Q2 2013.

-- Industry-leading Bell Mobile TV reached 1,472,000 subscribers
in Q2 2014, up from more than 875,000 at the same time last
year.

-- Postpaid customer churn(4) improved 0.11 percentage point to
1.16%, reflecting Bell's network quality and reach and focused
investments in customer service and retention.

-- Prepaid net subscriber losses improved 53.1% to 24,755 due to
higher gross activations and fewer customer deactivations.

-- Bell Wireless postpaid customers totalled 6,777,842 at the end
of Q2, a 3.0% increase over last year. Total Bell Wireless
customers grew 1.1% to 7,804,087.

-- Blended ARPU increased 4.6% to $59.49, driven by strong data
usage on Bell's expanding 4G LTE network and the favourable
ARPU impact of new 2-year contract pricing.

-- Cost of acquisition (COA)(4) was essentially stable at $403 per
subscriber compared to $402 last year, reflecting disciplined
promotional pricing.

-- With a greater number of customer upgrades to high-end devices,
retention spending increased to 10.1% of wireless service
revenues from 9.3% last year.

-- Bell continued to cut the cost of mobile roaming in countries
Canadians travel to the most, with reductions in voice and data
roaming prices for South Korea. This follows significant
roaming rate decreases for the United States, Europe, China,
Japan, Mexico, Australia and New Zealand, Bermuda, Cuba and
most other Caribbean islands previously announced.

-- TD Canada Trust and CIBC are launching secure mobile payment
services with Bell that enable customers to pay for purchases
with their smartphones. These institutions join RBC and
Desjardins in announcing mobile payment solutions with Bell.

-- In April, Bell was first in Canada to deploy 700 MHz spectrum
after acquiring 31 licences for 480M MHz-POP of prime
nationwide 700 MHz spectrum. With service rollouts to rural and
remote communities across Canada, including the North, Bell
plans to expand advanced LTE to cover more than 98% of
Canadians by the end of 2015.

-- Bell already offers customers access to Canada's largest 4G LTE
mobile network, reaching 82% of the population at the end of
Q2. LTE is complemented by 4G HSPA+ coverage to more than 98%
of the population.

Bell Wireline

Bell Wireline continued to see year-over-year improvement in the rate of
revenue and Adjusted EBITDA decline, benefitting from higher ARPU
across all residential services, disciplined TV and Internet growth,
fewer losses in traditional home phone, and well-controlled operating
costs.



Wireline revenue declined 0.8% to $2,485 million in Q2, as higher
Internet and TV revenues drove a third consecutive quarter of positive
residential services revenue growth. This growth countered the ongoing
loss of legacy voice and data revenues, competitive pricing pressures
in residential, business and wholesale markets, and lower business data
product sales.



Bell Wireline Adjusted EBITDA decreased 2.7% to $953 million in Q2 2014,
representing the 5(th) consecutive quarter of year-over-year improvement in the pace of
Adjusted EBITDA decline. It was also an improvement over the 2.9%
decrease reported both last quarter and in Q2 2013, reflecting positive
growth in residential services revenue and well-controlled operating
costs. With the ongoing decline in higher-margin voice revenues that
were not fully offset by growth in lower-margin data services (TV,
Internet, IP connectivity), Wireline Adjusted EBITDA margin decreased
modestly to 38.4% from 39.1% last year.



-- Bell Fibe TV added 46,533 net new customers in Q2 compared to
50,555 last year. The decrease reflects aggressive offers and
service bundle promotions from cable competitors and less
footprint expansion compared to the same quarter last year.
Bell Fibe TV subscribers totalled 580,643 at the end of Q2, up
67.7% from last year.

-- Bell's Fibe TV footprint reached more than 4.6 million
households at the end of Q2, up from 3.8 million last year.

-- Satellite TV net customer losses increased 2.5% to 25,573 in
the second quarter of 2014, the result of higher wholesale
customer deactivations attributable to IPTV service rollouts by
competing service providers in Western and Atlantic Canada.
However, retail Satellite TV net customer losses improved 13.5%
this quarter, reflecting our focus on improving the customer
experience with product enhancements such as more on-demand
content and PVRs with enhanced HD recording capacity.

-- Bell TV's subscriber base (Bell Satellite TV and Fibe TV)
totalled 2,327,954 at the end of Q2, a 6.0% increase over last
year.

-- High-speed Internet net subscriber additions totalled 3,638,
compared to 2,446 last year, benefitting from lower residential
customer churn attributable to a high Fibe TV attach rate and
higher speeds enabled by Bell's broadband fibre network. Bell's
high-speed Internet subscriber base increased 3.3% over last
year to 2,203,808.

-- Bell's fibre network ranks #1 in Canada on the Netflix global
index for online data speeds, coming out ahead of the 14
Canadian Internet Service Providers tested each month in Q2
2014.

-- Bell's new Home Hub Internet modem and Wi-Fi router delivers
Wi-Fi speeds up to 3 times faster than most residential Wi-Fi
routers and offers a range of integrated tools to enable
customers to easily manage access and usage by multiple users
and devices.

-- Wireline data revenues were up 2.0% to $1,485 million, driven
by strong residential services growth and a 3.4% increase in IP
connectivity revenues in Bell Business Markets. Residential
data services revenue grew 6.1% in Q2, reflecting higher
Internet and TV revenues driven by continued Fibe customer
growth and greater demand for higher bandwidth Internet
service.

-- Residential NAS net losses improved 17.2% in Q2 to 67,969 from
82,090 last year, reflecting lower rates of residential NAS
turnover where Bell Fibe TV is available and improved retention
in our non-Fibe TV service areas.

-- Business NAS losses increased 31.7%, or 9,167, to 38,079, due
to competitive losses, ongoing business customer conversion of
voice lines to IP-based services, and the ongoing deactivation
of excess dial-up ports with customer shifts to high-speed
fibre Internet access from older technologies.

-- Total Bell NAS at the end of the quarter was 5,034,968, a 7.2%
decline from last year. As a result, Bell's local and access
revenues decreased 5.9% to $595 million, while long distance
revenue fell 7.1% to $170 million.

Bell Media

Bell Media operating revenue was up 36.1% to $761 million and Adjusted
EBITDA grew 34.6% to $210 million in Q2 2014.



These increases reflect higher advertising and subscriber fee revenues
from the Astral acquisition, as well as the flow-through of
market-based rate increases for specialty TV services and higher
revenues generated by Bell Media's expanding array of TV Everywhere
products and mobile TV subscription growth.



Advertising revenue growth in Q2 was moderated by general softness in
the TV advertising market, a shift in customer spending to online
services, and other factors including fewer NHL hockey playoff games on
TSN compared to last year and a move of advertising dollars to the
broadcaster of 2014 FIFA World Cup Soccer.



Higher content costs for TV programming and sports broadcast rights
partly offset the growth in Bell Media Adjusted EBITDA in Q2.



-- Bell Media maintained its leadership position with strong
audience levels across its conventional and specialty TV
properties. CTV broadcast 12 of the top 20 programs nationally
among all viewers in the spring season and 4 of the top 5 shows
among the key 25 to 54 age demographic. In the key primetime
hours of 7 pm to 11 pm, CTV's average audience was 33% higher
than its closest conventional TV competitor's, while Bell
Media's specialty TV average minute audience was 38% higher.

-- In May, Bell Media secured 11 new series for CTV's and CTV
Two's 2014/2015 primetime schedules, which will join more
returning Top 20 hit programs than any other Canadian network.
CTV will remain the home of TV's biggest event programming with
broadcasts of the Academy Awards, the Super Bowl, the Golden
Globe Awards, the Primetime Emmy Awards, and the JUNO Awards.

-- TSN, Canada's sports leader and the #1 specialty network in the
country, announced its planned expansion from 2 to 5 national
feeds to leverage Bell Media's unparalleled portfolio of
premium sports programming. TSN and RDS reached a new
multi-year agreement with the Formula One group providing
exclusive multi-platform media rights to all Grand Prix races
to 2019. The two sports networks also reached a new rights
agreement with the United States Golf Association for exclusive
Canadian coverage of the US Open to 2022.

-- Online, Bell Media continued to rank first among Canadian
broadcasters and seventh among all digital properties in Canada
with monthly averages of 11.8 million unique visitors, 3
million unique video viewers, 358 million page views, and 102
million videos served.

-- Bell Media Radio, Canada's largest radio broadcaster, reached
in excess of 17.6 million listeners, who spent 84.1 million
hours - more than 4.75 hours each on average - tuned in each
week.

-- Bell Media division Astral Out-of-Home announced its
acquisition of Macdonald Outdoor Advertising Inc. in June,
marking Astral Out-of-Home's entry into Alberta and the
national expansion of its focus on large-format digital
advertising.

-- On July 31, Bell completed the sale of 3 TV services to DHX
Media Ltd. for total proceeds of approximately $170 million.
These asset divestitures were required by the Canadian
Radio-television and Telecommunications Commission (CRTC) and
the Competition Bureau as part of their approval of Bell's
acquisition of Astral. The sale of the remaining 2 Astral TV
services to V Media Group is expected to be completed later
this year, subject to closing conditions including approval by
the CRTC and termination rights.

BELL ALIANT RESULTS

Bell Aliant operating revenues decreased 1.3% to $682 million in Q2 2014
from $691 million last year. Growth in TV, Internet and other data, and
wireless revenues was offset by declines in local, long distance, and
other revenues. Operating costs declined $1 million this quarter, as
continued savings from productivity initiatives offset growth in
promotional and TV content costs from a growing FibreOP customer base.
As a result, Bell Aliant Adjusted EBITDA declined 2.5% to $314 million
from $322 million last year. For more information, please visit BellAliant.ca.


COMMON SHARE DIVIDEND

BCE's Board of Directors has declared a quarterly dividend of $0.6175
per common share, payable on October 15, 2014 to shareholders of record
at the close of business on September 15, 2014.



BCE confirmed its financial guidance targets for 2014, as provided on
February 6, 2014, as follows:






February 6 August 7
Guidance Guidance

Bell (i)

Revenue Growth 2% - 4% On track

Adjusted EBITDA Growth 3% - 5% On track

Capital Intensity(4) 16% - 17% On track

BCE

Adjusted EPS $3.10 - $3.20 On track

Free Cash Flow growth 3% - 7% On track

Annual common dividend per share $2.47 $2.47

Dividend payout(4) policy 65% - 75%
of free cash flow No change





(i) Bell's 2014 financial guidance for revenue, Adjusted EBITDA and
capital intensity is exclusive of Bell Aliant.





CALL WITH FINANCIAL ANALYSTS

BCE will hold a conference call for financial analysts to discuss Q2
2014 results on Thursday, August 7 at 8:00 am Eastern. Media are
welcome to participate on a listen-only basis. To participate, please
dial toll-free 1-800-766-6630 or (416) 340-2220. A replay will be
available for one week by dialing 1-800-408-3053 or (905) 694-9451 and
entering pass code 9717961#.



A live audio webcast of the call will be available on BCE's website at: BCE Q2-2014 conference call. The mp3 file will be available for download on the web page later in
the day.



The information contained in this news release is unaudited.






(1) Beginning with Q2 2014, we reference Adjusted EBITDA and Adjusted
EBITDA margin as non-GAAP financial measures. These terms replace
the previously referenced non-GAAP financial measures EBITDA and
EBITDA margin. Our definition of Adjusted EBITDA and Adjusted
EBITDA margin are unchanged from our former definition of EBITDA
and EBITDA margin respectively. Accordingly, this change in
terminology has no impact on our reported financial results for
prior periods. The terms Adjusted EBITDA and Adjusted EBITDA margin
do not have any standardized meaning under 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, as shown in BCE's consolidated income statements.
Adjusted EBITDA for BCE's segments is the same as segment profit as
reported in Note 3 to BCE's Q2 2014 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, the following table provides a reconciliation of net
earnings to Adjusted EBITDA.









($ millions)

Q2 2014 Q2 2013

Net earnings 707 671

Severance, acquisition and other costs 54 28

Depreciation 708 681

Amortization 171 161

Finance costs 229 228

Interest expense 26 38

Interest on post-employment benefit obligations 13 63

Other expense 236 196

Income taxes

Adjusted EBITDA 2,144 2,066

BCE Operating Revenues 5,220 5,000

Adjusted EBITDA Margin 41.1% 41.3%









(2) The terms Adjusted net earnings and Adjusted EPS do not have any
standardized meaning under IFRS. Therefore, they are unlikely to be
comparable to similar measures presented by other issuers. We
define Adjusted net earnings as net earnings attributable to common
shareholders before severance, acquisition and other costs, net
(gains) losses on investments, and premiums on early redemption of
debt. We define Adjusted EPS as Adjusted net earnings per BCE
common share. We use Adjusted net earnings and Adjusted EPS, and we
believe that certain investors and analysts use these measures,
among other ones, to assess the performance of our businesses
without the effects of severance, acquisition and other costs, net
(gains) losses on investments, and premiums on early redemption of
debt, net of tax and NCI. 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 2014 Q2 2013

TOTAL PER SHARE TOTAL PER SHARE

Net earnings attributable to
common shareholders 606 0.78 571 0.74

Severance, acquisition and other
costs 38 0.05 21 0.02

Net gains on investments (4) (0.01) (1) -

Premium on early redemption of
debt - - 3 0.01

Adjusted net earnings 640 0.82 594 0.77









(3) The terms free cash flow and free cash flow per share do not have
any standardized meaning under IFRS. Therefore, they are unlikely
to be comparable to similar measures presented by other issuers. We
define free cash flow as cash flows from operating activities,
excluding acquisition costs paid and voluntary pension funding,
plus dividends received from Bell Aliant, less capital
expenditures, preferred share dividends, dividends paid by
subsidiaries to NCI and Bell Aliant free cash flow. We define free
cash flow per share as free cash flow divided by the average number
of common shares outstanding.

We consider free cash flow and free cash flow per share to be
important indicators of the financial strength and performance of
our businesses because they show how much cash is available to pay
dividends, repay debt and reinvest in our company. We believe that
certain investors and analysts use free cash flow to value a
business and its underlying assets. We believe that certain
investors and analysts also use free cash flow and free cash flow
per share to evaluate the financial strength and performance of our
businesses. 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 except per share amounts)

Q2 2014 Q2 2013

Cash flows from operating activities 1,850 1,868

Bell Aliant dividends to BCE 48 47

Capital expenditures (937) (830)

Cash dividends paid on preferred shares (31) (32)

Cash dividends paid by subsidiaries to non-controlling (68) (74)
interest

Acquisition costs paid 16 8

Bell Aliant free cash flow (63) (84)

Free cash flow 815 903

Average number of common shares outstanding 777.7 775.9

Free cash flow per share 1.05 1.16









(4) We use ARPU, churn, COA, capital intensity and dividend payout
ratio to measure the success of our strategic imperatives. These
key performance indicators are not accounting measures and may not
be comparable to similar measures presented by other issuers. See
section 8.2, Non-GAAP Financial Measures and Key Performance
Indicators (KPIs) in BCE's Q2 2014 MD&A for a definition of such
KPIs.





CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements made in this news release are forward-looking
statements. These statements include, without limitation, statements
relating to our 2014 financial guidance (including revenues, Adjusted
EBITDA, capital intensity, Adjusted EPS and free cash flow), our
business outlook, objectives, plans and strategic priorities, BCE's
2014 annualized common share dividend and common share dividend policy,
our network deployment plans, the expected timing and completion of the
proposed acquisition by BCE of all of the issued and outstanding common
shares of Bell Aliant that it does not currently own (Privatization)
through a common share tender offer (Common Share Offer), certain
strategic and financial benefits (including expected synergies and free
cash flow accretion) and operational, competitive and cost efficiencies
expected to result from the Privatization, the nature and value of
investments expected to be made in Atlantic Canada over the next 5
years, and other statements that are not historical facts.
Forward-looking statements are typically identified by the words assumption, goal, guidance, objective, outlook, project, strategy,
target and other similar expressions or future or conditional verbs such as aim, anticipate, believe, could, expect, intend, may, plan, seek,
should, strive 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 and that our
business outlook, objectives, plans and strategic priorities may not be
achieved. As a result, we cannot guarantee that any forward-looking
statement will materialize and we caution you against relying on any of
these forward-looking statements. The forward-looking statements
contained in this news release describe our expectations as of August
7, 2014 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
non-recurring 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
7, 2014. The financial impact of these transactions and non-recurring
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 in
this news release for the purposes of assisting investors and others in
understanding certain key elements of our expected 2014 financial
results, as well as our objectives, strategic priorities and business
outlook for 2014, and in obtaining a better understanding of our
anticipated operating environment. Readers are cautioned that such
information may not be appropriate for other purposes. The value of
investments expected to be made in Atlantic Canada over the next 5
years assumes that investments will continue at current levels.
However, there can be no assurance that such investment levels will be
maintained with the result that the value of actual investments made in
Atlantic Canada could materially differ from current expectations.


Material Assumptions

A number of economic, market, operational and financial assumptions were
made by BCE in preparing its forward-looking statements for 2014
contained in this news release, including, but not limited to:


Canadian Economic and Market Assumptions


-- growth in the Canadian GDP of 2.2% in 2014, based on the Bank
of Canada's most recent estimate, a ten basis point decrease
compared to an earlier estimate of 2.3%;
-- a faster pace of employment growth compared to 2013
-- a sustained level of wireline and wireless competition in both
consumer and business markets
-- higher, but slowing, wireless industry penetration driven by
the increasing adoption of smartphones, tablets and other 4G
devices, the expansion of LTE service in non-urban markets, the
availability of new data applications and services, as well as
population growth
-- a softer advertising market

Assumptions Concerning our Bell Wireless Segment


-- higher, but slowing, wireless industry penetration in Canada
-- maintaining Bell's market share of incumbent wireless postpaid
net activations
-- continued adoption of smartphone devices, tablets and data
applications, as well as the introduction of more 4G LTE
devices and new data services
-- our ability to monetize increasing data usage and customer
subscription to new data services
-- further expansion of our 4G LTE wireless network in rural areas
and in more urban markets across Canada
-- ongoing technological improvements by handset manufacturers and
from faster data network speeds that allow customers to
optimize the use of our services
-- no material financial, operational and competitive consequences
of adverse changes in regulations affecting our wireless
business

Assumptions Concerning our Bell Wireline Segment


-- increasing wireless and Internet-based technological
substitution
-- aggressive residential service bundle offers from cable TV
competitors in our local wireline areas
-- stabilizing residential NAS line erosion rate as we leverage
our broadband investment in Fibe TV 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
-- higher revenue per household and flow-through of market-based
price increases across residential products from increasing
penetration of three-product households
-- faster pace of employment and economic growth compared to 2013
-- continued business customer migration to IP-based systems
-- ongoing competitive price pressures in our residential,
business and wholesale markets
-- ability to realize cost savings from management workforce
attrition and retirements, call centre efficiencies, field
service productivity improvements, reduction in supplier
contract rates, lower print and mail costs, content cost
management and reducing traffic that is not on our own network
-- growing consumption of OTT TV services and streaming video,
projected growth in TV Everywhere as well as the proliferation
of devices, such as tablets, that consume vast quantities of
bandwidth, will require considerable ongoing capital investment

Assumptions Concerning our Bell Media Segment


-- softer advertising market for Bell Media
-- escalating costs to secure TV programming and sports content
-- ability to successfully acquire highly-rated programming and
differentiated content
-- market rates for specialty content generally increasing
-- building and maintaining strategic supply arrangements for
content on all four screens
-- full realization of cost synergies from the integration of
Astral into Bell Media
-- no material financial, operational or competitive consequences
of adverse changes in media regulation

Assumptions Concerning our Bell Aliant Segment


-- economy continues to rebound
-- competitive activity in both consumer and business will
continue to be intense
-- wireless substitution for wireline services will increase in
Bell Aliant markets, but is expected to lag behind other
regions of Canada
-- NAS net decline stabilizing
-- steady demand for FibreOP service driving Internet and IPTV
customer acquisition at similar levels as 2013
-- cost reductions achieved through productivity initiatives will
continue, largely offsetting cost increases associated with
growth in IPTV customers and associated TV content costs and
normal inflationary pressures

Financial Assumptions Concerning Bell (Excluding Bell Aliant)


The following constitute Bell's principal financial assumptions for
2014:



-- the maintenance of a relatively stable consolidated Adjusted
EBITDA margin;
-- increasing wireless Adjusted EBITDA contribution and margin
expansion;
-- an improving year-over-year rate of decline in wireline revenue
and Adjusted EBITDA;
-- Bell's total post-employment benefit plans cost to be
approximately $310 million, based on an estimated accounting
discount rate of 4.9%, comprised of an estimated above Adjusted
EBITDA post-employment benefit plans service cost of
approximately $220 million and an estimated below Adjusted
EBITDA net post-employment benefit plans financing cost of
approximately $90 million;
-- total pension plan cash funding of approximately $350 million;
-- cash taxes of approximately $600 million;
-- net interest expense of approximately $775 million, instead of
$750 million;
-- net interest payments of approximately $775 million; and
-- working capital changes and severance and other costs of
approximately $175 million.

Financial Assumptions Concerning BCE


The following constitute BCE's principal financial assumptions for 2014:



-- BCE's total post-employment benefit plans cost to be
approximately $390 million, including approximately $80 million
for Bell Aliant, comprised of an estimated above Adjusted
EBITDA post-employment benefit plans service cost of
approximately $280 million and an estimated below Adjusted
EBITDA net post-employment benefit plans financing cost of
approximately $110 million;
-- depreciation and amortization expense approximately $115
million higher compared to 2013;
-- net interest expense of approximately $925 million, instead of
$900 million;
-- tax adjustments (per share) of approximately $0.04;
-- an effective tax rate of approximately 26%;
-- non-controlling interest of approximately $280 million; and
-- an annual common share dividend of $2.47 per share.


The foregoing assumptions, although considered reasonable by BCE on
August 7, 2014, 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 2014 financial guidance, are listed below. The
realization of our forward-looking statements, including our ability to
meet our 2014 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, and the resulting impact
on our ability to retain existing customers and attract new
ones, as well as on our pricing strategies, financial results
and operating metrics such as ARPU
-- the level of technological substitution and the presence of
alternative service providers, contributing to reduced
utilization of traditional wireline voice services
-- the adverse effect of new technology and increasing
fragmentation in Bell TV's TV distribution market and
Bell Media's TV and radio markets
-- variability in subscriber acquisition and retention costs based
on subscriber acquisitions, retention volumes, smartphone sales
and handset discount levels
-- regulatory initiatives and proceedings, government
consultations and government positions that affect us and
influence our business
-- economic and financial market conditions, the level of consumer
confidence and spending, and the demand for, and prices of, our
products and services
-- Bell Media's significant dependence on continued demand for
advertising, and the potential adverse effect thereon from
economic conditions, cyclical and seasonal variations and
ratings/audience levels
-- the complexity of our product offerings, pricing plans,
promotions, technology platforms and billing systems
-- our failure to satisfy customer expectations and build a low
cost operational delivery model
-- our failure to carry out wireline network evolution activities,
and to meet network upgrade or deployment timelines within our
capital intensity target
-- our failure to maintain network operating performance in the
context of significant increases in broadband demand and in the
volume of wireless data-driven traffic
-- our failure to anticipate and respond to technological change,
upgrade our networks and rapidly offer new products and
services
-- our failure to implement or maintain, on a timely basis,
effective information technology (IT) systems, and the
complexity and costs of our IT environment
-- our inability to protect our data centres, electronic and
physical records and the information stored therein
-- employee retention and performance, and labour disruptions
-- our failure to execute our strategic imperatives and business
development plans in order to produce the expected benefits,
including to continue to implement our targeted cost reduction
initiatives
-- ineffective change management resulting from restructurings and
other corporate initiatives, and the failure to successfully
integrate business acquisitions and existing business units
-- pension obligation volatility and increased contributions to
post-employment benefit plans
-- events affecting the ability of third-party suppliers to
provide to us, and our ability to purchase, critical products
and services
-- the quality of our network and customer equipment and the
extent to which they may be subject to manufacturing defects
-- events affecting the functionality of, and our ability to
protect, test, maintain and replace, our networks, equipment
and other facilities
-- in-orbit risks of satellites used by Bell TV
-- unfavourable resolution of legal proceedings and, in
particular, class actions
-- unfavourable changes in applicable laws
-- our capital and other expenditure levels, financing and debt
requirements and inability to access adequate sources of
capital and generate sufficient cash flows from operations to
meet our cash requirements and implement our business plan, as
well as our inability to manage various credit, liquidity and
market risks
-- our inability to discontinue certain services as necessary to
improve capital and operating efficiencies
-- our failure to evolve practices and effectively monitor and
control fraudulent activities
-- the theft of our direct-to-home (DTH) satellite TV services
-- copyright theft and other unauthorized use of our content
-- higher taxes due to new taxes, higher tax rates or changes to
tax laws, and our inability to predict the outcome of
government audits
-- health concerns about radio frequency emissions from wireless
devices and equipment
-- our inability to maintain customer service and our networks
operational in the event of the occurrence of epidemics,
pandemics and other health risks
-- BCE's dependence on the ability of its subsidiaries, joint
arrangements and other entities in which it has an interest to
pay dividends or otherwise make distributions to it
-- uncertainty as to whether dividends will be declared by BCE's
board of directors or BCE's dividend policy will be maintained
-- stock market volatility
-- the expected timing and completion of the Common Share Offer
and the Privatization are subject to closing conditions and
other risks and uncertainties and there can be no certainty
that anticipated benefits will be realized
-- the benefits expected to result from the Privatization are
subject to the successful and timely integration and
consolidation of Bell Aliant's operations, procedures and
personnel
-- the expectation that the Privatization will be accretive to
BCE's free cash flow is subject to the risks faced by Bell
Aliant's business following completion of the Privatization,
certain of which risks are described in BCE, Bell Aliant and
Bell Aliant Regional Communications Inc.'s (Bell Aliant GP)
respective MD&As for the year ended December 31, 2013, as
updated in BCE, Bell Aliant and Bell Aliant GP's quarterly
MD&As.


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 2013 Annual MD&A dated March 6, 2014
(included in the BCE 2013 Annual Report) and BCE's 2014 First and
Second Quarter MD&As dated May 5, 2014 and August 6, 2014 respectively,
for additional information with respect to certain of these and other
assumptions and risks, filed by BCE with the Canadian provincial
securities regulatory authorities (available at Sedar.com) and with the U.S. Securities and Exchange Commission (available at SEC.gov. These documents are also available at 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 Canada 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 #1 television network, and the country's most-watched
specialty channels. To learn more, please visit BCE.ca.



The Bell Let's Talk initiative promotes Canadian mental health with
national awareness and anti-stigma campaigns, like Clara's Big Ride for
Bell Let's Talk and Bell Let's Talk Day, and significant Bell funding
of community care and access, research, and workplace initiatives. To
learn more, please visit Bell.ca/LetsTalk.




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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