Results are reported in Canadian dollars and prepared according to Canadian GAAP.

Transcription

1 October 24, 2001 Revised November 6, 2001 Third Quarter 2001 (Unaudited) Investor Briefing This supplement to the press release announcing BCE s Quarterly results is intended to provide, on a timely basis, information of interest to the investment community. Results are reported in Canadian dollars and prepared according to Canadian GAAP. This supplement is a re-issue of the October 24, 2001 version of BCE s third quarter results to provide detailed results for BCE Ventures. For further information, please contact Isabelle Morin at (514) or George Walker at (514) The Investor Briefing is also available on BCE s web site at under the Investor Relations section. Certain sections of this document contain forward-looking statements with respect to BCE and its subsidiaries. These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. Factors which could cause actual results or events to differ materially from current expectations are discussed on page 22 under CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS. This material is presented for information only, and should not be construed as a solicitation to invest in any securities of BCE Inc.

2 Investor Briefing October 24, 2001 BCE s Core Operations Drive 6% Revenue Growth Data, Wireless, High Speed Internet and Satellite Television show continued growth BCE reported its third quarter results, reflecting solid growth in the face of a more challenging environment. Revenues from core operations grew 6.1% to reach $5.1B as compared to the third quarter of 2000, showing strong performance by BCE s growth drivers. Bell Canada contributed revenue increases of 21% in wireless and 17% in data. Bell ExpressVu revenue grew by 44% and BCE Emergis revenue reflected a 29% increase. Consolidated revenues for the third quarter of 2001 were $5.4B, up 5.7% from the same period last year. EBITDA from core activities was $1.9B reflecting 4.7% growth compared to the same period last year. Consolidated EBITDA growth was 6.6%. Consolidated cash baseline earnings per share of $0.40 for the third quarter increased 11% compared to proforma cash baseline earnings per share of $0.36 last year. Summary of Third Quarter Results (Millions of dollars, except where otherwise indicated) Consolidated results * % change Revenues Core 5,087 4, % Revenues Total (3) 5,379 5, % EBITDA - Core 1,854 1, % EBITDA Total (3) 1,942 1, % Cash baseline earnings per common share ($) - Core % Cash baseline earnings per common share ($) Total (3) % Bell Canada Wireline Data revenues % High Speed Internet net activations (k) % Wireless Revenues % PCS and cellular net activations (k) % Bell ExpressVu Revenues % DTH net activations (k) % Bell Globemedia Revenues (2.0%) Teleglobe Gross data and hosting revenues (4.1%) Gross voice revenues (5.6%) Net voice revenues % BCE Emergis Revenues % * for 2000 reflects the acquisition and consolidation of CTV (including NetStar), the Globe and Mail, Globe Interactive and Teleglobe for improved comparability. Figures have been restated to reflect Excel as a discontinued operation see note 3. BCE Inc. Investor Briefing Third Quarter 2001

3 Data / DSL Growth Solid data growth despite continued economic weakness Growth Customer Wins Data revenues came in at $881 million for the third quarter, up 17% from last year, reflecting continued growth in legacy, IP broadband, Internet and e-commerce services. The number of digital equivalent access lines grew to 3.7 million, reflecting a 4% increase over the second quarter and 32% growth compared to Q Data revenues made up 21% of Bell Canada s total revenues this quarter. In September, Bell Canada, with partners BCE Emergis, CGI and KPMG Consulting announced that they had entered into a partnership with the Ontario government to provide anywhere access to government services. The consortium will design, build and operate electronic connections, providing convenient 24-7 access to government services, including vehicle registration and renewal and address changes. Individuals will be able to access the services online, by telephone and over self-serve terminals. ($M) Data Revenues Q300 Q400 Q101 Q201 Q301 High Speed Internet subscriber base grows by 96,000 Growth Overall, the DSL customer base grew to 625,000 customers, up 18% from last quarter and over 181% from Q These growth rates are largely attributable to increased marketing activity and promotional offers, customer retention initiatives and seasonality. DSL net additions totaled 96,000 this quarter, of which 85,000 related to consumer DSL services, 8,000 business and 3,000 wholesale. Growth rates for Bell Canada s Sympatico High Speed Edition (SHSE) in Ontario and Quebec were strong, leading to a customer base of 484,000 at the end of this quarter. This represents a quarterly increase of 79,000 customers, 93% higher than that achieved in Q2. DSL High Speed Internet Subscribers (000's) Self-installation rate improvement Q300 Q400 Q101 Q201 Q301 Self-installation rates for SHSE averaged 74% in the quarter, an improvement over the 60-65% range seen at the end of the second quarter. Cost and service improvements During the quarter, the USB (universal serial bus) modem was introduced, simplifying installation and reducing costs. Customers no longer need to install an Ethernet card. They need only to plug the modem into the USB port on their PC and install the software. The quarter also saw the introduction of high density DSLAM s (digital subscriber line access multiplexor), which are smaller and easier to install. The new equipment reduces costs and floor space requirements and can be placed in locations that were previously not suitable. A new business Internet high speed service, with download speeds of up to 3Mbps and upload speeds of up to 640 kbps, was also introduced. BCE Inc. Investor Briefing Third Quarter 2001 Page 2

4 Wireless Growth Canada s largest wireless carrier continues to post impressive growth with 151,000 net additions and maintains its industry leading churn Growth Wireless service revenues were $490 million, up 21% from the third quarter of 2000, fuelled by strong growth in cellular and PCS subscribers and a continued focus on postpaid activations. Of the 151,000 net additions this quarter, 68% were on postpaid rate plans. Total cellular and PCS subscribers reached 3,186,000 at the end of the third quarter, with postpaid accounting for 73% of the total subscriber base. Including its paging subscribers, BCE now serves more than 3.9 million wireless customers. Growth of this magnitude is all the more impressive considering Bell Mobility moved away from offering $0 handsets during the quarter. (000's) ARPU Wireless Net Subscriber Additions While ARPU of $49 per month was flat compared to third quarter 2000, it was $3 higher than the second quarter, increasing for the second consecutive quarter Q300 Q400 Q101 Q202 Q301 Prepaid adds Postpaid adds 103 Postpaid ARPU of $62 per month increased by $1 compared to Q3 2000, while prepaid ARPU remained flat compared to the same period last year, at $14 per month. $ Wireless ARPU 48 Industry Leading Churn Postpaid churn for the quarter was 1.5%, once again leading the industry. This marked the sixth consecutive quarter that churn has remained below 2%, demonstrating BCE s continued commitment to customers and network service, as well as product innovation. Prepaid churn for the quarter was 1.4% compared to 2.0% in the third quarter of National Expansion In August, Bell Mobility announced it had contracted with Nortel Networks to expand Bell Mobility s CDMA digital PCS network into Alberta and B.C. This contract represents a $180 million investment and will deliver a 1xRTT ready network in early 2002 to urban centers in these provinces Q300 Q400 Q101 Q201 Q In September, Bell Mobility launched services for the consumer market in Alberta and B.C. At the end of the third quarter there were 120 retail points of presence in Alberta and B.C., including a total of 13 Bell World locations and numerous outlets at 5 major retailers. On October 17 th, Bell Mobility entered into a reciprocal agreement with Telus Mobility which will extend current roaming and resale agreements and will enhance the reach of Bell Mobility s digital PCS service across rural Alberta and B.C. This agreement will enable Bell Mobility to avoid capital expenditures in excess of $500 million over the 10 year term of the agreement and to fasttrack the delivery of wireless PCS and 3G applications to non-urban areas in Alberta and B.C. Wireless Data Bell Mobility mobile browser hits totaled 41 million, up 14% from the second quarter. Data users grew some 24% over Q to 650,000. Bell Mobility continues to be recognized as an industry leader for service innovation and leads the industry with the number of wireless data applications and services available to its customers. BCE Inc. Investor Briefing Third Quarter 2001 Page 3

5 DTH Growth Bell ExpressVu has best third quarter ever, with 83,000 net additions Growth Bell ExpressVu s strong growth continued with revenues of $117 million for the quarter, 44% higher than the same period last year. Bell ExpressVu grew its subscriber base to 930,000 customers, 57% higher than the same period last year, and well on its way to meet its year end target of 1 million subscribers. With 83,000 net subscriber activations, Bell ExpressVu had its strongest third quarter to date. Net activations were 63% higher than the previous quarter and 22% higher than the third quarter of Bell ExpressVu continues to be Canada s leading satellite TV provider with an estimated market share of 59%. Rural 43% (000's) Bell ExpressVu Subscribers Urban customer growth Seventy percent of this quarter s net additions were in urban areas, primarily serviced by cable companies. This compares to 65% in the second quarter of 2001 and 57% in the same quarter last year. At quarter-end, 55% of Bell ExpressVu s subscriber base was located in urban areas. Mix of Net Additions Rural 30% Q300 Q400 Q101 Q201 Q301 New product/service introductions In August, Bell ExpressVu launched its Personal Video Recorder (PVR), and became the first in Canada to offer an integrated digital satellite receiver capable of recording up to 30 hours of content on a 40-gigabyte PVR hard drive. The enhanced features of the model now offer customers more choice and control over program viewing. In early September, Bell ExpressVu added over 40 new specialty channels to its national digital programming lineup, for a total of over 275 video channels. The specialty channels cover NHL hockey, NBA basketball, travel, lifestyle and leisure and new kids programs.. Q3 00 Urban 57% Q3 01 Urban 70% Bell Canada Cost Management Bell Canada s plan for 2001 included an 8% improvement in productivity that translated into $450 million in savings. To date, Bell Canada is on track to achieve these savings. These initiatives have permitted Bell to continue investing in new service areas such as consumer DSL services and Bell ExpressVu while maintaining a healthy EBITDA performance. The $335M of savings year to date were achieved through a combination of process efficiencies, supply chain management improvements, management streamlining and various other initiatives. Process efficiency initiatives included improvements in work force management, call centers, network provisioning and integrated order management. Supply chain management improvements included outsourcing and the renegotiation of various supplier contracts and improved inventory management practices. Streamlining of management operations occurred in Q1. BCE Inc. Investor Briefing Third Quarter 2001 Page 4

6 Bell Globemedia Maintaining market leadership Despite continued softness in the advertising market, revenues remained relatively stable compared with Q3 2000, coming in at $246M, 2% lower than last year. A yearover-year decrease in print revenues, resulting from continuing competition and strong results in Q contributed to the third quarter decline. The acquisition of CFCF and CKY, along with a 50% increase in interactive advertising revenues as well as subscriber revenues helped partially offset the negative variance. EBITDA was negative $6 million during the quarter, compared to negative $4 million in Q as a result of weaker advertising markets combined with ongoing print competition, continuing startup losses of the interactive businesses and higher programming costs at CTV. Recently, CTV announced a restructuring program, resulting in the elimination of approximately 150 positions. Efficiencies will come from centralization and reorganization of administrative areas such as marketing, promotion, technical and management services. Print 23% Television Interactive 4% In September, the CRTC cleared the way for CTV affiliates CFCF in Montreal and CKY-TV in Manitoba to join CTV s family of TV stations across Canada. This will permit better amortization of programming costs over a larger airtime revenue base. The acquisition of ROBTv was recently granted CRTC approval. In September, Bell Globemedia and COGECO announced the conclusion of an agreement, subject to regulatory approval, to acquire Quebecor s 86% interest in TV network TQS. Under the terms of the agreement, COGECO has a 60% stake in the new business while Bell Globemedia has the remaining 40%. COGECO will contribute six of its TV stations, as well as its 13% interest in TQS for a total consideration valued at $104 million. Bell Globemedia will provide approximately $74 million in cash to complete the transaction. The agreement extends Bell Globemedia s reach into francophone Quebec. Revenue Mix Print 19% Recently, CTV launched six new digital channels which are largely sports and science based, namely WTSN, ESPN Classic Canada, NHL Network, Animal Planet, Discovery Civilization and CTV Travel. Print Interactive 6% TV Q % Q3 01 According to a recent independent study by NADbank, The Globe and Mail not only led in readership but also in quality of reader profile for advertisers. Interactive TV 75% During the quarter, Bell Globemedia Interactive continued to expand its leadership position in Canada. Bell Globemedia Interactive web sites are the first choice for Canadian advertisers. BCE Inc. Investor Briefing Third Quarter 2001 Page 5

7 Teleglobe Improved EBITDA despite challenging marketplace Total gross revenues were $491 million for the quarter, down 5% from the same period last year and 9% lower than Q Both voice and data revenues came in lower as a result of adverse market conditions. Net voice revenues came in at $87 million, 19% better than the same quarter last year. On a quarter over quarter basis, they were down 19%. Notwithstanding the softening in revenues, EBITDA doubled over Q to $38 million and came in 58% higher than Q2 of this year. Voice margins continue to stabilize and savings were realized during the quarter as customers migrated off of leased facilities onto Teleglobe s own network. Given the worldwide slowdown in international connectivity, Teleglobe rationalized selected business units in order to lower costs, more effectively utilize finite resources and better respond to customer needs. The restructuring, announced in August, resulted in the elimination of approximately 450 positions, or 20% of the workforce, and an associated third quarter pre-tax charge of US$85 million. Annualized savings of $US 50 million are anticipated. The restructuring announcement also included a US$500 million reduction in capital expenditures for the Globesystem buildout. Customer wins In August, Teleglobe announced that it would supply a high-speed Internet connection to China Unicom, a private-sector company that provides telecom services throughout China. With the sale, Teleglobe becomes the first global network service provider to serve all of China s commercial international Internet Service Providers. New service introductions During the quarter, Teleglobe announced that it had increased the capability to provide global wireless roaming services. The new platform, developed in conjunction with Performance Technologies, translates and converts signals seamlessly, permitting customers to place or receive calls wherever they travel internationally. GlobeSystem The wavelength purchases announced last quarter with Williams, Broadwing and KPNQwest have enabled a significant expansion in Teleglobe s network to over 63 thousand lambda route miles of fiber capacity this quarter, an 86% increase over the previous quarter. This increase in network capacity enabled the start of the migration of Teleglobe s customers from leased facilities to Teleglobe s own network which, as noted earlier, contributed to EBITDA improvements. BCE Inc. Investor Briefing Third Quarter 2001 Page 6

8 BCE Emergis Continued growth in all units drives revenues up 29% and EBITDA up 35% compared to same period last year Revenues for the third quarter of 2001 were $173 million, 29% higher than the same period last year, reflecting strong performance in all business segments. Recurring revenues continued to increase this quarter, representing the 40 th consecutive quarter-overquarter increase. EBITDA of $35 million this quarter was 35% higher than the same period last year. An EBITDA margin of 20% was achieved in the quarter, continuing the trend of increasing quarterly margins. Canada Life Agreement On October 17 th, BCE Emergis announced that Canada Life Assurance Company has become the second major insurance company to join the Emergis e-claims exchange. Canada Life will also be using the BCE Emergis e-premiums solution which will be integrated into the exchange. The Principal On October 3 rd, BCE Emergis announced that it had launched a new electronic premium presentment and management solution for the health and life insurance industry and has signed the Principal Financial Group as its first customer. BCE Emergis signs three-year ecommerce Agreements with Bell Canada On October 11 th, BCE Emergis announced that it had extended and enhanced previous agreements with Bell Canada for the provision of advanced ecommerce services. The agreements with Bell Canada relate to the delivery of ecommerce network-centric services through the Bell channel as part of BCE's convergence strategy. Included in these services are solutions that will provide the following capabilities: common infrastructure application; online web-based customer care; web-based management of marketing processes; small, medium and large enterprise web-based automation of ordering, invoicing and payment functions; and enablement services to support suppliers and buyers for electronic procurement. Convergence Launch of TSNMAX.ca On October 1 st, the first in a series of convergence products was announced - TSNMax.ca. This Internetbased service combines enriched sports coverage and exclusive reports from TSN and The Globe and Mail with dynamic video, personalized features, and wireless alerts of news and scores. Convergence Showcase On October 16 th, BCE held a media and analyst briefing in Toronto showcasing the first wave of convergence products to be launched by year-end. In addition to TSNMAX.ca other consumer focused convergence products showcased included: GlobeinvestorGOLD a premium subscriptionbased financial website. Gamesmania subscription-based access to cutting-edge games VoiceNet voice activated access to web-based information for wireless customers. Also displayed were a number of products developed by Bell and BCE Emergis for business customers including: SmartWeb allows small businesses to build their own website. e-crm an e-customer relationship management tool for medium sized businesses. e-invoicer B2B electronic invoice presentment and processing for medium and large businesses. BCE Inc. Investor Briefing Third Quarter 2001 Page 7

9 9 (1) (2) Results by Operating Group Three months ended September 30 Nine months ended September 30 (Millions of dollars, except where otherwise indicated) % change % change Revenues Bell Canada Bell Canada Holdings 4,220 3, % 12,351 11, % Bell ExpressVu % % Total Bell Canada 4,337 4, % 12,692 11, % Bell Globemedia (2.0%) % Teleglobe (5.2%) 1,539 1, % BCE Emergis % % Corporate and other (including core intercompany eliminations) (160) (171) 6.4% (512) (511) (0.2%) Total core revenues 5,087 4, % 15,043 13, % BCE Ventures (3) % 1,172 1, % Non-core intercompany eliminations (120) (43) N.M (252) (148) (70.3%) Revenues 5,379 5, % 15,963 14, % EBITDA Bell Canada Bell Canada Holdings 1,863 1, % 5,294 4, % Bell ExpressVu (45) (22) N.M. (122) (77) (58.4%) Total Bell Canada 1,818 1, % 5,172 4, % Bell Globemedia (6) (4) (50.0%) (16.7%) Teleglobe % N.M. BCE Emergis % % Corporate and other (including core intercompany eliminations) (31) (16) (93.8%) (82) (49) (67.3%) Total core EBITDA 1,854 1, % 5,338 4, % BCE Ventures (3) % % Non-core intercompany eliminations (12) - N.M. (34) - N.M. EBITDA 1,942 1, % 5,577 5, % Cash Baseline Earnings * Bell Canada Bell Canada Holdings (4) % 1, % Bell ExpressVu (45) (36) (25.0%) (129) (92) (40.2%) Total Bell Canada (2.5%) % Bell Globemedia (16) (13) (23.1%) (7) (6) (16.7%) Teleglobe (4) (14) (42) 66.7% (63) (137) 54.0% BCE Emergis 12 3 N.M N.M. Corporate and other (including core intercompany eliminations) N.M N.M. Total core cash baseline earnings applicable to common shares % % BCE Ventures (3) (4) 13 N.M (66.7%) Non-core intercompany eliminations (1) - N.M. 3 (6) N.M. Cash baseline earnings applicable to common shares % % Core cash baseline earnings per common share - $/sh $ 0.40 $ % $ 1.16 $ % Cash baseline earnings per common share - $/sh $ 0.40 $ % $ 1.17 $ % Average number of common shares outstanding (millions) N.M. : not meaningful * For a reconciliation of reported earnings, please refer to page 19 See accompanying notes on pages BCE Inc. Investor Briefing - Third quarter 2001 Page 8

10 Selected Historical Information Total (Millions of dollars, except where otherwise indicated) Q3 01 Q2 01 Q1 01 Q4 00 Q3 00 Q2 00 Q Revenues Bell Canada Bell Canada Holdings 4,220 4,133 3,998 4,078 3,982 3,807 3,628 15,495 Bell ExpressVu Total Bell Canada 4,337 4,248 4,107 4,176 4,063 3,875 3,686 15,800 Bell Globemedia ,171 Teleglobe ,013 BCE Emergis Corporate and other (including core intercompany eliminations) (160) (189) (163) (183) (171) (163) (177) (694) Total core revenues 5,087 5,057 4,899 4,988 4,795 4,616 4,359 18,758 BCE Ventures (3) ,429 Non-core intercompany eliminations (120) (98) (34) (48) (43) (55) (50) (196) Revenues 5,379 5,390 5,194 5,298 5,089 4,918 4,686 19,991 EBITDA Bell Canada Bell Canada Holdings 1,863 1,753 1,678 1,702 1,768 1,632 1,556 6,658 Bell ExpressVu (45) (34) (43) (61) (22) (28) (27) (138) Total Bell Canada 1,818 1,719 1,635 1,641 1,746 1,604 1,529 6,520 Bell Globemedia (6) (4) Teleglobe (9) BCE Emergis Corporate and other (31) (29) (22) (20) (16) (9) (24) (69) Total core EBITDA 1,854 1,786 1,698 1,742 1,771 1,660 1,548 6,721 BCE Ventures (3) Non-core intercompany eliminations (12) (10) (12) EBITDA 1,942 1,883 1,752 1,800 1,821 1,721 1,634 6,976 Cash Baseline Earnings Bell Canada Bell Canada Holdings (4) ,218 Bell ExpressVu (45) (40) (44) (54) (36) (29) (27) (146) Total Bell Canada ,072 Bell Globemedia (16) (13) 10 (3) 8 Teleglobe (4) (14) (46) (3) (8) (42) (47) (48) (145) BCE Emergis (3) 16 Corporate and other (including core intercompany eliminations) Total core cash baseline earnings applicable to common shares ,016 BCE Ventures (4) Non-core intercompany eliminations (1) (2) (4) (6) Cash baseline earnings applicable to common shares ,062 Core cash baseline earnings per common share - $/sh $ 0.40 $ 0.38 $ 0.37 $ 0.36 $ 0.34 $ 0.30 $ 0.24 $ 1.25 Cash baseline earnings per common share - $/sh $ 0.40 $ 0.39 $ 0.38 $ 0.39 $ 0.36 $ 0.31 $ 0.26 $ 1.31 Average number of common shares outstanding (millions) See accompanying notes on pages BCE Inc. Investor Briefing - Third quarter 2001 Page 9

11 Selected Financial Information (Millions of dollars, except where otherwise indicated) Proportionate EBITDA (6) Number of common * BCE* shares owned by BCE Ownership % Q3 01 Q2 01 Q1 01 Q Mth Trailing (M) ($M) ($M) ($M) ($M) ($M) Bell Canada Bell Canada Holdings 80% 1,285 1,202 1,173 1,191 4,851 Aliant % (5) Bell ExpressVu 100% (45) (34) (43) (61) (183) Total Bell Canada 1,356 1,281 1,226 1,225 5,088 Bell Globemedia 70% (9) Teleglobe 95% BCE Emergis % BCE Ventures (3) BCI % (4) 39 CGI % Telesat 100% Other 100% Total BCE Ventures Corporate and other 100% (43) (39) (34) (20) (136) Total 1,456 1,409 1,320 1,350 5,535 Proportionate Net Debt and Preferreds (6) Number of common * BCE* shares owned by BCE Ownership % September 30 (M) 2001 Bell Canada Bell Canada Holdings 80% 12,453 Aliant (5) % (5) 819 ExpressVu 100% 232 Total Bell Canada 13,504 Bell Globemedia 70% 465 Teleglobe 95% 2,497 BCE Emergis % (4) BCE Ventures BCI % 1,685 CGI % (1) Telesat 100% 442 Other 100% 1,353 Total BCE Ventures 3,479 Corporate 100% (3,108) Total 16,833 Corporate Liquidity and Debt Investments Net of Debt and Preferred Shares Outstanding September Cash and cash equivalents 540 Nortel common shares at market 114 Bell Canada Holdings debt due to BCE 4,154 Preferred shares outstanding (7) (1,700) Total 3,108 Other Information Nine months ended September Shares outstanding (M) Shares issued (M) Shares purchased for cancellation (M) Book value ($/sh) *At September 30, 2001 See accompanying notes on pages BCE Inc. Investor Briefing - Third quarter 2001 Page 10

12 (1a) (4) Bell Canada Financial Information Three months ended September 30 Nine months ended September 30 (Millions of dollars, except where otherwise indicated) % change % change Cash Baseline Income Statement Revenues Local and access 1,635 1, % 4,706 4, % Long distance (10.2%) 2,004 2,147 (6.7%) Wireless % 1,346 1, % Data % 2,569 2, % Other (1.8%) 1,726 1, % Total Bell Canada Holdings (including Aliant) 4,220 3, % 12,351 11, % Bell ExpressVu % % Total operating revenues 4,337 4, % 12,692 11, % Cash operating expenses Bell Canada Holdings (including Aliant) 2,357 2, % 7,057 6, % Bell ExpressVu % % Total cash operating expenses 2,519 2, % 7,520 6, % EBITDA Bell Canada Holdings (including Aliant) 1,863 1, % 5,294 4, % Bell ExpressVu (45) (22) N.M. (122) (77) (58.4%) Total EBITDA 1,818 1, % 5,172 4, % Depreciation and amortization (715) (699) (2.3%) (2,142) (2,057) (4.1%) Pension credit (3.4%) % Interest payments to third parties (236) (194) (21.6%) (711) (592) (20.1%) Interest payments to BCE (42) (59) 28.8% (129) (168) 23.2% Equity income and other (including non-controlling interest) (58) (56) (3.6%) (120) (126) 4.8% Cash baseline earnings before income taxes % 2,167 2, % Income taxes (368) (334) (10.2%) (945) (905) (4.4%) Cash baseline earnings (1.4%) 1,222 1, % Interest on equity settled notes (15) (15) 0.0% (44) (44) 0.0% Preferred dividends (15) (11) (36.4%) (40) (30) (33.3%) Cash baseline earnings applicable to common shares (2.5%) 1,138 1, % Cash baseline contribution to BCE (2.5%) % Net Debt and Preferreds September Cash and cash equivalents Bell Canada operating level debt (8) 13,891 Debt and equity notes due from Bell (9) (2,768) Debt and equity notes due to BCE 4,154 Equity notes due to SBC 314 Total Bell Canada Holdings net debt 15,566 Net Debt - Aliant 1,819 Net Debt - Bell ExpressVu 232 Total 17,617 (25) Other Balance Sheet Information September Consolidated common shareholders' equity 6,698 Other Information Three months Nine months For the periods ended September Free cash flow (10) 64 (304) (988) (1,042) Net capital expenditures ,533 2,259 N.M. : not meaningful See accompanying notes on pages BCE Inc. Investor Briefing - Third quarter 2001 Page 11

13 Bell Canada (1a) (4) Selected Historical Information Total (Millions of dollars, except where otherwise indicated) Q3 01 Q2 01 Q1 01 Q4 00 Q3 00 Q2 00 Q Cash Baseline Income Statement Revenues Local and access 1,635 1,590 1,481 1,543 1,521 1,492 1,463 6,019 Long distance ,845 Wireless ,515 Data ,919 Other ,197 Total Bell Canada Holdings (including Aliant) 4,220 4,133 3,998 4,078 3,982 3,807 3,628 15,495 Bell ExpressVu Total operating revenues 4,337 4,248 4,107 4,176 4,063 3,875 3,686 15,800 Cash operating expenses Bell Canada Holdings (including Aliant) 2,357 2,380 2,320 2,376 2,214 2,175 2,072 8,837 Bell ExpressVu Total cash operating expenses 2,519 2,529 2,472 2,535 2,317 2,271 2,157 9,280 EBITDA Bell Canada Holdings (including Aliant) 1,863 1,753 1,678 1,702 1,768 1,632 1,556 6,658 Bell ExpressVu (45) (34) (43) (61) (22) (28) (27) (138) Total EBITDA 1,818 1,719 1,635 1,641 1,746 1,604 1,529 6,520 Depreciation and amortization (715) (732) (695) (715) (699) (689) (669) (2,772) Pension credit Interest payments to third parties (236) (242) (233) (217) (194) (197) (201) (809) Interest payments to BCE (42) (43) (44) (51) (59) (59) (50) (219) Equity income and other (including non-controlling interest) (58) (27) (35) (37) (56) (54) (16) (163) Cash baseline earnings before income taxes ,669 Income taxes (368) (291) (286) (302) (334) (280) (291) (1,207) Cash baseline earnings ,462 Interest on equity settled notes (15) (15) (14) (15) (15) (14) (15) (59) Preferred dividends (15) (13) (12) (10) (11) (10) (9) (40) Cash baseline earnings applicable to common shares ,363 Cash baseline contribution to BCE ,072 See accompanying notes on pages BCE Inc. Investor Briefing - Thrid quarter 2001 Page 12

14 Bell Canada (1a) Operating Statistics* Three months ended September 30 Nine months ended September % change % change Wireline Network access service (k) Residential 8,648 8, % Business 4,736 4, % 13,384 13, % Estimated Local market share (%) - Bell Canada only Residential 99.4% 99.6% (0.2%) Business 90.6% 93.6% (3.2%) 96.1% 97.4% (1.3%) Long Distance conversation minutes (M) 4,400 4, % 13,396 13, % Estimated Long Distance market share (% based on revenues) - Bell Canada only 64.1% 63.5% 0.9% SmartTouch feature revenues ($M) % % Data Data revenues ($M) Legacy (11) % 1,620 1, % Non-Legacy (12) % % % 2,569 2, % Digital equivalent access lines (13) (k) - Bell Canada only 3,734 2, % Internet subscribers (14) (k) DSL High Speed Internet subscribers (k) N.M. Dial-up Internet subscribers (k) 1, % 1, % Wireless Cellular & PCS Net activations (k) Pre-paid N.M % Post-paid (13.4%) % % % Cellular & PCS subscribers (k) Pre-paid % Post-paid 2,310 1, % 3,186 2, % Wireless ARPU ($/month) % % Pre-paid % % Post-paid % % Post-paid churn (%) (average per month) 1.5% 1.3% 15.4% 1.4% 1.6% (12.5%) Usage per subscriber (min/month) % % Estimated cost of acquisition (15) ($/sub) - Bell Mobility only % (1.5%) Browser hits (M) - Bell Mobility only N.M N.M. Paging Subscribers (k) % ARPU ($/month) (9.1%) (16.7%) DTH Total DTH subscribers (k) % Net subscriber activations (k) % % ARPS ($/month) (4.3%) (2.2%) Churn (%) (per quarter, year-to-date) 3.3% 3.1% 6.5% 8.9% 10.2% (12.7%) *Operating statistics are reported on a consolidated basis, except where otherwise noted. N.M. : not meaningful See accompanying notes on pages BCE Inc. Investor Briefing - Third quarter 2001 Page 13

15 Bell Canada (1a) Selected Historical Information Operating Statistics* Total Q3 01 Q2 01 Q1 01 Q4 00 Q3 00 Q2 00 Q Wireline Network access service (k) Residential 8,648 8,576 8,652 8,642 8,602 8,530 8,581 Business 4,736 4,721 4,723 4,719 4,726 4,656 4,609 13,384 13,297 13,375 13,361 13,328 13,186 13,190 Estimated Local market share (%) - Bell Canada only Residential 99.4% 99.5% 99.6% 99.6% 99.6% 99.6% 99.6% Business 90.6% 90.8% 91.9% 92.8% 93.6% 94.4% 95.5% 96.1% 96.3% 96.8% 97.1% 97.4% 97.7% 98.2% Long Distance conversation minutes (M) 4,400 4,498 4,498 4,634 4,372 4,464 4,428 17,898 Estimated Long Distance market share (% based on revenues) - Bell Canada only 64.1% 63.2% 61.5% 62.0% 63.5% 62.3% 61.2% SmartTouch feature revenues ($M) Data Data revenues ($M) Legacy (11) ,007 Non-Legacy (12) ,919 Digital equivalent access lines (13) (k) - Bell Canada only 3,734 3,599 3,445 3,158 2,840 2,571 2,408 Internet subscribers (14) (k) DSL High Speed Internet subscribers (k) Dial-up Internet subscribers (k) 1, ,627 1,497 1,412 1, Wireless Cellular & PCS Net activations (k) Pre-paid Post-paid (1) Cellular & PCS subscribers (k) Pre-paid Post-paid 2,310 2,207 2,109 2,053 1,909 1,790 1,656 3,186 3,035 2,884 2,770 2,550 2,409 2,224 Wireless ARPU ($/Month) Pre-paid Post-paid Post-paid churn (%) (average per month) 1.5% 1.4% 1.3% 1.4% 1.3% 1.5% 2.0% 1.5% Usage per subscriber (min/month) Estimated cost of acquisition (15) ($/sub) - Bell Mobility only Browser hits (M) - Bell Mobility only Paging Subscribers (k) ARPU ($/month) DTH Total DTH subscribers (k) Net subscriber activations (k) ARPS ($/month) Churn (%) (per quarter, year-to-date) 3.3% 2.9% 2.7% 2.6% 3.1% 3.0% 4.1% 12.9% * Operating statistics are reported on a consolidated basis, except where otherwise noted. See accompanying notes on pages BCE Inc. Investor Briefing - Third quarter 2001 Page 14

16 Bell Globemedia (1b) (2) Financial Information Three months ended September 30 Nine months ended Setpember 30 (Millions of dollars, except otherwise indicated) % change % change Income Statement Data Revenues Advertising (3.0%) % Subscriber % % Production and Sundry (13.6%) % Total Revenues (2.0%) % EBITDA (6) (4) (50.0%) (16.7%) Cash baseline contribution to BCE (16) (13) (23.1%) (7) (6) (16.7%) Operating Statistics Sympatico-Lycos * Page views (in millions) % 2,825 1,210 N.M. Unique visitors per month (in millions) ** 8.5 N/A N.M. Selected Historical Information Total (Millions of dollars, except where otherwise indicated) Q3 01 Q2 01 Q1 01 Q4 00 Q3 00 Q2 00 Q Income Statement Data Revenues Advertising Subscriber Production and Sundry Total Revenues ,171 EBITDA (6) (4) Cash baseline contribution to BCE (16) (13) 10 (3) 8 Operating Statistics Bell Globemedia Interactive* Page views (in millions) 972 1, ,941 Unique visitors per month (in millions) *** 8.5 N/A N/A N/A N/A N/A N/A Sympatico-Lycos ** Unique visitors per month (in millions) *** N/A Globe Interactive Unique visitors per month (in millions)*** N/A N/A N/A N/A *As of July 1, 2001, Bell Globemedia Interactive combines all interactive new media initiatives across the company including Sympatico-Lycos, Globe Interactive, CTV Interacitve and the new media initiatives of the former Netstar group of properties. **Sympatico-Lycos commenced operations in May *** Source: Media Metrix N.M. : not meaningful See accompanying notes on pages BCE Inc. Investor Briefing - Third quarter 2001 Page 15

17 (1c) (2) Teleglobe Financial Information Three months ended September 30 Nine months ended September 30 (Millions of dollars, except where otherwise indicated) % change % change Income Statement Data Gross revenues: Voice (5.6%) 1,079 1,142 (5.5%) Data and hosting (4.1%) % Total gross revenues (5.2%) 1,539 1, % Net operating revenues: Voice % % Data and hosting (7.6%) % Total net operating revenues % % Network expenses (10.5%) % Selling, general and administration expenses (5.8%) % EBITDA % N.M Cash baseline contribution to BCE (14) (42) 66.7% (63) (137) 54.0% Selected Historical Information Total (Millions of dollars, except otherwise indicated) Q3 01 Q2 01 Q1 01 Q4 00 Q3 00 Q2 00 Q Income Statement Data Gross revenues: Voice ,490 Data and hosting Total gross revenues ,013 Net operating revenues: Voice Data and hosting Total net operating revenues Network expenses Selling, general and administration expenses EBITDA (9) Cash baseline contribution to BCE (14) (46) (3) (8) (42) (47) (48) (145) Operating Statistics Total Q3 01 Q2 01 Q1 01 Q4 00 Q3 00 Q2 00 Q Voice Minutes (millions) 1,850 1,868 1,669 1,759 1,785 1,728 1,584 6,856 GlobeSystem Deployment Sept.30 Jun.30 Mar.31 Dec Fibre capacity (lambda route miles) 63,494 34,060 15,915 5,853 Full service POPs Total Q3 01 Q2 01 Q1 01 Q4 00 Q3 00 Q2 00 Q Net capital expenditures ($M) N.M.: not meaningful See accompanying notes on pages BCE Inc. Investor Briefing - Third quarter 2001 Page 16

18 (1d) (2) BCE Emergis Financial Information Three months ended September 30 Nine months ended September 30 (Millions of dollars, except where otherwise indicated) % change % change Income Statement Data Revenues: Canadian Business Unit % % U.S. Business Unit 20 5 N.M N.M. ehealth Business Unit % % Total Revenues % % Operating expenses % % EBITDA % % Cash baseline contribution to BCE 12 3 N.M N.M. Other Selected Data Revenues by geographic mix: Canada % % United States % % Other % 1 5 N.M % % Selected Historical Information Total (Millions of dollars, except otherwise indicated) Q3 01 Q2 01 Q1 01 Q4 00 Q3 00 Q2 00 Q Income Statement Data Revenues: Canadian Business Unit U.S. Business Unit ehealth Business Unit Total Revenues Operating expenses EBITDA Cash baseline contribution to BCE (3) 16 Other Selected Data Revenues by geographic mix: Canada United States Other N.M. : not meaningful See accompanying notes on pages BCE Inc. Investor Briefing - Third quarter 2001 Page 17

19 (1e) (2) (3) BCE Ventures Financial Information Three months ended September 30 Nine months ended September 30 (Millions of dollars, except otherwise indicated) % change % change Revenues BCI % % CGI % % Telesat % % Other (19.0%) % Total Revenues % 1,172 1, % EBITDA BCI 27 (5) N.M % CGI % % Telesat % % Other % 21 (1) N.M. EBITDA % % Cash Baseline Contribution to BCE CGI % % Telesat (26.7%) % Other (23) (6) N.M. (50) (20) N.M. Cash Baseline Contribution to BCE (4) 13 N.M (66.7%) Selected Historical Information Total (Millions of dollars, except where otherwise indicated) Q3 01 Q2 01 Q1 01 Q4 00 Q3 00 Q2 00 Q Revenues BCI CGI Telesat Other Total Revenues ,429 EBITDA BCI (5) (5) CGI Telesat Other (3) (1) 4 EBITDA Cash Baseline Contribution to BCE CGI Telesat Other (23) (12) (15) (6) (6) (9) (5) (26) Cash Baseline Contribution to BCE (4) See accompanying notes on pages BCE Inc. Investor Briefing - Third quarter 2001 Page 18

20 Reconciliation of reported earnings YTD (Millions of dollars, except where otherwise indicated) Q3 01 Q2 01 Q Cash baseline earnings to common shares Bell Canada: Restructuring charge - - (114) (114) Gain on sale of Sympatico-Lycos Gain on sale of TDL Hong Kong Goodwill expense (18) (18) (17) (53) Aliant dilution gains and other Impact of Income tax rate adjustments and Other - 2 (1) 1 Bell Globemedia: Goodwill expense (36) (36) (36) (108) Impact of Income tax rate adjustments and Other - (10) - (10) Teleglobe: Goodwill expense (95) (103) (111) (309) Restructuring and other one-time charge (77) - - (77) BCE Emergis: - Goodwill expense (82) (89) (76) (247) Write-off of assets and IPR&D (15) 3 (21) (33) Dilution gain BCE Ventures: Bell Canada International (289) (83) 151 (221) Dilution gain in CGI Other Ventures - Gain on sale of Vistar Telesat - Investment write-off (PSN) (3) - - (3) Goodwill expense (6) (6) (7) (19) Excel - discontinued operations (3) - (9) (18) (27) Goodwill impairment (16) - - (2,049) (2,049) Impact of Income tax rate adjustments and Other Corporate: Gain on sale of Nortel Networks shares & settlement of related fund contracts - - 2,901 2,901 Teleglobe one-time charge - - (20) (20) Teleglobe one-time charge - Excel related (discontinued operations) - - (40) (40) Impact of Income tax rate adjustments and Other - (13) - (13) Net cash baseline adjustments (468) (344) 648 (164) Reported earnings applicable to common shares (146) (31) Reported earnings per common share - $/sh $ (0.18) $ (0.04) $ 1.19 $ 0.97 Average number of common shares outstanding (millions) See accompanying notes on pages BCE Inc. Investor Briefing - Third quarter 2001 Page 19

21 BCE Inc. Accompanying Notes (1) BCE centers its activities around four core operating businesses: Bell Canada (Canadian connectivity); Bell Globemedia (content), Teleglobe (global connectivity); and BCE Emergis (commerce). All other non-core investments are combined in BCE Ventures. (a) Bell Canada Bell Canada provides an integrated platform of domestic telecommunications services including voice, data, wireline, wireless, directory communications and satellite entertainment to Canadian customers. This segment reflects the consolidation of : Bell Canada Holdings (BCH) (80%): BCH results reflect the consolidation of Bell Canada (100%) and its wholly-owned subsidiaries, mainly, Bell Mobility, BCE Nexxia Inc and Bell ActiMedia Inc. In addition, BCH holds interests in Bell Intrigna (33.3%) and Manitoba Telecom Services Inc. (21.7% on a fully diluted basis) which are accounted for using the equity method, and Teleglobe (23%) which is accounted for at cost; Aliant (approximately 39% held by Bell Canada and approximately 14% held by BCE Inc.); and Bell ExpressVu Limited Partnership (100%). (b) Bell Globemedia (BGM) BGM is a Canadian multi-media company in the fields of broadcasting, print and the Internet. BGM provides integrated information, communications and entertainment services to Canadian customers and access to distinctive Canadian content that allows the creation of unique destinations for Internet users through various portal properties. BCE holds a 70.1% interest in BGM and therefore consolidates its results. BGM s main activities are centered around CTV Inc. (100%), Globe and Mail (100%), Globe Interactive (100%) and Sympatico-Lycos (71%). (c) Teleglobe This segment represents Teleglobe Communications group. Teleglobe provides, on a worldwide basis, a broad portfolio of voice, data and Internet services including connectivity services, hosting services and content distribution to Internet service providers, Internet content providers, application service providers, carriers and global enterprises. BCE holds an effective 95.4% ownership in Teleglobe (approximately 23% held by Bell Canada of which BCE indirectly owns 80% and approximately 77% held directly by BCE Inc.) and therefore consolidates Teleglobe s results. (d) BCE Emergis Represents BCE Emergis Inc. BCE Emergis focuses its activities in three business units (Canadian, US and ehealth), offering a full suite of products to companies in transaction-intensive, ehealth and financial services sectors. BCE Emergis Inc. is 65% owned by BCE and financial results are consolidated. (e) BCE Ventures Represents investments in a diverse group of companies which provide services to customers worldwide. This segment consolidates BCE s interests in BCI (73.7%), Telesat Canada (100%), TMI Communications and Company Limited Partnership (100%), Bimcor Inc. (100%), BCE Capital Inc. (100%) and TeleReal Inc. (100%), as well as, CGI (32.6%) on a proportionate basis and Look Communications Inc. (25.3%) at cost. (2) For comparative purposes, financial results for 2000 have been reported on a proforma basis to reflect full year consolidation of CTV (including Netstar), The Globe and Mail and Globe Interactive in the Bell GlobeMedia segment as well as Teleglobe Inc. The acquisition of Teleglobe Inc. consisted of Teleglobe Communications group (reported in the Teleglobe segment), Excel Communications group (see note 3) and Look (reported in the BCE Ventures segment). In 2000, Teleglobe Inc. s corporate expenses were reported in the Teleglobe segment. BCE Inc. Investor Briefing Third Quarter 2001 Page 20

22 BCE Inc. Accompanying Notes (continued) (3) Discontinued Operations BCI: Prior period figures have been restated to reflect BCI s discontinued operations in its Asia Mobile segment comprised primarily of KG Telecommunications Co. Ltd. and its Latin America Competitive Local Exchange Carriers business segment, comprising primarily of Axtel S.A. de C.V., Vésper S.A., Vésper Sao, Paulo S.A. and Vento S.A. Ltda. Excel: On August 26, 2001, BCE Inc. announced the signing of definitive agreements for the sale of Excel s North American assets to VarTec Telecom Inc. (VarTec) and the discontinuance of Excel s U.K. operations. Consequently, Excel s results are now reported as discontinued operations. Figures for 2000 have been restated to exclude Excel s cash baseline earnings from the Teleglobe segment, with the exception of interest expense related to Excel s debt which will not be assumed by VarTec, as well as Excel s revenues and EBITDA, previously reported in the BCE Ventures segment. Figures for 2001 have been restated to exclude Excel s results from BCE Ventures, except for any interest expense related to Excel s debt (allocated from Teleglobe Inc.) which is remaining within the BCE Ventures segment. (4) Bell Canada prior period figures have been restated to reflect Bell Canada s 23% equity interest in Teleglobe Inc. s earnings in the Teleglobe segment. (5) Represents 80% of Bell Canada s 38.9% (52.9M shares) interest and 100% of BCE s 13.9% interest (18.9M shares). (6) Calculated by applying BCE s ownership interest at September 30, (7) Includes Series P Retractable preferred shares of $400 million, which are reflected in other long-term liabilities on the financial statements. (8) Represents the debt, equity settled notes and preferred shares at the Bell Canada operating level. (9) Represents the debt and equity settled notes at the Bell Canada operating level due to BCH. (10) Represents cash from operating activities plus or minus cash from investing activities (including capital expenditures) less dividends paid. (11) Legacy data revenues include digital transmission services such as MEGALINK TM, network access for Integrated Services Digital Network (ISDN) and Data, as well as, competitive network services and the sale of inter-networking equipment. (12) Non-legacy data revenues include national and regional IP data and Internet services. (13) Digital equivalent access lines are derived by converting high capacity data lines to the estimated capacity of one NAS line. The conversion multiples used are as follows: Basic ISDN = 2, Primary ISDN= 23, DEA = 24, DSO = 1, DS1 = 24, DS3 = 672. Prior period numbers have been restated to include MicroLink lines and switched DS1 lines. (14) DSL High Speed Internet subscribers include consumer, business and wholesale. Dial-up Internet subscribers include consumer and business. (15) Includes an allocation of selling costs from Bell Canada and excludes costs of migrating from analog to digital. (16) In March 2001, after completion of an assessment of the carrying value of BCE s investment in Excel, an impairment charge in the amount of $2,049 million was recorded. The assets of Excel were written down to their estimated net recoverable amount, which was determined using the undiscounted net future cash flows to be generated by these assets. The primary factor contributing to the impairment was a lower than expected operating profit due to a reduction in Excel s forecasted minute volumes and average revenue per minute, which were expected to continue in the foreseeable future. As a result of this impairment charge, goodwill was reduced by $1,621 million and capital and other assets were reduced by $428 million. BCE Inc. Investor Briefing Third Quarter 2001 Page 21