BCE Reports 2008 Third Quarter Results



    
    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.

    - Bell revenue up 1.8% to $3.8 billion; Bell EBITDA up 2.4%
    - Record Q3 postpaid wireless net additions - 113,000
    - Fourth consecutive quarter of fewer YOY residential line losses
    - Completion of 100-day plan to restructure and re-energize Bell
    

    MONTREAL, Quebec, Oct. 29 /CNW Telbec/ - BCE Inc. (TSX, NYSE:   BCE),
Canada's largest communications company, today reported BCE and Bell Canada
results for the third quarter of 2008.
    Bell reported solid revenue and EBITDA growth, its fourth consecutive
quarter of decreased year-over-year residential line losses and steady
progress in the operating performance of its wireless and wireline segments.
    "This was a quarter of clear progress against Bell's strategic
imperatives, with improved customer satisfaction, accelerating growth in
wireless and ongoing momentum in our consumer and business wireline
operations," said George Cope, President and Chief Executive Officer of BCE
and Bell Canada.
    "We successfully implemented the Bell 100-day plan in the quarter,
including the streamlining of our organization, the launch of our new brand,
and significant investments in our customer service and broadband wireless and
wireline networks. Bell is clearly moving forward as a customer-focused,
competitive and cost-efficient communications company," Mr. Cope said.
    Bell's 100-day plan began on July 11 and included the launch of a bold
new national brand focused around the tagline "Today just got better"; the
rollout of two new customer-service products, Same Day Next Day service and
Express Install; the announcement of a strategic wireless network investment
expanding Bell's high-speed wireless offering and setting the stage for its
move to fourth-generation, or 4G, wireless; enhanced fibre rollouts to new
multiple dwelling units (MDUs) in Ontario and Quebec, and the deployment of
Nortel Networks' 40G Adaptive Optical Engine in its backbone broadband
network, the first such implementation in Canada.
    As part of the 100-day plan, Bell also announced a newly streamlined and
customer-focused structure that resulted in a 30% reduction in the number of
Bell executives and an overall 15% reduction in management ranks, or 2,500
positions. Combined with other workforce reductions undertaken earlier this
year, these changes are expected to provide annualized savings of
approximately $300 million.
    The Bell Wireless segment(1) had 113,000 postpaid net activations, or 49%
more than last year, with postpaid churn improving to 1.1% from 1.4%. Total
net activations were 117,000, reflecting a decrease in prepaid net activations
to 4,000 from 61,000 the year before. Total Bell Wireless operating revenues
increased by 9.3% and Bell Wireless EBITDA grew by 6.0%.
    Wireline momentum continued with improvements in residential line losses
for the fourth consecutive quarter and improving performance in the high-speed
Internet business. High-speed Internet net activations were 33,000 this
quarter, compared with 29,000 in Q3 2007, bringing Bell's total high-speed
Internet customer connections to 2,046,000 and reaffirming the company's
position as Canada's number-one ISP. Wireline also delivered EBITDA growth of
0.7% with key contributions from the Bell video and Enterprise units.
    Residential local line losses improved by 32,000 to 72,000 this quarter
from 104,000 in the same quarter last year. Total NAS declined by 10.0% over
the last twelve months. However, total NAS declined by just 5.8% when
normalized for the previously announced contract termination with a major
wholesale customer and a beginning-of-year adjustment to Bell's residential
NAS base following a review of historical records.
    Bell's operating revenues grew by 1.8% to $3,757 million this quarter as
growth in wireless, video, and data revenues more than offset declines in
local and access, long distance, and equipment and other revenues. Revenues
from Bell's growth services portfolio of wireless, video, high-speed Internet
and other services, such as ICT solutions, grew by 8% and now represent 60% of
Bell's revenues.
    Bell's operating income was $451 million, or 34% lower than last year due
to restructuring and other charges of $320 million this quarter. These charges
include amounts for workforce reduction initiatives, the proposed
privatization transaction, and the relocation of employees and the closing of
real estate facilities. Adjusted for these charges, Bell's operating income
grew by 3.6%.
    Bell's EBITDA(2) grew by 2.4% to $1,425 million due to stronger wireless
revenues and lower subscriber acquisition costs combined with relatively
stable Bell Wireline EBITDA.
    Bell invested $566 million of capital this quarter, or 1.2% less than Q3
2007. Underscoring Bell's commitment to its strategic imperatives including to
accelerate wireless and to invest in broadband networks and services, capital
expenditures focused on enhancing the wireless network and the continuing
expansion of the Fibre-to-the-node (FTTN) program. Bell also invested $741
million in advanced wireless services (AWS) spectrum licences this quarter.
    BCE's cash from operating activities was $1,649 million this quarter, up
2.7% from last year. BCE's free cash flow(3) of $89 million this quarter was
lower than $425 million in Q3 2007 due to the expenditure of $741 million for
AWS spectrum licences partly offset by a reduction of $293 million in common
dividends paid.

    
    Financial Highlights
    -------------------------------------------------------------------------
    ($ millions except per share amounts)    Q3 2008     Q3 2007    % change
    (unaudited)
    -------------------------------------------------------------------------
    Bell(i) Operating Revenues                $3,757      $3,689        1.8%
    -------------------------------------------------------------------------
    BCE(ii) Operating Revenues                $4,460      $4,476       (0.4%)
    -------------------------------------------------------------------------
    Bell EBITDA                               $1,425      $1,391        2.4%
    -------------------------------------------------------------------------
    BCE EBITDA                                $1,768      $1,793       (1.4%)
    -------------------------------------------------------------------------
    Bell Operating Income                       $451        $687      (34.4%)
    -------------------------------------------------------------------------
    BCE Operating Income                        $654        $903      (27.6%)
    -------------------------------------------------------------------------
    BCE Cash From Operating Activities        $1,649      $1,605        2.7%
    -------------------------------------------------------------------------
    BCE Free Cash Flow                           $89        $425      (79.1%)
    -------------------------------------------------------------------------
    BCE EPS                                    $0.31       $0.50      (38.0%)
    -------------------------------------------------------------------------
    BCE EPS before restructuring and other
     and net losses (gains) on investments(4)  $0.60       $0.54       11.1%
    -------------------------------------------------------------------------
    (i)  Bell includes the Bell Wireless and Bell Wireline segments.
    (ii) BCE's results for Q3 2007 include Bell, Bell Aliant and Telesat
         while BCE's results for Q3 2008 include only Bell and Bell Aliant.
    

    On October 31, 2007, BCE completed the sale of Telesat. Accordingly,
BCE's results for Q3 2008 no longer reflect Telesat's financial results while
BCE's results for Q3 2007 include Telesat's results for the full quarter.
    BCE's operating revenue declined by 0.4% to $4,460 million this quarter
as revenue growth at Bell was offset by lower revenue at Bell Aliant and the
loss of Telesat's contribution to revenue. BCE's operating income decreased by
27.6% to $654 million due to higher restructuring and other charges at Bell
and to the loss of Telesat's contribution to operating income. BCE's EBITDA
declined 1.4% to $1,768 million this quarter as Bell's EBITDA growth was
offset by the loss of Telesat's contribution to EBITDA.
    BCE's net earnings per share (EPS) was $0.31 for the quarter compared to
$0.50 for the same period last year. EPS this quarter included restructuring
and other charges of $0.27 and net losses on investments of $0.02.
    EPS before restructuring and other and net losses (gains) on
investments(4) was $0.60 in the quarter, or 11.1% higher than Q3 2007 due to
lower depreciation and amortization expense and lower interest expense partly
offset by lower EBITDA.

    
    Bell Wireless Segment

    The Bell Wireless segment delivered solid financial performance in Q3, a
record quarter for postpaid net activations and improved postpaid churn.

    - Total Bell Wireless operating revenues grew by 9.3% to $1,180 million
      due to a larger subscriber base and stronger equipment sales. Wireless
      network revenues increased by 8.5% to $1,061 million and wireless
      equipment revenues grew by 23.9% to $109 million due to higher
      smartphone sales and customer upgrades.
    - Bell Wireless operating income grew by 0.6% to $338 million this
      quarter as a result of higher EBITDA partly offset by higher
      depreciation and amortization expense and higher restructuring and
      other charges. Bell Wireless EBITDA grew by 6.0% to $474 million due to
      higher revenues and lower subscriber acquisition costs.
    - EBITDA margins on network revenues decreased by 1.0 percentage point to
      44.7% this quarter.
    - Total gross activations were 439,000 this quarter, or down 1.3%
      compared to last year.
    - Postpaid net activations reached the record level of 113,000 this
      quarter, or 49% higher than Q3 2007. Prepaid net activations decreased
      to 4,000 from the 61,000 experienced last year due to fewer prepaid
      gross activations and higher churn. Total net activations were 117,000
      this quarter, or 14.6% lower than last year.
    - The Bell Wireless client base reached 6,449,000, up 7.1% over last
      year.
    - Blended churn of 1.6% improved by 0.1 percentage points from Q3 2007
      with postpaid churn improving by 0.3 percentage points to 1.1% while
      prepaid churn increased to 3.2% from 2.7%.
    - Blended and postpaid ARPU were unchanged at $56 and $68 respectively.
      Prepaid ARPU decreased $1 to $18.
    - Cost of acquisition increased by 7.3% to $398 per gross activation,
      reflecting higher commission expense related to the sale of high-end
      smartphones and higher marketing costs related to promoting the new
      Bell brand.

    Bell Wireline Segment

    The Bell Wireline segment showed improvements in high-speed Internet and
video net additions this quarter and continued to reduce the number of
residential NAS losses.

    - Bell Wireline operating revenues decreased by 1.0% to $2,642 million
      this quarter as gains in video and data revenues were more than offset
      by decreases in local and access, long distance and equipment and other
      revenues.
    - Bell Wireline operating income decreased by 68% to $113 million due to
      higher restructuring and other charges. Bell Wireline EBITDA increased
      by 0.7% to $951 million as increased revenues from growth services and
      lower labour costs more than offset the margin loss due to the ongoing
      erosion of our NAS customer base.
    - Local and access revenues declined by 7.4% to $833 million due to
      ongoing NAS erosion.
    - Residential NAS declined by 72,000 this quarter, an improvement of
      32,000 over the decline of 104,000 experienced last year reflecting the
      effectiveness of Bell's integrated household marketing campaign, demand
      for Home Phone packages, and customer winbacks. Business NAS was stable
      this quarter.
    - Total NAS declined by 10.0% compared to the end of Q3 2007. However,
      when normalized for the contract termination with a major wholesale
      customer and a beginning-of-year adjustment to residential NAS
      following a review of historical records, total NAS declined by 5.8%.
    - Long distance revenues declined by 5.2% to $290 million this quarter
      due mainly to ongoing NAS erosion partly offset by pricing initiatives.
    - Data revenues increased 3.8% to $913 million this quarter due to growth
      in Internet, IP Broadband and ICT revenues partly offset by the
      further erosion of legacy data services.
    - High-speed Internet customer connections increased by 33,000 this
      quarter, compared to 29,000 in Q3 2007, due to the response to our new
      high-speed offers and back-to-school promotions. At the end of the
      quarter, Bell had 2,046,000 high-speed Internet customer connections,
      an increase of 3.6% compared to the end of Q3 2007.
    - Video revenues increased by 10.0% to $363 million this quarter due
      largely to an ARPU increase of $5 to $65. ARPU increased as a result of
      customer upgrades to higher-priced programming packages and pricing
      initiatives.
    - Video EBITDA was $76 million this quarter, or 16.9% higher than last
      year, due to higher ARPU and a larger customer base.
    - Total video subscribers increased by 7,000 this quarter, compared to
      3,000 in the same quarter in 2007, to reach a total of 1,838,000. This
      brings the total number of net new activations in the first nine months
      of 2008 to 16,000, compared with none in the corresponding nine-month
      period in 2007.
    - Video subscriber churn increased to 1.4% from 1.3% last year.
    - Equipment and other revenues decreased by 9.3% to $146 million due to
      lower customer premise equipment sales consistent with our continued
      focus on not pursuing low-margin business.
    

    Bell Aliant Regional Communications

    Bell Aliant's revenues decreased 1.3% this quarter to $821 million due
primarily to the wind-down of Atlantic Mobility Products (AMP) following
Bell's notification to terminate its contract to use AMP as its exclusive
distributor in Atlantic Canada. Operating income increased 14.7% to $203
million due to lower restructuring and other charges, depreciation and
amortization expenses and net benefit plans costs.

    Privatization Transaction

    As previously announced, BCE Inc. entered into a definitive agreement
dated June 29, 2007, as subsequently amended, relating to its privatization
through the proposed acquisition by a corporation owned by an investor group
led by Teachers' Private Capital, the private investment arm of the Ontario
Teachers' Pension Plan, and affiliates of Providence Equity Partners Inc.,
Madison Dearborn Partners, LLC and Merrill Lynch Global Private Equity of all
of BCE Inc.'s outstanding common and preferred shares. The transaction is
scheduled to close on or before December 11, 2008.

    Notes

    The information contained in this news release is unaudited.

    
    (1) Consistent with North American industry practices, total wireless
        gross activations, net activations and subscribers include 100% of
        Virgin Mobile's subscribers. Wireless ARPU, churn, usage per
        subscriber and cost of acquisition continue to be computed by
        including 50% of Virgin Mobile's results, a level corresponding to
        Bell Canada's ownership position.

    (2) The term EBITDA does not have any standardized meaning according to
        Canadian GAAP. It is therefore unlikely to be comparable to similar
        measures presented by other companies. We define EBITDA (earnings
        before interest, taxes, depreciation and amortization of intangible
        assets) as operating revenues less cost of revenue and selling,
        general and administrative expenses, meaning it represents operating
        income before depreciation and amortization of intangible assets and
        restructuring and other.

        We use EBITDA, among other measures, to assess the operating
        performance of our ongoing businesses without the effects of
        depreciation and amortization of intangible assets and restructuring
        and other. We exclude these items because they affect the
        comparability of our financial results and could potentially distort
        the analysis of trends in business performance. We exclude
        depreciation and amortization of intangible assets because it largely
        depends on the accounting methods and assumptions a company uses, as
        well as non-operating factors, such as the historical cost of capital
        assets. Excluding restructuring and other does not imply they are
        non-recurring.

        EBITDA allows us to compare our operating performance on a consistent
        basis. We believe that certain investors and analysts use EBITDA to
        measure a company's ability to service debt and to meet other payment
        obligations, or as a common measurement to value companies in the
        telecommunications industry.

        The most comparable Canadian GAAP financial measure is operating
        income. The following table is a reconciliation of operating income
        to EBITDA.

    ($ millions)
    -------------------------------------------------------------------------
    BCE                                                  Q3 2008     Q3 2007
    -------------------------------------------------------------------------
    Operating income                                         654         903
    Depreciation and amortization of intangible assets       794         812
    Restructuring and other                                  320          78
    -------------------------------------------------------------------------
    EBITDA                                                 1,768       1,793
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    BELL                                                 Q3 2008     Q3 2007
    -------------------------------------------------------------------------
    Operating income                                         451         687
    Depreciation and amortization of intangible assets       654         647
    Restructuring and other                                  320          57
    -------------------------------------------------------------------------
    EBITDA                                                 1,425       1,391
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    BELL WIRELINE                                        Q3 2008     Q3 2007
    -------------------------------------------------------------------------
    Operating income                                         113         351
    Depreciation and amortization of intangible assets       529         537
    Restructuring and other                                  309          56
    -------------------------------------------------------------------------
    EBITDA                                                   951         944
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    BELL WIRELESS                                        Q3 2008     Q3 2007
    -------------------------------------------------------------------------
    Operating income                                         338         336
    Depreciation and amortization of intangible assets       125         110
    Restructuring and other                                   11           1
    -------------------------------------------------------------------------
    EBITDA                                                   474         447
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (3) The term free cash flow does not have any standardized meaning
        according to Canadian GAAP. It is therefore unlikely to be comparable
        to similar measures presented by other companies. We define free cash
        flow as cash from operating activities after capital expenditures,
        total dividends and other investing activities. We consider free cash
        flow to be an important indicator of the financial strength and
        performance of our business because it shows how much cash is
        available to repay debt and to reinvest in our company. We present
        free cash flow consistently from period to period, which allows us to
        compare our financial performance on a consistent basis. We believe
        that free cash flow is also used by certain investors and analysts in
        valuing a business and its underlying assets. The most comparable
        Canadian GAAP financial measure is cash from operating activities.
        The following table is a reconciliation of cash from operating
        activities to free cash flow on a consolidated basis.

    ($ millions)
    -------------------------------------------------------------------------
                                                         Q3 2008     Q3 2007
    -------------------------------------------------------------------------
    Cash from operating activities                         1,649       1,605
    Capital expenditures                                    (705)       (763)
    Total dividends paid                                    (123)       (421)
    Other investing activities                              (732)          4
    -------------------------------------------------------------------------
    Free cash flow                                            89         425
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (4) The term net earnings before restructuring and other and net losses
        (gains) on investments does not have any standardized meaning
        according to Canadian GAAP. It is therefore unlikely to be comparable
        to similar measures presented by other companies.

        We use net earnings before restructuring and other and net losses
        (gains) on investments, among other measures, to assess the operating
        performance of our ongoing businesses without the effects of after-
        tax restructuring and other and net losses (gains) on investments. 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 necessarily non-recurring.

        The most comparable Canadian GAAP financial measure is net earnings
        applicable to common shares. The following table is a reconciliation
        of net earnings applicable to common shares to net earnings before
        restructuring and other and net losses (gains) on investments on a
        consolidated basis and per BCE Inc. common share.

    ($ millions except per share amounts)
    -------------------------------------------------------------------------
                                        Q3 2008                 Q3 2007
    -------------------------------------------------------------------------
                                   TOTAL   PER SHARE       TOTAL   PER SHARE
    Net earnings applicable to
     common shares                   248        0.31         406        0.50
    Restructuring and other          220        0.27          43        0.05
    Net losses (gains) on
     investments                      20        0.02          (7)      (0.01)
    -------------------------------------------------------------------------
    Net earnings before
     restructuring and other
     and net losses (gains) on
     investments                     488        0.60         442        0.54
    -------------------------------------------------------------------------
    

    Management's Discussion And Analysis

    This release should be read in conjunction with BCE Inc.'s 2008 Third
Quarter MD&A dated October 28, 2008 (available at
http://www.bce.ca/en/investors/financialperformance/quarterlyresults/) which
is incorporated by reference in this release, filed by BCE Inc. with the U.S.
Securities and Exchange Commission under Form 6-K and with Canadian securities
commissions.

    Caution Concerning Forward-Looking Statements

    This news release contains forward-looking statements relating to the
proposed privatization of BCE, certain expected annualized cost savings and
other statements that are not historical facts. Such forward-looking
statements are subject to important risks, uncertainties and assumptions
including, in particular, the inherent uncertainty regarding the conduct,
outcome and timing of any litigation. The results or events predicted in these
forward-looking statements may differ materially from actual results or
events. As a result, we cannot guarantee that any forward-looking statement
will materialize.
    The timing and completion of the proposed privatization transaction is
subject to each of the parties fulfilling their commitments under the
transaction documents and to a number of terms and conditions, including,
without limitation, the provisions of, and certain termination rights
available to the parties under, the definitive agreement dated June 29, 2007,
as amended including by the final amending agreement dated July 4, 2008,
governing the terms of the transaction. The conditions to the transaction may
not be satisfied in accordance with their terms, and/or the parties to the
definitive agreement may exercise their termination rights, in which case the
proposed privatization transaction could be modified, restructured or
terminated, as applicable. Failure to complete the proposed privatization
transaction could have a material adverse impact on the market price of BCE's
shares.
    The forward-looking statements contained in this news release are made as
of the date of this release 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. Additionally, we undertake no obligation to comment on
expectations of, or statements made by, third parties in respect of the
proposed privatization transaction. For additional information with respect to
certain of these and other assumptions and risks, please refer to BCE's 2007
annual management's discussion and analysis ("MD&A") dated March 5, 2008
included in the Bell Canada Enterprises 2007 Annual Report, BCE's 2008 First
Quarter MD&A dated May 6, 2008, BCE's 2008 Second Quarter MD&A dated August 5,
2008, BCE's 2008 Third Quarter MD&A dated October 28, 2008, the definitive
agreement dated June 29, 2007, as amended including by the final amending
agreement dated July 4, 2008, and BCE's management proxy circular dated August
7, 2007, all filed by BCE with the Canadian securities commissions (available
at www.sedar.com) and with the U.S. Securities and Exchange Commission
(available at www.sec.gov). These documents are also available on BCE's
website at www.bce.ca.

    About BCE Inc.

    BCE is Canada's largest communications company, providing the most
comprehensive and innovative suite of communication services to residential
and business customers in Canada. Under the Bell brand, the Company's services
include local, long distance and wireless phone services, high-speed and
wireless Internet access, IP-broadband services, information and
communications technology services (or value-added services) and
direct-to-home satellite and VDSL television services. BCE also holds an
interest in CTVglobemedia, Canada's premier media company. BCE shares are
listed in Canada and the United States.




For further information:

For further information: Jacques Bouchard, Bell Media Relations, (514)
391-2007, 1-877-391-2007, jacques.bouchard1@bell.ca; Thane Fotopoulos, BCE
Investor Relations, (514) 870-4619, thane.fotopoulos@bell.ca

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