BCE reports 2009 second quarter results, announces dividend increase



    
    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.

    - Cost reductions lead to Bell EBITDA growth of 3.0%
    - Adjusted EPS up 9.4% to $0.58; Statutory EPS stable
    - Seventh consecutive quarter of fewer YOY residential local line losses
    - Common share dividend increased by 5% to $1.62 per year
    - Financial guidance increased
    

    MONTREAL, Aug. 6 /CNW Telbec/ - BCE Inc. (TSX, NYSE:   BCE), Canada's
largest communications company, today reported BCE and Bell results for the
second quarter of 2009 and announced a 5% increase in its annual common share
dividend and improved financial guidance for 2009.
    BCE reported improved financial performance with solid free cash flow and
earnings, despite the economy's adverse impact on revenue growth this quarter;
the seventh consecutive quarter of improved year-over-year residential local
line losses; and continued progress on the execution of Bell's 5 Strategic
Imperatives - Improve Customer Service, Accelerate Wireless, Leverage Wireline
Momentum, Invest in Broadband Networks and Services, and Achieve a Competitive
Cost Structure.
    "Bell continued to make clear progress in executing our strategic
imperatives this quarter, with particular success in affirming the culture of
cost management and operational efficiency that allowed the Bell team to
deliver improved EBITDA performance," said George Cope, President and CEO of
BCE and Bell Canada. "With our year-to-date earnings performance and a sound
balance sheet, we are in a strong position to continue to return value to
shareholders through the dividend increase announced today. This is the second
increase to the annual common share dividend this year, demonstrating BCE's
commitment to return cash to shareholders through consistent and sustainable
dividend increases."
    BCE today announced that the annual common share dividend will increase
by 5% to $1.62 per share. Accordingly, the Board has declared a quarterly
dividend of $0.405 per common share, payable on October 15, 2009 to
shareholders of record at the close of business on September 15, 2009. This
increase is funded from free cash flow and is consistent with the company's
target dividend payout ratio of 65% to 75% of Adjusted EPS.
    "Based on the strength of our year-to-date operating performance, our
latest expectations for the balance of the year, and the completed
acquisitions of The Source and Virgin Mobile Canada, we are increasing our
revenue, EBITDA and Adjusted EPS guidance for 2009," said Siim Vanaselja,
Chief Financial Officer of BCE and Bell Canada.
    "We've also continued to execute against our capital structure
objectives. In June, using cash on hand, we repaid a total of $1.35 billion of
debt comprised of all the outstanding BCE Series C Notes and Bell Series M-2
Debentures. We raised $1 billion in debt in June and, last week, used part of
those proceeds to redeem all of the outstanding $600 million principal amount
of Bell Series M-16 Debentures. Our only remaining debt maturity in 2009 is
the $150 million principal amount of Bell Series EC Debentures maturing in
December, which we will self-fund. The lower cost of debt from this
refinancing will result in an annualized pre-tax savings on interest of
approximately $25 million," said Mr. Vanaselja.
    In line with its strategic imperative to Accelerate Wireless, Bell today
announced it has signed a reciprocal wireless roaming agreement with AT&T that
will enable AT&T wireless customers to roam on Bell Mobility's new HSPA
network when it launches, while providing Bell customers access to AT&T's GSM
and 3G wireless networks in the United States.
    The news follows several other recent initiatives that directly support
Bell's 5 Strategic Imperatives, including:

    
    - The announcement of several new mobile smartphones, including the
      popular BlackBerry Tour and the highly anticipated Palm Pre, which will
      be available in Canada exclusively from Bell Mobility on August 27,
      2009
    - The completion on July 1, 2009 of Bell's acquisitions of national
      retailer The Source and of leading wireless youth brand Virgin Mobile
      Canada
    - A minority equity interest in the successful bid led by the Molson
      family to acquire the Montréal Canadiens Hockey Club and the Bell
      Centre, supporting expanded access to popular Canadiens content via
      Bell Mobility, Bell TV and Bell Internet
    - Ongoing expansion of Bell TV's leadership in High Definition TV with
      the addition of more new channels to what was already the largest
      roster of HD channels available in Canada
    - Increased investment in Bell's next-generation wireless and Internet
      broadband networks for business and residential clients - including the
      national HSPA 3G network rolling out in time for the 2010 Winter Games
      in Vancouver.
    

    Bell's service revenues decreased slightly to $3,385 million, or by 0.6%,
this quarter as growth in video and data revenues was offset by declines in
wireless, local and access and long distance revenues. Bell's product revenues
declined by 12.0% to $243 million due to a decrease in lower margin product
sales. Overall, Bell's operating revenues decreased by 1.5% to $3,628 million
this quarter.
    Bell's operating income was $628 million, or 8.5% lower than the same
period last year due to higher restructuring and other costs. Bell's EBITDA(1)
grew by 3.0% this quarter, to $1,450 million as cost reductions more than
offset the impact of lower revenues and higher pension expenses which
negatively impacted EBITDA by $20 million. Bell's EBITDA margin grew by 1.8
percentage points this quarter to 40.0%.
    The Bell Wireless segment(2) had 404,000 gross activations this quarter,
or 3.3% more than last year. Postpaid net activations were 64,000 this quarter
compared to 111,000 last year. The prepaid client base decreased by 19,000
this quarter compared to a decrease of 28,000 last year.
    Bell Wireless service revenues declined slightly by 0.3% and Bell
Wireless product revenues declined by 11.1%. Total Bell Wireless operating
revenues decreased by 1.4%. Bell Wireless operating income and EBITDA grew by
7.0% and 5.9% respectively. EBITDA margin on wireless service revenues
increased 2.8 percentage points to 46.6%. Blended ARPU decreased by $2.22 to
$52.05 as the impact of economic pressures on customer usage and lower roaming
revenues more than offset data revenue growth of 28%.
    The Bell Wireline segment had its seventh consecutive quarter of
year-over-year improvement in residential local line (NAS) losses, which
declined by 100,000 this quarter, or 20.0% fewer than the decline of 125,000
in Q2 2008. Business NAS declined by 32,000 this quarter compared to a decline
of 7,000 last year, reflecting the continued softening of the SMB market. Bell
Wireline operating revenues decreased by 2.0% as more cautious business
investment adversely affected revenue performance. Bell Wireline operating
income decreased by 21.6% and Bell Wireline EBITDA increased by 1.7%.
    Bell invested $679 million of capital this quarter, an increase of 16.5%
compared to the same period last year. Capital expenditures supported Bell's
strategic imperatives with focused investment on enhancing its wireless
networks, including the deployment of an HSPA 3G network expected to be in
service nationally by early 2010, and the continuing expansion of the wireline
broadband network, including the Fibre-to-the-node (FTTN) program and Fibre to
multiple dwelling units (MDUs).
    BCE's cash from operating activities this quarter was $1,476 million, or
4.1% lower than the same period last year due to higher pension contributions
and restructuring and other costs. Free cash flow(3) was $520 million this
quarter, compared to $652 million in the same period last year due to lower
cash from operating activities and higher capital expenditures.
    BCE's net earnings applicable to common shares this quarter were $346
million, or $0.45 per share, compared to $361 million, or $0.45 per share, for
the same period last year. EPS included higher restructuring and other costs
of $0.13 per share this quarter compared to $0.06 per share last year. EPS
this quarter also included the impact of fewer outstanding BCE common shares
as a result of share purchases made through the normal course issuer bid
completed in May. BCE's Adjusted EPS(4) was $0.58 this quarter, or 9.4% higher
than in Q2 2008.

    
    Financial Highlights
    -------------------------------------------------------------------------
    ($ millions except per share amounts)   Q2 2009     Q2 2008    % change
    (unaudited)
    -------------------------------------------------------------------------
    Bell(i) Operating Revenues               $3,628      $3,683        (1.5%)
    -------------------------------------------------------------------------
    Bell EBITDA                              $1,450      $1,408         3.0%
    -------------------------------------------------------------------------
    Bell Operating Income                      $628        $686        (8.5%)
    -------------------------------------------------------------------------
    BCE Operating Revenues                   $4,302      $4,394        (2.1%)
    -------------------------------------------------------------------------
    BCE EBITDA                               $1,792      $1,744         2.8%
    -------------------------------------------------------------------------
    BCE Operating Income                       $825        $886        (6.9%)
    -------------------------------------------------------------------------
    BCE Cash From Operating Activities       $1,476      $1,539        (4.1%)
    -------------------------------------------------------------------------
    Free Cash Flow                             $520        $652       (20.2%)
    -------------------------------------------------------------------------
    BCE Net Earnings Applicable to Common
     Shares                                    $346        $361        (4.2%)
    -------------------------------------------------------------------------
    BCE EPS                                   $0.45       $0.45         0.0%
    -------------------------------------------------------------------------
    BCE Adjusted EPS                          $0.58       $0.53         9.4%
    -------------------------------------------------------------------------
    (i) Bell includes the Bell Wireless and Bell Wireline segments.
    

    BCE's operating revenues declined by 2.1% to $4,302 million this quarter
due to lower revenues at Bell and Bell Aliant.
    BCE's operating income decreased to $825 million this quarter, or by
6.9%, due to lower operating income at Bell and Bell Aliant. BCE's EBITDA
increased 2.8% to $1,792 million this quarter due to EBITDA growth at Bell and
Bell Aliant.

    Bell Wireless Segment

    The Bell Wireless segment was impacted by the weaker economy but
delivered strong growth in wireless data revenues, increased EBITDA and margin
expansion.

    
    - Total Bell Wireless operating revenues decreased by 1.4% to
      $1,104 million this quarter due principally to lower wireless product
      revenues. Wireless service revenues were largely stable as a larger
      subscriber base was offset by lower ARPU. Wireless product revenues
      decreased by 11.1% to $88 million due to lower average handset pricing
      and discounted acquisition offers in the quarter.
    - Postpaid ARPU decreased by $3.61 to $62.58 due to lower usage, lower
      roaming revenues, and the migration to lower rate plans as customers
      reacted to a weaker economy, partly offset by growth in wireless data
      revenues. Prepaid ARPU decreased by $1.07 to $16.41 due to the
      elimination of the system access fee for prepaid customers and lower
      usage, partly offset by growth in wireless data revenues. Blended ARPU
      decreased by $2.22 to $52.05.
    - Bell Wireless operating income grew by 7.0% to $338 million this
      quarter as a result of higher EBITDA. Bell Wireless EBITDA grew by 5.9%
      to $468 million this quarter due to lower subscriber acquisition and
      retention costs, partly offset by lower revenues.
    - EBITDA margins on wireless service revenues increased to 46.6% this
      quarter, or by 2.8 percentage points, when compared to the same period
      last year.
    - Total gross activations were 404,000 this quarter, an increase of 3.3%
      from Q2 of last year.
    - Postpaid net activations were 64,000 this quarter compared to net
      activations of 111,000 a year ago due to lower postpaid gross
      activations and higher churn primarily driven by the soft economy. The
      prepaid client base decreased by 19,000 compared to a decrease of
      28,000 last year as higher prepaid gross activations were partly offset
      by higher churn. Total net activations were 45,000 this quarter, 45.8%
      fewer than last year.
    - The Bell Wireless client base reached 6,572,000 at the end of the
      quarter.
    - Postpaid churn increased to 1.3% from 1.1% last year and prepaid churn
      increased to 3.3% from 3.0%. Blended churn increased to 1.7% from 1.6%.
    - Cost of acquisition decreased to $356 per gross activation this
      quarter, or 14.6% lower than last year, due to lower marketing and
      commission expense.
    

    Bell Wireline Segment

    The Bell Wireline segment grew EBITDA and continued to reduce the number
of residential NAS losses this quarter.

    
    - Bell Wireline operating revenues decreased by 2.0% to $2,575 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. Although a large part of our residential business is
      exhibiting resiliency during this weaker economy, more cautious
      business customer investment has adversely affected the revenue
      performance of our SMB and Enterprise units.
    - Bell Wireline operating income decreased by 21.6% to $290 million this
      quarter as higher depreciation, amortization of intangible assets, and
      restructuring and other costs more than offset higher EBITDA. Bell
      Wireline EBITDA increased by 1.7%, to $982 million this quarter, as a
      decline in labour costs attributable to a reduced workforce and rigid
      spending controls more than offset higher pension and variable
      compensation expenses. The impact of two unusual charges from Q2 2008
      regarding CRTC video broadcast licence fees and a write-down of assets
      related to the termination of Bell Internet's PC equipment sales
      program also positively impacted the Bell Wireline EBITDA growth rate
      this quarter.
    - Local and access revenues declined by 5.8% to $796 million this quarter
      due to ongoing residential and business NAS erosion. This is the fourth
      consecutive quarter that the rate of erosion of local and access
      revenues has improved.
    - Residential NAS declined by 100,000 this quarter, a 20.0% improvement
      over the decline of 125,000 experienced last year reflecting ongoing
      customer winbacks and demand for Home Phone packages. Business NAS
      declined by 32,000 this quarter compared to a decline of 7,000 in the
      same quarter last year reflecting the continued softening of the SMB
      market in Ontario and Québec. Total NAS declined by 5.4% on a year-
      over-year basis.
    - Long distance revenues declined by 9.1% to $271 million this quarter
      due mainly to ongoing residential and business NAS erosion, pricing
      pressures in our business and wholesale markets, and the increased
      adoption of unlimited or large block of time plans by residential
      customers.
    - Data revenues increased by 2.8% to $919 million this quarter as growth
      in high-speed Internet customer connections and residential Internet
      ARPU and higher revenues from our Wholesale unit were largely offset by
      the further erosion of legacy data services, including decreased data
      equipment sales to SMB customers.
    - High-speed Internet customer connections increased by 2,000 this
      quarter, compared to a decrease of 1,000 last year. At the end of the
      quarter, Bell had 2,062,000 high-speed Internet customer connections, a
      year-over-year increase of 2.4%.
    - Video revenues were $389 million this quarter, or 9.3% higher than last
      year due largely to an ARPU increase of $4.51 to $68.98. ARPU increased
      as a result of customer upgrades to higher-priced programming packages,
      driven partly by the increased adoption of premium set-top boxes, and
      price increases.
    - Video EBITDA increased by 93.6% to $91 million this quarter as Q2
      2008's results include the adverse effect from a judicial decision
      related to CRTC video broadcast licence fees. Video EBITDA also grew
      this quarter due to higher ARPU and a larger customer base.
    - Total video subscribers increased by 20,000 this quarter compared to an
      increase of 8,000 last year. At the end of the quarter, the video
      subscriber base reached a total of 1,884,000.
    - Video subscriber churn of 1.1% was unchanged from last year.
    - Equipment and other revenues decreased by 16.8% to $119 million due to
      lower overall equipment sales as a result of the weaker economy and the
      termination of the PC equipment sales program in Q2 2008.
    

    Bell Aliant Regional Communications

    Bell Aliant's revenues decreased to $790 million this quarter, or by
5.4%, due to the wind-down of the operations of Atlantic Mobility Products
(AMP) in Q3 2008 and to lower equipment and other revenues. Operating income
decreased by 1.5% to $197 million due to lower revenues and higher
restructuring and other costs which were largely offset by lower operating
expenses.

    Improved Outlook

    BCE increased its financial guidance for 2009 for revenues, EBITDA and
Adjusted EPS and maintained its guidance for capital intensity and free cash
flow at previous levels to reflect year-to-date results, the latest
expectations for the balance of the year and the acquisitions of The Source
and Virgin Mobile Canada. BCE's original guidance for 2009, issued on February
11, 2009, and its updated guidance are as follows:

    
    -------------------------------------------------------------------------
    2009 Guidance         Issued February 11, 2009   Updated August 6, 2009
    -------------------------------------------------------------------------
    Bell(i)
    -------------------------------------------------------------------------
    Revenues                                Stable        Growth of 1% - 2%
    -------------------------------------------------------------------------
    EBITDA(ii)                              Stable        Growth of 1% - 2%
    -------------------------------------------------------------------------
    Capital intensity                    15% - 16%                15% - 16%
    -------------------------------------------------------------------------
    BCE
    -------------------------------------------------------------------------
    Adjusted EPS(iii)    Growth of greater than 5%            $2.40 - $2.50
    -------------------------------------------------------------------------
    Free Cash Flow(iv)         $1,750 M - $1,900 M      $1,750 M - $1,900 M
    -------------------------------------------------------------------------
    (i)   Bell's 2009 financial guidance for revenue, EBITDA and capital
          intensity is exclusive of Bell Aliant.
    (ii)  EBITDA includes pension expense
    (iii) Adjusted EPS guidance of $2.40 - $2.50 corresponds to Adjusted EPS
          growth of approximately 7% - 11%
    (iv)  The most comparable Canadian GAAP financial measure is cash from
          operating activities. For 2009, BCE expects to generate
          approximately $1,750 million to $1,900 million in free cash flow.
          This amount reflects expected BCE cash from operating activities of
          approximately $4.9 billion to $5.1 billion.
    

    Call with Financial Analysts

    BCE will hold a conference call for financial analysts to discuss its
second quarter results on Thursday, August 6 at 8:00 a.m. (Eastern). Media are
welcome to participate on a listen-only basis. To participate, please dial
(416) 340-2216 or toll-free 1-866-226-1798 shortly before the start of the
call. A replay will be available for one week by dialing (416) 695-5800 or
1-800-408-3053 and entering pass code 5502855#.
    There will also be a live audio webcast of the call available on BCE's
website at: http://www.bce.ca/en/news/eventscalendar/webcasts/2009/20090806/.
The mp3 file will be available for download on this page later in the day.

    
    Notes

    The information contained in this news release is unaudited.

    (1) The 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                                                 Q2 2009     Q2 2008
    -------------------------------------------------------------------------
    Operating income                                        825         886
    Depreciation and amortization of intangible assets      821         787
    Restructuring and other                                 146          71
    -------------------------------------------------------------------------
    EBITDA                                                1,792       1,744
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    BELL                                                Q2 2009     Q2 2008
    -------------------------------------------------------------------------
    Operating income                                        628         686
    Depreciation and amortization of intangible assets      680         651
    Restructuring and other                                 142          71
    -------------------------------------------------------------------------
    EBITDA                                                1,450       1,408
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    BELL WIRELINE                                       Q2 2009     Q2 2008
    Operating income                                        290         370
    Depreciation and amortization of intangible assets      553         533
    Restructuring and other                                 139          63
    -------------------------------------------------------------------------
    EBITDA                                                  982         966
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    BELL WIRELESS                                       Q2 2009     Q2 2008
    Operating income                                        338         316
    Depreciation and amortization of intangible assets      127         118
    Restructuring and other                                   3           8
    -------------------------------------------------------------------------
    EBITDA                                                  468         442
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (2) 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
        our ownership position in Q2 2009.

    (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 and distributions received
        from Bell Aliant less capital expenditures, preferred share
        dividends, dividends/distributions paid by subsidiaries to non-
        controlling interest, other investing activities and Bell Aliant free
        cash flow. We consider free cash flow to be an important indicator of
        the financial strength and performance of our business because it
        shows how much cash is available to repay debt and 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. 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)
    -------------------------------------------------------------------------
                                                        Q2 2009     Q2 2008
    -------------------------------------------------------------------------
    Cash from operating activities                        1,476       1,539
    Bell Aliant distributions to BCE                         73          74
    Capital expenditures                                   (800)       (710)
    Other investing activities                              (27)          2
    Cash dividends paid on preferred shares                 (27)        (32)
    Cash dividends/distributions paid by subsidiaries
     to non-controlling interest                            (92)        (92)
    Bell Aliant free cash flow                              (83)       (129)
    -------------------------------------------------------------------------
    Free cash flow                                          520         652
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (4) The term Adjusted net earnings 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 Adjusted net
        earnings or Adjusted EPS, 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 adjusted net earnings on a
        consolidated basis and per BCE common share.

    ($ millions except per share amounts)
    -------------------------------------------------------------------------
                                        Q2 2009                 Q2 2008
    -------------------------------------------------------------------------
                                                PER                     PER
                                  TOTAL       SHARE       TOTAL       SHARE
    -------------------------------------------------------------------------
    Net earnings applicable to
     common shares                  346        0.45         361        0.45
    Restructuring and other          98        0.13          48        0.06
    Net (gains) losses on
     investments                      3        0.00          16        0.02
    -------------------------------------------------------------------------
    Adjusted net earnings           447        0.58         425        0.53
    -------------------------------------------------------------------------
    

    Management's Discussion and Analysis

    This release should be read in conjunction with BCE's 2009 Second Quarter
MD&A dated August 5, 2009 which is incorporated by reference in this release,
and is filed by BCE with the U.S. Securities and Exchange Commission under
Form 6-K (available at www.sec.gov) and with Canadian securities commissions
(available at www.sedar.com). This document is also available on BCE's website
at www.bce.ca.

    Caution Concerning Forward-Looking Statements

    Certain statements made in this news release, including, but not limited
to, statements relating to our financial guidance for 2009, and other
statements that are not historical facts, are forward-looking statements and
are subject to important risks, uncertainties and assumptions.
    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 and you are
cautioned not to place undue reliance on these forward-looking statements.
These forward-looking statements assume, in particular, that many of our lines
of business will be resilient to the current economic downturn. However, we
caution that the current adverse economic conditions make our forward-looking
statements and underlying assumptions subject to greater uncertainty and that,
consequently, they may not materialize. It is impossible to predict with
certainty the full impact that the current economic downturn and credit crisis
will have on our business or residential customers' purchasing patterns. 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. Except as otherwise indicated by BCE, these 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 the date hereof. Forward-looking statements are provided for the purpose
of providing information about management's current expectations and plans
relating to 2009 and allowing investors and others to get a better
understanding of our operating environment. Readers are cautioned that such
information may not be appropriate for other purposes.

    Material Assumptions

    A number of Canadian economic and market assumptions were made by BCE in
preparing forward-looking statements for 2009 contained in this release,
including, but not limited to: (i) Canadian GDP to decrease by approximately
2%, compared to 2008, consistent with estimates by the six major banks in
Canada, (ii) the Bank of Canada's target overnight rate to remain fairly
stable at approximately 1%, (iii) the Consumer Price Index as estimated by
Statistics Canada to decline to the range of 1.0% to 1.5%, (iv) revenues
generated by the residential voice telecommunications market to continue to
decrease due to wireless substitution and other factors including e-mail and
instant messaging substitution, (v) current levels of competition to continue
for residential and business local voice telephony, as cable operators and
other telecom service providers maintain the intensity of their marketing
efforts and continue to leverage their network footprints to pursue market
share in our regions, (vi) slower Internet and video market growth than in the
previous few years as a result of the relatively high penetration rates for
these services and a reduced focus by our indirect retailers on actively
selling these services and supporting the product category,(vii) wireless
industry penetration growth in 2009 to be similar to 2008, subject to the
economic environment potentially causing a slowing of growth.
    In addition, BCE's and Bell Canada's 2009 guidance is also based on
various internal financial and operational assumptions. Our guidance related
to Bell (excluding Bell Aliant) is based on certain assumptions concerning
Bell, including, but not limited to: (i) many of our lines of business to
provide good resiliency and protection from an economic downturn so that
spending on our core wireline telephone services should not be severely
impacted given the importance of these services to both residential and
business customers, (ii) reduced housing starts and residential moves to
contribute to reduced customer turnover, (iii) Enterprise market demand to be
adversely affected as business clients revisit their investment plans due to
tighter credit availability, economic uncertainty, continued competition from
offshore manufacturing and reduced public sector spending, (iv) the softening
of the Ontario and Québec SMB market to continue with the potential to drive
business NAS erosion higher, (v) more conservative investments by Enterprise
customers to result in lower capital spending requirements to support business
customers, (vi) the economic recessionary environment, increased price
competition and the introduction of new wireless entrants, potentially as soon
as the second half of 2009, to put pressure on ARPU and result in customer
satisfaction and retention becoming even more critical over time, (vii)
residential NAS losses to decline in 2009 compared to 2008, (viii) Bell's
revenue outlook was derived in the context of a worsening economy, (ix) Bell's
total net benefit plans cost, which is based on a discount rate of 7.0% and a
2008 return on pension plan assets of approximately (19.5%), is expected to be
approximately $260 million in 2009, (*) Bell's 2009 retirement benefit plans
funding is estimated to be approximately $500 million, based on a 10-year
amortization of the pension solvency deficits that arose during 2008, (xi)
Bell's capital intensity in 2009 is estimated to be in the 15% to 16% range,
(xii) Bell to continue to invest in extending its fibre network, and (xiii)
Bell's 100-day plan annualized cost savings and other cost reduction
opportunities to be approximately $400 million.
    Our guidance related to BCE is based on certain assumptions for 2009,
including, but not limited to: (i) restructuring and other charges in the
range of $350 million to $400 million, (ii) depreciation and amortization
expense at levels slightly above 2008, (iii) an effective tax rate of
approximately 20%, while the statutory tax rate is approximately 32%, (iv)
relatively stable cash taxes for 2009 given the accelerated utilization of
Bell's investment tax credit carry-forwards, and (v) the permanent repayment
of long-term debt maturing in 2009.
    The foregoing assumptions, although considered reasonable by BCE at the
time of preparation of its financial guidance and business outlook and other
forward-looking statements, may prove to be inaccurate. Accordingly, our
actual results could differ materially from our expectations as set forth in
this news release.

    Material Risks

    Factors that could cause actual results or events to differ materially
from those expressed in or implied by our forward-looking statements include:
general economic and credit market conditions, the level of consumer
confidence and spending, and the demand for, and prices of, our products and
services; our ability to implement our strategies and plan in order to produce
the expected benefits; our ability to continue to implement our cost reduction
initiatives and contain capital intensity while seeking to improve customer
service; the intensity of competitive activity, including the increase in
wireless competitive activity that could result from Industry Canada's
licensing of advanced wireless services spectrum, and the resulting impact on
our ability to retain existing and attract new customers, and on our pricing
strategies and financial results; increased contributions to retirement
benefit plans; our ability to respond to technological changes and rapidly
offer new products and services; events affecting the functionality of, and
our ability to protect, maintain and replace, our networks, information
technology (IT) systems and software; our ability to maintain customer service
and network operations in the event of the occurrence of epidemics, pandemics
and other health risks; events affecting the ability of third-party suppliers
to provide to us essential products and services; labour disruptions; the
potential adverse effects on our Internet and wireless businesses of network
congestion due to a significant increase in broadband demand; our ability to
raise the capital we need to implement our business plan, including for BCE's
share buy-back programs and dividend payments and to fund capital and other
expenditures; our ability to discontinue certain traditional services as
necessary to improve capital and operating efficiencies; regulatory
initiatives or proceedings, litigation and changes in laws or regulations;
launch and in-orbit risks of satellites used by Bell TV; competition from
unregulated U.S. direct-to-home (DTH) satellite television services sold
illegally in Canada and the theft of our satellite television services; BCE's
dependence on its subsidiaries' ability to pay dividends; stock market
volatility; depending, in particular, on the economic, competitive and
technological environment at any given time, and subject to dividends being
declared by the board of directors, there can be no certainty that BCE's
dividend policy will be maintained; Bell Aliant's ability to make
distributions to BCE and Bell Canada; health concerns about radio frequency
emissions from wireless devices; delays in completion of the high speed packet
access (HSPA) overlay of our wireless network and the successful
implementation of the network build and sharing arrangement with TELUS to
achieve cost efficiencies and reduce deployment risks; and loss of key
executives.
    For additional information with respect to certain of these and other
assumptions and risks, please refer to BCE's 2008 Annual MD&A dated March 11,
2009 included in the BCE 2008 Annual Report, BCE's 2009 First Quarter MD&A
dated May 6, 2009, and BCE's 2009 Second Quarter MD&A dated August 5, 2009,
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

    BCE is Canada's largest communications company, providing the most
comprehensive and innovative suite of communication services to residential
and business customers in Canada. Operating under the Bell and Bell Aliant
brands, the Company's services include telephone services, wireless
communications, high-speed Internet, digital television, IP-broadband services
and information and communications technology (ICT) services. BCE shares are
listed in Canada and the United States. For corporate information on BCE,
please visit www.bce.ca. For Bell product and service information, please
visit www.bell.ca.




For further information:

For further information: Media inquiries: Jacqueline Michelis, Bell
Media Relations, (613) 785-1427, jacqueline.michelis@bell.ca; Investor
inquiries: Thane Fotopoulos, BCE Investor Relations, (514) 870-4619,
thane.fotopoulos@bell.ca

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