Transcript: BCE Q2 2026 Earnings Conference Call

On Thursday, BCE (TSX: BCE ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This content is powered APIs. 5%, adjusted EBITDA growth of 1%, and generated over $1 billion in free cash flow.

7 times. BCE made significant advancements in its four strategic priorities, including improving customer retention, expanding fiber and wireless networks, leading in AI-powered enterprise solutions, and growing its digital media content. 8% rise in adjusted EBITDA. Ziply Fiber's build activity is expected to ramp up in the second half of the year, with progress in permits and engineering for future expansion markets.

5 times by the end of 2027. BCE's AI Fabric projects are progressing, with significant contracted capacity and future phases in development. Management emphasized a focus on maintaining profitability and disciplined investment. Full Transcript OPERATOR Good morning, ladies and gentlemen.

Welcome to the BCE Q2 2026 results conference call. I would now like to turn the meeting over to Chris Summers. Please go ahead, Mr. Summers.

Chris Summers, Investor Relations Thank you. Good morning, everyone, and thank you for joining our call. With me here today are Mirko Bibic, BCE's President and CEO, and our CFO, Curtis Millen. ca website, which we posted earlier this morning.

Before we begin, I'd like to draw your attention to our safe harbor statements on slide 2, reminding you that today's slide presentation and remarks made during the call will include forward-looking information and therefore are subject to risks and uncertainties. Results could differ materially. We disclaim any obligation to update forward-looking statements except as required by law. Please refer to our publicly filed documents for more details on assumptions and risks.

With that out of the way, I'll turn the call over to Mirko. Mirko Bibic, President and Chief Executive Officer, BCE Inc. and Bell Canada Thank you, Chris, and good morning to all. Our Q2 results show continued execution against the strategy we laid out at Investor Day last year.

5 percent, adjusted EBITDA grew 1% and we generated more than $1 billion of free cash flow in the quarter. 7 times while continuing to invest in the growth platforms that will shape BCE's long-term profile. The quarter also reflects progress across a number of key areas. Wireless trends improved with pricing better, reflecting the value we offer customers, postpaid churn reaching its lowest quarterly level in three years, and improved product margins.

Fiber continued to drive Internet growth across Canada and the US. Bell AI Fabric continued to build momentum and Bell Media delivered a strong quarter supported by FIFA World Cup performance and continued growth at Crave. This is exactly how we said we would run the company: disciplined execution in the core business, focused investment in higher growth opportunities, and a clear path to sustainable free cash flow growth. In fact, we've led the industry for the past couple of years in bringing down Canadian telecom capital spending in the face of unfavorable regulatory decisions, while at the same time redirecting that capital toward AI Fabric and US Fiber.

I'll start on slide three with our progress against the four strategic priorities we outlined last year. Putting the customer first remains foundational in Q2. The customer experience and retention initiatives we've executed over the past year and even before that continued to pay off. 02%, which is the lowest quarterly level in three years and in a lower growth market, that matters.

We also launched our Always On Internet solutions, Wireless Internet Backup and Power Backup. These are practical solutions that help customers stay connected when Internet service is disrupted or the power goes out, and they reflect how Bell's network assets can work together to deliver a more resilient experience. That focus on reliability and performance is also being recognized externally. During the quarter, Bell received leading network recognition from OpenSignal, Rohde & Schwarz and Ookla, including Canada's most reliable Internet, Canada's fastest 5G network, and a suite of 10 Ookla Speedtest Awards.

Now turning to our second priority, delivering the best fiber and wireless networks. You see that fiber continued to drive growth in the quarter. In Canada, we added more than 45,000 residential FTTH Internet subscribers, including Ziply Fiber. 2% Internet revenue growth.

Where we have fiber, we continue to win. That's been consistent. It's consistent in Canada and now in the US as well. At Ziply, the focus remains on build execution.

As we mentioned as early as the beginning of this year and reiterated in May of this year, permit submissions accelerated significantly through Q2, increasing more than fourfold from April to June. Contractor capacity and fiber supply are in place to support the expected second-half build ramp and penetration trends remain consistent with our investment case. In wireless, we delivered more than 41,000 postpaid mobile phone net adds comprising significant loading on the main Bell brand consumer share, which is in line with our peers, and we saw improved performance in the large enterprise segment.

This reflects our focus on higher value customers, lower handset discounting and a healthier recurring revenue mix across all customer segments. Video also remains an important part of the household strategy. Video net adds improved by roughly 24,000 year over year, driven by strong uptake of streaming bundles and a successful transition to hardware-free TV. Again, these are things we said we were going to do at Investor Day last October and if you combine that with fiber growth and adoption of Bell's own streaming and content services, you see support and continued momentum and product intensity on the full-service Bell brand.

We also completed construction of our first Sovereign Directed Device satellite ground station in Quebec, with additional ground stations underway as we build the infrastructure to extend wireless connectivity beyond the reach of traditional networks through our AST partnership. Turning to our next strategic priority, which is leading in enterprise with AI-powered solutions, this remains one of the clearest examples of how we are repositioning Bell for growth. We're bringing together cloud, cybersecurity, AI adoption, data sovereignty, connectivity and AI infrastructure for enterprise and government customers.

This is where Bell's enterprise relationships, national networks and AI capabilities come together. In Q2, demand for Ateco and Bell Cyber remains strong with combined revenue up 29% year over year, again clear proof of underlying momentum in AI-powered solutions. At the same time, Bell AI Fabric continues to move from announcement to execution. Saskatchewan remains on track with construction progressing at the 300 megawatt facility and first-phase operations expected in the first half of 2027.

The facility in Winnipeg is on track to enter service in the second half of this year and Merit Phase 2, which is supported by the Cohere Buzz, HPC and Hypertech partnership across AI models, GPU infrastructure and Canadian-built hardware, is expected in early 2027 as well. Turning to the last of our four strategic priorities, which is building a digital media and content powerhouse, the digital strategy which we've been executing in Bell Media for several years now continued to show strong momentum in Q2. 1 million, supported by 49% growth in direct-to-consumer streaming subs.

That scale matters because it gives a strong owned-and-operated domestic platform for premium content, sports and streaming, anchored in Canadian storytelling and our commitment to cultural sovereignty. FIFA World Cup 2026 was a major highlight this quarter. 5 million Canadians across TSN, RDS, CTV, Nouveau and Crave, with millions more through FIFA programming across our platforms. 4 million viewers.

Matches also consistently ranked among the most watched content on Crave. More broadly, premium content becomes more valuable as we monetize it across the full Bell Media ecosystem and increasingly through global content distribution. In Q2, digital video advertising revenue grew 39% year over year and total digital revenues were up 6%. That reinforces the monetization opportunity we continue to see from this strategy.

8% adjusted EBITDA growth in the quarter. Now I'll move to slide 5 because I want to come back to Bell AI Fabric and show the physical progress we're making on the ground. Saskatchewan is the anchor project; since our Q1 call, piling has been completed and structural steel work is underway at our 300 megawatt facility. Key construction partners are in place and the first phase remains on track for operations in the first half of 2027.

We now have approximately 335 megawatts of contracted capacity. Real facilities, real construction milestones, real customer commitments, all supporting the long-term AI-powered solutions growth platform we're building. Turning now to slide 6, this is the scorecard we introduced at Investor Day to track whether the strategy is translating into deeper customer relationships, stronger monetization and sustainable growth. Q2 shows continued execution against that roadmap.

We're focused on the operating drivers that support long-term revenue, EBITDA and free cash flow growth. And before I close, I want to thank the Bell team. The results we're sharing with everyone today reflect their focus on serving our customers, growing our business and executing against the transparent plan. Curtis will now take you through the financial and operating results in detail.

So Curtis, over to you now. Curtis Millen, Chief Financial Officer of BCE Inc. and Bell Canada Thank you, Mirko. Good morning, everyone.

I'll begin on slide 8 with BCE's consolidated financial results. We're pleased with our results which reflect continued execution against our plan, balancing measured investment with a clear focus on returns and free cash flow. 5% year over year in Q2 driven by the contribution from Ziply Fiber and growth at Bell Media. Adjusted EBITDA increased 1% driven by Ziply Fiber with Bell Media also contributing positively.

8%. Adjusted EPS was up 2 cents to 65 cents supported by higher adjusted EBITDA and the absence of certain non-cash mark-to-market losses on FX hedges and options recorded in Q2 of last year. Capex was up $317 million year over year reflecting Ziply Fiber's fiber buildout in the US and capital investments to support Bell AI Fabric. Putting aside the highly accretive AI Fabric investments, our Canadian telco capex declined year over year consistent with the disciplined multi-year reduction we've been executing.

3 billion is to be incurred in the second half of the year consistent with the structure we outlined. In March we received our first tenant payment on the Saskatchewan facility in the quarter, part of the approximately 400 million in setup fees and prepayments that partially offset the build cost of the facility. Free cash flow was over $1 billion in the quarter while down year over year due to higher capex. This was a strong result and is tracking consistent with our full year 26 guidance.

Overall in Q2 we delivered revenue and adjusted EBITDA growth, generated strong free cash flow and continued to fund targeted growth investments in Ziply Fiber and Bell AI Fabric. Turning to Bell CTS Canada on slide 9, starting with a high-level summary of Q2 sub metrics, we delivered 41,594 postpaid mobile phone net adds in the quarter, so it's modestly lower year over year reflecting a less active market and reduced promotional intensity compared to Q1. 02%, the lowest quarterly level since Q2 of 2023. The improvement reflected lower customer switching activity in the quarter together with the continued benefit of our customer service and retention initiatives.

ARPU is relatively stable year over year, down approximately 2% without the impact of G7 summit-related revenue in Q2 of last year. Importantly, the monthly recurring charges component of ARPU increased 7% supported by higher-quality loading and a healthier recurring revenue mix with improved transaction rates quarter over quarter and year over year. In broadband, residential FTTH Internet net adds were 45,271, a strong result. Demand for fiber remains strong and fiber continues to be the anchor of our household strategy.

Video also continues to improve with 8,741 net adds compared to a net loss of 15,851 in Q2 of last year. The improvement was supported by strong uptake of streaming bundles and a successful transition to hardware-free TV, reinforcing the product intensity strategy we outlined at our investor day. 4% year over year supported by continued momentum in AI-powered solutions including Ateco and Bell Cyber. On a reported basis, BVM was lower reflecting two non-recurring items in Q2 of last year: revenue from the Mission Flats AI data center in Kamloops, BC which was recognized upon delivery under finance lease accounting, as well as G7 summit-related revenue.

Wireless service revenue also affected by the G7 summit in Q2 of last year which, without that impact, was stable year over year. 6% year over year reflecting our focus on healthier product margins which drove fewer contracted mobile phone sales. Lower product revenue also reflected a Q2 market shift towards BYOD activations and fewer device upgrades. We'll continue to maintain discipline on hardware discounting given our focus on product margin improvement, ARPU growth and service revenue growth.

To address affordability, we'll leverage device residual programs and trade-in rather than hardware discounting. 1%. 7% this quarter. Turning to Bell CTS US on slide 10, Ziply remains focused on build execution and fiber penetration.

Build activity is expected to increase significantly in the second half of the year. Local permit submissions accelerated through Q2 and the broader readiness work is progressing across state approvals, engineering, contractor capacity and fiber supply for expansion markets. State-level approvals have been obtained for approximately 75% of the 2027 location funnel and high-level engineering is complete for approximately 60% of those locations. On subscriber performance, Ziply delivered its highest quarterly residential net adds since BCE acquired the business at 99,600.

Where Ziply has fiber, penetration continues to track the business case. Revenue was broadly stable sequentially as fiber growth in consumer and small business was offset by ongoing legacy copper and voice declines and wholesale pressure. 6% margin. The margin reflected higher subscriber acquisition activity associated with stronger Internet net adds.

We're comfortable making that investment given penetration trends. Key point is that the fiber thesis remains intact. Where Ziply has fiber it is winning customers, and the work needed to support the second half build ramp has advanced. Over to Bell Media on slide 11.

Continued digital momentum and strong overall financial performance marked the quarter. 8% year over year. Revenue growth was driven by strong FIFA World Cup performance and continued Crave growth, with additional contribution from the Formula One Canadian Grand Prix and higher program sales. 3% supported by strong FIFA advertiser demand.

7% driven by continued D2C streaming growth. 1 million subscribers with direct-to-consumer streaming subs up 49%. Digital video advertising revenue also grew 39%, reinforcing the progress Bell Media is making in streaming scale and digital monetization. Adjusted EBITDA growth reflected the flow-through of higher revenue despite higher content and event-related costs associated with FIFA, Formula One Canadian Grand Prix and other premium programming.

In short, a strong quarter for Bell Media.