Enhanced Investments - Financial Portal

Published: 2022-05-05

Consolidated financial statements
CONSOLIDATED INCOME STATEMENTS
FOR THE PERIOD ENDED MARCH 31
(IN MILLIONS OF CANADIAN DOLLARS, EXCEPT SHARE AMOUNTS) (UNAUDITED)NOTE	2022	2021
Operating revenues	3	5,850	5,706
Operating costs	3, 5	(3,266)	(3,277)
Severance, acquisition and other costs	6	(13)	(89)
Depreciation		(891)	(895)
Amortization		(260)	(238)
Finance costs
Interest expense		(260)	(267)
Net return (interest) on post-employment benefit plans	10	18	(5)
Impairment of assets		(2)	(3)
Other income	7	93	8
Income taxes		(335)	(253)
Net earnings		934	687
Net earnings attributable to:
Common shareholders		877	642
Preferred shareholders		34	32
Non-controlling interest		23	13
Net earnings		934	687
Net earnings per common share – basic and diluted	8	0.96	0.71
Weighted average number of common shares outstanding – basic (millions)		910.1	904.5

				Consolidated	financial statements
38 \| BCE InC. 2022 FIrst QuartEr sharEholdEr rEport

	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
	FOR THE PERIOD ENDED MARCH 31
	(IN MILLIONS OF CANADIAN DOLLARS) (UNAUDITED)		2022	2021
	Net earnings	934	687
	Other comprehensive income, net of income taxes
	Items that will be subsequently reclassified to net earnings
				Net change in value of derivatives designated as cash flow hedges, net of income taxes of ($55) million and
				($24) million for the three months ended March 31, 2022 and 2021, respectively	148	65
	Items that will not be reclassified to net earnings
				Actuarial gains on post-employment benefit plans, net of income taxes of ($235) million and ($420) million
				for the three months ended March 31, 2022 and 2021, respectively (1)		644	1,145
				Net change in value of publicly-traded and privately-held investments, net of income taxes of nil for the
				three months ended March 31, 2022 and 2021, respectively	1	(3)
				Net change in value of derivatives designated as cash flow hedges, net of income taxes of $3 million and
				$2 million for the three months ended March 31, 2022 and 2021, respectively	(8)	(6)
	Other comprehensive income	785	1,201
	Total comprehensive income	1,719	1,888
	Total comprehensive income attributable to:
	Common shareholders	1,662	1,843
	Preferred shareholders	34	32
	Non-controlling interest	23	13
	Total comprehensive income	1,719	1,888
	(1) The discount rate used to value our post-employment benefit obligations at March 31, 2022 was 4.3% compared to 3.2% at December 31, 2021. The discount rate used to value our post-employment
	benefit obligations at March 31, 2021 was 3.4% compared to 2.6% at December 31, 2020.

					Consolidated	financial statements
BCE InC. 2022 FIrst QuartEr sharEholdEr rEport \| 39

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(IN MILLIONS OF CANADIAN DOLLARS) (UNAUDITED)NOTE	MARCH 31, 2022	DECEMBER 31, 2021
ASSETSCurrent assets
Cash				104	207
Trade and other receivables		3,549			3,949
Inventory				567	482
Contract assets				386	414
Contract costs				564	507
Prepaid expenses				375	254
Other current assets				271	335
Assets held for sale	7		–		50
Total current assets		5,816			6,198
Non-current assets
Contract assets				247	251
Contract costs				365	387
Property, plant and equipment		28,108			28,235
Intangible assets		15,825			15,570
Deferred tax assets				108	105
Investments in associates and joint ventures				654	668
Post-employment benefit assets	10	4,110			3,472
Other non-current assets		1,378			1,306
Goodwill	4	10,724			10,572
Total non-current assets		61,519			60,566
Total assets		67,335			66,764
LIABILITIESCurrent liabilities
Trade payables and other liabilities		3,841			4,455
Contract liabilities				838	799
Interest payable				162	247
Dividends payable				854	811
Current tax liabilities				189	141
Debt due within one year	9	3,082			2,625
Liabilities held for sale	7		–		35
Total current liabilities		8,966			9,113
Non-current liabilities
Contract liabilities				244	246
Long-term debt	9	26,877			27,048
Deferred tax liabilities		5,065			4,679
Post-employment benefit obligations	10	1,464			1,734
Other non-current liabilities				934	1,003
Total non-current liabilities		34,584			34,710
Total liabilities		43,550			43,823
Commitments	14
EQUITYEquity attributable to BCE shareholders
						Consolidated	financial statements
Preferred shares	12	3,885			4,003
Common shares		20,830			20,662
Contributed surplus	12	1,137			1,157
Accumulated other comprehensive income				355	213
Deficit		(2,740)			(3,400)
Total equity attributable to BCE shareholders		23,467			22,635
Non-controlling interest				318	306
Total equity		23,785			22,941
Total liabilities and equity		67,335			66,764
40 \| BCE InC. 2022 FIrst QuartEr sharEholdEr rEport

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

ATTRIBUTABLE TO BCE SHAREHOLDERS

ACCUM-

ULATED

OTHER

NON-

CONTRI-

COMPRE-

CONTROL-

FOR THE PERIOD ENDED MARCH 31, 2022

PREFERRED

COMMON

BUTED

HENSIVE

LING

TOTAL

(IN MILLIONS OF CANADIAN DOLLARS) (UNAUDITED)

NOTE

SURPLUS

INCOME

DEFICIT

TOTAL

INTEREST

EQUITY

Balance at December 31, 2021

4,003

20,662

1,157

213

(3,400)

22,635

306

22,941

Net earnings

–

911

934

Other comprehensive income

–

142

643

785

–

785

Total comprehensive income

–

142

1,554

1,696

1,719

Common shares issued under employee stock

option plan

–

168

(6)

–

162

–

162

Other share-based compensation

–

(17)

–

(21)

(38)

–

(38)

Repurchase of preferred shares

(118)

–

(115)

–

(115)

Dividends declared on BCE common and

preferred shares

–

(873)

–

(873)

Dividends declared by subsidiaries to

non-controlling interest

–

(11)

Balance at March 31, 2022

3,885

20,830

1,137

355

(2,740)

23,467

318

23,785

ATTRIBUTABLE TO BCE SHAREHOLDERS

ACCUM-

ULATED

OTHER

NON-

CONTRI-

COMPRE-

CONTROL-

FOR THE PERIOD ENDED MARCH 31, 2021

PREFERRED

COMMON

BUTED

HENSIVE

LING

TOTAL

(IN MILLIONS OF CANADIAN DOLLARS) (UNAUDITED)

SURPLUS

INCOME

DEFICIT

TOTAL

INTEREST

EQUITY

Balance at December 31, 2020

4,003

20,390

1,174

103

(4,681)

20,989

340

21,329

Net earnings

–

674

687

Other comprehensive income

–

1,145

1,201

–

1,201

Total comprehensive income

–

1,819

1,875

1,888

Common shares issued under employee stock

option plan

–

(1)

–

Other share-based compensation

–

(19)

–

(8)

(27)

–

(27)

Dividends declared on BCE common and

preferred shares

–

(823)

–

(823)

Dividends declared by subsidiaries to

non-controlling interest

–

(13)

Settlement of cash flow hedges transferred to

the cost basis of hedged items

–

Other

–

(1)

Balance at March 31, 2021

4,003

20,400

1,154

163

(3,693)

22,027

339

22,366

Consolidated

financial statements

BCE InC. 2022 FIrst QuartEr sharEholdEr rEport | 41

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIOD ENDED MARCH 31
(IN MILLIONS OF CANADIAN DOLLARS) (UNAUDITED)NOTE	2022	2021
Cash flows from operating activitiesNet earnings
		934	687
Adjustments to reconcile net earnings to cash flows from operating activities Severance, acquisition and other costs	6	13	89
Depreciation and amortization		1,151	1,133
Post-employment benefit plans cost	10	51	79
Net interest expense		258	263
Impairment of assets		2	3
Gains on investments	7	(37)	–
Income taxes		335	253
Contributions to post-employment benefit plans		(79)	(79)
Payments under other post-employment benefit plans		(15)	(15)
Severance and other costs paid		(28)	(43)
Interest paid		(373)	(306)
Income taxes paid (net of refunds)		(116)	(109)
Acquisition and other costs paid		(3)	(4)
Change in contract assets		32	144
Change in wireless device financing plan receivables		59	(91)
Net change in operating assets and liabilities		(468)	(12)
Cash flows from operating activities		1,716	1,992
Cash flows used in investing activities
Capital expenditures		(952)	(1,012)
Business acquisitions	4	(139)	–
Business dispositions	7	52	–
Other investing activities		(9)	(21)
Cash flows used in investing activities		(1,048)	(1,033)
Cash flows (used in) from financing activities Increase (decrease) in notes payable		469	(357)
Decrease in securitized trade receivables		–	(13)
Issue of long-term debt	9	945	2,915
Repayment of long-term debt	9	(1,258)	(226)
Issue of common shares		161	10
Purchase of shares for settlement of share-based payments		(106)	(91)
Repurchase of preferred shares	12	(115)	–
Cash dividends paid on common shares		(795)	(753)
Cash dividends paid on preferred shares		(33)	(31)
Cash dividends paid by subsidiaries to non-controlling interest		(11)	(13)
Other financing activities		(28)	(17)
Cash flows (used in) from financing activities		(771)	1,424
Net (decrease) increase in cash		(103)	1,683
Cash at beginning of period		207	224

Cash at end of period		104	1,907
Net increase in cash equivalents		–	700
Cash equivalents at beginning of period		–	–
				Consolidated	financial statements
Cash equivalents at end of period		–	700
42 \| BCE InC. 2022 FIrst QuartEr sharEholdEr rEport

	Notes to consolidated financial statements
	These consolidated interim financial statements (financial statements) should be read in conjunction with BCE’s 2021 annual consolidated financial
	statements, approved by BCE’s board of directors on March 3, 2022.
	These notes are unaudited.
	We, us, our, BCE and the company mean, as the context may require, either BCE Inc. or, collectively, BCE Inc., Bell Canada, their subsidiaries, joint
	arrangements and associates.
	Note 1 \| Corporate information
	BCE is incorporated and domiciled in Canada. BCE’s head office is located at 1, Carrefour Alexander-Graham-Bell, Verdun, Québec, Canada. BCE is a telecommunications and media company providing wireless, wireline, Internet and television (TV) services to residential, business and wholesale customers in Canada. Our Bell Media segment provides conventional TV, specialty TV, pay TV, streaming services, digital media services, radio broadcasting services and out-of-home advertising services to customers in Canada.
	Note 2 \| Basis of presentation and significant accounting policiesThese financial statements were prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting
	Standards Board (IASB), under International Accounting Standard (IAS) 34 – Interim Financial Reporting and were approved by BCE’s board of directors
	on May 4, 2022. These financial statements were prepared using the same basis of presentation, accounting policies and methods of computation as outlined in Note 2, Significant accounting policies in our consolidated financial statements for the year ended December 31, 2021, except as noted below.
	These financial statements do not include all of the notes required in annual financial statements.
	All amounts are in millions of Canadian dollars, except where noted.
	ADOPTION OF AMENDED ACCOUNTING STANDARDSAs required, effective January 1, 2022, we adopted the following amendments to accounting standards issued by the IASB.
	STANDARD	DESCRIPTION	IMPACT
	Onerous Contracts – Cost of Fulfilling a Contract, Amendments to IAS 37 – Provisions, Contingent Liabilities and Contingent Assets	These amendments clarify which costs should be included in	These amendments did not have a significant impact on our
		determining the cost of fulfilling a contract when assessing whether a contract is onerous.	financial statements.
	FUTURE CHANGES TO ACCOUNTING STANDARDS
	The following amendments and clarification to standards issued by the IASB have not yet been adopted by BCE.
	STANDARD	DESCRIPTION	IMPACT	EFFECTIVE DATE
	Disclosure of Accounting Policies –	These amendments require that entities disclose material	We are currently assessing the impact of these amendments on the disclosure of our accounting policies.	Effective for annual reporting periods beginning on or after
	Amendments to IAS 1 – Presentation	accounting policies, as defined, instead of significant accounting policies.
	of Financial Statements			January 1, 2023. Early application
				is permitted.
	IFRIC Agenda Decision on Demand Deposits with Restrictions on Use arising from a Contract with a	In April 2022, the International Financial Reporting Interpretations Committee (IFRIC) issued an agenda decision clarifying that an entity should present a demand deposit with restrictions on use arising from a contract with a third party as cash and cash equivalents in the statements of financial position and cash flows, unless those restrictions change the nature of the deposit such that it no longer meets the definition of cash in IAS 7.	We are currently assessing the impact of this IFRIC agenda decision on our financial statements.	As permitted by the IASB,
				application of this IFRIC agenda decision is expected in the second quarter of 2022.
	Third Party (IAS 7 – Statement of
	Cash Flows)
					Notes to consolidated	financial statements
BCE InC. 2022 FIrst QuartEr sharEholdEr rEport \| 43

Note 3 \| Segmented information
Our results are reported in three segments: Bell Wireless, Bell Wireline and Bell Media. Our segments reflect how we manage our business and how we classify our operations for planning and measuring performance.
The following tables present financial information by segment for the three month periods ended March 31, 2022 and 2021.
		BELL	BELL	BELL	INTERSEGMENT
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2022	WIRELESS	WIRELINE	MEDIA	ELIMINATIONS	BCE
Operating revenues
External service revenues		1,635	741			–	5,177
Inter-segment service revenues		11	84			(197)	–
Operating service revenues		1,646	825			(197)	5,177
External product revenues		563	–			–	673
Inter-segment product revenues		1	–			(1)	–
Operating product revenues		564	–			(1)	673
Total external revenues		2,198	741			–	5,850
Total inter-segment revenues		12	84			(198)	–
Total operating revenues		2,210	825			(198)	5,850
Operating costs	5	(1,201)	(617)			198	(3,266)
Adjusted EBITDA (1)		1,009	208			–	2,584
Severance, acquisition and other costs					(13)
Depreciation and amortization						(1,151)
Finance costs
Interest expense						(260)
Net return on post-employment benefit plans					18
Impairment of assets						(2)
Other income					93
Income taxes						(335)
Net earnings						934
(1) The chief operating decision maker uses primarily one measure of profit to make decisions and assess performance, being operating revenues less operating costs.
		BELL	BELL	BELL	INTERSEGMENT
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2021	WIRELESS	WIRELINE	MEDIA	ELIMINATIONS	BCE
Operating revenues
External service revenues		1,503	623			–	4,968
Inter-segment service revenues		11	90			(186)	–
Operating service revenues		1,514	713			(186)	4,968
External product revenues		584	–			–	738
Inter-segment product revenues		2	–			(2)	–
Operating product revenues		586	–			(2)	738
Total external revenues		2,087	623			–	5,706
Total inter-segment revenues		13	90			(188)	–
Total operating revenues		2,100	713			(188)	5,706
Operating costs	5	(1,177)	(570)			188	(3,277)
Adjusted EBITDA (1)		923	1,363	143			–	2,429
Severance, acquisition and other costs					(89)
Depreciation and amortization						(1,133)
Finance costs
Interest expense						(267)
Net interest on post-employment benefit plans					(5)
Impairment of assets						(3)		Notes to consolidated	financial statements
Other income					8
Income taxes						(253)
Net earnings						687
(1) The chief operating decision maker uses primarily one measure of profit to make decisions and assess performance, being operating revenues less operating costs.
44 \| BCE InC. 2022 FIrst QuartEr sharEholdEr rEport

	REVENUES BY SERVICES AND PRODUCTS
	FOR THE PERIOD ENDED MARCH 31	2022	2021
	Services (1)
	Wireless	1,635	1,503
	Wireline data	1,953	1,965
	Wireline voice	771	803
	Media	741	623
	Other wireline services	77	74
	Total services	5,177	4,968
	Products (2)
	Wireless	563	584
	Wireline data	99	144
	Wireline equipment and other	11	10
	Total products	673	738
	Total operating revenues	5,850	5,706
	(1) Our service revenues are generally recognized over time.(2) Our product revenues are generally recognized at a point in time.
	Note 4 \| Business acquisition
	In February 2022, Bell acquired EBOX and other related companies, which provide Internet, telephone and television services to consumers and businesses in Québec and parts of Ontario for a total cash consideration of $153 million ($139 million net of cash acquired). The acquisition of EBOX and other related companies is expected to accelerate growth in Bell’s residential and small business customers. The results of the acquired companies are included in our Bell Wireline segment.
	The allocation of the purchase price includes provisional estimates and has been primarily allocated to goodwill. Goodwill arises principally from expected
	synergies and future growth and is not deductible for tax purposes.
	The transaction did not have a significant impact on our consolidated operating revenues and net earnings for the three months ended March 31, 2022.
	Note 5 \| Operating costs
	FOR THE PERIOD ENDED MARCH 31	NOTE		2022	2021
	Labour costs
	Wages, salaries and related taxes and benefits (1)	(1,040)	(1,033)
	Post-employment benefit plans service cost (net of capitalized amounts)	10		(69)	(74)
	Other labour costs (1) (2)	(237)	(246)
	Less:
	Capitalized labour	260	255
	Total labour costs	(1,086)	(1,098)
	Cost of revenues (1) (3)	(1,728)	(1,740)
	Other operating costs (1) (4)	(452)	(439)
	Total operating costs	(3,266)	(3,277)
	(1) We have reclassified amounts from the previous period to make them consistent with the presentation for the current period.(2) Other labour costs include contractor and outsourcing costs.(3) Cost of revenues includes costs of wireless devices and other equipment sold, network and content costs, and payments to other carriers.(4) Other operating costs include marketing, advertising and sales commission costs, bad debt expense, taxes other than income taxes, information technology costs, professional service fees and rent.

	.
				Notes to consolidated	financial statements
BCE InC. 2022 FIrst QuartEr sharEholdEr rEport \| 45

Note 6 \| Severance, acquisition and other costs
FOR THE PERIOD ENDED MARCH 31	2022	2021
Severance	(18)	(97)
Acquisition and other	5	8
Total severance, acquisition and other costs	(13)	(89)
SEVERANCE COSTSSeverance costs consist of charges related to involuntary and voluntary employee terminations.
ACQUISITION AND OTHER COSTSAcquisition and other costs consist of transaction costs, such as legal and financial advisory fees, related to completed or potential acquisitions, employee severance costs related to the purchase of a business, the costs to integrate acquired companies into our operations, costs relating to litigation and
regulatory decisions, when they are significant, and other costs.
Note 7 \| Other income
FOR THE PERIOD ENDED MARCH 31			NOTE	2022	2021
Net mark-to-market gains on derivatives used to economically hedge equity settled share-based
compensation plans	75	60
Gains on investments	37	–
Early debt redemption costs			9	(18)	(53)
Equity losses from investments in associates and joint ventures Operations	(9)	(13)
Losses on retirements and disposals of property, plant and equipment and intangible assets	(6)	(5)
Other	14	19
Total other income	93	8
GAINS ON INVESTMENTSOn March 1, 2022, we completed the previously announced sale of our wholly-owned subsidiary 6362222 Canada Inc. (Createch), for cash proceeds of $53 million. As a result, we recorded a gain on sale of $36 million (before tax expense of $2 million).
Our results for the three months ended March 31, 2022 and 2021 included $10 million and $17 million of revenue and net earnings of nil, respectively, related to the assets held for sale.
Note 8 \| Earnings per shareThe following table shows the components used in the calculation of basic and diluted net earnings per common share for earnings attributable to
common shareholders.
FOR THE PERIOD ENDED MARCH 31	2022	2021
Net earnings attributable to common shareholders – basic	877	642

Dividends declared per common share (in dollars)	0.92	0.875
Weighted average number of common shares outstanding (in millions)
Weighted average number of common shares outstanding – basic	910.1	904.5
Assumed exercise of stock options (1)	0.7	–
Weighted average number of common shares outstanding – diluted (in millions)	910.8	904.5
				Notes to consolidated	financial statements
(1) The calculation of the assumed exercise of stock options includes the effect of the average unrecognized future compensation cost of dilutive options. It excludes options for which the exercise price
is higher than the average market value of a BCE common share. The number of excluded options was nil for the first quarter of 2022, compared to 15,031,826 for the first quarter of 2021.
46 \| BCE InC. 2022 FIrst QuartEr sharEholdEr rEport

	Note 9 \| Debt
	On February 11, 2022, Bell Canada issued, under its 2016 trust indenture, 3.65% Series US-7 Notes, with a principal amount of $750 million in U.S. dollars ($954 million in Canadian dollars), which mature on August 15, 2052. The Series US-7 Notes have been hedged for foreign currency fluctuations through cross currency interest rate swaps. See Note 11, Financial assets and liabilities, for additional details.
	The Series US-7 Notes are fully and unconditionally guaranteed by BCE.
	On March 16, 2022, Bell Canada redeemed, prior to maturity, its 3.35% Series M-26 medium-term note (MTN) debentures, having an outstanding principal amount of $1 billion, which were due on March 22, 2023. As a result, in Q1 2022, we recognized early debt redemption charges of $18 million, which were recorded in Other income in the consolidated income statement.
	Note 10 \| Post-employment benefit plans
	POST-EMPLOYMENT BENEFIT PLANS COSTWe provide pension and other benefits for most of our employees. These include defined benefit (DB) pension plans, defined contribution (DC) pension plans and other post-employment benefits (OPEBs).
	COMPONENTS OF POST-EMPLOYMENT BENEFIT PLANS SERVICE COST
	FOR THE PERIOD ENDED MARCH 31	2022	2021
	DB pension	(48)	(55)
	DC pension	(38)	(36)
	OPEBs	–	(1)
	Less:
	Capitalized benefit plans cost	17	18
	Total post-employment benefit plans service cost	(69)	(74)
	COMPONENTS OF POST-EMPLOYMENT BENEFIT PLANS FINANCING INCOME (COST)
	FOR THE PERIOD ENDED MARCH 31	2022	2021
	DB pension	26	3
	OPEBs	(8)	(8)
	Total net return (interest) on post-employment benefit plans	18	(5)
	FUNDED STATUS OF POST-EMPLOYMENT BENEFIT PLANS
	The following table shows the funded status of our post-employment benefit obligations.
				FUNDED	PARTIALLY FUNDED (1)	UNFUNDED (2)						TOTAL
				MARCH 31,	DECEMBER 31,	MARCH 31,			DECEMBER 31,	MARCH 31,								DECEMBER 31,	MARCH 31,	DECEMBER 31,
	FOR THE PERIOD ENDED			2022			2021	2022				2021	2022	2021			2022	2021
	Present value of post-employment benefit obligations			(20,592)			(23,872)	(1,606)			(1,840)	(251)								(289)	(22,449)	(26,001)
	Fair value of plan assets			25,676			27,979	410				412	–	–	26,086	28,391
	Plan surplus (deficit)			5,084			4,107	(1,196)			(1,428)	(251)								(289)	3,637	2,390
	Effect of asset limit			(991)			(652)	–				–	–	–			(991)	(652)
	Post-employment benefit asset (liability)			4,093			3,455	(1,196)			(1,428)	(251)								(289)	2,646	1,738
	(1) The partially funded plans consist of supplementary executive retirement plans (SERPs) for eligible employees and certain OPEBs. The company partially funds the SERPs through letters of credit
	and a retirement compensation arrangement account with the Canada Revenue Agency. Certain paid-up life insurance benefits are funded through life insurance contracts.

	(2) Our unfunded plans consist of certain OPEBs, which are paid as claims are incurred.
	In Q1 2022, we recorded an increase in our post-employment benefit plans and a gain, before taxes, in Other comprehensive income of $879 million due to a decrease in the present value of our post-employment benefit obligations of $3,440 million as a result of an increase in the discount rate to
	4.3% at March 31, 2022, compared to 3.2% at December 31, 2021, partly offset by a decrease in the fair value of plan assets of $2,222 million as a result
	of a loss on plan assets of 7.0% and an increase in the effect of the asset limit of $339 million.
											Notes to consolidated	financial statements
BCE InC. 2022 FIrst QuartEr sharEholdEr rEport \| 47

Note 11 | Financial assets and liabilities

FAIR VALUE

The following table provides the fair value details of financial instruments measured at amortized cost in the consolidated statements of financial position.

MARCH 31, 2022

DECEMBER 31, 2021

CARRYING

FAIR

CARRYING

FAIR

CLASSIFICATION

FAIR VALUE METHODOLOGY

VALUE

CRTC deferral account obligation

Trade payables and other

Present value of estimated future cash flows discounted using observable market interest rates

liabilities and other non-current liabilities

Debt securities and other debt

Debt due within one year and long-term debt

Quoted market price of debt

23,552

23,897

23,729

26,354

The following table provides the fair value details of financial instruments measured at fair value in the consolidated statements of financial position.

FAIR VALUE

QUOTED PRICES IN

ACTIVE MARKETS FOR

OBSERVABLE

NON-OBSERVABLE

CARRYING VALUE OF

IDENTICAL ASSETS

MARKET DATA

MARKET INPUTS

CLASSIFICATION

ASSET (LIABILITY)

(LEVEL 1)

(LEVEL 2) (1)

(LEVEL 3) (2)

March 31, 2022

Publicly-traded and privately-held investments (3)

Other non-current assets

186

–

160

Derivative financial instruments

Other current assets, trade payables and other liabilities, other non-current assets and liabilities

348

–

348

–

Maple Leaf Sports & Entertainment Ltd. (MLSE) financial liability (4)

Trade payables and other liabilities

(149)

–

(149)

OtherOther non-current assets and liabilities

113

–

176

(63)

December 31, 2021

Publicly-traded and privately-held investments (3)

Other non-current assets

183

–

159

Derivative financial instruments

Other current assets, trade payables and other liabilities, other non-current assets and liabilities

279

–

279

–

MLSE financial liability (4)

Trade payables and other liabilities

(149)

–

(149)

OtherOther non-current assets and liabilities

122

–

185

(63)

(1) Observable market data such as equity prices, interest rates, swap rate curves and foreign currency exchange rates. (2) Non-observable market inputs such as discounted cash flows and earnings multiples. A reasonable change in our assumptions would not result in a significant increase (decrease) to our level 3

financial instruments.

(3) Unrealized gains and losses are recorded in Other comprehensive income in the statements of comprehensive income and are reclassified from Accumulated other comprehensive income to Deficit

in the statements of financial position when realized.

(4) Represents BCE’s obligation to repurchase the BCE Master Trust Fund’s (Master Trust Fund) 9% interest in MLSE at a price not less than an agreed minimum price should the Master Trust Fund exercise

its put option. The obligation to repurchase is marked to market each reporting period and the gain or loss is recognized in Other income in the income statements.

MARKET RISKCURRENCY EXPOSURESWe use forward contracts, options and cross currency interest rate swaps to manage foreign currency risk related to anticipated purchases and

certain foreign currency debt.

In Q1 2022, we entered into cross currency interest rate swaps with a total notional amount of $750 million in U.S. dollars ($954 million in Canadian dollars) to hedge the U.S. currency exposure of our U.S. Notes maturing in 2052. See Note 9, Debt, for additional details.

A 10% depreciation (appreciation) in the value of the Canadian dollar relative to the U.S. dollar would result in a loss of $3 million (loss of $41 million)

recognized in net earnings at March 31, 2022 and a gain of $207 million (loss of $188 million) recognized in Other comprehensive income at March 31, 2022, with all other variables held constant.

A 10% depreciation (appreciation) in the value of the Canadian dollar relative to the Philippine peso would result in a gain (loss) of $6 million recognized

Notes to consolidated

financial statements

in Other comprehensive income at March 31, 2022, with all other variables held constant.

48 | BCE InC. 2022 FIrst QuartEr sharEholdEr rEport

The following table provides further details on our outstanding foreign currency forward contracts and options as at March 31, 2022.

BUY

AMOUNT

SELL

AMOUNT

TYPE OF HEDGE

CURRENCY

TO RECEIVE

CURRENCY

TO PAY

MATURITY

HEDGED ITEM

Cash flow

USD

950

CAD

1,199

2022

Commercial paper

Cash flow

USD

429

CAD

545

2022

Anticipated purchases

Cash flow

PHP

1,743

CAD

2022

Anticipated purchases

Cash flow

PHP

2,147

CAD

2023

Anticipated purchases

Cash flow

USD

595

CAD

732

2023

Anticipated purchases

Cash flow

USD

240

CAD

299

2024

Anticipated purchases

Cash flow – call options

USD

157

CAD

203

2022

Anticipated purchases

Cash flow – put options

USD

157

CAD

200

2022

Anticipated purchases

Economic

USD

CAD

2022

Anticipated purchases

Economic – put options

USD

219

CAD

270

2022

Anticipated purchases

Economic – call options

USD

113

CAD

134

2022

Anticipated purchases

Economic – call options

CAD

142

USD

113

2022

Anticipated purchases

Economic – options (1)

USD

135

CAD

164

2022

Anticipated purchases

Economic – options (1)

USD

CAD

115

2023

Anticipated purchases

Economic – call options

USD

120

CAD

146

2024

Anticipated purchases

(1) Foreign currency options with a leverage provision and a profit cap limitation.

INTEREST RATE EXPOSURESIn Q1 2022, we entered into cross currency basis rate swaps with a notional amount of $63 million to hedge economically the basis rate exposure on

future debt issuances. The fair value of these cross currency basis rate swaps at March 31, 2022 was nil.

We use leveraged interest rate options to hedge economically the dividend rate resets on $582 million of our preferred shares which had varying reset dates in 2021, for the periods ending in 2026. The fair value of these leveraged interest rate options at March 31, 2022 and December 31, 2021 was a net liability of $1 million and $2 million, respectively, recognized in Trade payables and other liabilities and Other non-current liabilities in the statements of financial position. A gain of $1 million for the three months ended March 31, 2022 relating to these leveraged interest rate options is recognized in Other income in the income statements.

A 1% increase (decrease) in interest rates would result in a loss of $17 mil ion and a (gain of $19 mil ion) recognized in net earnings at March 31, 2022, with

all other variables held constant.

EQUITY PRICE EXPOSURESWe use equity forward contracts on BCE’s common shares to hedge economically the cash flow exposure related to the settlement of equity settled share-based compensation plans. The fair value of our equity forward contracts at March 31, 2022 and December 31, 2021 was a net asset of $112 million and $130 million, respectively, recognized in Other current assets, Trade payables and other liabilities and Other non-current assets in the statements of financial position. A gain of $75 million for the three months ended March 31, 2022, relating to these equity forward contracts is recognized in Other income in the income statements.

A 5% increase (decrease) in the market price of BCE’s common shares would result in a gain (loss) of $38 mil ion recognized in net earnings at March 31, 2022, with all other variables held constant.

Note 12 | Share capital

REDEMPTION OF SERIES AO PREFERRED SHARESOn March 31, 2022, BCE redeemed its 4,600,000 issued and outstanding Cumulative Redeemable First Preferred Shares, Series AO (Series AO Preferred Shares) with a stated capital of $118 million for a total cost of $115 million. The remaining $3 million was recorded to contributed surplus.

Note 13 | Share-based paymentsThe following share-based payment amounts are included in the income statements as operating costs.

FOR THE PERIOD ENDED MARCH 31

2022

2021

Employee savings plan

(8)

Notes to consolidated

financial statements

Restricted share units (RSUs) and performance share units (PSUs)

(25)

(20)

Other (1)

(1)

(2)

Total share-based payments

(34)

(30)

(1) Includes deferred share units and stock options.

BCE InC. 2022 FIrst QuartEr sharEholdEr rEport | 49

The following tables summarize the change in outstanding RSUs/PSUs and stock options for the period ended March 31, 2022.
RSUs/PSUs
	NUMBER OF
	RSUs/PSUs
Outstanding, January 1, 2022	3,085,667
Granted	990,707
Dividends credited	40,632
Settled	(1,020,345)
Forfeited	(25,704)
Outstanding, March 31, 2022	3,070,957
STOCK OPTIONS
		NUMBER OF	WEIGHTED AVERAGE
		OPTIONS	EXERCISE PRICE ($)
Outstanding, January 1, 2022		10,778,724	60
Exercised (1)		(2,795,351)	58
Forfeited or expired		(23,624)	65
Outstanding, March 31, 2022		7,959,749	61
Exercisable, March 31, 2022		4,696,829	58
(1) The weighted average market share price for options exercised during the three months ended March 31, 2022 was $69.
Note 14 \| CommitmentsThe following table is a summary of our contractual obligations at March 31, 2022 that are due in 2022 and in each of the next four years and thereafter.
				2022	2023	2024	2025	2026	THEREAFTER	TOTAL
Commitments for property, plant and equipment and intangible assets				1,102	1,301	734	491	354	1,035	5,017
Purchase obligations				424	455	342	297	373	392	2,283
Leases committed not yet commenced				7	3	6	–	–	–	16
Total				1,533	1,759	1,082	788	727	1,427	7,316
Our commitments for property, plant and equipment and intangible assets include program and feature film rights and investments to expand and update our networks to meet customer demand.
Purchase obligations consist of contractual obligations under service and product contracts for operating expenditures and other purchase obligations.
Our commitments for leases not yet commenced include OOH advertising spaces, fibre use and real estate. These leases are non-cancellable.
Note 15 \| COVID-19
During the first quarter of 2022, the unfavourable effects of the COVID-19 pandemic on our financial and operating performance continued to moderate due to our operational execution and easing of government restrictions during the quarter. However, due to uncertainties relating to the severity and duration of the COVID-19 pandemic and possible further resurgences in the number of COVID-19 cases, including as a result of the potential emergence of other variants, and various potential outcomes, it is difficult at this time to estimate the impacts of the COVID-19 pandemic on our business. Our business and financial results could continue to be unfavourably impacted, and could again become more significantly and negatively impacted, in future periods, including, among others, as a result of global supply chain challenges adversely affecting our wireless and wireline product revenues.

								Notes to consolidated	financial statements
50 \| BCE InC. 2022 FIrst QuartEr sharEholdEr rEport