Exhibit 99.1

MD&A

 

Management’s discussion and analysis

In this management’s discussion and analysis (MD&A), 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. Bell means, as the context may require, either Bell Canada or, collectively, Bell Canada, its subsidiaries, joint arrangements and associates.

All amounts in this MD&A are in millions of Canadian dollars, except where noted. Please refer to section 9, Non-GAAP financial measures, other financial measures and key performance indicators (KPIs) on pages 32 to 36 for a list of defined non-GAAP financial measures, other financial measures and KPIs.

Please refer to BCE’s unaudited consolidated financial statements for the first quarter of 2022 (Q1 2022 Financial Statements) when reading this MD&A. We also encourage you to read BCE’s MD&A for the year ended December 31, 2021 dated March 3, 2022 (BCE 2021 Annual MD&A). In preparing this MD&A, we have taken into account information available to us up to May 4, 2022, the date of this MD&A, unless otherwise stated.

You will find additional information relating to BCE, including BCE’s annual information form for the year ended December 31, 2021 dated March 3, 2022 (BCE 2021 AIF) and recent financial reports, including the BCE 2021 Annual MD&A, on BCE’s website at BCE.ca, on SEDAR at sedar.com and on EDGAR at sec.gov.

Documents and other information contained in BCE’s website or in any other site referred to in BCE’s website or in this MD&A are not part of this MD&A and are not incorporated by reference herein.

This MD&A comments on our business operations, performance, financial position and other matters for the three months (Q1) ended March 31, 2022 and 2021.

 

 

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This MD&A and, in particular, but without limitation, section 1.2, Key corporate and business developments, the section and sub-sections entitled Assumptions, section 3.2, Bell Wireline – Key business developments, and section 4.7, Liquidity, contain forward-looking statements. These forward-looking statements include, without limitation, statements relating to BCE’s 2022 annualized common share dividend, BCE’s anticipated capital expenditures, network deployment plans and the benefits expected to result therefrom, including our two-year increased capital expenditure acceleration program for the accelerated expansion of our broadband fibre, Fifth Generation (5G) and rural networks, the expectation that our available liquidity (as defined in section 4.7, Liquidity) will be sufficient to meet our anticipated cash requirements for the remainder of 2022, BCE’s business outlook, objectives, plans and strategic priorities, and other statements that do not refer to historical facts. A statement we make is forward-looking when it uses what we know and expect today to make a statement about the future. Forward-looking statements are typically identified by the words assumption, goal, guidance, objective, outlook, project, strategy, target, and other similar expressions or future or conditional verbs such as aim, anticipate, believe, could, expect, intend, may, plan, seek, should, strive and will. All such forward-looking statements are made pursuant to the safe harbour provisions of applicable Canadian securities laws and of the United States (U.S.) Private Securities Litigation Reform Act of 1995.

Unless otherwise indicated by us, forward-looking statements in this MD&A describe our expectations as at May 4, 2022 and, accordingly, are subject to change after that date. Except as may be required by applicable securities laws, we do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Forward-looking statements, by their very nature, are subject to inherent risks and uncertainties and are based on several assumptions, both general and specific, which give rise to the possibility that actual results or events could differ materially from our expectations expressed in, or implied by, such forward-looking statements and that our business outlook, objectives, plans and strategic priorities may not be achieved. These statements are not guarantees of future performance or events, and we caution you against relying on any of these forward-looking statements. Forward-looking statements are presented in this MD&A for the purpose of assisting investors and others in understanding our objectives, strategic priorities and business outlook as well as our anticipated operating environment. Readers are cautioned, however, that such information may not be appropriate for other purposes.

We have made certain economic, market, operational and other assumptions in preparing the forward-looking statements contained in this MD&A and, in particular, but without limitation, the forward-looking statements contained in the previously mentioned sections of this MD&A. These assumptions include, without limitation, the assumptions described in the section and sub-sections of this MD&A entitled Assumptions, which section and sub-sections are incorporated by reference in this cautionary statement. Subject to various factors including, without limitation, the future impacts of the COVID-19 pandemic and of the conflict between Russia and Ukraine, which are difficult to predict, we believe that our assumptions were reasonable at May 4, 2022. If our assumptions turn out to be inaccurate, our actual results could be materially different from what we expect.

Important risk factors that could cause actual results or events to differ materially from those expressed in, or implied by, the previously-mentioned forward-looking statements and other forward-looking statements contained in this MD&A, include, but are not limited to: the adverse effects of the COVID-19 pandemic, including from the restrictive measures implemented or to be implemented as a result thereof, and the adverse effects of the conflict between Russia and Ukraine, including from the economic sanctions imposed or to be imposed as a result thereof, and supply chain disruptions resulting therefrom; adverse economic and financial market conditions, including from the COVID-19 pandemic and the conflict between Russia and Ukraine; a declining level of retail and commercial activity, and the resulting negative impact on the demand for, and prices of, our products and services; the intensity of competitive activity including from new and emerging competitors; the level of technological substitution and the presence of alternative service providers contributing to disruptions and disintermediation in each of our business segments; changing customer behaviour and the expansion of over-the-top (OTT) television (TV) and other alternative service providers, as well as the fragmentation of, and changes in, the advertising market; rising content costs and challenges in our ability to acquire or develop key content; the proliferation of content piracy; higher Canadian smartphone penetration and reduced or slower immigration flow; regulatory initiatives, proceedings and decisions, government consultations and government positions that affect us and influence our business including, without limitation, concerning the conditions and prices at which access to our networks may be mandated and spectrum may be acquired in auctions; the inability to protect our physical and non-physical assets from events such as information security attacks, which risk may be exacerbated by the conflict between Russia and Ukraine, unauthorized access or entry, fire and natural disasters; the failure to implement effective data governance; the failure to evolve and transform our networks, systems and operations using next-generation technologies while lowering our cost structure; the inability to drive a positive customer experience; the failure to attract, develop and retain a diverse and talented team capable of furthering our strategic imperatives; labour disruptions and shortages; the failure to maintain operational networks;

 

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MD&A

 

the risk that we may need to incur significant unplanned capital expenditures to provide additional capacity and reduce network congestion; the complexity of our operations; the failure to implement or maintain highly effective processes and information technology (IT) systems; events affecting the functionality of, and our ability to protect, test, maintain, replace and upgrade, our networks, IT systems, equipment and other facilities; in-orbit and other operational risks to which the satellites used to provide our satellite TV services are subject; our dependence on third-party suppliers, outsourcers, and consultants to provide an uninterrupted supply of the products and services we need; the failure of our vendor selection, governance and oversight processes, including our management of supplier risk in the areas of security, data governance and responsible procurement; the quality of our products and services and the extent to which they may be subject to defects or fail to comply with applicable government regulations and standards; the inability to access adequate sources of capital and generate sufficient cash flows from operating activities to meet our cash requirements, fund capital expenditures and provide for planned growth; uncertainty as to whether dividends will be declared by BCE’s board of directors or whether the dividend on common shares will be increased; the inability to manage various credit, liquidity and market risks; new or higher taxes due to new tax laws or changes thereto or in the interpretation thereof, and the inability to predict the outcome of government audits; the failure to reduce costs, as well as unexpected increases in costs, and the inability to generate anticipated benefits from acquisitions and corporate restructurings; the failure to evolve practices to effectively monitor and control fraudulent activities; pension obligation volatility and increased contributions to post-employment benefit plans; unfavourable resolution of legal proceedings and, in particular, class actions; the failure to develop and implement strong corporate governance practices and compliance frameworks and to comply with legal and regulatory obligations; the failure to recognize and adequately respond to climate change and other environmental concerns and expectations; pandemics, epidemics and other health risks, including health concerns about radio frequency emissions from wireless communications devices and equipment; the inability to adequately manage social issues; and internal factors, such as the failure to implement sufficient corporate and business initiatives, as well as various external factors which could challenge our ability to achieve our environmental, social and governance (ESG) targets including, without limitation, those related to greenhouse gas (GHG) emissions reduction and diversity, equity and inclusion.

We caution that the foregoing list of risk factors is not exhaustive and other factors could also materially adversely affect us. Please see section 9, Business risks of the BCE 2021 Annual MD&A for a more complete description of the above-mentioned and other risks, which section, and the other sections of the BCE 2021 Annual MD&A referred to therein, are incorporated by reference in this cautionary statement. In addition, please see section 4.8, Litigation in this MD&A for an update to the legal proceedings described in the BCE 2021 AIF, which section 4.8 is incorporated by reference in this cautionary statement. Please also see section 6, Regulatory environment in this MD&A for an update to the regulatory initiatives and proceedings described in the BCE 2021 Annual MD&A, which section 6 is incorporated by reference in this cautionary statement. Please also see section 7, Business risks in this MD&A for an update to the description of the risk factors relating to the COVID-19 pandemic described in the BCE 2021 Annual MD&A and for a description of the risk factors relating to the conflict between Russia and Ukraine, which section 7 is incorporated by reference in this cautionary statement. Any of those risks could cause actual results or events to differ materially from our expectations expressed in, or implied by, the forward-looking statements set out in this MD&A. Except for the updates set out in section 4.8, Litigation, in section 6, Regulatory environment and in section 7, Business risks of this MD&A, the risks described in the BCE 2021 Annual MD&A remain substantially unchanged.

Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also have a material adverse effect on our business, financial condition, liquidity, financial results or reputation. From time to time, we consider potential acquisitions, dispositions, mergers, business combinations, investments, monetizations, joint ventures and other transactions, some of which may be significant. Except as otherwise indicated by us, forward-looking statements do not reflect the potential impact of any such transactions or of special items that may be announced or that may occur after May 4, 2022. The financial impact of these transactions and special items can be complex and depends on facts particular to each of them. We therefore cannot describe the expected impact in a meaningful way, or in the same way we present known risks affecting our business.

 

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1 MD&A Overview

 

1

Overview

 

 

 

1.1	Financial Highlights

BCE Q1 2022 SELECTED QUARTERLY INFORMATION

 

Operating revenues		Net earnings		Adjusted EBITDA (1)
$5,850		$934		$2,584
million		million		million
+2.5% vs. Q1 2021		+36.0% vs. Q1 2021		+6.4% vs. Q1 2021

 

Net earnings attributable		Adjusted net earnings (1)		Cash flows from		Free cash flow (1)
to common shareholders				operating activities
$877		$811		$1,716		$723
million		million		million		million
+36.6% vs. Q1 2021		+15.2% vs. Q1 2021		(13.9%) vs. Q1 2021		(23.1%) vs. Q1 2021
BCE CUSTOMER CONNECTIONS
Wireless		Retail high-speed		Retail TV (2)		Retail residential network
Total mobile phones		Internet (2)				access services (NAS) lines (2)
+3.5%		+6.0%		+0.5%		(7.1%)
9.5 million subscribers		4 million subscribers		2.7 million subscribers		2.3 million subscribers
at March 31, 2022		at March 31, 2022		at March 31, 2022		at March 31, 2022

 

(1)	Adjusted EBITDA is a total of segments measure, and adjusted net earnings and free cash flow are non-GAAP financial measures. See section 9.3, Total of segments measures and section 9.1, Non-GAAP financial measures in this MD&A for more information on these measures.

 

(2)	In Q1 2022, as a result of the acquisition of EBOX and other related companies, our retail high-speed Internet, retail Internet protocol television (IPTV) and retail residential NAS lines subscriber bases increased by 67,090, 9,025 and 3,456 subscribers, respectively.

 

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BCE INCOME STATEMENTS – SELECTED INFORMATION

 

		Q1 2022				Q1 2021				$  CHANGE				%  CHANGE
Operating revenues
Service			5,177				4,968				209				4.2%
Product			673				738				(65	)			(8.8%	)
Total operating revenues			5,850				5,706				144				2.5%
Operating costs			(3,266	)			(3,277	)			11				0.3%
Adjusted EBITDA			2,584				2,429				155				6.4%
Adjusted EBITDA margin (1)			44.2	%			42.6	%							1.6 p	ts
Net earnings attributable to:
Common shareholders			877				642				235				36.6%
Preferred shareholders			34				32				2				6.3%
Non-controlling interest			23				13				10				76.9%
Net earnings			934				687				247				36.0%
Adjusted net earnings			811				704				107				15.2%
Net earnings per common share (EPS)			0.96				0.71				0.25				35.2%
Adjusted EPS (2)			0.89				0.78				0.11				14.1%

 

(1)	Adjusted EBITDA margin is defined as adjusted EBITDA divided by operating revenues.

 

(2)	Adjusted EPS is a non-GAAP ratio. Refer to section 9.2, Non-GAAP ratios in this MD&A for more information on this measure.

 

 

BCE STATEMENTS OF CASH FLOWS – SELECTED INFORMATION

 

		Q1 2022				Q1 2021				$  CHANGE				%  CHANGE
Cash flows from operating activities			1,716				1,992				(276	)			(13.9%	)
Capital expenditures			(952	)			(1,012	)			60				5.9%
Free cash flow			723				940				(217	)			(23.1%	)

 

 

Q1 2022 FINANCIAL HIGHLIGHTS

BCE operating revenues grew by 2.5%, in Q1 2022, compared to the same period last year, reflecting our ongoing recovery from the unfavourable effects of the COVID-19 pandemic, which have moderated. The increase in operating revenues was driven by higher year-over-year service revenues of 4.2%, mainly due to strong wireless and internet performance along with higher media subscriber revenues, including a one-time retroactive adjustment related to a contract with a Canadian TV distributor, and greater advertising revenues, moderated by continued erosion in voice, and satellite TV revenues. Product revenues declined by 8.8% year over year, primarily due to lower mobile phone postpaid upgrades and gross subscriber activations in Bell Wireless, as well as lower equipment sales in our large business market due to strong sales to the government sector in Q1 2021 and delayed customer spending attributable to global supply chain challenges driven by the COVID-19 pandemic.

Net earnings increased by $247 million in the first quarter of 2022, compared to the same period last year, mainly due to higher adjusted EBITDA, higher other income and lower severance, acquisition and other costs, partly offset by higher income taxes from higher earnings.

BCE’s adjusted EBITDA increased by 6.4% in Q1 2022, compared to Q1 2021, driven by growth across all three segments. The higher year-over-year adjusted EBITDA was due to increased revenues along with lower operating costs. This drove an adjusted EBITDA margin of 44.2% in Q1 2022, which represented a 1.6 pts increase over the same period last year, resulting from greater service revenue flow-through and a decreased proportion of low-margin product sales in our total revenue base.

BCE’s EPS of $0.96 in Q1 2022 increased by $0.25, compared to the same period last year.

In the first quarter of 2022, adjusted net earnings, which excludes the impact of severance, acquisition and other costs, net mark-to-market gains (losses) on derivatives used to economically hedge equity settled share-based compensation plans, net equity gains (losses) on investments in associates and joint ventures, net gains (losses) on investments, early debt redemption costs, impairment of assets and discontinued operations, net of tax and NCI, was $811 million, or $0.89 per common share, compared to $704 million, or $0.78 per common share, for the same period last year.

Cash flows from operating activities in the first quarter of 2022 decreased by $276 million, compared to the same period last year, mainly due to lower cash from working capital reflecting the timing of supplier payments, and higher interest paid, partly offset by higher adjusted EBITDA.

Free cash flow in Q1 2022 decreased by $217 million, compared to the same period last year, mainly due to lower cash flows from operating activities, excluding cash from acquisition and other costs paid, partly offset by lower capital expenditures.

 

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1 MD&A Overview

 

 

 

1.2	Key corporate and business developments

This section contains forward-looking statements, including relating to BCE’s 2022 annualized common share dividend and our objectives and plans. Refer to the section Caution regarding forward-looking statements at the beginning of this MD&A.

 

 

COMMON SHARE DIVIDEND INCREASE

On February 2, 2022, BCE’s board of directors approved a 5.1%, or 18 cents per share, increase in the annualized common share dividend from $3.50 per share to $3.68 per share, effective with BCE’s 2022 first quarter dividend paid on April 18, 2022 to common shareholders of record on March 15, 2022. This is BCE’s 14th consecutive year of 5% or better dividend growth.

 

 

PUBLIC DEBT OFFERING AND REDEMPTION

On February 11, 2022, Bell Canada completed a public offering in the United States of US $750 million (Cdn $954 million) of notes in one series (the Notes). The US $750 million Series US-7 Notes will mature on August 15, 2052 and carry an annual interest rate of 3.65%. The Notes are fully and unconditionally guaranteed by BCE Inc. The net proceeds of the offering were used towards the cost of funding the early redemption in March 2022 of Bell Canada’s Cdn $1 billion principal amount of 3.35% Series M-26 medium-term note (MTN) debentures due March 22, 2023.

 

 

REDEMPTION OF SERIES AO PREFERRED SHARES

On March 31, 2022, BCE redeemed all of its outstanding Cumulative Redeemable First Preferred Shares, Series AO (Series AO Preferred Shares) at a redemption price of $25.00 per Series AO Preferred Share, for a total amount of $115 million.

 

 

BELL NAMED ONE OF CANADA’S BEST DIVERSITY EMPLOYERS, A TOP

FAMILY-FRIENDLY EMPLOYER AND A MONTRÉAL TOP EMPLOYER

For the sixth year in a row, Bell has been named one of Canada’s Best Diversity Employers in Mediacorp’s 2022 report on workplace diversity and inclusion. The award recognizes Bell’s commitment to fostering an inclusive, equitable and accessible workplace where all team members can make an impact, immerse themselves in opportunities, and feel like they belong.

In addition, Bell has once again been named a Top Family-Friendly Employer and a Montréal Top Employer, reflecting our continued efforts to engage and invest in our people with unmatched job opportunities, career development programs, employee benefits, commitment to mental health and more.

Our employee initiatives since the beginning of 2022 include:

 

•

Rolling out unlimited mental health benefit coverage for team members and their eligible family members to support their mental health and well-being

 

•

Introducing a flexible holiday policy, including the ability to substitute days, reflecting our support for flexibility and diversity in the workplace

 

•

Launched an Employee Value Proposition, capturing Bell’s promise to current and future employees as well as the values and experiences that make Bell unique

 

•

Welcoming our employees back to most office locations in April with Bell’s flexible, hybrid work model, Bell Workways

 

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1.3	Assumptions

As at the date of this MD&A, our forward-looking statements set out in the BCE 2021 Annual MD&A, as updated or supplemented in this MD&A, are based on certain assumptions including, without limitation, the following assumptions as well as the various assumptions referred to under the sub-sections entitled Assumptions set out in section 3, Business segment analysis of this MD&A.

ASSUMPTIONS ABOUT THE CANADIAN ECONOMY

We have made certain assumptions concerning the Canadian economy. As most public health restrictions in Canada have been lifted, pandemic-related effects on demand – notably consumer caution and reluctance to travel – are assumed to fade over 2022 and 2023. In particular, we have assumed:

 

•

Strong economic growth, given the Bank of Canada’s most recent estimated growth in Canadian gross domestic product of around 4.25% on average in 2022

 

•

Elevated consumer price index (CPI) inflation driven by sharp increases in energy and food prices as well as supply disruptions and strong demand for goods

 

•

Tight labour market leading to rising wage growth

 

•

Strong household consumption growth supported by job gains, the spending of some of the savings accumulated during the pandemic, and the lifting of public health restrictions

 

•

Solid business investment outside the oil and gas sector supported by robust demand, the gradual easing of supply constraints and improved business confidence

 

•

Higher interest rates

 

•

Higher immigration levels

 

•

The conflict between Russia and Ukraine affecting the Canadian economy predominantly through higher commodity prices

 

•

Canadian dollar expected to remain at or near current levels. Further movements may be impacted by the degree of strength of the U.S. dollar, interest rates and changes in commodity prices.

MARKET ASSUMPTIONS

 

•

A consistently high level of wireline and wireless competition in consumer, business and wholesale markets

 

•

Higher, but slowing, wireless industry penetration

 

•

A shrinking data and voice connectivity market as business customers migrate to lower-priced telecommunications solutions or alternative OTT competitors

 

•

While the advertising market continues to be adversely impacted by cancelled or delayed advertising campaigns from many sectors due to the economic downturn during the COVID-19 pandemic, we do expect gradual recovery in 2022

 

•

Declines in broadcasting distribution undertaking (BDU) subscribers driven by increasing competition from the continued rollout of subscription video-on-demand (SVOD) streaming services together with further scaling of OTT aggregators

ASSUMPTIONS UNDERLYING EXPECTED REDUCTIONS IN CONTRIBUTIONS TO OUR DB PENSION PLANS

 

•

At the relevant time, our defined benefit (DB) pension plans will remain in funded positions with going concern surpluses and maintain solvency ratios that exceed the minimum legal requirements for a contribution holiday to be taken

 

•

No significant declines in our DB pension plans’ financial position due to declines in investment returns or interest rates

 

•

No material experience losses from other unforeseen events such as through litigation or changes in laws, regulations or actuarial standards

 

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2 MD&A Consolidated financial analysis

 

2	Consolidated financial analysis

This section provides detailed information and analysis about BCE’s performance in Q1 2022 compared with Q1 2021. It focuses on BCE’s consolidated operating results and provides financial information for our Bell Wireless, Bell Wireline and Bell Media business segments. For further discussion and analysis of our business segments, refer to section 3, Business segment analysis.

 

 

 

2.1	BCE consolidated income statements

 

		Q1 2022				Q1 2021				$  CHANGE				%  CHANGE
Operating revenues
Service			5,177				4,968				209				4.2%
Product			673				738				(65	)			(8.8%	)
Total operating revenues			5,850				5,706				144				2.5%
Operating costs			(3,266	)			(3,277	)			11				0.3%
Adjusted EBITDA			2,584				2,429				155				6.4%
Adjusted EBITDA margin			44.2	%			42.6	%							1.6 p	ts
Severance, acquisition and other costs			(13	)			(89	)			76				85.4%
Depreciation			(891	)			(895	)			4				0.4%
Amortization			(260	)			(238	)			(22	)			(9.2%	)
Finance costs
Interest expense			(260	)			(267	)			7				2.6%
Net return (interest) on post-employment benefit plans			18				(5	)			23				n.m.
Impairment of assets			(2	)			(3	)			1				33.3%
Other income			93				8				85				n.m.
Income taxes			(335	)			(253	)			(82	)			(32.4%	)
Net earnings			934				687				247				36.0%
Net earnings attributable to:
Common shareholders			877				642				235				36.6%
Preferred shareholders			34				32				2				6.3%
Non-controlling interest			23				13				10				76.9%
Net earnings			934				687				247				36.0%
Adjusted net earnings			811				704				107				15.2%
EPS			0.96				0.71				0.25				35.2%
Adjusted EPS			0.89				0.78				0.11				14.1%

n.m.: not meaningful

 

 

 

2.2	Customer connections

BCE NET ACTIVATIONS (LOSSES)

 

		Q1 2022				Q1 2021				% CHANGE
Wireless mobile phone net subscriber activations (losses)			32,176				2,405				n.m.
Postpaid			34,230				32,925				4.0%
Prepaid			(2,054	)			(30,520	)			93.3%
Wireless mobile connected devices net subscriber activations			48,877				74,159				(34.1%	)
Wireline retail high-speed Internet net subscriber activations			26,024				21,208				22.7%
Wireline retail TV net subscriber (losses) activations			(8,361	)			(9,112	)			8.2%
IPTV			12,260				10,696				14.6%
Satellite			(20,621	)			(19,808	)			(4.1%	)
Wireline retail residential NAS lines net losses			(42,345	)			(51,069	)			17.1%
Total services net activations			56,371				37,591				50.0%

n.m.: not meaningful

 

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2 MD&A Consolidated financial analysis

 

TOTAL BCE CUSTOMER CONNECTIONS

 

		Q1 2022				Q1 2021				% CHANGE
Wireless mobile phone subscribers			9,491,361				9,166,748				3.5%
Postpaid			8,664,275				8,361,264				3.6%
Prepaid			827,086				805,484				2.7%
Wireless mobile connected devices subscribers			2,298,671				2,130,312				7.9%
Wireline retail high-speed Internet subscribers (1)			3,954,767				3,730,576				6.0%
Wireline retail TV subscribers (1)			2,735,674				2,723,368				0.5%
IPTV (1)			1,903,726				1,817,069				4.8%
Satellite			831,948				906,299				(8.2%	)
Wireline retail residential NAS lines (1)			2,259,716				2,432,863				(7.1%	)
Total services subscribers			20,740,189				20,183,867				2.8%

 

(1)	In Q1 2022, as a result of the acquisition of EBOX and other related companies, our retail high-speed Internet, retail IPTV and retail residential NAS lines subscriber bases increased by 67,090, 9,025 and 3,456 subscribers, respectively.

BCE added 56,371 net retail subscriber activations in Q1 2022, increasing by 50.0% compared to the same period last year. The net retail subscriber activations in Q1 2022 consisted of:

 

•

32,176 wireless mobile phone net subscriber activations, along with 48,877 wireless mobile connected devices net subscriber activations

 

•

26,024 retail high-speed Internet net subscriber activations

 

•

8,361 retail TV net subscriber losses comprised of 20,621 retail satellite TV net subscriber losses, offset in part by 12,260 retail IPTV net subscriber activations

 

•

42,345 retail residential NAS lines net losses

At March 31, 2022, BCE’s retail subscriber connections totaled 20,740,189, up 2.8% year over year, and consisted of:

 

•

9,491,361 wireless mobile phone subscribers, up 3.5% year over year, and 2,298,671 wireless mobile connected devices subscribers, up 7.9% year over year

 

•

3,954,767 retail high-speed Internet subscribers, 6.0% higher than the same period last year

 

•

2,735,674 total retail TV subscribers, up 0.5% over the same period last year, comprised of 1,903,726 retail IPTV subscribers, up 4.8% year over year, and 831,948 retail satellite TV subscribers, down 8.2% year over year

 

•

2,259,716 retail residential NAS lines, down 7.1% over Q1 2021

 

 

 

2.3	Operating revenues

    

BCE

Total BCE operating revenues increased by 2.5% in Q1 2022, compared to the same period last year, reflecting our continued recovery from the unfavourable effects of the COVID-19 pandemic. BCE service revenues of $5,177 million in Q1 2022 increased by 4.2% year-over-year, whereas product revenues of $673 million in Q1 2022, declined by 8.8% over the same period last year.

The year-over-year increase in Q1 2022 operating revenues was driven by growth in our Bell Media and Bell Wireless segments, offset in part by a decline in our Bell Wireline segment. Bell Media operating revenues grew by 15.7% in Q1 2022, over the same period last year, from higher subscriber revenues, including a one-time retroactive adjustment related to a contract with a Canadian TV distributor, and greater advertising revenues. Bell Wireless operating revenues increased by 5.2% in Q1 2022, compared to the same period last year, due to higher service revenues of 8.7%, offset in part by lower product revenues of 3.8%. Bell Wireline operating revenues declined by 2.2% in Q1 2022, over Q1 2021, due to lower product revenues of 28.6%, as well as lower service revenue of 0.8%, from ongoing voice erosion and lower data revenues.

 

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2 MD&A Consolidated financial analysis

 

 

 

2.4	Operating costs

 

 

		Q1 2022				Q1 2021				$ CHANGE				% CHANGE
Bell Wireless			(1,201	)			(1,177	)			(24	)			(2.0%	)
Bell Wireline			(1,646	)			(1,718	)			72				4.2%
Bell Media			(617	)			(570	)			(47	)			(8.2%	)
Inter-segment eliminations			198				188				10				5.3%
Total BCE operating costs			(3,266	)			(3,277	)			11				0.3%

 

(1)	Cost of revenues includes costs of wireless devices and other equipment sold, network and content costs, and payments to other carriers.

 

(2)	Labour costs (net of capitalized costs) include wages, salaries and related taxes and benefits, post-employment benefit plans service cost, and other labour costs, including contractor and outsourcing costs.

 

(3)	Other operating costs include marketing, advertising and sales commission costs, bad debt expense, taxes other than income taxes, IT costs, professional service fees and rent.

BCE

BCE operating costs decreased by 0.3% in Q1 2022, compared to Q1 2021, due to reduced expenses in Bell Wireline of 4.2%, partly offset by higher expenses in Bell Media of 8.2% and in Bell Wireless of 2.0%.

 

 

 

2.5	Net earnings

 

 

Net earnings in the first quarter of 2022 increased by $247 million, compared to the same period last year, mainly due to higher adjusted EBITDA, higher other income and lower severance, acquisition and other costs, partly offset by higher income taxes from higher earnings.

 

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2 MD&A Consolidated financial analysis

 

 

 

2.6	Adjusted EBITDA

    

BCE

BCE’s adjusted EBITDA was up by 6.4% in Q1 2022, compared to the same period last year, attributable to growth across all three of our segments. The adjusted EBITDA growth was driven by greater operating revenues combined with lower operating costs. Adjusted EBITDA margin of 44.2% in Q1 2022, increased by 1.6 pts over the same period last year, mainly driven by greater service revenue flow-through and a decreased proportion of low-margin product sales in our total revenue base.

 

 

 

2.7	Severance, acquisition and other costs

2022

Severance, acquisition and other costs of $13 million in the first quarter of 2022 included:

 

•

Severance costs of $18 million related to involuntary and voluntary employee terminations

 

•

Acquisition and other costs recovery of $5 million in Q1 2022

2021

Severance, acquisition and other costs of $89 million in the first quarter of 2021 included:

 

•

Severance costs of $97 million related to involuntary and voluntary employee terminations

 

•

Acquisition and other costs recovery of $8 million

 

 

 

2.8	Depreciation and amortization

DEPRECIATION

Depreciation in Q1 2022 decreased by $4 million, compared to Q1 2021, in part due to lower accelerated depreciation of Fourth Generation (4G) network elements as we transition to 5G, partly offset by a higher asset base as we continued to invest in our broadband and wireless networks as well as our IPTV services.

AMORTIZATION

Amortization in Q1 2022 increased by $22 million, compared to Q1 2021, mainly due to a higher asset base.

 

 

 

2.9	Finance costs

INTEREST EXPENSE

Interest expense in the first quarter of 2022 decreased by $7 million, compared to the same period last year, mainly due to higher capitalized interest, partly offset by higher average debt levels.

NET RETURN (INTEREST) ON POST-EMPLOYMENT BENEFIT PLANS

Net return (interest) on our post-employment benefit plans is based on market conditions that existed at the beginning of the year as well as the net post-employment benefit plan asset (liability). On January 1, 2022, the discount rate was 3.2% compared to 2.6% on January 1, 2021.

In the first quarter of 2022, net return on post-employment benefit plans was $18 million compared to net interest of $5 million in the first quarter of 2021, as a result of a net asset position in our post-employment benefits plans at the beginning of 2022 compared to a net obligation position at the beginning of 2021, and due to a higher discount rate in 2022.

The impacts of changes in market conditions during the year are recognized in other comprehensive income (OCI).

 

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2.10	Other income

2022

Other income of $93 million in the first quarter of 2022, included net mark-to-market gains on derivatives used to economically hedge equity settled share-based compensation plans and gains on investments which mainly related to the sale of our wholly-owned subsidiary, 6362222 Canada Inc. (Createch), partly offset by early debt redemption costs.

2021

Other income of $8 million in the first quarter of 2021 included net mark-to-market gains on derivatives used to economically hedge equity settled share-based compensation plans, partly offset by early debt redemption costs.

 

 

 

2.11	Income taxes

Income taxes in the first quarter of 2022 increased by $82 million, compared to the same period last year, mainly due to higher taxable income.

 

 

 

2.12	Net earnings attributable to common shareholders and EPS

Net earnings attributable to common shareholders in the first quarter of 2022 of $877 million, increased by $235 million, compared to the same period last year, mainly due to higher adjusted EBITDA, higher other income and lower severance, acquisition and other costs, partly offset by higher income taxes from higher earnings.

BCE’s EPS of $0.96 in Q1 2022 increased by $0.25, compared to the same period last year.

In the first quarter of 2022, adjusted net earnings, which excludes the impact of severance, acquisition and other costs, net mark-to-market gains (losses) on derivatives used to economically hedge equity settled share-based compensation plans, net equity gains (losses) on investments in associates and joint ventures, net gains (losses) on investments, early debt redemption costs, impairment of assets and discontinued operations, net of tax and NCI, was $811 million, or $0.89 per common share, compared to $704 million, or $0.78 per common share, for the same period last year.

 

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3 MD&A Business segment analysis – Bell Wireless

 

3	Business segment analysis

 

 

 

3.1	Bell Wireless

KEY BUSINESS DEVELOPMENTS

LAUNCH OF NEW UNLIMITED ULTIMATE PLANS

Bell launched a new tier of mobile unlimited share plans that provide more data at max speeds, international messaging, HD video quality plus sharable data and calling within Canada and the United States. The new unlimited Ultimate 40 and Ultimate 50 plans (offering 40 gigabyte (GB) and 50GB of data respectively) are available for both new and existing customers. Customers who subscribe to Ultimate plans enjoy a bonus 24 month subscription to Crave Mobile. Customers who don’t consume as much content can choose the Essential unlimited share plan with 20GB at max data speeds up to 250 megabits per second (Mbps), SD video quality and hotspot capability. The new Ultimate plans are available on Bell 5G, which is consistently rated Canada’s fastest.

LAUNCH OF 5G EDGE COMPUTE

On April 27, 2022, Bell announced the launch of the first public multi-access edge computing (MEC) with Amazon Web Services (AWS) Wavelength in Canada. Building on Bell’s agreement with AWS, announced last year, together the two companies are deploying AWS Wavelength Zones throughout the country at the edge of Bell’s 5G network starting in Toronto. Bell Public MEC with AWS Wavelength embeds AWS compute and storage services at the edge of the Bell 5G network, closer to mobile and connected devices where data is generated and consumed. This enables software developers and businesses to take full advantage of the high speed and low latency of Bell’s 5G network and the cloud with AWS to build innovative, low-latency solutions that leverage real-time visual data processing, augmented/virtual reality (AR/VR), artificial intelligence and machine learning (AI/ML), advanced robotics, and much more.

DEPLOYMENT OF GOOGLE DISTRIBUTED CLOUD EDGE

On February 28, 2022, Bell Canada and Google Cloud announced a significant milestone in their strategic partnership with Bell’s deployment of Google Distributed Cloud Edge in its network, enabling more efficiency, reliability and scale while also driving new business opportunities. This is the world’s first implementation of core network functions on Google Distributed Cloud Edge, a fully managed product that brings Google Cloud’s infrastructure and services closer to where the data is being generated and consumed. This advancement builds on Bell and Google Cloud’s strategic partnership, announced in 2021, to combine Bell’s 5G network leadership with Google Cloud’s expertise in multi-cloud, data analytics and Artificial Intelligence (AI), and to enable Bell to drive operational efficiencies, and deliver richer customer experiences.

LUCKY MOBILE AVAILABLE AT BEST BUY

Bell is partnering with Best Buy to make Lucky Mobile available in more than 160 Best Buy locations across Canada, further increasing the reach of Bell’s prepaid wireless offering. With Lucky Mobile, customers get all the calling, texting and data they need with no activation fee, data overage charges or long-term commitment. Bell continues to make our prepaid brands more accessible to customers across Canada. Lucky is currently available in more than 1,700 Circle K and Couche-Tard convenience stores and 250 Giant Tiger retail stores across the country. Lucky Mobile and Virgin Plus prepaid are also available at more than 1,200 Dollarama Inc. (Dollarama) locations nationwide.

 

 

FINANCIAL PERFORMANCE ANALYSIS

Q1 2022 PERFORMANCE HIGHLIGHTS

 

 

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Total mobile phone subscriber growth		Mobile phone postpaid net subscriber activations		Mobile phone prepaid net subscriber losses		Mobile phone postpaid churn in Q1 2022		Mobile phone blended average revenue per user (ARPU) (1) per month
+3.5%		34,230		(2,054)		0.79%		+5.1%
Q1 2022 vs. Q1 2021		in Q1 2022		in Q1 2022		improved 0.10 pts		Q1 2022:   $57.98
						vs. Q1 2021		Q1 2021:   $55.17

 

(1)	Mobile phone blended ARPU is calculated by dividing wireless operating service revenues by the average mobile phone subscriber base for the specified period and is expressed as a dollar unit per month.

BELL WIRELESS RESULTS

REVENUES

 

		Q1 2022				Q1 2021				$ CHANGE				% CHANGE
External service revenues			1,635				1,503				132				8.8%
Inter-segment service revenues			11				11				–				–
Operating service revenues			1,646				1,514				132				8.7%
External product revenues			563				584				(21	)			(3.6%	)
Inter-segment product revenues			1				2				(1	)			(50.0%	)
Operating product revenues			564				586				(22	)			(3.8%	)
Bell Wireless operating revenues			2,210				2,100				110				5.2%

Bell Wireless operating revenues increased by 5.2% in Q1 2022, compared to Q1 2021, due to higher service revenues, partly offset by lower product revenues.

Service revenues increased by 8.7% in the current quarter, compared to the same period last year, driven by:

 

•

Continued growth in our postpaid and prepaid mobile phone and connected device subscriber bases

 

•

Higher roaming revenues due to increased customer travel resulting from the easing of COVID-19 restrictions, however below pre-pandemic levels

 

•

Flow-through of rate increases

Product revenues decreased by 3.8% in Q1 2022, compared to Q1 2021, due to lower mobile phone postpaid upgrades and gross subscriber activations.

OPERATING COSTS AND ADJUSTED EBITDA

 

		Q1 2022				Q1 2021				$ CHANGE				% CHANGE
Operating costs			(1,201	)			(1,177	)			(24	)			(2.0%	)
Adjusted EBITDA			1,009				923				86				9.3%
Total adjusted EBITDA margin			45.7	%			44.0	%							1.7 p	ts

Bell Wireless operating costs increased by 2.0% in Q1 2022, compared to Q1 2021, driven by:

 

•

Higher network operating costs from the continued deployment of our mobile 5G network

 

•

Greater payments to other carriers corresponding to the higher roaming revenues

These factors were partly offset by:

 

•

Lower cost of goods sold associated with the lower year-over-year product sales

Bell Wireless adjusted EBITDA increased by 9.3% in Q1 2022, compared to Q1 2021, due to greater operating revenues, moderated by higher operating costs. Adjusted EBITDA margin of 45.7% in Q1 2022, increased by 1.7 pts, compared to the same period last year, primarily driven by the flow-through of the service revenue growth and a lower proportion of low-margin product sales in our total revenue base.

 

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3 MD&A Business segment analysis – Bell Wireless

 

BELL WIRELESS OPERATING METRICS

 

		Q1 2022				Q1 2021				CHANGE				% CHANGE
Mobile phones
Blended ARPU ($/month)			57.98				55.17				2.81				5.1%
Gross subscriber activations			349,908				340,127				9,781				2.9%
Postpaid			230,713				248,990				(18,277	)			(7.3%	)
Prepaid			119,195				91,137				28,058				30.8%
Net subscriber activations (losses)			32,176				2,405				29,771				n.m.
Postpaid			34,230				32,925				1,305				4.0%
Prepaid			(2,054	)			(30,520	)			28,466				93.3%
Blended churn % (average per month)			1.12	%			1.23	%							0.11 p	ts
Postpaid			0.79	%			0.89	%							0.10 p	ts
Prepaid			4.61	%			4.68	%							0.07 p	ts
Subscribers			9,491,361				9,166,748				324,613				3.5%
Postpaid			8,664,275				8,361,264				303,011				3.6%
Prepaid			827,086				805,484				21,602				2.7%
Mobile connected devices
Net subscriber activations			48,877				74,159				(25,282	)			(34.1%	)
Subscribers			2,298,671				2,130,312				168,359				7.9%

n.m.: not meaningful

Mobile phone blended ARPU of $57.98 increased by 5.1% in Q1 2022, compared to the same period last year, driven by:

 

•

Higher roaming revenues due to increased customer travel resulting from the easing of COVID-19 restrictions, however below pre-pandemic levels

 

•

Flow-through of rate increases

Mobile phone gross subscriber activations increased by 2.9% in Q1 2022, compared to Q1 2021, due to higher prepaid gross activations, offset in part by lower postpaid gross activations.

 

•

Mobile phone postpaid gross subscriber activations decreased by 7.3% in Q1 2022, compared to the same period last year, due to more targeted promotional offers and mobile device discounting as our focus remains on higher-value subscriber loadings

 

•

Mobile phone prepaid gross subscriber activations increased by 30.8% in Q1 2022, compared to the same period last year, due to greater market activity

Mobile phone net subscriber activations increased by 29,771 in Q1 2022, compared to Q1 2021, due to lower prepaid net losses and greater postpaid net activations.

 

•

Mobile phone postpaid net subscriber activations increased by 4.0% in Q1 2022, compared to the same period last year, driven by lower subscriber deactivations, offset in part by reduced gross activations

 

•

Mobile phone prepaid net subscriber losses in Q1 2022 were 28,466 favourable, compared to the same period last year, due to greater gross activations and lower subscriber deactivations

Mobile phone blended churn of 1.12% in Q1 2022 improved by 0.11 pts, compared to Q1 2021.

 

•

Mobile phone postpaid churn of 0.79% in Q1 2022 declined by 0.10 pts, compared to the same period last year, reflecting our continued investment in customer experience, retention and mobile networks

 

•

Mobile phone prepaid churn of 4.61% in Q1 2022 improved by 0.07 pts, compared to the same period last year, due to fewer year-over-year customer deactivations

Mobile phone subscribers at March 31, 2022 totaled 9,491,361 an increase of 3.5%, from 9,166,748 subscribers at the end of Q1 2021. This consisted of 8,664,275 postpaid subscribers, an increase of 3.6% from 8,361,264 subscribers at the end of Q1 2021, and 827,086 prepaid subscribers, an increase of 2.7% from 805,484 subscribers at the end of Q1 2021.

Mobile connected device net subscriber activations decreased by 34.1% in Q1 2022, compared to the same period last year, due to greater net losses from data devices, primarily lower tablet net activations, offset in part by greater business Internet of Things (IoT) net activations.

Mobile connected device subscribers at March 31, 2022 totaled 2,298,671, an increase of 7.9% from 2,130,312 subscribers at the end of Q1 2021.

 

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3 MD&A Business segment analysis – Bell Wireless

 

 

ASSUMPTIONS

As at the date of this MD&A, our forward-looking statements set out in the BCE 2021 Annual MD&A, as updated or supplemented in this MD&A, are based on certain assumptions including, without limitation, the following assumptions and the assumptions referred to in each of the other business segment discussions set out in this section 3, Business segment analysis, as well as the economic, market and other assumptions referred to in section 1.3, Assumptions, of this MD&A.

 

•

Maintain our market share of national operators’ wireless postpaid mobile phone net additions and growth of our prepaid subscriber base

 

•

Continued strong competitive intensity and promotional activity across all regions and market segments

 

•

Ongoing expansion and deployment of 5G wireless networks, offering competitive coverage and quality

 

•

Continued diversification of our distribution strategy with a focus on expanding direct-to-consumer (DTC) and online transactions

 

•

Growth in mobile phone blended ARPU, driven by growth in 5G subscriptions, and increased roaming revenue from the easing of travel restrictions implemented as a result of the COVID-19 pandemic, partly offset by reduced data overage revenue due to the continued adoption of unlimited plans

 

•

Accelerating business customer adoption of advanced 5G and IoT solutions

 

•

Improving wireless handset device availability in addition to stable device pricing and margins

 

•

Realization of cost savings related to operational efficiencies enabled by changes in consumer behaviour, digital adoption, product and service enhancements, new call centre and digital investments and other improvements to the customer service experience

 

•

No adverse material financial, operational or competitive consequences of changes in or implementation of regulations affecting our wireless business

 

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3 MD&A Business segment analysis – Bell Wireline

 

 

 

3.2	Bell Wireline

This section contains forward-looking statements, including relating to BCE’s anticipated capital expenditures, network deployment plans and the benefits expected to result therefrom. Refer to the section Caution regarding forward-looking statements at the beginning of this MD&A.

 

 

KEY BUSINESS DEVELOPMENTS

BELL INTRODUCES FASTEST INTERNET SPEEDS OF ANY MAJOR PROVIDER IN CANADA

Bell introduced the fastest Internet speeds of any major provider in Canada, with total speeds three times faster than cable. Bell pure fibre Internet service now offers download speeds of 3 gigabits per second (Gbps) as well as upload speeds of 3 Gbps, providing that faster experience while working or learning from home, playing games or sharing videos with the upload speeds that cable cannot deliver. Unlimited pure fibre 3 Gbps is now available in eligible areas of Toronto and will soon roll out in more regions across the country.

EXPANSION OF ALL-FIBRE INTERNET SERVICE

Bell announced the expansion of pure fibre Internet service to homes and businesses in the Ontario communities of Amherstberg, Georgina, Guelph and Pickering. The projects are part of Bell’s capital expenditure acceleration program to expand our next-generation broadband network infrastructure to additional locations across the country. Fully funded by Bell, this broadband expansion program will provide fast and high-capacity 100% fibre connections with Internet download speeds of up to 3 Gbps and access to leading Bell services such as Fibe TV. Last year, Bell announced an investment of $9.7 billion in capital expenditures over two years to accelerate the rollout of its broadband fibre, 5G and rural networks and help drive Canada’s recovery from the COVID-19 crisis. This will significantly increase the connections in localities across Canada while creating additional employment as network construction activity speeds up.

ACQUISITION OF EBOX AND OTHER RELATED COMPANIES

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. Bell will maintain the EBOX brand and operations, and EBOX will continue providing telecommunications options for consumers and businesses in these areas. As part of its commitment to provide Québec residents with fast and reliable telecommunications services now and in the future, Bell invests heavily in network infrastructure and expansion throughout urban and rural Québec. Under Bell, EBOX will benefit from the resources, scale and access to the technology needed to support the growth of the business and continue delivering improvements to the great services at competitive prices that have earned EBOX loyal customers over the past 25 years.

 

 

FINANCIAL PERFORMANCE ANALYSIS

Q1 2022 PERFORMANCE HIGHLIGHTS

 

 

 

 

Retail high-speed		Retail high-speed		Retail TV (1)		Retail IPTV		Retail residential
Internet (1)		Internet						NAS lines (1)
+6.0%		26,024		+0.5%		12,260		(7.1%)
Subscriber growth Q1 2022 vs. Q1 2021		Total net subscriber activations in Q1 2022		Subscriber growth Q1 2022 vs. Q1 2021		Total net subscriber activations in Q1 2022		Subscriber decline Q1 2022 vs. Q1 2021

 

(1)	In Q1 2022, as a result of the acquisition of EBOX and other related companies, our retail high-speed Internet, retail IPTV and retail residential NAS lines subscriber bases increased by 67,090, 9,025 and 3,456 subscribers, respectively.

 

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3 MD&A Business segment analysis – Bell Wireline

 

BELL WIRELINE RESULTS

REVENUES

 

		Q1 2022				Q1 2021				$ CHANGE				% CHANGE
Data			1,953				1,965				(12	)			(0.6%	)
Voice			771				803				(32	)			(4.0%	)
Other services			77				74				3				4.1%
External service revenues			2,801				2,842				(41	)			(1.4%	)
Inter-segment service revenues			102				85				17				20.0%
Operating service revenues			2,903				2,927				(24	)			(0.8%	)
Data			99				144				(45	)			(31.3%	)
Equipment and other			11				10				1				10.0%
External product revenues			110				154				(44	)			(28.6%	)
Inter-segment product revenues			–				–				–				–
Operating product revenues			110				154				(44	)			(28.6%	)
Bell Wireline operating revenues			3,013				3,081				(68	)			(2.2%	)

Bell Wireline operating revenues declined by 2.2% in Q1 2022, compared to the same period last year, mainly driven by lower product sales, ongoing voice revenue erosion, and reduced data revenue, partly offset by higher other services revenue.

Bell Wireline operating service revenues declined by 0.8%, in Q1 2022, compared to Q1 2021.

 

•

Data revenues decreased by 0.6% in Q1 2022, compared to the same period last year, driven by:

 

•

Higher acquisition, retention and bundle discounts on residential services

 

•

Continued decline in our satellite TV subscriber base

 

•

Reduced Internet protocol (IP) based data services revenue and the unfavourable impact from the sale of our wholly-owned subsidiary Createch on March 1, 2022, in our business market

 

•

Ongoing legacy data erosion

These factors were partly offset by:

 

•

Greater retail Internet and IPTV subscriber bases combined with the flow-through of residential rate increases

 

•

Voice revenues declined by 4.0% in Q1 2022, compared to Q1 2021, driven by:

 

•

Ongoing retail residential NAS line erosion mainly due to technological substitution to wireless and Internet based services

 

•

Greater business voice erosion across the customer base

These factors were partly offset by:

 

•

The flow-through of residential rate increases

 

•

Higher sales of international wholesale long distance minutes

 

•

Other services revenues grew by 4.1% in Q1 2022, compared to the same period last year, from higher data and analytics related revenues.

Bell Wireline operating product revenues decreased by 28.6% in Q1 2022, compared to the same period last year, attributable to strong Q1 2021 equipment sales in our business market, primarily to the government sector, coupled with reduced or delayed spending by business customers due to global supply chain challenges, driven by the COVID-19 pandemic.

OPERATING COSTS AND ADJUSTED EBITDA

 

		Q1 2022				Q1 2021				$ CHANGE				% CHANGE
Operating costs			(1,646	)			(1,718	)			72				4.2%
Adjusted EBITDA			1,367				1,363				4				0.3%
Adjusted EBITDA margin			45.4	%			44.2	%							1.2 p	ts

Bell Wireline operating costs decreased by 4.2% in Q1 2022, compared to Q1 2021, due to:

 

•

Lower product cost of goods sold corresponding to the lower product revenues

 

•

TV programming and content cost savings, combined with the impact of lower associated revenues

These factors were partly offset by:

 

•

Greater payments to other carriers from higher sales of international wholesale long distance minutes

 

•

Increased marketing costs, including greater spend during the Beijing 2022 Winter Olympics

Bell Wireline adjusted EBITDA increased by 0.3% in Q1 2022, compared to the same period last year, driven by operating expense savings, offset in part by lower year-over-year operating revenues. Adjusted EBITDA margin of 45.4% in Q1 2022, increased by 1.2 points over Q1 2021, attributable to a decreased proportion of low-margin product sales in our total revenue base, along with lower operating costs.

 

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3 MD&A Business segment analysis – Bell Wireline

 

BELL WIRELINE OPERATING METRICS

DATA

Retail high-speed Internet

 

		Q1 2022				Q1 2021				CHANGE				% CHANGE
Retail net subscriber activations			26,024				21,208				4,816				22.7%
Retail subscribers (1)			3,954,767				3,730,576				224,191				6.0%

 

(1)	In Q1 2022, as a result of the acquisition of EBOX and other related companies, our retail high-speed Internet subscriber base increased by 67,090 subscribers.

Retail high-speed Internet net subscriber activations increased by 6.0% in Q1 2022, compared to the same period last year, driven by lower year-over-year retail residential deactivations, resulting from an expanded fibre service footprint and our ongoing investment in customer retention, along with fewer customers coming off of promotional offers.

Retail high-speed Internet subscribers totaled 3,954,767 at March 31, 2022, up 6.0% from 3,730,576 subscribers reported at the end of Q1 2021. Our retail high-speed Internet subscriber base increased by 67,090 subscribers in Q1 2022, as a result of the acquisition of EBOX and other related companies.

Retail TV

 

		Q1 2022				Q1 2021				CHANGE				% CHANGE
Retail net subscriber (losses) activations			(8,361	)			(9,112	)			751				8.2%
IPTV			12,260				10,696				1,564				14.6%
Satellite			(20,621	)			(19,808	)			(813	)			(4.1%	)
Total retail subscribers (1)			2,735,674				2,723,368				12,306				0.5%
IPTV (1)			1,903,726				1,817,069				86,657				4.8%
Satellite			831,948				906,299				(74,351	)			(8.2%	)

 

(1)	In Q1 2022, as a result of the acquisition of EBOX and other related companies, our retail IPTV subscriber base increased by 9,025 subscribers.

Retail IPTV net subscriber activations increased by 14.6% in Q1 2022, compared to Q1 2021, attributable to fewer year-over-year deactivations resulting from reduced churn in our IPTV fibre footprint and our continued investment in customer retention.

Retail satellite TV net subscriber losses increased by 4.1% in Q1 2022, compared to Q1 2021, driven by higher small business net losses, due to the unfavourable impact of the COVID-19 pandemic on this market.

Total retail TV net subscriber losses (IPTV and satellite TV combined) improved by 8.2% in Q1 2022, compared to the same period last year, driven by higher IPTV net activations, offset in part by higher satellite TV net losses.

Retail IPTV subscribers at March 31, 2022 totaled 1,903,726, up 4.8% from 1,817,069 subscribers reported at the end of Q1 2021. Our IPTV subscriber base increased by 9,025 subscribers in Q1 2022, as a result of the acquisition of EBOX and other related companies.

Retail satellite TV subscribers at March 31, 2022 totaled 831,948, down 8.2% from 906,299 subscribers reported at the end of Q1 2021.

Total retail TV subscribers (IPTV and satellite TV combined) at March 31, 2022 were 2,735,674, representing a 0.5% increase from 2,723,368 subscribers at the end of Q1 2021. Our retail TV subscriber base increased by 9,025 subscribers in Q1 2022, as a result of the acquisition of EBOX and other related companies.

Voice

 

		Q1 2022				Q1 2021				CHANGE				% CHANGE
Retail residential NAS lines net losses			(42,345	)			(51,069	)			8,724				17.1%
Retail residential NAS lines (1)			2,259,716				2,432,863				(173,147	)			(7.1%	)

 

(1)	In Q1 2022, as a result of the acquisition of EBOX and other related companies, our retail residential NAS lines subscriber base increased by 3,456 subscribers.

Retail residential NAS lines net losses improved by 17.1% in Q1 2022 compared to the same period last year, resulting from lower year-over-year deactivations driven by ongoing impacts from the COVID-19 pandemic.

Retail residential NAS lines at March 31, 2022 of 2,259,716 declined by 7.1% from 2,432,863 lines reported at the end of Q1 2021. Our retail residential NAS lines subscriber base increased by 3,456 subscribers in Q1 2022, as a result of the acquisition of EBOX and other related companies. The decline in retail residential NAS lines of 7.1% represented an improvement over the 7.7% rate of erosion experienced in Q1 2021, primarily driven by fewer deactivations.

 

18  |  BCE INC. 2022 FIRST QUARTER SHAREHOLDER REPORT