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Invest in BCE

Gordon Nixon letter to shareholders

BCE’s scale and innovation delivering unmatched results for all our stakeholders

BCE’s strategy of leading performance and scale in broadband networks, continuous innovation to create exclusive communications services and in-demand content, and strategic acquisitions to seize emerging opportunities is delivering results for our customers, shareholders,  communities and team.  2017 was another year of outstanding operational and financial performance by the Bell team in an intensely competitive communications marketplace.

Underscoring Bell’s legacy of leadership in Canadian communications since 1880, our progress in 2017 has fueled significant enhancements to our national broadband network infrastructure, ongoing research & development in Canada, and high-profile leadership in corporate social responsibility, including the ongoing growth of our ground-breaking Bell Let’s Talk mental health initiative.

In an era when communications infrastructure and service innovation are more than ever the backbone of economic and social growth and prosperity, Bell is at the forefront of the global broadband revolution, leading the way in providing Canadians with the latest growth services in consumer and business communications.

Canada’s communications leader

Bell remains the primary driver of Canada’s advanced communications infrastructure development as we continue to roll out new and enhanced fibre and wireless networks. In 2017, total capital expenditures exceeded $4 billion, a national capital program on par with some of the largest in Canada and greater than any other communications competitor, while we maintained investment within a prudent capital intensity range.

With the launch of Bell MTS in March 2017 following our acquisition of Manitoba Telecom Services, we’re quickly expanding the Bell broadband strategy into Manitoba with significant network enhancements and the introduction of the latest LTE Advanced and Fibe services. Bell now offers wireline coverage to 76% of Canadian households and, in a major milestone achieved in 2017, LTE wireless service to 99% of the population.

Network leadership is the backbone of our success, with advanced LTE wireless speeds supporting fast growth in new subscribers and mobile data usage, and the next-generation Fibe network enabling innovative new TV, Internet and business services as our direct fibre connections continue to accelerate. Coupled with the best in sports, entertainment and news media across every platform, we’re building on Bell’s position as Canada’s leading provider of both Internet and TV services.

Bell’s fibre network is Canada’s largest at more than 240,000 total kilometres, passing approximately 9.2 million locations across 7 provinces – including the largest footprint capable of delivering Gigabit plus speeds with direct fibre connections to more than 3.7 million homes and businesses. Together with the country’s largest network of data centres with the integration of Q9 Networks, Bell has the connectivity and capacity to deliver demanding end-to-end integrated communications services for consumers, business and government.

This includes staking out a leadership position in the burgeoning Internet of Things marketplace, which enables multiple business verticals to easily collect and analyze data using mobile and fixed data collection devices powered by Bell’s broadband networks. Bell’s network and data management advantages are also driving innovation in connected vehicles, Smart City platforms and the Connected Home – further enabled by our acquisition of AlarmForce Industries.

Financial strength enables our strategy

BCE’s healthy balance sheet and liquidity position and our stable investment grade ratings provide us with the financial flexibility to achieve our capital markets objectives. Bell’s strong performance in a competitive communications marketplace delivered steady growth in revenue, adjusted EBITDA and the free cash flow that fuels our broadband investments while enabling us to return value to our shareholders with consistent and sustainable dividend growth.

In February 2018, we announced the 14th increase to the BCE common share dividend since the end of 2008, a 5.2% increase that raises the dividend to $3.02 in 2018. This is BCE’s 10th consecutive year of 5% or better dividend growth, while maintaining our dividend payout ratio within the target policy range of 65% to 75% of free cash flow, and an overall 107% increase since 2008. Total shareholder return in this timeframe was 283%, ahead of most peers and more than double the return of the S&P/TSX Composite Index.

We also recently initiated a $175 million share repurchase plan in the form of a normal course issuer bid and made an additional voluntary $100 million contribution to our Defined Benefit (DB) pension plans. This contribution has moved us up to a 97% solvency ratio and positions our DB plans to achieve a surplus position should interest rates rise.

In 2017, we raised a combined total of $3 billion in gross proceeds from the issuance of 5, 7, 10 and 30-year MTN debentures, lowering our after-tax cost of publicly issued debt securities to 3.2% (4.3% on a pre-tax basis). BCE had over $1.5 billion in available liquidity at the end of 2017.

Proud to be a top Canadian employer

Bell’s success has always been achieved by our employee team, and we now employ almost 52,000 people in every province and territory of this vast country. We were proud to again be recognized as one of Canada’s Top 100 Employers, Best 50 Corporate Citizens and Best Diversity Employers in 2017 and to receive the Federal Government’s award for Outstanding Commitment to Employment Equity.

The Chartered Professional Accountants of Canada cited BCE for excellence in corporate reporting and our ongoing commitment to the highest standards of governance. That recognition is a result of the insight, integrity and hard work of the Board of Directors that I am privileged to chair. I am grateful to each of them for their contribution to the success of your company and for their personal support.

On behalf of our shareholders and the Board, I thank President and CEO George Cope for positioning our company to lead the Canadian communications industry now and into the future with a clear strategy of investment and growth, and a Bell team clearly capable of continued successful execution in a competitive marketplace.

Thank you to our shareholders for your support of BCE and the Bell group of companies. Bell is a critical contributor to the development of our country, enabling Canadians to connect with each other and the world. With your support, we will continue to deliver them the most advanced communications networks, services and media to ensure our nation’s ongoing leadership in an increasingly broadband dependent world.

Gordon Nixon
Chair of the Board
BCE Inc.

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