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 8, Non-GAAP financial measures, other financial measures and key performance indicators (KPIs) on pages 34 to 38 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 third quarter of 2022 (Q3 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) as updated in BCE’s MD&A for the first quarter of 2022 dated May 4, 2022 (BCE 2022 First Quarter MD&A) and BCE’s MD&A for the second quarter of 2022 dated August 3, 2022 (BCE 2022 Second Quarter MD&A). In preparing this MD&A, we have taken into account information available to us up to November 2, 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, the BCE 2022 First Quarter MD&A and the BCE 2022 Second Quarter 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 (Q3) and nine months (YTD) ended September 30, 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 3.1, Bell Wireless – Key business developments, 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 anticipated capital expenditures, network deployment plans and the benefits expected to result therefrom, our plans to deliver faster wireless and Internet speeds and Wi-Fi technology and related offerings, 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, the expected completion of the proposed acquisition of Distributel Communications Limited (Distributel) and the benefits expected to result therefrom, Bell Ventures’ planned investments in early-stage and growth companies that provide advanced technology solutions, potential future purchases by BCE of its preferred shares pursuant to a normal course issuer bid (NCIB), 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 November 2, 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, of the conflict between Russia and Ukraine and of general economic conditions, which are difficult to predict, we believe that our assumptions were reasonable at November 2, 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 inflationary pressures, rising interest rates, increasing risk of recession, 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

 

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MD&A

 

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; service interruptions or outages due to legacy infrastructure and the possibility of instability as we transition towards converged wireline and wireless networks; the failure by us, or by other telecommunications carriers on which we rely to provide services, to complete planned and sufficient testing, maintenance, replacement or upgrade of our or their networks, equipment and other facilities, which could disrupt our operations including through network failures; 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; 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 the BCE 2022 First Quarter MD&A and in this MD&A for an update to the legal proceedings described in the BCE 2021 AIF, which sections 4.8 are incorporated by reference in this cautionary statement. Please also see section 6, Regulatory environment in the BCE 2022 First Quarter MD&A, in the BCE 2022 Second Quarter MD&A and in this MD&A for an update to the regulatory initiatives and proceedings described in the BCE 2021 Annual MD&A, which sections 6 are incorporated by reference in this cautionary statement. Please also see section 7, Business risks in the BCE 2022 First Quarter MD&A and in the BCE 2022 Second Quarter MD&A for an update to the description of the risk factors relating to the COVID-19 pandemic and general economic conditions 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 sections 7 are 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 the BCE 2022 First Quarter MD&A; in section 6, Regulatory environment and in section 7, Business risks in the BCE 2022 Second Quarter MD&A; as well as in section 4.8, Litigation and in section 6, Regulatory environment in this MD&A, the risks described in the BCE 2021 Annual MD&A remain substantially unchanged.

Forward-looking statements contained in this MD&A for periods beyond 2022 involve longer-term assumptions and estimates than forward-looking statements for 2022 and are consequently subject to greater uncertainty. In particular, the nature and value of capital expenditures planned to be made by BCE assume our ability to access or generate the necessary sources of capital as well as access the necessary equipment and labour. However, there can be no assurance that the required sources of capital, equipment and labour will be available with the result that the actual nature and value of capital expenditures made by BCE, as well as the timing thereof, could materially differ from current expectations. Forward-looking statements for periods beyond 2022 further assume, unless otherwise indicated, that the risks described above and in section 9, Business risks of the BCE 2021 Annual MD&A will remain substantially unchanged during such periods, except for an assumed improvement in the risks related to the COVID-19 pandemic in future years.

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 November 2, 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

 

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.

In Q2 2022, we applied this agenda decision retrospectively, to each prior period presented, the impact of which was limited to the classification of funding of $97 million received in Q1 2021 under a subsidy agreement with the Government of Québec. For further details, see section 7, Accounting policies in this MD&A.

 

 

1.1   Financial highlights

BCE Q3 2022 SELECTED QUARTERLY INFORMATION

 

Operating revenues		Net earnings		Adjusted EBITDA (1)
$6,024		$771		$2,588
million		million		million
+3.2% vs. Q3 2021		(5.2%) vs. Q3 2021		+1.2% vs. Q3 2021

 

 

 

Net earnings attributable		Adjusted net earnings (1)		Cash flows from		Free cash flow (1)
to common shareholders				operating activities
$715		$801		$1,996		$642
million		million		million		million
(5.5%) vs. Q3 2021		+7.1% vs. Q3 2021		+12.5% vs. Q3 2021		+13.4% vs. Q3 2021
BCE CUSTOMER CONNECTIONS
Wireless		Retail high-speed		Retail TV (2)		Retail residential network
Total mobile phones		Internet (2)				access services (NAS) lines (2)
+5.1%		+6.6%		+0.2%		(7.5%)
9.8 million subscribers		4.1 million subscribers		2.7 million subscribers		2.2 million subscribers
at September 30, 2022		at September 30, 2022		at September 30, 2022		at September 30, 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 8.3, Total of segments measures and section 8.1, 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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1 MD&A Overview

 

 

BCE INCOME STATEMENTS – SELECTED INFORMATION

 

		Q3 2022				Q3 2021				$ CHANGE				% CHANGE				YTD 2022				YTD 2021				$ CHANGE				% CHANGE
Operating revenues
Service			5,193				5,099				94				1.8%				15,603				15,107				496				3.3%
Product			831				737				94				12.8%				2,132				2,133				(1	)			–
Total operating revenues			6,024				5,836				188				3.2%				17,735				17,240				495				2.9%
Operating costs			(3,436	)			(3,278	)			(158	)			(4.8%)				(9,973	)			(9,777	)			(196	)			(2.0%)
Adjusted EBITDA			2,588				2,558				30				1.2%				7,762				7,463				299				4.0%
Adjusted EBITDA margin (1)			43.0	%			43.8	%							(0.8) pt	s			43.8	%			43.3	%							0.5 pts
Net earnings attributable to:
Common shareholders			715				757				(42	)			(5.5%)				2,188				2,084				104				5.0%
Preferred shareholders			39				34				5				14.7%				108				98				10				10.2%
Non-controlling interest			17				22				(5	)			(22.7%)				63				52				11				21.2%
Net earnings			771				813				(42	)			(5.2%)				2,359				2,234				125				5.6%
Adjusted net earnings			801				748				53				7.1%				2,403				2,203				200				9.1%
Net earnings per common share (EPS)			0.78				0.83				(0.05	)			(6.0%)				2.40				2.30				0.10				4.3%
Adjusted EPS (2)			0.88				0.82				0.06				7.3%				2.64				2.43				0.21				8.6%
(1)  Adjusted EBITDA margin is defined as adjusted EBITDA divided by operating revenues.   (2)  Adjusted EPS is a non-GAAP ratio. Refer to section 8.2, Non-GAAP ratios in this MD&A for more information on this measure.
BCE STATEMENTS OF CASH FLOWS – SELECTED INFORMATION
		Q3 2022				Q3 2021				$ CHANGE				% CHANGE				YTD 2022				YTD 2021				$ CHANGE				% CHANGE
Cash flows from operating activities			1,996				1,774				222				12.5%				6,309				6,265				44				0.7%
Capital expenditures			(1,317	)			(1,164	)			(153	)			(13.1%)				(3,495	)			(3,386	)			(109	)			(3.2%)
Free cash flow			642				566				76				13.4%				2,691				2,751				(60	)			(2.2%)

 

 

Q3 2022 FINANCIAL HIGHLIGHTS

BCE operating revenues grew by 3.2% in Q3 2022, compared to the same period last year, resulting from greater year-over-year service revenues of 1.8%, mainly due to strong wireless and Internet performance, partly offset by continued erosion in voice, and satellite TV revenues and lower business solutions services revenue. Bell Media service revenues were stable year over year as lower advertising revenues, due to decreased demand by advertisers as a result of the current economic uncertainty, was essentially offset by higher subscriber revenues. Product revenues also contributed to the overall growth of BCE operating revenues, with a 12.8% year over year increase, primarily due to greater sales mix of premium mobile phones, along with higher equipment sales in our large business market.

Net earnings decreased by $42 million in the third quarter of 2022, compared to the same period last year, mainly due to higher other expense, higher depreciation and amortization, higher interest expense, and higher impairment of assets, partly offset by lower income taxes, higher adjusted EBITDA, lower severance, acquisition and other costs and a higher net return on post-employment benefit plans.

BCE’s adjusted EBITDA increased by 1.2% in Q3 2022, compared to the same period last year, driven by growth in our Bell Wireless segment, partly offset by declines in our Bell Wireline and Bell Media segments. The year-over-year growth in adjusted EBITDA reflected higher revenues, moderated by greater operating costs. This drove a corresponding adjusted EBITDA margin of 43.0% in Q3 2022, down 0.8 pts over the same period last year, due to a higher proportion of low-margin product sales in our total revenue base, storm-related costs, primarily related to Hurricane Fiona, and inflationary expense pressures, partly offset by higher service revenue flow-through.

BCE’s EPS of $0.78 in Q3 2022 decreased by $0.05 compared to the same period last year.

In the third 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 $801 million, or $0.88 per common share, compared to $748 million, or $0.82 per common share, for the same period last year.

Cash flows from operating activities in the third quarter of 2022 increased by $222 million, compared to the same period last year, mainly due to lower income taxes paid, lower contributions to post-employment benefit plans due to a partial contribution holiday in 2022 and higher adjusted EBITDA, partly offset by lower cash from working capital, and higher interest paid.

Free cash flow in Q3 2022 increased by $76 million, compared to the same period last year, mainly due to higher cash flows from operating activities, excluding cash from acquisition and other costs paid, partly offset by higher 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 the expected completion of the proposed acquisition of Distributel and the benefits expected to result therefrom, Bell Ventures’ planned investments in early-stage and growth companies that provide advanced technology solutions, and potential future purchases by BCE of its preferred shares pursuant to a NCIB. Refer to the section Caution regarding forward-looking statements at the beginning of this MD&A.

 

 

BELL WINS CLEAN50 AWARDS FOR ENVIRONMENTAL INNOVATION AND ACCOMPLISHMENT

Bell was named the inaugural GHG Reductions Champion by Canada’s Clean50 Awards in recognition of our success reducing the GHG emissions intensity of our operations. In 2021, we surpassed our target by an additional 15%, with our GHG emissions per network usage showing a 55% improvement compared with our 2019 baseline. In addition, Bell’s solar-powered remote communication towers initiative was named one of the Clean50 Top Projects for 2023, ranking it among the most innovative and inspiring sustainability projects undertaken in Canada in the last two years.

 

 

ACQUISITION OF DISTRIBUTEL

On September 2, 2022, Bell announced it plans to acquire Distributel, a national independent communications provider offering a wide range of consumer, business and wholesale communications services. The acquisition of Distributel is expected to support Bell’s strategy to grow residential and business customers. The transaction is valued at up to $335 million, based on the achievement of certain performance objectives, and is expected to close by the end of the year, subject to closing conditions, including regulatory approvals. With this acquisition, Distributel will continue delivering world class, innovative products and services to Canadian consumers and businesses across the country.

 

 

LAUNCH OF BELL VENTURES

On October 25, 2022, Bell introduced Bell Ventures, its corporate venture capital initiative to encourage development of early-stage and growth companies that harness the power of Bell’s networks to drive growth and adoption of advanced technological solutions. Building on Bell’s history of innovation and investments, Bell Ventures is a natural extension of Bell’s purpose to advance how Canadians connect with each other and the world. Bell Ventures will invest in early-stage and growth companies that provide advanced technology solutions that will further differentiate Bell’s Fifth Generation (5G) and fibre networks and deliver solutions for its customers, including in the areas of network security, Internet of Things (IoT), robotics, telematics, clean technology (clean tech), augmented / virtual reality (AR/VR), and the metaverse.

 

 

APPOINTMENT TO BCE’S BOARD OF DIRECTORS

On October 21, 2022, Louis Vachon was appointed to the BCE Board of Directors. Mr. Vachon will also join the Board’s Management Resources and Compensation Committee and Risk and Pension Fund Committee. Mr. Vachon is an Operating Partner at J.C. Flowers & Co. Previously, he was President and Chief Executive Officer of the National Bank of Canada, from June 2007 to November 2021. Mr. Vachon is also a corporate director who serves on the board of directors of Alimentation Couche-Tard Inc., Groupe CH Inc., MDA Ltd. and Molson Coors Beverage Company, and is involved with a number of social and cultural organizations. He holds a master’s degree in International Finance from Tufts’ Fletcher School, a bachelor’s degree in economics from Bates College, and is a Chartered Financial Analyst. Mr. Vachon is a recipient of the Global Citizens Award from the United Nations Association in Canada, a Member of the Order of Canada, an Officer of the National Order of Québec, a Knight of the Order of Montréal, and was appointed Honorary Lieutenant-Colonel of Les Fusiliers Mont-Royal.

 

 

RENEWAL OF NORMAL COURSE ISSUER BID FOR BCE FIRST PREFERRED SHARES

On November 2, 2022, BCE’s Board of Directors authorized the company to renew its NCIB to purchase for cancellation up to 10% of the public float of each series of BCE’s outstanding First Preferred Shares (Preferred Shares) that are listed on the Toronto Stock Exchange (TSX). The NCIB will extend from November 9, 2022 to November 8, 2023, or an earlier date should BCE complete its purchases under the NCIB. Under the NCIB, BCE is authorized to repurchase up to 799,890 Series R Preferred Shares, 212,826 Series S Preferred Shares, 587,013 Series T Preferred Shares, 807,929 Series Y Preferred Shares, 191,850 Series Z Preferred Shares, 1,230,766 Series AA Preferred Shares, 768,873 Series AB Preferred Shares, 1,002,799 Series AC Preferred Shares, 996,320 Series AD Preferred Shares, 651,291 Series AE Preferred Shares, 948,148 Series AF Preferred Shares, 897,953 Series AG Preferred Shares, 501,757 Series AH Preferred Shares, 953,504 Series AI Preferred Shares, 446,496 Series AJ Preferred Shares, 2,319,031 Series AK Preferred Shares, 179,938 Series AL Preferred Shares, 1,043,997 Series AM Preferred Shares, 105,472 Series AN Preferred Shares and 920,000 Series AQ Preferred Shares, representing approximately 10% of the public float in respect of each series of Preferred Shares. The actual number of Preferred Shares to be repurchased under the NCIB and the timing of such repurchases will be at BCE’s discretion and shall be subject to the limitations set out by the TSX. BCE is making this NCIB because it believes that, from time to time, the Preferred Shares may trade in price ranges that do not fully reflect their value. BCE believes that, in such circumstances, the repurchase of its Preferred Shares represents an appropriate use of its available funds. A copy of BCE’s Notice of Intention to Commence a Normal Course Issuer Bid through the facilities of the TSX may be obtained, without charge, by contacting BCE’s Investor Relations department at investor.relations@bce.ca or by phone at 1-800-339-6353.

 

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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 the BCE 2022 First Quarter MD&A, in the BCE 2022 Second Quarter MD&A and 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 almost all public health restrictions in Canada have been lifted, pandemic-related effects on consumer demand are assumed to have dissipated. In addition, we have assumed:

 

•

Slowing economic growth, given the Bank of Canada’s most recent estimated growth in Canadian gross domestic product of 3.25% in 2022, representing a decrease from the earlier estimate of 3.5%

 

•

Elevated consumer price index (CPI) inflation as the demand for goods and services is outpacing the economy’s ability to supply them

 

•

Tight labour market

 

•

Slowing household spending growth as higher interest rates weigh on disposable income

 

•

Slowing business investment growth due to higher financing costs, softening demand and moderating capacity constraints

 

•

Higher interest rates

 

•

Higher immigration

 

•

The conflict between Russia and Ukraine affecting the Canadian economy through elevated food and gasoline prices

 

•

Canadian dollar expected to remain 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

 

•

The current advertising market is adversely impacted due to economic uncertainty resulting from inflationary pressures, increasing risk of recession and ongoing supply chain challenges

 

•

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 Q3 and YTD 2022 compared with Q3 and YTD 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

 

		Q3 2022				Q3 2021				$ CHANGE				% CHANGE				YTD 2022				YTD 2021				$ CHANGE				% CHANGE
Operating revenues
Service			5,193				5,099				94				1.8%				15,603				15,107				496				3.3%
Product			831				737				94				12.8%				2,132				2,133				(1	)			–
Total operating revenues			6,024				5,836				188				3.2%				17,735				17,240				495				2.9%
Operating costs			(3,436	)			(3,278	)			(158	)			(4.8%)				(9,973	)			(9,777	)			(196	)			(2.0%)
Adjusted EBITDA			2,588				2,558				30				1.2%				7,762				7,463				299				4.0%
Adjusted EBITDA margin			43.0	%			43.8	%							(0.8) pts				43.8	%			43.3	%							0.5 pts
Severance, acquisition and other costs			(22	)			(50	)			28				56.0%				(75	)			(146	)			71				48.6%
Depreciation			(914	)			(902	)			(12	)			(1.3%)				(2,738	)			(2,702	)			(36	)			(1.3%)
Amortization			(267	)			(245	)			(22	)			(9.0%)				(793	)			(731	)			(62	)			(8.5%)
Finance costs
Interest expense			(298	)			(272	)			(26	)			(9.6%)				(827	)			(807	)			(20	)			(2.5%)
Net return (interest) on post-employment benefit plans			13				(5	)			18				n.m.				38				(15	)			53				n.m.
Impairment of assets			(21	)			–				(21	)			n.m.				(129	)			(167	)			38				22.8%
Other (expense) income			(130	)			35				(165	)			n.m.				(134	)			134				(268	)			n.m.
Income taxes			(178	)			(306	)			128				41.8%				(745	)			(795	)			50				6.3%
Net earnings			771				813				(42	)			(5.2%)				2,359				2,234				125				5.6%
Net earnings attributable to:
Common shareholders			715				757				(42	)			(5.5%)				2,188				2,084				104				5.0%
Preferred shareholders			39				34				5				14.7%				108				98				10				10.2%
Non-controlling interest			17				22				(5	)			(22.7%)				63				52				11				21.2%
Net earnings			771				813				(42	)			(5.2%)				2,359				2,234				125				5.6%
Adjusted net earnings			801				748				53				7.1%				2,403				2,203				200				9.1%
EPS			0.78				0.83				(0.05	)			(6.0%)				2.40				2.30				0.10				4.3%
Adjusted EPS			0.88				0.82				0.06				7.3%				2.64				2.43				0.21				8.6%

n.m.: not meaningful

 

 

2.2   Customer connections

BCE NET ACTIVATIONS (LOSSES)

 

		Q3 2022				Q3 2021				% CHANGE				YTD 2022				YTD 2021				% CHANGE
Wireless mobile phone net subscriber activations (losses)			224,343				136,464				64.4	%			367,280				185,116				98.4	%
Postpaid			167,798				114,821				46.1	%			285,225				192,179				48.4	%
Prepaid			56,545				21,643				n.	m.			82,055				(7,063	)			n.	m.
Wireless mobile connected devices net subscriber activations			49,044				33,035				48.5	%			97,577				154,643				(36.9	%)
Wireline retail high-speed Internet net subscriber activations			89,652				65,779				36.3	%			138,296				104,667				32.1	%
Wireline retail TV net subscriber activations (losses)			10,853				10,521				3.2	%			(9,035	)			(3,519	)			n.	m.
IPTV			38,093				31,641				20.4	%			54,191				46,877				15.6	%
Satellite			(27,240	)			(21,120	)			(29.0	%)			(63,226	)			(50,396	)			(25.5	%)
Wireline retail residential NAS lines net losses			(42,853	)			(42,755	)			(0.2	%)			(137,910	)			(145,116	)			5.0	%
Total services net activations			331,039				203,044				63.0	%			456,208				295,791				54.2	%

n.m.: not meaningful

 

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TOTAL BCE CUSTOMER CONNECTIONS

 

		Q3 2022				Q3 2021				% CHANGE
Wireless mobile phone subscribers			9,826,465				9,349,459				5.1	%
Postpaid			8,915,270				8,520,518				4.6	%
Prepaid			911,195				828,941				9.9	%
Wireless mobile connected devices subscribers			2,347,371				2,210,796				6.2	%
Wireline retail high-speed Internet subscribers (1)			4,067,039				3,814,035				6.6	%
Wireline retail TV subscribers (1)			2,735,000				2,728,961				0.2	%
IPTV (1)			1,945,657				1,853,250				5.0	%
Satellite			789,343				875,711				(9.9	%)
Wireline retail residential NAS lines (1)			2,164,151				2,338,816				(7.5	%)
Total services subscribers			21,140,026				20,442,067				3.4	%

 

(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 331,039 net retail subscriber activations in Q3 2022, increasing by 63.0% compared to the same period last year. The net retail subscriber activations in Q3 2022 consisted of:

 

•

224,343 wireless mobile phone net subscriber activations, along with 49,044 wireless mobile connected devices net subscriber activations

 

•

89,652 retail high-speed Internet net subscriber activations

 

•

10,853 retail TV net subscriber activations comprised of 38,093 retail IPTV net subscriber activations, offset in part by 27,240 retail satellite TV net subscriber losses

 

•

42,853 retail residential NAS lines net losses

In the first nine months of the year, BCE had 456,208 net retail subscriber activations, increasing by 54.2% compared to the same period in 2021. The year-to-date net retail subscriber activations were comprised of:

 

•

367,280 wireless mobile phone net subscriber activations, coupled with 97,577 wireless mobile connected devices net subscriber activations

 

•

138,296 retail high-speed Internet net subscriber activations

 

•

9,035 retail TV net subscriber losses comprised of 63,226 retail satellite TV net subscriber losses, offset in part by 54,191 retail IPTV net subscriber activations

 

•

137,910 retail residential NAS lines net losses

At September 30, 2022, BCE’s retail subscriber connections totaled 21,140,026, up 3.4% year over year, and consisted of:

 

•

9,826,465 wireless mobile phone subscribers, up 5.1% year over year, and 2,347,371 wireless mobile connected devices subscribers, up 6.2% year over year

 

•

4,067,039 retail high-speed Internet subscribers, 6.6% higher year over year

 

•

2,735,000 total retail TV subscribers, up 0.2% over the same period last year, comprised of 1,945,657 retail IPTV subscribers, up 5.0% year over year, and 789,343 retail satellite TV subscribers, down 9.9% year over year

 

•

2,164,151 retail residential NAS lines, down 7.5% year over year

 

 

2.3   Operating revenues

 

 

BCE		BCE
Revenues		Revenues
(in $ millions)		(in $ millions)

 

		Q3 2022				Q3 2021				$ CHANGE				% CHANGE				YTD 2022				YTD 2021				$ CHANGE				% CHANGE
Bell Wireless			2,466				2,296				170				7.4	%			6,922				6,524				398				6.1	%
Bell Wireline			3,046				3,015				31				1.0	%			9,054				9,099				(45	)			(0.5	%)
Bell Media			719				719				–					–			2,365				2,187				178				8.1	%
Inter-segment eliminations			(207	)			(194	)			(13	)			(6.7	%)			(606	)			(570	)			(36	)			(6.3	%)
Total BCE operating revenues			6,024				5,836				188				3.2	%			17,735				17,240				495				2.9	%

 

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BCE

Total BCE operating revenues increased by 3.2% in Q3 2022, and by 2.9% in the first nine months of the year, compared to the same periods last year. BCE service revenues of $5,193 million in Q3 2022 and $15,603 million in the first nine months of the year, grew by 1.8% and 3.3%, respectively, over the same periods in 2021. Product revenues of $831 million in Q3 2022 increased by 12.8%, while year-to-date product revenues of $2,132 million remained stable year over year.

The increase in year-over-year operating revenue in Q3 2022 was driven by growth in our Bell Wireless and Bell Wireline segments, whereas our Bell Media segment remained stable compared to last year. During the first nine months of the year, the growth was due to increases in our Bell Wireless and Bell Media segments, offset in part by a decline in our Bell Wireline segment. Bell Wireless operating revenues increased by 7.4% in Q3 2022 and by 6.1% in the first nine months of the year, due to higher service revenues of 7.0%, and 7.8%, respectively, along with higher product revenues of 8.6% and 1.6%, respectively. Bell Media operating revenues remained unchanged in Q3 2022, compared to Q3 2021, but grew by 8.1% year to date, driven by higher subscriber, advertising and other revenues. Bell Wireline operating revenues increased by 1.0% in Q3 2022, compared to the same period last year, resulting from product revenue growth of 46.3%, moderated in part by a service revenue decline of 0.4%. However, during the first nine months of the year, operating revenues declined by 0.5%, compared to the same period in 2021, driven by lower product revenues of 7.2%, as well as service revenue declines of 0.2%.

 

 

2.4   Operating costs

 

 

BCE		BCE
Operating cost profile		Operating cost profile
Q3 2021		Q3 2022
BCE		BCE
Operating cost profile		Operating cost profile
YTD 2021		YTD 2022

 

		Q3 2022				Q3 2021				$ CHANGE				% CHANGE				YTD 2022				YTD 2021				$ CHANGE				% CHANGE
Bell Wireless			(1,377	)			(1,286	)			(91)				(7.1%)				(3,775	)			(3,622	)			(153	)			(4.2%)
Bell Wireline			(1,729	)			(1,682	)			(47)				(2.8%)				(5,055	)			(5,110	)			55				1.1%
Bell Media			(537	)			(504	)			(33)				(6.5%)				(1,749	)			(1,615	)			(134	)			(8.3%)
Inter-segment eliminations			207				194				13				6.7%				606				570				36				6.3%
Total BCE operating costs			(3,436	)			(3,278	)			(158)				(4.8%)				(9,973	)			(9,777	)			(196	)			(2.0%)

 

(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 increased by 4.8% in Q3 2022 and by 2.0% in the first nine months of the year, compared to the same periods in 2021. The higher Q3 2022 year-over-year expenses were driven by increases in Bell Wireless of 7.1%, Bell Wireline of 2.8% and Bell Media of 6.5%, whereas the higher year-to-date expenses were driven by greater expenses in Bell Wireless of 4.2% and in Bell Media of 8.3%, partly offset by lower expenses in Bell Wireline of 1.1%.

 

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2.5   Net earnings

 

BCE		BCE
Net earnings		Net earnings
(in $ millions)		(in $ millions)

Net earnings in the third quarter of 2022 decreased by $42 million compared to the same period last year, mainly due to higher other expense, higher depreciation and amortization, higher interest expense, and higher impairment of assets, partly offset by lower income taxes, higher adjusted EBITDA, lower severance, acquisition and other costs and a higher net return on post-employment benefit plans.

Net earnings on a year-to-date basis in 2022 increased by $125 million, compared to the same period last year, mainly due to higher adjusted EBITDA, lower severance, acquisition and other costs, higher net return on post-employment benefit plans, lower income taxes and lower impairment of assets, partly offset by higher other expense, higher amortization and depreciation and higher interest expense.

 

 

2.6   Adjusted EBITDA

 

 

BCE		BCE
Adjusted EBITDA		Adjusted EBITDA
(in $ millions)		(in $ millions)

 

		Q3 2022				Q3 2021				$ CHANGE				% CHANGE				YTD 2022				YTD 2021				$ CHANGE				% CHANGE
Bell Wireless			1,089				1,010				79				7.8%				3,147				2,902				245				8.4%
Bell Wireline			1,317				1,333				(16	)			(1.2%	)			3,999				3,989				10				0.3%
Bell Media			182				215				(33	)			(15.3%	)			616				572				44				7.7%
Total BCE adjusted EBITDA			2,588				2,558				30				1.2%				7,762				7,463				299				4.0%

BCE

BCE’s adjusted EBITDA increased by 1.2% in Q3 2022 and by 4.0% in the first nine months of the year, compared to the same periods in 2021. The growth in Q3 2022 was driven by an increase in our Bell Wireless segment, offset in part by declines in our Bell Media and Bell Wireline segments. The increase in the first nine months of the year reflected growth across all three of our segments.

The year-over-year growth in adjusted EBITDA for Q3 2022 and for the first nine months of the year was driven by higher operating revenues, partly offset by greater operating costs. Adjusted EBITDA margin in Q3 2022 of 43.0%, declined by 0.8 pts over the same period last year, due to an increased proportion of low-margin product sales in our total revenue base, storm-related costs, primarily related to Hurricane Fiona, and inflationary cost pressures, partly offset by greater service revenue flow-through. During the first nine months of the year, adjusted EBITDA margin of 43.8% increased by 0.5 pts over the same period last year, mainly due to higher service revenue flow-through and a decreased proportion of low-margin product sales in our total revenue base, partly offset by storm-related costs and inflationary cost pressures.

 

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2.7   Severance, acquisition and other costs

2022

Severance, acquisition and other costs of $22 million in the third quarter of 2022 and $75 million on a year-to-date basis included:

 

•

Severance costs of $9 million in Q3 2022 and $65 million on a year-to-date basis related to involuntary and voluntary employee terminations

 

•

Acquisition and other costs of $13 million in Q3 2022 and $10 million on a year-to-date basis

2021

Severance, acquisition and other costs of $50 million in the third quarter of 2021 and $146 million on a year-to-date basis included:

 

•

Severance costs of $25 million in Q3 2021 and $129 million on a year-to-date basis related to involuntary and voluntary employee terminations

 

•

Acquisition and other costs of $25 million in Q3 2021 and $17 million on a year-to-date basis

 

 

2.8   Depreciation and amortization

DEPRECIATION

Depreciation in the third quarter and on a year-to-date basis in 2022 increased by $12 million and $36 million, respectively, compared to the same periods in 2021, mainly due to a higher asset base as we continued to invest in our broadband and wireless networks as well as our IPTV services, partly offset by lower accelerated depreciation of Fourth Generation (4G) network elements as we transition to 5G.

AMORTIZATION

Amortization in the third quarter and on a year-to-date basis in 2022 increased by $22 million and $62 million, respectively, compared to the same periods in 2021, mainly due to a higher asset base.

 

 

2.9   Finance costs

INTEREST EXPENSE

Interest expense in the third quarter and on a year-to-date basis in 2022 increased by $26 million and $20 million, respectively, compared to the same periods last year, mainly due to higher average debt balances and higher average interest rates, partly offset by higher capitalized interest.

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 third quarter and on a year-to-date basis in 2022, net return on post-employment benefit increased by $18 million and $53 million, respectively, compared to the same periods last year, 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).

 

 

2.10 Impairment of assets

2022

Impairment charges for the three and nine months ended September 30, 2022 of $21 million and $129 million, respectively, relate mainly to right-of-use assets for certain office spaces we ceased using as part of our real estate optimization strategy as a result of our hybrid work policy.

2021

During the second quarter of 2021, we identified indicators of impairment for our Bell Media radio markets, notably a decline in advertising revenue and an increase in the discount rate resulting from the impact of the ongoing COVID-19 pandemic. Accordingly, impairment testing was required for our group of radio cash-generating units (CGUs).

During Q2 2021, we recognized $163 million of impairment charges for various radio markets within our Bell Media segment. These charges included $150 million allocated to indefinite-life intangible assets for broadcast licences, and $13 million to property, plant and equipment mainly for buildings and network infrastructure and equipment.

 

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2 MD&A Consolidated financial analysis

 

 

2.11  Other (expense) income

2022

Other expense of $130 million in the third quarter of 2022 mainly included net mark-to-market losses on derivatives used to economically hedge equity settled share-based compensation plans and losses on operations from our equity investments.

Other expense of $134 million on a year-to-date basis in 2022 mainly included net mark-to-market losses on derivatives used to economically hedge equity settled share-based compensation plans, losses on our equity investments which included a loss on BCE’s share of an obligation to repurchase at fair value the minority interest in one of BCE’s joint ventures, and early debt redemption costs, partly offset by gains on investments mainly related to the sale of our wholly-owned subsidiary, 6362222 Canada Inc. (Createch), and an obligation to repurchase at fair value the minority interest in one of our subsidiaries.

2021

Other income of $35 million and $134 million in the third quarter and on a year-to-date basis in 2021, respectively, included net mark-to-market gains on derivatives used to economically hedge equity settled share-based compensation plans, partly offset by losses on our equity investments, which included a loss on BCE’s share of an obligation to repurchase at fair value the minority interest in one of BCE’s joint ventures in Q2 2021. Additionally, on a year-to-date basis in 2021, other income included early debt redemption costs.

 

 

2.12  Income taxes

Income taxes in the third quarter of 2022 decreased by $128 million compared to the same period in 2021, mainly due to a higher value of uncertain tax positions favourably resolved in 2022 compared to 2021 and lower taxable income.

Income taxes on a year-to-date basis in 2022 decreased by $50 million compared to the same period in 2021, mainly due to a higher value of uncertain tax positions favourably resolved in 2022 compared to 2021, partly offset by higher taxable income.

 

 

2.13  Net earnings attributable to common shareholders and EPS

Net earnings attributable to common shareholders in the third quarter of 2022 of $715 million, decreased by $42 million, compared to the same period last year, mainly due to higher other expense, higher depreciation and amortization, higher interest expense, and higher impairment of assets, partly offset by lower income taxes, higher adjusted EBITDA, lower severance, acquisition and other costs and a higher net return on post-employment benefit plans.

Net earnings attributable to common shareholders on a year-to-date basis in 2022 of $2,188 million increased $104 million compared to the same period last year, mainly due to higher adjusted EBITDA, lower severance, acquisition and other costs, higher net return on post-employment benefit plans, lower income taxes and lower impairment of assets, partly offset by higher other expense, higher amortization and depreciation and higher interest expense.

BCE’s EPS of $0.78 in Q3 2022 decreased by $0.05, compared to the same period last year. BCE’s EPS of $2.40 on a year-to-date basis in 2022 increased by $0.10, compared to the same period last year.

In the third 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 $801 million, or $0.88 per common share, compared to $748 million, or $0.82 per common share, for the same period last year. Adjusted net earnings in the first nine months of 2022 was $2,403 million, or $2.64 per common share, compared to $2,203 million, or $2.43 per common share, for the first nine months of 2021.

 

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3 MD&A Business segment analysis – Bell Wireless

 

3    Business segment analysis

 

 

3.1   Bell Wireless

This section contains forward-looking statements, including relating to our 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

EXPANSION OF 5G+ AND 5G NETWORKS

Earlier this summer, Bell announced the availability of 5G+ service in southern Ontario. On September 20, 2022, Bell announced the expansion of 5G+ service to more communities across the province, including Hamilton, Markham, Middlesex Centre, North Dumfries, Puslinch and Thames Centre. Bell will continue to expand 5G+ across the country and is on track to offer coverage to approximately 40% of the Canadian population by the end of 2022. Bell also announced the expansion of its 5G service to 84 more communities in Alberta, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island and Québec. Bell’s award-winning 5G network is now available in all 10 Canadian provinces.

BELL AWARDED CANADA’S FASTEST MOBILE NETWORK BY PCMAG FOR THIRD CONSECUTIVE YEAR

Bell’s wireless network was awarded fastest in Canada for the third year in a row in PCMag’s 2022 Fastest Mobile Networks Canada report, the annual study of mobile network performance across the country. The report also ranks Bell’s 5G network as fastest in the country, scoring fastest in 22 of the 31 cities and rural areas tested, including Toronto, Calgary and Edmonton.

 

 

FINANCIAL PERFORMANCE ANALYSIS

Q3 2022 PERFORMANCE HIGHLIGHTS

 

Bell Wireless		Bell Wireless
Revenues		Adjusted EBITDA
(in $ millions)		(in $ millions)
		(% adjusted EBITDA margin)

 

Bell Wireless		Bell Wireless
Revenues		Adjusted EBITDA
(in $ millions)		(in $ millions)
		(% adjusted EBITDA margin)

 

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3 MD&A Business segment analysis – Bell Wireless

 

 

 

 

Total mobile phone		Mobile phone		Mobile phone		Mobile phone		Mobile phone blended
subscriber growth		postpaid		prepaid		postpaid churn		average revenue per
		net subscriber		net subscriber		in Q3 2022		user (ARPU) (1)
		activations		activations				per month
+5.1%		167,798		56,545		0.90%		+2.2%
Q3 2022 vs. Q3 2021		in Q3 2022		in Q3 2022		improved 0.03 pts		Q3 2022: $60.76
						vs. Q3 2021		Q3 2021: $59.47

 

(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

 

		Q3 2022				Q3 2021				$ CHANGE				% CHANGE				YTD 2022				YTD 2021				$ CHANGE				% CHANGE
External service revenues			1,759				1,642				117				7.1%				5,086				4,714				372				7.9%
Inter-segment service revenues			10				12				(2	)			(16.7%	)			32				34				(2	)			(5.9%	)
Operating service revenues			1,769				1,654				115				7.0%				5,118				4,748				370				7.8%
External product revenues			692				642				50				7.8%				1,797				1,772				25				1.4%
Inter-segment product revenues			5				–				5				n.m.				7				4				3				75.0%
Operating product revenues			697				642				55				8.6%				1,804				1,776				28				1.6%
Bell Wireless operating revenues			2,466				2,296				170				7.4%				6,922				6,524				398				6.1%

n.m.: not meaningful

Bell Wireless operating revenues increased by 7.4% in Q3 2022 and by 6.1% in the first nine months of the year, compared to the same periods last year, due to both higher service revenues and product revenues.

Service revenues increased by 7.0% in Q3 2022 and by 7.8% year to date, compared to the same periods last year, driven by:

 

•

Continued growth in our mobile phone and connected device subscriber bases

 

•

Higher roaming revenues due to increased international travel resulting from the easing of COVID-19 global travel restrictions

 

•

Flow-through of rate increases

These factors were partly offset by:

 

•

Lower data overages driven by greater customer adoption of monthly plans with higher data thresholds, including unlimited plans

Product revenues increased by 8.6% in Q3 2022 and by 1.6% in the first nine months of the year, compared to the same periods in 2021, mainly driven by a greater sales mix of premium mobile phones. In the first nine months of the year this was partly offset by lower volumes, mainly reduced number of upgrades.

OPERATING COSTS AND ADJUSTED EBITDA

 

		Q3 2022				Q3 2021				$ CHANGE				% CHANGE				YTD 2022				YTD 2021				$ CHANGE				% CHANGE
Operating costs			(1,377	)			(1,286	)			(91	)			(7.1%	)			(3,775	)			(3,622	)			(153	)			(4.2%	)
Adjusted EBITDA			1,089				1,010				79				7.8%				3,147				2,902				245				8.4%
Adjusted EBITDA margin			44.2	%			44.0	%							0.2 p	ts			45.5	%			44.5	%							1.0 p	ts

Bell Wireless operating costs increased by 7.1% in Q3 2022 and by 4.2% year to date, compared to the same periods last year, driven by:

 

•

Higher cost of goods sold due to increased product revenues

 

•

Higher network operating costs from the continued deployment of our mobile 5G network, including costs relating to Hurricane Fiona

 

•

Greater payments to other carriers corresponding to the higher roaming revenues

Bell Wireless adjusted EBITDA increased by 7.8% in Q3 2022 and by 8.4% in the first nine months of the year, compared to the same periods in 2021, due to greater operating revenues, moderated by higher operating costs. Adjusted EBITDA margin of 44.2% in Q3 2022 and 45.5% year to date, increased by 0.2 pts and 1.0 pts, respectively, compared to the same periods last year, primarily driven by the flow-through of service revenue growth.

 

14  |  BCE INC. 2022 THIRD QUARTER SHAREHOLDER REPORT