Earnings Call Transcript
BCE INC (BCE)
Earnings Call Transcript - BCE Q2 2022
Operator, Operator
Good morning, ladies and gentlemen. And welcome to the BCE Q2 2022 Results Conference Call. I would now like to turn the meeting over to Mr. Thane Fotopoulos. Please go ahead, Mr. Fotopoulos. Thank you, Paul and good morning, everyone, and thank you for joining our call today. As usual, I'm here with Mirko Bibic, BCE's President and CEO; and our CFO, Glen LeBlanc. You can find all our Q2 disclosure documents on the Investor Relations page of the bce.ca website, which we posted earlier this morning. However, before we begin, I want to draw your attention to our Safe Harbor statement on Slide 2 of the presentation, reminding you that today's remarks made during the call will include forward-looking information and therefore, are subject to risks and uncertainties. Results could differ materially. We disclaim any obligation to update forward-looking statements, except as required by law. Please refer to our publicly filed documents for more details on our assumptions and risks. With that, I'll turn the call over to Mirko.
Mirko Bibic, President and CEO
Thank you, Thane and good morning, everyone. The Bell team continues to deliver for all the stakeholders we serve. We remain focused on our strategic plan. It's working. Q2 marked another quarter of consistent operational execution with a disciplined focus on balancing market share growth and financial performance. Our approach drove consolidated service revenue and adjusted EBITDA growth of 3.8% and 4.6%, respectively. These strong results are underpinned by our extensive and unprecedented network investments that are building unmatched broadband fiber 5G infrastructure in Canada, and frankly, if not the world. By the end of this year, we'll have invested more than $14 billion since 2020, the highest ever over a 3-year period by Canadian Telecom. This includes planned CapEx for 2022 of approximately $5 billion, which also represents peak spending by Canadian Telco in one single year. These massive investments are focused primarily on our FTTH and 5G wireless networks, our ongoing expansion into rural and remote communities, and considerable spending on capacity and on resiliency. With approximately 900,000 more new FTTP connections deployed this year, 80% of our midterm broadband Internet build-out plan, comprising 10 million residential and business locations, will be completed, and 5G LTE network service will be available to more than 80% of Canadians. Recent events have illustrated the vital importance of communications networks and the role they play as an integral part in the lives of all Canadians. They have also illustrated the relevance of our corporate purpose, which, as you know, is to advance how Canadians connect with each other and the world. It's this purpose that guides us in how we design and how we build our networks to keep our customers at the forefront of all that we do. So I want to take a couple of moments now to make one thing especially clear. Bell's wireless and wireline networks use different network infrastructures, and they are configured such that a major disruption on the wireline network does not take down the national wireless network, excuse me. Since 2013, we have protected our cores from the Internet through the use, among other things, of multiple geographic zones to route traffic. Moreover, in the event of a localized outage, we have built an automated customer notification system starting first in Quebec and in Ontario. Now it's clear that no network is perfect or immune to outages, but network architecture clearly does make a difference. Since the start of the pandemic, and including planned spending for 2022, we will have invested, on average, close to $800 per retail subscriber, which is more than any other Canadian operator. This unmatched spending has not been limited to access, in other words, to coverage. Over 60% of total core network investment in our 3-year period since COVID has been directed towards capacity, modernization, robustness, and outage detection. Since COVID, we've actually invested approximately $1 billion in our wireless and wireline cores to increase capacity, harden security, improve resiliency and redundancy, and build automatic outage notification, and we're not standing still. As you've seen from recent announcements, including in this morning's press release, we're continuing to launch new products and services. Last week, we inaugurated the next evolution of 5G in Canada with the launch of our mobile 5G network that will offer peak data download speeds of 3 gigabits per second. 5G plus will be deployed across the country and is the result of our investment in mid-band 3.5 gigahertz spectrum. Currently available in Toronto and surrounding areas, Bell's 5G plus network is expected to cover approximately 60% of the addressable population by year-end, and this will include areas like the GTA, Halifax, St. John's, and Sherbrooke. We also continue to raise the bar on delivering the most advanced Internet and Wi-Fi services to Canadians. In September, we're launching an 8-gigabit symmetrical Internet service, so that's symmetrical upload and download in select areas of Toronto that will offer data download speeds 5 times faster than cable and data upload speeds at least 250 times faster than cable. We're introducing Wi-Fi 6E technology, which enables better in-home coverage and speed connected devices that are 2 times faster than previously. So, 8-gig upload and download symmetrical and Wi-Fi 6 really are game changers. Our plan is really coming together, as you can see from these concrete examples: basically, better wireless speeds, unmatched Internet upload and download with the best in-home Wi-Fi and network architecture that offers the best resiliency in the industry. On the TV front, we're making the IPTV experience even better by bringing together live and on-demand streaming content and thousands of apps all in one place. Our new 5 TV service powered by Android TV technology features access to Google Play Store, universal search, as well as voice remote and cloud PVR capabilities. In wireless, our focus on high-value mobile phone loading and customer base management continues to pay off with another set of excellent operating results this past quarter, highlighted by a more than twofold increase in total mobile phone net adds to approximately 111,000 record postpaid churn and continued strong service revenue, ARPU, and EBITDA growth. We achieved these results against the backdrop of relatively stable year-over-year wireless prices despite surging inflation across the Canadian economy. According to the most recent stats scan data, the price of all goods and services in aggregate across the Canadian economy has increased 8.1% over the past year compared to another decline for cellular services. In fact, comparing ARPUs today with those back in 2019, we're not back to 2019 levels. Basically, we're delivering far more value today at declining prices. In residential Wireline, we added 36,473 new net retail fiber customers this quarter, an increase of 19.5% versus last year, which contributed to strong residential Internet revenue growth of 8%. Turning to media now and our digital-first strategy. We continued our strong momentum across our streaming and digital platforms, as evidenced by outstanding 55% growth in total digital revenues. Digital now represents 27% of total Bell Media revenue, up from 19% last year. Underpinning this very strong performance was Crave, which grew direct streaming by 8%, while total subs were up 2% compared to last year when we experienced strong demand due to COVID. So a good result considering tougher year-over-year comparables. Revenue from SAM TV, our advertising sales tool platform, was up more than fourfold versus last year, generating approximately 60% of total digital advertising revenue in the quarter. On the customer experience front, we continue our momentum with more than 85% of customers now mainly interacting with Bell online. Our digital strategy is basically playing a significant role in our imperative to champion customer experience. Our ongoing investments in digital functionality, as well as the quality and reliability of our networks, are driving better customer satisfaction and retention results, as reflected in the third consecutive quarter of improved wireless residential Internet and 5 TV churn. We also continue to enhance apps and online support tools with features like virtual repair, enhanced self-install, automatic top-up enrollment, and personalized templates that improved the clarity of communications with our valuable customers. These initiatives are a big reason why Bell's customer satisfaction scores continue to improve and why our suite of apps continue to be the highest-rated telecom apps in the country. In terms of recent notable ESG developments, Bell was named the top telecom company in the world and the fourth overall in Canada for 2022 on the Best 50 Corporate Citizens list compiled by corporate rights. Bell is also the first communications company in North America to receive ISO 5001 certification for energy management, which has been renewed for a third consecutive year. We were recognized as one of Canada's greenest employers for a sixth straight year with our ambitious commitments to reduce GHG emissions and to recover and recycle mobile devices through the Bell Blue Box program. I'll now turn to Slide 6 for a synopsis of some of our key operating metrics in Q2. Let's start with wireless. As you can see, we added 83,197 new net postpaid mobile phone subscribers, up a very, very strong 87% compared to last year. And this was driven by a number of factors: greater retail store traffic, 5G momentum, improved business customer demand, immigration growth, more focus on bundling wireless with residential Internet, and outstanding customer base management, as you can see by our best-ever quarterly churn rate of 0.75% in the quarter. Similarly, for prepaid net adds were up meaningfully year-over-year, growing to 27,564 as market activity picked up significantly with increased immigration and travel to Canada. This represents our best quarterly prepaid result in almost 2 years. ARPU was up 3.8%, our fifth consecutive quarter of year-over-year growth. This was driven by a sharp increase in roaming revenue, as Glen will detail when he speaks, and more customers on premium rate plans, reflecting our laser focus on higher-value subscriber loadings across all our mobile brands. Consistently, quarter after quarter, a majority of our new postpaid customers are subscribing to unlimited plans. Of these, 87% are on monthly data plans greater than 10 gigs. There's more upside given that we're still in the early stages of the consumer upgrade cycle to 5G, with only 27% of postpaid subscribers now on a 5G-enabled device. As 5G momentum keeps building, subscribers will migrate up the rate plan curve and that will serve as a catalyst, we think, for continued strong ARPU and service revenue growth. Now turning to Bell wireline. We added 22,620 total new net retail Internet customers, up 28% versus last year, and that includes the competitive losses of legacy DSL subscribers where we do not have fiber. If we look at our performance just within our fiber footprint, it paints an even stronger picture, where we added over 36,000 new subscribers, and this importantly was achieved with a fiber cable overlap of only 56%. This is demonstrating in a very clear way the market share gains we're making, where we have fiber, and also we still have another 44% of our wireline footprint to go with cable overlap, so a lot of runway left. We also added around 4,000 net new IPTV subscribers, which is essentially stable versus last year despite the level of promotional offer intensity returning closer to prepandemic levels, while satellite TV and home phone net customer losses both increased compared to Q2 of last year when we experienced fewer customer deactivations due, of course, to COVID. At Bell Media, total advertising revenue was up 5% over last year. This was supported by continued strong digital growth, improved radio and out-of-home performance, and increases across our specialty TV sports and news channels. TSN and RDS again maintained their #1 rankings for the current broadcast year-to-date, and we benefited largely from the return of the F1 Canadian Grand Prix, which was the most watched Formula One race on record across all Bell Media properties. Notably, we also concluded negotiations with the NFL for a multiyear expansion of our media rights agreement. This now includes live coverage of all NFL International Series games, and the new agreement ensures that Bell Media will continue to be the exclusive television broadcast partner of the NFL in Canada for a number of years. As for our Quebec media strategy, it really continues to hunt. Nuvo has outpaced all other French language conventional TV competitors in viewership growth with year-to-date prime time audiences that are up a leading 5%. Despite this relatively strong overall performance, TV advertising demand in Q2 softened a bit, given the current macro environment of surging inflation, a potential recession, and supply chain issues in certain key consumer goods verticals. We did, however, see the return of some advertising dollars back into radio and out-of-home that had moved to TV during the height of the pandemic. Notwithstanding the broader economic backdrop, we did have one of our most successful upfront sales seasons ever, shattering the record for first-day bookings with a content funnel that includes 100 original TV productions planned for the upcoming broadcast year, a 75% increase compared to 2021. In summary, consistently strong execution by the Bell team within our well-defined strategy allowed us to deliver excellent overall operating results in Q2, supporting sustainable value creation for all the stakeholders we serve. So Glen, I'll turn it over to you in just a second. But before I do, I sadly want to acknowledge the recent passing of visionary leader and former Bell Canada, President, and CEO, Jean de Grandpré. Under his management in the 1970s and early '80s, Bell built its telecommunications leadership position with positive growth across our many business segments. Mr. de Grandpré led the formation of BCE in 1983 and we're now a $23 billion company delivering industry-leading employee infrastructure, R&D, and community investment. On behalf of all members of the Bell team, I would like to extend my deepest condolences to the de Grandpré family and my sincere thanks for his exceptional contributions to BCE, to Quebec, and to Canada. Over to you, Glen.
Glen LeBlanc, CFO
Thank you, Mirko, and good morning, everyone. Our financial performance continues to demonstrate the Bell team's consistent execution and disciplined focus on profitable customer growth, as evidenced by another quarter of strong consolidated revenue and adjusted EBITDA growth, which remain in line with the 2022 guidance targets we announced last February. Service revenue was up a very solid 3.8%, which drove 4.6% higher adjusted EBITDA, delivering a $0.7 million point margin increase to 44.2%. As a result of the strong EBITDA contribution from operations and the lower year-over-year pension financing costs due to the high net asset surplus position of our DB pension plans, adjusted EPS was up 4.8% to $0.87 per share. However, net earnings and statutory EPS were down compared to last year, directly as a result of a noncash mark-to-market equity derivative loss from a decrease in BCE's share price during the quarter. Notably, our net earnings results this quarter also included an asset impairment charge related to the consolidation of real estate space post-COVID as we shift increasingly to a hybrid work model and aggressively execute on a multiyear plan to reduce real estate costs. We anticipate taking further noncash impairment charges as we vacate other leased properties. We are confident that over the next 5 to 7 years, we can rationalize our physical footprint by up to 3 million square feet, which will generate cumulative cash savings in the range of $250 million to $300 million. As for CapEx spending in the quarter, it was up year-over-year with a total investment of more than $1.2 billion as we continue to expand our network leadership with advanced spending on the rollout of fiber and 5G, consistent with our 2-year capital acceleration program. Free cash flow was notably strong, increasing 7.1% over last year to $1.33 billion on the back of higher EBITDA, lower severance costs, and reduced pension cash funding due to the conservation holiday that started this quarter. Let's turn to the detailed financial results of our 3 operating segments and start with wireless on Slide 9. Just another great quarter. It was led by excellent service revenue growth of 7.8%, which excludes low-margin equipment revenue that declined 0.9% year-over-year, reflecting consumers' behavior towards longer upgrade cycles and pre-owned device activations. This standout performance was the result of our clear and consistent focus on higher value subscriber growth, particularly on the Bell brand. Also, effective customer base management and a very pronounced roaming recovery in the quarter as consumer travel accelerated with revenue rebounding to 98% of pre-pandemic levels. Due to the flow-through of the high-margin service revenues together with the promotional offer discipline, wireless EBITDA grew a very strong 8.3%, yielding a 1.2 percentage point increase in margin to 46.7%. Let's move over to Slide 10 on wireline. An improved top line performance trajectory this quarter with total revenue down 0.3% compared to a decline of 2.2% in the previous quarter. Underlining this sequential improvement was continued strong residential Internet revenue growth, which grew 8% year-over-year as we continue to drive further market share gains and higher ARPU from customers moving to higher-speed tiers and recognizing the value and dependability of Bell's superior pure fiber-based services compared to cable. On the B2B front, although near-term revenue headwinds continued this quarter from the sale of Createch in March and ongoing global data equipment shortages that drove a 23.2% decline in total wireline product sales, as well as related delays in spending on service solutions by large enterprise customers, we saw some moderation in the rate of year-over-year revenue declines. This can be attributed to improved performance, particularly in the small and medium business space, as customers resume more normal operations post-COVID. So definitely some encouraging signs as we enter the second half of the year, but pressures are expected to persist, given the current macroeconomic backdrop. Notwithstanding lower year-over-year revenue, wireline EBITDA was up 1.7% on the back of a 1.8% reduction in operating costs. This was achieved despite unusually high storm-related costs and inflationary impacts on fuel and labor that we absorbed this quarter, which we estimate totaled in excess of $20 million. We expect these inflationary pressures to persist for the remainder of the year. Let's move over to Slide 11 on Bell Media. Another good quarter with total revenue up 8.7% year-over-year, which, as Mirko said, benefited from the return of the F1 Canadian Grand Prix in June. Advertising growth, including a strong contribution from digital, as well as a 3.5% increase in subscriber revenue, reflecting ongoing Crave streaming growth. Advertising revenue grew 4.7%, reflecting year-over-year increases across our specialty TV sports and news services, as well as strong radio and out-of-home advertising demand as COVID recovery continues. Consistent with the increase in total revenue, Media EBITDA was up 5.6% year-over-year. This was achieved even with a 10% step-up in operating costs, reflecting the return of the F1 Canadian Grand Prix and an increase in overall marketing and sales activity back to more normal levels. Lastly, on Slide 12, we have the financial strength and flexibility to execute on our business plan and our capital market priorities for 2022. Our balance sheet remains healthy with approximately $3.1 billion in available liquidity at the end of Q2 that is supported by substantial recurring free cash flow generation and a relatively stable and manageable net debt-to-EBITDA ratio of 3.1. Excluding the impact of the 3.5 spectrum licenses we acquired last summer, our leverage ratio would be 2.9x. With 85% of fixed-rate debt currently, a favorable long-term debt maturity schedule that has an average term of approximately 14 years, no near-term debt refinancing requirements, and an interest coverage ratio that is well above our target policy of 9x adjusted EBITDA. We have good predictability over our debt service costs as well as a high degree of protection from interest rate volatility. On top of all of this, our defined benefit pension plans are stronger than ever with an average solvency pension position of 115%, which has enabled us to begin taking the contribution holidays on current service cost payments that I've been talking about in previous quarters. On that note, I'll turn the call back over to you, Thane, and the operator to begin Q&A.
Operator, Operator
Great. Thank you, Glen. So we are prepared and ready to take our first question. Paul, please explain to the participants how to queue up.
Operator, Operator
The first question is from Maher Yaghi from Scotiabank.
Maher Yaghi, Analyst
We had a strong quarter in wireless. I'd like to start with the wireline side. We've seen very good cost management, despite a decline in equipment sales impacting profitability. Glen, where do you expect these cost savings to support your growth in wireline over the next few quarters? Also, regarding wireless, have you noticed any changes in customer loading following the network issues that Rogers experienced? Are those impacts still being felt or were they mainly an early challenge? Additionally, could you explain the improvement in churn, which is quite low? How much of this can be attributed to bundling or other factors?
Mirko Bibic, President and CEO
Glen, I'll begin addressing the first part of your question. It's no surprise that we continue to demonstrate outstanding cost discipline and control, something that has been a hallmark of our management team for many years. As I mentioned in my opening remarks, we achieved a 0.7% margin expansion despite facing around $7 million in fuel cost pressures, which I anticipate will total about $20 million for the full year. Additionally, competition for skilled labor led to approximately $5 million in wage pressure this quarter, and I don't expect that to change in the near future. We are certainly experiencing inflationary pressures. We also incurred higher-than-usual storm costs, totaling approximately $10 million. Overall, we improved margins by 0.7% while managing these costs effectively. I assure you that we will take proactive measures to protect our margins if inflationary pressures escalate further. It's clear that we will implement necessary steps to manage our costs in both our wireline business and across our entire operation.
Glen LeBlanc, CFO
I will address the next two points, which relate to the loadings we expect to see in Q3 and my interpretation of your question, particularly regarding the associated churn. I view your question in a broader context. We are pleased with our overall results and are maintaining the momentum we have demonstrated over the past several quarters by effectively implementing our clear strategy. This strategy is strongly supported by our best networks customer value proposition, which is resonating well. In terms of specifics, the market conditions that supported our performance in Q2 are expected to continue into Q3. Factors such as the return of retail store traffic, our enhanced digital and direct sales capabilities developed during the pandemic, the growth of 5G, and travel-related immigration are all positive. Financially, we are also benefitting from roaming advantages. Importantly, our network superiority is evident in Q3, especially with respect to speeds, a common topic of discussion regarding both wireless and wireline services. On the wireline side, we are seeing significant engagement with higher speed plans, where customers tend to have 20% to 30% more connected devices and their upload consumption is three times higher. Upload capabilities are becoming increasingly important for customers, and we excel in this area. Reliability and resilience are prominent factors in customers' purchasing decisions, which is why I highlighted our network architecture in my opening remarks. To summarize, the market conditions coupled with our network superiority will continue to drive our momentum in Q3. When it comes to churn, several factors are at play. Improvements in customer experience are making a significant difference, which ties back to our best networks proposition. Customers are benefiting from longer-lasting devices, reducing the need for new handsets while maintaining satisfaction with our network, thanks to these experience enhancements and our network quality. Additionally, bundled offers that include both residential Internet and wireless services are contributing to lower churn rates, especially for customers with multiple products.
Maher Yaghi, Analyst
Have you noticed any initial increase in loading due to the Rogers network issues?
Mirko Bibic, President and CEO
Yes. Customers are choosing Bell.
Operator, Operator
The next question is from Drew McReynolds from RBC Capital Markets.
Drew McReynolds, Analyst
Maybe for you, Glen, probably just on the macro side, not just people looking at telecom but just looking more broadly, everyone is wondering what we're in for as we move forward here, and BCE certainly has a wide variety of touch points here with the economy. Are you seeing either any incremental inflation? And from a macro standpoint, any problems with receivables? You made some commentary on the ad market being a little soft. Just as we get here a little bit deeper into the summer, anything post-quarter that you would flag? And then secondly, maybe back to you, Mirko. Thanks for some of the data points on the fiber to the home market share. Just curious how fiber performs versus DOCSIS but then versus other fiber competitors because presumably, those fiber footprints of competitors will grow over time as we've seen globally and may see increasingly more here in Canada. Just wondering what your experience would be there?
Glen LeBlanc, CFO
Yes, your question on what we're seeing in the macroeconomic outlook. Look, to be very honest, I unpacked what we're seeing in inflation quite specifically in the past quarter. But other than that, we're not really seeing material issues. While economic growth is slowing, it remains relatively strong and the labor market remains robust. Specifically, you asked a question on customer payment: we have not experienced a material change in customer payment patterns. As a result, there's been no related increase in bad debts, nor are we increasing provisions at this time or having extended payment terms. So frankly, it's been quite manageable despite, as I said, unpacking a few inflationary pressures that are specific to our industry, having a large fleet like we have, obviously, the escalating fuel prices, and of course, attacking hot skills and ensuring we retain and attract the right people, some pressure there. The final comment I'll make is that you brought up is, yes, we're monitoring media closely and what impacts might be on TV advertising due to the macroeconomic pressures we are seeing globally. As I said, but this past quarter, we're quite pleased. We had the F1 to lean on, we have World Cup soccer coming up, so we're excited about that. But I think it's an area of the business that we tend to see macroeconomic pressures hit first. So we're monitoring that.
Mirko Bibic, President and CEO
We are experiencing growth in all our fiber regions, which is very encouraging and has been consistent over several quarters. Regarding fiber competition, it's challenging to provide a clear answer since there are currently very few areas with two fiber operators competing directly. The overlap in fiber coverage is quite limited at this point. It will likely take several years and substantial investment from various operators, whether they are small fiber-only companies or cable providers, to significantly encroach on our fiber infrastructure. From my experience at Bell throughout our fiber development, I understand the lengthy and costly process involved. In the meantime, we are offering 3 gigabit per second symmetrical Internet to millions of households and our service continues to expand. We recently announced the launch of 8-gigabit service starting next month in the Greater Toronto Area, our largest market, as well as in other locations in Ontario and Quebec later this year. In just a couple of years, we expect to have 8-gigabits per second available at up to 6 million locations. While competitors aim to catch up over the next few years, we are making aggressive progress. Our accelerated capital expenditures are aligning well, with 250,000 additional locations passed this quarter alone and significant growth expected in the latter half of the year. Our wireless 5G service now covers 60% of the target population, and we've introduced a new television product. This accelerated CapEx strategy has enabled us to establish a strong advantage in our fiber-based services.
Operator, Operator
The next question is from David Barden from Bank of America.
Unidentified Analyst, Analyst
It's Matt here in place of Dave. First, regarding the wireline and the significant delays in the supply chain affecting some of the business, do you have any insight into when these delays may be resolved? Also, once the supply chain issues are cleared, will there be sufficient capacity for us to experience an increase in delivery on the backlog, or should we anticipate a smooth return to normal operations? Secondly, concerning the real estate opportunity you mentioned, it seemed primarily related to office workers and office space. Can you provide more details on how this opportunity might connect to central offices? Additionally, do you have a general timeline for when this potential could be realized?
Glen LeBlanc, CFO
I'll handle the back half first, Matt, and Mirko will talk about B2B supply chain. Yes, the real estate numbers I gave you today is really focused on leased real estate space where we would have traditional office workers and naturally, like most in this country or globally, we're moving to more of a hybrid. Central offices is a bigger question to unpack. Obviously, as we look to the future and copper decommissioning, we will see how we rationalize their central offices. For now, the numbers I quoted today are really focused on office. As we get a better understanding and are further along the copper decommissioning path, we'll be able to give better insights on what central office opportunities we will have. With that, I'll turn to Mirko.
Mirko Bibic, President and CEO
On B2B, you see the trajectory is improving sequentially, so that's positive. As I said in Q1, it's continued in Q2 and up to date on 1 month and into Q3, we haven't seen cancellation of projects, which is another positive sign. Revenues obviously are delayed for the reasons that you've highlighted, which is largely supply chain. I do think that we will be poised to capitalize reasonably quickly when the supply chain stabilizes to answer your question fairly directly. On the small and medium segment, we are gaining momentum there, so we're seeing volumes come back, which is a positive, and we're seeing some revenue growth there, which is also another positive. Looking into 2023 and beyond, we remain quite optimistic about 5G B2B growth coming as all the components are now being put together. So that's another positive.
Operator, Operator
The next question is from Vince Valentini from TD Securities.
Vince Valentini, Analyst
Congrats as well on a very strong quarter. The EBITDA growth in the first half of the year is 5.5%. You're still sticking with your 2% to 5% guidance. It seems like there's a lot of tailwinds, especially on the wireless side. I'm wondering, is there something specific you're seeing on competitive developments in the second half or some unforeseen costs to keep you at that guidance and not even talking about the high end of that guidance range? Or is it just conservatism?
Glen LeBlanc, CFO
I believe I've already addressed this when discussing the impact of higher inflation, rising fuel costs, and wage pressures as we work to attract and retain top talent. I also noted that we need to closely monitor our TV advertising in light of macroeconomic challenges. Overall, we're very satisfied with our performance in the first half of the year. However, I remain committed to the guidance range I shared with you in February.
Vince Valentini, Analyst
So specifically, as we enter the back-to-school period, there’s nothing concerning regarding a resurgence of competitive intensity. The trends in Q3 are similar to those in the second quarter, as you mentioned earlier.
Mirko Bibic, President and CEO
Well, I'll say so on wireless, yes. We're seeing the same trends, plus we come back to the answer earlier around the best network superiority, resiliency, and redundancy, which is obviously benefiting us. On the wireline side, there's a little bit more promotional intensity. It feels a little bit more like the days pre-COVID. When I think of that question and I look at the dynamics and I observe the higher promotional intensity on the wireline side compared to wireless, it doesn't surprise me. Some of our competitors are under pressure given the products we have out there in our network. That's to be expected, and we're not going to let up. We have the better network with the better services, and we're going to keep pushing. But it's still early; we're only 1 month into Q3.
Vince Valentini, Analyst
And just to confirm, you said that it's the fixed line where you may be seeing a bit of an escalation?
Mirko Bibic, President and CEO
Yes. Fixed line wireless seems to be pretty stable, as it has been quite a while in terms of things like promotional intensity and handset discounting, those kinds of things.
Vince Valentini, Analyst
Cool. And one last one quick, Glen. The 98% roaming revenue figure from pre-pandemic. Can you give any color on the volume that is attached to that? Like is it in the range of 75% of volume leading to that kind of revenue traction?
Glen LeBlanc, CFO
Sure, Vince. Great question. 89% is where we're at the end of June for volume recovery, 98% of revenue; obviously, the differential is rate. We were much later introducing rate increases than some of our competitors were. It was July, I believe, before our rate increases went in.
Operator, Operator
The next question is from Stephanie Price from CIBC.
Stephanie Price, Analyst
The wireless and wireline bundling offerings have picked up across both the Bell and the Virgin brands. Can you share any early learnings with bundling and if you have any longer-term targets around bundling?
Mirko Bibic, President and CEO
I believe it reflects our desire to cater to the household and consumer as a unified group rather than treating wireless and wireline as separate customer bases. It’s essentially the same consumer and household. Approaching the market with that perspective leads to improved offers. As a result, we are experiencing higher lifetime value and lower churn. This approach has been in the industry for a while now. You might notice increased activity from us as we dedicate more focus to it, but there are significant advantages for us in doing so.
Stephanie Price, Analyst
And as spending capabilities become more important, how do you think about your competitive positioning in the West? Would you consider wholesale or maybe fixed wireless as an option and part of the strategy?
Mirko Bibic, President and CEO
When considering product bundling options like pairs, trios, and quads, we are in a strong competitive position compared to others due to our owner economics present in 75% of the country. This advantage makes it harder for competitors to succeed without similar owner economics. Additionally, we offer a wide range of content services for our customers, as evidenced by our wireless plans that include Crave to set us apart. Our ownership in content strengthens our offerings, and no other provider can meaningfully achieve owner economics on content within their overall bundles.
Stephanie Price, Analyst
That makes sense. And just finally for me, with I sad looking for all the telcos to work together to keep emergency services working in the event of an outage, do you see any additional CapEx requirements potentially arising from this?
Mirko Bibic, President and CEO
Not for us. That's why I did spend quite some time this morning outlining how much we've invested over the last few years on things like that. We are well positioned in that regard, Stephanie. Beyond the very specific question, we'll obviously work with all the other providers to serve Canadians and to help each other. We always have. To be fair, when we run into the occasional spot, others are quick to help us as well. So that's always been the culture within the industry.
Operator, Operator
The next question is from David Joyce from Barclays.
David Joyce, Analyst
On the upgrade cycle. I appreciate that you mentioned about the 56% fiber and cable overlap metric. I just wanted to kind of sense check and how that's progressing. Was that the figure around 30% that you wouldn't have mentioned in the first quarter? And just wanted to see if you could update us on how many fiber home passes you expect to be at year-end and when you expect to be completed on that.
Mirko Bibic, President and CEO
For the entire year 2022, we still expect to be very close to 900,000 additional fiber locations passed, bringing our total to around 7.1 million. We are on track. I mentioned 250,000 locations passed in Q2, and for the entire year, it will be 900,000. Regarding fiber and cable overlap, we are at 56%, which is an improvement from last quarter. Last year, we were slightly above 50%, not at 30%. This progress is encouraging, and there is still significant potential with 44% remaining to achieve.
David Joyce, Analyst
All right. And is it still roughly the three-year time frame when you expect to be fully upgraded?
Mirko Bibic, President and CEO
We aim to reach 10 million high-speed broadband locations by the end of 2024, which is our medium-term build-out plan. Of those, one million will have been completed with wireless home Internet. By the end of 2025, we plan to have 9 million fiber locations, and we expect to finish this year with approximately 7.1 million, possibly 7.2 million. This leaves us with around 1.8 million to 1.9 million fiber locations to complete over the next three years.
Operator, Operator
The next question is from Jerome Dubreuil from Desjardins Bank.
Jerome Dubreuil, Analyst
So the first one is on the 8-gigabit per second, definitely impressive and will future-proof your network for sure. If you can share maybe what percentage of your Internet customer base in your fiber footprint that are already taking your highest speed tier. I'm trying to get a sense here of the potential attractiveness of this new product in the current context.
Mirko Bibic, President and CEO
Yes. I'm not going to provide exact figures, but I can tell you that subscribers on 500 megabits per second and above are quite significant, particularly those on 1.5 gigabits and higher. The gigabit service was launched a couple of months ago, and the 8-gigabit service hasn't launched yet. While those numbers are smaller, there have been interesting successes with the 3-gig service to date. The majority of customers are not opting for the lower speed plans. I've mentioned before that customers who choose higher speed plans tend to use more data and have more connected devices. This trend is unlikely to change. Everyone in the industry has experienced underestimating bandwidth consumption and the demand for higher speeds over the last 10 to 15 years. I believe the same will occur with the 3-gig and 8-gig services as well.
Jerome Dubreuil, Analyst
Great. And then on the NFL deal, we've seen sports rights continue increasing in prices. So has there been a significant change in the cost of this contract? And also, do you fully allocate these costs to media?
Glen LeBlanc, CFO
Yes, the costs are fully allocated to media, but I won’t disclose the details of our NFL contract. It's clear that sports packages and renewals are increasing in price, but we are confident in the economics of the contract, or we wouldn't have signed it.
Operator, Operator
The next question is from Batya Levi from UBS.
Batya Levi, Analyst
A follow-up on the wireless ARPU side. Can you provide an update on what percent of your postpaid base has the unlimited premium plan as of now? I believe that was 20% last quarter. Along with roaming rate increases you mentioned, should we expect mid-single-digit ARPU growth to continue in the second half? And just a quick question on the cost side. Wireless, you mentioned acquisition retention is pretty steady. Any inflationary impact on the other part of costs that we should bake in for the second half for wireless?
Glen LeBlanc, CFO
No. On the cost side, we're seeing stability in handset pricing. We're not seeing any supply chain issues there. So nothing to speak of specifically at this time. You asked us to unpack roaming. Look, I gave some specifics that roaming we're at about 89% of pre-COVID volume. I do anticipate continued increases in roaming, which will support our ARPU but not to the same extent of the rebound you saw in roaming in Q2. Yes, ARPU will be supported by continued roaming improvements into the future but probably not to the same degree as we've enjoyed in the past few quarters. I think your first question was on?
Batya Levi, Analyst
On the unlimited premium mix of their subscriber base.
Glen LeBlanc, CFO
Yes. We haven't disclosed the mix of customers who are on those specific plans. We have said that 27% of our base is on 5G-enabled devices and their 5G plans. But we haven't broken that down further into the specifics you're requesting, and we're not going to do that right now.
Operator, Operator
So Paul, I think we've timed out. I think we'll end the conference call on that question. Thanks again for everybody's participation on the call this morning. As usual, I will be available throughout the day for any follow-ups and clarifications. So on that, have a great rest of the day.
Glen LeBlanc, CFO
Thank you, everyone, and have a good day.
Operator, Operator
Thank you. The conference has now ended. Please disconnect your lines at this time, we thank you for your participation.