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George A. Cope letter to shareholders

Leading innovation, outstanding execution

Drive marketplace performance On behalf of the Bell team, I am pleased to report on a year of strong progress by your company in a dynamic and highly competitive communications sector. In 2018, our rapidly expanding broadband fibre and wireless networks, coupled with the best communications services and content in Canada, enabled growth across Bell’s wireless, wireline and media operations.

Our goal and strategy

Bell’s goal is to be recognized by customers as Canada’s leading communications company, and we execute 6 Strategic Imperatives every day to achieve it. We are focused on delivering the best broadband connections and the latest wireless, TV, Internet and content innovations to customers, operating with the highest levels of efficiency and providing a better customer experience in a fast-changing marketplace.

The Bell broadband strategy delivered strong growth in customer additions and solid financial performance in 2018, including increases in BCE’s revenue, adjusted EBITDA and the free cash flow that enables both our strategic broadband investments and our shareholder value objectives.

We achieved all 2018 financial guidance targets including for revenue, adjusted EBITDA and free cash flow growth, capital intensity, adjusted EPS, annualized common dividend per share and our dividend payout policy.

Bell also closed the year with our 53rd consecutive quarter of year-over-year adjusted EBITDA growth, which has supported steady increases in the BCE common dividend since 2008, including the latest 5% increase announced for 2019.

The Bell fibre advantage

Bell’s historic project to rebuild Canada’s core communications infrastructure with direct fibre connections was approximately 50% complete by the end of 2018, reaching 4.6 million homes and business locations across 7 provinces. This includes the launch of the Toronto fibre network throughout Canada’s largest city in 2018, ongoing expansion in Greater Montréal, and the start of the next major phase of our rollout, in Southern Ontario’s populous 905 region.

A network built for the future, Bell fibre supports continued increases in data speeds to meet growing consumer demand and fully enables high-capacity business and government applications such as the Internet of Things, connected homes and cars, and Smart City platforms.

Our leading fibre density also offers significant advantages in wireless network connectivity, reducing backhaul costs and positioning Bell to efficiently roll out upcoming Fifth Generation (5G) mobile networks.

Bell was ranked as the fastest Internet provider in Canada in 2018, and was first to offer consumers data access speeds of 1.5 Gigabits per second. In wireless, Bell was also first to launch Gigabit-speed mobile service, and extended the latest wireless technology, LTE Advanced, to 91% of the population.

Bell takes broadband further than any Canadian communications company. In Manitoba, Bell MTS continued to execute its infrastructure investment plan, in many cases bringing broadband to communities previously unserved by any provider. BCE’s Northwestel significantly extended broadband service in Canada’s territories, and Bell was awarded Alberta’s SuperNet contract to ensure communities throughout the province are connected with broadband Internet access. We also steadily increased the number of smaller towns and rural locations connected with Bell’s broadband Wireless Home Internet service.

Canada’s broadband growth leader

Bell welcomed approximately 700,000 net new wireless, Internet and IPTV (Fibe TV and Alt TV) customers in 2018, the most new broadband customers in the industry and a 32% increase over the year before. We efficiently managed the ongoing declines in legacy businesses such as landline phone and the maturing satellite TV segment, and by the end of 2018 provided more than 22 million consumer and business customer connections throughout Canada.

Bell’s advantage in network performance and exclusive services supported a stronger growth trajectory in both business and residential wireline services. The fastest access speeds and innovations such as Whole Home Wi-Fi and app-based live television service Alt TV helped enhance our position as Canada’s largest Internet provider, with net Internet subscriber additions up 22.7% year over year.

Part of the evolving Fibe TV universe, Alt TV also contributed significantly to Bell’s positive TV subscriber growth in an era of new viewing options, cord cutting and cable decline. The speed, quality, reliability and coverage of the Bell LTE mobile network supported leading wireless customer additions, lower monthly customer churn and, with continued data usage growth on Canada’s best national mobile network, the industry’s highest blended average billing per user.

We welcomed approximately 480,000 net new postpaid and prepaid wireless customers in 2018, the most in the industry and 44% more than in 2017. Key to this exceptional performance was the growing popularity of our low-cost Lucky Mobile brand, which expanded to all 10 provinces in 2018 and quickly made Bell the growth leader in the competitive prepaid wireless marketplace.

#1 in Canadian media

Increasing competition from global media heavyweights and new viewing options for consumers continued to impact the Canadian media sector in 2018. Bell Media met the challenge with unparalleled programming leadership and ongoing innovation in direct-to-consumer platforms.

CTV remained Canada’s most-watched network for the 17th consecutive year while English and French language specialty channels, including top sports networks TSN and RDS, #significantly increased viewers in key demographics.

Canada’s leader in both pay TV and streaming services,  Bell Media launched the all-new Crave platform combining HBO Canada, Showtime, TMN and other premium programming, growing the service to 2.3 million subscribers by the end of the year, and debuted the popular TSN Direct and RDS Direct streaming services.

Executing its objective to create the best content for both Canadian and international audiences, Bell Media assumed a majority interest in Pinewood Toronto Studios and partnered to acquire the Just for Laughs comedy brand.

Bell Let’s Talk

Bell Let’s Talk continues to grow the mental health conversation while funding care, research and community programs throughout Canada. Bell Let’s Talk Day has become an annual focus for anti-stigma and mental health action in workplaces, schools, media and government as Canadians everywhere come together to address the challenge of mental illness.

Messages of support for the cause across social media and other communications platforms since our first Bell Let’s Talk Day in 2011 have now topped 1 billion, including growing support from high-profile influencers here in Canada and around the globe, while Bell’s funding commitment for mental health programs now exceeds $100 million.

We can all be proud that the made-in-Canada Bell Let’s Talk initiative has captured the attention of the world, reflecting a universal desire for progress in mental health.

Thank you

On behalf of the national team, I thank our shareholders for enabling Bell to lead the way in delivering the broadband communications that are at the heart of our ever more connected society and economy. We are proud and honoured to build on the renowned Bell Canada name, and will continue to pursue our goal, for Bell to be recognized by customers as Canada’s leading communications company, every day.

George A. Cope
President and Chief Executive Officer
BCE Inc. and Bell Canada

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