BCE Q1 Earnings Call Highlights

Key Points

• Revenue and cash flow improved in Q1, with consolidated revenue up 4% and adjusted EBITDA up 2.9%, helped by Ziply Fiber and AI-powered enterprise services. Free cash flow rose modestly to CAD 804 million, though adjusted EPS declined due to higher depreciation and interest costs.
• BCE’s AI Fabric strategy was a major focus, with Bell Business Markets revenue up 9.7% and AI-powered solutions growing 113%. The company’s fully contracted Saskatchewan AI data center is expected to become a major contributor to revenue, EBITDA, and free cash flow once operational.
• Wireless remained highly competitive, pressuring ARPU, but BCE still added 16,947 postpaid mobile phone subscribers and saw stronger fiber demand in both Canada and the U.S. Bell Media’s digital business also kept growing, with Crave subscribers up 25% year over year.

BCE NYSE: BCE reported higher first-quarter revenue and adjusted EBITDA as contributions from Ziply Fiber and growth in AI-powered enterprise services helped offset competitive pressure in wireless and softer traditional advertising demand at Bell Media.

On the company’s Q1 2026 earnings call, President and CEO Mirko Bibic said the results reflected “continued disciplined execution” in a competitive operating environment. Consolidated revenue rose 4%, while adjusted EBITDA increased 2.9%. CFO Curtis Millen said adjusted EPS declined by CAD 0.06 from a year earlier, reflecting higher depreciation and amortization expense and interest costs, in line with the company’s guidance assumptions.

Free cash flow increased 0.8% to CAD 804 million. Millen noted that BCE updated its free cash flow definition beginning this quarter to exclude income taxes paid on significant divestitures. The company paid CAD 542 million in cash taxes in the quarter related to the CAD 4.7 billion sale of its MLSE stake, which affected operating cash flow but was excluded from free cash flow.

AI Fabric and Enterprise Growth Take Center Stage

BCE executives spent a significant portion of the call discussing Bell AI Fabric, the company’s AI infrastructure and services platform. Bibic said Bell is positioned at the intersection of networks, enterprise relationships, power access and AI infrastructure, calling that combination “very difficult to replicate.”

Bell Business Markets revenue, disclosed separately for the first time, grew 9.7% in the quarter. Millen said the increase was driven by 113% growth in AI-powered solutions, which includes Ateco, Bell Cyber and Bell AI Fabric. He added that, excluding AI Fabric, Ateco and Bell Cyber together grew more than 30% year-over-year.

Bibic highlighted the company’s planned 300-megawatt AI data center in Saskatchewan, which he described as a “landmark investment” and fully contracted. At full run rate, BCE expects the facility to contribute about CAD 500 million in revenue, CAD 400 million in EBITDA and more than CAD 250 million in free cash flow at an approximately 20% internal rate of return at the data center level.

Construction work in Saskatchewan has begun, with site stripping, pile load testing and equipment mobilization underway. Bibic said the company expects major permits to be in place by July and the first phase to come online in the first half of next year. Millen said BCE had spent less than CAD 20 million in capital expenditures on the project during the quarter, with heavier spending expected in the second and third quarters.

Bibic said BCE now has four fully contracted AI Fabric facilities: Mission Flats and Merritt in British Columbia, which are live; Winnipeg, expected to go live early in the second half of the year; and Saskatchewan, which is under construction. He said the company has line of sight to monetizing about 800 megawatts of power over time and expressed confidence in BCE’s updated goal of about CAD 2 billion in AI-powered solutions revenue by 2028.

Wireless Market Remains Competitive, Fiber Demand Holds Up

Bibic described the first quarter as “unusually competitive” in wireless, with promotional activity extending beyond normal seasonal windows. He said BCE avoided the most aggressive pricing early in the quarter and participated selectively where it saw longer-term value.

The company reported 16,947 postpaid mobile phone net additions, compared with a net loss of nearly 10,000 in the year-earlier period. Postpaid churn was 1.34%, with Millen citing a higher number of switchers driven by aggressive competitive offers. Wireless ARPU declined 0.8%, an improvement from a 1.8% decline in the prior-year quarter but still reflecting pricing pressure.

Executives said early second-quarter signs suggested a more stable pricing environment. Bibic said BCE does not plan to lead on pricing and will focus on the premium Bell brand, product intensity and customer experience.

In internet, BCE added 42,750 residential fiber-to-the-home subscribers in Canada. Bibic said total residential fiber net additions were close to 50,000 when including Ziply Fiber, and internet revenue across BCE’s North American fiber platforms grew 15% year-over-year. Video net additions improved to 10,103, compared with a loss of close to 16,000 a year ago, helped by streaming bundles launched in the second half of last year.

Ziply Fiber Performs in Line With Plan

BCE’s U.S. fiber business, Ziply Fiber, generated Q1 revenue of $234 million and adjusted EBITDA of $102 million, representing a 43.6% margin. Millen said the business remains on track to reach about 3 million fiber passings by the end of 2028.

Ziply added nearly 7,000 net new fiber customers in the quarter. Bibic said demand for fiber remains strong in the U.S. and that penetration gains are tracking in line with historical performance, despite some cable competitors being more aggressive on pricing in prior periods.

Bell Media Digital Revenue Continues to Rise

Bell Media revenue increased 0.4% in the quarter. Subscriber revenue grew 11.8%, supported by Crave, sports direct-to-consumer streaming and a retroactive adjustment tied to a contract renewal with a Canadian TV distributor.

Advertising revenue declined 12.8%, which Millen attributed to softness in non-sports traditional advertising, lower audio revenue after radio station divestitures, the absence of a prior-year federal election benefit and advertising shifts tied to the 2026 Olympic Winter Games.

Bibic said Bell Media’s digital pivot continues, noting that digital revenue now represents 46% of Bell Media revenue, up from 19% when he became CEO in 2020. He said Q1 was the most watched quarter in Crave history, with Crave subscribers up 25% year-over-year to more than 4.7 million, including a 59% increase in direct-to-consumer streaming subscribers.

Balance Sheet and Capital Allocation Remain Priorities

BCE ended the quarter with CAD 4.3 billion of total available liquidity, up from CAD 2.5 billion at year-end. Net debt leverage was about 3.8 times, essentially unchanged from year-end, or about 3.7 times on a pro forma basis including a full 12 months of Ziply Fiber EBITDA.

The company recently announced the sale of its Land Mobile Radio business to Motorola Solutions for CAD 675 million, at about 10 times EBITDA. Millen said the transaction is expected to close in the fourth quarter and improve net debt leverage by approximately 0.04 times.

Bibic said BCE’s capital allocation remains focused on strengthening the balance sheet, funding strategic priorities and returning capital to shareholders through a sustainable dividend. The company reiterated that it remains on track to reach a net debt leverage target of 3.5 times by the end of 2027 and move below that level in 2028.

BCE also reaffirmed its 2026 financial guidance, which had been updated in March solely to reflect the expected financial impact of the Saskatchewan AI data center. Millen said revenue and EBITDA recognition from Saskatchewan are expected to begin in 2027.

About BCE NYSE: BCE

BCE Inc NYSE: BCE is a Canadian communications, media and entertainment company that operates through its primary subsidiaries, including Bell Canada and Bell Media. As a large integrated telecommunications provider, BCE delivers a broad range of connectivity services and content to residential, business and wholesale customers across Canada. The company combines network infrastructure with media assets to offer bundled communications and entertainment solutions.

On the services side, BCE provides fixed-line and wireless voice services, mobile data, high-speed internet, fibre and broadband access, and television services through platforms such as Bell Fibe and Bell TV.

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