BCE 2013 Annual Report

5/20/2018 BCE 2013 Annual Report

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BCE INC. 2013 ANNUAL REPORT

Were the same company


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just totally different.

Bell has connected Canadians since 1880,

leading the innovation and investment in our

nations communications networks and

services. We have successfully embraced

the rapid changes in communications

technology, competition and opportunity,

building on our 134-year record of service

to Canadians with a clear goal, and the strateg

and team execution required to achieve it.


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Our goal:

To be recognized by customersas Canadas leadingcommunications company.

Our 6 strategic imperatives

1. Accelerate wireless 102. Leverage wireline momentum 123. Expand media leadership 144. Invest in broadband networks and services 165. Achieve a competitive cost structure 176. Improve customer service 18

Bell is delivering the next generation of communications

and an enhanced service experience to our customers

across Canada. In the last five years, our industry-leading

investments in world-class networks and communications

services like Fibe and LTE, coupled with strong execution

by the national team, have re-energized Bell as a nimble

competitor setting the pace in TV, Internet, Wireless and

Media growth services. We achieved all financial targets

in 2013, delivering for our customers and shareholders and

giving us strong momentum going into 2014.

Financial and operational highlights 4Letters to shareholders 6Strategic imperatives 10Community investment 20Bell archives 22Managements discussion and analysis (MD&A) 24Reports on internal control 106

Consolidated financial statements 110Notes to consolidated financial statements 114


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Successfully executing our strategicimperatives in a competitive marketplace,Bell achieved all 2013 financial targets andcontinued to deliver value to shareholders.

2013 Financial Performance

Bell Actual Targets Result

Revenue growth 2.6% 2%4%

EBITDA growth* 3.4% 3%5%

Capital intensity 16.6% 16%17%

BCE Actual Targets Result

Adjusted EPS* $2.99 $2.97$3.03

Free cash flow* 5.9% 5%9%

6.5%Free Cash Flow Growth*

69%Dividend per Common Share Growth

141% 10Total Shareholder Return**

Number of Common Share

Dividend Increases

* EBITDA, Adjusted EPS and free cash flow are non-GAAP financial measures and do not have anystandardized meaning under IFRS. Therefore, they are unlikely to be comparable to similar measurespresented by other issuers. For a full description of these measures, see section 10.2 Non-GAAP FinancialMeasureson pp. 103 and 104 of the MD&A.

** Assumes the reinvestment of dividends.

Executing our dividend growth objective since 2008


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4

FINANCIAL AND OPERATIONAL HIGHLIGHTS

Growth services are taking Bell forward

Founded on the first popular communications service to connect Canadian consumers and businesses,Bell is leading the way to the next generation. With a focus on Wireless, Internet, TV and Mediagrowth services, Bells investments in world-leading fibre and mobile networks and innovativenew products are transforming our company and Canadas communications industry.

* In accordance with previously reported Canadian GAAP

82%Growth Serv

8% Consum

10% Busines

2013

18%Wireline Voice

26%Internet/

Wireline Data

13%Media

11%TV

32%Wireless

$18.1B

2008

31%Wireline Voice

29%Internet/

Wireline Data

10%TV

30%Wireless

$14.9B*

Revenue mix reflects focuson growth services

Bells Wireless, Internet, Media andTV growth services accounted for82% of revenues in 2013, up fromless than 70% in 2008. TraditionalHome Phone service, just 8%.

BCE Subscribers (millions)

2008 2013

Wireless 6.6 7.9

High-speed Internet 2.8 3.1

Television 1.9 2.5

Total growth services 11.3 13.5

Local telephone services 10.4 7.6

Total subscribers 21.7 21.1

+19.5%Growth Services Subscribers

2008-2013

21.1MTotal Subscribers

2013


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19.978 20.40017.661

+2.1%

+15.5%

5.560 6.4765.909

+16.5%

+9.6%

7.888 8.0897.004

+2.5%

+15.5%

2.294 2.3171.811

+1.0%

+27.9%

2012 2013

BCE Operating Revenue

($ billions)

2008* 2012 2013

BCE EBITDA

($ billions)

2008* 2012 2013

Adjusted Net Earnings

Attributable to Common

Shareholders

($ billions)

2008*

* In accordance with previously reported Canadian GAAP.

For more information, please refer to section 7.1 of the MD&A Annual Financial Information, pp. 83-84.

Cash Flows from Operating

Activities

($ billions)

2012 20132008*

3.14 3.313.00

+5.4%

+10.3%

Free Cash Flow per Share

($)

2012 20132008*

2.428 2.5712.415

+5.9%

+6.5%

Free Cash Flow

($ billions)

2012 20132008*


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6

MESSAGE FROM THE CHAIR OF THE BOARD

Investing for tomorrow,growing shareholder value today

Dear fellow shareholders,With your support, we continuedour work in 2013 to transformBCE, a historic Canadiancompany leading the advanceinto the next generation ofcommunications with a strategyof focused investment andinnovation, well executed bystrong management anda committed national team.

Our growing success in the

communications marketplace,robust financial performance andefficient operational executiongive us the flexibility to invest inthe networks, services andcontent we need to lead, whiledelivering value to you,our shareholders.

Bell competes from a positionof strength, with excellentfinancial fundamentals and acapital markets strategy that is

prudent and responsive to anevolving industry environment.

In 2013, we met all our financialguidance targets with solidrevenue and EBITDA growthdriving higher free cash flow andsubstantial earnings. Our healthybalance sheet rests on a strongcredit profile, a favourable

liquidity position and significantlyimproved funding in our definedbenefit pension plan.

Early in 2014, we announceda 6.0% increase in the commonshare dividend, from $2.33to $2.47, representing the tenthBCE common share dividendincrease since the fourth quarterof 2008, for total growth of69% in your dividend.

In the marketplace, are-energized Bell is shakingup the established order inCanadian communications.

Fibe is leading new consumerchoice in TV and Internet withtough competition for the once-entrenched cable companies inurban markets. The acquisition ofMontral-based Astral Media withits exceptional array of Frenchand English pay and specialty TV,

radio and outdoor advertisingproperties is delivering enhancedcompetition in the fast-pacedmedia marketplace, especiallyin Qubec. And investmentin the best wireless technologyavailable has enabled Bell tostake out a leadership position inmobile TV and other increasingly

popular smartphone-baseddata services.

BCE continues to live up to thehigh expectations Canadianshave of us as a company that hagiven back to our communities fogenerations, and as an enduringleader in corporate governance.

The Bell Lets Talk mentalhealth initiative has capturedthe attention and support of

Canadians beyond all expectationgrowing participation in themental health conversation,fighting the stigma and deliveringfunding to mental healthprograms in every region ofthe country. Were lookingforward to Claras Big Ride forBell Lets Talk starting inMarch 2014, a 12,000 kilometre

journey around Canada byOlympian and Bell Lets Talk

ambassador Clara Hughes thatwill take the conversationeven further.

I am proud to say that yourBoard was recognized multipletimes for our governanceleadership in 2013. We werehonoured with the prestigiousGavel Award from the Canadian


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Coalition for Good Governancefor exceptional communicationwith shareholders; the BestOverall Corporate Governance International award at the sixthannual Corporate SecretaryCorporate Governance Awards;and the first-ever award for bestoverall corporate governancefrom the Canadian Society ofCorporate Secretaries.

These awards recognizethe dedication of my fellowBoard members and theircommitment to guiding ourorganization forward.

We welcomed our newestDirector, Ian Greenberg, Canadianbroadcasting legend and formerAstral Chief Executive Officer,to your Board in 2013 followingthe closing of our acquisition,a key addition as Bell expands

our national media leadership.I would like to acknowledge

and thank two Directors with astrong record of distinguishedservice to you, Anthony Fell andThe Honourable Edward Lumley,who will be departing the Board inMay 2014. We are grateful fortheir brilliant leadership and

guidance as exceptional stewardsof your interests and BCEstradition of exemplarygovernance.

I thank our CEO George Cope,his executive team and Bellemployees across Canada fortheir hard work and successin transforming your company.It is my privilege and honourto work with such a focused,

dedicated and effective team.And all of us across BCE thank

you, our shareholders, for yourbelief in our company and itsability to prosper in the fastchanging and highly competitivecommunications industry.

Your confidence energizesour efforts to honour and buildon Bells history as Canadascommunications leader.

Thomas C. ONeillChair of the BoardBCE Inc.

+69%Since the end of 2008, BCE has raisedthe common share dividend 10 times,for an overall increase of 69%.


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Dear fellow shareholders,

8

MESSAGE FROM THE PRESIDENT & CEO

Hitting our stride with committedexecution by the Bell team

Bell put in place a clear new goal in 2008: To be recognized by customersas Canadas leading communications company. Our strategy to achieveit is built on 6 strategic imperatives that reflect the enduring strengthsof Bell, our competitive and operational challenges, and the excitingopportunities for growth.

Accelerate wireless Invest in broadband networks and services

Leverage wireline momentum Achieve a competitive cost structure

Expand media leadership Improve customer service

As Canadas largest and oldestcommunications company,

we vowed to lead in deliveringthe Wireless, Internet, TV andMedia platforms that define thenew reality of communications.We committed the investment toworld-class network technologiesrequired to enable these growthservices. And we dedicatedourselves to improving thecustomer service experienceand reducing costs acrossour operations to sustain Bells

growth into the future.With a focus on delivering

consistent dividend growth to ourshareholders, the Bell team hasmade sure and steady progressin the execution of ourimperatives. In 2013 we really hit

our stride, leveraging our networkleadership and growth services to

deliver increases in revenue,EBITDA and free cash flow,meeting all our financial targetsfor the year and fulfilling ourpromise to continue to returnsignificant value to you.

Each of Bells operatingunits demonstrated positiveprogress in 2013.

Bell closed the year leadingthe wireless industry in marketshare of net postpaid wireless

subscriber additions andwireless EBITDA growth.With access to the largestLTE network in the country,our customers are takingfull advantage of Bellsleading lineup of

smartphones to drive industry-leading service revenue growthwith heavy usage of data servicelike the unique Bell Mobile TV.

Next generation Fibe TVcontinues to grow fast, bringing asuperior television experience tomore Canadians. Fibe TVs surgingpopularity is driving impressivegrowth in high-speed Internet,while slowing decline in traditiona


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Home Phone too in 2013, fourin five new Fibe TV customerschose a bundle of all threeBell residential services.

With heavy investment in datahosting, cloud computing andother leading-edge businesscommunications services in 2013,Bell Business Markets looksforward to improved results onstronger economic and

employment growth in 2014.Canadas #1 multimedia

company, Bell Media, continued tobuild its lead in both viewershipand investment in the mostpopular new Canadian TVprogramming. We welcomed thevibrant Astral team to Bell Mediain 2013, growing our competitivepresence in the key Qubecmarketplace and adding top-tierpay and specialty channels such

as TMN, HBO Canada andSuper cran to our lineup.

Bell leads the industry in capitalinvestment, bringing the worldsbest networks to Canadians, whilekeeping to prudent capitalintensity targets. Fibe TV reached

a million more homes in 2013while mobile 4G LTE grew to cover80% of the population. With the700 MHz spectrum acquired inthe 2014 spectrum auction, wellrapidly deploy broadband LTEto rural communities, small townsand Canadas North, bringingadvanced mobile broadbandservices to more than 98% ofCanadas population, a national

coverage footprint that rivals anyin the world.

We invested in new call centresin Qubec and Ontario, enhancedour popular mobile self-servetools, refined our appointment anddispatch processes, and improvedfirst-call resolution. Consequently,we reduced wireless churn, cut thenumber of repeat calls into ourservice centres and enabled Belltechnicians to arrive on time for

98% of service appointments.These customer service

improvements have reduced ourcosts significantly, in line withthe operational efficiency andcost control focus now embeddedin Bells corporate culture.

A re-energized team of morethan 55,000 Bell employeesin every province and territoryis transforming our companyin remarkable ways in ouroperations, in the marketplace,and in our contributionto Canadian society withthe extraordinary success ofthe Bell Lets Talk mentalhealth initiative.

What hasnt changed is Bells134-year promise to always leadCanada into the next generationof communications, delivering forour shareholders, customers andcommunity. As our performancein 2013 shows, we get better everday. Thank you for your support.

George A. CopePresident andChief Executive OfficerBCE Inc. and Bell Canada

82%In 2013, Wireless, TV, Internet and Mediagrowth services accounted for morethan 4 in 5 dollars of Bell revenues.


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10

STRATEGIC IMPERATIVE 1

Accelerate wirelessWith the most advanced networks supporting the latest

smartphones and mobile data services, Bells growing wireless

strength was a key driver of our growth in 2013.

Bells next generation wirelessnetworks, superior smartphonelineup and innovative data servicesgave us the industry-leading share ofnet postpaid subscriber activationsand average revenue per user (ARPU)growth in 2013.

Already offering access toCanadas largest 4G LTE network,Bell added 25 new LTE marketsand reached 80% of the Canadianpopulation by the end of 2013.The worlds best wireless technology,LTE is backed up with our HSPA+network offering coast-to-coastcoverage to more than 98%of Canadians.

The speed and capacity of thesenetworks enable Bell customersto make the most of their powerfulsmartphones and superphones with

the latest mobile business, gaming,information and entertainment apps,including Bell Mobile TV.

With more than 1.2 million mobileTV subscribers at the end of 2013,66% more than the year before,Bell has staked out a clear leadershipposition in the fast-growing mobilemedia segment, delivering recordvideo streaming of major events likethe Super Bowl and most recentlySochi 2014 to customers anywherethey may be.

Bell launched 26 new mobiledevices in 2013, adding to the bestlineup in the mobile marketplace,including the in-demand smartphonesfrom Apple, BlackBerry, HTC, LG,Samsung and Sony, and the ultra-rugged Sonim BOLT push-to-talkphones for heavy business users

in the most extreme conditions.Almost three-quarters of Bellpostpaid customers now havesmartphones, growing to 73% ofthe base from 62% just a year ago.

These leading networks, handsetsand content applications led torobust growth in data service usagedriving a 2.6% increase in blendedARPU to $57.25 for the year. BellWireless reported strong financialresults overall, with service revenuesincreasing 5.4% to $5.36 billion andEBITDA up 10.6% to $2.34 billion,the highest growth rate reportedin Canadian wireless.

Other notable 2013 wirelessdevelopments include: A fast and secure mobile

banking solution developed byBell and RBC, Canadas largest

$57.25$55.82

$53.55

2013

2012

2011

Average Revenue per User (ARPU)Bells mobile data services lead the industry. At the end

of 2013, Bell Mobile TV had over 1.2 million subscribers with

on-the-go access to more than 40 live and on-demand

TV channels, and set new records for streaming of major

sports and entertainment events.


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73%2013

62%2012

48%2011

bank, that lets Bell smartphoneusers easily buy goods and serviceswith debit or credit simply bytapping their phones at a paymentterminal.

To enable customers to enjoytheir smartphones when theytravel as much as they do athome, Bell significantly reducedroaming rates in the most populardestinations for Canadians the United States, Europe,Mexico, China, Turkey, Australiaand New Zealand, and popularCaribbean sun destinationsincluding Cuba.

Bells focus on service improvementand the quality of our networksand devices helped reducepostpaid customer churn by yearend to 1.25% from 1.30%.

The new Bell M2M ManagementCentre is a secure online portalenabling business customersto remotely manage network-connected devices such as vendingmachines or parking meters,supporting Bells growing leadershipin the machine-to-machinemarketplace.

In line with our commitment tonetwork leadership, Bell invested$566 million to acquire significant700 MHz wireless spectrum assetsin every province and territoryin the January 2014 federalspectrum auction.

Bell will employ these valuablenew airwaves to bring LTE broadbandservice to small towns, rural locationsand Canadas North, ultimately covering98% of the population with LTE.

Smartphone Growth

Bells great mobile networks, data

services and device lineup are driving

the move to smartphones.


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12


The Fibe TV footprint reached more than

4.3 million households by the end of 2013,

a million more than a year earlier, and

subscribers nearly doubled to 479,430.

4.3M

The Bell wireless receiver is a

Canadian first and available only with

Fibe TV, enabling customers to movetheir TV anywhere in the home and

reducing installation times.


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Leverage wireline momentumOur growing momentum in residential services is driven by the strength of Fibe TV,

supporting household growth in high-speed Internet and slowing the decline in Home Phone.

Bell Business Markets continued to expand its broadband network and next generation

business services like cloud computing to take advantage of a strengthening economy.

On the consumer side, Bell Fibe TVis shaking up the Canadian televisionbusiness, quickly winning newsubscribers and increasing Bellsoverall share of the household as webring the superior alternative tocable TV to a fast-growing numberof Canadians.

The Fibe TV network footprintexpanded in 2013 to multiple newmarkets including Ottawa, increasingcoverage by a million householdsto a total of 4.3 million by the end ofthe year. We plan to extend servicecoverage to more than 5 millionhomes by the end of 2014 andultimately reach 6 million households.

Bells focus on service innovationdelivered hugely popular TV productslike the Bell wireless receiver, aCanadian first that lets customersenjoy the best TV viewing experienceon up to 5 TVs anywhere in the homewithout plugging them all into cable

outlets; the Fibe Remote app thatturns a smartphone or tablet into

a remote control; and the Bell TV app,which allows customers to watchmore than 100 channels on theirtablets or smartphones on Wi-Fi atno extra charge.

The power of Fibe TVs pull-througheffect supported stronger growthin Bell high-speed Internet subscribers,increasing 2.7% in 2013, and sloweddecline in Home Phone as 80%of new Fibe TV customers chose tobundle all three Bell residentialservices.

On the business side, customers ofall sizes including 96 of Canadastop 100 companies turn to BellBusiness Markets (BBM) for the fullrange of communications services,from connectivity to systemsintegration and managed services tocollaboration tools such as audio,video and web conferencing.

Bells broadband-connected datahosting centres are enabling cloud

computing and other managedservices for enterprise and

government, while in the massmarket, the launch of BusinessFibe TV is now bringing this superiorTV experience to small businessesof all kinds, from restaurants to autodealerships to dentists offices.

Major new contracts for BBMincluded a new fibre communicationnetwork connecting 1,500 branchesfor Desjardins Group, and thewinning bid, in partnership with CGI,to deliver a new integrated e-mailsystem for the federal government.

BBM also expanded the popularBell Business Advantage program tocover all small and medium-sizedbusiness customers, enabling themto take advantage of special Bellpromotional offers to saveon supplies and services.

Bell and Q9 offer business customers access

to 21 secure, broadband-connected hosting

centres in key markets.

21 Data Centres


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14


Expand media leadershipFrom great new Canadian programming to the addition of Astral and

a much stronger presence in Qubec, Bell Medias growth was positive

news for consumers, content creators and investors in 2013.

As the countrys premier multimediacompany, Bell Media is dedicated tobringing the best domestic andinternational programming toCanadians across every mediaplatform conventional TV with CTV,Canadas #1 television network,and CTV Two; 35 specialty channelsincluding TSN and RDS; pay TVservices including The Movie Network,HBO Canada and Super cran; radioin 55 markets across Canada; andmore than 200 innovative digitalonline properties.

In 2013, Bell welcomed theaccomplished team at Montral-basedAstral Media, now integrated intoBell Media to deliver unprecedentednew content choices for Canadianviewers and listeners, especially

in the Qubec marketplace.The acquisition includes AstralOut-of-Home, Canadas leadingoutdoor advertising companywith over 9,500 strategic advertisinglocations in key Qubec, Ontarioand British Columbia markets.

As part of its Astral acquisition,Bell Media committed to invest$246.9 million in new contentdevelopment for French andEnglish-language TV, radio and film,and support for emerging Canadianmusical talent.

Bell Medias homegrown contentalready includes shows likeThe Amazing Race Canada, whichwas the #1 program of summer 2013and the highest-rated debut for anyprogram, domestic or international,

in Canadian history. Overall, CTVsaverage audiences were 56% largerthan its closest conventional TVcompetitor in 2013.

Embracing the concept ofTV Everywhere, Bell Media launchedCTV GO to offer customerson-the-go access to more than3,000 hours of programming fromCTV and CTV Two; TMN GO andHBO Canada GO, the first CanadianTV Everywhere products offeringpremium on-demand programming;and Bravo GO, with live andon-demand access to Bravo dramasand feature films. Bells newbroadcast partnership with theNational Football League alsoincludes the first NFL digital mediarights for CTV GO and TSN GO.

CTVs average primetime audiences

were 56% larger than its closest

conventional TV competitor in 2013.

56%More


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TSN and RDS remain not onlyCanadas broadcast sports leaders butthe top English and French-languagespecialty channels of any kind. WhileBell was disappointed not to acquirenational broadcast rights for theNational Hockey League games in2013, we acquired rights to a numberof hockey properties and continuedto build on our overall sportsleadership throughout the year: RDS secured rights as the

official regional broadcasterof the Canadiens through the2025-26 season, with Bell retainingnaming rights to the Bell Centrethrough 2028. Bell Media signeda similar regional rights agreementwith the Ottawa Senators earlyin 2014, in addition to in-place

regional broadcast partnershipswith the Toronto Maple Leafs andWinnipeg Jets.

RDS produced 24CH, adocumentary series that givesfans of the Montral Canadiensunprecedented access to theiconic NHL club and its players.

Bell Media concluded amulti-platform extension of itsbroadcast partnership withthe National Football Leaguethat includes all Sunday gameson CTV and TSN, all Mondaynight games, the Playoffs andthe Super Bowl.

Bell signed a new multi-yearstrategic partnership with theNational Basketball Associationthat further enhances Bells

position as the officialcommunications partner forbasketball in Canada.

Bell extended its Premier FoundingPartnership with VancouverWhitecaps FC, includingBell branding of all Whitecapsapparel and support for theteams community youth initiativeand TSN is now the teamsofficial broadcaster.

Bell Medias leadership acrossmedia platforms, smoothintegration of the Astral team andstrong execution translated intoexcellent financial results for 2013.Bell Media revenue was $2.6 billion,up 17.1% over the previous year,while EBITDA grew 21.7% to$683 million.

$246.9MIn 2013, Bell committed to invest$246.9M more in new French andEnglish language TV, radio andfilm content.


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16


Invest in broadband networks and servicesThe backbone of our growth services strategy, Bells broadband

networks continued to expand to deliver new communications

choices to consumers and businesses across the country.

Bell has led the development ofCanadas communications infra-structure since 1880, investing morein new network buildouts and R&Dthan any other company. In 2013, Bellcontinued to lead the industry withcapital investments of more than$3 billion, enabling the rapid rollout ofnew fibre supporting our Fibe TV,Internet and business services andour Fourth Generation (4G) LongTerm Evolution (LTE) wireless network,which is driving fast growth insmartphones and data services.

We extended the Fibe TV footprintto 4.3 million households, includingnew markets such as Ottawa, Laval,Hamilton and Barrie, and expandedfurther in the greater Montral,Toronto and Qubec City regions.

Overall, Bells broadband fibrenetwork grew to approximately5.8 million homes and businesslocations with the ongoing deploy-ment of Fibre-to-the-home (FTTH) innew housing developments andmulti-dwelling units (MDUs); expan-sion of Fibre-to-the-node (FTTN) inneighbourhoods throughout Qubecand Ontario, and the introduction ofpair bonding technology to deliverupgraded service to hundreds ofthousands of locations.

We continue to enhance the reachand speed of our world-leading 4GLTE network, expanding coverage ofCanadas largest 4G network to 80%of the population at the end of 2013.We expanded our complementaryhigh-speed packet access plus (HSPA+)

network to more than 98% of thepopulation a level we will rapidlyreach with LTE as we leveragenew 700 MHz wireless spectrumacquired in the recent federalspectrum auction.

Bell has created Canadas largestnational network of data centres,providing Bell Business Marketscustomers with secure ways toprotect critical business applicationsand increase productivity throughco-location, data management,infrastructure as a service (IaaS) andcloud computing. With our strategicinvestment in Q9, Bell customershave access to 21 data hostingcentres in key markets, all linkedwith Bells broadbandfibre IP networks.

Did you know that Bell is

Canadas largest provider of

Wi-Fi services? We service more

than 4,000 Wi-Fi locations,

including at our partners Indigo,

McDonalds and Tim Hortons

4,000+


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Achieve a competitive cost structureCost efficiency is essential to the strategic success of Bell, enabling us to

sustain EBITDA margins and support investment in our networks and services

that will help drive future growth and higher dividends for our shareholders.

Controlling costs and increasingproductivity has become an integralpart of the culture at Bell. In additionto close management of suppliercosts and disciplined spending ontravel and other expenses, Bell issurfacing significant savings throughoperational efficiency and newtechnology.

As more customers chooseself-serve options and manage theiraccounts online or on theirsmartphones, call volumes to ourservice centres have declined by25% since 2011 and reduced our clientoperations costs.

Nearly half of our subscribers withsmartphones now access theiraccounts through their devices, andmobile customers accessed

self serve options 31 million times in2013, up from just 7 million in 2010.With the growing move to paperlessbilling, we continue to reduce ourprinting and mailing costs, and ourimpact on the environment.

We have focused on energy costreductions in numerous ways,including more efficient processesto dispatch field technicians,saving the cost of thousands oftruck rolls. We use GPS and initiativeslike our anti-idling program toensure our fleet vehicles operate asefficiently as possible. And wevesaved on facility energy costs withhighly efficient LEED-certifiedcampus buildings.

Overall cost reductions andproductivity gains have saved Bell

more than $1.5 billion since weimplemented our cost imperativein 2008, savings that have been keyto our ongoing investment inbroadband networks and consistentgrowth in shareholder dividends.

Bell cost savings and productivity gainsover the last 5 years reached $1.5 billion,enabling major strategic investmentsin network and service infrastructure todrive growth and shareholder returns.

$1.5B

Committed toSustainable GrowthAs a responsible Canadiancorporation, Bell builds our

business with a focus onstrong governance and businessethics, sustainable growthand environmental protection.

To learn more, please consultour annual Bell CorporateResponsibility Report in theResponsibility section of BCE.ca.

Bell Sustainability Awards and Recognition:

First and only telecommunicationscompany in Canada to haveobtained ISO 14001 certification

for its environmentalmanagement system.

One of Canadas Top 50 MostResponsible Companies in Macleans Sustainalytics 2013 Ranking.

Canadas first telecomsignatory to the United NationsGlobal Compact (UNGC).

Only Canadian communicationscompany to earn a top spot inthe CDP 2013 Climate Disclosure

Leadership Index, which ranks thelargest 200 companies listed on theTSX according to transparency andenvironmental performance.

LEED certification for newest greenTier 3 data centre, Montral headoffice campus, and Mississaugacampus expansion.


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18


Bell has announced three new Canadian call

centres, in Jonquire and Rouyn-Noranda,Qubec and Orillia, Ontario.

+3 Call Centres


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Improve customer serviceThe service experience defines Bells relationship with our customers for the long

term and were making it better with investments in people, call centres, and new online

and mobile technology reflecting the service options our customers want.

In 2013, Bell made significant stridesin improving the customer serviceexperience across our business withcapital investments of $140 millionin new service tools, training andinfrastructure to better serve theevolving needs of our customers andto enhance our productivity.

Were leveraging our owntechnology to make a difference,offering customers options tomanage the most straightforwardelements of their service experiencehow and when they want to.The result is a significant reductionin inbound calls to our servicerepresentatives and overall servicecosts and an overall rise in customersatisfaction. Similarly, new hardwaretechnology like the Bell wirelessreceiver makes it easier for ourcustomers to move their TVs whenand where they want, while reducinginstallation times for our field

technicians. Call centres remain our key

interaction point with customers,and Bell has announced theopening of three new locations,in Jonquire and Rouyn-Noranda,Qubec and Orillia, Ontario, to

enhance service for consumerswhile boosting local employment.

Customers have embracedself-serve with visits to MyBell.caincreasing by 88% since 2010,and usage of our mobile self-serveapp growing more than fourfold inthe same timeframe. Our agentsconducted 3.2 million online chatsessions with individual customersin 2013, up 100% since 2010.

Self-serve options give customersconvenient access to theiraccounts and reduce the loadon our customer service centres(by 25% in the last 2 years),lowering costs and freeing agentsto manage more complex issues.New online help options includethe personalized Bill Explainer andthe Mobility Bill Interactive Tour,which address common billing,usage and hardware questions.

Improved dispatch processes

support our field service techniciansin getting the job done on timethe first time. We fulfill our SameDay Next Day repair commitmentmore than 91% of the time andhave reduced the time betweenInternet service ordering and

install from eight days to two,and Fibe TV from five days to two.Our technicians now arrive on timefor appointments more than 98%of the time, and earned a customerating higher than 92%.

We continue to innovate with servicedelivery, recently introducing MakingIt Right, a team of specialists whotake on the toughest customer issuereferrals, while the Bell Privilegesprogram supports premiumcustomers by providing special offerlike priority appointments andshipping of replacement equipmentsuch as remotes and chargers.

To ensure wide availability ofin-person service, Bell continues toexpand our network of stores andkiosks across Canada. With theaddition of 43 new Bell stores and40 new The Source locations,we now have more than 1,600Bell-branded and The Source store

locations. In 2013, we also renewedour partnership with major wirelessretailer Glentel, which offers Bellwireless services in more than 360retail outlets such as WIRELESSWAVETbooth wireless, WIRELESS etc... andTarget Mobile.

With improved dispatch and other technology

support, Bell field technicians arrive on time for

appointments 98% of the time.

98%On Time


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20

COMMUNITY INVESTMENT

Bell Lets Talk sets new participation records

Led by high-profile events such as Bell Lets Talk Day and Claras Big Ride, Bell is driving

awareness, acceptance and action in Canadian mental health. The largest ever corporate

commitment to mental health in the country, the award-winning Bell Lets Talk initiative is

transforming the way Canadians think about this pervasive national health challenge.

No Canadian is untouched by mentalillness. At least 1 in 5 of us will dealwith a mental health issue directly atsome point in our lives, and all ofus will encounter the debilitating andoften devastating effects of mentalillness on family, friends, neighboursand colleagues who struggle.The overall impact of on our nationaleconomy surpasses $50 billionannually.

Bell Lets Talk began as a$50-million commitment to addressthe challenge of mental illness inCanada with the execution of 4 keyaction pillars anti-stigma, care andaccess, new research, and workplaceleadership. Thanks to the growingsupport from Canadians onBell Lets Talk Day, Bell fundingfor the national initiative has grownto more than $67.5 million.

Olympic champion Clara Hughesleads the high-profile Bell Lets Talk

campaign to fight the stigma andgrow Bells donations to mentalhealth programs by engagingCanadians directly in the issue.Supported by high-profile namesfrom across the sports andentertainment worlds, many of

whom, like Clara, have struggledwith mental health challenges, theBell Lets Talk team brings the mentalhealth message to every cornerof Canada with the assistance ofa broad range of Canadian mediaand corporate supporters, evenBell competitors, who help promotethe cause.

Bell Lets Talk Day 2014 set newrecords, and with Bell donating

5 cents for every mobile and longdistance call, text message, tweetand Facebook share at no extra costto participants, thats $5,472,585.90more funding to support Canadianmental health.

Now, were taking the conversationfurther. Claras Big Ride for BellLets Talk will see Clara ride her bikemore than 12,000 kilometres aroundCanada, visiting communitiesbig and small in every province and

territory to talk with Canadiansabout mental health where they live.Starting March 14 in Toronto,Claras Big Ride concludes in Ottawaon Canada Day July 1.

Here are some of the ways weexecuted the 4 pillars of Bell LetsTalk in 2013. Established the $1 million Bell True

Patriot Love Fund to support the

special mental health needs ofCanadian military families.

Marked the 25thanniversaryof Kids Help Phone, the nationalphone and online counsellingagency for youth, with a donationof $2.5 million to fund newcommunications technologies.

Partnered with Sunnybrook HealthSciences to create the $1 millionBell Canada Chair in Adolescent

Mood & Anxiety Disorders withprominent youth psychiatristDr. Amy Cheung as inaugural chai

Delivered major new funding toConcordias Applied PsychologyCentre, Brain Canada, MontralsJewish General Hospital andUniversit Laval Foundation foryouth programs, brain researchand frontline training.

Presented the first Bell Lectureon Mental Health and Anti-Stigma

with Queens University whereBell funded the worlds first chairin anti-stigma research.

Funded local and grassrootsmental health initiatives in everyregion with the $1 million annualBell Community Fund, which hasnow supported 150 frontlineorganizations.

Bell Lets Talk 2014

Total Messages 109,451,718 +14%

Tweets 3,016,621 +93%

Ranking in Canada #1

Ranking Worldwide #3

2014 Funding Growth $5.5M +14%

Total Bell Lets Talk Funding $67.5M +9%


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Clara Hughes with three

members of the Bell Lets Talk

ambassador team: Seamus

ORegan, Stefie Shock and

Michel Mpambara.

Celebrated the first anniversaryof federal guidelines for workplacemental health and safety,a national initiative funded byBell that provides organizationswith resources to promote mentalhealth in the workplace. This year,Bell significantly increased ouremployee benefit coverage formental health services.

Following its global recognition withthe international FreemanPhilanthropic Services Award forOutstanding Corporation in 2012,Bell Lets Talk was honoured withthe top award for Excellence inMental Health at Work in 2013by Excellence Canada.


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22

BELL ARCHIVES

Swift and sure emergency responseremains a Bell tradition

As December holiday celebrations were at their height, a massive ice storm paralyzed much of

southern Ontario, spreading into Qubec and Atlantic Canada and leaving hundreds of thousands

of homes without power and streets covered in ice, fallen branches and downed power lines.

For many Bell workers, thechallenges they faced to keep thecommunications links open andsupport emergency workers at theend of 2013 brought back memoriesof January 1998. Then, relentlessfreezing rain blanketed Qubec andeastern Ontario. Alongside otheremergency workers, Bell teamsbraved the biggest storm of thecentury to restore service to millionsof customers cut off by the storm.

While Bells business hastransformed dramatically, ourcommitment to serve our customersand communities will always befundamental to Canadas oldest andlargest communications company.

There are many examples detailedin the Bell Archives. During thedeadly Spanish flu pandemic in 1918,which killed 50,000 Canadians,Bell installers and repairmen oftenwore cheesecloth masks saturated

with formaldehyde when callingon customers.

In the days before antibiotics, theytook their lives in their hands as thatyears Bell annual report noted.Meanwhile, with a quarter of staffunavailable because of illness,Bell employees worked long hours tohandle the massive increase indemand for service while pleadingwith customers to make onlynecessary calls in the emergency.

In another example, Bell workerscame through in 1953 when a tornadoleft a dozen blocks of Sarnia, Ontarioin shambles. The storm blew out50 windows in the new Bell buildingand ripped off massive concretecornices, but Bell operators stayed attheir posts throughout to connectemergency calls.

Our dedication to helpingCanadians in an emergency remains.In the summer of 2013, floods coveredCalgary and much of southernAlberta, forcing thousands of people

from their homes (including Bell LetsTalk spokesperson Clara Hughes).

As our team worked to restorenetwork service, Bell responded withsignificant Red Cross fundingand support for emergency workersincluding the delivery of thousandsof batteries by The Source.

Bell was among the first torespond when a train derailmentand explosion devastatedLac-Mgantic, Qubec in July.In addition to funding for theRed Cross, Bells emergencyresponse trailer carriedemergency supplies to the townand served as the Red Crosscommand post on site.Our technicians worked aroundthe clock to restore networks andcustomer services while deliveringcommunications support toemergency workers and shelters.

Technology and competitionchange, and so does our company.But Bells willingness to answer

the call when an emergencystrikes never will.


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BCE Inc. 2013 Annual Repo

TABLE OF CONTENTSMANAGEMENTS DISCUSSION AND ANALYSIS

1 OVERVIEW

1.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251.2 About BCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271.3 Key Corporate Developments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311.4 Capital Markets Strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321.5 Corporate Governance and Risk Management. . . . . . . . . . . . . . . . . . . . . 34

2 BELLS STRATEGIC IMPERATIVES2.1 Accelerate Wireless. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 372.2 Leverage Wireline Momentum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382.3 Expand Media Leadership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382.4 Invest in Broadband Networks and Services. . . . . . . . . . . . . . . . . . . . . . . . 392.5 Achieve a Competitive Cost Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 402.6 Improve Customer Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

3 PERFORMANCE TARGETS, OUTLOOK,ASSUMPTIONS AND RISKS

3.1 2013 Performance vs. Guidance Targets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413.2 Business Outlook and Assumptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413.3 Principal Business Risks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

4 CONSOLIDATED FINANCIAL ANALYSIS

4.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

4.2 Customer Connections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

454.3 Operating Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 454.4 Operating Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 464.5 EBITDA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 474.6 Severance, Acquisition and Other Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 484.7 Depreciation and Amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 484.8 Finance Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 494.9 Other (Expense) Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 494.10 Income Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504.11 Net Earnings and EPS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504.12 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514.13 Cash Flows. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

5 BUSINESS SEGMENT ANALYSIS

5.1 Bell Wireless . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525.2 Bell Wireline. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

5.3 Bell Media. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

655.4 Bell Aliant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

6 FINANCIAL AND CAPITAL MANAGEMENT

6.1 Net Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 766.2 Outstanding Share Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 766.3 Cash Flows. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 776.4 Post-Employment Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 796.5 Credit Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 796.6 Liquidity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

7 SELECTED ANNUAL AND QUARTERLY INFORMATION

7.1 Annual Financial Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 837.2 Quarterly Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

8 REGULATORY ENVIRONMENT

8.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 878.2 Telecommunications Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 878.3 Broadcasting Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 898.4 Radiocommunication Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 908.5 Bell Canada Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 918.6 Other Key Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

9 BUSINESS RISKS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

10 FINANCIAL MEASURES, ACCOUNTING POLICIESAND CONTROLS

10.1 Our Accounting Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9910.2 Non-GAAP Financial Measures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10310.3 Effectiveness of Internal Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

REPORTS ON INTERNAL CONTROLManagements Report on Internal Control over Financial Reporting. . 10Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . 10

CONSOLIDATED FINANCIAL STATEMENTSManagements Responsibility for Financial Reporting . . . . . . . . . . . . . . . . . . 10Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . 10Consolidated Income Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Consolidated Statements of Comprehensive Income. . . . . . . . . . . . . . . . . . . 1Consolidated Statements of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Consolidated Statements of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . 1Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNote 1 Corporate Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Note 2 Significant Accounting Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Note 3 Segmented Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Note 4 Acquisition of Astral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Note 5 Operating Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Note 6 Severance, Acquisition and Other Costs. . . . . . . . . . . . . . . . . . . . . 12Note 7 Interest Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Note 8 Other (Expense) Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Note 9 Income Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Note 10 Earnings per Share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Note 11 Trade and Other Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Note 12 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Note 13 Property, Plant and Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Note 14 Intangible Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Note 15 Investments in Associates and Joint Ventures. . . . . . . . . . . . . . 13Note 16 Other Non-Current Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Note 17 Goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Note 18 Trade Payables and Other Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 13Note 19 Debt Due within One Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Note 20 Long-Term Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Note 21 Post-Employment Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Note 22 Other Non-Current Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Note 23 Financial and Capital Management . . . . . . . . . . . . . . . . . . . . . . . . . . 14Note 24 Share Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Note 25 Share-Based Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Note 26 Commitments and Contingencies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Note 27 Related Party Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Note 28 Significant Partly-Owned Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . 15

MEASURES USED TO MANAGE OUR BUSINESS . . . . . . . . . . . . . . . . . . . . . 15

BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

EXECUTIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

INVESTOR INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15


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BCE Inc. 2013 Annual Report24

MD&A

In this managements discussion and analysis of financial conditionand results of operations (MD&A), we, us, our, BCEand the companymean, as the context may require, either BCE Inc. or, collectively,BCE Inc., its subsidiaries, joint arrangements and associates. Bellmeans our Bell Wireline, Bell Wireless and Bell Media segmentson an aggregate basis. Bell Aliantmeans, as the context mayrequire, either Bell Aliant Inc. or, collectively, Bell Aliant Inc. and itssubsidiaries and associates.

All amounts in this MD&A are in millions of Canadian dollars, exceptwhere noted. Please refer to Measures Used to Manage our Businesson page 151 for a list of defined measures.

Please refer to BCEs audited consolidated financial statementsfor the year ended December 31, 2013 when reading this MD&A.

In preparing this MD&A, we have taken into account informationavailable to us up to March 6, 2014, the date of this MD&A, unlessotherwise stated.

You will find BCEs audited consolidated financial statements forthe year ended December 31, 2013, BCEs annual information formfor the year ended December 31, 2013 dated March 6, 2014 (BCE2013 AIF) and recent financial reports on BCEs website at BCE.caon SEDAR at sedar.com and on EDGAR at sec.gov.

This MD&A comments on our business operations, performance,financial position and other matters for the two years endedDecember 31, 2013 and 2012.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

BCEs 2013 annual report including this MD&A and, in particular, but

without limitation, section 1.4, Capital Markets Strategy, section 2,Bells Strategic Imperatives, section 3.2, Business Outlook andAssumptions, section5, Business Segment Analysisand section6.6, Liquidity of this MD&Acontain forward-looking statements.These forward-looking statements include, but are not limited to,BCEs 2014 annualized common share dividend and common sharedividend policy, Bell Canadas credit policies, BCEs business outlook,objectives, plans and strategic priorities, the sources of liquiditywe expect to use to meet our anticipated 2014 cash requirements,our 2014 expected post-employment benefit plan funding, andour networks deployment plans. Forward-looking statementsalso include any other statements that do not refer to historicalfacts. 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 wordsassumption, goal, guidance, objective, outlook, project, strategy,targetand other similar expressions or future or conditional verbssuch as aim, anticipate, believe, could, expect, intend, may, plan,seek, should, striveand will. All such forward-looking statementsare made pursuant to the safe harbour provisions of applicableCanadian securities laws and of the United States Private SecuritiesLitigation Reform Act of 1995. Unless otherwise indicated by us,forward-looking statements in BCEs 2013 annual report, includingin this MD&A, describe our expectations as at March 6, 2014 and,accordingly, are subject to change after this date. Except as maybe required by Canadian securities laws, we do not undertake anyobligation 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 subjectto inherent risks and uncertainties and are based on severalassumptions, both general and specific, which give rise to thepossibility that actual results or events could differ materially fromour expectations expressed in, or implied by, such forward-lookingstatements and that our business outlook, objectives, plans andstrategic priorities may not be achieved. As a result, we cannotguarantee that any forward-looking statement will materialize andwe caution you against relying on any of these forward-lookingstatements. Forward-looking statements are presented in BCEs 2013

annual report, including in this MD&A, for the purpose of assisting

investors and others in understanding our objectives, strategicpriorities and business outlook as well as our anticipated operatingenvironment. Readers are cautioned, however, that such informationmay not be appropriate for other purposes.

We have made certain economic, market and operational assump-tions in preparing forward-looking statements contained in BCEs2013 annual report and, in particular, but without limitation, theforward-looking statements contained in the above-mentionedsections of this MD&A. These assumptions include, without limitationthe assumptions described in the various sections of this MD&Aentitled Business Outlook and Assumptions, which sections areincorporated by reference in this cautionary statement. We believethat these assumptions were reasonable at March 6, 2014. If our

assumptions turn out to be inaccurate, our actual results could bematerially different from what we expect.

Important risk factors including, without limitation, competitiveregulatory, economic, financial, operational and technologicalrisks that could cause actual results or events to differ materiallyfrom those expressed in, or implied by, the above-mentionedforward-looking statements and other forward-looking statementsin BCEs 2013 annual report, as well as in this MD&A, include, but arenot limited to, the risks described in section 9, Business Risks, whichsection is incorporated by reference in this cautionary statement.

We caution readers that the risks described in the above-mentionedsection and in other sections of this MD&A are not the only onesthat could affect us. Additional risks and uncertainties not currentlyknown to us or that we currently deem to be immaterial may alsohave a material adverse effect on our financial position, financialperformance, cash flows, business or reputation. Except as otherwiseindicated by us, forward-looking statements do not reflect thepotential impact of any special items or of any dispositionsmonetizations, mergers, acquisitions, other business combinationsor other transactions that may be announced or that may occurafter March 6, 2014. The financial impact of these transactions andspecial items can be complex and depends on the facts particularto each of them. We therefore cannot describe the expected impactin a meaningful way or in the same way we present known risksaffecting our business.

MANAGEMENTS DISCUSSION

AND ANALYSIS


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1 OVERVIEW

1.1 INTRODUCTION

AT A GLANCEBCE is Canadas largest communications company, providingresidential, business and wholesale customers with a wide rangeof solutions for all their communications needs. BCEs shares arepublicly traded on the Toronto Stock Exchange and on the New YorkStock Exchange (TSX, NYSE: BCE).

In 2013 and 2012, we reported the results of our operations in foursegments: Bell Wireline, Bell Wireless, Bell Media and Bell Aliant.

Our Bell Wireline segment provides local telephone, long distance,data, including Internet access and television (TV), as well asother communications services and products to Bells residential,small and medium-sized business and large enterprise customers,primarily in the urban areas of Ontario and Qubec. In addition, this

segment includes our wholesale business, which buys and sellslocal telephone, long distance, data and other services from or toresellers and other carriers.

Our Bell Wireless segment provides wireless voice and datacommunication products and services to Bells residential, smalland medium-sized business and large enterprise customersacross Canada.

Our Bell Media segment provides conventional, specialty and paTV, digital media, and radio broadcasting services to customeracross Canada and out-of-home (OOH) advertising services. OJuly 5, 2013, BCE acquired 100% of the issued and outstanding shareof Astral Media Inc. (Astral). The results of Astral are included in ouBell Media segment from the date of acquisition.

Our Bell Aliant segment provides local telephone, long distancInternet, data, TV, wireless, home security and value-added businessolutions to residential and business customers in the Atlantprovinces and in rural and regional areas of Ontario and QubeBell Aliant is a public company in which we own a 44.1% interest, witthe remaining 55.9% publicly held. BCE controls Bell Aliant througits right to appoint a majority of the board of directors of Bell Alian

BCES BUSINESS SEGMENTS

BCE is Canadaslargestcommunicationscompany

We also hold investments in a number of other assets, including:

a 28% indirect equity interest in Maple Leaf Sports & Entertainment Ltd. (MLSE)

a 35.3% indirect equity interest in Q9 Networks Inc. (Q9)

a 18.4% indirect equity interest in entities that operate the Montral Canadiens Hockey Club and the Bell Centre in Montral

a 15% equity interest in the Globe and Mail

1

BCE

BELLWIRELESS

BELLMEDIA

BELLWIRELINE

BELLALIANT


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1OVERVIEW

MD&A

BCE 2013

OPERATING REVENUES

$20,400MILLION

BCE 2013

EBITDA(1)

$8,089MILLION

BCE 2013

NET EARNINGS

$2,388MILLION

BCECustomerConnections

BCE 2013 2012 CHANGE

Wireless Subscribers 7,925,032 7,824,890 1.3%

Postpaid 6,798,093 6,541,827 3.9%

Internet Subscribers 3,136,636 3,045,235 3.0%

TV (Satellite and Internet ProtocolTelevision) (IPTV)) Subscribers 2,489,248 2,312,065 7.7%

Total Growth Services 13,550,916 13,182,190 2.8%

Wireline Network AccessService (NAS) lines 7,595,569 8,136,309 (6.6%)

Total Services 21,146,485 21,318,499 (0.8%)

OUR GOALOur goal is to be recognized by customers as Canadas leadingcommunications company. Our primary business objectives areto maximize subscribers, revenues, operating profit, free cashflow (1)and return on invested capital by further enhancing ourposition as the foremost provider in Canada of comprehensivecommunications services to residential and business customers. Weseek to take advantage of opportunities to leverage our networks,

infrastructure, sales channels, and brand and marketing resourcesacross our various lines of business to create value for both ourcustomers and other stakeholders.

Our strategy is centred on our disciplined focus and execution ofsix strategic imperatives. The six strategic imperatives that underlieBells business plan are:

1 Accelerate Wireless

2 Leverage Wireline Momentum

3 Expand Media Leadership

4 Invest in Broadband Networks and Services

5 Achieve a Competitive Cost Structure

6 Improve Customer Service

(1) EBITDA and free cash flow are non-GAAP financial measures and do not have any standardized meaning under International Financial Reporting Standards (IFRS). Therefore,they are unlikely to be comparable to similar measures presented by other issuers. See section 10.2 Non-GAAP Financial Measures EBITDAand Free Cash Flowin this MD&Afor more details, including, for free cash flow, a reconciliation to the most comparable IFRS financial measure.


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1.2 ABOUT BCEWe report the results of our operations in four segments: Bell Wireless, Bell Wireline, Bell Media and Bell Aliant. Bell, which encompasseour core operations, is comprised of our Bell Wireless, Bell Wireline and Bell Media segments. We describe our product lines, by segmenbelow, to provide further insight into our operations.

OUR PRODUCTS AND SERVICES

Bell Wireless

SEGMENT DESCRIPTION

Provides integrated digital wireless voice and data communicationsproducts and services to residential and business customers across Canada

Includes the results of operations of Bell Mobility Inc. (Bell Mobility)and wireless-related product sales from The Source (Bell) Electronics Inc.(The Source)

OUR BRANDS INCLUDE

OUR NETWORKS AND REACHWe have deployed and operate a number of leading nationwidewireless broadband networks compatible with global standards thatdeliver high-quality and reliable voice and high-speed data servicesto virtually all of the Canadian population.

Fourth Generation (4G) Long-term Evolution (LTE) network launchedin September 2011

Offers mobile Internet data access speeds as fast as 75 mega-bits per second (Mbps) in most areas (typical speeds of 12 to25 Mbps) and up to 150 Mbps in others (typical speeds of 18 to40 Mbps)

Covers 80% of the Canadian population coast-to-coast atDecember 31, 2013

Roams on the High-speed packet access plus (HSPA+) networkoutside LTE urban coverage area

HSPA+ network launched in November 2009

Offers high-speed mobile access of up to 21 Mbps in most areas(typical speeds of 3.5-8 Mbps), and as high as 42 Mbps in areaswith dual cell capability when using compatible devices (typicalspeeds of 7 to 14 Mbps)

Covered over 98% of the Canadian population coast-to-coastat December 31, 2013

Supports international roaming in more than 200 countries

National 3G code division multiple access (CDMA), evolution data

optimized network, which we plan to continue operating for theforeseeable future

Largest wireless fidelity (Wi-Fi) network across Canada

Over 4,000 public Wi-Fi hotspots at participating McDonalds,Tim Hortons and Chapters/Indigo retail outlets acrossCanada, in addition to thousands of private Wi-Fi networksmanaged through our Bell Business Markets unit at enterprisecustomer locations

Approximately 1,600 Bell-branded stores and The Source locationsacross Canada

OUR PRODUCTS AND SERVICES Voice and data plans,available on either postpaid

or prepaid options

Extensive selection of 4G LTE-capable devices,includingleading smartphones as well as the iPad and iPad mini

Data:E-mail, web browsing, social networking, text messagingpicture and video messaging and call features

Mobile TV: over 40 live and on-demand channels on smart-phones and tablets

Entertainment:games, ringtones, wallpapers, ringback tones,music downloads and video streaming

Mobile Internet:Turbo Stick, Turbo Hub and MiFi

Mobile commerce: secure debit and credit purchases usingBell Mobility smartphones

Mobile business services: sales force automation, push-to-talkfield service automation, resource and tracking tools

Roaming services with other wireless service providersin more than 200 countries worldwide

Machine-to-machine (M2M) applications, including connectedcar and usage-based insurance vehicle tracking


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1OVERVIEW

MD&A

Bell WirelineSEGMENT DESCRIPTION

Provides local telephone, long distance, data (including TV, Internet accessand information and communications technology (ICT) solutions) and othercommunications services to residential and business customers primarilyin the urban areas of Ontario and Qubec. We also offer competitive localexchange carrier (CLEC) services in Alberta and British Columbia

Includes the results of our wholesale business, which provides local telephone,

long distance, data and other services to resellers and other carriers, andthe Wireline operations of NorthwesTel Inc. (NorthwesTel), which providestelecommunications services in Canadas Northern Territories

Includes wireline-related product sales from our wholly-owned subsidiary,national consumer electronics retailer The Source

OUR BRANDS INCLUDE

OUR NETWORKS AND REACH

Extensive local access network primarily in the urban areas ofOntario and Qubec, as well as in Canadas Northern Territories

Broadband fibre network, consisting of fibre-to-the-node(FTTN), fibre-to-the-home (FTTH) and fibre-to-the-building(FTTB), covering 5.8 million locations in Ontario and Qubec

IPTV service footprint encompassing 4.3 million householdsacross Ontario and Qubec at December 31, 2013

Largest Internet protocol (IP) multi-protocol label switchingfootprint of any Canadian provider, enabling us to offerbusiness customers a virtual private network (VPN) service forIP traffic and to optimize bandwidth for real-time voice and TV

Access to the largest data centre footprint in Canada with21 locations in 4 provinces, enabling us to offer data centreco-location and hosted services to business customersacross Canada

Approximately 1,600 Bell-branded stores and The Sourcelocations across Canada


RESIDENTIAL

Bell TV: Fibe TV (our IPTV service) and direct-to-home (DTH)Satellite TV, providing extensive content options and innovativefeatures such as wireless receiver, Whole Home personal videorecorder (PVR), on-demand programming, and a remote control

application (app) Bell Internet: High-speed Internet access offering speeds up

to 50 Mbps with FTTN or 175 Mbps with FTTH, a wide range ofusage options, a comprehensive suite of security solutions,e-mail, Wi-Fi home network, and mobile Internet

Bell Home Phone: Local telephone service with long distanceand advanced calling features

Bell Bundles: three and four product bundles of serviceswith monthly discounts

BUSINESS

IP-based services: IP VPN, Ethernet, business Internetand Voice over Internet protocol (VoIP)

ICT solutions: Hosted and cloud services, managed solutions,professional services and infrastructure services that supportand complement our data connectivity services

Voice:local and long distance and unified communicationsservices, including audio and video conferencing, webcasting,and web conferencing business terminal equipment


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Bell MediaSEGMENT DESCRIPTION

Canadas premier multimedia company with leading assets in TV,radio and digital media

On July 5, 2013, we completed the acquisition of Astral adding eight specialtyand pay TV services, 77 radio stations and digital media properties across Canada,as well as OOH advertising platforms, to Bell Medias portfolio of assets

Revenues are derived primarily from advertising and subscriber fees

Conventional TV revenue is derived from advertising

Specialty TV revenue is generated from subscription fees and advertising

Pay TV revenue is received from subscription fees

Radio revenue is generated from advertising aired over our stations

OOH revenues are generated from advertising

OUR BRANDS INCLUDE

OUR ASSETS AND REACH

TV

30 conventional TV stations, including CTV Inc. (CTV), Canadasleading TV network based on viewership

35 specialty TV channels, including TSN, Canadas leadingspecialty sports channel and RDS, Canadas leading French-language specialty sports channel

Four pay TV services, including The Movie Network andSuper cran

RADIO

107 licenced radio stations in 55 markets across Canada

OOH ADVERTISING

Network of more than 9,500 advertising faces in Qubec,Ontario and British Columbia

DIGITAL MEDIA

More than 200 websites, including TheLoop.ca

SPORTS BROADCAST RIGHTS

Bell Media has secured long-term media rights to many of thekey sports properties that are most important to Canadians,including being the official Canadian broadcaster of theSuper Bowl, Grey Cup, IIHF World Junior Championship andFIFA Womens World Cup Canada 2015. Bell Medias slate oflive sports coverage also includes the Toronto Maple Leafs,Montral Canadiens, Winnipeg Jets and Ottawa Senatorsgames, NFL, NBA, MLS, Season of Champions Curling, UEFAEuro 2016, MLB, Barclays Premier League, golfs major cham-

pionships, NASCAR Sprint Cup, Formula 1, Grand Slam Tennisand NCAA March Madness

OTHER ASSETS

We also have a 50% interest in Dome Productions Partnership,one of North Americas leading providers of sports and otherevent production and broadcast facilities


Varied and extensive array of TV programming to broadcast

distributors across Canada Advertisingon our TV, radio, OOH, and digital media properties

to both local and national advertisers across a wide range ofindustry sectors

Mobile TV service with live and on-demand access to contentfrom our conventional TV networks, CTV and CTV Two, as wellas real-time access to BNN, TSN, RDS, MTV and other brands innews, sports and entertainment. This mobile content is offeredon commercial terms to all Canadian wireless providers

TV Everywhere services,including TMN GO and CTV GO, whichprovide live and on-demand content delivered over mobile anWi-Fi networks to smartphones, tablets and computers


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1OVERVIEW

MD&A

Bell AliantSEGMENT DESCRIPTION

One of the largest regional telecommunications service providersin North America

Provides a complete range of innovative communications, information andentertainment services, including voice, Internet, data, TV, wireless, home security,and value-added business solutions to residential and business customers inCanadas Atlantic Provinces, as well as in rural and regional areas of Ontario

and Qubec

OUR BRANDS INCLUDE

OUR NETWORKS AND REACH

Reaching over 5 million Canadians in six provinces (Nova Scotia,New Brunswick, Newfoundland and Labrador, Prince EdwardIsland, Ontario and Qubec)

Extensive local access network in Atlantic Canada, as well asin certain areas of Ontario and Qubec not serviced by Bell

Extensive broadband fibre infrastructure, consisting primarilyof a FTTH network covering more than 806,000 locations


Residential service bundles that have a combination of Internetservice (FibreOP or Digital subscriber line), TV (FibreOP TV,Bell Aliant TV, or Bell Satellite TV), home phone, local features,long distance plans and cellular service (over digital wirelessnetworks in certain territories in Qubec and Ontario or

Bell Mobility)

In business markets, we provide combined service offeringsin the form of business bundles and customized solutions

Other BCE InvestmentsBCE also holds investments in a number of other assets, including:

MLSE: 28% indirect equity interest

Q9: 35.3% indirect equity interest

Montral Canadiens Hockey Club: 18.4% indirect equity interest

The Globe and Mail: 15% equity interest

OUR PEOPLE

EMPLOYEES

We are a team of 55,830 employees, dedicated to driving shareholder return and improving customer service.

BCE

EMPLOYEES

BCE

2012 EMPLOYEES

BCE

2013 EMPLOYEES

2012 2013

55,83055,500

49,545

6,285

48,800

6,700

65%

10%

13%

12%

63%

13%

13%

11%

Bell

Bell Aliant

Bell Wireline

Bell Wireless

Bell Media

Bell Aliant

Bell Wireline

Bell Wireless

Bell Media

Bell Aliant


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The total number of BCE employees at the end of 2013 increasedby 330 employees compared to 2012, due primarily to the acqui-sition of Astral. This increase was offset partly by a decreasedworkforce across our Bell Wireline, Bell Wireless and Bell Aliantsegments attributable to normal attrition, retirements andproductivity improvements.

Approximately 44% of total BCE employees are represented bylabour unions.

BELL CODE OF BUSINESS CONDUCT

The ethical business conduct of our people is core to the integritwith which we operate our business. The Bell Code of BusinesConduct sets out specific expectations and accountabilitieproviding employees with practical guidelines to conduct businesin an ethical manner. Our commitment to the Code of Conduct renewed by employees each year in an ongoing effort to ensurthat all employees are aware of and adhere to Bells standardof conduct.

1.3 KEY CORPORATE DEVELOPMENTS

ACQUISITION OF ASTRALOn July 5, 2013, BCE acquired 100% of the issued and outstandingshares of Astral for a cash consideration of $2,876 million and therepayment of $397 million of debt. Astral is a media company thatoperates specialty and pay TV channels, radio stations and digitalmedia properties across Canada, and provides OOH advertisingservices. BCE acquired Astral to enhance our competitive position inFrench-language broadcasting in Qubec, control content costs, and

increase opportunities for cross-platform innovation and advertisingpackages spanning digital, TV, radio and OOH advertising.

In order to approve the transaction, the Competition Bureauand the Canadian Radio-television and TelecommunicationsCommission (CRTC) required the divestiture by BCE of eleven AstralTV services and ten Astral and Bell Media English-language radiostations. BCE retained eight Astral TV services: the French-languageSupercran, CinPop, Canal Vie, Canal D, VRAK TV and Z Tl, andEnglish-language services The Movie Network, which includes HBOCanada, and TMN Encore. BCE also retained 77 Astral radio stationsand Astrals national OOH advertising business. As a result of thetransaction, Bell Media now owns 30 local TV stations, 39 specialtyand pay channels, and 107 radio stations, excluding the TV assets

and radio stations to be divested.

In January 2014, Bell completed the sale of Astrals share of six TVservices (the bilingual Teletoon/Tltoon service, English-languageTeletoon Retro and Cartoon Network (Canada) and French-languageTltoon Rtro, Historia and Sries+) and two radio stations inOttawa (CKQB-FM and CJOT-FM) to Corus Entertainment Inc.(Corus) as part of the divestiture process required by the CRTCand the Competition Bureau. Bell also completed the sale of twoWinnipeg radio stations (CHIQ-FM and CFQX-FM) and one Calgaryradio station (CKCE-FM) to Jim Pattison Broadcast Group (Pattison).Together, these sales generated total proceeds of $427.2 million. Inaddition, as a result of distinct auction processes, Bell has announced

the following proposed transactions to sell each of the remaininfive Astral TV assets and five radio stations required to be divesteby the CRTC and, as applicable, the Competition Bureau:

On August 26, 2013, Bell reached an agreement withNewcap Inc. for the sale of two Toronto radio stations(CHBM-FM and CFXJ-FM) and three Vancouver radio stations(CKZZ-FM, CHHR-FM and CISL-AM)

On November 28, 2013, Bell reached an agreement withDHX Media Ltd. for the sale of the following TV services: Family(including Disney Junior English), Disney XD and Disney JuniorFrench services

On December 3, 2013, Bell reached an agreement with VMedia Group for the sale of the two remaining TV services,MusiquePlus and MusiMax

Completion of these divestitures is subject to closing conditiontermination rights and other risks and uncertainties includinwithout limitation, approval by the CRTC. Accordingly, there cabe no assurance that the proposed sale transactions will occuor that they will occur on the terms and conditions current

contemplated, and such proposed sale transactions could bmodified, restructured or terminated. As required by the CRTand the Competition Bureau, the management and control of thassets to be sold were transferred to an independent trustee uncompletion of their respective divestiture processes.

As part of its approval of the Astral acquisition, the CRTC ordereBCE to spend $246.9 million in new benefits for French- anEnglish-language TV, radio and film content development, support femerging Canadian musical talent, training and professional develoment for Canadian media, and new consumer participation initiative

Astral revenues of $412 million and net earnings of $77 million arincluded in BCEs 2013 income statement from the date of acquisitio

CRTC WIRELESS CODE OF CONDUCTOn June 3, 2013, the CRTC issued a decision establishing a mandatorycode of conduct for all providers of retail mobile wireless voice anddata services in Canada (the Wireless Code). The Wireless Codeapplies to all wireless services provided to individual and smallbusiness consumers (e.g. businesses that on average spend lessthan $2,500 per month on telecom services) in all provinces andterritories. Among other things, the Wireless Code stipulates that

wireless service providers may not charge an early cancellatiofee once a customer has been under contract for 24 monthThe Wireless Code establishes regulations related to unlockinmobile phones and setting default caps for data roaming chargeand data overage charges. For more details on the Wireless Codrefer to section 8.2, Telecommunications Act-Adoption of a NationWireless Services Consumer Code.


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1OVERVIEW

MD&A

ACQUISITION OF 700 MEGAHERTZ (MHz) WIRELESS SPECTRUMThe 700 MHz wireless spectrum auction began on January 14, 2014and provisional spectrum licence winners were announced byIndustry Canada on February 19, 2014. The highly competitiveauction marked the first time 700 MHz spectrum had been madeavailable to Canadian wireless carriers. This band of spectrum ishighly desirable due to its ability to penetrate into buildings andpropagate over long distances. Bell secured the right to acquiresignificant 700 MHz spectrum assets in every provincial andterritorial market. Bell will acquire 31 licences for $566 million for480M Megahertz Population (MHz-POP) of nationwide 700 MHzspectrum, bringing Bells total holdings across various spectrum

bands to more than 4,200M MHz-POP nationally. Bell expects to fundits spectrum licensing payments to the federal government fromavailable sources of cash. These licences are expected to enablerapid expansion of advanced 4G LTE broadband mobile servicesto rural communities, small towns and Canadas North, while alsoenhancing coverage in urban and suburban areas. Our 4G LTEbuildout plan is expected to bring advanced mobile broadbandservices to more than 98% of Canadas population. We plan to beginoperationalizing the spectrum for the benefit of our customers assoon as it is made available to us later this year.

1.4 CAPITAL MARKETS STRATEGYWe seek to deliver sustainable shareholder returns through consistent dividend growth. That objective is underpinned by continued growthin free cash flow performance, a healthy level of ongoing capital investment in the business, a strong balance sheet and an investmentgrade credit profile.

DIVIDEND GROWTH AND PAYOUT POLICY

DIVIDEND GROWTH

+69%SINCE 2008

2014 DIVIDEND INCREASE

+6.0%TO $2.47 PER COMMON SHARE

DIVIDEND PAYOUT POLICY

65%-75%OF FREE CASH FLOW

On February 6, 2014, we announced a 6.0%, or 14 cent, increase inthe annualized dividend payable on BCEs common shares for 2014to $2.47 per share from $2.33 per share in 2013, starting with thequarterly dividend payable on April 15, 2014. With this increase for2014, BCEs annual common share dividend has increased 69% sincethe fourth quarter of 2008.

The dividend increase for 2014 is consistent with BCEs commonshare dividend policy of a target payout between 65% and 75% offree cash flow. We intend to grow BCEs common share dividend

if we achieve free cash flow growth. BCEs dividend policy andthe declaration of dividends are subject to the discretion of BCEsboard of directors (Board).

We have a strong alignment of interest between shareholders andour managements equity-based long-term incentive compensationplan. The vesting of performance share units depends on therealization of our dividend growth policy, while stock options reflectour commitment to increase the share price for our shareholdersSimply put, as we grow our free cash flow and common dividendwe create value for our shareholders and management alike.

BEST PRACTICESADOPTED BY

BCE

STRINGENT SHARE OWNERSHIP REQUIREMENTS

EMPHASIS ON PAY-AT-RISK FOR EXECUTIVE COMPENSATION

DOUBLE TRIGGER CHANGE IN CONTROL POLICY

ANTI-HEDGING POLICY ON SHARE OWNERSHIP AND INCENTIVE COMPENSATION

CLAWBACK PROVISION FOR CEO AND EVP (AS OF 2014) COMPENSATION

AND STOCK OPTION PLAN

CAPS ON ANNUAL BONUS PAYOUTS, PERFORMANCE SHARE UNIT PAYOUTS

AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN PAYMENTS

VESTING CRITERIA FOR PERFORMANCE SHARE UNITS FULLY ALIGNED

TO SHAREHOLDERS INTERESTS

ANNUAL SAY ON PAY VOTE


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(1) Based on BCE common share price on the Toronto Stock Exchange and assumes the reinvestment of dividends.

(2) With approximately 95% coverage of the Canadian equities market, the S&P/TSX Composite Index is the primary gauge against which to measure total shareholder returnfor Canadian-based, Toronto Stock Exchange-listed companies.

USE OF EXCESS CASHOur dividend payout policy allows BCE to retain a high level ofexcess cash, providing considerable overall financial flexibility.

Bell has deployed excess cash in a balanced manner in the lastfive years:

$2.75 billion of voluntary contributions to Bells defined benefit(DB) pension plan, which contributed to an improvement in thefunded position of t

Documents

BCE 2013 Annual Report