BCE (BCE) 29th Annual Scotiabank TMT Conference summary

Federal government contract and AI initiatives

• Announced a significant contract with the federal government, supporting national infrastructure goals and leveraging AI-powered solutions, data centers, and cybersecurity capabilities.

• The contract aligns with government mandates and is expected to drive economic benefits and infrastructure development.

• AI strategy focuses on full-stack solutions, partnerships with hyperscalers, and making advanced technology accessible to clients.

• Partnerships with Cohere and hyperscalers are central, but the company does not develop large language models directly.

• Contract execution involves a mix of in-house delivery and outsourcing, depending on value and expertise.

Capital allocation, leverage, and asset strategy

• No immediate change to CapEx plans; maintaining a 3.5x net leverage target by end of 2027.

• Asset sales totaling CAD 7 billion are underway, with about CAD 1 billion remaining to meet deleveraging goals.

• Ongoing review of asset ownership to maximize free cash flow and shareholder value, considering redeployment into higher-return areas like fiber and AI infrastructure.

• Satellite business serves rural customers; future options include migration to alternative technologies or potential sale.

Wireless and fiber market dynamics

• Wireless subscriber growth is normalizing, with competitive intensity fluctuating seasonally but remaining manageable.

• Focus is on bundled services, fiber-driven value, and direct-to-consumer content to drive long-term value and reduce churn.

• ARPU growth is now expected to return in early 2027, with current contracts showing higher recurring revenue.

• Net adds are less critical than free cash flow growth, which is the primary KPI for management and compensation.