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TABLE OF CONTENTS
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 under
the Securities Exchange Act of 1934
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For the month of: March 2006
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Commission File Number: 1-8481 |
BCE Inc.
(Translation of Registrants name into English)
1000, rue de La Gauchetière Ouest, Bureau 3700, Montréal, Québec H3B 4Y7, (514) 870-8777
(Address of principal executive offices)
Indicate
by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Indicate by check mark whether the Registrant by furnishing the information contained in this Form
is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.
If Yes is marked, indicate below the file number assigned to the Registrant in connection with
Rule 12g3-2(b): 82- .
Notwithstanding any reference to BCEs Web site on the World Wide Web in the documents attached
hereto, the information contained in BCEs site or any other site on the World Wide Web referred to
in BCEs site is not a part of this Form 6-K and, therefore, is not filed with the Securities and
Exchange Commission.
BCE
BUILDING
THE NEW BELL
BELL CANADA ENTERPRISES
2006 BUSINESS UPDATE
The telecommunications industry is in the midst of a transformation. New
technologies, new competitors, new challenges and new opportunities
arise at an ever-increasing
pace. As a leader of this transformation, Bell has been executing against a consistent strategic
plan to remake the company into a new, better Bell, to create significant value for our
shareholders and to win in the marketplace. While this plan will take time to complete, 2005 was a
year in which the company make meaningful and measurable progress.
LETTERS TO SHAREHOLDERS
p.2
section
i.
WE ARE RETHINKING HOW WE DO BUSINESS
A Conversation with George Cope & Stephen Wetmore
p.12
section
ii.
THIS IS A STRATEGIC FIGHT
Progress
Against Our Three Pillars
p.17
section iii.
PERFECTING OUR CUSTOMER SERVICE
Continuous
Improvement Is the Key to a Competitive Advantage
p.20
section iv.
A NEW CULTURE UNITES AND ENERGIZES OUR CORE
Stories of Transforming Bell
p.22
section v.
WINNING EVERY DAY
Major Accomplishments of 2005
p.26
p.2
LETTERS TO SHAREHOLDERS
Dear Fellow Shareholders,
When I became chair of BCE four years ago, rapid indeed revolutionary changes in our industry
were already underway, including the unpredictable impact of new products and services, an
onslaught of new competition and evolving and increasing customer expectations regarding
connectivity. The decision was made at that time to embark on a course of business transformation
that would position the company to not only survive but to prevail in this new marketplace.
Over the last four years we have cleaned up our balance sheet, reorganized business units and faced
head-on the loss of traditional sources of revenue by rapidly growing the size of our Next
Generation Services business. BCE has now established a platform from which a new type of
communications company is being built. This change has not been easy for the company, its
shareholders or its people. But only by putting the recent past into perspective can understanding
of our current plans be reasonably achieved.
In the span of a few short years, the telecommunications industry was rocked by two transformative
technological changes. The first was the introduction and then rapid adoption of wireless
technology that offered the first real alternative to old-fashioned, hundred-year-old
circuit-switched landline telephone service. The second and more far-reaching has been the
advent of Internet Protocol technology and the accompanying revolution in products and services
which has led to the resulting competitive landscape.
BCE has embraced these changes. With the introduction of EVDO wireless in 2005, we are leading the
way in 3G wireless. In IP, the vast majority of our core traffic now
runs on Internet-based systems. The challenges now for BCE are not so much for us to adopt changing
technologies, but to adapt ourselves to take advantage of the new growth industries these changes
have brought about.
In the near term, perhaps just as important as the changes in technology are the steps we have
taken to unlock value for shareholders and to focus Bell on its core business of
telecommunications. This concentration began with the decision in 2002 to exit from Teleglobe and
continued in recent years with the sale of Emergis, the purchase of
360 networks and the build-out
of SuperNet, giving the province of Alberta probably the most modern telecommunications system in
the world. In 2005, we exited our equity position in CGI and sold the majority of our stake in Bell
Globemedia. In early 2006 we announced plans to recapitalize and undertake a public offering of our
satellite company Telesat and to create a consolidated income trust comprised of our low density
and regional phone lines. The result of these activities, when taken together, is a BCE with a much
higher degree of concentration on its core business.
Challenges remain. The ever-changing competitive landscape will always present a fresh set of
hurdles that must be cleared. Among these challenges is a regulatory
environment that has not fully
adapted to the changing reality of telecommunications and the subsequent redefining of competition.
The ongoing federal government Telecom Policy Review, the results of which are scheduled to be
announced this spring, is expected to address this important issue.
BUILDING THE NEW BELL 2006
BUSINESS UPDATE
LETTERS
TO SHAREHOLDERS p.3
The question facing BCE today is not which way to go, but how fast we are going to get there.
The Board of Directors fully supports the management of BCE for its visionary and determined
leadership. In fact, if one compares BCEs track record against its true peer group U.S. RBOCs
and overseas carriers like British, French or Deutsche Telecom Bell Canada is well out in front
of the rest of the industry.
Another area in which BCE leads is that of Corporate Responsibility, which was demonstrated once
again in 2005 by the ratings of GovernanceMetrics International. Our vision is not only one of
economic growth for BCE, but also to build stronger communities, preserve our natural environment
and contribute to the overall well-being of the nation.
Bell was built on unmatched reliability and dedicated customer service. This company made
significant progress on both fronts in 2005, as part of its continuing transformation to a new
telecommunications age. The only certain reward for all that is even more hard work in 2006. But
the foundation has now been laid that will enable us to move forward even more rapidly in 2006. The
ultimate reward for our customers, our employees and our shareholders, will be Bells unquestioned
leadership, not only in Canada, but in the industry worldwide.
Richard J. Currie, O.C.
Chair of the Board
BCE Inc.
p.4
Dear Fellow Shareholders,
Each week, I receive many e-mails from the men and women of Bell. As you can imagine, the topics
vary across a range of issues. Some celebrate a success. Others raise questions, offer suggestions
or raise concerns about a new development in the company.
Last October, I received one that I will not forget. It came from one of our managers reporting on
an incident where we had let one of our customers down a small failure that resulted from too
many hand-offs in a complex process. But instead of bureaucratically pointing to the consequences
of complexity, our manager was writing to take personal accountability, even though the service
issue was easily rectified and was certainly not his fault in any normal meaning of the word.
This is my failure, he wrote, I have failed our customer.
I know it may seem unusual to highlight a service mishap in a letter to stakeholders. But that
e-mail struck a chord with me because it spoke to the clarity of accountability. It was about
taking responsibility not for the completion of a task but for the success of an outcome. It was
about taking what we do every day, personally. It was about recognizing that customers are not the
responsibility of an organization, they are our personal responsibility.
That spirit that quality of character is the foundation underlying all our efforts to build a
new, stronger Bell for the future. And that spirit is spreading step-by-step, month-by-month
across our organization. And that spirit is powerful.
2006 Executing to win
Every day we are building a new Bell. A Bell focused on its core business and capable of delivering
sustained profitable growth. Every day were working to make
service a market differentiator and
were reshaping the cost structure of this business so we can deliver new services profitably.
And every day, we continue building the three pillars of our strategy: Customer Experience,
Bandwidth and Next Generation Services. Taken together, these pillars will deliver simplicity to
our customers and durable value creation for our shareholders.
MIGHAEL SABIA President and
Chief Executive Officer
LETTERS TO SHAREHOLDERS p.5
TIMELINE OF A TRANSFORMED BELL
Entering phase two. Building a new Bell wont happen overnight. The plan is constructed in three distinct phases,
with 2006-2007 marking the mid-point in our strategy.
Customer Experience Executing to make Bell simpler
We have a clear, simple goal for customer experience: to lead the industry in customer loyalty and make the Bell Customer Experience
a competitive advantage.
Our customers have told us what they want from Bell. First, they want to feel recognized and
valued. And they want to have confidence that we can resolve any issues they might have, simply.
So in 2005 we introduced Ordermax, a tool that will allow all of our 9,000 customer service
representatives in call centres to see every service that each customer has, be it local access,
wireless, Sympatico Internet or ExpressVu television. And we developed a multi-product service team
composed of our top representatives to answer questions about all of our different services. So
that customers need to call in only once.
Thats crucially important as the number of households choosing multiple Bell services keeps
growing. Because the more products a customer buys from Bell and the better we serve them, the more
loyal they are to Bell. About 60 percent of our residential customers now get two or more products
or services from Bell, and more than 22 percent buy three or more.
We also introduced One Bill, which makes it easier for Bell customers to pay for the services they
choose to use. The idea is as simple as its name: One Bill for multiple transactions, easily
payable online. 3.5 million Bell customers get One Bill today. By the end of 2006, virtually all
multi-product households will get One Bill.
Our customers also told us that we need to be knowledgeable and to help them make their use of Bell
products seamless and simple. Here too we made changes. Im particularly proud of the simplicity we
now deliver to our customers online via a completely revamped www.bell.ca, launched late last year.
The new portal makes it much easier to add services, pay bills and review accounts. We also
introduced e-communications where we explain technical issues to our customers in a timely and
helpful way online.
And finally, our customers told us that they expect us to be reliable, to follow up on the
commitments we make to them. And to do so consistently. We made significant progress in this area
as well. Reducing missed appointments by one third by year-end, as our people started taking
greater personal accountability. But also by rethinking how we go about our business. Small things
like changing the way we schedule our people. Having assigners start work four hours earlier so
that the preparatory work they do gets completed in time for the first truck roll of the day. So
that technicians are not waiting around for instructions and losing valuable time they
could be spending with customers.
All that being said, last year was clearly not without its customer service challenges. But, by
tackling countless processes like the scheduling issue, by years end we raised key service
metrics, including first call resolution, to a higher level than they were at the start of the
year. And that pays two big dividends: better service because we get it right the first time and
lower costs because we eliminate waste and duplication.
p.6
By looking at processes from end to end, we are discovering that we are over-specialized in many
areas. Too many hand-offs and checkers in between processes that should be standardized and
seamless. Resulting in countless opportunities to reduce cycle times, to simplify how we do things
and to take costs out.
So well continue to rethink our core business processes. But well also make better use of our
scale, uniting across business units to lower our purchasing costs.
Last year our cost-reduction program, Galileo, delivered $524 million in recurring savings, earned
through hard work and hard choices. Thats just the start. To meet the cost structure our
marketplace demands, we will accelerate Galileo over the next two years. Including our progress in
2005, we intend to reduce costs between $1.2 and $1.4 billion by the end of this year, and
anticipate reaching $2 billion in cumulative run-rate savings by the end of 2007.
Bandwidth Executing to make technology simpler
Over the
past two years, we have been working to shift Bell to Internet
Protocol (IP)
undoubtedly the future of the industry.
Our fibre-to-the-node footprint continues to grow and the speed it delivers, to accelerate. Today,
we are offering speeds up to 6 megabits per second. Later this year, we will have the capability to offer 12
megabits per second moving to 26 megabits per second and eventually 50. As we make these
step-by-step investments, we are following with surgical marketing to enable our customers to
upgrade their speeds and to access a new generation of value-added services. In this way, we
monetize our investment as we make it.
High speeds are not restricted to the wired world. Late last year, ahead of schedule, we introduced
Toronto and Montréal to the fastest and most advanced wireless data network in Canada called EVDO,
which is able to transmit data at broadband speeds. This year were rolling it out in many more
cities across Canada. That means our customers can access the Internet, receive e-mails and
download attachments up to ten times faster than previously.
And now, combining wireless access with broadband speeds, were partnering with Rogers
Communications to build out the Inukshuk Wi-Max network. This wireless technology enables delivery
of first mile wireless broadband access with speeds of up to 1.5 megabits per second as an
alternative to DSL and cable access. Inukshuks footprint will cover over 40 cities and 50 unserved
rural and remote communities across Canada. It is exactly what our customers
THE SHAPE OF THE NEW BELL
A
new marketplace demands a new Bell Canada. By 2008, Bell will
be a completely transformed companyfocused
on its communications roots and delivering sustained growth and
shareholder value. To get there, the company has set specific
targets in each of the three strategic pillars and cost structure.
BUILDING THE NEW BELL
2006 BUSINESS UPDATE
LETTERS TO SHAREHOLDERS p.7
BUILDING
A NEW FINANCIAL MODEL
Growing revenue, driving out costs. As Bells Next Generation Services gain scale and revenues grow, they will offset
losses in revenue due to market share decline in traditional telephone service. And as we build a new cost structure, the contribution
margin from Next Generation Services will increase.
and investors demand: broadband access, rapid deployment and capital efficiency.
Collectively, our Inukshuk, fibre-to-the-node and EVDO investments will give us the ability to
provide broadband connections to virtually all of our customers.
Next Generation Services Executing to make life simpler and business more profitable
Customer Experience and Bandwidth ultimately matter most in relation to our third pillar: Next
Generation Services. This is our strategys lynchpin: change the revenue mix of the company, offset
erosion in our wireline business and deliver steady top line growth.
And it is from our progress last year with Next Generation Services that I draw the most
confidence. At the end of 2004, our growth services represented 41 percent of our aggregate
revenues. One year later, that figure had grown to 47 percent -or nearly half of our total
revenue. Growth services, including the latest Next Generation Services, should account for 65
percent of our total revenue by 2008-2009. And due to cost reductions, we expect these services
contribution to EBITDA to increase from 25 to 50 percent over the same period.
Next Generation Services provide our customers with innovative ways to simplify their lives and
business processes Internet services such as anti-virus and anti-spam software that are updated
regularly; educational content like Kidsmania where children can learn and play safely online. Or
live video downloads of sports and entertainment like Live @ The Orange Lounge which features
concerts by
artists ranging from Paul Anka to the Black Eyed Peas. About one-in-three of our Internet customers
are currently purchasing Next Generation Services such as these.
But it doesnt stop there. We are providing ExpressVu customers with Gamesmania and interactive
programming that gives them the ability to switch camera angles during sporting events. And our
wireless customers are able to download ring tones, games and music. Video streaming is gaining
popularity as evidenced during the recent Olympics, when many of Bell Mobilitys customers with
video-enabled mobile phones accessed live TV coverage.
And we continue to innovate. Last year we rolled out Bell Digital Voice, our innovative VoIP
offering, with an industry-leading suite of VoIP-enabled features. We are in trials right now with
IPTV an exciting technology that will provide our customers with on-demand television. And we are
working with other industry participants to bring mobile commerce to the wireless handset.
Our Enterprise and Small and Medium Business groups continue to lead the way into a future where
Bell provides much more than connections. In 2005 we concluded
agreements with Montréal-Trudeau
International Airport to provide complete ICT services, and with RBC to provide VoIP lines to all
of its branches. But Next Generation Services are also about security solutions for business. In Small and
Medium Business, our Virtual Chief Information Officer (VCIO) service is showing significant
traction by allowing Canadas smaller businesses to gain the same technology advantages as their
larger counterparts.
p.8
2005 Solid Results in a Challenging Year
In 2005, a year that challenged our industry, Bell
delivered solid financial results. Thanks in part to strong fourth quarter performance, annual
revenues were $19.1 billion, up 4 percent from 2004, with revenue from growth services more than
outpacing the decline in our legacy business. EBITDA increased 2.2 percent to $7.6 billion. And
cash from operating activities increased 2.1 percent to $5.6 billion. It was a solid performance,
and it speaks volumes about our peoples ability to fight back in tough times.
This is an important point. We are increasing our ability to counter-punch and to fight it out in a
competitive marketplace. Were staying on strategy. Were executing faster, and more precisely.
And were remaking the Bell culture, one day at a time, one person at a time.
Creating a High-Performance Culture
Culture is not soft. It is not about holding hands around a camp fire. It is how work gets
done. It is about how decisions get made. It is about whether or not we succeed. It is fundamental
to the future of this company.
About two years ago, a small group of senior leaders set out to build a truly high-performance
culture at Bell. A culture that reflects the best of our 125-year heritage, but that adds the edge
that we need to win in a very competitive industry. Today, that culture is spreading through the
organization, sometimes not as fast as I would like, but spreading every day. Accelerating this
change is the personal accountability of each and every one of our directors and senior managers.
But this effort goes far beyond the leaders and managers of Bell and directly involves our
frontline employees. Last year more than 1,000 customer-facing employees in every part of the
company participated in problem-solving workshops all of them opportunities to rethink how we
operate the business. The focus was on customer service and on coming up with everyday solutions
for everyday work problems. Problems as simple as determining the best physical layout of a call
centre phone bank and as complex as an overhaul of our order processing system. We did more than 50
workshops last year. Well do many more this year, this time focused on both service and the efficiency of
our operations.
The crucial thing about this effort is that it is all about developing internal solutions, about
asking our internal experts for the best solutions. Were developing practical, everyday answers
that are delivering results right now.
A
great example is the Small and Medium Business (SMB) performance pilot. We brought together a
group of highly-motivated SMB call centre employees and challenged them to develop their own answer
to the question about how best to serve customers. The results are clear evidence of the creativity
and power of our people. First-call resolution went up by 11 percent. Customer satisfaction went up
by 20 percent. And employee satisfaction went through the roof-increasing by 70 percent. And by the
way, we brought our costs down as well. It proves what weve been saying: truly superior customer
service costs less to deliver.
Unlocking Value and Returning to Our Core
Remaking Bell is our top priority. It has to be. Because telecommunications is and always will
be what this company is about.
Consistent with that direction, we have made real progress in simplifying and streamlining BCEs
asset portfolio. As we have gone about this work, weve asked two simple questions: first, what
capabilities do we need to own to build a revitalized Bell Canada, and what capabilities can we
secure through commercial agreements; and second, are there opportunities to surface hidden value
for our shareholders.
As a result of this work, we made a series of decisions announced toward the end of the year
and in early 2006. These decisions unlock close to $7 billion in capital, return value to our
shareholders, and permit us to focus squarely on the future of Bell, as Canadas leading provider
of integrated communications.
In late 2005, we reached agreement with our partners at Woodbridge to restructure Bell
Globemedia. While no doubt it took time, this agreement delivers the two basic requirements that I have had. It
secures our ability to participate in content creation and the packaging of content key
capabilities in the world of Next Generation Services.
BUILDING THE NEW BELL 2006
BUSINESS UPDATE
LETTERS
TO SHAREHOLDERS p.9
UNLOCKING CAPITAL FOR SHAREHOLDERS
As
part of its strategic asset review, Bell has announced transactions
that will unlock close to $7 billion in capital for shareholders.
And it frees up $1.3 billion shareholder capital better matching capital commitment to strategic
value.
Our decisions on CGI were more straightforward. CGI is a fine company, with excellent leadership.
But strategically, its greatest value to Bell lies in its role as a high service, low cost supplier
of outsourced IT services. So we are extending our commercial agreements and exiting our equity
investment, with expected total proceeds in excess of $1 billion.
We
are also moving to reposition Telesat. The satellite services sector is consolidating globally.
We want to ensure that Telesat has greater opportunities in that changing environment. So we plan
to take the company public later this year. Operationally, it will continue to be a vital supplier
to ExpressVu.
And closer to our core operations, we are combining Aliant, our lower density lines in Ontario and
Québec, and our controlling position in Bell Nordiq, to create one of the largest regional services
providers in North America. In merging these assets, we are pursuing two objectives. To create an
organization that can bring focus to the needs of regional communities while taking advantage of
scale. And to create value for shareholders, by assembling these assets in an income trust a
structure that we believe is well suited to the competitive and financial characteristics of these
markets.
We will use proceeds from these transactions to repurchase 5 percent of our outstanding common
shares by the end of the second quarter of 2006. Together with the exchange of shares from the new
trust, this will reduce the number of outstanding shares by approximately 13 percent. We will also
retire $1 billion in BCE debt. This will help us continue to build financial flexibility.
Our asset decisions speak about where we are headed and what we are building.
Building Bells Leadership
To get there, we need the most talented people. Throughout 2005, we promoted a new generation of
talent from inside the company to positions of increasing authority and impact.
And we have been fortunate to be able to attract to Bell from Canada, the United States and Great
Britain eighteen new executives whose creativity and determination auger well
for the future.
Capping off these significant additions to Bells leadership team, I was especially pleased that I
was able to persuade George Cope to join the company as Bells President and Chief Operating
Officer. I have admired his track record and entrepreneurial style at ClearNet and Telus Mobility
for some time. He brings experience, energy and a commitment to profitable growth. It is a pleasure
to welcome him as a colleague to our company.
Building Momentum
So yes, real progress. Enough? Never. Is our company better positioned today than it was 12, 24, 36
months ago? Yes, far better.
With so many sound building blocks in place, our challenge now is to accelerate. To speed up
building a new cost structure and developing new communications capabilities and services. To move
faster in taking personal responsibility to offer higher levels of service to our customers. To
make Bell an even better place to work for our people. In a phrase, to speed up building a better
company one that can deliver value to our shareholders for a long time.
Michael Sabia
President and Chief Executive Officer
p.10
GLOBAL TELECOMMUNICATIONS AT A GLANCE
NORTH
AMERICA
Competitive Landscape
As telcos and cable television companies move into one anothers markets throughout North America,
BCE is ahead of the converging industries both north and south of the border, given our DSL and
satellite video platforms.
Markets Share Projections
FOR 2009
Wireless Penetration
The wireless market in Canada is far from saturated wireless penetration lags behind all other G7
countries.
Estimated
Cellular Users
PER 100 PEOPLE 2005
Broadband Adoption
Broadband Internet access is still in its infancy, both in North America and the world as a whole.
The relatively higher penetration in North America is fuelled in part by strong competition between
cable modems and DSL and by the emergence of bandwidth-intensive applications.
Broadband Subscribers
PER 100 HOUSEHOLDS 2005
On the Horizon
Wi-Max represents one of the most promising breakthrough technologies today, poised to
revolutionize both mobile and last mile broadband access. Our Inukshuk partnership with Rogers
Communications will create the first national wireless broadband network in the world.
Wi-Max networks can deliver wireless broadband access up to
and may be able to deliver up to 50 mbps in certain circumstances.
BUILDING
THE NEW BELL 2006 BUSINESS UPDATE
GLOBAL
TELECOMMUNICATIONS AT A GLANCE p.11
THE WORLD
To date, IPTV is gaining rapid success overseas. Hong Kongs PCCW, Italys FastWeb and France
Telecom already provide IPTV to more than 100,000 subscribers each. About 145 telecom carriers use
their networks to deliver digital television to their subscribers.
We believe global IPTV subscribers may reach
OUR OPPORTUNITIES
The continued strong performance by ExpressVu, combined with our current IPTV trials in partnership
with Microsoft, are positioning Bell to stay in front of the telco video opportunity.
Wireless penetration in Europe is much higher than in North America in some
cases there are more cellular phones than people in a market.
Estimated Cellular Users
PER 100 PEOPLE 2005
The Canadian wireless market offers
more headroom for growth than any other major market. As a result, we expect to
continue to see strong customer growth for Bell Mobility for the foreseeable
future.
The opportunity for growth in broadband Internet access is a global one that outside of North
America is being led almost solely by telcos.
Broadband Subscribers
PER 100 HOUSEHOLDS 2005
As our Next Generation Services offerings grow, the demand for high-speed broadband
connections will increase. The next few years should see at least the beginnings of mainstream
adoption of such high-bandwidth services as IPTV, mobile video and online gaming.
Wi-Max is accelerating broadband access penetration globally as a last mile alternative in many
countries, especially the developing world.
The Asia-Pacific region
will represent
of global Wi-Max subscribers.
Bell will be a pioneer in the deployment of Wi-Max, both as a last mile replacement to serve remote
communities that other carriers would normally not cover and as a complementary technology in urban
areas to provide mobile access to the Internet.
SECTION
I. p.13
Twin challenges face Bell in 2006 and beyond. The company must continue to generate profitable
growth from its Next Generation Services, even as it brings its overall cost structure down. Bell
Canadas new President and Chief Operating Officer, George Cope, and Stephen Wetmore, Group
President Corporate Performance and National Markets, sat down to discuss these two halves of
the performance equation for Bell.
Q: We know that Bell is committed to radically reshaping its cost structure. How do you and the
management team balance a more efficient operation with the simultaneous need to sustain growth in
your Next Generation Services?
george cope: First of all, I dont buy into the idea that there is conflict between what
we do to grow revenue and what we do to become more efficient. Thats just being a smart, able
business. We wont get the revenue if we dont move fast and we wont move fast if were glued down
to wasteful processes. The idea is to cut the expenses we dont need the old processes and
equipment and procedures that hold us back so we can increase our investment in those areas of
the business that are growing.
stephen wetmore: I couldnt agree more. There is no trade-off between profitability and
market share. There is no trade-off between customer experience and cost cutting. And theres no
trade-off between growth and efficiency. In each case, we need the one to get to the other. By
doing both, we keep the focus on our strategic plan, and dont waste resources chasing low
priorities.
Q: Can you provide some concrete examples of that?
cope: Sure. Take profitability and market share. The answer there is to stop defining
those as separate categories. Our target should not be market share; instead we should aim to
achieve a disproportionate share of the profit available in a given market.
wetmore: Or when we think about Customer Experience and cost cutting, its critical to
understand that wed be crazy to cut things that deliver value to customers. Our efforts are all
about cutting the things we do that are not valuable to customers. I think the most important thing
to understand is that were not looking for some sort of across-the-board percentage cost
reduction. This isnt about swinging an axe; its about
using an analytical microscope and scalpel
to identify and get rid of those areas that we dont need and that our customers dont want to be
burdened with. Its going to be a restructuring of resources, not a simple reduction.
Q: George, what attracted you to Bell? What advantages drew you to the company?
cope: Im very impressed by Bells product portfolio and brand. In what has certainly
become a very competitive industry, Bell Canada has the best position in North America.
I dont buy into the idea that there is conflict between what we do to grow revenue and what we do
to become more efficient. Thats just being a smart, able business. We wont get the revenue if we
dont move fast and we wont move fast if were glued down to wasteful processes.
george cope
p.14
Im very impressed by Bells product portfolio and brand. In what has certainly become a very
competitive industry, Bell Canada has the best position in North
America. This is a company that in its areas
of growth adds one million new customer relationships each year.
george cope
President and Chief Operating Officer
This is a company that in its areas of growth adds one million new customer relationships each
year.
Essentially, we have the customer relationships, the know-how and the breadth of services. In
addition, weve got a brand thats synonymous with a century of Canadian growth and progress. A key
point for market leadership will be taking advantage of the tremendous name and brand recognition
Bell has across Canada. We must and will develop a consistent, clear and cost-effective brand
message going forward.
The portfolio behind the brand is our most significant advantage. Because of ExpressVu, were the
only telephone company with a nationwide television delivery system. We have a coast-to-coast
mobile service. Bell has a unique international stature that allows us to be involved in
standards-setting around new technologies. Sympatico-MSN is Canadas largest Internet portal. We
are leaders in serving the Enterprise market. With these types of advantages, we are well
positioned to cost-effectively leverage our brand across the entire portfolio. The most impressive
thing about Bell is that it dosent just participate in markets, it is a leader in them.
wetmore: Id add to that list of strengths the people who make up the Bell family; whether
they work in Central Canada, Western Canada or Atlantic Canada. The best ideas for how to run more
efficiently are coming every day from the frontline people of Bell who are just as offended by
inefficiency as our investors are. Nobody wants to waste their time doing the wrong thing or doing
something in a way that takes more time than it needs to.
Id also point to our role in providing access to underserved populations across the country,
through things like our consolidated income trust, the Inukshuk partnership, Project Chapleau and
the SuperNet project. Our customers benefit from dedicated management teams focused on their
particular needs but also able to leverage our scale and geographic reach to maintain a high
quality telecom infrastructure throughout the service area.
cope: Exactly. This is a time of growth and building in this industry. Fortunately,
another advantage Bell can count on is our scale. There are tremendous opportunities to leverage
our millions of customer relationships.
Q: How might Bell do that?
cope: Well, our scale gives us the ability to cost-effectively segment our various
markets, and tailor products and marketing programs that speak directly to them. For instance, its
a true strategic advantage for Bell to be able to segment the enterprise market from the
small-to-medium business market. There is no doubt that the clients in each of these categories see
the world differently and need different solutions. I think this is a great opportunity for us and
one that really is very hard for our competitors to cost-effectively duplicate.
BUILDING THE NEW BELL 2006 BUSINESS UPDATE
SECTION
I. p.15
wetmore: From a cost perspective, our size can actually be advantageous if we adhere to
what weve been discussing as end-to-end process transformations, rather than achieving all of
our cost reductions in siloed fashion from within the various business units. For example, with our
supply chain and sourcing strategy this is a single initiative with company-wide cost savings
potential. Because it affects all areas of the business, we can see
enormous results very quickly
if we do this correctly. Like George said, its viewing our relative size as an opportunity rather
than a hindrance. Because of our purchasing power, we should be paying the lowest prices for goods.
You see best-of-breed retailers do this successfully, and were going to follow the same strategy.
Q: As you strive for this combination of efficiency and revenue growth, where do you anticipate the
most sustained challenges, and how will Bell address them?
cope: The most significant challenge for us is the existence of a fiercely competitive
local telephone market. Were going to continue to see declines in our market share of local
wireline customers, through both local competition and wireless substitution. In response, well
have to leverage our technological lead to continue to offer new and innovative services to
customers, such as IPTV, security features and Kidsmania electronic games available through our
Sympatico Internet access service.
Another way well compete effectively is through service. Service will become a competitive
battleground in the truest sense of the word. No matter what kinds of innovative and
technologically advanced services we add, people have an expectation of our brand as well they
should that our service will live up to the Bell history of reliability.
But to compete effectively, to drive revenue growth, we need to actually exceed these expectations
and we need to do it efficiently. Were improving across the board in terms of knowing which
actions will have the greatest impact on the customer experience and directing our energies
accordingly.
wetmore: This is an area where we dont have a choice. The good news is that our customers
expect us to lead that historically were the gold standard for service in the industry. That
heritage is still here people at Bell feel it very deeply. I dont want to be too negative about
our competitors, but the idea that a cable company is going to consistently provide better service
than Bell Canada is just ludicrous.
Q: To achieve managements goals, Bell is undergoing a cultural transformation. What are some areas
in which a change in mindset and business approach will help Bell succeed?
wetmore: For the leadership team, our number one challenge is to develop management
systems that support the culture that we want and give leaders the tools they need to act
quickly and decisively so we can win in the marketplace.
Id add to that list of strengths the people who make up the Bell family; whether they work in
Central Canada, Western Canada or Atlantic Canada.
stephen wetmore
Group President Corporate Performance and National Markets
p.16
Our end-to-end process redesign is not just about streamlining and re-engineering, its also about
putting the right data into the right peoples hands at the right time
stephen wetmore
For example, one of the things weve done already in 2006 is to revamp our information systems so
managers can understand exactly when and how much our traditional revenue streams will shrink and
how well our products are doing in the market on a real-time basis. We are making it possible for
managers to see more clearly two, three quarters into the future and to adjust investment
accordingly, and that allows them to behave more like empowered business leaders and less like
regulated caretakers.
cope:
Yesand already, we can better anticipate the market
drivers, the competitive moves and then align our cost structure with the real revenue picture.
Look, the change we are all experiencing and believe me it will be hard at times is the growing
pain for a new business that is going to eventually dwarf our traditional offerings. We need to
help everyone at Bell see clearly what our assets are and what the business drivers are that they
contribute to. For instance, financial analysts talk and think about our local wire lines as a
declining part of our business. And its true that our market share will go down. But what is
important is that the connections, the wire into customers homes and, more importantly, the
relationships formed over a century of reliable service those connections will be a huge part of
our growth as we upgrade them to carry television and video services, high-speed Internet and other
services that we cant even predict today.
Q: How can the leadership team help managers and employees do what they need to do to move Bells
performance forward?
wetmore: We have to redesign our internal processes with the same rigour we brought to
simplifying BCEs asset base and for the same reasonsto improve our service offering to customers,
while creating shareholder value through improved financial performance.
It is up to us to make sure that every manager at Bell knows and understands their exact
responsibilities as well as managements expectations of them. And that they clearly understand and
appreciate how their own efficiency contributes to others ability to serve customers and achieve
efficiency in what they do.
Q: So is it really that simple? Just give people the facts and theyll do the right thing?
wetmore: At some level, I have to say yes. It is that simple. Naturally we have to help
people see what the right thing is and we have to recognize people who are doing the right thing.
In fancy HR terms, we have to build a culture of doing the right thing; of fighting in the
competitive marketplace, of serving our customers, of rethinking our
processes and procedures, of uniting across businesses and silos to leverage our scale and, most
importantly, of celebrating the wins we achieve each and every day.
So, is the hill steep enough for you, George?
cope: Its steep. But its going to be fun to climb it. Theres so much to build upon.
BUILDING THE NEW BELL 2006 BUSINESS UPDATE
SECTION II. p.17
section ii.
THIS IS A STRATEGIC FIGHT
Progress Against Our Three Pillars
The plan to transform Bell Canada into the worlds first new telecom is grounded in three
strategic pillars each with a clear link to our value proposition of Making it Simple.
Ultimately, Bell must deliver in each of these three areas if we are to become the best company we
can be. By pulling together, we have made significant progress on all fronts, moving us closer to
our vision for a new Bell.
p.18
1. CUSTOMER EXPERIENCE
Our goal: to offer customers superior product and service experiences that build loyalty while
saving them time and money. Basically, we need to make everything about Bell quick, easy and
hassle-free.
Average In-Store Activation Time
in minutes
Multi-Product
Customers on a Single Bill
in thousands
2. BANDWIDTH
Our customers need for speed is matched by our passion to provide it. Bell is leading customers
into a new era of communications grounded in high-speed bandwidth that never lets its users down.
Number of High-Speed Internet Access Connections
in thousands
Number
of Fibre-Optic Nodes Placed
since q4 04
We completed the rollout of our
EVDO NETWORK in
Toronto
and Montréal
in November 2005
FIVE MONTHS AHEAD
of schedule.
BUILDING THE NEW BELL 2006 BUSINESS UPDATE
SECTION II. p.19
3. NEXT GENERATION SERVICES
Making it possible for businesses and people to connect, produce, inform and entertain, on the
road, at home or in the office. In the next few years, these services will generate the bulk of our
revenues and our profits.
Percentage of Bell Canada Revenues from Growth Services
MAKING IT SIMPLE
Our strategic pillars directly address a promise we have made to our customers:
that we will make things simple.
At every customer touch point, we strive to make Bell simple for them. Our rollout of high
bandwidth wireless and wired networks makes accessing new technologies simple for our customers.
And our Next Generation Services are designed to make our customers lives and businesses more
simple and more profitable.
p. 20
section iii.
PERFECTING OUR
CUSTOMER SERVICE
Continuous Improvement Is the Key to a Competitive Advantage
BUILDING THE NEW BELL 2006 BUSINESS UPDATE
SECTION III. P.21
Customer service was a key area of focus for Bell in 2005. At years end, many of our most
important measures of service were up significantly. In some cases like DSL installation rates
and missed appointments our performance is better than ever. But it is still not enough. We must
deliver even higher levels of service on a consistent basis in order to create bonds of trust and
loyalty with our customers.
Not everything went as smoothly as we would have liked last year. Pressures on our customer service
system mounted during the late summer as we dealt with a backlog of service calls the aftermath
of a labour dispute we inherited with the purchase of Entourage.
Importantly, we used this challenge as an opportunity to learn which steps in our traditional
processes were crucial, and which ones we could change or do without. So while our field
representatives focused on answering customers immediate needs, others looked for permanent
solutions to these service challenges.
Learning
getting better each day, never being satisfied with good
enoughis central to our
approach to the Customer Experience. Delivering high levels of service consistently will
differentiate us in the market and provide us with a competitive advantage. This is important in an
industry where increased competition requires that not only our products perform above
expectations, but so too must customer service.
Among our accomplishments in service last year was the One and Done program, where our goal is to
get things right the first time on every call, on every customer installation and every time we
need to repair something. So that customers do not need to call back.
In the Enterprise market, we developed our Service Promise setting target commitments on service
performance together with our customers. By year end we had simplified order placement and status
by making the sales team accountable for the whole order process from beginning to end; allowed
customers to manage their billing data online; and set more rigorous procedures for repairs and
network change management. The end result: our customers recognized Bell as the service leader in
the Canadian business market last year.
In
the SMB market we created communities of interest where technicians and sales people are
associated with customers and work closely together to get to know their customers, understand
their issues and take personal responsibility for serving their particular needs.
We also laid the groundwork for our Service Accreditation program. In 2006 we will set rigorous
standards for all our employees who interact with customers. Simple things like a technician
explaining to a customer what needs to be done and then double-checking and confirming that the
work has been completed to the customers satisfaction.
We made significant progress in raising customer service levels in 2005. Now we need to go even
further, each day giving customers good reasons to stay with Bell.
Truly
differentiated customer service has no end point. There is no level at which Bell can stop
and say this is good enough. Instead, we must engage in a process of constant, continuous
improvement.
patrick pichette
President Operations
p. 22
section iv.
A NEW CULTURE UNITES AND
ENERGIZES OUR CORE
Stories of Transforming Bell
BUILDING THE NEW BELL 2006 BUSINESS UPDATE
SECTION IV. p.23
If Bell is to continue to progress against our strategic plan to make our company the nimble,
fast-responding company that will lead telecom into the future we need to constantly question the
way we work. We need to examine our core ways of doing business, and just as importantly, examine
the culture that is at the core of our company.
In fact, we believe that the effort to produce culture change within Bell is central to our efforts
to remake the company. Ultimately, we are shifting Bell to a culture of confidence. As this
transformation takes hold, its effects are already apparent across myriad divisions. People are
responding more rapidly, collaborating more frequently and pioneering new ways of doing business
without worrying about how weve always done it. Theyre encouraged to share their victories
company-wide, inspiring the kind of confidence that comes with knowing how much individual actions
truly matter.
On August 2, Bell Mobility employees saw smoke billowing from nearby Pearson Airport and confirmed
through news reports that an Air France flight had crashed. Compassion and instinct took over as a
Bell team sprung into action to assist survivors to get in touch with their loved ones.
The idea was to supply cell phones and calling cards immediately so people could contact their
loved ones. In France, it had been erroneously reported that everyone had died, when in fact
everyone had survived. We knew they would want to immediately talk to their families. We ran
around, grabbed about 50 phones, and had about 12 people hurrying to program and activate these
cell phones for overseas calls. When we got to the airport, it was complete chaos. I knew we needed
to get into where the passengers were so we could actually help them directly. Once we got behind
police lines, we could go through the room, offer the phones and cards, put our arms around
shoulders and squeeze hands. I held a baby while one woman called her family in India, and I dialed
for another woman who was shaking and crying so hard she couldnt do it. How could we not help?
Its amazing what an organization can do in times like this. Ive never been so proud.
julia
quinton oosterman
Associate Director Corporate Communications
p.24
When its members e-mail boxes recently became jammed, the Kitchener-Waterloo Chamber of
Commerce was misinformed that a Bell server was to blame. The Chamber president, naturally feeling
frustrated, placed an angry call to Bell. Even though the Chamber was not a Bell customer at the
time, the local Bell manager did more than just take his call.
Their IT folks were blaming Bell Canada and our server, but I knew it wasnt the case. I
grabbed one of my technicians and some virus software, and we went over to their offices. We
logged on to their mainframe to show them they had been hacked, and that our network was safe
and secure and not causing the problem. Why did I do it, even though I knew Bell wasnt
involved? Because of the pride in our network. I felt empowered to just take it on. I knew I
had the expertise within my team to solve it. I didnt care that they werent a Bell customer
they were a potential Bell customer. And I knew that if we waited for proper protocol, it
would not have been quick enough. The Chamber ended up coming over to Bell Canada for all of
their services. They have recognized us publicly over and over again, and they recommend
Bells whole suite of services to any new business coming into the region.
ERIC KINGSTON
Regional Manager Network Operations
JONATHAN PRIMEAU
Project Manager Bell Professional Services
More than 70 people from across Bell came together to build a communications technology
infrastructure for the XI FINA World Championships of Aquatics, held
in Montréal in July 2005.
Their challenge: to build from scratch in one month an IP network to accommodate FINA and host
broadcaster Radio-Canada, as well as more than 1,400 journalists filing stories day and night
during the 16-day event.
At the beginning, we realized we had different silos working separately: cable repair, broadcast,
the telephony team, the Internet team... which had silos of its own. The old way was to provide
support for each technology through a specialist. You cannot imagine the costs of doing that. With
all these teams, we were sometimes doing the same thing three
times.
To go forward, we needed to be sure the silos were working on the same path, and that when we
needed something specific done we would only do it once. We put all the teams together to
cross-train them and to change their mindset. They shared their skills, knowledge and experience
with one another, so they were able to understand each others realities and responsibilities. This
way one person could support all the different technologies. The technicians got a whole new
perspective that was not only applicable for FINA, but beyond. These people are so useful right now
that they are wanted everywhere.
JONATHAN PRIMEAU
Project Manager Bell Professional Services
BUILDING THE NEW BELL 2006 BUSINESS UPDATE
SECTION IV p.25
Emily is Bells voice-activated customer service representative that uses sophisticated
speech recognition technology to assist business and residential wireline customers. In late
2004, Emily received an upgrade, after which Bell dedicated a task force to continually
assess customer satisfaction with the application.
The intent with the redesign of Emily was to enable the consolidation of six stand-alone
call routing applications into one, with the long-term goal of providing a consistent customer
experience regardless of the number dialed. The approach taken was to really look at things
from a customer perspective first, and through the right line of questioning, get the
information needed to quickly and correctly route the call.
Following the launch we established a cross-departmental task force to improve the customer
experience in areas where customers were identifying navigational problems. We then sought ways to
simplify and streamline paths to our agents and the self-serve applications. With the task force
focused in this way, we were able to move customer satisfaction with Emily up by almost 15
percentage points from February to July. In addition, we shortened the average time customers spend
in the application by approximately 25 seconds.
CAROLE
SÉGUIN
Associate Director Marketing Research, Market Knowledge Centre
To
solve the massive customer pain point of long wait times to purchase products and services at
Bell retail stores, Bell launched a new initiative to make it much faster and simpler to buy
products at Bell stores.
Our research showed that people who went into our stores with an intent to buy were actually
leaving without making a purchase, and the number one reason was wait time we were averaging
more than 30 minutes at the cash register. It was a pain point for customers and a missed
revenue opportunity for Bell. To address it, we created a new computer program that was more
retail-friendly than our old programs.
We also totally rethought our process for managing the customer at the point of sale. We found
that we could do things that we used to do at the register at other times either in the store or
after the customer had made a purchase. The net effect was to optimize the customers time. For the
last four months after we finished our project, we brought the average down to just over 13 minutes
for each sale... and were not done yet.
DAVID GUEST
Director Retail Simplification
p.26
BUILDING
THE NEW BELL 2006 BUSINESS UPDATE
SECTION
V. p.27
Every day, Canadians grow more comfortable with and
dependent on the next generation of communications services.
Consumers want and need reliable cell phone coverage, high-speed
Internet and breakthrough products that make life easier.
Businesses demand the efficiencies and scalabilities that only
the IP network can provide. The company that succeeds in this age
will be the one that continues to invent, deliver and ultimately
harness the full potential of next generation services. From the
residential, wireless, business and broadband perspectives,
Bells leaders are seizing growth opportunities.
RESIDENTIAL
Multi-product households
The more Bell products a consumer has and uses,
the more loyal those customers are to Bell. To
that end, a centrepiece of our consumer
marketing strategy is to increase the number of
consumers who have one or more of our products
or services. At year-end, approximately 60
percent of households had two or more Bell
products up 10 percent from the start of the
year. Fully 22 percent of households have three
or more Bell products, a figure we are planning
to increase in 2006. This upsurge in
multi-product households is testament to our
stronger connection with residential customers
and positions us to win in the broadband home.
KEVIN CRULL
President Residential Services
A breakthrough year for Consumer Next Generation Services
Our ExpressVu satellite TV service turned in a record performance in 2005, with strong performance
in subscriber acquisitions, revenue and profits. Among the factors driving this growth were
innovative new products such as our HDPVR, the most advanced receiver in the industry, and the
broadest lineup of high definition (HD) programming in the country. By year-end, ExpressVu had
become the third-largest national television distributor, up from fourth place in 2004.
Our Sympatico-MSN Internet portal also turned in a stellar performance in 2005. Eighty-seven
percent of all Canadians online visit Sympatico at least once a month, and the service generates
ten times as much value-added service revenue as the next-closest North American ISP. Our
advertising revenue generated through Sympatico doubled in 2005, and is expected to continue to
grow, thanks in part to exclusive content like Kidsmania electronic games, Live @ The Orange and
Les Acoustiques.
And Bell introduced our VoIP product Bell Digital Voice (BDV) in
Toronto, Montréal and
Hamilton. Hailed as the best Internet telephony product in North America, BDV combines the quality
and reliability of a traditional telecom network with the innovative features normally associated
with VoIP.
Eighty-seven percent of all Canadians online visit Sympatico at least once a month, and the
service generates ten times as much value-added service revenue as the next-closest North American
ISP.
KEVIN CRULL
p.28
WIRELESS
Developing an expanded next generation wireless Infrastructure
Bell is creating the ultimate wireless broadband network, with the bandwidth
to deliver the kind of speed, access and features commonly associated with
broadband residential services. The initial launch in late 2005 of our EVDO
network and corresponding devices gave Canadians true Internet, television and
video on their cell phones. In addition to this launch,
we spent the year installing hotspots in 336 Starbucks
café locations nationwide and in 238 Mail Boxes Etc. centres. Continuing the momentum to expand our
networks reach, potency and leadership will be a top priority in the coming year.
Better marketing segmentation attracts better customers
Driving profitable growth of our wireless business is an
emphasis on marketing to attract and retain high-value customers
through segmented, differentiated, branded packages. This approach
contributed to many targeted launches, like the successful launch of
our Solo mobile brand a product designed to appeal to
younger customers, with its prepaid plans, walkie-talkie like features and ring tone options. We had this
audience and the high-volume, data-heavy power user in mind when we increased the number of new
handsets we offered each year from around 10 two years ago to 21 last year, including the latest
Samsung, Motorola, Nokia, Palm Treo and BlackBerry models.
This marketing effort has helped us improve in a critical area: post-paid Average Revenue Per
User (ARPU). In 2005, we made good sequential improvement in post-paid ARPU, going from $57 in the
first quarter to $64 in the fourth quarter. Well continue to push this further, ensuring that we
acquire and keep the most profitable customers and reclaim our leadership in this competitive
industry.
ROBERT ODENDALL
President Bell Mobility
and Bell Distribution Inc.
BUSINESS: ENTERPRISE
Information and Communications Technology
As we migrate customers to our IP network, they are increasingly turning to us as their single
source for Information and Communications Technology (ICT) needs. As a leader in Canadas ICT
market, we not only provide technology but also develop comprehensive ICT solutions for our
customers, helping us achieve year-over-year revenue growth of 36 percent in this space.
Testament to our efforts is Montréal-Trudeau International Airport, where in partnership with
Cisco Systems we will provide WiFi coverage for public users,
One
of our target was to get down to a 15-minute activation time in stores.
It was a two-year target, but within two months, we got it down to
14:23 down from 30 minutes. WE cut it in half.
Thats a major win and were not stopping there.
ROBERT ODENDALL
BUILDING THE NEW BELL 2006 BUSINESS UPDATE
SECTION
V. p.29
IP telephony for commercial users, state-of-the-art
digital signage, computerized kiosks and business
centres. It is a fully integrated solution that reaps the full benefits of the IP network and is transforming
Montréal-Trudeau into one of the worlds most technologically advanced airports. Strategic partnerships like this
and evolving technology that meets our customers,
expanding needs are our goals in 2006.
ISABELLE COURVILLE
President Enterprise
Bell Security Solutions Inc.:
A next generation service, delivered today
Computer viruses and worms cost big businesses
over $45 billion annually in lost work
hours and data recovery. Security, it goes
without saying, tops any
CIOs agenda. And it will continue to be high on Bells priority list as well.
Our leadership in protecting our customers was reaffirmed in 2005 with the
launch of Bell Security Solutions Inc. (BSSI), a provider of the most advanced
security solutions in the industry. Our Enterprise customers now have access
to a support structure or nearly 200 security professionals coast-to-coast, coupled
with a comprehensive set of IP security applications.
We have also advanced Enterprise security devices with the introduction of
biometric scanning, smart tags to track inventory and
predictive technologies that effectively profile the behaviours
of network saboteurs.
Bell is shaking Up the market
in Canada and the Enterprise
Were seen as an industry
leader in providing new products
and services.
ISABELLE COURVILLE
BUSINESS: SMALL AND MEDIUM BUSINESSES
Continued focus on VCIO strategy
Small and medium-sized business customers are rapidly
migrating to our Virtual Chief Information Officer (VCIO) solutions,
which offer an easy and affordable
way to handle many common IT needs. Our 2005
VCIO revenues were up 190 percent from one year ago.
A good example is Kia Motors, which deployed VCIO
services to enable a simplified extranet site, freeing its
IT department to concentrate on key business applications. Wescom, a customized software company, used
VCIO to consolidate its support lines and create secure
video conferencing capabilities.
We also rolled out PC Care and Network Care
programs that offer cost-effective ways to prevent and
address computer and network malfunctions for customers needing to maintain a small local area network.
In a ground-breaking pilot, We
used internal customer-facing
employees to overhaul SMB
customer service. First call
resolution went up by 11 percent.
Customer satisfaction Went Up
by 20 percent. And employee
satisfaction increased dramatically
by70 percent.
KAREN SHERIFF
KAREN SHERIFF
President Small and Medium Business
p.30
Computers are equipped with a Bell diagnostics program that
can scan the computer and correct any issues that might be
causing system errors.
Bell Business Solutions Inc.
In 2005, we created Bell Business Solutions Inc. (BBSI) which
houses the resources of CSB Systems, Nexxlink Technologies and
Charon Systems. These acquisitions are helping to bolster growth
in data product revenues and further enhance our VCIO offerings.
Last year BBSI provided electronic ballot management solutions to
48 municipalities for the 2005 Quebéc municipal elections,
ensuring rapid and more efficient turnaround of results.
OPERATIONS
Recommitting to five 9s service
For the last 125 years, Bell Canada has prided itself on making the dial tone
dependable. As our country has grown, so has our ability to serve it, by providing
our customers a reliable dial tone 99.999 percent of the time.
That service tradition continues as we meet
the demands or the IP network. we are making
the necessary improvements and realigning our
service commitment so that Bell will be able to
deliver that same five 9s promise with our IP-DSL network. Already, our core IP network almost reaches this level
of service with a performance of 99.997 percent for 2005. We believe
our customers deserve the same level of service
with their Internet access as their parents and
grandparents experienced with the copper
wire. That level of reliability is even more important today because we are providing a deeper
array or services to our clients.
We are making the necessary
improvements and realigning our
service commitment so that Bell
will be able to deliver that same
five 9s promise with our IP-DSL
network. Already, our core IP
network almost reaches this level
of service with a performance of
99.997 percent for 2005.
PATRICK PICHETTE
PATRICK
PICHETTE
President Operations
Upgrading Emily
The voice of our support line, 310-BELL, is Emily. She is Bells
voice-activated customer service representative, and has been
serving customers since 2003 through natural conversation.
Our investment in Emily continues to pay off, and has been
deployed on the front end of all service channels, not just
traditional telephone services. For example, we used Emily in
2005 to help 1.3 million ExpressVu customers in the
self-installation of new smart cards, with only 15 percent
needing live assistance. While this is a significant
accomplishment in cost savings and in simplifying Bell processes,
we will continue to make improvements in the coming year.
BUILDING THE NEW BELL 2006 BUSINESS UPDATE
p.31
PEOPLE
COUNT ON BELL. WE KNOW THAT.
Our shareholders are counting on us to deliver steadily returns and value for their investment. Our
multi-year strategic plan is remaking this company and will bring us to a point where the company
can deliver real, profitable growth for our shareholders.
Our customers are counting on us to continue to provide them with the products and services they
need to work more efficiently, connect more simply and live more enjoyable. As we compete in the
marketplace, we never lose sight of the fact that we are fighting on their behalf.
Our employees count on us as well. Thats one of the reasons why we are making the tough decisions
today, so that we will have built a winning platform for success tomorrow, and over the long
haul.
Canada is counting on Bell. The country expects us to keep pace and lead the technological
changes that are sweeping the global information and communications industry . Information is the
lifeblood of the global economy; how it is transmitted and managed is the difference between a
growing and a stagnating economy.
The
stakes are high. Thats why we are determined to win.
p.32
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL HIGHLIGHTS |
|
2005 |
|
2004 |
|
2003 |
|
Revenue (in millions) |
|
|
19,105 |
|
|
|
18,368 |
|
|
|
18,057 |
|
EBITDA (in millions) |
|
|
7,597 |
|
|
|
7,430 |
|
|
|
7,281 |
|
Operating income (in millions) |
|
|
4,048 |
|
|
|
2,894 |
|
|
|
4,030 |
|
Net earnings applicable to common shares (in millions) |
|
|
1,891 |
|
|
|
1,523 |
|
|
|
1,744 |
|
Net earnings before restructuring and
other items and net gains on investments (in millions) |
|
|
1,901 |
|
|
|
1,872 |
|
|
|
1,749 |
|
Net earnings per common share |
|
|
2.04 |
|
|
|
1.65 |
|
|
|
1.90 |
|
Net earnings per common share before restructuring and other
items and net gains on investments |
|
|
2.05 |
|
|
|
2.02 |
|
|
|
1.90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt (in millions) |
|
|
13,129 |
|
|
|
12,644 |
|
|
|
13,274 |
|
Net debt to capitalization ratio |
|
|
42.7 |
% |
|
|
42.8 |
% |
|
|
43.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow (in millions) |
|
|
662 |
|
|
|
870 |
|
|
|
1,577 |
|
Cash from operating activities (in millions) |
|
|
5,559 |
|
|
|
5,443 |
|
|
|
5,890 |
|
Capital expenditures (in millions) |
|
|
3,428 |
|
|
|
3,319 |
|
|
|
3,101 |
|
Capital intensity |
|
|
17.9 |
% |
|
|
18.1 |
% |
|
|
17.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATIONAL HIGHLIGHTS |
|
2005 |
|
2004 |
|
2003 |
|
Customer connections (thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Local telephone |
|
|
12,581 |
|
|
|
12,905 |
|
|
|
13,051 |
|
Cellular and personal communications (PCS) |
|
|
5,441 |
|
|
|
4,925 |
|
|
|
4,412 |
|
Paging |
|
|
347 |
|
|
|
427 |
|
|
|
524 |
|
High-speed Internet access |
|
|
2,195 |
|
|
|
1,808 |
|
|
|
1,458 |
|
Dial-up Internet access |
|
|
586 |
|
|
|
743 |
|
|
|
869 |
|
Video |
|
|
1,727 |
|
|
|
1,503 |
|
|
|
1,387 |
|
Digital equivalent access lines |
|
|
5,034 |
|
|
|
4,335 |
|
|
|
3,867 |
|
|
|
|
|
27,911 |
|
|
|
26,646 |
|
|
|
25,568 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net activations (thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
Cellular and personal communications (PCS) |
|
|
516 |
|
|
|
513 |
|
|
|
514 |
|
High-speed Internet access |
|
|
387 |
|
|
|
350 |
|
|
|
358 |
|
Video |
|
|
224 |
|
|
|
116 |
|
|
|
83 |
|
|
The
stakes are high. Thats why we are determined to win.
BUILDING THE NEW BELL 2006 BUSINESS UPDATE
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
Certain
statements appearing in this document including,
but not limited to, statements concerning
expected cost savings and unlocking capital for shareholders, are forward-looking statements and
are subject to important risks, uncertainties and assumptions. The results or events predicted in
these forward-looking statements may differ materially from actual
results or events. As a result,
readers are cautioned not to place undue reliance on these forward-looking statements. In
particular, forward-looking statements concerning expected cost
savings assume that our various
planned cost-saving initiatives and productivity improvements will achieve their objectives.
Furthermore, forward-looking statements concerning capital expected to be unlocked assume the
completion of various previously announced transactions that we
intend to carry out including: (i)
the reduction of our interest in Bell Globemedia from 68.5% to 20%; (ii) the formation of a new
consolidated income trust that will own and manage low density and regional lines; and (iii) the
recapitalization of, and launch of a public offering of a minority
stake in, Telesat. The value of
capital expected to be unlocked is based on various assumptions including that we will generate
proceeds of approximately $1 billion from the Telesat transaction. These assumptions also include
the expectation that transferring Bell Canadas regional
wireline operations and Aliants wireline
operations to an income trust will increase their aggregate equity
value assuming: (i) an income
trust valuation at approximately 10.0x 2005 EBITDA, in the case of the Bell Canada regional lines,
and approximately 7.0x 2005 EBITDA, in the case of the Aliant lines, as well as an approximate
2.0x debt to 2005 EBITDA leverage ratio for the consolidated trust;
(ii) the consolidated trust
being valued at a yield of between 7.0% and 7.5%, (iii) 2005 pro forma cash available for
distribution of approximately $685 million with the expectation that, initially, the trust will
pay out approximately 90% of its cash available for distribution to
unitholders, and (iv) Aliants
wireless assets being valued within BCE at an EBITDA multiple of between 9.0x and 10.0x 2005
EBITDA. Please also refer to the section entitled Assumptions Made in the Preparation of
Forward-Looking Statements and Risks that Could Affect Our Business
and Results in the Bell Canada
Enterprises 2005 Annual Report for a description of risks
relating to the completion of such
transactions. You will find the Bell Canada Enterprises 2005 Annual Report on our website at
www.bce.calreport 2005.
Communications
e-mail bcecomms@bce.ca tel 1 888 932-6666 fax
(514) 870-4385
Investor Relations e-mail investor.relations@bce.ca
tel 1 800 339-6353 fax (514) 786-3970
BCEs website has extensive information about the companys
governance practices, community investment and corporate responsibility.
Our 2005 Annual Report is available at www.bce.ca/report2OO5.
BCE Inc.
1000 de La Gauchetière Street West, Suite 3700,
Montréal, Québec H3B 4Y7 www.bce.ca
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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BCE Inc.
(signed) Siim A. Vanaselja
Siim A. Vanaselja
Chief Financial Officer
Date: March 22, 2006
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