Are we good now? Oh, we are good. Curtis, first question. BCE continues to focus on churn reduction, and Q2 was the lowest prepaid wireless churn in three years. Can you talk a little bit about customer retention and how BCE is navigating the current wireless competitive environment?
Yeah. Hi, Stephanie. Thanks for having me. Good morning, everyone. Appreciate the early time slot and that everyone attended.
You are kicking off the conference.
Yeah. I think Harry is next door. Look, churn is the output, and I would say it is a bit of a lagging indicator, right? Ultimately, we are focused on happy customers, delivering customer experience, and meeting them where they want to. If they want to call, we will answer the phone. If they want to interact with us on a digital basis, our UI is much improved. Frankly, our fiber and wireless networks are great. So it is about delivering what they expect. This is what they expected on their bill. This is what we show them on the bill. Because the value that we provide is very good. Just provide what you said you were going to provide. If you said you were going to call them back in 30 minutes, you call them back within that time slot. So that is what we track.
We track a bunch of individual KPIs, but also what we call an easy index, which is ultimately, did the customer get a good experience, and are they happy at the end of the interaction with us? It leads to churn, but ultimately, happy customers.
Maybe I'll add a follow-up just on AI. It's been very topical. I'm sure that you're using a lot of AI in those processes. Maybe you can give us an update on the AI strategy internally as well.
No, you're absolutely right. A lot of the AI conversation is on AI fabric externally, but we're leveraging AI across the company. It's finance, it's in legal, it's in HR, but especially in our customer experience and customer service. So in the banking world, you know your customer and know what services they have, and how do you quickly pivot the conversation to, again, provide them service. They have a question, agents, whether it's robotics or human, how do you provide them with an answer that's clear, whether it's online or on the phone? So that they hang up the phone, and they go, "That makes sense. I understand. There's no confusion." I just think humans don't like uncertainty. They don't like questions that don't have a clear answer. So provide information, leverage AI to understand the specifics of their question.
Again, hang up the phone, click your mouse, and it's a happy customer. I honestly think the team's done a great job with that. As you've seen, basically 5 out of 6 quarters, our churn has improved, and it's both wireless and wireline. So it's not just one product service level is getting better, it's the overall customer experience. Which, again, is I think the right thing to focus on.
In terms of the overall wireless environment, it seems like things are improving here. How would you characterize it as you head into the most promotional part of the year?
I'd say it's very constructive. Of the three promotional milestones, back to school, Black Friday, and Boxing Week. Back to school came and went. Prices are up year-over-year. Competitive intensity, it's a competitive environment. We are competitive in the marketplace. But the prices are certainly at a higher level, and the level of intensity of the competition is a little bit lower than it would've been last year. I think really good value for customers, but not to the detriment of our profitability.
Moving over to the wireline side, the pricing environment there also seems to be stabilizing. BCE has been focusing on increasing product intensity. How do you think about wireline service revenue growth, and should it continue to improve from here?
I think absolutely yes. Service revenue's up a couple of points last couple of quarters, and ultimately, fiber keeps winning in the market. It's a bit of beating the same drum, but ultimately, fiber is a great technology, and it wins in a market. It wins in Canada, it wins in the U.S., it wins in other jurisdictions. Sorry about that if I'm all of a sudden yellow. Ultimately, look, 45,000, 50,000. We are driving net adds where we have fiber, and we're pulling along wireless at a 40% clip where we sell new fiber. The game plan is fairly straightforward. We have fiber, sell the fiber that we have, provide a great customer experience. Churn goes down, long-term value subs go up.
So maybe let's switch over to wireline in the U.S. and Ziply. Build, it's been maybe a little bit slower than initially expected. Can you talk a little bit about the permit permissions and the factors in place supporting a Ziply build ramp in the back half of this year and into 2027?
Yeah. Following on my last answer. Ultimately, I think the team in the U.S. has done a great job. Where they have fiber, they are selling fiber. And the penetration curves, they track it on a weekly basis, cohort by cohort. It's fairly similar. It's really similar. It's highly correlated. So the fiber that they built the week of May 3rd, penetration tracked week by week by week by week, very good job penetrating it. The next week, the next week, the next week, it all looks very similar. Where they have fiber, they are bringing new competition to market. We are entering into cable-only markets, and there's just pent-up demand for a fiber product. So really good job driving penetration. We took a bit of a half-step pause to make sure that we were choosing the right geographies to maximize long-term value.
Now that that team has prioritized markets, they're growing. So permits are up 4 x year-over-year. So it's a engineering permits approvals build. Takes a little bit of time. I'm generally not that patient about anything. But all of the markers are headed in the right direction. Now we just need to build because again, where we have fiber, we are taking share from cable.
And when you think about the Ziply asset longer term, we're going to talk about AI and the data center build-out, which obviously is topical. How do you think about Ziply versus AI in terms of allocation of capital, and is Ziply kind of a longer-term asset for BCE here?
I think there's a lot of growth potential. Give me one second. Can you hear me without yelling? All right, perfect. Look, there's a lot of growth potential in U.S. fiber and through our Ziply platform. Again, where they have fiber, they're driving great penetration. The returns are really good. They just need to keep on building and ramping up that fiber. There's an opportunity. The U.S. is simply just not as built out on a fiber platform as we are in Canada. The opportunity, I think, has legs. We're in a really good position to actually capture that opportunity. Clearly, there's a lot of long-term option value, but there's a lot of room for us to continue to grow, and the returns are quite good.
Yes, we're at a capital allocation kind of Olympics where you're comparing it against AI fabric, which are great returns and a locked-in contract. That's very attractive. Digital transformation, I quite like those types of initiatives because you can see and touch the tangible results of that. We're really at no shortage of interesting investment opportunities. We need to manage the balance sheet, drive growth, and frankly, execute. We've got a plan. It's somewhat unique to us in terms of opportunity. Now we just need to capture the opportunity.
There's been a lot of fiber M&A in the U.S. Can you kind of talk a little bit about what you're seeing there, and could Ziply be a buyer instead of a builder for some of its areas?
Yeah. The big picture for me is we have a platform. We have a very strong management team. The idea is to build fiber and then penetrate fiber. Again, we go from 0% to north of 30% in a couple of years. That's the biggest opportunity for us. If there's an ability or a target that's within one of our identified kind of strategic priority geography markets, it's the right scale, i.e., it's not too big, it's the right value, and most importantly, it unlocks build opportunity, then yeah, we have to look at it. But again, this is really a build engine for us. We'll look at smaller, we call them launch pads. If it unlocks more build capability and more TAM for us, then we'll have a look. But again, this is a real build opportunity for us now that we have a platform.
Okay. We cannot talk about the U.S. without talking about SpaceX. In the U.S., you have seen concerns around SpaceX coming in both on mobile and being a lot more aggressive on internet. Maybe you can talk a bit about what you are seeing in the U.S. with SpaceX and how you think about it translating into Canada.
Yeah, I think it is right. I think I would bifurcate the two markets just as you did. It is a very different market. In the U.S., they have wireless spectrum. On the wireless side, I understand why the discussion is more of a bundle play or a wireless play. I do think that is very different in Canada. They do not have the spectrum, and look, their rate filings say that is not what they are looking to do.
They have a very different model in the U.S. than, again, just what I have read publicly, than what they want to do in Canada. Now, I do think there is a place for satellite as a complement to our networks. That is why we made an investment in AST SpaceMobile. I do find it interesting in remote locations or you are mountain climbing, whatever it is, whatever your use case is, to use it as an add-on.
Again, that will be complementary and frankly, better for customers. In the U.S., on the wireline side, clearly they have capacity. They will figure out the technology. Physics are a limiter everywhere, but they will figure out technology. I think what you have seen in the U.S. is I think we are somewhat insulated, not being cavalier about their ability to actually generate a business model, but we are not building fiber in deep urban because we are not interested in competing with AT&T and Verizon, right? We are not a let us show up second with fiber.
Our business model is go to a market, build fiber where there is a cable monopoly, and take share from cable. So we do not actually compete against the AT&T and Verizons of the world. We compete against cable operators, and they do not own their own wireless network, right? So they have an MVNO, but very different economics.
We build fiber, we drive subs onto our fiber network, we take share from cable in call it the suburbs and one ring out of that. I do think the SpaceX. I consider SpaceX, its natural home is a little bit more rural than that. So we are kind of in where Ziply Fiber is building is outside of the urban core where AT&T and Verizon are going to ultimately build fiber, but inside where fixed wireless and SpaceX Starlink are really going to find most of their subscribers, I would think. So I think we are in a pretty good position, and look, all of our markets already have fixed wireless, and satellite technology is kind of on the same arc as fixed wireless.
I think ultimately, if you look at the net add charts in the U.S., fiber is picking up net adds, fixed wireless is picking up net adds, and cable is kind of giving away some of their market share because it is starting from a very high market share for cable.
Maybe switching over to media. Media saw some very solid growth in Q2. Crave subscribers, I think, were up 23%. Your 2028 CAGR targets for media include 2%-4% revenue growth and 1%-3% adjusted EBITDA growth. I think consensus has you in those targets in 2026. How do you think about the media business here and growth in that business?
Yeah, I still think that is fair. Over the long term here, we are going to see positive revenue, positive EBITDA growth. It is a little lumpier than other businesses, given it is somewhat event-driven, right?
Yeah.
It is Olympics here. It is FIFA here. I think the team, or I would say the team has done a great job of transitioning from a bit more legacy content viewership and consumer habits. We follow consumer habits into our Crave platform. So it is just over 5 million subscribers on our Crave platform, and it is not only VOD anymore. It is live events. There is football over the weekend. They had election debates.
So it is VOD, it is podcast, it is live content. It really is a hub of content, as opposed to five, six, seven, eight years ago, you would have thought, okay, it was VOD. It was a TV replacement in a way. So video consumption, content consumption continues in our consumer base, and we are now actually delivering that content in the way that our customers want to, and frankly, when they want to.
Look, ease of use is important for customers, as is quality content. So we have great content, some of which we produce ourselves, and the user interface now is much improved. It is easy to consume content. So I am really happy with how the team has transformed that business, and it is much more future-proof than it would have been a handful of years ago.
I am going to switch over to AI fabric in a minute. Are there any questions in the room on the base business? Everyone wants to hear about AI fabric. Nope.
I think it is just a quick question on the wireless pricing. We have gone through many cycles of this matter on when we start getting more aggressive. So structurally, what do you see that is different that should give us confidence that we are entering a period where.
I will repeat the question for people on the internet. The question was basically around, we have seen wireless pricing ebb and flow and then get more aggressive, and what makes it different this time?
Yeah, look, I think the Canadian market, if you stretch back the timeline, has been fairly rational. Then there was the Rogers-Shaw transaction where there was a remedy. New entrant in market, had a bit of a disruption. If you go back to the second half of last year, it was, again, the three time periods you talk about where it tends to be more competitive in market: back to school, Black Friday, and Boxing Week. Last year in 2025, the prices were still up year-over-year, and then Q1 was a blip. We all have our hypotheses, and yours is probably as good as any. The marketplace since then, five months, again, not a long enough trend for me, but those five months have been pretty good and ARPUs are up. Even in Q1, frankly, our monthly recurring charge was up year-over-year.
It is encouraging, and we are not seeing some of the things that we saw in Q1 that hurt long-term value of subscribers happening right now and happening over the last five months. Again, we are focused on what we can control, and we can control our actions and ultimately chasing the last 2,000, 3,000, 4,000 subscribers at the end of a quarter. If it does not lead to long-term value and it is not profitable, then it does not make sense to do. Ultimately, free cash flow, net debt. That drives, frankly, our management compensation. That drives shareholder value. That is what we are focused on.
Any other questions on the base business? All right, let us switch over to AI, which definitely has been topical recently. BCE saw a 29% growth in Bell Cyber and Ateko in Q2. Can you talk a little bit about what is driving that growth and how we should think about BCE's opportunity to capitalize on AI outside of AI fabric data centers?
Yeah, that is right. It is a good distinction because that is outside of the actual data center business. So that is our Bell Cyber, and it is Ateko, which is our managed service, professional service, call it consulting arm. It is a very simple trend. We, along with other companies in Canada, are spending money on hyperscalers. We are spending money on the platforms. We need to drive value, and it needs to be secure.
Frankly, customers are looking to us to help them implement their platform, drive cost savings, drive their business, and Bell Cyber is a natural place to help keep it secure. So it really is that fundamental trend toward technological advancement and adoption across our customer base. So quite happy. I do not see that changing. I do not see the need and demand from our customer base to actually decrease. It is an increasingly complex world.
And obviously, the need for safe data transmission and cybersecurity is increasingly important. I expect that trend to continue, and I think we've got the team to continue delivering it. Then you have the AI fabric piece of that. Again, combined, we call it AI-powered solutions. We've talked about that being a CAD 2 billion revenue business by 2028. Look, obviously, we hope to over-deliver. We hope to over-deliver on everything. But the pace of AI fabric is certainly accelerating. The demand is there and over to us to execute on that. But just to say, if I take a step back, when we were at our investor day in October, if I take it, actually, look, a year and a half ago, AI fabric wasn't a thing yet.
It is really a startup that we are funding within our own capital envelope that we've grown from scratch based on our relationships and the fact that we've been in Canada operating nearly 150 years, relationships with government and enterprise at all levels. Our investor day last October, we said in our plan, we are baking in 73 MW of power being monetized. Then we signed the first 300 MW in Saskatchewan, and we upped that guidance. So, in our plan now is 373 MW being monetized. And we talked about we had line of sight into 500 MW of power, really to say this business was going to continue to grow, but until we have land, power, and a contract, we're not spending the capital, we're not baking it into our plan.
Obviously that opportunity is much bigger and faster than we were talking about investor day, and over to us to execute it. We're in the right place at the right time, and these types of opportunities don't come around all that often, and it's up to us to execute on the plan and the opportunity that's really in front of us here in Canada. So, we're pretty focused on that, but I think the opportunity's fantastic for us.
The returns, especially on that 300-MW facility, are very good. The question we've been getting is, in the additional potential new contract signings, do you think you could get similar metrics on new announcements?
That's the goal. We're targeting 20% returns. Capital is more scarce because we have so many different venues to actually drive growth. The risk-return profile, I think, is extraordinary given we're in a position where we're driving equity-like returns, but we already have signed contracts. It's not a build it and see what happens. It's a sign contracts, know what your revenue and EBITDA is going to be, and then build the data center. We have locked in access to power. There's a lot of runway there. Now it's just fund it and build it, execute it.
You recommitted to the 3.5 x leverage target by the end of 2027. What other financing options could you look at to capitalize on the data center demand? Do you think you need. It seems like you will need other financing opportunities if you are to execute on the opportunity.
Yeah, a couple things there. 3.5 is obviously important to us. We're very consistent that we're going to hit 3.5 and then go below that going forward. When I say it's important to us, not only because we say it, but our management compensation is actually tied to hitting our net debt targets. Free cash flow, net debt targets. It's fantastic internally when that is how we're being compensated because it drives all of our conversations into if you're spending capital, is it furthering our ability to hit our investor day targets, drive free cash flow, and reduce net debt? It's really simplified the planning and capital allocation process. In terms of AI fabric specifically, it's a great new story. If there's more demand and more growth than we can fund by ourselves, it means the opportunity is just even bigger and bigger.
I don't think we would need to reinvent the wheel. There have been partnerships and structures in the U.S., in Europe, so these types of deals have been done before. There's generally pretty deep pockets and capital available for infrastructure type transactions. Look, it's a good news story for me if we need a partner to fund incremental growth.
And maybe related on divestitures and that process, is that something you are still looking at or have you divested the easy things and you are looking to.
Yeah. Look, so you go back a year, we talked about we are looking to reallocate capital, sell about CAD 7 billion of assets. We have announced CAD 6.6 billion at this point, so we are well on our way. But ultimately, it is our job, if there is a better use of capital, if there is a better owner of an asset, or, again, I would prefer to reinvest in a higher growth, or risk-reward opportunity, then it is up to us to do so. Right? Again, we are not emotional about the assets we own. We want to drive free cash flow, and we want to drive shareholder value. So again, if we can partner or sell or buy and it drives value, then we are going to take a look at it.
We have time for maybe one more question. Is there anything in the audience people wanted to hear about on AI? All right. Maybe we will switch over to the regulatory environment. The Canada Investment Summit was last week. As the government focuses on infrastructure and by Canadians, do you get the sense that the regulatory and investment environment is shifting here from maybe a tougher one that we saw the last few years?
Look, clearly, I am a little biased, but I do think digital infrastructure for our country, our clients' sovereignty, is important. And it is what we can do. So we are building out fiber, we are building out a digital backbone for our clients, and it happens to be in line with the government's goals. And if we can play a role in furthering their goals, then fantastic. Obviously happy to do it. Again, we have been here nearly 150 years driving technology and technology solutions for government and clients. The definition of technology changes, obviously, over that 150 years, but we are going to play our part to drive the economy forward.
All right. Anybody have any last questions? All right. Well, thank you very much, Curtis. That's great.
Thanks, Stephanie. Have a good day, everyone.