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Good morning, ladies and gentlemen. Welcome to the BCE Q2 2019 Results Conference Call. I would like to turn the meeting over to Mr. Thane Fotopoulos. Please go ahead, Mr. Fotopoulos.
Thank you, Donna, and good morning to all on the call. With me here as usual are George Cope, BCE's President and CEO; and Glen LeBlanc, our CFO. Also joining us this quarter and going forward on all quarterly conference calls is Bell's COO, Mirko Bibic.As a reminder, our Q2 results package and other disclosure documents, including today's slide presentation, are available on BCE's Investor Relations webpage. However, before we get started, I want to draw your attention to our safe harbor statement on Slide 2. Information in this presentation and remarks made by the speakers today will contain statements about expected future events and financial results that are forward-looking and therefore subject to risks and uncertainties. These forward-looking statements represent our expectations as of today and therefore are subject to change. We disclaim any obligation to update forward-looking statements except as required by law.So with that, over to George.
Great. Thanks, Thane. Good morning, everyone. I hope everyone's enjoying the summer. I'm just -- I'm going to flip to Page 4. Just before I begin, I want to welcome Mirko to our call today. As I think everyone knows, Mirko is currently our chief operating officer and will become CEO at BCE on January 6th upon my retirement from BCE on the 5th of January next year. Mirko and I have worked side by side for the past years both strategically and operationally. Our company and your company will be in great hands going forward as we continue this evolution to being Canada's broadband leader. We're going to also get a chance this morning to hear from Mirko on our results in a few minutes.Turning to a few highlights. Broadband net adds for the company were very strong, up 25% year over year. We had record wireless net adds up 30% year over year. Our fiber footprint acceleration and strategy continues to pay off where we saw growth in fiber net additions up 10% year over year. Our footprint has now surpassed 50% of our overall fiber rollout at 4.9 million locations. Media had a very strong quarter, up close to 24% from an EBITDA perspective. And overall, truly strong profitability growth. Adding to that is the declining capital intensity ratio we talked about a year ago driving free cash flow up 10.0% in the quarter and year to date 13%.In my opinion, we had an exceptional quarter. I frankly was trying to remember, I cannot recall when the company has actually beat the Street on estimates of revenue, EBITDA, EPS, free cash flow and net additions all in one quarter. And just to round it out that it has only happened -- that has not happened before also includes an NBA championship to top it all off.So with that, let me turn it over to Mirko to take you through the highlights of the quarter.
Thanks, George, and good morning, everyone. Very pleased to be on this, my first quarterly analyst call since the announcement that I'll be assuming the position of CEO next January. And it goes without saying, but it is -- I need to say that it is a profound honor to lead this great company, and I'm grateful for the confidence that our board, George and the Bell executive team has shown in me, and for the opportunity to have partnered with a CEO as esteemed as George all these years. I'm certainly excited for the opportunity to work with the Bell team across the country to keep propelling our company forward. Also look forward to meeting and collaborating with both the analysts and buy side communities in the quarters and years to come.So before Glen goes over the financial results for the quarter, I will provide a quick overview of our Q2 operating metrics by segment, and I'm going to start on Slide 6 with wireless. Really excellent wireless operating results overall. We delivered our best Q2 subscriber performance in 18 years with 149,000 new net customers added. Postpaid net adds totaled 103,000. The year-over-year reduction was a direct result of fewer customer additions from our long-term federal government contract. But excluding the federal government contract, postpaid net adds were higher compared to last year, reflecting Bell Mobility's network leadership, strong sales channel execution and lower postpaid churn. In fact, Bell branded churn was under 1% for a second consecutive quarter. It's clear that our investments in customer retention and the quality of our mobile services are resonating with Canadians.On the prepaid side, we continue to see great results. Both Lucky Mobile and our new exclusive retail distribution deal with Dollarama are doing what we expected them to do strategically in the market, helping to drive 46,000 net adds this quarter. This compares to a loss of 8,000 last year. Clearly, we're taking market share in this segment, and over time we hope to convert many of these customers over to postpaid service.Blended ABPU increased a healthy 1.6%, and this reflects growth from customers selecting higher value rate plans and having more premium smartphones in the sales mix.Now turn a little bit, couple of comments on the network side. We continue to roll out LTE-Advanced service, now available to 94% of Canadians. And notably, 60% of the population will have access to speeds of up to 750 megabits per second, but enjoying more typical speeds in the range of 25 to 220 megabits per second, which is really incredible by any global standard. And it's now well recognized and acknowledged that we have globally leading networks, and this is a key reason why.I'm also pleased to report that Virgin Mobile topped every wireless carrier in Canada from a J.D. Power ranking perspective for a third consecutive year as #1 in overall customer service in the eyes of consumers. A very strong result and congrats to our Virgin Mobile team.On the 5G side, testing is well underway with network trials. We're very well positioned given our wireline fiber investment with 85% of all our urban and rural cell sites having high speed fiber backhaul capability by the end of this year. But as everyone knows, we also need 3,500 megahertz spectrum to bring Canada into the true 5G world, and as you all know, that auction is scheduled for 2020.I'm going to turn now to Slide 7 and wireline. We're pleased with total retail internet net adds of just over 19,000 in what is a seasonally low quarter for the consumer wireline business. That's up 52% over last year. And in terms of new FTTH customers, we saw 10% growth with 52,000 new adds. So we're really seeing the strategic benefit of our direct fiber investments. We're offering the fastest internet speeds of 1.5 gigs, we're growing our broadband market share, and we have better customer retention. In fact, our speed advantage has been confirmed in independent testing by PCMag, who recently ranked the Bell companies as Canada's fastest ISPs for a second year in a row.And on network as well, wireline network, our deployment is tracking to plan. Year to date, we've added 400,000 new FTTP and Wireless to the Home customer locations, and we're targeting 700,000 locations this year. Hoping to do better than that while keeping within the same capital envelope, that's what our current plan is calling for.We also had a good quarter from a TV perspective. We added 17,000 net new IPTV subs in Q2 as we continue to see that market mature and minimal new footprint growth. Alt TV continued to contribute positive to IPTV as customers increasingly embraced the consumption of content on alternative platforms.In satellite TV, we continued to see a slowing in the rate of subscriber decline. Net losses improved by more than 5% over last year to 14,000. And that of course helps from an overall revenue and cash flow perspective.Lastly, as it relates to Slide 6, although there's no specific reference to it, I think that it's worthwhile calling out for investors that our business markets unit continued to perform exceptionally well with a fourth consecutive quarter of revenue growth, which is reflective of a growing economy, effective reprice management and increasing customer demand for fiber and for bandwidth. Although business wireline isn't quite yet EBITDA positive, we continue to see steady improvement in the rate of year-over-year decline.Turning to Slide 8. Bell Media, as George said, a very strong quarter. Glen's going to go through the very strong financial performance with you in a few moments. But we have seen a continuation of positive trends on the TV advertising front with a fourth consecutive quarter of year-over-year growth. Our top 10 advertisers spent 20% more than last year, and spending from our 5 largest online marketplace advertisers was up almost 3-fold.CTV, once again the #1 network in the country for an 18th year in a row, and we secured a strong lineup going into the fall season with 13 new shows and more than 70 original English-language programs in production. Notably, we were the only Canadian media company with year-over-year audience growth in all key demos, which speaks to the quality and breadth of our programming and on-demand content.TSN remained Canada's leading sports network and top specialty channel overall for the 2018/2019 broadcast year to date. In fact, TSN grew viewership in the second quarter by 21% over last year, supported by our broadcast of the NBA playoffs, including the championship run as well as FIFA Women's World Cup soccer. The championship game for the Toronto Raptors was the most watched NBA game ever in Canada and the biggest broadcast of the year on any channel with an average audience of 7.9 million viewers.Strong quarter as well for specialty entertainment TV where viewership increased 16% over last year. And the final season of HBO's Game of Thrones was the most watched season in specialty and pay TV history in Canada, which helped to drive Crave linear and direct-to-consumer subscriptions to more than 2.7 million this quarter. So really strong for Crave this year with, quite frankly, unparalleled content available to consumers.Lastly, we're also really excited about our proposed acquisition of the French-language conventional network V and related digital assets. Although it's a very small transaction financially by Bell standards, the acquisition reinforces choice for French-language viewers. It will strengthen the Quebec television system, and it highlights our commitment at Bell Media to provide engaging French-language content on traditional and innovative platforms.And with that, I'll turn it over to Glen.
Thanks, Mirko, and good morning, everyone. I'll begin on Slide 10 with a review of our Q2 consolidated results.Our financial performance in the quarter demonstrated a disciplined focus on profitable subscriber acquisition as evidenced by our continued healthy revenue and adjusted EBITDA growth across all Bell operating segments, margin expansion as well as higher earnings in free cash flow, all of which are consistent with our 2019 guidance targets we provided in February.Total BCE revenue was up 2.5% year over year, which together with the favorable impact of IFRS 16 accounting led to strong 6.8% increase in adjusted EBITDA. Consistent with this growth in EBITDA, net earnings were up 8.2%, which drove a 9.3% year-over-year increase in adjusted EPS to $0.94.And we had a very strong quarter of cash generation with positive and higher year-over-year contributions from all 3 Bell operating segments. This, combined with the declining capital intensity ratio, drove a 10.0% year-over-year increase in free cash flow in the quarter.Turning to the detailed financial results of our segments starting with Bell Wireless on Slide 11. Total revenue was up 3.2% on continued strong postpaid subscriber growth, a third consecutive quarter of positive year-over-year financial contribution from prepaid, and a higher sales mix of premium handsets that drove a 5.2% increase in product revenue.Wireless EBITDA grew 9.9%, yielding a 2.7-point margin increase to 44.8%. This was driven by strong revenue flow through to EBITDA and a 1.6% decline in operating cost, which included the favorable impact of IFRS 16. And although we continued to maintain a low capital intensity ratio of 7.7% in the quarter, we did not slow down our investment on the deployment of small cells and increasing data backhaul capacity as we prepare for 5G.Moving on to our wireline segment on Slide 12. Total operating revenue increased 0.9% on combined internet and TV growth of 4% and a fourth consecutive quarter of higher year-over-year revenue at Bell business markets, as Mirko mentioned earlier. However, our overall growth in the quarter was moderated by the non-recurrence of revenues generated in Q2 of last year from the G7 Summit and the Ontario general election, which totaled approximately $15 million. Normalizing for these items, wireline revenue grew 1.4%.In terms of operating profitability, an increasing broadband scale, improved business markets results and stable year-over-year operating costs that reflected the benefit of IFRS 16 as well as the savings realized from workforce reductions undertaken last year and other fiber-related operating efficiencies, adjusted EBITDA was up 2.1%. This drove a 60 basis point increase in our industry-leading margin to 44.1%, which provides more than sufficient operating leverage to fully cover our planned $2 billion broadband fiber capital investments in 2019.Let's turn to Slide 13 on media financials. As Mirko said, Bell Media had its best set of quarterly financials in a number of years delivering outstanding revenue, adjusted EBITDA and cash flow growth in Q2. Total revenues up 6.4%, reflecting both higher year-over-year advertising and subscriber revenue.Advertising revenue increased 5.7% year over year on a fourth consecutive quarter of TV growth and continued Out of Home strength. Conventional TV saw improved performance, growing advertising revenue by more than 4%, reflecting stronger overall customer demand.And specialty TV was up 12% over last year on strong entertainment, sports and news performance, reflecting better audience growth, better pricing flexibility and incremental advertising from the Toronto Raptors championship run.Subscriber revenue increased 7%, reflecting growth in customer subscriptions due to the broadcast of the final season of Game of Thrones on HBO this quarter and the launch of our enhanced Crave streaming service last November.Adjusted EBITDA growth was exceptional, increasing 23.9% year over year. This was driven by the flow through of the strong revenue growth, combined with operating costs that remained largely flat year over year, and as the positive benefits of IFRS 16 was effectively offset by higher programming costs due to the ongoing Crave content expansion.Adjusted EPS. Slide 14 summarizes the main components of adjusted EPS, which was $0.94 per share in the quarter, up $0.08 over last year. Higher adjusted EBITDA drove $0.13 of that growth. In addition, tax adjustments contributed positively to earnings totaling $0.04 per share this quarter. This is consistent with our guidance assumptions for 2019 that it's calling for $0.07 of tax recoveries, down from approximately $0.09 in 2018.Adjusted EPS also reflected lower year-over-year losses from our minority interest equity investments due in part from improved performance at MLSE because of the Raptors. These favorable factors were partially offset by an expected year-over-year step up in depreciation and interest expense due to the adoption of IFRS 16 accounting at the beginning of the year. In aggregate, IFRS 16 had an approximate $0.02 unfavorable impact on EPS in the quarter.Turning to Slide 15, we generated $1.1 billion of free cash flow in Q2, up 10.0% over last year. This was driven by strong EBITDA growth and lower capital spending. This quarter also reflected higher interest paid due primarily to the imputed interests on the lease liabilities under IFRS 16 accounting. And the reduction in cash from working capital resulted from the timing of supplier payments and higher accounts receivable driven by strong advertising sales at Bell Media.We also took advantage of the favorable market conditions to complete 2 public debt offerings in Q2, the first a 6-year CAD 600 million issuance and the second a USD 600 million in 30-year U.S. dollar debentures. These 2 new issuance effectively satisfy the refinancing needs of the near-term maturities through to April of 2021 and maintain our weighted average after-tax costs of debt at a historic low, 3.1%, while increasing the average term to maturity to almost 12 years from around 10 years previously.So with year to date free cash flow of more than $1.7 billion, we remain on track to achieve our 2019 growth target of 7% to 12%. This, together with a positive financial outlook as we look out to the end of the year, positions us well to maintain our dividend growth model into 2020.Let's wrap up on Slide 16. We continued to leverage our advanced broadband networks and services to deliver higher wireless postpaid and residential wireline net customer additions in a financially disciplined manner during a seasonably slower quarter, providing the foundation for sustained financial performance going forward. Our consistently strong operational execution and favorable financial profile across all of our operating segments as we move into the second half of the year provides us with considerable flexibility to execute our strategy and achieve our 2019 guidance targets, all of which I'm reconfirming here today.On that, I'd like to turn the call back over to Thane and the operator to begin Q&A.
Great. Thanks, Glen. So before we start the Q&A period, just to keep the call as efficient as possible, I would ask that you limit yourself to one question and a brief follow up if you must so we can get to as many in the queue as possible in the time we have left. So on that, Donna, we're ready to take our first question.
[Operator Instructions] And the first question is from David Barden from Bank of America.
Mirko, welcome to the call. Tough to argue with the performance in the quarter with the strength across all the different units. I guess 2 questions, if I could. One would be how you guys would describe for us the impact of the unlimited plan launch in 2Q and kind of the shape of the ABPU or ARPU that we're going to see in the second half of the year and into 2020. And then I guess my follow up would be just on the strength in prepay, if you could kind of do some performance attribution and where you think the market strength is coming from. Is it on the Lucky Mobile brand, the distribution platform, the pricing, the positioning? It'd be helpful to get some color on that.
Let me take the first one and Mirko will take the second one. So yes, it is. We had a tremendous quarter literally across the board. On the unlimited data plans, been a lot talked about, obviously. Clearly this was not a move initiated by Bell in the marketplace, but one that we obviously followed as we will always be competitive in the market. The impact on ARPU will all take time for us to all see. I think it's fair to say that structurally, the change does ultimately moderate ARPU growth in the industry. From our position this year, we believe we will, and our outlook still continues to expect positive ARPU growth this year. I would say this, with the harmonization and simplification of the rate plans across all carriers, the key point of differentiation which Mirko talked about truly now becomes a network performance, because actually in one sense makes that focus -- brings that focus much more into the eyes of the consumer. And on that front, as everyone knows, we come out way ahead of the competitor who led this change and think we're in an excellent position and continue to move market share. And that's really my view on that. And then Mirko, do you want to maybe pick up the second one?
Sure, David. On the second one I think shows you -- clearly the results show you how competitive we're becoming in the prepaid segment. I think Lucky Mobile, certainly the brand is a big driver of that performance. We certainly have a distribution advantage there in the Dollarama relationship, which as you know as an exclusive relationship was working really well, and fundamentally that brand, Lucky Mobile, is resonating with consumers in that segment of the marketplace.
Your next question is from Jeff Fan from Scotiabank.
George, congrats on a stellar career. It's been a pleasure working with you. And Mirko, congrats on your new role. My question to start off with is also on wireless. You've made some recent moves I guess in reaction to what your competitor had done to unlimited. First, you came out and matched the $75, but then it went up to $85. And then on the equipment financing, it looks like you're keeping that option for customers available. So I'm wondering if you can just talk a little bit about the rationale behind those moves. And then maybe a quick follow up for Mirko, if I may. This is the first time you're on the call, so wondering if you can just give those on the call and investors some early high-level thoughts on maybe areas that you may think about focusing on.
Let me pick up first of all the questions on pricing in the marketplace. Competitive market. We'll always be competitive, and our rate plans will reflect that and have in terms of our move to the unlimited data plan. So that's really what I'll say around that and addressed earlier. And then in terms of moving into the equipment financing programs in the market where folks are getting the handset then paying for it over time, again, that was another development in the industry which we will clearly participate in. We're in that space now. We think one of the programs to have that financing over 3 years is an intelligent move for the consumer market and one that you'll probably ultimately see us roll out with as well as we're currently at the 24 months. And part of this from our end, of course, is just reacting at a pace to the -- chase the pace of the competitive change there. And then in terms of having both choices, that's just something we'll reflect on as the market stays competitive. Some competitors have gone one way and one of the competitors has gone another way. And we're at this point making sure consumers have maximum choice, and we'll see how that unfolds. And then over to Mirko -- by the way, thank you for the comments. You do have to put up with me on one more call, everybody, but I really appreciate the kind comment, Jeff. But over to Mirko on what he's thinking next year. My instincts tell me he's going to tell you about that next year, not today. But over to Mirko.
Right, George. So Jeff, thank you for the comments as well. Look, there'll be lots of time next year when I take over as CEO to discuss my vision. And I'll say one high level thing right now, which is we will continue on our quest to be the broadband leader in Canada, so that's clear. I'll leave it at that.
Your next question is from Simon Flannery from Morgan Stanley.
Congrats, Mirko, and best of luck, George. It's been great working with you. Maybe following up on that last point, Mirko, on broadband. You continue to make great progress in pushing out fiber-to-the-prem. Can you just talk about what sort of speeds you're seeing people taking and what sort of penetration levels you're getting on first pass and as that's been in the market for a couple of years? So what is the potential as we see that program come to completion?
As you've heard from George, we have strong coverage now at over 50% of our broadband footprint, and that's going to continue to grow. And we're seeing strong demand where we do have fiber. Again, both George and I mentioned the growth in our fiber footprint. In that footprint, we have more subscribers, so more subscribers in fiber-to-the-home. And in that geography where we do have fiber, we're seeing an increasing mix of subscriber take-up on the higher speed tiers. So that's all very good. As well, we also considered our Wireless to the Home program. It's part of our broadband -- next-generation broadband deployment. And there too, while early days on wireless, we're seeing strong customer demand. Quite pleased with the response. Clearly the service meets a need in those areas, which we're more than delighted to fill. So strategy's working, strong execution and we're quite pleased with the progress.
Your next question is from Aravinda Galappatthige from Canaccord Genuity.
I also want to offer my congratulations to George and Mirko. My question's on wireless. Been seeing both in Q1 and Q2 a pretty good wireless EBITDA growth and even if I kind of move out IFRS 16. And then in Q2, I get a number that's closer to 7% on 2.5% service revenue growth. Was wondering if there's a little -- if you can offer a little bit more color on that. I was wondering if there's any movement on the equipment margins or perhaps any additional cost reductions that would have facilitated that.
Just a couple quick things on it. I talked about it last quarter. It's so hard to see now because of all this -- the accounting changes the last few years. So I know where you invest in those. Just follow the sources and uses and you can figure it all out. But underlying service revenue growth for us has been a very positive the first 6 months of the year. As Mirko just talked about, the change of trajectory on prepaid, small in one sense, but as we've said on a couple of calls, much more positive in another sense because it takes something that's negative and makes it into a positive. And we've seen, again, a blended improvement in our ARPU as clients have migrated to more and more smartphones, as Mirko just mentioned. We did do a cost restructuring last year at the end of the fourth quarter, and that was across the entire organization. And we're really trying to be as careful as we can with the cost of upgrades, et cetera, through the cost structure. So a lot of things that we weren't exactly -- we were okay with last year, but not totally thrilled with. We think we've got some of that wind at our back again on some of those key metrics.
The next question is from Vince Valentini from TD Securities.
Coming back to the strength in broadband, which is clearly impressive, can I ask about the video component of that? Do you still think we should look at video subscribers as a key performance metric going forward, or is it really just a bundling tool to help you get broadband? And I'd note in particular your recent back to school offer, you want to get internet customers, but you throw in Alt TV for $10. I can't imagine that's profitable video subscriber growth, and I don't really care; it's driving better broadband so bad, it's all good by me. But do you really think video subs as a volume indicator is a key thing you should be pushing on going forward?
Yes, it's a great question. And I'd say we would still say, yes, absolutely for sure. Promos, I won't call them promos because I think everybody ought to understand we don't do anything that doesn't make money. So that's for sure. And some of those Alt programs would have just conventional but no operating cost to us. So you're absolutely on the right track that underneath all of that, everything we do of course is to drive broadband subscriptions. We've talked about this for a long time that the value proposition on the broadband from fiber is where there's going to be more revenue growth than we're going to see across our overall video platform. But our strategy of Alt and IPTV is to continue to take share and then use the internet, using the video as that pull through. But I still think it's an important metric for us and one that we're paying a lot of attention to. And there's no doubt, TV with that set-top box with Alt, which is a different cost structure, is doing what we want it to do. And we're learning as we go. We just got to keep trying to drive that. And of course, don't forget with the ownership of Bell Media, we bring eyeballs through the TV business, that helps Bell Media on the advertising side. And so it's still important to us.
And seeing as you mentioned advertising, I'll try to avoid Thane's wrath with a follow up that's somewhat linked.
Vince, go ahead.
On the Bell Media side, you're lapping you've said 4 quarters in a row of positive TV advertising revenue growth. So when you get into Q3, you'll be lapping a quarter where you were already positive last year. Can you give us any sense of does that make year-over-year comps tough and you may not be able to keep growing TV ad revenue? Or do you have some sense that the market's still strong, and bookings at this point would indicate you can maintain that positive trajectory?
Let's bring Glen into this call since he's got to work this morning.
I figured he'd put me to work at some point. Hi, Vince. Good morning. Look, we're delighted with our performance in the media business and our funnel looking forward. Very, very strong. Advertising can even be stronger. Mirko mentioned our lineup in the fall, very, very strong. Now the quarter we just experienced 6.4% revenue growth, truly outstanding. A portion of that, a third of that cropped up by just the incredible run from the Raptors. So do I think the future is going to look as rosy as the past? Probably not. But are we continue to be bullish and extremely excited about our media operations and its performance? The answer to that is a resounding yes.
The next question is from Maher Yaghi from Desjardins.
Again, congrats, Mirko and George. I wanted to just go back on your discussion about wireless ARPU growth. When you talked about ARPU eventually turning positive, were you referring this about the ARPU including the GOC government contract or excluding that contract?
Well, our ARPU includes everything. We have had -- maybe I'm not getting the question quite right. We've got ARPU positive year to date. We expect to see ARPU growth in the second half of the year continue to be positive, and we'll see what that amount is. So I'm not sure, did we get the question right? Or maybe --
No, I just wanted to just understand exactly what your reference point is.
We include all of our numbers in all of our subs in our metrics, which is a little different I know than other people and how they treated the government account.
Okay. Okay, just wanted to clear that up. So when you look at the wireless markets with all the changes that we are seeing, a lot of the companies are still trying to find the place where they are going to sit eventually. How long do you expect the impact on ARPU, the negative impact on ARPU to take place over the next couple of quarters until we see the full implementation of the plan in your ARPU numbers related to overage? And in terms of profitability, how should we track your performance in terms of the -- if you don't have a full removal of the subsidy model from your base, do you think you can offset the overage impact on your top line profitability-wise?
Okay. I guess what I'm going to say is what I said almost at the beginning, which is we think people ought to focus attention on our cash flow generation off the entire enterprise, off the wireless business. We'll be competitive with what the peers are doing in the marketplace. And I talked about there'll be some moderation of ARPU as a result of this change in the industry, but we're not going to go beyond what I said obviously this year on ARPU. And we've got to see how the market's competitive and you see us responding in the market. And then on the other, on the installment programs, that could turn out to be a positive for investors and consumers. It could turn out to be neutral. We're just going to have to see how it unfolds. There's a lot of experience in the U.S. to take a look at now that we're in that space. And we'll adjust according, again, to make sure we're always generating, which we have historically, leading free cash flow in the wireless space. That'll be our focus.
Okay. The reason I'm asking is just trying to get your sense about the end game in terms of moving the market to an unlimited plan. There is always going to be some arbitrage for consumers to take the unlimited plan and try to get subsidy from the companies that are offering these unlimited plans. So I'm trying to understand if both can be at the same time implemented and still not impact the bottom line. Just trying to understand it from your perspective.
Well, it's what I said earlier. First of all, the movements on unlimited plans we think puts an enormous focus on your network and your network's performance, and our superior network now should turn out to be even that much more of a competitive advantage going forward. And then I think as Mirko's reminding me, there's a general view that certainly within the call centers, call length should drop. We should see some of that just because again for a customer buying, it's a clearer rate plan, less rate plans in the market. But we haven't changed our guidance today as a result of any of this. We're very positive on the outlook. But I think some of these questions around this I think you probably ought to direct at the companies that are leading this stuff. And we're always going to be competitive and following it.
Right. And Maher, I would say that you got in the one swim lane you've had the installment plans, in the other swim lane you have the subsidy plans, and the price points are different between those 2 swim lanes.
The next question is from Tim Casey from BMO.
Mirko, could you just walk through your comments again on what you were talking about with respect to business revenues? And I think you're saying EBITDA growth is not yet positive, but the declines are slow. Could you just sort of walk through what you're seeing on the business side and what your expectations are into next year? And could you frame for investors your perspective of the regulatory environment now in the context of a general election coming where sometimes it can get a bit noisy and then into the wireless review next year?
Okay. So on business markets, as I mentioned and as you mentioned as well, revenues are up year over year, and that's a fourth consecutive quarter of positive revenue growth. So what we're seeing is basically strong performance, strong execution and the fiber strategy working, and strong demand in that customer base for bandwidth and expect that to continue. And essentially, as I mentioned in my opening remarks, we're seeing a slowing rate of decline on the EBITDA side. So a positive trajectory. On regulatory, the big issue coming up, as you mentioned, is the MVNO proceeding with a hearing in January, and here's what I'll say. We have the best speeds globally in Canada. We have amazing coverage. We have intense price competition. Clearly we've been talking about some of that on the call here. And we are on the cusp of 5G and investments that that will require. And we have the regional carriers doing what the regional carriers are doing. And we have also talked about the prepaid segment, which has gotten a whole lot more competitive and certainly meets a need of that lower cost segment in the marketplace. So if you put all those things together, say government and regulators ought to factor all that in quite seriously and not interfere with a market that's functioning really, really well. So I'll leave it at that on the regulatory front as being the biggest item coming up.
[Operator Instructions] And your next question is from Drew McReynolds from RBC.
Just reiterate congrats to you George and to you Mirko. Two follow ups for me. First, maybe George, get your view. You've talked a lot on the potential impact of unlimited in IPs. I know you're not kind of steering things here out there in the market. But there's been a lot of discussion on whether what everyone has observed and witnessed in the U.S. is a relevant kind of benchmark or blueprint for what will unfold here in Canada. I'd love to get your high level thoughts on that one. And then second, maybe to bring Glen back into the conversation. Glen, just I know your pension funding is fully funded. Just wondering if and when you're kind of crossing that threshold to lower annual pension funding. I think you've quantified that as potentially a $200 million free cash flow tailwind.
First of all, thank you for the comments to both Mirko and I. I think on the unlimited and on the EPPs, we've made our comments. We'll see how the market unfolds. But there's no doubt. Other markets that have moved to both these types of structured programs, there are lessons to be learned. And you can rest assure that we're obviously looking at those to make sure if there were positive things done, we make sure we try to duplicate them. If there's things that people wish they hadn't done, we'll obviously try to steer away from those. I know they're common sense answers, but at the same time, that's really what we're going to have to do and want to do within that space. So we'll stay competitive. We've got a great strategy on prepaid that's got growth. We've got a leading postpaid network. And we got the lowest capital intensity in wireless. So we think we're in a tremendous position for whatever the market brings us.
Good morning, Drew. It's Glen. I'll talk a little bit about pension funding. As you know, for years we've predicted that a rising interest rate environment would put us in that enviable position of having to take contribution holidays. And although we continuously see ourselves migrating towards that path, the solvency discount rates, as fast as they start rising, slip away and go the other direction on us, which I think has been my entire career I've been saying that. Great news, though, on our pension funding is despite the fact that solvency discount rates have actually come down in the last 6 months, our pension plans still find themselves in a fully funded position. And that's really a product of the asset mix, great returns that we were experiencing in that fund. So I couldn't be happier as to find ourselves north of 100. Ultimately getting to that date of having the contribution holiday of up to a couple hundred million dollars is really a product of discount rates, and unfortunately they slipped on us this year. So let's hope for a rebound.
There are no further questions registered at this time. I'd like to turn the meeting back over to Mr. Fotopoulos.
There is a question. I just see one.
The next question is from Adam Shine from National Bank Financial.
So congratulations to both of you as well. Maybe George, one issue around a topic that we see a lot of headlines about, as you can imagine, is the Huawei issue. And you've yet to put out your RFP, I presume, for the next phase of 5G. But at some point as we watch the rhetoric from this government, that could be the same government coming out of the election, it doesn't seem to be great, quick movement on this issue. Can you speak to your views on when you need to get going with this, when a certain amount of urgency sort of sets in beyond the fall in regards to moving forward on that RFP?
Yes. If we look at the timing -- well first of all, we'll of course always follow whatever the guidelines are in the country, and we've talked about that in the past. So we'll have to see how that unfolds. We clearly listened to some of the public announcements from Ottawa, and obviously we have dialogue, a very positive dialogue I would say, of sharing proper information between ourselves, Canadians and also the government. We have an expectation that post the election we'll get clarity, and we think that works within the timing of some of our plans around appointments of who the vendors would be going forward. So some resolution to this shortly after the election, which fit within our strategic time frames, and we'll work on that at the end of it. And we said before, however this unfolds, we see it not having a material impact on us, although we love the fact at having multiple vendor choices. But we'll follow whatever the rules are in the country.
There are no further questions. Back to you, Mr. Fotopoulos.
Thank you, Donna. Yes. So I think that the tightness of the Q&A is definitely a reflection of the strength of our results this quarter and the clarity and transparency of our disclosure, I'd like to think so. So on that, thanks again to all for your participation on the call. I will be available throughout the day as usual for follow-up questions and clarification. So thanks to all. Have a great day. Thank you.
Thank you.
Thanks very much.
Thank you.
The conference has now ended. Please disconnect your lines at this time, and thank you for your participation.