2017 BCE Annual report

1 BCE Annual REPORTIt s BayPeterboroughSudburyKingstonDauphinThe PasPlease check availability in your alGatineauQu becAlmaSherbrookeMonctonCharlottetownFre derictonTrois-Rivi resSydneySummersideGanderHalifaxSt. John sIt s Internet speeds. The best Whole Home Wi-Fi. The most innovative TV services. Just some of the advantages Bell s all-fibre network is delivering to millions of Canadians as we roll out the benefits of our broadband investment and innovation strategy directly to more homes and r me2 Our goal is for Bell to be recognized by customers as Canada s leading communications companyOUR STRATEGYOUR 6 STRATEGIC IMPERATIVESI nvest in broadband networks and services 10 Accelerate wireless 12 Leverage wireline momentum 14 Expand media leadership 16 Improve customer service 18 Achieve a competitive cost structure 20 Table of contentsFinancial and operational highlights 4 Letters to shareholders 6 Strategic imperatives 10 Community

2 Investment 22 Bell archives 24 Management s discussion and analysis (MD&A) 28 Reports on internal control 112 Consolidated financial statements 114 Notes to consolidated financial statements 120 BCE INC. 2017 Annual REPORT3 DRIVING GROWTH IN SHAREHOLDER VALUE 2017 FINANCIAL PERFORMANCE COMPARATIVE TOTAL RETURN (1) (2)The Bell team s diligent execution of our broadband strategy in 2017 delivered the best networks and most innovative customer services, drove leading subscriber and financial results and enabled us to continue to return value to shareholders, including our 10th consecutive year of 5% or greater dividend SHAREHOLDER RETURN IN 2017 (1)INCREASE IN DIVIDEND PER COMMON SHARE FOR 2018 TOTAL SHAREHOLDER RETURN SINCE THE END OF 2008 (1) (2)

3 INCREASE IN DIVIDEND PER COMMON SHARE SINCE THE END OF 2008 ACTUALTARGET Revenue 6% Adjusted EBITDA(3) 6% Capital intensity17. 8 %~17 % Adjusted EPS (3)$ $ $ Free cash flow(3) ~5% 10 % 2017 SINCE THE END OF 2008 S&P/TSX Composite S&P/TSX Telecom (1) Assumes the reinvestment of dividends. (2) Total return since the end of 2008, the year Bell implemented its transformational strategy.(3) Adjusted EBITDA, adjusted EPS and free cash flow are non-GAAP financial measures and do not have any standardized meaning under International Financial Reporting Standards. Therefore, they are unlikely to be comparable to similar measures presented by other issuers.

4 For a full description of these measures, including dividend payout ratio, see section , Non-GAAP financial measures and key performance indicators (KPIs) on pp. 108 to 110 of the MD& AND OPERATIONAL HIGHLIGHTSBell is rolling out Canada s next-generation communications infrastructure, turning on the world-leading broadband fibre and wireless networks that offer consumers and business customers dependable anytime, anywhere access to the crucial information and compelling entertainment they investment and innovation leadership strategy, including the creation of Bell MTS, delivered the most net new broadband IPTV, Internet and postpaid wireless additions in the industry and solid growth in market Coverage.

5 Best networks are On at subscribers (millions)* + + + growth + telephone + + than any other Canadian communications company, we invest in expanding and enhancing our unmatched fibre and wireless networks and in pursuing innovation-generating R&D to drive the services that create growth: wireless, TV, Internet and media.* Rounding in numbers may affect total figures INC. 2017 Annual REPORT5 For more information, please refer to section 7 of the MD&A Selected Annual and Quarterly information, page OPERATING REVENUES2017 OPERATING REVENUES$ 1 7. 7 B$ services64%of total operating revenue12%Growth services83%of total operating revenueWireless25%34%Wireline Broadband & TV39%37%Wireline Voice36%17%+ $ $ OPERATING REVENUES($ BILLIONS)+ $7.

6 3 5 82016$ FLOWS FROM OPERATING ACTIVITIES($ BILLIONS)+ $ 3 .4182016$ CASH FLOW($ BILLIONS)+ %2017$ $ CAPITAL EXPENDITURES($ BILLIONS) $ $ NET EARNINGS($ BILLIONS)+ $ $ ADJUSTED EBITDA($ BILLIONS)With the addition of more than million new Bell broadband customers in 2017, our postpaid wireless, Internet, IPTV and media growth services continue to drive the steady increases in revenue, adjusted EBITDA and free cash flow that offer us the financial flexibility to invest in STRATEGY POWERS GROWTH6 MESSAGE FROM THE CHAIR OF THE BOARDBCE s scale and innovation delivering unmatched results for all our stakeholdersBCE s strategy of leading performance and scale in broadband networks, continuous innovation to create exclusive communications services and in-demand content.

7 And strategic acquisitions to seize emerging opportunities is delivering results for our customers, shareholders, communities and team. 2017 was another year of outstanding operational and financial performance by the Bell team in an intensely competitive communications Bell s legacy of leadership in Canadian communications since 1880, our progress in 2017 has fueled significant enhancements to our national broadband network infrastructure, ongoing research & development in Canada, and high-profile leadership in corporate social responsibility, including the ongoing growth of our ground-breaking Bell Let s Talk mental health initiative. In an era when communications infrastructure and service innovation are more than ever the backbone of economic and social growth and prosperity, Bell is at the forefront of the global broadband revolution, leading the way in providing Canadians with the latest growth services in consumer and business s communications leaderBell remains the primary driver of Canada s advanced communications infrastructure development as we continue to roll out new and enhanced fibre and wireless networks.

8 In 2017, total capital expenditures exceeded $4 billion, a national capital program on par with some of the largest in Canada and greater than any other communications competitor, while we maintained investment within a prudent capital intensity the launch of Bell MTS in March 2017 following our acquisition of Manitoba Telecom Services, we re quickly expanding the Bell broadband strategy into Manitoba with significant network enhancements and the introduction of the latest LTE Advanced and Fibe services. Bell now offers wireline coverage to 76% of Canadian households and, in a major milestone achieved in 2017, LTE wireless service to 99% of the leadership is the backbone of our success, with advanced LTE wireless speeds supporting fast growth in new subscribers and mobile data usage, and the next-generation Fibe network enabling innovative new TV, Internet and business BCE INC.

9 2017 Annual REPORT7services as our direct fibre connections continue to accelerate. Coupled with the best in sports, entertainment and news media across every platform, we re building on Bell s position as Canada s leading provider of both Internet and TV services. Bell s fibre network is Canada s largest at more than 240,000 total kilometres, passing approximately million locations across 7 provinces including the largest footprint capable of delivering Gigabit plus speeds with direct fibre connections to more than million homes and businesses. Together with the country s largest network of data centres with the integration of Q9 Networks, Bell has the connectivity and capacity to deliver demanding end-to-end integrated communications services for consumers, business and government.

10 This includes staking out a leadership position in the burgeoning Internet of Things marketplace, which enables multiple business verticals to easily collect and analyze data using mobile and fixed data collection devices powered by Bell s broadband networks. Bell s network and data management advantages are also driving innovation in connected vehicles, Smart City platforms and the Connected Home further enabled by our acquisition of AlarmForce strength enables our strategyBCE s healthy balance sheet and liquidity position and our stable investment grade ratings provide us with the financial flexibility to achieve our capital markets objectives.