Maher Yaghi

Maher Yaghi asked about the board's key considerations in selecting Victor Dodig as the new CEO. He also followed up on the pricing environment, specifically recent changes to EPP plans, and whether these reflected ongoing market frustration or a temporary response to competitive aggression.

Answer

Darren Entwistle, President and CEO, TELUS, explained that the board sought a leader with a proven track record, strong leadership values aligned with TELUS's culture, a focus on customer service excellence, growth through strength, and an affinity for social purpose and execution. Zainul Mawji, EVP and President, TELUS, stated that TELUS would be reactionary in the market, participating effectively in value and premium segments, and driving discussions to keep promotions tightly managed. Darren Entwistle reiterated that rapid emulation of irrational pricing leads to commoditization, advocating for sustainable, differentiated value propositions.

Maher Yaghi asked about the board's rationale for hiring Victor Dodig as CEO and followed up on the current pricing environment, specifically changes to EPP plans and whether this reflects ongoing market frustration.

Answer

Darren Entwistle, President and CEO, TELUS, explained that the board sought a leader with a proven track record, strong leadership values reflecting TELUS's culture (customer service excellence, growth through strength, social purpose), and someone who would bring new ideas while maintaining core values. Zainul Mawji, EVP and President, TELUS, stated that TELUS will be more reactionary in the market, participating effectively where value is lost, and driving discussions to manage promotions tightly. Darren Entwistle reiterated that rapid emulation of irrational pricing leads to commoditization, and TELUS aims for differentiated, sustainable value propositions.

Maher Yaghi from Scotiabank asked about BCE's assumptions for 2026 wireless subscriber growth for both the industry and the company, and whether recent aggressive discounts impacted Q1 subscriber loading goals. He also inquired about the potential upside from leveraging BCE's fiber footprint to increase wireless market share through convergence and requested the percentage of wireline customers who are also wireless customers.

Answer

President and CEO Mirko Bibic stated that wireless market growth is expected to be a low single-digit rate, consistent with a mature market. He affirmed that recent aggressive promotions do not alter Bell's disciplined strategy of focusing on profitable Bell-branded loadings and aiming for an appropriate market share. He confirmed 100% upside from convergence, targeting a 25% increase in product intensity by 2028, but did not provide specific wireline/wireless customer overlap statistics.

Maher Yaghi asked about BCE's assumptions for 2026 wireless subscriber growth for the industry and BCE, and whether Q1 2026 discounts have impacted subscriber loading goals. He also inquired about the potential upside from wireless/wireline convergence leveraging BCE's fibre footprint and the percentage of BCE's wireline base that are also wireless customers.

Answer

Mirko Bibic, President and CEO, BCE, stated that BCE's view of wireless market growth is consistent with competitors, expecting low single-digit rates. He affirmed that recent aggressive promotions do not change BCE's disciplined execution plan, focusing on accretive Bell-branded loadings. Regarding ARPU, he reiterated that 11 months remain to achieve targets. Mirko Bibic confirmed significant upside from product intensity, targeting a 25% increase by 2028, driven by fibre, premium content, and wireless leadership, but did not provide specific wireline-to-wireless customer percentages.

Maher Yagi questioned whether the government would formalize a definition of 'sovereign AI' for Canadian enterprises and asked for more details on Bell's Q3 wireless performance, specifically regarding the pivot to new plan tiers and the mix of Bell-branded vs. Flanker brand post-paid net adds.

Answer

CEO Mirko Bibic stated that sovereignty is multifaceted and believes the market will speak, with enterprises relying on trusted Canadian providers. For wireless, he clarified that Bell-brand post-paid net adds were 'very, very large,' indicating a strategic shift from Flanker brands. CFO Curtis Millen added that new monthly rates are higher than embedded base rates, helping blended ARPU.

Maher Yaghi from Scotiabank questioned the sustainability of the improvement in wireless churn, the drivers of ARPU trends including any one-time impacts, and the current penetration of bundled wireless and internet services within BCE's customer base.

Answer

President & CEO Mirko Bibic noted that excluding one-time items, the ARPU decline was consistent with prior quarters but still industry-leading, and he anticipates positive ARPU movement in 3-5 quarters if pricing remains stable. He described the churn reduction as a result of a multifaceted approach. EVP & CFO Curtis Millen added that handset product margin is positive and has increased.

Maher Yaghi delved into wireless metrics, asking about the sustainability of churn improvements, the drivers of ARPU, and the penetration of bundled services. He also sought clarity on how the updated guidance reflects the performance of the core Canadian business.

Answer

President & CEO Mirko Bibic noted that excluding one-time items, ARPU decline was in line with prior quarters and expects positive ARPU movement in 3-5 quarters, contingent on pricing stability. He emphasized that churn reduction is a multifaceted effort. EVP & CFO Curtis Millen added that the guidance reflects a slightly decreased EBITDA view for the combined entity but a stable free cash flow outlook for the Canadian business with Zipline overlaid.

Maher Yaghi of Scotiabank inquired about whether unannounced asset sales are included in BCE's leverage targets and asked for commentary on the Q1 wireless loading environment.

Answer

CFO Curtis Millen confirmed that the leverage plan incorporates the previously announced $7 billion in asset sales. CEO Mirko Bibic explained that Q1 wireless results were impacted by a frothy pricing environment and a strategic decision to avoid non-accretive subscribers, but noted that key metrics are trending positively into Q2.

Maher Yaghi asked about BCE's U.S. fiber expansion strategy, specifically regarding the use of third-party capital. He also questioned whether Bell Media is considered a noncore asset for divestiture and sought clarity on the dividend policy's flexibility before the end of 2025.

Answer

Mirko Bibic, President and CEO, clarified that Bell Media is a core strategic pillar focused on becoming a digital content powerhouse and is not for sale. Regarding U.S. fiber, he stated the priority is closing the Ziply Fiber acquisition and noted inbound interest for third-party capital partnerships but offered no specifics. On the dividend, he confirmed the Board will continuously review it based on competitive, macroeconomic, and regulatory conditions, emphasizing the goals of deleveraging and maintaining investment-grade ratings.

Maher Yaghi questioned the profitability of BCE's fiber-to-the-home investments, asking if they still yield positive NPV given the current aggressive promotional environment and broadband ARPU levels of $55-$60, far below the original $90-$100 expectation.

Answer

CEO Mirko Bibic affirmed that fiber remains the critical growth engine for Bell's wireline segment and the investments will serve the company well long-term. He acknowledged the intense pricing environment but highlighted strong bundling success, which enhances customer lifetime value, and noted the company's ability to adjust its strategy, such as moderating the fiber build pace, in response to market pressures.

Maher Yaghi questioned President and CEO Tony Staffieri about the increased pricing pressure and promotions in the wireless market, particularly at year-end 2025 and into Q1 2026, asking if there's a risk to the downside on price given slowing subscriber growth. He then followed up with CFO Glenn Brandt on free cash flow, seeking clarification on any 'drag' factors that might be nullifying the benefits of CapEx reduction, specifically mentioning the backhaul deal.

Answer

President and CEO Tony Staffieri reiterated Rogers' balanced approach, focusing on service revenue growth and value propositions beyond price, avoiding 'uneconomical' price points seen from competitors. CFO Glenn Brandt clarified that there isn't a specific 'drag' on free cash flow; the guidance reflects prudence and variability across elements, with the timing of the MLSE minority interest acquisition and recapitalization potentially shifting savings between 2026 and 2027.

Maher Yaghi asked about the risk of downside on wireless pricing given slowing subscriber growth and aggressive promotions. He also followed up on free cash flow, questioning if the MLSE buyout's cash flow neutrality nullifies CapEx reduction benefits.

Answer

President and CEO Tony Staffieri reiterated Rogers' focus on service revenue growth and a balanced approach, avoiding uneconomical price points and highlighting their strong Q4 wireless margin of 67%. CFO Glenn Brandt clarified there's no specific drag on free cash flow; the guidance reflects prudence and variability. He noted the timing of the 25% MLSE interest acquisition could shift interest savings between 2026 and 2027.

Maher Yaghi requested clarification on whether the wireless 'back book' of customers is priced below the 'front book' and asked about Q4 iPhone demand in Canada, including potential impacts on handset subsidization.

Answer

CFO Glenn Brandt clarified that his previous comments referred to general wireless service revenue growth expectations, not specific front/back book pricing. President and CEO Tony Staffieri confirmed good demand for new iPhones in Q4, with supply being the main constraint, and outlined a Q4 strategy focused on hardware-based promotional incentives with disciplined tiering to manage subsidization.

Maher Yaghi of Scotiabank asked for the company's current pro forma leverage ratio after accounting for the Blackstone and MLSE transactions. He also inquired about the potential pace of wireless ARPU improvement heading into 2026, considering recent pricing changes and the impact of a prior subscriber reclassification.

Answer

CFO Glenn Brandt stated that pro forma leverage is approximately 4.0x after the MLSE purchase, up from just over 3.5x, and expects organic deleveraging to continue. President & CEO Tony Staffieri expressed confidence in strengthening ARPU through a simplified value proposition, base management, and new features like satellite service, expecting roaming headwinds to ease. Brandt also clarified the prior subscriber base adjustment no longer impacts churn calculations.

Maher Yaghi questioned the impact of the recent backhaul deal on free cash flow guidance and real cash generation. He also asked for the outlook on the increasing losses and CapEx in the Corporate segment.

Answer

CFO Glenn Brandt explained that the net cash flow impact of the backhaul deal (distributions paid less interest savings) is not substantial and would not have altered the free cash flow guidance. Regarding the Corporate line, he attributed the increased loss to startup investments in Rogers Bank and remaining Shaw integration costs, while noting that CapEx can have year-to-year variations. He affirmed that corporate efficiency remains a key focus.

Maher Yaghi focused on balance sheet uncertainties, asking if Rogers could opt out of the MLSE transaction, what caused the delay in the backhaul infrastructure deal, and why the company isn't pursuing a capital raise on its sports assets as a definite backstop.

Answer

President and CEO Tony Staffieri affirmed the company's intent to close the MLSE deal and remain investment grade. CFO Glenn Brandt described the backhaul financing as a complex transaction with good progress but no firm timeline, clarifying that the free cash flow guidance is not dependent on it. He emphasized that Rogers has multiple options to maintain balance sheet strength.

Maher Yaghi probed the structured financing deal for the effective rate for the investor, its impact on future free cash flow, the percentage of backhaul included, any minimum commitments, and whether Rogers has a repurchase option.

Answer

Chief Financial Officer Glenn Brandt stated the investor's return is based on tiered wholesale rates tied to data traffic growth, with no guaranteed minimums. He noted that while annual distributions will be slightly higher than the after-tax interest savings, the impact is not material to free cash flow. He also confirmed Rogers will have full control over the investment's duration and that distributions are not tax-deductible.

Maher Yaghi asked how AI advances are affecting the tax business, including its defensive capabilities and market share potential, and which of the Big Three segments is expected to drive the most revenue acceleration in 2026.

Answer

CEO Steve Hasker expressed equal excitement for AI in the tax business, noting less business model hurdles, an acute talent shortage, and the ability of AI to automate 'shoulder activities' and enable advisory services. CFO Mike Eastwood indicated that the Tax and Accounting Professional segment is expected to have the largest absolute increase in organic growth rate for 2026, driven by acquisitions like SafeSend and Materia, new product launches, and strong performance in Latin America and UltraTax.

Maher Yaghi asked how AI advances are affecting the tax business, specifically if it has similar defensive capabilities and market share gain potential as the legal segment, and which of the 'big three' segments is expected to see the most revenue acceleration in 2026 compared to 2025.

Answer

CEO Steve Hasker expressed equal excitement for agentic AI in the tax business, noting the profession's receptiveness due to value-based pricing (not per-hour), acute talent shortages, and the ability of AI to automate shoulder activities and enable advisory services. He highlighted how Ready to Advise integrates agents with existing tax calculation engines. CFO Mike Eastwood stated that the Tax & Accounting Professional segment is expected to have the largest absolute increase in organic growth rate for 2026 versus 2025, driven by scaling acquisitions (SafeSend, Materia), new launches (Ready to Advise, Ready to Review), continued dominance in Latin America, and strong UltraTax performance.

Maher Yaghi of Scotiabank asked for details on the second-half drivers needed to achieve the full-year free cash flow guidance of $1.9 billion. He also questioned what would cause revenue growth to accelerate in the back half of the year to meet full-year targets.

Answer

CFO Michael Eastwood expressed strong confidence in hitting the $1.9 billion free cash flow target, noting that H1 is typically lower due to annual bonus payments in March. For revenue acceleration, he cited strong underlying bookings and a healthy pipeline, combined with significantly easier year-over-year comps in H2 for both the Reuters News and Tax & Accounting Professional businesses. This gives him strong confidence in delivering the 7-7.5% full-year organic growth.

Maher Yaghi from Scotiabank asked for clarification on the implied revenue deceleration in the second half of 2024, given the strong first half, and how this aligns with the company's outlook for accelerating growth in 2025. He also inquired if AI could create new revenue streams for law firms.

Answer

CFO Mike Eastwood attributed the H2 moderation to the non-recurrence of a $25 million one-time GenAI licensing deal from Q1, seasonal factors in the tax businesses, and a tough year-over-year comparison in Q4. CEO Steve Hasker addressed the second question, stating that while it's early, innovative customers are already experimenting with new lines of business using AI. He drew a parallel to e-discovery, which ultimately allowed firms to grow revenue by reallocating talent and adopting value-based billing.

Maher Yaghi from Scotiabank asked about the long-term free cash flow impact of the tower monetization deal and questioned what factors support the view that recent wireless pricing improvements can be sustained.

Answer

EVP & CFO Doug French stated the tower deal will remain cash flow positive long-term through new builds and co-location leases. President and CEO Darren Entwistle expressed cautious optimism on pricing, citing the unsustainability of prior irrationality, encouraging trends, and TELUS's unique resilience due to its diversified wireline, health, and digital businesses.

Maher Yaghi asked about the long-term free cash flow impact of the tower monetization deal and sought management's view on the sustainability of recent improvements in wireless market pricing.

Answer

EVP & CFO Doug French explained the tower business model is designed to remain cash flow positive long-term, even with new builds. President and CEO Darren Entwistle expressed cautious optimism on pricing, citing encouraging trends and the unsustainability of prior irrational behavior. He highlighted TELUS's resilience through cost management, a diversified portfolio including wireline and TELUS Health, and AI-driven efficiencies.

Maher Yaghi from Scotiabank questioned the long-term outlook for wireless ARPU, noting the decline and the gap between back-book and front-book pricing. He also challenged the logic of increasing the dividend while the dilutive DRIP program remains active, suggesting a pause until the DRIP is eliminated.

Answer

EVP & CFO Doug French and EVP Zainul Mawji explained that ARPU is a complex mix and the goal is to avoid gravitating to the market floor by leveraging product intensity and bundling. President & CEO Darren Entwistle defended the dividend policy, stating it's based on a long-term view of sustainable free cash flow growth, not a short-term payout ratio metric. He expressed confidence in a specific, 24-month deleveraging plan that will enable the expedient removal of the D-DRIP, arguing this was a superior strategy to altering the long-term dividend program.

Maher Yaghi from Scotiabank noted the acceleration in fixed data services revenue growth for a second consecutive quarter and asked about the underlying KPIs driving this improvement, such as pricing and customer intensity. He also requested commentary on the general pricing environment in TELUS's marketplace.

Answer

Zainul Mawji, EVP and President of Consumer and Small Business Solutions, attributed the growth to a foundation of strong customer volume, a diversified portfolio of services, and customers upgrading to higher-speed fiber plans. Navin Arora, EVP and President of Business Solutions, added that the B2B segment, particularly SMB, saw significant volume growth and increased product intensity, contributing to the positive results.

Maher Yaghi questioned the low fixed data growth given TELUS's product mix and asked about remaining repricing pressure and the potential to tier 5G on Public Mobile.

Answer

Executive Zainul Mawji acknowledged seeing upside for differentiation on Public Mobile. For fixed data, she said the company counters cord-shaving with differentiated OTT bundles. CEO Darren Entwistle added that despite repricing, the company guides for 6%+ EBITDA profitability in H2, showing an ability to absorb pressure and positioning it for future upside as that pressure moderates.

Maher Yaghi from Scotiabank inquired about the initial performance of Freedom Mobile since its acquisition, focusing on subscriber loading and the competitive response. He also asked for the timeline to launch a bundled wireless and internet service in Freedom's markets.

Answer

President and CEO Pierre Karl Péladeau described the market as intensely competitive post-acquisition but noted Quebecor is executing a multi-step plan including new pricing, more data, and 5G. CFO Hugues Simard added that bundled services are part of this staged rollout and are expected in the coming weeks and months, without providing a specific date.

Maher Yaghi of Scotiabank questioned Quebecor's bundling strategy and profitability in Freedom Mobile's new markets, particularly concerning the ability to compete with low retail internet prices in Ontario given the high regulated wholesale access costs.

Answer

President and CEO Pierre Karl Péladeau acknowledged the competitive landscape and stated that the current wholesale FTTP access price of $122 makes it impossible to profitably sell internet at the $60 retail price offered by competitors like Bell. He expressed confidence that regulators like the CRTC and ISED will address these inflated wholesale rates to foster fair competition. CFO Hugues Simard added that the company anticipated this price pressure and has agreements with Rogers to ensure necessary margins and compete aggressively on bundled services.

Maher Yaghi of Scotiabank inquired about the sustainability of Quebecor's internet pricing strategy amidst aggressive competition from BCE in Québec. He also asked if the company remains confident in the terms of the Freedom Mobile acquisition and its ability to outperform Shaw's previous results.

Answer

President and CEO Pierre Karl Peladeau responded that Quebecor differentiates itself through superior customer service and bundled offerings, which foster customer loyalty. He argued that Bell's aggressive pricing is unsustainable given the regulated wholesale FTTH rates, a matter the CRTC is reviewing. Regarding the Freedom Mobile deal, Peladeau expressed strong confidence, stating the extended review period allowed them to assemble the right tools to compete effectively and profitably, and they are ready to proceed upon receiving ministerial approval.

Maher Yaghi of Scotiabank inquired about the status of the definitive agreement with Rogers for the Freedom Mobile acquisition and asked if Quebecor is observing a trend of wireless net adds shifting towards higher-end brands, similar to its competitors.

Answer

President and CEO Pierre Peladeau stated that details of the agreement with Rogers remain confidential to facilitate a successful approval process. CFO Hugues Simard confirmed a similar trend, noting that the main Videotron brand performed very well, although the flanker brand Fizz also continued to show strong performance.