BCE Inc (BCE) 2003 Q4 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to the BCE fourth-quarter results conference call. I would now like to turn the meeting over to Miss Maarika Paul. Please go ahead, Miss Paul.

Thank you and good morning, everybody. The purpose for the call obviously is to review the highlights of our fourth-quarter this morning based on the financial results which we released earlier. With us on the call today are Michael Sabia, President and CEO of BCE, and Siim Vanaselja, CFO of BCE. We will go through some slides this morning and if you don't have a copy of those you can download them from our website at BCE.ca . Following the formal presentation, we will also do a Q&A session including the heads of our various business -- [indiscernible] will join Michael and Siim for that part. As always I have to remind you that today's remarks contain forward-looking statements with respect to items such as revenues, EBITDA, and earnings. There are risks the actual results will differ materially from those contemplated by the forward-looking statements and for additional information on these risks, please consult BCE's 2003 fourth-quarter MD&A, which was filed with the SEC under Form 10-K and with the Canadian Security Commission.

These forward-looking statements represent the expectations of BCE and subsidiaries as of today and accordingly are subject to change after such date. BCE and its subsidiaries describe any obligation to update any forward looking statements whether result of new information, future events or otherwise.

As well, today's call is being taped. It will be available in replay mode as of noon today until Wednesday, February 11th. And you can also see the archive on the website. And now I turn the call over to Michael.

Thanks, Maarika. Good morning, everybody, thanks for joining us today. Just to get started on the first slide, I think when we stand back a bit from the year I think we accomplished two things in the year fundamentally.

First, operationally, where I think we made a lot of progress -- progress on continuing to simplify the business and building our business around the needs of the customer, re embracing innovation in the Company is one of the pillars that will take us forward so I think good solid operational progress. Financially yes I think we've improved profitability in the Company -- I'll have more to say about that as we go through some of this morning's presentation.

But I think also we have seen really a very, very important and strategically important turnaround in the Company's cash flow performance. As you all know that it is really so important in enhancing the balance sheet strength of the Company and the kind of financial flexibility that we have in a very quickly changing environment in telecom today.

So that turnaround in cash flow extremely important accomplishment -- and one of the things that we set out to do through the course of the year which I think we've had a very high degree of success. I might say given all of that, just a quick look ahead to some of the issues in 2004.

I must say I think through the course of and we talked to you a little bit about this, quite a bit about this during the December 17th session but I think we're making good progress on our 2004 objectives already. A lot of very good work in the Company on the design and execution of the Company's more aggressive move into IP and other of many of the legacy areas that have been important to us in the past. Some excellent work in building VoIP capabilities [indiscernible] products in really all of our core consumer, SMB and enterprise segments through the course of this year. And I think as we roll those products out on a commercial basis you will see and we feel very confident about the quality, the reliability, the technological sophistication of those products which I think will set a very high standard, very high competitive standard in the industry given what we're going to be able to do for our customers with that new and very important change in technology.

We're also seeing through the course of the year loss of opportunities to engage in substantial process simplification -- that, as you know is such important implication for us in terms of our ability to reduce costs and become a more efficient company. Things that will just be centrally important as we move forward into a world of IT to create a profitable durable business model which is what we're going to do.

Like you to turn to some of the high level numbers now. Turn to the numbers on this page. I think they're all very consistent with the kind of guidance that we have set out recognizing and this is important and seeing, we will spend a minute or two on this -- recognizing our decision to (indiscernible) global through reliant and also the sale of the U.S. health business unit out of Emergis with those adjustments made, I think the numbers line up quite well.

Revenues at the BP (ph) level up 2.3 percent; EBITDA at 6.3. Again I think very strong performance on the part of the Company in generating productivity, something over $630 million so again I think we've delivered on what was a very aggressive target on the productivity side of the business as well. That helped us improve margins, both at BCE and at Bell BCE level now at a little over 39 percent. So we continue to make good progress there.

EPS earnings. Once you clear away some of the noise in the fourth quarter of last year, with respect to one-time events and in particular accounting gains on the sale of the directory business almost a 16 percent step up in EPS 15.9 percent so, again, I think quite good there in terms of the Company's underlying performance and of course CapEx and tighter management of CapEx very helpful to us in securing the kind of cash flow turnaround that I mentioned before -- something on the order of $2.5 billion.

On the quarter itself in fourth-quarter and, again, seem to elaborate and you know, we've seen another good quarter on EBITDA, something over 6 percent at both BCE and Bell with margins up both at BCE and at Bell, and up a substantial amount.

Now, obviously, it's clear revenues -- as we anticipated -- are soft in the quarter. And I think that's driven, fundamentally, by two things. Both of them in -- on the business market side of our Company. First the continuation of the kind of trends that we talked to you about before in enterprise and wholesale. And, second, by a set of decisions that we've taken in the quarter to either phase out or eliminate some lines of business, some very low margin contracts in both enterprise and wholesale, and that's all part of a broader effort on our part to tighten up the business, get more focused on profitable growth, systematically try to exit lower market areas of the business -- that kind of that activity in the quarter cost us about $75 million revenue in the quarter. Now had it not been for that our revenue performance would have been fairly stable or flat in the quarter.

Obviously, that itself is no cause for celebration and it still leaves us with a substantial amount of work to do with respect to our revenue performance in the business markets. And I think we would be -- and I would certainly be the first to recognize that. But, generally, just in summary, you know I would say that I think in 2003 and indeed in the fourth-quarter I think all in, we had a pretty steady satisfactory year. We've seen our ROE go up substantially, up a couple of hundred basis points now to 14.9 percent etc.

But that being said, I won't describe it as satisfying and why do I say that? (indiscernible) satisfy only will be until we begin to ramp up our revenue performance as a business market and that's obviously a very high priority for us.

Now I turn to consumer, you know, I've spoken about the importance of ramping up on the business market side but when you look at the consumer side of our business I think it is very clear quite a strong year, very high level of performance both in terms of revenue and EBITDA both up quite substantially next quarter when we report the first quarter we will be reporting on a more segmented basis. I think that will be helpful in enhancing the transparency of -- your transparency into our business and you'll be able to see the kind of performance more clearly that we're generating in the consumer segment overall but quite strong revenue in EBITDA.

That performance has gotten many roots -- wireless, which I'll come back to and talk about and I think a very strong quarter. The ISP -- our Internet business -- again very good performance continuation of trends net (indiscernible) the year over 370,000. That's up about 20,000 over last year. Total subs on end of period basis up 33 percent in the year quite strong.

Now you'll note the absolute number of net ad (ph) [indiscernible] they're a bit below Q4 '02 or fourth-quarter last year but that, again, is entirely due to the emphasis that we placed this year on second end and in particular third-quarter performance with a little less emphasis on the fourth-quarter. That's kind of a reverse of the strategy that we had last year where we emphasized the fourth-quarter more and the previous quarters of bit less so we're quite satisfied with the kind of performance in the quarter. It's very much on track indeed. Actually, even a little bit better than our expectation.

I mentioned all these things because this is -- as you know -- such an important part of the future of our business. We believe that we are in a leadership position in the expansion of broadband capability and the consumer market. That's true in our core markets. We also think that's true of our position in North America in general.

We intend to keep it that way and we will be aggressively this year continuing to move expanding subs and in particular enhancing bandwidth as we go through the year and of course you've already seen the announcements we made toward the end of last year with respect to increasing speeds through the course of this year.

On the ISP we've also seen pretty good expansion in value-added services -- that's important to us, all part of a broader game plan of adding power to bandwidth and, again, later this year we will further take another important step when we launch our work with MSN (indiscernible) with all the capabilities that will provide to our residential customers. That will be an important event for us.

On ExpressVu -- you know, better this quarter than the rest of '03 but clearly a softer quarter than the fourth-quarter of last year. A lot of reasons for this. First, some of the pricing action we took some time ago. Second, generally, a relatively slow quarter and that's just been true, really, through the course of the year with respect to the digital market. I think, also, some of the quite aggressive [indiscernible] moves we've been taking I think that has had some impact as well and, again, I think that's the right thing to do as this business gets larger, obviously, building it on the foundation of integrity and durability is important. So we will continue to do those things.

I think you'll see further progress overall in the expansion of our video business as we talked about on December 17th. The bundle that we launched -- quite a good success there. Something in excess of 70,000 bundles sold and continues to ramp up strongly through the month of January, great (indiscernible) about 40 percent of those customers purchasing new services from us. And, again, I think very much reflecting the kind of customer demand for bundling that certainly reflects the customer's appetite for value -- that's for sure. But I also think and perhaps more fundamentally the strong customer appetite for simplicity, which is such an important part of where we're going overall.

And in some of the traditional areas, local access [indiscernible] pretty good performance. Our performance on LD, we continue to see modest erosion on the (indiscernible) side but really those two things pretty uneventful and pretty much consistent with trends.

So overall I would say a lot of momentum in our consumer business.

On wireless, speaking about momentum, I really do believe we feel very good about the performance of our wireless business. It really is a business that's firing on all cylinders. Our revenues are up 16 percent in the quarter, 15 percent on a full year basis. Comfortably in excess the rate of growth in the market our subscribers are up about 13 percent net ad over 500,000 for the year.

I think that on the quarter -- in the fourth-quarter performance -- very consistent with the strategy that Michael Newman reviewed with you on December 17th where we had -- where he had laid out our plan for the year to focus very much on the second-quarter as the key area key period for us to ramp up on net ad which we successfully did and given that strategy I must say when we look at the fourth-quarter number, we're very satisfied with the performance of our mobility business in the fourth-quarter, I think it's very good.

We've beaten all of the competition in terms of net ad in Q1 and Q2 and, again, in Q3. So we will see where we shake out at the end of Q4 but, again, I feel quite good about it, given that our strategic focus was earlier in the year.

I could go on. Churn continues to be very good, in fact, the month of December -- our post (indiscernible) churn was below 1 percent. Quite an achievement. ARPUs are up. Profitability is significantly up. Couple of hundred basis points in the year over 800 basis points in the quarter sounds more dramatic when you say 800 basis points than 8 percentage points.

And that, obviously, too -- we have seen COA step up a little bit in the fourth-quarter. Couple of things there. First, the intensity and a competitive environment in the fourth-quarter and, second, also what I think we brought on about five new handsets I think in the fourth-quarter very color feature rich phones and that has -- drags a little bit more subsidy with it but it also brings higher ARPU and I think begins to move us more aggressively into the expanded data side of our wireless business as well.

So overall I would say in the year on wireless, again, I think we feel very good about it, very good about the strategy underlying the growth of this business where I believe we really found and are executing well in the sweet spot between financial discipline and growth. So I am very satisfied with this.

And as I look forward into the year, I think we feel good about our ability to ramp up in the West, the impact that entering that pushed the top market will have the strong position we have in the wireless business market. All of that gives me a lot of confidence as we think about the future of our wireless business.

On small and medium I think -- given everything we've seen and the work that Karen Sheriff (ph) and her team are doing there, we have a growing conviction about the extent of the opportunity that exists in this -- I think -- still relatively underserved market. We got an awful lot of work to do. Certainly we're just at the beginning but we do see some encouraging signs of a turnaround in our ability to ramp up that business.

I think we're doing there and in the progress that we're beginning to have has many roots. First, a lot of it, blocking and tackling; better alignment; better deployment of our face-to-face sales force has been an important ingredient. There we got more to do but a lot of progress is made. DSL has been moving well, our share continues to grow there as well, I think 40 percent or so so good progress there we're going to continue to drive that and continue to grow share. There are a lot of success and cross selling. In the mass market -- the very small business market, we've seen about a 14 percent lift in revenue per call in the fourth-quarter. Some calls (indiscernible) running actually over 20 percent lift. And interestingly considerable openness in appetite on part of our small -- of our smaller business customers to acquiring packages or solution services to where we combine wireless and high-speed or high-speed and total etc.

So, again, further confirmation that the overall direction that we're taking in trying to move the business forward into a world of solutions and packages and bundles is the right direction to go.

A lot of progress in simplifying the business. Won't go through all of the details here but both in terms of order cycle times, cutting a lot of details red tape simplifying contracts, one bill capability and online billing capability -- which we're rolling out this year. All of that, a lot of confidence and I think as you'll see later in the year, some very interesting work that we're doing on new sets of products targeted for this market that will bring together hosted applications together with our wireline wireless connectivity capability in what I think will be -- again some products that will set some standards -- some interesting standards in the marketplace.

Now clearly when you turn to enterprise and wholesale, somewhat different flavor there to be direct about it and continuation of the kinds of trends we've seen and talked to you about the last 18 months or so. There we continue to see some revenue decline. For just one example in our enterprise business, I think our total revenues were off, something about 20 percent -- not because minutes are down, minutes are actually up about 3 percent but because average revenue per minute is way down -- (indiscernible) about 25 percent.

So there's a lot -- some areas of that business that we are simply not going to -- not going to chase, given what's happening on the pricing and margin side of that business and that same point about not chasing businesses is also true in some areas of our wholesale business, as well. All that's to say we are embarked here on -- if I can put it this way -- a selective pruning or trimming in that area of the business.

As an example. In the fourth-quarter, we have curtailed and in some cases exited some very low margin contracts. I think we mentioned in the materials that we released today changes in our exiting from our electrical cabling business, throttling down a lot in some other areas of cabling, exiting some contracts on wholesale international voice and as I mentioned earlier, that cost is to the tune of about $75 million but, again, I want to reemphasize that in our view that's exactly the right thing to do. We're going to bring this business back to a base that makes sense and then we will grow it from there and I might say I think [indiscernible] Corville (ph) and her team done a good job in managing on the expense side taking a lot of SG&A out. We were simply spending far too much on this business. And as a result of that, they've been able to very substantially mitigate the EBITDA impact with that kind of revenue performance.

But I look ahead for a little more developmental focus on this business. I do think we are beginning to see some pretty good, some pretty good progress, lot of progress on working with customers to develop IP migration plans that Isabel talked about on the 17th, good progress there, we feel good about our ability to continue to substantially increase the percentage of our revenues, our data and applications revenues moving on IP.

Good growth in IP/VPN and ethernet. I think that's up 40 or 50 percent strong growth there's same thing network management, managed security, wireless LAN -- all those non legacy type services growing a product quarter over quarter basis just around 10 percent or just under so good growth prospect there certainly challenges on the legacy side of that -- of that business. But we will keep moving forward there and the challenge is for us to move quickly as we can, get the business back to a better profitability basis and move very aggressively to migrate on to IP which is consistent with the plans in the overall direction we've talked to you about that we talked to you about before. But we will keep going here. We got a lot to do. Take it a step at a time and we will get this done.

Finally, before I hand this over to Siim Vanaselja, a quick word on BDM and Emergis. BDM as I said in the previous call I think an excellent job this year, very strong TV ratings there I think 13 of the top 20 programs and the management team there is Yvan Sassan (ph) [indiscernible] his team has done very well to modify that ratings performance, enhance good very good revenue and EBITDA performance in the year. That combined with some pretty good discipline on cost, you see step up in EBITDA there, which I think -- by anybody's standard -- is quite strong.

In the quarter TV continued to be quite good. Globe and Mail advertising backed off a little but I think our print advertising (indiscernible) down about 10 percent on quarter over quarter basis but that accounts for some other revenue pressure in the fourth-quarter. But, nonetheless, very good EBITDA performance in the quarter -- up about 15 percent.

Emergis, really, I think the key accomplishment there was the sale of U.S. (indiscernible). This was something that we at BCE felt very strongly about. There was just critical in bringing more focus, a lot more focused to the company that sell that business and it's a good business but the reality is that the U.S. health (ph) business and Emergis really had nothing to do with [indiscernible] and we think that's finally been recognized and we were able to move forward and get that done. That's important and I do think that that now results in a much better focused company and that's what all of us, certainly all of us at BCE in a much better position to assess the future of that company to assess its future prospects and to assess what the best next step will be in that area. So Siim, with that, I will turn it over to you.

Thanks, Michael, and good morning, ladies and gentlemen. In the next few slides I will turn to a more detailed review of the financial results of our performance in the fourth-quarter. And I will highlight upfront that our reporting this period reflects the sale of Alliance State and Stratus Global as well the BCE Emergis sale of its U.S. Health operations. Therefore, those two businesses have been accounted for. You'll see on the financial statements as discontinued operations meaning that the revenues in the EBITDA have been eliminated from our results for the current period and as well for all prior comparative periods.

For the 2003 year, this discontinued accounting treatment for those operations reduced our revenues by approximately $700 million and our EBITDA by $170 million. So making that adjustment, our revenue and EBITDA performance for the year came out solidly in the mid range of our original 2003 guidance which you'll recall was for revenue growth of 19.3 billion to 20 billion and EBITDA growth was 7.4 billion to 8 -- 7.8 billion.

You should also know that the discontinued accounting for Stratus (ph) and Emergis U.S. Health does not impact our year-over-year growth rate and this was because the combined revenue and EBITDA of both operations in 2003 were more or less the same up in 2002.

Our fourth-quarter revenues of 4.91 billion declined 0.9 percent or $44 million from the fourth quarter at 2002. That is after excluding the 2002 directory revenues in order to focus solely on the performance of our continuing business.

Now, as Michael said, we made a decision to exit the electrical cabling business and to terminate our promotion plans for international switch minutes or switch minute contracts with overseas carriers that weren't needing appropriate hurdle rates for profitability. That essentially counted I think Michael mentioned the number -- about 75 million decline in fourth-quarter revenues over last year. Certainly with the right financial decision for us and the benefits as you can see are reflected in the significant EBITDA margin improvement which grew by a full two percentage points to 37.8 percent. BCE's EBITDA itself increased by 6.1 percent in the quarter and, also, contributing to that EBITDA improvement was the strong revenue growth in our consumer businesses, lower total cost of acquisition expense in the quarter and good productivity results.

The bottom-line -- our bottom-line EPS for the quarter was 41 cents and while there's a number of gains and losses and onetime charges in the quarter, I'll show you on a subsequent Slide that those are essentially net out to only a negative one in EPS impact so it's a lot of noise in the quarter but no big impact on EPS. In the fourth-quarter of 2002, EPS was 39 cents after excluding the gain on the sale of our directories business and in the other onetime impairment and restructuring charges. So the underlying earnings improvement is therefore about 3 cents per share and I break that three cents down as follows.

First about a 9 cents improvement from underlying operating performance and that was offset by about a 6 cent impact from higher pension expense in the earnings hit from having to restate our future income taxes for the increase in the Ontario corporate tax rate that was announced.

Overall, the improved earnings contributed to a return on equity for 2003 of approximately 15 percent and that's up from about a 12.6 percent ROE for 2002. I mention pensions and just on that topic before I forget I'll highlight that the BCE and Bell pension plan to deliver an overall 14.6 percent total fund return for 2003 which we're quite pleased with.

The last point on this slide. We had a really strong free cash flow performance for the quarter. In fact it significantly exceeded our expectations with cash from operating activities increasing by about 41 percent. So with that let me turn to the next slide on EBITDA performance at the Bell level. [indiscernible] grew by over $100 million this quarter to 1.73 billion or about 6.1 percent after adjusting for the sale of our directories business in 2002. Not only did Bell's EBITDA show solid growth but so, too, did its EBITDA margin. In the fourth-quarter Bell margin grew to 40.4 percent -- that's about 2.5 percentage points higher than fourth-quarter of 2002.

Several factors I think helped to drive that increase. We generated high wireless ExpressVu and consumer internet revenue and improved our margins in those lines of business by being more disciplined and acquiring growth and by focusing on enhancing the quality of our subscriber additions. We had a strong profitability focus in enterprise and wholesale units this quarter as we outlined and Bell realized productivity gains of $158 million for the quarter and just over $600 million for the year. And that meets our 2003 productivity guidance.

And in terms of the productivity programs [indiscernible], let me break those down at a high level for the year as follows. Efficiencies in customer acquisition -- that includes sales activities, dealer commission, equipment provisioning -- all that would add up to about to $209 million and then there's the savings in the area of servicing our customers such as help desk support, billing and call centers, field services, maintenance and repairs. That will last up till about 115 million for the year and back office support functions finally, our cost initiative there total about $200 million dollars. That all totals just over 600 million for overall productivity for Bell for the year.

As I mentioned earlier, our Q4 earnings per share before net investment gains and losses and other charges was 42 cents. You see that on the next slide. Included in that 42 cents of EPS is a 4 cent hit attributable to that Ontario government corporate tax rate increase which was enacted in December.

I'd like to take a minute here on slide 12 just to walk you through the various onetime items which bring our statutory EPS to 41 cents for the quarter. If you followed our announcements over the last couple of months you are aware that we had some gains and losses related to asset dispositions. First we had $120 million gain from December sale of just over half of Bell's position in the Yellow Pages group. That sale led to a 13 cent increase in EPS in the quarter. Second, we recognized the $58 million gain on the sale of Alliance (indiscernible) and Stratus Growth Global and that created a 6 cent increase in our EPS. And then third, we realized the loss of $160 million on the sale of BCE Emergis's U.S. health business which led to a 17 cent increase in EPS. And although this sale isn't expected to close until the end of February or the beginning of March the loss is being recorded in December in the fourth-quarter in accordance with the discontinued accounting rule.

BCE Emergis also recorded a pretax charge of about 38 million in the fourth-quarter. That represents the employee severance and other costs that it expects to incur in restructuring its various ongoing businesses in 2004. So the Emergis charge, together with minor asset impairment charges about 14 million across the group, reduced our EPS by 3 cents this quarter after-tax and after noncontrolling interest.

So with all those items our reported EPS is 41 cents for the quarter and the point I want to highlight is that although individually these items would clearly have led to some significant swings in EPS this quarter, collectively, they have virtually no change in EPS and the same will hold true for $1.90 of earnings for the full year.

So I will now turn to slide 13 on free cash flow. As I said earlier, we made good progress on cash generation in the fourth-quarter with free cash flow before investments and divestitures and after dividends in the amount of $192 million. Compared to the fourth-quarter of 2002, this represents a $552 million overall improvement of free cash flow and I say that improvement is attributable to two things.

First, increased cash from operations of some $470 million which was driven by working capital management and lower cash taxes. And here again, particularly I say that we have very strong thrust at the end of the year on collections, in enterprise and some of the other areas of the business that led to an improvement in Bell's accounts receivable [indiscernible] standing from the third-quarter to year end by pretty much 4 days which is a very very considerable improvement and certainly exceeded the expectations that we set for ourselves at the beginning of the year.

Second component of the increase would be that the fact that our dividend payments were lower by 103 million due to the elimination of dividend payments to SBC (ph).

On a full year basis, we had free cash flow just over 1.6 billion. That's a 2.5 billion improvement over 2002 and, again, well ahead of our target for 2003 which was slightly over $1 billion. Driving that annual improvement, the contributors were essentially lower capital expenditures in the amount of about $550 million, lower dividend payments of $236 million and improved operating and working capital performance of about $900 million before one final items.

Now our free cash flow for 2003 as you know included a number of non-recurring items. Those were approximately 200 million in cash savings from funding our dividend reinvestment plan and employee share plan programs with treasury share issuance. Also there was approximately 600 million of various nonrecurring cash flow such as tax refunds, satellite insurance proceeds and some cash gains on the settlement of closing out hedge contracts. Therefore the recurring operational components of our 2003 free cash flow, I'd say was about $800 million. As you know, with this improvement in our cash position we continue to reduce our net debt levels and in 2003 we were able to produce net debt by about $2 billion to 13.2 billion of net debt (ph) from just under 15.2 billion of net debt at the end of 2002.

And all that has led to an improvement in our credit profile and reduced our net debt to capitalization ratio from 48.4 percent at the end of last year to 43.8 percent at the end of 2003.

Now on the last slide, looking ahead, we continue to focus on driving the [indiscernible] strategy which we laid out in fair bit of detail in our investor conference day on December 17th. Beginning in the first quarter of this year, I'll mention that we will align our external financial reporting to begin disclosing revenues, operating income, total assets, and capital expenditures by business segment. And here Bell will be broken down by consumer, business, alliance and other and that will all be disclosed in the segmented reporting note to our financials going forward.

Finally, as you know, on December 17th we presented our plans and detailed financial guidance for 2004. Our outlook for the full year continues to remain the same. That is, we expect to see 2004 revenue growth at comparable levels to 2003. Earnings per share to grow at a mid to high single digit range. And we expect free cash flow for the year approximately $1 billion mainly from recurring sources and capital intensity at the Bell level to fall within 17 to 18 percent range.

All that would suggest the return to stronger performance, stronger revenue performance for the first quarter of 2004, compared to the growth level in this past fourth-quarter. Generally, I would say that we're targeting for the pace of revenue growth to trend upward over the course of the year.

And with that, I'll return the call back to you, Maarika.

Thanks, Siim. Nancy, can you spell out for our listeners how the Q&A session works?

Thank you, Miss Paul. [Operator Instructions] Glen Campbell from Merrill Lynch.

I have a question on the revenue guidance where Siim left off. Your guidance implied around 2 percent growth in '04, you finished the year basically flat, and you're pruning in the enterprise segment and all indications are that that's a shrinking market with growing competition. Could you give us a bit of a sense of how you expect to see revenues pick up and whether you expect to be pruning more in the enterprise segment as you go forward?

Yes, Glen, let me answer that by -- I think you listened to me enough. I've got to turn to just for a real high-level summary turn to Isabel and Karen, Pierre just to talk a little bit about revenue actions outlook etc. and through the course of the year. So let's spend a minute on this because I think it's a good question. I would say just picking up one of your comments there, yes, we will continue to take the tough decisions that we need to take with respect to getting our enterprise business and our wholesale business but in particular the enterprise business get that focused on areas where we think there are growth opportunities so we will continue to do that piece by piece. We think we've done a lot here and we're a lot more comfortable with where that is than we were a little while ago but that is part of what we're going to do in terms of -- if I can put it this way kind of rebasing that business and getting it into the areas where we think there are opportunities and we will have some more to say in the not distant future with respect to areas where we will also be stop selling certain product lines etc. etc. as we go forward but all that is consistent with the kind of guidance that Siim's talked top at a general level. So if I can ask my colleagues to just take a minute or two and just give a sort of high-level view of revenues through the year.

We said on December 17th for the consumer organization we expect revenue to grow in excess of GDP (ph) growth and each of the growth businesses to continue to grow faster in its own market. Now as you've heard on December 17th some of these markets are slightly falling down but we expect to beat the competition and gain share and basically exceed the market growth.

As well on the access and total side we expect to sustain the current trajectory in terms of revenue and to continue to work to slow down the erosion.

Glen, we have actually in small and medium business we've already got what I think is a very nice trajectory going from negative growth in S&B (ph) in the first half of 2003. We are gaining momentum and added some points of growth in the second half of the year and we actually expect that to continue to build across the year pretty linearly, I think. And the trajectory -- the growth should pick up each quarter. So we do expect a bit of a pickup, even a little bit beyond what we saw in Q4 -- we'll see that in Q1 and we'll see pickup in every quarter beyond that and again that blocking and tackling that Michael talked about is really starting to pay off the sales focus, the cross-selling, DSL continues to chug. And as we get some of these other applications into the marketplace, we expect that to drive the growth as well.

In the enterprise market, I think the market in general especially in the legacy portion of the business will continue to decline the market as a whole so in that area, clearly the same situation is to be expected especially in this whole area. As well this pruning that you qualified that we've done on some of our businesses will continue over '04 as well. We are clearly redirecting our activities in our two main growth areas and in those areas I think the (indiscernible) are very good even in fourth-quarter. Those two area are IP, transitions [indiscernible] is already starting to show some very good momentum just in this quarter. IP/VPN grew by 53 percent so that's very very good and in line with our strategy. And the second strategy that we played out on December 17th was about value added services area and there, as well, all this solution business, managed solution business is a growing business. We said December 17th double-digit so both IP/VPN and valuated services will grow at double-digit, the challenge is to manage the decline of the legacy business and these new growth business and overall as we said before we anticipate that we will give more or less flat growth year-over-year in the enterprise segment.

Thanks very much. One quick follow up -- could you comment on how much the (indiscernible) strategy and also the bundling helped your growth in ExpressVu during the quarter?

The -- well the end use strategy has really just started to that one limited the impact on ExpressVu. We will have a more important (indiscernible) 2004. In terms of bundle, indeed it was helpful. Market is still very competitive, though, in terms of digital TV as you see from our competitors but the bundle did help quite a few people at selecting ExpressVu in their [indiscernible].

RBC Capital, [indiscernible]

I have two questions -- the first if you could comment on dividend policy, I was speaking of improvement in free cash flow. If you could update us on your thoughts there, would appreciate it and, secondly, following up on the question with respect to the bundles, if you could give us a sense on composition of which customers are being upsold and what services that would be very helpful, particularly given that the cable industry as a whole has grown quite well in the fourth-quarter. Just wondering where the bundles are having an impact and as a matter of clarification wondered whether any [indiscernible] video customers are currently being recorded with an ExpressVu or where we might see those in the numbers? Thanks.

Richard, thanks, I'll answer the first one and Pierre, I'll turn to you on bundles and -- [indiscernible] video customers and such the numbers there. Richard I think on the 17th walked everyone through a very important slide that laid out our -- how can I put it? The framework of our thinking, the financial framework for our thinking with respect to dividend policy. We continue to see, I think, very good progress toward those kinds of what we say? Threshold? I think if we continue to make progress, we will certainly look for every effort and every opportunity to share that progress with our shareholders and, certainly, in that context, some continuing assessment of the dividend will be appropriate. So that continues to be very much on our radar screen, Richard. I will leave it there but it continues to be very much on the radar screen.

On the bundle, first, the DSL customers -- I will start before we talk about the bundle, the (indiscernible) customers are in the ExpressVu numbers so as I said before it started late in the year so they are still small numbers and that's where we're going to report them going forward and we'll talk about how we're doing that and where we're just ramping up right now. In terms of the bundle there as Michael mentioned, we're quite excited about the results of bundle of how fast we moved there and how fast customers joined bundling. Over 44 percent of the customers are buying a new service from us when they take a bundle. Very often, the two lead services are Internet and television. So ExpressVu is a key part of that. The DSL (ph) customers are also allowed to take bundling if they want to and some of them are taking the [indiscernible]. So, we don't really, still too early to start disclosing. The numbers are still quite small vs. overall [indiscernible] sharing up but the two lead products in bundling are Internet and television. No doubt.

To follow up, would your interpretation be -- given that we have seen most of the cable results as well as the satellite operators -- that there is just a reacceleration of growth in the overall market or do you believe that there is a reduction in the black and gray market? And subscribers are actually returning to the fold, so to speak?

That is a good point. I think we see with our action in anti piracy, that we had many customers taking value added packages and options that they weren't taking before. So, indeed, some customers are returning back to the business due to the actions we're taking. Now the market is still a very competitive market. We believe we are gaining share. We believe that we are clearly winning the DCH battle at least and we have some good acquisition in the quarter. We've tried to protect the margin. We're trying to continue to grow to 2004 through adding more value, more innovation. You've seen our announcements for more interactive [indiscernible] and the [indiscernible] coming in, more (indiscernible) so I think there's some excitement in the market at least on the digital side on the DTH side. That's our helping of growing subscribers -- in fact, we're faster than cable.

In fact, Richard I think one of the things we're very much looking forward to through the course of this year and I think you'll begin to see as we work -- if I can put it this way, to reposition our video business along the lines that Pierre's just alluded to, but also exploring more fully the connection between our ability to deliver video capability into the home and some of our other connectivity services and beginning to think about television in a different way in the home and its part and its role as an important anchor in the broadband home itself. And as we begin to differentiate our capabilities there I think you're going to see some very interesting developments through the course of 2004. We feel very good about where we are.

Haywood (ph), Rob Goff.

Could you discuss changes that you've made to your sales forces? It sounds like you've expanded your sales force with small medium Bell West and not sure on the enterprise and will that expansion represent market growth opportunities or market share moves?

We have added a number of positions, particularly in our (indiscernible) small and medium business. And I would probably call it more growth than share, because I think, universally, this market is not well covered across the industry. We probably had only 75 to 80 percent coverage of our midsize market in the past which means lot of customers who have never really got contacted. So what we've done by adding salespeople is try to drive that to 100 percent and what we're finding is a lot of significantly untapped potential.

On the enterprise segment, we didn't add any new salespeople in the net number but we've changed the strategy -- completely changed the strategy on how we would go to market. We've made some segmentation and we made some alignment of the sales force on vertical industry instead of making it around the territory or the geographies so with that, we've actually been able to return the sales force by about 20 percent, bringing a lot of external people to help us in these new markets. And now we've got in front our customers as much continuity as we can but also new specialists and their respected industry and retail, manufacturing finance and all of that with the sales team that we had before complemented very nicely in this new world of solution that we are entering so major turnaround but no net reduction. We need a lot of salespeople on the ground in the enterprise market.

[indiscernible] we have hired additional salespeople over the last couple of months and in the last sort of three or four weeks pretty aggressive [indiscernible] as well but I think with the recent announcements, we're also able to combine the sales from both our wireless and slow and medium business. So that should be extremely positive for the western region.

Morgan Stanley, Janet Pease (ph).

Two questions if I may. First on your access line trends for 2005 what should we -- how should we look at access line growth going into -- sorry, 2004 -- going into this year as our major impact there and two, if you could just update us on your plans for workforce reduction for this year? Thanks.

Both those points look on access lines, I think what we're anticipating is just pretty much a continuation of what we've been seeing. No meaningful deviation from trends there and you've seen the numbers that we've reported there, I think this quarter we're at 8. or .7 something [indiscernible] and that's been fluctuated a tiny bit but in a very narrow corridor over the last number of quarters. And, frankly, through the course of 2004, that's pretty much what we expect to continue to see so very much continuation of what we've seen over the last while.

With respect to our plans, with respect to workforce and employees, we are continuing to work on that and as we've said internally in the Company, I think it is, it is largely that by the end of the year we will have reduced the size of our workforce. We are going to do that this year on a different basis than we've done it in the past. And this year we will use a substantially voluntary approach to that. So, you can anticipate through the course of the year, I won't -- at this point -- predict numbers but we are going to make some effort begin on a largely voluntary basis to make some adjustments in the size of the workforce.

That's an important part of the plan going forward. I might also say that while we will do that, we are also having a great deal of success in getting good at moving our people from one area if they like the areas of the business into faster growth areas of the business. This last year 2003 we were able to offer little over 500 people moves of that kind. This year we will do over 1,000. I mention that first because I think it is good management and good for our people such that the growth of the Company provides everybody with opportunities but second, it's also from a financial point of view it's also financially efficient in that we believe that we can retrain people to give them those opportunities in a way and at cost that is meaningfully less than the cost of having that individual leave the Company. So that is one of those good instances where doing the right thing is also the right thing -- doing the right thing for our people is also the right thing from a financial point of view which is -- we think is great and we're going to continue to pursue that.

So you will see action on -- lots of action I guess on our part with respect to movement in the labor force across the course of the year. And, also, some move on the voluntary side to reduce the overall size of the Company.

Thank you. Is the access line declined, is that mostly substitution based or just regional based if you could just give us some insight into that?

It's a few things, again, very consistent with trends. There's a certain amount of loss to competitors in the competitive process, order of magnitude about half of it. About a quarter to a third is -- would be wireless wireline substitution media, little more we think abandoning that area of the business that may be growing a little bit over time. Again no surprise, very consistent with expansion of the wireless business demographic changes etc. And the rest of that would be some erosion on second lines with respect to the growth of DSL etc. So -- and those have been the underlying drivers of that performance over the last while. We don't really see any really major changes in that area.

TD Newcrest, Vince Valentini.

First thing, can I just clarify? When you say 44 percent of the bundled customers are taking new product is that (indiscernible) 56 percent or not taking anything new? They are just purely repricing to take advantage of the discount?

Yes I think I said about 40 percent. (MULTIPLE SPEAKERS) so I guess 44 is right.

Just a broader question. Might not be able to say much but I'd like to hear you on the record. Your thoughts about income tax conversions for some of your investments and subsidiaries at MTS and Aliant (ph)?

I'm really surprised you asked that question. Look, let me [indiscernible] let me sort of outline the way we think about that issue. And I think the basic principle here -- I think the best way for me to express it is to say that clearly the one size does not fit all here. That the right answer with respect to this issue, I think, very much depends on a case-by-case assessment. I think that case-by-case assessment has a lot to do with issues of scale, with issues in the competitive environment of a particular company. Importantly and relatedly questions about investment requirements, technology requirement, all those things I think there are a lot of other factors but those are a few. You've got to consider all of those factors on a case-by-case basis. It's really the only way to weigh what we've regarded as the central issue here. And the central issue is finding the right balance between on the one hand the longer term welfare or the longer-term strength of the business and therefore its value to shareholders vs. on the other hand the short-term value realization gain valuation gain that you can get on the income trust side.

Now with respect to MTS itself I think that issue, obviously, is going to be looked at very intensely by by the MTS board. From our perspective where we will be coming from this is wanting to assess very carefully each one of those individual factors that I think are so important in getting to the right answer on a case-by-case basis. But that being said, we also recognize that as the 20 percent shareholder of the Company at MTS we really are only one voice and not necessarily in fact, almost certainly not a determining voice in that decision. So we will have a view and we'll participate in that process but it's going to be very much focused on a one by one, case-by-case assessment here and I think that to approach this from a more global perspective is really a fool's errand. It really needs to be done on a very specific case-by-case basis which is what we will do.

Maybe, Vince, one thing here on the bundles just to add, remember, those people are taking contracts multi-year contracts to get the discount. And customers that are buying an additional product the ARPU that we get by far outweighs the discount that we're getting to keep so overall net is positive. And we should be able to reduce churn in those businesses as customers are taking contracts.

CIBC World Market, Dvai Ghose.

Question on the softness on the enterprise side. You talked about some of your conscious decisions to get out of lower margin businesses. I am wondering whether the CRTC rulings of last year had any impact in terms of their accusation that you were illegally using tariff products in business bundles?

No the [indiscernible] [indiscernible] at all, the business, we are getting away [indiscernible] business -- it's all the Gateway business to see if they were in the activity on the CRPC side were all related to bundling of [indiscernible] legacies service with new value added services or a new emerging kind of data revenue and that's the area where we have been working with the CRTC throughout last year. On the business we want to move up is [indiscernible] best example I think is the electoral cabling business which is really an extension of our business, and given the competitive market there and our inability to have higher margin than what we have had in the past. We want to [indiscernible] and move our focus on better growth prospects. So it is not really related to [indiscernible]

So, Isabella, would it be fair to say that the CRTC ruling had no impact on the quarter of any material magnitude?

No, we've got that probably 20 million [indiscernible] really not material, no.

Thanks very much -- another question if I make (MULTIPLE SPEAKERS)

Before you go on you give me an opportunity here for a moment. Might also, I just do want to say both with respect to a couple of decisions from the commissioner recently both with respect to the [indiscernible] application on ethernet and next generation products etc. also the Callnet (ph) application that there's a very important, very important reaffirmation in those two decisions with respect to the conviction that the commission has to continue to support [indiscernible] facilities based approach to complication in the Canadian telecom market. As you know, at the end of the day we really do believe that the core ingredient to success here to Canada's success in telecommunications and we were pleased at that reaffirmation and with that we expect to see that further reaffirmed in other cases that are pending before the Commission. I take the opportunity to mention that, Dvia, because you know, I do know in one of the things that I read not necessarily from you, Dvai, but from the sell (ph) side of the market, a perception. With respect to [indiscernible] those decisions are under that there is a kind of meaningful change or adverse set of developments going on in the Commission which is something that, frankly, we don't buy. We think the fundamentals here continue to be quite sound and very useful and very, very important going forward.

Now there are lots of other cases that are currently before the commission so we'll see how all that goes but I do think this is one of those cases where the glass isn't half full, sorry this is one of those cases where is not half empty, it's half full.

No, I would attend to agree with you -- I think that's overstated as well but if I could just move to another thing [indiscernible] the bundle price question just to come back to Vince's -- a majority of customers are taking new product [indiscernible] the 44 percent who are increasing profitability, even accounting for the 17 percent or so average discount but you mentioned on the last call that would be the reviewing the discount over time I know a lot of times that you introduced the bundles but would you think that 17 percent could be reduced and do you think your primary competitor, Rogers (ph) would follow? I would tend to think they would. Is there any room for that?

The markets in which we operate right now are very competitive. I think [indiscernible] answer your bundle question right after that but the strategy that we took in 2003 of trying to get as many customers as possible before we get to Q4, I think I'd put it out there that there's some real crazy stuff out on the wireless side in the fourth quarter by some of the competitors and and it might be that we did get the larger share of customer before we got there, because it would have been expensive to do so in the fourth quarter and still come out very strong for the year. (indiscernible) to say, as we said, the bundle will evolve, the pricing will evolve according to what competitors are doing, what the customers are asking for and what value we put in so you could expect pricing to be modified through the year and I think they will and (indiscernible) react to competitive pressure of up or down. There seems to be some tendency to go back up these days in some of the businesses so bundles may follow on that side.

But other than that I think it's still also very early and we will see. Now on the customers not taking new products in the bundle, let's just realize and this was expected that the first wave of the first few months as a large proportion of our own customers just (indiscernible) their services in the bundles, not necessarily adding anything though the next few months will see new customers coming in in a larger proportion and there we should have better results in terms of additional new services.

Might also say on this one, Dvai -- sorry for such a long answer here -- we are also seeing we talk about the bundle from a consumer market point of view but certainly in Karen's market -- small and medium enterprise -- we're now beginning to see meaningful step ups as new customers come with us as those customers are purchasing not one but two or three different services from us, and we have seen on a quarter over quarter basis significant improvement in that -- in that point of view. So, yes, the consumer is the one who gets a lot of profile but in small and medium I think, we are making a lot of progress in pursuing a package and solution based selling approach to those customers.

[indiscernible] Services. John Grandy.

Two very brief questions. In the fourth quarter you contributed 110 million to your pension plan. Wonder if you could just remind us how much you'd expect to contribute in '04 -- also if you could fill us in on what the current funded status of the plan is?

Sure, John, it's Siim. The numbers that you see are non-cash numbers as pension expense and statements. So for 2004 we're not contemplating any requirements, the cash fund, the BCE or the Bell Canada pension plans. As I said the return that was generated in 2003 was 14.5 percent. And that will have increased our surplus in the pensions on a solvency basis to an amount in excess of $600 million and on a going concern the surplus is over 1.5 billion so no issues on funding with respect to BCE and Bell Canada.

The one plan that is funding its pension, the one company is Alliance (ph) and I think they talked up their pension plan in the fourth quarter by a modest amount and they may have some further (indiscernible) over the course of 2004 but that's the only one.

So when I see in the cash flow statement contribution to benefit plan 110 million that is not a [indiscernible] pension fund?

That would be Alliance pop up ...

(MULTIPLE SPEAKERS)

Second question. Getting back to the regulatory issues, and I may say I can't think I'm referring back to Michael's comments. No one who understands the CRTC's philosophy could have expected them to offer a 50 percent cut in excess rates. But another part of their decision last week was an extension of the prohibition on calling back customers from 90 days to a full year. And I wonder if you could comment quantitatively on what this means for you in terms of your ability to retain your residential customers?

Well, first, really even if we were disappointed with that decision, you should not expect any material changes to our numbers in that side of the business. We will continue with the action that we've taken over the past few years until some of the new ones [indiscernible] 2003. So [indiscernible] continuing ours to improve customer service and the one stop strategy -- the bundling is helping also and all the work that we're doing and then the (indiscernible) as well we're mainly in Toronto as a large proportion of the population. And we're working hard there introducing [indiscernible] now to package services and satisfy more and more customers over all and while it is not addressing directly access we feel that the one-stop strategy as we have in improvement service will continue to give a strong performance there and minimal impact from that decision.

Pierre, I guess part of your strategy consists of getting as many customers as possible on longer-term contracts? And wondered if you had any targets you could share with us on what percentage of your customers you'd hope to have on contract?

Let's remember we're talking here on the non access business so the competitive business or growth business was -- and on that side no real target you know as a lot of the products now in those businesses are offered with one and two years contract and very successful. We offer small discounts to get that and a large proportion of our activations now are done on contracts.

(MULTIPLE SPEAKERS) [indiscernible]

One short comment -- you still have to remember as well, the commission still has an outstanding proceeding observation of win backs, more general proceedings so we will see the results of that I think it's fair to say that we were disappointed they went to a year because we always thought that this was essentially (indiscernible) consumer. I don't think we were -- we thought they might increase it a bit but [indiscernible] year was more than we maybe expected.

Scotia Capital, John Henderson.

Just a couple of quick ones. I guess we saw Star Choice raise their rates $3 a month this month. Wondering what your expectations may be in ExpressVu?

[indiscernible] pricing, I guess, so shouldn't expect too much there -- I think the service charge [indiscernible]. And on that side nothing. Remember Star Choice is still offering extremely aggressive pricing on the market, giving for free the set-top box and (indiscernible) stopped by now but it's been many months now. And on that side we've been successful in still winning a large share, and winning share against them but shouldn't expect any change on that side at least because that price change we put in nine months ago.

Okay, that's great. On the income trust issue just wonder if the tax aspect of that is politically sensitive for you and (indiscernible) just a question.

They're not politically sensitive, they're economically sensitive. I think the short answer to that question is no.

Okay. I also.

[indiscernible] no, I should correct myself, what do you mean? (MULTIPLE SPEAKERS) [indiscernible]

Take to the government --

No, clearly I understand that but that -- is that your point, John?

Yes, that is my point.

No.

I was right the first time.

I just wonder as well you feel the [indiscernible] trust conversion is short term when it really is a long-term removal of the tax cost?

Oh, because again -- here's why I think it is so dependent on a case-by-case review and assessment. I just -- personally, I believe that and, again, it depends so much on the competitive environment of market, scale, geography -- I mean, a host of factors but I do believe saving the -- those accounts [indiscernible] even larger opportunities the telecom companies face today that over time an income trust capital structure raises issues of both the ability of the Company depending upon how the trust is designed to do the kind of things that it needs to do to continue to ensure that it is a strong capable competitor over the medium to long-term and I have, again, I think that's a very meaningful issue.

And I think that the leadership of companies and boards, etc., need to think very carefully very hard about that and, indeed, I guess for what it's worth taking to the fullest extent -- now, I am not sure that this dimension of the issue is really on the table here -- but I also think they're probably at the end of the day broader public policy issues here as well. But no, I think that's a very meaningful issue, John.

Has it been an issue for Bell Nardique (ph)?

Yes and there it is again -- that's my point. Case-by-case. Depends exactly very much on specific circumstances and environment of a particular company which is why I think you just can't have -- I believe -- an informed discussion about income trust. I don't really know how to have that discussion. I think you have to have a discussion about the particular capital structure that you want to have in a particular company. It's very hard to generalize. So in Nardique, we obviously came to a judgment that that particular set of circumstances that was something that was hospitable to an operation of a trust. In other circumstances I think we could come to a very different conclusion and that is why case-by-case one by one is really the only way to get to a rational and right kind of outcome on these types of decisions.

Last question.

I know [indiscernible] saying that [indiscernible] income trust in Telecom in Canada so I don't expect you, John, to sort of immediately (indiscernible) gee, gosh, he's right but -- anyway.

Okay, thank you for that. On your [indiscernible] plans for consumer can you talk about what your timing commercial rollout might be and what certain marketing -- how you might market that service?

Look we're not going to talk about what our plans are with respect to the commercial rollout of these products -- that is something that we regard as a commercially sensitive item. don't. We will roam them out commercially when we are ready to and we think market circumstances are right. I will say that in all three sectors we will be actively trialing and indeed in some areas we already are trialing the various products. And I might also say I think we're going to be able to bring into the market the most highly differentiated set of IP based voice products either in enterprise with different variety of solutions there -- certainly in small and medium where we're doing a lot of I think very interesting work on segmentation of the small and medium customer base in the right VoIP technology solution for each one of them and, similarly, in the consumer market. So the kind of work we're doing here is -- once again, one size doesn't fit all. We will be able to bring in over time I think the most comprehensive, well targeted, reliable and technologically sophisticated VoIP offerings in the Canadian marketplace and as far as I know today in the North American marketplace. Now that would change over time I guess because it's a rapidly moving area but I do think as I said to you in December, we're going to a leader here and I think they're -- everything I'm seeing, both from a technology development and the early returns on the trial is giving me more confidence about the quality of what we're going to be able to bring into the marketplace.

National Bank, Mr. Greg MacDonald.

Yes let's jump on this VoIP question again. I heard very clearly on your investor day and you commented again this morning, you do consider the potential migration of voice to IP to be an opportunity and a threat. So I wonder when you're talking about potential net access line erosion -- particularly on the consumer side maintaining relatively stable in 2004 -- can I read from that that you plan to use your own VoIP consumer product as a preemptive retention tool or is it the case that you just think that this is more an '05 issue?

I'm inclined, Greg, to want to say stay tuned. Unless, Pierre, you want to again balance risk and opportunity (indiscernible) funny line here is to (indiscernible) risk and opportunity and so is crossing the street but anyway Pierre, I am inclined it will be pretty careful here.

[indiscernible] sorry.

Wait and see on that one, then? Let me give you a second quick one.

It's more interesting to watch the hockey game than to listen to the pundits in advance of the hockey game talking about what it's going to be about so we will get you a good ticket -- enjoy the game.

Thanks, but if you're betting on the hockey game.

We don't do those sort of things here (MULTIPLE SPEAKERS) governance, we don't do that stuff. [indiscernible]

Another area of vulnerability is that area that has been doing quite well here is the wireless side. You've got a little over a 3 percent ARPU in 2004. You've got a churn rate of 1.4 percent. When you're thinking about guidance for 2004, can you give me some sense of whether you think some of those metrics maybe at risk? What are we going to see in 2004 with respect to those two areas in particular?

Well, I'm not sure about the vulnerability of wireless because that business is doing extremely well. You've seen the presentation from Michael for 2004 and you know we're not expecting to do bad in 2004. We're expecting to beat the market to [indiscernible] trends that you see. We're working on it and you're seeing the results. On improving margin and you see the tremendous improvement in Q4 and in overall 2003. We're working hard to improve ARPU, also, even as we're pushing down the penetration, we're adding quite a few value added services and 2004 is the year where we're introducing (indiscernible) we're going to make that market [indiscernible] and, hopefully, it gave us enough lift and, finally, see how we're doing vs. [indiscernible] comparing apples to apples. All this added to the strong growth that we're still realizing [indiscernible] continue to have in 2004 even faster growth. I think on that side we have no issue in that business.

So, Pierre, just a quick follow-on. Can I assume you're anticipating similar churn next year or '04 vs. '03 and considering also that ARPU should continue to rise?

Well on the churn side I think you've seen our performance over the last -- mostly ten-years something like that, it's been extremely strong. The December results seem to show to us that we can go even lower so we will continue to work hard and keep the same type of trend. And on the ARPU we're working hard on it, adding new data services and adding pictures and all this. If we see the trends in the U.S. there has been an increase in ARPU using these new services so hopefully those will follow [indiscernible] this year.

Thank you, Nancy, we're going to wrap up the call. I thank everyone for participating today and we look forward to talking to you when we report our first quarter results in early May. Thank you.