##### 



EXHIBIT 99.1
  2006 Annual Report
  About Forward-Looking Statements
    
    
    2About Our Business
    
    
    3Operating Highlights
    
    
    9Enhancing Shareholder Returns
    
    
    11Selected Annual and Quarterly Information
    
    
    12Financial Results AnalysisConsolidated Analysis
    
    
    16Segmented Analysis
    
    
    20Product Line Analysis
    
    
    27Financial and Capital Management
    
    
    32Competitive Environment
    
    
    39Regulatory Environment
    
    
    41Assumptions and Risks UnderlyingOur Forward-Looking Statements
    
    
    47Our Accounting Policies
    
    
    55Controls and Procedures
    
    
    59Non-GAAP Financial Measures
    
    
    59REPORTS ON INTERNAL CONTROLManagements Report on Internal Control
over Financial Reporting
    
    
    62Report of Independent Registered
Chartered Accountants
    
    
    63CONSOLIDATED FINANCIAL STATEMENTSManagements Responsibility
for Financial Reporting
    
    
    64Report of Independent Registered
Chartered Accountants
    
    
    64Consolidated Statements of Operations
    
    
    65Consolidated Statements of Deficit
    
    
    65Consolidated Balance Sheets
    
    
    66Consolidated Statements of Cash Flows
    
    
    67
  Note 1  Significant Accounting Policies
    
    
    68Note 2  Bell Aliant
    
    
    74Note 3  Segmented Information
    
    
    75Note 4  Business Acquisitions and Dispositions
    
    
    77Note 5  Restructuring and Other Items
    
    
    80Note 6  Other (Expense) Income
    
    
    81Note 7  Interest Expense
    
    
    82Note 8  Income Taxes
    
    
    82Note 9  Discontinued Operations
    
    
    84Note 10 Earnings Per Share
    
    
    85Note 11 Accounts Receivable
    
    
    85Note 12 Other Current Assets
    
    
    86Note 13 Capital Assets
    
    
    86Note 14 Other Long-Term Assets
    
    
    87Note 15 Indefinite-Life Intangible Assets
    
    
    87Note 16 Goodwill
    
    
    87Note 17 Accounts Payable and Accrued Liabilities
    
    
    88Note 18 Debt Due Within One Year
    
    
    88Note 19 Long-Term Debt
    
    
    88Note 20 Other Long-Term Liabilities
    
    
    89Note 21 Non-Controlling Interest
    
    
    90Note 22 Financial Instruments
    
    
    90Note 23 Share Capital
    
    
    91Note 24 Stock-Based Compensation Plans
    
    
    93Note 25 Employee Benefit Plans
    
    
    96Note 26 Commitments and Contingencies
    
    
    100Note 27 Guarantees
    
    
    104Note 28 Supplemental Disclosure for
Statements of Cash Flows
    
    
    105Glossary
    
    
    106Board of Directors
    
    
    108Executives
    
    
    109Tax Information
    
    
    110Shareholder Information
    
    
    111




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##### 



In this managements discussion and analysis of financial condition and results of operations
(MD&A), , , and mean BCE Inc., its subsidiaries and joint ventures. References to Bell
Aliant include matters relating to, and actions taken by, both Aliant Inc. (Aliant) and its
affiliated entities prior to July 7, 2006, and Bell Aliant Regional Communications Income Fund and
its affiliated entities on and after such date.
 All amounts in this MD&A are in millions of Canadian dollars, except where otherwise noted.
Please refer to our glossary on pages 106107 for a list of defined terms.
 Please refer to BCE Inc.s audited consolidated financial statements for the year ended
December 31, 2006 when reading this MD&A. Please also refer to The Quarter at a Glance section
at pages 6 to 17 of BCE Inc.s 2006 Fourth Quarter Investor Briefing dated February 6, 2007, which
pages are incorporated herein by reference, for a more detailed discussion of BCEs operational
and financial results for the fourth quarter of 2006.
 You will find more information about BCE, including BCE Inc.s audited consolidated financial
statements and annual information form dated March 7, 2007 (BCE 2006 AIF) for the year ended
December 31, 2006 and recent financial reports, including BCE Inc.s 2006 Fourth Quarter Investor
Briefing, on BCE Inc.s website at www.bce.ca, on SEDAR at www.sedar.com and on EDGAR at
www.sec.gov.
  About Forward-Looking Statements
  anticipate assumption believe could expect goal guidance intend may objective outlook plan seek should strive target will United States Private
Securities Litigation Reform Act of 1995
  unless otherwise indicated, forward-looking statements in BCEs 2006 annual report,
including in this MD&A, describe our expectations at March 7, 2007
 
 
 
 Assumptions and Risks Underlying Our
Forward-Looking Statements Competitive Environment Regulatory Environment
 2006 Annual Report




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##### 



About Our Business
   
          2006 Annual Report




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##### 




    
    local and access services
    
    long distance services
    
    wireless services
    
    data services
    
    video services
    
    terminal sales and other.
    
 
 
 
   2006 Annual Report




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##### 




 
 
       2006 Annual Report




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##### 



 direct-to-home (DTH) satellite 
  very high bit rate DSL (VDSL) 
  hybrid fibre co-axial cable 
     
 
 
 
    2006 Annual Report




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##### 



Service quality 
 Broadband acceleration 
 Wireless growth 
 Business sector profitability 
 Productivity improvements 
            2006 Annual Report




---



##### 




 
 
 
 
  
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 2006 Annual Report




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##### 




 
 
   (1)
  
 
 
 
   
 
 
 
 Operating Highlights
 (2)
 
 (1) EBITDA (earnings before interest, taxes, depreciation and amortization) is a non-GAAP
financial measure. See in this MD&A for more details
including a reconciliation to the most comparable GAAP financial measure.
 (2) Free cash flow is a non-GAAP financial measure. See in this MD&A for more details including a reconciliation to the most comparable GAAP
financial measure.
 2006 Annual Report




---



##### 



TOTALNET ACTIVATIONS
    
    
    CONNECTIONS(in thousands)
    
    2006
    
    
    DECEMBER 31, 2006NAS
    
    
    (525
    )
    
    
    12,056High-speed Internet
    
    
    267
    
    
    
    2,462Wireless
    
    
    432
    
    
    
    5,873Video
    
    
    93
    
    
    
    1,820
 
           2006 Annual Report




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##### 



Enhancing Shareholder Returns
     2006 Annual Report




---



##### 



Selected Annual and Quarterly Information
 This section shows selected financial and operational data.
   2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002OperationsOperating revenues
    
    
    17,713
    
    
    
    17,605
    
    
    
    17,009
    
    
    
    16,752
    
    
    
    17,114Operating expenses
    
    
    (10,384
    )
    
    
    (10,371
    )
    
    
    (9,895
    )
    
    
    (9,704
    )
    
    
    (10,009
    )EBITDA
    
    
    7,329
    
    
    
    7,234
    
    
    
    7,114
    
    
    
    7,048
    
    
    
    7,105Amortization expense
    
    
    (3,129
    )
    
    
    (3,061
    )
    
    
    (3,000
    )
    
    
    (3,001
    )
    
    
    (2,932
    )Net benefit plans (cost) credit
    
    
    (513
    )
    
    
    (359
    )
    
    
    (241
    )
    
    
    (168
    )
    
    
    36Restructuring and other items
    
    
    (355
    )
    
    
    (55
    )
    
    
    (1,219
    )
    
    
    (14
    )
    
    
    (768
    )Operating income
    
    
    3,332
    
    
    
    3,759
    
    
    
    2,654
    
    
    
    3,865
    
    
    
    3,441Other (expense) income
    
    
    (176
    )
    
    
    28
    
    
    
    439
    
    
    
    214
    
    
    
    3,139Impairment charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (765
    )Interest expense
    
    
    (952
    )
    
    
    (949
    )
    
    
    (961
    )
    
    
    (1,064
    )
    
    
    (1,080
    )Pre-tax earnings from continuing
operations
    
    
    2,204
    
    
    
    2,838
    
    
    
    2,132
    
    
    
    3,015
    
    
    
    4,735Income taxes
    
    
    (85
    )
    
    
    (803
    )
    
    
    (605
    )
    
    
    (1,079
    )
    
    
    (1,551
    )Non-controlling interest
    
    
    (228
    )
    
    
    (201
    )
    
    
    (132
    )
    
    
    (166
    )
    
    
    (860
    )Earnings from continuing operations
    
    
    1,891
    
    
    
    1,834
    
    
    
    1,395
    
    
    
    1,770
    
    
    
    2,324Discontinued operations
    
    
    116
    
    
    
    127
    
    
    
    129
    
    
    
    45
    
    
    
    83Net earnings before extraordinary gain
    
    
    2,007
    
    
    
    1,961
    
    
    
    1,524
    
    
    
    1,815
    
    
    
    2,407Extraordinary gain
    
    
    
    
    
    
    
    
    
    
    69
    
    
    
    
    
    
    
    Net earnings
    
    
    2,007
    
    
    
    1,961
    
    
    
    1,593
    
    
    
    1,815
    
    
    
    2,407Dividends on preferred shares
    
    
    (70
    )
    
    
    (70
    )
    
    
    (70
    )
    
    
    (64
    )
    
    
    (59
    )Premium on redemption of preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7
    )
    
    
    (6
    )Net earnings applicable to common shares
    
    
    1,937
    
    
    
    1,891
    
    
    
    1,523
    
    
    
    1,744
    
    
    
    2,342Included in net earnings:Net gains on investmentsContinuing operations
    
    
    419
    
    
    
    33
    
    
    
    410
    
    
    
    (81
    )
    
    
    1,351Discontinued operations
    
    
    106
    
    
    
    (6
    )
    
    
    11
    
    
    
    83
    
    
    
    96Restructuring and other items
    
    
    (222
    )
    
    
    (37
    )
    
    
    (770
    )
    
    
    3
    
    
    
    (441
    )Impairment charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26
    )Cost incurred to form Bell Aliant
    
    
    (42
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net earnings per common share:Continuing operations  basic
    
    
    2.12
    
    
    
    1.90
    
    
    
    1.44
    
    
    
    1.85
    
    
    
    2.66Continuing operations  diluted
    
    
    2.12
    
    
    
    1.90
    
    
    
    1.44
    
    
    
    1.84
    
    
    
    2.62Net earnings  basic
    
    
    2.25
    
    
    
    2.04
    
    
    
    1.65
    
    
    
    1.90
    
    
    
    2.66Net earnings  diluted
    
    
    2.25
    
    
    
    2.04
    
    
    
    1.65
    
    
    
    1.89
    
    
    
    2.62RatiosEBITDA margin (%)
    
    
    41.4
    %
    
    
    41.1
    %
    
    
    41.8
    %
    
    
    42.1
    %
    
    
    41.5
    %EBITDA to interest ratio (times)
    
    
    7.70
    
    
    
    7.62
    
    
    
    7.40
    
    
    
    6.62
    
    
    
    6.58Operating margin (%)
    
    
    18.8
    %
    
    
    21.4
    %
    
    
    15.6
    %
    
    
    23.1
    %
    
    
    20.1
    %ROE (%)
    
    
    15.7
    %
    
    
    14.8
    %
    
    
    12.5
    %
    
    
    15.2
    %
    
    
    17.8
    %
 2006 Annual Report




---



##### 



2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Balance SheetTotal assets
    
    
    36,957
    
    
    
    40,482
    
    
    
    39,133
    
    
    
    39,846
    
    
    
    39,388Long-term debt (including current portion)
    
    
    12,817
    
    
    
    12,925
    
    
    
    12,312
    
    
    
    13,593
    
    
    
    14,220Net debt
    
    
    12,272
    
    
    
    12,667
    
    
    
    12,175
    
    
    
    13,115
    
    
    
    14,702Total capitalization
    
    
    27,819
    
    
    
    30,286
    
    
    
    29,107
    
    
    
    30,076
    
    
    
    30,880Preferred shares
    
    
    1,670
    
    
    
    1,670
    
    
    
    1,670
    
    
    
    1,670
    
    
    
    1,510Common shareholders equity
    
    
    11,697
    
    
    
    13,051
    
    
    
    12,354
    
    
    
    11,895
    
    
    
    11,090RatiosNet debt to total capitalization (%)
    
    
    44.1
    %
    
    
    41.8
    %
    
    
    41.8
    %
    
    
    43.6
    %
    
    
    47.6
    %Net debt to EBITDA (times)
    
    
    1.67
    
    
    
    1.75
    
    
    
    1.71
    
    
    
    1.86
    
    
    
    2.07Total debt to total assets (times)
    
    
    0.35
    
    
    
    0.32
    
    
    
    0.32
    
    
    
    0.34
    
    
    
    0.38Long-term debt to equity (times)
    
    
    0.96
    
    
    
    0.88
    
    
    
    0.88
    
    
    
    1.00
    
    
    
    1.13Cash FlowsCash flows from operating activities
    
    
    5,389
    
    
    
    5,337
    
    
    
    5,268
    
    
    
    5,717
    
    
    
    4,545Cash flows from investing activities
    
    
    (3,701
    )
    
    
    (3,762
    )
    
    
    (3,551
    )
    
    
    (2,797
    )
    
    
    (6,878
    )Capital expenditures
    
    
    (3,133
    )
    
    
    (3,357
    )
    
    
    (3,272
    )
    
    
    (3,052
    )
    
    
    (3,644
    )Business acquisitions
    
    
    (71
    )
    
    
    (228
    )
    
    
    (1,118
    )
    
    
    (54
    )
    
    
    (6,432
    )Business dispositions
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    10
    
    
    
    3,166Bell Aliant
    
    
    (255
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other investing activities
    
    
    (2
    )
    
    
    39
    
    
    
    183
    
    
    
    167
    
    
    
    35Cash flows from financing activities
    
    
    (3,639
    )
    
    
    (1,613
    )
    
    
    (2,571
    )
    
    
    (2,704
    )
    
    
    3,402Repurchase of common shares
    
    
    (1,241
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net issuance of equity instruments
    
    
    29
    
    
    
    25
    
    
    
    32
    
    
    
    172
    
    
    
    2,819Net (repayment) issuance of debt instruments
    
    
    (432
    )
    
    
    (47
    )
    
    
    (1,140
    )
    
    
    (1,541
    )
    
    
    2,047Financing activities of subsidiaries with third parties
    
    
    (292
    )
    
    
    (77
    )
    
    
    (17
    )
    
    
    (29
    )
    
    
    91Cash dividends paid on common shares
    
    
    (1,169
    )
    
    
    (1,195
    )
    
    
    (1,108
    )
    
    
    (1,029
    )
    
    
    (999
    )Cash dividends paid on preferred shares
    
    
    (84
    )
    
    
    (86
    )
    
    
    (85
    )
    
    
    (61
    )
    
    
    (43
    )Cash dividends paid by subsidiaries to non-controlling
interest
    
    
    (293
    )
    
    
    (169
    )
    
    
    (179
    )
    
    
    (172
    )
    
    
    (468
    )Cash provided by (used in) discontinued operations
    
    
    2,087
    
    
    
    103
    
    
    
    512
    
    
    
    200
    
    
    
    (1,332
    )RatiosFree cash flow
    
    
    708
    
    
    
    569
    
    
    
    807
    
    
    
    1,570
    
    
    
    (574
    )Capital intensity (%)
    
    
    17.7
    %
    
    
    19.1
    %
    
    
    19.2
    %
    
    
    18.2
    %
    
    
    21.3
    %Cash flow per share (dollars)
    
    
    2.62
    
    
    
    2.14
    
    
    
    2.16
    
    
    
    2.90
    
    
    
    1.06Cash flow yield (%)
    
    
    7.4
    %
    
    
    6.8
    %
    
    
    7.2
    %
    
    
    9.7
    %
    
    
    1.6
    %Share InformationAverage number of common shares (millions)
    
    
    861.4
    
    
    
    926.8
    
    
    
    924.6
    
    
    
    920.3
    
    
    
    847.9Common shares outstanding at end of year (millions)
    
    
    807.6
    
    
    
    927.3
    
    
    
    925.9
    
    
    
    924.0
    
    
    
    915.9Market capitalization
    
    
    25,359
    
    
    
    25,844
    
    
    
    26,777
    
    
    
    26,704
    
    
    
    26,103Dividends declared per common share (dollars)
    
    
    1.32
    
    
    
    1.32
    
    
    
    1.20
    
    
    
    1.20
    
    
    
    1.20Book value per share (dollars)
    
    
    14.48
    
    
    
    14.07
    
    
    
    13.34
    
    
    
    12.87
    
    
    
    12.11Total dividends declared on common shares
    
    
    (1,132
    )
    
    
    (1,222
    )
    
    
    (1,110
    )
    
    
    (1,105
    )
    
    
    (1,031
    )Total dividends declared on preferred shares
    
    
    (70
    )
    
    
    (70
    )
    
    
    (70
    )
    
    
    (64
    )
    
    
    (59
    )Market price per common share (dollars)High
    
    
    32.92
    
    
    
    32.95
    
    
    
    30.00
    
    
    
    32.35
    
    
    
    36.87Low
    
    
    25.56
    
    
    
    26.60
    
    
    
    25.75
    
    
    
    26.60
    
    
    
    23.00Close
    
    
    31.40
    
    
    
    27.87
    
    
    
    28.92
    
    
    
    28.90
    
    
    
    28.50RatiosCommon dividend yield (%)
    
    
    4.6
    %
    
    
    4.6
    %
    
    
    4.1
    %
    
    
    3.9
    %
    
    
    3.8
    %Common dividend payout ratio (%)
    
    
    60.4
    %
    
    
    63.2
    %
    
    
    72.8
    %
    
    
    59.0
    %
    
    
    42.7
    %Price to earnings ratio (times)
    
    
    13.96
    
    
    
    13.66
    
    
    
    17.53
    
    
    
    15.21
    
    
    
    10.71Price to book ratio (times)
    
    
    2.17
    
    
    
    1.98
    
    
    
    2.17
    
    
    
    2.25
    
    
    
    2.35Price to cash flow ratio (times)
    
    
    11.98
    
    
    
    13.02
    
    
    
    13.39
    
    
    
    9.97
    
    
    
    26.89Other DataNumber of employees (thousands) (1)
    
    
    54
    
    
    
    56
    
    
    
    51
    
    
    
    54
    
    
    
    57
 The number of employees for 2004 excludes virtually all employees who left under
the voluntary departure program of 2004.
 2006 Annual Report




---



##### 



2006
    
    
    2005
    
    
    2004WirelineLocal network access services (thousands)
    
    
    12,056
    
    
    
    12,581
    
    
    
    12,905Long distance conversation minutes (millions)
    
    
    18,222
    
    
    
    18,243
    
    
    
    18,070Long distance average revenue per minute (cents)
    
    
    9.3
    
    
    
    10.3
    
    
    
    11.7DataHigh-speed Internet net activations (thousands)
    
    
    267
    
    
    
    387
    
    
    
    350High-speed Internet subscribers (thousands)
    
    
    2,462
    
    
    
    2,195
    
    
    
    1,808Dial-up Internet subscribers (thousands)
    
    
    511
    
    
    
    586
    
    
    
    743WirelessCellular and PCS net activations (thousands)
    
    
    432
    
    
    
    516
    
    
    
    513Cellular and PCS subscribers (thousands)
    
    
    5,873
    
    
    
    5,441
    
    
    
    4,925Average revenue per unit ($/month)
    
    
    51
    
    
    
    49
    
    
    
    49Churn (%) (average per month)
    
    
    1.5
    %
    
    
    1.6
    %
    
    
    1.3
    %Cost of acquisition ($/subscriber)
    
    
    419
    
    
    
    406
    
    
    
    411Paging subscribers (thousands)
    
    
    281
    
    
    
    347
    
    
    
    427VideoVideo net activations (thousands)
    
    
    93
    
    
    
    224
    
    
    
    116Video subscribers (thousands)
    
    
    1,820
    
    
    
    1,727
    
    
    
    1,503Average revenue per subscriber ($/month)
    
    
    54
    
    
    
    50
    
    
    
    49Churn (%) (average per month)
    
    
    1.0
    %
    
    
    0.9
    %
    
    
    1.0
    %
 2006 Annual Report




---



##### 



2006
    
    
    2005YEAR
    
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1
    
    
    YEAR
    
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1Operating revenues
    
    
    17,713
    
    
    
    4,547
    
    
    
    4,422
    
    
    
    4,388
    
    
    
    4,356
    
    
    
    17,605
    
    
    
    4,539
    
    
    
    4,408
    
    
    
    4,368
    
    
    
    4,290EBITDA
    
    
    7,329
    
    
    
    1,773
    
    
    
    1,840
    
    
    
    1,875
    
    
    
    1,841
    
    
    
    7,234
    
    
    
    1,740
    
    
    
    1,817
    
    
    
    1,856
    
    
    
    1,821Amortization expense
    
    
    (3,129
    )
    
    
    (797
    )
    
    
    (786
    )
    
    
    (790
    )
    
    
    (756
    )
    
    
    (3,061
    )
    
    
    (776
    )
    
    
    (774
    )
    
    
    (763
    )
    
    
    (748
    )Net benefit plans cost
    
    
    (513
    )
    
    
    (125
    )
    
    
    (118
    )
    
    
    (134
    )
    
    
    (136
    )
    
    
    (359
    )
    
    
    (59
    )
    
    
    (103
    )
    
    
    (99
    )
    
    
    (98
    )Restructuring and other items
    
    
    (355
    )
    
    
    (91
    )
    
    
    (126
    )
    
    
    (50
    )
    
    
    (88
    )
    
    
    (55
    )
    
    
    (24
    )
    
    
    (31
    )
    
    
    (5
    )
    
    
    5Operating income
    
    
    3,332
    
    
    
    760
    
    
    
    810
    
    
    
    901
    
    
    
    861
    
    
    
    3,759
    
    
    
    881
    
    
    
    909
    
    
    
    989
    
    
    
    980Earnings from continuing operations
    
    
    1,891
    
    
    
    717
    
    
    
    324
    
    
    
    444
    
    
    
    406
    
    
    
    1,834
    
    
    
    390
    
    
    
    444
    
    
    
    541
    
    
    
    459Discontinued operations
    
    
    116
    
    
    
    
    
    
    
    (22
    )
    
    
    50
    
    
    
    88
    
    
    
    127
    
    
    
    40
    
    
    
    15
    
    
    
    40
    
    
    
    32Net earnings
    
    
    2,007
    
    
    
    717
    
    
    
    302
    
    
    
    494
    
    
    
    494
    
    
    
    1,961
    
    
    
    430
    
    
    
    459
    
    
    
    581
    
    
    
    491Net earnings applicable to common shares
    
    
    1,937
    
    
    
    699
    
    
    
    285
    
    
    
    476
    
    
    
    477
    
    
    
    1,891
    
    
    
    413
    
    
    
    441
    
    
    
    563
    
    
    
    474Included in net earnings:Net gains on investmentsContinuing operations
    
    
    419
    
    
    
    410
    
    
    
    8
    
    
    
    
    
    
    
    1
    
    
    
    33
    
    
    
    
    
    
    
    
    
    
    
    33
    
    
    
    Discontinued operations
    
    
    106
    
    
    
    2
    
    
    
    (11
    )
    
    
    35
    
    
    
    80
    
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    (5
    )
    
    
    (1
    )Restructuring and other items
    
    
    (222
    )
    
    
    (66
    )
    
    
    (71
    )
    
    
    (27
    )
    
    
    (58
    )
    
    
    (37
    )
    
    
    (16
    )
    
    
    (21
    )
    
    
    (3
    )
    
    
    3Cost incurred to form Bell Aliant
    
    
    (42
    )
    
    
    
    
    
    
    (28
    )
    
    
    (14
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net earnings per common shareContinuing operations  basic
    
    
    2.12
    
    
    
    0.84
    
    
    
    0.39
    
    
    
    0.47
    
    
    
    0.42
    
    
    
    1.90
    
    
    
    0.39
    
    
    
    0.46
    
    
    
    0.57
    
    
    
    0.48Continuing operations  diluted
    
    
    2.12
    
    
    
    0.84
    
    
    
    0.39
    
    
    
    0.47
    
    
    
    0.42
    
    
    
    1.90
    
    
    
    0.39
    
    
    
    0.46
    
    
    
    0.57
    
    
    
    0.48Net earnings  basic
    
    
    2.25
    
    
    
    0.84
    
    
    
    0.36
    
    
    
    0.53
    
    
    
    0.52
    
    
    
    2.04
    
    
    
    0.44
    
    
    
    0.48
    
    
    
    0.61
    
    
    
    0.51Net earnings  diluted
    
    
    2.25
    
    
    
    0.84
    
    
    
    0.36
    
    
    
    0.53
    
    
    
    0.52
    
    
    
    2.04
    
    
    
    0.44
    
    
    
    0.48
    
    
    
    0.61
    
    
    
    0.51Average number of common shares
outstanding (millions)
    
    
    861.4
    
    
    
    811.6
    
    
    
    818.8
    
    
    
    896.4
    
    
    
    920.5
    
    
    
    926.8
    
    
    
    927.3
    
    
    
    927.0
    
    
    
    926.6
    
    
    
    926.2
 2006 Annual Report




---



##### 



Financial Results Analysis
 This section provides detailed information and analysis about our performance in 2006 compared
with 2005. It focuses on our consolidated operating results and provides financial information for
each of our operating segments.
  2006
    
    
    2005
    
    
    % CHANGEOperating revenues
    
    
    17,713
    
    
    
    17,605
    
    
    
    0.6
    %Operating expenses
    
    
    (10,384
    )
    
    
    (10,371
    )
    
    
    (0.1
    %)EBITDA
    
    
    7,329
    
    
    
    7,234
    
    
    
    1.3
    %Amortization expense
    
    
    (3,129
    )
    
    
    (3,061
    )
    
    
    (2.2
    %)Net benefit plans cost
    
    
    (513
    )
    
    
    (359
    )
    
    
    (42.9
    %)Restructuring and other items
    
    
    (355
    )
    
    
    (55
    )
    
    
    N/MOperating income
    
    
    3,332
    
    
    
    3,759
    
    
    
    (11.4
    %)Other (expense) income
    
    
    (176
    )
    
    
    28
    
    
    
    N/MInterest expense
    
    
    (952
    )
    
    
    (949
    )
    
    
    (0.3
    %)Pre-tax earnings from
continuing operations
    
    
    2,204
    
    
    
    2,838
    
    
    
    (22.3
    %)Income taxes
    
    
    (85
    )
    
    
    (803
    )
    
    
    89.4
    %Non-controlling interest
    
    
    (228
    )
    
    
    (201
    )
    
    
    (13.4
    %)Earnings from continuing
operations
    
    
    1,891
    
    
    
    1,834
    
    
    
    3.1
    %Discontinued operations
    
    
    116
    
    
    
    127
    
    
    
    (8.7
    %)Net earnings
    
    
    2,007
    
    
    
    1,961
    
    
    
    2.3
    %Dividends on preferred shares
    
    
    (70
    )
    
    
    (70
    )
    
    
    Net earnings applicable
to common shares
    
    
    1,937
    
    
    
    1,891
    
    
    
    2.4
    %EPS
    
    
    2.25
    
    
    
    2.04
    
    
    
    10.3
    %
 N/M: not meaningful
  
   
 
 
   2007 Outlook
  2006 Annual Report




---



##### 



Segmented Analysis Product Line Analysis
  
  (1)
 
 
 
 
 
 
 
  
 
 
 
 
 Segmented Analysis
      
 (1)  Operating income before restructuring and other items is a non-GAAP financial measure.
See in this
MD&A for more details including a reconciliation to the most comparable GAAP financial measure.
 2006 Annual Report




---



##### 



2007 Outlook
   The amount of our amortization expense in any year is affected by:
 
    
    how much we invested in new capital assets in previous years
 
    
    how many assets we retired during the year
 
    
    changes in accounting rules and estimates.
 Each year, we review our estimate of the useful life of our capital assets.
   The amount of the net benefit plans cost in a year mainly depends on:
 
    
    the return on pension plan assets that we expect to be generated during the year 
the lower the return, the higher the cost
 
    
    the present value of future pension benefit payments to employees  the lower the
present value, the lower the cost
     actuarial gain (loss)  the difference between the actual funded status of our
pension plans and the amount calculated using our accounting assumptions. We amortize this into earnings over time.
     new actuarial valuations of which one was completed in June 2006 for our defined benefit
pension plans (seeLiquidity within theFinancial and Capital Management section).
      a reduction in the discount rate from 6.2% in 2005 to an average of 5.4% in 2006,
which increased the cost of our pension plan liabilities and, therefore, net benefit plans cost
 
    
    a $44 million curtailment gain in 2005 associated with the phase-out, over three
years, of a discretionary allowance program.
  2006 Annual Report




---



##### 



This category includes various income and expenses that are not directly related to the
operating revenues generated during the year. Examples are costs related to workforce reduction
initiatives and asset write-downs.
  
 
 
  Other (expense) income includes (expense) income that we (incur) receive from activities that
are not part of our main business operations, such as:
  net gains on investments, including gains or losses when we dispose of, write down
or reduce our ownership in investments
  foreign currency gains (losses)
  interest income on cash and cash equivalents
  other miscellaneous income or expense.
  
 
 
 
      
 
 
 
    The non-controlling interest in the statements of operations reflects the percentage ownership
of a subsidiary owned by others multiplied by the amount of the subsidiarys after-tax earnings.
  2006 Annual Report




---



##### 



(1)
   
 (1) Net earnings before restructuring and other items, net gains on investments, and costs
incurred to form Bell Aliant is a non-GAAP financial measure. See in this MD&A for more details including a reconciliation to the most comparable
GAAP financial measure.
 2006 Annual Report




---



##### 



2006
    
    
    2005
    
    
    % CHANGEOperating revenuesResidential
    
    
    7,099
    
    
    
    7,016
    
    
    
    1.2
    %Business
    
    
    6,057
    
    
    
    5,966
    
    
    
    1.5
    %Bell Aliant
    
    
    3,358
    
    
    
    3,320
    
    
    
    1.1
    %Other Bell Canada
    
    
    1,592
    
    
    
    1,651
    
    
    
    (3.6
    %)Inter-segment eliminations
    
    
    (758
    )
    
    
    (719
    )
    
    
    (5.4
    %)Bell Canada
    
    
    17,348
    
    
    
    17,234
    
    
    
    0.7
    %Other BCE
    
    
    535
    
    
    
    538
    
    
    
    (0.6
    %)Inter-segment eliminations
    
    
    (170
    )
    
    
    (167
    )
    
    
    (1.8
    %)Total operating revenues
    
    
    17,713
    
    
    
    17,605
    
    
    
    0.6
    %
 2006
    
    
    2005
    
    
    % CHANGEOperating incomeResidential
    
    
    1,649
    
    
    
    1,772
    
    
    
    (6.9
    %)Business
    
    
    811
    
    
    
    863
    
    
    
    (6.0
    %)Bell Aliant
    
    
    777
    
    
    
    768
    
    
    
    1.2
    %Other Bell Canada
    
    
    116
    
    
    
    352
    
    
    
    (67.0
    %)Bell Canada
    
    
    3,353
    
    
    
    3,755
    
    
    
    (10.7
    %)Other BCE
    
    
    (21
    )
    
    
    4
    
    
    
    N/MTotal operating income
    
    
    3,332
    
    
    
    3,759
    
    
    
    (11.4
    %)
 N/M: Not meaningful
  Residential Revenues
 
     2006 Annual Report




---



##### 



Local and Access Long
Distance Product Line Analysis
   Wireless Product
Line Analysis
   Data Product Line
Analysis
  Product Line Analysis.
 Residential Operating Income
 
  Residential 2007 Outlook
  22
    
    Bell Canada Enterprises   2006 Annual Report




---



##### 



Business Revenues
 
     
 
 
   2006 Annual Report




---



##### 



Business Operating Income
 
     Business Outlook
  2006 Annual Report




---



##### 



Bell Aliant Revenues
 
     Bell Aliant Operating Income
 
  Bell Aliant 2007 Outlook
   Other Bell Canada Revenues
 
  2006 Annual Report




---



##### 



Other Bell Canada Operating Income
 
        Other BCE Revenues
 
       2006 Annual Report




---



##### 



Other BCE Operating Income
 
    
 REVENUES
    
    2006
    
    
    2005
    
    
    % CHANGELocal and access
    
    
    5,212
    
    
    
    5,465
    
    
    
    (4.6
    %)Long distance
    
    
    1,798
    
    
    
    2,055
    
    
    
    (12.5
    %)Wireless
    
    
    3,491
    
    
    
    3,085
    
    
    
    13.2
    %Data
    
    
    4,120
    
    
    
    4,016
    
    
    
    2.6
    %Video
    
    
    1,150
    
    
    
    976
    
    
    
    17.8
    %Terminal sales and other
    
    
    1,577
    
    
    
    1,637
    
    
    
    (3.7
    %)Total
Bell Canada
    
    
    17,348
    
    
    
    17,234
    
    
    
    0.7
    %
  
    2006 Annual Report




---



##### 



Outlook
   
  Outlook
   
 
   2006 Annual Report




---



##### 



Outlook
   2006 Annual Report




---



##### 



Outlook
  2006 Annual Report




---



##### 



Outlook
  2006 Annual Report




---



##### 



Financial and Capital Management
 This section tells you how we manage our cash and capital resources to carry out our
strategy and deliver financial results. It provides an analysis of our financial condition,
cashflows and liquidity on a consolidated basis.
  Our capital structure shows how much of our net assets are financed by debt and equity.
 2006
    
    
    2005Debt due within one year
    
    
    986
    
    
    
    1,161Long-term debt
    
    
    11,867
    
    
    
    11,855Less: Cash and cash equivalents
    
    
    (581
    )
    
    
    (349
    )Total net debt
    
    
    12,272
    
    
    
    12,667Non-controlling interest
    
    
    2,180
    
    
    
    2,898Total shareholders equity
    
    
    13,367
    
    
    
    14,721Total capitalization
    
    
    27,819
    
    
    
    30,286Net debt to capitalization
    
    
    44.1
    %
    
    
    41.8
    %Outstanding share data (in millions)Common shares
    
    
    807.6
    
    
    
    927.3Stock options
    
    
    24.2
    
    
    
    27.3
 
   
 
              2006 Annual Report




---



##### 




 
 
 
 
      
 
 
    2006
    
    
    2005Cash
flows from operating activities
    
    
    5,389
    
    
    
    5,337Capital expenditures
    
    
    (3,133
    )
    
    
    (3,357
    )Other investing activities
    
    
    (2
    )
    
    
    39Cash dividends paid on common shares
    
    
    (1,169
    )
    
    
    (1,195
    )Cash dividends paid on preferred shares
    
    
    (84
    )
    
    
    (86
    )Cash dividends paid by subsidiaries to
non-controlling interest
    
    
    (293
    )
    
    
    (169
    )Free cash
flow
    
    
    708
    
    
    
    569Business acquisitions
    
    
    (71
    )
    
    
    (228
    )Bell Aliant
    
    
    (255
    )
    
    
    Increase in investments
    
    
    (304
    )
    
    
    (233
    )Decrease in investments
    
    
    64
    
    
    
    17Issue of common shares
    
    
    29
    
    
    
    25Repurchase of common shares
    
    
    (1,241
    )
    
    
    Net repayment of debt instruments
    
    
    (432
    )
    
    
    (47
    )Financing activities of subsidiaries with
third parties
    
    
    (292
    )
    
    
    (77
    )Other financing activities
    
    
    (157
    )
    
    
    (64
    )Cash provided by discontinued operations
    
    
    2,087
    
    
    
    103Net
increase in cash and cash equivalents
    
    
    136
    
    
    
    65
  
  
 
 
 
 2006 Annual Report




---



##### 




 
 
  
   
    
 
 
 
     2006 Annual Report




---



##### 




 
 
           We use a combination of short-term and long-term debt to finance our operations. Our
short-term debt consists mostly of bank facilities and notes payable under commercial paper
programs. We usually pay fixed rates of interest on our long-term debt and floating rates on our
short-term debt.
  
 
 
 
 
 2006 Annual Report




---



##### 




 
 
 
 
   The interest rates we pay are based partly on the quality of our credit ratings, which were all
investment grade at March 7, 2007. Investment grade ratings usually mean that when we borrow money,
we qualify for lower interest rates than companies that have ratings lower than investment grade.
BCE Inc. and Bell Canada have stable outlooks from
DBRS(2),
Moodys(3) and
Fitch(4)
and a negative outlook from
S&P(1)
  BCE INC.S&P(1)
    
    DBRS(2)
    
    MOODYS(3)
    
    FITCH(4)Commercial paper
    
    A-l (low
    )
    R-1 (low
    )
    P-2
    
    Extendible commercial notes
    
    
    
    R-2 (high
    )
    
    
    Long-term debt
    
    BBB+
    
    A (low
    )
    Baa2
    
    BBB+Preferred shares
    
    P-2
    
    Pfd-2 (low
    )
    
    
    
 BELL CANADAS&P(1)
    
    DBRS(2)
    
    MOODYS(3)
    
    FITCH(4)Commercial paper
    
    A-l (low
    )
    R-l (low
    )
    P-2
    
    Extendible commercial notes
    
    
    
    R-l (low
    )
    
    
    Long-term debt
    
    A-
    
    A
    
    Baal
    
    BBB+Subordinated long-term debt
    
    BBB+
    
    BBB (high
    )
    Baa2
    
    BBB
 
 (1)
    
    Standard & Poors, a division of The McGraw-Hill Companies, Inc.(2)
    
    Dominion Bond Rating Services Limited(3)
    
    Moodys Investors Service, Inc.(4)
    
    Fitch Ratings Ltd. 2006 Annual Report




---



##### 



Capital Expenditures
  Pension Funding
  Contractual Obligations
  THERE-2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    AFTER
    
    
    TOTALLong-term debt (excluding capital leases)
    
    
    744
    
    
    
    1,051
    
    
    
    2,758
    
    
    
    1,076
    
    
    
    1,008
    
    
    
    5,117
    
    
    
    11,754Notes payable and bank advances
    
    
    36
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36Capital leases
    
    
    206
    
    
    
    120
    
    
    
    47
    
    
    
    45
    
    
    
    89
    
    
    
    556
    
    
    
    1,063Operating leases
    
    
    219
    
    
    
    199
    
    
    
    171
    
    
    
    143
    
    
    
    116
    
    
    
    771
    
    
    
    1,619Commitments for capital expenditures
    
    
    202
    
    
    
    116
    
    
    
    46
    
    
    
    4
    
    
    
    3
    
    
    
    49
    
    
    
    420Purchase obligations
    
    
    1,295
    
    
    
    988
    
    
    
    493
    
    
    
    353
    
    
    
    321
    
    
    
    414
    
    
    
    3,864Other long-term liabilities (including current portion)
    
    
    74
    
    
    
    42
    
    
    
    44
    
    
    
    47
    
    
    
    49
    
    
    
    21
    
    
    
    277Total
    
    
    2,776
    
    
    
    2,516
    
    
    
    3,559
    
    
    
    1,668
    
    
    
    1,586
    
    
    
    6,928
    
    
    
    19,033
      
 
 2006 Annual Report




---



##### 




 
  Other Cash Requirements
   Guarantees
   Securitization of Accounts Receivable
     Commitment under the CRTC Deferral Account Mechanism
 Commitment under the CRTC Deferral Account Mechanism Regulatory
Environment
    2006 Annual Report




---



##### 



Sources of Liquidity
    NON-COMMITTED
    

    
    COMMITTED
    

    
    TOTALCommercial paper credit lines (1)
    
    
    1,711
    
    
    
    2,000
    
    
    
    3,711Other credit facilities (2)
    
    
    2,653
    
    
    
    751
    
    
    
    3,404Total
    
    
    4,364
    
    
    
    2,751
    
    
    
    7,115Drawn(2)
    
    
    1,787
    
    
    
    
    
    
    
    1,787Undrawn
    
    
    2,577
    
    
    
    2,751
    
    
    
    5,328
 
 (1)
    
    BCE Inc.s and Bell Canadas current commercial paper credit lines expire in August
2009 and Bell Aliants current commercial paper credit lines expire in July 2011.(2)
    
    Includes $444 million in letters of credit.    Competitive Environment
    2006 Annual Report




---



##### 



Regulatory Environment  Wireless Number Portability
         2006 Annual Report




---



##### 



Regulatory Environment  Mobile Spectrum
   Regulatory Environment
  The Regulatory Environment we operate in
    Telecommunications Act
  2006 Annual Report




---



##### 



2006 Annual Report




---



##### 




 
        2006 Annual




---



##### 



Competition Act
        Regulatory Issues Related to the
Implementation of Wireless Number Portability
 Forbearance from Regulation of Local Exchange Services
 2006 Annual Report




---



##### 



Regulatory
Issues Related to the Implementation of Wireless
Number Portability  Follow-Up to Public Notice
2006-3
   force majeure
   2006 Annual Report




---



##### 



Radiocommunication Act
      2006 Annual Report




---



##### 



Assumptions
and Risks Underlying Our
Forward-Looking Statements
    
 
  
 
 
 
 
  Operational
 
 
 Financial
  
 
 
 
  
 
 
 
 2006 Annual Report




---



##### 




 
  Competitive Environment Regulatory Environment
 Risk Management Practices
         
 
     2006 Annual Report




---



##### 



2006 Annual Report




---



##### 




 
 
  Events Affecting
Our Networks
 2006 Annual Report




---



##### 



Telesat
     R. v. DArgy and Theriault (DArgy Case) Radiocommunication Act Charter
 2006 Annual Report




---



##### 




    
    from cash generated by our
operations or investments
    
    by borrowing
from commercial banks
    
    through debt and
equity offerings in the capital markets
    
    by selling or otherwise disposing of assets
(including accounts receivable).
      
    
    limit
our ongoing capital expenditures
    
    limit
our investment in new businesses
    
    limit
the size of our share buyback program
    
    try to raise additional capital by selling or
otherwise disposing of assets.
      2006 Annual Report




---



##### 



Legal Proceedings we
are involved in
 Regulatory Environment
   
    
    actual returns on pension plan assets
    
    long-term interest rates
    
    changes in pension regulations.
     Anticipating
Technological Change and Investing in New
Technologies, Products and Services Liquidity Competitive
Environment
     2006 Annual Report




---



##### 



Satellite Industry Risks
  Launch Failures
  2006 Annual Report




---



##### 



Construction and Launch Delays
  Market for Satellite Insurance
      Our
Accounting Policies
 This section discusses key estimates and
assumptions that management has made and how they
affect the amounts reported in the financial
statements and notes. It also describes the key
changes in accounting standards and our
accounting policies, and how they affect our
financial statements.
 We have prepared our consolidated financial
statements according to Canadian generally
accepted accounting principles (GAAP). Other
significant accounting policies, not involving
the same level of measurement uncertainty as
those discussed in this section, are nevertheless
important to an understanding of our financial
statements. Estimates related to revenues,
allowance for doubtful accounts, useful lives of
capital assets, asset impairments, inventory
reserves, employee compensation plans, evaluation
of minimum lease terms for operating leases, and
business combinations require difficult judgments
on complex matters that are often subject to
multiple sources of authoritative guidance. There
were no significant changes to the estimates we
made in the past two years. See Note 1 to the
consolidated financial statements for more
information about the accounting principles we
used to prepare our financial statements.
 2006 Annual Report




---



##### 



We maintain defined benefit plans that
provide pension and other post-employment
benefits for most of our employees. The amounts
reported in the financial statements relating to
these benefits are determined using actuarial
calculations that are based on several
assumptions.
     Discount Rate
 The discount rate is the interest rate used
to determine the present value of the future cash
flows that we expect will be needed to settle
employee benefit obligations. It is based on the
yield on long-term high-quality corporate fixed
income investments, with maturities matching the
estimated cash flows from the plan.
  IMPACT ONACCRUEDIMPACT ON
    
    
    BENEFITNET BENEFIT
    
    
    ASSET ATPLANS COST
    
    
    DECEMBER 31,FOR 2007
    
    
    2007Discount rate increased to 5.8%Residential
    
    
    (35
    )
    
    
    35Business
    
    
    (38
    )
    
    
    38Bell Aliant
    
    
    (23
    )
    
    
    23Other Bell Canada
    
    
    (8
    )
    
    
    8Other BCE
    
    
    (1
    )
    
    
    1Total
    
    
    (105
    )
    
    
    105Discount rate decreased to 4.8%Residential
    
    
    36
    
    
    
    (36
    )Business
    
    
    38
    
    
    
    (38
    )Bell Aliant
    
    
    23
    
    
    
    (23
    )Other Bell Canada
    
    
    8
    
    
    
    (8
    )Other BCE
    
    
    6
    
    
    
    (6
    )Total
    
    
    111
    
    
    
    (111
    )
 2006 Annual Report




---



##### 



Expected Long-Term Rate of Return
   IMPACT ONACCRUEDIMPACT ON
    
    
    BENEFITNET BENEFIT
    
    
    ASSET ATPLANS COST
    
    
    DECEMBER 31,FOR 2007
    
    
    2007Expected rate of return increased to 8.0%Residential
    
    
    (23
    )
    
    
    23Business
    
    
    (25
    )
    
    
    25Bell Aliant
    
    
    (15
    )
    
    
    15Other Bell Canada
    
    
    (5
    )
    
    
    5Other BCE
    
    
    (3
    )
    
    
    3Total
    
    
    (71
    )
    
    
    71Expected rate of return decreased to 7.0%Residential
    
    
    23
    
    
    
    (23
    )Business
    
    
    25
    
    
    
    (25
    )Bell Aliant
    
    
    15
    
    
    
    (15
    )Other Bell Canada
    
    
    5
    
    
    
    (5
    )Other BCE
    
    
    3
    
    
    
    (3
    )Total
    
    
    71
    
    
    
    (71
    )
   We assess goodwill impairment of individual
reporting units in the fourth quarter of every
year and when events or changes in circumstances
indicate that goodwill might be impaired.
        We become involved in various litigation and
regulatory matters as a part of our business.
Each of our operating segments may be affected.
Pending litigation, regulatory initiatives or
regulatory proceedings represent potential
financial loss to our business.
 2006 Annual Report




---



##### 



Accounts
payable and accrued liabilities Other
long-term liabilities
       Non-Monetary Transactions
   Accounting Changes
  Comprehensive Income
 
 
 
 Surplus Equity Foreign Currency Translation Foreign Currency
Translation
    Financial Instruments  Recognition and
Measurement
  
 
 
 2006 Annual Report




---



##### 



Financial
Instruments  Disclosure and Presentation
   Hedges
  
 
 
   Controls
and Procedures
   U.S. Securities Exchange Act of 1934 Multilateral Instrument 52-109
  U.S.
Securities Exchange Act of 1934 Multilateral Instrument 52-109 Internal Control
 Integrated Framework
  Non-GAAP
Financial Measures
 This section describes the non-GAAP financial
measures we use in the MD&A to explain our
financial results. It also provides
reconciliations of the non-GAAP financial
measures to the most comparable Canadian GAAP
financial measures.
    2006 Annual Report




---



##### 



BCE
    
    2006
    
    
    2005Operating income
    
    
    3,332
    
    
    
    3,759Amortization expense
    
    
    3,129
    
    
    
    3,061Net benefit plans cost
    
    
    513
    
    
    
    359Restructuring and other items
    
    
    355
    
    
    
    55EBITDA
    
    
    7,329
    
    
    
    7,234
 BELL CANADA
    
    2006
    
    
    2005Operating income
    
    
    3,353
    
    
    
    3,755Amortization expense
    
    
    3,073
    
    
    
    2,989Net benefit plans cost
    
    
    531
    
    
    
    389Restructuring and other items
    
    
    332
    
    
    
    54EBITDA
    
    
    7,289
    
    
    
    7,187
     BCE
    
    2006
    
    
    2005Operating income
    
    
    3,332
    
    
    
    3,759Restructuring and other items
    
    
    355
    
    
    
    55Operating income before
restructuring and other items
    
    
    3,687
    
    
    
    3,814
 BELL CANADA
    
    2006
    
    
    2005Operating income
    
    
    3,353
    
    
    
    3,755Restructuring and other items
    
    
    332
    
    
    
    54Operating income before
restructuring and other items
    
    
    3,685
    
    
    
    3,809
     2006 Annual Report




---



##### 



2006
    
    2005TOTAL
    
    PER SHARE
    
    TOTAL
    
    PER SHARENet earnings applicable to common shares
    
    
    1,937
    
    
    
    2.25
    
    
    
    1,891
    
    
    
    2.04Restructuring and other items (1)
    
    
    222
    
    
    
    0.26
    
    
    
    37
    
    
    
    0.04Net gains on investments (2)
    
    
    (525
    )
    
    
    (0.61
    )
    
    
    (27
    )
    
    
    (0.03
    )Other costs incurred to form Bell Aliant (3)
    
    
    42
    
    
    
    0.05
    
    
    
    
    
    
    
    Net earnings before restructuring and other items,
net gains on investments, and costs incurred to form Bell Aliant
    
    
    1,676
    
    
    
    1.95
    
    
    
    1,901
    
    
    
    2.05
 (1)
    
    Includes transaction costs associated with the formation of Bell Aliant. These costs relate
mainly to investment banking, professional and consulting fees. In 2006, we incurred $138 million
($77 million after tax and non-controlling interest).(2)
    
    Amounts for 2006 include the recognition of a future tax asset of $434 million, representing
the tax-effected amount of approximately $2,341 million of previously unrecognized capital loss
carryforwards as realization of the loss carryforwards now is more likely than not due to the
anticipated gain on the sale of Telesat.(3)
    
    Includes premium costs incurred by Bell Aliant on early redemption of long-term debt as a
result of the formation of Bell Aliant. In 2006, we incurred $122 million ($42 million after tax
and non-controlling interest).
      2006
    
    
    2005Cash from operating activities
    
    
    5,389
    
    
    
    5,337Capital expenditures
    
    
    (3,133
    )
    
    
    (3,357
    )Total dividends paid
    
    
    (1,546
    )
    
    
    (1,450
    )Other investing activities
    
    
    (2
    )
    
    
    39Free cash flow
    
    
    708
    
    
    
    569
 2006 Annual Report




---



##### 



Internal Control  Integrated Framework
  
 President and Chief Executive Officer
 
 Chief Financial Officer
 
 Senior Vice-President and Controller
  2006 Annual Report




---



##### 



Internal Control
 Integrated Framework
    Internal Control  Integrated Framework Internal Control 
Integrated Framework
  
 Independent Registered Chartered Accountants
 
 2006 Annual Report




---



##### 



President and Chief Executive Officer
 Chief Financial Officer
 Senior Vice-President and Controller
       Internal Control  Integrated Framework
 Independent Registered Chartered Accountants
 
 2006 Annual Report




---



##### 



FOR THE YEAR ENDED DECEMBER 31 (in $ millions, except share amounts)
    
    NOTE
    
    
    2006
    
    
    2005
    
    
    2004Operating revenues
    
    
    
    
    
    
    17,713
    
    
    
    17,605
    
    
    
    17,009Operating expenses
    
    
    
    
    
    
    (10,384
    )
    
    
    (10,371
    )
    
    
    (9,895
    )Amortization expense
    
    
    13, 14
    
    
    
    (3,129
    )
    
    
    (3,061
    )
    
    
    (3,000
    )Net benefit plans cost
    
    
    25
    
    
    
    (513
    )
    
    
    (359
    )
    
    
    (241
    )Restructuring and other items
    
    
    5
    
    
    
    (355
    )
    
    
    (55
    )
    
    
    (1,219
    )Total operating expenses
    
    
    
    
    
    
    (14,381
    )
    
    
    (13,846
    )
    
    
    (14,355
    )Operating income
    
    
    
    
    
    
    3,332
    
    
    
    3,759
    
    
    
    2,654Other (expense) income
    
    
    6
    
    
    
    (176
    )
    
    
    28
    
    
    
    439Interest expense
    
    
    7
    
    
    
    (952
    )
    
    
    (949
    )
    
    
    (961
    )Pre-tax earnings from continuing operations
    
    
    
    
    
    
    2,204
    
    
    
    2,838
    
    
    
    2,132Income taxes
    
    
    8
    
    
    
    (85
    )
    
    
    (803
    )
    
    
    (605
    )Non-controlling interest
    
    
    
    
    
    
    (228
    )
    
    
    (201
    )
    
    
    (132
    )Earnings from continuing operations
    
    
    
    
    
    
    1,891
    
    
    
    1,834
    
    
    
    1,395Discontinued operations
    
    
    9
    
    
    
    116
    
    
    
    127
    
    
    
    129Net earnings before extraordinary gain
    
    
    
    
    
    
    2,007
    
    
    
    1,961
    
    
    
    1,524Extraordinary gain
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    69Net earnings
    
    
    
    
    
    
    2,007
    
    
    
    1,961
    
    
    
    1,593Dividends on preferred shares
    
    
    
    
    
    
    (70
    )
    
    
    (70
    )
    
    
    (70
    )Net earnings applicable to common shares
    
    
    
    
    
    
    1,937
    
    
    
    1,891
    
    
    
    1,523Net earnings per common share  basic
    
    
    10Continuing operations
    
    
    
    
    
    
    2.12
    
    
    
    1.90
    
    
    
    1.44Discontinued operations
    
    
    
    
    
    
    0.13
    
    
    
    0.14
    
    
    
    0.14Extraordinary gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.07Net earnings
    
    
    
    
    
    
    2.25
    
    
    
    2.04
    
    
    
    1.65Net earnings per common share  diluted
    
    
    10Continuing operations
    
    
    
    
    
    
    2.12
    
    
    
    1.90
    
    
    
    1.44Discontinued operations
    
    
    
    
    
    
    0.13
    
    
    
    0.14
    
    
    
    0.14Extraordinary gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.07Net earnings
    
    
    
    
    
    
    2.25
    
    
    
    2.04
    
    
    
    1.65Dividends per common share
    
    
    
    
    
    
    1.32
    
    
    
    1.32
    
    
    
    1.20Average number of common shares outstanding  basic (millions)
    
    
    
    
    
    
    861.4
    
    
    
    926.8
    
    
    
    924.6
  FOR THE YEAR ENDED DECEMBER 31 (in $ millions)
    
    NOTE
    
    
    2006
    
    
    2005
    
    
    2004Balance at beginning of year
    
    
    
    
    
    
    (4,763
    )
    
    
    (5,432
    )
    
    
    (5,845
    )Net earnings
    
    
    
    
    
    
    2,007
    
    
    
    1,961
    
    
    
    1,593Dividends declared on preferred shares
    
    
    
    
    
    
    (70
    )
    
    
    (70
    )
    
    
    (70
    )Dividends declared on common shares
    
    
    
    
    
    
    (1,132
    )
    
    
    (1,222
    )
    
    
    (1,110
    )Excess of purchase price over stated capital of common shares
cancelled and related contributed surplus
    
    
    23
    
    
    
    (384
    )
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    Balance at end of year
    
    
    
    
    
    
    (4,343
    )
    
    
    (4,763
    )
    
    
    (5,432
    )
 2006 Annual Report




---



##### 



AT DECEMBER 31 (in $ millions)
    
    NOTE
    
    
    2006
    
    
    2005AssetsCurrent assetsCash and cash equivalents
    
    
    
    
    
    
    581
    
    
    
    349Accounts receivable
    
    
    11
    
    
    
    1,868
    
    
    
    1,525Other current assets
    
    
    12
    
    
    
    1,233
    
    
    
    915Current assets of discontinued operations
    
    
    9
    
    
    
    2
    
    
    
    894Total current assets
    
    
    
    
    
    
    3,684
    
    
    
    3,683Capital assets
    
    
    13
    
    
    
    22,079
    
    
    
    21,772Other long-term assets
    
    
    14
    
    
    
    2,816
    
    
    
    2,306Indefinite-life intangible assets
    
    
    15
    
    
    
    2,902
    
    
    
    2,899Goodwill
    
    
    16
    
    
    
    5,475
    
    
    
    5,966Non-current assets of discontinued operations
    
    
    9
    
    
    
    1
    
    
    
    3,856Total assets
    
    
    
    
    
    
    36,957
    
    
    
    40,482LiabilitiesCurrent liabilitiesAccounts payable and accrued liabilities
    
    
    17
    
    
    
    3,236
    
    
    
    3,085Interest payable
    
    
    
    
    
    
    165
    
    
    
    170Dividends payable
    
    
    
    
    
    
    315
    
    
    
    343Debt due within one year
    
    
    18
    
    
    
    986
    
    
    
    1,161Current liabilities of discontinued operations
    
    
    9
    
    
    
    
    
    
    
    828Total current liabilities
    
    
    
    
    
    
    4,702
    
    
    
    5,587Long-term debt
    
    
    19
    
    
    
    11,867
    
    
    
    11,855Other long-term liabilities
    
    
    20
    
    
    
    4,841
    
    
    
    4,807Non-current liabilities of discontinued operation
    
    
    9
    
    
    
    
    
    
    
    614Total liabilities
    
    
    
    
    
    
    21,410
    
    
    
    22,863Non-controlling interest
    
    
    2, 21
    
    
    
    2,180
    
    
    
    2,898Commitments and contingencies
    
    
    26Shareholders EquityPreferred shares
    
    
    23
    
    
    
    1,670
    
    
    
    1,670Common shareholders equityCommon shares
    
    
    2, 23
    
    
    
    13,487
    
    
    
    16,806Contributed surplus
    
    
    2, 23
    
    
    
    2,555
    
    
    
    1,081Deficit
    
    
    
    
    
    
    (4,343
    )
    
    
    (4,763
    )Currency translation adjustment
    
    
    
    
    
    
    (2
    )
    
    
    (73
    )Total common shareholders equity
    
    
    
    
    
    
    11,697
    
    
    
    13,051Total shareholders equity
    
    
    
    
    
    
    13,367
    
    
    
    14,721Total liabilities and shareholders equity
    
    
    
    
    
    
    36,957
    
    
    
    40,482
  -s- T. C. ONeill
    

-s- V. L. YoungDirector
    
    Director
 2006 Annual Report




---



##### 



FOR THE YEAR ENDED DECEMBER 31 (in $ millions)
    
    NOTE
    
    
    2006
    
    
    2005
    
    
    2004Cash flows from operating activitiesEarnings from continuing operations
    
    
    
    
    
    
    1,891
    
    
    
    1,834
    
    
    
    1,395Adjustments to reconcile earnings from continuing operations
to cash flows from operating activities:Amortization expense
    
    
    
    
    
    
    3,129
    
    
    
    3,061
    
    
    
    3,000Net benefit plans cost
    
    
    25
    
    
    
    513
    
    
    
    359
    
    
    
    241Restructuring and other items
    
    
    5
    
    
    
    355
    
    
    
    55
    
    
    
    1,219Net losses (gains) on investments
    
    
    6
    
    
    
    26
    
    
    
    (38
    )
    
    
    (351
    )Future income taxes
    
    
    
    
    
    
    (13
    )
    
    
    719
    
    
    
    (79
    )Non-controlling interest
    
    
    
    
    
    
    228
    
    
    
    201
    
    
    
    132Contributions to employee pension plans
    
    
    25
    
    
    
    (172
    )
    
    
    (206
    )
    
    
    (95
    )Other employee future benefit plan payments
    
    
    25
    
    
    
    (96
    )
    
    
    (93
    )
    
    
    (81
    )Payments of restructuring and other items
    
    
    
    
    
    
    (225
    )
    
    
    (171
    )
    
    
    (251
    )Operating assets and liabilities
    
    
    28
    
    
    
    (247
    )
    
    
    (384
    )
    
    
    138Cash flows from operating activities
    
    
    
    
    
    
    5,389
    
    
    
    5,337
    
    
    
    5,268Cash flows from investing activitiesCapital expenditures
    
    
    
    
    
    
    (3,133
    )
    
    
    (3,357
    )
    
    
    (3,272
    )Business acquisitions
    
    
    4
    
    
    
    (71
    )
    
    
    (228
    )
    
    
    (1,118
    )Business dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Bell Aliant Regional Communications Income Fund (Bell Aliant)
    
    
    2
    
    
    
    (255
    )
    
    
    
    
    
    
    Increase in investments
    
    
    
    
    
    
    (304
    )
    
    
    (233
    )
    
    
    (57
    )Decrease in investments
    
    
    
    
    
    
    64
    
    
    
    17
    
    
    
    711Other investing activities
    
    
    
    
    
    
    (2
    )
    
    
    39
    
    
    
    183Cash flows used in investing activities
    
    
    
    
    
    
    (3,701
    )
    
    
    (3,762
    )
    
    
    (3,551
    )Cash flows from financing activities(Decrease) increase in notes payable and bank advances
    
    
    
    
    
    
    (57
    )
    
    
    (69
    )
    
    
    90Issue of long-term debt
    
    
    
    
    
    
    4,392
    
    
    
    1,095
    
    
    
    461Repayment of long-term debt
    
    
    
    
    
    
    (4,767
    )
    
    
    (1,073
    )
    
    
    (1,691
    )Issue of common shares
    
    
    23
    
    
    
    29
    
    
    
    25
    
    
    
    32Repurchase of common shares
    
    
    23
    
    
    
    (1,241
    )
    
    
    
    
    
    
    Issue of equity securities by subsidiaries to non-controlling interest
    
    
    
    
    
    
    13
    
    
    
    1
    
    
    
    8Redemption of equity securities by subsidiaries from non-controlling interest
    
    
    
    
    
    
    (305
    )
    
    
    (78
    )
    
    
    (25
    )Cash dividends paid on common shares
    
    
    
    
    
    
    (1,169
    )
    
    
    (1,195
    )
    
    
    (1,108
    )Cash dividends paid on preferred shares
    
    
    
    
    
    
    (84
    )
    
    
    (86
    )
    
    
    (85
    )Cash dividends/distributions paid by subsidiaries to non-controlling interest
    
    
    
    
    
    
    (293
    )
    
    
    (169
    )
    
    
    (179
    )Other financing activities
    
    
    
    
    
    
    (157
    )
    
    
    (64
    )
    
    
    (74
    )Cash flows used in financing activities
    
    
    
    
    
    
    (3,639
    )
    
    
    (1,613
    )
    
    
    (2,571
    )Cash used in continuing operations
    
    
    
    
    
    
    (1,951
    )
    
    
    (38
    )
    
    
    (854
    )Cash provided by discontinued operations
    
    
    9
    
    
    
    2,087
    
    
    
    103
    
    
    
    512Net increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    136
    
    
    
    65
    
    
    
    (342
    )Cash and cash equivalents at beginning of year
    
    
    
    
    
    
    445
    
    
    
    380
    
    
    
    722Cash and cash equivalents at end of year
    
    
    
    
    
    
    581
    
    
    
    445
    
    
    
    380Consists of:Cash and cash equivalents of continuing operations
    
    
    
    
    
    
    581
    
    
    
    349
    
    
    
    298Cash and cash equivalents of discontinued operations
    
    
    9
    
    
    
    
    
    
    
    96
    
    
    
    82Total
    
    
    
    
    
    
    581
    
    
    
    445
    
    
    
    380Income taxes paid (net of refunds)
    
    
    
    
    
    
    199
    
    
    
    206
    
    
    
    148Interest paid
    
    
    
    
    
    
    874
    
    
    
    899
    
    
    
    916
 2006 Annual Report




---



##### 



This section of our annual report contains
the audited consolidated financial statements of
BCE and detailed notes with explanations and
additional information.
 The financial statements contain our results
and financial history for the past three years.
The notes are an important part of understanding
our financial results. They explain how we
arrived at the numbers in the financial
statements, describe significant events or
changes that affect the numbers, and explain
certain items in the financial statements. The notes also include details about our results
that do not appear in the financial statements.
 Except in the auditors report, , , and mean BCE Inc., its subsidiaries and joint
ventures. References to Bell Aliant include
matters relating to, and actions taken by, both
Aliant Inc. (Aliant) prior to July 7, 2006, and
Bell Aliant Regional Communications Income Fund
on and after such date.
 All amounts are in millions of Canadian
dollars, except where noted.
 Note 1: Significant Accounting Policies
         
    
    reported amounts of revenues and expenses
    
    reported amounts of assets and liabilities
    
    disclosure of contingent assets and liabilities.
    
    
    services are
provided or products are delivered to customers
    
    there is clear evidence that an arrangement exists
    
    amounts are fixed or can be determined
    
    our ability to collect is reasonably assured.
  
 
 
 
 
 
 
 2006 Annual Report




---



##### 




 
 
    Accounts payable and
accrued liabilities Other long-term
liabilities
  Cash and cash equivalents Other current assets
   Other income
  
 
     ESTIMATED USEFUL LIFETelecommunications assets
    
    
    10 to 25 yearsMachinery and equipment
    
    
    2 to 20 yearsBuildings
    
    
    10 to 40 yearsSatellites
    
    
    10 to 15 yearsFinite-life intangible assetsSoftware
    
    
    3 to 7 yearsCustomer relationships
    
    
    5 to 40 years
  2006 Annual Report




---



##### 



Operating expenses
     
 
  Other long-term
assets Other income
  Other long-term assets Interest expense
       
 
    
 
    
 2006 Annual Report




---



##### 




 
 Other income
   
 
 
 Other income
   
    
    interest rate risk
    
    foreign exchange rate risk
    
    changes in the price of BCE Inc. common shares relating to special compensation payments (SCPs)
and deferred share units (DSUs).
   
    
    a specific asset or liability, or
    
    a specific firm commitment, or
    
    an anticipated transaction.
   
 
 
 
 
   Accounts receivable Interest payable
  Other long-term assets Other
long-term liabilities
   
 
 2006 Annual Report




---



##### 



Other long-term assets Other long-term liabilities
      
    
    health-care and life insurance benefits during retirement
    
    other benefits, including various disability plans, workers compensation and medical benefits to
former or inactive employees, their beneficiaries
and dependants, from the time their employment
ends until their retirement starts, under certain
circumstances.
   
 
 
             2006 Annual Report




---



##### 




 
       
 
  Accounts payable and
accrued liabilities
        Telecommunications Act
   Non-Monetary
Transactions
 2006 Annual Report




---



##### 



Accounting Changes
  Comprehensive Income
 
 
 
 Surplus Equity Foreign
Currency Translation Foreign Currency Translation
    Financial Instruments  Recognition and Measurement
 
 
 
 Financial
Instruments  Disclosure and Presentation
   Hedges
  
 
 
   Note 2: Bell Aliant
   2006 Annual Report




---



##### 




    
    Goodwill decreased by $533 million
    
    Non-controlling interest increased by $469 million
    
    Common shares decreased by $2,549 million and
    
    Contributed surplus increased by $1,547 million.
    Restructuring and Other Items
  Other (Expense) Income
 
       Note 3: Segmented Information
 Significant Accounting Policies
   Residential Business Bell
Aliant Other Bell Canada Other BCE
     2006 Annual Report




---



##### 



INTER-SEGMENT
    
    
    
    
    
    
    
    
    
    
    INTER-ELIMINA-
    
    
    
    
    
    
    
    
    
    
    SEGMENTOTHER
    
    
    TIONS
    
    
    
    
    
    
    
    
    
    
    ELIMINA-BELL
    
    
    BELL
    
    
     BELL
    
    
    BELL
    
    
    OTHER
    
    
    TIONS
    
    
    CONSOLI-RESIDENTIAL
    
    
    BUSINESS
    
    
    ALIANT
    
    
    CANADA
    
    
    CANADA
    
    
    CANADA
    
    
    BCE
    
    
     OTHER
    
    
    DATEDFor the year ended
December 31, 2006Operating revenuesExternal customers
    
    
    7,086
    
    
    
    5,900
    
    
    
    2,996
    
    
    
    1,358
    
    
    
    
    
    
    
    17,340
    
    
    
    373
    
    
    
    
    
    
    
    17,713Inter-segment
    
    
    13
    
    
    
    157
    
    
    
    362
    
    
    
    234
    
    
    
    (758
    )
    
    
    8
    
    
    
    162
    
    
    
    (170
    )
    
    
    Total operating revenues
    
    
    7,099
    
    
    
    6,057
    
    
    
    3,358
    
    
    
    1,592
    
    
    
    (758
    )
    
    
    17,348
    
    
    
    535
    
    
    
    (170
    )
    
    
    17,713Operating income
    
    
    1,649
    
    
    
    811
    
    
    
    777
    
    
    
    116
    
    
    
    
    
    
    
    3,353
    
    
    
    (21
    )
    
    
    
    
    
    
    3,332Other (expense) income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (176
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (952
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (85
    )Non controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (228
    )Earnings from continuing
operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,891Segment assets
    
    
    12,787
    
    
    
    12,632
    
    
    
    5,974
    
    
    
    3,772
    
    
    
    
    
    
    
    35,165
    
    
    
    1,792
    
    
    
    
    
    
    
    36,957Investments at equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Capital expenditures
    
    
    (1,299
    )
    
    
    (767
    )
    
    
    (517
    )
    
    
    (338
    )
    
    
    
    
    
    
    (2,921
    )
    
    
    (212
    )
    
    
    
    
    
    
    (3,133
    )For the year ended December 31, 2005Operating revenuesExternal customers
    
    
    7,009
    
    
    
    5,814
    
    
    
    2,972
    
    
    
    1,432
    
    
    
    
    
    
    
    17,227
    
    
    
    378
    
    
    
    
    
    
    
    17,605Inter-segment
    
    
    7
    
    
    
    152
    
    
    
    348
    
    
    
    219
    
    
    
    (719
    )
    
    
    7
    
    
    
    160
    
    
    
    (167
    )
    
    
    Total operating revenues
    
    
    7,016
    
    
    
    5,966
    
    
    
    3,320
    
    
    
    1,651
    
    
    
    (719
    )
    
    
    17,234
    
    
    
    538
    
    
    
    (167
    )
    
    
    17,605Operating income
    
    
    1,772
    
    
    
    863
    
    
    
    768
    
    
    
    352
    
    
    
    
    
    
    
    3,755
    
    
    
    4
    
    
    
    
    
    
    
    3,759Other (expense) income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (949
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (803
    )Non controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (201
    )Earnings from continuing
operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,834Segment assets
    
    
    12,130
    
    
    
    12,409
    
    
    
    6,687
    
    
    
    2,790
    
    
    
    
    
    
    
    34,016
    
    
    
    6,466
    
    
    
    
    
    
    
    40,482Investments at equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    25Capital expenditures
    
    
    (1,417
    )
    
    
    (867
    )
    
    
    (525
    )
    
    
    (310
    )
    
    
    
    
    
    
    (3,119
    )
    
    
    (238
    )
    
    
    
    
    
    
    (3,357
    )
 2006 Annual Report




---



##### 



2006
    
    
    2005
    
    
    2004Local and access
    
    
    5,212
    
    
    
    5,465
    
    
    
    5,572Long distance
    
    
    1,798
    
    
    
    2,055
    
    
    
    2,327Wireless
    
    
    3,491
    
    
    
    3,085
    
    
    
    2,818Data
    
    
    4,120
    
    
    
    4,016
    
    
    
    3,640Video
    
    
    1,150
    
    
    
    976
    
    
    
    850Terminal sales and other
    
    
    1,577
    
    
    
    1,637
    
    
    
    1,580Total Bell Canada
    
    
    17,348
    
    
    
    17,234
    
    
    
    16,787Other BCE
    
    
    535
    
    
    
    538
    
    
    
    422Inter-segment eliminations
    
    
    (170
    )
    
    
    (167
    )
    
    
    (200
    )Total BCE
    
    
    17,713
    
    
    
    17,605
    
    
    
    17,009
 Note 4: Business Acquisitions and Dispositions
    2006TOTALConsideration received:Non-cash working capital
    
    
    2Capital assets
    
    
    3Other long-term assets
    
    
    3Indefinite-life intangible assets
    
    
    19Goodwill
    
    
    49Long-term debt
    
    
    (2
    )Other long-term liabilities
    
    
    (4
    )Non-controlling interest
    
    
    373Cash and cash equivalents
    
    
    9Net assets acquired
    
    
    82Consideration given:(1)Cash
    
    
    76Acquisition costs
    
    
    4Non-cash
    
    
    282
 (1)
  Excluding contingent payments of $5
million that may be paid if certain conditions
specified in the purchase agreements are met. If
the payments are made, the amounts will be
allocated to goodwill.  
 
    NR Communications Ltd. (NR
Communications)
  Nexxlink Technologies Inc. (Nexxlink)
 2006 Annual Report




---



##### 



2005ALL OTHERNR
    
    
    NEXXLINK
    
    
    BUSINESSCOMMUNI-
    
    
    TECHNOL-
    
    
    ACQUI-CATIONS LTD.
    
    
    OGIES INC.
    
    
    SITIONS
    
    
    TOTALConsideration received:Non-cash working capital
    
    
    (16
    )
    
    
    9
    
    
    
    (12
    )
    
    
    (19
    )Capital assets
    
    
    19
    
    
    
    24
    
    
    
    85
    
    
    
    128Other long-term assets
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    3Indefinite-life intangible assets (1)
    
    
    57
    
    
    
    
    
    
    
    35
    
    
    
    92Goodwill (1)
    
    
    
    
    
    
    47
    
    
    
    72
    
    
    
    119Long-term debt
    
    
    
    
    
    
    
    
    
    
    (61
    )
    
    
    (61
    )Other long-term liabilities (1)
    
    
    
    
    
    
    (6
    )
    
    
    (15
    )
    
    
    (21
    )60
    
    
    
    74
    
    
    
    107
    
    
    
    241Cash and cash equivalents (bank indebtedness)
    
    
    10
    
    
    
    (3
    )
    
    
    13
    
    
    
    20Net assets acquired
    
    
    70
    
    
    
    71
    
    
    
    120
    
    
    
    261Consideration given:(2)Cash
    
    
    69
    
    
    
    67
    
    
    
    105
    
    
    
    241Acquisition costs
    
    
    1
    
    
    
    4
    
    
    
    2
    
    
    
    7Non-cash
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    1370
    
    
    
    71
    
    
    
    120
    
    
    
    261
 (1)
  In 2006, we decreased goodwill by $12 million and increased indefinite-life intangible assets
by $15 million and future income tax liabilities by $3 million upon finalizing the purchase price
allocation of 2005 business acquisitions. These adjustments have been reflected in the above table.
See Note 16,Goodwill.(2)
  Excluding contingent payments of $8 million that may be paid if certain
conditions specified in the purchase agreements are met. If the payments are made, the amounts will
be allocated to goodwill.  
 
   Canadian operations of 360networks
Corporation (360networks)
    DownEast
  Bell West
  Infostream Technologies Inc.
(Infostream)
  Charon Systems Inc. (Charon)
  Elix Inc. (Elix)
  Accutel Conferencing Systems Inc.
(Canada) Accutel Conferencing Systems Corp.
(U.S.) (collectively Accutel)
 2006 Annual Report




---



##### 



2004CANADIAN
    
    
    40%
    
    
    ALL OTHEROPERATIONS
    
    
    INTEREST
    
    
    BUSINESSOF
    
    
    IN BELL
    
    
    ACQUI-360NETWORKS
    
    
    WEST
    
    
    SITIONS
    
    
    TOTALConsideration received:Non-cash working capital
    
    
    (9
    )
    
    
    
    
    
    
    10
    
    
    
    1Capital assets
    
    
    
    
    
    
    (15
    )
    
    
    12
    
    
    
    (3
    )Other long-term assets
    
    
    429
    
    
    
    5
    
    
    
    10
    
    
    
    444Goodwill
    
    
    
    
    
    
    395
    
    
    
    166
    
    
    
    561Other long-term liabilities
    
    
    (58
    )
    
    
    
    
    
    
    
    
    
    
    (58
    )Non-controlling interest
    
    
    
    
    
    
    261
    
    
    
    
    
    
    
    261362
    
    
    
    646
    
    
    
    198
    
    
    
    1,206Bank indebtedness
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    (4
    )Net assets acquired
    
    
    362
    
    
    
    646
    
    
    
    194
    
    
    
    1,202Extraordinary gain
    
    
    69
    
    
    
    
    
    
    
    
    
    
    
    69Consideration given:Cash
    
    
    283
    
    
    
    645
    
    
    
    174
    
    
    
    1,102Acquisition costs
    
    
    10
    
    
    
    1
    
    
    
    1
    
    
    
    12Future cash payment
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    4Issuance of 582,081 Aliant common shares
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    15293
    
    
    
    646
    
    
    
    194
    
    
    
    1,133
  
 
    2006 Annual Report




---



##### 



Note 5: Restructuring and Other Items
  2006
    
    
    2005
    
    
    2004Restructuring costs
    
    
    (93
    )
    
    
    (6
    )
    
    
    (1,063
    )Real estate
    
    
    (72
    )
    
    
    (49
    )
    
    
    Loss on long-term contract
    
    
    
    
    
    
    
    
    
    
    (128
    )Settlement with MTS
    
    
    
    
    
    
    
    
    
    
    75Other charges
    
    
    (190
    )
    
    
    
    
    
    
    (103
    )Restructuring and other items
    
    
    (355
    )
    
    
    (55
    )
    
    
    (1,219
    )
 BELLCANADA
    
    
    BELL
    
    
    CONSOLI-AND BCE
    
    
    ALIANT
    
    
    DATEDBalance in accounts payable
and accrued liabilities at
December 31, 2005
    
    
    72
    
    
    
    13
    
    
    
    852006 restructuring costs (1)
    
    
    77
    
    
    
    11
    
    
    
    88Real estate (2)
    
    
    69
    
    
    
    
    
    
    
    69Less:Cash payments
    
    
    (133
    )
    
    
    (20
    )
    
    
    (153
    )Balance in accounts payable
and accrued liabilities at
December 31, 2006
    
    
    85
    
    
    
    4
    
    
    
    89
  (1)
    
    Excludes amounts related to net
benefit plans cost ($5 million).(2)
    
    Excludes amounts related to
real estate impairment charges ($3
million).   
 
 
   
 
   
 
    2006 Annual Report




---



##### 



Other Income
     Note 6: Other (Expense) Income
 NOTE
    
    
    2006
    
    
    2005
    
    2004Premium on redemption of Bell Aliant debt
    
    
    
    
    
    
    (148
    )
    
    
    
    
    
    
    
    Net (losses) gains on investments
    
    
    
    
    
    
    (26
    )
    
    
    38
    
    
    
    
    351Interest income
    
    
    
    
    
    
    58
    
    
    
    18
    
    
    
    
    30Capitalized interest
    
    
    13
    
    
    
    13
    
    
    
    15
    
    
    
    
    19Securitization losses
    
    
    11
    
    
    
    (57
    )
    
    
    (34
    )
    
    
    
    (26
    )Bell Canada International Inc. (BCI) loss monetization charge
    
    
    
    
    
    
    
    
    
    
    (33
    )
    
    
    
    (Loss) income from cost and equity investments
    
    
    
    
    
    
    (7
    )
    
    
    (11
    )
    
    
    
    24Foreign currency (losses) gains
    
    
    
    
    
    
    (4
    )
    
    
    (3
    )
    
    
    
    3Other
    
    
    
    
    
    
    (5
    )
    
    
    38
    
    
    
    
    38Other (expense) income
    
    
    
    
    
    
    (176
    )
    
    
    28
    
    
    
    
    439
   
 
 2006 Annual Report




---



##### 




 
  
 
 
 Note 7: Interest Expense
 2006
    
    
    2005
    
    
    2004Interest expense on long-term debt
    
    
    909
    
    
    
    907
    
    
    
    916Interest expense on other debt
    
    
    43
    
    
    
    42
    
    
    
    45Total interest expense
    
    
    952
    
    
    
    949
    
    
    
    961
 Note
8: Income Taxes
  2006
    
    
    2005
    
    
    2004Income taxes computed at
statutory rates
    
    
    (765
    )
    
    
    (976
    )
    
    
    (733
    )Savings from BCI
monetization transaction
    
    
    
    
    
    
    99
    
    
    
    Recognition of previously
unrecognized capital loss
carryforwards (1)
    
    
    434
    
    
    
    
    
    
    
    54Net gains on investments
    
    
    (19
    )
    
    
    
    
    
    
    66Large corporations tax
    
    
    19
    
    
    
    (31
    )
    
    
    (34
    )Change in statutory rate
    
    
    56
    
    
    
    
    
    
    
    (2
    )Non-taxable portion of Bell Aliants income
    
    
    53
    
    
    
    16
    
    
    
    13Other
    
    
    137
    
    
    
    89
    
    
    
    31Total income tax expense
    
    
    (85
    )
    
    
    (803
    )
    
    
    (605
    )
 
 (1)
    
    In 2006, we recognized a future tax asset of
$434 million representing the tax-effected amount
of approximately $2,341 million of previously
unrecognized capital loss carryforwards as
realization of the loss carryforwards now is more
likely than not due to the anticipated gain on
the sale of Telesat.  2006
    
    
    2005
    
    
    2004Current income taxes
    
    
    (98
    )
    
    
    (84
    )
    
    
    (684
    )Future income taxesRecognition and utilization
of loss carryforwards
    
    
    138
    
    
    
    (234
    )
    
    
    (27
    )Change in statutory rate
    
    
    56
    
    
    
    
    
    
    
    (2
    )Change in temporary
differences and other
    
    
    (181
    )
    
    
    (485
    )
    
    
    108Total income tax expense
    
    
    (85
    )
    
    
    (803
    )
    
    
    (605
    )
 2006 Annual Report




---



##### 



2006
    
    
    2005Non-capital loss carryforwards
    
    
    191
    
    
    
    487Capital loss carryforwards
    
    
    457
    
    
    
    23Capital assets
    
    
    (779
    )
    
    
    (498
    )Indefinite-life intangible assets
    
    
    (437
    )
    
    
    (442
    )Investment tax credits
    
    
    (155
    )
    
    
    (69
    )Scientific research and experimental
development expenditures
    
    
    154
    
    
    
    18Employee benefit plans
    
    
    66
    
    
    
    87Investments
    
    
    23
    
    
    
    15Other
    
    
    (962
    )
    
    
    (1,082
    )Total future income taxes
    
    
    (1,442
    )
    
    
    (1,461
    )Future income taxes are comprised of:Future income tax asset 
current portion
    
    
    662
    
    
    
    310Future income tax asset 
long-term portion
    
    
    255
    
    
    
    342Future income tax liability 
current portion
    
    
    (9
    )
    
    
    (5
    )Future income tax liability 
long-term portion
    
    
    (2,350
    )
    
    
    (2,108
    )Total future income taxes
    
    
    (1,442
    )
    
    
    (1,461
    )
  
 
  
 
     Discontinued Operations
 2006 Annual Report




---



##### 



Note 9: Discontinued Operations
 2006
    
    
    2005
    
    
    2004CTVglobemedia
    
    
    7
    
    
    
    84
    
    
    
    52CGI
    
    
    63
    
    
    
    46
    
    
    
    54Emergis Inc. (Emergis)
    
    
    1
    
    
    
    
    
    
    
    23BCI
    
    
    52
    
    
    
    
    
    
    
    Other
    
    
    (7
    )
    
    
    (3
    )
    
    
    Net gain from discontinued
operations
    
    
    116
    
    
    
    127
    
    
    
    129
  2006
    
    
    2005
    
    
    2004Revenue
    
    
    989
    
    
    
    2,397
    
    
    
    2,300Operating gain from discontinued
operations, before tax
    
    
    78
    
    
    
    312
    
    
    
    255Future income tax asset
impairment charge
    
    
    
    
    
    
    
    
    
    
    (56
    )Gain (loss) from discontinued
operations, before tax
    
    
    106
    
    
    
    (1
    )
    
    
    70Income tax expense on
operating gain
    
    
    (32
    )
    
    
    (118
    )
    
    
    (116
    )Income tax expense on gain
    
    
    (14
    )
    
    
    
    
    
    
    (3
    )Non-controlling interest
    
    
    (22
    )
    
    
    (66
    )
    
    
    (21
    )Net gain from discontinued
operations
    
    
    116
    
    
    
    127
    
    
    
    129
  2006
    
    
    2005
    
    
    2004Cash flows (used in) from
operating activities
    
    
    (74
    )
    
    
    348
    
    
    
    265Cash flows from (used in)
investing activities
    
    
    1,534
    
    
    
    (120
    )
    
    
    (126
    )Cash flows from (used in)
financing activities
    
    
    627
    
    
    
    (125
    )
    
    
    373Cash provided by discontinued
operations
    
    
    2,087
    
    
    
    103
    
    
    
    512
               
 
 
 2006 Annual Report




---



##### 



Note 10: Earnings Per Share
  2006
    
    
    2005
    
    
    2004Earnings from continuing operations (numerator)Earnings from continuing operations
    
    
    1,891
    
    
    
    1,834
    
    
    
    1,395Dividends on preferred shares
    
    
    (70
    )
    
    
    (70
    )
    
    
    (70
    )Earnings from continuing operations  basic
    
    
    1,821
    
    
    
    1,764
    
    
    
    1,325Weighted average number of common shares outstanding
(denominator)(in millions)Weighted average number of common shares outstanding  basic
    
    
    861.4
    
    
    
    926.8
    
    
    
    924.6Assumed exercise of stock options (1)
    
    
    0.2
    
    
    
    0.3
    
    
    
    0.6Weighted average number of common shares outstanding  diluted
    
    
    861.6
    
    
    
    927.1
    
    
    
    925.2
  (1)
    
    The calculation of the assumed exercise of stock options includes the effect of the average
unrecognized future compensation cost of dilutive options. It does not include anti-dilutive
options. These are options that would not be exercised because their
exercise price is higher than the average market value of a BCE Inc. common share for each of the
periods shown in the table. The number of excluded options was 18,479,608 in 2006, 24,466,767 in
2005 and 26,693,305 in 2004. Note 11: Accounts Receivable
 2006
    
    
    2005Trade accounts receivable
    
    
    1,573
    
    
    
    1,470Allowance for doubtful accounts
    
    
    (106
    )
    
    
    (125
    )Allowance for revenue adjustments
    
    
    (112
    )
    
    
    (118
    )Income taxes receivable
    
    
    97
    
    
    
    48Investment tax credits receivable
    
    
    312
    
    
    
    154Other accounts receivable
    
    
    104
    
    
    
    96Total accounts receivable
    
    
    1,868
    
    
    
    1,525
     2006 Annual Report




---



##### 



RANGE
    
    
    2006
    
    
    2005Securitized interest in
accounts receivable
    
    
    
    
    
    
    1,338
    
    
    
    1,354Retained interest
    
    
    
    
    
    
    185
    
    
    
    172Servicing liability
    
    
    
    
    
    
    2
    
    
    
    2Average accounts
receivable managed
    
    
    
    
    
    
    2,009
    
    
    
    1,972Assumptions:Cost of funds
    
    
    2.90%4.20
    %
    
    
    4.20
    %
    
    
    2.86
    %Average
delinquency ratio
    
    
    11.62%12.32
    %
    
    
    11.69
    %
    
    
    12.32
    %Average net
credit loss ratio
    
    
    0.51%0.76
    %
    
    
    0.76
    %
    
    
    0.56
    %Weighted average
life (days)
    
    
    3637
    
    
    
    36
    
    
    
    37Servicing fee liability
    
    
    2.00
    %
    
    
    2.00
    %
    
    
    2.00
    %
  2006
    
    
    2005Collections reinvested in revolving sales
    
    
    18,611
    
    
    
    17,724(Decrease) increase in sale proceeds
    
    
    (16
    )
    
    
    229
 Note 12: Other Current Assets
 NOTE
    
    
    2006
    
    
    2005Future income taxes
    
    
    8
    
    
    
    662
    
    
    
    310Inventory
    
    
    
    
    
    
    329
    
    
    
    335Prepaid expenses
    
    
    
    
    
    
    234
    
    
    
    191Other
    
    
    
    
    
    
    8
    
    
    
    79Total other current assets
    
    
    
    
    
    
    1,233
    
    
    
    915
 Note 13: Capital Assets
 2006
    
    
    2005ACCUMULATED
    
    
    NET BOOK
    
    
    
    
    
    
    ACCUMULATED
    
    
    NET BOOKCOST
    
    
    AMORTIZATION
    
    
    VALUE
    
    
    COST
    
    
    AMORTIZATION
    
    
    VALUETelecommunications assetsInside plant
    
    
    20,058
    
    
    
    14,252
    
    
    
    5,806
    
    
    
    19,246
    
    
    
    13,358
    
    
    
    5,888Outside plant
    
    
    15,176
    
    
    
    9,931
    
    
    
    5,245
    
    
    
    14,522
    
    
    
    9,492
    
    
    
    5,030Station equipment
    
    
    2,910
    
    
    
    1,455
    
    
    
    1,455
    
    
    
    2,655
    
    
    
    1,311
    
    
    
    1,344Machinery and equipment
    
    
    5,949
    
    
    
    3,587
    
    
    
    2,362
    
    
    
    5,536
    
    
    
    3,225
    
    
    
    2,311Buildings
    
    
    3,204
    
    
    
    1,470
    
    
    
    1,734
    
    
    
    3,063
    
    
    
    1,314
    
    
    
    1,749Plant under construction
    
    
    1,579
    
    
    
    
    
    
    
    1,579
    
    
    
    1,852
    
    
    
    
    
    
    
    1,852Satellites
    
    
    1,553
    
    
    
    514
    
    
    
    1,039
    
    
    
    1,552
    
    
    
    404
    
    
    
    1,148Land
    
    
    79
    
    
    
    
    
    
    
    79
    
    
    
    78
    
    
    
    
    
    
    
    78Other
    
    
    337
    
    
    
    103
    
    
    
    234
    
    
    
    200
    
    
    
    66
    
    
    
    134Total property, plant and
equipment
    
    
    50,845
    
    
    
    31,312
    
    
    
    19,533
    
    
    
    48,704
    
    
    
    29,170
    
    
    
    19,534Finite-life intangible assetsSoftware
    
    
    3,960
    
    
    
    1,981
    
    
    
    1,979
    
    
    
    3,163
    
    
    
    1,497
    
    
    
    1,666Customer relationships
    
    
    652
    
    
    
    106
    
    
    
    546
    
    
    
    623
    
    
    
    64
    
    
    
    559Other
    
    
    32
    
    
    
    11
    
    
    
    21
    
    
    
    26
    
    
    
    13
    
    
    
    13Total capital assets
    
    
    55,489
    
    
    
    33,410
    
    
    
    22,079
    
    
    
    52,516
    
    
    
    30,744
    
    
    
    21,772
 2006 Annual Report




---



##### 



Note 14: Other Long-Term Assets
 NOTE
    
    
    2006
    
    
    2005Accrued benefit asset
    
    
    25
    
    
    
    1,110
    
    
    
    984Future income taxes
    
    
    8
    
    
    
    255
    
    
    
    342Investments at cost
    
    
    
    
    
    
    754
    
    
    
    346Investment tax credits receivable
    
    
    
    
    
    
    393
    
    
    
    345Investments at equity
    
    
    
    
    
    
    
    
    
    
    25Deferred debt issuance costs
    
    
    
    
    
    
    94
    
    
    
    72Long-term notes and other receivables
    
    
    
    
    
    
    87
    
    
    
    57Deferred development costs
    
    
    
    
    
    
    3
    
    
    
    16Other
    
    
    
    
    
    
    120
    
    
    
    119Total other long-term assets
    
    
    
    
    
    
    2,816
    
    
    
    2,306
  Note 15: Indefinite-Life Intangible Assets
 2006
    
    
    2005Brand name
    
    
    1,986
    
    
    
    1,986Spectrum licences
    
    
    900
    
    
    
    897Cable licences
    
    
    16
    
    
    
    16Total indefinite-life intangible assets
    
    
    2,902
    
    
    
    2,899
 Note 16: Goodwill
 OTHERBELL
    
    
    BELL
    
    
    OTHER
    
    
    CONSOLI-NOTE
    
    
    RESIDENTIAL
    
    
    BUSINESS
    
    
    ALIANT
    
    
    CANADA
    
    
    BCE
    
    
    DATEDBalance  December 31, 2005
    
    
    
    
    
    
    2,671
    
    
    
    1,831
    
    
    
    1,217
    
    
    
    150
    
    
    
    97
    
    
    
    5,966Goodwill arising from current
year acquisitions
    
    
    4
    
    
    
    7
    
    
    
    29
    
    
    
    12
    
    
    
    
    
    
    
    1
    
    
    
    49Goodwill arising from purchase
price
adjustments for 2005 acquisitions
    
    
    4
    
    
    
    
    
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12
    )Distribution of Bell Aliant units
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    (533
    )
    
    
    
    
    
    
    
    
    
    
    (533
    )Other
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    5Balance  December 31, 2006
    
    
    
    
    
    
    2,679
    
    
    
    1,848
    
    
    
    700
    
    
    
    150
    
    
    
    98
    
    
    
    5,475
 2006 Annual Report




---



##### 



Note 17: Accounts Payable and Accrued Liabilities
 NOTE
    
    
    2006
    
    
    2005Trade accounts payable and accruals
    
    
    
    
    
    
    1,614
    
    
    
    1,535Compensation payable
    
    
    
    
    
    
    486
    
    
    
    480Deferred revenues
    
    
    
    
    
    
    475
    
    
    
    441Taxes payable
    
    
    
    
    
    
    207
    
    
    
    244Restructuring costs payable
    
    
    5
    
    
    
    89
    
    
    
    85Other current liabilities
    
    
    
    
    
    
    365
    
    
    
    300Total accounts payable and accrued liabilities
    
    
    
    
    
    
    3,236
    
    
    
    3,085
 Note 18: Debt Due Within One Year
 WEIGHTED
    
    
    WEIGHTEDAVERAGE
    
    
    AVERAGENOTE
    
    
    INTEREST RATE
    
    
    MATURITY
    
    
    2006
    
    
    2005Bank advances
    
    
    
    
    
    
    4.25
    %
    
    
    N/A
    
    
    
    9
    
    
    
    11Notes payable
    
    
    
    
    
    
    5.68
    %
    
    

30 days
    
    
    
    27
    
    
    
    80Long-term debt due within one
year
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    950
    
    
    
    1,070Total debt due within one year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    986
    
    
    
    1,161
  N/A: Not applicable.   
    
    require us to meet specific financial ratios
    
    require us to maintain a certain level of Bell Canada voting shares.
  Note 19: Long-Term Debt
 WEIGHTEDAVERAGENOTE
    
    
    INTEREST RATE
    
    
    MATURITY
    
    
    2006
    
    
    2005BCE Inc.  Notes(a)
    
    
    
    
    
    
    7.35
    %
    
    
    2009
    
    
    
    650
    
    
    
    2,000Bell Canada(b)Debentures
    
    
    
    
    
    
    6.87
    %
    
    
    20072035
    
    
    
    7,025
    
    
    
    7,479Debentures
    
    
    
    
    
    
    9.84
    %
    
    
    20412054
    
    
    
    700
    
    
    
    700Subordinated debentures
    
    
    
    
    
    
    8.21
    %
    
    
    20262031
    
    
    
    275
    
    
    
    275Capital leases
    
    
    
    
    
    
    6.42
    %
    
    
    20072047
    
    
    
    975
    
    
    
    852Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40
    
    
    
    69Total  Bell Canada
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,015
    
    
    
    9,375Bell Aliant(c)Non-revolving term facility
    
    
    
    
    
    Floating
    
    
    2009
    
    
    
    1,235
    
    
    
    Debentures, notes and bonds
    
    
    
    
    
    
    5.19
    %
    
    
    20072020
    
    
    
    1,549
    
    
    
    1,086Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    25Total  Bell Aliant
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,812
    
    
    
    1,111Telesat  Notes and other
    
    
    
    
    
    
    7.78
    %
    
    
    20072010
    
    
    
    253
    
    
    
    340Total debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,730
    
    
    
    12,826Unamortized premium (d)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87
    
    
    
    99Less: Amount due within one year
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    (950
    )
    
    
    (1,070
    )Total long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,867
    
    
    
    11,855
 2006 Annual Report




---



##### 




    
    require us to meet specific financial
ratios
    
    impose covenants, maintenance
tests and new issue tests
    
    require us to maintain a certain
level of Bell Canada voting shares.
         US$200 million maturing in 2010, which
has been swapped into Canadian dollars   $125 million of long-term debt, which
includes a call option that has been exercised,
allowing for the debt to be redeemed on February
15, 2007.
       Note 20: Other Long-Term Liabilities
 NOTE
    
    
    2006
    
    
    2005Future income taxes
    
    
    8
    
    
    
    2,350
    
    
    
    2,108Accrued benefit liability
    
    
    25
    
    
    
    1,538
    
    
    
    1,448Deferred revenue on long-term contracts
    
    
    
    
    
    
    399
    
    
    
    389Deferred contract payments
    
    
    
    
    
    
    168
    
    
    
    199Other
    
    
    
    
    
    
    386
    
    
    
    663Total other long-term liabilities
    
    
    
    
    
    
    4,841
    
    
    
    4,807
 2006 Annual Report




---



##### 



Note 21: Non-Controlling Interest
 NOTE
    
    
    2006
    
    
    2005Non-controlling interest in subsidiaries:CTVglobemedia
    
    
    
    
    
    
    
    
    
    
    817Bell Aliant
    
    
    2
    
    
    
    1,063
    
    
    
    675Other
    
    
    
    
    
    
    17
    
    
    
    241,080
    
    
    
    1,516Preferred shares issued by subsidiaries:Bell Canada
    
    
    
    
    
    
    1,100
    
    
    
    1,100Bell Aliant
    
    
    2
    
    
    
    
    
    
    
    232Telesat
    
    
    
    
    
    
    
    
    
    
    501,100
    
    
    
    1,382Total non-controlling interest
    
    
    
    
    
    
    2,180
    
    
    
    2,898
 Note 22: Financial Instruments
    
 
 
       2006 Annual Report




---



##### 




 
 
 
 
 
     2006
    
    
    2005CARRYING
    
    
    FAIR
    
    
    CARRYING
    
    
    FAIRVALUE
    
    
    VALUE
    
    
    VALUE
    
    
    VALUEInvestment in Nortel (1)
    
    
    
    
    
    
    
    
    
    
    55
    
    
    
    52Long-term debt due within one year
    
    
    950
    
    
    
    956
    
    
    
    1,070
    
    
    
    1,079Long-term debt
    
    
    11,867
    
    
    
    13,127
    
    
    
    11,855
    
    
    
    13,523Derivative financial instruments, net
asset (liability) position:Forward
contracts  BCE Inc. shares
    
    
    5
    
    
    
    7
    
    
    
    
    
    
    
    (1
    )Currency contracts
    
    
    (58
    )
    
    
    (77
    )
    
    
    (90
    )
    
    
    (120
    )Interest rate swaps and swaptions
    
    
    
    
    
    
    (26
    )
    
    
    (7
    )
    
    
    (17
    )
 (1)
    
    In 2006, the Nortel common shares were undesignated as a hedge of our exposure to outstanding
rights to SCPs and the Bell Canada pension plan acquired them from us. In 2005, we designated 4
million of our approximately 15 million Nortel common shares to manage our exposure to outstanding
rights to SCPs. Note 23: Share Capital
   2006 Annual Report




---



##### 



STATEDNUMBER OF SHARES
    
    

CAPITALANNUAL
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    REDEMP-
    
    
    
    
    
    
    ISSUED
    
    
    ATDIVIDEND
    
    
    CONVERT-
    
    
    CONVERSION

    
    REDEMPTION

    
    TION
    
    
    
    
    
    
    AND OUT-
    
    
    DECEMBER 31SERIES
    
    RATE
    
    
    IBLE INTO
    
    
    DATE

    
    DATE

    
    PRICE
    
    
    AUTHORIZED
    
    
    STANDING
    
    
    2006
    
    
    2005Q
    
    floating
    
    Series R
    
    December 1, 2015
    
    At any time
    
    $25.50
    
    
    
    8,000,000
    
    
    
    
    
    
    
    
    
    
    
    R
    
    4.54%
    
    Series Q
    
    December 1, 2010
    
    December 1, 2010
    
    $25.00
    
    
    
    8,000,000
    
    
    
    8,000,000
    
    
    
    200
    
    
    
    200S
    
    floating
    
    Series T
    
    November 1, 2011
    
    At any time
    
    $25.50    
    
    
    8,000,000
    
    
    
    2,279,791
    
    
    
    57
    
    
    
    200T
    
    4.502%
    
    Series S
    
    November 1, 2011
    
    November 1,2011
    
    $25.00
    
    
    
    8,000,000
    
    
    
    5,720,209
    
    
    
    143
    
    
    
    Y
    
    floating
    
    Series Z
    
    December 1, 2007
    
    At any time
    
    $25.50
    
    
    
    10,000,000
    
    
    
    1,147,380
    
    
    
    29
    
    
    
    29Z
    
    5.319%
    
    Series Y
    
    December 1, 2007
    
    December 1, 2007
    
    $25.00
    
    
    
    10,000,000
    
    
    
    8,852,620
    
    
    
    221
    
    
    
    221AA
    
    5.45%
    
    Series AB
    
    September 1, 2007
    
    September 1, 2007
    
    $25.00
    
    
    
    20,000,000
    
    
    
    20,000,000
    
    
    
    510
    
    
    
    510AB
    
    floating
    
    Series AA
    
    September 1, 2012
    
    At any time
    
    $25.50
    
    
    
    20,000,000
    
    
    
    
    
    
    
    
    
    
    
    AC
    
    5.54%
    
    Series AD
    
    March 1, 2008
    
    March 1, 2008
    
    $25.00
    
    
    
    20,000,000
    
    
    
    20,000,000
    
    
    
    510
    
    
    
    510AD
    
    floating
    
    Series AC
    
    March 1, 2013
    
    At any time
    
    $25.50
    
    
    
    20,000,000
    
    
    
    
    
    
    
    
    
    
    
    1,670
    
    
    
    1,670
                2006 Annual Report




---



##### 



2006
    
    
    2005NUMBER
    
    
    STATED
    
    
    NUMBER
    
    
    STATEDOF SHARES
    
    
    CAPITAL
    
    
    OF SHARES
    
    
    CAPITALOutstanding, beginning of year
    
    
    927,318,916
    
    
    
    16,806
    
    
    
    925,935,682
    
    
    
    16,781Shares issued under employee stock option plan (1)
    
    
    1,246,932
    
    
    
    35
    
    
    
    1,383,234
    
    
    
    25Shares repurchased and cancelled
    
    
    (45,151,666
    )
    
    
    (805
    )
    
    
    
    
    
    
    Share reduction (2)
    
    
    (75,770,241
    )
    
    
    (2,549
    )
    
    
    
    
    
    
    Outstanding,
end of year
    
    
    807,643,941
    
    
    
    13,487
    
    
    
    927,318,916
    
    
    
    16,806
 (1)
    
    Includes a $6 million reclassification from contributed surplus relating to the exercise
of employees stock options.(2)
    
    Reduction of BCE Inc. common shares outstanding, in conjunction with a distribution of Bell
Aliant trust units, by way of return of capital, to holders
of BCE Inc. common shares.          NOTE
    
    
    2006
    
    
    2005Balance, beginning of year
    
    
    
    
    
    
    1,081
    
    
    
    1,061Gain on distribution of
Bell Aliant units
    
    
    2
    
    
    
    1,547
    
    
    
    Repurchase
of common shares 
NCIB
    
    
    
    
    
    
    (52
    )
    
    
    Other
    
    
    
    
    
    
    (21
    )
    
    
    20Balance,
end of year
    
    
    
    
    
    
    2,555
    
    
    
    1,081
 Note
24: Stock-Based Compensation Plans
  2006
    
    
    2005
    
    
    2004Employee savings plans (1)
    
    
    46
    
    
    
    45
    
    
    
    43Stock options (1)
    
    
    8
    
    
    
    17
    
    
    
    22Restricted share units (1)
    
    
    45
    
    
    
    39
    
    
    
    26Special compensation payments (2)
    
    
    (3
    )
    
    
    (3
    )
    
    
    (9
    )Deferred share units
    
    
    1
    
    
    
    4
    
    
    
    5Deferred unit plan
    
    
    3
    
    
    
    
    
    
    
    Total
stock-based compensation expense
    
    
    100
    
    
    
    102
    
    
    
    87
 (1)
    
    Prior periods have been adjusted to include stock-based compensation of Bell Aliant that
had been previously excluded.(2)
    
    Includes recoveries of SCP expense as a result of forfeitures. 2006 Annual Report




---



##### 



2006
    
    
    2005
    
    
    2004WEIGHTED
    
    
    
    
    
    
    WEIGHTED
    
    
    
    
    
    
    WEIGHTEDAVERAGE
    
    
    
    
    
    
    AVERAGE
    
    
    
    
    
    
    AVERAGENUMBER OF
    
    
    EXERCISE
    
    
    NUMBER OF
    
    
    EXERCISE
    
    
    NUMBER OF
    
    
    EXERCISESHARES
    
    
    PRICE ($)
    
    
    SHARES
    
    
    PRICE ($)
    
    
    SHARES
    
    

    PRICE ($)Outstanding, January 1
    
    
    27,342,735
    
    
    $32
    
    
    
    28,481,679
    
    
    $32
    
    
    
    25,750,720
    
    
    $32Granted
    
    
    485,372
    
    
    $27
    
    
    
    1,481,924
    
    
    $28
    
    
    
    5,911,576
    
    
    $30Exercised
    
    
    (1,246,932
    )
    
    $23
    
    
    
    (1,383,234
    )
    
    $18
    
    
    
    (1,946,864
    )
    
    $16Expired/forfeited
    
    
    (2,339,327
    )
    
    $32
    
    
    
    (1,237,634
    )
    
    $34
    
    
    
    (1,233,753
    )
    
    $34Outstanding,
December 31
    
    
    24,241,848
    
    
    $33
    
    
    
    27,342,735
    
    
    $32
    
    
    
    28,481,679
    
    
    $32Exercisable,
December 31
    
    
    16,648,952
    
    
    $35
    
    
    
    16,505,709
    
    
    $34
    
    
    
    14,633,433
    
    
    $34
 2006 Annual Report




---



##### 



STOCK OPTIONS OUTSTANDING
    
    
    STOCK OPTIONS EXERCISABLEWEIGHTED
    
    
    WEIGHTED
    
    
    
    
    
    
    WEIGHTEDAVERAGE
 REMAINING
    
    
    AVERAGE
 EXERCISE
    
    
    
    
    
    
    AVERAGE
 EXERCISERANGE OF EXERCISE PRICES
    
    NUMBER
    
    
    LIFE
    
    
    PRICE ($)
    
    
    NUMBER
    
    
    PRICE ($)Below $20
    
    
    318,745
    
    
    
    2.23
    
    
    $16
    
    
    
    318,745
    
    
    $16$20-$29
    
    
    11,277,420
    
    
    
    4.69
    
    
    $29
    
    
    
    3,868,374
    
    
    $28$30-$39
    
    
    7,033,741
    
    
    
    4.70
    
    
    $34
    
    
    
    6,849,891
    
    
    $34Over $40
    
    
    5,611,942
    
    
    
    3.76
    
    
    $41
    
    
    
    5,611,942
    
    
    $4124,241,848
    
    
    
    4.45
    
    
    $33
    
    
    
    16,648,952
    
    
    $35
   2006
    
    
    2005
    
    
    2004Number of stock options granted
    
    
    485,372
    
    
    
    1,481,924
    
    
    
    5,911,576Weighted average fair value
per option granted ($)
    
    
    2
    
    
    
    3
    
    
    
    4Weighted average assumptions:Dividend yield
    
    
    4.4
    %
    
    
    4.4
    %
    
    
    4.0
    %Expected volatility
    
    
    17
    %
    
    
    19
    %
    
    
    27
    %Risk-free interest rate
    
    
    4.1
    %
    
    
    3.6
    %
    
    
    3.1
    %Expected life (years)
    
    
    3.9
    
    
    
    3.5
    
    
    
    3.5
      NUMBER OF RSUS2006
    
    
    2005
    
    
    2004Outstanding, January 1
    
    
    2,520,781
    
    
    
    1,996,522
    
    
    
    Granted
    
    
    3,090,144
    
    
    
    504,427
    
    
    
    1,986,513Dividends credited
    
    
    89,773
    
    
    
    100,657
    
    
    
    61,086Payments
    
    
    (2,542,451
    )
    
    
    
    
    
    
    Forfeited
    
    
    (173,212
    )
    
    
    (80,825
    )
    
    
    (51,077
    )Outstanding,
December 31
    
    
    2,985,035
    
    
    
    2,520,781
    
    
    
    1,996,522
      
    
    292,150 relating to BCE Inc. common shares
    
    216,864 relating to Nortel common shares.
   2006 Annual Report




---



##### 



NUMBER OF DSUS2006
    
    
    2005
    
    
    2004Outstanding, January 1
    
    
    984,648
    
    
    
    886,714
    
    
    
    703,995Granted
    
    
    358,993
    
    
    
    173,158
    
    
    
    306,225Dividends credited
    
    
    54,597
    
    
    
    40,668
    
    
    
    37,226Payments
    
    
    (110,816
    )
    
    
    (115,892
    )
    
    
    (160,732
    )Outstanding,
December 31
    
    
    1,287,422
    
    
    
    984,648
    
    
    
    886,714
   Note
25: Employee Benefit Plans
  2006
    
    
    2005
    
    
    2004Pension benefits:DB plans cost
    
    
    320
    
    
    
    221
    
    
    
    76DC plans cost
    
    
    28
    
    
    
    20
    
    
    
    9Other future benefits cost
    
    
    165
    
    
    
    118
    
    
    
    156Net
benefit plans cost
    
    
    513
    
    
    
    359
    
    
    
    241
 2006 Annual Report




---



##### 



PENSION BENEFITS
    
    
    OTHER BENEFITS2006
    
    
    2005
    
    
    2004
    
    
    2006
    
    
    2005
    
    
    2004Current service cost
    
    
    268
    
    
    
    212
    
    
    
    221
    
    
    
    28
    
    
    
    35
    
    
    
    31Interest cost on accrued benefit obligation
    
    
    851
    
    
    
    858
    
    
    
    791
    
    
    
    111
    
    
    
    110
    
    
    
    104Actual return on plan assets
    
    
    (1,723
    )
    
    
    (1,545
    )
    
    
    (1,047
    )
    
    
    (17
    )
    
    
    (12
    )
    
    
    (4
    )Past service costs (credits) arising during period
    
    
    38
    
    
    
    
    
    
    
    75
    
    
    
    (55
    )
    
    
    (120
    )
    
    
    14Actuarial loss (gain) on accrued benefit obligation
    
    
    (9
    )
    
    
    1,747
    
    
    
    754
    
    
    
    79
    
    
    
    499
    
    
    
    102Elements of employee future benefit plans cost, before recognizing its
long-term nature
    
    
    (575
    )
    
    
    1,272
    
    
    
    794
    
    
    
    146
    
    
    
    512
    
    
    
    247Excess (deficiency) of actual return over expected return (1)
    
    
    737
    
    
    
    617
    
    
    
    110
    
    
    
    5
    
    
    
    2
    
    
    
    (6
    )Deferral of amounts arising during period:Past service (costs) credits
    
    
    (38
    )
    
    
    
    
    
    
    (75
    )
    
    
    55
    
    
    
    120
    
    
    
    (14
    )Actuarial
(loss) gain on accrued benefit obligation
    
    
    9
    
    
    
    (1,747
    )
    
    
    (754
    )
    
    
    (79
    )
    
    
    (499
    )
    
    
    (102
    )Amortization of previously deferred amounts:Net past service costs (credits)
    
    
    12
    
    
    
    8
    
    
    
    8
    
    
    
    (5
    )
    
    
    1
    
    
    
    Net actuarial losses
    
    
    167
    
    
    
    92
    
    
    
    31
    
    
    
    19
    
    
    
    
    
    
    
    1Transitional (asset) obligation
    
    
    (6
    )
    
    
    1
    
    
    
    (43
    )
    
    
    24
    
    
    
    26
    
    
    
    30Curtailment gain (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (44
    )
    
    
    Adjustments to recognize long-term nature of employee future benefit plans
cost
    
    
    881
    
    
    
    (1,029
    )
    
    
    (723
    )
    
    
    19
    
    
    
    (394
    )
    
    
    (91
    )Increase (decrease) in valuation allowance
    
    
    12
    
    
    
    (24
    )
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    2
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    DB plans
cost, recognized
    
    
    320
    
    
    
    221
    
    
    
    76
    
    
    
    165
    
    
    
    118
    
    
    
    156
 (1)
    
    The expected return on plan assets for a given year is calculated based on the
market-related value of plan assets at the beginning of that year.
The market-related value of pension plan assets was $13,192 million at January 1, 2006, $12,691
million at January 1, 2005, and $12,820 million
at January 1, 2004.(2)
    
    2005 includes a curtailment gain associated with the phase-out, over three years, of a
discretionary allowance program. 2006 Annual Report




---



##### 



PENSION BENEFITS
    
    
    OTHER BENEFITS2006
    
    
    2005
    
    
    2006
    
    
    2005Accrued benefit obligation, beginning of the year
    
    
    16,213
    
    
    
    14,068
    
    
    
    2,179
    
    
    
    1,770Current service cost
    
    
    268
    
    
    
    212
    
    
    
    28
    
    
    
    35Interest cost on accrued benefit obligation
    
    
    851
    
    
    
    858
    
    
    
    111
    
    
    
    110Actuarial losses (gains)
    
    
    (9
    )
    
    
    1,747
    
    
    
    79
    
    
    
    499Benefit payments
    
    
    (914
    )
    
    
    (884
    )
    
    
    (96
    )
    
    
    (93
    )Employee contributions
    
    
    8
    
    
    
    8
    
    
    
    
    
    
    
    Special termination costs
    
    
    (49
    )
    
    
    (17
    )
    
    
    (17
    )
    
    
    (21
    )Plan amendment (1)
    
    
    38
    
    
    
    
    
    
    
    (55
    )
    
    
    (120
    )Transfers from DC pension plans
    
    
    
    
    
    
    221
    
    
    
    
    
    
    
    Other
    
    
    9
    
    
    
    
    
    
    
    2
    
    
    
    (1
    )Accrued benefit obligation, end of the year
    
    
    16,415
    
    
    
    16,213
    
    
    
    2,231
    
    
    
    2,179Fair value of plan assets, beginning of the year
    
    
    13,870
    
    
    
    12,793
    
    
    
    149
    
    
    
    137Actual return on plan assets
    
    
    1,723
    
    
    
    1,545
    
    
    
    17
    
    
    
    12Benefit payments
    
    
    (914
    )
    
    
    (884
    )
    
    
    (96
    )
    
    
    (93
    )Employer contributions (2)
    
    
    431
    
    
    
    202
    
    
    
    96
    
    
    
    93Employee contributions
    
    
    8
    
    
    
    8
    
    
    
    
    
    
    
    Transfers from DC pension plans
    
    
    
    
    
    
    221
    
    
    
    
    
    
    
    Other
    
    
    3
    
    
    
    (15
    )
    
    
    
    
    
    
    Fair value of plan assets, end of the year
    
    
    15,121
    
    
    
    13,870
    
    
    
    166
    
    
    
    149Plan deficit
    
    
    (1,294
    )
    
    
    (2,343
    )
    
    
    (2,065
    )
    
    
    (2,030
    )Unamortized net actuarial losses
    
    
    2,290
    
    
    
    3,246
    
    
    
    514
    
    
    
    492Unamortized net past service costs (credits)
    
    
    140
    
    
    
    115
    
    
    
    (41
    )
    
    
    (1
    )Unamortized transitional (asset) obligation
    
    
    (20
    )
    
    
    (26
    )
    
    
    163
    
    
    
    186Valuation allowance
    
    
    (115
    )
    
    
    (103
    )
    
    
    
    
    
    
    Accrued benefit asset (liability), end of year
    
    
    1,001
    
    
    
    889
    
    
    
    (1,429
    )
    
    
    (1,353
    )Accrued benefit asset included in other long-term assets
    
    
    1,110
    
    
    
    984
    
    
    
    
    
    
    
    Accrued benefit liability included in other long-term
liabilities
    
    
    (109
    )
    
    
    (95
    )
    
    
    (1,429
    )
    
    
    (1,353
    )
 (1)     2005 includes a curtailment gain associated with the phase-out, over the next three years, of a
discretionary allowance program.
 (2)     In 2006, the Bell Canada pension fund acquired from us 14.9 million Nortel shares, 31.4 million
CGI shares and other marketable securities having an aggregate market value of $284 million. These
acquisitions reduced our cash contributions in 2006.
  
 
  
 
   2006 Annual Report




---



##### 



PENSION BENEFITS
    
    
    OTHER BENEFITS2006
    
    
    2005
    
    
    2004
    
    
    2006
    
    
    2005
    
    
    2004At December 31Accrued benefit obligation:Discount rate, end of year
    
    
    5.3
    %
    
    
    5.2
    %
    
    
    6.2
    %
    
    
    5.3
    %
    
    
    5.2
    %
    
    
    6.2
    %Rate of compensation increase, end of year
    
    
    3.0
    %
    
    
    3.0
    %
    
    
    3.5
    %
    
    
    3.0
    %
    
    
    3.0
    %
    
    
    3.5
    %For the year ended December 31Net benefit plans cost:Discount rate, end of preceding year (1)
    
    
    5.4
    %
    
    
    6.2
    %
    
    
    6.5
    %
    
    
    5.4
    %
    
    
    6.2
    %
    
    
    6.5
    %Expected return on plan assets, end of preceding
year
    
    
    7.5
    %
    
    
    7.5
    %
    
    
    7.5
    %
    
    
    7.5
    %
    
    
    7.5
    %
    
    
    7.5
    %Rate of compensation increase, end of preceding
year
    
    
    3.0
    %
    
    
    3.5
    %
    
    
    3.5
    %
    
    
    3.0
    %
    
    
    3.5
    %
    
    
    3.5
    %
 (1) The discount rate is an average for 2006 and at the end of the preceding year for 2005 and
2004. On July 7, 2006, following the formation of Bell Aliant, the discount rate used to value our
pension obligations was increased to 5.6% from 5.2% to reflect the change in long-term market
interest rates at that time.
  
 
  1% INCREASE
    
    
    1% DECREASEEffect on
other benefits 
total service and interest cost
    
    
    17
    
    
    
    (16
    )Effect on
other benefits 
accrued obligation
    
    
    236
    
    
    
    (220
    )
    WEIGHTEDWEIGHTED
    
    
    PERCENTAGE
    
    
    AVERAGEAVERAGE
    
    
    OF PLAN
    
    
    EXPECTEDTARGET
    
    
    ASSETS AT
    
    
    LONG-TERMALLOCATION
    
    
    DECEMBER 31
    
    
    RATE OF RETURNASSET CATEGORY
    
    2006
    
    
    2006
    
    
    2005
    
    
    2006Equity securities
    
    
    45%65
    %
    
    
    58
    %
    
    
    59
    %
    
    
    9.0
    %Debt securities
    
    
    35%55
    %
    
    
    42
    %
    
    
    41
    %
    
    
    5.5
    %Total/average
    
    
    
    
    
    
    100
    %
    
    
    100
    %
    
    
    7.5
    %
     PENSION
    
    
    OTHERBENEFITS
    
    
    BENEFITS2007
    
    
    925
    
    
    
    1022008
    
    
    947
    
    
    
    1072009
    
    
    968
    
    
    
    1142010
    
    
    989
    
    
    
    1192011
    
    
    1,010
    
    
    
    12620122016
    
    
    5,336
    
    
    
    731Total estimated future benefit payments
    
    
    10,175
    
    
    
    1,299
 2006 Annual Report




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##### 



PENSION BENEFITS
    
    
    OTHER BENEFITS2006
    
    
    2005
    
    
    2004
    
    
    2006
    
    
    2005
    
    
    2004Bell Aliant
    
    
    116
    
    
    
    178
    
    
    
    69
    
    
    
    7
    
    
    
    6
    
    
    
    4Bell Canada
    
    
    42
    
    
    
    21
    
    
    
    18
    
    
    
    89
    
    
    
    87
    
    
    
    77BCE Inc.
    
    
    8
    
    
    
    7
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    Telesat
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    172
    
    
    
    206
    
    
    
    95
    
    
    
    96
    
    
    
    93
    
    
    
    81Comprised of:Contributions to DB plans
    
    
    147
    
    
    
    201
    
    
    
    86
    
    
    
    96
    
    
    
    93
    
    
    
    81Contributions to DC plans
    
    
    25
    
    
    
    5
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    
  Note 26: Commitments and Contingencies
   THERE-2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    AFTER
    
    
    TOTALLong-term debt (excluding capital leases)
    
    
    744
    
    
    
    1,051
    
    
    
    2,758
    
    
    
    1,076
    
    
    
    1,008
    
    
    
    5,117
    
    
    
    11,754Notes payable and bank advances
    
    
    36
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36Capital leases
    
    
    206
    
    
    
    120
    
    
    
    47
    
    
    
    45
    
    
    
    89
    
    
    
    556
    
    
    
    1,063Operating leases
    
    
    219
    
    
    
    199
    
    
    
    171
    
    
    
    143
    
    
    
    116
    
    
    
    771
    
    
    
    1,619Commitments for capital expenditures
    
    
    202
    
    
    
    116
    
    
    
    46
    
    
    
    4
    
    
    
    3
    
    
    
    49
    
    
    
    420Purchase obligations
    
    
    1,295
    
    
    
    988
    
    
    
    493
    
    
    
    353
    
    
    
    321
    
    
    
    414
    
    
    
    3,864Other long-term liabilities (including current
portion)
    
    
    74
    
    
    
    42
    
    
    
    44
    
    
    
    47
    
    
    
    49
    
    
    
    21
    
    
    
    277Total
    
    
    2,776
    
    
    
    2,516
    
    
    
    3,559
    
    
    
    1,668
    
    
    
    1,586
    
    
    
    6,928
    
    
    
    19,033
 2006 Annual Report




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##### 




 
   
 
     
 
 2006 Annual Report




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##### 



2006 Annual Report




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##### 



Canada Business Corporations Act
 Canada Business Corporations Act
     Canada Business Corporations Act Canada Business Corporations
Act
  2006 Annual Report




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##### 



Note 27: Guarantees
   INDEFI-2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011+
    
    
    NITE
    
    
    TOTALSale of assets and businesses
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    1,500
    
    
    
    28
    
    
    
    102
    
    
    
    1,645Sale of services
    
    
    15
    
    
    
    20
    
    
    
    91
    
    
    
    
    
    
    
    55
    
    
    
    
    
    
    
    181Purchase and development of assets
    
    
    
    
    
    
    12
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    23Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    12Total
    
    
    30
    
    
    
    32
    
    
    
    92
    
    
    
    1,500
    
    
    
    83
    
    
    
    124
    
    
    
    1,861
     2006 Annual Report




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##### 



Note 28: Supplemental Disclosure for Statements of Cash Flows
 2006
    
    
    2005
    
    
    2004Cash (used in) provided by non-cash operating assets and
liabilities is as follows:Accounts receivable
    
    
    (86
    )
    
    
    518
    
    
    
    31Other current assets
    
    
    (52
    )
    
    
    (31
    )
    
    
    (94
    )Other long-term assets
    
    
    (52
    )
    
    
    (83
    )
    
    
    (28
    )Accounts payable and accrued liabilities
    
    
    (259
    )
    
    
    (675
    )
    
    
    261Other long-term liabilities
    
    
    (7
    )
    
    
    (138
    )
    
    
    11Other
    
    
    209
    
    
    
    25
    
    
    
    (43
    )Total cash (used in) provided by non-cash operating assets and liabilities
    
    
    (247
    )
    
    
    (384
    )
    
    
    138
 2006 Annual Report




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##### 



ARPU and ARPS
  Black-Scholes Option Pricing Model
  Book Value Per Share
  Capital Intensity
  Cash Flow Per Share
  Cash Flow Yield
  Churn
  Common Dividend Payout Ratio
  Common Dividend Yield
  Cost of Acquisition
  Cost Method
  Curtailment
  Digital Equivalent Access Lines
  EBITDA
  EBITDA Margin
  EBITDA to Interest Ratio
  Equity Method
  Free Cash Flow
  Goodwill
  2006 Annual Report




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##### 



Long-Term Debt to Equity
  Market Capitalization
  Net Debt to Capitalization Ratio
  Net Debt to EBITDA
  Operating Margin
  Price to Book Ratio
  Price to Cash Flow Ratio
  Price to Earnings Ratio
  ROE
  Settlement
  Total Debt to Total Assets
  Translation of Foreign Currencies
  2006 Annual Report




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##### 



As at March 7, 2007
 Toronto, Ontario
Chair of the Board,
BCE Inc. and Bell Canada
Director since May 1995
 Montréal, Québec
Corporate Director
Director since January 2003
 Calgary, Alberta
President and Chief Executive Officer,
 Petro-Canada
Director since November 2003
 Toronto, Ontario
Chairman of the Board,
RBC Dominion Securities Limited
Director since January 2002
 Toronto, Ontario
Corporate Director and Lawyer
Director since June 1998
 Montréal, Québec
Partner and Co-Chair,
Osler, Hoskin & Harcourt LLP
Director since May 1998
 South Lancaster, Ontario
Vice-Chairman,
BMO Nesbitt Burns Inc.
Director since January 2003
 Ottawa, Ontario
Research Fellow, Canadian Policy,
Research Networks Inc.
Director since January 2000
 Massachusetts, U.S.A.
Dean Emeritus, Harvard University,
Graduate School of
Business Administration
Director since May 1995
 Don Mills, Ontario
Corporate Director and
Chartered Accountant
Director since January 2003
 Vancouver, British Columbia
Chairman and Chief Executive Officer,
The Jim Pattison Group
Director since February 2005
 Massachusetts, U.S.A.
Chairman of the Board,
MFS Investment Management
Director since February 2002
 Montréal, Québec
President and Chief Executive Officer, 
BCE Inc., and
Chief Executive Officer, Bell Canada
Director since October 2002
 Montréal, Québec
Corporate Director
Director since April 1999
 St. Johns, Newfoundland and Labrador
Corporate Director
Director since May 1995
 
 COMMITTEES OF THE BOARD  Members of Committees of the Board
  (Chair)
 The audit committee assists the board in the oversight of:
 
 
 
 
 
  (Chair)
 The PFC assists the board in the oversight of:
 
 
  (Chair)
 The CGC assists the board in:
 
 
 
 
 
 
  (Chair)
 The MRCC assists the board in the oversight of the:
 
 
 2006 Annual Report




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##### 



As at March 7, 2007
 President and Chief Executive Officer
 President and Chief Operating Officer,
Bell Canada
 Senior Vice-President and Treasurer
 President  Enterprise, Bell Canada
 President  Residential Services,
Bell Canada
 Executive Vice-President 
Communications and Corporate Development
 Chief Talent Officer
 Executive Vice-President and
Chief Corporate Officer
 Corporate Secretary
 President  Bell Mobility and
Bell Distribution Inc.,
Chief Brand Officer, Bell Canada
 President  Operations, Bell Canada
 Group President  Systems and
Technology, Bell Canada
 President  Small and Medium 
Business, Bell Canada
 Executive Vice-President 
Corporate Development and Planning
 Chief Legal Officer
 Chief Financial Officer
 2006 Annual Report




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##### 



www.bce.ca
 Income Tax Act
        2006 Annual Report




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##### 



www.bce.ca
   First quarter
    
    May 2, 2007Second quarter
    
    August 1, 2007Third quarter
    
    November 7, 2007Fourth quarter
    
    February 6, 2008
 www.bce.ca
  Symbol
 Listings
  www.bce.ca
 Common Shares Outstanding
 Stock Splits
  Quarterly Dividend*
 2007 Dividend Schedule*
 Record Date
    
    Payment DateMarch 15, 2007
    
    April 15, 2007June 15, 2007
    
    July 15, 2007September 14, 2007
    
    October 15, 2007December 14, 2007
    
    January 15, 2008
 
 * Subject to approval by the board of directors
  Dividend Reinvestment and Stock Purchase Plan
  Dividend Direct Deposit Service
  E-Delivery Service
  Manage your Shareholder Account
 www.computershare.com
 Duplicate Mailings
    Transfer Agent and Registrar
  
 e-mail
    
    bce@computershare.comtel
    
    514 982-7555 or 1 800 561-0934(toll free in Canada and the U.S.)fax
    
    416 263-9394 or 1 888 453-0330(toll free in Canada and the U.S.) or visit their
website at www.computershare.com
   e-mail
    
    investor.relations@bce.catel
    
    1 800 339-6353fax
    
    514 786-3970or visit the Investors section on our website at www.bce.ca
 
 Trademarks: The following is a list of all our trademarks referred to and used as such in this
annual report. Fuel, 10-4 and Sympatico are trademarks of Bell Canada; Mobile Browser is a
trademark of Bell Mobility Inc.; Nimiq and Anik are trademarks of Telesat Canada; SmartTouch is a
trademark of Stentor Resource Centre Inc.; Solo is a trademark of Solo Branding Inc. Any other
trademarks, or corporate, trade or domain names used in this report are the property of their
owners. We believe that our trademarks and domain names are very important to our success. Our
exclusive trademark rights are perpetual provided that their registrations are timely renewed and
that the trademarks are used in commerce by us or our licensees. We take appropriate measures to
protect, renew and defend our trademarks. We also spend considerable time and resources overseeing, registering, renewing, licensing and protecting our
trademarks and domain names and prosecuting those who infringe on them. We take great care not to
infringe on the intellectual property and trademarks of others.
 Cette publication est disponible en français. BCEs Annual Report is printed with vegetable-based
ink and is recyclable.
 Printed in Canada




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##### 



BCEs website has extensive information about the companys governance practices, community
investment, and corporate responsibility.
 The is available at www.bce.ca/businessupdate.
  e-mail tel fax
 e-mail tel fax