**EXHIBIT
  99.1**

















**BCE
  INC.**

**2003
  ANNUAL REPORT**





















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This is not 
            telecom as usual.Bell
            Canada Enterprises
          2003 Annual Report




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Telecommunications is changing. In wireless and
  wireline, whats possible in voice, data and video is expanding 
  and with it, competition.

This is not telecom as usual. Barriers are disappearing;
  traditional industry lines are blurring. In this new age, the winners will be
  those who deliver one thing above all: Simplicity.



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|    |  | Contents                                        
|--- |  | ------------------------------------------------
|2   |  | Our world of
      opportunity                  
|6   |  | Getting to simple                               
|10  |  | Delivering
      simplicity                     
|14  |  | Boldly defining
      the future                
|18  |  | Chairmans
      message                        
|20  |  | Letter from
      the President and CEO         
|24  |  | Corporate social
      responsibility           
|27  |  | Financial
      and operational highlights      
|28  |  | Managements
      discussion and analysis      
|64  |  | Consolidated
      financial statements         
|68  |  | Notes to consolidated
      financial statements
|102 |  | Board of directors
      and executives         
|104 |  | Committees of the
      board                   

| | Inside
        Back Cover
| | -------------------------

| |  | Shareholder
      information
| |  | -----------------------------



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|2 | 2003 annual report
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Our world of opportunity

Change is here. The capabilities of wireless and wired
  communication have merged. Higher speeds mean instant access. Technology is
  getting faster and more affordable. Its changing the way people live 
  what they do, what they want and what they expect. For BCE, this is our world
  of opportunity.



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The new world of IP    The world
  of communications is migrating to a place where data, video and voice share
  a common, Internet Protocol-based communication platform. In this world, the
  emphasis shifts from the network to its edges  to the technology and devices
  in the hands, homes and offices of the customer. In the world of IP, common
  standards translate to an open marketplace, where communication service providers
  of all types and sizes can compete for the same customer.      Bells
  edge in this new, intensely competitive world is in its powerful brand and its
  26 million customer connections. The Bell name is known and trusted by millions
  of Canadians.

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Bells breadth
  of services represents tremendous potential to broaden customer relationships.
  With individuals and families, we have the opportunity to provide the convenience
  of multiple services from one provider, with a single bill. With small and mid-sized
  businesses, we have the capabilities to become a trusted technology and telecommunications
  advisor. With large enterprises, were expanding beyond connectivity to
  become a much higher-value service provider. Were becoming a Bell thats
  quicker to learn from the customer. Fast to move from insight to action. Agile
  in the face of change.

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Getting to
  simple

For us, one thing will never change: The customer drives
  everything. It all starts, and ends, with the customer. Were changing
  to get closer to those we serve. Were becoming simpler as an organization.
  More aligned with our customers. More streamlined. More efficient and responsive.
  Faster. Smarter.



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Serving customers smarter; getting to market faster
     The key to the future is in our ability to serve our customers
  better than any competitor. To do that, we are building a Bell that delivers
  world-class products  simply packaged, simple to use, with industry-leading
  customer service and top-tier efficiency. In other words, were building
  a simpler Bell to deliver simplicity to customers.

We established an
  important foundation when we organized Bell around its three main markets: Consumer,
  Small and Medium Business, and Enterprise, our largest business customers. The
  new Bell structure will help us gain deeper knowledge of our customers and improve
  our ability to provide solutions that encompass a broader range of their needs.

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Throughout 2003, we
  worked to improve core processes across the organization to increase the speed
  at which we deliver those solutions. Weve streamlined to simplify the
  customer experience, improve the quality of service and reduce costs. For example,
  the Consumer group advanced its goal to present one face to the customer by
  better integrating call centres and Bell World stores. In Small and Medium Business,
  we successfully reduced the time it takes to open a high-speed Internet account
  from 37 days to five. And Enterprise began the process of transforming itself
  into a more agile, integrated service company  better able to leverage
  its deep network expertise with improved service delivery for end-to-end competitive
  advantage.

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Delivering simplicity

Our customers are looking for much more than technological
  wizardry. They want products and services that simplify the way they live or
  do business. They want to reduce the complexity of deciding what they want.
  Once they make that decision, they want a trusted provider to deliver it conveniently.
  And they want it to work the first time, every time.



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Creating simplicity    Were
  focused on helping customers choose Bell for more of their communications needs.
  Making it easier for customers  to select Bell products, to use them and
  to stay with Bell  is the best barometer of our success.      Whether were
  working with an individual, a small business or a large corporation, our value
  centres on providing tools to make it easier to address day-to-day complexity.      For customers,
  achieving simplicity is rarely simple, but Bell is intensifying its efforts
  to help customers get there by enhancing the value it brings.

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In our Consumer business,
  we delivered One Bill and made another step forward with the launch of The Bundle.
  This gives our long-distance customers the opportunity to obtain two or more
  Bell services, including Internet access and television services, through one
  point of contact. Small and Medium Business is piloting wire-line, wireless
  and Internet service packages to increase the number of customers using multiple
  Bell services. In Enterprise, we are enhancing our ability to converge voice,
  data and video into a next-generation platform enabling high-value services
  such as wireless data, security and network management to our customers.

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Boldly defining the
  future

Rapidly advancing technology is creating a new competitive
  landscape where traditional industry definitions no longer apply. A world that
  can change overnight demands providers that can react quickly. But a world that
  is changing continuously demands something more: providers that can lead.



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Action, not reaction: creating the new telecom    The
  world where separate networks carry data and voice is going to disappear, replaced
  by IP technology that enables voice, data and video to be provided over a single
  network. Internally, the benefits are obvious streamlined and less costly
  network management, platforms that enable greater bandwidth and greater simplicity.
  For customers, new services like Voice over IP and multimedia to a wide range
  of IP-enabled devices will change how they live and work.      But an IP network
  is not enough. With our goal of having a fully IP-based company within three
  years, were developing new products and services that IP technology will
  enable.

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We developed a Voice
  over IP product in the fourth quarter, with some trials planned for the first
  half of 2004. By mid-year, we will have IP migration plans for all of our major
  Enterprise customers. We are partnering with industry leaders like Nortel Networks
  to ensure Canadian businesses are among the first to reap the benefits of IP,
  with Microsoft to make Internet television a reality and with Lucent to deliver
  more bandwidth to consumers.      We opened new
  innovation centres in Ottawa, Montreal and, most recently, Toronto, to incubate
  new ideas and rapidly develop them. This is the future: Bells world of
  IP, a world of new capabilities, new services and lower cost to provide them.

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Chairmans Message

This is my second report as Chairman of the Board
  of Bell Canada Enterprises. The first focused on our work to renew the credibility
  and financial strength of the company and concentrated on corporate governance
  creating a greater independence between the Board and management.
       Our high standards for corporate governance, directed
  at sustaining business reputation and increasing shareholder value, have been
  widely recognized. In 2003, we took more steps to further our progress. We better
  aligned Directors compensation with shareholders interest. We created
  a pension fund committee to assist the Board in the oversight of the pension
  fund. And we welcomed Ron Brenneman, Chief Executive Officer of Petro-Canada,
  to our Board.
       In December 2003, with the credibility and financial
  strength of BCE restored, management outlined its vision of the future of telecommunications
  at its annual meeting with the financial community. Management presented its
  plans to capture that future with the full support of the Board.
       The potential for BCE is enormous. Its traditional
  wireline business is solid, and the wireless and Internet Protocol (IP) revolutions
  provide opportunities for the future. The limits of the technology drivers of
  those revolutions  microchip, optical, electronic storage and software
   are far in the future. BCEs principal opportunity and challenge
  will be to transition from the successful wireline business to a much broader
  set of services based on wireless and IP networks. It will need to manage that
  transition carefully in order not to sacrifice traditional earnings, while building
  its leadership in the new services.
       BCE is already a leader in wireless; it will aggressively
  compete with cable for the broadband home and it will evolve to master the integrated
  business solutions value chain. BCE has always been an outstanding network organization.
  But as connectivity becomes increasingly commoditized in an IP world, just providing
  the network will no longer be good enough. The future will require a layer of
  applications and services over the new network. It is these applications and
  services that





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contain the systems and the organizations that
  will make communications simple and transparent for any customer. And in the
  attainment of simplicity, in telecommunications as in any field, the most important
  element is not the concept but the implementation or execution of the concept.
       In a time of profound structural change in the
  worldwide telecommunications industry, it is worth noting that Canada has had
  a long-standing tradition of using private money for public good in an enlightened
  and responsible regulatory environment  one that has provided Canada and
  Canadians with worldwide telecommunications leadership. Real, facilities-based
  competition is the basis and the result of our home-grown regulatory model.
  Today, new-entrant wireline competitors are trying to convince the regulator
  to mandate sufficiently cheap access to the incumbents networks so they
  can avoid investing. This would create artificial competition that would weaken
  the entire industry. And be the wrong public policy.
       In a very short period of time  only two
  years  and with much hard work, many positive changes have been brought
  about at BCE by a capable and committed management. Through the present and
  upcoming challenging period, the Board will continue to support thoughtful,
  reasoned and courageous work. By supporting that work and vision with ever more
  passion and boldness, an even greater company can be built at BCE.
       A great company. There is nothing this country
  needs more of than great companies with head offices here  in Canada.



Richard J. Currie, C.M.

Chairman of the Board

BCE Inc.























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From the President and
  CEO

Dear Shareholder:

Simpler is better.

Its all about
  performance.

Good is never good enough.

The customer drives everything.

These were the principles we said were important
  in our annual report to you last year. They guided our progress in 2003, giving
  us focus and clarity of purpose. With an eye on these fundamentals, we built
  momentum within the company throughout the year, and that momentum continues
  to accelerate.

Accomplishing what we set out to do In my letter to you last year, I told
  you we would intensify our focus on our customers while maintaining strong financial
  discipline. I said we have to put the customer at the centre of all we do while
  we work to build a financially durable organization. Without question, we made
  important progress in 2003 against those measures.      First, financial
  performance. We saw a $636 million improvement to our cost structure, thanks
  to the hard work of all our employees who followed through on our commitment
  to year-over-year productivity improvement. Their efforts led to an increase
  in our EBITDA performance of over six per cent to reach more than $7.4 billion
  and a $2.5 billion improvement in our free cash flow, well exceeding our original
  target for the year. And that in turn allowed us to reduce our net debt by $2
  billion.      BCE ended the
  year with a balance sheet that was significantly improved from just twelve months
  before  this gives us the flexibility we need to plan and invest for the
  future.

Customer focus from the ground up In 2003 we successfully reorganized the
  company to reflect the markets we serve: Consumer, Small and Medium Business,
  and Enterprise, our largest business customers.

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Michael Sabia President and Chief Executive
  Officer

This represents a
  profound and important change for our company. We have stepped away from our
  traditional product focus and moved to better integrate the company around the
  unique needs of three distinct customer types. Our new structure removes barriers
  that once existed within Bell that made it difficult to understand our customers.
  We're now dedicated to serving them in a unified way.      Our new customer-centred
  organization positions us to capitalize on Bells two greatest strengths
   our brand and the breadth of our services.

Simplicity in action Providing simplicity to our customers
  means first simplifying the way we operate. Integrating internal administrative
  systems. Retraining our front-line employees. Giving them greater knowledge
  of the broad array of services we offer.      Putting the
  real emphasis where it belongs  on serving customers the way theywant to be served, and doing it profitably.
  In addition to our financial performance and successful transition to a new
  organizational structure, we accomplished much to be proud of in 2003.      One call service
  for all moves and The Bundle in our Consumer business are excellent examples
  of our efforts to make our customers lives simpler. Emily, the voice-activated
  call routing technology we introduced at the end of 2002, was extremely well
  received. We launched a French-speaking version in 2003. And we are now taking
  the same capability and turning it into a product for our large business customers.
  Thats the spirit of Bell today.      Our wireless
  services had one of our best performances ever in 2003. Wireless revenues increased
  by 15 per cent, and the number of wireless customers increased by 13 per cent.

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And while delivering that growth, we kept customer
  churn at an industry-leading 1.4 per cent, which proves simplicity and service
  do more than draw our customers to our products. It convinces them to stay.      Early in this
  report, we mentioned the dramatic reduction in the time it takes to deliver
  high-speed Internet services to our Small and Medium Business customers. This
  is an extremely important accomplishment  just as significant is the fact
  that it was completed in just two months. Its an early win. We are capitalizing
  on it to bring even more momentum to our broader efforts to accelerate cycle
  times and improve service quality across the entire company.      In 2003, we
  took a hard look at our Enterprise business and established a clear strategic
  direction to expand beyond our traditional connectivity portfolio to higher
  growth value-added solutions. Bell is providing our largest and most complex
  customers with network management and security, hosted Voice over IP, advanced
  contact centres and wireless data. Were moving aggressively to leverage
  and market that expertise.

An exciting new destination: the world of IP The map of telecommunications is being
  redrawn, transformed by technology, competition and changing demographics. Internet
  Protocol (IP) is rapidly becoming the network standard of the Internet Age.
  This creates a new world of possibility for individuals and businesses. It also
  creates a whole new competitive landscape.      This is not
  telecom as usual. The transition to all-purpose, open standard IP networks and
  the corresponding shift of emphasis to smart devices at the edge of those networks
  represent a significant shift for industry participants. In the IP world, virtually
  anyone can cost-effectively provide services to the end user. Traditional definitions
  of markets and services will matter less and less as the lines that once separated
  distinct markets  local and long distance, wireline and wireless, voice
  and data  become increasingly irrelevant. This will create an environment
  of no barriers, where competitors bear little resemblance to one another beyond
  the services they provide.      This no-barrier
  world that IP is bringing about will challenge all of us. It will challenge
  our company, our management, our people and certainly our industry and our customers.
  It will also challenge those who regulate the industry. In an industry as critical
  as ours, in one as deeply woven into how advanced economies work, its
  essential that we acknowledge the change thats occurring and set our definitions
  and goals to align with it.      This much, at
  least, is simple: Its a new game. It requires new rules.      Ive said
  this before  if you arent managing the change thats going
  on around you, if you arent constantly reinventing yourself, youre
  not on track for success.      At our annual
  meeting with the financial community in December, we announced our intention
  to migrate 100 per cent of our core traffic onto a national IP network by 2006,
  offering by that time a full suite of IP-based services to our customers.      At the time
  of the announcement, we had already made real progress toward our objective.
  During 2003, we developed a cost-efficient way to substantially expand the bandwidth
  of the local link in our residential network.

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We developed new technology that enables us to add
  video capabilities to our high-speed Internet offerings. We created, in just
  100 days, our own consumer Voice over IP product that we will be testing in
  the first half of 2004. It was definitely a running start, and we expect to
  build upon the momentum in the coming year.      We see a new
  world of opportunity in the world of IP. How will we differentiate ourselves
  in an industry with such radically changed fundamentals?      We will differentiate
  ourselves in the breadth of our services, in the quality of our products, in
  how well we deliver and support those products, and in the quality of our financial
  performance relative to our peers. We are equipped like no other to lead. We
  have the infrastructure, the people, the technology and the resources to deliver
  the world of IP and all of its exciting benefits.      Our plans are
  in place, our organization is engaged and our direction is clear. In the Consumer
  segment, we will be the provider of choice for telephony, Internet and video
  services to help customers create the broadband home. For small and mid-sized
  businesses, we will work to establish ourselves as a trusted IT advisor, helping
  them take maximum advantage of new technology thats emerging. In the Enterprise
  segment, we will become more than a source of connectivity, offering a much
  richer set of value-added services that enable large companies to be more productive
  and focus on their core businesses.

Leadership for Canada This is important work were doing
   important for us, for our employees and for our shareholders. Our goal
  is to set the standard in an IP world for the breadth and quality of services
  we provide to our customers in Canada and beyond.      This is important
  for Canada. As we deliver for our customers, we enable them to make Canada an
  even more connected, productive and innovative place. Working together 
  within our company, with industry colleagues, with customers, with government
   we have the opportunity as Canadians to show the world whats possible.
  An exciting future lies ahead, and we at Bell Canada Enterprises intend to help
  lead the way.      Next year will
  mark the 125th anniversary of Bell Canadas service to this country. Throughout
  our history, one of our great strengths has been the pride our employees have
  in what this company does. Theres a pride among Bell people in how we
  serve our customers, in how we serve our communities, our country, and in how
  we serve our shareholders. That pride is the source of my confidence. Because
  it is that pride that makes us unwilling to settle for second place and drives
  the determination, the passion that will keep us in the lead. As I look at all
  we have accomplished, at our financial performance and our successes over the
  past year, I believe our progress is sound. The future? Bring it on.



Michael J. Sabia President and Chief Executive Officer
  BCE Inc.

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Corporate Social Responsibility

Making a Difference    At BCE, we
  believe we play a critical role in Canadian communities. We are committed to
  nurturing a successful society and to providing regular, comprehensive reports
  on our role as a corporate citizen on social, economic and environmental matters.

Society In 2003, we invested in a host of educational,
  health care, research, and community development initiatives. While we support
  a large variety of undertakings, we emphasize those that help unleash youth
  potential by helping Canadians live and learn in new ways  through the
  innovative use of communications technology.      We believe that
  by investing in young Canadians, we are sowing the seeds of a stronger future
  for our country. In 2003, we supported youth through organizations such asKids
  Help Phone,Junior
  Achievement,School Net,Torontos Hospital for Sick Children,
  andSte-Justine Hospitalin Montreal.



In our modern knowledge
  economy, innovation is a key ingredient for success, the underpinning of future
  productivity and prosperity. Bell Canada has a long-standing commitment to innovation
  in Canada. In 2003, we contributed $5.4 million to university research and development
  initiatives including Bell University Laboratories, a cooperative organization
  that links Bell Canada professionals with the Canadian university research community
  in key strategic areas of emerging wireline and wireless communications, e-business,
  new media, human/computer interaction and e-health applications. Bell Labs provide
  an innovative environment for more than 600 students and renowned university
  researchers across the country.      In addition
  to corporate support, we also encourage employees to actively take part in the
  development of their communities, in many cases facilitating contributions and
  volunteer work with matching grants and other programs. Bell Canada employees
  and retirees donated $1.3 million to registered charities, including $650,000
  to United Way. They also contributed at least 218,000 hours of volunteer work,
  which represents an economic contribution of $4 million. The company donated
  $1.4 million through various employee programs, including $840,000 in volunteer
  grants.

Economic Development Our involvement reaches beyond donating
  funds to philanthropic causes. The dollars we spend in our communities help

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stimulate local and national economies. Bell Canadas
  2003 investments include $2.9 billion in capital expenditures, $6 billion in
  goods and services, $4.2 billion in corporate income and sales taxes, and $3
  billion in salaries and benefits.      Some of the
  projects we support are specifically designed to stimulate economic development.
  For instance, we have pledged $1 million over three years to the Bell Canada Community Development Fundto
  help support local economic development commissions.

Workplace In 2003, BCE companies employed over 64,000
  people. Bell Canadas workforce, including Aliant, was 51,000 strong. Every
  year, employees have the opportunity to voice opinions in an anonymous, confidential
  survey. Last year, more than 41,000 employees from BCE companies participated
  in the sixth annual company-wide survey. Many programs and improvements introduced
  in 2003 were the direct result of employee feedback.      To promote career
  mobility among Bell companies, we launched Bell
  People First: a commitment to hire, promote
  and train Bell employees before looking externally. This program has enabled
  540 employees with redundant jobs to find new positions within the organization.      We believe in
  lifelong learning as a means of empowering employees to excel in both their
  professional and personal lives, so we make significant investments in training
  and development. Much of this training was available online, anywhere, anytime.
  At their convenience, Bell employees accessed tools likeMentor
  Match, a computer-based mentoring program
  that matches protégés to an appropriate mentor from a cross-sectional
  pool of potential candidates.Click n
  Learnoffers more than 400 online learning
  solutions. More than 60 per cent of Bell course content was delivered online,
  with close to 15,000 Bell employees registering for a total of 87,000 online
  courses.      A work/life
  balance is essential for long-term career satisfaction. In 2003, we added a
  number of initiatives to our roster of programs that help employees achieve
  this balance. Our newWorkforce Flexibility
  Programlets eligible employees take up
  to one year, with benefits, to pursue a variety of activities including education,
  volunteer work,

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|26 | 2003 annual report
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and political work.Wellness
  Checkpoint, a confidential, interactive
  tool, helps employees assess lifestyle and well-being while obtaining practical
  suggestions and health information. Our quarterlyHealth
  and Wellness Bulletingives employees and
  their families practical tips.

Environment Bell Canada monitors and controls environmental
  issues based on our established environmental management system. In 2003, we
  recovered close to 8,000 tons of recyclable materials such as cables and hardware,
  and 1,400 tons of hazardous residual materials such as batteries, aerosols and
  fluorescent tubes. Through our new cell phone recycling program, we recovered
  almost 35,000 mobile phones, 5,000 of which were donated to womens shelters.
  We adopted a new vegetation management policy that lets us diligently manage
  company green spaces using ecological methods while ensuring the promotion of
  biodiversity, as well as water and energy conservation. We also ran an employee
  information campaign to spread the word about eco-friendly methods for lawn
  care at home. 2003 marked our third year of partnership with the Centre de formation
  en entreprise et récupération, a network of specialized schools
  in Québec which gives recycling job training to young men and women with
  learning difficulties.

Measurement and Reporting BCE strengthened its commitment to measure
  and report on corporate social responsibility in 2003 by adopting Global Reporting
  Initiative (GRI) reporting practices. Launched in 1997 by the Coalition for
  Environmentally Responsible Economies, the GRI develops and distributes globally
  applicable Sustainability Reporting Guidelines and is the official collaborating
  centre of the United Nations Environment Program. The organizations goal
  is to enhance the quality, thoroughness and usability of sustainability reporting.
  For a complete corporate social responsibility report on BCE and Bell Canada,
  visit our website.

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Financial Highlights

|                                                             | 2003   | 2002   | 2001   
|------------------------------------------------------------ | ------ | ------ | -------
|Revenue (in millions)(1)                                     | 19,056 | 19,186 | 18,796 
|EBITDA (in millions)(1) (2)                                  | 7,426  | 7,355  | 6,939  
|Operating income (in millions)                               | 4,052  | 3,419  | 2,566  
|Net earnings applicable to
      common shares (in millions) | 1,744  | 2,342  | 372    
|Net earnings per common share                                | 1.90   | 2.66   | 0.46   
|                                                            
|Net debt (in millions)                                       | 13,216 | 15,166 | 12,763 
|Net debt to capitalization
      ratio                       | 43.8%  | 48.4%  | 36.5%  
|                                                            
|Free cash flow (in millions)(2)                              | 1,626  | (850)  | (2,240)
|Cash from operating activities
      (in millions)           | 6,015  | 4,378  | 4,192  
|Capital expenditures (in millions)                           | 3,179  | 3,731  | 4,945  
|Capital intensity                                            | 16.7%  | 19.4%  | 26.3%  

Operational Highlights

|                                                 | 2003   | 2002   | 2001  
|------------------------------------------------ | ------ | ------ | ------
|                                                
|Customer connections (thousands)                 |        |        |       
|Local telephone                                  | 13,051 | 13,154 | 13,296
|Cellular
      and personal communications (PCS) | 4,412  | 3,898  | 3,446 
|Paging                                           | 524    | 639    | 715   
|High-speed
      Internet access                 | 1,482  | 1,110  | 757   
|Dial-up Internet
      access                    | 869    | 957    | 1,019 
|DTH satellite
      television                   | 1,387  | 1,304  | 1,069 
|Digital equivalent
      access lines            | 3,867  | 3,683  | 3,713 
|                                                 | 25,592 | 24,745 | 24,015
|                                                
|Net activations (thousands)                      |        |        |       
|Cellular
      and personal communications (PCS) | 514    | 452    | 684   
|High-speed
      Internet access                 | 372    | 353    | 421   
|DTH satellite
      television                   | 83     | 235    | 347   



|(1) | Our financial results in 2003 exclude the
      financial results of the directories business, which we sold in November
      2002. Our financial results before that date, however, include those of
      that business. In 2002, the directories business contributed $501 million
      of revenues and $311 million of EBITDA. In 2001, the directories business
      contributed $577 million of revenues and $313 million of EBITDA.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The terms EBITDA (Earnings
      before interest expense, income taxes, depreciation and amortization) and
      free cash flow do not have a standardized meaning prescribed by Canadian
      Generally Accepted Accounting Principles (GAAP) and may not be comparable
      to similar measures presented by other publicly traded companies. Refer
      to page 28 and 29 of this Annual Report for a description of these terms.    





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|--------------------------------------------
|28                                          
|                                            
|MANAGEMENTS
        DISCUSSION AND ANALYSIS
|                                            



MD&A at a glanceAbout our business
      
      29The year at
        a glance
      
      34Financial
        results analysis
      
      36Financial
        and capitalmanagement
      
      45Risks that
        could affectour
        business
      
      51Our accounting
        policies
      
      59Supplementary
        financialinformation
      
      62


|In
        this MD&A, we, us, our and BCE mean BCE Inc., its
        subsidiaries and joint ventures. Bell Canada, Aliant Inc. (Aliant), and
        their subsidiaries are referred to as the Bell Canada segment.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

This managements discussion and analysis
  of financial condition and results of operations (MD&A) comments on BCEs
  operations, performance and financial condition for the years ended December
  31, 2003 and 2002.

|All amounts in this MD&A
          are in millions of Canadian dollars, except where otherwise noted.
|-----------------------------------------------------------------------------------------------------



|Please refer to the audited
          consolidated financial statements when reading this MD&A. You will
          find more information about BCE, including BCE Inc.s Annual Information
          Form for the year ended December 31, 2003 (BCE 2003 AIF), on BCE Inc.s
          website at www.bce.caand on SEDAR at www.sedar.com.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

About forward-looking statements

|A statement we make is forward
          looking when it uses what we know today to make a statement about the
          future.
        Forward-looking statements
          may include words such as anticipate, believe, could, expect, goal,
          intend, may, objective, outlook, plan, seek, strive, targetand
          will.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Securities laws encourage companies to disclose
  forward-looking information so that investors can get a better understanding
  of the companys future prospects and make informed investment decisions.
       BCEs 2003 annual report, including this
  MD&A, and in particular the outlook sections of this MD&A, contain forward-looking
  statements about BCEs objectives, strategies, financial condition, results
  of operations and businesses. These statements are forward-looking
  because they are based on our current expectations about the markets we operate
  in, and on various estimates and assumptions. It is important to know that:

- forward-looking statements in BCEs 2003
    annual report, including this MD&A, describe our expectations on March
    10, 2004
- our actual results could be materially different
    from what we expect if known or unknown risks affect our business, or if our
    estimates or assumptions turn out to be inaccurate. As a result, we cannot
    guarantee that any forward-looking statement will materialize.
- forward-looking statements do not take into
    account the effect that transactions or non-recurring items announced or occurring
    after the statements are made may have on our business. For example, they
    do not include the effect of sales of assets, monetizations, mergers, acquisitions,
    other business combinations or transactions, asset write-downs or other charges.
- we disclaim any intention and assume no obligation
    to update any forward-looking statement even if new information becomes available,
    as a result of future events or for any other reason.

Risks that could
  cause our actual results to materially differ from our current expectations
  are discussed throughout this MD&A and, in particular, in Risks that
  could affect our business.

Non-GAAP financial measures

EBITDA

|We define EBITDA as operating
          revenues less operating expenses, which means it represents operating
          income before amortization expense, net benefit plans (cost) credit,
          and restructuring and other charges.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The term, EBITDA (earnings before interest, taxes,
  depreciation and amortization), does not have any standardized meaning prescribed
  by Canadian generally accepted accounting principles (GAAP). It is therefore
  unlikely to be comparable to similar measures presented by other issuers. EBITDA
  is presented on a consistent basis from period to period.
       We believe that EBITDA is an important measure
  because it allows us to assess the operating performance of our ongoing businesses
  without the effects of amortization expense, net benefit plans (cost) credit,
  and restructuring and other charges. We exclude amortization expense and net
  benefit plans (cost) credit because they largely depend on the accounting methods
  and assumptions a company uses, as well as non-operating factors, such as the
  historical cost of capital assets and the fund performance of a companys
  pension plans. We exclude restructuring and other charges because they are transitional
  in nature.
       EBITDA allows us to compare our operating performance
  on a consistent basis. We believe that certain investors and analysts use EBITDA
  to measure a companys ability to service debt and to meet other payment
  obligations, or as a common valuation measurement in the telecommunications
  industry.
       EBITDA should not be confused with net cash flows
  from operating activities. The most comparable Canadian GAAP financial measure
  is operating income. The table below is a reconciliation of EBITDA to operating
  income on a consolidated and segmented basis.

Bell
      
      Bell
      
      BCE
      
      BCE
      
      Corporate
      
      BCECanada
      
      Globemedia
      
      Emergis
      
      Ventures
      
      and other
      
      Consolidated2003EBITDA
      7,001
      
      233
      
      15
      
      347
      
      (170
      )
      7,426Amortization expense
      (2,970
      )
      (60
      )
      (46
      )
      (126
      )
      55
      
      (3,147
      )Net benefit plans (cost) credit
      (181
      )
      (6
      )
      
      
      
      
      12
      
      (175
      )Restructuring and other charges
      (14
      )
      
      
      (38
      )
      
      
      
      
      (52
      )Operating income (loss)
      3,836
      
      167
      
      (69
      )
      221
      
      (103
      )
      4,0522002EBITDA
      7,079
      
      180
      
      (29
      )
      287
      
      (162
      )
      7,355Amortization expense
      (2,894
      )
      (67
      )
      (58
      )
      (121
      )
      58
      
      (3,082
      )Net benefit plans (cost) credit
      38
      
      (3
      )
      
      
      
      
      (2
      )
      33Restructuring and other charges
      (675
      )
      
      
      (119
      )
      
      
      (93
      )
      (887
      )Operating income (loss)
      3,548
      
      110
      
      (206
      )
      166
      
      (199
      )
      3,419






|                                          
|------------------------------------------
|www.bce.ca                                
|                                          
|MANAGEMENTS DISCUSSION
      AND ANALYSIS
|                                          

Free cash flow

|We define free cash flow as
          cash from operating activities after capital expenditures, total dividends
          and other investing activities.
|----------------------------------------------------------------------------------------------------------------------------------------------------------

The term, free cash flow, does not have any standardized
  meaning prescribed by Canadian GAAP. It is therefore unlikely to be comparable
  to similar measures presented by other issuers. Free cash flow is presented
  on a consistent basis from period to period.
       We consider free cash flow to be an important
  indicator of the financial strength and performance of our business because
  it shows how much cash is available to repay debt and to reinvest in our company.
  We believe that certain investors and analysts use free cash flow when valuing
  a business and its underlying assets.
       The most comparable Canadian GAAP financial measure
  is cash from operating activities. You will find a reconciliation of free cash
  flow to cash from operating activities on a consolidated basis in Financial
  and capital management.

**ABOUT OUR BUSINESS**

|This section describes BCEs businesses,
          objectives and strategies.
|-----------------------------------------------------------------------------

BCE is Canadas largest communications company.
  We operate under four segments: Bell Canada, Bell Globemedia, BCE Emergis and
  BCE Ventures. Our segments are organized by products and services, and reflect
  how we classify our operations for planning and measuring performance. In addition
  to discussing our consolidated financial results in this MD&A, we discuss
  the operating results of each of these segments. We believe this provides a
  useful discussion of our managements view of our results and reflects
  how we manage our business.
       Through our Bell Canada segment, we provide local
  telephone, long distance, wireless communications, Internet access, data, Direct-to-home
  (DTH) satellite television and other services to residential and business customers
  through our 26 million customer connections.
       We reach millions of people every day through
  Bell Globemedia Inc. (Bell Globemedia), a leading Canadian media company, which
  includes CTV Inc. (CTV), Canadas leading private broadcaster, and The
  Globe and Mail, Canadas leading national newspaper.
       We also provide eBusiness services through BCE
  Emergis Inc. (BCE Emergis).
       For management purposes, all of BCEs other
  businesses and investments, including Telesat Canada (Telesat) and CGI Group
  Inc. (CGI), are combined in the BCE Ventures segment.
       Our primary focus is the Bell Canada segment,
  which represents the largest component of our business.

|See Note 2 to the consolidated
          financial statements for more information about our segments.
|------------------------------------------------------------------------------------------------------

Bell Canada segment

The Bell Canada segment is Canadas leading
  provider of wireline and wireless communications services, Internet access,
  data services and DTH satellite television services to residential and business
  customers.
       The table below shows the number of customer connections
  for each of the Bell Canada segments connectivity services.

Number
          of connections (millions)Connectivity service
      December
          31, 2003
      
      December
          31, 2002
      
      December
          31, 2001Local telephone
      13.1
      
      13.2
      
      13.3Cellular and personal communications
        (PCS)
      4.4
      
      3.9
      
      3.4Paging
      0.5
      
      0.6
      
      0.7High-speed Internet access
      1.5
      
      1.1
      
      0.8Dial-up Internet access
      0.9
      
      0.9
      
      1.0DTH satellite television
      1.4
      
      1.3
      
      1.1Digital equivalent access lines(1)
      3.9
      
      3.7
      
      3.7Total
      25.7
      
      24.7
      
      24.0(1)Calculated
        by converting low-capacity data lines to the equivalent number of voice-grade
        access lines.


We operate mainly
  as the incumbent telephone company in:

- Ontario and Québec, through Bell Canada,
    Télébec Limited Partnership (Télébec) and Northern
    Telephone Limited Partnership (Northern Telephone)
- Atlantic Canada, through Aliant
- Canadas northern territories, through
    Northwestel Inc. (Northwestel).

We also operate
  as a competitive local exchange carrier (CLEC) in Alberta and British Columbia
  through Bell West Inc. (Bell West). BCE Inc. owns 100% of Bell Canada. Bell
  Canada owns:

- 63% of Télébec and Northern Telephone.
    The Bell Nordiq Income Fund owns the remaining 37%.
- 53.5% of Aliant. The remaining 46.5% is publicly
    held.
- 100% of Northwestel
- 60% of Bell West. The remaining 40% is held
    by Manitoba Telecom Services Inc. (MTS).

30
      2003
          annual report
      www.bce.caMANAGEMENTS
          DISCUSSION AND ANALYSIS




|MTS is publicly traded. Bell
          Canada owns 22% of MTS. MTS is a significantly influenced investment,
          which we account for under the equity method.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------

On February 2, 2004,
  MTS exercised its option to sell its 40% interest in Bell West to Bell Canada
  for approximately $645 million in cash. The cash is payable at closing, which
  is expected to occur on or before August 3, 2004.In May 2002,
  the Canadian Radio-television and Telecommunications Commission (CRTC) issued
  the second Price Cap decision (Price Cap decision). This decision mandated price
  reductions to various services and led to lower revenues in the last seven months
  of 2002 compared to the same period in 2001 and for the first five months of
  2003 compared to the same period in 2002. In some cases in this MD&A, we
  presented a comparison of our actual reported results, which include the impact
  of the Price Cap decision on our results in the first five months of 2003, as
  well as a comparison excluding this impact. This is to help you assess our performance
  without the impact of the Price Cap decision.The chart shows the
  operating revenues that each line of business contributed to the Bell Canada
  segments total operating revenues for the year ended December 31, 2003.
  Some of these revenues vary slightly by season. For example, terminal equipment
  sales to business customers have historically tended to be higher in the fourth
  quarter. Wireless and DTH satellite television equipment sales have also tended
  to be higher in the fourth quarter because of increased consumer spending during
  the holiday season. These seasonal effects were less pronounced in 2003.



Local and access services We operate an extensive local access network
  that provides local telephone services to business and residential customers.
       Local telephone service is the main source of
  local and access revenues. Other sources of local and access revenues include:

- value-added services, such as call display,
    call waiting and voice mail
- services provided to competitors accessing our
    local network
- connections to and from our local telephone
    service customers for competing long distance companies
- subsidies from the National Contribution Fund
    to support local service in high-cost areas.

Rates for local
  telephone and value-added services in our incumbent territories are subject
  to the Price Cap decision.

Long distance services We supply long distance voice services
  to business and residential customers. We also receive settlement payments from
  other carriers for completing their customers long distance calls in our
  territory.
       Prices for long distance services have been declining
  since this market was opened to competition. The rate of decline, however, has
  eased over the past several years. Price decreases have generally led to increased
  volume in conversation minutes.

Wireless services We offer a full range of wireless communications
  services to business and residential customers, including cellular, PCS and
  paging. PCS customers can get wireless access to the Internet through our Mobile
  Browserservice or send text messages. We also provide value-added services,
  such as call display and voice mail, and roaming services with other wireless
  service providers. Customers can choose to pay for their cellular and PCS services
  through a monthly rate plan (post-paid) or in advance (prepaid).
       The wireless division of each of our incumbent
  telephone companies provides wireless communications in its home territory,
  except for Bell Mobility Inc. (Bell Mobility), which provides these services
  in Alberta and British Columbia, in addition to its home territory of Ontario
  and Québec.
       In 2003, we continued to expand the reach of our
  high-speed wireless network, which allows customers to send data at speeds of
  up to 86 Kbps, five times faster than what was previously available. By the
  end of 2003, our high-speed wireless network covered:

- 95% of the population in Ontario and Québec,
    which is the same as our analogue coverage in these regions
- 60% of the population in Atlantic Canada
- Calgary, Edmonton and Vancouver in Western Canada.

Data services High-speed Internet access services provided
  through digital subscriber line (DSL) technology for residential, and small
  and medium-sized business customers are a growth area for us. We provide high-speed
  and dial-up Internet access to residential customers in our incumbent territories
  primarily through the Sympatico brand.
       DSL was available to 78% of home and business
  lines passed in Ontario and Québec at the end of 2003, up from 75% at
  the end of 2002. In Atlantic Canada, DSL was available to 65% of homes at the
  end of 2003 compared to 60% at the end of 2002. Bell Canada is scheduled to
  begin installing new low-density DSL remotes in neighbourhoods in 2004 to further
  expand its DSL footprint.

|                                          
|------------------------------------------
|www.bce.ca                                
|                                          
|MANAGEMENTS DISCUSSION
      AND ANALYSIS
|                                          

In the fourth quarter
  of 2003, we announced our plans to double the speed of our main consumer DSL
  offering, Sympatico High Speed Edition, to 3 megabits per second (Mbps) from
  1.5 Mbps. We also announced that we would be increasing the speed for our Ultra
  customers in early 2004 to 4 Mbps from 3 Mbps.
       We offer a full range of data services to business
  customers, including local network access, Internet access, Internet Protocol
  (IP)/broadband, managed network solutions, frame relay, asynchronous transfer
  mode (ATM) and e-commerce services, as well as sales of communications and related
  equipment. In 2004, we will start retiring many of our legacy data services,
  including frame relay and ATM, as we carry out our IP strategy. See About
  our business  Our objectives and strategyfor details.
       Our incumbent telephone companies provide data
  services to business customers in their home territory. Bell West provides these
  services in Western Canada.

DTH satellite television services DTH satellite television services have
  rapidly become a major competitor to cable television. Bell ExpressVu Limited
  Partnership (Bell ExpressVu) has been delivering digital services directly to
  Canadian homes and businesses since 1997. It is Canadas largest licensed
  DTH distributor of digital programming, with more than 300 digital television
  and CD-quality audio channels, more than 60 pay-per-view channels, and unique
  interactive TV services such as Hockey Night in Canada Plus. It is also Canadas
  leading provider of high-definition television (HDTV) with over 20 HDTV channels.
  Bell ExpressVu uses two satellites, Nimiq 1 and Nimiq 2, which are owned by
  Telesat.
       In 2003, Bell ExpressVu began expanding into the
  multiple-dwelling unit (MDU) market in Toronto using very high-speed DSL (VDSL).
  This market represents approximately 40% of all households in Toronto. VDSL
  allows Bell ExpressVu to deliver video signals to up to three televisions, a
  high-speed Internet connection and on-screen access to calling features, such
  as calling-line identification, through one set-top box.
       Signal piracy continues to be a major issue facing
  all segments of the Canadian broadcasting industry. During the year, Bell ExpressVu
  intensified its ongoing efforts against television signal theft with several
  new initiatives. These included:

- an electronic countermeasure program that transmits
    electronic signals to disable set-top boxes with illegal cards
- the use of new sophisticated set-top box tracking
    systems and implementation of specific point-of-sale practices, such as obtaining
    customer photo identification and credit card information, and requiring customers
    to pre-register online, to ensure that set-top boxes are being used by legitimate
    subscribers
- Bell ExpressVu also launched a public awareness
    campaign about signal theft and its new measures to combat this industry problem.
    This included print and TV advertising, as well as letters to existing customers.

Terminal sales and other This category includes revenues from
  a number of other sources, including:

- renting, selling and maintaining terminal equipment
- wireless handset sales
- wholesale international switched minutes
- network installation for third parties.

Bell Globemedia

Bell Globemedia provides information and entertainment
  services to Canadian customers and access to distinctive Canadian content. It
  includes CTV, Canadas leading private broadcaster, and The Globe and Mail,
  Canadas leading national newspaper.
       Bell Globemedias revenues mainly come from
  selling advertising through its TV and print businesses. Revenues also come
  from subscriptions to The Globe and Mail and subscription fees that cable and
  DTH companies pay for carrying Bell Globemedias specialty TV channels,
  such as TSN, RDS and Discovery Channel.
       BCE Inc. owns 68.5% of Bell Globemedia. The Woodbridge
  Company Limited and affiliates own the remaining 31.5%.

BCE Emergis

BCE Emergis provides eBusiness solutions to the
  financial services industry in North America and the health industry in Canada.
  It automates transactions between companies and allows them to interact and
  transact electronically. In March 2004, BCE Emergis sold its U.S. Health operations
  and decided to focus on its core competencies in claims, payments, loan processing
  and related security services. With this sale, we are in a better position to
  assess the future of BCE Emergis, its prospects, and what the best next steps
  will be for us and our shareholders. BCE Emergis is publicly traded. BCE Inc.
  owns 63.9% of BCE Emergis.

|                                            
|--------------------------------------------
|32                                          
|                                            
|MANAGEMENTS
        DISCUSSION AND ANALYSIS
|                                            

BCE Ventures

The BCE Ventures segment combines various assets
  for management purposes. These include Telesat and CGI.
       Telesat is a leader in satellite communications
  and systems management and is a leading consultant in establishing, operating
  and upgrading satellite systems worldwide. BCE Inc. owns 100% of Telesat.
       CGI is one of Canadas largest information
  technology (IT) services companies. It provides a full range of IT services
  and business solutions, including outsourcing, systems development and integration
  and consulting. CGI is publicly traded. BCE owns 29.8% of CGI.

Discontinued operations

In the past two years, we have disposed of, or
  approved formal plans for disposing of, a number of our businesses. These include:

- Teleglobe Inc. (Teleglobe), which was sold on
    December 31, 2002
- Bell Canada International Inc. (BCI), which
    will be liquidated once all of its assets have been disposed of and all claims
    against it have been determined
- Bell Canadas directories business, which
    was sold in November 2002
- Aliants emerging business segment, the
    assets of which were sold in 2003
- Aliants remote communications segment,
    which consisted of Aliants 53.2% investment in Stratos Global Corporation
    (Stratos). Stratos was sold in December 2003.
- BCE Emergis U.S. Health operations, which
    were sold in March 2004.

All of these business
  dispositions were treated as discontinued operations, except for the sale of
  the directories business.
       Treating business dispositions as discontinued
  operations means that we restated the financial results of all previous years
  to exclude the results of these businesses. They are presented separately in
  the consolidated financial statements and are discussed separately in the MD&A.
       The sale of our directories business in November
  2002 was not treated as a discontinued operation because it did not meet the
  criteria set out in the Canadian Institute of Chartered Accountants (CICA) Handbook.
  As a result, our financial results before that date were not restated to exclude
  the financial results of that business. In some cases in this MD&A, we presented
  a comparison of our actual reported results, which include the results of our
  directories business until November 2002, as well as a comparison excluding
  the results of that business. This is to help you assess the performance of
  our continuing businesses without the effects of the sale of the directories
  business.

|See Financial results analysisfor details about how these business dispositions affected our results
          of operations, financial condition and cash flows.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------

New reporting structure

In May 2003, Bell Canada announced a new business
  structure that simplified its operations by creating business divisions that
  reflect the major customer segments it serves. Starting in the first quarter
  of 2004, we will present and discuss the operating results of Bell Canada under
  these segments:

- the consumer segment provides the following
    services to Bell Canadas residential customers mainly in Ontario and
    Québec:
    
          local telephone and long distance
            through the Bell brand
          wireless through Bell Mobility
          Internet access through the
            Sympatico brand
          television services through
            the ExpressVu brand and VDSL
- the business segment provides local telephone,
    long distance, data and other services to Bell Canadas small and medium-sized
    and large enterprise business customers in Ontario and Québec and to
    medium-sized and large enterprise business customers in Western Canada
- the Aliant segment provides local telephone,
    long distance, wireless, data and other services to residential and business
    customers in Atlantic Canada.

|                                          
|------------------------------------------
|www.bce.ca                                
|                                          
|MANAGEMENTS DISCUSSION
      AND ANALYSIS
|                                          

Our objectives and strategy

The telecommunications industry is currently going
  through a major transformation as it evolves from multiple service-specific
  networks to IP-based integrated communications networks. These will facilitate
  the introduction of innovative new applications and opportunities for our customers.
       Businesses will benefit from our ability to integrate
  all of their communications needs while we lay out an evolution plan that will
  result in greater flexibility and cost savings for our customers. Consumers
  will discover the advantages of a Broadband Home where leading-edge voice, video
  and data services are provided simply through one company and one brand: Bell
  Canada.
       Our overall objective is to take a leadership
  position in setting the standard in IP for the industry and for our customers.
       That begins with a three year plan to:

- move all of Bell Canadas core traffic
    to a national IP-based network
- offer a full range of IP services to 90% of
    Bell Canadas customers.

IP-based communications
  will allow us to further enhance our revenue growth profile and realize on our
  promise of simplicity for customers by offering new value-added features, faster
  and simpler delivery and greater self-service capabilities. It will also provide
  Bell Canada with significant opportunities to reduce costs in the future.
       Our strategy is to set the standard for innovation,
  simplicity and service, and efficiency leveraging the opportunities created
  by IP-based communications.

Innovation Bell Canada intends
  to bring together the broadest set of platforms by:

- expanding its next-generation network to increase
    bandwidth and value-added services
- offering new voice-over-IP (VoIP) based products
- expanding its digital video service offerings
    through VDSL and IP television (IPTV).

Simplicity and service We plan
  to simplify the customer experience by offering simpler products and solutions,
  and by making it easier to deal with us. This includes:

- value-added bundles of services
- speech-activated assistance
- unified customer channels and one-stop service
- faster response and improved service.

Efficiency We intend to build on
  our success as a streamlined and responsive provider of services through:

- increased productivity
- fewer networks and related operating support
    systems
- financial discipline.

Our goal is to
  expand Bell Canadas consumer segment by providing the Broadband Home and
  offering our customers the advantages of one-company, one brand and one
  point of contact. Next-generation services will provide growth opportunities
  and will include video services, new information management tools that are being
  developed with Microsoft Corporation (Microsoft), VoIP and wireless solutions.
       Our goal for Bell Canadas small and medium-sized
  business customers is to increase our market share by becoming our customers
  technology advisor with new VoIP and wireless fidelity (Wi-Fi) services, added
  security and firewall capabilities, new mobile and business information tools
  and storage capacity.
       Our goal for Bell Canadas large enterprise
  customers is to move from providing connectivity to offering value-added services
  on an IP network, including security, network management, wireless data and
  simplified customer channels.

34
      2003
          annual report
      www.bce.caMANAGEMENTS
          DISCUSSION AND ANALYSIS


THE YEAR AT A GLANCE

|This section reviews the key
          measures we use to assess our performance and how our results in 2003
          compare to our results in 2002.
|------------------------------------------------------------------------------------------------------------------------------------------------------

Customer connections

Wireless– The total number of cellular
  and PCS subscribers grew 13.2% or 514,000 to 4,412,000 in 2003.

High-speed Internet– The number
  of DSL high-speed Internet subscribers grew 34% or 372,000 to 1,482,000 in 2003.

DTH satellite television– The number
  of DTH satellite television service subscribers grew 6.4% or 83,000 to 1,387,000
  in 2003.

Network Access Services (NAS)–
  Our NAS declined 0.8% or 103,000 to 13.1 million in 2003.

Revenues

Our revenues were $19,056 million in 2003, compared
  to revenues of $19,186 million in 2002. This decline was mainly from the sale
  of our directories business in late November 2002. Excluding the revenues from
  our directories business in 2002 and the impact of the Price Cap decision in
  the first five months of 2003, our 2003 operating revenues would have increased
  2.3%. This reflected growth in revenues at the Bell Canada segment’s consumer
  business, at Bell Globemedia and at CGI. This was partly offset by declines
  in revenues at BCE Emergis and in the Bell Canada segment’s terminal sales
  and other, long distance and business and wholesale data revenues.



Operating income and EBITDA

Our operating income increased 18.5% or $633 million
  to $4,052 million in 2003, compared to 2002.
       Our EBITDA was $7,426 million in 2003, compared
  to $7,355 million in 2002. Our EBITDA margin grew 0.7% to 39.0%.
       Excluding the EBITDA from our directories business
  in 2002 and the effect of the Price Cap decision in the first five months of
  2003, our 2003 EBITDA would have increased 6.3% and our EBITDA margin would
  have grown 1.5%.



Net earnings/Earnings per share (EPS)

Net earnings applicable to common shares were
  $1,744 million, or $1.90 per common share in 2003, compared to $2,342 million,
  or $2.66 per common share in 2002. Net earnings in 2002 were significantly higher
  than 2003 mainly because of the gain on the sale of our directories business.
  This was partly offset by restructuring and impairment charges.



We achieved a return on equity (ROE)
  of 15.1% in 2003.

|ROE (return on common shareholders’
          equity) is calculated as net earnings applicable to common shares as
          a percentage of average common shareholders’ equity.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Capital expenditures

Capital expenditures declined 14.8% or $552 million
  to $3,179 million in 2003, compared to 2002. Capital expenditures as a percentage
  of revenues decreased to 16.7% in 2003 from 19.4% in 2002.

Cash from operating activities and free cash
  flow

Cash from operating activities increased 37% or
  $1,637 million to $6,015 million in 2003, compared to 2002.
       Free cash flow was $1,626 million in 2003, a significant
  improvement from negative free cash flow of $850 million in 2002. This was the
  result of the increase in cash from operations, tax refunds and lower total
  dividends. We paid lower total dividends mainly because Bell Canada stopped
  paying dividends to SBC Communications Inc. (SBC) when BCE repurchased SBC’s
  20% indirect interest in Bell Canada in 2002.
       The improvement in free cash flow contributed
  to a reduction of our net debt to total capitalization ratio to 43.8% at December
  31, 2003 from 48.4% at December 31, 2002. We reduced our net debt by $2 billion
  in 2003.

|                                          
|------------------------------------------
|www.bce.ca                                
|                                          
|MANAGEMENTS DISCUSSION
      AND ANALYSIS
|                                          





Executing on our priorities

Setting the standard in IP The telecommunications industry is currently
  going through a major transformation as it evolves from multiple service-specific
  networks to IP-based communications. At BCEs Business Review Conference
  in December 2003, we announced our multi-year plan to lead change in the industry
  and set the standard in the IP world while continuing to deliver on our goals
  of innovation, simplicity and service, and efficiency.
       We will also continue to focus on our previously
  announced consumer, small and medium-sized business and large enterprise customer
  segments strategies.

Innovation Significant progress was made in 2003
  in furthering our innovation goals including:

- agreement with Microsoft on June 16, 2003 to
    create a co-branded portal and to deliver a unique package of leading-edge
    Microsoft services to customers in the second quarter of 2004
- use of Nortel Networks Corporation (Nortel)
    IP telephony technology and the creation of a joint Bell-Nortel Innovation
    Centre to accelerate the launch of new IP telephony and multimedia services
    announced on September 8, 2003
- agreement with Microsoft on October 9, 2003
    to work together to test and deploy standard and HDTV channels, on-demand
    programming and interactivity over Bell Canadas broadband network through
    the use of Microsofts new IPTV technology
- our October 20, 2003 announcement that we will
    be using Lucent Technologies Canada Corp.s new DSL remotes in neighbourhoods
    to expand the Sympatico high-speed Internet footprint and its IP-based platform
    to evolve our voice messaging services
- our December 16, 2003 announcement regarding
    the purchase of Nortels optical network technology to accelerate the
    delivery of IP-based services and the creation of an Optical Innovation Centre
    to accelerate the deployment of new IP-oriented optical solutions
- our showcasing of working demonstrations of
    Hosted IP telephony and residential VoIP services at BCEs Business Review
    Conference in December 2003. Hosted IP telephony service for enterprise customers
    is expected to be commercially available in the third quarter of 2004, while
    residential VoIP is currently undergoing technical trials.
- more recently, on January 19, 2004, Bell Canada
    and Cisco Systems Canada (Cisco) announced plans to accelerate the creation,
    commercialization and delivery of a comprehensive suite of IP services that
    will allow large and medium-sized business customers to benefit from an integrated
    data, voice and video IP-based network. As a result of this alliance, Bell
    Canada will build on its network capability and focus its investments towards
    a single IP/Multi-Protocol Label System (MPLS) service delivery network with
    a national footprint.

Simplicity and service We made significant progress in simplifying
  the customer experience in 2003. Initiatives such as Bell Canadas interactive
  voice-response system Emily, specialized call centre queues, the introduction
  of One-Bill,and reduced provisioning intervals for business high-speed
  Internet service have improved customer service. In addition, the launch of
  new services, such as Single Number Reachand Business Back-Up,have
  made life simpler for customers.
       On September 25, 2003, Bell Canada launched The
  Bell Bundlewhich combines wireless, Internet access and DTH satellite television
  services into one simple offer for customers taking Bell Canadas long
  distance service. Customer response to The Bell Bundlehas exceeded expectations
  with over 70,000 sales by December 31, 2003.

|                                          
|------------------------------------------
|36                                        
|                                          
|MANAGEMENTS
      DISCUSSION AND ANALYSIS
|                                          

FINANCIAL RESULTS ANALYSIS

|This section provides detailed
          information and analysis about our performance for the past two years.
          It focuses on our consolidated operating results and provides financial
          information for each of our four business segments.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Operating revenues       |        |   |        |   |                  |   
|------------------------ | ------ | - | ------ | - | ---------------- | --
|                        
|                         | 2003   |   | 2002   |   | %
        change |   
|                        
|Bell Canada segment      | 16,698 |   | 17,102 |   | (2.4             | %)
|Bell Globemedia          | 1,363  |   | 1,290  |   | 5.7              | % 
|BCE Emergis              | 316    |   | 346    |   | (8.7             | %)
|BCE Ventures             | 1,218  |   | 1,064  |   | 14.5             | % 
|Corporate and other      | (539   | ) | (616   | ) | 12.5             | % 
|                        
|Total operating revenues | 19,056 |   | 19,186 |   | (0.7             | %)
|                        

BCEs revenues declined 0.7%. Excluding
  directories business and Price Cap decision, revenues would have increased 2.3% Our revenues declined 0.7% or $130 million
  to $19,056 million in 2003, compared to 2002. This reflected revenue declines
  at the Bell Canada segment and BCE Emergis, partly offset by revenue growth
  at Bell Globemedia and BCE Ventures. Excluding the results of our directories
  business in 2002 and the impact of the Price Cap decision in the first five
  months of 2003, BCEs operating revenues would have increased 2.3%.
       The Bell Canada segments revenues declined
  2.4% or $404 million to $16,698 million in 2003, compared to 2002. This reflected
  a decrease of $501 million from the sale of our directories business and a decrease
  of $61 million from the Price Cap decision, partly offset by an increase of
  $158 million from our continuing businesses. This $158 million increase was
  driven by our consumer business. Growth in customer connections and revenues
  from wireless, high-speed Internet access and DTH satellite television services
  offset revenue declines in terminal sales and other, long distance, and business
  and wholesale data revenues.
       Bell Globemedias revenues increased 5.7%
  or $73 million to $1,363 million in 2003, compared to 2002. This reflected a
  strong television schedule and an improved television advertising market.
       BCE Emergis revenues declined 8.7% or $30
  million to $316 million in 2003, compared to 2002. This was because of lower
  revenue from the distribution agreement with Bell Canada for legacy products
  and from other non-core and exited products.
       BCE Ventures revenues increased 14.5% or
  $154 million to $1,218 million in 2003, compared to 2002. This was mainly from
  CGIs acquisition of Cognicase Inc. (Cognicase) in January 2003.



Bell Canada segment

Local and access revenues essentially flat Local and access revenues declined 0.4%
  or $24 million to $6,105 million in 2003, compared to 2002. This decline, related
  to lower NAS, was offset partly by gains from SmartTouchfeatures, wireline
  insurance and maintenance plans, as well as increased demand for interconnection
  services provided to competing companies. The Price Cap decision led to a revenue
  reduction of $25 million in the first five months of the year compared to the
  same period in 2002. Excluding the impact of the Price Cap decision in the first
  five months of 2003, full-year local and access revenues would have been essentially
  unchanged in 2003, compared to 2002. 
       NAS in service declined 0.8% or 103,000 in 2003,
  compared to 2002. This was a result of continued pressure from growth in high-speed
  Internet access services, which reduces the need for second telephone lines,
  losses resulting from competition and business downsizings, and customers substituting
  wireline with wireless telephone service. Consumer NAS in service declined 0.7%
  or 62,000 in 2003, compared to 2002. Business NAS in service declined 0.9% or
  41,000 in 2003, compared to 2002.



Long distance revenues declined 3.6% Long distance revenues declined 3.6% or
  $94 million to $2,487 million in 2003, compared to 2002. This reflected competitive
  pressures in the business and wholesale long distance markets, as well as lower
  settlement payments. Rate reductions of $9 million in the first five months
  of 2003 related to the Price Cap decision also contributed to the overall revenue
  decline.
       Although prices for consumer long distance increased
  because of various pricing initiatives introduced in the past year, these gains
  were partly offset by a reduction in consumer long distance conversation minutes.
  This reflected competition from nontraditional long distance providers such
  as prepaid card and dial-around providers, and greater long distance usage from
  wireless services.
       Business and wholesale long distance minutes grew
  in 2003, compared to 2002. Prices decreased as a result of competitive pressures. 
       Overall, the volume of conversation minutes increased
  0.5% in 2003. The additional revenues generated by this increase were more than
  offset by average-revenue-per-minute (ARPM) declines of 1.6% to $0.124 in 2003
  from $0.126 in 2002.



|                                          
|------------------------------------------
|www.bce.ca                                
|                                          
|MANAGEMENTS DISCUSSION
      AND ANALYSIS
|                                          

Wireless revenues grew 14.7% with strong post-paid
  additions Wireless service revenues grew 14.7% or
  $323 million to $2,526 million in 2003, compared to 2002. This reflected subscriber
  growth of 13.2% and higher average revenue per unit (ARPU).
       Despite continued competitive pressures, net additions
  of 514,000 in 2003 were up 62,000 over 2002. Improved customer satisfaction
  suggests that our quality of service, and price and value of our offerings are
  key drivers to this growth.
       The total number of cellular and PCS subscribers
  was 4,412,000 at the end of 2003. Including paging subscribers, the total number
  of wireless subscribers was 4,936,000 at the end of 2003.
       80% of the net subscribers added in 2003 were
  on post-paid rate plans. At December 31, 2003, 76% of our total cellular and
  PCS subscribers were on post-paid plans, up from 75% at the end of 2002.
       Total ARPU increased $1 to $48 per month in 2003,
  compared to 2002. This reflected a higher post-paid ARPU and an increase in
  post-paid subscribers as a percentage of total subscribers. Increases in revenues
  from value-added services, such as Message Centreand Call Display,
  long distance and data services, as well as higher usage, led to a $1 per month
  increase in post-paid ARPU in 2003, compared to 2002. Prepaid ARPU was $12 per
  month in 2003, unchanged from 2002.





Blended churn improved
  to 1.4% per month in 2003 from 1.7% in 2002. Post-paid churn improved 0.2% to
  1.3% in 2003, compared to 2002.

**Churn**

|Churn
        Churn measures the rate at which
          existing subscribers cancel their service. Lower churn reduces the cost
          incurred to maintain or grow the existing subscriber base and leads
          to improved profitability.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Strong growth in consumer data revenue offset
  by weakness in enterprise and wholesale markets Data revenues increased 0.6% or $21 million
  to $3,791 million in 2003, compared to 2002. This was mainly because of continued
  softness in the business market. The Price Cap decision led to a $27 million
  decline in data revenues.
       Consumer data revenue grew 20.7% in 2003, compared
  to 2002. This reflected strong growth in the number of Sympatico subscribers. 
       Business data revenues increased 0.5% in 2003,
  compared to 2002. This reflected continued softness in the market as well as
  a more disciplined approach to acquiring customers in the later part of 2003
  to increase profitability. Business data revenues were also negatively affected
  by price competition, the Price Cap decision and a shift in product mix from
  legacy data services to emerging data services. Declines in legacy service revenue
  were partly offset by growth in high-speed Internet access service for small
  and medium-sized business customers, and by growth in IP/broadband and managed
  network services. 
       Wholesale data revenues declined 16.2% in 2003,
  compared to 2002, as this business remained weak due to price and volume drivers,
  as well as being negatively impacted by the Price Cap decision.



Solid growth in high-speed Internet access subscribers The number of high-speed Internet access
  subscribers increased 372,000 to 1,482,000 in 2003. The total number of dial-up
  customers declined to 869,000 at the end of 2003, compared to 957,000 at the
  end of 2002. Bell Canada added 203,000 new subscriptions of Sympatico value-added
  services such as Desktop Anti-virusand Desktop Firewallin 2003,
  for a total of 287,000 at the end of 2003.
       Bell Canada continues to develop and offer exclusive
  online content to attract and retain high-speed Internet access customers. Exclusive
  content provided in 2003 included the Bell Sympatico Concert Tour series, which
  featured concert webcasts from many of Canadas top recording artists,
  and NHL Snapshot, which featured summaries of hockey games.



DTH satellite television revenues grew 19.3% DTH satellite television revenues increased
  19.3% or $123 million to $761 million in 2003, compared to 2002. This growth
  was driven by increases in the number of subscribers and average revenue per
  subscriber (ARPS). Bell ExpressVus customer base grew 6.4% to 1,387,000
  in 2003. This was an estimated 14% share of the combined DTH and cable market.
       Bell ExpressVu had 83,000 net additions in 2003.
  It acquired more than 75% of all new Canadian DTH subscribers, increasing its
  DTH market share to 63.1%. Net additions in 2003 were down from 235,000 achieved
  in 2002. This reflected a significant slowdown in the digital television market
  in general, price increases implemented earlier in the year and ongoing anti-piracy
  initiatives. 
       In 2003, Bell ExpressVu focused on acquiring higher
  quality subscribers by implementing new anti-piracy initiatives. Specific point-of-sale
  initiatives, such as obtaining customer photo identification and credit card
  information may have negatively affected the rate of subscriber growth. In addition,
  Bell ExpressVu introduced one and two-year terms to improve customer retention
  and to further enhance the quality of its subscriber base. This is expected
  to improve long-term profitability. 
       ARPS increased $2 to $46 per month in 2003, compared
  to 2002. This increase reflected the $2.99 system access charge for all customers,
  which came into effect April 28, 2003, and the $2 to $3 rate increase on specific
  programming packages that was introduced on February 1, 2003. This was partly
  offset by lower pay-per-view revenues.

|                                            
|--------------------------------------------
|38                                          
|                                            
|MANAGEMENTS
        DISCUSSION AND ANALYSIS
|                                            



Churn increased
  to 1.1% in 2003 from 1.0% in 2002. This was a result of the rate increases introduced
  earlier in the year and new anti-piracy initiatives that started in the third
  quarter of 2003.

Terminal sales and other revenues Terminal sales and other revenues declined
  19.8% or $254 million to $1,028 million in 2003, compared to 2002. This decline
  was mainly from reductions in wholesale international long distance minutes,
  lower voice terminal equipment sales and lower third-party billing related to
  network installation, particularly in the fourth quarter. The wholesale unit
  intentionally exited certain contracts for international switched minutes that
  had minimal margins.

Bell Globemedia

Strong TV ad revenues partly offset by slower
  print advertising market Bell Globemedias revenues increased
  5.7% or $73 million to $1,363 million in 2003, compared to 2002. This increase
  was driven by strong growth in television advertising revenues, partly offset
  by a slower print advertising market.
       CTV maintained a strong television schedule throughout
  the year. Television advertising revenues increased 15% in 2003, compared to
  2002. This was the result of strong ratings and a solid television advertising
  market. Print
  advertising declined 2% in 2003, compared to 2002. Markets for national and
  classified advertising were down significantly in the latter part of the year,
  particularly in the automotive sector. The
  Globe and Mail maintained its strong paid weekday circulation. It had a 29%
  lead over the National Post based on an Audit Bureau of Circulation(1)report for the 12 months ended September 30, 2003.



BCE Emergis

BCE Emergis revenues declined 8.7% BCE Emergis revenues declined 8.7%
  or $30 million to $316 million in 2003, compared to 2002. The decline was mainly
  from lower revenues from the distribution agreement with Bell Canada for legacy
  products and from other non-core and exited products.



BCE Ventures

BCE Ventures revenues increased 14.5% or $154
  million to $1,218 million in 2003, compared to 2002. This was mainly a result
  of revenue growth at CGI.
       In 2003, BCEs share of CGIs revenues
  increased 19.7% in 2003, compared to 2002. This was mainly driven by its acquisition
  of Cognicase in January 2003.
       Telesats revenues increased 5.5% in 2003,
  compared to 2002. This was mainly a result of placing the Nimiq 2 satellite
  in service in early 2003.

Revenue outlook for 2004

In 2004, we expect the overall Canadian telecom
  market to grow in line with the Canadian gross domestic product (GDP), which
  is expected to grow by about 3%. As a result, we are targeting only modest revenue
  growth for BCE in 2004 similar to our revenue growth in 2003, excluding the
  revenues from the directories business in 2002.
       We are targeting higher revenue growth in the
  Bell Canada consumer segment than GDP growth. We expect solid increases in the
  number of customer connections, including growth in wireless, DSL high-speed
  Internet access and DTH satellite television services.
       We are targeting flat to slightly positive revenue
  growth in the Bell Canada business segment. Revenue growth from small and medium-sized
  business customers should be largely offset by flat to slightly negative revenue
  growth from enterprise customers.

|Operating income    |       |   |       |   |                  |  
|------------------- | ----- | - | ----- | - | ---------------- | -
|                   
|                    |       |   |       |   |                  |  
|                    | 2003  |   | 2002  |   | %
        change |  
|                   
|Bell Canada segment | 3,836 |   | 3,548 |   | 8.1              | %
|Bell Globemedia     | 167   |   | 110   |   | 51.8             | %
|BCE Emergis         | (69   | ) | (206  | ) | 66.5             | %
|BCE Ventures        | 221   |   | 166   |   | 33.1             | %
|Corporate and other | (103  | ) | (199  | ) | 48.2             | %
|                   
|Operating income    | 4,052 |   | 3,419 |   | 18.5             | %
|                   

Operating income
  increased 18.5% or $633 million to $4,052 million in 2003, compared to 2002.
  The increase was mainly from lower restructuring and other charges, and higher
  EBITDA. This was partly offset by higher amortization expense and the net benefit
  plan cost.

(1)The Audit Bureau of Circulation
  is a not-for-profit organization that audits circulation figures.

|                                          
|------------------------------------------
|www.bce.ca                                
|                                          
|MANAGEMENTS DISCUSSION
      AND ANALYSIS
|                                          



|EBITDA              |       |   |       |   |          |   
|------------------- | ----- | - | ----- | - | -------- | --
|                   
|                    |       |   |       |   |          |   
|                    | 2003  |   | 2002  |   | % change |   
|                   
|Bell Canada segment | 7,001 |   | 7,079 |   | (1.1     | )%
|Bell Globemedia     | 233   |   | 180   |   | 29.4     | % 
|BCE Emergis         | 15    |   | (29   | ) |         |   
|BCE Ventures        | 347   |   | 287   |   | 20.9     | % 
|Corporate and other | (170  | ) | (162  | ) | (4.9     | )%
|                   
|EBITDA              | 7,426 |   | 7,355 |   | 1.0      | % 
|                   

BCEs EBITDA increased 1.0%. Excluding
  directories business and Price Cap decision, EBITDA would have increased 6.3% BCEs consolidated EBITDA increased
  1.0% or $71 million to $7,426 million in 2003, compared to 2002. Growth was
  driven by gains at Bell Globemedia, BCE Emergis and BCE Ventures, which offset
  EBITDA decreases at the Bell Canada segment. The Bell Canada segments
  EBITDA was lower in 2003 because of the sale of the directories business in
  November 2002 and the Price Cap decision. Excluding the results of our directories
  business in 2002 and the effect of the Price Cap decision in the first five
  months of 2003, BCEs EBITDA would have increased 6.3%.



Bell Canada segments EBITDA decreased
  1.1%. Excluding directories business and Price Cap decision, EBITDA would have
  increased 4.3% The Bell Canada segments EBITDA
  declined 1.1% or $78 million to $7,001 million in 2003, compared to 2002. This
  reflected growth of 4.3% or $294 million in EBITDA from our continuing businesses
  (which exclude the directories business we sold in November 2002), which was
  more than offset by a decrease of $311 million from the sale of our directories
  business and a decrease of $61 million from the Price Cap decision.
       The increase of $294 million in EBITDA from our
  continuing businesses reflected higher wireless, Internet access and DTH satellite
  television revenues, a continued focus on productivity, lower acquisition costs
  related to lower levels of gross additions (DTH in particular) and a greater
  emphasis on more profitable contracts within the enterprise and wholesale business
  units.
       Our productivity improvement program reduces the
  cost per unit of various processes and materials required throughout the company.
  By constantly focusing on unit cost reduction, the large volumes involved in
  our operations lead to significant productivity improvements. The processes
  and materials used in our operations are generally used to:

- acquire customers; for example, sales activities,
    commissions and equipment sold
- serve existing customers; for example, help
    desk support, equipment maintenance and repair and billing
- provide back-office support functions; for example,
    finance, human resources and communications.

We achieve unit
  cost reductions in many ways. These include:

- negotiating lower prices from various external
    providers of equipment, software, supplies and services
- optimizing operational processes based on current
    business needs and the latest IS/IT capabilities
- better use of economies of scale.

Our 2003 program
  achieved cost savings in many of the same areas as our 2002 program. These included
  call centres, field services, supply chain, and customer provisioning and servicing
  of new services, such as consumer high-speed Internet access and IP/broadband. 
       In addition to taking costs out of the business,
  our various productivity initiatives are simplifying how customers deal with
  us. Initiatives such as our interactive voice-response system, Emily,and
  specialized call centre queues, which provide customers who are moving with
  a single point of contact for all their Bell Canada services, contribute to
  our productivity gains while improving customer service.
       Renegotiating collective agreements could result
  in higher labour costs and work disruptions, including work stoppages or work
  slowdowns. Labour disruptions could also result in reduced revenues. 
       Wireless EBITDA increased 22% or $164 million
  to $918 million in 2003, compared to 2002. This reflected higher revenues from
  gains in subscribers and an improvement in post-paid ARPU. This was partly offset
  by higher customer acquisition costs as a result of more customer activations
  in 2003. 
       Our wireless EBITDA margin increased to 36% in
  2003 from 34% in 2002. This increase reflected the positive effects of a larger
  customer base, higher ARPU and our initiatives to manage handset upgrades through
  a more disciplined response to competitive pressures.
       Wireless cost of acquisition (COA) was $426
  per gross activation in 2003, an improvement of 0.7% or $3 per gross activation,
  compared to 2002. This was mainly driven by reduced marketing and advertising
  expenses related to higher levels of gross additions and higher direct channel
  sales, which are more cost effective for us.



|                                            
|--------------------------------------------
|40                                          
|                                            
|MANAGEMENTS
        DISCUSSION AND ANALYSIS
|                                            

Bell ExpressVus
  EBITDA loss of $45 million was a significant improvement from an EBITDA loss
  of $176 million in 2002. This improvement was driven by decreased subscriber
  acquisition costs related to lower gross activations, improved ARPS from rate
  increases introduced earlier in the year and ongoing cost controls.
       Bell ExpressVus COA per gross activation
  was $671 in 2003, down from $690 in 2002. This reflected the benefit of a stronger
  Canadian dollar because we buy our set-top boxes in U.S. dollars. This was partly
  offset by more customers who bought second receivers and costs related to a
  promotion for free installation.

Strong EBITDA growth at Bell Globemedia Bell Globemedias EBITDA increased
  29% or $53 million to $233 million in 2003, compared to 2002. This gain was
  from increased EBITDA from television operations as a result of an increasing
  revenue base, cost savings from the restructuring of Bell Globemedias
  interactive operations and ongoing cost controls in the print operations.



BCE Emergis EBITDA improves BCE Emergis contributed EBITDA of $15
  million in 2003, an increase of $44 million from 2002. This included stock compensation
  expense of $7 million in 2003, compared to $6 million in 2002. The improvement
  also reflects continued success in controlling costs.



Below EBITDA income and expenses

The table below is a reconciliation of EBITDA to
  net earnings applicable to common shares.

|                                                 
|-------------------------------------------------
|                                                 
|                                                 
|EBITDA                                           
|Amortization expense                             
|Net benefit plans (cost) credit                  
|Restructuring and other charges                  
|                                                 
|Operating income                                 
|Other income                                     
|Impairment charge                                
|Interest expense                                 
|                                                 
|Pre-tax earnings from continuing
      operations
|Income taxes                                     
|Non-controlling interest                         
|                                                 
|Earnings from continuing operations              
|Discontinued operations                          
|                                                 
|Net earnings                                     
|Dividends on preferred shares                    
|Premium on redemption of preferred
      shares  
|                                                 
|Net earnings applicable to common
      shares   
|                                                 

Amortization expense

|Amortization
        expenseThe 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.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Amortization
  expense increased 2.1% or $65 million to $3,147 million in 2003, compared to
  2002. 
       The following activities increased our amortization
  expense:

- an increase in assets that resulted from capital
    expenditures, the creation of Bell West in April 2002 and CGIs acquisition
    of Cognicase in January 2003
- the completion of the purchase price allocation
    relating to the repurchase of SBCs 20% indirect interest in Bell Canada.
    This increased our assets (customer relationships) by $603 million.
- the consolidation of $88 million in capital
    assets of a shared services entity, starting on July 1, 2003.

The following activities
  decreased our amortization expense:

- the sale of the directories business in November
    2002
- the full amortization of Telesats Anik
    E satellites in 2002.

Outlook for 2004 We expect a modest increase in amortization
  expense in 2004 as a result of the investments in capital assets we have made
  over the past few years. We plan to maintain our capital spending in 2004 at
  an amount similar to 2003.

|                                          
|------------------------------------------
|www.bce.ca                                
|                                          
|MANAGEMENTS DISCUSSION
      AND ANALYSIS
|                                          

Net benefit plans cost

|Net
        benefit plansWe maintain plans that provide
        two types of benefits:
      pension benefits  we are responsible
            for adequately funding these plans as entitlements are earned. We
            make contributions based on actuarial methods permitted by the pension
            regulatory bodies. Because most of our plans have a surplus, we have
            not had to make any significant contributions in the past several
            years.
          other retirement and post-employment
            benefits  we do not generally fund these benefit plans in advance.
            We make contributions every year as actual benefit payments are made.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
  amount of the net pension benefit plans (cost) credit in a year primarily depends
  on:

- the return on pension plan assets expected 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 that calculated
    using our accounting assumptions. We amortize this into earnings over time.

The net benefit
  plans cost was $175 million in 2003, compared to a net benefit plans credit
  of $33 million in 2002.
       Poor capital market conditions resulted in an
  actual rate of return on plan assets of negative 6% in 2002. This created an
  actuarial loss, which contributed to approximately two-thirds of the change
  from a credit to a cost. The remaining one-third reflected a reduction in our
  assumption of expected long-term return on plan assets to 7.5% in 2003 from
  8.3% in 2002. We made this change based on a review of market trends and our
  long-term outlook for the investment performance of our pension assets.
       Our main pension plan had a surplus of approximately
  $600 million on a solvency basis at December 31, 2003. The actual return on
  our pension plan assets was approximately 14.6% in 2003.

Outlook for 2004 We are anticipating an increase
  in the net benefit plans cost in 2004. The most recent actuarial valuation reflects
  a higher accrued benefit obligation. We expect that this will contribute to
  the increase in the net benefit plans cost in 2004. This should be partly offset
  by the effect of the positive fund performance in 2003, which resulted in an
  actuarial gain and increased the fair value of plan assets. Based on a review
  of market trends and our investment outlook, we have maintained our assumption
  of the long-term return on plan assets at 7.5% for 2004.

Restructuring and other charges

|Restructuring
        and other chargesRestructuring and other charges
        include various operating expenses that are not directly related to the
        operating revenues generated during the year. Examples are costs related
        to streamlining initiatives, asset write-downs and other types of charges.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2003Streamlining and other charges at BCE
  Emergis BCE Emergis recorded a pre-tax charge
  of $38 million ($21 million after taxes and non-controlling interest) in the
  fourth quarter of 2003. This included restructuring charges of $22 million and
  other charges of $16 million.
       The restructuring charges will be incurred as
  BCE Emergis streamlines its organizational structure. These costs include employee
  severance and other employee costs. At December 31, 2003, the unpaid balance
  of this restructuring provision was $21 million. The restructuring is expected
  to be complete in 2004.
       Other charges consisted of asset write-downs in
  BCE Emergis remaining businesses.

Restructuring of Xwave Solutions Inc. Aliant recorded a pre-tax restructuring
  charge of $15 million ($4 million after taxes and non-controlling interest)
  in 2003. This was a result of a restructuring at its subsidiary, Xwave Solutions
  Inc. Costs associated with the restructuring include severance and related benefits,
  technology lease cancellation penalties and real estate rationalization costs.
  At December 31, 2003, the unpaid balance of this restructuring provision was
  $6 million. The restructuring is expected to be complete in 2004.

Bell Canada charges In 2003, Bell Canada recorded charges
  of $65 million relating to various asset write-downs and other provisions. These
  charges were offset by a credit of $66 million relating to the reversal of the
  restructuring charges recorded in 2002, which were no longer necessary because
  fewer employees were terminated than expected. This was due to an increased
  redeployment of employees within Bell Canada.

2002Streamlining and other charges at Bell
  Canada Bell Canada recorded a pre-tax charge
  of $302 million in the fourth quarter of 2002 ($190 million after taxes). This
  included restructuring charges of $232 million and other charges of $70 million.
       The restructuring charges were mainly from streamlining
  Bell Canadas management, line and other support functions. They included
  severance for approximately 1,700 employees, enhanced pension benefits and other
  employee costs. The restructuring was largely complete in 2003.
       Other charges consisted mainly of various accounts
  receivable write-downs relating to billing adjustments and unreconciled balances
  from previous years that were identified in 2002.

|                                            
|--------------------------------------------
|42                                          
|                                            
|MANAGEMENTS
        DISCUSSION AND ANALYSIS
|                                            

Write-off of deferred costs BCE Inc. recorded a pre-tax charge
  of $93 million ($61 million after taxes) in the fourth quarter of 2002. This
  represented a write-off of deferred costs relating to various convergence initiatives
  after an analysis indicated that it was unlikely that these costs would be recovered.

Pay equity settlement On September 25, 2002, the members
  of the Canadian Telecommunications Employees Association (CTEA) ratified
  a settlement reached between the CTEA and Bell Canada relating to the 1994 pay
  equity complaints that the CTEA had filed on behalf of its members before the
  Canadian Human Rights Commission. The settlement included a cash payout of $128
  million and related pension benefits of approximately $50 million.
       As a result of the settlement, Bell Canada recorded
  a charge of $79 million in the third quarter of 2002 ($37 million after taxes
  and non-controlling interest). The charge is equal to the $128 million cash
  payout, less a previously recorded provision. We are deferring and amortizing
  the related pension benefits into earnings over the estimated average remaining
  service life of active employees and the estimated average remaining life of
  retired employees.

Write-down of Bell Canadas accounts
  receivable At the same time it was developing
  its new billing system, Bell Canada adopted a new and more precise method for
  analysing receivables by customer and by service line. This method allows it
  to more accurately determine the validity of amounts that customers owe to Bell
  Canada.
       The analysis indicated that a write-down of accounts
  receivable of $272 million ($142 million after taxes and non-controlling interest)
  was appropriate at June 30, 2002.
       Because these amounts came from legacy billing
  systems and processes, Bell Canada carried out a detailed review of billings
  and adjustments for the period from 1997 to 2002. It determined that these amounts
  were the cumulative result of a series of individually immaterial events and
  transactions relating to its legacy accounts receivable systems dating back
  to the early 1990s.

Streamlining and other charges at BCE Emergis BCE Emergis recorded a pre-tax charge
  of $119 million in the second quarter of 2002 ($63 million after taxes and non-controlling
  interest). This included restructuring charges of $95 million and other charges
  of $24 million.
       All of these charges were mainly from streamlining
  BCE Emergis services and reducing its operating costs. They consisted
  of the write-off of certain assets, severance and other employee costs, contract
  settlements and costs of leased properties no longer in use. The charges were
  reduced by the proceeds of disposition of certain exited activities. The restructuring
  was complete in 2003.

Other income

|Other
        incomeOther income includes income that
        we receive from activities that are not part of our regular business,
        such as:
      net gains on investments, including
            gains or losses when we dispose of, write down or reduce our ownership
            in investments
          interest income on our cash and cash
            equivalents
          foreign currency gains (losses)
          other items, including equity in net earnings
            (losses) in significantly influenced companies and miscellaneous income.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                        
|------------------------
|                        
|                        
|Net gains on investments
|Interest income         
|Foreign currency gains  
|Other                   
|                        
|Other income            
|                        

Net gains on investments In 2003, our net gains on investments
  of $76 million were mainly from:

- a $120 million gain from the sale of a 3.66%
    interest in the directories business for net proceeds of $135 million in cash
    in the fourth quarter. Bell Canadas retained interest in the directories
    business is 3.24%.
- a $44 million loss from the write-down of a
    number of our cost-accounted investments.

In 2002, our net gains
  on investments of $2,414 million were mainly from:

- selling the directories business ($2.3 billion)
    in the fourth quarter
- selling a 37% interest in each of Télébec
    and Northern Telephone when the Bell Nordiq Income Fund was created ($222
    million) in the second quarter
- writing down our cost-accounted investment in
    Nortel ($98 million) in the fourth quarter.

|                                          
|------------------------------------------
|www.bce.ca                                
|                                          
|MANAGEMENTS DISCUSSION
      AND ANALYSIS
|                                          

Interest income Interest income was $5 million higher
  in 2003, compared to 2002. This reflected slightly higher average cash balances.
  The retained cash on hand from the sale of the directories business in November
  2002 and the net cash raised in 2003 from operating and financing activities
  contributed to the increase in average cash balances.

Foreign currency gains

|Foreign
        currency gains (losses)We recognize foreign currency gains
        on our U.S. dollar denominated debt when the Canadian dollar strengthens
        compared to the U.S. dollar. We recognize foreign currency losses on our
        U.S. dollar denominated debt when the Canadian dollar weakens compared
        to the U.S. dollar.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In
  April 2003, we entered into forward contracts to hedge U.S.$200 million of long-term
  debt at Bell Canada that had not been previously
  hedged. This removed the foreign currency risk on the principal amount of that
  debt, which minimized the effect of foreign exchange for the rest of the year.

Other We recorded a $30 million write-down
  of deferred debt issuance costs relating to the early retirement of credit facilities
  in 2002.

Impairment charge In the fourth quarter of 2002, we completed
  our annual impairment test for goodwill for all of our reporting units. As a
  result, we recognized a charge of $765 million to pre-tax earnings ($527 million
  after non-controlling interest) relating to impaired goodwill of reporting units
  in Bell Globemedia ($715 million) and Aliant ($50 million). In each case, the
  goodwill was written down to its estimated fair value, which was determined
  based on estimates of discounted future cash flows and confirmed by market-related
  values.
       The main factor contributing to the impairment
  at Bell Globemedia was a revised estimate of future cash flows, which reflected
  managements decision to scale back its trials in convergence products
  and other non-core businesses. Market conditions for the media business also
  contributed to the impairment.
       The write-down at Aliant was a result of poor
  market conditions in the information technology business, which led to lower
  than expected performance.

Interest expense

|Interest
        expenseOur debt structure consists of
        a combination of short-term and long-term debt. The interest rate on our
        short-term debt is usually variable. The interest rate on our long-term
        debt is usually fixed.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Interest
  expense declined $31 million to $1,093 million in 2003, compared to 2002. This
  reflected the $1.8 billion of debt repayments in 2003 and the refinancing of
  some of our debt at lower interest rates.
       Also contributing to the decline was the completion
  of the purchase price allocation relating to the repurchase of SBCs 20%
  indirect interest in Bell Canada. This resulted in a premium of $165 million
  on long-term debt. We are amortizing the premium over the remaining terms of
  the long-term debt as a reduction to interest expense.

Outlook for 2004 We expect a further decrease in
  interest expense in 2004 because we significantly reduced our debt in 2003 and
  we refinanced some of our debt at lower rates.

Income taxes Income taxes declined 28% or $447 million
  to $1,136 million in 2003, compared to 2002. The decline was mainly from lower
  pre-tax earnings and the reduction in the statutory income tax rate to 35.4%
  in 2003 from 37.4% in 2002.
       In December 2003, the Ontario government enacted
  tax changes that eliminated the previous reductions in corporate tax rates to
  11% and increased them to 14% for 2004 and later years. As a result, we recalculated
  our future income tax balances using the new rates. This resulted in an adjustment
  of approximately $33 million to net earnings in 2003. We recorded $14 million
  as income tax expense and $19 million as non-controlling interest.
       As a result of the sale of its U.S. Health operations,
  BCE Emergis wrote down $18 million of future income tax assets relating to its
  other U.S. subsidiaries.
       The Canadian statutory rate that applies to us
  is currently set at 34.3% for 2004. The decrease from 2003 relates to reductions
  in federal corporate tax rates, partly offset by the increase in the Ontario
  tax rate.

Non-controlling interest

|Non-controlling
        interestThe non-controlling interest in
        the statements of operations reflects the percentage of a subsidiary that
        we do not own multiplied by the amount of the subsidiarys after-tax
        earnings.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Non-controlling
  interest decreased $411 million to $191 million in 2003, compared to 2002. This
  decline was a result of the repurchase of SBCs 20% indirect interest in
  Bell Canada in 2002. It was partly offset by higher earnings at Bell Globemedia
  and lower operating losses at BCE Emergis in 2003.

|                                            
|--------------------------------------------
|44                                          
|                                            
|MANAGEMENTS
        DISCUSSION AND ANALYSIS
|                                            

Discontinued operations The table below is a summary of net gains
  (losses) on discontinued operations.

|                                                  
|--------------------------------------------------
|                                                  
|                                                  
|Teleglobe                                         
|Operating losses                                  
|Net gain on disposal                              
|BCI                                               
|Net loss on disposal                              
|Aliants emerging business
      segment          
|Operating losses                                  
|Net gain (loss) on disposal                       
|Aliants remote communications
      segment      
|Operating gains                                   
|Net gain on disposal                              
|BCE Emergis U.S. Health
      operations         
|Operating gains                                   
|Net loss on disposal                              
|                                                  
|Net gain (loss) from discontinued
      operations
|                                                  

Teleglobe We recorded a loss of $73 million
  in the second quarter of 2002 on the write-down of our interest in Teleglobe
  to its net realizable value, which we determined to be zero. This loss was in
  addition to the transitional goodwill impairment charge of $7,516 million to
  opening retained earnings as of January 1, 2002. 
       Effective May 15, 2002, we stopped consolidating
  Teleglobes financial results and started accounting for the investment
  at cost. On December 31, 2002, after obtaining court approval, we sold all of
  our common and preferred shares in Teleglobe to the court-appointed monitor
  for a nominal amount. The sale triggered approximately $10 billion of capital
  losses for tax purposes. We recorded a gain of $1,042 million, relating mainly
  to the tax benefit from:

- reinstating non-capital loss carryforwards that
    were previously used to offset gains incurred on the transactions related
    to the disposition of Nortel common shares in 2001
- applying a portion of the capital losses against
    the gain on the sale of the directories business in 2002.

The net gain of
  $39 million in the fourth quarter of 2003 relates mainly to the use of available
  loss carryforwards that were applied against taxes payable relating to Bell
  Canadas sale of a 3.66% interest in the directories business and Aliants
  sale of Stratos. Otherwise, the tax benefit associated with the remaining unused
  capital losses has not been reflected in the financial statements.

BCI We recorded a charge of $316 million
  in 2002, which represented a write-down of the investment in BCI to our estimate
  of its net realizable value.

Aliants emerging business segment Aliants emerging business segment
  mainly consisted of Aliants investments in iMagicTV Inc., Prexar LLC and
  AMI Offshore Inc. Almost all of these assets were sold as of December 31, 2003.

Aliants remote communications segment Aliants remote communications
  segment consisted of Aliants 53.2% investment in Stratos. In December
  2003, Aliant completed the sale of Stratos, after receiving the required regulatory
  approvals. Aliant received
  $340 million ($320 million net of selling costs) in cash for the sale. At the
  time of the sale, the net carrying value of Stratos net assets was $215
  million. Stratos had total assets of $696 million, including $52 million in
  cash and cash equivalents, and total liabilities of $372 million. The transaction
  resulted in a gain on sale of $105 million ($48 million after taxes and non-controlling
  interest).

BCE Emergis U.S. Health operations (US
  Health) In December 2003, BCE Emergis
  board of directors approved the sale of US Health for a total of U.S.$213 million
  in cash. The total price is subject to adjustments set out in the purchase agreement.
  BCE Emergis sold US Health in March 2004.
       The sale excluded BCE Emergis National Health
  Services Inc. subsidiary (NHS), which runs care management operations in the
  United States. BCE Emergis sold NHS in a separate transaction in March 2004
  for a total of U.S.$10 million in cash. At December
  31, 2003, the carrying value of US Healths net assets was $247 million.
  It had total assets of $254 million (including $9 million in cash and cash equivalents)
  and total liabilities of $7 million. The loss on the transaction was $87 million
  ($160 million after non-controlling interest and BCE Inc.s incremental
  goodwill in US Health), which was recorded in December 2003.

|                                          
|------------------------------------------
|www.bce.ca                                
|                                          
|MANAGEMENTS DISCUSSION
      AND ANALYSIS
|                                          

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, cash flows and liquidity.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2003 highlights

We executed on our priorities in 2003. By the end
  of the year we had:

- generated free cash flow of $1.6 billion. Approximately
    $800 million was from recurring sources.
- reduced our capital intensity to 16.7%. This
    was an improvement of 2.7% over 2002.
- reduced our net debt by approximately $2 billion
- improved our credit ratings.

Outlook for 2004

In 2004, we will continue to focus on financial
  discipline and execution. We are targeting to:

- deliver free cash flow of approximately $1 billion,
    mostly from recurring sources. This amount reflects targeted cash from operating
    activities of approximately $5.5 billion less capital expenditures, total
    dividends and other investing activities.
- reduce our overall net debt
- maintain Bell Canadas capital intensity
    at 17% to 18%.

Capital structure

|Capital
        structureCapital structure shows how much
        of our net assets are financed by debt and equity.
|--------------------------------------------------------------------------------------------------------------------



|                                                              
|--------------------------------------------------------------
|                                                              
|                                                              
|Debt due within one year                                      
|Long-term debt                                                
|Retractable preferred shares (1)                              
|Less: Cash and cash equivalents                               
|                                                              
|Total net debt                                                
|Non-controlling interest                                      
|Total shareholders equity                                    
|                                                              
|Total capitalization                                          
|                                                              
|Net debt to capitalization                                    
|                                                              
|Common shares outstanding at
      end of period (in millions)
|                                                              
|Stock options outstanding at
      end of period (in millions)
|                                                              

(1)On December 8, 2003, BCE Inc. announced
  that it would redeem all of its outstanding Series P retractable preferred shares
  for approximately $351 million, which it did on January 15, 2004. As a result,
  the amount outstanding at December 31, 2003 is presented as debt due within
  one year.

Net debt to capitalization ratio

|Net
        debt to capitalization ratioThe net debt to capitalization ratio
        is a key measure that we use to assess our financial condition. It shows
        how much net debt (short-term and long-term debt, net of cash) we have
        in relation to our capital (total net debt, non-controlling interest and
        shareholders equity).
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our net
  debt to capitalization ratio was 43.8% at the end of 2003, a significant improvement
  from 48.4% at the end of 2002. This reflected improvements in net debt and total
  shareholders equity. Net debt
  improved $1,950 million to $13,216 million in 2003. This was mainly from:

- $1,626 million of free cash flow in 2003
- Bell Canadas sale of its 89.9% ownership
    in Certen Inc. (Certen). This resulted in an overall reduction of $135 million
    in net debt.
- net cash proceeds of $320 million on the sale
    of Aliants 53.2% interest in Stratos.

These were partly
  offset by:

- the completion of the purchase price allocation
    relating to the repurchase of SBCs 20% indirect interest in Bell Canada.
    This resulted in a premium on long-term debt of $165 million.
- the consolidation of $122 million of debt relating
    to a newly consolidated shared services entity, effective July 1, 2003.

Total shareholders
  equity increased $965 million to $13,580 million in 2003. This was mainly a
  result of $647 million of net earnings in excess of the dividends declared on
  common and preferred shares in 2003, and an increase of $389 million in common
  and preferred shares.





|                                            
|--------------------------------------------
|46                                          
|                                            
|MANAGEMENTS
        DISCUSSION AND ANALYSIS
|                                            

Summary of cash flows

The table below is a summary of the flow of cash
  into and out of BCE in 2003 and 2002.

|                                                                           
|---------------------------------------------------------------------------
|                                                                           
|                                                                           
|Cash from operating activities                                             
|Capital expenditures                                                       
|Other investing activities                                                 
|Preferred dividends                                                        
|Dividends paid by subsidiaries to
      non-controlling interest           
|                                                                           
|Free cash flow from operations,
      before common dividends              
|Common dividends                                                           
|                                                                           
|Free cash flow from operations,
      after common dividends               
|Business acquisitions                                                      
|Business dispositions                                                      
|Change in investments accounted
      for under the cost and equity methods
|Net issuance of equity instruments                                         
|Net issuance (repayment) of debt
      instruments                         
|Financing activities of subsidiaries
      with third parties              
|Cash provided by (used in) discontinued
      operations                   
|Other                                                                      
|                                                                           
|Net increase (decrease) in cash
      and cash equivalents                 
|                                                                           

|Free
        cash flowFree cash flow is a key financial
        measure we use to assess our performance. It is derived from the statement
        of cash flows. A positive
        free cash flow means that we generated more cash from our operations than
        we needed to pay for capital expenditures, dividends and other investing
        activities.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Cash from operating activities Cash from operating activities increased
  37% or $1,637 million to $6,015 million in 2003, compared to 2002. This was
  mainly a result of the positive effect of changes in working capital and cash
  tax savings in 2003.
       We realized tax savings by using strategies to
  consolidate tax losses of BCE Inc., BCE Emergis and Bell Canada Holdings Inc.
  (BCH) with Bell Canadas current earnings. We also received cash tax refunds
  of $440 million in 2003, compared to $288 million of taxes paid on capital gains
  in 2002.

Capital expenditures

|Capital
        intensityCapital intensity is capital expenditures
        divided by operating revenues. It is a key financial measure that we use
        to assess our performance and that of our business units. Improving
        capital intensity is a key component to improved free cash flow. A positive
        trend over time means that we are becoming more efficient in using capital
        to generate growth in revenue and cash flows.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We continue
  to make investments to expand and update our networks, and to meet customer
  demand. Rigorous programs we have in place to manage capital spending prudently
  led to a reduction of 14.8% in capital expenditures in 2003, compared to 2002.
  This resulted in a decrease in our capital intensity ratio to 16.7% in 2003
  from 19.4% in 2002.
       The Bell Canada segments capital intensity
  ratio improved to 17.3% in 2003 from 19.8% in 2002. The Bell Canada segment
  accounted for 91% of our capital expenditures in 2003.

Other investing activities Cash from other investing activities was
  $64 million in 2003. This included:

- $83 million of proceeds from the early settlement
    of dividend rate swaps. These swaps hedged dividend payments on $510 million
    of BCE Inc. Series AA preferred shares and $510 million of BCE Inc. Series
    AC preferred shares.
- $68 million of insurance proceeds that Telesat
    and Bell ExpressVu received for a malfunction on the Nimiq 2 satellite.

These proceeds
  were partly offset by $87 million relating mainly to changes in long-term notes
  receivable and payments by Bell Globemedia relating to CRTC benefits owing on
  previous business combinations.

Dividends We paid a dividend of $1.20 per common
  share in 2003. This was the same as the dividend we paid in 2002. Total dividends
  paid on common shares increased to $1,029 million in 2003 from $999 million
  in 2002. This was the result of an increase in the average number of common
  shares outstanding to 920.3 million in 2003 from 847.9 million in 2002.
       The increase in common shares resulted from BCE
  Inc. issuing equity in 2002 to fund part of the repurchase price of SBCs
  20% indirect interest in Bell Canada.
       We realized a cash benefit of approximately $73
  million in 2003 because we issued treasury shares to fund BCE Inc.s dividend
  reinvestment plan instead of buying shares on the open market. Effective the
  first quarter of 2004, we will buy all of the shares needed for the dividend
  reinvestment plan on the open market to avoid dilution. This will eliminate
  any further cash benefits related to issuing treasury shares. Dividends
  paid on preferred shares were $61 million in 2003, up from $43 million in 2002.
  This was a result of the increase in the number of preferred shares outstanding.
  It was partly offset by the savings we realized from the dividend rate swap
  agreements we had in place. These swaps converted the fixed-rate dividends on
  some of our preferred shares to floating-rate dividends.
       Bell Canada stopped paying a dividend to SBC when
  BCE Inc. repurchased SBCs 20% indirect interest in Bell Canada in 2002.
  As a result, dividends paid by subsidiaries to third parties decreased $284
  million to $184 million in 2003, compared to 2002.

|                                          
|------------------------------------------
|www.bce.ca                                
|                                          
|MANAGEMENTS DISCUSSION
      AND ANALYSIS
|                                          

Business acquisitions We invested $119 million in business acquisitions
  in 2003. This consisted mainly of our proportionate share of the cash paid for
  CGIs acquisition of Cognicase in the first quarter, and Bell Canadas
  purchase of an additional 30% interest in Connexim, Limited Partnership in the
  fourth quarter, which increased its total interest to 100%.
       We invested $6.5 billion in business acquisitions
  in 2002. This consisted mainly of the repurchase of SBCs 20% indirect
  interest in Bell Canada for $6.3 billion ($1.3 billion in the third quarter
  and $5 billion in the fourth quarter).

Business dispositions We received $55 million for business dispositions
  in 2003. This related to Bell Canadas sale of its 89.9% ownership interest
  in Certen in the third quarter. Bell Canada received $89 million in cash, which
  was reduced by $34 million of Certens cash and cash equivalents at the
  time of sale.
       We received $3.2 billion for business dispositions
  in 2002. This consisted mainly of the net proceeds of approximately $2.8 billion
  from the sale of our directories business in the fourth quarter. Other business
  dispositions of $432 million included Bell Canadas sale of a 37% interest
  in each of Télébec and Northern Telephone to the Bell Nordiq Income
  Fund in the second quarter, and the sale of an office building in Montreal in
  the first quarter.

Change in investments accounted for under the
  cost and equity methods In the fourth quarter of 2003, Bell Canada
  sold a 3.66% interest in the directories business for net proceeds of $135 million
  in cash. Bell Globemedia sold its 14.5% interest in Artisan Entertainment Inc.
  for $24 million in cash in the fourth quarter of 2003.
       In the first quarter of 2002, Bell Globemedia
  bought a 40% interest in the TQS network and other television stations for $72
  million and sold its 12% interest in the History Channel for $18 million.

Equity instruments In the first quarter of 2003, BCE Inc.
  issued 20 million Series AC preferred shares for $510 million and redeemed 14
  million Series U preferred shares for $357 million, which included a $7 million
  premium on redemption.
       In 2002, BCE Inc. issued 85 million common shares
  to the public for $2 billion in the third quarter and 18 million common shares
  to SBC for $500 million ($250 million in each of the third and fourth quarters)
  as part of the financing for the repurchase of SBCs 20% indirect interest
  in Bell Canada. It also issued 20 million Series AA preferred shares for $510
  million in the first quarter and redeemed 12 million Series W preferred shares
  for $306 million in the first quarter, which included a $6 million premium on
  redemption.

Use of proceeds The table below updates the disclosure
  we previously made about how BCE Inc. was going to use proceeds from public
  financings carried out in 2003 (other than disclosure that proceeds were to
  be used for working capital).

|                                                                                                                                                                     
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Financing                                                                                                                                                            
|                                                                                                                                                                     
|Public offering of
      6,000,000
      Series AC preferred shares
      of BCE Inc. for $153 million                                                               
|                                                                                                                                                                     
|Distribution of 14,000,000 
      Series AC preferred shares 
      to the holders of 14,000,000 
      Series U preferred shares of 
      BCE Inc. for $357 million
|                                                                                                                                                                     

Debt instruments

|Debt
        instrumentsWe use a combination of long-term
        and short-term debt to finance our operations. Our short-term debt consists
        primarily 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.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We made
  $1.8 billion of debt repayments (net of issues) in 2003. These were mainly at
  Bell Canada, Bell Globemedia and BCE Inc. They were financed mainly with free
  cash flow of $1.6 billion generated in 2003 and net cash proceeds of $320 million
  from the sale of Stratos. 
       BCE Inc. had cash on hand of $714 million at December
  31, 2003. It used a portion of this to redeem all of its outstanding Series
  P retractable preferred shares on January 15, 2004 for $351 million. 
       On March 1, 2004, Bell Canada redeemed all of
  its outstanding Series DU debentures for $126 million. The original maturity
  date of these debentures was March 1, 2011. They had an interest rate of 9.45%. 
       The combined debt of BCE Inc. and Bell Canada
  makes up 95% of our total debt portfolio. The average annual interest rate on
  our total debt was between 7.0% and 8.0% in 2003 and in 2002.

|                                            
|--------------------------------------------
|48                                          
|                                            
|MANAGEMENTS
        DISCUSSION AND ANALYSIS
|                                            

Cash relating to discontinued operations Cash provided by discontinued operations
  was $364 million in 2003. This consisted mainly of net cash proceeds of $320
  million on Aliants sale of its 53.2% interest in Stratos.
       Cash used in discontinued operations was $889
  million in 2002. This consisted mainly of significant cash injections into Teleglobe
  and BCI.

Credit ratings

|*Credit
        ratings*
      The interest rates we pay are
        partly based on the quality of our credit ratings, all of which were investment
        grade at March 10, 2004. 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.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On May 13, 2003, Dominion Bond Rating Service (DBRS)
  removed the negative trend on BCE Inc.s long-term debt and preferred share
  credit ratings. On May 15, 2003, Moodys Investors Service, Inc. (Moodys)
  removed the negative trend on Bell Canadas and BCE Inc.s commercial
  paper and long-term debt credit ratings. The table below lists our key credit
  ratings at March 10, 2004.

|                            |                 
|--------------------------- | ----------------
|                            | BCE
        Inc.
|                            |                 
|                            | S&P             
|                           
|                            | A-1 (mid) /     
|Commercial paper            | stable          
|                           
|                            | A-1 (mid) /     
|Extendable commercial notes | stable          
|                           
|                            |                 
|Long-term debt              | A- / stable     
|                           
|                            |                 
|Preferred shares            | P-2 / stable    
|                           

Liquidity

|LiquidityOur ability to generate cash in the
        short term and in the long term, when needed, and to provide for planned
        growth and to fund development activities, depends on our sources of liquidity
        and on our cash requirements.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our plan is to generate enough cash from our operating
  activities to pay for capital expenditures and dividends. In other words, we
  are targeting to have positive free cash flow in the short term and in the long
  term.      We expect to
  repay contractual obligations maturing in 2004 and in the long term from cash
  on hand, from cash generated from our operations or by issuing new debt. Contractual
  obligations include long-term debt.

Cash requirements In 2004, we will need cash mainly for
  capital expenditures, dividend payments, the payment of contractual obligations
  and other cash requirements. This includes the financing of approximately $645
  million for the acquisition of MTSs 40% interest in Bell West.

Capital expenditures We spent $3.2 billion on capital expenditures
  in 2003. This equalled 16.7% of our revenues for the year. Our target is for
  Bell Canadas capital expenditures to be in the range of 17% to 18% of
  its total revenues in 2004.

Dividends We expect to pay quarterly dividends
  on BCE Inc.s common shares of approximately $280 million, based on the
  current dividend policy of the board of directors. This assumes that there are
  no significant changes to the number of outstanding common shares. These dividends
  equal $0.30 per common share, based on approximately 924 million common shares
  outstanding at December 31, 2003.

Contractual obligations The table below is a summary of our
  contractual obligations at December 31, 2003 that are due in each of the next
  five years and thereafter.

|                                               
|-----------------------------------------------
|                                               
|                                               
|Long-term debt (excluding capital
      leases)
|Notes payable and bank advances                
|Capital leases                                 
|Operating leases                               
|Commitments for capital expenditures           
|Other purchase obligations                     
|Other long-term liabilities                    
|                                               
|Total                                          
|                                               



|                                          
|------------------------------------------
|www.bce.ca                                
|                                          
|MANAGEMENTS DISCUSSION
      AND ANALYSIS
|                                          

Long-term debt and
  notes payable and bank advances include $194 million drawn under our committed
  credit facilities. They exclude $361 million of letters of credit. The total
  amount available under these committed credit facilities and under our commercial
  paper programs, including the amount currently drawn, is $2,841 million.      The imputed
  interest to be paid on capital leases is $135 million.
       Rental expense relating to operating leases was
  $368 million in 2003 and $356 million in 2002. 
       Our commitments for capital expenditures include
  investments to expand and update our networks, and to meet customer demand.
  Other purchase obligations consist mainly of contractual obligations under service
  contracts.      Other long-term
  liabilities included in the table relate to:

- Bell Canadas future payments over the
    remaining life of its contract with Certen for the development of Bell Canadas
    billing system. The total amount was $301 million at December 31, 2003.
- Bell Globemedias obligations relating
    to CRTC benefits owing on previous business combinations. These and other
    long-term liabilities were $130 million at December 31, 2003.

At December 31,
  2003, we had other long-term liabilities that were not included in the table.
  They consisted of an accrued employee benefit liability, future income tax liabilities,
  deferred revenue and gains on assets and various other long-term liabilities.
       We did not include the accrued employee benefit
  liability and future income tax liabilities because we cannot accurately determine
  the timing and amount of cash needed for them. This is because:

- future contributions to the pension plans depend
    largely on how well they are funded. This varies based on the results of actuarial
    valuations that are performed periodically and on the investment performance
    of the pension fund assets.
- future payments of income taxes depend on the
    amount of taxable earnings and on whether there are tax loss carryforwards
    available to reduce income tax liabilities.

We did not include
  deferred revenue and gains on assets because they do not represent future cash
  payments.

Agreement with MTS The agreement between Bell Canada
  and MTS to create Bell West included put and call options relating to MTSs
  40% interest in Bell West. On February 2, 2004, MTS exercised its option to
  sell its 40% interest in Bell West to Bell Canada for approximately $645 million
  in cash. The cash is payable at closing, which is expected to occur on or before
  August 3, 2004.
       Bell Canada will finance the purchase of MTSs
  40% interest in Bell West with cash on hand, from cash raised from operations
  or by issuing debt.

Other cash requirements

Our cash requirements may also be affected by the
  liquidity risks related to our contingencies, off-balance sheet arrangements
  and derivative instruments. We may not be able to quantify all of these risks.

Off-balance sheet arrangements Guarantees As a regular part of our business, we
  enter into agreements that provide for indemnification and guarantees to counterparties
  in transactions involving business dispositions, sales of assets, sales of services,
  purchases and development of assets, securitization agreements and operating
  leases.      The nature of
  almost all of these indemnifications prevents us from making a reasonable estimate
  of the maximum potential amount we could be required to pay counterparties.
  As a result, we cannot determine how they could affect our future liquidity,
  capital resources or credit risk profile. We have not made any significant payments
  under these indemnifications in the past. See Note 24 to the consolidated financial
  statements for more information.

Securitization of accounts receivable Bell Canada and Aliant have agreements
  in place under which they sold interests in pools of accounts receivable to
  securitization trusts for a total of $1,030 million in 2001. The main purpose
  of these agreements is to provide us with a less expensive form of financing.
  As a result, they are an important part of our capital structure and liquidity.
  If we did not have these agreements, we would have had to finance approximately
  $1,030 million by issuing debt or equity, either of which would have been more
  expensive for us. 
       The total accounts receivable that were sold must
  meet minimum performance targets. These are based on specific delinquency, default
  and receivable turnover ratio calculations, as well as minimum credit ratings.
  If these accounts receivable go into default, the full purchase price will have
  to be returned to the buyers. See Note 11 to the consolidated financial statements
  for more information.

|                                            
|--------------------------------------------
|50                                          
|                                            
|MANAGEMENTS
        DISCUSSION AND ANALYSIS
|                                            

Derivative instruments We periodically use derivative instruments
  to manage our exposure to interest rate risk, foreign currency risk and changes
  in the price of BCE Inc. common shares. We do not use derivative instruments
  for speculative purposes. Because we do not trade actively in derivative instruments,
  we are not exposed to any significant liquidity risks relating to them.
       The carrying value of the outstanding derivative
  instruments was a net liability of $138 million at December 31, 2003. Their
  fair values amounted to a net liability of $163 million. See Note 19 to the
  consolidated financial statements for more information.

Litigation We become involved in various claims
  and litigation as a regular part of our business. While we cannot predict the
  final outcome of claims and litigation that were pending at December 31, 2003,
  management believes that the resolution of these claims and litigation will
  not have a material and negative effect on our consolidated financial position
  or results of operation.
       You will find a more detailed description of the
  material claims and litigation pending at December 31, 2003 in the BCE 2003
  AIF and in Note 23 to the consolidated financial statements.

CRTC Price Cap decision The Price Cap decision made a number
  of changes to the rules governing local service in Canadas telecommunications
  industry. These rules will be in effect for four years.
       The CRTC has stated that it will initiate a Price
  Cap review in the final year of the regime and make modifications to the regulatory
  framework, as necessary. 
       One of the changes resulting from the Price Cap
  decision was a new mechanism, called the deferral account, which will be used
  to fund initiatives such as service improvements, reduced rates and/or rebates.
  We estimated our commitment relating to the deferral account to be approximately
  $160 million at December 31, 2003, which we expect to clear substantially in
  2004 by implementing various initiatives.

Sources of liquidity While we do not expect any cash shortfall
  in the foreseeable future, we believe that we could cover a shortfall through
  the financing facilities we have in place at this time.
       These financing facilities, along with our strengthening
  balance sheet, give us flexibility in carrying out our plans for future growth.
  We can supplement our liquidity sources, if necessary, by issuing additional
  debt or equity, or by selling non-core assets. We might do this to help finance
  business acquisitions or for contingencies.
       The table below is a summary of our outstanding
  lines of credit, bank facilities and commercial paper programs at December 31,
  2003.

|                             
|-----------------------------
|                             
|                             
|Commercial paper credit lines
|Other credit facilities      
|                             
|Total                        
|                             
|Drawn                        
|Undrawn                      
|                             

BCE Inc., Bell
  Canada and Aliant may issue notes under their commercial paper programs up to
  the amount of their supporting committed lines of credit. The total amount of
  these supporting committed lines of credit was $1.3 billion at December 31,
  2003.      BCE Inc.,
  Bell Canada and Aliant had no amounts outstanding under their commercial paper
  programs at December 31, 2003. 
       BCE Inc. and Bell Canada can issue Class E notes
  under their commercial paper programs. These notes are not supported by committed
  lines of credit and may be extended in certain circumstances. BCE Inc. may issue
  up to $360 million of Class E notes and Bell Canada may issue up to $400 million.
  BCE Inc. and Bell Canada had no Class E notes outstanding at December 31, 2003.      The drawn
  portion of our total credit facilities includes issued letters of credit of
  $361 million under our committed facilities.

|                                          
|------------------------------------------
|www.bce.ca                                
|                                          
|MANAGEMENTS DISCUSSION
      AND ANALYSIS
|                                          

RISKS THAT COULD AFFECT OUR BUSINESS

|This section describes
        general risks that could affect the BCE group of companies and specific
        risks that could affect BCE Inc. and each of our business segments.
      A risk is the possibility that an event might
        happen in the future that could have a negative effect on the financial
        condition, results of operations or business of one or more BCE companies.
        Part of managing our business is to understand what these potential risks
        could be and to minimize them where we can. Because
        no one can predict whether an event will happen or its consequences, the
        actual effect of any event on our business could be materially different
        from what we currently anticipate. In addition, this description of risks
        does not include all possible risks, and there may be other risks that
        we are currently not aware of.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

BCE group of companies

Our dependence on the Bell Canada segment The Bell Canada segment is our largest
  segment, which means our financial performance depends in large part on how
  well the Bell Canada segment performs financially. The risks that could affect
  the Bell Canada segment are more likely to have a significant impact on our
  financial condition, results of operations and business than the risks that
  affect our other segments.

Strategies and plans We plan to achieve our business objectives
  through various strategies and plans. For the Bell Canada segment, the strategy
  is to lead change in the industry and set the standard for IP-based communications
  while continuing to deliver on our goals of innovation, simplicity and service,
  and efficiency. The key elements of the Bell Canada segments strategies
  and plans include:

- evolving from multiple service-specific networks
    to a single IP-based network
- providing new services to meet customers
    needs by introducing innovative technologies, including VoIP, VDSL and IPTV
- maintaining and improving customer satisfaction
    by simplifying all areas of our customers experience, including call
    centres, billing and points of sale
- increasing the number of customers who buy multiple
    products by focusing our marketing and sales efforts by customer segment.
    This includes offering bundled services to consumers and service packages
    to businesses.
- lowering costs by improving efficiency in all
    areas of product and service delivery, including installation, activation
    and call centres.

Our strategic direction
  involves significant changes in processes, in how we approach our markets, and
  in products and services. These changes will require a shift in employee skills.
       The strategies and plans outlined above will require
  capital expenditures for their implementation. The timing and quantity of the
  returns from these investments are uncertain.
       If we are unable to achieve our business objectives,
  our financial performance, including our growth prospects, could be hurt. This
  could have a material and negative effect on our results of operations. At this
  time, we cannot determine the effect that moving to a single IP-based network
  could have on our results of operations.

Economic and market conditions Our business is affected by general economic
  conditions, consumer confidence and spending, and the demand for, and the prices
  of, our products and services. When there is a decline in economic growth, and
  in retail and commercial activity, there tends to be a lower demand for our
  products and services. During these periods, customers may delay buying our
  products and services, or reduce or discontinue using them.
       The slower pace of growth and the uncertainty
  in the global economy have reduced demand for some of our products and services,
  which has negatively affected our financial performance and may continue to
  negatively affect it in the future. In particular, weak economic conditions
  have led to:

- lower than expected growth in data revenue for
    the Bell Canada segment because of lower demand from business and wholesale
    customers
- pressure on business customers to reduce their
    capital expenditures and delay or defer communication system upgrades and
    expansion plans reducing revenues for the Bell Canada segment
- pressure on business customers to reduce operating
    expenses. This increases their tendency to negotiate contracts with lower
    unit prices for communications services, which reduces revenues for the Bell
    Canada segment.
- some reductions in the number of network access
    lines for the Bell Canada segment because of business failures, consolidations
    or business contractions.

Weak economic conditions
  may negatively affect our profitability and cash flows from operations. They
  could also negatively affect the financial condition and credit risk of our
  customers, which could increase uncertainty about our ability to collect receivables
  and potentially increase our bad debt expenses.

Increasing competition We face intense competition from traditional
  competitors, as well as from new entrants to the markets we operate in. We compete
  not only with other telecommunications, media, television and e-commerce service
  providers, but also with other businesses and industries. These include cable,
  software and Internet companies, a variety of companies that offer network services,
  such as providers of business information systems and system integrators, and
  other companies that deal with, or have access to, customers through various
  communications networks.

|                                          
|------------------------------------------
|52                                        
|                                          
|MANAGEMENTS
      DISCUSSION AND ANALYSIS
|                                          

Many of our competitors
  have substantial financial, marketing, personnel and technological resources.
  Other competitors have recently emerged, or may emerge in the future, from restructurings
  with reduced debt and a stronger financial position. This means that they could
  have more financial flexibility to price their products and services at very
  competitive rates.
       Competition could affect our pricing strategies
  and reduce our revenues and profitability. It could also affect our ability
  to retain existing customers and attract new ones. Competition puts us under
  constant pressure to improve, and invest in, customer service and to keep our
  prices competitive. It forces us to continue to reduce costs, manage expenses
  and increase productivity. This means that we need to be able to anticipate
  and respond quickly to the constant changes in our businesses and markets.
       We already have several domestic and foreign competitors,
  but the number of foreign competitors with a presence in Canada and large resources
  could increase in the future. In 2003, the Canadian government started a review
  of the foreign ownership restrictions that apply to telecommunications carriers
  and to broadcasting distribution undertakings (BDUs). Removing or easing the
  limits on foreign ownership could result in foreign companies entering the Canadian
  market by making acquisitions or investments. This could result in greater access
  to capital for our competitors or the arrival of new competitors with global
  scale, which would increase competitive pressure. Because the governments
  review has not been completed, it is impossible to predict the outcome or to
  assess how any recommendations may affect us.

Wireline and long distance We experience significant competition
  in long distance from dial-around providers, pre-paid card providers and others,
  and from traditional competitors, such as inter-exchange carriers and resellers.      Contracts
  for long distance services to large business customers are very competitive.
  Our pricing strategy is to offer prices that reflect the quality of our service
  and the volume and the characteristics of the traffic. Customers may choose
  to switch to competitors that offer very low prices to acquire market share
  and have little regard for the quality of service or impact on their earnings.
       We also face increasing cross-platform competition
  as customers substitute new technologies for traditional services. For example,
  our wireline business competes with wireless and Internet services, including
  chat services, instant messaging and e-mail. We expect to face competitive pressure
  from cable companies as they implement voice services over their networks and
  from other emerging competitors, including municipal electrical utilities and
  other VoIP providers. We expect these kinds of competition to intensify as growth
  in Internet and wireless services continues and new technologies are developed.
       Cross-platform competition will be increasingly
  intense as technologies, such as VoIP, improve and gain market acceptance. We
  have announced plans to launch our own VoIP initiative, but there is no assurance
  that it will attract a sustainable customer base. VoIP services are anticipated
  to take business away from our other products and services. If significant competition
  for VoIP develops, it could reduce our existing market share in local and long
  distance services, and could have a material and negative effect on our future
  revenues and profitability.
       VoIP technology does not require service providers
  to own or rent physical networks, which increases access to this market by other
  competitors. If competition from these service providers further develops, it
  could have a material and negative effect on our future revenues and profitability.
       Technology substitution, and VoIP in particular,
  has reduced barriers to entry that existed in the industry. This has allowed
  competitors with limited access to financial, marketing, personnel and technological
  resources to rapidly launch new products and services and to gain market share.
  This trend is expected to accelerate in the future, which could materially and
  negatively affect our financial performance.

Internet access Cable companies and independent
  Internet service providers have increased competition in the broadband and Internet
  access services business. Competition has led to pricing for Internet access
  in Canada that is among the lowest in the world.

Wireless The Canadian wireless telecommunications
  industry is also highly competitive. We compete directly with other wireless
  service providers that have aggressive product and service introductions, pricing
  and marketing, and with wireline service providers. We expect competition to
  intensify as new technologies, products and services are developed.

DTH satellite television Bell ExpressVu competes directly
  with another DTH satellite television provider and with cable companies across
  Canada. These cable companies have recently upgraded their networks, operational
  systems and services, which could improve their competitiveness. This could
  materially and negatively affect the financial performance of Bell ExpressVu.

|                                          
|------------------------------------------
|www.bce.ca                                
|                                          
|MANAGEMENTS DISCUSSION
      AND ANALYSIS
|                                          

Improving productivity and containing capital
  intensity We continue to implement several productivity
  improvements while containing our capital intensity. There could be a material
  and negative effect on our profitability if we do not continue to successfully
  implement these productivity improvements and manage capital intensity while
  maintaining the quality of our service. For example, we must reduce the price
  of certain services offered by the Bell Canada segment, that are subject to
  regulatory price caps, each year between 2002 and 2006. In addition, to remain
  competitive in some business data services that are not regulated, we have reduced
  our prices and may have to continue doing so in the future. The Bell Canada
  segments profits will decline if it cannot lower its expenses at the same
  rate. There could also be a material and negative effect on our profitability
  if market factors or other regulatory actions result in lower revenues and we
  cannot reduce our expenses at the same rate.
       Many productivity improvements require capital
  expenditures to implement systems that automate or assist in our operations.
  There is no assurance that these investments will be effective in delivering
  the planned productivity improvements.

Anticipating technological change

|We
        operate in markets that are experiencing constant technological change,
        evolving industry standards, changing client needs, frequent new product
        and service introductions, and short product life cycles.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our success will depend in large part on how well
  we can anticipate and respond to changes in industry standards and client needs,
  and how quickly and efficiently we can introduce new products, services and
  technologies, and upgrade existing ones.
       We may face additional financial risks as we develop
  new products, services and technologies, and update our networks to stay competitive.
  Newer technologies, for example, may quickly become obsolete or may need more
  capital than expected. Development could be delayed for reasons beyond our control.
  Substantial investments usually need to be made before new technologies prove
  to be commercially viable.
       Bell Canada is in the process of moving its core
  circuit-based infrastructure to IP technology. This may allow it to:

- offer integrated voice, data and video services
- offer a range of valuable network enabled business
    solutions to large business customers
- increase capital efficiency
- increase operating efficiency, including our
    efficiency in introducing and supporting services.

As part of this
  move, Bell Canada also plans to discontinue certain services that are based
  on circuit-based infrastructure. This is a necessary component of increasing
  capital and operating efficiencies. In some cases, this could be delayed or
  prevented by customers or regulatory actions. If Bell Canada cannot discontinue
  these services as planned, it will not be able to achieve improvements as expected.
       There is no assurance that we will be successful
  in developing, implementing and marketing new technologies, products, services
  or enhancements in a reasonable time, or that they will have a market. There
  is also no assurance that efficiencies will increase as expected. New products
  or services that use new or evolving technologies could make our existing ones
  unmarketable or cause their prices to fall.

Liquidity Our ability to generate cash and to
  maintain capacity to meet our financial obligations and provide for planned
  growth depends on our cash requirements and on our sources of liquidity.
       Our cash requirements may be affected by the risks
  associated with our contingencies, off-balance sheet arrangements and derivative
  instruments.      In general,
  we finance our capital needs in four ways:

- 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.

Financing through
  equity offerings would dilute the holdings of existing equity investors. An
  increased level of debt financing could lower our credit ratings, increase our
  borrowing costs and give us less flexibility to take advantage of business opportunities.
       Our ability to raise financing depends on our
  ability to access the capital markets and the syndicated commercial loan market.
  The cost of funding depends largely on market conditions, and the outlook for
  our business and our credit ratings at the time capital is raised. If our credit
  ratings are downgraded, our cost of funding could significantly increase. In
  addition, participants in the capital and syndicated commercial loan markets
  have internal policies limiting their ability to invest in, or extend credit
  to, any single borrower or group of borrowers or to a particular industry.
       BCE Inc. and certain of its subsidiaries have
  entered into renewable credit facilities with various financial institutions.
  They include facilities serving as back-up facilities for issuing commercial
  paper. There is no assurance that these facilities will be renewed at favourable
  terms.

|                                          
|------------------------------------------
|54                                        
|                                          
|MANAGEMENTS
      DISCUSSION AND ANALYSIS
|                                          

We need significant
  amounts of cash to implement our business plan. This includes cash for capital
  expenditures to provide our services, dividend payments and payment of our contractual
  obligations, including refinancing our outstanding debt.
       Our plan in 2004 is to generate enough cash from
  our operating activities to pay for capital expenditures and dividends. We expect
  to repay contractual obligations maturing in 2004 from cash on hand, from cash
  generated from our operations or by issuing debt. If actual results are different
  from our business plan or if the assumptions in our business plan change, we
  may have to raise more funds than expected from issuing debt or equity.      If we cannot
  raise the capital we need upon acceptable terms, we may have to:

- limit our ongoing capital expenditures
- limit our investment in new businesses
- try to raise additional capital by selling or
    otherwise disposing of assets.

Any of these possibilities
  could have a material and negative effect on our cash flow from operations and
  growth prospects in the long term.

Reliance on major customers An important amount of revenue earned
  by certain of our segments, including the Bell Canada segment, comes from a
  small number of major customers. If they lose contracts with such major customers
  and cannot replace them, it could have a material and negative effect on their
  results.

Making acquisitions Our growth strategy includes making
  strategic acquisitions and entering into joint ventures.
       There is no assurance that we will find suitable
  companies to acquire or to partner with or that we will have the financial resources
  needed to complete any acquisition or to enter into any joint venture. There
  could also be difficulties in integrating the operations of recently acquired
  companies with our existing operations or in operating joint ventures.

Litigation, regulatory matters and changes
  in laws Pending or future litigation, regulatory
  initiatives or regulatory proceedings could have a material and negative effect
  on our businesses, operating results and financial condition. Changes in laws
  or regulations or in how they are interpreted, and the adoption of new laws
  or regulations, including changes in, or the adoption of, new tax laws that
  result in higher tax rates or new taxes, could also materially and negatively
  affect us. Any claim by a third party, with or without merit, that a significant
  part of our business infringes on its intellectual property could also materially
  and negatively affect us.

|The
        BCE 2003 AIF contains a detailed description of the principal legal proceedings
        involving BCE and certain regulatory initiatives and proceedings concerning
        the Bell Canada segment. In
        addition, please refer to the discussion under Bell Canada segmentof this section for a description of certain regulatory initiatives
        and proceedings that could affect the Bell Canada segment.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Funding and control of subsidiaries BCE Inc. is currently funding, and may
  continue to fund, the operating losses of some of its subsidiaries in the future,
  but it is under no obligation to continue doing so. 
       If BCE Inc. decides to stop funding any of its
  subsidiaries and that subsidiary does not have other sources of funding, this
  would have a material and negative effect on the subsidiarys results of
  operations and financial condition and on the value of its securities.
       In addition, BCE Inc. does not have to remain
  the majority holder of, or maintain its current level or nature of ownership
  in, any subsidiary, unless it has agreed otherwise. The announcement of a decision
  by BCE Inc. to change the nature of its investment in a subsidiary, to dispose
  of some or all of its interest in a subsidiary, or any other similar decision
  could have a material and negative effect on the subsidiarys results of
  operations and financial condition and on the value of its securities.
       If BCE Inc. stops funding a subsidiary, changes
  the nature of its investment or disposes of all or part of its interest in a
  subsidiary, stakeholders or creditors of the subsidiary might decide to take
  legal action against BCE Inc. For example, certain members of the lending syndicate
  of Teleglobe, a former subsidiary of BCE Inc., and other creditors of Teleglobe
  have launched lawsuits against BCE Inc. following its decision to stop funding
  Teleglobe. You will find a description of these lawsuits in the BCE 2003 AIF.
  While we believe that these kinds of claims have no legal foundation, they could
  negatively affect the market price of BCE Inc.s securities. BCE Inc. could
  have to devote considerable management time and resources in responding to any
  such claim.

|                                          
|------------------------------------------
|www.bce.ca                                
|                                          
|MANAGEMENTS DISCUSSION
      AND ANALYSIS
|                                          

Pension fund contributions Most of our pension plans had pension
  fund surpluses as of our most recent actuarial valuation. As a result, we have
  not had to make regular contributions to the pension funds in the past few years.
  It also means that we have reported pension credits, which have had a positive
  effect on our net earnings.
       The decline in the capital markets in 2001 and
  2002, combined with historically low interest rates, have significantly reduced
  the pension fund surpluses and the pension credits. This has negatively affected
  our net earnings.
       Our pension plan assets had higher returns than
  expected in 2003. There is no assurance that high returns will continue. If
  returns on pension plan assets decline again in the future, the surpluses could
  also continue to decline. If this happens, we might have to start making contributions
  to the pension funds. This could have a material and negative effect on our
  results of operations.

Retaining employees Our success depends in large part on
  our ability to attract and retain key employees.
       The exercise price of most of the stock options
  that our key employees hold is higher than the current trading price of BCE
  Inc.s common shares. As a result, our stock option programs may not be
  effective in retaining these employees. While we do not expect that we will
  lose key people, if it happens, this could materially hurt our businesses and
  operating results.

Renegotiating labour agreements

|Approximately
        45% of our employees are represented by unions and are covered by collective
        agreements.
|----------------------------------------------------------------------------------------------------------------------

The following material collective agreements
  have expired:

- the collective agreement between Bell Canada
    and the Communications, Energy and Paperworkers Union of Canada (CEP), representing
    approximately 7,000 craft and services employees
- the collective agreements between Aliant Telecom
    Inc. (Aliant Telecom), a subsidiary of Aliant, and its employees, representing
    approximately 4,200 employees
- the collective agreements relating to employees
    of certain divisions and subsidiaries of CTV, representing approximately 550
    employees
- the collective agreement between Connexim, Limited
    Partnership and its employees, representing approximately 100 craft and services
    employees.

The following material
  collective agreements will expire in 2004:

- the collective agreements between Entourage
    Technology Solutions Inc. and the CEP, representing approximately 2,000 technicians
    in Ontario and Québec, will expire on September 30, 2004
- the collective agreements between certain divisions
    and subsidiaries of CTV and their employees, representing approximately 500
    employees, will expire on or before December 31, 2004.

Renegotiating collective
  agreements could result in higher labour costs and work disruptions, including
  work stoppages or work slowdowns. Difficulties in renegotiations or other labour
  unrest could significantly hurt our businesses, operating results and financial
  condition.

Events affecting our networks Network failures could materially hurt
  our business, including our customer relationships and operating results. Our
  operations depend on how well we protect our networks, our equipment, our applications
  and the information stored in our data centres against damage from fire, natural
  disaster, power loss, hacking, computer viruses, disabling devices, acts of
  war or terrorism, and other events. Any of these events could cause our operations
  to be shut down indefinitely.
       Our network is connected with the networks of
  other telecommunications carriers, and we rely on them to deliver some of our
  services. Any of the events mentioned in the previous paragraph, as well as
  strikes or other work disruptions, bankruptcies, technical difficulties or other
  events affecting the networks of these other carriers could also hurt our business,
  including our customer relationships and operating results.

BCE Inc.

Holding company structure BCE Inc. is a holding company. That
  means it does not carry on any significant operations and has no major sources
  of income or assets of its own, other than the interests it has in its subsidiaries,
  joint ventures and significantly influenced companies.
       BCE Inc.s cash flow and its ability to service
  its debt and to pay dividends on its shares all depend on dividends or other
  distributions it receives from its subsidiaries, joint ventures and significantly
  influenced companies and, in particular, from Bell Canada. BCE Inc.s subsidiaries,
  joint ventures and significantly influenced companies are separate legal entities.
  They do not have to pay dividends or make any other distributions to BCE Inc.

|                                            
|--------------------------------------------
|56                                          
|                                            
|MANAGEMENTS
        DISCUSSION AND ANALYSIS
|                                            

Stock market volatility The stock markets have experienced significant
  volatility over the last few years, which has affected the market price and
  trading volumes of the shares of many telecommunications companies, in particular.
  Differences between BCE Inc.s actual or anticipated financial results
  and the published expectations of financial analysts may also contribute to
  volatility in BCE Inc.s common shares. A major decline in the capital
  markets in general, or an adjustment in the market price or trading volumes
  of BCE Inc.s common shares or other securities, may materially and negatively
  impact our ability to raise capital, issue debt, retain employees or make future
  strategic acquisitions or joint ventures.

Bell Canada segment

Changes to wireline regulationsDecisions of regulatory agencies The Bell Canada segments business
  is affected by decisions made by various regulatory agencies, including the
  CRTC. Many of these decisions balance requests from competitors for access to
  facilities, such as the telecommunications networks, switching and transmission
  facilities, and other network infrastructure of incumbent telephone companies,
  with the rights of the incumbent telephone companies to compete reasonably freely.

Second Price Cap decision In May 2002, the CRTC issued decisions
  relating to new price cap rules that will govern incumbent telephone companies
  for a four-year period starting in June 2002. These decisions:

- set a 3.5% productivity factor on many capped
    services, which may require companies in the Bell Canada segment to reduce
    prices on these services
- extended price cap regulation to more services
- reduced the prices that incumbent telephone
    companies can charge competitors for services
- set procedures for enforcing standards of service
    quality
- effectively froze rates for residential services.

The CRTC also established
  a deferral account, but has not yet determined how the funds in the account
  will be used. It will start a proceeding in 2004 to address issues related to
  the deferral accounts of incumbent telephone companies. There is a risk that
  the account could be used in a way that could have a negative financial effect
  on the Bell Canada segment.
       The balance in Bell Canadas and Aliant Telecoms
  deferral accounts at the end of 2003 was estimated to be approximately $160
  million. Almost all of these funds are expected to be used in 2004. On December
  2, 2003, Bell Canada filed an application with the CRTC asking for approval
  to use some of the funds in its deferral account to expand its broadband services
  to certain areas. On December 24, 2003, the CRTC indicated that it plans to
  review this proposal as part of its proceeding in 2004.
       In addition, other follow-up issues to the Price
  Cap decision are expected to be resolved in 2004. The outcome of these issues
  could result in an additional negative effect on the results of the Bell Canada
  segment.

Decision on incumbent affiliates On December 12, 2002, the CRTC released
  its decision on incumbent affiliates, which requires Bell Canada and its carrier
  affiliates to receive CRTC approval on contracts that bundle tariffed and non-tariffed
  products and services. This means that:

- all existing contracts that bundle tariffed
    and non-tariffed products and services must be filed with the CRTC for approval
- all new contracts that bundle tariffed and non-tariffed
    products and services must receive CRTC approval before they are carried out
- carrier affiliates must meet the same approval
    requirements as Bell Canada on products and services they offer in Bell Canadas
    operating territory.

On September 23,
  2003, the CRTC issued a decision that requires Bell Canada and its carrier affiliates
  to include a detailed description of the bundled services they provide to customers
  when they file tariffs with the CRTC. The customers name will be kept
  confidential, but the pricing and service arrangements it has with the Bell
  Canada segment will be available on the public record.
       These decisions increase the Bell Canada segments
  regulatory burden at both the wholesale and retail levels. They could also cause
  some large customers of the Bell Canada segment to choose another preferred
  supplier, which could have a material and negative effect on its results of
  operations. These decisions are currently under appeal.

|                                          
|------------------------------------------
|www.bce.ca                                
|                                          
|MANAGEMENTS DISCUSSION
      AND ANALYSIS
|                                          

Allstream and Call-Net application concerning
  customer-specific arrangements On January 23, 2004, Allstream Corp.
  (Allstream) and Call-Net Enterprises Inc. (Call-Net) filed a joint application
  asking the CRTC to order Bell Canada to stop providing service under any customer-specific
  arrangements (CSAs) that are currently filed with the CRTC and are not yet approved.
       Allstream and Call-Net have proposed that Bell
  Canada should only provide services to these customers under its general tariff.
  Allstream and Call-Net have also proposed that the CRTC suspend its approval
  of any new CSAs until Bell Canadas appeal of the decision on incumbent
  affiliates is heard.
       Bell Canada will be opposing all aspects of this
  application. If the CRTC grants it, Bell Canada will be required to cancel contracts
  with many of its enterprise customers and, in some cases, to reprice services.
  Suspending approval of any new CSAs could have a material and negative effect
  on Bell Canadas ability to offer new services to the large business customer
  market on competitive terms and conditions.

Public notice on changes to minimum prices On October 23, 2003, the CRTC issued
  a public notice asking for comments on its preliminary view that revised rules
  may be needed for setting minimum prices for the Bell Canada segments
  regulated services and for how incumbent telephone companies price their services,
  service bundles and customer contracts. It issued an amended public notice on
  December 8, 2003.
       The CRTC is also seeking comments on proposed
  pricing restrictions on volume or term contracts for retail tariffed services.
  It is too early to determine if the proposals will be implemented as proposed.
  If they are, the Bell Canada segment will be required to increase the minimum
  prices it charges for regulated services. This would limit its ability to compete.
  Bell Canada provided its comments to the CRTC on January 30, 2004.

Application seeking consistent regulation On November 6, 2003, Bell Canada
  filed an application requesting that the CRTC start a public hearing to review
  how similar services offered by cable companies and telephone companies are
  regulated. This would allow consistent rules to be developed that recognize
  and support the growing competition between these converging sectors. Bell Canada
  also requested that this proceeding address any rules that might be needed to
  govern VoIP services provided by cable companies and others. This proceeding
  could determine the rules for competition with other service providers and could
  affect our ability to compete in the future.

Licences and changes to wireless regulation

|Companies
        must have a spectrum licence to operate cellular, PCS and other radio-telecommunications
        systems in Canada. The Minister of Industry awards spectrum licences,
        through a variety of methods, at his or her discretion under the Radiocommunication
        Act.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As
  a result of a recent Industry Canada decision, Bell Mobilitys and Aliant
  Telecom / MT&T Mobility Inc.s cellular and PCS licences, which would
  have expired on March 31, 2006, will now expire in 2011. MT&T Mobility Inc.
  is a wholly-owned subsidiary of Aliant Telecom. The PCS licences that were awarded
  in the 2001 PCS auction will expire on November 29, 2011. As a result, all of
  Bell Mobilitys cellular and PCS licences are now classified as spectrum
  licences with a 10-year licence term. While we expect that they will be renewed,
  there is no assurance that this will happen. Industry Canada can revoke a companys
  licence at any time if the company does not comply with the licences conditions.
  While we believe that we comply with the conditions of our licences, there is
  no assurance that Industry Canada will agree, which could have a material and
  negative effect on the Bell Canada segment.
       In December 2003, Industry Canada issued its decision
  on changing the terms and the method of calculating the fees of cellular and
  PCS licences. The new fees are based on the amount of spectrum a carrier holds
  in a given geographic area. Fees were previously based on the degree of deployment
  or the number of radio sites in operation. The changes come into effect on April
  1, 2004 and will be implemented over seven years. They are not expected to have
  a material impact on the amount of fees paid by Bell Mobility.
       In October 2001, the Minister of Industry announced
  plans for a national review of Industry Canadas procedures for approving
  and placing wireless and radio towers in Canada, including a review of the role
  of municipal authorities in the approval process. If the consultation process
  results in more municipal involvement in the approval process, there is a risk
  that it could significantly slow the expansion of wireless networks in Canada.
  This could have a material and negative effect on the operations of the Bell
  Canada segment. The final report is expected in April 2004.

Increased accidents from using cellphones Some studies suggest that using handheld
  cellphones while driving may result in more accidents. It is possible that this
  could lead to new regulations or legislation banning the use of handheld cellphones
  while driving, as it has in Newfoundland and Labrador and in several U.S. states.
  If this happens, cellphone use in vehicles could decline, which could negatively
  affect the Bell Canada segments business.

|                                            
|--------------------------------------------
|58                                          
|                                            
|MANAGEMENTS
        DISCUSSION AND ANALYSIS
|                                            

Health concerns about radio frequency emissions It has been suggested that some radio
  frequency emissions from cellphones may be linked to medical conditions, such
  as cancer. In addition, some interest groups have requested investigations into
  claims that digital transmissions from handsets used with digital wireless technologies
  pose health concerns and cause interference with hearing aids and other medical
  devices. This could lead to additional government regulation, which could have
  a material and negative effect on the Bell Canada segments business. In
  addition, actual or perceived health risks of wireless communications devices
  could result in fewer new network subscribers, lower network usage per subscriber,
  higher churn rates, product liability lawsuits or less outside financing available
  to the wireless communications industry. Any of these would have a negative
  effect on the Bell Canada segments business.

Bell ExpressVu

|Bell
        ExpressVu currently uses two satellites, Nimiq 1 and Nimiq 2, for its
        DTH satellite television services. Telesat operates these satellites.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------

Satellites
  are subject to significant risks. Any loss, failure, manufacturing defects,
  damage or destruction of these satellites could have a material and negative
  effect on Bell ExpressVus results of operations and financial condition.
  Please see the BCE 2003 AIF for more information on the risks concerning Telesats
  satellites.
       Bell ExpressVu is subject to programming and carriage
  requirements under its CRTC licence. Changes to the regulations that govern
  broadcasting or to its licence could negatively affect Bell ExpressVus
  competitive position or the cost of providing its services. Bell ExpressVus
  existing DTH satellite television distribution undertaking licence was scheduled
  to be renewed in August 2003, but was extended to March 31, 2004 so that the
  CRTC could review Bell ExpressVus application. The CRTC held the hearings
  on the renewal application in October 2003. Although we expect that this licence
  will be renewed, there is no assurance that it will be renewed under the same
  terms and conditions.
       Bell ExpressVu continues to face competition from
  unregulated U.S. DTH satellite television services that are illegally sold in
  Canada. In response, it has started, or is participating in, several legal actions
  that are challenging the sale of U.S. DTH satellite television equipment in
  Canada. While Bell ExpressVu has been successful in increasing its share of
  the satellite television market despite this competition, there is no assurance
  that it will continue to do so.
       Bell ExpressVu faces a loss of revenue resulting
  from the theft of its services. It is taking numerous actions to reduce these
  losses, including legal action, investigations, implementing electronic countermeasures
  targeted at illegal devices, leading information campaigns and developing new
  technology. Implementing these measures, however, could increase Bell ExpressVus
  capital and operating expenses, reduce subscriber growth and increase churn.

Bell Globemedia

|See
        the BCE 2003 AIF for a detailed description of the specific risks that
        apply to Bell Globemedia.
|--------------------------------------------------------------------------------------------------------------------

Specific risks that could affect Bell Globemedia
  include its dependence on advertising, the increasing fragmentation in the television
  market, contractual arrangements with distributors of specialty television services,
  increased competition for fewer print customers and the regulatory risks associated
  with the renewal of its broadcast licences.

BCE Emergis

|See
        the BCE 2003 AIF for a detailed description of the specific risks that
        apply to BCE Emergis.
|----------------------------------------------------------------------------------------------------------------

Specific risks that could affect BCE Emergis include
  the level of adoption of e-business, and the success of its strategic plans
  and relationships.

BCE Ventures

Specific risks that could affect Telesat include:

- launch and in-orbit risks associated with its
    satellites, including risks of loss, failure, manufacturing defects, damage
    or destruction of these satellites
- Telesats ability to obtain insurance coverage
    for its satellites and, to the extent that it does, its ability to receive
    payment of insurance proceeds for its claims
- the possibility that the delivery of the satellites
    under construction be delayed.

See the BCE 2003 AIF for a detailed description
  of the specific risks that apply to Telesat.

|                                          
|------------------------------------------
|www.bce.ca                                
|                                          
|MANAGEMENTS DISCUSSION
      AND ANALYSIS
|                                          

**OUR ACCOUNTING POLICIES**

|We have prepared our
        consolidated financial statements according to Canadian GAAP. See Note
        1 to the consolidated financial statements for more information about
        the accounting principles we used to prepare our financial statements. This
        section discusses key estimates and assumptions that management has made
        under these principles 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.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|

Critical accounting estimates

Under Canadian GAAP, we are required to make estimates
  when we account for and report assets, liabilities, revenues and expenses, and
  to disclose contingent assets and liabilities in our financial statements. We
  are also required to continually evaluate the estimates that we use.
       We base our estimates on past experience and on
  other factors that we believe are reasonable under the circumstances. Because
  this involves varying degrees of judgment and uncertainty, the amounts currently
  reported in the financial statements could, in the future, prove to be inaccurate.
       We consider the estimates described in this section
  to be an important part of understanding our financial statements because they
  rely heavily on managements judgment and are based on factors that are
  highly uncertain.
       Our senior management has discussed the development
  and selection of the critical accounting estimates described in this section
  with the audit committee of the board of directors. The audit committee has
  reviewed these critical accounting estimates.

Employee benefit plans

|Employee benefit
        plansWe maintain defined benefit plans
        that provide pension, other retirement and post-employment benefits for
        almost all 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.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We perform
  a valuation at least every three years to determine the actuarial present value
  of the accrued pension and other retirement benefits. The valuation uses managements
  assumptions for the discount rate, expected long-term rate of return on plan
  assets, rate of compensation increase, health-care cost trend and expected average
  remaining years of service of employees.
       While we believe that these assumptions are reasonable,
  differences in actual results or changes in assumptions could materially affect
  employee benefit obligations and future net benefit plans costs.
       We account for differences between actual and
  assumed results by recognizing differences in benefit obligations and plan performance
  over the working lives of the employees who benefit from the plans.
       The two most significant assumptions used to calculate
  the net employee benefit plans cost are the discount rate and the expected long-term
  rate of return on plan assets.
       Because it has over 90% of the total consolidated
  market value of pension plan assets and total consolidated accrued benefit obligation,
  Bell Canada is the only operating segment that is significantly affected by
  these assumptions.

Discount rate

|Discount rateThe 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
        usually based on the yield on long-term high-quality corporate fixed income
        investments, with maturities matching the estimated cash flows from the
        plan.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We
  determine the appropriate discount rate at the end of every year. Our discount
  rate was 6.5% at December 31, 2003, unchanged from 2002 and 2001. The table
  below shows the impact on the net benefit plans cost for 2004 and the accrued
  benefit asset at December 31, 2004 of a 0.5% increase and a 0.5% decrease in
  the discount rate.

|                 
|-----------------
|                 
|                 
|Discount rate    
|Increased to 7.0%
|Decreased to 6.0%
|                 

Although there
  is no immediate impact on our balance sheet, a lower discount rate results in
  a higher accrued benefit obligation and a lower pension surplus. This means
  that we may have to increase any cash contributions to the plan otherwise required.

Expected long-term rate of return We assumed an expected long-term rate
  of return on plan assets of 7.5% in 2003. We lowered our assumption from 8.3%
  in 2002 because we expect lower long-term rates of return in the financial markets.
  This change increased our net benefit plans cost by about $80 million in 2003.
       Over the long term, the actual rate of return
  has, on average, been substantially more than the rates we assumed. In 2002
  and 2001, however, it was substantially less than expected. This resulted in
  a significant accumulated actuarial loss, which negatively affected pre-tax
  earnings by about $120 million in 2003.
       The table below shows the impact on the net benefit
  plans cost for 2004 and the accrued benefit asset at December 31, 2004 of a
  0.5% increase and a 0.5% decrease in the expected rate of return on plan assets.

|                                            
|--------------------------------------------
|                                            
|                                            
|Expected rate of return on plan
      assets
|Increased to 8.0%                           
|Decreased to 7.0%                           
|                                            

Although there
  is no immediate impact on our balance sheet, poor fund performance results in
  a lower fair value of plan assets and a lower pension surplus. This means that
  we may have to increase any cash contributions to the plan otherwise required.

|                                            
|--------------------------------------------
|60                                          
|                                            
|MANAGEMENTS
        DISCUSSION AND ANALYSIS
|                                            

Goodwill impairment

|Good will impairmentWe assess the value of goodwill of
        all reporting units within each of our operating segments every year and
        when events or changes in circumstances indicate that it might be impaired.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We generally
  measure for impairment using a projected discounted cash flow method and corroborate
  our assessment using other valuation methods. If the assets carrying value
  is more than its fair value, we record the difference as a reduction in the
  amount of goodwill on the balance sheet and an impairment charge in the statement
  of operations.
       We have to make a number of significant estimates
  when calculating fair value using a projected discounted cash flow method. These
  estimates include the assumed growth rates for future revenue, EBITDA and cash
  flows, the numbers of years used in the cash flow model, the discount rate for
  future cash flows and many others.
       We believe that all of our estimates are reasonable.
  They are consistent with our internal planning and reflect our best estimates,
  but they have inherent uncertainties that management may not be able to control.
       Any change in each of the estimates used could
  have a material impact on the calculation of the fair value and resulting impairment
  charge. As a result, we are unable to reasonably quantify the changes in our
  overall financial performance if we had used different assumptions.
       We cannot predict whether an event that triggers
  an impairment will occur, when it will occur or how it will affect the asset
  values we have reported.
       The table below shows the amount of goodwill at
  December 31, 2003 by operating segment and related impairment charges recorded
  in 2002. There were no impairment charges recorded in 2003.

|                       
|-----------------------
|                       
|                       
|Bell Canada segment    
|Bell Globemedia        
|BCE Emergis            
|BCE Ventures           
|Discontinued operations
|                       
|Total                  
|                       

We charged an impairment
  of $8,180 million to opening retained earnings at January 1, 2002 ($8,652 million
  before income taxes and non-controlling interest). This related to the impaired
  goodwill of reporting units in Teleglobe ($7,516 million), Bell Globemedia ($953
  million) and BCE Emergis ($183 million). CICA Handbook section 3062, Goodwill
  and other intangible assets,required us to perform impairment tests at
  January 1, 2002 and write-down goodwill to its estimated fair value at that
  time. Before adopting this section, goodwill was carried at the lower of cost
  and net recoverable amount, which was calculated using undiscounted future cash
  flows.
       In the fourth quarter of 2002, BCE completed its
  annual impairment test for goodwill for all of its reporting units. As a result,
  we recognized a charge of $765 million to operating income, relating to impaired
  goodwill of reporting units in Bell Globemedia ($715 million) and Aliant ($50
  million).
       The main factor contributing to the impairment
  at Bell Globemedia was a revised estimate of future cash flows, which reflected
  managements decision to scale back its trials in convergence products
  and other non-core businesses. Market conditions for the media business also
  contributed to the impairment.
       The write-down at Aliant was a result of poor
  market conditions in the information technology business, which led to lower
  than expected performance.

Contingencies

|ContingenciesWe become involved in various litigation
        and regulatory matters as a part of our business. Each of our operating
        segments is affected. Pending litigation, regulatory initiatives or regulatory
        proceedings represent potential financial loss to our business.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We accrue
  a potential loss if we believe the loss is probable and it can be reasonably
  estimated. We base our decision on information that is available at the time.
  We estimate the amount of the loss by consulting with the outside legal counsel
  who is handling our defence. This involves analysing potential outcomes and
  assuming various litigation and settlement strategies.
       If the final resolution of a legal or regulatory
  matter results in a judgment against us or requires us to pay a large settlement,
  it could have a material and negative effect on our results of operations, cash
  flows and financial position in the period that the judgment or settlement occurs.
  Any accrual would be charged to operating income and included in Accounts
  payable and accrued liabilitiesor Other long-term liabilities. Any
  cash settlement would be included in cash from operating activities.
       None of our operating segments had any significant
  provisions relating to pending litigation, regulatory initiatives or regulatory
  proceedings at December 31, 2003. We have not made any significant changes to
  our estimates in the past two years.



|                                          
|------------------------------------------
|www.bce.ca                                
|                                          
|MANAGEMENTS DISCUSSION
      AND ANALYSIS
|                                          

Income taxes Management believes that it has adequately
  provided for income taxes based on all of the information that is currently
  available. The calculation of income taxes in many cases, however, requires
  significant judgment in interpreting tax rules and regulations, which are constantly
  changing.
       Our tax filings are also subject to audits, which
  could materially change the amount of current and future income tax assets and
  liabilities. Any change would be recorded as a charge or a credit to income
  tax expense. Any cash payment or receipt would be included in cash from operating
  activities.
       We had $978 million of future income tax assets
  and $1,811 million of future income tax liabilities at December 31, 2003. We
  recognized an income tax expense of $1,136 million in 2003 and $1,538 million
  in 2002. Before 2003, in computing future income tax liabilities, we netted
  the future income tax asset relating to the liability for other retirement and
  post-employment benefits against the future income tax liability relating to
  pension benefits. In 2003, we stopped netting these two items to better represent
  the asset and liability components of future income taxes, which resulted in
  an increase of $486 million in future income tax assets and future income tax
  liabilities. This was the only significant change to our estimates that we made
  in the past two years.

Recent changes to accounting standards and policies

Please see Note 1 to the consolidated financial
  statements for more information about the adoption of accounting policies in
  2003 resulting from new accounting standards, which consisted of:

- stock-based compensation and other stock-based
    payments
- disclosure of guarantees
- disposal of long-lived assets and discontinued
    operations
- consolidation of variable interest entities.

Subscriber acquisition costs Before 2003, we accounted for the
  costs of acquiring subscribers by:

- deferring and amortizing the costs of acquiring
    DTH satellite television service subscribers against earnings over three years
- deferring and amortizing the costs of acquiring
    wireless subscribers against earnings over the terms of the contracts, which
    are normally up to 24 months
- expensing all other subscriber acquisition costs
    when services were activated.

The costs we deferred
  and amortized consisted mainly of hardware subsidies, net of revenues from the
  sale of wireless handsets.
       Effective January 1, 2003, we changed our accounting
  method and started expensing all subscriber acquisition costs when services
  are activated. We also started presenting the revenues generated from the sale
  of wireless handsets instead of netting them against operating expenses.      As a result
  of applying this change, we restated the comparative figures for 2002 and 2001:

- operating revenues increased by $195 million
    in 2002 and $183 million in 2001
- operating expenses increased by $275 million
    in 2002 and $332 million in 2001
- income taxes decreased by $32 million in 2002
    and $60 million in 2001
- non-controlling interest decreased by $7 million
    in 2002 and $11 million in 2001
- net earnings decreased by $41 million in 2002
    and $78 million in 2001.

At December 31, 2002,
  this resulted in:

- a decrease of $133 million in other current
    assets
- a decrease of $339 million in other long-term
    assets
- an increase of $15 million in goodwill
- a decrease of $189 million in future income
    tax liabilities
- a decrease of $9 million in non-controlling
    interest
- an increase of $259 million in the deficit.

Future changes to accounting standards and policiesImpairment of long-lived assets Effective January 1, 2004, we adopted
  section 3063 of the CICA Handbook, Impairment of long-lived assets. Adopting
  this section will affect how we recognize, measure and disclose the impairment
  of long-lived assets. The section is effective for years beginning on or after
  April 1, 2003.
       An impairment loss is recognized on a long-lived
  asset to be held and used when its carrying value exceeds the total undiscounted
  cash flows expected from its use and disposition.
       Before January 1, 2004, the amount of the loss
  was determined by deducting the assets net recoverable amount (based on
  undiscounted cash flows expected from its use and disposition) from its carrying
  value.
       After January 1, 2004, the amount of the loss
  is determined by deducting the assets fair value (based on discounted
  cash flows expected from its use and disposition) from its carrying value.

|                                            
|--------------------------------------------
|62                                          
|                                            
|MANAGEMENTS
        DISCUSSION AND ANALYSIS
|                                            

Asset retirement obligations Effective January 1, 2004, we adopted
  section 3110 of the CICA Handbook, Asset retirement obligations. The
  section is effective for years beginning on or after January 1, 2004. It describes
  how to recognize and measure liabilities related to the legal obligations of
  retiring property, plant and equipment.
       These obligations are initially measured at fair
  value and are adjusted for any changes resulting from the passage of time and
  any changes to the timing or the amount of the original estimate of undiscounted
  cash flows. The asset retirement cost is capitalized as part of the related
  asset and is amortized into earnings over time.
       Adopting this section will not have a material
  effect on our future consolidated financial statements because we do not have
  any significant asset retirement obligations.

Hedging relationships Effective January 1, 2004, we adopted
  Accounting Guideline 13, Hedging relationships.The section is effective
  for years beginning on or after July 1, 2003. The guideline provides additional
  documentation and designation requirements for hedge accounting and requires
  regular, periodic assessments of effectiveness. The guideline does not change
  the method of accounting for derivative instruments in hedging relationships.
       Adopting this guideline will not affect our future
  consolidated financial statements. All outstanding hedges that previously qualified
  for hedge accounting continue to qualify for hedge accounting under this guideline.

Financial instruments The CICA recently issued revisions
  to section 3860 of the CICA Handbook, Financial instruments  Disclosure
  and presentation. The revisions change the accounting for certain financial
  instruments that have liability and equity characteristics. It requires instruments
  that meet specific criteria to be classified as liabilities on the balance sheet.
  Some of these financial instruments were previously classified as equities.
       These revisions come into effect on January 1,
  2005. Because we do not have any instruments with these characteristics, adopting
  this section on January 1, 2005 will not affect our future consolidated financial
  statements.

SUPPLEMENTARY FINANCIAL
  INFORMATION

Annual financial information

The table below shows selected consolidated financial
  data for each of the years from 1999 to 2003.

|                                                         
|---------------------------------------------------------
|                                                         
|                                                         
|Operational data                                         
|Operating revenues                                       
|Earnings from continuing operations                      
|Discontinued operations                                  
|Net earnings                                             
|Net earnings applicable to common
      shares           
|Included in net earnings:                                
|Net gains on
      sale of investments and dilution gains
|Continuing operations                                    
|Discontinued
      operations                            
|Restructuring
      and other charges                    
|Impairment charge                                        
|Goodwill amortization                                    
|Other                                                    
|                                                         
|Balance sheet data                                       
|Total assets                                             
|Long-term debt (including current
      portion)         
|Preferred shares                                         
|Common shareholders equity                              
|Capital expenditures                                     
|                                                         
|Share data                                               
|Net earnings per common share                            
|Continuing operations
       basic                      
|Continuing operations
       diluted                    
|Net earnings
       basic                               
|Net earnings
       diluted                             
|Dividends declared per common share                      
|Dividends declared on common shares                      
|Dividends declared on preferred
      shares             
|                                                         
|Other data                                               
|Number of employees (thousands)unaudited                
|                                                         



|                                          
|------------------------------------------
|www.bce.ca                                
|                                          
|MANAGEMENTS DISCUSSION
      AND ANALYSIS
|                                          

The factors that
  have caused our results to vary over the past two years are discussed throughout
  this MD&A.
       In 2001, our net earnings included a gain of $2.9
  billion on the settling of short-term forward contracts on approximately 47.9
  million Nortel common shares and selling the same number of Nortel common shares,
  dilution gains of $265 million from the reduction of our ownership interest
  in CGI, Aliant and BCE Emergis, restructuring and other charges of $461 million
  at Bell Canada (relating to streamlining initiatives and the write-down of certain
  Bell Mobility capital assets), and an impairment charge of $2,049 million recorded
  by Teleglobe relating to its investment in the Excel Communications group. Our
  results also included $971 million of goodwill amortization. Goodwill is no
  longer amortized effective January 1, 2002.

Quarterly financial information

The table below shows selected consolidated financial
  data for each quarter of 2003 and 2002. This quarterly information has been
  prepared on the same basis as the annual consolidated financial statements,
  but it is unaudited.

|                                              
|----------------------------------------------
|                                              
|                                              
|                                              
|                                              
|Operating revenues                            
|EBITDA                                        
|Operating income                              
|Earnings from continuing operations           
|Discontinued operations                       
|Net earnings                                  
|Net earnings applicable to common
      shares
|Included in net earnings:                     
|Net gains on
      sale of investments        
|and
      dilution gains                      
|Continuing
      operations                   
|Discontinued
      operations                 
|Restructuring
      and other charges         
|Impairment charge                             
|Net earnings per common share                 
|Continuing
      operations  basic           
|Continuing
      operations  diluted         
|Net
      earnings  basic                    
|Net
      earnings  diluted                  
|Average number of common shares               
|outstanding
      (millions)                  
|                                              

The factors that
  have caused our results to vary over the past eight quarters are discussed throughout
  this MD&A.



|                                         
|-----------------------------------------
|64                                       
|                                         
|CONSOLIDATED
        FINANCIAL STATEMENTS
|                                         



|Financial statements at a glance |  |   
|-------------------------------- |  | --
|Managements
      report        |  | 64
|Auditors
      report           |  | 64
|Statements
      of operations   |  | 65
|Statements of
      (deficit)    |  |   
|retained
      earnings          |  | 65
|Balance sheets                   |  | 66
|Statements of
      cash flows   |  | 67
|Notes to consolidated            |  |   
|financial
      statements       |  | 68



|This section of
        our annual report contains the audited consolidated financial statements
        of BCE and detailed notes with explanations and additional information. BCE
        consists of many businesses, including subsidiaries, joint ventures and
        investments in significantly influenced companies. We present the financial
        information for all of our holdings as one consolidated company.
      Except in the auditors report, we,
        us, ourand BCEmean BCE Inc., its subsidiaries and joint ventures.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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. They also
  include details about our financial results that are not shown in the financial
  statements.



Managements report

These financial statements form the basis for
  all of the financial information that appears in this annual report.
       The financial statements and all of the information
  in this annual report are the responsibility of the management of BCE Inc. and
  have been reviewed and approved by the board of directors. The board of directors
  is responsible for ensuring that management fulfills its financial reporting
  responsibilities. Deloitte & Touche LLP, the shareholders auditors,
  have audited the financial statements.
       Management has prepared the financial statements
  according to Canadian generally accepted accounting principles. Under these
  principles, management has made certain estimates and assumptions that are reflected
  in the financial statements and notes. Management believes that these financial
  statements fairly present BCEs consolidated financial position, results
  of operations and cash flows.
       Management has a system of internal controls designed
  to provide reasonable assurance that the financial statements are accurate and
  complete in all material respects. This is supported by an internal audit group
  that reports to the audit committee, and includes communication to employees
  about policies for ethical business conduct. Management believes that the internal
  controls provide reasonable assurance that our financial records are reliable
  and form a proper basis for preparing the financial statements, and that our
  assets are properly accounted for and safeguarded.
       The board of directors has appointed an audit
  committee, which is made up of unrelated and independent directors. The audit
  committees responsibilities include reviewing the financial statements
  and other information in this annual report, and recommending them to the board
  of directors for approval. You will find a description of the audit committees
  other responsibilities on page 104 of this annual report. The internal auditors
  and the shareholders auditors have free and independent access to the
  audit committee.

Michael
          J. Sabia
          President and
          Chief Executive Officer March
            10, 2004
        Siim
          A. Vanaselja
          Chief Financial Officer
        Karyn
          A. Brooks
          Vice-President and
          Corporate Controller


Auditors report

To the shareholders of BCE Inc.: We have audited the consolidated balance
  sheets of BCE Inc. as at December 31, 2003 and 2002, and the consolidated statements
  of operations, (deficit) retained earnings and cash flows for each of the years
  in the three-year period ended December 31, 2003. These consolidated financial
  statements are the responsibility of BCE Inc.s management. Our responsibility
  is to express an opinion on these consolidated financial statements based on
  our audits.
       We conducted our audits in accordance with Canadian
  generally accepted auditing standards. Those standards require that we plan
  and perform an audit to obtain reasonable assurance whether the financial statements
  are free of material misstatement. An audit includes examining, on a test basis,
  evidence supporting the amounts and disclosures in the consolidated financial
  statements. An audit also includes assessing the accounting principles used
  and significant estimates made by management, as well as evaluating the overall
  financial statement presentation.
       In our opinion, these consolidated financial statements
  present fairly, in all material respects, the financial position of BCE Inc.
  as at December 31, 2003 and 2002 and the results of its operations and its cash
  flows for each of the years in the three-year period ended December 31, 2003,
  in accordance with Canadian generally accepted accounting principles.

Deloitte & Touche LLP
        Chartered Accountants Montréal,
          Canada
          March 10, 2004




|                                           
|-------------------------------------------
|www.bce.ca                                 
|                                           
|CONSOLIDATED
      STATEMENTS OF OPERATIONS
|                                           



|                                                                            
|----------------------------------------------------------------------------
|For
        the year ended December 31 (in $ millions, except share amounts)
|                                                                            
|Operating revenues                                                          
|                                                                            
|Operating expenses                                                          
|Amortization expense                                                        
|Net benefit plans (cost) credit                                             
|Restructuring and other charges                                             
|                                                                            
|Total operating expenses                                                    
|                                                                            
|Operating income                                                            
|Other income                                                                
|Impairment charge                                                           
|Interest expense                                                            
|                                                                            
|Earnings from continuing operations
      before                            
|income taxes
      and non-controlling interest                             
|Income taxes                                                                
|Non-controlling interest                                                    
|                                                                            
|Earnings from continuing operations                                         
|Discontinued operations                                                     
|                                                                            
|Net earnings                                                                
|Dividends on preferred shares                                               
|Premium on redemption of preferred
      shares                             
|                                                                            
|Net earnings applicable to common
      shares                              
|                                                                            
|Net earnings (loss) per common
      share  basic                          
|Continuing operations                                                       
|Discontinued
      operations                                               
|Net earnings                                                                
|Net earnings (loss) per common
      share  diluted                        
|Continuing operations                                                       
|Discontinued
      operations                                               
|Net earnings                                                                
|Dividends per common share                                                  
|Average number of common shares
      outstanding  basic (millions)        
|                                                                            
|The following is a reconciliation
      of net earnings to reflect the      
|comparative
      impact of no longer amortizing goodwill and               
|indefinite-life
      intangible assets effective January 1, 2002:          
|Net earnings, as reported                                                   
|Amortization expense on goodwill
      and indefinite-life intangible assets
|                                                                            
|Adjusted net earnings                                                       
|                                                                            
|Adjusted net earnings per common
      share:                               
|Basic                                                                       
|Diluted                                                                     
|                                                                            

CONSOLIDATED STATEMENTS OF
  (DEFICIT) RETAINED EARNINGS

|                                                                                  
|----------------------------------------------------------------------------------
|For the year ended
      December 31 (in $ millions, except share amounts)        
|                                                                                  
|Balance at beginning
      of year, as previously reported                        
|Adjustment for change
      in accounting policies                                
|                                                                                  
|Balance at beginning
      of year, as restated                                   
|Consolidation of variable
      interest entity                                   
|Net earnings                                                                      
|Dividends                                                                         
|                                                                                  
|                                                                                  
|                                                                                  
|Costs relating to the
      issuance of common shares, net of $22 million of taxes
|Premium on redemption
      of common and preferred shares                        
|Other                                                                             
|                                                                                  
|Balance at end of
      year                                                      
|                                                                                  



|                                   
|-----------------------------------
|66                                 
|                                   
|CONSOLIDATED
        BALANCE SHEETS
|                                   



|                                                        
|--------------------------------------------------------
|At
        December 31 (in $ millions)                  
|                                                        
|                                                        
|ASSETS                                                  
|Current assets                                          
|Cash and cash equivalents                               
|Accounts receivable                                     
|Other current assets                                    
|Current assets of discontinued operations               
|                                                        
|Total current assets                                    
|Capital assets                                          
|Other long-term assets                                  
|Indefinite-life intangible assets                       
|Goodwill                                                
|Non-current assets of discontinued
      operations     
|                                                        
|Total assets                                            
|                                                        
|                                                        
|LIABILITIES                                             
|Current liabilities                                     
|Accounts payable and accrued liabilities                
|Debt due within one year                                
|Current liabilities of discontinued
      operations    
|                                                        
|Total current liabilities                               
|Long-term debt                                          
|Other long-term liabilities                             
|Non-current liabilities of discontinued
      operations
|                                                        
|Total liabilities                                       
|                                                        
|Non-controlling interest                                
|                                                        
|Commitments and contingencies                           
|SHAREHOLDERS
        EQUITY                            
|Preferred shares                                        
|                                                        
|Common shareholders equity                             
|Common shares                                           
|Contributed surplus                                     
|Deficit                                                 
|Currency translation adjustment                         
|                                                        
|Total common shareholders
      equity                 
|                                                        
|Total shareholders equity                              
|                                                        
|Total liabilities and shareholders
      equity        
|                                                        

On behalf of the board of directors:

Director
      
      Director




|                                           
|-------------------------------------------
|www.bce.ca                                 
|                                           
|CONSOLIDATED
      STATEMENTS OF CASH FLOWS
|                                           



|                                                                     
|---------------------------------------------------------------------
|For
        the year ended December 31 (in $ millions)               
|                                                                     
|Cash flows from operating activities                                 
|Earnings from continuing operations                                  
|Adjustments to reconcile earnings
      from continuing operations   
|to cash flows
      from operating activities:                       
|Amortization
      expense                                           
|Net
      benefit plans cost (credit)                                
|Restructuring
      and other charges (non-cash portion)             
|Impairment
      charge                                              
|Net
      gains on investments                                       
|Future
      income taxes                                            
|Non-controlling
      interest                                       
|Contributions
      to employee pension plans                        
|Other
      employee future benefit plan payments                    
|Other
      items                                                    
|Changes
      in non-cash working capital                            
|                                                                     
|                                                                     
|                                                                     
|Cash flows from investing activities                                 
|Capital expenditures                                                 
|Business acquisitions                                                
|Business dispositions                                                
|Decrease (increase) in investments                                   
|accounted for
      under the cost and equity methods                
|Other items                                                          
|                                                                     
|                                                                     
|                                                                     
|Cash flows from financing activities                                 
|Decrease in notes payable and bank
      advances                    
|Issue of long-term debt                                              
|Repayment of long-term debt                                          
|Issue of common shares                                               
|Costs relating to the issuance of
      common shares                
|Issue of preferred shares                                            
|Redemption of common and preferred
      shares                      
|Issue of equity securities and convertible
      debentures          
|by subsidiaries
      to non-controlling interest                    
|Redemption of equity securities
      by subsidiaries                
|Cash dividends paid on common and
      preferred shares             
|Cash dividends paid by subsidiaries
      to non-controlling interest
|Other items                                                          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Cash provided by continuing operations                               
|Cash provided by (used in) discontinued
      operations             
|                                                                     
|Net increase (decrease) in cash
      and cash equivalents           
|Cash and cash equivalents at beginning
      of year                 
|                                                                     
|Cash and cash equivalents at
      end of year                       
|                                                                     
|Consists of:                                                         
|Cash
      and cash equivalents of continuing operations             
|Cash
      and cash equivalents of discontinued operations           
|                                                                     
|Total                                                                
|                                                                     



|                                                  
|--------------------------------------------------
|68                                                
|                                                  
|NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                  

NOTE1

SIGNIFICANT ACCOUNTING POLICIES

|All amounts are in
        millions of Canadian dollars, except where noted.
      See Note 26, Reconciliation of Canadian
        GAAP to United States GAAP,for a description and reconciliation of
        the significant differences between Canadian GAAP and United States GAAP
        that affect our financial statements.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Basis of presentation

We have prepared the consolidated financial statements
  according to Canadian generally accepted accounting principles (GAAP).
       We consolidate the financial statements of all
  of the companies we control. We proportionately consolidate our share of the
  financial statements of our joint venture interests. All transactions and balances
  between these companies have been eliminated on consolidation.

Comparative figures

We have reclassified some of the figures
  for previous years in the consolidated financial statements to make them consistent
  with the current years presentation.
       We have restated financial information for previous
  years to reflect:

- the change in accounting treatment to discontinued
    operations for:
    
        Aliant Inc.s (Aliant)
          emerging business segment, which consists of Aliants investments
          in iMagicTV Inc., Prexar LLC and AMI Offshore Inc., effective May 2003
        Aliants remote communications
          segment, which consists of Aliants investment in Stratos Global
          Corporation (Stratos), effective December 2003
        BCE Emergis Inc.s (BCE
          Emergis) U.S. Health operations, effective December 2003
        other minor business dispositions
- the adoption of the fair value-based method
    of accounting for employee stock options, effective January 1, 2003
- the change in the method of accounting for subscriber
    acquisition costs in our wireless and Direct-home (DTH) satellite television
    businesses from a deferral and amortization method to a method of expensing
    as a customer service is activated, effective January 1, 2003.

Using estimates

When preparing financial statements according to
  GAAP, management makes estimates and assumptions relating to:

- reported amounts of revenues and expenses
- reported amounts of assets and liabilities
- disclosure of contingent assets and liabilities.

Actual results could
  be different from these estimates.

Recognizing revenue

We recognize operating revenues when they are earned,
  specifically when:

- services are provided or products are delivered
    to customers
- clear proof that an arrangement exists
- amounts are fixed or can be determined
- our ability to collect is reasonably assured.

In particular, we
  recognize:

- fees for long distance and wireless services,
    and other fees, such as network access fees, licence fees, hosting fees, maintenance
    fees and standby fees, when we provide the services or over the term of the
    contract
- subscriber revenue when customers receive the
    service
- advertising revenue when advertisements are
    aired, or printed and distributed
- revenues from the sale of equipment when the
    equipment is delivered to customers and accepted
- revenue on long-term contracts based on actual
    performance as services are provided, as equipment is delivered and accepted,
    or as contract milestones are met.

www.bce.ca
      2003 annual
          report
      69NOTES TO CONSOLIDATED FINANCIAL
        STATEMENTS


NOTE1

SIGNIFICANT ACCOUNTING POLICIES (continued)

When a transaction
  involves more than one product or service, we allocate revenue to each based
  on its relative fair value.
       We may enter into arrangements with subcontractors
  who provide services to our customers. When we act as the principal in these
  arrangements, we recognize revenue based on the amounts billed to the customers.
  Otherwise, we recognize the net amount that we keep as revenue.
       Accruals for sales returns are recorded when revenues
  are recognized. We base them on past experience. 
       We record the payments we receive in advance as
  deferred revenues until we provide the service or deliver the product to customers.
  Deferred revenues are presented in Accounts payable and accrued liabilitiesor in Other long-term liabilitieson the balance sheet.

Cash and cash equivalents

We classify all highly liquid investments
  with a short-term maturity of generally three months or less as Cash
  and cash equivalents.

Securitization of accounts receivable

We consider a transfer of accounts receivable to
  be a sale when we give up control of them in exchange for proceeds from a trust
  (other than our retained beneficial interest in the accounts receivable).
       We determine the fair value of the accounts receivable
  transferred based on the present value of future expected cash flows. The present
  value of future cash flows is projected using managements best estimates
  of key assumptions, such as discount rates, weighted-average life of accounts
  receivable and credit loss ratios. We recognize a loss on this kind of transaction
  as Other income.The loss partly depends on the carrying amount of the
  accounts receivable transferred. We allocate this amount to accounts receivable
  sold, or to our retained interest, according to its relative fair value on the
  day the transfer is made.
       Accounts receivable are transferred on a fully
  serviced basis. As a result, we:

- recognize a servicing liability on the day accounts
    receivable are transferred to the trust
- amortize this liability to earnings over the
    expected life of the transferred accounts receivable.

Capital assets

We carry capital assets at cost, less accumulated
  amortization. Most of our capital assets are amortized using the composite group
  depreciation method. When we retire assets in the ordinary course of business,
  we charge their original cost to accumulated amortization. In general, we amortize
  capital assets on a straight-line basis over the estimated useful lives of the
  assets. We review the estimate of the useful lives of the assets every year
  and adjust it, if needed.

|                             
|-----------------------------
|                             
|                             
|Telecommunications assets    
|Machinery and equipment      
|Buildings                    
|Finite-life intangible assets
|Software                     
|Customer relationships       
|                             

We capitalize construction
  costs, labour and overhead related to our self-constructed assets.
       We capitalize certain costs incurred for developing
  or obtaining internal-use software. We expense software maintenance and training
  costs when they are incurred. The expense is included in Operating expensesin the statement of operations.
       We assess capital assets for impairment when events
  or changes in circumstances indicate that we may not be able to recover their
  carrying value. We calculate impairment by deducting the assets net recoverable
  amount (based on estimates of undiscounted future cash flows or other valuation
  methods) from its carrying value. This amount is deducted from earnings.

|                                                  
|--------------------------------------------------
|70                                                
|                                                  
|NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                  

NOTE1

SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting for investments

We use the following methods to account for investments
  that are not consolidated or proportionately consolidated in our financial statements:

- the equity method for companies that we can
    significantly influence
- the cost method for our investments in all other
    companies.

|Significantly
        influenced
      It means that:
      we have a 20% to 50% equity interest in
          a company that we do not control or jointly control, and
        we have a significant influence on its
          operating, investing and financing activities.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Equity method
      An investment is initially recorded at cost,
        and adjustments are made to include our share of the investments
        net earnings or losses. These adjustments are included in our net earnings.
        The amount of our investment is reduced by the amount of dividends received
        or receivable from the investment.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Cost method
      The investment is recorded at cost. Dividends
        received or receivable from the investment are included in our net earnings.
|----------------------------------------------------------------------------------------------------------------------------------------------------

We include investments
  in Other long-term assetson the balance sheet. Earnings from investments
  are included in Other incomein the statement of operations.
       We expense declines in the market values of our
  investments when management considers them to be longer term. The expense is
  included in Other incomein the statement of operations.



Costs of issuing debt and equity

The costs of issuing debt are capitalized in Other
  long-term assets. They are amortized on a straight-line basis over the term
  of the related debt and are included in Interest expensein the statement
  of operations. The costs of issuing equity are reflected in the statement of
  deficit.



Indefinite-life intangible assets

Our indefinite-life intangible assets consist mainly
  of the Bell brand name, spectrum licences and television licences.
       We assess these assets for impairment in the fourth
  quarter of every year and when events or changes in circumstances indicate that
  an asset might be impaired. We calculate the impairment by deducting the assets
  fair value (based on estimates of discounted future cash flows or other valuation
  methods) from its carrying value. This amount is deducted from earnings.

Goodwill

|Goodwill
      Goodwill is created when we acquire a business.
        It is calculated by deducting the fair value of the net assets acquired
        from the amount paid. It represents the value of factors that contribute
        to a greater earning power, such as a good reputation, customer loyalty
        or intellectual capital.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We assess goodwill of individual reporting units
  for impairment in the fourth quarter of every year and when events or changes
  in circumstances indicate that goodwill might be impaired.
       We assess goodwill for impairment in two steps:

- we identify a potential impairment by comparing
    the fair value of a reporting unit to its carrying value. Fair value is based
    on estimates of discounted future cash flows or other valuation methods. When
    the fair value of the reporting unit is less than its carrying value, we allocate
    the fair value to all of its assets and liabilities, based on their fair values.
    The amount that the fair value of the reporting unit exceeds the amounts assigned
    to its assets and liabilities is the fair value of goodwill.
- we determine if there is an impairment by comparing
    the fair value of goodwill to its carrying value. Any excess is deducted from
    earnings.

Translation of foreign currencies

|Translation of
        foreign currencies
      The way we account for a foreign operation
        depends on whether it is self-sustaining or integrated. A self-sustaining
        foreign operation is largely independent of the parent company. An integrated
        foreign operation depends on the parent company to finance or run its
        operations.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Self-sustaining foreign operations For self-sustaining foreign operations,
  we use:

- the exchange rates in effect on the date of
    the balance sheet for assets and liabilities
- the average exchange rates during the year for
    revenues and expenses.

Translation exchange
  gains and losses are reflected as a currency translation adjustment in shareholders
  equity. When we reduce our net investment in a self-sustaining foreign operation,
  we recognize an appropriate portion of the currency translation adjustment in
  earnings.

Integrated foreign operations For integrated foreign operations, we
  use:

- the exchange rates on the date of the balance
    sheet for monetary assets and liabilities, such as cash, accounts receivable
    and payable, and long-term debt
- the historical exchange rates for non-monetary
    assets and liabilities, such as capital assets
- the average exchange rates during the year for
    revenues and expenses.

Translation exchange
  gains and losses are included in Other incomein the statement of operations.



|                                                
|------------------------------------------------
|www.bce.ca                                      
|                                                
|NOTES TO CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                

NOTE1

SIGNIFICANT ACCOUNTING POLICIES (continued)

Domestic transactions and balances in
  foreign currencies For domestic transactions made in foreign
  currencies, we use:

- the exchange rates on the date of the balance
    sheet for monetary assets and liabilities
- the average exchange rates during the year for
    revenues and expenses.

Translation exchange
  gains and losses are included in Other incomein the statement of operations.

Derivative financial instruments

We use various derivative financial instruments
  to hedge against:

- interest rate risk
- foreign exchange rate risk
- changes in the price of BCE Inc. common shares
    relating to special compensation payments (SCPs).

We expect that
  the derivatives we use will generate enough cash flows and gains or incur losses
  to offset these risks. We do not use derivative financial instruments for speculative
  or trading purposes.
       We document all relationships between derivatives
  and the items they hedge, and our risk management objective and strategy for
  using various hedges. This process includes linking every derivative to:

- a specific asset or liability on the balance
    sheet, or
- a specific net investment in self-sustaining
    foreign operations, or
- a specific firm commitment, or
- an anticipated transaction.

We assess how effective
  derivatives are in managing risk when the hedge is put in place and on an ongoing
  basis. If a hedge is no longer effective, we will stop using hedge accounting.
       We follow these policies when accounting for derivatives:

- deferred gains or losses relating to derivatives
    that qualify for hedge accounting are recognized in earnings when the hedged
    item is sold or the anticipated transaction is ended early
- gains and losses related to hedges of anticipated
    transactions are recognized in earnings or are recorded as adjustments of
    carrying values when the transaction takes place
- derivatives that are economic hedges, but do
    not qualify for hedge accounting, are recognized at fair value. We record
    the change in fair value in earnings.
- any premiums paid for financial instrument contracts
    are deferred and expensed to earnings over the term of the contract
- any forward premiums or discounts on forward
    foreign exchange contracts that are used to hedge long-term debt that is denominated
    in foreign currencies are amortized as an adjustment to interest expense over
    the term of the forward contract.

The following describes
  our policies for specific kinds of derivatives.

Interest rate swap agreements We use interest rate swap agreements to help manage
  the fixed and floating interest rate mix of our total debt portfolio. These
  agreements often involve exchanging interest payments without exchanging the
  notional principal amount that the payments are based on. We record the exchange
  of payments as an adjustment of interest expense on the hedged debt. We include
  the related amount payable or receivable from counterparties as an adjustment
  to Other long-term assets or liabilities.

Foreign currency swap agreements We use foreign currency swap agreements to manage
  the exchange rate exposure of some of our debt that is denominated in foreign
  currencies. We designate these agreements as hedges of firm commitments to pay
  interest and principal on the foreign currency risk. We recognize gains and
  losses on these contracts the same way we recognize the gains and losses on
  the hedged item. Unrealized gains or losses are included in Other long-term
  assets or liabilities.

Forward contracts We use forward contracts to manage:

- the exchange rate exposure of some of our debt
    that is denominated in foreign currencies. We designate these agreements as
    hedges of firm commitments to pay the principal on the foreign currency risk.
- the exposure to anticipated forecasted transactions
    denominated in foreign currencies. We designate these agreements as hedges
    of the future cash flows.
- changes in price of BCE Inc. common shares relating
    to SCPs.

We recognize gains
  and losses on these contracts the same way we recognize the gains and losses
  on the hedged item. Unrealized gains or losses are included in Other long-term
  assets or liabilities.

|                                                  
|--------------------------------------------------
|72                                                
|                                                  
|NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                  

NOTE1

SIGNIFICANT ACCOUNTING POLICIES (continued)



Employee benefit plans

We maintain defined benefit plans that provide pension
  benefits for almost all of our employees. Benefits are based on the employees
  length of service and average rate of pay during their last five years of service.
  Most employees are not required to contribute to the plans. The plans provide
  increasing pension benefits to help protect a portion of the income of retired
  employees against inflation. We are responsible for adequately funding our pension
  plans. We make contributions to them based on various actuarial cost methods
  that are permitted by pension regulatory bodies. Contributions reflect actuarial
  assumptions about future investment returns, salary projections and future service
  benefits.

We also provide
  other future benefits to employees, including:

- health-care and life insurance benefits during
    retirement
- other post-employment 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.

We do not fund
  the other employee future benefit plans.
       We accrue our obligations under employee benefit
  plans and related costs, net of the fair value of plan assets. Actuaries determine
  pension and other retirement benefit costs using:

- the projected benefit method, prorated on years
    of service, which takes into account future salary levels
- a discount rate based on market interest rates
    on high-quality bonds with maturities that match the timing and benefits expected
    to be paid by the plans
- managements best estimate of the plans
    expected investment performance, salary increases, retirement ages of employees
    and expected health-care costs.

We value pension
  plan assets at fair value, which is determined using current market values.
  We use a market-related value to calculate the expected return on plan assets.
  This value is based on a four-year weighted-average of the fair value of the
  pension plan assets.
       We amortize past service costs from plan amendments
  on a straight-line basis over the average remaining service period of employees
  who were active on the day of the amendment but not yet fully eligible to receive
  benefits. This represents the period that we expect to realize economic benefits
  from the amendments.
       We use the corridor approach to recognize actuarial
  gains and losses into earnings. First we deduct 10% of the benefit obligation
  or the market-related value of plan assets, whichever is greater, from the unamortized
  net actuarial gains or losses. Then we amortize the excess over the average
  remaining service period of active employees. This ranged from approximately
  10 to 17 years, with a weighted average of 14 years at the end of 2003.

|Curtailment
      A curtailment is a significant reduction
        in plan benefits that can result when a defined benefit pension plan is
        amended or restructured. Types of curtailments include:
      a reduction in the expected number of
          years of future service of active employees
        the elimination of the right to earn defined
          benefits for some or all of the future service of employees.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Settlement
      A company makes a settlement when it substantially
        settles all or part of an accrued benefit obligation. An example is a
        lump-sum cash payment to employees in exchange for their rights to receive
        future benefits.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

When the restructuring
  of a benefit plan results in both a curtailment and a settlement of obligations,
  we account for the curtailment before we account for the settlement.
       December 31 is the measurement date for most of
  our employee benefit plans. Our actuaries perform a valuation at least every
  three years to determine the actuarial present value of the accrued pension
  and other retirement benefits. The last actuarial valuation of most of our pension
  plans was performed on January 1, 2003.

Income taxes

Current income tax expense reflects the estimated
  income taxes payable for the current year before any refunds or the use of losses
  incurred in previous years. We use the asset and liability method to account
  for future income taxes. Future income taxes reflect:

- the temporary differences between the carrying
    amounts of assets and liabilities for accounting purposes and the amounts
    used for tax purposes, on an after-tax basis
- the benefit of losses that will more likely
    than not be realized and carried forward to future years to reduce income
    taxes.

We calculate future
  income taxes using the rates enacted by tax law and those substantively enacted.
  The effect of a change in tax rates on future income tax assets and liabilities
  is included in earnings in the period when the change is substantively enacted.

|Tax laws
      A tax law is substantively enacted when
        it has been tabled in the legislature but may not have been passed into
        law.
|---------------------------------------------------------------------------------------------------------------------------------------------------





|                                                
|------------------------------------------------
|www.bce.ca                                      
|                                                
|NOTES TO CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                

NOTE1

SIGNIFICANT ACCOUNTING POLICIES (continued)

Stock-based compensation plans

BCE Inc.s stock-based compensation plans mainly
  include employee savings plans (ESPs) and long-term incentive programs. Before
  2000, the long-term incentive programs often included SCPs.
       We credit to share capital any amount employees
  pay when they exercise their stock options or buy shares. We recognize the contributions
  BCE Inc. makes under ESPs as a compensation expense. We also recognize a compensation
  expense or recovery relating to SCPs.
       We use the fair-value based method for employee
  stock options and account for employee stock options by measuring the compensation
  cost of options using the Black-Scholes option pricing model. This method was
  used for options granted on or after January 1, 2002.

Recent changes to accounting standards and
  policies

Transitional goodwill impairment charge Under the goodwill transitional provisions
  of CICA Handbook section 3062, Goodwill and other intangible assets,
  we charged an impairment of $8,180 million to opening retained earnings at January
  1, 2002 without restating the comparative figures for 2001. This related to
  the impaired goodwill of reporting units in Teleglobe Inc. (Teleglobe) ($7,516
  million), Bell Globemedia Inc. (Bell Globemedia) ($545 million) and BCE Emergis
  ($119 million).

Stock-based compensation and other stock-based
  payments Effective January 1, 2002, we adopted
  the recommendations in section 3870 of the CICA Handbook, Stock-based compensation
  and other stock-based payments, on a prospective basis. The section sets
  standards for recognizing, measuring and disclosing stock-based compensation
  and other stock-based payments made in exchange for goods and services. The
  standards require us to use a fair value-based method for:

- all stock-based awards to non-employees
- direct awards of stock and stock appreciation
    rights to employees
- awards to employees that can be settled in cash
    or other assets.

The standards also
  encourage companies to use a fair value-based method for all other awards granted
  to employees. Awards that are settled in stock are recorded as equity. Awards
  that are required to be, or are usually, settled in cash are recorded as liabilities.
       Before January 1, 2003, we recognized an expense
  when the option was exercised. We measured the cost of employee stock options
  as the amount that the quoted market price of BCE Inc.s common shares
  on the day of the grant exceeded the exercise price an employee had to pay to
  buy the common shares multiplied by the number of options exercised.
       Effective January 1, 2003, we changed our accounting
  to the fair value-based method. We now recognize and measure the compensation
  cost of options granted on or after January 1, 2002 using the Black-Scholes
  option pricing model.

|Black-Scholes
        option pricing model
      The Black-Scholes option pricing model is
        a financial model we use to calculate the weighted-average fair value
        of a stock option granted using four key assumptions: stock dividend yield,
        expected stock volatility, risk-free interest rate and expected life of
        the stock option.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As a result of applying
  this change, we restated the comparative figures for 2002. We recorded a compensation
  expense of $27 million in 2002. At December 31, 2002, this resulted in:

- an increase of $27 million in the deficit
- a decrease of $3 million in non-controlling
    interest
- an increase of $30 million in contributed surplus.

Subscriber acquisition costs Before 2003, we accounted for the costs
  of acquiring subscribers by:

- deferring and amortizing the costs of acquiring
    DTH satellite television service subscribers against earnings over three years
- deferring and amortizing the costs of acquiring
    wireless subscribers against earnings over the terms of the contracts, which
    are normally up to 24 months
- expensing all other subscriber acquisition costs
    when services were activated.

The costs we deferred
  and amortized consisted mainly of hardware subsidies, net of revenues from the
  sale of wireless handsets.
       Effective January 1, 2003, we changed our accounting
  method and started expensing all subscriber acquisition costs when services
  are activated. We also started presenting the revenues generated from the sale
  of wireless handsets instead of netting them against operating expenses.

|                                                  
|--------------------------------------------------
|74                                                
|                                                  
|NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                  

NOTE1

SIGNIFICANT ACCOUNTING POLICIES (continued)

As a result of applying
  this change, we restated the comparative figures for 2002 and 2001:

- operating revenues increased by $195 million
    in 2002 and $183 million in 2001
- operating expenses increased by $275 million
    in 2002 and $332 million in 2001
- income taxes decreased by $32 million in 2002
    and $60 million in 2001
- non-controlling interest decreased by $7 million
    in 2002 and $11 million in 2001
- net earnings decreased by $41 million in 2002
    and $78 million in 2001.

At December 31,
  2002, this resulted in:

- a decrease of $133 million in other current
    assets
- a decrease of $339 million in other long-term
    assets
- an increase of $15 million in goodwill
- a decrease of $189 million in future income
    tax liabilities
- a decrease of $9 million in non-controlling
    interest
- an increase of $259 million in the deficit.

Disclosure of guarantees Effective January 1, 2003, we adopted
  Accounting Guideline 14, Disclosure of guarantees. The guideline describes
  how to identify guarantees and requires guarantors to disclose the significant
  details about guarantees they make, whether or not they will have to make payments
  under the guarantees. See
  Note 24, Guarantees, for more information.

Disposal of long-lived assets and discontinued
  operations Effective May 1, 2003, we adopted the
  recommendations in section 3475 of the CICA Handbook, Disposal of long-lived
  assets and discontinued operations. The new section describes:

- how to recognize, measure, present and disclose
    long-lived assets that will be sold
- criteria for classifying assets as held for
    sale. This section requires an asset held for sale to be measured at its carrying
    value or fair value less disposal costs, whichever is lower
- criteria for classifying a disposal of a business
    as a discontinued operation and how to present and disclose discontinued operations
    and other disposals of long-lived assets.

We are following
  the recommendations in this section for all business dispositions after May
  1, 2003.

Consolidation of variable interest entities Effective July 1, 2003, we adopted Accounting
  Guideline 15, Consolidation of variable interest entities, on a retroactive
  basis without restatement of previous periods. The guideline clarifies when
  variable interest entities should be consolidated, when equity investors are
  not considered to have a controlling financial interest, or they have not invested
  enough equity to allow the entity to finance its activities without additional
  subordinated financial support from other parties.
       We performed a review and concluded that the entity
  with which Bell Canada entered into a 10-year shared services agreement on June
  22, 2001 met the criteria for consolidation under this guideline. This entity,
  which is a corporation owned by a third party, provides Bell Canada with accounting
  systems and administrative services. Before the consolidation, we reported the
  fees that the entity charged Bell Canada for its services as operating expenses. The
  consolidation of this entity resulted in the following changes to our consolidated
  balance sheet at July 1, 2003:

- an increase of $102 million in total assets,
    of which $88 million is capital assets
- an increase of $127 million in total liabilities,
    of which $122 million is long-term debt
- an increase of $25 million in the deficit.

Changes to our consolidated
  statement of operations for the year ended December 31, 2003 were:

- a decrease of $4 million in operating revenues
- a decrease of $11 million in operating expenses
- an increase of $22 million in amortization expense
- an increase of $4 million in interest expense
- a decrease of $19 million in net earnings.

Changes to our consolidated
  statement of cash flows for the year ended December 31, 2003 were:

- an increase of $2 million in cash flows from
    operating activities
- an increase of $7 million in cash flows from
    investing activities
- a decrease of $7 million in cash flows from financing
    activities.

|                                                
|------------------------------------------------
|www.bce.ca                                      
|                                                
|NOTES TO CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                

NOTE1

SIGNIFICANT ACCOUNTING POLICIES (continued)

Future changes to accounting standards and
  policies

Impairment of long-lived assets Effective January 1, 2004, we adopted section 3063
  of the CICA Handbook, Impairment of long-lived assets. Adopting this
  section will affect how we recognize, measure and disclose the impairment of
  long-lived assets. The section is effective for years beginning on or after
  April 1, 2003.
       An impairment loss is recognized on a long-lived
  asset to be held and used when its carrying value exceeds the total undiscounted
  cash flows expected from its use and disposition.
       Before January 1, 2004, the amount of the loss
  was determined by deducting the assets net recoverable amount (based on
  undiscounted cash flows expected from its use and disposition) from its carrying
  value.
       After January 1, 2004, the amount of the loss
  is determined by deducting the assets fair value (based on discounted
  cash flows expected from its use and disposition) from its carrying value.

Asset retirement obligations Effective January 1, 2004, we adopted
  section 3110 of the CICA Handbook, Asset retirement obligations. The
  section is effective for years beginning on or after January 1, 2004. It describes
  how to recognize and measure liabilities related to the legal obligations of
  retiring property, plant and equipment.
       These obligations are initially measured at fair
  value and are adjusted for any changes resulting from the passage of time and
  any changes to the timing or the amount of the original estimate of undiscounted
  cash flows. The asset retirement cost is capitalized as part of the related
  asset and is amortized into earnings over time.
       Adopting this section will not have a material
  effect on our future consolidated financial statements because we do not have
  any significant asset retirement obligations.

Hedging relationships Effective January 1, 2004, we adopted
  Accounting Guideline 13, Hedging relationships.The guideline is effective
  for years beginning on or after July 1, 2003. The guideline provides additional
  documentation and designation requirements for hedge accounting and requires
  regular, periodic assessments of effectiveness. The guideline does not change
  the method of accounting for derivative instruments in hedging relationships.
       Adopting this guideline will not affect our future
  consolidated financial statements. All outstanding hedges that previously qualified
  for hedge accounting continue to qualify for hedge accounting under this guideline.

Financial instruments The CICA recently issued revisions to
  section 3860 of the CICA Handbook, Financial instruments  Disclosure
  and presentation. The revisions change the accounting for certain financial
  instruments that have liability and equity characteristics. It requires instruments
  that meet specific criteria to be classified as liabilities on the balance sheet.
  Some of these financial instruments were previously classified as equities.
       These revisions come into effect on January 1,
  2005. Because we do not have any instruments with these characteristics, adopting
  this section on January 1, 2005 will not affect our future consolidated financial
  statements.

|
|

NOTE2

SEGMENTED INFORMATION

We operate under four segments: Bell Canada, Bell
  Globemedia, BCE Emergis and BCE Ventures. Our segments are organized by products
  and services, and reflect how we manage our operations for planning and for
  measuring performance.

Bell Canada segment  Canadas leading provider of wireline and wireless communications services,
  Internet access, data services and DTH satellite television services to residential
  and business customers.

Bell Globemedia  provides information and entertainment services to Canadian customers and access
  to distinctive Canadian content. It includes CTV Inc. (CTV), Canadas leading
  private broadcaster, and The Globe and Mail, Canadas leading national
  newspaper.

BCE Emergis  provides eBusiness solutions to the financial services industry in North America
  and the health industry in Canada. It automates transactions between companies
  and allows them to interact and transact electronically.

BCE Ventures  consists mainly of our interests in Telesat Canada (Telesat) and CGI Group Inc.
  (CGI).

|                                                  
|--------------------------------------------------
|76                                                
|                                                  
|NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                  

NOTE2

SEGMENTED INFORMATION (continued)

|The accounting
        policies of the segments are the same as those we describe in Note 1,
        Significant accounting policies.Segments negotiate sales between
        each other as if they were unrelated parties.
             We measure the profitability of each segment
        based on its contribution to consolidated net earnings.
             Our operations, including most of our revenues,
        capital assets and goodwill, are located in Canada. Effective January
        1, 2003, the results of Bell Canada Holdings Inc. (BCH), Bell Canadas
        holding company, are classified under Corporate and other.They
        were previously classified under Bell Canada.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The tables on this
  page and the following page are a summary of financial information by segment.
  The results in the Corporate and othersegment include inter-segment
  eliminations.

|                                               
|-----------------------------------------------
|                                               
|                                               
|For the year ended December 31,
      2003     
|Operating revenues                             
|External customers                             
|Inter-segment                                  
|                                               
|Total operating revenues                       
|Operating expenses                             
|Amortization expense                           
|Net benefit plans (cost) credit                
|Restructuring and other charges                
|                                               
|Operating income (loss)                        
|Other income (expense)                         
|Interest expense                               
|Income taxes                                   
|Non-controlling interest                       
|Discontinued operations                        
|Dividends on preferred shares                  
|Premium on redemption of preferred
      shares
|                                               
|Net earnings (loss) applicable                 
|to common shares                               
|                                               
|Segment assets                                 
|Investments at equity                          
|Capital expenditures                           
|                                               

|For the year ended December 31,
      2002      |         |   |        |   |      |   |       |   |      |   |         |  
|----------------------------------------------- | ------- | - | ------ | - | ---- | - | ----- | - | ---- | - | ------- | -
|Operating revenues                              |         |   |        |   |      |   |       |   |      |   |         |  
|External customers                              | 16,930  |   | 1,246  |   | 205  |   | 796   |   | 9    |   | 19,186  |  
|Inter-segment                                   | 172     |   | 44     |   | 141  |   | 268   |   | (625 | ) |        |  
|                                               
|Total operating revenues                        | 17,102  |   | 1,290  |   | 346  |   | 1,064 |   | (616 | ) | 19,186  |  
|Operating expenses                              | (10,023 | ) | (1,110 | ) | (375 | ) | (777  | ) | 454  |   | (11,831 | )
|Amortization expense                            | (2,894  | ) | (67    | ) | (58  | ) | (121  | ) | 58   |   | (3,082  | )
|Net benefit plans (cost) credit                 | 38      |   | (3     | ) |     |   |      |   | (2   | ) | 33      |  
|Restructuring and other charges                 | (675    | ) |       |   | (119 | ) |      |   | (93  | ) | (887    | )
|                                               
|Operating income (loss)                         | 3,548   |   | 110    |   | (206 | ) | 166   |   | (199 | ) | 3,419   |  
|Other income (expense)                          | 2,434   |   | (11    | ) | 25   |   | 65    |   | (80  | ) | 2,433   |  
|Impairment charge                               | (50     | ) | (715   | ) |     |   |      |   |     |   | (765    | )
|Interest expense                                | (1,108  | ) | (39    | ) | (4   | ) | (35   | ) | 62   |   | (1,124  | )
|Income taxes                                    | (1,609  | ) | (34    | ) | 31   |   | (65   | ) | 94   |   | (1,583  | )
|Non-controlling interest                        | (881    | ) | 197    |   | 61   |   | (2    | ) | 23   |   | (602    | )
|Discontinued operations                         | 14      |   |       |   | 38   |   |      |   | 577  |   | 629     |  
|Dividends on preferred shares                   |        |   |       |   |     |   |      |   | (59  | ) | (59     | )
|Premium on redemption of preferred
      shares |        |   |       |   |     |   |      |   | (6   | ) | (6      | )
|                                               
|Net earnings (loss) applicable                  |         |   |        |   |      |   |       |   |      |   |         |  
|to common shares                                | 2,348   |   | (492   | ) | (55  | ) | 129   |   | 412  |   | 2,342   |  
|                                               
|Segment assets                                  | 33,359  |   | 3,238  |   | 926  |   | 2,554 |   | (971 | ) | 39,106  |  
|Investments at equity                           | 371     |   | 117    |   |     |   |      |   |     |   | 488     |  
|Capital expenditures                            | 3,390   |   | 47     |   | 22   |   | 232   |   | 40   |   | 3,731   |  
|                                               

|For the year ended December 31,
      2001 |         |   |        |   |      |   |       |   |        |   |         |  
|------------------------------------------ | ------- | - | ------ | - | ---- | - | ----- | - | ------ | - | ------- | -
|Operating revenues                         |         |   |        |   |      |   |       |   |        |   |         |  
|External customers                         | 16,703  |   | 1,175  |   | 242  |   | 670   |   | 6      |   | 18,796  |  
|Inter-segment                              | 164     |   | 28     |   | 205  |   | 374   |   | (771   | ) |        |  
|                                          
|Total operating revenues                   | 16,867  |   | 1,203  |   | 447  |   | 1,044 |   | (765   | ) | 18,796  |  
|Operating expenses                         | (10,236 | ) | (1,095 | ) | (378 | ) | (754  | ) | 606    |   | (11,857 | )
|Amortization expense                       | (2,873  | ) | (265   | ) | (204 | ) | (152  | ) | (23    | ) | (3,517  | )
|Net benefit plans (cost) credit            | 128     |   | (1     | ) |     |   |      |   | (6     | ) | 121     |  
|Restructuring and other charges            | (972    | ) | (5     | ) |     |   |      |   |       |   | (977    | )
|                                          
|Operating income (loss)                    | 2,914   |   | (163   | ) | (135 | ) | 138   |   | (188   | ) | 2,566   |  
|Other income (expense)                     | 48      |   |       |   | 3    |   | 236   |   | 3,779  |   | 4,066   |  
|Interest expense                           | (1,063  | ) | (35    | ) | (33  | ) | (64   | ) | 194    |   | (1,001  | )
|Income taxes                               | (802    | ) | (15    | ) | (22  | ) | (27   | ) | (830   | ) | (1,696  | )
|Non-controlling interest                   | (456    | ) | 63     |   | 71   |   |      |   | 33     |   | (289    | )
|Discontinued operations                    | (28     | ) |       |   | (125 | ) |      |   | (3,057 | ) | (3,210  | )
|Dividends on preferred shares              |        |   |       |   |     |   |      |   | (64    | ) | (64     | )
|                                          
|Net earnings (loss) applicable             |         |   |        |   |      |   |       |   |        |   |         |  
|to common shares                           | 613     |   | (150   | ) | (241 | ) | 283   |   | (133   | ) | 372     |  
|                                          



|                                                
|------------------------------------------------
|www.bce.ca                                      
|                                                
|NOTES TO CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                

NOTE3

BUSINESS ACQUISITIONS AND DISPOSITIONS

|The consolidated statements
        of operations include the results of acquired businesses from the day
        they were acquired.
|-------------------------------------------------------------------------------------------------------------------------------------

CGIs acquisition of Cognicase Inc.
  (Cognicase)

|Cognicase provides
        services, such as implementing e-business solutions, application services
        provider (ASP) services, re-engineering existing applications for e-business,
        technology configuration management, as well as project management and
        business process improvement consulting services.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

CGI acquired 100%
  of the outstanding common shares of Cognicase in the first quarter of 2003.
  It issued Class A subordinate shares to pay for part of the purchase price,
  which reduced BCEs equity interest in CGI to 29.9% from 31.5%. BCE recognized
  a dilution gain of $5 million.
       The table below shows the final purchase price
  allocation.

|                                                              
|--------------------------------------------------------------
|                                                              
|                                                              
|Non-cash working capital items                                
|Capital assets                                                
|Contract costs and other long-term
      assets               
|Future income taxes                                           
|Goodwill(1)                                                   
|Long-term debt                                                
|                                                              
|                                                              
|Cash position at acquisition                                  
|                                                              
|Net assets acquired                                           
|                                                              
|Consideration                                                 
|Cash                                                          
|Acquisition
      costs                                       
|Issuance
      of 19,850,245 CGI Class A subordinate shares(2)
|                                                              
|                                                              
|                                                              

|(1) | The goodwill is not deductible
      for tax purposes.                                                                                                                                                                                                            
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The value of the CGI shares issued
      as payment was determined using the weighted-average closing share price
      on the Toronto Stock Exchange for the 10 trading days before the day that
      the terms of the acquisition were agreed on and announced.

Sale
  of Certen Inc. (Certen) On July 2, 2003, Bell Canada sold its
  89.9% ownership interest in Certen to a subsidiary of Amdocs Limited for $89
  million in cash.
       The carrying value of Certens net assets
  was $159 million at the time of the sale. Certen had total assets of $450 million,
  including $34 million in cash and cash equivalents, and total liabilities of
  $291 million.
       At the time of the sale, Bell Canada extended
  the remaining term of its contract with Certen and Amdocs Limited for billing
  operations outsourcing, customer care and billing solutions development from
  four years to seven years.
       Bell Canada received a perpetual right to use
  and modify the intellectual property relating to the billing system. It recorded
  the perpetual right as an intangible asset of $494 million that will be amortized
  against earnings over the remaining life of the contract.
       Bell Canada recorded a liability of $392 million.
  This represented its future payments to Certen over the remaining life of the
  contract for the development of Bell Canadas billing system. The development
  of the billing system was largely completed at the time of the sale. This liability
  will be reduced as Bell Canada makes payments to Certen.
       The future income tax liability relating to the
  intangible asset and long-term liability was $32 million. The
  transaction did not result in any gain or loss for Bell Canada. Before the sale,
  Certens results of operations were presented in the Bell Canada segment.

Repurchase of SBC Communications Inc.s
  (SBC) 20% interest in BCH On June 28, 2002, BCE Inc., BCH and entities controlled
  by SBC entered into agreements that ultimately led to BCE Inc.s repurchase
  of SBCs 20% interest in BCH for $6,316 million. The initial purchase price
  allocation resulted in $5,430 million of goodwill. The goodwill is not deductible
  for tax purposes.
       We completed the purchase price allocation in
  the third quarter of 2003. This resulted in reallocating $1,758 million from
  goodwill to other net assets of BCH, based on their fair values on the day of
  the repurchase.
       This resulted in the following on our consolidated
  balance sheet:

- an increase of $18 million in investments, which
    are classified as other long-term assets
- a decrease of $456 million in accrued benefit
    asset, which is classified as other long-term assets
- an increase of $1,986 million in indefinite-life
    intangibles
- an increase of $603 million in customer relationships,
    which are classified as capital assets
- an increase of $165 million in long-term debt
- an increase of $228 million in future income tax
    liability, which is classified as other long-term liabilities.

|                                                  
|--------------------------------------------------
|78                                                
|                                                  
|NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                  

NOTE3

BUSINESS ACQUISITIONS AND DISPOSITIONS(continued)

Sale of the directories business On November 29, 2002, we sold our print
  and electronic directories business for approximately $3 billion ($2.8 billion
  net of selling costs and after the acquisition of an approximate 10% interest
  in the acquisition vehicle) in cash. The net carrying value of the net assets
  of the directories business was $518 million at the time of the sale. The directories
  business had total assets of $390 million, including $52 million in cash and
  cash equivalents, and total liabilities of $90 million. We recorded a pre-tax
  gain of $2.3 billion on the sale. We allocated $218 million of goodwill to the
  sale.
       On the day of the transaction, the buyers owned
  an approximate 90% equity interest in an acquisition vehicle that holds the
  directories business. Bell Canada indirectly acquired an approximate 10% interest
  in the acquisition vehicle for approximately $91 million. It is accounted for
  under the cost method.

|See Note 5, Other
        income,for more information about the sale of the directories business.
|-------------------------------------------------------------------------------------------------

Creation of Bell West Inc. (Bell West) In April 2002, Bell Canada and Manitoba Telecom Services
  Inc. (MTS) created Bell West by combining Bell Canadas interests in the
  wireline assets of BCE Nexxia Inc. in Alberta and British Columbia with Bell
  Canadas and MTSs interests in Bell Intrigna Inc. Bell West provides
  telecommunications services in those two provinces and operates under the Bell
  brand.

|MTS is publicly
        traded. Bell Canada owns 22% of MTS. MTS is a significantly influenced
        investment, which we account for under the equity method.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------

The transaction
  was accounted for at the combined carrying values of the assets and liabilities.
  As a result of the transaction, Bell Canada owns 60% of Bell West and MTS owns
  40%. The terms of the agreement between Bell Canada and MTS also included put
  and call options relating to MTSs 40% interest in Bell West. 
       On February 2, 2004, MTS exercised its option
  to sell its 40% interest in Bell West to Bell Canada for approximately $645
  million in cash. The cash is payable at closing, which is expected to occur
  on or before August 3, 2004.

Creation of the Bell Nordiq Income Fund In April 2002, Bell Canada announced the
  initial public offering of units of the Bell Nordiq Income Fund. The fund acquired
  a 37% interest in each of Télébec Limited Partnership (Télébec)
  and Northern Telephone Limited Partnership (Northern Telephone) from Bell Canada.
  Bell Canada retains management control over both partnerships and holds a 63%
  interest in each of them. Bell Canada received gross proceeds of $324 million
  and recorded a pre-tax gain of $222 million on this transaction.

|
|

NOTE4

RESTRUCTURING AND OTHER CHARGES

2003

Streamlining and other charges at BCE
  Emergis BCE Emergis recorded a pre-tax charge of $38 million
  ($21 million after taxes and non-controlling interest) in the fourth quarter
  of 2003. This included restructuring charges of $22 million and other charges
  of $16 million.
       The restructuring charges will be incurred as
  BCE Emergis streamlines its organizational structure. These costs include employee
  severance and other employee costs. At December 31, 2003, the unpaid balance
  of this restructuring provision was $21 million. The restructuring is expected
  to be complete in 2004.
       Other charges consisted of asset write-downs in
  BCE Emergis remaining businesses.

Restructuring of Xwave Solutions Inc. Aliant recorded a pre-tax restructuring
  charge of $15 million ($4 million after taxes and non-controlling interest)
  in 2003. This was a result of a restructuring at its subsidiary, Xwave Solutions
  Inc. Costs associated with the restructuring include severance and related benefits,
  technology lease cancellation penalties and real estate rationalization costs.
  At December 31, 2003, the unpaid balance of this restructuring provision was
  $6 million. The restructuring is expected to be complete in 2004.

Bell Canada charges In 2003, Bell Canada recorded other charges
  of $65 million relating to various asset write-downs and other provisions. These
  charges were offset by a credit of $66 million relating to the reversal of the
  restructuring charges recorded in 2002, which were no longer necessary because
  fewer employees were terminated than expected. This was due to an increased
  redeployment of employees within Bell Canada.

|                                                
|------------------------------------------------
|www.bce.ca                                      
|                                                
|NOTES TO CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                

NOTE4

RESTRUCTURING AND OTHER CHARGES(continued)

2002

Streamlining and other charges at Bell
  Canada Bell Canada recorded a pre-tax charge of $302 million
  in the fourth quarter of 2002 ($190 million after taxes). This included restructuring
  charges of $232 million and other charges of $70 million.
       The restructuring charges were mainly from streamlining
  Bell Canadas management, line and other support functions. They included
  severance for approximately 1,700 employees, enhanced pension benefits and other
  employee costs. The restructuring was largely complete in 2003.
       Other charges consisted mainly of various accounts
  receivable write-downs relating to billing adjustments and unreconciled balances
  from previous years that were identified in 2002.

Write-off of deferred costs BCE Inc. recorded a pre-tax charge of
  $93 million ($61 million after taxes) in the fourth quarter of 2002. This represented
  a write-off of deferred costs relating to various convergence initiatives after
  an analysis indicated that it was unlikely that these costs would be recovered.

Pay equity settlement On September 25, 2002, the members of the Canadian
  Telecommunications Employees Association (CTEA) ratified a settlement
  reached between the CTEA and Bell Canada relating to the 1994 pay equity complaints
  that the CTEA had filed on behalf of its members before the Canadian Human Rights
  Commission. The settlement included a cash payout of $128 million and related
  pension benefits of approximately $50 million.
       As a result of the settlement, Bell Canada recorded
  a charge of $79 million in the third quarter of 2002 ($37 million after taxes
  and non-controlling interest). The charge is equal to the $128 million cash
  payout, less a previously recorded provision. We are deferring and amortizing
  the related pension benefits into earnings over the estimated average remaining
  service life of active employees and the estimated average remaining life of
  retired employees.

Write-down of Bell Canadas accounts
  receivable At the same time it was developing its
  new billing system, Bell Canada adopted a new and more precise method for analysing
  receivables by customer and by service line. This method allows it to more accurately
  determine the validity of amounts that customers owe to Bell Canada.
       The analysis indicated that a write-down of accounts
  receivable of $272 million ($142 million after taxes and non-controlling interest)
  was appropriate at June 30, 2002.
       Because these amounts came from legacy billing
  systems and processes, Bell Canada carried out a detailed review of billings
  and adjustments for the period from 1997 to 2002. It determined that these amounts
  were the cumulative result of a series of individually immaterial events and
  transactions relating to its legacy accounts receivable systems dating back
  to the early 1990s.

Streamlining and other charges at BCE
  Emergis BCE Emergis recorded a pre-tax charge of $119 million
  in the second quarter of 2002 ($63 million after taxes and non-controlling interest).
  This included restructuring charges of $95 million and other charges of $24
  million.
       All of these charges were mainly from streamlining
  BCE Emergis services and reducing its operating costs. They consisted
  of the write-off of certain assets, severance and other employee costs, contract
  settlements and costs of leased properties no longer in use. The charges were
  reduced by the proceeds of disposition of certain exited activities. The restructuring
  was complete in 2003.

2001

Streamlining and other charges at Bell
  Canada Bell Canada recorded a total of $975 million in pre-tax
  charges in the first and fourth quarters of 2001 ($461 million after taxes and
  non-controlling interest). This included restructuring charges of $555 million
  and other charges of $420 million.
       The restructuring charges were from Bell Canadas
  streamlining initiatives and included employee severance for approximately 4,700
  employees, enhanced pension benefits and other employee costs. The restructuring
  was complete in 2002.
       Other charges consisted of the write-down of Bell
  Mobility Inc.s wireless capital assets, in particular, its analogue networks,
  paging networks and personal communications service (PCS) base stations.

|                                                  
|--------------------------------------------------
|80                                                
|                                                  
|NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                  

NOTE5

OTHER INCOME

|                               
|-------------------------------
|                               
|                               
|Net gains on investments       
|Interest income                
|Foreign currency gains (losses)
|Other                          
|                               
|Other income                   
|                               

Net gains on investments
  of $76 million in 2003 were mainly from:

- a $120 million gain from the sale of a 3.66%
    interest in the directories business for net proceeds of $135 million in cash.
    Bell Canadas retained interest in the directories business is 3.24%.
- a $44 million loss from the write-down of a
    number of our cost-accounted investments.

Net gains on investments
  of $2,414 million in 2002 were mainly from:

- selling the directories business ($2.3 billion)
- selling a 37% interest in each of Télébec
    and Northern Telephone when the Bell Nordiq Income Fund was created ($222
    million)
- writing down our cost-accounted investment in
    Nortel Networks Corporation (Nortel) ($98 million).

Included in Otheris a $30 million write-down of deferred debt issuance costs relating to
  the early retirement of credit facilities.
       Net gains on investments of $4,063 million in
  2001 were mainly from:

- settling short-term forward contracts on approximately
    48 million Nortel common shares and selling the same number of Nortel common
    shares ($3.7 billion)
- dilution gains resulting from share issues by
    CGI, Aliant and BCE Emergis to third parties relating to business acquisitions
    and public offerings ($265 million).

|
|

NOTE6

IMPAIRMENT CHARGE

In the fourth quarter of 2002, we completed our
  annual impairment test for goodwill for all of its reporting units. As a result,
  we recognized a charge of $765 million to pre-tax earnings ($527 million after
  non-controlling interest) relating to impaired goodwill of reporting units in
  Bell Globemedia ($715 million) and Aliant ($50 million). In each case, the goodwill
  was written down to its estimated fair value, which was determined based on
  estimates of discounted future cash flows and confirmed by market-related values.
       The main factor contributing to the impairment
  at Bell Globemedia was a revised estimate of future cash flows, which reflected
  managements decision to scale back its trials in convergence products
  and other non-core businesses. Market conditions for the media business also
  contributed to the impairment.
       The write-down at Aliant was a result of poor
  market conditions in the information technology business, which led to lower
  than expected performance.

|
|

NOTE7

INTEREST EXPENSE

|                                  
|----------------------------------
|                                  
|                                  
|Interest expense on long-term debt
|Interest expense on other debt    
|                                  
|Total interest expense            
|                                  



|
|

NOTE8

INCOME TAXES

The table below is a reconciliation of income tax
  expense at Canadian statutory rates of 35.4% in 2003, 37.4% in 2002 and 40.1%
  in 2001, and the amount of reported income tax expense in the statements of
  operations.

|                                                                                      
|--------------------------------------------------------------------------------------
|                                                                                      
|                                                                                      
|Income taxes computed at statutory
      rates                                        
|Gains on reduction
      of ownership in subsidiaries and joint ventures              
|Losses not tax
      affected                                                         
|Equity in net
      (losses) earnings of significantly influenced companies           
|Net gains on
      disposal of investments                                            
|Difference between
      Canadian statutory rates and those applicable to subsidiaries
|Large corporations
      tax                                                          
|Goodwill amortization                                                                 
|Goodwill impairment                                                                   
|Other                                                                                 
|                                                                                      
|Total income tax expense                                                              
|                                                                                      



|                                                
|------------------------------------------------
|www.bce.ca                                      
|                                                
|NOTES TO CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                

NOTE8

INCOME TAXES(continued)

The table below
  shows the significant components of income tax expense relating to earnings
  from continuing operations.

|                                                       
|-------------------------------------------------------
|                                                       
|                                                       
|Current income taxes                                   
|Future income taxes                                    
|Recognition
      and utilization of loss carryforwards
|Change in Canadian
      statutory rate                
|Change in temporary
      differences and other        
|                                                       
|Total income tax expense                               
|                                                       

The table below
  shows future income taxes resulting from temporary differences between the carrying
  amounts of assets and liabilities for accounting purposes and the amounts used
  for tax purposes, as well as tax loss carryforwards.

|                                                     
|-----------------------------------------------------
|                                                     
|                                                     
|Non-capital loss carryforwards                       
|Capital loss carryforwards                           
|Capital assets                                       
|Indefinite-life intangible assets                    
|Employee benefit plans                               
|Investment tax credits                               
|Investments                                          
|Other                                                
|                                                     
|Total future income taxes                            
|                                                     
|Future income taxes are comprised
      of:          
|Future income
      tax asset  current portion      
|Future income
      tax asset  long-term portion    
|Future income
      tax liability  current portion  
|Future income
      tax liability  long-term portion
|                                                     
|Total future income taxes                            
|                                                     

At December 31,
  2003, BCE had $1,542 million in non-capital loss carryforwards. We:

- recognized a future tax asset of $469 million
    for financial reporting purposes on approximately $1,435 million of the non-capital
    loss carryforwards. $1,347 million expires in varying annual amounts until
    the end of 2010. $88 million expires in varying annual amounts from 2011 to
    2023.
- did not recognize a future tax asset for financial
    reporting purposes on approximately $107 million of the non-capital loss carryforwards.
    $41 million expires in varying annual amounts until the end of 2010. $66 million
    expires in varying annual amounts from 2011 to 2023.

At December 31,
  2003, BCE had $4,093 million in capital loss carryforwards, all of which can
  be carried forward indefinitely. We:

- recognized a future tax asset of $22 million
    for financial reporting purposes on approximately $99 million of the capital
    loss carryforwards
- did not recognize a future tax asset for financial
    reporting purposes on the balance.

|
|

NOTE9

DISCONTINUED OPERATIONS

|                                                  
|--------------------------------------------------
|                                                  
|                                                  
|Teleglobe                                         
|Bell Canada International Inc. (BCI)              
|Aliants emerging business
      segment          
|Aliants remote communications
      segment      
|BCE Emergis U.S. Health operations               
|                                                  
|Net gain (loss) from discontinued
      operations
|                                                  

The table below
  is a summarized statement of operations for the discontinued operations.

|                                                                    
|--------------------------------------------------------------------
|                                                                    
|                                                                    
|Revenue                                                             
|                                                                    
|Operating gain (loss) from discontinued
      operations, before tax
|Gain (loss) from discontinued operations,
      before tax          
|Income tax recovery (expense) on
      operating loss (gain)        
|Income tax recovery (expense) on
      loss (gain)                  
|Non-controlling interest                                            
|                                                                    
|Net gain (loss) from discontinued
      operations                  
|                                                                    



|                                                  
|--------------------------------------------------
|82                                                
|                                                  
|NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                  

NOTE9

DISCONTINUED OPERATIONS(continued)

Teleglobe

|Teleglobe provided
        international voice and data telecommunications services. It also provided
        retail telecommunications services through its investment in the Excel
        Communications group until the second quarter of 2002. These services
        included long distance, paging and Internet services to residential and
        business customers in North America.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Effective April 24, 2002, we started presenting
  the financial results of Teleglobe as discontinued operations. They were previously
  presented in the BCE Teleglobe segment.
       The net gain of $39 million in the fourth quarter
  of 2003 relates mainly to the use available loss carry-forwards that were applied
  against the taxes payable relating to Bell Canadas sale of a 3.66% interest
  in the directories business and Aliants sale of Stratos. Otherwise, the
  tax benefit associated with the remaining unused capital losses has not been
  reflected in the financial statements.
       We recorded a loss of $73 million in the second
  quarter of 2002 for the write-down of our interest in Teleglobe to its net realizable
  value, which we determined to be zero. This loss was in addition to the transitional
  goodwill impairment charge of $7,516 million to opening retained earnings as
  of January 1, 2002, which was required by section 3062 of the CICA Handbook.
       Effective May 15, 2002, we stopped consolidating
  Teleglobes financial results and started accounting for the investment
  at cost. On December 31, 2002, after obtaining court approval, we sold all of
  our common and preferred shares in Teleglobe to the court-appointed monitor
  for a nominal amount. The sale triggered approximately $10 billion of capital
  losses for tax purposes. We recorded a gain of $1,042 million, relating mainly
  to the tax benefit from:

- reinstating non-capital loss carryforwards that
    were previously used to offset gains incurred on the transactions related
    to the disposition of Nortel common shares in 2001
- applying a portion of the capital losses against
    the gain on the sale of the directories business in 2002.

Teleglobes
  results of operations include an impairment charge of $2,049 million that was
  recorded in the first quarter of 2001 after it completed an assessment of the
  carrying value of its investment in the Excel Communications group.

BCI

|BCI developed and
        operated communications companies in markets outside Canada, with a focus
        on Latin America, until July 2002 when it sold its interest in Telecom
        Américas Ltd. BCI held most of its investments through Telecom
        Américas Ltd.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Effective January 1, 2002, we started presenting
  the financial results of BCI as discontinued operations. They were previously
  presented in the BCE Ventures segment.
       Effective June 30, 2002, we stopped consolidating
  BCIs financial results and started accounting for our investment in BCI
  at cost. We recorded a charge of $316 million in 2002, which represented a write-down
  of the investment to our estimate of its net realizable value.
       BCI will be liquidated once all of its assets
  have been disposed of and all claims against it have been determined. A final
  distribution will be made to BCIs creditors and shareholders with the
  approval of the court. BCI is publicly traded. BCE Inc. owns a 62.2% interest
  in BCI.



Aliants emerging business segment

|Aliants emerging
        business segment consisted mainly of Aliants investments in iMagicTV
        Inc., Prexar LLC and AMI Offshore Inc. iMagicTV Inc. is a software development
        company that provides broadband TV software and solutions to service providers
        around the world. Prexar LLC is an Internet services provider. AMI Offshore
        Inc. provides process and systems control technical services, and contracts
        manufacturing solutions to offshore oil and gas and other industries.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Effective May 2003, we started presenting the financial
  results of Aliants emerging business segment as discontinued operations.
  They were previously presented in the Bell Canada segment.
       Almost all of the assets of Aliants emerging
  business segment were sold at December 31, 2003.



Aliants remote communications segment

|Aliants remote
        communications segment consisted of Aliants 53.2% investment in
        Stratos. Stratos offers Internet Protocol (IP), data and voice access
        services through a range of newly emerging and established technologies,
        including satellite and microwave, to customers in remote locations.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Effective December 2003, we started presenting the
  financial results of Aliants remote communications segment as discontinued
  operations. They were previously presented in the Bell Canada segment.
       In December 2003, Aliant completed the sale of
  Stratos, after receiving the required regulatory approvals. Aliant received
  $340 million ($320 million net of selling costs) in cash for the sale. At the
  time of sale, the net carrying value of Stratos net assets was $215 million.
  Stratos had total assets of $696 million, including $52 million in cash and
  cash equivalents, and total liabilities of $372 million. The transaction resulted
  in a gain on sale of $105 million ($48 million after taxes and non-controlling
  interest).

|                                                
|------------------------------------------------
|www.bce.ca                                      
|                                                
|NOTES TO CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                

NOTE9

DISCONTINUED OPERATIONS(continued)

BCE Emergis U.S. Health operations (US
  Health)

|US
        Health operates cost containment networks (shared savings and preferred
        provider organizations) that process medical claims for health care payers,
        including insurance companies and self-insured entities.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Effective December 2003, we started presenting the
  financial results of US Health as discontinued operations. They were previously
  presented in the BCE Emergis segment.
       In December 2003, BCE Emergis board of directors
  approved the sale of US Health for a total of U.S.$213 million in cash. The
  total price is subject to adjustments set out in the purchase agreement. BCE
  Emergis sold US Health in March 2004. 
       The sale excluded BCE Emergis National Health
  Services Inc. subsidiary (NHS), which runs care management operations in the
  United States. BCE Emergis sold NHS in a separate transaction in March 2004
  for a total of U.S.$10 million in cash.
       At December 31, 2003, the carrying value of US
  Healths net assets was $247 million. It had total assets of $254 million
  (including $9 million in cash and cash equivalents) and total liabilities of
  $7 million. The loss on the transaction was $87 million ($160 million after
  non-controlling interest and BCE Inc.s incremental goodwill in US Health),
  which was recorded in December 2003.



|
|

NOTE10

EARNINGS PER SHARE

The table below is a reconciliation of the numerator
  and the denominator used in the calculation of basic and diluted earnings per
  common share from continuing operations.

|                                                                                           
|-------------------------------------------------------------------------------------------
|                                                                                           
|                                                                                           
|Earnings from continuing operations
      (numerator)                                      
|Earnings from continuing operations                                                        
|Dividends on preferred shares                                                              
|Premium on redemption of preferred
      shares                                            
|                                                                                           
|Earnings from continuing operations
       basic                                          
|Assumed exercise of put options
      by CGI shareholders (1)                              
|                                                                                           
|Earnings from continuing operations
       diluted                                        
|                                                                                           
|Weighted-average number of
      common shares outstanding (denominator)(in
      millions)
|Weighted-average number of common
      shares outstanding  basic                         
|Assumed exercise of stock options
      (2)                                                
|Assumed exercise of put options
      by CGI shareholders (1)                              
|                                                                                           
|Weighted-average number of common
      shares outstanding  diluted                       
|                                                                                           

(1)
      See Note 23, Commitments
        and Contingencies,for information about the cancellation of the put
        options with CGI shareholders.(2)
      The calculation of the assumed
        exercise of stock options includes the effect of the average unrecognized
        future compensation cost of dilutive options. It excludes all 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. If we included them, they
        would cause our diluted earnings per share to be overstated. The number
        of excluded options was 22,176,302 in 2003, 20,770,155 in 2002 and 13,185,622
        in 2001.




|
|

NOTE11

ACCOUNTS RECEIVABLE

|                               
|-------------------------------
|                               
|                               
|Trade accounts receivable      
|Other accounts receivable      
|Allowance for doubtful accounts
|                               
|                               
|                               

Securitization of accounts receivable

Bell Canada sold an interest in a pool of accounts
  receivable to a securitization trust for a total of $900 million in cash, under
  a revolving sales agreement that came into effect on December 12, 2001. The
  agreement expires on December 12, 2006. Bell Canada had a retained interest
  of $128 million in that pool of accounts receivable at December 31, 2003. This
  is equal to the amount of overcollateralization in the receivables transferred.
       Aliant sold an interest in a pool of accounts
  receivable to a securitization trust for a total of $130 million in cash, under
  a revolving sales agreement that came into effect on December 13, 2001. The
  agreement expires on December 13, 2006. Aliant had a retained interest of $29
  million in that pool of accounts receivable at December 31, 2003.

|                                                  
|--------------------------------------------------
|84                                                
|                                                  
|NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                  

NOTE11

ACCOUNTS RECEIVABLE(continued)

Bell Canada and
  Aliant continue to service these accounts receivable. The buyers interest
  in the collection of these accounts receivable ranks ahead of the interests
  of Bell Canada and Aliant. Bell Canada and Aliant remain exposed to certain
  risks of default on the amount of receivables that is securitized. They have
  provided various credit enhancements in the form of overcollateralization and
  subordination of their retained interests.
       The buyers will reinvest the amounts collected
  by buying additional interests in the Bell Canada and Aliant accounts receivable
  until the agreements expire. The buyers and their investors have no claim on
  Bell Canadas and Aliants other assets if customers do not pay amounts
  owed on time.
       In 2003, we recognized a pre-tax loss of $33 million
  on the revolving sale of accounts receivable for the combined securitizations,
  compared to $27 million in 2002.
       The table below shows balances for the combined
  securitizations at December 31, 2003 and the assumptions that were used in the
  model on the date of transfer and at December 31, 2003. A 10% or 20% adverse
  change in each of these assumptions would have no significant effect on the
  current fair value of the retained interest.

|                                                 
|-------------------------------------------------
|                                                 
|                                                 
|Securitized interest in accounts
      receivable
|Retained interest                                
|Servicing liability                              
|Average accounts receivable managed              
|Assumptions                                      
|Cost of funds                                    
|Average delinquency
      ratio                  
|Average net
      credit loss ratio              
|Weighted average
      life (in days)            
|Servicing fee
      liability                    
|                                                 

The table below
  is a summary of certain cash flows received from and paid to the trusts during
  the year.

|                                         
|-----------------------------------------
|                                         
|                                         
|Collections reinvested in revolving sales
|Increase (decrease) in sale proceeds     
|                                         



|
|

NOTE12

CAPITAL ASSETS

|                                   
|-----------------------------------
|                                   
|                                   
|                                   
|                                   
|Telecommunications assets          
|Machinery and equipment            
|Buildings                          
|Plant under construction           
|Land                               
|Other                              
|                                   
|Total property, plant and equipment
|Finite-life intangible assets      
|                                   
|Total capital assets               
|                                   

The cost of assets
  under capital leases was $481 million at December 31, 2003 and $565 million
  at December 31, 2002. The net book value of these assets was $242 million at
  December 31, 2003 and $352 million at December 31, 2002.
       Amortization of capital assets was $3,133 million
  in 2003, $3,043 million in 2002 and $2,935 million in 2001. We capitalized total
  interest cost of $23 million in 2003, $25 million in 2002 and $47 million in
  2001. Retirements charged to accumulated amortization were $460 million in 2003,
  $893 million in 2002 and $822 million in 2001.

|                                                
|------------------------------------------------
|www.bce.ca                                      
|                                                
|NOTES TO CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                

NOTE13

OTHER LONG-TERM ASSETS

|                                     
|-------------------------------------
|                                     
|                                     
|Accrued benefit asset                
|Future income taxes                  
|Investments at equity                
|Investments at cost                  
|Long-term notes and other receivables
|Deferred debt issuance costs         
|Deferred development costs           
|Other                                
|                                     
|                                     
|                                     

The amount of Investments
  at equityincludes goodwill of $199 million at December 31, 2003 and $207
  million at December 31, 2002. Amortization of deferred charges was $14 million
  in 2003, $39 million in 2002 and $49 million in 2001.

|
|

NOTE14

INDEFINITE-LIFE INTANGIBLE ASSETS

|                                                               
|---------------------------------------------------------------
|                                                               
|                                                               
|Intangible assets, December 31, 2002                           
|Goodwill reallocated to indefinite-life intangible
      assets
|Capitalized interest                                           
|                                                               
|Intangible assets, December 31, 2003                           
|                                                               
|Consisting of:                                                 
|Brand name                                                     
|Spectrum licences                                              
|Television licences                                            
|Cable licences                                                 
|                                                               
|Total                                                          
|                                                               



|
|

NOTE15

GOODWILL

|                                              
|----------------------------------------------
|                                              
|                                              
|Balance  December 31, 2002                   
|Additions                                     
|Goodwill reallocated to other net
      assets
|Other                                         
|                                              
|Balance  December 31, 2003                   
|                                              



|
|

NOTE16

DEBT DUE WITHIN ONE YEAR

|                                                    
|----------------------------------------------------
|                                                    
|                                                    
|Bank advances                                       
|Notes payable                                       
|BCE Inc. Series P retractable preferred
      shares
|Long-term debt due within one year                  
|                                                    
|Total debt due within one year                      
|                                                    

We expect to repay
  debt due within one year with funds generated internally or by refinancing it. 
       The conditions of some of the credit agreements
  require us to meet specific financial ratios and to place restrictions on acquiring
  capital assets and paying dividends. We are in compliance with all conditions
  and restrictions.

|                                                  
|--------------------------------------------------
|86                                                
|                                                  
|NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                  

NOTE17

LONG-TERM DEBT

|                                                   
|---------------------------------------------------
|                                                   
|                                                   
|BCE Inc.                                           
|Notes (a)                                          
|Notes payable to SBC                               
|                                                   
|Total  BCE Inc.                                   
|                                                   
|Bell Canada                                        
|Debentures and notes (b)                           
|Subordinated debentures                            
|Capital leases (c)                                 
|Other                                              
|                                                   
|Total  Bell Canada                                
|                                                   
|Aliant                                             
|Debentures, notes and bonds (d)                    
|Other                                              
|                                                   
|Total  Aliant                                     
|                                                   
|Bell Globemedia                                    
|Revolving reducing term credit
      agreements (e)
|Notes                                              
|                                                   
|Total  Bell Globemedia                            
|                                                   
|Telesat Notes
      and other                     
|                                                   
|Total  Other                                      
|                                                   
|Total debt                                         
|Unamortized premium                                
|Less: Amount due within one year                   
|                                                   
|Long-term debt                                     
|                                                   

|BCE Inc.       
|---------------
|(a)            
|Bell Canada    
|(b)            
|(c)            
|Aliant         
|(d)            
|Bell Globemedia
|(e)            

Restrictions Certain debt agreements:

- require us to meet specific financial ratios
- impose covenants, maintenance tests and new
    issue tests
- restrict the payment of dividends
- restrict how we can dispose of Bell Canada voting
    shares.

We are in compliance
  with all conditions and restrictions.

|                                                
|------------------------------------------------
|www.bce.ca                                      
|                                                
|NOTES TO CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                

NOTE18

OTHER LONG-TERM LIABILITIES

|                                                        
|--------------------------------------------------------
|                                                        
|                                                        
|Future income taxes                                     
|Accrued benefit liability                               
|Deferred revenue and gains on assets                    
|Deferred contract payments                              
|CRTC benefits packages                                  
|BCE Inc. Series P retractable
      preferred shares (a)
|Other                                                   
|                                                        
|Total other long-term liabilities                       
|                                                        

(a)
      At December 31, 2003, 14.1 million
        shares were outstanding (14.2 million shares at December 31, 2002). The
        annual dividend rate was $1.60 per share. The dividend payments are classified
        as interest expense in the statements of operations. On December 8, 2003,
        BCE Inc. announced that it would redeem all of its outstanding Series
        P retractable preferred shares for approximately $351 million, which it
        did on January 15, 2004. As a result, the amount outstanding at December
        31, 2003 is presented as debt due within one year.




|
|

NOTE19

FINANCIAL INSTRUMENTS

Using derivatives

We periodically use derivative instruments to manage
  our exposure to interest rate risk, foreign currency risk and changes in the
  price of BCE Inc. common shares. We do not use derivative instruments for speculative
  purposes. Because we do not trade actively in derivative instruments, we are
  not exposed to any significant liquidity risks relating to them.
       The following derivative instruments were outstanding
  at December 31, 2003:

- cross-currency swaps, interest rate swaps and
    forward contracts that hedge foreign currency risk on a portion of our long-term
    debt
- forward contracts on BCE Inc. common shares
    that hedge the fair value exposure related to SCPs.

|See Note 11, Accounts
        receivable,for a description of the receivables securitization agreements
        that are outstanding.
|-------------------------------------------------------------------------------------------------------------------------------------

Credit risk

We are exposed to credit risk if counterparties
  to our derivative instruments are unable to meet their obligations. We expect
  that they will be able to meet their obligations because we deal only with highly
  rated institutions that have strong credit ratings and we regularly monitor
  our credit risk and credit exposure.
       There was no credit risk relating to derivative
  instruments at December 31, 2003.
       We are also exposed to credit risk from our customers,
  but the concentration of this risk is minimized because we have a large and
  diverse customer base.

Currency exposures

We use cross-currency swaps and forward contracts
  to hedge debt that is denominated in foreign currencies. Derivatives that qualify
  for hedge accounting are marked to current rates, as is the underlying hedged
  item. 
       The principal amount to be received under currency
  contracts was U.S.$589 million at December 31, 2003. The principal amount to
  be paid under these contracts was $869 million at December 31, 2003.

Interest rate exposures

We use interest rate swaps to manage the mix of
  fixed and floating interest rates on our debt. We have entered into interest
  rate swaps with a notional amount of $195 million, maturing in 2006 and 2011.
  On $100 million of swaps we pay interest at a rate equal to a three-month bankers
  acceptance floating interest rate plus 2.1%. We receive interest on these swaps
  at a rate of 6.8%. On $75 million of swaps we pay interest at a rate of 3.2%.
  We receive interest on these swaps at a rate equal to the three-month bankers
  acceptance floating rate. On $20 million of swaps we pay interest at a rate
  of 4.7%. We receive interest on these swaps at a rate equal to the three-month
  bankers acceptance floating rate.
       We also have issued swaptions for the right to
  enter into interest rate swap transactions for a notional amount of $90 million.
  If exercised, these swaptions will involve the payment of fixed interest rates
  of 10.5% and 11% in exchange for the receipt of the three-month bankers
  acceptance floating rate from 2006 until maturity in 2013.
       We have also entered into a forward contract that
  fixes the interest rate on a notional amount of $150 million of future debt.

|                                                  
|--------------------------------------------------
|88                                                
|                                                  
|NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                  

NOTE19

FINANCIAL INSTRUMENTS(continued)

Fair value

Fair value is the amount at which a financial instrument
  could be exchanged between willing parties, based on the current market for
  instruments with the same risk, principal and remaining maturity. We base fair
  values on estimates using present value and other valuation methods.
       These estimates are significantly affected by
  our assumptions for the amount and timing of estimated future cash flows and
  discount rates, all of which reflect varying degrees of risk. Potential income
  taxes and other expenses that would be incurred on disposition of these financial
  instruments are not reflected in the fair values. As a result, the fair values
  are not necessarily the net amounts that would be realized if these instruments
  were actually settled.
       The carrying value of all financial instruments
  approximates fair value, except for those noted in the table below.

|                                                                        
|------------------------------------------------------------------------
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Investment in Nortel (a)                                                
|Long-term debt due within one year                                      
|Long-term debt                                                          
|Derivative financial instruments,
      net assets (liability) position:
|Forward contracts
       BCE Inc. shares                               
|Currency contracts
      (b)                                            
|Interest rate
      swaps                                               
|                                                                        

|(a) | We have designated 4 four million
      of our approximately 14 million Nortel common shares to manage our exposure
      to outstanding rights to SCPs. See Note 21, Stock-based compensation
      plans,for more information.                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Currency contracts include cross-currency
      interest rate swaps and foreign currency forward contracts. Some of the
      cross-currency interest rate swaps are economic hedges that do not qualify
      for hedge accounting. We carry these at fair value.

We included net
  losses of $26 million in 2003 and net gains of $8 million in 2002 in the currency
  translation adjustment account. This related to foreign currency contracts that
  hedged a self-sustaining operation. They were settled in 2003.

|
|

NOTE20

SHARE CAPITAL

(i) Preferred shares

|BCE Inc.s
        articles of incorporation provide for an unlimited number of First Preferred
        Shares and Second Preferred Shares. The terms set out in the articles
        authorize BCE Inc.s directors to issue the shares in one or more
        series and to set the number of shares and conditions of each series.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The table below is a summary of the
  principal terms of BCE Inc.s First Preferred Shares. There were no Second
  Preferred Shares issued and outstanding at December 31, 2003. BCE Inc.s
  articles of incorporation describe the terms and conditions of these shares
  in detail.

|      
|------
|      
|      
|      
|      
|Series
|      
|Q     
|R     
|S     
|T     
|U     
|Y     
|Z     
|AA    
|AB    
|AC    
|AD    
|      
|      
|      



|                                                
|------------------------------------------------
|www.bce.ca                                      
|                                                
|NOTES TO CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                

NOTE20

SHARE CAPITAL(continued)

Transactions in 2003

On February 28, 2003, BCE Inc. issued 20 million
  Series AC shares for total proceeds of $510 million. Six million of the 20 million
  Series AC shares were issued by public offering for a subscription price of
  $153 million. The remaining 14 million Series AC shares were issued to the holders
  of BCE Inc.s Series U shares.
       BCE Inc. elected to exercise its option to buy
  all of the Series U shares for $357 million (including a $7 million premium
  on redemption). The holders of the Series U shares then used the proceeds from
  the sale of their shares to buy the 14 million Series AC shares for the subscription
  price of $357 million.
       Before February 28, 2003, the Series U shares
  were convertible at the holders option into Series V shares. On February
  28, 2003, all Series U and V shares were cancelled.

Voting rights

All of the issued and outstanding preferred shares
  at December 31, 2003 were non-voting, except under special circumstances when
  the holders were entitled to one vote per share.

Entitlement to dividends

Holders of Series R, Z, AA and AC shares are entitled
  to fixed cumulative quarterly dividends.
       Holders of Series S and Y shares are entitled
  to floating adjustable cumulative monthly dividends. 
       If Series Q, AB and AD shares are issued, their
  holders will be entitled to floating adjustable cumulative monthly dividends.
       If Series T shares are issued, their holders will
  be entitled to fixed cumulative quarterly dividends. The rate will be set at
  the Government of Canada yield multiplied by a percentage rate, as set out in
  BCE Inc.s articles of incorporation.

Conversion features

All of the issued and outstanding preferred shares
  at December 31, 2003 are convertible at the holders option into another
  series of preferred shares on a one-for-one basis.

Redemption features

BCE Inc. may redeem Series R, Z, AA and AC shares
  on the redemption date and every five years after that date.
       If Series T shares are issued, BCE Inc. may redeem
  them on the redemption date and every five years after that date.
       BCE Inc. may redeem Series S and Y shares at any
  time.
       If Series Q, AB and AD shares are issued, BCE
  Inc. may redeem them at any time.

Dividend rate swaps

In 2003, we elected to settle the dividend rate
  swaps that hedged dividend payments on $510 million of BCE Inc. Series AA preferred
  shares and $510 million of BCE Inc. Series AC preferred shares. These swaps
  converted the fixed-rate dividends on these preferred shares to floating-rate
  dividends. They were to mature in 2007.
       As a result of the early settlement, we received
  total cash proceeds of $83 million. We are deferring and amortizing the proceeds
  against the dividends on these preferred shares over the original term of the
  swaps.

|                                                  
|--------------------------------------------------
|90                                                
|                                                  
|NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                  

NOTE20

SHARE CAPITAL (continued)

(ii) Common shares and Class B shares

|BCE Inc.s articles
        of incorporation provide for an unlimited number of voting common shares
        and non-voting Class B shares. The common shares and the Class B shares
        rank equally in the payment of dividends and in the distribution of assets
        if BCE Inc. is liquidated, dissolved or wound up.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

BCE Inc. issued 85,000,000 common shares to the public
  in 2002 for a total of $2.1 billion. BCE Inc. issued 17,862,714 common shares
  through private placements to SBC in 2002 for $500 million. The net proceeds
  were used to pay for part of the repurchase of SBCs 20% interest in BCH.
       The table below provides details about the outstanding
  common shares of BCE Inc. No Class B shares were outstanding at December 31,
  2003 and 2002.

|                                                      
|------------------------------------------------------
|                                                      
|                                                      
|                                                      
|                                                      
|Outstanding, beginning of year                        
|Shares issued:                                        
|Publicly                                              
|To SBC                                                
|Under employee
      savings plans                    
|Under dividend
      reinvestment plans               
|To employees
      (under employee stock option plans)
|Shares redeemed                                       
|                                                      
|Outstanding, end of year                              
|                                                      

NOTE21

STOCK-BASED COMPENSATION PLANS

Employee savings plans

ESPs are designed to encourage employees of BCE
  Inc. and its participating subsidiaries to own shares of BCE Inc. Each year,
  employees who participate in the plans can choose to have up to a certain percentage
  of their annual earnings withheld through regular payroll deductions to buy
  BCE Inc. common shares. In some cases, the employer may also contribute up to
  a maximum percentage of the employees annual earnings to the plan.
       Each participating company decides on its maximum
  percentages. For Bell Canada, employees can contribute 10% to 12% of their annual
  earnings. Bell Canada contributes up to 2%.
       The trustee of the ESPs buys BCE Inc. common shares
  for the participants on the open market, by private purchase or from BCE Inc.
  (shares issued from treasury). BCE Inc. chooses the method the trustee uses
  to buy the shares.
       There were 36,536 employees participating in the
  plans at December 31, 2003. The total number of common shares bought for employees
  was 6,352,654 in 2003 and 6,368,907 in 2002. Compensation expense related to
  ESPs was $38 million in 2003, $43 million in 2002 and $42 million in 2001. 13,513,812
  common shares were reserved for issue under the ESPs at December 31, 2003.

BCE Inc. stock options

Under BCE Inc.s long-term incentive programs,
  BCE Inc. may grant options to key employees to buy BCE Inc. common shares. The
  subscription price is usually equal to the market value of the shares on the
  last trading day before the grant comes into effect. At December 31, 2003, 29,739,237
  common shares were authorized for issue under these programs.
       In general, the right to exercise options vests
  or accrues by 25% a year for four years of continuous employment from the day
  of grant, unless a special vesting period applies. Options usually become exercisable
  when they vest and can be exercised for a period of up to 10 years. Special
  vesting provisions may apply if:

- there is a change of control of BCE Inc. and
    the option holders employment ends under certain circumstances
- the option holder is employed by a designated
    subsidiary of BCE Inc., and BCE Inc.s ownership interest in that subsidiary
    falls below the percentage set out in the program.

|                                                
|------------------------------------------------
|www.bce.ca                                      
|                                                
|NOTES TO CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                

NOTE21

STOCK-BASED COMPENSATION PLANS (continued)

When the Nortel
  common shares were distributed in May 2000, each outstanding BCE Inc. stock
  option was cancelled and was replaced by two new stock options. The first option
  gives the holder the right to buy one BCE Inc. common share. The second option
  gives the holder the right to buy approximately 1.57 post-split common shares
  of Nortel (Nortel option) at exercise prices that maintain the holders
  economic position.
       We ensured that exercising the Nortel options
  would not dilute Nortel shares by:

- calculating how many BCE Inc. common shares
    could be issued under options granted under stock option programs immediately
    before the day of the distribution
- factoring this number into the calculation that
    determined how many Nortel common shares were distributed for each BCE Inc.
    common share held.

BCE Inc. may exercise
  all Nortel options that expire unexercised or are forfeited. The exercise price
  paid to Nortel is given back to BCE Inc. We credit an amount to retained earnings
  that is equal to the market share price of Nortel.
       The table below is a summary of the status of
  BCE Inc.s stock option programs.

|                              
|------------------------------
|                              
|                              
|                              
|                              
|Outstanding, beginning of year
|Granted                       
|Exercised                     
|Expired/forfeited             
|                              
|Outstanding, end of year      
|                              
|Exercisable, end of year      
|                              

The table below
  tells you more about BCE Inc.s stock option programs at December 31, 2003.

|                             
|-----------------------------
|                             
|                             
|Range
      of exercise price
|                             
|Below $20                    
|$20–$30                      
|$30–$40                      
|Over $40                     
|                             
|                             
|                             

Teleglobe stock options

When we acquired a controlling interest in Teleglobe
  in November 2000, holders of Teleglobe stock options were allowed to exercise
  their options under the original terms, except that when they exercise their
  options, they receive 0.91 of one BCE Inc. common share for each Teleglobe stock
  option exercised. All of the outstanding Teleglobe stock options that were not
  already vested, vested when Teleglobe was sold on December 31, 2002.
       The table below is a summary of the status of
  Teleglobes stock option programs.

|                              
|------------------------------
|                              
|                              
|                              
|                              
|Outstanding, beginning of year
|Exercised                     
|Expired/forfeited             
|                              
|Outstanding, December 31      
|                              
|Exercisable, December 31      
|                              



|                                                  
|--------------------------------------------------
|92                                                
|                                                  
|NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                  

NOTE21

STOCK-BASED COMPENSATION
  PLANS(continued)

The table below tells
  you more about Teleglobes stock option programs at December 31, 2003.

|                             
|-----------------------------
|                             
|                             
|Range of exercise
      price
|                             
|Below $20                    
|$20$30                      
|$30$40                      
|Over $40                     
|                             
|                             
|                             

Assumptions used in stock option pricing model

The table below shows the assumptions used to determine
  stock-based compensation expense using the Black-Scholes option pricing model.

|                                                        
|--------------------------------------------------------
|                                                        
|                                                        
|Compensation cost (in $ millions)                       
|Number of stock options granted                         
|Weighted-average fair value per
      option granted ($)
|Assumptions                                             
|Dividend yield                                          
|Expected volatility                                     
|Risk-free interest
      rate                           
|Expected life
      (years)                             
|                                                        

Special compensation payments

Before 2000, when BCE Inc. granted options to officers,
  vice-presidents and other key employees, related rights to SCPs were also often
  granted. SCPs are cash payments representing the amount that the market value
  of the shares on the date of exercise of the related options exceeds the exercise
  price of these options.
       When the distribution of Nortel common shares
  was made in 2000, the outstanding options were divided into options to buy BCE
  Inc. common shares and options to buy Nortel common shares. The related SCPs
  were adjusted accordingly.
       For each right to an SCP held before the distribution,
  right holders now have rights related to both BCE Inc. and Nortel common shares.
       To manage the cost of SCPs, we:

- entered into forward contracts to hedge our
    exposure to outstanding rights related to options on BCE Inc. common shares
- designated approximately four million Nortel
    common shares to hedge our exposure to outstanding rights related to the options
    on the Nortel common shares.

The number of SCPs
  outstanding at December 31, 2003 was:

- 2,547,652 relating to BCE Inc. common shares
- 2,656,990 relating to Nortel common shares.

All of the outstanding
  SCPs covered the same number of shares as the options they related to. It is
  the employers responsibility to make the payments under the SCPs. The
  income related to SCPs was $29 million in 2003, an expense of $1 million in
  2002 and $64 million in 2001. The income of $29 million in 2003 and the expense
  of $1 million in 2002 include a recovery of SCP expense previously established
  of $50 million and $59 million, respectively relating to forfeitures of SCPs.

Dividend reinvestment plan

The dividend reinvestment plan allows eligible common
  shareholders to use their dividends to buy additional common shares. A trustee
  buys BCE Inc. common shares for the participants on the open market, by private
  purchase or from BCE Inc. (shares issued from treasury). BCE Inc. chooses the
  method the trustee uses to buy the shares.
       A total of 2,807,899 common shares were bought
  under this plan for $82 million in 2003. A total of 2,528,624 common shares
  were bought for $70 million in 2002.

|                                                
|------------------------------------------------
|www.bce.ca                                      
|                                                
|NOTES TO CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                

NOTE22

EMPLOYEE BENEFIT PLANS

We maintain defined benefit plans that provide pension,
  other retirement and post-employment benefits for almost all of our employees.

Components of accrued benefit asset (liability)

The table below shows the change in benefit obligations,
  change in fair value of plan assets and the funded status of the plans.

|                                                                       
|-----------------------------------------------------------------------
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Accrued benefit obligation, beginning
      of year                    
|Current service
      cost                                             
|Interest cost
      on accrued benefit obligation                      
|Actuarial (gains)
      losses                                         
|Benefits payments                                                      
|Employee contributions                                                 
|Business combinations                                                  
|Special termination
      costs                                        
|Plan amendment                                                         
|Divestitures
      and other                                           
|                                                                       
|Accrued benefit obligation, end
      of year                          
|                                                                       
|Fair value of plan assets, beginning
      of year                     
|Actual return
      (loss) on plan assets                              
|Benefits payments                                                      
|Employer contribution                                                  
|Employee contribution                                                  
|Business combinations                                                  
|Divestitures
      and other                                           
|                                                                       
|Fair value of plan assets, end
      of year (1)                       
|                                                                       
|Plan surplus (deficit)                                                 
|Unamortized net actuarial (gains)
      losses                         
|Unamortized past service costs                                         
|Unamortized transitional (asset)
      obligation                      
|Valuation allowance                                                    
|                                                                       
|Accrued benefit asset (liability),
      end of year                   
|                                                                       
|Accrued benefit asset included in
      other long-term assets         
|Accrued benefit liability included
      in other long-term liabilities
|                                                                       

(1)
      The market-related value of
        pension plan assets was $13,044 million at December 31, 2003 and $12,542
        million at December 31, 2002.


For pension plans
  with an accrued benefit obligation that was more than plan assets:

- the accrued benefit obligation was $2,737 million
    at December 31, 2003 and $2,683 million at December 31, 2002
- the fair value of plan assets was $2,010 million
    at December 31, 2003 and $1,909 million at December 31, 2002.

For pension plans
  with an accrued benefit obligation that was less than plan assets:

- the accrued benefit obligation was $9,773 million
    at December 31, 2003 and $9,132 million at December 31, 2002
- the fair value of plan assets was $10,564 million
    at December 31, 2003 and $9,678 million at December 31, 2002.

|                                                  
|--------------------------------------------------
|94                                                
|                                                  
|NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                  

NOTE22

EMPLOYEE BENEFIT PLANS (continued)

Components of net benefit plans cost (credit)

The table below shows the net benefit plans cost
  (credit) before and after recognizing its long-term nature. The recognized net
  benefit plan cost (credit) reflects the amount reported in our statement of
  operations and is calculated according to our accounting policy.

|                                                                                                             
|-------------------------------------------------------------------------------------------------------------
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Current service cost                                                                                         
|Interest cost on accrued benefit
      obligation                                                            
|Actual (return) loss on plan assets                                                                          
|Past service costs arising during
      period                                                               
|Actuarial loss (gain) on accrued
      benefit obligation                                                    
|                                                                                                             
|Elements
      of employee future benefit planscost (credit),
      before recognizing its   long-term nature
|                                                                                                             
|(87                                                                                                          
|                                                                                                             
|Excess (deficiency) of actual return
      over expected return                                              
|Deferral of amounts arising during
      period:                                                             
|Past service
      costs                                                                                     
|Actuarial (loss)
      gain on accrued benefit    obligation                                                 
|Amortization of previously deferred
      amounts:                                                           
|Past service
      costs                                                                                     
|Net actuarial
      (gains) losses                                                                           
|Transitional
      (asset) obligation                                                                        
|                                                                                                             
|                                                                                                             
|Adjustments to recognize long-term
      nature ofemployee future benefit
      plans cost (credit)          
|                                                                                                             
|Increase (decrease) in valuation
      allowance                                                             
|Other                                                                                                        
|                                                                                                             
|Net benefit plans cost (credit),
      recognized                                                            
|                                                                                                             

Significant assumptions

We used the following key assumptions
  to measure the accrued benefit obligation and the net benefit plans cost (credit).
  These assumptions are long term, which is consistent with the nature of employee
  benefit plans.

|                                                              
|--------------------------------------------------------------
|                                                              
|                                                              
|                                                              
|                                                              
|At December 31                                                
|Accrued benefit obligation                                    
|Discount rate,
      end of year                              
|Rate of compensation
      increase, end of year              
|For the year ended December 31                                
|Net benefit plans cost (credit)                               
|Discount rate,
      end of preceding year                    
|Expected return
      on plan assets, end of    preceding year
|Rate of compensation
      increase, end of    preceding year 
|                                                              

We assumed the
  following trend rates in health-care costs:

- a 4.5% annual rate of increase in the cost per
    person of covered health-care benefits for 2003 and the foreseeable future
- a 10.5% annual rate of increase in the cost
    of medication for 2003 with a gradual decline to 4.5% over six years.

Assumed trend rates
  in health-care costs have a significant effect on the amounts reported for the
  health-care plans. The table below, for example, shows the effect of a 1% change
  in the assumed trend rates in health-care costs.

|                                                                
|----------------------------------------------------------------
|                                                                
|                                                                
|Effect on other benefits  total service
      and interest cost
|Effect on other benefits  accrued obligation                   
|                                                                



|                                                
|------------------------------------------------
|www.bce.ca                                      
|                                                
|NOTES TO CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                

NOTE22

EMPLOYEE BENEFIT PLANS(continued)

Pension plan assets

The table below shows the allocation of our pension
  plan assets at December 31, 2003 and 2002, target allocation for 2003 and expected
  long-term rate of return by asset class.

|                 
|-----------------
|                 
|                 
|Asset category   
|                 
|Equity securities
|Debt securities  
|                 
|Total            
|                 

Equity securities
  included approximately $111 million of BCE Inc. common shares or 0.9% of total
  plan assets at December 31, 2003, and approximately $123 million of BCE Inc.
  common shares or 1.1% of total plan assets at December 31, 2002. 
       Debt securities included approximately $108 million
  of BCE Inc. and affiliates debentures or 0.9% of total plan assets at
  December 31, 2003, and $109 million or 1.0% of total plan assets at December
  31, 2002.
       The maturities of debt securities ranged from
  zero to 39 years, with a weighted-average maturity of 11 years at December 31,
  2003. They ranged from zero to 40 years, with a weighted-average maturity of
  10 years at December 31, 2002.

Projected cash flows

We are responsible for adequately funding our pension
  plans. We make contributions to them based on various actuarial cost methods
  that are permitted by pension regulatory bodies. Contributions reflect actuarial
  assumptions about future investment returns, salary projections and future service
  benefits. The table below shows the amounts we contributed to the pension benefit
  plans in 2003.

|                            
|----------------------------
|                            
|                            
|                            
|                            
|Aliant                      
|Bell Canada                 
|Bell Globemedia             
|BCE Inc.                    
|                            
|Total employer contributions
|                            

We expect to contribute
  $107 million to the pension plans in 2004. Because we do not fund the other
  employee future benefit plans, the total $87 million paid in 2003 represents
  payments made to beneficiaries under these plans. We expect to pay $84 million
  under these plans in 2004.

|
|

NOTE23

COMMITMENTS AND CONTINGENCIES

Contractual obligations

The table below is a summary of our contractual
  obligations at December 31, 2003 that are due in each of the next five years
  and thereafter.

|                                               
|-----------------------------------------------
|                                               
|                                               
|Long-term debt (excluding capital
      leases)
|Notes payable and bank advances                
|Capital leases                                 
|Operating leases                               
|Commitments for capital expenditures           
|Other purchase obligations                     
|Other long-term liabilities                    
|                                               
|Total                                          
|                                               

Long-term debt
  and notes payable and bank advances include $194 million drawn under our committed
  credit facilities. They exclude $361 million of letters of credit. The total
  amount available under these committed credit facilities and under our commercial
  paper programs, including the amount currently drawn, is $2,841 million.
       The imputed interest to be paid on capital leases
  is $135 million.
       Rental expense relating to operating leases was
  $368 million in 2003, $356 million in 2002 and $278 million in 2001.

|                                                  
|--------------------------------------------------
|96                                                
|                                                  
|NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                  

NOTE23

COMMITMENTS AND CONTINGENCIES (continued)

Our commitments
  for capital expenditures include investments to expand and update our networks,
  and to meet customer demand. Other purchase obligations consist mainly of contractual
  obligations under service contracts.
       Other long-term liabilities included in the table
  relate to:

- Bell Canadas future payments over the
    remaining life of its contract with Certen for the development of Bell Canadas
    billing system. The total amount was $301 million at December 31, 2003.
- Bell Globemedias obligations relating
    to CRTC benefits owing on previous business combinations. These and other
    long-term liabilities were $130 million at December 31, 2003.

At December 31,
  2003, we had other long-term liabilities that were not included in the table.
  They consisted of an accrued employee benefit liability, future income tax liabilities,
  deferred revenue and gains on assets and various other long-term liabilities.
       We did not include the accrued employee benefit
  liability and future income tax liabilities because we cannot accurately determine
  the timing and amount of cash needed for them. This is because:

- future contributions to the pension plans depend
    largely on how well they are funded. This varies based on the results of actuarial
    valuations that are performed periodically and on the investment performance
    of the pension fund assets.
- future payments of income taxes depend on the
    amount of taxable earnings and on whether there are tax loss carryforwards
    available to reduce income tax liabilities.

We did not include
  deferred revenue and gains on assets because they do not represent future cash
  payments.

CRTC Price Cap decision

The Price Cap decision made a number of changes
  to the rules governing local service in Canadas telecommunications industry.
  These rules will be in effect for four years. The CRTC has stated that it will
  initiate a Price Cap review in the final year of the regime and make modifications
  to the regulatory framework, as necessary. One of the changes resulting from
  the Price Cap decision was a new mechanism, called the deferral account, which
  will be used to fund initiatives such as service improvements, reduced rates
  and/or rebates. We estimated our commitment relating to the deferral account
  to be approximately $160 million at December 31, 2003, which we expect to clear
  substantially in 2004 by implementing various initiatives.

Agreement with CGI

On July 24, 2003, BCE and CGI signed a new agreement
  relating to BCEs ownership in CGI. It replaced the shareholders
  agreement entered into on July 1, 1998. As a result:

- the put rights of CGIs three majority
    individual shareholders relating to the CGI shares they hold were cancelled
- BCEs call rights relating to the CGI shares
    held by these majority shareholders were cancelled
- BCE converted all of its 7,027,606 CGI Class
    B multiple voting shares into CGI Class A single voting shares on a one-for-one
    basis.

BCE has shareholders
  rights under the new agreement. These include preemptive rights relating to
  CGIs equity shares, right of representation on CGIs board of directors
  and certain veto rights. In addition, there are no restrictions on BCE selling
  its shares of CGI. We continue to proportionately consolidate CGIs results.

Litigation

Teleglobe lending syndicate lawsuit On July 12, 2002, some members of the Teleglobe and
  Teleglobe Holdings (U.S.) Corporation lending syndicate (the plaintiffs) filed
  a lawsuit against BCE Inc. in the Ontario Superior Court of Justice.
       The claim makes several allegations, including
  that BCE Inc. and its management, in effect, made a legal commitment to repay
  the advances the plaintiffs made as members of the lending syndicate, and that
  the court should disregard Teleglobe as a corporate entity and hold BCE Inc.
  responsible to repay the advances as Teleglobes alter ego.
       The plaintiffs claim damages of U.S.$1.19 billion,
  plus interest and costs, which they allege is equal to the amount they advanced.
  This represents approximately 95.2% of the total U.S.$1.25 billion that the
  lending syndicate advanced.
       While we cannot predict the outcome of any legal
  proceeding, based on information currently available, BCE Inc. believes that
  it has strong defences, and it intends to vigorously defend its position.

|                                                
|------------------------------------------------
|www.bce.ca                                      
|                                                
|NOTES TO CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                

NOTE23

COMMITMENTS AND CONTINGENCIES(continued)

Kroll Restructuring lawsuit In February 2003, a lawsuit was filed in the Ontario
  Superior Court of Justice by Kroll Restructuring Ltd., in its capacity as interim
  receiver of Teleglobe, against five former directors of Teleglobe. This lawsuit
  was filed in connection with Teleglobes redemption of its third series
  preferred shares in April 2001 and the retraction of its fifth series preferred
  shares in March 2001.
       The plaintiff is seeking a declaration that such
  redemption and retraction were prohibited under the Canada Business Corporations
  Actand that the five former directors should be held jointly and severally
  liable to restore to Teleglobe all amounts paid or distributed on such redemption
  and retraction, being an aggregate of approximately $661 million, plus interest.
       While BCE Inc. is not a defendant in this lawsuit,
  Teleglobe was at the relevant time a subsidiary of BCE Inc. Pursuant to standard
  policies and subject to applicable law, the five former Teleglobe directors
  are entitled to seek indemnification from BCE Inc. in connection with this lawsuit.
       While we cannot predict the outcome of any legal
  proceeding, based on information currently available, BCE Inc. believes that
  the defendants have strong defences and that the claims of the plaintiffs will
  be vigorously defended against.

Other litigation We become involved in various other claims and litigation
  as a regular part of our business.
       While we cannot predict the final outcome of claims
  and litigation that were pending at December 31, 2003, management believes that
  the resolution of these claims and litigation will not have a material and negative
  effect on our consolidated financial position or results of operations.

|
|

NOTE24

GUARANTEES

|As
        a regular part of our business, we enter into agreements that provide
        for indemnification and guarantees to counterparties that may require
        us to pay for costs and losses incurred in various types of transactions.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Sales of assets and businesses

As part of transactions involving business dispositions
  and sales of assets, we may be required to pay counterparties for costs and
  losses incurred as a result of breaches of representations and warranties, intellectual
  property right infringement, loss or damages to property, environmental liabilities,
  changes in, or in the interpretation of, laws and regulations (including tax
  legislation), valuation differences, litigation against the counterparties,
  earn-out guarantees if the disposed business does not meet specific targets,
  contingent liabilities of a disposed business or reassessments of previous tax
  filings of the corporation that carries on the business.
       We are unable to make a reasonable estimate of
  the maximum potential amount we could be required to pay counterparties. While
  some of the agreements specify a maximum potential exposure of $2.1 billion
  in total, many do not specify a maximum amount or limited period. The amount
  also depends on the outcome of future events and conditions, which cannot be
  predicted. A total of $16 million has been accrued in the consolidated balance
  sheet relating to this type of indemnification or guarantee at December 31,
  2003. Historically, we have not made any significant payments under these indemnifications
  or guarantees.

Sales of services

As part of transactions involving sales of services,
  we may be required to pay counterparties for costs and losses incurred as a
  result of breaches of representations and warranties, changes in, or in the
  interpretation of, laws and regulations (including tax legislation) or litigation
  against the counterparties.
       We are unable to make a reasonable estimate of
  the maximum potential amount we could be required to pay counterparties. While
  some of the agreements specify a maximum potential exposure of $261 million
  in total, many do not specify a maximum amount or limited period. The amount
  also depends on the outcome of future events and conditions, which cannot be
  predicted. No amount has been accrued in the consolidated balance sheet relating
  to this type of indemnification or guarantee at December 31, 2003. Historically,
  we have not made any significant payments under these indemnifications or guarantees.

Purchases and development of assets

As part of transactions involving purchases and
  development of assets, we may be required to pay counterparties for costs and
  losses incurred as a result of breaches of representations and warranties, loss
  or damages to property, changes in, or in the interpretation of, laws and regulations
  (including tax legislation), or litigation against the counterparties.
       We are unable to make a reasonable estimate of
  the maximum potential amount we could be required to pay counterparties. While
  some of the agreements specify a maximum potential exposure of $1.5 billion
  in total, many do not specify a maximum amount or limited period. The amount
  also depends on the outcome of future events and conditions, which cannot be
  predicted. No amount has been accrued in the consolidated balance sheet relating
  to this type of indemnification or guarantee at December 31, 2003. Historically,
  we have not made any significant payments under these indemnifications or guarantees.

|                                                  
|--------------------------------------------------
|98                                                
|                                                  
|NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                  

NOTE24

GUARANTEES(continued)

Other transactions

As part of other transactions, such as securitization
  agreements and operating leases, we may be required to pay counterparties for
  costs and losses incurred as a result of breaches of representations and warranties,
  loss or damages to property, changes in, or in the interpretation of, laws and
  regulations (including tax legislation) or litigation against the counterparties.
       We are unable to make a reasonable estimate of
  the maximum potential amount we could be required to pay counterparties. While
  some of the agreements specify a maximum potential exposure of $26 million in
  total, many do not specify a maximum amount or limited period. The amount also
  depends on the outcome of future events and conditions, which cannot be predicted.
  No amount has been accrued in the consolidated balance sheet relating to this
  type of indemnification or guarantee at December 31, 2003. Historically, we
  have not made any significant payments under these indemnifications or guarantees.

|
|

NOTE25

SUPPLEMENTAL DISCLOSURE FOR STATEMENTS OF CASH
  FLOWS

|                                                            
|------------------------------------------------------------
|                                                            
|                                                            
|Interest paid on long-term debt                             
|Income taxes paid (net of refunds)                          
|Cash restricted to collateralize
      short-term bank loans
|                                                            

NOTE26

RECONCILIATION OF CANADIAN GAAP TO UNITED STATES
  GAAP

We have prepared these consolidated financial statements
  according to Canadian GAAP. The tables that follow are a reconciliation of significant
  differences relating to the statement of operations and total shareholders
  equity reported according to Canadian GAAP and United States GAAP.

Reconciliation of net earnings (loss)

|                                                                                              
|----------------------------------------------------------------------------------------------
|                                                                                              
|                                                                                              
|Canadian GAAP  Earnings
      from continuing operations                                     
|Adjustments                                                                                   
|Deferred
      costs(a)                                                                       
|Employee
      future benefits(b)                                                             
|Gain on
      disposal of investments and on reduction of ownership in subsidiary companies(e)
|Income
      taxes(h)                                                                         
|Goodwill(c)                                                                                   
|Derivative
      instruments(m)                                                               
|Restructuring
      and other charges(d)                                                      
|Other                                                                                         
|                                                                                              
|United States GAAP  Earnings
      from continuing operations                                
|Discontinued
      operations  United States GAAP(j)                                         
|Cumulative
      effect of change in accounting policy(m) (n)                                 
|                                                                                              
|United States GAAP  Net
      earnings (loss)                                                
|Dividends
      on preferred shares(m)                                                        
|Premium on redemption
      of preferred shares                                               
|                                                                                              
|United States GAAP  Net
      earnings (loss) applicable to common shares                    
|Other comprehensive earnings (loss)
      items                                               
|Change in currency
      translation adjustment                                               
|Change
      in unrealized loss on investments(k)                                             
|Additional
      minimum liability for pension obligation(b)                                  
|                                                                                              
|Comprehensive
      earnings (loss)                                                           
|                                                                                              
|Net earnings (loss) per common
      share  basic                                            
|Continuing operations                                                                         
|Discontinued
      operations and change in accounting policy                                 
|Net earnings
      (loss)                                                                     
|Net earnings (loss) per common
      share  diluted                                          
|Continuing operations                                                                         
|Discontinued
      operations and change in accounting policy                                 
|Net earnings
      (loss)                                                                     
|Dividends per common share                                                                    
|Average number of common shares
      outstanding (millions)                                  
|                                                                                              
|Adjusted net earnings
      (loss)(p)                                                         
|Net earnings (loss), as reported                                                              
|Amortization expense on goodwill
      and other intangible assets                            
|                                                                                              
|Net earnings (loss), adjusted                                                                 
|                                                                                              
|Adjusted net earnings (loss) per
      common share                                           
|Basic                                                                                         
|Diluted                                                                                       
|                                                                                              



|                                                
|------------------------------------------------
|www.bce.ca                                      
|                                                
|NOTES TO CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                

NOTE26

RECONCILIATION OF CANADIAN GAAP TO UNITED
  STATES GAAP(continued)

Statements of accumulated other comprehensive
  loss

|                                                  
|--------------------------------------------------
|                                                  
|                                                  
|Currency translation adjustment                   
|Unrealized gain (loss) on investments
      (k)   
|Additional minimum liability for
      pension (b)
|                                                  
|Accumulated other comprehensive
      loss        
|                                                  

Reconciliation of total shareholders equity

|                                                                                               
|-----------------------------------------------------------------------------------------------
|                                                                                               
|                                                                                               
|Canadian GAAP                                                                                  
|Adjustments                                                                                    
|Deferred costs
      (a)                                                                       
|Purchase price
      adjustment (c)                                                            
|Employee future
      benefits (b)                                                             
|Gain on disposal of investments
      and on reduction of ownership in subsidiary companies (e)
|Other                                                                                          
|Tax effect of
      the above adjustments (h)                                                  
|Non-controlling
      interest effect of the above adjustments (i)                             
|Discontinued
      operations (j)                                                              
|Unrealized gain
      (loss) on investments (k)                                                
|                                                                                               
|United States GAAP                                                                             
|                                                                                               

Description of United States GAAP adjustments

|(a) | Deferred costsUnder Canadian GAAP, certain expenses can be deferred and amortized if they
      meet certain criteria. Under United States GAAP, these costs are expensed
      as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Employee future
      benefitsThe accounting for future benefits for employees under Canadian GAAP and
      United States GAAP is essentially the same, except for the recognition of
      certain unrealized gains and losses.
           Canadian GAAP requires companies to recognize
      a pension valuation allowance for any excess of the accrued benefit asset
      over the expected future benefit. Changes in the pension valuation allowance
      are recognized in the consolidated statement of operations. United States
      GAAP does not specifically address pension valuation allowances. The United
      States regulators have recently interpreted this to be a difference between
      Canadian and United States GAAP. As a result, we retroactively increased
      previously reported United States GAAP net income by $61 million (net of
      a tax expense of $41 million) for 2001.This resulted in an increase of $0.07
      per basic share and $0.07 per diluted share in 2001. Under United States
      GAAP, an additional minimum liability is recorded for the excess of the
      unfunded accumulated benefit obligation over the recorded pension benefits
      liability. An offsetting intangible asset equal to the unrecognized prior
      service costs is recorded. Any difference is recorded as a reduction in
      accumulated other comprehensive income. The accumulated benefit obligation
      at December 31, 2003 was $11.4 billion.
|(c) | GoodwillUnder Canadian GAAP, before July 1, 2001, the purchase price of an acquisition
      was based on the market value price for a reasonable period before and after
      the date of acquisition. Under United States GAAP, the total purchase price
      of an acquisition was based on the market price for a reasonable period
      before and after the date that the transaction was announced. This results
      in a difference in the amount of the purchase price allocated to goodwill.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(d) | Restructuring
      and other chargesUnder Canadian GAAP, when calculating impairment of capital assets, the
      assets net recoverable amount (based on estimates of undiscounted
      future cash flows) is deducted from its carrying value. Under United States
      GAAP, when calculating impairment of capital assets, the assets net
      recoverable amount is based on estimates of discounted future cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(e) | Gains or losses
      on investmentsUnder Canadian GAAP and United States GAAP, gains or losses on investments
      are calculated in a similar manner. Differences in Canadian GAAP and United
      States GAAP, however, will cause the underlying carrying value of the investment
      to be different. This will cause the resulting gain or loss to be different.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(f) | Equity incomeUnder Canadian GAAP, we account for our joint venture investment in CGI
      using the proportionate consolidation method. Effective July 2003, as a
      result of the new agreement with CGI, we present CGI as an equity investment
      under United States GAAP.
           Our proportionate share of CGIs operating
      results for the six months ended December 31, 2003 were: operating revenues of $422 million, of
          which $74 million was with subsidiaries of BCE Inc.
        operating expenses of $356 million, of
          which $14 million was to subsidiaries of BCE Inc.
        amortization expense of $21 million
        interest expense of $3 million
        other expense of $1 million
        income tax expense of $17 million.See Note 23,
        Commitments and contingencies,for more information about the CGI
        agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(g) | Interest expenseUnder Canadian GAAP, convertible debentures are separated into a debt component
      and an equity component. Over time, the debt component is increased to reach
      its original face value at maturity by recognizing an accretion expense
      as part of interest expense. Under United States GAAP, convertible debentures
      that do not have certain characteristics are recorded as long-term debt
      and no accretion expense is recognize.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              



|                                                  
|--------------------------------------------------
|100                                               
|                                                  
|NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                  

NOTE26

RECONCILIATION OF CANADIAN GAAP TO UNITED STATES
  GAAP (continued)

|(h) | Income taxesThe income tax adjustment reflects the impact on income taxes of all of
      the United States GAAP adjustments that we describe above. The accounting
      for income taxes under Canadian GAAP and United States GAAP is essentially
      the same, except that: income tax rates of enacted or substantively
          enacted tax law are used to calculate future income tax assets and liabilities
          under Canadian GAAP
        only income tax rates of enacted tax law
          can be used under United States GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | Non-controlling
      interestThe non-controlling interest adjustment represents the impact of all of
      the United States GAAP adjustments on non-controlling interest.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(j) | Discontinued operationsDifferences between Canadian GAAP and United States GAAP will cause the
      historical carrying values of the net assets of discontinued operations
      to be different.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(k) | Change in unrealized
      gain (loss) on investmentsOur portfolio investments are recorded at cost under Canadian GAAP. They
      would be classified as available-for-sale under United States
      GAAP and would be carried at fair value with any unrealized gains or losses
      included in other comprehensive loss, net of tax.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(l) | Accounting for
      stock-based compensationIn December 2002, the Financial Accounting Standards Board (FASB) issued
      Statement of Financial Accounting Standards (SFAS) No. 148, Accounting
      for Stock-Based Compensation  Transition and Disclosure. It applies
      to fiscal years ending after December 15, 2002. It amends the transitional
      provisions of SFAS No. 123 for companies that choose to recognize stock-based
      compensation under the fair value-based method of SFAS No. 123, instead
      of choosing to continue following the intrinsic value method of Accounting
      Principles Board Opinion (APB) No. 25.
           We adopted the fair value-based method of
      accounting on a prospective basis, effective January 1, 2002. As a result,
      we recorded operating expenses of $27 million in 2002 ($2 million in the
      first quarter, $4 million in the second quarter, $15 million in the third
      quarter and $6 million in the fourth quarter), which is consistent with
      Canadian GAAP.
           Under SFAS No. 123, however, we are required
      to make pro forma disclosures of net earnings, and basic and diluted earnings
      per share, assuming that the fair value-based method of accounting had been
      applied from the date that SFAS No. 123 was adopted. The table below shows
      the estimated fair value of each option grant on the date of the grant using
      the Black-Scholes pricing model.

|                                                              
|--------------------------------------------------------------
|                                                              
|                                                              
|Net earnings (loss), as reported                              
|Compensation cost included in net
      earnings              
|Total compensation cost                                       
|                                                              
|Pro forma net earnings (loss)                                 
|Pro forma net earnings (loss) per
      common share (basic)  
|Pro forma net earnings (loss) per
      common share (diluted)
|Weighted average fair value of options
      granted ($)      
|Assumptions                                                   
|Dividend yield                                                
|Expected volatility                                           
|Risk-free interest
      rate                                 
|Expected life
      (years)                                   
|                                                              

|(m) | Accounting for
      derivative instruments and hedging activities (SFAS No. 133)On January 1, 2001, we adopted SFAS 133, Accounting for Derivatives Instruments
      and Hedging Activities, as amended by SFAS 138. Under this standard,
      all derivatives must be recorded on the balance sheet at fair value under
      United States GAAP. In addition, certain economic hedging strategies, such
      as using dividend rate swaps to hedge preferred share dividends and hedging
      SCPs, no longer qualify for hedge accounting under United States GAAP.
           The change in the fair value of derivative
      contracts that no longer qualify for hedge accounting under United States
      GAAP is reported in net earnings. This resulted in an increase of $44 million
      in other assets and a net gain of $21 million in 2002.
           In addition, on January 1, 2001, the forward
      contracts relating to the Nortel shares, which we previously recorded in
      other comprehensive income at their fair value of $2,005 million, and the
      offsetting change in the value of the hedged Nortel shares, were reclassified
      to earnings on the transition to the new rule. There was no effect on net
      earnings. This resulted in a pre-tax gain of $27 million in 2002 and $44
      million in 2001.
           We elected to settle the dividend rate swaps
      used to hedge $510 million of BCE Inc. Series AA preferred shares and $510
      million of BCE Inc. Series AC preferred shares in the third quarter of 2003.
      These dividend rate swaps, in effect, converted the fixed-rate dividends
      on these preferred shares to floating-rate dividends. They were to mature
      in 2007. As a result of the early settlement, we received total proceeds
      of $83 million in cash.
           Under Canadian GAAP, the proceeds are being
      deferred and amortized against the dividends on these preferred shares over
      the remaining original terms of the swaps. Under United States GAAP, these
      dividend rate swaps did not qualify for hedge accounting and were recorded
      on the balance sheet at fair value. As a result, the amortization of the
      deferred gain under Canadian GAAP is reversed for United States GAAP purposes.
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|www.bce.ca                                      
|                                                
|NOTES TO CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                

NOTE26

RECONCILIATION OF CANADIAN GAAP TO UNITED
  STATES GAAP(continued)

|(n) | Impact of adopting
      new accounting standards Business
        combinations and goodwill and other intangible assetsEffective January 1, 2002, we followed the requirements of SFAS No. 142,
        Goodwill and Other Intangible Assets.This standard required us
        to stop amortizing goodwill and indefinite-life intangible assets to earnings
        and to assess them for impairment each year. It includes a transitional
        impairment test.
             Effective June 30, 2002, we followed the
        requirements of SFAS No. 142, Goodwill and Other Intangible Assets:
      we allocated our existing goodwill and
          indefinite-life intangible assets to our reporting units
        we completed the assessment of the quantitative
          impact of the transitional impairment test measured at January 1, 2002
          on our financial statements.In performing
        the transitional impairment test, we:
      estimated the fair value of our reporting
          units based on discounted future cash flows
        compared the fair values to those implied
          by public company trading multiples.We determined
        a transitional impairment loss of $7,268 million net of tax in the second
        quarter of 2002. We recorded it as a cumulative effect of a change in
        accounting policy as of January 1, 2002, as required by the transitional
        provisions of SFAS No. 142. Under Canadian GAAP, the transitional impairment
        loss is recorded as an adjustment to opening retained earnings. The impairment
        loss related to impaired goodwill of reporting units in Teleglobe ($6,604
        million), Bell Globemedia ($545 million) and BCE Emergis ($119 million).
      Consolidation of variable interest entitiesEffective July 1, 2003, we adopted FASB Interpretation (FIN) No. 46, Consolidation
        of Variable Interest Entities,on a prospective basis.
             This interpretation clarifies how to apply
        Accounting Research Bulletin No. 51, Consolidated Financial Statements,to variable interest entities when equity investors are not considered
        to have a controlling financial interest or they have not invested enough
        equity to allow the entity to finance its activities without additional
        subordinated financial support from other parties.
             We determined a transitional loss of $25
        million net of tax in the third quarter of 2003. We recorded it as a cumulative
        effect of a change in accounting policy as of July 1, 2003, as required
        by the transitional provisions of FIN No. 46. Under Canadian GAAP, the
        transitional loss is recorded as an adjustment to retained earnings. See
        Note 1, Significant accounting policies,for a summary of how this
        affected our consolidated financial statements.                                                                                                                                                         
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(o) | Recent changes
      to accounting standards Costs
        associated with exit or disposal activities
        Effective January 1, 2003, we adopted SFAS No. 146, Accounting for
        Costs Associated with Exit or Disposal Activities.The new standard
        requires costs relating to exits or disposal activities to be recorded
        at fair value when a liability has been incurred.
             Under the previous guidance of Emerging
        Issues Task Force Issue 94-3, Liability Recognition for Certain Employee
        Termination Benefits and Other Costs to Exit and Activity (including Certain
        Costs Incurred in a Restructuring),certain exit costs were recorded
        when management committed to an exit plan.
             We followed the recommendations in this
        section for all business dispositions after January 1, 2003.
      Asset retirement obligationsEffective January 1, 2003, we adopted SFAS No. 143, Accounting for
        Asset Retirement Obligations.It describes how to recognize and measure
        liabilities related to the legal obligations of retiring property, plant
        and equipment.
             These obligations are initially measured
        at fair value and are later adjusted for any changes resulting from the
        passage of time and for any changes to the timing or the amount of the
        original estimate of undiscounted cash flows. The asset retirement cost
        is capitalized to the related asset and amortized into earnings over time.
             Adopting this standard did not significantly
        affect our consolidated financial statements.
      GuaranteesEffective December 31, 2003, we adopted FIN No. 45, Guarantors
        Accounting and Disclosure Requirements for Guarantees, Including Indirect
        Guarantees of Indebtedness of Others.The interpretation:
      describes how to identify guarantees
        requires guarantors to disclose the significant
          details about guarantees they make, whether or not they will have to
          make payments under the guarantees
        requires guarantors to recognize a liability
          for the fair value of their obligation when they enter into these guarantees.Adopting this
        interpretation did not affect our consolidated financial statements.
      Financial instrumentsEffective July 1, 2003, we adopted SFAS No. 150, Accounting for Certain
        Financial Instruments with Characteristics of both Liabilities and Equity.It clarifies how to account for certain financial instruments that
        have liability characteristics and equity characteristics. It requires
        instruments that meet specific criteria to be classified as liabilities
        on the balance sheet. Many of these financial instruments were previously
        classified as equities.
             Because we did not have any instruments
        with these characteristics, adopting this standard did not affect our
        consolidated financial statements.
|(p) | Adjusted net earningsThe adjusted net earnings reflect the impact of no longer amortizing goodwill
      and indefinite-life intangible assets, effective January 1, 2002. See Note
      26 (n), Impact of adopting new accounting standardsfor more information.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           



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|102                              
|                                 
|BOARD OF DIRECTORS AND EXECUTIVES
|                                 



Board of Directors  as at March 10, 2004

André
          Bérard, O.C. Montréal, Québec Corporate Director and Chairman, 
          National Bank of Canada*
          Director since January 2003
      
      Thomas
          E. Kierans, O.C. Toronto, Ontario Chairman, Canadian Institute
          for 
          Advanced Research
          Director since April 1999
      
      Thomas
          C. O’Neill, F.C.A. Don Mills, Ontario Chartered Accountant and 
          Corporate Director
          Director since January 2003Ronald
          A. Brenneman Calgary, Alberta President and Chief Executive
          Officer 
          and a director, Petro-Canada
          Director since November 2003
      
      Brian M.
          Levitt Montréal, Québec Co-Chair, Osler, Hoskin &
          Harcourt LLP
          Director since May 1998
      
      Robert
          C. Pozen Boston, Massachusetts Chairman, MFS Investment Management
          Director since February 2002Richard
          J. Currie, C.M. Toronto, Ontario Chairman, BCE Inc. and Bell
          Canada
          Director since May 1995
      
      The Honourable
          Edward C. Lumley, P.C. South Lancaster, Ontario Vice-Chair, BMO Nesbitt Burns
          Inc.
          Director since January 2003
      
      Michael
          J. Sabia Montréal, Québec President and
          Chief Executive Officer, BCE Inc. 
          Chief Executive Officer, Bell Canada
          Director since October 2002Anthony
          S. Fell, O.C. Toronto, Ontario Chairman, RBC Dominion 
          Securities Limited
          Director since January 2002
      
      Judith
          Maxwell, C.M. Ottawa, Ontario President, Canadian Policy 
          Research Networks Inc.
          Director since January 2000
      
      Paul M.
          Tellier, P.C., C.C., Q.C. Montréal, Québec President and Chief Executive
          Officer 
          and a director, Bombardier Inc.
          Director since April 1999Donna Soble
          Kaufman Toronto, Ontario Lawyer and Corporate Director
          Director since June 1998
      
      John H.
          McArthur Wayland, Massachusetts Dean Emeritus, Harvard University 
          Graduate School of Business 
          Administration
          Director since May 1995
      
      Victor
          L. Young, O.C. St. John’s, Newfoundland Corporate Director
          Director since May 1995*Resigned
          as Chairman, National Bank 
          of Canada on March 10, 2004.


BCE board members from left to
  right: Thomas C. ONeill, F.C.A., Brian M. Levitt, Richard J. Currie, C.M.,
  Ronald A. Brenneman, Judith Maxwell, C.M., John H. McArthur, André Bérard,
  O.C.,





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|---------------------------------
|www.bce.ca                       
|                                 
|BOARD OF DIRECTORS AND EXECUTIVES
|                                 

Executives  as at March 10, 2004

Michael
          J. Sabia President and
          Chief Executive Officer
      
      Peter
          Daniel Executive Vice-President 
          Communications 
          and Marketing Services
      
      Karen H.
          Sheriff President
          Small and Medium 
          Business Markets 
          Bell CanadaWilliam
          D. Anderson President 
          BCE Ventures
      
      Ivan Fecan President and
          Chief Executive Officer 
          Bell Globemedia
      
      David A.
          Southwell Group President 
          Operations 
          Bell CanadaPierre
          J. Blouin Group President 
          Consumer Markets 
          Bell Canada
      
      Tony Gaffney President and
          Chief Executive Officer 
          BCE Emergis
      
      Martine
          Turcotte Chief Legal OfficerLaurier
          (Larry) J. Boisvert President and
          Chief Executive Officer 
          Telesat Canada
      
      Lawson
          A.W. Hunter Executive Vice-President 
          Government and 
          Regulatory Affairs
      
      Siim A.
          Vanaselja Chief Financial OfficerLinda Caty Corporate Secretary
      
      Eugene
          Roman Group President
          Systems and Technology 
          Bell Canada
      
      Stephen
          G. Wetmore Group President 
          National Markets 
          Bell CanadaIsabelle
          Courville President
          Enterprise Markets 
          Bell Canada
      
      
      
      Mahes S.
          Wickramasinghe Senior Vice-President 
          Audit and Risk Management




Robert C. Pozen, Anthony S. Fell,
  O.C., Paul M. Tellier, P.C., C.C., Q.C., Donna Soble Kaufman, The Honourable
  Edward C. Lumley, P.C., Michael J. Sabia, Thomas E. Kierans, O.C., Victor L.
  Young, O.C.





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|104                    
|                       
|COMMITTEES OF THE BOARD
|                       

Members of committees of the board

Audit T.C. ONeill  Chairman 
  T.E. Kierans 
  J. Maxwell 
  R.C. Pozen 
  V.L. Young

Corporate governance
  R.J. Currie  Chairman 
  D. Soble Kaufman 
  T.E. Kierans 
  The Honourable E.C. Lumley 
  J.H. McArthur

Management resources and compensation
  P.M. Tellier  Chairman 
  R.A. Brenneman 
  A.S. Fell 
  B.M. Levitt 
  J.H. McArthur 
  V.L. Young

Pension fund
  R.C. Pozen  Chairman 
  A. Bérard 
  A.S. Fell 
  D. Soble Kaufman 
  B.M. Levitt 
  J. Maxwell

The committees of the board of directors, and their
  purpose and members, are identified below.

The audit committee

The audit committee assists the board in the oversight
  of:

- the integrity of BCEs financial statements
    and related information
- BCEs compliance with applicable legal
    and regulatory requirements
- the independence, qualifications and appointment
    of the external auditors
- the performance of the internal and external
    auditors
- the managements responsibility for reporting
    on internal controls.

The corporate governance committee

The CGC assists the board in:

- developing and implementing our corporate governance
    guidelines
- identifying individuals qualified to become
    directors
- determining the composition of the board and
    its committees
- determining the directors compensation
- monitoring the process to assess board and committees
    effectiveness.

The management resources and compensation committee

The MRCC assists the board in the oversight of the:

- compensation
- nomination
- evaluation
- succession

of officers and other management personnel.

The MRCC also assists the board
  in the oversight of BCEs health and safety policies and procedures.

The pension fund committee

The PFC assists the board in the oversight of:

- the administration, funding and investment of
    our pension plans and fund
- the unitized pooled fund sponsored by BCE for
    the collective investment of the pension fund and the master fund in which
    certain of BCEs subsidiaries pension funds invest in.

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SHAREHOLDER INFORMATION

---

2004 SHAREHOLDER MEETING

Our shareholder meeting will take place at 9:00
  a.m. (Pacific time), Wednesday, May 26, 2004, at the Vancouver Convention &
  Exhibition Centre, 999 Canada Place, Vancouver, British Columbia.

The meeting will also be webcast live on our website
  at www.bce.ca.

We offer various ways to vote your shares. For more
  details, consult our proxy circular or visit our website.

2004 QUARTERLY EARNINGS RELEASE DATES

First quarter  May 5, 2004 
  Second quarter  August 4, 2004 
  Third quarter  November 3, 2004 
  Fourth quarter  February 2, 2005

Quarterly and annual reports as well as other corporate
  documents can be found on our website. If you wish to be notified electronically
  when documents are posted, register online at www.bce.ca for our service News
  Alerts. Corporate documents can also be requested from the Investor Relations
  group.

SHARE FACTS

Symbol BCE

Listings Toronto (TSX), New York (NYSE) and Zurich
  (SWX) stock exchanges

Common Shares Outstanding 923,988,818 as at December 31, 2003

Stock Splits Three-for-one on April 26, 1979 and two-for-one
  on May 15, 1997

Quarterly Dividend*$0.30 per common share

2004 Dividend Schedule*

|Record Date        | Payment Date    
|------------------ | ----------------
|March 15, 2004     | April 15, 2004  
|June 15, 2004      | July 15, 2004   
|September 15, 2004 | October 15, 2004
|December 15, 2004  | January 15, 2005

*Subject to approval by the Board of Directors

TAX INFORMATION

Dividends and Capital Gains on Your BCE Shares BCE common shareholders are required to
  pay tax on dividends as well as any capital gains they realize when they sell
  their shares or are deemed to have sold them. If you received Nortel Networks
  common shares in May 2000, you should contact the Investor Relations group to
  learn more on the tax implications of the BCE/Nortel Plan of Arrangement or
  visit www.bce.ca.

Foreign Investors Dividends on BCE shares paid or credited
  to non-residents of Canada are subject to a 25% withholding tax unless reduced
  by treaty. Under current tax treaties, U.S. and U.K. residents are subject to
  a 15% withholding tax.

U.S. Investors Since January 1, 2001, BCE has been required
  to solicit taxpayer identification numbers (TIN) and Internal Revenue Service
  (IRS) Form W-9 certifications of residency from certain U.S. investors. Where
  these have not been received, BCE may be required to deduct the IRS specified
  backup withholding tax. The backup withholding rate on dividends is currently
  28%. Shareholders who did not provide their TIN and W-9 certification of residency
  and had the backup withholding tax applied on their dividends can obtain a refund
  or credit against their U.S. federal income tax through the filing of their
  income tax return the following year.

Under the Jobs and Growth Tax Reconciliation Act
  of 2003, dividends paid to U.S. individuals by most U.S. public companies and
  qualifying foreign corporations, including public Canadian companies such as
  BCE whose shares are readily tradable on a U.S. stock exchange (e.g., the New
  York Stock Exchange), will be subject to U.S. federal income tax at a maximum
  rate of 15% (or 5% for those in the lowest tax brackets), so long as certain
  conditions are met.

For additional information, please contact your
  tax advisor.

SHAREHOLDER SERVICES

Dividend Reinvestment and Stock Purchase Plan This plan provides a convenient method
  for eligible holders of BCE common shares to reinvest their dividends and make
  optional cash contributions to purchase additional common shares without brokerage
  costs.

Dividend Direct Deposit Service Avoid postal delays and trips to the bank
  by joining the dividend direct deposit service.

E-delivery Service Enrol in our e-delivery service to receive
  the proxy material, the annual report and/or quarterly documents by e-mail.

Duplicate Mailings Help us control costs and eliminate duplicate
  mailings by consolidating your accounts.

For more details on any of these services, registered
  shareholders must contact the transfer agent. Non-registered shareholders must
  contact their brokers.

CONTACT INFORMATION

Transfer Agent and Registrar For information on shareholder services
  or any other inquiries regarding your account (including stock transfer, address
  change, lost certificates and tax forms), contact:

Computershare Trust Company of Canada 9th Floor, 100 University Avenue 
  Toronto, Ontario M5J 2Y1 
  e-mail: bce@computershare.com 
  Tel.: (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

BCE Inc. Investor Relations
  1000, rue de La Gauchetière Ouest 
  Bureau 3700 
  Montréal (Québec) 
  H3B 4Y7 
  e-mail: investor.relations@bce.ca 
  Tel.: 1 800 339-6353 
  Fax: (514) 786-3970 
  or visit the Investors section on our website at 
  www.bce.ca

TRADEMARKS

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The following is a list of all our trademarks referred
  to and used as such in this annual report. BCE is a trademark of BCE Inc. The
  rings and head design, Bell Canada Enterprises corporate logo, Bell, Sympatico,
  Sympatico High Speed Edition, Bell Mobility, Emily, Single Number Reach, Business
  Back-Up and The Bell Bundle are trademarks of Bell Canada. ExpressVu is a trademark
  of Bell ExpressVu Limited Partnership. The Globe and Mail is a trademark of
  Bell Globemedia Publishing Inc. Mobile Browser is a trademark of Bell Mobility
  Inc. CTV is a trademark of CTV Inc. Nimiq and Anik are trademarks of Telesat
  Canada. TSN and RDS are trademarks of The Sports Network 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 are very important to our success
  and take the appropriate measures to protect them. We spend considerable time
  and resources overseeing, registering and prosecuting those who infringe on
  them. We also take great care not to infringe on trademarks of others.

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Cette publication est disponible en français.

BCEs Annual Report is printed with vegetable-based
  ink and is recyclable.

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|BCE Inc.                               
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|1000, rue de la Gauchetière
      Ouest
|Bureau 3700                            
|Montréal (Québec)                      
|H3B 4Y7 www.bce.ca
      Communications
|email:                                 
|tel:                                   
|fax:                                   
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|Investor Relations                     
|email:                                 
|tel:                                   
|fax:                                   



|Printed in Canada
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