##### 



Exhibit 99.1
 BELL
CANADA ENTERPRISES 2005 ANNUAL REPORT
 MANAGEMENTS DISCUSSION AND ANALYSIS
 About
Forward-Looking Statements
    
    
    2Non-GAAP
Financial Measures
    
    
    2About
Our Business
    
    
    4The
Year at a Glance
    
    
    11Selected
Annual and Quarterly Information
    
    
    16Financial Results Analysis
    
    
    20Financial and Capital Management
    
    
    34Evaluation of Disclosure Controls and Procedures
    
    
    41Assumptions Made in the Preparation of
Forward-Looking Statements and Risks that
Could Affect Our Business and Results
    
    
    42Our Accounting Policies
    
    
    56
 CONSOLIDATED FINANCIAL STATEMENTS
 Managements Report
    
    
    60Auditors Report
    
    
    60Consolidated Statements of Operations
    
    
    61Consolidated Statements of Deficit
    
    
    61Consolidated Balance Sheets
    
    
    62Consolidated Statements of Cash Flow
    
    
    63
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1
    
    Significant Accounting Policies
    
    
    64Note 2
    
    Segmented Information
    
    
    71Note 3
    
    Business Acquisitions
    
    
    73Note 4
    
    Restructuring and Other Items
    
    
    75Note 5
    
    Other Income
    
    
    77Note 6
    
    Interest Expense
    
    
    77Note 7
    
    Income Taxes
    
    
    77Note 8
    
    Discontinued Operations
    
    
    79Note 9
    
    Earnings per Share
    
    
    80Note 10
    
    Accounts Receivable
    
    
    81Note 11
    
    Other Current Assets
    
    
    81Note 12
    
    Capital Assets
    
    
    82Note 13
    
    Other Long-Term Assets
    
    
    82Note 14
    
    Indefinite-Life Intangible Assets
    
    
    82Note 15
    
    Goodwill
    
    
    83Note 16
    
    Accounts Payable and Accrued Liabilities
    
    
    83Note 17
    
    Debt Due Within One Year
    
    
    83Note 18
    
    Long-Term Debt
    
    
    84Note 19
    
    Other Long-Term Liabilities
    
    
    85Note 20
    
    Non-Controlling Interest
    
    
    85Note 21
    
    Financial Instruments
    
    
    85Note 22
    
    Share Capital
    
    
    87Note 23
    
    Stock-Based Compensation Plans
    
    
    88Note 24
    
    Employee Benefit Plans
    
    
    91Note 25
    
    Commitments and Contingencies
    
    
    95Note 26
    
    Guarantees
    
    
    97Note 27
    
    Supplemental Disclosure for
Statements of Cash Flows
    
    
    98Note 28
    
    Reconciliation of Canadian GAAP
to United States GAAP
    
    
    98Board of Directors and Executives
    
    
    102Shareholder Information
    
    
    103




---



##### 



p. 2
 MANAGEMENTS DISCUSSION AND ANALYSIS
 www.bce.ca www.sedar.com www.sec.gov.
 we us our BCE
  anticipate assumption believe could expect goal guidance intend may objective outlook plan seek,
should strive target will
 Non-GAAP Financial Measures
  
 ABOUT FORWARD-LOOKING STATEMENTS
  United States
Private Securities Litigation Reform Act of
1995 Securities Act of Ontario
  unless otherwise indicated,
forward-looking statements in
BCEs 2005 annual
report, including in this MD&A,
describe our expectations at March 1, 2006
 
 
 
 Assumptions Made in the
Preparation of Forward-Looking Statements
and Risks that Could Affect Our Business
and Results.
 
 NON-GAAP FINANCIAL MEASURES
    2005 ANNUAL REPORT




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##### 



p. 3
  EBITDA
   BCE
    
    2005
    
    
    2004Operating income
    
    
    4,048
    
    
    
    2,894Amortization expense
    
    
    3,114
    
    
    
    3,056Net benefit plans cost
    
    
    380
    
    
    
    256Restructuring and other items
    
    
    55
    
    
    
    1,224EBITDA
    
    
    7,597
    
    
    
    7,430
 BELL CANADA
    
    2005
    
    
    2004Operating income
    
    
    3,755
    
    
    
    2,695Amortization expense
    
    
    2,989
    
    
    
    2,962Net benefit plans cost
    
    
    389
    
    
    
    235Restructuring and other items
    
    
    54
    
    
    
    1,219EBITDA
    
    
    7,187
    
    
    
    7,111
     BCE
    
    2005
    
    
    2004Operating income
    
    
    4,048
    
    
    
    2,894Restructuring and other items
    
    
    55
    
    
    
    1,224Operating income before
restructuring and other items
    
    
    4,103
    
    
    
    4,118
 BELL CANADA
    
    2005
    
    
    2004Operating income
    
    
    3,755
    
    
    
    2,695Restructuring and other items
    
    
    54
    
    
    
    1,219Operating income before
restructuring and other items
    
    
    3,809
    
    
    
    3,914
     2005
    
    
    2004TOTAL
    
    
    PER SHARE
    
    
    TOTAL
    
    
    PER SHARENet earnings applicable to common shares
    
    
    1,891
    
    
    
    2.04
    
    
    
    1,523
    
    
    
    1.65Restructuring and other items
    
    
    38
    
    
    
    0.04
    
    
    
    772
    
    
    
    0.83Net gains on investments
    
    
    (28
    )
    
    
    (0.03
    )
    
    
    (423
    )
    
    
    (0.46
    )Net earnings before restructuring and other items
and net gains on investments
    
    
    1,901
    
    
    
    2.05
    
    
    
    1,872
    
    
    
    2.02
 2005 ANNUAL REPORT




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##### 



p. 4
  MANAGEMENTS DISCUSSION AND ANALYSIS
   Free Cash Flow
      2005
    
    
    2004Cash from operating activities
    
    
    5,559
    
    
    
    5,443Capital expenditures
    
    
    (3,428
    )
    
    
    (3,319
    )Total dividends paid
    
    
    (1,473
    )
    
    
    (1,381
    )Other investing activities
    
    
    4
    
    
    
    127Free cash flow
    
    
    662
    
    
    
    870
 
 ABOUT OUR BUSINESS
 Residential Business Aliant Other Bell
Canada Other BCE
  
      2005 ANNUAL REPORT




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##### 



p. 5
                 2005 ANNUAL REPORT




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##### 



p. 6
  MANAGEMENTS DISCUSSION AND ANALYSIS
   The
Globe and Mail
              
    
 
 
 
         2005 ANNUAL REPORT




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##### 



p. 7
   
 
 
           direct-to-home (DTH) satellite
  very high bit rate DSL (VDSL)
  hybrid fibre co-axial cable
 2005 ANNUAL REPORT




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##### 



p. 8 MANAGEMENTS DISCUSSION AND ANALYSIS
     
 
 
 
   
 
 
          2005 ANNUAL REPORT




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##### 



p. 9
 Service
 Customer retention 
 Growth
 Cost
      
 
   
 
 
 
      
 
 
 
   2005 ANNUAL REPORT




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##### 



p. 10 MANAGEMENTS DISCUSSION AND ANALYSIS
       
 
 
 
 
   
 
 
  
 
 
    2005 ANNUAL REPORT




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##### 



p. 11
     
 
 
 
    
 
 
 
 YEAR AT A GLANCE
    The Year at a Glance
 2005 ANNUAL REPORT




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##### 



p. 12 MANAGEMENTS DISCUSSION AND ANALYSIS
        2005
    
    
    DECEMBER 31, 2005(in thousands)
    
    NET ACTIVATIONS
    
    
    CONNECTIONSNAS
    
    
    (324
    )
    
    
    12,581Digital equivalent access lines
    
    
    699
    
    
    
    5,034High-speed Internet
    
    
    387
    
    
    
    2,195Dial-up Internet
    
    
    (157
    )
    
    
    586Wireless
    
    
    516
    
    
    
    5,441Paging
    
    
    (80
    )
    
    
    347Video
    
    
    224
    
    
    
    1,727Total
    
    
    1,265
    
    
    
    27,911
  
    2005 ANNUAL REPORT




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##### 



p. 13
        
      
   
 
 
 
 
 Operating
Income and EBITDA 
EBITDA margin
 2005 ANNUAL REPORT




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##### 



p. 14 MANAGEMENTS DISCUSSION AND ANALYSIS
 Capital
Expenditures
 Capital intensity
     
 
 
 
   
   
    
 
 
 
 
  2005 ANNUAL REPORT




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##### 



p. 15
  
 
  
 
 
 
  
 
 
  
 
 
    
 
 
    2005 ANNUAL REPORT




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##### 



p. 16       MANAGEMENTS DISCUSSION AND ANALYSIS
 Selected Annual and Quarterly Information
  EBITDA  to interest ratio
 Operating margin
 ROE
 Net debt to  EBITDA
 Total debt to total assets
 Long-term debt to equity
 Cash flow per share
 SELECTED ANNUAL AND QUARTERLY INFORMATION
   2005
    
    2004
    
    2003
    
    2002
    
    2001OperationsOperating revenues
    
    
    19,105
    
    
    
    18,368
    
    
    
    18,057
    
    
    
    18,349
    
    
    
    18,058Operating expenses
    
    
    (11,508
    )
    
    
    (10,938
    )
    
    
    (10,776
    )
    
    
    (11,064
    )
    
    
    (11,285
    )EBITDA
    
    
    7,597
    
    
    
    7,430
    
    
    
    7,281
    
    
    
    7,285
    
    
    
    6,773Amortization expense
    
    
    (3,114
    )
    
    
    (3,056
    )
    
    
    (3,062
    )
    
    
    (2,999
    )
    
    
    (3,267
    )Net benefit plans (cost) credit
    
    
    (380
    )
    
    
    (256
    )
    
    
    (175
    )
    
    
    33
    
    
    
    121Restructuring and other items
    
    
    (55
    )
    
    
    (1,224
    )
    
    
    (14
    )
    
    
    (768
    )
    
    
    (977
    )Operating income
    
    
    4,048
    
    
    
    2,894
    
    
    
    4,030
    
    
    
    3,551
    
    
    
    2,650Other income
    
    
    8
    
    
    
    407
    
    
    
    177
    
    
    
    2,413
    
    
    
    3,891Impairment charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (765
    )
    
    
    Interest expense
    
    
    (981
    )
    
    
    (999
    )
    
    
    (1,100
    )
    
    
    (1,119
    )
    
    
    (966
    )Pre-tax earnings from continuing operations
    
    
    3,075
    
    
    
    2,302
    
    
    
    3,107
    
    
    
    4,080
    
    
    
    5,575Income taxes
    
    
    (893
    )
    
    
    (681
    )
    
    
    (1,086
    )
    
    
    (1,585
    )
    
    
    (1,648
    )Non-controlling interest
    
    
    (267
    )
    
    
    (174
    )
    
    
    (201
    )
    
    
    (663
    )
    
    
    (360
    )Earnings from continuing operations
    
    
    1,915
    
    
    
    1,447
    
    
    
    1,820
    
    
    
    1,832
    
    
    
    3,567Discontinued operations
    
    
    46
    
    
    
    77
    
    
    
    (5
    )
    
    
    575
    
    
    
    (3,131
    )Net earnings before extraordinary gain
    
    
    1,961
    
    
    
    1,524
    
    
    
    1,815
    
    
    
    2,407
    
    
    
    436Extraordinary gain
    
    
    
    
    
    
    69
    
    
    
    
    
    
    
    
    
    
    
    Net earnings
    
    
    1,961
    
    
    
    1,593
    
    
    
    1,815
    
    
    
    2,407
    
    
    
    436Dividends on preferred shares
    
    
    (70
    )
    
    
    (70
    )
    
    
    (64
    )
    
    
    (59
    )
    
    
    (64
    )Premium on redemption of preferred shares
    
    
    
    
    
    
    
    
    
    
    (7
    )
    
    
    (6
    )
    
    
    Net earnings applicable to common shares
    
    
    1,891
    
    
    
    1,523
    
    
    
    1,744
    
    
    
    2,342
    
    
    
    372Included in net earnings:Net gains on investmentsContinuing operations
    
    
    29
    
    
    
    389
    
    
    
    84
    
    
    
    1,341
    
    
    
    3,184Discontinued operations
    
    
    (1
    )
    
    
    34
    
    
    
    (86
    )
    
    
    607
    
    
    
    (1,943
    )Restructuring and other items
    
    
    (38
    )
    
    
    (772
    )
    
    
    (3
    )
    
    
    (441
    )
    
    
    (462
    )Impairment charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (527
    )
    
    
    Goodwill amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (971
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (44
    )Net earnings per common share:Continuing operations  basic
    
    
    1.99
    
    
    
    1.49
    
    
    
    1.91
    
    
    
    2.08
    
    
    
    4.34Continuing operations  diluted
    
    
    1.99
    
    
    
    1.49
    
    
    
    1.90
    
    
    
    2.05
    
    
    
    4.28Net earnings  basic
    
    
    2.04
    
    
    
    1.65
    
    
    
    1.90
    
    
    
    2.66
    
    
    
    0.46Net earnings  diluted
    
    
    2.04
    
    
    
    1.65
    
    
    
    1.89
    
    
    
    2.62
    
    
    
    0.46RatiosEBITDA margin (%)
    
    
    39.8
    %
    
    
    40.5
    %
    
    
    40.3
    %
    
    
    39.7
    %
    
    
    37.5
    %EBITDA to interest ratio (times)
    
    
    7.74
    
    
    
    7.44
    
    
    
    6.62
    
    
    
    6.51
    
    
    
    7.01Operating margin (%)
    
    
    21.2
    %
    
    
    15.8
    %
    
    
    22.3
    %
    
    
    19.4
    %
    
    
    14.7
    %ROE (%)
    
    
    14.8
    %
    
    
    12.5
    %
    
    
    15.2
    %
    
    
    17.8
    %
    
    
    2.4
    %
 2005 ANNUAL REPORT




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##### 



p. 17
 Cash flow yield
 Market capitalization
 Book value per share
 Common dividend yield
 Common dividend payout ratio
 Price to earnings ratio
 Price to book ratio
 Price to cash flow ratio
 2005
    
    2004
    
    2003
    
    2002
    
    2001Balance SheetTotal assets
    
    
    40,630
    
    
    
    39,140
    
    
    
    39,402
    
    
    
    39,125
    
    
    
    53,674Long-term debt (including current portion)
    
    
    13,405
    
    
    
    12,802
    
    
    
    13,802
    
    
    
    14,673
    
    
    
    11,793Net debt
    
    
    13,129
    
    
    
    12,644
    
    
    
    13,274
    
    
    
    15,178
    
    
    
    12,905Total capitalization
    
    
    30,748
    
    
    
    29,576
    
    
    
    30,236
    
    
    
    31,356
    
    
    
    35,072Preferred shares
    
    
    1,670
    
    
    
    1,670
    
    
    
    1,670
    
    
    
    1,510
    
    
    
    1,300Common shareholders equity
    
    
    13,051
    
    
    
    12,354
    
    
    
    11,895
    
    
    
    11,090
    
    
    
    15,266RatiosNet debt to total capitalization (%)
    
    
    42.7
    %
    
    
    42.8
    %
    
    
    43.9
    %
    
    
    48.4
    %
    
    
    36.8
    %Net debt to EBITDA (times)
    
    
    1.73
    
    
    
    1.70
    
    
    
    1.82
    
    
    
    2.08
    
    
    
    1.91Total debt to total assets (times)
    
    
    0.33
    
    
    
    0.33
    
    
    
    0.35
    
    
    
    0.39
    
    
    
    0.24Long-term debt to equity (times)
    
    
    0.91
    
    
    
    0.91
    
    
    
    1.02
    
    
    
    1.16
    
    
    
    0.71Cash FlowsCash flows from operating activities
    
    
    5,559
    
    
    
    5,443
    
    
    
    5,890
    
    
    
    4,409
    
    
    
    4,024Cash flows from investing activities
    
    
    (3,866
    )
    
    
    (3,635
    )
    
    
    (2,875
    )
    
    
    (7,003
    )
    
    
    (698
    )Capital expenditures
    
    
    (3,428
    )
    
    
    (3,319
    )
    
    
    (3,101
    )
    
    
    (3,691
    )
    
    
    (4,885
    )Business acquisitions
    
    
    (228
    )
    
    
    (1,118
    )
    
    
    (54
    )
    
    
    (6,455
    )
    
    
    (307
    )Business dispositions
    
    
    
    
    
    
    20
    
    
    
    54
    
    
    
    3,187
    
    
    
    248Other investing activities
    
    
    4
    
    
    
    127
    
    
    
    62
    
    
    
    10
    
    
    
    (79
    )Cash flows from financing activities
    
    
    (1,643
    )
    
    
    (2,300
    )
    
    
    (2,949
    )
    
    
    3,370
    
    
    
    (1,921
    )Net issuance (repayment) of equity instruments
    
    
    25
    
    
    
    32
    
    
    
    172
    
    
    
    2,819
    
    
    
    (120
    )Net issuance (repayment) of debt instruments
    
    
    (54
    )
    
    
    (820
    )
    
    
    (1,827
    )
    
    
    2,014
    
    
    
    (1,489
    )Financing activities of subsidiaries with third parties
    
    
    (77
    )
    
    
    (50
    )
    
    
    24
    
    
    
    92
    
    
    
    1,010Cash dividends paid on common shares
    
    
    (1,195
    )
    
    
    (1,108
    )
    
    
    (1,029
    )
    
    
    (999
    )
    
    
    (969
    )Cash dividends paid on preferred shares
    
    
    (86
    )
    
    
    (85
    )
    
    
    (61
    )
    
    
    (43
    )
    
    
    (64
    )Cash
dividends paid by subsidiaries to  non-controlling interest
    
    
    (192
    )
    
    
    (188
    )
    
    
    (184
    )
    
    
    (468
    )
    
    
    (357
    )Cash provided by (used in) discontinued operations
    
    
    15
    
    
    
    150
    
    
    
    350
    
    
    
    (1,039
    )
    
    
    (1,095
    )RatiosFree cash flow
    
    
    662
    
    
    
    870
    
    
    
    1,577
    
    
    
    (782
    )
    
    
    (2,330
    )Capital intensity (%)
    
    
    17.9
    %
    
    
    18.1
    %
    
    
    17.2
    %
    
    
    20.1
    %
    
    
    27.1
    %Cash flow per share (dollars)
    
    
    2.30
    
    
    
    2.30
    
    
    
    3.03
    
    
    
    0.85
    
    
    
    (1.07
    )Cash flow yield (%)
    
    
    7.2
    %
    
    
    7.4
    %
    
    
    9.8
    %
    
    
    0.8
    %
    
    
    (4.7
    %)Share InformationAverage number of common shares (millions)
    
    
    926.8
    
    
    
    924.6
    
    
    
    920.3
    
    
    
    847.9
    
    
    
    807.9Common shares outstanding at end of year (millions)
    
    
    927.3
    
    
    
    925.9
    
    
    
    924.0
    
    
    
    915.9
    
    
    
    808.5Market capitalization
    
    
    25,844
    
    
    
    26,777
    
    
    
    26,704
    
    
    
    26,103
    
    
    
    29,114Dividends declared per common share (dollars)
    
    
    1.32
    
    
    
    1.20
    
    
    
    1.20
    
    
    
    1.20
    
    
    
    1.20Book value per share (dollars)
    
    
    14.07
    
    
    
    13.34
    
    
    
    12.87
    
    
    
    12.11
    
    
    
    18.88Total dividends declared on common shares
    
    
    (1,222
    )
    
    
    (1,110
    )
    
    
    (1,105
    )
    
    
    (1,031
    )
    
    
    (969
    )Total dividends declared on preferred shares
    
    
    (70
    )
    
    
    (70
    )
    
    
    (64
    )
    
    
    (59
    )
    
    
    (64
    )Market price per common share (dollars)High
    
    
    32.95
    
    
    
    30.00
    
    
    
    32.35
    
    
    
    36.87
    
    
    
    43.50Low
    
    
    26.60
    
    
    
    25.75
    
    
    
    26.60
    
    
    
    23.00
    
    
    
    32.75Close
    
    
    27.87
    
    
    
    28.92
    
    
    
    28.90
    
    
    
    28.50
    
    
    
    36.01RatiosCommon dividend yield (%)
    
    
    4.6
    %
    
    
    4.1
    %
    
    
    3.9
    %
    
    
    3.8
    %
    
    
    3.3
    %Common dividend payout ratio (%)
    
    
    63.2
    %
    
    
    72.8
    %
    
    
    59.0
    %
    
    
    42.7
    %
    
    
    260.5
    %Price to earnings ratio (times)
    
    
    13.66
    
    
    
    17.53
    
    
    
    15.21
    
    
    
    10.71
    
    
    
    78.28Price to book ratio (times)
    
    
    1.98
    
    
    
    2.17
    
    
    
    2.25
    
    
    
    2.35
    
    
    
    1.91Price to cash flow ratio (times)
    
    
    12.12
    
    
    
    12.57
    
    
    
    9.54
    
    
    
    33.53
    
    
    
    (33.65
    )Other DataNumber of employees (thousands) (1)
    
    
    60
    
    
    
    62
    
    
    
    64
    
    
    
    64
    
    
    
    73
 (1)
    
    The number of employees for 2004 excludes virtually all employees who left
under the voluntary departure program of 2004. 2005 ANNUAL REPORT




---



##### 



p. 18       MANAGEMENTS DISCUSSION AND ANALYSIS
 Digital equivalent access lines
 ARPU (average revenue per unit) ARPS (average revenue per subscriber)
 Churn
 Cost of acquisition (COA)
   2005
    
    2004
    
    2003WirelineLocal network access services (thousands)
    
    
    12,581
    
    
    
    12,905
    
    
    
    13,051Long distance conversation minutes (millions)
    
    
    18,306
    
    
    
    18,070
    
    
    
    19,132Long distance average revenue per minute (cents)
    
    
    10.2
    
    
    
    11.7
    
    
    
    12.4DataDigital equivalent access lines (thousands)
    
    
    5,034
    
    
    
    4,335
    
    
    
    3,867High-speed Internet net activations (thousands)
    
    
    387
    
    
    
    350
    
    
    
    358High-speed Internet subscribers (thousands)
    
    
    2,195
    
    
    
    1,808
    
    
    
    1,458Dial-up Internet subscribers (thousands)
    
    
    586
    
    
    
    743
    
    
    
    869WirelessCellular and PCS net activations (thousands)
    
    
    516
    
    
    
    513
    
    
    
    514Cellular and PCS subscribers (thousands)
    
    
    5,441
    
    
    
    4,925
    
    
    
    4,412Average revenue per unit ($/month)
    
    
    49
    
    
    
    49
    
    
    
    48Churn (%) (average per month)
    
    
    1.6
    %
    
    
    1.3
    %
    
    
    1.4
    %Cost of acquisition ($/subscriber)
    
    
    406
    
    
    
    411
    
    
    
    426Paging subscribers (thousands)
    
    
    347
    
    
    
    427
    
    
    
    524VideoVideo net activations (thousands)
    
    
    224
    
    
    
    116
    
    
    
    83Video subscribers (thousands)
    
    
    1,727
    
    
    
    1,503
    
    
    
    1,387Average revenue per subscriber ($/month)
    
    
    50
    
    
    
    49
    
    
    
    46Churn (%) (average per month)
    
    
    0.9
    %
    
    
    1.0
    %
    
    
    1.1
    %Cost of acquisition ($/subscriber) (1)
    
    
    375
    
    
    
    571
    
    
    
    532
 (1)
    
    The 34% decrease in  COA  over 2004 was impacted by the capitalization of
STBs and installation costs associated with our new rental program. 2005 ANNUAL REPORT




---



##### 



p. 19
   2005
    
    2004YEAR
    
    Q4
    
    Q3
    
    Q2
    
    Q1
    
    YEAR
    
    Q4
    
    Q3
    
    Q2
    
    Q1Operating revenues
    
    
    19,105
    
    
    
    4,986
    
    
    
    4,732
    
    
    
    4,757
    
    
    
    4,630
    
    
    
    18,368
    
    
    
    4,769
    
    
    
    4,556
    
    
    
    4,577
    
    
    
    4,466EBITDA
    
    
    7,597
    
    
    
    1,858
    
    
    
    1,864
    
    
    
    1,972
    
    
    
    1,903
    
    
    
    7,430
    
    
    
    1,794
    
    
    
    1,901
    
    
    
    1,920
    
    
    
    1,815Amortization expense
    
    
    (3,114
    )
    
    
    (791
    )
    
    
    (786
    )
    
    
    (776
    )
    
    
    (761
    )
    
    
    (3,056
    )
    
    
    (787
    )
    
    
    (754
    )
    
    
    (757
    )
    
    
    (758
    )Net benefit plans cost
    
    
    (380
    )
    
    
    (65
    )
    
    
    (108
    )
    
    
    (104
    )
    
    
    (103
    )
    
    
    (256
    )
    
    
    (67
    )
    
    
    (61
    )
    
    
    (65
    )
    
    
    (63
    )Restructuring and other items
    
    
    (55
    )
    
    
    (23
    )
    
    
    (31
    )
    
    
    (5
    )
    
    
    4
    
    
    
    (1,224
    )
    
    
    (126
    )
    
    
    (1,081
    )
    
    
    (14
    )
    
    
    (3
    )Operating income
    
    
    4,048
    
    
    
    979
    
    
    
    939
    
    
    
    1,087
    
    
    
    1,043
    
    
    
    2,894
    
    
    
    814
    
    
    
    5
    
    
    
    1,084
    
    
    
    991Earnings from continuing operations
    
    
    1,915
    
    
    
    418
    
    
    
    448
    
    
    
    570
    
    
    
    479
    
    
    
    1,447
    
    
    
    354
    
    
    
    90
    
    
    
    529
    
    
    
    474Discontinued operations
    
    
    46
    
    
    
    12
    
    
    
    11
    
    
    
    11
    
    
    
    12
    
    
    
    77
    
    
    
    11
    
    
    
    10
    
    
    
    42
    
    
    
    14Extraordinary gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69
    
    
    
    69
    
    
    
    
    
    
    
    
    
    
    
    Net earnings
    
    
    1,961
    
    
    
    430
    
    
    
    459
    
    
    
    581
    
    
    
    491
    
    
    
    1,593
    
    
    
    434
    
    
    
    100
    
    
    
    571
    
    
    
    488Net earnings applicable to common shares
    
    
    1,891
    
    
    
    413
    
    
    
    441
    
    
    
    563
    
    
    
    474
    
    
    
    1,523
    
    
    
    417
    
    
    
    82
    
    
    
    554
    
    
    
    470Included in net earnings:Net gains on investmentsContinuing operations
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    1
    
    
    
    389
    
    
    
    64
    
    
    
    325
    
    
    
    
    
    
    
    Discontinued operations
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    34
    
    
    
    (2
    )
    
    
    (2
    )
    
    
    31
    
    
    
    7Restructuring and other items
    
    
    (38
    )
    
    
    (16
    )
    
    
    (21
    )
    
    
    (3
    )
    
    
    2
    
    
    
    (772
    )
    
    
    (62
    )
    
    
    (725
    )
    
    
    16
    
    
    
    (1
    )Net earnings per common shareContinuing operations  basic
    
    
    1.99
    
    
    
    0.43
    
    
    
    0.46
    
    
    
    0.60
    
    
    
    0.50
    
    
    
    1.49
    
    
    
    0.37
    
    
    
    0.08
    
    
    
    0.55
    
    
    
    0.49Continuing operations  diluted
    
    
    1.99
    
    
    
    0.43
    
    
    
    0.46
    
    
    
    0.60
    
    
    
    0.50
    
    
    
    1.49
    
    
    
    0.37
    
    
    
    0.08
    
    
    
    0.55
    
    
    
    0.49Net earnings  basic
    
    
    2.04
    
    
    
    0.44
    
    
    
    0.48
    
    
    
    0.61
    
    
    
    0.51
    
    
    
    1.65
    
    
    
    0.45
    
    
    
    0.09
    
    
    
    0.60
    
    
    
    0.51Net earnings  diluted
    
    
    2.04
    
    
    
    0.44
    
    
    
    0.48
    
    
    
    0.61
    
    
    
    0.51
    
    
    
    1.65
    
    
    
    0.45
    
    
    
    0.09
    
    
    
    0.60
    
    
    
    0.51Average number of common shares
outstanding (millions)
    
    
    926.8
    
    
    
    927.3
    
    
    
    927.0
    
    
    
    926.6
    
    
    
    926.2
    
    
    
    924.6
    
    
    
    925.3
    
    
    
    924.6
    
    
    
    924.3
    
    
    
    924.1
 2005 ANNUAL REPORT




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##### 



p. 20       MANAGEMENTS DISCUSSION AND ANALYSIS
 Financial Results Analysis
 FINANCIAL RESULTS ANALYSIS
  2005
    
    2004
    
    % CHANGEOperating revenues
    
    
    19,105
    
    
    
    18,368
    
    
    
    4.0
    %Operating expenses
    
    
    (11,508
    )
    
    
    (10,938
    )
    
    
    (5.2
    %)EBITDA
    
    
    7,597
    
    
    
    7,430
    
    
    
    2.2
    %Amortization expense
    
    
    (3,114
    )
    
    
    (3,056
    )
    
    
    (1.9
    %)Net benefit plans cost
    
    
    (380
    )
    
    
    (256
    )
    
    
    (48.4
    %)Restructuring and other items
    
    
    (55
    )
    
    
    (1,224
    )
    
    
    95.5
    %Operating income
    
    
    4,048
    
    
    
    2,894
    
    
    
    39.9
    %Other income
    
    
    8
    
    
    
    407
    
    
    
    (98.0
    %)Interest expense
    
    
    (981
    )
    
    
    (999
    )
    
    
    1.8
    %Pre-tax earnings from
continuing operations
    
    
    3,075
    
    
    
    2,302
    
    
    
    33.6
    %Income taxes
    
    
    (893
    )
    
    
    (681
    )
    
    
    (31.1
    %)Non-controlling interest
    
    
    (267
    )
    
    
    (174
    )
    
    
    (53.4
    %)Earnings from continuing
operations
    
    
    1,915
    
    
    
    1,447
    
    
    
    32.3
    %Discontinued operations
    
    
    46
    
    
    
    77
    
    
    
    (40.3
    %)Net earnings before
extraordinary gain
    
    
    1,961
    
    
    
    1,524
    
    
    
    28.7
    %Extraordinary gain
    
    
    
    
    
    
    69
    
    
    
    N/MNet earnings
    
    
    1,961
    
    
    
    1,593
    
    
    
    23.1
    %Dividends on preferred shares
    
    
    (70
    )
    
    
    (70
    )
    
    
    Net earnings applicable
to common shares
    
    
    1,891
    
    
    
    1,523
    
    
    
    24.2
    %EPS
    
    
    2.04
    
    
    
    1.65
    
    
    
    23.6
    %
 N/M: Not meaningful
     Segmented Analysis Product Line Analysis
  
  2005 ANNUAL REPORT




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##### 



p. 21
  
 
 
 
 
  Segmented Analysis
         Amortization Expense
  Amortization Expense
  
 
 
 2005 ANNUAL REPORT




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##### 



p. 22       MANAGEMENTS DISCUSSION AND ANALYSIS
 Net Benefit Plans Cost
  
 
 
 Restructuring and Other Items
  Net Benefit Plans Cost
  
 
 
 
   Restructuring and Other Items
  
 
   
 
 
 
     2005 ANNUAL REPORT




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##### 



p. 23
  
 2005
    
    2004
    
    % CHANGEOperating revenuesResidential
    
    
    7,599
    
    
    
    7,502
    
    
    
    1.3
    %Business
    
    
    6,120
    
    
    
    5,851
    
    
    
    4.6
    %Aliant
    
    
    2,097
    
    
    
    2,033
    
    
    
    3.1
    %Other Bell Canada
    
    
    1,958
    
    
    
    1,939
    
    
    
    1.0
    %Inter-segment eliminations
    
    
    (524
    )
    
    
    (538
    )
    
    
    2.6
    %Bell Canada
    
    
    17,250
    
    
    
    16,787
    
    
    
    2.8
    %Other BCE
    
    
    2,093
    
    
    
    1,842
    
    
    
    13.6
    %Inter-segment eliminations
    
    
    (238
    )
    
    
    (261
    )
    
    
    8.8
    %Total operating revenues
    
    
    19,105
    
    
    
    18,368
    
    
    
    4.0
    %Operating incomeResidential
    
    
    2,001
    
    
    
    2,119
    
    
    
    (5.6
    %)Business
    
    
    910
    
    
    
    896
    
    
    
    1.6
    %Aliant
    
    
    396
    
    
    
    268
    
    
    
    47.8
    %Other Bell Canada
    
    
    448
    
    
    
    (588
    )
    
    
    N/MBell Canada
    
    
    3,755
    
    
    
    2,695
    
    
    
    39.3
    %Other BCE
    
    
    293
    
    
    
    199
    
    
    
    47.2
    %Total operating income
    
    
    4,048
    
    
    
    2,894
    
    
    
    39.9
    %
 N/M: Not meaningful
  
  Wireline
   2005 ANNUAL REPORT




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##### 



p. 24       MANAGEMENTS DISCUSSION AND ANALYSIS
  Local and Access Long Distance Product Line Analysis.
 Wireless
  Wireless Product Line Analysis.
 Data
   Data Product Line Analysis.
 Video
 
 
  2005 ANNUAL REPORT




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##### 



p. 25
     
    
  2005 ANNUAL REPORT




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##### 



p. 26       MANAGEMENTS DISCUSSION AND ANALYSIS
 Enterprise
   
 
 
 
  
 
 
 
 SMB
  Bell West
   2005 ANNUAL REPORT




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##### 



p. 27
   
       
  2005 ANNUAL REPORT




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p. 28       MANAGEMENTS DISCUSSION AND ANALYSIS
       
    
 2005 ANNUAL REPORT




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##### 



p. 29
   
   2005
    
    2004
    
    % CHANGEOperating revenuesBell Globemedia
    
    
    1,555
    
    
    
    1,420
    
    
    
    9.5
    %Telesat
    
    
    475
    
    
    
    362
    
    
    
    31.2
    %Other
    
    
    63
    
    
    
    60
    
    
    
    5.0
    %Other BCE revenues
    
    
    2,093
    
    
    
    1,842
    
    
    
    13.6
    %
 
  The Globe and
Mail. The Globe and Mail, The Globe and Mail
  2005 ANNUAL REPORT




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##### 



p. 30       MANAGEMENTS DISCUSSION AND ANALYSIS
      
  The Globe and Mail
   
 REVENUES
    
    2005
    
    2004
    
    % CHANGELocal and access
    
    
    5,446
    
    
    
    5,572
    
    
    
    (2.3
    %)Long distance
    
    
    2,044
    
    
    
    2,327
    
    
    
    (12.2
    %)Wireless
    
    
    3,097
    
    
    
    2,818
    
    
    
    9.9
    %Data
    
    
    4,015
    
    
    
    3,640
    
    
    
    10.3
    %Video
    
    
    976
    
    
    
    850
    
    
    
    14.8
    %Terminal sales and other
    
    
    1,672
    
    
    
    1,580
    
    
    
    5.8
    %Total Bell Canada
    
    
    17,250
    
    
    
    16,787
    
    
    
    2.8
    %
  
  2005 ANNUAL REPORT




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##### 



p. 31
     
    
 
  2005 ANNUAL REPORT




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##### 



p. 32       MANAGEMENTS DISCUSSION AND ANALYSIS
       
 
  2005 ANNUAL REPORT




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##### 



p. 33
     See discussion under Residential segment.
  
     
  Related Party Transaction)
 
 
 Other Income
  
 
 
 
 
 2005 ANNUAL REPORT




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##### 



p. 34       MANAGEMENTS DISCUSSION AND ANALYSIS
  Non-Controlling Interest
  
 Financial and Capital Management
  Capital Structure
  Net debt to capitalization ratio
      
 
  
  Related Party Transaction)
    
 
    
 
   
 
 FINANCIAL AND CAPITAL MANAGEMENT
  AT DECEMBER 31
    
    2005
    
    2004Debt due within one year
    
    
    1,373
    
    
    
    1,272Long-term debt
    
    
    12,119
    
    
    
    11,685Less: Cash and cash equivalents
    
    
    (363
    )
    
    
    (313
    )Total net debt
    
    
    13,129
    
    
    
    12,644Non-controlling interest
    
    
    2,898
    
    
    
    2,908Total shareholders equity
    
    
    14,721
    
    
    
    14,024Total capitalization
    
    
    30,748
    
    
    
    29,576Net debt to capitalization ratio
    
    
    42.7
    %
    
    
    42.8
    %Outstanding share data(in millions)Common shares
    
    
    927.3
    
    
    
    925.9Stock options
    
    
    27.3
    
    
    
    28.5
 
 2005 ANNUAL REPORT




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##### 



p. 35
   
 
 
      
 
 
    
 
  
  2005
    
    2004Cash flows from operating activities
    
    
    5,559
    
    
    
    5,443Capital expenditures
    
    
    (3,428
    )
    
    
    (3,319
    )Other investing activities
    
    
    4
    
    
    
    127Cash dividends paid on common shares
    
    
    (1,195
    )
    
    
    (1,108
    )Cash dividends paid on preferred shares
    
    
    (86
    )
    
    
    (85
    )Cash dividends paid by subsidiaries
to non-controlling interest
    
    
    (192
    )
    
    
    (188
    )Free cash flow
    
    
    662
    
    
    
    870Business acquisitions
    
    
    (228
    )
    
    
    (1,118
    )Business dispositions
    
    
    
    
    
    
    20Increase in investments
    
    
    (233
    )
    
    
    (58
    )Decrease in investments
    
    
    19
    
    
    
    713Net issuance of equity instruments
    
    
    25
    
    
    
    32Net repayment of debt instruments
    
    
    (54
    )
    
    
    (820
    )Financing activities of subsidiaries
with third parties
    
    
    (77
    )
    
    
    (50
    )Other financing activities
    
    
    (64
    )
    
    
    (81
    )Cash provided by discontinued operations
    
    
    15
    
    
    
    150Net increase (decrease) in
cash and cash equivalents
    
    
    65
    
    
    
    (342
    )
   
 
 
 
 2005 ANNUAL REPORT




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##### 



p. 36       MANAGEMENTS DISCUSSION AND ANALYSIS
  
 
 
   
 
 
     
 
  
 
 
 
 
  Our Strategic
Priorities)
     2005 ANNUAL REPORT




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##### 



p.
37
 Debt Instruments
   
 
 
  
 
 
        
 
 
 
  
 
  
 
 
  
 
      
 
 
  2005 ANNUAL REPORT




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##### 



p. 38       MANAGEMENTS DISCUSSION AND ANALYSIS
 Credit Ratings
   BCE INC.S&P (1)
    
    DBRS (2)
    
    MOODYS (3)
    
    FITCH (4)Commercial paper
    
    A-1 (low)
    
    R-1 (low) / stable
    
    P-2
    
    Long-term debt
    
    BBB+ / negative
    
    A (low) / stable
    
    Baa1 / negative
    
    BBB+ / stablePreferred shares
    
    P-2
    
    Pfd-2 (low) / stable
    
    
    
    
 BELL CANADAS&P (1)
    
    DBRS (2)
    
    MOODYS(3)
    
    FITCH (4)Commercial paper
    
    A-1 (low)
    
    R-1 (low) / stable
    
    P-2
    
    Extendable commercial notes
    
    
    
    R-1 (low) / stable
    
    
    
    Long-term debt
    
    A- / negative
    
    A / stable
    
    A3 / negative
    
    BBB+ / stableSubordinated long-term debt
    
    BBB+ / negative
    
    BBB (high) / stable
    
    Baa1 / negative
    
    BBB / stablePreferred shares
    
    P-2
    
    Pfd-2 / stable
    
    
    
    
 
 (1)
    
    Standard & Poors, a division of The McGraw-Hill Companies, Inc.; maintains a negative
outlook on our corporate rating(2)
    
    Dominion Bond Rating Service Limited(3)
    
    Moodys Investors
Service, Inc.; on February 1, 2006 ratings placed under review for possible
downgrade(4)
    
    Fitch Ratings Ltd.      Capital Expenditures
  Pension Funding
  Contractual Obligations
  THERE-2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    AFTER
    
    
    TOTALLong-term debt (excluding capital leases)
    
    
    1,160
    
    
    
    1,686
    
    
    
    1,043
    
    
    
    1,624
    
    
    
    1,013
    
    
    
    5,955
    
    
    
    12,481Notes payable and bank advances
    
    
    87
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87Capital leases
    
    
    126
    
    
    
    110
    
    
    
    63
    
    
    
    47
    
    
    
    45
    
    
    
    533
    
    
    
    924Operating leases
    
    
    231
    
    
    
    204
    
    
    
    181
    
    
    
    158
    
    
    
    134
    
    
    
    679
    
    
    
    1,587Commitments for capital expenditures
    
    
    184
    
    
    
    52
    
    
    
    8
    
    
    
    2
    
    
    
    16
    
    
    
    
    
    
    
    262Purchase obligations
    
    
    1,413
    
    
    
    1,001
    
    
    
    716
    
    
    
    287
    
    
    
    205
    
    
    
    530
    
    
    
    4,152Other long-term liabilities (including current portion)
    
    
    143
    
    
    
    119
    
    
    
    79
    
    
    
    80
    
    
    
    4
    
    
    
    25
    
    
    
    450Total
    
    
    3,344
    
    
    
    3,172
    
    
    
    2,090
    
    
    
    2,198
    
    
    
    1,417
    
    
    
    7,722
    
    
    
    19,943
 2005 ANNUAL REPORT




---



##### 



p. 39
      
 
 
    
 
  Other Cash Requirements
   Guarantees
   Securitization of Accounts Receivable
    2005 ANNUAL REPORT




---



##### 



p. 40 MANAGEMENTS DISCUSSION AND ANALYSIS
  Commitment under the CRTC Deferral Mechanism
    
 
 
         Sources of Liquidity
   2005 ANNUAL REPORT




---



##### 



p. 41
  NON-COMMITTED
    
    
    COMMITTED
    
    
    TOTALCommercial paper
credit lines (1)
    
    
    1,513
    
    
    
    2,000
    
    
    
    3,513Other credit facilities (2)
    
    
    916
    
    
    
    413
    
    
    
    1,329Total
    
    
    2,429
    
    
    
    2,413
    
    
    
    4,842Drawn (2)
    
    
    513
    
    
    
    
    
    
    
    513Undrawn
    
    
    1,916
    
    
    
    2,413
    
    
    
    4,329
 
 (1)
    
    Current commercial paper credit
lines expire during August 2008(2)
    
    Includes $455
million in letters of credit          
 
 
 EVALUATION OF DISCLOSURE CONTROLS
AND PROCEDURES
  2005 ANNUAL REPORT




---



##### 



p. 42 MANAGEMENTS DISCUSSION AND ANALYSIS
 Assumptions
Made in the
Preparation of
Forward-Looking
Statements and
Risks that Could
Affect Our Business
and Results
 ASSUMPTIONS MADE IN THE PREPARATION OF
FORWARD-LOOKING STATEMENTS AND RISKS THAT
COULD AFFECT OUR BUSINESS AND RESULTS
    
 
 
  
 
 
 
 
 
  Subscribers and Services
 
 
 Financial
 
 
 
 
 
  
 
 
 
 2005 ANNUAL REPORT




---



##### 



p. 43
 Increasing Competition
     Our Strategic
Priorities Our Strategic
Priorities
  
 
        2005 ANNUAL REPORT




---



##### 



p. 44       MANAGEMENTS DISCUSSION AND ANALYSIS
 Wireline and Long Distance
      Internet Access
   Wireless
  Video
    2005 ANNUAL REPORT




---



##### 



p. 45
     Anticipating
Technological
Change and
Investing in New
Technologies,
Products and
Services
  Liquidity
        
 
 
 
   2005 ANNUAL REPORT




---



##### 



p. 46       MANAGEMENTS DISCUSSION AND ANALYSIS
      
 
 
        Securities Act of Ontario
    Litigation,
Regulatory Matters
and Changes in Laws
 Legal Proceedings
We Are Involved In
 The
Regulatory
Environment We
Operate In
 Funding and
Control of
Subsidiaries
 2005 ANNUAL REPORT




---



##### 



p. 47
 Renegotiating
Labour Agreements
 Legal Proceedings We Are
Involved In
    
 
          2005 ANNUAL REPORT




---



##### 



p. 48       MANAGEMENTS DISCUSSION AND ANALYSIS
 Holding Company Structure
  Stock Market Volatility
   
 
 
 
 
 
 
 
    
 
 
 
 
        2005 ANNUAL REPORT




---



##### 



p. 49
     Changes to Wireline Regulation
  Second Price Cap Decision
     
 
   Competitor Digital Network Service
   
 
 Retail Quality of Service Indicators
  Decisions of Regulatory Agencies
 The Regulatory
Environment We
Operate In
 Competitor Digital
Network Service
 2005 ANNUAL REPORT




---



##### 



p. 50 MANAGEMENTS DISCUSSION AND ANALYSIS
 force
majeure
  Decision of VoIP Regulation
    
 
 
 
 
   2005 ANNUAL REPORT




---



##### 



p. 51
  Forbearance from Regulation of Local Exchange Services
  Price Floor Safeguards for Retail Services
   Application to Change Bundling Rules
   
 
  Bell Canada Proposals to Telecom Policy Review Panel
     Access to Bell Canada Loops for
Competitor Local Exchange Carriers
Customers Served Via Remotes
  Application to
Change Bundling
Rules
  Access to Bell
Canada Loops for
Competitor Local
Exchange Carriers
Customers Served
Via Remotes
 2005 ANNUAL REPORT




---



##### 



p. 52       MANAGEMENTS DISCUSSION AND ANALYSIS
 Wireless Number Portability
  Licences and
Changes to Wireless
Regulation
 Radiocommunication
Act
  Wireless Number Portability
 Regulatory
issues related to the implementation of
wireless number portability
 Licences and Changes to Wireless Regulation
   Revenue from Major Customers
  Competition Bureaus
Investigation
 Concerning
System Access Fees
 Competition Act Competition Act
  Competition
Act
 2005 ANNUAL REPORT




---



##### 



p. 53
 Potential
Legislation Restricting
In-Vehicle Use of
Cellphones
  Health Concerns About Radio Frequency Emissions
       R. v. DArgy and Theriault (DArgy
Case) Radiocommunication Act Charter DArgy Case Radiocommunication Act DArgy Case
 Bell ExpressVu
   Risks that Could
Affect Certain
BCE Group
Companies Telesat
 2005 ANNUAL REPORT




---



##### 



p. 54       MANAGEMENTS DISCUSSION AND ANALYSIS
 Operational
Risks Due to
Various Types of
Potential Anomalies
  Dependence on Advertising
  Increasing Fragmentation in Television Markets
  Revenues from Distributing Television Services
  Increased Competition for Fewer Print Customers
 The
Globe
and Mail
 Broadcast Licences and CRTC Decisions
 Broadcasting Act
  Satellite Industry Risks
     2005 ANNUAL REPORT




---



##### 



p. 55
             Business Risks and Competition
  Market for Satellite Insurance
 2005 ANNUAL REPORT




---



##### 



p. 56       MANAGEMENTS DISCUSSION AND ANALYSIS
 Government Regulations
  
 Our Accounting Policies
     Foreign Exchange Risk
  Government Regulations
    OUR ACCOUNTING POLICIES
      2005 ANNUAL REPORT




---



##### 



p. 57
      Discount Rate
  IMPACT ONACCRUEDIMPACT ON
    
    
    BENEFITNET BENEFIT
    
    
    ASSETS ATPLANS COST
    
    
    DECEMBER 31,FOR 2006
    
    
    2006Discount rate increased to 5.7%Residential
    
    
    (33
    )
    
    
    33Business
    
    
    (33
    )
    
    
    33Aliant
    
    
    (24
    )
    
    
    24Other Bell Canada
    
    
    (10
    )
    
    
    10Other BCE
    
    
    (6
    )
    
    
    6Total
    
    
    (106
    )
    
    
    106Discount rate decreased to 4.7%Residential
    
    
    33
    
    
    
    (33
    )Business
    
    
    33
    
    
    
    (33
    )Aliant
    
    
    24
    
    
    
    (24
    )Other Bell Canada
    
    
    10
    
    
    
    (10
    )Other BCE
    
    
    6
    
    
    
    (6
    )Total
    
    
    106
    
    
    
    (106
    )
  Expected Long-Term Rate of Return
   IMPACT ONACCRUEDIMPACT ON
    
    
    BENEFITNET BENEFIT
    
    
    ASSETS ATPLANS COST
    
    
    DECEMBER 31,FOR 2006
    
    
    2006Expected rate of return
increased to 8.0%Residential
    
    
    (22
    )
    
    
    22Business
    
    
    (21
    )
    
    
    21Aliant
    
    
    (16
    )
    
    
    16Other Bell Canada
    
    
    (6
    )
    
    
    6Other BCE
    
    
    (3
    )
    
    
    3Total
    
    
    (68
    )
    
    
    68Expected rate of return
decreased to 7.0%Residential
    
    
    22
    
    
    
    (22
    )Business
    
    
    21
    
    
    
    (21
    )Aliant
    
    
    16
    
    
    
    (16
    )Other Bell Canada
    
    
    6
    
    
    
    (6
    )Other BCE
    
    
    3
    
    
    
    (3
    )Total
    
    
    68
    
    
    
    (68
    )
  Employee Benefit Plans
  Discount Rate
 2005 ANNUAL REPORT




---



##### 



p. 58       MANAGEMENTS DISCUSSION AND ANALYSIS
 Goodwill Impairment
  Contingencies
          Accounts payable and
accrued liabilities Other
long-term liabilities Cash
from operating activities
       Financial
Instruments  Disclosure and
Presentation
    Comprehensive
Income
 2005 ANNUAL REPORT




---



##### 



p.59
  
 
 Surplus Equity Comprehensive Income
  
 
  Financial Instruments  Recognition and
Measurement
 
 
 
 Financial Instruments Disclosure and
Presentation
   Hedges
  
 
 
    Non-Monetary Transactions
 2005 ANNUAL REPORT




---



##### 



p. 60       CONSOLIDATED FINANCIAL STATEMENTS
  we us our BCE
 
 MANAGEMENTS REPORT
      President and Chief Executive Officer
 Chief Financial Officer
 Vice-President and Controller
  
 AUDITORS REPORT
     
 Chartered Accountants
 
 2005 ANNUAL REPORT




---



##### 



CONSOLIDATED STATEMENTS OF OPERATIONS
    
    p. 61
 FOR THE YEAR ENDED DECEMBER 31 (in $ millions, except share amounts)
    
    NOTE
    
    
    2005
    
    
    2004
    
    
    2003Operating revenues
    
    
    
    
    
    
    19,105
    
    
    
    18,368
    
    
    
    18,057Operating expenses
    
    
    
    
    
    
    (11,508
    )
    
    
    (10,938
    )
    
    
    (10,776
    )Amortization expense
    
    
    
    
    
    
    (3,114
    )
    
    
    (3,056
    )
    
    
    (3,062
    )Net benefit plans cost
    
    
    24
    
    
    
    (380
    )
    
    
    (256
    )
    
    
    (175
    )Restructuring and other items
    
    
    4
    
    
    
    (55
    )
    
    
    (1,224
    )
    
    
    (14
    )Total operating expenses
    
    
    
    
    
    
    (15,057
    )
    
    
    (15,474
    )
    
    
    (14,027
    )Operating income
    
    
    
    
    
    
    4,048
    
    
    
    2,894
    
    
    
    4,030Other income
    
    
    5
    
    
    
    8
    
    
    
    407
    
    
    
    177Interest expense
    
    
    6
    
    
    
    (981
    )
    
    
    (999
    )
    
    
    (1,100
    )Pre-tax earnings from continuing operations
    
    
    
    
    
    
    3,075
    
    
    
    2,302
    
    
    
    3,107Income taxes
    
    
    7
    
    
    
    (893
    )
    
    
    (681
    )
    
    
    (1,086
    )Non-controlling interest
    
    
    
    
    
    
    (267
    )
    
    
    (174
    )
    
    
    (201
    )Earnings from continuing operations
    
    
    
    
    
    
    1,915
    
    
    
    1,447
    
    
    
    1,820Discontinued operations
    
    
    8
    
    
    
    46
    
    
    
    77
    
    
    
    (5
    )Net earnings before extraordinary gain
    
    
    
    
    
    
    1,961
    
    
    
    1,524
    
    
    
    1,815Extraordinary gain
    
    
    3
    
    
    
    
    
    
    
    69
    
    
    
    Net earnings
    
    
    
    
    
    
    1,961
    
    
    
    1,593
    
    
    
    1,815Dividends on preferred shares
    
    
    
    
    
    
    (70
    )
    
    
    (70
    )
    
    
    (64
    )Premium on redemption of preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7
    )Net earnings applicable to common shares
    
    
    
    
    
    
    1,891
    
    
    
    1,523
    
    
    
    1,744Net earnings (loss) per common share  basic
    
    
    9Continuing operations
    
    
    
    
    
    
    1.99
    
    
    
    1.49
    
    
    
    1.91Discontinued operations
    
    
    
    
    
    
    0.05
    
    
    
    0.09
    
    
    
    (0.01
    )Extraordinary gain
    
    
    
    
    
    
    
    
    
    
    0.07
    
    
    
    Net earnings
    
    
    
    
    
    
    2.04
    
    
    
    1.65
    
    
    
    1.90Net earnings (loss) per common share  diluted
    
    
    9Continuing operations
    
    
    
    
    
    
    1.99
    
    
    
    1.49
    
    
    
    1.90Discontinued operations
    
    
    
    
    
    
    0.05
    
    
    
    0.09
    
    
    
    (0.01
    )Extraordinary gain
    
    
    
    
    
    
    
    
    
    
    0.07
    
    
    
    Net earnings
    
    
    
    
    
    
    2.04
    
    
    
    1.65
    
    
    
    1.89Dividends per common share
    
    
    
    
    
    
    1.32
    
    
    
    1.20
    
    
    
    1.20Average number of common shares outstanding  basic (millions)
    
    
    
    
    
    
    926.8
    
    
    
    924.6
    
    
    
    920.3
 
 CONSOLIDATED STATEMENTS OF DEFICIT
 FOR THE YEAR ENDED DECEMBER 31 (in $ millions)
    
    NOTE
    
    
    2005
    
    
    2004
    
    
    2003Balance at beginning of year, as previously reported
    
    
    
    
    
    
    (5,424
    )
    
    
    (5,837
    )
    
    
    (6,442
    )Accounting policy change
    
    
    1
    
    
    
    (8
    )
    
    
    (8
    )
    
    
    (8
    )Balance at beginning of year, as restated
    
    
    
    
    
    
    (5,432
    )
    
    
    (5,845
    )
    
    
    (6,450
    )Consolidation of variable interest entity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25
    )Net earnings
    
    
    
    
    
    
    1,961
    
    
    
    1,593
    
    
    
    1,815Dividends declared on preferred shares
    
    
    
    
    
    
    (70
    )
    
    
    (70
    )
    
    
    (64
    )Dividends declared on common shares
    
    
    
    
    
    
    (1,222
    )
    
    
    (1,110
    )
    
    
    (1,105
    )Premium on redemption of preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9
    )Balance at end of year
    
    
    
    
    
    
    (4,763
    )
    
    
    (5,432
    )
    
    
    (5,845
    )




---



##### 



p. 62       CONSOLIDATED BALANCE SHEETS
 AT DECEMBER 31 (in $ millions)
    
    NOTE
    
    
    2005
    
    
    2004AssetsCurrent assetsCash and cash equivalents
    
    
    
    
    
    
    363
    
    
    
    313Accounts receivable
    
    
    10
    
    
    
    1,766
    
    
    
    1,951Other current assets
    
    
    11
    
    
    
    1,142
    
    
    
    1,061Current assets of discontinued operations
    
    
    8
    
    
    
    402
    
    
    
    383Total current assets
    
    
    
    
    
    
    3,673
    
    
    
    3,708Capital assets
    
    
    12
    
    
    
    22,062
    
    
    
    21,104Other long-term assets
    
    
    13
    
    
    
    2,914
    
    
    
    2,628Indefinite-life intangible assets
    
    
    14
    
    
    
    3,031
    
    
    
    2,916Goodwill
    
    
    15
    
    
    
    7,887
    
    
    
    7,756Non-current assets of discontinued operations
    
    
    8
    
    
    
    1,063
    
    
    
    1,028Total assets
    
    
    
    
    
    
    40,630
    
    
    
    39,140LiabilitiesCurrent liabilitiesAccounts payable and accrued liabilities
    
    
    16
    
    
    
    3,435
    
    
    
    3,444Interest payable
    
    
    
    
    
    
    182
    
    
    
    183Dividends payable
    
    
    
    
    
    
    343
    
    
    
    297Debt due within one year
    
    
    17
    
    
    
    1,373
    
    
    
    1,272Current liabilities of discontinued operations
    
    
    8
    
    
    
    281
    
    
    
    271Total current liabilities
    
    
    
    
    
    
    5,614
    
    
    
    5,467Long-term debt
    
    
    18
    
    
    
    12,119
    
    
    
    11,685Other long-term liabilities
    
    
    19
    
    
    
    5,028
    
    
    
    4,834Non-current liabilities of discontinued operations
    
    
    8
    
    
    
    250
    
    
    
    222Total liabilities
    
    
    
    
    
    
    23,011
    
    
    
    22,208Non-controlling interest
    
    
    20
    
    
    
    2,898
    
    
    
    2,908Commitments and contingencies
    
    
    25Shareholders EquityPreferred shares
    
    
    22
    
    
    
    1,670
    
    
    
    1,670Common shareholders equityCommon shares
    
    
    22
    
    
    
    16,806
    
    
    
    16,781Contributed surplus
    
    
    
    
    
    
    1,081
    
    
    
    1,061Deficit
    
    
    
    
    
    
    (4,763
    )
    
    
    (5,432
    )Currency translation adjustment
    
    
    
    
    
    
    (73
    )
    
    
    (56
    )Total common shareholders equity
    
    
    
    
    
    
    13,051
    
    
    
    12,354Total shareholders equity
    
    
    
    
    
    
    14,721
    
    
    
    14,024Total liabilities and shareholders equity
    
    
    
    
    
    
    40,630
    
    
    
    39,140
  (SIGNATURE)
    

(SIGNATURE)Director
    
    Director
 2005 ANNUAL REPORT




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##### 



CONSOLIDATED STATEMENTS OF CASH FLOW
    
    p. 63
 FOR THE YEAR ENDED DECEMBER 31 (in $ millions)
    
    NOTE
    
    
    2005
    
    
    2004
    
    
    2003Cash flows from operating activitiesEarnings from continuing operations
    
    
    
    
    
    
    1,915
    
    
    
    1,447
    
    
    
    1,820Adjustments to reconcile earnings from continuing operations
to cash flows from operating activities:Amortization expense
    
    
    
    
    
    
    3,114
    
    
    
    3,056
    
    
    
    3,062Net benefit plans cost
    
    
    24
    
    
    
    380
    
    
    
    256
    
    
    
    175Restructuring and other items
    
    
    4
    
    
    
    55
    
    
    
    1,224
    
    
    
    14Net gains on investments
    
    
    5
    
    
    
    (33
    )
    
    
    (320
    )
    
    
    (76
    )Future income taxes
    
    
    7
    
    
    
    746
    
    
    
    (35
    )
    
    
    409Non-controlling interest
    
    
    
    
    
    
    267
    
    
    
    174
    
    
    
    201Contributions to employee pension plans
    
    
    24
    
    
    
    (226
    )
    
    
    (112
    )
    
    
    (160
    )Other employee future benefit plan payments
    
    
    24
    
    
    
    (93
    )
    
    
    (81
    )
    
    
    (87
    )Payments of restructuring and other items
    
    
    
    
    
    
    (176
    )
    
    
    (253
    )
    
    
    (124
    )Operating assets and liabilities
    
    
    27
    
    
    
    (390
    )
    
    
    87
    
    
    
    656Cash flows from operating activities
    
    
    
    
    
    
    5,559
    
    
    
    5,443
    
    
    
    5,890Cash flows from investing activitiesCapital expenditures
    
    
    
    
    
    
    (3,428
    )
    
    
    (3,319
    )
    
    
    (3,101
    )Business acquisitions
    
    
    3
    
    
    
    (228
    )
    
    
    (1,118
    )
    
    
    (54
    )Business dispositions
    
    
    
    
    
    
    
    
    
    
    20
    
    
    
    54Increase in investments
    
    
    
    
    
    
    (233
    )
    
    
    (58
    )
    
    
    (4
    )Decrease in investments
    
    
    
    
    
    
    19
    
    
    
    713
    
    
    
    168Other investing activities
    
    
    
    
    
    
    4
    
    
    
    127
    
    
    
    62Cash flows used in investing activities
    
    
    
    
    
    
    (3,866
    )
    
    
    (3,635
    )
    
    
    (2,875
    )Cash flows from financing activitiesIncrease (decrease) in notes payable and bank advances
    
    
    
    
    
    
    (66
    )
    
    
    130
    
    
    
    (295
    )Issue of long-term debt
    
    
    
    
    
    
    1,190
    
    
    
    1,306
    
    
    
    1,880Repayment of long-term debt
    
    
    
    
    
    
    (1,178
    )
    
    
    (2,256
    )
    
    
    (3,412
    )Issue of common shares
    
    
    22
    
    
    
    25
    
    
    
    32
    
    
    
    19Issue of preferred shares
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    510Redemption of preferred shares
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    (357
    )Issue of equity securities by subsidiaries
to non-controlling interest
    
    
    
    
    
    
    1
    
    
    
    8
    
    
    
    132Redemption of equity securities by subsidiaries
from non-controlling interest
    
    
    
    
    
    
    (78
    )
    
    
    (58
    )
    
    
    (108
    )Cash dividends paid on common shares
    
    
    
    
    
    
    (1,195
    )
    
    
    (1,108
    )
    
    
    (1,029
    )Cash dividends paid on preferred shares
    
    
    
    
    
    
    (86
    )
    
    
    (85
    )
    
    
    (61
    )Cash dividends paid by subsidiaries to non-controlling interest
    
    
    
    
    
    
    (192
    )
    
    
    (188
    )
    
    
    (184
    )Other financing activities
    
    
    
    
    
    
    (64
    )
    
    
    (81
    )
    
    
    (44
    )Cash flows used in financing activities
    
    
    
    
    
    
    (1,643
    )
    
    
    (2,300
    )
    
    
    (2,949
    )Cash provided by (used in) continuing operations
    
    
    
    
    
    
    50
    
    
    
    (492
    )
    
    
    66Cash provided by discontinued operations
    
    
    
    
    
    
    15
    
    
    
    150
    
    
    
    350Net increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    65
    
    
    
    (342
    )
    
    
    416Cash and cash equivalents at beginning of year
    
    
    
    
    
    
    380
    
    
    
    722
    
    
    
    306Cash and cash equivalents at end of year
    
    
    
    
    
    
    445
    
    
    
    380
    
    
    
    722Consists of:Cash and cash equivalents of continuing operations
    
    
    
    
    
    
    363
    
    
    
    313
    
    
    
    556Cash and cash equivalents of discontinued operations
    
    
    
    
    
    
    82
    
    
    
    67
    
    
    
    166Total
    
    
    
    
    
    
    445
    
    
    
    380
    
    
    
    722




---



##### 



p. 64       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Reconciliation of Canadian GAAP to United States GAAP
 
 NOTE 1:
 SIGNIFICANT ACCOUNTING POLICIES
        Recent Changes to Accounting Policies and Standards
 
   
 
 
    
 
 
 
  
 
 
 
 
 
 
  
 
 
  2005 ANNUAL REPORT




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##### 



p. 65
    Accounts payable and accrued liabilities Other long-term liabilities
  Cash and cash equivalents Other current assets
   Other income
  
 
     ESTIMATED USEFUL LIFETelecommunications assets
    
    
    10 to 25 yearsMachinery and equipment
    
    
    2 to 20 yearsBuildings
    
    
    10 to 40 yearsSatellites
    
    
    10 to 15 yearsFinite-life intangible assets:Software
    
    
    3 to 7 yearsCustomer relationships
    
    
    5 to 40 years
   2005 ANNUAL REPORT




---



##### 



p. 66       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Equity Method
  Cost Method
  Goodwill
  Translation of Foreign Currencies
 Operating expenses
     
 
  Other long-term assets Other income
  Other long-term assets Interest expense
     
 
    
 
  2005 ANNUAL REPORT




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##### 



p. 67
   
 
 
 Other income
   
 
 
 Other income
   
 
 
   
 
 
   
 
 
 
 
   Accounts receivable Interest payable
   Other long-term assets Other long-term liabilities
 2005 ANNUAL REPORT




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##### 



p. 68      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Curtailment
  Settlement
   
 
  Other long-term assets Other long-term liabilities
      
 
   
 
 
       2005 ANNUAL REPORT




---



##### 



p. 69
         
 
       
 
      Black-Scholes Option Pricing Model
 2005 ANNUAL REPORT




---



##### 



p. 70       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Telecommunications Act
    
 
 
 
 
  Financial Instruments  Disclosure and Presentation
   Comprehensive Income
  
 
 Surplus Equity Comprehensive Income
  
 
 2005 ANNUAL REPORT




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##### 



p. 71
  Financial Instruments  Recognition
and Measurement
 
 
 
 Financial Instruments Disclosure and Presentation
  Hedges
  
 
 
    Non-Monetary Transactions
 
 NOTE 2: SEGMENTED INFORMATION
 Residential Consumer Business Aliant Other Bell
Canada Other BCE
    2005 ANNUAL REPORT




---



##### 



p. 72
       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Significant Accounting Policies
   The
Globe and Mail.
    INTER-SEGMENT
    
    
    
    
    
    
    
    
    
    
    INTER-ELIMINA-
    
    
    
    
    
    
    
    
    
    
    SEGMENTOTHER
    
    
    TIONS
    
    
    
    
    
    
    
    
    
    
    ELIMINA-BELL
    
    
    - BELL
    
    
    BELL
    
    
    OTHER
    
    
    TIONS
    
    
    CONSOLI-RESIDENTIAL
    
    
    BUSINESS
    
    
    ALIANT
    
    
    CANADA
    
    
    CANADA
    
    
    CANADA
    
    
    BCE
    
    
    - OTHER
    
    
    DATEDFor the year ended
December 31, 2005Operating revenuesExternal customers
    
    
    7,527
    
    
    
    5,965
    
    
    
    1,958
    
    
    
    1,768
    
    
    
    
    
    
    
    17,218
    
    
    
    1,887
    
    
    
    
    
    
    
    19,105Inter-segment
    
    
    72
    
    
    
    155
    
    
    
    139
    
    
    
    190
    
    
    
    (524
    )
    
    
    32
    
    
    
    206
    
    
    
    (238
    )
    
    
    Total operating revenues
    
    
    7,599
    
    
    
    6,120
    
    
    
    2,097
    
    
    
    1,958
    
    
    
    (524
    )
    
    
    17,250
    
    
    
    2,093
    
    
    
    (238
    )
    
    
    19,105Operating income
    
    
    2,001
    
    
    
    910
    
    
    
    396
    
    
    
    448
    
    
    
    
    
    
    
    3,755
    
    
    
    293
    
    
    
    
    
    
    
    4,048Other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (981
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (893
    )Non-controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (267
    )Earnings from continuing
operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,915Segment assets
    
    
    14,405
    
    
    
    12,319
    
    
    
    3,681
    
    
    
    3,785
    
    
    
    
    
    
    
    34,190
    
    
    
    6,440
    
    
    
    
    
    
    
    40,630Investments at equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    89
    
    
    
    
    
    
    
    89Capital expenditures
    
    
    (1,519
    )
    
    
    (897
    )
    
    
    (363
    )
    
    
    (343
    )
    
    
    
    
    
    
    (3,122
    )
    
    
    (306
    )
    
    
    
    
    
    
    (3,428
    )
 2005 ANNUAL REPORT




---



##### 



p. 73
 INTER-SEGMENT
    
    
    
    
    
    
    
    
    
    
    INTER-ELIMINA-
    
    
    
    
    
    
    
    
    
    
    SEGMENTOTHER
    
    
    TIONS
    
    
    
    
    
    
    
    
    
    
    ELIMINA-BELL
    
    
    BELL
    
    
    BELL
    
    
    OTHER
    
    
    TIONS
    
    
    CONSOLI-RESIDENTIAL
    
    
    BUSINESS
    
    
    ALIANT
    
    
    CANADA
    
    
    CANADA
    
    
    CANADA
    
    
    BCE
    
    
    OTHER
    
    
    DATEDFor the year ended
December 31, 2004Operating revenuesExternal customers
    
    
    7,440
    
    
    
    5,652
    
    
    
    1,894
    
    
    
    1,736
    
    
    
    
    
    
    
    16,722
    
    
    
    1,646
    
    
    
    
    
    
    
    18,368Inter-segment
    
    
    62
    
    
    
    199
    
    
    
    139
    
    
    
    203
    
    
    
    (538
    )
    
    
    65
    
    
    
    196
    
    
    
    (261
    )
    
    
    Total operating revenues
    
    
    7,502
    
    
    
    5,851
    
    
    
    2,033
    
    
    
    1,939
    
    
    
    (538
    )
    
    
    16,787
    
    
    
    1,842
    
    
    
    (261
    )
    
    
    18,368Operating income (loss)
    
    
    2,119
    
    
    
    896
    
    
    
    268
    
    
    
    (588
    )
    
    
    
    
    
    
    2,695
    
    
    
    199
    
    
    
    
    
    
    
    2,894Other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    407Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (999
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (681
    )Non-controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (174
    )Earnings from continuing
operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,447Segment assets
    
    
    12,965
    
    
    
    11,764
    
    
    
    3,685
    
    
    
    4,533
    
    
    
    
    
    
    
    32,947
    
    
    
    6,193
    
    
    
    
    
    
    
    39,140Investments at equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    4
    
    
    
    106
    
    
    
    
    
    
    
    110Capital expenditures
    
    
    (1,371
    )
    
    
    (1,008
    )
    
    
    (295
    )
    
    
    (352
    )
    
    
    
    
    
    
    (3,026
    )
    
    
    (293
    )
    
    
    
    
    
    
    (3,319
    )For the year ended
December 31, 2003Operating revenuesExternal customers
    
    
    7,142
    
    
    
    5,564
    
    
    
    1,909
    
    
    
    1,868
    
    
    
    
    
    
    
    16,483
    
    
    
    1,574
    
    
    
    
    
    
    
    18,057Inter-segment
    
    
    61
    
    
    
    263
    
    
    
    150
    
    
    
    147
    
    
    
    (490
    )
    
    
    131
    
    
    
    187
    
    
    
    (318
    )
    
    
    Total operating revenues
    
    
    7,203
    
    
    
    5,827
    
    
    
    2,059
    
    
    
    2,015
    
    
    
    (490
    )
    
    
    16,614
    
    
    
    1,761
    
    
    
    (318
    )
    
    
    18,057Operating income
    
    
    2,019
    
    
    
    781
    
    
    
    415
    
    
    
    621
    
    
    
    
    
    
    
    3,836
    
    
    
    194
    
    
    
    
    
    
    
    4,030Other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    177Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,100
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,086
    )Non-controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (201
    )Earnings from continuing
operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,820Segment assets
    
    
    13,321
    
    
    
    11,648
    
    
    
    3,840
    
    
    
    4,698
    
    
    
    
    
    
    
    33,507
    
    
    
    5,895
    
    
    
    
    
    
    
    39,402Investments at equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    398
    
    
    
    
    
    
    
    398
    
    
    
    98
    
    
    
    
    
    
    
    496Capital expenditures
    
    
    (1,287
    )
    
    
    (936
    )
    
    
    (333
    )
    
    
    (336
    )
    
    
    
    
    
    
    (2,892
    )
    
    
    (209
    )
    
    
    
    
    
    
    (3,101
    )
 
 NOTE 3: BUSINESS ACQUISITIONS
    NR Communications Ltd. (NR Communications)
  Nexxlink Technologies Inc. (Nexxlink)
  
 
 2005 ANNUAL REPORT




---



##### 



p. 74 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
   Canadian operations of 360 networks Corporation (360 networks)
    DownEast Mobility Limited (DownEast)
  Bell West
  Infostream Technologies Inc. (Infostream)
  Charon Systems Inc. (Charon)
  Elix Inc. (Elix)
  Accutel Conferencing Systems Inc. (Canada) and Accutel Conferencing Systems Corp. (U.S.)
(collectively Accutel)
  
 
  2005ALL OTHERNR
    
    
    NEXXLINK
    
    
    BUSINESSCOMMUNI-
    
    
    TECHNOL-
    
    
    ACQUI-CATIONS LTD.
    
    
    OGIES INC.
    
    
    SITIONS
    
    
    TOTALConsideration received:Non-cash working capital
    
    
    (16
    )
    
    
    9
    
    
    
    (12
    )
    
    
    (19
    )Capital assets
    
    
    19
    
    
    
    24
    
    
    
    85
    
    
    
    128Other long-term assets
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    3Indefinite-life intangible assets
    
    
    57
    
    
    
    
    
    
    
    20
    
    
    
    77Goodwill
    
    
    
    
    
    
    47
    
    
    
    84
    
    
    
    131Long-term debt
    
    
    
    
    
    
    
    
    
    
    (61
    )
    
    
    (61
    )Other long-term liabilities
    
    
    
    
    
    
    (6
    )
    
    
    (12
    )
    
    
    (18
    )60
    
    
    
    74
    
    
    
    107
    
    
    
    241Cash and cash equivalents (bank indebtedness) at acquisition
    
    
    10
    
    
    
    (3
    )
    
    
    13
    
    
    
    20Net assets acquired
    
    
    70
    
    
    
    71
    
    
    
    120
    
    
    
    261Consideration given:(1)Cash
    
    
    69
    
    
    
    67
    
    
    
    105
    
    
    
    241Acquisition costs
    
    
    1
    
    
    
    4
    
    
    
    2
    
    
    
    7Non-cash
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    1370
    
    
    
    71
    
    
    
    120
    
    
    
    261
 (1) This does not include contingent payments of $8 million that may be paid if
certain conditions specified in the purchase agreements are met. If the payments are made,
the amounts will be allocated to goodwill.
 2005 ANNUAL REPORT




---



##### 



p. 75
 2004CANADIAN
    
    
    40%
    
    
    ALL OTHEROPERATIONS
    
    
    INTEREST
    
    
    BUSINESSOF
    
    
    IN BELL
    
    
    ACQUI-360 NETWORKS
    
    
    WEST
    
    
    SITIONS
    
    
    TOTALConsideration received:Non-cash working capital
    
    
    (9
    )
    
    
    
    
    
    
    10
    
    
    
    1Capital assets
    
    
    
    
    
    
    (15
    )
    
    
    12
    
    
    
    (3
    )Other long-term assets
    
    
    429
    
    
    
    5
    
    
    
    10
    
    
    
    444Goodwill
    
    
    
    
    
    
    395
    
    
    
    166
    
    
    
    561Other long-term liabilities
    
    
    (58
    )
    
    
    
    
    
    
    
    
    
    
    (58
    )Non-controlling interest
    
    
    
    
    
    
    261
    
    
    
    
    
    
    
    261362
    
    
    
    646
    
    
    
    198
    
    
    
    1,206Bank indebtedness at acquisition
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    (4
    )Net assets acquired
    
    
    362
    
    
    
    646
    
    
    
    194
    
    
    
    1,202Extraordinary gain
    
    
    69
    
    
    
    
    
    
    
    
    
    
    
    69Consideration given:Cash
    
    
    283
    
    
    
    645
    
    
    
    174
    
    
    
    1,102Acquisition costs
    
    
    10
    
    
    
    1
    
    
    
    1
    
    
    
    12Future cash payment
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    4Issuance of 582,081 Alliant common shares
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    15293
    
    
    
    646
    
    
    
    194
    
    
    
    1,133
 
 NOTE 4: RESTRUCTURING AND OTHER ITEMS
 2005
    
    
    2004
    
    
    2003Restructuring initiatives
    
    
    (55
    )
    
    
    (1,063
    )
    
    
    Loss on long-term contract
    
    
    
    
    
    
    (128
    )
    
    
    Settlement with MTS
    
    
    
    
    
    
    75
    
    
    
    Other charges
    
    
    
    
    
    
    (108
    )
    
    
    (14
    )Restructuring and
other items
    
    
    (55
    )
    
    
    (1,224
    )
    
    
    (14
    )
  BELL
    
    
    
    
    
    
    CONSOLI-CANADA
    
    
    ALIANT
    
    
    DATEDBalance in accounts payable
and accrued liabilities at
December 31 , 2004
    
    
    120
    
    
    
    67
    
    
    
    1872005 restructuring initiatives
    
    
    51
    
    
    
    
    
    
    
    51Less:Cash payments
    
    
    (74
    )
    
    
    (54
    )
    
    
    (128
    )Reversal of excess provision
    
    
    (45
    )
    
    
    
    
    
    
    (45
    )Balance in accounts payable
and accrued liabilities at
December 31, 2005
    
    
    52
    
    
    
    13
    
    
    
    65
   
 
   2005 ANNUAL REPORT




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##### 



p. 76       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
 
         
 
  Other Income
 
     2005 ANNUAL REPORT




---



##### 



p. 77
 
 NOTE 5: OTHER INCOME
 NOTE
    
    
    2005
    
    
    2004
    
    
    2003Net gains on investments
    
    
    
    
    
    
    33
    
    
    
    320
    
    
    
    76Interest income
    
    
    
    
    
    
    19
    
    
    
    30
    
    
    
    67Capitalized interest
    
    
    12
    
    
    
    15
    
    
    
    19
    
    
    
    24Securitization losses
    
    
    10
    
    
    
    (34
    )
    
    
    (26
    )
    
    
    (33
    )Bell Canada International Inc. (BCI) loss monetization charge
    
    
    
    
    
    
    (33
    )
    
    
    
    
    
    
    Debt restructuring costs
    
    
    
    
    
    
    (14
    )
    
    
    
    
    
    
    Income (loss) from cost and equity investments
    
    
    
    
    
    
    (11
    )
    
    
    24
    
    
    
    35Foreign currency gains (losses)
    
    
    
    
    
    
    (4
    )
    
    
    3
    
    
    
    33Other
    
    
    
    
    
    
    37
    
    
    
    37
    
    
    
    (25
    )Other income
    
    
    
    
    
    
    8
    
    
    
    407
    
    
    
    177
   
 
 
  
 
 
  
 
 
 NOTE 6: INTEREST EXPENSE
 2005
    
    
    2004
    
    
    2003Interest expense on long-term debt
    
    
    (939
    )
    
    
    (954
    )
    
    
    (1,030
    )Interest expense on other debt
    
    
    (42
    )
    
    
    (45
    )
    
    
    (70
    )Total interest expense
    
    
    (981
    )
    
    
    (999
    )
    
    
    (1,100
    )
 
 NOTE 7: INCOME TAXES
  2005
    
    
    2004
    
    
    2003Income taxes computed at
statutory rates
    
    
    (1,057
    )
    
    
    (790
    )
    
    
    (1,100
    )Savings from BCI
monetization transaction
    
    
    99
    
    
    
    
    
    
    
    Net gains on investments
    
    
    
    
    
    
    120
    
    
    
    28Large corporations tax
    
    
    (34
    )
    
    
    (37
    )
    
    
    (46
    )Other
    
    
    99
    
    
    
    26
    
    
    
    32Total income tax expense
    
    
    (893
    )
    
    
    (681
    )
    
    
    (1,086
    )
  2005
    
    
    2004
    
    
    2003Current income taxes
    
    
    (147
    )
    
    
    (716
    )
    
    
    (677
    )Future income taxes
Utilization of loss
carryforwards
    
    
    (244
    )
    
    
    (38
    )
    
    
    (402
    )Change in statutory rate
    
    
    
    
    
    
    (2
    )
    
    
    (21
    )Change in temporary
differences and other
    
    
    (502
    )
    
    
    75
    
    
    
    14Total income tax expense
    
    
    (893
    )
    
    
    (681
    )
    
    
    (1,086
    )
 2005 ANNUAL REPORT




---



##### 



p. 78       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2005
    
    
    2004Non-capital loss carryforwards
    
    
    565
    
    
    
    809Capital loss carryforwards
    
    
    23
    
    
    
    23Capital assets
    
    
    (508
    )
    
    
    (289
    )Indefinite-life intangible assets
    
    
    (339
    )
    
    
    (339
    )Employee benefit plans
    
    
    82
    
    
    
    91Investments
    
    
    35
    
    
    
    49Other
    
    
    (986
    )
    
    
    (756
    )Total future income taxes
    
    
    (1,128
    )
    
    
    (412
    )Future income taxes are comprised of:Future income tax asset 
current portion
    
    
    474
    
    
    
    485Future income tax asset 
long-term portion
    
    
    511
    
    
    
    744Future income tax liability 
current portion
    
    
    (5
    )
    
    
    (8
    )Future income tax liability 
long-term portion
    
    
    (2,108
    )
    
    
    (1,633
    )Total future income taxes
    
    
    (1,128
    )
    
    
    (412
    )
  
 
  
 
      
 
 2005 ANNUAL REPORT




---



##### 



p. 79
 
 NOTE 8: DISCONTINUED OPERATIONS
 2005
    
    
    2004
    
    
    2003CGI Group Inc. (CGI)
    
    
    46
    
    
    
    54
    
    
    
    51Emergis
    
    
    
    
    
    
    23
    
    
    
    (154
    )Teleglobe Inc. (Teleglobe)
    
    
    
    
    
    
    
    
    
    
    39Aliants emerging
business segment
    
    
    
    
    
    
    
    
    
    
    (4
    )Aliants emerging
communications segment
    
    
    
    
    
    
    
    
    
    
    63Net gain (loss) from
discontinued operations
    
    
    46
    
    
    
    77
    
    
    
    (5
    )
  2005
    
    
    2004
    
    
    2003Revenue
    
    
    897
    
    
    
    941
    
    
    
    1,629Operating gain from discontinued
operations, before tax
    
    
    74
    
    
    
    84
    
    
    
    150Future income tax asset
impairment charge
    
    
    
    
    
    
    (56
    )
    
    
    Gain (loss) from discontinued
operations, before tax
    
    
    (1
    )
    
    
    70
    
    
    
    (70
    )Income tax expense on
operating gain
    
    
    (27
    )
    
    
    (40
    )
    
    
    (62
    )Income tax recovery (expense)
on loss (gain)
    
    
    
    
    
    
    (3
    )
    
    
    17Non-controlling interest
    
    
    
    
    
    
    22
    
    
    
    (40
    )Net gain (loss) from
discontinued operations
    
    
    46
    
    
    
    77
    
    
    
    (5
    )
  2005
    
    
    2004
    
    
    2003Cash flows from operating
activities
    
    
    128
    
    
    
    91
    
    
    
    260Cash flows (used in) from
investing activities
    
    
    (19
    )
    
    
    (42
    )
    
    
    150Cash flows (used in) from
financing activities
    
    
    (94
    )
    
    
    101
    
    
    
    (60
    )Cash provided by
discontinued operations
    
    
    15
    
    
    
    150
    
    
    
    350
         
 
 
    
 2005 ANNUAL REPORT




---



##### 



p. 80       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
          
 NOTE 9: EARNINGS PER SHARE
  2005
    
    
    2004
    
    
    2003Earnings from continuing operations (numerator)Earnings from continuing operations
    
    
    1,915
    
    
    
    1,447
    
    
    
    1,820Dividends on preferred shares
    
    
    (70
    )
    
    
    (70
    )
    
    
    (64
    )Premium on redemption of preferred shares
    
    
    
    
    
    
    
    
    
    
    (7
    )Earnings from continuing operations  basic
    
    
    1,845
    
    
    
    1,377
    
    
    
    1,749Weighted average number of common shares outstanding (denominator)(in millions)Weighted average number of common shares outstanding  basic
    
    
    926.8
    
    
    
    924.6
    
    
    
    920.3Assumed exercise of stock options (1)
    
    
    0.3
    
    
    
    0.6
    
    
    
    1.6Weighted average number of common shares outstanding  diluted
    
    
    927.1
    
    
    
    925.2
    
    
    
    921.9
 (1)
    
    The calculation of the assumed exercise of stock options includes the effect of the
average unrecognized future compensation cost of dilutive options. It does not include
anti-dilutive options. These are options that would not be exercised because their exercise
price is higher than the average market value of a BCE Inc. common share for each
of the periods shown in the table. Including them would cause our diluted earnings per share
to be overstated. The number of excluded options was 24,466,767 in 2005,
26,693,305 in 2004 and 22,176,302 in 2003. 2005 ANNUAL REPORT




---



##### 



p. 81
 
 NOTE 10: ACCOUNTS RECEIVABLE
 2005
    
    
    2004Trade accounts receivable
    
    
    1,842
    
    
    
    2,100Allowance for doubtful accounts
    
    
    (130
    )
    
    
    (144
    )Allowance for revenue adjustments
    
    
    (118
    )
    
    
    (102
    )Income taxes receivable
    
    
    48
    
    
    
    1Other accounts receivable
    
    
    124
    
    
    
    961,766
    
    
    
    1,951
        RANGE
    
    
    2005
    
    
    2004Securitized interest in
accounts receivable
    
    
    
    
    
    
    1,354
    
    
    
    1,125Retained interest
    
    
    
    
    
    
    172
    
    
    
    176Servicing liability
    
    
    
    
    
    
    1.8
    
    
    
    1.3Average accounts
receivable managed
    
    
    
    
    
    
    1,972
    
    
    
    1,513Assumptions:Cost of funds
    
    
    2.54%2.86
    %
    
    
    2.86
    %
    
    
    2.58
    %Average
delinquency ratio
    
    
    7.70%12.32
    %
    
    
    12.32
    %
    
    
    7.20
    %Average net
credit loss ratio
    
    
    0.55%0.90
    %
    
    
    0.56
    %
    
    
    0.90
    %Weighted average
life (days)
    
    
    3237
    
    
    
    37
    
    
    
    32Servicing fee liability
    
    
    2.00
    %
    
    
    2.00
    %
    
    
    2.00
    %
  2005
    
    
    2004Collections reinvested in revolving sales
    
    
    17,724
    
    
    
    14,360Increase in sale proceeds
    
    
    229
    
    
    
    95
 
 NOTE 11: OTHER CURRENT ASSETS
 NOTE
    
    
    2005
    
    
    2004Future income taxes
    
    
    7
    
    
    
    474
    
    
    
    485Inventory
    
    
    
    
    
    
    338
    
    
    
    295Prepaid expenses
    
    
    
    
    
    
    205
    
    
    
    232Other
    
    
    
    
    
    
    125
    
    
    
    491,142
    
    
    
    1,061
 2005 ANNUAL REPORT




---



##### 



p. 82       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 NOTE 12: CAPITAL ASSETS
 2005
    
    
    2004ACCUMULATED
    
    
    NET BOOK
    
    
    
    
    
    
    ACCUMULATED
    
    
    NET BOOKCOST
    
    
    AMORTIZATION
    
    
    VALUE
    
    
    COST
    
    
    AMORTIZATION
    
    
    VALUETelecommunications assets:Inside plant
    
    
    19,246
    
    
    
    13,358
    
    
    
    5,888
    
    
    
    18,011
    
    
    
    12,452
    
    
    
    5,559Outside plant
    
    
    14,433
    
    
    
    9,475
    
    
    
    4,958
    
    
    
    14,303
    
    
    
    9,107
    
    
    
    5,196Station equipment
    
    
    2,655
    
    
    
    1,311
    
    
    
    1,344
    
    
    
    3,167
    
    
    
    1,910
    
    
    
    1,257Machinery and equipment
    
    
    6,273
    
    
    
    3,685
    
    
    
    2,588
    
    
    
    5,529
    
    
    
    3,039
    
    
    
    2,490Buildings
    
    
    3,157
    
    
    
    1,340
    
    
    
    1,817
    
    
    
    2,681
    
    
    
    1,384
    
    
    
    1,297Plant under construction
    
    
    1,852
    
    
    
    
    
    
    
    1,852
    
    
    
    1,605
    
    
    
    
    
    
    
    1,605Satellites
    
    
    1,552
    
    
    
    404
    
    
    
    1,148
    
    
    
    1,769
    
    
    
    758
    
    
    
    1,011Land
    
    
    94
    
    
    
    
    
    
    
    94
    
    
    
    95
    
    
    
    
    
    
    
    95Other
    
    
    200
    
    
    
    66
    
    
    
    134
    
    
    
    215
    
    
    
    71
    
    
    
    144Total property, plant and equipment
    
    
    49,462
    
    
    
    29,639
    
    
    
    19,823
    
    
    
    47,375
    
    
    
    28,721
    
    
    
    18,654Finite-life intangible assets:Software
    
    
    3,163
    
    
    
    1,497
    
    
    
    1,666
    
    
    
    3,158
    
    
    
    1,274
    
    
    
    1,884Customer relationships
    
    
    623
    
    
    
    64
    
    
    
    559
    
    
    
    603
    
    
    
    42
    
    
    
    561Other
    
    
    27
    
    
    
    13
    
    
    
    14
    
    
    
    10
    
    
    
    5
    
    
    
    5Total capital assets
    
    
    53,275
    
    
    
    31,213
    
    
    
    22,062
    
    
    
    51,146
    
    
    
    30,042
    
    
    
    21,104
     
 NOTE 13: OTHER LONG-TERM ASSETS
 NOTE
    
    
    2005
    
    
    2004Accrued benefit asset
    
    
    24
    
    
    
    1,164
    
    
    
    1,128Future income taxes
    
    
    7
    
    
    
    511
    
    
    
    744Investments at cost
    
    
    
    
    
    
    465
    
    
    
    261Investment tax credits receivable
    
    
    
    
    
    
    345
    
    
    
    Investments at equity
    
    
    
    
    
    
    89
    
    
    
    110Deferred debt issuance costs
    
    
    
    
    
    
    77
    
    
    
    82Long-term notes and other receivables
    
    
    
    
    
    
    63
    
    
    
    135Deferred development costs
    
    
    
    
    
    
    16
    
    
    
    8Other
    
    
    
    
    
    
    184
    
    
    
    1602,914
    
    
    
    2,628
  
 NOTE 14: INDEFINITE-LIFE INTANGIBLE ASSETS
 2005
    
    
    2004Brand name
    
    
    1,986
    
    
    
    1,986Spectrum licences
    
    
    895
    
    
    
    778Television licences
    
    
    132
    
    
    
    134Cable licences
    
    
    18
    
    
    
    183,031
    
    
    
    2,916
 2005 ANNUAL REPORT




---



##### 



p. 83
 
 NOTE 15: GOODWILL
 OTHERBELL
    
    
    OTHER
    
    
    CONSOLI-NOTE
    
    
    RESIDENTIAL
    
    
    BUSINESS
    
    
    ALIANT
    
    
    CANADA
    
    
    BCE
    
    
    DATEDBalance  December 31, 2004
    
    
    
    
    
    
    3,062
    
    
    
    1,833
    
    
    
    562
    
    
    
    289
    
    
    
    2,010
    
    
    
    7,756Additions
    
    
    3
    
    
    
    23
    
    
    
    90
    
    
    
    
    
    
    
    11
    
    
    
    7
    
    
    
    131Balance  December 31, 2005
    
    
    
    
    
    
    3,085
    
    
    
    1,923
    
    
    
    562
    
    
    
    300
    
    
    
    2,017
    
    
    
    7,887
 
 NOTE 16: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
 NOTE
    
    
    2005
    
    
    2004Trade accounts payable
and accruals
    
    
    
    
    
    
    1,782
    
    
    
    1,830Compensation payable
    
    
    
    
    
    
    548
    
    
    
    506Deferred revenues
    
    
    
    
    
    
    441
    
    
    
    385Taxes payable
    
    
    
    
    
    
    274
    
    
    
    216Restructuring charges payable
    
    
    4
    
    
    
    65
    
    
    
    187Future income taxes
    
    
    7
    
    
    
    5
    
    
    
    8Other current liabilities
    
    
    
    
    
    
    320
    
    
    
    3123,435
    
    
    
    3,444
 
 NOTE 17: DEBT DUE WITHIN ONE YEAR
 WEIGHTED
    
    
    WEIGHTEDAVERAGE
    
    
    AVERAGENOTE
    
    
    INTEREST RATE
    
    
    MATURITY
    
    
    2005
    
    
    2004Bank advances
    
    
    
    
    
    
    3.37
    %
    
    
    N/A
    
    
    
    7
    
    
    
    18Notes payable
    
    
    
    
    
    
    4.11
    %
    
    30 days
    
    
    80
    
    
    
    137Long-term debt due within one year
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    1,286
    
    
    
    1,1171,373
    
    
    
    1,272
 
 N/A
    
    : Not applicable.   
 
 
  2005 ANNUAL REPORT




---



##### 



p. 84       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 NOTE 18: LONG-TERM DEBT
 WEIGHTEDAVERAGENOTE
    
    
    INTEREST RATE
    
    
    MATURITY
    
    
    2005
    
    
    2004BCE Inc.  Notes(a)
    
    
    
    
    
    
    6.86
    %
    
    
    2006 2009
    
    
    
    2,000
    
    
    
    2,000Bell CanadaDebentures and notes(b)
    
    
    
    
    
    
    7.14
    %
    
    
    20062054
    
    
    
    8,380
    
    
    
    8,246Subordinated debentures
    
    
    
    
    
    
    8.21
    %
    
    
    20262031
    
    
    
    275
    
    
    
    275Capital leases(c)
    
    
    
    
    
    
    6.16
    %
    
    
    20062047
    
    
    
    854
    
    
    
    400Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    75Total  Bell Canada
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,582
    
    
    
    8,996AliantDebentures, notes and bonds(d)
    
    
    
    
    
    
    7.65
    %
    
    
    20072025
    
    
    
    885
    
    
    
    885Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    11Total  Aliant
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    904
    
    
    
    896Bell Globemedia(e)Revolving reducing term credit agreements
    
    
    
    
    
    
    3.97
    %
    
    
    2006
    
    
    
    30
    
    
    
    40Notes
    
    
    
    
    
    
    6.44
    %
    
    
    20092014
    
    
    
    450
    
    
    
    450Total  Bell Globemedia
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    480
    
    
    
    490Telesat  Notes and other
    
    
    
    
    
    
    7.84
    %
    
    
    20062009
    
    
    
    340
    
    
    
    289Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18Total debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,306
    
    
    
    12,689Unamortized premium(f)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99
    
    
    
    113Less: Amount due within one year
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    (1,286
    )
    
    
    (1,117
    )Long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,119
    
    
    
    11,685
 
 (a)
    
    BCE Inc.    
 
     2005 ANNUAL REPORT




---



##### 



p. 85
        
 
 
 
  
 NOTE 19: OTHER LONG-TERM LIABILITIES
 NOTE
    
    
    2005
    
    
    2004Future income taxes
    
    
    7
    
    
    
    2,108
    
    
    
    1,633Accrued benefit liability
    
    
    24
    
    
    
    1,606
    
    
    
    1,519Deferred revenue on
long-term contracts
    
    
    
    
    
    
    389
    
    
    
    446Deferred contract payments
    
    
    
    
    
    
    199
    
    
    
    254Other
    
    
    
    
    
    
    762
    
    
    
    982Total other long-term liabilities
    
    
    
    
    
    
    5,028
    
    
    
    4,834
 
 NOTE 20: NON-CONTROLLING INTEREST
 2005
    
    
    2004Non-controlling interest in subsidiaries:Bell Globemedia
    
    
    817
    
    
    
    775Aliant
    
    
    585
    
    
    
    640Bell Nordiq Group Inc.(Bell Nordiq)
    
    
    150
    
    
    
    143Other
    
    
    24
    
    
    
    281,576
    
    
    
    1,586Preferred shares issued by subsidiaries:Bell Canada
    
    
    1,100
    
    
    
    1,100Aliant
    
    
    172
    
    
    
    172Telesat
    
    
    50
    
    
    
    501,322
    
    
    
    1,3222,898
    
    
    
    2,908
 
 NOTE 21: FINANCIAL INSTRUMENTS
    
 
 
 
   2005 ANNUAL REPORT




---



##### 



p. 86       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       
 
 
 
      2005
    
    
    2004CARRYING
    
    
    FAIR
    
    
    CARRYING
    
    
    FAIRVALUE
    
    
    VALUE
    
    
    VALUE
    
    
    VALUEInvestment in Nortel(1)
    
    
    55
    
    
    
    52
    
    
    
    54
    
    
    
    59Long-term debt due within one year
    
    
    1,286
    
    
    
    1,304
    
    
    
    1,117
    
    
    
    1,130Long-term debt
    
    
    12,119
    
    
    
    13,800
    
    
    
    11,685
    
    
    
    13,623Derivative financial instruments, net asset (liability) position:Forward contracts  BCE Inc. shares
    
    
    
    
    
    
    (1
    )
    
    
    (37
    )
    
    
    (41
    )Currency contracts(2)
    
    
    (83
    )
    
    
    (120
    )
    
    
    (65
    )
    
    
    (97
    )Interest rate swaps and swaptions
    
    
    (8
    )
    
    
    (17
    )
    
    
    (10
    )
    
    
    (29
    )
 
 (1)
    
    We have designated 4 million of our approximately 15 million Nortel
common shares to manage our exposure to outstanding rights to SCPs.(2)
    
    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 and all gains or losses are recorded in the statement of operations. 2005 ANNUAL REPORT




---



##### 



p. 87
 
 NOTE 22: SHARE CAPITAL
    STATEDNUMBER OF SHARES
    
    
    CAPITALANNUAL
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    REDEMP-
    
    
    
    
    
    
    ISSUED
    
    
    ATDIVIDEND
    
    
    CONVERT-
    
    
    CONVERSION

    
    REDEMPTION

    
    TION
    
    
    
    
    
    
    AND OUT-
    
    
    DECEMBER 31SERIES
    
    RATE
    
    
    IBLE INTO
    
    
    DATE

    
    DATE

    
    PRICE
    
    
    AUTHORIZED
    
    
    STANDING
    
    
    2005
    
    
    2004Q
    
    floating
    
    
    Series R
    
    December 1, 2015
    
    At any time
    
    $
    25.50
    
    
    
    8,000,000
    
    
    
    
    
    
    
    
    
    
    
    R
    
    
    4.54%
    
    
    Series Q
    
    December 1, 2010
    
    December 1, 2010
    
    $
    25.00
    
    
    
    8,000,000
    
    
    
    8,000,000
    
    
    
    200
    
    
    
    200S
    
    floating
    
    
    Series T
    
    November 1, 2006
    
    At any time
    
    $
    25.50
    
    
    
    8,000,000
    
    
    
    8,000,000
    
    
    
    200
    
    
    
    200T
    
    fixed
    
    
    Series S
    
    November 1, 2011
    
    November 1, 2011
    
    $
    25.00
    
    
    
    8,000,000
    
    
    
    
    
    
    
    
    
    
    
    Y
    
    floating
    
    
    Series Z
    
    December 1, 2007
    
    At any time
    
    $
    25.50
    
    
    
    10,000,000
    
    
    
    1,147,380
    
    
    
    29
    
    
    
    29Z
    
    
    5.319%
    
    
    Series Y
    
    December 1, 2007
    
    December 1, 2007
    
    $
    25.00
    
    
    
    10,000,000
    
    
    
    8,852,620
    
    
    
    221
    
    
    
    221AA
    
    
    5.45%
    
    
    Series AB
    
    September 1, 2007
    
    September 1, 2007
    
    $
    25.00
    
    
    
    20,000,000
    
    
    
    20,000,000
    
    
    
    510
    
    
    
    510AB
    
    floating
    
    
    Series AA
    
    September 1, 2012
    
    At any time
    
    $
    25.50
    
    
    
    20,000,000
    
    
    
    
    
    
    
    
    
    
    
    AC
    
    
    5.54%
    
    
    Series AD
    
    March 1, 2008
    
    March 1, 2008
    
    $
    25.00
    
    
    
    20,000,000
    
    
    
    20,000,000
    
    
    
    510
    
    
    
    510AD
    
    floating
    
    
    Series AC
    
    March 1, 2013
    
    At any time
    
    $
    25.50
    
    
    
    20,000,000
    
    
    
    
    
    
    
    
    
    
    
    1,670
    
    
    
    1,670
              2005 ANNUAL REPORT




---



##### 



p. 88       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    2005
    
    
    2004NUMBER
    
    
    STATED
    
    
    NUMBER
    
    
    STATEDOF SHARES
    
    
    CAPITAL
    
    
    OF SHARES
    
    
    CAPITALOutstanding, beginning of year
    
    
    925,935,682
    
    
    
    16,781
    
    
    
    923,988,818
    
    
    
    16,749Shares issued under employee stock option plan
    
    
    1,383,234
    
    
    
    25
    
    
    
    1,946,864
    
    
    
    32Outstanding, end of year
    
    
    927,318,916
    
    
    
    16,806
    
    
    
    925,935,682
    
    
    
    16,781
    
 NOTE 23: STOCK-BASED COMPENSATION PLANS
          2005 ANNUAL REPORT




---



##### 



p. 89
  
 
   2005
    
    
    2004
    
    
    2003WEIGHTED
    
    
    
    
    
    
    WEIGHTED
    
    
    
    
    
    
    WEIGHTEDAVERAGE
    
    
    
    
    
    
    AVERAGE
    
    
    
    
    
    
    AVERAGENUMBER
    
    
    EXERCISE
    
    
    NUMBER
    
    
    EXERCISE
    
    
    NUMBER
    
    
    EXERCISEOF SHARES
    
    
    PRICE ($)
    
    
    OF SHARES
    
    
    PRICE ($)
    
    
    OF SHARES
    
    
    PRICE ($)Outstanding, January 1
    
    
    28,481,679
    
    
    $
    32
    
    
    
    25,750,720
    
    
    $
    32
    
    
    
    24,737,423
    
    
    $
    34Granted
    
    
    1,481,924
    
    
    $
    28
    
    
    
    5,911,576
    
    
    $
    30
    
    
    
    6,008,051
    
    
    $
    28Exercised
    
    
    (1,383,234
    )
    
    $
    18
    
    
    
    (1,946,864
    )
    
    $
    16
    
    
    
    (552,681
    )
    
    $
    17Forfeited
    
    
    (1,237,634
    )
    
    $
    34
    
    
    
    (1,233,753
    )
    
    $
    34
    
    
    
    (4,442,073
    )
    
    $
    35Outstanding, December 31
    
    
    27,342,735
    
    
    $
    32
    
    
    
    28,481,679
    
    
    $
    32
    
    
    
    25,750,720
    
    
    $
    32Exercisable, December 31
    
    
    16,505,709
    
    
    $
    34
    
    
    
    14,633,433
    
    
    $
    34
    
    
    
    10,722,294
    
    
    $
    33
  STOCK OPTIONS OUTSTANDING
    
    
    STOCK OPTIONS EXERCISABLEWEIGHTED
    
    
    WEIGHTED
    
    
    
    
    
    
    WEIGHTEDAVERAGE
    
    
    AVERAGE
    
    
    
    
    
    
    AVERAGERANGE OF
    
    
    
    
    
    REMAINING
    
    
    EXERCISE
    
    
    
    
    
    
    EXERCISEEXERCISE PRICES
    
    NUMBER
    
    
    LIFE
    
    
    PRICE ($)
    
    
    NUMBER
    
    
    PRICE ($)Below $20
    
    
    749,254
    
    
    2.36 years
    
    $
    15
    
    
    
    749,254
    
    
    $
    15$20$29
    
    
    12,852,301
    
    
    5.67 years
    
    $
    29
    
    
    
    3,198,525
    
    
    $
    28$30$39
    
    
    7,750,392
    
    
    5.68 years
    
    $
    34
    
    
    
    6,567,142
    
    
    $
    34Over $40
    
    
    5,990,788
    
    
    4.78 years
    
    $
    41
    
    
    
    5,990,788
    
    
    $
    4127,342,735
    
    
    5.39 years
    
    $
    32
    
    
    
    16,505,709
    
    
    $
    34
   2005
    
    
    2004
    
    
    2003Compensation expense
($ millions)
    
    
    16
    
    
    
    22
    
    
    
    22Number of stock
options granted
    
    
    1,481,924
    
    
    
    5,911,576
    
    
    
    6,008,051Weighted average fair value
per option granted ($)
    
    
    3
    
    
    
    4
    
    
    
    6Weighted average assumptions:Dividend yield
    
    
    4.4
    %
    
    
    4.0
    %
    
    
    3.6
    %Expected volatility
    
    
    19
    %
    
    
    27
    %
    
    
    30
    %Risk-free interest rate
    
    
    3.6
    %
    
    
    3.1
    %
    
    
    4.0
    %Expected life (years)
    
    
    3.5
    
    
    
    3.5
    
    
    
    4.5
 2005 ANNUAL REPORT




---



##### 



p. 90       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      NUMBER OF RSUS2005
    
    
    2004Outstanding, January 1
    
    
    1,996,522
    
    
    
    Granted
    
    
    504,427
    
    
    
    1,986,513Dividends credited
    
    
    100,657
    
    
    
    61,086Forfeited
    
    
    (80,825
    )
    
    
    (51,077
    )Outstanding, December 31
    
    
    2,520,781
    
    
    
    1,996,522
       
 
      2005 ANNUAL REPORT




---



##### 



p. 91
  NUMBER OF DSUS2005
    
    
    2004
    
    
    2003Outstanding, January 1
    
    
    886,714
    
    
    
    703,995
    
    
    
    890,834Granted
    
    
    173,158
    
    
    
    306,225
    
    
    
    154,417Dividends credited
    
    
    40,668
    
    
    
    37,226
    
    
    
    31,472Payments
    
    
    (115,892
    )
    
    
    (160,732
    )
    
    
    (372,728
    )Outstanding, December 31
    
    
    984,648
    
    
    
    886,714
    
    
    
    703,995
  
 NOTE 24: EMPLOYEE BENEFIT PLANS
  2005
    
    
    2004
    
    
    2003Pension benefits:DB plans cost
    
    
    236
    
    
    
    85
    
    
    
    13DC plans cost
    
    
    26
    
    
    
    15
    
    
    
    5Other future benefits costs
    
    
    118
    
    
    
    156
    
    
    
    157Net benefit plans cost
    
    
    380
    
    
    
    256
    
    
    
    175
   PENSION BENEFITS
    
    
    OTHER BENEFITS2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Current service cost
    
    
    221
    
    
    
    228
    
    
    
    217
    
    
    
    35
    
    
    
    31
    
    
    
    31Interest cost on accrued benefit obligation
    
    
    876
    
    
    
    806
    
    
    
    757
    
    
    
    110
    
    
    
    104
    
    
    
    105Actual (return) loss on plan assets
    
    
    (1,573
    )
    
    
    (1,074
    )
    
    
    (1,583
    )
    
    
    (12
    )
    
    
    (4
    )
    
    
    (8
    )Past service costs arising during period
    
    
    3
    
    
    
    77
    
    
    
    4
    
    
    
    (120
    )
    
    
    14
    
    
    
    2Actuarial loss (gain) on accrued benefit obligation
    
    
    1,803
    
    
    
    772
    
    
    
    513
    
    
    
    499
    
    
    
    102
    
    
    
    (52
    )Elements of employee future benefit plans cost (credit),
before recognizing its long-term nature
    
    
    1,330
    
    
    
    809
    
    
    
    (92
    )
    
    
    512
    
    
    
    247
    
    
    
    78Excess (deficiency) of actual return
over expected return(1)
    
    
    628
    
    
    
    121
    
    
    
    648
    
    
    
    2
    
    
    
    (6
    )
    
    
    (1
    )Deferral of amounts arising during period:Past service costs
    
    
    (3
    )
    
    
    (77
    )
    
    
    (4
    )
    
    
    120
    
    
    
    (14
    )
    
    
    (2
    )Actuarial (loss) gain on accrued benefit obligation
    
    
    (1,803
    )
    
    
    (772
    )
    
    
    (513
    )
    
    
    (499
    )
    
    
    (102
    )
    
    
    52Amortization of previously deferred amounts:Past service costs
    
    
    9
    
    
    
    10
    
    
    
    9
    
    
    
    1
    
    
    
    
    
    
    
    Net actuarial losses
    
    
    97
    
    
    
    33
    
    
    
    23
    
    
    
    
    
    
    
    1
    
    
    
    Transitional (asset) obligation
    
    
    
    
    
    
    (44
    )
    
    
    (44
    )
    
    
    26
    
    
    
    30
    
    
    
    30Curtailment gain(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (44
    )
    
    
    
    
    
    
    Adjustments to recognize long-term nature of employee
future benefit plans cost (credit)
    
    
    (1,072
    )
    
    
    (729
    )
    
    
    119
    
    
    
    (394
    )
    
    
    (91
    )
    
    
    79Increase (decrease) in valuation allowance
    
    
    (24
    )
    
    
    3
    
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    2
    
    
    
    2
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    DB plans cost, recognized
    
    
    236
    
    
    
    85
    
    
    
    13
    
    
    
    118
    
    
    
    156
    
    
    
    157
 
 (1)
    
    The expected return on plan assets for a given year is calculated based on the
market-related value of plan assets at the beginning of that year. The market-related value
of pension plan assets was $12,928 million at January 1, 2005,
$13,044 million at January 1, 2004, and $12,542
million at January 1, 2003.(2)
    
    2005 includes a curtailment gain associated with the phase-out, over the next three
years, of a discretionary allowance program. 2005 ANNUAL REPORT




---



##### 



p. 92       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   PENSION BENEFITS
    
    
    OTHER BENEFITS2005
    
    
    2004
    
    
    2005
    
    
    2004Accrued benefit obligation, beginning of year
    
    
    14,348
    
    
    
    12,505
    
    
    
    1,772
    
    
    
    1,615Current service cost
    
    
    221
    
    
    
    228
    
    
    
    35
    
    
    
    31Interest cost on accrued benefit obligation
    
    
    876
    
    
    
    806
    
    
    
    110
    
    
    
    104Actuarial losses
    
    
    1,803
    
    
    
    772
    
    
    
    499
    
    
    
    102Benefit payments
    
    
    (897
    )
    
    
    (725
    )
    
    
    (93
    )
    
    
    (81
    )Employee contributions
    
    
    11
    
    
    
    8
    
    
    
    
    
    
    
    Special termination costs(1)
    
    
    (17
    )
    
    
    660
    
    
    
    (21
    )
    
    
    (12
    )Plan amendment(2)
    
    
    3
    
    
    
    77
    
    
    
    (120
    )
    
    
    14Transfers from DC pension plans
    
    
    221
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    17
    
    
    
    (1
    )
    
    
    (1
    )Accrued benefit obligation, end of year
    
    
    16,569
    
    
    
    14,348
    
    
    
    2,181
    
    
    
    1,772Fair value of plan assets, beginning of year
    
    
    13,030
    
    
    
    12,569
    
    
    
    137
    
    
    
    133Actual return on plan assets
    
    
    1,573
    
    
    
    1,074
    
    
    
    12
    
    
    
    4Benefit payments
    
    
    (897
    )
    
    
    (725
    )
    
    
    (93
    )
    
    
    (81
    )Employer contributions
    
    
    215
    
    
    
    97
    
    
    
    93
    
    
    
    81Employee contributions
    
    
    11
    
    
    
    8
    
    
    
    
    
    
    
    Transfers from DC pension plans
    
    
    221
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    (15
    )
    
    
    7
    
    
    
    
    
    
    
    Fair value of plan assets, end of year
    
    
    14,138
    
    
    
    13,030
    
    
    
    149
    
    
    
    137Plan deficit
    
    
    (2,431
    )
    
    
    (1,318
    )
    
    
    (2,032
    )
    
    
    (1,635
    )Unamortized net actuarial losses
    
    
    3,361
    
    
    
    2,304
    
    
    
    491
    
    
    
    47Unamortized past service costs
    
    
    121
    
    
    
    129
    
    
    
    (1
    )
    
    
    17Unamortized transitional (asset) obligation
    
    
    (35
    )
    
    
    (35
    )
    
    
    187
    
    
    
    227Valuation allowance
    
    
    (103
    )
    
    
    (127
    )
    
    
    
    
    
    
    Accrued benefit asset (liability), end of year
    
    
    913
    
    
    
    953
    
    
    
    (1,355
    )
    
    
    (1,344
    )Accrued benefit asset included in other long-term assets
    
    
    1,164
    
    
    
    1,128
    
    
    
    
    
    
    
    Accrued benefit liability included in other long-term liabilities
    
    
    (251
    )
    
    
    (175
    )
    
    
    (1,355
    )
    
    
    (1,344
    )
 
 (1)
    
    Costs in 2004 relate to the employee departure programs announced at Bell
Canada. See Note 4,Restructuring and Other Items, for more information.(2)
    
    2005 includes a curtailment gain associated with the phase-out, over the next
three years, of a discretionary allowance program. Costs in 2004 mainly relate to
DB pension plan amendments at Aliant whereby certain bargaining unit employees and
eligible management employees were awarded past service benefits.  
 
  
 
 2005 ANNUAL REPORT




---



##### 



p. 93
   PENSION BENEFITS
    
    
    OTHER BENEFITS2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003At December 31Accrued benefit obligation:Discount rate, end of year
    
    
    5.2
    %
    
    
    6.2
    %
    
    
    6.5
    %
    
    
    5.2
    %
    
    
    6.2
    %
    
    
    6.5
    %Rate of compensation increase, end of year
    
    
    3.0
    %
    
    
    3.5
    %
    
    
    3.5
    %
    
    
    3.0
    %
    
    
    3.5
    %
    
    
    3.5
    %For the year ended December 31Net benefit plans cost:Discount rate, end of preceding year
    
    
    6.2
    %
    
    
    6.5
    %
    
    
    6.5
    %
    
    
    6.2
    %
    
    
    6.5
    %
    
    
    6.5
    %Expected return on plan assets, end of preceding year
    
    
    7.5
    %
    
    
    7.5
    %
    
    
    7.5
    %
    
    
    7.5
    %
    
    
    7.5
    %
    
    
    7.5
    %Rate of compensation increase, end of preceding year
    
    
    3.5
    %
    
    
    3.5
    %
    
    
    3.5
    %
    
    
    3.5
    %
    
    
    3.5
    %
    
    
    3.5
    %
  
 
  1% INCREASE
    
    
    1% DECREASEEffect on other benefits 
total service and interest cost
    
    
    19
    
    
    
    (18
    )Effect on other benefits 
accrued obligation
    
    
    231
    
    
    
    (217
    )
   2005 ANNUAL REPORT




---



##### 



p. 94       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 WEIGHTEDWEIGHTED
    
    
    PERCENTAGE
    
    
    AVERAGEAVERAGE
    
    
    OF PLAN
    
    
    EXPECTEDTARGET
    
    
    ASSETS AT
    
    
    LONG-TERMALLOCATION
    
    
    DECEMBER 31
    
    
    RATE OF RETURNASSET CATEGORY
    
    2005
    
    
    2005
    
    
    2004
    
    
    2005Equity securities
    
    
    45%65
    %
    
    
    59
    %
    
    
    57
    %
    
    
    9.0
    %Debt securities
    
    
    35%55
    %
    
    
    41
    %
    
    
    43
    %
    
    
    5.5
    %Total/average
    
    
    
    
    
    
    100
    %
    
    
    100
    %
    
    
    7.5
    %
     PENSION
    
    
    OTHERBENEFITS
    
    
    BENEFITS2006
    
    
    907
    
    
    
    972007
    
    
    928
    
    
    
    1032008
    
    
    950
    
    
    
    1082009
    
    
    973
    
    
    
    1142010
    
    
    995
    
    
    
    12120112015
    
    
    5,284
    
    
    
    698Total estimated future benefit payments
    
    
    10,037
    
    
    
    1,241
     PENSION BENEFITS
    
    
    OTHER BENEFITS2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Aliant
    
    
    172
    
    
    
    67
    
    
    
    125
    
    
    
    5
    
    
    
    4
    
    
    
    4Bell Canada
    
    
    27
    
    
    
    20
    
    
    
    17
    
    
    
    88
    
    
    
    77
    
    
    
    83Bell Globemedia
    
    
    20
    
    
    
    17
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    BCE Inc.
    
    
    7
    
    
    
    8
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    226
    
    
    
    112
    
    
    
    160
    
    
    
    93
    
    
    
    81
    
    
    
    87Comprised of:Contributions to DB plans
    
    
    215
    
    
    
    97
    
    
    
    155
    
    
    
    93
    
    
    
    81
    
    
    
    87Contributions to DC plans
    
    
    11
    
    
    
    15
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
  2005 ANNUAL REPORT




---



##### 



p. 95
 
 NOTE 25: COMMITMENTS AND CONTINGENCIES
   THERE-2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    AFTER
    
    
    TOTALLong-term debt (excluding capital leases)
    
    
    1,160
    
    
    
    1,686
    
    
    
    1,043
    
    
    
    1,624
    
    
    
    1,013
    
    
    
    5,955
    
    
    
    12,481Notes payable and bank advances
    
    
    87
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87Capital leases
    
    
    126
    
    
    
    110
    
    
    
    63
    
    
    
    47
    
    
    
    45
    
    
    
    533
    
    
    
    924Operating leases
    
    
    231
    
    
    
    204
    
    
    
    181
    
    
    
    158
    
    
    
    134
    
    
    
    679
    
    
    
    1,587Commitments for capital expenditures
    
    
    184
    
    
    
    52
    
    
    
    8
    
    
    
    2
    
    
    
    16
    
    
    
    
    
    
    
    262Purchase obligations
    
    
    1,413
    
    
    
    1,001
    
    
    
    716
    
    
    
    287
    
    
    
    205
    
    
    
    530
    
    
    
    4,152Other long-term liabilities (including current portion)
    
    
    143
    
    
    
    119
    
    
    
    79
    
    
    
    80
    
    
    
    4
    
    
    
    25
    
    
    
    450Total
    
    
    3,344
    
    
    
    3,172
    
    
    
    2,090
    
    
    
    2,198
    
    
    
    1,417
    
    
    
    7,722
    
    
    
    19,943
      
 
 
 Discontinued
Operations
   
 
  2005 ANNUAL REPORT




---



##### 



p. 96 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          Canada Business Corporations Act
      2005 ANNUAL REPORT




---



##### 



p. 97
  Canada Business Corporations
Act Canada Business Corporations
Act
      
 NOTE 26: GUARANTEES
   INDEFI-2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010+
    
    
    NITE
    
    
    TOTALSale of assets and businesses
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    1,502
    
    
    
    134
    
    
    
    1,651Sale of services
    
    
    10
    
    
    
    15
    
    
    
    10
    
    
    
    91
    
    
    
    55
    
    
    
    
    
    
    
    181Purchase and development of assets
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    1
    
    
    
    
    
    
    
    10
    
    
    
    22Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    12Total guarantees
    
    
    10
    
    
    
    30
    
    
    
    21
    
    
    
    92
    
    
    
    1,557
    
    
    
    156
    
    
    
    1,866
 2005 ANNUAL REPORT




---



##### 



p. 98       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              
 NOTE 27: SUPPLEMENTAL DISCLOSURE FOR
STATEMENTS OF CASH FLOWS
 2005
    
    
    2004
    
    
    2003Interest paid
    
    
    960
    
    
    
    981
    
    
    
    1,105Income taxes paid (net of refunds)
    
    
    249
    
    
    
    176
    
    
    
    (47
    )Cash provided by (used in)
non-cash operating assets
and liabilities is as follows:Accounts receivable
    
    
    371
    
    
    
    (350
    )
    
    
    217Other current assets
    
    
    (41
    )
    
    
    (119
    )
    
    
    (25
    )Other long-term assets
    
    
    (94
    )
    
    
    (22
    )
    
    
    17Accounts payable and
accrued liabilities
    
    
    (527
    )
    
    
    601
    
    
    
    559Other long-term liabilities
    
    
    (138
    )
    
    
    12
    
    
    
    (105
    )Other
    
    
    39
    
    
    
    (35
    )
    
    
    (7
    )(390
    )
    
    
    87
    
    
    
    656
 
 NOTE 28: RECONCILIATION OF CANADIAN
GAAP TO UNITED STATES GAAP
  2005 ANNUAL REPORT




---



##### 



p. 99
  2005
    
    
    2004
    
    
    2003Canadian GAAP  Earnings from continuing operations
    
    
    1,915
    
    
    
    1,447
    
    
    
    1,820Adjustments:Deferred costs
 (a)
    
    
    
    
    
    
    7
    
    
    
    (1
    )Employee future benefit costs
(b)
    
    
    (65
    )
    
    
    (75
    )
    
    
    (132
    )Equity income
 (c) (e)
    
    
    46
    
    
    
    52
    
    
    
    50Derivative instruments
(d)
    
    
    (2
    )
    
    
    
    
    
    
    (12
    )Other
    
    
    5
    
    
    
    
    
    
    
    (8
    )United States GAAP  Earnings from continuing operations
    
    
    1,899
    
    
    
    1,431
    
    
    
    1,717Discontinued operations  United States GAAP
(e) (k)
    
    
    
    
    
    
    107
    
    
    
    (56
    )Cumulative effect of change in accounting policy
 (f)
    
    
    
    
    
    
    
    
    
    
    (25
    )United
States GAAP   Net earnings before extraordinary gain
    
    
    1,899
    
    
    
    1,538
    
    
    
    1,636Extraordinary gain
    
    
    
    
    
    
    69
    
    
    
    United
States GAAP   Net earnings
    
    
    1,899
    
    
    
    1,607
    
    
    
    1,636Dividends on preferred shares
 (d)
    
    
    (85
    )
    
    
    (85
    )
    
    
    (70
    )Premium on redemption of preferred shares
    
    
    
    
    
    
    
    
    
    
    (7
    )United
States GAAP   Net earnings applicable to common shares
    
    
    1,814
    
    
    
    1,522
    
    
    
    1,559Other comprehensive earnings items:Change in
currency translation adjustment
    
    
    (17
    )
    
    
    (10
    )
    
    
    (56
    )Change in unrealized gain
(loss) on investments and derivative instruments (d) (g)
    
    
    131
    
    
    
    (12
    )
    
    
    17Additional minimum liability for pension obligations
 (b)
    
    
    (1,112
    )
    
    
    (72
    )
    
    
    (40
    )Comprehensive earnings
    
    
    816
    
    
    
    1,428
    
    
    
    1,480Net earnings per common share  basicContinuing operations
    
    
    1.96
    
    
    
    1.46
    
    
    
    1.78Discontinued operations and change in accounting policy
    
    
    
    
    
    
    0.12
    
    
    
    (0.09
    )Extraordinary gain
    
    
    
    
    
    
    0.07
    
    
    
    Net earnings
    
    
    1.96
    
    
    
    1.65
    
    
    
    1.69Net earnings per common share  dilutedContinuing operations
    
    
    1.95
    
    
    
    1.45
    
    
    
    1.78Discontinued operations and change in accounting policy
    
    
    
    
    
    
    0.12
    
    
    
    (0.09
    )Extraordinary gain
    
    
    
    
    
    
    0.07
    
    
    
    Net earnings
    
    
    1.95
    
    
    
    1.64
    
    
    
    1.69Dividends per common share
    
    
    1.32
    
    
    
    1.20
    
    
    
    1.20Average number of common shares outstanding (millions)
    
    
    926.8
    
    
    
    924.6
    
    
    
    920.3
  2005
    
    
    2004
    
    
    2003Currency translation adjustment
    
    
    (73
    )
    
    
    (56
    )
    
    
    (46
    )Unrealized
gain on investments and derivative
instruments(d) (g)
    
    
    135
    
    
    
    4
    
    
    
    16Additional minimum liability
for pension obligations
(b)
    
    
    (1,305
    )
    
    
    (193
    )
    
    
    (121
    )Accumulated other
comprehensive loss
    
    
    (1,243
    )
    
    
    (245
    )
    
    
    (151
    )
 (k)
 2005
    
    
    2004
    
    
    2003Canadian GAAP
    
    
    14,721
    
    
    
    14,024
    
    
    
    13,565Adjustments:Deferred costs
 (a)
    
    
    (37
    )
    
    
    (37
    )
    
    
    (44
    )Employee future benefits
(b)
    
    
    (1,460
    )
    
    
    (283
    )
    
    
    (136
    )Goodwill
 (h)
    
    
    63
    
    
    
    63
    
    
    
    63Other
    
    
    21
    
    
    
    33
    
    
    
    47Discontinued operations
(e)
    
    
    
    
    
    
    
    
    
    
    (81
    )Unrealized gain on investments and derivative
instruments (d) (g)
    
    
    135
    
    
    
    4
    
    
    
    16United States GAAP
    
    
    13,443
    
    
    
    13,804
    
    
    
    13,430
 2005 ANNUAL REPORT




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##### 



p. 100 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                2005 ANNUAL REPORT




---



##### 



p. 101
  Consolidation of Variable Interest
Entities Consolidated Financial Statements
         2005
    
    
    2004
    
    
    2003Net earnings as reported
    
    
    1,899
    
    
    
    1,607
    
    
    
    1,636Compensation cost included
in net earnings
    
    
    22
    
    
    
    29
    
    
    
    29Total compensation cost
    
    
    (23
    )
    
    
    (38
    )
    
    
    (51
    )Pro forma net earnings
    
    
    1,898
    
    
    
    1,598
    
    
    
    1,614Pro forma net earnings
per common share (basic)
    
    
    1.96
    
    
    
    1.64
    
    
    
    1.67Pro forma net earnings
per common share (diluted)
    
    
    1.95
    
    
    
    1.64
    
    
    
    1.67
      2005 ANNUAL REPORT




---



##### 



BOARD OF DIRECTORS
As at March 1, 2006
 Toronto,Ontario
 Chair of the Board,
BCE Inc.
and Bell Canada
Director since May 1995
 Montréal, Québec
Corporate Director
Director since January 2003
 Calgary, Alberta
President and Chief Executive
Officer and a director,
Petro-Canada
Director since November 2003
 Toronto, Ontario
Chairman of the Board,
RBC Dominion Securities Limited
Director since January 2002
 Toronto, Ontario
Corporate Director and Lawyer
Director since June 1998
 Montréal, Québec
Partner and Co-Chair,
Osler, Hoskin & Harcourt LLP
Director since May 1998
 South Lancaster, Ontario
Vice-Chairman,
BMO Nesbitt Burns Inc.
Director since January 2003
 Ottawa, Ontario
Research Fellow, Canadian Policy,
Research Networks Inc.
Director since January 2000
 Wayland, Massachusetts
Dean Emeritus, Harvard University,
Graduate School of Business Administration
Director since May 1995
 Don Mills, Ontario
Corporate Director and
Chartered Accountant
Director since January 2003
 Vancouver, British Columbia
Chairman and Chief Executive Officer,
The Jim Pattison Group
Director since February 2005
 Boston, Massachusetts
Chairman of the Board,
MFS Investment Management
Director since February 2002
 Montréal, Québec
President and Chief Executive
Officer and a director, BCE Inc.,
and Chief Executive Officer and
a director, Bell Canada
Director since October 2002
 Montréal, Québec
Corporate Director
Director since April 1999
 St. Johns, Newfoundland and
Labrador
 Corporate
Director
Director since May 1995
 EXECUTIVES *  As at March 1, 2006
 President and Chief Executive Officer
 President and Chief
Operating Officer,
Bell Canada
 Group President   Corporate Performance and
National Markets, Bell Canada
 President and Chief Executive Officer,
Telesat Canada
 Senior Vice-President and Treasurer
 Executive Vice-President and
Chief Strategy Officer
 President  Enterprise, Bell Canada
 President   Residential Services,
Bell Canada
 Executive Vice-President 
Communications and
Corporate Development
 Chief Talent Officer
 Executive Vice-President and
Chief Corporate Officer
 President  Bell Mobility and
Bell Distribution Inc.,
Bell Canada
 Corporate Secretary
 President  Operations, Bell Canada
 Group President 
Systems and Technology,
Bell Canada
 President  Small and Medium Business,
Bell Canada
 Chief Legal Officer
 Chief Financial Officer
 COMMITTEES OF THE BOARD Members of Committees of the Board
 (Chair)
 The audit committee assists the board in the oversight of:
 
 
 
 
 
  (Chair)
 The PFC assists the board in the oversight of:
 
 
  (Chair)
 The CGC assists the board in:
 
 
 
 
 
 
  (Chair)
 The MRCC assists the board in the oversight of the:
 
 
 
 *
    
    For a complete
list of BCE
Inc.s and Bell
Canadas officers,
please see BCE
Inc.s and Bell
Canadas respective
Annual Information
Forms for the year
ended December
31,
2005 . 2005 ANNUAL REPORT




---



##### 



www.bce.ca
   First quarter
    
    May 3, 2006Second quarter
    
    August 2, 2006Third quarter
    
    November 1, 2006Fourth quarter
    
    February 7, 2007
 www.bce.ca
  Symbol
  Listings
  www.bce.ca
 Common Shares Outstanding
  Stock Splits
  Quarterly
Dividend *
  2006 Dividend Schedule *
 Record Date
    
    Payment DateMarch 15, 2006
    
    April 15, 2006June 15, 2006
    
    July 15, 2006September 15, 2006
    
    October 15, 2006December 15, 2006
    
    January 15, 2007
 
 *Subject to approval by the Board of Directors   www.bce.ca
       Notice of Intention to Make a
Normal Course Issuer Bid Notice of
Intention www.sedar.com
                e-mail
    
    bce@computershare.comtel
    
    (514) 982-7555 or 1 800 561-0934(toll free in Canada and the U.S.)fax
    
    (416) 263-9394 or 1 888 453-0330(toll free in Canada and the U.S.)or visit their website at www.computershare.com
  
 e-mail
    
    investor.relations@bce.catel
    
    1 800 339-6353fax
    
    (514) 786-3970or visit the Investors section on our
website at www.bce.ca
 
 Trademarks: The following is a list of all our trademarks referred to and used as such in this
annual report. Aliant is a trademark of Aliant Inc. BCE is a trademark of BCE
Inc. The Rings and Head Design, 10-4 & Design, Bell Canada Enterprises corporate
logo, Bell, Bell Canada, Bell Globemedia, Bell Making It Simple, Bell Mobility, Bell Nordiq, Bell
West, Bell World, Emily, GoTrax, Group Telecom, Kidsmania, Seek & Find, Sympatico, VDN &
Design are trademarks of Bell Canada. ExpressVu is a trademark of Bell ExpressVu Limited
Partnership. is a trademark of Bell Globemedia Publishing Inc. Mobile Browser is
a trademark of Bell Mobility Inc. CTV is a trademark of CTV Inc. Expertech is a
trademark of Expertech Network Installation Inc. Northwestel is a trademark of Northwestel Inc.
Infostream is a trademark of Infostream Technologies Inc. Solo and Solo Mobile are trademarks of
Solo Branding Inc. Télébec is a trademark of Telebec Limited Partnership. Anik, Nimiq and Telesat
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 and domain names are very important to our
success. Our exclusive trademark rights are perpetual provided that their registrations are timely
renewed and that the trademarks are used in commerce by us or our licensees. We take appropriate
measures to protect, renew and defend our trademarks. We also spend considerable time and resources
overseeing, registering, renewing, licensing and protecting our trademarks and domain names and
prosecuting those who infringe on them. We take great care not to infringe on the intellectual
property and trademarks of others.
 Cette
publication est disponible en français. BCEs Annual Report is printed with
vegetable-based ink and is recyclable. Printed in Canada
 Typesetting: Inc. Moveable




---



##### 



BCEs website has extensive information about
the companys governance practices, community investment,
and corporate responsibility.
 is
an in-depth presentation of our strategy and is available
at www.bce.ca/businessupdate.
 h3b 4y7 www.bce.ca
 e-mail tel fax
 e-mail tel fax