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## Enterprise 

Enterprise revenues declined in 2004, compared to 2003, as a result of lower local and access, long dis- tance and data revenues. These declines were partly offset by increases in wireless and terminal sales and other revenues. 

The decline in data revenues relates mainly to the completion of the Hydro-Québec outsourcing contract in the fourth quarter of 2003. Despite this decline, our IP-based connectivity and VAS revenues continued to grow significantly. IP-based connectivity and VAS service revenues grew from 22% of enterprise data revenues in 2003 to 43% in 2004. By December 31, 2004, more than 65% of our Enterprise customers used some element of our VAS portfolio. 

In December, 2004, we announced the signing of a seven-year, $140 million exclusive outsourcing agreement with Manulife Financial for the provision- ing and management of its IP-based voice and data services. The outsourcing arrangement will lever our VAS capabilities by having BCE Connexim, Bell Canada’s outsourcing and professional services unit, provide an end-to-end solution that reduces and sim- plifies Manulife Financial’s transition to IP. Our out- sourcing capabilities play a key role in our strategy of securing the connectivity business of our Enterprise customers and preventing possible disintermediation by systems integrators. We also had a number of other significant contract wins during the year, including Fédération des Caisses Desjardins du Québec, La Senza Inc., Government of Québec, Hydro One Networks Inc., Department of Foreign Affairs and International Trade of the Government of Canada, and Enterprise Rent-a-Car. 

Significant growth in Enterprise operating income was the result of our focus on more profitable contracts and productivity savings, which led to reductions in cost of goods sold. This was partly offset by the com- pletion of the Hydro-Québec contract in 2003 and higher operating expenses related to businesses acquired during the year (Infostream and Elix). 

## SMB 

SMB revenues increased in 2004, compared to 2003, as a result of higher data, wireless and terminal sales and other revenues. These gains were partly offset by revenue declines in local and access and long distance revenues. 

Business acquisitions in 2004, such as Accutel Conferencing Systems Inc. (Accutel) and Charon, con- tributed to the revenue growth, as did our continued growth in DSL high-speed Internet access services and VAS services. At December 31, 2004, we had 83,000 VAS subscriptions. 

The decline in long distance revenues resulted from competitive pricing pressures and lower usage in our payphone business. Local and access revenues were also lower in our payphone business. 

SMB operating income growth was driven by rev- enue growth and productivity savings, partly offset by higher operating expenses of businesses acquired during the year. 

## Bell West 

Bell West continued to grow its customer base lead- ing to increases in local and access and long distance revenues in 2004, compared to 2003. In 2001, we were awarded a contract by the Government of Alberta to build a next-generation network (SuperNet) to bring high-speed Internet and broadband capabilities to rural communities in Alberta. Mechanical construc- tion of the network was completed in December 2004. The decline in data revenues in 2004 reflects a decrease of approximately $43 million as this contract was nearing completion. 

The improvement in operating income performance at Bell West was driven by the increase in local and access and long distance revenues and lower operating costs related to the contract with the Government of Alberta, partly offset by higher salary costs due to the growing workforce. 

## Aliant 

ALIANT REVENUES 

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Aliant segment revenues declined 1.3% or $26 million to $2,033 million in 2004, compared to 2003. The labour disruption that started on April 23, 2004 and ended on September 20, 2004 negatively impacted revenues by an estimated $40 million. This represents fewer new customers, reduced product sales, additional 

