## Letters to Shareholders 

## Dear Fellow Shareholders, 

Bell Canada was founded 125 years ago and for the past three of those years I have had the honour of serving as its Chairman. In that time, I have witnessed a company reaffirming its legacy. Bell “wired” Canada in the last century. Today, Bell is the company that is leading Canada into a new century of broadband connectivity. 

Your Board of Directors fully recognizes that because of the Internet, the telecommunications industry is in dramatic transition and Bell must undergo a major transformation in order to ensure its future growth. Your Board also recognizes the financial strength of BCE. It is now clear that the asset base of the company will be renewed and transformed well within its operating cash flow. Our confidence in the continuing financial strength and in the future of BCE led us to declare a 10% increase in the annual dividend, to $1.32 per share, the first increase in 10 years. 

On behalf of the Board, I want to publicly endorse and support the management of BCE for its visionary and determined leadership. 

Bell is now nearing the end of the beginning of that trans- formation, having positioned itself with 27 million customer connections in 2004 and one of the highest measures of customer loyalty in North America. 

To be at the end of the beginning implies that we are also at the beginning of something entirely new. That something, of course, is a new kind of telecommunications company, built on the platform of Internet Protocol (IP). For consumers and businesses, this will mean access to the full capabilities of Bell—wireline, wireless, Internet, and video—from a single source. As ever-more sophisticated technology arrives and data transfer speeds accelerate, the choices for consumers will increase. To package, organize and deliver these choices in ways consumers can use and to do so while maintaining Bell’s historically superior level of service and reliability and at materially lower cost will be the real challenge of this telecommunications transformation. 

To lower costs, Bell Canada launched the Galileo initiative, which introduced company-wide operational changes and started to streamline all key processes in the company—a project that is expected to save in excess of a billion dollars by the end of 2006. On the revenue side, Bell is now improv- ing customer experience and satisfaction through the bundling of its multiple services. 

Proof that our business model for BCE is working can be found in the current trend in business acquisitions among other North American telecommunications companies. In 

