BC TELECOM REPORTS SECOND QUARTER EARNINGS.

BURNABY, BC--(BUSINESS WIRE)--July 26, 1995--BC TELECOM INC.(TSE, ME, VSE: BCT ) Despite a continuing decline in earnings by BC TEL, the regulated telephone utility, BC TELECOM today announced consolidated net earnings for the second quarter of 1995 were $73.3 million or 60 cents per share compared to $57.8 million or 49 cents per share during the same quarter last year. The increase reflects an after- tax gain of $20 million or 16 cents per share from the sale of BC TELECOM's investment in PMC-Sierra, Inc.

Contributions to second quarter earnings by BC TEL declined six cents per share, while earnings from BC TEL Mobility increased two cents per share.

BC TELECOM's earnings for the first six months of 1995 were $125 or $1.03 per share compared to $108.3 million or 91 cents per share in the same period last year.

"The good news is that our net earnings increased in the second quarter," said Brian Canfield, BC TELECOM's chairman and chief executive officer. "However, these results mask the continuing decline in BC TEL's earnings."

Intense competition is driving long-distance prices down and shrinking BC TEL's market share, Canfield said. "At the same time, B.C.'s economic growth continues to stimulate demand for local services, which are still priced well below their actual costs. This demand also increases the costs associated with maintaining our telecommunications infrastructure. Combined, these events challenge us to continue to cut our costs. We must reduce our operating costs by $100 million between now and the end of 1996 if we are to continue to be competitive in this rapidly changing industry."

As announced earlier this month, part of this cost-reduction plan involves the elimination of about 2,000 jobs from BC TELECOM's workforce. The company has sought cooperation from the Telecommunications Workers Union - which represents the 12,200 unionized employees who work at BC TELECOM - and hopes to achieve the job reductions mostly through early retirements and voluntary separation packages.

BC TELECOM's second quarter operating expenses were $457 million compared to $417.3 million in 1994. More than half of this increase is due to costs associated with a higher demand for new and emerging services, such as cellular and paging. On the regulated utility side, BC TEL's operating expenses increased as a result of higher advertising and sales costs, due to aggressive competition in the long-distance market, and higher depreciation of equipment and facilities.

BC TELECOM's consolidated operating revenues in the second quarter increased to $592.7 million from $562.3 million in 1994. Reflecting a decline in long-distance revenues, BC TEL's revenues increased only $4.1 million from the same time last year. Long-distance revenues declined by $28.8 million, due to declining market share and lower prices.

However, revenues from local telephone service increased $23.7 million, as a result of the growing number of telephone lines and increased revenues from long-distance competitors which interconnect with BC TEL's network. Revenues from the sale of telecommunications equipment and telephone directory advertising also increased in the second quarter.

BC TEL Mobility's cellular and paging businesses both recorded significant revenue increases in the second quarter compared to the same period last year. The number of customers increased to 256,669 at the end of June, reflecting a quarterly gain of 18,482 compared to a gain of 14,071 during the same quarter last year.

CONTACT: Michelle Gagne

604/432-2949 (office)

604/977-5875 (pager)