BC Telecom Reports Strong Growth in Third Quarter.

BURNABY, British Columbia--(BUSINESS WIRE)--Oct. 22, 1998--BC Telecom (TSE:BCT)(ME:BCT)(VSE:BCT)(T:BCT) today reported consolidated net earnings from continuing operations for the first nine months of 1998 - before a previously announced extra-ordinary charge - were $266.3 million or $2.12 per share compared to $211.8 million or $1.68 per share in the same period of 1997.

Consolidated net earnings for the quarter ended September 30, 1998 were $88.6 million or 70 cents per share compared to $77.3 million or 61 cents per share last year. Third quarter results showed an eight per cent improvement in earnings from continuing operations, after a four-cent adjustment for lower depreciation and amortization, net of other one-time charges.

"Our third quarter results reflect our strong performance in key market segments," said Ken Crump, BC TELECOM's chief financial officer. "Our momentum built throughout the quarter, and we ended with solid gains in both revenues and earnings compared to our last quarter. At the same time, our ongoing emphasis on managing costs is evident in our lower core operating expenses."

In the highly competitive consumer long-distance market, Crump said, "our No Limits flat-rate calling plan has been a big hit. We're now winning back many more long-distance customers.

"We're also the market leader in B.C.'s emerging data services business, with annual revenue growth of well over 50 per cent. This growth is fueled by our performance in the Internet market - we continue to be the top Internet service provider in the province, with our Sympatico customer base up almost 70 per cent over last year." Earnings per share results

BC TEL's contribution to third quarter earnings was 58 cents per share - a 14-cent increase from the same period last year and a nine-cent increase from the second quarter this year. The third quarter increase includes eight cents per share from lower depreciation and amortization charges stemming from the one-time write-down of assets in the first quarter.

On the wireless side, BC TEL Mobility posted its strongest quarter of the year - highest customer growth, revenue and earnings. BC TEL Mobility's contribution to third-quarter earnings was 12 cents per share - a two-cent decline from the same period last year, reflecting higher costs associated with new customer growth and the migration of customers from analog to our new digital service. BC TEL Mobility continues to attract one out of every two new wireless customers in B.C., and its high customer loyalty is reflected by an industry-leading customer turnover rate. Revenues and expenses

BC TELECOM's operating revenues increased $56.6 million to $808.8 million in the third quarter compared to $752.2 million in the same period last year. BC TEL's local-service revenues increased $25 million in the quarter, reflecting higher revenues from SmartTouch services - such as Call Answer and Call Waiting and higher local- service rates. Long-distance revenues declined $19 million compared to the same period last year but increased $8 million from the second quarter this year. Despite fierce price competition, BC TEL continues to hold 73 per cent of the long-distance market in B.C. Revenues from BC TEL Mobility Cellular increased $7 million in the quarter. Revenues from ISM-BC, an information systems management company owned 75 per cent by BC TELECOM, increased $25 million. The increase in BC TELECOM's operating revenues also includes $14 million from changes in accounting methodology.

BC TELECOM's third quarter operating expenses increased $10.1 million to $591.5 million compared to $581.4 million in 1997. This increase in expenses reflected primarily higher costs associated with revenue growth at BC TEL Mobility and ISM-BC, as well as accounting methodology changes. The increase was partially offset by BC TEL's lower depreciation expenses and the continued decline in its core operating expenses compared to the same period last year.

BC TEL added 19,105 new customer access lines in the quarter and now serves more than 2.5 million customer access lines. BC TEL Mobility added 22,308 cellular and paging customers and now has more than 586,000 customers.

BC TELECOM is Canada's second largest telecommunications company, offering a range of products and services to customers throughout British Columbia. BC TELECOM shares are listed on the Toronto, Montreal and Vancouver stock exchanges. The share symbol is BCT. -0-

BC TELECOM Inc.
CONSOLIDATED STATEMENT OF EARNINGS

                       Three Months Ended   Nine Months Ended
                           September 30        September 30

Unaudited (Millions)       1998     1997      1998      1997

OPERATING REVENUES (1)  $ 808.8  $ 752.2  $2,366.4  $2,195.4

OPERATING EXPENSES (1)    591.5    581.4   1,774.4   1,679.1
                        ------------------------------------
OPERATING EARNINGS        217.3    170.8     592.0     516.3

Other (loss) income       (11.7)     4.8      14.1      (1.9)

Financing costs, net       34.5     32.3      97.9      96.2
                        ------------------------------------
EARNINGS BEFORE INCOME
TAXES AND MINORITY
INTEREST                  171.1    143.3     508.2     418.2

Income taxes               81.4     65.1     238.5     203.4

                        ------------------------------------
EARNINGS BEFORE
MINORITY INTEREST          89.7     78.2     269.7     214.8

Minority interest           1.1      1.1       3.4       3.0
                        ------------------------------------
NET EARNINGS FROM
CONTINUING OPERATIONS
BEFORE EXTRAORDINARY
ITEM                       88.6     77.1     266.3     211.8

Extraordinary loss            -        -     530.6         -

Net gain on disposition of MPR Teltech Ltd.
assets                        -      0.2         -       5.6
                        ------------------------------------
NET EARNINGS (LOSS)        88.6     77.3    (264.3)    217.4

Preference and preferred
share dividends             0.9      0.9       2.6       2.6
                        ------------------------------------
COMMON SHARE
EARNINGS (LOSS)          $ 87.7   $ 76.4    (266.9)  $ 214.8
                        ------------------------------------
EARNINGS PER COMMON
SHARE ($)

Earnings from continuing
operations before
extraordinary item
and accounting
methodology changes        0.62     0.61      1.89      1.68

Earnings from continuing
operations before
extraordinary item         0.70     0.61      2.12      1.68

Common share
earnings (loss)            0.70     0.61     (2.15)     1.73

DIVIDENDS DECLARED
PER COMMON SHARE ($)       0.35(2)  0.34      1.04      1.01

AVERAGE COMMON SHARES
OUTSTANDING (Thousands) 124,241  123,985   124,213   123,886

(1) 1997 restated to include settlement-related revenues and expenses previously reported on a net basis. 1997 and 1998 restated to move uncollectibles revenues to operating expenses.

(2) On April 28, 1998 the Board of Directors approved a one cent per share increase in the quarterly dividend rate effective.