BCE Announces 1998 Year End and Fourth Quarter Results.

MONTREAL--(BUSINESS WIRE)--Jan. 27, 1999--BCE(ME:BCE.) (TSE:BCE.) (VSE:BCE.) (NYSE:BCE) BCE announced today unaudited baseline earnings of $1.6 billion ($2.50 per share) for the year ended December 31, 1998, compared with $1.3 billion ($2.00 per share) for the same period in 1997. "BCE's results reflect our determination to remain Canada's telecommunications leader," said Jean C. Monty, President and Chief Executive Officer. "In today's highly competitive environment, we demonstrated that determination through a series of strategic investments, including: Bell Canada's new IP company, Bell Nexxia, CGI, Telesat, ExpressVu, BCE Emergis, Teleglobe and other businesses with remarkable potential for growth, such as our alliance with Manitoba Telecom Services Inc. which we announced today," Jean Monty added.

The 25 percent improvement in BCE's baseline earnings for 1998 resulted from increases in our Canadian and International Telecommunications groups, and Nortel Networks. "BCE's competitive growth strategy is unfolding rapidly and is already showing benefits," Jean Monty added. These benefits include:

-  Aggressive savings plans for residence and business customers
   allowed Bell Canada to stem the erosion of market share in the
   long distance telephone market for the first year since the
   introduction of competition;

- Bell Mobility leads its market with 2 million subscribers for
  cellular, PCS and paging services;

- Bell Canada International's investee companies now provide
  service to some 3 million customers on three continents;

- Bell ExpressVu continues to build its customer base for direct-
  to-home satellite TV services and now has 180,000 subscribers;

- Nortel Networks, through the acquisition of Bay Networks, has
  once again been quick off the mark in acting to capitalize on the
  tremendous potential of the emerging capabilities of the Internet
  and burgeoning data services.

"We are positioning ourselves to offer individual and business customers across Canada a whole new range of products and services at competitive prices. BCE intends to increase its presence in all aspects of communications including emerging businesses such as information, technology, electronic commerce and new media," said Mr. Monty.

Excluding Nortel, BCE's revenues for 1998 grew by 6 percent over 1997. Including Nortel, BCE's consolidated revenues for 1998 were $27.5 billion, down 20 percent compared with $34.5 billion for 1997. The lower reported revenues in 1998 reflect the fact that Nortel Networks' revenues are no longer consolidated in BCE as of September 1, 1998. As a result of the merger of Nortel and Bay Networks, BCE's ownership of Nortel was reduced from approximately 51 percent to 41 percent. BCE continues to record its proportionate share of Nortel Networks' earnings (equity accounting).

Fourth Quarter Results

For the fourth quarter of e fourth quarter were $344 million ($0.50 per share), compared with a net loss of $2.5 billion ($4.01 per shated with the change from regulatory accounting revenues in 1998 do not include Nortel's revenue for the reasons outlined above.) Revenues for the fourth quarter of 1998 compared with 1997 actually grew by 5 percent excluding Nortel revenues for both periods.

sat Canada and Bell Satellite Services and the ion;

- Bell Canada's long distance market sha Services, built its

customer base on the strength of its expanded channel line-up.

     For the f in 1997. In the fourth quarter of 1998, the grored with 1997.
Revenue from long distance and neng.
     Earnings before interest, taxes, depreciation and amortization
(EBITDA) - increased slightly by 1.9 percent in 1998 as strong
competitive pressure on revenue waluding depreciation and amortization as
well aslemented in prior periods and lower long distancnd costs resulting from
volume increases.
     The comparison of Bell Canada's 1998 baseline earnings with tAP) to
replace
the former system of "regulatory" accounting provisions. As a result
of the change - which ha depreciation and amortization expense in 1998
ared on the
same basis with 1998 baseline earnireciation charges in 1998 as noted above.
Revenof
costs.
     The foregoing commentary has focused on Bell's "baseline"
performance. Taking into account a number of special charges and gains
for the 12-month period and the fourth quarter, net earnings available
to common shareholders were $799 million in 1998, compared with $852
million in 1997, before an extraordinary item. Fourth quarter net
earnings were approximately equal to baseline earnings in both 1998
and 1997. BCE Mobile
     BCE Mobile contributed a loss of $1 million in 1998, compared
with a contribution of $45 million to the Canadian Telecom group's
earnings in 1997. In the fourth quarter of 1998, BCE Mobile
contributed a loss of $6 million, compared with a positive
contribution of $1 million in the year-earlier period. As expected,
costs associated with the start-up of digital PCS service and the
migration of analog customers to the new technology led to lower
margins.
     Revenues for the 12-month period were $1.3 billion, a 3 percent
increase over 1997. Total wireless subscribers topped the 2 million
mark, an increase of 19 percent over the previous year. In the fourth
quarter of 1998, revenues decreased by 26 percent to $324 million from
$438 million for the same period in 1997 mainly due to lower equipment
sales, partly offset by higher wireless voice service revenues.

     NORTEL NETWORKS (NORTHERN TELECOM)

     Nortel Networks contributed $679 million to the baseline earnings
of BCE in 1998, compared with $576 million in 1997. In the fourth
quarter, Nortel contributed $294 million to BCE's baseline earnings,
compared with $278 million for the same period in 1997.
     As a result of Nortel's acquisition of Bay Networks in August
1998, the book value of BCE's investment in Nortel Networks increased,
notwithstanding a reduction of BCE's percentage ownership of Nortel.
This resulting "dilution gain", a non-cash item, amounted to $3.6
billion and is accounted for as an addition to BCE's income in 1998.
This amount was partially offset by other net special items, including
BCE's share of Nortel's amortization of Bay Networks intangibles. The
dilution gain and other special items are not included in BCE's
baseline earnings.

     INTERNATIONAL TELECOMMUNICATIONS

     The International Telecommunications group is comprised of Bell
Canada International (BCI), whose net earnings are excluded from
baseline earnings, and BCE's remaining international
telecommunications services interests. For the full 12 months of 1998,
this group contributed $471 million to BCE's earnings, compared with
$63 million in 1997. The contribution to earnings in the fourth
quarter was $48 million, compared with a loss of $24 million for the
same period in 1997. Bell Canada International
     BCI's revenues for the full-year 1998 were $772 million, up 85
percent from $418 million in 1997. The total number of subscribers in
companies in which BCI has an interest reached close to 3 million at
the end of 1998, up from 600 thousand a year earlier due principally
to BCI's mid-year investment in Hansol PCS, a Korean mobile telephony
company, which has 1.4 million subscribers. BCI's revenues for the
fourth quarter increased by 71 percent to $224 million from $131
million for the same period in 1997, largely due to increased revenues
from BCI's operations in Colombia, Brazil and Korea.
     BCE's share of BCI's loss bsidiaries, partially offset by costs
associatedmunications products and applications, satellite communications
and direct-to-home television services, systems integration expertise,
electronic commerce solutions, Internet access and high-speed data
services, and directories. Abroad, through Bell Canada International,
BCE provides communications services to an additional 3 million
customers in Asia and Latin America. BCE also has an extensive
international presence through its ownership in Nortel Networks, a
global leader in the design and building of communications networks,
as well as through Teleglobe, an international telecommunications
carrier. BCE shares are listed in Canada, the United States and
Europe.