BCE Announces Third Quarter Earnings.

MONTREAL--(BUSINESS WIRE)--Oct. 28, 1998-- BCE(ME:BCE.) (TSE:BCE.) (VSE:BCE.) (NYSE:BCE) In announcing third quarter results for BCE Inc., Jean C. Monty, President and Chief Executive Officer, said: "The results for the quarter demonstrate the significant progress we've made in many areas of our business, including an 18 per cent increase, year-over-year, in our baseline earnings. Bell Canada saw its first gain in long distance market share since the introduction of competition in 1992; Nortel Networks increased its revenues from continuing operations by 20 percent; Bell Mobility continued to lead the market with close to 2 million subscribers to its cellular, PCS and paging services; BCI reached 2.2 million subscribers; and our satellite TV service, Bell ExpressVu, is expanding its channel line up for a growing customer base."

BCE unaudited earnings, before special items (baseline earnings), were $383 million ($0.60 per common share) for the quarter ended September 30, 1998, up 18 percent from $325 million ($0.51 per common share) for the same period in 1997.

BCE recorded a one-time (non-cash) dilution gain of $3.6 billion as a result of Nortel's acquisition of Bay Networks. This one-time gain was partially offset by special items of $357 million. This compares with a net gain of $103 million for the same period in 1997. Net earnings, including one-time gains and special charges, were $3.6 billion ($5.70 per common share) compared with $428 million ($0.67 per common share) in the third quarter of 1997.

For the nine months ended September 30, 1998, unaudited baseline earnings before special items, were $1.1 billion ($1.65 per common share) compared with $809 million ($1.27 per common share) last year. Net earnings for the nine-month period, including special items, were $4 billion ($6.34 per common share), compared with $943 million ($1.48 per common share) for the first nine months of 1997.

BCE's total consolidated revenues for the third quarter were $6.6 billion, compared with $8.1 billion for the same period last year. Total revenues for the nine-month period were $23.7 billion, compared with $24.2 billion for the same period last year.

The lower reported revenues this quarter and for the nine month period reflect the fact that Nortel Networks' revenues are no longer consolidated 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). Excluding Nortel Networks, BCE's revenues increased by 7 percent in the third quarter and by 6 percent for the nine month period.

RESULTS BY GROUP CANADIAN TELECOM

The BCE Canadian Telecommunications group consists of Bell Canada, the domestic operations of Tele-Direct, BCE Mobile and other telecommunications interests including The CGI Group Inc., Telesat Canada and Bell Satellite Services. The highlights of the quarter include: overall revenues increased 5 percent; Bell Canada's long distance market share increased from 61.5 percent at the end of the second quarter to 63 percent at the end of this quarter, mainly due to the success of its residence and business savings plans; and Bell ExpressVu, a division of Bell Satellite Services, added 34,000 new subscribers to its direct-to-home satellite television service, for a total of 119,000 at September 30, 1998.

In the thirtions (EBS) unit of Bell Emergis to MPACT Immedins and charges for restructuring and other costs reported in the second quarter, the contribution was $913 mnada

Bell Canada's contribution to the last year, an increase of 38 percent. Including special one-time items, Bell Canada's nine month earnings wrge reported in the second quarter of 1998, partthe nine-month period, operating revenues were service rate increase, growth in network access services and in optional services, and increased payments by private line digital service users. Long distance and network services revenues decreased by 8 percent due to lower average long distance prices, partially offset by a 6 percent increase in volumes. Revenues from data services increased by 17 percent in the third quarter.

Total operating expenses decreased by 6 percent in the third quarter and by 5 percent for the year-to-date. Lower total operating expenses were primarily due to lower depreciation and amortization associated with changes in accounting procedures introduced on January 1, 1998. BCE Mobile

BCE Mobile's third quarter contribution to the Canadian Telecommunications group was $3 million, compared with $16 million for the same quarter last year. As expected, costs associated with PCS service start-up and migrating analog customers to the new technology led to lower margins. On a nine-month basis, the contribution from BCE Mobile was $5 million in 1998 compared with $44 million in 1997.

Revenues at BCE Mobile grew 20 percent in the third quarter to $337 million from $282 million for the same period in 1997. Revenues for the nine-month period were $971 million, up 19 percent from $815 million during the same period last year. Total subscribers are now at 1.9 million, an increase of 17 percent over the same period last year.

NORTEL NETWORKS (NORTHERN TELECOM)

Excluding a one-time gain on the reduction of BCE's percentage ownership partially offset by other net special items, Nortel Networks contributed $136 million to BCE's consolidated earnings for the third quarter of 1998, up 24 percent from $110 million for the same period in 1997. On a nine-month basis, excluding gains and other special items, Nortel Networks' net contribution was $392 million in 1998, an increase of 32 percent from $298 million in 1997.

INTERNATIONAL TELECOMMUNICATIONS

The International Telecommunications group is comprised of Bell Canada International (BCI), the public company, and BCE's remaining international telecommunications interests. The group contributed a loss of $55 million, including a loss of $53 million for BCI. This compares with net earnings of $98 million for the third quarter in 1997, including a net gain of $103 million. Bell Canada International

BCI's revenues for the quarter increased by 71 percent to $205 million from $120 million for the same period in 1997, largely due to increased revenues from BCI's cellular operations in Colombia and in Brazil. The total number of subscribers has reached more than 2.2 million at the end of the third quarter, double the previous quarter due to BCI's investment in Hansol (Korea) which added over 1 million subscribers.

For the quarter, BCE's share of BCI's loss was $53 million compared with a loss of $23 million for the same period last year. The increased loss was mainly attributable to Occel, a leading cellular telephone operator in Colombia. Occel's results were included in BCI's results for the first time in the second quarter.

BCE is Canada's largest telecommunications company. Through its operations in communications services, BCE provides residence and business customers in Canada with wireline and wireless telecommunications 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 2.2 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, and through Teleglobe, an international telecommunications carrier. BCE shares are listed in Canada, the United States and Europe.

                        ($ millions, except per share amounts)
                              Third Quarter     Nine Months
For the periods ended
 September 30               1998      1997     1998      1997
_____________________________________________________________
Revenues(i)
Canadian Telecommunications
    - Bell Canada          2,623     2,641    7,796     7,742
    - BCE Mobile             337       282      971       815
    - Other Canadian Telecom 391       192      838       575
_____________________________________________________________
                           3,351     3,115    9,605     9,132
_____________________________________________________________
Nortel Networks            3,210     4,843   14,253    14,657
_____________________________________________________________
International Telecommunications
    - Bell Canada
       International         205       120      548       287
    - Other International
       Telecom                23        26       59        63
_____________________________________________________________
                             228       146      607       350
_____________________________________________________________
Corporate                      7         8       23        23
_____________________________________________________________
Intercompany eliminations)  (199)        -     (749)        -
_____________________________________________________________
Total revenues             6,597     8,112   23,739    24,162
_____________________________________________________________
Net earnings(i)
Canadian Telecommunications
    - Bell Canada            333       230      477       602
    - BCE Mobile               3        16        5        44
    - Other Canadian Telecom  20        27       88        72
_____________________________________________________________
                             356       273      570       718
_____________________________________________________________
Nortel Networks            3,405       110    3,299       303
_____________________________________________________________
International Telecommunications
    - Bell Canada
       International         (53)      (23)     (89)      (50)
    - Other International
       Telecom                (2)      121      512       137
_____________________________________________________________
                             (55)       98      423        87
_____________________________________________________________
Corporate                    (27)      (35)    (115)     (110)
_____________________________________________________________
Intercompany eliminations    (16)        -      (68)        -
_____________________________________________________________
Net earnings               3,663       446    4,109       998
Dividends on preferred
 shares                       24        18       69        55
_____________________________________________________________
Net earnings applicable
 to common shares          3,639       428    4,040       943
_____________________________________________________________
Earnings per common share   5.70      0.67     6.34      1.48
_____________________________________________________________
Operating cash flow per
 common share(ii)           1.20      1.98     4.91      5.73
_____________________________________________________________

(i) Effective January 1, 1998, the Directories segment is no longer
shown separately.  The directory business division of Tele-Direct
(Publications) Inc. is now included in Bell Canada.  Other
directory operations are included in Other Canadian Telecom and
Other International Telecom.  Previously reported amounts have been
reclassified to conform with the current presentation.

(ii) After payment of preferred dividends.