Letters to Shareholders Bell Canada Enterprises  2004  Annual Report 2 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 