Slide 1: Q3 2011 Results Conference Call
Q3 2011 Results Conference Call November 3, 2011
Slide 2: Safe harbour notice
Safe harbour notice Certain statements made in the attached presentation, including, but not limited to, statements relating to our 2011 financial guidance (including revenues, EBITDA, capital intensity, Adjusted EPS and free cash flow), annualized cost savings expected to result from workforce redu
Slide 3: George Cope, President & Chief Executive Officer
George Cope President & Chief Executive Officer
Slide 4: Solid wireless operating metrics
Solid wireless operating metrics Metrics Q3’11 Y/Y • Postpaid gross adds up 1.1% y/y Postpaid gross additions 372k 1.1% – Matched pricing and offers where required to maintain postpaid market share Total gross additions 526k (2.1%) – Prepaid gross adds down 9.3% y/y Postpaid net additions 127k (20.5
Slide 5: Launching portfolio of LTE handset devices
Launching portfolio of LTE handset devices HTC Raider 4G LTE LG Optimus LTE • Bell Mobility’s first LTE • Exclusive to Bell mobile device • First true HD superphone • Available starting Nov. 1st • Available in late November LTE/HSPA+ handsets instantly provide national coverage 5
Slide 6: Wireline voice erosion improves y/y
Wireline voice erosion improves y/y NAS • Annualized NAS erosion rate lower y/y, even as residential line losses increased in Q3’11 Residential Business Total – Residential performance impacted by competitors’ Annualized 8.1% aggressive back-to-school offers and increasing erosion 7.7% 6.2% rate 5.1
Slide 7: TV subscriber acquisitions driven by Fibe TV
TV subscriber acquisitions driven by Fibe TV TV net additions Retail TV ARPU Bell TV revenues $M +40.5% 26k +1.5% $74.45 +3.9% $454 $437 $73.34 19k Q3'10 Q3'11 Q3'10 Q3'11 Q3'10 Q3'11 • Net adds of 26k, up 41% y/y on strong • Solid financial performance in Q3’11 gross activations – TV revenue growth
Slide 8: Wireline data
Wireline data Total data revenue Data service revenue • Data service revenue essentially flat y/y – Up ~1% y/y when normalized for portal revenue $M $M reclassification to Bell Media $972 (4.3%) $808 (0.5%) $930 $804 – Total data revenue down 4.3% in Q3’11 on lower y/y business data product sales $7
Slide 9: Executing on cost reduction imperative
Executing on cost reduction imperative Wireline cost reductions(1) in Q3 Workforce reduction • Total savings of ~$80M • ~1,200 management positions • Lower labour and support group costs, and • Departures completed by end of October reduced marketing/sales expenses • Reductions achieved through vaca
Slide 10: Bell Media performing well
Bell Media performing well Subscriber revenues Advertising revenues • Strong TV ratings maintained across all conventional and specialty channels y/y growth y/y growth ~4% ~1% • Mobile TV content expanded with live access to CTV and CTV Two • Launched TSN Radio in Montreal and Winnipeg markets Q3'10
Slide 11: Q3 summary
Q3 summary • Executing on 5 Strategic Imperatives • Solid wireless operating metrics – Healthy postpaid subscriber growth with accelerating smartphone mix – Blended ARPU up 2.7% y/y – Step-up in wireless EBITDA trajectory • LTE wireless network launched on Sept.14th • Wireline continue to perform we
Slide 12: Siim Vanaselja, Chief Financial Officer
Siim Vanaselja Chief Financial Officer
Slide 13: Q3 financial review
Q3 financial review Bell Q3’11 Y/Y • Revenue growth of 10.1% includes Bell Media Revenue $4,313M 10.1% • Excluding Bell Media, service revenue up 1.2% y/y Service $3,936M 12.7% – Reflects ~$11M of portal revenues moved to Bell Media Product $377M (11.0%) EBITDA • Total product revenues down 11% y/y
Slide 14: Wireless financials
Wireless financials • Service revenue growth of 6.1% in Q3’11 – Wireless data revenue up 34% y/y driven by accelerating smartphone adoption and increased usage – Blended ARPU up 2.7%, reflecting an increased mix of higher-value postpaid customers • Product revenues down 1.0%, despite higher y/y smar
Slide 15: Wireline financials
Wireline financials ($M) Q3’11 Y/Y • Solid residential performance – Internet and TV revenues up 8% and 3.9%, respectively Revenues 2,610 (3.1%) Voice 933 (5.1%) • Business Markets results mixed Data -- service 804 (0.5%) – Lower data product sales y/y, due to reduced spending Data -- product 126 (2
Slide 16: Media results on track with expectations
Media results on track with expectations Bell Media Q2’11 Q3’11 • Healthy subscriber revenue growth of ~4% y/y – Reflects partial impact of TSN rate increase ($M) – Digital growth driven by Mobile TV and online video Revenues 529 435 • Advertising revenues up ~1% y/y EBITDA (reported) 123 81 – Suppo
Slide 17: Strong Adjusted EPS
Strong Adjusted EPS Adjusted EPS(1) • Adjusted EPS up 14.8% y/y, or $0.12 per share $0.93 – Excluding tax adjustments, Adjusted EPS grew 10.8% y/y +14.8% $0.81 $0.21 +10.8% • Higher y/y EBITDA drives $0.09 of EPS growth $0.16 $0.72 • Increased depreciation and net interest expense $0.65 due to CTV a
Slide 18: Free cash flow
Free cash flow Free cash flow • FCF of $1,005M in Q3’11, up 25% y/y on higher EBITDA and improved working capital +$199M • Investing in broadband platforms, while $1,005M maintaining capex spending flat y/y $806M – Wireless CI of 11.2%; Wireline CI of 18.2% in Q3’11 – On track to achieve CI of ~16%
Slide 19: Updated 2011 financial guidance
Updated 2011 financial guidance(1) May 12 November 3 • On track to achieve revenue and Guidance Guidance EBITDA targets Revenue growth 9% to 11% No change – Solid competitive position across all product lines and in all markets EBITDA growth 8% to 10% No change • Adjusted EPS guidance increased – Lo
Slide 20: Revised key financial assumptions for 2011
Appendix Revised key financial assumptions for 2011 Bell May 12 November 3 Current service pension cost (above EBITDA) ~$190M No change Pension finance costs (below EBITDA) ~($60M) No change Cash pension funding ~$425M No change Cash taxes ~$225M ~$175M Net interest paid ~$650M No change Y/E cash ba