Bce Inc. · TSX:BCE
Bce — TD Newcrest Communications & Media Conference 2009
33 slides from Bce's conference presentation, May 21, 2009
Slide 1: TD Newcrest Communications & Media Conference 2009
TD Newcrest Communications & Media Conference 2009 May 21, 2009 George Cope President & Chief Executive Officer
Slide 2: Safe harbour notice
Safe harbour notice This presentation may contain forward-looking statements with respect to items such as revenue, EBITDA, earnings per share, free cash flow, capital intensity, capital structure model and other statements that are not historical facts. Several assumptions were made by BCE in prepa
Slide 3: 5 strategic imperatives
5 strategic imperatives Our goal Strategic imperatives 1 “To be 1 Achieve a competitive cost structure 2 recognized by 2 3 Accelerate wireless customers as Canada’s leading 3 4 Leverage wireline momentum communications 5 company” 4 Invest in broadband network and services 5 Improve customer service
Slide 4: Achieve a competitive cost structure
Strategic imperative 1 : Achieve a competitive cost structure
Slide 5: Streamlined organization
Streamlined organization Bell wireline labour force Streamlined organizational structure 9 Executive team from 17 to 12 3,500 9 30% reduction in SVP and VP positions 9 Removed 3 layers of management 9 Reduced 8% of workforce and 15% of management 36,000 32,500 9 Pay for performance culture – Managem
Slide 6: Driving productivity
Driving productivity Efficiency and contracts Insourcing, outsourcing and offshoring Field force productivity Non-customer affecting − 2,000 new Bell trucks Call centre/IT/back office − GPS-equipped for better efficiency Call centres consolidated from 33 to 27 with Renegotiated contracts w
Slide 7: Disciplined capital management
Disciplined capital management Capital intensity Rigorous new capital governance – single company priorities list Q1 Capital Intensity on track at 13.3% 20%-20.4% 19.3% 17.7% 17.7% 16.5% 16.4% 15%-16% 13.5%-14.6% $2.5B 2008 2009E 2008 2009E* 2008 2009E* 2008 2009E* Source: Company guidance and s
Slide 8: Accelerate wireless
Strategic imperative 2 : Accelerate wireless
Slide 9: Wireless performance
Wireless performance Gross adds Postpaid net adds Q1 2009 highlights 366K 35K 351K 28K Gross additions up 4.3% – Postpaid gross additions up 6.1% Postpaid net additions up 25% – Improved postpaid churn ARPU declines $0.80 EBITDA margin margin* ** EBITDA – Impacted by economy 44.0% $434M 42.9% $410M
Slide 10: Wireless EBITDA growth in difficult environment
Wireless EBITDA growth in difficult environment Wireless EBITDA growth Three consecutive quarters of leading EBITDA growth versus peers Reflects lower retention spend and disciplined handset pricing 15.8% 13.6% 10.8% 6.8% 6.0% 5.9% 1.0% 0.7% 0.6% 0.2% Q2’08 Q3’08 Q4’08 Q1’09 Q2’08 Q3’08 Q4’08 Q1
Slide 11: Accelerating wireless data
Accelerating wireless data First NHL mobile experience of its kind in North America Live audio and video highlights More than a billion messages a month 1 text for every phone call 1st location aware mobile portal in North America Live content on Bell home page by location 2 million TV
Slide 12: Acquisition of The Source on track to close in Q3
Acquisition of The Source on track to close in Q3 Distribution game-changer The Asset Pro-forma exclusive carrier points of distribution(1) 756 retail stores nationally and ~3,000 1,479 employees Revenues(2) of $643M; EBITDA(2) of $27M 7-year track record of profitability ~1100 ~800 723 Benefi
Slide 13: Acquisition of Virgin Mobile's 50% stake
Acquisition of Virgin Mobile’s 50% stake Rationale 1 Significant brand awareness Leverage Virgin Continued global marketing support from Virgin Group Brand Long-term extension of brand licensing agreement Maximizes Bell’s flanker brand flexibility 2 Virgin’s strong brand appeal should driv
Slide 14: Next generation wireless network
Next generation wireless network Global standard Path to next generation data services Customer More choice in handsets benefits Improved rural coverage International roaming Bell/TELUS agreement lowers capital requirement Network operating cost savings Financial Lower handset costs
Slide 15: Leverage wireline momentum
Strategic imperative 3 : Leverage wireline momentum
Slide 16: Slowing telephone line losses
Slowing telephone line losses Fewer local line losses Significant improvement Line losses improve for six straight Erosion rate 6.6% quarters Residential Business 5.3% Economy softened SMB results Bundles contributing to improving trend in residential NAS erosion Steady level of winbacks 106
Slide 17: Strong Bell TV growth
Strong Bell TV growth Revenue per sub EBITDA Solid revenue and EBITDA growth $68.84 $92M Revenue up 8.7% $64.65 $77M EBITDA up 19.5% Industry-leading churn of 1.1% Over 1.8M TV subscribers Maintaining HD leadership Most HD channels in Canada HD penetration over 25% PVR penetration over
Slide 18: New TV distribution channel
New TV distribution channel Agreement with TELUS to distribute satellite TV in BC and AB – Confirms success and quality of Bell TV – Supports industry-leading offering, including the most HD channels of any television provider in Canada Takes advantage of TELUS’ distribution network in the West
Slide 19: Accelerated fibre broadband investment
Accelerated fibre broadband investment By 2012: 5.0M homes an Pl t ed a ler e A cc By 2013: 4.6M homes n 2.5M homes Pla today $1 Billion+ invested 2009 2010 2011 2012 2013 19
Slide 20: Best-in-class wireline EBITDA performance
Best-in-class wireline EBITDA performance Wireline EBITDA growth Telco peer performance benchmark: LTM ended Q1’09 -1.6% -3.0% -5.9% -6.2% Leading our North American peers 20
Slide 21: Invest in broadband networks & services
Strategic imperative 4 : Invest in broadband networks & services
Slide 22: Building platforms for the future
Building platforms for the future Rolling out HSPA Investing in FTTN Ready by early 2010 Accelerating FTTN deployment Accelerated time to market Advanced by one year Joint build reduces capital ~$700M cumulative investment requirement over next 3 years Global standard and path to next 17
Slide 23: Improve customer service
Strategic imperative 5 : Improve customer service
Slide 24: New service model
New service model Full in-home Better in-store service experience Quality focus Self-serve convenience 24
Slide 25: Service just got better
Service just got better Service enhancements Better results 95% success rate Same Day Next Day Great improvement over 2008 Customers prepared to pay for premium service Express Install Solid momentum with new orders increasing monthly Offered to all new DSL subscribers Full Install Targe
Slide 26: Measurable call centre improvement
Measurable call centre improvement Same Day / Next Day Fewer repair calls Call volumes drop 95% (14%) 14% fewer repair calls per year 86% Customer satisfaction increases Internet satisfaction up 33% Key service desks 2007 Q1'09 Q1'08 Q1'09 move onshore Repair call satisfaction ~1 million calls
Slide 27: More to come
More to come SPA (Service & Product Assistance) Move Concierge Service Full wireless service, warranty and repair in store One Bell agent dedicated to 3-Product customers 27
Slide 28: Capital structure & Results review
Capital structure & Results review
Slide 29: Capital structure model
Capital structure model Maintain strong Solid investment grade metrics 1 credit profile Ample access to short- and long-term capital Ensure ample Strong, reliable cash flow generation 2 liquidity Ability to self-fund debt maturities Return cash to Target dividend payout ratio of 65%-75% of
Slide 30: Executing on our capital structure model
Executing on our capital structure model 1 5% dividend increase > February 11, 2009 9 2 5% share buyback completed > May 5, 2009 9 3 $1.4B three-year credit facility renewed > May 7, 2009 9 4 Repay $1.5B 2009 debt maturities from cash on hand > Balance of 2009 9 Balancing shareholder returns with st
Slide 31: Q1 financial results consistent with strategy
Q1 financial results consistent with strategy Bell Q1'09 Y/Y Revenues essentially flat y/y – Service revenues up 0.2% Revenues $3,623M (0.5%) – Product sales down 8.2% EBITDA $1,426M 0.3% Managing through economic downturn EBITDA margin 39.4% 0.3 pts Stable EBITDA y/y Capex $482M (5.7%) High
Slide 32: What's changed at Bell since July 2008
What’s changed at Bell since July 2008 Focus on cost… … balanced with investments in strategic imperatives 9 New organizational structure 9 Changed culture to pay for performance 9 Removed 3 layers of management 9 New HSPA wireless network build 9 Launched new satellite for HD capacity 9 Reduced wir
Slide 33: Today just got better
today just got better Bell
BCE — TD Newcrest Communications & Media Conference 2009 on 6ix