Slide 1: Q2 2016 Results Conference Call
Q2 2016 Results Conference Call August 4, 2016
Slide 2: Safe harbour notice
Safe harbour notice Certain statements made in this presentation are forward-looking statements. These statements include, without limitation, statements relating to our 2016 financial guidance (including revenues, adjusted EBITDA, capital intensity, adjusted EPS and free cash flow), the expected ti
Slide 3: George Cope, President & Chief Executive Officer
George Cope President & Chief Executive Officer
Slide 4: Q2 overview
Q2 overview 113k total wireless and wireline broadband net customer additions in traditionally soft quarter for activations Exceptional wireless financial performance with 7.7% growth in adjusted EBITDA and strong revenue flow-through driving 1.4 point increase in service margin to 48.0% 8th c
Slide 5: Wireless operating metrics
Wireless operating metrics Q2’16 Y/Y • 70k postpaid net additions, up 14.4% y/y Postpaid gross additions 317k (0.3%) • Lower postpaid churn reflects fewer customer contract expiries, network quality Postpaid net additions 70k 14.4% and subscriber base management Postpaid churn rate 1.15% 0.08 pts •
Slide 6: Wireline subscriber metrics
Wireline subscriber metrics Internet and IPTV subscribers (EOP) • Broadband market share growth in Q2 with 43k total IPTV and Internet net adds IPTV Internet 4,685k • 35.3k IPTV net adds 4,357k +7.5% – Promotional offers during Québec move period less rich y/y 3,419k – Minimal new footprint expansio
Slide 7: World's 1st fully wireless IPTV service
World’s 1st fully wireless IPTV service 4K PVR – now wireless • Bell is 1st provider in world to offer a completely wireless IPTV install with the enablement of wireless connectivity on Fibe TV’s 4K PVR • Enables in-home placement flexibility and faster install times • Bell is also 1st BDU in Canada
Slide 8: Global in-home Wi-Fi leadership
Global in-home Wi-Fi leadership Home Hub 3000 Modem • Best available wireless speed and coverage with 3x the Wi-Fi power and 2x more antennas than current modem • Both FTTN and FTTH compatible • Reduces number of stand-alone devices in a FTTH home from 5 to 1 • 30-minute decrease in installation tim
Slide 9: Bell Media
Bell Media • Generated positive revenue, adjusted EBITDA and simple FCF growth in Q2 • CTV completes another industry-leading year – 14 of top 20 programs in September-to-May 2015/2016 broadcast season, including 7 series in the top 10 – 4 of top 10 entertainment specialty TV services in primetime,
Slide 10: MTS acquisition update
MTS acquisition update • MTS shareholder approval obtained on June 23rd – Transaction supported by 99.66% of the votes cast at special shareholders meeting • Court approval obtained from Manitoba Court of Queen’s Bench on June 29th • Regulatory review process underway with Competition Bureau, ISED a
Slide 11: Glen LeBlanc, EVP & Chief Financial Officer
Glen LeBlanc EVP & Chief Financial Officer
Slide 12: Q2 financial review
Q2 financial review ($M) except per share data Q2’16 Y/Y YTD’16 Y/Y Revenue 5,340 0.3% 10,610 0.4% Service 4,989 1.3% 9,896 1.3% Product 351 (12.3%) 714 (10.2%) Adjusted EBITDA 2,268 3.2% 4,431 3.3% Margin 42.5% 1.2 pts 41.8% 1.2 pts Statutory EPS 0.89 (1.1%) 1.71 11.8% Adjusted EPS(1) 0.94 8.0% 1.7
Slide 13: Wireless financials
Wireless financials ($M) Q2’16 Y/Y YTD’16 Y/Y Revenue 1,735 2.2% 3,428 2.8% Service 1,610 4.6% 3,189 4.9% Product 114 (23.5%) 218 (21.0%) Operating costs 963 1.7% 1,895 0.5% Adjusted EBITDA 772 7.7% 1,533 7.3% Margin (service revenue) 48.0% 1.4 pts 48.1% 1.1 pts Capex 183 2.7% 345 (1.8%) Capital int
Slide 14: Wireline financials
Wireline financials ($M) Q2’16 Y/Y YTD’16 Y/Y Revenue 2,979 (2.1%) 5,962 (1.8%) Service 2,740 (1.8%) 5,462 (1.5%) Product 239 (5.9%) 500 (4.4%) Operating costs 1,706 4.0% 3,432 3.7% Adjusted EBITDA 1,273 0.6% 2,530 1.0% Margin 42.7% 1.1 pts 42.4% 1.1 pts Capex 733 (5.3%) 1,402 (3.7%) Capital intensi
Slide 15: Media financials
Media financials ($M) Q2’16 Y/Y YTD’16 Y/Y Revenue 779 5.3% 1,520 3.7% Operating costs 556 (5.9%) 1,152 (3.8%) Adjusted EBITDA 223 3.7% 368 3.4% Margin 28.6% (0.5 pts) 24.2% (0.1 pts) Capex 34 (13.3%) 55 (10.0%) Capital intensity 4.4% (0.3 pts) 3.6% (0.2 pts) Adjusted EBITDA-capex 189 2.2% 313 2.3%
Slide 16: Adjusted EPS
Adjusted EPS Adjusted EPS(1) • Higher y/y adjusted EBITDA contributed 6¢ to adjusted EPS growth in Q2 +8.0% $0.94 • Higher D&A expense consistent with a higher $0.87 capital asset base • Lower net interest expense due to lower average Q2'15 Q2'16 cost of debt Adjusted EPS walk down ($) Q2’15 Q2’16 •
Slide 17: Free cash flow
Free cash flow FCF • Healthy adjusted EBITDA growth driving higher y/y FCF of $934M +0.3% $934M • Higher capex spending in line with strategic $931M focus on broadband fibre and wireless LTE • Lower net interest paid reflects lower weighted- average cost of debt Q2'15 Q2'16 • Cash pension payments a
Slide 18: Outlook
Outlook 2016 guidance February 4 April 28 August 4 Revenue growth 1% to 3% On track On track Adjusted EBITDA growth 2% to 4% On track On track Capital intensity approx. 17% On track On track Adjusted EPS(1) $3.45 to $3.55 On track On track Growth y/y approx. 3% to 6% Free cash flow(2) $3,125M to $3,