Slide 1: Q3 2012 Results Conference Call
Q3 2012 Results Conference Call November 1, 2012
Slide 2: Safe harbour notice
Safe harbour notice Certain statements made in the attached presentation, including, but not limited to, statements relating to our 2012 financial guidance (including revenues, EBITDA, capital intensity, Adjusted EPS and free cash flow), our IPTV footprint expansion, BCE’s proposed acquisition of As
Slide 3: George Cope, President & Chief Executive Officer
George Cope President & Chief Executive Officer
Slide 4: Solid Q3 results – strong momentum continues
Solid Q3 results – strong momentum continues Strong wireless and media performance helping to offset mature traditional wireline voice business Wireless postpaid net adds of 149k up 17.1% as EBITDA grows 15.2% Bell Media driving significant EBITDA and cash flow growth Wireline margin held at
Slide 5: Significant growth in total RGU net activations in Q3
Significant growth in total RGU net activations in Q3 Net customer activations • Total RGUs up 49k y/y as wireless, TV and Internet loadings exceed NAS losses Wireless TV 50k • Excluding NAS, total net activations of Internet NAS 159k up 42% y/y in Q3’12 1k – Record Q3 wireless gross activations and
Slide 6: Continued strong wireless performance
Continued strong wireless performance Metrics Q3’12 Y/Y • 149k postpaid net additions, up 17.1% y/y Postpaid net additions 149k 17.1% • Lowest postpaid churn rate in 10 quarters Postpaid churn rate 1.2% 0.3 pts Blended churn rate 1.6% 0.4 pts • ARPU increase of 4.2% driven by smartphone Smartphones
Slide 7: Wireline data
Wireline data Fibe TV net additions Internet net additions Data revenues $M 43.0k +0.1% 2,112k $1,386 +112% 13.4k $1,384 20.3k (0.1k) Q3'11 Q3'12 Q3'11 Q3'12 Q3'11 Q3'12 • Fibe TV net adds more than double • Internet net adds of 13.4k highest in • Overall data results continue to be y/y with 43k net
Slide 8: Wireline voice
Wireline voice NAS line losses • Residential NAS losses improve 11.3% y/y – Continued strong Fibe TV pull-through supporting Residential Business retention and winback activities – Wireless substitution increasing, but at modest pace 95.3k 84.5k • Business NAS losses up 9.3k y/y – Increased competit
Slide 9: Bell Media
Bell Media Advertising revenues Subscriber revenues • Advertising revenues driven by Olympics y/y growth y/y growth – 95% of Canadians watched, on average, 21 hours of Games coverage – 3.4M hours of video content watched on digital platforms and 1.1M apps downloaded +20% +32% • Subscriber revenues n
Slide 10: Corporate developments update
Corporate developments update • Acquisition of MLSE completed on August 22 • Total cash commitment of $398M for Bell • Aggregate 37.5% interest in MLSE • Premier portfolio of Canadian sports assets with MLSE and Montréal Canadiens providing access to broadcast rights across multiple platforms • Acqu
Slide 11: Strategic Imperatives improving Bell’s operating mix
Strategic Imperatives improving Bell’s operating mix Bell’s revenue mix Q3’12 • 81% of Bell revenues generated by Internet / our growth services: Wireless, TV, Wireline Data Internet / Wireline Data, Media 26% 81% Media from Growth Wireline • Growth services revenue up $165M, 11% Services Voice or 5
Slide 12: Siim Vanaselja, Chief Financial Officer
Siim Vanaselja Chief Financial Officer
Slide 13: Q3 financial review
Q3 financial review Bell Q3’12 Y/Y YTD’12 Y/Y • Service revenue up 2.1% on strong y/y wireless and media growth Revenue $4,392M 1.8% $13,065M 4.0% – Product revenue down 1.1%, due to softer wireless data product sales in business EBITDA $1,688M 5.2% $5,009M 5.1% Margin 38.4% 1.2 pts 38.3% 0.4 pts •
Slide 14: Wireless financials
Wireless financials ($M) Q3’12 Y/Y YTD’12 Y/Y Revenue 1,434 7.1% 4,115 6.4% Service 1,307 6.4% 3,769 6.3% Product 113 10.8% 306 4.4% Operating costs 880 (2.6%) 2,484 (0.8%) EBITDA 554 15.2% 1,631 16.3% Margin (service revenue) 42.4% 3.2 pts 43.3% 3.8 pts Capex 152 (1.3%) 460 (6.7%) EBITDA-Capex 402
Slide 15: Wireline financials
Wireline financials ($M) Q3’12 Y/Y YTD’12 Y/Y Revenues 2,505 (4.0%) 7,612 (3.8%) Voice 846 (9.3%) 2,607 (8.5%) Data(1) 1,386 0.1% 4,199 0.2% Equipment & other 195 (8.0%) 572 (10.5%) Operating costs 1,527 2.6% 4,623 2.8% EBITDA 978 (6.2%) 2,989 (5.4%) EBITDA margin 39.0% (1.0 pts) 39.3% (0.6 pts) Cap
Slide 16: Bell Media financials
Bell Media financials ($M) Q3’12 Y/Y • Revenue growth of 25.5% in Q3’12 Revenues 546 25.5% • Advertising revenues up 20% y/y – Driven by Olympics and radio ad sales growth in key markets Operating costs 390 (10.2%) • Subscriber fee revenues up 32% y/y on EBITDA (reported) 156 92.6% market-based spec
Slide 17: Adjusted EPS
Adjusted EPS Adjusted EPS(1) • Adjusted EPS, before tax adjustments, up 5.6%, $0.93 or $0.04 per share y/y $0.76 $0.21 +5.6% • Higher y/y EBITDA driving $0.07 of EPS growth $0.76 $0.72 • Increased depreciation expense due to capital investments in LTE and Fibe TV Q3'11 Q3'12 Tax adjustments • Intere
Slide 18: Free cash flow
Free cash flow Free cash flow • Consistent with plan, FCF of $684M in Q3’12 $M down $321M y/y $1,815 $1,815 +$118 – Reflects catch-up in A/R cash collections in Q3’11 $1,697 following settlement of Canada Post Strike $1,697 -$321 – Build-up in A/R balance at Bell Media from $1,005 Olympics and retro
Slide 19: Outlook
Outlook • No fundamental change in overall outlook • Strong Wireless and Media operating momentum continues • Consolidated Bell EBITDA growth continues to track to higher end of guidance • Dividend increase announced on Aug.8th supported by healthy free cash flow and earnings 2012 Guidance (1) Febru
Slide 20: Revised key financial assumptions for 2012
Appendix Revised key financial assumptions for 2012 Bell Feb. 9 Aug. 8 Nov. 1 Employee benefit plans service cost (above EBITDA) ~$190M No change ~$170M Net employee benefit plans financing cost (below EBITDA) ~($100M) No change No change Cash pension funding ~$375M No change No change Cash taxes ~$