Slide 1: Q4 2022 Results & 2023 Financial Guidance Call
Q4 2022 Results & 2023 Financial Guidance Call February 2, 2023
Slide 2: Safe harbour notice
Safe harbour notice Certain statements made in this presentation are forward-looking statements. These forward-looking statements include, but are not limited to, statements relating to BCE’s financial guidance (including revenues, adjusted EBITDA, capital intensity, adjusted EPS and free cash flow)
Slide 3: Executing on 2022 strategic priorities
Executing on 2022 strategic priorities • 3.1% revenue and adjusted EBITDA(1) growth, contributed to 1.2% higher y/y net earnings Financial • Achieved close to mid-point of guidance for revenue and adjusted EBITDA growth, despite macroeconomic-related media advertising and B2B pressures performance •
Slide 4: Executing on 2022 strategic priorities (cont’d)
Executing on 2022 strategic priorities (cont’d) • 489,901 total mobile phone net additions in 2022, up 66.2% High-value wireless • 41% of postpaid subscriber base on 5G-capable devices subscribers • Strong wireless financials reflect focus on profitable growth and customer base management – 7.3% ser
Slide 5: Executing on 2022 strategic priorities (cont’d)
Executing on 2022 strategic priorities (cont’d) • Significant CCTS improvement for the 7th consecutive year, leading all national service providers with a 38% decrease in customer complaints and a 17% y/y reduction in Bell’s Champion share of overall complaints(1) customer experience • Industry reco
Slide 6: Q4 operating metrics
Q4 operating metrics Bell Wireless Bell Wireline Bell Media 154,617 63,466 3.8% Postpaid net adds Retail Internet net adds Advertising revenue growth Up 41.2% y/y Up 33.3% y/y • Record quarterly mobile phone • Best Q4 performance in 18 years • Digital revenues up 46% y/y gross adds • ~70% of new act
Slide 7: 2023 strategic priorities
2023 strategic priorities • Generational network investments continue Build – Capex beginning to decrease from peak spend in 2022, but remains elevated compared to pre-2020 levels at ~$4.8B for 2023 • Growing FTTP footprint by ~650K locations in 2023 Best networks & services – ~85% of planned broadb
Slide 8: 2023 dividend increase
2023 dividend increase • 5.2% increase for 2023 to $3.87 per share 5.2% • Effective with Q1 payment on April 17, 2023 Common share dividend • Dividend payout ratio(1) to remain above historical 65%-75% target range during increase for 2023 broadband buildout program • Supported by 2023 free cash flo
Slide 9: Financial & Operating Results
Financial & Operating Results
Slide 10: Consolidated financial results
Consolidated financial results ($M) except per share data Q4’22 Y/Y 2022 Y/Y Revenue 6,439 3.7% 24,174 3.1% Service 5,353 2.1% 20,956 3.0% Product 1,086 12.4% 3,218 3.8% Adjusted EBITDA 2,437 0.3% 10,199 3.1% Margin(1) 37.8% (1.3 pts) 42.2% 0.0 pts Net earnings 567 (13.8%) 2,926 1.2% Statutory EPS 0
Slide 11: Wireless financials
Wireless financials Revenue ($M) • Service revenue increased 5.8% in Q4 on strong postpaid subscriber base growth and +6.5% higher y/y roaming revenue 9,588 8,999 +7.7% • Q4 product revenue up 11.7% y/y, driven by higher contracted transaction volumes 2,666 2,475 • Q4 adjusted EBITDA up 4.1% y/y Q4'
Slide 12: Wireline financials
Wireline financials Revenue ($M) • Residential Internet revenue up ~9% in Q4 -0.2% • Q4 wireline product revenue up 17.2% despite 12,178 12,148 ongoing global data equipment shortages +0.5% • Improved overall business wireline service 3,094 revenue decline in Q4 3,079 – SMB revenue higher y/y Q4'21
Slide 13: Media financials
Media financials Revenue ($M) • Total Q4 revenue 4.7% higher y/y +7.2% • Q4 advertising revenue up 3.8% y/y – Record sales for FIFA World Cup Qatar 2022TM 3,254 – Continued y/y out of home improvement +4.7% 3,036 • Digital revenue up 46% in Q4 on Crave and 889 TSN direct-to-consumer streaming growth
Slide 14: 2023 financial outlook
2023 financial outlook Bell
Slide 15: New reporting segmentation structure
New reporting segmentation structure • Wireless and Wireline operating segments being BCE combined to create Bell Communication and Technology Services (Bell CTS) – Wireless and Wireline service revenue and product revenue will continue to be reported separately – Adjusted EBITDA will be presented o
Slide 16: Revenue and adjusted EBITDA outlook
Revenue and adjusted EBITDA outlook BCE revenue ($M) • Growth ranges for 2023 remain wide to account for financial impact of a potential recession +1%-5% • Strong CTS contribution underpinned by +3.1% continued robust subscriber growth – Accelerating 5G cycle, immigration growth and multi-product 24
Slide 17: Pension funding and expense
Pension funding and expense Total pension cash funding(1) ($M) • Solvency ratio(3) of ~117% at YE2022 – Solvency surplus of ~$3.3B Payments under other post-employment benefit plans – Net impact on solvency position from a 100 bps Contributions to post-employment benefit plans change in discount rat
Slide 18: Tax outlook
Tax outlook BCE income taxes paid ($M) Income tax expense • 2023 statutory tax rate unchanged y/y at 26.8% • 2023 effective tax rate of ~26% ~800-900 – Income taxes of $967M in 2022 reflecting tax adjustments 749 of 10¢ per share(1) vs. no tax adjustments in 2023 Income taxes paid • Cash tax savings
Slide 19: Adjusted EPS outlook
Adjusted EPS outlook Adjusted EPS ($) • Adjusted EBITDA growth and lower pension financing cost moderating y/y decline in Tax adjustments adjusted net earnings(1) 3.35 • No tax adjustments in 2023, driving 10¢ of y/y 0.10 (3%)-(7%) adjusted EPS pressure 3.10-3.25 • Depreciation and amortization expe
Slide 20: Free cash flow outlook
Free cash flow outlook Free cash flow ($M) • Flow-through from higher y/y adjusted EBITDA • Lower y/y pension funding reflects full contribution holiday +2%-10% • Capex and CI ratio lower y/y, but remain higher +2.9% 3,125 than pre-2020 annual levels to – Total capex in 2023 ~$300M lower y/y 3,067 3
Slide 21: Balance sheet and liquidity position
Balance sheet and liquidity position Available liquidity(1) • $3.5B total available liquidity going into 2023 • Favourable debt maturity schedule allows for $3.5B opportunistic pre-financing of post-2023 incl. $99M in cash debt maturing and spectrum acquisitions *At December 31, 2022 – $1B of 2023 M
Slide 22: Financial targets for 2023
Financial targets for 2023 BCE 2022 guidance 2022 results 2023 guidance Revenue growth 1% to 5% 3.1% 1% to 5% Adjusted EBITDA growth 2% to 5% 3.1% 2% to 5% Capital intensity(1) ~21% 21.2% 19% to 20% Adjusted EPS growth(2) 2% to 7% 5.0% (3%) to (7%) Free cash flow growth(1),(3) 2% to 10% 2.9% 2% to 1
Slide 23: Appendix
Appendix Bell
Slide 24: Key financial assumptions for 2023
Key financial assumptions for 2023 BCE ($M except per share data) 2022 2023E Post-employment benefit plans service cost 249 ~210 Net return on post-employment benefit plans 51 ~100 Depreciation & amortization expense 4,723 ~4,900 to 4,950 Interest expense 1,146 ~1,375 to 1,425 Average effective tax
Slide 25: Non-GAAP and other financial measures
Non-GAAP and other financial measures BCE uses various financial measures to assess its business performance. Certain of these measures are calculated in accordance with International Financial Reporting Standards (IFRS or GAAP) while certain other measures do not have a standardized meaning under G
Slide 26: Non-GAAP and other financial measures (cont’d)
Non-GAAP and other financial measures (cont’d) Non-GAAP Financial Measures (cont’d) Adjusted net earnings Adjusted net earnings is a non-GAAP financial measure and it does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other
Slide 27: Non-GAAP and other financial measures (cont’d)
Non-GAAP and other financial measures (cont’d) Non-GAAP Financial Measures (cont’d) Available liquidity Available liquidity is a non-GAAP financial measure and it does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other issu
Slide 28: Non-GAAP and other financial measures (cont’d)
Non-GAAP and other financial measures (cont’d) Non-GAAP Financial Measures (cont’d) Free cash flow Free cash flow is a non-GAAP financial measure and it does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other issuers. We de
Slide 29: Non-GAAP and other financial measures (cont’d)
Non-GAAP and other financial measures (cont’d) Non-GAAP Financial Measures (cont’d) Net debt Net debt is a non-GAAP financial measure and it does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other issuers. We define net deb
Slide 30: Non-GAAP and other financial measures (cont’d)
Non-GAAP and other financial measures (cont’d) Non-GAAP Financial Measures (cont’d) Tax adjustments Tax adjustments is a non-GAAP financial measure and it does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other issuers. We
Slide 31: Non-GAAP and other financial measures (cont’d)
Non-GAAP and other financial measures (cont’d) Non-GAAP Financial Measures (cont’d) Total pension cash funding Total pension cash funding is a non-GAAP financial measure and it does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented
Slide 32: Non-GAAP and other financial measures (cont’d)
Non-GAAP and other financial measures (cont’d) Non-GAAP Ratios A non-GAAP ratio is a financial measure disclosed in the form of a ratio, fraction, percentage or similar representation and that has a non-GAAP financial measure as one or more of its components. Adjusted EPS Adjusted EPS is a non-GAAP
Slide 33: Non-GAAP and other financial measures (cont’d)
Non-GAAP and other financial measures (cont’d) Total of Segments Measures A total of segments measure is a financial measure that is a subtotal or total of 2 or more reportable segments and is disclosed within the Notes to BCE’s consolidated primary financial statements. Adjusted EBITDA Adjusted EBI
Slide 34: Non-GAAP and other financial measures (cont’d)
Non-GAAP and other financial measures (cont’d) Capital management measures A capital management measure is a financial measure that is intended to enable a reader to evaluate our objectives, policies and processes for managing our capital and is disclosed within the Notes to BCE’s consolidated finan