Slide 1: Q4 2016 Results & 2017 Financial Guidance Call
Q4 2016 Results & 2017 Financial Guidance Call February 2, 2017
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 BCE’s 2017 financial guidance (including revenues, adjusted EBITDA, capital intensity, adjusted EPS and free cash flow), our expected
Slide 3: George Cope, President & Chief Executive Officer
George Cope President & Chief Executive Officer
Slide 4: Q4 overview
Q4 overview Service revenue growth accelerates to 2.3% — best top-line performance since Q3’15 BCE adjusted EBITDA up 2.3% on positive growth across all 3 Bell operating segments Continued leading wireless subscriber and financial results – 112k postpaid net additions, up 23.1% y/y – 7.2% incr
Slide 5: Wireless operating metrics
Wireless operating metrics Operating metrics Q4’16 Y/Y 2016 Y/Y • Record Q4 postpaid gross adds, up 11.9% y/y Postpaid gross additions 434k 11.9% 1,408k 5.2% • 112k postpaid net adds, up 23.1% y/y Postpaid net additions 112k 23.1% 315k 18.8% – Churn up on deactivation of 18.5k, $30 ARPU customers fr
Slide 6: Wireless network speed and coverage leadership
Wireless network speed and coverage leadership LTE Advanced (LTE-A) coverage • Expanding LTE-A network footprint to ~83% of population by YE2017 % of Canadian population – 4G LTE network with speeds of up to 150 Mbps ~83% expanding to 99% of Canadians, up from 97% in 2016 73% 48% • Carrier aggregati
Slide 7: Wireline subscriber metrics
Wireline subscriber metrics Internet and IPTV subscribers (EOP) • Continued broadband growth in Q4 with 18.4k total Internet net adds IPTV Internet 4,815k – ~30k Internet net adds in IPTV footprint 4,596k +4.8% – Total Internet service revenue up 7.0% y/y 3,477k • 35.9k IPTV net adds 3,413k – Minima
Slide 8: Broadband Internet and IPTV product leadership
Broadband Internet and IPTV product leadership Bell fibre footprint • FTTP footprint expanding to ~3.5M of 8.4M total fibre locations passed by YE2017 FTTP FTTN – Gigabit Fibe capability in approximately one-third of total Locations passed residential households in Bell’s wireline footprint (incl. D
Slide 9: Bell Media
Bell Media • Industry-leading financials for Bell Media – Positive revenue, adjusted EBITDA and adjusted EBITDA-capex growth generated in FY2016 • Continued leading viewership and TV ratings – CTV was #1 network for 13th consecutive fall season, broadcasting 10 of 20 top programs – 12 of top 20 ente
Slide 10: Raising common dividend 5.1% to $2.87 per share
Raising common dividend 5.1% to $2.87 per share Annualized common dividend per share • Fully supported by projected FCF 97% growth in 2017 increase $2.87 • FCF dividend payout ratio maintained within 65% to 75%, even without $2.73 contribution from MTS acquisition • 13 common share dividend increase
Slide 11: Glen LeBlanc, EVP & Chief Financial Officer
Glen LeBlanc EVP & Chief Financial Officer
Slide 12: Q4 financial review
Q4 financial review ($M) except per share data Q4’16 Y/Y 2016 Y/Y Revenue 5,702 1.8% 21,719 1.0% Service 5,169 2.3% 20,090 1.7% Product 533 (3.2%) 1,629 (7.2%) Adjusted EBITDA 2,121 2.3% 8,788 2.8% Margin 37.2% 0.2 pts 40.5% 0.8 pts Net earnings 699 29.0% 3,087 13.1% Statutory EPS 0.75 29.3% 3.33 11
Slide 13: Wireless financials
Wireless financials ($M) Q4’16 Y/Y 2016 Y/Y Revenue 1,883 6.4% 7,159 4.1% Service 1,702 7.2% 6,602 5.7% Product 170 (0.6%) 515 (12.7%) Operating costs 1,209 (7.1%) 4,156 (2.7%) Adjusted EBITDA 674 5.1% 3,003 6.2% Margin (service revenue) 39.6% (0.8 pts) 45.5% 0.2 pts Capex 193 0.0% 733 (2.4%) Capita
Slide 14: Wireline financials
Wireline financials ($M) Q4’16 Y/Y 2016 Y/Y Revenue 3,137 (0.8%) 12,104 (1.3%) Service 2,770 (0.3%) 10,980 (0.9%) Product 367 (4.2%) 1,124 (4.4%) Operating costs 1,878 1.8% 7,062 2.7% Adjusted EBITDA 1,259 0.9% 5,042 0.8% Margin 40.1% 0.6 pts 41.7% 0.9 pts Capex 778 (5.0%) 2,936 (4.5%) Capital inten
Slide 15: Media financials
Media financials ($M) Q4’16 Y/Y 2016 Y/Y Revenue 845 3.6% 3,081 3.6% Operating costs 657 (4.0%) 2,338 (3.9%) Adjusted EBITDA 188 2.2% 743 2.8% Margin 22.2% (0.3 pts) 24.1% (0.2 pts) Capex 22 8.3% 102 (1.0%) Capital intensity 2.6% 0.3 pts 3.3% 0.1 pts Adjusted EBITDA-capex 166 3.8% 641 3.1% • Total Q
Slide 16: 2016 financial wrap-up
2016 financial wrap-up ($M) 2016 Target Met • Solid top-line performance driven by except per share data service revenue growth of 1.7% Revenue 21,719 Growth y/y 1.0% 1%-3% • Adjusted EBITDA growth in line with plan at around mid-point of guidance range Adjusted EBITDA 8,788 Growth y/y 2.8% 2%-4
Slide 17: Financial targets for 2017
Financial targets for 2017 BCE Revenue growth 1% to 2% Adjusted EBITDA growth 1.5% to 2.5% Capital intensity approx. 17% Adjusted EPS(1) $3.42 to $3.52 Growth y/y approx. (1%) to 2% Free cash flow(2) $3,325M to $3,450M Growth y/y approx. 3% to 7% Annualized common dividend per share(3) $2.87 Dividen
Slide 18: Pension funding outlook
Pension funding outlook BCE cash pension funding ($M) Special contribution Regular funding • $400M voluntary contribution in Dec’16 801 • Maintains YE2016 consolidated pension plan position at same level as previous 400 year with strong solvency ratio of ~94% ~400-450 • Regular pension funding for 2
Slide 19: Tax outlook
Tax outlook BCE cash income taxes paid Income tax expense ($M) • Statutory tax rate for 2017 unchanged at 27.1% • Effective tax rate increasing to ~27% from ~700-750 26.4% in 2016 due to lower y/y tax adjustments 672 565 Cash income taxes • Increase in 2017 cash taxes reflects higher y/y taxable inc
Slide 20: Adjusted EPS outlook
Adjusted EPS outlook Adjusted EPS(1) • Solid underlying adjusted EBITDA contribution from Bell’s growth services $3.42–$3.52 • Depreciation & amortization expense higher y/y $3.46 – Greater capex spend reflects continued significant investment in FTTP and wireless LTE • Increased tax expense reflect
Slide 21: 2017 FCF growth supports 5.1% dividend increase
2017 FCF growth supports 5.1% dividend increase FCF(1) • FCF growth of ~3% to 7% for 2017 Common dividends paid – Flow-through of organic adjusted EBITDA growth Excess FCF and working capital improvement – Capital intensity ratio maintained at ~17% $3,325M–$3,450M – Stable y/y cash pension funding –
Slide 22: Strong capital structure
Strong capital structure Credit profile* Target 12/31/2016 • Investment grade ratings with stable outlook – Capital structure aligned to strong BBB+ rating Net debt leverage ratio 1.75x-2.25x 2.57x – Deleveraging through adjusted EBITDA growth Adj. EBITDA/Net Interest >7.5x 9.31x and applying excess