Slide 1: Q3 2013 Results Conference Call
Q3 2013 Results Conference Call November 7, 2013
Slide 2: Safe harbour notice
Safe harbour notice Certain statements made in the attached presentation, including, but not limited to, statements relating to our 2013 financial guidance (including revenues, EBITDA, capital intensity, Adjusted EPS and free cash flow), our business outlook, objectives, plans and strategic prioriti
Slide 3: George Cope, President & Chief Executive Officer
George Cope President & Chief Executive Officer
Slide 4: Q3 overview
Q3 overview Maintaining competitiveness and market share with 103k postpaid net adds as Wireless Code of Conduct (WCOC) is implemented Strong Wireless financials with 11.6% EBITDA growth and 45% service margin Astral contribution to overall Bell Media results meeting acquisition expectations
Slide 5: Solid wireless results
Solid wireless results Metrics Q3’13 Y/Y YTD’13 Y/Y • Solid postpaid net additions as industry begins implementation of WCOC Postpaid gross additions 333k (10.6%) 964k (2.9%) – Delay in consumer purchases due to fewer promotions, new 2-year contract pricing and Postpaid net additions 103k (30.8%) 25
Slide 6: Accelerating TV & Internet subscriber growth
Accelerating TV & Internet subscriber growth Fibe TV net additions TV • Best-ever Fibe TV net adds of 73k, up 30k y/y – Footprint expanded to 4.1M homes 73k – Launch of wireless receivers +69% – Successful residential move season in Québec 43k • Satellite TV net losses improve 3.7% y/y – Pull-throug
Slide 7: Positive Residential Wireline RGU growth
Positive Residential Wireline RGU growth Bell Residential RGU net additions • Significant y/y growth in total residential TV + Internet + NAS (k) RGU net additions – 28k net additions in Q3’13, up 74k y/y Q3'07 Q3'08 Q3'09 Q3'10 Q3'11 Q3'12 Q3'13 – Record Fibe TV activations and strong Internet 28 p
Slide 8: Continued progress in improving customer service
Continued progress in improving customer service Fibe TV install time -25% 2011 YTD 2013 • Mobile self-serve smartphone app • Fibe TV install time down 25% since start driving lower customer call volume and of 2012 better customer service • With introduction of wireless receivers, • Total calls redu
Slide 9: Bell Media
Bell Media • Astral meeting acquisition expectations — integration on track • The Amazing Race Canada created and produced by Bell Media – Record results, averaging 3.4M viewers – Highest-rated Canadian series on record – Highest-rated debut season for any Canadian or U.S produced show • CFL viewers
Slide 10: Growth services driving improved operating mix
Growth services driving improved operating mix Bell’s improving revenue mix Q3’13 Wireline Product • Astral contributing to Bell’s changing revenue mix profile Wireline 6% Broadband • Wireless, TV, Internet and Media now 19% TV account for ~65% of total Bell revenue Wireline Business 11% 82% Voice 1
Slide 11: Siim Vanaselja, EVP & Chief Financial Officer
Siim Vanaselja EVP & Chief Financial Officer
Slide 12: Q3 financial review
Q3 financial review Bell Q3’13 Y/Y • Service revenue up 3.3% in Q3’13 – Reflects Astral and solid y/y Wireless growth Revenue $4,524M 3.0% – Bell Wireline approaching positive revenue growth Service $4,152M 3.3% Product $372M (0.3%) • EBITDA growth of 3.0% with stable y/y margin EBITDA $1,739M 3.0%
Slide 13: Wireless financials
Wireless financials ($M) Q3’13 Y/Y YTD’13 Y/Y Revenue 1,493 4.1% 4,344 5.2% Service 1,372 5.0% 4,003 6.0% Product 106 (6.2%) 298 (2.6%) Operating costs 876 0.6% 2,533 (1.6%) EBITDA 617 11.6% 1,811 10.7% Margin (service revenue) 45.0% 2.7 pts 45.2% 1.9 pts Capex 157 (3.3%) 413 10.2% Capital intensity
Slide 14: Wireline financials
Wireline financials ($M) Q3’13 Y/Y YTD’13 Y/Y Revenues 2,482 (0.9%) 7,496 (1.5%) Data 1,426 2.5% 4,315 2.4% Voice 797 (7.1%) 2,442 (7.8%) Equipment & other 168 (5.6%) 485 (5.5%) Operating costs 1,559 (2.1%) 4,636 (0.3%) EBITDA – reported 923 (5.6%) 2,860 (4.3%) Margin 37.2% (1.8 pts) 38.2% (1.1 pts)
Slide 15: Bell Media financials
Bell Media financials ($M) Q3’13 Y/Y YTD’13 Y/Y Revenues 664 21.6% 1,736 9.0% Operating costs 465 (19.5%) 1,283 (6.7%) EBITDA (reported) 199 26.8% 453 16.5% Margin 30.0% 1.2 pts 26.1% 1.7 pts PPA (2) n.m. (36) (63.6%) EBITDA (excl. PPA) 201 48.9% 489 19.0% Margin 30.3% 5.6 pts 28.2% 2.4 pts Capex 23
Slide 16: Adjusted EPS
Adjusted EPS Adjusted EPS(1) • Higher EBITDA from Astral acquisition and Bell Wireless drive $0.05 of EPS growth y/y +7.1% $0.75 • Higher net interest expense due to increased $0.70 average debt from Astral acquisition financing – Issued $1B of 5- and 10-year MTNs in Sept. 2013 at blended average ra
Slide 17: Free cash flow
Free cash flow Free cash flow • FCF of $747M up 8.9% y/y on higher EBITDA and positive change in working capital – Higher A/R balance at Bell Media in Q3’12 from Olympics +$61M $747M and retroactive BDU billings $686M • Higher y/y net interest paid reflects increased average level of long-term debt
Slide 18: Outlook
Outlook • No fundamental change in overall outlook for core businesses • Continued strong Fibe TV momentum and Wireless profitability • Improving Wireline revenue and EBITDA trends • Astral meeting acquisition expectations • Consolidated Bell revenue and EBITDA guidance on track 2013 guidance (1) Fe