Slide 1: Q4 2018 Results & 2019 Financial Guidance Call
Q4 2018 Results & 2019 Financial Guidance Call February 7, 2019
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: George Cope, President & Chief Executive Officer
George Cope President & Chief Executive Officer
Slide 4: Q4 overview
Q4 overview • Strong revenue and adjusted EBITDA growth delivered by all 3 Bell operating segments • 3.0% increase in revenue yielded 2.8% growth in consolidated adjusted EBITDA • Expanded wireline broadband market share in Q4 with 66k Internet and IPTV net additions, up 11.0% y/y • Wireline revenue
Slide 5: Broadband scale continued to grow in 2018
Broadband scale continued to grow in 2018 Broadband services customer additions (k) • 698k new broadband customers added to Bell growth services subscriber base in 2018, up Wireless Internet 698 32.1% y/y IPTV 529 +32.1% 111 • Growing wireless mix supporting lower 108 consolidated capital intensity
Slide 6: Wireless operating metrics
Wireless operating metrics Subscriber metrics Q4’18 Y/Y 2018 Y/Y • 122k postpaid net subscribers added in Q4 – Aggressive holiday offers selectively matched Total gross additions 546k (3.9%) 1,955k 9.8% – Lapping of federal government contract Total net additions 143k (9.7%) 480k 44.1% • Postpaid ch
Slide 7: Wireless network leadership
Wireless network leadership LTE Advanced (LTE-A) coverage • Expanding LTE-A network footprint to ~94% of Canadians in 2019 % of Canadian population ~94% • 2019 network investment focus on increasing 91% 87% LTE speeds and densification in urban markets – ~60% of Canadians expected to have access to
Slide 8: Wireline subscriber metrics
Wireline subscriber metrics Retail Internet and IPTV net additions • 65k new FTTH additions in Q4, bringing total direct fibre customers to 1.2M at YE2018 IPTV Internet • 33k retail Internet net additions, up 15.5% y/y 69k 61k – 30k total Internet net additions including wholesale +13.8% 33k • 36k t
Slide 9: Continued significant broadband footprint expansion
Continued significant broadband footprint expansion Bell broadband footprint • Combined direct fibre and fixed wireless WTTP broadband footprint expanding by ~700k homes FTTP FTTN WTTP and businesses to over 5.3M locations in 2019 Total locations passed 11.9M 12.0M 12.1M (incl. DSL and dial-up) • FT
Slide 10: Bell Media
Bell Media • Best quarterly financial performance since Q4’16 • Continued leading TV viewership and ratings – 8 of top 10 shows for CTV in fall season across all key adult demographics – Primetime audiences up 4% over fall 2017 – English entertainment specialty TV channels grew audiences 15% y/y in
Slide 11: Raising common dividend 5.0% to $3.17 per share
Raising common dividend 5.0% to $3.17 per share Annualized common dividend per share 117% • Supported by projected free cash flow increase growth in 2019 $3.17 • 11th consecutive year of 5% or higher $3.02 dividend increase as free cash flow payout maintained within 65% to 75% target range $1.46 • H
Slide 12: Glen LeBlanc, EVP & Chief Financial Officer
Glen LeBlanc EVP & Chief Financial Officer
Slide 13: Q4 financial review
Q4 financial review ($M) except per share data Q4’18 Y/Y 2018 Y/Y Revenue 6,215 3.0% 23,468 3.1% Service 5,231 1.5% 20,441 1.7% Product 984 11.3% 3,027 13.7% Adjusted EBITDA 2,394 2.8% 9,535 2.7% Margin 38.5% (0.1 pts) 40.6% (0.2 pts) Net earnings 642 (8.0%) 2,973 (2.5%) Statutory EPS 0.68 (5.6%) 3.
Slide 14: Wireless financials
Wireless financials ($M) Q4’18 Y/Y 2018 Y/Y Revenue 2,248 4.6% 8,422 6.3% Service 1,590 2.2% 6,306 3.5% Product 658 11.0% 2,116 15.3% Operating costs 1,359 (4.3%) 4,856 (6.7%) Adjusted EBITDA 889 5.1% 3,566 5.6% Margin 39.5% 0.1 pts 42.3% (0.3 pts) Capex 132 39.4% 656 10.3% Capital intensity (CI) 5.
Slide 15: Wireline financials
Wireline financials ($M) Q4’18 Y/Y 2018 Y/Y Revenue 3,296 2.4% 12,662 2.1% Service 2,970 1.5% 11,747 1.5% Product 326 12.0% 915 10.2% Operating costs 1,967 (3.2%) 7,386 (2.4%) Adjusted EBITDA 1,329 1.3% 5,276 1.7% Margin 40.3% (0.5 pts) 41.7% (0.2 pts) Capex 810 4.1% 3,201 (0.9%) Capital intensity (
Slide 16: Media financials
Media financials ($M) Q4’18 Y/Y 2018 Y/Y Revenue 850 1.9% 3,121 0.5% Operating costs 674 (1.7%) 2,428 (1.7%) Adjusted EBITDA 176 2.9% 693 (3.2%) Margin 20.7% 0.2 pts 22.2% (0.9 pts) Capex 32 13.5% 114 11.6% Capital intensity (CI) 3.8% 0.6 pts 3.7% 0.5 pts • Total revenue 1.9% higher y/y • Subscriber
Slide 17: Financial targets for 2019
Financial targets for 2019 BCE • IFRS 16: new accounting standard for operating leases effective Jan.1, 2019 Revenue growth 1% to 3% – No restatement of prior periods Adjusted EBITDA growth 5% to 7% • Most operating leases now recognized on the balance sheet as right-of-use Capital intensity ~16.5%
Slide 18: Revenue & adjusted EBITDA outlook
Revenue & adjusted EBITDA outlook BCE revenue • Revenue not impacted by adoption of IFRS 16 ($M) • Excluding IFRS 16, 2019 consolidated adjusted 1%-3% growth EBITDA growth in line with historical rate of 2% to 4% • Continued strong contribution from Bell Wireless to overall 2019 consolidated financi
Slide 19: Pension funding
Pension funding BCE cash pension funding ($M) • $240M voluntary contribution in Dec’18 – Aligns funded status of subsidiary BCE Voluntary contribution Regular funding plans with the Bell Canada plan, and substantially reduces the use of letters of 614 credit for funding deficits 240 ~375 • Bell Cana
Slide 20: Tax outlook
Tax outlook BCE cash income taxes paid Income tax expense ($M) • Statutory tax rate unchanged y/y at 27.0% • Effective tax rate of ~25% for 2019 650 ~650-700 – Reflects lower level of tax adjustments y/y Cash income taxes • Relatively stable y/y cash taxes • Additional ~$100M of MTS tax losses to be
Slide 21: Adjusted EPS outlook
Adjusted EPS outlook Adjusted EPS(1) • Adjusted EBITDA growth key driver of higher adjusted EPS in 2019 ($) • Increased depreciation & amortization expense 3.48–3.58 – Reflects continued high level of capital expenditures 3.51 and impact of IFRS 16 • Net interest expense up y/y, due mainly to impact
Slide 22: Free cash flow growth outlook
Free cash flow growth outlook Free cash flow(1) • 2019 free cash flow growth of 7% to 12% – Higher y/y adjusted EBITDA driven by wireless ($M) strength and improving wireline growth trajectory Common dividends paid – Lower y/y capital intensity ratio of ~16.5% Excess FCF (excluding spectrum cost) 3,
Slide 23: Strong capital structure
Strong capital structure Credit profile(1) Target 12/31/2018 • Increasing net debt leverage ratio target range to 2.00x-2.50x from 1.75x-2.25x Net debt leverage ratio 2.00x-2.50x 2.72x – Reflects one-time impact from application of IFRS 16 due to designation of a portion of operating Adj. EBITDA/Net