Bce Inc. · TSX:BCE
Bce — Morgan Stanley 11th Annual Technology Media & Telecoms Conference 2011
26 slides from Bce's conference presentation, Nov 16, 2011
Slide 1: Morgan Stanley 11th Annual Technology Media & Telecoms Conference
Morgan Stanley 11th Annual Technology Media & Telecoms Conference November 16 - 18, 2011 Siim Vanaselja Executive Vice-President and Chief Financial Officer
Slide 2: Safe harbour notice
Safe harbour notice Certain statements made in the attached presentation, including, but not limited to, statements relating to our 2011 financial guidance (including revenues, EBITDA, capital intensity, Adjusted EPS and free cash flow), annualized cost savings expected to result from workforce redu
Slide 3: Canada's largest communications company
Canada’s largest communications company • 22 million customer connections • Bell Mobility and Virgin Mobile – Largest local exchange carrier in Canada – Largest Enterprise service provider • Bell Fibe Internet – Second largest wireless operator • Bell Satellite and Fibe TV – Largest Internet service
Slide 4: Bell's evolving revenue mix
Bell’s evolving revenue mix Operating revenue mix — 2011E Pro forma ~80% ~30% ~11% ~27% ~12% ~20% Wireless Satellite/ Wireline Media Wireline Fibe TV Internet/Data Voice 80% of revenues now driven by growth segments 4
Slide 5: Business overview
Business overview Bell
Slide 6: Our goal: Strategic Imperatives
Focus maintained on key value drivers 5 Strategic Imperatives 1 Accelerate wireless 2 Leverage wireline momentum 3 Invest in broadband networks and services Our goal To be recognized 4 Achieve a competitive cost structure by customers as Canada’s leading 5 Improve customer service communications com
Slide 7: Executing on Strategic Imperatives in 2011
Executing on Strategic Imperatives in 2011 • Capturing over 1/3 of incumbent postpaid net adds • Maintaining wireless network leadership with broadest HSPA+ network in Canada TV • Wireless LTE network launch in 2011 • Fibre build-out supports IPTV and broadband Internet • Fibe TV footprint at 2M hou
Slide 8: Bell Media advances Bell's strategic imperatives
Bell Media advances Bell’s strategic imperatives • $3.2B acquisition completed April 1, 2011 • 100% ownership of Canada’s #1 media company CTV • Hedges against increasing programming costs • Accelerates 4+ screen platform distribution • TSN/RDS rate re-negotiations progressing well • Olympics broadc
Slide 9: Wireless network, device & content leadership
1. Accelerate wireless Wireless network, device & content leadership Network build Expanding network Best choice in Bell Mobile TV started footprint devices with the enhanced most distribution • Launched in September in • HSPA+ deployed to 96% of • Launching portfolio of LTE • Access to expanded liv
Slide 10: Significant market share gain
1. Accelerate wireless Significant market share gain Postpaid net additions market share (incumbents) 2007 YTD Q3’11 18% 28% 38% 50% 32% 34% Dramatic growth for Bell Wireless over past four years 10
Slide 11: Solid wireless operating metrics
1. Accelerate wireless Solid wireless operating metrics Metrics YTD Q3’11 Y/Y • Postpaid gross adds up 8.6% y/y Postpaid gross additions 1,014k 8.6% Total gross additions 1,424k (1.5%) • Smartphones represent 43% of total postpaid base, up from 26% in Q3’10 Postpaid net additions 302k (12.1%) Total
Slide 12: Wireline voice erosion improves y/y
2. Leverage wireline momentum Wireline voice erosion improves y/y NAS • Annualized NAS erosion rate lower y/y – Service bundles with Fibe Internet and Fibe TV Residential Business Total helping retention and winbacks Annualized 8.1% – However, aggressive competitive offers and erosion 7.7% 6.2% wire
Slide 13: Bell's changing residential revenue mix
2. Leverage wireline momentum Bell’s changing residential revenue mix TV: ~30% 2.1M Internet subs 2.1M Bell TV subs Internet: ~15% Bell Media: ~25% ~70% ~30% Launched Fibe TV 25 million CTV viewers Local voice: ~25% LD: ~5% TV, Internet and content are driving revenues 13
Slide 14: Bell's Fibe TV opportunity
2. Leverage wireline momentum Bell’s Fibe TV opportunity Rural Suburban Urban Bell Satellite TV (2M subs) Bell Fibe TV Bell TV portfolio Fibe TV enhances Bell’s opportunity to be a TV leader in all markets 14
Slide 15: Bell Business Markets
2. Leverage wireline momentum Bell Business Markets ICT and service innovation • Economy impacting overall business results – Continuing slow and uncertain pace of job growth – Data product sales soft, reflecting deferred customer spending – However, better IP connectivity and ICT growth y/y • Conne
Slide 16: Investing to drive future operational performance
3. Invest in broadband networks and services Investing to drive future operational performance • Wireless CI of ~11%-12% in 2011 Wireless HSPA+ and LTE networks • Growth in data demand • Network coverage and quality Broadband fibre network • Wireline CI of ~18% in 2011 • Fibre expansion/upgrades to
Slide 17: Capital intensity consistent with other N.A. carriers
3. Invest in broadband networks and services Capital intensity consistent with other N.A. carriers Capital intensity Source: Company guidance and First Call analyst estimates 14%-15% 16.0% ~16% 15.8% 14.9% 16.3% 16.2% 2010 2011E 2010 2011E 2010 2011E • Bell’s CI reflects investment in strategic prio
Slide 18: Significant cost savings continue
4. Achieve a competitive cost structure Significant cost savings continue… Wireline cost reductions(1) in Q3 Workforce reduction • Total savings of ~$80M • ~1,200 management positions • Lower labour and support group costs, and • Departures completed by end of October reduced marketing/sales expense
Slide 19: Improving customer service
5. Improve customer service …while improving service Improved service in the field Enhanced customer experience • >90% completion rate on Same Day • One call for all services Next Day service • Fast-track to live help • Internet Full Install rate at 85% • Care centres open on Sundays • Convenient ap
Slide 20: Financial performance & Capital structure
Financial performance & Capital structure
Slide 21: Financial review
Financial review May 12 November 3 YTD Q3’11 Y/Y Guidance Guidance Revenues $12,557M 8.2% 9% to 11% No change EBITDA $4,764M 8.1% 8% to 10% No change Margin 37.9% (0.1 pts) Capital Intensity 14.4% (0.3 pts) ~16% No change Adjusted EPS(1) $2.51 14.1% $2.95 to $3.05 $3.10 to $3.15 Free Cash Flow(2) $1
Slide 22: Best-in-class financial performance among telco peers
Best-in-class financial performance among telco peers Wireline EBITDA growth – FY 2010 Wireline EBITDA growth – YTD’11 (1) (1) 5.9% 2.7% -1.7% -3.1% -4.6% -5.9% -4.9% -6.1% Total EBITDA growth – FY 2010 Total EBITDA growth – YTD’11 (2) (1) (1) 3.1% 3.4% 2.4% 1.0% 2.4% 0.2% 2.5% -3.7% Source: Company
Slide 23: Strong capital markets positioning
Strong capital markets positioning • Strong investment grade credit ratings with stable outlooks Strong credit profile • Net debt to Adjusted EBITDA maintained below 2.0x • Issued $345M of BCE preferred shares in July’11 • Accessed $3B of low-cost debt between Nov’10 and Substantial liquidity May’11
Slide 24: Increasing returns to shareholders
Increasing returns to shareholders Annualized common dividend per share Share buyback program (Dec. 2008 to Dec. 2010) Amount ($) ~$1.5B 42% $2.07 $1.97 Shares repurchased $1.83 56.2M $1.74 and cancelled $1.62 $1.54 $1.46 Average price per $26.43 share repurchased Q4’08 Q1’09 Q3’09 Q1’10 Q3’10 Q1’11
Slide 25: Strategic imperatives paying dividends
Strategic imperatives paying dividends Total shareholder returns Dec. 12, 2008 – Nov. 7, 2011 122.1% 73.5% 28.4% 3.5% 46.2% 25.6% 59.1% Total shareholder return of ~122%, including 6 dividend increases, since December 2008 25
Slide 26: Summary
Summary • Executing on 5 Strategic Imperatives • Maintaining wireless competitiveness and postpaid momentum – Healthy postpaid subscriber growth with accelerating smartphone mix – Blended ARPU up 2.5% YTD – Step-up in wireless EBITDA trajectory in 2H’11 – LTE wireless network launched on Sept.14th •
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