Slide 1: Q3 2014 Results Conference Call
Q3 2014 Results Conference Call November 6, 2014
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 our 2014 financial guidance (including revenues, Adjusted EBITDA, capital intensity, Adjusted EPS and free cash flow), our business ou
Slide 3: George Cope, President & Chief Executive Officer
George Cope President & Chief Executive Officer
Slide 4: Focused execution delivers strong Q3 results
Focused execution delivers strong Q3 results Bell Adjusted EBITDA growth of 3.4% drives margin increase to 39% and 10.7% higher Adjusted EPS Strong wireless financial results with accelerated revenue growth of 7% and 10.9% higher Adjusted EBITDA Positive Wireline Adjusted EBITDA growth achieve
Slide 5: Wireless operating metrics
Wireless operating metrics Bell Q3’14 Y/Y • 91k postpaid net additions – Implementation of 2-year contract pricing in Postpaid gross additions 327k (1.9%) Aug’13 lapped in Q3’14 – 11 new devices in Q3’14, including iPhone 6/6+ Postpaid net additions 91k (11.4%) • Stable postpaid churn Postpaid churn
Slide 6: Positive wireline residential RGU growth in Q3
Positive wireline residential RGU growth in Q3 Fibe TV and Internet net additions • 50k Internet net adds in Q3’14, up 14k y/y – Strong back-to-school execution and Fibe TV attach • Fibe TV net adds of 62k, down 11k y/y 232k – Record activations in Q3’13 driven by launch of new 213k wireless receive
Slide 7: Bell Aliant provides increased broadband growth and efficiencies
Bell Aliant provides increased broadband growth and efficiencies Customer connections (Sept. 30, 2014) • Capturing the full value of Bell Aliant’s 3.7M customer connections and 1M FTTH locations (in thousands) Bell Bell Aliant BCE • Total BCE IPTV and Internet net adds of 139k Internet 2,253 992 3,2
Slide 8: Bell Media
Bell Media • Leading industry revenue market share driven by strong programming schedule as TV advertising market remains soft – Grew combined English/French audience share for viewers aged 25-54 in 2014 broadcast year to 33% • CTV delivers Top 5 most-watched programs in first two weeks of Fall TV s
Slide 9: Increasing contribution from growth services
Increasing contribution from growth services BCE revenue mix(1) Q3’14 • Total BCE growth services revenue up $163M, or 4.1%, y/y in Q3’14 • Expect 3rd consecutive year of double-digit Wireless Wireless Adjusted EBITDA growth in 2014 Wireline Voice 31% Wireless 20% voice Business • Bell Aliant mainta
Slide 10: Siim Vanaselja, EVP & Chief Financial Officer
Siim Vanaselja EVP & Chief Financial Officer
Slide 11: Q3 financial review
Q3 financial review Bell Q3’14 Y/Y YTD’14 Y/Y • Service revenue up 2.2% in Q3’14 – Continued strong Wireless and Wireline residential Revenue $4,607M 1.8% $13,794M 3.7% growth with stable y/y Media revenues Service $4,245M 2.2% $12,715M 4.3% Product $362M (2.7%) $1,079M (2.6%) • Adjusted EBITDA grow
Slide 12: Wireless financials
Wireless financials ($M) Q3’14 Y/Y YTD’14 Y/Y Revenue 1,598 7.0% 4,592 5.7% Service 1,468 7.0% 4,236 5.8% Product 117 10.4% 316 6.0% Operating costs 914 (4.3%) 2,613 (3.2%) Adjusted EBITDA 684 10.9% 1,979 9.3% Margin (service revenue) 46.6% 1.6 pts 46.7% 1.5 pts Capex 179 (14.0%) 460 (11.4%) Capital
Slide 13: Wireline financials
Wireline financials ($M) Q3’14 Y/Y YTD’14 Y/Y Revenues 2,465 (0.7%) 7,412 (1.1%) Data 1,470 3.1% 4,418 2.4% Voice 751 (5.8%) 2,281 (6.6%) Equipment & other 155 (7.7%) 451 (7.0%) Operating costs 1,533 1.7% 4,597 0.8% Adjusted EBITDA 932 1.0% 2,815 (1.6%) Margin 37.8% 0.6 pts 38.0% (0.2 pts) Capex 609
Slide 14: Media financials
Media financials ($M) Q3’14 Y/Y YTD’14 Y/Y Revenues 665 0.2% 2,148 23.7% Operating costs 483 (3.9%) 1,606 (25.2%) Adjusted EBITDA (reported) 182 (8.5%) 542 19.6% Margin 27.4% (2.6 pts) 25.2% (0.9 pts) PPA (1) 50.0% (38) (5.6%) Adjusted EBITDA (excl. PPA) 183 (9.0%) 580 18.6% Margin 27.5% (2.8 pts) 2
Slide 15: Adjusted EPS
Adjusted EPS Adjusted EPS(1) • Organic growth in Adjusted EBITDA contributed 6¢ to y/y increase +10.7% $0.83 • Increased depreciation expense from higher $0.75 capital asset base • Lower y/y net interest expense reflects early Q3'13 Q3'14 debt redemption in Q3’13 and lower overall (1) Before severan
Slide 16: Free cash flow
Free cash flow Free cash flow • FCF up 11.6% in Q3’14 on higher Adjusted EBITDA(1) and positive change in working capital +87M $834M • Capex reflects higher planned spending in 2H’14 $747M • Lower net interest paid due to early redemption in Q3’13 and lower weighted-average cost of debt Q3'13 Q3'14
Slide 17: Outlook
Outlook 2014 guidance(1) February 6 November 6 • No fundamental change in overall outlook for core businesses Revenue growth 2%-4% On track • Continued strong Wireless postpaid momentum and profitability Adjusted EBITDA growth 3%-5% On track • Further improvement in Wireline financial trends expecte
Slide 18: Key financial assumptions for 2014
Appendix Key financial assumptions for 2014 Bell Feb. 6 Aug. 7 Nov. 6 Employee benefit plans service cost (above Adjusted EBITDA) ~$220M No change No change Net employee benefit plans financing cost (below Adjusted EBITDA) ~$90M No change No change Cash pension funding ~$350M No change No change Cas