Bce Inc. · TSX:BCE
Bce — BofA Merrill Lynch Media & Telecom Conference 2010
28 slides from Bce's conference presentation, Sep 15, 2010
Slide 1: BofA Merrill Lynch Media & Telecom Conference
BofA Merrill Lynch Media & Telecom Conference September 15, 2010 George Cope President & Chief Executive Officer
Slide 2: Safe harbour notice
Safe harbour notice Certain statements made in this presentation including, but not limited to, statements relating to our 2010 financial guidance (including revenue, EBITDA, adjusted earnings per share, free cash flow and capital intensity), our dividend policy, the proposed acquisition of CTVglobe
Slide 3: Transaction overview
Transaction overview • Acquiring 100% of CTV – 15% equity stake in The Globe and Mail CTV maintained Television • $1.3B equity value for additional 85% stake – $1.7B in proportionate debt • 9.9x proportionate EBITDA multiple • Woodbridge/Thomson Group to take $750M in BCE common stock at closing • C
Slide 4: Maintains strong balance sheet and credit profile
Maintains strong balance sheet and credit profile Estimated Financing Structure ($B) • Transaction financing fully committed Committed debt financing & surplus cash 2.0 – New committed credit facility of $2.0B BCE equity issuance 0.75 – BCE shares issued to Thomson family at closing subject to two-y
Slide 5: CTV financial profile
CTV financial profile CTV Financials (1) • Immediately EPS and FCF per share accretive, even before Revenues $1,870M synergies EBITDA $385M Margin 20.6% • 100% access to CTV cash flows Capital expenditures $75M Capital Intensity 4.0% • Improves Bell’s growth profile Simple FCF $310M Margin 16.6% • L
Slide 6: CTV is Canada's #1 media company
CTV is Canada’s #1 media company • Leading portfolio of 30 Specialty television channels Specialty Channels • Canada’s #1 Specialty channel, TSN as well as RDS, Discovery, Comedy, Much Music and MTV • Canada’s most watched network for the 9th straight year, with 8 out of the Top 10 programs (adults
Slide 7: Strategic context and rationale
Strategic context and rationale Communications landscape has changed dramatically in the last five years • Cable competitors increased media ownership and expanding into wireless • Sports and news genres deregulated in late 2008; Internet and mobile unregulated • Adoption of mobile TV/video is set t
Slide 8: Industry structure in 2006
Industry structure in 2006 Video content was a separate business Video was largely viewed on 1 screen 8
Slide 9: Industry structure today
Industry structure today Video content is part of an integrated business Launched IPTV and DTH Video content is now viewed on 3+ screens Launched Launching on Sept.9 Acquisition substantially strengthens our competitive position 9
Slide 10: Regulatory considerations
Regulatory considerations Video Platform Regulatory Cable and Internet Mobile Classification Satellite • Conventional • Must Carry Specialty Regulated • Video-On- Not Not Demand Regulated Regulated • Pay-Per-View Deregulated • Sports / News in Oct. 2008 Today’s regulatory and technological environme
Slide 11: Bell TV / Video is a key growth driver for Bell
Bell TV / Video is a key growth driver for Bell Bell TV / Video Continued product leadership Bell’s Video revenues supports profitable and growing Video as % of Bell’s Residential revenues video business ~40% • National DTH footprint with growing base of ~2M subscribers ~20% • Accelerated roll-out o
Slide 12: Rising content costs
Rising content costs Video Content Costs Video content is the fastest growing cost for Bell • Programming now accounts for 40% ~10% of total Residential video costs CAGR ~$600M • CTV is one of Bell’s largest suppliers of video programming ~$350M Bell also spends $200M+ on advertising annually • Acqu
Slide 13: The future of Bell TV
The future of Bell TV Investments in broadband …delivering an integrated networks and services… viewing experience Bell TV Anytime, Anywhere TV 5 million + homes IPTV enabled National DTH network with leading HD 15+ position million screens in 2015 National wireless +/ broadband network with speeds
Slide 14: Business Overview
Business Overview OlOc
Slide 15: Focused on key drivers of value
Focused on key drivers of value Our Goal 5 Strategic Imperatives 1 Accelerate wireless To be recognized by customers as 2 Leverage wireline momentum Canada’s leading communications 3 Invest in broadband networks and services company 4 Achieve a competitive cost structure 5 Improve customer service 1
Slide 16: Bell Wireless has accelerated
1. Accelerate wireless Bell Wireless has accelerated + 9 Fastest, largest, global 9 Best choice in devices 9 The most distribution points 9 #1 telecom brand 9 Rapid growth in data usage 16
Slide 17: Continued strong wireless market momentum
1. Accelerate wireless Continued strong wireless market momentum YTD Market share Metrics* Q2’10 Y/Y Bell’s Share of incumbent postpaid net adds Postpaid gross additions 565k 24.4% Total gross additions 909k 18.2% 37% Postpaid net additions 184k 85.4% Total net additions 154k 105.4% 20% Postpaid ARP
Slide 18: Our business has evolved...
2. Leverage wireline momentum Our business has evolved... Consumer Wireline revenue mix (H1’10) Canada’s largest Internet provider LD Internet 10% 17% 57% Local voice TV 33% Bell TV 40% leadership Voice revenue decline stabilizing, while TV accelerates 18
Slide 19: Bell is Canada's largest Internet provider
2. Leverage wireline momentum / 3. Invest in broadband networks and services Bell is Canada’s largest Internet provider • FTTN driving broadband growth • Higher Residential Internet ARPU driven by usage Internet ARPU FTTN subscribers Residential +3.3% +31% Q2'09 Q2'10 Q2'09 Q2'10 Broadband network s
Slide 20: Bell TV continues to accelerate
2. Leverage wireline momentum Bell TV continues to accelerate Retail ARPU Video revenues • Strong financial performance +6.5% +11.6% $434M $68.98 $73.43 • Maintaining industry leadership $389M • IPTV commercial roll-out underway Q2'09 Q2'10 Q2'09 Q2'10 TV Ramping up for broader scale roll-out of IPT
Slide 21: Business Markets
2. Leverage wireline momentum Business Markets Business Markets EBITDA margin • Continuing focus on improving EBITDA margins and growing cash + 5.1 pts flow • Customer spending remains soft given current economic cycle • Stable business NAS YTD Q2’09 YTD Q2’10 • Growing momentum in ICT Business Mark
Slide 22: Maintaining strong focus on cost control in 2010
4. Achieve a competitive cost structure Maintaining strong focus on cost control in 2010 Bell workforce * • Wireline operating costs* down ~$180M y/y in first half of 2010 44,100 -12% • Lower workforce y/y, while growing 40,250 38,700 subscribers and revenues • Working capital improvement • Customer
Slide 23: Highest customer satisfaction in 5 years
5. Improve customer service Highest customer satisfaction in 5 years • 95% completion rate on Same Day Fewer customer calls Next Day Agent calls handled – Bell Residential Services call centres • Single point of contact for household billing inquiries -16% -12% 42% -8% • Customized support in stores
Slide 24: Financial Performance & Capital Structure
Financial Performance & Capital Structure
Slide 25: Financial performance
Financial performance February 4 August 5 YTD Q2’10 Y/Y Guidance Guidance Revenues $7,550M 4.1% 1%-2% 2%-3% EBITDA $2,953M 2.7% 2%-4% No change Margin 39.1% (0.6 pts) Capital expenditures $969M 16.5% Capital Intensity 12.8% 3.2 pts ≤16% No change Adjusted EPS1 $1.42 23.5% $2.65-$2.75 $2.75-$2.80 Fre
Slide 26: Capital markets strategy for 2010 consistent with 2009
Capital markets strategy for 2010 consistent with 2009 Maintain strong • Solid investment grade metrics 1 credit profile • Voluntary $500M pension plan contribution in Dec’09 Maintain ample • Over $2B in cash and credit facilities 2 liquidity • Easily manageable debt maturity schedule Grow sustainab
Slide 27: Increasing total shareholder returns
Increasing total shareholder returns Common share dividend Delivering on dividend growth model (Annualized common dividend per share) • 25% increase since Q4’08 +25% • 5% dividend increase to $1.83 per year effective with Oct.15 payment $1.83 $1.74 $1.62 • Higher dividend maintains payout ratio(1) a
Slide 28: today
today just got better Bell
BCE — BofA Merrill Lynch Media & Telecom Conference 2010 on 6ix