Slide 1: Q2 2009 Results Conference Call
Q2 2009 Results Conference Call August 6, 2009
Slide 2: Safe harbour notice
Safe harbour notice This presentation contains forward-looking statements with respect to items such as revenue, EBITDA, earnings per share, adjusted earnings per share, average revenue per user, free cash flow, capital intensity, dividends and other statements that are not historical facts. Several
Slide 3: George Cope, President & Chief Executive Officer
George Cope President & Chief Executive Officer
Slide 4: Delivering on dividend growth model
Delivering on dividend growth model Returning cash to shareholders Dividend increase (Annualized common dividend per share) • 5% dividend increase effective with October 15th payment • 2nd increase in 2009 +5% $1.62 • Reflects favourable YTD earnings +5% and cash flow performance $1.54 $1.46 Dividen
Slide 5: Q2 progress on our 5 strategic imperatives
Q2 progress on our 5 strategic imperatives • 94% completion rate on Same Day Next Day Service Improve • 22% reduction in customer call backs with Full Install customer • 19% y/y reduction in repair call centre volumes service • 7% y/y improvement in wireless dropped call rate in GTA • Cultural shift
Slide 6: Q2 progress on our 5 strategic imperatives
Q2 progress on our 5 strategic imperatives • Bell TV revenues up 9.3% y/y; best video net adds since Q4’06 Leverage • Residential NAS line losses improve 20% y/y wireline • Average revenue per household up 9% y/y momentum • Ninth consecutive quarter of y/y EBITDA growth in Enterprise • Minority inve
Slide 7: Wireless metrics
Wireless metrics Metrics Q2’09 Y/Y • Metrics for Q2’09 reflect impact of weak economy and competitive pressures Total gross additions 404k 3.3% – Postpaid churn of 1.3% contributed to lower net adds Postpaid 244k (3.6%) – Lower ARPU due to lower voice usage, roaming and Prepaid 160k 15.9% higher sub
Slide 8: Voice
Voice Local Residential NAS Losses Business NAS Losses • 20% fewer residential NAS losses y/y 9.4% 2.7% – Better move retention 7.4% 32k 125k 1.7% – Ongoing service improvement & winbacks 100k 7k – Competitive bundle offers driving higher Internet and video attach rates • Local and access revenue er
Slide 9: Video continues to outperform
Video continues to outperform Retail ARPU EBITDA • Solid revenue growth of 9.3% ($M) +7.0% $68.98 $91 • ARPU up $4.51 or 7.0% y/y $64.47 +93.6% – Driven by programming upgrades and price $47 increases • Net adds of 20k best result since Q4’06 – Reflects strength of direct channels and Q2'08 Q2'09 Q2
Slide 10: Wireline Data
Wireline Data Internet EOP subscribers Residential Internet ARPU • Data service revenue growth of 4.2% y/y – Stronger residential ISP performance +2.4% +10.7% – Solid IP/BB connectivity and ICT services growth 2,062k 2,013k – Wholesale upside driven by higher access demand and rate increases • Data
Slide 11: Looking forward
Looking forward • Continue to drive 5 strategic imperatives • Maintain strong focus on operational execution – Step-up in revenues – Continue driving out costs – Keep HSPA rollout and FTTN deployment on track • Execute on wireless strategic initiatives – Launch of HSPA network in early 2010 – Introd
Slide 12: Siim Vanaselja, Chief Financial Officer
Siim Vanaselja Chief Financial Officer
Slide 13: Q2 financial review
Q2 financial review • Service revenues down slightly y/y Bell Q2’09 Y/Y – Residential services show continued resiliency Revenues $3,628M (1.5%) – Business markets and wireless impacted by economic weakness and competitive intensity Service $3,385M (0.6%) • Higher business NAS erosion Product $243M
Slide 14: Wireless financials
Wireless financials • Service revenues essentially flat y/y in Q2’09 – Slight decline driven by lower voice ARPU and plan mix – Reduced roaming rates and traffic y/y – Offset by continued data growth • Product revenues down 11.1% y/y, despite increased data device sales – Due primarily to lower aver
Slide 15: Positive wireline EBITDA growth
Positive wireline EBITDA growth • Residential business delivering good results in ($M) Q2’09 Y/Y current environment Revenues 2,575 (2.0%) – Exhibiting resiliency to economic pressures Local & access 796 (5.8%) – Making progress in competitive landscape Long distance 271 (9.1%) • Pace of legacy eros
Slide 16: Adjusted EPS and tax expense
Adjusted EPS and tax expense Adjusted EPS(1) Adjusted EPS • Up $0.05 per share y/y in Q2’09 +9.4% $0.58 • Higher EBITDA and lower share $0.53 count due to NCIB, partly offset by increased depreciation and higher net interest expense Q2'08 Q2'09 (1) Before restructuring and other and net gains (losse
Slide 17: Free cash flow
Free cash flow Free cash flow • FCF of $520M in Q2’09 on track with plan ($M) $62 $652 • Reflects increased capital investment in ($96) ($41) $520 strategic priorities ($47) ($10) – Wireless CI at 20.3%, due to HSPA investment and data expansion – Wireline CI of 17.7% reflects accelerated FTTN spend
Slide 18: Improved outlook
Improved outlook • Increased revenue guidance reflects February 11 August 6 impact of The Source and Virgin Guidance Guidance – Bell revenues before acquisitions expected to Revenues Stable 1% to 2% improve in 2H’09 vs. 1H’09 • EBITDA reflects our core competency in EBITDA Stable 1% to 2% reducing c