Slide 1: Q2 2012 Results Conference Call
Q2 2012 Results Conference Call August 8, 2012
Slide 2: Safe harbour notice
Safe harbour notice Certain statements made in the attached presentation, including, but not limited to, statements relating to our 2012 financial guidance (including revenues, EBITDA, capital intensity, Adjusted EPS and free cash flow), our business outlook, objectives, plans and strategic prioriti
Slide 3: George Cope, President & Chief Executive Officer
George Cope President & Chief Executive Officer
Slide 4: Strong operating results delivered in Q2
Strong operating results delivered in Q2 • Executing on strategy across all products and in all markets • Exceptional wireless momentum • IPTV growth steadily accelerates, while holding wireline margins at ~40% • Bell Media financial results lead industry in Q2 • Total Bell operating costs in Q2 red
Slide 5: Continued wireless operating momentum
Continued wireless operating momentum Postpaid net additions Postpaid churn • Postpaid net adds of 102k, up 8.2% y/y – Business net adds increased 20% in Q2’12 – Postpaid subscribers in West 14% higher y/y +8.2% 102k 1.53% 25 bps 94k 1.28% • 34% share of incumbent postpaid net adds • Lowest postpaid
Slide 6: Industry-leading wireless ARPU and EBITDA growth
Industry-leading wireless ARPU and EBITDA growth Wireless EBITDA Blended ARPU $556M +20.9% +4.5% $55.37 $460M $52.99 Q2'11 Q2'12 Q2'11 Q2'12 • Best Q2 EBITDA growth rate in 8 years • Increased ARPU growth driven by smartphone adoption and higher-value customer mix • Strong ARPU growth and cost disci
Slide 7: Wireline data
Wireline data Fibe TV net additions Internet subscribers Data revenues $M -0.4% 38k +0.1% 2,112k 2,104k $1,395 $1,393 +168% 14k Q2'11 Q2'12 Q2'11 Q2'12 Q2'11 Q2'12 • Total TV net adds up 166% y/y to 17k • Internet net loss of 664 in Q2’12 vs. • Overall data results moderated by net gain of 1,275 in
Slide 8: Wireline voice
Wireline voice NAS line losses Q2’12 Y/Y Residential NAS 85k (2k) Residential NAS – Adjusted (1) 82k 17k Business NAS 34k (17k) Business NAS – Adjusted (1) 31k (5k) Total NAS 119k (19k) Total NAS – Adjusted (1) 113k 12k (1) Excluding contribution of wholesale customers via a 3rd party reseller • Res
Slide 9: Bell Media
Bell Media Media revenues Media EBITDA • Revenue growth in Q2’12 moderated by $M $M soft advertising market +0.9% $529 $534 • Agreements concluded with all BDUs for +23.6% $152 specialty sports rate increases $123 – Supports stronger revenue trajectory in 2H’12 • Strong audience levels maintained ac
Slide 10: Astral transaction update
Astral transaction update Market share -- TV viewership(1) • Transaction increases competition in Québec, while meeting all CRTC rules on media ownership French language TV • Bell Media’s TV viewership share post-close Bell maintained within CRTC threshold of 35% 8.1% 24.4% – 24.4% for French langua
Slide 11: Raising dividend 10¢ to $2.27 per share
Raising dividend 10¢ to $2.27 per share Annualized common dividend per share 55% $2.27 $2.17 $2.07 $1.97 $1.83 $1.74 $1.62 Up 10¢ $1.54 $1.46 Effective Date: Q4’08 Q1’09 Q3’09 Q1’10 Q3’10 Q1’11 Q2’11 Q1’12 Q3’12 • Effective with Q3’12 dividend payment • Astral acquisition on track for Q4 close on Oc
Slide 12: Siim Vanaselja, Chief Financial Officer
Siim Vanaselja Chief Financial Officer
Slide 13: Q2 financial review
Q2 financial review Bell Q2’12 Y/Y YTD’12 Y/Y • Strong financial contribution from Bell Wireless and Bell Media in Q2’12 Revenue $4,340M (0.5%) $8,673M 5.2% • EBITDA growth of 3.7% in Q2’12 drives EBITDA $1,716M 3.7% $3,321M 5.1% margin up 1.6 pts y/y to 39.5% Margin 39.5% 1.6 pts 38.3% -- – Wireles
Slide 14: Wireless financials
Wireless financials ($M) Q2’12 Y/Y YTD’12 Y/Y Revenue 1,361 6.7% 2,681 6.1% Service 1,248 6.3% 2,462 6.2% Product 99 7.6% 193 1.0% Operating costs 805 1.3% 1,604 0.1% EBITDA 556 20.9% 1,077 16.9% Margin (service revenue) 44.6% 5.4 pts 43.7% 4.0 pts Capex 172 (2.4%) 308 (9.6%) EBITDA-Capex 384 31.5%
Slide 15: Wireline financials
Wireline financials ($M) Q2’12 Y/Y YTD’12 Y/Y Revenues 2,528 (3.9%) 5,107 (3.7%) Voice 871 (8.6%) 1,761 (8.1%) Data(1) 1,395 0.1% 2,813 0.2% Equipment & other 185 (11.1%) 377 (11.7%) Operating costs 1,520 2.5% 3,096 2.9% EBITDA 1,008 (5.9%) 2,011 (4.9%) EBITDA margin 39.9% (0.8 pts) 39.4% (0.5 pts)
Slide 16: Bell Media financials
Bell Media financials ($M) Q2’12 Y/Y • Revenue growth of 0.9% in Q2’12, despite a soft advertising market Revenues 534 0.9% • Advertising revenue down 7.8% y/y Operating costs 382 5.9% – TV, radio and digital ad sales down y/y across most industry sectors EBITDA (reported) 152 23.6% – Stronger Q2’11
Slide 17: Adjusted EPS
Adjusted EPS Adjusted EPS(1) • Adjusted EPS up 18.6% y/y, or $0.16 per share $1.02 – Excluding tax adjustments, Adjusted EPS grew 4.8% y/y +18.6% $0.15 $0.86 • Higher y/y EBITDA drives $0.06 of EPS growth $0.03 +4.8% $0.87 $0.83 • Increased depreciation expense due to capital investments in LTE and
Slide 18: Free cash flow
Free cash flow Free cash flow • FCF of $804M up 88% y/y on higher EBITDA and improved working capital $M • Higher capex reflects accelerated y/y spending on $804 +$377 wireline and wireless broadband networks – Wireline CI of 23.2% and Wireless CI of 12.6% in Q2’12 $427 • Lower net interest paid ref
Slide 19: Updated 2012 financial guidance
Updated 2012 financial guidance(1) February 9th August 8th • Positive wireless and media outlooks Guidance Guidance Revenue growth 3%-5% Lower end • Stabilizing revenue and EBITDA trajectories for Bell Wireline in second half of 2012 EBITDA growth 2%-4% Higher end • EBITDA tracking to higher end of
Slide 20: Revised key financial assumptions for 2012
Appendix Revised key financial assumptions for 2012 Bell February 9 August 8 Current service pension cost (above EBITDA) ~$190M No change Net pension finance costs (below EBITDA) ~($100M) No change Cash pension funding ~$375M No change Cash taxes ~$300M No change Net interest paid ~$675M No change B