Bce Inc. · TSX:BCE
Bce — Q1 2011 Earnings Presentation
22 slides from Bce's earnings presentation, May 12, 2011
Slide 1: Q1 2011 Results Conference Call
Q1 2011 Results Conference Call May 12, 2011
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), Bell Media’s financial profile, BCE Inc.’s dividend policy, ou
Slide 3: George Cope, President & Chief Executive Officer
George Cope President & Chief Executive Officer
Slide 4: Continued progress in executing on Strategic Imperatives
Continued progress in executing on Strategic Imperatives • CTV acquisition completed April 1 – one full quarter ahead of schedule • Launched Bell Media • Delivered 81k postpaid net adds in Q1’11 • Achieved highest Q1 incumbent postpaid market share: 46% + • Double-digit wireless EBITDA growth and 40
Slide 5: Strong wireless performance
Strong wireless performance Metrics Q1’11 Y/Y • Postpaid gross additions up 13.4% y/y – Represents 71% of total gross adds vs. 62% in Q1’10 Postpaid gross additions 300k 13.4% – Prepaid gross adds down 24.5% y/y reflecting Bell’s Total gross additions 424k (1.2%) postpaid focus and new entrant compe
Slide 6: Wireless network leadership
Wireless network leadership • Broadest, national HSPA+ network available to more than 96% of the Canadian population + • First in North America to commercially deploy HSPA+ 42 Mbps Dual Cell technology – Service footprint currently encompasses Toronto, Vancouver, Calgary, Edmonton and Winnipeg • LTE
Slide 7: Improving NAS line loss trajectory
Improving NAS line loss trajectory NAS • Residential NAS losses improve 15% y/y – Fibe Internet and Fibe TV service helping retention Residential Business Total Y/Y – Increased winbacks 8.0% Erosion 7.0% 6.1% rate 5.1% • Business NAS lines increased 5k in Q1’11 (100k) – Wholesale net adds higher y/y
Slide 8: Bell TV
Bell TV Retail TV ARPU Bell TV revenues • TV revenue growth of 7.5% $M +4.4% +7.5% $460 • ARPU up 4.4% y/y to $75.76 $75.76 $72.60 $428 – Driven by programming upgrades and price increases • Bell Fibe TV ramping up and driving triple- play household penetration – ~30% of new Fibe TV customers bringi
Slide 9: Residential wireline data performing well
Residential wireline data performing well Total data revenues Internet ARPU Bell Residential Services $M Residential $1,015 (5.9%) +2.3% • Data revenue growth of 4.5% in Q1’11 $955 – Internet ARPU up 2.3% y/y, driven by higher proportion of customers on premium service tiers • Internet net adds up 2
Slide 10: Bell Media
Bell Media • Bell Media rebranding on April 1 – Encompasses all of CTV and Bell’s other content assets • Introduced new services – Bell Mobile TV enhanced -- instant access to live content – Bell TV online -- more top-rated on-demand programs – TSN Radio launched in Toronto • Creating new revenue st
Slide 11: Mobile TV
Mobile TV • Bell Media offering packages on commercial terms to all Canadian wireless providers – Access to TSN and TSN2, RDS, BNN, CTV News Channel, MTV, The Comedy network – Creating new revenue streams for media assets • Bell Wireless offering its customers on-demand access to more mobile TV cont
Slide 12: Q1 summary
Q1 summary Continued wireless operating strength Highest market share of incumbent postpaid net adds, growing ARPU, and strong smartphone sales achieved while generating 12.2% wireless EBITDA growth and 40% margins Positive wireline operating trends Reduced NAS landline losses, slowing voice revenue
Slide 13: Raising dividend by 5% to $2.07 per share
Raising dividend by 5% to $2.07 per share Annualized common dividend per share 42% $2.07 $1.97 $1.83 $1.74 $1.62 $1.54 Up 10¢ $1.46 Effective Date: Q4’08 Q1’09 Q3’09 Q1’10 Q3’10 Q1’11 Q2’11 • Effective with Q2’11 dividend payment • Early closing of CTV delivers strong on July 15 earnings accretion o
Slide 14: Siim Vanaselja, Chief Financial Officer
Siim Vanaselja Chief Financial Officer
Slide 15: Q1 financial review
Q1 financial review Bell Q1’11 Y/Y • Service revenue growth of 1.8% Revenues – Strong wireless, TV and Internet revenue growth $3,882M 1.0% $3,473 1.8% – Y/Y Business Markets performance impacted by Olympics Service and lower data product and ICT sales Product $409 (6.2%) EBITDA $1,505M 6.4% • EBITD
Slide 16: Strong wireless financial results
Strong wireless financial results • Wireless revenue growth of 9.2% in Q1’11 – Reflects benefit from flow-through of significant investment in postpaid acquisition in 2010 – Increased smartphone mix and usage drive data revenue growth of 38% • Product revenues up 15.1% on higher y/y smartphone sales
Slide 17: Industry-leading wireline EBITDA growth
Industry-leading wireline EBITDA growth ($M) Q1’11 Y/Y • Continued solid Residential performance – Higher TV and Internet revenues drive top-line growth of 0.5% Revenues 2,672 (2.7%) – Increased ARPU across all residential services Local & access 729 (4.3%) – Improved voice revenue erosion due to re
Slide 18: Strong Adjusted EPS
Strong Adjusted EPS Adjusted EPS(1) • Adjusted EPS up 18% y/y, or $0.11 per share +18% $0.72 • Higher EBITDA driven by solid service revenue $0.61 growth and cost savings • Lower y/y net pension finance costs in Q1 – Higher return on plan assets and positive impact of $750M pension contribution in D
Slide 19: Free cash flow
Free cash flow Free cash flow • FCF of $265M in Q1’11 in line with plan $560M ($295M) • Impacted by $226M in customer rebates from Bell’s CRTC deferral account balance $265M – CRTC-mandated $252M customer obligation fully met • Accelerated capital spending program y/y – Wireless CI of 9% reflects hi
Slide 20: Increased 2011 financial guidance
Increased 2011 financial guidance(1) February 10 May 12 • Increased revenue, EBITDA and Adjusted Guidance Guidance EPS guidance reflects CTV acquisition Revenue growth 1% to 2% 9% to 11% • No change to free cash flow guidance EBITDA growth 2% to 4% 8% to 10% – Absorbing Bell Media capital spending a
Slide 21: Bell Media financial profile
Appendix Bell Media financial profile Bell Media Q2’11-Q4’11 • 8.2x proportionate EBITDA Revenues ~$1,450M-$1,550M multiple Bell inter-segment eliminations ~($125M) EBITDA ~$350M • Improved valuation multiple as compared to announcement, Adjusted EPS ~$0.07 reflects better-than-expected CTV Free Cas
Slide 22: Revised key financial assumptions for 2011
Appendix Revised key financial assumptions for 2011 Bell February 10 May 12 (no Bell Media) (incl. Bell Media) Current service pension cost (above EBITDA) ~$170M ~$190M Pension finance costs (below EBITDA) ~($50M) ~($60M) Cash pension funding ~$400M ~$425M Cash taxes ~$200M ~$225M Net interest paid