Slide 1: Q1 2010 Results Conference Call
Q1 2010 Results Conference Call May 6, 2010
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 plan to launch Internet Protocol Television (IPTV) la
Slide 3: George Cope, President & Chief Executive Officer
George Cope President & Chief Executive Officer
Slide 4: Executing on our Strategic Imperatives in Q1
Executing on our 5 Strategic Imperatives in Q1 • Record Q1 postpaid net adds up 132% y/y • Increased share of incumbent postpaid net adds to 42% from 19% in Q1’09 Accelerate • Launch of Bell Mobility and Virgin at The Source wireless • Wireless data revenue growth of 40% • Live coverage of Olympics
Slide 5: Executing on our Strategic Imperatives in Q1
Executing on our 5 Strategic Imperatives in Q1 • 10th consecutive quarter of improved y/y retail residential NAS line losses Leverage • Business NAS line losses improve 8.5% y/y wireline • Average revenue per household up 12% y/y • Bell TV revenues up 10.6% y/y momentum • Maintaining best-in-class w
Slide 6: Successfully executing our 4P marketing strategy
Successfully executing our 4P marketing strategy Revenue generating units (RGUs) • Market traction driven by Net additions – Competitive product offers and effective advertising Video – New HSPA+ network and devices High-speed Internet 86k – High service levels Wireless +78% 20k • RGU net additions,
Slide 7: Wireless subscriber acquisition accelerates
Wireless subscriber acquisition accelerates Metrics* Q1’10 Y/Y • Significant y/y market share gain in Q1 Postpaid gross additions 264k 25.8% • Total gross additions up 17% Total gross additions 429k 17.2% – Higher postpaid mix y/y – First full quarter with new HSPA+ network Postpaid net additions 81
Slide 8: Voice
Voice Residential NAS Business NAS • Residential NAS losses improve 2.8% y/y Line losses Line losses – 10th consecutive quarter of reduced y/y retail +2.8% +8.5% residential NAS losses 78k 26k 76k 24k – Effective winback efforts despite competition – Synergy of bundled service offers • Improving bus
Slide 9: Bell TV continues to accelerate
Bell TV continues to accelerate Retail ARPU Revenue • Strong financial results $M +10.6% $428 • ARPU up $3.76 or 5.5% y/y to $72.60 +5.5% $72.60 – Driven by programming upgrades and price $68.84 $387 increases • Net adds of 20k – Leveraging HD leadership position to drive higher sales in direct chan
Slide 10: Wireline Data
Wireline Data Internet ARPU FTTN subscribers • Residential Internet ARPU up 5.2% y/y Residential – Favourable impact of price increases +5.2% – Bandwidth usage revenues up 42% y/y due to strong +39% demand and usage-based billing • FTTN helping to drive broadband growth – Internet net adds of 10k in
Slide 11: 2010 focus areas
2010 focus areas Wireless Wireline • Grow market share • Drive broadband investment • Expand data penetration and ARPU • Launch IPTV • Leverage HSPA+ network and • Benefit from economic recovery related devices • Continue driving out costs to maintain margins • Further improve service delivery Measu
Slide 12: Siim Vanaselja, Chief Financial Officer
Siim Vanaselja Chief Financial Officer
Slide 13: Q1 financial review
Q1 financial review Bell Q1’10 Y/Y • Revenue growth of 3.8% – Reflects acquisitions of The Source and Virgin Revenues $3,758M 3.8% – Improved wireless service revenue growth Service $3,389 0.6% – Continued strong TV and IP/BB performance Product $369 45.9% – Increased equipment sales to large busine
Slide 14: Wireless financials
Wireless financials • Wireless revenue growth of 7% – Reflects significant postpaid subscriber base growth, increased smartphone penetration and Virgin acquisition – ARPU stable y/y after 5 consecutive quarters of decline • Excluding the unanticipated outcome of an arbitration decision of a contract
Slide 15: Improving wireline performance
Improving wireline performance ($M) Q1’10 Y/Y • Revenues higher y/y from The Source acquisition Revenues 2,658 2.5% • Residential continues to perform well Local & access 762 (5.3%) – Improvement in local voice revenue erosion driven by fewer Long distance 238 (14.4%) NAS line losses y/y and targete
Slide 16: Growth in earnings
Growth in earnings Adjusted EPS(1) • Adjusted EPS up 14% y/y, or $0.08 per share +14% $0.65 • Lower y/y pension expense in Q1 $0.57 – Higher returns on plan assets in 2009 and positive impact of $500M pension contribution – Benefit of $51M pension valuation credit – FY2010 pension expense projected
Slide 17: Substantial free cash flow generation
Substantial free cash flow generation Free cash flow • FCF of $545M in Q1 ahead of plan • Lower cash taxes paid due to savings from $545M +$273M $500M voluntary pension contribution • Reduced capital spending y/y $272M – Higher wireless capex in Q1’09 as a result of HSPA+ network investment Q1'09 Q1
Slide 18: Outlook
Outlook • Reconfirming all 2010 guidance targets • Substantial free cash flow supports maintenance of strong balance sheet, liquidity position and dividend growth model 2010 Guidance* Revenue growth 1% to 2% EBITDA growth 2% to 4% Capital intensity ≤ 16% (1) Adjusted EPS $2.65 to $2.75 6%-10% (2) Fr