Slide 1: Q3 2009 Results Conference Call
Q3 2009 Results Conference Call November 12, 2009
Slide 2: Safe harbour notice
Safe harbour notice This presentation contains forward-looking statements with respect to items such as revenue, EBITDA, adjusted earnings per share, free cash flow, capital intensity and other statements that are not historical facts. Several assumptions were made by BCE in preparing these forward-
Slide 3: George Cope, President & Chief Executive Officer
George Cope President & Chief Executive Officer
Slide 4: HSPA network launched ahead of schedule
HSPA network launched ahead of schedule • Launched on November 4th • Largest HSPA deployment in North America • Broadest HSPA network in Canada – Provides access to 93% of Canadian population covering 20,000 cities and towns – Most ubiquitous rural coverage – HSPA+ in thousands more locations than R
Slide 5: Thousands more cities and towns than Rogers EAST
Thousands more cities and towns than Rogers EAST COVERAGE Bell HSPA+ Bell HSPA(1) Rogers HSPA+ coverage(2) Rogers HSPA coverage(3) (1) HSPA+ to be deployed everywhere in Quebec by the end of Q1’10 (2) Based on Rogers’ September 14, 2009 public announcement of HSPA+ coverage within cities indicated (
Slide 6: Thousands more cities and towns than Rogers WEST
Thousands more cities and towns than Rogers WEST COVERAGE Bell HSPA+ Rogers HSPA+ coverage(1) Rogers HSPA coverage(2) (1) Based on Rogers’ September 14, 2009 public announcement of HSPA+ coverage within cities indicated (2) Based on coverage maps made publicly available by Rogers on October 23, 2009
Slide 7: Extensive fibre deployment on HSPA network
Extensive fibre deployment on HSPA network • 75% of HSPA cell sites have fibre – Encompasses all Tier 1 markets Network – Microwave in remaining markets to be converted over time Features • 100 Mb fibre to every tower rather than copper • Fibre is more resilient to adverse weather conditions • Costl
Slide 8: Extensive new device line-up for HSPA
Extensive new device line-up for HSPA BLACKBERRY BLACKBERRY EXCLUSIVE SAMSUNG APPLE iPHONE NOVATEL NOVATEL 9000 9700 3GS & 3G U998 X950 OMNIA II EXCLUSIVE SAMSUNG EXCLUSIVE NOKIA 2730 EXCLUSIVE LG XENON IMPACT NOKIA 6350 • 12 new devices at launch • More to come in Q4’09 and Q1’10 • Combined with EV
Slide 9: Executing on our strategic imperatives in Q3
Executing on our 5 strategic imperatives in Q3 • 91% completion rate on Same Day Next Day service, even with summer peak load volumes Improve • 2-day provisioning with Full Install during July move season in Québec customer • 21% y/y reduction in number of call centre agent calls handled service • R
Slide 10: Executing on our strategic imperatives in Q3
Executing on our 5 strategic imperatives in Q3 • Record Q3 postpaid net adds up 8% y/y • Increased share of industry net adds in Q3 by 6.7 points y/y to ~29% Accelerate • Data revenues represent ~18% of ARPU wireless • Data device subscribers up 124% y/y • 12 new HSPA devices launched with roll-out
Slide 11: Growing base of subscribers on broadband platforms
Growing base of subscribers on broadband platforms Revenue generating units (RGUs) • Step-up in subscriber acquisition Net additions – Better sales channel execution – Effective marketing Video High-speed Internet – Service initiatives paying off +11% Wireless 94k NAS • Total Bell RGU growth of 11%
Slide 12: Wireless subscriber growth accelerates
Wireless subscriber growth accelerates Metrics* Q3’09 Y/Y • Record Q3 postpaid net additions – Driven by strong handset line-up, Turbo sticks, and Total gross additions 501k 14.1% focus on better sales execution at large retailers Postpaid 302k 13.1% – Stable postpaid churn q/q Prepaid 199k 15.7% –
Slide 13: Voice
Voice Residential NAS erosion Business NAS erosion Local Annual rate of decline Annual rate of decline • Effectively managing residential NAS 8.9% 7.6% erosion, despite heightened competition 3.5% – Retail residential NAS losses down 3% y/y 1.3% – Better service execution during move season – Increa
Slide 14: Bell TV continues strong momentum
Bell TV continues strong momentum Retail ARPU EBITDA • Double-digit revenue growth of 10.2% +6.4% ($M) +9.2% $83 • ARPU up $4.15 or 6.4% y/y $69.35 $76 $65.20 – Driven by programming upgrades and price increases – Pass-through of new LPIF charge • Net adds of 40k best result since Q4’05 Q3'08 Q3'09
Slide 15: Bell TV leadership accelerates
Bell TV leadership accelerates • First TV provider in Canada to offer 100 HD channels (Nov. 2nd) • Maintaining our industry leadership in HD – Bell: 101 channels – Rogers: 74 channels – Shaw: 56 (DTH); 53 (cable) – Cogeco: 45 (Ontario); 32 (Quebec) – Videotron: 39 Source: Company public information
Slide 16: Wireline Data
Wireline Data Internet EOP subscribers Residential Internet ARPU • Overall data revenues down 2.4% y/y – Slow pace of economic recovery affecting +8% +1.9% 2,084k Business Markets performance 2,046k – Reduced equipment sales and demand for basic connectivity service – Offset partly by higher residen
Slide 17: Looking forward
Looking forward • Deliver the year – Effectively absorb competitive and economic pressures • Maintain strong focus on operational execution – Continue to manage NAS erosion – Maintain momentum at Bell TV – Deliver a positive service experience both in the field and call centres • Continue driving ou
Slide 18: Siim Vanaselja, Chief Financial Officer
Siim Vanaselja Chief Financial Officer
Slide 19: Q3 financial review
Q3 financial review Bell Q3’09 Y/Y • Revenues up 1.2% y/y in Q3’09 – Inclusion of revenues from acquisition of The Source Revenues $3,788M 1.2% and remaining 50% of Virgin – Growth from video, Internet and wireless data moderated by higher business NAS erosion and lower EBITDA $1,448M 1.5% wireless
Slide 20: Wireless financials
Wireless financials • Service revenues largely unchanged y/y – Lower voice ARPU driven by economy and competitive intensity – Offset by increased wireless data usage consistent with significant growth in data device activations • Product revenues up 1.9% y/y – Upside from acquisition of The Source a
Slide 21: Maintaining best-in-class wireline EBITDA performance
Maintaining best-in-class wireline EBITDA performance ($M) Q3’09 Y/Y • Revenues higher y/y from The Source acquisition Revenues 2,659 1.0% – The Source included in Equipment & other product line Local & access 783 (6.0%) • Residential performance reflects effective Long distance 264 (9.0%) Data – Se
Slide 22: Focused execution reflected in our results
Focused execution reflected in our results Wireline EBITDA growth – Q3’09 Wireline EBITDA growth – YTD’09 * * 2.1% 0.5% -5.0% -3.0% -14.6% -17.1% -14.2% -15.0% Total EBITDA growth – Q3’09 Total EBITDA growth – YTD’09 * * 1.5% 0.6% 1.6% 0.0% -1.7% -2.8% -3.0% -6.1% Source: Company reports * TELUS EBI
Slide 23: Growth in Adjusted EPS
Growth in Adjusted EPS Adjusted EPS(1) +40% $0.84 • $0.24 per share increase in Q3’09 $0.60 reflects higher EBITDA and lower shares o/s due to NCIB – Offset partly by increased depreciation $0.07 $0.29 – F/X losses on U.S. dollar hedges due to Q3'08 Q3'09 strengthening of Canadian dollar Tax adjustm
Slide 24: Free cash flow
Free cash flow Free cash flow • FCF of $649M in Q3’09 ahead of plan $649M • FCF of $1,441M YTD +$563M – Includes negative F/X impact of ~$100M YTD • Bell capital intensity of 15.5% in line with guidance $86M – Wireless CI of 15%, due to HSPA build Q3'08 Q3'09 – Accelerated FTTN spending, although wi
Slide 25: Strong balance sheet and liquidity position
Strong balance sheet and liquidity position Bell liquidity position ($M) • Substantial FCF generation Q3’09 YTD'09 BOP cash balance 1,749 3,045 • Debt repayments of ~$2B YTD Free cash flow(1) 649 1,441 – Financed through cash on hand Debt issuance - 1,000 Debt repayments (600) (1,950) • Significant
Slide 26: Q4 priorities
Q4 priorities • Step-up in wireless and wireline revenue trajectories, driven partly by The Source • Maintain focus on operational efficiencies to reduce costs further • Capital investment aligned to strategic imperatives • Maintain strong balance sheet and liquidity position February 11 August 6 FY