Slide 1: Q2 2010 Results Conference Call
Q2 2010 Results Conference Call August 5, 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 dividend policy, expected levels of capital expenditu
Slide 3: Siim Vanaselja, Chief Financial Officer
Siim Vanaselja Chief Financial Officer
Slide 4: Q2 financial review
Q2 financial review Bell Q2’10 Y/Y • Revenues up 4.5% in Q2’10 – Includes The Source and Virgin acquisitions Revenues $3,792M 4.5% – Double-digit wireless service and TV revenue growth Service $3,454 2.0% – Solid IP broadband and ICT growth in business with Product $338 39.3% upside from G8/G20 Summ
Slide 5: Wireless financials
Wireless financials • Double-digit wireless service revenue growth of 10.8% – Reflects larger postpaid subscriber base, higher ARPU and Virgin acquisition – Wireless data revenues up 45% y/y on higher usage and increased smartphone penetration • Product revenues down 4.5% y/y, despite higher volumes
Slide 6: Strong wireline performance
Strong wireline performance ($M) Q2’10 Y/Y • Higher y/y product revenues from The Source acquisition Revenues 2,632 2.2% Local & access 758 (4.8%) • Residential continues to deliver solid results Long distance 233 (14.0%) – Maintaining competitive position in the market Data 909 (1.1%) – Voice reven
Slide 7: Growth in Adjusted EPS
Growth in Adjusted EPS Adjusted EPS(1) • Adjusted EPS up 33% y/y, or $0.19 per share +33% $0.77 • Higher EBITDA driven by opex savings, $0.58 increased revenue growth and lower pension • Accretion from lower share count – 2010 NCIB program now 66% complete Q2'09 Q2'10 • Effective tax rate of 18.5% i
Slide 8: Strong free cash flow generation
Strong free cash flow generation Free cash flow • FCF of $566M in Q2’10 on track with high end of guidance +$46M $566M $520M • Reduced capital spending y/y – Higher wireless capex in Q2’09 as a result of HSPA+ network investment – Wireline CI of 17.3% in Q2’10 as spending on broadband fibre and IPTV
Slide 9: Improved 2010 financial guidance
Improved 2010 financial guidance February 4 August 5 • Increased revenue guidance reflects step-up Guidance Guidance in wireless revenue trajectory – The Source and Virgin acquisitions now fully Revenue growth 1% to 2% 2% to 3% reflected in results EBITDA growth 2% to 4% No change • No change in EBI
Slide 10: Dividend increase
Dividend increase • 5% dividend increase effective with Delivering on dividend growth model (Annualized common dividend per share) October 15, 2010 payment • 2nd increase in 2010 +25% • Reflects favourable YTD earnings and free cash flow performance $1.83 $1.74 $1.62 • Readily funded from free cash
Slide 11: Share buybacks
Share buybacks NCIB program # of shares Cost Status Average price purchased per share 2009 40M $986M Completed $24.65 2010 11.2M $329M 66% completed $29.42 • 2010 share buyback program for up to $500M to be executed over course of year • Accretive to EPS and surplus cash – Contributes ~$0.03 to Adju
Slide 12: George Cope, President & Chief Executive Officer
George Cope President & Chief Executive Officer
Slide 13: Expanding base of customers on Growth Services
Expanding base of customers on Growth Services Revenue generating units (RGUs) • RGU net additions, excluding NAS, up 56% Growth Services net additions y/y to 104k Video +56% 104k – Highlighted by strong wireless results High-speed Internet 10k – Competitive product offers and effective sales Wirele
Slide 14: Continued strong wireless market momentum
Continued strong wireless market momentum Metrics* Q2’10 Y/Y • Total net additions more than doubled in Q2’10 – Reflects 19% higher gross adds y/y with stable churn Postpaid gross additions 301k 23.2% Total gross additions 481k 19.0% • Postpaid driving higher acquisitions y/y – New HSPA+ network and
Slide 15: NAS decline stable
NAS decline stable Residential NAS Business NAS • Residential NAS losses improve 4.3% y/y Net line losses Net line losses – 11th consecutive quarter of reduced y/y retail residential NAS losses 101k 32k 31k – Québec driving y/y improvement, reflecting good 97k move season performance – Increased mul
Slide 16: Bell TV
Bell TV Retail ARPU Revenues • Double-digit revenue growth of 11.6% • ARPU up $4.45 or 6.5% y/y to $73.43 +6.5% +11.6% $73.43 $434M – Driven by programming upgrades and price $68.98 $389M increases • Net adds of 10k in Q2’10 – Gross activations 6% higher y/y – But, increased churn due to competitors
Slide 17: Wireline Data
Wireline Data Total Data revenues Internet ARPU Residential Services $M Residential $919 (1.1%) +3.3% • Data revenue growth of 3.8% in Q2’10 $909 – Internet ARPU up 3.3% y/y, driven by 71% increase in bandwidth usage revenues and plan mix • Lower Internet customer churn y/y – Bell Fibe product line-
Slide 18: Executing on our Service and Cost Strategic Imperatives in Q2
Executing on our Service and Cost Strategic Imperatives in Q2 Improve customer service Achieve a competitive cost structure • Fewer customer calls into Bell’s Residential • Wireline operating costs* down $92M y/y in Q2 Services call centres – Flow-through of labour force reductions – Procurement sav
Slide 19: Q2 Summary
Q2 Summary • Continued successful execution of 5 strategic imperatives • Positive trends for wireless and wireline results – Increased wireless ARPU – Strong postpaid subscriber growth – Stable NAS erosion – Continued strong financial performance in TV and Internet • Cost reductions helping EBITDA g