Slide 1: Q1 2013 Results Conference Call
Q1 2013 Results Conference Call May 9, 2013
Slide 2: Safe harbour notice
Safe harbour notice Certain statements made in the attached presentation, including, but not limited to, statements relating to our 2013 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: Solid Q1 results
Solid Q1 results Strong wireless financials and postpaid operating results Improving wireline revenue and EBITDA trajectories underpinned by positive RGU performance in IPTV footprint and cost savings Media continues to drive significant EBITDA and cash flow growth in tough environment Conso
Slide 5: Maintaining wireless momentum
Maintaining wireless momentum Metrics Q1’13 Y/Y • Strong postpaid net adds supported by higher y/y postpaid gross adds Postpaid gross additions 295k 0.5% • Best-in-class retention spending at 10.3% Postpaid net additions 59k (4.9%) Postpaid churn rate 1.25% 0.1 pts • Postpaid churn reduced to 1.25%
Slide 6: Wireline data
Wireline data Fibe TV net additions TV • Fibe TV net adds of 47k, up 14k y/y • Fibe TV ARPU ~$65, up 8% y/y +41.9% 47k • 11% y/y increase in three-product households 33k • Quarterly TV revenues surpass $500M for 1st time Internet Q1'12 Q1'13 • Net adds of 13k inside IPTV footprint • 11k net loss out
Slide 7: Wireline voice
Wireline voice NAS line losses (k) Residential Business 83.6 • Residential NAS losses up 12k y/y, 71.1 reflecting higher wireless substitution and competition 25.4 24.9 Q1'12 Q1'13 Q1'12 Q1'13 • Business NAS losses stable y/y Voice(1) revenues • Rate of voice decline held relatively stable over past
Slide 8: Bell Media
Bell Media • Flat revenues y/y as subscriber fee growth offsets soft advertising market • Strong audience levels maintained with most watched events in Q1 – Super Bowl, Academy Awards, Golden Globes • Specialty growth led by increases at Bravo, E! and CP24 • NHL viewership on TSN and RDS up over 11%
Slide 9: Astral update
Astral update • Divestitures in amended application include 11 Astral TV services and 10 radio stations – Corus has agreed to purchase 6 TV services, along with 2 radio stations, for $400.6M – Pro forma divestitures, English viewership market share is 35.7% and French viewership market share is 22.6
Slide 10: Transformation of the business continues
Transformation of the business continues Bell’s improving revenue mix Q1’13 Wireline Product • Growth Services service revenue up $120M, or ~4% y/y Internet / 6% Wireline Data Service • Wireless, TV and media now account Business 19% for 56% of total Bell revenues Wireline Voice 10% TV 81% 12% from
Slide 11: Siim Vanaselja, EVP & Chief Financial Officer
Siim Vanaselja EVP & Chief Financial Officer
Slide 12: Q1 financial review
Q1 financial review Bell Q1’13 Y/Y • Service revenues up 1.3% on wireless, TV, Internet and business IP/solutions growth Revenue $4,348M 0.3% Service $3,987M 1.3% Product $361M (9.0%) • 2.1% EBITDA growth drives margin expansion of 0.6 pts y/y to 37.7% EBITDA $1,641M 2.1% – Strong double-digit Wirel
Slide 13: Wireless financials
Wireless financials ($M) Q1’13 Y/Y • Service revenue up 7.2% y/y on postpaid service revenue growth of 8.9% Revenue 1,409 6.3% Service 1,303 7.2% • EBITDA growth of 11.6% yielding 70% Product 93 (1.1%) flow-through Operating costs 824 (2.7%) • 44.9% EBITDA service margin, up 1.8 pts y/y EBITDA 585 1
Slide 14: Wireline financials
Wireline financials ($M) Q1’13 Y/Y • Positive Bell Residential Services service revenue growth of 0.6% in Q1’13 Revenues 2,508 (2.8%) – Strong data services growth and slower y/y voice erosion Data 1,433 0.8% Voice 830 (8.3%) • Data up 0.8% y/y on 7.5% growth in residential Equipment & other 164 (4.
Slide 15: Bell Media financials
Bell Media financials ($M) Q1’13 Y/Y • Total revenues stable y/y Revenues 513 0.2% • Subscriber revenue up 11.9% y/y on specialty TV rate increases Operating costs 415 3.7% • Advertising revenue down 5.8% y/y, reflecting continued soft advertising market EBITDA (reported) 98 21.0% – Sports specialty
Slide 16: Adjusted EPS
Adjusted EPS Adjusted EPS(1) • Higher y/y EBITDA drives $0.03 of EPS growth • Higher depreciation reflects increased asset base +11.6% $0.77 $0.69 • Lower y/y tax adjustments and higher taxable income – Effective rate of 26.4% in Q1’13 vs. 23.2% in Q1’12 Q1'12 Q1'13 (1) Before severance, acquisition
Slide 17: Free cash flow
Free cash flow Free cash flow • EBITDA-Capex up $128M, or 13% y/y • Seasonally low Q1 FCF of $247M, down $84M y/y $331M -$84M – Reflects decreased working capital due to timing of A/R collections mainly from fewer business days vs. Q1’12 $247M • Net interest paid reflects higher average level of out
Slide 18: Outlook
Outlook February 7th FY2013 • No fundamental changes in outlook Guidance(1) Expectation for core businesses Revenue growth 0%-2% On track • All financial guidance targets on track EBITDA growth 1%-3% On track • Maintaining strong wireless operating momentum Capital intensity 16%-17% On track • Conti