Slide 1: Q4 2019 Results & 2020 Financial Guidance Call
Q4 2019 Results & 2020 Financial Guidance Call February 6, 2020
Slide 2: Safe harbour notice
Safe harbour notice Certain statements made in this presentation are forward-looking statements. These forward-looking statements include, but are not limited to, statements relating to BCE’s financial guidance (including revenues, adjusted EBITDA, capital intensity, adjusted EPS and free cash flow)
Slide 3: Mirko Bibic, President & Chief Executive Officer
Mirko Bibic President & Chief Executive Officer
Slide 4: Bell's updated Strategic Imperatives
Bell’s updated 6 Strategic Imperatives 1 Build the best networks − Continued capital investment in all-fibre connections and enhanced rural connectivity − Maintain LTE-A mobile leadership, while launching 5G 2 Drive growth with innovative services − Offer the fastest Internet, best Wi-Fi and highest
Slide 5: Overview
Overview • Grew wireless, retail Internet and IPTV market share in Q4 with 181k total net additions in an intensely competitive quarter • Wireless adjusted EBITDA up 7.4%, while delivering highest-ever Q4 gross additions • Wireline margin increased to 43.3% in Q4 on 1.5% adjusted EBITDA growth as fo
Slide 6: Q4 operating highlights
Q4 operating highlights Bell Wireless Bell Wireline Bell Media • 122k postpaid net adds in Q4, up • 36k retail Internet net adds in Q4, • CTV maintained viewership and 21% y/y excluding GoC contract up 9.6% y/y ratings leadership in Q4 – 402k net adds in 2019 – 136k net new subscribers added in 2019
Slide 7: Increasing common dividend 5% in 2020
Increasing common dividend 5% in 2020 Annualized common dividend per share • Supported by healthy projected free cash flow growth in 2020 128% – Stable y/y absolute dollar capital spending increase – Pension plan in solvency surplus position – Continued cost structure discipline enabled by $3.33 new
Slide 8: Glen LeBlanc, EVP & Chief Financial Officer
Glen LeBlanc EVP & Chief Financial Officer
Slide 9: Q4 financial review
Q4 financial review ($M) except per share data Q4’19 Y/Y 2019 Y/Y Revenue 6,316 1.6% 23,964 2.1% Service 5,276 0.9% 20,737 1.4% Product 1,040 5.7% 3,227 6.6% Adjusted EBITDA 2,508 4.8% 10,106 6.0% Margin 39.7% 1.2 pts 42.2% 1.6 pts Net earnings 723 12.6% 3,253 9.4% Statutory EPS 0.74 8.8% 3.37 8.7%
Slide 10: Wireless financials
Wireless financials ($M) Q4’19 Y/Y 2019 Y/Y Revenue 2,493 3.6% 9,142 3.7% Service 1,619 1.6% 6,476 2.5% Product 874 7.4% 2,666 6.6% Operating costs 1,549 (1.4%) 5,300 (0.1%) Adjusted EBITDA 944 7.4% 3,842 9.1% Margin (total revenue) 37.9% 1.4 pts 42.0% 2.1 pts Capex 211 (58.6%) 697 (5.0%) Capital in
Slide 11: Wireline financials
Wireline financials ($M) Q4’19 Y/Y 2019 Y/Y Revenue 3,138 0.0% 12,356 0.7% Service 2,969 0.1% 11,788 0.4% Product 169 (0.6%) 568 7.2% Operating costs 1,779 1.1% 6,942 0.1% Adjusted EBITDA 1,359 1.5% 5,414 1.7% Margin 43.3% 0.6 pts 43.8% 0.4 pts Capex 905 (11.9%) 3,183 0.3% Capital intensity (CI) 28.
Slide 12: Media financials
Media financials ($M) Q4’19 Y/Y 2019 Y/Y Revenue 879 3.4% 3,217 3.1% Operating costs 674 0.0% 2,367 2.5% Adjusted EBITDA 205 16.5% 850 22.7% Margin 23.3% 2.6 pts 26.4% 4.2 pts Capex 37 (15.6%) 108 5.3% Capital intensity (CI) 4.2% (0.4 pts) 3.4% 0.3 pts 2019 operating results presented in accordanc
Slide 13: Financial targets for 2020
Financial targets for 2020 BCE Revenue growth 1% to 3% Adjusted EBITDA growth 2% to 4% Capital intensity ~16.5% Adjusted EPS(1) $3.50 to $3.60 Free cash flow growth(2) 3% to 7% Annualized common dividend(3) $3.33 per share Dividend payout policy 65% to 75% of FCF (1) Before severance, acquisition an
Slide 14: Revenue & adjusted EBITDA outlook
Revenue & adjusted EBITDA outlook BCE revenue • Revenue and adjusted EBITDA growth for 2020 consistent with historical rates ($M) 1%-3% – Absorbing ~$25M higher y/y non-cash pension current growth service costs within adjusted EBITDA in 2020 • Continued strong contribution from Bell Wireless 23,964
Slide 15: Pension funding
Pension funding BCE cash funding ($M) • Aggregate of all BCE pension plans in fully funded position at YE2019 with 362 ~350-375 solvency ratio of ~100% – Bell Canada plan at ~102% • 16% return on plan assets and ~70 bps decline in solvency discount rates in 2019 • Cash pension funding for 2020 stabl
Slide 16: Tax outlook
Tax outlook BCE cash income taxes ($M) Income tax expense • Statutory tax rate unchanged y/y at 27.0% • Effective tax rate in line with statutory rate 725 – No tax adjustments in 2020 vs. 7¢ per share in 2019 ~625-725 Cash income taxes • Favourable y/y impact from MTS tax losses that are now fully u
Slide 17: Adjusted EPS outlook
Adjusted EPS outlook Adjusted EPS(1) ($) • Adjusted EBITDA growth remains key driver of adjusted earnings in 2020 Tax adjustments • Higher y/y depreciation & amortization expense 3.50-3.60 reflects ongoing investment in next generation 3.50 wireless and wireline broadband networks 0.07 ~2%-5% • Net
Slide 18: Free cash flow growth outlook
Free cash flow growth outlook Free cash flow(1) • 2020 free cash flow growth of 3% to 7% – Strong flow-through of higher y/y adjusted EBITDA ($M) reflecting positive growth across all Bell segments Excess FCF Common dividends paid – Capital intensity ratio ~16.5% – Steady cash pension funding, while
Slide 19: Strong capital structure
Strong capital structure Credit profile(1) Target 12/31/2019 Investment grade ratings with stable outlook Net debt leverage ratio 2.00x-2.50x 2.79x • Net debt leverage ratio in 2020 to reflect 3.5 GHz wireless spectrum purchases Adj. EBITDA/Net Interest >7.5x 00 8.54x • Deleveraging towards higher e