Slide 1: Q1 2014 Results Conference Call
Q1 2014 Results Conference Call May 6, 2014
Slide 2: Safe harbour notice
Safe harbour notice Certain statements made in the attached presentation, including, but not limited to, our 2014 financial guidance (including revenues, EBITDA, capital intensity, Adjusted EPS and free cash flow), our business outlook, objectives, plans and strategic priorities, BCE’s 2014 annualiz
Slide 3: George Cope, President & Chief Executive Officer
George Cope President & Chief Executive Officer
Slide 4: Q1 overview
Q1 overview Bell EBITDA up 4.1% with stable y/y margin of 37.6% Strong Wireless service revenue growth of 4.7% drives 7.4% higher EBITDA Improved y/y rates of Wireline revenue and EBITDA decline driven by significant 40.5k improvement in residential RGU net loss Astral contributing to strong
Slide 5: Wireless operating metrics
Wireless operating metrics Metrics Q1’14 Y/Y • 34k postpaid net adds in line with plan – Slower industry growth as market adjusts to new pricing Postpaid gross additions 275k (6.8%) environment brought about by Wireless Code – No iconic handset launches in Q1 Postpaid net additions 34k (42.9%) • Pos
Slide 6: Wireline voice
Wireline voice Residential NAS line losses • Residential NAS losses improve 21.4% y/y – Lower churn driven by growth in IPTV footprint and continued strong Fibe TV pull-through 83.6k – Higher y/y activations in Quebec – Wireless substitution continues to steadily increase 65.6k • Business NAS losses
Slide 7: TV and Internet subscriber metrics
TV and Internet subscriber metrics Fibe TV net additions TV • Fibe TV net adds in Q1 up 15.2% y/y to 55K +15.2% 54.7k – Continued IPTV footprint expansion 47.5k • Fibe TV customer base up 81% y/y to 534k • Total TV net adds double y/y to 29k – 22% fewer Satellite TV net losses y/y reflects product Q
Slide 8: Improving residential Wireline RGU trajectory
Improving residential Wireline RGU trajectory Bell Residential RGU net losses • Total residential RGU net losses in Q1’14 improve 40.5k y/y – ~75% of Fibe TV customers taking 3 products – 18% y/y increase in three-product households 62.2k +65% • Fibe TV service footprint now reaches 4.5M homes in Qu
Slide 9: Bell Media
Bell Media • Revenues up y/y, despite soft advertising market and Olympics on CBC – But content costs continue to rise • Programming driving strong audience levels – 12 of top 20 programs in winter season for CTV – TSN viewership up 8% y/y – Highly-rated Canadian programming: MasterChef Canada, Bitt
Slide 10: Increasing contribution from growth services
Increasing contribution from growth services Bell revenue mix Q1’14 Wireline • Growth services revenue in Product Q1’14 up $251M, or 7.2%, y/y Wireline 6% Broadband 19% TV Wireline Business 12% 83% Voice 9% from Growth Consumer Services 8% Media 14% Wireless 32% Growth services now represent 83% of
Slide 11: Siim Vanaselja, EVP & Chief Financial Officer
Siim Vanaselja EVP & Chief Financial Officer
Slide 12: Q1 financial review
Q1 financial review Bell Q1’14 Y/Y • Service revenues up 5.0% y/y – Reflects Astral contribution, strong wireless ARPU Revenue $4,538M 4.4% growth and positive Wireline residential revenue growth Service $4,188M 5.0% Product $350M (3.1%) • 4.1% higher y/y EBITDA with stable margin EBITDA $1,708M 4.1
Slide 13: Wireless financials
Wireless financials ($M) Q1’14 Y/Y • Improving revenue growth trajectory with service revenues up 4.7% in Q1’14 Revenue 1,472 4.5% – Reflects strong data revenue growth of 17.5% Service 1,364 4.7% driven by greater smartphone usage and mix Product 94 1.1% Operating costs 844 (2.4%) • EBITDA up 7.4%
Slide 14: Wireline financials
Wireline financials ($M) Q1’14 Y/Y • Residential Services revenue growth positive in Q1’14, driven by y/y improvement in RGU net loss Revenues 2,462 (1.8%) Data 1,463 2.1% • Data revenue reflects 4.8% increase in residential Voice 765 (7.8%) services driven by Fibe growth and price increases Equipme
Slide 15: Media financials
Media financials ($M) Q1’14 Y/Y • Total Media revenues up 40.7% y/y – Including Astral in Q1’13 results, revenues up ~3% y/y Revenues 722 40.7% • Advertising revenue up ~28% y/y Operating costs 572 (37.8%) – Conventional and non-sports specialty TV advertising impacted by soft market and Sochi Winte
Slide 16: Adjusted EPS
Adjusted EPS Adjusted EPS(1) • Higher y/y EBITDA contributes 6¢ of EPS growth • Higher depreciation and amortization reflects +5.2% $0.81 growth in capital assets and Astral contribution $0.77 • Net pension finance cost down y/y due to lower pension obligation Q1'13 Q1'14 (1) Before severance, acqui
Slide 17: Free cash flow
Free cash flow Free cash flow • FCF up 6.1% y/y in seasonally low quarter +$15M • $66M higher y/y EBITDA(1) driven by increased $262M contribution from growth services $247M • Improved working capital position reflects lower A/R balance due to timing of collections and Q1'13 Q1'14 distributions from
Slide 18: Outlook
Outlook February 6th FY2014 • No fundamental changes in outlook Guidance (1) Expectation for core businesses Revenue growth 2%-4% On track • Continued y/y improvement in Wireline performance trajectory EBITDA growth 3%-5% On track • Astral synergies helping to offset impact of rising content costs a