Slide 1: Q3 2016 Analyst Conference Call
Q3 2016 Analyst Conference Call November 3, 2016
Slide 2: Safe harbour notice
Safe harbour notice Certain statements made in this presentation are forward-looking statements. These statements include, without limitation, statements relating to our 2016 financial guidance (including revenues, adjusted EBITDA, capital intensity, adjusted EPS and free cash flow), the expected ti
Slide 3: George Cope
George Cope President & Chief Executive Officer
Slide 4: Q3 overview
Q3 overview Total service revenue growth of 1.8% and cost control drove 2.2% increase in BCE adjusted EBITDA and 0.5-point y/y expansion in margin to 41.4% Outstanding wireless subscriber and financial performance – 107k postpaid net additions, up 38.1% y/y – 5.7% service revenue growth on 3.7%
Slide 5: Wireless operating metrics
Wireless operating metrics Q3’16 Y/Y • Postpaid gross additions up 7.9% y/y – Network speed leadership supporting growth Postpaid gross additions 382k 7.9% • 107k postpaid net additions -- best Q3 Postpaid net additions 107k 38.1% performance since 2012 Postpaid churn rate 1.26% 0.05 pts • ARPU up 3
Slide 6: Wireline subscriber metrics
Wireline subscriber metrics Internet and IPTV subscribers (EOP) • Operational focus remains on disciplined subscriber growth and TV product superiority IPTV Internet 4,760k • 39.4k total Internet net adds 4,483k +6.2% – Residential churn stable y/y, despite very aggressive 3,458k promotional student
Slide 7: Bell Media
Bell Media • Q3 financial results tracking to plan with positive revenue, adjusted EBITDA and adjusted EBITDA- capex growth for 3rd consecutive quarter • Strong Q3 TV viewership and ratings maintained – CTV was #1 network for 12th consecutive summer season, broadcasting 11 of 20 top programs – 3 of
Slide 8: Corporate developments update
Corporate developments update • Regulatory review process progressing normally with the Competition Bureau, ISED and CRTC – Shareholder and court approval obtained at end of Q2 • Transaction expected to be completed at end of 2016 or early 2017 • Acquired remaining 64.6% equity ownership of Q9 Netwo
Slide 9: Glen LeBlanc
Glen LeBlanc EVP & Chief Financial Officer
Slide 10: Q3 financial review
Q3 financial review ($M) except per share data Q3’16 Y/Y YTD’16 Y/Y Revenue 5,407 1.2% 16,017 0.7% Service 5,024 1.8% 14,921 1.5% Product 383 (7.0%) 1,096 (9.1%) Adjusted EBITDA 2,236 2.2% 6,667 2.9% Margin 41.4% 0.5 pts 41.6% 0.9 pts Net earnings 800 1.1% 2,388 9.1% Statutory EPS 0.87 0.0% 2.58 7.5
Slide 11: Wireless financials
Wireless financials ($M) Q3’16 Y/Y YTD’16 Y/Y Revenue 1,848 4.3% 5,276 3.3% Service 1,711 5.7% 4,900 5.2% Product 127 (11.2%) 345 (17.7%) Operating costs 1,052 (3.7%) 2,947 (1.0%) Adjusted EBITDA 796 5.0% 2,329 6.5% Margin (service revenue) 46.5% (0.3 pts) 47.5% 0.5 pts Capex 195 (6.0%) 540 (3.3%) C
Slide 12: Wireline financials
Wireline financials ($M) Q3’16 Y/Y YTD’16 Y/Y Revenue 3,005 (0.8%) 8,967 (1.4%) Service 2,747 (0.3%) 8,210 (1.1%) Product 258 (4.9%) 757 (4.5%) Operating costs 1,752 1.7% 5,184 3.0% Adjusted EBITDA 1,253 0.6% 3,783 0.8% Margin 41.7% 0.6 pts 42.2% 1.0 pts Capex 756 (5.6%) 2,158 (4.4%) Capital intensi
Slide 13: Media financials
Media financials ($M) Q3’16 Y/Y YTD’16 Y/Y Revenue 716 3.5% 2,236 3.6% Operating costs 529 (3.9%) 1,681 (3.8%) Adjusted EBITDA 187 2.2% 555 3.0% Margin 26.1% (0.3 pts) 24.8% (0.2 pts) Capex 25 7.4% 80 (3.9%) Capital intensity 3.5% 0.4 pts 3.6% 0.0 pts Adjusted EBITDA-capex 162 3.8% 475 2.8% • Total
Slide 14: Adjusted EPS
Adjusted EPS Adjusted EPS(1) • Positive adjusted EBITDA growth for all segments drove 4¢ increase in adjusted EPS +2.3% $2.70 $2.64 • Higher depreciation and amortization expense consistent with a higher capital asset base • Lower net pension financing cost in 2016 reflects YTD'15 YTD'16 higher disc
Slide 15: Free cash flow
Free cash flow FCF • FCF up 3.3% y/y on solid adjusted EBITDA growth and working capital improvement ($M) +10.6% $2,303 • Higher y/y capex due to planned investments in $2,083 strategic broadband wireless and wireline network infrastructure and service platforms • Low interest rates driving decrease
Slide 16: Outlook
Outlook 2016 guidance February 4 April 28 August 4 November 3 Revenue growth 1% to 3% On track On track On track Adjusted EBITDA growth 2% to 4% On track On track On track Capital intensity approx. 17% On track On track On track Adjusted EPS(1) $3.45 to $3.55 On track On track On track Growth y/y ap