Slide 1: Q2 2011 Results Conference Call
Q2 2011 Results Conference Call August 4, 2011
Slide 2: Safe harbour notice
Safe harbour notice Certain statements made in the attached presentation, including, but not limited to, statements relating to our 2011 financial guidance (including revenues, EBITDA, capital intensity, Adjusted EPS and free cash flow), our LTE wireless network deployment plans, our expected 2011 y
Slide 3: George Cope, President & Chief Executive Officer
George Cope President & Chief Executive Officer
Slide 4: Continued strong wireless postpaid acquisitions
Continued strong wireless postpaid acquisitions Metrics Q2’11 Y/Y • Postpaid gross adds up 13.7% y/y Postpaid gross additions 342k 13.7% – Leveraged extensive hardware line-up, promotional Total gross additions 475k (1.2%) offers and marcom to drive postpaid loadings – 94k postpaid net adds, down 8k
Slide 5: Enhancing our wireless network, device & content leadership
Enhancing our wireless network, device & content leadership + Network build Expanding network Expanded handset Bell Mobile TV started footprint line-up enhanced • On track to launch certain • Dual-cell 42 Mbps service • 4 new Bell exclusive • Instant access to expanded markets this Fall deployed to
Slide 6: NAS line erosion continues to slow
NAS line erosion continues to slow NAS • Residential NAS losses improve 14% y/y – Service bundles with Fibe Internet and Fibe TV Residential Business Total helping retention and winbacks Y/Y 8.1% Erosion – Growth in wholesale residential net adds y/y 6.8% 6.2% rate 4.8% 3.7% • Business NAS losses re
Slide 7: Bell TV
Bell TV Retail TV ARPU Bell TV revenues • Solid TV revenue growth of 6.0% in Q2’11 $M +3.8% +6.0% $460 • ARPU up 3.8% y/y to $76.22 $76.22 $434 $73.43 – Reflects programming upgrades and price increases – Offset partly by Fibe TV promotional discounts • Steady increase in Fibe TV subscribers – Over
Slide 8: Residential wireline data continues to perform well
Residential wireline data continues to perform well Total data revenues Internet ARPU Bell Residential Services Residential $M • Healthy data revenue growth of 6.6% y/y (3.1%) +3.7% $963 – Internet ARPU up 3.7% y/y, driven by FTTN $933 subscriber growth and price increases – Internet net adds improv
Slide 9: Cost reductions drive wireline EBITDA margin improvement
Cost reductions(1) drive wireline EBITDA margin improvement • ~$160M of savings YTD ~ $70M of ~$70M • Reduction in support group costs and wireline labour cost • 9% fewer calls y/y into Bell reductions Residential Services call centres in Q2 ’11 • Capital taxes abolished at end of 2010 Q2’11 • Lower
Slide 10: Strong start for Bell Media
Strong start for Bell Media • Healthy y/y organic growth in advertising and subscriber revenues in TV and Digital • Rebranding /A\ Network to CTV Two • Launched TSN Radio in Toronto market • Strong new Fall programming line-up • Progress in concluding BDU agreements for TSN/RDS rate increases • Four
Slide 11: Q2 summary
Q2 summary • Significant contribution from Bell Media • Maintaining wireless competitiveness – Strong postpaid subscriber growth with higher smartphone mix – LTE deployment on track • Managing competitive pressures and absorbing non-recurring items, while preserving wireless margin close to 40% leve
Slide 12: Siim Vanaselja, Chief Financial Officer
Siim Vanaselja Chief Financial Officer
Slide 13: Q2 financial review
Q2 financial review Bell Q2’11 Y/Y • Revenue growth of 13.5% includes CTV – Strong CTV contribution Revenue $4,362M 13.5% – Solid wireless revenue growth in Q2’11, but softer y/y Service $3,997M 15.2% $365M (1.9%) – Higher ARPU for all wireline consumer products Product EBITDA $1,654M 10.2% • Exclud
Slide 14: Wireless financials
Wireless financials • Solid postpaid service revenue growth of 8.8% in Q2’11 – Increased smartphone mix and usage drive robust data revenue growth of 34% in Q2’11 – Impacted by increased competitive intensity for new subscriber acquisitions and retention • Product revenues up 9.5% on higher y/y smar
Slide 15: Continued solid wireline results
Continued solid wireline results ($M) Q2’11 Y/Y • Residential performing well on all fronts – Solid TV and Internet revenue growth of 6% and 6.6% Revenues 2,630 (2.0%) – Higher ARPUs for all residential services Local & access 726 (4.2%) – Voice revenue decline improvement y/y driven by reduced NAS
Slide 16: Strong Bell Media results in line with plan
Strong Bell Media results in line with plan ($M) Q2’11 • Advertising revenues up ~5% y/y, fuelled by strength in TV and Digital Revenues 529 – Specialty TV driven primarily by NHL playoffs on TSN/RDS and improved audience numbers EBITDA (reported) 123 – Conventional TV driven by federal election, Ro
Slide 17: Healthy growth in Adjusted EPS
Healthy growth in Adjusted EPS Adjusted EPS(1) • Adjusted EPS up 10.3% y/y, or $0.08 per share +10.3% $0.86 • Higher EBITDA from CTV acquisition and wireline $0.78 cost savings drive $0.14 of EPS growth y/y • Increased depreciation mainly reflects higher asset base from Bell Media Q2'10 Q2'11 • Net
Slide 18: Free cash flow
Free cash flow Free cash flow • FCF of $427M in Q2’11, down $175M y/y – Reflects ~$200M net impact on working capital due to ($175M) delayed cash collections from postal strike $602M – Collection cycle expected to normalize in Q3 $427M • Higher y/y capital expenditures due to increased wireless spen
Slide 19: Outlook
Outlook • No fundamental changes in outlook for core businesses • Good visibility on $200M of wireline cost savings for FY2011 • Improving free cash flow trajectory in 2H’11 with projected YE2011 cash balance of $700M-$800M • Strong, reliable dividend with attractive yield May 12 FY2011 Increased Ex