Slide 1: Q1 2009 Results Conference Call
Q1 2009 Results Conference Call May 7, 2009
Slide 2: Safe harbour notice
Safe harbour notice This presentation may contain forward-looking statements with respect to items such as revenue, EBITDA, earnings per share, free cash flow, capital intensity, capital structure model and other statements that are not historical facts. Several assumptions were made by BCE in prepa
Slide 3: Siim Vanaselja, Chief Financial Officer
Siim Vanaselja Chief Financial Officer
Slide 4: Q1 financial review
Q1 financial review Bell Q1'09 Y/Y • Managing through economic downturn – Residential services showing good resiliency $3,623M (0.5%) – Softer SMB market Revenues – Reduced equipment sales in Enterprise EBITDA $1,426M 0.3% – Cautious spending and competitor pressures impacting wireless growth EBITDA
Slide 5: Wireless financials
Wireless financials • Service revenues reflect data growth of 36% y/y and impact of lower voice ARPU • EBITDA growth of 5.9% – Reflects lower retention spend and disciplined handset pricing • EBITDA margin increase of 1.1 pts y/y to 44% • EBITDA flow-through of 80% ($M) Q1'09 Y/Y Revenues 1,079 3.5%
Slide 6: Solid wireline performance underpinned by tight cost control
Solid wireline performance underpinned by tight cost control ($M) Q1'09 Y/Y • Residential business showing good resiliency to economic downturn Revenues 2,592 (2.4%) – Pace of legacy erosion continues to slow Local & Access 805 (6.1%) – Solid video performance Long distance 278 (6.7%) Data – Service
Slide 7: Free cash flow
Free cash flow Free cash flow ($M) • FCF of $272M for Q1 ahead of plan $22 $304 $18 $272 – Reflects normal seasonality of ($26) ($46) payments • Impacted by higher capex spend – Wireless CI at 12.0% due to HSPA investment and data expansion Q1'08 EBITDA (1) Capex Pension Net interest, Q1'09 – Accele
Slide 8: Executing on our capital structure model
Executing on our capital structure model • 5% dividend increase effective with April 15th dividend payment • 5% NCIB completed on May 5th at an average cost of approximately $24.65 per share • Renewed $1.4B credit facility for 3-year term on May 7th • $2.3B of cash on hand at Bell to readily meet $1
Slide 9: George Cope, President & Chief Executive Officer
George Cope President & Chief Executive Officer
Slide 10: Clear progress on strategic imperatives in Q1
Clear progress on strategic imperatives in Q1 1 • 95% completion rate on Same Day Next Day services Improve • 14% y/y reduction in repair call centre volumes customer • Began process of repatriating one million calls from offshore suppliers service • 14% y/y improvement in wireless dropped call rate
Slide 11: Acquisition of Virgin Mobile's 50% stake
Acquisition of Virgin Mobile’s 50% stake Rationale 1 • Significant brand awareness Leverage Virgin • Continued global marketing support from Virgin Group Brand • Long-term extension of brand licensing agreement • Maximizes Bell’s flanker brand flexibility 2 • Virgin’s strong brand appeal should driv
Slide 12: Acquisition of The Source on track to close in Q3
Acquisition of The Source on track to close in Q3 Pro-forma exclusive carrier The Asset points of distribution(1) • Canadian consumer electronics retailer with 756 retail stores nationally and ~3,000 employees 1,479 • Revenues(2) of $643M; EBITDA(2) of $27M • 7-year track record of profitability The
Slide 13: Wireless metrics
Wireless metrics Metrics Q1'09 Y/Y • Growth in postpaid sales driven by data demand, rate plans and more points of sale Postpaid gross additions 210k 6.1% – Gross adds up 6.1% – Net adds up 25% Prepaid gross additions 156k 2.0% – Postpaid churn improved 0.1 pts y/y to 1.2% Postpaid net additions 35k
Slide 14: Voice
Voice Residential NAS Losses Total NAS Losses Local 9.7% 6.6% • 13% fewer NAS losses y/y in Q1’09 7.7% 5.3% 106k – Steady winbacks with higher Internet and 119k 78k 104k video attach rates – Offset partly by higher business line losses • Local and access revenue erosion slowed for third quarter in a
Slide 15: Continued strong video performance
Continued strong video performance ARPU EBITDA • Solid revenue growth of 8.7% ($M) +6.5% $68.84 +19.5% $92 • ARPU up $4.19 or 6.5% y/y $64.65 $77 – Driven by programming upgrades and price increases • Highest Q1 gross adds in past 7 years Q1'08 Q1'09 Q1'08 Q1'09 • Net adds of 12k vs 1k last year – S
Slide 16: Data
Data Internet EOP subs Residential Internet ARPU • Data service revenue growth of 3.6% y/y – Solid residential ISP performance (,000) +10% +2.3% 2,060 – Continued growth in IP/BB connectivity and 2,014 ICT services solutions – Weaker equipment sales to business customers due to softer economy • Inte
Slide 17: Q1 summary
Q1 summary Solid operating results given macroeconomic environment • Abating NAS losses • Higher residential household ARPU • Wireless margin expansion in tough environment • Stable revenues and EBITDA • Efficient and targeted capex investment • Financial results in-line with 2009 guidance targets M