Q1 2019 Results Conference Call May 2, 2019
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), BCE’s common share dividend payout policy, our network deployment and capital investment plans, BCE’s business outlook, objectives, plans and strategic priorities, and other statements that are not historical facts. A statement we make is forward-looking when it uses what we know and expect today to make a statement about the future. Forward-looking statements are typically identified by the words assumption , goal , guidance , objective , outlook , project , strategy , target and other similar expressions or future or conditional verbs such as aim , anticipate , believe , could , expect , intend , may , plan , seek , should , strive and will . All such forward-looking statements are made pursuant to the ‘safe harbour’ provisions of applicable Canadian securities laws and of the United States Private Securities Litigation Reform Act of 1995 . Forward-looking statements, by their very nature, are subject to inherent risks and uncertainties and are based on several assumptions, both general and specific, which give rise to the possibility that actual results or events could differ materially from our expectations expressed in or implied by such forward-looking statements. These statements are not guarantees of future performance or events, and we caution you against relying on any of these forward-looking statements. For a description of such assumptions and risks, please consult BCE’s 2018 Annual MD&A dated March 7, 2019, as updated in BCE’s 2019 First Quarter MD&A dated May 1, 2019, and BCE’s news release dated May 2, 2019 announcing its financial results for the first quarter of 2019, all filed with the Canadian provincial securities regulatory authorities (available at sedar.com) and with the U.S. Securities and Exchange Commission (available at sec.gov), and which are also available on BCE's website at BCE.ca. The forward-looking statements contained in this presentation describe our expectations at May 2, 2019 and, accordingly, are subject to change after such date. Except as may be required by applicable securities laws, we do not undertake any obligation to update or revise any forward-looking statements contained in this presentation, whether as a result of new information, future events or otherwise. The terms “adjusted EBITDA”, “adjusted EBITDA margin”, “adjusted EPS”, “free cash flow” and “dividend payout ratio” are non-GAAP financial measures and do not have any standardized meaning under IFRS. Therefore, they are unlikely to be comparable to similar measures presented by other issuers. Refer to the section “Notes” in BCE’s news release dated May 2, 2019 for more details.
President & Chief Executive Officer George Cope
Q1 overview • Continued revenue momentum with 2.6% growth and IFRS 16 impact drove 6.9% higher adjusted EBITDA and 1.7 percentage point margin increase to 42.0% • Positive adjusted EBITDA growth for all Bell operating segments excluding IFRS 16 • Strong wireless financial results with 4.5% revenue growth and 11.6% higher adjusted EBITDA • Leading retail wireline broadband subscriber performance with 44k combined retail Internet and IPTV net additions, up 37.4% y/y • Wireline adjusted EBITDA up 2.0% on 1.8% higher revenue, driven by positive top-line growth across all main units • Higher TV advertising revenue and cost savings drove 26.9% media adjusted EBITDA growth • 54 consecutive quarters of y/y consolidated adjusted EBITDA growth 6.9% consolidated adjusted EBITDA growth and declining capital intensity ratio drove 20% y/y increase in BCE free cash flow in Q1 4
Wireless operating metrics • 50k postpaid net subscribers added in Q1 Subscriber metrics Q1’19 Y/Y – Fewer y/y federal government contract customer Total gross additions 410k 1.4% additions as migration process near completion – Best Q1 postpaid churn performance in 15 years Postpaid net additions 50k (26.7%) – Bell-branded postpaid churn of 0.98% in Q1 Total net additions 38k (13.7%) • Blended ABPU increased 1.2% y/y to $67.35 Postpaid churn rate 1.07% 0.06 pts – Excluding federal government contract and Q1 subscriber adjustments, blended ABPU was up 0.8% 0.00 pts Blended churn rate 1.31% • Prepaid gross adds up 56.2% y/y, reflecting continued strong Lucky Mobile demand Blended ABPU – 12k net customer loss improved 50.6% y/y – Higher y/y churn, driven by change in deactivation policy and increased competitive intensity +1.2% $67.35 – Prepaid deactivation policy harmonized to 90 days across all brands $66.56 • Dollarama appointed as distributor of Virgin and Lucky Mobile prepaid service – Exclusive distribution agreement Q1'18 Q1'19 – 1,200 locations across Canada Key wireless value drivers of postpaid churn and ABPU show strong y/y improvement in Q1 5
Wireless network leadership LTE Advanced (LTE-A) coverage • LTE-A service available to ~91% of Canadians and expanding to ~94% by YE2019 % of Canadian population – Average data speeds up to 260 Mbps (1) ~94% 91% • Quad-band LTE-A footprint now covers ~25% of 87% the population with speeds up to 750 Mbps (2) – ~60% of Canadians to have access to speeds up to 750 Mbps in 2019 – LTE-A provides peak theoretical mobile data access download speeds that exceed 1 Gbps (3) Q1'18 Q1'19 2019E • Current wireline fibre investment significantly reducing future wireless 5G spend requirement Wireless capital intensity – 85% of total combined urban and rural cell sites with high-speed fibre backhaul by YE2019, representing % of wireless revenues approximately 90% of total capacity in use 8.3% ~7% 7.1% (1) Expected average download speeds of 18 to 74 Mbps Q1'18 Q1'19 2019E (2) Expected average download speeds of 25 to 220 Mbps in select areas (3) Currently offered in Kingston and Toronto, with more to come Preparing for 5G, while maintaining LTE-A speed and coverage leadership as wireless capital intensity ratio declines to ~7% in 2019 6
Wireline subscriber metrics • 23k retail Internet net additions, up 24.9%, in Retail Internet and IPTV net additions seasonally slower quarter IPTV – 51k new FTTH customers added in Q1, up 17.8% y/y Internet – Speeds of 1.5 Gbps offered to all direct fibre customers 44k 32k +37.4% • Combined FTTP and fixed wireless WTTH 23k broadband footprints now cover 4.8M locations 18k 74k 68k – Expanding by ~700k homes and businesses to more 21k than 5.3M locations in 2019, including ~200k rural 14k households on WTTH Q1'18 Q1'19 • 21k IPTV net additions, up 54.1% y/y, reflects continued strong Alt TV customer demand Bell broadband footprint (locations passed) • Retail satellite TV net losses improved 6.1% y/y FTTP FTTN WTTH to 22k 9.7M 9.5M 41k 4.9M 5.5M 4.9M 4.7M 4.0M 4.6M Q1'18 Q1'19 Fibre investments driving leading retail wireline broadband subscriber performance 7
Bell Media • Leading TV viewership and ratings maintained – 11 of top 20 programs for CTV in winter season – Viewership for English entertainment specialty TV properties up 27% in winter season • Game of Thrones premiere was most-watched broadcast in Canadian entertainment specialty and pay TV history with more than 3.3M viewers • TSN was the top-rated Canadian sports network and specialty TV channel overall in Q1 – Regular season Raptors games on TSN up 50% y/y – RDS remains the leading French specialty TV channel for A25-54 • Advertising sales strength and innovation – Top 20 TV advertisers spent 14% more y/y in Q1 – Entertainment specialty TV advertising up ~11% y/y – Launched SAM, an all-new proprietary strategic data- enabled TV sales tool 3 rd consecutive quarter of y/y TV advertising growth for Bell Media 8
EVP & Chief Financial Officer Glen LeBlanc
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