This news release contains forward-looking statements. For a
description of the related risk factors and assumptions please see
the section entitled "Caution Concerning Forward-Looking
Statements" later in this release.
- BCE Q1 net earnings attributable to common shareholders grow
8.7% to $615 million; Adjusted net
earnings per share of $0.81, up
5.2%
- Free cash flow up 6.1% to $262
million on 4.1% higher Bell EBITDA
- Strong Bell Wireless service revenue growth of 4.7%
supported by 3.5% increase in blended ARPU, drives 7.4% higher
EBITDA
- Canada's Mobile TV leader with 1,335,000 subscribers, up 67%
year over year
- Bell Fibe TV adds 54,680 net new customers, up 15.2%;
high-speed Internet net activations increase fourfold to 15,627;
residential local access line losses improve 21.4%
- Total TV subscribers for BCE up 8.1% to 2,529,471, including
723,891 IPTV customers
- Improved customer service drives lower churn across all
residential and wireless services
- Bell Media EBITDA increases 53.1%, reflecting Astral
acquisition and revenue share gain in both advertising and
broadcast distributor subscriber fees
- Acquired prime nationwide 700 MHz wireless spectrum licences
to bring advanced broadband wireless to small towns, rural regions
and Canada's North
MONTREAL, May 6, 2014 /PRNewswire/ - BCE Inc. (TSX, NYSE:
BCE), Canada's largest communications company, today reported BCE
and Bell results for the first quarter (Q1) of 2014.
FINANCIAL HIGHLIGHTS |
|
|
|
|
($ millions except per share amounts)
(unaudited) |
|
Q1 2014 |
Q1 2013 |
% change |
Bell(i) |
|
|
|
|
Operating revenues |
|
4,538 |
4,348 |
4.4% |
EBITDA(1) |
|
1,708 |
1,641 |
4.1% |
BCE |
|
|
|
|
Operating revenues |
|
5,099 |
4,919 |
3.7% |
EBITDA |
|
2,022 |
1,962 |
3.1% |
Net earnings attributable to common
shareholders |
|
615 |
566 |
8.7% |
EPS |
|
0.79 |
0.73 |
8.2% |
Adjusted EPS(2) |
|
0.81 |
0.77 |
5.2% |
Cash flows from operating
activities |
|
982 |
1 040 |
(5.6%) |
Free cash flow(3) |
|
262 |
247 |
6.1% |
(i)Bell includes the Bell Wireless, Bell Wireline and
Bell Media segments.
"Bell's strategic investments in advanced broadband networks and
services, improved customer service and Canadian content
development are driving the growth services - Wireless, TV,
Internet and Media - that are rapidly transforming our business,"
said George Cope, President and
Chief Executive Officer of BCE and Bell. "Fast-growing Fibe TV is
increasing Bell's share of the household as it drives significant
gains in high-speed Internet additions and reductions in Home Phone
losses. Bell Media, with Astral contributing to strong EBITDA and
free cash flow growth, continues to expand its media leadership
with outstanding new Canadian programming, TV Everywhere
innovations and sports viewership growth. Wireless customers are
using smartphones and data services like never before on Canada's
largest 4G LTE network - and we're taking it further by being the
first to introduce mobile service with new 700 MHz spectrum."
"The Bell team has made great strides in executing our
imperative to improve customer service, backed by investment of
approximately $600 million in new
service enhancements since 2008. We've developed innovative online
and mobile service apps to enhance the customer experience,
maximized our field service fleet with state-of-the-art dispatch
and communications capabilities, and announced the opening of 3 new
Bell customer service call centres in Québec and Ontario in the last year," said Mr. Cope. "The
hard work and investment is paying off, with an array of industry
measures highlighting our service progress. That includes
reductions in customer churn in all residential and wireless
services, and 7% fewer calls into our service centres compared to
Q1 of last year. Bell's journey to achieving our customer service
objectives is not over, but we are well on our way."
In its most recent North American Technographics Telecom and
Devices Online Q4 2013 survey, global research firm Forrester
Research Inc. found that Bell significantly increased its Customer
Experience Index (CEI) scores across all residential and wireless
services. Bell TV, Internet, Home Phone and Wireless all greatly
improved customer satisfaction, experiencing an average 41%
increase in CEI scores from 2010 to 2013.
Bell is dedicated to achieving a clear goal - to be recognized
by customers as Canada's leading communications company - through
the execution of 6 Strategic Imperatives: Invest in Broadband
Networks and Services, Improve Customer Service, Accelerate
Wireless, Leverage Wireline Momentum, Expand Media Leadership, and
Achieve a Competitive Cost Structure.
"Bell begins 2014 with solid first-quarter financial results
that underline the operating momentum we have across our growth
services, especially in Wireless, residential Wireline and Media,"
said Siim Vanaselja, Chief Financial
Officer of BCE and Bell. "EBITDA growth in Q1 drove strong
increases in earnings and free cash flow, supporting our strategic
broadband network investments and BCE's higher common share
dividend rate for 2014. With a good start to the year across Bell's
business segments and a favourable outlook, we reconfirm our 2014
financial guidance as we remain on track with our business plan for
the year."
BCE RESULTS
BCE delivered healthy revenue and EBITDA(1) growth of
3.7% and 3.1%, respectively, in Q1 2014 with a relatively steady
EBITDA margin(1) of 39.7%, supported by improved
year-over-year financial results at Bell. This was partly offset by
lower revenue and EBITDA at Bell Aliant, where cost management
initiatives helped to contain the adverse impact on its overall
financial performance from intense competitive pressure.
BCE reported Q1 2014 net earnings attributable to common
shareholders of $615 million, up 8.7%
from $566 million in Q1 2013, and
Adjusted net earnings(2) of $626 million, an increase of 4.5% from
$599 million last year. Net earnings
per share (EPS) of $0.79 and Adjusted
EPS of $0.81 were up 8.2% and 5.2%,
respectively, reflecting higher EBITDA driven by the increased
contribution of Bell's growth services (Wireless, TV, Internet and
other broadband services, and Media).
BCE's cash flows from operating activities were $982 million in Q1 2014, compared to $1,040 million in Q1 2013, due to a decrease at
Bell Aliant which was partly offset by an increase at Bell. Free
cash flow(3) was up 6.1% to $262 million from $247
million last year, reflecting higher Bell EBITDA and an
improvement in working capital. This was partly offset by lower
dividends received in 2014 from Bell Aliant, due to a change in its
common share dividend payment dates, and higher income taxes paid
by Bell mainly as a result of no special pension contribution tax
benefit. Free cash flow per share(3) in Q1 2014
was $0.34 per common share, compared
to $0.32 per common share last
year.
At March 31, 2014, BCE
(Bell Canada and Bell Aliant) served
a total of 7,908,596 Wireless subscribers, up 1.2% from Q1 2013;
total TV subscribers of 2,529,471, up 8.1% (including 723,891 IPTV
customers, an increase of 67.2% compared to Q1 2013); Internet
subscribers of 3,163,218, up 3.4%; and total NAS lines of
7,462,829, a decrease of 6.7%.
BELL RESULTS
Bell operating revenues increased 4.4% to $4,538 million. This was driven by a 5.0%
increase in service revenues, reflecting Astral's contribution to
Bell Media results, solid Wireless revenue growth as well as higher
TV and Internet service revenues that drove positive Wireline
residential revenue growth this quarter, which more than offset the
ongoing, but moderating, decline in traditional Wireline voice
revenues.
Growth services continued to accelerate, with our Wireless, TV,
Internet and other Wireline broadband, and Media services now
delivering 83% of operating revenues, for a 7.2%, or $251 million, increase in Q1 2014.
Bell EBITDA grew 4.1% to $1,708
million, reflecting increases of 7.4% at Bell Wireless and
53.1% at Bell Media, moderated by a 2.9% decrease at Bell Wireline.
Bell's consolidated EBITDA margin remained stable at 37.6% in Q1
2014, compared to 37.7% last year, due to higher Wireless average
revenue per user (ARPU)(4), diminishing Wireline voice
erosion, and cost efficiencies.
Bell continued its strategic investments in industry-leading
network and services, with capital expenditures of $594 million in Q1 unchanged year over year. This
reflects the continued rapid deployment of broadband fibre to
homes, neighbourhoods and businesses in Québec and Ontario that is fuelling the rapid expansion
of Fibe TV; higher spending on network capacity to support
increasing Internet bandwidth usage and 4G LTE mobile data
consumption; and enhancements to our client care and customer
service delivery systems.
BELL OPERATING RESULTS BY SEGMENT
Bell Wireless
Bell Wireless operating revenues increased 4.5% to $1,472 million in Q1 2014 from $1,409 million last year. Service revenues grew
4.7% to $1,364 million, driven by a
higher postpaid subscriber mix in our wireless customer base and
strong growth in blended ARPU attributable to greater data usage.
Wireless data revenue increased 17.5%, reflecting higher adoption
and usage of smartphones.
Bell Wireless EBITDA increased 7.4% to $628 million, reflecting the flow-through of
strong ARPU growth and disciplined postpaid subscriber acquisition
and customer retention spending. This resulted in a 1.1% increase
in EBITDA service margin to 46.0%, our best quarterly performance
in almost five years (since Q2 2009).
- Postpaid net additions totalled 33,964 compared to 59,497 last
year. This reflected a 6.8% decrease in postpaid gross activations
attributable to slower overall market growth as a result of higher
rate-plan pricing on new 2-year contracts brought about by the new
federal Wireless Code of Conduct and fewer major smartphone
launches during the quarter. Prepaid net subscriber losses improved
27.5%, year over year, to 49,642, due to fewer customer
deactivations.
- Smartphones represented 74% of total postpaid gross activations
in Q1 2014, compared to 71% in Q1 2013. This increased the
percentage of postpaid subscribers with smartphones to 74% at
March 31, 2014, compared to 65% at
the end of Q1 2013.
- Postpaid customer churn(4) improved 0.01% to 1.24%,
reflecting Bell's network quality and reach, focused investments in
customer service and retention, and fewer switchers in the market
as a result of more disciplined industry pricing and handset
discounting.
- Bell Wireless postpaid customers totalled 6,711,656, a 3.5%
increase over last year. Total Bell Wireless customers grew 1.2% to
7,762,656.
- Blended ARPU increased 3.5% to $57.90, driven by growing smartphone penetration,
increasing usage of data services, and higher rate plan pricing
driven by the transition from 3-year to 2-year contracts.
- Cost of acquisition (COA)(4) increased to
$442 per subscriber compared to
$404 last year, reflecting higher
sales commissions and increased marketing costs related to Olympics
advertising.
- Retention spending in Q1 kept pace with growth in wireless
service revenues and, therefore, remained essentially unchanged,
year over year, at 10.2% compared to 10.3% last year.
- Bell continued to lead in cutting the cost of mobile roaming in
countries Canadians travel to the most, reducing voice and data
roaming prices for consumers travelling in Cuba and Japan in Q1. This follows significant rate
decreases for the United States,
Europe, Mexico, China, Turkey, Australia and New
Zealand, Bermuda and most
Caribbean islands.
- Industry-leading Bell Mobile TV reached 1,335,000 subscribers
in Q1 2014, up from approximately 800,000 at the same time last
year. Mobile TV video streams grew 22.5% in Q1 to more than 10.6
million, which included major events like the Super Bowl and Sochi
2014.
- In Q1, Bell and the Royal Bank of Canada (RBC) launched a
secure mobile payment service that enables RBC customers with
compatible Bell Mobility smartphones to make debit and credit
purchases at retail locations that accept contactless
payments.
- Bell offers customers access to Canada's largest 4G LTE mobile
network, reaching 81% of the Canadian population at the end of Q1,
and complemented by 4G HSPA+ coverage to more than 98% of the
population.
- On April 2, 2014, Bell acquired
31 licences for 480M MHz-POP of prime nationwide 700 MHz spectrum
for $566 million, following
February's federal wireless spectrum auction, bringing Bell's total
spectrum holdings to more than 4,200M MHz-POP nationally. That same
day, Bell launched Canada's first 700 MHz spectrum LTE service,
employing lower C-block spectrum that most Bell smartphones are
compatible with today. With 700 MHz spectrum in all national
markets, Bell will expand 4G mobile broadband service to small
towns, rural locations and Canada's North, with an objective to
deliver advanced LTE to more than 98% of the population.
Bell Wireline
Our Wireline segment progressed in its ongoing transformation,
slowing the pace of revenue and EBITDA decline in Q1 2014 with a
65%, or 40,500, improvement in the total number of residential (TV,
Internet and local access lines) net customer losses.
Led by strong Fibe TV performance, which supported significant
increases in high-speed Internet net additions and fewer
residential NAS line losses compared to last year, Bell Residential
Services delivered positive revenue growth for a second consecutive
quarter. While the rate of revenue decline at Bell Business Markets
also improved year over year, results were impacted by competitive
pricing pressures and reduced spending by large business customers
indicative of a continuing soft economy.
In addition, a significant year-over-year decrease in consumer
electronic sales at The Source, largely attributable to a
weather-driven drop in retail store traffic this winter, negatively
impacted Wireline revenues this quarter. As a result, Bell Wireline
Q1 operating revenues decreased 1.8% to $2,462 million from $2,508
million last year.
Wireline EBITDA decreased 2.9% to $930
million in Q1 and we maintained margin at 37.8%, compared to
38.2% in Q1 2013. This represents a notable improvement over the
4.5% EBITDA decline reported last year, which was supported by an
$18 million, or 1.2%, year-over-year
reduction in operating costs this quarter.
Approximately 1%, or $9 million,
of the Wireline EBITDA decrease this quarter was due to a decline
in sales at The Source. Higher network operating costs driven by
severe weather conditions in central Canada this winter and
Olympics advertising for Sochi 2014 also contributed to lower
Wireline EBITDA in Q1 2014.
- Bell Fibe TV added 54,680 net new customers, 15.2% more than in
Q1 2013. This brings the total number of Bell Fibe TV subscribers
to 534,110 - up 80.6% over last year.
- The Bell Fibe TV residential service footprint grew by a
million homes over last year to reach 4.5 million at the end of
Q1.
- Bell Satellite TV losses improved 22.0% to 26,119 as a result
of fewer retail customer deactivations, despite aggressive customer
conversion offers from cable TV competitors. This reflects our
focus on improving the customer experience with product
enhancements, including more on-demand content.
- Combined Fibe TV and Satellite TV net additions more than
doubled, year over year, to 28,561. The Bell TV subscriber base
totalled 2,306,994 at the end of Q1 2014, a 6.3% increase over last
year.
- High-speed Internet net customer additions increased almost
fourfold to 15,627, compared to 3,952 in Q1 2013, driven by the
pull-through of Bell Fibe TV, wholesale customer gains, and lower
residential customer churn. High-speed Internet subscribers at the
end of the quarter totalled 2,200,170, an increase of 3.3% over
last year.
- Wireline data revenue was $1,463
million, up 2.1%, driven by continued solid residential
services growth and a 3.7% increase in IP connectivity revenues in
Bell Business Markets. Residential data revenue was up 4.8% in Q1,
reflecting higher TV and Internet revenues, driven by stronger Fibe
customer growth, and greater demand for higher bandwidth Internet
service.
- Residential NAS net losses improved 21.4% in Q1 to 65,638 from
83,557 last year. This was supported by strong Fibe TV attach rates
which helped to drive NAS customer retention, contributing to an
18% increase in 3-product households this quarter.
- Business NAS losses increased 43.0%, up 10,706 over last year,
to 35,595, due to a greater number of deactivations in our large
business segment resulting from ongoing customer conversion of
voice lines to IP-based services and competitive losses.
- Total Bell NAS lines at the end of Q1 2014 were 5,141,016, down
7.1% from 5,536,493 last year. As a result, Bell's local and access
revenues declined 6.7% to $603
million, while long distance revenues decreased 12.0% to
$162 million.
Bell Media
Bell Media continued to build on its position as Canada's leading
media company with its extensive portfolio of news, sports and
entertainment programming that drove high audience levels and
ratings, contributing to strong overall financial and operating
performance this quarter.
Bell Media operating revenue grew 40.7% to $722 million and EBITDA grew 53.1% to
$150 million in Q1 2014. The
significant year-over-year increases reflected higher advertising
and subscriber fee revenues from the Astral acquisition, as well as
the flow-through of 2013 market-based rate increases in specialty
TV services and higher revenues generated from new mobile content
deals and TV Everywhere products. Overall advertising revenue
growth this quarter was moderated by a continuing soft advertising
market that saw a shift in spending to the main broadcaster of the
Sochi Winter Olympics. Higher costs for TV programming, increased
spending on in-house Canadian productions, and sports broadcast
rights agreements that continue to escalate in price for the
industry as a whole were absorbed by operating synergies from
Astral's successful integration into Bell Media.
- Bell Media continued to win strong audiences across its
conventional and specialty TV properties. CTV completed the winter
season with 12 of the Top 20 programs nationally among all viewers
and aired a range of highly-rated Canadian programming, including
MasterChef Canada, Biteen and the JUNO Awards.
- TSN remains the top sports and specialty channel, growing
viewership 8% in Q1 with the return of regular-season NHL hockey
and coverage of the Sochi 2014 Winter Olympics. TSN broadcast more
than 250 hours of Sochi 2014.
- Bell Media's slate of TV Everywhere options expanded
significantly with the TSN GO app, providing access to more than
6,000 hours of live and on-demand sports programming on Canada's
sports leader, TSN and TSN 2. TSN GO is the latest addition to Bell
Media TV Everywhere products, which includes TMN GO and CTV GO,
with more to come.
- The Academy of Canadian Cinema and Television recognized Bell
Media and its production partners for excellence in programming
across multiple categories at the Canadian Screen Awards, honouring
CTV National News with Lisa LaFlamme
(Best National Newscast), W5 (Gordon
Sinclair Award for Broadcast Journalism), The Amazing Race
Canada (3 awards, including Best Writing in a Reality Series), the
MuchMusic Video Awards (Best Music Program or Series) and TSN's
Grey Cup coverage topping numerous sports categories (including
Best Live Sports Event) - 54 awards in total.
- Bell continued with its divestiture of TV and radio assets
required by the Canadian Radio-television and Telecommunications
Commission (CRTC) and the Competition Bureau as part of their
approval of Bell's acquisition of Astral. In Q1, Bell completed the
sale of 6 TV services and 2 radio stations to Corus Entertainment
Inc., 3 radio stations to Jim Pattison Broadcast Group, and 5 radio
stations to Newcap Inc., generating total proceeds of $538 million. Sales of the final 5 Astral TV
assets to DHX Media Ltd. and V Media Group are expected to be
completed later this year, subject to closing conditions including
approval by the CRTC and termination rights, bringing total
expected asset divestiture proceeds to more than $720 million.
BELL ALIANT RESULTS
Bell Aliant (TSX: BA) revenues decreased 1.2% to $676 million in Q1 2014 from $684 million last year, as a result of the
continued declines in voice (local and access and long distance)
revenues, as well as the adverse revenue impact from intense
competitive pricing pressures in both its consumer and business
markets, that were not fully offset by continued solid growth in
data service (Internet and TV) revenues. Bell Aliant's EBITDA
decreased 2.2% to $314 million from
$321 million, despite relatively
stable year-over-year operating costs, due to lower operating
revenues. For more information, please visit BellAliant.ca.
COMMON SHARE DIVIDEND
BCE's Board of Directors has declared a quarterly dividend of
$0.6175 per common share, payable on
July 15, 2014 to shareholders of
record at the close of business on June 16,
2014.
OUTLOOK
BCE confirmed its financial guidance targets for 2014, as provided
on February 6, 2014, as follows:
|
|
|
|
February 6
Guidance |
May 6
Guidance |
Bell (i) |
|
|
Revenue Growth |
2% - 4% |
On track |
EBITDA Growth |
3% - 5% |
On track |
Capital Intensity(4) |
16% - 17% |
On track |
BCE |
|
|
Adjusted EPS |
$3.10 - $3.20 |
On track |
Free Cash Flow growth |
3% - 7% |
On track |
Annual common dividend per share |
$2.47 |
$2.47 |
Dividend payout(4)
policy |
65% - 75%
of free cash flow |
On track |
(i) |
Bell's 2014 financial guidance for revenue, EBITDA and capital
intensity is exclusive of Bell Aliant. |
CALL WITH FINANCIAL ANALYSTS
BCE will hold a conference call for financial analysts to discuss
Q1 2014 results on Tuesday, May 6 at
8:00 a.m. (Eastern). Media are
welcome to participate on a listen-only basis. To participate,
please dial (416) 340-2216 or toll-free 1-866-223-7781 shortly
before the start of the call. A replay will be available for one
week by dialing (905) 694-9451 or 1-800-408-3053 and entering pass
code 9343972#.
A live audio webcast of the conference call will be available on
BCE's website at BCE Q1-2014 conference call. The mp3 file will be
available for download on this page later in the day.
NOTES
The information contained in this news release is unaudited.
(1) |
The terms EBITDA and EBITDA margin do
not have any standardized meaning under IFRS. Therefore, they are
unlikely to be comparable to similar measures presented by other
issuers. We define EBITDA as operating revenues less operating
costs, as shown in BCE's consolidated income statements. EBITDA for
BCE's segments is the same as segment profit as reported in Note 3
to BCE's Q1 2014 consolidated financial statements. We define
EBITDA margin as EBITDA divided by operating revenues. We use
EBITDA and EBITDA margin to evaluate the performance of our
businesses as they reflect their ongoing profitability. We believe
that certain investors and analysts use EBITDA to measure a
company's ability to service debt and to meet other payment
obligations or as a common measurement to value companies in the
telecommunications industry. We believe that certain investors and
analysts also use EBITDA and EBITDA margin to evaluate the
performance of our businesses. EBITDA also is one component in the
determination of short-term incentive compensation for all
management employees. EBITDA and EBITDA margin have no directly
comparable IFRS financial measure. Alternatively, the following
table provides a reconciliation of net earnings
to EBITDA. |
($ millions) |
|
|
|
Q1 2014 |
Q1 2013 |
Net earnings |
714 |
672 |
Severance, acquisition
and other costs |
38 |
33 |
Depreciation |
699 |
675 |
Amortization |
167 |
163 |
Finance costs |
235 |
221 |
|
Interest expense |
25 |
37 |
|
Interest on post-employment benefit
obligations |
(87) |
(80) |
Other income |
231 |
241 |
Income taxes |
|
|
EBITDA |
2,022 |
1,962 |
|
|
|
|
BCE Operating Revenues |
5,099 |
4,919 |
EBITDA Margin |
39.7% |
39.9% |
(2) |
The terms Adjusted net earnings and
Adjusted EPS do not have any standardized meaning under IFRS.
Therefore, they are unlikely to be comparable to similar measures
presented by other issuers. We define Adjusted net earnings as
net earnings attributable to common shareholders before severance,
acquisition and other costs, net (gains) losses on investments, and
premiums on early redemption of debt. We define Adjusted EPS as
Adjusted net earnings per BCE common share. We use Adjusted
net earnings and Adjusted EPS, and we believe that certain
investors and analysts use these measures, among other ones, to
assess the performance of our businesses without the effects of
severance, acquisition and other costs, net (gains) losses on
investments, and premiums on early redemption of debt, net of tax
and NCI. We exclude these items because they affect the
comparability of our financial results and could potentially
distort the analysis of trends in business performance. Excluding
these items does not imply they are non-recurring. The most
comparable IFRS financial measures are net earnings attributable to
common shareholders and EPS. The following table is a
reconciliation of net earnings attributable to common shareholders
and EPS to Adjusted net earnings on a consolidated basis and per
BCE common share (Adjusted EPS), respectively. |
($ millions except per share
amounts) |
|
|
|
|
|
Q1 2014 |
Q1 2013 |
|
TOTAL |
PER SHARE |
TOTAL |
PER SHARE |
Net earnings attributable to common
shareholders |
615 |
0.79 |
566 |
0.73 |
Severance, acquisition and other
costs |
23 |
0.03 |
23 |
0.03 |
Net gains on investments |
(12) |
(0.01) |
(2) |
- |
Premium on early redemption of
debt |
- |
- |
12 |
0.01 |
Adjusted net earnings |
626 |
0.81 |
599 |
0.77 |
(3) |
The terms free cash flow and free
cash flow per share do not have any standardized meaning under
IFRS. Therefore, they are unlikely to be comparable to similar
measures presented by other issuers. We define free cash flow
as cash flows from operating activities, excluding acquisition
costs paid and voluntary pension funding, plus dividends received
from Bell Aliant, less capital expenditures, preferred share
dividends, dividends paid by subsidiaries to NCI and
Bell Aliant free cash flow. We define free cash flow per
share as free cash flow divided by the average number of common
shares outstanding. |
($ millions except per
share amounts) |
|
|
|
Q1 2014 |
Q1 2013 |
Cash flows from operating
activities |
982 |
1,040 |
Bell Aliant dividends to
BCE |
- |
48 |
Capital expenditures |
(729) |
(722) |
Cash dividends paid on
preferred shares |
(32) |
(26) |
Cash dividends paid by
subsidiaries to non-controlling interest |
(7) |
(73) |
Acquisition costs
paid |
14 |
10 |
Bell Aliant free cash
flow |
34 |
(30) |
Free cash flow |
262 |
247 |
|
|
|
|
Average number of common shares
outstanding |
776.5 |
775.7 |
Free cash flow per
share |
0.34 |
0.32 |
We consider free cash flow and free cash flow per share to be
important indicators of the financial strength and performance of
our businesses because they show how much cash is available to pay
dividends, repay debt and reinvest in our company. We believe that
certain investors and analysts use free cash flow to value a
business and its underlying assets. We believe that certain
investors and analysts also use free cash flow and free cash flow
per share to evaluate the financial strength and performance of our
businesses. The most comparable IFRS financial measure is cash
flows from operating activities. The table above is a
reconciliation of cash flows from operating activities to free cash
flow on a consolidated basis.
(4) |
We use ARPU, churn, COA, capital
intensity and dividend payout ratio to measure the success of our
strategic imperatives. These key performance indicators are not
accounting measures and may not be comparable to similar measures
presented by other issuers. See section 8.2, Non-GAAP Financial
Measures and Key Performance Indicators (KPIs)- KPIs in BCE's Q1
2014 MD&A for a definition of such KPIs. |
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements made in this news release, including, but not
limited to, statements relating 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 annualized common share dividend
and common share dividend policy, our networks deployment plans,
the sales of the final five Astral TV assets, and other statements
that are not historical facts, are forward-looking. 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 and that our business outlook,
objectives, plans and strategic priorities may not be achieved. As
a result, we cannot guarantee that any forward-looking statement
will materialize and we caution you against relying on any of these
forward-looking statements. The forward-looking statements
contained in this news release describe our expectations as of
May 6, 2014 and, accordingly, are
subject to change after such date. Except as may be required by
Canadian securities laws, we do not undertake any obligation to
update or revise any forward-looking statements contained in this
news release, whether as a result of new information, future events
or otherwise. Except as otherwise indicated by BCE, forward-looking
statements do not reflect the potential impact of any non-recurring
or other special items or of any dispositions, monetizations,
mergers, acquisitions, other business combinations or other
transactions that may be announced or that may occur after
May 6, 2014. The financial impact of
these transactions and non-recurring and other special items can be
complex and depends on the facts particular to each of them. We
therefore cannot describe the expected impact in a meaningful way
or in the same way we present known risks affecting our business.
Forward-looking statements are presented in this news release for
the purpose of assisting investors and others in understanding
certain key elements of our expected 2014 financial results, as
well as our objectives, strategic priorities and business outlook
for 2014, and in obtaining a better understanding of our
anticipated operating environment. Readers are cautioned that such
information may not be appropriate for other purposes.
Material Assumptions
A number of economic, market, operational and financial assumptions
were made by BCE in preparing its forward-looking statements for
2014 contained in this news release, including, but not limited
to:
Canadian Economic and Market Assumptions
- growth in the Canadian GDP of 2.3% in 2014, based on the Bank
of Canada's most recent estimate, a twenty basis point decrease
compared to an earlier estimate of 2.5%;
- a faster pace of employment growth compared to 2013
- a sustained level of wireline and wireless competition in both
consumer and business markets
- higher, but slowing, wireless industry penetration driven by
the increasing adoption of smartphones, tablets and other 4G
devices, the expansion of LTE service in non-urban markets, the
availability of new data applications and services, as well as
population growth
- a relatively stable advertising market for Bell Media
Assumptions Concerning our Bell Wireless
Segment
- Higher, but slowing, wireless industry penetration in
Canada
- Maintaining Bell's market share of incumbent wireless postpaid
net activations
- Continued adoption of smartphone devices, tablets and data
applications, as well as the introduction of more 4G LTE devices
and new data services
- Our ability to monetize increasing data usage and customer
subscription to new data services
- Further expansion of our 4G LTE wireless network in rural areas
and in more urban markets across Canada
- Ongoing technological improvements by handset manufacturers and
from faster data network speeds that allow customers to optimize
the use of our services
- No material financial, operational and competitive consequences
of adverse changes in regulations affecting our wireless
business
Assumptions Concerning our Bell Wireline
Segment
- Increasing wireless and Internet-based technological
substitution
- Aggressive residential service bundle offers from cable TV
competitors in our local wireline areas
- Stabilizing residential NAS line erosion rate as we leverage
our broadband investment in Fibe TV to drive three-product
household penetration, increase our MDU market share, and generate
higher pull-through attach rates for our residential Internet and
Home Phone services
- Higher revenue per household and flow-through of market-based
price increases across residential products from increasing
penetration of three-product households
- Faster pace of employment and economic growth compared to
2013
- Continued business customer migration to IP-based systems
- Ongoing competitive reprice pressures in our business and
wholesale markets
- Ability to realize cost savings from management workforce
attrition and retirements, call centre efficiencies, field service
productivity improvements, reduction in supplier contract rates,
lower print and mail costs, content cost management and reducing
traffic that is not on our own network
- Growing consumption of OTT TV services and streaming video,
projected growth in TV Everywhere as well as the proliferation of
devices, such as tablets, that consume vast quantities of
bandwidth, will require considerable ongoing capital
investment
Assumptions Concerning our Bell Media Segment
- Relatively stable advertising market
- Escalating costs to secure TV programming and sports
content
- Ability to successfully acquire highly-rated programming and
differentiated content
- Market rates for specialty content generally increasing
- Building and maintaining strategic supply arrangements for
content on all four screens
- Full realization of cost synergies from the integration of
Astral into Bell Media
- No material financial, operational or competitive consequences
of adverse changes in media regulation
Assumptions Concerning our Bell Aliant Segment
- Economy continues to rebound
- Competitive activity in both consumer and business will
continue to be intense
- Wireless substitution for wireline services will increase in
Bell Aliant markets, but is expected to lag other regions of
Canada
- NAS net decline stabilizing
- Steady demand for FibreOP service driving Internet and IPTV
customer acquisition at similar levels as 2013
- Cost reductions achieved through productivity initiatives will
continue, largely offsetting cost increases associated with growth
in IPTV customers and associated TV content costs and normal
inflationary pressures
Financial Assumptions Concerning Bell (Excluding Bell
Aliant)
The following constitute Bell's principal financial assumptions
for 2014:
- the maintenance of a relatively stable consolidated EBITDA
margin;
- increasing wireless EBITDA contribution and margin
expansion;
- an improving year-over-year rate of decline in wireline revenue
and EBITDA;
- Bell's total post-employment benefit plans cost to be
approximately $310 million, based on
an estimated accounting discount rate of 4.9%, comprised of an
estimated above EBITDA post-employment benefit plans service cost
of approximately $220 million and an
estimated below EBITDA net post-employment benefit plans financing
cost of approximately $90 million;
- total pension plan cash funding of approximately $350 million;
- cash taxes of approximately $600
million;
- net interest expense of approximately $750 million;
- net interest payments of approximately $775 million; and
- working capital changes and severance and other costs of
approximately $175 million.
Financial Assumptions Concerning BCE
The following constitute BCE's principal financial assumptions
for 2014:
- BCE's total post-employment benefit plans cost to be
approximately $390 million, including
approximately $80 million for Bell
Aliant, comprised of an estimated above EBITDA post-employment
benefit plans service cost of approximately $280 million and an estimated below EBITDA net
post-employment benefit plans financing cost of approximately
$110 million;
- depreciation and amortization expense approximately
$115 million higher compared to
2013;
- net interest expense of approximately $900 million;
- tax adjustments (per share) of approximately $0.04;
- an effective tax rate of approximately 26%;
- non-controlling interest of approximately $280 million; and
- an annual common share dividend of $2.47 per share.
The foregoing assumptions, although considered reasonable by BCE
on May 6, 2014, may prove to be
inaccurate. Accordingly, our actual results could differ materially
from our expectations as set forth in this news release.
Material Risks
Important risk factors that could cause our assumptions and
estimates to be inaccurate and actual results or events to differ
materially from those expressed in or implied by our
forward-looking statements, including our 2014 financial guidance,
are listed below. The realization of our forward-looking
statements, including our ability to meet our 2014 financial
guidance, essentially depends on our business performance which, in
turn, is subject to many risks. Accordingly, readers are cautioned
that any of the following risks could have a material adverse
effect on our forward-looking statements. These risks include, but
are not limited to:
- the intensity of competitive activity, and the resulting impact
on our ability to retain existing customers and attract new ones,
as well as on our pricing strategies, financial results and
operating metrics such as ARPU
- the level of technological substitution and the presence of
alternative service providers, contributing to reduced utilization
of traditional wireline voice services
- the adverse effect of new technology and increasing
fragmentation in Bell TV's TV distribution market and
Bell Media's TV and radio markets
- variability in subscriber acquisition and retention costs based
on subscriber acquisitions, retention volumes, smartphone sales and
handset discount levels
- regulatory initiatives and proceedings, government
consultations and government positions that affect us and influence
our business
- economic and financial market conditions, the level of consumer
confidence and spending, and the demand for, and prices of, our
products and services
- Bell Media's significant dependence on continued demand
for advertising, and the potential adverse effect thereon from
economic conditions, cyclical and seasonal variations and
ratings/audience levels
- the complexity of our product offerings, pricing plans,
promotions, technology platforms and billing systems
- our failure to satisfy customer expectations and build a low
cost operational delivery model
- our failure to carry out wireline network evolution activities,
and to meet network upgrade or deployment timelines within our
capital intensity target
- our failure to maintain network operating performance in the
context of significant increases in broadband demand and in the
volume of wireless data-driven traffic
- our failure to anticipate and respond to technological change,
upgrade our networks and rapidly offer new products and
services
- our failure to implement or maintain, on a timely basis,
effective information technology (IT) systems, and the complexity
and costs of our IT environment
- our inability to protect our data centres, electronic and
physical records and the information stored therein
- employee retention and performance, and labour disruptions
- our failure to execute our strategic imperatives and business
development plans in order to produce the expected benefits,
including to continue to implement our targeted cost reduction
initiatives
- ineffective change management resulting from restructurings and
other corporate initiatives, and the failure to successfully
integrate business acquisitions and existing business units
- pension obligation volatility and increased contributions to
post-employment benefit plans
- events affecting the ability of third-party suppliers to
provide to us, and our ability to purchase, critical products and
services
- the quality of our network and customer equipment and the
extent to which they may be subject to manufacturing defects
- events affecting the functionality of, and our ability to
protect, test, maintain and replace, our networks, equipment and
other facilities
- in-orbit risks of satellites used by Bell TV
- unfavourable resolution of legal proceedings and, in
particular, class actions
- unfavourable changes in applicable laws
- our capital and other expenditure levels, financing and debt
requirements and inability to access adequate sources of capital
and generate sufficient cash flows from operations to meet our cash
requirements and implement our business plan, as well as our
inability to manage various credit, liquidity and market risks
- our inability to discontinue certain services as necessary to
improve capital and operating efficiencies
- our failure to evolve practices and effectively monitor and
control fraudulent activities
- the theft of our direct-to-home (DTH) satellite TV
services
- copyright theft and other unauthorized use of our content
- higher taxes due to new taxes, higher tax rates or changes to
tax laws, and our inability to predict the outcome of government
audits
- health concerns about radio frequency emissions from wireless
devices and equipment
- our inability to maintain customer service and our networks
operational in the event of the occurrence of epidemics, pandemics
and other health risks
- BCE's dependence on the ability of its subsidiaries, joint
arrangements and other entities in which it has an interest to pay
dividends or otherwise make distributions to it
- uncertainty as to whether dividends will be declared by BCE's
board of directors or BCE's dividend policy will be maintained
- stock market volatility
We caution that the foregoing list of risk factors is not
exhaustive and other factors could also adversely affect our
results. We encourage investors to also read BCE's 2013 Annual
MD&A dated March 6, 2014
(included in the BCE 2013 Annual Report) and BCE's 2014 First
Quarter MD&A dated May 5, 2014,
for additional information with respect to certain of these and
other assumptions and risks, filed by BCE with the Canadian
provincial securities regulatory authorities (available at
Sedar.com) and with the U.S. Securities and Exchange Commission
(available at SEC.gov). These documents are also available at
BCE.ca.
ABOUT BCE
BCE is Canada's largest communications company, providing a
comprehensive and innovative suite of broadband communication
services to residential and business customers under the Bell and
Bell Aliant brands. Bell Media is Canada's premier multimedia
company with leading assets in television, radio and digital media,
including CTV, Canada's #1 television network, and the country's
most-watched specialty channels. To learn more, please visit
BCE.ca.
The Bell Let's Talk mental health initiative is a national
charitable and awareness program promoting mental health across
Canada with the Bell Let's Talk Day anti-stigma campaign and
significant Bell funding of community care and access, research,
and workplace initiatives. To learn more, please visit
Bell.ca/LetsTalk.
For BCE corporate information, please visit BCE.ca. For Bell
product and service information, please visit Bell.ca. For Bell
Media, please visit BellMedia.ca.
SOURCE BCE INC.