- Net earnings attributable to common shareholders of
$542 million, up 9.5%; Adjusted net
earnings grow 13% to $610 million;
Adjusted EPS of $0.72, up
2.9%
- 10.6% higher Bell Wireless Adjusted EBITDA driven by
accelerated revenue growth of 9.6% on 5.5% increase in blended
ARPU
- Total BCE wireless postpaid net customer activations in Q4
of 118,120
- Second consecutive quarter of positive Bell Wireline
Adjusted EBITDA growth, up 2.0%
- Activated 76,074 net new BCE IPTV customers and 52,010 net
new BCE Internet customers as IPTV fibre footprint expanded to more
than 6 million customer locations
- Free cash flow grows 23.6% to $833
million; full-year 2014 free cash flow up 6.7%
- Bell Media maintains leading TV audience levels and ratings
as TSN and RDS affirm their position as Canada's top specialty channels
- 2015 outlook builds on positive operating momentum and
execution of Strategic Imperatives, supporting dividend increase
and significant capital investment
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.
MONTREAL, Feb. 5, 2015 /CNW Telbec/ - BCE Inc. (TSX, NYSE:
BCE), Canada's largest
communications company, today reported BCE and Bell fourth quarter
(Q4) and annual 2014 results, announcing its financial guidance for
2015 and a $0.13 per share hike in
the BCE annual common dividend to $2.60.
FINANCIAL HIGHLIGHTS |
|
|
|
|
|
|
($ millions except per share amounts)
(unaudited) |
Q4 2014 |
Q4 2013 |
% change |
2014 |
2013 |
% change |
Bell (i) |
|
|
|
|
|
|
Operating Revenues |
4,940 |
4,813 |
2.6% |
18,734 |
18,109 |
3.5% |
Adjusted EBITDA(1) |
1,730 |
1,693 |
2.2% |
7,066 |
6,817 |
3.7% |
BCE |
|
|
|
|
|
|
Operating Revenues |
5,528 |
5,382 |
2.7% |
21,042 |
20,400 |
3.1% |
Adjusted EBITDA |
2,022 |
1,998 |
1.2% |
8,303 |
8,089 |
2.6% |
Net Earnings Attributable to Common
Shareholders |
542 |
495 |
9.5% |
2,363 |
1,975 |
19.6% |
EPS |
0.64 |
0.64 |
- |
2.98 |
2.55 |
16.9% |
Adjusted EPS(2) |
0.72 |
0.70 |
2.9% |
3.18 |
2.99 |
6.4% |
Cash flows from operating
activities |
1,527 |
1,838 |
(16.9%) |
6,241 |
6,476 |
(3.6%) |
Free Cash Flow(3) |
833 |
674 |
23.6% |
2,744 |
2,571 |
6.7% |
Free Cash Flow per
share(3) |
1.01 |
0.86 |
17.4% |
3.46 |
3.31 |
4.5% |
(i) Bell includes the Bell Wireless, Bell Wireline and Bell
Media segments.
"The Bell team's hard work in executing our strategy of
broadband network and service investment, efficient operation and
improved customer service is delivering for all our stakeholders -
unmatched network and product innovation for Bell customers; strong
value for BCE shareholders, including the announcement of our
latest dividend increase; and unparalleled investment in the
community with another record Bell Let's Talk Day campaign. These
strong Q4 and 2014 results prove Bell is a bold competitor focused
on leading in the growth services of Canadian communications -
wireless, TV, Internet and media," said George Cope, President and CEO of BCE Inc. and
Bell Canada. "Bell Wireless
delivered exceptional customer additions and strong revenue growth,
including a significant quarterly increase in average revenue per
customer as smartphones and data services soar in popularity. With
fast-growing Fibe TV and Internet leading the way, we recorded our
first quarter of growth across each of Wireline revenue, EBITDA and
wireline residential customer net additions since the introduction
of cable telephony a decade ago. Bell Media continued to set the
pace in Canadian multimedia with ongoing leadership in conventional
and specialty TV, radio and now, with CraveTV, the burgeoning
on-demand video streaming marketplace."
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, Accelerate
Wireless, Leverage Wireline Momentum, Expand Media Leadership,
Improve Customer Service, and Achieve a Competitive Cost
Structure.
"Financially, we enjoyed a successful 2014, comfortably
achieving all our financial guidance targets for the year. Our
consistent performance delivery, year after year, shows the
strength of the business model Bell has built around our 6
Strategic Imperatives. While the communications industry is marked
by intense competition and dynamic change, we have leveraged our
business model to produce results consistently at or above
expectations," said Siim Vanaselja,
Chief Financial Officer for BCE and Bell Canada. "Going into 2015,
BCE's operating momentum and financial foundation is strong. Our
financial targets for this year reflect our expectation for
continued strong Wireless segment profitability, positive growth in
Wireline segment performance, as well as healthy earnings and free
cash flow growth from operations to support our substantial capital
investment in strategic network infrastructure and a higher BCE
common share dividend for 2015."
COMMON SHARE DIVIDEND INCREASE
Today's dividend announcement represents BCE's 11th
increase to its annual common share dividend, representing a 78%
increase, in the past 6 years. The BCE annualized common share
dividend will increase 5.3%, or 13
cents per share, from $2.47 to
$2.60 effective with BCE's Q1 2015
dividend payable on April 15, 2015 to
shareholders of record at the close of business on March 16, 2015. With this increase, BCE will
maintain the dividend payout ratio(4) within its target
policy range of 65% to 75% of free cash flow. The higher dividend
for 2015 is fully supported by higher expected free cash flow
generation and a strong business outlook for 2015.
VOLUNTARY PENSION PLAN CONTRIBUTION
BCE made a $350 million voluntary
pension plan contribution in December
2014 to align the funded status of Bell Aliant's defined
benefit pension plan with the strong solvency position of the Bell
Canada plans, reducing the amount of BCE's future pension
obligations. The voluntary contribution was funded from cash on
hand at the end of 2014. Accelerating the funding of BCE's future
obligation is an efficient use of cash given the market's general
expectation for a sustained low interest rate environment.
GLENTEL ACQUISITION
On November 28, 2014, BCE announced a
definitive agreement to acquire all of the issued and outstanding
shares of GLENTEL Inc., a Canadian-based dual-carrier, multi-brand
mobile products distributor, for a total consideration of
$594 million. GLENTEL shareholder
approval was obtained at a special meeting of shareholders on
January 12, 2015, and court approval
was obtained on January 14, 2015. The
transaction is expected to close in Spring 2015, pending
Competition Bureau approval. BCE has entered into an agreement to
divest 50% of its ownership interest in GLENTEL to Rogers
Communications Inc. following closing of the acquisition. Rogers
will pay BCE approximately $392
million in cash, resulting in the reduction of BCE's net
cost of acquiring its retained 50% ownership interest in GLENTEL to
$202 million. The Rogers transaction
is expected to close shortly after BCE's acquisition of GLENTEL,
subject to customary closing conditions including regulatory
approvals.
A RECORD BELL LET'S TALK DAY
The signature annual event in Bell's national mental health
initiative, Bell Let's Talk Day on January
28 grew the conversation about mental health and the promise
of a stigma-free Canada like never
before. Led by Bell Let's Talk national spokesperson Clara Hughes, Canadians and people worldwide
sent a record 122,150,772 tweets, texts, calls and Facebook shares
in support of mental health on Bell Let's Talk Day - and with a
Bell donation of 5 cents per
interaction, drove $6,107,538.60 in
new funding for mental health programs. With a 58% increase in
tweets compared to 2014, Bell Let's Talk was the #1 Twitter trend
in Canada and #1 worldwide. Based
on 4 action pillars - anti-stigma, care and access, research and
workplace leadership - and providing funding for leading mental
health hospitals, research institutions and community groups in
every region, Bell Let's Talk has now committed $73,623,413.80 to Canadian mental health. To
learn more, please visit Bell.ca/LetsTalk.
RESTART: ANOTHER FIBE TV INNOVATION
The latest enhancement from Bell Fibe TV, the exclusive new
"Restart" feature enables customers to rewind and watch TV shows
already in progress from the beginning. Another Canadian first from
Fibe TV introduced February 2,
Restart supports thousands of shows from networks including CBC,
CTV, Global TV, HBO Canada, Super Channel, TSN and many more.
Restart underscores the innovation and choice represented by
next-generation IPTV services like Fibe TV, the result of Bell's
strategic focus on leading investment in Canada's advanced broadband networks and
services. Like the robust wireless subscriber and data services
growth propelled by Bell's rapid deployment of mobile 4G LTE,
ongoing fibre expansion is driving strong additions in Bell's IPTV
and Internet growth services. The Fibe TV footprint now covers more
than 5 million households, up from 4.3 million at the end of 2013.
Including Bell Aliant's service area, BCE's total IPTV footprint
now exceeds 6 million customer locations.
BCE RESULTS
BCE operating revenue grew 2.7% to $5,528
million in Q4, reflecting higher revenues at Bell and Bell
Aliant. Adjusted EBITDA was up 1.2% to $2,022 million, driven by healthy growth at Bell
that was partly offset by a year-over-year decline at Bell Aliant.
For the full year 2014, BCE operating revenue and Adjusted EBITDA
increased 3.1% and 2.6%, respectively.
BCE's Q4 2014 net earnings attributable to common shareholders
of $542 million, or $0.64 per share, were 9.5% higher than the
$495 million, or $0.64 per share, reported in Q4 2013. Adjusted
net earnings increased 13.0% to $610
million, and adjusted earnings per share (EPS) grew 2.9% to
$0.72 from $0.70 last year, driven by higher Adjusted EBITDA
from continued strong wireless profitability and positive overall
wireline growth. Lower non-controlling interest, resulting from the
privatization of Bell Aliant completed on November 1, 2014, also contributed to higher
adjusted net earnings in the quarter.
In Q4 2014, we recorded a net impairment charge of $95 million, mainly related to Bell Media's
conventional TV properties. The impairment resulted from ongoing
softness in the overall Canadian TV advertising market and higher
content costs. This impact was offset largely by mark-to-market net
gains in the quarter on equity derivative contracts entered into to
hedge our share-based compensation liabilities and U.S. dollar
purchases.
For 2014, net earnings attributable to common shareholders were
$2,363 million, or $2.98 per share, up 19.6% from $1,975 million, or $2.55 per share, in 2013. The increase was the
result of healthy growth in Adjusted EBITDA, lower non-controlling
interest, and a charge in 2013 for the CRTC tangible benefits
obligation that Bell paid as part of its acquisition of Astral
Media, partly offset by the net impairment charge recorded in Q4
2014. Adjusted net earnings of $2,524
million and Adjusted EPS of $3.18 were up 8.9% and 6.4%, respectively,
compared to 2013. This reflected higher Adjusted EBITDA driven by
the increased contribution of Bell's growth services, lower net
pension financing cost, and mark-to-market gains realized on equity
derivatives used as economic hedges of share-based compensation and
U.S. dollar purchases.
BCE's cash flow from operating activities was $1,527 million compared to $1,838 million in Q4 2013, due to the
$350 million voluntary contribution
made to post-employment benefit plans at the end of 2014. Free cash
flow generated in Q4 2014 was $833
million, or 23.6% higher than last year, driven by higher
Adjusted EBITDA and lower capital expenditures. With the
privatization of Bell Aliant completed on November 1, 2014, BCE's free cash flow in Q4
included 2 months of contribution from Bell Aliant. For full year
2014, cash flow from operating activities decreased 3.6% to
$6,241 million as a result of the
$350 million voluntary pension
contribution, while free cash flow increased 6.7% to $2,744 million. Free cash flow per share was
$1.01 per share in Q4 and
$3.46 per share in 2014, representing
year-over-year increases of 17.4% and 4.5%, respectively.
In Q4 2014, BCE (Bell Canada and Bell Aliant) added 177,698 net
new customers from communications growth services (wireless, TV and
Internet): 118,120 postpaid wireless customers, partly offset by
the loss of 34,622 prepaid customers; 42,190 TV subscribers,
reflecting the addition of 76,074 net new IPTV customers; and
52,010 high-speed Internet customers. Total net NAS line losses
improved 31.0% to 93,005. At the end of 2014, BCE served a total of
8,118,628 wireless customers, up 2.4% from Q4 2013; total TV
subscribers of 2,642,608, up 6.2% (including 933,547 IPTV
customers, an increase of 42%); total high-speed Internet
subscribers of 3,297,026, up 5.1%; and total NAS lines of
7,130,852, a decrease of 6.1%.
BELL RESULTS
Bell operating revenues grew 2.6% to $4,940
million in Q4 on 2.2% higher service revenues, reflecting a
strong year-over-year increase at Bell Wireless and positive
overall Wireline growth. Product revenues grew 6.8% over Q4 2013,
reflecting more wireless device upgrades and increased business
data equipment sales, and contributing to the year-over-year
improvement in total Bell operating revenues. Bell Media revenues
declined 3.9% compared to last year.
Bell Adjusted EBITDA in Q4 was up 2.2% to $1,730 million, driven by increases of 10.6% at
Bell Wireless and 2.0% at Bell Wireline. Overall growth in the
quarter was moderated by a 16.5% decline at Bell Media, due to
higher costs for sports rights and content investments for the
CraveTV on-demand video streaming service. Bell's consolidated
EBITDA margin in Q4 2014 remained essentially unchanged at 35.0%
compared to 35.2% in Q4 2013.
For 2014, in line with guidance targets for the year, Bell
operating revenues and EBITDA were up 3.5% and 3.7%, respectively,
to $18,734 million and $7,066 million, driven by the increased
contribution of Bell growth services - Wireless, TV, Internet and
Media. Total revenues generated by these growth services grew
$814 million in 2014, a 5.5% increase
over the previous year.
Bell invested $932 million in new
capital in Q4 2014, bringing total capital expenditures for the
year to $3,142 million, an increase
of 4.7% over 2013. These investments support the continued
deployment of broadband fibre to homes and businesses to expand our
Fibe TV service footprint and enable faster Internet speeds; the
continuing rollout of 4G LTE mobile service in markets across
Canada; higher spending on network
capacity to support increasing Internet bandwidth usage and mobile
data consumption; and enhancements to our customer service delivery
systems.
BELL OPERATING RESULTS BY SEGMENT
Bell Wireless
Wireless operating revenue growth continued to accelerate this
quarter, increasing 9.6% to $1,649
million on 8.1% higher service revenues of $1,469 million. The growth was driven by an
increased mix of postpaid subscribers in our customer base and
higher blended ARPU(4), fuelled by greater mobile data
usage on smartphones and higher average rate plan pricing. Wireless
data revenues grew 26% in the quarter and now represent
approximately half of total Bell Wireless service revenues. Product
revenues were up 24.6% to $167
million as a result of more activations and upgrades to more
premium smartphones compared to last year.
Bell Wireless Adjusted EBITDA increased 10.6% to $585 million in Q4 2014, delivering a
0.9 percentage-point expansion in service margin to 39.8%.
This was achieved even with an approximate $40 million year-over-year increase in combined
subscriber acquisition costs and retention spending, which
contributed to operating cost growth of 9.0% in the quarter.
For full-year 2014, Bell Wireless operating revenues increased
6.7% to $6,241 million with service
revenues growing 6.4% to $5,705
million and product revenues up 11.8% to $483 million. Adjusted EBITDA grew 9.6% to
$2,564 million as service margin
increased 1.3 percentage points to 44.9%, reflecting the
strong service revenue flow-through from an expanding base of
postpaid subscribers and disciplined pricing.
- Postpaid gross additions totalled 377,735 in Q4, up 2.6% over
last year, reflecting strong holiday period sales, higher
activations in western Canada, and
increased tablet sales.
- Postpaid net additions were 117,378, compared to 119,520 in Q4
2013, bringing the total number of postpaid customers at the end of
2014 to 6,986,196, an increase of 4.6%. Including wireless
operations at Bell Aliant, total BCE wireless postpaid net customer
activations in Q4 were 118,120.
- Total Bell Wireless customers grew 2.5% to 7,970,702. Postpaid
customers represented 88% of this total at the end of 2014,
compared to 86% one year earlier. Including Bell Aliant customers,
BCE now serves a total of 8,118,628 wireless customers, up 2.4%
from Q4 2013.
- The percentage of postpaid subscribers with smartphones
increased to 76% at the end of 2014, compared to 73% at the end of
2013.
- Postpaid customer churn(4) in Q4 2014 remained
essentially unchanged at 1.30%, compared to 1.29% last year,
despite the seasonally high level of promotional activity in Q4
2014.
- Blended ARPU(4) increased 5.5% to $61.12 in Q4, representing the 20th
consecutive quarter of year-over-year improvement. Growth was
driven by accelerating data usage on Bell's expanding 4G LTE
network as the proportion of smartphone users continued to
increase, and the favourable impact of 2-year contract pricing
introduced in 2013 following implementation of the federal Wireless
Code of Conduct. For full-year 2014, blended ARPU increased 4.9% to
$60.07.
- Cost of acquisition (COA) (4) increased 6.2% this
quarter to $497 per gross addition,
due to a higher postpaid mix and sale of more premium smartphones
compared to last year. For full-year 2014, COA increased 5.2% to
$443 per gross addition.
- Retention spending increased to 13.5% of wireless service
revenues in Q4 2014 from 12.4% last year, reflecting a greater
number of early customer upgrades to high-end devices. In line with
plan, retention spending for full-year 2014 was 11.0% of wireless
service revenues.
- 4G LTE network coverage increased to 86% of the Canadian
population at the end of Q4 and is expected to grow to more than
98% by the end of 2015 as Bell intends to roll out LTE to more
small towns, rural locations and Canada's North. 4G LTE is complemented by 4G
HSPA+ coverage currently available to more than 98% of the
population.
- In January 2015, Bell introduced
Travel Data Passes that provide up to twice the data for customers
travelling to more than 200 countries worldwide. The passes offer
100 MB of data usage for as little as $30, enabling Bell customers to take full
advantage of their smartphones and data services when visiting
countries such as Mexico, the U.K.
or China.
Bell Wireline
Bell Wireline operating revenues increased 1.0% to $2,628 million in Q4 2014, representing the first
quarter of positive growth since Q2 of 2010. This was the result of
continued robust residential growth, including positive total net
subscriber additions driven by strong broadband Internet and Fibe
TV customer acquisitions in the quarter, a slower pace of voice
revenue decline, and improved year-over-year Business Markets
revenue performance from increased sales of business service
solutions and data equipment.
With an increasing mix of growth services, improved Business
Markets results and tight operating cost control, Bell Wireline
Adjusted EBITDA grew 2.0% to $953
million in Q4, driving a 40 basis point improvement in
margin to 36.3%.
Notably, Q4 2014 represents the first quarter since cable
telephony was launched in 2005 that Bell Wireline generated
positive overall revenue growth together with positive Adjusted
EBITDA growth and positive total residential net subscriber
additions.
For full-year 2014, Bell Wireline operating revenues decreased
0.6% to $10,040 million, while
operating costs decreased 0.5% to $6,272
million, resulting in a 0.7% decline in Wireline Adjusted
EBITDA to $3,768 million. Wireline
Adjusted EBITDA margin held stable at 37.5%, compared to 37.6% in
2013, despite the continuing shift from higher-margin voice
revenues towards lower-margin growth services.
- Total Bell residential customer net activations increased
23,917 to 11,451 in Q4 2014 from a net loss of 12,466 last year,
reflecting strong Internet subscriber growth and Fibe TV adoption
that also drove higher residential NAS activations and retention.
Including residential wireline operations at Bell Aliant, total BCE
residential customer net activations in Q4 were 22,741, up from a
net loss of 20,043 last year.
- Net high-speed Bell Internet customer additions were 34,126 in
Q4 2014, more than double the 15,690 customers added in Q4 2013.
The year-over-year increase reflects continued strong Internet
customer attach rates on Fibe TV service bundles and the higher
service speeds and reliability of Bell's growing broadband fibre
network. Including Bell Aliant, total BCE Internet net customer
activations in Q4 were 52,010, up 29,141 over the previous
year.
- Bell Fibe TV added 58,371 net new customers this quarter,
compared to 60,301 last year. Total BCE IPTV net additions in Q4
2014 were 76,074, up from 75,120 in Q4 2013. At the end of 2014,
BCE served 933,547 IPTV subscribers, up 42.0% from the end of
2013.
- The Bell Fibe TV footprint reached more than 5 million
households at the end of 2014, compared to approximately 4.3
million at the end of 2013. Including Bell Aliant's FibreOP service
area, BCE's total IPTV footprint now covers 6 million homes, up
from 5.1 million at the end of 2013.
- Bell had 2,287,489 high-speed Internet customers at the end of
2014, a 4.7% increase over 2013. Including Bell Aliant, BCE has
3,297,026 high-speed Internet subscribers, up 5.1% compared to last
year.
- Satellite TV net customer losses increased to 33,934 in Q4 2014
from 24,112 last year. This was the result of fewer retail
activations due to aggressive cable TV offers in Bell service areas
where Fibe TV is not available, and lower wholesale activations
reflecting the expanded roll-out of IPTV service by competing
providers in Western and Atlantic
Canada.
- Bell TV's subscriber base (Bell Satellite TV and Fibe TV)
totalled 2,376,885 at the end of 2014, a 4.3% increase over 2013.
Including Bell Aliant, BCE now serves 2,642,608 TV customers, up
6.2%.
- Wireline data revenues were up 4.0% to $1,573 million in Q4 2014, the result of combined
Internet and TV service revenue growth of 5.1%, growth in IP
broadband connectivity and business service solutions of
approximately 3% and 10%, respectively, and higher data equipment
sales to business customers.
- Residential NAS net losses in Q4 2014 improved 36.5% to 40,178
from 63,281 in Q4 2013, reflecting the pull-through effect of Fibe
TV service bundles and improved retention in areas where IPTV
service is available. Including Bell Aliant, total BCE residential
NAS net losses in Q4 were 58,870, down 35.7% over the previous
year.
- Business NAS net losses improved 18.3% in Q4 2014, or 26,527,
compared to 32,478 in Q4 2013, due to fewer customer deactivations.
Including Bell Aliant, total BCE business NAS net losses in Q4 were
34,135, or 8,988 fewer than Q4 2013.
- Total NAS access lines at the end of 2014 were 4,893,236, a
6.7% decline compared to the previous year. Including Bell Aliant,
BCE now has total NAS lines of 7,130,852, a decrease of 6.1%.
- Consistent with the year-over-year reduction in NAS net losses
in Q4 2014, the rate of local and access revenue decline improved
4.6% to $578 million.
- Long distance revenues were up 1.2% to $173 million in Q4 2014 on higher year-over-year
sales of international long distance minutes.
Bell Media
Bell Media operating revenues decreased by 3.9% this quarter to
$789 million. The decline was due to
$20 million in retroactive subscriber
fee and retransmission royalty revenues that did not recur in Q4
2014, and the loss of revenue services that ceased operations in
2014 (regional hockey feeds and Viewers Choice). Advertising
revenues in Q4 2014 increased slightly over last year, attributable
to the programming strength of Bell Media's leading specialty
sports services, TSN and RDS, and growth in specialty news channel
audiences, which offset declines in conventional TV
advertising.
Bell Media Adjusted EBITDA decreased 16.5% in Q4 to $192 million from $230
million last year, the result of higher TV content costs for
sports broadcast rights and the launch of CraveTV, as well as the
flow-through of $20 million in
revenues from Q4 2013 that did not recur in Q4 2014.
For the full year 2014, operating revenues were up 14.9% to
$2,937 million and Adjusted EBITDA
increased 7.5% to $734 million,
reflecting the incremental contribution to advertising and
subscriber revenues in the first half of the year from the
acquisition of Astral Media.
- CTV remained Canada's leading
conventional TV network during the fall season in all key
demographics, holding 14 of the top 20 programs nationally among
total viewers and all 4 of the top 4 programs among viewers aged 25
to 54 (The Big Bang Theory, The Flash, Gotham, and Marvel's Agents
of S.H.I.E.L.D). CTV's fall season audience was up 9%, widening its
lead over conventional TV competitors and producing its highest
full-day average audience level in over a decade.
- Bell Media's specialty and pay TV properties reached 83% of all
Canadian English specialty and pay TV viewers in the average week
during Q4 2014. In primetime, for the key 25 to 54 age demographic,
viewing was led by TSN and Discovery for sports and entertainment
specialty and The Movie Network (TMN) for pay TV.
- Canada's sports leader and the
leading specialty TV network in the country, TSN expanded to 5
national feeds with a deep portfolio of premium sports programming,
broadcasting the 2014 CFL Grey Cup, growing audience levels for NFL
football through its expanded broadcast schedule, and hosting the
#1 specialty program and #1 hockey program of Q4 with its broadcast
of World Junior Hockey.
- The IIHF World Junior Championship game broke the all-time
audience record in Canadian specialty TV history with 7.1 million
viewers.
- Bell Media maintained its leading position in Québec as its
properties reached an average of 83% of the French-language
population weekly. The Top 5 Specialty channels in Québec for
viewers aged 25 to 54 were RDS, Canal D, Canal Vie, Z and Super
Écran, all Bell Media properties.
- Bell Media led its Canadian competitors in unique visitors and
video viewers, total page views, visits and videos served with
monthly averages of 16.6 million visitors, 3.5 million viewers, 519
million page views, 127 million visits and 87 million videos,
respectively.
- Bell Media remained Canada's
top radio broadcaster, reaching 17.4 million listeners who spent 84
million hours tuned in each week during Q4 2014.
- Bell Media launched Crave TV, its new on-demand TV streaming
service, on December 11, 2014.
Offering the largest collection of premium content in one place
with thousands of hours of programming and approximately 350 unique
titles of popular series and movies, CraveTV is now distributed by
Bell TV, Bell Aliant, Eastlink, Northwestel and TELUS.
- Bell Media and CBS Corp. announced on January 29, 2015 a long-term content licensing
and trademark agreement for SHOWTIME in Canada. This exclusive deal will bring the
SHOWTIME brand to Canada for the
first time with hundreds of hours of past, present and future
SHOWTIME-owned programming being made available across all
platforms in English and French, including Bell Media's CraveTV
service and its leading pay TV service, TMN. CraveTV and TMN become
Canada's exclusive home of
SHOWTIME-owned first-run programming as well as its entire catalog
of scripted and unscripted series, documentaries, specials and TV
movies.
BELL ALIANT
Bell Aliant revenues increased 1.7% in Q4 2014 to $700 million from $688
million last year, as growth in Internet, TV, other data and
wireless revenues exceeded the declines in local, long distance and
other revenues. Despite higher year-over-year operating revenues,
Bell Aliant Adjusted EBITDA decreased 4.3% this quarter to
$292 million from $305 million in Q4 2013, reflecting higher
operating costs driven by growth of its FibreOP services and
customers.
Bell Aliant continued to extend its fibre-to-the-home (FTTH)
network in Q4, passing 56,000 additional homes and businesses with
FibreOP services, bringing its total FTTH service footprint to
approximately 1,017,000 locations in more than 89 communities
throughout Atlantic Canada, Québec
and Ontario.
With the privatization of Bell Aliant completed on November 1, 2014, Bell Aliant will cease being a
reporting operating segment starting with BCE's Q1 2015 results.
Its operating results will be integrated within Bell's respective
Wireline and Wireless segments.
COMMON SHARE DIVIDEND
BCE's Board of Directors declared a quarterly dividend of
$0.65 per common share, payable on
April 15, 2015 to shareholders of
record at the close of business on March 16,
2015.
OUTLOOK FOR 2015
BCE's 2015 outlook builds on the positive wireless and wireline
momentum we delivered in 2014 and reflects continued progress in
the execution of our 6 Strategic Imperatives.
All our 2015 financial guidance targets reflect continued
healthy projected Wireless profitability and improving Wireline
growth as well as the privatization of Bell Aliant, with Adjusted
EPS and free cash flow providing a strong and stable foundation for
the 5.3% increase in BCE's common share dividend for 2015.
Our 2014 guidance, 2014 results, and financial
guidance targets for 2015 are as follows:
|
2014
Guidance |
2014
Results |
2015
Guidance |
BCE |
|
|
|
Revenue growth(i) |
2% - 4% |
3.5% |
1% - 3% |
Adjusted EBITDA
growth(i) |
3% - 5% |
3.7% |
2% - 4% |
Capital
Intensity(i),(4) |
16% - 17% |
16.8% |
approx. 17% |
Adjusted EPS |
$3.10 - $3.20 |
$3.18 |
$3.28 - $3.38 |
Free cash flow
growth(ii) |
3% - 7% |
6.7% |
approx. 8% - 15% |
Annual common dividend per share |
$2.47 |
$2.47 |
$2.60 |
Dividend payout policy |
65% - 75%
of free cash flow |
69%
of free cash flow |
65% - 75%
of free cash flow |
(i) |
2014 results and financial guidance
for revenue growth, Adjusted EBITDA growth and capital intensity
are exclusive of Bell Aliant. |
(ii) |
As of November 1, 2014, BCE's free
cash flow includes 100% of Bell Aliant's free cash flow rather than
cash dividends received from Bell Aliant. |
CALL WITH FINANCIAL ANALYSTS
BCE will hold a conference call for financial analysts to discuss
Q4 2014 results on Thursday, February
5 at 8:00 am (Eastern). Media
are welcome to participate on a listen-only basis. Please dial
toll-free 1-800-355-4959 or (416) 340-2218. A replay will be
available for one week by dialing 1-800-408-3053 or (905) 694-9451
and entering pass code 5323218#.
A live audio webcast of the conference call will be available on
BCE's website at: BCE Q4-2014 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) |
Beginning with Q2 2014, we reference
Adjusted EBITDA and Adjusted EBITDA margin as non-GAAP financial
measures. These terms replace the previously referenced non-GAAP
financial measures EBITDA and EBITDA margin. Our definition of
Adjusted EBITDA and Adjusted EBITDA margin are unchanged from our
former definition of EBITDA and EBITDA margin respectively.
Accordingly, this change in terminology has no impact on our
reported financial results for prior periods. The terms Adjusted
EBITDA and Adjusted 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 Adjusted
EBITDA as operating revenues less operating costs, as shown in
BCE's consolidated income statements. Adjusted EBITDA for BCE's
segments is the same as segment profit as reported in BCE's
consolidated financial statements. We define Adjusted EBITDA margin
as Adjusted EBITDA divided by operating revenues. We use Adjusted
EBITDA and Adjusted EBITDA margin to evaluate the performance of
our businesses as they reflect their ongoing profitability. We
believe that certain investors and analysts use Adjusted 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 Adjusted EBITDA and Adjusted EBITDA
margin to evaluate the performance of our businesses. Adjusted
EBITDA also is one component in the determination of short-term
incentive compensation for all management employees. Adjusted
EBITDA and Adjusted EBITDA margin have no directly comparable IFRS
financial measure. Alternatively, the following table provides a
reconciliation of net earnings to Adjusted EBITDA. |
($ millions) |
|
|
|
|
|
Q4 2014 |
Q4 2013 |
2014 |
2013 |
Net earnings |
594 |
593 |
2,718 |
2,388 |
Severance, acquisition
and other costs |
58 |
48 |
216 |
406 |
Depreciation |
734 |
695 |
2,880 |
2,734 |
Amortization |
118 |
160 |
572 |
646 |
Finance costs |
|
|
|
|
|
Interest expense |
238 |
240 |
929 |
931 |
|
Interest on post-employment benefits
obligations |
25 |
37 |
101 |
150 |
Other expense
(income) |
34 |
(1) |
(42) |
6 |
Income taxes |
221 |
226 |
929 |
828 |
Adjusted EBITDA |
2,022 |
1,998 |
8,303 |
8,089 |
|
BCE Operating Revenues |
5,528 |
5,382 |
21,042 |
20,400 |
Adjusted EBITDA
Margin |
36.6% |
37.1% |
39.5% |
39.7% |
(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
early debt redemption costs. 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
early debt redemption costs, 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) |
|
|
|
|
|
|
|
|
|
Q4 2014 |
Q4 2013 |
2014 |
2013 |
|
Total |
Per
share |
Total |
Per
share |
Total |
Per
share |
Total |
Per
share |
Net earnings attributable to common
shareholders |
542 |
0.64 |
495 |
0.64 |
2,363 |
2.98 |
1,975 |
2.55 |
Severance, acquisition and other
costs |
42 |
0.04 |
33 |
0.04 |
148 |
0.18 |
299 |
0.38 |
Net losses (gains) on
investments |
8 |
0.01 |
12 |
0.02 |
(8) |
(0.01) |
7 |
0.01 |
Premiums on early redemption of
debt |
18 |
0.03 |
- |
- |
21 |
0.03 |
36 |
0.05 |
Adjusted net earnings |
610 |
0.72 |
540 |
0.70 |
2,524 |
3.18 |
2,317 |
2.99 |
(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. As of November 1, 2014,
BCE's free cash flow includes 100% of Bell Aliant's free cash flow
rather than cash dividends received from Bell Aliant. We define
free cash flow as cash flows from operating activities, excluding
acquisition costs paid and voluntary pension funding, less capital
expenditures, preferred share dividends and dividends paid by
subsidiaries to NCI. |
|
|
|
Prior to November 1, 2014, free cash
flow was defined 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. |
|
|
|
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
following table is a reconciliation of cash flows from operating
activities to free cash flow on a consolidated basis. |
($ millions except per
share amounts) |
|
|
|
|
|
Q4 2014 |
Q4 2013 |
2014 |
2013 |
Cash flows from operating
activities |
1,527 |
1,838 |
6,241 |
6,476 |
Bell Aliant dividends
paid to BCE |
- |
48 |
95 |
191 |
Capital expenditures |
(1,076) |
(1,139) |
(3,717) |
(3,571) |
Cash dividends paid on
preferred shares |
(40) |
(31) |
(134) |
(127) |
Cash dividends paid by
subsidiaries to non-controlling interest |
(1) |
(68) |
(145) |
(283) |
Acquisition costs
paid |
68 |
30 |
131 |
80 |
Voluntary defined benefit
pension plan contribution |
350 |
- |
350 |
- |
Bell Aliant free cash
flow |
5 |
(4) |
(77) |
(195) |
Free cash flow |
833 |
674 |
2,744 |
2,571 |
|
Average number of common shares
outstanding |
837.7 |
775.9 |
793.7 |
775.8 |
Free cash flow per
share |
1.01 |
0.86 |
3.46 |
3.31 |
(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) in BCE's Q3 2014
MD&A for a definition of such KPIs. |
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements made in this news release are forward-looking
statements. These statements include, without limitation,
statements relating to our 2015 financial guidance (including
revenues, Adjusted EBITDA, capital intensity, Adjusted EPS and free
cash flow), our business outlook, objectives, plans and strategic
priorities, BCE's 2015 annualized common share dividend and common
share dividend policy, our network deployment plans, the expected
timing and completion of BCE's proposed acquisition of GLENTEL and
the subsequent divestiture of a 50% ownership interest in GLENTEL
to Rogers, and other statements that are not historical facts.
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
February 5, 2015 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 special items
or of any dispositions, monetizations, mergers, acquisitions, other
business combinations or other transactions that may be announced
or that may occur after February 5,
2015. The financial impact of these transactions and 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 2015 financial
results, as well as our objectives, strategic priorities and
business outlook for 2015, 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
2015 contained in this news release, including, but not limited
to:
Canadian Economic and Market Assumptions
- slower economic growth, given the Bank of Canada's estimated growth in Canadian GDP of
approximately 2.1% in 2015, compared to estimated growth of 2.3% in
2014
- weaker employment growth compared to 2014, as the overall level
of business investment is expected to remain soft
- interest rates to remain largely unchanged in 2015 or slightly
decrease year-over-year
- a sustained level of wireline and wireless competition in both
consumer and business markets
- higher, but slowing, wireless industry penetration and
smartphone adoption
- industry pricing discipline even with the potential unusual
market activity that could result from the possible expiry of
three-year service contracts, entered into before the Wireless Code
of Conduct came into effect, and of new two-year plans, driving
higher expiries and higher transaction volumes, to the extent that
the CRTC's June 3, 2015 Wireless Code
of Conduct application date is found to be valid
- relatively stable media advertising market and escalating costs
to secure TV programming
Assumptions Concerning our Bell Wireless
Segment
- higher subscriber acquisition and retention spending, driven by
a greater number of year-over-year gross additions and customer
device upgrades
- higher than industry-average blended ARPU and Adjusted EBITDA
growth, driven by a greater mix of postpaid smartphone customers
and accelerating data consumption on the 4G LTE network, and higher
access rates on new two-year contracts
- completion of the LTE network expected to cover 98% of the
Canadian population
- no material financial, operational or competitive consequences
of changes in regulations affecting our wireless business
Assumptions Concerning our Bell Wireline
Segment
- positive full-year revenue and Adjusted EBITDA growth
- IPTV contributing to TV and broadband Internet market share
growth, as well as fewer residential NAS losses despite increasing
wireless substitution, resulting in fewer year-over-year total
wireline residential net customer losses and higher penetration of
three-product households
- residential services ARPU growth from increased penetration of
three-product households, promotion expiries and price
increases
- continued large business customer migration to IP-based systems
and competitive re-price pressures in business and wholesale
markets
- improving year-over-year rate of decline in Business Markets
revenue and Adjusted EBITDA
- new broadband fibre deployment expected to be largely FTTH/
FTTP
- no material financial, operational or competitive consequences
of changes in regulations affecting our wireline business
Assumptions Concerning our Bell Media Segment
- lower year-over-year Adjusted EBITDA and margin, due to rising
sports rights and specialty content costs, CraveTV investment,
higher regulatory Canadian content spending, the expiry of certain
CRTC benefits as well as the completion of the Local Programming
Improvement Fund
- ability to successfully acquire highly rated programming and
differentiated content
- building and maintaining strategic supply arrangements for
content on all four screens
- successful scaling of CraveTV
- TV unbundling and growth in OTT viewing expected to result in
moderately lower subscriber levels for many Bell Media TV
properties
- no material financial, operational or competitive consequences
of changes in regulations affecting our media business
Financial Assumptions Concerning BCE
The following constitute BCE's principal financial assumptions
for 2015:
- total post-employment benefit plans cost to be approximately
$370 million, based on an estimated
accounting discount rate of 4%, comprised of an estimated above
Adjusted EBITDA post-employment benefit plans service cost of
approximately $260 million and an
estimated below Adjusted EBITDA net post-employment benefit plans
financing cost of approximately $110
million
- depreciation and amortization expense of approximately
$3,425 million
- net interest expense of approximately $970 million
- tax adjustments (per share) of approximately $0.02
- an effective tax rate of approximately 26%
- non-controlling interest of approximately $50 million
- total pension plan cash funding of approximately $400 million
- cash taxes of approximately $750
million
- net interest payments of approximately $925 million
- working capital changes, severance and other costs of
approximately $125 million to
$225 million
- average BCE common shares outstanding of approximately 845
million
- an annual common share dividend of $2.60 per share
The foregoing assumptions, although considered reasonable by BCE
on February 5, 2015, 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 2015 financial guidance,
are listed below. The realization of our forward-looking
statements, including our ability to meet our 2015 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:
- regulatory initiatives and proceedings, government
consultations and government positions that affect us and influence
our business
- 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
- the level of technological substitution and the presence of
alternative service providers, contributing to reduced utilization
of traditional wireline services
- the adverse effect of new technology and increasing
fragmentation in Bell TV's TV distribution market and
Bell Media's markets
- rising programming costs and Bell Media's inability to secure
key content
- variability in subscriber acquisition and retention costs based
on subscriber acquisitions, retention volumes, smartphone sales and
handset discount levels
- 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 and ratings/audience levels
- our inability to protect our networks, systems, applications,
data centres, electronic and physical records and the information
stored therein against cyber attacks, unauthorized access or entry,
damage from fire, natural disasters and other events
- the complexity of our product offerings, pricing plans,
promotions, technology platforms and billing systems
- our failure to satisfy customer expectations and build a simple
and expeditious operational delivery model
- our failure to carry out network evolution activities, and to
meet network upgrade or deployment timelines within our capital
intensity target
- our inability to discontinue certain services as necessary to
improve capital and operating efficiencies
- 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 IT systems, and the complexity and costs of our IT
environment
- our failure to maintain optimal network operating performance
in the context of significant increases in broadband demand and in
the volume of wireless data-driven traffic
- employee retention and performance, and labour disruptions
- pension obligation volatility and increased contributions to
post-employment benefit plans
- 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
- 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
- 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
- ineffective change management resulting from restructurings and
other corporate initiatives, and the failure to successfully
integrate business acquisitions and existing business units
- our failure to evolve practices to effectively monitor and
control fraudulent activities
- copyright theft and other unauthorized use of our content
- the theft of our DTH satellite TV services
- 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, and our failure to develop a successful business
strategy
- 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
communications devices
- our inability to maintain customer service and our networks
operational in the event of the occurrence of epidemics, pandemics
and other health risks
- our failure to recognize and adequately respond to climate
change and public expectations on environmental matters
- 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
- the expected timing and completion of the proposed acquisition
of GLENTEL and of the subsequent divestiture of a 50% ownership
interest to Rogers are subject to closing conditions and other
risks and uncertainties and there can be no certainty that
anticipated benefits will be realized
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 Safe Harbour
Notice Concerning Forward-Looking Statements dated February 5, 2015, 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). This document is
also available at BCE.ca.
BCE's Safe Harbour Notice Concerning Forward-Looking Statements
dated February 5, 2015 is
incorporated by reference into this news release.
For additional information, please refer to the February 5, 2015 presentation entitled "Q4 2014
Results and 2015 Analyst Guidance Call" available on BCE's
website.
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 Canada and Bell Aliant brands.
Bell Media is Canada's premier
multimedia company with leading assets in television, radio, out of
home 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 initiative promotes Canadian mental health
with national awareness and anti-stigma campaigns, like Clara's Big
Ride for Bell Let's Talk and Bell Let's Talk Day, and significant
Bell funding of community care and access, research, and workplace
initiatives. To learn more, please visit Bell.ca/LetsTalk.
SOURCE BCE INC.