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.
- Net earnings increased 29.0% to $699
million; net earnings attributable to common shareholders up
32.5% to $657 million, or
$0.75 per common share; adjusted net
earnings increased 8.5% to $667
million, driving 5.6% higher adjusted EPS of $0.76
- Cash flow from operating activities of $1,520 million and free cash flow of $923 million contributed to growth in full-year
cash flow from operating activities and free cash flow of 5.9% and
7.6%, respectively
- Operating revenue up 1.8% on stronger service revenue growth
of 2.3% – best top-line performance since Q3 2015 – driving 2.3%
higher BCE adjusted EBITDA and margin expansion in an intensely
competitive quarter
- Exceptional wireless results: 112,393 postpaid net
additions, up 23.1%; service revenue grew 7.2% on 4.7% higher ARPU;
adjusted EBITDA up 5.1%
- Steady broadband customer gain in Q4 with 54,307 IPTV and
Internet net additions
- Wireline adjusted EBITDA up 0.9% on 1.8% lower operating
costs, generating a 0.6-point margin increase to 40.1%; second
consecutive full year of positive adjusted EBITDA growth for Bell
Wireline
- Strong Bell Media contribution with revenue growth of 3.6%
driving 2.2% higher adjusted EBITDA; Crave TV subscriber growth
accelerates in the quarter
MONTRÉAL, Feb. 2, 2017 /CNW
Telbec/ - BCE Inc. (TSX: BCE) (NYSE: BCE), Canada's largest
communications company, today reported results for the fourth
quarter (Q4) and full-year 2016, provided financial guidance
targets for 2017, and announced a $0.14 per share, or 5.1%, increase in the BCE
annual common share dividend to $2.87.
FINANCIAL
HIGHLIGHTS
|
($ millions except
per share amounts) (unaudited)
|
Q4
2016
|
Q4
2015
|
%
change
|
2016
|
2015
|
%
change
|
BCE
|
|
|
|
|
|
|
Operating
revenues
|
5,702
|
5,603
|
1.8%
|
21,719
|
21,514
|
1.0%
|
Net
earnings
|
699
|
542
|
29.0%
|
3,087
|
2,730
|
13.1%
|
Net earnings
attributable to common shareholders
|
657
|
496
|
32.5%
|
2,894
|
2,526
|
14.6%
|
Adjusted net
earnings(1)
|
667
|
615
|
8.5%
|
3,009
|
2,845
|
5.8%
|
Adjusted
EBITDA(2)
|
2,121
|
2,073
|
2.3%
|
8,788
|
8,551
|
2.8%
|
EPS
|
0.75
|
0.58
|
29.3%
|
3.33
|
2.98
|
11.7%
|
Adjusted
EPS(1)
|
0.76
|
0.72
|
5.6%
|
3.46
|
3.36
|
3.0%
|
Cash flows from
operating activities
|
1,520
|
1,510
|
0.7%
|
6,643
|
6,274
|
5.9%
|
Free cash
flow(3)
|
923
|
916
|
0.8%
|
3,226
|
2,999
|
7.6%
|
"Our Q4 performance was a strong finish to a year in which the
Bell team consistently executed our broadband leadership strategy,
delivering value for our customers, communities and shareholders
alike. Bell is a company with momentum, rolling out new fibre and
wireless networks that rank with the best in the world and the
exclusive innovations in communications and media that Canadians
clearly want the most," said George
Cope, President and CEO of BCE and Bell Canada. "Unceasing network and service
innovation is key to Bell's growing leadership in broadband
communications, reflected in Q4 with a gain of more than 54,000
Fibe TV and Internet net customer additions, and approximately
240,000 in 2016; more than 112,000 new postpaid wireless customers
in the quarter and 315,000 in 2016, increases of 23% and 19%
respectively; and the accelerating growth of Bell Media's CraveTV
streaming service."
"Marketplace success and fast-growing customer usage of Bell's
superior services – including an increase of 41% in total wireless
data usage and 31% in broadband Internet compared to Q4 last year –
is delivering solid revenue growth. Combined with our team's
disciplined focus on cost efficiency in a competitive marketplace,
Bell is delivering ongoing increases in operating profitability,
especially in our wireless business which grew service revenue
7.2%, ARPU 4.7%, and adjusted EBITDA 5.1%. Increased free cash flow
enables our industry leading investment in Bell's award-winning LTE
wireless and fibre networks and product R&D; our focus on
returning value to shareholders with another increase to the BCE
common share dividend, the 13th since the end of 2008;
and our support for the national community with another record Bell
donation for mental health in 2017 thanks to the unprecedented
engagement by Canadians in Bell Let's Talk Day last week."
Bell is focused on 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
& Services, Accelerate Wireless, Leverage Wireline Momentum,
Expand Media Leadership, Improve Customer Service, and Achieve a
Competitive Cost Structure. This broadband leadership strategy has
delivered world-class fibre and wireless LTE networks; continued
strong performance across Wireless, TV, Internet and Media growth
services; 45 consecutive quarters of uninterrupted year-over-year
adjusted EBITDA growth; and 13 increases to the BCE common share
dividend since the end of 2008 – a total increase of 97%.
"Again in 2016, BCE achieved all of our financial guidance
targets. This consistent performance year after year shows the
strength of the business model Bell has built around our 6
Strategic Imperatives, and our unwavering focus on profitable
subscriber growth and cost discipline in a highly competitive and
dynamic marketplace," said Glen
LeBlanc, Chief Financial Officer of BCE and Bell Canada. "Going into 2017, BCE's operations
and financial foundation are strong. Our healthy balance sheet is
underpinned by investment-grade credit metrics and good liquidity,
together with a defined benefit pension plan that is very well
funded and attractively positioned to benefit from a rising
interest rate environment."
"BCE's 2017 guidance targets reflect a favourable financial
profile for all 3 Bell operating segments, with free cash flow
providing a strong and stable foundation for the 5.1% increase in
BCE's common share dividend for 2017 as well as continued
significant capital investment that will enable future growth of
the business and support our objective to deliver sustainable
shareholder returns."
CRTC approves Bell MTS broadcast distribution
licence
In December, the CRTC approved the transfer to Bell
of the terrestrial broadcasting licence held by Manitoba Telecom
Services Inc., another step in the process to complete BCE's
acquisition of MTS. Expected to close by the end of Q1 2017, the
transaction has also been approved by MTS shareholders and the
Manitoba courts, and remains
subject to approvals by the Competition Bureau and Innovation,
Science and Economic Development (ISED).
BCE common share dividend increased
Today's dividend
announcement is BCE's 13th increase to its annual common
share dividend since Q4 2008, representing a 97% increase. The BCE
annualized common share dividend will increase 5.1%, or
14 cents per share, from $2.73 to $2.87
effective with BCE's Q1 2017 dividend payable on April 15, 2017 to shareholders of record at the
close of business on March 15, 2017.
This is BCE's 9th consecutive year of 5% or better
dividend growth, while maintaining the dividend payout
ratio(3) within the target policy range of 65% to 75% of
free cash flow. The higher dividend for 2017 is fully supported by
projected growth in free cash flow.
Voluntary pension plan contribution
BCE made a
$400 million voluntary pension plan
contribution in December 2016,
further reinforcing the strong solvency position of its defined
benefit (DB) pension plans, reducing the amount of future pension
obligations, and effectively positioning BCE to assume the MTS DB
pension plan post acquisition. The voluntary contribution to
pre-fund future obligations was an efficient use of cash on hand at
the end of 2016, favourably impacting BCE's free cash flow
generation in 2017 due to the contribution's tax deductibility and
accelerating the move to a surplus position should interest rates
rise.
Bell Let's Talk Day 2017 sets new records
With new
ways for Canadians to engage including Instagram and Snapchat, Bell
Let's Talk Day 2017 was the biggest mental health conversation
ever, generating 131,705,010 total texts, calls and social media
messages of support on January 25.
#BellLetsTalk was again the top Twitter trend in Canada and worldwide, and overall social media
engagement on Twitter, Facebook, Snapchat and Instagram more than
tripled this year. With Bell donating 5
cents per interaction, participants drove $6,585,250.50 in new Bell funding for mental
health programs. Bell's total commitment to mental health now
stands at $86,504,429.05 and will
reach at least $100 million in 2020.
Bell Let's Talk has supported more than 700 organizations
delivering anti-stigma, care, research and workplace mental health
initiatives in every region of the country.
BCE RESULTS
BCE operating revenue was up 1.8% in Q4 to
$5,702 million, reflecting a 2.3%
year-over-year increase in service revenue to $5,169 million driven by solid wireless,
residential services and media top-line growth. Product revenue
decreased 3.2% to $533 million, the
result of aggressive competitor discounting and promotions for
mobile handsets and lower wireline product sales to business
customers. For full-year 2016, BCE operating revenue increased in
line with our guidance target to $21,719
million, or 1.0%, from $21,514
million in 2015 on service revenue growth of 1.7%, while
total product revenue decreased 7.2%.
Net earnings increased 29.0% to $699
million from $542 million in
Q4 2015, while net earnings attributable to common shareholders
totalled $657 million this quarter,
or $0.75 per share, up 32.5% and
29.3%, respectively, from $496
million, or $0.58 per share,
last year. These year-over-year increases were due to growth in
operating revenue that drove higher adjusted EBITDA, as well as
decreased severance, acquisition and other costs and lower other
expense, partly offset by increased amortization expense and higher
income taxes.
Severance, acquisition and other costs were lower this quarter
due mainly to higher wireline and media workforce restructuring
costs in Q4 2015. Other expense improved as a result of lower
year-over-year asset impairment charges related to Bell Media
properties. Excluding the impact of severance, acquisition and
other costs, net losses on investments, and early debt redemption
costs, adjusted net earnings increased 8.5% to $667 million or $0.76 per common share, compared to $615 million or $0.72 per common share in Q4 2015.
For the full year 2016, net earnings grew 13.1% to $3,087 million from $2,730
million in the previous year, while net earnings
attributable to common shareholders were $2,894 million, or $3.33 per share, up 14.6% and 11.7%,
respectively, compared to $2,526
million or $2.98 per share in
2015. The increases were the result of solid operating revenue
growth and tight cost control that drove higher adjusted EBITDA,
lower severance, acquisition and other costs, reduced finance costs
that reflected lower interest expense on various Bell Canada debt instruments and lower interest
on post-employment benefit obligations, as well as higher other
income. This was partly offset by higher amortization expense and
higher income taxes. Adjusted net earnings of $3,009 million and adjusted net earnings per
share (EPS) of $3.46 in 2016 were up
5.8% and 3.0%, respectively, compared to 2015, reflecting higher
adjusted EBITDA across all three Bell operating segments.
BCE's adjusted EBITDA increased 2.3% to $2,121 million in Q4, driven by year-over-year
increases of 5.1% at Bell Wireless, 0.9% at Bell Wireline and 2.2%
at Bell Media. BCE's consolidated Adjusted EBITDA
margin(2) was up modestly, increasing to 37.2% this
quarter from 37.0% last year, reflecting the flow-through of higher
wireless average revenue per user (ARPU)(4), increasing
broadband Internet and IPTV scale and lower wireline operating
costs. Consistent with our 2016 guidance target range of 2% to 4%
growth for the year, BCE's adjusted EBITDA increased 2.8% to
$8,788 million from $8,551 million in 2015.
BCE invested $993 million in new
capital in Q4, bringing total capital expenditures for 2016 to
$3,771 million, an increase of 4.0%
over 2015. This result was consistent with higher planned spending
on advanced broadband wireline and wireless infrastructure, and
represented a capital intensity(4) ratio (capital
expenditures as a percentage of total revenue) for 2016 of 17.4%,
in line with our guidance assumption of approximately 17%.
Capital investment was focused on expanding broadband fibre
directly to more homes and businesses, including the build-out of
Gigabit Fibe infrastructure in Toronto and other urban locations; continued
investment in Bell's leading 4G LTE and LTE Advanced (LTE-A)
networks, including the deployment of small-cell technology to
optimize coverage, signal quality and data capacity; and increased
wireless and Internet network capacity to support subscriber growth
and accelerating data usage.
BCE cash flows from operating activities in Q4 were $1,520 million, up from $1,510 million the year before, the result of
higher adjusted EBITDA, lower income taxes paid, and higher
acquisition and other costs paid in Q4 2015 due mainly to the
payment in full satisfaction of the judgment rendered in a
litigation claim for satellite TV signal piracy as well as
severance and integration costs relating to the privatization of
Bell Aliant. This was largely offset by a higher voluntary
contribution of $400 million made to
post-employment benefit plans at the end of 2016 compared to
$250 million at the end of 2015, and
a decrease in working capital. BCE generated free cash flow of
$923 million this quarter, a 0.8%
increase from $916 million the year
before, reflecting higher cash flows from operating activities and
lower cash dividends paid on preferred shares as a result of the
timing of payment, partly offset by higher capital expenditures.
For full-year 2016, BCE's cash flows from operating activities
increased 5.9% to $6,643 million from
$6,274 million in 2015, while free
cash flow grew 7.6% to $3,226 million
from $2,999 million.
In Q4 2016, BCE gained 112,393 net new wireless postpaid
customers and reported a net loss of 24,470 prepaid subscribers;
35,905 net new Fibe TV customers and a net loss of 36,869 satellite
TV customers; and the addition of 18,402 net new high-speed
Internet customers. NAS line net losses totalled 100,630. At the
end of 2016, BCE served a total of 8,468,872 wireless customers, up
2.7% from Q4 2015 (including 7,690,727 postpaid customers, an
increase of 4.3%); total TV subscribers of 2,744,909, up 0.2%
(including 1,337,944 Fibe TV customers, an increase of 13.1%);
total high-speed Internet subscribers of 3,476,562, up 1.9%; and
total NAS lines of 6,257,732, a decrease of 6.4%.
BCE OPERATING RESULTS BY SEGMENT
Bell Wireless
Wireless operating revenue growth
accelerated this quarter, increasing 6.4% over Q4 2015 to
$1,883 million on a 7.2% increase in
service revenue to $1,702 million
driven by a higher mix of postpaid subscribers in our customer base
and strong year-over-year blended ARPU growth. Product revenue of
$170 million was essentially
unchanged compared to Q4 2015. For the full 2016 year, Bell
Wireless operating revenue increased 4.1% to $7,159 million with service revenue growing 5.7%
to $6,602 million. However, total
product revenue in 2016 declined 12.7% to $515 million, despite a higher number of
subscriber gross additions compared to 2015, due to lower average
handset pricing reflecting the sustained high level of competitive
promotional market activity throughout the year and fewer
year-over-year customer upgrades.
Wireless adjusted EBITDA was up 5.1% to $674 million in Q4 on strong service revenue
growth from an increased mix of higher-value postpaid subscribers
in our overall customer base and price discipline. Service revenue
margin decreased to 39.6% from 40.4% in Q4 2015, due to a
$67 million year-over-year increase
in total combined retention spending and subscriber acquisition
costs, which drove operating cost growth of 7.1% in the quarter.
For full-year 2016, adjusted EBITDA increased 6.2% to $3,003 million. Higher blended ARPU more than
offset higher retention and subscriber acquisition costs, driving a
0.2 percentage-point increase in service margin to 45.5%.
- Postpaid gross additions totalled 434,008, up 11.9% over Q4
2015, reflecting increased market activity driven by richer
promotions throughout the holiday period compared to last year;
Bell's continued leadership in mobile network speeds; and overall
strong sales execution across all our channels. For full-year 2016,
postpaid gross additions increased 5.2% to 1,408,030 from 1,338,141
in 2015.
- Postpaid net additions grew 23.1% to 112,393, from 91,308 in Q4
2015, the result of higher gross additions. For the full year 2016,
postpaid net additions were up 18.8% to 315,311 from 265,369 in
2015, driven by higher gross additions and lower customer
churn(4).
- Postpaid subscriber churn increased 0.07 percentage points to
1.45% this quarter, due to the seasonally higher level of
aggressive promotional activity and the deactivation of low-ARPU
customers resulting from the loss of a corporate contract. Postpaid
churn in full-year 2016 improved 0.03 percentage points to 1.25%,
reflecting greater overall market activity in 2015 due to the
double cohort as well as the operational benefits stemming from
continued investments in network speed and quality, customer
retention, and service excellence.
- Bell Wireless postpaid customers totalled 7,690,727 at the end
of 2016, a 4.3% increase over 2015. Total wireless customers grew
2.7% to 8,468,872. The percentage of postpaid subscribers with
smartphones increased to 83% from 78% at the end of 2015, while the
proportion of postpaid subscribers on LTE reached 81%, up from 68%
a year earlier.
- Blended ARPU increased 4.7% to $66.69 in Q4, driven by a higher postpaid
subscriber mix, a greater percentage of subscribers on higher-rate
2-year plans, increased data usage on our 4G LTE and LTE-A mobile
networks, and pricing discipline. For full-year 2016, blended ARPU
increased 3.8% to $65.46.
- Cost of acquisition (COA)(4) was up 3.0% to
$541 per subscriber in Q4, due to
richer handset promotions in line with competitor offers, a higher
sales mix of premium smartphones, more postpaid gross additions
compared to last year, and higher handset costs due to the weak
Canadian dollar. For full-year 2016, COA increased 5.8% to
$494.
- Retention spending increased to 16.4% of wireless service
revenue from 14.3% in Q4 2015, reflecting a higher mix of premium
handset upgrades and more aggressive promotional market activity.
Retention spending for full-year 2016 was 13.2% of total wireless
service revenue.
- Bell's LTE-A wireless network provided service to 73% of the
Canadian population at the end of 2016 with data download speeds up
to 260 megabits per second (Mbps) (expected average 18 to 74 Mbps).
In addition, our Tri-band LTE-A service delivered download speeds
of up to 335 Mbps (expected average 25 to 100 Mbps). This is
complemented by a national 4G LTE mobile network that reached 97%
of Canadians at the end of 2016 with download speeds ranging from
75 Mbps to 150 Mbps (expected average 12 to 40 Mbps).
Bell Wireline
Wireline operating revenue was down 0.8%
to $3,137 million in Q4, impacted by
lower wholesale revenue as a result of downward revisions to
wholesale Internet tariffs by the CRTC and lower sales of
international long distance minutes, as well as by a year-over-year
decline in business customer spending on core connectivity services
and data products reflecting slow economic growth and competitive
pricing pressures.
This was moderated by the financial performance of Bell Wireline
residential services, which delivered positive revenue growth in
the quarter despite richer acquisition and retention discounts
offered to match competitor promotional bundle offers, and the
contribution of data centre operator Q9 Networks Inc. (Q9), which
was acquired on October 3, 2016.
Similarly, full-year 2016 wireline operating revenue decreased 1.3%
to $12,104 million.
With increasing broadband scale and a 1.8% reduction in total
operating costs driven by ongoing spending controls, fibre-related
savings as well as customer service improvement and other operating
efficiencies, wireline adjusted EBITDA grew 0.9% to $1,259 million in Q4, driving a 60 basis-point
increase in margin to 40.1%.
For a second consecutive year in 2016, Bell Wireline delivered
positive adjusted EBITDA growth, increasing 0.8% to $5,042 million and yielding a 0.9
percentage-point improvement in Bell's North American-leading
margin of 41.7%. This was enabled by a 2.7% year-over-year decline
in operating costs, the result of integration synergies with Bell
Aliant, cost savings from workforce restructuring initiatives
undertaken at the end of 2015 and ongoing service improvement.
- Bell TV added 35,905 net new Fibe TV customers, compared to
74,092 in Q4 2015, reflecting limited new footprint expansion
combined with the increasing maturity of established Fibe TV
markets, fewer satellite TV customer migrations, and promotional
bundle offers that were generally less rich than the year before.
Fibe TV net additions totalled 155,153 in 2016 compared to 253,329
the year before. At the end of 2016, BCE served 1,337,944 Fibe TV
subscribers, up 13.1% year over year.
- Satellite TV net customer losses were relatively stable this
quarter at 36,869 compared to 36,306 in Q4 2015. For full-year
2016, Satellite TV net customer losses increased 1.9% to 148,740
from 145,949 in 2015, due to the cable competitors targeted
acquisition offers in areas where IPTV service is not available. At
the end of 2016, BCE had a combined total of 2,744,909 TV
subscribers, compared to 2,738,496 at the end of 2015.
- High-speed Internet net additions totalled 18,402 this quarter,
compared to 38,908 in Q4 2015. Despite strong year-over-year growth
in new customer activations within our rapidly expanding
fibre-to-the-home (FTTH) service footprint, total Internet net
additions decreased as a result of higher residential customer
churn due to more aggressive promotional bundle offers from the
cable competitors and a higher volume of Bell customers with
expired promotions as well as fewer wholesale subscriber
activations.
- With full-year 2016 Internet net additions of 85,099 compared
to 155,052 in 2015, BCE continued to build on its position as the
leading Internet service provider in Canada with a high-speed Internet subscriber
base of 3,476,562 at the end of 2016, up 1.9% over 2015.
- Bell's broadband fibre footprint reached approximately 8.3
million homes and businesses at the end of 2016, including
approximately 2.9 million fibre-to-the-premises (FTTP)
locations.
- Wireline data revenue increased 2.9% to $1,916 million in Q4, driven by combined
residential Internet and TV service revenue growth of 5.8% and
strong 11.8% business service solutions growth reflecting the
incremental financial contribution of Q9. This was partly offset by
lower data product sales to large enterprise business customers due
to the soft economy and the ongoing decline in legacy data services
as business customers migrate to IP-based services and reduce
overall communications spending. Similarly, full-year 2016 wireline
data revenue increased 2.6% to $7,350
million.
- Residential NAS net losses increased 16.0% to 67,385, from
58,081 in Q4 2015, due to reduced pull-through from fewer
year-over-year Fibe TV activations, aggressive competitor discounts
on promotional service bundle offers and continued wireless and
Internet-based technology substitution for local services. For
full-year 2016, residential NAS net losses totalled 283,993, up
2.1% compared to 278,124 in 2015.
- Business NAS net losses improved 31.9% to 33,245 in Q4, from
48,829 the year before, due to improved small business performance
as well as fewer large business customer deactivations and a
reduction in business voice line conversions to IP-based services.
Similarly, for full-year 2016, business NAS net losses were down
18.0% to 131,415 from 160,310 in 2015.
- Total NAS access lines at the end of 2016 totalled 6,257,732,
or 6.4% lower than the year before, resulting in local and access
revenue declines in Q4 and full-year 2016 of 6.1% and 5.6%,
respectively, to $753 million and
$3,089 million. Long distance revenue
was down 12.7% to $178 million this
quarter and 10.8% to $741 million in
2016 due to fewer NAS access lines and lower sales of international
long distance minutes compared to 2015.
Bell Media
Media operating revenue grew 3.6% to
$845 million, up from $816 million in Q4 2015. The increase was the
result of higher subscriber revenue driven by the national
expansion of The Movie Network (TMN) in March 2016 and continued growth in CraveTV and TV
Everywhere GO streaming products.
Advertising revenue in Q4 was essentially unchanged compared to
last year as declines in conventional TV, mainly reflecting the
non-recurrence of revenue generated in Q4 2015 from the federal
election and a soft radio advertising market, were offset by growth
in outdoor advertising at Astral Out of Home (OOH) from
acquisitions and new contract wins in 2016, and higher
year-over-year revenues from Bell Media's specialty entertainment
and news channel services.
Media adjusted EBITDA increased 2.2% to $188 million, from $184
million in Q4 2015, due to higher year-over-year revenue
that more than offset operating cost growth of 4.0% attributable to
TMN's national expansion, CraveTV content growth, and increased
expenses at Astral OOH related to acquisitions and outdoor
advertising contract wins over the past year.
For the full year 2016, operating revenues were up 3.6% to
$3,081 million as operating costs
increased 3.9%, resulting in adjusted EBITDA growth of 2.8% to
$743 million.
- CTV was the #1 network for the 13th consecutive fall season
among total viewers and all key adult demographics with 10 of the
top 20 programs, more than all other Canadian networks
combined.
- Bell Media's English specialty and pay TV properties reached
82% of Canadian English specialty and pay TV viewers in the average
week in Q4 and broadcast 12 of the top 20 programs among key adult
viewers. Discovery remained the top entertainment specialty channel
in primetime while TMN, Space, and Bravo all ranked in the top
10.
- Bell Media maintained its leadership position in Québec's
French-language market with audiences for specialty and pay TV
reaching 77% of all TV viewers in the average week. Five of the top
10 specialty and pay channels among key viewers are Bell Media
properties: RDS, Canal D, Super Écran, Canal Vie and Z.
- Total primetime viewership in Q4 for TSN was up 11% over last
year, supported by higher average audiences for CFL, NFL and
Toronto Raptors games and the MLS Cup playoffs, which produced the
3 most-watched MLS games in Canadian TV history and attracted 1.3
million viewers for the final game. During the quarter, TSN's deal
with MLS was extended for 5 years.
- The World Juniors final on January
5 was the most watched hockey broadcast on Canadian TV since
2015, attracting 5.2 million viewers on TSN and RDS.
- Bell Media continued to lead in Canadian digital media with
monthly unique visitors in Q4 totalling 18.4 million, average
monthly time spent of 961 million minutes, and 47.3 million average
monthly videos served.
- Bell Media remained Canada's top radio broadcaster in Q4,
reaching 17.1 million listeners who spent more than 77 million
hours tuned in each week.
- On January 3, Bell Media acquired
Cieslok Media, a specialist in large-format outdoor advertising in
key urban areas. Expanding Astral Out of Home's (OOH) digital
presence, Cieslok is a premium out-of-home advertiser with 120
high-profile displays in Vancouver, Edmonton, Calgary, Montréal and Toronto, including Canada's largest multimedia
billboards at Yonge-Dundas Square. Astral OOH operates 30,000
advertising displays in Québec, Ontario, Alberta, Nova
Scotia and BC.
COMMON SHARE DIVIDEND
BCE's Board of Directors has
declared a quarterly dividend of $0.7175 per common share, payable on April 15, 2017 to shareholders of record at the
close of business on March 15,
2017.
OUTLOOK FOR 2017
Our 2017 business plan builds on the
positive financial results and operating momentum we delivered in
2016 that reflected strong wireless profitability and postpaid
subscriber activations, increasing broadband Internet and TV scale,
improved media financial performance, as well as effective
operating cost control and price discipline across all our
operating segments and products.
BCE's 2017 guidance targets are underpinned by continued
progress in the execution of our 6 Strategic Imperatives and a
favourable financial profile for all three Bell operating segments,
with higher free cash flow generation providing a strong and stable
foundation for the 5.1% increase in BCE's annualized common share
dividend for 2017 as well as continued significant capital
investment in wireline and wireless network infrastructures to
support future growth. These targets also reflect the confidence we
have in continuing to successfully manage our wireless, wireline
and media businesses within the context of a highly competitive and
dynamic market.
Our 2016 guidance, 2016 results and financial guidance targets
for 2017, which do not currently reflect the pending acquisition of
MTS, are as follows:
|
2016
Guidance
|
2016
Results
|
2017
Guidance
|
Revenue
growth
|
1% – 3%
|
1.0%
|
1% – 2%
|
Adjusted EBITDA
growth
|
2% – 4%
|
2.8%
|
1.5% –
2.5%
|
Capital
intensity
|
approx.
17%
|
17.4%
|
approx.
17%
|
Adjusted
EPS
|
$3.45 –
$3.55
|
$3.46
|
$3.42 –
$3.52
|
Free cash flow
growth
|
approx. 4% –
12%
|
7.6%
|
approx. 3% –
7%
|
Annualized common
dividend per share
|
$2.73
|
$2.73
|
$2.87
|
Dividend payout
policy
|
65% – 75%
of free cash
flow
|
71.5%
of free cash
flow
|
65% – 75%
of free cash
flow
|
CALL WITH FINANCIAL ANALYSTS
BCE will hold a
conference call for financial analysts to discuss Q4 2016 results
and 2017 financial guidance on Thursday,
February 2 at 8:00 am
(Eastern). Media are welcome to participate on a listen-only basis.
Please dial toll-free 1-866-223-7781 or (416) 340-2216. A replay
will be available for one week by dialing 1-800-408-3053 or (905)
694-9451 and entering pass code 2972315#.
A live audio webcast of the conference call will be available on
BCE's website at: BCE Q4-2016 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 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 non-controlling interest (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 2016
|
Q4 2015
|
2016
|
2015
|
|
Total
|
Per share
|
Total
|
Per share
|
Total
|
Per share
|
Total
|
Per share
|
Net earnings
attributable to common shareholders
|
657
|
0.75
|
496
|
0.58
|
2,894
|
3.33
|
2,526
|
2.98
|
Severance,
acquisition and other costs
|
9
|
0.01
|
112
|
0.12
|
104
|
0.12
|
327
|
0.38
|
Net losses (gains) on
investments
|
1
|
-
|
1
|
0.01
|
3
|
-
|
(21)
|
(0.02)
|
Early debt redemption
costs
|
-
|
-
|
6
|
0.01
|
8
|
0.01
|
13
|
0.02
|
Adjusted net
earnings
|
667
|
0.76
|
615
|
0.72
|
3,009
|
3.46
|
2,845
|
3.36
|
(2) 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 Note 4 to BCE's 2016 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 is also 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 2016
|
Q4 2015
|
2016
|
2015
|
Net
earnings
|
699
|
542
|
3,087
|
2,730
|
Severance,
acquisition and other costs
|
11
|
152
|
135
|
446
|
Depreciation
|
719
|
731
|
2,877
|
2,890
|
Amortization
|
165
|
136
|
631
|
530
|
Finance
costs
|
|
|
|
|
|
Interest
expense
|
225
|
226
|
888
|
909
|
|
Interest on
post-employment benefits obligations
|
20
|
28
|
81
|
110
|
Other (expense)
income
|
30
|
70
|
21
|
12
|
Income
taxes
|
252
|
188
|
1,110
|
924
|
Adjusted
EBITDA
|
2,121
|
2,073
|
8,788
|
8,551
|
|
BCE operating
revenues
|
5,702
|
5,603
|
21,719
|
21,514
|
Adjusted EBITDA
margin
|
37.2%
|
37.0%
|
40.5%
|
39.7%
|
(3) The terms free cash flow and dividend payout ratio 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 and other costs paid (which
include significant litigation costs) and voluntary pension
funding, less capital expenditures, preferred share dividends and
dividends paid by subsidiaries to NCI. We exclude acquisition and
other costs paid and voluntary pension funding 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. We consider free
cash flow to be an important indicator of the financial strength
and performance of our businesses because it shows 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 and to evaluate the
financial strength and performance of our businesses. The most
comparable IFRS financial measure is cash flows from operating
activities. We define dividend payout ratio as dividends paid on
common shares divided by free cash flow. We consider dividend
payout ratio to be an important indicator of the financial strength
and performance of our businesses because it shows the
sustainability of the company's dividend payments. 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 2016
|
Q4 2015
|
2016
|
2015
|
Cash flows from
operating activities
|
1,520
|
1,510
|
6,643
|
6,274
|
Capital
expenditures
|
(993)
|
(958)
|
(3,771)
|
(3,626)
|
Cash dividends paid
on preferred shares
|
(21)
|
(37)
|
(126)
|
(150)
|
Cash dividends paid
by subsidiaries to non-controlling
interest
|
(11)
|
(8)
|
(46)
|
(41)
|
Acquisition and other
costs paid
|
28
|
159
|
126
|
292
|
Voluntary defined
benefit pension plan
contribution
|
400
|
250
|
400
|
250
|
Free cash
flow
|
923
|
916
|
3,226
|
2,999
|
(4) We use ARPU, churn, COA and capital intensity 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.
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 2017 financial guidance (including
revenues, adjusted EBITDA, capital intensity, adjusted EPS and free
cash flow), BCE's 2017 annualized common share dividend and common
share dividend payout policy, the expected timing and completion of
BCE's proposed acquisition of all of the issued and outstanding
shares of MTS, our network deployment plans and related capital
investments, our business outlook, objectives, plans and strategic
priorities, 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 2, 2017 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 2,
2017. 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 2017 financial
results, as well as our objectives, strategic priorities and
business outlook for 2017, 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 and
operational assumptions were made by BCE in preparing its
forward-looking statements contained in this news release,
including, but not limited to:
Canadian Economic and Market Assumptions
- Gradual improvement in economic growth, given the Bank of
Canada's most recent estimated growth in Canadian gross domestic
product of 2.1% in 2017
- Modest employment growth, as the overall level of business
investment is expected to remain soft
- Canadian dollar expected to remain at or around near current
levels. Further movements may be impacted by the degree of strength
of the U.S. dollar, interest rates and changes in commodity
prices.
- A higher level of wireline and wireless competition in
consumer, business and wholesale markets
- Higher but slowing wireless industry penetration and smartphone
adoption
- Wireless industry pricing discipline maintained
- Soft advertising market expected due to variable demand, and
escalating costs to secure TV programming
Assumptions Concerning our Bell Wireless
Segment
- Maintain our market share of incumbent wireless postpaid
subscriber activations
- Continued adoption of smartphone devices, tablets and data
applications, as well as the introduction of more 4G LTE devices
and new data services
- Higher subscriber acquisition and retention spending, driven by
higher handset costs and more customer device upgrades, reflecting
a higher number of off-contract subscribers due to earlier expiries
under two-year contracts
- Higher blended ARPU, driven by a higher postpaid smartphone
mix, increased data consumption on 4G LTE and LTE-A networks, and
higher access rates from price increases
- Completion of the LTE network buildout to 99% of the Canadian
population and expansion of the LTE-A network coverage to
approximately 83% of the Canadian population
- Ability to monetize increasing data usage and customer
subscriptions to new data services
- 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 or competitive consequences
of changes in regulations affecting our wireless business
Assumptions Concerning our Bell Wireline
Segment
- Continued growth in residential IPTV and Internet
subscribers
- Increasing wireless and Internet-based technological
substitution
- Residential services household ARPU growth from increased
penetration of multi-product households and price increases
- Aggressive residential service bundle offers from cable TV
competitors in our local wireline areas
- Continued large business customer migration to IP-based
systems
- Ongoing competitive repricing pressures in our business and
wholesale markets
- Continued competitive intensity in our small and mid-sized
business markets as cable operators and other telecom competitors
continue to intensify their focus on business customers
- Growing consumption of OTT TV services and on-demand streaming
video, as well as the proliferation of devices, such as tablets,
that consume vast quantities of bandwidth, will require
considerable ongoing capital investment
- TV unbundling will not materially accelerate the downsizing of
TV packages by customers
- Realization of cost savings related to management workforce
attrition and retirements, lower contracted rates from our
suppliers and reduction of traffic that is not on our network
- Softer wholesale financial performance due to a CRTC decision
in October 2016 that significantly
lowered capacity based billing rates for aggregated wholesale high
speed Internet access services
- No other changes in regulations affecting our wireline business
having material financial, operational or competitive
consequences
Assumptions Concerning our Bell Media Segment
- Higher year-over-year revenue, reflecting further CraveTV
subscriber growth, The Movie Network's national expansion that
began in March 2016, and growth in
outdoor advertising supported by acquisitions and new contract
wins
- Operating cost growth driven by higher TV programming and
sports broadcast rights costs, as well as continued investment in
CraveTV content
- Continued scaling of CraveTV
- Ability to successfully acquire and produce highly rated
programming and differentiated content
- Building and maintaining strategic supply arrangements for
content across all screens and platforms
- Increased revenue generation from monetization of content
rights and Bell Media properties across all platforms
- 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
The foregoing assumptions, although considered reasonable by BCE
on February 2, 2017, 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 2017 financial
guidance, are listed below. The realization of our forward-looking
statements, including our ability to meet our 2017 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, proceedings and decisions, government
consultations and government positions that affect us and influence
our business, including, in particular, those relating to mandatory
access to networks, net neutrality, spectrum auctions, approval of
acquisitions, broadcast licensing and foreign ownership
requirements
- the intensity of competitive activity, including from new and
emerging competitors, and the resulting impact on the cost of
retaining existing customers and attracting new ones, as well as on
our market shares, service volumes and pricing strategies
- the level of technological substitution and the presence of
alternative service providers contributing to reduced utilization
of our traditional wireline services
- the adverse effect of the fundamental separation of content and
connectivity, which is changing our TV and media ecosystems and may
accelerate the disconnection of TV services and the reduction of TV
spending, as well as the fragmentation of, and changes in, the
advertising market
- competition with global competitors, in addition to traditional
Canadian competitors, for programming content could drive
significant increases in content acquisition costs and challenge
our ability to secure key content
- adverse economic and financial market conditions, a declining
level of retail and commercial activity, and the resulting negative
impact on the demand for, and prices of, our products and services
and the level of bad debts
- the inability to protect our assets, including networks, IT
systems, offices and sensitive information, from events and attacks
such as cyber threats, and damage from fire and natural
disasters
- the failure to optimize network and IT deployment and upgrading
timelines, accurately assess the potential of new technologies, and
invest and evolve in the appropriate direction
- the failure to continue investment in a disciplined and
strategic manner in next-generation capabilities, including
real-time information-based customer service strategies
- the inability to drive a positive customer experience
resulting, in particular, from the failure to embrace new
approaches and challenge operational limitations
- the complexity in our operations resulting from multiple
technology platforms, billing systems, marketing databases and a
myriad of rate plans, promotions and product offerings
- the failure to maintain optimal network operating performance
in the context of significant increases in capacity demands on our
Internet and wireless networks
- the failure to implement or maintain highly effective IT
systems supported by an effective governance and operating
framework
- the risk that we may need to incur significant capital
expenditures beyond our capital intensity target in order to
provide additional capacity and reduce network congestion
- the failure to generate anticipated benefits from our corporate
restructurings, system replacements and upgrades, process redesigns
and the integration of business acquisitions
- events affecting the functionality of, and our ability to
protect, test, maintain and replace, our networks, IT systems,
equipment and other facilities
- in-orbit and other operational risks to which the satellites
used to provide our satellite TV services are subject
- the failure to attract and retain employees with the
appropriate skill sets and to drive their performance in a safe and
secure environment
- labour disruptions
- the inability to access adequate sources of capital and
generate sufficient cash flows from operations to meet our cash
requirements, fund capital expenditures and provide for planned
growth
- uncertainty as to whether dividends will be declared by BCE's
board of directors or whether BCE's dividend payout policy will be
maintained
- the inability to manage various credit, liquidity and market
risks
- pension obligation volatility and increased contributions to
post-employment benefit plans
- higher taxes due to new tax laws or changes thereto or in the
interpretation thereof, and the inability to predict the outcome of
government audits
- the failure to reduce costs as well as unexpected increases in
costs
- the failure to evolve practices to effectively monitor and
control fraudulent activities, including unauthorized use of our
content and the theft of our TV services
- events affecting the continuity of supply of products and
services that we need to operate our business from our third-party
suppliers and outsourcers
- the failure of our procurement and vendor management practices
to address risk exposures associated with existing and new supplier
models
- the quality of our products and services and the extent to
which they may be subject to manufacturing defects or fail to
comply with applicable government regulations and standards
- security and data leakage exposure if security control
protocols applicable to our cloud-based solutions are bypassed
- unfavourable resolution of legal proceedings and, in
particular, class actions
- unfavourable changes in applicable laws and the failure to
proactively address our legal and regulatory obligations
- health concerns about radiofrequency emissions from wireless
communications devices
- the inability to maintain customer service and our networks
operational in the event of the occurrence of epidemics, pandemics
and other health risks
- the failure to recognize and adequately respond to climate
change concerns or public and governmental expectations on
environmental matters
- the expected timing and completion of the proposed acquisition
of MTS and of the proposed subsequent divestiture of certain
postpaid wireless subscribers and dealer locations of MTS to TELUS
Corporation are subject to closing conditions and other risks and
uncertainties, and there can be no certainty that the 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 2, 2017 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 2, 2017 is
incorporated by reference into this news release.
For additional information, please refer to the February 2, 2017 presentation entitled "Q4 2016
Results & 2017 Financial Guidance Call" available on BCE's
website.
ABOUT BCE
Canada's largest communications company,
BCE provides broadband wireless, TV, Internet and business
communication services from Bell
Canada and Bell Aliant. Bell Media is Canada's premier
multimedia company with leading assets in television, radio, out of
home and digital media. 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 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.
Media inquiries:
Jean Charles Robillard
Bell Communications
(514) 870-4739
jean_charles.robillard@bell.ca
Investor inquiries:
Thane Fotopoulos
BCE Investor Relations
(514) 870-4619
thane.fotopoulos@bell.ca
SOURCE Bell Canada