This news release contains forward-looking statements. For a
description of the related risk factors and assumptions, please see
the section entitled "Caution Regarding Forward-Looking Statements"
later in this news release.
- Q1 results and COVID-19 response underscore BCE's financial
strength and leading broadband wireline, wireless and broadcast
networks
- BCE adjusted EBITDA up 1.4% on solid year-over-year growth
of 4.0% at Bell Wireless and 0.5% at Bell Wireline, driving
$1,451 million of cash flows from
operating activities and free cash flow of $627 million
- 45,042 total wireless, retail Internet and IPTV net customer
additions
- Bell Media results impacted by industry-wide decline in
advertising due to COVID-19
- Net earnings of $733 million
with net earnings attributable to common shareholders of
$680 million, or $0.75 per common share; adjusted net earnings of
$720 million generated adjusted EPS
of $0.80
- Withdrawing 2020 financial guidance due to uncertainty
regarding duration and impacts of COVID-19
- Significant financial flexibility to manage through COVID-19
with $3.2 billion of liquidity at end
of Q1 and substantial free cash flow generation for planned 2020
capital spending and BCE's common share dividend payments
- Common share dividend of $0.8325 declared for Q2, up 5% over last
year
MONTRÉAL, May 7, 2020 /CNW Telbec/ - BCE Inc. (TSX:
BCE)(NYSE: BCE) today reported results for the first quarter (Q1)
of 2020.
"During these unprecedented times, Bell is focused on keeping
Canadians connected and informed, prioritizing safety, and
supporting our customers and communities as we all work through the
COVID-19 crisis together. As we celebrate our company's 140th year,
the Bell team is building on a proud legacy of service to Canadians
by delivering the critical connections that consumers, businesses,
government and public health responders need in a time of
extraordinary demand," said Mirko
Bibic, President and Chief Executive Officer of BCE and
Bell Canada. "Bell's goal is
advancing how Canadians connect with each other and the world, and
the industry-leading investments we've made in network coverage and
capacity have also enabled us to deliver 99.99+% network
availability throughout the crisis despite significant usage
increases across our wireless, wireline and broadcast networks.
Building the best networks is a core strategic imperative for Bell,
and we will be continuing our investments in network infrastructure
and service innovation to champion the customer experience."
"As the primary builder of Canada's communications
infrastructure since 1880, Bell will continue to lead the way in
network investment and innovation as our country recovers from the
crisis. Although we are withdrawing our previous financial guidance
for the year due to the COVID-19 situation, we do not anticipate
any changes to planned 2020 capital expenditures or to dividend
payments for the foreseeable future. While the crisis significantly
impacted retail activity, media advertising revenue and many other
parts of our business in Q1, our solid results underscore Bell's
ongoing leadership in network and service innovation, and
consistently strong execution by the Bell team," said Mr.
Bibic.
OPERATING PRINCIPLES DURING COVID-19
Canada's largest
communications company, Bell continues to deliver critical services
and support to consumers, businesses, governments and public health
responders during the COVID-19 situation. We are guided by 3 key
operating principles during this crisis: Keep Canadians connected
and informed; Prioritize the health and safety of the public, our
customers and team; and Support our customers and communities.
Keep Canada connected and informed
- Accelerated investments in network capacity, reliability and
redundancy to manage the significant increases in network usage due
to remote work, self-isolation and support for government and
emergency response.
- This includes Internet data increases of up to 60% during the
day and 20% at night; 40% growth in rural Wireless Home Internet
usage; 25% increase in live TV viewing and 75% for Crave; surges in
wireline voice traffic volumes up to 200% at peak times; and a 250%
increase in conference calling alongside increased demand for 1-800
services to support public health and other government information
lines.
- Accelerated the rollout of new or enhanced Wireless Home
Internet service in April to 137,000 more homes than originally
anticipated in 180 rural communities.
- Equipped over 4,000 customer service agents to work remotely,
and redeployed thousands of Bell team members to frontline service
roles.
- Encouraged customers to take advantage of MyBell online and
mobile self-serve options; digital self-serve represents more than
50% of total customer transactions since start of the COVID-19
crisis.
- Our capital investment program continues, including ongoing
deployment of high-speed fibre, preparation for the launch of
mobile 5G, and investment in Customer Experience improvements
including online fulfillment, digital self-serve and improved app
functionality.
Prioritize the health and safety of the public, our customers
and team
- Implemented strict sanitation and safety procedures across our
operations in line with the latest public health protocols and
equipped our teams with required personal protective equipment
(PPE).
- Implemented innovations such as Assisted Self-Installation and
Repair, which enables field technicians to support customers from
outside the home by voice and video links.
- Accelerated remote work arrangements for employees across
Canada, ensured wage support for employees impacted by temporary
closures or workload reduction who could not be redeployed to
frontline service roles, and provided enhanced access to workplace
mental health services.
- Temporarily closed retail locations nationally other than a
limited number of street-front stores open for critical customer
support, while enhancing online and phone sales and support.
- In addition to PPE necessary for the Bell team, acquired and
donated 1.5 million protective N95 and KN95 face masks for use by
frontline workers throughout Canada.
Support our customers and communities
- Waived wireline residential Internet overage fees until
June 30 and wireless roaming charges
for customers travelling abroad until April
30.
- Implemented flexible payment options for customers financially
impacted by the crisis and suspended all new service price
increases.
- Offered free Bell TV previews of a wide range of news, family
and entertainment channels, and 30-day free Crave trials for new
customers.
- Provided thousands of complimentary smartphones, tablets and
airtime to healthcare facilities, shelters and other social service
providers.
- Increased Bell Let's Talk mental health funding by $5 million, including immediate support for
Canadian organizations providing emergency response and services
for youth and families, such as Canadian Red Cross and Kids Help
Phone.
- Bell Media presented the all-Canadian Stronger Together, Tous
Ensemble benefit special on April 26,
supporting frontline workers and Food Banks Canada with donations
of more than $8.6 million.
BCE Q1 RESULTS
Financial
Highlights
|
($ millions except
per share amounts) (unaudited)
|
Q1
2020
|
Q1
2019
|
%
change
|
BCE
|
|
|
|
Operating
revenues
|
5,680
|
5,734
|
(0.9%)
|
Net
earnings
|
733
|
791
|
(7.3%)
|
Net earnings
attributable to common shareholders
|
680
|
740
|
(8.1%)
|
Adjusted net
earnings(1)
|
720
|
692
|
4.0%
|
Adjusted
EBITDA(2)
|
2,442
|
2,409
|
1.4%
|
Net earnings per
common share (EPS)
|
0.75
|
0.82
|
(8.5%)
|
Adjusted
EPS(1)
|
0.80
|
0.77
|
3.9%
|
Cash flows from
operating activities
|
1,451
|
1,516
|
(4.3%)
|
Capital
expenditures
|
783
|
850
|
7.9%
|
Free cash
flow(3)
|
627
|
642
|
(2.3%)
|
"Despite the impacts of COVID-19, Bell delivered positive
service revenue and adjusted EBITDA growth in Q1, supported by
ongoing broadband wireless, Internet and IPTV subscriber base
expansion and a 2.6% reduction in total operating costs. Our
overall financial performance this quarter, including healthy free
cash flow generation to fund strategic capital investments in
critical network infrastructure, reflects the strength, resiliency
and durability of our business," said Glen
LeBlanc, Chief Financial Officer for BCE and Bell Canada. "As Canada looks forward to moving
past the COVID-19 crisis, BCE remains in a solid financial position
with $3.2 billion of liquidity, a
strong balance sheet, continued access to capital markets, and the
free cash flow profile that is more than adequate to meet BCE's
cash requirements for the balance of the year."
- BCE operating revenue was $5,680
million, down 0.9% compared to Q1 2019, due to reduced
economic and commercial activity as a result of COVID-19 that
adversely affected financial results for all Bell operating
segments.
- Service revenue was up 0.3% to $5,058
million on higher year-over-year wireless service and media
revenue. Product revenue decreased 9.7% to $622 million, reflecting reduced wireless
transactions due to COVID-19 and lower business wireline data
equipment sales.
- Net earnings declined 7.3% to $733
million and net earnings attributable to common shareholders
totalled $680 million, or
$0.75 per share, down 8.1% and 8.5%
respectively. The decreases were the result of higher other expense
driven by net mark-to-market losses on derivatives used to
economically hedge equity settled share-based compensation plans,
partly offset by higher adjusted EBITDA and lower income
taxes.
- Adjusted net earnings were $720
million, or $0.80 per common
share, up 4.0% and 3.9% respectively, compared to $692 million, or $0.77 per common share, in Q1 2019.
- Adjusted EBITDA increased 1.4% to $2,442
million, driven by increases of 4.0% at Bell Wireless and
0.5% at Bell Wireline. Bell Media adjusted EBITDA was down 6.1% due
to the industry-wide impact on advertising sales attributable to
COVID-19.
- BCE's consolidated adjusted EBITDA margin(2)
increased 1.0 percentage point to 43.0%, reflecting a 2.6%
reduction in operating costs from lower variable costs of
subscriber acquisition including wireless device discounts, and a
year-over-year decline in low-margin wireline product sales.
- BCE capital expenditures totalled $783
million, compared to $850
million last year, representing an improved capital
intensity(4) ratio of 13.8% compared to 14.8% in Q1 last
year, reflecting the timing of capital spending. Capital investment
was driven by network capacity enhancements to manage increased
demand during COVID-19 alongside continued investment in our fibre
and LTE networks and preparations for mobile 5G.
- BCE cash flows from operating activities were $1,451 million, down 4.3% compared to Q1 2019.
The decrease was the result of higher interest paid and lower cash
from working capital, due in part to a slowdown in accounts
receivable collections and build-up of mobile handset inventory
from COVID-19. This was offset by a delay in income tax installment
payments from government COVID-19 relief measures, higher adjusted
EBITDA, and lower severance and other costs paid.
- Free cash flow decreased 2.3% to $627
million, from $642 million in
Q1 last year, due to lower cash flows from operating activities,
excluding acquisition and other costs paid, partly offset by lower
capital expenditures.
Q1 SUBSCRIBER HIGHLIGHTS
- BCE reported 19,595 net new wireless customers (23,650 postpaid
and a net loss of 4,055 prepaid); 22,595 net new retail Internet
customers; 2,852 net new IPTV customers; a net loss of 21,407
retail satellite TV customers; and a net loss of 61,595 retail
residential NAS lines.
- BCE wireless and retail Internet, TV and residential NAS
connections(4) totalled 18,945,550, up 2.0% over Q1
2019. The total includes 9,977,557 wireless customers, up 5.2%
(including 9,183,590 postpaid customers, an increase of 4.3%, and
793,967 prepaid customers, up 18.0%); 3,578,196 retail Internet
subscribers, up 3.9%; 2,753,909 retail TV subscribers, down 0.4%
(including 1,770,034 IPTV customers, an increase of 4.3%, and
983,875 retail satellite TV customers, down 7.9%); and 2,635,888
retail residential NAS lines, down 8.9%.
Q1 BUSINESS DEVELOPMENTS
- Bell Media received CRTC approval to acquire conventional TV
network V and video on demand service Noova.ca from Groupe V Média,
a transaction that will ensure the viability of V's French-language
news and entertainment programming, preserve jobs, and enhance
choice and competition in Québec media.
- As part of Bell's $1 billion
investment plan for Manitoba, Bell
MTS announced a $400 million
investment to bring all-fibre connections to 275,000 residences and
business locations throughout Winnipeg, as well as a fibre expansion to the
Town of La Salle in Manitoba's Rural Municipality of Macdonald. Bell MTS has already added more
than 30 communities large and small throughout the province to
Bell's all-fibre network.
- Bell became Quibi's Canadian partner, providing CTV News and
TSN sports content for the new mobile video entertainment platform
and marketing of the service through Bell Mobility channels.
- Bell Mobility introduced new 5G smartphones Samsung Galaxy S20
5G series and the LG V60 ThinQ 5G Dual Screen, as well as Apple's
2nd generation iPhone SE and Samsung's Galaxy Z Flip, the first
folding smartphone.
- Following a record-breaking Bell Let's Talk Day on January 29, Bell announced the extension of the
Bell Let's Talk initiative to 2025 and an increase in our mental
health funding target to $150 million
– which was further increased to $155
million with an additional commitment of $5 million to help youth, families and
communities in response to COVID-19. Bell Let's Talk also announced
a $10 million partnership with
Montréal's Graham Boeckh Foundation to support youth mental health
services across Canada.
Q1 OPERATING RESULTS BY SEGMENT
To align with changes
in how we manage our business and assess performance, the operating
results of our public safety land radio network business are now
included within our Bell Wireline segment effective January 1, 2020, with prior periods restated for
comparative purposes. Previously, these results were included
within our Bell Wireless segment. Our public safety land radio
network business, which builds and manages land mobile radio
networks primarily for the government sector, is now managed by our
Bell Business Markets team in order to better serve our customers
with end-to-end communications solutions.
Bell Wireless
- Total operating revenue decreased 2.0% to $2,035 million due to lower product revenue,
which was offset partly by higher year-over-year service
revenue.
- Service revenue increased 0.5% to $1,547
million, driven mainly by postpaid and prepaid subscriber
base growth over the past year.
- Product revenue was down 9.1% to $488
million, due to a reduction in customer transactions
attributable to retail channel disruptions because of the COVID-19
pandemic.
- Wireless adjusted EBITDA grew 4.0% to $928 million, yielding a 2.7 percentage-point
increase in margin to 45.6%. This was the result of the
flow-through of service revenue growth and a 6.6% decrease in
operating costs, driven by lower product cost of goods sold from
reduced mobile smartphone sales and lower variable subscriber
acquisition costs.
- Bell added 19,595 total net new postpaid and prepaid customers,
compared to 38,282 in Q1 2019.
- Postpaid net additions totalled 23,650, down from 50,204 in Q1
2019. Subscriber and promotional activity was affected by the
temporary closure of retail stores and call centre impacts due to
COVID-19, which drove an 11.9% decline in Q1 postpaid gross
additions. This was moderated by a 0.1 percentage-point improvement
in customer churn(4) to 0.97%, our best churn result
ever, reflecting reduced market activity due to COVID-19.
- Prepaid subscriber net losses improved 66.0% to 4,055 from
11,922 in Q1 2019, reflecting a 38.2% increase in gross additions
driven by continued strong demand for our low-cost Lucky Mobile
prepaid service. Prepaid customer churn increased 0.54 percentage
points to 5.03%, due mainly to greater competitive intensity in the
discount mobile market.
- Bell's total wireless customer base totalled 9,977,557 at the
end of Q1, a 5.2% increase over Q1 2019, comprising 9,183,590
postpaid subscribers, up 4.3%, and 793,967 prepaid customers, up
18.0%.
- Blended average billing per user (ABPU)(4) decreased
2.7% to $65.53, mainly the result of
a decline in data overage revenue from more subscribers on
unlimited plans, including a growing mix of customers on
installment plans; the dilutive impact of a greater number of
prepaid customers; and lower roaming revenue from reduced travel
and waiving of roaming charges because of COVID-19.
Bell Wireline
- Total operating revenue in Q1 decreased 0.7% to $3,076 million.
- Service revenue was essentially stable, year over year, down
0.1% to $2,941 million, as voice
revenue erosion from traditional NAS, long distance and satellite
TV services was largely offset by higher data revenue from retail
Internet and IPTV subscriber growth.
- Product revenue was down 11.8% to $135
million, due to a decline in low-margin data equipment sales
to large business enterprise customers as we lapped strong growth
from Q1 2019, and delays in customer spending given the current
economic environment.
- Wireline adjusted EBITDA increased 0.5% in Q1 to $1,359 million. This resulted in a 50 basis-point
increase in margin to 44.2% that was supported by a 1.6%
improvement in operating costs driven by lower product sales,
reduced labour costs, lower TV programming costs, as well as other
cost efficiencies driven by changes in customer service delivery
methods and discretionary spending in light of the COVID-19
situation.
- Bell added 22,595 new retail Internet customers, compared to
22,671 in Q1 2019, as higher residential gross activations, driven
by ongoing growth in Bell's direct fibre and Wireless Home Internet
footprints, and fewer customer deactivations during COVID-19. This
was offset by higher business net losses attributable to the
shutdown of non-essential services during the crisis.
- Retail Internet customers totalled 3,578,196 at the end of Q12,
an increase of 3.9% over last year.
- Bell TV added 2,852 net new retail IPTV subscribers, down from
20,916 in Q1 2019, due to increasing market maturity for Bell's
Fibe TV and Alt TV services, ongoing over-the-top substitution and
fewer customers installing new TV services during COVID-19. Bell
served 1,770,034 retail IPTV subscribers at the end of Q1, up 4.3%
over Q1 2019.
- Retail satellite TV net customer losses improved 4.8% to 21,407
from 22,476 in Q1 2019, due to fewer customer deactivations.
- At the end of Q1, Bell had a combined total of 2,753,909 retail
IPTV and satellite TV subscribers, down 0.4% from Q1 2019.
- Retail residential NAS net losses were down 7.8% in Q1 to
61,595, the result of fewer customers with expired promotional
bundle offers and improved customer retention attributable to
COVID-19. Bell's retail residential NAS customer base totalled
2,635,888 at the end of Q1, an 8.9% decline from last year.
Bell Media
- Media operating revenue increased 0.9% to $752 million on higher subscriber revenue from
Crave growth over the past year and contract renewals with TV
distributors.
- Advertising revenue was lower compared to Q1 2019 due mainly to
the impact of COVID-19 on customer spending across all advertising
platforms – TV, radio, out of home and digital – as commercial
activity has been significantly curtailed, major sports leagues
suspended and other live events cancelled during the crisis.
- Adjusted EBITDA decreased 6.1% to $155
million, due to the flow-through impact of lower advertising
revenue and higher operating costs, driven mainly by ongoing Crave
content expansion and sports broadcast rights for the Super
Bowl.
COMMON SHARE DIVIDEND
BCE's Board of Directors has
declared a quarterly dividend of $0.8325 per common share, payable on July 15, 2020 to shareholders of record at the
close of business on June 15,
2020.
FINANCIAL OUTLOOK
Due to the speed with which the
COVID-19 situation is developing and the uncertainty of its
severity, duration and potential outcomes, we are not able at this
time to estimate the impacts of the crisis on our business or
future financial results and related assumptions. The extent to
which the COVID-19 situation will continue to impact our business,
financial condition, liquidity and financial results will depend on
future developments that are unknown and cannot be predicted, as
well as new information which may emerge concerning the severity
and duration of the COVID-19 pandemic and the actions required to
contain the coronavirus or remedy its impact, among others. As a
result, given this unprecedented and highly uncertain environment,
BCE is withdrawing all of its 2020 financial guidance that it
announced on February 6, 2020.
BCE's underlying business fundamentals remain strong. Our strong
liquidity position, underpinned by a healthy balance sheet,
substantial free cash flow generation and access to the debt and
bank capital markets, is expected to provide significant financial
flexibility to execute on our planned capital expenditures for 2020
and to sustain BCE's common share dividend payments for the
foreseeable future.
See BCE's Q1 2020 MD&A for more information on the
historical and future potential impacts on our business, financial
condition, liquidity and financial results of the outbreak of the
COVID-19 pandemic, including, without limitation, the introduction
to section 1, Overview, section 1.3, Assumptions,
section 4.7, Liquidity and section 6, Business
risks.
CALL WITH FINANCIAL ANALYSTS
BCE will hold a
conference call for financial analysts to discuss Q1 2020 results
on Thursday, May 7 at 8:00 am (Eastern). Media are welcome to
participate on a listen-only basis. Please dial toll-free
1-800-806-5484 or 416-340-2217and enter passcode 4789815#. A replay
will be available until midnight June 5,
2020 by dialing 1-800-408-3053 or 905-694-9451 and entering
passcode 3452793#.
A live audio webcast of the conference call will be available on
BCE's website at: BCE Q1 2020 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
mark-to-market losses (gains) on derivatives used to economically
hedge equity settled share-based compensation plans, net losses
(gains) on investments, early debt redemption costs and impairment
charges, net of tax and non-controlling interest (NCI). 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 mark-to-market losses
(gains) on derivatives used to economically hedge equity settled
share-based compensation plans, net losses (gains) on investments,
early debt redemption costs and impairment charges, net of tax and
NCI. We exclude these items because they affect the comparability
of our financial results and could potentially distort the analysis
of trends in business performance. Excluding these items does not
imply they are non-recurring. The most comparable IFRS financial
measures are net earnings attributable to common shareholders and
EPS. The following table is a reconciliation of net earnings
attributable to common shareholders and EPS to adjusted net
earnings on a consolidated basis and per BCE common share (adjusted
EPS), respectively.
($ millions except
per share amounts)
|
|
Q1 2020
|
Q1 2019
|
|
TOTAL
|
PER
SHARE
|
TOTAL
|
PER SHARE
|
Net earnings
attributable to common shareholders
|
680
|
0.75
|
740
|
0.82
|
Severance,
acquisition and other costs
|
12
|
0.01
|
18
|
0.02
|
Net mark-to-market
losses (gains) on derivatives used to economically hedge
equity settled share-based
compensation plans
|
20
|
0.03
|
(73)
|
(0.07)
|
Net (gains) losses on
investments
|
(9)
|
(0.01)
|
4
|
-
|
Early debt redemption
costs
|
12
|
0.01
|
-
|
-
|
Impairment
charges
|
5
|
0.01
|
3
|
-
|
Adjusted net
earnings
|
720
|
0.80
|
692
|
0.77
|
(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 3, Segmented information, in BCE's Q1 2020
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)
|
|
Q1 2020
|
Q1 2019
|
Net
earnings
|
733
|
791
|
Severance,
acquisition and other costs
|
16
|
24
|
Depreciation
|
868
|
882
|
Amortization
|
234
|
221
|
Finance
costs
|
|
|
Interest
expense
|
279
|
283
|
Interest on
post-employment benefit obligations
|
12
|
16
|
Other expense
(income)
|
55
|
(101)
|
Income
taxes
|
245
|
293
|
Adjusted
EBITDA
|
2,442
|
2,409
|
BCE operating
revenues
|
5,680
|
5,734
|
Adjusted EBITDA
margin
|
43.0%
|
42.0%
|
(3) The terms free cash flow does not have any standardized
meaning under IFRS. Therefore, it is 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 on common shares, 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. The following table is a reconciliation of cash flows
from operating activities to free cash flow on a consolidated
basis.
($
millions)
|
|
Q1 2020
|
Q1 2019
|
Cash flows from
operating activities
|
1,451
|
1,516
|
Capital expenditures
|
(783)
|
(850)
|
Cash dividends paid
on preferred shares
|
(36)
|
(26)
|
Cash dividends paid
by subsidiaries to NCI
|
(14)
|
(27)
|
Acquisition and other
costs paid
|
9
|
29
|
Free cash
flow
|
627
|
642
|
(4) We use ABPU, churn, capital intensity and subscriber
units 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 REGARDING FORWARD-LOOKING STATEMENTS
Certain statements made in this news release are forward-looking
statements. These statements include, without limitation,
statements relating to the potential impacts on our business,
financial condition, liquidity and financial results of the
outbreak of the COVID-19 pandemic, BCE's 2020 annualized common
share dividend and the expected continued payment thereof for the
foreseeable future, our network deployment and capital investment
plans, the sources of liquidity we expect to use to meet our
anticipated 2020 cash requirements, BCE's 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.
These statements are not guarantees of future performance or
events, and we caution you against relying on any of these
forward-looking statements. The forward-looking statements
contained in this news release describe our expectations as of
May 7, 2020 and, accordingly, are
subject to change after such date. Except as may be required by
applicable securities laws, we do not undertake any obligation to
update or revise any forward-looking statements contained in this
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 May 7, 2020.
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 our
objectives, strategic priorities and business outlook, 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
The forward-looking statements
set out in this news release are based on certain assumptions
including, without limitation, the following assumptions. Due to
the speed with which the COVID-19 pandemic is developing and the
uncertainty of its severity, duration and potential outcomes, we
are not able at this time to estimate the impacts of the pandemic
on our business or future financial results and related
assumptions. Accordingly, the assumptions outlined in this news
release and, consequently, the forward-looking statements based on
such assumptions, may turn out to be inaccurate.
- Our liquidity from our cash and cash equivalents balance, the
remaining undrawn capacity under our committed credit facilities,
our cash flows from operations, continued access to the public
capital, bank credit and commercial paper markets based on
investment-grade credit ratings, and continued access to our
securitized trade receivables programs, will be sufficient to meet
our cash requirements for the remainder of 2020
- No material financial, operational or competitive consequences
of changes in regulations affecting any of our business
segments
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 include, without limitation:
pandemics, epidemics and other public health risks including, in
particular, the COVID-19 pandemic, and the severity and duration of
the adverse effects thereof; our inability to access adequate
sources of capital and generate sufficient cash flows from
operating activities to meet our cash requirements; our failure to
maintain operational networks in the context of significant
increases in capacity demands; the risk that we may need to make
significant capital expenditures in order to provide additional
capacity and reduce network congestion; our inability to drive a
positive customer experience; labour disruptions and shortages; our
dependence on third-party suppliers, outsourcers and consultants to
operate our business; uncertainty as to whether dividends will be
declared by BCE's board of directors or whether the dividend on
common shares will be increased; pension obligation volatility and
increased contributions to post-employment benefit plans;
regulatory initiatives, proceedings and decisions, and government
consultations, positions, actions and measures that affect us and
influence our business; the intensity of competitive activity,
including from new and emerging competitors, coupled with the
launch of new products and services; the level of technological
substitution and the presence of alternative service providers
contributing to the acceleration of disruptions and
disintermediation in each of our business segments; the adverse
effect of changing viewer habits and the expansion of OTT TV on
subscriber and viewer growth and on the advertising market; rising
content costs, as an increasing number of domestic and global
competitors seek to acquire the same content, and challenges in our
ability to acquire or develop key content; the proliferation of
content piracy impacting our ability to monetize products and
services, as well as creating bandwidth pressure; higher Canadian
smartphone penetration and increased device costs could challenge
subscriber growth and cost of acquisition and retention; the
inability to protect our physical and non-physical assets from
events such as information security attacks, fire and natural
disasters; the failure to transform our operations, enabling a
truly customer-centric service experience, while lowering our cost
structure; the failure to continue investment in next-generation
capabilities; the complexity in our operations resulting from
multiple technology platforms, billing systems, sales channels,
marketing databases and a myriad of rate plans, promotions and
product offerings; the failure to implement or maintain highly
effective IT systems; the failure to generate anticipated benefits
from our corporate restructurings, system replacements and
upgrades, staff reductions, process redesigns and the integration
of business acquisitions; our failure to test, maintain, replace or
upgrade 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 environment; changes to our base
of suppliers or outsourcers that we may decide on or be required to
implement; the failure of our vendor selection, governance and
oversight processes; security and data leakage exposure if security
control protocols affecting our suppliers are bypassed; 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; the inability to manage
various credit, liquidity and market risks; new or 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; the unfavourable
resolution of legal proceedings and, in particular, class actions;
new or unfavourable changes in applicable laws and the failure to
proactively address our legal and regulatory obligations; the
failure to recognize and adequately respond to climate change
concerns or public and governmental expectations on environmental
matters; and health concerns about radiofrequency emissions from
wireless communication devices and equipment
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 2020 First
Quarter MD&A dated May 6, 2020
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.
About BCE
BCE is Canada's largest communications
company, providing advanced Bell broadband wireless, TV, Internet
and business communications services alongside Canada's premier
content creation and media assets from Bell Media. To learn more,
please visit Bell.ca or 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 leadership initiatives. To learn more,
please visit Bell.ca/LetsTalk.
Media inquiries:
Marie-Eve Francoeur
514-391-5263
marie-eve.francoeur@bell.ca
Investor inquiries:
Thane Fotopoulos
514-870-4619
thane.fotopoulos@bell.ca
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SOURCE BCE Inc.