Announces 2021 financial targets, 5.1%
dividend increase and capital investment acceleration of at least
$1 billion to advance fibre and
wireless network expansion over the next 2 years
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.
- Net earnings increased 28.9% to $932
million in Q4 with net earnings attributable to common
shareholders of $889 million, or
$0.98 per common share, up 32.3%; Q4
adjusted net earnings of $731 million
generated adjusted EPS of $0.81, down
5.8%
- Achieved approximately 96% of 2019 service revenue and
adjusted EBITDA in 2020 and sequential quarterly improvement in Q4
despite ongoing COVID-19 impacts
- Adjusted EBITDA down 3.2% in Q4 on 2.8% lower revenue and
2.6% reduction in operating costs
- 92,928 total wireless postpaid net additions in Q4; postpaid
mobile phone net additions of 86,590 up 27% year over year
- Leading broadband wireline subscriber results in Q4: retail
Internet net additions increase 25% to 44,512 with 12% Internet
revenue growth; 21,106 IPTV net additions
- Over 6 million combined direct fibre and rural Wireless Home
Internet locations at end of 2020, expected to grow to up to 6.9
million in 2021 with enhanced capital plan as Canada's fastest 5G
network doubles population coverage
- Strong financial position with $3.8
billion of available liquidity at end of 2020
- Q4 cash flows from operating activities down 22% to
$1,631 million; Q4 free cash flow of
$92 million reflects $1.5 billion in capital investments, up 30% year
over year; generated substantial free cash flow of $3.35 billion in 2020
MONTRÉAL, Feb. 4, 2021 /CNW
Telbec/ - BCE Inc. (TSX: BCE), (NYSE: BCE) today reported results
for the fourth quarter (Q4) and full-year 2020, provided financial
guidance for 2021 and announced a 5.1%, or $0.17 per share, increase in the BCE annual
common share dividend to $3.50. The
company also unveiled an ambitious broadband network acceleration
program enabled by an additional $1
billion to $1.2 billion in
capital investment over the next 2 years.
"Today, BCE is proud to announce a significant acceleration in
network capital investment to support Canada's recovery from the
social and economic impacts of COVID-19 alongside a 5.1% increase
in our common share dividend. These initiatives reflect our
commitment to lead the buildout of Canada's next-generation digital
infrastructure while also delivering increased dividend returns to
the shareholders who have invested in Bell's strategy of broadband
innovation and growth," said Mirko
Bibic, President and CEO of BCE and Bell Canada.
"Bell's solid fourth-quarter Q4 and 2020 results – including
welcoming 147,000 net new retail Internet, IPTV and wireless
customers in Q4 – underscore the advantages of fast, reliable and
high-capacity networks in a challenging and competitive
marketplace. Bell's network leadership has kept Canadians
connected, informed and entertained throughout COVID-19, with the
round-the-clock support and ongoing investments in network capacity
and digital platforms necessary to enable the business, government
and front-line response to the crisis," said Mr. Bibic.
"Now, Bell looks forward to playing a key role in the country's
move forward with an acceleration of at least $1 billion over the next 2 years to deliver fibre
connections, rural Internet services and the fastest 5G network to
even more Canadians. Since 1880, Bell has led the way in ensuring
Canada's leadership position in the global communications sector,
and our team is proud to advance how Canadians connect with each
other and the world in 2021."
KEY BUSINESS DEVELOPMENTS
Accelerating Canada's best networks
Committed to being
a key driver of Canada's social and economic recovery, Bell today
announced a capital investment acceleration of an additional
$1 billion to $1.2 billion over the next 2 years to roll out
its fast fibre, rural Wireless Home Internet (WHI) and 5G networks
to even more Canadians. Bell plans to increase the number of new
locations covered with fibre and WHI by as many as 900,000 in 2021
– bringing the combined footprint to up to 6.9 million homes and
businesses by the end of the year – while doubling the population
coverage of Canada's fastest 5G network. Funded by proceeds from
the sale of Bell data centres in 2020, the investment acceleration
is in addition to Bell's typical capital expenditures over the last
decade of approximately $4 billion a
year (growing to $4.2 billion in 2020
due to added investment in network capacity and digital platforms
in response to unprecedented usage demand during the COVID
crisis).
Bell continues to lead the way in connecting rural Canada with
Wireless Home Internet, including launching an unlimited usage
option for WHI customers this week. Bell significantly stepped
up WHI expansion in 2020, including to rural Atlantic Canada and in response to COVID-19
demand, while also doubling Internet access speeds for most WHI
customers. Bell's 5G network was ranked Canada's fastest in PCMag's
prestigious Fastest Mobile Networks Canada analysis, and now
reaches more than 150 major urban areas and smaller communities
across Canada with plans to double the footprint in 2021. Bell
also helped accelerate broadband Internet rollouts throughout
Québec with new measures simplifying access to support structures
and a Centre of Excellence, and worked with Société de Transport de
Montréal (STM) and industry partners to complete deployment of
wireless service throughout Montréal's metro transit system.
5G research leadership
Bell remains the #1
communications R&D investor in Canada according to Research Infosource's
latest annual ranking of the country's top 100 investors in
research and development. Bell and the University of New Brunswick have launched the Bell
Research Intensive Cyber Knowledge Studies (BRICKS)
program providing students with the opportunity to earn a
Masters of Applied Cybersecurity along with research internships
and a full-time job after graduation. Bell has also partnered
with the Université de Sherbrooke
to accelerate 5G research at its Interdisciplinary Institute for
Technological Innovation, building on an earlier 5G alliance with
Western University.
The most compelling content
Bell Media's
French-language Noovo television and digital network is delivering
new investment in Québec media and fresh choice for viewers,
including the new Le Fil news
service launching next month. We further enhanced content
creation and production resources through a new partnership with
Montréal's Grandé Studios while also significantly expanding
sound stages and other facilities at Pinewood Toronto Studios. With
8 of the Top 10 programs in the fall season, CTV remains Canada's
most-watched network with growth in viewership throughout the
season. iHeartRadio Canada introduced the adult contemporary MOVE
Radio brand in 10 markets across the country.
Champion customer experience
Bell led the industry for
a 5th consecutive year in significantly reducing
customer complaints according to the annual report from the
Commission for Complaints for Telecom-television Services (CCTS).
With ongoing enhancement of digital capabilities including online
fulfillment, self-serve and enhanced app functionality, more than
50% of total customer transactions are now conducted online.
Following similar wins for the MyBell and Lucky Mobile self-serve
apps, Virgin Mobile's My Account was named the Best
Telecommunications Mobile Application of the year at the 2020
MobileWebAwards.
Now more than ever: Bell Let's Talk Day sets new
records
Reflecting widespread recognition of the impacts of
the COVID-19 crisis on the mental health of so many, Canadians set
all-new records on Bell Let's Talk Day 2021, sharing 159,173,435
messages of support for those who live with mental illness. With
Bell donating 5 cents to Canadian
mental health programs for each of these calls, texts and social
media interactions, this unprecedented level of engagement grew our
total Bell Let's Talk funding commitment to date by $7,958,671.75 to $121,373,806.75. More than 160 Bell Let's Talk
flags were raised around the country and students at over 200
colleges and universities took part in virtual programs to
share ideas for action, alongside the launch of the Bell Let's Talk
Post-Secondary Fund supporting implementation of the National
Standard of Canada for Mental Health and Well-Being for
Post-Secondary Students.
As part of Bell's commitment to support diverse communities,
Bell Let's Talk announced the next 8 recipients of the Bell Let's
Talk Diversity Fund, which provides grants up to $250,000 to organizations advancing mental heath
services for Black, Indigenous and People of Colour (BIPOC)
communities in Canada. Bell Let's
Talk also announced new support for the QEII Foundation in
Halifax, Montréal's Sainte-Justine
University Hospital Centre, national youth mental health
organization Jack.org, and Brain
Canada in a $4 million
partnership with the federal government. Applications for 2021's
Bell Let's Talk Community Fund, the special $2 million annual program supporting local and
grassroots organizations providing community access to mental
health care, are now open.
BCE RESULTS
Following BCE's June 1, 2020 announcement that it had agreed to
sell substantially all of its data centre operations, we have
reclassified amounts related to the announced sale for the previous
periods to discontinued operations in our consolidated income
statements and consolidated statements of cash flows to make them
consistent with the presentation for the current period. The
transaction was completed in Q4 2020.
Financial Highlights
($ millions except
per share amounts) (unaudited)
|
Q4
2020
|
Q4
2019
|
%
change
|
2020
|
2019
|
%
change
|
BCE
|
|
|
|
|
|
|
Operating
revenues
|
6,102
|
6,275
|
(2.8%)
|
22,883
|
23,793
|
(3.8%)
|
Net
earnings
|
932
|
723
|
28.9%
|
2,699
|
3,253
|
(17.0%)
|
Net earnings
attributable to common shareholders
|
889
|
672
|
32.3%
|
2,498
|
3,040
|
(17.8%)
|
Adjusted net
earnings(1)(2)
|
731
|
784
|
(6.8%)
|
2,730
|
3,119
|
(12.5%)
|
Adjusted
EBITDA(3)
|
2,404
|
2,484
|
(3.2%)
|
9,607
|
10,006
|
(4.0%)
|
Net earnings per
common share (EPS)
|
0.98
|
0.74
|
32.4%
|
2.76
|
3.37
|
(18.1%)
|
Adjusted
EPS(1)(2)
|
0.81
|
0.86
|
(5.8%)
|
3.02
|
3.46
|
(12.7%)
|
Cash flows from
operating activities
|
1,631
|
2,091
|
(22.0%)
|
7,754
|
7,958
|
(2.6%)
|
Capital
expenditures
|
(1,494)
|
(1,150)
|
(29.9%)
|
(4,202)
|
(3,974)
|
(5.7%)
|
Free cash
flow(1)(4)
|
92
|
874
|
(89.5%)
|
3,348
|
3,738
|
(10.4%)
|
"In every successive quarter since COVID-19 began, Bell has
delivered sequential quarterly improvement in our operating
results, underscoring the stability and resiliency of our company
and the strength of our financial position," said Glen LeBlanc, Chief Financial Officer for BCE
and Bell Canada. "As we enter 2021,
our business fundamentals are sound, our competitive position
remains strong and the Bell team's ability to execute is proven. We
are poised to succeed with a rock-solid financial foundation
driving both our unparalleled national investment strategy and
BCE's higher common share dividend, and ready to deliver on the
2021 financial guidance targets we announced today."
- BCE operating revenue in Q4 was $6,102
million, down 2.8% compared to Q4 2019, as COVID-19
continued to impact consumer and commercial activity, including
wireless product sales and roaming volumes, media advertising
demand and business customer spending. Service revenue declined
2.8% to $5,090 million and product
revenue by 2.7% to $1,012 million.
For full-year 2020, BCE operating revenue decreased 3.8% to
$22,883 million with year-over-year
declines of 3.6% in service revenue and 5.5% in product
revenue.
- Net earnings in Q4 increased 28.9% to $932 million and net earnings attributable to
common shareholders totalled $889
million, or $0.98 per share,
up 32.3% and 32.4% respectively. Higher net earnings and net
earnings per common share reflected the gain realized on the sale
of Bell data centres to Equinix in Q4 2020, lower year-over-year
non-cash media asset impairment charges and decreased income taxes.
This was partly offset by lower adjusted EBITDA, increased
depreciation and amortization expense, higher severance,
acquisition and other costs, and higher other expense. For
full-year 2020, net earnings decreased 17.0% to $2,699 million, and net earnings attributable to
common shareholders were $2,498
million, or $2.76 per share,
down 17.8% and 18.1% respectively.
- Adjusted net earnings in Q4 were $731
million, or $0.81 per common
share, down 6.8% and 5.8% respectively, compared to $784 million, or $0.86 per common share, in Q4 2019. The decreases
reflected lower adjusted EBITDA, higher depreciation and
amortization expense and higher other expense due to the pick-up of
equity losses from our minority interest investments. For full-year
2020, adjusted net earnings were $2,730
million compared to $3,119
million in 2019, and adjusted EPS was down 12.7% to
$3.02.
- Adjusted EBITDA decreased 3.2% to $2,404
million in Q4, reflecting declines of 3.0% in wireless, 2.7%
in wireline and 7.8% in media. BCE's consolidated adjusted EBITDA
margin decreased 0.2 percentage points to 39.4%, due to the
flow-through of lower year-over-year revenue, partly offset by a
2.5% improvement in operating costs. For full-year 2020, adjusted
EBITDA was down 4.0% to $9,607
million, while BCE's adjusted EBITDA margin was essentially
unchanged at 42.0% compared to 42.1% in 2019.
- Total BCE capital expenditures in Q4 increased 29.9% to
$1,494 million for a capital
intensity(5) ratio of 24.5%, compared to 18.3% in Q4
2019. This brought total 2020 capital expenditures to $4,202 million, up from $3,974 million the year before, representing a
capital intensity ratio of 18.4% compared to 16.7% in 2019. Capital
investment in 2020 focused on continued expansion of our broadband
fibre network, the accelerated rollout of Wireless Home Internet to
more rural locations, deployment of mobile 5G, the ongoing digital
transformation of our operations – including online fulfillment,
customer self-serve, automation tools and improved app
functionality – and network capacity enhancements to manage
unprecedented usage volumes during COVID-19.
- BCE cash flows from operating activities in Q4 were
$1,631 million, down 22.0% from Q4
2019, reflecting lower adjusted EBITDA, higher income taxes paid
due to the timing of instalment payments, and a reduction in cash
from working capital driven mainly by growth in accounts receivable
from increased consumer activity, including a higher volume of
wireless equipment instalment plan sales, and the timing of
supplier payments. For full-year 2020, BCE cash flows from
operating activities totalled $7,754
million, down 2.6% compared to 2019.
- Free cash flow was down 89.5% in Q4 to $92 million, compared to $874 million the year before, due to lower cash
flows from operating activities, excluding cash from discontinued
operations and acquisition and other costs paid, as well as higher
capital expenditures. For full-year 2020, BCE free cash flow
decreased 10.4% to $3,348
million.
BCE OPERATING RESULTS BY SEGMENT
Bell Wireless
- Wireless operating revenue decreased 1.9% in Q4 to $2,408 million, and by 3.5% to $8,683 million for 2020, reflecting lower service
and product revenues.
- Service revenue was down 2.5% to $1,554
million in Q4, due mainly to lower roaming revenue during
COVID-19 and reduced data overage as customers adopt plans with
higher data thresholds, including unlimited options. For full-year
2020, service revenue declined 3.2% to $6,169 million.
- Product revenue decreased 0.7% to $854
million in Q4 and was down 4.4% to $2,514 million in 2020, the result of lower
transaction volumes from reduced consumer activity during
COVID-19.
- Consistent with the decline in high-margin service revenue,
wireless adjusted EBITDA was down 3.0% to $903 million, yielding a 0.4 percentage-point
decrease in margin to 37.5%. For full-year 2020, adjusted EBITDA
decreased 3.3% to $3,666 million.
However, wireless margin increased 0.1 percentage points to 42.2%,
reflecting lower operating costs due to reduced sales
activity.
- Bell added 81,256 total net new postpaid and prepaid
customers(5) in Q4, compared to 123,582 in Q4 2019. For
full-year 2020, total postpaid and prepaid net additions decreased
48.8% to 263,721.
- Postpaid net additions totalled 92,928, down from 121,599 in Q4
2019. Overall market activity was impacted by reduced retail store
traffic and transaction volumes during COVID-19, resulting in a
13.2% decline in postpaid gross additions. This was moderated by a
17 basis-point improvement in postpaid customer churn(5)
to 1.11%. For full-year 2020, postpaid net additions were 225,739,
down from 401,955 in 2019, while customer churn decreased to 0.99%,
our best annual postpaid churn rate result ever.
- Bell's prepaid customer base decreased by 11,672 net
subscribers in Q4, compared to a net gain of 1,983 in Q4 2019. The
decline reflected lower overall market activity due to reduced
immigration and fewer visitors to Canada during COVID-19, resulting
in 16.8% fewer gross additions. Prepaid churn improved 0.35
percentage points to 4.79%. For full-year 2020, prepaid net
additions decreased 66.5% to 37,982 on 5.4% fewer gross additions
and a higher churn rate of 4.60%.
- Bell's total wireless customer base in 2020 increased 2.6% to
10,221,683, comprising 9,385,679 postpaid subscribers, up 2.5% over
2019, and 836,004 prepaid customers, up 4.8%.
- While blended average billing per user (ABPU)(5)
decreased 3.9% to $64.71 in Q4,
reflecting reduced roaming due to COVID-19 and ongoing contraction
of data overage revenue driven by the adoption of big bucket and
unlimited rate plans, this result represented a second consecutive
quarter of ABPU improvement. For full-year 2020, blended ABPU
decreased 5.4% to $67.69.
Bell Wireline
- Total wireline operating revenue in Q4 decreased 1.3% to
$3,095 million compared to Q4 2019
and by 0.9% to $12,206 million in
full-year 2020.
- Service revenue was down 0.6% to $2,933
million in Q4, due mainly to ongoing declines in legacy
voice, data and satellite TV services, reduced sales of business
service solutions during COVID-19, and the non-recurrence of
revenue from Q4 2019 generated from the federal election and bulk
sales of international wholesale long-distance minutes. These
impacts were partly offset by strong Internet revenue growth,
driven by retail subscriber base expansion and flow-through of
residential pricing changes over the past year. For full-year 2020,
wireline service revenue declined 0.4% to $11,662 million.
- Product revenue declined 11.5% in Q4 to $162 million and by 9.9% in 2020 to $544 million. These decreases were due to lower
data equipment sales to enterprise business customers as customers
reduced or delayed spending during COVID-19.
- Wireline adjusted EBITDA decreased 2.7% to $1,312 million in Q4, driving a 0.6
percentage-point decline in margin to 42.4%. Wireline operating
costs were relatively stable, improving 0.2% year over year,
reflecting reduced commercial activity and discretionary cost
savings during COVID-19. For full-year 2020, wireline adjusted
EBITDA declined 2.2% to $5,246
million on 0.1% higher operating costs, yielding a lower
margin of 43.0%, compared to 43.6% in 2019.
- Bell added 44,512 new retail Internet customers(5)
in Q4, up 24.9% from 35,639 in Q4 2019. The increase reflected
growth across all Bell Internet brands, driven by our expanded
direct fibre and Wireless Home Internet footprints, and fewer
deactivations as Canadians relied on fast and reliable Internet
connectivity for remote work, entertainment and information during
COVID-19. For full-year 2020, total retail Internet net additions
grew 9.7% to 148,989.
- Retail Internet customers totalled 3,704,590 at the end of
2020, an increase of 4.2% over 2019, building on Bell's position as
the leading Internet service provider in Canada.
- Bell TV added 21,106 new net retail IPTV
subscribers(5), down from 22,039 in Q4 2019. The
decrease was the result of reduced sales activity during COVID-19,
Fibe TV and Alt TV market maturity, and ongoing over-the-top
substitution, partly offset by lower customer churn and strong
demand for the Virgin TV service launched in Q3 2020. For full-year
2020, total retail IPTV net additions were 39,191, compared to
91,476 in 2019. At the end of 2020, Bell served 1,806,373 retail
IPTV subscribers, up 2.2% over 2019.
- Retail satellite TV net customer(5) losses improved
4.8% to 20,570 in Q4, and by 14.5% to 73,050 for full-year 2020,
due to fewer customer deactivations during COVID-19.
- At the end of 2020, Bell remained Canada's #1 TV provider with
a combined total of 2,738,605 retail IPTV and satellite TV
subscribers, down 1.2% from 2019.
- Retail residential NAS(5) net losses improved 7.5%
in Q4 to 53,759, reflecting fewer customer deactivations during
COVID-19. Full-year 2020 retail residential NAS net losses totalled
213,551, an 18.9% reduction in losses compared to 2019 that
resulted in an overall 7.9% year-over-year decline in Bell's
residential NAS customer base to 2,483,932.
Bell Media
- Media operating revenue decreased 10.0% in Q4 to $791 million, and by 14.5% to $2,750 million for 2020, due to decreased
customer spending across all of our TV, radio, digital and out of
home platforms, reflecting reduced commercial activity during
COVID-19 as well as the impacts on major league sports and other
live events.
- The Q4 revenue result represented a second quarter of
sequential improvement as advertiser demand increased with the
start of the new fall TV season and more live sports
broadcasts.
- TSN was Canada's #1 ranked sports channel for Q4 and full-year
2020, and RDS was the top non-news French-language specialty among
adults 25-54 in Q4.
- Noovo, Bell Media's new TV and digital brand in Québec,
increased primetime viewership by 6% and gained 1.5 percentage
points in market share among adults A25-54 in the fall season.
- Subscriber revenue was also lower compared to Q4 2019, due to
the timing of certain contract renewals with Canadian TV
distributors that was partly offset by higher revenue from Crave
streaming subscriber growth in 2020. Crave subscribers totalled
approximately 2.8 million at the end of 2020, up 8% over 2019.
- Adjusted EBITDA decreased 7.8% in Q4 to $189 million, due to the flow-through impact of
lower revenue. However, margin improved to 23.9% from 23.3%,
reflecting a 10.7% reduction in operating costs, which encompassed
delays or shutdowns in sports broadcasts and TV productions as well
as reduced discretionary expenses. For full-year 2020, adjusted
EBITDA was down 18.2% to $695
million, yielding a margin of 25.3% compared to 26.4% in
2019.
COMMON SHARE DIVIDEND
BCE's Board of Directors has
declared a quarterly dividend of $0.875 per common share, payable on April 15, 2021 to shareholders of record at the
close of business on March 15,
2021.
OUTLOOK FOR 2021
The table below provides our 2021
financial guidance targets. These ranges are based on our current
outlook for 2021 taking into account the impact of COVID-19 on our
2020 consolidated financial results.
Due to uncertainties relating to the severity and duration of
COVID-19, including the current resurgence and possible future
resurgences in the number of cases, and various potential outcomes,
our business and financial results could continue to be
significantly and negatively impacted in 2021. Accordingly, there
can be no certainty that any of our 2021 financial guidance targets
will be achieved. The extent to which COVID-19 will continue to
adversely impact us will depend on future developments that are
unknown and cannot be predicted, including the development and
distribution of effective vaccines and/or treatment options, as
well as new information which may emerge concerning the severity,
duration and resurgences of COVID-19 and the actions required to
contain the coronavirus or remedy its impacts, among others. Please
see the section entitled "Caution Regarding Forward-Looking
Statements" later in this news release for a description of the
principal assumptions made by BCE in developing its 2021 financial
guidance targets, as well as the principal related risk
factors.
|
2020
Results
|
2021
Guidance
|
Revenue
growth
|
(3.8%)
|
2% – 5%
|
Adjusted EBITDA
growth
|
(4.0%)
|
2% – 5%
|
Capital
intensity
|
18.4%
|
18% – 20%
|
Adjusted EPS
growth
|
(12.7%)
|
1% – 6%
|
Free cash flow
($M)
|
$3,348
|
$2,850 –
$3,200
|
Annualized common
dividend per share
|
$3.33
|
$3.50
|
CALL WITH FINANCIAL ANALYSTS
BCE will hold a
conference call for financial analysts to discuss Q4 2020 results
and 2021 financial guidance on Thursday,
February 4 at 8:00 am eastern.
Media are welcome to participate on a listen-only basis. Please
dial toll-free 1-800-806-5484 or 416-340-2217 and enter passcode
9050712#. A replay will be available until midnight on March 4, 2021 by dialing 1-800-408-3053 or
905-694-9451 and entering passcode 1001600#.
A live audio webcast of the conference call will be available on
BCE's website at: BCE Q4 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) In Q2 2020, we updated our definitions of adjusted net
earnings, adjusted EPS and free cash flow to exclude the impacts of
discontinued operations as they may affect the comparability of our
financial results and could potentially distort the analysis of
trends in business performance. As a result of this change, prior
periods have been restated for comparative purposes.
(2) The terms adjusted net earnings and adjusted EPS do not have
any standardized meaning under IFRS. Therefore, they are unlikely
to be comparable to similar measures presented by other issuers. We
define adjusted net earnings as net earnings attributable to common
shareholders before severance, acquisition and other costs, net
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, impairment of
assets and discontinued operations, 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 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, impairment of
assets and discontinued operations, net of tax and NCI. We exclude
these items because they affect the comparability of our financial
results and could potentially distort the analysis of trends in
business performance. Excluding these items does not imply they are
non-recurring. The most comparable IFRS financial measures are net
earnings attributable to common shareholders and EPS. The following
table is a reconciliation of net earnings attributable to common
shareholders and EPS to adjusted net earnings on a consolidated
basis and per BCE common share (adjusted EPS), respectively.
($ millions except
per share amounts)
|
|
Q4 2020
|
Q4 2019
|
2020
|
2019
|
|
Total
|
Per share
|
Total
|
Per share
|
Total
|
Per share
|
Total
|
Per share
|
Net earnings
attributable to common shareholders
|
889
|
0.98
|
672
|
0.74
|
2,498
|
2.76
|
3,040
|
3.37
|
Severance,
acquisition and other costs
|
38
|
0.05
|
20
|
0.02
|
85
|
0.10
|
83
|
0.10
|
Net mark-to-market
losses (gains) on derivatives used to economically hedge equity
settled share-based compensation plans
|
-
|
-
|
45
|
0.05
|
37
|
0.04
|
(101)
|
(0.11)
|
Net (gains) losses on
investments
|
(3)
|
(0.01)
|
(18)
|
(0.02)
|
(46)
|
(0.05)
|
39
|
0.04
|
Early debt redemption
costs
|
9
|
0.01
|
-
|
-
|
37
|
0.04
|
13
|
0.01
|
Impairment of
assets
|
9
|
0.01
|
70
|
0.08
|
345
|
0.38
|
74
|
0.08
|
Net earnings from
discontinued operations
|
(211)
|
(0.23)
|
(5)
|
(0.01)
|
(226)
|
(0.25)
|
(29)
|
(0.03)
|
Adjusted net
earnings
|
731
|
0.81
|
784
|
0.86
|
2,730
|
3.02
|
3,119
|
3.46
|
(3) 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, Segmented information, in BCE's Q3 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 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.
|
Q4 2020
|
Q4 2019
|
2020
|
2019
|
Net
earnings
|
932
|
723
|
2,699
|
3,253
|
Severance,
acquisition and other costs
|
52
|
28
|
116
|
114
|
Depreciation
|
872
|
854
|
3,475
|
3,458
|
Amortization
|
233
|
224
|
929
|
886
|
Finance
costs
|
|
|
|
|
Interest
expense
|
274
|
285
|
1,110
|
1,125
|
Interest
on post-employment benefits obligations
|
11
|
16
|
46
|
63
|
Impairment of
assets
|
12
|
96
|
472
|
102
|
Other expense
(income)
|
38
|
18
|
194
|
(95)
|
Income
taxes
|
191
|
245
|
792
|
1,129
|
Net earnings from
discontinued operations
|
(211)
|
(5)
|
(226)
|
(29)
|
Adjusted
EBITDA
|
2,404
|
2,484
|
9,607
|
10,006
|
BCE operating
revenues
|
6,102
|
6,275
|
22,883
|
23,793
|
Adjusted EBITDA
margin
|
39.4%
|
39.6%
|
42.0%
|
42.1%
|
(4) The term 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 cash from
discontinued operations, 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 cash from
discontinued operations, 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 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.
|
Q4 2020
|
Q4 2019
|
2020
|
2019
|
Cash flows from
operating activities
|
1,631
|
2,091
|
7,754
|
7,958
|
Capital
expenditures
|
(1,494)
|
(1,150)
|
(4,202)
|
(3,974)
|
Cash dividends paid
on preferred shares
|
(31)
|
(37)
|
(132)
|
(147)
|
Cash dividends paid
by subsidiaries to NCI
|
(16)
|
(14)
|
(53)
|
(65)
|
Acquisition and other
costs paid
|
2
|
7
|
35
|
60
|
Cash from
discontinued operations (included in cash flows from operation
activities)
|
-
|
(23)
|
(54)
|
(94)
|
Free cash
flow
|
92
|
874
|
3,348
|
3,738
|
(5) 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 BCE's financial guidance (including
revenues, adjusted EBITDA, capital intensity, adjusted EPS and free
cash flow), BCE's 2021 annualized common share dividend, BCE's
anticipated capital expenditures, including its two-year increased
capital investment program to accelerate fibre, Wireless Home
Internet and 5G footprint expansion, 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
February 4, 2021 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 February 4,
2021. 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 financial
results, as well as 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
A number of economic, market,
operational and financial assumptions were made by BCE in preparing
its forward-looking statements contained in this news release,
including, but not limited to the following:
Canadian Economic Assumptions
Our
forward-looking statements are based on certain assumptions
concerning the Canadian economy, which in turn depend on important
assumptions about how the COVID-19 pandemic will evolve. Notably,
it is assumed that the vaccine rollout proceeds largely as
announced by governments and that Canada, other advanced economies
and China achieve broad immunity
by the end of 2021. In particular, we have assumed:
- Strong rebound in economic growth after the first quarter of
2021 as the economy recovers from the significant impacts of the
COVID-19 pandemic, given the Bank of Canada's most recent estimated
growth in Canadian gross domestic product of around 4% on average
in 2021, following a decline of about 5.5% in 2020
- Recovery of consumer confidence and elevated levels of
disposable income
- Strengthening business investment outside the oil and gas
sector as uncertainty recedes
- Employment gains expected in 2021, despite ongoing challenges
in some sectors
- Accelerating trend toward e-commerce
- Low immigration levels until international travel and/or
health-related restrictions are lifted
- Prevailing low interest rates expected to remain at or near
current levels for the foreseeable future
- Canadian dollar expected to remain at or 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.
Canadian Market Assumptions
Our forward-looking
statements also reflect various Canadian market assumptions. In
particular, we have made the following market assumptions:
- A consistently high level of wireline and wireless competition
in consumer, business and wholesale markets
- Higher, but slowing, wireless industry penetration
- A shrinking data and voice connectivity market as business
customers migrate to lower-priced traditional telecommunications
solutions or alternative over-the-top (OTT) competitors
- While the advertising market continues to be adversely impacted
by cancelled or delayed advertising campaigns from many sectors due
to the economic downturn during the COVID-19 pandemic, we do expect
gradual recovery in 2021
- Declines in broadcasting distribution undertakings (BDU)
subscribers driven by increasing competition from the continued
rollout of subscription video on demand (SVOD) streaming services
together with further scaling of OTT aggregators
Assumptions Concerning our Bell Wireless
Segment
Our forward-looking statements are also based on
the following internal operational assumptions with respect to our
Bell Wireless segment:
- Maintain our market share of national operators' wireless
postpaid net additions
- Continued growth of our prepaid subscriber base
- Continued adoption of smartphone devices, tablets and data
applications, as well as the introduction of more 5G, Fourth
Generation long-term evolution (4G LTE) and LTE-Advanced (LTE-A)
devices and new data services
- Continued deployment of 5G wireless network offering coverage
that is competitive with other national operators in centres across
Canada, and expansion of LTE-A network coverage to approximately
96% of the Canadian population
- Improvement in subscriber acquisition and retention spending,
enabled by increasing adoption of installment payment plans
- Unfavourable impact on blended ABPU, driven by reduced outbound
roaming revenue due to travel restrictions as a result of the
COVID-19 pandemic, reduced data overage revenue due to continued
adoption of unlimited plans and the impact of a higher prepaid mix
in our overall subscriber base
- Increased adoption of unlimited data plans and installment
payment plans
- No material financial, operational or competitive consequences
of changes in regulations affecting our wireless business
Assumptions Concerning our Bell Wireline
Segment
Our forward-looking statements are also based on
the following internal operational assumptions with respect to our
Bell Wireline segment:
- Continued growth in retail Internet and IPTV subscribers
- Increasing wireless and Internet-based technological
substitution
- Continued 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 telecommunications
competitors continue to intensify their focus on business
customers
- Traditional high-margin product categories challenged by large
global cloud and OTT providers of business voice and data solutions
expanding into Canada with on-demand services
- Accelerating customer adoption of OTT services resulting in
downsizing of TV packages
- Further deployment of direct fibre to more homes and businesses
within our wireline footprint and fixed wireless-to-the-premise
technology in rural communities
- Growing consumption of OTT TV services and on-demand streaming
video, as well as the proliferation of devices, such as tablets,
that consume large quantities of bandwidth, will require ongoing
capital investment
- Realization of cost savings related to management workforce
reductions including attrition and retirements, lower contracted
rates from our suppliers, operating efficiencies enabled by a
growing direct fibre footprint, changes in consumer behaviour and
product innovation, new call centre technology that is enabling
self-serve capabilities, and other improvements to the customer
service experience
- No material financial, operational or competitive consequences
of changes in regulations affecting our wireline business
Assumptions Concerning our Bell Media
Segment
Our forward-looking statements are also based on
the following internal operational assumptions with respect to our
Bell Media segment:
- Overall revenue is expected to reflect a gradual economic
recovery in 2021 combined with subscriber revenue growth and
strategic pricing on advertising sales. However, revenue
performance is expected to continue to be negatively impacted by
the effects of COVID-19 on many sectors of the economy.
- Continued escalation of media content costs to secure quality
programming, as well as the return of sports and entertainment
programming; however, in the short term, savings can still be
expected due to production delays, shortened sports seasons, and
possible cancellations from the ongoing COVID-19 pandemic
- Continued scaling of Crave through broader content offering and
user experience improvements
- Investment in Noovo news and more French-language originals to
better serve our French-language customers with a wider array of
content, in the language of their choice, on their preferred
platforms
- Enhanced market-leading attribution through our Strategic
Audience Management tool (SAM)
- 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
- Continued monetization of content rights and Bell Media
properties across all platforms
- No material financial, operational or competitive consequences
of changes in regulations affecting our media business
Financial Assumptions Concerning BCE
Our
forward-looking statements are also based on the
following internal financial assumptions with respect to BCE
for 2021:
- Total post-employment benefit plans cost to be approximately
$300 million, based on an estimated
accounting discount rate of 2.6%, comprised of an estimated above
adjusted EBITDA post-employment benefit plans service cost of
approximately $275 million and an
estimated below adjusted EBITDA net post-employment benefit plans
financing cost of approximately $25
million
- Increase in depreciation and amortization expense of
approximately $200 million to
$250 million compared to 2020
- Interest expense and payments of approximately $1,050 million to $1,100
million
- An effective tax rate of approximately 27%
- NCI of approximately $60
million
- Total cash pension and other post-employment benefit plan
funding of approximately $350 million
to $375 million
- Cash income taxes of approximately $800
million to $900 million
- Average number of BCE common shares outstanding of
approximately 905 million
- An annual common share dividend of $3.50 per share
The foregoing assumptions, although considered reasonable by BCE
on February 4, 2021, 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 2021 financial
guidance, are listed below. The realization of our forward-looking
statements, including our ability to meet our 2021 financial
guidance targets, essentially depends on our business performance,
which, in turn, is subject to many risks. Accordingly, readers are
cautioned that any of the following risks could have a material
adverse effect on our forward-looking statements. These risks
include, but are not limited to: the COVID-19 pandemic and the
adverse effects from the emergency measures implemented or to be
implemented as a result thereof, as well as other pandemic,
epidemic and other health risks; 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; the intensity of competitive
activity including from new and emerging competitors; 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; changing viewer
habits and the expansion of OTT TV and other alternative service
providers, as well as the fragmentation of, and changes in, the
advertising market; rising content costs and challenges in our
ability to acquire or develop key content; the proliferation of
content piracy; higher Canadian smartphone penetration and reduced
or slower immigration flow; regulatory initiatives, proceedings and
decisions, government consultations and government positions that
affect us and influence our business; the inability to protect our
physical and non-physical assets from events such as information
security attacks, unauthorized access or entry, 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 in a disciplined and strategic manner; the inability
to drive a positive customer experience; the complexity in our
operations; the failure to maintain operational networks in the
context of significant increases in capacity demands; the risk that
we may need to incur significant capital expenditures to provide
additional capacity and reduce network congestion; the failure to
implement or maintain highly effective IT systems; the failure to
generate anticipated benefits from our corporate restructurings,
system replacements and upgrades, process redesigns, staff
reductions and the integration of business acquisitions; events
affecting the functionality of, and our ability to protect, test,
maintain, replace and 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; labour disruptions and shortages; our dependence on
third-party suppliers, outsourcers and consultants to provide an
uninterrupted supply of the products and services we need to
operate our business; 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 access adequate sources of capital and generate
sufficient cash flows from operating activities 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 the dividend on common shares
will be increased; the inability to manage various credit,
liquidity and market risks; pension obligation volatility and
increased contributions to post-employment benefit plans; 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; 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 Safe Harbour
Notice Concerning Forward-Looking Statements dated February 4, 2021 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 4, 2021 is
incorporated by reference in this news release.
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 Bell Canada