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 149.7% to $734
million with net earnings attributable to common
shareholders growing 189% to $685
million, or $0.76 per common
share, up 192.3%; 31.1% higher adjusted net
earnings(1) of $751
million generated adjusted EPS(1)
of $0.83, up 31.7%
- Delivered 6.4% consolidated revenue growth and 6.2% higher
adjusted EBITDA(2)
- 115,916 total wireless mobile phone and mobile connected
device, retail Internet and IPTV net additions, up 75% year over
year
- Leading growth in wireless service revenue and mobile phone
average billing per user (ABPU) (4) as we
welcomed 44,433 postpaid mobile phone net additions, up by 45,393,
and increased net mobile connected device additions 22.2% to
47,449
- Retail Internet fibre net additions up 80% to 27,112, with
12% residential Internet revenue growth; up to 900,000 new fibre
and WHI locations to be passed in 2021
- Growing 5G leadership: Total 3.5 GHz mobile spectrum
holdings of 1,690M MHz-POP; strategic
cloud and technology partnerships with AWS and Google Cloud; on
track to cover 70% of national population with 5G service by year
end
- Strong financial position including $5.3 billion of available
liquidity(5) enabling accelerated capital
investment, wireless spectrum purchases and dividend
growth
- Ongoing industry leadership in ESG standards highlighted by
the launch of the Bell for Better initiative
MONTRÉAL, Aug. 5, 2021 /CNW
Telbec/ - BCE Inc. (TSX: BCE) (NYSE: BCE) today reported
results for the second quarter (Q2).
"The Bell team successfully delivered on our growth strategy in
Q2 with strong execution across all of our operating segments. A
year after COVID-19's initial impacts in early 2020, we've achieved
strong, sequential improvement in total customer net additions;
increased consolidated revenue and adjusted EBITDA more than 6%,
with leading growth in wireless service revenue and ABPU; and
further accelerated capital spending to drive the next-generation
networks and service innovations critical to Canada's recovery and
long-term economic growth," said Mirko
Bibic, President and CEO of BCE Inc. and Bell Canada. "Canadians are continuing to
embrace the power of our next-generation networks like 5G and Bell
pure fibre, reflected in a 12% increase in residential Internet
revenue; a 75% increase in total retail Internet, IPTV, and mobile
phone and connected device net subscriber additions; and the
ongoing introduction of exclusive digital media platform and
service innovations.
"Continued healthy free cash flow and Bell's overall strong
financial position are enabling our historic network acceleration
in every region, supported by public policy encouraging
next-generation infrastructure investment and our recent
acquisition of significant 5G spectrum; ongoing dividend growth for
our shareholders; and continued leadership in building a diverse,
sustainable and connected Canada, embodied in the new Bell for
Better initiative that encompasses all of our ESG initiatives. For
the last year and a half, Bell employees in every province and
territory have stepped up 24/7 to keep Canadians connected,
informed and supported throughout the crisis. Our team's
outstanding Q2 performance announced today underscores that we're
moving forward, building on Bell's 141-year legacy of service,
innovation and investment like never before to deliver for all our
stakeholders."
KEY BUSINESS DEVELOPMENTS
Focusing ESG leadership with Bell for
Better
Centralizing Bell's multiple initiatives to lead the
way in Environmental, Social and Governance (ESG) standards, the
Bell for Better program continued to drive positive outcomes for
Bell stakeholders. We continued to accelerate the rollouts of
Bell's 5G, fibre and rural networks; launched a new Sustainability
Financing Framework and the first sustainability bond offering in
the industry; adopted Science Based Targets to reduce greenhouse
gas emissions; introduced Bell Security Unified Response
Environment (BSURE), a managed cybersecurity solution to enhance
data protection and governance for Bell Business Markets customers;
announced new grant availability from the Bell Let's Talk Diversity
Fund supporting Black, Indigenous and People of Colour (BIPOC)
communities; and launched phase 2 of the Bell Let's Talk
Post-Secondary Fund enhancing student mental health at Canadian
colleges and universities.
Building the best networks faster
BCE's capital
investment increased to $1.2 billion
– 34.1% higher than in Q2 last year – reflecting ongoing execution
of Bell's accelerated network rollout plan, supporting Canada's
COVID recovery and enabled by government and regulatory support for
significant investment in next-generation communications
infrastructure. This included expanded Wireless Home Internet
service for rural and remote communities across Manitoba; all-fibre Internet access for
smaller centres in Ontario and
Québec; and mobile 5G service for over 50 more communities in
Atlantic Canada, Ontario, Quebec and Manitoba. Bell continued to work closely with
governments on projects to bring broadband access to remote and
other hard to serve areas, including Québec's Operation High
Speed and the federal Universal Broadband Fund.
Accelerating Bell's 5G leadership
Bell is taking our
5G lead further with the acquisition of significant 3500 MHz
spectrum in urban, mid-size and rural markets at the lowest cost
per MHZ-POP of all major carriers, increasing Bell's share of this
high-value 5G spectrum available to incumbents to 37%. Ranked once
again as Canada's fastest 5G, Bell 5G also launched Canada's first
5G roaming service for travellers to the
United States. Bell announced strategic cloud and technology
partnerships with Amazon Web Services (AWS) and Google Cloud, and
with 5G consumer premise equipment provider Casa Systems as Bell
prepares to launch 5G Wireless Home Internet service in rural
regions later this year.
Delivering the most compelling content
Growing our
lead in multi-platform sports media, Bell acquired Formula1
Canadian Grand Prix promoter Octane Racing Group and media rights
for F1 partner W Series; extended our Winnipeg Jets partnership and
announced a new one with the Winnipeg Blue Bombers; and signed new
or extended agreements with Wimbledon, LaLiga, the Canadian Hockey
League and the National Lacrosse League. The UEFA Euro 2020 Final on CTV and TSN was one of the
most-watched broadcasts of the year and TSN's most-streamed live
event ever. Bell Media's French-language network Noovo celebrated a
successful first year with a 10% audience increase; MuchMusic has
been revitalized as a digital-first network available across major
social media platforms; and Virgin Mobile Canada has transformed
into Virgin Plus, reflecting the brand's extension into TV and
Internet services.
BCE Q2 RESULTS
Financial Highlights
($ millions except
per share amounts) (unaudited)
|
Q2
2021
|
Q2
2020
|
%
change
|
BCE
|
|
|
|
Operating
revenues
|
5,698
|
5,354
|
6.4%
|
Net
earnings
|
734
|
294
|
149.7%
|
Net earnings
attributable to common shareholders
|
685
|
237
|
189.0%
|
Adjusted net
earnings
|
751
|
573
|
31.1%
|
Adjusted
EBITDA
|
2,476
|
2,331
|
6.2%
|
Net earnings per
common share (EPS)
|
0.76
|
0.26
|
192.3%
|
Adjusted
EPS
|
0.83
|
0.63
|
31.7%
|
Cash flows from
operating activities
|
2,499
|
2,562
|
(2.5%)
|
Capital
expenditures
|
(1,207)
|
(900)
|
(34.1%)
|
Free cash
flow(3)
|
1,248
|
1,611
|
(22.5%)
|
"We delivered strong consolidated financial performance this
quarter, including revenue and adjusted EBITDA growth acceleration
as we lapped the significant COVID-19 impacts in Q2 last year,
demonstrating continued marketplace momentum and outstanding
execution in all Bell segments. In an increasingly positive
investment climate and a background of renewed consumer confidence,
wireless, residential Internet and media were especially strong.
Although telecom spending by large enterprise customers continued
to be impacted by the current economic backdrop, business service
solutions revenue increased year over year, a very positive
indicator as the overall recovery continues," said Glen LeBlanc, Chief Financial Officer for BCE
and Bell Canada.
"BCE is in an exceptional financial and competitive position,
with a strong investment grade balance sheet underpinned by
$5.3 billion of available liquidity
at the end of Q2 and fully funded defined benefit pension plans.
With a second quarter of healthy consolidated growth, we remain on
track to meet our financial guidance targets for full-year 2021,
even taking into account higher spending under our recently upsized
capital investment acceleration program."
- Total operating revenue was up 6.4% over Q2 2020 to
$5,698 million, comprised of 5.0%
higher service revenue of $5,040
million and an 18.8% increase in product revenue to
$658 million. This result was driven
by strong year-over-year growth in wireless, residential Internet
and media as we began to lap the significant COVID-19 impacts in Q2
2020, the quarter most affected by the crisis. Bell Wireline
revenue decreased due to a $44
million regulatory charge for the period March 2016 to June
2021 related to the CRTC's recent decision on final
aggregated rates for wholesale Internet access. Excluding this
regulatory impact, total BCE operating revenue was up 7.2% this
quarter.
- Net earnings increased 149.7% to $734
million and net earnings attributable to common shareholders
totalled $685 million, or
$0.76 per share, up 189.0% and 192.3%
respectively. The increases were due to higher adjusted EBITDA
driven by improving consumer and commercial activity as the economy
rebounds from COVID-19; lower year-over-year non-cash media asset
impairment charges; and higher other income due mainly to net
mark-to-market gains on derivatives used to economically hedge
equity settled share-based compensation. This was partly offset by
increased depreciation and amortization expenseas well as higher
income taxes.
- Adjusted net earnings were $751
million, or $0.83 per common
share, up 31.1% and 31.7% respectively, from $573 million, or $0.63 per common share, in Q2 2020.
- Adjusted EBITDA grew 6.2% in Q2 to $2,476 million, driven by year-over-year
increases at all Bell operating segments. Q2 consolidated adjusted
EBITDA margin(2) of 43.5% was unchanged from Q2 2020.
Excluding Bell Wireline's $44 million
wholesale Internet regulatory charge noted above, adjusted EBITDA
was up 8.1% and margin expanded 0.4 percentage points to 43.9% in
the quarter.
- BCE capital expenditures increased 34.1% to $1,207 million, a capital intensity(4)
ratio of 21.2%, compared to 16.8% in Q2 2020. The year-over-year
increase in capital spending is consistent with our 2-year program
to accelerate the rollout of Bell's 5G, fibre and rural Wireless
Home Internet networks.
- BCE cash flows from operating activities totalled $2,499 million, down 2.5% from Q2 2020,
reflecting higher income taxes, and higher severance and other
costs paid from workforce reductions earlier this year, partly
offset by higher adjusted EBITDA.
- Free cash flow decreased 22.5% to $1,248
million, compared to $1,611
million in Q2 2020, due to higher capital expenditures and
lower cash flows from operating activities, excluding cash from
discontinued operations and acquisition and other costs paid.
Q2 OPERATING RESULTS BY SEGMENT
Bell Wireless
- Total wireless operating revenue grew 10.7% to $2,128 million, reflecting both higher service
and product revenues.
- Bell led all national players in wireless service revenue
growth, which increased 5.8% to $1,580
million, representing the first quarter of year-over-year
growth since the start of the COVID-19 crisis. It's a result that
reflects healthy subscriber base growth over the past year, driven
by our focus on higher-value smartphone loadings, continued strong
demand for Bell's IoT solutions and higher average revenue per
mobile phone user year over year.
- Product revenue was up 27.7% to $548
million, reflecting increased customer transaction volumes,
including from direct and digital channels; a greater sales mix of
premium mobile phones; and stronger year-over-year consumer
electronic sales at The Source as retail stores re-opened.
- Wireless adjusted EBITDA increased 10.2% to $969 million on the flow-through of strong
service revenue growth, while margin contracted 0.2 percentage
points to 45.5% due to increased operating costs reflecting
increased commercial activity.
- Bell added 46,247 total net new postpaid and prepaid mobile
phone customers, up from 12,110 in Q2 2020.
- Postpaid mobile phone net additions grew to 44,433, compared to
a net loss 960 in Q2 2020. The significant improvement reflects a
35.2% increase in gross additions, reflecting our emphasis on
higher-value smartphone transactions, pent-up customer demand, and
higher direct and digital channel sales volumes that balanced
ongoing retail store restrictions. Postpaid mobile phone customer
churn(4) was 0.83% compared to 0.76% last year.
- Prepaid mobile phone net additions were 1,814, down from 13,070
in Q2 2020. This result reflects an 18.4% decrease in gross
activations from lower market activity due to the slowdown in
immigration and international travel during COVID-19. This was
partly offset by a 0.65 percentage point improvement in mobile
phone prepaid customer churn to 3.98%.
- Bell's mobile phone customer base totalled 9,212,995 at the end
of Q2 2021, a 2.6% increase over last year, comprising 8,405,697
postpaid subscribers, up 2.8%, and 807,298 prepaid customers,
essentially unchanged compared to Q2 2020.
- Blended mobile phone ABPU increased an industry-leading 3.3% to
$72.21, reflecting our focus on
higher-value activations, including a growing base of customers on
equipment instalment plans; and improved roaming and data overage
revenue.
- Mobile connected device net activations increased 22.2% to
47,449, driven by continued strong demand for Bell's IoT solutions.
Mobile connected device subscribers totalled 2,177,761 at the end
of Q2 2021, an increase of 13.7% over last year.
Bell Wireline
- Total wireline operating revenue was down 1.3% in Q2 2021 to
$3,003 million, reflecting both lower
service and product revenues.
- Wireline service revenue was unfavourably impacted in Q2 by the
$44 million regulatory charge for the
period March 2016 to June 2021 related to the CRTC's recent decision
on final aggregated rates for wholesale Internet access, resulting
in a 0.9% year-over-year decrease to $2,891
million. Excluding this charge, wireline service revenue was
up 0.6%, driven by a 12% increase in residential Internet revenue
that was partly offset by softer business wireline results given
the exceptionally high demand in Q2 2020 for conferencing services,
remote collaboration tools and voice connectivity as Canadians
began to telework with the implementation of COVID-19
restrictions.
- Product revenue decreased 11.1% to $112
million compared to Q2 2020, due mainly to lower sales of
data equipment to the government sector.
- Wireline adjusted EBITDA grew 1.1% to $1,293 million, reflecting a 3.1% reduction in
operating costs that drove a 1.1 percentage-point improvement in
margin to 43.1%. Excluding the wholesale Internet regulatory impact
noted above, wireline adjusted EBITDA increased 4.5%, yielding a
margin of 43.9%.
- Bell added 17,680 new retail Internet customers, down from
19,023 in Q2 2020 when we experienced strong broadband demand and
fewer customer deactivations due to COVID-19. Within Bell's direct
fibre footprint, retail Internet net additions were 27,112, up
79.6% over last year. Retail Internet customers totalled 3,748,256
at the end of Q2, a 4.2% increase over Q2 last year. This included
approximately 1.9 million residential fibre customers, up 15%.
- Bell TV leveraged its multi-brand strategy, including
standalone Fibe TV app subscriptions and Virgin TV streaming
services, to drive 4,540 new retail IPTV net additions, up from a
net loss of 3,604 in Q2 2020. At the end of Q2, Bell served
1,821,609 retail IPTV subscribers, up 3.1% from last year.
- Retail satellite TV net customer losses improved 20.7% to 9,468
due to higher seasonal and small business activations compared to
last year. Bell's retail satellite TV customer base totalled
896,831 at the end of Q2, down 7.7% compared to last year.
- Retail residential NAS net losses totalled 51,292, up from
48,405 in Q2 2020 when we experienced fewer customer deactivations
due to COVID-19. Bell's retail residential NAS customer base
totalled 2,381,571 at the end of Q2, an 8.0% decline from last
year.
Bell Media
- Media operating revenue increased 30.4% in Q2 to $755 million, driven by increased advertiser
spending across TV, radio, out of home and digital media platforms,
reflecting a recovery in commercial activity impacted by COVID-19
during Q2 2020, as well as higher subscriber revenue.
- Increasing 57% this quarter, digital revenues now represent 19%
of total Bell Media revenue, up from 16% in Q2 2020.
- Adjusted EBITDA increased 23.7% to $214
million with the flow-through of higher year-over-year
revenue. However, margin declined to 28.3% from 29.9%, due to a
33.3% increase in operating costs with the return of live sports
and TV productions, and the non-recurrence of Canada Emergency Wage
Subsidy (CEWS) funding received in Q2 2020.
- Advertising revenue increased 65% this quarter, driven by
stronger advertiser bookings with the return of live sports and
more original TV programming compared to last year, as well as the
incremental contribution from French-language network Noovo.
- SAM TV, Bell Media's sales tool connecting advertisers and
other marketers with the right audiences on the right media
platforms, more than tripled its 2020 sales revenue in the first 6
months of 2021.
- TSN and RDS remain Canada's top-ranked English and
French-language sports networks for the 2020/2021 broadcast year to
date.
- Noovo continues to make notable gains with key demographics
versus its French-language competitors, increasing year-to-date
primetime viewership and growing market share by 2 points compared
to last year.
- Subscriber revenue increased 6% due mainly to growth in Crave
and TSN Direct streaming subscribers. Crave subscribers increased
6% over last year, approaching the 3 million mark, while TSN Direct
more than doubled its subscriber base thanks in part to a
record-setting UEFA Euro 2020.
COMMON SHARE DIVIDEND
BCE's Board of Directors has
declared a quarterly dividend of $0.875 per common share, payable on October 15, 2021 to shareholders of record at the
close of business on September 15,
2021.
OUTLOOK FOR 2021
BCE confirmed its financial guidance
targets for 2021, as provided on February 4,
2021, as follows:
|
February 4
Guidance
|
August
5 Guidance
|
Revenue
growth
|
2% – 5%
|
On track
|
Adjusted EBITDA
growth
|
2% – 5%
|
On track
|
Capital
intensity
|
18% – 20%
|
On track
|
Adjusted EPS
growth
|
1% – 6%
|
On track
|
Free cash flow
($M)
|
$2,850 –
$3,200
|
On track
|
Annualized common
dividend per share
|
$3.50
|
$3.50
|
The COVID-19 pandemic continued to unfavourably impact our
financial and operating performance in Q2 2021 due to the
government restrictions put in place to combat the pandemic, which
reduced commercial activity during the quarter. However, compared
to the same period last year, the impact of the pandemic on our
year-over-year performance was considerably reduced, as Q2 2020 was
the quarter most significantly affected by the pandemic. Moreover,
it has been over a year since the pandemic began affecting our
performance and we have since adapted many aspects of our business
to better operate in this environment. Bell Wireless product and
roaming revenues and Bell Media advertising revenues continued to
be adversely impacted by the pandemic in the quarter, however to a
lesser extent than experienced in Q2 2020. As the number of
COVID-19 cases decreased and the number of people getting
vaccinated increased, certain emergency measures were gradually
eased in the latter part of the second quarter, which allowed many
businesses to resume some level of, or increase, commercial
activities.
Due to uncertainties relating to the severity and duration of
the COVID-19 pandemic and possible resurgences in the number of
COVID-19 cases, and various potential outcomes, it is difficult at
this time to estimate the impacts of the COVID-19 pandemic on our
business or future financial results and related assumptions. Our
business and financial results could continue to be unfavourably
impacted, and could again become more significantly and negatively
impacted in future periods. The extent to which the COVID-19
pandemic will continue to adversely impact us will depend on future
developments that are difficult to predict, including the
prevalence of COVID-19 variants that are more contagious and may
lead to increased health risks, the timely distribution of
effective vaccines and treatments, the potential development and
distribution of new vaccines and treatments, the time required to
achieve broad immunity, as well as new information which may emerge
concerning the severity and duration of the COVID-19 pandemic,
including the number and intensity of resurgences in COVID-19
cases, 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 on which
BCE's 2021 financial guidance targets are based, as well as the
principal related risk factors.
CALL WITH FINANCIAL ANALYSTS
BCE will hold a
conference call for financial analysts to discuss Q2 2021 results
on Thursday, August 5 at 8:00 am eastern. Media are welcome to participate
on a listen-only basis. To participate, please dial toll-free
1-800-806-5484 or 416-340-2217 and enter passcode 2447561#. A
replay will be available until midnight on September 5, 2021 by dialing 1-800-408-3053 or
905-694-9451 and entering passcode 8741283#.
A live audio webcast of the conference call will be available on
BCE's website at BCE Q2-2021 conference call
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, 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)
|
|
Q2 2021
|
Q2 2020
|
|
|
TOTAL
|
PER
SHARE
|
TOTAL
|
PER SHARE
|
Net earnings
attributable to common shareholders
|
685
|
0.76
|
237
|
0.26
|
Severance,
acquisition and other costs
|
5
|
0.01
|
16
|
0.02
|
Net mark-to-market
(gains) losses on derivatives used to economically
hedge equity settled share-based compensation plans
|
(73)
|
(0.09)
|
7
|
-
|
Net losses (gains) on
investments
|
14
|
0.02
|
(11)
|
(0.01)
|
Early debt redemption
costs
|
-
|
-
|
-
|
-
|
Impairment of
assets
|
120
|
0.13
|
328
|
0.36
|
Net earnings from
discontinued operations
|
-
|
-
|
(4)
|
-
|
Adjusted net
earnings
|
751
|
0.83
|
573
|
0.63
|
(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 Q2 2021
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.
($ millions)
|
Q2
2021
|
Q2
2020
|
Net
earnings
|
734
|
294
|
Severance,
acquisition and other costs
|
7
|
22
|
Depreciation
|
905
|
869
|
Amortization
|
248
|
234
|
Finance
costs
|
|
|
Interest
expense
|
268
|
280
|
Interest on
post-employment benefit obligations
|
5
|
11
|
Impairment of
assets
|
164
|
449
|
Other (income)
expense
|
(91)
|
80
|
Income
taxes
|
236
|
96
|
Net earnings from
discontinued operations
|
-
|
(4)
|
Adjusted
EBITDA
|
2,476
|
2,331
|
BCE
operating revenues
|
5,698
|
5,354
|
Adjusted EBITDA
margin
|
43.5%
|
43.5%
|
(3) 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.
($ millions)
|
Q2 2021
|
Q2 2020
|
Cash flows from
operating activities
|
2,499
|
2,652
|
Capital expenditures
|
(1,207)
|
(900)
|
Cash dividends paid
on preferred shares
|
(31)
|
(33)
|
Cash dividends paid
by subsidiaries to NCI
|
(15)
|
(12)
|
Acquisition and other
costs paid
|
2
|
11
|
Cash from
discontinued operations (included in cash flows from operating
activities)
|
-
|
(17)
|
Free cash
flow
|
1,248
|
1,611
|
(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.
(5) Available liquidity at June 30,
2021 was comprised of $1,752
million in cash and cash equivalents, $400 million available under our securitized
trade receivables programs and $3.2
billion available under our committed bank credit
facilities.
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 and
dividend growth objective, our network deployment and capital
investment plans as well as the benefits expected to result
therefrom, including our two-year increased capital investment
program to accelerate the rollout of 5G, fibre and rural Wireless
Home Internet networks, certain ESG objectives (including, without
limitation, our objective to lead the way in ESG standards and for
continued leadership in building a diverse, sustainable and
connected Canada, and our targeted reductions in the level of our
greenhouse gas emissions), the potential impacts on our business,
financial condition, liquidity and financial results of the
COVID-19 pandemic, 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
August 5, 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. From time to time, we consider potential
acquisitions, dispositions, mergers, business combinations,
investments, monetizations, joint ventures and other transactions,
some of which may be significant. Except as otherwise indicated by
us, forward-looking statements do not reflect the potential impact
of any such transactions or of special items that may be announced
or that may occur after August 5,
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, including
the progress of the global vaccination rollout. Notably, it is
assumed that broad immunity is achieved in the third quarter of
2021 in Canada; later in 2021 in
the U.S., most other advanced economies and China; and in 2022 in other emerging-market
economies. In particular, we have assumed:
- Strong rebound in economic growth as the economy recovers from
the effects of the pandemic and related restrictions, given the
Bank of Canada's most recent estimated growth in Canadian gross
domestic product of around 6% on average in 2021
- Improving consumer confidence as the rollout of vaccinations
proceeds and restrictions are eased
- Strengthening business investment outside the oil and gas
sector as demand increases and business confidence improves
- 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 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 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
- In the BCE 2020 Annual MD&A, we disclosed our assumption of
continued growth of our prepaid subscriber base. As a result of
lower immigration levels and reduced customer travel as a result of
the COVID-19 pandemic, we are now assuming only modest growth of
our prepaid subscriber base in 2021.
- Continued focus on mobile phone subscriber growth, as well as
the introduction of more 5G, 4G Long-term evolution (LTE) and LTE
Advanced devices and new data services
- Continued deployment of 5G wireless network offering coverage
that is competitive with other national operators in centres across
Canada
- In the BCE 2020 Annual MD&A, we disclosed our assumption of
improvement in subscriber acquisition and retention spending,
enabled by increasing adoption of device financing plans. As a
result of store closures and reduced store opening hours in the
first half of the year driven by government restrictions
attributable to the COVID-19 pandemic, and the resulting increased
competitive intensity driven by aggressive discount offers in the
market, we are now assuming increased subscriber acquisition and
retention spending in 2021.
- Unfavourable impact on mobile phone blended ABPU, driven by
reduced outbound roaming revenue due to travel restrictions as a
result of the COVID-19 pandemic and reduced data overage revenue
due to continued adoption of unlimited plans
- Increased adoption of unlimited data plans and device financing
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 medium-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 WTTP 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 the COVID-19 pandemic 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 original
content 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 (SAM) tool
- 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 August 5, 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 pandemics,
epidemics 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 over-the-top (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 information technology (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 stakeholder and governmental changing expectations on
environmental matters; and health concerns about radio frequency
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 Annual
MD&A dated March 4, 2021
(included in BCE's 2020 Annual Report) and BCE's 2021 First and
Second Quarter MD&As dated April 28,
2021 and August 4, 2021,
respectively, for additional information with respect to certain of
these and other assumptions and risks, filed by BCE with the
Canadian provincial securities regulatory authorities (available at
Sedar.com) and with the U.S. Securities and Exchange Commission
(available at SEC.gov). These documents are also available at
BCE.ca.
About BCE
BCE is Canada's largest communications
company, providing advanced Bell broadband wireless, Internet, TV,
media and business communications services. To learn more, please
visit Bell.ca or BCE.ca.
Through Bell for Better, we are investing to create a better
today and a better tomorrow by supporting the social and economic
prosperity of our communities. This includes the Bell Let's Talk
initiative, which 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 throughout the country. 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