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. The information
contained in this news release is unaudited.
- Consolidated adjusted EBITDA1 up 4.6% driven by
3.8% service revenue growth
- Net earnings of $654 million,
down 10.9%, with net earnings attributable to common shareholders
of $596 million, or $0.66 per common share, down 13.2%; adjusted net
earnings1 of $791
million generated adjusted EPS1 of
$0.87, up 4.8%
- Wireless operating momentum continues: 110,761 mobile phone
net subscriber activations, up 139.5%; best-ever quarterly postpaid
churn2 rate of 0.75%; 3.8% higher mobile phone blended
ARPU3; and strong service revenue and adjusted EBITDA
growth of 7.8% and 8.3% respectively
- Next evolution of 5G underway with the launch of mobile 5G+,
delivering Bell's fastest mobile speeds ever
- Retail Internet net activations up 27.9% to 22,620 with 8%
residential Internet revenue growth; on track to deliver
approximately 900,000 new fibre locations in 2022
- Broadband leadership underscored with upcoming launches of 8
Gbps symmetrical pure fibre Internet service in select areas of
Toronto with data upload speeds
250 times faster than cable, and Wi-Fi 6E technology; and newly
launched Fibe TV service powered by Google Android TV
- Media revenue up 8.7% with 5.6% adjusted EBITDA growth;
digital revenue4 up 55%
- Reconfirming all 2022 financial guidance targets
MONTRÉAL, Aug. 4, 2022
/CNW/ - BCE Inc. (TSX: BCE) (NYSE: BCE) today reported results for
the second quarter (Q2) of 2022.
"The Bell team continues to deliver for all the stakeholders we
serve. Q2 marked another quarter of consistent operational
execution, demonstrating that our strategy to reach more Canadians
in communities large and small across our footprint with the best
network technologies, as well as our efforts to champion the
customer experience is the right approach to move us forward," said
Mirko Bibic, President and CEO of
BCE and Bell Canada.
"We continue to see momentum in wireless with 110,761 mobile
phone net subscriber activations and strong service revenue growth.
Our retail Internet net activations were also up 27.9% with 8%
residential Internet revenue growth. These excellent results are a
testament to the significant and unprecedented investments we're
making in network connectivity, reliability, and our fibre
footprint expansion. In addition, our continued investments in
customer experience and digital support options are encouraging
customers to stay with Bell, as reflected in a third consecutive
quarter of improved churn for our wireless, residential Internet
and Fibe TV services.
The Bell team continues to be there for our customers with
reliable, robust networks and innovative products and services. By
the end of the year, we will have invested $14 billion since 2020, including planned capital
expenditures of approximately $5
billion for 2022, the highest amount ever by a Canadian
telecom company in both a single year and over a three-year cycle.
These massive investments are going towards our fibre-to-the-home
and 5G wireless core networks, ongoing expansion into rural and
remote communities, as well as on boosting capacity and ensuring
resiliency. Most importantly, we're investing in our people. We
welcomed 570 new grads and interns to our team across the country,
and are looking to hire over 1,000 team members with high-tech
skills by the end of this year."
_________________________
|
1
|
Adjusted EBITDA is a
total of segments measure, adjusted net earnings is a non-GAAP
financial measure and adjusted EPS is a non-GAAP ratio. Refer to
the Non-GAAP and Other Financial Measures section in this
news release for more information on these measures.
|
2
|
Refer to
the Key Performance Indicators (KPIs) section in
this news release for more information on churn.
|
3
|
Mobile phone blended
ARPU is calculated by dividing wireless operating service revenues
by the average mobile phone subscriber base for the specified
period and is expressed as a dollar unit per month. Refer to the
Key Performance Indicators (KPIs) section in this news
release for more information on blended ARPU.
|
4
|
Digital revenues are
comprised of advertising revenue from digital platforms including
web sites, mobile apps, connected TV apps and OOH digital
assets/platforms, as well as advertising procured through Bell
digital buying platforms and subscription revenue from
direct-to-consumer services and Video on Demand
services.
|
KEY BUSINESS DEVELOPMENTS
Building the Best Networks
Bell expanded availability
of its 3-gigabit per second symmetrical Internet service to Québec
City and announced that 8-gigabit per second symmetrical Internet
speeds will be available for customers in the coming months,
starting in Toronto this Fall.
Bell is also launching Wi-Fi 6E, the fastest Wi-Fi technology
available today. Bell expanded pure fibre Internet access to
approximately 160,000 additional homes and businesses in
London, Ontario; approximately
5,000 in Kingsville, Ontario; and
over 20,000 homes and businesses in New
Brunswick. Bell continued to work closely with governments
on projects to bring broadband access to remote and other hard to
serve areas including to the Rural Municipality of Kingston in conjunction with the PEI Broadband
Fund and the Municipality of Kingston, and in Northern Québec and
Newfoundland and Labrador with the federal Universal Broadband
Fund.
5G Leadership and Technology Innovation
Bell announced
the commercial availability of 5G+ in Toronto and parts of Southern Ontario, the next evolution of 5G
using the 3500 MHz spectrum obtained in the ISED auction last year.
Bell expects to cover approximately 40% of the Canadian population
with 5G+ by the end of 2022, including the Greater Toronto Area, Halifax, Nova Scotia, St. John's, Newfoundland and Sherbrooke, Québec. Bell also announced the
upcoming rollout of its nationwide 5G standalone core to enable the
development and delivery of new and more advanced services with
lower latency and greater capacity. Bell continues to work with
partners on 5G and network innovations including Numana in Québec
on an open quantum telecommunications network and The PIER in
Halifax for a 5G-ready wireless
private network at its innovation hub.
Delivering compelling content
Bell Media signed a
long-term agreement with the NFL to continue to be the exclusive
television broadcast partner of the NFL in Canada with TSN, CTV and RDS airing games
across the country. TSN, RDS, CTV and Noovo delivered extensive
coverage of the Formula1 Canadian Grand Prix, and TSN and RDS
kicked off the CFL 2022 season. Bell Media announced the details of
its English and French language Fall 2022 – Winter 2023 slate as
part of its Upfront 22 and Futur 22 events, including nearly 100
titles of original programming. The Amazing Race Canada is back
after a two-year hiatus with Season 8 on CTV, Crave Original
Canada's Drag Race Season Three is now streaming on Crave, and
Shoresy was the most-watched Canadian series launch on Crave.
Bell kicked off the summer festival season supporting marquee
events across the country including an expansion of its sponsorship
agreement with evenko as presenting sponsor of Osheaga, îLESONIQ
and LASSO Montréal festivals, presenting sponsor of the Cavendish
Beach Music Festival in PEI, the Area 506 festival in New Brunswick, and the Bell Grandstand Show at
the Calgary Stampede. Bell continues to be a leader in Canada's
rapidly growing esports community with the renewal and expansion of
its partnership with OverActive Media, a global esports and
entertainment organization, and the recent unveiling of the Raptors
Uprising gaming hub, the Bell Gaming Centre. Bell Fibe TV customers
in Ontario and Québec can now
enjoy new capabilities and features including access to the Google
Play app catalogue, voice remote powered by Google Assistant,
universal search and Cloud PVR, backed by Google Android TV.
Bell for Better: Better World, Better Communities, Better
Workplace
Bell was the highest ranked telco in the world and
#4 overall in Canada on the Best
50 Corporate Citizens list compiled by Corporate Knights. Bell's
science-based targets for greenhouse gas emissions reduction have
been approved by the Science Based Targets initiative
(SBTi)1. Science-based targets are emissions reduction
targets in line with what the latest climate science deems
necessary to meet the goals of the Paris Agreement to limit global
warming to 1.5°C above pre-industrial levels. Bell achieved
ISO 50001 certification of its energy management system for a
third consecutive year, and is the first communications company in
North America to have its energy
management system ISO 50001 certified. IDC Canada once again named
Bell as a cybersecurity services leader in their annual Canadian
Security Services Vendor Assessment report, the only
telecommunications company in Canada to be recognized as a leader five times
in a row by IDC. The Winnipeg Blue Bombers and Bell MTS announced a
new grant program to help over 100 youth play football this year.
Northwestel sold its fibre-to-the-home assets in Yukon to a group of 13 First Nation
development corporations, as part of the Shared Pathways Network
partnership with the consortium.
Bell welcomed 570 new grads and interns, and we continue to
exceed our BIPOC diversity target of 40%. Bell also plans to hire
over 1,000 people for highly-skilled technical roles this year
including in AI/ML, Cloud, Cybersecurity, 5G and software
development. Bell became a member of the Tent Partnership for
Refugees to explore hiring and training opportunities for refugees
in the private sector.
__________________________
|
1
|
For more information
about our science-based targets, please refer to page 19 of our
BCE's 2021 Annual Information Form dated March 3, 2022
|
BCE Q2 RESULTS
Financial Highlights
($ millions except per
share amounts) (unaudited)
|
Q2
2022
|
Q2
2021
|
%
change
|
BCE
|
|
|
|
Operating
revenues
|
5,861
|
5,698
|
2.9 %
|
Net earnings
|
654
|
734
|
(10.9 %)
|
Net earnings
attributable to common shareholders
|
596
|
685
|
(13.0 %)
|
Adjusted net
earnings
|
791
|
751
|
5.3 %
|
Adjusted
EBITDA
|
2,590
|
2,476
|
4.6 %
|
Net earnings per common
share (EPS)
|
0.66
|
0.76
|
(13.2 %)
|
Adjusted EPS
|
0.87
|
0.83
|
4.8 %
|
Cash flows from
operating activities
|
2,597
|
2,499
|
3.9 %
|
Capital
expenditures1
|
(1,219)
|
(1,210)
|
(0.7 %)
|
Free cash
flow1,2
|
1,333
|
1,245
|
7.1 %
|
__________________________
|
1
|
In Q2 2022, we applied
the IFRIC Agenda Decision on Demand Deposits with Restrictions on
Use arising from a Contract with a Third Party (IAS 7 – Statement
of Cash Flows) retrospectively to each prior period presented. For
further details, refer to Note 2, Basis of presentation and
significant accounting policies in our Q2 2022 shareholder
report.
|
2
|
Free cash flow is a
non-GAAP financial measure. Refer to the Non-GAAP and Other
Financial Measures section in this news release for more
information on this measure.
|
"Bell's Q2 financial results continued to demonstrate our
disciplined focus on profitable customer growth and effective
management of challenging global macroeconomic conditions, as
evidenced by another quarter of healthy consolidated revenue,
adjusted EBITDA and free cash flow growth that remain in line with
our financial guidance targets for 2022, supporting sustainable
value creation for all stakeholders," said Glen LeBlanc, Chief Financial Officer for BCE
and Bell Canada.
"This strong consolidated financial performance was underpinned
by standout results across the organization, highlighted by strong
wireless service revenue growth of 7.8%, 8% higher residential
Internet revenue, an 8.7% increase in total media revenue, and
year-over-year increases in adjusted EBITDA at all Bell operating
segments.
Our balance sheet remains very healthy with availability
liquidity1 at the end of Q2 of approximately
$3.1 billion, including $596 million in cash, substantial recurring cash
flow, a defined benefit plan that is stronger than ever, as well as
good predictability over debt service costs given no near-term debt
re-financing requirements and a high proportion of fixed-rate debt.
Overall, we have the financial strength and flexibility to execute
on our strategic priorities and capital markets objectives for
2022."
- BCE operating revenue increased 2.9% over Q2 2021 to
$5,861 million, due to 3.8% higher
service revenue of $5,233 million,
driven by strong wireless, residential Internet and media growth.
Product revenue was down 4.6% to $628
million, largely reflecting lower year-over-year business
wireline data equipment sales.
- Net earnings declined 10.9% to $654
million and net earnings attributable to common shareholders
totalled $596 million, or
$0.66 per share, down 13.0% and 13.2%
respectively. The year-over-year decreases were driven mainly by
higher other expense, reflecting net mark-to-market losses on
derivatives used to economically hedge equity settled share-based
compensation, higher depreciation and amortization expense and
increased severance, acquisition and other costs, partly offset by
higher adjusted EBITDA, lower year-over-year asset impairment
charges and a higher net return on post-employment benefit plans.
Adjusted net earnings were up 5.3% to $791
million, delivering a 4.8% increase in adjusted EPS to
$0.87.
- Adjusted EBITDA grew 4.6% to $2,590
million, reflecting year-over-year increases at all Bell
operating segments. BCE's consolidated adjusted EBITDA
margin2 increased 0.7 percentage points to 44.2% from
43.5% in Q2 2021, due to the flow-through impact of strong service
revenue growth and a decline in low-margin product sales.
- BCE capital expenditures were $1,219
million, up 0.7% from $1,210
million in Q2 2021, corresponding to a capital
intensity3 of 20.8%, compared to 21.2% last year.
Capital expenditures this quarter were focused on the continued
accelerated rollout of Bell's pure fibre and wireless 5G
networks.
- BCE cash flows from operating activities increased 3.9% to
$2,597 million compared to Q2 2021,
reflecting higher adjusted EBITDA, lower severance and other costs
paid and reduced contributions to post-employment benefit plans due
to a contribution holiday in 2022, partly offset by lower cash from
working capital and higher cash taxes paid.
- Free cash flow was $1,333
million, up 7.1% from $1,245
million in Q2 2021, as higher cash flows from operating
activities, excluding acquisition and other costs paid, was partly
offset by increased capital expenditures.
__________________________
|
1
|
Available liquidity is
a non-GAAP financial measure. Refer to the Non-GAAP and Other
Financial Measures section in this news release for more
information on this measure.
|
2
|
Adjusted EBITDA margin
is defined as adjusted EBITDA divided by operating revenues. Refer
to the Key Performance Indicators (KPIs) section in this
news release for more information on adjusted EBITDA
margin.
|
3
|
Capital intensity is
defined as capital expenditures divided by operating revenues.
Refer to the Key Performance Indicators (KPIs) section in
this news release for more information on capital
intensity.
|
Q2 OPERATING RESULTS BY SEGMENT
Bell Wireless
- Total wireless operating revenue increased 5.5% to $2,246 million.
- Service revenue grew 7.8% to $1,703
million, driven by larger mobile phone and connected device
subscriber bases and higher blended mobile phone ARPU that
reflected higher roaming revenue due mainly to higher international
travel volumes with the easing of COVID-related global travel
restrictions.
- Product revenue decreased 0.9% to $543
million as a result of fewer device upgrades by existing
subscribers.
- Wireless adjusted EBITDA increased 8.3% to $1,049 million on the flow-through of strong
service revenue growth, yielding a 1.2 percentage-point margin
increase to 46.7%.
- Bell added 110,761 total net new postpaid and prepaid mobile
phone subscribers1, 139.5% higher than 46,247 in Q2
2021.
- Postpaid mobile phone net subscriber activations totaled
83,197, compared to 44,433 in Q2 2021. The significant 87.2%
increase was the result of an 8 basis-point improvement in mobile
phone customer churn to 0.75% — our best-ever postpaid churn
result, and a 9.8% increase in gross subscriber activations driven
by greater retail store traffic compared to last year, continued 5G
momentum, immigration growth, as well as improved business customer
demand.
- Bell's prepaid mobile phone net subscriber activations were
27,564, up significantly from 1,814 in Q2 2021. The year-over-year
increase was the result of 40.7% higher gross activations,
reflecting greater market activity, including increased immigration
and travel to Canada, which also contributed to a higher customer
churn rate of 4.41%, up from 3.98% in Q2 2021.
- Bell's mobile phone customer base totalled 9,602,122 at the end
of Q2, a 4.2% increase over last year, comprising 8,747,472
postpaid subscribers, up 4.1%, and 854,650 prepaid customers, up
5.9% from last year.
- Blended mobile phone ARPU grew 3.8% to $59.54, driven by increased roaming revenue
consistent with the return of international travel as COVID
restrictions eased, and our continued focus on higher-value
subscriber loadings across all our postpaid and prepaid
brands.
- Bell's mobile connected device subscriber base¹ declined by
344, compared to a net increase of 47,449 in Q2 2021, due to higher
data device net losses, reflecting fewer low-ARPU tablet
transactions as well as higher business IoT deactivations driven
largely by one customer. Mobile connected device subscribers
totalled 2,298,327 at the end of Q2, an increase of 5.5% over last
year.
__________________________
|
1
|
Refer to the Key
Performance Indicators (KPIs) section in this news release for
more information on subscriber (or customer) units.
|
Bell Wireline
- Total wireline operating revenue decreased 0.3% to $2,995 million, compared to Q2 2021.
- Wireline service revenue was up 0.6% to $2,909 million, driven by higher residential
Internet revenue and a regulatory charge from Q2 2021 related to
the CRTC's decision on final aggregated rates for wholesale
Internet access that did not recur this year. This was partly
offset by ongoing declines in legacy voice, data and satellite TV
services, reduced sales of IP connectivity and business service
solutions revenue1, reflecting delayed project spending
by large enterprise customers because of ongoing data equipment
supply chain disruptions, and the sale of Createch on March 1, 2022.
- Product revenue decreased 23.2% to $86
million, due mainly to lower sales of data equipment to
enterprise business customers attributable to global supply chain
constraints.
- Wireline adjusted EBITDA grew 1.7% to $1,315 million, which benefitted from the
non-recurrence of the wholesale Internet regulatory impact from Q2
2021 noted above. A 1.8% reduction in operating costs also
contributed to higher wireline adjusted EBITDA and a 0.8
percentage-point improvement in margin to 43.9% this quarter,
despite the unfavourable impact of unusually high storm-related
costs and inflationary pressure particularly on fuel and labour
costs.
- Bell added 22,620 net new retail Internet
subscribers2, up 27.9% from 17,680 in Q2 2021, driven by
higher customer gross activations and lower churn within Bell's
rapidly-expanding direct fibre service footprint and improved
year-over-year small business performance. Within Bell's all-fibre
footprint, retail Internet net subscriber activations were 36,473,
up 19.5% over last year. Retail Internet subscribers totalled
3,977,387 at the end of Q2, up 6.1% from last year.
- Bell TV added 3,838 net new retail IPTV
subscribers2, compared to 4,540 in Q2 2021. At the end
of Q2, Bell served 1,907,564 retail IPTV subscribers, a 4.7%
increase compared to Q2 2021.
- Retail satellite TV net subscriber2 losses were
15,365, up from 9,468 in Q2 2021, reflecting fewer seasonal
residential activations and increased churn compared to last year
when we experienced fewer customer deactivations due to COVID.
Bell's retail satellite TV customer base totalled 816,583 at the
end of Q2, down 8.9% from last year.
- Retail residential NAS2 net losses totalled 52,712,
compared to 51,292 in Q2 2021. Bell's retail residential NAS
customer base totalled 2,207,004 at the end of Q2, a 7.3% decline
compared to last year.
__________________________
|
1
|
Business service
solutions revenues are comprised of managed services, which include
network management, voice management, hosting and security, and
professional services, which include consulting, integration and
resource services.
|
2
|
Refer to the Key
Performance Indicators (KPIs) section in this news release for
more information on subscriber (or customer) units.
|
Bell Media
- Media operating revenue increased 8.7% to $821 million compared to Q2 2021, driven by the
return of the F1 Canadian Grand Prix, continued strong digital
media growth, advertising increases across Bell Media's specialty
TV sports and news services, stronger radio and out of home
advertiser demand as the COVID recovery continues, and higher
subscriber revenue from Crave streaming subscriber growth.
- Digital revenue grew 55%, the result of strong Crave
direct-to-consumer growth and continued rapid scaling of our
strategic audience management (SAM) TV media sales tool.
- TSN and RDS are Canada's top-ranked English and French-language
sports networks for the 2021/2022 broadcast year to date.
- Noovo has outpaced its French-language conventional TV
competitors in viewership growth for the 2021/2022 broadcast year
to date with primetime audiences up 5%.
- Adjusted EBITDA was up 5.6% to $226
million on the flow-through of higher year-over-year
operating revenue. However, margin declined to 27.5% from 28.3% in
Q2 2021, due to a 10.0% increase in operating costs that reflected
the return of the F1 Canadian Grand Prix and increased overall
activity as the economy returns to more normal levels.
COMMON SHARE DIVIDEND
BCE's Board of Directors has
declared a quarterly dividend of $0.92 per common share, payable on October 15, 2022 to shareholders of record at the
close of business on September 15,
2022.
OUTLOOK FOR 2022
BCE confirmed its financial guidance
targets for 2022, as provided on February 3,
2022, as follows:
|
2021
Results
|
2022
Guidance
|
Revenue
growth
|
2.5 %
|
1% – 5%
|
Adjusted EBITDA
growth
|
3.0 %
|
2% – 5%
|
Capital
intensity1
|
20.7 %
|
21 %
|
Adjusted EPS
growth
|
5.6 %
|
2% – 7%
|
Free cash flow
growth1
|
(11.0 %)
|
2% – 10%
|
Annualized common
dividend per share
|
$3.50
|
$3.68
|
__________________________
|
1
|
In Q2 2022, we applied
the IFRIC Agenda Decision on Demand Deposits with Restrictions on
Use arising from a Contract with a Third Party (IAS 7 – Statement
of Cash Flows) retrospectively to each prior period presented. For
further details, refer to Note 2, Basis of presentation and
significant accounting policies in our Q2 2022 shareholder
report.
|
For the full-year 2022, we expect growth in adjusted
EBITDA, a reduction in contributions to post-employment
benefit plans and payments under other post-employment benefit
plans, and lower cash income taxes, will drive higher free
cash flow.
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 2022
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 2022 results
on Thursday, August 4 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 6085726#. A
replay will be available until midnight on September 4, 2022 by dialing 1-800-408-3053
or 905-694-9451 and entering passcode 6368475#. A live audio
webcast of the conference call will be available on BCE's website
at BCE Q2 2022 conference call.
NON-GAAP AND OTHER FINANCIAL MEASURES
BCE uses various financial measures to assess its business
performance. Certain of these measures are calculated in accordance
with International Financial Reporting Standards (IFRS or GAAP)
while certain other measures do not have a standardized meaning
under GAAP. We believe that our GAAP financial measures, read
together with adjusted non-GAAP and other financial measures,
provide readers with a better understanding of how management
assesses BCE's performance.
National Instrument 52-112, Non-GAAP and Other Financial
Measures Disclosure (NI 52-112), prescribes disclosure
requirements that apply to the following specified financial
measures:
- Non-GAAP financial measures;
- Non-GAAP ratios;
- Total of segments measures;
- Capital management measures; and
- Supplementary financial measures.
This section provides a description and classification of the
specified financial measures contemplated by NI 52-112 that we use
in this news release to explain our financial results except
that, for supplementary financial measures, an explanation of such
measures is provided where they are first referred to in this news
release if the supplementary financial measures' labelling is not
sufficiently descriptive.
Non-GAAP Financial Measures
A non-GAAP financial measure is a financial measure used to
depict our historical or expected future financial performance,
financial position or cash flow and, with respect to its
composition, either excludes an amount that is included in, or
includes an amount that is excluded from, the composition of the
most directly comparable financial measure disclosed in BCE's
consolidated primary financial statements. We believe that non-GAAP
financial measures are reflective of our on-going operating results
and provide readers with an understanding of management's
perspective on and analysis of our performance.
Below are descriptions of the non-GAAP financial measures that
we use in this news release to explain our results as well as
reconciliations to the most comparable IFRS financial measures.
Adjusted net earnings – Adjusted net earnings is a
non-GAAP financial measure and it does not have any standardized
meaning under IFRS. Therefore, it is 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 equity losses (gains) on investments in associates and joint
ventures, net losses (gains) on investments, early debt redemption
costs, impairment of assets and discontinued operations, net of tax
and NCI.
We use adjusted net earnings and we believe that certain
investors and analysts use this measure, 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 equity losses (gains) on
investments in associates and joint ventures, 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 directly comparable IFRS financial measure is net
earnings attributable to common shareholders.
The following table is a reconciliation of net earnings
attributable to common shareholders to adjusted net earnings on a
consolidated basis.
($ millions)
|
|
|
|
Q2 2022
|
Q2 2021
|
Net earnings
attributable to common shareholders
|
596
|
685
|
Reconciling
items:
|
|
|
Severance,
acquisition and other costs
|
40
|
7
|
Net
mark-to-market losses (gains) on derivatives used to
economically hedge equity settled share-based
compensation plans
|
81
|
(100)
|
Net equity
losses on investments in associates and joint
ventures
|
42
|
14
|
Net gains
on investments
|
(16)
|
-
|
Early debt
redemption costs
|
-
|
-
|
Impairment
of assets
|
106
|
164
|
Income
taxes for above reconciling items
|
(62)
|
(18)
|
NCI for
the above reconciling items
|
4
|
(1)
|
Adjusted net
earnings
|
791
|
751
|
Available liquidity – Available liquidity is a non-GAAP
financial measure and it does not have any standardized meaning
under IFRS. Therefore, it is unlikely to be comparable to similar
measures presented by other issuers.
We define available liquidity as cash, cash equivalents and
amounts available under our securitized trade receivable program
and our committed bank credit facilities.
We consider available liquidity to be an important indicator of
the financial strength and performance of our businesses because it
shows the funds available to meet our cash requirements, including
for, but not limited to, capital expenditures, post-employment
benefit plans funding, dividend payments, the payment of
contractual obligations, maturing debt, on-going operations, the
acquisition of spectrum, and other cash requirements. We
believe that certain investors and analysts use available liquidity
to evaluate the financial strength and performance of our
businesses. The most directly comparable IFRS financial measure is
cash.
The following table is a reconciliation of cash to available
liquidity on a consolidated basis.
($ millions)
|
|
|
|
June 30,
2022
|
December 31,
2021
|
Cash1
|
596
|
289
|
Amounts available under
our securitized trade receivables program2
|
400
|
400
|
Amounts available under
our committed bank credit facilities3
|
2,091
|
2,789
|
Available
liquidity1
|
3,087
|
3,478
|
__________________________
|
1
|
In Q2 2022, we applied
the IFRIC Agenda Decision on Demand Deposits with Restrictions on
Use arising from a Contract with a Third Party (IAS 7 – Statement
of Cash Flows) retrospectively to each prior period presented. For
further details, refer to Note 2, Basis of presentation and
significant accounting policies in our Q2 2022 shareholder
report.
|
2
|
At June 30, 2022 and
December 31, 2021, $400 million was available under our securitized
trade receivables program, under which we borrowed $900 million as
at June 30, 2022 and December 31, 2021. Loans secured by trade
receivables are included in Debt due within one year in our
consolidated financial statements.
|
3
|
At June 30, 2022 and
December 31, 2021, respectively, $2,091 million and $2,789 million
were available under our committed bank credit facilities, given
outstanding commercial paper of $1,093 million in U.S.
dollars ($1,409 million in Canadian dollars) and $561 million in
U.S. dollars ($711 million in Canadian dollars) as at June 30, 2022
and December 31, 2021, respectively. Commercial paper outstanding
is included in Debt due within one year in our consolidated
financial statements.
|
Free cash flow – Free cash flow is a non-GAAP
financial measure and it does not have any standardized meaning
under IFRS. Therefore, it is unlikely to be comparable to similar
measures presented by other issuers.
We define free cash flow as cash flows from operating
activities, excluding cash from discontinued operations,
acquisition and other costs paid (which include significant
litigation costs) and voluntary pension funding, less capital
expenditures, preferred share dividends and dividends paid by
subsidiaries to NCI. We exclude cash from discontinued operations,
acquisition and other costs paid and voluntary pension funding
because they affect the comparability of our financial results and
could potentially distort the analysis of trends in business
performance. Excluding these items does not imply they are
non-recurring.
We consider free cash flow to be an important indicator of the
financial strength and performance of our businesses. Free cash
flow shows how much cash is available to pay dividends on common
shares, repay debt and reinvest in our company. We believe that
certain investors and analysts use free cash flow to value a
business and its underlying assets and to evaluate the financial
strength and performance of our businesses. The most directly
comparable IFRS financial measure is cash flows from operating
activities.
The following table is a reconciliation of cash flows from
operating activities to free cash flow on a consolidated basis.
($ millions)
|
|
|
|
Q2 2022
|
Q2 2021
|
Cash flows from
operating activities
|
2,597
|
2,499
|
Capital
expenditures
|
(1,219)
|
(1,210)
|
Cash dividends paid on
preferred shares
|
(34)
|
(31)
|
Cash dividends paid by
subsidiaries to NCI
|
(14)
|
(15)
|
Acquisition and other
costs paid
|
3
|
2
|
Free cash
flow
|
1,333
|
1,245
|
Non-GAAP Ratios
A non-GAAP ratio is a financial measure disclosed in the form of
a ratio, fraction, percentage or similar representation and that
has a non-GAAP financial measure as one or more of its
components.
Below is a description of the non-GAAP ratio that we use in this
news release to explain our results.
Adjusted EPS – Adjusted EPS is a non-GAAP ratio and it
does not have any standardized meaning under IFRS. Therefore, it is
unlikely to be comparable to similar measures presented by other
issuers.
We define adjusted EPS as adjusted net earnings per BCE common
share. Adjusted net earnings is a non-GAAP financial measure. For
further details on adjusted net earnings, refer to Non-GAAP
Financial Measures above.
We use adjusted EPS, and we believe that certain investors and
analysts use this measure, 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 equity losses (gains) on investments in
associates and joint ventures, 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.
Total of Segments Measures
A total of segments measure is a financial measure that is a
subtotal or total of 2 or more reportable segments and is disclosed
within the Notes to BCE's consolidated primary financial
statements.
Below is a description of the total of segments measure that we
use in this news release to explain our results as well as a
reconciliation to the most comparable IFRS financial measure.
Adjusted EBITDA – Adjusted EBITDA is a total of segments
measure. We define adjusted EBITDA as operating revenues less
operating costs as shown in BCE's consolidated income
statements.
The most directly comparable IFRS financial measure is net
earnings. The following table is a reconciliation of net earnings
to adjusted EBITDA on a consolidated basis.
($ millions)
|
|
|
|
Q2 2022
|
Q2 2021
|
Net earnings
|
654
|
734
|
Severance, acquisition
and other costs
|
40
|
7
|
Depreciation
|
933
|
905
|
Amortization
|
266
|
248
|
Finance
costs
|
|
|
Interest
expense
|
269
|
268
|
Net
(return) interest on post-employment benefit plans
|
(7)
|
5
|
Impairment of
assets
|
106
|
164
|
Other expense
(income)
|
97
|
(91)
|
Income taxes
|
232
|
236
|
Adjusted
EBITDA
|
2,590
|
2,476
|
Supplementary Financial Measures
A supplementary financial measure is a financial measure that is
not reported in BCE's consolidated financial statements, and is, or
is intended to be, reported periodically to represent historical or
expected future financial performance, financial position, or cash
flows.
An explanation of such measures is provided where they are first
referred to in this news release if the supplementary financial
measures' labelling is not sufficiently descriptive.
KEY PERFORMANCE INDICATORS (KPIs)
We use adjusted
EBITDA margin, blended ARPU, capital intensity, churn and
subscriber (or customers or NAS) 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 2022 annualized common share dividend, our
network deployment plans and anticipated capital expenditures, our
plans to deliver faster Internet and Wi-Fi speeds and related
offerings, the expectation that we have the financial strength and
flexibility to execute on our strategic priorities and capital
markets objectives in 2022, our goal to achieve our science-based
targets (SBTs) for greenhouse gas (GHG) emissions reduction, 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 4, 2022 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 4,
2022. 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. As most public health restrictions
in Canada have been lifted,
pandemic-related effects on consumer caution and travel are assumed
to continue to fade over 2022 and 2023. In particular, we have
assumed:
- Slowing economic growth, given the Bank of Canada's most recent
estimated growth in Canadian gross domestic product of 3.5% in
2022, representing a decrease from the earlier estimate of
4.25%
- Elevated consumer price index (CPI) inflation driven by sharp
increases in energy and food prices as well as supply disruptions
and strong demand for goods
- Tight labour market leading to rising wage growth
- Modest household consumption growth supported by the spending
of some of the savings accumulated during the pandemic
- Business investment outside the oil and gas sector supported by
solid demand, improved business confidence and a push to alleviate
capacity constraints
- Higher interest rates
- Higher immigration
- The conflict between Russia
and Ukraine affecting the Canadian
economy through higher food and gasoline prices
- 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 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 2022
- Declines in broadcasting distribution undertaking (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 mobile phone net additions and growth of our prepaid
subscriber base
- Continued strong competitive intensity and promotional activity
across all regions and market segments
- Ongoing expansion and deployment of 5G and 5G+ wireless
networks, offering competitive coverage and quality
- Continued diversification of our distribution strategy with a
focus on expanding direct-to-consumer (DTC) and online
transactions
- Growth in mobile phone blended ARPU, driven by growth in 5G
subscriptions, and increased roaming revenue from the easing of
travel restrictions implemented as a result of the COVID-19
pandemic, partly offset by reduced data overage revenue due to the
continued adoption of unlimited plans
- Accelerating business customer adoption of advanced 5G, 5G+ and
IoT solutions
- Improving wireless handset device availability in addition to
stable device pricing and margins
- Realization of cost savings related to operational efficiencies
enabled by changes in consumer behaviour, digital adoption, product
and service enhancements, new call centre and digital investments
and other improvements to the customer service experience
- No adverse material financial, operational or competitive
consequences of changes in or implementation of 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:
- Further deployment of direct fibre to more homes and businesses
within our wireline footprint
- 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, moderated by
growing our share of competitive residential service bundles
- 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
- 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 operating efficiencies
enabled by a growing direct fibre footprint, changes in consumer
behaviour and product innovation, expanding self-serve
capabilities, other improvements to the customer service
experience, management workforce reductions including attrition and
retirements, and lower contracted rates from our suppliers
- No adverse material financial, operational or competitive
consequences of changes in or implementation of 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 expected to reflect continued scaling of our
strategic audience management (SAM) TV and Bell
demand-side-platform (DSP) buying platforms, a gradual recovery in
advertising, as well as direct-to-consumer (DTC) subscriber
growth
- Continued escalation of media content costs to secure quality
programming, as well as the continued return to normal volumes of
entertainment programming
- Continued scaling of Crave through broader content offering,
user experience improvements and Crave Mobile
- Continued investment in Noovo original programming to better
serve our French-language customers with a wider array of content
on their preferred platforms
- Leveraging of first-party data to improve targeting,
advertisement delivery and attribution
- 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
- No adverse material financial, operational or competitive
consequences of changes in or implementation of 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 2022:
- An estimated post-employment benefit plans service cost of
approximately $255 million
- An estimated net return on post-employment benefit plans of
approximately $50 million, instead of
$70 million
- Depreciation and amortization expense of approximately
$4,700 million to $4,750 million
- Interest expense of approximately $1,075
million to $1,125 million
- Interest paid of approximately $1,125
million to $1,175 million
- An average effective tax rate of approximately 27%
- NCI of approximately $60
million
- Contributions to post-employment benefit plans of approximately
$150 million, instead of $200 million
- Payments under other post-employment benefit plans of
approximately $75 million
- Income taxes paid (net of refunds) of approximately
$800 million to $900 million
- Weighted average number of BCE common shares outstanding of
approximately 911 million
- An annual common share dividend of $3.68 per share
Assumptions underlying expected reductions in
contributions to our defined benefit pension plans
Our
forward-looking statements are also based on the following
principal assumptions underlying expected reductions in
contributions to our defined benefit pension plans:
- At the relevant time, our defined benefit (DB) pension plans
will remain in funded positions with going concern surpluses and
maintain solvency ratios that exceed the minimum legal requirements
for a contribution holiday to be taken
- No significant declines in our DB pension plans' financial
position due to declines in investment returns or interest
rates
- No material experience losses from other unforeseen events such
as through litigation or changes in laws, regulations or actuarial
standards
Assumptions underlying our GHG emissions reduction
targets
Our GHG emissions reduction targets are based on
a number of assumptions including, without limitation, the
following principal assumptions:
- Implementation of various corporate and business initiatives to
reduce our electricity and fuel consumption, as well as reduce
other direct and indirect GHG emissions enablers
- No new corporate initiatives, business acquisitions or
technologies that would materially increase our anticipated levels
of GHG emissions
- Our ability to purchase sufficient credible carbon credits and
renewable energy certificates to offset or further reduce our GHG
emissions, if and when required
- No negative impact on the calculation of our GHG emissions from
refinements in or modifications to international standards or the
methodology we use for the calculation of such GHG emissions
- No required changes to our SBTs pursuant to the SBTi
methodology that would make the achievement of our updated SBTs
more onerous
- Sufficient supplier engagement and collaboration in setting
their own SBTs and sufficient collaboration with partners in
reducing their own GHG emissions
The foregoing assumptions, although considered reasonable by BCE
on August 4, 2022, 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 2022 financial
guidance, are listed below. The realization of our forward-looking
statements, including our ability to meet our 2022 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 adverse effects of the
COVID-19 pandemic, including from the restrictive measures
implemented or to be implemented as a result thereof, and the
adverse effects of the conflict between Russia and Ukraine, including from the economic sanctions
imposed or to be imposed as a result thereof, and supply chain
disruptions resulting therefrom; adverse economic and financial
market conditions, including from the COVID-19 pandemic and the
conflict between Russia and
Ukraine; 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
disruptions and disintermediation in each of our business segments;
changing customer behaviour 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
including, without limitation, concerning the conditions and prices
at which access to our networks may be mandated and spectrum may be
acquired in auctions; the inability to protect our physical and
non-physical assets from events such as information security
attacks, which risk may be exacerbated by the conflict between
Russia and Ukraine, unauthorized access or entry, fire
and natural disasters; the failure to implement effective data
governance; the failure to evolve and transform our networks,
systems and operations using next-generation technologies while
lowering our cost structure; the inability to drive a positive
customer experience; the failure to attract, develop and retain a
diverse and talented team capable of furthering our strategic
imperatives; labour disruptions and shortages; the failure to
maintain operational networks; service interruptions or outages due
to legacy infrastructure and the possibility of instability as we
transition towards converged wireline and wireless networks; the
failure by us, or by other telecommunications carriers on which we
rely to provide services, to complete planned and sufficient
testing, maintenance, replacement or upgrade of our or their
networks, equipment and other facilities, which could disrupt our
operations including through network failures; the risk that we may
need to incur significant unplanned capital expenditures to provide
additional capacity and reduce network congestion; the complexity
of our operations; the failure to implement or maintain highly
effective processes and information technology (IT) systems; 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; our dependence on third-party suppliers, outsourcers, and
consultants to provide an uninterrupted supply of the products and
services we need; the failure of our vendor selection, governance
and oversight processes, including our management of supplier risk
in the areas of security, data governance and responsible
procurement; the quality of our products and services and the
extent to which they may be subject to 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; 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, and the inability to generate
anticipated benefits from acquisitions and corporate
restructurings; the failure to evolve practices to effectively
monitor and control fraudulent activities; pension obligation
volatility and increased contributions to post-employment benefit
plans; unfavourable resolution of legal proceedings; the failure to
develop and implement strong corporate governance practices and
compliance frameworks and to comply with legal and regulatory
obligations; the failure to recognize and adequately respond to
climate change and other environmental concerns and expectations;
pandemics, epidemics and other health risks, including health
concerns about radio frequency emissions from wireless
communications devices and equipment; the inability to adequately
manage social issues; and internal factors, such as the failure to
implement sufficient corporate and business initiatives, as well as
various external factors which could challenge our ability to
achieve our ESG targets including, without limitation, those
related to GHG emissions reduction and diversity, equity and
inclusion.
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 2021 Annual
MD&A dated March 3, 2022
(included in BCE's 2021 Annual Report) and BCE's 2022 First and
Second Quarter MD&As dated May 4,
2022 and August 3, 2022,
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