Stock Name: BCE
Amount: CAD 0.5425
Announcement Date: 03/05/2012
Record Date: 13/06/2012
Dividend Detail:
BCE Q1 net earnings attributable to common shareholders of $574 million,
up 14.1%; Adjusted net earnings(1) attributable to common shareholders of $580 million, up 6.8%
Cash flows from operating activities up 63.2%, while free cash flow(3) increases 23.4%
Bell revenue growth of 11.6% and EBITDA(2) growth of 6.6% reflect strong contributions from Bell Wireless and Bell
Media
Best Q1 Wireless EBITDA growth in five years at 13.0%; wireless service
margin expands to 42.9% on 6% increase in service revenue; Postpaid net
activations of 62,576 reflect continued strong smartphone adoption with
smartphone users now representing 52% of postpaid subscriber base
Bell Fibe TV net activations of 33,443 bring total Fibe TV subscriber
base to 120,000; Bell TV now serves more than 2.1 million customers
across Canada
Bell Wireline maintains relatively stable margin of 38.9% in a declining voice revenue environment on reduction in operating costs
This news release contains forward-looking statements. For a description
of the related risk factors and assumptions please see the section
entitled "Caution Concerning Forward-Looking Statements" later in this
release.
MONTREAL, May 3, 2012 /CNW Telbec/ - BCE Inc. (TSX, NYSE: BCE), Canada's
largest communications company, today reported BCE and Bell results for
the first quarter (Q1) of 2012.
BCE reported Q1 net earnings attributable to common shareholders of $574
million, up 14.1% from $503 million last year, and adjusted net
earnings attributable to common shareholders of $580 million, an
increase of 6.8% compared to $543 million in Q1 2011. Earnings per
share (EPS) of $0.74 per share and Adjusted EPS(1) of $0.75 per share were up 10.4% and 4.2%, respectively, compared to
$0.67 and $0.72 per share in Q1 2011.
Bell delivered revenue growth of 11.6%, reflecting significant
contributions from Bell Media - formed in April 2011 after Bell
acquired CTV - and Bell Wireless, which reported higher service
revenues driven by a growing postpaid subscriber base and higher
average revenue per user (ARPU). These growth services offset lower
wireline revenue, reflecting continued decline in local and
long-distance voice services that was nevertheless improved in Q1 over
the previous quarter due to improved residential local access line
retention and Fibe TV pull-through. Bell EBITDA increased 6.6% in the
quarter on the strength of wireless EBITDA growth (up 13%), the
positive impact of the CTV acquisition and improved wireline operating
costs.
"The Bell team's successful execution of our Strategic Imperatives
resulted in solid Q1 financial performance, with significant growth in
Bell revenue and EBITDA reflecting especially strong contributions by
Bell Wireless and Bell Media," said George Cope, President and CEO of
Bell Canada and BCE. "We look forward to welcoming Montreal-based
Astral Media to the Bell team later this year as Bell works to expand
our media leadership, delivering the best content across the best
networks to any broadband screens our customers choose."
"Bell's strategic investments in world-leading network technology and
Canada's best content continue to drive steady growth in our Fibe TV
and broadband mobile services. In Q1, we increased our smartphone
customers and mobile data revenue significantly as we continued to roll
out our new 4G LTE mobile network and enhance our industry-leading Bell
Mobile TV service. And with next-generation Fibe TV coverage expanded
to 2.2 million homes across Qu��bec City, Montr��al and Toronto, Fibe TV
customer additions more than tripled over last year. The popularity of
Fibe TV is improving performance in our other residential services too,
as almost 9 out of 10 new Fibe TV customers also chose both Bell
Internet and Bell Home Phone," said Mr. Cope.
Bell is committed to achieving a clear goal - to be recognized by
customers as Canada's leading communications company - through the
execution of 6 Strategic Imperatives: Invest in Broadband Networks and
Services, Accelerate Wireless, Leverage Wireline Momentum, Expand Media
Leadership, Improve Customer Service, and Achieve a Competitive Cost
Structure.
"Our execution in the first quarter demonstrated a solid start to the
year, highlighted by strong wireless performance, stabilizing Business
Markets performance, continued competitive price discounting in
residential wireline, and Media results that delivered a strong
contribution to earnings and cash flow. With healthy year-over-year
growth in EBITDA, Adjusted EPS and Free Cash Flow in Q1, our 2012
financial plan is on track as we reconfirm today all our Bell and BCE
guidance targets for the year," said Siim Vanaselja, Chief Financial
Officer for Bell and BCE. "Our continued strong earnings and Free Cash
Flow generation provides solid support for BCE's 2012 increased
dividend, all underpinned by a sound balance sheet and credit metrics.
Additionally, our pending acquisition of Astral, expected to close in
the second half of the year, will be EPS and cash flow accretive in
2013 - positioning us well to continue executing on our dividend growth
objective going forward."
Bell Fibe growth in Qu��bec City
Qu��bec City - the site of Bell's Annual General Shareholder Meeting
being held today - is the focus of a $240 million investment in
fibre-to-the-home technology that is bringing the fastest Internet
speeds and the best TV service available to residents of Qu��bec's
capital. Bell announced yesterday that it will hire an additional 300
new Bell team members in Qu��bec City in the remainder of 2012 to
support its ongoing Fibe buildout in the region.
BCE first in Canada to achieve significant Internet milestone of 3
million customers
Building on its position as Canada's largest Internet Service Provider,
BCE announced today that Bell and Bell Aliant now serve more than 3
million residential and business Internet customers as of Q1 2012. With
more than $3 billion in annual capital investment, Bell companies are
bringing the latest-generation fibre optic technology and the fastest
Internet speeds to customers in centres across eastern Canada.
Competition Bureau completes review of Bell's acquisition of ownership
position in MLSE, confirms it has no plans to challenge
Yesterday, the Competition Bureau confirmed that it has no plans to
challenge Bell's acquisition of an ownership position in Maple Leaf
Sports and Entertainment (MLSE), while noting that the Competition Act
provides a one-year period following completion of such transactions
during which it can bring the matter before the Tribunal. MLSE is
Canada's largest sports and entertainment company and owner of the
premier professional sports teams in Canada's largest marketplace: The
Toronto Maple Leafs, Toronto Raptors, Toronto Marlies and Toronto FC.
On December 9, 2011, Bell announced it had, in a joint ownership
arrangement with Rogers Communications Inc. (Rogers), agreed to
purchase a net 75% ownership position in MLSE from Ontario Teachers'
Pension Plan Board. The acquisition secures on a long-term basis access
to TV, mobile, digital online and radio broadcast rights for both Bell
and Rogers to MLSE's sports teams. This investment in MLSE accelerates
Bell's strategy to deliver Canada's best content across world-leading
broadband networks to any screen customers may choose. The transaction
is expected to close in mid-2012 following Canadian Radio-television
and Telecommunications Commission (CRTC) and sports league approvals.
Acquisition of Astral Media
In March, BCE announced the acquisition of Montr��al-based Astral Media
Inc. and its leading specialty and pay television channels, radio
stations, digital media properties, and national out-of-home
advertising platforms. Expected to close in the second half of 2012,
the acquisition will greatly enhance Bell's competitive position in the
French-language media market, improve control of content costs, and
present new opportunities for cross-platform media and advertising
innovation at Bell Media.
NCIB program
On March 12, 2012, BCE completed its Normal Course Issuer Bid (NCIB)
program, having repurchased and canceled 6,104,905 common shares, at an
average price of $40.95 per share, for a total cost of $250 million.
Since December 2008, BCE has repurchased more than 62 million shares at
an average price of $27.85 per share for a total cost of $1.7 billion.
Bell operational performance
Bell's operating revenues increased 11.6% to $4,333 million in Q1 2012.
This was the result of increased revenues from Bell Media, Bell
Wireless and Wireline data, which offset declines in local and access,
long distance as well as in equipment and other revenues. Bell's EBITDA
grew 6.6% this quarter to $1,605 million on strong performance by Bell
Wireless and the addition of Bell Media's EBITDA.
Bell Wireless EBITDA in Q1 2012 grew 13.0% to $521 million and its
service margin expanded to 42.9% from 40.3% last year, reflecting solid
wireless revenue growth of 5.5% to $1,320 million and disciplined
control over postpaid subscriber acquisition and customer retention
spending. Postpaid net activations totaled 62,576 as smartphone
adoption continued to accelerate. Smartphone users represented 52% of
total postpaid subscribers at the end of Q1, up from 34% a year
earlier. This drove significantly higher wireless data usage year over
year with services like Bell Mobile TV, which contributed to strong
mobile data revenue growth of 31% and blended ARPU growth of 4.2%.
Blended ARPU was $53.84 per month in Q1 2012, up from $51.68 per month
in Q1 2011.
Bell Wireline revenue totaled $2,579 million in the quarter, down 3.5%
from Q1 2011, while EBITDA decreased 3.9% to $1,003 million, as
competitive and wireless substitution pressures continued to affect
legacy voice and data services. This was moderated by the solid growth
in residential Internet revenue, higher IP broadband connectivity
revenues and increased data sales to our business customers. Bell
maintained relatively steady wireline margins year over year as a
result of our continued focus on managing wireline costs, which
improved 3.2%, or $52 million, in the quarter. Bell Fibe TV added
33,443 net new subscribers in Q1 2012, driving a 119% increase in total
TV net activations year over year. The activation of new Fibe customers
also led to stronger Internet acquisition with 12,393 new Internet
customers in the quarter.
Bell Media revenue was $512 million in Q1 2012, driven by advertising
sales across its television, radio and digital media properties, as
well as subscriber fees paid by broadcast distributors for carrying
Bell Media's TV services. Subscriber revenues this quarter reflected
higher rates charged to broadcast distributors for carrying leading
Bell Media specialty channels, such as TSN and RDS. Bell Media EBITDA
in Q1 2012 was $81 million, which included a $23 million non-cash
charge to amortize the fair value increment of programming rights
recognized on the acquisition of CTV.
Bell invested $680 million in new capital this quarter to support its
rapid broadband network infrastructure development, a $165 million
increase from Q1 2011. Our investments support the deployment of
broadband fibre to residential homes, neighbourhoods and businesses in
Qu��bec and Ontario and enhancements to Bell's core wireline broadband
network to support the commercial roll-out of Fibe TV and Fibe
Internet. Capital investments also increased speed and capacity in our
IP backbone network infrastructure, enhanced wireless capacity and
enabled the rapid rollout of Bell's 4G LTE mobile network which is now
available in 16 urban centres across Canada with deployment to more
centres planned for this year.
BCE results
BCE's operating revenue grew 9.9% in Q1 2012, while EBITDA increased
5.1%, mainly as a result of higher revenue at Bell, driven by the
acquisition of CTV and improved year-over-year performance at Bell
Wireless.
BCE's cash flows from operating activities were $1,198 million in Q1
2012, compared to $734 million in the same period last year due to
lower pension contributions at Bell Aliant. Free cash flow available to
BCE's common shareholders increased 23.4% to $327 million in Q1 2012.
The year-over-year improvement is attributable primarily to higher
EBITDA and positive changes in working capital due, in part, to
customer rebates paid from Bell's deferral account balance obligation
in Q1 2011 that did not occur this year.
BCE's net earnings attributable to common shareholders increased 14.1%
in Q1 2012 to $574��million, or $0.74 per share, compared to $503
million, or $0.67 per share, in the same quarter last year. The
year-over-year increase in earnings is due primarily to higher EBITDA
and lower severance, acquisition and other costs.
BCE's Adjusted EPS was $0.75 per common share in the quarter, compared
to $0.72 per common share in the previous year. The 4.2% increase
reflects higher EBITDA and a lower statutory tax rate year over year,
offset partly by higher depreciation expense, increased interest
expense attributable to long-term debt related to the CTV acquisition,
and the dilutive impact of BCE common shares issued in relation to the
CTV acquisition.
Financial Highlights | �� | �� | �� | �� | �� | �� |
($ millions except per share amounts) (unaudited) | �� | Q1 2012 | �� | Q1 2011 | �� | % change |
Bell (i) | �� | �� | �� | �� | �� | �� |
Operating Revenues | �� | 4,333 | �� | 3,882 | �� | 11.6% |
EBITDA | �� | 1,605 | �� | 1,505 | �� | 6.6% |
BCE | �� | �� | �� | �� | �� | �� |
Operating Revenues | �� | 4,909 | �� | 4,466 | �� | 9.9% |
EBITDA | �� | 1,927 | �� | 1,833 | �� | 5.1% |
Net Earnings Attributable to Common Shareholders | �� | 574 | �� | 503 | �� | 14.1% |
EPS | �� | 0.74 | �� | 0.67 | �� | 10.4% |
Adjusted EPS | �� | 0.75 | �� | 0.72 | �� | 4.2% |
Cash flows from operating activities | �� | 1,198 | �� | 734 | �� | 63.2% |
Free Cash Flow | �� | 327 | �� | 265 | �� | 23.4% |
(i) ��Bell includes the Bell Wireless, Bell Wireline and Bell Media
segments.
Bell Wireless
Bell Wireless' operating performance in Q1 2012 was highlighted by
profitable postpaid subscriber growth, as evidenced by higher blended
ARPU and disciplined spending on postpaid subscriber acquisition and
customer retention, which helped drive double-digit wireless EBITDA
growth and a higher margin year over year.
Bell Wireless operating revenues increased 5.5% in the first quarter of
2012 to $1,320 million. Service revenue was up 6.0% to $1,214 million
as a result of a larger postpaid subscriber base and growth in wireless
data usage. Product revenue decreased 5.1% in the quarter to $94
million mainly as a result of lower volumes.
Blended ARPU was $53.84 per month in Q1 2012, up 4.2% compared to $51.68
per month in Q1 2011. Growth in blended ARPU was primarily the result
of increasing data usage which reflects a greater percentage of
higher-value postpaid customers using smartphones in our subscriber
base. That was partly offset by declining voice ARPU.
Smartphone users represented 52% of total postpaid subscribers at the
end of Q1 2012, compared to 34% one year earlier.
Bell Wireless EBITDA reached $521 million in the first quarter, up
13.0%. The increase is mainly attributable to higher wireless operating
revenues and cost management as wireless operating costs increased
marginally year over year.
EBITDA margin as a percentage of wireless service revenue increased to
42.9% in Q1 2012, from 40.3% in Q1 2011, on solid service revenue
growth.
Postpaid gross activations totaled 293,572 this quarter compared to
299,657 in the first quarter of 2011, consistent with our focus on
profitable postpaid subscriber growth and increasing our mix of
higher-value customers.
Prepaid gross activations decreased 23.8% in Q1 2012 to 94,574, due
primarily to our emphasis on postpaid acquisitions as well as
competitive acquisition offers from the newer wireless entrants for
lower-ARPU subscribers.
Blended churn rate decreased to 1.8% in the quarter compared to 1.9% in
Q1 2011 due to a greater percentage of postpaid subscribers in our
customer base, year over year, as postpaid service typically has lower
churn than prepaid service. Postpaid churn this quarter was stable at
1.4%. Prepaid churn increased to 3.9% from 3.7%, due to a high level of
competitive intensity particularly at the low end of the consumer
market.
Postpaid net activations totaled 62,576 this quarter, down from 80,648
in Q1 2011, as a result of fewer gross activations.
Prepaid net customer losses increased to 83,903 in Q1 2012, from 75,356
in Q1 2011, as a result of fewer gross activations and higher churn.
The Bell Wireless client base reached 7,406,155 wireless subscribers at
the end of Q1 2012, a 2.2% increase over last year.
Bell continued to enhance its 4G HSPA+ network, which now serves more
than 97% of the Canadian population, while continuing to roll out its
next-generation 4G LTE network, which now serves 16 urban centres in 7
provinces and territories: Whitehorse, Yellowknife, Vancouver, Calgary,
Edmonton, the Great Toronto Area (GTA), Ottawa, Hamilton, London,
Kitchener-Waterloo, Guelph, Belleville, Peterborough, Montr��al, Qu��bec
City and Halifax.
Bell's leadership in 4G mobile devices continues with the announcement
of several new smartphones in Q1, including the new Galaxy S II HD LTE,
superphone available exclusively from Bell starting today.
Bell Mobility also announced the introduction of Bell PTT, a
next-generation push-to-talk service for business customers that takes
full advantage of the broader coverage and faster data speeds of Bell's
4G networks.
Bell Wireline
Bell Residential Services experienced growing market traction for Fibe
TV in Toronto, Montr��al and Qu��bec City, an improving Internet net
activations trajectory, and fewer retail residential network access
service (NAS) line losses. Richer upfront promotional discounts and
retention credits to customers, as well as ongoing legacy voice erosion
and re-pricing pressures in our business and wholesale markets
contributed to lower overall wireline revenues this quarter. Bell
wireline margins remained relatively steady as a result of our
continued focus on wireline cost reductions and stabilizing operating
performance in our Business Markets unit.
Bell Wireline revenues totaled $2,579 million in this quarter, down 3.5%
from Q1 2011. The decline reflects a decrease in local and access, long
distance, and equipment and other revenues, partly offset by slightly
higher year-over-year data revenues.
Data revenues in Q1 2012 increased 0.2% to $1,418 million, reflecting an
improving revenue trend compared to previous quarters in 2011.
Beginning in Q1 2012, we began including revenue generated from Bell's
TV services in wireline data revenues to align our reporting with that
of our Canadian and U.S. industry peers. Prior periods have been
restated to make year-over-year comparisons consistent.
Local and access revenues declined 7.0% in Q1 2012 to $678 million.
Total NAS at the end of Q1 was 6,005,126, representing a 6.4% decline
year over year. This is attributable to competition and a reduction in
access lines and digital circuits, as customers continue to adopt
wireless and IP-based technologies.
Long distance revenues declined 9.4% to $212 million this quarter.
Equipment and other revenue decreased 12.3% this quarter to $192
million.
Bell Wireline EBITDA was $1,003 million, down 3.9% from the first
quarter of 2011 due to lower operating revenues, partly offset by lower
operating costs which improved 3.2% in Q1 2012. EBITDA margin was 38.9%
this quarter, compared to 39.1% in Q1 2011.
Total TV net activations totaled 17,623 in Q1 2012, up from 8,058 in Q1
2011. TV subscriber acquisition was fueled by increased sales of Fibe
TV, which added 33,443 net new customers this quarter, reflecting
increasing customer demand as we further expanded our Fibe TV footprint
and enhanced our service bundle offers in many urban markets to include
Fibe TV and Fibe Internet services. This was moderated by lower
satellite TV net activations this quarter, due to roll-outs of IPTV
service by other competing service providers, aggressive customer
conversion offers from cable competitors, and Bell customer migrations
to Fibe TV.
The Bell TV subscriber base totaled 2,111,675 at the end of Q1 2012,
representing a 3.3% increase since the end of the first quarter of
2011.
Bell added 12,393 new net high-speed Internet customers in the first
quarter of 2012, compared to additions of 13,161 in Q1 2011. The result
this quarter represents an improvement over the previous few quarters,
reflecting the pull-through effect of Fibe TV customer activations,
continued broadband fibre service expansion, as well as fewer business
and wholesale customer deactivations.
Residential net losses in the quarter were 71,119, compared to net
losses of 64,287 in Q1 2011. Business NAS losses totaled 25,411 in Q1
2012, compared to a net gain of 5,044 in Q1 2011. The results for Q1
2011 reflected the favourable impact of wholesale customer migrations
from a competitor via a third-party reseller, which began in Q4 2010
and were completed substantially in Q2 2011. Excluding the impact of
this third-party reseller, residential NAS net losses improved 3.4%,
year over year, to 66,999 this quarter compared to 69,391 last year,
while business NAS losses were 22,700 compared to a loss of 18,303 in
Q1 2011.
Bell Media
On April 1, 2011, Bell completed its acquisition of CTV and launched the
new Bell Media segment encompassing all CTV and other Bell content
assets, including the Sympatico.ca portal.
Bell Media's operating revenue was $512 million this quarter, as
advertising revenues were supported by the maintenance of strong
audience levels in conventional and specialty TV channels, strong
subscriber revenue growth due to higher rates for broadcast
distributors carrying leading Bell Media specialty channels such as TSN
and RDS, and increasing usage of online video and mobile TV services.
Subscriber revenues in Q1 2012 reflect the implementation of higher
rates charged to broadcast distributors for Bell Media specialty sports
and non-sports services, as well as continued solid specialty channel
and digital results.
Bell Media's EBITDA was $81 million in Q1 2012. A $23 million non-cash
charge was recognized in the quarter for the amortization of the fair
value increment of certain programming rights acquired as part of the
CTV acquisition.
CTV completed the winter ratings season with 13 of the 20 top programs
among all viewers, with Big Bang Theory continuing to be the number one performer in Canada. For the spring season to date, CTV held 12 of the 20 top programs among
all viewers.
Bell Media specialty channels also continued to ongoing high viewership
levels, led by TSN which remains the #1 specialty channel in all key
demographics.
CTV's non-sports specialty services maintained strong audience growth,
led by double-digit increases for The Comedy Network, Bravo! and CP24.
For the first time in CTV history, a highly-anticipated new series - SMASH - previewed online on CTV.ca and the CTV iPad App prior to the
conventional television premiere. Similarly, CTV.ca exclusively
presented the first-ever backstage camera at the JUNO Awards.
BNN Mobile Portal, the first of many mobile-optimized sites to be
launched throughout Bell Media properties, went live during the
quarter.
Bell Media websites streamed more than 186 million video views in the
quarter and welcomed 14.7 million unique visitors on average each
month, serving up 30 million hours of video and a total of 1.9 billion
page views. Page views on CTV.ca grew 6%, with major gains in
properties such as TSN.ca and TheComedyNetwork.ca.
Bell Aliant Regional Communications
Bell Aliant's revenues in the first quarter of 2012 remained unchanged
at $682 million year over year. Bell Aliant's EBITDA decreased 1.8% to
$322 million due mainly to slightly higher operating costs in Q1 2012
compared to the same period last year.
Common Share Dividend
BCE's Board of Directors has declared a quarterly dividend of $0.5425
per common share, payable on July 15, 2012 to shareholders of record at
the close of business on June 15, 2012.
Outlook
BCE confirmed its financial guidance targets for 2012, as provided on
February 9, 2012, as follows:
�� | �� | |
�� | 2012 Guidance Issued February 9, 2012 | |
Bell (i) | �� | |
Revenue Growth | 3% - 5% | |
EBITDA Growth | 2% - 4% | |
Capital Intensity | ���16% | |
BCE | �� | |
Adjusted EPS (ii) | $3.13 - $3.18 | |
Free Cash Flow | $2,350 M - $2,500 M | |
Common dividend per share | $2.17 | |
Dividend payout ratio (iii) | �� | |
�� | - Adjusted EPS | approx. 69% |
�� | - Free Cash Flow | approx. 69% |
(i) | Bell's 2012 financial guidance for revenue, EBITDA and capital intensity is exclusive of Bell Aliant. |
(ii) | EPS before severance, acquisition and other costs and net gains/losses on investments. |
(iii) | Calculated using the mid-point of BCE's 2012 Adjusted EPS and free cash flow guidance ranges. |
Call with Financial Analysts
BCE will hold a conference call for financial analysts to discuss first
quarter results on Thursday, May 3 at 8:00 a.m. (Eastern). Media are
welcome to participate on a listen-only basis. To participate, please
dial 416-695-7848 or toll-free 1-800-952-6845 shortly before the start
of the call. A replay will be available for one week by dialing
905-694-9451 or 1-800-408-3053 and entering pass code 4187858#.
There will also be a live audio webcast of the call available on BCE's
website at: http://bce.ca/investors/investorevents/all/show/bce-q1-2012-results-conference-call. The mp3 file will be available for download on this page later in the
day.
Notes
The information contained in this news release is unaudited.
(1) | The terms Adjusted net earnings and Adjusted EPS do not have any standardized meaning according to IFRS. They are therefore unlikely to be comparable to similar measures presented by other companies. |
�� | �� |
�� | We define Adjusted net earnings as net earnings attributable to common shareholders before severance, acquisition and other costs, and net (gains) losses on investments. We define Adjusted EPS as Adjusted net earnings per BCE common share. |
�� | �� |
�� | We use Adjusted net earnings and Adjusted EPS, among other measures, to assess the performance of our businesses without the effects of severance, acquisition and other costs, and net (gains) losses on investments, net of tax and non-controlling interest. We exclude these items because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding these items does not imply they are non-recurring. |
�� | �� |
�� | The most comparable IFRS financial measures are net earnings attributable to common shareholders and EPS. The following table is a reconciliation of net earnings attributable to common shareholders and EPS to Adjusted net earnings on a consolidated basis and per BCE common share (Adjusted EPS), respectively. |
($ millions except per share amounts) | �� | �� | �� | �� | ||||
�� | �� | Q1 2012 | �� | Q1 2011 | ||||
�� | �� | TOTAL | �� | PER SHARE | �� | TOTAL | �� | PER SHARE |
Net earnings attributable to common shareholders | �� | 574 | �� | 0.74 | �� | 503 | �� | 0.67 |
Severance, acquisition and other costs | �� | 14 | �� | 0.02 | �� | 40 | �� | 0.05 |
Net gains on investments | �� | (8) | �� | (0.01) | �� | - | �� | - |
Adjusted net earnings | �� | 580 | �� | 0.75 | �� | 543 | �� | 0.72 |
(2) | The term EBITDA does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other companies. We define EBITDA as operating revenues less operating costs, as shown in BCE's consolidated income statements |
�� | �� |
�� | EBITDA for BCE's segments is the same as segment profit as reported in Note 3 to BCE's Q1 2012 consolidated financial statements. |
�� | �� |
�� | We use EBITDA to evaluate the performance of our businesses as it reflects their ongoing profitability. We believe that certain investors and analysts use 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. EBITDA also is one component in the determination of short-term incentive compensation for all management employees. EBITDA has no directly comparable IFRS financial measure. Alternatively, the following table provides a reconciliation of net earnings to EBITDA. |
($ millions) | �� | �� | �� | �� | |
�� | �� | Q1 2012 | �� | Q1 2011 | |
Net earnings | �� | 676 | �� | 582 | |
Severance, acquisition and other costs | �� | 19 | �� | 61 | |
Depreciation | �� | 644 | �� | 611 | |
Amortization | �� | 181 | �� | 179 | |
Finance costs | �� | �� | �� | �� | |
�� | Interest expense | �� | 204 | �� | 191 |
�� | Interest on employee benefits obligations | �� | 243 | �� | 242 |
Expected return on pension plan assets | �� | (267) | �� | (254) | |
Other expense | �� | 20 | �� | 22 | |
Income taxes | �� | 207 | �� | 199 | |
EBITDA | �� | 1,927 | �� | 1,833 | |
(3) | The term free cash flow does not have any standardized meaning according to IFRS. It is therefore unlikely to be comparable to similar measures presented by other companies. |
�� | �� |
�� | We define free cash flow as cash flows from operating activities, excluding acquisition costs paid, and dividends/distributions received from Bell Aliant less capital expenditures, preferred share dividends, dividends/distributions paid by subsidiaries to non-controlling interest and Bell Aliant free cash flow. |
�� | �� |
�� | We consider free cash flow to be an important indicator of the financial strength and performance of our business because it shows how much cash is available to repay debt and reinvest in our company. We present free cash flow consistently from period to period, which allows us to compare our financial performance on a consistent basis. |
�� | �� |
�� | We believe that certain investors and analysts use free cash flow to value a business and its underlying assets. |
�� | �� |
�� | The most comparable IFRS financial measure is cash flows from operating activities. The following table is a reconciliation of cash flows from operating activities to free cash flow on a consolidated basis. |
($ millions) | �� | �� | �� | �� |
�� | �� | Q1 2012 | �� | Q1 2011 |
Cash flows from operating activities | �� | 1,198 | �� | 734 |
Bell Aliant dividends/distributions to BCE | �� | 48 | �� | 71 |
Capital expenditures | �� | (817) | �� | (634) |
Dividends paid on preferred shares | �� | (33) | �� | (28) |
Dividends paid by subsidiaries to non-controlling interest | �� | (79) | �� | (91) |
Acquisition costs paid | �� | 25 | �� | 4 |
Bell Aliant free cash flow | �� | (15) | �� | 209 |
Free cash flow | �� | 327 | �� | 265 |
Caution Concerning Forward-Looking Statements
Certain statements made in this news release, including, but not limited
to, statements relating to our 2012 financial guidance (including
revenues, EBITDA, capital intensity, Adjusted EPS, and free cash flow),
our business outlook, objectives, plans and strategic priorities, BCE's
2012 annualized common share dividend, targeted dividend payout ratios,
the expected timing and completion of, and the benefits expected to
result from, BCE Inc.'s (BCE) proposed acquisition of Astral Media Inc.
(Astral), the expected contribution of Astral to BCE's earnings and
free cash flow, our 4G LTE wireless network deployment plans, and other
statements that are not historical facts, are forward-looking.
Forward-looking statements may include words such as aim, anticipate, assumption, believe, could, expect, goal, guidance,
intend, may, objective, outlook, plan, project, seek, should, strategy,
strive, target 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. As a
result, we cannot guarantee that any forward-looking statement will
materialize and you are cautioned not to place undue reliance on these
forward-looking statements. The forward-looking statements contained in
this news release describe our expectations at May 3, 2012 and,
accordingly, are subject to change after such date. Except as may be
required by Canadian securities laws, we do not undertake any
obligation to update or revise any forward-looking statements contained
in this news release, whether as a result of new information, future
events or otherwise. Except as otherwise indicated by BCE,
forward-looking statements do not reflect the potential impact of any
nonrecurring or other special items or of any dispositions,
monetizations, mergers, acquisitions, other business combinations or
other transactions that may be announced or that may occur after May 3,
2012. The financial impact of these transactions and nonrecurring and
other 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 for the purpose of
providing information about management's current expectations and plans
relating, in particular, to 2012, and allowing investors and others to
obtain 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 for 2012
contained in this news release, including, but not limited to:
Economic and Market Assumptions
growth in the Canadian economy of approximately 2.4% in 2012 based on
the Bank of Canada's most recent estimate, a 40 basis point increase
compared with an earlier estimate of 2.0%;
continued weak product sales, reflecting deferred business customer
spending given the slow pace of economic growth;
a softer advertising market expected for Bell Media;
an ongoing intense level of wireline competition in both consumer and
business markets;
higher wireline replacement, due primarily to increasing wireless and
Internet-based technological substitution; and
wireless industry penetration gain of 4 to 5 basis points in 2012
driven, in particular, by increased competition, the accelerating
adoption of smartphones, tablets and data applications, as well as by
the introduction of more LTE devices.
Operational Assumptions Concerning Bell Wireline (excluding Bell Aliant)
stabilizing residential NAS line erosion rate as we leverage our
broadband investment in IPTV to drive three-product household
penetration, increase our MDU market share, and generate higher
pull-through attach rates for our residential Internet and home phone
services;
in particular, targeted retention and service bundle offers, customer
win backs and better service execution to contribute to the improvement
in residential NAS line losses year over year, subject to the risk of
more aggressive service bundle offers from our cable TV competitors and
marketing actions from the newer wireless entrants which could lead to
higher residential NAS line losses;
increased subscriber acquisition at Bell TV to be driven by increased
customer adoption of Fibe TV, and our ability to seek greater
penetration within the MDU market, capitalize on our extensive retail
distribution network, which includes The Source, and leverage our
market leadership position in high definition programming;
improved subscriber acquisition at Bell Internet to be driven by
pull-through from Fibe TV and increased adoption of Fibe Internet
packages as we leverage our expanding broadband fibre network to offer
higher-speed service to customers in more areas;
increased business customer spending, new business formation and higher
demand for connectivity and ICT services, as the economy strengthens
and employment rates improve, to result in a gradual improvement in the
performance of our Business Markets unit, subject to the risk of
business customers adopting more conservative strategies which could
result in lower capital spending requirements, deferral of ICT projects
and increased NAS erosion;
cost savings and labour efficiency gains to be achieved from a reduced
management workforce, lower corporate support group costs, renegotiated
contracts with our vendors and outsource suppliers, client care and
field service productivity improvements, managing content costs and
reducing traffic that is not on our own network;
continued customer migration to IP-based systems and competitive
re-price pressures in our business and wholesale markets;
increasing EBITDA contribution from growth services;
approximately 3.3 million Bell Fibe TV-ready households by the end of
2012.
Operational Assumptions Concerning Bell Wireless (excluding Bell Aliant)
Bell Wireless to benefit from the flow-through of significant
investments made in 2011 in customer acquisition and retention, along
with continued acceleration in smartphone activations and data usage;
incumbents and newer wireless entrants to continue aggressive
competition in 2012 and newer wireless entrants to continue enhancing
the breadth and reach of their networks, improving their distribution
reach and expanding their device portfolios;
wireless revenue growth to be underpinned by ARPU driven by a higher mix
of smartphone and higher-value postpaid customers, increased
distribution in western Canada, new services, and continued disciplined
price management;
Bell Wireless to benefit from ongoing technological improvements by
manufacturers in our handset and device lineup and from faster data
speeds that are allowing our clients to optimize the use of our
services;
Bell Wireless to maintain a reasonable market share of the incumbent
wireless postpaid market;
higher subscriber acquisition and customer retention costs, as well as
the continued deployment of our wireless LTE network in urban markets
while continuing to leverage our wireless HSPA+ network.
Operational Assumptions Concerning Bell Media
building and maintaining strategic supply arrangements for content on
four screens, successfully acquiring high-rated programming and
differentiated content to execute on Bell's multi-screen content
strategy, producing and commissioning high-quality Canadian content,
and producing market-leading news;
revenue growth in our sports broadcast operations to be generated
primarily by increased subscription revenue;
increased costs to secure content in our sports broadcast operations as
we face greater competition from both new and established entrants, and
as market rates for specialty content generally increase;
investment in programming and marketing and launch of new services in
both English and French for our non-sports specialty services, in
combination with ongoing investment in high definition services;
maintaining our strong market position in our radio operations by
leveraging strategic investments made in 2011; and
the achievement of productivity gains and other operating efficiencies
related to Bell Media integration synergies.
Financial Assumptions Concerning Bell (excluding Bell Aliant) and BCE
Bell's total pension expense to be approximately $90 million, based on
an estimated accounting discount rate of 5.1% and an expected return on
plan assets of 6.75%, comprised of an estimated above EBITDA current
service pension cost of approximately $190 million and an estimated
below EBITDA net pension finance return of approximately $100 million;
Bell's total pension plan cash funding to be approximately $375 million;
Bell's cash taxes to be approximately $300 million;
net interest paid to be approximately $675 million;
BCE's total pension expense to be approximately $150 million, including
approximately $60 million for Bell Aliant, comprised of an estimated
above EBITDA current service pension cost of approximately $250 million
and an estimated below EBITDA net pension finance return of
approximately $100 million;
depreciation and amortization expense approximately $125 million higher
compared to 2011;
severance, acquisition costs and other of approximately $100 million;
an effective tax rate of approximately 23%;
tax adjustments (per share) of approximately $0.10 to $0.15;
the repayment of $500 million of 2012 long-term debt maturities; and
an annual common share dividend of $2.17 per share.
The foregoing assumptions, although considered reasonable by BCE on May
3, 2012, 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 2012 financial guidance, are listed below. The
realization of our forward-looking statements, including our ability to
meet our 2012 financial guidance, essentially depends on our business
performance which, in turn, is subject to many risks. Accordingly,
readers are cautioned that any of the following risks could have a
material adverse effect on our forward-looking statements. These risks
include, but are not limited to:
the intensity of competitive activity, including the increase in
wireless competitive activity resulting from Industry Canada's
licensing of advanced wireless services (AWS) spectrum to new wireless
entrants and their ability to launch or expand services, and the
resulting impact on our ability to retain existing customers and
attract new ones, as well as on our pricing strategies, average revenue
per unit and financial results;
the level of technological substitution contributing to reduced
utilization of traditional wireline voice services and the increasing
number of households that use only wireless telephone services;
the increased adoption by customers of alternative TV services;
variability in subscriber acquisition and retention costs based on
subscriber acquisitions, retention volumes, smartphone sales and
subsidy levels;
regulatory initiatives or proceedings, litigation, changes in laws or regulations and tax matters;
general economic and financial market conditions, the level of consumer
confidence and spending, and the demand for, and prices of, our
products and services;
our ability to implement our strategies and plans in order to produce
the expected benefits, including our ability to continue to implement
our cost reduction initiatives and contain capital intensity while
seeking to improve customer service;
our ability to anticipate and respond to technological change, upgrade
our networks and rapidly offer new products and services;
our failure to maintain network operating performance including as a
result of the significant increase in broadband demand and in the
volume of wireless data driven traffic;
events affecting the functionality of, and our ability to protect,
maintain and replace, our networks, equipment, facilities, information
technology (IT) systems, software and other assets;
our failure to implement, on a timely basis, or maintain effective IT
systems and the complexity and costs of our IT environment;
the complexity of our product offerings and pricing plans;
events affecting the ability of third-party suppliers to provide to us,
and our ability to purchase, essential products and services;
the quality of our network and customer equipment and the extent to
which they may be subject to manufacturing defects;
ineffective management of changes resulting from restructurings and
other corporate initiatives and from the integration of business units
and business acquisitions;
increased contributions to employee benefit plans;
labour disruptions;
capital and other expenditure levels, financing and debt requirements
and our ability to raise the capital we need to implement our business
plan, including for BCE's dividend payments and to fund capital and
other expenditures and generally meet our financial obligations;
our ability to discontinue certain traditional services as necessary to
improve capital and operating efficiencies;
launch and in-orbit risks of satellites used by Bell ExpressVu Limited
Partnership;
the theft of our satellite television services;
Bell Media's significant dependence on continued demand for advertising,
and the potential adverse effect thereon from challenging economic
conditions, cyclical and seasonal variations and competitive pressures,
and on securing commercially favourable distribution arrangements with
broadcasting distribution undertakings;
the adverse effect of new technology and increasing fragmentation in
Bell Media's television and radio markets;
royalties payable by Bell Media under licences pursuant to the Copyright
Act may increase;
health concerns about radio frequency emissions from wireless devices;
our ability to maintain customer service and our networks operational in
the event of the occurrence of environmental disasters or epidemics,
pandemics and other health risks;
employee retention and performance;
BCE's dependence on the ability of its subsidiaries, joint ventures and
other companies in which it has an interest to pay dividends and make
other distributions;
there can be no certainty that dividends will be declared by BCE's board
of directors or that BCE's dividend policy will be maintained;
stock market volatility;
the expected timing and completion of the proposed acquisition of Astral
and of an interest in MLSE are subject to closing conditions,
termination rights and other risks and uncertainties including, without
limitation, in the case of Astral, court, shareholder and regulatory
approvals and, in the case of MLSE, regulatory and sports league
approvals;
the benefits expected to result from the proposed acquisition of Astral
are subject to the successful and timely integration and consolidation
of Astral's operations, procedures and personnel; and
the expectation that Astral's acquisition will be accretive to BCE's
earnings and free cash flow is subject to the risks faced by Astral's
business, certain of which are described in Astral's MD&A for the year
ended August 31, 2011, as updated in Astral's subsequent quarterly
MD&As.
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 2011 Annual MD&A dated March
8, 2012 (included in the BCE 2011 Annual Report) and BCE's 2012 First
Quarter MD&A dated May 3, 2012, for additional information with respect
to certain of these and other assumptions and risks, filed by BCE with
the Canadian securities commissions (available at www.sedar.com) and with the U.S. Securities and Exchange Commission (available at www.sec.gov). These documents are also available on BCE's website at www.bce.ca.
About BCE
BCE is Canada's largest communications company, providing a
comprehensive and innovative suite of broadband communication services
to residential and business customers under the Bell and Bell Aliant
brands. Bell Media is Canada's premier multimedia company with leading
assets in television, radio and digital media, including CTV, Canada's
leading television network, and the country's most-watched specialty
channels.
The Bell Mental Health Initiative is a multi-year charitable program
that promotes mental health across Canada via the Bell Let's Talk
anti-stigma campaign and support for community care, research and
workplace best practices. To learn more, please visit Bell.ca/LetsTalk.
For BCE corporate information, please visit BCE.ca. For Bell product and service information, please visit Bell.ca. For Bell Media, please visit BellMedia.ca.
For further information:
Media inquiries:
Jean Charles Robillard
Bell Communications
(514) 870-4739
jean_charles.robillard@bell.ca
Investor inquiries:
Thane Fotopoulos
BCE Investor Relations
(514) 870-4619
thane.fotopoulos@bell.ca
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