Information contained on this page is provided by an independent third-party content provider. WorldNow and this Station make no warranties or representations in connection therewith. If you have any questions or comments about this page please contact firstname.lastname@example.org.
SOURCE BCE INC.
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 6, 2014 /PRNewswire/ - BCE Inc. (TSX, NYSE: BCE), Canada's largest communications company, today reported BCE and Bell results for the first quarter (Q1) of 2014.
|($ millions except per share amounts) (unaudited)||Q1 2014||Q1 2013||% change|
|Net earnings attributable to common shareholders||615||566||8.7%|
|Cash flows from operating activities||982||1 040||(5.6%)|
|Free cash flow(3)||262||247||6.1%|
(i) Bell includes the Bell Wireless, Bell Wireline and Bell Media segments.
"Bell's strategic investments in advanced broadband networks and services, improved customer service and Canadian content development are driving the growth services - Wireless, TV, Internet and Media - that are rapidly transforming our business," said George Cope, President and Chief Executive Officer of BCE and Bell. "Fast-growing Fibe TV is increasing Bell's share of the household as it drives significant gains in high-speed Internet additions and reductions in Home Phone losses. Bell Media, with Astral contributing to strong EBITDA and free cash flow growth, continues to expand its media leadership with outstanding new Canadian programming, TV Everywhere innovations and sports viewership growth. Wireless customers are using smartphones and data services like never before on Canada's largest 4G LTE network - and we're taking it further by being the first to introduce mobile service with new 700 MHz spectrum."
"The Bell team has made great strides in executing our imperative to improve customer service, backed by investment of approximately $600 million in new service enhancements since 2008. We've developed innovative online and mobile service apps to enhance the customer experience, maximized our field service fleet with state-of-the-art dispatch and communications capabilities, and announced the opening of 3 new Bell customer service call centres in Québec and Ontario in the last year," said Mr. Cope. "The hard work and investment is paying off, with an array of industry measures highlighting our service progress. That includes reductions in customer churn in all residential and wireless services, and 7% fewer calls into our service centres compared to Q1 of last year. Bell's journey to achieving our customer service objectives is not over, but we are well on our way."
In its most recent North American Technographics Telecom and Devices Online Q4 2013 survey, global research firm Forrester Research Inc. found that Bell significantly increased its Customer Experience Index (CEI) scores across all residential and wireless services. Bell TV, Internet, Home Phone and Wireless all greatly improved customer satisfaction, experiencing an average 41% increase in CEI scores from 2010 to 2013.
Bell is dedicated 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, Improve Customer Service, Accelerate Wireless, Leverage Wireline Momentum, Expand Media Leadership, and Achieve a Competitive Cost Structure.
"Bell begins 2014 with solid first-quarter financial results that underline the operating momentum we have across our growth services, especially in Wireless, residential Wireline and Media," said Siim Vanaselja, Chief Financial Officer of BCE and Bell. "EBITDA growth in Q1 drove strong increases in earnings and free cash flow, supporting our strategic broadband network investments and BCE's higher common share dividend rate for 2014. With a good start to the year across Bell's business segments and a favourable outlook, we reconfirm our 2014 financial guidance as we remain on track with our business plan for the year."
BCE delivered healthy revenue and EBITDA(1) growth of 3.7% and 3.1%, respectively, in Q1 2014 with a relatively steady EBITDA margin(1) of 39.7%, supported by improved year-over-year financial results at Bell. This was partly offset by lower revenue and EBITDA at Bell Aliant, where cost management initiatives helped to contain the adverse impact on its overall financial performance from intense competitive pressure.
BCE reported Q1 2014 net earnings attributable to common shareholders of $615 million, up 8.7% from $566 million in Q1 2013, and Adjusted net earnings(2) of $626 million, an increase of 4.5% from $599 million last year. Net earnings per share (EPS) of $0.79 and Adjusted EPS of $0.81 were up 8.2% and 5.2%, respectively, reflecting higher EBITDA driven by the increased contribution of Bell's growth services (Wireless, TV, Internet and other broadband services, and Media).
BCE's cash flows from operating activities were $982 million in Q1 2014, compared to $1,040 million in Q1 2013, due to a decrease at Bell Aliant which was partly offset by an increase at Bell. Free cash flow(3) was up 6.1% to $262 million from $247 million last year, reflecting higher Bell EBITDA and an improvement in working capital. This was partly offset by lower dividends received in 2014 from Bell Aliant, due to a change in its common share dividend payment dates, and higher income taxes paid by Bell mainly as a result of no special pension contribution tax benefit. Free cash flow per share(3) in Q1 2014 was $0.34 per common share, compared to $0.32 per common share last year.
At March 31, 2014, BCE (Bell Canada and Bell Aliant) served a total of 7,908,596 Wireless subscribers, up 1.2% from Q1 2013; total TV subscribers of 2,529,471, up 8.1% (including 723,891 IPTV customers, an increase of 67.2% compared to Q1 2013); Internet subscribers of 3,163,218, up 3.4%; and total NAS lines of 7,462,829, a decrease of 6.7%.
Bell operating revenues increased 4.4% to $4,538 million. This was driven by a 5.0% increase in service revenues, reflecting Astral's contribution to Bell Media results, solid Wireless revenue growth as well as higher TV and Internet service revenues that drove positive Wireline residential revenue growth this quarter, which more than offset the ongoing, but moderating, decline in traditional Wireline voice revenues.
Growth services continued to accelerate, with our Wireless, TV, Internet and other Wireline broadband, and Media services now delivering 83% of operating revenues, for a 7.2%, or $251 million, increase in Q1 2014.
Bell EBITDA grew 4.1% to $1,708 million, reflecting increases of 7.4% at Bell Wireless and 53.1% at Bell Media, moderated by a 2.9% decrease at Bell Wireline. Bell's consolidated EBITDA margin remained stable at 37.6% in Q1 2014, compared to 37.7% last year, due to higher Wireless average revenue per user (ARPU)(4), diminishing Wireline voice erosion, and cost efficiencies.
Bell continued its strategic investments in industry-leading network and services, with capital expenditures of $594 million in Q1 unchanged year over year. This reflects the continued rapid deployment of broadband fibre to homes, neighbourhoods and businesses in Québec and Ontario that is fuelling the rapid expansion of Fibe TV; higher spending on network capacity to support increasing Internet bandwidth usage and 4G LTE mobile data consumption; and enhancements to our client care and customer service delivery systems.
BELL OPERATING RESULTS BY SEGMENT
Bell Wireless operating revenues increased 4.5% to $1,472 million in Q1 2014 from $1,409 million last year. Service revenues grew 4.7% to $1,364 million, driven by a higher postpaid subscriber mix in our wireless customer base and strong growth in blended ARPU attributable to greater data usage. Wireless data revenue increased 17.5%, reflecting higher adoption and usage of smartphones.
Bell Wireless EBITDA increased 7.4% to $628 million, reflecting the flow-through of strong ARPU growth and disciplined postpaid subscriber acquisition and customer retention spending. This resulted in a 1.1% increase in EBITDA service margin to 46.0%, our best quarterly performance in almost five years (since Q2 2009).
Our Wireline segment progressed in its ongoing transformation, slowing the pace of revenue and EBITDA decline in Q1 2014 with a 65%, or 40,500, improvement in the total number of residential (TV, Internet and local access lines) net customer losses.
Led by strong Fibe TV performance, which supported significant increases in high-speed Internet net additions and fewer residential NAS line losses compared to last year, Bell Residential Services delivered positive revenue growth for a second consecutive quarter. While the rate of revenue decline at Bell Business Markets also improved year over year, results were impacted by competitive pricing pressures and reduced spending by large business customers indicative of a continuing soft economy.
In addition, a significant year-over-year decrease in consumer electronic sales at The Source, largely attributable to a weather-driven drop in retail store traffic this winter, negatively impacted Wireline revenues this quarter. As a result, Bell Wireline Q1 operating revenues decreased 1.8% to $2,462 million from $2,508 million last year.
Wireline EBITDA decreased 2.9% to $930 million in Q1 and we maintained margin at 37.8%, compared to 38.2% in Q1 2013. This represents a notable improvement over the 4.5% EBITDA decline reported last year, which was supported by an $18 million, or 1.2%, year-over-year reduction in operating costs this quarter.
Approximately 1%, or $9 million, of the Wireline EBITDA decrease this quarter was due to a decline in sales at The Source. Higher network operating costs driven by severe weather conditions in central Canada this winter and Olympics advertising for Sochi 2014 also contributed to lower Wireline EBITDA in Q1 2014.
Bell Media continued to build on its position as Canada's leading media company with its extensive portfolio of news, sports and entertainment programming that drove high audience levels and ratings, contributing to strong overall financial and operating performance this quarter.
Bell Media operating revenue grew 40.7% to $722 million and EBITDA grew 53.1% to $150 million in Q1 2014. The significant year-over-year increases reflected higher advertising and subscriber fee revenues from the Astral acquisition, as well as the flow-through of 2013 market-based rate increases in specialty TV services and higher revenues generated from new mobile content deals and TV Everywhere products. Overall advertising revenue growth this quarter was moderated by a continuing soft advertising market that saw a shift in spending to the main broadcaster of the Sochi Winter Olympics. Higher costs for TV programming, increased spending on in-house Canadian productions, and sports broadcast rights agreements that continue to escalate in price for the industry as a whole were absorbed by operating synergies from Astral's successful integration into Bell Media.
BELL ALIANT RESULTS
Bell Aliant (TSX: BA) revenues decreased 1.2% to $676 million in Q1 2014 from $684 million last year, as a result of the continued declines in voice (local and access and long distance) revenues, as well as the adverse revenue impact from intense competitive pricing pressures in both its consumer and business markets, that were not fully offset by continued solid growth in data service (Internet and TV) revenues. Bell Aliant's EBITDA decreased 2.2% to $314 million from $321 million, despite relatively stable year-over-year operating costs, due to lower operating revenues. For more information, please visit BellAliant.ca.
COMMON SHARE DIVIDEND
BCE's Board of Directors has declared a quarterly dividend of $0.6175 per common share, payable on July 15, 2014 to shareholders of record at the close of business on June 16, 2014.
BCE confirmed its financial guidance targets for 2014, as provided on February 6, 2014, as follows:
|Revenue Growth||2% - 4%||On track|
|EBITDA Growth||3% - 5%||On track|
|Capital Intensity(4)||16% - 17%||On track|
|Adjusted EPS||$3.10 - $3.20||On track|
|Free Cash Flow growth||3% - 7%||On track|
|Annual common dividend per share||$2.47||$2.47|
|Dividend payout(4) policy||
65% - 75%
of free cash flow
|(i)||Bell's 2014 financial guidance for revenue, EBITDA and capital intensity is exclusive of Bell Aliant.|
CALL WITH FINANCIAL ANALYSTS
BCE will hold a conference call for financial analysts to discuss Q1 2014 results on Tuesday, May 6 at 8:00 a.m. (Eastern). Media are welcome to participate on a listen-only basis. To participate, please dial (416) 340-2216 or toll-free 1-866-223-7781 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 9343972#.
A live audio webcast of the conference call will be available on BCE's website at BCE Q1-2014 conference call. The mp3 file will be available for download on this page later in the day.
The information contained in this news release is unaudited.
|(1)||The terms EBITDA and EBITDA margin do not have any standardized meaning under IFRS. Therefore, they are unlikely to be comparable to similar measures presented by other issuers. We define 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 2014 consolidated financial statements. We define EBITDA margin as EBITDA divided by operating revenues. We use EBITDA and EBITDA margin to evaluate the performance of our businesses as they reflect 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. We believe that certain investors and analysts also use EBITDA and EBITDA margin to evaluate the performance of our businesses. EBITDA also is one component in the determination of short-term incentive compensation for all management employees. EBITDA and EBITDA margin have no directly comparable IFRS financial measure. Alternatively, the following table provides a reconciliation of net earnings to EBITDA.|
|Q1 2014||Q1 2013|
|Severance, acquisition and other costs||38||33|
|Interest on post-employment benefit obligations||(87)||(80)|
|BCE Operating Revenues||5,099||4,919|
|(2)||The terms Adjusted net earnings and Adjusted EPS do not have any standardized meaning under IFRS. Therefore, they are unlikely to be comparable to similar measures presented by other issuers. We define Adjusted net earnings as net earnings attributable to common shareholders before severance, acquisition and other costs, net (gains) losses on investments, and premiums on early redemption of debt. We define Adjusted EPS as Adjusted net earnings per BCE common share. We use Adjusted net earnings and Adjusted EPS, and we believe that certain investors and analysts use these measures, among other ones, to assess the performance of our businesses without the effects of severance, acquisition and other costs, net (gains) losses on investments, and premiums on early redemption of debt, net of tax and NCI. We exclude these items because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding these items does not imply they are non-recurring. The most comparable IFRS financial measures are net earnings attributable to common shareholders and EPS. The following table is a reconciliation of net earnings attributable to common shareholders and EPS to Adjusted net earnings on a consolidated basis and per BCE common share (Adjusted EPS), respectively.|
|($ millions except per share amounts)|
|Q1 2014||Q1 2013|
|TOTAL||PER SHARE||TOTAL||PER SHARE|
|Net earnings attributable to common shareholders||615||0.79||566||0.73|
|Severance, acquisition and other costs||23||0.03||23||0.03|
|Net gains on investments||(12)||(0.01)||(2)||-|
|Premium on early redemption of debt||-||-||12||0.01|
|Adjusted net earnings||626||0.81||599||0.77|
|(3)||The terms free cash flow and free cash flow per share do not have any standardized meaning under IFRS. Therefore, they are unlikely to be comparable to similar measures presented by other issuers. We define free cash flow as cash flows from operating activities, excluding acquisition costs paid and voluntary pension funding, plus dividends received from Bell Aliant, less capital expenditures, preferred share dividends, dividends paid by subsidiaries to NCI and Bell Aliant free cash flow. We define free cash flow per share as free cash flow divided by the average number of common shares outstanding.|
|($ millions except per share amounts)|
|Q1 2014||Q1 2013|
|Cash flows from operating activities||982||1,040|
|Bell Aliant dividends to BCE||-||48|
|Cash dividends paid on preferred shares||(32)||(26)|
|Cash dividends paid by subsidiaries to non-controlling interest||(7)||(73)|
|Acquisition costs paid||14||10|
|Bell Aliant free cash flow||34||(30)|
|Free cash flow||262||247|
|Average number of common shares outstanding||776.5||775.7|
|Free cash flow per share||0.34||0.32|
We consider free cash flow and free cash flow per share to be important indicators of the financial strength and performance of our businesses because they show how much cash is available to pay dividends, 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. We believe that certain investors and analysts also use free cash flow and free cash flow per share to evaluate the financial strength and performance of our businesses. The most comparable IFRS financial measure is cash flows from operating activities. The table above is a reconciliation of cash flows from operating activities to free cash flow on a consolidated basis.
|(4)||We use ARPU, churn, COA, capital intensity and dividend payout ratio 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. See section 8.2, Non-GAAP Financial Measures and Key Performance Indicators (KPIs)- KPIs in BCE's Q1 2014 MD&A for a definition of such KPIs.|
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements made in this news release, including, but not limited to, statements relating to our 2014 financial guidance (including revenues, EBITDA, capital intensity, Adjusted EPS and free cash flow), our business outlook, objectives, plans and strategic priorities, BCE's 2014 annualized common share dividend and common share dividend policy, our networks deployment plans, the sales of the final five Astral TV assets, and other statements that are not historical facts, are forward-looking. 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. As a result, we cannot guarantee that any forward-looking statement will materialize and we caution you against relying on any of these forward-looking statements. The forward-looking statements contained in this news release describe our expectations as of May 6, 2014 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 non-recurring 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 6, 2014. The financial impact of these transactions and non-recurring 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 in this news release for the purpose of assisting investors and others in understanding certain key elements of our expected 2014 financial results, as well as our objectives, strategic priorities and business outlook for 2014, and in obtaining a better understanding of our anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes.
A number of economic, market, operational and financial assumptions were made by BCE in preparing its forward-looking statements for 2014 contained in this news release, including, but not limited to:
Canadian Economic and Market Assumptions
Assumptions Concerning our Bell Wireless Segment
Assumptions Concerning our Bell Wireline Segment
Assumptions Concerning our Bell Media Segment
Assumptions Concerning our Bell Aliant Segment
Financial Assumptions Concerning Bell (Excluding Bell Aliant)
The following constitute Bell's principal financial assumptions for 2014:
Financial Assumptions Concerning BCE
The following constitute BCE's principal financial assumptions for 2014:
The foregoing assumptions, although considered reasonable by BCE on May 6, 2014, may prove to be inaccurate. Accordingly, our actual results could differ materially from our expectations as set forth in this news release.
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 2014 financial guidance, are listed below. The realization of our forward-looking statements, including our ability to meet our 2014 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:
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 2013 Annual MD&A dated March 6, 2014 (included in the BCE 2013 Annual Report) and BCE's 2014 First Quarter MD&A dated May 5, 2014, 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.
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 #1 television network, and the country's most-watched specialty channels. To learn more, please visit BCE.ca.
The Bell Let's Talk mental health initiative is a national charitable and awareness program promoting mental health across Canada with the Bell Let's Talk Day anti-stigma campaign and significant Bell funding of community care and access, research, and workplace initiatives. To learn more, please visit Bell.ca/LetsTalk.
©2012 PR Newswire. All Rights Reserved.