This news release contains forward-looking statements. For a
description of the related risk factors and assumptions, please see
the section entitled "Caution Regarding Forward-Looking Statements"
later in this news release.
- Net earnings grew 9.9% to $813
million with net earnings attributable to common
shareholders increasing 9.4% to $757
million, or $0.83 per common
share, up 7.8%; 5.1% higher adjusted net
earnings(1) of $748
million generated adjusted EPS(1)
of $0.82, up 3.8%
- 3.6% consolidated service revenue growth drove 4.2% higher
adjusted EBITDA(2)
- 266,919 total wireless mobile phone and mobile connected
device, retail Internet and IPTV net subscriber activations
increased 10.2%
- 136,464 mobile phone net subscriber
activations(4), up 14.3%; best-ever Q3
postpaid churn rate at 0.93%; quarterly wireless service revenue
and adjusted EBITDA recovered to pre-COVID levels in 2019, growing
5.0% and 5.6% respectively in Q3
- 65,779 retail Internet net subscriber activations represents
best quarterly performance in 15 years with 9% residential Internet
revenue growth; IPTV net subscriber activations up 68% to
31,641
- Media revenue grew 14.5%, reflecting higher advertiser
spending across all platforms; digital revenue increased 32% and
now represents 22% of total media revenue
- Strong financial position maintained with $6.1 billion of available
liquidity(5) at end of Q3
- Reconfirming all 2021 financial guidance targets
MONTRÉAL, Nov. 4, 2021 /CNW
Telbec/ - BCE Inc. (TSX: BCE) (NYSE: BCE) today reported results
for the third quarter (Q3) of 2021.
"With a clear strategic roadmap to build back from the impacts
of COVID-19 and invest in the growth opportunities ahead, our team
delivered positive performances across all Bell operating segments
in Q3. Bell's leading fibre and 5G broadband networks, and the
wireline, wireless and media innovations they enable, are clearly
delivering the connections Canadian consumers and business
customers need as we all work to recover from the impacts of the
COVID crisis," said Mirko Bibic,
President and CEO of BCE Inc. and Bell
Canada.
"As pace of our recovery from the crisis quickens, the strong
demand for the speed and connectivity advantages of Bell's leading
networks and services is clearly reflected in our Q3 results. Our
fast-growing fibre network powered Bell's best quarterly retail
Internet net subscriber activations in 15 years and a 9% increase
in residential Internet revenue as we also grew IPTV net subscriber
activations by 68%. At the same time, the unparalleled performance
advantages of Bell's wireless networks drove a 46% increase in
postpaid mobile phone net additions and exceptional growth in
service revenue and adjusted EBITDA."
"The Bell team has achieved our objective to steadily improve
results each quarter since Q2 2020, when our business experienced
its heaviest impacts from the COVID crisis. We have grown total
revenue and adjusted EBITDA back to the levels of pre-pandemic Q3
2019 while at the same time significantly accelerating our
next-generation network infrastructure investments to help our
customers and company come back better from the COVID crisis. As
reflected in the Bell for Better initiative, including the historic
two-year $1.7 billion acceleration in
our 5G, fibre and rural network rollouts, the Bell team is
committed to championing customer experience, investing in our
communities and driving our country's ongoing recovery and
resurgence."
KEY BUSINESS Developments
Building the best network: Canada's fastest
5G
Executing our accelerated network investment plan with a
12.4% increase in capital expenditures in Q3, Bell network rollouts
included pure fibre Internet for 52 smaller communities in
Manitoba, Ontario, Québec and the Atlantic provinces and
Bell 5G in communities large and small across multiple provinces.
Bell is on track to meet or exceed our 2021 targets for new fibre
and Wireless Home Internet locations passed, and to offer 5G
coverage to more than 70% of the national population by the end of
the year.
PCMag again determined that Bell's mobile networks are the
fastest in the country in its latest national network performance
tests, while Global Wireless Solutions (GWS) ranked Bell 5G as
Canada's best. With the most awarded 5G network in Canada, Bell is driving the next generation of
mobile innovation including the expansion of TSN 5G View / Vision
5G RDS access to Toronto Raptors home games in addition to regional
coverage of the Montréal Canadiens and Toronto Maple Leafs; a 5G
collaboration with Tiny Mile for its
fleet of food delivery robots in downtown Toronto; and a partnership with TikTok Canada
to power its unique Paint Portal multi-user Augmented Reality
effect.
Leading the digital transformation of Canadian
business
Building on Bell's strategic agreement with Amazon
Web Services (AWS) to accelerate 5G innovation and cloud adoption,
we're working with VMware Cloud and AWS to support enterprise
business and government organizations in managing their hybrid
cloud strategies. Bell is also offering enterprise customers a
portfolio of Software-as-a-Service (SaaS) solutions to support
their digital transformations, including Smart Supply Chain by Bell
IoT Smart Connect for fleet and supply chain operators. We're also
working with Esri, Canada's leading geographic information system
(GIS) provider, on the Bell Integrated Smart City Ecosystem and
with international AI-powered contact centre software provider
NICE, to expand access to NICE CXone for Contact Centre as a
Service in Canada.
Expanding consumer choice with service innovation, compelling
content
Delivering new options for mobility and media
customers, Virgin Plus reduced pricing on mobile data plans,
achieving the federal government's 25% price reduction target well
ahead of the January 2022 deadline,
and Bell Media announced Crave Mobile, offering access to the
streaming service's unparalleled content library on a single mobile
device, and Crave Total for multiple user access across a full
range of screens.
Canada's top-ranked sports networks TSN and RDS are delivering
more major league sports action this fall-winter season including
the Toronto Raptors, the CFL, and the NFL on CTV as well as TSN and
RDS. CTV Comedy Channel remained Canada's most watched
entertainment specialty channel for the third year in a row, while
Noovo continues to lead viewership growth in conventional
French-language TV. The Noovo Info news service aired its first
French-language federal leaders debate and election night coverage
alongside CTV's coverage in English. Reflecting a focus on
accelerating digital revenue growth, Bell Media launched the Bell
DSP ad-tech platform with advanced advertising company Xandr.
Bell for Better: Mental health in the community
To
mark Mental Illness Awareness Week, Bell Let's Talk announced the
113 recipients of the 2021 Bell Let's Talk Community Fund in every
region of Canada, including South and Central Health Foundation in
Grand Falls-Windsor, Newfoundland
and Labrador; Legacy of Hope
Foundation in Gloucester, Ontario;
and Le Centre de Prévention du Suicide (CPS) Côte-Nord in
Baie-Comeau, Québec. Bell Let's
Talk also introduced a mental health podcast series featuring
mental health experts and guests from Black, Indigenous and People
of Colour (BIPOC) communities, and a mobile app in partnership with
Strongest Families Institute (SFI) to enhance access to SFI's
proven mental health programs for remote communities.
Bell continues to abide by its COVID-19 operating principles and
all government protocols, with a focus on protecting the health and
safety of our customers, colleagues and communities. In preparation
for a gradual and voluntary return to Bell office locations for
more team members this fall, we introduced the Bell Workways
program to provide many of our employees with flexible remote and
mobile work options and are implementing a mandatory
vaccination policy for Bell team members nationally.
BCE Q3 RESULTS
Financial Highlights
($ millions except
per share amounts) (unaudited)
|
Q3
2021
|
Q3
2020
|
%
change
|
BCE
|
|
|
|
Operating
revenues
|
5,836
|
5,787
|
0.8%
|
Net
earnings
|
813
|
740
|
9.9%
|
Net earnings
attributable to common shareholders
|
757
|
692
|
9.4%
|
Adjusted net
earnings
|
748
|
712
|
5.1%
|
Adjusted
EBITDA
|
2,558
|
2,454
|
4.2%
|
Net earnings per
common share (EPS)
|
0.83
|
0.77
|
7.8%
|
Adjusted
EPS
|
0.82
|
0.79
|
3.8%
|
Cash flows from
operating activities
|
1,774
|
2,110
|
(15.9%)
|
Capital
expenditures
|
(1,159)
|
(1,031)
|
(12.4%)
|
Free cash
flow(3)
|
571
|
1,034
|
(44.8%)
|
"Our consolidated Q3 financial results demonstrated another step
forward in our COVID recovery and continued strong operational
execution, including strong residential wireline performance,
industry-leading wireless service revenue and adjusted EBITDA
growth, and higher advertising revenue across all TV platforms.
Total revenue and adjusted EBITDA are essentially back to Q3 2019
levels with BCE service revenue up 3.6% and adjusted EBITDA 4.2%
higher, contributing to a year-over-year increase in net earnings
of 9.9% despite ongoing COVID headwinds," said Glen LeBlanc, Chief Financial Officer for BCE
and Bell Canada.
"With strong marketplace performance and free cash flow,
bolstered by exceptional liquidity, a well-structured balance sheet
and a net debt leverage ratio that is the lowest among our Canadian
peers, Bell remains on track to meet our 2021 financial guidance
targets, lead investment in next-generation broadband networks and
services, and deliver on our capital markets objectives for BCE
shareholders."
- BCE operating revenue was up 0.8% over Q3 2020 to $5,836 million, driven by a 3.6% increase in
service revenue to $5,099 million
reflecting year-over-year increases at all Bell operating segments.
Product revenue decreased 14.6% to $737
million, the result of fewer mobile device transactions and
lower business wireline data equipment sales.
- Net earnings increased 9.9% to $813
million and net earnings attributable to common shareholders
totalled $757 million, or
$0.83 per share, up 9.4% and 7.8%
respectively. The increases were driven by adjusted EBITDA growth
and higher other income due mainly to net mark-to-market gains on
derivatives used to economically hedge equity settled share-based
compensation. This was partly offset by increased depreciation and
amortization expense, higher severance, acquisition and other costs
as well as higher income taxes.
- Adjusted net earnings were $748
million, or $0.82 per common
share, up 5.1% and 3.8% respectively, from $712 million, or $0.79 per common share, in Q3 2020.
- Adjusted EBITDA grew 4.2% in Q3 to $2,558 million, driven by year-over-year
increases at all Bell operating segments. BCE's consolidated
adjusted EBITDA margin(2) increased 1.4 percentage
points to 43.8% from 42.4% in Q3 2020, due to the flow-through of
higher service revenue and a 1.7% reduction in total operating
costs that reflected a year-over-year decrease in low-margin
product sales and the non-recurrence of a number of COVID-19
related expenses incurred last year.
- BCE capital expenditures increased 12.4% to $1,159 million, a capital intensity(4)
ratio of 19.9%, compared to 17.8% in Q3 2020. The year-over-year
increase in capital spending is consistent with our 2-year program
to accelerate the rollout of Bell's 5G, fibre and rural Wireless
Home Internet networks.
- BCE cash flows from operating activities totalled $1,774 million, down 15.9% from Q3 2020, due to a
reduction in cash from the timing of working capital changes and
higher income taxes paid, partly offset by higher adjusted
EBITDA.
- Free cash flow decreased 44.8% to $571
million, compared to $1,034
million in Q3 2020, due to lower cash flows from operating
activities, excluding cash from discontinued operations and
acquisition and other costs paid, and higher capital
expenditures.
Q3 OPERATING RESULTS BY SEGMENT
Bell Wireless
- Total wireless operating revenue decreased 0.9% to $2,296 million, due to lower year-over-year
product revenue, partly offset by strong service revenue
growth.
- Service revenue increased 5.0% to $1,654
million, the result of robust mobile phone postpaid
subscriber base growth over the past year, driven by our
disciplined focus on higher-value smartphone loadings and continued
strong demand for Bell's IoT solutions. Roaming revenue increased
modestly over Q3 2020, reflecting increased travel due to easing of
COVID-19 restrictions.
- Product revenue was down 13.6% to $642
million, due to a reduction in sales transaction volumes
attributable to fewer customer device upgrades and a greater mix of
bring-your-own-device customer activations.
- Wireless adjusted EBITDA increased 5.6% to $1,010 million, reflecting the flow-through of
higher service revenue and a 5.6% reduction in operating costs,
consistent with lower product sales, which delivered a 2.8
percentage point margin increase to 44.0%.
- Bell added 136,464 total net new postpaid and prepaid mobile
phone subscriber activations, up 14.3% from 119,345 in Q3
2020.
- Postpaid mobile phone net subscriber activations were up 45.9%
to 114,821 from 78,706 in Q3 2020. The notable increase was driven
by a 9.0% increase in gross subscriber activations, reflecting
pent-up customer demand and greater consumer traffic from the
reopening of all retail stores compared to last year's COVID-19
restrictions, and higher direct and digital channel sales volumes.
Postpaid mobile phone customer churn(4) improved 5 basis
points to 0.93%, representing our best-ever Q3 result.
- Prepaid mobile phone net subscriber activations were 21,643,
down from 40,639 in Q3 2020. This result can be attributed to a
9.9% decrease in gross activations from lower market activity due
to the ongoing slowdown in immigration and international travel
during COVID-19. Mobile phone prepaid customer churn increased 17
basis points to 4.15%, reflecting greater competitive intensity in
the discount mobile market.
- Bell's mobile phone customer base totalled 9,349,459 at the end
of Q3 2021, a 2.7% increase over last year, comprising 8,520,518
postpaid subscribers, up 3.2%, and 828,941 prepaid customers, down
2.2% compared to Q3 2020.
- Blended mobile phone average billing per user
(ABPU)(4) was up 1.1% to $74.07, driven by greater customer adoption of
higher-value rate plans, including unlimited data plans, and a
modest year-over-year increase in roaming.
- Mobile connected device net activations were down 19.9% to
33,035, despite strong growth in Bell's business IoT net
connections, due to higher data device net losses as we continue
de-emphasizing unprofitable, low-ABPU tablet transactions. Mobile
connected device subscribers totalled 2,210,796 at the end of Q3
2021, an increase of 13.0% over last year.
Bell Wireline
- Total wireline operating revenue decreased 0.6% to $3,015 million.
- Wireline service revenue was up 0.3% to $2,920 million, the result of a 9.1% increase in
residential Internet revenue that was partly offset by lower
business markets revenue due to exceptionally high demand in Q3
2020 for conferencing services, remote collaboration tools and
voice connectivity as a result of work-at-home protocols enacted by
Canadian enterprises because of COVID-19 restrictions.
- Product revenue decreased 21.5% to $95
million, due to higher sales of data equipment in Q3 2020 as
large enterprise and government sector customers spent on capacity
and network facilities to connect more employees working remotely,
as well as the timing of data equipment sales in 2021.
- Wireline adjusted EBITDA grew 1.0% to $1,333 million, reflecting a 1.8% reduction in
operating costs that contributed to a 0.7 percentage-point
improvement in margin to 44.2%.
- Bell added 65,779 net retail Internet subscribers, 4.6% more
than Q3 2020. This represents our best quarterly result in 15
years, driven by the accelerated buildout of Bell's all-fibre and
Wireless Home Internet service footprints, and a more active
back-to-school period compared to last year. Retail Internet
subscribers totalled 3,814,035 at the end of Q3, a 4.2% increase
over Q3 last year.
- Bell TV added 31,641 net new retail IPTV subscribers, up 68.0%
from 18,837 in Q3 2020. This represents our best quarterly result
in two years, reflecting the success of our multi-brand strategy,
including standalone Fibe TV subscriptions and Fibe TV app
streaming services, as well as more typical back-to-school student
market activity and more live sporting programming this year. At
the end of Q3, Bell served 1,853,250 retail IPTV subscribers, up
3.8% from last year.
- Retail satellite TV net subscriber losses increased 10.4% to
21,120, due to lower gross activations compared to last year.
Bell's retail satellite TV customer base totalled 875,711 at the
end of Q3, down 8.1% compared to last year.
- Retail residential NAS net losses improved 14.1% to 42,755,
reflecting fewer customer deactivations during COVID-19. Bell's
retail residential NAS customer base totalled 2,338,816 at the end
of Q3, a 7.8% decline since Q3 2020.
Bell Media
- Media operating revenue increased 14.5% in Q3 to $719 million, driven by increased advertiser
spending across TV, radio, out of home and digital media platforms
as the COVID-19 economic recovery takes hold more fully, as well as
higher subscriber revenue.
- Adjusted EBITDA was up 20.8% to $215
million, resulting in a 1.6 percentage point increase in
margin to 29.9%. This was driven by the flow-through of higher
year-over-year revenue, despite a 12% increase in operating costs
reflecting more live sports events and TV programming compared to
last year when COVID-19 related TV production shutdowns and delays
occurred, and the non-recurrence of Canada Emergency Wage Subsidy
(CEWS) funding received in Q3 2020.
- Advertising revenue increased 18.6% this quarter, driven by
stronger conventional and specialty TV performance, due to a
timelier start to the new fall TV programming season, more live
sporting events compared to 2020, and revenue generated from the
recent federal election.
- Subscriber revenue was up 12.3% in Q3, driven by a 5%
year-over-year increase in Crave subscribers. Digital revenue grew
32% due to rapid expansion of CTV's AVOD product, continued scaling
of the SAM TV media sales tool and continued Crave growth.
- TSN and RDS were Canada's top-ranked English and
French-language sports networks for Q3 and the full 2020/2021
broadcast year.
- Bell Media's English-language entertainment specialty channels
achieved record rankings, with CTV Comedy, Discovery and CTV Drama
claiming the top 3 spots.
- Noovo continued to gain viewership over its French-language
competitors with primetime audiences up 18% in the current fall TV
season.
COMMON SHARE DIVIDEND
BCE's Board of Directors has
declared a quarterly dividend of $0.875 per common share, payable on January 15, 2022 to shareholders of record at the
close of business on December 15,
2021.
OUTLOOK FOR 2021
BCE confirmed its financial guidance
targets for 2021, as provided on February 4,
2021, as follows:
|
February
4
Guidance
|
November
4
Guidance
|
Revenue
growth
|
2% – 5%
|
On track
|
Adjusted EBITDA
growth
|
2% – 5%
|
On track
|
Capital
intensity
|
18% – 20%
|
On track
|
Adjusted EPS
growth
|
1% – 6%
|
On track
|
Free cash flow
($M)
|
$2,850 –
$3,200
|
On track
|
Annualized common
dividend per share
|
$3.50
|
$3.50
|
During the third quarter of 2021, our financial and operating
performance continued to recover from the effects of COVID-19, due
to our operational execution and the easing of government
restrictions put in place to combat the pandemic, which allowed
many businesses to resume some level of, or increase, commercial
activities in the latter part of Q2 2021. As a result, the adverse
impacts of COVID-19 on our sequential and year-over-year
performance were reduced. Additionally, it has been well over a
year since the pandemic began affecting our performance and we have
since adapted many aspects of our business to better operate in
this environment. The effects of COVID-19, although moderating,
continued to unfavourably impact Bell Wireless product and roaming
revenues, Bell Wireline business markets equipment revenues, as
well as Bell Media advertising revenues during the quarter.
Due to uncertainties relating to the severity and duration of
the COVID-19 pandemic and possible resurgences in the number of
COVID-19 cases, and various potential outcomes, it is difficult at
this time to estimate the impacts of COVID-19 on our business or
future financial results and related assumptions. Our business and
financial results could continue to be unfavourably impacted, and
could again become more significantly and negatively impacted, in
future periods. Notably, our wireless product revenues and mobile
phone and mobile connected devices gross additions may be
unfavourably impacted due to a global chip shortage attributable to
the impacts of the COVID-19 pandemic that is resulting in
short-term supply chain disruptions and inventory constraints for
consumer electronics and mobile devices, including smartphones and
tablets. The extent to which COVID-19 will continue to adversely
impact us will depend on future developments that are difficult to
predict, including the prevalence of COVID-19 variants that are
more contagious and may lead to increased health risks, the timely
distribution of effective vaccines and treatments, the potential
development and distribution of new vaccines and treatments, the
time required to achieve broad immunity, as well as new information
which may emerge concerning the severity and duration of the
COVID-19 pandemic, including the number and intensity of
resurgences in COVID-19 cases, and the actions required to contain
the coronavirus or remedy its impacts, among others. Please see the
section entitled "Caution Regarding Forward-Looking Statements"
later in this news release for a description of the principal
assumptions on which BCE's 2021 financial guidance targets are
based, as well as the principal related risk factors.
CALL WITH FINANCIAL ANALYSTS
BCE will hold a
conference call for financial analysts to discuss Q3 2021 results
on Thursday, November 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
7661656#. A replay will be available until midnight on December 5, 2021 by dialing 1-800-408-3053
or 905-694-9451 and entering passcode 6228194#.
A live audio webcast of the conference call will be available on
BCE's website at BCE Q3-2021 conference call.
NOTES
The information contained in this news release
is unaudited.
(1) The terms adjusted net earnings and adjusted EPS do not have
any standardized meaning under IFRS. Therefore, they are unlikely
to be comparable to similar measures presented by other issuers. We
define adjusted net earnings as net earnings attributable to common
shareholders before severance, acquisition and other costs, net
mark-to-market losses (gains) on derivatives used to economically
hedge equity settled share-based compensation plans, net losses
(gains) on investments, early debt redemption costs, impairment of
assets and discontinued operations, net of tax and non-controlling
interest (NCI). We define adjusted EPS as adjusted net earnings per
BCE common share. We use adjusted net earnings and adjusted EPS,
and we believe certain investors and analysts use these measures,
among other ones, to assess the performance of our businesses
without the effects of severance, acquisition and other costs, net
mark-to-market losses (gains) on derivatives used to economically
hedge equity settled share-based compensation plans, net losses
(gains) on investments, early debt redemption costs, impairment of
assets and discontinued operations, net of tax and NCI. We exclude
these items because they affect the comparability of our financial
results and could potentially distort the analysis of trends in
business performance. Excluding these items does not imply they are
non-recurring. The most comparable IFRS financial measures are net
earnings attributable to common shareholders and EPS. The following
table is a reconciliation of net earnings attributable to common
shareholders and EPS to adjusted net earnings on a consolidated
basis and per BCE common share (adjusted EPS) respectively.
($ millions except per share amounts)
|
|
Q3 2021
|
Q3 2020
|
|
TOTAL
|
PER
SHARE
|
TOTAL
|
PER SHARE
|
Net earnings
attributable to common
shareholders
|
757
|
0.83
|
692
|
0.77
|
Severance,
acquisition and other
costs
|
36
|
0.04
|
19
|
0.02
|
Net mark-to-market
(gains) losses
on
derivatives used to economically
hedge equity settled
share-based
compensation
plans
|
(45)
|
(0.05)
|
10
|
0.01
|
Net losses (gains) on
investments
|
-
|
-
|
(22)
|
(0.02)
|
Early debt redemption
costs
|
-
|
-
|
16
|
0.02
|
Impairment of
assets
|
-
|
-
|
3
|
-
|
Net earnings from
discontinued
operations
|
-
|
-
|
(6)
|
(0.01)
|
Adjusted net
earnings
|
748
|
0.82
|
712
|
0.79
|
|
|
|
|
|
|
(2) The terms adjusted EBITDA and adjusted EBITDA margin do not
have any standardized meaning under IFRS. Therefore, they are
unlikely to be comparable to similar measures presented by other
issuers. We define adjusted EBITDA as operating revenues less
operating costs, as shown in BCE's consolidated income statements.
Adjusted EBITDA for BCE's segments is the same as segment profit as
reported in Note 3, Segmented information, in BCE's Q3 2021
consolidated Financial Statements. We define adjusted EBITDA margin
as adjusted EBITDA divided by operating revenues. We use adjusted
EBITDA and adjusted EBITDA margin to evaluate the performance of
our businesses as they reflect their ongoing profitability. We
believe certain investors and analysts use adjusted EBITDA to
measure a company's ability to service debt and to meet other
payment obligations or as a common measurement to value companies
in the telecommunications industry. We believe that certain
investors and analysts also use adjusted EBITDA and adjusted EBITDA
margin to evaluate the performance of our businesses. Adjusted
EBITDA is also one component in the determination of short-term
incentive compensation for all management employees. Adjusted
EBITDA and adjusted EBITDA margin have no directly comparable IFRS
financial measure. Alternatively, the following table provides a
reconciliation of net earnings to adjusted EBITDA.
($ millions)
|
Q3
2021
|
Q3
2020
|
Net
earnings
Severance,
acquisition and other costs
Depreciation
Amortization
Finance
costs
Interest
expense
Interest on
post-employment benefit obligations
Impairment of
assets
Other (income)
expense
Income
taxes
Net earnings from
discontinued operations
|
813
50
902
245
272
5
-
(35)
306
-
|
740
26
876
232
279
12
4
29
262
(6)
|
Adjusted
EBITDA
|
2,558
|
2,454
|
BCE
operating revenues
|
5,836
|
5,787
|
Adjusted EBITDA
margin
|
43.8%
|
42.4%
|
(3) The term free cash flow does not have any standardized
meaning under IFRS. Therefore, it is unlikely to be comparable to
similar measures presented by other issuers. We define free cash
flow as cash flows from operating activities, excluding cash from
discontinued operations, acquisition and other costs paid (which
include significant litigation costs) and voluntary pension
funding, less capital expenditures, preferred share dividends and
dividends paid by subsidiaries to NCI. We exclude cash from
discontinued operations, acquisition and other costs paid and
voluntary pension funding because they affect the comparability of
our financial results and could potentially distort the analysis of
trends in business performance. Excluding these items does not
imply they are non-recurring. We consider free cash flow to be an
important indicator of the financial strength and performance of
our businesses because it shows how much cash is available to pay
dividends on common shares, repay debt and reinvest in our company.
We believe certain investors and analysts use free cash flow to
value a business and its underlying assets and to evaluate the
financial strength and performance of our businesses. The most
comparable IFRS financial measure is cash flows from operating
activities. The following table is a reconciliation of cash flows
from operating activities to free cash flow on a consolidated
basis.
($ millions)
|
Q3 2021
|
Q3 2020
|
Cash flows from
operating activities
|
1,774
|
2,110
|
Capital expenditures
|
(1,159)
|
(1,031)
|
Cash dividends paid
on preferred shares
|
(31)
|
(32)
|
Cash dividends paid
by subsidiaries to NCI
|
(13)
|
(11)
|
Acquisition and other
costs paid
|
-
|
13
|
Cash from
discontinued operations (included in cash flows
from operating
activities)
|
-
|
(15)
|
Free cash
flow
|
571
|
1,034
|
(4) We use ABPU, churn, capital intensity and subscriber
units to measure the success of our strategic imperatives. These
key performance indicators are not accounting measures and may not
be comparable to similar measures presented by other issuers.
(5) Available liquidity at September 30,
2021 was comprised of $2,167
million in cash and cash equivalents, $400 million available under our securitized
trade receivables programs and $3.5
billion available under our committed bank credit
facilities.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
Certain
statements made in this news release are forward-looking
statements. These statements include, without limitation,
statements relating to BCE's financial guidance (including
revenues, adjusted EBITDA, capital intensity, adjusted EPS and free
cash flow), BCE's 2021 annualized common share dividend, our
network deployment and capital investment plans, including our
two-year increased capital investment program to accelerate the
rollout of 5G, fibre and rural Wireless Home Internet networks, the
potential impacts on our business, financial condition, liquidity
and financial results of the COVID-19 pandemic, BCE's business
outlook, objectives, plans and strategic priorities, and other
statements that are not historical facts. Forward-looking
statements are typically identified by the words assumption,
goal, guidance, objective, outlook, project, strategy, target
and other similar expressions or future or conditional verbs such
as aim, anticipate, believe, could, expect, intend, may, plan,
seek, should, strive and will. All such forward-looking
statements are made pursuant to the 'safe harbour' provisions of
applicable Canadian securities laws and of the United States Private Securities
Litigation Reform Act of 1995.
Forward-looking statements, by their very nature, are subject to
inherent risks and uncertainties and are based on several
assumptions, both general and specific, which give rise to the
possibility that actual results or events could differ materially
from our expectations expressed in or implied by such
forward-looking statements and that our business outlook,
objectives, plans and strategic priorities may not be achieved.
These statements are not guarantees of future performance or
events, and we caution you against relying on any of these
forward-looking statements. The forward-looking statements
contained in this news release describe our expectations as of
November 4, 2021 and, accordingly,
are subject to change after such date. Except as may be required by
applicable securities laws, we do not undertake any obligation to
update or revise any forward-looking statements contained in this
news release, whether as a result of new information, future events
or otherwise. 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 November 4,
2021. The financial impact of these transactions and special
items can be complex and depends on the facts particular to each of
them. We therefore cannot describe the expected impact in a
meaningful way or in the same way we present known risks affecting
our business. Forward-looking statements are presented in this news
release for the purpose of assisting investors and others in
understanding certain key elements of our expected financial
results, as well as our objectives, strategic priorities and
business outlook, and in obtaining a better understanding of our
anticipated operating environment. Readers are cautioned that such
information may not be appropriate for other purposes.
Material Assumptions
A number of economic, market,
operational and financial assumptions were made by BCE in preparing
its forward-looking statements contained in this news release,
including, but not limited to the following:
Canadian Economic Assumptions
Our
forward-looking statements are based on certain assumptions
concerning the Canadian economy, which in turn depend on important
assumptions about how the COVID-19 pandemic will evolve, including
the progress of the vaccination rollout. Notably, it is assumed
that most public health restrictions in Canada are eased by the end of 2021 and
pandemic-related effects on consumer demand for goods and services
diminish gradually over time. In particular, we have assumed:
- Strong rebound in economic growth as the economy recovers from
the effects of the pandemic and related restrictions, given the
Bank of Canada's most recent estimated growth in Canadian gross
domestic product of around 5% on average in 2021
- Household consumption growth as the pandemic recedes and
consumer confidence rises
- Strengthening business investment outside the oil and gas
sector as demand increases and business confidence improves
- Employment gains expected in 2021, despite ongoing challenges
in some sectors
- Accelerating trend toward e-commerce
- Low immigration levels until the majority of international
travel and/or health-related restrictions are lifted
- Prevailing low interest rates expected to remain at or near
current levels for the foreseeable future
- Canadian dollar expected to remain at or near current levels.
Further movements may be impacted by the degree of strength of the
U.S. dollar, interest rates and changes in commodity prices
Canadian Market Assumptions
Our forward-looking
statements also reflect various Canadian market assumptions. In
particular, we have made the following market assumptions:
- A consistently high level of wireline and wireless competition
in consumer, business and wholesale markets
- Higher, but slowing, wireless industry penetration
- A shrinking data and voice connectivity market as business
customers migrate to lower-priced telecommunications solutions or
alternative over-the-top (OTT) competitors
- While the advertising market continues to be adversely impacted
by cancelled or delayed advertising campaigns from many sectors due
to the economic downturn during the COVID-19 pandemic, we do expect
gradual recovery in 2021
- Declines in broadcasting distribution undertakings (BDU)
subscribers driven by increasing competition from the continued
rollout of subscription video on demand streaming services together
with further scaling of OTT aggregators
Assumptions Concerning our Bell Wireless
Segment
Our forward-looking statements are also based on
the following internal operational assumptions with respect to our
Bell Wireless segment:
- Maintain our market share of national operators' wireless
postpaid net additions
- Modest growth of our prepaid subscriber base
- Continued focus on mobile phone subscriber growth, as well as
the introduction of more 5G, 4G Long-term evolution (LTE) and LTE
Advanced devices and new data services
- Continued deployment of 5G wireless network offering coverage
that is competitive with other national operators in centres across
Canada
- Increased subscriber acquisition and retention spending
- Unfavourable impact on mobile phone blended ABPU, driven by
reduced outbound roaming revenue due to travel restrictions as a
result of the COVID-19 pandemic and reduced data overage revenue
due to continued adoption of unlimited plans
- Increased adoption of unlimited data plans and device financing
plans
- No material financial, operational or competitive consequences
of changes in regulations affecting our wireless business
Assumptions Concerning our Bell Wireline
Segment
Our forward-looking statements are also based on
the following internal operational assumptions with respect to our
Bell Wireline segment:
- Continued growth in retail Internet and IPTV subscribers
- Increasing wireless and Internet-based technological
substitution
- Continued aggressive residential service bundle offers from
cable TV competitors in our local wireline areas
- Continued large business customer migration to IP-based
systems
- Ongoing competitive repricing pressures in our business and
wholesale markets
- Continued competitive intensity in our small and medium-sized
business markets as cable operators and other telecommunications
competitors continue to intensify their focus on business
customers
- Traditional high-margin product categories challenged by large
global cloud and OTT providers of business voice and data solutions
expanding into Canada with on-demand services
- Accelerating customer adoption of OTT services resulting in
downsizing of TV packages
- Further deployment of direct fibre to more homes and businesses
within our wireline footprint and fixed wireless-to-the-premise
technology in rural communities
- Growing consumption of OTT TV services and on-demand streaming
video, as well as the proliferation of devices, such as tablets,
that consume large quantities of bandwidth, will require ongoing
capital investment
- Realization of cost savings related to management workforce
reductions including attrition and retirements, lower contracted
rates from our suppliers, operating efficiencies enabled by a
growing direct fibre footprint, changes in consumer behaviour and
product innovation, new call centre technology that is enabling
self-serve capabilities, and other improvements to the customer
service experience
- No material financial, operational or competitive consequences
of changes in regulations affecting our wireline business
Assumptions Concerning our Bell Media
Segment
Our forward-looking statements are also based on
the following internal operational assumptions with respect to our
Bell Media segment:
- Overall revenue is expected to reflect a gradual economic
recovery in 2021 combined with subscriber revenue growth and
strategic pricing on advertising sales. However, revenue
performance is expected to continue to be negatively impacted by
the effects of the COVID-19 pandemic on many sectors of the
economy.
- Continued escalation of media content costs to secure quality
programming, as well as the return of sports and entertainment
programming
- Continued scaling of Crave through broader content offering and
user experience improvements
- Investment in Noovo News and more French-language original
content to better serve our French-language customers with a wider
array of content, in the language of their choice, on their
preferred platforms
- Enhanced market-leading attribution through our Strategic
Audience Management (SAM) tool
- Ability to successfully acquire and produce highly rated
programming and differentiated content
- Building and maintaining strategic supply arrangements for
content across all screens and platforms
- Continued monetization of content rights and Bell Media
properties across all platforms
- No material financial, operational or competitive consequences
of changes in regulations affecting our media business
Financial Assumptions Concerning BCE
Our
forward-looking statements are also based on the
following internal financial assumptions with respect to BCE
for 2021:
- Total post-employment benefit plans cost to be approximately
$300 million, based on an estimated
accounting discount rate of 2.6%, comprised of an estimated above
adjusted EBITDA post-employment benefit plans service cost of
approximately $275 million and an
estimated below adjusted EBITDA net post-employment benefit plans
financing cost of approximately $25
million
- Increase in depreciation and amortization expense of
approximately $200 million to
$250 million compared to 2020
- Interest expense and payments of approximately $1,050 million to $1,100
million
- An effective tax rate of approximately 27%
- NCI of approximately $60
million
- Total cash pension and other post-employment benefit plan
funding of approximately $350 million
to $375 million
- Cash income taxes of approximately $800
million to $900 million
- Average number of BCE common shares outstanding of
approximately 905 million
- An annual common share dividend of $3.50 per share
The foregoing assumptions, although considered reasonable by BCE
on November 4, 2021, may prove to be
inaccurate. Accordingly, our actual results could differ materially
from our expectations as set forth in this news release.
Material Risks
Important risk factors that could cause
our assumptions and estimates to be inaccurate and actual results
or events to differ materially from those expressed in, or implied
by, our forward-looking statements, including our 2021 financial
guidance, are listed below. The realization of our forward-looking
statements, including our ability to meet our 2021 financial
guidance targets, essentially depends on our business performance,
which, in turn, is subject to many risks. Accordingly, readers are
cautioned that any of the following risks could have a material
adverse effect on our forward-looking statements. These risks
include, but are not limited to: the COVID-19 pandemic and the
adverse effects from the emergency measures implemented or to be
implemented as a result thereof, including supply chain
disruptions, as well as other pandemics, epidemics and other health
risks; adverse economic and financial market conditions, a
declining level of retail and commercial activity, and the
resulting negative impact on the demand for, and prices of, our
products and services; our dependence on third-party suppliers,
outsourcers and consultants to provide an uninterrupted supply of
the products and services we need to operate our business,
including mobile devices; the intensity of competitive activity
including from new and emerging competitors; the level of
technological substitution and the presence of alternative service
providers contributing to the acceleration of disruptions and
disintermediation in each of our business segments; changing viewer
habits and the expansion of OTT TV and other alternative service
providers, as well as the fragmentation of, and changes in, the
advertising market; rising content costs and challenges in our
ability to acquire or develop key content; the proliferation of
content piracy; higher Canadian smartphone penetration and reduced
or slower immigration flow; regulatory initiatives, proceedings and
decisions, government consultations and government positions that
affect us and influence our business; the inability to protect our
physical and non-physical assets from events such as information
security attacks, unauthorized access or entry, fire and natural
disasters; the failure to transform our operations, enabling a
truly customer-centric service experience, while lowering our cost
structure; the failure to continue investment in next-generation
capabilities in a disciplined and strategic manner; the inability
to drive a positive customer experience; the complexity in our
operations; the failure to maintain operational networks in the
context of significant increases in capacity demands; the risk that
we may need to incur significant capital expenditures to provide
additional capacity and reduce network congestion; the failure to
implement or maintain highly effective information technology (IT)
systems; the failure to generate anticipated benefits from our
corporate restructurings, system replacements and upgrades, process
redesigns, staff reductions and the integration of business
acquisitions; events affecting the functionality of, and our
ability to protect, test, maintain, replace and upgrade, our
networks, IT systems, equipment and other facilities; in-orbit and
other operational risks to which the satellites used to provide our
satellite TV services are subject; the failure to attract and
retain employees with the appropriate skill sets and to drive their
performance in a safe environment; labour disruptions and
shortages; the failure of our vendor selection, governance and
oversight processes; security and data leakage exposure if security
control protocols affecting our suppliers are bypassed; the quality
of our products and services and the extent to which they may be
subject to manufacturing defects or fail to comply with applicable
government regulations and standards; the inability to access
adequate sources of capital and generate sufficient cash flows from
operating activities to meet our cash requirements, fund capital
expenditures and provide for planned growth; uncertainty as to
whether dividends will be declared by BCE's board of directors or
whether the dividend on common shares will be increased; the
inability to manage various credit, liquidity and market risks;
pension obligation volatility and increased contributions to
post-employment benefit plans; new or higher taxes due to new tax
laws or changes thereto or in the interpretation thereof, and the
inability to predict the outcome of government audits; the failure
to reduce costs, as well as unexpected increases in costs; the
failure to evolve practices to effectively monitor and control
fraudulent activities; unfavourable resolution of legal proceedings
and, in particular, class actions; new or unfavourable changes in
applicable laws and the failure to proactively address our legal
and regulatory obligations; the failure to recognize and adequately
respond to climate change concerns or stakeholder and governmental
changing expectations on environmental matters; and health concerns
about radio frequency emissions from wireless communication devices
and equipment.
We caution that the foregoing list of risk factors is not
exhaustive and other factors could also adversely affect our
results. We encourage investors to also read BCE's 2020 Annual
MD&A dated March 4, 2021
(included in BCE's 2020 Annual Report) and BCE's 2021 First, Second
and Third Quarter MD&As dated April 28,
2021, August 4, 2021 and
November 3, 2021, respectively, for
additional information with respect to certain of these and other
assumptions and risks, filed by BCE with the Canadian provincial
securities regulatory authorities (available at Sedar.com) and with
the U.S. Securities and Exchange Commission (available at SEC.gov).
These documents are also available at BCE.ca.
About BCE
BCE is Canada's largest communications
company, providing advanced Bell broadband wireless, Internet, TV,
media and business communications services. To learn more, please
visit Bell.ca or BCE.ca.
Through Bell for Better, we are investing to create a better
today and a better tomorrow by supporting the social and economic
prosperity of our communities. This includes the Bell Let's Talk
initiative, which promotes Canadian mental health with national
awareness and anti-stigma campaigns like Bell Let's Talk Day and
significant Bell funding of community care and access, research and
workplace initiatives throughout the country. To learn more, please
visit Bell.ca/LetsTalk.
Media inquiries:
Marie-Eve Francoeur
514-391-5263
marie-eve.francoeur@bell.ca
Investor inquiries:
Thane Fotopoulos
514-870-4619
thane.fotopoulos@bell.ca
SOURCE Bell Canada