BCE reports 2019 Q4 and full-year results, announces 2020 financial targets

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BCE reports 2019 Q4 and full-year results, announces 2020 financial targets

by ahnationtalk on February 6, 2020142 Views

5% dividend increase to $3.33 per year

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.

  • BCE adjusted EBITDA up 4.8% in Q4 on year-over-year growth at all Bell operating segments, driven by 1.6% higher revenue, cost control and IFRS 16 impact
  • Total wireless net additions of 123,582 in Q4 generated 3.6% revenue growth and 7.4% higher adjusted EBITDA in an intensely competitive quarter
  • 57,678 total retail Internet and IPTV net customer additions; Bell’s leading wireline margin improves 60 basis points to 43.3%
  • Grew combined fibre to the premises and Wireless Home Internet footprint by about 760,000 homes and businesses in 2019; direct fibre program now 53% complete
  • Strong Q4 Bell Media results with 3.4% revenue growth; adjusted EBITDA up 16.5%
  • Bilingual Crave and Super Écran direct-to-consumer service launched January 28
  • Net earnings increased 12.6% to $723 million; net earnings attributable to common shareholders grew 10.9% to $672 million, or $0.74 per common share, up 8.8%; adjusted net earnings of $794 million generated adjusted EPS of $0.88, down 1.1%
  • Q4 cash flows from operating activities increased 16.9% to $2,091 million; Q4 free cash flow of $894 million contributed to 7.0% growth for full-year 2019

MONTRÉAL, Feb. 6, 2020 /CNW Telbec/ – BCE Inc. (TSX: BCE) (NYSE: BCE) today reported results for the fourth quarter (Q4) and full-year 2019, provided financial guidance for 2020, and announced a 5%, or $0.16 per share, increase in the BCE annual common share dividend to $3.33.

“Bell’s leading network performance, service innovations and focused execution by our team delivered very positive results in a highly competitive fourth quarter. Our wireless, wireline and media operating segments all contributed to our strong financial performance as we welcomed more than 181,000 net new wireless, Internet and IPTV subscribers to Bell in the quarter and approximately 743,000 for the year, a 5% increase over 2018,” said Mirko Bibic, Bell’s President and Chief Executive Officer. “I am also pleased to announce today the latest increase in BCE’s dividend to $3.33 per common share – our 12th consecutive year of 5% or higher growth in the common share dividend.”

“These results underscore that Bell is well positioned to lead the way as we take Canadian communications into the next generation with all-fibre broadband and mobile 5G services. Bell’s goal is advancing how Canadians connect with each other and the world, and our team will deliver by championing customer experience in this new world of communications possibilities,” said Mr. Bibic. “Bell is ready to launch initial 5G service, and we are eager to build on our and the broader Canadian industry’s success in delivering high-quality mobile 4G access to more than 99% of the national population. Canada’s wireless infrastructure is the envy of the world for its coverage, speed and reliability, and consumers are taking full advantage of these high-performance networks, enhanced data services and falling prices to get more value from wireless than ever before. In fact, Bell gained more net new wireless subscribers in 2019 than in any year since 2005. As we enter the exciting next generation of mobile connectivity, it bears emphasizing that we need a regulatory environment that encourages the ongoing significant capital investment and speedy deployment of wireless spectrum necessary to enable Canada to also lead the way in 5G.”

KEY BUSINESS DEVELOPMENTS

Bell announces 5G partnership with Nokia
As part of our mobile 5G strategy, Bell today announced our first 5G network equipment supplier agreement with long-time partner Nokia. The Finnish company has quickly become a leading international vendor of 5G network solutions with more than 60 commercial 5G contracts with wireless carriers worldwide. Bell is ready to deliver initial 5G service in urban centres across Canada as next-generation smartphones come to market in 2020, and will continue to enhance 5G access speeds, capacity and coverage as additional 5G wireless spectrum, including in the 3.5 GHz band, becomes available this year through the federal government’s spectrum auction process. To learn more about Bell 5G, please visit Bell.ca/Network.

Broadband expansion for centres large and small
As part of its fibre to the premises (FTTP) expansion into the populous 905 region surrounding Toronto, Bell is bringing direct fibre links to more than 200,000 residential and business locations in the City of Hamilton. We also continue to expand the reach of our fibre network in smaller centres, including in Northern Manitoba to approximately 2,800 locations in the City of Flin Flon. More rural Canadians continue to have access to Bell broadband with the ongoing expansion of our Wireless Home Internet service with recent deployments to dozens more small communities in Eastern Ontario, in the Eastern Townships and the Montérégie region in Québec.

Bell Media: bilingual Crave, Super Bowl success
Bell Media’s Crave is now a bilingual TV and streaming service offering more than 6,000 hours of exclusive francophone content from Crave and Super Écran as well as French-language versions of Showtime and HBO programming. Launched January 28, bilingual Crave is available through participating television providers and at Crave.ca. With simultaneous substitution back for the February 2 broadcast of Super Bowl LIV, CTV, TSN and RDS achieved a record Super Bowl audience of 9.5 million viewers. TSN and RDS extended their exclusive long-term broadcast partnerships with the Canadian Football League, including the Grey Cup, and with Hockey Canada, including the annual IIHF World Junior Championship.

Bell innovation tackles fraudulent calls
Bell has developed network technology based on Artificial Intelligence and machine learning that could block approximately 120 million more fraudulent telephone calls per month than the call-blocking methods currently mandated by the CRTC. Bell is eagerly awaiting the CRTC’s approval to test the new system, which uses proprietary algorithms and cross-referencing with the Canadian Anti-Fraud Centre (CAFC) to identify and block only verifiably fraudulent calls.

Record-setting Bell Let’s Talk Day
Bell Let’s Talk Day on January 29 set new records for engagement with 154,387,425 million calls, texts and social media messages from Canadians and people around the world calling for action in mental health. With a Bell donation of 5 cents for each communication, our funding for Canadian mental health grew by $7,719,371.25 and brought Bell’s total funding commitment to $108,415,135. Bell Let’s Talk announced new support for Strongest Families Institute in the Northwest Territories, Peguis First Nation in Manitoba, William Osler Health System in Ontario and Fondation de ma vie in Québec, as well as the national 2020 Bell Let’s Talk Community Fund.

BCE RESULTS

Financial Highlights

($ millions except per share amounts) (unaudited)

Q4 2019

Q4 2018

% change

2019

2018

% change

BCE

Operating revenues

6,316

6,215

1.6%

23,964

23,468

2.1%

Net earnings

723

642

12.6%

3,253

2,973

9.4%

Net earnings attributable to common shareholders

672

606

10.9%

3,040

2,785

9.2%

Adjusted net earnings(1)

794

794

3,153

3,151

0.1%

Adjusted EBITDA(2)

2,508

2,394

4.8%

10,106

9,535

6.0%

Net earnings per common share (EPS)

0.74

0.68

8.8%

3.37

3.10

8.7%

Adjusted EPS(1)

0.88

0.89

(1.1%)

3.50

3.51

(0.3%)

Cash flows from operating activities

2,091

1,788

16.9%

7,958

7,384

7.8%

Capital expenditures

(1,153)

(974)

(18.4%)

(3,988)

(3,971)

(0.4%)

Free cash flow(3)

894

1,022

(12.5%)

3,818

3,567

7.0%

 

“Bell’s strong performance in Q4 closed out a successful year of growth in revenue, adjusted EBITDA and free cash flow, all of which were in line with our financial guidance targets, and continued increases in new subscribers. Our financial targets for 2020 announced today build on our market momentum and positive financial profile across all Bell operating segments,” said Glen LeBlanc, Chief Financial Officer for BCE and Bell Canada. “Our favourable operational and financial outlook is underpinned by an investment-grade balance sheet, including a healthy liquidity position and a fully funded defined benefit pension plan, together with a capital structure that provides good financial flexibility to support our operating needs and deliver consistent, steady dividend growth for BCE shareholders. And with a regulatory environment going forward that focuses on delivering value to Canadians, our free cash flow generation will enable the capital investments in fibre and wireless network infrastructure necessary to drive future growth of the business and Canada’s ongoing leadership in the sector.”

BCE operating revenue in Q4 was $6,316 million, up 1.6% compared to Q4 2018, led by healthy top-line growth at Bell Wireless and Bell Media that drove 0.9% higher service revenue to $5,276 million. Bell Wireline revenue was stable year over year. Product revenue grew 5.7% to $1,040 million, due mainly to increased wireless transaction volumes and a greater sales mix of higher-value smartphones. For full-year 2019, BCE operating revenue increased in line with our guidance target of 1% to 3% growth: up 2.1% over 2018 to $23,964 million on 1.4% higher service revenue and a 6.6% increase in total product revenue.

Net earnings in Q4 increased 12.6% to $723 million and net earnings attributable to common shareholders totalled $672 million, or $0.74 per share, up 10.9% and 8.8% respectively. Higher net earnings and net earnings per common share were driven by strong growth in adjusted EBITDA, decreased severance, acquisition and other costs, and lower other expense due to lower year-over-year non-cash media asset impairment charges. This was partly offset by increased depreciation and amortization expense and higher finance costs. For full-year 2019, net earnings increased 9.4% to $3,253 million while net earnings attributable to common shareholders were $3,040 million, or $3.37 per share, up 9.2% and 8.7% respectively. The adoption of IFRS 16 did not have a significant impact on net earnings.

Adjusted net earnings in Q4 were $794 million, or $0.88 per common share, compared to $794 million, or $0.89 per common share, in Q4 2018. The decrease in adjusted net earnings per share (adjusted EPS) was attributable to the factors discussed above as well as a higher average number of common shares outstanding compared to the previous year. For full-year 2019, adjusted net earnings were $3,153 million compared to $3,151 million in 2018, and adjusted EPS was down 0.3% to $3.50.

Adjusted EBITDA in Q4 grew 4.8% to $2,508 million, driven by increases of 7.4% in wireless, 1.5% in wireline and 16.5% in media. BCE’s consolidated adjusted EBITDA margin (2) increased 1.2 percentage points to 39.7% due to the high flow-through of service revenue growth, increasing broadband Internet scale and ongoing cost discipline as reflected in a 0.3% reduction in total operating costs. Consistent with our guidance target range of 5% to 7% growth for the year, adjusted EBITDA increased 6.0% to $10,106 million in 2019, while BCE’s consolidated EBITDA margin expanded to 42.2% from 40.6% in 2018. Adjusted EBITDA was impacted positively by IFRS 16 as most operating lease expenses are now recorded as depreciation and interest expense rather than operating costs within adjusted EBITDA.

BCE invested $1,153 million in new capital in Q4, compared to $974 million the year before. This timing related year-over-year increase brought total capital expenditures for 2019 to $3,988 million, up slightly from $3,971 million in 2018, and represented a capital intensity(5) ratio (capital expenditures as a percentage of total revenue) of 16.6%, compared to 16.9% the year before. Capital spending in 2019 focused on further expansion of Bell’s combined FTTP and Wireless Home Internet footprints to approximately 760,000 additional locations; the connection of fibre Internet and TV services to more homes and businesses; ongoing wireless network investment, including the deployment of small cells to increase LTE Advanced (LTE-A) coverage, speed and quality, and to expand fibre backhaul in preparation for the launch of 5G service; as well as spending on digital media platforms.

BCE cash flows from operating activities in Q4 were $2,091 million, up 16.9% over last year. The increase was due mainly to adjusted EBITDA growth, lower interest paid and no voluntary contribution made to post-employment benefit plans at the end of 2019 compared to $240 million in 2018, partly offset by higher income taxes paid. Free cash flow decreased 12.5% in Q4 to $894 million, from $1,022 million the year before, due to increased capital expenditures, partly offset by higher cash flows from operating activities excluding acquisition and other costs paid and voluntary pension contributions. For full-year 2019, BCE cash flows from operating activities totalled $7,958 million, up 7.8% compared to 2018, while free cash flow grew in line with our guidance growth target of 7% to 12%, increasing 7.0% to $3,818 million.

In Q4, BCE reported 123,582 net new wireless customers (121,599 postpaid and 1,983 prepaid); 35,639 net new retail Internet customers; 22,039 net new IPTV customers; a net loss of 21,618 retail satellite TV customers; and a net loss of 58,110 retail residential NAS lines.(5)

BCE wireless and retail Internet, TV and residential NAS connections totalled 18,983,510 at the end of 2019, up 1.3% over 2018. The total includes 9,957,962 wireless customers(4), up 3.6% (including 9,159,940 postpaid customers, an increase of 3.7%, and 798,022 prepaid customers, up 2.3%); 3,555,601 retail Internet subscribers(4), up 4.3%; 2,772,464 retail TV subscribers, up 0.2% (including 1,767,182 IPTV customers, an increase of 5.5%, and 1,005,282 retail satellite TV customers, down 7.8%); and 2,697,483 retail residential NAS lines, down 8.9%.

BCE OPERATING RESULTS BY SEGMENT

Bell Wireless
Wireless operating revenue grew 3.6% in Q4 to $2,493 million, with service revenue up 1.6% to $1,619 million, reflecting continued postpaid subscriber growth and a stronger revenue contribution from prepaid. Product revenue increased 7.4% to $874 million, driven by higher transaction volumes and a greater sales mix of higher-value smartphones. For full-year 2019, operating revenue increased 3.7% to $9,142 million on 2.5% higher service revenue of $6,476 million and product revenue growth of 6.6% to $2,666 million.

Wireless adjusted EBITDA grew 7.4% in Q4 to $944 million, delivering a 1.4 percentage-point increase in margin to 37.9%, as total operating costs increased 1.4% to $1,549 million due to higher costs from premium smartphone sales and support for a growing customer base with increasing data consumption. Improvement in adjusted EBITDA and margin was driven by a high service revenue flow-through, promotional spending discipline and the favourable impact of IFRS 16. For full-year 2019, adjusted EBITDA increased 9.1%, yielding a 2.1 percentage-point margin increase to 42.0%, on a 0.1% increase in operating costs to $5,300 million.

  • Bell added 123,582 total net new postpaid and prepaid customers in Q4, compared to 143,114 last year. For full-year 2019, total postpaid and prepaid net additions grew 7.4% to 515,409, representing our best annual subscriber performance since 2005.
  • Postpaid net additions were 121,599 compared to 121,780 in Q4 2018. Postpaid gross additions in Q4 were up 1.7% over last year, driven by increased market activity during the Black Friday to Christmas holiday period and strong sales execution across our retail channels. For full-year 2019, postpaid net additions were 401,955, down from 447,682 in 2018 due to fewer year-over-year customer additions from our long-term mobile services contract with Shared Services Canada.
  • Postpaid customer churn(5) increased 0.02 percentage points in Q4 to 1.28% due to the seasonally high level of competitive intensity in the quarter and selective matching of aggressive competitor promotions. For full-year 2019, postpaid churn decreased 0.03 percentage points to 1.13%, reflecting Bell’s mobile network quality and focus on subscriber base management.
  • Prepaid net additions totalled 1,983 in Q4, down from 21,334 last year. While gross additions increased 42.9%, reflecting strong demand for our low-cost Lucky Mobile prepaid service and exclusive national retail distribution agreement with Dollarama, customer churn increased 1.96 percentage-points to 5.14%. This was attributable to increased competitive intensity in the discount mobile market and a change in our prepaid deactivation policy at the beginning of 2019 from 120-150 days to 90 days. For full-year 2019, prepaid net additions grew 253.1% to 113,454, with 61.9% higher gross additions and an increase in customer churn to 4.44% from 3.17% in 2018.
  • Bell’s total wireless customer base in 2019 increased 3.6% to 9,957,962, comprising 9,159,940 postpaid subscribers, up 3.7% over 2018, and 798,022 prepaid customers, up 2.3% year over year.
  • Blended average billing per user (ABPU)(5) decreased 0.4% to $67.20 in Q4, due mainly to the impact of unlimited data plans on data overage revenue, a higher mix of installment plans in the customer base and the dilutive impact of a greater number of prepaid subscribers. For full-year 2019, blended ABPU increased 0.8% to $68.32, with more customers subscribing to higher-value monthly plans including larger data allotments, as well as the flow-through of price changes and subscriber adjustments made at the beginning of 2019.

Bell Wireline
Wireline operating revenue totalled $3,138 million in Q4 compared to $3,137 million last year. Service revenue increased 0.1% to $2,969 million, while product revenue declined 0.6% to $169 million. Higher Internet and IPTV revenue together with growth in business service solutions was offset by lower voice revenue from traditional NAS and long distance services; the impact of acquisition and retention discounts on residential service bundles to match aggressive competitor promotions; lower TV pay-per-view revenue compared to last year; and a decline in low-margin data equipment sales to large business enterprise customers. For full-year 2019, total wireline operating revenue increased 0.7% to $12,356 million on service revenue growth of 0.4% to $11,788 million and 7.2% higher product revenue of $568 million.

Wireline adjusted EBITDA increased 1.5% in Q4 to $1,359 million, delivering a 60 basis-point increase in our industry-leading margin to 43.3%. This was driven by broadband Internet and IPTV subscriber growth, improved year-over-year business markets operating profitability, and a 1.1% reduction in operating costs that reflected the favourable impact of IFRS 16 as well as continued service improvement, spending control and fibre-related operating efficiencies. For a fifth  consecutive year, wireline delivered positive adjusted EBITDA growth in 2019, increasing 1.7% to $5,414 million on 0.1% lower operating costs of $6,942 million to yield a 0.4 percentage-point higher margin of 43.8%.

  • Bell added 35,639 new retail Internet customers in Q4, an increase of 9.6% over the year before, reflecting the ongoing growth in high-speed broadband services in Bell’s FTTP and Wireless Home Internet footprints (which together reached approximately 5.4 million locations at the end of 2019, up from approximately 4.6 million in 2018). For full-year 2019, total retail Internet net additions grew 16.5% to 135,861, driven by higher gross activations, including the pull-through of Internet customer activations from Bell’s Alt TV service, and lower residential customer churn.
  • Retail Internet customers totalled 3,555,601 at the end of 2019, an increase of 4.3% over 2018, building on Bell’s position as the leading Internet service provider in Canada.
  • Bell TV added 22,039 net new retail IPTV subscribers, down from 36,473 in Q4 2018 due to the high rate of customer penetration in current Fibe markets, increasing maturity of our Alt TV service and ongoing over-the-top substitution. For full-year 2019, total retail IPTV net additions were 91,476 compared to 110,790 the year before. At the end of 2019, Bell served 1,767,182 retail IPTV subscribers, up 5.5% over last year.
  • Retail satellite TV net customer losses in Q4 and full-year 2019 improved 7.0% and 4.3%, respectively, to 21,618 and 85,423, due to fewer customer deactivations. At the end of 2019, Bell remained Canada’s #1 TV provider with a combined total of 2,772,464 retail IPTV and satellite TV subscribers, up 0.2% from 2018.
  • Wireline data service revenue was up 1.6% in Q4 to $1,941 million, driven by Internet and IPTV subscriber growth, residential rate increases, higher ARPU from customer upgrades to faster Internet speeds with larger data allotments, and an increase in business service solutions sales. Full-year 2019 wireline data service revenue increased 2.9% to $7,684 million.
  • Retail residential NAS net losses improved 3.2% in Q4 to 58,110, reflecting improved customer retention in Bell’s growing fibre footprint and lapping of the industry’s shift from 3-product to 2-product Internet and TV service bundles that began in mid-2018, which unfavourably impacted new activations. Full-year 2019 retail residential NAS net losses totalled 263,325, up 1.7% over 2018, reflecting ongoing wireless and IP substitution. This resulted in an 8.9% year-over-year decline in Bell’s total residential NAS customer base to 2,697,483 at the end of 2019.
  • Wireline voice revenue decreased 5.8% to $879 million in Q4 and 5.8% to $3,564 million in full-year 2019, due to NAS line reductions, business customer conversions to IP-based data services, and reduced usage of traditional long distance by residential and business customers.

Bell Media
Media operating revenue increased 3.4% in Q4 to $879 million, supported by higher revenue from Crave subscriber growth in 2019 and contract renewals with TV distributors. Advertising revenue was essentially stable as increases in our entertainment, sports and news specialty services and at Astral out of home were offset by softer year-over-year conventional TV and radio performance.

Adjusted EBITDA for Bell Media increased 16.5% to $205 million due to strong revenue growth, while operating costs remained stable at $674 million as the higher costs for sports broadcast rights and ongoing Crave content expansion were offset by the favourable impact of IFRS 16.

For full-year 2019, media operating revenue was up 3.1% to $3,217 million and operating costs improved 2.5% to $2,367 million, resulting in adjusted EBITDA growth of 22.7% to $850 million.

  • CTV was Canada’s most-watched television network in primetime among total viewers in the fall season with 12 of the top 20 shows nationally.
  • TSN remained Canada’s sports leader and most-watched specialty and pay TV channel overall in Q4. Average audiences grew 9% year over year, reflecting strong ratings for TSN key properties, including the Grey Cup, NFL football, MLS soccer, 2020 IIHF World Junior Championship and Toronto Raptors broadcasts. RDS remained the #1 French-language sports network and specialty TV channel in Q4 among adults 25-54.
  • Bell Media’s English-language entertainment specialty TV properties grew audience among total viewers by 7% in Q4. Bell Media is also leading French-language entertainment specialty and pay TV with 4 of the top 10 channels (RDS, Super Écran, Canal D and Z) among adults 25-54.
  • Bell Media remained Canada’s top radio broadcaster with national audiences growing 7% in Q4, reaching an average audience of 16.8 million listeners who spent approximately 77 million hours tuned in each week.
  • The digital leader among Canadian media competitors, Bell Media reached 23.5 million unique online visitors monthly and achieved averages of 515 million page views and 1billion minutes spent online each month.

COMMON SHARE DIVIDEND
BCE’s Board of Directors has declared a quarterly dividend of $0.8325 per common share, payable on April 15, 2020 to shareholders of record at the close of business on March 16, 2020.

OUTLOOK FOR 2020
The table below provides our 2020 financial guidance targets. These ranges take into consideration our current outlook as well as our 2019 consolidated financial results that reflected the favourable impact on adjusted EBITDA and free cash flow growth rates from the adoption of IFRS 16 accounting at the beginning of 2019.

2019 Guidance

2019 Results

2020 Guidance

Revenue growth

1% – 3%

2.1%

1% – 3%

Adjusted EBITDA growth

5% – 7%

6.0%

2% – 4%

Capital intensity

approx. 16.5%

16.6%

approx. 16.5%

Adjusted EPS

$3.48 – $3.58

$3.50

$3.50 – $3.60

Free cash flow growth

7% – 12%

7.0%

3% – 7%

Annualized common dividend per share

$3.17

$3.17

$3.33

Dividend payout policy(3)

65% – 75%

of free cash flow

73.8%

65% – 75%

of free cash flow

 

CALL WITH FINANCIAL ANALYSTS
BCE will hold a conference call for financial analysts to discuss Q4 2019 results and 2020 financial guidance on Thursday, February 6 at 8:00 am (Eastern). Media are welcome to participate on a listen-only basis. Please dial toll-free 1-800-273-9672 or 416-340-2216. A replay will be available until midnight March 6, 2020 by dialing 1-800-408-3053 or 905-694-9451 and entering passcode 1191984#.

A live audio webcast of the conference call will be available on BCE’s website at: BCE Q4 2019 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 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 and impairment charges, 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 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 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 and impairment charges, 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)

     Q4 2019

     Q4 2018

2019

2018

Total

Per share

Total

Per share

Total

Per share

Total

Per share

Net earnings attributable to common shareholders

672

0.74

606

0.68

3,040

3.37

2,785

3.10

Severance, acquisition and other costs

20

0.02

44

0.05

83

0.10

100

0.11

Net mark-to-market losses (gains) on derivatives used to economically hedge equity settled share-based compensation plans

45

0.05

(25)

(0.03)

(101)

(0.11)

58

0.07

Net (gains) losses on investments

(13)

(0.01)

27

0.03

44

0.05

47

0.05

Early debt redemption costs

13

0.01

15

0.02

Impairment charges

70

0.08

142

0.16

74

0.08

146

0.16

Adjusted net earnings

794

0.88

794

0.89

3,153

3.50

3,151

3.51

 

(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 4, Segmented information, in BCE’s Q3 2019 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 that 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)

Q4 2019

Q4 2018

2019

2018

Net earnings

723

642

3,253

2,973

Severance, acquisition and other costs

28

58

114

136

Depreciation

865

799

3,496

3,145

Amortization

228

216

902

869

Finance costs

Interest expense

286

259

1,132

1,000

Interest on post-employment benefits obligations

16

18

63

69

Other expense (income)

119

158

13

348

Income taxes

243

244

1,133

995

Adjusted EBITDA

2,508

2,394

10,106

9,535

BCE operating revenues

6,316

6,215

23,964

23,468

Adjusted EBITDA margin

39.7%

38.5%

42.2%

40.6%

 

(3) The terms free cash flow and dividend payout ratio 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 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 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 that certain investors and analysts use free cash flow to value a business and its underlying assets and to evaluate the financial strength and performance of our businesses. The most comparable IFRS financial measure is cash flows from operating activities. We define dividend payout ratio as dividends paid on common shares divided by free cash flow. We consider dividend payout ratio to be an important indicator of the financial strength and performance of our businesses because it shows the sustainability of the company’s dividend payments. The following table is a reconciliation of cash flows from operating activities to free cash flow on a consolidated basis.

($ millions)

Q4 2019

Q4 2018

2019

2018

Cash flows from operating activities

2,091

1,788

7,958

7,384

Capital expenditures

(1,153)

(974)

(3,988)

(3,971)

Cash dividends paid on preferred shares

(37)

(46)

(147)

(149)

Cash dividends paid by subsidiaries to NCI

(14)

(65)

(16)

Acquisition and other costs paid

7

14

60

79

Voluntary defined benefit pension plan contribution

240

240

Free cash flow 

894

1,022

3,818

3,567

 

(4) At the beginning of Q1 2019, we adjusted our wireless subscriber base to remove 167,929 subscribers (72,231 postpaid and 95,698 prepaid) as follows: 65,798 subscribers (19,195 postpaid and 46,603 prepaid) due to the completion of the shutdown of the CDMA network on April 30, 2019; 49,095 prepaid subscribers as a result of a change to our deactivation policy mainly from 120 days for Bell and Virgin Mobile and 150 days for Lucky Mobile to 90 days; 43,670 postpaid subscribers relating to Internet of Things (IoT) due to a further refinement of our subscriber definition as a result of technology evolution; and 9,366 postpaid fixed wireless Internet customers transferred to Bell Internet.

(5) We use ABPU, churn, capital intensity and subscriber units as key performance indicators 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.

 

Media inquiries:

Marie-Eve Francoeur
514-391-5263
[email protected]

Investor inquiries:

Thane Fotopoulos
514-870-4619
[email protected]

NT4

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