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SOURCE Bell Canada
Common share dividend increased 6.0% to $2.47 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 Concerning Forward-Looking Statements" later in this release.
MONTREAL, Feb. 6, 2014 /PRNewswire/ - BCE Inc. (TSX, NYSE: BCE), Canada's largest communications company, today reported BCE and Bell 2013 fourth quarter (Q4) and annual results in addition to announcing its financial guidance for 2014, and a $0.14 per share increase in its annual common share dividend to $2.47.
|($ millions except per share amounts) (unaudited)||Q4 2013||Q4 2012||% change||2013||2012||% change|
|Net Earnings Attributable to Common Shareholders||495||666||(25.7%)||1,975||2,456||(19.6%)|
|Cash flows from operating activities||1,838||863||113.0%||6,476||5,560||16.5%|
|Free Cash Flow(3)||674||605||11.4%||2,571||2,428||5.9%|
|(i) Bell includes the Bell Wireless, Bell Wireline and Bell Media segments.|
"Bell's strategy of intense investment in Canada's next-generation communications infrastructure is delivering for our customers and shareholders. Momentum continued across all Bell's business segments, especially in our Wireless, Media, TV and Internet growth services," said George Cope, President and CEO of Bell Canada and BCE Inc. "We achieved healthy smartphone additions and operating metrics in Wireless, ongoing acceleration in Fibe TV and Internet, and strong financial growth and ratings leadership at Media. At the same time, we reduced losses in traditional home and business landlines, supporting the positive trajectory in Bell Wireline revenue and EBITDA, and continued to decrease operating costs. Our strategy of investment in growth services, coupled with strong execution by the Bell team in a competitive marketplace, is delivering significant increases in revenue, EBITDA and free cash flow growth."
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, Accelerate Wireless, Leverage Wireline Momentum, Expand Media Leadership, Improve Customer Service, and Achieve a Competitive Cost Structure.
"We had another successful year financially, with solid revenue and EBITDA growth driving higher levels of free cash flow and Adjusted earnings. Our healthy balance sheet is underpinned by strong credit metrics, a favourable liquidity position, and a significant improvement in the funded status of Bell Canada's defined benefit pension plan," said Siim Vanaselja, Chief Financial Officer for Bell Canada and BCE. "Our 2014 financial guidance reflects continued strong operating momentum across our core businesses, the ongoing transformation of our revenue and EBITDA mix away from traditional voice services, and U.S. dollar-denominated purchases of goods and services that are fully hedged at close to par. Our strong financial position and projected free cash flow growth for 2014, provides us with considerable financial capacity to execute our dividend growth strategy, while increasing capital investment to support the growth of our business."
Today's dividend announcement represents BCE's tenth increase to its annual common share dividend, representing a 69% increase, in the past 5 years. The BCE annualized common share dividend will increase 6.0%, or 14 cents per share, from $2.33 to $2.47 effective with BCE's Q1 2014 dividend, payable on April 15, 2014 to shareholders of record at the close of business on March 14, 2014. This increase maintains our dividend payout ratio at the mid-point of our target policy range of 65% to 75% of free cash flow. The higher dividend for 2014 is supported by higher expected free cash flow generation and a positive business outlook for 2014.
BCE reported Q4 2013 net earnings attributable to common shareholders of $495 million, or $0.64 per share, compared to $666 million, or $0.86 per share, in Q4 2012. The year-over-year decrease in net earnings was due to a non-cash gain recognized in Q4 2012 on the transfer of spectrum from Inukshuk to its partners. Adjusted net earnings attributable to common shareholders were $540 million, an increase of 16.4%, and Adjusted earnings per share (EPS) increased 16.7% to $0.70 from $0.60, mainly as a result of higher EBITDA at Bell.
For 2013, net earnings attributable to common shareholders were $1,975 million, or $2.55 per share, down from $2,456 million, or $3.17 per share, in 2012. The year-over-year decrease was due to the CRTC tangible benefits obligation of $230 million that Bell was ordered to pay as part of the acquisition of Astral that was completed in Q3 2013, the higher value of uncertain tax positions favourably resolved in 2012, and the aforementioned non-cash gain recognized on the transfer of spectrum from Inukshuk to its partners. Adjusted net earnings attributable to common shareholders of $2,317 million and Adjusted EPS of $2.99, were up 1.0% compared to 2012, reflecting the flow-through of higher Bell Wireless and Bell Media EBITDA.
BCE's cash flow from operating activities was $1,838 million, compared to $863 million last year in Q4 2012, due mainly to lower contributions to post-employment benefit plans, attributable to the $750 million voluntary defined benefit pension plan contribution made in 2012. Free cash flow was $674 million, up 11.4% from $605 million in the previous year, driven by higher EBITDA and an increase in working capital. Similarly, for full-year 2013, cash flow from operating activities increased 16.5% to $6,476 million and free cash flow was up 5.9% to $2,571 million.
At the end of Q4 2013, BCE (Bell and Bell Aliant) served a total of 7,925,032 wireless customers, up 1.3% from Q4 2012; total TV subscribers of 2,489,248 (including 657,513 IPTV customers, reflecting the addition of 75,120 net new IPTV subscribers in Q4 2013), a 7.7% increase; total high-speed Internet subscribers of 3,136,636, up 3.0%; and total NAS lines of 7,595,569, a decrease of 6.6%.
Bell operating revenues increased 5.2% to $4,813 million in Q4 2013, driven by steady Wireless revenue growth, positive Wireline residential services revenue growth as strong TV and Internet expansion outpaced declines in traditional voice services, and Astral's contribution to Bell Media results.
Bell EBITDA was $1,693 million in Q4, up 7.0%, reflecting strong double-digit EBITDA growth of 10.4% at Bell Wireless and 33.7% at Bell Media. Notably, we generated positive EBITDA growth of 0.3% at Bell Wireline this quarter with a 41,000 year-over-year improvement in total Bell Wireline residential net customer losses, higher household ARPU, and a reduction in operating costs. Higher EBITDA across all Bell segments contributed to a 0.6 percentage-point improvement in Bell's consolidated EBITDA margin to 35.2%.
For 2013, in line with guidance targets for the year, Bell operating revenues and EBITDA were up 2.6% and 3.4%, respectively, to $18,109 million and $6,817 million. Bell's 2013 operating revenues and EBITDA reflect the contribution of Astral to Bell Media revenues and EBITDA after it became part of Bell Media on July 5, 2013.
Bell invested $992 million in new capital in Q4 2013, bringing total capital expenditures to $3,001 million in 2013, an increase of 2.7% over 2012. These investments reflect the continued deployment of broadband fibre to homes, neighbourhoods and businesses in Québec and Ontario that is fuelling the rapid expansion of Fibe TV; the ongoing rollout of 4G LTE mobile service in markets across Canada; higher spending on network capacity to support increasing Internet and mobile data consumption; enhancements to customer service systems; and the addition of new Bell and The Source stores across Canada.
BELL OPERATING RESULTS BY SEGMENT
Bell Wireless operating revenues increased 3.2% to $1,505 million in Q4 2013 with service revenue up 3.7% to $1,359 million and EBITDA up 10.4% to $529 million, reflecting the flow-through of postpaid smartphone subscribers acquired in 2013, combined with blended ARPU growth from higher data revenue.
Wireless data revenue increased 15.2% on higher customer usage driven by greater adoption of smartphones and increased data consumption on our 4G LTE network that is driving growth in wireless, Internet, video streaming, and data services such as Bell Mobile TV. In Q4, Bell also continued to reduce the price of mobile roaming for Canadian consumers travelling to popular international destinations.
Bell Wireless EBITDA grew 10.4% to $529 million, delivering a 2.4 percentage-point expansion in EBITDA service margin to 38.9%, which also benefited from a 0.3% reduction in operating costs resulting from disciplined spending on postpaid subscriber acquisition and customer retention.
For full-year 2013, Bell Wireless operating revenues increased 4.7% to $5,849 million on postpaid service revenue growth of 6.7% and data growth of 19.4%. EBITDA grew 10.6% to $2,340 million as service margin increased 2.0 percentage points to 43.6%, our highest margin result since 2009.
Higher TV and Internet revenues, driven by subscriber growth in Fibe TV and increased ARPU, along with strong business IP connectivity and Professional Services growth, slowed the pace of Wireline revenue erosion this quarter.
Bell Wireline operating revenues were essentially unchanged compared to Q4 2012, decreasing by 0.3% to $2,601 million in Q4 2013. Bell Residential Services delivered revenue growth of 3.1%, while the rate of revenue decline at Bell Business Markets improved year over year. Bell Wireline also generated positive EBITDA growth this quarter, increasing 0.3% to $934 million, with margin improving 0.2 percentage points to 35.9%, supported by a $10 million year-over-year reduction in operating costs.
For full-year 2013, Wireline operating revenues decreased 1.2% to $10,097 million, while operating costs were stable compared to last year, resulting in a 3.2% decline in Wireline EBITDA to $3,794 million. Wireline EBITDA margin was 37.6%, down 0.8 percentage points from 38.4% in 2012, due to higher acquisition costs from significantly more new Fibe TV and Internet customer activations in 2013 than the year before, and higher post-employment benefit plans service cost (pension expense).
Bell Media operating revenue was up 38.9% in Q4 2013 to $821 million while EBITDA grew 33.7% to $230 million. The increases reflect higher advertising and subscriber fee revenues from the Astral acquisition, which closed on July 5, 2013, as well as planned market-based step-ups in specialty TV rates paid by broadcast distributors for Bell Media content and programming. For the full year 2013, operating revenue and EBITDA were up 17.1% and 21.7%, respectively, to $2,557 million and $683 million.
Bell Aliant's revenues decreased 0.9% to $688 million in Q4 2013, as growth in its Internet and TV services were offset by ongoing revenue erosion in its traditional local and access and long distance services. Bell Aliant's EBITDA decreased 2.9% to $305 million this quarter, as a result of lower revenues and higher operating costs related mainly to growth of its FibreOP services. Similarly, for the full year 2013, Bell Aliant revenues and EBITDA declined 0.1% and 1.5%, respectively, to $2,759 million and $1,272 million.
BELL RESPONSE TO ILLEGAL HACKING AT THIRD-PARTY SUPPLIER
On Sunday February 2, Bell announced that 22,421 user names and passwords and 5 valid credit card numbers of Bell small-business customers had been posted on the Internet that weekend. The posting results from the illegal hacking of an Ottawa-based third-party supplier's information technology system. In line with our strict privacy and security policies, Bell disabled all affected passwords, contacted customers and informed credit card providers. Bell continues to investigate the matter with its supplier and law enforcement and government security officials. Bell network and IT systems were not impacted, and the issue did not affect Bell residential, mobility or enterprise business customers.
ASTRAL DIVESTITURES UPDATE
On November 28, 2013, Bell announced that it entered into an agreement with DHX Media Ltd. (DHX) for the proposed sale of its television services Family Channel, Disney XD, Disney Junior (English-language), and Disney Junior (French-language). In addition, on December 3, 2013, Bell announced the sale of its two French-language music TV properties, MusiquePlus and MusiMax, to V Media Group, owner of V Interactions. With these announcements, Bell has now entered into agreements with buyers for all of the properties it was required to divest by the Competition Bureau and the Canadian Radio-television and Telecommunications Commission (CRTC) as part of the Astral transaction in order to comply with the CRTC's Common Ownership Policy.
In January 2014, we completed the sale of six Bell Media TV services and two radio stations to Corus Entertainment Inc. (Corus) for total proceeds of $400.6 million, and three radio stations to Jim Pattison Broadcast Group Limited Partnership. The completion of the remaining divestitures of certain Bell Media TV and radio assets, consisting of proposed sales to Newfoundland Capital Corporation's wholly-owned subsidiary, Newcap Inc., DHX and V Media Group, remain subject to approval by the CRTC. These sales are expected to be completed in the first half of 2014.
BELL LET'S TALK DAY 2014
Bell Let's Talk Day 2014 was a tremendous success as Canadians joined the mental health conversation with 109,451,718 mobile and long distance calls, tweets, and Facebook shares on January 28, our fourth annual Bell Let's Talk Day. With Bell donating 5 cents to mental health for each message, the company announced an additional investment of $5,472,585.90 in Canadian mental health. Bell's total commitment to the cause now stands at $67,515,875.20. Led by Canadian Olympian and Bell Let's Talk spokesperson Clara Hughes, Bell Let's Talk Day 2014 set new records for participation - including extraordinary support on Twitter that made Bell Let's Talk the top Twitter trend in Canada and #3 in the world.
BCE AWARDED CORPORATE GOVERNANCE AWARD
BCE was honoured with the Best Overall Corporate Governance Award - International at the sixth annual Corporate Secretary's Corporate Governance Awards. Competing against a number of high-profile Canadian and international corporations, BCE was recognized for best overall governance, compliance and ethics in board structure, shareholder communications, regulatory filing and other governance operations.
BELL NAMED ONE OF MONTRÉAL'S TOP EMPLOYERS FOR A SECOND YEAR IN A ROW
Bell is proud to be recognized for a second consecutive year as one of Montréal's Top Employers in the 2014 MediaCorp Canada competition. Bell was cited for its leadership in workplace mental health, significant investment in training and professional development, wide-ranging career possibilities, leading parental support programs, and a share purchase plan that enables all team members to share in the company's success. A Montréal-based company since its founding in 1880, Bell is the largest communications company in Québec and a leading contributor to the technological, economic and social prosperity of Québec.
COMMON SHARE DIVIDEND
BCE's Board of Directors declared a quarterly dividend of $0.6175 per common share, payable on April 15, 2014 to shareholders of record at the close of business on March 14, 2014.
OUTLOOK FOR 2014
BCE's 2014 financial outlook reflects continued progress in the execution of Bell's 6 Strategic Imperatives, while maintaining a sharp focus on our dividend growth strategy, as a transformed Bell continues to invest significantly in next-generation TV, wireless, Internet and media growth services, and pursue superior operational execution in the highly competitive Canadian communications marketplace, to deliver growth in revenue, EBITDA, earnings and free cash flow
Our 2013 guidance, 2013 results, and financial guidance targets for 2014 are as follows:
|Revenue Growth||2% - 4%||2.6%||2% - 4%|
|EBITDA Growth||3% - 5%||3.4%||3% - 5%|
|Capital Intensity||16% - 17%||16.6%||16% - 17%|
|Adjusted EPS||$2.97 - $3.03||$2.99||$3.10 - $3.20|
|Free Cash Flow growth||5% - 9%||5.9%||3% - 7%|
|Annual common dividend per share||$2.33||$2.33||$2.47|
|Dividend payout policy||
65% - 75%
of free cash flow
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 Q4 2013 results on Thursday, February 6 at 8:00 am (Eastern). Media are welcome to participate on a listen-only basis. Please dial toll-free 1-866-226-1792 or (416) 340-2216. A replay will be available for one week by dialing 1-800-408-3053 or (905) 694-9451 and entering pass code 3092522#.
A live audio webcast of the conference call will be available on BCE's website at: BCE Q4-2013 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.
The term EBITDA does not have any standardized meaning under IFRS.
Therefore, it is 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. We
use EBITDA to evaluate the performance of our businesses as it reflects
their ongoing profitability. We believe that certain investors and
analysts use EBITDA to measure a company's ability to service debt and
to meet other payment obligations or as a common measurement to value
companies in the telecommunications industry. EBITDA also is one
component in the determination of short-term incentive compensation for
all management employees. EBITDA has no directly comparable IFRS
financial measure. Alternatively, the following table provides a
reconciliation of BCE net earnings to EBITDA.
|December 31||Q4 2013||Q4 2012||2013||2012|
|Severance, acquisition and other costs||48||69||406||133|
|Interest on post-employment benefits obligations||(1)||(243)||6||(269)|
|Other income (expense)||226||181||828||760|
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 Inc. 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
non-controlling interest. We exclude these items because they affect
the comparability of our financial results and could potentially
distort the analysis of trends in business performance. Excluding these
items does not imply they are non-recurring. The most comparable IFRS
financial measures are net earnings attributable to common shareholders
and earnings per share. The following table is a reconciliation of net
earnings attributable to common shareholders and earnings per share to
Adjusted net earnings on a consolidated basis and per BCE Inc. common
share (Adjusted EPS), respectively.
|($ millions except per share amounts)|
|Q4 2013||Q4 2012||2013||2012|
|Net earnings attributable to common shareholders||495||0.64||666||0.86||1,975||2.55||2,456||3.17|
|Severance, acquisition and other costs||33||0.04||46||0.06||299||0.38||94||0.12|
|Net losses (gains) on investments||12||0.02||(248)||(0.32)||7||0.01||(256)||(0.33)|
|Premiums on early redemption of debt||-||-||-||-||36||0.05||-||-|
|Adjusted net earnings||540||0.70||464||0.60||2,317||2.99||2,294||2.96|
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 acquisition costs paid and voluntary
pension funding, plus dividends received from Bell Aliant, less capital
expenditures, preferred share dividends, dividends/distributions paid
by subsidiaries to non-controlling interest and Bell Aliant free cash
flow. We consider free cash flow to be an important indicator of the
financial strength and performance of our business because it shows how
much cash is available to repay debt and reinvest in our company. We
believe that certain investors and analysts use free cash flow to value
a business and its underlying assets. The most comparable IFRS
financial measure is cash from operating activities. The following
table is a reconciliation of cash flows from operating activities to
free cash flow on a consolidated basis.
|Q4 2013||Q4 2012||2013||2012|
|Cash flows from operating activities||1,838||863||6,476||5,560|
|Bell Aliant dividends paid to BCE||48||48||191||191|
|Cash dividends paid on preferred shares||(31)||(39)||(127)||(133)|
|Cash dividends paid by subsidiaries to non-controlling interest||(68)||(85)||(283)||(340)|
|Acquisition costs paid||30||5||80||101|
|Voluntary defined benefit pension plan contribution||-||750||-||750|
|Bell Aliant free cash flow||(4)||(23)||(195)||(186)|
|Free cash flow||674||605||2,571||2,428|
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, common share dividend policy and targeted dividend payout ratio, our broadband fibre, IPTV and wireless networks deployment plans, 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 February 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 February 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
Operational Assumptions Concerning Bell Wireline (Excluding Bell Aliant)
Operational Assumptions Concerning Bell Wireless (Excluding Bell Aliant)
Operational Assumptions Concerning Bell Media
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 February 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 Safe Harbour Notice Concerning Forward-Looking Statements dated February 6, 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. This document is also available at BCE.ca.
BCE's Safe Harbour Notice Concerning Forward-Looking Statements dated February 6, 2014 is incorporated by reference into this news release. For additional information, please refer to the February 6, 2014 presentations entitled "Q4 2013 Results and 2014 Analyst Guidance Call" available on BCE's website.
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.
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.
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