BCE(BCE) - 2020 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - BCE's adjusted EBITDA decreased by 3.2% year-over-year, maintaining a consolidated margin of 39.4% despite $10 million in COVID-related expenses [28] - Net earnings increased by 29% year-over-year, attributed to higher net mark-to-market losses on equity derivatives and hedge contracts from the previous year [28] - Free cash flow was down $782 million in Q4 due to increased capital spending and higher cash taxes [29] Business Line Data and Key Metrics Changes - Wireless segment added 93,000 new net postpaid subscribers, with a churn rate improvement to 1.11% [22] - Wireline segment saw a strong performance with 45,000 new internet customers, a 25% increase year-over-year, and 73,000 new fiber customers, totaling 1.7 million direct fiber customers [24] - Bell Media's revenue decreased by 10% year-over-year, but there was an increase in advertising demand and strong subscriber growth for Crave, which rose by 8% [32] Market Data and Key Metrics Changes - BCE's broadband internet market share grew faster than peers, with 149,000 retail internet net adds, a 10% increase over 2019 [19] - The mobile 5G network is operational in over 150 centers, covering nearly a quarter of the Canadian population [19] - The company plans to expand its broadband service to 850,000 to 900,000 more homes and businesses in 2021, increasing its total coverage to approximately 6.9 million locations [15] Company Strategy and Development Direction - BCE is focusing on increased investment in core network infrastructure, digital transformation, and cost structure improvements, with a capital investment acceleration program of $1 billion to $1.2 billion over two years [9][10] - The company aims to enhance its broadband strategy by expanding fiber connections and accelerating the rollout of its 5G network [8][9] - BCE's strategy includes maintaining a stable regulatory environment to support significant long-term investments [12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2021, anticipating a return to pre-pandemic financial performance levels [7] - The company expects revenue and adjusted EBITDA growth of 2% to 5% in 2021, reflecting a recovery back to 2019 performance levels [34] - Management highlighted the importance of maintaining operational momentum and adapting to the ongoing pandemic challenges [42] Other Important Information - BCE's dividend was increased by 5.1% for 2021, marking the 13th consecutive year of a dividend increase of 5% or more [10] - The company has access to $3.8 billion in liquidity and a manageable debt leverage ratio of 2.9x adjusted EBITDA [40][41] Q&A Session Summary Question: Investment plans for '21 and '22 - Management clarified that the $1 billion to $1.2 billion investment is to advance capital that would have been spent over a longer period, with expectations to return to normal CapEx intensity ratios post-2022 [46] Question: Clarification on CapEx for 2021 - Management confirmed that approximately $700 million of the $1 billion to $1.2 billion will be spent in 2021, with the remainder in 2022 [50][52] Question: Guidance on margin improvement - Management indicated that while there are expectations for margin improvement, challenges remain due to the ongoing pandemic and its impact on high-margin revenues like roaming [56][71] Question: Competitive intensity in wireless markets - Management noted that transaction volumes have been affected by lockdowns, but they are focusing on high-quality subscriber growth, which has shown positive results [69] Question: Fiber build-out and penetration opportunities - Management discussed the potential for high penetration gains in new markets and emphasized the competitive advantages of their fiber offerings [66][67]