100209 george cope business overview - bce inc. · 2006-2008 highlights arpu increased by over $3...
TRANSCRIPT
Cautionary statement concerning forward-looking statements
Today’s remarks will contain forward-looking statements with respect to items such as revenue, EBITDA, earnings per share, free cash flow and capital intensity and other statements that are not historical facts. Several assumptions were made by BCE in preparing these forward-looking statements and there are risks that actual results will differ materially from those contemplated by the forward-looking statements. As a result, we cannot guarantee that any forward-looking statement will materialize and you are cautioned not to place undue reliance on these forward-looking statements. For additional information on such assumptions and risks, please consult BCE’s Safe Harbour Notice Concerning Forward-Looking Statements dated February 11, 2009 filed by BCE with the Canadian securities commissions and with the SEC and which is also available on BCE’s website.
Forward-looking statements made today represent BCE’s expectations as of February 11, 2009 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 any forward-looking statement made today, whether as a result of new information, future events or otherwise.
5 strategic imperatives
Strategic imperatives
Achieve a competitive cost structure
Accelerate wireless
Leverage wireline momentum
Invest in broadband network and services
Improve customer service
1
2
3
4
5
Our goal
“To be recognized by customers as Canada’s leading communications company”
Focused on key drivers of value
New organizational structure
Market facing• Residential• SMB & Bell West• Enterprise• Wholesale
Service delivery• Field Services• Information
Technology• Network
Wireline
Market facing• Mobility• Bell Distribution
Service delivery• Information
Technology• Network
Wireless
People & support• Corporate Services• Finance• Legal & Regulatory
New executive team
Mary Ann Turcke Executive Vice-President –
Field Services
Michael ColeExecutive Vice-President and
Chief Information Officer
J. Trevor AndersonExecutive Vice-President –
Network
Martine TurcotteExecutive Vice-President and
Chief Legal & Regulatory Officer
Siim A. VanaseljaExecutive Vice-President and
Chief Financial Officer
David WellsExecutive Vice-President –
Corporate Services
Stéphane BoisvertPresident – Enterprise
Charles BrownPresident – Small & Medium
Business and Bell West
Kevin W. CrullPresident –
Residential Services
Wade OostermanPresident – Bell Mobility and
Channels, and Chief Brand Officer
John SweeneyPresident – Wholesale
Service delivery People & support Market facing
George CopePresident and
Chief Executive Officer
Jun-08 Wireline Wireless Dec-08
Streamlined organizationStreamlined organizational structure
Executive team from 17 to 12
30% reduction in SVP and VP positions
Removed 3 layers of management
Reduced 8% of workforce and 15% of management
Pay for performance culture− Management base compensation
unchanged since 2007− Increased management variable pay
Retirement incentive for 1,500 moreAnnounced January 20
Bell Aliant 15% management reductionAnnounced January 12
44,20040,840
3,500 wireline reductions over past 6 months
Bell labour force
3,500
140
2008 2009
Further cost reductionsLowering costs of wireline services
• Field force productivity− Drive performance culture− Increase jobs/day
• Renegotiate contracts with key IT vendors
Driving down other support costs• Outsourcing and offshoring
− Non-customer affecting− Call center/IT/back office
• Real estate consolidation− 10,000 employees at 3 campuses− Moved out of 40 locations in past two years
• Reducing discretionary spend− Consulting expense down dramatically− 47 ad agencies to 11− Eliminated ~7,000 credit cards
Multi-year plan will continue to take costs out
Wireline service delivery costs
-15%
2.7
2.3
OPEX and CAPEX for Wireline Field Services, IT and Network ($B)
Disciplined capital management
Investing in strategic priorities
Bell capital expenditures(1)
2,459
16.5%
2008 2009E
Capital expenditures ($M)Capital intensity
15% - 16%
(1) Excludes AWS spectrum licences
Tighter capital management
• Rigorous new capital governance− Single company priorities list− Common investment criteria
• Aggressive buying
• Tighter network provisioning intervals
• Leverage common IT platforms
Accelerating investment
• 80% focused on our 5 strategic imperatives, including:− HSPA roll out− FTTN acceleration
Focused on profitability
Eliminated revenues with negative EBITDA contributionImproved DSO by 4 days
One Bell• Integrated 12 business subsidiaries
• Consolidated SMB and Bell West
• Re-branded residential services as Bell Home Phone, Bell Internet and Bell TV
Exited non-core businesses• Bell Business Solutions
(SMB)
• Bell New Ventures
• Expertech U.S.
Reduced hardware focus• Exiting low margin segments of business
hardware market
• Eliminated PC Fusion
Improved working capital• Tighter collections
• Inventory management
• Improved payables terms
• BCE Merchant services
• BCE Capital
Wireless improvement2006-2008 Highlights
ARPU increased by over $3
• Strong data revenue growth
Postpaid net additions up 13%
• Improved postpaid mix
COA reduced by $25
• While increasing smartphone sales
Driving up EBITDA margins
• Service EBITDA margin up from 41.2% in 2006 to 43.6% in 2008
ARPU COA
Postpaid churn
$51.18
$53.92 $54.29
2006 2007 2008
$420
$404
$395
2006 2007 2008
1.1%1.3%
1.2%
2006 2007 2008
Postpaid net adds
2006 2007 2008
293k
206k
332k
Three-brand strategy
• Full-service, high-value
• High ARPU with data
• Retail & direct sales
Canada’s largest 3G network
• Discount fighter brand
• Talk & text-centric
• Low cost base
Canada’s most affordable rates
• Youth brand
• Wholesale revenues
• Alternative channelsMade with love
Enhancing distribution networkSignificant progress• Increased points of presence
• Partnered with HMV
• Introduced new point of sale system
• Initiated re-branding
Further opportunities • More stores and dealer locations
• Improving Solo distribution
• Revitalizing third-party retail relationships
• Enhanced selling process
• Re-branding stores
Focused on closing distribution gap
Significant improvement in data ARPU
Growing wireless dataIncreasing mix of smartphones• RIM World Edition (CDMA/GSM)
• Over 50% of handsets
More music, entertainment and data applications• Exclusive NHL content
Wireless data revenues
Data revenue growthData % of ARPU
31%46%
54%
10%
13%15%
0%
10%
20%
30%
40%
50%
60%
2007 2008 Q4080%
5%
10%
15%
HSPA rollout
Customer benefits
Financial benefits
• Global standard
• Path to next generation data services
• More choice in handsets
• Improved rural coverage
• International roaming
• Bell/Telus agreement lowers capital requirement
• Network operating cost savings
• Lower handset costs
• New entrant roaming revenues
• Faster time to market and greater coverage
Launching by early 2010
2009 priorities
Broadband network
• Enhanced distribution
• Leverage new brandDistribution and brand
• Fighter brand management
• Prepare for new entrants
• Cost management
Competition
• HSPA network
• Continue to close data ARPU gap
Slowing NAS losses
Maintain momentum in 2009
Lower NAS losses
580423
6.9%
5.4%
2007 2008
Net NAS losses (thousands)Y/Y erosion rate
2009
Year-over-year improvement• Only major North American carrier with
slowing rate of decline
Residential• Increase multi-product households
• Accelerate winbacks
• Fewer households moving
Business• Focus on retaining small businesses
• Shift to IP PBX
• Managing through economic downturn
2008 2012E
Improving Internet experienceInternet growth slowed in 2008
• Net additions 50k
Focus on improving product and service performance
• Continue to harden and groom network
• Introduce Full Installs
FTTN delivering solid results
• Coverage in GTA/GMA nearly complete– Customer satisfaction 50% higher – Churn is 25% lower– ARPU is higher
Continuing to monetize traffic growth
• Maintaining usage caps
2.4M
5.0M
FTTN homes passed
Healthy video business
Leveraging triple-play
Bell TV ARPU
$53.85
$65.37$59.69
2006 2007 2008
Most HD channels in CanadaMaintaining HD leadership• Increased HD and PVR
penetration− HD set-top box penetration up
10 percentage points − PVR penetration over 25%
• Successful launch of Nimiq 4
Increasing MDU footprint• Passed ~1,700 MDUs in 2008
• Targeting ~700 more in 2009
Strong EBITDA growth• Programming and pricing
drive ARPU
• Driving down set-top box costs
• Improved distribution
Enterprise continues positive momentum
Enterprise focused on profitable growth
Enterprise EBITDA growth
2006 2007 2008
(~30%)
~15%~20%
Two years of strong EBITDA growth
• Focused on winning profitable deals− Wins exceeded losses 3:1
• IP MPLS network #1 in North America
• Growing ICT services− Professional services revenue growth over 20%
in 2008
• Improving cash flow− EBITDA-CAPEX double-digit growth in 2008
-3.2%
-0.7%
-3.0%-2.7%
0.1%
Best-in-class wireline EBITDA performanceWireline EBITDA growth
Telco peer performance benchmark: Q3 ’08 YTD/Q3 ’07 YTD wireline EBITDA growth
Leading our North American peers
Building platforms for the future
Rolling out HSPAReady by early 2010
• Accelerated time to market
• Joint build reduces capital requirement
• Global standard and path to next generation data services
Investing in FTTNAccelerating FTTN deployment
• Advanced by one year
• ~$700M cumulative investment over next 3 years
• 175 condos set up for fibre
Leveraging best-in-class IP coreInvestments in core made Bell #1 IP MPLS network in North America
• Reduced outages for Enterprise customers
New levels of service
Same Day/Next Day
• Faster repair on Bell Home Phone, Bell Internet and Bell TV
Express Install
• Premium service that offers customers next-day installation of Bell Home Phone, Bell Internet and Bell TV
Internet Full Install
• Bell Internet installation now includes – Modem delivery and installation– Speed and performance optimization– Email set-up and account registration
Call Centres
• Moved key service desks on-shore
• Raised level of quality with vendors– From cost/call to pay for performance
Field Services
• Purchased ~2,000 new trucks
Service enhancements Support investments
Full SPA experience
New in-store serviceService and ProductAssistance (SPA)
• Complete service in store
• Warranty and repair
• Access to detailed client info
• Call centre team in store
New brandFour new brand elements
1. New logo
2. New tag lines in French and English
3. New look
4. Theme of “on Bell”
Aligned business unit names
Sympatico
ExpressVu
Residential
Mobile
Successful and effective new brand
Bell Internet
Bell TV
Bell Home Phone
Bell Mobility
What changed at Bell since July ’08?
New organizational structure
Removed 3 layers of management
Reduced Wireline workforce by 3,500
Renegotiated IT contracts
Campus consolidation
New capital governance process
Exited non-core businesses
Announced new HSPA wireless network build
Launched a new satellite for HD capacity
Announced fibre to the building for MDUs
Awarded #1 IP MPLS network ranking in North America
Rolled out new service initiatives • Same Day/Next Day• Express Install• Full Install
Changing the culture to “One Bell” and pay for performance
Launched a new brand – received best new brand award in Quebec market
Focus on cost…… balanced with investments
in strategic priorities
Driving shareholder value through dividend growth
Value for investors
• Focus on core business drives free cash flow growth
• Supported by strong balance sheet and capital structure
– Conservative approach to liquidity given market environment
• Clear dividend policy
Increased dividend