BCE Inc.

Good morning, ladies and gentlemen. Welcome to the Q4 2021 results and 2022 financial guidance conference call and webcast. I would now like to turn the meeting over to Mr. Richard Bengen. Please go ahead, sir.

Thank you, Maud, and good morning to all. With me here today are Mirko Bibic, BCE's president and CEO, and our CFO, Glenn LeBlanc. Our head of investor relations, Thayne Fotopoulos, couldn't be here because he recently had an eye surgery that prevented him from hosting today's conference call. but he will be back next quarter. You can find all of our Q4 disclosure documents on the investor relations page of the bce.ca website, which were posted this morning. We have a lot of material to get through this morning. However, before we begin, I would like to draw your attention to the safe harbor statement, reminding you that today's slide presentation and remarks made during the call will include forward-looking information and therefore are subject to risks and uncertainties. Results could differ materially. We disclaim any obligation to update forward-looking statements except as required by law. Please refer to the company's publicly filed documents for more details on assumptions and risks. With that, I'll now hand over the call to Mirko.

Thank you, Richard, and good morning, everyone. We had another successful year at Bell as we continue to execute on our purpose, which is to advance how Canadians connect with each other and the world. A laser focus on our key strategic imperatives enabled us to deliver for all our stakeholders over the past year, and it remains the foundation for Bell's future success. With the right strategic roadmap for future growth and a clear near-term tactical plan for every part of our business, the Bell team delivered positive results across all operating segments in 2021, hitting the sweet spot between market share growth and financial performance. We achieved our objective of steadily improving results each quarter since Q2 of 2020, and in fact, we're now essentially at 2019 levels, having reached approximately 99% of pre-COVID consolidated revenue and adjusted EBITDA in 2021. We not only met, but we actually surpassed our upsized network expansion targets for 2021, delivering approximately 1.1 million new locations equipped with either direct fiber or wireless home internet connections. And we expanded mobile 5G coverage to more than 70% of Canadians, as we also successfully secured $2.1 billion worth of critical 3.5 GHz spectrum. Notably, I'm pleased to report that we effectively completed our wireless home internet build-out program for the benefit of hundreds of rural communities, having now reached our 1 million household target one year earlier than originally planned. This is a testament to the exceptional work of the Bell Network team, local government cooperation, and supportive regulatory policies. In our wireless segment, we remain focused on growing high-value post-paid mobile phone subscribers, managing customer churn, and delivering industry-leading service revenue growth and profitability. Total mobile phone post-paid net ads in 2021 nearly doubled year-over-year to 301,706, driving service revenue growth of 4% and 5% higher adjusted EBITDA, despite a muted recovery and roaming. In residential wireline, Bell's leading broadband networks are clearly delivering immediate tangible benefits on subscriber growth, market share and internet revenue. In fact, in the past two quarters, we achieved positive total retail residential net customer additions, including satellite TV and home phone. It's the first time we've done so in seven years, driving our best annual residential RGU performance since 2011. We also continue to win share in our rapidly expanding fiber footprint with 202,000 new net fiber customer additions, up 20% over 2020, which contributed to strong annual internet growth of close to 11%. As our team continues to manage near-term COVID financial impacts and ongoing legacy service decline, the organization remains focused on putting the building blocks in place to ensure Bell is strategically well-positioned to capture a leading share of the IoT and next-generation solutions revenue enabled by 5G fiber convergence. With significant high-capacity 3.5 GHz airwaves at our disposal, we have the mid-band spectrum necessary to drive the rollout of true 5G across Canada. But success in 5G and IoT will depend on more than just coverage. Industry leadership requires delivering the fastest speeds and the lowest latency. and Bell's wireless network offers the fastest data speeds and quickest response times as certified by PCMag, Ookla, Tutela, and Global Wireless Solutions in their latest studies of mobile network performance. Leadership also requires leveraging network points of presence such as central offices for MEC that support product development. In that regard, Bell's already entered into strategic partnerships with Amazon Web Services, Google Cloud, and other major hyperscalers to expand our IoT, MEC, and cloud offerings. And leadership, of course, requires cultivating deep relationships with the biggest Canadian companies. So no matter which critical success factor you look at, we're very well positioned. And we're continuing to build 5G momentum with innovative new business and consumer applications. Recent 5G enterprise initiatives include our recent announcement that Bell became a founding partner an exclusive telecom provider of the pier at the Halifax seaport. We're deploying a 5G ready wireless private network to enable a living lab that will shape the future of the transportation, supply chain and logistics industries in Canada. Another initiative I'd like to highlight is a launch of smart supply chain powered by Bell IoT Smart Connect, a software as a service IoT aggregation solution designed for fleet and supply chain operators. One of the first applications is cold chain monitoring, a solution to automatically record temperature levels and provide real-time alerts when they fall outside safe ranges while cargo is in transit. On the consumer side of things, earlier this week we launched our new unlimited ultimate plans. We believe these plans will truly demonstrate the value prop of 5G and serve as a catalyst for the upcoming upgrade cycle from 4G to 5G handsets. We're also going to drive existing 5G customers up the unlimited rate plan curve by distinguishing the superior video quality offered by our ultimate plans and leveraging Crave Mobile. And as we execute on our strategy, it's definitely worth highlighting that we're hitting the public policy sweet spot of quality, coverage, and price. Our quality speaks for itself. As for coverage, it's accelerated considerably in both urban and underserved rural areas as a result of our capital advancement program. And on price, we achieved the federal government's 25% price reduction target well ahead of the January 2022 deadline, and that's for mid-range wireless plans. And according to recent StatsCan data, pricing for wireless services declined 15% in 2021, while the price Canadians pay for all goods and services has actually increased 4.8%. So we're seeing the impacts of elevated price inflation across the Canadian economy, yet our industry is delivering the highest quality services at decreasing prices. I'll turn now to media. Our media segment experienced a notable rebound from COVID in 2021 as TV ad revenue returned to pre-pandemic levels in Q3, while our focus on French-language TV led Nouveau to outpace its main competitors in viewership growth. And we're also gaining significant traction from our pivot to a digital first strategy, which I've discussed in the past. A little bit more on that. Like consumers, advertisers gravitate towards quality. And that's what we're delivering to them with industry-leading content delivered on high-quality online and traditional platforms to the largest audiences, a growing proportion of which is addressable. Advertisers want the most effective way to reach a specific audience for a specific message. Sometimes that requires a broad reach, and sometimes that requires addressing a specific or targeted audience. With SAM TV and the Bell advertising platform, we deliver powerful ad tech to advertisers for all those needs. And the strategy is working. Digital revenues increased an impressive 35% in 2021 and now represent 20% of total Bell Media revenue, which is up from 16% last year. And underpinning this very strong performance was Crave, which grew direct streaming subscribers by 28% in 2021. We continue to scale our CTV AVOD app, which became the top AVOD platform in Canada this past year. And of course, I mentioned our SamTV sales tool, which tripled sales revenue in 2021. So the strategic initiatives I've highlighted across our operating segments are supported by our customer experience focus culture as well, and that's driving improved satisfaction, loyalty, and retention with improved NPS scores and lower customer churn. And this past year saw the formalization of our commitment to hold Bell to the highest standards in ESG with the launch of Bell for Better, through which we will support a better workplace, better communities, and a better world. I'm going to turn now to slide five, give you an overview of some of our key operating metrics specifically for Q4. Let's start with wireless. We added 110,000 new net postpaid mobile phone subscribers, 49% higher than last year and 76% higher than Q4 of 2019. This strong result was realized despite reduced retail store traffic late in the quarter brought about by renewed COVID restrictions. Pent-up customer demand is helping drive higher new gross activations, which grew 14% year over year. That's a function of multiple things. Stores reopening, immigration growth, 5G momentum, more focus on bundling of mobility with Bell's residential services, and effective customer base management, as you can see by a low post-pay churn rate of 1.08 in the quarter. For mobile connected devices, although new IoT subscriptions increased over last year to 88,000, total net ads were just 39,000 as we continued to de-emphasize unprofitable, low ARPU data device transactions. And in prepaid, total net ads were slightly positive, but that represented a notable improvement compared to Q4 of 2020. Lastly, a word on ARPU. It was up a strong 3.3%, our third consecutive quarter of year-over-year growth. This industry-leading result is a direct reflection of our continued focus on higher-value smartphone subscribers and higher roaming volumes driven by the easing of international travel restrictions. Turning now to Wireline, we achieved the second consecutive quarter of positive RGU retail residential net ads. This represents our best Q4 performance since 2015 and caps off our strongest residential result, including satellite TV and home phone net losses in the past 10 years we added 48 000 new net retail internet customers seven percent higher than q4 of 2020 during a time when we had experienced unseasonably strong demand due to covid it was another standout quarter for bell tv with our best q4 iptv net ads in the past three years as we leveraged our multiple brands and lower customer churn particularly in our iptv fiber footprint to drive 29,000 new subscribers this quarter, up 38% versus 2020. Putting all of this together, at the end of the year, at the end of 2021, 91% of Bell residential households with TV and internet were on our FTTH network. That's a notable data point, as the steadily increasing number of customers on Bell 5 services is driving stronger internet revenue growth, higher household ARPU, lower churn, and improved overall EBITDA performance. At Bell Media, TV advertiser demand remained strong throughout the quarter supported by the return to more normal major league sports and fall TV schedules. The ongoing COVID related challenges in radio also redirected some incremental advertiser dollars towards TV and digital. These factors drove a 14% year over year increase in total TV advertising revenue which was above pre-pandemic levels for a second consecutive quarter, 12% higher than Q4 of 2019, in fact. We also saw great results from our Quebec media strategy in 2021, as Nouveau led in prime-time viewership growth versus its largest competitors. And just a few weeks ago, we launched the new Nouveau Info digital platform. Lastly, Crave subscriptions increased 6% over the last year to more than 2.9 million, And in fact, 2021 was the most watched year ever for Crave streaming platforms. A great result. Okay, I'll turn to slide six. 2021 was a reset year as we transitioned towards a return to pre-pandemic levels of financial performance and operating momentum. And although COVID turbulence is still expected to ebb and flow in the near term because of Omicron, we're optimistic about our business outlook as reflected in our financial guidance targets for 2022. We're entering 2022 with a clear set of priorities and a focus on execution built on the operating progress in 2021, which I outlined in detail. We expect that revenue in adjusted EBITDA will surpass pre-COVID-19 levels, 2019 levels, sorry, pre-COVID-19, 2019 levels, supporting a second year of historic growth in capital investments. And that historic growth in capital investment will be approximately $5 billion in 2022. We're forging ahead with our most ambitious annual fiber build-out yet and the launch of a standalone 5G core that will enable faster data speeds and lower latencies than what is available with 5G today. And as we look forward with even more fiber and 5G growth upside on the horizon and a cost structure that reflects these advantages, Not only do we realize operational benefits sooner, but we're also supporting future free cash flow growth to support our dividend growth model. Dividend growth continues to be a top capital markets priority. You see this commitment with our announcement this morning of a 5.1% increase to BC's common share dividend for 2022. It's our 14th consecutive year of a 5% or higher dividend increase and my third as CEO. Normalized for the advanced capital investments we're making once again this year, our dividend payout ratio in 2022 will be around 80% above our historical free cash flow target range of 65% to 75%. Our healthy free cash flow growth and a strong liquidity position fully support the execution of this second year of our two-year capital advancement program and BCE's higher common share dividends. So now what I want to do is go to slide seven and unpack for you the second year of our capital acceleration program. Our 2022 CapEx includes $900 million in accelerated investment on top of the approximately $4 billion in baseline capital that we've typically spent each year over the last decade. This compares to total CapEx of $4.8 billion in 2021, which in 2021 included $800 million of incremental spending under the first year of the two-year program. As a result of the early completion of our planned WHI build-out initiative, we're allocating more of the incremental capital earmarked for 2022 towards fiber. The plan this year is to reach up to an additional 900,000 homes and businesses across our footprint with fiber. This is our most aggressive annual fiber build ever, representing an increase of 300,000 new locations compared to 2021. At the end of this year, approximately 80% of our planned broadband internet build will be completed, representing more than 8.1 million total combined fiber and wireless home internet locations. That's up from 77.2 million premises at the end of 2021. So not only were we delivering the best internet experience in the home today with 1.5 gigabit speeds and unmatched Wi-Fi, But we also have a low-cost transition to a multi-gig future with 10 GPON upgrades to our fiber backbone already underway. And that will evolve to 25 GPON over time and as well upgrades to Wi-Fi 6E service. In wireless, our accelerated capital investment will expand the reach of our national 5G network to more than 80% of Canadians. further densify the network with 1,100 new 5G sites to meet growing customer usage requirements, and it will enable the launch of a 5G standalone core leveraging recently acquired 3.5 spectrum that will drive enhanced speeds, lower latency, and other 5G network slicing features. So taken altogether and normalized for the $900 million capital advancement, our capital intensity ratio is expected to be in the range of 16% to 17% in 2022, consistent with typical pre-COVID levels. I'll close now by highlighting that, of course, the entire Bell team looks forward to delivering for our customers and our shareholders in 2022. And on that, I'll turn the call over to Glenn.