BCE Inc.

Good morning, ladies and gentlemen, and welcome to the BCE Q4 2020 Second Results and 2023 Guidance Conference Call. I would now like to turn the meeting over to Mr. Thayne Fotopoulos. Please go ahead, sir.

Thank you, Maud. Good morning, everybody, and thank you for joining our call at this unusually but equitable early start time. With me here today are Mirko Bibic, BCE's President and CEO, and our CFO, Glenn LeBlanc. You can find all our Q4 disclosure documents, including our safe harbor notice concerning forward-looking statements for 2023 on the investor relations page on the bce.ca website, which we posted earlier this morning. We have a lot of material to get through this morning on this call. However, before we begin, I want to draw your attention to our safe harbor statement on slide two of the presentation. With that out of the way, I'll turn the call over to Mirko.

Thank you, Thayne, and good morning, everyone. Our 2022 accomplishments are anchored to the operational priorities we set back in 2020, and the Bell team's unwavering commitment to all our stakeholders. These priorities remain the foundation for Bell's future success. With a strategic roadmap, including a historic multi-year transformational Accelerate CapEx program that is well advanced and already paying off with subscriber loadings, an improved end-to-end customer experience, leading self-serve apps, and consistently strong execution, the Bell team delivered great results across all operating segments this past year. In terms of overall financial performance for 2022, we essentially achieved the midpoint of guidance for both revenue and EBITDA growth, despite unprecedented cost pressures from inflation and record storms, an expensive and highly competitive Black Friday, and media advertising softness. Normalizing for $87 million in largely unplanned inflation and storm-related costs this year, EBITDA growth was actually 4%. We're making massive investments to build the highest quality networks, and they're consistently being recognized by third parties such as PCMag, Ookla, and OpenSignal as being the fastest. Our customer value proposition is to offer the best networks at affordable prices, and we're loading these networks profitably while maintaining margin stable in a highly competitive marketplace. It's a notable achievement. Since 2020, we've accelerated CapEx, investing more than $14 billion, the highest ever over a three-year period by a Canadian communications company. And we're doing it to forge ahead aggressively on constructing the broadest fiber footprint in North America, opening up wireless home internet to 1 million rural communities, homes in rural communities and building our mobile 5G networks faster. In the past three years alone, we have delivered over 2.6 million new customer ready broadband internet locations, including a record 854,000 direct fiber connections in 2022. We've expanded mobile 5G coverage to 82% of Canadians. and we secured $2.1 billion worth of critical 3.5 gigahertz mid-band spectrum with which we deployed a standalone 5G Plus network. In our wireless segment, we continued growing our base of high-value mobile phone subscribers, increasing our cross-cell penetration of wireless and internet households and managing customer churn. Total mobile phone net ads in 2022 were up 66% to 490,000, driving both service revenue and EBITDA growth of more than 7%. With only 41% of post-paid customers currently on 5G-capable devices, as well as accelerating immigration levels and a sharp focus on bundling wireless and consumer internet service, we see good runway for continued growth. On the wireline front, fueled by our biggest annual fiber build-out ever, we added 201,762,000 new net retail internet customers in 2022. That was up 33% over 2021 and our best result in 16 years. That drove strong residential internet revenue growth of 8%. In fact, we capped off 2022 with our best annual residential RGU performance and our first year of positive net ads since 2005. These results are a testament to the power of fiber-based internet service that provides the fastest, dedicated symmetrical speeds that cable just can't match. By the end of this month, multi-gig symmetrical internet speeds of three gigs per second or higher will be available in five million locations, and one million of these will have access to eight gigabits per second. And our acquisitions of Ebox and Distributel also further strengthen our competitive position and support our internet growth strategy with more service options for value conscious residential and SMB customers. Despite a challenging macroeconomic backdrop for advertising, our media segment performed better than expected, driven by continued strong digital revenue growth, which is up 54% in 2022, and now comprises 29% of total Bell Media revenue compared to 20% in 2021. Underpinning this performance was Crave, which grew direct streaming subscribers by 26% in 2022 on the back of market-leading content, as well as rapid growth of our SamTV sales tool, which nearly tripled sales revenue for a second consecutive year. We're also developing a strong customer-first culture. Investments in our people and in the tools they need to support our customers are as well as investments in digital functionality, AI, and machine learning capabilities, together with the unmatched quality and reliability of our networks, as I've mentioned, all of that is leading to higher NPS scores, lower customer churn, and meaningful CCPS performance improvement. On the ESG front, the Bell for Better initiative, which highlights our leadership in mental health, environmental sustainability, and workplace engagement, also made notable progress in 2022. We were named by Corporate Knights the top telecom company and number four in Canada overall on the best 50 corporate citizens list, as well as the inaugural greenhouse gas reductions champion by Clean 50, a national sustainability organization. And reflecting our ongoing efforts to engage and invest in our people, Bell was named one of Canada's top 100 employers for the eighth consecutive year by Mediacorp. This latest recognition reflects our success in key areas, including employee benefits, training and skills development, and community involvement. And just last week, we proudly launched a new era of Bell Let's Talk in response to the growing need for mental health services in Canada. We're committing an additional $10 million towards our goal of $155 million in funding for Canadian mental health programs replacing the five cents per interaction donations made in previous years. Exceeding any previous Bell Let's Talk Day donation, this funding will help support vitally important mental health projects all year round, and it will allow us to put more emphasis on the practical ways we can all make positive change on Bell Let's Talk Day and throughout the year. Let me turn now to slide six. Starting with Bell Wireless, I'll give an overview of some key operating segments. We're very pleased with our post-paid wireless loadings. We had a record quarter of gross activations that drove 155,000 new net subscribers, and that's up 41% over 2021 and 148% higher than Q4 2019. This strong result was achieved even with a higher number of switchers, reflecting aggressive offers from our competitors that we chose to match selectively. For the first time since 2019, Q4 retail foot traffic and shopping activity was unrestricted and back to pre-pandemic levels of competition, particularly during Black Friday, that whole Black Friday period actually, which was very promotional intense in 2022 of Q4, Q4 of 2022. That said, all the work we do on cost and the strength of our balance sheet and liquidity position prepared us financially to load the subscribers that we did despite a level of promotional activity that was higher than any of us would have desired. ARPU is up 0.5%, which is our seventh consecutive quarter of growth. This was supported by higher roaming revenue that was at 112% of pre-COVID levels, and our continued focus on higher value subscriber loadings, even as higher transaction intensity moderated ARPU growth due to the financial impact of the shift to installment plans. For mobile-connected devices, net ads increased an impressive 168% over last year to 104,000, driven by continued strong demand for all Bell IoT solutions. Let's turn to Wireline. Another strong RGU quarter. In fact, we've now delivered positive retail residential net customer ads, including satellite TV and local phone, in four of the last six years. And I've already mentioned our performance for the full year of 2022. Bell Internet added 63,466 new net retail subscribers, and that's 33% higher than 2021, driven by strong growth in every region. This was our best Q4 performance in 18 years. Notably, 70% of consumer fiber activations in Q4 were on gigabit or higher speeds. bringing our base of gigabit or higher customers to approximately 1 million or 43% of total fiber subscribers at the end of 2022. And it was another great quarter for Bell IPTV with our best quarterly result in almost seven years as we leveraged our multi-brand customer segmentation approach to drive 40,209 net ads up 38% versus 2021. At Bell Media, As I said, advertising sales were better than we feared going into the quarter. Q4 ad revenue was up 3.8% over the previous year, buoyed by strong demand for the FIFA World Cup, demonstrating the massive popularity and the value that advertisers place on premium sporting events. This helped CSN and RDS assume their ranking as the top English and French language sports channels in Q4. and they're also off to a good, strong start in 2023, thanks to the World Juniors and the NFL playoffs. Brave also continued to deliver, with total subs up 6% over last year, surpassing 3.1 million. This, together with the increased adoption of our advanced advertising platforms and expanded AVOD offerings, contributed to robust 46% growth in digital revenues in Q4. And our Quebec media strategy continues to hunt as we let all competitors in Q4 in the French language specialty market, and that includes news and sports. Let me turn now to slide seven. Our 2023 business plan is anchored to our strategic framework to build, to execute, and to transform. It's a prudent plan designed to mitigate the effects of a potential recession. to maintain the generational investments in our networks and in our services, and to support our dividend growth model. Although we can't accurately predict the severity and magnitude of an economic downturn, we know our business is resilient and that our financial position is rock solid to weather potential impacts. As a result, we remain optimistic about our business outlook, as you see reflected in our financial guidance targets for 2023. As I said last February, so February 2022, in line with our accelerated capital investment program, CapEx will begin to decrease in 2023 from what we clearly stated would be a peak spend year 2022. We plan to invest around $4.8 billion in 2023, and that's to support the expansion of our pure fiber footprint to another 650,000 homes and businesses. Approximately 85% of our planned broadband build-out program will be done. That comprises approximately 10 million total combined fiber and wireless home internet locations. By the end of the year, we will have 4 million homes that will be able to access symmetrical internet speeds of 8 gigabits per second. We'll also grow our 5G wireless footprint in 2023 to cover 85% of the national population. and will enable low latency standalone 5G plus service for 46% of Canadians or 71% of the addressable population. We plan to continue to win the home by leveraging our symmetrical internet speed advantage over cable, delivering the best Wi-Fi with Wi-Fi 6E and our Giga Hub modem, and will drive greater cross-cell penetration of higher value, lower churn wireless and internet households. In wireless now, We plan to grow mobile phone net ads by capitalizing on our network leadership and accelerating 5G upgrade cycle and higher immigration levels. And building on our retail distribution leadership, you will have seen that earlier this week, we announced an exclusive multi-year distribution agreement with Staples Canada to sell Bell Consumer and small and medium business services and more than 300 of their stores across the country. In our B2B sector, Our objective is to build on our improved results from last year. In fact, 2022 represented our best SMB financial performance in over 15 years. And we expect to maintain this momentum in 2023 by expanding in key channels and leveraging our fiber footprint. In the large enterprise space, we'll continue to put in place the foundation for our advanced products and services portfolio that will drive growth in the medium to long term. And at the same time, we're carefully managing our legacy portfolio through a combination of cost discipline and a focus on key legacy products. And at Bell Media, we'll continue to drive advanced advertising and digital products like Crave and the CTV and Nubull apps to help offset some of the recessionary pressures we're seeing in advertising, particularly expected in the first half of 2023. Lastly, With respect to our work to, with respect, pardon me, to our transformed work stream, we'll continue to focus on end-to-end customer experience improvements that make it easier for customers to do business and develop, and we'll do this by investing in digital self-serve and high-touch interaction. We also intend to drive operational efficiencies through enterprise architecture and agile development, automation tools, product and process simplification, integration of central billing systems, and an ongoing attention to our cost structure in order to maintain a stable margin, even in the face of a potential recession. Now let me turn to my last slide, which is slide eight, and our dividend announcement from this morning. The financial pillars of our 2023 plan enable us to execute on BC's dividend growth objective, which is a top capital markets priority, as you all know. we're increasing the BCE common share dividend by 5.2% for 2023. It's our 15th uninterrupted year of a 5% or higher increase, and my fourth as CEO. Although CapEx will be lower in 2023, it will remain elevated compared to pre-2020 baseline spending, and this is why our dividend payout ratio will remain above our historical free cash flow target range of 65% to 75%. We're delivering on the strategic initiatives that we transparently laid out for you three years ago. And I'm so pleased with how far we've come in such a short period of time to future-proof this great company competitively in a changing world, and this will position us for continued success. Our unmatched collection of assets, including the best networks and the most innovative products, our digital transformation journey, and our customer-first approach will serve as the springboard to deliver the operating metrics and the financial results that all of you and all of our shareholders have come to expect from us. And on that, let me turn it over to Glenn.