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.
- BCE revenues up 4.0% in 2005
- Met or exceeded 2005 guidance
- Revenues from growth services reach 47% - surpassing 2005 target of 45%
- Double-digit subscriber increases in growth services
- Business segment revenue growth rate increases for 6th consecutive
quarter
MONTREAL, Feb. 1 /PRNewswire-FirstCall/ - BCE Inc. (TSX, NYSE: BCE)
reported fourth quarter and full year 2005 financial results and announced its
financial guidance for 2006 this morning prior to the annual BCE Business
Review Conference in Toronto. BCE met or exceeded its 2005 guidance for
revenue growth, cost reductions, EPS, free cash flow and capital intensity.
BCE also provided details of its business plan for 2006 and announced the use
of proceeds from recent asset sales and further initiatives in the company's
ongoing asset review. Further details on this can be found in BCE's Business
Review Conference news release also issued this morning.
For the full year 2005, BCE reported revenues of $19.1 billion, up 4.0%
from the previous year as fourth quarter revenues increased by 4.6% to
$5 billion. Operating income for the full year 2005 was $4 billion compared to
$2.9 billion(1) the previous year, and operating income for the fourth quarter
was $979 million, compared with $814 million in the same quarter last year.
EBITDA(2) for the full year reached $7.6 billion, a 2.2% increase compared to
2004, and fourth quarter EBITDA was $1.9 billion, up $64 million or 3.6% over
the same period last year.
That performance translated into cash from operating activities of
$5.6 billion in 2005, an increase of 2.1% over the previous year. Cash from
operating activities in the quarter was $1.6 billion, an increase of 24% over
the same period in 2004. Free Cash Flow(3) for the year was $662 million
compared to $870 million for 2004, consistent with our revised guidance of
$600 million to $800 million(4). Free cash flow in the quarter was
$423 million, compared to the negative $121 million recorded in the fourth
quarter of 2004. Earnings per share (EPS) were $2.04 for the full year 2005
compared to $1.65 for 2004, and were $0.44 in the fourth quarter compared to
$0.45 for the same period in 2004. 2005 EPS before restructuring and other
items and net gains on investments(5) were $2.05 compared to $2.02 reported
for 2004; and in the fourth quarter were $0.46 compared to $0.45 in the fourth
quarter of 2004.
"As we expected, our performance bounced back in the fourth quarter and
we ended 2005 on a strong footing from which to continue our progress in
2006," said Michael Sabia, President and Chief Executive Officer of BCE. "We
delivered on the commitments that we made for 2005, and demonstrated Bell's
ability to execute in the face of growing competition. Our guidance was met or
exceeded, and importantly, revenue from our growth services more than outpaced
the decline in our legacy business."
Revenue growth from new services such as Internet Protocol (IP),
Information and Communications Technology (ICT), wireless, Internet and video
reached 47% of Bell's total revenues by the end of 2005, exceeding the
company's target of 45%.
In the Residential segment (formerly reported as the Consumer segment),
growth services showed double-digit subscriber increases for the year.
Revenues from these services surpassed the decline of the company's
residential wireline business. The decrease in NAS of 324,000 for the year, or
2.5%, plus the higher costs of wireless acquisition, led to a decline in full
year operating income of 5.6%. To further counter the increased competitive
pressures, the company pursued its strategy of securing two-plus and three-
plus multi-product households to both drive customer retention and higher
revenues per household. By the end of 2005, almost 60% of the Bell households
in Quebec and Ontario subscribed to two or more services.
In the Business segment, a year of accelerated growth was fuelled by
strong sales of IP based connectivity and ICT solutions to our Enterprise and
Small and Medium Business (SMB) customers. Bell has 143 of its largest
Enterprise customers contracted to implement Internet Protocol-Virtual Private
Network (IP-VPN) solutions. RBC Financial Group signed a five-year contract
with Bell for fully managed IP solutions, converting 8,400 of the bank's head
office telephone lines. At year end, 62% of Enterprise revenues were generated
by growth services. The SMB group saw strong progress this year as Virtual
Chief Information Officer (VCIO) revenues far outpaced the decline in legacy
data. The successful integration of recent acquisitions - CSB Systems, Charon
Systems and Nexxlink Technologies - under Bell Business Solutions (BBS) has
generated considerable cross-selling opportunities. VCIO revenues recorded 60%
organic growth in the fourth quarter of 2005 compared to the same period in
2004.
Significant progress was made in 2005 as BCE stepped up its efforts to
reset its cost structure. The company delivered $524 million in recurring cost
savings during the year, meeting the 2005 target. In the fourth quarter cost
savings totalled $171 million, creating a solid take-off point for 2006. Next
year as cost-reduction programs accelerate and new initiatives come on line,
the company anticipates reaching $1.3 -$1.4 billion in recurring annual
savings by the end of 2006.
In late 2005, BCE completed two important steps in the ongoing review and
restructuring of its asset portfolio, resulting in a more focused and simple
corporate structure. BCE disposed of a significant portion of its interest in
CGI Group Inc. in early January 2006 and expects to dispose of its remaining
interest during the course of the year. As well, BCE announced an agreement to
reduce its interest in Bell Globemedia Inc. to 20% and also received a return
of capital from Bell Globemedia in January 2006. These transactions are
expected to return $2.4 billion in cash to BCE. These proceeds, and cash from
operations, will be applied towards buying back 5% of BCE's outstanding common
shares, repaying BCE's corporate-level debt and for pension contributions.
(See BCE's Business Review Conference news release for more details.)
"We have taken a balanced and responsible approach to the use of these
proceeds, placing an emphasis on our commitment to shareholders while ensuring
the company's financial health," said Mr. Sabia. "We now have a singular focus
on our core business, Bell Canada, and on a strategy that we believe will
deliver industry-leading service and product excellence to our customers and
sustainable value to our shareholders."
2005 KEY OPERATIONAL ACHIEVEMENTS
Residential Segment Highlights
Bell continued to broaden its offerings to residential customers,
introducing a wireless video streaming service, a mobile music download
service, faster Internet access speeds and more high-definition channels to
its ExpressVu customers.
- The segment achieved positive revenue growth in the quarter and for
the year, in the face of an increased rate of decline of Bell's
legacy residential wireline business
- Full year revenue increased by 1.3% to reach $7.6 billion
- Fourth quarter revenue increased by 0.7% to $1.9 billion
- Full year operating income for the residential segment was
$2 billion, down 5.6% compared to 2004
- Operating income in the fourth quarter was $444 million, down 4.3%
compared with the fourth quarter of 2004
- Launched IPTV technical trials in Toronto
- 2.3 million customers now on new, simplified "One Bill"
Business Segment Highlights
The Business segment revenue growth rate continued to increase throughout
the year. The services developed by both the SMB and Enterprise groups met
with strong demand from customers. Solid growth in wireless and data revenues
during the quarter was a major contributor to revenue growth in both SMB and
Enterprise.
- Full year revenue reached $6.1 billion, an increase of 4.6% over
2004
- Business segment revenues in the quarter increased by 6% to reach
$1.6 billion
- Full year operating income was $910 million compared to $896 million
in 2004
- Operating income increased by 29% in the quarter to reach
$236 million
- Sale of ICT services to Enterprise customers increased by 36% during
the year and a number of important contracts were signed with major
customers including Kingston General Hospital, Aeroports de
Montreal, Federation des caisses Desjardins du Quebec and Manulife
Financial
- At the end of 2005, 78% of the migratable traffic on Bell's core
network was IP-based, which surpassed the year-end objective of 75%
- 275,000 IP-enabled lines were sold on customer premise equipment by
the end of the year, representing a 90% increase over 2004
- SMB launched Business IP Voice, a hosted IP telephony solution
designed specifically for the small and medium size business market
- Bell Business Solutions, formed in April 2005 by the SMB group,
provided electronic ballot management solutions to 48 municipalities
during last year's Quebec municipal elections.
Video:
Bell's video group continued its performance as Canada's leading Direct-
to-Home (DTH) provider in 2005 with strong revenue and subscriber growth.
- Total video subscribers grew by 224,000 or 14.9% in 2005 and reached
1,727,000, compared to 1,503,000 at the end of 2004
- Net activations in the quarter grew by 16.3% to 50,000, compared to
43,000 for the same period in 2004
- ARPU in the quarter increased by $3 to $52, full year ARPU was $50
compared to $49 in 2004
- Video revenues were up 22.4% in the quarter and 14.8% for 2005
- Churn improved during the year to 0.9% compared to 1% for 2004, the
lowest full year churn rate in the past five years
Wireless:
With record gross additions for the year and the introduction of new,
innovative services (EVDO, 10-4, MobiTV, Seek & Find, MSN Messenger) Bell's
wireless unit expanded both its customer base and its revenue base.
- Total wireless customers grew to 5,441,000 compared to 4,925,000 at
year-end 2004, a 10.5% increase
- A record of 455,000 gross activations in the quarter as the company
continues to secure new high value subscribers in both the
residential and business markets
- 74% of the customer base is on post-paid rate plans
- Net activations totalled 210,000 in the quarter, compared to 217,000
in the fourth quarter of 2004
- Pre-paid ARPU for the year was $14, up 16.7% over 2004; post-paid
ARPU for the year was $61, essentially unchanged from the previous
year
- In the fourth quarter, pre-paid ARPU was $14 per month, up from $13
the same quarter in 2004; fourth quarter post-paid ARPU was $64 per
month, an increase of $3 over the fourth quarter of 2004
- Wireless revenues increased by 9.9% to $3.1 billion for the full
year and by 9.5% to $812 million in the fourth quarter
- Wireless EBITDA in the year was $1,307 million, up by 10.1% over
2004; and wireless EBITDA for the fourth quarter reached
$311 million, an increase of 13.5% over the fourth quarter in 2004
- Overall churn for the year was 1.6% as compared to 1.3% for 2004
High-Speed Internet:
High-Speed Internet had a solid year of subscriber growth adding 387,000
net new subscribers.
- Total high-speed Internet customers of 2,195,000 compared to
1,808,000 at year-end 2004, a 21% increase
- Net activations of 61,000 in the quarter compared to 91,000 for the
same period last year
- Sympatico.msn advertising revenues doubled over the previous year
- VAS revenues went up 64% over the previous year
- 34 million video streams over sympatico.msn in 2005, a five-fold
increase over 2004
- In the quarter, 17.2 million unique visitors to sympatico.msn,
reaching 87.4% of all on-line Canadians, and average time spent by
visitors on the site increased by 25%
- At year-end, Bell's High-Speed Internet access footprint in Quebec
and Ontario was 85% compared to 83% at year-end 2004
Telesat Canada
Telesat continued to deliver robust financial performance with increased
revenues from its acquisition of The SpaceConnection, Inc. and from the
provision of network services in Brazil.
- Full year revenues increased 31% to reach $475 million; revenue in
the quarter was $118 million compared to $102 million for the same
period last year, a 15.7% increase
- Full year operating income was $157 million compared to $141 million
in 2004, an increase of 11.3%; operating income in the fourth
quarter was $34 million compared to $37 million reported for the
same period last year
Bell Globemedia
Bell Globemedia's CTV remains the nation's top broadcaster with the most
popular programming line up in the country.
- Revenues for full year 2005 were up 9.5% to $1.6 billion; revenue in
the quarter was $465 million, up 14.8% over the same period last
year
- Operating income for the full year was up 20.4% while operating
income in the quarter was down 1.9% from the same period last year,
mainly due to higher sports programming costs with the return of NHL
Hockey.
Bell Canada Statutory Results
Bell Canada "statutory" includes Bell Canada, and Bell Canada's interests
in Aliant, Bell ExpressVu (at 52%), and other Canadian telcos.
In the fourth quarter of 2005, Bell Canada's reported statutory revenue
was $4.5 billion, up 3.6% compared to the same period last year. Net earnings
applicable to common shares were $502 million in the fourth quarter of 2005,
compared to net earnings of $465 million for the same period last year.
In the full year of 2005, Bell Canada's reported statutory revenue was
$17.3 billion, up 2.8% compared to the same period last year. Net earnings
applicable to common shares were $2,098 million in the full year of 2005,
compared to net earnings applicable to common shares of $1,527 million for the
same period last year, an increase of 37.4%.
Notes
(1) The employee reduction program at Bell Canada in 2004 resulted in a
charge to earnings in the third quarter of 2004 of $985 million,
which adversely affected operating income and EPS.
(2) The term EBITDA (earnings before interest, taxes, depreciation and
amortization) does not have any standardized meaning prescribed by
Canadian generally accepted accounting principles (GAAP). Please
refer to the section of BCE Inc.'s Q4 2005 Investor Briefing dated
January 31, 2006, entitled "Non-GAAP Financial Measures" included in
this news release, for more details on EBITDA including a
reconciliation of EBITDA to operating income.
(3) We define free cash flow as cash from operating activities after
capital expenditures, total dividends and other investing activities.
Free cash flow does not have any standardized meaning prescribed by
GAAP. Please refer to the section of BCE Inc.'s Q4 2005 Investor
Briefing dated January 31, 2006, entitled "Non-GAAP Financial
Measures" included in this news release for more details on free cash
flow including a reconciliation of free cash flow to cash from
operating activities.
(4) BCE declared CGI a discontinued operation in December 2005 and
consequently, it reduced its forecasted 2005 free cash flow target
range accordingly from $700 million to $900 million to $600 million
to $800 million.
(5) Net earnings and EPS before restructuring and other items and net
gains on investments do not have any standardized meaning prescribed
by GAAP. Please refer to the section of BCE Inc.'s Q4 2005 Investor
Briefing dated January 31, 2006, entitled "Non-GAAP Financial
Measures" included in this news release for more details on net
earnings and EPS before restructuring and other items and net gains
on investments including a reconciliation to net earnings applicable
to common shares on a total and per share basis.
Caution Concerning Forward-Looking Statements
Certain statements made in this press release, including, but not limited
to, anticipated cost reductions, the expected disposition of BCE's remaining
interest in CGI, the reduction of its interest in Bell Globemedia Inc. to 20%
and the expected return in cash as a result of the CGI and Bell Globemedia
Inc. transactions and other statements that are not historical facts, are
forward-looking statements and are subject to important risks, uncertainties
and assumptions. The results or events predicted in these forward-looking
statements may differ materially from actual results or events. As a result,
you are cautioned not to place undue reliance on these forward-looking
statements. Except as otherwise indicated by BCE, these statements do not
reflect the potential impact of any special items or of any dispositions,
monetizations, mergers, acquisitions, other business combinations or other
transactions that may be announced or that may occur after the date hereof.
The expected closing of the Bell Globemedia Inc. transaction is subject
to a number of approvals and closing conditions, including approval by the
CRTC and the Competition Bureau, and other closing conditions that are
customary in a transaction of this nature. There is no assurance that we will
be able to complete the disposition of our remaining interest in CGI. Finally,
there is no assurance that cost reduction initiatives that we may undertake
will achieve their objectives.
For additional information with respect to the assumptions underlying the
forward-looking statements made in this release and the risk factors that
could cause the results or events predicted in such forward-looking statements
to differ materially from actual results or events, please refer to the Safe
Harbor Notice Concerning Forward-Looking Statements dated February 1, 2006
filed by BCE Inc. with the U.S. Securities and Exchange Commission, under Form
6-K, and with the Canadian securities commissions. The forward-looking
statements contained in this press release represent our expectations as of
February 1, 2006 and, accordingly, are subject to change after such date.
However, we disclaim any intention and assume no obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise. For additional information, please refer to the
presentations made at the Bell Canada Enterprises Business Review 2006
available on BCE's website at http://www.bce.ca.
About BCE Inc.
BCE is Canada's largest communications company. Through its 28 million
customer connections, BCE provides the most comprehensive and innovative suite
of communication services to residential and business customers in Canada.
Under the Bell brand, the Company's services include local, long distance and
wireless phone services, high-speed and wireless Internet access, IP-broadband
services, information and communications technology services (or value-added
services) and direct-to-home satellite and VDSL television services. Other BCE
businesses include Canada's premier media company, Bell Globemedia, and
Telesat Canada, a pioneer and world leader in satellite operations and systems
management. BCE shares are listed in Canada, the United States and Europe.
The Year in Review
The results for 2005 demonstrate solid progress on our strategic
objectives. Although the pace of competition accelerated steadily throughout
the year, particularly as a result of the emergence of cable telephony, we
continued to execute on our plan to mitigate the impact of this new, more
competitive telecommunications landscape. Accordingly, we focused further on
profitably growing our wireless, video and high-speed Internet businesses,
which helps lay an important foundation for the future growth of the company.
We also continued to successfully execute on our multi-product household
consumer strategy. By the end of 2005, nearly 60% of the households in our
Ontario and Quebec footprint subscribed to two or more products, and over 22%
subscribed to three or more products. Our Business segment made steady
progress throughout the year on its Internet Protocol (IP) strategy by leading
Bell Canada in the shift towards new growth services, helping to drive its
transition to an Information and Communications Technology (ICT) leader. In
fact, revenues from growth services (composed mainly of wireless, video and
data-related products such as high-speed Internet) accounted for 47% of total
revenues at Bell Canada by the end of 2005, which exceeded our target of 45%
for the year. Moreover, we also responded to the rising competitive challenges
by proactively taking the lead to deliver unmatched features and reliability
for our residential and business customers with the launch of next-generation
services such as Bell Digital Voice.
In order to alleviate the pressure on operating margins from the expected
erosion in our legacy wireline business, we made significant strides in
transforming our cost structure in 2005. Under our ongoing Galileo Program
(Galileo), we continued to deliver significant cost savings by improving
processes, reviewing procurement activities and eliminating work. Our various
initiatives allowed us to reduce costs by $524 million, which was in line with
our run-rate savings target of $500-$600 million for 2005.
We also stepped up efforts to secure our customers and improve service.
Although we faced a number of customer service challenges brought about by
some residual impacts from our wireless billing system migration last year and
a four-month labour dispute with Entourage Technology Solutions Inc.
(Entourage) (renamed Bell Technical Solutions Inc. on October 25, 2005)
technicians in Ontario, we substantially resolved these issues by the end of
the third quarter and subsequently resolved order backlogs, improved
efficiency and dealt with customer issues more promptly.
In late 2005, we completed two important steps in our ongoing efforts to
reshape the company's asset portfolio and bring greater focus to our core
businesses by establishing the framework for the ultimate disposition of our
entire interest in CGI Group Inc. (CGI) and the reduction of our interest in
Bell Globemedia Inc. (Bell Globemedia) to 20%.
In our Residential segment (formerly called the Consumer segment),
revenue growth was fuelled by the strength of our growth services as we
continued to execute on our strategy of securing multi-product households to
drive customer loyalty and generate higher revenue per household. This growth
reflected increased subscriber acquisition in our growth services and higher
average revenue per user (ARPU), particularly for video, offset partly by an
accelerated decline in legacy wireline revenues.
In our Business segment, increased sales of IP based connectivity and ICT
(or value-added services (VAS)) solutions to our Enterprise and small and
medium-sized business (SMB) customers and improved wireless results drove
revenue growth in 2005. This positive trend now has contributed to six
consecutive quarters of improved revenue growth, despite increased competitive
pressures and lower demand for legacy wireline services.
In our Aliant segment, continued strong growth in wireless and Internet
services, as well as a recovery from the 2004 labour disruption, offset
declines in other areas due to the impact of competition, wireless and
internet substitution, and regulatory restrictions related to customer win-
backs and bundling of services.
Within the Other Bell Canada segment, despite a challenging market for
our wholesale business, revenues grew as a result of the acquisition of the
operations of 360networks Corporation, including GT Group Telecom Inc.
(collectively 360networks), in November 2004.
In the other BCE segment, Bell Globemedia delivered better revenue and
operating performance compared with last year, driven largely by higher
television advertising revenue, reflecting strong television ratings and
improved subscription revenues. Telesat Canada (Telesat) also had a strong
year, reflecting growth in Ka-band revenues on its Anik F2 satellite, revenue
gains from the installation and maintenance of an Interactive Distance
Learning network and the positive impact from its acquisition of The Space-
Connection, Inc. (SpaceConnection) in January 2005.
Customer Connections
2005 31 Dec. 05
Connections Net Connec-
(in thousands) Activations tions
-------------------------------------------------------------------------
Wireless 516 5,441
High-Speed Internet 387 2,195
Video 224 1,727
NAS (324) 12,581
-------------------------------------------------------------------------
-------------------------------------------------------------------------
- Wireless - Our total cellular and PCS subscriber base grew by 516,000
in 2005, or 10.5%, to 5,441,000, which was in line with guidance for
the year. As a result of a record number of gross activations in the
year, we acquired a similar level of net activations compared with
2004, despite a year-over-year increase in our overall churn rate to
1.6% from 1.3% in 2004.
- High-Speed Internet - We added 387,000 net new high-speed Internet
customers in 2005, increasing our customer base by 21% to 2,195,000,
which was ahead of our target of 15% to 20% for the year. The net
activations achieved in 2005 were 10.6% higher than the 350,000
subscribers acquired in 2004. Subscriber growth in 2005 was fuelled
largely by the introduction of our Basic Lite product and higher net
activations at Aliant.
- Video - We gained significant momentum in our video business in 2005,
growing the subscriber base by 14.9% to end the year with 1,727,000
customers. This was at the upper end of our guidance range of 10% to
15% for 2005. During the year, we activated service for 224,000 new
subscribers, an almost two-fold increase over 2004. As a result of our
continued focus on customer retention and a higher proportion of
customers on long-term contracts, churn decreased to 0.9% from 1.0% in
the previous year.
- Network Access Services (NAS) - NAS in service declined by 324,000 in
2005, or 2.5%, representing a higher rate of decline compared with 1.1%
experienced in the previous year. The accelerated rate of erosion
reflects an increasingly competitive environment as the major cable
operators in our Quebec and Ontario markets began to offer low-priced
cable telephony services, offset partly by our new Bell Digital Voice
service and higher demand for access lines from Shaw Communications to
deploy Voice-over-Internet Protocol (VoIP) services in western Canada.
Operating Revenues
Our revenues increased by 4.0% year-over-year to reach $19,105 million in
2005. This result, which reflected improved revenue performance across all our
segments, surpassed our target growth rate of equal to or greater than GDP. At
Bell Canada, revenues grew by 2.8%, driven primarily by the Business segment
where continued wireless strength, growth of ICT (or VAS) solution sales
arising from both business acquisitions and organic growth, as well as focused
execution of our Virtual Chief Information Officer (VCIO) strategy in SMB led
to improved top-line results. Our Residential segment delivered solid revenue
growth as a result of the performance of its video, Internet and wireless
services, despite continued decreases in legacy wireline services, while
Aliant revenues also increased notably due in part to its recovery from a
labour disruption in 2004. In addition to the Bell Canada contribution,
overall growth was further enhanced by the performance in the Other BCE
segment, where revenues grew 9.5% at Bell Globemedia and 31% at Telesat.
Operating Income and EBITDA(1)
Operating income at BCE for 2005 was $4,048 million, an increase of
$1,154 million over the previous year, which included restructuring and other
charges of $1,224 million related primarily to the employee departure program
in 2004. The results for 2005 reflect restructuring and other items of
$55 million associated with new restructuring initiatives for involuntary
employee departures, as well as the relocation of employees and closing of
real estate facilities related to last year's employee departure program.
Operating income before restructuring and other items(1) decreased $15 million
or 0.4% compared with the previous year. Despite an increase in revenues
across all segments, Galileo cost savings and the recovery from the 2004
labour disruption at Aliant, operating income was negatively impacted by the
increased cost of acquiring a substantially higher number of wireless
subscribers, the Canadian Radio-television and Telecommunications Commission's
(CRTC) decision with respect to Competitor Digital Network Services (CDN),
continued margin pressure from the ongoing transformation of our product mix
toward growth services, as well as the cost of restoring customer service
levels following the settlement of the Entourage labour dispute in July. Also
contributing to the decline in operating income was the impact of higher net
benefit plans cost and amortization expense for the year.
At Bell Canada, operating income for the year was $3,755 million, a
$1,060 million increase over 2004 resulting from the charges recognized last
year in consideration of the employee departure program. Operating income
before restructuring and other items declined by $105 million in 2005 to
$3,809 million, representing a 2.7% decrease from $3,914 million in the
previous year due to the reasons referred to previously.
Our 2005 EBITDA increased 2.2% or $167 million to $7,597 million compared
with the previous year, reflecting improved performance at Bell Canada, Bell
Globemedia and Telesat. EBITDA for Bell Canada was $7,187 million,
representing a 1.1% increase over 2004, driven primarily by increases in our
Business segment and at Aliant, which were partially offset by decreases in
our Residential and Other Bell Canada segments.
EBITDA margins for full-year 2005 were 39.8% at BCE and 41.7% at Bell
Canada, both down 0.7 percentage points compared with 2004. The year-over-year
declines reflected operating cost pressures, which included higher wireless
acquisition costs, continued erosion of high-margin legacy voice and data
services in all our segments, the CRTC's CDN decision as well as the costs to
restore service levels subsequent to the resolution of the labour dispute at
Entourage. The impact of these elements on EBITDA margin was largely offset by
the operating cost savings achieved through Galileo.
(1) EBITDA, operating income before restructuring and other items, net
earnings before restructuring and other items and net gains on
investments, and free cash flow do not have any standardized meaning
prescribed by Canadian generally accepted accounting principles
(GAAP) and are therefore unlikely to be comparable to similar
measures presented by other companies. For more details on these
measures, including a reconciliation to the most comparable GAAP
measure, please refer to the section entitled Non-GAAP Financial
Measures contained herein.
Net Earnings / Earnings per Share (EPS)
In 2005, net earnings applicable to common shares were $1,891 million, or
$2.04 per common share, 24% higher than net earnings of $1,523 million, or
$1.65 per common share, for the same period last year. Included in earnings
this year was a net charge of $10 million from restructuring and other items
and net gains on investments, compared with a net charge of $349 million for
the same period last year. Net earnings before restructuring and other items
and net gains on investments(1) of $1,901 million, or $2.05 per common share,
were up $29 million, or $0.03 per share. This represents an increase of 1.5%
over last year, which was in line with our expectations of single-digit growth
for 2005. On a year-to-date basis, the improvement in EPS before gains on
investments and restructuring and other items can be attributed to higher
EBITDA combined with the impact from the income tax loss monetization program
between Bell Canada and BCI and net income tax savings. This more than offset
the increase in net benefit plans cost and amortization expense.
(1) EBITDA, operating income before restructuring and other items, net
earnings before restructuring and other items and net gains on
investments, and free cash flow do not have any standardized meaning
prescribed by Canadian generally accepted accounting principles
(GAAP) and are therefore unlikely to be comparable to similar
measures presented by other companies. For more details on these
measures, including a reconciliation to the most comparable GAAP
measure, please refer to the section entitled Non-GAAP Financial
Measures contained herein.
Capital Expenditures
For the full year, capital expenditures of $3,428 million were
$109 million, or 3.3%, higher than 2004. Similarly, at Bell Canada, capital
expenditures increased by 3.2%, or $96 million, to $3,122 million. As a
percentage of revenues, Bell Canada's capital expenditures increased slightly
to 18.1% in 2005 from 18.0% last year, in line with our guidance range of 18%
to 19% for 2005. Capital spending in 2005 reflected higher investment in the
growth areas of the business and reduced expenditures in legacy areas. Our key
strategic investments this year included the expansion of our fibre-to-the-
node (FTTN) footprint to deliver higher-speed broadband access, our launch of
Bell Digital Voice, the deployment of an Evolution, Data Optimized (EV-DO)
wireless data network in certain of our markets, our Digital Subscriber Line
(DSL) footprint expansion facilitated through the deployment of new high-
density remotes, investment in our IP television (IPTV) platform and
information technology (IT) efficiency projects to deliver cost savings.
Higher spending also resulted from a return to more normal spending levels at
Aliant after its labour disruption in 2004 and satellite builds at Telesat.
Cash from operating activities and free cash flow(1)
Cash from operating activities was $5,559 million in 2005, an increase of
2.1% compared to $5,443 million in 2004. Cash from operating activities was
impacted positively by:
- an improvement in cash earnings resulting from higher EBITDA
- a significant improvement in accounts receivable collections, due to
the resolution of issues associated with the implementation of our new
wireless billing platform in 2004
- an increase of $134 million in proceeds from the sale of accounts
receivable
- a decrease of $77 million in restructuring payments relating to the
restructuring initiatives of 2004 and 2005.
These improvements were partly offset by:
- higher pension and other benefit plan payments mainly at Aliant
- an increase of $73 million in income taxes paid, primarily related to
the final instalment for 2004 made in 2005 as instalments were not
required at Bell Canada in 2004
- a $75 million settlement payment received from MTS in 2004.
We generated $662 million of free cash flow for 2005, meeting our target
of $600 million to $800 million for the year. On December 16, 2005, we
adjusted our 2005 guidance for free cash flow from the range of $700 million
to $900 million to $600 million to $800 million to reflect the pending sale of
CGI. Free cash flow of $662 million for 2005 was $208 million lower than the
$870 million achieved in the previous year. The decrease can be attributed to:
- a decrease of $149 million in insurance proceeds received by Telesat
- an increase of $109 million in capital expenditures related to our
investment in next-generation service platforms
- an $87 million increase in common dividends paid resulting from the
$0.03 quarterly increase in dividend per common share.
These items were offset in part by a $116 million increase in cash from
operating activities.
(1) EBITDA, operating income before restructuring and other items, net
earnings before restructuring and other items and net gains on
investments, and free cash flow do not have any standardized meaning
prescribed by Canadian generally accepted accounting principles
(GAAP) and are therefore unlikely to be comparable to similar
measures presented by other companies. For more details on these
measures, including a reconciliation to the most comparable GAAP
measure, please refer to the section entitled Non-GAAP Financial
Measures contained herein.
The Quarter at a Glance
In the fourth quarter, we regained momentum in the execution of our
strategy as evidenced by our strong financial and operating performance. Our
cost reduction program accelerated and we re-established consistent levels of
customer service. Improved operating performance in the quarter was driven
primarily by the results of our Business and Aliant segments, as well as by
the continuing successful execution of our wireless and video subscriber
growth strategies, which offset the pressure on operating income from the
expected further erosion of our legacy voice and data business. This
translated into overall revenue growth in Q4 2005 of 4.6% at BCE and 3.6% at
Bell Canada. Revenues from our growth services continued to increase,
accounting for 47% of total revenues at Bell Canada at the end of 2005.
Operating income before restructuring and other items improved by 6.6% at BCE
and 6.3% at Bell Canada this quarter, despite higher expected acquisition
costs from an increased number of wireless gross activations and increasing
wireline customer losses.
Our Residential segment continued to experience solid subscriber
acquisition in all its growth services (composed mainly of wireless, video and
data-related products such as high-speed Internet), which helped to fully
offset the impact on revenues resulting from continued local wireline and long-
distance erosion. To counter the competitive pressure of cable telephony, we
continued to focus on securing multi-product households and retaining our
highest-value customers in order to enhance customer loyalty and drive higher
revenue per household.
In our Business segment, while competitive pricing pressures persisted
and demand for legacy wireline business services lessened, we recorded a sixth
consecutive quarter of improved revenue growth as a result of increased sales
of our IP based connectivity and ICT (or VAS) solutions within the Enterprise
and SMB markets, as well as continued wireless strength.
In the Aliant segment, higher wireless and Internet service revenues, as
well as the recovery from the 2004 labour disruption, offset declines in its
wireline business resulting from the impacts of competition, technology
substitution and regulatory restrictions.
In the Other Bell Canada segment, the marketplace remained challenging
for our wholesale business due to competitive market pressures, customers
migrating services onto their own network facilities and the CRTC's CDN
decision. The performance of this segment was positively influenced by the
acquisition in November 2004 of the operations of 360networks.
Within the Other BCE segment, Bell Globemedia delivered double-digit
revenue growth as a result of strong advertising sales as well as higher
subscription revenues. While strong television ratings and the end of the
hockey lockout favourably impacted revenue growth, higher costs associated
with NHL hockey broadcasts adversely affected operating income in Q4.
Continued solid operating performance at Telesat was driven largely by its
acquisition of SpaceConnection at the beginning of 2005 and higher
telecommunication carrier revenues stemming from increased sales of services
from its now retired Anik E2 satellite.
Customer Connections
Q4 2005 31 Dec. 05
Connections Net Connec-
(in thousands) Activations tions
-------------------------------------------------------------------------
Wireless 210 5,441
High-Speed Internet 61 2,195
Video 50 1,727
NAS (122) 12,581
-------------------------------------------------------------------------
-------------------------------------------------------------------------
- Wireless - We grew our wireless base by 210,000 customers this quarter,
down from net activations of 217,000 in Q4 2004. Notwithstanding a
record number of gross activations, the decrease in year-over-year net
activations was due to slightly higher churn. In line with guidance for
2005, we expanded our customer base by 10.5% year-over-year to
5,441,000.
- High-Speed Internet - We added 61,000 net new high-speed Internet
customers this quarter, compared with net activations of 91,000 in Q4
2004, resulting in a 21% expansion of our subscriber base to reach an
end-of-year count of 2,195,000. Subscriber growth during the quarter
slowed primarily as a result of aggressive price competition in the
entry-level segment of the market and increased emphasis by certain
cable operators on selling multi-product bundles at discounted rates.
This was offset partly by higher net additions at Aliant.
- Video - Our video business had its best Q4 since 2002, activating
50,000 net new customers, an increase of 16.3% compared with Q4 2004.
Our video subscriber base grew by 14.9% in 2005 to reach 1,727,000.
Although churn increased by 0.2 percentage points year-over-year to
1.0%, reflecting aggressive price competition brought about by cable
operators' emphasis on bundling cable service with other products, it
remained unchanged compared with the previous quarter.
- Network Access Services (NAS) - NAS in service declined by 122,000 or
1.0% during the quarter, reflecting competitive losses and lower demand
for second lines, offset partly by higher demand for access lines from
Shaw Communications to deploy Voice-over-Internet Protocol (VoIP)
services in western Canada. The increase in the year-over-year NAS rate
of decline can be attributed mainly to the ramp up in competition from
the major cable operators in Ontario and Quebec.
Operating Revenues
Our revenues increased by 4.6% year-over-year to reach $4,986 million in
the quarter, reflecting improved revenue performance across most of our
segments. At Bell Canada, revenues grew by 3.6%, driven primarily by the
Business segment where higher data revenues from focused execution of our ICT
and VCIO strategies and continued wireless strength positively impacted top-
line results, and by Aliant where recovery from a labour disruption in 2004
and the solid performance of its wireless and Internet businesses translated
into increased revenue growth. In our Residential segment, we delivered
positive revenue growth in the quarter as the continued loss of legacy
wireline business was more than offset by growth in video, Internet and
wireless services. Higher revenues at our Other BCE segment, fuelled by
stronger advertising and subscriber revenues at Bell Globemedia and higher
carrier and broadcast revenue at Telesat combined with the positive impact
from its acquisition of SpaceConnection, further contributed to overall
revenue growth.
Operating Income and EBITDA
Operating income at BCE for the quarter was $979 million, compared with
$814 million for Q4 2004, while Bell Canada operating income increased to
$884 million from $731 million for the same respective period. The results for
Q4 2004 included the recognition of $126 million of restructuring and other
items related to last year's employee departure program at Aliant and costs
related to the relocation of employees and the closure of excess real estate
facilities at Bell Canada, compared with a charge of $23 million for Q4 2005
related to new restructuring initiatives for involuntary employee departures.
Operating income before restructuring and other items for Q4 2005 increased by
6.6%, or $62 million, at BCE and by 6.3%, or $54 million, at Bell Canada,
compared with the previous year. Higher revenues, cost savings from Galileo
and lower cost of acquisition (COA) expense in our video unit more than offset
continued margin pressure from the ongoing transformation of our product mix
towards growth services, the expected higher COA expense from an increased
number of wireless gross activations, the CRTC's CDN decision and higher
amortization expense at BCE.
Our EBITDA for the quarter improved $64 million, or 3.6%, to
$1,858 million compared with last year, reflecting an increase at Bell Canada
offset partly by a decrease at Bell Globemedia. At Bell Canada, EBITDA was
$1,729 million this quarter, representing a 3.0% increase over last year, due
primarily to improved performance at our Business, Aliant and Other Bell
Canada segments, which was partly offset by a decrease at our Residential
segment.
EBITDA margin in the fourth quarter was 37.3% at BCE and 38.8% at Bell
Canada, down 0.3 and 0.2 percentage points, respectively, compared with Q4
2004. The year-over-year declines reflected a number of expected impacts,
including continued loss of higher-margin legacy voice and data customers in
all our businesses, the ongoing transformation of our product mix towards
growth services, higher wireless acquisition costs and the CRTC's CDN
decision.
Net Earnings / Earnings per Share
Net earnings applicable to common shares for Q4 2005 were $413 million,
or $0.44 per common share, compared to net earnings of $417 million, or $0.45
per common share, for the same period last year. Included in Q4 earnings this
year was a net charge of $16 million for restructuring and other items,
compared with no charge in Q4 2004. Net earnings before restructuring and
other items and net gains on investments for Q4 2005 were $429 million, or
$0.46 per common share, up $12 million, or $0.01 per share. This increase can
be attributed to higher EBITDA, partly offset by lower other income stemming
from unfavourable changes in foreign exchange rates. We also recorded a gain
of $44 million in the quarter associated with the phase-out, over the next
three years, of a discretionary allowance program, which substantially offset
the increase in pension expense.
Capital Expenditures
Capital expenditures were $831 million this quarter, or 20% lower than
the same period last year. As a percentage of revenues, capital expenditures
decreased this quarter to 16.7% from 22% last year, reflecting a reduction at
Bell Canada partly as a result of higher spending earlier in the year. Greater
investment in IT systems and other efficiency-related processes to deliver
future cost savings was more than offset by lower expenditures on network
infrastructure and DSL footprint expansion, lower spending to support business
customer contracts and the timing of spending on certain strategic initiatives
such as our FTTN footprint expansion and IPTV platform development.
Cash from operating activities and free cash flow
In Q4 2005, cash from operating activities was $1,585 million, an
increase of 24% compared with $1,279 million in Q4 2004. Cash from operating
activities was impacted positively by:
- an improvement in cash earnings from higher EBITDA
- an increase of $84 million in proceeds from the sale of accounts
receivable
- a decrease of $191 million in restructuring payments relating to the
restructuring initiatives of 2004 and 2005.
These improvements were partly offset by lower accounts receivable
collections in our wireless business during Q4 2005, compared with a higher-
than-usual collection volume in Q4 2004 as a result of the implementation of
our new wireless billing platform, notwithstanding a significant improvement
year-over-year in days sales outstanding.
Free cash flow of $423 million generated in Q4 2005 was $544 million
better than the negative $121 million reported for Q4 2004. The improvement
can be attributed to:
- the $306 million increase in cash from operating activities
- an improvement of $212 million in capital expenditures, as described
previously
- $30 million in insurance proceeds received by Telesat in Q4 2005.
These items were offset in part by a $29 million increase in common
dividends paid, resulting from the $0.03 quarterly increase in dividend per
common share.
Strategic Priorities
Our strategy is to deliver unrivalled integrated communication services
to customers and to take a leadership position in setting the standard in
Internet Protocol (IP). During the quarter, we made significant progress on
each of our three key strategic priorities.
1) Enhancing customer experience while targeting lower costs (our Galileo
program)
In our Residential segment:
- We continued to execute on our multi-product household strategy. At the
end of 2005, nearly 60% of the total households in our Ontario and
Quebec footprint subscribed to two or more products (a combination of
local wireline, Internet, video and long distance services) and over
22% of total households subscribed to three or more products.
- By the end of 2005, 2.3 million customers in Ontario and Quebec were
enjoying the benefits of a single bill for their wireline, Internet,
and video services, representing more than a two-fold increase since
the beginning of 2005. Simplification of the billing process not only
improves the customer experience, but also lowers costs since we issue
fewer invoices. During the fourth quarter, we initiated the process to
migrate Bell Mobility customers who receive a single invoice for their
other Bell Canada services to the one bill platform.
- We expanded the scope of OrderMax, our order entry tool that enables
customers to order any Bell Canada product from any channel, to include
Bell ExpressVu. OrderMax is currently available to over 50% of our
customer service agents.
- We launched the 'beta' site of our new Bell.ca website to the general
public. The new website enhances the customer experience through a
simplified and consistent page layout, a single shopping process for
all our products, an improved search engine and easy access to online
bills.
In our Business segment:
- We continued making progress on moving our core traffic to a national
IP multi-protocol label-switching (IP-MPLS) network. At the end of
2005, 78% of the migratable traffic on our core network was IP-based,
which surpassed our year-end objective of 75%.
- As part of our shift to IP, we continued the process of rationalizing
legacy data services. In 2005, we stopped selling 28 legacy data
services. Since we began this initiative in 2004, we have discontinued
47 legacy data services.
- The move to IP continued this quarter with 12 large enterprise
customers contracted to implement IP Virtual Private Networks (IPVPN),
including Royal Bank Financial Group and Xerox. This brought the total
number of Enterprise customers implementing IPVPN networks as of the
end of 2005 to 143.
- At the end of 2005, 656 Enterprise customers were enrolled on 'Service
Promise', which is our commitment to provide customers with a clearly
defined and consistent level of service in the delivery of connectivity
services.
Overall, our various Galileo initiatives led to cost reductions in Q4 of
$171 million, bringing total savings for the year to $524 million, which were
in line with our run-rate savings target of $500-$600 million for 2005. These
cost savings resulted mainly from:
- the employee departures that took place in 2004
- reduced procurement costs
- call centre efficiencies and optimization
- the elimination of network elements and standardization of core
operating processes.
As part of our commitment to transform our cost structure, we began a
comprehensive program to review procurement spending and related processes
during the fourth quarter with the goal of implementing improved spending
controls and reducing our approximate $8.5 billion of annual external
operating and capital expenditures.
2) Deliver abundant bandwidth to enable next-generation services
We continued our FTTN rollout by deploying another 194 neighbourhood
nodes in Q4, raising the total number to 2,048, which surpassed our objective
to deploy more than 2,000 nodes by the end of 2005.
During Q4, we extended the availability of our EV-DO wireless data
network to western Canada. EV-DO technology is the third generation (3G) of
wireless networks delivering average data download speeds of 400-700 kilobits
per second (Kbps) with peaks of up to 2.4 Mbps. Given these speeds, EV-DO
enables a new generation of sophisticated wireless data solutions, as well as
fuels the speed and potential for current tools such as e-mail, file
downloads, instant messaging, streaming video and games.
3) Create next-generation services to drive future growth
We ended 2005 with approximately 81,000 wireless subscribers on our
'10-4' push-to-talk service, which included a significant number of non-
business consumers.
In addition, our Residential segment:
- Introduced our first GSM-compatible handset and launched Canada's first
flat per-minute rate billing service for global roaming on GSM networks
in up to 150 countries for Bell Mobility customers.
- Announced the launch of the first mobile streaming video clip service
in Canada. Bell Mobility customers who subscribe to the service can
instantly view the latest in news, weather, sports and entertainment
highlights.
- Introduced a new full-track mobile music download service. Subscribers
will have instant access to a music library allowing for the ability to
browse, review, download and share music with others.
- Announced the addition of more High Definition (HD) sports programming,
offering Bell ExpressVu customers the most HD channels currently
available in Canada.
Our SMB unit:
- Grew its VAS service offerings primarily through Enterprise Resource
Planning (ERP), hosting and other managed services, which are important
growth drivers given their ability to create incremental connectivity
revenues and to solidify customer relationships.
- Began to market and sell customized digital video surveillance
solutions to Canadian businesses that are being developed at our newly
opened innovation centre established to develop IP-based technology and
applications for SMB customers and governmental bodies.
Our Enterprise unit:
- Sold 275,000 IP-enabled lines on customer premises equipment (CPE) by
the end of the year, representing a 90% increase in 2005.
- Continued its focus on developing productivity-enhancing solutions for
the health sector by launching a fully integrated wireless
communications solution for Kingston General Hospital that features a
secure wireless medical record system, a point-of-care computer that
accommodates various clinical procedures, and a new wireless phone
system throughout the patient care areas.
Other Corporate Developments
Under our asset review program, we announced on December 2, 2005 an
agreement to reduce our equity interest in Bell Globemedia from 68.5% to 20%.
Following completion of all closing conditions and subject to receipt of the
required regulatory approvals expected later in 2006, we will sell an 8.5%
equity interest in Bell Globemedia to The Woodbridge Company Limited
("Woodbridge") and a 20% stake to each of Ontario Teachers' Pension Plan Board
and Torstar Corporation for aggregate cash proceeds of $685 million. In
conjunction with the agreement to make these ownership changes, Bell
Globemedia has restructured its capital on a basis more appropriate to ongoing
operations through additional borrowing and a return of capital to its
existing shareholders. The recapitalization, which was completed in January
2006, resulted in a cash distribution of $607 million to us. By retaining a
20% equity interest in the company, we have maintained our strong relationship
with Bell Globemedia, allowing us to continue participating in the growth of
Canada's leading media property, and secured ongoing access to media content
thereby enhancing our growth services platforms.
On December 16, 2005, we announced our decision to sell our stake in CGI
following a review of our investment determining that it was no longer
strategically essential for BCE to hold an equity interest in CGI given our
focus on providing network-centric managed services and applications. On the
closing date of the transaction (January 12, 2006), we received cash proceeds
of $859 million from CGI, reducing our ownership stake from 29.8% to 8.6%. We
also extended our long-term commercial relationship with CGI. Our existing
information systems and technology (IS/IT) outsourcing contract, commercial
alliance agreement and network management agreement making Bell Canada CGI's
preferred telecom services provider all have been extended by four years until
June 2016.
Financial Results Analysis
Residential segment
Residential revenues increased by 0.7% in the fourth quarter of 2005 to
$1,924 million, reflecting the continued expansion of our wireless, video and
high-speed Internet subscriber bases and an increase in video ARPU, offset
almost entirely by lower wireline (local and access and long distance)
revenues. Although overall Residential revenue growth slowed somewhat compared
with previous quarters, this result was anticipated given increased
competition from cable telephony, which adversely affected long distance and
local and access service revenues.
Local and access revenues, which represents the largest proportion of our
Residential segment revenues, declined this quarter compared with the fourth
quarter of 2004, due mainly to NAS declines which resulted in lower basic
service and related SmartTouch feature revenues, offset partly by an increase
in wireline maintenance plan revenues following price increases implemented in
the previous quarter. NAS decreased this quarter primarily as a result of
losses to competitive local exchange carriers (CLECs), cable telephony and
continued pressure from growth in high-speed Internet access which reduces the
need for second telephone lines, while the impact from other VoIP providers
and customers substituting wireline with wireless telephone service remained
minimal. The rate of year-over-year NAS losses increased this quarter as
several major cable operators operating in our territory increased their
marketing efforts and expanded the footprint of their low-priced local
telephony offerings in certain of our Ontario and Quebec markets.
Long distance revenues this quarter decreased year-over-year as a result
of lower average revenue per minute (ARPM) and lower international prepaid
calling card revenue. Lower ARPM reflected increased competition from non-
traditional long distance providers, the impact of our $5 Long Distance Bundle
(which was discontinued in July 2005) and Block-of-Time (BOT) minute plans, as
well as a lower volume of higher priced overseas minutes. Overall minutes also
declined compared with the same quarter last year as usage gains stemming from
our bundle product were more than offset by losses of domestic and overseas
minutes to alternative, non-traditional long distance service providers.
Residential data revenues grew this quarter, fuelled by further growth of
our high-speed Internet subscriber base, an increase in revenues from our
Sympatico.MSN.ca web portal and Bell Sympatico value-added services. Our
Sympatico.MSN.ca portal revenues increased by 65% over the fourth quarter of
2004. The portal currently averages 17.2 million unique visitors per month, or
87% of online Canadians.
Residential wireless revenues for the quarter increased year-over-year as
a result of a higher average number of customers compared with last year,
price increases for certain services and features implemented earlier in the
year and increased adoption of feature and data services. Overall revenue
growth was dampened by the loss of high-value customers in the early part of
2005 due to billing system conversion issues and a higher proportion of
customers choosing prepaid service or postpaid monthly packages that include a
large number of in-plan minutes and free unlimited local airtime usage for up
to six months.
Video revenues increased significantly in Q4 2005, driven by substantial
year-over-year subscriber growth and higher ARPU reflecting the impact from
price increases implemented during the year and the success of our strategy to
upsell customers to higher priced programming packages.
Our Residential segment reported operating income of $444 million this
quarter, down 4.3% compared with the fourth quarter of 2004. This decrease was
due primarily to a higher rate of decline in our high-margin residential NAS
wireline customer base and higher wireless marketing costs related to an
increased level of advertising and sales activity. These factors were offset
partially by higher revenues, lower contact centre costs driven by an
improvement in the first-call resolution rate and outsourcing, and cost
savings associated with Galileo.
Business segment
Business segment revenues for the fourth quarter of 2005 increased by
6.0% over the same quarter last year to reach $1,627 million, reflecting
higher revenues from our Enterprise and SMB units, and the positive impact
from the acquisition of 360networks in November 2004 which increased our
customer base and gave us an extensive fibre network across major cities in
western Canada. This solid revenue performance was offset slightly by a
decline in total revenues at Bell West, due mainly to revenues received in
2004 from the Government of Alberta (GOA) to build a next-generation broadband
access network (Alberta SuperNet).
Continued growth of higher-value wireless subscribers and increased data
revenues drove solid revenue improvement at our Enterprise unit. Data
delivered strong year-over-year performance, due to solid growth in IP-based
connectivity and ICT (or VAS) revenues. ICT revenues grew by 28% in Q4 2005,
compared with last year, mostly as a result of acquisitions, organic growth,
and outsourcing. These increases in data and wireless revenues were partially
offset by declines in long distance and local and access revenues, due to
further erosion of our legacy voice and data business, the reprice of some
existing wireline business in response to competitive market pressures and the
continued migration of our voice and data traffic to IP-based systems.
Our Enterprise unit also signed a five-year contract with RBC Financial
Group, Canada's largest financial institution, to implement a fully managed IP
solution, converting approximately 8,400 of the bank's phone lines at its head
office in Toronto to VoIP.
The SMB unit delivered its best quarter of the year, contributing
significantly to the solid financial performance of our Business segment.
Revenues generated from SMB customers increased this quarter as increases in
data products and services and wireless revenues more than compensated for the
decreases in long distance and local and access revenues and the sale of our
conferencing solutions operations in the United States. Despite a highly
competitive market environment, data revenue growth in Q4 2005 was driven by
the continued strong adoption of our VCIO strategy and cross-selling
opportunities with companies acquired in 2005 (including Nexxlink Technologies
Inc., and CSB Systems, which are a part of Bell Business Solutions Inc.). This
resulted in higher VAS and equipment sales year-over-year, which grew
organically by 60% in the quarter, as well as an increase in the number of new
DSL high-speed Internet access service connections. Long distance revenues
decreased, due mainly to the combined impact of lower volumes and competitive
pricing pressures, and a weakening of our pay-phone business that is directly
attributable to wireless and Internet substitution. Similarly, local and
access revenues were also lower due to pressure from our declining pay-phone
business and NAS losses to alternative telephony providers.
Bell West continued to grow its Enterprise and SMB customer bases during
Q4 2005, leading to increases in local and access and long distance revenues,
as well as the sale of services on the Alberta SuperNet completed and accepted
by the GOA in the fourth quarter. These increases were more than offset by
revenues earned in Q4 2004 for construction of the Alberta SuperNet.
Business segment operating income for the fourth quarter of 2005
increased by 29% to $236 million, due largely to a year-over-year increase in
revenues and the positive impact from our Galileo cost-reduction initiatives.
This was mitigated by continued margin pressure from competitive pricing and
lower demand, the loss of higher-margin legacy voice and data business, the
ongoing shift of voice and data traffic to lower-margin IP-based growth
services and a slight increase in net benefits plans cost.
- In the Enterprise unit, operating income increased in the quarter,
despite the negative margin impact from steady progress in transforming
our product mix towards growth services, due mainly to solid revenue
growth and focused cost management.
- Similarly, our SMB unit also had higher fourth-quarter operating income
year-over-year, due to strong revenue performance, lower selling,
general and administrative costs and a decrease in amortization
expense, offset partially by higher operating expenses stemming from
recent business acquisitions and margin erosion related to the shift
from legacy voice and data services to VCIO revenues.
- Bell West recorded lower operating income in the fourth quarter of
2005, due primarily to lower data revenues and higher amortization
expense.
Aliant
Aliant segment revenues were $535 million in the fourth quarter,
reflecting an increase of $29 million, or 5.7%, compared with the same period
last year. Continued strong growth in wireless and Internet services, as well
as a recovery from the 2004 labour disruption, offset declines in other areas
due to impacts of competition, wireless and Internet substitution, and
regulatory restrictions.
Aliant's wireless revenue increased in the fourth quarter, driven by an
11.9% year-over-year increase in its wireless customer base and higher ARPU.
Subscriber results included a 23% increase in digital customers, reflecting
Aliant's expanded service area coverage and digital wireless network, enhanced
dealer network that improved market penetration and broad product selection.
In addition, ARPU increased in the quarter, reflecting the impacts of a higher
percentage of customers subscribing to digital service and an increase in
average minutes of use.
Data revenues increased in the fourth quarter as higher Internet revenues
and recovery from the 2004 labour disruption were offset slightly by other
data revenue declines from the continued rationalization of circuit networks
by customers and the negative impact of the CRTC's CDN decision, which
amounted to $1.9 million in the quarter. The growth in Internet revenues was
attributable to year-over-year subscriber growth of 7.9%, reflecting a 42%
growth in Aliant's high-speed Internet customer base. The expansion of the
subscriber base reflected expansion of high-speed Internet service into new
areas, the migration of dial-up customers to higher-speed products, successful
marketing programs and an emphasis on bundling Internet service with other
products.
Long distance revenues declined in the fourth quarter, due to lower per-
minute pricing and a decline in minutes of use arising from intense
competition, substitution of long distance calling with Internet and wireless
options, and the use of contact centre management tools (such as integrated
voice response systems) that reduce the duration of calls.
Local and access revenues also decreased on a year-over-year basis in the
quarter. This resulted mainly from a 1.5% decline in the NAS customer base
since Q4 2004, reflecting losses to the competition and technology
substitution. In addition, the CRTC's regulatory restrictions continue to
place pressure on Aliant's local and access revenue with respect to bundling
and packaging of local services with other non-regulated services, and
limitations imposed with respect to customer win-back promotions. Moreover,
enhanced service features revenue also declined as a higher number of
customers received bundling discounts.
Terminal sales and other revenues increased for the fourth quarter, due
mainly to higher product sales reflecting Aliant's recovery from its 2004
labour disruption.
Operating income at Aliant in the fourth quarter was $105 million or
$82 million higher compared with the same period last year. The full impact of
growth and recovery from the 2004 labour disruption and the non-recurrence in
2005 of a $67 million restructuring charge related to the voluntary early
retirement program in December 2004 was partially offset by the impact of the
CDN decision and an increase in net benefit plans cost. Operating expense
increases required to drive revenue growth were contained by sound expense
management and reflected the cost savings from Aliant's 2004 voluntary early
retirement program.
Other Bell Canada segment
Other Bell Canada segment revenues for the fourth quarter of 2005 were
$494 million, representing a decrease of $17 million or 3.3% compared with the
same period in 2004. The decline was due mainly to the performance of our
wholesale unit that was affected by the impact of the CRTC's CDN decision
(which reduced revenues by $15 million in the quarter), lower long distance
revenues resulting from a decline in switched minute volumes and continued
competitive pricing pressure, and weaker data revenues as a result of
customers migrating services onto their own network facilities. This was
offset partially by the contribution to revenues from the acquisition of
360networks late in the fourth quarter of 2004 and a contract to help restore
telecommunications service to the areas affected in the United States by
hurricane Katrina.
Operating income for the Other Bell Canada segment was $99 million this
quarter, up from $61 million in Q4 2004. The amount reported in Q4 2004
included restructuring and other charges of $56 million, relating to the
relocation of employees and closure of excess real estate facilities
associated with our employee departure program. Operating income before
restructuring items increased 5.1% to $123 million this quarter compared with
$117 million in the same period last year, reflecting lower costs due to
fulfillment of our cross-border exchange traffic commitments for the year and
the consequent purchase of termination minutes for southbound U.S. traffic at
a lower rate. Lower revenues partly offset the positive impacts on operating
income.
Other BCE segment
Other BCE segment revenues were $596 million this quarter or 13.3% higher
than the same period in 2004, reflecting higher revenues at Bell Globemedia
and Telesat.
Bell Globemedia's revenues for the quarter were $465 million, up 14.8%
from Q4 2004. Total advertising revenues grew by 15.7% in Q4 2005, reflecting
the strength of CTV Television's schedule, which included 9 of the top 10 and
14 of the top 20 regularly scheduled programs during the fall season among all
viewers, higher national and careers advertising at The Globe and Mail, as
well as increased advertising from the resumption of hockey broadcasts on our
sports specialty channels TSN and RDS following the end of the NHL players'
lockout in Q3 2005. Bell Globemedia's subscriber revenues grew by 11.7% this
quarter, due primarily to strong specialty channel growth and increased online
subscription at The Globe and Mail, as well as a larger number of subscribers
and an increase in the home delivery rate for The Globe and Mail implemented
at the beginning of 2005.
Telesat's revenues increased by 15.7% to $118 million this quarter,
primarily as a result of higher revenues from its acquisition of
SpaceConnection, increased sales of services from its Anik E2 satellite (which
was retired in November 2005), and higher overall broadcast revenues.
- SpaceConnection was acquired in January 2005 and is a provider of
programming-related satellite transmission services to major U.S.
television networks and cable programmers.
- On October 1, 2005, Telesat's new Anik F1R satellite was placed into
service and is now providing capacity for broadcasters, home satellite
television services and telecommunications.
- On January 17, 2006, Telesat announced plans to build and launch Nimiq
4, a new direct broadcast satellite that will carry a wide range of
digital television services and enable Bell ExpressVu to continue to
enhance advanced services such as HD television, specialty channels and
foreign language programming.
Operating income for the Other BCE segment increased by 14.5% this
quarter to $95 million, despite lower operating income at both Bell Globemedia
and Telesat, as a result of lower corporate expenses at BCE Inc.
- Bell Globemedia's operating income decreased by 1.9% this quarter,
despite solid revenue growth, primarily as a result of higher sports
specialty programming costs due to the resumption of NHL hockey
broadcasts, increased sales and circulation costs at The Globe and Mail
and higher net benefit plans cost.
- Telesat's operating income decreased by 8.1% this quarter, reflecting
SpaceConnection's operating expenses, network equipment costs for
Interactive Distance Learning services and higher amortization expense
related to its newest satellites (Anik F2 and Anik F1R).
Product Line Analysis
Local and access
Local and access revenues for the quarter decreased by 3.9% to
$1,343 million, compared with the same period in 2004, as a result of
accelerating NAS erosion and lower Smart-Touch feature revenues, offset partly
by gains from wireline insurance and maintenance plans.
NAS in service declined by 324,000 or 2.5% since the beginning of the
year, as a result of losses to cable operators offering local telephone
service, other VoIP providers and CLECs, wireline to wireless substitution, as
well as continued pressure from growth in high-speed Internet access that
reduces the need for second telephone lines. This decrease in 2005 reflected a
higher level of NAS losses than the previous year, as several major cable
operators in our incumbent territories increased their marketing efforts and
expanded the footprint of their low-priced local telephony offerings in
certain of our Ontario and Quebec markets. This was offset partly by customers
subscribing to our new Bell Digital Voice service and higher demand for access
lines from Shaw Communications to offer VoIP services in western Canada.
Long distance
Long distance revenues were $478 million for the quarter, reflecting a
year-over-year decrease of 14.6% compared with Q4 2004. Lower long distance
revenues affected all Bell Canada segments, particularly our Residential and
Business segments. Overall minute volumes for the fourth quarter of 2005
increased marginally year-over-year, by 0.2%, to 4,567 million conversation
minutes. However, ARPM decreased by $0.013 during the same period to reach
$0.096, reflecting competitive pricing pressures in our Residential, Business
and Wholesale markets.
Wireless
Gross wireless activations increased by 9.9% this quarter to a record
455,000, up from 414,000 in Q4 2004. Although the percentage of total gross
activations from postpaid rate plans in the fourth quarter decreased to 68%
this year from 71% in 2004, due to the impact of Solo Mobile and Virgin Mobile
performance on our prepaid gross activations, the absolute number of postpaid
activations increased by 5.1% year-over-year to 308,000. Prepaid gross
activations comprised the remaining 147,000, representing a 22% increase
compared with Q4 2004. Postpaid growth was stimulated by the success of our of
holiday-season advertising campaign and attractive promotions, new handsets,
continued traction from innovative services such as our '10-4' service, our
growing presence in western Canada, as well as continued success with the
business market segments. Although prepaid activations are traditionally the
highest in Q4 due to the commitment-free, gift-giving nature of the product,
growth was also fuelled by the success of our two youth-oriented brands, Solo
Mobile and Virgin Mobile.
Our postpaid churn rate in Q4 increased on a year-over-year basis to 1.3%
from 1.2%, but decreased when compared to the previous quarter's churn rate of
1.5% due primarily to the impact of various retention initiatives targeted
mainly at our higher-value subscribers. The year-over-year increase reflected
increased competitive pressures, price increases implemented at the beginning
of Q3 and the enforcement of tighter policies on customer credits and
upgrades. Prepaid churn increased to 2.2% for the fourth quarter of 2005 from
1.9% for the same period last year, representing the cancellation of a higher
number of inactive, non-revenue-generating customer accounts. Accordingly, our
blended churn rate for Q4 increased to 1.5% this year compared with 1.4% for
the same quarter in 2004.
As at December 31, 2005, our cellular and PCS subscriber base totalled
5,441,000, representing a 10.5% increase in 2005. Postpaid rate plans
accounted for 74% of our total subscriber base at the end of the year. Net
additions of 210,000 for the fourth quarter were lower than net additions of
217,000 in Q4 2004, despite solid year-over-year growth in gross activations,
as a result of higher customer churn. For the quarter, 60% of the net
additions were on postpaid rate plans, compared with 59% in Q4 2004 and 41% in
the previous quarter, while the remaining 40% customers activated prepaid
service.
Wireless service revenues for the quarter increased to $812 million from
$742 million for the same quarter in 2004, reflecting a higher average number
of customers in our subscriber base in combination with higher ARPU.
Postpaid ARPU increased by $3 year-over-year to $64 per month in Q4 2005,
compared with the same quarter last year. This improvement was achieved
primarily as a result of higher value-added service and data revenues, fuelled
by the growing popularity of text messaging and our '10-4' service, increased
penetration of Blackberry customers and other heavy users subscribing to
higher-priced rate plans, the positive impact from price increases for certain
features (including 911, 411, outbound text messaging), out-of-bundle minutes
and other miscellaneous charges introduced earlier this year, and the
continued strong wireless performance of our Business segment particularly in
western Canada. This was offset by lower out-of-bundle airtime usage,
resulting from the popularity of price plans offering a large number of
bundled minutes or an unlimited local usage option. Prepaid ARPU increased to
$14 per month this quarter, compared with $13 per month for Q4 2004, due to
the growing presence of higher-than-average ARPU Solo and Virgin Mobile
subscribers in our prepaid customer base and higher usage. As a result of both
higher postpaid and prepaid ARPU and offset by a slight decrease in the
percentage of total subscribers on postpaid rate plans, blended ARPU also
increased in the quarter reaching $51 per month, up from $50 in Q4 2004.
Wireless EBITDA increased by 13.5%, year-over-year, to $311 million in Q4
2005, reflecting wireless revenue growth of 9.5% and lower call centre
expenses due to resolution of residual billing system conversion issues. These
factors contributed to wireless EBITDA margin of 37.1% for the quarter,
representing a 0.9 percentage point improvement in margin compared with the
fourth quarter of 2004.
Wireless COA increased 1.7% to $409 per gross activation in Q4 2005 from
$402 per gross activation for the same quarter in 2004. Despite a larger
number of gross activations, higher COA was driven primarily by an increase in
advertising and marketing spend for the holiday period, an increase in sales
of more expensive handsets to higher-ARPU generating customers and promotional
incentives offered to acquire higher-value and longer-term contract customers.
Data
Our data revenues for Q4 2005 increased by 13.9% year-over-year to
$1,097 million. The improvement was a result of growth in our high-speed
Internet customers, increased penetration of IP-based connectivity and ICT (or
VAS) solutions within our Enterprise and SMB business units, and the
contribution from business acquisitions completed in the past year, which more
than offset a decline in legacy data revenues, price competition, the
continued rationalization of circuit networks by wholesale customers, lower
construction revenues from the GOA contract and the CDN decision which
adversely affected revenues by $17 million in Q4 2005.
The number of high-speed Internet subscribers increased by 61,000 this
quarter, compared with 91,000 in Q4 2004, bringing the total subscriber count
at the end of the year to 2,195,000. Subscriber growth during the quarter was
affected by aggressive price competition in both our Ontario and Quebec
markets arising from cable operators' increased emphasis on selling multi-
product bundles at discounted rates. Moreover, a $5 price increase on our
Basic high-speed service for new customers in Ontario implemented during the
quarter was not matched by a major competitor until the end of the year.
Although our Residential segment experienced slower high-speed Internet
subscriber growth, we benefited from higher net additions at Aliant and in our
SMB unit.
The introduction of lower priced high-speed services, such as Basic Lite,
that are tailored to the very price sensitive segments of the market has
expanded the overall high-speed market, stimulating high-speed service growth
and accelerating the rate of erosion of dial-up Internet service. Total dial-
up customers decreased to 586,000 at the end of 2005 from 743,000 at the end
of 2004.
Our high-speed Internet access footprint in Ontario and Quebec reached
85% of homes and business lines passed at the end of the fourth quarter,
compared with 83% at the end of 2004.
Video
Our video revenues grew by 22% this quarter to $268 million from
$219 million last year, driven by year-over-year growth in our subscriber base
and higher ARPU.
Our video business had its best Q4 since 2002 activating 50,000 new net
customers, an increase of 16.3% compared with the 43,000 net activations
recorded for the same period last year. At the end of 2005, we provided video
services to 1,727,000 customers, representing a 14.9% year-over-year increase
in our video customer base. The solid improvement in net activations this
quarter was fuelled by the continued success of our set-top box (STB) rental
program, which accounted for more than 70% of our new activations in the
quarter. Our video churn rate increased by 0.2 percentage points, year-over-
year, to 1.0% this quarter, reflecting aggressive price competition brought
about by cable operators' emphasis on bundling cable service with other
products.
Our ARPU this quarter increased to $52 per month from $49 per month in Q4
2004 as a result of various price increases implemented during the year, a
shift in the product mix towards higher priced programming packages and higher
pay-per-view revenues, offset partly by bundle and retention discounts. In
March 2005, we applied a $3 rate increase to our existing subscriber base and
on October 1, 2005, we brought into effect $2 and $3 increases, respectively,
on our basic and theme packages for all new customers.
Video EBITDA for Q4 2005 increased to $23 million from negative
$4 million for the same period in 2004, reflecting strong double-digit revenue
growth and lower subscriber acquisition costs due to an increased number of
new activations choosing our STB rental option, offset partly by higher costs
incurred to handle increased call volumes at our contact centres.
The COA for video services decreased by 52% to $258 per gross activation
in Q4 2005 from $537 per gross activation in Q4 2004. The significant
improvement resulted mainly from the capitalization of STB and installation
costs associated with our new rental program and fewer promotional offers,
partly offset by an increased number of new customers purchasing additional
STBs.
Terminal sales and other
Terminal sales and other revenues were $459 million this quarter, or 8.8%
higher than Q4 2004. The year-over-year improvement was attributable to higher
wireless equipment revenues resulting from an increased volume of devices
sold, which included the purchase by customers of a larger number of premium-
priced handsets, higher product sales at Aliant reflecting its recovery from a
labour disruption in 2004, the favourable impact from several acquisitions
(including those of 360networks and Entourage), as well as incremental
revenues from a contract secured by Expertech (a Bell Canada majority-owned
provider of installation and network infrastructure services) to help restore
telecommunications service to the areas affected in the United States by
hurricane Katrina. This was offset partly by lower legacy voice equipment
sales to business customers.
Non-GAAP Financial Measures
This section describes the non-GAAP financial measures we used in this Q4
2005 Investor Briefing to explain our financial results. It also provides
reconciliations of the non-GAAP financial measures to the most comparable
Canadian GAAP financial measures.
------------------------
EBITDA
We define EBITDA (earnings before interest, taxes, depreciation and
amortization) as operating revenues less operating expenses, which means
it represents operating income before amortization expense, net benefit
plans cost, and restructuring and other items.
The term EBITDA does not have any standardized meaning prescribed by
Canadian generally accepted accounting principles (GAAP). It is therefore
unlikely to be comparable to similar measures presented by other companies.
EBITDA is presented on a consistent basis from period to period.
We use EBITDA, among other measures, to assess the operating performance
of our ongoing businesses without the effects of amortization expense, net
benefit plans cost, and restructuring and other items. We exclude amortization
expense and net benefit plans cost because they largely depend on the
accounting methods and assumptions a company uses, as well as non-operating
factors, such as the historical cost of capital assets and the fund
performance of a company's pension plans. We exclude restructuring and other
items because they are transitional in nature.
EBITDA allows us to compare our operating performance on a consistent
basis. 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 valuation measurement in the telecommunications industry.
The most comparable Canadian GAAP financial measure is operating income.
The tables below are reconciliations of EBITDA to operating income on a
consolidated basis for BCE and Bell Canada.
BCE Q4 2005 Q4 2004 2005 2004
-------------------------------------------------------------------------
EBITDA 1,858 1,794 7,597 7,430
Amortization expense (791) (787) (3,114) (3,056)
Net benefit plans cost (65) (67) (380) (256)
Restructuring and other items (23) (126) (55) (1,224)
-------------------------------------------------------------------------
Operating income 979 814 4,048 2,894
-------------------------------------------------------------------------
-------------------------------------------------------------------------
BELL Q4 2005 Q4 2004 2005 2004
-------------------------------------------------------------------------
EBITDA 1,729 1,679 7,187 7,111
Amortization expense (755) (763) (2,989) (2,962)
Net benefit plans cost (66) (62) (389) (235)
Restructuring and other items (24) (123) (54) (1,219)
-------------------------------------------------------------------------
Operating income 884 731 3,755 2,695
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Operating Income Before Restructuring and Other Items
The term operating income before restructuring and other items does not
have any standardized meaning prescribed by Canadian GAAP. It is therefore
unlikely to be comparable to similar measures presented by other companies.
We use operating income before restructuring and other items, among other
measures, to assess the operating performance of our ongoing business without
the effects of restructuring and other items. We exclude these items because
they affect the comparability of our financial results and could potentially
distort the analysis of trends in business performance. The exclusion of these
items does not imply they are non-recurring.
The most comparable Canadian GAAP financial measure is operating income.
The tables below are reconciliations of operating income to operating income
before restructuring and other items on a consolidated basis for BCE and Bell
Canada.
BCE Q4 2005 Q4 2004 2005 2004
-------------------------------------------------------------------------
Operating Income 979 814 4,048 2,894
Restructuring and other items 23 126 55 1,224
-------------------------------------------------------------------------
Operating income before
restructuring and other items 1,002 940 4,103 4,118
-------------------------------------------------------------------------
-------------------------------------------------------------------------
BELL Q4 2005 Q4 2004 2005 2004
-------------------------------------------------------------------------
Operating Income 884 731 3,755 2,695
Restructuring and other items 24 123 54 1,219
-------------------------------------------------------------------------
Operating income before
restructuring and other items 908 854 3,809 3,914
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net Earnings Before Restructuring and Other Items and Net Gains on
Investments
The term net earnings before restructuring and other items and net gains
on investments does not have any standardized meaning prescribed by Canadian
GAAP. It is therefore unlikely to be comparable to similar measures presented
by other companies.
We use net earnings before restructuring and other items and net gains on
investments, among other measures, to assess the operating performance of our
ongoing business without the effects of after-tax restructuring and other
items and net gains on investments.
We exclude these items because they affect the comparability of our
financial results and could potentially distort the analysis of trends in
business performance. The exclusion of these items does not imply they are non-
recurring.
The most comparable Canadian GAAP financial measure is net earnings
applicable to common shares. The table below is a reconciliation of net
earnings applicable to common shares to net earnings before restructuring and
other items and net gains on investments on a consolidated basis and per
common share.
Q4 2005 Q4 2004 2005 2004
TOTAL PER TOTAL PER TOTAL PER TOTAL PER
SHARE SHARE SHARE SHARE
-------------------------------------------------------------------------
Net earnings
applicable to
common shares 413 0.44 417 0.45 1,891 2.04 1,523 1.65
Restructuring
and other items 16 0.02 62 0.04 38 0.04 772 0.83
Net gains on
investments - - (62) (0.04) (28) (0.03) (423) (0.46)
-------------------------------------------------------------------------
Net earnings
before
restructuring
and other items
and net gains
on investments 429 0.46 417 0.45 1,901 2.05 1,872 2.02
-------------------------------------------------------------------------
-------------------------------------------------------------------------
------------------------
Free Cash Flow
We define free cash flow as cash from operating activities after capital
expenditures, total dividends and other investing activities.
The term free cash flow does not have any standardized meaning prescribed
by Canadian GAAP. It is therefore unlikely to be comparable to similar
measures presented by other companies. Free cash flow is presented on a
consistent basis from period to period.
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 to reinvest in our company. We believe that
certain investors and analysts use free cash flow when valuing a business and
its underlying assets.
The most comparable Canadian GAAP financial measure is cash from
operating activities. The table below is a reconciliation of free cash flow to
cash from operating activities on a consolidated basis.
SOURCE BCE INC.
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CONTACT:
Pierre Leclerc, Media Relations, (514)
391-2007, 1-877-391-2007, pierre.leclerc@bell.ca; Thane
Fotopoulos, Investor Relations, (514) 870-4619,
thane.fotopoulos@bell.ca; To request a free copy of this
organization's annual report, please go to http://www.newswire.ca
and click on reports@cnw.
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