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Transcription du T3 2021 (anglais seulement)

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BCE Third Quarter 2021 Results

Conference Call

Mirko Bibic

President and Chief Executive Officer

Glen LeBlanc

Executive Vice President and Chief Financial Officer

November 4, 2021

BCE Third Quarter 2021 Results Conference Call

Page 2

Thursday, November 4, 2021 – 8:00 AM ET

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

Certain statements made by BCE’s President and Chief Executive Officer and Executive Vice-President and Chief Financial Officer during BCE’s Q3 2021 Results Conference Call, as reflected in this transcript, are forward-looking statements. These statements include, without limitation, statements relating to BCE’s financial guidance (including revenues, adjusted EBITDA, capital intensity, adjusted EPS and free cash flow), BCE’s 2021 annualized common share dividend, BCE’s network deployment and capital investment plans as well as the benefits expected to result therefrom, including its two-year increased capital investment program to accelerate the rollout of Fifth Generation (5G), fibre and Wireless Home Internet (WHI) networks, our expected cash pension funding, the expectation of future revenue growth and operating profitability, the expected improvement in our mobile phone prepaid net customer additions as immigration and international travel resume more fully, the expectation that we will increase our share of the digital advertising spend in Canada and continue to grow Crave subscriber base, the expected increase in our net debt leverage ratio following payment of the remaining balance for the 3.5 GHz wireless spectrum we secured at the recently concluded spectrum auction, BCE’s business outlook, objectives, plans and strategic priorities, and other statements that are not historical facts. Forward-looking statements are typically identified by the words assumption, goal, guidance, objective, outlook, project, strategy, target and other similar expressions or future or conditional verbs such as aim, anticipate, believe, could, expect, intend, may, plan, seek, should, strive and will. All such forward-looking statements are made pursuant to the ‘safe harbour’ provisions of applicable Canadian securities laws and of the United States Private Securities Litigation Reform Act of 1995.

Forward-looking statements, by their very nature, are subject to inherent risks and uncertainties and are based on several assumptions, both general and specific, which give rise to the possibility that actual results or events could differ materially from our expectations expressed in or implied by such forward-looking statements and that our business outlook, objectives, plans and strategic priorities may not be achieved. These statements are not guarantees of future performance or events, and we caution you against relying on any of these forward-looking statements. The forward-looking statements contained in this transcript describe our expectations as of November 4, 2021 and, accordingly, are subject to change after such date. Except as may be required by applicable securities laws, we do not undertake any obligation to update or revise any forward-looking statements contained in this transcript, whether as a result of new information, future events or otherwise. From time to time, we consider potential acquisitions, dispositions, mergers, business combinations, investments, monetizations, joint ventures and other transactions, some of which may be significant. Except as otherwise indicated by BCE, forward-looking statements do not reflect the potential impact of any such transactions or of special items that may be announced or that may occur after November 4, 2021. The financial impact of these transactions and special items can be complex and depends on the facts particular to each of them. We therefore cannot describe the expected impact in a meaningful way or in the same way we present known risks affecting our business. Forward-looking statements were made during BCE’s Q3 2021 Results Conference Call for the purpose of assisting investors and others in understanding certain key elements of our expected financial results, as well as our objectives, strategic priorities and business outlook, and in obtaining a better understanding of our anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes. The forward-looking statements made during BCE’s Q3 2021 Results Conference Call for periods beyond 2021 assume, unless otherwise indicated, that the economic, market, operational and financial assumptions as well as the material risk factors described in this transcript will remain substantially unchanged during such periods, except for an assumed improvement in the risks related to the COVID-19 pandemic and general economic conditions in future years.

Material Assumptions

A number of economic, market, operational and financial assumptions were made by BCE in preparing certain forward- looking statements contained in this transcript, including, but not limited to the following:

Canadian Economic Assumptions

Our forward-looking statements are based on certain assumptions concerning the Canadian economy, which in turn depend on important assumptions about how the COVID-19 pandemic will evolve, including the progress of the vaccination rollout. Notably, it is assumed that most public health restrictions in Canada are eased by the end of 2021 and pandemic-related effects on consumer demand for goods and services diminish gradually over time. In particular, we have assumed:

  • Strong rebound in economic growth as the economy recovers from the effects of the pandemic and related restrictions, given the Bank of Canada’s most recent estimated growth in Canadian gross domestic product of around 5% on average in 2021
  • Household consumption growth as the pandemic recedes and consumer confidence rises
  • Strengthening business investment outside the oil and gas sector as demand increases and business confidence improves
  • Employment gains expected in 2021, despite ongoing challenges in some sectors
  • Accelerating trend toward e-commerce
  • Low immigration levels until the majority of international travel and/or health-related restrictions are lifted

BCE Third Quarter 2021 Results Conference Call

Page 3

Thursday, November 4, 2021 – 8:00 AM ET

  • Prevailing low interest rates expected to remain at or near current levels for the foreseeable future
  • Canadian dollar expected to remain at or near current levels. Further movements may be impacted by the degree of strength of the U.S. dollar, interest rates and changes in commodity prices

Canadian Market Assumptions

Our forward-looking statements also reflect various Canadian market assumptions. In particular, we have made the following market assumptions:

  • A consistently high level of wireline and wireless competition in consumer, business and wholesale markets
  • Higher, but slowing, wireless industry penetration
  • A shrinking data and voice connectivity market as business customers migrate to lower-priced telecommunications solutions or alternative over-the-top (OTT) competitors
  • While the advertising market continues to be adversely impacted by cancelled or delayed advertising campaigns from many sectors due to the economic downturn during the COVID-19 pandemic, we do expect gradual recovery in 2021
  • Declines in broadcasting distribution undertakings (BDU) subscribers driven by increasing competition from the continued rollout of subscription video on demand streaming services together with further scaling of OTT aggregators

Assumptions Concerning our Bell Wireless Segment

Our forward-looking statements are also based on the following internal operational assumptions with respect to our Bell Wireless segment:

  • Maintain our market share of national operators’ wireless postpaid net additions
  • Modest growth of our prepaid subscriber base
  • Continued focus on mobile phone subscriber growth, as well as the introduction of more 5G, 4G Long-term evolution (LTE) and LTE Advanced devices and new data services
  • Continued deployment of 5G wireless network offering coverage that is competitive with other national operators in centres across Canada
  • Increased subscriber acquisition and retention spending
  • Unfavourable impact on mobile phone blended ABPU, driven by reduced outbound roaming revenue due to travel restrictions as a result of the COVID-19 pandemic and reduced data overage revenue due to continued adoption of unlimited plans
  • Increased adoption of unlimited data plans and device financing plans
  • No material financial, operational or competitive consequences of changes in regulations affecting our wireless business

Assumptions Concerning our Bell Wireline Segment

Our forward-looking statements are also based on the following internal operational assumptions with respect to our Bell Wireline segment:

  • Continued growth in retail Internet and IPTV subscribers
  • Increasing wireless and Internet-based technological substitution
  • Continued aggressive residential service bundle offers from cable TV competitors in our local wireline areas
  • Continued large business customer migration to IP-based systems
  • Ongoing competitive repricing pressures in our business and wholesale markets
  • Continued competitive intensity in our small and medium-sized business markets as cable operators and other telecommunications competitors continue to intensify their focus on business customers
  • Traditional high-margin product categories challenged by large global cloud and OTT providers of business voice and data solutions expanding into Canada with on-demand services
  • Accelerating customer adoption of OTT services resulting in downsizing of TV packages
  • Further deployment of direct fibre to more homes and businesses within our wireline footprint and fixed wireless-to-the- premise technology in rural communities
  • Growing consumption of OTT TV services and on-demand streaming video, as well as the proliferation of devices, such as tablets, that consume large quantities of bandwidth, will require ongoing capital investment
  • Realization of cost savings related to management workforce reductions including attrition and retirements, lower contracted rates from our suppliers, operating efficiencies enabled by a growing direct fibre footprint, changes in consumer behaviour and product innovation, new call centre technology that is enabling self-serve capabilities, and other improvements to the customer service experience
  • No material financial, operational or competitive consequences of changes in regulations affecting our wireline business

BCE Third Quarter 2021 Results Conference Call

Page 4

Thursday, November 4, 2021 – 8:00 AM ET

Assumptions Concerning our Bell Media Segment

Our forward-looking statements are also based on the following internal operational assumptions with respect to our Bell Media segment:

  • Overall revenue is expected to reflect a gradual economic recovery in 2021 combined with subscriber revenue growth and strategic pricing on advertising sales. However, revenue performance is expected to continue to be negatively impacted by the effects of the COVID-19 pandemic on many sectors of the economy.
  • Continued escalation of media content costs to secure quality programming, as well as the return of sports and entertainment programming
  • Continued scaling of Crave through broader content offering and user experience improvements
  • Investment in Noovo News and more French-language original content to better serve our French-language customers with a wider array of content, in the language of their choice, on their preferred platforms
  • Enhanced market-leading attribution through our Strategic Audience Management (SAM) tool
  • Ability to successfully acquire and produce highly rated programming and differentiated content
  • Building and maintaining strategic supply arrangements for content across all screens and platforms
  • Continued monetization of content rights and Bell Media properties across all platforms
  • No material financial, operational or competitive consequences of changes in regulations affecting our media business

Financial Assumptions Concerning BCE

Our forward-looking statements are also based on the following internal financial assumptions with respect to BCE for 2021:

  • Total post-employment benefit plans cost to be approximately $300 million, based on an estimated accounting discount rate of 2.6%, comprised of an estimated above adjusted EBITDA post-employment benefit plans service cost of approximately $275 million and an estimated below adjusted EBITDA net post-employment benefit plans financing cost of approximately $25 million
  • Increase in depreciation and amortization expense of approximately $200 million to $250 million compared to 2020
  • Interest expense and payments of approximately $1,050 million to $1,100 million
  • An effective tax rate of approximately 27%
  • NCI of approximately $60 million
  • Total cash pension and other post-employment benefit plan funding of approximately $350 million to $375 million
  • Cash income taxes of approximately $800 million to $900 million
  • Average number of BCE common shares outstanding of approximately 905 million
  • An annual common share dividend of $3.50 per share

The foregoing assumptions, although considered reasonable by BCE on November 4, 2021, may prove to be inaccurate. Accordingly, our actual results could differ materially from our expectations as set forth in this transcript.

BCE Third Quarter 2021 Results Conference Call

Page 5

Thursday, November 4, 2021 – 8:00 AM ET

Material Risks

Important risk factors that could cause our assumptions and estimates to be inaccurate and actual results or events to differ materially from those expressed in, or implied by, our forward-looking statements, including our 2021 financial guidance, are listed below. The realization of our forward-looking statements, including our ability to meet our 2021 financial guidance targets, essentially depends on our business performance, which, in turn, is subject to many risks. Accordingly, readers are cautioned that any of the following risks could have a material adverse effect on our forward-looking statements. These risks include, but are not limited to: the COVID-19 pandemic and the adverse effects from the emergency measures implemented or to be implemented as a result thereof, including supply chain disruptions, as well as other pandemics, epidemics and other health risks; adverse economic and financial market conditions, a declining level of retail and commercial activity, and the resulting negative impact on the demand for, and prices of, our products and services; our dependence on third-party suppliers, outsourcers and consultants to provide an uninterrupted supply of the products and services we need to operate our business, including mobile devices; the intensity of competitive activity including from new and emerging competitors; the level of technological substitution and the presence of alternative service providers contributing to the acceleration of disruptions and disintermediation in each of our business segments; changing viewer habits and the expansion of OTT TV and other alternative service providers, as well as the fragmentation of, and changes in, the advertising market; rising content costs and challenges in our ability to acquire or develop key content; the proliferation of content piracy; higher Canadian smartphone penetration and reduced or slower immigration flow; regulatory initiatives, proceedings and decisions, government consultations and government positions that affect us and influence our business; the inability to protect our physical and non-physical assets from events such as information security attacks, unauthorized access or entry, fire and natural disasters; the failure to transform our operations, enabling a truly customer-centric service experience, while lowering our cost structure; the failure to continue investment in next-generation capabilities in a disciplined and strategic manner; the inability to drive a positive customer experience; the complexity in our operations; the failure to maintain operational networks in the context of significant increases in capacity demands; the risk that we may need to incur significant capital expenditures to provide additional capacity and reduce network congestion; the failure to implement or maintain highly effective information technology (IT) systems; the failure to generate anticipated benefits from our corporate restructurings, system replacements and upgrades, process redesigns, staff reductions and the integration of business acquisitions; events affecting the functionality of, and our ability to protect, test, maintain, replace and upgrade, our networks, IT systems, equipment and other facilities; in-orbit and other operational risks to which the satellites used to provide our satellite TV services are subject; the failure to attract and retain employees with the appropriate skill sets and to drive their performance in a safe environment; labour disruptions and shortages; the failure of our vendor selection, governance and oversight processes; security and data leakage exposure if security control protocols affecting our suppliers are bypassed; the quality of our products and services and the extent to which they may be subject to manufacturing defects or fail to comply with applicable government regulations and standards; the inability to access adequate sources of capital and generate sufficient cash flows from operating activities to meet our cash requirements, fund capital expenditures and provide for planned growth; uncertainty as to whether dividends will be declared by BCE’s board of directors or whether the dividend on common shares will be increased; the inability to manage various credit, liquidity and market risks; pension obligation volatility and increased contributions to post-employment benefit plans; new or higher taxes due to new tax laws or changes thereto or in the interpretation thereof, and the inability to predict the outcome of government audits; the failure to reduce costs, as well as unexpected increases in costs; the failure to evolve practices to effectively monitor and control fraudulent activities; unfavourable resolution of legal proceedings and, in particular, class actions; new or unfavourable changes in applicable laws and the failure to proactively address our legal and regulatory obligations; the failure to recognize and adequately respond to climate change concerns or stakeholder and governmental changing expectations on environmental matters; and health concerns about radio frequency emissions from wireless communication devices and equipment.

We caution that the foregoing list of risk factors is not exhaustive and other factors could also adversely affect our results. We encourage investors to also read BCE’s 2020 Annual MD&A dated March 4, 2021 (included in BCE’s 2020 Annual Report), BCE’s 2021 First, Second and Third Quarter MD&As dated April 28, 2021, August 4, 2021 and November 3, 2021, respectively, and BCE’s news release dated November 4, 2021 announcing its financial results for the third quarter of 2021 for additional information with respect to certain of these and other assumptions and risks, filed by BCE with the Canadian provincial securities regulatory authorities (available at Sedar.com) and with the U.S. Securities and Exchange Commission (available at SEC.gov). These documents are also available at BCE.ca.

The terms “adjusted EBITDA”, “adjusted EBITDA margin”, “adjusted EPS”, “free cash flow” and “net debt leverage ratio” are non-GAAP financial measures and do not have any standardized meaning under IFRS. Therefore, they are unlikely to be comparable to similar measures presented by other issuers. Refer to section 7.2, Non-GAAP financial measures and key performance indicators (KPIs) in BCE’s 2021 Third Quarter MD&A for more details.

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Disclaimer

BCE Inc. published this content on 11 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 November 2021 15:46:02 UTC.

Publicnow 2021

Analyst Recommendations on BCE INC.

Sales 2021 23 484 M
18 644 M
18 644 M
Net income 2021 2 765 M
2 195 M
2 195 M
Net Debt 2021 29 455 M
23 384 M
23 384 M
P/E ratio 2021 20,9x
Yield 2021 5,10%
Capitalization 58 224 M
46 809 M
46 224 M
EV / Sales 2021 3,73x
EV / Sales 2022 3,61x
Nbr of Employees 50 704
Free-Float 85,0%



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BCE Inc. Technical Analysis Chart | MarketScreener

Technical analysis trends BCE INC.

Short Term Mid-Term Long Term
Trends Neutral Bullish Bullish



Income Statement Evolution

Sell

Buy

Mean consensus OUTPERFORM
Number of Analysts 18
Last Close Price
64,07 CAD
Average target price
65,71 CAD
Spread / Average Target 2,55%




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