Q1 2020 Earnings Call
All participants please stand by your.
Conference is ready to begin.
Good morning, ladies and gentlemen, welcome to the <unk> Q1, 2020 results conference call.
We don't like to turn the meeting over to Mr. Thane Fotopoulos. Please go ahead Mr. fotopoulos. Thank you ally and good morning, everyone. Joining me on the call today are Merck <unk>, President and CEO and Glen Leblanc our CFO.
A reminder, first quarter results package and other disclosure documents, including today's slide presentation are available on Pcs Investor Relations Web page.
Before we get started to want to draw your attention to the Safe Harbor statement on slide two information in this presentation and remarks made by the speakers today will contain statements about expected future events and financial results that are forward looking and therefore subject to risks and uncertainties. These forward looking statements represent our expectation as of today and accordingly are subject to change we disclaim.
The obligation to update forward looking statements, except as required by law doctors that may affect future results are contained in Pcs filings.
Union Securities commissions, and the FCC and are also available on our corporate website with that'll turn it over to Mirko.
Thank you, saying and good morning, everyone. We hope that you're all staying safe and following government measures. So that we may resume as much as possible given the circumstances or daily lives.
I also want to open up like knowledge and government efforts at all levels and extending our deepest gratitude to all health professionals and other frontline workers, who are working tirelessly around the clock.
Speaking of frontline workers I'm, especially proud of the Bell team, who is outstanding work to keep Canadians connected 24, seven is being widely recognized as critical to our country's ability to withstand the covert 19 crisis.
This is the biggest challenge our country his face and generations and I'm. So proud to be working alongside the more than 50000 Bell employees as we build on our legacy as the company. That's always there when Canadians need us our people and I were networks have certainly risen to the challenge. Thank you.
I'll now turn to highlighting the key operational priorities that I've guided us over the last few weeks one of the key operational priorities is to keep Canadians connected and informed at a time in the country needs at the most.
We've taken a number of steps to ensure continuity of critical services, including enhanced capacity and redundancy for our wireless wireline and broadcast media networks ongoing special support for health care providers, and first responders and a commitment to delivering the latest news to Canadians at the local regional and national levels. We've.
Operating our networks at a remarkable 99.99% overall availability, despite surging demand, while maintaining internet speeds, even with increases in peak daily traffic of up to 60%.
Rural customers are also keeping connected with a 40% increase in usage of our innovative wireless home Internet service and by the end of April we made this service available to 137000 more rural homes and we had initially planned.
I understand the importance of the service for rural communities.
We've also seen an increase in voice krasik, including a 250% increase in conference call usage as Canadians are keeping connected to their family their friends and offices, well sheltering and working from home.
And Canadians are turning to Bell media for news and entertainment now more than ever with significant increases in viewership across our platforms, including crave that is registering 75% higher usage.
Now turning our focus to a second key operational priority, which has been to meet the needs of our team members our customers in our communities were safe guarding our people with stringent sanitation and safety procedures enhanced support for remote work capability and we source significant supplies a personal protective equipment.
Our assisted self installation and repair program enables fuel tech's to perform installations and repairs entirely from outside the home by voice and video links.
While technicians will enter a customer's premises where necessary. The new program has decreased time spent by technicians and customers farms by up to 85%.
With disruptions to our call center operations remote customer service has ramped up we have equipped 4000 agents with specialize and secure connections to work at home further reducing the number of people that are Worksite. We've also built service capacity by redeploying team members, including retail employees displaced by store closing.
To frontline customer service rules. The team has done an amazing job reestablishing service levels and extremely difficult circumstances.
We're also enhancing self serve capabilities digital self serve now represents more than 50% of all customer transactions across all channels since the start of the covert 19 crisis.
These initiatives are protecting our team members and our customers while improving the customer experience in this time a crisis in that regard. We're also providing significant additional support for customers isolated and working from home.
Efforts to champion customer experience.
We removed any extra usage fees for customers not already on unlimited residential internet plans and waived wireless roaming fees for customers traveling abroad.
We also understand many are facing financial difficulties right now because of the economic impact of covert 19, and we will work with customers on flexible payment arrangements. If they are having trouble.
This is also why we have delayed implementation of previously planned pricing.
Increases for home phone and certain TV services.
Bell TV has may see TV news channel CP 24, and other Canadian New services available as free previews. In addition to a variety of family lifestyle and entertainment channels.
Bell Media's also offering 30 day free trials crave.
From a broader community perspective, we're supporting the frontline response to covert 19 with over 3500 Bell mobility phones in their time for a wide range of organizations across the country, including mental health and other health care facilities homeless shelters children's eight societies and other social service providers and.
And we donated 1.5 million protective masks for use on the front lines throughout Canada, while at the same time procuring the personal protective equipment needed for our own team members.
And we increased our bell, let's talk commitment by an additional $5 million with particular emphasis on funding agencies delivering remote mental health services.
And taking all these steps we have been guided by our new gold unveiled on January six.
Advancing how Canadians connect with each other and the world.
And focusing on these key operational priorities has reinforced that our updated strategic imperatives are the right warns that guide us not only through this period, but also over the long term.
Building the best networks will always be a core strategic imperative for bell in good times and bad.
To that end, we're making the necessary investments now.
Keep up with the demand from all sectors of society.
At the same time, we're maintaining our network deployment plans, whether that be fiber to the home expanding our leading wireless networks getting ready for fiveg for accelerating our wireless home Internet service footprint with as I said 137000 additional homes passed in April.
This is not a time to pull back capital spending on critical network infrastructure, the country's depending on us.
These are healthy investments for the long term benefit of our company.
Our customers and our economy.
We're also making the investments we need to champion the customer experience, especially as it relates to online fulfillment self serve in automation tools for improved functionality.
Importance of such investments has been made all the more pressing in the current environment, where retail stores were temporarily closed and only now ramping back up slowly.
Where call center operations, our disrupted and were Canadians are sheltering at home and Teleworking is the order of the day.
In short now is not the time to curtail strategically critical investments in customer experience.
They are necessary to keep us competitive in the short term and will benefit us in so many ways over the medium and long term.
The current crisis also highlights in a very clear way the benefits of candidates Global network leadership, which has been made possible because of our massive investments supported by long standing facilities based regulatory policies.
It has never been more important for governments and regulators to stay the course with policies that incense continued deployment of high speed fiber networks wireless home Internet and Ken is underserved rural communities and next generation mobile Fiveg technology. The bottom line is Canada cannot risk, losing its global leadership.
On networks.
Now I'll turn to slide five of our presentation and our financial outlook for 2020.
Like every other company, we are being affected by Cobot 19, the situation is evolving continuously and its ultimate link severity and outcome is unknown.
As a result, we are withdrawing our twentytwenty financial guidance previously announced on February six.
Against the backdrop of this uncertainty I am confident BC he will exit the crisis in strong shape.
We remain highly focused on managing our cost structure and ensuring continued financial flexibility.
Bells underlying business fundamentals have not changed our liquidity position is strong underpinned by healthy balance sheet and substantial free cash flow generation that provides significant financial flexibility to execute on our capital investment priorities and to sustain BC ease common share dividend payments from.
Future in fact, we just declared this morning as scheduled our common share dividend for Q2 that will be paid to shareholders on July 15.
As mentioned, we plan to make investments, Canada needs now and for the future and we will do so without putting the dividend in jeopardy.
This will provide a strong foundation for growth going forward that will benefit all stakeholders, our customers our employees and are more than 1.4 million shareholders, maintaining our planned level of capital spending will result in a dividend payout ratio that exceeds the upper end of our historical target policy range.
Turning now to slide six and a quick overview of some key operating metrics by segment I'll start with wireless subscriber and promotional activity was down significantly in the last few weeks of the quarter with a temporary closure of retail stores and call center disruptions due to covert which resulted in a 12% year over year decline in postpaid gross.
Activations in Q1.
As fewer wireless consumers are shopping we also saw a corresponding decline and customer churn.
We reported our lowest ever postpaid churn rate of 0.97% this quarter.
As a result, a fewer customer disconnections combined with some temporary new covert 19 related government Activations postpaid net adds in Q1 totaled 24000.
With respect to prepaid gross adds were up 38% on the continued strength of Lucky mobile and our goal around distribution agreement, which drove a 66% year over year improvement in net subscriber losses to 4000.
Blended ARPU was down 2.7% compared to last year not an entirely unexpected result, given the restrictions on travel and waving of roaming fees due to coven as well as the continued decline in data overage revenue due to more subscribers on unlimited plans, including a growing mix of installment customers in the base.
Now I'll move to Bell wireline.
Our subscriber results reflect the resiliency of our household products in the current environment and should fare relatively well during the cold and crisis as consumers are now spending more time at home using broadband Internet and video services, therefore, although fewer customers installing new residential services.
Our also disconnected.
This drove 23000 retail internet net additions in Q1 unchanged versus last year.
We also added another 48000 fiber to the home subscribers this quarter, bringing the total number of direct fiber customers to around 1.5 million up 19% over last year.
On the TV side of things, we added 3000, net new IP TV subscribers, a modest yet reasonable result, given the impact of sales channel disruptions on gross additions as well as overall TV market maturity and the maturity of our footprint.
We also continued to see nice year over year improvement in retail satellite TV and residential home phone customer losses, which were down 5% and 8% respectively.
For Bell media, while overall TV viewership is up 25% since the start of covert TSN and Rds subscriber deactivations have been minimal even without live sports. This speaks to the quality and depth of our programming, which is unparalleled in the Canadian market.
Lastly at the beginning of April see RTC approved our acquisition of television network.
Supporting our growing media presence in Quebec, and offering more competition and consumer choice in French language conventional TV.
All the regulatory approvals in place the transaction is scheduled to close in the second quarter.
Thank you and I'll turn it over to Glenn.
Thank you Merkel and thank you everyone for joining us and I Hope you are all remaining healthy and safe.
Firstly, let me Echo Marcos thanks to our employees for ensuring Canadians remain connected and informed.
And to my finance team specifically thank you.
I would have told you two months ago that we would close at the quarter and prepare our financial documents released remotely.
We would have said that's not possible.
What you did just that and you did it flawlessly as usual so again thank you.
Im going to begin on slide eight with an overview of our Q1 financial results.
The financial impact of Cobot 19 was limited in Q1 as government locked down measures and related shutdown of businesses only went into effect towards the end of the quarter.
Although difficult to assess with any pinpoint accuracy, we estimate that our normalized that normalizing for coal that our overall consolidated results for Q1, we're tracking to our now withdrawn guidance targets for 2020.
Total service revenue remained positive in Q1, despite the curtailment of commercial activity starting in mid March as well as the impact of initiatives to support bell customers sheltering and working from home.
However, product revenue was down decreasing 10% year over year. This was the result of a significant reduction in wireless customer transactions.
Rebuttal to retail channel disruptions as well as lower business wireline data equipment sales given last year's strategy.
And the current economic environment.
Despite the year over year revenue declined adjusted EBITDA grew a respectable 1.4%, reflecting a 2.6% decrease in total operating costs, which drove a one point increase in margin to 43%.
Thats customer activity has waned so has call volumes and technician visits to the home. This combined with fewer promotional offers reduced mobile handset subsidies as well as decreased advertising and travel.
Helped to mitigate some of the revenue softness we saw in the quarter.
And as Carl mentioned, we will continue to make the necessary changes to our cost structure to offset as much of the colbert related financial pressure as possible.
With respect to earnings adjusted EPS was up three cents over last year, However, statutory EPS decreased.
Due to the net mark to market loss on equity derivative contracts, resulting from a decline in BC share price this quarter versus a sizable increase.
This time last year.
As for free cash flow the modest year over year decline was driven mainly by a reduction in cash from working capital, which I'm going to expand on later.
Lastly, I want to bring your attention to a couple of reporting changes we made in Q1.
Our public safety radio network business, which builds in manages private land mobile radio networks, primarily for the government sector will now be managed within our bell business markets in order to better aligned with how we manage that part of our business and assessed performance. Therefore, those operating results are now included within.
Our wireline segment with pre prior periods restate it for comparative purposes. Previously. These results were included within the Bell wireless segment.
In addition, our wireless ARPU definition was updated to include going from device.
Payment plans.
With a growing mix of IP customer Activations. This metric now more accurately reflects the full monthly cash amounts received from customers.
Let's turn to our wireless on slide nine.
Of our three operating segments Cobot 19 had the biggest immediate impact on wireless with a reduction in new customer loadings and device upgrades as a result product revenue decreased 9.1% in the quarter.
This subscriber slow down together with reduced roaming volumes and the ongoing steady decline in overage revenue from customer adoption of unlimited data and installment plans also moderated service revenue growth, which saw step down versus last quarter.
Consistent with the decrease in wireless market activity variable C O a cost including device subsidization and other marketing and selling expenses also decreased driving a 6.6% year over year improvement in operating costs. Therefore, the impact of cobot on wireless EBITDA, which grew a solid 4%.
Was not overly material in Q1.
However longer the cold shutdown persist the more significant effect on EBITDA, given the financial impact of slower subscriber growth a declining roaming revenue and the amortization of deferred customer acquisition costs.
From previous periods.
Let's move onto wireline on slide 10.
Our wireline results for Q1 were impacted only minimally by cobot.
Although we experienced a reduction in new residential service installation requests waived internet overage fees and implemented flexible payment options for customers financially impacted by the crisis, our consumer Sumer wireline unit delivered stable and consistent results this quarter.
Combined Internet and TV revenue was up approximately 3% year over year, while the rate of voice revenue decline improved reflecting fewer deactivations and increase long distance usage.
For business wireline softer quarter as we lapped the revenue growth acceleration enjoyed in the first half of 19 and saw reduced or delayed customer spending given the current economic situation.
Despite more near term financial risk from me after effects of coal, but compared to our residential services unit the impact that data on business wireline has been relatively contained while we have seen an increase in pricing concessions to customers, particularly in the SMB space as well as lower data equipment and business.
Service solution sales to larger enterprise customers.
We also provide critical conductivity services needed to maintain business continuity.
Against this backdrop, we have reduced discretionary expense.
Expenses in this digitized customer service delivery to optimize our cost structure.
This resulted in a 1.6% reduction in operating costs this quarter.
Which drove positive wireline EBITDA growth of 0.5%.
And a 50 basis point improvement in margin.
Let's turn to slide 11 on our media business.
Total revenue was up <unk>, 0.9% in the quarter. This was as a result of 5.6% year over year increase in subscriber revenue driven by crave growth over the past year and contract renewals with Canadian TV distributors.
Not surprisingly advertising revenue was down 2.5% year over year affected by the industry wide decline in AD sales because of cobot 19.
Advertising is frequently one of the first discretionary expense items that many companies cut back on.
Although the reduction in spending was relatively small this quarter that should accelerate in Q2 as advertisers rationalize delay or eliminate advertising budgets in light of cobot related impacts on their business.
And although media consumption and TV viewership is up as Mirko described AD spending will necessarily follow.
Each of course will depend on the length of the shutdown and the depth of the resulting economic downturn.
Due largely to the fact that advertising was very high revenue has a very high revenue flow through Bell Media's EBITDA decreased 6.1% in Q1.
Let's turn to slide 12, <unk> provides a walk down of the main components of adjusted EPS, which was 80 cents per share in Q1 up 3.9% compared to last.
In addition to higher EBITDA, which drove three cents of earnings growth. This quarter. Adjusted EPS also reflected lower net interest expense due to the impact of lower interest rates on a short term debt.
And a favorable income tax expense benefit due to the change in Nova Scotia corporate tax rate.
Turning to slide 13, you will see that we generated $627 million a free cash flow this quarter.
Adjusted EBITDA less capex or what I, commonly referred to as simple free cash flow grew 6.5% over last year, contributing 106 million of higher cash year over year.
However, this was more than offset by the large cobot related swing in working capital.
Driven mainly by a buildup of mobile handset inventory in anticipation.
Of potential supply chain constraints and a slowing in customer count collections. This quarter's results also reflected a year over year decrease in cash taxes enabled by recently enacted government measures that allow for a delay tax installment payments until later this year as well as higher interest paid.
Due mainly to a higher level of debt outstanding as we tapped the bond markets in Q1 to strengthen our already strong liquidity position.
That's a good lead into slide 14, we ended Q1.
With 3.2 billion of liquidity.
Providing us with good financial flexibility to navigate through the cobot crisis.
Our cash balances and Undrawn portions of our 4 billion committed credit facilities together with substantial daily cash inflows from operation and continued access to public debt and bank markets are expected to be more than adequate to meet our cash requirements for the remainder of 2020.
Our debt leverage ratio remains manageable at 2.86 times adjusted EBITDA.
And our interest coverage ratio is high providing good predictability in our debt service costs.
Moreover, we have no near term refinancing requirements as our next public debt maturity does not occur until the end of Q3 2021.
As for Bell, Canada is defined benefit pension plan. The estimated funded position has declined only modestly since the end of 19, but remains fully funded.
As a result, our cash pension funding requirements for 2020 are unchanged.
This can be attributed to the pension plans assets, which are invested conservatively.
Have ample liquidity and are well diversified.
Public equity securities make up only 22% of the plant assets, we have allocated overtime, a greater portion of the plans assets to fixed income securities.
And that that have returns much less impacted by the current equity markets and that serve as a natural hedge to lower interest rates.
Lastly, I would like to add that BC east close to 1 billion and annual U.S. dollar spending has been had substantially through to the end of 21.
Effectively insulating our free cash flow exposure until last time.
To conclude I think it's worth reiterating what Merkel said earlier and that is that BCS dividend remains safe.
Our substantial free cash flow generation provides that requires funding to support our plant network investments and dividend payments for 2020, while we expect a higher than normal dividend payout ratio. This year the dividend to secure given BCS resilient free cash flow profile.
Reasonable leverage and the company's relatively easy access to liquidity markets if required.
That concludes my formal remarks, so I'd like to turn the call back over to saying in the operator and to begin questions. Thanks, Glenn said before we start to Kuni period, I want to remind participants that units in time constraints. This morning, because of our age.
Which is taking place right. After this call. Please limit yourself to one question in a brief follow ups that we can get as many of you as possible in the queue with that Atlanta weren't ready to take our first question.
Certainly thank you.
Please press star one at this time, if you have a question.
The first question is from a Richard Choe JP Morgan. Please go ahead.
Hi service revenue in wireless was up on the quarter, but there were some impact the yen due to go that in that who was down what is going to be the full impact going forward, how much roaming and data leverage exposure do you have relative to overall service revenue. Thank you.
So thanks, Thanks, Richard so on.
And as I mentioned at the.
<unk> said in terms of our.
Right we have.
No it data overage.
Pack, there and like I said in past.
Orders are or over to decline actually in Q1 of this year was relatively books and were relatively muted like in Q4 2019 is just another quarter, where we have demonstrated that base management. It really is one of our core competencies and that will continue as far as as role.
I mean, clearly that was going to have an impact in Q2, given the restrictions on basically.
Restrictions on travels to whether or not that's inbound outbound roaming that's going to be significantly.
Impacted in Q2 and for as long as a as the crisis lies and travel restrictions remain in place and they Glenn give any one at that.
Not much Merkel I think thats, that's pretty good Richard I'm, not going to try to to forecast the duration in severity of covet and try to predict.
Its implications on service revenues go forward, certainly I'm not equipped to to do that.
I think as Marco said naturally roaming revenue is going to be significantly impacted for the foreseeable future. We're managing the data overage transactions are significantly down in wireless, but all in all I think the underlying health of our business remains in as Merkel said in his opening remarks, the fundamentals remain strong.
No. It seems like you're managing the service revenue part well to follow up on the equipment side, what was the kind of decline in the second half of March versus than 910% that you saw in the overall quarter.
I'm going to provide any any specifics on that Richard.
Sufficed to say that as retail channels closed.
We see we saw a significant reduction in transactions and that.
Has that continued wells through the month of April.
Good news is we're starting to see signs across the country that that retail channels are opening storefronts or are coming back online and Oh, let's hope that that this is relatively short lived and we start to see a Canadian shopping again and transactions picking up.
Great. Thank you. Thank you Richard.
Thank you.
The next question is from Aravinda Galappatthige with Canaccord. Please go ahead.
Good morning, Thanks for taking my questions you referred to some of the.
Your next back on the asset side already seeing I'm guessing side.
It's down a little bit on what.
The would be the impact on enterprise, obviously that could become pricing pressure.
Contracts will roll over the same time I think as you alluded to that there might be some upside.
Increased spend on connectivity, including confidence in your markets et cetera, maybe just talk to some of the some of the dynamic that sure. Thank you. Thank you. Please do so.
It's a pandemic certainly is highlighted the importance of our wireline services generally to Canadian homes and businesses, we're seeing usage up and churn down as it relates to.
The enterprise segment, we are seeing an increase or sought really increases in demand for our conductivity, which was a positive that said there has been lower demand for data equipment and some lower demand for service solutions, but ultimately Canadian businesses do rely on bell to keep them connected so it's no.
Surprise that we're seeing that stability.
Stability to an increase in demand for connectivity now on the that's that's in the enterprise segment and these small business segment. That's clearly more exposed given economic circumstances that small businesses are facing but that also is a small or a portion of our business segment revenue.
Thank you and just as my follow up.
Some of the cost reductions in wireless speak to your expenses.
The industry instead of consumption and moving to woods.
So a handset subsidies in general I know that the current period not necessarily the vast representation, but I know that with some progress even I've tried to call that 19, hitting just wanted to get your thoughts on that thank you.
Right. Okay. So we're seeing.
We are seeing some subsidies savings from.
Two sources, one is clearly though.
Decrease in transactions due to their retail store closures Glenn touched on that so no need repeating that but we also saw a reduction in subsidy due to scaling of installment plans and and they have been.
Scaling quite nicely, we're quite pleased with it and as we said in previous calls where.
Quite favorably disposed to the installing the installment plan model and we like the early results whether or not that was the latter part of Q4 of last year and into Q1. This year, a nice scaling and we see the financial benefits that will come and a couple of points.
To highlight at the end of April the Bell brand.
As fully switched over to the smart pay model.
And I believe I mentioned on our last call together that we were doing the work necessary to transition the Virgin brand of over two installment plans I'm happy to report that will.
Dahlman plans will be available in the Virgin brand this month actually.
So it's looking it's looking good we'd like the early results and I think that.
Through the question.
Thank you.
Thank you.
Next question is from David Barden with Bank of America. Please go ahead.
Hey, guys. Thanks for him.
I guess.
Could you talk a little bit about what behavioral changes we saw emerge in the wireless business kind of in the last month and a half.
Reserves, a modest, albeit in the queue, one but that will accelerate for additional reserves in q. too.
Data just add a little bit to that.
My saying that we're seeing.
Those small businesses that are the most affected and who we are working with where we're seeing suspensions.
Rather than than just everyone necessarily disconnecting, which is which is favorable in relative terms and we're also working with though was affected small businesses on alternative payment arrangements and Glenn as he mentions taking the the appropriate permissions.
Great. Thank you guys.
Thank you.
Question is from assignments running with Morgan Stanley. Please go ahead.
Great. Thank you very much good morning, you talked about maintaining your capital spending program because your talk a little bit about your five g. up plans and where do where to start stand at this point with potential five g. I phone coming later this year, maybe lair into that when when are we going to get some clarity from the government on though while way why waste central.
No not in the in the networks. Thanks.
Thanks for the question. So we are ready.
So we're initial five G. network, but frankly, we've made frankly, we don't think that it's the right time right now.
Officially launched from for marketing purposes.
Just don't think that customers are paying attention to this right now and that's not what is top of mind for our customer base. They have other priorities understandably, but but we are we already.
As you know I think we are carrying the first five g. phones that have been brought to market. Samsung G.S. 20 would be one example, and you know as the economy opens up.
We'll have more more news on on when we will launch our initial five g. services and ask for a while way in the government I I really.
Don't know and couldn't provide more insight than I provide in the last couple of times. We spoke we will we're waiting for the government's decision and we will follow government rules with respect to usage of equipment in our five G. network and and as you know we work with multiple.
Suppliers in our supply chain.
Great and do you think the auction timing could be impacted by the crisis.
Well I you on the auction timing like here's what.
Back to my opening comments about my general comments and my opening about we cannot risk as a country falling behind and communications networks and now.
It makes it as clear as ever how important world leading communications.
Are so you know with is that as contacts.
I don't think we can and should want to fall behind on five G. and 3500 megahertz as we all know was the backbone of five G. So my point of view as we need to have that option is planned or very soon after if it's not december 15th than like very soon after December 15th.
And that would be our position, let's have the auction, let's move forward, let's make that spectrum available, let's lead in five Gee now with you know that having been said I would also say that given how our industry has stepped up with accelerated investments this year in particular.
Governments would be open to delaying payments until calendar year 2022 that would be helpful to everyone concerned, but ultimately those short answer. Your question is let's have the option.
Great. Thank you.
Thank you My next question in front of events Valentini with T.V. Securities. Please go ahead.
Yeah. Thanks, very much you might start with one clarification, Glenn we talked about the equipment revenues in wireless and the volume declining in March you able to give us what the figures are on how much both the <unk> for equipment costs as well as the the cash costs for equipment subsidies.
[noise] went down into one.
I don't have that at my fingertips, but obviously, it's not overly material due to the the fact that we basically had 10 10 or so weeks, what I would deem normality prior to the <unk> naturally what I've experienced in the past month has been substantial in a in April and you'll see that in our.
Futile results.
Okay.
Bigger picture question Mirko do you give any thoughts about when when we come out of this crisis sitting obviously, there's a lot of people talking about a new way for society to interact in more work from home a in more embracing of a digital economy. When you think about your business Telecom operations is this a net positive or negative.
In your view, if there's less office lines unless people in offices, but more cut activity required in services. So people can work from home. It is it a net neutral or a positive or negative in your mind.
I view it as.
Medium to long term net positive for all the reasons you you mentioned in in the question.
And also.
We.
Yeah, we we've all we've all had to adjust the way we serve customers and that's why I mentioned in the in the opening remarks that we are.
Making investments necessary now in.
Digital adoption and self serving self install.
Apps and online fulfillment.
<unk> on January 6th when we update or a strategic imperatives, and we added one that talked about operating with with agility and cost efficiency and we talked about.
The need for digital adoption, we identified it then.
That you know, we're all going to be on this journey now of course. This crisis highlighted how important it is to serve customers in that matter and in that manner and customers. We're seeing are prepared and very comfortable and being served in this manner. So what that does it a lot of goodness on the cost structure in because if we can accelerate those investments in the long term is going.
To reduce our cost of a of operations much like building fiber has an obvious when in terms of market share button when in terms of cost structure. So to answer your question I do see it on the business side as a as a net positive and the whole way, we're shifting and how we're serving the customer is all go also going to have some medium and long term benefits on the costs site.
Hey.
Thank you.
The question, it's from Jeff Animal Scotiabank. Please go ahead.
Thanks. Good morning Hope you guys are doing well first question is just a clarification probably for Glenn regarding your cat bags comment all normally you give topics intensity guidance, but it looks like what you guys are saying is you're going to keep the same <unk> dollar are you Oh, we calculated based on the.
Previous.
I guess revenue guidance and getting to roughly a 4 billion number just wanted to check the map mixture that's.
But that you're referring to on cutbacks and then the second question, probably looking beyond covert 19 in wireless as store starts reopened as we start to get back to some kind of a normal see I'm wondering how local you think about the.
<unk> shut down competitive environment, given a lot of contracts are probably labs, you know a lot of pent up perhaps a demand upgrades wondering how you see that competitive environment sort of play out post to shut down. Thanks.
[noise]. Once you go ahead go out on the first one <unk>.
Morning, Jeff.
<unk>, you're you're absolutely right in your your assessment of.
Of what we were adapting to say if I wasn't clear, obviously, our ability to forecast C.I. or capital intensity in this environment is extraordinarily difficult.
Because we really don't know the lens <unk> the duration.
The severity of of cold it in how that's going to impact our top line. So what what I, what I sat on cap actually what I intended to say is that we intend to spend roughly on an absolute dollar basis consistent to what our target was I said in our our February 16th guidance that we spend approximately 16.5%.
Intensity and if you took that against our our revenue guidance of 1% to 3% growth you'd get a number of.
4 billion 4.1 billion I I believe so I.
Are intended remarks were that we intend to spend to that level.
And as Mirko said this is not a time to be shy. This is a time to lean forward, we're gonna make the investments we need to keep this business.
<unk> keep this business vibrant and to keep Canadians connected and you know with us with the strength of our balance sheet. The health of our our liquidity is a healthy liquidity position the health of our balance sheet.
We're gonna Lennane, and we're going to make the investments we need.
Okay, Thanks, Glen and Jeff on.
Second question in terms of wireless demand is things open up I feel I feel pretty pretty good about our position as.
The economy slowly opens up and as our stores open up and I will see how long it takes for customers to consumers to get comfortable to go out and start shopping by so put aside prediction of this when that will be when when when that does happen. We're in a very good position.
Strong inventory.
As a stores open up we lead in distribution, which is which is great news and we have that the best networks, and we will have or five g. network lit up and so that puts us in a in a very strong position competitively.
And kind of leave it at that and I think when when people do start going out we'll see I think my my sense is those who go out to shop, we're going out to shop with a purpose and that's the by rather than to to just browse.
Thank you both.
Yeah and the next question is found that Marianne <unk>. Please go ahead.
Thank you for it.
So I wanted to just go back to a common your while.
And you know now that we're looking at April.
<unk>.
The effect of.
Shut down on small and medium.
How was that being.
Good.
Are these.
Mmm core credit.
Or the month is not that though closed or there.
Deciding that too.
We'd use actual depending on the bill and so I'm trying to figure out how your.
Tuition on cash flow versus you know type.
On my business and and my other question, although it's online or that is <unk>.
It seems an alarming increase and.
Number of.
Criminal Act on powered starting more and more in Canada, which we have not seen in the past it used to be more in Europe.
Seems like the endemic has increased.
Alum, where some people games.
<unk>.
In Quebec, we've seen a few criminal act.
However, you expected or what.
In terms of protecting assets.
In this situation that this could continue to increase in the future.
Okay. Thank you I'll take the second one Glen.
I think the second one first Glen and I'll turn it over to use on the.
On the vandalism those are really.
Unfortunate criminal acts against our wireless towers across the industry. We you know those.
These are facilities that communities need for critical communications and that are first responders need there in in the field and so you know it's it's rather unfortunate that what we're doing is as you'd expect we'd be doing we are hardening our security were being very vigilant, we're working with law enforcement.
And I noted that.
Prime Minister did issue communication, a tweet not that long ago actually decrying. These these acts of vandalism.
And so that thank you to the prime minister for that because it's important for us to educate consumers in the public that there is no link between or wireless facilities and.
Corona virus and I think there have been a couple of arrest actually related to some of these recent acts of vandalism. So that's that's positive news <unk>.
Sure. Good morning, there on a they asked me activity what are we seeing <unk> were literally seeing.
I mean, everything that you alluded to.
When you think about restaurants and bars many of them have suspended service therefore, they've they've taken a pause there so that.
Impacts are are castle, and naturally, but it impacts the piano as well as they're not in operations. Other small business that that are continuing to.
To operate but operate in a more limited capacity have retain their services, we've seen minimal requests for for payment arrangements or or changes in the manner in which they pay but in some instances we've provided that I'm. We're trying to do everything we can to make it easy and and <unk>.
Well for our small and medium size businesses to remain healthy and and and to ensure that they return, but we've seen it across the board as you can appreciate some of suspend the service. Some have continued operations with with no disruption in the manner in which they're paying and others have have requested a modest amount of requested some.
Additional.
Terms for for paying but I would say at this point I'm going to go back to my earlier comments, we've changed the way we track.
Cash collections, we literally track it daily compared to the a day to day comparisons we do comparisons to previous we previous month and same period last year, we're monitoring everything on cash collections to ensure that we are proactive in the way, we reach customers and introduce terms.
To them that make it make the flexibility.
Available to them so that ultimately we don't result in.
In a unforeseen bad that but as I say, it's across the board and thanks for the question Mare.
Thank you.
Thank you.
Question in from <unk> when P.B.S. Please go ahead.
Great. Thank you just to follow up on on why line I'm, sorry, if I missed us, but can you remind us what percent of your wine I make sense <unk> business segment and in specific from that sent me segment and maybe if you could provide more color on way you expect cost efficiency is to come from in light of the current Tim.
Meant that could potentially keep the wired line profitability more flatish as they don't have been sold five resilient except point. It says have me pressure that where where you're highlighting thank you.
Okay. So you know business business segment revenues writ large or a third of our wireline revenues.
And then in terms of.
Yeah.
Arms out the puts and takes on.
On you know <unk>, we'll see.
Subsidy savings with a low you know lowering of transactions I mentioned earlier in with a scaling of installment plan. So you know savings there. We we we will see of course, we have to watch collections at school and has mentioned a couple of times.
Already you know we have.
Savings on on travel as you'd expect and other discretionary spending on the other hand, you know put.
Puts and takes P.P.E. and cleaning is going up or installing plexiglass and stores.
Easily for the safety of our customers in our team members you will ultimately at the end of the end of this as I mentioned in an earlier in response in earlier question, we're going to seeing the medium term some cost savings goodness just from accelerated.
Footprint deployment.
Which were continuing to engage honor embark on throughout 2020 and as we had initially planned and as we continue to evolve our service delivery model with more self serve one touch digital there will be savings and I would.
You know significant savings on on the delivery side in that respect look ultimately, we we generate substantial cash inflows that will continue.
Cost disciplined the second to none in that will continue and it really puts us in good stead to be able to make these long term investments for the long term health of B.C.E. as well as to continue to sustain that dividend.
Okay. Thank you.
Thank you.
Question is from a 10 K.C.B.M.L. Please go ahead.
Okay.
Oh and up on that what what other things are you considering mirko in terms of.
Permanent changes to work in cross sources within the company or are you looking at having.
People were permanently from home or maybe you know on a teen basis. So you can reduce you know your real estate footprint and things like that and I'm, just wondering what what what you're contemplating to to to do on the permanent side.
And second can you comment on.
You're going to manage media, obviously, it's going to be a rough.
Rough summer in you know the false schedules are in just to raise so you know there's gonna be challenges their how will you how you manage the the costs side on media going forward. Thanks.
Thanks for thanks for the questions. So.
You know they were the first ones are really good question in terms of.
You know future long range planning so as we as we undertake are are planning exercises, which and we have a regular cadence as you'd expect that we would have you know one or the items that we're going to be taking away is what have we learn from.
This crisis in terms of operations that we can adopt permanently.
That will enhance are competitive position improve our cost structure or improve the customer experience. So we're going to be looking at everything through that lens and that will include what we do in terms of real estate footprint, but it's still early days on that but definitely something will be.
We'll be looking at and it will be looking at those things across.
Tire scope of our operations.
And.
Gone media.
I'd say I'd say this I mean, the cute you know the Q1 impacts as you saw were relatively small let me see there'll be a impacts on media into two and a and b. on depending on how long.
This last but no customers and viewers are rediscovering.
The value in attractiveness of a linear T.V. and you can see it in the ratings.
Can see it in terms of the engagement with crave, which isn't absolutely.
Phenomenal product and more customers are discovering it and we've also seen in in the last few last few days last couple of weeks. Some stabilization in a number of cancellations of AD buys which is also a positive sign and you know we have puts and takes me see something a decline across some some advertising sector.
But I picked up and things like financial services technology consumer package. Good so.
You know I I.
I'd say, we're we're gonna be managing our cost structure very carefully at media. Our subscriber revenues are remaining strong and we're seeing that some lie sports are going to to to start coming back on fairly fairly soon you'll think of U.F.C. and NASCAR in the P.G.A. tour and I think it's gonna be pent up.
Man for sports viewership, so that bodes well as well.
<unk>.
Thank you.
The next question is from it.
<unk> Cormark Securities. Please go ahead.
Hi, Yeah Uh huh.
Just just buying along that bad.
Last question to me now that.
Are into May I was born here. So you get an idea what yeah.
You stop in a month and they throw right.
Yeah.
Yeah, I I'm not going to give a forward looking.
Numbers that David as you can appreciate but but suffice to say that there was a substantives decrease in in advertising in the month of April.
Well well managed as as Mirko alluded to on our guns on the cost side as we took the unnecessary actions, we could I I need to remind everybody that our media operations. You know represents about about eight 8% of our consolidated even does so not overly impacting tour.
Our our consolidated cash flow, what we took actions on costs advertising was certainly down but that you know that was a relatively short window. When we think here we are.
In early May in as Mirko alluded to were NASCAR, and and P.G.A. Torre and we're starting to hear about U.U.F.C. in many sports coming back online that that I'm optimistic that we will start to see some return of advertising, although let's be honest cute too is going to be.
Difficult quarter compared to historic advertising levels.
Could you could you give us any color on.
The declines for your sports properties versus non sports property and how sounds great.
No I think you'll look I sports I.
Klein advertising and then there's there's subscription revenue in our sports subscriptions.
Cancellations I've been frankly minimal.
So customers are not disconnecting, you know customers are the ones, who who make make the ultimate call.
And so far those those cancellations I've been frankly minimal and with like sports coming back soon I think you're going to see yeah.
Pick up there certainly and viewership and stability that we've seen continue in subscriptions.
Alright, so with that said we've timed out so thank you again for your participation. This morning, I will be available throughout the day for follow up thing clarification.
Take care, everybody and say.
Thank you everyone.
Thank you.
Thank you.
<unk>. Please disconnect your lines out this time and thank you all for your participation.
Thank you. The conference has now ended please disconnect your lines at this time and we thank you for your participation.
This conference is no longer being recorded no loses promoted Greenfield. This conference is no longer being recorded.
This is promoted Golfinho incidentally.
[music].
50.
Please note that this conference call has ended please disconnect your lines at this time. Thank you.
Opinion.
For the Tommy.
Okay, that's associated with funding.
[music].
Fair enough ARSESP.
Please note that this conference call has ended please disconnect. Your line at this time. Thank you.
Okay opinion, that's because at that that's something else autonomy.
And our cause she wants ending.
[music].
Hi, Physpeed.
Please note that this conference call has ended please disconnect your lines at this time. Thank you.
<unk> opinion, not good for that that's going to host autonomy.
Okay. So she was funding fees.
[music].
I was on process FIFA.
Please note that this conference call has ended please disconnect your lines at this time. Thank you.
Okay opinion, not because it had been coffeehouse autonomy.
She was feeling you see.
[music].
Process fever. Please note that this conference call has ended please disconnect. Your line at this time. Thank you.
Okay opinion, that's because at that can you tell me.
Okay No question about funding.
[music].
Process before.
Please note that this conference call has ended please disconnect your lines at this time. Thank you.
Opinion, not because that's going to host autonomy.
Okay. So she was funding.
[music].
Fair enough office people.
Please note that this conference call has ended please disconnect. Your line at this time. Thank you.
If you compare opinion not because it had medical sales to tell me.
She was feeling.
[music].
Process FIFA. Please note that this conference call has ended please disconnect your lines at this time. Thank you.
Okay opinion, that's because it does something else autonomy.
Okay Cushy with funding.
[music].
I don't process before.
Please note that this conference call has ended please disconnect your lines at this time. Thank you.
Opinion, Nokia for that that's going to host autonomy.
Okay 'cause she went funding.
[music].
Assessment process FIFA.
Please note that this conference call has ended please disconnect your lines at this time. Thank you.
Okay, and the units because it had been coffeehouse autonomy.
She was feeling.
[music].
Cellphone assess FIFA. Please note that this conference call has ended please disconnect. Your line at this time. Thank you.
Okay opinion, that's because at that don't fit tell me.
And our Cushing about funding.
[music].
I don't process before.
Please note that this conference call has ended please disconnect your lines at this time. Thank you.
Opinion, not because of that that's going to host autonomy.
Okay. So she was funding.
[music].
I was on process people.
Please note that this conference call has ended please disconnect your lines at this time. Thank you.
If you compare opinion not because it had been coffeehouse autonomy.
She was feeling.
[music].
So Steve.
Please note that this conference call has ended please disconnect. Your line at this time. Thank you.
Okay opinion, because at that that's something I don't tell me.
And our consumer spending.
[music].