Q4 2021 BCE Inc Earnings Call
Policies.
In our wireless segment, we remain focused on growing high value postpaid mobile phone subscribers, managing customer churn and delivering industry, leading service revenue growth and profitability.
Total more total mobile phone postpaid net add in 2021 nearly doubled year over year to 301706, driving service revenue growth of 4% and 5% higher adjusted EBITDA, Despite a muted recovery in roaming and.
In residential wireline Bell's leading broadband networks are clearly delivering immediate tangible benefits on subscriber growth market share and internet revenue.
In fact in the past two quarters, we achieved positive total retail residential net customer additions, including satellite TV and home phone.
It's the first time, we've done so in seven years, driving our best annual residential <unk> performance since 2011.
We also continued to win share in our rapidly expanding fiber footprint with 202000, new net fiber customer additions up 20% over 2020, which contributed to strong annual internet growth of close to 11%.
As our team continues to manage near term corporate financial impacts and ongoing legacy service declines the organization remains focused on putting the building blocks in place to ensure bell is strategically well positioned to capture a leading share of the Iot and next generation solutions revenue enabled by <unk> fiber convergence.
With significant high capacity $3 five gigahertz Airways at our disposal, we have the mid band spectrum necessary to drive the rollout true five G across Canada.
Success in <unk>, and Iot will depend on more than just coverage industry leadership requires delivering the fastest speeds in the lowest latency.
And Bell's wireless network offers the fastest data speeds and quickest response times as certified by PC Mag.
Two tele and global wireless solutions in their latest studies of mobile network performance.
Leadership also requires leveraging network points of presence such as central offices for Mac that support product development in that regard bells already entered into strategic partnerships with Amazon Web services, Google cloud and other major hyperscale or to expand our Iot mec and cloud offerings and leadership.
Of course requires cultivating deep relationships with the biggest Canadian companies. So no matter, which critical success factors you look at we're very well positioned.
And we're continuing to build <unk> momentum with innovative new business and consumer applications. Recent <unk> enterprise initiatives include our recent announcement that bell became a founding partner and exclusive telecom provider of the peer at the Halifax Seaport, we're deploying a <unk> ready wireless private network to enable a living lab.
That will shape, the future of the transportation supply chain and logistics industries in Canada.
Another initiative I'd like to highlight is the launch of smart supply chain powered by Bell Iot Smart connect a software as a service Iot aggregation solution designed for fleet and supply chain operators one of the first applications as cold chain monitoring solution to automatically record temperature levels and provide.
Real time alerts when they fall outside safe ranges, while cargoes in transit.
On the consumer side of things earlier. This week, we launched our new unlimited Ultimate plans. We believe these plans will truly demonstrate the value prop of five G and serve as a catalyst for the upcoming upgrade cycle from <unk> to <unk> handsets.
We're also going to drive existing five customers up the unlimited rate plan curve by distinguishing the superior video quality offered by our ultimate plans and leveraging crave mobile.
And as we execute on our strategy, it's definitely worth highlighting that we're hitting the public policy sweet spot of quality coverage and price.
Our quality speaks for itself.
For coverage, it's accelerated considerably in both urban and underserved rural areas as a result of our capital Advancement program.
And on price, we achieved the federal government's 25% price reduction target well ahead of the January 2022 deadline and Thats for mid range wireless plans.
And according to recent stats can data pricing for services for wireless services excuse me declined 15% in 2021, while the price Canadians pay for all goods and services is actually increased four 8%.
So we're seeing the impacts of elevated price inflation across the Canadian economy, yet our industry is delivering the highest quality services at decreasing prices.
I'll turn now to media or media segment experienced a notable rebound from Covid in 2021 as TV AD revenue returned to pre pandemic levels in Q3, while our focus on French language television led nouvel to outpace its main competitors in viewership growth.
And we're also gaining significant traction from our pivot to a digital first strategy, which ive discussed in the past.
A little bit more on that like consumers advertisers gravitate towards quality and.
And that's what we're delivering to them with industry, leading content delivered on high quality online and traditional platforms the largest audiences.
Growing proportion of which is addressable.
Advertisers want the most effective way to reach a specific audience for a specific message sometime.
Sometimes that requires a broad reach and sometimes that requires addressing a specific targeted audience with <unk> TV and the bell advertising platform, we deliver powerful AD tech to advertisers for all of those needs.
And the strategy is working.
Digital revenues increased an impressive 35% in 2021 and now represent 20% of total Bell media revenue, which is up from 16% last year.
And underpinning this very strong performance was crave.
Which grew direct streaming subscribers by 28% in 2021, we continue to scale, our CTV Avon App, which became the top Avon platform in Canada. This past year.
And of course, I mentioned, our Sam television sales tool sales tool, which tripled sales revenue in 2021.
So the strategic initiatives I've highlighted across our operating segments are supported by our customer experience focused culture, as well and that's driving improved satisfaction loyalty and retention with improved NPS scores and lower customer churn.
And this past year saw the formalization of our commitment to hold bell to the highest standards of ESG with the launch of Bell for better through which we will support a better workplace better communities and a better world.
I'm going to turn now to slide five gives you an overview of some of our key operating metrics specifically for Q4.
Lets start with wireless.
We added 110000, new net postpaid mobile phone subscribers, 49% higher than last year, and 76% higher than Q4 of 2019.
This strong result was realized despite reduced retail store traffic late in the quarter brought about by renewed COVID-19 restrictions.
Pent up customer demand is helping drive higher new gross activations, which grew 14% year over year.
That's a function of multiple things.
Stores reopening.
Immigration growth.
<unk> momentum more.
More focus on bundling of mobility with bells residential services and effective customer base management as you can see by our a low postpaid churn rate of one dot OE in the quarter.
For mobile connected devices, although new Iot subscriptions increased over last year to 88000 total net adds were just 39000 as we continue to deemphasize unprofitable low <unk> data device transactions.
And in prepaid total net adds were slightly positive, but that represented a notable improvement compared to Q4 of 2020.
Lastly, a word on <unk>.
It was up a strong $3, 3%, our third consecutive quarter of year over year growth. This.
This industry, leading result is a direct reflection of our continued focus on higher value smartphone subscribers and higher roaming volumes driven by the easing of international travel restrictions.
Turning now to wireline.
We achieved the second consecutive quarter of positive <unk> retail residential net adds this represents our best Q4 performance since 2015 and caps off our strongest residential result, including satellite TV and home phone net losses in the past 10 years.
We added 48000, new net retail internet customers, 7% higher than Q4 of 2020.
During a time when we had experienced unseasonably strong demand due to COVID-19 .
It was another standout quarter for Bell TV with our best Q4, IP TV net adds in the past three years as we leverage our multiple brands and lower customer churn, particularly in our IP TV fiber footprint to drive 29000, new subscribers this quarter up 38% versus 2012.
<unk>.
Putting all of this together at the end of the year at the end of 2021, 91% of Bell residential households, with TV and Internet, where on our FTE Th network.
That's a notable data point.
As a steadily increasing number of customers on Bell five services is driving stronger internet revenue growth.
Higher household ARPA lower churn and improved overall EBITDA performance.
At Bell media TV Advertiser demand remained strong throughout the quarter supported by the return to more normal major league sports and fall TV schedules.
Ongoing COVID-19 related challenges in radio also redirected some incremental advertiser dollars towards TV and digital.
These drop these factors drove a 14% year over year increase in total television advertising revenue, which was above pre pandemic levels for a second consecutive quarter, 12% higher than Q4 of 2019 in fact.
We also saw great results from our Quebec media strategy in 2021, as new vault led in prime time viewership growth versus its largest competitors and just a few weeks ago, we launched the new Nouvel a full digital platform.
Lastly, creative subscriptions increased 6% over the last year to more than $2 9 million and in fact 2021 was the most watched year ever for crave streaming platforms a great result.
Okay, I will turn to slide six.
2021 was a reset year as we spend to transition towards a return to pre pandemic levels of financial performance and operating momentum.
And although COVID-19 turbulence is still expected to ebb and flow in the near term because of omicron, we're optimistic about our business outlook as reflected in our financial guidance targets for 2022.
We're entering 'twenty, two with a clear set of priorities and our focus on execution built on the operating progress in 2021, which I outlined in detail.
We expect that revenue and adjusted EBITDA will surpass pre COVID-19 levels.
2019 levels, sorry, pre COVID-19 2019 levels.
Supporting our second year of historic growth and capital investment.
And that historic growth in capital investment will be approximately $5 billion in 2022.
We're forging ahead with our most ambitious annual fiber build out yet and the launch of a standalone <unk> that will enable faster data speeds and lower latencies and what is available with <unk> today.
And as we look forward with even more five fiber and <unk> growth upside on the horizon and a cost structure that reflects these advantages not only do we realize operational benefits sooner, but we're also supporting future free cash flow growth to support our dividend growth model.
Dividend growth continues to be a top capital market's priority.
You see this commitment with our announcement this morning of a five 1% increase to Bce's common share dividend for 2022.
Our 14th consecutive year of a 5% or higher dividend increase.
And my third as CEO .
Normalized for the advanced capital investments, we're making once again this year our dividend payout ratio in 2022 will be around 80% above our historical free cash flow target range of 65% to 75%.
Our healthy free cash flow growth and a strong liquidity position fully support the execution of this second year of our two year capital Advancement program and Bce's higher common share dividend.
So now what I want to do is go to slide seven on unpack for you the second year of our capital acceleration program.
Our 2022, Capex includes $900 million and accelerated investment on top of the approximately $4 billion in baseline capital that we've typically spent each year over the last decade.
This compares to total capex of $4 8 billion in 2021.
Which in 2021 included $800 million of incremental spending under the first year of the two year program.
As a result of the early completion of our planned WHI Buildout initiative, we're allocating more of the incremental capital earmarked for 2022 towards fiber.
The plan this year is to reach up to an additional 900000 homes and businesses across our footprint with fiber. This is our most aggressive annual fiber build ever representing an increase of 300000, new locations compared to 2021.
At the end of this year approximately 80% of our planned broadband internet build will be completed representing more than $8 1 million total combined fiber and wireless home internet locations.
That's up from $77 2 million premises at the end of 2021.
So not only were we delivering the best Internet experience in the home today with one five gigabit speeds and unmatched Wi Fi, but we also have a low cost transition to a multi gig future with teng PON upgrades to our fiber backbone already underway and that will evolve to 'twenty five G PON over time.
And as well upgrades to Wi Fi six E service.
In wireless our accelerated capital investment will expand the reach of our national <unk> network to more than 80% of Canadians.
Further densify the network with 1100, new <unk> sites to meet growing customer usage requirements and it will enable the launch of our <unk> Standalone core leveraging recently acquired $3 five spectrum that will drive enhanced speeds lower latency and other <unk> network slicing features.
So taken altogether and normalize for the $900 million capital Advancement, our capital intensity ratio is expected to be in the range of 16% to 17% in 2022, consistent with typical pre COVID-19 levels.
Ill close now by highlighting that of course, the entire bell team looks forward to delivering for our customers and our shareholders in 2022.
And on that I'll turn the call over to Glenn.
Yes.
Thank you Marco and good morning, everyone.
As Marco said Q4 capped off a great year in our Covid recovery with a healthy 3% increase in service revenue driven by continued strong wireless <unk>.
<unk> Internet and media growth.
Total revenue was up a more modest one 8% due to lower year over year product revenue, reflecting COVID-19 related softness in business data equipment sales and mobile device transactions.
Consolidated adjusted EBIT growth slowed to one 1% in Q4 as.
As I signaled on our Q3 call in November . This result was anticipated given the resetting of Bell Media's TV programming and broadcast rights cost to a more normal pre COVID-19 run rate.
Net earnings decreased 29, 4% as a result.
As a result in Q4 of 2022 included a onetime gain realized as you will recall on the divestiture of our data centers.
Similarly, adjusted EPS was down six 2% this quarter to 76.
Due to a favorable tax adjustments recognized last year again.
<unk> to the sale of data centers.
Capital expenditures remained elevated in Q4 at 146 billion.
As we advance spending consistent with our two year Capex program Marco just detailed.
Despite the substantial capital spending this quarter free cash flow increased year over year.
Due to a timing related decreases in cash taxes and interest payments on Bell, Canada MTN debt.
Let's turn to Bell wireless financials on slide 10.
Another standout performance.
That led national peers, once again with service revenue and EBIT that surpassed pre pandemic 2019 levels for a second consecutive quarter.
Service revenue grew a strong six three.
<unk>, 3%, our best quarterly result in four years.
This was achieved even as roaming remained below pre pandemic volumes, reflecting the successful execution of our strategy to grow high value mobile phone subscribers and effectively manage the decline in data overage revenue as we move postpaid customers to higher tier unlimited.
Plans to take advantage of <unk> network speeds and services.
Mobile device inventory in Q4 continued to be constrained by global supply chain challenges.
Similar to Q3, but to a lesser degree this contributed to fewer customer smartphone upgrades and a higher proportion of new customers activating service with pre owned devices.
<unk>, a three 6% year over year decrease in product revenue.
The high flow through of strong service revenue growth yielded EBITDA growth of five 3% and a 90 point increase in margin to 38, 4%.
Let's turn to slide 11, and Bell wireline.
Year over year revenue client in Q4 was similar to last quarter as we continued to face COVID-19 related challenges in our business markets unit.
And a step up in residential promotional offer intensity compared to Q4 of 2020 when competitor activity was more restrained.
Service revenue was stable year over year, driven by strong residential internet revenue growth of 7% while product revenue decreased 10, 5% due to the softer data equipment sales attributed to delayed business customer spending.
And again global supply chain challenges because of Covid.
On a positive note despite near term Covid impacts Q4 represented the best quarterly service revenue performance of 2021 for Bell business markets, where higher customer spending on cloud and security solutions drove a 5% year over year increase in business solutions revenue.
The combined impact of the continued residential strength and improving business wireline results delivered healthy Q4, EBITDA growth of one 1% and a 70 point expansion in margins to $43 one.
Turning to slide 12 on Bell media another good quarter overall with strong advertising advertiser spending across our TV and out of home platforms and continued subscriber growth that murko detailed earlier that collectively drove seven 3% year over year increase.
And total media revenue.
Total advertising revenue increased 12% driven by strong stronger year over year conventional and special specialty TV performance, reflecting the return to a more normal regular major league sports and fall TV programming schedules.
Higher out of home revenue and increased leisure and travel activity with the easing of Covid restrictions.
And robust digital media growth.
As Michael mentioned.
However, radio has been slow to recover and disproportionately impacted by the pandemic due to ongoing going COVID-19 related restrictions on local businesses.
The work from home protocols.
Despite a strong revenue performance this quarter EBITDA was down 19%. This result was expected given significantly higher year over year programming and broadcast rights costs with the return to regular major league sports schedules and a higher volume of original television productions compared to 2020 when cancellations.
Delays had a favorable impact.
On operating costs.
I'll now turn to our financial outlook for 2022, starting with revenue and EBITDA on slide 14.
Growth rates are similar to 2021 with a slightly higher or a wider range excuse me for revenue of 1% to 5%. This together with targeted adjusted EBIT growth of 2% to 5%.
Should yield a relatively stable year over year consolidated margin and help enable us to surpass full year 2019 financial performers performance levels.
Broadening our revenue guidance range for 2022 is prudent given ongoing economic certainty with the latest.
Omicron wave that is slowing the pace of recovery in roaming.
Product sales.
Business consumer spending.
Customer spending and non television media advertising.
But underpinning this outlook is positive top line and EBITDA growth for all Bell segments.
We expect an even stronger financial contribution from Bell wireless in 2022, driven by our ongoing focus on higher value mobile phone subscribers.
A more robust roaming recovery.
Rational device discounting.
And a greater volume of customers transacting as COVID-19 related supply.
Constraints that alleviate.
The decline in data overage revenue is expected to be relatively stable year over year again due to our base management strategy.
We also anticipate further <unk> improvements through a greater mix of customers on higher value rate plans, including unlimited data plans.
The <unk> upgrade cycle accelerates and higher year over year roaming.
Despite the improvement in rolling volumes projected total roaming revenues is expected to remain below pre COVID-19 levels.
At Bell wireline, we expect to generate positive revenue and EBITDA growth on a full year basis.
This is predicated on continued strong residential performance on the back of rapidly growing growing fiber footprint and product leadership.
Positions us extremely well to continue growing internet market share and revenue faster than our competitors.
We also expect improving rate rates of year over year business revenue and EBITDA decline as COVID-19 related turbulence dissipates again that backdrop.
Against that backdrop, we will be maintaining a sharp focus on cost to offset the financial impact of ongoing legacy erosion.
Which continues to slow.
As for Bell media total advertising expected decline back to pre COVID-19 levels, a strong TV advertiser demand continues.
And the rebound in radio and out of home takes hold more fully.
We also expect the benefit from contract renewals with TV distributors and continued <unk>.
<unk> growth to drive higher year over year subscription revenue, while continuing to grow our share of digital ad spend.
Lastly, despite a resetting of the cost structure in Q4 that brought TV programming costs closer to pre COVID-19 .
Run rate levels, we will be absorbing even higher spend in 2022, as we returned to normal broadcast schedules for the full year.
French language content and further increase.
Crave programming inventory.
I'm now going to turn to slide 15 and.
And discuss pensions.
Our solvency ratio across our major defined benefit pension plans was above 105% at the end of 2021.
With the Bell, Canada DB plan.
By far the largest of all BCE pension plans at 111%.
This strong valuation position.
Was achieved even without a material increase in interest rates in 2021, and a solid five 5% return on plant assets.
Having reached surplus position of over 105% contribution holidays can now be taken on an annual cash on the annual cash funding, which totals approximately $200 million in aggregate across all BCE plans.
However, we can only take advantage of a partial reduction in 'twenty two since we file our final actuarial evaluations at the end of June .
As a result, bce's pension cash funding for 2022 is projected to be about $75 million lower than last year at around $275 million in total.
Although the in year cash funding reduction is actually closer to $90 million. This includes a preexisting contribution holiday in the range of 15 on one of our smaller plans we've previously taken.
All things being equal I believe that in 2023, we will be able to take advantage of full cash funding.
Closer to <unk>.
Closer to the amount of $200 million, which should also continue for the foreseeable planning horizon as we project the solvency ratio for each DB plan to remain above the required 105% threshold.
So we're talking about a very real $1 billion free cash flow opportunity over the next five years that we didn't have in our long range plan. Just a few years ago that could be used to fund continued fiber acceleration and of course support our dividend growth model.
Moving to our tax outlook on slide 16 statutory tax rate for 'twenty two remains unchanged at 27%, 27% our effective tax rate for accounting purposes is also projected to be relatively stable again at 27%, reflecting a very reflecting a similar year over year level of <unk>.
Adjustments of approximately <unk> <unk> per share.
We're also expecting cash taxes due to decreased two within the $800 million to $900 million range as higher planned capital spending in 2022 will generate incremental tax savings under the federal government's accelerated CCA program more than offsetting the impact of increased income taxes from higher.
Year over year taxable income as our operations recover more fully from the effects of this pandemic.
Slide 17 summarizes our adjusted EPS outlook for 2022, which we project to be $3 25 to $3 40, a share or two 2% to 7% higher year over year.
This is similar to last year's growth range and reflects the strong underlying contribution from operations.
Driven by the positive EBITDA growth across all three bell segments, and the lower pension financing costs I referenced earlier.
These factors will be partially offset by approximately $100 million to $150 million increase in depreciation and amortization as more capital assets will be put into service sooner as a result of our two year accelerated capital investment plan.
The step up in interest expense due to higher outstanding debt and higher year over year income tax expense.
Turning to slide 18 free cash flow is projected to grow in the range of 2% to 10% in 2022, reflecting strong flow through of higher EBITDA.
As well as a reduction in cash taxes and pension funding that will largely offset the year over year increase in capital expenditures.
<unk> consolidated capital intensity ratio for 2022 should be similar to that of 'twenty, one around 21% of total revenue as.
As Marco mentioned this includes the $900 million of capital Advancement that we are targeting in 2022 as part of our Upsized two year capital acceleration program.
And again as mentioned earlier normalizing for this incremental capital investment our absolute dollar Capex in 2022.
Decrease is closer to a $4 billion range, which is in line with pre Covid historical spending.
A quick update on our balance sheet and liquidity position on slide 19, as we begin the year, we have access to $3 4 billion of liquidity and a balance sheet with a pension solvency surplus.
Of totaling $2 3 billion that provides good overall financial flexibility supporting the execution of our strategic priorities and higher BCE dividend for 2022.
Our capital structure is aligned with our investment grade credit ratings, which all have stable outlooks and our net debt leverage ratio, which remains lowest among national peers.
Is projected to remain relatively stable in 2022 at around three two times adjusted EBITDA, reflecting the impact of our recent <unk> spectrum purchases.
And the capital Advancement program also highlighted on the slide as Bell's favorable long term debt.
Maturity schedule that has an average term of 13 years and a low after tax cost of debt of just two 8%.
And no material debt refinancing requirements until March of 2023, as $1 7 billion of the 2020 to MTN maturities were pre finance and.
In early redeemed in 'twenty one.
However, as we have always done we intend to access debt markets on an opportunistic basis throughout 'twenty two if market conditions are favorable to.
To strengthen our liquidity position extend durations ahead of the maturities and various spectrum auctions, taking place over the next few years to.
To conclude on slide 20, we are announcing today, what we are announcing today is a strong set of financial guidance targets for 2002.
Essentially all guidance ranges are similar to 2021 with the exception of free cash flow, which is returning to growth. Despite historic capex spending as we lapped COVID-19 significant impacts last year, our outlook is underpinned by positive financial profile for all three bell operating segments.
That reflects sound industry fundamentals and our consistent execution in a competitive marketplace as we build on favorable financial performance significant broadband investments and operating momentum we delivered in 'twenty, one and with that Richard I'll turn it back over to you and the operator to begin Q&A. Thanks Glenn.
Given the volume of information we presented this morning I'm sensitive to the time, we have left so before we start the Q&A period I would ask you to please limit yourselves to one question and a brief follow up if you must so that we can get to as many in the queue as possible.
For your cooperation with that mode, we are ready to take our first question.
Thank you we will now take questions from the telephone lines. If you have a question and you are using a speaker phone. Please lift your handset before making your selection. If you have a question. Please press star one on your devices keypad.
So in your question at any time by pressing star two.
Please press star one at this time, if you have a question.
I'll be brief pause all participants logistical questions. We thank you for your patience.
Our first question is from Jeff fan from Scotiabank. Please go ahead.
Thank you good morning, everybody and thanks for all the color.
I think the question for me is on the network investments.
And you gave so much public for 22, despite another questions relate to 'twenty two so I want to look beyond 'twenty, two if I may and I know you don't have any guidance for that.
But if I look at your network.
Around $7 million is fiber to the home.
Roughly 70% of your targeted footprint by the end of this year.
Michael what does that.
So if you look beyond 'twenty two is there any need to.
At the same pace.
How do you think about that and then also the $1 million.
Wireless home Internet footprints.
Is that.
Is that where you like to end or is there a overbilled can you just talk a little bit around that and I guess the related question is what that means for capex.
I made some comments about.
Using perhaps pension holiday a funding holiday to help fund this investment and perhaps we can wrap it around what that means for the capex beyond 'twenty two thank you.
Thank you Jeff.
Thanks for the question for sure.
Government I'm going to start off with.
First part of my answer will be something you fully expect but very important to say our focus right. Now is on the two year program that we are in the second Europe .
<unk>.
Okay.
So I guided last year or two to two years of Capex and right now the focus is on delivering on up to 900000 additional fiber homes and will get us to those percentages that you mentioned, but.
But.
I do need to highlight that Thats the focus right now, but <unk> fair question. So.
We're focused on 2022 and as the year progresses. We will continue we continually look at the situation and we're going to base our future build out plans.
Factors that include our broadband success, and it's going really well so far our overall financial situation, which continues to improve from the kind of at depths.
Q2, 2020, and also the availability of government subsidy. So those will be the things we look at as we get ready for 2023, Capex and beyond and Glenn mentioned, a new highlighted it Jeff we have a very real $1 billion in free cash flow opportunity over the next five years due to the reduced pension funding.
And that was not in my calculus, when we announced the two year program at this time last year and that will provide us with flexibility to seize on some strategic opportunities. So ultimately we're going to have flexibility on our capital allocation strategy. So yes, we will be 80% done on the on the 10.
Targeted broadband footprint, but thats not.
Hundred percent done so those are the factors, we'll look at we have more flexibility on the allocation strategy than I expected.
A year ago at this time, so that's all great news and on wireless home Internet I think 1 million footprint I mean, I'm really happy that we did that a year earlier than planned that's great for the communities. We're serving I think thats the right that's the right footprint.
Thank you for the answer and kudos for the Commscope team.
Yes.
Okay.
Ready for our next question.
Our next question is from drew Mcreynolds from RBC capital markets. Please go ahead.
Yes, thanks, very much and good morning, Jeff stole my question, So I'll move on here Marco.
Just maybe a bigger picture one on the Internet market and you kind of alluded to in your last comment on fixed wireless.
I think obviously investors see what's going on with the competitive environment in the U S and trying to draw conclusions here in Canada with respect to the competitive intensity meter net market.
The fiber that's being deployed the fixed wireless that is being deployed the satellite broadband thats coming into play.
Can you give us kind of your sense of how this plays out in the next two to three years in terms of.
Managing the risk of higher competitive intensity.
And then just second just a clarification for you Glenn on the pension holiday.
Awesome to see.
Does this kind of expire after five years or or are you just kind of saying look illustrative Lee over the next five years, we get the $200 million benefit each year and that equates to a $1 billion.
But not necessarily kind of concluding anything beyond kind of your thoughts. Thank you.
Thanks drew I'll start so.
I'll give you a more detailed answer but the short answer is.
Fiber can't be beat.
And I think investors and bell.
To be.
We are optimistic about that yes.
Yes, so because fiber can't be beat and because consumers and businesses continue to choose fiber over other technologies that may result in periods of time of some competitive.
Intensity, particularly as Covid subsides, but we'll be we'll be ready because we're focused on.
Delivering a healthy balance of <unk>.
Volume.
Tier mix price is kind of again that sweet spot between market share and financial performance and we've got a lot. We've got lots of runway ahead of us.
So first thing we did.
Fiber is better than the other technologies, we have runway ahead of us in terms of more fiber build.
In fact, we.
Sit here today against some of our larger competitors, we have 50% fiber overlap with their with their network footprint. So to me. That's a that's a big positive in terms of looking ahead at what's next and then I look ahead even.
Not even that far out and I referenced it in my opening remarks, as we enter into a multi gig world.
And it's coming and it's coming soon.
The advantages we have our network is multi gig ready and when I say multi gig I mean, multi gig symmetrical up and down I don't think anyone should underestimate the importance of upload speeds both for consumers and for businesses.
We've got we're future proofed on the capacity in our network. We've got no powered field components to maintain we don't have to recapture spectrum, we don't have to swap out modems in the homes served by a node in order to deliver higher speeds.
There might be an uptick in promotional intensity.
Particular periods of time drew but when you think about the franchise. We've got we're well set up to win the household and to win the household you want fiber <unk> best in home Wi Fi and compelling content. So we've got the right asset mix and we will just continue to execute.
Thanks Mark.
Good morning, drew it's Glen I'll jump in and give some color additional color on pension.
Okay.
<unk> been talking about this for a decade, but to think the burden that the pension has placed on our cash flow over the years and the requirement to do special funding.
As Jeff said kudos to our pension team we didn't get here by accident. This has been a 10 year journey and a remarkable job managing the pension we followed an asset mix glide path that Hasnt had us move from significantly higher equities to a point now where we're at more than 70% in fixed income and 30% in equities and even.
Amongst those equities are much smaller portion of those in public so we find ourselves from 2023.
Excuse me 2013 to today moving from an interest rate coverage of 40% to two.
84%, which has given us.
The tremendous opportunity in all of that occurs while interest rates really haven't moved so.
I would say we at all on this call expect that there'll be some increase in interest rates, which will only add to this opportunity. So today, we wanted to announce that we're in a very confident position that we see.
<unk>.
Pension contribution holidays to the tune of 200, a year for the foreseeable future and I defined foreseeable future is five years. There is no magic to that drew could that be longer is certainly hope. So you know how the math works as that you have to stay above 105% and I think our pension team's track record speaks for itself.
I hope I'm here in five years, telling you that it's going for longer Thank you Joe.
Thank you Bob.
Next question. Please. Thank you. Our next question is from Arab Linda Galipeau.
From Canaccord Genuity. Please go ahead.
Good morning, Thanks for taking my question.
My main question is on the on the enterprise side I mean, when I hear some of the comments you made about the new initiatives on the Iot front.
As well as even some of the side the SaaS initiatives that you've talked about can you just give us a sense of that growth segment within enterprise.
Where are we in terms of that piece.
Similar level of materiality that it can kind of really move the needle to be aggregated number I mean, historically, we've thought of enterprise is kind of a drag on bell and maybe it is going to be the case for a little bit longer as well, but as we tried to look beyond 'twenty, two and some of the <unk> cheaper than offerings become more material can you set us.
Picture as to what and how that can what that can look like.
Are we getting closer to that timeline, where that materiality develops.
Ed.
A quick follow up for Glenn on the guidance.
The 2% to 5%, maybe slightly wider than I would've anticipated.
Kind of given in particular.
Strong sub sub trends in wireline, obviously, the really good service revenues in wireless I was wondering why.
I was wondering if you can give a little bit color as to.
The size of that range in particular in terms of appetite.
Good morning, Linda.
Just to remind you that the guidance range, we provided in calendar 'twenty, one was 2% to 5% on revenue.
And the same on EBITDA.
We expanded revenue only because of the comments I made earlier in the volatility of product revenues and we remained consistent on EBITDA, 2% to 5%.
And an organization that generates in excess of $10 billion a year on EBITDA NOI actually do not see that as an overly broad range I think if you look back historically the last decade, we traditionally had a range of approximately 2%, but this organization has grown materially in <unk>.
<unk>.
From where we were a decade ago with the acquisitions, we've made and the growth. We've enjoyed so I think two to five is a very reasonable range consistent to that of 2021.
Our objective will be to deliver solidly within that range and I'm confident we will.
Thanks, Glenn so thanks for the question Arvind on my on the on your first question around the enterprise side and those new revenues.
Look I.
Okay.
The enterprise side and to some degree at Walmart to some degree in the enterprise the business, whether it's smaller enterprise there has been a COVID-19 impact for sure so and last year and this year. The focus really is on managing those impacts while never losing sight of the importance of being ready to capture.
The growth in the segments, you identified whether or not it's <unk> Iot that kind of solution spending so what I like about what we're doing is those building blocks every quarter keep getting more powerful and I did refer this morning to bell Iot smart connect.
Hinted at Cold chain monitoring just as an example.
One of our clients, who is using the platform as a long haul frozen seafood trans border and they are using the platform to increase visibility into their operations make sure they're compliant with food food safety regulations reduce spoilage. So.
What I, what I think is particularly powerful about our platform is it's a software as a service platform, it's not a simple point solution that.
Yes that basic providers can offer and it will operate across multiple verticals. So I mean are.
Are we there yet where where there is.
Significant increases in those markets no do we have line of sight into them absolutely. Yes, do we have clients, yes, so so I expect that to grow.
When it becomes material I think 2022 will still be a learning in the initial stages of growth, but we're going to continue to put put the platforms in place to be ready.
Key business I think I mentioned that last quarter is already a nine figure revenue business, so pretty sizable in its own right already.
So thats, where the focus is we're well positioned and last we're just if you look in the here and now actually in Q4 of 2021. It was our enterprise segments Best quarterly service revenue performance of 2021, and we're seeing some customer spending come back on cloud and Iot service solutions, we saw 5% growth.
In that revenue in Q4 2021 compared to Q4 2020 so.
I'm optimistic but in terms of the.
The fundamental point of your question it is still to come.
Thank you.
Okay.
Thank you. Our next question is from Vince Valentini from TD Securities. Please go ahead.
Thanks very much.
Wanted to try to unpack the 91% figure that you'd noted is quite impressive and I would agree.
In terms of the percentage of your subs on fiber.
To make sure you Didnt say fixed wireless and that is while you are just sharing fiber. So if you indulge me, let me walk through these numbers and make sure you and Glen agree.
At $7 2 million total fiber plus wireless home Internet homes passed so I would mean $6 2 million fiber to the home <unk> at this point out of your total footprint in urban footprint.
$10 million or just over $10 million, so that would mean, 61% of your homes or best buy fiber, but yet 91% of the subs.
Take internet and IP TV year around that footprint do I have all of that metric.
Yes.
Yes, so it's you've.
<unk> got it right so at 61 today.
61% of the near term.
Let's back up so our near term plan broadband footprint by near term I mean between now and say 2025, okay, well what near to medium term. If you. If you prefer we got kind of $10 million thats in that planned footprint over that time horizon, where 61% done today with fiber.
70, 172% done at the end of this year with fiber.
For those customers who are on in our fiber footprint.
And who take Internet and TV, 91% of those are on fiber.
Right, which means the number of combined Internet and TV customers you have in your non fiber footprint is quite low is it thats, what we tried to emphasize that the.
The incremental risk of losing those subs.
Tony you've upgraded its pretty small.
So im not really what I'm trying to emphasize but let's go there so.
Clearly, where we have fiber, we're outperforming and if you kind of take our footprint from Manitoba, all the way to Atlantic, Canada, and Youll see our impressive Internet net adds.
We are gaining.
Significant share in fiber and depending on the state of our non fiber footprint, whether or not its ATM or FTC and et cetera. There are puts and takes there in terms of the performance, but that's a function of the.
The network technology, what im, saying, what im so thats, one point, which I think is what youre getting at what I'm trying to emphasize with the 91% is we are well positioned to really beginning to really begin leaning in on copper decommissioning, particularly in the residential.
Segment, So I think 2020 twos, the year, where you see us pick up the pace on decommissioning and positioning to position ourselves for a clear multiyear roadmap on that front.
Very glad to clarify that thanks for advertising and if I can just on fixed wireless just one.
A follow up question.
You, obviously have a great add started and kudos to getting to 1 million homes passed already and I think youre doing pretty well on sub ads in those regions.
Good for society, but also get you get for your business, but.
But other players seem to be now wanting to get into that space can you talk a little bit about how how do you protect that customer base, how sticky they are under contracts used for these customers or do they have significant upfront equipment or install costs that Mike.
After the barrier to them switching.
Hi, Luke.
I'll put up our wireless home internet product against anyone so I think ultimately it's going to be a function of of the network quality. The speeds that you offer and the customer service that you offer along with it so and the fact that we're there in areas where in those areas, where we were there first because theres no one else I think the first.
Mover advantage is is critical.
And there are some areas in that million.
Household footprint events, where we actually Werent first there might have been.
Another competitor there.
Smaller cable competitor for example, so being third or fourth in the market is going to be really difficult. So in those areas. We're taking share, but we were second to market, we may be offering faster speeds being third fourth.
It's going to be tough so I think I think really its first mover advantage.
It's the kind of credibility you buy with the community by having connected that community and it's the customer service and the quality of the networks that packages.
Going to allow us to continue to win.
Fair enough. Thank you.
We have time for one last question.
Perfect and then last question is from Simon Flannery from Morgan Stanley . Please go ahead.
Alright. Thank you very much good morning, another strong quarter on the wireless side continue to have really good momentum year over year.
To unpack the outlook for 2022, how are you thinking about the overall wireless opportunity.
And the snapback from Covid population growth household formation market share in that in the guidance assumption do you think we continue at similar levels to 2022 or is there some certain concern in the U S about a kind of a deceleration after some very good quarters any color there about what's driving the industry growth and your growth and how sustainable is that.
Okay, Great question I'll take it I'll take it kind of into two stages. So first just industry wide I think it's.
It's looking like a strong balanced Q4 across the industry So base.
Based on the results that have been released so far.
And I see some good growth and strong upside.
For the for the industry because of immigration.
Reopening to more customary levels in Canada, the roaming upside that we're seeing that since November .
Kind of holding I think.
Supply chain issues should begin to ease in the second half of the year I think the store constraints.
Not quite as constrained as it was a year ago and I think what's kind of the restrictions were in now we will begin to ease so I think industry wide that's looking.
Fairly good now.
I think it's worth mentioning where we sit competitively within that and you.
You see it in our strong service revenue growth and <unk> growth.
And year to date.
We know why in our case.
There is the mobile phone strategy focusing on high quality smartphone loading, but it's more than that right. Because we have within the mobile phone strategy. We're focused on premium brands premium network within the mobile phone strategy and I think that's driving our results and in Q4, we had some heavy year over year growth on.
The Bell brand.
And I think that's that's important if you look at our six 3% service revenue growth. The majority of that came from organic performance not roaming which is also quite positive and I'll leave you with this thought everyone.
The launch of the new plans this week.
Unlimited ultimate plans.
We got I really want to highlight those because this is how we're going to differentiate <unk> from five G and highlight our network superiority. So you're kind of differentiate prepaid from postpaid you want to differentiate flanker from your premium brands and then you wanted to.
Eight years <unk> from your <unk> services, So now with unlimited ultimate we have the bigger data buckets to higher video quality, we're including content and on the content. That's create mobile so we're paying ourselves essentially so now you start to showcase the incremental capabilities of <unk> and you would encourage people to up tier to move up that rate plan curve.
As I said in my opening remarks, and I think that that's a good tailwind.
For five <unk> momentum in the wireless.
Segment, particularly for Bell mobility.
Great. Thank you.
Thanks, Ed.
Again for your participation on the call. This morning, we'll be available throughout the day for any follow up questions or clarifications have a good rest of the day.
Thank you. Thank you everyone.
Thank you.
Conference has now ended please disconnect your lines at this time and we thank you for your participation.
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