Q4 2022 BCE Inc Earnings Call
Standby your conferences.
Good morning, ladies and gentlemen, and welcome to the BCE Q4, 2000, Twenty's results and 2020 guidance conference call I would now like to turn the meeting over to Mr. Fotopoulos. Please go ahead, Sir Thank you good morning.
And thank you for joining our call at this unusually.
Early start time.
With me here today are.
He is president and CEO and our CFO Glenn.
You can find all our Q4 disclosure documents, including our safe Harbor notice concerning forward looking statements for 2023 on the Investor Relations page on the B C. C. A web site, which we posted earlier. This morning, we have a lot of material to get through this this morning on this call. However, before we begin I want to draw your attention to our safe Harbor statement on slide two of the presentation.
With that I'll turn the call over to Marco. Thank you and good morning, everyone. Our 2022 accomplishments are anchor to the operational priorities, we set back in 2020.
And the team's unwavering commitment to all our stakeholders. These priorities remain the foundation for future success with.
With a strategic roadmap, including our historic multiyear transformational accelerate Capex program that is well advanced and already paying off with subscriber loadings and improved end to end customer experience, leading self serve option consistently strong execution.
The Bell team delivered great results across all operating segments this past year.
In terms of overall financial performance for 2022, we essentially achieved the midpoint of guidance for both revenue and EBITDA growth, despite unprecedented cost pressures from inflation and record storms and expensive and highly competitive black Friday and media advertising softness normalizing for ATC.
$7 million in largely unplanned inflation and storm related costs this year.
Our growth was actually 4%.
We're making massive investments to build the highest quality networks and they are consistently being recognized by third parties such as PC Mag.
Clark and open signal as being the fastest.
Our customer value proposition is to offer the best networks at affordable prices and were loading these networks profitably, while maintaining margins stable in a highly competitive marketplace.
It is a notable achievement.
Since 2021.
Accelerated capex investing more than $14 billion, the highest ever over a three year period by Canadian Communications company and we're doing it to forge ahead aggressively on constructing the broadest fiber footprint in North America.
Turning up wireless home Internet to 1 million rural.
In rural communities and building, our mobile five G networks faster.
In the past three years alone we have delivered over two 6 million new customer ready broadband internet locations, including a record 854000 direct fiber connections in 2022.
We've expanded mobile five G coverage to 82% of Canadians and we secured at $2 $1 billion worth of critical three five gigahertz mid band spectrum, with which we deployed a standalone five G plus network.
In our wireless segment, we continued growing our base of high value mobile phone subscribers, increasing our cross sell penetration of wireless and internet households, and managing customer churn.
Total mobile phone net adds in 2022 were up 66% to 490000, driving both service revenue and EBITDA growth of more than 7%.
With only 41% of postpaid customers currently on five G capable devices as well as accelerating immigration levels and a sharp focus on bundling wireless and consumer Internet service.
We see good runway for continued growth.
On the wireline front fueled by our biggest annual fiber buildout ever we added 201 762000, new net retail internet customers in 2022.
That was up 33% over 2021.
And our best result in 16 years.
I drove strong residential internet revenue growth of 8%.
Back we capped off 2022 with our best annual residential Archie you performance in our first year of published positive net adds since 2005.
These results are a testament to the power of fiber based Internet service that provides the fastest dedicated symmetrical speeds that cable just can't match.
By the end of this month multi gig symmetrical internet speeds of three gigs per second or higher will be available in 5 million locations and 1 million of these will have access to eight gigabits per second.
And our acquisitions of E box and distribute tell also further strengthen our competitive position and support our internet growth strategy with more service options for value conscious residential and SMB customers.
Despite a challenging macroeconomic backdrop for advertising our media segment performed better than expected driven by continued strong digital revenue growth, which is up 54%, 54% in 2022 and now comprises 29% of total bell media revenue compared to 20%.
In 2021.
Underpinning this performance was crave, which grew direct streaming subscribers by 26% in 2022 on the back of market, leading content as well as rapid growth of our Sam T V sales tool, which nearly tripled sales revenue for a second consecutive year.
We're also developing a strong customer first culture.
Investments in our people and the tools they need to support our customers as well as investments in digital functionality.
<unk> and machine learning capabilities together with the unmatched quality and reliability of our networks as I've mentioned all of that is leading to higher NPS scores lower customer churn and meaningful C. C. T S performance improvement.
On the ESG front, the bell for better initiative, which highlights our leadership in mental health environmental sustainability and workplace engagement also made notable progress in 2022.
We were named by corporate Knights, the top Telecom company and number four in Canada overall on the best 50, corporate citizens list as well as the inaugural greenhouse gas reductions champion by clean 50, a national sustainability organization.
And reflecting our ongoing efforts to engage and invest in our people Bell was named one of Canada's top 100 employers for the eighth consecutive year by Media Corp. This latest recognition reflects our success in key areas, including employee benefits training and skills development and community involvement.
And just last week, we proudly launched a new era of Bell, let's talk in response to the growing need for mental health services in Canada, we're committing an additional $10 million towards our goal of $155 million in funding for Canadian mental health programs.
Replacing the <unk> per interaction donations made in previous years.
Exceeding any previous Bell, let's talk day donation. This funding will help support vitally important meta health projects all year round.
And it will allow us to put more emphasis on the practical ways. We can all make positive change on bell, let's talk day and.
Throughout the year.
Let me turn now to slide six.
Starting with Bell wireless I'll give you an overview of some key operating segments. We're very pleased with our postpaid wireless loadings, we had a record quarter of gross activations that drove 155000, new net subscribers and that's up 41% over 2021 and 148% higher than Q.
For 2019.
This strong result was achieved even with a higher number of switchers, reflecting aggressive offers from our competitors that we chose to match selectively.
For the first time since 2019 Q4 retail foot traffic in shopping activity was unrestricted and back to pre pandemic levels of competition, particularly during black Friday that whole Black Friday period, actually which was very promotional intense in 2022 of Q4 Q4 of 2022.
That said all the work, we do on costs and the strength of our balance sheet and liquidity position prepared us financially to load the subscribers that we did despite the level of promotional activity that was higher than any of us would have desired.
ARPA was up <unk>, 5%, which is our seventh consecutive quarter of growth. This was supported by higher roaming revenue that was at 112% or pre COVID-19 levels and our continued focus on higher value subscriber loadings, even as higher transaction intensity moderated our ARPA growth due to the financial impact of this.
Shifting to installment plans.
For mobile connected devices net adds increased an impressive 168% over last year to 104000, driven by continued strong demand for all Bell Iot solutions.
Let's turn to wireline.
Another strong margin quarter. In fact, we've now delivered positive retail residential net customer ads, including satellite TV and local phone and four of the last six quarters and I've already mentioned our performance for the full year of 2022.
Well Internet added 63466, new net retail subscribers and that's 33% higher than 2021, driven by strong growth in every region. This was our best Q4 performance in 18 years.
Notably 70% of consumer fiber Activations in Q4 were on gigabit or higher speeds, bringing our base of gigabit or higher customers to approximately $1 million or 43% of total fiber subscribers at the end of 2022.
And it was another great quarter for Bell I P. T V with our best quarterly result in almost seven years as we leveraged our multi brand customer segmentation approach to drive 40209, net adds up 38% versus 2021.
At Bell media as I said advertising sales were better than we feared going into the quarter Q4 AD revenue was up three 8% over the previous year buoyed by strong demand for the FIFA World Cup, demonstrating the massive popularity and the value that advertisers place on premium sporting events.
This helped TSN and Rds assume their ranking as a top English and French language sports channels in Q4, and there are also off to a good strong start in 2023, thanks to the world Juniors and the NFL playoffs.
<unk> also continued to deliver with total subs up 6% over last year, surpassing $3 1 million. This together with the increased adoption of our advanced advertising platforms and expanded Avon offerings contributed to robust 46% growth in digital revenues in Q4.
And our Quebec media strategy continues to hunt as we lead all competitors in Q4, and the French language specialty market and that includes news and sports.
Let me turn now to slide seven.
Our 2023 business plan is anchored to our strategic framework to build to execute and to transform.
It's a prudent plan designed to mitigate the effects of a potential recession.
To maintain the general generational investments in our networks and in our services and to support our dividend growth model.
Although we can't accurately predict the severity and magnitude of any economic downturn, we know our business is resilient and that our financial position is rock solid to weather potential impacts as a result, we remain optimistic about our business outlook as you see reflected in our financial garden guidance targets for 2023.
As I said last February so February 2022 in.
In line with our accelerated capital investment program Capex will begin to decrease in 2023 from what we clearly stated would be at peak spend year 2022.
We plan to invest around $4 $8 billion in 2023, and that's to support the expansion of our pure fiber footprint to another 650000 homes and businesses.
Approximately 85% of our planned broadband Buildout program.
We will be done that comprises approximately 10 million total combined fiber and wireless home internet locations.
By the end of the year.
We will have 4 million homes that we'll be able to access the symmetrical internet speeds of eight gigabits per second.
We'll also grow our five G wireless footprint in 2023 to cover 85% of the national population and will enable low latency standalone five G plus service for 46% of Canadians or 71% of the addressable population.
We plan to continue to win the home by leveraging our symmetrical internet speed advantage over cable delivering the best Wi Fi with Wi Fi six E and our Giga hub modem and will drive greater cross sell penetration of higher value lower churn wireless and internet households.
In wireless now we plan to grow mobile phone net adds by capitalizing on our network leadership and accelerating five G upgrade cycle and higher immigration levels and.
And building on our retail distribution leadership you you will have seen that earlier. This week, we announced an exclusive multi year distribution agreement with Staples, Canada to sell bell consumer and small medium business services and more than 300 of their stores across the country.
In our <unk> sector. Our objective is to build on our improved results from last year. In fact 2022 represented our best SMB financial performance in over 15 years, and we expect to maintain this momentum in 2023 by expanding in key channels and leveraging our <unk>.
Or footprint.
In the large enterprise space will continue to put in place the foundation for our advanced products and services portfolio that will drive growth in the medium to long term and at the same time, we're carefully managing our legacy portfolio through a combination of cost discipline and a focus on key legacy products.
And at Bell Media will continue to drive advanced advertising and digital products like crave and the CTV and newborn apps to help offset some of the recessionary pressures, we're seeing in advertising, particularly expected in the first half of 2023.
Lastly, with respect to our work to with respect pardon me to our transform work stream will continue to focus on end to end customer experience improvements that make it easier for customers to do business in Bell and will do this by investing in digital self serve and high touch interactions. We also intend to drive.
So efficiencies through enterprise architecture, and agile development automation tools product and process simplification integration of central billing systems, and an ongoing attention to our cost structure in order to maintain a stable margin even in the face of a potential recession.
Now, let me turn to my last slide which is slide eight and our dividend announcement from this morning.
The financial pillars of our 2023 plan enable us to execute on Bce's dividend growth objective, which is a top capital market's priority as you all know we're increasing the BCE common share dividend by five 2% for 2023.
Our 15th uninterrupted year of a 5% or higher increase in my fourth as CEO .
Although capex will be lower in 2023, it will remain elevated compared to pre 2020 baseline spending and this is why our dividend payout ratio will remain above our historical free cash flow target range of 65% to 75%.
We're delivering on the strategic initiatives that we transparently laid out for you three years ago and I'm. So pleased with how far we've come in such a short period of time to future proof. This great company competitively in a changing world and this will position us for continued success, our unmatched collection of assets.
The best networks, and the most innovative products, our digital transformation journey and our customer first approach will serve as a springboard to deliver the operating metrics and financial results that all of you and all of our shareholders have come to expect from us and on that let me turn it over to Gulf.
Thank you Marco and good morning, everyone.
Q4 marked another quarter of consistent and focused execution with a three 7% increase in consolidated revenues that was driven by year over year growth at all Bell operating segments. Despite economic conditions that continue to pressure media advertising and our b to b sector.
I am quite pleased that we delivered positive EBITDA growth this quarter, even while absorbing $26 million in incremental storm recovery and inflationary cost pressures higher media programming cost and a very expensive and highly competitive black Friday period.
If I take a wider lens view of 2022, the accelerated capex investments, we are making are paying off with some of the highest wireless internet and TV subscriber loadings, we've enjoyed in over a decade.
That said all of the work, we do on cost and the strength of our balance sheet prepared us financially to be able to afford the subscribers that we acquired.
And despite a step up in competitive intensity exceptional cost pressures.
And other economic challenges impacting our business.
We still land at 2022 with a stable margin.
Why.
No one is better at managing costs.
That core competency, we will continue to serve as well as we go forward.
Net earnings in statutory EPS in Q4 were down year over year due to non cash asset impairment charges, mainly for Bell Media's French language television properties to reflect market conditions.
Economic related pressures on current advertising.
Although adjusted EPS was up 5% for the full year. It was down this quarter decreasing six 6% to 71.
Due mainly to increased interest expense because of higher rates.
And despite a historically a historical year for Capex with total spending in excess of $5 1 billion free cash flow was up 2.9%.
Notably our reported Capex number includes cash amounts received upfront from the Quebec provincial government as a subsidy for the Buildout of high speed.
Fiber.
Royal communities, which as per eye FRS rules must be accounted for as a non cash increase in capital expenditures.
Let's turn now to wireless on slide 11 overall, a very good set of financial results. This quarter total revenue up seven 7% fueled by robust postpaid subscriber growth.
A higher proportion of customers on higher value five G. Unlimited plans strong demand for Bell Iot services continued roaming improvement and higher year over year mobile phone sales transactions that drove an 11, 7% increase in product revenue.
Merkle has already pointed out it was an expensive quarter for postpaid subscriber acquisition. This had a direct impact on EBIT growth, which increased a solid four 1% in the quarter.
Let's turn to slide 12 on wireline.
A second consecutive quarter of positive top line growth with total revenue up 5%.
This was led by continued strong residential internet revenue growth of around 9% higher year over year, SMB revenue and 17, 2% increase in product revenue.
A good result, given the ongoing legacy declines global data equipment shortages.
And Richard promotional residential bundle offers.
Further to this last point, given our industry, leading wireline margins broad geographic scale and fiber superior cost structure, we have room to compete on price as multi product bundling helps drive lower churn and greater customer lifetime value.
Notwithstanding higher revenue wireline EBITDA was down 6% due to $23 million in storm recovery cost and inflationary pressures absorbed in this quarter.
Normalized for these cost underlying EBIT growth was quite respectable this quarter, increasing one 1%.
Slide 13 on Bell media against the backdrop of challenging economic conditions, but contrary to our North American media peers Bell media delivered revenue growth of four 7% in the quarter.
Despite soft overall TV and radio Advertiser demand total advertising revenue was still up three 8% and this was just driven by record sales for the 2022 FIFA World Cup and continued strong out of home and digital growth.
Subscriber revenue grew five 4% on the back of strong crave and TSN direct to consumer streaming growth.
These results are a testament to our programming strength diversified mix of media assets and focused execution of our digital first strategy.
Similar to previous quarter EBIT was down.
15, 7%. This result was anticipated given the broadcast rights costs of the.
The FIFA World Cup and the ongoing normalization.
TV Entertainment TV content deliveries.
This does this.
That does it for the quarterly results I want to move on and talk about the new reporting segment structure.
I want to bring your attention to an important change that we're making to our segment reporting structure. Starting this year as highlighted on slide 15, beginning with Q1 2023 results our previous wireless and wireline operating segments are being combined into a single segment called communications and technology.
Services or Cts.
Bell Media media remains a distinct operating segments consolidated BCE financial results.
Our unaffected the.
The reason for this market modification is to align with organizational changes we made in calendar 'twenty, two and to reflect the increasing strategic focus on multi product sales and our digital transformation.
Wireless and wireline service and product revenues will continue being reported separately and there'll be no change to subscriber related operating metrics disclosure.
However, adjusted EBITDA will now only be reported for the combined Bell Cts operating segment with no split for wireless and wireline.
For comparative purposes, we have provided you with our quarterly 2022 segmented results on the new basis of reporting.
Slide 16 provides some perspective on our revenue and adjusted EBITDA outlooks for 2023.
Guidance ranges are the same as in 2022 with consolidated revenue growth of one 5% adjusted EBITDA growth of two 5%.
Given this outlook, we project Bce's margins to remain stable.
In the coming year.
Based on latest economic forecast, we must plan for a potential recession.
While we can't accurately predict the timing and the pace of economic downturn. The fact that we are maintaining the same target guidance ranges as last year shows the confidence we have in our business outlook and the strength of our franchise to act to execute under any circumstances.
Underpinning this steady growth is a strong financial contribution from Bell Cts, reflecting continued wireless subscriber momentum driven by <unk> acceleration.
Fast immigration growth and a sharp focus on our multi product cross sell.
Further.
But more moderate year over year roaming revenue growth and a continued consumer wireline performance as.
As we leverage our fiber and our product leadership in the home as well as our recent acquisitions of <unk> box and distributed <unk> to drive a high market share of Internet and TV net additions and revenue.
We also expect an improving performance trajectory of our bell business markets predicted.
Predicated on higher product sales is going to resumption of.
Of project spending by large enterprise customers.
Supply constraints ease against that backdrop, we will be maintaining a close eye on costs.
To mitigate the financial impact of ongoing legacy erosion, which continues to slow and of course macroeconomic pressures.
At Bell media, although we continue to experience soft TV and radio advertising demand in the early stages of 'twenty three as the economic but as the economy impacts advertising budgets, we do expect a recovery as the year progresses.
We also expect to benefit from the continued growth in crave and out of home advertising, while also leveraging bell Media's advanced advertising platforms and digital capabilities to grow our market share of digital ad spend.
Taking all of this into account, we expect to generate positive revenue growth in 'twenty three.
Despite the non recurrence of FIFA World Cup advertising revenue and the onetime retroactive adjustment to subscriber and revenue that we recorded in Q1 of 'twenty two.
Lastly, despite a resetting of the cost structure in 'twenty, two that brought TV programming and production costs closer to pre COVID-19 levels, we will be zorba, even higher spending in 23. This is due to higher costs for sports rights and other premium contact.
As well as further program volume normalization, which will weigh on Bell Media's EBITDA growth this year.
Let's turn to slide 17, the funded status of <unk> defined benefit pension plan.
Remained strong with a weighted average solvency ratio of 117% at the end of 'twenty two.
Our pension plan was in our solvency surplus position when interest rates were at historical lows.
Now that rates have increased.
Further strengthen that value duration position.
With every DB pension plan now above the required 105% threshold will be able to monetize.
Full contribution holiday in 2023, resulting in cash savings of approximately $230 million versus the 145, we enjoyed in 'twenty two.
This level of annual cash funding reduction is expected to continue well into the foreseeable future as we project the solvency ratio to remain above 105% in fact with the solved with the substantial solvency surplus of $3 3 billion.
That has a very low sensitivity to interest rate changes there is little risk that our pension plan ever goes back into a deficit position.
Moving to our tax outlook on slide 18, the statutory tax rate tax rate for 'twenty three will remain unchanged at $26 eight our effective tax rate for accounting purposes is also projected to be essentially around that level, reflecting no tax adjustments this year compared to 10.
Per share in 2022, we expect a step up in cash taxes for 'twenty, three increasing to a range of $800 million to $900 million up from 749. This year and this is due mainly to higher taxable income projected for the year.
Slide 19, despite positive EBIT growth and lower pension financing costs, we project adjusted EBIT EPS to be between 110 or excuse me 310, and $3 25 per share for calendar 'twenty, three or 327% lower compared to 22 the year over year.
The decline is a direct result of the <unk> 10 per share year over year decrease in tax adjustments that I just referred to.
The approximate $200 million increase in depreciation and amortization expense and a further step up in interest expense due to higher rates and the higher level of debt outstanding.
Over to slide 20, slide 20 summarizes our free cash flow look, which we predict project will grow again by 2% to 10% and 23.
Similar to last year's growth range and reflects the strong flow through of our higher EBITDA lower year over year pension funding and an approximate $300 million decrease in capex.
That will drive a lower capital intensity ratio of 19% to 20%.
Free cash flow generation is strong reliable and well protected from macroeconomic uncertainty due to the recession resistant nature of the majority of our revenue streams, providing strong support for the five 2% dividend increase we have announced this morning.
Turning to our balance sheet.
I'll make a few brief comments.
On slide 21, we have <unk>.
Access to $3 5 billion of liquidity as we begin the year and our balance sheet that provides good overall financial flexibility to execute on the business plan and the strategic priorities of 'twenty three.
Our net debt leverage ratio, while elevated at three three times adjusted EBITDA due to several years of generational capex spending and critical spectrum investments is manageable and projected to remain relatively unchanged. This year.
Our debt capital structure remains very well structured with an average term to maturity of around 13 years, a low after tax cost of debt of just $2 nine and a relatively high proportion of fixed rate debt.
Additionally, we have no material refinancing requirements. This year as $1 1 billion of the 'twenty three maturities was pre finance and early redeemed in 'twenty two.
This permits us to be opportunistic in assessing the debt accessing the debt desked markets. This year to further strengthen our liquidity position and extend durations and maturities ahead of the anticipated <unk>.
Ben spectrum.
Auctions.
Finally to conclude BC.
<unk> and competitive position are strong as ever as evidenced by our 2022 operating results and consistent financial guidance targets for 'twenty three and.
<unk> 2023 we intend to build on that operating momentum underpinned by our proven ability to execute under any competitive or economic conditions.
And our set of industry, leading assets that will continued growth for years to come.
All of that I will turn the call back over to thin and the operator for questions. Thanks, Glenn So given the volume of information. We presented this morning I'm sensitive to the time, we have left for Q&A unusually this quarter one of our peers is hosting a call at eight a M. So respecting all of your time and none of our competitors I wanted to ask you to please limit yourselves to one question. So we can get to as many people in the queue is.
So with that mode, we are ready to take our first question.
We will now take questions from the telephone lines. If you have a question and you are using a speakerphone. Please lift your handset before making your <unk>.
If you have a question. Please press star one on your device.
So on your question at any time by pressing star two.
Please press star one at this time, if you have a question it will be a brief pause them all participants with just a couple questions. We thank you for your patience.
Our first question is from MS Mayer Yaghi from Scotiabank. Please go ahead.
Yes. Good morning, I know, it's early so I appreciate the help that you guys are going to have companies are called the run different on different times.
I wanted to maybe start by asking you.
Merkel about the guidance that you provided for 'twenty three.
One to five on the revenue two five on an EBITDA exactly the same as you had in 'twenty, two which is a quite impressive given all the macroeconomic changes that we're seeing right now, but I do I do want to I wanted to ask you what's underpinning that guidance.
When it comes to our macroeconomic view as well as competitiveness in the marketplace in case.
We see a large transaction close during 'twenty, three which a lot of people are investors are wondering what it can or cant do to the competitive intensity in the market and maybe if I can just follow up on the regulatory side.
We've seen a new change a change at the at the C level.
What's your take in terms of what we should expect from a regulatory body that is looking more and more on.
Improving prices for Canadians as discussed in the media recently could that change the environment for you and Uh Huh.
Participants.
And the industry. Thank you.
Thanks, Mike Good morning, and good.
Good question. So what I'll do is Glenn Glenn maybe you can unpack the guidance I might have a few things to add on the guidance question and then I'll continue with the regulatory question absolutely. Good morning are as I said in my opening remarks, I mean, our guidance speaks volumes to the confidence we have in our business and the resiliency of our business.
Absolutely, we expect there to be a recession, albeit.
Personally I believe it will be short and shallow the guidance. We provided here it takes into consideration that that recession, we haven't seen any changes at this time to consumer demand in America remains active and healthy and the proof points are in our results record postpaid mobile phone.
Gross Activations best Internet ads.
Ads in 16 years strong wireless service in residential Internet revenue growth and in fact consumers are upgrading to higher service tiers rather than downgrading.
On a BB BBB front theres been no indications of paused and new orders are customers looking to cut spend.
So I think.
When we look at the health of our business and some of the challenges we faced in calendar <unk> and calendar 'twenty Two America I'll mentioned $87 million.
$44 million in an inflationary pressures that we experienced this year and $43 million of Scott cost or excuse me storm costs.
You know a typical year, our Goodyear, maybe a $5 million of storm costs.
With changing weather patterns.
That's probably been closer to 10 than recent history 43 is extraordinary and not.
Knock on wood, it's something we don't repeat and although I don't think we're out of the woods completely on inflation.
The $44 million.
About 21 of that is labor 16 fuel in about seven utilities.
The labor started really in the back half so I would suspect that that type of pressure continues into 'twenty. Two as we we have another half year before we start lapping that but I don't anticipate the same pressure on fuel our utilities. So.
All in all I think.
The 2022 results were pretty well.
We're pretty strong considering we had that in but those headwinds behind us I am very confident in the guidance we provide.
Thanks, Meera and Michael you were going to make some comments yeah, just a I'm not going to repeat any of that because that was very good I'll just add the following so at the highest level.
Sure I think the investors our investors should have confidence like we have a clear strategy, we've articulated that strategy and we're funding and in executing against it. So we have a diversified revenue streams and our fiber strategy is working we have good wireless momentum and while the media.
Industry is pressured right now we are taking share because of our digital strategy has traction.
And then you alluded to.
Bit of a summation, what Glenn said, you you alluded to.
Price competition.
As well and we kind of see some of that we saw some of that during the black Friday period, and you foreshadow potentially more of that for 2023 on that I'll say the following we have the room to compete on price if anyone wants to take us there.
And we have the room, because we're really good at managing cost and because of the scale of our fiber network, which and then the bundling strategy and all of that is delivering lower churn lower cost structure higher lifetime value of our subscribers look we've invested billions and billions to bill.
<unk> North American leading networks, we are going to load those networks and we can compete on price if were taken there and then that kind of segways into the regulatory.
Question that you asked me and look it's a bit early like we are looking forward to sharing our thoughts are with the new C. RTC leadership on how competitive.
Our industry.
His annual we shared those thoughts on these calls obviously quarter after quarter, but theres, new CRT C leadership. So we're looking forward to those conversations and in particular really looking forward to highlight and reiterate the importance of the massive investments that need to be made.
In communications networks to drive the country forward.
So a couple of other things just on that prices are declining it's actually undeniable.
Communications networks are pretty central to everything we want to accomplish as a country in terms of economic growth and productivity and maybe I'll leave it with a lot of this last point.
Does everyone in the country want better networks, yes, do we want more coverage, yes, do we want prices that keep declining of course does local TV content matter, yes. It does do we want better customer experience, yes, we do do we want more innovation more jobs, yes, yes, and yes.
But there is one common element that underpins all of those and its investment so we can't lose sight of that and I'll leave it there.
Next question please.
Thank you. Following question is from Stephanie price from CIBC. Please go ahead.
Hi, good morning.
For 2023.
Fiber homes decreased from 900000 to a plan of 650000, but capex stayed relatively elevated at $4 8 billion. Just curious about the other buckets investment. Besides the mid band and fiber that you are looking at and maybe related how do you think about a longer term view and what a more normalized run rate could look like the capex is.
You ran sounds libraries.
Yeah, so on that we've been.
I've tried to consistently articulate where we're going with this starting in February 2021, We said, we're going to start elevating capex to accelerate our fiber and <unk> build and we're doing that we said 2022 was going to be the peak year and you can see that $5 1 billion spent in 2022 is 300 million higher.
The guidance, we're giving you for 2023, so we did say that each year. After 2022, Capex would start to glide down.
<unk> 23, lower than 'twenty to 'twenty, four lower than 23 et cetera until we get to them.
At the end of 2025, and then you'll you should expect capex to get closer to.
To what you were used to seeing from us in terms of capital intensity ratio prior to Covid.
650.
650, the reason, we dropped capex by $300 million from 'twenty to 'twenty. Two is because we're going from 854000 locations back on fiber to $6 50, and that's the bulk of the reason for the decline.
Okay. Thank you very much.
Thank you. Thank you. Following question is from Joel <unk> from Dish Hardy. Please go ahead.
Hi, Thanks, Thanks for taking my question.
Hey can you can you talk a bit about about site D. Plus you know we have in mind that maybe this could mean a bit dilution for the <unk> brand overall, but at the same time I understand you want to maintain a differentiation.
And then the second one.
I think it's fair to say that that you've been using promotions in a different way than in the past recently would you say that it's a it's a new way of doing business. The overall or this is more.
Something that is done to rapidly ramp up your market share on newly deployed fiber. Thank you.
I'll take the fiber question first we.
Actually on the fiber look what we're doing here is like.
Like I said, we spent we're spending billions of dollars to build the best networks and we have an undeniable structural.
Product superiority advantage so the telco network traditionally was structurally.
Disadvantaged from a technology point of view with with copper in years past now the telco advantage is structurally there's a structural telco advantage with fiber.
So you have a structural technology advantage, you have product superiority and differentiation and you spent billions of dollars to get that the next step is to is to low load. The network and we are taking share and frankly, we've reached we're resetting the benchmark for what consumers believe broadband should be.
That's a key thing its a competitive differentiator that's going to last for a few years in my view resetting the benchmark for what consumers believe broadband should be if you look at our sales in Q4 70, 70% seven zero, 70% of our Internet Activations.
On fiber we're on speeds.
<unk> or above.
And 38% of our fiber Internet base is now.
Speed of a gig and above so we're loading the network and we're shielding our customer base by resetting that that broadband benchmark and it's a potent combination right you have fiber with symmetrical.
Symmetrical upload and download speeds that competitors can't match, a gigabit modem with Wi Fi six <unk> and we have a new Android powered television.
Service basically the new evolution of five television, which is pretty powerful on.
On wireless and on and on <unk>.
On wireless and on <unk>, we're just kind of I'm really pleased that industry wide actually the five G pricing structure has remained intact, where we're we've delineated there's clear demarcation between <unk>, plus and <unk> and other services with with the pricing that comes with it and so far frankly, that's that's.
Health.
And as I mentioned in my opening remarks, 41% of our subscriber base is on <unk> devices <unk> customers continue to use more and spend more and there is room for growth there and then.
And Mike I might add on both both our wireless loadings in our market share gains on fiber we're doing that.
Spite some promotional intensity, we're doing that while maintaining margin stable, which is quite an accomplishment and the reason we're able to do that one of the big reason that with the fiber scale our cost structure comes down.
Thank you.
Thank you. Our following question is from Tim Casey from BMO capital markets. Please go ahead.
Thank you Michael could we follow up on that discussion on your fiber leadership.
And talking about what youre seeing in the marketplace.
You mentioned that you are.
You have the ability to to match costs I'm, just wondering how that plays out in the wireline market.
With respect to your as you say your.
The competitive advantage, we have with product could you just talk a little bit about the dynamics, you're seeing in the marketplace there.
Yes, so we're seeing I mean, essentially the short story, Tim as you see it when you see the pretty quiet loadings are quite strong right now.
Correct.
Television results in seven years on overall wireline our consumer our views best results in 2005 and.
And best Internet and that's in 18 years I think again those so I mean, we've talked about the fiber advantage, but theyre just not idle words, because youre seeing the results follow fall of what we're saying right and just to give you. Another another data point. So we had 63 and a half 63500.
<unk> Internet net or thereabouts, but we had 78000 internet net in fibre territory. So I mean I've been pretty transparent about this too we do lose internet customers, where we don't have fiber, we're gaining big share where we do have fiber and I think that's the key thing.
You know 80% of our target broadband build is done will be at 85% done.
Shared in my opening remarks.
A vast footprint that we will have that has three gigabit or eight gigabit speeds.
Our phenomenal speeds and as we reset what the benchmark is for acceptable broadband and we reset the bar to a gig or above that becomes a powerful competitive proposition.
Yes, Tim.
As you've heard us say time and time again, the gift that keeps on giving as fiber not only does it allow us to deliver a superior product to our customers a superior product over our competitors, but it is a it's a network that allows us is cheaper to operate and it's reducing our cost of operating which you see in our margins. Despite the challenges I spoke of.
Out earlier were maintaining stable margins and a big part of that is the.
Is the cost advantage that fiber gives us.
Thank you.
Thanks, Tim Thank.
Thank you I was.
The following question is from <unk> <unk> from UBS. Please go ahead.
Great. Thank you as you look at your new reporting structure, you anticipate more cost rationalization. When you combine the wireline and wireless expense buckets or has that already been aligned last year and from Q and it will be more business as usual cost efficiencies and and you did mentioned some incremental spending.
This year.
Is there a way to quantify them with the timing on when they will show up thank you.
All of the attack the first part of your question I'm not sure what your last part was referring to.
We combined our internal structure for wireless and wireline this year and we did enjoy cost efficiencies in doing so and as I said in my opening remarks, it's become.
Our core competency of Bell, we were always attacking costs and looking for more effective and efficient ways to deliver service and that's not going to change and again to the to the opening remarks that merit made about how are you able to deliver stable guidance over 2022, and that's part of it is focusing on our cost finding efficiencies leveraging.
The ability that fiber gives us we're taking costs out on the second part of your question.
Well I think you mentioned that you'd like to make some internal investments this year to digitize some capabilities.
In terms of efficiency. So I was wondering if there is.
Quantification or the pacing of that or is it also more.
Sort of business as usual investments.
Yes, so we want to unpack that specifically, but since since 2020, particularly since we got completely shut down in 2020 during COVID-19.
Made a concerted effort to improve our digital capabilities. Both those that are customer facing and continue to automate some of the processes and the operations of our business and and Thats continuing because it is important and it's driving better customer experience and lower cost structure. So we're going to keep we're going to keep doing that and thats.
Within our within the Capex guidance that you see.
Okay. Thank you. Thank you.
Thank you I'm. Following question is from Vince Valentini from TD Securities. Please go ahead.
Thanks, very much just a comment first.
Not happy about getting rid of the segmented EBITDA and it makes our lives a very difficult I'm sure you have internal.
As to what wireline versus wireless is and youre not going to change based on what I say, but I wanted to get that on record that it is not helpful to US My question is on the guidance.
The range is reasonably wide at 2% to 5% on an EBITDA Glen and as you've articulated competition seems to be escalating you seem to be willing to lean in and load up your new networks and fight on price. If you have two I'm just wondering how the high end of the range. It's possible what kind of factors would you need to.
You see some sort of big economic improvement or or some sort of improvement in the competitive environment versus the current pacing maybe you can talk a bit about the pros and cons are the gives and takes up at the high end versus low end of that guidance.
Well first of all Vince the Guy.
How wide the range is it's the same range as in 'twenty, two and we're now approaching $25 billion revenue company in north of $10 billion in EBITDA and I don't feel that range is all out wide. When you consider the size of our organization.
Yes, we provide a range because there are all kinds of uncertainties that can happen in our business we've talked.
A number of times on this call about recession, and I think that that.
Although I personally believe will be short and shallow I certainly could be wrong and many people on this call probably have a different opinion than I.
Barring barring.
Submit substantive revenue recessionary impacts continued momentum we have in our fiber and our <unk> strategy recovery in our media business. Those are the types of things that I think drive us towards the higher end or past the midpoint of our guidance range.
I mean for me to be able to give you insights on what drives you to the high end you know it as well as I do low promotional activity continuing to load the network.
Avoiding a recession recovery of advertising advancement of our digital first strategy and media those are the things that we're focused on but I believe the guidance range as is prudent I think it takes into consideration the potential challenges plus the upside and it is not inconsistent to what you've seen from us before but thanks for your question.
And Vincent duly noted on segment reporting.
Thanks.
Thanks.
Thank you.
Following question is from Simon Flannery from Morgan Stanley . Please go ahead.
Great. Thank you very much good morning, Glenn I Wonder if we could talk about roaming revenue, you've obviously had a very nice recovery. During 2022, but you are pointing to a further recovery in 'twenty three perhaps just help us understand where we are in the recovery cycle and what sort of benefit are you anticipating in your guidance next year on a year over year basis versus <unk>.
And when do we get some sort of a new run rate.
Certainly Simon Marco mentioned that were at 112% of what pre pre pandemic roaming revenue is to unpack that for you about.
On a volume basis were pretty much flat were back to pre pandemic.
Pandemic. So these additional 12% is all related to price so.
Your P versus Q.
I said in our opening remarks, one of US said that we don't anticipate the same tailwind on roaming that we enjoyed this year naturally this was a year of true recovery as I think Canadians in.
We're starting to gain confidence to move again post the challenge of this pandemic I would say.
Some of the price increases that we implemented in calendar 2022 were done through the year. So we get to enjoy the.
At the half year of those coupled with I think youre starting to see Canadian confidence continue on.
Moving around again.
And enjoying the ability to travel so.
The short answer is the improvement from 'twenty, one to 'twenty two will not repeat itself, but there is still a bit of a tail win there for 'twenty two to 'twenty three.
Great. Thank you.
You're welcome Simon.
Okay mode any more questions.
We have no further questions. So I just thought at this time so back to you Mr. Fotopoulos right. Thank you very much.
So as usual I'll be available throughout the day to take your follow up questions or any clarification. So you have a few minutes to get ready for your next call. So have a great day everybody.
Thank you.
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