For the month of: | November 2021 | Commission File Number: | 1-8481 |
BCE Inc.
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By: | (signed) Glen LeBlanc | ||||
Glen LeBlanc
Executive Vice-President and Chief Financial Officer |
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Date: | November 4, 2021 |
Exhibit 99.1
MD&A
Managements discussion and analysis
In this managements discussion and analysis (MD&A), we, us, our, BCE and the company mean, as the context may require, either BCE Inc. or, collectively, BCE Inc., Bell Canada, their subsidiaries, joint arrangements and associates. Bell means, as the context may require, either Bell Canada or, collectively, Bell Canada, its subsidiaries, joint arrangements and associates.
All amounts in this MD&A are in millions of Canadian dollars, except where noted. Please refer to section 7.2, Non-GAAP financial measures and key performance indicators (KPIs) on pages 33 to 36 for a list of defined non-GAAP financial measures and KPIs.
Please refer to BCEs unaudited consolidated financial statements for the third quarter of 2021 (Q3 2021 Financial Statements) when reading this MD&A. We also encourage you to read BCEs MD&A for the year ended December 31, 2020 dated March 4, 2021 (BCE 2020 Annual MD&A) as updated in BCEs MD&A for the first quarter of 2021 dated April 28, 2021 (BCE 2021 First Quarter MD&A) and BCEs MD&A for the second quarter of 2021 dated August 4, 2021 (BCE 2021 Second Quarter MD&A). In preparing this MD&A, we have taken into account information available to us up to November 3, 2021, the date of this MD&A, unless otherwise stated.
You will find additional information relating to BCE, including BCEs annual information form for the year ended December 31, 2020 dated March 4, 2021 (BCE 2020 AIF) and recent financial reports, including the BCE 2020 Annual MD&A, the BCE 2021 First Quarter MD&A and the BCE 2021 Second Quarter MD&A, on BCEs website at BCE.ca, on SEDAR at sedar.com and on EDGAR at sec.gov.
Documents and other information contained in BCEs website or in any other site referred to in BCEs website or in this MD&A are not part of this MD&A and are not incorporated by reference herein.
This MD&A comments on our business operations, performance, financial position and other matters for the three months (Q3) and nine months (YTD) ended September 30, 2021 and 2020.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This MD&A and, in particular, but without limitation, the introduction to section 1, Overview, section 1.2, Key corporate and business developments, the section and sub-sections entitled Assumptions, section 3.2, Bell Wireline Key business developments, section 4.3, Cash flows and section 4.7, Liquidity, contain forward-looking statements. These forward-looking statements include, without limitation, statements relating to the potential impacts on our business, financial condition, liquidity and financial results of the COVID-19 pandemic, our network deployment and capital investment plans as well as the benefits expected to result therefrom, including our two-year increased capital investment program to accelerate the rollout of our broadband fibre, Fifth Generation (5G) and rural networks, the expectation that our available liquidity (as defined in section 4.7, Liquidity) will be sufficient to meet our anticipated cash requirements for the remainder of 2021, potential future purchases by BCE of its preferred shares pursuant to a normal course issuer bid (NCIB), proposed amendments to Bell Canadas 1976 Indenture (as defined in section 1.2, Key corporate and business developments) and certain expected effects of such proposed amendments, BCEs business outlook, objectives, plans and strategic priorities, and other statements that do not refer to historical facts. A statement we make is forward-looking when it uses what we know and expect today to make a statement about the future. Forward-looking statements are typically identified by the words assumption, goal, guidance, objective, outlook, project, strategy, target, and other similar expressions or future or conditional verbs such as aim, anticipate, believe, could, expect, intend, may, plan, seek, should, strive and will. All such forward-looking statements are made pursuant to the safe harbour provisions of applicable Canadian securities laws and of the United States (U.S.) Private Securities Litigation Reform Act of 1995.
Unless otherwise indicated by us, forward-looking statements in this MD&A describe our expectations as at November 3, 2021 and, accordingly, are subject to change after that date. Except as may be required by applicable securities laws, we do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Forward-looking statements, by their very nature, are subject to inherent risks and uncertainties and are based on several assumptions, both general and specific, which give rise to the possibility that actual results or events could differ materially from our expectations expressed in, or implied by, such forward-looking statements and that our business outlook, objectives, plans and strategic priorities may not be achieved. These statements are not guarantees of future performance or events, and we caution you against relying on any of these forward-looking statements. Forward-looking statements are presented in this MD&A for the purpose of assisting investors and others in understanding our objectives, strategic priorities and business outlook as well as our anticipated operating environment. Readers are cautioned, however, that such information may not be appropriate for other purposes.
We have made certain economic, market and operational assumptions in preparing the forward-looking statements contained in this MD&A and, in particular, but without limitation, the forward-looking statements contained in the previously mentioned sections of this MD&A. These assumptions include, without limitation, the assumptions described in the section and sub-sections of this MD&A entitled Assumptions, which section and sub-sections are incorporated by reference in this cautionary statement. Subject to various factors including, without limitation, the future impacts of the COVID-19 pandemic, which are difficult to predict, we believe that our assumptions were reasonable at November 3, 2021. If our assumptions turn out to be inaccurate, our actual results could be materially different from what we expect.
Important risk factors that could cause actual results or events to differ materially from those expressed in, or implied by, the previously-mentioned forward-looking statements and other forward-looking statements contained in this MD&A, include, but are not limited to: the COVID-19 pandemic and the adverse effects from the emergency measures implemented or to be implemented as a result thereof, including supply chain disruptions, as well as other pandemics, epidemics and other health risks; adverse economic and financial market conditions, a declining level of retail and commercial activity, and the resulting negative impact on the demand for, and prices of, our products and services; our dependence on third-party suppliers, outsourcers, and consultants to provide an uninterrupted supply of the products and services we need to operate our business, including mobile devices; the intensity of competitive activity including from new and emerging competitors; the level of technological substitution and the presence of alternative service providers contributing to the acceleration of disruptions and disintermediation in each of our business segments; changing viewer habits and the expansion of over-the-top (OTT) television (TV) and other alternative service providers, as well as the fragmentation of, and changes in, the advertising market; rising content costs and challenges in our ability to acquire or develop key content; the proliferation of content piracy;
BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT | 1
MD&A
higher Canadian smartphone penetration and reduced or slower immigration flow; regulatory initiatives, proceedings and decisions, government consultations and government positions that affect us and influence our business; the inability to protect our physical and non-physical assets from events such as information security attacks, unauthorized access or entry, fire and natural disasters; the failure to transform our operations, enabling a truly customer-centric service experience, while lowering our cost structure; the failure to continue investment in next-generation capabilities in a disciplined and strategic manner; the inability to drive a positive customer experience; the complexity in our operations; the failure to maintain operational networks in the context of significant increases in capacity demands; the risk that we may need to incur significant capital expenditures to provide additional capacity and reduce network congestion; the failure to implement or maintain highly effective information technology (IT) systems; the failure to generate anticipated benefits from our corporate restructurings, system replacements and upgrades, process redesigns, staff reductions and the integration of business acquisitions; events affecting the functionality of, and our ability to protect, test, maintain, replace and upgrade, our networks, IT systems, equipment and other facilities; in-orbit and other operational risks to which the satellites used to provide our satellite TV services are subject; the failure to attract and retain employees with the appropriate skill sets and to drive their performance in a safe environment; labour disruptions and shortages; the failure of our vendor selection, governance and oversight processes; security and data leakage exposure if security control protocols affecting our suppliers are bypassed; the quality of our products and services and the extent to which they may be subject to manufacturing defects or fail to comply with applicable government regulations and standards; the inability to access adequate sources of capital and generate sufficient cash flows from operating activities to meet our cash requirements, fund capital expenditures and provide for planned growth; uncertainty as to whether dividends will be declared by BCEs board of directors or whether the dividend on common shares will be increased; the inability to manage various credit, liquidity and market risks; pension obligation volatility and increased contributions to post-employment benefit plans; new or higher taxes due to new tax laws or changes thereto or in the interpretation thereof, and the inability to predict the outcome of government audits; the failure to reduce costs, as well as unexpected increases in costs; the failure to evolve practices to effectively monitor and control fraudulent activities; unfavourable resolution of legal proceedings and, in particular, class actions; new or unfavourable changes in applicable laws and the failure to proactively address our legal and regulatory obligations; the failure to recognize and adequately respond to climate change concerns or stakeholder and governmental changing expectations on environmental matters; and health concerns about radio frequency emissions from wireless communication devices and equipment.
We caution that the foregoing list of risk factors is not exhaustive and other factors could also materially adversely affect us. Please see section 9, Business risks of the BCE 2020 Annual MD&A for a more complete description of the above-mentioned and other risks, which section, and the other sections of the BCE 2020 Annual MD&A referred to therein, are incorporated by reference in this cautionary statement. In addition, please also see the introduction to section 1, Overview in this MD&A for an update to the description of the risk factor relating to the COVID-19 pandemic described in the BCE 2020 Annual MD&A, which section is incorporated by reference in this cautionary statement. Please also see section 4.7, Liquidity Litigation in the BCE 2021 Second Quarter MD&A for an update to the legal proceedings described in the BCE 2020 AIF, which section 4.7 is incorporated by reference in this cautionary statement. Please also see section 6, Regulatory environment in the BCE 2021 First Quarter MD&A, in the BCE 2021 Second Quarter MD&A and in this MD&A for updates to the regulatory initiatives and proceedings described in the BCE 2020 Annual MD&A, which sections 6 are incorporated by reference in this cautionary statement. Any of those risks could cause actual results or events to differ materially from our expectations expressed in, or implied by, the forward-looking statements set out in this MD&A. Except for the updates set out in section 6, Regulatory environment of the BCE 2021 First Quarter MD&A; in section 4.7, Liquidity Litigation and in section 6, Regulatory environment of the BCE 2021 Second Quarter MD&A; as well as in the introduction to section 1, Overview and in section 6, Regulatory environment of this MD&A, the risks described in the BCE 2020 Annual MD&A remain substantially unchanged.
Forward-looking statements contained in this MD&A for periods beyond 2021 involve longer-term assumptions and estimates than forward-looking statements for 2021 and are consequently subject to greater uncertainty. In particular, the nature and value of capital investments planned to be made by BCE in 2022 assume our ability to access or generate the necessary sources of capital as well as access the necessary equipment and labour. However, there can be no assurance that the required sources of capital, equipment or labour will be available with the result that the actual nature and value of capital investments made by BCE, as well as the timing thereof, could materially differ from current expectations. Forward-looking statements for periods beyond 2021 further assume, unless otherwise indicated, that the competitive, regulatory, security, technological, operational, financial and other risks described above and in section 9, Business risks of the BCE 2020 MD&A will remain substantially unchanged during such periods, except for an assumed improvement in the risks related to the COVID-19 pandemic and general economic conditions in future years.
Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also have a material adverse effect on our business, financial condition, liquidity, financial results or reputation. From time to time, we consider potential acquisitions, dispositions, mergers, business combinations, investments, monetizations, joint ventures and other transactions, some of which may be significant. Except as otherwise indicated by us, forward-looking statements do not reflect the potential impact of any such transactions or of special items that may be announced or that may occur after November 3, 2021. The financial impact of these transactions and special items can be complex and depends on facts particular to each of them. We therefore cannot describe the expected impact in a meaningful way, or in the same way we present known risks affecting our business.
2 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
1 MD&A Overview
1 Overview
BCEs purpose is to advance how Canadians connect with each other and the world. Our strategic imperatives frame our longstanding strengths in networks, service innovations and content creation, and aim at positioning the company for continued growth and leadership in a fast-changing communications marketplace. Through our Bell for Better initiative, we are investing to create a better today and a better tomorrow by supporting the social and economic prosperity of our communities. With our connectivity initiatives from the smallest rural communities to the largest cities, investments in mental health initiatives, environmental sustainability and an engaged workplace, we look to create a thriving, prosperous and more connected world for Canadians across the country, especially as we recover from the unprecedented challenges of the COVID-19 pandemic. Through our accelerated capital investment plan, we are delivering more connections to help Canadas social and economic recovery from the COVID-19 pandemic.
During the third quarter of 2021, our financial and operating performance continued to recover from the effects of the COVID-19 pandemic due to our operational execution and the easing of government restrictions put in place to combat the pandemic, which allowed many businesses to resume some level of, or increase, commercial activities in the latter part of Q2 2021. As a result, the adverse impacts of the COVID-19 pandemic on our sequential and year-over-year performance were reduced. Additionally, it has been well over a year since the pandemic began affecting our performance and we have since adapted many aspects of our business to better operate in this environment. The effects of the COVID-19 pandemic, although moderating, continued to unfavourably impact Bell Wireless product and roaming revenues, Bell Wireline business market equipment revenues, as well as Bell Media advertising revenues during the quarter.
Due to uncertainties relating to the severity and duration of the COVID-19 pandemic and possible resurgences in the number of COVID-19 cases, and various potential outcomes, it is difficult at this time to estimate the impacts of the COVID-19 pandemic on our business or future financial results and related assumptions. Our business and financial results could continue to be unfavourably impacted, and could again become more significantly and negatively impacted, in future periods. Notably, our wireless product revenues and mobile phone and mobile connected devices gross additions may be unfavourably impacted due to a global chip shortage attributable to the impacts of the COVID-19 pandemic that is resulting in short-term supply chain disruptions and inventory constraints for consumer electronics and mobile devices, including smartphones and tablets.
In addition, the extent to which the COVID-19 pandemic will continue to adversely impact us will depend on future developments that are difficult to predict, including the prevalence of COVID-19 variants that are more contagious and may lead to increased health risks, the timely distribution of effective vaccines and treatments, the potential development and distribution of new vaccines and treatments, the time required to achieve broad immunity, as well as new information which may emerge concerning the severity and duration of the COVID-19 pandemic, including the number and intensity of resurgences in COVID-19 cases, and the actions required to contain the coronavirus or remedy its impacts, among others. Any of the risks referred to in this MD&A, including, in particular, in the section Caution regarding forward-looking statements at the beginning of this MD&A, and others arising from the COVID-19 pandemic, could have a material adverse effect on our business, financial condition, liquidity, financial results or reputation.
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1 MD&A Overview
1.1 Financial highlights
BCE Q3 2021 SELECTED QUARTERLY INFORMATION
Operating revenues | Net earnings | Adjusted EBITDA (1) | ||
$5,836 | $813 | $2,558 | ||
million | million | million | ||
+0.8% vs. Q3 2020 | +9.9% vs. Q3 2020 | +4.2% vs. Q3 2020 |
(1) |
Adjusted EBITDA, adjusted net earnings and free cash flow are non-GAAP financial measures and do not have any standardized meaning under International Financial Reporting Standards (IFRS). Therefore, they are unlikely to be comparable to similar measures presented by other issuers. See section 7.2, Non-GAAP financial measures and key performance indicators (KPIs) Adjusted EBITDA and adjusted EBITDA margin, Adjusted net earnings and adjusted EPS and Free cash flow and dividend payout ratio, in this MD&A for more details, including reconciliations to the most comparable IFRS financial measure. |
(2) |
Effective January 1, 2021, we changed our wireless operating metrics to reflect our revised approach to reporting wireless subscriber units. Consequently, we are now reporting in two categories, mobile phone subscriber units and mobile connected device subscriber units (e.g. tablets, wearables and mobile Internet devices). Additionally, mobile connected device subscribers now include previously undisclosed Internet of Things (IoT) units (e.g. connected telematics services, monitoring devices, connected cars and fleet management solutions). These changes are consistent with the way we manage our business, reflect our focus on mobile phone subscribers and align to industry peers. As a result, previously reported 2020 subscribers and associated operating metrics (gross and net activations (losses), average billing per user (ABPU) and churn) have been restated for comparability. See section 7.2, Non-GAAP financial measures and key performance indicators (KPIs) KPIs, in this MD&A for more details. |
(3) |
At the beginning of Q1 2021, our retail high-speed Internet subscriber base was increased by 4,778 subscribers due to the transfer of fixed wireless Internet subscribers from our mobile connected devices subscriber base. |
(4) |
At the beginning of Q1 2021, we adjusted our satellite TV subscriber base to remove 6,125 non-revenue generating units. |
4 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
1 MD&A Overview
BCE INCOME STATEMENTS SELECTED INFORMATION
Q3 2021 FINANCIAL HIGHLIGHTS
BCEs financial performance in the third quarter of 2021 continued to recover from the effects of the COVID-19 pandemic. BCE operating revenue growth of 0.8% in Q3 2021, compared to the same period in 2020, was driven by higher year-over-year service revenues of 3.6% from greater media advertising and subscriber revenues, and ongoing growth in our mobile phones, retail Internet and Internet protocol TV (IPTV) subscriber bases coupled with rate increases. This was moderated in part by continued erosion in our voice, satellite TV and legacy data revenues. The decline in year-over-year product revenues of 14.6% was primarily due to lower wireless product sales and reduced equipment sales in our large business market.
Net earnings increased by $73 million in the third quarter of 2021, compared to the same period last year, mainly due to higher adjusted EBITDA and higher other income, partly offset by higher income taxes, higher depreciation and amortization, and higher severance, acquisition and other costs.
BCEs adjusted EBITDA grew by 4.2% in Q3 2021, compared to Q3 2020, due to higher revenues along with reduced operating costs. This drove an adjusted EBITDA margin of 43.8% in Q3 2021, representing a 1.4 pts increase over the same period last year, attributable to higher service revenue flow-through and reduced low-margin product sales in our total revenue base.
BCEs EPS of $0.83 in Q3 2021 increased by $0.06 compared to the same period last year.
Excluding the impact of severance, acquisition and other costs, net mark-to-market gains (losses) on derivatives used to economically hedge equity settled share-based compensation plans, net gains (losses) on investments, early debt redemption costs, impairment of assets and discontinued operations, net of tax and non-controlling interest (NCI), adjusted net earnings in the third quarter of 2021 was $748 million, or $0.82 per common share, compared to $712 million, or $0.79 per common share, for the same period last year.
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1 MD&A Overview
Cash flows from operating activities in the third quarter of 2021 decreased by $336 million, compared to the same period last year, mainly due to lower cash from timing of working capital and higher income taxes paid, reflecting both higher taxable income in 2021 and timing of payments as compared to Q3 2020 related to government relief measures due to the COVID-19 pandemic, partly offset by higher adjusted EBITDA.
Free cash flow in Q3 2021 decreased by $463 million, compared to the same period last year, mainly due to lower cash flows from operating activities, excluding cash from discontinued operations and acquisition and other costs paid, and higher capital expenditures.
1.2 Key corporate and business developments
This section contains forward-looking statements, including relating to potential future purchases by BCE of its preferred shares pursuant to a NCIB and relating to proposed amendments to Bell Canadas 1976 Indenture (as defined below) as well as certain expected effects of such proposed amendments. Refer to the section Caution regarding forward-looking statements at the beginning of this MD&A.
RETURN TO OFFICE LOCATIONS AND VACCINATION POLICIES
Bell continues to abide by its COVID-19 operating principles and all government protocols, with a focus on protecting the health and safety of our customers, colleagues and communities. In preparation for a gradual and voluntary return to Bell office locations for more team members this fall, we introduced the Bell Workways program to provide many of our employees with flexible remote and mobile work options and are instituting a mandatory vaccination policy for Bell team members nationally.
PUBLIC DEBT OFFERING
On August 12, 2021, Bell Canada completed a public offering in the United States of US $1.25 billion (Cdn $1.573 billion) of notes in two series (the Notes). The US $600 million Series US-5 Notes will mature on February 15, 2032 and carry an annual interest rate of 2.15%. The US $650 million Series US-6 Notes will mature on February 15, 2052 and carry an annual interest rate of 3.20%. The Notes are fully and unconditionally guaranteed by BCE Inc. A portion of the net proceeds from the offering of the Notes was applied towards the $2.07 billion cost of 3500 megahertz (MHz) spectrum licences Bell secured pursuant to the Canadian spectrum auction completed in July 2021 and the balance was used for the repayment of short-term debt and general corporate purposes.
PROPOSED AMENDMENTS TO TERMS OF 1976 TRUST INDENTURE
On October 7, 2021, Bell Canada announced the commencement of a solicitation of consents and proxies from holders of record as of September 15, 2021 of its: (i) 10% debentures, Series EH, due November 15, 2041; (ii) 9.7% debentures, Series EJ, due December 15, 2032; (iii) 9.25% debentures, Series EO, due May 15, 2053; (iv) 10% debentures, Series EU, due December 1, 2054 and (v) 7% debentures, Series EZ, due September 24, 2027, each issued under and governed by a trust indenture dated as of July 1, 1976, as amended or supplemented (the 1976 Indenture). The purpose of the solicitation is to seek approval from the holders of these debentures, providing consents and voting as a single class, to an extraordinary resolution to approve certain proposed amendments to the 1976 Indenture that are designed to:
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align the 1976 Indenture more closely with current and generally accepted market practice in Canada for investment-grade senior unsecured debt, including the deletion of certain of the covenants of the 1976 Indenture that require Bell Canada to meet certain financial ratio tests when issuing long-term debt |
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conform certain terms of the 1976 Indenture more closely to Bell Canadas more recent Canadian trust indenture dated as of November 28, 1997 and U.S. trust indenture dated as of September 12, 2016 |
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include a requirement for Bell Canada to make an offer to repurchase the debentures at 101% of their principal amount in the event of certain change of control events affecting Bell Canada or BCE Inc. together with certain downgrades of credit ratings of the debentures to ratings below investment grade |
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reduce administrative and governance processes |
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provide Bell Canada with more flexibility with respect to raising capital to finance its business and operations, including enabling us to maintain Bell Canada as the sole public debt issuer in BCEs corporate structure |
RENEWAL OF NORMAL COURSE ISSUER BID FOR BCE FIRST PREFERRED SHARES
On November 3, 2021, BCEs Board of Directors authorized the company to renew its NCIB to purchase for cancellation up to 10% of the public float of each series of BCEs outstanding First Preferred Shares (Preferred Shares) that are listed on the Toronto Stock Exchange (TSX). The NCIB will extend from November 9, 2021 to November 8, 2022, or an earlier date should BCE complete its purchases under the NCIB. Under the NCIB, BCE is authorized to repurchase up to 799,890 Series R Preferred Shares, 212,826 Series S Preferred Shares, 587,013 Series T Preferred Shares, 807,929 Series Y Preferred Shares, 191,850 Series Z Preferred Shares, 1,139,719 Series AA Preferred Shares, 859,920 Series AB Preferred Shares, 1,002,799 Series AC Preferred Shares, 996,320 Series AD Preferred Shares, 651,291 Series AE Preferred Shares, 948,148 Series AF Preferred Shares, 897,953 Series AG Preferred Shares, 501,757 Series AH Preferred Shares, 953,504 Series AI Preferred Shares, 446,496 Series AJ Preferred Shares, 2,273,562 Series AK Preferred Shares, 225,407 Series AL Preferred Shares, 1,043,997 Series AM Preferred Shares, 105,472 Series AN Preferred Shares, 460,000 Series AO Preferred Shares and 920,000 Series AQ Preferred Shares, representing approximately 10% of the public float in respect of each series of Preferred Shares. The actual number of Preferred Shares to be repurchased under the NCIB and the timing of such repurchases will be at BCEs discretion and shall be subject to the limitations set out by the TSX. BCE is making this NCIB because it believes that, from time to time, the Preferred Shares may trade in price ranges that do not fully reflect their value. BCE believes that, in such circumstances, the repurchase of its Preferred Shares represents an appropriate use of its available funds. A copy of BCEs Notice of Intention to Commence a Normal Course Issuer Bid through the facilities of the TSX may be obtained, without charge, by contacting BCEs Investor Relations department at investor.relations@bce.ca or by phone at 1-800-339-6353.
6 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
1 MD&A Overview
1.3 Assumptions
As at the date of this MD&A, our forward-looking statements set out in the BCE 2020 Annual MD&A, as updated or supplemented in the BCE 2021 First Quarter MD&A, in the BCE 2021 Second Quarter MD&A and in this MD&A, are based on certain assumptions including, without limitation, the following economic and market assumptions as well as the various assumptions referred to under the sub-sections entitled Assumptions set out in section 3, Business segment analysis of this MD&A.
ASSUMPTIONS ABOUT THE CANADIAN ECONOMY
We have made certain assumptions concerning the Canadian economy, which in turn depend on important assumptions about how the COVID-19 pandemic will evolve, including the progress of the vaccination rollout. Notably, it is assumed that most public health restrictions in Canada are eased by the end of 2021 and pandemic-related effects on consumer demand for goods and services diminish gradually over time. In particular, we have assumed:
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Strong rebound in economic growth as the economy recovers from the effects of the pandemic and related restrictions, given the Bank of Canadas most recent estimated growth in Canadian gross domestic product of around 5% on average in 2021 |
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Household consumption growth as the pandemic recedes and consumer confidence rises |
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Strengthening business investment outside the oil and gas sector as demand increases and business confidence improves |
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Employment gains expected in 2021, despite ongoing challenges in some sectors |
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Accelerating trend toward e-commerce |
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Low immigration levels until the majority of international travel and/or health-related restrictions are lifted |
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Prevailing low interest rates expected to remain at or near current levels for the foreseeable future |
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Canadian dollar expected to remain at or near current levels. Further movements may be impacted by the degree of strength of the U.S. dollar, interest rates and changes in commodity prices |
MARKET ASSUMPTIONS
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A consistently high level of wireline and wireless competition in consumer, business and wholesale markets |
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Higher, but slowing, wireless industry penetration |
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A shrinking data and voice connectivity market as business customers migrate to lower-priced telecommunications solutions or alternative OTT competitors |
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While the advertising market continues to be adversely impacted by cancelled or delayed advertising campaigns from many sectors due to the economic downturn during the COVID-19 pandemic, we do expect gradual recovery in 2021 |
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Declines in broadcasting distribution undertakings (BDU) subscribers driven by increasing competition from the continued rollout of subscription video on demand streaming services together with further scaling of OTT aggregators |
BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT | 7
2 MD&A Consolidated financial analysis
2 Consolidated financial analysis
This section provides detailed information and analysis about BCEs performance in Q3 and YTD 2021 compared with Q3 and YTD 2020. It focuses on BCEs consolidated operating results and provides financial information for our Bell Wireless, Bell Wireline and Bell Media business segments. For further discussion and analysis of our business segments, refer to section 3, Business segment analysis.
2.1 BCE consolidated income statements
Q3 2021 | Q3 2020 | $ CHANGE | % CHANGE | YTD 2021 | YTD 2020 | $ CHANGE | % CHANGE | |||||||||||||||||||||||||
Operating revenues |
||||||||||||||||||||||||||||||||
Service |
5,099 | 4,924 | 175 | 3.6% | 15,107 | 14,742 | 365 | 2.5% | ||||||||||||||||||||||||
Product |
737 | 863 | (126 | ) | (14.6% | ) | 2,133 | 2,039 | 94 | 4.6% | ||||||||||||||||||||||
Total operating revenues |
5,836 | 5,787 | 49 | 0.8% | 17,240 | 16,781 | 459 | 2.7% | ||||||||||||||||||||||||
Operating costs |
(3,278 | ) | (3,333 | ) | 55 | 1.7% | (9,777 | ) | (9,578 | ) | (199 | ) | (2.1% | ) | ||||||||||||||||||
Adjusted EBITDA |
2,558 | 2,454 | 104 | 4.2% | 7,463 | 7,203 | 260 | 3.6% | ||||||||||||||||||||||||
Adjusted EBITDA margin |
43.8 | % | 42.4 | % | 1.4 p | ts | 43.3 | % | 42.9 | % | 0.4 p | ts | ||||||||||||||||||||
Severance, acquisition and other costs |
(50 | ) | (26 | ) | (24 | ) | (92.3% | ) | (146 | ) | (64 | ) | (82 | ) | n.m. | |||||||||||||||||
Depreciation |
(902 | ) | (876 | ) | (26 | ) | (3.0% | ) | (2,702 | ) | (2,603 | ) | (99 | ) | (3.8% | ) | ||||||||||||||||
Amortization |
(245 | ) | (232 | ) | (13 | ) | (5.6% | ) | (731 | ) | (696 | ) | (35 | ) | (5.0% | ) | ||||||||||||||||
Finance costs |
||||||||||||||||||||||||||||||||
Interest expense |
(272 | ) | (279 | ) | 7 | 2.5% | (807 | ) | (836 | ) | 29 | 3.5% | ||||||||||||||||||||
Interest on post-employment benefit obligations |
(5 | ) | (12 | ) | 7 | 58.3% | (15 | ) | (35 | ) | 20 | 57.1% | ||||||||||||||||||||
Impairment of assets |
| (4 | ) | 4 | 100.0% | (167 | ) | (460 | ) | 293 | 63.7% | |||||||||||||||||||||
Other income (expense) |
35 | (29 | ) | 64 | n.m. | 134 | (156 | ) | 290 | n.m. | ||||||||||||||||||||||
Income taxes |
(306 | ) | (262 | ) | (44 | ) | (16.8% | ) | (795 | ) | (601 | ) | (194 | ) | (32.3% | ) | ||||||||||||||||
Net earnings from continuing operations |
813 | 734 | 79 | 10.8% | 2,234 | 1,752 | 482 | 27.5% | ||||||||||||||||||||||||
Net earnings from discontinued operations |
| 6 | (6 | ) | (100.0% | ) | | 15 | (15 | ) | (100.0% | ) | ||||||||||||||||||||
Net earnings |
813 | 740 | 73 | 9.9% | 2,234 | 1,767 | 467 | 26.4% | ||||||||||||||||||||||||
Net earnings from continuing operations attributable to: |
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Common shareholders |
757 | 686 | 71 | 10.3% | 2,084 | 1,594 | 490 | 30.7% | ||||||||||||||||||||||||
Preferred shareholders |
34 | 32 | 2 | 6.3% | 98 | 104 | (6 | ) | (5.8% | ) | ||||||||||||||||||||||
Non-controlling interest |
22 | 16 | 6 | 37.5% | 52 | 54 | (2 | ) | (3.7% | ) | ||||||||||||||||||||||
Net earnings from continuing operations |
813 | 734 | 79 | 10.8% | 2,234 | 1,752 | 482 | 27.5% | ||||||||||||||||||||||||
Net earnings attributable to: |
||||||||||||||||||||||||||||||||
Common shareholders |
757 | 692 | 65 | 9.4% | 2,084 | 1,609 | 475 | 29.5% | ||||||||||||||||||||||||
Preferred shareholders |
34 | 32 | 2 | 6.3% | 98 | 104 | (6 | ) | (5.8% | ) | ||||||||||||||||||||||
Non-controlling interest |
22 | 16 | 6 | 37.5% | 52 | 54 | (2 | ) | (3.7% | ) | ||||||||||||||||||||||
Net earnings |
813 | 740 | 73 | 9.9% | 2,234 | 1,767 | 467 | 26.4% | ||||||||||||||||||||||||
Adjusted net earnings |
748 | 712 | 36 | 5.1% | 2,203 | 1,999 | 204 | 10.2% | ||||||||||||||||||||||||
EPS |
||||||||||||||||||||||||||||||||
Continuing operations |
0.83 | 0.76 | 0.07 | 9.2% | 2.30 | 1.76 | 0.54 | 30.7% | ||||||||||||||||||||||||
Discontinued operations |
| 0.01 | (0.01 | ) | (100.0% | ) | | 0.02 | (0.02 | ) | (100.0% | ) | ||||||||||||||||||||
EPS |
0.83 | 0.77 | 0.06 | 7.8% | 2.30 | 1.78 | 0.52 | 29.2% | ||||||||||||||||||||||||
Adjusted EPS |
0.82 | 0.79 | 0.03 | 3.8% | 2.43 | 2.21 | 0.22 | 10.0% |
n.m.: not meaningful
8 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
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2.2 Customer connections
BCE NET ACTIVATIONS (LOSSES)
Q3 2021 | Q3 2020 | % CHANGE | YTD 2021 | YTD 2020 | % CHANGE | |||||||||||||||||||
Wireless mobile phone net subscriber activation (losses) (1) |
136,464 | 119,345 | 14.3% | 185,116 | 128,959 | 43.5% | ||||||||||||||||||
Postpaid |
114,821 | 78,706 | 45.9% | 192,179 | 79,305 | n.m. | ||||||||||||||||||
Prepaid |
21,643 | 40,639 | (46.7% | ) | (7,063 | ) | 49,654 | n.m. | ||||||||||||||||
Wireless mobile connected devices net subscriber activations (1) |
33,035 | 41,225 | (19.9% | ) | 154,643 | 129,032 | 19.8% | |||||||||||||||||
Wireline retail high-speed Internet net subscriber activations |
65,779 | 62,859 | 4.6% | 104,667 | 104,477 | 0.2% | ||||||||||||||||||
Wireline retail TV net subscriber activations (losses) |
10,521 | (296 | ) | n.m. | (3,519 | ) | (34,395 | ) | 89.8% | |||||||||||||||
IPTV |
31,641 | 18,837 | 68.0% | 46,877 | 18,085 | n.m. | ||||||||||||||||||
Satellite |
(21,120 | ) | (19,133 | ) | (10.4% | ) | (50,396 | ) | (52,480 | ) | 4.0% | |||||||||||||
Wireline retail residential NAS lines net losses |
(42,755 | ) | (49,792 | ) | 14.1% | (145,116 | ) | (159,792 | ) | 9.2% | ||||||||||||||
Total services net activations |
203,044 | 173,341 | 17.1% | 295,791 | 168,281 | 75.8% |
n.m.: not meaningful
TOTAL BCE CUSTOMER CONNECTIONS
Q3 2021 | Q3 2020 | % CHANGE | ||||||||||
Wireless mobile phone subscribers (1) |
9,349,459 | 9,102,627 | 2.7% | |||||||||
Postpaid |
8,520,518 | 8,254,951 | 3.2% | |||||||||
Prepaid |
828,941 | 847,676 | (2.2%) | |||||||||
Wireless mobile connected devices subscribers (1) |
2,210,796 | 1,957,204 | 13.0% | |||||||||
Wireline retail high-speed Internet subscribers (2) |
3,814,035 | 3,660,078 | 4.2% | |||||||||
Wireline retail TV subscribers (3) |
2,728,961 | 2,738,069 | (0.3%) | |||||||||
IPTV |
1,853,250 | 1,785,267 | 3.8% | |||||||||
Satellite (3) |
875,711 | 952,802 | (8.1%) | |||||||||
Wireline retail residential NAS lines |
2,338,816 | 2,537,691 | (7.8%) | |||||||||
Total services subscribers |
20,442,067 | 19,995,669 | 2.2% |
(1) |
Effective January 1, 2021, we changed our wireless operating metrics to reflect our revised approach to reporting wireless subscriber units. Consequently, we are now reporting in two categories, mobile phone subscriber units and mobile connected device subscriber units (e.g. tablets, wearables and mobile Internet devices). Additionally, mobile connected device subscribers now include previously undisclosed IoT units (e.g. connected telematics services, monitoring devices, connected cars and fleet management solutions). These changes are consistent with the way we manage our business, reflect our focus on mobile phone subscribers and align to industry peers. As a result, previously reported 2020 subscribers and associated operating metrics (gross and net activations (losses), ABPU and churn) have been restated for comparability. See section 7.2, Non-GAAP financial measures and key performance indicators (KPIs) KPIs, in this MD&A for more details. |
(2) |
At the beginning of Q1 2021, our retail high-speed Internet subscriber base was increased by 4,778 subscribers due to the transfer of fixed wireless Internet subscribers from our mobile connected devices subscriber base. |
(3) |
At the beginning of Q1 2021, we adjusted our satellite TV subscriber base to remove 6,125 non-revenue generating units. |
BCE added 203,044 net retail subscriber activations in Q3 2021, increasing by 17.1% compared to the same period last year. The net retail subscriber activations in Q3 2021 consisted of:
|
136,464 wireless mobile phone net subscriber activations, along with 33,035 wireless mobile connected devices net subscriber activations |
|
65,779 retail high-speed Internet net subscriber activations |
|
10,521 retail TV net subscriber activations comprised of 31,641 retail IPTV net subscriber activations, offset in part by 21,120 retail satellite TV net subscriber losses |
|
42,755 retail residential NAS lines net losses |
During the first nine months of the year, BCE had 295,791 net retail subscriber activations, increasing by 75.8% compared to the same period in 2020. The year-to-date net retail subscriber activations consisted of:
|
185,116 wireless mobile phone net subscriber activations, along with 154,643 wireless mobile connected devices net subscriber activations |
|
104,667 retail high-speed Internet net subscriber activations |
|
3,519 retail TV net subscriber losses comprised of 50,396 retail satellite TV net subscriber losses, moderated by 46,877 retail IPTV net subscriber activations |
|
145,116 retail residential NAS lines net losses |
At September 30, 2021, BCEs retail subscriber connections totaled 20,442,067, up 2.2% year over year, and consisted of:
|
9,349,459 wireless mobile phone subscribers, up 2.7% year over year, and 2,210,796 wireless mobile connected devices subscribers, up 13.0% year over year |
|
3,814,035 retail high-speed Internet subscribers, 4.2% higher than last year |
|
2,728,961 total retail TV subscribers, down 0.3% compared to Q3 2020, comprised of 875,711 retail satellite TV subscribers, down 8.1% year over year, and 1,853,250 retail IPTV subscribers, up 3.8% year over year |
|
2,338,816 retail residential NAS lines, a decline of 7.8% compared to last year |
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2.3 Operating revenues
Q3 2021 | Q3 2020 | $ CHANGE | % CHANGE | YTD 2021 | YTD 2020 | $ CHANGE | % CHANGE | |||||||||||||||||||||||||
Bell Wireless |
2,296 | 2,318 | (22 | ) | (0.9% | ) | 6,524 | 6,275 | 249 | 4.0% | ||||||||||||||||||||||
Bell Wireline |
3,015 | 3,032 | (17 | ) | (0.6% | ) | 9,099 | 9,111 | (12 | ) | (0.1% | ) | ||||||||||||||||||||
Bell Media |
719 | 628 | 91 | 14.5% | 2,187 | 1,959 | 228 | 11.6% | ||||||||||||||||||||||||
Inter-segment eliminations |
(194 | ) | (191 | ) | (3 | ) | (1.6% | ) | (570 | ) | (564 | ) | (6 | ) | (1.1% | ) | ||||||||||||||||
Total BCE operating revenues |
5,836 | 5,787 | 49 | 0.8% | 17,240 | 16,781 | 459 | 2.7% |
BCE
Total operating revenues at BCE increased by 0.8% in Q3 2021 and by 2.7% in the first nine months of the year, compared to the same periods last year. Excluding the unfavourable retroactive impact of the Q2 2021 Canadian Radio-television and Telecommunications Commission (CRTC) decision on wholesale high-speed Internet access services of $44 million, year-to-date operating revenues increased by 3.0%. BCE service revenues of $5,099 million in Q3 2021 and $15,107 million year to date, increased by 3.6% and 2.5%, respectively, year over year. Product revenues of $737 million in Q3 2021 decreased by 14.6% compared to the same period last year, whereas year-to-date product revenues of $2,133 million increased by 4.6% year over year.
The increase in operating revenues in Q3 2021, as compared to Q3 2020, was driven by growth in our Bell Media segment, offset in part by a decline in our Bell Wireless and Bell Wireline segments. The year-to-date increase in operating revenues reflected growth in both our Bell Wireless and Bell Media segments, partly offset by a modest decline in our Bell Wireline segment. Bell Media operating revenues increased by 14.5% in Q3 2021 and by 11.6% in the first nine months of the year, compared to the same periods in 2020, driven by both higher advertising and subscriber revenues. Bell Wireline operating revenues declined by 0.6% in Q3 2021, and by 0.1% year to date, over the same periods last year, driven by lower product revenues of 21.5% and 5.5%, respectively, offset in part by service revenue growth of 0.3% and 0.1%, respectively, due to higher data and other services revenues, offset in part by ongoing voice erosion. Wireless operating revenues declined by 0.9% in Q3 2021 compared to Q3 2020 due to lower product revenues of 13.6%, moderated by higher service revenues of 5.0%. Conversely, during the first nine months of the year, operating revenues increased by 4.0% compared to the same period last year due to both higher service revenues of 2.9% and higher product revenues of 7.0%.
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2.4 Operating costs
Q3 2021 | Q3 2020 | $ CHANGE | % CHANGE | YTD 2021 | YTD 2020 | $ CHANGE | % CHANGE | |||||||||||||||||||||||||
Bell Wireless |
(1,286 | ) | (1,362 | ) | 76 | 5.6% | (3,622 | ) | (3,512 | ) | (110 | ) | (3.1% | ) | ||||||||||||||||||
Bell Wireline |
(1,682 | ) | (1,712 | ) | 30 | 1.8% | (5,110 | ) | (5,177 | ) | 67 | 1.3% | ||||||||||||||||||||
Bell Media |
(504 | ) | (450 | ) | (54 | ) | (12.0% | ) | (1,615 | ) | (1,453 | ) | (162 | ) | (11.1% | ) | ||||||||||||||||
Inter-segment eliminations |
194 | 191 | 3 | 1.6% | 570 | 564 | 6 | 1.1% | ||||||||||||||||||||||||
Total BCE operating costs |
(3,278 | ) | (3,333 | ) | 55 | 1.7% | (9,777 | ) | (9,578 | ) | (199 | ) | (2.1% | ) |
(1) |
Cost of revenues includes costs of wireless devices and other equipment sold, network and content costs, and payments to other carriers. |
(2) |
Labour costs (net of capitalized costs) include wages, salaries and related taxes and benefits, post-employment benefit plans service cost, and other labour costs, including contractor and outsourcing costs. |
(3) |
Other operating costs include marketing, advertising and sales commission costs, bad debt expense, taxes other than income taxes, IT costs, professional service fees and rent. |
BCE
Total BCE operating costs decreased by 1.7% in Q3 2021 compared to the same period last year, attributable to lower costs in Bell Wireless of 5.6% and Bell Wireline of 1.8%, offset in part by higher costs at Bell Media of 12.0%. During the first nine months of the year, costs increased by 2.1% compared to the same period in 2020 due to greater expenses in Bell Media of 11.1% and Bell Wireless of 3.1%, offset in part by reduced expenses in Bell Wireline of 1.3%.
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2.5 Net earnings
Net earnings in the third quarter and on a year-to-date basis in 2021 increased by $73 million and $467 million, respectively, compared to the same periods last year, mainly due to higher adjusted EBITDA and higher other income, partly offset by higher income taxes, higher depreciation and amortization, and higher severance, acquisition and other costs. Additionally, on a year-to-date basis in 2021, net earnings increased due to lower impairment of assets at Bell Media as compared to 2020.
2.6 Adjusted EBITDA
Q3 2021 | Q3 2020 | $ CHANGE | % CHANGE | YTD 2021 | YTD 2020 | $ CHANGE | % CHANGE | |||||||||||||||||||||||||
Bell Wireless |
1,010 | 956 | 54 | 5.6% | 2,902 | 2,763 | 139 | 5.0% | ||||||||||||||||||||||||
Bell Wireline |
1,333 | 1,320 | 13 | 1.0% | 3,989 | 3,934 | 55 | 1.4% | ||||||||||||||||||||||||
Bell Media |
215 | 178 | 37 | 20.8% | 572 | 506 | 66 | 13.0% | ||||||||||||||||||||||||
Total BCE adjusted EBITDA |
2,558 | 2,454 | 104 | 4.2% | 7,463 | 7,203 | 260 | 3.6% |
BCE
BCEs adjusted EBITDA grew by 4.2% in Q3 2021 and by 3.6% in the first nine months of the year, compared to the same periods last year, driven by growth across all three of our segments. Excluding the unfavourable retroactive impact of the Q2 2021 CRTC decision on wholesale high-speed Internet access services of $44 million, year-to-date adjusted EBITDA increased by 4.2% year-over-year. The growth in Q3 2021 adjusted EBITDA was driven by higher operating revenues combined with lower operating costs, whereas the growth in the first nine months of the year was attributable to higher operating revenues, moderated by increased operating costs. Adjusted EBITDA margin of 43.8% in Q3 2021 increased by 1.4 pts over Q3 2020, due to greater service revenue flow-through and reduced low-margin product sales in our total revenue base, while adjusted EBITDA margin of 43.3% in the first nine months of the year increased by 0.4 pts over the same period last year, mainly driven by higher year-over-year service revenue flow-through and lower costs primarily related to the non-recurrence of a number of COVID-19 related expenses incurred last year, moderated by greater low-margin product sales in our total revenue base.
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2 MD&A Consolidated financial analysis
2.7 Severance, acquisition and other costs
2021
Severance, acquisition and other costs of $50 million in the third quarter of 2021 and $146 million on a year-to-date basis included:
|
Severance costs of $25 million in Q3 2021 and $129 million on a year-to-date basis related to involuntary and voluntary employee terminations |
|
Acquisition and other costs of $25 million in Q3 2021 and $17 million on a year-to-date basis |
2020
Severance, acquisition and other costs of $26 million in the third quarter of 2020 and $64 million on a year-to-date-basis included:
|
Severance costs of $19 million in Q3 2020 and $29 million on a year-to-date basis related to involuntary and voluntary employee terminations |
|
Acquisition and other costs of $7 million in Q3 2020 and $35 million on a year-to-date basis |
2.8 Depreciation and amortization
DEPRECIATION
Depreciation in the third quarter and on a year-to-date basis in 2021 increased by $26 million and $99 million, respectively, compared to the same periods in 2020, in part due to a higher asset base as we continued to invest in our broadband and wireless networks as well as our IPTV services and accelerated depreciation of Fourth Generation (4G) network elements as we transition to 5G.
AMORTIZATION
Amortization in the third quarter and on a year-to-date basis in 2021 increased by $13 million and $35 million, respectively, compared to the same periods in 2020, mainly due to a higher asset base.
2.9 Finance costs
INTEREST EXPENSE
Interest expense in the third quarter and on a year-to-date basis in 2021 decreased by $7 million and $29 million, respectively, compared to the same periods last year, mainly due to lower interest rates, partly offset by higher average debt levels.
INTEREST ON POST-EMPLOYMENT BENEFIT OBLIGATIONS
Interest on our post-employment benefit obligations is based on market conditions that existed at the beginning of the year. On January 1, 2021, the discount rate was 2.6% compared to 3.1% on January 1, 2020.
In the third quarter and on a year-to-date basis in 2021, interest expense on post-employment benefit obligations decreased by $7 million and $20 million, respectively, compared to the same periods last year, due to a lower discount rate and a lower net post-employment benefit obligation at the beginning of the year.
The impacts of changes in market conditions during the year are recognized in other comprehensive income (OCI).
2.10 Impairment of assets
2021
During the second quarter of 2021, we identified indicators of impairment for our Bell Media radio markets, notably a decline in advertising revenue and an increase in the discount rate resulting from the impact of the ongoing COVID-19 pandemic. Accordingly, impairment testing was required for our group of radio cash-generating units (CGUs).
During Q2 2021, we recognized $163 million of impairment charges for various radio markets within our Bell Media segment. These charges included $150 million allocated to indefinite-life intangible assets for broadcast licences, and $13 million to property, plant and equipment mainly for buildings and network infrastructure and equipment.
2020
During the second quarter of 2020, we identified indicators of impairment for certain of our Bell Media TV services and radio markets, notably declines in advertising revenues, lower subscriber revenues and overall increases in discount rates resulting from the economic impact of the COVID-19 pandemic. Accordingly, impairment testing was required for certain groups of CGUs as well as for goodwill.
During Q2 2020, we recognized $452 million of impairment charges for our English and French TV services as well as various radio markets within our Bell Media segment. These charges included $291 million allocated to indefinite-life intangible assets for broadcast licences, $146 million allocated to finite-life intangible assets, mainly for program and feature film rights, and $15 million to property, plant and equipment for network and infrastructure and equipment. There was no impairment of Bell Media goodwill.
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2.11 Other income (expense)
2021
Other income of $35 million and $134 million in the third quarter and on a year-to-date basis in 2021, respectively, included net mark-to-market gains on derivatives used to economically hedge equity settled share-based compensation plans, partly offset by losses on our equity investments, which included a loss on BCEs share of an obligation to repurchase at fair value the minority interest in one of BCEs joint ventures in Q2 2021. Additionally, on a year-to-date basis in 2021, other income included early debt redemption costs.
2020
Other expense of $29 million and $156 million in the third quarter and on a year-to-date basis in 2020, respectively, included net mark-to-market losses on derivatives used to economically hedge equity settled share-based compensation plans, early debt redemption costs, and losses on operations from our equity investments. These expenses were partly offset by gains on our equity investments, which included gains on BCEs share of an obligation to repurchase at fair value the minority interest in one of BCEs joint ventures. Additionally, on a year-to-date basis in 2020, other expense included losses on retirements and disposals of property, plant and equipment and intangible assets, which included a loss related to a change in strategic direction of the ongoing development of some of our TV platform assets.
2.12 Income taxes
Income taxes in the third quarter and on a year-to-date basis in 2021 increased by $44 million and $194 million, respectively, compared to the same periods in 2020, mainly due to higher taxable income.
2.13 Net earnings attributable to common shareholders and EPS
Net earnings attributable to common shareholders in the third quarter and on a year-to-date basis in 2021 of $757 million and $2,084 million, respectively, increased by $65 million and $475 million, respectively, compared to the same periods last year, mainly due to higher adjusted EBITDA and higher other income, partly offset by higher income taxes, higher depreciation and amortization, and higher severance, acquisition and other costs. Additionally, on a year-to-date basis in 2021, net earnings attributable to common shareholders increased due to lower impairment of assets at Bell Media as compared to 2020.
BCEs EPS of $0.83 in Q3 2021 and $2.30 on a year-to-date basis increased by $0.06 and $0.52, respectively, compared to the same periods last year.
Excluding the impact of severance, acquisition and other costs, net mark-to-market gains (losses) on derivatives used to economically hedge equity settled share-based compensation plans, net gains (losses) on investments, early debt redemption costs, impairment of assets and discontinued operations, net of tax and NCI, adjusted net earnings in the third quarter of 2021 was $748 million, or $0.82 per common share, compared to $712 million, or $0.79 per common share, for the same period last year. Adjusted net earnings in the first nine months of 2021 was $2,203 million, or $2.43 per common share, compared to $1,999 million, or $2.21 per common share, for the first nine months of 2020.
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3 MD&A Business segment analysis Bell Wireless
3 Business segment analysis
3.1 Bell Wireless
KEY BUSINESS DEVELOPMENTS
BELL ADDS MORE VALUE TO COMPETITIVE WIRELESS MARKETPLACE
Bell further reduced monthly pricing for mobile data plans from Virgin Plus as of October 5, 2021, offering Virgin Plus Members even more value while achieving federal targets for reduced wireless costs. The reduced prices come into effect several months in advance of federal expectations announced in March 2020 that 2 gigabyte (GB), 4 GB and 6 GB data plans that include unlimited talk and text should be available to all Canadians at prices that would be 25% lower by early 2022.
EXPANSION OF TSN 5G VIEW
TSN 5G View, the exclusive in-app feature powered by Bells mobile 5G network, was expanded for TSNs coverage of Toronto Raptors home games, starting with TSNs coverage of the Raptors season opener against the Washington Wizards on Wednesday, October 20, 2021. Raptors fans who subscribe to TSN on the Bell 5G network with a 5G device can use the innovative TSN 5G View technology to control their viewing angle on every play from their mobile device. Fans can get up close to every dunk, three-pointer, steal, and block with zoom, pause, rewind, and slow motion, as well as nearly 360° replay capabilities made possible with Bells superfast, high-capacity mobile 5G network. TSN 5G View / Vision 5G RDS continues to be available for Montréal Canadiens and Toronto Maple Leafs regional home game broadcasts on TSN and RDS.
BELL 5G POWERS TINY MILE FOOD DELIVERY ROBOTS IN DOWNTOWN TORONTO
On August 12, 2021, Bell announced a collaboration with Tiny Mile to provide 5G connectivity for the Canadian artificial intelligence (AI) start-ups growing fleet of food delivery robots in downtown Toronto. Collectively named Geoffrey, Tiny Miles remotely operated pink robots rely on built-in cameras and GPS to navigate the busy streets of Toronto. Connecting Geoffrey to Bells 5G network enables high definition video telematics data capabilities, improving real-time decisions and enhancing safety and response times.
BELL 5G AND TIKTOK BRING CREATORS TOGETHER WITH AUGMENTED REALITY EXPERIENCE
On September 20, 2021, Bell announced a collaboration with TikTok Canada that lets TikTok users with Bell 5G co-create with friends in real time. With Paint Portal, a new 5G multi-user augmented reality (AR) experience, the TikTok community can paint together while physically apart, powered by Canadas most awarded and fastest-ranked 5G network.
FINANCIAL PERFORMANCE ANALYSIS
Effective January 1, 2021, we changed our wireless operating metrics to reflect our revised approach to reporting wireless subscriber units. Consequently, we are now reporting in two categories, mobile phone subscriber units and mobile connected device subscriber units (e.g. tablets, wearables and mobile Internet devices). Additionally, mobile connected device subscribers now include previously undisclosed IoT units (e.g. connected telematics services, monitoring devices, connected cars and fleet management solutions). These changes are consistent with the way we manage our business, reflect our focus on mobile phone subscribers and align to industry peers. As a result, previously reported 2020 subscribers and associated operating metrics (gross and net activations (losses), ABPU and churn) have been restated for comparability. See section 7.2, Non-GAAP financial measures and key performance indicators (KPIs) KPIs, in this MD&A for more details.
Q3 2021 PERFORMANCE HIGHLIGHTS
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Total mobile phone subscriber growth |
Mobile phone postpaid net subscriber activations |
Mobile phone prepaid net subscriber activations |
||
+2.7% | 114,821 | 21,643 | ||
Q3 2021 vs. Q3 2020 | in Q3 2021 | in Q3 2021 |
Mobile phone postpaid churn in Q3 2021 |
Mobile phone blended ABPU per month |
|
0.93% | +1.1% | |
improved 0.05 pts vs. Q3 2020 |
Q3 2021: $74.07 Q3 2020: $73.25 |
BELL WIRELESS RESULTS
REVENUES
Q3 2021 | Q3 2020 | $ CHANGE | % CHANGE | YTD 2021 | YTD 2020 | $ CHANGE | % CHANGE | |||||||||||||||||||||||||
External service revenues |
1,642 | 1,563 | 79 | 5.1% | 4,714 | 4,579 | 135 | 2.9% | ||||||||||||||||||||||||
Inter-segment service revenues |
12 | 12 | | | 34 | 36 | (2 | ) | (5.6% | ) | ||||||||||||||||||||||
Total operating service revenues |
1,654 | 1,575 | 79 | 5.0% | 4,748 | 4,615 | 133 | 2.9% | ||||||||||||||||||||||||
External product revenues |
642 | 742 | (100 | ) | (13.5% | ) | 1,772 | 1,657 | 115 | 6.9% | ||||||||||||||||||||||
Inter-segment product revenues |
| 1 | (1 | ) | (100.0% | ) | 4 | 3 | 1 | 33.3% | ||||||||||||||||||||||
Total operating product revenues |
642 | 743 | (101 | ) | (13.6% | ) | 1,776 | 1,660 | 116 | 7.0% | ||||||||||||||||||||||
Total Bell Wireless revenues |
2,296 | 2,318 | (22 | ) | (0.9% | ) | 6,524 | 6,275 | 249 | 4.0% |
Bell Wireless operating revenues decreased by 0.9% in Q3 2021, compared to the same period last year, due to lower product revenues, offset in part by higher service revenues, which benefited from moderating impacts of the COVID-19 pandemic. Year-to-date operating revenues increased by 4.0%, compared to the same period last year, driven by both higher service and product revenues.
Service revenues increased by 5.0% in the current quarter, compared to the same period last year, driven by:
|
Continued growth in our mobile phone postpaid subscriber base |
|
Flow-through of rate increases combined with mix shift to higher-value monthly plans including unlimited data plans |
|
Improving year-over-year outbound roaming revenues from increased customer travel due to the easing of COVID-19 travel restrictions |
These factors were partly offset by:
|
Lower data overages driven by greater customer adoption of monthly plans with higher data thresholds, including unlimited and shareable plans, along with lower voice overages due to increased usage last year driven by the COVID-19 pandemic |
In the first nine months of the year, service revenues increased by 2.9%, compared to the same period last year, due to the same factors noted above, however outbound roaming revenues declined year over year from reduced customer travel driven by greater COVID-19 related travel restrictions at the beginning of the year.
Product revenues declined by 13.6% in Q3 2021, compared to the same period last year, driven by lower contracted sales volumes mainly from fewer device upgrades and a greater mix of bring-your-own devices. Year-to-date product revenues increased by 7.0%, compared to the same period last year, due to a greater sales mix of premium mobile phones and higher handset prices, along with increased consumer electronic sales at The Source (Bell) Electronics Inc. (The Source) as the prior year was more significantly impacted by the temporary store closures due to the COVID-19 pandemic.
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3 MD&A Business segment analysis Bell Wireless
OPERATING COSTS AND ADJUSTED EBITDA
Q3 2021 | Q3 2020 | $ CHANGE | % CHANGE | YTD 2021 | YTD 2020 | $ CHANGE | % CHANGE | |||||||||||||||||||||||||
Operating costs |
(1,286 | ) | (1,362 | ) | 76 | 5.6% | (3,622 | ) | (3,512 | ) | (110 | ) | (3.1%) | |||||||||||||||||||
Adjusted EBITDA |
1,010 | 956 | 54 | 5.6% | 2,902 | 2,763 | 139 | 5.0% | ||||||||||||||||||||||||
Total adjusted EBITDA margin |
44.0 | % | 41.2 | % | 2.8 p | ts | 44.5 | % | 44.0 | % | 0.5 pts |
Bell Wireless operating costs decreased by 5.6% in Q3 2021, compared to the same period last year, driven by:
|
Decreased cost of goods sold due to reduced contracted sales volumes of mobile phones, offset in part by higher handset costs |
|
Lower labour costs mainly due to retail store closures and reduced operating hours, offset in part by the Canada Emergency Wage Subsidy (CEWS), a wage subsidy program offered by the federal government to eligible employers as a result of the COVID-19 pandemic, recognized in the prior year |
These factors were partly offset by:
|
Increased network operating costs driven by the continued deployment of our mobile 5G network |
During the first nine months of the year, operating costs increased by 3.1%, compared to the same period last year, due to higher cost of goods sold from greater sales of premium mobile phones and higher handset costs, partly offset by the higher bad debt expense in 2020 related to the financial difficulty experienced by customers during the COVID-19 pandemic.
Bell Wireless adjusted EBITDA increased by 5.6% in Q3 2021, compared to the same period last year, mainly due to lower operating costs, moderated by lower operating revenues. This corresponded to an adjusted EBITDA margin of 44.0% in Q3 2021, up 2.8 pts over last year, primarily driven by the flow-through of the service revenue growth and a lower proportion of low-margin product sales. Year-to-date adjusted EBITDA increased by 5.0%, compared to the same period last year, mainly due to the growth in operating revenues, partly offset by higher operating costs. This represented an adjusted EBITDA margin of 44.5%, up 0.5 pts year over year, mainly driven by the flow-through of the service revenue growth and lower bad debt expense, partly offset by a greater proportion of low-margin product sales in our total revenue base.
BELL WIRELESS OPERATING METRICS
Q3 2021 | Q3 2020 | CHANGE | % CHANGE | YTD 2021 | YTD 2020 | CHANGE | % CHANGE | |||||||||||||||||||||||||
Mobile phones |
||||||||||||||||||||||||||||||||
Blended ABPU ($/month) |
74.07 | 73.25 | 0.82 | 1.1% | 72.21 | 71.97 | 0.24 | 0.3% | ||||||||||||||||||||||||
Gross subscriber activations |
470,165 | 457,161 | 13,004 | 2.8% | 1,158,695 | 1,099,851 | 58,844 | 5.4% | ||||||||||||||||||||||||
Postpaid |
336,328 | 308,558 | 27,770 | 9.0% | 828,038 | 697,697 | 130,341 | 18.7% | ||||||||||||||||||||||||
Prepaid |
133,837 | 148,603 | (14,766 | ) | (9.9% | ) | 330,657 | 402,154 | (71,497 | ) | (17.8% | ) | ||||||||||||||||||||
Net subscriber activations (losses) |
136,464 | 119,345 | 17,119 | 14.3% | 185,116 | 128,959 | 56,157 | 43.5% | ||||||||||||||||||||||||
Postpaid |
114,821 | 78,706 | 36,115 | 45.9% | 192,179 | 79,305 | 112,874 | n.m. | ||||||||||||||||||||||||
Prepaid |
21,643 | 40,639 | (18,996 | ) | (46.7% | ) | (7,063 | ) | 49,654 | (56,717 | ) | n.m. | ||||||||||||||||||||
Blended churn % (average per month) |
1.21 | % | 1.25 | % | 0.04 p | ts | 1.18 | % | 1.21 | % | 0.03 p | ts | ||||||||||||||||||||
Postpaid |
0.93 | % | 0.98 | % | 0.05 p | ts | 0.88 | % | 0.88 | % | | |||||||||||||||||||||
Prepaid |
4.15 | % | 3.98 | % | (0.17) p | ts | 4.27 | % | 4.54 | % | 0.27 p | ts | ||||||||||||||||||||
Subscribers |
9,349,459 | 9,102,627 | 246,832 | 2.7% | 9,349,459 | 9,102,627 | 246,832 | 2.7% | ||||||||||||||||||||||||
Postpaid |
8,520,518 | 8,254,951 | 265,567 | 3.2% | 8,520,518 | 8,254,951 | 265,567 | 3.2% | ||||||||||||||||||||||||
Prepaid |
828,941 | 847,676 | (18,735 | ) | (2.2% | ) | 828,941 | 847,676 | (18,735 | ) | (2.2% | ) | ||||||||||||||||||||
Mobile connected devices |
||||||||||||||||||||||||||||||||
Net subscriber activations |
33,035 | 41,225 | (8,190 | ) | (19.9% | ) | 154,643 | 129,032 | 25,611 | 19.8% | ||||||||||||||||||||||
Subscribers |
2,210,796 | 1,957,204 | 253,592 | 13.0% | 2,210,796 | 1,957,204 | 253,592 | 13.0% |
n.m.: not meaningful
Mobile phone blended ABPU of $74.07 in Q3 2021 increased by 1.1%, compared to the same period last year, driven by:
|
Flow-through of rate increases and mix shift to higher-value monthly plans including unlimited data plans |
|
Improving year-over-year outbound roaming revenues due to increased customer travel resulting from the easing of COVID-19 travel restrictions |
These factors were partly offset by:
|
Reduced data overages driven by greater customer adoption of monthly plans with higher data thresholds, including unlimited and shareable plans, and lower voice overages due to increased usage last year as a result of the COVID-19 pandemic |
In the first nine months of the year, mobile phone blended ABPU of $72.21 increased by 0.3%, compared to the same period last year, due to the same factors noted above, however year-to-date outbound roaming revenues declined year over year from reduced customer travel driven by greater COVID-19 related travel restrictions at the beginning of the year.
Mobile phone gross subscriber activations increased by 2.8% in Q3 2021 and by 5.4% in the first nine months of the year, compared to the same periods last year, due to higher postpaid gross activations, partly offset by lower prepaid gross activations.
|
Mobile phone postpaid gross subscriber activations increased by 9.0% in the current quarter and by 18.7% year to date, compared to the same periods last year, due to greater bring-your-own device activations in the quarter and the continued recovery from the effects of the COVID-19 pandemic, as prior year activity was impacted by the temporary closure of retail distribution channels. Additionally, our focus on growing higher-valued mobile phone subscribers, leveraging targeted promotional capabilities and higher sales through our direct and digital channels also contributed to the growth. |
|
Mobile phone prepaid gross subscriber activations decreased by 9.9% in the current quarter and by 17.8% year to date, compared to the same periods last year, driven by continued low market activity from fewer visitors to Canada and reduced immigration as a result of the COVID-19 pandemic |
BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT | 17
3 MD&A Business segment analysis Bell Wireless
Mobile phone net subscriber activations increased by 14.3% in Q3 2021 and by 43.5% in the first nine months of the year, compared to the same periods last year, due to higher postpaid net activations, offset in part by lower prepaid net activations.
|
Mobile phone postpaid net subscriber activations increased by 45.9% or 36,115 in Q3 2021, compared to the same period last year, driven by higher gross activations and lower subscriber deactivations. Year-to-date mobile phone postpaid net activations increased by 112,874 year over year, driven by higher gross activations, partly offset by greater subscriber deactivations. |
|
Mobile phone prepaid net subscriber activations decreased by 46.7% or 18,996 in Q3 2021, compared to the same period last year, due to lower gross activations and greater subscriber deactivations. Year-to-date mobile phone prepaid net losses were 56,717 unfavourable, compared to the same period last year, due to lower gross activations, partly offset by reduced subscriber deactivations. |
Mobile phone blended churn improved by 0.04 pts in Q3 2021 and by 0.03 pts for the first nine months of the year, to 1.21% and 1.18%, respectively, compared to the same periods last year.
|
Mobile phone postpaid churn of 0.93% in Q3 2021 improved by 0.05 pts, while year-to-date churn of 0.88% remained stable, compared to the same periods last year, reflecting our continued investments in customer experience, retention and our mobile networks |
|
Mobile phone prepaid churn of 4.15% in Q3 2021 increased by 0.17 pts, compared to the same period last year, due to greater competitive intensity in the discount mobile market. Year to date mobile phone prepaid churn of 4.27%, improved by 0.27 pts, compared to the same period last year, due to the lower market activity in the first half of the year as a result of the COVID-19 pandemic. |
Mobile phone subscribers at September 30, 2021 totaled 9,349,459, an increase of 2.7%, compared to the same period last year. This consisted of 8,520,518 postpaid subscribers, an increase of 3.2% from 8,254,951 subscribers at the end of Q3 2020, and 828,941 prepaid subscribers, a decrease of 2.2% from 847,676 subscribers at the end of Q3 2020.
Mobile connected device net subscriber activations decreased by 19.9% in Q3 2021, compared to the same period last year, due to greater net losses from data devices primarily from less tablet net activations, offset in part by increased business IoT net activations. Year-to-date mobile connected device net activations increased by 19.8%, compared to the same period last year, as the growth in business and consumer IoT net activations more than offset the higher net losses from data devices, primarily related to lower tablet net activations.
Mobile connected device subscribers at September 30, 2021 totaled 2,210,796, an increase of 13.0% from 1,957,204 subscribers at the end of Q3 2020.
ASSUMPTIONS
As at the date of this MD&A, our forward-looking statements set out in the BCE 2020 Annual MD&A, as updated or supplemented in the BCE 2021 First Quarter MD&A, in the BCE 2021 Second Quarter MD&A and in this MD&A, are based on certain assumptions including, without limitation, the following assumptions and the assumptions referred to in each of the other business segment discussions set out in this section 3, Business segment analysis, as well as the economic and market assumptions referred to in section 1.3, Assumptions, of this MD&A.
|
Maintain our market share of national operators wireless postpaid net additions |
|
Modest growth of our prepaid subscriber base |
|
Continued focus on mobile phone subscriber growth, as well as the introduction of more 5G, 4G Long-term evolution (LTE) and LTE Advanced devices and new data services |
|
Continued deployment of 5G wireless network offering coverage that is competitive with other national operators in centres across Canada |
|
Increased subscriber acquisition and retention spending |
|
Unfavourable impact on mobile phone blended ABPU, driven by reduced outbound roaming revenue due to travel restrictions as a result of the COVID-19 pandemic and reduced data overage revenue due to continued adoption of unlimited plans |
|
Increased adoption of unlimited data plans and device financing plans |
|
No material financial, operational or competitive consequences of changes in regulations affecting our wireless business |
18 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
3 MD&A Business segment analysis Bell Wireline
3.2 Bell Wireline
This section contains forward-looking statements, including relating to our network deployment and capital investment plans as well as the benefits expected to result therefrom. Refer to the section Caution regarding forward-looking statements at the beginning of this MD&A.
KEY BUSINESS DEVELOPMENTS
EXPANSION OF ALL-FIBRE INTERNET SERVICE
Bell announced multiple projects this summer to bring pure fibre Internet service to additional homes and businesses in Ontario, Québec, Atlantic Canada and Manitoba. These projects form part of Bells accelerated capital investment in national next-generation network infrastructure. These projects will bring all-fibre broadband access to more Canadians across the country by the end of 2021 and will provide fast and high-capacity 100% fibre connections with Internet download speeds of up to 1.5 Gigabit(s) per second (Gbps) and access to leading Bell services such as Fibe TV.
Earlier this year, Bell announced an accelerated capital investment plan of $1.7 billion for 2021 and 2022 to accelerate the rollout of its broadband fibre, 5G and rural networks and help drive Canadas recovery from the COVID-19 crisis. This capital acceleration is in addition to the approximately $4 billion in capital that Bell has typically invested each year in network infrastructure and expansion over the last decade, and will significantly increase the connections in localities across Canada while creating additional employment as network construction activity speeds up.
COLLABORATION WITH VMWARE CLOUD AND AWS FOR CUSTOMER CLOUD TRANSFORMATION
On October 13, 2021, Bell Canada announced it is working with VMware and Amazon Web Services (AWS) to help organizations across Canada plan, simplify and manage their hybrid cloud transformations. This collaboration leverages the strengths of all three companies to design and deliver solutions for hybrid cloud environments with a single point of contact. The Bell Cloud Professional Services team will work with organizations to assess their current structures, workloads and goals, and develop the optimal cloud strategy for their business in conjunction with VMware and AWS. Bell manages the migration to ensure a seamless and agile transition with cloud infrastructure and security support, all on Canadas largest broadband fibre network and fastest-ranked 5G network. This relationship builds on Bells agreement with AWS, announced earlier this year, to support 5G innovation and accelerate cloud adoption across Canada. Bell is the first Canadian communications company to offer AWS-powered 5G MEC (multi-access edge computing) for business and government customers.
FINANCIAL PERFORMANCE ANALYSIS
Q3 2021 PERFORMANCE HIGHLIGHTS
BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT | 19
3 MD&A Business segment analysis Bell Wireline
Retail high-speed Internet (1) | Retail high-speed Internet | Retail TV (2) | ||
+4.2% | 65,779 | (0.3%) | ||
Subscriber growth | Total net subscriber activations | Subscriber decline | ||
Q3 2021 vs. Q3 2020 | in Q3 2021 | Q3 2021 vs. Q3 2020 |
Retail IPTV | Retail residential NAS lines | |
31,641 | (7.8%) | |
Total net subscriber activations in Q3 2021 |
Subscriber decline Q3 2021 vs. Q3 2020 |
(1) |
At the beginning of Q1 2021, our retail high-speed Internet subscriber base was increased by 4,778 subscribers due to the transfer of fixed wireless Internet subscribers from our mobile connected devices subscriber base. |
(2) |
At the beginning of Q1 2021, we adjusted our satellite TV subscriber base to remove 6,125 non-revenue generating units. |
BELL WIRELINE RESULTS
REVENUES
Q3 2021 | Q3 2020 | $ CHANGE | % CHANGE | YTD 2021 | YTD 2020 | $ CHANGE | % CHANGE | |||||||||||||||||||||||||
Data |
1,976 | 1,931 | 45 | 2.3% | 5,885 | 5,738 | 147 | 2.6% | ||||||||||||||||||||||||
Voice |
778 | 839 | (61 | ) | (7.3% | ) | 2,375 | 2,574 | (199 | ) | (7.7% | ) | ||||||||||||||||||||
Other services |
73 | 61 | 12 | 19.7% | 214 | 181 | 33 | 18.2% | ||||||||||||||||||||||||
Total external service revenues |
2,827 | 2,831 | (4 | ) | (0.1% | ) | 8,474 | 8,493 | (19 | ) | (0.2% | ) | ||||||||||||||||||||
Inter-segment service revenues |
93 | 80 | 13 | 16.3% | 264 | 236 | 28 | 11.9% | ||||||||||||||||||||||||
Total operating service revenues |
2,920 | 2,911 | 9 | 0.3% | 8,738 | 8,729 | 9 | 0.1% | ||||||||||||||||||||||||
Data |
86 | 110 | (24 | ) | (21.8% | ) | 331 | 346 | (15 | ) | (4.3% | ) | ||||||||||||||||||||
Equipment and other |
9 | 11 | (2 | ) | (18.2% | ) | 30 | 36 | (6 | ) | (16.7% | ) | ||||||||||||||||||||
Total external product revenues |
95 | 121 | (26 | ) | (21.5% | ) | 361 | 382 | (21 | ) | (5.5% | ) | ||||||||||||||||||||
Total operating product revenues |
95 | 121 | (26 | ) | (21.5% | ) | 361 | 382 | (21 | ) | (5.5% | ) | ||||||||||||||||||||
Total Bell Wireline revenues |
3,015 | 3,032 | (17 | ) | (0.6% | ) | 9,099 | 9,111 | (12 | ) | (0.1% | ) |
Bell Wireline operating revenues decreased by 0.6% in Q3 2021 and by 0.1% in the first nine months of the year, compared to the same periods last year. Excluding the unfavourable retroactive impact of the Q2 2021 CRTC decision on wholesale high-speed Internet access services of $44 million, year-to-date operating revenues increased by 0.4% year-over-year. The year-over-year decline was driven by continued erosion in voice revenues and lower product sales, offset in part by higher data and other services revenue.
Bell Wireline operating service revenues increased by 0.3% in Q3 2021 and by 0.1% in the first nine months of the year, compared to the same periods last year. Excluding the unfavourable retroactive impact of the Q2 2021 CRTC decision described above of $44 million, year-to-date operating service revenues increased by 0.6% year-over-year.
|
Data revenues increased by 2.3% in Q3 2021 and by 2.6% in the first nine months of the year, compared to the same periods in 2020, driven by: |
|
Higher retail Internet and IPTV subscriber bases coupled with the flow-through of residential rate increases |
|
Greater sales of maintenance contracts on data equipment sold to business customers |
|
Growth in business solutions services revenue primarily from our managed services business |
These factors were partly offset by:
|
Continued declines in our satellite TV subscriber base |
|
Ongoing legacy data erosion |
20 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
3 MD&A Business segment analysis Bell Wireline
On a year-to-date basis, data revenues were also unfavourably impacted by the Q2 2021 CRTC decision on wholesale high-speed Internet access services.
|
Voice revenues declined by 7.3% in Q3 2021 and by 7.7% in the first nine months of the year, compared to the same periods in 2020, driven by: |
|
Ongoing retail residential NAS line erosion from technological substitution to wireless and Internet based services |
|
COVID-19 related strength in 2020 from conferencing and long distance, as business customers have adopted cheaper solutions since the onset of the COVID-19 pandemic |
|
Continued business voice erosion across the customer base |
These factors were partly offset by the flow-through of residential rate increases.
|
Other services revenue increased by 19.7% in Q3 2021 and by 18.2% in the first nine months of the year, compared to the same periods last year, due to the acquisition in Q4 2020 of Environics Analytics Group Ltd., a Canadian data and analytics company, and higher revenues from our Smart Home business due to subscriber growth. |
Bell Wireline operating product revenues decreased by 21.5% in Q3 2021 and by 5.5% in the first nine months of the year, compared to the same periods last year, due to strong 2020 equipment sales to large business customers, primarily to the government sector, as well as the timing of data equipment sales in 2021.
OPERATING COSTS AND ADJUSTED EBITDA
Q3 2021 | Q3 2020 | $ CHANGE | % CHANGE | YTD 2021 | YTD 2020 | $ CHANGE | % CHANGE | |||||||||||||||||||||||||
Operating costs |
(1,682 | ) | (1,712 | ) | 30 | 1.8% | (5,110 | ) | (5,177 | ) | 67 | 1.3% | ||||||||||||||||||||
Adjusted EBITDA |
1,333 | 1,320 | 13 | 1.0% | 3,989 | 3,934 | 55 | 1.4% | ||||||||||||||||||||||||
Adjusted EBITDA margin |
44.2 | % | 43.5 | % | 0.7 p | ts | 43.8 | % | 43.2 | % | 0.6 p | ts |
Bell Wireline operating costs decreased by 1.8% in Q3 2021 and by 1.3% in the first nine months of the year, compared to the same periods last year, due to:
|
Lower product cost of goods sold and payments to other carriers driven by reduced revenues |
|
Greater COVID-19 related costs in 2020, including employee redeployment, donations and personal protective equipment costs |
|
Lower labour costs in the quarter from fewer call volumes to our customer service centres, along with vendor contract savings |
Year-to-date operating costs were also favourably impacted by the higher bad debt expense in 2020 related to the financial difficulty experienced by customers during the COVID-19 pandemic.
Bell Wireline adjusted EBITDA increased by 1.0% in Q3 2021 and by 1.4% in the first nine months of the year, compared to the same periods last year, due to operating expense savings, moderated by lower year-over-year operating revenues. Excluding the unfavourable retroactive impact of the Q2 2021 CRTC decision on wholesale high-speed Internet access services of $44 million, year-to-date adjusted EBITDA increased by 2.5% year over year. Adjusted EBITDA margin of 44.2% in Q3 2021 and 43.8% in the first nine months of the year, increased by 0.7 points and 0.6 points, respectively, over the same periods in 2020, due to a decreased proportion of low-margin product sales in our total revenue base, reduced operating costs primarily related to the non-recurrence of a number of COVID-19 related expenses incurred last year and the flow-through of service revenue growth.
BELL WIRELINE OPERATING METRICS
DATA
Retail high-speed Internet
Q3 2021 | Q3 2020 | CHANGE | % CHANGE | YTD 2021 | YTD 2020 | CHANGE | % CHANGE | |||||||||||||||||||||||||
Retail net subscriber activations |
65,779 | 62,859 | 2,920 | 4.6% | 104,667 | 104,477 | 190 | 0.2% | ||||||||||||||||||||||||
Retail subscribers (1) |
3,814,035 | 3,660,078 | 153,957 | 4.2% | 3,814,035 | 3,660,078 | 153,957 | 4.2% |
(1) |
At the beginning of Q1 2021, our retail high-speed Internet subscriber base was increased by 4,778 subscribers due to the transfer of fixed wireless Internet subscribers from our mobile connected devices subscriber base. |
Retail high-speed Internet net subscriber activations increased by 4.6% in Q3 2021, compared to the same period last year, driven by higher activations from increased market activity due to the ongoing recovery from the effects of the COVID-19 pandemic, reflecting greater activations in our fibre-to-the-premise (FTTP) and wireless-to-the-premise (WTTP) footprints and higher back to school activity. This was offset in part by greater year-over-year deactivations from lower 2020 retail residential deactivations due to the COVID-19 pandemic, combined with increased competitive intensity. Year-to-date retail high-speed Internet subscriber net activations remained relatively stable, increasing by 0.2% year-over-year, as higher gross activations were offset by greater deactivations from lower 2020 retail residential deactivations due to the COVID-19 pandemic.
Retail high-speed Internet subscribers totaled 3,814,035 at September 30, 2021, up 4.2% from 3,660,078 subscribers reported at the end of Q3 2020.
Retail TV
Q3 2021 | Q3 2020 | CHANGE | % CHANGE | YTD 2021 | YTD 2020 | CHANGE | % CHANGE | |||||||||||||||||||||||||
Retail net subscriber activations (losses) |
10,521 | (296 | ) | 10,817 | n.m. | (3,519 | ) | (34,395 | ) | 30,876 | 89.8% | |||||||||||||||||||||
IPTV |
31,641 | 18,837 | 12,804 | 68.0% | 46,877 | 18,085 | 28,792 | n.m. | ||||||||||||||||||||||||
Satellite |
(21,120 | ) | (19,133 | ) | (1,987 | ) | (10.4% | ) | (50,396 | ) | (52,480 | ) | 2,084 | 4.0% | ||||||||||||||||||
Total retail subscribers (1) |
2,728,961 | 2,738,069 | (9,108 | ) | (0.3% | ) | 2,728,961 | 2,738,069 | (9,108 | ) | (0.3% | ) | ||||||||||||||||||||
IPTV |
1,853,250 | 1,785,267 | 67,983 | 3.8% | 1,853,250 | 1,785,267 | 67,983 | 3.8% | ||||||||||||||||||||||||
Satellite (1) |
875,711 | 952,802 | (77,091 | ) | (8.1% | ) | 875,711 | 952,802 | (77,091 | ) | (8.1% | ) |
n.m.: not meaningful
(1) |
At the beginning of Q1 2021, we adjusted our satellite TV subscriber base to remove 6,125 non-revenue generating units. |
BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT | 21
3 MD&A Business segment analysis Bell Wireline
Retail IPTV net subscriber activations increased by 12,804 in Q3 2021 and by 28,792 in the first nine months of the year, compared to the same periods in 2020, reflecting the success of our multi-brand strategy. Additionally, the growth was driven by increased sports programming in Q3 2021 which was curtailed in Q3 2020 as a result of the COVID-19 pandemic, as well as more typical back to school activity.
Retail satellite TV net subscriber losses increased by 10.4% in Q3 2021, compared to the same period last year, due to lower gross activations in our retail residential market, partly offset by lower retail residential deactivations. Conversely, during the first nine months of the year net subscriber losses improved by 4.0% year over year, as lower deactivations resulting from the COVID-19 pandemic more than offset reduced gross activations.
Total retail TV net subscriber activations (IPTV and satellite TV combined) improved by 10,817 in Q3 2021, compared to the same period last year, driven by higher IPTV net activations, offset in part by higher satellite TV net subscriber losses. During the first nine months of the year, net subscriber activations improved by 30,876 compared to the same period in 2020 due to higher IPTV net activations, coupled with lower satellite TV net subscriber losses.
Retail IPTV subscribers at September 30, 2021 totaled 1,853,250, up 3.8% from 1,785,267 subscribers reported at the end of Q3 2020.
Retail satellite TV subscribers at September 30, 2021 totaled 875,711, down 8.1% from 952,802 subscribers reported at the end of Q3 2020.
Total retail TV subscribers (IPTV and satellite TV combined) at September 30, 2021 were 2,728,961, representing a 0.3% decline from 2,738,069 subscribers at the end of Q3 2020.
VOICE
Q3 2021 | Q3 2020 | CHANGE | % CHANGE | YTD 2021 | YTD 2020 | CHANGE | % CHANGE | |||||||||||||||||||||||||
Retail residential NAS lines net losses |
(42,755 | ) | (49,792 | ) | 7,037 | 14.1% | (145,116 | ) | (159,792 | ) | 14,676 | 9.2% | ||||||||||||||||||||
Retail residential NAS lines |
2,338,816 | 2,537,691 | (198,875 | ) | (7.8% | ) | 2,338,816 | 2,537,691 | (198,875 | ) | (7.8% | ) |
Retail residential NAS lines net losses improved by 14.1% in Q3 2021 and by 9.2% in the first nine months of the year, compared to the same periods last year, due to fewer year-over-year deactivations driven by the COVID-19 pandemic.
Retail residential NAS lines at September 30, 2021 of 2,338,816 declined by 7.8% from 2,537,691 subscribers reported at the end of Q3 2020. This was essentially stable compared to the 7.9% rate of erosion experienced in Q3 2020.
ASSUMPTIONS
As at the date of this MD&A, our forward-looking statements set out in the BCE 2020 Annual MD&A, as updated or supplemented in the BCE 2021 First Quarter MD&A, in the BCE 2021 Second Quarter MD&A and in this MD&A, are based on certain assumptions including, without limitation, the following assumptions and the assumptions referred to in each of the other business segment discussions set out in this section 3, Business segment analysis, as well as the economic and market assumptions referred to in section 1.3, Assumptions, of this MD&A.
|
Continued growth in retail Internet and IPTV subscribers |
|
Increasing wireless and Internet-based technological substitution |
|
Continued aggressive residential service bundle offers from cable TV competitors in our local wireline areas |
|
Continued large business customer migration to IP-based systems |
|
Ongoing competitive repricing pressures in our business and wholesale markets |
|
Continued competitive intensity in our small and medium-sized business markets as cable operators and other telecommunications competitors continue to intensify their focus on business customers |
|
Traditional high-margin product categories challenged by large global cloud and OTT providers of business voice and data solutions expanding into Canada with on-demand services |
|
Accelerating customer adoption of OTT services resulting in downsizing of TV packages |
|
Further deployment of direct fibre to more homes and businesses within our wireline footprint and fixed WTTP technology in rural communities |
|
Growing consumption of OTT TV services and on-demand streaming video, as well as the proliferation of devices, such as tablets, that consume large quantities of bandwidth, will require ongoing capital investment |
|
Realization of cost savings related to management workforce reductions including attrition and retirements, lower contracted rates from our suppliers, operating efficiencies enabled by a growing direct fibre footprint, changes in consumer behaviour and product innovation, new call centre technology that is enabling self-serve capabilities, and other improvements to the customer service experience |
|
No material financial, operational or competitive consequences of changes in regulations affecting our wireline business |
22 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
3 MD&A Business segment analysis Bell Media
3.3 Bell Media
KEY BUSINESS DEVELOPMENTS
BELL MEDIAS SPECIALTY CHANNELS SEE RECORD RANKINGS
Bell Medias entertainment specialty channels achieved record rankings during the 2020/2021 broadcast year. Final data from Numeris, a primary provider of viewership figures for TV and radio outlets in Canada, confirmed that Bell Media claimed the Top 3 spots for entertainment specialty channels among Adults 18-49 (A18-49) and a total of 5 in the Top 10 among Adults 25-54 (A25-54). Sitting at the #1 spot, CTV Comedy Channel was once again the most-watched entertainment specialty channel in the key A25-54 and A18-49 demographics. Additionally, Discovery and CTV Drama Channel joined CTV Comedy in the Top 3, staking their claim as the #2 and #3 entertainment specialty channels, respectively, for A18-49, marking the first time Bell Medias entertainment specialty channels secured the Top 3 ranks in the demographic. Rounding out the Top 10, CTV Sci-Fi Channel secured the #9 spot in both key demographics of A25-54 and A18-49, while Much claimed #10 for A25-54, giving Bell Media 5 of the Top 10 entertainment specialty channels for the second year in the row for A25-54.
CRAVE LAUNCHES MOBILE-ONLY PRODUCT
On October 26, 2021, Crave launched a mobile-only product, available directly to consumers, and in the future through participating wireless carriers. Both the Crave Mobile and the existing Crave Total plans deliver the same great content and a customized choice of how to watch. Whether a subscriber chooses Crave Mobile or Crave Total, they will have access to HBO, HBO Max originals, SHOWTIME, the biggest Hollywood blockbusters, water cooler series like RUPAULS DRAG RACE, classics such the entire FRIENDS library, thousands of hours of exclusive French-language content, the latest originals from Crave, and more. STARZ remains available through participating service providers and directly to consumers as a separate add-on.
FINANCIAL PERFORMANCE ANALYSIS
Q3 2021 PERFORMANCE HIGHLIGHTS
BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT | 23
3 MD&A Business segment analysis Bell Media
BELL MEDIA RESULTS
REVENUES
Q3 2021 | Q3 2020 | $ CHANGE | % CHANGE | YTD 2021 | YTD 2020 | $ CHANGE | % CHANGE | |||||||||||||||||||||||||
Total external revenues |
630 | 530 | 100 | 18.9% | 1,919 | 1,670 | 249 | 14.9% | ||||||||||||||||||||||||
Inter-segment revenues |
89 | 98 | (9 | ) | (9.2% | ) | 268 | 289 | (21 | ) | (7.3% | ) | ||||||||||||||||||||
Total Bell Media revenues |
719 | 628 | 91 | 14.5% | 2,187 | 1,959 | 228 | 11.6% |
Bell Media operating revenues increased by 14.5% in Q3 2021 and by 11.6% year to date, compared to the same periods last year, from both higher advertising and subscriber revenues.
|
Advertising revenues increased by 18.6% in Q3 2021 and 18.4% in the first nine months of the year, compared to the same periods in 2020, driven by growth across all advertising platforms (TV, radio and out-of-home (OOH)) in the quarter, reflecting the ongoing recovery from the effects of the COVID-19 pandemic. Conventional and specialty TV advertising revenue growth was due to increased demand by advertisers along with the benefit from the 2021 federal election. Additionally, conventional TV revenues reflected the favourability from a timely start of Fall 2021 programming compared to a delayed start in Fall 2020 due to the COVID-19 pandemic. Specialty TV revenues also benefited from the return of more live sporting events in 2021 compared to 2020 as a result of the ongoing recovery from the effects of the COVID-19 pandemic. Radio and OOH advertising revenues were both up modestly in the quarter, compared to last year. However, year-to date OOH advertising revenues declined year over year due to the unfavourable impact of the COVID-19 pandemic, while radio revenues essentially remained stable year over year. |
|
Subscriber revenues increased by 12.3% in Q3 2021 and 5.7% in the first nine months of the year, compared to the same periods last year, primarily related to the timing of certain BDU contract renewals and the continued growth in direct-to-consumer subscribers from Crave, STARZ, and sports streaming services. |
OPERATING COSTS AND ADJUSTED EBITDA
Q3 2021 | Q3 2020 | $ CHANGE | % CHANGE | YTD 2021 | YTD 2020 | $ CHANGE | % CHANGE | |||||||||||||||||||||||||
Operating costs |
(504 | ) | (450 | ) | (54 | ) | (12.0% | ) | (1,615 | ) | (1,453 | ) | (162 | ) | (11.1% | ) | ||||||||||||||||
Adjusted EBITDA |
215 | 178 | 37 | 20.8% | 572 | 506 | 66 | 13.0% | ||||||||||||||||||||||||
Adjusted EBITDA margin |
29.9 | % | 28.3 | % | 1.6 p | ts | 26.2 | % | 25.8 | % | 0.4 p | ts |
Bell Media operating costs increased by 12.0% in Q3 2021 and by 11.1% year to date, compared to the same periods in 2020, driven by:
|
Higher TV programming costs from greater programming and TV productions as a result of COVID-19 related delays and/or cancellations in 2020 |
|
The benefit in 2020 from the CEWS |
Year-to-date operating costs were also impacted by greater sports rights and production costs due to cancellations and/or suspension of sporting events in 2020 as a result of the COVID-19 pandemic
Bell Media adjusted EBITDA increased by 20.8% in Q3 2021 and by 13.0% year to date, compared to the same periods last year, driven by higher revenues, partially offset by increased operating costs.
ASSUMPTIONS
As at the date of this MD&A, our forward-looking statements set out in the BCE 2020 Annual MD&A, as updated or supplemented in the BCE 2021 First Quarter MD&A, in the BCE 2021 Second Quarter MD&A and in this MD&A, are based on certain assumptions including, without limitation, the following assumptions and the assumptions referred to in each of the other business segment discussions set out in this section 3, Business segment analysis, as well as the economic and market assumptions referred to in section 1.3, Assumptions, of this MD&A.
|
Overall revenue is expected to reflect a gradual economic recovery in 2021 combined with subscriber revenue growth and strategic pricing on advertising sales. However, revenue performance is expected to continue to be negatively impacted by the effects of the COVID-19 pandemic on many sectors of the economy. |
|
Continued escalation of media content costs to secure quality programming, as well as the return of sports and entertainment programming |
|
Continued scaling of Crave through broader content offering and user experience improvements |
|
Investment in Noovo News and more French-language original content to better serve our French-language customers with a wider array of content, in the language of their choice, on their preferred platforms |
|
Enhanced market-leading attribution through our Strategic Audience Management (SAM) tool |
|
Ability to successfully acquire and produce highly rated programming and differentiated content |
|
Building and maintaining strategic supply arrangements for content across all screens and platforms |
|
Continued monetization of content rights and Bell Media properties across all platforms |
|
No material financial, operational or competitive consequences of changes in regulations affecting our media business |
24 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
4 MD&A Financial and capital management
4 Financial and capital management
This section tells you how we manage our cash and capital resources to carry out our strategy and deliver financial results. It provides an analysis of our financial condition, cash flows and liquidity on a consolidated basis.
4.1 Net debt (1)
SEPTEMBER 30, 2021 | DECEMBER 31, 2020 | $ CHANGE | % CHANGE | |||||||||||||
Debt due within one year |
1,994 | 2,417 | (423 | ) | (17.5% | ) | ||||||||||
Long-term debt |
27,070 | 23,906 | 3,164 | 13.2% | ||||||||||||
Preferred shares (2) |
2,002 | 2,002 | | | ||||||||||||
Cash and cash equivalents |
(2,167 | ) | (224 | ) | (1,943 | ) | n.m. | |||||||||
Net debt |
28,899 | 28,101 | 798 | 2.8% |
n.m.: not meaningful
(1) |
Net debt is a non-GAAP financial measure and does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other issuers. See section 7.2, Non-GAAP financial measures and key performance indicators (KPIs) Net debt, in this MD&A for more details, including a reconciliation to the most comparable IFRS financial measure. |
(2) |
50% of outstanding preferred shares of $4,003 million in 2021 and 2020 are classified as debt consistent with the treatment by some credit rating agencies. |
The increase of $2,741 million in total debt, comprised of debt due within one year and long-term debt, was due to:
|
the issuance by Bell Canada of Series US-3, Series US-4, Series US-5 and Series US-6 Notes, with total principal amounts of $600 million, $500 million, $600 million and $650 million in U.S. dollars, respectively ($747 million, $623 million, $755 million and $818 million in Canadian dollars, respectively). The Notes are fully and unconditionally guaranteed by BCE. |
|
the issuance by Bell Canada of Series M-54, Series M-55 and Series M-56 MTN debentures, with total principal amounts of $1 billion, $550 million and $500 million in Canadian dollars, respectively. The MTN debentures are fully and unconditionally guaranteed by BCE. |
Partly offset by:
|
the early redemption of Series M-40 MTN debentures with a total principal amount of $1,700 million in Canadian dollars |
|
a net decrease of $164 million due to lower lease liabilities and other debt |
|
a decrease in our notes payable (net of issuances) of $368 million |
|
a decrease in our securitized trade receivables of $20 million |
The increase in cash and cash equivalents of $1,943 million was mainly due to:
|
$6,265 million of cash flows from operating activities |
|
$2,081 million of debt issuances (net of repayments) |
|
$245 million from the issuance of common shares |
Partly offset by:
|
$2,430 million of dividends paid on BCE common and preferred shares |
|
$3,378 million of capital expenditures |
|
$415 million of spectrum payment |
|
$245 million paid for the purchase on the open market of BCE common shares for the settlement of share-based payments |
4.2 Outstanding share data
COMMON SHARES OUTSTANDING |
NUMBER OF SHARES |
|||
Outstanding, January 1, 2021 |
904,415,010 | |||
Shares issued under employee stock option plan |
4,339,016 | |||
Outstanding, September 30, 2021 |
908,754,026 |
STOCK OPTIONS OUTSTANDING |
NUMBER
OF OPTIONS |
WEIGHTED AVERAGE
EXERCISE PRICE ($) |
||||||
Outstanding, January 1, 2021 |
15,650,234 | 59 | ||||||
Exercised (1) |
(4,339,016 | ) | 57 | |||||
Forfeited or expired |
(245,288 | ) | 60 | |||||
Outstanding, September 30, 2021 |
11,065,930 | 60 | ||||||
Exercisable, September 30, 2021 |
4,581,269 | 58 |
(1) |
The weighted average market share price for options exercised during the nine months ended September 30, 2021 was $64. |
BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT | 25
4 MD&A Financial and capital management
4.3 Cash flows
Q3 2021 | Q3 2020 | $ CHANGE | % CHANGE | YTD 2021 | YTD 2020 | $ CHANGE | % CHANGE | |||||||||||||||||||||||||
Cash flows from operating activities |
1,774 | 2,110 | (336 | ) | (15.9% | ) | 6,265 | 6,123 | 142 | 2.3% | ||||||||||||||||||||||
Capital expenditures |
(1,159 | ) | (1,031 | ) | (128 | ) | (12.4% | ) | (3,378 | ) | (2,708 | ) | (670 | ) | (24.7% | ) | ||||||||||||||||
Cash dividends paid on preferred shares |
(31 | ) | (32 | ) | 1 | 3.1% | (93 | ) | (101 | ) | 8 | 7.9% | ||||||||||||||||||||
Cash dividends paid by subsidiaries to non-controlling interest |
(13 | ) | (11 | ) | (2 | ) | (18.2% | ) | (41 | ) | (37 | ) | (4 | ) | (10.8% | ) | ||||||||||||||||
Acquisition and other costs paid |
| 13 | (13 | ) | (100.0% | ) | 6 | 33 | (27 | ) | (81.8% | ) | ||||||||||||||||||||
Cash from discontinued operations (included in cash flows from operating activities) |
| (15 | ) | 15 | 100.0% | | (54 | ) | 54 | 100.0% | ||||||||||||||||||||||
Free cash flow |
571 | 1,034 | (463 | ) | (44.8% | ) | 2,759 | 3,256 | (497 | ) | (15.3% | ) | ||||||||||||||||||||
Cash from discontinued operations (included in cash flows from operating activities) |
| 15 | (15 | ) | (100.0% | ) | | 54 | (54 | ) | (100.0% | ) | ||||||||||||||||||||
Business acquisitions |
(1 | ) | | (1 | ) | n.m. | (12 | ) | (23 | ) | 11 | 47.8% | ||||||||||||||||||||
Acquisition and other costs paid |
| (13 | ) | 13 | 100.0% | (6 | ) | (33 | ) | 27 | 81.8% | |||||||||||||||||||||
Acquisition of spectrum licences |
(3 | ) | (85 | ) | 82 | 96.5% | (3 | ) | (86 | ) | 83 | 96.5% | ||||||||||||||||||||
Spectrum payment |
(415 | ) | | (415 | ) | n.m. | (415 | ) | | (415 | ) | n.m. | ||||||||||||||||||||
Other investing activities |
(11 | ) | (49 | ) | 38 | 77.6% | (49 | ) | (67 | ) | 18 | 26.9% | ||||||||||||||||||||
Cash used in discontinued operations (included in cash flows from investing activities) |
| (6 | ) | 6 | 100.0% | | (21 | ) | 21 | 100.0% | ||||||||||||||||||||||
Net issuance of debt instruments |
992 | 65 | 927 | n.m. | 2,081 | 957 | 1,124 | n.m. | ||||||||||||||||||||||||
Issue of common shares |
172 | | 172 | n.m. | 245 | 22 | 223 | n.m. | ||||||||||||||||||||||||
Purchase of shares for settlement of share-based payments |
(83 | ) | (40 | ) | (43 | ) | n.m. | (245 | ) | (209 | ) | (36 | ) | (17.2% | ) | |||||||||||||||||
Cash dividends paid on common shares |
(793 | ) | (753 | ) | (40 | ) | (5.3% | ) | (2,337 | ) | (2,222 | ) | (115 | ) | (5.2% | ) | ||||||||||||||||
Other financing activities |
(14 | ) | (32 | ) | 18 | 56.3% | (75 | ) | (87 | ) | 12 | 13.8% | ||||||||||||||||||||
Cash used in discontinued operations (included in cash flows from financing activities) |
| (4 | ) | 4 | 100.0% | | (7 | ) | 7 | 100.0% | ||||||||||||||||||||||
Net increase in cash and cash equivalents |
415 | 132 | 283 | n.m. | 1,943 | 1,534 | 409 | 26.7% |
n.m.: not meaningful
CASH FLOWS FROM OPERATING ACTIVITIES AND FREE CASH FLOW
Cash flows from operating activities in the third quarter of 2021 decreased by $336 million, compared to the same period last year, mainly due to lower cash from timing of working capital and higher income taxes paid, reflecting both higher taxable income in 2021 and timing of payments as compared to Q3 2020 related to government relief measures due to the COVID-19 pandemic, partly offset by higher adjusted EBITDA.
Cash flows from operating activities in the first nine months of 2021 increased by $142 million, compared to the same period last year, mainly due to higher adjusted EBITDA and higher cash from timing of working capital, partly offset by higher income taxes paid, and higher severance and other costs paid.
Free cash flow in the third quarter of 2021 decreased by $463 million, compared to the same period last year, mainly due to lower cash flows from operating activities, excluding cash from discontinued operations and acquisition and other costs paid, and higher capital expenditures.
Free cash flow in the first nine months of 2021 decreased by $497 million, compared to the same period last year, mainly due to higher capital expenditures, partly offset by higher cash flows from operating activities, excluding cash from discontinued operations and acquisition and other costs paid.
CAPITAL EXPENDITURES
Q3 2021 |
Q3 2020 | $ CHANGE | % CHANGE | YTD 2021 | YTD 2020 | $ CHANGE | % CHANGE | |||||||||||||||||||||||||
Bell Wireless |
254 | 212 | (42 | ) | (19.8 | %) | 846 | 524 | (322 | ) | (61.5 | %) | ||||||||||||||||||||
Capital intensity ratio |
11.1 | % | 9.1 | % | (2.0 | ) pts | 13.0 | % | 8.4 | % | (4.6 | ) pts | ||||||||||||||||||||
Bell Wireline |
880 | 792 | (88 | ) | (11.1 | %) | 2,464 | 2,108 | (356 | ) | (16.9 | %) | ||||||||||||||||||||
Capital intensity ratio |
29.2 | % | 26.1 | % | (3.1 | ) pts | 27.1 | % | 23.1 | % | (4.0 | ) pts | ||||||||||||||||||||
Bell Media |
25 | 27 | 2 | 7.4 | % | 68 | 76 | 8 | 10.5 | % | ||||||||||||||||||||||
Capital intensity ratio |
3.5 | % | 4.3 | % | 0.8 | pts | 3.1 | % | 3.9 | % | 0.8 | pts | ||||||||||||||||||||
BCE |
1,159 | 1,031 | (128 | ) | (12.4 | %) | 3,378 | 2,708 | (670 | ) | (24.7 | %) | ||||||||||||||||||||
Capital intensity ratio |
19.9 | % | 17.8 | % | (2.1 | ) pts | 19.6 | % | 16.1 | % | (3.5 | ) pts |
26 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
4 MD&A Financial and capital management
BCE capital expenditures grew by 12.4% in Q3 2021 and by 24.7% in the first nine months of the year, compared to the same periods last year, to $1,159 million and $3,378 million, respectively. This corresponded to a capital intensity ratio of 19.9% in Q3 2021 and of 19.6% year to date, up 2.1 pts and 3.5 pts, respectively, compared to the same periods in 2020. The year-over-year increase in capital spending is consistent with our two-year plan to accelerate network investments. The growth in capital expenditures was driven by:
|
Higher capital spending in our wireless segment of $42 million in Q3 2021 and $322 million year to date, compared to the same periods last year, primarily due to the ongoing deployment of our mobile 5G network |
|
Greater capital spending in our wireline segment of $88 million in Q3 2021 and $356 million year to date, compared to the same periods last year, mainly due to the continued expansion of our FTTP network to more homes and businesses and the rollout of our fixed WTTP network to more rural locations |
DEBT INSTRUMENTS
2021
In the third quarter of 2021, we issued $992 million of debt, net of repayments. This included:
|
$1,570 million issuance of long-term debt comprised of the issuance of Series US-5 and Series US-6 Notes, with total principal amounts of $600 million and $650 million in U.S. dollars, respectively ($755 million and $818 million in Canadian dollars, respectively), partly offset by $3 million of discounts on our debt issuances |
Partly offset by:
|
$322 million repayment (net of issuances) of notes payable and bank advances |
|
$249 million repayment of long-term debt due to net payments of leases and other debt |
|
$7 million decrease in securitized trade receivable |
In the first nine months of 2021, we issued $2,081 million of debt, net of repayments. This included:
|
$4,985 million issuance of long-term debt comprised of the issuance of Series US-3, Series US-4, Series US-5 and Series US-6 Notes, with total principal amounts of $600 million, $500 million, $600 million and $650 million in U.S. dollars, respectively ($747 million, $623 million, $755 million and $818 million in Canadian dollars, respectively), and the issuance of Series M-54, Series M-55 and Series M-56 MTN debentures, with total principal amounts of $1 billion, $550 million and $500 million in Canadian dollars, respectively, partly offset by $8 million of discounts on our debt issuances |
Partly offset by:
|
$2,516 million repayment of long-term debt comprised of the early redemption of Series M-40 MTN debentures with a total principal amount of $1,700 million in Canadian dollars and net payments of leases and other debt of $816 million |
|
$368 million repayment (net of issuances) of notes payable and bank advances |
|
$20 million decrease in securitized trade receivables |
2020
In the third quarter of 2020, we issued $65 million of debt, net of issuances. This included:
|
$750 million issuance of long-term debt comprised of the issuance of Series M-53 MTN debentures with a total principal amount of $750 million |
|
$317 million issuance (net of repayments) of notes payable and bank advances |
Partly offset by:
|
$979 million repayment of long-term debt comprised of the early redemption of Series M-30 MTN debentures with a total principal amount of $750 million and net payments of leases and other debt of $229 million |
|
$23 million decrease in securitized trade receivables |
In the first nine months of 2020, we issued $957 million of debt, net of repayments. This included:
|
$6,006 million issuance of long-term debt comprised of the drawdown of $1,450 million in U.S. dollars ($2,035 million in Canadian dollars) under Bell Canadas committed credit facilities and the issuance of Series M-51, Series M-47, Series M-52, and Series M-53 MTN debentures, with total principal amounts of $1,250 million, $1 billion, $1 billion and $750 million in Canadian dollars, respectively, partly offset by $29 million of net discounts on our debt issuances |
Partly offset by:
|
$3,909 million repayment of long-term debt comprised of the repayment by Bell Canada of $1,450 million in U.S. dollars ($2,035 million in Canadian dollars) under its committed credit facilities, the early redemption of Series M-30 and M-24 debentures with total payments of $750 million and $500 million, respectively, and net payments of leases and other debt of $624 million |
|
$1,117 million repayment (net of issuances) of notes payable and bank advances |
|
$23 million decrease in securitized trade receivables |
BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT | 27
4 MD&A Financial and capital management
SPECTRUM PAYMENT
On July 29, 2021, provisional spectrum licence winners in the 3500 MHz spectrum auction were announced by Innovation, Science and Economic Development Canada (ISED). Bell Mobility Inc. (Bell Mobility) secured the right to acquire 271 licences in a number of urban and rural markets for 678 million Megahertz per Population (MHz-Pop) of 3500 MHz spectrum for $2.07 billion. On August 13, 2021, Bell Mobility made the required deposit of $415 million to ISED.
ISSUANCE OF COMMON SHARES
The issuance of common shares in the third quarter and on a year-to-date basis in 2021 increased by $172 million and $223 million, respectively, compared to the same periods in 2020, mainly due to a higher number of exercised stock options.
CASH DIVIDENDS PAID ON COMMON SHARES
In the third quarter of 2021, cash dividends paid on common shares increased by $40 million compared to Q3 2020, due to a higher dividend paid in Q3 2021 of $0.8750 per common share compared to $0.8325 per common share in Q3 2020.
In the first nine months of 2021, cash dividends paid on common shares increased by $115 million compared to 2020, due to a higher dividend paid in the first nine months of 2021 of $2.5825 per common share compared to $2.458 per common share for the same period last year.
4.4 Post-employment benefit plans
For the three and nine months ended September 30, 2021, we recorded an increase in our post-employment benefit plans and a gain, before taxes, in OCI from continuing operations of $668 million and $2,807 million, respectively, due to a higher actual discount rate of 3.5% at September 30, 2021, compared to 3.3% at June 30, 2021 and 2.6% at December 31, 2020, partly offset by a lower-than-expected return on plan assets in 2021.
For the three and nine months ended September 30, 2020, we recorded an increase in our post-employment benefit plans and a gain, before taxes, in OCI from continuing operations of $148 million and $298 million, respectively, due to a higher-than-expected return on plan assets in 2020, partly offset by a lower actual discount rate of 2.7% at September 30, 2020, compared to 2.8% at June 30, 2020 and 3.1% at December 31, 2019.
4.5 Financial risk management
FAIR VALUE
The following table provides the fair value details of financial instruments measured at amortized cost in the consolidated statements of financial position.
SEPTEMBER 30, 2021 |
DECEMBER 31, 2020 | |||||||||||||||||||
CLASSIFICATION |
FAIR VALUE METHODOLOGY |
CARRYING VALUE |
FAIR VALUE |
CARRYING VALUE |
FAIR VALUE |
|||||||||||||||
CRTC deferral account obligation | Trade payables and other liabilities and other non-current liabilities | Present value of estimated future cash flows discounted using observable market interest rates | 73 | 75 | 82 | 86 | ||||||||||||||
Debt securities and other debt | Debt due within one year and long-term debt | Quoted market price of debt | 23,721 | 26,183 | 20,525 | 24,366 |
28 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
4 MD&A Financial and capital management
The following table provides the fair value details of financial instruments measured at fair value in the consolidated statements of financial position.
FAIR VALUE | ||||||||||||||||
CLASSIFICATION |
|
CARRYING VALUE OF
ASSET (LIABILITY) |
|
QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1) |
|
OBSERVABLE
MARKET DATA (LEVEL 2) |
(1) |
|
NON-OBSERVABLE
MARKET INPUTS (LEVEL 3) |
(2) |
||||||
September 30, 2021 | ||||||||||||||||
Publicly-traded and privately-held investments (3) | Other non-current assets | 134 | 22 | | 112 | |||||||||||
Derivative financial instruments |
Other current assets, trade payables and other liabilities, other non-current assets and liabilities |
468 | | 468 | | |||||||||||
Maple Leaf Sports & Entertainment Ltd. (MLSE) financial liability (4) |
Trade payables and other liabilities |
(149 | ) | | | (149 | ) | |||||||||
Other |
Other non-current assets and liabilities |
123 | | 181 | (58 | ) | ||||||||||
December 31, 2020 | ||||||||||||||||
Publicly-traded and privately-held investments (3) |
Other non-current assets |
126 | 3 | | 123 | |||||||||||
Derivative financial instruments |
Other current assets, trade payables and other liabilities, other non-current assets and liabilities |
(51 | ) | | (51 | ) | | |||||||||
MLSE financial liability (4) |
Trade payables and other liabilities |
(149 | ) | | | (149 | ) | |||||||||
Other |
Other non-current assets and liabilities |
109 | | 167 | (58 | ) |
(1) |
Observable market data such as equity prices, interest rates, swap rate curves and foreign currency exchange rates. |
(2) |
Non-observable market inputs such as discounted cash flows and earnings multiples. A reasonable change in our assumptions would not result in a significant increase (decrease) to our level 3 financial instruments. |
(3) |
Unrealized gains and losses are recorded in OCI from continuing operations in the consolidated statements of comprehensive income and are reclassified from Accumulated OCI to Deficit in the consolidated statements of financial position when realized. |
(4) |
Represents BCEs obligation to repurchase the BCE Master Trust Funds (Master Trust Fund) 9% interest in MLSE at a price not less than an agreed minimum price should the Master Trust Fund exercise its put option. The obligation to repurchase is marked to market each reporting period and the gain or loss is recognized in Other income (expense) in the consolidated income statements. |
MARKET RISK
CURRENCY EXPOSURES
We use forward contracts, options and cross currency interest rate swaps to manage foreign currency risk related to anticipated purchases and sales and certain foreign currency debt.
During the first nine months of 2021, we entered into cross currency interest rate swaps with a total notional amount of $2,350 million in U.S. dollars ($2,958 million in Canadian dollars) to hedge the U.S. currency exposure of our U.S. Notes maturing from 2024 to 2052. See section 4.1, Net debt, in this MD&A, for additional details.
A 10% depreciation (appreciation) in the value of the Canadian dollar relative to the U.S. dollar would result in a loss of $2 million and $18 million recognized in net earnings from continuing operations at September 30, 2021 and a gain (loss) of $257 million and ($237 million) recognized in Other comprehensive income (loss) from continuing operations at September 30, 2021, with all other variables held constant.
A 10% depreciation (appreciation) in the value of the Canadian dollar relative to the Philippines Peso would result in a gain (loss) of $5 million recognized in Other comprehensive income (loss) from continuing operations at September 30, 2021, with all other variables held constant.
The following table provides further details on our outstanding foreign currency forward contracts and options as at September 30, 2021.
TYPE OF HEDGE |
BUY
|
AMOUNT
TO RECEIVE |
SELL
CURRENCY |
AMOUNT
TO PAY |
MATURITY | HEDGED ITEM | ||||||||||||||||
Cash flow |
USD | 195 | CAD | 258 | 2021 | Anticipated transactions | ||||||||||||||||
Cash flow |
PHP | 565 | CAD | 15 | 2021 | Anticipated transactions | ||||||||||||||||
Cash flow |
USD | 509 | CAD | 651 | 2022 | Anticipated transactions | ||||||||||||||||
Cash flow |
PHP | 2,270 | CAD | 58 | 2022 | Anticipated transactions | ||||||||||||||||
Cash flow |
USD | 520 | CAD | 641 | 2023 | Anticipated transactions | ||||||||||||||||
Cash flow call options |
USD | 231 | CAD | 299 | 2022 | Anticipated transactions | ||||||||||||||||
Cash flow put options |
USD | 231 | CAD | 295 | 2022 | Anticipated transactions | ||||||||||||||||
Economic |
USD | 46 | CAD | 60 | 2021 | Anticipated transactions | ||||||||||||||||
Economic put options |
USD | 30 | CAD | 39 | 2021 | Anticipated transactions | ||||||||||||||||
Economic call options |
USD | 150 | CAD | 178 | 2022 | Anticipated transactions | ||||||||||||||||
Economic call options |
CAD | 190 | USD | 150 | 2022 | Anticipated transactions | ||||||||||||||||
Economic put options |
USD | 399 | CAD | 481 | 2022 | Anticipated transactions |
BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT | 29
4 MD&A Financial and capital management
INTEREST RATE EXPOSURES
We use leveraged interest rate options to hedge economically the dividend rate resets on $582 million of our preferred shares having varying reset dates in 2021 for the periods ending in 2026. The dividend rates for $100 million of these preferred shares had not yet been reset as at September 30, 2021. The fair value of these interest rate options at September 30, 2021 and December 31, 2020 was a net liability of $1 million and $6 million, respectively, recognized in Other current assets, Trade payables and other liabilities and Other non-current liabilities in the consolidated statements of financial position. A gain of $1 million and $14 million for the three and nine months ended September 30, 2021, respectively, relating to these interest rate options is recognized in Other income (expense) in the consolidated income statements.
A 1% increase (decrease) in interest rates would result in a gain (loss) of $4 million recognized in net earnings from continuing operations at September 30, 2021.
EQUITY PRICE EXPOSURES
We use equity forward contracts on BCEs common shares to hedge economically the cash flow exposure related to the settlement of equity settled share-based compensation plans and the equity price risk related to certain share-based payment plans. The fair value of our equity forward contracts at September 30, 2021 and December 31, 2020 was a net asset of $87 million and a net liability of $82 million, respectively, recognized in Other current assets, Trade payables and other liabilities, Other non-current assets and Other non-current liabilities in the consolidated statements of financial position. A gain of $61 million and $221 million for the three and nine months ended September 30, 2021, respectively, relating to these equity forward contracts is recognized in Other income (expense) in the consolidated income statements.
A 5% increase (decrease) in the market price of BCEs common shares at September 30, 2021 would result in a gain (loss) of $41 million recognized in net earnings from continuing operations, with all other variables held constant.
COMMODITY PRICE EXPOSURE
We use fuel swaps to hedge economically the purchase cost of fuel in 2021. The fair value of our fuel swaps at September 30, 2021 and December 31, 2020 was an asset of $3 million, recognized in Other current assets in the consolidated statements of financial position. A gain of nil and $6 million for the three and nine months ended September 30, 2021, respectively, relating to these fuel swaps is recognized in Other income (expense) in the consolidated income statements.
A 25% increase (decrease) in the market price of fuel at September 30, 2021 would result in a gain (loss) of $1 million relating to fuel swaps recognized in net earnings from continuing operations, with all other variables held constant.
4.6 Credit ratings
BCEs and Bell Canadas key credit ratings remain unchanged from those described in the BCE 2020 Annual MD&A.
4.7 Liquidity
AVAILABLE LIQUIDITY
This section contains forward-looking statements, including relating to the expectation that our available liquidity, which is comprised of cash and cash equivalents and amounts available under our securitized trade receivable programs and our committed bank credit facilities, will be sufficient to meet our cash requirements for the remainder of 2021. Refer to the section Caution regarding forward-looking statements at the beginning of this MD&A.
Total available liquidity at September 30, 2021 was $6.1 billion, comprised of $2,167 million in cash and cash equivalents, $400 million available under our securitized trade receivable programs and $3.5 billion available under our committed bank credit facilities.
We expect our available liquidity to be sufficient to meet our cash requirements for the remainder of 2021, including for capital expenditures, post-employment benefit plans funding, dividend payments, the payment of contractual obligations, maturing debt, on-going operations, the payment of the remaining balance for the 3500 MHz spectrum licences, and other cash requirements. However, we may choose to fund some of our cash requirements with other sources of financing.
We continuously monitor the rapidly changing COVID-19 pandemic for impacts on operations, capital markets and the Canadian economy with the objective of maintaining adequate available liquidity.
30 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
5 MD&A Quarterly financial information
5 Quarterly financial information
BCEs Q3 2021 Financial Statements were prepared in accordance with IFRS, as issued by the International Accounting Standards Board (IASB), under International Accounting Standard (IAS) 34, Interim Financial Reporting and were approved by BCEs board of directors on November 3, 2021.
The following table, which was also prepared in accordance with IFRS, shows selected consolidated financial data of BCE for the eight most recent completed quarters.
2021 | 2020 | 2019 | ||||||||||||||||||||||||||||||
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | |||||||||||||||||||||||||
Operating revenues |
||||||||||||||||||||||||||||||||
Service |
5,099 | 5,040 | 4,968 | 5,090 | 4,924 | 4,800 | 5,018 | 5,235 | ||||||||||||||||||||||||
Product |
737 | 658 | 738 | 1,012 | 863 | 554 | 622 | 1,040 | ||||||||||||||||||||||||
Total operating revenues |
5,836 | 5,698 | 5,706 | 6,102 | 5,787 | 5,354 | 5,640 | 6,275 | ||||||||||||||||||||||||
Adjusted EBITDA |
2,558 | 2,476 | 2,429 | 2,404 | 2,454 | 2,331 | 2,418 | 2,484 | ||||||||||||||||||||||||
Severance, acquisition and other costs |
(50 | ) | (7 | ) | (89 | ) | (52 | ) | (26 | ) | (22 | ) | (16 | ) | (28 | ) | ||||||||||||||||
Depreciation |
(902 | ) | (905 | ) | (895 | ) | (872 | ) | (876 | ) | (869 | ) | (858 | ) | (854 | ) | ||||||||||||||||
Amortization |
(245 | ) | (248 | ) | (238 | ) | (233 | ) | (232 | ) | (234 | ) | (230 | ) | (224 | ) | ||||||||||||||||
Net earnings from continuing operations |
813 | 734 | 687 | 721 | 734 | 290 | 728 | 718 | ||||||||||||||||||||||||
Net earnings from discontinued operations |
| | | 211 | 6 | 4 | 5 | 5 | ||||||||||||||||||||||||
Net earnings |
813 | 734 | 687 | 932 | 740 | 294 | 733 | 723 | ||||||||||||||||||||||||
Net earnings from continuing operations attributable to common shareholders |
757 | 685 | 642 | 678 | 686 | 233 | 675 | 667 | ||||||||||||||||||||||||
Net earnings attributable to common shareholders |
757 | 685 | 642 | 889 | 692 | 237 | 680 | 672 | ||||||||||||||||||||||||
EPS basic and diluted |
||||||||||||||||||||||||||||||||
Continuing operations |
0.83 | 0.76 | 0.71 | 0.75 | 0.76 | 0.26 | 0.74 | 0.73 | ||||||||||||||||||||||||
Discontinued operations |
| | | 0.23 | 0.01 | | 0.01 | 0.01 | ||||||||||||||||||||||||
EPS basic and diluted |
0.83 | 0.76 | 0.71 | 0.98 | 0.77 | 0.26 | 0.75 | 0.74 | ||||||||||||||||||||||||
Weighted average number of common shares outstanding basic (millions) |
906.9 | 905.0 | 904.5 | 904.4 | 904.3 | 904.3 | 904.1 | 903.8 |
BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT | 31
6 MD&A Regulatory environment
6 Regulatory environment
The following is an update to the regulatory initiatives and proceedings described in the BCE 2020 Annual MD&A under section 3.2, Principal business risks and section 8, Regulatory environment, as subsequently updated in the BCE 2021 First Quarter MD&A and in the BCE 2021 Second Quarter MD&A.
TELECOMMUNICATIONS ACT
REVIEW OF MOBILE WIRELESS SERVICES
Further to the CRTCs April 15, 2021 decision in respect of the regulatory framework for mobile wireless services, on July 14, 2021 Bell Mobility, Rogers Communications Canada Inc. (Rogers), Telus Communications Inc. (Telus) and Saskatchewan Telecommunications filed proposed tariff terms and conditions for the mandated mobile virtual network operator (MVNO) access service and Bell Mobility, Rogers and Telus filed proposed amendments to their mandated roaming tariffs to reflect the CRTCs determinations. The CRTCs review process for the proposed tariffs and amendments is ongoing.
REVIEW OF WHOLESALE FIBRE-TO-THE-NODE HIGH-SPEED ACCESS SERVICE RATES
TekSavvy Solutions Inc. (TekSavvy) obtained leave to appeal the CRTCs May 27, 2021 decision before the Federal Court of Appeal, and the decision is further being challenged in three petitions brought by TekSavvy, Canadian Network Operations Consortium Inc. and National Capital Freenet before Cabinet to overturn the decision.
RADIOCOMMUNICATION ACT
3500 MHZ SPECTRUM AUCTION
On July 29, 2021, provisional spectrum licence winners in the 3500 MHz spectrum auction were announced by ISED. Bell Mobility secured the right to acquire 271 licences in a number of urban and rural markets for 678 million MHz-Pop of 3500 MHz spectrum for $2.07 billion. On August 13, 2021, Bell Mobility made the required deposit of $415 million to ISED. On September 22, 2021, ISED delayed the payment for the remaining balance due to an extension related to ISEDs Consultation on Amendments to SRSP-520, Technical Requirements for Fixed and/or Mobile Systems, Including Flexible Use Broadband Systems, in the Band 3450-3650 MHz. This consultation addresses issues regarding the technical specifications for use of 3500 MHz spectrum, primarily around major airports. ISED has not indicated a new date for the final auction payment. It is possible that the technical specifications implemented by ISED will constrain the ability of 3500 MHz licensees to use this spectrum band around major airports and under certain conditions. It is unknown at this time whether such constraints will be imposed by ISED and, if so, for how long.
32 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
7 MD&A Accounting policies, financial measures and controls
7 Accounting policies, financial measures and controls
7.1 Our accounting policies
BCEs Q3 2021 Financial Statements were prepared in accordance with IFRS, as issued by the IASB, under IAS 34 Interim Financial Reporting and were approved by BCEs board of directors on November 3, 2021. These financial statements were prepared using the same basis of presentation, accounting policies and methods of computation as outlined in Note 2, Significant accounting policies in BCEs consolidated financial statements for the year ended December 31, 2020. BCEs Q3 2021 Financial Statements do not include all of the notes required in the annual financial statements.
FUTURE CHANGES TO ACCOUNTING STANDARDS
The following amendments to standards issued by the IASB have not yet been adopted by BCE.
STANDARD | DESCRIPTION | IMPACT | EFFECTIVE DATE | |||
Onerous Contracts Cost of Fulfilling a Contract, Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets |
These amendments clarify which costs should be included in determining the cost of fulfilling a contract when assessing whether a contract is onerous.
|
We are currently assessing the impact of these amendments. | Effective for annual reporting periods beginning on or after January 1, 2022. Early application is permitted. | |||
Disclosure of Accounting Policies Amendments to IAS 1 Presentation of Financial Statements |
These amendments require that entities disclose material accounting policies, as defined, instead of significant accounting policies.
|
We are currently assessing the impact of these amendments on the disclosure of our accounting policies. | Effective for annual reporting periods beginning on or after January 1, 2023. Early application is permitted. |
7.2 Non-GAAP financial measures and key performance indicators (KPIs)
This section describes the non-GAAP financial measures and KPIs we use to explain our financial results. It also provides reconciliations of the non-GAAP financial measures to the most comparable IFRS financial measures.
ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN
The terms adjusted EBITDA and adjusted EBITDA margin do not have any standardized meaning under IFRS. Therefore, they are unlikely to be comparable to similar measures presented by other issuers.
We define adjusted EBITDA as operating revenues less operating costs, as shown in BCEs consolidated income statements. Adjusted EBITDA for BCEs segments is the same as segment profit as reported in Note 3, Segmented information, in BCEs Q3 2021 Financial Statements. We define adjusted EBITDA margin as adjusted EBITDA divided by operating revenues.
We use adjusted EBITDA and adjusted EBITDA margin to evaluate the performance of our businesses as they reflect their ongoing profitability. We believe that certain investors and analysts use adjusted EBITDA to measure a companys ability to service debt and to meet other payment obligations or as a common measurement to value companies in the telecommunications industry. We believe that certain investors and analysts also use adjusted EBITDA and adjusted EBITDA margin to evaluate the performance of our businesses. Adjusted EBITDA is also one component in the determination of short-term incentive compensation for all management employees.
Adjusted EBITDA and adjusted EBITDA margin have no directly comparable IFRS financial measure. Alternatively, the following table provides a reconciliation of net earnings to adjusted EBITDA.
Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | |||||||||||||
Net earnings |
813 | 740 | 2,234 | 1,767 | ||||||||||||
Severance, acquisition and other costs |
50 | 26 | 146 | 64 | ||||||||||||
Depreciation |
902 | 876 | 2,702 | 2,603 | ||||||||||||
Amortization |
245 | 232 | 731 | 696 | ||||||||||||
Finance costs |
||||||||||||||||
Interest expense |
272 | 279 | 807 | 836 | ||||||||||||
Interest on post-employment benefit obligations |
5 | 12 | 15 | 35 | ||||||||||||
Impairment of assets |
| 4 | 167 | 460 | ||||||||||||
Other (income) expense |
(35 | ) | 29 | (134 | ) | 156 | ||||||||||
Income taxes |
306 | 262 | 795 | 601 | ||||||||||||
Net earnings from discontinued operations |
| (6 | ) | | (15 | ) | ||||||||||
Adjusted EBITDA |
2,558 | 2,454 | 7,463 | 7,203 | ||||||||||||
BCE operating revenues |
5,836 | 5,787 | 17,240 | 16,781 | ||||||||||||
Adjusted EBITDA margin |
43.8 | % | 42.4 | % | 43.3 | % | 42.9 | % |
BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT | 33
7 MD&A Accounting policies, financial measures and controls
ADJUSTED NET EARNINGS AND ADJUSTED EPS
The terms adjusted net earnings and adjusted EPS do not have any standardized meaning under IFRS. Therefore, they are unlikely to be comparable to similar measures presented by other issuers.
We define adjusted net earnings as net earnings attributable to common shareholders before severance, acquisition and other costs, net mark-to-market losses (gains) on derivatives used to economically hedge equity settled share-based compensation plans, net losses (gains) on investments, early debt redemption costs, impairment of assets and discontinued operations, net of tax and NCI. We define adjusted EPS as adjusted net earnings per BCE common share.
We use adjusted net earnings and adjusted EPS, and we believe that certain investors and analysts use these measures, among other ones, to assess the performance of our businesses without the effects of severance, acquisition and other costs, net mark-to-market losses (gains) on derivatives used to economically hedge equity settled share-based compensation plans, net losses (gains) on investments, early debt redemption costs, impairment of assets and discontinued operations, net of tax and NCI. We exclude these items because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding these items does not imply they are non-recurring.
The most comparable IFRS financial measures are net earnings attributable to common shareholders and EPS.
The following table is a reconciliation of net earnings attributable to common shareholders and EPS to adjusted net earnings on a consolidated basis and per BCE common share (adjusted EPS), respectively.
Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | |||||||||||||||||||||||||||||
TOTAL | PER SHARE | TOTAL | PER SHARE | TOTAL | PER SHARE | TOTAL | PER SHARE | |||||||||||||||||||||||||
Net earnings attributable to common shareholders |
757 | 0.83 | 692 | 0.77 | 2,084 | 2.30 | 1,609 | 1.78 | ||||||||||||||||||||||||
Severance, acquisition and other costs |
36 | 0.04 | 19 | 0.02 | 106 | 0.12 | 47 | 0.05 | ||||||||||||||||||||||||
Net mark-to-market (gains) losses on derivatives used to economically hedge equity settled share-based compensation plans |
(45 | ) | (0.05 | ) | 10 | 0.01 | (162 | ) | (0.18 | ) | 37 | 0.04 | ||||||||||||||||||||
Net (gains) losses on investments |
| | (22 | ) | (0.02 | ) | 14 | 0.02 | (43 | ) | (0.04 | ) | ||||||||||||||||||||
Early debt redemption costs |
| | 16 | 0.02 | 39 | 0.04 | 28 | 0.03 | ||||||||||||||||||||||||
Impairment of assets |
| | 3 | | 122 | 0.13 | 336 | 0.37 | ||||||||||||||||||||||||
Net earnings from discontinued operations |
| | (6 | ) | (0.01 | ) | | | (15 | ) | (0.02 | ) | ||||||||||||||||||||
Adjusted net earnings |
748 | 0.82 | 712 | 0.79 | 2,203 | 2.43 | 1,999 | 2.21 |
FREE CASH FLOW AND DIVIDEND PAYOUT RATIO
The terms free cash flow and dividend payout ratio do not have any standardized meaning under IFRS. Therefore, they are unlikely to be comparable to similar measures presented by other issuers.
We define free cash flow as cash flows from operating activities, excluding cash from discontinued operations, acquisition and other costs paid (which include significant litigation costs) and voluntary pension funding, less capital expenditures, preferred share dividends and dividends paid by subsidiaries to NCI. We exclude cash from discontinued operations, acquisition and other costs paid and voluntary pension funding because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding these items does not imply they are non-recurring.
We consider free cash flow to be an important indicator of the financial strength and performance of our businesses because it shows how much cash is available to pay dividends on common shares, repay debt and reinvest in our company. We believe that certain investors and analysts use free cash flow to value a business and its underlying assets and to evaluate the financial strength and performance of our businesses. The most comparable IFRS financial measure is cash flows from operating activities.
We define dividend payout ratio as dividends paid on common shares divided by free cash flow. We consider dividend payout ratio to be an important indicator of the financial strength and performance of our businesses because it shows the sustainability of the companys dividend payments.
34 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
7 MD&A Accounting policies, financial measures and controls
The following table is a reconciliation of cash flows from operating activities to free cash flow on a consolidated basis.
Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | |||||||||||||
Cash flows from operating activities |
1,774 | 2,110 | 6,265 | 6,123 | ||||||||||||
Capital expenditures |
(1,159 | ) | (1,031 | ) | (3,378 | ) | (2,708 | ) | ||||||||
Cash dividends paid on preferred shares |
(31 | ) | (32 | ) | (93 | ) | (101 | ) | ||||||||
Cash dividends paid by subsidiaries to NCI |
(13 | ) | (11 | ) | (41 | ) | (37 | ) | ||||||||
Acquisition and other costs paid |
| 13 | 6 | 33 | ||||||||||||
Cash from discontinued operations (included in cash flows from operating activities) |
| (15 | ) | | (54 | ) | ||||||||||
Free cash flow |
571 | 1,034 | 2,759 | 3,256 |
NET DEBT
The term net debt does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other issuers.
We define net debt as debt due within one year plus long-term debt and 50% of preferred shares, less cash and cash equivalents, as shown in BCEs consolidated statements of financial position. We include 50% of outstanding preferred shares in our net debt as it is consistent with the treatment by certain credit rating agencies.
We consider net debt to be an important indicator of the companys financial leverage because it represents the amount of debt that is not covered by available cash and cash equivalents. We believe that certain investors and analysts use net debt to determine a companys financial leverage.
Net debt has no directly comparable IFRS financial measure, but rather is calculated using several asset and liability categories from the statements of financial position, as shown in the following table.
SEPTEMBER 30, 2021 | DECEMBER 31, 2020 | |||||||
Debt due within one year |
1,994 | 2,417 | ||||||
Long-term debt |
27,070 | 23,906 | ||||||
50% of outstanding preferred shares |
2,002 | 2,002 | ||||||
Cash and cash equivalents |
(2,167 | ) | (224 | ) | ||||
Net debt |
28,899 | 28,101 |
NET DEBT LEVERAGE RATIO
The net debt leverage ratio does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other issuers. We use, and believe that certain investors and analysts use, the net debt leverage ratio as a measure of financial leverage.
The net debt leverage ratio represents net debt divided by adjusted EBITDA. For the purposes of calculating our net debt leverage ratio, adjusted EBITDA is twelve-month trailing adjusted EBITDA.
ADJUSTED EBITDA TO NET INTEREST EXPENSE RATIO
The ratio of adjusted EBITDA to net interest expense does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other issuers. We use, and believe that certain investors and analysts use, the adjusted EBITDA to net interest expense ratio as a measure of financial health of the company.
The adjusted EBITDA to net interest expense ratio represents adjusted EBITDA divided by net interest expense. For the purposes of calculating our adjusted EBITDA to net interest expense ratio, adjusted EBITDA is twelve-month trailing adjusted EBITDA. Net interest expense is twelve-month trailing net interest expense as shown in our statements of cash flows, plus 50% of declared preferred share dividends as shown in our income statements.
BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT | 35
7 MD&A Accounting policies, financial measures and controls
KPIs
In addition to the non-GAAP financial measures described previously, we use a number of KPIs to measure the success of our strategic imperatives. These KPIs are not accounting measures and may not be comparable to similar measures presented by other issuers.
KPI | DEFINITION | |
ABPU |
Mobile phone average billing per user (ABPU) or subscriber approximates the average amount billed to customers on a monthly basis, including monthly billings related to device financing receivables owing from customers on contract, which is used to track our recurring billing streams. Mobile phone blended ABPU is calculated by dividing customer billings by the average mobile phone subscriber base for the specified period and is expressed as a dollar unit per month. | |
Capital intensity |
Capital expenditures divided by operating revenues. | |
Churn |
Mobile phone churn is the rate at which existing mobile phone subscribers cancel their services. It is a measure of our ability to retain our customers. Mobile phone churn is calculated by dividing the number of mobile phone deactivations during a given period by the average number of mobile phone subscribers in the base for the specified period and is expressed as a percentage per month. | |
Subscriber unit |
Mobile phone subscriber unit is comprised of a recurring revenue generating portable unit (e.g. smartphones and feature phones) on an active service plan, that has access to our wireless networks and includes voice, text and/or data connectivity. We report mobile phone subscriber units in two categories: postpaid and prepaid. Prepaid mobile phone subscriber units are considered active for a period of 90 days following the expiry of the subscribers prepaid balance.
Mobile connected device subscriber unit is comprised of a recurring revenue generating portable unit (e.g. tablets, wearables, mobile Internet devices and IoT) on an active service plan, that has access to our wireless networks and is intended for limited or no cellular voice capability.
Wireline subscriber unit consists of an active revenue-generating unit with access to our services, including retail Internet, satellite TV, IPTV, and/or residential NAS. A subscriber is included in our subscriber base when the service has been installed and is operational at the customer premise and a billing relationship has been established. |
|
Retail Internet, IPTV and satellite TV subscribers have access to stand-alone services, and are primarily represented by a dwelling unit |
||
Retail residential NAS subscribers are based on a line count and are represented by a unique telephone number |
7.3 Controls and procedures
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
No changes were made in our internal control over financial reporting during the quarter ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
36 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
Exhibit 99.2
Consolidated financial statements
Consolidated financial statements
CONSOLIDATED INCOME STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30
(IN MILLIONS OF CANADIAN DOLLARS, EXCEPT SHARE AMOUNTS) (UNAUDITED) |
THREE MONTHS | NINE MONTHS | ||||||||||||||||||
NOTE |
2021 |
2020 |
2021 |
2020 |
||||||||||||||||
Operating revenues |
3 | 5,836 | 5,787 | 17,240 | 16,781 | |||||||||||||||
Operating costs |
3, 4 | (3,278 | ) | (3,333 | ) | (9,777 | ) | (9,578 | ) | |||||||||||
Severance, acquisition and other costs |
5 | (50 | ) | (26 | ) | (146 | ) | (64 | ) | |||||||||||
Depreciation |
(902 | ) | (876 | ) | (2,702 | ) | (2,603 | ) | ||||||||||||
Amortization |
(245 | ) | (232 | ) | (731 | ) | (696 | ) | ||||||||||||
Finance costs |
||||||||||||||||||||
Interest expense |
(272 | ) | (279 | ) | (807 | ) | (836 | ) | ||||||||||||
Interest on post-employment benefit obligations |
11 | (5 | ) | (12 | ) | (15 | ) | (35 | ) | |||||||||||
Impairment of assets |
6 | | (4 | ) | (167 | ) | (460 | ) | ||||||||||||
Other income (expense) |
7 | 35 | (29 | ) | 134 | (156 | ) | |||||||||||||
Income taxes |
(306 | ) | (262 | ) | (795 | ) | (601 | ) | ||||||||||||
Net earnings from continuing operations |
813 | 734 | 2,234 | 1,752 | ||||||||||||||||
Net earnings from discontinued operations |
| 6 | | 15 | ||||||||||||||||
Net earnings |
813 | 740 | 2,234 | 1,767 | ||||||||||||||||
Net earnings from continuing operations attributable to: |
||||||||||||||||||||
Common shareholders |
757 | 686 | 2,084 | 1,594 | ||||||||||||||||
Preferred shareholders |
34 | 32 | 98 | 104 | ||||||||||||||||
Non-controlling interest |
22 | 16 | 52 | 54 | ||||||||||||||||
Net earnings from continuing operations |
813 | 734 | 2,234 | 1,752 | ||||||||||||||||
Net earnings attributable to: |
||||||||||||||||||||
Common shareholders |
757 | 692 | 2,084 | 1,609 | ||||||||||||||||
Preferred shareholders |
34 | 32 | 98 | 104 | ||||||||||||||||
Non-controlling interest |
22 | 16 | 52 | 54 | ||||||||||||||||
Net earnings |
813 | 740 | 2,234 | 1,767 | ||||||||||||||||
Net earnings per common share basic and diluted |
8 | |||||||||||||||||||
Continuing operations |
0.83 | 0.76 | 2.30 | 1.76 | ||||||||||||||||
Discontinued operations |
| 0.01 | | 0.02 | ||||||||||||||||
Net earnings per common share basic and diluted |
0.83 | 0.77 | 2.30 | 1.78 | ||||||||||||||||
Weighted average number of common shares outstanding basic (millions) |
906.9 | 904.3 | 905.5 | 904.3 |
BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT | 37
Consolidated financial statements
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE PERIOD ENDED SEPTEMBER 30
(IN MILLIONS OF CANADIAN DOLLARS) (UNAUDITED) |
THREE MONTHS | NINE MONTHS | ||||||||||||||||||
NOTE |
2021 |
2020 |
2021 |
2020 |
||||||||||||||||
Net earnings from continuing operations |
813 | 734 | 2,234 | 1,752 | ||||||||||||||||
Other comprehensive income (loss) from continuing operations, net of income taxes |
||||||||||||||||||||
Items that will be subsequently reclassified to net earnings |
||||||||||||||||||||
Net change in value of publicly-traded and privately-held investments, net of income taxes of nil for the three and nine months ended September 30, 2021 and 2020, respectively |
(5 | ) | (8 | ) | (5 | ) | (15 | ) | ||||||||||||
Net change in value of derivatives designated as cash flow hedges, net of income taxes of ($35) million and $39 million for the three months ended September 30, 2021 and 2020, respectively, and ($74) million and ($37) million for the nine months ended September 30, 2021 and 2020, respectively |
97 | (106 | ) | 201 | 101 | |||||||||||||||
Items that will not be reclassified to net earnings |
||||||||||||||||||||
Actuarial gains on post-employment benefit plans, net of income taxes of ($180) million and ($40) million for the three months ended September 30, 2021 and 2020, respectively, and ($754) million and ($80) million for the nine months ended September 30, 2021 and 2020, respectively (1) |
11 | 488 | 108 | 2,053 | 218 | |||||||||||||||
Net change in value of derivatives designated as cash flow hedges, net of income taxes of ($8) million and $4 million for the three months ended September 30, 2021 and 2020, respectively, and ($3) million and ($8) million for the nine months ended September 30, 2021 and 2020, respectively |
22 | (12 | ) | 8 | 21 | |||||||||||||||
Other comprehensive income (loss) from continuing operations |
602 | (18 | ) | 2,257 | 325 | |||||||||||||||
Net earnings from discontinued operations attributable to common shareholders |
| 6 | | 15 | ||||||||||||||||
Total comprehensive income |
1,415 | 722 | 4,491 | 2,092 | ||||||||||||||||
Total comprehensive income attributable to: |
||||||||||||||||||||
Common shareholders |
1,358 | 675 | 4,340 | 1,933 | ||||||||||||||||
Preferred shareholders |
34 | 32 | 98 | 104 | ||||||||||||||||
Non-controlling interest |
23 | 15 | 53 | 55 | ||||||||||||||||
Total comprehensive income |
1,415 | 722 | 4,491 | 2,092 |
(1) |
The discount rate used to value our post-employment benefit obligations at September 30, 2021 was 3.5% compared to 3.3% at June 30, 2021 and 2.6% at December 31, 2020. The discount rate used to value our post-employment benefit obligations at September 30, 2020 was 2.7% compared to 2.8% at June 30, 2020 and 3.1% at December 31, 2019. |
38 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
Consolidated financial statements
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(IN MILLIONS OF CANADIAN DOLLARS) (UNAUDITED) | NOTE | SEPTEMBER 30, 2021 | DECEMBER 31, 2020 | |||||||||
ASSETS |
||||||||||||
Current assets |
||||||||||||
Cash |
2,086 | 224 | ||||||||||
Cash equivalents |
81 | | ||||||||||
Trade and other receivables |
3,498 | 3,528 | ||||||||||
Inventory |
418 | 439 | ||||||||||
Contract assets |
410 | 687 | ||||||||||
Contract costs |
464 | 402 | ||||||||||
Prepaid expenses |
292 | 209 | ||||||||||
Other current assets |
9 | 292 | 199 | |||||||||
Total current assets |
7,541 | 5,688 | ||||||||||
Non-current assets |
||||||||||||
Contract assets |
235 | 256 | ||||||||||
Contract costs |
373 | 362 | ||||||||||
Property, plant and equipment |
27,825 | 27,513 | ||||||||||
Intangible assets |
13,367 | 13,102 | ||||||||||
Deferred tax assets |
124 | 106 | ||||||||||
Investments in associates and joint ventures |
697 | 756 | ||||||||||
Post-employment benefit assets |
11 | 3,785 | 1,277 | |||||||||
Other non-current assets |
15 | 1,811 | 1,001 | |||||||||
Goodwill |
10,578 | 10,604 | ||||||||||
Total non-current assets |
58,795 | 54,977 | ||||||||||
Total assets |
66,336 | 60,665 | ||||||||||
LIABILITIES |
||||||||||||
Current liabilities |
||||||||||||
Trade payables and other liabilities |
4,131 | 3,935 | ||||||||||
Contract liabilities |
748 | 717 | ||||||||||
Interest payable |
159 | 222 | ||||||||||
Dividends payable |
810 | 766 | ||||||||||
Current tax liabilities |
162 | 214 | ||||||||||
Debt due within one year |
10 | 1,994 | 2,417 | |||||||||
Total current liabilities |
8,004 | 8,271 | ||||||||||
Non-current liabilities |
||||||||||||
Contract liabilities |
245 | 242 | ||||||||||
Long-term debt |
10 | 27,070 | 23,906 | |||||||||
Deferred tax liabilities |
4,824 | 3,810 | ||||||||||
Post-employment benefit obligations |
11 | 1,672 | 1,962 | |||||||||
Other non-current liabilities |
1,012 | 1,145 | ||||||||||
Total non-current liabilities |
34,823 | 31,065 | ||||||||||
Total liabilities |
42,827 | 39,336 | ||||||||||
EQUITY |
||||||||||||
Equity attributable to BCE shareholders |
||||||||||||
Preferred shares |
4,003 | 4,003 | ||||||||||
Common shares |
20,646 | 20,390 | ||||||||||
Contributed surplus |
1,151 | 1,174 | ||||||||||
Accumulated other comprehensive income |
320 | 103 | ||||||||||
Deficit |
(2,962 | ) | (4,681 | ) | ||||||||
Total equity attributable to BCE shareholders |
23,158 | 20,989 | ||||||||||
Non-controlling interest |
351 | 340 | ||||||||||
Total equity |
23,509 | 21,329 | ||||||||||
Total liabilities and equity |
66,336 | 60,665 |
BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT | 39
Consolidated financial statements
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
ATTRIBUTABLE TO BCE SHAREHOLDERS | ||||||||||||||||||||||||||||||||
FOR THE PERIOD ENDED SEPTEMBER 30, 2021
(IN MILLIONS OF CANADIAN DOLLARS) (UNAUDITED) |
PREFERRED SHARES |
COMMON SHARES |
CONTRI- BUTED SURPLUS |
ACCUM- ULATED OTHER COMPRE- HENSIVE INCOME |
DEFICIT | TOTAL |
NON- CONTROL- LING INTEREST |
TOTAL EQUITY |
||||||||||||||||||||||||
Balance at December 31, 2020 |
4,003 | 20,390 | 1,174 | 103 | (4,681 | ) | 20,989 | 340 | 21,329 | |||||||||||||||||||||||
Net earnings |
| | | | 2,182 | 2,182 | 52 | 2,234 | ||||||||||||||||||||||||
Other comprehensive income |
| | | 204 | 2,052 | 2,256 | 1 | 2,257 | ||||||||||||||||||||||||
Total comprehensive income |
| | | 204 | 4,234 | 4,438 | 53 | 4,491 | ||||||||||||||||||||||||
Common shares issued under employee stock option plan |
| 256 | (9 | ) | | | 247 | | 247 | |||||||||||||||||||||||
Other share-based compensation |
| | (14 | ) | | (38 | ) | (52 | ) | | (52 | ) | ||||||||||||||||||||
Dividends declared on BCE common and preferred shares |
| | | | (2,477 | ) | (2,477 | ) | | (2,477 | ) | |||||||||||||||||||||
Dividends declared by subsidiaries to non-controlling interest |
| | | | | | (41 | ) | (41 | ) | ||||||||||||||||||||||
Settlement of cash flow hedges transferred to the cost basis of hedged items |
| | | 13 | | 13 | | 13 | ||||||||||||||||||||||||
Other |
| | | | | | (1 | ) | (1 | ) | ||||||||||||||||||||||
Balance at September 30, 2021 |
4,003 | 20,646 | 1,151 | 320 | (2,962 | ) | 23,158 | 351 | 23,509 | |||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
ATTRIBUTABLE TO BCE SHAREHOLDERS | ||||||||||||||||||||||||||||||||
FOR THE PERIOD ENDED SEPTEMBER 30, 2020
(IN MILLIONS OF CANADIAN DOLLARS) (UNAUDITED) |
PREFERRED
SHARES |
COMMON
SHARES |
CONTRI-
BUTED SURPLUS |
ACCUM-
ULATED OTHER COMPRE- HENSIVE INCOME (LOSS) |
DEFICIT | TOTAL |
NON-
CONTROL- LING INTEREST |
TOTAL
EQUITY |
||||||||||||||||||||||||
Balance at December 31, 2019 |
4,004 | 20,363 | 1,178 | 161 | (4,632 | ) | 21,074 | 334 | 21,408 | |||||||||||||||||||||||
Net earnings |
| | | | 1,713 | 1,713 | 54 | 1,767 | ||||||||||||||||||||||||
Other comprehensive income |
| | | 106 | 218 | 324 | 1 | 325 | ||||||||||||||||||||||||
Total comprehensive income |
| | | 106 | 1,931 | 2,037 | 55 | 2,092 | ||||||||||||||||||||||||
Common shares issued under employee stock option plan |
| 23 | (1 | ) | | | 22 | | 22 | |||||||||||||||||||||||
Other share-based compensation |
| | (9 | ) | | (23 | ) | (32 | ) | | (32 | ) | ||||||||||||||||||||
Dividends declared on BCE common and preferred shares |
| | | | (2,363 | ) | (2,363 | ) | | (2,363 | ) | |||||||||||||||||||||
Dividends declared by subsidiaries to non-controlling interest |
| | | | | | (38 | ) | (38 | ) | ||||||||||||||||||||||
Settlement of cash flow hedges transferred to the cost basis of hedged items |
| | | (9 | ) | | (9 | ) | | (9 | ) | |||||||||||||||||||||
Balance at September 30, 2020 |
4,004 | 20,386 | 1,168 | 258 | (5,087 | ) | 20,729 | 351 | 21,080 |
40 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
Consolidated financial statements
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIOD ENDED SEPTEMBER 30
(IN MILLIONS OF CANADIAN DOLLARS) (UNAUDITED) |
THREE MONTHS | NINE MONTHS | ||||||||||||||||||
NOTE | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
Cash flows from operating activities |
||||||||||||||||||||
Net earnings from continuing operations |
813 | 734 | 2,234 | 1,752 | ||||||||||||||||
Adjustments to reconcile net earnings from continuing operations to cash flows from operating activities |
||||||||||||||||||||
Severance, acquisition and other costs |
5 | 50 | 26 | 146 | 64 | |||||||||||||||
Depreciation and amortization |
1,147 | 1,108 | 3,433 | 3,299 | ||||||||||||||||
Post-employment benefit plans cost |
11 | 70 | 77 | 217 | 239 | |||||||||||||||
Net interest expense |
268 | 273 | 794 | 818 | ||||||||||||||||
Impairment of assets |
6 | | 4 | 167 | 460 | |||||||||||||||
Income taxes |
306 | 262 | 795 | 601 | ||||||||||||||||
Contributions to post-employment benefit plans |
(64 | ) | (69 | ) | (213 | ) | (219 | ) | ||||||||||||
Payments under other post-employment benefit plans |
(16 | ) | (15 | ) | (47 | ) | (44 | ) | ||||||||||||
Severance and other costs paid |
(31 | ) | (11 | ) | (153 | ) | (59 | ) | ||||||||||||
Interest paid |
(352 | ) | (321 | ) | (888 | ) | (877 | ) | ||||||||||||
Income taxes paid (net of refunds) |
(407 | ) | (236 | ) | (611 | ) | (463 | ) | ||||||||||||
Acquisition and other costs paid |
| (13 | ) | (6 | ) | (33 | ) | |||||||||||||
Change in contract assets |
53 | 178 | 299 | 572 | ||||||||||||||||
Change in wireless device financing plan receivables |
(92 | ) | (322 | ) | (244 | ) | (548 | ) | ||||||||||||
Net change in operating assets and liabilities |
29 | 420 | 342 | 507 | ||||||||||||||||
Cash from discontinued operations |
| 15 | | 54 | ||||||||||||||||
Cash flows from operating activities |
1,774 | 2,110 | 6,265 | 6,123 | ||||||||||||||||
Cash flows used in investing activities |
||||||||||||||||||||
Capital expenditures |
(1,159 | ) | (1,031 | ) | (3,378 | ) | (2,708 | ) | ||||||||||||
Business acquisitions |
(1 | ) | | (12 | ) | (23 | ) | |||||||||||||
Acquisition of spectrum licences |
(3 | ) | (85 | ) | (3 | ) | (86 | ) | ||||||||||||
Spectrum payment |
15 | (415 | ) | | (415 | ) | | |||||||||||||
Other investing activities |
(11 | ) | (49 | ) | (49 | ) | (67 | ) | ||||||||||||
Cash used in discontinued operations |
| (6 | ) | | (21 | ) | ||||||||||||||
Cash flows used in investing activities |
(1,589 | ) | (1,171 | ) | (3,857 | ) | (2,905 | ) | ||||||||||||
Cash flows from (used in) financing activities |
||||||||||||||||||||
(Decrease) increase in notes payable and bank advances |
(322 | ) | 317 | (368 | ) | (1,117 | ) | |||||||||||||
Decrease in securitized trade receivables |
(7 | ) | (23 | ) | (20 | ) | (23 | ) | ||||||||||||
Issue of long-term debt |
10 | 1,570 | 750 | 4,985 | 6,006 | |||||||||||||||
Repayment of long-term debt |
10 | (249 | ) | (979 | ) | (2,516 | ) | (3,909 | ) | |||||||||||
Issue of common shares |
172 | | 245 | 22 | ||||||||||||||||
Purchase of shares for settlement of share-based payments |
(83 | ) | (40 | ) | (245 | ) | (209 | ) | ||||||||||||
Cash dividends paid on common shares |
(793 | ) | (753 | ) | (2,337 | ) | (2,222 | ) | ||||||||||||
Cash dividends paid on preferred shares |
(31 | ) | (32 | ) | (93 | ) | (101 | ) | ||||||||||||
Cash dividends paid by subsidiaries to non-controlling interest |
(13 | ) | (11 | ) | (41 | ) | (37 | ) | ||||||||||||
Other financing activities |
(14 | ) | (32 | ) | (75 | ) | (87 | ) | ||||||||||||
Cash used in discontinued operations |
| (4 | ) | | (7 | ) | ||||||||||||||
Cash flows from (used in) financing activities |
230 | (807 | ) | (465 | ) | (1,684 | ) | |||||||||||||
Net increase in cash |
334 | 185 | 1,862 | 1,341 | ||||||||||||||||
Cash at beginning of period |
1,752 | 1,297 | 224 | 141 | ||||||||||||||||
Cash at end of period |
2,086 | 1,482 | 2,086 | 1,482 | ||||||||||||||||
Net increase (decrease) in cash equivalents |
81 | (53 | ) | 81 | 193 | |||||||||||||||
Cash equivalents at beginning of period |
| 250 | | 4 | ||||||||||||||||
Cash equivalents at end of period |
81 | 197 | 81 | 197 |
BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT | 41
Notes to consolidated financial statements
Notes to consolidated financial statements
These consolidated interim financial statements (financial statements) should be read in conjunction with BCEs 2020 annual consolidated financial statements, approved by BCEs board of directors on March 4, 2021.
These notes are unaudited.
We, us, our, BCE and the company mean, as the context may require, either BCE Inc. or, collectively, BCE Inc., Bell Canada, their subsidiaries, joint arrangements and associates.
Note 1 | Corporate information
BCE is incorporated and domiciled in Canada. BCEs head office is located at 1, Carrefour Alexander-Graham-Bell, Verdun, Québec, Canada. BCE is a telecommunications and media company providing wireless, wireline, Internet and television (TV) services to residential, business and wholesale customers in Canada. Our Bell Media segment provides conventional TV, specialty TV, pay TV, streaming services, digital media services, radio broadcasting services and out-of-home advertising services to customers in Canada.
Note 2 | Basis of presentation and significant accounting policies
These financial statements were prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB), under International Accounting Standard (IAS) 34 Interim Financial Reporting and were approved by BCEs board of directors on November 3, 2021. These financial statements were prepared using the same basis of presentation, accounting policies and methods of computation as outlined in Note 2, Significant accounting policies in our consolidated financial statements for the year ended December 31, 2020.
These financial statements do not include all of the notes required in annual financial statements.
All amounts are in millions of Canadian dollars, except where noted.
FUTURE CHANGES TO ACCOUNTING STANDARDS
The following amendments to standards issued by the IASB have not yet been adopted by BCE.
STANDARD |
DESCRIPTION |
IMPACT |
EFFECTIVE DATE |
|||
Onerous Contracts Cost of Fulfilling a Contract, Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets |
These amendments clarify which costs should be included in determining the cost of fulfilling a contract when assessing whether a contract is onerous.
|
We are currently assessing the impact of these amendments. | Effective for annual reporting periods beginning on or after January 1, 2022. Early application is permitted. | |||
Disclosure of Accounting Policies Amendments to IAS 1 Presentation of Financial Statements |
These amendments require that entities disclose material accounting policies, as defined, instead of significant accounting policies.
|
We are currently assessing the impact of these amendments on the disclosure of our accounting policies. | Effective for annual reporting periods beginning on or after January 1, 2023. Early application is permitted. |
42 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
Notes to consolidated financial statements
Note 3 | Segmented information
Our results are reported in three segments: Bell Wireless, Bell Wireline and Bell Media. Our segments reflect how we manage our business and how we classify our operations for planning and measuring performance.
The following tables present financial information by segment for the three month periods ended September 30, 2021 and 2020.
(1) |
The chief operating decision maker uses primarily one measure of profit to make decisions and assess performance, being operating revenues less operating costs. |
BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT | 43
Notes to consolidated financial statements
The following tables present financial information by segment for the nine month periods ended September 30, 2021 and 2020.
(1) |
The chief operating decision maker uses primarily one measure of profit to make decisions and assess performance, being operating revenues less operating costs. |
44 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
Notes to consolidated financial statements
REVENUES BY SERVICES AND PRODUCTS
THREE MONTHS | NINE MONTHS | |||||||||||||||||
FOR THE PERIOD ENDED SEPTEMBER 30 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||
Services (1) |
||||||||||||||||||
Wireless |
1,642 | 1,563 | 4,714 | 4,579 | ||||||||||||||
Wireline data |
1,976 | 1,931 | 5,885 | 5,738 | ||||||||||||||
Wireline voice |
778 | 839 | 2,375 | 2,574 | ||||||||||||||
Media |
630 | 530 | 1,919 | 1,670 | ||||||||||||||
Other wireline services |
73 | 61 | 214 | 181 | ||||||||||||||
Total services |
5,099 | 4,924 | 15,107 | 14,742 | ||||||||||||||
Products (2) |
||||||||||||||||||
Wireless |
642 | 742 | 1,772 | 1,657 | ||||||||||||||
Wireline data |
86 | 110 | 331 | 346 | ||||||||||||||
Wireline equipment and other |
9 | 11 | 30 | 36 | ||||||||||||||
Total products |
737 | 863 | 2,133 | 2,039 | ||||||||||||||
Total operating revenues |
5,836 | 5,787 | 17,240 | 16,781 |
(1) |
Our service revenues are generally recognized over time. |
(2) |
Our product revenues are generally recognized at a point in time. |
Note 4 | Operating costs
THREE MONTHS | NINE MONTHS | |||||||||||||||||||
FOR THE PERIOD ENDED SEPTEMBER 30 | NOTE | 2021 | 2020 | 2021 | 2020 | |||||||||||||||
Labour costs |
||||||||||||||||||||
Wages, salaries and related taxes and benefits (1) |
(1,067 | ) | (1,038 | ) | (3,173 | ) | (3,073 | ) | ||||||||||||
Post-employment benefit plans service cost (net of capitalized amounts) |
11 | (65 | ) | (65 | ) | (202 | ) | (204 | ) | |||||||||||
Other labour costs (2) |
(237 | ) | (244 | ) | (727 | ) | (707 | ) | ||||||||||||
Less: |
||||||||||||||||||||
Capitalized labour |
268 | 259 | 793 | 753 | ||||||||||||||||
Total labour costs |
(1,101 | ) | (1,088 | ) | (3,309 | ) | (3,231 | ) | ||||||||||||
Cost of revenues (3) |
(1,722 | ) | (1,787 | ) | (5,128 | ) | (4,912 | ) | ||||||||||||
Other operating costs (4) |
(455 | ) | (458 | ) | (1,340 | ) | (1,435 | ) | ||||||||||||
Total operating costs |
(3,278 | ) | (3,333 | ) | (9,777 | ) | (9,578 | ) |
(1) |
Costs reported in 2020 are net of amounts from the Canada Emergency Wage Subsidy, a wage subsidy program offered by the federal government to eligible employers as a result of the COVID-19 pandemic. |
(2) |
Other labour costs include contractor and outsourcing costs. |
(3) |
Cost of revenues includes costs of wireless devices and other equipment sold, network and content costs, and payments to other carriers. |
(4) |
Other operating costs include marketing, advertising and sales commission costs, bad debt expense, taxes other than income taxes, information technology costs, professional service fees and rent. |
Note 5 | Severance, acquisition and other costs
THREE MONTHS | NINE MONTHS | |||||||||||||||||||
FOR THE PERIOD ENDED SEPTEMBER 30 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
Severance |
(25 | ) | (19 | ) | (129 | ) | (29 | ) | ||||||||||||
Acquisition and other |
(25 | ) | (7 | ) | (17 | ) | (35 | ) | ||||||||||||
Total severance, acquisition and other costs |
(50 | ) | (26 | ) | (146 | ) | (64 | ) |
SEVERANCE COSTS
Severance costs consist of charges related to involuntary and voluntary employee terminations.
BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT | 45
Notes to consolidated financial statements
ACQUISITION AND OTHER COSTS
Acquisition and other costs consist of transaction costs, such as legal and financial advisory fees, related to completed or potential acquisitions, employee severance costs related to the purchase of a business, the costs to integrate acquired companies into our operations, costs relating to litigation and regulatory decisions, when they are significant, and other costs.
Note 6 | Impairment of assets
2021
During the second quarter of 2021, we identified indicators of impairment for our Bell Media radio markets, notably a decline in advertising revenue and an increase in the discount rate resulting from the impact of the ongoing COVID-19 pandemic. Accordingly, impairment testing was required for our group of radio cash-generating units (CGUs).
During Q2 2021, we recognized $163 million of impairment charges for various radio markets within our Bell Media segment. These charges included $150 million allocated to indefinite-life intangible assets for broadcast licences, and $13 million to property, plant and equipment mainly for buildings and network infrastructure and equipment. They were determined by comparing the carrying value of the CGUs to their fair value less cost of disposal. We estimated the fair value of the CGUs using both discounted cash flows and market-based valuation models, which include five-year cash flow projections derived from business plans reviewed by senior management for the period of July 1, 2021 to December 31, 2026, using a discount rate of 8.5% and a perpetuity growth rate of (2.0)% as well as market multiple data from public companies and market transactions. After impairments, the carrying value of our group of radio CGUs was $235 million.
2020
During the second quarter of 2020, we identified indicators of impairment for certain of our Bell Media TV services and radio markets, notably declines in advertising revenues, lower subscriber revenues and overall increases in discount rates resulting from the economic impact of the COVID-19 pandemic. Accordingly, impairment testing was required for certain groups of CGUs as well as for goodwill.
During Q2 2020, we recognized $452 million of impairment charges for our English and French TV services as well as various radio markets within our Bell Media segment. These charges included $291 million allocated to indefinite-life intangible assets for broadcast licences, $146 million allocated to finite-life intangible assets, mainly for program and feature film rights, and $15 million to property, plant and equipment for network and infrastructure and equipment. They were determined by comparing the carrying value of the CGUs to their fair value less cost of disposal. We estimated the fair value of the CGUs using both discounted cash flows and market-based valuation models, which include five-year cash flow projections derived from business plans reviewed by senior management for the period of July 1, 2020 to December 31, 2025, using discount rates of 8.0% to 9.5% and a perpetuity growth rate of (1.0)% to nil as well as market multiple data from public companies and market transactions. After impairments, the carrying value of these CGUs was $942 million.
There was no impairment of Bell Media goodwill. For the Bell Media group of CGUs, a decrease of (0.6)% in the perpetuity growth rate or an increase of 0.4% in the discount rate would have resulted in its recoverable amount being equal to its carrying value.
Note 7 | Other income (expense)
THREE MONTHS | NINE MONTHS | |||||||||||||||||||
FOR THE PERIOD ENDED SEPTEMBER 30 | NOTE | 2021 | 2020 | 2021 | 2020 | |||||||||||||||
Net mark-to-market gains (losses) on derivatives used to economically hedge equity settled share-based compensation plans |
61 | (13 | ) | 221 | (50 | ) | ||||||||||||||
Early debt redemption costs |
10 | | (21 | ) | (53 | ) | (38 | ) | ||||||||||||
Equity gains (losses) from investments in associates and joint ventures |
||||||||||||||||||||
Gain (loss) on investment |
| 22 | (14 | ) | 43 | |||||||||||||||
Operations |
(36 | ) | (14 | ) | (51 | ) | (29 | ) | ||||||||||||
Losses on retirements and disposals of property, plant and equipment and intangible assets |
(4 | ) | (1 | ) | (12 | ) | (71 | ) | ||||||||||||
Other |
14 | (2 | ) | 43 | (11 | ) | ||||||||||||||
Total other income (expense) |
35 | (29 | ) | 134 | (156 | ) |
46 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
Notes to consolidated financial statements
EQUITY GAIN (LOSS) FROM INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
We recorded a gain on investment of nil and $22 million for the three months ended September 30, 2021 and 2020, respectively, and a (loss) gain on investment of ($14) million and $43 million for the nine months ended September 30, 2021 and 2020, respectively, related to equity gains (losses) on our share of an obligation to repurchase at fair value the minority interest in one of BCEs joint ventures. The obligation is marked to market each reporting period and the gain or loss on investment is recorded as equity gains or losses from investments in associates and joint ventures.
LOSSES ON RETIREMENTS AND DISPOSALS OF PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
In Q2 2020, we recorded a loss of $45 million due to a change in strategic direction related to the ongoing development of some of our TV platform assets under construction.
Note 8 | Earnings per share
The following table shows the components used in the calculation of basic and diluted net earnings per common share for earnings attributable to common shareholders.
THREE MONTHS | NINE MONTHS | |||||||||||||||
FOR THE PERIOD ENDED SEPTEMBER 30 | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Net earnings from continuing operations attributable to common shareholders basic |
757 | 686 | 2,084 | 1,594 | ||||||||||||
Net earnings from discontinued operations attributable to common shareholders basic |
| 6 | | 15 | ||||||||||||
Net earnings attributable to common shareholders basic |
757 | 692 | 2,084 | 1,609 | ||||||||||||
Dividends declared per common share (in dollars) |
0.8750 | 0.8325 | 2.6250 | 2.4975 | ||||||||||||
Weighted average number of common shares outstanding (in millions) |
||||||||||||||||
Weighted average number of common shares outstanding basic |
906.9 | 904.3 | 905.5 | 904.3 | ||||||||||||
Assumed exercise of stock options (1) |
0.7 | 0.1 | 0.2 | 0.1 | ||||||||||||
Weighted average number of common shares outstanding diluted (in millions) |
907.6 | 904.4 | 905.7 | 904.4 |
(1) |
The calculation of the assumed exercise of stock options includes the effect of the average unrecognized future compensation cost of dilutive options. It excludes options for which the exercise price is higher than the average market value of a BCE common share. The number of excluded options was 3,280,426 for the third quarter of 2021 and 3,314,662 for the first nine months of 2021, compared to 14,335,937 for the third quarter of 2020 and 10,795,216 for the first nine months of 2020. |
Note 9 | Restricted cash
In Q1 2021, we entered into a $107 million subsidy agreement with the Government of Québec to facilitate the deployment of high-speed Internet in certain areas of the province of Québec by September 2022. At the end of Q3 2021, we had received $97 million of the total committed funding, with the remainder expected upon completion of the project.
As a result, we recorded $89 million in Other current assets as restricted cash with a corresponding liability in Trade payables and other liabilities on the consolidated statement of financial position at September 30, 2021. Additionally, for the three and nine months ended September 30, 2021, we recorded $5 million and $8 million, respectively, as a reduction of capital expenditures on the consolidated statements of cash flow.
Note 10 | Debt
On August 12, 2021, Bell Canada issued, under its 2016 trust indenture, 2.15% Series US-5 Notes, with a principal amount of $600 million in U.S. dollars ($755 million in Canadian dollars), which mature on February 15, 2032, and 3.20% Series US-6 Notes, with a principal amount of $650 million in U.S. dollars ($818 million in Canadian dollars), which mature on February 15, 2052.
On May 28, 2021, Bell Canada issued, under its 1997 trust indenture, 2.20% Series M-56 medium term note (MTN) debentures, with a principal amount of $500 million, which mature on May 29, 2028. This issue constitutes Bell Canadas first sustainability bond offering.
On April 19, 2021, Bell Canada redeemed, prior to maturity, its 3.00% Series M-40 MTN debentures, having an outstanding principal amount of $1.7 billion, which were due on October 3, 2022. As a result, in Q1 2021, we recognized early debt redemption costs of $53 million, which were recorded in Other income (expense) in the consolidated income statement.
On March 17, 2021, Bell Canada issued, under its 1997 trust indenture, 3.00% Series M-54 MTN debentures, with a principal amount of $1 billion, which mature on March 17, 2031, and 4.05% Series M-55 MTN debentures, with a principal amount of $550 million, which mature on March 17, 2051.
Additionally, on March 17, 2021, Bell Canada issued, under its 2016 trust indenture, 0.75% Series US-3 Notes, with a principal amount of $600 million in U.S. dollars ($747 million in Canadian dollars), which mature on March 17, 2024, and 3.65% Series US-4 Notes, with a principal amount of $500 million in U.S. dollars ($623 million in Canadian dollars), which mature on March 17, 2051.
The Series US-3, Series US-4, Series US-5 and Series US-6 Notes (collectively, the Notes) have been hedged for foreign currency fluctuations through cross currency interest rate swaps. See Note 12, Financial assets and liabilities, for additional details.
The MTN debentures and Notes are fully and unconditionally guaranteed by BCE.
BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT | 47
Notes to consolidated financial statements
Note 11 | Post-employment benefit plans
POST-EMPLOYMENT BENEFIT PLANS COST
We provide pension and other benefits for most of our employees. These include defined benefit (DB) pension plans, defined contribution (DC) pension plans and other post-employment benefits (OPEBs).
COMPONENTS OF POST-EMPLOYMENT BENEFIT PLANS SERVICE COST
THREE MONTHS | NINE MONTHS | |||||||||||||||
FOR THE PERIOD ENDED SEPTEMBER 30 | 2021 | 2020 | 2021 | 2020 | ||||||||||||
DB pension |
(56 | ) | (55 | ) | (167 | ) | (164 | ) | ||||||||
DC pension |
(25 | ) | (25 | ) | (87 | ) | (87 | ) | ||||||||
OPEBs |
(1 | ) | (1 | ) | (2 | ) | (2 | ) | ||||||||
Less: |
||||||||||||||||
Capitalized benefit plans cost |
17 | 16 | 54 | 49 | ||||||||||||
Total post-employment benefit plans service cost |
(65 | ) | (65 | ) | (202 | ) | (204 | ) |
COMPONENTS OF POST-EMPLOYMENT BENEFIT PLANS FINANCING (COST) INCOME
THREE MONTHS | NINE MONTHS | |||||||||||||||
FOR THE PERIOD ENDED SEPTEMBER 30 | 2021 | 2020 | 2021 | 2020 | ||||||||||||
DB pension |
3 | (2 | ) | 8 | (7 | ) | ||||||||||
OPEBs |
(8 | ) | (10 | ) | (23 | ) | (28 | ) | ||||||||
Total interest on post-employment benefit obligations |
(5 | ) | (12 | ) | (15 | ) | (35 | ) |
FUNDED STATUS OF POST-EMPLOYMENT BENEFIT PLANS
The following table shows the funded status of our post-employment benefit obligations.
FUNDED | PARTIALLY FUNDED (1) | UNFUNDED (2) | TOTAL | |||||||||||||||||||||||||||||
FOR THE PERIOD ENDED |
SEPTEMBER 30,
2021 |
DECEMBER 31,
|
SEPTEMBER 30,
2021 |
DECEMBER 31,
|
SEPTEMBER 30,
2021 |
DECEMBER 31,
2020 |
SEPTEMBER 30,
2021 |
DECEMBER 31,
2020 |
||||||||||||||||||||||||
Present value of post-employment benefit obligations |
(23,103 | ) | (26,421 | ) | (1,777 | ) | (2,011 | ) | (281 | ) | (317 | ) | (25,161 | ) | (28,749 | ) | ||||||||||||||||
Fair value of plan assets |
26,938 | 27,727 | 401 | 402 | | | 27,339 | 28,129 | ||||||||||||||||||||||||
Plan surplus (deficit) |
3,835 | 1,306 | (1,376 | ) | (1,609 | ) | (281 | ) | (317 | ) | 2,178 | (620 | ) |
(1) |
The partially funded plans consist of supplementary executive retirement plans (SERPs) for eligible employees and certain OPEBs. The company partially funds the SERPs through letters of credit and a retirement compensation arrangement account with the Canada Revenue Agency. Certain paid-up life insurance benefits are funded through life insurance contracts. |
(2) |
Our unfunded plans consist of certain OPEBs, which are paid as claims are incurred. |
In Q3 2021, we recorded an increase in our post-employment benefit plans and a gain, before taxes, in Other comprehensive income (loss) from continuing operations of $668 million due to a decrease in the present value of our post-employment benefit obligations of $685 million as a result of an increase in the discount rate to 3.5% at September 30, 2021, compared to 3.3% at June 30, 2021, partly offset by a decrease in the fair value of plan assets of ($17) million as a result of a lower-than-expected return on plan assets of 0.6%.
During the first nine months of 2021, we recorded an increase in our post-employment benefit plans and a gain, before taxes, in Other comprehensive income (loss) from continuing operations of $2,807 million due to a decrease in the present value of our post-employment benefit obligations of $3,254 million as a result of an increase in the discount rate to 3.5% at September 30, 2021, compared to 2.6% at December 31, 2020, partly offset by a decrease in the fair value of plan assets of ($447) million as a result of a lower-than-expected return on plan assets of 0.5%.
48 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
Notes to consolidated financial statements
Note 12 | Financial assets and liabilities
FAIR VALUE
The following table provides the fair value details of financial instruments measured at amortized cost in the consolidated statements of financial position.
SEPTEMBER 30, 2021 |
DECEMBER 31, 2020 | |||||||||||||||||||||
CLASSIFICATION | FAIR VALUE METHODOLOGY |
CARRYING
VALUE |
FAIR
VALUE |
CARRYING
VALUE |
FAIR
VALUE |
|||||||||||||||||
CRTC deferral account obligation | Trade payables and other liabilities and other non- current liabilities | Present value of estimated future cash flows discounted using observable market interest rates | 73 | 75 | 82 | 86 | ||||||||||||||||
Debt securities and other debt | Debt due within one year and long-term debt | Quoted market price of debt | 23,721 | 26,183 | 20,525 | 24,366 |
The following table provides the fair value details of financial instruments measured at fair value in the consolidated statements of financial position.
FAIR VALUE | ||||||||||||||
CLASSIFICATION |
|
CARRYING VALUE OF
ASSET (LIABILITY) |
|
QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1) |
OBSERVABLE MARKET DATA (LEVEL 2) (1) |
|
NON-OBSERVABLE
MARKET INPUTS (LEVEL 3) |
(2) |
||||||
September 30, 2021 |
||||||||||||||
Publicly-traded and privately-held investments (3) |
Other non-current assets | 134 | 22 | | 112 | |||||||||
Derivative financial instruments |
Other current assets, trade payables and other liabilities, other non-current assets and liabilities | 468 | | 468 | | |||||||||
Maple Leaf Sports & Entertainment Ltd. (MLSE) financial liability (4) | Trade payables and other liabilities | (149 | ) | | | (149 | ) | |||||||
Other |
Other non-current assets and liabilities | 123 | | 181 | (58 | ) | ||||||||
December 31, 2020 |
||||||||||||||
Publicly-traded and privately-held investments (3) |
Other non-current assets | 126 | 3 | | 123 | |||||||||
Derivative financial instruments |
Other current assets, trade payables and other liabilities, other non-current assets and liabilities | (51 | ) | | (51) | | ||||||||
MLSE financial liability (4) |
Trade payables and other liabilities | (149 | ) | | | (149 | ) | |||||||
Other |
Other non-current assets and liabilities | 109 | | 167 | (58 | ) |
(1) |
Observable market data such as equity prices, interest rates, swap rate curves and foreign currency exchange rates. |
(2) |
Non-observable market inputs such as discounted cash flows and earnings multiples. A reasonable change in our assumptions would not result in a significant increase (decrease) to our level 3 financial instruments. |
(3) |
Unrealized gains and losses are recorded in Other comprehensive income (loss) from continuing operations in the consolidated statements of comprehensive income and are reclassified from Accumulated other comprehensive income to Deficit in the consolidated statements of financial position when realized. |
(4) |
Represents BCEs obligation to repurchase the BCE Master Trust Funds (Master Trust Fund) 9% interest in MLSE at a price not less than an agreed minimum price should the Master Trust Fund exercise its put option. The obligation to repurchase is marked to market each reporting period and the gain or loss is recognized in Other income (expense) in the consolidated income statements. |
BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT | 49
Notes to consolidated financial statements
MARKET RISK
CURRENCY EXPOSURES
We use forward contracts, options and cross currency interest rate swaps to manage foreign currency risk related to anticipated purchases and sales and certain foreign currency debt.
During the first nine months of 2021, we entered into cross currency interest rate swaps with a total notional amount of $2,350 million in U.S. dollars ($2,958 million in Canadian dollars) to hedge the U.S. currency exposure of our U.S. Notes maturing from 2024 to 2052. See Note 10, Debt, for additional details.
A 10% depreciation (appreciation) in the value of the Canadian dollar relative to the U.S. dollar would result in a loss of $2 million and $18 million recognized in net earnings from continuing operations at September 30, 2021 and a gain (loss) of $257 million and ($237 million) recognized in Other comprehensive income (loss) from continuing operations at September 30, 2021, with all other variables held constant.
A 10% depreciation (appreciation) in the value of the Canadian dollar relative to the Philippines Peso would result in a gain (loss) of $5 million recognized in Other comprehensive income (loss) from continuing operations at September 30, 2021, with all other variables held constant.
The following table provides further details on our outstanding foreign currency forward contracts and options as at September 30, 2021.
TYPE OF HEDGE |
BUY
CURRENCY |
AMOUNT
TO RECEIVE |
SELL
CURRENCY |
AMOUNT
TO PAY |
MATURITY | HEDGED ITEM | ||||||||||||||||||
Cash flow |
USD | 195 | CAD | 258 | 2021 | Anticipated transactions | ||||||||||||||||||
Cash flow |
PHP | 565 | CAD | 15 | 2021 | Anticipated transactions | ||||||||||||||||||
Cash flow |
USD | 509 | CAD | 651 | 2022 | Anticipated transactions | ||||||||||||||||||
Cash flow |
PHP | 2,270 | CAD | 58 | 2022 | Anticipated transactions | ||||||||||||||||||
Cash flow |
USD | 520 | CAD | 641 | 2023 | Anticipated transactions | ||||||||||||||||||
Cash flow call options |
USD | 231 | CAD | 299 | 2022 | Anticipated transactions | ||||||||||||||||||
Cash flow put options |
USD | 231 | CAD | 295 | 2022 | Anticipated transactions | ||||||||||||||||||
Economic |
USD | 46 | CAD | 60 | 2021 | Anticipated transactions | ||||||||||||||||||
Economic put options |
USD | 30 | CAD | 39 | 2021 | Anticipated transactions | ||||||||||||||||||
Economic call options |
USD | 150 | CAD | 178 | 2022 | Anticipated transactions | ||||||||||||||||||
Economic call options |
CAD | 190 | USD | 150 | 2022 | Anticipated transactions | ||||||||||||||||||
Economic put options |
USD | 399 | CAD | 481 | 2022 | Anticipated transactions |
INTEREST RATE EXPOSURES
We use leveraged interest rate options to hedge economically the dividend rate resets on $582 million of our preferred shares having varying reset dates in 2021 for the periods ending in 2026. The dividend rates for $100 million of these preferred shares had not yet been reset as at September 30, 2021. The fair value of these interest rate options at September 30, 2021 and December 31, 2020 was a net liability of $1 million and $6 million, respectively, recognized in Other current assets, Trade payables and other liabilities and Other non-current liabilities in the consolidated statements of financial position. A gain of $1 million and $14 million for the three and nine months ended September 30, 2021, respectively, relating to these interest rate options is recognized in Other income (expense) in the consolidated income statements.
A 1% increase (decrease) in interest rates would result in a gain (loss) of $4 million recognized in net earnings from continuing operations at September 30, 2021.
EQUITY PRICE EXPOSURES
We use equity forward contracts on BCEs common shares to hedge economically the cash flow exposure related to the settlement of equity settled share-based compensation plans and the equity price risk related to certain share-based payment plans. The fair value of our equity forward contracts at September 30, 2021 and December 31, 2020 was a net asset of $87 million and a net liability of $82 million, respectively, recognized in Other current assets, Trade payables and other liabilities, Other non-current assets and Other non-current liabilities in the consolidated statements of financial position. A gain of $61 million and $221 million for the three and nine months ended September 30, 2021, respectively, relating to these equity forward contracts is recognized in Other income (expense) in the consolidated income statements.
A 5% increase (decrease) in the market price of BCEs common shares at September 30, 2021 would result in a gain (loss) of $41 million recognized in net earnings from continuing operations, with all other variables held constant.
COMMODITY PRICE EXPOSURE
We use fuel swaps to hedge economically the purchase cost of fuel in 2021. The fair value of our fuel swaps at September 30, 2021 and December 31, 2020 was an asset of $3 million, recognized in Other current assets in the consolidated statements of financial position. A gain of nil and $6 million for the three and nine months ended September 30, 2021, respectively, relating to these fuel swaps is recognized in Other income (expense) in the consolidated income statements.
A 25% increase (decrease) in the market price of fuel at September 30, 2021 would result in a gain (loss) of $1 million relating to fuel swaps recognized in net earnings from continuing operations, with all other variables held constant.
50 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
Notes to consolidated financial statements
CONVERSION AND DIVIDEND RATE RESET OF FIRST PREFERRED SHARES
On August 1, 2021, 12,985 of BCEs 5,949,884 fixed-rate Cumulative Redeemable First Preferred Shares, Series AI (Series AI Preferred Shares) were converted, on a one-for-one basis, into floating-rate Cumulative Redeemable First Preferred Shares, Series AJ (Series AJ Preferred Shares). In addition, on the same date, 3,598,141 of BCEs 8,050,116 Series AJ Preferred Shares were converted, on a one-for-one basis, into Series AI Preferred Shares.
The annual fixed dividend rate on BCEs Series AI Preferred Shares was reset for the next five years, effective August 1, 2021, at 3.39%. The Series AJ Preferred Shares will continue to pay a monthly floating cash dividend.
On May 1, 2021, 105,430 of BCEs 4,984,851 fixed-rate Cumulative Redeemable First Preferred Shares, Series AG (Series AG Preferred Shares) were converted, on a one-for-one basis, into floating-rate Cumulative Redeemable First Preferred Shares, Series AH (Series AH Preferred Shares). In addition, on the same date, 4,100,109 of BCEs 9,012,249 Series AH Preferred Shares were converted, on a one-for-one basis, into Series AG Preferred Shares.
The annual fixed dividend rate on BCEs Series AG Preferred Shares was reset for the next five years, effective May 1, 2021, at 3.37%. The Series AH Preferred Shares will continue to pay a monthly floating cash dividend.
On March 31, 2021, 42,423 of BCEs 9,542,615 fixed-rate Cumulative Redeemable First Preferred Shares, Series AM (Series AM Preferred Shares) were converted, on a one-for-one basis, into floating-rate Cumulative Redeemable First Preferred Shares, Series AN (Series AN Preferred Shares). In addition, on the same date, 939,786 of BCEs 1,952,085 Series AN Preferred Shares were converted, on a one-for-one basis, into Series AM Preferred Shares.
The annual fixed dividend rate on BCEs Series AM Preferred Shares was reset for the next five years, effective March 31, 2021, at 2.939%. The Series AN Preferred Shares will continue to pay a quarterly floating cash dividend.
Subsequent to quarter end, on November 1, 2021, 9,593 of BCEs 4,486,552 fixed-rate Cumulative Redeemable First Preferred Shares, Series T (Series T Preferred Shares) were converted, on a one-for-one basis, into floating-rate Cumulative Redeemable First Preferred Shares, Series S (Series S Preferred Shares). In addition, on the same date, 1,393,174 of BCEs 3,511,848 Series S Preferred Shares were converted, on a one-for-one basis, into Series T Preferred Shares.
The annual fixed dividend rate on BCEs Series T Preferred Shares was reset for the next five years, effective November 1, 2021, at 4.99%. The Series S Preferred Shares will continue to pay a monthly floating cash dividend.
Dividends will be paid as and when declared by the board of directors of BCE.
RENEWAL OF NORMAL COURSE ISSUER BID FOR BCE FIRST PREFERRED SHARES
Subsequent to quarter end, on November 3, 2021, BCEs Board of Directors authorized the company to renew its normal course issuer bid (NCIB) to purchase for cancellation up to 10% of the public float of each series of BCEs outstanding First Preferred Shares that are listed on the Toronto Stock Exchange. The NCIB will extend from November 9, 2021 to November 8, 2022, or an earlier date should BCE complete its purchases under the NCIB.
Note 14 | Share-based payments
The following share-based payment amounts are included in the income statements as operating costs.
THREE MONTHS |
NINE MONTHS | |||||||||||||||
FOR THE PERIOD ENDED SEPTEMBER 30 | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Employee savings plan |
(7 | ) | (8 | ) | (23 | ) | (24 | ) | ||||||||
Restricted share units (RSUs) and performance share units (PSUs) |
(13 | ) | (11 | ) | (46 | ) | (40 | ) | ||||||||
Other (1) |
(2 | ) | (2 | ) | (5 | ) | (7 | ) | ||||||||
Total share-based payments |
(22 | ) | (21 | ) | (74 | ) | (71 | ) |
(1) |
Includes deferred share plan, deferred share units and stock options. |
The following tables summarize the change in outstanding RSUs/PSUs and stock options for the period ended September 30, 2021.
RSUs/PSUs
NUMBER OF
RSUs/PSUs |
||||
Outstanding, January 1, 2021 |
2,973,393 | |||
Granted |
1,174,390 | |||
Dividends credited |
133,212 | |||
Settled |
(1,116,743 | ) | ||
Forfeited |
(89,897 | ) | ||
Outstanding, September 30, 2021 |
3,074,355 |
BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT | 51
Notes to consolidated financial statements
STOCK OPTIONS
NUMBER OF
OPTIONS |
WEIGHTED AVERAGE
EXERCISE PRICE ($) |
|||||||
Outstanding, January 1, 2021 |
15,650,234 | 59 | ||||||
Exercised (1) |
(4,339,016 | ) | 57 | |||||
Forfeited or expired |
(245,288 | ) | 60 | |||||
Outstanding, September 30, 2021 |
11,065,930 | 60 | ||||||
Exercisable, September 30, 2021 |
4,581,269 | 58 |
(1) |
The weighted average market share price for options exercised during the nine months ended September 30, 2021 was $64. |
Note 15 | Commitment and contingency
COMMITMENT
On July 29, 2021, provisional spectrum licence winners in the 3500 MHz spectrum auction were announced by Innovation, Science and Economic Development Canada (ISED). Bell Mobility Inc. (Bell Mobility) secured the right to acquire 271 licences in a number of urban and rural markets for 678 million Megahertz per Population (MHz-Pop) of 3500 MHz spectrum for $2.07 billion. On August 13, 2021, Bell Mobility made the required deposit of $415 million to ISED, which is included in Other non-current assets on our consolidated statement of financial position at September 30, 2021. On September 22, 2021, ISED delayed the payment for the remaining balance due to an extension related to ISEDs Consultation on Amendments to SRSP-520, Technical Requirements for Fixed and/or Mobile Systems, Including Flexible Use Broadband Systems, in the Band 3450-3650 MHz. This consultation addresses issues regarding the technical specifications for use of 3500 MHz spectrum, primarily around major airports. ISED has not indicated a new date for the final auction payment.
CONTINGENCY
As part of its ongoing review of wholesale Internet rates, on October 6, 2016, the Canadian Radio-television and Telecommunications Commission (CRTC) significantly reduced, on an interim basis, some of the wholesale rates that Bell Canada and other major providers charge for access by third-party Internet resellers to fibre-to-the-node (FTTN) or cable networks, as applicable. On August 15, 2019, the CRTC further reduced the wholesale rates that Internet resellers pay to access network infrastructure built by facilities-based providers like Bell Canada, with retroactive effect back to March 2016.
The August 2019 decision was stayed, first by the Federal Court of Appeal and then by the CRTC, with the result that it never came into effect. In response to review and vary applications filed by each of Bell Canada, five major cable carriers (Cogeco Communications Inc., Bragg Communications Inc. (Eastlink), Rogers Communications Inc., Shaw Communications Inc. and Videotron Ltée) and Telus Communications Inc., the CRTC issued Decision 2021-182 on May 27, 2021, which mostly re-instated the rates prevailing prior to August 2019 with some reductions to the Bell Canada rates with retroactive effect to March 2016. As a result, in Q2 2021, we recorded a reduction in revenue of $44 million in our consolidated income statements.
While there remains a requirement to refund monies to third-party Internet resellers, the establishment of final wholesale rates that are similar to those prevailing since 2019 reduces the impact of the CRTCs long-running review of wholesale Internet rates and ensures a better climate for much-needed investment in advanced networks. The decision is being challenged by at least one reseller, TekSavvy Solutions Inc. (TekSavvy), before the Federal Court of Appeal, where TekSavvy obtained leave to appeal the decision, and in three petitions brought by TekSavvy, the Canadian Network Operators Consortium Inc. and National Capital Freenet before Cabinet to overturn the decision.
Note 16 | COVID-19
Our financial and operating performance in the third quarter of 2021 continued to recover from the effects of the COVID-19 pandemic due to our operational execution and the easing of government restrictions put in place to combat the pandemic, which allowed many businesses to resume some level of, or increase, commercial activities in the latter part of the second quarter of 2021. The effects of the COVID-19 pandemic, although moderating, continued to unfavourably impact Bell Wireless product and roaming revenues, Bell Wireline business market equipment revenues, as well as Bell Media advertising revenues during the quarter. Depending on the severity and duration of the COVID-19 pandemic, including the number and intensity of resurgences in COVID-19 cases, the prevalence of variants, the timely distribution of effective vaccines and treatments, the time required to achieve broad immunity, and the scope and duration of measures adopted to combat the pandemic, our financial results and operations could continue to be unfavourably impacted, and could again become more significantly and negatively impacted, in future periods. It is difficult at this time to estimate the magnitude of such future impacts.
52 | BCE INC. 2021 THIRD QUARTER SHAREHOLDER REPORT
Exhibit 99.3
|
||
|
Supplementary Financial Information Third Quarter 2021 |
|
BCE Investor Relations Thane Fotopoulos 514-870-4619 thane.fotopoulos@bell.ca |
|
BCE (1)
Consolidated Operational Data
(In millions of Canadian dollars, except share amounts) (unaudited) |
Q3 2021 |
Q3 2020 |
$ change | % change |
YTD
2021 |
YTD
2020 |
$ change | % change | ||||||||||||||||||||||||||||||
Operating revenues |
||||||||||||||||||||||||||||||||||||||
Service |
5,099 | 4,924 | 175 | 3.6% | 15,107 | 14,742 | 365 | 2.5% | ||||||||||||||||||||||||||||||
Product |
737 | 863 | (126 | ) | (14.6%) | 2,133 | 2,039 | 94 | 4.6% | |||||||||||||||||||||||||||||
Total operating revenues |
5,836 | 5,787 | 49 | 0.8% | 17,240 | 16,781 | 459 | 2.7% | ||||||||||||||||||||||||||||||
Operating costs (A) |
(3,213 | ) | (3,268 | ) | 55 | 1.7% | (9,575 | ) | (9,374 | ) | (201 | ) | (2.1%) | |||||||||||||||||||||||||
Post-employment benefit plans service cost |
(65 | ) | (65 | ) | - | - | (202 | ) | (204 | ) | 2 | 1.0% | ||||||||||||||||||||||||||
Adjusted EBITDA (2) |
2,558 | 2,454 | 104 | 4.2% | 7,463 | 7,203 | 260 | 3.6% | ||||||||||||||||||||||||||||||
Adjusted EBITDA margin (2) |
43.8% | 42.4% | 1.4 pts | 43.3% | 42.9% | 0.4 pts | ||||||||||||||||||||||||||||||||
Severance, acquisition and other costs |
(50 | ) | (26 | ) | (24 | ) | (92.3%) | (146 | ) | (64 | ) | (82 | ) | n.m. | ||||||||||||||||||||||||
Depreciation |
(902 | ) | (876 | ) | (26 | ) | (3.0%) | (2,702 | ) | (2,603 | ) | (99 | ) | (3.8%) | ||||||||||||||||||||||||
Amortization |
(245 | ) | (232 | ) | (13 | ) | (5.6%) | (731 | ) | (696 | ) | (35 | ) | (5.0%) | ||||||||||||||||||||||||
Finance costs |
||||||||||||||||||||||||||||||||||||||
Interest expense |
(272 | ) | (279 | ) | 7 | 2.5% | (807 | ) | (836 | ) | 29 | 3.5% | ||||||||||||||||||||||||||
Interest on post-employment benefit obligations |
(5 | ) | (12 | ) | 7 | 58.3% | (15 | ) | (35 | ) | 20 | 57.1% | ||||||||||||||||||||||||||
Impairment of assets |
- | (4 | ) | 4 | 100.0% | (167 | ) | (460 | ) | 293 | 63.7% | |||||||||||||||||||||||||||
Other income (expense) |
35 | (29 | ) | 64 | n.m. | 134 | (156 | ) | 290 | n.m. | ||||||||||||||||||||||||||||
Income taxes |
(306 | ) | (262 | ) | (44 | ) | (16.8%) | (795 | ) | (601 | ) | (194 | ) | (32.3%) | ||||||||||||||||||||||||
Net earnings from continuing operations |
813 | 734 | 79 | 10.8% | 2,234 | 1,752 | 482 | 27.5% | ||||||||||||||||||||||||||||||
Net earnings from discontinued operations |
- | 6 | (6 | ) | (100.0%) | - | 15 | (15 | ) | (100.0%) | ||||||||||||||||||||||||||||
Net earnings |
813 | 740 | 73 | 9.9% | 2,234 | 1,767 | 467 | 26.4% | ||||||||||||||||||||||||||||||
Net earnings from continuing operations attributable to: |
||||||||||||||||||||||||||||||||||||||
Common shareholders |
757 | 686 | 71 | 10.3% | 2,084 | 1,594 | 490 | 30.7% | ||||||||||||||||||||||||||||||
Preferred shareholders |
34 | 32 | 2 | 6.3% | 98 | 104 | (6 | ) | (5.8%) | |||||||||||||||||||||||||||||
Non-controlling interest |
22 | 16 | 6 | 37.5% | 52 | 54 | (2 | ) | (3.7%) | |||||||||||||||||||||||||||||
Net earnings from continuing operations |
813 | 734 | 79 | 10.8% | 2,234 | 1,752 | 482 | 27.5% | ||||||||||||||||||||||||||||||
Net earnings attributable to: |
||||||||||||||||||||||||||||||||||||||
Common shareholders |
757 | 692 | 65 | 9.4% | 2,084 | 1,609 | 475 | 29.5% | ||||||||||||||||||||||||||||||
Preferred shareholders |
34 | 32 | 2 | 6.3% | 98 | 104 | (6 | ) | (5.8%) | |||||||||||||||||||||||||||||
Non-controlling interest |
22 | 16 | 6 | 37.5% | 52 | 54 | (2 | ) | (3.7%) | |||||||||||||||||||||||||||||
Net earnings |
813 | 740 | 73 | 9.9% | 2,234 | 1,767 | 467 | 26.4% | ||||||||||||||||||||||||||||||
Net earnings per common share - basic and diluted |
||||||||||||||||||||||||||||||||||||||
Continuing operations |
$ | 0.83 | $ | 0.76 | $ | 0.07 | 9.2% | $ | 2.30 | $ | 1.76 | $ | 0.54 | 30.7% | ||||||||||||||||||||||||
Discontinued operations |
$ | - | $ | 0.01 | $ | (0.01 | ) | (100.0%) | $ | - | $ | 0.02 | $ | (0.02 | ) | (100.0%) | ||||||||||||||||||||||
Net earnings per common share - basic and diluted |
$ | 0.83 | $ | 0.77 | $ | 0.06 | 7.8% | $ | 2.30 | $ | 1.78 | $ | 0.52 | 29.2% | ||||||||||||||||||||||||
Dividends per common share |
$ | 0.8750 | $ | 0.8325 | $ | 0.0425 | 5.1% | $ | 2.6250 | $ | 2.4975 | $ | 0.13 | 5.1% | ||||||||||||||||||||||||
Weighted average number of common shares outstanding - basic (millions) |
906.9 | 904.3 | 905.5 | 904.3 | ||||||||||||||||||||||||||||||||||
Weighted average number of common shares outstanding - diluted (millions) |
907.6 | 904.4 | 905.7 | 904.4 | ||||||||||||||||||||||||||||||||||
Number of common shares outstanding (millions) |
908.8 | 904.3 | 908.8 | 904.3 | ||||||||||||||||||||||||||||||||||
Adjusted net earnings and EPS |
||||||||||||||||||||||||||||||||||||||
Net earnings attributable to common shareholders |
757 | 692 | 65 | 9.4% | 2,084 | 1,609 | 475 | 29.5% | ||||||||||||||||||||||||||||||
Severance, acquisition and other costs |
36 | 19 | 17 | 89.5% | 106 | 47 | 59 | n.m. | ||||||||||||||||||||||||||||||
Net mark-to-market (gains) losses on derivatives used to economically hedge equity settled share-based compensation plans |
(45 | ) | 10 | (55 | ) | n.m. | (162 | ) | 37 | (199 | ) | n.m. | ||||||||||||||||||||||||||
Net (gains) losses on investments |
- | (22 | ) | 22 | 100.0% | 14 | (43 | ) | 57 | n.m. | ||||||||||||||||||||||||||||
Early debt redemption costs |
- | 16 | (16 | ) | (100.0%) | 39 | 28 | 11 | 39.3% | |||||||||||||||||||||||||||||
Impairment of assets |
- | 3 | (3 | ) | (100.0%) | 122 | 336 | (214 | ) | (63.7%) | ||||||||||||||||||||||||||||
Net earnings from discontinued operations |
- | (6 | ) | 6 | 100.0% | - | (15 | ) | 15 | 100.0% | ||||||||||||||||||||||||||||
Adjusted net earnings (2) |
748 | 712 | 36 | 5.1% | 2,203 | 1,999 | 204 | 10.2% | ||||||||||||||||||||||||||||||
Adjusted EPS (2) |
$ | 0.82 | $ | 0.79 | $ | 0.03 | 3.8% | $ | 2.43 | $ | 2.21 | $ | 0.22 | 10.0% |
n.m. : not meaningful
(A) Excludes post-employment benefit plans service cost
BCE Supplementary Financial Information - Third Quarter 2021 Page 2
BCE
Consolidated Operational Data - Historical Trend
(In millions of Canadian dollars, except share amounts) (unaudited) | YTD 2021 | Q3 21 | Q2 21 | Q1 21 |
TOTAL 2020 |
Q4 20 | Q3 20 | Q2 20 | Q1 20 | |||||||||||||||||||||||||||||||||
Operating revenues |
||||||||||||||||||||||||||||||||||||||||||
Service |
15,107 | 5,099 | 5,040 | 4,968 | 19,832 | 5,090 | 4,924 | 4,800 | 5,018 | |||||||||||||||||||||||||||||||||
Product |
2,133 | 737 | 658 | 738 | 3,051 | 1,012 | 863 | 554 | 622 | |||||||||||||||||||||||||||||||||
Total operating revenues |
17,240 | 5,836 | 5,698 | 5,706 | 22,883 | 6,102 | 5,787 | 5,354 | 5,640 | |||||||||||||||||||||||||||||||||
Operating costs (A) |
(9,575 | ) | (3,213 | ) | (3,159 | ) | (3,203 | ) | (13,007 | ) | (3,633 | ) | (3,268 | ) | (2,959 | ) | (3,147 | ) | ||||||||||||||||||||||||
Post-employment benefit plans service cost |
(202 | ) | (65 | ) | (63 | ) | (74 | ) | (269 | ) | (65 | ) | (65 | ) | (64 | ) | (75 | ) | ||||||||||||||||||||||||
Adjusted EBITDA |
7,463 | 2,558 | 2,476 | 2,429 | 9,607 | 2,404 | 2,454 | 2,331 | 2,418 | |||||||||||||||||||||||||||||||||
Adjusted EBITDA margin |
43.3% | 43.8% | 43.5% | 42.6% | 42.0% | 39.4% | 42.4% | 43.5% | 42.9% | |||||||||||||||||||||||||||||||||
Severance, acquisition and other costs |
(146 | ) | (50 | ) | (7 | ) | (89 | ) | (116 | ) | (52 | ) | (26 | ) | (22 | ) | (16 | ) | ||||||||||||||||||||||||
Depreciation |
(2,702 | ) | (902 | ) | (905 | ) | (895 | ) | (3,475 | ) | (872 | ) | (876 | ) | (869 | ) | (858 | ) | ||||||||||||||||||||||||
Amortization |
(731 | ) | (245 | ) | (248 | ) | (238 | ) | (929 | ) | (233 | ) | (232 | ) | (234 | ) | (230 | ) | ||||||||||||||||||||||||
Finance costs |
||||||||||||||||||||||||||||||||||||||||||
Interest expense |
(807 | ) | (272 | ) | (268 | ) | (267 | ) | (1,110 | ) | (274 | ) | (279 | ) | (280 | ) | (277 | ) | ||||||||||||||||||||||||
Interest on post-employment benefit obligations |
(15 | ) | (5 | ) | (5 | ) | (5 | ) | (46 | ) | (11 | ) | (12 | ) | (11 | ) | (12 | ) | ||||||||||||||||||||||||
Impairment of assets |
(167 | ) | - | (164 | ) | (3 | ) | (472 | ) | (12 | ) | (4 | ) | (449 | ) | (7 | ) | |||||||||||||||||||||||||
Other income (expense) |
134 | 35 | 91 | 8 | (194 | ) | (38 | ) | (29 | ) | (80 | ) | (47 | ) | ||||||||||||||||||||||||||||
Income taxes |
(795 | ) | (306 | ) | (236 | ) | (253 | ) | (792 | ) | (191 | ) | (262 | ) | (96 | ) | (243 | ) | ||||||||||||||||||||||||
Net earnings from continuing operations |
2,234 | 813 | 734 | 687 | 2,473 | 721 | 734 | 290 | 728 | |||||||||||||||||||||||||||||||||
Net earnings from discontinued operations |
- | - | - | - | 226 | 211 | 6 | 4 | 5 | |||||||||||||||||||||||||||||||||
Net earnings |
2,234 | 813 | 734 | 687 | 2,699 | 932 | 740 | 294 | 733 | |||||||||||||||||||||||||||||||||
Net earnings from continuing operations attributable to: |
||||||||||||||||||||||||||||||||||||||||||
Common shareholders |
2,084 | 757 | 685 | 642 | 2,272 | 678 | 686 | 233 | 675 | |||||||||||||||||||||||||||||||||
Preferred shareholders |
98 | 34 | 32 | 32 | 136 | 32 | 32 | 34 | 38 | |||||||||||||||||||||||||||||||||
Non-controlling interest |
52 | 22 | 17 | 13 | 65 | 11 | 16 | 23 | 15 | |||||||||||||||||||||||||||||||||
Net earnings from continuing operations |
2,234 | 813 | 734 | 687 | 2,473 | 721 | 734 | 290 | 728 | |||||||||||||||||||||||||||||||||
Net earnings attributable to: |
||||||||||||||||||||||||||||||||||||||||||
Common shareholders |
2,084 | 757 | 685 | 642 | 2,498 | 889 | 692 | 237 | 680 | |||||||||||||||||||||||||||||||||
Preferred shareholders |
98 | 34 | 32 | 32 | 136 | 32 | 32 | 34 | 38 | |||||||||||||||||||||||||||||||||
Non-controlling interest |
52 | 22 | 17 | 13 | 65 | 11 | 16 | 23 | 15 | |||||||||||||||||||||||||||||||||
Net earnings |
2,234 | 813 | 734 | 687 | 2,699 | 932 | 740 | 294 | 733 | |||||||||||||||||||||||||||||||||
Net earnings per common share - basic and diluted |
||||||||||||||||||||||||||||||||||||||||||
Continuing operations |
$ | 2.30 | $ | 0.83 | $ | 0.76 | $ | 0.71 | $ | 2.51 | $ | 0.75 | $ | 0.76 | $ | 0.26 | $ | 0.74 | ||||||||||||||||||||||||
Discontinued operations |
$ | - | $ | - | $ | - | $ | - | $ | 0.25 | $ | 0.23 | $ | 0.01 | $ | - | $ | 0.01 | ||||||||||||||||||||||||
Net earnings per common share - basic and diluted |
$ | 2.30 | $ | 0.83 | $ | 0.76 | $ | 0.71 | $ | 2.76 | $ | 0.98 | $ | 0.77 | $ | 0.26 | $ | 0.75 | ||||||||||||||||||||||||
Dividends per common share |
$ | 2.6250 | $ | 0.8750 | $ | 0.8750 | $ | 0.8750 | $ | 3.3300 | $ | 0.8325 | $ | 0.8325 | $ | 0.8325 | $ | 0.8325 | ||||||||||||||||||||||||
Weighted average number of common shares outstanding - basic (millions) |
905.5 | 906.9 | 905.0 | 904.5 | 904.3 | 904.4 | 904.3 | 904.3 | 904.1 | |||||||||||||||||||||||||||||||||
Weighted average number of common shares outstanding - diluted (millions) |
905.7 | 907.6 | 905.3 | 904.5 | 904.4 | 904.4 | 904.4 | 904.4 | 904.5 | |||||||||||||||||||||||||||||||||
Number of common shares outstanding (millions) |
908.8 | 908.8 | 905.7 | 904.6 | 904.4 | 904.4 | 904.3 | 904.3 | 904.3 | |||||||||||||||||||||||||||||||||
Adjusted net earnings and EPS |
||||||||||||||||||||||||||||||||||||||||||
Net earnings attributable to common shareholders |
2,084 | 757 | 685 | 642 | 2,498 | 889 | 692 | 237 | 680 | |||||||||||||||||||||||||||||||||
Severance, acquisition and other costs |
106 | 36 | 5 | 65 | 85 | 38 | 19 | 16 | 12 | |||||||||||||||||||||||||||||||||
Net mark-to-market (gains) losses on derivatives used to economically hedge equity settled share-based compensation plans | (162 | ) | (45 | ) | (73 | ) | (44 | ) | 37 | - | 10 | 7 | 20 | |||||||||||||||||||||||||||||
Net losses (gains) on investments |
14 | - | 14 | - | (46 | ) | (3 | ) | (22 | ) | (11 | ) | (10 | ) | ||||||||||||||||||||||||||||
Early debt redemption costs |
39 | - | - | 39 | 37 | 9 | 16 | - | 12 | |||||||||||||||||||||||||||||||||
Impairment of assets |
122 | - | 120 | 2 | 345 | 9 | 3 | 328 | 5 | |||||||||||||||||||||||||||||||||
Net earnings from discontinued operations |
- | - | - | - | (226 | ) | (211 | ) | (6 | ) | (4 | ) | (5 | ) | ||||||||||||||||||||||||||||
Adjusted net earnings |
2,203 | 748 | 751 | 704 | 2,730 | 731 | 712 | 573 | 714 | |||||||||||||||||||||||||||||||||
Adjusted EPS |
$ | 2.43 | $ | 0.82 | $ | 0.83 | $ | 0.78 | $ | 3.02 | $ | 0.81 | $ | 0.79 | $ | 0.63 | $ | 0.79 |
(A) |
Excludes post-employment benefit plans service cost |
BCE Supplementary Financial Information - Third Quarter 2021 Page 3
BCE (1)
Segmented Data
(In millions of Canadian dollars, except where otherwise indicated) (unaudited) |
Q3
2021 |
Q3
2020 |
$ change | % change |
YTD 2021 |
YTD 2020 |
$ change | % change | ||||||||||||||||||||||||||||||||
Operating revenues |
||||||||||||||||||||||||||||||||||||||||
Bell Wireless |
2,296 | 2,318 | (22 | ) | (0.9%) | 6,524 | 6,275 | 249 | 4.0% | |||||||||||||||||||||||||||||||
Bell Wireline |
3,015 | 3,032 | (17 | ) | (0.6%) | 9,099 | 9,111 | (12 | ) | (0.1%) | ||||||||||||||||||||||||||||||
Bell Media |
719 | 628 | 91 | 14.5% | 2,187 | 1,959 | 228 | 11.6% | ||||||||||||||||||||||||||||||||
Inter-segment eliminations |
(194 | ) | (191 | ) | (3 | ) | (1.6%) | (570 | ) | (564 | ) | (6 | ) | (1.1%) | ||||||||||||||||||||||||||
Total |
5,836 | 5,787 | 49 | 0.8% | 17,240 | 16,781 | 459 | 2.7% | ||||||||||||||||||||||||||||||||
Operating costs |
||||||||||||||||||||||||||||||||||||||||
Bell Wireless |
(1,286 | ) | (1,362 | ) | 76 | 5.6% | (3,622 | ) | (3,512 | ) | (110 | ) | (3.1%) | |||||||||||||||||||||||||||
Bell Wireline |
(1,682 | ) | (1,712 | ) | 30 | 1.8% | (5,110 | ) | (5,177 | ) | 67 | 1.3% | ||||||||||||||||||||||||||||
Bell Media |
(504 | ) | (450 | ) | (54 | ) | (12.0%) | (1,615 | ) | (1,453 | ) | (162 | ) | (11.1%) | ||||||||||||||||||||||||||
Inter-segment eliminations |
194 | 191 | 3 | 1.6% | 570 | 564 | 6 | 1.1% | ||||||||||||||||||||||||||||||||
Total |
(3,278 | ) | (3,333 | ) | 55 | 1.7% | (9,777 | ) | (9,578 | ) | (199 | ) | (2.1%) | |||||||||||||||||||||||||||
Adjusted EBITDA |
||||||||||||||||||||||||||||||||||||||||
Bell Wireless |
1,010 | 956 | 54 | 5.6% | 2,902 | 2,763 | 139 | 5.0% | ||||||||||||||||||||||||||||||||
Margin |
44.0% | 41.2% | 2.8 pts | 44.5% | 44.0% | 0.5 pts | ||||||||||||||||||||||||||||||||||
Bell Wireline |
1,333 | 1,320 | 13 | 1.0% | 3,989 | 3,934 | 55 | 1.4% | ||||||||||||||||||||||||||||||||
Margin |
44.2% | 43.5% | 0.7 pts | 43.8% | 43.2% | 0.6 pts | ||||||||||||||||||||||||||||||||||
Bell Media |
215 | 178 | 37 | 20.8% | 572 | 506 | 66 | 13.0% | ||||||||||||||||||||||||||||||||
Margin |
29.9% | 28.3% | 1.6 pts | 26.2% | 25.8% | 0.4 pts | ||||||||||||||||||||||||||||||||||
Total |
2,558 | 2,454 | 104 | 4.2% | 7,463 | 7,203 | 260 | 3.6% | ||||||||||||||||||||||||||||||||
Margin |
43.8% | 42.4% | 1.4 pts | 43.3% | 42.9% | 0.4 pts | ||||||||||||||||||||||||||||||||||
Capital expenditures |
||||||||||||||||||||||||||||||||||||||||
Bell Wireless |
254 | 212 | (42 | ) | (19.8%) | 846 | 524 | (322 | ) | (61.5%) | ||||||||||||||||||||||||||||||
Capital intensity (3) |
11.1% | 9.1% | (2.0) pts | 13.0% | 8.4% | (4.6) pts | ||||||||||||||||||||||||||||||||||
Bell Wireline |
880 | 792 | (88 | ) | (11.1%) | 2,464 | 2,108 | (356 | ) | (16.9%) | ||||||||||||||||||||||||||||||
Capital intensity |
29.2% | 26.1% | (3.1) pts | 27.1% | 23.1% | (4.0) pts | ||||||||||||||||||||||||||||||||||
Bell Media |
25 | 27 | 2 | 7.4% | 68 | 76 | 8 | 10.5% | ||||||||||||||||||||||||||||||||
Capital intensity |
3.5% | 4.3% | 0.8 pts | 3.1% | 3.9% | 0.8 pts | ||||||||||||||||||||||||||||||||||
Total |
1,159 | 1,031 | (128 | ) | (12.4%) | 3,378 | 2,708 | (670 | ) | (24.7%) | ||||||||||||||||||||||||||||||
Capital intensity |
19.9% | 17.8% | (2.1) pts | 19.6% | 16.1% | (3.5) pts | ||||||||||||||||||||||||||||||||||
BCE Supplementary Financial Information - Third Quarter 2021 Page 4
BCE
Segmented Data - Historical Trend
(In millions of Canadian dollars, except where otherwise indicated) (unaudited) |
YTD 2021 |
Q3 21 | Q2 21 | Q1 21 |
TOTAL 2020 |
Q4 20 | Q3 20 | Q2 20 | Q1 20 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Operating revenues |
||||||||||||||||||||||||||||||||||||
Bell Wireless |
6,524 | 2,296 | 2,128 | 2,100 | 8,683 | 2,408 | 2,318 | 1,922 | 2,035 | |||||||||||||||||||||||||||
Bell Wireline |
9,099 | 3,015 | 3,003 | 3,081 | 12,206 | 3,095 | 3,032 | 3,043 | 3,036 | |||||||||||||||||||||||||||
Bell Media |
2,187 | 719 | 755 | 713 | 2,750 | 791 | 628 | 579 | 752 | |||||||||||||||||||||||||||
Inter-segment eliminations |
(570 | ) | (194 | ) | (188 | ) | (188 | ) | (756 | ) | (192 | ) | (191 | ) | (190 | ) | (183 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total |
17,240 | 5,836 | 5,698 | 5,706 | 22,883 | 6,102 | 5,787 | 5,354 | 5,640 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Operating costs |
||||||||||||||||||||||||||||||||||||
Bell Wireless |
(3,622 | ) | (1,286 | ) | (1,159 | ) | (1,177 | ) | (5,017 | ) | (1,505 | ) | (1,362 | ) | (1,043 | ) | (1,107 | ) | ||||||||||||||||||
Bell Wireline |
(5,110 | ) | (1,682 | ) | (1,710 | ) | (1,718 | ) | (6,960 | ) | (1,783 | ) | (1,712 | ) | (1,764 | ) | (1,701 | ) | ||||||||||||||||||
Bell Media |
(1,615 | ) | (504 | ) | (541 | ) | (570 | ) | (2,055 | ) | (602 | ) | (450 | ) | (406 | ) | (597 | ) | ||||||||||||||||||
Inter-segment eliminations |
570 | 194 | 188 | 188 | 756 | 192 | 191 | 190 | 183 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total |
(9,777 | ) | (3,278 | ) | (3,222 | ) | (3,277 | ) | (13,276 | ) | (3,698 | ) | (3,333 | ) | (3,023 | ) | (3,222 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Adjusted EBITDA |
||||||||||||||||||||||||||||||||||||
Bell Wireless |
2,902 | 1,010 | 969 | 923 | 3,666 | 903 | 956 | 879 | 928 | |||||||||||||||||||||||||||
Margin |
44.5% | 44.0% | 45.5% | 44.0% | 42.2% | 37.5% | 41.2% | 45.7% | 45.6% | |||||||||||||||||||||||||||
Bell Wireline |
3,989 | 1,333 | 1,293 | 1,363 | 5,246 | 1,312 | 1,320 | 1,279 | 1,335 | |||||||||||||||||||||||||||
Margin |
43.8% | 44.2% | 43.1% | 44.2% | 43.0% | 42.4% | 43.5% | 42.0% | 44.0% | |||||||||||||||||||||||||||
Bell Media |
572 | 215 | 214 | 143 | 695 | 189 | 178 | 173 | 155 | |||||||||||||||||||||||||||
Margin |
26.2% | 29.9% | 28.3% | 20.1% | 25.3% | 23.9% | 28.3% | 29.9% | 20.6% | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total |
7,463 | 2,558 | 2,476 | 2,429 | 9,607 | 2,404 | 2,454 | 2,331 | 2,418 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Margin |
43.3% | 43.8% | 43.5% | 42.6% | 42.0% | 39.4% | 42.4% | 43.5% | 42.9% | |||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Capital expenditures |
||||||||||||||||||||||||||||||||||||
Bell Wireless |
846 | 254 | 306 | 286 | 916 | 392 | 212 | 182 | 130 | |||||||||||||||||||||||||||
Capital intensity |
13.0% | 11.1% | 14.4% | 13.6% | 10.5% | 16.3% | 9.1% | 9.5% | 6.4% | |||||||||||||||||||||||||||
Bell Wireline |
2,464 | 880 | 877 | 707 | 3,161 | 1,053 | 792 | 694 | 622 | |||||||||||||||||||||||||||
Capital intensity |
27.1% | 29.2% | 29.2% | 22.9% | 25.9% | 34.0% | 26.1% | 22.8% | 20.5% | |||||||||||||||||||||||||||
Bell Media |
68 | 25 | 24 | 19 | 125 | 49 | 27 | 24 | 25 | |||||||||||||||||||||||||||
Capital intensity |
3.1% | 3.5% | 3.2% | 2.7% | 4.5% | 6.2% | 4.3% | 4.1% | 3.3% | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total |
3,378 | 1,159 | 1,207 | 1,012 | 4,202 | 1,494 | 1,031 | 900 | 777 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Capital intensity |
19.6% | 19.9% | 21.2% | 17.7% | 18.4% | 24.5% | 17.8% | 16.8% | 13.8% |
BCE Supplementary Financial Information - Third Quarter 2021 Page 5
Bell Wireless (1)
Q3 | Q3 | YTD | YTD | |||||||||||||||||||||||||||
(In millions of Canadian dollars, except where otherwise indicated) (unaudited) | 2021 | 2020 | % change | 2021 | 2020 | % change | ||||||||||||||||||||||||
Bell Wireless |
||||||||||||||||||||||||||||||
Operating revenues |
||||||||||||||||||||||||||||||
External service revenues |
1,642 | 1,563 | 5.1% | 4,714 | 4,579 | 2.9% | ||||||||||||||||||||||||
Inter-segment service revenues |
12 | 12 | - | 34 | 36 | (5.6%) | ||||||||||||||||||||||||
Total operating service revenues |
1,654 | 1,575 | 5.0% | 4,748 | 4,615 | 2.9% | ||||||||||||||||||||||||
External product revenues |
642 | 742 | (13.5%) | 1,772 | 1,657 | 6.9% | ||||||||||||||||||||||||
Inter-segment product revenues |
- | 1 | (100.0%) | 4 | 3 | 33.3% | ||||||||||||||||||||||||
Total operating product revenues |
642 | 743 | (13.6%) | 1,776 | 1,660 | 7.0% | ||||||||||||||||||||||||
Total external revenues |
2,284 | 2,305 | (0.9%) | 6,486 | 6,236 | 4.0% | ||||||||||||||||||||||||
Total operating revenues |
2,296 | 2,318 | (0.9%) | 6,524 | 6,275 | 4.0% | ||||||||||||||||||||||||
Operating costs |
(1,286 | ) | (1,362 | ) | 5.6% | (3,622 | ) | (3,512 | ) | (3.1%) | ||||||||||||||||||||
Adjusted EBITDA |
1,010 | 956 | 5.6% | 2,902 | 2,763 | 5.0% | ||||||||||||||||||||||||
Adjusted EBITDA margin (Total operating revenues) |
44.0% | 41.2% | 2.8 pts | 44.5% | 44.0% | 0.5 pts | ||||||||||||||||||||||||
Capital expenditures |
254 | 212 | (19.8%) | 846 | 524 | (61.5%) | ||||||||||||||||||||||||
Capital intensity |
11.1% | 9.1% | (2.0) pts | 13.0% | 8.4% | (4.6) pts | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||
Mobile phone subscribers(3)(A) |
||||||||||||||||||||||||||||||
Gross subscriber activations |
470,165 | 457,161 | 2.8% | 1,158,695 | 1,099,851 | 5.4% | ||||||||||||||||||||||||
Postpaid |
336,328 | 308,558 | 9.0% | 828,038 | 697,697 | 18.7% | ||||||||||||||||||||||||
Prepaid |
133,837 | 148,603 | (9.9%) | 330,657 | 402,154 | (17.8%) | ||||||||||||||||||||||||
Net subscriber activations (losses) |
136,464 | 119,345 | 14.3% | 185,116 | 128,959 | 43.5% | ||||||||||||||||||||||||
Postpaid |
114,821 | 78,706 | 45.9% | 192,179 | 79,305 | n.m. | ||||||||||||||||||||||||
Prepaid |
21,643 | 40,639 | (46.7%) | (7,063 | ) | 49,654 | n.m. | |||||||||||||||||||||||
Subscribers end of period (EOP) |
9,349,459 | 9,102,627 | 2.7% | 9,349,459 | 9,102,627 | 2.7% | ||||||||||||||||||||||||
Postpaid |
8,520,518 | 8,254,951 | 3.2% | 8,520,518 | 8,254,951 | 3.2% | ||||||||||||||||||||||||
Prepaid |
828,941 | 847,676 | (2.2%) | 828,941 | 847,676 | (2.2%) | ||||||||||||||||||||||||
Blended average billing per user (ABPU) ($/month)(3) |
74.07 | 73.25 | 1.1% | 72.21 | 71.97 | 0.3% | ||||||||||||||||||||||||
Blended churn (%) (average per month)(3) |
1.21% | 1.25% | 0.04 pts | 1.18% | 1.21% | 0.03 pts | ||||||||||||||||||||||||
Postpaid |
0.93% | 0.98% | 0.05 pts | 0.88% | 0.88% | - | ||||||||||||||||||||||||
Prepaid |
4.15% | 3.98% | (0.17) pts | 4.27% | 4.54% | 0.27 pts | ||||||||||||||||||||||||
Mobile connected device subscribers (3)(A) |
||||||||||||||||||||||||||||||
Net subscriber activations |
33,035 | 41,225 | (19.9%) | 154,643 | 129,032 | 19.8% | ||||||||||||||||||||||||
Subscribers EOP |
2,210,796 | 1,957,204 | 13.0% | 2,210,796 | 1,957,204 | 13.0% |
n.m. : not meaningful
(A) |
Effective January 1, 2021, we changed our wireless operating metrics to reflect our revised approach to reporting wireless subscriber units. Consequently, we are now reporting in two categories, mobile phone subscriber units and mobile connected device subscriber units (e.g. tablets, wearables and mobile Internet devices). Additionally, mobile connected device subscribers now include previously undisclosed Internet of Things (IoT) units (e.g. connected telematics services, monitoring devices, connected cars and fleet management solutions). These changes are consistent with the way we manage our business, reflect our focus on mobile phone subscribers and align to industry peers. As a result, previously reported 2020 subscribers and associated operating metrics (gross and net activations (losses), ABPU and churn) have been restated for comparability. |
BCE Supplementary Financial Information - Third Quarter 2021 Page 6
Bell Wireless - Historical Trend
(In millions of Canadian dollars, except where otherwise indicated) (unaudited) |
YTD 2021 |
Q3 21 | Q2 21 | Q1 21 |
TOTAL
2020 |
Q4 20 | Q3 20 | Q2 20 | Q1 20 | |||||||||||||||||||||||||||||||||
Bell Wireless |
||||||||||||||||||||||||||||||||||||||||||
Operating revenues |
||||||||||||||||||||||||||||||||||||||||||
External service revenues |
4,714 | 1,642 | 1,569 | 1,503 | 6,122 | 1,543 | 1,563 | 1,481 | 1,535 | |||||||||||||||||||||||||||||||||
Inter-segment service revenues |
34 | 12 | 11 | 11 | 47 | 11 | 12 | 12 | 12 | |||||||||||||||||||||||||||||||||
Total operating service revenues |
4,748 | 1,654 | 1,580 | 1,514 | 6,169 | 1,554 | 1,575 | 1,493 | 1,547 | |||||||||||||||||||||||||||||||||
External product revenues |
1,772 | 642 | 546 | 584 | 2,508 | 851 | 742 | 428 | 487 | |||||||||||||||||||||||||||||||||
Inter-segment product revenues |
4 | - | 2 | 2 | 6 | 3 | 1 | 1 | 1 | |||||||||||||||||||||||||||||||||
Total operating product revenues |
1,776 | 642 | 548 | 586 | 2,514 | 854 | 743 | 429 | 488 | |||||||||||||||||||||||||||||||||
Total external revenues |
6,486 | 2,284 | 2,115 | 2,087 | 8,630 | 2,394 | 2,305 | 1,909 | 2,022 | |||||||||||||||||||||||||||||||||
Total operating revenues |
6,524 | 2,296 | 2,128 | 2,100 | 8,683 | 2,408 | 2,318 | 1,922 | 2,035 | |||||||||||||||||||||||||||||||||
Operating costs |
(3,622 | ) | (1,286 | ) | (1,159 | ) | (1,177 | ) | (5,017 | ) | (1,505 | ) | (1,362 | ) | (1,043 | ) | (1,107 | ) | ||||||||||||||||||||||||
Adjusted EBITDA |
2,902 | 1,010 | 969 | 923 | 3,666 | 903 | 956 | 879 | 928 | |||||||||||||||||||||||||||||||||
Adjusted EBITDA margin (Total operating revenues) |
44.5% | 44.0% | 45.5% | 44.0% | 42.2% | 37.5% | 41.2% | 45.7% | 45.6% | |||||||||||||||||||||||||||||||||
Capital expenditures |
846 | 254 | 306 | 286 | 916 | 392 | 212 | 182 | 130 | |||||||||||||||||||||||||||||||||
Capital intensity |
13.0% | 11.1% | 14.4% | 13.6% | 10.5% | 16.3% | 9.1% | 9.5% | 6.4% | |||||||||||||||||||||||||||||||||
Mobile phone subscribers(A) |
||||||||||||||||||||||||||||||||||||||||||
Gross subscriber activations |
1,158,695 | 470,165 | 348,403 | 340,127 | 1,545,173 | 445,322 | 457,161 | 309,133 | 333,557 | |||||||||||||||||||||||||||||||||
Postpaid |
828,038 | 336,328 | 242,720 | 248,990 | 1,025,748 | 328,051 | 308,558 | 179,589 | 209,550 | |||||||||||||||||||||||||||||||||
Prepaid |
330,657 | 133,837 | 105,683 | 91,137 | 519,425 | 117,271 | 148,603 | 129,544 | 124,007 | |||||||||||||||||||||||||||||||||
Net subscriber activations (losses) |
185,116 | 136,464 | 46,247 | 2,405 | 190,675 | 61,716 | 119,345 | 12,110 | (2,496 | ) | ||||||||||||||||||||||||||||||||
Postpaid |
192,179 | 114,821 | 44,433 | 32,925 | 152,693 | 73,388 | 78,706 | (960 | ) | 1,559 | ||||||||||||||||||||||||||||||||
Prepaid |
(7,063 | ) | 21,643 | 1,814 | (30,520 | ) | 37,982 | (11,672 | ) | 40,639 | 13,070 | (4,055 | ) | |||||||||||||||||||||||||||||
Subscribers EOP |
9,349,459 | 9,349,459 | 9,212,995 | 9,166,748 | 9,164,343 | 9,164,343 | 9,102,627 | 8,983,282 | 8,971,172 | |||||||||||||||||||||||||||||||||
Postpaid |
8,520,518 | 8,520,518 | 8,405,697 | 8,361,264 | 8,328,339 | 8,328,339 | 8,254,951 | 8,176,245 | 8,177,205 | |||||||||||||||||||||||||||||||||
Prepaid |
828,941 | 828,941 | 807,298 | 805,484 | 836,004 | 836,004 | 847,676 | 807,037 | 793,967 | |||||||||||||||||||||||||||||||||
Blended ABPU ($/month) |
72.21 | 74.07 | 72.21 | 70.34 | 72.01 | 72.13 | 73.25 | 69.88 | 72.78 | |||||||||||||||||||||||||||||||||
Blended churn (%) (average per month) |
1.18% | 1.21% | 1.10% | 1.23% | 1.26% | 1.40% | 1.25% | 1.11% | 1.26% | |||||||||||||||||||||||||||||||||
Postpaid |
0.88% | 0.93% | 0.83% | 0.89% | 0.92% | 1.06% | 0.98% | 0.76% | 0.89% | |||||||||||||||||||||||||||||||||
Prepaid |
4.27% | 4.15% | 3.98% | 4.68% | 4.60% | 4.79% | 3.98% | 4.63% | 5.03% | |||||||||||||||||||||||||||||||||
Mobile connected device subscribers(A) |
||||||||||||||||||||||||||||||||||||||||||
Net subscriber activations |
154,643 | 33,035 | 47,449 | 74,159 | 227,981 | 98,949 | 41,225 | 38,843 | 48,964 | |||||||||||||||||||||||||||||||||
Subscribers EOP |
2,210,796 | 2,210,796 | 2,177,761 | 2,130,312 | 2,056,153 | 2,056,153 | 1,957,204 | 1,915,979 | 1,877,136 |
(A) |
Effective January 1, 2021, we changed our wireless operating metrics to reflect our revised approach to reporting wireless subscriber units. Consequently, we are now reporting in two categories, mobile phone subscriber units and mobile connected device subscriber units (e.g. tablets, wearables and mobile Internet devices). Additionally, mobile connected device subscribers now include previously undisclosed IoT units (e.g. connected telematics services, monitoring devices, connected cars and fleet management solutions). These changes are consistent with the way we manage our business, reflect our focus on mobile phone subscribers and align to industry peers. As a result, previously reported 2020 subscribers and associated operating metrics (gross and net activations (losses), ABPU and churn) have been restated for comparability. |
BCE Supplementary Financial Information - Third Quarter 2021 Page 7
Bell Wireline (1)
Q3 | Q3 | YTD | YTD | |||||||||||||||||||||||||||
(In millions of Canadian dollars, except where otherwise indicated) (unaudited) | 2021 | 2020 | % change | 2021 | 2020 | % change | ||||||||||||||||||||||||
Bell Wireline |
||||||||||||||||||||||||||||||
Operating revenues |
||||||||||||||||||||||||||||||
Data |
1,976 | 1,931 | 2.3% | 5,885 | 5,738 | 2.6% | ||||||||||||||||||||||||
Voice |
778 | 839 | (7.3%) | 2,375 | 2,574 | (7.7%) | ||||||||||||||||||||||||
Other services |
73 | 61 | 19.7% | 214 | 181 | 18.2% | ||||||||||||||||||||||||
Total external service revenues |
2,827 | 2,831 | (0.1%) | 8,474 | 8,493 | (0.2%) | ||||||||||||||||||||||||
Inter-segment service revenues |
93 | 80 | 16.3% | 264 | 236 | 11.9% | ||||||||||||||||||||||||
Total operating service revenues |
2,920 | 2,911 | 0.3% | 8,738 | 8,729 | 0.1% | ||||||||||||||||||||||||
Data |
86 | 110 | (21.8%) | 331 | 346 | (4.3%) | ||||||||||||||||||||||||
Equipment and other |
9 | 11 | (18.2%) | 30 | 36 | (16.7%) | ||||||||||||||||||||||||
Total external product revenues |
95 | 121 | (21.5%) | 361 | 382 | (5.5%) | ||||||||||||||||||||||||
Inter-segment product revenues |
- | - | - | - | - | - | ||||||||||||||||||||||||
Total operating product revenues |
95 | 121 | (21.5%) | 361 | 382 | (5.5%) | ||||||||||||||||||||||||
Total external revenues |
2,922 | 2,952 | (1.0%) | 8,835 | 8,875 | (0.5%) | ||||||||||||||||||||||||
Total operating revenues |
3,015 | 3,032 | (0.6%) | 9,099 | 9,111 | (0.1%) | ||||||||||||||||||||||||
Operating costs |
(1,682 | ) | (1,712 | ) | 1.8% | (5,110 | ) | (5,177 | ) | 1.3% | ||||||||||||||||||||
Adjusted EBITDA |
1,333 | 1,320 | 1.0% | 3,989 | 3,934 | 1.4% | ||||||||||||||||||||||||
Adjusted EBITDA margin |
44.2% | 43.5% | 0.7 pts | 43.8% | 43.2% | 0.6 pts | ||||||||||||||||||||||||
Capital expenditures |
880 | 792 | (11.1%) | 2,464 | 2,108 | (16.9%) | ||||||||||||||||||||||||
Capital intensity |
29.2% | 26.1% | (3.1) pts | 27.1% | 23.1% | (4.0) pts | ||||||||||||||||||||||||
Retail high-speed Internet subscribers (3) |
||||||||||||||||||||||||||||||
Retail net subscriber activations |
65,779 | 62,859 | 4.6% | 104,667 | 104,477 | 0.2% | ||||||||||||||||||||||||
Retail subscribers EOP(A) |
3,814,035 | 3,660,078 | 4.2% | 3,814,035 | 3,660,078 | 4.2% | ||||||||||||||||||||||||
Retail TV subscribers (3) |
||||||||||||||||||||||||||||||
Retail net subscriber activations (losses) |
10,521 | (296 | ) | n.m. | (3,519 | ) | (34,395 | ) | 89.8% | |||||||||||||||||||||
Internet protocol television (IPTV) |
31,641 | 18,837 | 68.0% | 46,877 | 18,085 | n.m. | ||||||||||||||||||||||||
Satellite |
(21,120 | ) | (19,133 | ) | (10.4%) | (50,396 | ) | (52,480 | ) | 4.0% | ||||||||||||||||||||
Total retail subscribers EOP(B) |
2,728,961 | 2,738,069 | (0.3%) | 2,728,961 | 2,738,069 | (0.3%) | ||||||||||||||||||||||||
IPTV |
1,853,250 | 1,785,267 | 3.8% | 1,853,250 | 1,785,267 | 3.8% | ||||||||||||||||||||||||
Satellite(B) |
875,711 | 952,802 | (8.1%) | 875,711 | 952,802 | (8.1%) | ||||||||||||||||||||||||
Retail residential network access services (NAS)(3) |
||||||||||||||||||||||||||||||
Retail residential NAS lines net losses |
(42,755 | ) | (49,792 | ) | 14.1% | (145,116 | ) | (159,792 | ) | 9.2% | ||||||||||||||||||||
Retail residential NAS lines |
2,338,816 | 2,537,691 | (7.8%) | 2,338,816 | 2,537,691 | (7.8%) |
n.m. : not meaningful
(A) |
At the beginning of Q1 2021, our retail high-speed Internet subscriber base was increased by 4,778 subscribers due to the transfer of fixed wireless Internet subscribers from our mobiled connected devices subscriber base. |
(B) |
At the beginning of Q1 2021, we adjusted our satellite TV subscriber base to remove 6,125 non-revenue generating units. |
BCE Supplementary Financial Information - Third Quarter 2021 Page 8
Bell Wireline - Historical Trend
(In millions of Canadian dollars, except where otherwise indicated) (unaudited) |
YTD 2021 |
Q3 21 | Q2 21 | Q1 21 |
TOTAL 2020 |
|
Q4 20 | Q3 20 | Q2 20 | Q1 20 | ||||||||||||||||||||||||||||||||||||||
Bell Wireline |
||||||||||||||||||||||||||||||||||||||||||||||||
Operating revenues |
||||||||||||||||||||||||||||||||||||||||||||||||
Data |
5,885 | 1,976 | 1,944 | 1,965 | 7,691 | 1,953 | 1,931 | 1,916 | 1,891 | |||||||||||||||||||||||||||||||||||||||
Voice |
2,375 | 778 | 794 | 803 | 3,402 | 828 | 839 | 863 | 872 | |||||||||||||||||||||||||||||||||||||||
Other services |
214 | 73 | 67 | 74 | 248 | 67 | 61 | 58 | 62 | |||||||||||||||||||||||||||||||||||||||
Total external service revenues |
8,474 | 2,827 | 2,805 | 2,842 | 11,341 | 2,848 | 2,831 | 2,837 | 2,825 | |||||||||||||||||||||||||||||||||||||||
Inter-segment service revenues |
264 | 93 | 86 | 85 | 321 | 85 | 80 | 80 | 76 | |||||||||||||||||||||||||||||||||||||||
Total operating service revenues |
8,738 | 2,920 | 2,891 | 2,927 | 11,662 | 2,933 | 2,911 | 2,917 | 2,901 | |||||||||||||||||||||||||||||||||||||||
Data |
331 | 86 | 101 | 144 | 494 | 148 | 110 | 113 | 123 | |||||||||||||||||||||||||||||||||||||||
Equipment and other |
30 | 9 | 11 | 10 | 49 | 13 | 11 | 13 | 12 | |||||||||||||||||||||||||||||||||||||||
Total external product revenues |
361 | 95 | 112 | 154 | 543 | 161 | 121 | 126 | 135 | |||||||||||||||||||||||||||||||||||||||
Inter-segment product revenues |
- | - | - | - | 1 | 1 | - | - | - | |||||||||||||||||||||||||||||||||||||||
Total operating product revenues |
361 | 95 | 112 | 154 | 544 | 162 | 121 | 126 | 135 | |||||||||||||||||||||||||||||||||||||||
Total external revenues |
8,835 | 2,922 | 2,917 | 2,996 | 11,884 | 3,009 | 2,952 | 2,963 | 2,960 | |||||||||||||||||||||||||||||||||||||||
Total operating revenues |
9,099 | 3,015 | 3,003 | 3,081 | 12,206 | 3,095 | 3,032 | 3,043 | 3,036 | |||||||||||||||||||||||||||||||||||||||
Operating costs |
(5,110 | ) | (1,682 | ) | (1,710 | ) | (1,718 | ) | (6,960 | ) | (1,783 | ) | (1,712 | ) | (1,764 | ) | (1,701 | ) | ||||||||||||||||||||||||||||||
Adjusted EBITDA |
3,989 | 1,333 | 1,293 | 1,363 | 5,246 | 1,312 | 1,320 | 1,279 | 1,335 | |||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA margin |
43.8% | 44.2% | 43.1% | 44.2% | 43.0% | 42.4% | 43.5% | 42.0% | 44.0% | |||||||||||||||||||||||||||||||||||||||
Capital expenditures |
2,464 | 880 | 877 | 707 | 3,161 | 1,053 | 792 | 694 | 622 | |||||||||||||||||||||||||||||||||||||||
Capital intensity |
27.1% | 29.2% | 29.2% | 22.9% | 25.9% | 34.0% | 26.1% | 22.8% | 20.5% | |||||||||||||||||||||||||||||||||||||||
Retail high-speed Internet subscribers |
||||||||||||||||||||||||||||||||||||||||||||||||
Retail net subscriber activations |
104,667 | 65,779 | 17,680 | 21,208 | 148,989 | 44,512 | 62,859 | 19,023 | 22,595 | |||||||||||||||||||||||||||||||||||||||
Retail subscribers EOP(A) |
3,814,035 | 3,814,035 | 3,748,256 | 3,730,576 | 3,704,590 | 3,704,590 | 3,660,078 | 3,597,219 | 3,578,196 | |||||||||||||||||||||||||||||||||||||||
Retail TV subscribers |
||||||||||||||||||||||||||||||||||||||||||||||||
Retail net subscriber (losses) activations |
(3,519 | ) | 10,521 | (4,928 | ) | (9,112 | ) | (33,859 | ) | 536 | (296 | ) | (15,544 | ) | (18,555 | ) | ||||||||||||||||||||||||||||||||
IPTV |
46,877 | 31,641 | 4,540 | 10,696 | 39,191 | 21,106 | 18,837 | (3,604 | ) | 2,852 | ||||||||||||||||||||||||||||||||||||||
Satellite |
(50,396 | ) | (21,120 | ) | (9,468 | ) | (19,808 | ) | (73,050 | ) | (20,570 | ) | (19,133 | ) | (11,940 | ) | (21,407 | ) | ||||||||||||||||||||||||||||||
Total retail subscribers EOP(B) |
2,728,961 | 2,728,961 | 2,718,440 | 2,723,368 | 2,738,605 | 2,738,605 | 2,738,069 | 2,738,365 | 2,753,909 | |||||||||||||||||||||||||||||||||||||||
IPTV |
1,853,250 | 1,853,250 | 1,821,609 | 1,817,069 | 1,806,373 | 1,806,373 | 1,785,267 | 1,766,430 | 1,770,034 | |||||||||||||||||||||||||||||||||||||||
Satellite(B) |
875,711 | 875,711 | 896,831 | 906,299 | 932,232 | 932,232 | 952,802 | 971,935 | 983,875 | |||||||||||||||||||||||||||||||||||||||
Retail residential NAS |
||||||||||||||||||||||||||||||||||||||||||||||||
Retail residential NAS lines net losses |
(145,116 | ) | (42,755 | ) | (51,292 | ) | (51,069 | ) | (213,551 | ) | (53,759 | ) | (49,792 | ) | (48,405 | ) | (61,595 | ) | ||||||||||||||||||||||||||||||
Retail residential NAS lines |
2,338,816 | 2,338,816 | 2,381,571 | 2,432,863 | 2,483,932 | 2,483,932 | 2,537,691 | 2,587,483 | 2,635,888 |
(A) |
At the beginning of Q1 2021, our retail high-speed Internet subscriber base was increased by 4,778 subscribers due to the transfer of fixed wireless Internet subscribers from our mobiled connected devices subscriber base. |
(B) |
At the beginning of Q1 2021, we adjusted our satellite TV subscriber base to remove 6,125 non-revenue generating units. |
BCE Supplementary Financial Information - Third Quarter 2021 Page 9
BCE
Net debt and other information
BCE - Net debt and preferred shares |
||||||||||||||||||||||||||||||||||||||
(In millions of Canadian dollars, except where otherwise indicated) (unaudited) | ||||||||||||||||||||||||||||||||||||||
September 30 | June 30 | March 31 | December 31 | |||||||||||||||||||||||||||||||||||
2021 | 2021 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||
Debt due within one year |
1,994 | 2,304 | 3,786 | 2,417 | ||||||||||||||||||||||||||||||||||
Long-term debt |
27,070 | 25,422 | 24,965 | 23,906 | ||||||||||||||||||||||||||||||||||
50% of preferred shares |
2,002 | 2,002 | 2,002 | 2,002 | ||||||||||||||||||||||||||||||||||
Cash and cash equivalents |
(2,167 | ) | (1,752 | ) | (2,607 | ) | (224 | ) | ||||||||||||||||||||||||||||||
Net debt (2) |
28,899 | 27,976 | 28,146 | 28,101 | ||||||||||||||||||||||||||||||||||
Net debt leverage ratio (2) |
2.93 | 2.87 | 2.93 | 2.93 | ||||||||||||||||||||||||||||||||||
Adjusted EBITDA /net interest expense ratio (2) |
8.75 | 8.62 | 8.40 | 8.32 | ||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||
Cash flow information |
||||||||||||||||||||||||||||||||||||||
(In millions of Canadian dollars, except where otherwise indicated) (unaudited) | Q3 | Q3 | YTD | YTD | ||||||||||||||||||||||||||||||||||
2021 | 2020 | $ change | % change | 2021 | 2020 | $ change | % change | |||||||||||||||||||||||||||||||
Free cash flow (FCF) (2) |
||||||||||||||||||||||||||||||||||||||
Cash flows from operating activities |
1,774 | 2,110 | (336 | ) | (15.9% | ) | 6,265 | 6,123 | 142 | 2.3% | ||||||||||||||||||||||||||||
Capital expenditures |
(1,159 | ) | (1,031 | ) | (128 | ) | (12.4% | ) | (3,378 | ) | (2,708 | ) | (670 | ) | (24.7% | ) | ||||||||||||||||||||||
Cash dividends paid on preferred shares |
(31 | ) | (32 | ) | 1 | 3.1% | (93 | ) | (101 | ) | 8 | 7.9% | ||||||||||||||||||||||||||
Cash dividends paid by subsidiaries to non-controlling interest |
(13 | ) | (11 | ) | (2 | ) | (18.2% | ) | (41 | ) | (37 | ) | (4 | ) | (10.8% | ) | ||||||||||||||||||||||
Acquisition and other costs paid |
- | 13 | (13 | ) | (100.0% | ) | 6 | 33 | (27 | ) | (81.8% | ) | ||||||||||||||||||||||||||
Cash from discontinued operations (included in cash flows from operating activities) |
- | (15 | ) | 15 | 100.0% | - | (54 | ) | 54 | 100.0% | ||||||||||||||||||||||||||||
FCF |
571 | 1,034 | (463 | ) | (44.8% | ) | 2,759 | 3,256 | (497 | ) | (15.3% | ) | ||||||||||||||||||||||||||
Cash flow information - Historical trend |
||||||||||||||||||||||||||||||||||||||
(In millions of Canadian dollars, except where otherwise indicated) (unaudited) | YTD | Q3 | Q2 | Q1 | TOTAL | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||||||||||
2021 | 2021 | 2021 | 2021 | 2020 | 2020 | 2020 | 2020 | 2020 | ||||||||||||||||||||||||||||||
FCF |
||||||||||||||||||||||||||||||||||||||
Cash flows from operating activities |
6,265 | 1,774 | 2,499 | 1,992 | 7,754 | 1,631 | 2,110 | 2,562 | 1,451 | |||||||||||||||||||||||||||||
Capital expenditures |
(3,378 | ) | (1,159 | ) | (1,207 | ) | (1,012 | ) | (4,202 | ) | (1,494 | ) | (1,031 | ) | (900 | ) | (777 | ) | ||||||||||||||||||||
Cash dividends paid on preferred shares |
(93 | ) | (31 | ) | (31 | ) | (31 | ) | (132 | ) | (31 | ) | (32 | ) | (33 | ) | (36 | ) | ||||||||||||||||||||
Cash dividends paid by subsidiaries to non-controlling interest |
(41 | ) | (13 | ) | (15 | ) | (13 | ) | (53 | ) | (16 | ) | (11 | ) | (12 | ) | (14 | ) | ||||||||||||||||||||
Acquisition and other costs paid |
6 | - | 2 | 4 | 35 | 2 | 13 | 11 | 9 | |||||||||||||||||||||||||||||
Cash from discontinued operations (included in cash flows from operating activities) |
- | - | - | - | (54 | ) | - | (15 | ) | (17 | ) | (22 | ) | |||||||||||||||||||||||||
FCF |
2,759 | 571 | 1,248 | 940 | 3,348 | 92 | 1,034 | 1,611 | 611 | |||||||||||||||||||||||||||||
BCE Supplementary Financial Information - Third Quarter 2021 Page 10
BCE
Consolidated Statements of Financial Position
(In millions of Canadian dollars, except where otherwise indicated) (unaudited) |
September 30 2021 |
June 30 2021 |
March 31 2021 |
December 31
2020 |
||||||||||||||||||||||
ASSETS |
||||||||||||||||||||||||||
Current assets |
||||||||||||||||||||||||||
Cash |
2,086 | 1,752 | 1,907 | 224 | ||||||||||||||||||||||
Cash equivalents |
81 | - | 700 | - | ||||||||||||||||||||||
Trade and other receivables |
3,498 | 3,244 | 3,247 | 3,528 | ||||||||||||||||||||||
Inventory |
418 | 418 | 459 | 439 | ||||||||||||||||||||||
Contract assets |
410 | 467 | 563 | 687 | ||||||||||||||||||||||
Contract costs |
464 | 441 | 424 | 402 | ||||||||||||||||||||||
Prepaid expenses |
292 | 346 | 345 | 209 | ||||||||||||||||||||||
Other current assets |
292 | 278 | 244 | 199 | ||||||||||||||||||||||
Total current assets |
7,541 | 6,946 | 7,889 | 5,688 | ||||||||||||||||||||||
Non-current assets |
||||||||||||||||||||||||||
Contract assets |
235 | 230 | 236 | 256 | ||||||||||||||||||||||
Contract costs |
373 | 364 | 344 | 362 | ||||||||||||||||||||||
Property, plant and equipment |
27,825 | 27,554 | 27,370 | 27,513 | ||||||||||||||||||||||
Intangible assets |
13,367 | 13,263 | 13,227 | 13,102 | ||||||||||||||||||||||
Deferred tax assets |
124 | 118 | 107 | 106 | ||||||||||||||||||||||
Investments in associates and joint ventures |
697 | 725 | 745 | 756 | ||||||||||||||||||||||
Post-employment benefit assets |
3,785 | 3,185 | 2,601 | 1,277 | ||||||||||||||||||||||
Other non-current assets |
1,811 | 1,167 | 1,124 | 1,001 | ||||||||||||||||||||||
Goodwill |
10,578 | 10,579 | 10,606 | 10,604 | ||||||||||||||||||||||
Total non-current assets |
58,795 | 57,185 | 56,360 | 54,977 | ||||||||||||||||||||||
Total assets |
66,336 | 64,131 | 64,249 | 60,665 | ||||||||||||||||||||||
LIABILITIES |
||||||||||||||||||||||||||
Current liabilities |
||||||||||||||||||||||||||
Trade payables and other liabilities |
4,131 | 3,904 | 3,723 | 3,935 | ||||||||||||||||||||||
Contract liabilities |
748 | 767 | 762 | 717 | ||||||||||||||||||||||
Interest payable |
159 | 228 | 181 | 222 | ||||||||||||||||||||||
Dividends payable |
810 | 806 | 804 | 766 | ||||||||||||||||||||||
Current tax liabilities |
162 | 344 | 271 | 214 | ||||||||||||||||||||||
Debt due within one year |
1,994 | 2,304 | 3,786 | 2,417 | ||||||||||||||||||||||
Total current liabilities |
8,004 | 8,353 | 9,527 | 8,271 | ||||||||||||||||||||||
Non-current liabilities |
||||||||||||||||||||||||||
Contract liabilities |
245 | 242 | 242 | 242 | ||||||||||||||||||||||
Long-term debt |
27,070 | 25,422 | 24,965 | 23,906 | ||||||||||||||||||||||
Deferred tax liabilities |
4,824 | 4,530 | 4,285 | 3,810 | ||||||||||||||||||||||
Post-employment benefit obligations |
1,672 | 1,734 | 1,723 | 1,962 | ||||||||||||||||||||||
Other non-current liabilities |
1,012 | 1,081 | 1,141 | 1,145 | ||||||||||||||||||||||
Total non-current liabilities |
34,823 | 33,009 | 32,356 | 31,065 | ||||||||||||||||||||||
Total liabilities |
42,827 | 41,362 | 41,883 | 39,336 | ||||||||||||||||||||||
EQUITY |
||||||||||||||||||||||||||
Equity attributable to BCE shareholders |
||||||||||||||||||||||||||
Preferred shares |
4,003 | 4,003 | 4,003 | 4,003 | ||||||||||||||||||||||
Common shares |
20,646 | 20,467 | 20,400 | 20,390 | ||||||||||||||||||||||
Contributed surplus |
1,151 | 1,156 | 1,154 | 1,174 | ||||||||||||||||||||||
Accumulated other comprehensive income |
320 | 204 | 163 | 103 | ||||||||||||||||||||||
Deficit |
(2,962 | ) | (3,401 | ) | (3,693 | ) | (4,681 | ) | ||||||||||||||||||
Total equity attributable to BCE shareholders |
23,158 | 22,429 | 22,027 | 20,989 | ||||||||||||||||||||||
Non-controlling interest |
351 | 340 | 339 | 340 | ||||||||||||||||||||||
Total equity |
23,509 | 22,769 | 22,366 | 21,329 | ||||||||||||||||||||||
Total liabilities and equity |
66,336 | 64,131 | 64,249 | 60,665 | ||||||||||||||||||||||
Number of common shares outstanding (millions) |
908.8 | 905.7 | 904.6 | 904.4 |
BCE Supplementary Financial Information - Third Quarter 2021 Page 11
BCE
Consolidated Cash Flow Data
(In millions of Canadian dollars, except where otherwise indicated) (unaudited) |
Q3
2021 |
Q3
2020 |
$ change |
YTD
2021 |
YTD
2020 |
$ change | ||||||||||||||||||||||||||
Net earnings from continuing operations |
813 | 734 | 79 | 2,234 | 1,752 | 482 | ||||||||||||||||||||||||||
Adjustments to reconcile net earnings from continuing operations to cash flows from operating activities |
||||||||||||||||||||||||||||||||
Severance, acquisition and other costs |
50 | 26 | 24 | 146 | 64 | 82 | ||||||||||||||||||||||||||
Depreciation and amortization |
1,147 | 1,108 | 39 | 3,433 | 3,299 | 134 | ||||||||||||||||||||||||||
Post-employment benefit plans cost |
70 | 77 | (7 | ) | 217 | 239 | (22 | ) | ||||||||||||||||||||||||
Net interest expense |
268 | 273 | (5 | ) | 794 | 818 | (24 | ) | ||||||||||||||||||||||||
Impairment of assets |
- | 4 | (4 | ) | 167 | 460 | (293 | ) | ||||||||||||||||||||||||
Income taxes |
306 | 262 | 44 | 795 | 601 | 194 | ||||||||||||||||||||||||||
Contributions to post-employment benefit plans |
(64 | ) | (69 | ) | 5 | (213 | ) | (219 | ) | 6 | ||||||||||||||||||||||
Payments under other post-employment benefit plans |
(16 | ) | (15 | ) | (1 | ) | (47 | ) | (44 | ) | (3 | ) | ||||||||||||||||||||
Severance and other costs paid |
(31 | ) | (11 | ) | (20 | ) | (153 | ) | (59 | ) | (94 | ) | ||||||||||||||||||||
Interest paid |
(352 | ) | (321 | ) | (31 | ) | (888 | ) | (877 | ) | (11 | ) | ||||||||||||||||||||
Income taxes paid (net of refunds) |
(407 | ) | (236 | ) | (171 | ) | (611 | ) | (463 | ) | (148 | ) | ||||||||||||||||||||
Acquisition and other costs paid |
- | (13 | ) | 13 | (6 | ) | (33 | ) | 27 | |||||||||||||||||||||||
Change in contract assets |
53 | 178 | (125 | ) | 299 | 572 | (273 | ) | ||||||||||||||||||||||||
Change in wireless device financing plan receivables |
(92 | ) | (322 | ) | 230 | (244 | ) | (548 | ) | 304 | ||||||||||||||||||||||
Net change in operating assets and liabilities |
29 | 420 | (391 | ) | 342 | 507 | (165 | ) | ||||||||||||||||||||||||
Cash from discontinued operations |
- | 15 | (15 | ) | - | 54 | (54 | ) | ||||||||||||||||||||||||
Cash flows from operating activities |
1,774 | 2,110 | (336 | ) | 6,265 | 6,123 | 142 | |||||||||||||||||||||||||
Capital expenditures |
(1,159 | ) | (1,031 | ) | (128 | ) | (3,378 | ) | (2,708 | ) | (670 | ) | ||||||||||||||||||||
Cash dividends paid on preferred shares |
(31 | ) | (32 | ) | 1 | (93 | ) | (101 | ) | 8 | ||||||||||||||||||||||
Cash dividends paid by subsidiaries to non-controlling interest |
(13 | ) | (11 | ) | (2 | ) | (41 | ) | (37 | ) | (4 | ) | ||||||||||||||||||||
Acquisition and other costs paid |
- | 13 | (13 | ) | 6 | 33 | (27 | ) | ||||||||||||||||||||||||
Cash from discontinued operations (included in cash flows from operating activities) |
- | (15 | ) | 15 | - | (54 | ) | 54 | ||||||||||||||||||||||||
Free cash flow |
571 | 1,034 | (463 | ) | 2,759 | 3,256 | (497 | ) | ||||||||||||||||||||||||
Cash from discontinued operations (included in cash flows from operating activities) |
- | 15 | (15 | ) | - | 54 | (54 | ) | ||||||||||||||||||||||||
Business acquisitions |
(1 | ) | - | (1 | ) | (12 | ) | (23 | ) | 11 | ||||||||||||||||||||||
Acquisition and other costs paid |
- | (13 | ) | 13 | (6 | ) | (33 | ) | 27 | |||||||||||||||||||||||
Acquisition of spectrum licences |
(3 | ) | (85 | ) | 82 | (3 | ) | (86 | ) | 83 | ||||||||||||||||||||||
Spectrum payment |
(415 | ) | - | (415 | ) | (415 | ) | - | (415 | ) | ||||||||||||||||||||||
Other investing activities |
(11 | ) | (49 | ) | 38 | (49 | ) | (67 | ) | 18 | ||||||||||||||||||||||
Cash used in discontinued operations (included in cash flows from investing activities) |
- | (6 | ) | 6 | - | (21 | ) | 21 | ||||||||||||||||||||||||
Decrease (increase) in notes payable and bank advances |
(322 | ) | 317 | (639 | ) | (368 | ) | (1,117 | ) | 749 | ||||||||||||||||||||||
Decrease in securitized trade receivables |
(7 | ) | (23 | ) | 16 | (20 | ) | (23 | ) | 3 | ||||||||||||||||||||||
Issue of long-term debt |
1,570 | 750 | 820 | 4,985 | 6,006 | (1,021 | ) | |||||||||||||||||||||||||
Repayment of long-term debt |
(249 | ) | (979 | ) | 730 | (2,516 | ) | (3,909 | ) | 1,393 | ||||||||||||||||||||||
Issue of common shares |
172 | - | 172 | 245 | 22 | 223 | ||||||||||||||||||||||||||
Purchase of shares for settlement of share-based payments |
(83 | ) | (40 | ) | (43 | ) | (245 | ) | (209 | ) | (36 | ) | ||||||||||||||||||||
Cash dividends paid on common shares |
(793 | ) | (753 | ) | (40 | ) | (2,337 | ) | (2,222 | ) | (115 | ) | ||||||||||||||||||||
Other financing activities |
(14 | ) | (32 | ) | 18 | (75 | ) | (87 | ) | 12 | ||||||||||||||||||||||
Cash used in discontinued operations (included in cash flows from financing activities) |
- | (4 | ) | 4 | - | (7 | ) | 7 | ||||||||||||||||||||||||
(156 | ) | (902 | ) | 746 | (816 | ) | (1,722 | ) | 906 | |||||||||||||||||||||||
Net increase in cash and cash equivalents |
415 | 132 | 283 | 1,943 | 1,534 | 409 | ||||||||||||||||||||||||||
Cash and cash equivalents at beginning of period |
1,752 | 1,547 | 205 | 224 | 145 | 79 | ||||||||||||||||||||||||||
Cash and cash equivalents at end of period |
2,167 | 1,679 | 488 | 2,167 | 1,679 | 488 |
BCE Supplementary Financial Information - Third Quarter 2021 Page 12
BCE
Consolidated Cash Flow Data - Historical Trend
(In millions of Canadian dollars, except where otherwise indicated) (unaudited) |
YTD
2021 |
Q3 21 | Q2 21 | Q1 21 |
TOTAL
2020 |
Q4 20 | Q3 20 | Q2 20 | Q1 20 | |||||||||||||||||||||||||||||||||
Net earnings from continuing operations |
2,234 | 813 | 734 | 687 | 2,473 | 721 | 734 | 290 | 728 | |||||||||||||||||||||||||||||||||
Adjustments to reconcile net earnings from continuing operations to cash flows from operating activities |
||||||||||||||||||||||||||||||||||||||||||
Severance, acquisition and other costs |
146 | 50 | 7 | 89 | 116 | 52 | 26 | 22 | 16 | |||||||||||||||||||||||||||||||||
Depreciation and amortization |
3,433 | 1,147 | 1,153 | 1,133 | 4,404 | 1,105 | 1,108 | 1,103 | 1,088 | |||||||||||||||||||||||||||||||||
Post-employment benefit plans cost |
217 | 70 | 68 | 79 | 315 | 76 | 77 | 75 | 87 | |||||||||||||||||||||||||||||||||
Net interest expense |
794 | 268 | 263 | 263 | 1,087 | 269 | 273 | 275 | 270 | |||||||||||||||||||||||||||||||||
Impairment of assets |
167 | - | 164 | 3 | 472 | 12 | 4 | 449 | 7 | |||||||||||||||||||||||||||||||||
Gains on investments |
- | - | - | - | (3 | ) | (3 | ) | - | - | - | |||||||||||||||||||||||||||||||
Income taxes |
795 | 306 | 236 | 253 | 792 | 191 | 262 | 96 | 243 | |||||||||||||||||||||||||||||||||
Contributions to post-employment benefit plans |
(213 | ) | (64 | ) | (70 | ) | (79 | ) | (297 | ) | (78 | ) | (69 | ) | (71 | ) | (79 | ) | ||||||||||||||||||||||||
Payments under other post-employment benefit plans |
(47 | ) | (16 | ) | (16 | ) | (15 | ) | (61 | ) | (17 | ) | (15 | ) | (12 | ) | (17 | ) | ||||||||||||||||||||||||
Severance and other costs paid |
(153 | ) | (31 | ) | (79 | ) | (43 | ) | (78 | ) | (19 | ) | (11 | ) | (13 | ) | (35 | ) | ||||||||||||||||||||||||
Interest paid |
(888 | ) | (352 | ) | (230 | ) | (306 | ) | (1,112 | ) | (235 | ) | (321 | ) | (240 | ) | (316 | ) | ||||||||||||||||||||||||
Income taxes paid (net of refunds) |
(611 | ) | (407 | ) | (95 | ) | (109 | ) | (846 | ) | (383 | ) | (236 | ) | 6 | (233 | ) | |||||||||||||||||||||||||
Acquisition and other costs paid |
(6 | ) | - | (2 | ) | (4 | ) | (35 | ) | (2 | ) | (13 | ) | (11 | ) | (9 | ) | |||||||||||||||||||||||||
Change in contract assets |
299 | 53 | 102 | 144 | 704 | 132 | 178 | 239 | 155 | |||||||||||||||||||||||||||||||||
Change in wireless device financing plan receivables |
(244 | ) | (92 | ) | (61 | ) | (91 | ) | (867 | ) | (319 | ) | (322 | ) | (150 | ) | (76 | ) | ||||||||||||||||||||||||
Net change in operating assets and liabilities |
342 | 29 | 325 | (12 | ) | 636 | 129 | 420 | 487 | (400 | ) | |||||||||||||||||||||||||||||||
Cash from discontinued operations |
- | - | - | - | 54 | - | 15 | 17 | 22 | |||||||||||||||||||||||||||||||||
Cash flows from operating activities |
6,265 | 1,774 | 2,499 | 1,992 | 7,754 | 1,631 | 2,110 | 2,562 | 1,451 | |||||||||||||||||||||||||||||||||
Capital expenditures |
(3,378 | ) | (1,159 | ) | (1,207 | ) | (1,012 | ) | (4,202 | ) | (1,494 | ) | (1,031 | ) | (900 | ) | (777 | ) | ||||||||||||||||||||||||
Cash dividends paid on preferred shares |
(93 | ) | (31 | ) | (31 | ) | (31 | ) | (132 | ) | (31 | ) | (32 | ) | (33 | ) | (36 | ) | ||||||||||||||||||||||||
Cash dividends paid by subsidiaries to non-controlling interest |
(41 | ) | (13 | ) | (15 | ) | (13 | ) | (53 | ) | (16 | ) | (11 | ) | (12 | ) | (14 | ) | ||||||||||||||||||||||||
Acquisition and other costs paid |
6 | - | 2 | 4 | 35 | 2 | 13 | 11 | 9 | |||||||||||||||||||||||||||||||||
Cash from discontinued operations (included in cash flows from operating activities) |
- | - | - | - | (54 | ) | - | (15 | ) | (17 | ) | (22 | ) | |||||||||||||||||||||||||||||
Free cash flow |
2,759 | 571 | 1,248 | 940 | 3,348 | 92 | 1,034 | 1,611 | 611 | |||||||||||||||||||||||||||||||||
Cash from discontinued operations (included in cash flows from operating activities) |
- | - | - | - | 54 | - | 15 | 17 | 22 | |||||||||||||||||||||||||||||||||
Business acquisitions |
(12 | ) | (1 | ) | (11 | ) | - | (65 | ) | (42 | ) | - | (23 | ) | - | |||||||||||||||||||||||||||
Acquisition and other costs paid |
(6 | ) | - | (2 | ) | (4 | ) | (35 | ) | (2 | ) | (13 | ) | (11 | ) | (9 | ) | |||||||||||||||||||||||||
Acquisition of spectrum licences |
(3 | ) | (3 | ) | - | - | (86 | ) | - | (85 | ) | - | (1 | ) | ||||||||||||||||||||||||||||
Spectrum payment |
(415 | ) | (415 | ) | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||
Other investing activities |
(49 | ) | (11 | ) | (17 | ) | (21 | ) | (79 | ) | (12 | ) | (49 | ) | (13 | ) | (5 | ) | ||||||||||||||||||||||||
Cash from (used in) discontinued operations (included in cash flows from investing activities) |
- | - | - | - | 892 | 913 | (6 | ) | (8 | ) | (7 | ) | ||||||||||||||||||||||||||||||
(Decrease) increase in notes payable and bank advances |
(368 | ) | (322 | ) | 311 | (357 | ) | (1,641 | ) | (524 | ) | 317 | (1,204 | ) | (230 | ) | ||||||||||||||||||||||||||
(Decrease) increase in securitized trade receivables |
(20 | ) | (7 | ) | - | (13 | ) | - | 23 | (23 | ) | (400 | ) | 400 | ||||||||||||||||||||||||||||
Issue of long-term debt |
4,985 | 1,570 | 500 | 2,915 | 6,006 | - | 750 | 1,975 | 3,281 | |||||||||||||||||||||||||||||||||
Repayment of long-term debt |
(2,516 | ) | (249 | ) | (2,041 | ) | (226 | ) | (5,003 | ) | (1,094 | ) | (979 | ) | (2,221 | ) | (709 | ) | ||||||||||||||||||||||||
Issue of common shares |
245 | 172 | 63 | 10 | 26 | 4 | - | - | 22 | |||||||||||||||||||||||||||||||||
Purchase of shares for settlement of share-based payments |
(245 | ) | (83 | ) | (71 | ) | (91 | ) | (263 | ) | (54 | ) | (40 | ) | (75 | ) | (94 | ) | ||||||||||||||||||||||||
Cash dividends paid on common shares |
(2,337 | ) | (793 | ) | (791 | ) | (753 | ) | (2,975 | ) | (753 | ) | (753 | ) | (753 | ) | (716 | ) | ||||||||||||||||||||||||
Other financing activities |
(75 | ) | (14 | ) | (44 | ) | (17 | ) | (93 | ) | (6 | ) | (32 | ) | (25 | ) | (30 | ) | ||||||||||||||||||||||||
Cash used in discontinued operations (included in cash flows from financing activities) |
- | - | - | - | (7 | ) | - | (4 | ) | (2 | ) | (1 | ) | |||||||||||||||||||||||||||||
(816 | ) | (156 | ) | (2,103 | ) | 1,443 | (3,269 | ) | (1,547 | ) | (902 | ) | (2,743 | ) | 1,923 | |||||||||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents |
1,943 | 415 | (855 | ) | 2,383 | 79 | (1,455 | ) | 132 | (1,132 | ) | 2,534 | ||||||||||||||||||||||||||||||
Cash and cash equivalents at beginning of period |
224 | 1,752 | 2,607 | 224 | 145 | 1,679 | 1,547 | 2,679 | 145 | |||||||||||||||||||||||||||||||||
Cash and cash equivalents at end of period |
2,167 | 2,167 | 1,752 | 2,607 | 224 | 224 | 1,679 | 1,547 | 2,679 |
BCE Supplementary Financial Information - Third Quarter 2021 Page 13
Accompanying Notes
(1) |
Our results are reported in three segments: Bell Wireless, Bell Wireline and Bell Media. Our segments reflect how we manage our business and how we classify our operations for planning and measuring performance. |
Throughout this report, we, us, our, BCE and the company mean, as the context may require, either BCE Inc. or, collectively, BCE Inc., Bell Canada, their subsidiaries, joint arrangements and associates. Bell means, as the context may require, either Bell Canada or, collectively, Bell Canada, its subsidiaries, joint arrangements and associates.
(2) |
Non-GAAP Financial Measures |
Adjusted EBITDA and adjusted EBITDA margin
The terms adjusted EBITDA and adjusted EBITDA margin do not have any standardized meaning under IFRS. Therefore, they are unlikely to be comparable to similar measures presented by other issuers.
We define adjusted EBITDA as operating revenues less operating costs (including post-employment benefit plans service cost) as shown in BCEs consolidated income statements. Adjusted EBITDA for BCEs segments is the same as segment profit as reported in BCEs consolidated financial statements. We define adjusted EBITDA margin as adjusted EBITDA divided by operating revenues.
We use adjusted EBITDA and adjusted EBITDA margin to evaluate the performance of our businesses as they reflect their ongoing profitability. We believe that certain investors and analysts use adjusted EBITDA to measure a companys ability to service debt and to meet other payment obligations or as a common measurement to value companies in the telecommunications industry. We believe that certain investors and analysts also use adjusted EBITDA and adjusted EBITDA margin to evaluate the performance of our businesses. Adjusted EBITDA also is one component in the determination of short-term incentive compensation for all management employees.
Adjusted EBITDA and adjusted EBITDA margin have no directly comparable IFRS financial measure. Alternatively, adjusted EBITDA may be reconciled to net earnings as shown in this document.
Adjusted net earnings and adjusted EPS
The terms adjusted net earnings and adjusted EPS do not have any standardized meaning under IFRS. Therefore, they are unlikely to be comparable to similar measures presented by other issuers.
We define adjusted net earnings as net earnings attributable to common shareholders before severance, acquisition and other costs, net mark-to-market losses (gains) on derivatives used to economically hedge equity settled share-based compensation plans, net losses (gains) on investments, early debt redemption costs, impairment of assets and discontinued operations, net of tax and non-controlling interest (NCI). We define adjusted EPS as adjusted net earnings per BCE common share.
We use adjusted net earnings and adjusted EPS, and we believe that certain investors and analysts use these measures, among other ones, to assess the performance of our businesses without the effects of severance, acquisition and other costs, net mark-to-market losses (gains) on derivatives used to economically hedge equity settled share-based compensation plans, net losses (gains) on investments, early debt redemption costs, impairment of assets and discontinued operations, net of tax and NCI. We exclude these items because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding these items does not imply they are non-recurring.
The most comparable IFRS financial measures are net earnings attributable to common shareholders and EPS, as reconciled in this document.
BCE Supplementary Financial Information - Third Quarter 2021 Page 14
Free cash flow
The term free cash flow does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other issuers.
We define free cash flow as cash flows from operating activities, excluding cash from discontinued operations, acquisition and other costs paid (which include significant litigation costs) and voluntary pension funding, less capital expenditures, preferred share dividends and dividends paid by subsidiaries to NCI. We exclude cash from discontinued operations, acquisition and other costs paid and voluntary pension funding because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding these items does not imply they are non-recurring.
We consider free cash flow to be an important indicator of the financial strength and performance of our businesses because it shows how much cash is available to pay dividends on common shares, repay debt and reinvest in our company.
We believe that certain investors and analysts use free cash flow to value a business and its underlying assets and to evaluate the financial strength and performance of our businesses.
The most comparable IFRS financial measure is cash flows from operating activities, as reconciled in this document.
Net debt
The term net debt does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other issuers.
We define net debt as debt due within one year plus long-term debt and 50% of preferred shares, less cash and cash equivalents, as shown in BCEs consolidated statements of financial position. We include 50% of outstanding preferred shares in our net debt as it is consistent with the treatment by certain credit rating agencies.
We consider net debt to be an important indicator of the companys financial leverage because it represents the amount of debt that is not covered by available cash and cash equivalents. We believe that certain investors and analysts use net debt to determine a companys financial leverage.
Net debt has no directly comparable IFRS financial measure, but rather is calculated using several asset and liability categories from the statements of financial position, as shown in this document.
Net debt leverage ratio
The net debt leverage ratio does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other issuers. We use, and believe that certain investors and analysts use, the net debt leverage ratio as a measure of financial leverage.
The net debt leverage ratio represents net debt divided by adjusted EBITDA. For the purposes of calculating our net debt leverage ratio, adjusted EBITDA is twelve-month trailing adjusted EBITDA.
Adjusted EBITDA to net interest expense ratio
The ratio of adjusted EBITDA to net interest expense does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other issuers. We use, and believe that certain investors and analysts use, the adjusted EBITDA to net interest expense ratio as a measure of financial health of the company.
BCE Supplementary Financial Information - Third Quarter 2021 Page 15
The adjusted EBITDA to net interest expense ratio represents adjusted EBITDA divided by net interest expense. For the purposes of calculating our adjusted EBITDA to net interest expense ratio, adjusted EBITDA is twelve-month trailing adjusted EBITDA. Net interest expense is twelve-month trailing net interest expense as shown in our statements of cash flows, plus 50% of declared preferred share dividends as shown in our income statements.
(3) |
Key performance indicators (KPIs) |
In addition to the non-GAAP financial measures described previously, we use a number of KPIs to measure the success of our strategic imperatives. These KPIs are not accounting measures and may not be comparable to similar measures presented by other issuers.
Capital intensity is capital expenditures divided by operating revenues.
Mobile phone average billing per user (ABPU) or subscriber approximates the average amount billed to customers on a monthly basis, including monthly billings related to device financing receivables owing from customers on contract, which is used to track our recurring billing streams. Mobile phone blended ABPU is calculated by dividing customer billings by the average mobile phone subscriber base for the specified period and is expressed as a dollar unit per month.
Mobile phone churn is the rate at which existing mobile phone subscribers cancel their services. It is a measure of our ability to retain our customers. Mobile phone churn is calculated by dividing the number of mobile phone deactivations during a given period by the average number of mobile phone subscribers in the base for the specified period and is expressed as a percentage per month.
Mobile phone subscriber unit is comprised of a recurring revenue generating portable unit (e.g. smartphones and feature phones) on an active service plan, that has access to our wireless networks and includes voice, text and/or data connectivity. We report mobile phone subscriber units in two categories: postpaid and prepaid. Prepaid mobile phone subscriber units are considered active for a period of 90 days following the expiry of the subscribers prepaid balance.
Mobile connected device subscriber unit is comprised of a recurring revenue generating portable unit (e.g. tablets, wearables, mobile Internet devices and Internet of Things) on an active service plan, that has access to our wireless networks and is intended for limited or no cellular voice capability.
Wireline subscriber unit consists of an active revenue-generating unit with access to our services, including retail Internet, satellite TV, IPTV, and/or residential NAS. A subscriber is included in our subscriber base when the service has been installed and is operational at the customer premise and a billing relationship has been established.
● |
Retail Internet, IPTV and satellite TV subscribers have access to stand-alone services, and are primarily represented by a dwelling unit |
● |
Retail residential NAS subscribers are based on a line count and are represented by a unique telephone number |
BCE Supplementary Financial Information - Third Quarter 2021 Page 16
Exhibit 99.4
Form 52-109F2 Certification of Interim Filings - Full Certificate
I, Mirko Bibic, President and Chief Executive Officer of BCE Inc., certify the following:
1. Review: I have reviewed the interim financial report and interim MD&A (together, the interim filings) of BCE Inc. (the issuer) for the interim period ended September 30, 2021.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4. Responsibility: The issuers other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers Annual and Interim Filings, for the issuer.
5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuers other certifying officer(s) and I have, as at the end of the period covered by the interim filings
A. |
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
I. |
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and |
II. |
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
B. |
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuers GAAP. |
5.1 Control framework: The control framework the issuers other certifying officer(s) and I used to design the issuers ICFR is the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
5.2 N/A
5.3 N/A
6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuers ICFR that occurred during the period beginning on July 1, 2021 and ended on September 30, 2021 that has materially affected, or is reasonably likely to materially affect, the issuers ICFR.
Date: November 4, 2021
(signed) Mirko Bibic | ||||
Mirko Bibic | ||||
President and Chief Executive Officer |
Form 52-109F2 Certification of Interim Filings - Full Certificate
I, Glen LeBlanc, Executive Vice-President and Chief Financial Officer of BCE Inc., certify the following:
1. Review: I have reviewed the interim financial report and interim MD&A (together, the interim filings) of BCE Inc. (the issuer) for the interim period ended September 30, 2021.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4. Responsibility: The issuers other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers Annual and Interim Filings, for the issuer.
5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuers other certifying officer(s) and I have, as at the end of the period covered by the interim filings
A. |
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
I. |
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and |
II. |
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
B. |
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuers GAAP. |
5.1 Control framework: The control framework the issuers other certifying officer(s) and I used to design the issuers ICFR is the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
5.2 N/A
5.3 N/A
6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuers ICFR that occurred during the period beginning on July 1, 2021 and ended on September 30, 2021 that has materially affected, or is reasonably likely to materially affect, the issuers ICFR.
Date: November 4, 2021
(signed) Glen LeBlanc | ||||
Glen LeBlanc | ||||
Executive Vice-President and Chief Financial Officer |
Exhibit 99.5
|
|
This news release contains forward-looking statements. For a description of the related risk factors and assumptions, please see the section entitled Caution Regarding Forward-Looking Statements later in this news release.
BCE reports third quarter 2021 results
● |
Net earnings grew 9.9% to $813 million with net earnings attributable to common shareholders increasing 9.4% to $757 million, or $0.83 per common share, up 7.8%; 5.1% higher adjusted net earnings(1) of $748 million generated adjusted EPS(1) of $0.82, up 3.8% |
● |
3.6% consolidated service revenue growth drove 4.2% higher adjusted EBITDA(2) |
● |
266,919 total wireless mobile phone and mobile connected device, retail Internet and IPTV net subscriber activations increased 10.2% |
● |
136,464 mobile phone net subscriber activations(4), up 14.3%; best-ever Q3 postpaid churn rate at 0.93%; quarterly wireless service revenue and adjusted EBITDA recovered to pre-COVID levels in 2019, growing 5.0% and 5.6% respectively in Q3 |
● |
65,779 retail Internet net subscriber activations represents best quarterly performance in 15 years with 9% residential Internet revenue growth; IPTV net subscriber activations up 68% to 31,641 |
● |
Media revenue grew 14.5%, reflecting higher advertiser spending across all platforms; digital revenue increased 32% and now represents 22% of total media revenue |
● |
Strong financial position maintained with $6.1 billion of available liquidity(5) at end of Q3 |
● |
Reconfirming all 2021 financial guidance targets |
MONTRÉAL, November 4, 2021 BCE Inc. (TSX, NYSE: BCE) today reported results for the third quarter (Q3) of 2021.
With a clear strategic roadmap to build back from the impacts of COVID-19 and invest in the growth opportunities ahead, our team delivered positive performances across all Bell operating segments in Q3. Bells leading fibre and 5G broadband networks, and the wireline, wireless and media innovations they enable, are clearly delivering the connections Canadian consumers and business customers need as we all work to recover from the impacts of the COVID crisis, said Mirko Bibic, President and CEO of BCE Inc. and Bell Canada.
As pace of our recovery from the crisis quickens, the strong demand for the speed and connectivity advantages of Bells leading networks and services is clearly reflected in our Q3 results. Our fast-growing fibre network powered Bells best quarterly retail Internet net subscriber activations in 15 years and a 9% increase in residential Internet revenue as we also grew IPTV net subscriber activations by 68%. At the same time, the unparalleled performance advantages of Bells wireless networks drove a 46% increase in postpaid mobile phone net additions and exceptional growth in service revenue and adjusted EBITDA.
The Bell team has achieved our objective to steadily improve results each quarter since Q2 2020, when our business experienced its heaviest impacts from the COVID crisis. We have grown total revenue and adjusted EBITDA back to the levels of pre-pandemic Q3 2019 while at the same time significantly accelerating our next-generation network infrastructure investments to help our customers and company come back better from the COVID crisis. As reflected in the Bell for Better initiative, including the historic two-year $1.7 billion acceleration in our 5G, fibre
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and rural network rollouts, the Bell team is committed to championing customer experience, investing in our communities and driving our countrys ongoing recovery and resurgence.
KEY BUSINESS DEVELOPMENTS
Building the best network: Canadas fastest 5G
Executing our accelerated network investment plan with a 12.4% increase in capital expenditures in Q3, Bell network rollouts included pure fibre Internet for 52 smaller communities in Manitoba, Ontario, Québec and the Atlantic provinces and Bell 5G in communities large and small across multiple provinces. Bell is on track to meet or exceed our 2021 targets for new fibre and Wireless Home Internet locations passed, and to offer 5G coverage to more than 70% of the national population by the end of the year.
PCMag again determined that Bells mobile networks are the fastest in the country in its latest national network performance tests, while Global Wireless Solutions (GWS) ranked Bell 5G as Canadas best. With the most awarded 5G network in Canada, Bell is driving the next generation of mobile innovation including the expansion of TSN 5G View / Vision 5G RDS access to Toronto Raptors home games in addition to regional coverage of the Montréal Canadiens and Toronto Maple Leafs; a 5G collaboration with Tiny Mile for its fleet of food delivery robots in downtown Toronto; and a partnership with TikTok Canada to power its unique Paint Portal multi-user Augmented Reality effect.
Leading the digital transformation of Canadian business
Building on Bells strategic agreement with Amazon Web Services (AWS) to accelerate 5G innovation and cloud adoption, were working with VMware Cloud and AWS to support enterprise business and government organizations in managing their hybrid cloud strategies. Bell is also offering enterprise customers a portfolio of Software-as-a-Service (SaaS) solutions to support their digital transformations, including Smart Supply Chain by Bell IoT Smart Connect for fleet and supply chain operators. Were also working with Esri, Canadas leading geographic information system (GIS) provider, on the Bell Integrated Smart City Ecosystem and with international AI-powered contact centre software provider NICE, to expand access to NICE CXone for Contact Centre as a Service in Canada.
Expanding consumer choice with service innovation, compelling content
Delivering new options for mobility and media customers, Virgin Plus reduced pricing on mobile data plans, achieving the federal governments 25% price reduction target well ahead of the January 2022 deadline, and Bell Media announced Crave Mobile, offering access to the streaming services unparalleled content library on a single mobile device, and Crave Total for multiple user access across a full range of screens.
Canadas top-ranked sports networks TSN and RDS are delivering more major league sports action this fall-winter season including the Toronto Raptors, the CFL, and the NFL on CTV as well as TSN and RDS. CTV Comedy Channel remained Canadas most watched entertainment specialty channel for the third year in a row, while Noovo continues to lead viewership growth in conventional French-language TV. The Noovo Info news service aired its first French-language federal leaders debate and election night coverage alongside CTVs coverage in English. Reflecting a focus on accelerating digital revenue growth, Bell Media launched the Bell DSP ad-tech platform with advanced advertising company Xandr.
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Bell for Better: Mental health in the community
To mark Mental Illness Awareness Week, Bell Lets Talk announced the 113 recipients of the 2021 Bell Lets Talk Community Fund in every region of Canada, including South and Central Health Foundation in Grand Falls-Windsor, Newfoundland and Labrador; Legacy of Hope Foundation in Gloucester, Ontario; and Le Centre de Prévention du Suicide (CPS) Côte-Nord in Baie-Comeau, Québec. Bell Lets Talk also introduced a mental health podcast series featuring mental health experts and guests from Black, Indigenous and People of Colour (BIPOC) communities, and a mobile app in partnership with Strongest Families Institute (SFI) to enhance access to SFIs proven mental health programs for remote communities.
Bell continues to abide by its COVID-19 operating principles and all government protocols, with a focus on protecting the health and safety of our customers, colleagues and communities. In preparation for a gradual and voluntary return to Bell office locations for more team members this fall, we introduced the Bell Workways program to provide many of our employees with flexible remote and mobile work options and are implementing a mandatory vaccination policy for Bell team members nationally.
BCE Q3 RESULTS
Financial Highlights
Our consolidated Q3 financial results demonstrated another step forward in our COVID recovery and continued strong operational execution, including strong residential wireline performance, industry-leading wireless service revenue and adjusted EBITDA growth, and higher advertising revenue across all TV platforms. Total revenue and adjusted EBITDA are essentially back to Q3 2019 levels with BCE service revenue up 3.6% and adjusted EBITDA 4.2% higher, contributing to a year-over-year increase in net earnings of 9.9% despite ongoing COVID headwinds, said Glen LeBlanc, Chief Financial Officer for BCE and Bell Canada.
With strong marketplace performance and free cash flow, bolstered by exceptional liquidity, a well-structured balance sheet and a net debt leverage ratio that is the lowest among our Canadian peers, Bell remains on track to meet our 2021 financial guidance targets, lead investment in next-generation broadband networks and services, and deliver on our capital markets objectives for BCE shareholders.
3/15
● |
BCE operating revenue was up 0.8% over Q3 2020 to $5,836 million, driven by a 3.6% increase in service revenue to $5,099 million reflecting year-over-year increases at all Bell operating segments. Product revenue decreased 14.6% to $737 million, the result of fewer mobile device transactions and lower business wireline data equipment sales. |
● |
Net earnings increased 9.9% to $813 million and net earnings attributable to common shareholders totalled $757 million, or $0.83 per share, up 9.4% and 7.8% respectively. The increases were driven by adjusted EBITDA growth and higher other income due mainly to net mark-to-market gains on derivatives used to economically hedge equity settled share-based compensation. This was partly offset by increased depreciation and amortization expense, higher severance, acquisition and other costs as well as higher income taxes. |
● |
Adjusted net earnings were $748 million, or $0.82 per common share, up 5.1% and 3.8% respectively, from $712 million, or $0.79 per common share, in Q3 2020. |
● |
Adjusted EBITDA grew 4.2% in Q3 to $2,558 million, driven by year-over-year increases at all Bell operating segments. BCEs consolidated adjusted EBITDA margin(2) increased 1.4 percentage points to 43.8% from 42.4% in Q3 2020, due to the flow-through of higher service revenue and a 1.7% reduction in total operating costs that reflected a year-over-year decrease in low-margin product sales and the non-recurrence of a number of COVID-19 related expenses incurred last year. |
● |
BCE capital expenditures increased 12.4% to $1,159 million, a capital intensity(4) ratio of 19.9%, compared to 17.8% in Q3 2020. The year-over-year increase in capital spending is consistent with our 2-year program to accelerate the rollout of Bells 5G, fibre and rural Wireless Home Internet networks. |
● |
BCE cash flows from operating activities totalled $1,774 million, down 15.9% from Q3 2020, due to a reduction in cash from the timing of working capital changes and higher income taxes paid, partly offset by higher adjusted EBITDA. |
● |
Free cash flow decreased 44.8% to $571 million, compared to $1,034 million in Q3 2020, due to lower cash flows from operating activities, excluding cash from discontinued operations and acquisition and other costs paid, and higher capital expenditures. |
Q3 OPERATING RESULTS BY SEGMENT
Bell Wireless
● |
Total wireless operating revenue decreased 0.9% to $2,296 million, due to lower year-over-year product revenue, partly offset by strong service revenue growth. |
● |
Service revenue increased 5.0% to $1,654 million, the result of robust mobile phone postpaid subscriber base growth over the past year, driven by our disciplined focus on higher-value smartphone loadings and continued strong demand for Bells IoT solutions. Roaming revenue increased modestly over Q3 2020, reflecting increased travel due to easing of COVID-19 restrictions. |
● |
Product revenue was down 13.6% to $642 million, due to a reduction in sales transaction volumes attributable to fewer customer device upgrades and a greater mix of bring-your-own-device customer activations. |
● |
Wireless adjusted EBITDA increased 5.6% to $1,010 million, reflecting the flow-through of higher service revenue and a 5.6% reduction in operating costs, consistent with lower product sales, which delivered a 2.8 percentage point margin increase to 44.0%. |
● |
Bell added 136,464 total net new postpaid and prepaid mobile phone subscriber activations, up 14.3% from 119,345 in Q3 2020. |
● |
Postpaid mobile phone net subscriber activations were up 45.9% to 114,821 from 78,706 in Q3 2020. The notable increase was driven by a 9.0% increase in gross subscriber |
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activations, reflecting pent-up customer demand and greater consumer traffic from the reopening of all retail stores compared to last years COVID-19 restrictions, and higher direct and digital channel sales volumes. Postpaid mobile phone customer churn(4) improved 5 basis points to 0.93%, representing our best-ever Q3 result. |
● |
Prepaid mobile phone net subscriber activations were 21,643, down from 40,639 in Q3 2020. This result can be attributed to a 9.9% decrease in gross activations from lower market activity due to the ongoing slowdown in immigration and international travel during COVID-19. Mobile phone prepaid customer churn increased 17 basis points to 4.15%, reflecting greater competitive intensity in the discount mobile market. |
● |
Bells mobile phone customer base totalled 9,349,459 at the end of Q3 2021, a 2.7% increase over last year, comprising 8,520,518 postpaid subscribers, up 3.2%, and 828,941 prepaid customers, down 2.2% compared to Q3 2020. |
● |
Blended mobile phone average billing per user (ABPU)(4) was up 1.1% to $74.07, driven by greater customer adoption of higher-value rate plans, including unlimited data plans, and a modest year-over-year increase in roaming. |
● |
Mobile connected device net activations were down 19.9% to 33,035, despite strong growth in Bells business IoT net connections, due to higher data device net losses as we continue de-emphasizing unprofitable, low-ABPU tablet transactions. Mobile connected device subscribers totalled 2,210,796 at the end of Q3 2021, an increase of 13.0% over last year. |
Bell Wireline
● |
Total wireline operating revenue decreased 0.6% to $3,015 million. |
● |
Wireline service revenue was up 0.3% to $2,920 million, the result of a 9.1% increase in residential Internet revenue that was partly offset by lower business markets revenue due to exceptionally high demand in Q3 2020 for conferencing services, remote collaboration tools and voice connectivity as a result of work-at-home protocols enacted by Canadian enterprises because of COVID-19 restrictions. |
● |
Product revenue decreased 21.5% to $95 million, due to higher sales of data equipment in Q3 2020 as large enterprise and government sector customers spent on capacity and network facilities to connect more employees working remotely, as well as the timing of data equipment sales in 2021. |
● |
Wireline adjusted EBITDA grew 1.0% to $1,333 million, reflecting a 1.8% reduction in operating costs that contributed to a 0.7 percentage-point improvement in margin to 44.2%. |
● |
Bell added 65,779 net retail Internet subscribers, 4.6% more than Q3 2020. This represents our best quarterly result in 15 years, driven by the accelerated buildout of Bells all-fibre and Wireless Home Internet service footprints, and a more active back-to-school period compared to last year. Retail Internet subscribers totalled 3,814,035 at the end of Q3, a 4.2% increase over Q3 last year. |
● |
Bell TV added 31,641 net new retail IPTV subscribers, up 68.0% from 18,837 in Q3 2020. This represents our best quarterly result in two years, reflecting the success of our multi-brand strategy, including standalone Fibe TV subscriptions and Fibe TV app streaming services, as well as more typical back-to-school student market activity and more live sporting programming this year. At the end of Q3, Bell served 1,853,250 retail IPTV subscribers, up 3.8% from last year. |
● |
Retail satellite TV net subscriber losses increased 10.4% to 21,120, due to lower gross activations compared to last year. Bells retail satellite TV customer base totalled 875,711 at the end of Q3, down 8.1% compared to last year. |
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● |
Retail residential NAS net losses improved 14.1% to 42,755, reflecting fewer customer deactivations during COVID-19. Bells retail residential NAS customer base totalled 2,338,816 at the end of Q3, a 7.8% decline since Q3 2020. |
Bell Media
● |
Media operating revenue increased 14.5% in Q3 to $719 million, driven by increased advertiser spending across TV, radio, out of home and digital media platforms as the COVID-19 economic recovery takes hold more fully, as well as higher subscriber revenue. |
● |
Adjusted EBITDA was up 20.8% to $215 million, resulting in a 1.6 percentage point increase in margin to 29.9%. This was driven by the flow-through of higher year-over-year revenue, despite a 12% increase in operating costs reflecting more live sports events and TV programming compared to last year when COVID-19 related TV production shutdowns and delays occurred, and the non-recurrence of Canada Emergency Wage Subsidy (CEWS) funding received in Q3 2020. |
● |
Advertising revenue increased 18.6% this quarter, driven by stronger conventional and specialty TV performance, due to a timelier start to the new fall TV programming season, more live sporting events compared to 2020, and revenue generated from the recent federal election. |
● |
Subscriber revenue was up 12.3% in Q3, driven by a 5% year-over-year increase in Crave subscribers. Digital revenue grew 32% due to rapid expansion of CTVs AVOD product, continued scaling of the SAM TV media sales tool and continued Crave growth. |
● |
TSN and RDS were Canadas top-ranked English and French-language sports networks for Q3 and the full 2020/2021 broadcast year. |
● |
Bell Medias English-language entertainment specialty channels achieved record rankings, with CTV Comedy, Discovery and CTV Drama claiming the top 3 spots. |
● |
Noovo continued to gain viewership over its French-language competitors with primetime audiences up 18% in the current fall TV season. |
COMMON SHARE DIVIDEND
BCEs Board of Directors has declared a quarterly dividend of $0.875 per common share, payable on January 15, 2022 to shareholders of record at the close of business on December 15, 2021.
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OUTLOOK FOR 2021
BCE confirmed its financial guidance targets for 2021, as provided on February 4, 2021, as follows:
February 4 Guidance |
November 4 Guidance |
|||||
Revenue growth | 2% 5% | On track | ||||
Adjusted EBITDA growth | 2% 5% | On track | ||||
Capital intensity | 18% 20% | On track | ||||
Adjusted EPS growth | 1% 6% | On track | ||||
Free cash flow ($M) | $2,850 $3,200 | On track | ||||
Annualized common dividend per share | $3.50 | $3.50 |
During the third quarter of 2021, our financial and operating performance continued to recover from the effects of COVID-19, due to our operational execution and the easing of government restrictions put in place to combat the pandemic, which allowed many businesses to resume some level of, or increase, commercial activities in the latter part of Q2 2021. As a result, the adverse impacts of COVID-19 on our sequential and year-over-year performance were reduced. Additionally, it has been well over a year since the pandemic began affecting our performance and we have since adapted many aspects of our business to better operate in this environment. The effects of COVID-19, although moderating, continued to unfavourably impact Bell Wireless product and roaming revenues, Bell Wireline business markets equipment revenues, as well as Bell Media advertising revenues during the quarter.
Due to uncertainties relating to the severity and duration of the COVID-19 pandemic and possible resurgences in the number of COVID-19 cases, and various potential outcomes, it is difficult at this time to estimate the impacts of COVID-19 on our business or future financial results and related assumptions. Our business and financial results could continue to be unfavourably impacted, and could again become more significantly and negatively impacted, in future periods. Notably, our wireless product revenues and mobile phone and mobile connected devices gross additions may be unfavourably impacted due to a global chip shortage attributable to the impacts of the COVID-19 pandemic that is resulting in short-term supply chain disruptions and inventory constraints for consumer electronics and mobile devices, including smartphones and tablets. The extent to which COVID-19 will continue to adversely impact us will depend on future developments that are difficult to predict, including the prevalence of COVID-19 variants that are more contagious and may lead to increased health risks, the timely distribution of effective vaccines and treatments, the potential development and distribution of new vaccines and treatments, the time required to achieve broad immunity, as well as new information which may emerge concerning the severity and duration of the COVID-19 pandemic, including the number and intensity of resurgences in COVID-19 cases, and the actions required to contain the coronavirus or remedy its impacts, among others. Please see the section entitled Caution Regarding Forward-Looking Statements later in this news release for a description of the principal assumptions on which BCEs 2021 financial guidance targets are based, as well as the principal related risk factors.
CALL WITH FINANCIAL ANALYSTS
BCE will hold a conference call for financial analysts to discuss Q3 2021 results on Thursday, November 4 at 8:00 am eastern. Media are welcome to participate on a listen-only basis. To
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participate, please dial toll-free 1-800-806-5484 or 416-340-2217 and enter passcode 7661656#. A replay will be available until midnight on December 5, 2021 by dialing 1-800-408-3053 or 905-694-9451 and entering passcode 6228194#.
A live audio webcast of the conference call will be available on BCEs website at BCE Q3-2021 conference call.
NOTES
The information contained in this news release is unaudited.
(1) The terms adjusted net earnings and adjusted EPS do not have any standardized meaning under IFRS. Therefore, they are unlikely to be comparable to similar measures presented by other issuers. We define adjusted net earnings as net earnings attributable to common shareholders before severance, acquisition and other costs, net mark-to-market losses (gains) on derivatives used to economically hedge equity settled share-based compensation plans, net losses (gains) on investments, early debt redemption costs, impairment of assets and discontinued operations, net of tax and non-controlling interest (NCI). We define adjusted EPS as adjusted net earnings per BCE common share. We use adjusted net earnings and adjusted EPS, and we believe certain investors and analysts use these measures, among other ones, to assess the performance of our businesses without the effects of severance, acquisition and other costs, net mark-to-market losses (gains) on derivatives used to economically hedge equity settled share-based compensation plans, net losses (gains) on investments, early debt redemption costs, impairment of assets and discontinued operations, net of tax and NCI. We exclude these items because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding these items does not imply they are non-recurring. The most comparable IFRS financial measures are net earnings attributable to common shareholders and EPS. The following table is a reconciliation of net earnings attributable to common shareholders and EPS to adjusted net earnings on a consolidated basis and per BCE common share (adjusted EPS) respectively.
(2) The terms adjusted EBITDA and adjusted EBITDA margin do not have any standardized meaning under IFRS. Therefore, they are unlikely to be comparable to similar measures
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presented by other issuers. We define adjusted EBITDA as operating revenues less operating costs, as shown in BCEs consolidated income statements. Adjusted EBITDA for BCEs segments is the same as segment profit as reported in Note 3, Segmented information, in BCEs Q3 2021 consolidated Financial Statements. We define adjusted EBITDA margin as adjusted EBITDA divided by operating revenues. We use adjusted EBITDA and adjusted EBITDA margin to evaluate the performance of our businesses as they reflect their ongoing profitability. We believe certain investors and analysts use adjusted EBITDA to measure a companys ability to service debt and to meet other payment obligations or as a common measurement to value companies in the telecommunications industry. We believe that certain investors and analysts also use adjusted EBITDA and adjusted EBITDA margin to evaluate the performance of our businesses. Adjusted EBITDA is also one component in the determination of short-term incentive compensation for all management employees. Adjusted EBITDA and adjusted EBITDA margin have no directly comparable IFRS financial measure. Alternatively, the following table provides a reconciliation of net earnings to adjusted EBITDA.
(3) The term free cash flow does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other issuers. We define free cash flow as cash flows from operating activities, excluding cash from discontinued operations, acquisition and other costs paid (which include significant litigation costs) and voluntary pension funding, less capital expenditures, preferred share dividends and dividends paid by subsidiaries to NCI. We exclude cash from discontinued operations, acquisition and other costs paid and voluntary pension funding because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding these items does not imply they are non-recurring. We consider free cash flow to be an important indicator of the financial strength and performance of our businesses because it shows how much cash is available to pay dividends on common shares, repay debt and reinvest in our company. We believe certain investors and analysts use free cash flow to value a business and its underlying assets and to evaluate the financial strength and performance of our businesses. The most comparable IFRS financial measure is cash flows from operating activities. The following table is a reconciliation of cash flows from operating activities to free cash flow on a consolidated basis.
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(4) We use ABPU, churn, capital intensity and subscriber units to measure the success of our strategic imperatives. These key performance indicators are not accounting measures and may not be comparable to similar measures presented by other issuers.
(5) Available liquidity at September 30, 2021 was comprised of $2,167 million in cash and cash equivalents, $400 million available under our securitized trade receivables programs and $3.5 billion available under our committed bank credit facilities.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
Certain statements made in this news release are forward-looking statements. These statements include, without limitation, statements relating to BCEs financial guidance (including revenues, adjusted EBITDA, capital intensity, adjusted EPS and free cash flow), BCEs 2021 annualized common share dividend, our network deployment and capital investment plans, including our two-year increased capital investment program to accelerate the rollout of 5G, fibre and rural Wireless Home Internet networks, the potential impacts on our business, financial condition, liquidity and financial results of the COVID-19 pandemic, BCEs business outlook, objectives, plans and strategic priorities, and other statements that are not historical facts. Forward-looking statements are typically identified by the words assumption, goal, guidance, objective, outlook, project, strategy, target and other similar expressions or future or conditional verbs such as aim, anticipate, believe, could, expect, intend, may, plan, seek, should, strive and will. All such forward-looking statements are made pursuant to the safe harbour provisions of applicable Canadian securities laws and of the United States Private Securities Litigation Reform Act of 1995.
Forward-looking statements, by their very nature, are subject to inherent risks and uncertainties and are based on several assumptions, both general and specific, which give rise to the possibility that actual results or events could differ materially from our expectations expressed in or implied by such forward-looking statements and that our business outlook, objectives, plans and strategic priorities may not be achieved. These statements are not guarantees of future performance or events, and we caution you against relying on any of these forward-looking statements. The forward-looking statements contained in this news release describe our expectations as of November 4, 2021 and, accordingly, are subject to change after such date. Except as may be required by applicable securities laws, we do not undertake any obligation to update or revise any forward-looking statements contained in this news release, whether as a result of new information, future events or otherwise. From time to time, we consider potential acquisitions, dispositions, mergers, business combinations, investments, monetizations, joint ventures and other transactions, some of which may be significant. Except as otherwise indicated by us, forward-looking statements do not reflect the potential impact of any such
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transactions or of special items that may be announced or that may occur after November 4, 2021. The financial impact of these transactions and special items can be complex and depends on the facts particular to each of them. We therefore cannot describe the expected impact in a meaningful way or in the same way we present known risks affecting our business. Forward-looking statements are presented in this news release for the purpose of assisting investors and others in understanding certain key elements of our expected financial results, as well as our objectives, strategic priorities and business outlook, and in obtaining a better understanding of our anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes.
Material Assumptions
A number of economic, market, operational and financial assumptions were made by BCE in preparing its forward-looking statements contained in this news release, including, but not limited to the following:
Canadian Economic Assumptions
Our forward-looking statements are based on certain assumptions concerning the Canadian economy, which in turn depend on important assumptions about how the COVID-19 pandemic will evolve, including the progress of the vaccination rollout. Notably, it is assumed that most public health restrictions in Canada are eased by the end of 2021 and pandemic-related effects on consumer demand for goods and services diminish gradually over time. In particular, we have assumed:
● |
Strong rebound in economic growth as the economy recovers from the effects of the pandemic and related restrictions, given the Bank of Canadas most recent estimated growth in Canadian gross domestic product of around 5% on average in 2021 |
● |
Household consumption growth as the pandemic recedes and consumer confidence rises |
● |
Strengthening business investment outside the oil and gas sector as demand increases and business confidence improves |
● |
Employment gains expected in 2021, despite ongoing challenges in some sectors |
● |
Accelerating trend toward e-commerce |
● |
Low immigration levels until the majority of international travel and/or health-related restrictions are lifted |
● |
Prevailing low interest rates expected to remain at or near current levels for the foreseeable future |
● |
Canadian dollar expected to remain at or near current levels. Further movements may be impacted by the degree of strength of the U.S. dollar, interest rates and changes in commodity prices |
Canadian Market Assumptions
Our forward-looking statements also reflect various Canadian market assumptions. In particular, we have made the following market assumptions:
● |
A consistently high level of wireline and wireless competition in consumer, business and wholesale markets |
● |
Higher, but slowing, wireless industry penetration |
● |
A shrinking data and voice connectivity market as business customers migrate to lower-priced telecommunications solutions or alternative over-the-top (OTT) competitors |
● |
While the advertising market continues to be adversely impacted by cancelled or delayed advertising campaigns from many sectors due to the economic downturn during the COVID-19 pandemic, we do expect gradual recovery in 2021 |
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● |
Declines in broadcasting distribution undertakings (BDU) subscribers driven by increasing competition from the continued rollout of subscription video on demand streaming services together with further scaling of OTT aggregators |
Assumptions Concerning our Bell Wireless Segment
Our forward-looking statements are also based on the following internal operational assumptions with respect to our Bell Wireless segment:
● |
Maintain our market share of national operators wireless postpaid net additions |
● |
Modest growth of our prepaid subscriber base |
● |
Continued focus on mobile phone subscriber growth, as well as the introduction of more 5G, 4G Long-term evolution (LTE) and LTE Advanced devices and new data services |
● |
Continued deployment of 5G wireless network offering coverage that is competitive with other national operators in centres across Canada |
● |
Increased subscriber acquisition and retention spending |
● |
Unfavourable impact on mobile phone blended ABPU, driven by reduced outbound roaming revenue due to travel restrictions as a result of the COVID-19 pandemic and reduced data overage revenue due to continued adoption of unlimited plans |
● |
Increased adoption of unlimited data plans and device financing plans |
● |
No material financial, operational or competitive consequences of changes in regulations affecting our wireless business |
Assumptions Concerning our Bell Wireline Segment
Our forward-looking statements are also based on the following internal operational assumptions with respect to our Bell Wireline segment:
● |
Continued growth in retail Internet and IPTV subscribers |
● |
Increasing wireless and Internet-based technological substitution |
● |
Continued aggressive residential service bundle offers from cable TV competitors in our local wireline areas |
● |
Continued large business customer migration to IP-based systems |
● |
Ongoing competitive repricing pressures in our business and wholesale markets |
● |
Continued competitive intensity in our small and medium-sized business markets as cable operators and other telecommunications competitors continue to intensify their focus on business customers |
● |
Traditional high-margin product categories challenged by large global cloud and OTT providers of business voice and data solutions expanding into Canada with on-demand services |
● |
Accelerating customer adoption of OTT services resulting in downsizing of TV packages |
● |
Further deployment of direct fibre to more homes and businesses within our wireline footprint and fixed wireless-to-the-premise technology in rural communities |
● |
Growing consumption of OTT TV services and on-demand streaming video, as well as the proliferation of devices, such as tablets, that consume large quantities of bandwidth, will require ongoing capital investment |
● |
Realization of cost savings related to management workforce reductions including attrition and retirements, lower contracted rates from our suppliers, operating efficiencies enabled by a growing direct fibre footprint, changes in consumer behaviour and product innovation, new call centre technology that is enabling self-serve capabilities, and other improvements to the customer service experience |
● |
No material financial, operational or competitive consequences of changes in regulations affecting our wireline business |
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Assumptions Concerning our Bell Media Segment
Our forward-looking statements are also based on the following internal operational assumptions with respect to our Bell Media segment:
● |
Overall revenue is expected to reflect a gradual economic recovery in 2021 combined with subscriber revenue growth and strategic pricing on advertising sales. However, revenue performance is expected to continue to be negatively impacted by the effects of the COVID-19 pandemic on many sectors of the economy. |
● |
Continued escalation of media content costs to secure quality programming, as well as the return of sports and entertainment programming |
● |
Continued scaling of Crave through broader content offering and user experience improvements |
● |
Investment in Noovo News and more French-language original content to better serve our French-language customers with a wider array of content, in the language of their choice, on their preferred platforms |
● |
Enhanced market-leading attribution through our Strategic Audience Management (SAM) tool |
● |
Ability to successfully acquire and produce highly rated programming and differentiated content |
● |
Building and maintaining strategic supply arrangements for content across all screens and platforms |
● |
Continued monetization of content rights and Bell Media properties across all platforms |
● |
No material financial, operational or competitive consequences of changes in regulations affecting our media business |
Financial Assumptions Concerning BCE
Our forward-looking statements are also based on the following internal financial assumptions with respect to BCE for 2021:
● |
Total post-employment benefit plans cost to be approximately $300 million, based on an estimated accounting discount rate of 2.6%, comprised of an estimated above adjusted EBITDA post-employment benefit plans service cost of approximately $275 million and an estimated below adjusted EBITDA net post-employment benefit plans financing cost of approximately $25 million |
● |
Increase in depreciation and amortization expense of approximately $200 million to $250 million compared to 2020 |
● |
Interest expense and payments of approximately $1,050 million to $1,100 million |
● |
An effective tax rate of approximately 27% |
● |
NCI of approximately $60 million |
● |
Total cash pension and other post-employment benefit plan funding of approximately $350 million to $375 million |
● |
Cash income taxes of approximately $800 million to $900 million |
● |
Average number of BCE common shares outstanding of approximately 905 million |
● |
An annual common share dividend of $3.50 per share |
The foregoing assumptions, although considered reasonable by BCE on November 4, 2021, may prove to be inaccurate. Accordingly, our actual results could differ materially from our expectations as set forth in this news release.
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Material Risks
Important risk factors that could cause our assumptions and estimates to be inaccurate and actual results or events to differ materially from those expressed in, or implied by, our forward-looking statements, including our 2021 financial guidance, are listed below. The realization of our forward-looking statements, including our ability to meet our 2021 financial guidance targets, essentially depends on our business performance, which, in turn, is subject to many risks. Accordingly, readers are cautioned that any of the following risks could have a material adverse effect on our forward-looking statements. These risks include, but are not limited to: the COVID-19 pandemic and the adverse effects from the emergency measures implemented or to be implemented as a result thereof, including supply chain disruptions, as well as other pandemics, epidemics and other health risks; adverse economic and financial market conditions, a declining level of retail and commercial activity, and the resulting negative impact on the demand for, and prices of, our products and services; our dependence on third-party suppliers, outsourcers and consultants to provide an uninterrupted supply of the products and services we need to operate our business, including mobile devices; the intensity of competitive activity including from new and emerging competitors; the level of technological substitution and the presence of alternative service providers contributing to the acceleration of disruptions and disintermediation in each of our business segments; changing viewer habits and the expansion of OTT TV and other alternative service providers, as well as the fragmentation of, and changes in, the advertising market; rising content costs and challenges in our ability to acquire or develop key content; the proliferation of content piracy; higher Canadian smartphone penetration and reduced or slower immigration flow; regulatory initiatives, proceedings and decisions, government consultations and government positions that affect us and influence our business; the inability to protect our physical and non-physical assets from events such as information security attacks, unauthorized access or entry, fire and natural disasters; the failure to transform our operations, enabling a truly customer-centric service experience, while lowering our cost structure; the failure to continue investment in next-generation capabilities in a disciplined and strategic manner; the inability to drive a positive customer experience; the complexity in our operations; the failure to maintain operational networks in the context of significant increases in capacity demands; the risk that we may need to incur significant capital expenditures to provide additional capacity and reduce network congestion; the failure to implement or maintain highly effective information technology (IT) systems; the failure to generate anticipated benefits from our corporate restructurings, system replacements and upgrades, process redesigns, staff reductions and the integration of business acquisitions; events affecting the functionality of, and our ability to protect, test, maintain, replace and upgrade, our networks, IT systems, equipment and other facilities; in-orbit and other operational risks to which the satellites used to provide our satellite TV services are subject; the failure to attract and retain employees with the appropriate skill sets and to drive their performance in a safe environment; labour disruptions and shortages; the failure of our vendor selection, governance and oversight processes; security and data leakage exposure if security control protocols affecting our suppliers are bypassed; the quality of our products and services and the extent to which they may be subject to manufacturing defects or fail to comply with applicable government regulations and standards; the inability to access adequate sources of capital and generate sufficient cash flows from operating activities to meet our cash requirements, fund capital expenditures and provide for planned growth; uncertainty as to whether dividends will be declared by BCEs board of directors or whether the dividend on common shares will be increased; the inability to manage various credit, liquidity and market risks; pension obligation volatility and increased contributions to post-employment benefit plans; new or higher taxes due to new tax laws or changes thereto or in the interpretation thereof, and the inability to predict the outcome of government audits; the failure to reduce costs, as well as unexpected increases in costs; the failure to evolve practices to effectively monitor and control fraudulent activities; unfavourable resolution of legal
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proceedings and, in particular, class actions; new or unfavourable changes in applicable laws and the failure to proactively address our legal and regulatory obligations; the failure to recognize and adequately respond to climate change concerns or stakeholder and governmental changing expectations on environmental matters; and health concerns about radio frequency emissions from wireless communication devices and equipment.
We caution that the foregoing list of risk factors is not exhaustive and other factors could also adversely affect our results. We encourage investors to also read BCEs 2020 Annual MD&A dated March 4, 2021 (included in BCEs 2020 Annual Report) and BCEs 2021 First, Second and Third Quarter MD&As dated April 28, 2021, August 4, 2021 and November 3, 2021, respectively, for additional information with respect to certain of these and other assumptions and risks, filed by BCE with the Canadian provincial securities regulatory authorities (available at Sedar.com) and with the U.S. Securities and Exchange Commission (available at SEC.gov). These documents are also available at BCE.ca.
About BCE
BCE is Canadas largest communications company, providing advanced Bell broadband wireless, Internet, TV, media and business communications services. To learn more, please visit Bell.ca or BCE.ca.
Through Bell for Better, we are investing to create a better today and a better tomorrow by supporting the social and economic prosperity of our communities. This includes the Bell Lets Talk initiative, which promotes Canadian mental health with national awareness and anti-stigma campaigns like Bell Lets Talk Day and significant Bell funding of community care and access, research and workplace initiatives throughout the country. To learn more, please visit Bell.ca/LetsTalk.
Media inquiries:
Marie-Eve Francoeur
514-391-5263
marie-eve.francoeur@bell.ca
Investor inquiries:
Thane Fotopoulos
514-870-4619
thane.fotopoulos@bell.ca
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Exhibit 99.6
NOTICE OF RELIANCE
SECTION 13.4 OF NATIONAL INSTRUMENT 51-102
CONTINUOUS DISCLOSURE OBLIGATIONS
To: |
Alberta Securities Commission |
British Columbia Securities Commission
Manitoba Securities Commission
Financial and Consumer Services Commission, New Brunswick
Office of the Superintendent of Securities, Newfoundland and Labrador
Nova Scotia Securities Commission
Ontario Securities Commission
Office of the Superintendent of Securities, Prince Edward Island
Autorité des marchés financiers
Financial and Consumer Affairs Authority of Saskatchewan
Toronto Stock Exchange
Notice is hereby given that Bell Canada relies on the continuous disclosure documents filed by BCE Inc. pursuant to the exemption from the requirements of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) provided in Section 13.4 of NI 51-102.
The continuous disclosure documents of BCE Inc. can be found for viewing in electronic format at www.sedar.com.
Attached to this notice and forming part thereof is the consolidating summary financial information for BCE Inc. as required by Section 13.4 of NI 51-102.
Dated: November 4, 2021
BELL CANADA | ||
By: (signed) Thierry Chaumont | ||
Name: Thierry Chaumont | ||
Title: Senior Vice-President, Controller and Tax |
BELL CANADA
|
UNAUDITED SELECTED SUMMARY FINANCIAL INFORMATION (1)
For the periods ended September 30, 2021 and 2020
(in millions of Canadian dollars)
BCE Inc. fully and unconditionally guarantees the payment obligations of its 100% owned subsidiary Bell Canada under the public debt issued by Bell Canada. Accordingly, the following summary financial information is provided by Bell Canada in compliance with the requirements of section 13.4 of National Instrument 51-102 (Continuous Disclosure Obligations) providing for an exemption for certain credit support issuers. The tables below contain selected summary financial information for (i) BCE Inc. (as credit supporter), (ii) Bell Canada (as credit support issuer) on a consolidated basis, (iii) BCE Inc.s subsidiaries, other than Bell Canada, on a combined basis, (iv) consolidating adjustments, and (v) BCE Inc. and all of its subsidiaries on a consolidated basis, in each case for the periods indicated. Such summary financial information for BCE Inc. and Bell Canada and all other subsidiaries is intended to provide investors with meaningful and comparable financial information about BCE Inc. and its subsidiaries. This summary financial information should be read in conjunction with BCE Inc.s audited consolidated financial statements for the year ended December 31, 2020 and the unaudited consolidated interim financial report for the nine months ended September 30, 2021.
For the periods ended September 30:
BCE INC. | BELL CANADA CONSOLIDATED | SUBSIDIARIES OF BCE INC. | CONSOLIDATING | BCE INC. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(CREDIT SUPPORTER)(2) | (CREDIT SUPPORT ISSUER) | OTHER THAN BELL CANADA(3) | ADJUSTMENTS(4) | CONSOLIDATED | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three | Three | Nine | Nine | Three | Three | Nine | Nine | Three | Three | Nine | Nine | Three | Three | Nine | Nine | Three | Three | Nine | Nine | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
months | months | months | months | months | months | months | months | months | months | months | months | months | months | months | months | months | months | months | months | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating revenues |
| | | | 5,836 | 5,788 | 17,241 | 16,783 | | | | | | (1 | ) | (1 | ) | (2 | ) | 5,836 | 5,787 | 17,240 | 16,781 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net earnings from continuing operations attributable to owners |
791 | 718 | 2,182 | 1,698 | 830 | 711 | 2,401 | 1,883 | 263 | 7 | 332 | 78 | (1,093 | ) | (718 | ) | (2,733 | ) | (1,961 | ) | 791 | 718 | 2,182 | 1,698 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net earnings attributable to owners |
791 | 724 | 2,182 | 1,713 | 830 | 717 | 2,401 | 1,897 | 263 | 7 | 332 | 78 | (1,093 | ) | (724 | ) | (2,733 | ) | (1,975 | ) | 791 | 724 | 2,182 | 1,713 |
As at September 30, 2021 and December 31, 2020, respectively:
BCE INC. | BELL CANADA CONSOLIDATED | SUBSIDIARIES OF BCE INC. | CONSOLIDATING | BCE INC. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(CREDIT SUPPORTER)(2) | (CREDIT SUPPORT ISSUER) | OTHER THAN BELL CANADA(3) | ADJUSTMENTS(4) | CONSOLIDATED | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sept. 30, | Dec. 31, | Sept. 30, | Dec. 31, | Sept. 30, | Dec. 31, | Sept. 30, | Dec. 31, | Sept. 30, | Dec. 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Current Assets |
590 | 711 | 7,833 | 9,291 | 263 | 337 | (1,145 | ) | (4,651 | ) | 7,541 | 5,688 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Non-current Assets |
23,950 | 24,971 | 52,364 | 48,444 | 38 | 38 | (17,557 | ) | (18,476 | ) | 58,795 | 54,977 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Current Liabilities |
1,332 | 4,589 | 7,734 | 8,238 | 82 | 95 | (1,144 | ) | (4,651 | ) | 8,004 | 8,271 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Non-current Liabilities |
49 | 104 | 34,187 | 30,367 | | | 587 | 594 | 34,823 | 31,065 |
(1) |
The summary financial information is prepared in accordance with International Financial Reporting Standards (IFRS) and is in accordance with generally accepted accounting principles issued by the Canadian Accounting Standards Board for publicly-accountable enterprises. |
(2) |
This column accounts for investments in all subsidiaries of BCE Inc. under the equity method. |
(3) |
This column accounts for investments in all subsidiaries of BCE Inc. (other than Bell Canada) on a consolidated basis. |
(4) |
This column includes the necessary amounts to eliminate the intercompany balances between BCE Inc., Bell Canada and other subsidiaries and other adjustments to arrive at the information for BCE Inc. on a consolidated basis. |
Exhibit 99.7
BCE Inc.
EXHIBIT TO 2021 THIRD QUARTER FINANCIAL STATEMENTS
EARNINGS COVERAGE
The following consolidated financial ratios are calculated for the twelve months ended September 30, 2021, give effect to the issuance and redemption of all long-term debt since October 1, 2020 as if these transactions occurred on October 1, 2020, and are based on unaudited financial information of BCE Inc.
September 30, 2021 | ||
Earnings coverage of interest on debt requirements based on net earnings attributable to owners of BCE Inc. before interest expense and income tax: | 4.4 times | |
Earnings coverage of interest on debt requirements based on net earnings attributable to owners of BCE Inc. before interest expense, income tax and non-controlling interest: | 4.5 times |