BCE(BCE) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue increased by 1.3%, driven by the acquisition of Ziply Fiber [13] - Adjusted EBITDA rose by 1.5%, leading to a margin increase of 10 basis points to 45.7%, the strongest result in over 30 years [13] - Net earnings and statutory EPS saw significant increases, largely due to a $5.2 billion gain from the sale of a minority stake in MLSE [14] - Adjusted EPS increased by 5.3%, supported by higher EBITDA [14] - Free cash flow increased by $171 million in Q3, driven by lower CapEx and higher cash from working capital [14] Business Line Data and Key Metrics Changes - Internet revenue in Canada grew by 2%, supported by fiber [15] - Wireless service revenue declined modestly by 0.4%, while post-paid churn improved by 15 basis points [8][15] - AI-powered solutions revenue grew by 34% year-over-year, indicating strong demand [10][15] - Ziply Fiber's total revenue reached $160 million, with a 15% year-over-year growth in internet revenue [16] Market Data and Key Metrics Changes - The Canadian wireless environment has stabilized, with expectations for continued stability [7] - The partnership with AST SpaceMobile aims to enhance network reach in challenging geographical areas, with an initial service launch scheduled for late 2026 [8] - Ziply Fiber's network currently passes 1.4 million homes, with plans to reach approximately 3 million by the end of 2028 [6] Company Strategy and Development Direction - The company unveiled a three-year strategic plan focusing on four priorities: fiber, wireless, media, and enterprise [3] - A renewed focus on customer service has led to significant reductions in post-paid churn [4] - The company aims to increase product intensity by approximately 25% over the next three years [7] - The digital media and content strategy includes new streaming bundles and partnerships to enhance advertising opportunities [12] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the growth potential of AI-powered solutions, with a strong pipeline of interest [10] - The Canadian economy is changing, and the company is well-positioned for growth amid rising global instability [9] - Management remains focused on reducing leverage and maintaining a healthy balance sheet, with a net debt leverage ratio of approximately 3.8 times adjusted EBITDA [20] Other Important Information - The company anticipates a year-over-year increase in overall spending in Q4 as Ziply Fiber executes its fiber buildout [14] - The balance sheet remains healthy, with $3.6 billion of available liquidity and a pension solvency surplus of $4.5 billion [20] Q&A Session Summary Question: Can you help us unpack the federal budget a bit? - Management noted that the budget includes initiatives to spur investment in the Canadian economy, which is viewed positively [26] Question: Can you provide an update on the competitive landscape in Eastern Canada? - Management emphasized a twofold approach: protecting Bell's retail position and driving higher fiber network penetration [36] Question: Do you expect margin growth in the Canadian telecom business between 2026 and 2028? - Management indicated a focus on operating cost reduction and expects flat margins with potential for dollar growth [39] Question: Can you provide an update on the $1.5 billion cost savings initiative? - Management confirmed they are halfway through the initiative and expect continued acceleration in cost savings [58] Question: What is the competitive landscape for AI-powered solutions? - Management stated that the company is uniquely positioned with integrated offerings in AI, cybersecurity, and automation [72]