BCE(BCE) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In 2025, consolidated service revenue increased by 0.6%, with adjusted EBITDA rising by 0.7%, leading to a 20 basis point improvement in adjusted EBITDA margin to 43.6%, the strongest annual margin in over 30 years [18] - Adjusted EPS declined by 7.9% in 2025, primarily due to higher depreciation and amortization from network investments and increased interest expense [18] - Capital expenditures decreased by CAD 197 million to CAD 3.7 billion, resulting in a capital intensity of 15.1% [19] - Free cash flow increased by 10% to CAD 3.2 billion, driven by higher EBITDA, lower CapEx, and improved working capital [19] Business Line Data and Key Metrics Changes - Wireless service revenue declined by 0.2% in Q4, an improvement from the 0.4% decline in Q3 and significantly better than the 1.5% decline in Q4 of the previous year [22] - Fiber continued to be a key growth driver with approximately 200,000 net new subscriber additions, contributing to an 8% growth in internet revenue [7][19] - AI-powered solutions revenue grew by 31% in the enterprise segment, driven by momentum in Ateco and Bell Cyber [22] Market Data and Key Metrics Changes - Postpaid churn improved by 17 basis points to 1.49%, marking the third consecutive quarter of year-over-year improvement [20] - Consumer wireless service revenue remained stable year-over-year in Q4, indicating a positive trend as the company enters 2026 [22] - Ziply Fiber's total revenue reached CAD 232 million in Q4, with internet revenue growing in double digits [24] Company Strategy and Development Direction - The company has aligned its organization around four strategic priorities: fiber, wireless, enterprise, and media, aiming for sustainable free cash flow growth [3][4] - The acquisition of Ziply Fiber is a key milestone in the fiber growth strategy, with plans to reach approximately 3 million fiber passings by the end of 2028 [9] - The focus remains on delivering premium content through digital platforms and enhancing customer experience across all segments [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth segments while acknowledging the need to manage declines in legacy services carefully [36] - The company expects consolidated revenue growth of 1%-5% and adjusted EBITDA growth of 0%-4% for 2026, reflecting continued momentum in core growth engines [27] - Management highlighted the importance of maintaining disciplined execution and focusing on customer value amidst competitive pressures [40] Other Important Information - The company is targeting a net debt leverage ratio of approximately 3.5x by the end of 2027, with a focus on deleveraging [32] - The company has CAD 2.5 billion of available liquidity and a pension solvency surplus of CAD 4.4 billion, providing financial flexibility [31] Q&A Session Summary Question: Could you talk about your guidance ranges? - Management indicated that the guidance reflects growth in segments while managing legacy declines, with factors such as wireless penetration and overall market growth influencing the ranges [35][36] Question: Any comment on the wireless pricing environment? - Management noted that consumers are receiving significant value from wireless services, with a focus on disciplined execution and premium brand positioning [40][41] Question: What are the expectations for Ziply's growth and margins in 2026? - Management expressed satisfaction with Ziply's performance and indicated strong demand for fiber, with plans to expand beyond the existing footprint [46][47] Question: Any updates on asset sales? - Management confirmed ongoing efforts to optimize the balance sheet through asset sales, with transparency to be provided as agreements are reached [71][72]