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3.0 PERFORMANCE TARGETS, OUTLOOK, ASSUMPTIONS AND RISKS - 3.1 2016 Performance vs Guidance Targets

3 Performance targets, outlook, assumptions and risks

This section provides information pertaining to our performance against 2016 targets, our consolidated business outlook and operating assumptions for 2017 and our principal business risks.


3.1 2016 performance vs. guidance targets





Revenue growth 1%–3% 1.0% Led by solid revenue growth from our Bell Wireless and Bell Media segments of 4.1% and 3.6%, respectively, moderated by a decline in Bell Wireline revenue of 1.3%.
Adjusted EBITDA growth 2%–4% 2.8% Reflected adjusted EBITDA growth across all three of our segments driven by strong wireless service revenue flow-through of 49.2%, and growth from Internet, IPTV and media revenues, which more than offset the continued revenue erosion in wireline voice and legacy data services. This, combined with ongoing effective cost management, drove an expansion in adjusted EBITDA margin to 40.5% from 39.7% experienced in 2015.
Capital intensity Approx. 17% 17.4% BCE continued its strategic investment in broadband wireline and wireless infrastructure with capital expenditures of $3,771 million in 2016, up 4.0% over last year. This drove an increase in the capital intensity ratio to 17.4% in 2016 from 16.9% in 2015. Capital spending in 2016 was focused on the continued deployment of our broadband fibre directly to more homes and businesses, including the build-out of Gigabit Fibe infrastructure, the ongoing rollout of our 4G LTE and LTE-A wireless networks, as well as the expansion of wireless and Internet network capacity to support greater speeds, subscriber growth, and higher data consumption.
Adjusted net earnings per share (adjusted EPS)(1) $3.45–$3.55 $3.46 Adjusted net earnings in 2016 increased by $164 million, or $0.10 per common share, driven by higher operating revenues and lower operating costs, which resulted in higher adjusted EBITDA, lower finance costs and higher other income, partly offset by higher amortization expense and higher income taxes. The average number of BCE common shares outstanding increased, mostly as a result of shares issued under a bought deal offering in December 2015, which moderated the increase in adjusted EPS.
Free cash flow growth Approx. 4%–12% 7.6% Increase in free cash flow of $227 million in 2016 was driven by an increase in cash flows from operating activities, partly offset by higher capital expenditures. Cash flows from operating activities increased due to higher adjusted EBITDA, lower acquisition and other costs paid and lower income taxes paid, partly offset by a higher voluntary DB pension plan contribution made in 2016.
Annualized common dividend per share $2.73 $2.73 Annualized BCE common dividend per share for 2016 increased by 13 cents, or 5.0%, to $2.73 compared to $2.60 per share in 2015.
Dividend payout ratio 65%–75% of free cash flow 71.5% Dividend payout ratio in 2016 decreased by 0.8% to 71.5% from 72.3%.


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