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3.2 Business outlook and assumptions

3.2 Business outlook and assumptions

Outlook

Our 2017 outlook builds on the positive financial results and operating momentum we delivered in 2016 that reflected strong wireless profitability and postpaid subscriber activations, increasing broadband Internet and TV scale, improved media financial performance, as well as effective operating cost control and price discipline across all our operating segments and products. Our projected financial performance for 2017 is underpinned by continued progress in the execution of our six strategic imperatives and a favourable financial profile for all three Bell operating segments, which is expected to be further enhanced following the completion of the acquisition of MTS by BCE, with higher free cash flow generation providing a strong and stable foundation for a higher BCE common share dividend for 2017, as well as continued significant capital investment in wireline and wireless network infrastructures to support future growth. Our outlook also reflects the confidence we have in continuing to successfully manage our wireless, wireline and media businesses within the context of a highly competitive and dynamic market.

The key 2017 operational priorities for BCE are to:

  • Maintain market share of incumbent wireless postpaid subscriber activations
  • Drive continued adoption of mobile smartphone handsets, tablets and data applications, as well as the introduction of more 4G LTE devices and new data services
  • Achieve higher wireless adjusted EBITDA through wireless postpaid subscriber base expansion and higher blended ARPU, driven by a higher postpaid smartphone mix, increased data consumption on 4G LTE and LTE-A networks, and higher access rates from price increases
  • Complete our 4G LTE network build and further expand our LTE-A network coverage
  • Continue broadband fibre deployment with a focus on expanding our FTTP footprint
  • Further grow our residential IPTV and Internet subscriber bases
  • Increase residential services household ARPU from increased penetration of multi-product households and price increases
  • Limit downsizing of current TV packages by our customers as a result of TV channel unbundling
  • Continue scaling Bell Media’s CraveTV on-demand streaming service
  • Realize operating cost savings from workforce attrition and retirements, lower contracted rates from our suppliers, reduction in traffic that is not on our wireline network, broader deployment of FTTP, customer service improvements, and operating cost synergies from the planned integration of MTS into our Bell Wireline and Bell Wireless operating segments following the completion of the acquisition by BCE

Our projected financial performance for 2017 enabled us to increase the annualized BCE common share dividend for 2017 by 14 cents, or 5.1%, to $2.87 per share, maintaining our dividend payout ratio within our target policy range of 65% to 75% of free cash flow.

 

Assumptions

ASSUMPTIONS ABOUT THE CANADIAN ECONOMY

  • Gradual improvement in economic growth, given the Bank of Canada’s most recent estimated growth in Canadian gross domestic product of 2.1% in 2017
  • Modest employment growth, as the overall level of business investment is expected to remain soft
  • Canadian dollar expected to remain at or around 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

  • A higher level of wireline and wireless competition in consumer, business and wholesale markets
  • Higher, but slowing, wireless industry penetration and smartphone adoption
  • Wireless industry pricing discipline maintained
  • Soft media advertising market expected, due to variable demand, and escalating costs to secure TV programming
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