Skip to main content | Go to site map | Read our accessibility commitment

News releases

Bell announces 2007 business outlook - Improving revenue and EBITDA growth in 2007 guidance

    - Improvements underline confidence in operational outlook
    - Focus on enhanced service quality and accelerating growth platforms
    - Dividend increase, renewed share buyback
    - Strengthened value proposition for investors

    This news release contains forward-looking statements. For a description
    of the related risk factors and assumptions please see the section
    entitled "Caution Concerning Forward-Looking Statements" later in this

MONTREAL, Québec, Dec. 12 2006 -- BCE Inc. (TSX, NYSE: BCE) today
announced its 2007 guidance for Bell, which includes improving revenue and
EBITDA growth.
    The company also announced an 11% increase in its annual dividend and a
renewed share buyback program.
    "Bell is on an improved trajectory, one based on the successful execution
of the business plan we put into place three years ago," said Michael Sabia,
President and Chief Executive Officer of BCE and Chief Executive Officer of
Bell Canada. "We now have a simplified business structure, an improved revenue
mix between growth and legacy products and services, and a strengthened
operational capacity. The result is improved sustainable growth in revenues
and operating earnings. This new business and financial model allows us to
invest significantly in growth platforms and to share our progress with
shareholders, providing them with improved returns now and in the future."
    "The company's customer value proposition going forward is simple - to
deliver a differentiated customer experience through outstanding service and
compelling products, delivered over advanced networks at a competitive cost,"
said Mr. Sabia.
    "In 2007, we will intensify our efforts to enhance the customer
experience, in order to create a sustainable competitive advantage and allow
us to increase the velocity of profitability of our growth services in a
disciplined way."
    Bell's senior leadership team - Mr. Sabia; George Cope, President and
Chief Operating Officer; and Siim Vanaselja, Chief Financial Officer -
provided details on Bell's 2007 financial guidance today during the company's
annual Business Review Conference with the investment community in Toronto.


    Refer to the section entitled "Caution Concerning Forward-Looking
Statements" later in this news release for a discussion concerning the
material risk factors that could affect, and the material assumptions
underlying, our 2007 financial guidance.

    BCE has provided financial guidance for 2007 as follows:

                                                            Guidance 2007E(i)
    Bell Canada
    Revenue growth                                                    3% - 5%
    EBITDA growth (ii)                                                4% - 6%
    Capital intensity                                               16% - 17%
    BCE Inc.
    EPS growth (iii)                                                  4% - 7%
    Free Cash Flow (iv)                                        $700M - $900M
    Common Dividend (v)                                                $1.46
    NCIB Program                                                 5% of float

    (i)   Bell Canada's 2007 financial guidance for revenue, EBITDA and
          capital intensity is exclusive of Bell Aliant.
    (ii)  The term EBITDA does not have any standardized meaning according to
          Canadian generally accepted accounting principles (GAAP). It is
          therefore unlikely to be comparable to similar measures presented
          by other issuers. We define EBITDA (earnings before interest,
          taxes, depreciation and amortization) as operating income before
          amortization expense and restructuring and other items. Effective
          in 2007, Bell Canada is including net benefit plans cost in EBITDA.
          This recognizes that Bell Canada is now cash funding its pension
          plan and the treatment is consistent with North American peers
          allowing for greater comparability. EBITDA for prior periods will
          be restated to conform to the new presentation. We use EBITDA,
          among other measures, to assess the operating performance of our
          ongoing businesses without the effects of amortization expense and
          restructuring and other items. We exclude these items because they
          affect the comparability of our financial results and could
          potentially distort the analysis of trends in business performance.
          We exclude amortization expense because it largely depends on the
          accounting methods and assumptions a company uses, as well as non-
          operating factors such as the historical cost of capital assets.
          Excluding restructuring and other items does not imply they are
          necessarily non-recurring. EBITDA allows us to compare our
          operating performance on a consistent basis. We believe that
          certain investors and analysts use EBITDA to measure a company's
          ability to service debt and to meet other payment obligations, or
          as a common measurement to value companies in the
          telecommunications industry. The most comparable Canadian GAAP
          financial measure is operating income. For 2007, we expect growth
          in operating income to be between 13% to 15% for Bell Canada
          excluding Bell Aliant.
    (iii) Before net gains (losses) on investments and restructuring and
          other items.
     (iv) The term free cash flow does not have any standardized meaning
          prescribed by Canadian GAAP. It is therefore unlikely to be
          comparable to similar measures presented by other issuers. We
          define it as cash from operating activities less capital
          expenditures, total dividends and other investing activities. Free
          cash flow is presented on a consistent basis from period to period.
          We consider free cash flow to be an important indicator of the
          financial strength and performance of our business because it shows
          how much cash is available to repay debt and to reinvest in our
          company. Free cash flow allows us to compare our financial
          performance on a consistent basis. We believe that free cash flow
          is also used by certain investors and analysts in valuing a
          business and its underlying assets. The most comparable Canadian
          GAAP financial measure is cash from operating activities. For 2007,
          BCE expects to generate approximately $700 million to $900 million
          in free cash flow. This amount reflects expected cash from
          operating activities of approximately $5.6 billion to $5.8 billion
          less capital expenditures, total dividends and other investing
    (v)   Subject to declaration by BCE Inc.'s board of directors.

    A target revenue growth of 3% to 5% in 2007 is expected to result from
Bell's enhanced ability to compete within growth markets and against the
maturing cable telephony sector. Growth services combined are expected to
represent approximately 60% of total revenue at the end of 2007. Bell's
wireless subscriber base is expected to grow by 8% to 10% in 2007, video
subscribers by 5% to 7% and high-speed Internet subscribers by 8% to 10%.
    With network access services (NAS) erosion stabilizing, improving growth
services margins and ongoing productivity improvements, Bell expects EBITDA
growth of 4% to 6% in 2007. Expected productivity improvements of
approximately $450 million in 2007 should further enhance the competitive cost
structure, enabling Bell to shift investment toward long-term growth and
enhanced service delivery.
    With expected capital intensity of 16% to 17%, Bell will continue to make
disciplined capital expenditure investments in its strategic growth platforms.
Roughly 75% of capex will be allocated to its strategic priorities, such as
enhancing customer service, its wireless operations and the company's advanced
residential broadband network.
    Bell expects it will have no significant federal cash taxes through 2010,
due to organizational simplification enabling accelerated use of Bell's R&D
tax credits.

    Bell's key operational priorities in 2007

    Bell is Canada's leading provider of communications services, with a focus
on growth areas such as wireless, video, high-speed Internet and ICT
(Information and Communications Technology) services.
    Having made significant progress in its operational efficiency and
productivity improvement programs, Bell is intensifying its focus on
delivering enhanced service quality, driving the performance of its wireless
and broadband services and growing the profitability of the company's business
sector operations.
    "We will execute on our priorities based on a foundation of market
leadership behaviour and a balance between profitable growth and enhanced
market share," said George Cope, Bell Canada's President and Chief Operating
Officer. "With an increasingly cost-efficient structure, Bell is well
positioned to leverage our unique network, product and brand assets to offer a
differentiated customer service experience."

    - Service quality - With a focus on people, products and processes, Bell
      aims to consistently meet or exceed customer expectations and enhance
      their overall experience with Bell. This focus on service quality will
      differentiate Bell from competitors and ensure long-term customer
      loyalty to the Bell brand and products.

    - Wireless growth - A key driver of growth and financial performance, the
      wireless business is supported by ongoing enhancements to broadband
      EVDO and overall network quality. Bell is focused on delivering
      continued improvements in ARPU and data growth, while always ensuring
      its competitive share of net subscriber additions.

    - Broadband acceleration - Bell is investing in ongoing advanced network
      enhancements, such as the continued rollout of FTTN - which has already
      reached 1 million homes - in order to maintain leadership in the
      residential sector and to enable IPTV services.

    - Productivity improvements - A core element of financial performance,
      productivity improvements have enabled Bell's increased competitiveness
      in the marketplace. 2007 productivity improvements are expected to
      amount to approximately $450 million, and cost discipline remains a
      centrepiece of the company's strategy.

    - Business sector profitability - With a focus on ICT/VCIO profitability,
      Bell is leveraging the unique capabilities and scale in its Enterprise
      and SMB operations to access adjacent market opportunities and pull-
      through connectivity revenues.

    "Going forward into 2007, our competitive cost structure and
state-of-the-art networks will allow us to intensify service improvements
while stepping up performance and profitability of our growth engines," said
Mr. Cope.

    Dividend increase, NCIB buyback

    The common share dividend increase announced today underlines Bell's
long-term growth model and its position as a market leader in shareholder
distributions. The annual dividend will increase by 11% to $1.46 per share.
Based on the current competitive and technological environment, the Board
believes that a distribution policy with a target dividend payout of 70% to
75% of EPS before net gains (losses) on investments and restructuring costs
provides sufficient financial flexibility to continue the growth and
improvement of the business while delivering significant distributions to
    "The Board's new distribution policy announced today ensures that as our
earnings grow, shareholders can be confident they will share in our progress
with a growing dividend," said Mr. Sabia.
    BCE also announced it will renew its share buyback program upon expiry of
the current one in early February 2007, with a Normal Course Issuer Bid (NCIB)
targeting approximately 5% of its outstanding common shares, with an estimated
value in excess of $1 billion. BCE's NCIB is subject to approval by the
Toronto Stock Exchange. Purchase of the shares will be carried out through the
Toronto Stock Exchange and/or the New York Stock Exchange and will be made in
accordance with the requirements of such exchanges.

    Elimination of holding company operations

    BCE also announced today that it will not move forward with the planned
conversion into an income trust announced by the company on October 11, 2006.
However, the company is continuing with previously announced plans to simplify
its corporate structure and eliminate BCE's holding company operations. As
part of this process, BCE intends, at its next annual shareholders meeting, to
change its name to Bell Canada Inc. and will have two operating businesses:
Bell and Bell Aliant Regional Communications. Bell Canada also intends to
change its name to Bell Inc. at the same time.
    Under a plan of arrangement, and as part of the corporate simplification
process, holders of Bell Canada preferred shares will be asked to exchange
their shares for BCE preferred shares with the same series rights. The
arrangement will also provide for a one-time special dividend of $0.20 per
Bell Canada preferred share outstanding immediately prior to the exchange. The
arrangement must be approved by the holders of common and preferred shares of
Bell Canada, each voting as a class, at a special meeting to be held on
January 23, 2007.

     Business Review Conference

    BCE's Business Review Conference is being webcast live beginning at 9:00
am ET, today from the company's website:

    About BCE

    BCE is Canada's largest communications company. Through its 28 million
customer connections, Montreal-based BCE provides the most comprehensive and
innovative suite of communication services to residential and business
customers in Canada. Under the Bell brand, the Company's services include
local, long distance and wireless phone services, high-speed and wireless
Internet access, IP-broadband services, information and communications
technology services (or value-added services) and direct-to-home satellite and
VDSL television services. Other BCE businesses include Canada's premier media
company, Bell Globemedia, and Telesat Canada, a pioneer and world leader in
satellite operations and systems management. BCE shares are listed in Canada,
the United States and Europe.

    Caution concerning Forward-Looking Statements

    Certain statements made in this press release, including, but not limited
to, financial guidance relating to revenue growth, EBITDA growth, capital
intensity, earnings per share (EPS) growth and free cash flow, expected growth
in subscribers, target dividend payout ratio, anticipated productivity
improvements, net benefit plans cost, investments and losses in network access
services (NAS), the expected launch of new services, products and
technologies, our plans and strategies and other statements that are not
historical facts, are forward-looking statements and are subject to important
risks, uncertainties and assumptions. The results or events predicted in these
forward-looking statements may differ materially from actual results or
events. As a result, you are cautioned not to place undue reliance on these
forward-looking statements. The forward-looking statements contained in this
press release represent the expectations of BCE Inc., Bell Canada and their
respective subsidiaries (collectively we, us, our or Bell) as of December 12,
2006 and, accordingly, are subject to change after such date. However, we
disclaim any intention and assume no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. Except as otherwise indicated by Bell, these statements
do not reflect the potential impact of any non-recurring or other special
items or of any dispositions, monetizations, mergers, acquisitions, other
business combinations or other transactions that may be announced or that may
occur after the date hereof.

    Material assumptions

    A number of Canadian economic and market assumptions were made by Bell in
making forward-looking statements for 2007 contained in this release,
including but not limited to: (i) Canadian GDP growth in 2007 to be
essentially in line with GDP growth in 2006, consistent with estimates by the
Conference Board of Canada, (ii) the Bank of Canada prime rate and the
Consumer Price Index, as estimated by Statistics Canada, to decline from
current levels, (iii) growth in the overall Canadian telecommunications market
revenues in 2007 to be in line with Canadian GDP growth, (iv) revenues of the
residential voice telecommunications market in Canada to continue to decrease
in 2007 due to wireless substitution, the Internet, and other factors, (v)
wireline competition in both the business and residential telecommunications
markets in Canada to continue in 2007 mainly from cable companies, and (vi)
the 2007 revenue growth rates of the Canadian wireless and video industries to
be in line with 2006 and the 2007 revenue growth rate of the Canadian Internet
market to be slightly lower than 2006.
    In addition, BCE Inc.'s and Bell Canada's 2007 guidance is also based on
various internal financial and operational assumptions. Our guidance related
to Bell Canada (excluding Bell Aliant) is based on certain assumptions
concerning Bell Canada, including but not limited to: (i) revenue growth
estimates for 2007 being based upon an assumption of increasing average
revenue per unit ("ARPU") across various lines of service, (ii) a wireless
subscriber growth rate of 8% to 10%, a video subscriber growth rate of 5% to
7% and a high speed Internet subscriber growth rate of 8% to 10%, (iii)
residential NAS losses to stabilize in 2007 compared to 2006, (iv) Bell
Canada's 2007 total net benefit plans cost, which assumes a discount rate of
5.4%, being expected to be approximately $325 million, (v) the funding of our
total net benefit plans in 2007 estimated to be approximately $300 million,
(vi) Bell Canada's capital intensity in 2007 being estimated to be in the 16%
to 17% range, and (vii) 2007 productivity improvements at Bell Canada
estimated at approximately $450 million.
    Our guidance related to BCE Inc. is based on certain assumptions,
including but not limited to: (i) in 2007, Bell to incur restructuring costs
in the range of $100 million to $150 million, (ii) amortization expense for
2007 in the range of $3,200 million to $3,300 million, (iii) Bell's effective
tax rate in 2007 to be approximately 26%, (iv) no significant escalation in
cash taxes in 2007 as we have assumed that the simplification of our
organizational structure should permit the accelerated use of Bell Canada's
R&D tax credits, and (v) EPS for 2007 to be positively impacted by the planned
repurchase of common shares under BCE Inc.'s normal course issuer bid for 5%
of its outstanding common shares.

    Bell's forward-looking statements for time periods subsequent to 2007
involve longer term assumptions and estimates than forward-looking statements
for 2007 and are consequently subject to greater uncertainty. Therefore, you
are especially cautioned not to place undue reliance on such long-term
forward-looking statements. The forward-looking statement concerning Bell's
cash taxes for 2008 to 2010 assumes no significant escalation in cash taxes as
we expect that the simplification of our organizational structure will permit
the accelerated use of Bell Canada's R&D tax credits.
    The foregoing assumptions, although considered reasonable by Bell at the
time of preparation of such guidance and other forward-looking statements, may
prove to be inaccurate. Accordingly, our actual results could differ
materially from our expectations as set forth in this press release.

    Risks that could affect our business and results

    Risk factors that could cause results or events to differ materially from
current expectations include, among other things: our ability to implement our
strategies and plans in order to produce the expected benefits and growth
prospects, including meeting targets for revenue growth, EBITDA growth,
capital intensity, EPS growth and free cash flow; our ability to implement the
significant changes in our processes, in how we approach our markets and in
how we develop and deliver products and services, required by our strategic
direction; general economic and market conditions and the level of consumer
confidence and spending, and the demand for, and prices of, our products and
services; the intensity of competitive activity from both traditional and new
competitors, Canadian or foreign, including in particular from cable
companies, including cross-platform competition, which is increasing following
the introduction of new technologies such as Voice over Internet Protocol
(VoIP) which have reduced barriers to entry that existed in the industry, and
its resulting impact on the ability to retain existing, and attract new,
customers, and on pricing strategies and financial results; the increase in
wireless competitive activity that could result from Industry Canada's
intention to initiate a consultation concerning the licensing of additional
wireless spectrum; the potential adverse impact on our business of wireless
number portability; the ability to continue to implement our cost reduction
initiatives and productivity improvements and contain capital intensity while
improving quality of services; the ability to achieve customer service
improvement, which is critical to customer retention and ARPU growth, while
significantly reducing costs; the ability to anticipate, and respond to,
changes in technology, industry standards and client needs and invest in and
migrate to and deploy new technologies, including VoIP, and offer new products
and services on a timely basis and achieve market acceptance thereof; the
availability and cost of capital required to implement our financing plans
(including BCE Inc.'s share buyback program and dividend policy) and fund
capital and other expenditures; the fact that depending on the competitive and
technological environment at any given time there can be no guarantee that
BCE's dividend policy will be maintained; that the proposed public offering
and recapitalization of Telesat are subject to various conditions, as well as
BCE Inc. being satisfied that prevailing market conditions are conducive to
allowing BCE Inc. to obtain a favourable and acceptable valuation in respect
of Telesat, and the adverse impact on BCE Inc.'s liquidity and share buyback
program should these transactions not be completed; our ability to find
suitable companies to acquire or to partner with and to make and complete
dispositions of assets or businesses; the impact of pending or future
litigation, including class actions, and of adverse changes in laws or
regulations, including tax laws, or in how they are interpreted, or of adverse
regulatory initiatives or proceedings, including decisions by the CRTC
affecting our ability to compete effectively; the risk of litigation should
BCE Inc. or Bell Canada stop funding a subsidiary or change the nature of its
investment, or dispose of all or part of its interest, in a subsidiary; the
risk of increased pension plan contributions; our ability to manage
effectively labour relations, negotiate satisfactory labour agreements,
including new agreements replacing expired labour agreements, while avoiding
work stoppages, and maintain service to customers and minimize disruptions
during strikes and other work stoppages; events affecting the functionality of
our networks or of the networks of other telecommunications carriers on which
we rely to provide our services; events that could adversely affect the
business and operations of service providers to whom we outsource services;
our ability to improve and upgrade, on a timely basis, our various IT systems
and software on which many aspects of our businesses, including customer
billing, depend; stock market volatility; the risk that licences on which we
rely to provide services might be revoked or not renewed when they expire; our
ability to retain major customers; health concerns about radio frequency
emissions; and the launch and in-orbit risks, including the ability to obtain
appropriate insurance coverage at favourable rates, concerning Telesat's
satellites, certain of which are used by Bell ExpressVu to provide services.
    For additional information with respect to certain of these and other
assumptions and risk factors, please refer to the Safe Harbor Notice
Concerning Forward-Looking Statements dated December 12, 2006 filed by BCE
Inc. with the U.S. Securities and Exchange Commission, under Form 6-K, and
with the Canadian securities commissions.

    The Safe Harbor Notice Concerning Forward-Looking Statements is also
available on BCE Inc.'s website at Please also refer to
presentations made at the Bell 2007 Business Review Conference available on
BCE Inc.'s website for additional information.

For further information: Media relations: Pierre Leclerc, (514)
391-2007, 1-877-391-2007,;
Investor relations: Thane
Fotopoulos, (514) 870-4619,

SOURCE Corporate

Back to search results
­ ­