BCE announces 7% common share dividend increase for 2010 and plans for the
use of surplus cash - Includes $500 million share buyback and $500 million
voluntary pension contribution
"BCE is committed to delivering attractive ongoing returns to our shareholders and has done so through consistent and sustainable dividend increases and share buybacks since December 2008," said
Today's announcement represents BCE's third increase to the annual common share dividend and the second share buyback since the termination of its proposed privatization agreement in
The BCE annual common share dividend will increase by 7% to
Deployment of surplus cash
BCE also announced today that it will return capital to shareholders in the form of an NCIB for up to
"This new share buyback program and the significant special voluntary pension contribution also announced today are further proof of BCE's well-balanced financial strategy. As we strengthen BCE's balance sheet and credit profile, we are enhancing our company's ability to maximize total shareholder returns now and in the future," said Siim Vanaselja, Chief Financial Officer of BCE and
BCE estimates its
BCE will make its special contribution to Bell Canada's defined benefit pension plan from cash on hand. This contribution will take place prior to year-end 2009 and is tax deductible, leading to cash tax savings of approximately
"This special voluntary pension contribution further enhances the security of pension benefits for all of Bell's retirees and employees in our defined benefit pension plan," said
Updated 2009 outlook
As a result of the
------------------------------------------------------------------------- Increased 2009 Guidance provided November 12 December 17 on August 6 Expectation Expectation ------------------------------------------------------------------------- Bell (i) ------------------------------------------------------------------------- Revenue Growth 1% - 2% Low end of Low end of range range ------------------------------------------------------------------------- EBITDA(ii) Growth 1% - 2% On track On track ------------------------------------------------------------------------- Capital Intensity 15% - 16% On track On track ------------------------------------------------------------------------- BCE ------------------------------------------------------------------------- Adjusted EPS $2.40 - $2.50 High end of High end of range range ------------------------------------------------------------------------- Free Cash Flow(iii) $1,750 M - $1,250 M - $1,900 M On track $1,400 M ------------------------------------------------------------------------- (i) Bell's 2009 financial guidance for revenue, EBITDA and capital intensity is exclusive of Bell Aliant (ii) EBITDA includes pension expense (iii) The most comparable Canadian GAAP financial measure is cash flows from operating activities. For 2009, BCE expects to generate approximately $1,250 million to $1,400 million in free cash flow after a $500 million special contribution to Bell Canada's defined benefit pension plan. This amount reflects expected BCE cash flows from operating activities of approximately $4.4 billion to $4.6 billion.
BCE will provide its 2010 financial outlook on
Call with financial analysts
BCE will hold a conference call for financial analysts to discuss its cash deployment strategy on
There will also be a live audio webcast of the call available on BCE's website at: http://www.bce.ca/en/news/eventscalendar/webcasts/2009/20091217/. The mp3 file will be available for download on this page later in the day.
Normal Course Issuer Bid
BCE has received approval from the
Purchases under the BCE NCIB program announced today will be effected through the facilities of the TSX and/or the New York Stock Exchange (NYSE) or by such other means as may be permitted by the TSX and/or the NYSE, and under applicable laws, including pre-arranged crosses, exempt offers, private agreements under an issuer bid exemption order issued by a securities regulatory authority and/or block purchases in accordance with the applicable regulations of the TSX. In the event that BCE purchases common shares by pre-arranged crosses, exempt offers or private agreements, the purchase price of the common shares may be different than the market price of the common shares at the time of the acquisition.
The average daily trading volume (ADTV) for BCE's common shares during the six-month period preceding
BCE has purchased 40 million common shares, or approximately 5% of outstanding common shares, at a weighted average price of approximately
Caution concerning forward-looking statements
Certain statements made in this news release, including, but not limited to, statements relating to our financial guidance for 2009, plans relating to the return of cash to shareholders, including potential purchases of common shares for cancellation under a normal course issuer bid, and the projected sources of funds which may be used for such purpose, and other statements that are not historical facts, are forward-looking statements and are subject to important risks, uncertainties and assumptions, and to the discretion of BCE's Board of Directors in respect of the declaration of dividends.
The results or events predicted in these forward-looking statements may differ materially from actual results or events. As a result, we cannot guarantee that any forward-looking statement will materialize and you are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements assume, in particular, that many of our lines of business will be resilient to the current economic downturn. However, we caution that the current adverse economic conditions make our forward-looking statements and underlying assumptions subject to greater uncertainty and that, consequently, they may not materialize. It is impossible to predict with certainty the full impact that the current economic downturn and credit crisis will have on our business or residential customers' purchasing patterns. The forward-looking statements contained in this news release are made as of the date of this release and, accordingly, are subject to change after such date. Except as may be required by Canadian securities laws, we do not undertake any obligation to update or revise any forward-looking statements contained in this news release, whether as a result of new information, future events or otherwise. Except as otherwise indicated by BCE, 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. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans and allowing investors and others to get a better understanding of our operating environment. Readers are cautioned that such information may not be appropriate for other purposes.
Material assumptions
A number of Canadian economic and market assumptions were made by BCE in preparing forward-looking statements for 2009 contained in this release, including, but not limited to: (i) Canadian GDP to decrease by approximately 2%, compared to 2008, consistent with estimates by the six major banks in
In addition, BCE's and Bell Canada's 2009 guidance is also based on various internal financial and operational assumptions. Our guidance related to Bell (excluding Bell Aliant) is based on certain assumptions concerning Bell, including, but not limited to: (i) many of our lines of business to provide good resiliency and protection from an economic downturn so that spending on our core wireline telephone services should not be severely impacted given the importance of these services to both residential and business customers, (ii) reduced housing starts and residential moves to contribute to reduced customer turnover, (iii) business market demand to be adversely affected as business clients revisit their investment plans due to tighter credit availability, economic uncertainty, continued competition from offshore manufacturing and reduced public sector spending, (iv) the softening of the Ontario and Québec business market to continue with the potential to drive business NAS erosion higher, (v) more conservative investments by business customers to result in lower capital spending requirements to support business customers, (vi) the economic recessionary environment and increased price competition to put pressure on ARPU and result in customer satisfaction and retention becoming even more critical, (vii) residential NAS losses to decline in 2009 compared to 2008, (viii) Bell's revenue outlook was derived in the context of a worsening economy, (ix) Bell's total net benefit plans cost, which is based on a discount rate of 7.0% and a 2008 return on pension plan assets of approximately (19.5%), is expected to be approximately
Our guidance related to BCE is based on certain assumptions for 2009, including, but not limited to: (i) restructuring and other charges in the range of
The foregoing assumptions, although considered reasonable by BCE at the time of preparation of its financial guidance and business outlook 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 news release.
Material risks
Factors that could cause actual results or events to differ materially from our expectations expressed in or implied by our forward-looking statements include: general economic and credit market conditions, the level of consumer confidence and spending, and the demand for, and prices of, our products and services; our ability to implement our strategies and plans in order to produce the expected benefits; our ability to continue to implement our cost reduction initiatives and contain capital intensity while seeking to improve customer service; the intensity of competitive activity, including the increase in wireless competitive activity that could result from Industry Canada's licensing of advanced wireless services spectrum, and the resulting impact on our ability to retain existing and attract new customers, and on our pricing strategies and financial results; increased contributions to employee benefit plans; our ability to respond to technological changes and rapidly offer new products and services; events affecting the functionality of, and our ability to protect, maintain and replace, our networks, information technology (IT) systems and software; our ability to maintain customer service and our networks operational in the event of the occurrence of epidemics, pandemics and other health risks; events affecting the ability of third-party suppliers to provide to us essential products and services; labour disruptions; the potential adverse effects on our Internet and wireless businesses of network congestion due to a significant increase in broadband demand; our ability to generate or raise the capital we need to implement our business plan, including for BCE's share buyback program and dividend payments and to fund capital and other expenditures; our ability to discontinue certain traditional services as necessary to improve capital and operating efficiencies; regulatory initiatives or proceedings, litigation and changes in laws or regulations; launch and in-orbit risks of satellites used by Bell TV; competition from unregulated U.S. direct-to-home (DTH) satellite television services sold illegally in
For additional information with respect to certain of these and other assumptions and risks, please refer to BCE's 2008 Annual MD&A dated
About BCE
BCE is Canada's largest communications company, providing the most comprehensive and innovative suite of communication services to residential and business customers in
For further information: Media inquiries: Claire Fiset, Bell Media Relations, (514) 870-4739, 1-877-391-2007, [email protected]; Investor inquiries: Thane Fotopoulos, BCE Investor Relations, (514) 870-4619, [email protected]
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