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Article Excerpt
For the year ended December 31, 2003, BCE Inc. (TSX, NYSE: BCE) reported revenue of $19.1 billion, EBITDA(1) of $7.4 billion, operating income of $4.1 billion and earnings per share of $1.90. Excluding certain one-time events(2) in 2002, EPS for the full year 2003 increased by 16%. In the fourth quarter, the company posted revenue of $4.9 billion, EBITDA of $1.9 billion, operating income of $971 million and earnings per share of $0.41. BCE generated full year 2003 free cash flow(3) of $1.6 billion, an improvement of $2.5 billion, which allowed the company to reduce net debt by almost $2 billion.
"In 2003 we made steady progress on both the operational and financial fronts," said Michael Sabia, President and CEO of Bell Canada Enterprises. "Operationally, we made major improvements to our structure and moved to increase the speed and simplicity with which we serve our customers and bring innovative solutions to the market. Financially, our disciplined management has driven a major turnaround in our cash flow. This gives us the solid financial foundation that is critical to supporting our strategy of setting the standard in the Internet Protocol world."
"We also grew revenues and EBITDA from continuing businesses(4) by 2.3% and 6.3% respectively," said Mr. Sabia. "Our overall revenue and EBITDA grew due to our focus on careful cost management and the solid performance of our Consumer business. Notably, our EBITDA margin grew to 39%. That said, our Enterprise and Wholesale businesses continued to face a number of market challenges."
Solid Fourth Quarter for the Consumer Market
"During the year, we made a major effort to improve customer service. Our many improvements included 'Emily', 'One Bill', 'Move Queues' and 'All-in-One Mobility' rate plans," said Mr. Sabia.
"Consumers have responded well. For example, our recently launched 'Bundle from Bell' has over 70,000 customers in just three months. We have increased the number of customers with three or more of our key consumer services by three percentage points since last year. With this momentum, our strategy to win the broadband home is well under way and meeting initial success."
Other highlights: - Cellular and PCS net additions of 189,000 in the quarter, for a total of 514,000 for 2003; subscribers increased by 13% to reach 4,412,000 at December 31 - Wireless post-paid churn for the quarter was at 1.2%. Wireless EBITDA for the quarter increased by 52% to reach $229 million - High-Speed Internet (DSL) subscribers increased by 91,000 in the quarter and 372,000 in 2003 to reach 1,482,000 by December 31, an increase of 34% compared to last year - Bell ExpressVu (DTH) net additions of 35,000 in the quarter and 83,000 for full year 2003; total subscribers in 2003 increased by 6.4% to reach 1,387,000 at December 31 - Consumer revenues increased significantly in 2003, driven by wireless revenues, up 15%, consumer ISP revenues, up 21%, and DTH revenues, up 19%, and - As of December 31, there were almost 350,000 customers with One Bill. A Challenging Quarter for the Business Market
"We anticipated a marginal decrease in our overall fourth quarter revenues," continued Mr. Sabia. "This was largely due to deliberate decisions we made to better focus our Enterprise and Wholesale businesses on profitability. That being said, the Small and Medium Business market slightly improved its revenues compared to the fourth quarter of 2002."
The company withdrew from certain product lines as part of a strategy to increase profitability in the Enterprise and Wholesale sector. The Enterprise unit curtailed the volume of Gateways cabling contracts by not pursuing new contracts with minimal margins. The unit also exited the electrical cabling business. Additionally, the Wholesale unit did not renew certain contracts for international switched minutes that had minimal margins. These actions reduced fourth quarter business revenues by approximately $75 million. However, margins improved compared to the fourth quarter of 2002. Enterprise and Wholesale were also affected by continued softness in market demand, increased competition, and recent regulatory decisions. Emerging Data and value-added services continued their growth in the fourth quarter.
In the second half of 2003, revenue in Small and Medium Business grew due to intensified sales force coverage and stronger demand for its DSL data products. Progress was also made on improving cross-selling skills. This business is now focused on becoming the technology advisor for small and medium businesses.
Continued Emphasis on Disciplined Financial Management
During the quarter, the company continued to focus on various projects to increase efficiency, simplify operations and improve productivity savings. Total EBITDA from continuing businesses for the quarter increased by 6.1%, an improvement in EBITDA margins of two percentage points.
The company also maintained its focus on capital efficiency. Free cash flow reached $192 million in the quarter, a year-over-year increase of $552 million.
Moving to an IP World
"Executing our strategy is not only about expanding our portfolio of IP based value-added products and services for our customers," said Mr. Sabia. "It's about improving performance by becoming the most cost efficient, customer oriented and superior service communications provider possible."
"In the past twelve months, we made important progress in transforming Bell Canada into a simpler, more...
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