BCE Inc. (BCE) Earnings Call Transcript & Summary

Good morning, and welcome to the 2022 Annual General Meeting of Shareholders of BCE. My name is Gordon Nixon, I am pleased to preside over this meeting as Chair of the BCE Board of Directors, and I will now call this meeting to order. To begin with, I wish to acknowledge that we are joining you today from Bell Media Studios located on the traditional territories of many nations including the Mississaugas of the Credit, the Anishnabeg, the Chippewa, [ Bojana Nashon ]i and the Wendat peoples and now home to many First Nations, Inuit, and [ Metis ]. I hope this acknowledgment serves as a reminder of the many connections to this land, and I encourage everyone to honor indigenous peoples who live and work wherever you may be. Today is the third consecutive year that we have conducted our Annual General Meeting virtually. We initially adopted this format due to the unfortunate realities of COVID-19. However, we are pleased to confirm that in step with BCE's leadership in ESG and our Bell for Better commitments, we will continue to hold these meetings virtually in the future. Please this view as we do as one more example of how the strength of communication technologies and our networks can minimize environmental impacts while enabling even broader and more diverse participation from our shareholders. We have made every effort to afford shareholders the same rights that they would have at a physical meeting. We will shortly go over the procedures of the meeting and how shareholders can vote and ask questions during the meeting. The business of this meeting will be conducted in English and in French. Online, you may choose the language of the meeting by selecting the English, French or original feed at the top left of your broadcast screen. If you select the original feed, you will hear the original language spoken without any translation. Closed captioning is available on all feeds. It can be tuned at the top right of the broadcast screen. If you are listening by telephone, you wish and you wish to change languages, you must hang up and dial back into the meeting use the phone number that corresponds to the language of your choice, which is indicated on our website. I will now introduce the members of the BCE team joining me today. Mirko Bibic is our President and Chief Executive Officer; and Martin Cossette is our Vice President and Corporate Secretary. In accordance with the BCE bylaws, I, as Chair of the Board, will act as Chair of this meeting, and Martin will act as Secretary. Also attending today's meeting via telephone are Jacklyn Mercer and Paul Fletcher, representatives of Deloitte, who are the shareholders' auditors. Glen LeBlanc, our Chief Financial Officer, is also with us to ask questions. And members of the Board of Directors as well as other senior management are also viewing the webcast. Before I begin, I would like to ask Martin to take us through the procedures of this meeting. Martin?

[Foreign Language]

[Foreign Language] Martin. And once again, thank you, everybody, for joining our 2022 Annual Shareholder Meeting. As the BCE Group of companies move forward with our overriding purpose specifically to advance how Canadians connect with each other and the world, we are doing so with ambitious targets that add to the tremendous progress that we have been making. In 2021, we continue to connect more homes and businesses in urban and rural areas alike, with broadband and wireless networks and services that are amongst the best in the world. This means more customers with greater capabilities than ever to connect with family, friends more opportunities for businesses small and large, to modernize and to grow and more opportunities to enhance public services. We continue to connect Canadian viewers and listeners to the compelling content that they want when they want it, helping everyone stay informed and entertained on the media platforms of their choice. We also continue to connect Canadians to customer experiences that are always improving by adopting innovative goals that make it easier for customers to do business with Bell. Proudly serving Canadian since 1880, all of this progress continues to have at its core, the actions we take and the work we do as a responsible, reliable, forward-looking engine of growth, whether during times of crisis or periods of relative stability. Indeed, BCE's long-standing commitment to the highest standards of corporate responsibility and ongoing focus on leadership in ESG continues to guide every action we take to benefit customers team members as well as you, our shareholders. Underscoring more vividly how ingrained and important ESG is to our overall strategy, the launch of Bell for Better in 2001 highlights initiatives underway that are helping build a better world, better communities and importantly, a better workplace. Under your Board's direction, BCE continues to improve on generations of successful environmental initiatives. The first Canadian communications company to have an environmental management system certifies to the international 14001 standard over a decade ago. More recently, Bell became the first communications company in North America to have an energy consumption plan received ISO 50,001 certification. In 2001, we proudly announced a new commitment to achieve in carbon neutral operations across BCE and Bell by 2025. We are also moving forward with the adoption of science-based targets to reduce greenhouse gas emissions by 2030, in line with the Paris Accord. We continue to work with international organizations on developing positive environmental solutions to ensure our disclosures, including those related to climate change, aligned with expectations that are evolving requirements of the investment community. The launch of BCE's new sustainable financing framework in 2021 also represents what I believe is a seminal moment. With the framework in place, we initiated a sustainable bond offering, another first for Canada's telecommunications industry and another step forward in keeping our ESG commitments. Supporting social and economic programs in the communities, we serve has always been at the heart of what we do and remain so today. In addition to connecting more customer and communities to the best in broadband, wireless and content, our commitment to mental health initiatives now stand at $155 million by 2025. Our ongoing support of Bell Let's Talk addresses the stigma associated with mental health on a national and international level, supports improved access and care in hundreds of communities across the country and funds important new research and encourages programs that will improve mental health in the workplace. Consistently recognized as one of Canada's top employers, your Board of Directors is also proud to continue working with management across BCE group of companies to enhance diversity, equity and inclusion, support new skills development and training and provide additional workplace flexibility. We also now offer unlimited mental health coverage for team members as well as their families. BCE also made notable progress in gender equity within the leadership team. Since 2021, women Executive Vice Presidents went from 8% to 20%, and women Senior Vice Presidents went from 29% to 39%. Additional progress in 2021 included meeting our gender diverse goal for your Board members of at least 35%. I applaud all of you, our shareholders, for helping us make this long-standing objective a reality. Financially, BCE's quarterly results continue sequential improvements over the past year, with revenue achieving approximately 99% of pre-pandemic levels in 2021. A strong balance sheet, including healthy free cash flow, supported by acceleration of capital expenditures in 2021 to over $4.8 billion as well as the $2.07 billion acquisition of high-value 3,500 megahertz spectrum. Our sound financial position also enables us to increase our common dividend share by 5.1%, the 14th consecutive year that BCE has increased the dividend by a minimum of 5%. I would also like to say a word -- a few words about some notable losses that your BCE Board of Directors has had over the past year. Tom Richards, a seasoned technology telecom executive who first joined your Board in 2020 passed away on October 2021. Tom's wide-ranging experience and incredible insights accrued over a long and successful career provided tremendous value during his short time with us. And sadly, earlier this year, we lost Ian Greenberg, an outstanding innovator, a leader, great Canadian and mentor to many of us. A positive force in Canada's media industry for years, Ian joined the Board shortly after BCE acquisition of Astral Media in 2013. He has left a legacy of strong character, incredible wisdom and enduring goodwill. I know that both Tom and Ian would be excited about the possibilities ahead for BCE, and we will miss them both very much. With the historic capital expenditures in fiber and 5G networks and services, as well as leading investments in Canadian content and media, Bell continues to build momentum for a strong recovery from COVID-19 and a more positive future for our customers as well as for our team members and you, our shareholders. On behalf of everyone on your Board of Directors, I'd like to thank you for your support. The meeting today will proceed as follows. After confirming the establishment of a quorum, we will proceed with the receipt of the 2021 consolidated financial statements as well as our auditor's report. We will then vote on the election of directors the appointment of auditors, the advisory resolution on executive compensation and the 3 shareholder proposals. To facilitate the proceedings, I have asked Martin to move the first 3 motions before we get to the shareholder proposals. Our President and Chief Executive Officer, Mirko Bibic, will then address the meeting. And following that, we will announce the results of the votes. And finally, we will conclude the meeting with a question-and-comment session, and we look forward to your questions. Starting with agenda item number 1. The scrutineers have provided me with their report on attendance, which will be filed with the records of this meeting. The attendance report, together with the proxies, which I hold confirm that shareholders representing at least 25% of the outstanding shares of BCE entitled to vote and attend this meeting. I therefore declare that the meeting to be properly constituted for the transaction of such business as may properly be brought before it. The next item on the agenda is item 2, the BCE Annual Report for the 2001 (sic) [ 2021 ] year contains consolidated financial statements with the auditor's report thereon. A copy of the 2021 annual report will be filed with the records of this meeting. Attending today, as I said, is Mr. Glen LeBlanc, our Chief Financial Officer; as well as representatives of Deloitte to answer any questions that you have specifically related to the financial statements. Martin, are there any questions online related specifically to this item of business?

We don't have any questions at this time, Mr. Chair.

Operator, are there any questions on the phone related to the financial statements?

No, there are not.

Hearing none. I remind you that the polls for all items submitted to a vote at this meeting are open. Shareholders may vote online by clicking the vote button at the top of the screen. The next item of business on the agenda is the election of our directors. There are 13 directors to be elected and 13 eligible candidates to [ have nominate ]. The Board nominees at today's meeting are as follows Mirko Bibic, David Denison, Robert Dexter, Katherine Lee, Monique Leroux, Sheila Murray, Louis Pagnutti, Calin Rovinescu, Karen Sherriff, Robert Simmonds, Jennifer Tory and Cornell Wright. Along with me, Gordon Nixon, these are your Board nominees. We will now turn to questions related to this item of business. [Operator Instructions] Martin, are there any questions related to this item of business?

There are no questions on this item of business, Mr. Chairman.

Operator, are there any questions on the phone?

There are none.

Thank you. Martin, could we please move this motion?

[Foreign Language]

[Foreign Language] Martin. The next item on the agenda is the appointment of our auditors, and I remind you that the polls remain open. Martin, are there any questions online related to this item of business?

No, Mr. Chair, we have no questions at this time.

Operator, are there any questions on the line?

There are none.

Thank you. Martin, would you please move the motion?

[Foreign Language]

The next item on the agenda is the advisory vote on BCE's approach to executive compensation. Martin, are there any questions online relating to this item of business?

No, Mr. Chairman, no questions on the item of business.

Operator, are there any questions on the phone?

No questions.

Martin, would you please move the motion?

[Foreign Language]

[Foreign Language] Martin. The last item submitted to a vote are 3 shareholder proposals. And I will now invite Willie Gagnon from MEDAC to [ prevent ] and move the proposals and to make brief remarks regarding the 2 proposals that MEDAC withdrew after discussions with our management team. Operator, please open the line for Mr. Gagnon.

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language] We thank you very much for your proposals and your comments and keep pushing because you're making us a better organization. So thank you. Martin, are there any questions on the line relating to the shareholder?

There are no questions at this moment about the shareholder proposals, Mr. Chairman.

Operator, are there any questions on the line?

No questions.

Okay. Thank you very much. And please note that the polls will close shortly. We have now dealt with all the business items on the agenda, and I declare that the voting on all matters is now closed. The results will be announced prior to the question and comment period. It's now my pleasure to ask Mirko Bebek, our President and Chief Executive Officer, to address the meeting.

[Foreign Language] These purpose-driven strategic imperatives of the road map we have followed since early 2020 with one notable and recent addition and emphasis on our long-standing leadership in ESG, including Bell for Better initiatives that are making our world and our communities more prosperous, more connected and more sustainable every day. Actions such as developing and launching new online services, virtual capabilities, 5G solutions and IoT applications, initiatives like continuing to adopt renewable energy sources expanding our waste diversion programs, increasing our fleet of electric vehicles and retrofitting our facilities to bring us closer to our goal of carbon-neutral operations by 2025. Bell is an incredible force for positive change and Bell for Better is about how we are building a stronger today and a stronger tomorrow for all Canadians as the following video highlights. [Presentation]

Further strengthening sustainability is our ongoing support for Bell team members, all of whom I believe are the greatest advantage we have in an intensely competitive and highly dynamic communications market, advancing diversity, equity and inclusion, generating opportunities for skills and career development, our flexible work waste program and expanding benefits to include unlimited mental health coverage for all team members and their family. These are all key components of a new employee value proposition, highlighting the many positives that set Bell apart as a truly great place to work. The tremendous capabilities of the Bell team have been on full display since the start of the COVID-19 pandemic and throughout 2021. We've made amazing strides forward on every one of our strategic imperatives while at the same time adjusting to meet urgent priorities. Last year, with the full support of the BCE Board of Directors and backed by the experienced senior leadership team here at Bell, we put in place a bold vision. Rather than pull back on investment at the high of the crisis, we leaned in. We chose to boost capital expenditures on our networks to historic levels, and we chose to ramp up the development and availability of new digital tools that incorporate innovations and machine learning and artificial intelligence to improve the customer experience and make it easier than ever to do business with Bell. Putting customers first with digital tools like our new virtual repair service, outage notifications, order tracking and self-installation delivers clear customer benefits while allowing us to operate faster and to offer more value, including lower-priced wireless options. The results of our customer-first investments have been outstanding as we continue to lead national competitors in reducing customer complaints. [Foreign Language] [Presentation]

[Foreign Language] The convergence of our fiber and 5G networks also generates growth opportunities for Bell and for our business customers as we develop new services like Smart Supply Chain powered by Bell, IoT, Smart Connect and multi-access edge computing capabilities in partnership with AWS and Google. All of our investments are helping to build a better world, better communities and better workplaces by supporting ambitious environmental targets more customer first choices for high-quality services, local and national economic growth and a stronger, more sustainable future. We're also immensely proud of our leadership in mental health and all of our Bell Let's Talk initiatives. This past January, our annual Bell Let's Talk Day boosted Bell's funding by more than $8.2 million, thanks to a new record of over 164 million messages of support for mental health. Indeed, every Bell Let's Talk initiative has meaningful and positive impacts as this next video clearly demonstrates. [Presentation]

Our Bell for Better initiatives, our network builds, the launch of innovative services and our customer-first approach, these are all crucial to achieving our purpose of advancing how Canadians connect with each other and the world. And of course, our strategic focus is delivering very real and very tangible benefits to you, our shareholders, including a 1-year total shareholder return of 27.9% for 2021 and an increase of 5.1% in the dividend per common share for 2022, the 14th consecutive year of a 5% or greater dividend growth. On behalf of everyone on the Bell team, thank you for your support as we move forward on this positive and exciting journey. I'll now turn the meeting back to the Chair. Gord, over to you.

Thank you, Mirko. I would now ask Martin to provide the preliminary results of the scrutineers' tabulation of today's votes.

[Foreign Language] Back to you, Gord.

Thank you, Martin. We will now take questions and comments from our shareholders. Martin, would you please remind us of the procedures to ask a question?

[Foreign Language] Back to you, Gord.

Thank you, Martin. We have a few questions online. But before we go there, are there any questions on the phone, operator?

There are no questions, Mr. Chair.

Okay. Hearing no questions on the phone. We'll go to the first question online. So Martin, to read the question.

The first question is coming from Jeff Carlson, a shareholder, reads a follow. We have just listened to a number of withdrawn shareholder proposals that appear in the management proxy circular, and we can see them on Page 88 and 89 of the proxy. Including them in the circular, are discussing them in this meeting sends the message to shareholders that they should be seriously considered when instead they have been withdrawn. Any specific shareholder proposal appearing within the management circular and expected to be discussed should either include -- should either be included for voting or if withdrawn, should not be discussed as a shareholder proposal. Otherwise, it is nothing more than lobbying by a special interest group at the expense of shareholders. My question is, why does BCE believe it's necessary to include shareholder proposals in the management circular that have been withdrawn from voting are to allocate any time at its AGM for their official discussion.

Thank you, Jeff, for your question. We do value the engagement of our shareholders as well as their feedback and some, including MEDAC, tend to do this through the annual meeting and proxy process. We did receive 5 proposals, and we had a number of meetings with MEDAC to discuss them and a couple of the proposals, in most cases, Bell met essentially what the proposal was asking for. While it's not necessary that we include these in the circular, simply as a result of openness and trying to accommodate the shareholders' wishes we did allow, as part of our discussions with MEDAC that they be included in the proposal. And frankly, it's helpful for our shareholders to know how far along we are with respect to the areas that were proposed and withdrawn.

The next one is a comment from [ Fate Jenner ], a shareholder. Reads as follow. For the environment, please stop sending paper adverts and envelopes.

Thank you, Ms. [ Jenner ]. As you would have noted from my presentation a few minutes ago, we launched Bell for Better, which is our commitment to be leaders in ESG, of course, being the environment. So I certainly appreciate the sentiment behind your question. We are actually on a pretty ambitious aggressive program to digitize as many of our operations as possible, and you saw it in my presentation. Developing world-class apps to drive our customers to the apps, which would allow us to do things like self-install and virtual repair, in other words, digitizing our operations, moving away from paper bills, where possible to e-bill again reduces our cost structure, makes us more efficient. We believe improves the customer experience and, of course, has a positive impact on the environment. And the same would go for paper advertisements. We understand the sentiment and is part of our evolution to being as digital as possible. Thank you very much for your engagement.

We don't have any more comments or questions at this time, Mr. Chair.

Operator, are there any questions on the phone?

No question, Mr. Chair.

Okay. That makes for a very straightforward and simple Q&A period. We would like to thank again all the shareholders for their support and for their participation in this meeting. And I will now declare that the question-and-comment session is over. Short Q&A period, partially because I think we're very proud of not just the results of BCE, but the great job done by Mirko, his management team, all of our employees and supporters throughout the organization. It's having managed through some interesting couple of years. We come out of it stronger than ever, and we're very happy and very proud of the job that the team has done. I just conclude by once again thanking everybody for their participation in our annual meeting and your confidence in the Bell team, and we look forward to doing it again next year. So thank you very much.