Transcript

FINAL TRANSCRIPT
Manitoba Telecom Services Inc.
Third Quarter Results Conference Call
Event Date/Time: November 2, 2016 — 6:00 p.m. E.T.
Length: 12 minutes
"Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or
liabilities which may arise out of or result from any use made of this transcript or any error contained therein."
« Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne
contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou
découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. »
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FINAL TRANSCRIPT
November 2, 2016 — 6:00 p.m. E.T.
Manitoba Telecom Services Inc. Third Quarter Results Conference
Call
CORPORATE PARTICIPANTS
Brenda McInnes
Manitoba Telecom Services Inc. — Vice President and Treasurer
Jay Forbes
Manitoba Telecom Services Inc. — President and Chief Executive Officer
"Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or
liabilities which may arise out of or result from any use made of this transcript or any error contained therein."
« Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne
contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou
découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. »
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FINAL TRANSCRIPT
November 2, 2016 — 6:00 p.m. E.T.
Manitoba Telecom Services Inc. Third Quarter Results Conference
Call
PRESENTATION
Operator
Good afternoon. My name is Shannon (phon), and I will be your conference Operator today.
At this time, I would like to welcome everyone to the MTS Third Quarter Results Conference Call. All
lines have been placed on mute to prevent any background noise.
After the speakers’ remarks, there will be a question-and-answer session. If you would like
to ask a question at this time, you may press *, followed by the number 1 on your telephone keypad.
To withdraw your question, you may press the # key.
It is now my pleasure to turn today’s conference over to Ms. Brenda McInnes, Vice President
and Treasurer. Ms. McInnes, you may begin your conference.
Brenda McInnes — Vice President and Treasurer, Manitoba Telecom Services Inc.
Thank you, Shannon. Hello, everyone, and thank you for joining us today on our Q3 2016
results call.
Our news release, MD&A, financial statements, and supplemental information package can
be found on our website at mts.ca under the About Us link.
Please note that due to the arrangement agreement with BCE, we do not expect to declare
or pay any more dividends to shareholders prior to closing. Our last dividend was declared on May
11, 2016, and paid to shareholders on July 15, 2016.
"Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or
liabilities which may arise out of or result from any use made of this transcript or any error contained therein."
« Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne
contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou
découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. »
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FINAL TRANSCRIPT
November 2, 2016 — 6:00 p.m. E.T.
Manitoba Telecom Services Inc. Third Quarter Results Conference
Call
Our call today will consist of comments by Jay Forbes, our President and CEO, followed by a
question-and-answer period.
Before we start, I’d like to remind all listeners that today’s presentations and remarks may
contain forward-looking statements. A number of assumptions were made by us in preparing these
forward-looking statements, which represent our expectations as of today. As such, they are subject
to the risk that actual results may differ materially from a conclusion, forecast, or projection in such
forward-looking information.
Therefore, forward-looking statements should be considered carefully, and undue reliance
should not be placed on them. We disclaim any intention or obligation to update or revise any
forward-looking statement, whether as a result of new information, future events, or otherwise,
except as required by law.
For additional information about such material factors and assumptions, please refer to our
third quarter 2016 MD&A released today and our 2015 annual MD&A, which are available on our
website.
I will now turn the call over to Jay.
Jay Forbes — President and Chief Executive Officer, Manitoba Telecom Services Inc.
Thanks, Brenda, and good afternoon to everyone joining us on the call today. As our Q3
financial results are available on our website, I will keep my comments fairly brief today.
"Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or
liabilities which may arise out of or result from any use made of this transcript or any error contained therein."
« Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne
contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou
découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. »
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FINAL TRANSCRIPT
November 2, 2016 — 6:00 p.m. E.T.
Manitoba Telecom Services Inc. Third Quarter Results Conference
Call
Let me begin with the BCE transaction. We continue to work to a late 2016, early 2017
closing of our transaction with BCE.
As you will recall, receipt of regulatory approvals from the CRTC, ISED, and the Competition
Bureau are the final steps required to close the $3.9 billion transaction to combine MTS with BCE.
We’re having a constructive dialogue with each of these three regulators and, accordingly,
we remain confident of our ability to affect a timely closing along the time lines we originally
announced.
As part of our pre-closing process, a letter of transmittal and election form packages were
mailed today to our registered shareholders providing information on how shareholders can deposit
their MTS common shares and elect the form of consideration they wish to receive. This package can
also be found on our website and on SEDAR.
Turning to operations. Our transformation program remains a top priority at MTS. In fact,
we recently marked one full year since we started our journey to transfer MTS into a customer-first
organization.
We’ve made tremendous progress on a number of our multiyear program initiatives, and
our transformation efforts are starting to show very positive results in all aspects of the business.
With all of our transformation work streams launched, and several of them having already
been implemented, our efforts have identified close to two-thirds of the $100 million of annualized
free cash flow improvements we expect to unlock from this program.
"Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or
liabilities which may arise out of or result from any use made of this transcript or any error contained therein."
« Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne
contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou
découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. »
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FINAL TRANSCRIPT
November 2, 2016 — 6:00 p.m. E.T.
Manitoba Telecom Services Inc. Third Quarter Results Conference
Call
Lastly, let me draw your attention to our financial results. As you all know, the pace of
change at MTS remains breathtaking as we rapidly build out our customer-centric capabilities.
Further, all this change is being executed against a backdrop of a pending transaction with
BCE and the inevitable uncertainty that a change in ownership brings.
It is thus with great pride that we share our Q3 financial performance with you. The 2,700
employees of MTS have done a great job of delivering yet another strong quarter of great financial
performance.
Our free cash flow and free cash flow per share growth in Q3 was exceptional and
demonstrates that our transformation program is delivering results. Free cash flow of $48 million was
up by $18.1 million, 60 percent over Q3 2015, as we generated substantial free cash flow from both
EBITDA growth before restructuring and transformation expenses and reduced capital spending.
Our free cash flow per share of $0.65 was up 71 percent over Q3 2015. These very strong
key performance metrics not only reflect the results of our customer-first strategy, but also our
commitment to return capital to our shareholders through our normal course issuer bid that we
completed in the first half of this year.
Our EBITDA before restructuring and transformation expenses, which forms the basis of our
free cash flow, was up $9.7 million in Q3 2016 when compared to Q3 2015, due mainly to a reduction
in operating expenses resulting from our restructuring and transformation initiatives, as well the $2.4
million revenue increase driven largely by growth in our Internet revenues and wireless data.
"Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or
liabilities which may arise out of or result from any use made of this transcript or any error contained therein."
« Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne
contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou
découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. »
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FINAL TRANSCRIPT
November 2, 2016 — 6:00 p.m. E.T.
Manitoba Telecom Services Inc. Third Quarter Results Conference
Call
Our capital investments continued to align with our more rigorous process, which we
instituted in late 2015 as part of launching the transformation program. Q3 2016 capital investments,
excluding restructuring and transformation, were $6.6 million lower than Q3 2015, giving us a capital
intensity ratio of 14.5 percent.
Although our capital intensity ratio this quarter remains below our annual target of 18
percent, we expect capital investments to increase in the final quarter of this year.
With respect to our subscriber results, we are pleased with performance in our Wireless
business. Net additions of 4,481 were very strong in the quarter, above both Q2 and the same quarter
last year.
Average revenue per customer and churn continued to improve, with postpaid churn in the
quarter continuing the strength we’ve seen all year due to our strong retention programs that reflect
our customer-first strategy improvements.
In our Wireline business, our results in quarter show the impact of a more intense
competitive environment, largely driven by aggressive pricing actions of one competitor. We have
revamped our retention and marketplace offers accordingly and are focused on stemming this trend
in Q4.
A more complete analysis of our financial results can be found in our Q3 2016 MD&A and
supplemental.
"Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or
liabilities which may arise out of or result from any use made of this transcript or any error contained therein."
« Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne
contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou
découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. »
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FINAL TRANSCRIPT
November 2, 2016 — 6:00 p.m. E.T.
Manitoba Telecom Services Inc. Third Quarter Results Conference
Call
In summary, our commitment to our customer-first strategy has delivered outstanding
results in this first year of execution. We know that we’re taking the right actions to create ongoing
benefits for our customers and for our shareholders.
We’re excited for the future as we continue on this transformation journey and move to
complete the BCE transaction.
Importantly, our employees are making a difference every day. They’re the ones executing
our strategies, delivering the best possible experience at every customer interaction, and generating
the results that will drive improvements for years to come. My thanks go out to them for delivering
yet another strong quarter of performance.
And with that, I would be happy to take any questions you might have.
Q&A
Operator
At this time, I would remind our participants that if they have a question they may press *,
followed by the number 1 on their telephone keypad. We’ll pause for just a moment.
Again, participants, you may press *, followed by the number 1 on your telephone keypad
if you have a question or a comment.
As there are no questions on the phone lines, this concludes the question-and-answer
session. I would return the call to Ms. McInnes.
"Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or
liabilities which may arise out of or result from any use made of this transcript or any error contained therein."
« Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne
contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou
découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. »
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FINAL TRANSCRIPT
November 2, 2016 — 6:00 p.m. E.T.
Manitoba Telecom Services Inc. Third Quarter Results Conference
Call
Brenda McInnes
Thank you, Shannon. Ladies and gentlemen, we have reached the end of our Q3 2016 results
conference call.
Once again, thank you for joining us today.
Operator
Thank you. The conference call is now over.
*****
"Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or
liabilities which may arise out of or result from any use made of this transcript or any error contained therein."
« Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne
contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou
découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. »
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