Bell meets quarterly results expectations

BCE Inc.’s bottom line took a hit from closing costs associated with buying Manitoba Telecom Services earlier this year, but the telecom giant’s otherwise consistent financial results pleased both analysts and shareholders at the annual general meeting on Wednesday.

Bell, Canada’s largest telecommunications company, reported quarterly results hit analysts’ expectations despite intense competition from its top cable competitor Rogers Communications Inc., which is vying to sign up as many customers as possible to its highspeed Internet plans. Bell is also racing to build fibre connections in Montreal and Toronto that can compete with gigabit speeds.

Bell’s profit dropped 4.4 per cent to $725 million in the three months ending Mar. 31. But excluding severance, acquisition and other costs from the MTS deal, approved by government agencies in February after a nine-month review, Bell’s adjusted profit slightly beat analysts’ predictions, climbing 3.3 per cent to $758 million or 87 cents per share.

In a call with analysts, CEO George Cope said Bell is already enjoying synergies from the MTS deal that added more than 700,000 wireless, television, Internet and telephone subscribers to its books. It has already moved all MTS wireless customers that previously roamed on the Rogers network to roam on Bell’s network, he said.

Cope characterized the quarter as “really strong ” considering regulatory decisions that Bell said cost $35 million, with the Canadian Radio-television and Telecommunications Commission’s decision to ban simultaneous substitution of advertising during Super Bowl LI costing $11 million. The rest of the regulatory costs were associated with lower wholesale Internet rates and refunds for customer cancellations.

Still, Bell posted strong margins on both its wireless and wireline businesses, even though subscriber additions were lighter than expected when it came to Internetprotocol television and Internet.

Cope said it was an “aggressive” quarter as competitors ramped up acquisition efforts in advance of Bell’s fibre roll out, which it expects to complete this year in Montreal and by early 2018 in Toronto.

Meantime, Bell’s IPTV product — critical for stealing market share from Rogers, which won’t launch a similar offering until early 2018 — gained 22,000 customers compared to 48,000 last year. Bell attributed the slower growth to expired pricing promotions, reduced footprint expansion, maturing market penetration, fewer satellite migrations and growing video streaming substitution.