BCE profit meets forecasts despite weaker internet, TV numbers
BCE Inc. again relied on its wireless division to bolster financial results as it races to build fibre connections that it expects will help win new customers from its cable competitors.
The telecom giant reported Thursday quarterly results in line with Bay Street’s expectations, with impressive results in wireless and the Manitoba Telecom Services acquisition making up for fewer new internet and television subscribers. Its profit dipped 2.3 per cent to $811 million, but adjusted earnings per share of $0.88 topped analysts’ expectations by a penny.
Bell added 89,000 postpaid wireless subscribers in the three months ending June 30, beating consensus expectations of 70,000. Average revenue per user increased by 4.6 per cent to $67.28 per month as mobile internet usage jumped 26 per cent from this period last year. Churn, the number of customers leaving the company, dropped to an 11-year low of 1.08 per cent.
Meantime, Bell lost 13,000 television subscribers and only added 1,000 internet customers.
But on a conference call with analysts, CEO George Cope said Bell is ahead of schedule in building fibre-to-the-home connections, which offer ultra-fast internet speeds that Bell’s cable rivals are able to offer across their entire footprints with less capital investment. He said it will connect 100,000 more premises than anticipated by year-end for a total of 3.7 million homes and businesses.
“We expect stronger internet additions particularly as our fibre rolls out,” he said.
Where Bell already has fibre, Cope said it added 17,000 new internet customers and “literally had no (telephone line) losses.”
“It’s really quite interesting what the power of that is,” he said.
While Cope was bullish on fibre and the internet protocol television (IPTV) platform it offers, he said he was most pleased about the May launch of Alt TV, a live TV service that doesn’t require a set-top box. He expects this product, which is cheaper than typical TV packages and only available to existing Bell customers, will help drive broadband sales.
“It’s clear how we’re going after the cord cutter market,” he said, noting that the service can save customers up to 40 per cent. That positions it well should other over-the-top TV services enter the market from the U.S., he said.
Analysts were pleased with the impressive wireless numbers, but noted the weaker-than-expected broadband results.
Barclays analyst Phillip Huang noted to clients that the broadband results were “surprisingly weak” given Bell added about 200,000 new fibre-to-the-home connections this quarter.
“This is due to increased churn in areas where FTTH is not yet available from intensified cable bundle competition.”
“Wireless saves the day again,” Desjardins analyst Maher Yaghi noted to clients, adding it “continued to be a positive surprise” in terms of subscribers and revenue.
He believes Bell’s focus on increasing its fibre footprint will be key to reversing negative trend in wireline subscribers.
“The company’s FTTH program should help improve wireline results in 2018 when a large part of the Greater Toronto Area upgrade is completed,” he wrote.