Bell Canada takes aim at Netflix
CEO George Cope says company to announce streaming service as BCE lowers earnings estimate
MONTREAL— Bell Canada says it’s on the cusp of launching a new streaming product to attract customers who prefer to watch video such as Netflix through the Internet instead of traditional TV services.
Chief executive George Cope said the Montreal-based company will announce its plans in the next four to six weeks as it combats the trend of customers cutting or reducing their television connections.
“This industry’s in an evolution towards people viewing TV in different ways over time,” he told shareholders at the company’s annual meeting in Ottawa.
He said Bell leads the country with TV subscriptions, but Internet Protocol television (IPTV) growth slowed in the first quarter as customers continued to opt for online streaming services. It added 22,000 Fibe TV customers, down from 48,000 a year ago.
Still, Cope sees opportunities to grow against cable competitors who have more than half of the TV market by expanding television and satellite services while also offering its new streaming product.
Maher Yaghi of Desjardins Capital Markets said “competitive dynamics” weighed on Bell’s wireline business as it faced heavy promotions from Rogers and Vidéotron during the quarter.
Cope added that having powerful and fast Wi-Fi in the home will increasingly be required as consumers continually increase the number of devices they use.
“Everything is going to be plugged into the Internet and we need this speed to stay competitive and make sure the Canadian economy for business also stays competitive.”
He said enhancing its so-called overthe-top (OTT) service, which includes Crave TV, would also help to enhance its wireless position.
Earlier, Cope told analysts that its investment to add fibre to Toronto homes and businesses is being wellreceived as more homeowners than expected are seeking the connection, even if they don’t immediately sign up for Bell services.
“I think there is a recognition that if you can get glass or fibre to your home, you don’t want to be in a home that doesn’t have that capability,” he said in a conference call about its first-quarter results.
Bell expects to mostly complete the extension to 1.1 million Toronto locations this year. It’s also expanding its fibre optic network in Montreal.
The parent of Bell Canada lowered its benchmark earnings estimate for this year in a revised guidance issued this morning ahead of the company’s annual shareholders meeting.
BCE Inc. is now estimating its fullyear adjusted earnings per share will be no higher than $3.40 per share, which is below the low end of its previous estimate issued in February.
The revision was contained in first- quarter results issued by Canada’s largest telecommunications and media company, which also increased its revenue guidance and free cash flow estimates as a result of acquiring Manitoba Telecom Services.
For the three months ended March 31, BCE reported adjusted earnings of 87 cents per share, which was up from last year and four cents above estimates compiled by Thomson Reuters.
BCE’s net income attributable to shareholders was $679 million, or 78 cents per share, a decline of five per cent due to a combination of factors including higher severance payments and more shares outstanding.
Revenue was up 2.2 per cent compared with last year’s first quarter, at $5.38 billion, due to higher service revenue at all three Bell operating segments. The company benefited from 36,000 new wireless customers and greater mobile data use that offset slower growth in TV and Internet and a loss in ad spending after the CRTC barred it from substituting Canadian ads on U.S. channels during the Super Bowl.