BCE boosts profit on wireless customer gains
BCE Inc.’s quarterly profit edged up on strong wireless performance despite weaker-than-expected results in the hotly contested Internet and television market.
Canada’s largest telecommunications company reported adjusted net earnings of 94 cents per share on Thursday, topping analysts’ consensus estimate of 91 cents for the second quarter.
Bell beat its biggest rival, Rogers Communications Inc., when it came to the number of new wireless subscribers and how much revenue it earned from each user. The Montreal-based company credited more smartphone customers using more data on Bell’s faster 4G LTE network for the strong results.
But it blamed its competitors’ aggressive pricing for fewer additions to its broadband segment, citing deals on television in Quebec and high-speed Internet in Toronto. The Big Three, including Telus Corp., are duking it out in highspeed Internet and Internet-protocol television to make up for declines as consumers cut the cord on traditional telephone and TV sets.
“We chose not to match some of the aggressive pricing we saw in the market in Toronto,” CEO George Cope told analysts, Thursday.
Cope said he’s confident that Bell’s residential fibre Internet and TV services are close to offsetting loses from the business and telephone segments as the costs to deliver wireline services drop.
Bell added 69,848 postpaid wireless subscribers, topping analysts’ consensus estimate of 52,000 and the 65,000 adds Rogers reported in July. Average revenue per user, an important industry metric, increased 2.9 per cent to $64.32.
Fewer wireless contracts expired so Bell kept more of its customers and spent less to retain them since fewer upgraded their phones. The weak Canadian dollar, however, made it more expensive to attract new customers who increasingly want premium smartphones.
Revenue dropped 2.1 per cent in its wireline segment, where the addition of 35,255 Fibe TV customers and 7,539 Internet subscribers (only half of analysts’ estimates) tempered the loss of 33,154 satellite TV customers and 88,825 telephone subscribers.
Bell blamed the soft results on the sale of a call centre subsidiary last September, fewer wholesale Internet customers and the ongoing drift away from traditional voice services.
Bell will continue to build its fibre network and expects to connect around 3 million premises by year’s end, up from 2.6 million.
Bell announced a new fully wireless IPTV service — a world first, it believes — and a new modem compatible with fibre-to-thehome services. These devices will reduce installation time and the cost of installing fibre, since only one piece of hardware, (not five), is needed. Cope estimates this will lower costs by at least 10 per cent.
Bell’s adjusted net earnings were $824 million compared to $735 million last year. Operating revenue edged up to $5,340 million from $5,326 million.
The company said it was on track to meet its 2016 forecast. Analysts called the results steady and largely in line with expectations. Bell’s stock got a tiny lift from the news as of Thursday morning.