BCE sees profit rise on wireless services growth
CEO cites network quality, improved customer service at Bell Mobility as factors
Costing cutting along with “best-inclass” wireless additions helped BCE Inc. top operating earnings forecasts in its latest quarter even while revenue growth all but flat lined.
The Montreal-based parent of Bell Canada, CTV and TSN said Thursday that second quarter earnings excluding items rose 12.1 per cent to $824 million, or 94 cents per share, from a year-earlier 87 cents — exceeding the consensus estimate of analysts for 91 cents.
Net earnings for the June quarter came in at $778 million, or 89 cents per common share, an annual increase of 2.5 per cent and just ahead of expectations. BCE operating revenue rose 0.3 per cent year over year to $5.34 billion.
The company reported 113,000 net new postpaid wireless, IPTV and high-speed Internet subscriber additions and said wireless adjusted operating earnings were up 7.7 per cent on 4.6 per cent growth in service revenue and 1.7 per cent lower operating costs.
CEO George Cope told analysts on a conference call that customers are choosing Bell wireless because of the quality of the company’s 4G LTE network and improvements in customer service.
Wireline operating costs fell 4 per cent to drive the adjusted income increase of 0.6 per cent — an eighth consecutive quarter of positive growth. Bell Media revenue advanced 5.3 per cent on increased viewership at TSN and other specialty channels.
Cope said the company is balancing increased revenue from wireless services against reduced sales of handsets and other products, with Bell Media gains offsetting a continued decline in wireline subs amid elevated competitive intensity.
“While revenue was slightly below expectations, strong cost controls drove a beat in EBITDA,” Canaccord Genuity analyst Aravinda Galappatthige, said in a note to investors.
On the wireless side, he said Bell Mobility continues to generate “best-in-class” growth with strong margins despite rising subscriber acquisition costs.
Postpaid additions surprised to the upside as net additions came in at 69,848 versus Canaccord’s 50,000 estimate and 65,000 for Torontobased rival Rogers in its second quarter. Wireline showed solid cost control but Internet subscription additions were lighter than expected partly on aggressive promotional activity from cable competitors.
Bell’s Internet and TV subscription base rose 3.1 per cent and 2.8 per cent, respectively.
Media operating income increased 3.7 per cent on better-than-forecasts revenue of $779 million — up 5.3 per cent on growth at subscriptionbased video on demand service CraveTV, higher subscriber revenue from some specialty channels and the expansion of The Movie Network into a national pay-TV service.