Bell Aliant's move to expand its FibreOP fiber to the home (FTTH) broadband offering continued to be a major driver in the telco's portfolio, helping to drive up Internet revenues 4.8 percent to $6.4 million.
The Canadian telco added 17,100 FibreOP subscribers during the quarter, bringing the total FibreOP Internet customers to about 217,100 at the end of June.
FibreOP Internet additions include a mix of existing Bell Aliant customers migrating from either DSL or fiber to the node (FTTN) networks to the new service. The telco said that these "migrations do not contribute to overall high-speed customer growth but increasingly contribute to improved customer retention and growth in overall average revenue per customer." In total, the service provider added 13,900 in the second quarter of 2014, up from 6,200 in the same quarter of 2013, ending the period with a total of 977,000 total high-speed Internet customers.
"For the first time in Bell Aliant's history, we actually had positive wireline RGU [revenue generating units] growth and the best net growth in Bell Aliant history," said Karen Sheriff, CEO of Bell Aliant, during the second-quarter earnings call, according to a Seeking Alpha transcript. "Customer growth in high-speed Internet and IPTV was driven by our FibreOP expansion and strong performance in our wholesale markets more than offset NAS [network access services] declines."
Sheriff said that the company is reaching maturity with FibreOP in some of its markets.
"As we have said before, we have a couple of more mature markets over 50 percent penetration and we have an increasing number of markets with over 40 percent penetration," Sheriff said.
In tandem with FibreOP data growth, IPTV revenue grew $11 million, or 38.3 percent, in the second quarter of 2014 compared to the same quarter in 2013, with total IPTV customers of 202,400, up 36.1 percent from a year earlier. Similar to its FibreOP broadband data offering, FibreOP TV customers grew by 14,200 in the second quarter to reach 185,600, a portion of which were migrations from Bell Aliant's FTTN TV service. Overall Bell Aliant added 12,600 new FibreOP TV subscribers in the second quarter of 2014, up from 11,500 in the same period a year ago.
Other data revenues increased by $3.7 million, or 3.9 percent, in the second quarter of 2014 compared to the same quarter in 2013, due to growth in IP data services enabled by Bell Aliant's expansion of its next-gen network technology.
Per the ongoing industry trend seen in all traditional wireline telcos, local service and long distance revenues declined $13.7 million (5.3 percent) and $11 million (13.9 percent), respectively, in the second quarter of 2014 compared to the same quarter in 2013, driven largely by a 5.3 percent decline in NAS revenues.
Overall net NAS declines improved 25.3 percent from the same quarter in 2013. Interestingly, Bell Aliant narrowed both residential and business net NAS declines during the quarter. Residential NAS declines of 20,000 in the second quarter of 2014 improved 6,700 from the same quarter in 2013, with improved performance in both fiber and non-fiber markets. Business net NAS declines of 4,900 in the second quarter of 2014 improved 1,800 from the same quarter a year earlier.
From an overall financial perspective, Bell Aliant reported net earnings of $66 million, up $5.5 million from the same quarter in 2013. Bell Aliant said the increase was driven by higher earnings in Bell Aliant GP, with lower finance and income tax expenses more than offsetting lower adjusted EBITDA and higher restructuring costs compared to the second quarter of 2013.
However, second-quarter operating revenues were $626 million, down $8.2 million, or 1.3 percent year-over-year as growth in Internet, TV, other data and wireless revenues was offset by declines in local, long distance and other revenues.
Shares of Bell Aliant were trading at $30.94, up 4 cents or 0.13 percent, in Monday morning trading on the Toronto stock exchange.
For more:
- see the earnings release
- and the earnings transcript (sub. req.)
Special report: Wireline telecom earnings in the second quarter of 2014
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