Bell Aliant FTTH passes 725,000 premises in second quarter

Bell Aliant continued to make progress with its FibreOP fiber to the home (FTTH) rollout in Q2, passing an additional 45,000 premises to reach a total of 725,000 premises as of the end of June. 

With penetration of FibreOP now exceeding 20 percent, the service provider said it's on track to meet its goal to pass 800,000 premises with FTTH by the end of the year.

"We are in a prime construction period now and continue to expect to reach approximately 800,000 premises by the end of the year, which will give us a significant technological advantage in a large portion of our competitive footprint," said Karen Sheriff, president and CEO, during the earnings call.

During the quarter, Bell Aliant extended the service into additional communities in Nova Scotia and Ontario. 

FTTH and IPTV services were two key revenue growth drivers for Internet and TV growth. During the quarter, Internet and TV revenues rose $23.1 million, or 9.9 percent.

Sheriff said that "Internet and TV revenue growth in the second quarter more than offset declines in local and long distance revenues, thanks to our growing FibreOP services."

Here's a breakdown of its key metrics:

Internet Services: Internet revenue rose $9 million, or 6.9 percent, with residential high-speed Internet Average Revenue per Customer (ARPC) in Q2 2013 up 7.3 percent from the same period a year ago. The telco said the ARPC increase was due to selected pricing action and customer demand for higher bandwidth bundles and other services. A 3 percent year-over-year increase in broadband Internet customers also contributed to Internet revenue growth. It added a total of 16,600 FTTH customers, bringing total FibreOP Internet customers to 146,700 at the end of June 2013. 

Sheriff said that some of the mature FibreOP markets "are reaching penetration rates in the high 30 percent range so we believe we still have lots of room to increase our FibreOP customer base, not just in new markets that we enter but also in the footprint we already have open for business."

New FibreOP Internet additions include existing Bell Aliant customers migrating from legacy DSL and fiber to the node (FTTN) networks to the new service. Although the migrated customers don't contribute to overall broadband customer growth, Bell Aliant said they do "increasingly contribute to improved customer retention and growth in overall customer ARPC." Factoring in the migrations, the telco added a total of 6,200 broadband customers in Q2 2013, up from 4,300 in Q2 2012, bringing total high-speed Internet customers to 933,400.

In addition to FTTH, the service provider also added 6,000 new DSL connections in the quarter, which Sheriff said "helped high-speed net adds in the quarter."

IPTV:  With a total of 148,700 IPTV customers at the end of June 2013, IPTV revenue grew $11.5 million in the second quarter of 2013. FibreOP TV customers grew by 13,300 in the quarter to reach 125,800, a portion of which were migrations from Bell Aliant's FTTN-based TV service. Overall net IPTV customer additions were 11,500 in the second quarter of 2013, compared to 10,200 a year earlier.

Local and long distance service: Following the industrywide trend, Bell Aliant reported that local and long distance voice service revenues declined $12.5 million and $9 million, respectively, in Q2 2013 due to 5.5 percent decline in Network Access Services (NAS). Net NAS declines of 33,300 in the second quarter of 2013 were up 7,600 from the same quarter in 2012, a result of intense competitive activity and technology substitution throughout the markets it serves.

Overall, Bell Aliant's total revenues were $64 million for the second quarter of 2013, down year-over-year from $7.7 million from the second quarter of 2012. The service provider attributes the decline to the recognition of an early redemption penalty on long-term debt refinanced, which it said will result in lower interest costs, in June 2013.  

Due to the revenue decline, earnings per share were 28 cents in the second quarter of 2013, down 4 cents from the same quarter in 2012.

Shares of Bell Aliant were listed $26, down 0.59, or 2.12 percent, at the end of Friday trading on the Toronto stock exchange.

For more:
- see the earnings release
- and the earnings call transcript (sub req.)

Special report: Wireline telecom earnings in the second quarter of 2013

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