Bell Aliant's (Toronto: BA.TO) IP service growth pains continued into the second quarter of 2012, as the service provider's operating revenue dropped 0.7 percent to CAD 688 million (USD 675 million) due to declines in traditional local and long distance voice revenues.
What continues to help the service provider stem the landline voice bleeding is its ongoing dedication to broadband and IPTV services.
In the broadband arena, the key growth area is about the expansion of its FibreOP Fiber to the Home (FTTH) network. To support the FibreOP buildout effort, Bell Aliant increased its capex spending 14.8 percent to CAD 23 million (USD 22.8 million) over Q2 2011 for related IT and construction work.
During the quarter, the telco passed an additional 58,000 homes and businesses with FTTH, expanding overall coverage to 574,000 premises as of the end of June. The service provider said it expects 2012 annual capital expenditures to be within its guidance range of CAD 550 million (USD 545 million) to CAD 600 million (USD 594 million).
"As we have stated many times before, growing FibreOP is the key to returning our overall revenue and profitability to positive growth," Karen Sheriff, president and CEO of Bell Aliant, said in the earnings statement. "We continue to expect to pass 650,000 homes and businesses with the service this year, and, assuming continued strong fibre performance, expect to further expand our coverage in the future. We expect to have more details on the timing of further builds in the coming quarters."
Here's a breakdown of Bell Aliant's key performance metrics:
Landline losses: As expected, the telco's local and long distance voice revenues declined CAD 17 million (USD 16.8 million) or 5.4 percent and CAD 11 million (USD 10.9 million) or 11.6 percent, respectively, from Q2 2011. Network Access Services declined 5.2 percent due to ongoing cable competitors offering voice services and subscribers opting to replace their landline phones with a wireless phone. However, it did narrow its residential and business NAS declines to 19,700 and 4,300 from 26,800 and 5,400 in Q2 2011, respectively. Bell Aliant said NAS performance improved in FTTH markets where it has seen strong new customer activations and winbacks, and improved customer retention.
Broadband: It added 4,300 new broadband subscribers in Q2, ending the month of June with a total of 906,200 customers. It also added 15,200 new FibreOP FTTH customers, bringing total FibreOP Internet customers to 75,500 at the end of June 2012. About one half of FibreOP Internet net additions in Q2 2012 were customers migrating from DSL and Fiber to the Node (FTTN) networks to the FTTH-based service.
- IPTV service: IPTV was also another star performer in Bell Aliant's residential service portfolio, ending the quarter with CAD 19 million (USD 18.8 million) in Q2 2012 and a total of 95,100 IPTV customers at the end of June. Similar to its broadband customer base, a portion of the the 13,000 FibreOP TV customers it added during the quarter migrated over from Bell Aliant TV service. It ended the quarter with 63,500 FibreOP TV customers.
Bell Aliant's shares were trading at CAD 24.99 (USD 24.74), down CAD 0.09 (USD 0.8), or 0.36 percent in late afternoon trading on the Toronto Stock Exchange.
- see the release
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