Bell Aliant (Toronto: BA-UN.TO) once again is feeling the industry-wide impact of landline loss in the second quarter, but the service provider remains confident that its ongoing investments in Fiber to the Home (FTTH) and IP will pay off.
During the quarter, Bell Aliant's operating revenues declined $31 million compared to Q2 2009. The service provider attributes the revenue dip to declines in local and long distance voice revenues associated with lower network access services (NAS), lower data revenue and lower information technology (IT) service revenues. However, these declines were offset partially by increases in Internet revenues.
Here's a breakdown of other key metrics:
- Local Services: Bell Aliant's local service revenue declined $16 million (4.7 percent) in Q2 2020 vs. Q2 2009 as a result of NAS declines and a $6 million decrease in competitor contribution subsidies. At the same time, residential and business NAS were 6.1 percent and 2.1 percent lower because of increased competition. However, Bell Aliant's total NAS declines improved by about 8,000 over Q2 09 and by 15,000 compared to Q1 2010.
- Long Distance: The service provider's long distance revenue also dropped $7 million (6.9 percent) versus Q2 09. Bell Aliant attributes the long distance revenue dip to NAS declines and the migration to flat rate long distance plans.
- Internet Services: While local and long distance services declined in Q2, Internet revenue were up 7 percent ($7 million) in Q2 2010 over Q2 2009. During the quarter, Internet services were 6 percent higher than in 2009, while Bell Aliant TV subscribership was also up. These factors drove up the average revenue per customer (ARPC) for residential high speed users by 4.5 percent over Q2 2009 due to pricing action and customer migration to higher value services.
Along with increased broadband growth, Bell Aliant continues to grow its FTTH rollout to compete with a strong set of cable operators, including Quebec's Videotron and Rogers Communications Inc. in Atlantic Canada as well as in Ontario and Quebec. In May, Bell Aliant announced that its FTTH footprint will reach more than 600,000 households and businesses by the end of 2012.
Thus far, Karen Sheriff, Bell Aliant's President and CEO reports that it is seeing decent customer adoption of its FibreOP FTTH service in the areas it is currently offered. "The rollout of our FibreOP services is proceeding well and I am very pleased with the results we are experiencing to date, particularly the take-up of our FibreOP Bundles which include TV, Internet and home phone," she said.
Of course, the rest of 2010 is going to be challenging for Bell Aliant. The service provider announced earlier this month that it will have to conduct more cost cutting measures throughout 2010 after union employees decided to reject a tentative collective agreement in June. What those measures will include won't be revealed until this fall.
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