Bell Aliant's (Toronto: BA-UN.TO) Q4 and 2010 year revenues illustrate the ongoing growing pains of an incumbent service provider trying to shed its traditional wireline voice image as it becomes a provider of IP-based residential and business services.
In Q4 2010, Bell Aliant reported operating revenues of $709 million, a 1.4 percent decline from Q4 2009, a factor it attributes to ongoing declines in its local, long distance and data revenue as a result of lower network access services (NAS) and the migration to new alternative IP-based technologies. Similarly, Bell Aliant's annual revenues declined 3 percent.
Here's a breakdown of other key metrics:
- Local/Long distance Voice Services: In 2010, Bell Aliant was able to stem its residential and business local wireline voice losses in Q4 and for 2010. During the quarter, local service declined $11 million (3.2 percent) in the fourth quarter of 2010 compared to Q4 2009, a factor it attributes to lower NAS from increased competitive activity. For the full year 2010, Bell Aliant's landline losses decreased by 140,000 (4.8 percent) in 2010 compared to a decline of 156,000 (5.1 percent) in 2009. Similarly, long-distance revenue declined $6 million (5.9 percent).
- Internet services: Bell Aliant's Internet revenue continues to be a growth engine for the telco, growing $9 million, or 8.3 percent over Q4 2009. Internet service growth was driven higher residential high-speed average revenue per customer (ARPC), a 4.3 percent increase in the number of high-speed Internet customers from the end of 2009, and growth in TV subscribers. However, Bell Aliant only added 5,000 DSL subscribers during the quarter, down from 12,000 it added in Q4 2009. But while DSL subscribers declined in Q4, Bell Aliant said it continued to expand coverage of its FTTH-based FibreOP service throughout the quarter. For the year, Bell Aliant's Internet Services revenue was up 4.3 percent from the end of 2009.
Karen Sheriff, President and Chief Executive Officer, Bell Aliant, said in a statement that the service provider is starting to see revenue growth in the residential market, and that its ongoing FTTH investment is starting to pay off. "Even in these very early stages of our FibreOP services rollout, we are seeing Internet and TV revenue growth that is offsetting declines in our legacy voice revenues in these markets."
Looking forward into 2011, Bell plans to increase its capex spending to about $520 million to $560 million, up from $494 million in 2020, a factor related to the "acceleration" of its ongoing build out of its Fiber to the Home (FTTH) roll out.
Last May, Bell Aliant announced plans to spend $350 million over 2011 and 2012 in FTTH, making the service available to over 600,000 homes and businesses or about one third of its competitive territory by the end of 2012.
Sheriff said its ongoing FTTH network investment "will give scale to this area of revenue growth allowing us to improve our profitability going forward."
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