Bell Canada grows Fibe TV subscribers 42 percent in Q1, as wireline voice declines

Bell Canada (NYSE: BCE) reported that in Q1 it added 47,463 new Fibe TV IPTV customers in Q1 2013, up 41.9 percent from the same period a year ago, a factor that helped it stem traditional wireline voice revenue losses. 

BCE reported operating revenues of CAD 4.9 billion (USD 4.83 billion), a scant 0.2 percent rise over Q1 2012. However, net earnings attributed to common shareholders rose 6.6 percent to CAD 566 million (USD 558.8 million), resulting in an adjusted EPS of 77 cents, up 11.6 percent.

As of the end of the quarter, the telco had 295,761 Bell Fibe TV subscribers, up 147 percent over last year. However, overall Bell Satellite TV and Fibe TV net additions declined to 13,971 in the quarter due to lower year-over-year satellite TV net activations attributable to aggressive offers from cable and other TV competitors. Overall, Bell TV's subscriber base totaled 2,169,954 at the end of Q1 2013, up 2.8 percent year-over-year.

Interestingly, the ongoing adoption of Fibe TV helped drive 13,000 new broadband Internet additions in the quarter. Still, the telco only added a total 1,931 net broadband customers in the quarter, down from 12,933 from Q1 2012, a factor it relates to higher residential DSL churn from customers opting to purchase a bundle package from a cable competitor. At the end of the quarter, Bell had a total of 2.1 million broadband subscribers, up 0.6 percent from Q1 2012.

"Net adds are quite positive in the IPTV footprint, up 13,000, but outside the IPTV footprint, we lost 11,000 subs for a net of 2,000," said George Cope, President and Chief Executive Officer of BCE and Bell, during the earnings call. "And so clearly, the strategy of growing the fiber footprint is critical to the growth of our Internet pull-through."

Ongoing Fibe TV and broadband growth drove up overall wireline data revenue up 0.8 percent to CAD 1.43 billion (USD 1.42 billion) on data service revenue growth of 3.2 percent.

During the quarter, the telco narrowed traditional local and long-distance voice wireline revenue losses to 2.8 percent, or CAD 2.5 million (USD 2.48 billion) from CAD 2.58 (USD 2.56 billion) in the same period a year ago.

Driven by wireless substitution and the adoption of VoIP services and discounted bundles from competitors, residential Network Access Service (NAS) losses rose 17.5 percent to 83,577. Business NAS losses, however, improved 2.1 percent to 24,889 as Bell Business Markets reduced access line losses in their large and mid-sized customer segments.

Bell NAS declined 7.8 percent to 5,536,493. Likewise, Bell's local and access revenues declined 6.8 percent to CAD 646 million (USD 642 million), while long distance revenue declined 13.2 percent to CAD 184 million (USD 183 million).

"Overall, the share of our voice revenue is now under 20% for the first time," Cope said. "And as everyone knows, that is the one part of our revenue mix that's the challenge to offset some of the growth we're seeing on data."

Meanwhile, wireline EBIDTA declined 4.5 percent to CAD 958 million (USD 952 million) from CAD 1 billion (USD 1 billion) in Q1 2012, while margins were in line with plan at 38.2 percent, reflecting a CAD 26 million (USD 25.8 million), or 1.6 percent, reduction in operating costs. Bell's wireline EBIDTA was also impacted by CAD 14 million (USD 13.9 million) in charges from a CRTC decision that affects its wholesale broadband service business. Without the CRTC charge, Bell Wireline EBITDA declined 3.1 percent with a stable year-over-year margin of 38.8 percent.

The telco's operating revenues increased 0.3 percent to CAD 4.3 billion (USD 4.27 billion) with a 1.3 percent increase in service revenues from wireless, TV, Internet, media and business services such as data hosting and cloud computing.

Shares of Bell Canada were listed at $47.24 at the close of trading Thursday on the New York Stock Exchange.

For more:
- see the earnings release
- see the call transcript

Earnings roundup: Wireline telecom earnings in the first quarter of 2013

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