Bell Canada's 13.5 % revenue rise in Q2 doesn't impress investors

Bell Canada's (NYSE: BCE) revenues may have risen 13.5 percent year-on-year to CAD 4.36 billion (USD 4.50 billion) in Q2 2011 but unfortunately that wasn't enough to prevent its shares from declining 2 percent.

The service provider reported that a big contributor to Q2 revenue came from its new media unit, which it formed after it acquired CTV, Canada's biggest private broadcaster.

In the wireline division, Bell's growth was driven, not surprisingly, by its ongoing rollout of Bell Fibe TV and Fibe broadband data services. During the quarter, Bell's wireline division reported 2.5 percent in EBITDA growth on a 4.9 percent year-over-year reduction in operating costs.

Here's a breakdown of Bell's key wireline metrics:

  • Landline Loss: During the second quarter, Bell narrowed its Network Access Service (NAS) line loss to 100,497 compared to 129,147 in the same period last year. In the residential segment, Bell lost only 83,479 NAS lines versus 96,992 last year. Bell attributes the lower NAS losses to a couple of factors: increased penetration of service bundles which have been enhanced with its Fibe TV service offer, competitive retention offers, customer winbacks and overall new subscriber additions. On a year-over-year basis, total NAS declined by 4.8 percent, while long distance voice revenues declined 1.7 percent to CAD 227 million (USD 230.4 million).
  • Broadband Access: Although broadband continues to be a hot product for Bell Canada, the service provider only added 1,275 new broadband customers this quarter, but the additional customers were an improvement over the 3,899 subscribers it had in the same period last year. At the end of the quarter, Bell had 2.11 million high-speed Internet subscribers, 2.3 percent more than it had in 2010. One of the continuing bets for Bell Canada is that it continues to lead Canada's investment in broadband infrastructure, dedicating CAD 645 million (USD 655 million) in new capital to deploy Fiber to the Premises (FTTP) to homes and businesses in Ontario and Quebec. The FTTP network will support the expansion of Bell Fibe TV and Fibe Internet.
  • Video Services: Driven by subscriber growth and higher ARPU, Bell's Fibe TV service revenue increased 6 percent to CAD 460 million (USD 467.5 million) this quarter. Bell added 6,072 new TV subscribers, down slightly from the 9,775 subscribers it added in Q2 2010. At the end of the second quarter, Bell had 2,03 million TV subscribers, 2.8 percent more than it had last year.
  • Business Services: In the business segment, Bell narrowed its NAS line losses to 17,018, an improvement over the 32,155 decline it saw in Q2 2010.

Looking forward, Bell said it is maintaining its executing on what it says is its five Strategic Imperatives: Improve Customer Service, Accelerate Wireless, Leverage Wireline Momentum, Invest in Broadband Networks and Services, and Achieve a Competitive Cost Structure.

From a financial outlook, Bell has maintained its guidance of 9 to 11 percent revenue growth.  

For more:
- see the earnings release
- Reuters has this article

Earnings Summary: Wireline in the second quarter 2011 

Related articles:
Canada's CRTC to discuss usage based billing, broadband pricing
Bell Canada pays $10.3 million fine for false service price advertising
Bell Canada increases wireline ARPU in Q1, but it wasn't enough to offset legacy losses
Bell Canada's broadband meter is flawed, report says

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