Bell Canada's (NYSE: BCE) wireline operating revenue gets boost from broadband, TV growth

Bell Canada (NYSE: BCE) may have taken a hit in Q3 with shrinking wireline voice revenue, but gains in wireless, TV and broadband data enabled it to surpass C$4.52 billion (US$4.49 billion) versus analysts' C$4.43 billion (US$4.39 billion) forecast.

While the Canadian incumbent took a hit in Q3 from its shrinking wireline voice business--which drove its net earnings down 5 percent in Q3 to C$528 million (US$524 million) from C$558 million (US$554 million) in Q3--higher wireless, TV and wireline broadband results drove up operating revenues by 1.8 percent.

The service provider's wireline segment operating income actually increased 48.9 percent during the quarter, while 9.3 percent of TV revenue growth and cost cutting drove up wireline EBITDA 5.4 percent.

Bell Canada has set a goal to be "recognized by customers as Canada's leading communications company" by carrying out five strategic initiatives: improve customer service, accelerate wireless, leverage wireline momentum, invest in broadband networks and services, and achieve a competitive cost structure.

Here's a breakout of the Bell's key wireline metrics:

  • Landline Voice: Bell's local and access revenues dipped 3.1 percent to C$759 million (US$754 million), a factor it attributes to ongoing residential and business network access services (NAS). However, total NAS reductions declined by 92,169 this quarter compared to a decline of 103,087 in Q3 09. Business NAS declined 23,686 compared to 26,701 last year, while residential NAS declined by 68,483 compared to a decline of 76,386 last year as retail residential NAS losses improved for the twelfth consecutive quarter.    
  • Long Distance: Similar to its local service business, Bell's long-distance revenues also took a hit in Q3, declining 14 percent to $227 million. Bell attributes the decline to residential and business NAS erosion, pricing pressures in the business market, in addition to increased adoption of unlimited residential long-distance pricing plans.
  • Broadband Access: Total data revenues were up 0.9 percent to $900 million in Q3 as the growth in IP and broadband connectivity service revenues, residential Internet services revenues to large enterprise customer were partly offset by declining legacy data service revenues. A big contributor to Bell's Internet growth was broadband. During the quarter, Bell signed up 21,668 new subscribers, which were up slightly from the 21,531 subscribers it added in Q3 09. As of the end Q3 2010, Bell had 2,085,227 high-speed Internet subscribers.
  • Video Services: As has been the trend with Bell in recent quarters, video revenues rose 9.3 percent to $437 million this quarter due to subscriber growth, price increases and higher set-top box rental revenues. In total, Bell had 1,997,079 TV subscribers. The service provider hopes to augment its video play going forward with its $2.9 billion purchase of the remaining 85 percent stake in Canadian broadcaster CTV.

Going forward, Bell plans to continue investing of course in expanding key wireline areas, including its continued roll out of Fiber to the X-based broadband and IPTV. Bell will expand the reach of its Fiber to the Node/Neighborhood (FTTN)-based Fibe service initiative to single family homes, expanding its Fiber to the Home (FTTH) roll out in Quebec City as well as preparing its network to support new Fibe TV service customers.   

For the full 2010 year, Bell Canada did not change financial forecasts that it set in August. At that time, Bell forecast 2 to 3 percent in revenue growth and 2 to 4 percent EBITDA growth.  

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

Related articles:
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For ongoing Q3 earnings summaries:
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