BCE’s profit down on restructuring; Bell Canada hit by charge; Aliant bolstered by internet

8 May 2008

Canada’s largest telecoms group BCE’s first-quarter net profit fell by CAD241 million (USD240 million) year-on-year to CAD258 million on virtually flat revenues of CAD4.39 billion, due to restructuring costs and charges to fund broadband expansion in smaller communities. BCE’s results for the three months ended 31 March 2008 do not include Telesat, which the group sold in October 2007. BCE took a CAD236 million charge, spread across its Bell Canada and Bell Aliant units, to expand broadband services to 86 communities.

Bell Canada saw its operating revenue rise by 2.3% year-on-year to CAD3.66 billion, although its operating income fell 34% to CAD471 million, largely due to the broadband charge. Bell Canada’s wireline division’s operating revenues increased by 0.1% to CAD2.64 billion as gains in video, data and equipment sales offset decreases in local and long-distance telephony revenues. Wireless turnover grew 8.7% to CAD1.04 billion on subscriber increases and stronger equipment sales. Net mobile additions were 34,000 in the quarter, compared to the 13,000 net activations in Q1 2007, to give Bell a total of 6.25 million users, up 7.4% year-on-year. Blended and post-paid monthly mobile ARPU fell slightly to CAD52 and CAD64 respectively while pre-paid ARPU increased CAD2 to CAD17. Bell Canada’s high speed internet subscriber base reached 2.014 million at the end of March after it added 10,000 new DSL customers in three months.

Bell Aliant Regional Communications Income Fund (Bell Aliant) saw first quarter operating revenue rise 1.6% y-o-y to CAD865 million, and EBITDA also climb 1.6% to CAD355 million. Declines in local and long-distance revenues continued to be more than offset by growth in internet and IT service turnover. Aliant reduced its quarterly CAPEX by 17.5% to CAD95 million.

BCE is in the process of being taken over by a consortium of investment groups led by the Ontario Teachers’ Pension Plan, with the transaction expected to be completed in the current quarter. BCE said in a statement: ‘During the quarter, we made good progress on the completion of the privatisation transaction and delivered solid financial results, consistent with our plan for the year.’