Bell loses margin on one-offs, but claims a post-paid victory over Rogers

7 Aug 2008

Bell Canada Enterprises (BCE), the parent of telcos Bell Canada and Bell Aliant, has reported that its second-quarter net income dropped to CAD392 million (USD376 million) from CAD700 million a year earlier, when BCE had a net gain from discontinued operations of CAD135 million, including CAD110 million from the sale of a directories business. The company said its profit margin was dented by restructuring costs associated with the Ontario Teachers’ Pension Plan’s CAD34 billion leveraged buyout of BCE, which received final approval in June. Revenue in the three months ended 30 June 2008 was almost unchanged year-on-year at CAD4.42 billion. Wireless division Bell Mobility signed up 111,000 post-paid wireless users in the second quarter, up from 43,000 in the year-before period – higher than Canada’s mobile market leader Rogers which added 92,000 contract customers in the three months under review. However, Bell Canada’s internet business did not fare so well, losing a net 1,000 broadband customers in the quarter, after adding 25,000 a year ago. Fixed line subscribers also fell by 132,000 in 2Q, lost to mobile substitution as well as the triple- and quadruple-play offerings of cablecos including Rogers. Bell Aliant, which provides fixed line and internet services in Atlantic Canada and parts of Ontario and Quebec, reported a 2.4% year-on-year increase in second-quarter revenues to CAD823 million, whilst the unit’s operating revenue climbed by CAD19 million, as growth in internet/IT services turnover offset slumps in fixed telephony earnings.

Meanwhile, in separate deals announced on Tuesday, Bell Canada and Bell Aliant agreed to sell non-core businesses as part of a streamlining programme ahead of the completion of their leveraged buyout. GFI Solutions Group agreed to buy Bell Business Solutions, an IT services unit of Bell Canada, for an undisclosed price. CAE signed a deal to buy the defence, security and aerospace unit of Bell Aliant for CAD26 million.