HALIFAX – "Our first quarter results again demonstrated our ability to maintain solid financial and operational performance," said Stephen Wetmore, president and CEO of Bell Aliant Regional Communications Income Fund in kicking off his company’s first quarter results press release.
"Looking forward we expect this performance to be enhanced by the recent changes to the forbearance rules and we applaud yesterday’s price caps decision issued by the CRTC. Both will enable us to provide more choices to our customers and more fully compete in many of the markets we serve."
Q1 operating revenue for the telco serving Eastern Canada as well as non-urban regions in Ontario and Quebec was $651.4 million, up 3.6% over pro forma Q1 2006.
Operating income for the period ended March 31 was $171.6 million, the same as last year.
Net earnings were $94.7 million and distributions to its unitholders was $96 million or $0.698 per unit. Capex was $115.3 million, an increase of 2.8%.
The release did not mention the company’s DSL TV gains at all.
Highlights of the first quarter of 2007 include the following:
* Operating revenue increased $29.5 million (3.6%) in the first quarter of 2007 compared to the same period a year ago with growth in Internet revenue (16.3%) and Information Technology (IT) revenues (21.9%).
* Internet revenue grew by $11.6 million in the quarter with high-speed Internet subscribers growing by 21.7% from a year ago.
* IT revenue, increased by $19.0 million in the quarter compared to the same period last year. Service revenues provided $3.8 million in growth and product sales of computer hardware and software increased by $15.2 million.
* In line with expectations, local services and long distance revenues declined by $6.4 million (1.8%) and $4.2 million (3.5%) respectively in the first quarter of 2007 compared to the first quarter in 2006. First quarter 2007 NAS declines of 22,299 were significantly lower than NAS declines of 37,480 in the fourth quarter of 2006.
* Increases in provincial capital taxes in first quarter 2007 operating expenses contributed to a decline in EBITDA of $3.4 million (1%) from the first quarter of 2006. Excluding the $5.1 million effect of capital taxes on EBITDA, growth for the first quarter of 2007 was 0.5% over the same period in 2006.
* Distributable cash increased $7.9 million (4.3%) in the quarter with Bell Aliant now benefiting from 100% of the operations of the Bell Nordiq Group. On January 30, 2007, Bell Aliant completed the privatization of the Bell Nordiq Income Fund of which Bell Aliant previously held 63.3%.
* On February 19, 2007, Bell Aliant announced an agreement with Yellow Pages Group to sell the assets of Aliant Directory Services (ADS) for cash proceeds of $330 million. This transaction closed April 30, 2007.
* During the quarter significant strides were made in implementing financing strategies designed to bring further stability to distributable cash flow and enhance unitholder value. On February 26, 2007, Bell Aliant’s major operating subsidiary placed $1 billion of fixed rate debt in the public market, locking-in interest rates on another sizeable portion of long-term financing. Also, on February 28, 2007, the Fund initiated a Normal Course Issuer Bid (NCIB), enabling the purchase of up to 13.7 million outstanding Fund units at market prices through the TSX until February 27, 2008. To the end of March 2007, 2.4 million units had been purchased for cancellation under the NCIB. The proceeds from the sale of ADS will be used to continue to fund the NCIB, reducing the number of units outstanding to enhance distributable cash on a per unit basis.
* As a result of the positive changes in the regulatory decision on forbearance announced by the Governor in Council on April 4, 2007, Bell Aliant filed for forbearance from regulation of local residential and business telephone service in a number of competitive exchanges throughout its territory. Decisions are expected from the CRTC within 120 days of the applications.
