HALIFAX – Bell Aliant blames restructuring charges for fourth quarter net income dropping $10 million to $70.3 million from the same period of 2011. Operating revenue also fell 0.8% to $694.8 million due to a decline in local and long distance revenues. Analysts were expecting revenues of $697.1 million for the regional telecom.
In 2013 the company expects to spend less on capital expenditures which it says should keep profit and revenues at about the same levels as 2012. It’s also forecasting continued strong sales from its Internet and TV services will offset losses in local and long distance revenues.
"2012 was another year of strong execution for us," said Karen Sheriff, president and chief executive officer, Bell Aliant. "Our focus has been on expanding our fibre-to-the-home (FTTH) coverage to provide our leading edge FibreOP Internet and TV service to our customers and we are seeing the benefits. In our FTTH markets we are now experiencing revenue and EBITDA growth, with growing TV and Internet revenues more than offsetting declines in our traditional voice revenues. Continuing to grow our FibreOP customer base is the key to securing a strong future for our company and 2012 was a year of great FTTH results for us.
Bell Aliant expects operating revenues in 2013 to be between $2.73 and $2.81 billion compared to $2.76 billion in 2012. It expects strong growth in Internet and TV revenues as a result of FTTH expansion to offset decreases in traditional voice revenues. Operating expenses are expected to increase slightly in 2013 compared to 2012. Savings from productivity initiatives are expected to largely offset cost increases from inflationary pressures and FibreOP rollout costs. However, pension current service costs included in EBITDA are expected to increase as a result of lower discount rates.
Capital expenditures in 2013 are expected to be between $525 million and $575 million, compared to $592 million in 2012. Smaller FTTH footprint expansion, improved productivity in FibreOP connection costs, and non-recurrence of start-up costs incurred in 2012 for expansion outside of Atlantic Canada are expected to offset increases from higher new FibreOP customer connections in 2013 compared to 2012.
"Our FibreOP services are now available to over 650,000 premises in our territories, with over 110,000 customers now subscribing. Our FTTH expansion will continue in 2013, as we expect to reach approximately 800,000 premises with FTTH by the end of the year. This will let us manage the build in an operationally efficient way while focusing on our priority of adding new customers. We are on a solid path to returning to revenue growth in the coming years, as the bulk of our FTTH network build will be behind us,” added Sheriff.
"We also see growth opportunities with the expansion of our Next Generation Networks for our business customers, and with our newly announced NextGen Home Security service, which is a natural extension of our ability to leverage our broadband expertise and leadership position to serve the whole home.
"And importantly, we continued to make great headway in managing costs in 2012. Despite the incremental costs associated with acquiring and supporting new FibreOP customers, year-over-year operating expenses were held close to flat. Continuously finding better ways to do things has become ingrained in our business, and we keep finding ways to reduce traditional operating costs to help finance our growth initiatives.”
It credits continued strong free cash flow for allowing it to expand its FTTH network while maintaining a dividend payout ratio within its long-term targeted range of 75-85% of free cash flow. Bell Aliant used its excess free cash flow in 2012 to make lump sum contributions to its defined benefit pension plans in the fourth quarter.
Total data revenue including Internet and TV increased $18 million (7.7%) in the fourth quarter of 2012 compared to the same period in 2011.
Internet revenue increased $7 million (5.5%) with residential high-speed average revenue per customer (ARPC) in the fourth quarter of 2012 up 4.2% from the same quarter a year earlier. Selected pricing action, and customer movement to premium services, including FibreOP, drove the increase says Bell Aliant
FibreOP Internet customers grew by 20,200, bringing total FibreOP Internet customers to 112,200 at the end of December 2012. FibreOP Internet additions include existing Bell Aliant customers migrating from DSL and fibre-to-the-node (FTTN) networks to the upgraded service. The migrations do not contribute to overall high-speed customer growth but increasingly contribute to improved customer retention and growth in overall customer ARPC says the carrier. Overall net high-speed Internet customer additions were 4,800 in the fourth quarter of 2012, up from 3,400 in the same quarter of 2011, bringing total high-speed Internet customers to 918,400 at the end of December 2012, up 2.6 per cent from a year earlier.
IPTV revenue grew $10 million in the fourth quarter of 2012 compared to the fourth quarter of 2011 with total IPTV customers of 123,000 at the end of December 2012. FibreOP TV customers grew by 17,400 in the quarter to reach 96,800, a portion of which were migrations from Bell Aliant's FTTN TV service. Overall net IPTV customer additions were 15,600 in the fourth quarter of 2012, compared to 8,900 a year earlier.
Local service and long distance revenues declined $15 million (4.8%) and $10 million (11.6%), respectively, in the fourth quarter of 2012 compared to the same quarter in 2011, driven by NAS declines of 5.2%. Residential net NAS declines of 33,800 in the fourth quarter of 2012 improved by 1,600 from the same quarter in 2011 with improved residential customer activations, winbacks and retention in FibreOP markets. Business net NAS declines of 10,600 increased by 2,200 from the same quarter a year earlier, mainly as a result of increased customer migration to IP-based technologies which reduce NAS counts but retain the business customer.
Wireless revenues were up $4 million (15.9%) in the fourth quarter of 2012 compared to the same quarter in 2011, driven by 5.5% customer growth and 9.4% wireless ARPC growth compared to a year ago.
