HALIFAX – Despite continued growth in its fibre-to-the-home product FibreOp, Bell Aliant reported a $14 million drop in first quarter profits.
Net earnings of $69 million in the first quarter ended March 31, were down from $55 million in the same quarter in 2013. The decrease was driven by lower earnings in Bell Aliant GP, with lower EBITDA and increased restructuring costs compared to the same quarter a year earlier.
Operating revenues of $676 million decreased 1.2% ($8 million) year-over-year as growth in Internet, TV and other data revenues was offset by declines in local, long distance, wireless and other revenues.
Operating expenses dipped $1 million as continued savings from productivity initiatives offset normal inflationary pressures and growth in promotional and TV content costs from a growing FibreOP customer base. As a result, adjusted EBITDA declined 2.2% ($7 million) compared to the first quarter in 2013.
Revenues for Bell Alliant’s Internet and IPTV segments increased 3.9% ($5 million) and 43.5% ($12 million), respectively. Wireless revenues were relatively flat year-over-year, primarily as a result of lower ARPC from competitive pressures and lower roaming rates.
Bell Aliant’s fibre-to-the-home (FTTH) currently passes 827,000 premises, and the company said that it expects to pass one million premises by the end of this year.
FibreOP Internet customers grew by 16,000 during the quarter, bringing total FibreOP Internet customers to approximately 200,000 at the end of March 2014. FibreOP Internet additions include existing Bell Aliant customers migrating from DSL and fibre-to-the-node (FTTN) networks to the upgraded service.
Overall high-speed Internet customer net additions were 11,000 in this quarter of 2014, up 26% from 8,700 in the same quarter last year, bringing total high-speed Internet customers to 963,000 at the end of March 2014.
FibreOP TV added 13,400 new customers in the quarter to reach 171,400, a portion of which were migrations from Bell Aliant's FTTN TV service. Overall net IPTV customer additions were 11,700, down from 14,300 a year earlier, while total IPTV customers climbed 38.3% to 189,800.
Local service and long distance revenues dropped 5.4% ($15 million) and 13.4% ($10 million), respectively, compared to the same quarter in 2013, driven largely by NAS declines of 5.6%. Residential net NAS declines of 23,900 improved 2,400 (8.7%) year-over-year with improved performance in both fibre and non-fibre markets. Business net NAS declines were 7,600 compared to 5,900 the same quarter a year earlier.
Wireless customers increased 1.8% from a year earlier with growth in postpaid wireless customers of 3.5% cent offset by declines in prepaid wireless customers, reflecting industry trends.
President and CEO Karen Sheriff said that the company remains focussed on continuing to expand its fibre-to-the-home coverage area and growing its FibreOP penetration rate.
“We believe loading this network is the path to returning us to revenue growth, and that continues to be our focus”, she said in a statement. "We again demonstrated disciplined cost management, holding expenses in the first quarter of 2014 essentially flat to the same quarter in 2013, despite our growing TV customer base and normal inflationary pressures. Productivity initiatives continued to deliver results and are key to our strategy going forward.”
Bell Aliant declared a quarterly dividend of $0.475 per common share, payable on July 7 to shareholders of record at the close of business on June 13, 2014. Bell Aliant Preferred Equity Inc. declared a dividend on its Series A Preferred Shares of $0.303125 per share, a dividend on its Series C Preferred Shares of $0.284375 per share, and a dividend on its Series E Preferred Shares of $0.265625 per share, each to be paid on June 30 to shareholders of record at the close of business on June 13, 2014.
