By Ahmad Hathout
Bell said Thursday it has agreed to sell its home security and monitored alarm assets, in a transaction that aligns with its efforts to focus on its core businesses.
The transaction to Toronto-based a.p.i Alarm Inc. is part of a strategy of focusing on its telecommunications, enterprise solutions and media businesses, the company said Thursday. Closing is expected in the second half of this year.
The deal, whose top-end value is estimated at $170 million, comes nearly eight years after it purchased Alarm Force for $166 million – a move that it said would boost its connected home strategy. It’s a business that its telco rival Telus – which nearly six years ago purchased ADT Canada for $700 million – continues to embrace as part of its bundling strategy.
Bell’s alarm deal is part of the telco’s ongoing review of non-core assets to chop — and to focus on core assets that it could potentially leverage in the future. Rogers, which has been offloading its own non-core assets, and Telus are utilizing their existing wireless infrastructure to generate money and pay down debt. Bell has been open to a similar strategy.
“We view our infrastructure as potentially a valuable source of capital and we fully recognize the strategic value of a lot of our infrastructure,” Bell President and CEO Mirko Bibic said during a second quarter earnings conference call Thursday. “That could be towers, could be AI fabric, it could be other things … we’re gonna remain open to exploring opportunities and under the right conditions going forward.”
The company is in the process of divesting north service provider subsidiary Northwestel to indigenous-owned Sixty North Unity for $1 billion and it agreed, last September, to sell to Rogers its 37.5 per cent stake in Maple Leaf Sports and Entertainment (MLSE) for $4.7 billion. Bell is plowing that money into its acquisition of U.S.-based Ziply Fiber, which it closed late last week.
The purchase of Ziply Fiber is part of its broader strategy to be a dominant fibre provider, a key asset with which it will seek to bundle its other services.
“Fiber continues to drive higher multi-product penetration, contributing to an eight per cent increase in households subscribing to mobility and internet service bundles where we have fiber,” Bibic said Thursday.
The telco said it added 27,000 new fibre-to-the-home customers this quarter, a “strong result” despite its slowdown in its delivery of direct fibre. In February, the company said it was going to reduce the number of homes it will target with fibre this year – unless the CRTC reverses course on a decision to allow the largest telecoms to roam on the networks of others.
It’s advice the CRTC didn’t take. On Wednesday night, Bell was delivered even more bad news when the federal cabinet declined to reverse the policy.
Bibic said Bell is “obviously disappointed” with the decision.
“At this stage, we urge the government and the CRTC to ensure that network builders are fully compensated for the significant build costs and investment risk they take in building,” he added Thursday.
“You’ve seen, quite unfortunately, a significant scaling back of our fiber build in the last 18 months,” Bibic said. “We were aiming to a nine-million fiber locations past, and that’s largely going to plateau around the eight million mark, so that gives you a sense of the impact that decision’s already had.”
Rogers and Cogeco also released statements blasting the decision, with Rogers noting that the previous industry minister recommended the CRTC reverse course on the policy.
The telecoms can now look toward final CRTC rates and whether the Federal Court of Appeal will hear a challenge to the policy.
In the meantime, in the quarter that ended June 30, Bell reported 44,547 net new postpaid wireless subscribers, all of which signed up to the company’s premium brand. Still, that gain was down 43.3 per cent compared to the same quarter last year, which saw the company add 78,500 net new postpaid subscribers. Gross adds in this segment were also down 14.8 per cent for a total in the quarter of 331,438. Average monthly churn on postpaid improved 12 basis points to 1.06 per cent.
On prepaid, it added five per cent fewer new subscribers, at roughly 50,000, compared to the equivalent period. Gross prepaid adds were roughly 179,000, down 3.7 per cent. Average monthly churn on prepaid was up 46 basis points to 5.06 per cent.
Monthly average revenue per user was down 0.7 per cent to $57.61, thanks to competitive pricing pressure and lower roaming due in part to decreased travel to the US. The company noted this was still an improvement over consecutive quarters.
The total mobile wireless base was up a smidge to 10.38 million.
Internet subscriber numbers were also down, with the telco added 5,000 net new customers compared to the 23,841 it added in the equivalent period. The total base by the end of the quarter was down 2.2 per cent to 4.42 million.
It also lost 15,851 IPTV subscribers, compared to a loss of 1,313 in the same period last year, for a total base that shrunk 1.1 per cent to 2.1 million.
The number of new connected device subscribers was up 11 per cent to 97,502 in the quarter, for a total base that was up 10 per cent by quarter-end to roughly 3.18 million.
The telco reported $6.1 billion in revenue for the quarter, up 1.3-per-cent, and $644 million in net earnings, up 6.6 per cent.
Service revenue was down 0.8 per cent to $5.27 billion, which was offset by a 17.4-per-cent increase, to $818 million, in product revenue.
The revenue number was boosted by $843 million in media division revenue, up 3.8 per cent compared to the same period last year.
“Despite strong digital video ad growth in the quarter, total advertising revenue was down 3.1 per cent due to continued weakness in traditional broadcast TV advertiser demand for non-sports programs and the previously announced divestiture of 45 radio stations of which the majority were completed during the quarter,” Curtis Millen, the company’s chief financial officer, said Thursday.
