“Our Canadian telecom CapEx will continue to decline”: Bibic
By Ahmad Hathout
Bell President and CEO Mirko Bibic said Thursday that the telco is focusing its investing strategy on what it calls “higher-return growth opportunities” during a period of lower overall spending.
The spending focus is less on “legacy segments” and more on its build-out of AI data centres across Canada (AI Fabric) and Ziply Fiber, its newly acquired internet brand in the United States, which added 6,775 net new fibre customers in the quarter. Bell said the Ziply goal of reaching three million fibre passings by the end of 2028 is on track.
“As construction ramps through the balance of the year, we expect both operating and subscriber momentum to accelerate,” Curtis Millen, chief financial officer, said about Ziply on a first-quarter conference call Thursday.
Bell’s capital spending in the U.S. was $156 million in the quarter, which doesn’t have a comparable period because it closed the deal in August. Spending on the Canadian telecom side, however, was down 6.7 per cent to $657 million year-over-year.
Despite lower annual spending since 2022, this quarter saw a bump up by 15.4 per cent, to $841 million thanks to those “growth segments.”
“If you just look at the capital investments over that short period of time in our industry on an annual basis, I mean, literally multiple billions of annual CapEx that are no longer being invested,” Bibic said on the call, noting a dip from around $5 billion in 2022 to below $3 billion in 2026.
“I mean, that’s frankly unfortunate,” Bibic added. “Thankfully, we’ve developed some highly differentiated opportunities where we can deploy capital in high-growth, high-return segments that aren’t regulated. That’s how we’ve pivoted. If the environment for the core businesses in the country were to shift, I’m sure capital would flow back in.”
Rogers also announced that it was reducing its capital expenditure for this year and for the “foreseeable future,” thanks in part to what it conveyed as an unfavourable regulatory environment that mandates access to competitor networks by the largest telecoms. It’s a policy that Bell also opposes.
“Our Canadian telecom CapEx will continue to decline,” Bibic said Thursday. “In the current environment, we’ve seen others in the industry recalibrate their capital spending. We totally understand that because it’s what we’ve been doing. We laid out this discipline clearly at Investor Day [in October], and we’ve been executing against it for three-plus years.”
Outside of those growth segments, Bell is also leaning hard on its content. Spending increased 12 per cent to $28 million on the media side, as the segment targets six million subscribers by 2028.
The subscriber base grew 25 per cent year-over-year to more than 4.7 million, thanks to a 59-per-cent increase in direct-to-consumer streaming subscribers.
“We have a clear runway ahead,” Bibic said about the goal. “What’s driving this is a combination of premium original content, a significantly expanded library, the streaming bundles we launched in the second half of last year, and continued improvements to the product experience, including targeted marketing offers in the French-language market. Another recent addition is SNL, which will simulcast on Crave and CTV beginning this fall, one of the most watched shows on television and a strong signal of the content value we’re building across those platforms. We also continue to solidify our long-term sports content leadership.”
“Over the last few months, we extended regional media rights with the Senators, the Montreal Canadiens, the Winnipeg Jets, and became the new Canadian home of the Toronto Tempo and the WNBA,” Bibic continued. “We expect to announce additional major rights renewals in the near future.”
The FIFA World Cup this summer is also expected to be a boon for the company, which has the exclusive Canadian broadcasting rights to the 104 matches.
Media revenue was $778 million, up 0.4 per cent on a year-over-year basis.
Total company-wide revenue was approximately $6.2 billion, up 4 per cent year-over-year. Net earnings were $667 million, down 2.3 per cent. Canadian telecom revenue was $5.25 billion, up 0.1 per cent, while American telecom revenue was $234 million.
On mobile wireless, the company added approximately 17,000 net new postpaid subscribers, compared to the roughly 9,600 it lost in the same quarter last year. It lost roughly 11,900 prepaid subscribers, lower than the 9,000 it gained in the same period last year. Gross postpaid additions were 386,211, up 20.6 per cent versus 134,282 for prepaid, down 9.5 per cent.
Postpaid and prepaid churn were up 13 basis points and 20 basis points – to 1.34 per cent and 5.97 per cent – respectively. Monthly average revenue per user (ARPU) was $56.61, down 47 cents.
The total postpaid base by the end of quarter was 9.57 million, up 0.5 per cent, and 755,212 on prepaid, down 1.6 per cent.
Total Ziply internet subscribers at quarter-end was roughly 439,400, while the total Canadian internet base was 4.45 million, down 2.6 per cent. The Ziply base counts 368,643 of that as fibre-to-the-home (FTTH) subscribers, while the Canadian side counts 3.2 million as FTTH.
Bell added roughly 10,000 Canadian video customers and lost 215 American ones for a total base of roughly 2.15 million and 5,624, respectively.
Net new connected device subscribers in the quarter was 81,326 for a total base that increase 8.7 per cent to roughly 3.35 million.
Screengrab of Bell President and CEO Mirko Bibic
