MONTREAL – BCE posted third quarter net earnings of $343 million, a sharp 34.9% drop from $527 million in the same period last year, as it absorbed the CRTC tangible benefits obligation of $230 million that it was ordered to pay as part of its acquisition of Astral Media.
The company said Thursday that EBITDA for the quarter increased 2.2% to $2.06 billion.
At the end of Q3, BCE (including Bell and Bell Aliant) served a total of 7,951,182 wireless subscribers, up 3% from Q3 2012; total TV subscribers of 2,438,100 (including 582,393 IPTV customers, reflecting the addition of 87,355 net new IPTV customers in Q3 2013), a 7.1% increase; total high-speed Internet subscribers of 3,102,627, up 2.7%; and total NAS lines of 7,730,283, a decrease of 6.9%.
At Bell, which includes the Bell Wireless, Bell Wireline and Bell Media segments, operating revenues grew 3% from $4.39 billion last year to $4.52 billion, with the inclusion of Astral contributing to Bell Media revenue growth of 21.6%. Wireless revenue growth of 4.1%, higher TV and Internet service revenues, growth in IP connectivity and business service solutions revenue, and greater business data product sales also contributed to consolidated Bell revenue growth this quarter. EBITDA increased 3% to $1.74 billion from $1.68 billion.
Bell Wireless
Bell Wireless operating revenues increased 4.1% to $1.49 billion in Q3 2013, compared to $1.43 billion in Q3 2012. Service revenues were up 5% to $1.37 million, driven by postpaid subscriber growth and higher blended ARPU. Wireless data revenue increased 18.4% on increased adoption of smartphones and use of wireless Internet and data services such as Mobile TV.
– Postpaid net additions in Q3 were 102,714. This reflected a 10.6% decrease in postpaid gross activations attributable to fewer promotional offers, reduced handset discounts, new 2-year rate plan pricing resulting from the federal Wireless Code of Conduct, and reduced availability of some new smartphone models. Prepaid net customer losses improved 29.3% to 13,255 this quarter, due to fewer customer deactivations.
– Smartphone users represented 73% of total postpaid subscribers at the end of the quarter, compared to 60% a year earlier. Bell Wireless postpaid customers totalled 6,683,646 at the end of Q3, an increase of 6.4% over last year, while total Bell Wireless customers grew 3% to 7,805,100.
Bell Wireline
The pace of Bell Wireline's revenue decline remained stable compared to the previous quarter, dipping 0.9% to $2.48 billion, as higher TV and Internet service revenues, stronger business IP connectivity and service solutions growth, and increased data product sales to large enterprise customers, largely offset the decline in voice revenues.
– Total Bell Residential customer net additions, including residential NAS, were positive for the first time since 2005, the year cable telephony service was introduced. Total residential net additions of approximately 28,000 in Q3 were up 74,000 year-over-year, supported by record Fibe TV activations and strong Internet performance that in turn drove higher residential NAS activations and retention.
– Bell Fibe TV customer acquisition accelerated this quarter with the addition of 72,813 net new subscribers, up 69.4% compared to Q3 2012. At the end of the quarter, Bell Fibe TV subscribers totalled 419,129, more than double the 200,064 subscribers at the end of the same period last year.
– Bell's IPTV footprint reached approximately 4.1 million households, up from 2.9 million households at the end of Q3 2012.
– Total Bell Satellite TV net customer losses improved 3.7% this quarter to 26,128, reflecting fewer customer deactivations. Bell TV's subscriber base totalled 2,242,244 at the end of Q3 2013, representing a 4.9% increase over the past year.
– Bell high-speed Internet net subscriber additions were 36,638, compared to 13,416 in Q3 2012, the best quarterly performance in more than 6 years. This reflects the pull-through of Bell Fibe TV customer activations, a higher number of student activations during the back-to-school period, as well as increased business customer activations. Bell total high-speed Internet subscribers reached 2,157,713, up 2.4% since the end of Q3 2012.
Bell Media
Bell Media delivered strong financial and operational performance this quarter. Higher advertising and subscriber fee revenues reflect the acquisition of Astral, now part of the Bell Media segment, driving year-over-year revenue growth of 21.6% to $664 million and EBITDA growth of 26.8% to $199 million.
This contributed to a higher Media EBITDA margin of 30% (compared to 28.8% in Q3 2012) due to Bell Media's enhanced mix of specialty and pay TV properties.
"Our third-quarter financial results were very solid across all Bell operating segments with excellent double-digit wireless and media EBITDA growth driving strong growth in adjusted earnings and free cash flow”, said Siim Vanaselja, chief financial officer for Bell and BCE, in the company news release. “We also continued to leverage our advanced broadband networks and services to deliver healthy wireless and residential wireline net customer activations, which provides the foundation for sustained financial performance going forward.
"With an outlook for continued strong wireless profitability, an improving wireline financial profile and a significant contribution from Astral to our Bell Media results, we are on track with our 2013 financial plan and reconfirm today all our Bell and BCE guidance targets for the year."
BCE's Board of Directors declared a quarterly dividend of $0.5825 per common share, payable on January 15, 2014 to shareholders of record at the close of business on December 16, 2013.
