MONTREAL – BCE recorded “healthy” gains in revenue and EBITDA for the first quarter of 2014, powered by growth in Bell's media and wireless divisions.
For the period ended March 31, 2014, net earnings attributable to common shareholders of $615 million was up 8.7% from $566 million in the same period last year, and adjusted net earnings of $626 million rose 4.5% from $599 million year-over-year. Operating revenues grew 3.7% to $5.09 billion, and EBITDA rose 3.1% to $2.02 billion compared to the first quarter of 2013.
Operating revenues at Bell, which include wireless, wireline and media, increased 4.4% to $4.5 billion. This was driven by a 5.0% increase in service revenues, reflecting Astral's contribution to Bell Media results, solid Wireless revenue growth as well as higher TV and Internet service revenues that drove positive Wireline residential revenue growth this quarter, which more than offset the ongoing, but moderating, decline in traditional Wireline voice revenues.
Bell EBITDA grew 4.1% to $1.71 billion, reflecting increases of 7.4% at Bell Wireless and 53.1% at Bell Media, moderated by a 2.9% decrease at Bell Wireline. Bell's “growth services” of wireless, TV, Internet, other wireline broadband, and media services now delivers 83% of the company's operating revenues.
Bell Wireless
– Postpaid net additions totalled 33,964 compared to 59,497 last year. This reflected a 6.8% decrease in postpaid gross activations attributable to slower overall market growth as a result of higher rate-plan pricing on new 2-year contracts brought about by the new federal Wireless Code of Conduct and fewer major smartphone launches during the quarter. Prepaid net subscriber losses improved 27.5%, year-over-year, to 49,642, due to fewer customer deactivations;
– Smartphones represented 74% of total postpaid gross activations in Q1 2014, compared to 71% in Q1 2013. This increased the percentage of postpaid subscribers with smartphones to 74% at March 31, 2014, compared to 65% at the end of Q1 2013;
– Bell Wireless postpaid customers totalled 6,711,656, a 3.5% increase over last year, while total Bell Wireless customers grew 1.2% to 7,762,656;
– Bell Mobile TV reached 1,335,000 subscribers in Q1 2014, up from approximately 800,000 at the same time last year. Mobile TV video streams grew 22.5% in Q1 to more than 10.6 million, which included major events like the Super Bowl and Sochi 2014.
Bell Wireline
– Bell Fibe TV added 54,680 net new customers, 15.2% more than in Q1 2013, bringing the total number of Bell Fibe TV subscribers to 534,110 – up 80.6% over last year;
– The Bell Fibe TV residential service footprint grew by a million homes over last year to reach 4.5 million at the end of Q1.
– Bell Satellite TV losses improved 22.0% to 26,119 as a result of fewer retail customer deactivations;
– Combined Fibe TV and Satellite TV net additions more than doubled, year-over-year, to 28,561. The Bell TV subscriber base totalled 2,306,994 at the end of Q1 2014, a 6.3% increase over last year;
– High-speed Internet net customer additions increased almost fourfold to 15,627, compared to 3,952 in Q1 2013, driven by the pull-through of Bell Fibe TV, wholesale customer gains, and lower residential customer churn. High-speed Internet subscribers at the end of the quarter totalled 2,200,170, an increase of 3.3% over last year;
– Residential NAS net losses improved 21.4% in Q1 to 65,638 from 83,557 last year. This was supported by strong Fibe TV attach rates which helped to drive NAS customer retention, contributing to an 18% increase in 3-product households this quarter;
– Business NAS losses increased 43.0%, up 10,706 over last year, to 35,595, due to a greater number of deactivations in our large business segment resulting from ongoing customer conversion of voice lines to IP-based services and competitive losses.
Bell Media
– Operating revenue grew 40.7% to $722 million and EBITDA grew 53.1% to $150 million in Q1 2014;
– The significant year-over-year increases reflected higher advertising and subscriber fee revenues from the Astral acquisition, as well as the flow-through of 2013 market-based rate increases in specialty TV services and higher revenues generated from new mobile content deals and TV Everywhere products;
– Overall advertising revenue growth this quarter was moderated by a continuing soft advertising market that saw a shift in spending to the main broadcaster of the Sochi Winter Olympics. Higher costs for TV programming, increased spending on in-house Canadian productions, and sports broadcast rights agreements that continue to escalate in price for the industry as a whole were absorbed by operating synergies from Astral's successful integration into Bell Media.
"Bell begins 2014 with solid first-quarter financial results that underline the operating momentum we have across our growth services, especially in Wireless, residential Wireline and Media," said Siim Vanaselja, Chief Financial Officer of BCE and Bell, in a statement. "EBITDA growth in Q1 drove strong increases in earnings and free cash flow, supporting our strategic broadband network investments and BCE's higher common share dividend rate for 2014. With a good start to the year across Bell's business segments and a favourable outlook, we reconfirm our 2014 financial guidance as we remain on track with our business plan for the year."
