HALIFAX – Bell Aliant will spend $350 million in the next two years to accelerate the roll out of its fibre-to-the-home (FTTH) technology, the company announced Wednesday, along with its first quarter 2010 results.
The regional telecom company said that based on the success of FTTH in the New Brunswick markets of Fredericton and Saint John, the technology will provide it with “a significant competitive advantage in its markets now and in the future”.
“Our competitive environment and the success we are having with our FibreOP Internet and TV service in New Brunswick make it clear to us that accelerating this technology rollout now is the right thing to do,” said president and CEO Karen Sheriff, in a statement. “We believe FTTH will help us grow revenue, retain and gain customers, improve customer service, and reduce our future operating and capital costs; all of which are fundamental to our future success.”
While almost all homes and businesses in its territory have access to its high-speed Internet service, the expansion of FTTH means that over 600,000 homes and businesses, or approximately one third of its territory, will have access to the technology by the end of 2012. The company announced in February that it would grow its fibre optic network to about 140,000 homes and businesses, primarily in New Brunswick, this year alone.
Bell Aliant also announced plans to convert from an income trust to a corporate structure by January 1, 2011, pending unitholder and other regulatory approvals. The conversion, spurred by tax changes to income trusts that come in to effect in 2011, is expected to reduce administrative costs associated with a more complex trust structure, improve the comparability of Bell Aliant to its peers, and broaden the potential investor base, the company said. Unitholders are expected to vote on the conversion at the fund’s annual meeting on June 16.
Operating revenues for the first quarter of 2010 were down 4.9% from the first quarter of last year to $779 million. The decline was driven by reductions in low-margin Information Technology (IT) equipment sales after a strong first quarter in 2009, and declines in local and long distance revenues associated with lower network access services (NAS). These decreases were somewhat offset by increases in Internet revenues.
Operating expense reductions of $35 million (7.6%) from lower cost of sales and the benefits of restructuring and other initiatives mitigated the effects on EBITDA of lower revenues, with overall EBITDA dropping by $5 million to $354 million from the same quarter in 2009.
Local service revenue dipped $15 million (4.5%) year-over-year as a result of NAS declines and a $5 million decrease in contribution revenues. Long distance revenue was down 8.2% ($9 million) compared to the same quarter in 2009 as a result of NAS declines and migration to flat rate long distance plans.
Internet revenue was up by $8 million (8.4%), thanks to growth in Bell Aliant TV subscribers, and 6.5% more high-speed Internet customers.
IT revenues were down 15% compared to the same quarter a year ago, and IT equipment sales dropped by $16 million from “very strong sales” in the first quarter in 2009.
