HALIFAX – With BCE’s deal to Bell Aliant private due to close in the fall, this is one of the final quarterly reports we’ll see from the East Coast-based telco/wireless/TV provider – and their CEO is happy with it.
“We achieved a significant milestone in the second quarter of 2014, growing our overall customer unit base with the best unit growth performance in Bell Aliant’s history,” said Karen Sheriff, president and CEO, in the Q2 press release. “Competition throughout our territory continues to be intense, and I am extremely pleased with the customer additions we have been able to achieve in this environment.”
Last week, BCE and Bell Aliant announced that BCE had made an offer to take Bell Aliant private. Under BCE's proposal, Bell Aliant public minority shareholders will receive cash and BCE common shares for a combined value of $31 per Bell Aliant share. BCE expects the privatization transaction to be completed by November 30, 2014, subject to more than 50% of Bell Aliant common shares held by public minority shareholders being tendered to the offer, and other conditions.
Aliant reported net earnings of $72 million in the second quarter of 2014, up $6 million from the same quarter in 2013. The increase was driven by higher earnings in Bell Aliant GP, with lower finance and income tax expenses more than offsetting lower adjusted EBITDA and higher restructuring costs compared to the second quarter in 2013.
Operating revenues in the second quarter of 2014 were $683 million, down 1.3% from the same quarter in 2013. Growth in Internet, TV, other data, and wireless revenues was offset by declines in local, long distance, and other revenues. Operating expenses in the second quarter of 2014 declined $1 million from the same quarter in 2013, as continued savings from productivity initiatives offset normal inflationary pressures and growth in promotional and TV content costs from a growing FibreOP customer base. As a result, adjusted EBITDA declined 2.6% in the second quarter of 2014 compared to the same quarter in 2013, reads the press release.
Capital expenditures in the second quarter of 2014 were $146 million, down $11 million (6.6%) from the same quarter a year earlier. Capex increases from higher FTTH footprint expansion and higher FibreOP customer connections in the second quarter of 2014 were more than offset by lower spending on DSL expansion and the completion of several large business customer network projects in 2013.
Free cash flow in the second quarter of 2014 was $131 million, down $22 million from the same quarter in 2013, primarily as result of higher cash income taxes and lower adjusted EBITDA, somewhat offset by lower capital expenditures and less use of cash for changes in working capital, said the company.
High-speed Internet net additions were up 7,700 from Q2 2013, FibreOP Internet added 17,100 net new customers to reach 217,100, FibreOP TV added 14,200 net new customers to reach 185,600, and net NAS declines slowed by 25%. Fibre-to-the-home (FTTH) now passes 879,000 premises and is on track to pass 1 million premises by end of 2014
“Our expanding fibre-to-the-home network with our FibreOP service offerings drove customer growth from high-speed Internet and IPTV to more than offset customer declines in our traditional legacy business. Not only did we achieve strong growth in our broadband services customer bases, we significantly improved customer declines in our legacy voice services,” added Sheriff.
