HALIFAX – Despite an uptick in operating revenue, Bell Aliant reported a $22 million drop in third quarter profits as its parent BCE continues in its efforts to take the company private.
Net earnings of $59 million for the period ended September 30, 2014 were impacted by an increase in financial advisory, professional and consulting fees, and other costs associated with the privatization transactions, the company said. Operating revenues of $698 million increased 0.5% year-over-year, as growth in Internet, TV, other data, and wireless revenues was partially offset by declines in local, long distance, and other revenues.
Operating expenses increased $7 million from the same quarter in 2013, driven by growth in promotional and TV content costs from a growing FibreOp customer base and storm-related costs, which were partially offset by savings from productivity initiatives. As a result, adjusted EBITDA dipped 1.2% to $323 million.
Capital expenditures in the third quarter of 2014 were $150 million, up 8.6% from the same quarter a year earlier, driven by higher FTTH footprint expansion. FTTH now passes 961,000 premises in Bell Aliant's territories.
Internet revenue increased 8.8% driven by growth in high-speed Internet customers of 4.9% and growth in residential high-speed average revenue per customer (ARPC) of 6.7% year-over-year. FibreOp Internet customers grew by 19,000 during the quarter, bringing total FibreOp Internet customers to approximately 236,000 at quarter end. Overall high-speed Internet customer net additions were 14,700 bringing total high-speed Internet customers to 991,700 at the end of September 2014.
IPTV revenue grew 35.9% with total IPTV customers increasing 31.9% to 215,300. FibreOp TV customers grew by 14,300 in the third quarter to reach approximately 200,000, a portion of which were migrations from Bell Aliant's FTTN TV service. Overall net IPTV customer additions were 12,900 in the third quarter of 2014, compared to 14,500 a year earlier.
Wireless revenues increased 1.7% in the third quarter of 2014 compared to the third quarter in 2013. Overall wireless customers were up 1.3% year-over-year, with growth in postpaid wireless customers of 3.3% offset by declines in prepaid wireless customers, reflecting industry trends. Wireless ARPC increased 0.5% compared to the same quarter in 2013, driven by higher smartphone penetration.
Local service and long distance revenues dropped 4.0% and 10.6%, respectively, driven largely by NAS declines of 5.4%. Net NAS declines were essentially flat to the same quarter in 2013.
"Our third quarter results continued to demonstrate our commitment to solid execution," said president and CEO Karen Sheriff, in the news release. "I am extremely proud of our team's performance and the strong position we have put Bell Aliant in as we deliver even more value to our customers by combining our product and service strength, and cost management skills, with the world class communications networks and operations of Bell."
BCE’s privatization of Bell Aliant is expected to close on or about October 31, 2014.
