MONTREAL – BCE Inc., owners of Bell Canada, Bell Globemedia, Bell ExpressVu, Aliant and other assets posted revenues of $4.9 billion in the first quarter of 2005, up 4.8%, and of $1.9 billion, up 5.1% when compared to the same period last year.
Operating income increased by 5.4% year over year to reach $1.1 billion.
“This is a solid start to the year. Our revenue and EBITDA performance continued to improve reflecting progress on many fronts across the business," said Michael Sabia, president and CEO.
"Contributing to our financial results were cost savings of $120 million realized from initiatives under Project Galileo (transitioning business customers to IP voice delivery) and the benefits of last year’s employee departure program. In addition, top line growth was driven by a 6.6% increase in our data revenues reflecting in part the good performance of our DSL service this quarter."
In December 2004, Bell Canada outlined three key priorities driving its strategy to deliver unrivaled communications to its customers while setting the standard in Internet Protocol (IP). During the first quarter the Company made progress in all three areas, for example:
* Delivering an enhanced customer experience while significantly lowering our costs. We substantially reduced provisioning time for large Enterprise customers with the launch of a new standardized IP-Virtual Private Network (IP-VPN) solution. In the consumer segment, we made progress on initiatives to improve first call resolution – resolving a customer issue on the first contact. At the same time, we took initiatives to improve order resolution – ensuring that products and services are delivered as specified by the customer.
* Delivering abundant, reliable and secure bandwidth that can provide all the services of the future. Fibre-to-the-node (FTTN) roll-out accelerated with the provisioning of 386 additional neighbourhood nodes, more than all of 2004, for a total of 762.
* Providing next generation services that customers want. Bell Canada introduced several next generation services, including Bell Digital Voice, our feature-rich Voice over Internet Protocol (VoIP) product and Bell 10-4, a combined "walkie talkie" and cell phone service.
“We continue to deliver on our plan to redefine Bell Canada," added Mr. Sabia. "Despite some temporary softness in our Mobility unit during the first part of the quarter, the operational transformation of our business is very much on track."
Sympatico high-speed Internet additions of 128,000 in the first three months of the year represented the strongest quarterly increase in the last three years. The high-speed subscriber base increased to over 1.9 million by the end of the quarter, up by approximately 24% over the first quarter of last year. This increase was largely driven by our footprint expansion and focused marketing activities. Subscriptions to Value-Added Services (VAS) such as MSN Premium, Security Services and Home Networking grew by 142,000 – more than double the number a year ago.
Sympatico.MSN continued to be the country’s most popular online destination with 84% of all online Canadians visiting the site. Portal revenues increased by over 185% and VAS revenues by 121%, year over year.
Bell introduced services providing enhanced customer care, both online and in our call centres. The virtual Emily(TM) service, a user-friendly self- help tool, allows customers to resolve technical issues themselves, resulting in fewer calls to our customer care centres.
First call resolution rates continued to improve thanks to advanced applications that allow customer service representatives to remotely assess and resolve customer technical issues. New subscribers, especially those new to the Internet, appreciate this as Internet access installation, by its nature, prompts more customer queries than other services.
ExpressVu net additions for the quarter were 29,000, representing an 81% increase, year over year. Total subscribers grew to reach more than 1.5 million, or a 9% increase over the first quarter of 2004. Our lower churn rate of 0.8% compared to 0.9% in the first quarter of last year was also a contributing factor to this solid growth.
Revenues increased by 7% year-over-year despite the absence of National Hockey League (NHL) programming. This impact was mitigated at the end of the quarter by a pricing increase which was communicated to customers in January and began to flow through in March.
Disciplined cost containment, including the negotiation of a favourable supply contract for set-top boxes, resulted in a lower cost of acquisition in the quarter and positive EBITDA for ExpressVu.
Wireless added 82,000 new subscribers to our customer base during the quarter compared to 92,000 in first quarter of last year.
Prepaid net activations were strong particularly in January and February with approximately 42,000 subscribers added during the quarter. Christmas promotions led to a high level of activations of new prepaid subscribers in January and the March launch of Virgin Mobile further contributed to the strong prepaid total for the quarter.
Postpaid net activations for the quarter totaled almost 40,000 with the majority of these coming in the second half of the quarter, as a result of promotions initiated in March. The launch of Bell’s 10-4 walkie-talkie service in March contributed to the increasing momentum in postpaid activations, a trend which continued into April.
In the quarter, approximately 45,000 non-paying postpaid accounts were cancelled resulting in net additions of 37,000. Blended churn was 1.6% per month, up from 1.3% in the first quarter of last year, largely as a function of the cancellation of these non-paying postpaid accounts. Absent our decision to cancel these accounts, the underlying rate of churn would have continued at 1.2%.
Revenues grew by 9.5% year-over-year and were in line with subscriber growth of 10%. ARPU declined to approximately $46 from $47 in the first quarter of the previous year. EBITDA margin was again above 40% reflecting effective cost containment and lower cost of acquisition during the quarter.
Consumer segment revenues grew by 1.7%, year over year, to $1.9 billion, with our strategy of simplification and cost management driving an increase in EBITDA for the quarter.
Bell introduced Bell Digital Voice, our feature-rich consumer VoIP service, in Québec City, Sherbrooke and Trois-Rivières. Customer reaction has been positive and we are satisfied with the early acquisition numbers and the insights gathered through our initial offering in this next generation services market.
In the first quarter, more than 107,000 customers signed on to the Digital Bundle. Furthermore, 46% of our customers added at least one new service, deepening their relationship with Bell. We now have over 554,000 bundle customers who have taken advantage of the offer since the launch of the program. Also, by the end of the quarter, over 820,000 customers had chosen Bell’s One Bill for their wireline, Internet and video services.
Bell Globemedia’s revenues for the first quarter increased by 4.1% over the same period last year to reach $356 million. Improved profitability both at CTV and The Globe and Mail delivered an impressive 60% increase in operating income over the same period last year.
CTV’s strong schedule continued to lead the way in Canada with 18 of the top 20 regularly scheduled programs among all viewers in the September 2004 to March 2005 time period. This was a major factor driving an increase of 5.7% in television advertising revenues compared to the first quarter of last year.
Strong growth in advertising revenues in conventional and specialty television helped offset the loss of advertising on hockey broadcasts on the sports specialty channels TSN and RDS.
Bell Globemedia subscriber revenues grew by 4.1% this quarter reflecting specialty channel growth and online subscription growth at The Globe and Mail. According to the latest NADBank and PMB statistics, The Globe and Mail continues to lead its national competitor in readership by 60% on weekdays and 78% on Saturdays.
For the full release, go to www.bce.ca.
