MONTREAL – Faced with a backlog of 50,000 work orders when its striking technicians came back to work in July after a strike, Bell Canada Enterprises made the decision to keep 1,000 workers it hired during the strike through the summer to help deal with the situation.
That decision, along with a few others, said BCE CEO Michael Sabia, led to a short-term financial hit for the company in the third quarter, ended September 30th.
The company still earned a buck or two though. For the third quarter of 2005, BCE reported revenues of $5 billion, up 3.6% from the same period last year. Operating income for the quarter increased to $957 million, from $25 million in the third quarter of 2004, due primarily to restructuring charges recognized in 2004 for the company’s employee departure program then.
EBITDA was $1.9 billion, down 1.9% from the same period last year. Cash from operating activities was $1.7 billion in the quarter, down 7.8% from the third quarter of 2004, while free cash flow was $344 million, compared to $673 million for the same period last year.
On the video side, ExpressVu posted its best third quarter since 2001 as net additions jumped 148% over the same quarter in 2004 to 82,000. So far this year, Bell has added 174,000 net new video subscribers, bringing the total subscriber base to 1,677,000, up 14.9% year-over-year. “The improvement in net activations this quarter and year-to-date was driven by the positive impact of our set-top-box rental program and the addition of 12,500 subscribers from the acquisition of Cable VDN,” says the release.
Video revenues increased by 17.8% year-over-year, driven by a higher customer base, an improvement in Average Revenue Per User (ARPU) of $3 over the third quarter of last year (thanks mostly to a rate increase) and a churn rate of 1%, down by 0.1 points year-over-year. Cost containment and the impact of a new rental program drove improved operating performance, despite a significant increase in new additions.
Capital expenditures were $968 million this quarter – or 19.4% higher than the same period last year. As a percentage of revenues, capital expenditures increased this quarter to 19.6% from 17.0% last year, reflecting acceleration in the company’s spending program in preparation for its 2006 launch of IPTV – which means deploying a fibre-to-the-node (FTTN) footprint. The initial deployment of its (EVDO) wireless data network in certain of our markets also contributed to the capex jump.
Bell attracted 358,000 gross subscribers, a 27% increase over the third quarter of 2004. Net additions were 123,000 in the third quarter, up 12.8% over the same period last year. At the end of the third quarter, Bell had 5.2 million wireless subscribers, an increase of 11.1% when compared to September 30, 2004.
Subscriber growth, and a $1 increase in ARPU to $51, contributed to wireless revenues of $801 million, an improvement of 10.2%, over the third quarter of 2004.
Bell’s high-speed Internet service added 106,000 subscribers in the third quarter of 2005, an increase of 26% over the same period in 2004, bringing the total high-speed subscriber base to 2,134,000, up 24% over the third quarter of last year.
Focused selling efforts, the continued success of Basic Lite and subscriptions to the 5 Mbps Ultra service resulted in 58% of gross additions subscribing to high-speed products. An expanded footprint and attractive back-to-school offers also contributed to overall growth in the third quarter.
Sympatico.MSN portal revenues increased by 58% in the quarter over the third quarter of 2004. The portal continues to be the country’s most popular online destination with over 16 million unique visitors to the site monthly.
