Fibe 1.5 Gigabit to launch this month in Ontario
MONTREAL — BCE reported a healthy increase in revenue for the second quarter of 2018, driven by strong growth in wireless, combined with gains in broadband Internet and IPTV customers, the company announced Thursday morning.
In reporting its Q2 2018 financial results, BCE highlighted Bell Wireless’s postpaid wireless net additions of 122,092, an increase of 37.8% compared to the same quarter last year and its best second-quarter net increase in postpaid wireless customers since 2000, the company said in a news release announcing its Q2 2018 results. In comparison, last month Rogers Communications also reported 122,000 postpaid net additions in its second quarter, representing roughly a 31.2% increase over Q2 2017 and Rogers’s highest second-quarter postpaid net additions in nine years.
The Bell Wireline business unit reported strong gains in total broadband Internet and IPTV net additions of 31,469, up 76.5% compared to the second quarter of 2017. This number breaks down as 10,816 net new broadband Internet customers and 20,653 net new IPTV customers.
While reporting its second-quarter financial results, BCE took the opportunity to announce its Bell Fibe 1.5 Gigabit service will launch this month in Ontario, followed by Quebec, Atlantic Canada and Manitoba.
On the downside, in the second quarter BCE experienced a decrease of 19,844 net satellite TV customers and a decrease in residential NAS lines of 70,665. In addition, the company reported a decrease of 7,606 net prepaid wireless customers.
In all, BCE customer connections across wireless, Internet, TV and residential NAS totalled 19,127,867 at the end of the second quarter, up 1.9% from the same period last year. This total included: 9,309,534 wireless customers, up 4.6% over last year (including 8,593,113 postpaid customers, an increase of 5.7%); 3,856,555 high-speed Internet subscribers, up 3.7%; 2,835,227 TV subscribers, up 0.4% (including 1,599,142 IPTV customers, an increase of 7.9%); and 3,126,551 residential NAS lines, down 6.2%.
Overall, BCE’s operating revenue totalled almost $5.79 billion in the second quarter, an increase of 1.7% over the same quarter last year. This revenue growth reflected a 1.0% increase in service revenue to $5.13 billion and 7.7% higher product revenue of $657 million in the second quarter, BCE said. This was driven by increases at both Bell Wireless and Bell Wireline, partly offset by a modest year-over-year revenue decline at Bell Media, BCE said.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) in the second quarter grew 2.0% to $2.43 billion, when compared to Q2 2017. This was driven by increases of 6.2% at Bell Wireless and 1.1% at Bell Wireline, BCE said. Bell Media’s adjusted EBITDA was down 8.5% in the second quarter, due to the combined impact of lower advertising revenue and higher programming costs compared to the same quarter last year, the company said.
BCE’s net earnings in Q2 2018 decreased 7.2% to $755 million when compared to the same quarter in 2017, while net earnings attributable to common shareholders totalled $704 million, or $0.79 per share, down 8.0% and 7.1%, respectively. Despite higher adjusted EBITDA, net earnings declined mainly due to higher other expenses and increased depreciation and amortization, BCE said. The company’s adjusted net earnings in Q2 2018 decreased 2.3% to $777 million, or $0.86 per common share.
“Bell’s network leadership coupled with our team’s dedicated execution in a competitive marketplace delivered strong operational performance in Q2, including 154,000 net new Fibe TV, Internet and postpaid wireless additions, a 44.3% increase from last year, and continued growth in customer usage of our broadband services,” said George Cope, president and CEO of BCE and Bell Canada, in the news release.
“Wireless continued to lead the way as we welcomed 122,092 net new postpaid customers, up 37.8% over last year and our best Q2 result in 18 years. The unmatched performance of Bell’s fibre network continues to propel wireline growth, including customer increases in Fibe TV and Internet and improved performance at Bell Business Markets,” Cope added.
“With 51 consecutive quarters of year-over-year adjusted EBITDA growth, the Bell team’s consistently strong operational execution is driving expected free cash flow growth of 3% to 7% in 2018, fully supporting our ongoing investment in the Bell broadband innovation strategy. Bell’s network leadership was underscored in Q2 with our ranking as by far the fastest Internet provider in Canada and our selection by the government of Alberta to operate its provincial SuperNet broadband network, and again today as Bell announces that our new 1.5 Gigabit Internet service will be available to consumers beginning this month,” Cope said.
Characterizing BCE’s second-quarter results as “mixed”, Canaccord Genuity analyst Aravinda Galappatthige provided Cartt.ca with a “first look” analysis note via email, saying Bell’s wireless and wireline segments met or exceeded Canaccord Genuity’s expectations for the most part.
“Importantly, wireline EBITDA turned positive on an organic basis, Internet and IPTV net adds came in a lot stronger, postpaid wireless net adds beat materially and wireless EBITDA met expectations despite lower service revenue growth. On the negative side, wireless ABPU (average billings per user) growth eased more that we expected to 0.6% and Media dragged down the consolidated EBITDA number below our estimate,” Galappatthige wrote.
“With Bell launching its Fibe Internet products more aggressively in the GTA starting April, we expect some discussion around potential sub gains. We believe it is important for broadband adds, in particular, to trend towards 120-125k in the near term, up from 95-100k currently. The other key area is Enterprise, which has recently showed some early signs of improvement,” Galappatthige added.
To view BCE’s full financial results for Q2 2018, click here.
