Bell EBITDA(1) increases 5.2%, reflecting strong contributions from Bell Wireless and Bell Media
Wireless postpaid net activations of 148,502, up 17.1%; Wireless EBITDA growth of 15.2% is best Q3 performance in 5 years; smartphone users now represent 60% of postpaid subscribers, driving 4.2% higher wireless ARPU and data revenue growth of 29.5%
Bell Fibe TV net activations of 42,973 as service footprint expands to more than 2.8 million households; high-speed Internet net activations of 13,416; 11.3% year-over-year improvement in residential local access line losses
Bell Media revenue up 25.5%, EBITDA increased 92.6%
Wireline EBITDA margin of 39.0% supported by $40 million year-over-year reduction in operating costs
BCE net earnings attributable to common shareholders of $569 million or $0.74 per share; adjusted net earnings per share(2) of $0.76 in line with plan
Reconfirming all 2012 BCE and Bell Canada financial guidance targets
This news release contains forward-looking statements. For a description of the related risk factors and assumptions please see the section entitled "Caution Concerning Forward-Looking Statements" later in this release.
MONTREAL, Nov. 1, 2012 /CNW Telbec/ - BCE Inc. (TSX: BCE) (NYSE: BCE), Canada's largest communications company, today reported BCE and Bell results for the third quarter (Q3) of 2012.
BCE reported net earnings attributable to common shareholders of $569 million, compared to $642 million in Q3 2011, and adjusted net earnings attributable to common shareholders of $588 million, compared to $724 million last year. In line with plan, earnings per share (EPS) of $0.74 and Adjusted EPS of $0.76 decreased in the third quarter of 2012 from $0.83 and $0.93 per share in Q3 2011. The year-over-year decrease was mainly due to lower income tax expense in Q3 2011 from the favourable resolution of tax matters.
Bell total revenue increased 1.8% in the third quarter of 2012 as Bell Wireless and Bell Media revenue growth of 7.1% and 25.5%, respectively, was moderated by a 4.0% decrease at Bell Wireline. Bell EBITDA was up 5.2% in Q3 on growth of 15.2% at Bell Wireless and 92.6% at Bell Media, partly offset by a 6.2% decline at Bell Wireline. Bell's operating performance in the quarter generated $1,589 million of cash flow from operating activities and significant free cash flow(3) of $684 million. Year to date, total cash flow from operating activities increased to $4,689 million, or 16.3%, and total free cash flow increased to $1,815 million, up 7.0% compared to last year.
"Bell is making unparalleled investments in the best new networks, products and content, and we're seeing the results in strong growth across our wireless, TV, Internet and media businesses. Bell's robust 5.2% EBITDA growth was driven in large part by outstanding performance at Bell Wireless and Bell Media, both of which posted exceptionally strong revenue and EBITDA growth," said George Cope, President and CEO of BCE and Bell Canada.
"Bell is bringing new competition and choice to consumers with our next-generation Fibe network, now serving 200,000 Fibe TV customers and supporting both strong Bell Internet subscriber growth and our traditional Home Phone business as more customers choose multiple Bell services in our Fibe TV coverage area, which has expanded to over 2.8 million households. Bell's new mobile LTE network, combined with world-leading smartphones and content services like Bell Mobile TV, helped bring us 148,502 net new postpaid subscribers - 17.1% more than last year - reduced churn, and great growth in Wireless data and overall revenue."
"We're executing a strategy of investment in network leadership, product innovation and improved customer service, and I'm proud to say the Bell team has made us a serious contender in every market in which Bell competes," said Mr. Cope. Bell is committed to achieving a clear goal - to be recognized by customers as Canada's leading communications company - through the execution of 6 Strategic Imperatives: Invest in Broadband Networks and Services, Accelerate Wireless, Leverage Wireline Momentum, Expand Media Leadership, Improve Customer Service, and Achieve a Competitive Cost Structure.
"We performed well across the business in Q3, posting another sound quarter of EBITDA growth and margin expansion, driven by exceptional wireless and media results as well as substantial net earnings and free cash flow consistent with our plan. Our 2012 financial plan remains on track as we reconfirm today all our Bell and BCE guidance targets for the year," said Siim Vanaselja, Chief Financial Officer for Bell and BCE. "Our continued strong free cash flow generation, which year to date has grown 7% over last year, has not only enabled significant strategic investment in Bell's broadband wireline and wireless platforms, but also amply supports the recent 10-cent annualized increase in BCE's common share dividend, effective with the dividend payment of October 15."
Bell Q3 operational performance
Bell's operating revenues were $4,392 million in Q3 2012, up 1.8% from $4,313 million in Q3 2011. This was driven by total service revenue growth of 2.1% as Wireless and Media revenues increased significantly compared to last year. Total product revenues declined 1.1%, reflecting softer wireline data equipment sales to business customers. Bell's EBITDA grew 5.2% this quarter to $1,688 million on the strong performance of the Bell Wireless and Bell Media segments.
Bell Wireless EBITDA in Q3 2012 grew 15.2% to $554 million and service margin expanded to 42.4% from 39.2% last year, reflecting stronger wireless revenue growth of 7.1% to $1,434 million as we continued to gain high-value postpaid customers and upgrade existing customers to smartphones, while exercising discipline in postpaid customer acquisition and retention spending. Postpaid net activations increased 17.1% to 148,502, while the postpaid customer churn rate improved to 1.2% from 1.5% in Q3 2011, reflecting the benefits of investment in customer service and retention. Smartphone users represented 60% of postpaid subscribers at the end of Q3, up from 43% a year earlier, which contributed to strong data revenue growth of 29.5% and blended ARPU growth of 4.2%. Blended ARPU was $57.30 per month in Q3 2012, up from $55.01 in Q3 2011, driven by a greater number of customers in western Canada, higher roaming revenues, and more smartphone customers taking advantage of mobile data services such as Bell Mobile TV.
Bell Wireline revenue totalled $2,505 million in the quarter, down 4.0% from Q3 2011, as competitive and wireless substitution pressures continued to impact traditional voice services. Reduced spending by business customers on wireline data products and ICT solutions reflected continuing sluggish economic growth, which also contributed to the year-over-year decrease in overall wireline revenue this quarter.
Continued steady growth in Fibe TV and Fibe Internet drove residential data revenue growth of 3.5% in Q3 2012. Bell Fibe TV experienced its best quarter ever, adding 42,973 net new subscribers, up from 20,297 in Q3 2011. At the end of the third quarter, Bell Fibe TV had more than 200,000 subscribers with a footprint reaching over 2.8 million households, up from approximately 1.5 million households at the end of Q3 2011. The activation of new Fibe customers also led to 13,416 net new high-speed Internet activations in the quarter. Although Bell Wireline EBITDA decreased 6.2% this quarter to $978 million, margins were maintained on plan at 39.0%, reflecting a $40 million, or 2.6%, improvement in operating costs over last year.
Bell Media reported revenue of $546 million in Q3 2012, up 25.5% from last year, the result of increased advertising revenues generated by Bell Media's broadcast of the London 2012 Games and higher subscriber fee revenue driven by market-based rates charged to broadcast distributors through renegotiated agreements for certain Bell Media specialty sports and non-sports TV services. Bell Media EBITDA increased 92.6% in Q3 2012 to $156 million, reflecting the flow-through of higher subscriber fee revenue and lower non-Olympics-related operating expenses. Despite the positive impact on revenues from the Olympics during Q3, advertising sales across Bell Media's properties continued to be impacted adversely by a soft advertising market.
Bell invested $688 million in new capital this quarter, a $36 million increase compared to Q3 2011. These investments support the continued deployment of broadband fibre to residential homes, neighbourhoods and businesses in Ontario and Québec and expansion of the Fibe TV service footprint, enhancement of customer service systems, the ongoing rollout of the 4G LTE network in markets across Canada, and the addition of new Bell and The Source stores, particularly in western Canada.
BCE's operating revenue was $4,982 million in the third quarter of 2012, up 1.5% from $4,910 million in the third quarter of 2011, due to 1.8% higher revenues at Bell and slightly lower revenues at Bell Aliant. EBITDA grew 4.0% this quarter to $2,019 million, reflecting higher EBITDA at Bell driven by the strong contributions of Bell Wireless and Bell Media, moderated by a year-over-year decrease at Bell Aliant.
BCE's cash flows from operating activities were $1,589 million in Q3 2012, compared to $1,916 million in the same period last year. Free cash flow available to BCE's common shareholders was $684 million in Q3 2012 compared to $1,005 million in Q3 2011. The year-over-year reductions were attributable primarily to the catch-up in accounts receivable cash collection in Q3 2011 following the settlement of the Canada Post strike.
BCE's net earnings attributable to common shareholders decreased 11.4% in Q3 2012 to $569 million, or $0.74 per share, compared to $642 million, or $0.83 per share, last year. The year-over-year decrease in earnings was due to the favourable resolution of tax matters in Q3 2011, higher depreciation expense, and increased interest expense, partly offset by higher EBITDA and lower severance, acquisition and other costs.
BCE's Adjusted EPS was $0.76 in Q3 2012, compared to $0.93 last year. Despite solid EBITDA growth this quarter, the decrease is attributable to the favourable resolution of tax matters in Q3 2011 that did not recur this year.