Canada's largest telephone operator,
) reported first-quarter 2013 adjusted earnings of 77 Canadian
cents per share (76 cents per ADS) comfortably surpassing the
Zacks Consensus Estimate of 70 cents. The results improved 5.8%
from 69 Canadian cents (68 cents per ADS) in the year-ago
quarter, aided by healthy growth in TV business, data services
and growing adoption of smartphones along with cost-saving
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Revenues remained flat year over year at C$4.91 billion ($4.87
billion), but breezed past the Zacks Consensus Estimate of $4.52
billion. The strong performance was backed by strength in the
Wireless, TV, Internet and business service segments plus a
reduction in wireline voice erosion.
EBITDA grew 1.7% year over year to C$1.96 billion ($1.94 billion)
in the reported quarter fueled by strong contributions from the
Wireless and Media units.
Revenues from Bell Wireless increased 6.3% year over year to
C$1.41 billion ($1.40 billion). Higher service revenues (up
7.2%), resulting from increased usage of data services, negated
the low product revenues (down 1.1%).
BCE lost 8,957 net wireless subscribers during the reported
quarter, bringing the total to 7.67 million, up 3.6% year over
year. Post-paid net additions decreased by 4.9% to 59,497, while
prepaid net losses slid to 68,454. Blended ARPU (average revenue
per user) rose 3.9% year over year to C$55.92 ($55.49) on the
back of growing market share plus more customers opting for
mobile data services.
Churn rate (customer switch) improved to 1.7% from 1.8% in the
year-ago quarter. Post-paid churn was 1.3% compared with 1.4% in
the year-ago quarter, while prepaid churn improved to 3.8% from
3.9% in the year-earlier period due to lower customer
Revenues from Bell Wireline fell 2.8% year over year to C$2.50
billion ($2.48 billion) due to lower local and access (down
6.8%), long distance (down 13.2%) and equipment and other
revenues (down 4.7%). Data revenues increased marginally 0.8%
owing to customer growth, more IP-based broadband connections and
better data hosting services.
Network access services (NAS) fell 7.8% year over year to 5.54
million. Residential NAS losses went down to 83,557 in the
reported quarter compared with 71,119 in first quarter of 2012.
Business NAS losses were 24,889 against 25,411 in the year-ago
quarter. The decline was primarily due to heavy changeover to
BCE activated just 1,931 high-speed Internet customers compared
with 12,393 customers in the year-ago period. TV subscriber
additions were 13,971, down 20.7% year over year. At the end of
the first quarter, TV subscribers grew 2.8% year over year to
Bell Media generated revenues of C$513.0 million ($509.0
million), up 0.2% year over year. The growth is attributed to
strong advertising and high subscriber revenues.
Revenues from this segment inched up 0.3% year over year to
C$684.0 million ($678.7 million), driven by enhanced Internet, TV
and wireless activities.
BCE exited the quarter with C$1,115.0 million (approximately
$1,106.4 million) of cash and cash equivalents compared with
C$129.0 million (approximately $128.0 million) as of Dec 31,
2012. Capital expenditure was C$594.0 million ($589.4 million),
down 12.6% year over year.
Other telecom stocks worth considering are
Cellcom Israel Ltd.
Verizon Communications Inc.
). All three carry a Zacks Rank #2 (Buy).
BCE currently retains a Zacks Rank #3 (Hold). The company
displays a robust wireless business model, improving wireline
operations and expanding activities in the media sector. We
believe that the company's focus on investing in broadband
networks and rendering better services, supported by a
competitive cost structure will deliver positive results, going