Canada's leading telephone operator
) reported first-quarter 2014 adjusted earnings of 81 Canadian
cents per share (73 cents per ADS), beating the Zacks Consensus
Estimate of 69 cents. Results also improved 5.2% year over year
owing to a higher EBITDA at Bell.
Revenues grossed C$5.1 billion ($4.63 billion), beating the
Zacks Consensus Estimate of $4.61 billion and improving 3.7% year
over year. Strong performances at the Wireless and Media segments
were offset by the weakness in Wireline voice and data
EBITDA grew 4.1% year over year to C$1.7 billion ($1.5 billion)
in the reported quarter fueled by strong contributions from Bell
Wireless and Bell Media.
Segments in Detail
: Revenues from Bell Wireless increased 4.5% year over year to
C$1.47 billion ($1.33 billion). Higher service revenues (up 4.7%),
resulting from higher postpaid subscriber (up 3.5%) and wireless
data revenue growth (up 17.5%), and better-blended ARPU (average
revenue per user) boosted the results.
BCE lost 15,678 net wireless subscribers during the reported
quarter, bringing the total to 7.76 million, up 1.2% year over
year. Post-paid net additions decreased by 42.9% from the year-ago
quarter to 33,964. Blended ARPU rose 3.5% year over year to C$57.90
($52.54) on the back of increasing post-paid subscribers in
wireless customer base plus more subscribers opting for mobile data
Churn rate (customer switch) improved to 1.58% from 1.65% in the
year-ago quarter. Post-paid churn declined from 1.25% a year
ago to 1.24%, and prepaid churn fell from 3.79% to 3.67% in the
: Revenues from Bell Wireline fell 1.8% year over year to C$2.46
billion ($2.23 billion) due to lower local and access (down 6.7%),
long distance (down 12.0%) and equipment and other revenues (down
Network access services (NAS) fell 7.1% year over year to 5.14
million. The decline was primarily due to competition from cable
operators and substitution of the service wireless and IP-based
technologies. Residential NAS losses during the quarter were 65,638
compared with 83,557 in the first quarter of 2013. Business NAS
losses were 35,595 against 24,889 in the year-ago quarter.
BCE activated 15,627 high-speed Internet customers compared with
3,952 in the year-ago period. At the end of the first quarter, TV
subscribers grew 6.3% year over year to 2.31 million.
: Bell Media generated revenues of C$722.0 million ($655 million),
surging 40.7% year over year. The upsurge was attributable to
strong advertising and high subscriber revenues from the Astral
acquisition along with higher rates paid by broadcasters for Bell
: Revenues from this segment dropped 1.2% year over year to C$676.0
million ($613 million), as improvement in Internet and TV services
were hurt by reduced voice revenues and intense pricing
BCE exited the first quarter with C$982 million (approximately
$301.5 million) of cash from operating activities compared with
C$1.04 billion (approximately $1.03 billion) in the first quarter
of 2013. Capital expenditure for BCE during the year was C$594
million ($539 million), flat year over year.
For 2014, BCE reaffirmed its financial guidance.
The company expects EPS of C$3.10-$3.20 while free cash flow
growth will be around 3-7%. Annual dividend per share will be $2.47
reflecting a dividend payout policy of 65-75%.
Excluding Bell Alliant, revenue growth for Bell is expected
around 2-4%, while EBITDA growth is estimated at around 3-5%.
Capital intensity projection for Bell is around 16-17%.
The company displays a robust wireless business model, improving
wireline operations and expanding activities in the media sector.
However, stiff competition from other players like
), continued decline in network access services, constant need to
invest in technology and union issues remain the primary concerns
for the company.
BCE currently retains a Zacks Rank #3 (Hold).
A better-ranked stock in this sector is
Level 3 Communications, Inc.
) with a Zacks Rank #1 (Strong Buy).
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