Canada's leading telephone operator,
), reported second-quarter 2013 adjusted earnings of 73 cents per
share (77 Canadian cents) missing the Zacks Consensus Estimate of
75 cents. The results deteriorated 24% from 96 cents per ADS (97
Canadian cents) in the year-ago quarter. The decline in earnings
is mainly attributable to the higher value of uncertain tax
position and increased interest expenses related to the financing
of the Astral acquisition.
Revenues increased 1.5% year over year to $4.88 billion
(C$5.00 billion) and ahead of the Zacks Consensus Estimate of
$4.78 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 1.1% year over year to C$2.06 billion ($2.01
billion) in the reported quarter supported by strong
contributions from the Wireless and Media units.
: Revenues from Bell Wireless increased 5.4% year over year to
C$1.44 billion ($1.41 billion). Service revenues were up 6.1%,
(resulting from postpaid subscriber growth and increased usage of
data services) and product revenues were up 2.9%, which aided the
BCE's net wireless subscribers during the reported quarter
stood at 7.86 million, up 3.5% year over year. Post-paid net
additions increased by 2.7% or 96,390, while prepaid net losses
improved 3.7% or 52,824. Blended ARPU (average revenue per user)
rose 2.7% year over year to C$56.85 ($55.56) on the back of
higher proportion of postpaid customers in the total wireless
subscriber base in addition to more customers opting for mobile
Churn rate (customer switch) improved to 1.6% from 1.7% in the
year-ago quarter. Post-paid churn remained unchanged at 1.3% as
compared with the year-ago quarter due to continuous investments
in customer service and retention. Prepaid churn also remained
unchanged at 3.7% as compared to the year-earlier period.
: Revenues fell 0.9% year over year to C$2.51 billion ($2.45
billion) due to lower local and access (down 7.1%), long distance
(down 11.2%) and equipment and other revenues (down 4.7%). Data
revenues increased marginally 4.0% to C$1.45 billion ($1.42
billion) owing to Fibe customer growth, increased IP-based
broadband connections revenues and better data product sales.
Network access services (NAS) fell 7.7% year over year to 5.42
million. Residential NAS losses improved 11.8% or 11,029 in the
second quarter of 2012. Business NAS losses improved 15.3% or
5,206 in the reported quarter.
BCE activated 3,901 high-speed Internet customers compared
with a net loss of 664 customers in the year-ago period. Bell
FibeTV subscribers at the end of the second quarter were 346,316
versus 158,324 million in the year-ago quarter. At the end of the
second quarter, total TV subscribers grew 5.3% year over year to
: Bell Media generated revenues of C$559.0 million ($546.4
million), up 4.7% year over year. The growth is attributed to
strong advertising and increase in speciality TV rates.
: Revenues from this segment inched up 0.6% year over year to
C$691.0 million ($675.0 million) based on increased growth in
data, which was offset by continuous decline in local and access,
long distance and equipment and Other revenues.
Astral Acquisition Completed
On July 5, 2013, Bell Media completed the acquisition of
Montreal-based Astral Media for $3.27 billion. Bell Media now
holds 25 television stations, including the very popular, The
Movie Network and French language pay-TV service, Super Ecran.
Bell Media will also hold 77 radio stations including top brands
like NRJ, Rouge fm, Virgin Radio among others. Apart from
enhancing Bell's presence in Quebec, the acquisition provides
Bell's customers with various programming options.
BCE exited the quarter with C$2,208.0 million (approximately
$2,158.1 million) of cash and cash equivalents compared with
C$129.0 million (approximately $128.0 million) as of December 31,
2012. Capital expenditures were C$830.0 million ($811.2 million),
down 12.8% year over year.
The company's board of directors declared a quarterly dividend
of 58.25 Canadian cents per share, payable on Oct 15, 2013 to
shareholders of record on Sep 16, 2013.
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
forward. However, stiff competition, continued decline in network
access services, constant need to invest in technology and union
issues remain the primary concerns for the company.
Other telecom stocks worth considering are
SK Telecom Co.
China Mobile Limited
Turkcell Iletisim Hizmetleri AS
). SKM carries a Zacks Rank #1 (Strong Buy) while the other two
stocks carry a Zacks Rank #2 (Buy).
BCE INC (BCE): Free Stock Analysis Report
CHINA MOBLE-ADR (CHL): Free Stock Analysis
SK TELECOM CO (SKM): Free Stock Analysis
TURKCELL IL-ADR (TKC): Free Stock Analysis
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