News
Telco reports improved postpaid customer mix and growth in ARPU at mobile business.
BCE on Thursday reported earnings growth in the second quarter of the year, driven by higher revenues and lower costs.
The Canadian telco’s operating revenues for the three months to the end of June reached C$5.34 billion, up 0.3% on the previous year, while adjusted EBITDA grew by 3.2% to C$2.27 billion.
Net earnings attributable to shareholders increased by 2.5% to C$778 million.
The operator’s Bell Wireless division posted 7.7% adjusted EBITDA growth to C$772 million on 4.6% revenue growth and a 1.7% reduction in operating costs. The division improved its postpaid subscriber mix with postpaid net additions increasing by 14.4% on the year-ago quarter to 69,848; its total postpaid base stood at 7.47 million at the end of June, while total mobile customers grew by 1.9% to 8.28 million.
Blended ARPU increased by 2.9% to C$64.32, driven by a larger proportion of two-year contracts, a higher postpaid smartphone subscriber mix, and increased data usage, BCE said. Its cost of acquisition rose 10.1% to C$478 per customer, due to the increased postpaid mix, a higher proportion of premium smartphone sales, and handset promotions in general, but spending on customer retention fell to 11.9% of mobile service revenue, 1% lower than in the year-ago quarter, thanks to fewer device upgrades.
The operator’s biggest business is its Bell Wireline division, where operating revenues slid by 2.1% to C$2.98 billion following the sale of a call centre unit in September, reduced spending on data products by large business customers and softer wholesale revenues. However, excluding the impact of the call centre sale, the telco said its residential business reported positive growth in the quarter thanks to a 5.3% uptick in TV and Internet revenues.
Wireline adjusted EBITDA grew by 0.6% to C$1.27 billion.
"Our very solid financial results in the quarter demonstrate a clear focus on subscriber profitability and price discipline," said Glen LeBlanc, chief financial officer of BCE and Bell Canada.
"Our steady service revenue and adjusted EBITDA growth, margin expansion, and increased earnings and free cash flow are consistent with the guidance targets we provided at the beginning of the year," he added.
"We expect positive wireless, wireline and media adjusted EBITDA growth for full-year 2016 and an accelerating free cash flow trajectory that fully supports higher planned capital spending on broadband network infrastructure, all of which provides a strong foundation to continue executing on our dividend growth objective," LeBlanc said.
