BCE Inc earnings exceed estimates on wireless subscriber gains.
Telus Corp. BCE Inc.’s third-quarter results came in ahead of analyst expectations as it reported strong performance across multiple divisions and took the biggest share of new wireless customers in the period.
BCE Inc., Canada’s largest telecommunications company, reported third-quarter earnings that topped analysts’ estimates as it attracted new wireless subscribers.Getting rid of the full-time positions will save C$100 million ($76 million) to C$125 million a year, the Vancouver-based company said in its third-quarter earnings statement. TU -3.91 % , one of Canada’s biggest phone companies, on Thursday said it would eliminate 1,500 positions as it looks to cut costs while investing in its key wireless and wireline operations. The Montreal-based telecommunications giant said Thursday it saw revenue growth of 2.9 per cent in the third quarter to $5.345-billion, up from $5.2-billion last year. Telus is spending billions to build out its network and buy new licenses for wireless airwaves as it works to keep up the quality of its networks compared to rivals BCE Inc. and Rogers Communications Inc.
Canada’s three big incumbent telecoms are counting on their wireless businesses to fuel growth as companies and individuals carry out more communications over mobile devices. On an adjusted basis, the company reported earnings of 93 cents per share, up 12 per cent from last year and ahead of the 85 cents per share analysts predicted on average. “The results reported today are ahead of our own internal expectations and the street’s expectations on revenue, EBITDA [earnings before interest, taxes, depreciation and amortization] and EPS,” BCE CEO George Cope said on a conference call with analysts, calling it a “rare hat trick” for a company of its size. A “notable number” of the reductions will be voluntary departures and early retirements, Telus said in the statement. “These are very difficult decisions to make but a necessary element of aligning our organization with the growth, customer service and capital allocation activities we are implementing,” said Chief Executive Officer Darren Entwistle. In addition to the subscriber gains, BCE reported 6.1 per cent growth in average revenue per user (ARPU) to $65.34 as customers used more mobile data on the company’s faster LTE network. Telus reported a quarterly profit of 365 million Canadian dollars ($277.4 million), or 61 Canadian cents a share, up from C$355 million, or 58 Canadian cents, a year earlier.
Still, Telus added fewer new wireless contract customers than analysts had expected, reporting 69,000 new users compared with an average estimate of 86,600. Telus said that, along with significant spending on capital programs this year, it now expects restructuring and related costs in 2015 to total about C$250 million, about double its previous expectations. Analysts said that was largely due to weakness in the company’s enterprise services business while residential services – including Internet and IPTV – performed well. Canada’s government in 2013 put an end to cancellation fees for contracts longer than two years, potentially leaving twice the usual number of wireless users free to switch providers this year.
Restructuring moves, including the job cuts are expected to result in annual savings of between C$100 million and C$125 million, it noted, with some benefits starting in the current fourth quarter. Although the results for the division were lower than expected, Canaccord Genuity’s Aravinda Galappatthige noted that BCE still posted adjusted EBITDA growth of 1.1 per cent, “reflecting efficiency improvements and Bell Aliant synergies,” as it has integrated the Atlantic Canada business into its own operations. BCE’s media division also topped estimates, with revenue of $692-million up 4.1 per cent due to growth in its CraveTV video streaming service and strength in advertising revenues particularly compared to a relatively weak quarter this time last year.