Bell Canada reports 2006 results; ‘growth services’ exceed 50% of revenues

8 Feb 2007

Canada’s largest telco Bell Canada has reported steady revenue increases in its wireless, high speed internet and video operations in 2006, driving revenues from ‘growth’ services to reach 51% of total turnover, up from 40% two years ago. Total revenues were CAD17.348 billion (USD14.668 billion) in 2006, an increase of 0.7% compared to the previous year. Q4 revenues of CAD4.451 billion were unchanged compared to last year, attributed in part to a shift towards recurring revenue products and services. Bell’s EBITDA grew 2.7% year-on-year in the fourth quarter to CAD1.779 billion, driven by ‘solid’ operating performance, a focus on profitable growth, continued cost reduction and lower acquisition costs. EBITDA for the year was CAD7.289 million, an increase of 1.4% on 2005. Bell Canada’ guidance for 2007 includes revenue growth of between 3% and 5% and EBITDA growth of 4%-6%.

Local telephony losses in Q4 2006 were in line with company expectations, reflecting increased momentum in customer win-back campaigns. Local subscriber losses in Q4 amounted to 181,000 lines, compared to 122,000 losses in Q4 2005. At end-2006 Bell’s number of fixed lines in service stood at 12.056 million, down from 12.581 million at end-2005. Overall long-distance revenues declined 12.3% in the quarter, an improvement from a decline of 14.1% the year before, due to improving performance in the residential sector.

Total residential revenues for the year increased by 1.2% to CAD7.099 billion, whilst residential turnover in Q4 was CAD1.811 billion, a 1.3% increase over the year-ago period. Business segment revenues were CAD1.591 billion in the quarter, unchanged from the previous year, as higher revenues from the small-to-medium business and Bell West divisions were offset by the results in Enterprise, the corporate client unit. Total business user revenues for the year were CAD6.057 million, up 1.5%.

Mobile revenues increased 14.5% to CAD925 million in Q4, and 13.2% to CAD3.491 billion for the year. Bell Mobility’s blended ARPU increased by CAD2 to CAD53 in Q4, whilst post-paid ARPU rose CAD2 to CAD66, its highest fourth quarter level ever, and pre-paid ARPU was up CAD1 at CAD15. Post-paid churn decreased to 1.1% from 1.3% in Q4 2005, while pre-paid churn was down 0.5 percentage points to 1.7%. The total wireless subscriber base grew to 5.873 million, up 7.9% from a year ago. Post-paid net additions for the year increased by 5.5% from 289,000 in 2005 to 305,000 in 2006. Q4 post-paid net adds were down by 47.2% quarter-on-quarter to 67,000, largely due to decreased sales during the holiday period and a lack of promotional offers. Pre-paid net additions were 102,000 in the fourth quarter, up from 83,000 in Q4 2005. Wireless EBITDA reached CAD402 million in Q4, an increase of 29.3% over the same period in 2005, and CAD1.535 billion for full-year 2006, a 17.4% year-on-year rise.

At Bell’s broadband division, annual ISP revenues grew 15.5% year-on-year, due to an effective regional pricing strategy. Total wholesale and retail broadband internet subscribers grew to 2.462 million, an annual increase of 12.2%; Q4 net additions were 59,000, as compared to 61,000 net adds in Q4 2005. Bell’s video customer base saw a gain of 32,000 subscribers in Q4 to reach an end-year total of 1.82 million.

Bell’s parent company BCE Inc reported fourth-quarter net income of CAD699 million, up from a year-earlier figure of CAD413 million. Full-year net income was CAD1.94 billion, up from CAD1.89 billion in 2005. During 2006 BCE completed the disposition of its interest in CGI Group Inc and reduced its investment in CTV Globemedia Inc (formerly Bell Globemedia Inc.) to 15%, created the Bell Aliant Regional Communications Income Fund and announced the sale of its satellite services subsidiary Telesat Canada, a transaction that is expected to close in mid-2007, subject to regulatory approval both in Canada and the US. On 6 June 2007 BCE shareholders will vote on the planned name change of BCE Inc to Bell Canada Inc.

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