Bell Canada Enterprises (BCE) reported Q2 revenue of $4.78 billion, up 2.3% and EBITDA of $1.95 billion, up 3.1% when compared to the same period last year. Operating income reached $1.11 billion and earnings per share were $0.60, an increase of $0.10 (increase of $0.05 or 10% not including one-time items).
Some highlights for the quarter:.
- Wireless: Bell's Wireless subscriber base grew 12% compared to Q2 2003, driving a 15% increase in wireless revenues. Post-paid churn dropped by 0.2 percentage points to 1.1%. Wireless also recorded the best EBITDA margin ever. As part of a billing system modernization program, the company migrated customers to a new Wireless and IP/Broadband billing platform in the quarter. To ensure an orderly migration during the period of system conversion while minimizing the impact to customers, the company reduced emphasis during the quarter on aggressive subscriber growth. Wireless still achieved gains of 95,000 net new customers.
- DSL: Sympatico DSL High-Speed Internet subscribers grew by 30% compared to Q2 2003 to reach 1.7 million. For the quarter, Bell added 73,000 new DSL customers. Consumer additions represented 73% of the total net additions. Bell's DSL footprint in Ontario and Quebec reached 81% of home and business lines compared to 78% for the same period last year. Subscriptions to value-added services, such as Desktop Anti-Virus and Desktop Firewall, increased by 86,000 in the quarter to reach 433,000. The company built on its "Broadband Home" strategy and its leading Internet presence by launching the content and features rich Sympatico-MSN portal. Ten thousand customers per week are converting to the new platform.
- Video: revenues were up 11%. Bell added 24,000 subscribers, a 33% higher activation rate compared to the second quarter of 2003. The company also reported increased VDSL sales.
To further augment bundling capabilities in broadband, and as part of its Video strategy, Bell applied for a license to broadcast video services over terrestrial connections to single family homes. - Business: revenues experienced a marginal decline of 0.8% mainly due to an anticipated decrease in construction revenues from Bell West's Government of Alberta SuperNet contract, which is nearing completion. As well, revenues from low-margin cabling declined as Bell phased out of this product line in the fourth quarter of 2003 with the completion of The Greater Toronto Airport Authority contract. Bell's SMB group continued to grow in the quarter, through increased revenues from DSL (up 15%). This urn was at 1.3%, down from the 1.4% noted last year.
- Data: Data revenues decreased by 7.1%. Competitive pricing and volume pressures were partially offset by the increase in revenues from DSL.
- CAPEX: BCE's Q2 2004 capital expenditures as a percentage of revenues (CAPEX intensity) were at a planned level of 17.3%, compared to the 15.1% reported last year. The higher CAPEX spending related primarily to investment in strategic areas including the migration to an IP network, Bell's DSL footprint expansion, implementation of the VDSL strategy, and Telesat's satellite build program. There was reduced spending in legacy areas.
