BCE boosts outlook despite profit dip

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BCE Inc. boosted its financial guidance for 2013 on Thursday as it reported a second-quarter profit of $571-million that fell 22 per cent from the same period last year.

The Montreal-based communications giant said net earnings attributable to common shareholders amounted to 74 cents per common share. That compared to a profit of $732-million or 94 cents per share for the same period last year.

On an adjusted basis, which excludes extraordinary items, earnings per share were 77 cents versus year-ago 97 cents.

"The year-over-year decrease was due to the higher value of uncertain tax positions favourably resolved in Q2 2012, losses on equity derivative contracts entered into to economically hedge future payments under our share-based compensation plans, and increased interest expense related to the financing of our acquisition of Astral," the company said in a release.

BCE's operating revenues for the second-quarter totalled $5-billion up 1.5 per cent on a year-over-year basis.

In conjunction with its earnings release, BCE also increased certain aspects of its 2013 financial guidance due to the closing of its Astral Media Inc. acquisition in early July.

Specifically, it is now forecasting revenue growth of 2 per cent to 4 per cent for its Bell division, up from previous guidance of zero to 2 per cent that was issued in February.

Bell's EBITDA growth, meanwhile, is now expected to be 3 to 5 per cent for the year. The company had previously forecast EBITDA growth of 1 to 3 per cent for 2013 for Bell.

"Increasing smartphone adoption and use of data services like Bell Mobile TV supported strong revenue and EBITDA growth at Bell Wireless. Our rapidly expanding Fibe footprint drove the highest number of Fibe TV customer additions since its launch, as well as growing Internet performance and improvement in our traditional landline business as more customers bundled Bell services," stated president and CEO George Cope.

"And with solid financial performance in Q2 supported by increased advertising and revenue from sports and other specialty services, Bell Media remains Canada's top media company – a competitive position further strengthened with the addition of the Astral team, especially in the Quebec media marketplace."

Its wireless division posted a 5.4-per-cent increase in operating revenue to $1.44-billion in the quarter as the company recorded net additions of 96,390 postpaid customers, top-end mobile users who pay their bills at the end of the month instead of prepaying for wireless service.

Smartphones users now comprise 70 per cent of all postpaid users for Bell, which had a total of 7.71 million subscribers at quarter's end.

Its postpaid churn rate, a measure that reflects how many customers leave the company, was 1.3 per cent. Prepaid churn, meanwhile, was 3.7 per cent.

Blended ARPU (average revenue per user) – a metric representing the average monthly consumer bill – increased by 2.7 per cent to $56.85.

Dvai Ghose, a telecom analyst with Canaccord Genuity, said Bell's wireless results were softer than expected.

"This suggests that Bell Mobility may have surprisingly had the weakest postpaid net additions in the quarter, although the split seems relatively even between the big 3," he wrote in a note to clients.

BCE, the parent company of Bell Media, owns 15 per cent of The Globe and Mail.