BCE Inc. posted a 2-per-cent drop in quarterly revenue and 4-per-cent decline in profits Thursday, as the recession caused customers to spend less on wireless and land-line services.
Bell Canada's wireless unit, the engine of the company's growth, saw revenue slide just over 1 per cent as fewer new customers signed up for cellphones and existing customers did less travelling, reducing Bell's take of roaming fees.
But the nation's largest phone company notched up its financial forecast for the year ahead, saying it expects growth of between 1 and 2 per cent, up from its outlook of no growth provided in February. Share profit should rise between 7 and 11 per cent, reflecting share buybacks and aggressive cost-cutting.
George Cope, president and chief executive officer of BCE and Bell Canada, has made spending cuts one of his priorities since taking the helm last summer. "There's no doubt that we've seen cultural change across the company," he said on a conference call with analysts on Thursday.
BCE also increased its annual common share dividend for the second time this year by 5 per cent to $1.62.
Second quarter revenue fell to $4.3-billion from $4.4-billion a year earlier. Profit declined 4 per cent to $346-million, or 45 cents a share, from $361-million.
Bell Canada signed up 45,000 new wireless customers, compared with 83,000 in the same period last year, as the market continues to show signs of maturing. In addition to signing up fewer new accounts, the company saw a decline in the average revenue per user, which fell $2.22 to $52.05 a month.
"People are actually using the product less," Mr. Cope said, blaming the economy for the behaviour. About $1 of the shortfall was due to reduced travel by customers, he added.
Bell TV, the company's satellite service, proved the highlight of the quarter, with video revenue rising 9 per cent to $389-million as customers opted for higher-priced packages.
Bell Canada's traditional land-line phone business continued to suffer. The carrier lost 132,000 residential and business land line accounts in the quarter, the same rate of decline as a year earlier.
Bell said it has signed a reciprocal wireless roaming agreement with U.S. wireless giant AT&T. The deal will let AT&T wireless customers roam on Bell Mobility's new HSPA network, which is expected to launch before the end of the year, and give Bell customers access to AT&T's networks in the United States.