Atlantic telecom company Bell Aliant Inc. had $75.8-million of net income in its third quarter with growth in Internet and TV revenues, turning around a loss it recorded a year earlier.
Bell Aliant said Tuesday that net income amounted to 33 cents per share, including a $27-million restructuring charge related to a voluntary retirement offer to Aliant's unionized employees. About 500 employees have accepted the offer, with departures to occur from 2011 to 2014.
“Our revenue performance in the quarter was solid, with growth in Internet and TV revenues largely offsetting declines in our legacy voice business,” chief executive Karen Sheriff said in a news release.
On an adjusted basis, Bell Aliant had 41 cents per share of profit. A year earlier, it had a $400,000 net loss or less than a cent per unit.
Revenue for this year's third quarter slipped to $700-million from $704-million.
Analysts' estimates compiled by Thomson Reuters pegged third-quarter revenue at $692-million while earnings per share were estimated at 41 cents per share.
Bell Aliant said it now expects to reach 450,000 homes and businesses with its fibre optic network for high-speed Internet and high-definition TV, and video-on-demand services by the end of 2011, up from the previous estimate of 430,000.
As a result, the Halifax-based telecom company has increased its 2011 capital expenditure guidance to between $560-million and $575-million. That's up from its earlier guidance of between $520-million and $560-million.
Chief financial officer Glen LeBlanc said Bell Aliant expects to finish 2011 with solid financial results.
“However, we continue to expect that our fourth-quarter results will be softer compared to prior year than the previous quarters of 2011,” Mr. LeBlanc said.
“This is largely the result of one-time revenue in the fourth quarter of 2010 due to regulatory decisions and unusually strong product sales that we do not expect to repeat this year,” he said.
Bell Aliant has said it may go out in search of financing to expand its fibre optic network beyond its target of 600,000 homes and businesses by the end of 2012.
The fibre optic network allows faster downloads and uploads of data such as music or movies and the ability to share video and photos faster.
Bell Aliant has also said it expects its strategy of selling bundles of services including TV and Internet will help offset declines in local and long distance phone revenues.
Desjardins analyst Maher Yaghi said Bell Aliant's results were mainly in line with expectations. But he said free cash flow of $110-million was below his forecast of $148-million due to capital expenditures associated with fibre optic TV and Internet services.
Mr. Yaghi said he believes Bell Aliant will need to connect at least 900,000 premises to its fibre optic network, compared with the company's goal of 600,000 by the end of 2012.
“Overall, significant customer losses for Bell Aliant are still occurring, eroding legacy revenue,” Mr. Yaghi said in a research note.
“While IPTV and cost-cutting are helping to offset this pressure, the investment in FTTH (fibre to the home) is weighing on free cash flow. We continue to believe that Bell Aliant will need to connect more of its customer base to FTTH than currently planned to effectively turn the tide of customer erosion,” he said.
“We maintain that at least 900,000 premises need to be connected to FTTH (fibre to the home network), compared with the company's current year-end 2012 goal of 600,000.”
Shares in Bell Aliant were down 26 cents to $27.80 in mid-morning trading Tuesday on the Toronto Stock Exchange.
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