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File photo of George Cope, chief executive officer of BCE. (FRED THORNHILL/REUTERS)
File photo of George Cope, chief executive officer of BCE. (FRED THORNHILL/REUTERS)

BCE bolstered by strong growth of wireless subscribers Add to ...

BCE Inc. posted better-than-expected revenue for the third quarter, propelled in part by strong growth in wireless subscribers as a rising tide of cellphone use has lifted earnings across the industry.

The wireless giant added 107,265 net subscribers on monthly plans, well ahead of analyst expectations, and lost only 7,009 prepaid customers, while its churn rate – which measures customer turnover – improved to 1.26 per cent. In doing so, BCE kept pace with competitor Rogers Communications Inc., which added 116,000 net subscribers with monthly plans in the third quarter.

Demand for wireless plans has been accelerating across Canada’s telecommunications industry. At the same time, users are becoming more hungry for wireless data as network speeds improve. And the combination of those two factors is driving higher average revenue per user, or ARPU, bolstering the telcos’ bottom lines.

“Rogers’ strong quarter clearly did not come at the expense of Bell,” Greg MacDonald, an analyst at Macquarie Capital Markets Canada Ltd., said in a research note.

On a conference call with analysts on Thursday, BCE’s chief executive officer, George Cope, cited a number of factors he believes may be fuelling the countrywide spike in wireless sign-ups. Some discount brands have seen their growth slow, more users are separating their business and personal phones, young people are getting their own smartphones at ever younger ages, and immigration to Canada continues to provide a stream of new customers.

“I think it is fair to say ... we’ve all been pleasantly surprised by the strength in the industry,” Mr. Cope said.

Bell also saw a 35-per-cent spike in data usage among customers using its LTE wireless network compared with a year earlier, which was a major factor in BCE posting 3.7 per cent better ARPU from wireless customers in the third quarter.

“The real focus, and where the significant money in the industry is coming from is the increased usage of these products because of our networks,” he said. “Net adds are a secondary part of that.”

Net earnings for the quarter were $800-million or 87 cents a share, up 1.1 per cent from $791-million and 87 cents a year earlier.

Operating revenue was up 1.2 per cent to $5.4-billion, slightly ahead of analysts’ expectations.

The company added 39,400 Internet subscribers, in line with expectations, as Bell continues to build out its fastest broadband offering, known as fibre-to-the-home. But one of the rare disappointments in the results was the addition of only 36,300 subscribers to Fibe TV, Bell’s internet protocol television (IPTV) platform, along with a loss of 41,000 satellite subscribers.

Maher Yaghi, an analyst at Desjardins Securities Inc., said in a research note that Bell’s Internet and TV results “were pressured by heightened pricing competition from [Rogers] in the [Greater Toronto Area] and [Quebecor’s] promotions in the quarter. TV service was particularly affected this time around.”

Mr. Cope also cautioned that the company is still watching for the impact of a recent decision from Canada’s telecom regulator that will slash the rates large broadband providers can charge smaller competitors for access to their networks.

“We just have to see how that process unfolds and what those pricings are,” Mr. Cope said. “It’s not a positive decision. We think it has the risk to mitigate investment in broadband.”

Revenue at the company’s media division, Bell Media, rose 3.5 per cent, helped by Bell’s expansion of The Movie Network into Western Canada, and the CraveTV video-streaming service surpassing one million subscribers. But advertising revenue was down 3.7 per cent in a weak market.

Bell also announced it will offer its Fibe TV product through the Apple TV streaming box in Ontario and Quebec, starting next week. But Mr. Cope said the option will be “as a secondary settop box in the home,” meaning customers will still need a traditional IPTV box and TV subscription as well.

BCE’s proposed $3.1-billion acquisition of Manitoba Telecom Services Inc., which was announced in May, “continues to track toward a closing” by late 2016 or early 2017, Mr. Cope said.

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  • Bce Inc
    $43.20
    +0.37
    (+0.86%)
  • Bce Inc
    $57.37
    +0.32
    (+0.56%)
  • Updated December 2 4:02 PM EST. Delayed by at least 15 minutes.

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