BCE Inc. and Telus Corp. say they plan to continue investing in their networks, even as the uncertainty stemming from the COVID-19 pandemic prompted the telecom providers to withdraw their financial guidance for the year.
Both companies reported their results Thursday for the three-month period ended March 30, highlighting various ways that the health crisis has affected their businesses from reducing roaming revenues to eating into new customer sign-ups as the majority of their retail stores have been temporarily shuttered.
However, BCE chief executive officer Mirko Bibic said the company will keep laying fibre-optic cables to customers’ homes, expanding its fifth-generation wireless networks and providing more high-speed internet service to rural parts of the country, even as it faces short-term financial pressures.
“This is not a time to pull back capital spending on critical network infrastructure,” Mr. Bibic said during a conference call to discuss the company’s first-quarter results. “These are healthy investments for the long-term benefit of our company, our customers and our economy.”
Telus CEO Darren Entwistle also emphasized plans to keep investing in the company’s networks.
“These investments will help us drive both near- and longer-term revenue and operating efficiency benefits, as well as sustainable cash flow and future dividend growth,” Mr. Entwistle said during the company’s annual shareholder meeting, also held on Thursday.
Voluntary measures that telecom companies have taken to help out during the crisis, such as temporarily lifting overage fees on some home internet plans, have also hurt profits. Customers have come to rely more heavily on services as they work, learn and entertain themselves from home amid the global health crisis.
“We see roaming revenue as the biggest headwind that we are facing, as travel is expected to slowly come back over time," Jim Senko, Telus’s president of mobility solutions, said during a conference call.
Customer acquisition could also take time to accelerate. “Even as stores open up, customers will be hesitant to return to the mall, and hence returning to business as usual will take time,” Mr. Senko said.
Telus reported that its first-quarter income declined to $353-million or 28 cents a share, from $437-million or 36 cents a share a year ago, largely because of higher depreciation and amortization relating to its acquisitions of Competence Call Center and ADT Canada as well as its network investments.
Its revenue for the three-month period ended March 31 totalled $3.69-billion, up 5.4 per cent from a year ago as it added more wireless customers.
BCE, meanwhile, opted to delay the official launch of its initial 5G network as a result of the crisis. “We just don’t think that customers are paying attention to this right now,” Mr. Bibic said, adding, "They have other priorities, understandably.”
However, BCE is still eager for the December auction of 3,500 MHz spectrum, a key band for the deployment of 5G, to go ahead as planned, Mr. Bibic said.
The company’s earnings for the quarter totalled $733-million or 75 cents a share, down from $791-million or 82 cents a share a year ago. Its first-quarter revenue came to $5.68-billion, down slightly from a year ago when it reported $5.73-billion in revenue.
Bell Media saw its adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) decline 6.1 per cent owing to an industry-wide impact on advertising revenue related to the pandemic. Telus, which runs a health technology business and does not own any media entities, will likely be impacted less by the crisis, Desjardins analyst Maher Yaghi said in a note to clients.
The longer that the shutdowns continue, the greater the impact on roaming revenues and subscriber growth will be, BCE’s chief financial officer, Glen LeBlanc, said.
BCE has also been increasing its security in response to more than half a dozen fires at cell towers in Quebec over the past week. Police have arrested a man and a woman and charged them with arson in relation to the blazes, which come after dozens of acts of vandalism across Europe believed to be spurred by baseless conspiracy theories linking 5G wireless technology to the spread of COVID-19. “It’s important for us to educate consumers and the public that there is no link between our wireless facilities and the coronavirus,” Mr. Bibic said.
On Wednesday, Prime Minister Justin Trudeau decried such acts of vandalism on Twitter, calling them serious criminal offences that carry severe penalties.
“Vandalizing cellphone towers does nothing but threaten emergency services and impact the daily lives of Canadians across the country,” Mr. Trudeau said.
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