The Montreal-based telecom, which reported $734-million in net earnings and $5.7-billion in revenue for the three-month period ended June 30, also saw a pickup in activity from small businesses, which have been hit hard by the restrictions stemming from the public health crisis.
A number of small businesses did not survive or scaled back their spending on telecom services, BCE’s chief financial officer, Glen LeBlanc, told analysts during a conference call on Thursday. “But as we start to come out of this, we’re starting to see new formations of businesses,” Mr. LeBlanc added. “There is a light at the end of the tunnel.”
BCE’s second-quarter profit was up nearly 150 per cent from $294-million during the same period last year, while its revenue increased by 6.4 per cent from a year ago. The earnings amounted to 76 cents a share, up from 26 cents a share a year ago.
After stripping out items such as lower impairment charges on its media assets and gains on derivatives used for hedging, the earnings amount to 83 cents a share, up about 32 per cent from 63 cents a share during the same period last year. Analysts were expecting $5.76-billion in revenue and 78 cents in adjusted earnings per share, according to the consensus analyst estimate from S&P Capital IQ.
The increase came despite the fact that roaming revenues, which are charged when wireless customers use their phones abroad, media advertising and revenues from providing internet service to businesses have not returned to prepandemic levels.
“A notable positive was the stronger-than-expected wireless service revenue growth, which nearly reached prepandemic (Q2/19 levels), reflecting a faster recovery,” Canaccord Genuity analyst Aravinda Galappatthige wrote in a note to clients, referring to the revenue that Bell generates through providing wireless services.
Mirko Bibic, president and chief executive of BCE and Bell Canada, said the telecom achieved strong results in its wireless division by focusing on signing up more profitable customers. Bell added 44,433 net new postpaid mobile-phone customers and 1,814 prepaid customers during the quarter. Postpaid subscribers, who are billed at the end of the month for the services they used, are generally considered more profitable than prepaid customers, who pay upfront for wireless services.
The company also added 17,680 net new retail-internet subscribers but lost 4,928 television subscribers, with losses in its satellite TV division partly offset by new subscribers to its IPTV service.
Its Bell Media division – which owns television stations such as CTV, TSN and the French-language Noovo network in Quebec, as well as a number of radio stations – saw its revenues increase by 30 per cent to $755-million, driven by higher advertising and subscriber revenues.
During a conference call to discuss the company’s results, Mr. Bibic blamed Ottawa for the telecom’s inflated costs in a recent auction of airwaves vital for delivering fifth-generation wireless services. The auction for spectrum – wireless airwaves in the 3,500 megahertz range – netted $8.9-billion for the federal government, with Bell shelling out $2.07-billion for 271 licences.
Executives at Bell and Telus Corp. have previously said Ottawa’s practice of setting aside spectrum for smaller carriers led to high prices for the limited airwaves available to the large telecoms.
Mr. Bibic said on Thursday that Bell now has the spectrum it needs to drive the rollout of 5G wireless services across the country, but called on Ottawa to rethink its approach. (The government is planning to auction off more mid-band radio waves in early 2023, while a sale of the much higher-frequency millimetre band is slated for 2024.)
“Given how the government designed the auction, it was the most expensive auction in Canadian history – a key factor that requires careful consideration in … auction frameworks and on future assessments of wireless pricing by the government,” Mr. Bibic said.
The results included a one-time, $44-million charge related to a recent ruling by the Canadian Radio-television and Telecommunications Commission (CRTC) “to lower wholesale internet rates even further, to the benefit of resellers,” Mr. Bibic said.
In May, the CRTC reversed its 2019 decision that reduced the rates large phone and cable companies can charge smaller internet service providers (ISPs) for access to their broadband networks. The commission decided to maintain the interim rates that have been in place since 2016 with some minor adjustments, including removing a 10-per-cent markup that the telephone companies – Bell Canada, Telus and SaskTel – were previously able to charge.
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