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BCE reported quarterly financial results on Thursday morning.

Chris Wattie/Reuters

BCE Inc. reported strong wireless subscriber growth and solid financial results for the third quarter, even as a shift in smartphone pricing plans has created uncertainty among telecom investors.

The Montreal-based company, along with its national rivals, introduced wireless plans in June that throttle download speeds after customers exceed data limits instead of charging hefty overage fees, which have been a source of revenue for telecom firms. BCE’s financial results show minimal impact, however, which the company said is due to a more gradual approach to new pricing plans.

Chief operating officer Mirko Bibic said on an earnings call Thursday that the company offers a variety of smartphone plans, which has helped smooth the transition to so-called unlimited data options. “We can land customers on the right price point for them, but also for ourselves and our metrics,” he said. “There’s a difference between that and force migrating everyone to those [unlimited] plans as rapidly as possible.”

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BCE added 204,067 net new wireless customers in the quarter, the best performance since 2006, according to the company. Growth in prepaid wireless additions grew 80.9 per cent to 76,895 year-over-year, due to strong demand for its discount Lucky Mobile service and national SIM-card distribution agreement with Dollarama Inc.

Growth in customers on contracts, which are more lucrative because they spend more on monthly data, fell 2.1 per cent year-over-year to 127,172 new customers, however, owing to fewer additions from BCE’s contract with the federal government. Excluding the contract, net customer growth rose, BCE said.

The company’s financial results were largely in line with analyst expectations. Profit increased 6.3 per cent to $922-million or 96 cents a share. On an adjusted basis, the company earned 91 cents, down 5.2 per cent owing to lower income taxes in the same quarter last year.

Revenue totalled $5.98-billion, an increase of 1.8 per cent, while adjusted EBITDA was up 5.6 per cent to $2.6-billion, which the company said reflected growth in all of its operating divisions. (EBITDA stands for earnings before interest, taxes, depreciation and amortization.)

In addition to the introduction of unlimited plans, BCE, Rogers Communications Inc. and Telus Corp. are experimenting with a wireless pricing model where customers pay for their smartphones in instalments rather than providing a hardware subsidy, which is intended to lower capital costs.

Both changes are expected to carry financial implications, such as a loss of overage revenue. It’s also unclear whether consumers will opt for instalment plans, which some analysts say shift considerable costs to customers.

But BCE delivered a “robust” quarter for its wireless division, Canaccord Genuity analyst Aravinda Galappatthige wrote in a note. Wireless revenue increased 3.5 per cent to $2.3-billion, partly owing to a higher mix of premium smartphones and higher-value rate plans. Adjusted EBITDA grew 7.9 per cent to $1-billion.

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The shift to unlimited data plans hit Rogers in the third quarter when revenue from overage charges fell by $50-million. More than one million customers signed up under the new pricing model, which was more than three times the number Rogers anticipated. The company missed third-quarter profit forecasts and reduced its full-year revenue and earnings guidance, prompting a dip in share prices among the major telecoms.

“While the sector’s performance was heavily affected last week due to Rogers’ results, this morning’s BCE results show very little impact from unlimited plans, again putting the spotlight on Rogers and the aggressive strategy it is pursuing to switch customers quickly to unlimited plans,” Desjardins Securities analyst Maher Yaghi said in a research note.

BCE chief executive George Cope said on the earnings call that he expects the company’s network performance to attract customers as unlimited plans take hold. “If you’re going to go to unlimited data, you want to be on the network that’s the fastest,” Mr. Cope said. (This marked his last earnings call before he retires from BCE in January; Mr. Bibic will succeed him as CEO.)

Shaw Communications Inc. has long offered plans that do not charge customers for exceeding data limits through its regional carrier, Freedom Mobile. Paul McAleese, the company’s president of wireless, suggested on an earnings call last week that the introduction of unlimited plans by the national carriers was “a little too aggressive and a bit too early."

Freedom will continue to differentiate itself by offering smartphone subsidies, he said, adding that the alternative approach amounts to “a massive price increase wrapped up in a fancy financing bow.”

Telus has yet to release third-quarter results.

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In BCE’s residential (or wireline) business, the company added 58,137 retail internet customers and 31,746 internet protocol television (IPTV) customers, but lost 26,904 satellite TV subscribers. Revenue was relatively flat at $3.1-billion while adjusted EBITDA increased 1.4 per cent to $1.4-billion.

Revenue in the company’s Bell Media division increased 2.7 per cent to $751-million, owing to subscriber demand for Crave, BCE’s streaming platform.

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