Driven largely by the acquisition of electronics retail store The Source, BCE Inc. reported strong fourth quarter earnings on Thursday morning, with revenue up 3.9 per cent from this time last year to $4.65-billion.
BCE's Bell Canada unit saw record wireless subscriber growth in the quarter, aided by strong holiday sales and marketing related to the company's new high-speed network, and the strongest television subscriber growth in four years.
The company announced earnings per share of $0.46, with total profit - or net earnings applicable to common shares - of $350-million. BCE's operating income increased 12.8 per cent to $751-million, from $666-million in the fourth quarter of 2008.
Canada's largest telecommunications company, which launched its new high-speed cellular network in November, saw 163,000 new wireless subscribers in the last quarter. Total wireless operating revenue was up 5.7 per cent to $1.198-million.
BCE's acquisition of The Source in the third quarter, and its completed acquisition of Virgin Mobile Canada, helped boost Bell's revenue in the fourth quarter. Meanwhile, BCE's Bell Wireline unit, which gained 41,000 new television subscribers, saw revenue increase 4.2 per cent to $2.84-billion.
The company reported some drag in Olympics-related expenditures and pension expenses, as well as declining wireless ARPU - industry speak for the average revenue-per-user. Expenses from acquisitions and marketing costs related to promoting the launch of its new network, built with Telus Corp., also weighed on earnings.
"I'm quite pleased with our overall execution," said Siim Vanaselja, BCE's executive vice-president and chief financial officer, during a conference call with analysts.
The company used the conference call to announce a fibre-to-the-home strategy in Quebec City, that will see homes and businesses connected to the company's network with high-speed fibre-optic cables. This type of connection permits much greater bandwidth use, which becomes crucial as households use multiple, heavy data-using services at the same time, such as high definition television and high-speed, broadband Internet. The long-term and costly strategy, analysts said, would give BCE a firmer footing when competing with cable companies for high-revenue generating customers, such as households that bundle multiple services.
Analysts had predicted solid growth for the company, though they voiced strong concerns about new competition in wireless this year, combined with the possibility of more Canadians dropping land line telephone services in favour of going completely wireless. But analyst Maher Yaghi with Desjardins Securities in Montreal, was upbeat Thursday morning.
The results "were slightly ahead of the Street's and our expectations," Mr. Yaghi wrote. "BCE appears to be continuing to make good progress on the cost-cutting front, and is reinvesting the cost savings in its broadband deployment."
Mr. Vanaselja offered what he called a "conservative outlook" for 2010, that included concerns about the economy and pressure from new wireless competitors, with revenue growth of between 1 and 2 per cent.
He predicted that as more people buy smart phones, the company's data revenues would help offset the decline in wireless voice revenue, which Mr. Vanaselja said was hit by people talking and roaming less during the economic downturn.
There was also some "cannibalization" from consumers dropping land line Internet service for mobile Internet data sticks, which allow people to surf the Internet from laptops, he said.