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Bell Aliant shows the new Facebook App on FibreOP TV

Bell Aliant Inc. says it swung back into profitability in the fourth quarter of 2011 from a more than $1-billion-dollar loss in the year-earlier, when the regional telecom provider took a big writedown.

The Halifax-based company posted Tuesday a fourth-quarter profit of $80-million, or 35 cents per share, compared to a loss of $1.4-billion in the fourth quarter of 2010 when it took a $1.7-billion non-cash writedown against intangible assets.

Adjusted for one-time items, net earnings per share came in at 42 cents. Analysts had estimated adjusted earnings per share 37 cents.

The company said that excluding that writedown, operating income would have been relatively flat from the fourth quarter of 2010 to the same quarter of 2011.

Bell Aliant converted from a trust to a corporate structure on Jan. 1, 2011, and as such cautioned the year-over-year results are not strictly comparable.

Earnings before income tax, depreciation and amortization actually fell 6 per cent to $324-million from $345-million in the year-earlier period.

Operating revenue fell 2 per cent to $701-million from $715-million in the same quarter of 2010, largely due to declines in local and access, long distance and other revenue.

Those declines were partly offset by growth in its data and wireless revenue.

The company also gave 2012 guidance of operating revenue of $2.78-billion and adjusted earnings per share of between $1.60 and $1.80.

Bell Aliant said it expects its year-over-year financial trends to continue to improve in 2012.

"We met or exceeded all of our financial targets while executing an aggressive construction program expanding our fibre-to-the-home coverage area," said Karen Sheriff, president and chief executive officer of Bell Aliant.

"This expansion is improving our opportunities for revenue growth by giving more customers access to the best Internet and TV service bundle available in our markets."

Bell Aliant expects to eventually connect close to one million homes and businesses to its fibre optic network for high-speed Internet and digital TV services, about 50 per cent more than previously anticipated.

UBS analyst Philip Huang said a bigger fibre-optic network could require "sacrifices."

"We believe management's fibre strategy makes sense to sustain long-term competitiveness," Mr. Huang said in a research note.

"However, with increasing pension funding obligations, cash taxes in '13, and growing competition, we continue to believe a bigger FTTH (fibre-to-the-home) project would increase perceived risk of the dividend," Mr. Huang said.

Bell Aliant's fibre-optic network allows faster downloads of data such as music or movies and the ability to share video and photos faster and is also used for high definition television.

Mr. Huang also said competition was intense in the quarter.

"However, we think aggressive promo activity was offset somewhat as Bell Aliant and its competitors put through bundle price increases in the latter part of the quarter."

Mr. Huang said Bell Aliant is "vulnerable" to growing cable competition and could see some customers leave for other competitors offering faster speeds and aggressively priced home phone service in bundled offerings.

The company provides telephone, Internet, television and other services to customers in Canada's six most eastern provinces and is partly owned by BCE Inc. of Montreal.