Telecom giant BCE Inc. has improved its customer service so much that it is now having a positive impact on the company's bottom line, chief executive officer George Cope says.
Mr. Cope told analysts on a conference call following the company's first quarter earnings release that the number of service calls handled were down 1.7 million in the quarter, a shift that has reduced the "churn" of accounts leaving the company, and cut the costs of answering those calls.
"Our actual overall costs to operate the company have [been] reduced as a result of this improvement in service," Mr. Cope said. At the same time, "we're seeing [that]the interaction with our customers has improved dramatically," he added.
BCE's first quarter results underlined the strength and growth potential of its wireless division, which sells cell phone services. The revenue in that group rose 9.7 per cent to $1.64-billion, a showing that Mr. Cope described as "exceptional".
BCE added 35,373 new wireless contract customers in the quarter, more than analysts had expected. And the churn – the percentage of subscribers that drop the company's services – fell to 1.18 per cent from 1.24 per cent. Last week rival Rogers Communications Inc. reported that it lost 26,000 wireless customers in the first quarter, as it continued to implement a strategy aimed at attracting higher-paying clients. Rogers acknowledged that this might mean losing some subscribers.
Mr. Cope said BCE is spending more money on retaining customers, in the face of the so-called "double cohort" – where now-banned three year phone contracts are maturing at the same time as new two-year contracts.
Analyst Drew McReynolds of RBC Capital Markets said BCE appears to have that situation under control. "We expect wireless momentum to continue through 2015 and continue to believe the double cohort impact is manageable," he said in a note.
The shift to smart phones and the more advanced LTE network is helping BCE generate more revenue. Its wireless customers paid, on average, 5.3 per cent more on their monthly bills in the quarter compared to last year, thanks to increased data usage.
Mr. Cope told investors at BCE's annual meeting, which was held Thursday in Toronto, that increased cell phone usage is key for the wireless division. Growth is "not because prices are going up but because people are using our products more and more," he said.
The other parts of BCE's business are not showing the same kind of growth as wireless. Its wireline division – still its largest – sells home telephone, internet and television services. It saw revenue rise just 0.3 per cent to $3.03-billion. Mr. Cope noted that while home phones were central to Bell Canada when it was founded 135 years ago this week, that segment now makes up just 9 per cent of BCE's business.
The media division, which owns radio and television stations – including CTV, BNN and several specialty channels – is also growing slowly. It saw revenue growth of just 0.6 per cent to $726-million.
Over all, BCE reported net income of $532-million, or 63 cents a share, down from $615-million, or 79 cents, in last year's first quarter. Excluding one time items, BCE's profit hit $705-million, or 84 cents a share, versus $626-million, or 81 cents a share, a year earlier.
The company announced Thursday that it plans to invest $20-billion between 2015 and the end of 2020. That capital investment will be used to instal new fibre optic cables to homes and businesses, and for high speed wireless networks.