BCE wireless division reports costs due to phone subsidies

BCE Inc.’s wireless division reported a drop in income in its third quarter results as the company incurred costs subsidizing new subscribers’ phones. Rogers Communications Inc. also recently reported a drop in revenues during the third quarter as it upgraded more than 500,000 customers to new smart phones and incurred device subsidization costs through contracts. Incumbent telcos are reporting costs as they compete with new wireless entrants and fight to keep their existing customers. BCE reported that Bell Wireless’ operating income decreased by 5.9 per cent to $333 million in the third quarter. The wireless division's earnings before interest, taxes, depreciation and amortization (EBITDA) also dropped "by 1.7% to $467 million this quarter due to higher subscriber acquisition costs associated with higher gross activations and an increase in customer upgrades,” the company said. The company said its average revenue per user (ARPU) increased during the quarter by $1.41 to $53.54. Postpaid ARPU increased by 95 cents to $65.04 due to growth in data usage, but that increase was offset by the adoption of “richer rate plans with more services and voice minutes included at lower monthly prices.” The company reported 537,295 total gross device activations for the quarter, 7.3 per cent higher than last year. Total net subscriber additions were 137,880 for the quarter, or 2.3 per cent higher than 2009. Bell said its total wireless client base reached 7,125,266 at the end of the third quarter, an increase of 6.2 per cent over 2009. At the end of the third quarter of 2010, Bell had 2,085,227 high-speed Internet subscribers. The total number of TV subscribers increased by 18,538 in the quarter compared to an increase of 40,665 in the same period last year. At the end of the quarter, there were 1,997,079 television subscribers, 3.8 more than at the end of the third quarter of 2009.

BCE wireless division reports costs due to phone subsidies

Brief | November 4, 2010

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