Bell mulling advantages in prepaid wireless segment: CFO

When it comes to the wireless industry’s torrid run of late, much of the focus has been on postpaid plans, though BCE Inc. is looking to turn the discussion to the relatively underlooked prepaid segment, which executive vice-president and chief financial officer Glen LeBlanc said could potentially bolster the company’s postpaid sub base in the future. Admitting the prepaid segment has not been a huge focus for the company, LeBlanc told analyst Drew McReynolds of RBC Capital Markets, which hosted the annual TMT Deep Dive conference Tuesday, that Canadians’ search for affordable front-end wireless options could lead to longer-term customer stickiness. “I think the question that comes to us is, is that an area we should be playing, not so much due to the front-end profitability of the prepaid segment, but the opportunity for postpaid migration?” LeBlanc asked, suggesting there may be an opportunity to move those prepaid customers to postpaid plans as they get familiar and comfortable with the brand. Following those comments, LeBlanc reiterated what CEO George Cope hinted at on a previous conference call with analysts, that they should expect an upcoming offering that advances that strategy. “In the coming months, you’re going to see us launch an offering,” LeBlanc added. “We’re going to have a greater presence in the prepaid market.” While prepaid plans bring in lower average revenue per user (ARPU), LeBlanc acknowledged, he said that “we can do a better job of being involved in order to enjoy the upstream migrations.” Over the year, Bell has been losing fewer prepaid subs while making postpaid gains. In its most recent quarterly report, Bell lost 10,200 prepaid customers but gained 117,182 postpaid subscribers, a 9.2 per cent increase over a year earlier. In the quarter before that, it lost just over 21,695 prepaid subs, buoyed by the 26.9 per cent increase in postpaid over the year. And in the first quarter, it lost 35,110 prepaid subs compared to an increase of 38.7 per cent in its postpaid base over the year. By the end of September, the total prepaid customer base sat at just over 760,000 and the total wireless base just over nine million. LeBlanc also took the opportunity to suggest that there are many affordable wireless plans in the country, especially with the existence of the carriers’ flanker brands. He said that exists because they are able to make investments in the networks, a situation he said should “never be challenged” or the stifling of investment would make for a “materially inferior network.” The government’s facilities-based policy “gives me confidence that they understand that anything else would threaten” the country’s world-class networks, LeBlanc said. “It really can’t be taken for granted.” The roughly half-hour conversation also touched on whether Bell is feeling the heat from Shaw Communications Inc.’s Freedom brand. That company recently made a couple of big announcements following its fourth quarter earnings report. It appointed to its board an executive from T-Mobile US Inc., a company known to make radical moves in the industry south of the border, rejigged pre-existing spectrum, and is deploying its 2500 MHz spectrum to support a much broader range of handsets, including older Apple Inc. iPhones. In a follow-up note on Thursday, McReynolds said the wireless spotlight is now on Shaw’s impact in the industry. In the meantime, like Rogers, LeBlanc pointed to the relative infancy of Freedom’s LTE network quality. “With all due respect to the investments they’re making to improve their network, I think there will be a significant gap in network quality between themselves and ourselves,” LeBlanc said, suggesting Freedom is still “a number of years” away from bringing its network up to LTE speeds. He added that Bell will be ready to compete on network strength and — considering it covers the lower-end pricing segment with its Virgin brand, which runs on Bell’s network — on pricing as well. And even there, he said Virgin can be “more price sensitive.” LeBlanc also touched on the television segment and the phenomena of cord cutters and cord nevers. The company has, in addition to its main Fibe TV IPTV offering and legacy satellite service, both a streaming product called CraveTV and a newer app-based IPTV service, Alt TV. Soon, LeBlanc said, Bell customers will have the ability to download home personal video-recorded (PVR) content to watch offline and on the go, which he said is just one of the evolutions that the company needs to make to maintain a leadership position in the market. That’s even more important now that its cableco competitors are launching their TV products on Comcast Corp.’s X1 platform, which LeBlanc admitted is a "great" product and “closes the gap on product superiority” for the company’s IPTV offerings. Rogers is planning a “soft launch” of its X1 platform in early 2018, which LeBlanc said gives it a bit of a cushion especially when it requires existing customers to switch out their current boxes — that could drive customers to explore other options in the market before they embark on that, he said. Shaw already has its BlueSky service on X1, and Quebecor Inc.’s Videotron was the latest to announce it was adopting the platform. Ultimately for LeBlanc, it’s the way television is going to be delivered that’s going to matter. “When you think about the future way down the road, it’s hard to envision that delivery of content is going to be any other way than an over-the-top (OTT) delivery through the broadband pipe,” LeBlanc said. The timeline for when we’ll get to that is irrelevant, LeBlanc remarked. “It’s about the evolution of delivery and I think us getting involved in this now is critical.” — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Bell mulling advantages in prepaid wireless segment: CFO

News | November 16, 2017

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Bell mulling advantages in prepaid wireless segment: CFO

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