Bell posts subscriber gains, but wireless ARPU dips

BCE Inc. reported its wireless average revenue per user (ARPU) dipped in its third quarter results Thursday, though CEO George Cope cautioned analysts to keep in mind that the company’s prepaid base, with its lower revenues, is no longer declining. “The blended ARPU for us now gets to be a funny number to compare on. So we’re going to have to decide even internally here how we direct the analyst community to understand the difference between the two items,” he said on a Thursday morning conference call. “We’ll see how that unfolds.” Bell's average billing per user (ABPU) decreased 0.7 per cent from the same quarter last year to $69.28 and average revenue per user (ARPU) dropped 1.9 per cent to $56.67. The company attributed the lower ARPU to cheaper plans from a new federal contract with Shared Services Canada -- an effect previously predicted by analysts -- and a higher number of prepaid subscribers, as well as a drop in data overage revenue due to larger data “buckets.” The company took its low-cost prepaid brand Lucky Mobile national in the quarter, which ended Sept. 30. The decline in overages was led by customers moving to plans with higher data usage thresholds, according to the quarterly report. A note from Barclays analyst Phillip Huang suggests it’s likely from bonus data promos in the telecom industry. Desjardins analyst Maher Yaghi said in a note to clients that wireless pricing will likely be a focus for investors into 2019, as Shaw Communications Inc.’s Freedom Mobile “continues its go-to-market evolution.” He had noted earlier this year that Freedom could put downward pressure on industry ARPU. Outside of the government contract, Bell’s ABPU actually increased 0.6 per cent from last year, BCE Inc.'s Cope said in Thursday’s call. “Without that, we would have been up 0.6 per cent year-over-year and 1.3 per cent year-to-date,” he said. Cope said now that Lucky Mobile is national, the company is cutting into competitor market share and expects revenue growth in prepaid to be positive in 2019. He said the company also has an opportunity to “migrate some of that base to postpaid, which we think will be strategically important going forward.” The company posted total wireless net additions of 177,834 in the quarter, up 66 per cent from the number of new additions in Q3 2017. That includes a 15.5 per cent increase in new postpaid subscribers to 135,000 – which Huang said was likely “the lion's share of industry postpaid subscriber growth” – and 42,511 prepaid additions. Overall, wireless revenues grew 5.9 per cent to $2.18 billion from Q3 last year. Bell ended the quarter with 9,487,368 wireless subscribers -- 8.7 million postpaid and 758,932 prepaid. Meanwhile, wireline growth was pushed up by higher internet and IPTV revenue $3.1 billion -- a 1.9 per cent increase. Bell added 47,749 net new high-speed Internet customers in the quarter, bringing its total up to 3.9 million. Cope said on the call that Bell’s wireline gains had “tremendous results” outside the GTA through its fibre products, and the company wants to focus on getting more traction for its Toronto footprint. Canaccord Genuity analyst Aravinda Galappatthige said in a note to clients that Bell could potentially see an “incremental upside from the GTA down the road.” Bell has meanwhile been rolling out fixed wireless service in rural markets, with 16 communities added by end of the quarter, covering about 12,000 households. Bell began the rollout in second quarter this year with plans to add service to 30 rural communities by the end of the year. Cope said Thursday that will extend its rural footprint by somewhere between 700,000 and 800,000 households. Bell also reported it added 40,091 net new IPTV customers, while it lost 31,490 net satellite TV customers, for a total of 2.8 million satellite and IPTV subscribers. The company posted gains of 266,000 new net subscribers for wireless, internet and IPTV in its third quarter ending Sept. 30, up 41.5 per cent from the same quarter the previous year. Thursday, Bell also announced a new premium tier package for its CraveTV service, a new package that costs about $10 more than the base and comes with additional movie and HBO content, including new episodes of current shows that will be available at the same as on traditional television. It also rebranded its pay TV service The Movie Network as Crave, and is shuttering TMN Go and migrating those customers over to Crave. Bell Media revenues grew 1.1 per cent over last year’s third quarter, pushed up to $731 million after remaining static for nine months through broadcasting the 2018 FIFA World Cup and by adding new Crave subscribers. The FIFA broadcast “more than offset the impact of overall viewership declines and the ongoing shift in customer spending to over-the-top and digital platforms, which unfavourably impacted conventional TV and radio,” Bell’s Q3 investor report said. Bell edged-out Rogers Communications Inc. for subscriber gains for the quarter, which had reported 124,000 wireless adds, 35,000 new internet subscribers and a loss of 18,000 TV subscribers. Cope ended the call noting that company brass will provide a detailed update on its 5G small-cell installations on its February 2019 conference call, and expects thousands will be built by end of the year. Bell meanwhile completed a four per cent net reduction in its management workforce in the past four months – cutting roughly 700 positions. Cope said that’s expected to deliver an annual cash savings of approximately $75 million. The company’s overall revenue was up 3.2 per cent the quarter to $5.87 billion, up from nearly $5.70 billion the year before. Its net earnings were $850 million, up two per cent from a year earlier. — With reporting by Kyle Duggan at kduggan@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Bell posts subscriber gains, but wireless ARPU dips

News | 11/01/2018 5:42 pm EDT

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