(Adds detail from analyst call, adds share reaction)
By Alastair Sharp
TORONTO May 6 BCE Inc, Canada's
largest telecommunications company, reported
better-than-expected adjusted profit on Tuesday, helped by the
inclusion of TV and radio content producer Astral Media and
strong growth in its wireless business.
Price hikes tied to a new industry code that shortens the
duration of contracts as well as the lack of iconic smartphone
device launches acted as a drag on wireless growth in the first
quarter, the Montreal-based company said.
Higher content costs and lower ad revenue also hurt media
earnings, it added.
"Wireless growth is clearly punching above its weight," BCE
Chief Executive Officer George Cope said on a call with
analysts. He said improving landline earnings later in the year
should offset content cost pressures for media.
BCE, which operates under the Bell brand, maintained its
revenue and profit forecast for 2014.
Bell added 33,964 net contract wireless subscribers in the
three months to the end of March, compared to almost 60,000 in
the same quarter a year ago. Such customers are coveted because
they sign multi-year contracts and pay more each month than
The average Bell wireless customer's monthly bill was
C$57.90, a rise of 3.5 percent.
By comparison, market-leader Rogers Communications Inc
added just 2,000 net postpaid wireless customers and
its average wireless customer, a blend of contract and prepaid
subscribers, paid C$57.63 a month in the first
LOSS OF NHL BROADCASTING
BCE's net income attributable to shareholders rose to C$615
million ($561 million), or 79 Canadian cents per share, from
C$566 million, or 73 Canadian cents per share, a year earlier.
On an adjusted basis, the company earned 81 Canadian cents
per share. Operating revenue rose 3.7 percent to C$5.10 billion.
Analysts had expected earnings of 76 Canadian cents per
share on revenue of C$5.12 billion, according to Thomson Reuters
Dvai Ghose, an analyst with Canaccord Genuity, said BCE
would have just missed estimates without counting non-operating
"Headline EPS beat is a little misleading, while strong
wireline subscriber results are positive, wireline financials
and wireless COA (cost of acquisition) were a little
disappointing and media is a concern," he wrote in a note.
The company lost out to Rogers on the rights to broadcast
National Hockey League games starting with the 2014/15 season,
its first major media disappointment after buying Astral in
mid-2013 and CTV in 2011.
BCE executives said the loss of hockey broadcasting would
not affect results until next year, and that content costs were
higher overall even without the NHL.
Bell added 15,627 landline Internet customers and 54,680
customers signed up to Fibe TV, which BCE runs over its Internet
network and has helped offset a long-term decline in the number
of people with a landline telephone connection. That number was
offset by more than 26,000 losses from satellite TV.
BCE's shares, which have risen about 8 percent in the last
six months, slipped 0.8 percent to C$48.59 on the Toronto Stock
($1 = 1.0963 Canadian dollars)
(Additional reporting by Ashutosh Pandey; Editing by Ted Kerr,
Don Sebastian, Chizu Nomiyama and Paul Simao)