BCE, Telus report higher revenues, signing up more wireless customers

(Reuters) - Canadian telecoms companies BCE Inc BCE.TO and Telus T.TO reported increases in their fourth-quarter revenues on Thursday as they added more postpaid subscribers than expected in a highly competitive wireless market.

The holiday season saw a period of aggressive promotions from Canada's Big Three telecom firms - BCE, Telus and Rogers Communications Inc RCIb.TO. Rogers, however, was hit by a technical glitch that caused it to lose customers.

Both BCE and Telus were expected to benefit from Rogers’ troubles, which resulted in 35,000 deactivations last month.

Shares of BCE and Telus were trading higher on the Toronto Stock Exchange on Thursday afternoon amid a broader decline in the stock market.

BCE, commonly called Bell, said it added 175,000 postpaid wireless customers on a net basis in the fourth quarter, up nearly 56 percent from a year earlier. Morgan Stanley had estimated an addition of 121,000 subscribers.

Bell CEO George Cope said the sign-ups were the “best quarterly performance since Q4 2002.”

BCE’s revenue rose 4.5 percent to C$5.96 billion.

Telus added 121,000 wireless postpaid customers - higher than Morgan Stanley’s estimate 105,000 subscribers. Its revenue rose about 5 percent to C$3.48 billion.

However, profit took a hit as Telus spent heavily on expanding its fiber-optic network, used to deliver faster internet.

Telus spent C$3.09 billion on capital in 2017, its highest ever.

Telus Chief Financial Officer Doug French said his company’s objective to be have positive cash flow this year will be driven by “focused capital spending.” He reaffirmed Telus’s C$2.85 billion budget for 2018.

While both BCE and Telus have been investing heavily to upgrade their networks amid stiff competition, the strength of BCE’s results surprised some analysts.

“We do not believe anyone had anticipated this magnitude of subscriber outperformance,” Barclays analyst Phillip Huang said of BCE’s numbers.

BCE’s average monthly bill for its wireless customers rose 2.4 percent to C$68.27 as more customers subscribed to higher-paying plans.

Montreal-based BCE said it expects its earnings to rise this year on the back of its wireless and direct fiber businesses and cost cuts at Bell Media, where advertising revenue dipped in the fourth quarter.

Telus said it expects a strong 2018.

The company is targeting 2018 revenue growth of up to 6 percent and growth in earnings before interest, tax, depreciation and amortization growth of up to 7 percent.

Reporting by John Benny in Bengaluru; Editing by Maju Samuel