BCE Beats Estimates on Growth in Internet, Wireless Service

(Bloomberg) -- BCE Inc. beat earnings estimates for the third quarter as an easing of Covid-19 restrictions gave a boost to wireless service and the company did a better job of retaining customers.

Canada’s largest telecommunications company by market value earned 82 Canadian cents a share on an adjusted basis, better than the consensus estimate of 81 cents and last year’s 79 cents. It said it “remains on track to meet our 2021 financial guidance targets.” 

Another bright spot was residential internet service, where revenue rose 9% and the company added about 66,000 new subscribers. 

Key Insights

• The company added just under 115,000 net postpaid wireless subscribers, close to what analysts were expecting. Wireless service revenue was up 5%. The numbers reflected “greater consumer traffic from the reopening of all retail stores compared to last year’s Covid-19 restrictions,” the company said.
• Postpaid wireless churn, which measures the rate at which customers leave for other providers, was 0.93%, better than the expected 1.03%.
• Overall revenue growth was soft, however, with operating revenue rising just 0.8% to C$5.84 billion over last year, below the expected C$5.95 billion. One reason for that: revenue from selling phones and other wireless products was down 14% because consumers are holding onto their phones for longer. Supply-chain issues are a factor, executives said on a conference call.
• The company said it’s still on pace for 2% to 5% revenue growth this year.
• “As pace of our recovery from the crisis quickens, the strong demand for the speed and connectivity advantages of Bell’s leading networks and services is clearly reflected in our Q3 results,” Chief Executive Officer Mirko Bibic said in a statement.
• BCE’s media unit saw a 19% increase in advertising revenue over last year’s 3Q because of federal election advertising and the resumption of a regular schedule for most professional sports leagues. BCE owns one of Canada’s two major cable sports networks.

Market Reaction

• BCE shares were up 17.5% this year as of Wednesday’s close. That’s better than key rivals Telus Corp. and Rogers Communications Inc. and trails the 22% gain of the S&P/TSX Composite Index.

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