BCE, Telus See Drop in Wireless, Keep Dividends Steady

(Bloomberg) -- Two of Canada’s largest wireless companies said the Covid-19 pandemic is clouding the outlook for the rest of 2020.

BCE Inc. is withdrawing its financial guidance for the year. Telus Corp. said it won’t update its guidance until summer, when it releases second quarter earnings. BCE shares were flat and Telus shares were down 1% as of 10:03 a.m. Toronto time.

Both companies saw declines in wireless revenue in the first quarter as they closed stores in March and lost roaming fees due to the spread of the virus. But they held their dividends steady. “The dividend is secure,” said BCE Chief Financial Officer Glen LeBlanc.

Telus said it would defer a dividend increase that would otherwise have been made this quarter.

Key insights - BCE

• Closed stores meant fewer customers upgraded their phones or switched from other carriers. Wireless revenue fell 2% to C$2.04 billion ($1.45 billion). Gross additions on postpaid wireless customers fell almost 12%.
• Roaming revenue will be “significantly impacted” as long as travel restrictions remain in place, Chief Executive Officer Mirko Bibic said on a conference call with analysts, but the company declined to forecast by how much.
• BCE’s media division saw revenues increase but adjusted Ebitda dropped 6.1%. Its Crave streaming service had strong growth in subscribers and usage, but advertising revenue dropped because of the recession and the shutdown of live sports. The company owns TSN, a major sports network.
• Overall, BCE’s revenue in the quarter fell 0.9% compared with last year while adjusted net income was up 4% to C$720 million.
• Bibic said the Montreal-based company is ready to offer 5G services but “we don’t think it’s the right time, right now, to officially launch it for marketing purposes.”

Key insights - Telus

• The Vancouver-based carrier said operating revenue increased 5.4% in the first quarter compared with the year before.
• Wireless revenue fell 2.1%. Sales of equipment and other services dropped when the company temporarily shut stores and it waived roaming fees for traveling customers.
• Adjusted Ebitda rose 4.2% while adjusted net income dropped 11.7% to C$400 million.
• On the increase in broadband and other usage, Chief Executive Officer Darren Entwistle said in a statement: “Our team’s efforts to sustain our networks during the pandemic is tantamount to supporting Super Bowl-level traffic, every day.”

Performance YTD

• Canadian telecom shares have outperformed the market. Before Thursday’s open, BCE had fallen 5.4% this year and Telus had dropped 9.1% versus a 13.1% decline in the S&P/TSX Composite Index.

Get more

• BCE earnings release
• Telus earnings release

©2020 Bloomberg L.P.