Credit: Shutterstock photoLeading Canadian telephone operator BCE Inc.BCE reported strong financial results for the third quarter of 2015 on the back of impressive performance by its wireless service division.
Quarterly net income was approximately $565.1 million, up 23.2% year over year. GAAP earnings per share were 67 cents, up 13% year over year. Adjusted net income per ADS (American Depository Share) came in at 72 cents, above the Zacks Consensus Estimate of 65 cents.
Bce, Inc. (BCE) - Earnings Surprise | FindTheCompany
Total revenue came in at approximately $4,087 million, up 2.9% year over year and ahead of the Zacks Consensus Estimate of $4,031 million. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $1,672.4 million, up 3.4% year over year. Quarterly adjusted EBITDA margin stood at 40.9% against 40.7% in the prior-year quarter.
Cash Flow
During the third quarter of 2015, BCE generated approximately $1,436.1 million of cash from operations, down 0.2% year over year. Free cash flow in the reported quarter was around $704.3 million, up 10.4% year over year.
Segments in Detail
Bell Wireless : Revenues from Bell Wireless increased 9.3% year over year to around $1,355.0 million. Notably, higher service revenues, strong data revenue growth and increased product revenues boosted the segment's performance.
Services revenues climbed 8.3% to $1,238.0 million on the back of higher postpaid mix and robust growth in blended ARPU. Meanwhile, product revenues increased 22.2% to $109.4 million reflecting increased sales of higher-priced mobile devices and customer upgrades.
Blended ARPU rose 6.1% year over year to $49.97 on increased data usage, higher percentage of customers on 2-year contracts and a greater mix of postpaid customers in the total subscriber base. Wireless data revenues surged 23.5% while postpaid customer churn was 1.31% against 1.20% in the year-ago quarter.
During the reported quarter, BCE added a net of 77,655 postpaid wireless subscribers compared with 91,779 in the prior-year quarter. As of Sep 30, 2015, the company had 7,284,108 postpaid subscribers, up 4.2% year over year. The total wireless subscriber base increased 1.8% to 8,183,367. At third-quarter end, 78% of the total postpaid wireless customers used smartphones compared with 75% at the end of the year-ago quarter.
Bell Wireline : Revenues from Bell Wireline dropped 0.6% year over year to approximately $2,315.5 million. Wireline data revenues were up 2.8% to $1,353.5 million. Local and access revenues declined 4.3% to $625.5 million. Long distance revenues were down 9.6% to $158.3 million.
Network access services (NAS) lines fell 5.9% year over year to 6,795,576. The decline was primarily due to competition from cable operators, business customer conversion from voice lines to IP-based services, and customer shift to high-speed Internet from conventional technologies. Residential NAS losses during the reported quarter widened to 78,354 compared with 70,782 in the year-ago quarter. Business NAS losses were 29,722 against 37,270 a year ago.
As of Sep 30, 2015, BCE had 2,700,710 TV subscribers, up 3.9% (including 1,108,699 IPTV customers, an increase of 29.3%) and 3,374,239 high-speed Internet subscribers, up 4% year over year. In the third quarter, Bell Wireline added a net of 57,888 high-speed Internet customers and 67,908 IPTV customers, but lost 41,994 satellite TV subscribers.
Bell Media : Bell Media generated revenues of approximately $529.2 million, up 4.1% year over year. The upside was driven by higher advertising and subscriber revenues.
Guidance
For full-year 2015, BCE reaffirmed its financial guidance. The company expects adjusted earnings per share of C$3.28-C$3.38 while free cash flow growth is likely to be around 8-15%. Annual dividend per share is projected at C$2.60, reflecting a dividend pay-out policy of 65-75%. Revenue growth for BCE is expected around 1-3%, while EBITDA growth is estimated at roughly 2-4%. Capital intensity projection for BCE is pegged at approximately 17%.
Zacks Rank & Stocks to Consider
BCE currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in this sector are AT&T, Inc. T , Windstream Holdings, Inc. WIN and CenturyLink, Inc. CTL . All the three stocks hold a Zacks Rank #2 (Buy).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
