Bell Q4 revenue rises on strong wireless performance

Bell’s Q4 earnings are in, and the company exceeded expectations in many areas, including wireless, with significantly higher subscriber numbers and an accompanying revenue boost.

Revenue for BCE, Bell’s parent company, increased to $5.5 CAD billion for the quarter, a 2.7% jump over the previous year, with an adjusted EPS (earnings per share) of $0.72. Net Earnings Attributable to Common Shareholders were $542 million for the quarter, up nearly 10% from the previous year.

Wireless revenues rose by 9.6% in the quarter to $1.65 billion and full 2014 year saw an increase in revenue by 6.7% to $6.2 billion.

Postpaid subscriber growth and subsequent higher ARPU were the reasons for the revenue growth, along with improved net customer additions, with outpaced Rogers by a significant margin the quarter. TELUS has yet to announce its Q4 2014 earnings. Bell noted the superlative wireless performance “reflecting strong holiday period sales, higher activations in western Canada, and increased tablet sales.”

The company’s wireless division grew its overall subscriber numbers to 7,970,702, a 2.5% rise from the previous quarter. Postpaid customers now comprise 88% of Bell’s overall wireless user base, increasing by a net amount of 117,378; gross additions were 377,735.

Like Rogers, Bell is noting a higher percentage of smartphone customers as a total of its wireless base, up to 3% year-over-year to 76%. Rogers claimed 84% of its postpaid subscriber base now runs on smartphones, indicating a faster growth than Bell in encouraging customers to spend on costly handsets and data plans.

Blended ARPU (average revenue per customer) rose to  $61.12 for the quarter, slightly higher than Rogers’ $59.86. The discrepancy comes from the fact that Bell has fewer prepaid clients than Rogers, which the latter is intent to convert into the postpaid in 2015.

Bell’s LTE network now covers 86% of the population, with the company aiming to cover 98% by the end of the year.

Total Bell Wireless customers grew 2.5% to . Postpaid customers represented 88% of this total at the end of 2014, compared to 86% one year earlier. Including Bell Aliant customers, BCE now serves a total of 8,118,628 wireless customers, up 2.4% from Q4 2013.

One interesting stat that Rogers doesn’t typically break out in its reports is Cost of Acquisition (COA). According to Bell, it spent $497 per gross addition — every new subscriber coming onto the network — due to “a higher postpaid mix and sale of more premium smartphones compared to last year.” This number includes things like discounts, device subsidies and more, showing how much money it takes just to bring a customer onto the network in exchange for wireless service revenue.

Bell also mentioned that its deal to purchase Glentel will likely conclude in Q2, and with the sale of 50% of the company to Rogers it stands to earn upwards of $100 million from the deal.

The company also mentioned that CraveTV, the on-demand streaming TV service it launched in December, has been growing faster than anticipated, but wouldn’t break out specific numbers. Curiously, Bell no longer mentions its mobile TV subscriber numbers in its earnings report.

Siim Vanaselja, CFO for BCE and Bell Canada, said, “Going into 2015, BCE’s operating momentum and financial foundation is strong. Our financial targets for this year reflect our expectation for continued strong Wireless segment profitability, positive growth in Wireline segment performance, as well as healthy earnings and free cash flow growth from operations to support our substantial capital investment in strategic network infrastructure and a higher BCE common share dividend for 2015.”

The company plans to boost its dividend to $0.65 per share.

[source]Bell (PDF)[/source]