BCE Q3 profit more than doubles; wireless segment delivers growth

By Luann Lasalle, The Canadian Press

MONTREAL - BCE Inc. (TSX:BCE) scooped up 501,000 new wireless customers in the third quarter, but said Thursday customers on average were spending less than a year ago due to the weaker economy.

Average monthly revenue per customer decreased to about $64, down $3.98, as subscribers switched to lower monthly rate plans, used their phones less and lower roaming revenues, BCE said in a conference call about its third-quarter financial results.

The increase in wireless subscribers was 14.1 per cent more than in the same period last year - due to new mobile phones, services and applications. Net activations were about 15 per cent higher at 135,000 from the same quarter last year.

"Importantly as investors know, acceleration of market share has been a core strategy of ours," CEO George Cope told the conference call.

"We're beginning to gain traction here."

Canada's largest telecommunications company reported Thursday a third-quarter profit of $558 million or 72 cents per share for the third quarter, up from a profit of $248 million or 31 cents per share last year.

Operating revenue totalled $4.46 billion, up from $4.44 billion a year ago.

Wireless operating revenues increased 0.3 per cent to $1.2 billion in the quarter on growing wireless data revenues and increased product sales, while revenue at Bell Canada, BCE's largest subsidiary, was $3.78 billion, up $40 million from $3.74 billion last year.

The company said it expects full-year adjusted earnings to be at the high end of its guidance, which is $2.40 to $2.50 per share for 2009, while revenue this year to come in at the low end of a range provided in August.

Analysts had pegged BCE revenues at $4.5 billion for the third quarter and $4.5 billion in the October-December quarter. They also predicted 70 cents per share of adjusted earnings in the third quarter and 62 cents in the fourth quarter, according to estimates compiled by Thomson Reuters.

Bell launched its advanced wireless network earlier this month which will carry Apple's iPhone, breaking Rogers (TSX:RCIB) hold on the touchscreen smartphone. Telus (TSX:T) also launched it's new wireless network this month, which will also carry the iPhone.

UBS analyst Phillip Huang wrote in a research note that BCE expects all of its post-paid or longer-term subscribers to migrate to its new HSPA network over the next to two three years.

Huang also noted there was no mention of Bell eliminating 911 or service activation fees, but "management stated that they will remain competitive."

BCE said its operating revenues for the July-September quarter were boosted by the acquisitions of The Source retail chain and the remaining 50 per cent equity of Virgin Mobile Canada not already owned by Bell.

The company also reported growth in video revenues which offset declines in local, long-distance and wireline data revenues.

To cut costs, Cope said the company's labour force had been reduced by 1,100 during the quarter as part of a previously announced efficiency drive, bringing a total reduction since June 2008 to a little over 5,000 employees, or about 11 per cent of Bell's total workforce.

BCE shares closed at $27.14, up five cents, in trading Thursday on the Toronto Stock Exchange.