Strategy continues to produce desired results
Fourth quarter 2011 results in line with expectations and reflect
continued improved trends after adjusting for 2010 out-of-the-ordinary
Fibre-to-the-home (FTTH) premises passed reaches 458,000 at the end of
2011; target for end of 2012 now 650,000
Year-over-year financial trends expected to continue to improve in 2012
This news release contains forward-looking statements. For a description
of the related risk factors and assumptions please see the section
entitled "Forward-looking Information" later in this release.
HALIFAX, Feb. 7, 2012 /CNW/ - Bell Aliant Inc. (TSX: BA) today reported financial results for the fourth quarter of
2011 for Bell Aliant Inc. (Bell Aliant) and Bell Aliant Regional
Communications Inc. (Bell Aliant GP), and announced its 2012 financial
"2011 was a year of solid execution for us," said Karen Sheriff,
president and chief executive officer, Bell Aliant. "We met or exceeded
all of our financial targets while executing an aggressive construction
program expanding our fibre-to-the-home coverage area. This expansion
is improving our opportunities for revenue growth by giving more
customers access to the best Internet and TV service bundle available
in our markets.
"I am very pleased with our fourth quarter results. Our revenue and
EBITDA trends in the fourth quarter of 2011 continued to show the
improved trends we experienced throughout the earlier quarters of 2011,
when normalized for several out-of-the-ordinary events that boosted our
fourth quarter 2010 results.
"The success we have achieved over the past several years with our
strategy has convinced us to stay the course - continuing to grow our
broadband business, while resetting our cost structure and improving
our customers' experience. We now plan to pass approximately 650,000
premises with FTTH by the end of 2012, up slightly from our previous
target of more than 600,000. As a result of our accomplishments in
managing costs, we expect to do this while maintaining strong free cash
flow, similar to our 2011 results.
"I look forward to 2012 with optimism," continued Ms. Sheriff. "We have
begun to see a change in our revenue trajectory in Atlantic Canada, and
as we announced yesterday, we will be launching FibreOPTM in Sudbury, Ontario later this year. By continuing to execute on our
strategy, we expect to progressively return our overall revenue
trajectory to a positive path. I also expect our 2012 financial results
to show improved year-over-year trends from our 2011 experience."
Fourth quarter 2011 highlights1
Bell Aliant Inc. reported net earnings of $80 million for the fourth
quarter of 2011 with earnings per share and adjusted earnings per share
in the quarter of $0.35 and $0.42, respectively.2
Fourth quarter and full-year 2011 financial highlights of Bell Aliant GP
are summarized as follows:
(In millions of dollars)
EBITDA before pension current service costs
Free Cash Flow*
* 2011 free cash flow results exclude lump sum contributions to defined
benefit pension plans of $115 million made in Q4 2011, and $315 million
for the full year 2011.
Operating revenues in the fourth quarter of 2011 were $701 million, down
$14 million (2.0 per cent) compared to the same quarter of 2010. Fourth
quarter 2010 revenues included out-of-the-ordinary favourable
adjustments related to contribution revenues and pole attachment fees,
and unusually strong product sales. Excluding these adjustments, fourth
quarter 2011 revenues were flat compared to the fourth quarter of 2010,
with growth in Internet and TV revenues offsetting declines in local
and long distance revenues from lower network access services (NAS).
Operating expenses in the fourth quarter of 2011 increased $7 million
(1.8 per cent) compared to the same quarter of 2010. Productivity gains
helped to mitigate the expense effects of normal inflationary
pressures, lower scientific research and experimental development
(SR&ED) credits and revenue driven expense growth.
EBITDA declined $21 million (6.0 per cent) in the fourth quarter of 2011
from the same quarter a year ago. Excluding the effects of the
out-of-the-ordinary revenue adjustments and SR&ED credits in the fourth
quarter of 2010, year-over-year fourth quarter 2011 EBITDA results were
similar to earlier quarters of 2011.
Capital expenditures in the fourth quarter of 2011 decreased $25 million
(15.3 per cent) from the same quarter a year earlier, as 2010 included
a $57 million purchase of telephone poles, which was somewhat offset by
higher capital expenditures in 2011 associated with the FTTH expansion.
In the fourth quarter of 2011, Bell Aliant passed an additional 60,000
homes and businesses with FTTH, bringing its total FTTH coverage to
458,000 premises at the end of December 2011.
Free cash flow excluding a $115 million lump sum contribution to defined
benefit pension plans was $168 million in the fourth quarter of 2011,
up $18 million (12.0 per cent) from the same quarter a year earlier.
The increase was primarily a result of lower capital spending in the
fourth quarter of 2011 compared to 2010, which was partially offset by
lower EBITDA in 2011 compared to 2010. Free cash flow before lump sum
contributions to defined benefit pension plans for the full year 2011
increased by $26 million (4.8 per cent) over 2010 as a result of
improvements in working capital and lower regular pension funding.
Local service and long distance revenues declined $22 million (6.6 per
cent) and $5 million (5.3 per cent), respectively, in the fourth
quarter of 2011 compared to the same quarter in 2010. In addition to
the revenue effects of a 5.3 per cent decline in NAS from a year
earlier, the local revenue decline included the year-over-year effects
of a favourable adjustment related to contribution revenues in the
fourth quarter of 2010. Net NAS declines were 44,000 in the fourth
quarter of 2011, up slightly from 43,000 in the fourth quarter of 2010.
Internet revenue grew by $10 million (8.7 per cent) in the fourth
quarter of 2011 compared to the same period in 2010. Residential
high-speed average revenue per customer (ARPC) continued to grow, as
customer demand for more bandwidth and premium services, along with the
carry-over effects of pricing actions earlier in the year, pushed ARPC
in the fourth quarter of 2011 up 8.2 percent from the same quarter a
High-speed Internet customers were 862,000 at the end of December 2011,
up 2.4 percent from a year earlier. Overall net high-speed Internet
customer additions of 2,000 in the fourth quarter of 2011 were down
from 5,000 in the fourth quarter of 2010, reflecting continued
competitive activity and migration to FibreOP. Included in net high-speed Internet customer additions for the quarter
was FibreOP Internet customer growth of 13,000 to bring total FibreOP Internet customers to 47,000 at the end of 2011. The majority of FibreOP Internet customer growth was related to customers migrating from
traditional DSL and fibre-to-the-node networks, which did not
contribute to overall high-speed customer growth, but is expected to
increasingly contribute to growth in ARPC.
IPTV revenue was $14 million in the fourth quarter of 2011 with total
IPTV customers of 77,000 at the end of 2011. Overall net IPTV customer
additions were 9,000 in the fourth quarter of 2011. FibreOP TV customers grew by 11,000 in the quarter to reach 42,000 at the end of
2011, including migration from Bell Aliant's fibre-to-the-node TV
Other data revenue grew $2 million (1.9 per cent) in the fourth quarter
of 2011 from the same quarter a year earlier, continuing the improved
trends of previous quarters as a result of data demand growth in
Other revenues decreased $7 million (12.1 per cent) in the fourth
quarter of 2011 compared to the same quarter in 2010, largely driven by
lower product sales, and the effects of a favourable adjustment related
to pole attachment fees in the fourth quarter of 2010.
Bell Aliant's 2012 financial guidance is as follows:
$2,700 million to $2,780 million
EBITDA(2) after pension expense
$1,285 million to $1,325 million
$550 million to $600 million
Free Cash Flow(2)
$500 million to $560 million
Adjusted earnings per share(2)
$1.60 to $1.80
(1) Excludes $315 million lump sum contributions to defined benefit pension plans made
(2) EBITDA, Free Cash Flow and Adjusted earnings per share are non-IFRS
measures. Refer to the "Non-IFRS financial measures" section of Bell
Aliant GP's Q4 2011 Management's Discussion and Analysis (MD&A) for
Operating revenues in 2012 are expected to be between $2,700 million and
$2,780 million compared to $2,775 million in 2011. Strong growth in
Internet and TV revenues as a result of FibreOP expansion is expected to largely offset decreases in traditional voice
revenues arising from competitive activity and technology substitution.
Operating expenses are expected to be similar in 2012 to 2011 as
savings from restructuring in 2011 and other productivity initiatives
offset cost increases from normal inflationary pressures and FibreOP rollout costs.
As a result, EBITDA in 2012 is expected to be between $1,285 million and
$1,325 million, compared to 2011 EBITDA of $1,327 million.
Capital expenditures in 2012 are expected to be between $550 million and
$600 million, compared to $573 million in 2011. Increased capital
expenditures arising from FTTH expansion to somewhat less densely
populated markets, start-up costs for expansion outside Atlantic
Canada, and stronger growth in new FibreOP customer connections in 2012 are expected to offset declines from lower
FTTH footprint expansion in 2012 than in 2011.
Free cash flow is expected to be between $500 million and $560 million
in 2012, compared to $557 million in 2011, excluding 2011 lump sum
contributions to defined benefit pension plans. Adjusted earnings per
share in 2012 is expected to be similar to 2011.
Bell Aliant's Board of Directors declared a quarterly dividend of
$0.4750 per common share, payable on March 30, 2012 to shareholders of
record at the close of business on March 15, 2012.
Bell Aliant Preferred Equity Inc. declared a dividend on its Series A
Preferred Shares of $0.303125 per share to be paid on March 30, 2012 to
shareholders of record at the close of business on March 15, 2012.
Bell Aliant Preferred Equity Inc. declared the first dividend on its
Series C Preferred Shares of $0.3584 per share to be paid on March 30,
2012 to shareholders of record at the close of business on March 15,
Unless otherwise stated, dividends paid by Bell Aliant and Bell Aliant
Preferred Equity Inc. to Canadian residents are "eligible dividends" as
defined by the Canadian Income Tax Act and corresponding provincial
More information on Bell Aliant's and Bell Aliant GP's fourth quarter
2011 results and 2012 guidance can be found in Bell Aliant's fourth
quarter 2011 supplementary information package and Bell Aliant GP's
fourth quarter 2011 MD&A, available at www.bellaliant.ca/investors.
Analyst conference call
A conference call with the financial community is scheduled for February
7, 2012 at 12 p.m. (Eastern). The dial-in numbers are 866-226-1792 and
416-340-2216 for Toronto area participants. Media are invited to attend
in listen-only mode. A replay of the session can be heard until March
6, 2012. To access the replay, dial 800-408-3053 or 905-694-9451 and
enter the passcode 6872111#.
A live audio webcast of the conference call can be accessed on www.bellaliant.ca under the Investor Relations section. A replay of the conference call
will be available on the website for one year.
1 See Notes section at the end of this release for definitions of the
non-International Financial Reporting Standard (IFRS) financial metrics
including EBITDA, free cash flow and adjusted earnings per share.
2 Bell Aliant converted from an income trust structure to a corporate
structure on January 1, 2011. Prior year net earnings and earnings per
share metrics of the trust structure are not meaningful or comparable
to 2011 results.
The information contained in this news release is unaudited.
Bell Aliant derives virtually all of its income from its ownership in
Bell Aliant GP. Bell Aliant GP's results consolidate the results of
Bell Aliant Regional Communications, Limited Partnership, Télébec,
Limited Partnership, NorthernTel, Limited Partnership, and Bell Aliant
Preferred Equity Inc.
Percentage changes quoted in this release related to dollar values are
based on amounts rounded to the nearest hundred-thousand, consistent
with disclosure in Bell Aliant's supplementary information package and
Bell Aliant GP's MD&As for the fourth quarter of 2011. Dollar values
quoted in this release are rounded to the nearest million unless
Definitions of non-IFRS measures:
EBITDA: Bell Aliant defines EBITDA as operating revenue less operating
expenses (operating income) before interest, income taxes, depreciation
and amortization expense, severance and other charges.
Free cash flow: Bell Aliant defines free cash flow as cash generated from operating
activities less capital expenditures. Free cash flow includes the
operations of Bell Aliant and Bell Aliant GP on a combined basis.
Adjusted earnings per share: Bell Aliant defines adjusted earnings per share as fully diluted
earnings per share adjusted for the after-tax per share impact of
amortizing purchase price allocations (PPA) amounts, which represent
the adjustments to historical cost of tangible and intangible assets
acquired in business combinations.
For a reconciliation of these non-IFRS measures to the most closely
comparable IFRS measures, please refer to Bell Aliant GP's MD&A for the
fourth quarter of 2011.
This news release contains forward-looking statements concerning
anticipated future events, results, circumstances or expectations, in
particular statements concerning fibre-to-the-home expansion plans,
2012 financial guidance and dividend payments. Unless otherwise
indicated, such forward-looking statements describe management's
expectations at February 7, 2012. These statements are based on
management's beliefs regarding future events, many of which, by their
nature, are inherently uncertain and beyond management's control. These
statements are not guarantees of future performance and are subject to
assumptions which may prove to be inaccurate and numerous risks and
uncertainties which are difficult to predict.
Several assumptions were made in the preparation of Bell Aliant's 2012
financial guidance and in making forward-looking statements in this
news release. For 2012, Bell Aliant expects:
Competition in both business and consumer markets will continue to be
intense with the cable telephony competitive footprint growing from its
current level of 72 percent to reach a peak of 75 to 80 per cent over
the next several years;
Wireless substitution for voice services will increase in Bell Aliant
territories but will continue to lag other regions of Canada;
NAS declines will be similar to those experienced in 2011;
High-speed Internet subscriber net additions will be similar to those
experienced in 2011;
IPTV subscribers net additions will grow from those experienced in 2011;
Bell Aliant will continue to invest in FTTH technology to pass
approximately 650,000 homes and businesses by the end of 2012, which
should result in higher total residential ARPC and significant TV
subscriber and revenue growth;
Cost reductions will continue in 2012, offsetting cost increases
associated with the rollout of FTTH and normal inflationary pressures;
Net benefit plans cost included in EBITDA in 2012 is expected to be $55
million to $65 million based on a 2011 year-end discount rate of 5.2
per cent at year-end 2011, compared to $60 million in 2011 which used a
blended discount rate of 5.3 per cent. The assumed rate of return on
plan assets (for financing income) is 6.0 per cent consistent with
Substantially all of the 2012 pension deficit funding requirements are
expected to be met by drawing down voluntary lump sum contributions to
defined benefit pension plans made in 2011 or through use of letters of
credit; cash funding for deficit reduction in 2012 is expected to be in
the range of nil to $15 million. Cash funding for current service costs
and other net benefit plans in 2012 is expected to be in the range of
$65 million to $75 million, compared to $66 million in 2011;
Taxable income is expected to be subject to a blended federal and
provincial corporate income tax rate of 28 per cent in 2012, with a
2012 income tax provision of approximately $125 million to $135
million. The utilization of accumulated tax-loss carry forwards will
result in minimal cash taxes being paid in 2012;
Productivity initiatives, largely arising from workforce restructuring
programs announced in 2011, will result in a use of cash for severance,
benefits and real estate rationalization costs of approximately $20
million to $25 million in 2012;
Bell Aliant's depreciation and amortization expense for 2012 will be
$635 million to $650 million, including approximately $85 million to
$90 million of amortization of PPA adjustments which are excluded from
adjusted earnings per share calculations.
Bell Aliant encourages investors to review the risk factors section
below, and related disclosures, for a discussion of the various factors
that could cause actual results to differ from what is currently
There are many factors that could cause results or events to differ
materially from current expectations. The most significant factors that
Bell Aliant has identified that may affect Bell Aliant's results or
events in 2012 include but are not limited to: increasing competition;
management's ability to achieve strategies and plans, including
expansion of our fibre-to-the-home (FTTH) network and managing the cost
structure; general economic conditions; pension valuation and
investment risk; reliance on systems; changing technology; demand for
our products and services; our business relationship with BCE Inc.
(BCE) and Bell Canada; changing regulations; dependence on key
suppliers; maintenance of credit ratings; leverage and restrictive
covenants; BCE's governance rights; reliance on key personnel and
labour relations, including the requirement for effective business
continuity planning and the ability to attract and retain new
employees; legal contingencies and changes in laws, including laws
pertaining to privacy and security of customer information; and tax
related risks. Some of these risk factors are largely beyond Bell
Aliant's control. For additional information on material factors and
assumptions used to develop forward-looking information and risk
factors that could cause actual results to differ materially from
forward-looking information, see also the "Risk management" section of
Bell Aliant Regional Communications Income Fund's MD&A for the year
ended December 31, 2010, and the "Assumptions made in the preparation
of forward-looking information" and "Risks that could affect our
business and results" sections of Bell Aliant Regional Communications
Holdings, Limited Partnership's MD&A for the year ended December 31,
2010, as updated by their 2011 quarterly MD&As, as well as the "Risk
Factors" sections of Bell Aliant Inc.'s and Bell Aliant Regional
Communication Inc.'s 2010 Annual Information Forms. These documents are
available at www.bellaliant.ca and www.sedar.com.
Should any risk factor affect Bell Aliant in an unexpected manner, or
should assumptions underlying the forward-looking statements prove
incorrect, the actual results or events may differ materially from the
results or events predicted. Unless otherwise indicated,
forward-looking information does not take into account the effect that
transactions, or non-recurring or other special items, announced or
occurring after this information is provided may have on the business.
All of the forward-looking information reflected in this press release
and the documents referred to within it are qualified by these
cautionary statements. There can be no assurance that the results or
developments anticipated by Bell Aliant will be realized or, even if
substantially realized, that they will have the expected consequences
for Bell Aliant.
Except as may be required by Canadian securities laws, Bell Aliant
disclaims any intention and assumes no obligation to update or revise
any forward-looking information, even if new information becomes
available, as a result of future events or for any other reason.
Readers should not place undue reliance on any forward-looking
information. Forward-looking information is provided for the purpose of
providing information about management's current expectations and plans
relating to fiscal 2012 or other future periods. Readers are cautioned
that such information may not be appropriate for other purposes.
About Bell Aliant
Bell Aliant (TSX: BA) is one of North America's largest regional
communications providers and the first company in Canada to cover an
entire city with fibre-to-the-home (FTTH) technology with its FibreOP services. Through its operating entities it serves customers in six
Canadian provinces with innovative information, communication and
technology services including voice, data, Internet, video and
value-added business solutions. Bell Aliant's employees deliver the
highest quality of customer service, choice and convenience.
# # #
SOURCE BELL ALIANT INC.
For further information:
Sarah Levy MacLeod