Net wireline customer activations show strong year-over-year growth
High-speed Internet adds 11,600 net new customers, up 55 per cent from
IPTV adds 14,500 net new customers, up 19 per cent from Q3 2012
Strong FibreOPTM growth continues
FibreOP Internet adds 19,300 net new customers, up 17 per cent from Q3 2012
FibreOP TV adds 16,300 net new customers, up 14 per cent from Q3 2012
Fibre-to-the-home (FTTH) footprint expands to 770,000 premises
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, Oct. 31, 2013 /CNW/ - Bell Aliant Inc. (TSX: BA) today reported
financial results for the third quarter of 2013 for Bell Aliant Inc.
(Bell Aliant) and Bell Aliant Regional Communications Inc. (Bell Aliant
"I am very pleased with our third quarter results," said Karen Sheriff, president and chief executive officer, Bell Aliant.
"We achieved very strong net wireline customer activations, which is
especially rewarding considering the competitive environment in which
we are operating.
"We added 11,600 net new high-speed Internet customers, up 55 per cent
from the same quarter in 2012. At the end of the third quarter of 2013,
we have already added more high-speed Internet customers than we did
for the full year 2012. We also added 14,500 net new IPTV customers,
increasing our IPTV customer base by 52 per cent from the same time a
year ago. Our third quarter net NAS results declined only slightly from
the third quarter of 2012, significantly improving upon the
year-over-year trend experienced in the second quarter.
"The progress we are continuing to make with our fibre-to-the-home
strategy is a significant contributor to our improved customer
activation results. We continue to gain confidence that our FTTH
strategy is the right one to return us to growth.
"As we expected, our year-over-year financial performance in the third
quarter was somewhat softer than prior quarters of this year. Pricing
activity that occurred later in 2012 and expense recognition timing
differences benefitted the year-over-year comparisons of earlier
quarters this year, without similar benefits in the third quarter.
Also, our response to aggressive competitive activity in the third
quarter, while helping to improve our customer activation performance,
caused our costs in the quarter to increase, and thereby contributed to
softer year-over-year financial performance in the quarter.
"While the competitive environment is fierce, I remain confident that FibreOP offers the best value to customers in our FTTH markets. With our FTTH
penetration rates now at 22 per cent, and further FTTH footprint
expansion to 800,000 premises expected by the end of this year, we
believe we have great opportunity for future growth. By continuing to
build our customer base, our goal is to expand our opportunities for
returning to revenue growth, and our performance this quarter solidly
supported that objective."
"Our third quarter results and our solid performance in the first two
quarters of 2013 position us well to achieve our previously announced
financial guidance for fiscal 2013."
Third quarter 2013 highlights(1)( 2)(3)
Bell Aliant Inc. reported net earnings of $81 million for the third
quarter of 2013, down $7 million from the third quarter of 2012,
primarily as a result of lower EBITDA in Bell Aliant GP. Earnings per
share and adjusted earnings per share were $0.35 and $0.42
respectively, each down $0.03 from the same quarter in 2012.
Third quarter financial highlights of Bell Aliant GP are summarized as
(In millions of dollars) (unaudited)
Free Cash Flow
Operating revenues of $695 million in the third quarter of 2013 were
down 0.4 per cent from the same quarter in 2012. Growth in TV,
Internet, other data, wireless and other revenues were offset by
declines in local and long distance revenues.
Operating expenses of $368 million in the third quarter of 2013 grew 1.4
per cent compared to the same quarter in 2012. The increase was largely
due to growth in TV content, marketing and customer support costs from
a growing FibreOP customer base, and the timing of management incentive accruals, which
were somewhat offset by expense reductions throughout the business.
As a result, EBITDA of $327 million in the third quarter of 2013
declined by 2.2 per cent compared to the same quarter in 2012.
Capital expenditures in the third quarter of 2013 were $138 million,
down 4.4 per cent from the same quarter a year earlier, primarily due
to lower central Canada FibreOP startup costs and the completion of large FTTH transport projects in
FTTH footprint expansion in the third quarter of 2013 was similar to the
same quarter of 2012. Bell Aliant passed an additional 45,000 premises
with FTTH in the third quarter of 2013 compared to 47,000 in the third
quarter of 2012, bringing total FTTH coverage to 770,000 premises at
the end of September 2013. Capital expenditure pressures arising from
higher FibreOP customer connections in the third quarter of 2013 compared to the same
quarter in 2012, were offset by improved installation efficiencies.
Free cash flow was $145 million in the third quarter of 2013, up $32
million (27.8 per cent) from the same quarter a year earlier. The
increase was primarily due to changes in working capital and lower
capital expenditures compared to the third quarter of 2012, which were
somewhat offset by lower EBITDA.
IPTV revenue grew $12 million (56.1 per cent) in the third quarter of
2013 compared to the third quarter of 2012, due to strong growth in
IPTV customers of 52.0 per cent from September 30, 2012. FibreOP TV added 16,300 net new customers in the quarter to reach 142,100, a
portion of which were migrations from Bell Aliant's fibre-to-the-node
(FTTN) TV service. Overall net IPTV customer additions were 14,500 in
the third quarter of 2013, compared to 12,300 a year earlier. Total
IPTV customers reached 163,300 at the end of September 2013.
Internet revenue increased $6 million (4.8 per cent) with residential
high-speed Internet average revenue per customer (ARPC) in the third
quarter of 2013 up 3.4 per cent from the same quarter a year earlier.
The high-speed Internet ARPC increase was a result of selected pricing
action and customer demand for higher bandwidth bundles and other
services, offset by increased promotional pricing. Growth in high-speed Internet customers of 3.4 per cent from a year
earlier also contributed to Internet revenue growth. FibreOP Internet customer net additions in the quarter were 19,300, bringing
total FibreOP Internet customers to 166,000 at the end of September 2013. FibreOP Internet additions include existing Bell Aliant customers migrating
from DSL and FTTN networks to the upgraded service. These migrations do
not contribute to overall high-speed customer growth but increasingly
contribute to improved customer retention and growth in overall
customer ARPC. Overall net high-speed Internet customer additions were
11,600 in the third quarter of 2013, up from 7,500 in the same quarter
of 2012, bringing total high-speed Internet customers to 944,900 at the
end of September 2013.
Local service and long distance revenues declined $17 million (5.6 per
cent) and $10 million (11.5 per cent), respectively, in the third
quarter of 2013 compared to the same quarter in 2012, driven by NAS
declines of 5.7 per cent. Net NAS declines of 33,700 in the third
quarter of 2013 were up 1,300 from the same quarter in 2012, a result
of competitive activity and technology substitution.
Wireless revenues were up $1 million (3.2 per cent) in the third quarter
of 2013 compared to the same quarter in 2012, driven by 2.6 per cent
Other revenues were up $3 million (8.4 per cent) in the third quarter of
2013 compared to the same quarter in 2012, mainly as a result of
increased custom work for large customers.
Bell Aliant declared a quarterly dividend of $0.475 per common share,
payable on December 31, 2013, to shareholders of record at the close of
business on December 13, 2013.
Bell Aliant Preferred Equity Inc. declared a dividend on its Series A
Preferred Shares of $0.303125 per share, a dividend on its Series C
Preferred Shares of $0.284375 per share, and a dividend on its Series E
Preferred Shares of $0.265625 per share, each to be paid on December
31, 2013, to shareholders of record at the close of business on
December 13, 2013.
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 third quarter
2013 can be found in Bell Aliant's third quarter 2013 supplementary
financial information package and Bell Aliant's and Bell Aliant GP's
third quarter 2013 MD&As, available at www.bellaliant.ca/investors and on SEDAR at www.sedar.com .
Analyst Conference Call
A conference call with the financial community is scheduled for October
31, 2013, at noon (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
December 1, 2013. To access the replay, dial 800-408-3053 or
905-694-9451 and enter the passcode 3670003#.
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.
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&A for the third quarter of 2013. Dollar values
quoted in this release are rounded to the nearest million unless
otherwise stated. Customer metrics are rounded to the nearest hundred
unless otherwise stated.
Definitions of non-IFRS measures:
EBITDA: Bell Aliant defines EBITDA as operating revenue less operating
expenses, which means it represents operating income before
depreciation and amortization expense, and severance and other charges.
Operating income is calculated before net finance costs, other expense
and income taxes are deducted.
Free cash flow: Bell Aliant defines free cash flow as cash from operating activities
less capital expenditures. Free cash flow includes the cash performance
of Bell Aliant and Bell Aliant GP on a combined basis.
Adjusted earnings per share (EPS): Bell Aliant defines adjusted EPS as diluted EPS of Bell Aliant Inc.
adjusted for the per share after-tax effect of purchase price
allocation amortization, severance and other charges, and debt
redemption loss, recorded by Bell Aliant GP. In Q2 2013, Bell Aliant
revised its definition of adjusted EPS to exclude the after-tax effect
of severance and other charges, and debt redemption loss in order to
align with the reporting practices of peers. Adjusted EPS for 2012 has
been restated to be presented on a consistent basis to 2013.
For a reconciliation of these non-IFRS financial measures to the most
closely comparable IFRS financial measures, please refer to Bell Aliant
GP's MD&A for the third quarter of 2013 available at www.bellaliant.ca/investors and www.sedar.com .
This news release contains forward-looking statements concerning
anticipated future events, results, circumstances or expectations, in
particular statements concerning revenue growth, FibreOP customer growth and FTTH expansion plans. Unless otherwise indicated,
such forward-looking statements describe management's expectations at
October 31, 2013. 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.
Forward-looking statements made in this press release are based on a
number of assumptions Bell Aliant believed were reasonable on the date
the forward-looking statements were made. In Bell Aliant and Bell
Aliant GP's 2012 annual MD&As, and as updated in their 2013 quarterly
MD&As issued to date, the principal assumptions that were made in the
preparation of the forward-looking statements related to Bell Aliant's
expected financial and operational performance in 2013 were outlined.
These assumptions included market, operational and financial
assumptions and have not changed significantly during Q3 2013.
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 2013 include but are not limited to: increasing competition;
cost management; financing and free cash flow; network evolution;
pension valuation and investment risk; legislative and regulatory
factors; outsourcing and vendor relationships; information technology
(IT); human capital; as well as the structural subordination of our
common shares; limitations on non-resident ownership; dilution,
unpredictability and volatility of our share price; 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 "Risks that could affect our business
results" section of Bell Aliant Inc.'s MD&A for the year ended December
31, 2012, 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 Inc.'s
MD&A for the year ended December 31, 2012, as updated by their first,
second and third quarter 2013 MD&As, as well as the "Risk Factors"
sections of Bell Aliant and Bell Aliant GP's 2012 Annual Information
Forms. These documents are available at www.bellaliant.ca/investors 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 2013 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 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 customer service, choice and convenience.
SOURCE: Bell Aliant Inc.
For further information:
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Toll-free: (877) 487-5726