Improved year-over-year financial trends continue, supported by strong
FibreOPTM results from expanding fibre-to-the-home (FTTH) network
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, July 24, 2012 /CNW/ - Bell Aliant Inc. (TSX: BA) today reported financial results for the second quarter of
2012 for Bell Aliant Inc. (Bell Aliant) and Bell Aliant Regional
Communications Inc. (Bell Aliant GP).
"I am very pleased with our results this quarter as we continued to
execute and again achieved improved trends from those we experienced in
2011," said Karen Sheriff, president and chief executive officer, Bell
Aliant. "I am particularly pleased with our performance in our
fibre-to-the-home markets, where we continued to see strong growth in
TV and Internet revenues, along with improved retention of our
traditional voice business.
"As we have stated many times before, growing FibreOP is the key to returning our overall revenue and profitability to
positive growth. We continue to expect to pass 650,000 homes and
businesses with the service this year, and, assuming continued strong
fibre performance, expect to further expand our coverage in the future.
We expect to have more details on the timing of further builds in the
"While our Board will always have discretion regarding our annual
business plans and dividend decisions, we plan to manage the pace of
the build such that we can maintain the current dividend during this
period of further fibre investment. As we've said in the past, we
continue to believe that our dividend is sustainable, and that FTTH is
an investment that is focused on returning us to positive growth,
providing even further dividend support."
Second quarter 2012 highlights1
Bell Aliant Inc. reported net earnings of $79 million for the second
quarter of 2012 compared to $83 million in the same quarter of 2011.
Earnings per share and adjusted earnings per share in the quarter were
$0.35 and $0.42 respectively, compared to $0.36 and $0.43 in the same
quarter of 2011.
Second quarter financial highlights of Bell Aliant GP are summarized as
(In millions of
Free Cash Flow*
* Year to date 2011 free cash flow excludes a $200 million lump sum
contribution to defined benefit plans made in Q1 2011.
Operating revenues in the second quarter of 2012 were $688 million, down
$5 million (0.7 per cent) from the same quarter in 2011. Declines in
local and long distance revenues driven by lower network access
services (NAS) were largely offset by growth in all other major revenue
categories, led by TV and Internet.
Operating expenses in the second quarter of 2012 were down slightly from
the same quarter in 2011 as productivity gains and reductions in
equity-based compensation expenses offset growth in TV content costs
from higher FibreOP TV sales and other costs of revenues. As a result, the EBITDA decline
was held to $4 million (1.1 per cent) in the second quarter of 2012
compared to the same quarter in 2011.
Capital expenditures in the second quarter of 2012 increased $23 million
(14.8 per cent) from the same quarter a year earlier. Costs associated
with preparatory information technology and construction work for
launching fibre-to-the-home (FTTH) in Bell Aliant's central Canada
territory, and connecting more customers to the FTTH network than the
same quarter in 2011 drove the increase in capital expenditures. In the
second quarter of 2012, Bell Aliant passed an additional 58,000 homes
and businesses with FTTH, bringing its total FTTH coverage to 574,000
premises at the end of June 2012. As planned FTTH spending was weighted
towards the first half of 2012 as Bell Aliant prepared for its FTTH
launch in central Canada, capital expenditures are expected to moderate
in the second half of the year. Bell Aliant continues to expect 2012
annual capital expenditures to be within its guidance range of $550
million to $600 million.
Free cash flow was $165 million in the second quarter of 2012, down $26
million from the same quarter a year earlier. The decrease was
primarily a result of higher capital spending and lower EBITDA in the
second quarter of 2012 compared to 2011, which was somewhat offset by
lower regular pension funding than the same quarter in 2011.
Local service and long distance revenues declined $17 million (5.4 per
cent) and $11 million (11.6 per cent), respectively, in the second
quarter of 2012 compared to the same quarter in 2011. NAS were down 5.2
per cent at the end of June 2012 from a year earlier, driven by
competitive activity and technology substitution. Residential net NAS
declines of 19,700 in the second quarter of 2012 improved from 26,800
in the second quarter of 2011. Business net NAS declines of 4,300 in
the second quarter of 2012 also improved from 5,400 in the same quarter
of 2011. Improved net NAS performance resulted primarily from success
in FTTH markets, with strong customer activations and winbacks, and
improved customer retention than the same period in 2011.
Internet revenue increased $7 million (5.8 per cent) in the second
quarter of 2012 compared to the same period in 2011. Residential
high-speed average revenue per customer (ARPC) in the second quarter of
2012 was up 5.1 per cent from the same quarter a year earlier as a
result of selected pricing action and customer movement to premium
Overall net high-speed Internet customer additions were 4,300 in the
second quarter of 2012, bringing total high-speed Internet customers to
906,200 at the end of June 2012, up 2.6 per cent from a year earlier.
Excluding the loss of some low-margin wholesale Internet lines,
high-speed Internet customer net additions improved to 7,300 in the
second quarter of 2012 from 5,600 in the second quarter of 2011. FibreOP Internet customers grew by 15,200, bringing total FibreOP Internet customers to 75,500 at the end of June 2012. Approximately one
half of FibreOP Internet net adds in the second quarter of 2012 were customers migrating
from DSL and fibre-to-the-node networks, which would not have
contributed to overall high-speed customer growth, but increasingly
contributes to improved customer retention and growth in overall
IPTV revenue reached $19 million in the second quarter of 2012 with
total IPTV customers of 95,100 at the end of June 2012. FibreOP TV customers grew by 13,000 in the quarter to reach 65,300, a portion of
which were migrations from Bell Aliant TV. Overall net IPTV customer
additions were 10,200 in the second quarter of 2012, compared to 5,500 a year earlier.
Other data revenue grew $2 million (2.0 per cent) in the second quarter
of 2012 from the same quarter a year earlier, continuing the improved
trends of recent quarters as a result of data demand growth.
Wireless revenues were up $4 million (14.6 per cent) driven by 8.0 per
cent customer growth and 5.9 per cent wireless ARPC growth compared to
a year ago as customers subscribe to higher value plans. Other revenues
also increased $3 million (6.6 per cent) in the second quarter compared
to a year ago, driven by higher product sales and increased pole
Bell Aliant's Board of Directors today declared a quarterly dividend of
$0.4750 per common share, payable on September 28, 2012 to shareholders
of record at the close of business on September 14, 2012.
Bell Aliant Preferred Equity Inc. today declared a dividend on its
Series A Preferred Shares of $0.303125 per share and a dividend on its
Series C Preferred Shares of $0.284375 per share to be paid on
September 28, 2012 to shareholders of record at the close of business
on September 14, 2012.
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 second quarter
2012 results can be found in Bell Aliant's second quarter 2012
supplementary information package and MD&A and Bell Aliant GP's second
quarter 2012 MD&A, available at www.bellaliant.ca/investors .
Analyst conference call
A conference call with the financial community is scheduled for July 25,
2012, at 8:00 a.m. (EDT). 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 August
22, 2012. To access the replay, dial 800-408-3053 or 905-694-9451 and
enter the passcode 3148460.
A live audio webcast of the conference call can be accessed at 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
measures including EBITDA, free cash flow and adjusted earnings per
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 second quarter of 2012. Dollar values
quoted in this release are rounded to the nearest million unless
otherwise stated. Unit values are rounded to the nearest hundred 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 (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
second quarter of 2012 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 FTTH expansion plans. Unless otherwise
indicated, such forward-looking statements describe management's
expectations at July 24, 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.
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
Several assumptions were made in making forward-looking statements in
this news release. Bell Aliant expects to 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.
Bell Aliant expects to continue to have affordable access to capital
markets to fund future investment in FTTH beyond 2012, should it be
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 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; legal contingencies and
changes in laws; 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 and results" section of Bell Aliant Inc.'s
MD&A for the year ended December 31, 2011, and the "Assumptions made in
the preparation of forward-looking information" and "Risks that could
affect our business and results" sections of Bell Aliant GP's MD&A for
the year ended December 31, 2011, as updated by their first and second
quarter 2012MD&As, as well as the "Risk Factors" sections of Bell
Aliant Inc.'s and Bell Aliant GP's 2011 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 forward-looking information reflected in this news 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, 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 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:
Sarah Levy MacLeod