Bell Aliant reports third quarter 2009 results

    
          - Continued cost containment delivers solid EBITDA growth
          - 15.9 per cent distributable cash increase
          - Fibre to the home successfully launched with first Canadian
            entire city coverage on target for early 2010
    

HALIFAX, Nov. 10 /CNW/ - Bell Aliant Regional Communications Income Fund (Bell Aliant or the Fund) (TSX: BA.UN) today reported the Fund's and Bell Aliant Regional Communications Holdings, LP's (Bell Aliant Holdings LP) third quarter 2009 financial results.

"I am very satisfied with our overall progress this quarter, where despite continued economic and competitive pressures, we have again produced solid EBITDA and distributable cash results through continued cost management and operational improvements," said Karen Sheriff, President and Chief Executive Officer.

"Our launch of the country's first fibre to the home network to an entire city is on plan with great customer response in Fredericton. Enabling better customer service and delivering broadband innovation, while achieving strong cash flows, are fundamental to Bell Aliant's strategy. Our results this quarter continue to demonstrate our ongoing progress and commitment to achieving these objectives."

    
    Bell Aliant Holdings LP's third quarter financial highlights

    -------------------------------------------------------------------------
    (In
     millions                         Percen-                       Percen-
     of                                 tage       YTD       YTD      tage
     dollars)    Q3 2009   Q3 2008    Change      2009      2008    Change
    -------------------------------------------------------------------------
    Operating
     Revenue      $  786    $  807      (2.6%) $ 2,389   $ 2,443      (2.2%)
    -------------------------------------------------------------------------
    EBITDA           375       371       1.1%    1,101     1,085       1.5%
    -------------------------------------------------------------------------
    Capital
     Expenditures    115       138     (17.0%)     344       360      (4.5%)
    -------------------------------------------------------------------------
    Distributable
     Cash            208       179      15.9%      591       569       3.8%
    -------------------------------------------------------------------------
    

Operating revenues were down $21 million or 2.6 per cent in the third quarter of 2009 compared to the third quarter of 2008, primarily as a result of declines in local and long distance revenues associated with lower network access services (NAS) and softness in the economy affecting product sales across multiple revenue categories.

Despite the revenue declines, labour-related cost reductions from restructuring programs and ongoing cost containment initiatives resulted in an increase in EBITDA of $4 million or 1.1 per cent over the same quarter a year earlier, a continued trend from earlier quarters of 2009.

NAS declines of 4.9 per cent from a year earlier, driven by slowdowns in the economy and increased competitive activity, were the primary driver of local service and long distance revenue declines of $15 million (4.2 per cent) and $6 million (5.0 per cent), respectively, in the third quarter of 2009 compared to the same quarter in 2008. However, the third quarter of 2008 included a one-time favourable contribution revenue adjustment, without which the local service revenue decline in the third quarter of 2009 was 3.4 per cent, similar to the rate of decline experienced in the second quarter of 2009.

Residential NAS declines in the third quarter were approximately 13,000 higher than the second quarter of 2009, driven by the compounding effect of seasonal connects in the second quarter with disconnects in the third quarter, and increased competitive activity. Business NAS declines were approximately 2,000 lower than those incurred in the second quarter of 2009, with winbacks offsetting declines from the flow-through of government contract losses.

Internet revenue grew by $11 million or 11.3 per cent in the third quarter of 2009 compared to the same period in 2008, with the number of high-speed Internet customers 7.1 per cent higher than a year ago and strong growth in Bell Aliant TV subscribers. Residential high-speed Internet average revenue per customer (ARPC) was 5.6 per cent higher than the same quarter in 2008 with customers subscribing to higher value services.

IT revenue declined $2 million or 2.4 per cent in the third quarter, driven by lower IT equipment sales than the same quarter a year ago. Other revenues declined $10 million or 19.9 per cent from the same quarter in 2008, as a result of softness in product sales and rentals, and lower outsourcing revenues.

Capital expenditures in the third quarter of 2009 were $115 million, down $23 million (17.0 per cent) from the same quarter a year ago, with capital intensity for the third quarter of 2009 at 14.6 per cent, down from 17.1 per cent in the third quarter of last year. Capital spending in the third quarter declined compared to the same quarter a year earlier primarily as a result of heavier spending in the third quarter of 2008 due to weather-related delays earlier in the year, and a lower overall capital program in 2009.

Distributable cash increased $29 million (15.9 per cent) in the third quarter of 2009 from the same period in 2008, due to the cash benefits of higher EBITDA and lower capital spending.

On September 30, 2009, Bell Aliant announced that an agreement had been reached to sell 100 per cent of the outstanding shares of its subsidiary Innovatia Inc. The transaction close was effective November 1, 2009 with proceeds on closing of $1.5 million. Accordingly, Bell Aliant has retroactively reclassified the results of Innovatia's operations to discontinued operations in the third quarter of 2009.

On October 15, 2009, Bell Aliant announced that it was consolidating its Atlantic Canadian customer contact centre operations, and that employees in the affected centres would be offered relocation to a remaining centre. During the third quarter of 2009, Bell Aliant estimated and recorded a pre-tax restructuring charge of $13.0 million for severance and other costs of implementing the consolidation plan.

The Fund maintained its distributions to unitholders and reported distributions of $92 million or $0.725 per unit for the quarter ended September 30, 2009.

Guidance Updated for Accounting Reclassifications of Divestitures

As a result of the divestitures and reclassifications of xwave New England Corp. and Innovatia Inc. to discontinued operations in the second and third quarters of 2009 respectively, approximately $40 million of annualized revenues are now reported as discontinued operations rather than as revenue. Bell Aliant has updated its 2009 revenue and capital intensity guidance to reflect these accounting reclassifications as follows:

    
    -------------------------------------------------------------------------
    2009 Guidance          Issued February 2009       Updated November 2009
    -------------------------------------------------------------------------
    Operating Revenues     $3,180 - $3,280 million    $3,140 - $3,240 million
    -------------------------------------------------------------------------
    Capital Intensity      13.5 - 14.5 per cent       13.7 - 14.7 per cent
    -------------------------------------------------------------------------
    Distributable Cash     $750 - $790 million        No change
    -------------------------------------------------------------------------
    

Supplementary Financial Information

More information on the Fund's and Bell Aliant Holdings LP's Q3 results can be found in Bell Aliant's third quarter 2009 supplementary information package, available at www.bellaliant.ca.

Analyst conference call

A conference call with the financial community is scheduled for Wednesday, November 11, 2009 at 8:00 a.m. (Eastern). The dial-in numbers are (888) 789-9572 or (416) 695-7806 for Toronto area participants. Media are invited to attend in a listen-only mode. The title of the call is "Bell Aliant Third Quarter 2009 Financial Results." A replay of the session can be heard until November 25, 2009. To access the replay, dial (800) 408-3053 or (416) 695-5800 and enter the passcode 3187372#.

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.

Notes

The information contained in this news release is unaudited.

    
    (1) Bell Aliant derives virtually all of its income from its indirect
    ownership in Bell Aliant Holdings LP. Bell Aliant Holdings LP's results
    combine the results of Bell Aliant Regional Communications, Limited
    Partnership (Bell Aliant LP), Télébec, Limited Partnership (Télébec) and
    NorthernTel, Limited Partnership (NorthernTel).

    (2) On February 1, 2008, Bell Aliant Holdings LP completed the
    acquisition of the assets and operations of Kenora Municipal Telephone
    System (KMTS). Bell Aliant Holdings LP's financial results and subscriber
    metrics include KMTS data from that date onward.

    (3) Percentage changes quoted in this release related to dollar values
    are based on amounts rounded to the nearest hundred-thousand, consistent
    with disclosure in the Fund's and Bell Aliant Holdings LP's management's
    discussion and analysis and supplementary information package. Dollar
    values quoted in this release are rounded to the nearest million unless
    otherwise stated.

    (4) Bell Aliant Holdings LP defines EBITDA, a non-GAAP measure, as
    operating revenue less expenses (earnings) before interest, income taxes,
    depreciation and amortization expense, net benefit plans cost, and
    restructuring and other charges. For a reconciliation of EBITDA to the
    most closely comparable GAAP measure, please refer to Bell Aliant
    Holdings LP's management's discussion and analysis for the third quarter
    of 2009.

    (5) Bell Aliant defines capital intensity as capital expenditures as a
    percentage of operating revenue.

    (6) Bell Aliant defines distributable cash, a non-GAAP measure, as cash
    from operating activities of continuing and discontinued operations of
    Bell Aliant Holdings LP and of the Fund, plus operating items funded
    through cash reserves or borrowings, such as working capital, pension
    deficit funding, restructuring and other charges and cash capital taxes
    in excess of normalized levels, plus amounts for current income tax
    provisions plus other elements of working capital changes that do not
    affect cash flow, less capital expenditures. For a reconciliation of
    distributable cash to the most closely comparable GAAP measure, please
    refer to Bell Aliant Holdings LP's management's discussion and analysis
    for the third quarter of 2009.
    

Forward-looking Statements

This news release contains forward-looking statements concerning anticipated future events, results, circumstances or expectations, including statements relating to expected service and product improvements, and the consolidation of customer contact centres in Atlantic Canada. Unless otherwise noted, such statements describe management's expectations at November 10, 2009. These statements are based on management's beliefs regarding future events, and are subject to inherent risks and uncertainties that are beyond management's control. Therefore, actual results may differ materially from what is predicted. Assumptions made and risk factors considered in preparing our forward-looking statements are discussed in detail in Bell Aliant's fourth quarter 2008 earnings and 2009 guidance news release dated February 2, 2009, as well as in the Fund's and Bell Aliant Holdings LP's 2008 annual management's discussion and analysis (MD&A) and annual information forms, and their first, second, and third quarter 2009 MD&As, which are available at www.bellaliant.ca or at www.sedar.com. All forward-looking statements in this news release are qualified by these cautionary statements, and there can be no assurance that the results or events predicted will be realized. 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 statement 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 statements.

About Bell Aliant

Bell Aliant (TSX: BA.UN) is one of North America's largest regional communications providers and an Official Supporter of the Vancouver 2010 Olympic and Paralympic Winter Games. 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. Through its xwave offices, Bell Aliant also provides IT professional services and advanced technology solutions. Bell Aliant's employees are committed to deliver the highest quality of customer service, choice and convenience.

%SEDAR: 00023938EF

SOURCE Bell Aliant Inc.

For further information: For further information: Media Relations: Alyson Queen, (866) 696-6700, alyson.queen@bellaliant.ca; Investor Relations: Zeda Redden, (877) 487-5726, zeda.redden@bellaliant.ca

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