BUSINESS

Bell's Second Quarter Profits Boosted By Growth In Wireless Subscribers

08/06/2015 11:49 EDT | Updated 08/06/2015 11:59 EDT

Changes in the rules for wireless contracts gave BCE Inc. an extra bump in new subscribers and helped raise profits by 25 per cent in the second quarter.

The Montreal-based telecommunications company said Thursday that net income was $759 million or 90 cents per share, compared to $606 million or 78 cents a year ago.

The big increase was attributed to a number of other factors as well, including taking full ownership of Bell Aliant last year and gains from the sale of a 50 per cent interest in the Glentel retail business to Rogers Communications (TSX:RCI.B).

But it was the addition of 61,000 net postpaid subscribers in the period that stood out as a victory against one of its biggest competitors, Rogers Communications (TSX:RCI.B), which managed to deliver just over a third of that growth, or 24,000 customers, in the same period.

Both carriers have been in fierce competition, along with Telus (TSX:T), to retain their wireless customers after the CRTC issued rule changes that eliminate cancellation fees for wireless contracts after two years.

The new regulations, which kicked in June 3, created a so-called double cohort of wireless subscribers suddenly unshackled from their contracts, allowing them to look for a new carrier.

Telus is scheduled to report its financial results and wireless subscriber numbers for the same period on Friday.

"We again took market share from the largest wireless carrier in the country, so we're really pleased with the results," said CEO George Cope in a conference call with analysts.

Over the same time last year, BCE spent $64 million more on retention costs — like subsidized phones or discounted packages — to keep customers from straying to its competitors.

"We'll definitely see a little lift in retention spend the second half of the year and we'll be able to absorb that within the revenue growth we're seeing on wireless," Cope added.

After adjustments, BCE (TSX:BCE) earned $735 million or 87 cents per share, up from $640 million or 82 cents per share.

Operating revenue increased by two per cent to $5.3 billion from $5.2 billion, with the main driver coming from its wireless services.

In its Internet division, Bell added 18,600 net subscribers and 50,000 customers to its IPTV (Bell Fibe) television service. It lost nearly 34,000 subscribers to its satellite TV service.

At the company's media operations, which include TV channels like CTV and TSN, revenues dropped 2.8 per cent to $740 million, as advertising revenues were impacted by both the loss of the broadcast rights to the NHL playoffs and heightened competition from large social media companies.

Bell also announced details on the rollout of Bell Gigabit Fibe, its new service that will deliver higher Internet speeds of up to one Gigabit per second.

About 1.3 million homes in Ontario and Quebec will have the option of subscribing to the service starting Monday, while the Atlantic provinces will have access by October.

Bell hopes to have the higher-priced Gigabit Fibe service available in 2.2 million Canadian homes by the end of this year.

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