AH Bell Canada Logo 1.5

Bell Sees Good Q2 Earnings Due To Wireless Division

August 6, 2015 - Written By Cory McNutt

Analysts were not sure what to expect from BCE’s quarterly report this time around after several quarters of substantial growth, they were looking to see a downward trend, especially with the state of Canada’s economy.  To the surprise of all, except Bell, they had solid operating revenue of over $5.3 billion, which is an increase of 2-percent versus the second quarter in 2014 and net earnings came in at $814 million and an increase of 15.1-percent year-on-year.

This during a slow economic growth for Canada with an estimated growth in the Canadian gross domestic product (GDP) of only 1.1-percent so far in 2015, along with weaker employment growth and an overall soft business investment.  However, in the wireline and wireless markets there continues a sustained competition and a higher though slowing, wireless market penetration and smartphone adoption – which means more data and device sales.  Bell also saw a higher than expected number of subscriber renewals after their 2 and 3-year contracts expired.

Bell did add 61,033 post-paid subscribers in the second quarter, which is actually a decrease from the 67,951 it gained last year during the same time period.  Even its customer churn rate increase slightly by .08-percent to 1.23-percent, after Bell was able to enjoy only 1.18-percent churn rate last year.  Despite these downward trends, Bell had more new customers join up with them than the number that left.  This brought their new total number of wireless subscribers at 8,124,824, a 2.2-percent increase.  With the coveted post-paid subscribers, Bell has 7,206,453, which is an increase over last year of 4.4-percent.  Bell also shows that 77-percent of Bell’s wireless post-paid subscribers are using a smartphone and the portion of them on their LTE network increased to 57-percent.

One of the most important figures in the wireless industry is the average revenue per user (ARPU) – in other words, how much do we make on each customer.  The ARPU grew by a whopping 5.3-percent year-over-year to $62.48, which is up from $60.83 from only the first quarter, so you can see how fast it has grown.  Bell believes there are three factors involved in that rapid growth – first, there are more subscribers on the higher cost post-paid plans.  Secondly, the rapid growth in data usage as more subscribers opt for a smartphone…customer data has increased by 24.2-percent this quarter.  Lastly, there were a large number of three-year and two-year contracts that came up for renewal at the end of June at the higher rates.  This also increases the number of devices being sold and Bell reported an unheard of 41.9-percent increase or $149 million in product revenue.  Going along with that was a 7.7-percent increase in service revenue that brought in an additional $1.5 billion.