CEO says Bell is set to launch 5G, but it’s not the right time
By Greg O’Brien
MONTREAL – Taking into account the Covid-19 crisis so far, there was nothing unexpected in Bell Canada’s first quarter of 2020 – and company executives told investors and analysts today it plans to continue to with its capital expenditures this year.
“Despite the impacts of Covid-19, Bell delivered positive service revenue and adjusted EBITDA growth in Q1, supported by ongoing broadband wireless, Internet and IPTV subscriber base expansion and a 2.6% reduction in total operating costs,” said company CFO Glen LeBlanc in this morning’s press release announcing the results.
Free cash flow is still strong, he added, meaning the company will continue to invest in its wired and wireless networks, both of which have performed well for customers during the pandemic. Data traffic on the residential portion of its wired network has increased 60% and on its nascent rural wireless solution, 40%, since the start of the pandemic and the resulting economic shutdown, said CEO Mirko Bibic to financial analysts this morning during the company’s Q1 conference call.
Usage of Crave, its TV and online entertainment brand, has leapt 75% (combining viewership of all platforms, we confirmed), added the CEO, which was the bright spot at a heavily impacted media division. Bell Media adjusted EBITDA was down 6.1% to $155 million in the quarter, due to the industry-wide impact on advertising sales attributable to Covid-19. Bibic said the full impact of the crisis on its media division will be seen in Q2, but added despite the lack of live sports, subscriber levels at TSN and RDS are holding steady and the pace of ad campaign cancellations in its media group has “stabilized” of late.
Bibic also thanked front line workers all around the country and added “I am especially proud of the Bell team whose outstanding work to keep Canadians connected to 24-7 is being widely recognized as critical to our country’s ability to withstand the Covid-19 crisis.”
The fact Canadians need connectivity – and to do it in a customer-friendly but frictionless, contact-free way – means the company will not pare back on its planned 2020 capital expenditures, even in unprecedented tough times like this. “This is not a time to pull back capital spending on critical network infrastructure… These are healthy investments for the long term benefit of our company, our customers and our economy,” added Bibic. “We are also making the investments we need to champion the customer experience, especially as it relates to online fulfilment, self-serve and automation tools or improved app functionality.”
“We’re ready with our initial 5G network but, frankly, we don’t think it’s the right time now to officially launch.” – Mirko Bibic, Bell Canada
When asked on the conference call, like Rogers CEO Joe Natale was asked, about 5G and the prospects for the next wireless spectrum auction scheduled for December, Bibic said his preference is for an on-time auction, or one delayed as minimally as possible – and he hopes the federal government will let the companies recover a bit from the crisis before demanding the billions of dollars expected in the 3500 MHz auction – spectrum that is critical to have for 5G.
“We’re ready with our initial 5G network but, frankly, we don’t think it’s the right time now to officially launch. I just don’t think customers are paying attention to this right now… They have other priorities, understandably.”
As for the timing of the auction, “my point of view is we need to have that auction as planned or very soon after,” said Bibic, “I would also say given how our industry has stepped up with accelerated investments this year in particular, if the government would be open to delaying payments until calendar year 2022, that would be helpful to everyone concerned.
“Ultimately the short answer to the question is ‘let’s have the auction’.”
Operating revenue was $5.68 billion in Q1, ended March 30th, down 0.9% compared to Q1 2019, due to reduced economic and commercial activity as a result of the Covid-19 crisis, said the official company announcement.
While service revenue was up 0.3% to $5.06 billion on higher year-over-year wireless service and media revenue, product revenue decreased 9.7% to $622 million, “reflecting reduced wireless transactions due to Covid-19 and lower business wireline data equipment sales,” said the company announcement.
Net earnings declined 7.3% to $733 million and net earnings attributable to common shareholders totaled $680 million, or $0.75 per share, down 8.1% and 8.5% respectively.
The company reported 19,595 net new wireless customers (23,650 postpaid and a net loss of 4,055 prepaid); 22,595 net new retail Internet customers; 2,852 net new IPTV customers; a net loss of 21,407 retail satellite TV customers; and a net loss of 61,595 retail residential NAS lines.
Bell wireless and retail Internet, TV and residential NAS connections totaled 18,945,550 at the end of March, up 2% over Q1 2019. The total includes 9,977,557 wireless customers, up 5.2%; 3,578,196 retail Internet subscribers, up 3.9%; 2,753,909 retail TV subscribers, down 0.4% (including 1,770,034 IPTV customers, an increase of 4.3%, and 983,875 retail satellite TV customers, down 7.9%); and 2,635,888 retail residential NAS lines, down 8.9%.
For more on Bell’s Q1, please click here.
