Leading Canadian telecom operator BCE Inc. (BCE - Free Report) reported disappointing financial results in the second quarter of 2016, with both the top and bottom line lagging the respective Zacks Consensus Estimate.
This Zacks Rank #4 (Sell) company competes with Rogers Communications Inc. (RCI - Free Report) , Shaw Communications Inc. and TELUS Corp. (TU - Free Report) in the highly competitive Canadian telecom market.
Quarterly net income was approximately $619 million, up 2% year over year. GAAP earnings per ADS (American Depository Share) were 62 cents, down 1.1% year over year. Adjusted net income per ADS came in at 66 cents, missing the Zacks Consensus Estimate of 71 cents.
Total revenue was approximately $3,981 million, up 0.3% year over year but well short of the Zacks Consensus Estimate of $4,149 million. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was about $1,692 million, up 3.2% year over year. Quarterly adjusted EBITDA margin was 42.5% compared with 41.3% in the prior-year quarter.
Cash Flow
During the second quarter of 2016, BCE generated approximately $1,410 million of cash from operations, up 2.7% year over year. Free cash flow in the reported quarter was around $696.8 million, up 0.3% year over year.
Segments in Detail
Bell Wireless: Revenues from Bell Wireless increased 2.2% to $1,294.3 million. Services revenues climbed 4.6% to approximately $1,201.1 million while product revenues decreased 23.5% to approximately $85 million. Blended average revenue per user improved 2.9% year over year to $48. Postpaid customer churn was 1.15% versus 1.23% in the year-ago quarter.
During the reported quarter, BCE added a net of 69,848 postpaid wireless subscribers compared with 61,033 in the prior-year quarter. As of Jun 30, 2016, the company had 7,471,069 postpaid subscribers, up 3.7% year over year. The total wireless subscriber base increased 1.9% to 8,280,693. At second-quarter end, 82% of the total postpaid wireless customers used smartphones compared with 77% at the end of the year-earlier quarter. The proportion of postpaid subscribers on LTE reached 76%, up from 57% a year earlier.
Bell Wireline: Revenues from Bell Wireline declined 2.1% year over year to approximately $2,222.3 million. Wireline data revenues were up 1.9% to $1,348 million. Local and access revenues declined 5.6% to $582.6 million. Long distance revenues were down 11.6% to $136.5 million.
Total network access services (NAS) lines fell 6.2% year over year to 6,476,683, at the end of the reported quarter. Residential NAS losses during the reported quarter were 68,593 compared with 75,819 in the year-ago quarter. Business NAS losses narrowed to 20,232 from 37,690 a year ago.
As of Jun 30, 2016, BCE had 2,750,596 TV subscribers, up 2.8% (including 1,265,786 Fibe TV customers, an increase of 21.6%) and 3,418,785 high-speed Internet subscribers, up 3.1% year over year. In the second quarter, Bell Wireline added a net of 7,539 high-speed Internet customers and 35,255 Fibe TV customers, but lost 33,154 satellite TV subscribers.
Bell Media: Bell Media generated quarterly revenues of approximately $581.1 million, up 5.3% year over year.
Guidance
BCE issued its financial guidance for 2016. The company expects adjusted earnings per share of C$3.45–C$3.55 while free cash flow growth is likely to be around 4–12%. Annual dividend per share is projected at C$2.73, reflecting a dividend payout policy of 65–75%. Revenue growth is expected at around 1–3%, while EBITDA growth is estimated at roughly 2–4%. Capital intensity projection is pegged at approximately 17%.
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Leading Canadian telecom operator BCE Inc. (BCE - Free Report) reported disappointing financial results in the second quarter of 2016, with both the top and bottom line lagging the respective Zacks Consensus Estimate.
This Zacks Rank #4 (Sell) company competes with Rogers Communications Inc. (RCI - Free Report) , Shaw Communications Inc. and TELUS Corp. (TU - Free Report) in the highly competitive Canadian telecom market.
Quarterly net income was approximately $619 million, up 2% year over year. GAAP earnings per ADS (American Depository Share) were 62 cents, down 1.1% year over year. Adjusted net income per ADS came in at 66 cents, missing the Zacks Consensus Estimate of 71 cents.
Total revenue was approximately $3,981 million, up 0.3% year over year but well short of the Zacks Consensus Estimate of $4,149 million. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was about $1,692 million, up 3.2% year over year. Quarterly adjusted EBITDA margin was 42.5% compared with 41.3% in the prior-year quarter.
Cash Flow
During the second quarter of 2016, BCE generated approximately $1,410 million of cash from operations, up 2.7% year over year. Free cash flow in the reported quarter was around $696.8 million, up 0.3% year over year.
Segments in Detail
Bell Wireless: Revenues from Bell Wireless increased 2.2% to $1,294.3 million. Services revenues climbed 4.6% to approximately $1,201.1 million while product revenues decreased 23.5% to approximately $85 million. Blended average revenue per user improved 2.9% year over year to $48. Postpaid customer churn was 1.15% versus 1.23% in the year-ago quarter.
During the reported quarter, BCE added a net of 69,848 postpaid wireless subscribers compared with 61,033 in the prior-year quarter. As of Jun 30, 2016, the company had 7,471,069 postpaid subscribers, up 3.7% year over year. The total wireless subscriber base increased 1.9% to 8,280,693. At second-quarter end, 82% of the total postpaid wireless customers used smartphones compared with 77% at the end of the year-earlier quarter. The proportion of postpaid subscribers on LTE reached 76%, up from 57% a year earlier.
Bell Wireline: Revenues from Bell Wireline declined 2.1% year over year to approximately $2,222.3 million. Wireline data revenues were up 1.9% to $1,348 million. Local and access revenues declined 5.6% to $582.6 million. Long distance revenues were down 11.6% to $136.5 million.
Total network access services (NAS) lines fell 6.2% year over year to 6,476,683, at the end of the reported quarter. Residential NAS losses during the reported quarter were 68,593 compared with 75,819 in the year-ago quarter. Business NAS losses narrowed to 20,232 from 37,690 a year ago.
As of Jun 30, 2016, BCE had 2,750,596 TV subscribers, up 2.8% (including 1,265,786 Fibe TV customers, an increase of 21.6%) and 3,418,785 high-speed Internet subscribers, up 3.1% year over year. In the second quarter, Bell Wireline added a net of 7,539 high-speed Internet customers and 35,255 Fibe TV customers, but lost 33,154 satellite TV subscribers.
Bell Media: Bell Media generated quarterly revenues of approximately $581.1 million, up 5.3% year over year.
Guidance
BCE issued its financial guidance for 2016. The company expects adjusted earnings per share of C$3.45–C$3.55 while free cash flow growth is likely to be around 4–12%. Annual dividend per share is projected at C$2.73, reflecting a dividend payout policy of 65–75%. Revenue growth is expected at around 1–3%, while EBITDA growth is estimated at roughly 2–4%. Capital intensity projection is pegged at approximately 17%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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