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BCE Inc. (BCE) Misses on Q4 Earnings, Revenues Grow Y/Y

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Leading Canadian telecom operator, BCE Inc. (BCE - Free Report) reported mixed financial results in the fourth quarter of 2016. Total revenue grew year over year. However, earnings per share lagged the Zacks Consensus Estimate.

This Zacks Rank #4 (Sell) company competes with its peers Rogers Communications Inc. (RCI - Free Report) , Shaw Communications Inc. and TELUS Corp. (TU - Free Report) in the highly competitive Canadian telecom market.  While TELUS also carries a Zacks Rank #4, both Rogers Communications and Shaw Communications carry a Zacks Rank #2 (Buy). You can see  the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Quarterly net income was approximately $492 million, up a substantial 32.2% year over year. However, GAAP earnings per ADS (American Depository Share) were 55 cents, up 29.3% year over year. However, adjusted net income per ADS came in at 57 cents, falling short of the Zacks Consensus Estimate of 59 cents.

Total revenue was approximately $4,271 million, up 1.8% year over year. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) came in at about $1,588.6 million, increasing 2.3% year over year. Quarterly adjusted EBITDA margin was 37.2% compared with 37% in the prior-year quarter.

Cash Flow

In the fourth quarter of 2016, BCE generated approximately $1,138.5 million of cash from operations, inching up 0.7% year over year. Free cash flow in the reported quarter came in at around $691.3 million, up marginally 0.8% year over year.

Segments in Detail

Bell Wireless: Revenues from Bell Wireless increased 6.4% year over year to $1,410.4 million. Services revenues climbed 7.2% to approximately $1,274.8 million while product revenues remained flat to approximately $127.3 million. Blended average revenue per user improved 4.7% year over year to $49.95. Postpaid customer churn was 1.45% compared with 1.38% in the year-ago quarter.

During the reported quarter, BCE added a net of 112,393 postpaid wireless subscribers compared with 91,308 in the prior-year quarter. As of Dec 31, 2016, the company had 7,690,727 postpaid subscribers, up 4.3% year over year. The total wireless subscriber base increased 2.7% to 8,468,872. At 2016 end, 83% of the total postpaid wireless customers used smartphones compared with 78% at the end of 2015. The proportion of postpaid subscribers on LTE reached 81%, surging from 68% a year earlier.

Bell Wireline: Revenues from Bell Wireline declined 0.8% year over year to approximately $2,349.6 million. Wireline data revenues were up 2.9% to $1,435.1 million. Local and access revenues decreased 6.1% to $564 million. Long distance revenues were down 12.7% to $133.3 million.

Total network access services (NAS) lines fell 6.4% year over year to 6,257,732, at the end of 2016. Residential NAS losses during the reported quarter were 67,385 compared with 58,081 in the year-ago quarter. Business NAS losses decreased to 33,245 from 48,829 a year ago.

As of Dec 31, 2016, BCE had 2,744,909 TV subscribers, up 0.2% (including 1,337,944 Fibe TV customers, an increase of 13.1%) and 3,476,562 high-speed Internet subscribers, up 1.9% year over year. In the fourth quarter, Bell Wireline added a net of 18,402 high-speed Internet customers and 35,905 Fibe TV customers, but lost 36,869 satellite TV subscribers.

Bell Media: Bell Media generated quarterly revenues of approximately $611.2 million, rising 3.6% year over year.

Hike in Dividend Rate

The board of directors of BCE has decided to raise annualized dividend rate by 5.1% from $2.73 a share to $2.87. This is the company’s 13th increase to its annual common share dividend since the fourth quarter of 2008.

Guidance

BCE issued financial guidance for 2017. The company expects adjusted earnings per share of C$3.42–C$3.52 while free cash flow growth is likely to be around 3–7%. Annual dividend per share is projected at C$2.87, reflecting a dividend pay-out policy of 65–75%. Revenue growth is expected at around 1–2%, while EBITDA growth is estimated at roughly 1.5–2.5%. Capital intensity projection is pegged at approximately 17%.

BCE, Inc. Price, Consensus and EPS Surprise

 

BCE, Inc. Price, Consensus and EPS Surprise | BCE, Inc. Quote

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