BCE earnings "steady," but ExpressVu faulters
Montreal, - Bell Canada Enterprises chief executive Michael Sabia characterized the company's first quarter of 2003 as "steady" with revenue and EBITDA up 4.4% and 7.4%, respectively. However, he added that its direct-to-home satellite division's performance needs improvement.
For the first quarter of 2003 at BCE, reported total earnings applicable to common shares was $458 million in the first quarter, ended March 31, 2003, up 19% compared to the first quarter of 2002.
BCE's reported total revenue in the quarter was $4.9 billion, an increase of 0.8% over last year, and reported EBITDA was $1.8 billion, up 0.7% over last year.
"Despite challenges in our industry, we delivered a reasonably balanced performance for the quarter," said Sabia, president and CEO of BCE. "While we continue to face pressures in certain areas of our business, we have achieved solid growth in others. We now have more than four million subscribers in our wireless operation and strong demand for DSL high-speed Internet grew our subscriber base by 39%."
"We continue to execute on our plans to improve our productivity and tightly manage our capital expenditures," concluded Sabia. "For the quarter, our operations delivered free cash flow (after capex and dividends) of $236 million. With now close to $2 billion of consolidated cash, we are well positioned to reduce debt levels and strengthen our balance sheet."
But, in conference calls with financial analysts and the media today, Sabia admitted ExpressVu needs some fixing after a rough first three months of 2003. The DTH company added just 13,000 customers in the quarter, well off the 76,000 which were added in the first quarter of 2002 and the 83,000 added in the fourth quarter of last year.
"We have tried to find a balance point between the growth of the product and the profitability of the product and I think it's pretty clear in the first quarter we didn't have it right," said Sabia.
He pointed to several reasons why growth flattened so suddenly including the dramatic pull-back of advertising and promotion, that cable companies have been very aggressive in promoting their own digital products, the fact the company didn't carry over its Christmas deals into the new year as it has in past years, and its recent price increases - including and already announced system fee which will be inserted onto customer bills next month.
ExpressVu did ramp up its ad and promotional levels in March and saw a direct impact, added Sabia. "We saw the beginnings of a step-up… which largely accounts for the 13,000 subscribers that were added," he explained. ExpressVu had 1.317 million customers at the end of the quarter.
While the company confirmed all of its previously issued financial guidance for the year, including revenue and EBITDA for ExpressVu, it did cut the division's total expected subscriber count by year's end from a range of 1.45 million-1.55 million to between 1.41 million-1.46 million. "BCE expects Bell ExpressVu's revenue growth to be at the low end of its 2003 guidance of 20% to 25% and confirms previously stated guidance of approximately 50% EBITDA growth," reads the release.
And, the price increases are over for now. When asked about the incoming ExpressVu system fee, Sabia added: "Once we've finished that one, I'm pretty confident we'll be done for a bit… a long bit."
Things are still growing well on the DSL side for Bell Canada as Sympatico added a further 96,000 customers in the quarter, bringing its total to over 1.2 million.
At Bell Globemedia, the division which owns CTV and CTV Specialty (channels such as TSN, RDS, OLN and Animal Planet), revenue was up 7% to $335 million. EBITDA was up 12% to $37 million. While the television side performed well since CTV claims many top-rated shows and ad revenue was up, the war in Iraq cost the Globe and Mail newspaper about $1 million a week in additional expenses, said Sabia, which contributed to Globemedia's net loss in the quarter of $2 million, which compares to a net profit of $1 million in the first quarter a year ago.
For the full release, go to www.bce.ca.
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