Restructuring shapes BCE bottom line
MONTREAL - Solid growth among Bell Canada Enterprises' wireless, Internet and video divisions helped lead the company to a dramatic rise in earnings in the second quarter of 2003, ended June 30, 2003.
The company reported earnings applicable to common shares of $461 million, quite an increase over total earnings applicable to common shares of $6 million in the same quarter last year. However, second quarter 2002 earnings per share included net charges of $0.48 per share.
Total revenue in Q2 this year was $4.9 billion and EBITDA (earnings before interest, taxes, depreciation and amortization) was $1.9 billion, essentially flat over last year.
Excluding the impacts of the sale of Bell Canada's directories business on November 29, 2002, and the May 30, 2002 CRTC price cap decision, BCE's total revenue growth for the quarter was 2.8% and total EBITDA growth for the quarter was 6.5%. Similarly, for the first half of the year, revenue and EBITDA were up 3.7% and 7.0% respectively.
"During the quarter, we implemented a new business structure that simplifies Bell Canada and sharpens our customer focus," said Michael Sabia, president and CEO of BCE. "This represented a significant initiative for the company, one that was completed quickly while maintaining the highest levels of customer service."
Part of that restructuring was the announcement of the elimination of 1,700 positions. Sabia told this morning's conference call with financial analysts that 1,350 of those cuts had already happened.
The company's cellular and PCS subscriber base grew in the quarter by 13% to 4.21 million customers, its DSL high-speed Internet subscriber base to 1.3 million, and grew Bell ExpressVu revenues by 23% on subscriber growth of 18,000 to a total of 1.34 million.
However, ExpressVu's rate of growth has flattened considerably (as has the growth of all digital television distributors) compared to Q2 2002, when net additions were 31,000.
The business sector was the flattest portion of the BCE ledger. "Our results reflect the impact of an uncertain economic environment and soft demand from our business customers, particularly our wholesale customers," said Sabia.
Sabia called Bell Globemedia out for praise during the conference call as the owner of The Globe and Mail, CTV, TSN, and numerous other specialty services posted gains across the board with revenue up 10% to $357 million, EBITDA up 33% to $77 million and EBITDA margin up 3.8 percentage points to 21.6%.
"Quite a strong quarter there," he said.
And, what would a quarterly report be without the mention of free cash flow as all companies seem to have found religion on this particular line item. BCE says its actions (including decreased capital expenditures) so far in 2003 has led to a $400-million turnaround in FCF in the quarter to $322 million, compared to Q2 2002. The company paid down $1.5 billion in debt in the quarter.
For the full release, go to www.bce.ca.
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