MONTREAL - BCE reported a 31% increase in net earnings, to $773 million in the second quarter of 2012, ended June 30th, despite basically flat overall revenue of $4.34 billion (a 0.5% decline).
On the positive side, revenue grew 6.7% at Bell Wireless (to $1.36 billion) and 0.9% at Bell Media (to $534 million) this quarter. But the 3.9% decrease at Bell Wireline (to $2.53 billion), resulted in the slight revenue drop.
Bell EBITDA was up 3.7% in the quarter (to $1.72 billion) on growth of 20.9% at Bell Wireless (to $556 million) and 23.6% at Bell Media (to $152 million) alongside a 3.1% reduction in total operating costs. The company generated $1.9 billion of cash flows from operating activities (up 37.7%) and free cash flow of $804 million (up 88.3%).
"We accelerated strategic capital investment to extend our broadband wireless and wireline footprint in support of Bell's future operating performance, while remaining committed to a strong balance sheet position to underpin our dividend growth objective,” said Siim Vanaselja, CFO of BCE and Bell Canada. “Our operating performance through the first half of the year, strong free cash flow trajectory through 2012, and confidence in our business outlook going forward all provide us with the financial flexibility to execute our strategy and achieve our 2012 financial guidance targets."
Bell Wireless postpaid net activations increased 8.2% to 102,067, while postpaid customer churn rate improved to 1.3%. Smartphone users represented 55% of postpaid subscribers up from 38% a year earlier, according to the company’s release. This drove significantly higher wireless data usage year over year with services like Bell Mobile TV, which contributed to strong mobile data revenue growth of 31.1% and blended ARPU (average revenue per user) growth of 4.5%. Blended ARPU was $55.37 per month in Q2 2012, up from $52.99 per month in Q2 2011.
At Bell Wireline, TV revenue from steadily increasing Fibe TV penetration, higher IP broadband connectivity revenues, and increased data product sales to business customers moderated the overall decline. Bell Fibe TV added 38,477 net new subscribers, up from 14,367 in Q2 2011, representing a 168% increase in total TV net activations year over year. Bell’s total TV subscriber base (satellite and Fibe) was 2,128,433 as of June 30. At the end of Q2 2012, Bell's IPTV footprint encompassed more than 2.4 million households, up from approximately 1.2 million households at the end of Q2 2011. Although Bell Wireline EBITDA decreased 5.9% this quarter to $1 billion due to lower revenues, margins remained relatively stable at 39.9% compared to 40.7% in Q2 2011, reflecting a 2.5% improvement in operating costs.
Bell Media revenue was up 0.9% to $534 million in Q2 2012, despite continued softness in advertising markets, thanks to the kick-in of higher rates charged to broadcast distributors through renegotiated agreements for certain Bell Media specialty sports and non-sports TV services.