BlackBerry 10 phones help BCE rein in wireless cos
BlackBerry 10 phones help BCE rein in wireless costs
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Christine Dobby
Thursday, May 9, 2013
BCE revenue rose only slightly, to $4.34 billion from $4.33 billion. National Post
Bell Canada parent BCE Inc. said Thursday that selling BlackBerry Inc.’s refreshed line of smartphones during its most recent quarter helped Canada’s largest telecommunications company rein in a two-year trend of steadily climbing costs related to the addition of new customers.
Wireless providers love signing up new smartphone customers for the promise of future spending on lucrative data services, but the cost of subsidizing pricey phones like Apple Inc.’s iPhone to make them more affordable for customers makes that a double-edged sword.
George Cope, president and chief executive of the Montreal-based telecom and media giant, said that BlackBerry’s new line of BB10 phones, which require a lower subsidy than some other smartphones, helped lessen that pressure in the quarter.
“There is no doubt that in the first quarter, the mix of having the BlackBerry in our portfolio helped us in our overall cost of acquisition,” Mr. Cope said on a conference call with investors after BCE announced its first-quarter results.
The company’s cost of acquisition during the period increased 1.3% or $5 to $404 per gross acquisition. By contrast, in the fourth quarter of 2012, its COA increased 6.7%.
“Now we have three really strong competitors back in the smartphone space, not two, and that’s obviously, as a buyer, advantageous for the consumer from the choice perspective,” Mr. Cope said, referencing BlackBerry’s increased competition with Apple and Samsung devices since the launch of its BB10 devices this year. He said there was no material change in the overall cost BCE pays to subsidize devices, but added, “we’ve been going on one trajectory the last two years and this is the first time we saw it go the other way, is what I would say.”
The Blackberry Z10 smartphone. SAUL LOEB/AFP/Getty Images
BCE reported flat revenue of $4.92-billion compared to $4.91-billion in the first quarter of 2012. But net earnings attributable to shareholders were up 6.6% to $566-million versus $531-million in the same period last year.
On an adjusted basis, it earned 77¢ a share, compared to 69¢, a year earlier, ahead of consensus expectations of 71¢ per share.
RBC Capital Markets telecom analyst Drew McReynolds attributed the stagnant revenue growth to slower than expected sales growth from BCE’s media division compared to last year while net earnings benefitted from a pension surplus entitlement and gains on derivative investments.
BCE lost 68,000 prepaid wireless subscribers during the quarter but added 59,000 more lucrative postpaid customers, well ahead of analyst expectations.
Blended average revenue per user across both prepaid and postpaid wireless subscribers increased 3.9% to $55.92 while its postpaid churn improved to 1.25% from 1.35% in the first quarter of 2012.
On the media side, BCE is still seeking the Canadian Radio-television and Telecommunications Commission’s approval of its $3.4-billion bid to buy Astral Media Inc.
A week of hearings into its revised proposal that includes the divestiture of several Asset television and radio services wraps up Friday with executives from BCE and Astral slated to make reply submissions.