Bell Aliant reports second quarter 2013 results
- Operating revenues up $4 million
- Fibre-to-the-home (FTTH) footprint expands to 725,000 premises
- FibreOPTMTV adds 13,300 net new customers
- FibreOP Internet adds 16,600 net new customers
- FibreOP penetration exceeds 20 per cent of premises passed
- Residential high-speed Internet average revenue per customer (ARPC) reaches new high, up 7.3 per cent
This news release contains forward-looking statements. For a description of the related risk factors and assumptions please see the section entitled "Forward-looking Information" later in this release.
HALIFAX, Aug. 2, 2013 /CNW/ - Bell Aliant Inc. (TSX: BA) today reported financial results for the second quarter of 2013 for Bell Aliant Inc. (Bell Aliant) and Bell Aliant Regional Communications Inc. (Bell Aliant GP).
"Our second quarter results demonstrated further success in improving the financial trajectory of our business," said Karen Sheriff, president and chief executive officer, Bell Aliant. "We continued to expand our FTTH coverage area and added more FibreOP customers, strengthening our company for the future. We reached a key milestone in the second quarter with more than 20 per cent of the premises in our FTTH coverage area now subscribing to FibreOP.
"Internet and TV revenue growth in the second quarter more than offset declines in local and long distance revenues, thanks to our growing FibreOP services. Our FTTH coverage now passes approximately 725,000 premises. This puts us well on our way to our target of 800,000 premises passed by the end of this year, giving us a significant technological advantage in a large portion of our territory.
"Having the best technology for the future, with the best TV and Internet service at a competitive price will provide the greatest value to customers in our FibreOP markets. Continuing to add FibreOP customers is the key to our future success, and that continues to be our focus."
Second quarter 2013 highlights1 2 3
Bell Aliant Inc. reported net earnings of $67 million for the second quarter of 2013, down $8 million from the second quarter of 2012. The decline in earnings was primarily a result of the recognition of an early redemption penalty on long-term debt refinanced in June 2013, which will result in lower interest costs going forward. As a result, earnings per share were $0.29 in the second quarter of 2013, down $0.04 from the same quarter in 2012. Adjusted earnings per share, which excludes this penalty and other adjustments, was $0.39, down $0.02 from the same quarter in 2012, primarily as a result of lower EBITDA in Bell Aliant GP.
Second quarter financial highlights of Bell Aliant GP are summarized as follows:
| (In millions of dollars) (unaudited) | Q2 2013 | Q2 2012 | Change | YTD 2013 | YTD 2012 | Change |
| Operating Revenue | $692 | $688 | 0.6% | 1,375 | 1,370 | 0.4% |
| EBITDA (*) | 327 | 330 | (1.0%) | 650 | 655 | (0.8%) |
| Capital Expenditures | 157 | 177 | (11.4%) | 285 | 314 | (9.1%) |
| Free Cash Flow (*) | 153 | 165 | (7.2%) | 248 | 245 | 1.2% |
| (*)EBITDA and free cash flow are non-IFRS financial measures. Refer to the "Non-IFRS financial measures" section of Bell Aliant GP's Q2 2013 Management's Discussion and Analysis (MD&A) for details. |
Operating revenues of $692 million in the second quarter of 2013 grew by $4 million (0.6 per cent) from the same quarter in 2012. Growth in TV, Internet, other data, wireless, and other revenues offset declines in local and long distance revenues.
Operating expenses in the second quarter of 2013 grew by $7 million, largely due to growth in TV content, marketing and customer support cost pressures from a growing FibreOP customer base, which were somewhat offset by expense reductions throughout the business, largely driven by productivity savings.
As a result, EBITDA in the second quarter of 2013 declined by $3 million (1.0 per cent) compared to the same quarter in 2012.
Capital expenditures in the second quarter of 2013 were $157 million, down $20 million (11.4 per cent) from the same quarter a year earlier. Lower FTTH footprint expansion and reduced Central Canada FibreOP startup costs were the reasons for the decline compared to the second quarter of 2012.
Bell Aliant passed an additional 45,000 premises with FTTH in the second quarter of 2013, compared to 58,000 incremental premises in the second quarter of 2012. Total FTTH coverage reached 725,000 premises at the end of June 2013. FibreOP penetration of premises passed exceeded 20 per cent at the end of June 2013.
Free cash flow was $153 million in the second quarter of 2013, down $12 million (7.2 per cent) from the same quarter a year earlier. The decrease was primarily due to changes in working capital and accelerated interest payments arising from an early debt redemption, which were somewhat offset by lower capital expenditures compared to the second quarter of 2012.
Revenue details
Total data revenue including Internet and TV increased $24 million (9.9 per cent) in the second quarter of 2013 compared to the same period in 2012.
IPTV revenue grew $12 million in the second quarter of 2013 compared to the second quarter of 2012, with total IPTV customers of 148,700 at the end of June 2013. FibreOP TV customers grew by 13,300 in the quarter to reach 125,800, a portion of which were migrations from Bell Aliant's fibre-to-the-node (FTTN) TV service. Overall net IPTV customer additions were 11,500 in the second quarter of 2013, compared to 10,200 a year earlier.
Internet revenue increased $9 million (6.9 per cent) with residential high-speed Internet ARPC in the second quarter of 2013 up 7.3 per cent from the same quarter a year earlier. The ARPC increase was a result of selected pricing action and customer demand for higher bandwidth bundles and other services. Growth in high-speed Internet customers of 3.0 per cent from a year earlier also contributed to Internet revenue growth. FibreOP Internet customer net additions in the quarter were 16,600, bringing total FibreOP Internet customers to 146,700 at the end of June 2013. FibreOP Internet additions include existing Bell Aliant customers migrating from DSL and FTTN networks to the upgraded service. These migrations do not contribute to overall high-speed customer growth but increasingly contribute to improved customer retention and growth in overall customer ARPC. Overall net high-speed Internet customer additions were 6,200 in the second quarter of 2013, up from 4,300 in the same quarter of 2012, bringing total high-speed Internet customers to 933,400 at the end of June 2013.
Local service and long distance revenues declined $13 million (4.2 per cent) and $9 million (10.1 per cent), respectively, in the second quarter of 2013 compared to the same quarter in 2012, driven by NAS declines of 5.5 per cent. Net NAS declines of 33,300 in the second quarter of 2013 were up 7,600 from the same quarter in 2012, a result of intense competitive activity and technology substitution throughout our markets.
Wireless revenues were up $1 million (2.5 per cent) in the second quarter of 2013 compared to the same quarter in 2012, driven by 3.2 per cent customer growth.
Other revenues were up $1 million (1.7 per cent) in the second quarter of 2013 compared to the same quarter in 2012, mainly as a result of custom work.
Declared Dividends
Bell Aliant declared a quarterly dividend of $0.475 per common share, payable on September 30, 2013, to shareholders of record at the close of business on September 13, 2013.
Bell Aliant Preferred Equity Inc. declared a dividend on its Series A Preferred Shares of $0.303125 per share, a dividend on its Series C Preferred Shares of $0.284375 per share, and a dividend on its Series E Preferred Shares of $0.265625 per share, each to be paid on September 30, 2013, to shareholders of record at the close of business on September 13, 2013.
Unless otherwise stated, dividends paid by Bell Aliant and Bell Aliant Preferred Equity Inc. to Canadian residents are "eligible dividends" as defined by the Canadian Income Tax Act and corresponding provincial legislation.
Additional Information
More information on Bell Aliant's and Bell Aliant GP's second quarter 2013 can be found in Bell Aliant's second quarter 2013 supplementary information package and Bell Aliant and Bell Aliant GP's second quarter 2013 MD&As, available at www.bellaliant.ca/investors and on SEDAR at www.sedar.com .
Analyst conference call
A conference call with the financial community is scheduled for August 2, 2013, at 8:00 a.m. (Eastern). The dial-in numbers are 866-542-4239 and 416-406-6419 for Toronto area participants. Media are invited to attend in listen-only mode. A replay of the session can be heard until September 2. To access the replay, dial 800-408-3053 or 905-694-9451 and enter the passcode 3266319#.
A live audio webcast of the conference call can be accessed on www.bellaliant.ca under the Investor Relations section. A replay of the conference call will be available on the website for one year.
Notes
The information contained in this news release is unaudited.
| (1) | Bell Aliant derives virtually all of its income from its ownership in Bell Aliant GP. Bell Aliant GP's results consolidate the results of Bell Aliant Regional Communications, Limited Partnership; Télébec, Limited Partnership; NorthernTel, Limited Partnership; and Bell Aliant Preferred Equity Inc. | |
| (2) | Percentage changes quoted in this release related to dollar values are based on amounts rounded to the nearest hundred-thousand, consistent with disclosure in Bell Aliant's supplementary information package and Bell Aliant GP's MD&A for the second quarter of 2013. Dollar values quoted in this release are rounded to the nearest million unless otherwise stated. Customer metrics are rounded to the nearest hundred unless otherwise stated. | |
| (3) | Definitions of non-IFRS measures: | |
| a. | EBITDA: Bell Aliant defines EBITDA as operating revenue less operating expenses before interest, income taxes, depreciation and amortization expense, and severance and other charges. | |
| b. | Free cash flow: Bell Aliant defines free cash flow as cash generated from operating activities less capital expenditures. Free cash flow includes the operations of Bell Aliant and Bell Aliant GP on a combined basis. | |
| c. | Adjusted earnings per share (EPS): Bell Aliant defines adjusted EPS as fully diluted EPS of Bell Aliant Inc. adjusted for the per share effect of purchase price allocation amortization (PPA), severance and other charges, and debt redemption loss, net of income taxes, recorded by Bell Aliant GP. In Q2 2013, Bell Aliant modified its definition of adjusted EPS to exclude severance and other charges, and debt redemption loss in order to align with the reporting practices of peers. Adjusted EPS for 2012 has been restated to be presented on a consistent basis to 2013. | |
For a reconciliation of these non-IFRS financial measures to the most closely comparable IFRS financial measures, please refer to Bell Aliant GP's MD&A for the second quarter of 2013 available at www.bellaliant.ca/investors and www.sedar.com .
Forward-looking Information
This news release contains forward-looking statements concerning anticipated future events, results, circumstances or expectations, in particular statements concerning revenue growth, FibreOP customer growth and FTTH expansion plans. Unless otherwise indicated, such forward-looking statements describe management's expectations at August 2, 2013. These statements are based on management's beliefs regarding future events, many of which, by their nature are inherently uncertain and beyond management's control. These statements are not guarantees of future performance and are subject to assumptions which may prove to be inaccurate and numerous risks and uncertainties which are difficult to predict.
Bell Aliant encourages investors to review the risk factors section below, and related disclosures, for a discussion of the various factors that could cause actual results to differ from what is currently expected.
Key Assumptions
Several assumptions were made in making forward-looking statements in this news release. In addition to and as an update to the "Assumptions made in the preparation of forward-looking information" section of Bell Aliant Regional Communications Inc.'s MD&A for the year ended December 31, 2012, Bell Aliant expects2013 net NAS declines to be somewhat higher than those experienced in 2012. This change in assumption has no effect on Bell Aliant's financial guidance ranges for 2013.
Risk Factors
There are many factors that could cause results or events to differ materially from current expectations. The most significant factors that Bell Aliant has identified that may affect Bell Aliant's results or events in 2013 include but are not limited to: increasing competition; cost management; financing and free cash flow; network evolution; pension valuation and investment risk; legislative and regulatory factors; outsourcing and vendor relationships; information technology (IT); human capital; as well as the structural subordination of our common shares; limitations on non-resident ownership; dilution, unpredictability and volatility of our share price; and tax related risks. Some of these risk factors are largely beyond Bell Aliant's control. For additional information on material factors and assumptions used to develop forward-looking information and risk factors that could cause actual results to differ materially from forward-looking information, see also the "Risks that could affect our business results" section of Bell Aliant Inc.'s MD&A for the year ended December 31, 2012, and the "Assumptions made in the preparation of forward-looking information" and "Risks that could affect our business and results" sections of Bell Aliant Regional Communications Inc.'s MD&A for the year ended December 31, 2012, as updated by their 2013 first and second quarter MD&As, as well as the "Risk Factors" sections of Bell Aliant and GP's 2012 Annual Information Forms. These documents are available at www.bellaliant.ca/investors and www.sedar.com .
Should any risk factor affect Bell Aliant in an unexpected manner, or should assumptions underlying the forward-looking statements prove incorrect, the actual results or events may differ materially from the results or events predicted. Unless otherwise indicated, forward-looking information does not take into account the effect that transactions, or non-recurring or other special items, announced or occurring after this information is provided may have on the business. All of the forward-looking information reflected in this press release and the documents referred to within it are qualified by these cautionary statements. There can be no assurance that the results or developments anticipated by Bell Aliant will be realized or, even if substantially realized, that they will have the expected consequences for Bell Aliant.
Except as may be required by Canadian securities laws, Bell Aliant disclaims any intention and assumes no obligation to update or revise any forward-looking information, even if new information becomes available, as a result of future events or for any other reason. Readers should not place undue reliance on any forward-looking information. Forward-looking information is provided for the purpose of providing information about management's current expectations and plans relating to fiscal 2013 or other future periods. Readers are cautioned that such information may not be appropriate for other purposes.
About Bell Aliant
Bell Aliant (TSX: BA) is one of North America's largest regional communications providers and the first company in Canada to cover an entire city with FTTH technology with its FibreOP services. Through its operating entities it serves customers in six Canadian provinces with innovative information, communication and technology services including voice, data, Internet, video and value-added business solutions. Bell Aliant's employees deliver the highest quality customer service, choice and convenience.
SOURCE: Bell Aliant Inc.
Media Relations:
Sarah Dawson
(855) 482-5541
sarah.dawson@bellaliant.ca
Investor Relations:
Zeda Redden
(877) 487-5726
zeda.redden@bellaliant.ca