CEO discusses why taking risks and facing setbacks is the pathway to 'outlier' results
BCE Inc., the owner of Bell Canada, faced a challenging week, as reported by BNN Bloomberg, with a regulatory setback and significant financial losses in its latest quarter.
The company disclosed a net loss of $1.24bn, or $1.36 per share, for the quarter ending September 30, compared to a profit of $640m or 70 cents per share a year earlier.
Additionally, BCE recorded $2.11bn in asset impairment charges primarily associated with Bell Media’s TV and radio properties. Shares in BCE dropped $1.12, or 2.8 percent, closing at $38.94 on Thursday, marking the first time since 2012 that the share price fell below $40.
BCE’s adjusted earnings stood at 75 cents per share, down from 81 cents in the same quarter last year. The company also reported a decline in operating revenues, which totalled $5.97bn for the third quarter, down from $6.08bn in 2023.
Consequently, BCE revised its 2024 revenue forecast, now expecting a decrease of approximately 1.5 percent rather than the previously projected zero to four percent increase. The revision is attributed to lower-than-expected wireless product revenues and ongoing pressures on wireless prices.
The financial disclosure came shortly after BCE faced another regulatory hurdle.
The federal government dismissed Bell’s petition to “rescind or vary” a Canadian Radio-television and Telecommunications Commission (CRTC) decision allowing smaller internet providers to use Bell’s fibre network in Ontario and Quebec.
Industry Minister François-Philippe Champagne commended the CRTC for promoting competition, stating, “Workable wholesale access to fibre networks is needed.”
Bell had argued the decision disincentivized it from expanding its fibre network, which the CRTC has since mandated nationwide, effective next February.
BCE CEO Mirko Bibic emphasized Bell’s focus on fibre, describing the company as a “fibre-first company” and noting that the technology is “at the heart of what we do.”
Bibic reaffirmed Bell’s commitment to its fibre expansion, targeting 8.3m locations by the end of 2025, despite reduced capital expenditures of over $1bn across 2024 and 2025, including a year-to-date reduction exceeding $600m.
This week, BCE also announced its acquisition of the US fibre internet provider Ziply Fiber for $5bn in cash, partially financed by $4.2bn in proceeds from the sale of its Maple Leaf Sports & Entertainment stake.
Bibic explained the move, indicating that BCE is adjusting its cost structure in response to declining segments, particularly its radio businesses.
On the wireless front, BCE reported a 33,111 increase in net postpaid mobile phone subscribers, a significant drop of 76.8 percent from last year, which Bibic attributed to heightened customer churn amid increased competition and promotional offers.
The monthly churn rate rose to 1.28 percent from 1.1 percent in the previous year.
“I’m not happy with where churn is… It is a marketplace reality that consumers are continuing to shop for deals given the sustained, aggressive promotional offers,” Bibic remarked.
Bell also experienced an 11.6 percent decline in gross subscriber activations, with its mobile phone average revenue per user (ARPU) decreasing 3.4 percent to $58.26.
Bibic highlighted BCE’s strategic approach, noting that the company is prioritizing quality customers, particularly those opting for its premium Bell brand, rather than pursuing aggressive growth at all costs.
Chief Financial Officer Curtis Millen supported this approach, indicating that the company “intentionally slowed down subscriber acquisition” to avoid low ARPU contracts.
Analyst Maher Yaghi from Scotiabank expressed concern over BCE’s increased churn rate, describing it as “significantly more than anticipated.” Yaghi stressed the need for BCE to address churn to stabilize its financial performance, particularly as the competitive holiday season approaches.
