It’s one of the behemoths Canada watches closely, the chief of the country’s communications community. When BCE Inc. (T.BCE) shines a light on its bottom line, waves part and people pay attention.
So it was this week when the phone operator announced earnings per share of $1.02 for the second quarter of fiscal 2012, head and shoulders above the 81-cent figure projected by Zacks Investment Research.
The company, which is in the midst of a controversial $3.4-billion takeover bid of Astral Media Inc. (T.ACM.A), earned $773 million in the quarter, or $1 a share, compared to $590 million or 76 cents a share a year ago.
Revenue slid 0.6% year over year to $4.92 billion and missed the Zacks Consensus Estimate of $4.93 billion, that because of weak growth at the conglomerate’s Bell Canada, in particular Bell Wireline -- and continued feeble performance by Bell Alliant.
However, BCE’s Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) grew 2.8% year over year to $2.04 billion in the reported quarter, driven by strong contributions from Bell Wireless and Bell Media.
The company told shareholders it is focusing on five strategic areas including investment in broadband network and services, accelerating wireless services, leveraging wireline momentum, improving customer service, and achieving a competitive cost structure.
BCE raised its fiscal 2012 guidance based on lower tax rates. BCE now expects adjusted earnings per share in the range of $3.15-$3.20 compared with $3.13-$3.18 projected previously. Free cash flow guidance remains unchanged at $235-$250 million.
In singing BCE’s praises, Zacks analysts commented "we are encouraged by management's confidence about delivering strong results going forward, based on its substantial investments to expand broadband wireless and wireline footprint.
"In addition, the expected robust free cash flow trajectory and financial flexibility would underpin the company's dividend growth further."
At the same time, the company put to rest any thoughts it was exiting the home phone business anytime soon. The Montreal-based giant was the top dog in the home phone game as recently as a decade ago, only to see that dominance bitten into by rival companies offering more affordable mobile phones, and as cable companies began offering Internet-based systems.
But with this newfound affluence and aggressive growth strategy for the near future, BCE is emboldened to win back some of the land-line customers once thought gone for good.
BCE is engaging in a multi-million-dollar network upgrade that is getting fibre optic cable directly to consumers’ homes in Southern Ontario and Quebec. This upgrade would enable BCE to offer enhanced digital television services and faster Internet speeds to about 2.4 million households so far.
"BCE Inc.", says the company website, "is Canada's largest communications company, providing consumers and business with solutions to all their communications needs, including Bell Mobility wireless, high-speed Bell Internet, Bell Satellite TV and Bell Fibe TV, Bell Home Phone local and long distance, and Bell Business Markets IP-broadband and information and communications technology (ICT) services."
BCE stock closed Friday at $45.04, 25 cents or 0.6% higher than the day before, placing it at a new 52-week high. The 52-week low, plumbed in mid-August 2011, was $36.53.
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