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• Q1 2012 results reflect continued improved financial trends
"Returning to revenue growth is a momentous occasion for Bell Aliant and in the first quarter of 2012 we turned a corner," said Karen Sheriff, president and chief executive officer, Bell Aliant. "We expected the quarter to show improved financial trends and the business has delivered.
"Declines in our traditional local and long distance revenues were offset by increases in every other major revenue category. While timing of certain events may result in future quarters of 2012 having softer year-over-year comparators than the first quarter, we are very pleased that signs of future growth are occurring in many areas of the business. We are very well positioned to achieve solid financial results with improving trends in 2012, in line with the guidance ranges we set out in February.
"FibreOP is playing a key role in the turnaround, with our first quarter results particularly strong in FibreOP territories. Over 500,000 premises in Atlantic Canada now have access to FibreOP services. Demand is escalating as we add new features and expand into more markets and later this year we will launch FibreOP in Sudbury, Ontario. FibreOP is making the difference that we expected and I am confident that we have chosen the right strategy for the long-term profitability of our business."
First quarter 2012 highlights1
First quarter financial highlights of Bell Aliant GP are summarized as follows:
*Q1 2011 free cash flow excludes a $200 million lump sum contribution to defined benefit pension plans.
Operating revenues in the first quarter of 2012 were $682 million, consistent with revenues in the same quarter of 2011. Declines in local and long distance revenues as a result of lower network access services (NAS) were offset by growth in all other major revenue categories, led by Internet and TV.
Operating expenses in the first quarter of 2012 increased $4 million (1.2 per cent) compared to the same quarter of 2011. Growth in TV content costs from higher FibreOP TV sales and other costs of revenues were largely offset by productivity gains throughout the business. As a result of the expense increases, EBITDA declined $4 million (1.2 per cent) in the first quarter of 2012 from the same quarter in 2011.
Capital expenditures in the first quarter of 2012 increased $17 million (14.6 per cent) from the same quarter a year earlier, as a result of further expansion of the fibre-to-the-home (FTTH) network. Start-up costs associated with launching FTTH in Bell Aliant's central Canada territory, passing more homes, and connecting more customers to the FTTH network than the same quarter in 2011 all contributed to the increase in capital expenditures. In the first quarter of 2012, Bell Aliant passed an additional 58,000 homes and businesses with FTTH, bringing its total FTTH coverage to 516,000 premises at the end of March 2012.
Free cash flow was $80 million in the first quarter of 2012, down $8 million from the same quarter a year earlier, excluding a $200 million lump sum contribution to pension plans made in the first quarter of 2011. The decrease was primarily a result of higher capital spending in the first quarter of 2012 compared to 2011, which was partially offset by lower regular pension funding in 2012.
Internet revenue increased $9 million (7.5 per cent) in the first quarter of 2012 compared to the same period in 2011. Residential high-speed average revenue per customer (ARPC) continued to grow, with customer adoption of additional services, along with the carry-over effects of pricing actions from 2011. Residential high-speed ARPC in the first quarter of 2012 was up 7.7 per cent from the same quarter a year earlier.
High-speed Internet customers reached 902,000 at the end of March 2012, up 2.8 per cent from a year earlier. FibreOP Internet customers grew by 13,000 in the quarter to reach 59,000 at the end of March 2012. The majority of the FibreOP net adds were customers migrating from DSL and fibre-to-the-node networks, which would not have contributed 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 of 6,400 in the first quarter of 2012 were down from 8,500 in the first quarter of 2011, reflecting this migration, lower high-speed Internet footprint expansion and continued competitive activity.
IPTV revenue reached $17 million in the first quarter of 2012 with total IPTV customers of 85,000 at the end of March 2012. FibreOP TV customers grew by 11,000 in the quarter to reach 52,000, a portion of which were migrations from Bell Aliant TV. Overall net IPTV customer additions were 8,000 in the first quarter of 2012, up from 4,000 in the same quarter of 2011.
Other data revenue grew $2 million (2.1 per cent) in the first quarter of 2012 from the same quarter a year earlier, continuing the improved trends of recent quarters as a result of data demand growth.
Wireless revenues were up $3 million (13.3 per cent) driven by 8.9 per cent customer growth and 4.1 per cent wireless ARPC growth compared to a year ago as customers subscribe to higher value plans. Other revenues also increased $3 million (6.8 per cent) in the first quarter compared to a year ago, driven by higher product sales and increased pole attachment fees.
Bell Aliant Preferred Equity Inc. today declared a dividend on its Series A Preferred Shares of $0.303125 per share and a dividend on its Series C Preferred Shares of $0.284375 per share to be paid on June 29, 2012 to shareholders of record at the close of business on June 15, 2012.
1See Notes section at the end of this release for definitions of the non-International Financial Reporting Standard (IFRS) financial metrics including EBITDA, free cash flow and adjusted earnings per share.
(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&As for the first quarter of 2012. Dollar values quoted in this release are rounded to the nearest million unless otherwise stated.
(3) Definitions of non-IFRS measures:
a. EBITDA: Bell Aliant defines EBITDA as operating revenue less operating expenses (operating income) before interest, income taxes, depreciation and amortization expense, 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: Bell Aliant defines adjusted earnings per share as fully diluted earnings per share adjusted for the after-tax per share impact of amortizing purchase price allocations (amounts which represent the adjustments to historical cost of tangible and intangible assets acquired in business combinations).
For a reconciliation of these non-IFRS measures to the most closely comparable IFRS measures, please refer to Bell Aliant GP's MD&A for the first quarter of 2012 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 2012 or other future periods. Readers are cautioned that such information may not be appropriate for other purposes.
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