Bell targeting more rural markets with fixed wireless expansion

BCE Inc. will grow its presence in the fixed wireless space to 30 additional rural communities after a successful trial earlier this year, CEO George Cope said Thursday in a call with analysts. “We ran a unique wireless trial in some markets, leveraging our footprint in areas we’ve not really been competitive in the rural footprint in the past. It’s a very positive result,” he said. Bell announced in February that it was testing 5G tech using 3.5 GHz spectrum for fixed wireless in Ontario, with Desjardins Capital Markets analyst Maher Yaghi flagging high-capacity fixed wireless as an interesting alternative to fibre connections earlier this year. “The great thing here is the fibre that we’re building for our wireless network to these towers, we as a result can offer a fixed wireless solution into the home as well,” Cope said. He noted that makes the cost to offer the service attractive. Customers will get speeds of 25 to 50 Mbps. “It’s a real way for us to get at the rural markets,” he said. If the move into the 30 additional markets is successful, the company plans to offer the service in more communities. Cope said the total addressable market Bell could eventually reach in this way is about 1.25 million. “Those are markets where we have high satellite share, obviously traditional local access share, but very, very low internet share,” Cope said. He noted the company’s market share in some communities is in the single digits. Cope was speaking to analysts following the release of the company’s second quarter results. The announcement follows a submission by Bell urging Innovation Canada not to claw back two-thirds of incumbents’ spectrum holdings for the 3.5 GHz auction in 2020 because it could hamper its ability to deliver those services in rural areas. For the service it calls "wireless to the home," Bell noted in the submission that a "more extensive deployment began in 2018 and our current plan is to accelerate this further in 2019 and beyond." Bell also announced speed increases for its top tier internet offers Thursday. The company will begin to offer speeds of 1.5 Gbps, 50 per cent higher than its current fastest offering, which it said in the quarterly results press release are “the fastest available to the home in Canada.” They will launch later this month in Ontario first, then in the rest of Bell’s operating territory. Barclays Capital analyst Phillip Huang said in a research note Thursday that launch is well-timed given the upcoming back-to-school season, when he expects competition to heat up. He added that the new service would help Bell market and differentiate the offering just as rival Rogers Communications Inc. launches its new IPTV service. “We believe actual consumer adoption of 1.5 service will be more gradual,” he noted. The company added 10,816 high-speed internet subscribers in the three months ended June 30, significantly more than the 1,407 it added in the same quarter last year. In its quarterly results press release, it chalked that up to its fibre network reaching more homes and “the pull-through of Internet customer activations from app-based live TV service Alt TV,” which requires Bell internet. It ended with 3.86 million internet customers, 3.7 per cent more than in the second quarter of 2017. It also added 809 TV subscribers, ending the quarter with a total of 2.84 million. That made for a slight 0.4 per cent increase over the year. Bell said it added 25 per cent more IPTV customers in the quarter, 20,653, compared to a year earlier, due to its fibre-to-the-home (FTTH) expansion and “strong customer demand” for the Alt TV offering, launched last year. It also lost 33 per cent fewer satellite customers, shedding 19,844 in the quarter, which it said reflected “a more mature subscriber base geographically better-suited for satellite TV service, as well as increased market activity from the traditional summer bump in activations.” Cope said he expects that decline to keep improving, and noted Bell’s acquisitions of Bell Aliant and Manitoba Telecom Services helped the satellite business. Overall, the wireline division revenues increased 0.6 per cent to $3.14 billion, due to a variety of factors, including “positive residential services revenue growth driven by strong Internet and IPTV customer gains and higher household ,” improved performance in the Bell Business Markets segment and “increased sales of professional services, including non-recurring contributions in the quarter from the G7 Summit and Ontario general election.” The company added 122,092 postpaid wireless customers, which it noted was its best Q2 performance in 18 years, party due to the ongoing movement of customers from Shared Services Canada as part of a government contract. It lost 7,606 prepaid customers, which Bell said was a nearly 65 per cent improvement over the previous year, citing traction from the low-cost prepaid service Lucky Mobile it introduced late last year and expanded this summer. “The Lucky Mobile product is doing that we expected it to do strategically,” Cope told analysts. Bell ended the quarter with 9.31 million wireless subscribers, a 4.6 per cent increase from a year earlier. Its blended wireless ABPU was $67.71 a month, 0.6 per cent higher than a year earlier. Cope noted that the lower-revenue customers from Shared Services Canada affected that number negatively, as analysts had predicted. Bell’s wireless revenues were up five per cent from the same quarter the previous year, to just over $2 billion. Bell said service revenue was up because of “continued subscriber base expansion, including a higher proportion of postpaid customers,” while product revenue was up due to more sales of higher-value smartphones. Bell Media revenues were down 0.6 per cent over the year, to $791 million. While ad revenue for both conventional and non-sport specialty channels “decreased due to ongoing market softness and viewership declines for traditional linear TV,” that was “moderated by advertising revenue from the 2018 FIFA World Cup, increases at specialty TV news service CP24 and continued growth in Astral outdoor advertising,” it said. Overall company revenues were up 1.7 per cent from a year earlier, to $5.8 billion, driven by increases in service revenue and product revenue in both its wireless and wireline divisions. Net earnings, however, were down 7.2 per cent, to $755 million, which the company said was due mainly to higher expenses and increased depreciation and amortization. — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Ahmad Hathout at ahathout@thewirereport.ca

Bell targeting more rural markets with fixed wireless expansion

News | August 2, 2018

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