Bell says ‘unlimited’ plans put network quality in focus, will move to 3-year financing

BCE Inc. said the race to “unlimited” wireless data plans has placed a renewed focus on carriers’ network performance and has unleashed a competitive dynamic that will also see it follow competitors with its own 36-month device financing options. “The move to the unlimited plans puts an enormous focus on your network, and your network’s performance, and our superior network should turn out to be even that much more of a competitive advantage going forward,” Bell head George Cope said on Thursday. Cope spoke on the company’s second-quarter conference call with analysts about the competitive dynamic that followed the release of no-overage data by Rogers Communications Inc. in June and subsequently other major players, including itself and Telus Corp. While the latter decreased its unlimited pricing in some cases, Bell increased its base $75 for 10 GB no-overage offer by $10 after the promotion’s end. Part of what informs that increase is Bell’s network quality, Cope said. Claiming to “come out way ahead of the competitor who led this change,” he said Bell is “in an excellent position to move market share.” The comments reach back to a similar argument made against Shaw Communications Inc.’s Freedom when the regional player released its Big Gig data plans in 2017. The plans increased data packages to at least 10 GB for a base price of $50, which forced the incumbents to respond in kind. But before they did respond, the initial reaction from at least Rogers head Joe Natale was to shrug at the new deals. Freedom’s fledgling network paled in comparison to Roger’s more established infrastructure, he said on a third quarter conference call in 2017. Freedom is now in the midst of rolling out its network-improving 700 MHz spectrum and has recently purchased spectrum in the 600 MHz band, considered important for 5G. Last week, Freedom announced a new back-to-school promotion called “Absolute $0,” which offers customers select phones for free on certain-priced plans. The deal was viewed as a response to the incumbents’ move toward equipment financing plans, which give customers the option of paying $0 upfront for any device in exchange for them paying for the full cost of the device over a contract period. The move was also seen as one that would help the telecoms reduce subsidies they gave customers that bring down the consumer cost of the device by between $300 and $500, some analysts estimated. Freedom, in some analysts’ view, was doubling-down on the subsidy model as providers were moving away from that. Bell, however, is keeping both subsidy and financing models for what Cope described as maximum choice for customers. Freedom’s offer had some analysts saying the incumbents may rethink the move away from subsidies. And the tit-for-tat that the unlimited deals unleashed on the industry isn’t done. After Rogers announced that it would use the financing model, Telus was the first carrier to implement it on 24-month plans. Rogers followed that by offering financing over 36 months, which Telus then also followed. Now, Bell will follow suit. “We think one of the programs to have that financing over three years is an intelligent move for the consumer market and one that you will ultimately see us roll-out,” Cope said. “Part of this from our end is of course reacting at a pace of the competitive change there,” he added. Some groups think the 36-month financing deals are offside of the Wireless Code, which caps service contracts at 24 months. The CRTC is asking the telecoms to address questions related to the plans. Analysts have predicted that the industry’s breakout move toward ending data caps would have a moderating effect on average revenue per user (ARPU). Canaccord Genuity analyst Aravinda Galappatthige said the wireless-heavy players like Telus and Rogers would suffer more than those with less reliance on that business, like Bell. On the call, Cope said while it will take time to see what the action in the industry has wrought -- and it expects the new plans will “moderate” ARPU -- the company still sees positive ARPU in the back half of the year. The company now calculated average billing per user, which was up 1.6 per cent to $68.79 over the same period last year. The company added 102,980 postpaid subscribers, 15.7 per cent less than what it added in the second-quarter last year. But it also added 46,498 prepaid subscribers, a 711 per cent increase compared to the 7,606 subscribers it lost in last year’s equivalent quarter. The combined sum of nearly 150,000 new subscribers for both segments is the best second-quarter performance for the company since 2001, it said. The total sum of both sub-bases increased 3.4 per cent to 9.63 million. The prepaid segment has grown since the launch of the prepaid-focused flanker Lucky Mobile and its distribution agreement with Dollarama. The company has said that long-term, it hopes to migrate prepaid users to more longer-term postpaid subscribers. The postpaid churn rate -- the measure of customers who cancel -- was flat at 1.06 per cent. Wireless revenues were up 3.2 per cent to $2.2 billion, with service revenue up 2.5 per cent to $1.6 billion and product, including devices, revenue up 5.2 per cent to $571 million, due to higher mix of premium smartphones. The company also said its LTE-A service is now available to 94 per cent of Canadians, offering speeds of up to 260 Mbps using technology known as quad-band carrier aggregation. On wireline, the company said it has added 52,000 new fibre-to-the-home internet customers, which is an increase of 10.4 per cent over the year. It added 19,414 net new internet subscribers in the quarter, more than the 12,803 it added in the same period last year -- an increase of 51.6 per cent. Total subscribers at the end of the quarter stood at roughly 3.5 million. However, it gained fewer IPTV subscribers with 16,775 this quarter compared to the same period last year, which saw an increase of 20,653. Total IPTV subs were still up to roughly 1.71 million. Bell Media revenues were up as well by 6.4 per cent $842 million over the year. The company saw increased revenues of 2.5 per cent to $5.9 billion, with net earnings up 8.2 per cent to $817 million compared to the equivalent period last year. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

Bell says ‘unlimited’ plans put network quality in focus, will move to 3-year financing

News | August 1, 2019

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Bell says ‘unlimited’ plans put network quality in focus, will move to 3-year financing

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