Bell reports dip in revenue for Q2 2024

BCE Inc. reported a slight drop in revenue for its second quarter of 2024. Operating revenues for the telecom took a small dive of one per cent for the quarter, which ended June 30, landing at just over $6 billion compared to the same period in 2023. Bell said that was due primarily to a decrease of 8.7 per cent in product revenue, down to $697 million. The company’s net earnings spiked by 52.1 per cent to $604 million from $397 million in the same quarter last year. The jump was credited to several factors, including lower severance, higher adjusted EBITDA, and lower income taxes, all partially offset by higher interest expenses and increased depreciation and amortization expense. Its adjusted net earnings were down to $712 million from $722 million in Q2 2023, a drop of 1.4 per cent. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) rose by two per cent to more than $2.69 billion, up from approximately $2.64 billion last year. In a press release, CEO Mirko Bibic touted Bell’s gains in consumer internet subscribers as bringing the best Q2 for such net additions in 17 years, with an 18 per cent year-over-year increase in the number of households subscribing to internet and mobility bundles where Bell has fibre. Postpaid and prepaid mobile phone net additions grew by 4.4 per cent in Q2, rising to 131,043. The company’s mobile phone customer base was more than 10.3 million by the end of the quarter, up by 3.1 per cent from the same quarter last year – 9,440,775 of those were postpaid subscribers, while 896,720 were prepaid customers. Bell CFO Curtis Millen highlighted that Bell Media’s digital revenue was up 23 per cent, making for the first quarter since Q2 two years ago that it has seen growth in total media revenue and adjusted EBITDA. That climb in revenue was because of growth in its digital advertising and streaming subscriber growth for Crave and its sports direct-to-consumer offering. On Crave, it saw growth pick up in its ad-supported subscription tiers and overall streaming subscriber growth of 21 per cent. The company said that growth at Bell Media was mostly offset by a year-over-year decline at its Bell Communication and Technology Services, or Bell CTS. Total Bell CTS operating revenues for the quarter were down 1.3 per cent to just over $5.28 billion compared to the same period last year, which Bell said was mainly because of lower product revenue, not changes in its service revenue. The company reported its product revenue dropped by 8.7 per cent to $697 million, after it closed store locations under The Source brand as part of its partnership with Best Buy Canada, meaning it lost some revenue from selling consumer electronics. It also saw a lower number of mobile devices sold attached to plan contracts, as more people chose bring-your-own device plans. Bell has already set up the first 24 Best Buy Express stores in British Columbia, Alberta, Ontario, and Quebec and expects to see all planned stores open by the end of 2024. The stories sell a selection of consumer tech from Best Buy, with exclusive telecom services from Bell, Virgin Plus, and Lucky Mobile. While Bell has been seeing “very good” bundling success with its various offerings, Bibic told analysts during the quarterly investors call Thursday that there is room for ARPU (average revenue per user) growth in some markets. “We’re in an intense pricing environment in wireless and wireline, everybody knows this, but we’re going to continue to focus on generating lifetime value for customers who choose the very best and who want premium products, and that’s Bell fibe,” he said. Bell’s blended ARPU on a monthly basis was $58.04 in Q2, down just over one per cent from $59.16 in the same quarter last year. Fibre still ‘growth engine’ for wireline Bibic said fibre continues to be a “growth engine” of Bell’s wireline operations. When asked during the investors’ call whether Bell considers its previous investments in fibre to have been a solid one based on competition and aggressive promotional pricing by its competitors, Bibic said fibre remains the “bedrock” of the company's wireline strategy. “The investments were much needed, critical and will serve us well for years and years to come,” he said. “Frankly, if you look at the communication segments pretty much everywhere, the area of growth in wireline is actually fibre.” Analysts heard Bell is going to continue to capitalize on its fibre momentum because it is the product of choice for its customers. However, analysts were also told observers would have spotted a major adjustment over the past year in the company’s pace on building fibre infrastructure, as the company gets “closer and closer” to reaching its near-term build-out targets. Artificial intelligence and automation Company brass told investors the company’s focus is on its premium offerings in wireless, mobility and internet bundles, and maintaining its lead in the AI space to “improve the customer experience and lower costs.” In July, Bell announced it signed a multi-year deal with “business transformation” AI platform ServiceNow following a previous agreement. The goal of the agreement is to streamline “business-critical” areas of Bell’s operations, including its customer service and field service teams, it said. The automated system will be able to handle order management, case management, and Bell’s incident response processes. When asked if automation means there could be job cuts for human customer service workers at Bell, who might typically handle calls for those types of service requests, Michel Richer, Bell’s senior vice-president of enterprise solutions, told The Wire Report at the time that “over the course of time, yes, those technologies will keep displacing some types of activities toward other activities. That’s the natural evolution that we’ll have seen in time. And we expect this will continue.” Bell also announced a new partnership with Mila in June, a Montreal-based research institute in AI. Earlier in the year, the two began an 18-month collaboration to “apply deep learning neural network algorithms to Bell’s environment,” the company noted. Also during the quarter, Bell acquired CloudKetle Inc. and Stratejm Inc. for $78 million. The company expects them to help its efforts to become a leader in supporting medium and large organizations digital transformations and automation through cloud services. - Reporting by Hannah Daley at hdaley@thewirereport.ca

Bell reports dip in revenue for Q2 2024

News | | August 1, 2024

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Bell reports dip in revenue for Q2 2024

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