BCE’s Fourth-Quarter Profit Tops Estimates on Data Sales

BCE Inc., Canada’s second-largest wireless carrier, reported fourth-quarter earnings that beat analysts’ estimates after smartphone data fees boosted profit and its landline business improved.

Excluding one-time charges and gains, earnings were 70 Canadian cents (63 cents) a share, the Montreal-based company said today in a statement. That compared with the 69 cents projected by analysts on average, according to data compiled by Bloomberg. Sales were C$5.38 billion, missing the average estimate of C$5.41 billion.

BCE, known by its brand name Bell, is fighting to maintain average revenue per customer, an area where it has outperformed competitors Telus Corp. and Rogers Communications Inc. An increase in smartphone users is allowing Bell to make more money from each customer, Phillip Huang, a Toronto-based analyst with Barclays Plc, said in a note last week to clients. Huang rates the shares a buy.

“Wireless data revenue increased 15.2 percent on higher customer usage driven by greater adoption of smartphones and increased data consumption,” the company said in the statement.

The company’s shares rose 2 percent to C$46.30 at the close in Toronto. They rose 7.9 percent last year, compared with an 8.1 percent gain for the S&P/TSX Telecom Services Index.

Subscriber Increase

BCE added 119,520 wireless contract customers last quarter. That compared with an estimate of 123,600, based on a Bloomberg survey of nine analysts. Average revenue per customer was C$57.92, topping the estimate of C$57.80.

Earnings from the wireline business, which includes residential phone lines and cable television, grew 0.3 percent because of lower operating costs, Bell said in its statement.

“We’re very pleased with these results,” George Cope, Bell’s chief executive officer, said in a call with analysts this morning.

The turnaround of the landline business is a key development for Bell, said Maher Yaghi, a Toronto-based analyst with Desjardins Securities Inc.

“Wireline has always been a drag on the company’s free cash flow and earnings growth,” he said in a phone interview. “Wireline is now slowly taking a bigger share in the potential growth opportunities for the company.”

Government Auction

Bell also is participating in a government auction for premium 700-megahertz spectrum that would be used to stream videos and other Web content. The company is likely to get its share of spectrum for close to the starting price of C$162 million for each block because the auction hasn’t attracted enough bidders to drive up the price, Greg MacDonald, a Toronto-based analyst with Macquarie Group Ltd., said on Jan. 15, the week the auction started.

Bell predicted revenue growth this year of 2 percent to 4 percent and plans to keep its dividend payout at 65 percent to 75 percent of free cash flow. The company said it would increase its dividend 6 percent to C$2.47 per year.

Rogers and Telus, who join Bell to make the Big Three Canadian phone companies, report their fourth-quarter earnings next week.

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