BCE Profit Beats Estimates by Mixing Prudence and Promotionsby
Added 69,848 wireless customers, topping analysts’ projections
Internet additions dropped as BCE didn’t match Rogers’ deals
BCE Inc. posted second-quarter profit that topped analysts’ estimates as Canada’s biggest telecommunications company spent more on marketing to draw new wireless subscribers.
Earnings excluding some items were 94 Canadian cents a share, the company said in a statement Thursday. That exceeded the 91-cent average of estimates compiled by Bloomberg. Sales of C$5.34 billion ($4.09 billion) compared with a projection of C$5.38 billion. BCE added 69,848 new wireless customers. Six analysts surveyed by Bloomberg predicted a gain of 47,000 on average.
BCE is fighting with Telus Corp. and Rogers Communications Inc. for new wireless and internet customers. Montreal-based BCE increased promotional spending to keep existing wireless customers from leaving and to score new ones, yet it didn’t match Rogers’ packaged pricing on internet deals in the Toronto area, leading to a drop in the number of internet customer additions.
“We view the results as neutral to the shares with better-than-expected wireless results offset by lower-than-expected wireline results,” Drew McReynolds, an analyst with RBC Capital Markets, said in a note to clients.
The shares gained 0.5 percent to C$62.13 at 9:48 a.m. in Toronto trading. They had climbed 16 percent this year through Wednesday.
Rogers added almost twice the number of new wireless users than analysts had projected when it posted results last month by also increasing spending on promotions. Telus reports on Friday.
- BCE added 7,539 high-speed internet customers, compared with 18,606 in the same quarter last year.
- Average revenue per wireless customer was C$64.32, compared with projections for C$64.41.
- The average cost of winning a new wireless customer rose 10 percent to $478 per subscriber.